Taylor v. Trans Acceptance Corp.

• Decision Date: 07 October 1994
• Docket Number: No. 1-93-0539,1-93-0539
• Citation: 267 Ill.App.3d 562,641 N.E.2d 907
• Parties: , 204 Ill.Dec. 477 Willie F. TAYLOR and Dwayne M. Taylor, Plaintiff-Appellant, v. TRANS ACCEPTANCE CORP., and John Does 1-20, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 907

641 N.E.2d 907

267 Ill.App.3d 562, 204 Ill.Dec. 477

Willie F. TAYLOR and Dwayne M. Taylor, Plaintiff-Appellant, v. TRANS ACCEPTANCE CORP., and John Does 1-20, Defendants-Appellees.

No. 1-93-0539.

Appellate Court of Illinois First District, Fifth Division.

Oct. 7, 1994.

Edelman & Combs (Daniel A. Edelman, Cathleen M. Combs, Tara G. Redmond, J. Eric Vander Arend, Michelle A. Weinberg, of counsel), Lawrence Walner & Associates (Lawrence Walner, of counsel), Chertkow & Chertkow, Chicago (Glenn Chertkow, of counsel), for appellant.

Jay L. Statland, Chicago (Jay L. Statland, of counsel), for appellee.

Justice COUSINS, delivered the opinion of the court:

Willie F. Taylor and Dwayne M. Taylor (plaintiffs) appeal a motion to dismiss their complaint against the Trans Acceptance Corporation and John Does 1-20 (defendants) alleging violations of Illinois Consumer Fraud Act (CFA) and the Illinois Sales Finance Agency Act (SFAA). The complaint alleged that an automobile retail installment contract, co-signed by plaintiffs as buyers and assigned to defendants, was a violation of Section 18 of the Motor Vehicle Retail Installment Sales Act (MVRISA S.18) which warranted redress under the CFA and SFAA. The trial court, relying on the Fourth District case of Magna Bank of McLean County v. Comer (1992), 232 Ill.App.3d 300, 175 Ill.Dec. 612, 600 N.E.2d 855, held that MVRISA S.18 did not apply to plaintiffs' contract and granted defendants' motion to dismiss. Plaintiffs appeal, contending Comer was incorrectly decided and that their complaint was sufficient to state a cause of action.

We reverse and remand.

BACKGROUND

The basis for plaintiffs' claim, MVRISA S.18, reads as follows:

"Each person, other than a seller or holder, who signs a retail installment contract may be held liable only to the extent that he actually receives the motor vehicle described or identified in the contract, except that a parent or spouse who co-signs such retail installment contract may be held liable to the full extent of the deferred payment price notwithstanding such parent or spouse has not actually received the motor vehicle described or identified in the contract and except to the extent such person other than a seller or holder, signs in the capacity of a guarantor of collection.

The obligation of such guarantor is secondary, and not primary. The obligation arises only after the seller or holder has diligently taken all ordinary legal means to collect the debt from the primary obligor, but has not received full payment from such primary obligor or obligors.

No provisions in a retail installment contract obligating such guarantor is valid unless:

(1) there appears below the signature space provided for such guarantor the following:

'I hereby guarantee the collection of the above described amount upon failure of the seller named herein to collect said amount from the buyer named herein.'; and

(2) unless the guarantor, in addition to signing the retail installment contract, signs a separate instrument in the following form:

'EXPLANATION OF GUARANTOR'S OBLIGATION

You ... (name of guarantor) by signing the retail installment contract and this document are agreeing that you will pay ... (total deferred payment price) for the purchase of ... (description of goods or services) purchased by ... (name of buyer) from ... (name of seller).

[204 Ill.Dec. 479] Your obligation arises only after the seller or holder has attempted through the use of the court system to collect this amount from the buyer.

If the seller cannot collect this amount from the buyer, you will be obligated to pay even though you are not entitled to any of the goods or services furnished. The seller is entitled to sue you in court for the payment of the amount due.'

The instrument must be printed, typed, or otherwise reproduced in a size and style equal to at least 8 point bold type, may contain no other matter (except a union printing label) than above set forth and must bear the signature of the co-signer and no other person. The seller must give the co-signer a copy of the retail installment contract and a copy of the co-signer statement." Ill.Rev.Stat.1993, 815 ILCS 375/18 (formerly Ill.Rev.Stat.1991, ch. 121- 1/2 par. 578.)

Because plaintiffs' claims were dismissed on the pleadings, we must accept as true all well-pleaded facts in the complaint and all inferences that can reasonably be drawn from those facts. (Meerbrey v. Marshall Field and Co., Inc. (1990), 139 Ill.2d 455, 473, 151 Ill.Dec. 560, 564 N.E.2d 1222.) A complaint should not be dismissed for failure to state a claim unless it clearly appears that no set of facts could be proved under the allegations that would entitle the party to relief. Meerbrey, 139 Ill.2d at 473, 151 Ill.Dec. 560, 564 N.E.2d 1222.

Applying these principles, we examine the facts as plaintiffs have pled them. On November 8, 1991, plaintiff Dwayne M. Taylor (D. Taylor) went to The Autobarn, Ltd. (Autobarn) to purchase a 1983 Saab. Autobarn undertook to finance the purchase through a retail installment contract to be assigned to defendant Trans Acceptance Corporation (TAC). Autobarn and TAC conducted a credit investigation on D. Taylor and requested a cosigner before extending credit to him.

D. Taylor's uncle, plaintiff Willie F. Taylor (W. Taylor), agreed to act as a cosigner. Plaintiffs informed Autobarn of the relationship between them, information which TAC also later obtained. Autobarn and TAC also conducted a credit check on W. Taylor, revealing that his address was different than that of his nephew. On November 8, 1991, D. Taylor and W. Taylor signed a retail installment contract (contract) as "Buyers" of the vehicle. Below the line for the second buyer's signature was the message: "Instruction: If parent or spouse is a co-buyer, sign above. Co-signers other than parent or spouse co-buyer sign on guarantor line below."

Promptly after the contract was executed, it was assigned to TAC on the face of the contract. Both TAC and Autobarn examined and approved the contract before its execution. The Saab was delivered to D. Taylor, who has retained possession since its delivery. W. Taylor has not used or had possession of the vehicle at any time. Defendants have made collection attempts against plaintiffs based on the contract.

Both defendant TAC and its auto dealers such as Autobarn had knowledge of MVRISA S.18. Yet on multiple occasions TAC and its dealers implemented a policy of making persons who were not to actually receive the vehicle, such as W. Taylor, sign as "buyers" even though TAC and Autobarn knew these persons were not subject to liability under MVRISA S.18 except as guarantors of collection. TAC then attempted to enforce the contract against "buyers" such as W. Brown while knowing these "buyers" were not liable due to MVRISA S.18.

The contract also contained the following provision, as required under federal law in 16 C.F.R. part 433:

"ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICES OBTAINED PURSUANT HERETO OR WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER."

In response to the plaintiffs' complaint, the defendants filed a 2-615 motion to dismiss "The purpose of the statute [MVRISA S.18] is obviously to limit the liability of persons, not buyers, who sign a retail installment contract, but to whom the extent of their personal liability in so doing has not been fully disclosed prior to or at the time of signing the contract. This is a laudable purpose, but the Act does not alter the liability of a buyer." Comer, 232 Ill.App.3d at 304-305, 175 Ill.Dec. 612, 600 N.E.2d 855.

                [204 Ill.Dec. 480] for failure to state a claim.  Immediately after the motion was filed, the Fourth District issued its decision in Comer.   The Comer court stated
                

Because plaintiffs were both buyers of the car, the circuit court was compelled to dismiss the complaint in reliance on Comer. "In Illinois the opinions of any district of the appellate court are binding on all of the state trial courts." People v. Foote (1982), 104 Ill.App.3d 581, 585, 60 Ill.Dec. 355, 432 N.E.2d 1254.

OPINION

I.

After careful analysis of the language of MVRISA S.18 and its legislative history, we must disagree with Comer; we find that MVRISA S.18 may apply to car buyers who do not actually receive physical possession and use of the vehicle. A district of the appellate court is not always bound to follow the decisions of other districts, and decisions from other districts have only persuasive value for this court. In re May 1991 Will County Grand Jury (1992), 152 Ill.2d 381, 398, 178 Ill.Dec. 406, 604 N.E.2d 929.

The primary rule of statutory interpretation, to which all other rules are subordinate, is that a court should ascertain and give effect to the intent of the legislature. (Bonaguro v. County Officers Electoral Board (1994), 158 Ill.2d 391, 397, 199 Ill.Dec. 659, 634 N.E.2d 712.) Where statutory language is clear, it will be given effect without resorting to other aids for construction; however, where the language is ambiguous it is appropriate to examine legislative history. People v. Zaremba (1994), 158 Ill.2d 36, 40, 196 Ill.Dec. 632, 630 N.E.2d 797.

The Comer court, acting without the benefit of an appearance or brief from the consumer appellee, thought it could ascertain the meaning and purpose of MVRISA S.18 without looking at the legislative history of the provision. The Comer court believed that "it is clear from a reading of section 18 of the Act that the legislature did not intend to limit the contractual obligation of a 'buyer.' " (Comer (1992), 232 Ill.App.3d at 304, 175 Ill.Dec. 612, 600 N.E.2d 855.) However, a clear example of unambiguous language on buyer liability is MVRISA S.18 as written before amended to its present form in 1975 by P.A. 79-738 Sec. 2 (th...