Commonwealth Co. v. Fauver
| Decision Date | 19 February 1960 |
| Docket Number | No. 34698,34698 |
| Citation | 101 N.W.2d 150,169 Neb. 795 |
| Parties | COMMONWEALTH COMPANY, a corporation, Appellee, v. Robert D. FAUVER, Appellant. |
| Court | Nebraska Supreme Court |
Syllabus by the Court
1. An automobile dealer may in good faith sell a car on time for a price in excess of the cash price without tainting the transaction with usury, though the difference in prices may exceed lawful interest for a loan.
2. In order to have the foregoing principle apply it must appear that the buyer actually was informed of and had the opportunity to choose between a time sale price and a cash sale price.
3. In an action in equity where the evidence on material questions of fact is in irreconcilable conflict, this court will, in determining the weight of evidence, consider the fact that the trial court observed the witnesses and their manner of testifying, and must have accepted one version of the facts rather than the opposite.
Nelson, Harding & Acklie, Lincoln, for appellant.
Ginsburg, Rosenberg & Ginsburg, Norman Krivosha, Lincoln, for appellee.
Heard before CARTER, MESSMORE, YEAGER, CHAPPELL, WENKE, and BOSLAUGH, JJ.
This is an appeal from the district court for Lancaster County in an action brought by The Commonwealth Company, a Nebraska corporation, to foreclose a chattel mortgage on a 1957 Ford Tudor automobile owned by the defendant, Robert D. Fauver, and to hold said defendant personally liable for any deficiency owing on his debt to plaintiff, for which the chattel mortgage on the automobile was given as security, after the net proceeds from the sale of the car are applied thereon. The debt is evidenced by a negotiable promissory note in the principal amount of $2,777.25 which is payable in 36 installments. Defendant filed an answer and cross-petition in which he alleged the negotiable promissory note set out in plaintiff's petition was a loan made by plaintiff to finance the balance defendant owed on the 1957 Ford Tudor, which he had purchased from N. E. Copple, and, since the terms of said note violated the laws of Nebraska relating to loans by industrial loan and investment companies, it was void and uncollectible. Trial was had and the trial court found for plaintiff and rendered judgment accordingly. Defendant then filed a motion for new trial and has perfected this appeal from the overruling thereof.
Appellee was, at all times herein material, chartered and licensed to do business in this state as an industrial loan and investment company under the provisions of Chapter 8, article 4, R.R.S.1943, and had its principal place of business located in Lincoln, Nebraska. Consequently, if the indebtedness here sought to be enforced was in fact a loan, it was subject to the limitations and restrictions of the act relating thereto and, if in violation thereof, is void and uncollectible. See Section 8-432, R.R.S.1943. On the other hand if the note was given to pay the amount owing on a bona fide time sale then the limitation and restriction of the act would have no application thereto. The question then, as put by the appellant, is, was the purchase of the automobile by the defendant Robert D. Fauver a bona fide time sale transaction or was it on a cash basis and a loan made to pay the balance thereof?
This court has frequently stated that in cases of this type it is not bound by the form of the transaction but will look through the form thereof to the real substance. State ex rel. Spillman v. Central Purchasing Co., 118 Neb. 383, 225 N.W. 46; State ex rel. Beck v. Associates Discount Corp., 162 Neb. 683, 77 N.W.2d 215; McNish v. General Credit Corp., 164 Neb. 526, 83 N.W.2d 1. However, there is no presumption against the validity of such a contract merely because it arises out of the sale of an automobile. State ex rel. Beck v. Associates Discount Corp., 168 Neb. 298, 96 N.W.2d 55. The burden of proof to show the nature of the transaction is on the appellant, since he claims it was a loan. McNish v. General Credit Corp., supra. The action being one in equity we will consider the record de novo.
We recently restated in Robb v. Central Credit Corp., 169 Neb. 505, 100 N.W.2d 57, 58, that: 'An automobile dealer may in good faith sell a car on time for a price in excess of the cash price without tainting the transaction with usury, though the difference in prices may exceed lawful interest for a loan. * * * in order to have the foregoing...
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