Rapid City Teachers Federal Credit Union v. VanTassel

PROCEDURAL HISTORY/ISSUES HENDERSON, Justice. On May 26, 1988, Rapid City Teachers Federal Credit Union (Credit Union) commenced an action seeking a deficiency judgment against Jan and Ruby VanTassel after they defaulted on loans provided by the Credit Union. The Credit Union had repossessed and sold two motor vehicles which the VanTassels had given as security on the loans with the Credit Union. However, the amount received after the sale was not sufficient to cover the amount of the loans. On June 24, 1988, Jan and Ruby VanTas-sel answered and counterclaimed. The Credit Union filed a Motion for Summary Judgment on the counterclaim which the trial court granted. No appeal was taken from the summary judgment on the counterclaim. On August 30, 1989, the Credit Union filed a Motion for Summary Judgment on its Complaint and the VanTassels’ answer. On September 22, 1989, the trial court entered an Order granting summary judgment in favor of the Credit Union in the amount of $20,303.47. This constitutes principal, interest, and costs on three loan accounts. On appeal, Jan and Ruby Van-Tassel present this issue: The record, in its present state,'presents a genuine issue of fact and, therefore, the trial court erred in granting the Cred [207] it Union’s Motion for Summary Judgment. We agree and therefore reverse. FACTS On February 1, 1984, a loan account was established by Jan VanTassel at the Credit Union. A total of $5,000.00 was borrowed by Jan VanTassel between February 1, 1984 and September 19,1984. Jan VanTas-sel secured the entire indebtedness by granting the Credit Union a security interest in his 1977 Chevy Blazer. In December 1985, Jan VanTassel defaulted on the monthly payments ($160) under the loan. The Credit Union declared the entire unpaid balance ($4,182.70 plus interest) immediately due and payable. Jan VanTassel had previously opened a second loan account with the Credit Union on November 2, 1984. Between November 2, 1984 and January 18, 1985, Jan VanTas-sel borrowed $1,815.42 from the Credit Union and was obligated to make payments of $62.00 per month. In June 1985, Jan Van-Tassel defaulted on his monthly payment. The Credit Union declared the entire unpaid balance ($1,789.97) immediately due and payable. On December 30, 1983, Ruby VanTassel established a loan account with the Credit Union. The note and security agreement, which was co-signed by Jan VanTassel, loaned the VanTassels $9,965.15. The Credit Union took a 1982 Volvo 244DL as collateral. In January 1985, the VanTas-sels defaulted on this loan account. The balance owing on the loan account at the time of default was $7,012.82 plus interest. Pursuant to the terms of the security agreement, the Credit Union had a right to repossess the two vehicles upon default on the loans. These vehicles were located and repossessed by two employees of the Credit Union, Ron Peters (Peters) and Jeff Jor-genson (Jorgenson) on August 28, 1988. On September 3, 1985, a redemption letter was sent to the VanTassels. In the letter, the VanTassels were informed that their vehicles had been repossessed and demand was made for the outstanding balance on the loan. They were further advised that if the unpaid balance was not paid by September 17, 1985, that the vehicles would be sold at a private sale and that they would be liable for any deficiency. No payment was received from the VanTassels. A notice of sale was placed on the Credit Union’s bulletin board. Other Credit Unions in the Rapid City area were notified of the repossession. The Volvo was taken to two Rapid City car dealers, McKie Johnson Ford and Jacobs Motors, where both dealers declined to make a bid on the vehicle. An advertisement was placed in the Guide and the Action Advertiser, trade circulars in the Rapid City area, for the sale of both vehicles. This advertisement occasioned four bids on each vehicle. The two highest bids were accepted on the vehicles ($2,950 for the Volvo and $625 for the Blazer). These proceeds were applied to the loans. After the sale of the repossessed vehicles, the Credit Union made several unsuccessful attempts to secure payment for the outstanding loan balances. In May 1988, the Credit Union brought suit to collect the outstanding deficiency balance. DECISION I. The trial court erred in granting the Credit Union’s Motion for Summary Judgment. VanTassels contend a material issue of fact exists with regard to the Credit Union’s actions in selling their vehicles commercially reasonable. Generally, when a creditor sues for a deficiency, he bears the burden of proving that disposition of the collateral was conducted in compliance with the Uniform Commercial Code. First Bank v. Haberer Dairy & Farm Equip., 412 N.W.2d 866 (S.D.1987) (citing Clark Leasing Corp. v. White Sands Forest Prod., Inc., 87 N.M. 451, 535 P.2d 1077 (1975)) (interpreting U.C.C. 9-504(3) which parallels SDCL 57A-9-504(3)). A creditor’s right to dispose of collateral under SDCL 57A-9-504(3) is subject to two requirements: (1) creditor must [208] send notice of the sale, and (2) the method, manner, time, place and terms of the sale must be commercially reasonable. First Bank of South Dakota v. VonEye, 425 N.W.2d 630 (S.D.1988).1 We hold that the second requirement presents questions of fact for determination by the trial court2. Therefore, entry of a summary judgment was improper. The Credit Union proffered affidavits from Jorgensen and Peters, loan officers affiliated with the Credit Union. Jorgen-sen and Peters offered testimony regarding the notice of the proposed sale and the condition of the cars. Their statements were opposed by Jan VanTassel’s own affidavit. Specifically, the affidavits can be broken down as follows: [[Image here]] [209] Credit Union_Jan YanTassel_ [[Image here]] Thus, we cannot agree with the trial court that there is no genuine issue as to any material fact or that the Credit Union was entitled to judgment as a matter of law. We hold that the opposing affidavits create a genuine issue of material fact as to the sale of the collateral being commercially reasonable. Therefore, summary judgment is precluded. In such a case, the trial judge should not resolve the evidentia-ry conflict on the basis of which affidavit he believes. Rather, the parties should have presented their evidence and testimony. Via testimony, the trial judge then could make factual findings on the commercial reasonableness of the sale upon a full disclosure of the dispute. In Wilson v. Great Northern Ry. Co., 83 S.D. 207, 212, 157 N.W.2d 19, 21 (1968) we held that summary judgment was proper when the moving party demonstrates the absence of any genuine issue of material fact and shows entitlement to judgment on the merits as a matter of law. Pickering v. Pickering, 434 N.W.2d 758 (S.D.1989). However, the evidence must be viewed most favorably to the nonmoving party and reasonable doubts should be resolved against the moving party. Pickering, 434 N.W.2d at 760-761; Wilson, 83 S.D. at 210, 157 N.W.2d at 21. As reflected above, there are reasonable doubts concerning the factual allegations of the Credit Union. VanTassels have made a challenge to the sale of their vehicles by asserting specific facts. In the present case, a complete trial with both parties having the opportunity to present testimony and to rebut testimony is vital to determine the commercial reasonableness of the sale. Reversed. All the Justices concur. Footnotes [1] It should be noted that this case, unlike VonEye and Haberer, was decided on summary judgment. [2] The VanTassels have not argued in their brief that the notice of sale was faulty,