## Facts

- Greg Sagmiller bought a 1999 Ford Ranger pickup in November 1998 under a retail installment contract financed by Ford Motor Credit Company (FMCC), which held a security interest in the vehicle.
- Sagmiller died on April 12, 1999.
- FMCC repossessed the pickup on April 22, 1999, and mailed a notice of repossession and right to redeem to Sagmiller’s last known address on April 23, 1999.
- On May 12, 1999, FMCC sold the pickup at a dealers-only auto auction for $15,500 and applied the proceeds to an outstanding balance of about $18,506.70.
- FMCC sought allowance of a deficiency claim in the estate; the personal representative denied the claim.
- In district court, FMCC presented testimony that it regularly used the auction to sell repossessed vehicles, that it lacked a retail dealer’s license, and that the sale price was fair based on the employee’s valuation experience.
- The district court denied the deficiency claim, finding the disposition commercially unreasonable in method (dealers-only auction instead of retail consignment) and price (compared to an internal wholesale value figure).

## Issues

1. Whether the secured creditor proved that “every aspect” of the disposition of collateral after default—including method and price—was commercially reasonable under N.D.C.C. § 41-09-50(3) (U.C.C. § 9-504(3)).
2. If the disposition was commercially reasonable, whether the secured creditor was entitled to allowance of a deficiency claim against the decedent’s estate.

## Decision

- The North Dakota Supreme Court reversed the order denying FMCC’s claim and remanded with directions to allow the deficiency claim.
- The court held the district court clearly erred in finding the sale commercially unreasonable.
- A private disposition through a dealers-only auction was not commercially unreasonable merely because a retail sale might have produced a higher price.
- The district court’s reliance on speculation about alternative sales methods and on an internal valuation figure, without supporting market evidence, did not defeat FMCC’s proof of reasonableness.

## Legal Principles

- A secured party seeking a deficiency bears the burden to prove the collateral was disposed of in a commercially reasonable manner, considering method, manner, time, place, and terms.
- Article 9 permits public or private dispositions; a private auction channel can be commercially reasonable when consistent with customary practice.
- Price disparity alone does not establish commercial unreasonableness; courts assess the totality of circumstances rather than hypothetical alternatives.
- Findings on commercial reasonableness are reviewed for clear error; a trial court may not substitute conjecture for record evidence about market practice and feasibility.

## Conclusion

The court held that FMCC’s post-default sale of the repossessed vehicle at a dealers-only auction, following notice and supported by evidence of customary practice and fair pricing in that market, satisfied the commercial reasonableness requirement; FMCC therefore could recover the deficiency from the estate.


In re Estate of Sagmiller, 615 N.W.2d 567 (N.D. 2000)