Court Opinion

ID: 9773251
Source: CourtListenerOpinion
Date Created: 2023-08-29 17:40:42.731746+00
Date Added: 2024-06-11T07:31:51.317011
License: Public Domain

Robert L. Brown, Justice, concurring in part; dissenting in part. I dissent from the majority’s conclusion that the issue of the value received from the sale of the logging equipment must be remanded to the trial court for determination. First, the majority has rushed to consider an issue of first impression in this state, but fails to recognize that the issue was not raised by the Simpsons before the trial court. It is all but axiomatic that we, as an appellate court, dp not consider issues where the trial court has not had an opportunity to decide them first. See, e.g., Horne Brothers, Inc. v. Ray Lewis Corp., 292 Ark. 477, 731 S.W.2d 190 (1987). The Simpsons did not question the amount received from the sale of their equipment at the trial, even after the Bank’s loan officer testified that a fair price was realized. Rather, they attacked the failure of the Bank to give notice under the Uniform Commercial Code which we have held absolutely bars collection of a deficiency amount after the sale of the personal property securing the note. See Walker v. Grant County Savings and Loan Ass’n, 304 Ark. 571, 803 S.W.2d 913 (1991); First State Bank of Morrilton v. Hallett, 291 Ark. 37, 722 S.W.2d 555 (1987). Attacking the notice provisions is not the same as arguing that the actual sale resulted in unfair prices, as the majority now suggests. Secondly, the Simpsons did not ask for the relief fashioned by the majority opinion. The Simpsons asked for an absolute bar against a real estate foreclosure because the Bank had failed to comply with the notice requirements of the Commercial Code. In effect, the Simpsons asked for an extension of our decisions barring deficiency judgments after sales of personalty under the Commercial Code to real estate foreclosures where the real estate secures the same note. Hence, the majority has granted relief to the Simpsons which was never requested by them or contemplated by the trial court. Thirdly, though the majority’s opinion acknowledges that the Commercial Code does not apply to real property remedies [Ark. Code. Ann. § 4-9-501(4) (1987)], it then applies a Commercial Code remedy to real estate foreclosures. The majority does admit that the rebuttable presumption remedy is one that we previously applied to notice violations under the Commercial Code prior to our adoption of the absolute bar under First State Bank of Morrilton v. Hallett, supra. Now it resurrects that Commercial Code remedy and applies it to foreclosures in equity. Fourthly, the record in this case is absolutely devoid of any evidence suggesting that fair market value was not received from the Bank’s sale of the logging equipment. The majority, however, remands the case for still another hearing and applies a theory that “presumes” that fair market value was not obtained. Fifthly, by applying a different Commercial Code remedy to real estate collateral (rebuttable presumption) as opposed to personalty collateral (absolute bar), we are confusing this area of the law to the extent that it has become well-nigh unintelligible. Assuming we should apply Commercial Code remedies to real estate foreclosures, which I do not countenance, there is an inconsistency in the majority’s application where the security is personal property and land. A better result would be to allow the trial judge to consider the matter of value and the appropriate amount left to be collected against real estate through foreclosure than for this court to apply Commercial Code concepts to equitable foreclosures. Other jurisdictions have allowed a foreclosure against land to proceed where the trial court has made a finding that fair market value was in fact realized from the sale of personalty. See, e.g., Siltzer v. North First Bank, 445 So. 2d 649 (Fla. App. 1984). Having the lower court make this determination, after value is placed in issue by the debtor, seems infinitely preferable to this court’s mandate of a rebuttable presumption hearing. But, again, the issue of fair market value is not appropriately before us and should not be considered on appeal. The Simpsons had ample opportunity to question the value received from the UCC sales, especially when the trial court specifically scrutinized the amount to be collected by the foreclosure and reduced that amount because of the Bank’s misapplication of sale proceeds. Yet they remained silent. By the majority’s decision today we are giving financial institutions, holding both realty and personalty as security for a note, an incentive to foreclose on a debtor’s homestead first. By doing so they avoid the rebuttable presumption hearing, after the sale of personalty, which has now been fixed in place by this court. Public policy considerations alone should militate against that incentive. I would affirm the trial court’s order finding that the Uniform Commercial Code does not govern real estate foreclosures.