General Finance Corp. v. Smith

Decision Date20 March 1987
Citation505 So.2d 1045
Parties3 UCC Rep.Serv.2d 1278 GENERAL FINANCE CORPORATION v. Patricia J. SMITH. 85-852.
CourtAlabama Supreme Court

James M. Ivins of Cornett & Ivins, Phenix City, for appellant.

Sidney Gene Landreau of Faulk & Landreau, Phenix City, for appellee.

PER CURIAM.

The defendant, General Finance Corporation, appeals from a judgment entered on a $20,000 jury verdict in favor of the plaintiff, Patricia J. Smith. We affirm.

The plaintiff purchased a pickup truck from Williams Motor Company in Phenix City, Alabama, and financed a portion of the purchase price through the defendant. Approximately four and a half months later the defendant repossessed the truck. Shortly thereafter, the plaintiff filed this action, seeking damages for fraud, conversion, and wrongful repossession.

The case was submitted to the jury on conflicting evidence. For purposes of our discussion, we find it unnecessary to state the tendencies of the evidence in detail. Suffice it to say that while the defendant's evidence was to the contrary, the plaintiff's evidence tended to show that she was not in default on her monthly payments at the time of the repossession and that a breach of the peace occurred during the repossession.

The defendant maintains that the judgment must be reversed and the case remanded for a new trial on the following grounds:

1) The trial court erred in submitting the plaintiff's wrongful repossession claim to the jury.

2) The trial court erred in refusing to instruct the jury that an employer is not liable for the tortious acts committed by an independent contractor.

3) The trial court erred in refusing to join George and Howard Burgchardt, individually and d/b/a H & B Recoveries (hereinafter "H & B Recoveries"), as defendants. (H & B Recoveries was hired to repossess the truck.)

4) The trial court erred in refusing to grant a mistrial.

5) The trial court erred in refusing to grant a new trial on the basis of an excessive verdict.

For the following reasons, we disagree.

The plaintiff's wrongful repossession claim is premised on the defendant's liability for the tortious acts committed by H & B Recoveries during the repossession. There was evidence from which the jury could have readily found that H & B Recoveries breached the peace while repossessing the truck and that the breach resulted in damage to the plaintiff under general theories of trespass and/or conversion.

However, the defendant contends that the undisputed evidence showed that H & B Recoveries was acting as an independent contractor when it repossessed the truck and not as its agent. Consequently, it argues that the trial court erred in denying its motion for summary judgment and its motion for a directed verdict at the close of the plaintiff's case in chief. In the alternative, the defendant argues that if the evidence was in dispute regarding the status of H & B Recoveries as either an agent or an independent contractor, then its written requested instructions stating that an employer is not liable for the tortious acts committed by an independent contractor should have been given to the jury.

Relying on the general rule that an employer is not ordinarily liable for the tortious acts committed by an independent contractor, the defendant insists that it is not liable in this case for the wrongful manner in which the plaintiff's truck was repossessed.

The general rule urged by the defendant is well settled. 41 Am.Jur.2d Independent Contractors § 24 (1968); Restatement (Second) of Torts § 409 (1965). But this general rule has important exceptions. One is that an employer is responsible for the manner of the performance of certain non-delegable duties, though done by an independent contractor. An employer who by contract or law owes a specific duty to another cannot escape liability for a tortious performance by reason of the employment of an independent contractor. Alabama Power Co. v. Pierre, 236 Ala. 521, 183 So. 665 (1938); State Farm Mut. Auto. Ins. Co. v. Dodd, 276 Ala. 410, 162 So.2d 621 (1964); Robertson v. City of Tuscaloosa, 413 So.2d 1064 (Ala.1982); 41 Am.Jur.2d Independent Contractors § 38 (1968).

The plaintiff contends that § 7-9-503, Code 1975, granted to the defendant the privilege of proceeding without judicial process in gaining possession of the truck only if that could be done without a breach of the peace. She argues that while the defendant could contract for H & B Recoveries to physically recover the truck, it could not delegate to H & B Recoveries the liability resulting from a breach of the peace. We agree.

Section 7-9-503, supra, states that "Unless otherwise agreed a secured party has on default the right to take possession of the collateral. In taking possession a secured party may proceed without judicial process if this can be done without breach of the peace or may proceed by action." (Emphasis added.) This section, which was incorporated into the security agreement executed by the plaintiff, goes farther than merely conferring upon a secured party the power to engage in self-help. See Robertson v. City of Tuscaloosa supra. It allows the secured party to proceed without judicial process only if that can be done peacefully (i.e., without risk of injury to the secured party, the debtor, or any innocent bystanders). See also Restatement (Second) of Torts § 424 (1965) ("One who by statute or by administrative regulation is under a duty to provide specified safeguards or precautions for the safety of others is subject to liability to the others for whose protection the duty is imposed for harm caused by the failure of a contractor employed by him to provide such safeguards or precautions") and § 427 ("One who employs an independent contractor to do work which the employer knows or has reason to know to be likely to involve a trespass upon the land of another ... is subject to liability for harm resulting to others from such trespass").

The legislature, in enacting § 7-9-503, supra, did not attempt to set out with specificity the safeguards or precautions which a secured party must take in order to effect a peaceful repossession. By implication, however, a secured party is under a duty to take those precautions which are necessary at the time to avoid a breach of the peace. It is axiomatic that this duty is based on sound public policy.

Assuming, without deciding, that the status of H & B Recoveries as an independent contractor was undisputed by the evidence, the defendant could not delegate to H & B Recoveries its liability for the wrongful manner in which the repossession was accomplished. The defendant is in the business of financing automobiles and trucks. The plaintiff had no knowledge of, nor was she interested in, the arrangement made by the defendant with H & B Recoveries. However, she did have a reasonable expectation that the truck would not be repossessed in violation of her security agreement. Therefore, the trial court did not err in submitting the plaintiff's wrongful repossession claim to the jury. Neither did it err in refusing the defendant's written requested jury instructions.

The trial court did not err in denying the defendant's motion to have H & B Recoveries joined as a party defendant under Rule 19, Ala.R.Civ.P. The defendant's argument that the presence of H & B Recoveries was indispensable to the action is foreclosed by paragraph (a) of that rule. H & B Recoveries claimed no interest in the...

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