Supreme Court of Iowa. Lawrence L. Robert G. Allbee , Wade R. West Des Moines State Bank financed a boat wholesaler called Ralph's Distributing Company Ralph's and took a real estate mortgage as part of its security. The bank obtained a decree of foreclosure, and Ralph's appealed.
We affirm. This is a companion opinion to Engstrand v. The facts leading up to the bank's foreclosure are set out in that opinion and need not be repeated in detail here. The defendant challenges the decree on three grounds: 1 the bank was not entitled to foreclose because the defendant was not in default, 2 the bank did not dispose of the defendant 's collateral in a commercially reasonable manner under Iowa Code section The defendant contends that the bank did not establish that it was in default.
The loan agreement defined the circumstances that would be considered by the bank to be acts of default. Under the loan agreement, default on any of the notes by any of the principals, including Ralph's or its associated corporations, would be considered to be a default on the loan agreement and would entitle the bank to foreclose its mortgage. We agree that the loan was in default for foreclosure purposes.
We have held that a failure to dispose of collateral in a commercially reasonable manner may deprive the secured party of a deficiency judgment. See Barnhouse v. Hawkeye State Bank , N. Steinbronn , N.
Gray , N. Ralph's contends that the liquidation was not commercially reasonable because the amount paid by the bank as expenses of liquidation were grossly excessive. There would be no remaining debt to be secured by the mortgage, therefore, and the bank would have no right to foreclose the mortgage, according to its argument.
