Chrysler Credit Corp. v. Friendly Ford, Inc., 9740

Decision Date10 February 1976
Docket NumberNo. 9740,9740
Citation535 S.W.2d 110
Parties19 UCC Rep.Serv. 849 CHRYSLER CREDIT CORPORATION, Plaintiff-Respondent, v. FRIENDLY FORD, INC., Defendant-Appellant.
CourtMissouri Court of Appeals

David W. Bernhardt, Thomas J. O'Neal, Bussell, Hough, Bernhardt, Leighton & O'Neal, Springfield, for plaintiff-respondent.

John R. Lewis, Bruce K. Kirby, Kirby, Lewis & Cohick, Springfield, for defendant-appellant.


BILLINGS, Chief Judge.

Respondent Chrysler Credit Corporation had judgment in this court-tried case against appellant Friendly Ford, Inc. for the balance due on a retail installment contract. The contract had been assigned by Friendly Ford to Chrysler Credit with full recourse, and Friendly Ford had unconditionally guaranteed payment of any unpaid indebtedness under the contract. The lower court also allowed Chrysler Credit attorney fees as provided by the contract and ruled in its favor on Friendly Ford's counterclaim for damages. We affirm.

Chrysler Credit maintained a branch office in Springfield, and Friendly Ford sold automobiles and trucks in that city. For some time prior to the sale giving rise to the subject installment contract, Chrysler Credit had financed installment sales by Friendly Ford.

Friendly Ford sold a 1968 Ford diesel tractor to William Richardson under a retail installment contract dated March 29, 1968. The contract was assigned to Chrysler Credit by Friendly Ford on the same date. A policy of insurance covering the vehicle against physical damage had been issued the previous day, March 28, 1968. Richardson was the named insured, and Chrysler Credit was shown as lien holder and loss payee. The policy was for the period of March 28, 1968, to March 28, 1969, and both Chrysler Credit and Friendly Ford were notified of the insurance coverage. The certificate of insurance was subsequently forwarded to Chrysler Credit by the insurance company.

On April 9, 1969, Chrysler Credit received an endorsement of a policy issued by a second insurance company insuring the vehicle against loss or casualty. Richardson was described as owner of the tractor, and Chrysler Credit was shown as the loss payee. This second policy was for the period of July 1, 1968 to July 1, 1969. Friendly Ford was not notified of the issuance of the second policy.

On December 17, 1969, Richardson executed an extension agreement to Chrysler Credit whereby, for an additional charge, his monthly payments due under the contract were postponed until March, 1970. This transaction was approved by Friendly Ford.

The Ford tractor, uninsured, was damaged beyond repair in June, 1970. Richardson was then current in his monthly payments but thereafter discontinued payments. Chrysler Credit notified Friendly Ford of Richardson's nonpayment and demanded payment of the balance owing under the contract. Friendly Ford obtained possession of the damaged tractor and by consent of the parties to this suit sold it for salvage; the amount received was applied on the indebtedness. Friendly Ford refused to pay the balance of the contract, and this suit followed.

The installment contract provided Richardson was to insure the vehicle against loss or damage during the life of the contract. In paragraph 3 of the 'Additional Terms and Conditions' of the contract, the failure of Richardson to procure or maintain the requisite insurance was one of several enumerated occurrences that constituted a default under the contract and authorized foreclosure. In addition, paragraph 7 provided:

'Buyer agrees to keep the mortgaged property insured at his own expense against substantial risk of damage, destruction, or loss for so long as any amount remains unpaid on the contract, with loss payable to the Seller as its interest may appear and that he will deliver all such insurance policies upon receipt of same to Chrysler Credit Corporation. . . . Seller may, but shall not be required to, and without prejudice to Seller's rights under this mortgage if it does not, procure such vehicle insurance protecting: (a) interest of Buyer and Seller or (b) interest of Seller only, if Buyer fails to procure or maintain such vehicle insurance or fails to furnish satisfactory evidence thereof upon request. . . .' (emphasis added)

The assignment portion of the contract provided in part as follows: 'For value received, the undersigned does hereby sell, assign and transfer to Chrysler Credit Corporation (hereinafter called 'Chrysler') his, its or their entire right, title and interest in and to the within contract and the property covered thereby, and authorizes Chrysler to do every act and thing necessary to collect and discharge obligations arising out of or incident to said contract and assignment. . . . In addition, this assignment is subject to the provisions set out below in the paragraph initialed by undersigned. Liability of undersigned arising out of or incident to this assignment shall not be affected by any indulgence, compromise, settlement, extension, or variation, of terms of the within contract effected with or by the discharge or release of the obligation of Buyer or any other person interested, by operation of law or otherwise. Undersigned waives notice of acceptance of this assignment and notices of non-payment and non-performance of this contract.' (emphasis added)

Immediately following the foregoing was the form of recourse agreed to by the parties and it is here set forth:

'FULL RECOURSE: The undersigned unconditionally guarantees payment of the full amount remaining unpaid under said contract, and agrees to purchase said contract from Chrysler, upon demand, for the full amount then unpaid whether said contract shall then be, or not be, in default.'

By way of defense and in support of its counterclaim for expenses, Friendly Ford set forth the first sentence of paragraph 7, supra, and then alleged: 'That from the date of the alleged assignment by defendant to plaintiff, William D. Richardson, the person obligated on the contract alleged to have been assigned, did have a policy of insurance protecting the lien holder against property damage and did apparently maintain said policy of insurance for a period of time after the date of the alleged assignment; that, thereafter, the policy of insurance insuring the property on which the indebtedness is owed to be lapsed and was not renewed by the owner of the property or the plaintiff lien holder to where on the date of the loss of the property there was no insurance existing on the property covered by the Retail Installment Contract alleged to have been assigned by Defendant to Plaintiff; that because of Plaintiff's failure to maintain the contract in question between itself as the lien holder and as the alleged assignee of said contract, Plaintiff should be estopped from recovering any damage in any amount of money from the defendant under the terms of its Petition.'

At trial Chrysler Credit submitted its case on stipulations and exhibits including the Richardson retail installment contract, and Friendly Ford offered testimony only on the issue of its claimed defense of estoppel. The trial court made and entered findings of fact and conclusions of law and rendered judgment in favor of Chrysler Credit on its claim and against Friendly Ford on its counterclaim.

Three elements must be clearly established by a party seeking to assert an equitable estoppel: (1) an admission, statement or act inconsistent with a claim afterwards asserted or sued upon; (2) action by the other party in reliance on such admission, statement or act; and, (3) injury to such other party if the first party is allowed to contradict or repudiate such admission, statement or act. Peerless Supply Co. v. Industrial Plumbing and Heating Co., 460 S.W.2d 651 (Mo.1970); Owens v. Estate of Saville, 409 S.W.2d 660 (Mo.1966); Rodgers v. Seidlitz Paint and Varnish Co., 404 S.W.2d 191 (Mo.1966); 31 C.J.S. Estoppel § 67 (1964).

Silence or inaction may be sufficient conduct to estop a party from asserting an inconsistent claim. However, '(T)he rule is equally clear that mere innocent silence or inaction will not work an estoppel. . . . there must be a right and an opportunity to speak and, in addition, an obligation or duty to do so.' 28 Am.Jur.2d Estoppel & Waiver § 53 at 667--68 (1966). And, the estopped party's silence or inaction must be the result of culpable negligence or 'done with the intention, or, at least, with the expectation that it will be acted upon by the other party, or under such circumstances that it is both natural and probable that it will be so acted upon.' Mills v. Taylor, 270 S.W.2d 724, 729 (Mo.1954); Rodgers v. Seidlitz Paint & Varnish Co., 404 S.W.2d 191, 195--96 (Mo.1956); 31 C.J.S. Estoppel §§ 59, 69, 87, 102 (1964); 28 Am.Jur.2d Estoppel & Waiver §§ 41, 53, 61 (1966).

Each of the elements of estoppel was considered by the trial judge who concluded the contract placed no duty on Chrysler Credit to insure the vehicle and there was no estoppel. We agree.

The retail installment contract gave Friendly Ford, or its assignee, the authority to procure insurance at Richardson's expense 'if Buyer fails to procure or maintain such vehicle insurance or fails to furnish satisfactory evidence thereof upon request.' However, the duty to maintain insurance remained on Richardson, and the contract specifically provides Friendly Ford or its assignee 'shall not be required to' exercise its power to acquire insurance if Richardson failed to do so. The option to acquire insurance was assigned to Chrysler Credit, together with the rest of Friendly Ford's rights under the contract.

In its assignment Friendly Ford expressly agreed its liability to Chrysler Credit, 'arising out of or incident to (the) assignment shall not be affected by any indulgence, compromise, settlement, extension, or...

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