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Finch v. Auburn National Bank of Auburn
Citations: 646 So. 2d 64; 25 U.C.C. Rep. Serv. 2d (West) 1300; 1994 Ala. Civ. App. LEXIS 64; 1994 WL 37976Docket: AV93000203, AV93000223, AV93000224 and AV93000225
Court: Court of Civil Appeals of Alabama; February 10, 1994; Alabama; State Appellate Court
Auburn National Bank filed a lawsuit against nine individuals (debtors) for defaulting on a promissory note dated November 4, 1991, claiming they owed $61,459.32 plus interest, attorney fees, and costs. The Bank moved for summary judgment, which the trial court granted, awarding a total of $71,853.91. The debtors appealed, primarily arguing that the Bank failed to act in a commercially reasonable manner by not notifying them of the stock sale that served as collateral for the note. The court referenced Alabama law, noting that while lack of notice can be deemed commercially unreasonable, it does not prevent recovery of a deficiency judgment. Under Ala.Code 1975, 7-9-504(3), reasonable notification is required unless the collateral is sold on a recognized market. The stock in question was traded on the Midwest Stock Exchange, eliminating the need for prior notice. The court found that the debtors suffered no damages from the lack of notification. Additionally, the debtors claimed the Bank did not inform them that part of the collateral had been released to a co-debtor. The court stated that all debtors, being competent adults, were bound by the terms of the note they signed, which clearly indicated the collateral. Thus, they were aware that the additional shares were no longer pledged when they executed the November 4, 1991, note. The appellate court affirmed the trial court's decision, with all judges concurring.