In the Matter of Earl L. Carter, D/B/A Highland Farms, Bankrupt. Wells Fargo Bank v. Earl L. Carter, D/B/A Highland Farms, Debtor-Appellee

This is an appeal from a district court order affirming the decision of a referee in bankruptcy denying Wells Fargo’s claim for a deficiency owed on a tomato harvester.- We affirm.

The debtor, Earl L. Carter, had purchased the harvester under an equipment sale contract and security agreement which covered a secured balance of $8,000. The seller assigned the contract to Wells Fargo. Carter failed to make the first payment due under the contract and subsequently filed a petition for an arrangement pursuant to Chapter XI. Wells Fargo filed a claim which included the $8,000 balance owed by Carter, and the bankruptcy judge approved a stipulation allowing repossession.

Shortly thereafter, the bank sent notice of foreclosure sale by certified mail, return receipt requested, to Carter at his residence. The notice was returned unclaimed before the sale. Wells Fargo made no further attempt to notify the debtor, although its officers knew his whereabouts and had business dealings with him through a branch office.

The harvester was sold for $2,250 and Wells Fargo claimed a deficiency for the $5,750 balance. Carter objected on the ground that he had not been notified of the…