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Commercial Discount Corp. v. Bayer





APPEAL from the Circuit Court of Cook County; the Hon. PAUL A. LUND, Judge, presiding.


Plaintiff (secured party) appeals from the trial court's direction of the verdict in favor of defendants (guarantors) and presents the following issues for review: (1) whether a secured party is required to give guarantors notice of a default sale; and (2) whether the trial court erred in directing the verdict at the close of plaintiff's case.

In March, 1969, plaintiff purchased a plastic injection molding machine for $15,500 and leased it to SAS Injection Molding, Inc., for five years with a total rental fee of $20,925. As a condition of and to facilitate this transaction, defendants guaranteed payment of the fee. SAS accepted delivery of the machine and made a few payments and then, in the autumn of 1969, defaulted. Sometime after default, plaintiff repossessed the machine, which was then resold in April, 1970.

Plaintiff brought this action to recover from defendants the difference between the unpaid balance of the rental fee and the proceeds of the sale of the collateral — a deficiency of $18,032. Defendants answered, denying that a deficiency was due and owing as plaintiff's sale of the collateral did not comply with applicable provisions of the Uniform Commercial Code. Consequently, plaintiff's evidence concerned its actions subsequent to default, including the notice given to defendants and the procedures employed in consummating the sale.

After repossessing the machine, plaintiff drafted a notice stating that the collateral was to be sold at a private sale which would take place on January 29, 1970, at its offices in Los Angeles, California. The notice was admitted into evidence but, due to the lack of foundation, evidence of its mailing was not admitted. Defendants Gerald Bayer and Earl Schwarz were called under section 60 of the Civil Practice Act (Ill. Rev. Stat. 1975, ch. 110, par. 60), and each admitted receiving the notice — but after January 29, the sale date mentioned in the notice. In addition, Schwarz testified that after hearing from another source that the machine had been repossessed, he telephoned plaintiff on January 19 and offered to purchase it for $12,000. This offer was refused, and he was told that any offer of less than $16,000 was unacceptable. No time or place was given regarding a proposed sale to another during this telephone conversation.

Sometime in January, 1970, plaintiff arranged with Harold Rowen, who was in the business of buying, selling and appraising machinery, to store and clean the machine. After the machinery had been on Rowen's premises a month or more, he was requested to find a buyer for it. Although Rowen had qualified as an expert concerning the valuation of machinery on several occasions in unrelated proceedings, he repeatedly testified that he had no expertise in the plastic injection molding machinery field. Consequently, he consulted several unidentified sources and, based upon their opinions, he valued the machine in question at $4,500 (because a newer model was reported to be more desirable in terms of increased speed and decreased operating expense).

Rowen then placed an advertisement in a trade journal on two occasions. He could not remember the name of the journal, now defunct, nor could he remember the contents of the ad — except that it stated no price; but, rather, invited offers. The journal had a circulation of 25,000 in 11 western States, with specialized subscribers described only as not "the general machine shop trade." Rowen also advertised the machinery in the Los Angeles Times on eight occasions, but again could not remember the details of the ad — except that it invited offers without quoting an asking price. Meanwhile, the machine was on display at his place of business, but he admitted that the type of customer interested in such machinery did not regularly frequent his premises unless they happened to be there in search of another type of equipment and noticed the molder on display. Receiving no response from the ads or the display of the machine, Rowen then solicited an offer from a Chicago business concern which eventually purchased it for $3,250. After deducting Rowen's fee and expenses, plaintiff realized $2,750.

At the close of plaintiff's case, a verdict was directed in favor of defendants. Although plaintiff in its complaint alleged that the sale was in conformity with the California Commercial Code, its post-trial motion asserted that the judgment was contrary to the provisions of the Illinois Commercial Code.


• 1-3 Plaintiff first contends that because the guarantee contract provided that California law was applicable, it is that State's adoption of the Uniform Commercial Code which governs this cause. We disagree. In a civil bench trial, the failure to include an issue in a post-trial motion does not preclude its consideration by a reviewing court. (City of Chicago v. Mid-City Laundry Co. (1972), 8 Ill. App.3d 88, 289 N.E.2d 233.) Such a rule, however, does not relieve a litigant from raising issues of fact and law in the trial court (Ill. Ann. Stat., ch. 110A, par. 366, Historical and Practice Notes, at 270 (Smith-Hurd 1976)), and "if there has been a misapprehension of the law in the trial court, the place to correct that misapprehension is in that court * * *" (Fulwider v. Fulwider (1972), 8 Ill. App.3d 581, 583, 290 N.E.2d 264, 265). Moreover, a theory inconsistent with that which is espoused in the trial court may not be considered on review. (Woman's Athletic Club v. Hulman (1964), 31 Ill.2d 449, 202 N.E.2d 528.) We believe that by filing a post-trial motion which alleged the judgment was erroneous upon the singular theory that its conduct had complied with Illinois law, plaintiff has abandoned the application of California law to the facts in this cause. Therefore, we shall review the merits of the case in accord with applicable provisions of the Illinois Uniform Commercial Code — Secured Transactions (Ill. Rev. Stat. 1975, ch. 26, par. 9-101 et seq. (the Code)).

Plaintiff next contends that under the Code, a guarantor is not entitled to notice of a default sale. Again, we disagree.

"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 * * * after which any private sale * * * is to be made shall be sent by the secured party to the debtor, if he has not signed after default a statement renouncing or modifying his right to notification of sale." (Ill. Rev. Stat. 1975, ch. 26, par. 9-504(3).)

The Code defines the term "debtor" as:

"[T]he person who owes payment or other performance of the obligation secured, whether or not he owns or has rights in the collateral * * *. Where the debtor and the owner of the collateral are not the same person, the term `debtor' means the owner of the collateral in any provision of the Article dealing with the collateral, the obligor in any provision dealing with the obligation, and ...

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