General Motors Acceptance Corporation v. Weinrich

Decision Date26 May 1924
Docket NumberNo. 14894.,14894.
CourtMissouri Court of Appeals

Appeal from Circuit Court, Pettis County; Dimmitt Hoffman, Judge.

Action by the General Motors Acceptance Corporation against E. H. Weinrich. From a judgment for defendant, plaintiff appeals. Reversed and remanded, with directions.

Bohling & Bohling of Sedalia, for appellant.

Paul Barnett, of Sedalia, for respondent.


This is a replevin suit for possession of an automobile. Plaintiff's rights depend upon the validity of a chattel mortgage which defendant gave thereon, The defense is that the mortgage is void be cause of usury. At the close of the evidence the trial court instructed the jury to find for defendant upon that question. Plaintiff has appealed from the judgment on the very diet thus obtained.

Robert Reuter, a retail dealer in automobiles at Sedalia, advertised some secondhand cars for sale, and defendant called at Reuter's place of business to purchase one. None of them, however, suited him, but he did see a new car that caught his fancy, and he made overtures to buy it. He told Reuter he had an equity in some property in Windsor, Mo., and wanted to put this equity in as a cash payment and obtain time on the balance. The dealer and defendant went the next day to Windsor and examined the property. Defendant valued his equity at $800, and wanted to put it in at that amount, but Reuter thought it worth only $600, and they finally agreed on the value of the equity being $600, and for the same to go in the trade at that amount. The cash price of the automobile was $1,450, but, as defendant was not paying cash, the "time-selling price" was fixed at $1501.

Defendant turned the equity over to Reuter and executed to him the chattel mortgage in question. The mortgage recited that defendant had that day purchased the car of Reuter, mortgagee, "for the total time price of $1501," payable, "Cash on or before delivery $600, balance of $901" in a series of 12 installments, 11 of which were for $75.09 each, due respectively in one, 2, 3, 4, 5, 6, 7, 8, 9, 10, and 11 months after date, and the twelfth for $75.01 due:2 months after date, "with interest thereon after maturity at the highest lawful rate."

Defendant also executed to Reuter his promissory note or "time price obligation," dated June 23, 1922, in which he promised to pay to the order of Robert Reuter the sum of $901 "at the time or times stated in the Schedule of payments hereon, at the office of General Motors Acceptance Corporation, Railway Exchange Building, Kansas City, Mo., with interest after maturity at the highest lawful rate." It was provided in said note that a default in the payment of any one or more of said installments rendered the whole note due and payable. The "schedule of payments" thus referred to was the same as that specified in the chattel mortgage.

Defendant then signed a "purchaser's statement," dated the same day, June 23, 1922, addressed to "Robert Reuter and to General Motors Acceptance Corporation," which recited that "in order to secure credit from the above-named dealer, and induce the abovenamed Acceptance Corporation to purchase any purchase money obligation" executed by him in connection with such credit, he gave his name, residence, business, income, place of keeping the automobile, and other particulars, together with a statement that he owned an equity of $36,000 in two farms, and of his ability tc pay the installments as they became due. Reuter then signed the following:

"Dealer's Recommendation and Assignment to General Motors Acceptance Corporation.

"For the purpose of inducing you to purchase a note signed by the above-named purchaser and indorsed by the undersigned, the undersigned submits the foregoing statement which the undersigned believes to be substantially true, unless otherwise hereinafter stated, and certifies that said note arose from the sale of the within described property and that the amount of said note is not more than seventy-five per cent. (75%) of the value of said property, as and where delivered, warranting to you that, at the time of the transaction of which this is a part, the title to the aforesaid property was vested in the undersigned free and clear of all liens and incumbrances, and that the undersigned has the right to assign such title.

"The undersigned, for value received, does hereby sell, assign and transfer tc General Motors Acceptance Corporation, his, its or their right, title and interest in and to the within mortgage, and the property covered thereby and authorize said General Motors Acceptance Corporation to do every act and thing necessary to collect and discharge the same.

"In witness whereof, said undersigned has hereunto subscribed his name this 23d day of

                June, 1922.                Robert Reuter."

And he also signed the following indorsemeat printed on the back of the above-men.toned promissory note:

"For value received, we and each and all of the indorsers hereon jointly and severally guarantee payment of the within obligation, as and when the same shall become due of any extension thereof in whole or in part, accepting all its provisions, authorizing the maker, without notice to us or either of us, to obtain an extension or extensions in whole or in part, and waiving presentment for payment, demand, protest and notice of protest and nonpayment; also agreeing that in case of nonpayment of the within obligation when due, suit may be brought by the holder of this note against any one or all of us, at the option of said holder, whether such suit has been commenced against the maker or not and that in any such suit the maker may be joined with one or more or all of us at the option of the holder.

                                         "[Signed] Robert Reuter."

Reuter also made out an "invoice" to defondant showing a bill to him of —

                1 serial * * * Oldsmobile touring car........ $1,450 00
                Finance charge ..............................     51 00
                                                              $1,501 00
                By allowance on trade .......................    600 00
                By 12 payments G. M. A. C. note..............    901 00
                                                              $1,501 00

This invoice, and the above-mentioned "purchaser's statement," "dealer's recommendation," note and chattel mortgage, were mailed by Reuter to plaintiff at Kansas City, accompanied by a "Letter of Transmittal" as follows:

"General Motors Acceptance Corporation— Gentlemen: Inclosed is note, chattel mortgage and purchaser's statement for purchase as follows:

                Purchaser's name................. Ernest H. Weinrich
                List price (f. o. b. factory)................ $_____
                Freight ..................................... $_____
                War tax ..................................... $_____
                Extra equipment ............................. $_____
                Total equals cash selling price special...... $1,450
                Down payment: Cash................... $ None
                              Trade in .............. $  600
                Total down payment...........................    600
                Deferred payment..................... $  850
                G. M. A. C. differential...............   51
                Note for ....................................    901
                Total equals time selling price.... ......... $1,501"

Owing to an error of a few cents made somewhere in the statement of payments, plaintiff refused the offering and returned it to Reuter, but after this was corrected the plaintiff, on June 29, 1922, purchased the security from Reuter, paying him therefor the sum of $850, which was at a discount of $51.

The following other facts appear in the record:

Plaintiff is a banking institution special.. izing in automobile paper. It buys notes, mortgages, contracts, and trade acceptances secured by automobiles. Dealers throughout the United States, in making sales of autobiles, may submit to plaintiff papers which the dealers take in making sales, and if the the papers are acceptable to plaintiff it buys them, but it reserves the right to refuse to take any paper, and does not purchase all papers submitted, but buys the paper or not as it chooses. It further appears that papers are submitted and looked over, and, if everything is acceptable and plaintiff desires to buy, its check is sent to the dealer making the sale; that investigation is made of the makers of the notes and also of the dealer selling the cars; that the dealer submits financial statements, and may immediately thereafter submit papers, but plaintiff does not have to buy what is submitted; that, after plaintiff has investigated, and it is found that both dealer and papers are satisfactory, then plaintiff buys the papers.

It further appears that plaintiff furnishes blanks to dealers regardless of whether the latter are accepted to do business with plaintiff or not; that plaintiff does not undertake or bind itself to purchase anything submitted by the dealer; that among these blanks are forms of mortgages and notes and other literature pertaining to the business; that plaintiff has a uniform schedule of rates that are in effect throughout all the states in the Union; that plaintiff has representatives working out of the Kansas City office, calling on dealers, asking them, in the regular routine of business, to sent their business to it, that is, to send notes that they take in the purchase of automobiles; that plaintiff furnished blank notes, mortgages, and supplies to Reuter; that plaintiff did not instruct Reuter what interest to charge, but did furnish him with a rate card showing the amount of charges on terms of that kind; that this rate card showed that, if the amount to be paid was $850, the note should be made for $901 where the payments were to run for 12 months; that Mr. Reuter, in preparing the mortgage,...

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