Ervin v. Arnold

Sognier, Judge.

Theresa M. Ervin instituted an action against James R. Arnold, d/b/a Arnold Grading, to obtain a deficiency judgment following the repossession and sale of certain heavy equipment pledged as collateral for a loan. Arnold answered, alleging that Ervin had failed to comply with statutory notice requirements and had failed to dispose of the collateral in a commercially reasonable manner and accordingly was not entitled to recover. The case was tried before a jury and, after the close of evidence, the trial court granted Arnold’s motion for a directed verdict. Ervin appeals.

The evidence showed that appellee was a friend of appellant’s daughter. When he sought to start a grading business, appellant borrowed money herself and lent it to appellee. On January 31, 1986, appellee executed a promissory note in the amount of $59,706.37. The parties also entered into an agreement whereby the note was secured by certain heavy equipment purchased by appellee for use in the business. The equipment consisted of a 1975 Ford tractor, a 1942 Dorsey low-boy trailer, and a Caterpillar Crawler front-end loader. In November 1987, appellee ceased doing business as Arnold Grading, stopped making payments on the loan, and abandoned the equipment without informing appellant of its whereabouts. Sometime late in February 1988, appellant located the collateral which, after notifying appellee, she sold at private sale for a total of $25,000. After unsuccessful attempts to recover the deficiency balance, appellant instituted this suit.

1. Appellant first contends the trial court erred by directing a verdict for appellee based on its finding that appellee was not given proper notice of the sale. Appellant argues that the notice sent complies with the applicable statutory requirements. Although evidence established that the tractor and trailer, being “vehicles operated over the public highways and streets of this state and propelled by power other than muscular power,” see OCGA § 10-1-31 (a) (4), are “motor vehicles” within the meaning of the Motor Vehicle Sales Finance Act, OCGA § 10-1-30 et seq., and that the notice sent by appellant was not sent within ten days after repossession and did not specifically inform appellee of his right to redeem the collateral, both of which are required by OCGA § 10-1-36, compliance with OCGA § 10-1-36 was not required in disposing of this equipment because appellant is not engaged in the business of selling motor vehicles to retail buyers in retail installment actions, OCGA § 10-1-31 (a) (10), and thus was not subject to the notice requirements of OCGA § 10-1-36. The repossession at issue here was governed only by the UCC provision, OCGA § 11-9-504 (3).

In Emmons v. Burkett, 256 Ga. 855 (353 SE2d 908) (1987) the Supreme Court abolished the “absolute bar” rule of Gurwitch v. Luxurest Furn. Mfg. Co., 233 Ga. 934 (214 SE2d 373) (1975). Instead, the Supreme Court extended to all deficiency suits under the UCC in which adequacy of the notice or commercial reasonability of the sale is involved the “rebuttable presumption” rule, which was first set forth in Georgia for “adequacy of sale price” cases in Farmers Bank v. Hubbard, 247 Ga. 431 (276 SE2d 622) (1981). The notice sent by appellant complied with the requirements of OCGA § 11-9-504 (3), which governed here, and accordingly we agree with appellant that the trial court erred by granting a directed verdict to appellee based on its finding that the notice was insufficient.

2. Assuming, without deciding, that the sale was commercially unreasonable, appellant was not absolutely barred from pursuing a deficiency. Rather, under Emmons, supra, a presumption was raised that the value of the collateral sold was equal to the debt, requiring appellant to overcome that presumption by presenting evidence that the loader’s value was less than the debt in order to recover any balance. Appellant contends the trial court erred by finding that she did not do so.

We reverse. While it is true that proof of the sale price is not sufficient to overcome the presumption against the creditor, see Zohbe v. First Nat. Bank, 162 Ga. App. 604, 605 (292 SE2d 444) (1982), in the case sub judice, appellant presented evidence consisting of far more than a simple recitation of the sale price. Giddens v. Bo Lovein Ford, 167 Ga. App. 699 (1) (307 SE2d 271) (1983), cited by the dissent, is inapposite here because in Giddens “[ajppellee did not introduce any evidence of the fair and reasonable value of the collateral in order to overcome the presumption,” id. at 700 (1), (emphasis supplied), and accordingly, this court found that a directed verdict should have been granted in the debtor’s favor.

Appellant testified that appellee abandoned the equipment without notifying her of its location, and stopped making payments. Appellee’s last payment was in October 1987, and the abandoned equipment was not located by appellant until February 1988. She testified that the equipment was in poor condition when it was found. The loader was not operable — the battery was dead, the starter switches and reset buttons did not work, the bucket was cracked, belts were loose, cable harnessing was faulty and wiring needed replacing, cover plates and engine covers were missing, the idler roller needed replacement — and it was dirty and shabby. Appellant expended time and her own effort cleaning and repairing the equipment and moving it to a secure location. She then obtained bids from four people, knowledgeable as to the value of such equipment, including a neighbor who has a large farm in South Georgia, the owner of a fencing business, an electronic engineer, and the owner of a large lumber business who had experience with heavy equipment. Their bids ranged from $18,000 to $22,500, and the loader was sold to the highest bidder.

Although bids cannot be equated with considered opinions as to value, they generally do reflect the bidder’s opinion as to the value of the item, by indicating that the bidder believes the item is worth at least that amount, and thus are indicative of at least a general range of value. Appellant testified that she sought bids from people who handled this sort of equipment all the time, and relied on their bids to bring a fair price. She testified she did everything she could to get the most money for the equipment.

Appellant is not a commercial seller or lender, but an individual who herself obtained a bank loan against her personal savings in order to help out appellee, and she made extraordinary efforts to obtain the best price for the equipment after appellee abandoned it and refused to disclose its location. We find appellant’s evidence was sufficient to overcome the presumption that the value of the collateral was equal to the amount of the debt, and the trial court erred by granting a directed verdict in favor of appellee. See generally Ace Parts &c. v. First Nat. Bank, 146 Ga. App, 4, 5-6 (2) (245 SE2d 314) (1978). The issue of the deficiency balance should have gone to the jury.

3. Our holdings in Divisions 1 and 2 render it unnecessary that we address appellant’s remaining enumerations of error.

Judgment reversed and case remanded.

Carley, C. J., Deen, P. J., Banke, P. J., Birdsong, Pope and Beasley, JJ., concur. McMurray, P. J., and Cooper, J., dissent.