Marine Midland Bank v. Russo Produce Co., 50 N.Y.2d 31 (1980)
When a secured party sells collateral after default, the sale’s commercial reasonableness, including the price obtained, is a question of fact for the jury, and an appellate court cannot substitute its factual findings for a jury verdict supported by sufficient evidence.
Summary
Marine Midland Bank sold stock held as collateral after Russo Produce Co. defaulted, and Russo claimed the sale was improper because the price was too low. Russo presented evidence at trial suggesting the corporation’s primary asset, an oil tanker, was worth significantly more than the sale price. The jury found in favor of Russo, but the trial court set aside the verdict as against the weight of the evidence and ordered a new trial. The Appellate Division went further, entering judgment for the bank. The Court of Appeals reversed, holding that because there was sufficient evidence to support the jury’s verdict, the Appellate Division erred in substituting its own factual findings and entering judgment for the bank; its power was limited to ordering a new trial.
Facts
Russo Produce Co. defaulted on a loan from Marine Midland Bank, for which it had pledged stock as collateral.
The bank subsequently sold the stock in a private sale.
Russo challenged the sale, arguing that the sale price was unreasonably low, violating section 9-504 of the Uniform Commercial Code.
At trial, Russo presented evidence suggesting the corporation’s sole asset, an oil tanker, was worth at least $1,650,000 at the time of the sale, significantly more than the price obtained by the bank.
Procedural History
The trial court initially entered a verdict for Russo.
The trial court then set aside the jury verdict as against the weight of the evidence and ordered a new trial.
The Appellate Division reversed the trial court’s order for a new trial and entered judgment for Marine Midland Bank, dismissing Russo’s complaint.
Russo appealed to the New York Court of Appeals.
Issue(s)
Whether the Appellate Division erred in entering judgment for the defendant (Marine Midland Bank) after the trial court ordered a new trial, when there was sufficient evidence presented at trial to support the jury’s verdict.
Holding
Yes, because the Appellate Division improperly substituted its factual findings for those of the jury when sufficient evidence supported the jury’s verdict; the Appellate Division’s authority was limited to ordering a new trial in such circumstances.
Court’s Reasoning
The Court of Appeals emphasized the role of the jury as the fact-finder. The court noted that the Appellate Division exceeded its authority by making new factual findings and substituting them for the jury’s verdict. The court cited Cohen v. Hallmark Cards, 45 NY2d 493, 498, stating that the Appellate Division only had the power to order a new trial “unless there was insufficient evidence to support the verdict.” Because Russo presented sufficient evidence regarding the oil tanker’s value from which the jury could have inferred that the sale price was unreasonably low, the Appellate Division’s entry of judgment for the bank was deemed erroneous. The court implicitly reinforced the importance of UCC 9-504 regarding commercially reasonable sales of collateral, stating the core question was one of fact for the jury to decide. The decision underscores that the determination of commercial reasonableness is intensely fact-dependent, and appellate courts should defer to jury findings when supported by evidence, even if the appellate court might have reached a different conclusion on the same facts.