In re Estate of Sagmiller

In November 1998, Greg Sagmiller purchased a pickup truck from a dealership. Ford Motor Credit Company (Ford) (plaintiff) financed the sale, lending Sagmiller approximately $19,000 in exchange for a security interest in the truck. Sagmiller died in April 1999, and Ford repossessed the truck later that month. Ford sold the truck at the Minneapolis Auto Auction, a private dealers-only auction, for $15,500. At the time of the auction, Ford’s records showed that the wholesale value of the truck was over $22,000. Because the auction price of the truck was less than the outstanding balance on Sagmiller’s loan, Ford petitioned Sagmiller’s estate (the estate) (defendant) to allow its claim. The estate denied the claim. Ford filed a petition in North Dakota district court, seeking to bring its claim against the estate. At the hearing, a Ford employee testified that Ford regularly sold its repossessed vehicles at the Minneapolis Auto Auction. The employee also testified that he had been involved with valuing hundreds of vehicles and that, based on his experience, he believed $15,500 was a fair price for Sagmiller’s truck. The employee explained that Ford did not have a retail license to sell repossessed vehicles on its own, and that a dealership was unlikely to allow Ford to sell its vehicles at the dealership. The district court disregarded the employee’s testimony, believing instead that Ford could have gotten a better price for the truck had it sold the truck in a retail sale instead of at an auction. The district court ultimately determined that Ford had not sold the truck in a commercially reasonable manner and denied Ford’s claim against the estate. Ford appealed.