Meffe's motion for summary judgment presents a different
problem. Meffe filed an affidavit accompanying his motion
stating that he was no longer a principal of Medlin Coal at
the time notice of the sale was given, and that he received no
notice from any other source. This is undisputed and for the
purposes of this motion it is presumed that Meffe was not sent
any notice of the sale and did not receive any notice from any
There is a split of authority among the Illinois courts on
the effect of a creditor's failure to give notice of the sale
of collateral on his ability to recover any deficiency from
the debtor.*fn5 Some Illinois courts apply the "no notice, no
deficiency" rule, which holds that failure of a secured party
to comply with the notice requirements of Section 9-504(3)
flatly bars him from recovering any deficiency, Morris Plan Co.
v. Johnson, 133 Ill. App.2d 717, 271 N.E.2d 404 (3d Dist. 1971).
Others follow the "rebuttable presumption" rule, which holds
that failure to provide the statutory notice merely raises the
presumption that the value of the collateral sold was equal to
the amount of the debt, thereby placing the burden on the
creditor to rebut that presumption and prove that the sale was
commercially reasonable, Tauber v. Johnson, 8 Ill. App.3d 789,
291 N.E.2d 180 (1st Dist. 1972).
The Illinois Supreme Court has not decided the issue, and
while this court ought to attribute some weight to the
appellate court decisions, they are not controlling.
Commissioner v. Estate of Bosch, 387 U.S. 456, 465, 87 S.Ct.
1776, 1782, 18 L.Ed.2d 886 (1967). As the Seventh Circuit has
recognized, intermediate appellate court decisions provide this
court with data for ascertaining relevant Illinois law, but may
be disregarded if this court is convinced by other persuasive
data that the Illinois Supreme Court would decide otherwise.
Gates Rubber Co. v. U.S.M. Corp., 508 F.2d 603, 607 (7th Cir.,
1975). This court must therefore determine how the Illinois
Supreme Court would decide this issue by considering the
Illinois appellate court decisions as well as other persuasive
After reviewing the relevant authority, the "rebuttable
presumption" rule as advocated by the Illinois appellate court
for the First District appears the more logical approach.
Section 9-507(1) provides a remedy for failure to comply with
Section 9-504(3) by granting the debtor the right "to recover
from the secured party any loss caused by a failure to comply
with the provisions" of the Code, but makes no mention of a
denial of a deficiency judgment. This section indicates that
the Code's drafters did not intend that failure to give notice
would bar the creditor's right to a deficiency judgment.
U.S. v. Whitehouse Plastics, 501 F.2d 692, 696 (5th Cir.
1974). The right to recover any loss stemming from the lack of
notice necessarily includes any prejudice to the debtor from
loss of his right of redemption under Section 9-506 or from
loss of the opportunity to take steps to drive up the sale
price and eliminate or reduce any deficiency. Id., at 696.
Because of the specific provision for a penalty in the event of
a defective sale, the sensible approach is to apply the Code
penalty and no more. Hogan, Pitfalls in Default Procedure, 2
U.C.C.L.J. 244, 257 (1969).
Moreover, the default is separable from the lack of notice
and it seems reasonable that recovery on the basic debt be in
the usual way and in accordance with the terms of the note.
Barbour v. U.S., 562 F.2d 19, 21 (10th Cir. 1977). This view
recognizes the respective positions of the borrower and the
lender and their remedies provided in the UCC. Preference for
the "rebuttable presumption" rule is further reinforced by the
UCC's avoidance of punitive damages. For these reasons, this
court believes that the Illinois Supreme Court would adopt this
The court finds no absolute bar to a deficiency judgment for
failure to give notice and therefore denies Meffe's motion for
Accordingly, Medlin and Rodgers' motion for summary judgment
is denied and
Meffe's motion for summary judgment is also denied.