Appeal by defendant from Osborne, Judge. Judgment signed 21 March 1980 in District Court, Alleghany County. Heard in the Court of Appeals 16 November 1981.
Morris, Chief Judge. Judges Hedrick and Martin (Robert M.) concur.
Both plaintiff and defendants violate Rule 28(b)(3) of the Rules of Appellate Procedure by failing to refer, after each question presented in their briefs, to the pertinent assignments of error and exceptions, by number and by the pages of the printed record at which they appear. Although exceptions in the record not set out in a party's brief are to be taken as abandoned, we choose to suspend the requirement, pursuant to Rule 2, in order to discuss the case on its merits.
Defendants allege in their first, third and fourth assignments of error that the court erred in (1) failing to grant summary judgment in favor of defendants on the ground that plaintiff's failure to give them notice of sale pursuant to G.S. 25-9-504(3) barred plaintiff's right to a deficiency judgment, (2) in failing to include in its judgment a conclusion of law regarding the legal consequences of plaintiff's failure to give defendants notification of the time after which disposition of the collateral was to be made, and (3) in failing to find facts and make conclusions of law upon the right of defendants to a dismissal because of plaintiff's failure to give notice. Defendants' second assignment of error was abandoned. We choose to consider these assignments together, because they all turn on the question whether, in North Carolina, failure of notice to a debtor of sale of collateral bars a creditor's right to a deficiency judgment.
We said in Hodges v. Norton, 29 N.C. App. 193, 223 S.E.2d 848 (1976), that
absolutely precluding recovery of a deficiency judgment would in some cases (i.e., where the collateral has been so used by the debtor before the creditor could take possession its market value was substantially below the debt) result in injustice and contravene the U.C.C. spirit of commercial reasonableness. Further, in our view the provision of U.C.C. § 9-507(1) that a debtor has a right to recover from the creditor any loss caused by failure to comply with the code contemplates the right to deficiency judgment by the creditor who fails to comply with the U.C.C. provisions in disposing of the collateral.
We hold that the debt is to be credited with the amount that reasonably should have been obtained through a sale conducted
in a reasonably commercial manner according to the U.C.C., and that the creditor's failure to dispose of the collateral as required by the Code raises a presumption that the collateral was worth at least the amount of the debt, which places upon the creditor the burden of overcoming such presumption by proving the market value of the collateral by evidence other than the resale price.
Id. at 198-99, 223 S.E.2d at 851-52. The U.C.C. provision said to have been violated was G.S. 25-9-504(3), which reads in pertinent part:
Unless collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, reasonable 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, . . .
The Hodges opinion clearly states that a creditor's failure to give the required notice does not absolutely bar a deficiency judgment. Rather, the debt will be credited with the amount that reasonably could have been obtained via a commercially reasonable sale of the collateral. Lack of notice raises a presumption that the collateral was worth at least the amount of the debt. This is not a conclusive presumption, however. It may be overcome by the creditor by proving that the collateral was sold at market value, and that the market value was less than the amount of the debt.
Plaintiff concedes that he failed to notify appellants of the sale. Defendants, relying on G.S. 25-9-504(3) and G.S. 25-9-507(1), allege that because notice was not given, they are entitled to a sanction of $1,348, which they have sought by way of counterclaim. Although $1,348 reflects the downpayment amount and is validly set forth by defendants in their motion for summary judgment as damages for that reason, we deem the ...