Ridley v. First National Bank in Albuquerque , 87 N.M. 184 ( 1974 )

OPINION

LOPEZ, Judge.

This is an interlocutory appeal from an order of the district court pursuant to § 21-10-3, N.M.S.A.1953 (Repl.Vol. 4, Supp. 1973).

The plaintiffs individually, and as representatives of a class of persons similarly situated, filed suit in the district court for damages against the defendants for the wrongful resale of repossessed motor vehicles. The trial court issued an order declaring that the suit proceed as a class action. From this order the defendants appeal. We reverse.

The issues presented are whether the plaintiffs have sustained their burden of proof to show the following elements: (1) common question of law; (2) common question of fact; (3) adequate representation by the plaintiff of the members of the alleged class; and (4) policy justifications for a class action suit.

Plaintiffs purchased new automobiles from the defendant Art Janpol and New Mexico Installment Contracts were assigned to the defendant, First National Bank. The bank repossessed the respective automobiles. In each case, the bank immediately mailed to the plaintiff a notification that unless other arrangements were made, the motor vehicle in question would be sold after five days. Pursuant to the bank’s right to compel the dealer to repurchase the collateral when a debtor would default on a new installment contract, the cars were transferred to Art Janpol. After about 20 days, each car was transferred to a new buyer.

The district court found that plaintiffs are members of a definable class of persons, that there are common questions of fact and law, that the claims of plaintiffs are representative of claims of other members of the class and that plaintiffs will adequately prosecute the action against defendants and protect the interests of the other members of the class, and that the action .is therefore a proper class action.

The defendants contest each of these findings and claim error in that the court did not make findings favorable to defendants on all of these points. This is a question of first impression in the appellate courts of New Mexico. The appeal involves § 21-1-1 (23) (a), N.M.S.A.1953 (Repl.Vol. 4), which reads in pertinent part as follows:

“Rule 23. Class actions.

“(a) Representation. If persons constituting a class are so numerous as to make it impracticable to bring them all before the court, such of them, one [1] or more, as will fairly insure the adequate representation of all may, on behalf of all, sue or be sued, when the character of the right sought to be enforced for or against the class is

“(3) several, and there is a common question of law or fact affecting the several rights and a common relief is sought.”

A class action suit does not exist just because it is so designated by the pleadings. Rather, the plaintiffs must prove that all the elements required to make the case a class action are present. Rossin v. Southern Union Gas Company, 472 F.2d 707 (10th Cir. 1973). Such elements necessarily include the presence of common questions of fact or law and adequate representation of the whole class. Section 21-1-1(23) (a), supra.

Questions of fact and law

The district court found that “there are common questions of fact and law, to-wit: The legal sufficiency and propriety of the notice of repossession and resale, the commercial reasonableness of the resale of the vehicles, and whether a public or private sale is appropriate.”

The defendants argue that these are not common questions of fact and law affecting the rights of the alleged class (“All persons who have had their motor vehicles repossessed by either Defendant and resold at a private sale, or sold without being given notice of either the time or the place of the sale, or without being given an opportunity to repurchase at the sale, or whose vehicles were resold without any notice, or were only given the ‘form’ notice by Defendant FIRST NATIONAL BANK IN ALBUQUERQUE, all during that period of time since December 21, 1967 to the date of the entry of this Order.”).

Defendants state that the one factual similarity, the use by the bank of five-day form notices, is not a common question of fact because the bank admits the form notice. The bank alleges that the controlling questions of reasonable notification and commercial reasonableness of resale of collateral are unsuited for treatment as a class action because there are material variations in each individual repossession and resale as to the circumstances under which notice to the debtor was sent and received, as to the actions taken by the debtors upon receiving the notice, as to the method, manner and terms of resale which may or may not call for the payment of any surplus to the debtor, and as to a multitude of defenses applicable to some members of the alleged class and not to others.

The plaintiffs argue that the bank’s failure to give proper notice of the disposition of repossessed automobiles and failure to account to plaintiffs for any surplus pertain to the question of law and fact common to the class.

We shall first discuss whether reasonable notification, as that term is used in the § 50A-9-504(3), N.M.S.A.1953 (Repl. Vol. 8, pt. 1) is a question suitable for a class action determination. Section 50A-1-204(2), N.M.S.A.1953 (Repl.Vol. 8, pt. 1) defines reasonable time as follows:

“What is a reasonable time for taking any action depends on the nature, purpose and circumstances of such action.”

It is our opinion that the uniform commercial code calls for a case by case determination of reasonable notification.

Referring to the two plaintiffs in this case, there is a question of fact as to notice. One plaintiff alleges that he received the bank’s notice late due to a holiday, after the mailing of the five-day notice, and the other plaintiff claims to have never received the notice at all. One can only imagine how many questions of fact there would be as to notice among the hundreds of purchasers whose automobiles may have been repossessed.

The uniform commercial code does not specify the number of days within which notice must be given to the purchaser. While the five-day notice might be applicable to purchasers within the city where the bank is located, it might be unreasonable as to purchasers living 200 miles away, even though within the state of New Mexico. What is reasonable to one purchaser, might not be reasonable to another. This issue requires a determination of fact by the jury or the court. The courts have consistently treated the uniform commercial code requirement of reasonable notification as a question of fact to be determined only after considering all the facts and circumstances of the individual case. Baber v. Williams Ford Co., 239 Ark. 1054, 396 S. W.2d 302 (1965); see Beneficial Finance Co. of Black Hawk County v. Reed, 212 N.W.2d 454 (Iowa 1973); Prairie Vista, Inc., v. Casella, 12 Ill.App.3d 34, 297 N.E. 2d 385 (1973); Tauber v. Johnson, 8 Ill.App.3d 789, 291 N.E.2d 180 (1972); United States v. Pirnie, 339 F.Supp. 702 (D. Neb.1972), affirmed 472 F.2d 712 (8th Cir. 1973).

We next consider the meaning of commercially reasonable within § 50A-9-504(3), supra, to require a factual determination in light of all the circumstances of any particular case. This phrase raises questions in regard to the variance in values of cars from time to time and in market conditions. Other elements which may be considered are preparation for resale, attorneys fees, expenses of retaking, holding and selling, and the method, manner, time and place of resale. Crosby v. Basin Motor Company, 83 N.M. 77, 488 P.2d 127 (Ct.App.1971) ; see Beneficial Finance Co. of Black Hawk County v. Reed, supra. Whether there should be a private or public sale is also not a common question of law or fact. We hold that these questions require factual determinations.

Now we go to plaintiffs’ argument that a failure to account for any surplus raises a question of law or fact common to the alleged class. The bank alleges that one of the named plaintiffs received an accounting from the bank of the proceeds of the sale. The same elements which raise an issue of fact with respect to commercial reasonableness apply here.

According to § 50A-9-504(2), N.M.S.A. 1953 (Repl.Vol. 8, pt. 1), the purchaser or debtors are entitled to an accounting only if there is a surplus after paying reasonable attorneys fees and reasonable expenses of retaking, holding, preparing for sale, selling the collateral and satisfying the indebtedness cured by the collateral paid. If there is no surplus, the debtor or the purchaser would be entitled to no accounting. All these elements require that there be a factual determination as to each potential purchaser on the facts of each individual case as to whether there is a surplus. Whiteman v. Degnan Chevrolet, Inc., 8 U.C.C.Rep. 262 (Pa.1970).

We hold that as to the entitlement of a purchaser to an accounting, there must be a factual determination as to each individual case.

Adequate representation of the class

Finally we consider whether in this case the plaintiffs could fairly insure the adequate representation of the alleged class. Our answer is in the negative. The prerequisite to maintenance in a class action under § 21-1-1 (23) (a), supra, requires the plaintiffs to make an affirmative showing that they would assure adequate representation of all the members constituting the class. The uniform commercial code section applicable to repossession of an automobile gives a right to the bank to counterclaim. Charley v. Rico Motor Co., 82 N.M. 290, 480 P.2d 404 (Ct.App.1971). The form of these counterclaims will vary according to the individual purchaser within the alleged class. Therefore, we hold that there is no common approach by which the plaintiffs could adequately represent all the members of the class, since there is no way of knowing what the possible counterclaims would require by way of any defenses.

We hold that there are uncommon questions of law and fact and that the plaintiffs cannot adequately represent all the members of the alleged class. We think that to allow this suit to proceed as a class action would be unjust to the other members of the alleged class and would deny them their day in court. Covert v. Nashville, Chattanooga & St. Louis Railway Co., 186 Term. 142, 208 S.W.2d 1008, 1 A.L.R.2d 154 (1948).

This cause is reversed with instructions to the district court to enter the case as consolidated and not as a class action.

It is so ordered.

HERNANDEZ, J., concurs. SUTIN, J., dissents.