Reeves v. Foutz & Tanner, Inc.
New Mexico Supreme Court
617 P.2d 149 (1980)
Reeves and Begay (plaintiffs), Navajo tribal members with limited English, separately pawned jewelry with Foutz & Tanner (FT) (defendant) for loans well below the jewelry's value. When they defaulted after 30 days, FT claimed it sent notice of its intent to keep the jewelry to satisfy the debt (Reeves disputed receiving notice), and after no objection, FT put the jewelry into its inventory and sold it in the ordinary course of business without accounting for any surplus to the plaintiffs. The plaintiffs won at trial; the cases were consolidated on appeal, the appellate court reversed, and the plaintiffs appealed further.
Whether a secured party who has notified a defaulting debtor of its intent to keep collateral in satisfaction of the debt may then instead sell the collateral in the ordinary course of business.