Gramatan Home Investors Corp. v. Starling, Nos. 82-148

• Docket Nº: Nos. 82-148
• Citation: 143 Vt. 527, 470 A.2d 1157
• Case Date: November 01, 1983
• Court: United States State Supreme Court of Vermont

Page 1157

470 A.2d 1157 143 Vt. 527 GRAMATAN HOME INVESTORS CORP.; The Gramatan Company (A
Division of Home Investors Trust); and Jonah
Goldstein, d/b/a Home Investors Company
v.
Richard and Patricia STARLING, Raymond and Eva Cole, Daisy
Hall and Nicholas and Sandra Martocci. Nos. 82-148 to 82-151. Supreme Court of Vermont. Nov. 1, 1983.

Page 1158

[143 Vt. 529] Smith & Craven, Brandon, for plaintiffs-appellants.

Sam Farrington, Vermont Legal Aid, Inc., Rutland, for defendants-appellees.

Before [143 Vt. 527] BILLINGS, C.J., and HILL, UNDERWOOD, PECK and GIBSON, JJ.

[143 Vt. 529] BILLINGS, Chief Justice.

Plaintiffs appeal, and defendants cross-appeal from final judgment and the denial of their post-judgment motions by the Rutland Superior Court. Following a joint hearing on the merits, the court dismissed plaintiffs' complaint for moneys due and owing on promissory notes executed by the [143 Vt. 530] defendants and found for the defendants on those parts of their counterclaims seeking restitution of moneys paid on the notes and cancellation of the notes, home mortgages and sales contracts entered into with plaintiffs' assignor. The court denied plaintiffs' post-judgment motion for a new trial and defendants' post-judgment motions to amend the court's findings, conclusions and judgment orders.

On appeal, plaintiffs argue that the evidence heard by the trial court does not support the court's findings of fact and conclusions of law that: (1) defendants' defenses of fraud are good against plaintiffs and the existence of fraud renders defendants' promissory notes unenforceable; (2) there was a total failure of consideration between the seller/assignor and each of the defendants, and such failure is a good defense

Page 1159

against the claims of the plaintiffs/assignees; (3) under federal Truth in Lending regulations the defendants effectively rescinded the transactions entered into with the seller and are therefore discharged from any obligation owed to plaintiffs on the promissory notes; and (4) the defendants' notices of rescission are likewise effective under Vermont's Consumer Fraud Act, 9 V.S.A. §§ 2451-2462. In their cross-appeals, defendants aver that the superior court erred in not awarding them civil penalties and reasonable attorney's fees as provided for in 9 V.S.A. § 2461 of the Vermont Consumer Fraud Act.

Home Investors Trust (HIT) was engaged in the business of purchasing and financing home improvement transactions. Jonah Goldstein was chairman of HIT. After its 1975 dissolution, HIT's assets were sold to Goldstein doing business as Home Investors Company (HIC). Through its agent, plaintiff Gramatan Home Investors Corp. (GHIC), of which Goldstein was sole stockholder, HIC continued to operate the business of HIT, that is, the discounting and collection of home improvement obligations. All the plaintiffs operated from the same location in the state of New York. Vinyl Distributors, Inc., (Vinyl) not a party to this action, sold and installed vinyl home siding in Vermont during 1973 and 1974. Vinyl was an "Approved Dealer" with HIT, meaning that HIT would purchase and finance home improvement obligations entered into by customers of Vinyl. Four of Vinyl's obligations, purchased by HIT and subsequently assigned to GHIC upon HIT's dissolution, were the defendants'.

[143 Vt. 531] Testimony at trial revealed that each defendant experienced a similar sales approach used by Vinyl Distributors in its endeavor to sell vinyl siding. Vinyl's agent, accompanied by an associate, would appear at a defendant's door, the defendant having done nothing to invite the solicitation (all the defendants were approached by the same agent and his associate). Once inside, the agent told the defendant of the financial, structural, ecological and aesthetic benefits of vinyl siding. The agent guaranteed the structural qualities of the siding and warranted that installation would be accomplished in a workmanlike manner. The agent solicited personal financial information from the defendant and assured the defendant that financing could be arranged through Vinyl and be tailored to the defendant's economic means. As an added inducement, the agent suggested that the defendant allow Vinyl to use the defendant's house as a model home: in return for allowing Vinyl to place a Vinyl Distributors, Inc. sign on the defendant's front lawn and to take before-and-after pictures of the defendant's house for future sales use, the defendant would be given a reduction in the price of the siding.

Once a defendant agreed to purchase the siding, the agent showed the defendant a sales contract attached to a clipboard. After the defendant finished reading the contract, the agent would take back the clipboard. Thereupon, the agent's associate would position himself between the defendant and the agent and proceed to demonstrate the structural qualities of the siding and show the various colors of siding available. After this demonstration, the agent would present the clipboard, with the sales contract on top of a number of other papers, to the defendant for signing. After the defendant signed the top sales contract, the agent would expose the signature lines on the underneath documents for the defendant to sign, explaining that the underlying documents were copies of the top sales contract. During the time it took for a defendant to sign the contract and copies, the agent retained hold of the clipboard and documents.

Installation of the siding...