Oil City Motor Co. v. CIT Corporation

• Decision Date: 01 April 1935
• Docket Number: No. 1151.,1151.
• Citation: 104 ALR 240,76 F.2d 589
• Parties: OIL CITY MOTOR CO. v. C. I. T. CORPORATION.
• Court: U.S. Court of Appeals — Tenth Circuit

104 ALR 240, 76 F.2d 589 (1935)

OIL CITY MOTOR CO. v. C. I. T. CORPORATION.

No. 1151.

Circuit Court of Appeals, Tenth Circuit.

April 1, 1935.

J. H. Maxey, of Tulsa, Okl. (N. A. Gibson and Wilbur J. Holleman, both of Tulsa, Okl., on the brief), for appellant.

H. F. Birnbaum, of New York City, and Villard Martin, of Tulsa, Okl. (Geo. S. Ramsey and Garrett Logan, both of Tulsa, Okl., and Phillip W. Haberman, of New York City, on the brief), for appellee.

Before PHILLIPS, McDERMOTT, and BRATTON, Circuit Judges.

BRATTON, Circuit Judge.

This is an action to recover for alleged usurious interest exacted and paid. Plaintiff was a dealer in DeSoto and Plymouth automobiles at Tulsa, Okl. It purchased new automobiles from the manufacturer in Detroit, Mich., at wholesale for cash and sold them at retail in Tulsa and adjacent trade territory. It was obligated by contract to purchase 300 DeSoto and 200 Plymouth automobiles during the year 1932. Most of its sales at retail were made for part cash, part deferred payments, and a used automobile taken in trade. That method of purchase and sale necessitated more cash than plaintiff had available and required it to borrow substantial sums from time to time. Defendant was engaged in the business of financing dealers in automobiles and maintained a branch office at Tulsa. The parties entered into two contracts in writing dated March 17, 1932. The first, denominated "Application for Floor Plan" signed by plaintiff and accepted by defendant, contained the following provisions:

"We hereby make application for privilege of storing cars under C. I. T. Floor Plan. For that purpose, we hereby request you to open for us an unconfirmed revocable credit for the maximum sum at any one time of $15,000.00 or such other sum as you may determine in favor of the manufacturer and/or distributor (direct dealer) of motor vehicles handled by us, to be availed of by notifying you of drafts drawn on us for the cost of such motor vehicles which drafts you shall pay, or by notifying you of direct deliveries we may desire to have made to us and covered by invoices to you which you shall pay, and/or by utilizing any other plan which you may designate. Bills of lading to be made out to order or to your order. Insurance against loss by fire or theft to be taken out and paid for by you.

"In consideration of your opening the above credit and of any extensions thereunder we hereby recognize, admit and guarantee your ownership of the merchandise or the proceeds thereof represented by the bills of lading or invoices aforesaid and of your right of disposal and possession of said merchandise and proceeds and of the bills of lading covering the same until such time as any and all indebtedness and liability existing in your favor as against us under said credit or otherwise shall have been paid, discharged and fulfilled. * * *

"In consideration of the above credit being extended to us, we hereby agree to use the C. I. T. retail plan exclusively on all of our retail deferred payment sales. * * *"

The other, called "C. I. T. Retail Plan," required plaintiff to submit to defendant for purchase at less than their face value all notes and conditional sales contracts taken for the sale of new or used automobiles on terms. At the time the contracts were executed, defendant furnished plaintiff forms of sight drafts, trust receipts, and all other blanks necessary to operate under the agreements. In making each subsequent order from the manufacturer, plaintiff wrote a letter requesting shipment of a stated number of specified automobiles and inclosed therewith a signed draft and trust receipt in favor of defendant, but otherwise in blank. When the order reached Detroit in that form, defendant paid or assumed payment of the purchase price of the automobiles; the manufacturer thereupon delivered the draft and trust receipt to defendant and either shipped the automobiles to plaintiff or delivered them to a transport company for transportation to Tulsa; plaintiff paid the transportation charges in either event. Defendant then sent the draft and trust receipt to its branch manager at Tulsa. By mutual action of the parties there the draft was filled out for 90 per cent. of the purchase price of the automobiles and made payable ninety days after date; plaintiff then paid defendant the remaining 10 per cent. by check and the trust receipt was completed in like manner by inserting a description of the automobiles. The automobiles thus acquired were placed in plaintiff's salesroom for display and sale.

Defendant advanced $110,127 for the acquisition of automobiles from the manufacturer. Plaintiff paid defendant $2,478.19 for the money advanced and received rebates in the sum of $1,599.76 occasioned by payment of drafts before maturity. The sum thus charged equals in amount interest on the money advanced computed at the rate of 9 per cent. per annum. The written agreement was silent with respect to interest, but according to the testimony the parties agreed verbally that it should be paid at the rate of 9 per cent. per annum. Plaintiff sold defendant notes secured by conditional sales contracts on automobiles sold to its customers in the aggregate face value of $194,126 for which defendant paid $160,389.75. Charges against the differential in the sum of $14,619.55 were conceded in substance and amount. The remainder of the differential amounts to $19,116.70.

Alleging that the two contracts were parts of one agreement for the loan of money; that as a condition to the making of such loan ...