Garst v. General Contract Purchase Corporation

• Decision Date: 21 April 1947
• Docket Number: 4-8163
• Citation: 201 S.W.2d 757,211 Ark. 526
• Parties: Garst v. General Contract Purchase Corporation
• Court: Arkansas Supreme Court

201 S.W.2d 757

211 Ark. 526

Garst v. General Contract Purchase Corporation

No. 4-8163

Supreme Court of Arkansas

April 21, 1947

Rehearing Denied May 26, 1947.

Appeal from Pulaski Circuit Court, Third Division; J. Mitchell Cockrill, Judge.

Affirmed in Part and Reversed in Part.

T J. Gentry, for appellant.

Guy B. Reeves and Barber, Henry & Thurman, for appellee.

OPINION

Griffin Smith, Chief Justice.

March 3, 1946, Garst signed Consolidated Motor & Aviation Company's conditional sales contract covering a Studebaker automobile. The "bona fide cash delivered price, including sales tax and extra equipment," was $ 843, with a cash payment of $ 300. At the same time Garst signed a retail buyer's order. It shows "cash delivered price in Little Rock, $ 843; cash on delivery, $ 300; net balance due, $ 543." Supplementing these entries the following appears: "Special notes, $ 45.99; balance, 15 monthly notes of $ 45.99 each; balance due, $ 543; rec. fee, etc., $ 146.85; grand total, $ 689.85." The purchaser signed a buyer's statement in which it was noted that the obligation would be carried by Commercial Credit Corporation.

Attached to the conditional sales contract, perforated for easy detachment, was Garst's negotiable note for $ 689.85 payable to Consolidated, providing for payment in fifteen monthly installments of $ 45.99, beginning April 6, 1946. This note was sold to General Contract Purchase Corporation.

March 26 following execution of the note and contract, Garst replied to a letter from Purchase Corporation. He acknowledged receipt of the Corporation's "outline of time payment contract," saying, "I am paying a usurious and unlawful rate of interest upon the balance of $ 543."

Purchase Corporation responded April 2d, stating that the note was for $ 689.85. The "rates charged," it said, "were certainly within reason for a fifteen-months contract, for, as you know, this covers a considerable amount of insurance. . . . You may be quite certain that these charges are in no way unlawful."

Garst refused to pay the note maturing April 6th. In a letter dated April 10th Purchase Corporation told Garst it was not required to define the term "time price differential; [for], as we stated previously, this figure represents insurance, investigation charges, bookkeeping and legal cost of setting up your account." When the May note was not paid it was explained that the insurance premium was $ 36.25, finance company service charge $ 43.44, and that $ 67.16 was set up as a dealer's reserve fund "which is authorized as a protection against any loss due to repossession or damages to this collateral."

May 14 Purchase Corporation, invoking an acceleration clause contained in the note, declared all installments due; and on May 18 it brought an action of replevin, executed bond, and procured possession of the automobile, value of which was alleged to be $ 700.

In an answer and cross-complaint Garst alleged that his agreement was to pay $ 843 for the car; that interest charged exceeded the legal rate; that he had offered to pay the balance of $ 543; that the contract and note he signed were in blank, and that he relied upon the seller to fill in the agreed amount, but that instead of doing so an item of $ 146.85 was fraudulently inserted. He alleged that Consolidated had damaged him in the sum of $ 1,000; that Purchase Corporation's action in repossessing the car had injured him to the extent of $ 5,000, and he prayed judgment against U. S. F. & G. for $ 1,400, amount of the bond it had executed.

Appeal is from directed verdicts (1) for the plaintiff, Purchase Corporation, and (2) for the defendants named in the cross-complaint, Consolidated, and U. S. F. & G. First. -- The Court correctly directed the jury to find for Purchase Corporation. The note was negotiable, and there is no evidence that the assignee had knowledge of any infirmities. Garst admitted signing it, but insists that the monthly installment items of $ 45.99 were not on the document when he subscribed. He also signed the buyer's statement, in which it was said that the obligation would be carried by Purchase Corporation; hence he had actual notice that it would be transferred. This, however, was not controlling, since the note was negotiable.

Before...