Singer Co. v. Gardner

• Decision Date: 30 July 1974
• Citation: 323 A.2d 457,65 N.J. 403
• Parties: The SINGER COMPANY, a New Jersey Corporation, Plaintiff-Appellant and Cross-Respondent, v. Larry K. GARDNER, Defendant-Respondent and Cross-Appellant.
• Court: New Jersey Supreme Court

Page 403

65 N.J. 403

323 A.2d 457

The SINGER COMPANY, a New Jersey Corporation Plaintiff-Appellant and Cross-Respondent, v. Larry K. GARDNER, Defendant-Respondent and Cross-Appellant.

Supreme Court of New Jersey.

Argued June 4, 1974.

Decided July 30, 1974.

Dickinson R. Debevoise, Newark, for plaintiff-appellant and cross-respondent (Riker, Danzig, Scherer & Brown, Newark, attorneys; James S. Rothschild, Jr., Newark, on the brief).

David A. Kasen, Haddonfield, for defendant-respondent and cross-appellant.

The opinion of the Court was delivered by

CLIFFORD, J.

In this replevin action the district court entered judgment dismissing the complaint and dismissing the counterclaim for damages. Plaintiff appealed to the Appellate Division and defendant filed a cross-appeal. Before argument in the Appellate Division we certified on our own motion, R. 2:12--1.

The nature of the action, the contentions of the parties, and the basic facts are set forth in the opinion of the district court, 121 N.J.Super. 261, 262--266, 296 A.2d 562 (1972), as follows:

This is an action in replevin in which plaintiff The Singer Company seeks judgment for possession of certain articles of merchandise sold to defendant, and by way of damages, the balance of the purchase price of said articles allegedly remaining due and unpaid. Defendant denies any indebtedness to plaintiff. He contends that the agreement between him and plaintiff be declared void as unconscionable and by reason of the exaction of wrongful charges by plaintiff in violation of the Retail Instalment Sales Act, N.J.S.A. 17:16C--1 Et seq. By way of counterclaim defendant demands damages for the alleged wrongful seizure by plaintiff of the goods in question.

On January 15, 1969 defendant purchased from plaintiff a sewing machine for the agreed purchase price of $400. He paid $65 down on account of the purchase price with the balance to be paid in instalments. A sales slip was prepared setting forth the sale, the price (plus sales tax of $12), the down-payment, the balance of $347 remaining due, and showing the 'agreed monthly payment' as $14.

On January 21, 1969 defendant signed a 'Singer Credit Application' setting forth on the face thereof personal data usually called for on such applications. On the reverse of said application form there appears in reasonably legible type an agreement headed 'The Singer One to Thirty-six Credit Plan Agreement.' This agreement sets forth the terms of instalment payments made on this socalled 'credit plan.'

On or about February 8, 1969 defendant purchased a Singer U--43 vacuum cleaner for the sum of $70. The sales slip covering the transaction indicates a payment of $2.10 on account (the amount of the sales tax), a balance due of $70 and agreed monthly payments of $15.

On May 21, 1969 defendant purchased two more vacuum cleaners, a U--43 model for $69.95 and a C--10 model for $79.95, a total purchase price of $149.90. This sales slip showed payment of $4.50 (the amount of the sales tax), the balance of $149.90, and no amount of agreed monthly payments.

Defendant made monthly payments on account of these purchases until July 1969. Thereafter payments were made sporadically until April 24, 1971, when a payment of $100 was made, bringing the amount paid on account to a total of $469. No payments on account were made thereafter. Certain attempts at collection by representatives of plaintiff having been unsuccessful, this action in replevin was instituted by the filing of the complaint on July 13, 1971. A writ of replevin was issued and there were seized thereunder the sewing machine and two vacuum cleaners. No notice of the repossession was given to defendant.

The sewing machine was resold by the plaintiff on April 4, 1972 for $172.95. One U--43 vacuum cleaner was resold on May 27, 1972 for $7.99. No notice was given to defendant of the resales and it is to be noted that such sales were prior to the entry of any judgment in this action. There is no evidence as to whether the resale prices represented the then fair market value of the goods sold. In any event, defendant was credited with the sum of $180.94 realized from the repossession sales. Plaintiff has thus credited defendant with payments totalling $469.60 and proceeds of resales in the sum of $180.94, making total credits of $650.64. The other vacuum cleaner seized under the writ of replevin has not been sold and nothing is credited to defendant by reason of its repossession.

It is to be noted that while the complaint alleges sale of two vacuum cleaners to defendant, the evidence and testimony disclose the sale of three vacuum cleaners, one February 8, 1969 and two on May 21, 1969. Defendant testified that he paid cash in full for the vacuum cleaner purchased in February. The records produced by plaintiff indicate no such payment. Defendant says he was given a receipt for the purchase. He did not produce such receipt, saying he gave it to his mother in Philadelphia for whom he bought the machine. I conclude that the sale in question was not a cash sale as contended by defendant. Defendant claims that he made certain payments with which he was not credited. I find that such payments are not established and I conclude that the charges and credits as stated by plaintiff must be accepted as correct.

Plaintiff's claim against defendant, then, is summarized as follows:

                            Total Charges
                Purchases              $619.60
                Sales taxes              18.60
                Service charges         228.87
                  (time-price
                     differential)
                Credit life insurance     3.27  $870.64
                                       -------
                            Total Credits
                Payments               $469.60
                Proceeds from
                  repossession sales    180.94   650.54
                                       -------  -------
                     Total Due                  $220.10
                

Defendant contends that the transactions were retail instalment sales, and fall within the provisions of the Retail Instalment Sales Act, N.J.S.A. 17:16C--1 Et seq. He contends that plaintiff violated the provisions of the act in that:

(1) The contract failed to set forth the particulars required by N.J.S.A. 17:16C--27.

(2) The effective interest, or time-price differential, amounts to an annual rate of 18%, although such interest or time-price differential is limited by the act of 10%, N.J.S.A. 17:16C--41.

(3) Particulars as to separate items were not set forth in additional statements annexed to the contract, as required by N.J.S.A. 17:16C--28.

(4) Defendant was not informed as to allocation of payments or balances due on individual items, as required by N.J.S.A. 17:16C--29.

Defendant therefore urges that the contract be held unconscionable and void, and thus unenforceable under N.J.S.A. 12A:2--302.

Plaintiff concedes that the provisions of the Retail Instalment Sales Act, including the limitation of 10% On the time-price differential, have not been complied with. It contends, however, that these transactions are not retail instalment sales but are 'retail charge account' sales, and do not come within the provisions of the act. The principal issue in this case is whether the transactions are retail instalment sales subject to the provisions of N.J.S.A. 17:16C--1 Et seq.

Defendant also contends that the seizure of the goods by plaintiff under the writ of replevin was wrongful since it was made without notice or an opportunity by defendant to be heard, and that the replevin statute is unconstitutional. Cf. Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972). ¹

The county district court concluded that (1) The Singer Company's time sales agreement was an installment contract covered by the pre-1971 Retail Installment Sales Act, N.J.S.A. 17:16C--1 et seq., rather than a revolving charge account outside the Act's ambit, and (2) that agreement was unconscionable under the rationale of Williams v. Walker-Thomas Furniture Co., 121 U.S.App.D.C. 315, 350 F.2d 445 (D.C.Cir. 1965) because it was a cross-collateral security arrangement. We are of the view that these conclusions are predicated upon a misinter-pretation of two distinct areas of the law. We hold that the agreement in question was neither encompassed by the Retail Installment Sales Act nor unconscionable. Accordingly, we reverse and uphold the plaintiff's position.

I

Defendant argued that Singer's 'One to Thirty-Six Month Plan' violated the Retail Installment Sales Act as it existed before being amended in 1971, in that it failed to specify the time-price differential, time balance, and time sales price as required by N.J.S.A. 17:16C--27; it did not apportion each payment among the separate purchases in proportion to the cash prices of the items purchased, as required by N.J.S.A. 17:16C--29; it did not call for appropriate statements after each purchase, mandated by N.J.S.A. 17:16C--28; and its time-price differential amounted to more than 10% Per year, the maximum permitted under N.J.S.A. 17:16C--41. With the exception of the last asserted violation, ² plaintiff does not dispute that these provisions were not met. However, it contends that its 'One to Thirty-Six Month Plan' was a revolving charge account and therefore not bound by the requirements of the Retail Installment Sales Act.

The court below apparently rejected this contention on two grounds. First, it considered the fact that the scheduled monthly payment does not decline with reduction of the unpaid balance necessarily means that the agreement is an installment sale. ³ Second, it believed that a security interest cannot attach to items purchased under a revolving charge account. ⁴ In reality, however, the key distinction between the two types of time sales depends upon the method of interest computation. The interest, and thus the time-price differential, N.J.S.A. 17:16C--1(l), on an installment sale can be pre-computed for the entire time span over which payments must be made. This sum is immutable and generally cannot be avoided or mitigated by prepayment of the principal....