Court Opinion

ID: 9608424
Source: CourtListenerOpinion
Date Created: 2023-08-22 03:12:27.819652+00
Date Added: 2024-06-11T18:02:46.355272
License: Public Domain

CARDINE, Justice,
dissenting.
REPLEVIN
Replevin is to obtain possession while settling a dispute over the right to possession between parties. W.S. 1-15-102(a)(xiii) (1988). Replevin is a remedy that is available to a secured creditor under the Uniform Commercial Code. W.S. 34.1-9-501 (1991). Once a party obtains lawful possession, he can then proceed with foreclosure, sale and obtain a deficiency if necessary to make him whole. W.S. 34.1-9-501, comment 6; W.S. 34.1-9-504(a) and (b) (1991). The majority improperly limits the ability of secured creditors to utilize replev-in and other remedies.
The majority describes FDIC’s complaint as requesting possession of collateral, judg*809ment in replevin, and a personal judgment against the debtors for the balance owed on the promissory notes. Maj. op. at 785. The majority then states: “It was not clear on the face of the complaint if these were alternative remedies.” Maj. op. at 785. Therein lies my basic disagreement with the majority. I would not require a creditor to choose between these remedies. The very purpose of becoming a secured creditor under the Uniform Commercial Code (UCC) would be undermined by requiring a creditor to initially select among remedies.
By taking the steps to secure a debt, the secured creditor has earned the right to act against the collateral and obtain a judgment if the collateral is insufficient. Requiring the secured creditor to artificially elect his remedies removes the advantage that he had obtained by securing his debt rather than remaining an unsecured creditor. Alamosa Nat’l Bank v. San Luis Valley Grain Growers, Inc., 756 P.2d 1022, 1025 (Colo.App.1988). The Uniform Commercial Code expressly provides that the remedies are cumulative.
Section 9-501 of the Uniform Commercial Code provides:
(a) When a debtor is in default under a security agreement, a secured party has the rights and remedies provided in this part and except as limited by subsection (c) of this section those provided in the security agreement. He may reduce his claim to judgment, foreclose or otherwise enforce the security interest by any available judicial procedure. * * * A secured party in possession has the rights, remedies and duties provided in section 34.1-9-207. The rights and remedies referred to in this subsection are cumulative.
W.S. 34.1-9-501 (1991) (emphasis added).
The majority relies on Ayares-Eisenberg Perrine Datsun, Inc. v. Sun Bank, 455 So.2d 525 (Fla.App.1984) and the White & Summers treatise on the Uniform Commercial Code. The reliance is misplaced.
White & Summers indicate that creditors have several remedies, and the remedies in the Code are cumulative. James J. White & Robert S. Summers, Uniform Commercial Code, § 25-4 at 1197 (3d ed. 1988) (hereinafter White & Summers). White & Summers then state that at some point the creditor must choose a remedy and pursue it to fruition and cannot lodge a “double-barreled” attack on a debtor. White & Summers, § 25-4 at 1197-98. However, White & Summers acknowledge that there is a split of authority on the election of remedies question:
But courts split on whether 9-501 authorizes a “double-barreled” attack upon the debtor. * * * However, a number of jurisdictions allow secured parties to pursue multiple remedies simultaneously. Most of these courts reason that 9-507(1) and general obligations of good faith provide debtors with adequate protection against harassment.
White & Summers, § 25-4 at 1198 (emphasis added).
The case the majority cites, Ayares-Eisenberg Perrine Datsun Inc. v. Sun Bank, 455 So.2d 525 (Fla.App.1984), holds that a secured creditor must choose a remedy and pursue that remedy to fruition before he can begin another. Ayares, 455 So.2d at 527. However the facts in Ayares make it distinguishable. The secured creditor in Ayares had “harassed” the debtor while attempting to collect a note secured by a computer system. The secured creditor seized the collateral and sat on it for nine months and eventually gave it away rather than selling it. Ayares, 455 So.2d at 526. The Florida Court of Appeals for the Third District summed up the creditor’s actions:
Eleven months after repossessing the computer, three months after beginning an action directly on the note, two months after giving the computer away and three days after the denial of its motion to strike the appellants’ request for an offset, Sun Bank told the appellants that if they wanted the computer back they could come get it.
Ayares, 455 So.2d at 526. Since no attempt at sale had taken place, the Bank’s suit on the note was premature and could not be continued until fulfillment of the statutory requirements for disposition of collateral.
*810Ayares should be limited to those situations where a creditor has engaged in abusive practices. It should not be given the broad reading of the majority by limiting the creditor’s ability to elect remedies. Other Florida courts of appeals have not followed the Ayares approach. See Williams v. Kloeppel, 537 So.2d 1033, 1036 (Fla.App.1988); Land v. Cessna Aircraft Co., 466 So.2d 1265, 1268 (Fla.App.1985) (remedies in the UCC are to be administered liberally).
I would not follow the rationale in Ayares. Instead I would hold, as many other courts have, that a secured creditor need not elect remedies. I find this reasoning more persuasive:
“It has been recognized that the most important remedy available to a secured creditor is the right to take possession of the collateral following the debtor’s default. A secured creditor is not required to elect a remedy. He can take any permitted action or combination of actions.”
Kimura v. Wauford, 104 N.M. 3, 715 P.2d 451, 454 (1986) (citations omitted) (quoting Citicorp Homeowners, Inc. v. Western Surety Co., 131 Ariz. 334, 641 P.2d 248, 250 (1981)). See also Olsen v. Valley Nat’l Bank of Aurora, 91 Ill.App.2d 365, 234 N.E.2d 547, 550 (1968).
A secured party is not required first to exhaust the collateral. A secured party in possession may proceed in a judicial action on the note and is not required to reduce itself to the position of an unsecured creditor so long as it acts in a commercially reasonable manner regarding the collateral and does not impair the position of the debtor.
Alamosa Nat’l Bank v. San Luis Valley Grain Growers, Inc., 756 P.2d 1022, 1025 (Colo.App.1988). See also Ruidoso State Bank v. Garcia, 92 N.M. 288, 587 P.2d 435 (1978); ITT Terryphone Corp. v. Modems Plus, Inc., 171 Ga.App. 710, 320 S.E.2d 784, 786 (1984); Farmers State Bank v. Ballew, 626 P.2d 337, 340 (Okla.App.1981); Ingersoll-Rand Financial Corp. v. Atlantic Mgmt. and Consulting Corp., Ill F.Supp. 1067, 1070 (N.J.1989) (explicitly rejecting the exclusive remedy view from Ayares and stating that concerns of “double-barreled” attacks were not applicable); Ingersoll-Rand Financial Corp. v. Electro Coal, Inc., 496 F.Supp. 1289, 1291 (Ky.1980). See also Mushitz v. First Bank of South Dakota, N.A., 457 N.W.2d 849, 856 (S.D.1990).
The majority follows Ayares based in part on the notion that a creditor might receive a double recovery if he is able to collect on both the collateral and obtain a personal judgment. That is unlikely in any case, and no risk of that is present here. The district court ordered that the promissory notes be canceled as “ ‘merged in [the] judgment.’ ” Maj. op. at 786.
The court cites Tanenbaum v. Economics Laboratory, Inc., 628 S.W.2d 769, 771-72 (Tex.1982) and indicates legislative intent that a creditor must choose between retention of the collateral as satisfaction under § 9-505 or proceed with sale under § 9-504. Maj. op. at 797. Of course a creditor will eventually have to make a choice between two mutually inconsistent remedies. However, it does not follow that the statute requires a choice when the remedies can be pursued simultaneously. That result is more consistent with the purpose of the UCC and its plain language.
NOTICE
I would hold the notice of time and place of sale was sufficient, and that the notice which advised appellant that he could redeem by purchasing at the sale was essentially correct. The November 21st notice was sent via certified and regular mail and was sufficient in substance and time under the parties’ agreement. The November 21st notice provided:
Dear Mr. Coones:
This is to advise you that the FDIC will be conducting a public sale on the attached items which we gained possession of pursuant to the Writs of Replevin issued by Judge O’Brien on October 29, 1991. The items will be sold and proceeds will be applied to the debts that you have with the FDIC as Receiver for Stockmens Bank & Trust Company and *811as Liquidator for the First National Bank of Sheridan. Dickensheet & Associates will be conducting the sale. You will have the opportunity at that time to bid on whatever items of collateral you chose to redeem. The public sale will take place as follows: [listing date, time, place, terms of sale and items to be sold].
The notice the majority requires would be burdensome and is not required by statute. The purpose of the notice required by W.S. 34.1-9-504(c) is to inform the debtor of what will occur at the sale and what the debtor can do on the day of the sale. The court confuses two different time frames and holds creditors responsible for not only notifying the debtor of the sale, but also informing the debtor of what his possible options would be during the pre-sale period. This is not statutorily required. See W.S. 34.1-9-506 (1991). Although § 9-506 gives the debtor certain pre-sale rights, it does not require the creditor to notify the debtor of those rights. W.S. 34.1-9-506 (1991). The only notice the creditor is required to give is notice of sale under § 9-504(c) which was satisfied by the November 21st notice.
I would not hold that the November 21st notice misled Coones and was “an attempt to abrogate statutory rights.” Maj. op. at 803. The phrase in the notice to which the court objects is no more than surplusage.
I also do not agree with the statement: “The attempt to seek simultaneous remedies coupled with the oppressive nature of the judgment sought must be viewed as commercially unreasonable harassment which further precludes obtaining a deficiency judgment.” Maj. op. at 804. FDIC is not attempting to obtain an oppressive judgment or a double recovery. FDIC acknowledges in its brief that the proper remedy is to remand so that it does not appear that FDIC could recover in excess of what it was owed.
It is true that FDIC is not entitled to a windfall and should not receive a recovery on a personal judgment in addition to possession of the collateral if the collateral satisfied the debt. There is no realistic threat of a windfall to FDIC in this case, and there would not be that threat in any case. A deficiency judgment is always limited to what the creditor did not receive after sale of the collateral.
For the reasons stated herein I respectfully dissent.