Court Opinion

ID: 882971
Source: CourtListenerOpinion
Date Created: 2013-06-05 01:58:27.92495+00
Date Added: 2024-06-11T15:12:15.043882
License: Public Domain

No.    92-398

           IN THE SUPREME COURT OF THE STATE OF MONTANA

FIRST NATIONAL BANK OF LEWISTOWM,
a Banking C o r p o r a t i o n ,
          Plaintiff and Respondent,

           Third-Party P l a i n t i f f ,

THERESA DESMANAIS, f / k / a THERESA
O'FBILLY and THERESA MORK,
           Third-Party Defendant.

 .PPEAL FROM:     District Court of t h e Tenth J u d i c i a l D i s t r i c t ,
                  In and f o r the County of Fergus,
                  The Honorable Peter Rapkoch, Judge presiding.

COUNSEL OF RECORD:
           F o r Appellant:

                  J e r r o l d L. Nye; Nye & Meyer, B i l l i n g s , Montana
           For Respondent:
                  James L. Stogsdill, A t t o r n e y at Law, Lewistown,
                  Montana

                                    Submitted on Briefs:         January 21, 1993
                                                  Decided:       A p r i l 7, 1993
 Filed:
Justice John Conway Harrison delivered the Opinion of the Court.

        Appellant Gary Mork (Mork) appeals from a judgment entered in
the Tenth Judicial ~istrictCourt, Fergus County, ordering him and
third-party defendant Theresa Desmanais (Desmanais) to pay the
deficiency incurred by respondent First National Bank of Lewistown
(the Bank) upon the sale of collateral securing the debt on a
promissory note.     We affirm.
        The dispositive issue on appeal is whether the Bank met the
statutory notice requirements of 5 5 30-1-201(26) and 30-9-504(3),
MCA .
        On March 17, 1980, Mork and Desmanais, who was Mork's wife at
the time, borrowed $15,000 from the Bank to purchase a mobile home.
They signed a promissory note promising to pay the Bank a total of
$38,899.80 in principal and interest over a fifteen-year period.
The mobile home was listed as collateral for the loan and the Bank
properly perfected a security interest in it.
        The Morks listed their address as #17 Hickory Lane, Lewistown,
Montana, on all of the loan documents, including the promissory
note, the security agreement, the HUD/FHA credit application, the
HUD/FHA placement certificate, and the purchase documents from the
mobile home dealer.         They listed #6 Willow Lane, Lewistown,
Montana,     as   their   previous   address   on   the   HUD/FHA   credit
application.      At the time they signed the documents, though, they
had not moved to #17 Hickory Lane as that was the address where the
mobile home eventually was to be located.
        Mork and Desmanais eventually divorced.      According to Mork's

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third-party complaint, Desmanais received the mobile home in the
divorce and agreed to indemnify him for any claims the Bank might
have against him.
     Due to financial difficulty in July 1987, Desmanais entered a
loan extension agreement allowing her to forego paying two monthly
installments and extending the maturity date of the loan.         In
October 1988, the Bank contacted Desmanais because she was again
behind in her payments. After conferring with her attorney,
Desmanais voluntarily turned the mobile home over to the Bank.
Once the Bank had regained title it sent both Desmanais and Mork a
request to waive the requirement that the Bank notify them when it
intended to sell the mobile home.      Desmanais signed this request.
The Bank sent Mork's request by regular and certified mail to # 6
Willow Lane. The post office returned the requests unopened.     The
Bank also sent Desmanais and Mork a document entitled "NOTICE OF
PRIVATE SALE AND RIGHT TO REDEEM REPOSSESSED COUATERAL.ll It sent
Morkas copy to # 6 Willow Lane.       This document also was returned
unopened.
     The Bank eventually sold the home through a mobile home
realtor for $4,000.   After paying lot rental and commission, the
Bank received $3,173, leaving a deficiency of $8,088.24 still due
and owing on the note. The Bank sued only Mork for the deficiency.
Mork filed a third-party complaint against Desmanais seeking to be
indemnified for any judgment entered against him.        She did not
appear in this action, so her default was entered.       The District
Court awarded the Bank a judgment against Mork and Desmanais for a
principal balance of $8,088.24 on the note; interest of $4,245.39;

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attorney's fees of $500: and costs of $180.50.    The District Court
also allowed Mork to recover from Desmanais any and all sums he
paid to the Bank by reason of the judgment.
     On appeal, Mork claims that the Bank is not entitled to a
deficiency judgment against him because it failed to satisfy the
notice requirements of 5 30-9-504(3), MCA.    That section provides
in pertinent part:
          30-9-504.   Secured party's right to dispose of
     collateral after default -effect of disposition.

           (3) (a)   . . . [Elvery aspect of the disposition
     including the method, manner, time, place, and terms must
     be commercially reasonable.              .   [Rleasonable
     notification of the time and place of any public sale or
     reasonable notification of the time after which any
     private sale or other intended disposition is to be made
     shall be sent by the secured party to the debtor if he
     has not signed after default a statement renouncing or
     modifying his right to notification of sale. In the case
     of consumer goods no other notification need be sent.    .
          (b) Notification by the secured party is reasonable
     under subsection (3)(a) and constitutes steps reasonably
     required to inform another in the ordinary course under
     30-1-201(26) if it is sent by certified mail to the most
     recent address provided by the debtor or another secured
     party as follows:

          (i) the address stated on the security agreement or
     other applicable loan document in the case of a debtor   .
     ..
          (ii) such other address of which the secured party
     receives notice in writing from the debtor     . ..
                                                       prior
     to the time notification is sent to the most recent
     address previously given under subsection (3)(b) (i) or
     this subsection (3)(b)(ii)   .
Section 30-1-201(26), MCA, referenced in subsection 3(b) above,
provides :
     A person "notifies" or "gives" a notice or notification
      to another by taking such steps as may be reasonably
      required to inform the other in ordinary course whether
      or not such other actually comes to know of it.     ...
      The secured party bears the burden of proving the commercial
reasonableness of the sale, includingthe commercial reasonableness
of the notification. Bank of Sheridan v. Devers (1985), 217 Mont.
173, 176, 702 P.2d 1388, 1390.       Failure to give reasonable notice
precludes the secured party from recovering a deficiency judgment.
Bank of Sheridan, 702 P.2d at 1390: Westmont Tractor Co. v.
Continental I, Inc. (1986), 224 Mont. 516, 523, 731 P.2d 327, 331;
Wippertv. Blackfeet Tribe (1985), 215 Mont. 85, 90, 695 P.2d 461,
465. However,   §   30-9-504(3), MCA, must be read in conjunction with
5 30-1-201(26), MCA, which does not require that the debtor receive
actual notice of the sale; it only requires that the creditor take
reasonable steps to assure that the debtor is notified.       Talcott,
Inc. v. Reynolds (1974), 165 Mont. 404, 410, 529 P.2d 352, 355;
Dulan v. Montana Nat'l Bank (1983), 203 Mont. 177, 184, 661 P.2d
28,   31.
      Mork relies solely on Bank of Sheridan and Westmont Tractor
Co. to argue that because the notices were sent to #6 Willow Lane
rather than #17 Hickory Lane--the address on the loan documents--
the notice requirements of     §   30-9-504(3), MCA, have not been met,
so the Bank is precluded from recovering a deficiency from him.
      Michael   Phillips, assistant vice-president of the Bank,
testified as to the Bank's efforts to locate Mork.        Mr. Phillips
asked Desmanais if she knew how to contact Mork.       She informed him
that she had not spoken with Mork since their divorce.             Mr.
Phillips also explained why the notices were sent to #6 Willow
  Lane. His understanding was that the mobile home would eventually
  be placed at #17 Hickory Lane, but at the time the documents were
  signed, the Bank knew that the Morks lived at # 6 Willow Lane.     It
  is undisputed that the Morks never sent written notice to the Bank
  that they had actually moved to #17 Hickory Lane.        In fact, the
  Bank finally located Desmanais and the mobile home in Colstrip.
  Further, the District Court found that following the closing of the
  loan the Bank had sent all correspondence and notification to the
  Morks at # 6 Willow Lane, none of which were returned to the Bank.
  Finally, when Mork moved from Lewistown, he did not notify the Bank
  where he could be contacted.
          The Bank sent notice to Mork at his last known address.    We
      conclude that the Bank satisfied the statutory notice requirements
  under these facts.      Having concluded that the Bank could properly
      recover a deficiency judgment, we need not address Mork's request
      for penalties and attorney's fees.
          Affirmed.

      We concu

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             Chief ~ustice
                                      April 7, 1993

                             CERTIFICATE OF SERVICE

I hereby certlfy that the following order was sent by United States mail, prepaid, to the
following named:

Jerrold L. Nye
Nye & Meyer, P.C.
3317 Third Avenue North
Billings, MT 59101

James L. Stogsdill
Attorney at Law
314 Bank Electric Building
Lewistown, MT 59457

                                               ED SMITH
                                               CLERK OF THE SUPREME COURT
                                               STATE OF MONTANA