APPEAL from a judgment of the Superior Court of the County of Maricopa. G. A. Rodgers, Judge. Judgment reversed and case remanded with instructions.
Messrs. Gust, Rosenfeld, Divelbess, Robinette & Coolidge, for Appellant.
Mr. A. David Latham, for Appellee.
[53 Ariz. 329] LOCKWOOD,
C. A. Stewart, hereinafter called plaintiff, brought suit against the Valley National Bank, a corporation, hereinafter called defendant, to recover the alleged value of certain broom corn pledged as collateral to secure a promissory note executed by him in favor of defendant, claiming that defendant sold the collateral contrary to law. The case was tried before the court sitting without a jury, and judgment rendered in favor of plaintiff for the sum of $505.35, whereupon this appeal was taken.
The facts material to a determination of the case may be stated as follows: In the year 1933 or 1934, plaintiff made a loan from defendant, secured by a pledge of certain collateral, and at the same time executed and gave to defendant a continuing pledge agreement, which we will refer to and quote from hereinafter. Subsequently the loan was paid, and the collateral released, but the pledge agreement remained in the possession of the defendant. With this general pledge agreement still in its possession, defendant on September 3, 1936, made a ninety day loan of $1,750 to plaintiff, taking as security therefor warehouse receipts [53 Ariz. 330] for some fifty thousand pounds of broom corn, but no new pledge agreement was taken at that time. The loan was not paid on December 2, 1936, its due date, and on December 15th it was renewed until January 2, 1937. It was not paid at that time, and defendant wrote plaintiff several times that the note was again past due, and demanding his immediate attention. Plaintiff, however, testified that he never received any of these letters. On February 8, 1937, the bank's attorney wrote plaintiff,
again demanding payment, giving him five days within which to make it, and advising that unless the payment was made the collateral would be sold. To this letter plaintiff responded, stating he would be in Phoenix in a few days and would then clear up the note. He did not, however, pay the note nor communicate further with defendant, and on March 20th the latter made preparations to sell the collateral at public sale, under section 2337, Revised Code of 1928. A notice of the sale was prepared, posted and published, in accordance with the statute, and a copy thereof was enclosed in a letter addressed to plaintiff at his residence address in Phoenix, where he had previously been in the habit of receiving his mail. This letter, however, according to plaintiff's testimony was never received by him. Thereafter, and on April 6, 1937, a sale was held in the manner required by the statute, and the property was bid in by defendant for the amount of the debt and charges. After this sale, a question arose as to whether section 2337, supra, required personal service on defendant of the notice of sale, or whether it was sufficient to mail such copy to him. In order to eliminate that question, a second sale was held on April 27, 1937, in accordance with the terms authorized under the pledge agreement above referred to. At this sale one Hodgson purchased the collateral for an amount which was $9.01 in excess of the debt and the charges [53 Ariz. 331] then due. This $9.01 was tendered to plaintiff before and at the time of trial, but was refused by him.
There was considerable evidence offered as to the value of the collateral at the time of sale, there being a sharp dispute over whether it was worth more than the price for which it was sold, or not. On this evidence the court found for the plaintiff as aforesaid, and this appeal was taken.
There are seven assignments of error, but we think it necessary to consider only the first two, which read as follows:
"The court erred in finding for appellee in any amount because the public sale of the collateral held on April 6, 1937, was made in accordance with the terms of the statute and appellee is entitled only to the proceeds of the sale, which he has received by proper credits."
"The court erred in finding for appellee in any amount in excess of $9.01 for the reason the private sale of the collateral on April 27, 1937, was authorized by the terms of the pledge agreement and appellee is entitled only to the surplus proceeds of that sale of $9.01, which was tendered to him before and at the time of trial and refused."
We consider them in their order. First was the public sale of April 6th a valid one? If it were, of course plaintiff could not recover. Section 2337, supra, under which the sale was held, reads as follows:
"Pledges; sale of property: foreclosure. Chattels pledged as security for an indebtedness, unless in writing the contrary has been agreed upon, may be sold for the nonpayment of the indebtedness by giving the pledgor, his purchaser or assignee, of whose purchase or assignment the pledgee has knowledge, fifteen days' written notice and posting the notice for the same time in three public places in the county, and publishing the notice at least once in a newspaper published in such county not less than ten days before the date of sale. The notice shall contain a description of the [53 Ariz. 332] property to be sold, and the time and place of the sale. If redemption is not made before the sale, the pledgee may sell at public auction, to the highest bidder, the pledged property, or so much thereof as necessary to pay the debt, interest and costs of sale, and he may be a bidder at such sale. Any surplus arising from the sale and ...