Appeal from the District Court for Dakota County: Robert E. Otte, Judge.
Hastings, C.j., Boslaugh, White, Caporale, Shanahan, Grant, and Fahrnbruch, JJ.
1. Statutes. Statutes relating to the same subject are in pari materia and should be construed together.
2. Uniform Commercial Code: Liens: Words and Phrases. The "any loss" provision of Neb. U.C.C. § 9-507(1) (Reissue 1980), as to junior lienholders, refers to the loss of any surplus proceeds due to an improper Disposition of repossessed collateral.
3. Liens: Sales: Words and Phrases. Surplus proceeds means the difference between the fair market value of the collateral, if sold at a proper sale, and the amount required to satisfy the senior lien.
4. Uniform Commercial Code: Liens: Notice: Sales. A junior lienholder can only be said to suffer a loss due to lack of notice, pursuant to Neb. U.C.C. § 9-507(1) (Reissue 1980), if a commercially reasonable sale would have produced an amount in excess of the senior lien.
The opinion of the court was delivered by: White
This case involves a dispute between a senior secured creditor, Nebraska State Bank (hereafter NSB), and a junior lienholder, William and Marilyn McGowen, both NSB and McGowens having secured interests in certain cattle owned by debtor/farmer Paul High. The McGowens filed a petition in the district court for Dakota County alleging that NSB had wrongfully converted certain livestock in which the McGowens held a perfected security interest.
Pursuant to a stipulation of the parties, the trial was bifurcated on the issue of liability and the issue of damages. The trial was before a jury, and most of the evidence was presented by stipulation. The stipulated facts are as follows. On or about October 8, 1980, the McGowens sold to Paul High various items of personal property and livestock. An exact list of these items was incorporated into a purchase agreement dated October 8, 1980. In that agreement High granted the McGowens a security interest in that personal property and livestock.
On December 18, 1980, High granted to NSB, as consideration for a promissory note in the amount of $86,695.76 executed on that date, a security interest in all his farm products, including but not limited to all of his livestock, i.e., all of his cattle, hogs, etc. By September 5, 1984, High's total indebtedness to NSB apparently amounted to $372,341.95.
NSB perfected its security interest by filing a financing statement with the county clerk in Dakota County on December 20, 1980. The McGowens perfected their security interest by filing a financing statement and security agreement with the county clerk on April 28, 1981.
High defaulted on the purchase agreement entered into with the McGowens and also defaulted on his obligations to NSB. In September of 1984, NSB repossessed and sold 97 head of cattle owned by High. The cattle were sold on September 25, 1984, at Bleil-Chapman Livestock Auction Company in Moville, Iowa, for a total sales price of $28,956.01, with net proceeds of $27,872.29 after expenses. After application of the cattle sale proceeds, and other proceeds not involved in this suit, to High's debt to NSB, the remaining obligation amounted to $314,046.46.
NSB had notice and knowledge of the McGowen security interest from and after March 1984. On September 25, 1984, the date of repossession and sale of the cattle, each of the parties to this suit had a valid and existing security interest in the repossessed collateral.
It was further stipulated that at no time prior to the sale of the cattle did NSB give notice of the repossession or sale to the McGowens. Neb. U.C.C. § 9-504(3) (Reissue 1980) requires a secured creditor to notify "any other secured party" of the intended Disposition of ...