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Stensel v. Stensel





APPEAL from the Circuit Court of McLean County; the Hon. WENDELL E. OLIVER, Judge, presiding.


Rehearing denied September 26, 1978.

This appeal concerns itself with the interpretation of certain related sections of the Uniform Commercial Code (Ill. Rev. Stat. 1973, ch. 26, pars. 9-501, 9-504, 9-505). We reverse.

In May 1971, January 1972, and May 1972, defendant Glenn Stensel (herein Glenn) borrowed funds from the Farmer City State Bank of Farmer City, Illinois, for which he gave his promissory notes totaling about $35,000. The notes were co-signed by his father Vernell Stensel (herein Vernell). In addition, 16 mobile homes owned by Glenn and located near Bloomington were given as collateral.

Glenn defaulted in payment on the notes, and in September 1973, Vernell took up Glenn's notes by giving the bank his own note in payment. There is some indication in the record that the bank would not have made the loans to Glenn without the co-signing by Vernell. The mobile homes were sold in the latter part of 1973 at public auction. They brought $3,160. No notice of the sale was given to Glenn.

Vernell died on December 18, 1975. In May 1977, plaintiff, Vernell's widow and executor, brought this suit against Glenn seeking a deficiency judgment for $30,670.39. Following a bench trial in the circuit court of McLean County, plaintiff was awarded $28,184.39. This appeal ensued.

Defendant makes two principal contentions: (1) The failure of Vernell to give him any notice of the sale bars any deficiency judgment, and (2) the sale without notice indicates an election by Vernell to retain the collateral in satisfaction of the obligation.

Plaintiff contends that no notice was required because the collateral was in danger of destruction and threatened to decline speedily in value, and in any event, Glenn renounced his right to notice by sending certain written instructions to the bank and to Vernell.

• 1 The pertinent provision of the Code relating to the secured party's right to dispose of collateral is section 9-504(3) which reads as follows:

"Disposition of the collateral may be by public or private proceedings and may be made by way of one or more contracts. Sale or other disposition may be as a unit or in parcels and at any time and place and on any terms but every aspect of the disposition including the method, manner, time, place and terms must be commercially reasonable. 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, if he has not signed after default a statement renouncing or modifying his right to notification of sale. In the case of consumer goods no other notification need be sent. In other cases notification shall be sent to any other secured party from whom the secured party has received (before sending his notification to the debtor or before the debtor's renunciation of his rights) written notice of a claim of an interest in the collateral. The secured party may buy at any public sale and if the collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations he may buy at private sale." (Emphasis added.) Ill. Rev. Stat. 1973, ch. 26, par. 9-504(3).

We are not persuaded that a mobile home is collateral which "threatens to decline speedily in value." The record shows that the mobile homes here had been condemned by the city of Bloomington as uninhabitable, so it is a fair inference that whatever decline there was in value had occurred some time prior to the sale. It is also significant that several months elapsed from the time Vernell paid off the bank until the time of sale. No one during this period appears to have been concerned with declining value. In our opinion, that application of this provision to chattel property would be a rarity. Its obvious intent was to apply to securities in a rapidly falling market, or any other item, such as gold bullion, which is subject to price fluctuations on a daily basis.

It is admitted that Glenn received no notice of the sale, other than a passing reference in the record to the fact that someone not named mailed him a display advertisement from one of the local newspapers. Plaintiff makes much of some letters in the record from Glenn to the bank and to Vernell. The letter to Vernell reads in part:

"I hereby give you power of attorney to sell or assigned [sic] all the mobile homes in ...

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