Brooks v. Auto Wholesalers, 1393.

• Decision Date: 04 December 1953
• Docket Number: No. 1393.,1393.
• Citation: 101 A.2d 255
• Parties: BROOKS v. AUTO WHOLESALERS, Inc. et al.
• Court: D.C. Court of Appeals

101 A.2d 255

BROOKS v. AUTO WHOLESALERS, Inc. et al.

No. 1393.

Municipal Court of Appeals for the District of Columbia.

Argued October 26, 1953.

Decided December 4, 1953.

Frederick A. Ballard, Washington, D. C., Dyer J. Taylor, Washington, D. C., on the brief, for appellant.

William R. Lichtenberg, Washington, D. C., Joseph Luria, Washington, D. C., and William Bogen, Washington, D. C., on the brief, for appellees.

Before CAYTON, Chief Judge, and HOOD and QUINN, Associate Judges.

CAYTON, Chief Judge.

Auto Wholesalers sold a used automobile to Brooks, and took from him a conditional sale agreement and a promissory note covering the deferred purchase price. These instruments were negotiated to Consolidated Auto Investment Corp. Thereafter Brooks sued Auto Wholesalers and Consolidated to have both instruments declared void and for the return of the money he had paid in the transaction. He also demanded reimbursement for monies he had spent in repairing the automobile. He charged fraud, breach of warranty, and usury. The trial court found against him on all issues and awarded judgment against him in favor of Consolidated for the balance claimed on the note.

We first consider Brooks' claim of fraud. The gist of his testimony was that he had been induced to make the purchase by a salesman's oral promise, made with no intention of fulfillment, that if he was not satisfied he could return the car within 90 clays and receive his money back. No such provision was in the written contract and the salesman denied making such a promise. The trial judge specifically found as a fact that no fraudulent representations had been made. This finding was supported by substantial evidence and is not subject to reversal.

Appellant also asserts that the salesman stated the car was in good running condition, when in fact he had no personal knowledge of its running condition, but based his statement on the general appearance of the car and the fact that it bore a yellow tag indicating that it had been through the shop for repair. This, we are told, amounts to an actionable misrepresentation, because made without knowledge of its truth or falsity. But the evidence does not show it to have been false. There was evidence that repairs were required soon after the car was purchased, but there was nothing to establish that such repairs were made necessary by defects existing at the time of sale. "The testimony of appellant's own expert was that the troubles were such as might develop suddenly and without previous warning.

Appellant's next point is that the written warranty provided that the car would remain in good running condition for 90 days, that it did not remain in good running condition, and that, therefore, he had the right to rescind. But it is plain that the agreement only warranted that the seller would, in the event the car failed to remain in good running condition, repair it at a cost 25% below the normal charge for such service. There was no proof that such warranty was breached.

More serious, and more difficult as well, is appellant's charge of usury. The cash price of the automobile was $895, of which appellant paid $300 down, leaving a balance of $595. He was required to purchase insurance, for which the premium was $91.73. Finance charges were $276.27, leaving a total time balance of $963.

Appellant contends that the insurance premium must be regarded as an exaction of interest because the policy was improperly countersigned. But the trial court found, on sufficient evidence, that the premium had been paid over to the insurance company and accepted by it, that the policy was binding and the insurance legally effective. We agree that since appellant had the benefit of insurance protection, he cannot be heard to say that the premium was really an interest charge.

This brings us to the critical issue in the case: What was the legal status of the remaining difference? Was it a legitimate finance charge or was it usury? We have twice in recent years had occasion to announce and apply the generally accepted rule that a sale of personalty at a time price, under a conditional sale contract providing for payment for insurance, financing and other related services for the privilege of buying on time instead of by cash, does not violate our usury statute.¹

Appellant does not challenge the correctness of those decisions but stresses the argument that he as purchaser was given no real choice between a cash price and a time price. We think, however, that this argument must fail in view of the specific finding of fact made by the trial judge "that the finance charge was included in the total contract price * * * and that the sale was at a time price for the privilege of buying on time rather than by cash. The charge was not included as payment for a loan or the forbearance of a debt, but was a part of the purchase price of the automobile which the plaintiff agreed to pay." The evidence supported this finding and we cannot override it

The finding of fact just quoted also makes it unavailing for us to consider another contention of appellant: that the contract was in violation of law because both the dealer and the finance company were in the business of lending money at more than six per cent without first procuring a license under the "Loan Shark Law." Code 1951, § 26-601 et seq. Since we must refrain from overruling the finding that there was no loan of money, we would have no right to apply the sanctions of the Loan Shark Law.

Appellant relies heavily on, and asks us to follow, a recent decision of the Supreme Court of Arkansas. Hare v. General Contract Purchase Corp., 1952, 220 Ark....