Tradewinds Ford Sales, Inc. v. Caskey
| Decision Date | 24 April 1980 |
| Docket Number | No. 5395,5395 |
| Citation | 600 S.W.2d 865 |
| Parties | TRADEWINDS FORD SALES, INC. et al., Appellants, v. Don B. CASKEY et al., Appellees. |
| Court | Texas Court of Appeals |
Walter Conrad, Randall Hopkins, Baker & Botts, Houston, Rick Rogers, Jr., Porter, Taylor, Gonzalez, Thompson & Rogers, James R. Sorrell, Jr., Sorrell, Anderson & Sorrell, Corpus Christi, for appellants.
C. M. Henkel, III, Corpus Christi, for appellees.
The issue for determination is whether a vehicle installment sales contract is in violation of the Texas Consumer Credit Code. 1 Tex.Rev.Civ.Stat.Ann. art. 5069-2.01 et seq. (Vernon Pamphlet Supp.1979).
Don B. Caskey and Ralph E. Caskey sued Tradewinds Ford Sales, Inc., Ford Motor Credit Company and Ford Motor Company alleging violations of the Texas Deceptive Trade Practices-Consumer Protection Act, the Texas Consumer Credit Code and the Federal Consumer Protection Act in connection with their purchase of a 1978 Ford Thunderbird. The automobile was financed by the Caskeys' execution of a retail installment contract with Tradewinds, which was later assigned to Ford Credit. Ford Credit and Tradewinds filed a counterclaim against the Caskeys alleging breach of contract for their failure to make payments. After the Deceptive Trade Practices portion of the suit was severed, removing Ford Motor Company from the instant case, a partial summary judgment was rendered against Tradewinds and Ford Credit for eight violations of the Texas Consumer Credit Code. Trial was then to the court on the remaining issues of attorney's fees; additional alleged violations of the Texas Consumer Credit Code; alleged violations of the Federal Truth-in-Lending Act; and alleged violations of Federal Reserve Regulation Z. Judgment was rendered in favor of the Caskeys against Tradewinds and Ford Credit for statutory penalties under the Texas Consumer Credit Code, including attorney's fees, for the eight violations thereof; recovery was denied under the Federal Truth-in-Lending Act, Federal Reserve Regulation Z 2 and the alleged additional violations of the Texas Consumer Credit Code. The Caskeys were found to have been in default on their contractual obligations, but because of the violations of the Texas Consumer Credit Code, Tradewinds and Ford Credit were denied recovery on their counterclaim. Tradewinds and Ford Credit appeal. We reverse and render.
In fourteen points of error, Tradewinds and Ford Credit contend that the trial court erred in granting judgment for the Caskeys because the installment contract did not violate the Consumer Credit Code in the specific instances found by the court. 3 Appellants Since the provisions of the Consumer Credit Code are penal in nature, these provisions will be strictly construed. Commerce Trust Company v. Best, 124 Tex. 583, 80 S.W.2d 942, 946 (1935); Hight v. Jim Bass Ford, 552 S.W.2d 490, 491 (Tex.Civ.App. Austin 1977, writ ref'd n. r. e.). Also, any doubt as to the intention of the legislature to punish the conduct of the appellant should be resolved in favor of that party. Gulf, Colorado & S. F. Ry. Co. v. Dwyer, 84 Tex. 194, 19 S.W. 470 (1892).
also urge that the court erred in refusing to grant judgment on their counterclaim.
The trial court concluded that the contract violated the Texas Consumer Credit Code by:
1. (C)ontractually allowing the Seller in paragraph 19 of the Retail Installment Contract to accelerate the maturity of the contract under conditions expressly prohibited in that same may be accelerated if the Buyer fails to comply with any provisions of the contract, all contrary to Section 7.07(1) of the Texas Consumer Credit Code.
Ford Credit and Tradewinds argue that the contract did not provide for acceleration of maturity of the indebtedness under conditions expressly prohibited by the Consumer Credit Code. We agree.
Article 5069-7.07(1) of the Code provides:
No retail installment contract or retail charge agreement shall:
(1) Provide that the seller or holder may accelerate the maturity of any part or all of the amount owing thereunder unless (a) the buyer is in default on the performance of any of his obligations or (b) the seller or holder in good faith believes that the prospect of payment or performance is impaired.
Paragraph 19 of the contract allows the unpaid balance to be declared immediately due and payable in four specified instances:
(1) When the buyer defaults in any payment.
(2) When the buyer fails to obtain or maintain required insurance.
(3) When the buyer fails to comply with any provision of the contract.
(4) When the seller in good faith believes that the prospect of payment or performance is impaired.
We hold that none of the provisions listed above violates the Code in the manner found by the trial judge. A creditor has the right to contract for acceleration of the date of maturity when the buyer has defaulted in his obligation to make timely payments. Ramo, Inc. v. English, 500 S.W.2d 461, 466 (Tex.1973); Motor & Industrial Finance Corporation v. Hughes, 157 Tex. 276, 302 S.W.2d 386, 394 (1957). Also, with regard to the insurance requirement, Articles 5069-7.06(1) and 7.02(2) of the Code specifically permits a seller to require the maintenance of credit life or property insurance.
Furthermore, Article 5069-7.07(1)(a) expressly permits acceleration when "the buyer is in default on the performance of any of his obligations." Default in any payment and failure to obtain or maintain required insurance are clearly defaults in the performance of the buyer's obligations and thus are instances in which acceleration is expressly permitted by the Code.
The provision permitting acceleration if the buyer fails to comply with any provision of the contract essentially repeats the language of Article 5069-7.07(1)(a) and thus does not violate the Code. Nor do we find any violation in the provision which permits acceleration when the seller "in good faith believes that the prospect of payment or performance is impaired." This provision merely repeats the language found in Article 5069-7.07(1)(b) and does not violate the code.
The trial court also concluded that the contract violated Article 5069-7.07(3) 4 of the Texas Consumer Credit Code by:
2. (C)ontractually allowing the Seller, pursuant to the terms of paragraph 19 of the Retail Installment Contract to enter upon Buyer's premises unlawfully and to commit a breach of peace in effecting repossession of the property, contrary to Section 7.07(3) of the Texas Consumer Credit Code in the following respects:
(a) By giving the Seller the right to repossess the property wherever the same may be found with free right of entry.
(b) By giving the Seller the right to retain personalty in or attached to the property when repossessed. 5
Appellants urge that the parties have not agreed that appellants could enter appellees' premises unlawfully and commit a breach of the peace in effecting repossession of the collateral. It is appellants' position that the contract permits repossession only if seller finds the collateral at a place where "free right of entry" exists. They contend that such "right of entry" is determined by rights given under the Texas Business & Commerce Code and, therefore, the language does not attempt an unlawful expansion of the seller's legal repossession rights or excuse an unlawful entry.
The contract provides in the event of default,
Appellants argue that the contract provision refers to the remedy of repossession specifically conferred by Tex.Bus. & Com.Code Ann. § 9.503 (Vernon Supp.1980) which provides in part:
Unless otherwise agreed a secured party has on default the right to take possession of the collateral. In taking possession a secured party may proceed without judicial process if this can be done without breach of the peace or may proceed by action. . . .
The Caskeys contend that the language of the contract which gives the seller the right of repossession of the property "wherever the same may be found" gives seller a remedy beyond that allowed in the Texas Business & Commerce Code and, as a result, violates the Texas Consumer Credit Code.
In construing this contract we must apply the rule as stated in Piper It is the duty of the court to look to the entire instrument so that the effect or meaning of one part on any other part may be determined.
In addition, we must presume "that in contracting parties intend to observe and obey the law." Nevels v. Harris, 129 Tex. 190, 102 S.W.2d 1046 (1937); Walker v. Temple Trust Co., 124 Tex. 575, 80 S.W.2d 935, 936 (Com.App.1935, opinion adopted).
Applying these rules, we hold the phrase "free right of entry" qualifies or limits the phrase "wherever the same may be found," and authorizes the seller to enter only where he has free right of entry. Thus, the contract does not authorize appellants to enter appellees' premises unlawfully and commit a breach of the peace in effecting repossession of the collateral.
The trial court also concluded that the contract violated Article 5069-7.07(4) 6 of the Code by:
3. (C)ontractually providing in paragraph 19 of the Retail Installment Contract for a waiver of Buyer's rights of action against Seller or holder or any other person acting therefor for any...
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