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Spillers v. First National Bank

OPINION FILED OCTOBER 26, 1982.

RICHARD SPILLERS, PETITIONER-APPELLANT,

v.

FIRST NATIONAL BANK OF ARENZVILLE, RESPONDENT-APPELLEE.



Appeal from the Circuit Court of Schuyler County; the Hon. David K. Slocum, Judge, presiding.

PRESIDING JUSTICE GREEN DELIVERED THE OPINION OF THE COURT:

This is the second appeal arising out of a dispute between petitioner-appellant, Richard Spillers, and the First National Bank of Arenzville (bank) over the bank's repossession and sale of two items of collateral subject to the bank's perfected security interest.

On March 14, 1977, petitioner borrowed $25,000 from the bank for the purchase of a 1957 Lima 54-T crane. This purchase was financed with a six-month promissory note and secured by the crane as well as steel concrete forms. When the note matured, the bank requested payment but agreed to a 30-day extension. At the end of the extension, the bank confessed judgment on the note against petitioner, and on January 27, 1978, confirmed the judgment in the amount of $27,640.95.

The bank subsequently repossessed the crane and on April 22, 1978, sold it to a construction equipment dealer named Chuck Wessel. According to Mr. A.C. Hart, president of the bank, Wessel told the bank that the crane was worth $15,000 and that Wessel would pay the bank that amount. The bank made no attempt to appraise the property, advertise it for sale, or otherwise solicit bids, except for the understanding with petitioner that he would be given notice of the sale and an opportunity to find a higher bidder.

Spillers was notified on March 7, 1978, that a bid of $15,000 for the crane had been received from Wessel and was advised that sale would take place within 10 days from his receipt of the notice. On March 22, 1978, petitioner responded with a bid from a corporation owned and controlled by him in the amount of $16,000. No other notice was given petitioner of the sale, and on April 22, 1978, the crane was sold to Wessel for $15,000. Within five days of the sale to Wessel, the crane was sold to an equipment dealer in Aledo, Illinois, named Henderson. The price Henderson paid does not appear in the record. On November 3, 1978, Henderson sold the crane to an Iowa contractor named Hall for $27,500. Hall testified that he presently had the crane for sale for $35,000 but that he wasn't particularly interested in selling it.

After application of the sale price to the indebtedness, a deficiency of $12,640.95 still remained. The bank then proceeded to sell the steel concrete forms to reduce this amount. No notice of sale of the forms was given to petitioner. The forms were sold to a contractor who had his forms commingled with Spillers' forms for the sum of $6,120. Although petitioner had obtained a bid of $500 higher than the ultimate purchase price, this bid was withdrawn due to the confusion over which forms were Spillers'. The bank made no effort to segregate the forms, advertise them for sale, or seek a broker to sell them.

After these sales were made and the credits applied against the indebtedness, there still existed a deficiency of approximately $6,500. The bank garnished the sum of $1,020.73 from petitioner's checking account to further reduce the deficiency.

On October 13, 1978, Spillers filed a petition for damages alleging the sale was commercially unreasonable and praying for damages for the bank's failure to follow the dictates of the Uniform Commercial Code (Ill. Rev. Stat. 1977, ch. 26, par. 9-507(1)). Following a hearing on the petition, the trial court found that the sale of the crane and the forms was in all respects commercially reasonable.

On appeal, this court in Spillers v. First National Bank of Arenzville (1980), 81 Ill. App.3d 199, 400 N.E.2d 1057, held that the sale of both the crane and the forms was conducted in violation of section 9-504(3) of the Uniform Commercial Code (Ill. Rev. Stat. 1977, ch. 26, par. 9-504(3)), and that such violation absolutely barred any deficiency judgment. We than remanded the case to the trial court with directions to vacate the deficiency order and to then consider Spillers' petition for damages. We stated that those damages would be the amount, if any, by which the net amount which should have been received from the sales of the chattels exceeded the judgment and costs confirmed on January 27, 1978.

On remand, the court considered the testimony of petitioner, the father of the initial purchaser, William Wessel, and further considered the evidence deposition of Thomas Speciale, an expert witness on the value of the concrete forms.

On the issue of the value of the forms, the court considered the evidence deposition of Speciale, a salesman for Economy Forms Corporation, the company which sold the petitioner the forms at issue. Speciale stated that Spillers had paid $11,400 for the forms in 1975 and that the same forms in February of 1978 would sell for approximately $12,500. According to Speciale, if the concrete forms belonging to Spillers were in good condition, they would sell for approximately 85% of their original cost. On cross-examination, Speciale testified that if his company were to repurchase forms that they had originally sold, they would pay the average 25% of their original cost.

Petitioner, who also testified at the hearing on remand, stated that in his opinion the forms were worth what he had originally paid for them when they were repossessed and sold by the bank. He stated that this would be their retail value. Additionally, he felt that the reasonable market value of the crane was $35,000.

William Wessel, father of the initial purchaser, Chuck Wessel, related that he had been in the heavy equipment business for 15 to 20 years and was familiar with the values of construction equipment as of February 1978. Wessel stated that he had seen the crane and when asked if he had an opinion of the crane's value, indicated that if he were buying it for resale he would value it from $18,000 to $20,000, but that if he were buying it for his own use it would probably be worth a few thousand more.

On March 11, 1982, the trial court entered an order finding that an adequate and reasonable value of the used forms was equal to or below the price that the bank had obtained, and that the reasonable value of the crane was $18,000. The court then added this $3,000 in damages ($18,000 — the crane's market value — minus $15,000 — price obtained on resale) with the amount the bank garnished from Spillers' checking account ($1,020.73), and concluded that Spillers' total damages were $4,020.73. These damages were then offset against the deficiency of $6,500, which this court had barred. The court concluded that no damages were recoverable from the bank. Petitioner has appealed these ...


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