Lewis v. Muntz Car Co. of Cal.
| Decision Date | 12 August 1958 |
| Citation | 50 Cal.2d 681,328 P.2d 968 |
| Court | California Supreme Court |
| Parties | Everett M. LEWIS, Plaintiff and Appellant, v. MUNTZ CAR COMPANY OF CALIFORNIA (a Corporation), and Seaboard Finance Company(a Corporation), Defendants and Respondents. L. A. 24964. |
David J. Lee, Los Angeles, for appellant.
Ellery E. Cuff, Public Defender, Los Angeles County, and Raymond F. Crigger, Deputy Public Defender, Allan L. Leonard, Edwin F. Franke and Donald E. Wheeler, Horrigan & McKnight, and J. Wallace McKnight, Los Angeles, amici curiae on behalf of appellant.
K. E. Nungesser and Bromley, Ritter & Lindersmith, Los Angeles, for respondent Seaboard Finance Co.
This is an appeal by the plaintiff from a judgment in favor of himself in an action for restitution, rescission, and cancellation of a contract of conditional sale of an automobile alleged to have been executed in violation of section 2982 of the Civil Code. 1
In April 1953 the plaintiff entered into negotiations for the purchase of an automobile from the defendant Muntz Car Company. After agreeing upon the terms of the sale, an agent of Muntz submitted several documents to the plaintiff for his signature, including a conditional sale contract form supplied by the defendant Seaboard. It was signed in blank by the plaintiff who then took possession of the car. The terms of the sale were subsequently filled in by Muntz. The document was then assigned by Muntz to the defendant Seaboard Finance Company. After the action was commenced Seaboard forcibly repossessed the car. Plaintiff's motion for a preliminary injunction to restrain Seaboard from selling or disposing of the automobile was denied.
The trial court found that Muntz violated section 2982 of the Civil Code in several particulars: Subdivision (a): The conditional sale contract signed by the plaintiff did not contain all of the agreements between the buyer and the seller; a copy of the contract was never delivered to the plaintiff; the cash price was stated to be $5,232, an amount which included a fictitious credit of $1,000 above the agreed price of the car; the buyer's down payment was incorrectly stated to be $1,800, an amount $1,000 in excess of the agreed down payment; the additional $1,000 was added by Muntz to make it appear that the buyer had paid one third of the purchase price; the amount unpaid on the cash price was incorrectly stated; Muntz obtained insurance for the plaintiff at a premium higher than that agreed upon, but stated the lower premium in the contract; Muntz included a charge of $126 for life insurance which the plaintiff did not agree to buy; no policy of life insurance was procured by Muntz or delivered to the plaintiff; the registration and title fees were not stated. The amount of the unpaid balance was incorrectly stated, and the time price differential was incorrectly stated. Subdivision (b): No life insurance policy was delivered to the buyer. Subdivision (c): The time price differential was in excess of the limitations prescribed and the misstatement was not due to accident or innocent error in computation.
Muntz went out of business and defaulted but Seaboard appeared. The court found that the plaintiff paid Muntz $800 as a down payment and $2,833.30 to Seaboard in installments. The trial court concluded that judgment should be entered against Muntz for $3,633.30 less an offset of $2,000 for the value of the use of the car. It further concluded that judgment should be entered against Seaboard for $2,833.30 less an offset of $2,000. Accordingly, it entered judgment against Muntz for $1,633.30 and a judgment against Seaboard for $833.30, and directed that the automobile be retained by Seaboard. Neither Muntz nor Seaboard has appealed.
It is clear as found and ordered by the trial court that Muntz is bound to return the consideration paid to it by the plaintiff under the conditional sale contract. Civ.Code, § 2982, subd. (e); Carter v. Seaboard Finance Co., 33 Cal.2d 564, 203 P.2d 758. The first question relates to the right of Muntz to offset the reasonable value of the use of the automobile while in the plaintiff's possession. A like question is presented as to Seaboard. Seaboard contends that no recovery may be had against it, relying on the Carter case.
The trial court found that the retail market value of the vehicle at the time it was sold to the plaintiff in April of 1953 was $4,056; that the retail market value in June 1956, the time of the trial, was $1,510; that the car at the time of the trial was not in operable condition, could not be driven, but that the body of the vehicle appeared to be in good condition; that the plaintiff had not used the automobile since January 1956; that the depreciation in the value of the car occasioned by use and possession of it by the plaintiff and the sum required to return it to the same condition it was in at the time the plaintiff received it was $2,000.
Whether the seller or his assignee is entitled to an offset for the reasonable use of a vehicle purchased under a contract rendered unenforceable by section 2982 of the Civil Code has not been definitively stated by this court. However, that question has been before a district court of appeal and the appellate departments of the superior court. The question was involved in United States Credit Bureau v. Sanders, 103 Cal.App.2d 806, 230 P.2d 849. In that case, the plaintiff, as assignee of Seaboard, sued to recover deficiencies on promissory notes secured by chattel mortgages. The notes and mortgages had been executed by the defendants Sanders with Seaboard as mortgagee. The Sanders cross-complained to recover sums paid by them on the notes claiming that the transaction was illegal under Civil Code, section 2982. Seaboard was held to have been a 'seller' within the meaning of that section. The court held the plaintiff liable on defendants' cross-complaint for money paid by the defendants to the plaintiff under the illegal contract. The court further directed that the amount of the judgment for the defendants on their cross-complaint be reduced by the value of their use of the vehicle.
Williams v. Caruso Enterprises, 140 Cal.App.2d Supp. 973, 295 P.2d 592, was an action to recover money paid under a conditional sale contract rendered invalid by a violation of the provisions of section 2982. The court there held that the defendant was entitled to an offset for the reasonable value of the use of the car and stated at pages 980 and 981 of 140 Cal.App.2d Supp., at page 597 of 295 P.2d: The court further determined that the buyer was required to return the vehicle as a condition to maintaining the action and said at page 979 of 140 Cal.App.2d Supp., at page 596 of 295 P.2d: 'By instituting an action for the return of the consideration paid by him on account of the purchase of the car, he is, in effect, asserting that the contract as to him is void and as a consequence that he has received no rights in the vehicle which necessarily implies that he claims no right to the possession thereof.'
In Baum v. Aleman, 139 Cal.App.2d Supp. 929, 293 P.2d 162, the plaintiff vendor repossessed an automobile sold under a conditional sale contract. He then brought an action to recover the balance due on the contract. The defendant cross-complained, claiming that the written contract was invalid because it did not set forth the time price differential as required by section 2982. It was there held that the defendant was entitled to relief on his cross-complaint subject to an offset for the reasonable value of the use of the car.
Subdivision (c) of section 2982, setting the maximum time price differential, was violated by Muntz. Subdivision (e) of that section states the effect of such violations: '* * * the conditional sale contract shall not be enforceable, except by a bona fide purchaser for value, and the buyer may recover from the seller in a civil action the total amount paid on the contract balance by the buyer to the seller or his assignee pursuant to the terms of such contract.' It is the plaintiff's contention that because subdivision (e) does not provide for an offset, none can be allowed. He seeks the return of the consideration paid by him without deduction for the benefits he has received under the contract. He further seeks to recover the vehicle. Plaintiff's contentions in this regard are based upon his construction of section 2982, subdivision (e) as a penalty clause. Section 2982 as enacted in 1945 (Stats.1945, Ch. 1030, § 2) provided in subdivision (c): '* * * If the seller, except as the result of an accidental and bona fide error in computation, shall violate any provision of this subsection (c) (), the...
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