Court Opinion

ID: 5153053
Source: CourtListenerOpinion
Date Created: 2022-01-02 02:05:20.307227+00
Date Added: 2024-06-11T08:25:10.402584
License: Public Domain

CROCKETT, Justice
(concurring in reversal, but suggesting procedure on remand)..
I do not think that justice can be done in the dispute between these parties over the credit to be given on plaintiff’s judgment by rigid adherence to the contentions of either the plaintiff or the defendants. The defendants’ position- is that because the plaintiff bank failed to give notice as required by Section 70A-9-504-(3), U.C.A. 1953, of the Uniform Commercial Code, plaintiff should be deemed to have sold the collateral to satisfy the entire debt; and further that if it had desired to claim a further deficiency, it should have complied with the statute. On the other hand, the plaintiff contends that it sold the collateral (the claims of lien) for a fair and reasonable price of $6,666 and that that amount is all the credit defendants are entitled to.
It is undoubtedly true that the requirement of Section 70A-9-504(3) that the secured creditor (plaintiff) give the debtor (defendants) notice of sale of the collateral is to afford the debtor an opportunity to see that a fair price is paid therefor and that he gets adequate credit on his debt. It strikes me as unrealistic and unfair to rule that, regardless of actual value, the sale of the pledged property without notice should be deemed to pay the entire debt. The circumstances may be such that the pledged property is worth only a small fraction of the judgment and thus the plaintiff would be cheated out of the remainder of his debt.1 On the other hand, to permit the creditor to sell the pledged property without notice may result in its being sold for much less than its fair value and thus deprive the debtor of credit he is entitled to.
It is my view that the court should not apply an unvarying and rigid rule, but should examine the total situation to determine what is fair and reasonable. Justice requires the rule to be that if the sale of the collateral is not conducted according to *759the requirements of the statute, that should neither automatically and conclusively bar the plaintiff from claiming payment of the rest of the judgment,2 nor should the amount received at the sale be regarded as conclusive evidence that the fair market value of the property was received, and thus determinative of the amount which the defendants are entitled to as credit on the judgment.
Justice and equity would best be served, particularly in this situation where there was difficulty in giving defendants notice, by setting a time for a hearing and affording both sides an opportunity to present proof and have the trial court make a determination of their respective contentions: the plaintiffs, that a fair and reasonable price was in fact obtained and credited on the judgment; the defendants, that the claims of lien were in fact worth more than was so obtained and credited.
‘In view of the reversal of the trial court’s judgment by our decision, it is appropriate to observe that the solution I propose is in accord with the plaintiff’s (appellant’s) „ own argument under Point III of its brief, wherein it says that: “in any event, plaintiff has the right to a hearing to prove the fair market value of the collateral.” There is precedent for such procedure in the decisions of other courts in similar situations.3 When that determination is made, the defendants should be given credit for whatever amount is found to be the fair market value of the collateral. I would therefore remand this case with directions to so proceed.
ELLETT, J., concurs in the views expressed in the opinion of Mr. Justice CROCKETT.

. This could result in an unconscionable forfeiture which equity should refuse to enforce, cf. Jacobson v. Swan, 3 Utah 2d 59, 278 P.2d 294, and authorities cited therein.

. I so state in awareness that under particular circumstances courts have so held. See Bank of Gering v. Glover, 192 Neb. 575, 223 N.W.2d 56; Skeels v. Universal C. I. T. Credit Corp., 222 F.Supp. 696; Atlas Thrift Co. v. Horan, 27 Cal.App.3d 999, 104 Cal.Rptr. 315 (1972).

. See Community Manage. Ass’n. of Colorado Sp. v. Tousley, 32 Colo.App. 33, 505 P.2d 1314 and cases cited therein; and see Grant County Tractor Co. v. Nuss, 6 Wash.App. 866, 496 P.2d 966; United States v. Whitehouse Plastics, 5 Cir., 501 F.2d 692.