Ford Motor Credit Co. v. Welch

Ford Motor Credit Co. v. Welch  (2003-453); 177 Vt. 563; 861 A.2d 1126

2004 VT 94

[Filed 17-Sep-2004]


                                 ENTRY ORDER

                                 2004 VT 94
                      SUPREME COURT DOCKET NO. 2003-453

                               JUNE TERM, 2004

   Ford Motor Credit Company            }     APPEALED FROM:
                                        }
                                        }
       v.                               }     Rutland Superior Court
                                        }     
   Matthew A. Welch                     }
                                        }     DOCKET NO. 335-6-03 Rdcv

                                              Trial Judge: Richard W. Norton

       In the above-entitled cause, the Clerk will enter:

       ¶  1.     Appellant, Ford Motor Credit Company ("Ford"), commenced
  this action for a deficiency judgment following the sale of a repossessed
  automobile at private auction.  The trial court denied Ford's claim because
  it found that Ford had failed to provide the defendant debtor with notice
  of a right to redeem.  We affirm.

       ¶  2.     In 1998, Matthew Welch purchased a used pickup truck and
  entered into a repayment agreement with Ford.  The contract provided Ford
  with a security interest in the vehicle, and the right to repossess it if
  Welch failed to make timely payments.  The contract further provided that
  upon repossession, Ford must provide Welch with a notice of a right of
  redemption specifying the amount needed to redeem and that Welch could
  exercise his right of redemption any time prior to the moment of sale by
  Ford.  If Welch did not exercise his right of redemption, the contract
  authorized Ford to sell the vehicle and apply the proceeds to Welch's
  outstanding obligation.  

       ¶  3.     Welch defaulted on his payments and voluntarily surrendered
  the vehicle to Ford on June 4, 2001.  Ford sold the vehicle at private
  auction on June 22, and credited the sale price to Welch's account.  A
  deficiency of $4,466.82 remained, and on June 2, 2003, Ford filed suit in
  the Rutland Superior Court.  

       ¶  4.     At trial, Ford submitted business records into evidence
  during the testimony of the custodian of records for its New Hampshire
  office to establish that it had sent notice of a right to redeem to Welch
  prior to the sale of the repossessed vehicle.  The court admitted the
  records without objection. Welch, however, testified that he never received
  the notice, and questioned the sufficiency of Ford's evidence.  The trial
  court, after weighing the evidence, found that Ford violated the contract
  by failing to provide Welch with notice of his right to redemption.  The
  court therefore denied Ford's request for a deficiency judgment.  
        
       ¶  5.     Ford raises five claims on appeal: (1) that the court
  wrongly interpreted V.R.E. 803 (6) to require a corporate witness
  testifying to business records to have personal knowledge regarding each
  transaction contained in the records; (2) that the court applied the wrong
  legal standard by requiring proof of receipt of notice, rather than merely
  proof that the notice was sent; (3) that the court incorrectly determined
  that Ford failed to prove that it sent the notice to Welch; (4) that the
  court used an outdated remedial standard when it barred any recovery of
  deficiency; and (5) that the court should have waived the notice
  requirement because the debtor voluntarily surrendered the collateral for
  sale at private auction. 

       ¶  6.     First, Ford contends that the trial court misapplied V.R.E.
  803(6) and improperly discounted evidence that it sent Welch the required
  notice.(FN1) Ford argues that the court interpreted the Rule as requiring a
  corporate witness testifying to business records to have personal knowledge
  of the submitted evidence.  We disagree with this characterization of the
  court's action, because V.R.E.  803(6) goes to the admissibility, and not
  the weight of the evidence.  Because Ford's business records were admitted
  without objection, it's argument is unavailing. 

       ¶  7.     In its second claim, Ford argues that the court imposed the
  wrong legal standard by requiring Ford to show proof of "receipt," rather
  than proof, as required by the contract, that the notice was "sent." 
  Again, we disagree. 

       ¶  8.     "[T]he secured party has the burden of pleading and proving
  that any given disposition of collateral was commercially reasonable, and
  preceded by reasonable notice."  Chittenden Trust Company v. Maryanski, 138
  Vt. 240, 244-45, 415 A.2d 206, 209 (1980) (emphasis added).   In its
  decision at trial, the court emphasized Welch's testimony that he never
  received notice, but it did so as support for its finding that Ford had
  failed to prove that it actually mailed the notice.  The court's final
  conclusion, moreover, was expressly based on Ford's failure to prove that
  notice was sent: "I don't have any evidence in this case . . . how [the
  notice] was stamped and what method was used to send it to the debtor in
  Brandon, so I'm going to deny the request and find for the Defendant in
  this case."  Thus, we conclude that the court applied the proper legal
  standard.

       ¶  9.     Third, Ford takes issue with the court's determination, that
  based on the weight of the evidence, Ford failed to prove that it had
  actually sent the notice of the right of redemption to Welch.  The
  custodian of records for Ford's New Hampshire office testified that the
  company's standard practice is to prepare and send notice of a right to
  redeem whenever it repossesses a vehicle.  She could not, however, testify
  as to the procedures employed by the South Carolina office, which allegedly
  prepared and sent the notice to Welch.  Nor did she have personal knowledge
  of whether the notice was actually placed in the mail, and she could not
  explain why, in contrast to normal procedures, Ford did not send the notice
  return receipt requested.  Moreover, the copy of the notice offered into
  evidence by Ford at trial was unsigned and unexecuted, and did not indicate
  whether it was actually mailed. 
   

       ¶  10.      "As the trier of fact, it [is] the province of the trial
  court to determine the credibility of the witnesses and weigh the
  persuasiveness of the evidence."  Cabot v. Cabot, 166 Vt. 485, 497, 697 A.2d 644, 652 (1997).  A trial court's findings shall not be set aside
  unless clearly erroneous.  V.R.C.P. 52(a)(2); Bergeron v. Boyle, 2003 VT
  89, ¶ 15, 14 Vt. L. Wk. 337, 838 A.2d 918.  Here, because there is
  sufficient credible evidence on the record that supports the court's
  conclusion that Ford failed to prove it sent the notice, we will not
  disturb it.

       ¶  11.     Ford's forth claim challenges the remedy applied by the
  trial court.  After finding that Ford had failed to provide proper notice,
  the trial court denied Ford's request to recover the deficiency.  On
  appeal, Ford argues that revisions made by the Legislature in 2000 to
  Article 9 of Vermont's Uniform Commercial Code (UCC) dictate use of a
  different remedial standard.  See 1999, No. 106 (Adj. Sess.), §§ 2, 23
  (effective.  July 1, 2001).   

       ¶  12.     In Maryanski, 138 Vt. at 246, 415 A.2d  at 210, we held that
  failure to provide reasonable notice of disposition acts as an absolute bar
  to recovery of a deficiency.  See also Chittenden Trust Co. v. Andre Noel
  Sports, 159 Vt. 387, 393-95, 621 A.2d 215, 219-20 (1992) (reviewing
  intervening case law and affirming the "absolute-bar" rule of Maryanski). 
  Ford argues that Maryanski was abrogated by the Legislature's repeal of
  former 9A V.S.A. § 504(3) and addition of 9A V.S.A. § 9-626, which
  establishes a "rebuttable presumption" rule entitling a noncomplying
  secured party to recover in limited circumstances.  We disagree. 

       ¶  13.     The revised remedial provisions Ford relied on are not
  applicable to this case.  Both the notice and remedial provisions Ford
  cites, §§ 9-611(b) and 9-626 respectively, became effective on July 1,
  2001. All of the facts and circumstances giving rise to the present
  dispute, however, occurred by June 2001.

       The . . . repeal of [a] . . . statutory provision . . .
       shall not . . .  
       . . . .
       
            (4) Affect any suit, remedy or proceeding to enforce or
       give effect to any right, privilege, obligation or liability
       acquired, incurred or accrued under the amended or repealed
       provision prior to the effective date of the amendment or
       repeal; and the suit, remedy or proceeding may be instituted,
       prosecuted or continued as if the act or provision had not
       been repealed or amended.   

  1 V.S.A. § 214(b)(4).  See also State v. Willis, 145 Vt. 459, 467, 494 A.2d 108, 112 (1985) ("The applicable law is that which is in effect at the time
  of the occurrence of the facts which give rise to the rights in question."
  (emphasis in original)).
   
        
       ¶  14.     Under the savings statute, 1 V.S.A. § 214(b), revisions or
  repeals of statutory provisions do not apply retrospectively where the
  change "affects a preexisting 'right, privilege, obligation or liability.'"  
  Myott v. Myott, 149 Vt. 573, 576, 547 A.2d 1336, 1338 (1988) (quoting 1
  V.S.A. § 214(b)(4)).  Here, all of the rights and obligations in question
  accrued before the effective date of the UCC provisions on which Ford
  relies.  Therefore, Maryanski applies to this case, and there is no error.

       ¶  15.     Finally, Ford argues that, where the debtor voluntarily
  surrenders collateral to the creditor and the creditor elects to dispose of
  the collateral by private sale, the notice requirement  should be deemed
  waived.  We disagree. 

       ¶  16.     The effective law at the time Welch surrendered his vehicle
  was former 9A V.S.A. § 504(3), which required that the secured party
  provide notice to the debtor "if he or she has not signed after default a
  statement renouncing or modifying his or her right to notification of
  sale."  Under this clear standard, we can find no waiver of notice by
  Welch.  See, e.g., Vermont Nat'l Bank v. Hamilton, 149 Vt. 477, 482 n.4,
  546 A.2d 1349, 1352 n. 4 (1988) (noting that a stipulated order which
  provided that constructive possession of secured collateral would be turned
  over to the secured party and the proceeds applied to the secured
  obligation was not a specific waiver of notice).  

       ¶  17.     Nor do we find Ford's argument for implied waiver of notice
  compelling.  Voluntary surrender does not forfeit a debtor's right to
  notice, or exercise of the right of redemption.  Such a construction would
  merely discourage voluntary surrender and frustrate the State's interest in
  promoting peaceful repossessions.  Union Trust Co. v. Hardy, 400 A.2d 384,
  388 (Me. 1979).  While a debtor may not bid on the collateral at a private
  sale, he retains the right to redeem prior to the sale.  Thus, Welch was
  entitled to timely notice of the date and time of sale, so that he would
  have known  when his redemption rights would expire.  The Legislature has
  provided safeguards for the rights of both creditors and debtors, and we
  find no applicable exceptions here.

       Affirmed.



       BY THE COURT:



  _______________________________________
  John A. Dooley, Associate Justice

  _______________________________________
  Denise R. Johnson, Associate Justice
  
  _______________________________________
  Marilyn S. Skoglund, Associate Justice

  _______________________________________
  Paul L. Reiber, Associate Justice

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                                  Footnotes


  FN1.  Rule 803(6) allows for admission of business records when
  accompanied by testimony of a custodian of the records, or other qualified
  witness, that such records are kept in the regular course of business,
  unless the method or circumstances of preparation indicate lack of
  trustworthiness.