Deutsche Credit Corp. v. Hi-Bo Farms, Inc.

398 N.W.2d 693, 224 Neb. 463, 2 U.C.C. Rep. Serv. 2d (West) 1479, 1987 Neb. LEXIS 758
CourtNebraska Supreme Court
DecidedJanuary 2, 1987
Docket85-512
StatusPublished
Cited by15 cases

This text of 398 N.W.2d 693 (Deutsche Credit Corp. v. Hi-Bo Farms, Inc.) is published on Counsel Stack Legal Research, covering Nebraska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Deutsche Credit Corp. v. Hi-Bo Farms, Inc., 398 N.W.2d 693, 224 Neb. 463, 2 U.C.C. Rep. Serv. 2d (West) 1479, 1987 Neb. LEXIS 758 (Neb. 1987).

Opinions

Caporale, J.

Plaintiff-appellant, Deutsche Credit Corporation, a Delaware corporation, brought a suit for a deficiency judgment against defendants-appellees, Hi-Bo Farms, Inc., a Nebraska corporation, Allen Bors, Janice Bors, Dale E. Hinz, and Carol Hinz. The noncorporate defendants, who guarantied Hi-Bo Farms’ debt, each moved for a summary judgment against plaintiff. The trial court sustained the motion, thereby dismissing plaintiff’s suit as to each of the guarantors. Plaintiff’s four assignments of error converge to present a single issue: whether the trial court correctly determined that plaintiff failed to give each of the guarantors notice, as a consequence of which plaintiff is barred from recovering a deficiency judgment from any one of them. We affirm.

On June 28, 1981, Hi-Bo Farms purchased farm machinery on a retail installment contract from Friend Implement Company for a total deferred purchase price of $130,599.82, which contract included a security interest in favor of Friend Implement. Friend Implement then assigned the security interest to Fiat Credit Corporation. Fiat later filed a restated certificate of incorporation in the State of Delaware to change its name to D.B. Credit Corporation. A second Delaware restated certificate of incorporation changed the name to the present Deutsche Credit Corporation.

Concurrent with the signing of the contract between Hi-Bo Farms and Friend Implement, each of the noncorporate defendants entered into a guaranty with Fiat. One guaranty was signed by Allen Bors, who was a vice president of Hi-Bo Farms, and Janice Bors, who was the treasurer. A second guaranty was signed by Dale Hinz, who was president of Hi-Bo Farms, and [465]*465Carol Hinz, who was the secretary. The guaranties made the individuals personally liable for the debts of Hi-Bo Farms.

Hi-Bo Farms defaulted, and plaintiff accelerated the balance due under the terms and conditions of the retail installment contract and security agreement. Hi-Bo Farms then surrendered the equipment to plaintiff. Thereafter, plaintiff mailed a separate notice of private sale to Hi-Bo Farms as well as to each of the guarantors. Each notice reads as follows:

RE: HI-BO FARMS INC.
You are hereby notified by and on behalf of the undersigned secured party that by virtue of the default under the terms and provisions of a security agreement executed by the captioned Debtor dated 06-28-81, the undersigned secured party, holder of the aforesaid agreement and the indebtedness represented therby [sic] will, on or after 08-18-84 make one or more private sales or other dispositions of our right, title and interest in and to the goods described in said agreement, which goods may be described as follows:
ONE WHITE 9700 COMBINE S/N 97-20218
W/CORNHEAD S/N A90065, AND KWICK CUT HEAD S/N 912118
The net proceeds of sale (less expenses incurred) shall be, in accordance with said agreement, applied to the reduction of total obligation due and owing by Debtor to the undersigned secured party.
Dated this 7TH day of AUGUST, 1984.
Deutsche Credit Corporation

The equipment was sold at private sale on October 3, 1984, for $28,800. This action for deficiency involves the principal balance of $35,154.24 remaining due under the installment sales contract and security agreement after application of the net proceeds of the sale.

Neb. U.C.C. § 9-504(1) (Reissue 1980) provides that after default a secured party may sell the collateral. Section 9-504(3) provides for the disposition of the collateral by public or private sale and, with certain exceptions not relevant to the present [466]*466inquiry, requires that reasonable notice of the sale be sent by the secured party to the debtor. A guarantor, being one “who owes payment or other performance of the obligation secured,” has been held to be a “debtor” as defined in Neb. U.C.C. § 9-105(l)(d) (Reissue 1980), and thus entitled to notice. Allis-Chalmers Corp. v. Haumont, 220 Neb. 509, 371 N.W.2d 97 (1985).

The guarantors contend the trial court correctly determined they were not given notice. In so arguing they place heavy reliance upon this court’s recent opinion in First Nat. Bank & Trust Co. v. Hughes, 214 Neb. 42, 332 N.W.2d 674 (1983).

In Hughes, Vernor L. Hughes and his wife, Diana L. Hughes, were corporate officers of Central Auto & Truck Supply, Inc. The bank’s loan to Central Auto was evidenced by a promissory note and by a security agreement tying the loan to the security of the assets of Central Auto. The loan, promissory note, and security agreement were executed by Central Auto through Mr. Hughes, its president. On the same date the loan was made, Mr. and Mrs. Hughes both executed and delivered a personal guaranty for the corporate debt. Default subsequently occurred, and Central Auto filed a bankruptcy proceeding. The trustee in bankruptcy abandoned the secured assets of Central Auto, and the bank obtained possession of them. The bank then sent a letter to the Hughes residence, reading as follows:

Mr. Venor [sic] Hughes, President
Central Auto & Truck Supply
1558 East 5th
Fremont, NE. 68025
RE: Loan #869930
Collateral: Financing Statement 5-9-74
Dear Mr. Hughes:
This is to notify you that, in connection with the repossession of the above collateral involved in the abovee [sic] account, you may redeem said collateral and terminate the contract relating thereto by payment of $51,417.90 plus interest and expenses any time prior to the sale of said collateral on the date designated below. It is possible for this sum to increase should further expenses [467]*467of any nature be incurred by our bank.
In the event you are not able to fully redeem the collateral or make suitable arrangements for redemption, the collateral will be sold at private sale on or after April 10, 1981 at the present place of storage which is 245 East 5th St., and First National Bank & Trust Company of Fremont.
Local, State and Federal laws permitting, you will be held liable for any deficiency declared owing after disposal of this collateral.

Hughes at 44-45, 332 N.W.2d at 676.

In resolving the case we said:

The [above] notice in this case makes no reference to the guaranty; indeed, it makes reference only to the “Financing Statement 5-9-74,” in fact a security agreement dated May 24, 1974, a document which was signed individually by neither Mr. Hughes nor Mrs. Hughes. In that regard the notice fails to apprise either Mr. or Mrs. Hughes that a personal deficiency judgment might be sought against any one of them in his or her capacity as guarantor of the corporation’s debt. Secondly, as between Mr. Hughes and Central Auto, the matter as to whom the notice was sent is ambiguous. The interest of Mr. Hughes in this context conflicts with that of the corporation.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Howard Kool Chevrolet, Inc. v. Blomstedt
511 N.W.2d 222 (Nebraska Court of Appeals, 1994)
McCormack v. First Westroads Bank
473 N.W.2d 102 (Nebraska Supreme Court, 1991)
Krohn v. Gardner
471 N.W.2d 391 (Nebraska Supreme Court, 1991)
Mason State Bank v. Sekutera
461 N.W.2d 517 (Nebraska Supreme Court, 1990)
Federal Deposit Ins. Corp. v. Percival
752 F. Supp. 313 (D. Nebraska, 1990)
Bank of Burwell v. Kelley
445 N.W.2d 871 (Nebraska Supreme Court, 1989)
American Honda Finance Corp. v. Bennett
439 N.W.2d 459 (Nebraska Supreme Court, 1989)
General Electric Credit Corp. v. Lewis
432 N.W.2d 27 (Nebraska Supreme Court, 1988)
First National Bank v. Greene
413 N.W.2d 899 (Nebraska Supreme Court, 1987)
In Re Estate of Thompson
407 N.W.2d 738 (Nebraska Supreme Court, 1987)
Naidoo v. Union Pacific Railroad
402 N.W.2d 653 (Nebraska Supreme Court, 1987)
Deutsche Credit Corp. v. Hi-Bo Farms, Inc.
398 N.W.2d 693 (Nebraska Supreme Court, 1987)

Cite This Page — Counsel Stack

Bluebook (online)
398 N.W.2d 693, 224 Neb. 463, 2 U.C.C. Rep. Serv. 2d (West) 1479, 1987 Neb. LEXIS 758, Counsel Stack Legal Research, https://law.counselstack.com/opinion/deutsche-credit-corp-v-hi-bo-farms-inc-neb-1987.