Crest Investment Trust, Inc. v. Alatzas

McWilliams, J., delivered the opinion of the Court. When Greek meets Greek, then comes the tug of war. 1 Triffona George Alatzas met Peter Angelides and sold him a restaurant, whence comes this tug of war. A year or so later (June 1968) Angelides 2 borrowed $18,333 from the appellant (Crest). When Angelides defaulted Alatzas foreclosed his lien.

Crest says no notice of the foreclosure was “sent” to it. Thus is presented for our ⁵⁷³ consideration, for the first time it seems, the nature of the “reasonable notification” required by Code (1964 Repl. Vol.), Art. 95B, § 9-504 (3), the Uniform Commercial Code. As we shall see, the parties are not in complete agreement in respect of what happened.

In early 1967 Alatzas occupied as lessee a building in east Baltimore in which he had a restaurant-cum-bar. In March he sold it to Angelides for $33,000, $16,000 of which was evidenced by a note secured by a recorded financing statement. He assigned the lease to Angelides but, of course, his own liability to the lessor was not thereby diminished. The financing statement evidencing Crest’s loan was recorded on 21 June 1968.

Whether Crest, at the time, was aware of Alatzas’s lien is not altogether clear. One of its former attorneys, however, said he knew of the Alatzas lien prior to the foreclosure sale. Although Alatzas had sold him “a good business, a very good business,” Angelides fell behind in his payments to Alatzas and in mid-1969 he closed his doors. The public foreclosure sale was scheduled for 28 October.

The auctioneer (Billig) caused the advertisement of sale to appear in the Baltimore Sun on the two Sundays before the sale and on the day of the sale. Alatzas concedes a written notice was not sent to Crest. Despite credible evidence to the contrary Crest insists its only notice of the sale was received during a telephone conversation between Dennis Psoras, then of counsel for Alatzas, and Irving Bowers, of counsel for Crest, around 4:00 p.m. on the day before the sale. Bowers said he and Sidney Kaplan, also of counsel for Crest, tried, without success, to inform Crest’s management of the impending sale and that as a result Crest was not represented at the sale.

Bowers admitted talking to Angelides several times in September and October but, he said, Angelides never mentioned- the imminence of the sale, nor had he (Bowers) seen the advertisement of the sale. Billig, the auctioneer, testified that about five days before the sale ⁵⁷⁴ “ [w] e were notified by phone that Crest had an interest in the sale .and we referred them to Mr. Psoras. Now who called us from Crest and in what capacity I don’t know.” Psoras testified he first became aware of Crest’s interest a week or ten days before the sale when Billig telephoned him. He said Bowers also called him around that time and that they discussed the situation.

Psoras said he asked Bowers if he planned to attend the sale, to which Bowers replied he might after he had investigated the status of Alatzas’s lien. Stanley Radcliffe, Psoras’s associate, said Bowers told him of his conversation with Psoras and that he (Bowers) admitted knowing when and where the sale was to take place. Bowers, of course, denied all of this. Forty or more persons attended the sale.

The bidding began at $10,000; Alatzas, at $13,000, was the highest bidder. The amount due him was $11,274.01; the expenses were $3,805; the deficiency amounted to $2,079.01. Crest does not claim the sale was not “commercially reasonable” as required by § 9-507 (2) or that the collateral was not disposed of in the “good faith” required by § 1-203. The balance due it at the time, including attorney’s fees of 15%, was $9,376.27.

Alatzas refurbished the place and operated the business, successfully it seems, until July 1970 when he sold it, this time for $22,000. It is this fact which seems to have exacerbated Crest’s discontent. Its suit for damages, filed in March 1970, came on for trial before Cardin, J., without a jury, on 11 May 1971. Judge Cardin thought the weight of the evidence was in favor of Alatzas and he found as a fact that Crest “did have actual notice of the sale.” He went on to say, “Even by giving * * * [Crest] the benefit of the doubt that * * * [it] did not see the notice in the paper, or that neither Mr. Psoras [n]or Mr. Billig informed * * * [it] of the sale, * * * [it] admits knowing of the sale on the day be ⁵⁷⁵ fore the auction and from * * * its actions * * * [he found that Crest] had ‘knowledge of facts and circumstances sufficiently pertinent in character to enable reasonably prudent persons to investigate and ascertain as to the ultimate facts * * V [Citing 66 C.J.S., Notice, Sec. 5.]” Judge Cardin was also of the opinion that there had been substantial compliance with § 9-504(3).

The pertinent part of § 9-504(3) follows: “* * * Unless collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market reasonable notification of the time and place of any public sale or reasonable notification of the time after which any private sale or other intended disposition is to be made