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Arden Equipment Co. v. Rhodes

Filed: January 19, 1982.

ARDEN EQUIPMENT COMPANY, INCORPORATED
v.
LILLIE MAE RHODES AND BILLY RICHARD RHODES



Appeal by defendants from Allen, Judge. Judgment entered 31 October 1981 in Superior Court, Buncombe County. Heard in the Court of Appeals 23 October 1981.

Webb, Judge. Judges Martin (Robert M.) and Wells concur.

Webb

In his first assignment of error, the defendant contends there was a genuine issue of a material fact under G.S. 25-9-504 which provides in part:

(1) A secured party after default may sell, lease or otherwise dispose of any or all of the collateral in its then condition or following any commercially reasonable preparation or processing.

(3) Disposition of the collateral may be by public or private proceedings and may be made by one or more contracts. Sale or other disposition may be as a unit or in parcels and at any time and any place and on any terms but

every aspect of the disposition including the method, manner, time, place and terms must be commercially reasonable.

The defendants argue that there is an issue as to whether the sale was made in a commercially reasonable manner. There have been several cases decided by this Court on the question of whether the sale by a creditor of a secured chattel is commercially reasonable. See Allis-Chalmers Corp. v. Davis, 37 N.C. App. 114, 245 S.E.2d 566 (1978); Credit Co. v. Concrete Co., 31 N.C. App. 450, 229 S.E.2d 814 (1976) and Hodges v. Norton, 29 N.C. App. 193, 223 S.E.2d 848 (1976). For a well-reasoned comment on this subject, see Dunn, "The Standard of Commercial Reasonableness in the Sale of Repossessed Collateral by Secured Creditors in North Carolina", 15 Wake Forest L. Rev. 71 (1979). In order to recover a deficiency judgment against the defendants, the burden of proof is on the plaintiff to show the sale of the secured chattel was commercially reasonable.

In the instant case there is little evidence in the record as to the manner of the sale by the bank except that it was sold to the plaintiff at private sale for $4,500.00. The plaintiff offered evidence that the backhoe was worth $4,500.00. The defendants offered evidence through the testimony of Mr. Rhodes that John Warren, a sales representative for the plaintiff, said the backhoe was "worth what was owed on it." Mr. Rhodes testified that in his opinion the backhoe "should have brought around $10,000.00 at the time of the sale." This testimony as to Mr. Warren's statement and Mr. Rhodes' opinion as to the value of the bankhoe was evidence that the sales price was grossly inadequate. We held in Allis-Chalmers Corp v. Davis, supra, that evidence of a grossly inadequate sales price was evidence of unreasonable terms so that a directed verdict for the secured party was in error. In this case there was not sufficient evidence of the "manner, time, place, and terms" so that if the evidence had been offered at trial it would have required a directed verdict for the plaintiff. It was error to grant the plaintiff's motion for summary judgment. See Moore v. fieldcrest Mills, Inc., 296 N.C. 467, 251 S.E.2d 419 (1979).

The defendants also argue that it was error to grant the motion for summary judgment because they offered evidence that there was an agreement that if the defendant would not contest the repossession of the backhoe, no deficiency judgment would be sought. All the evidence showed the bank was entitled to possession of the backhoe. There was no consideration to support this agreement. See Tile and Marble Co. v. Construction Co., 16 N.C. App. 740, 193 S.E.2d 338 (1972).

Reversed and remanded.

Disposition

Reversed and ...


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