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IN THE TERRITORIAL COURT OF THE VIRGIN ISLANDS



DIVISION OF ST. CROIX



THE BANK OF NOVA SCOTIA

ISLAND CENTER BRANCH,

Plaintiff, S.C. 322/1990

vs. ACTION FOR DEBT

WAYNE R. PETRUS,



Defendant.



et Set Soe Smee me Semel Saget Se Set ae



THE BANK OF NOVA SCOTIA, by

TERENCIA MADURO, Pro Se

Island Center



Christiansted, St. Croix 00820

(809) 778-5350



WAYNE R. PETRUS, Pro Se



71 Sion Farm



Christiansted, St. Croix

U.S. Virgin Islands 00820



MEMORANDUM OPINION



(December |2-, 1990)

In this small claims action, The Bank of Nova Scotia seeks

a deficiency judgment against the defendant, Wayne R. Petrus,

following the repossession and sale of a pickup truck, the

collateral for a loan. The defendant claims that the bank

initially refused an offer of voluntary surrender of the truck

and then delayed unduly before finally repossessing and selling

it. For the reasons which follow, the Court reluctantly awards



judgment to the plaintiff.



FACTS

In December, 1986, The Bank of Nova Scotia loaned Petrus



$10,535.00 to purchase a vehicle. Petrus gave the bank a

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Memorandum Opinion



The Bank of Nova Scotia v. Wayne Petrus

S.C. No. 322/1990



Page 2



chattel mortgage for a 1986 Isuzu pickup truck. [In June, 1989,

the bank sent a notice of default to Petrus. In October, 1989,

the defendant advised the bank that he could not continue to pay

the monthly loan installments and offered to surrender the

vehicle to the bank. At that point, the balance on the note was

$5,273.00. The bank officer declined to accept the surrender

and suggested that Petrus try to sell the vehicle himself. By

January, 1990, the defendant still had not been able to sell the

truck. He returned to the bank, made a partial payment on the

delinquency and told the loan officer to repossess the collat-

eral. The bank did not do so until April, 1990, when it sold

the vehicle for $4,750.00, leaving a deficiency of $249.07, for



which it now seeks judgment.



DISCUSSION



Generally, a secured party is under no duty to resell or

take possession of its collateral upon a default. USX Credit

Corp. v. Lichterman, 876 F.2d 1283, 1287 (7th Cir. 1989). See



also, U.C.C., § 9-504(1) (creditor's options after debtor



defaults) and § 9-502(1) (no duty to resell after default,

unless debtor has paid at least 60% of loan). However, the

doctrine of commercial reasonableness requires a secured party

in possession of the collateral to dispose of the goods with



reasonable promptness. Id. The Uniform Commercial Code does

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Memorandum Opinion



The Bank of Nova Scotia v. Wayne Petrus

S.C. No. 322/1990



Page 3



not impose a time limit on the disposition of the collateral.

U.C.C. § 9-504; Fletcher v. Cobuzzi, 499 F.Supp. 694 (W.D.Pa.

1980). The trier of fact determines whether the length of time

the secured party takes to resell the collateral is reasonable.

Swanson v. May, 697 F.2d 1013, 1016 (Wash.App. 1985). See also,

Armstrong Ford, Inc. v. Government of the Virgin Islands, 21

V.I. 212, 219-20 (Terr.Ct. 1984).



When the debtor challenges the reasonableness of the sale,

the burden of proof is on the holder of the security interest.

U.C.C. §§ 9-504(3), 9-507(2) (1981). Some jurisdictions

maintain that when a creditor takes possession of the collateral

after default and does not take any action to resell it, the

creditor is barred from recovering on the debt from the debtor.

U.c.C. § 9-504 (1981), see also, Bradford v. Lindsey Chevrolet

Co., 161 S.E.2d 904 (Ct.App.Ga. 1968), and Cox Motor Car Co. v.

Castle, 402 S.W.2d 429 (Ct.App.Ky. 1966). A secured party is

permitted a reasonable length of time to hold collateral before

it is deemed to a have exercised its right to retain that

collateral as satisfaction of the obligation. Swanson at 1016.

Undue delay by the secured party after repossession affects the

claim for deficiency. Armstrong Ford, Inc. v. Government of the

Virgin Islands, 21 V.I. 212, 219-20 (Terr.Cct. 1984), and Nelson

v. Armstrong, 582 P.2d 1100, 1107 (Idaho 1978). If the resale



is commercially unreasonable, the creditor is barred from

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Memorandum Opinion



The Bank of Nova Scotia v. Wayne Petrus



S.C.



No.



322/1990



Page 4



obtaining a deficiency judgment against the debtor.



Savoy_v.



Beneficial Consumer Discount Co., 468 A.2d 465, 467 (Pa. 1983).



The plaintiff was under no legal duty to repossess the



pick-up truck, but it was required to promptly dispose of the



collateral after repossession.



The plaintiff sold the pickup



truck for $4,750.00 twenty days after repossession.



The bank



acted promptly,



and the resale amount was reasonable.



The



written agreement between the parties holds the defendant



responsible for any outstanding balance after the resale of the



collateral.



Therefore,



the



plaintiff



is



entitled to



a



deficiency judgment.



BA



{



Gkorge S. ‘Eltman, Judge