Universal C. I. T. Credit Corp. v. Hulett

• Decision Date: 09 April 1963
• Docket Number: No. 810,810
• Citation: 151 So.2d 705
• Parties: UNIVERSAL C.I.T. CREDIT CORPORATION, Plaintiff-Appellant, v. Henry HULETT et uz., Defendants-Appellees.
• Court: Court of Appeal of Louisiana — District of US

Page 705

151 So.2d 705

UNIVERSAL C.I.T. CREDIT CORPORATION, Plaintiff-Appellant, v. Henry HULETT et uz., Defendants-Appellees.

No. 810.

Court of Appeal of Louisiana, Third Circuit.

April 9, 1963.

William C. Boone, Leesville, for plaintiff-appellant.

Wm. C. Pegues, III, DeRidder, for defendants-appellees.

Before TATE, FRUGE and HOOD, JJ.

TATE, Judge.

This is a suit to recover a deficiency due for the purchase price of an automobile. The automobile was repossessed by the creditor in Louisiana and then sold in Indiana at a nonjudicial sale.

The central issue is a conflict-of-law question. The issue is whether the plaintiff's right to a deficiency judgment is to be determined by reference to the law of Louisiana or to the law of Indiana.

The trial court sustained the defendants' motion for summary judgment, since it held that under the undisputed facts the plaintiff's rights are to be determined by reference to the law of Louisiana, under which a deficiency judgment is barred when the repossession sale is made without appraisement. The plaintiff appeals from the consequent dismissal of its suit.

The undisputed facts show:

The defendants purchased an Edsel automobile in 1959 from an Indiana firm. The conveyance was made by a conditional sale contract executed in Indiana, which was immediately assigned to an Indiana office of the plaintiff finance company.

On its face, however, this contract showed that the defendants-purchasers were at the time residents of Louisiana and that following the purchase the car was to be brought to and kept in Vernon Parish, Louisiana.

Some five months after the Indiana sale, the automobile was repossessed by the plaintiff's agent in Vernon Parish, Louisiana with the written consent of the defendant wife.

The vehicle was immediately returned to Indiana, where it was sold by the plaintiff at a nonjudicial public sale in accordance with the Indiana statutes. The sale was made without appraisement, which is not required by Indiana law as a prerequisite to the creditor's obtaining a deficiency judgment.

If Louisiana law is regarded as regulating the question, the creditor is not entitled to a deficiency judgment under the statutory law and public policy of this State, because the repossessed vehicle was sold without the debtors having been afforded the benefit of a prior appraisement, which ordinarily fixes a minimum selling price. See the Louisiana Deficiency Judgment Act, LSA-R.S. 13:4106, 4107. As stated in David Investment Co. v. Wright, La.App. 1 Cir., 89 So.2d 442, 444, 'under the stringent public policy provisions of the Deficiency Judgment Act as interpreted, a mortgage creditor is absolutely barred from a deficiency judgment where he provokes a sale, judicial or private, without the benefit of appraisement, * * *'. See also Atlas Finance Corp. v. Whitehead, La.App. Orleans, 99 So.2d 481; Farmerville Bank v. Scheen, La.App. 2 Cir., 76 So.2d 581.

If, to the contrary, Indiana law is regarded as governing the question, the plaintiff creditor did comply with the Indiana prerequisites for a deficiency judgment. It gave prior written notice to the debtor of the repossession sale, and it also posted prior notice of the sale in three public places in the Indiana county of sale. Under Indiana statutory law, further, the creditor was entitled to hold the nonjudicial sale after repossession either at the place of the repossession (Vernon Parish, Louisiana) or at the place where the goods had originally been sole (Indiana).

In contending that the plaintiff company is entitled to a deficiency judgment because it had complied with all the necessary prerequisites of Indiana law therefor, able counsel for the plaintiff relies upon jurisprudence to the effect that the law of the state in which a contract is executed governs procedure in the performance of the provisions of the contract. Thus, argues counsel, this is an Indiana conditional sale of a motor vehicle located at the time in Indiana, which subsequent to its repossession was formally sold in Indiana by a public sale conducted in accordance with the laws of Indiana pursuant to which the plaintiff-creditor is entitled to a deficiency judgment.

On the other hand, as counsel for the appellees argues, this conditional sales contract may indeed have been executed in Indiana, but it shows on its face that the vehicle was sold to Louisiana residents in order to be brought into Louisiana, as a result of which the effects of the conditional sale and the subsequent repossession sale all must be regarded as governed by the law of Louisiana. 'In Louisiana, the rule has been generally stated to be that the law of the place where the contract is to have effect determines the rights and obligations of the parties. See General Talking Pictures Corp. v. Pine Tree Amusement Co., 180 La. 529, 156 So. 812; American Slicing Machine Co. v. Rothschild et al., 12 La.App. 287, 125 So. 499, and Finance Security Co., Inc. v. Mexic, La.App., 188 So. 657'. McKane v. New Amsterdam Casualty Co., La.App., Orleans, 199 So. 175, 182.

Thus, even though conditional sales and unrecorded chattel mortgages are not recognized in Louisiana, through comity the Louisiana courts will nevertheless enforce such transactions when validly confected in another state, even to the prejudice of innocent third persons who have dealt with the property in Louisiana--providing the property has been brought into Louisiana Without the creditor's consent. If the chattel which was the object of the foreign conditional sale or chattel mortgage is brought into Louisiana With the consent or to the knowledge of the creditor, however, the Louisiana courts will then apply the Louisiana law and policy protecting third persons who deal with the property in Louisiana (instead of enforcing the conflicting foreign-law rights of the creditor), on the theory that the creditor consented to or intended the application of Louisiana law to dealings with the movable brought to Louisiana with his consent or to his knowledge. See, e.g.: Fisher v. Bullington, 223 La. 368, 65 So.2d 880 and Finance Security Co. v. Mexic, La.App.Orleans, 188 So. 657 (conditional sales--also Restatement of Conflict of Laws, Sections 275 and 276); G.F.C. Corp. v. Rollins, 221 La. 166, 59 So.2d 108 and General Motors Acceptance Corp. v. Nuss, 195 La. 209, 196 So. 323 (chattel mortgages--also Restatement, Sections 268, 269, 271).

The cited jurisprudence relates only to the effect of the extra-state transaction insofar as affecting the rights of innocent third parties dealing with the property after it has been brought into Louisiana.

Nevertheless, perhaps the rationale of these cases can be said to apply insofar as also determining under which state's law the rights of the parties to the contract themselves should be determined. Under the rationale of such jurisprudence, the present might then be regarded as a situation where the conditional sale of the automobile, as well as the right to repossess it and to obtain a deficiency judgment, all are regarded as regulated by the law of the place where the contract was intended to have effect--namely, Louisiana, where the purchased automobile was intended to be brought and thereafter to be maintained by the purchaser or to be repossessed by the seller in the event of default, and in which place the vehicle was actually repossessed. Likewise, the recovery of a deficiency judgment might be regarded as governed by the law of the situs of the mortgaged property, which is for many purposes regard as Louisiana, where the parties intended the chattel to be brought and maintained. See Leflar, Conflict of Laws (1959), Section 154.¹

Such an approach indeed furnishes a legical method to resolve the conflict-of-law problem now before us.

We should point out, however, that the mechanical application of other conflict-of-law principles also apparently pertinent may with equal logic furnish a contrary answer.

For instance, the present conditional sale contract was executed in Indiana. Although the sale by its terms shows that the vehicle conveyed was intended to be brought to Louisiana (where in all probability it would be repossessed in the event of default), the conditional vendor can argue that the contract was executed under Indiana law, which enters into and forms part of the contract, and under which law the conditional vendor had the right to hold the repossession sale in the place where the contract was executed, namely, Indiana (as well as in the place where the property was repossessed, Louisiana). The purchasers may thus have bought their vehicle subject to the right under Indiana law of the conditional vendor or his assignee to bring the repossessed vehicle back to Indiana and then to hold the repossession sale in accordance with the laws of Indiana, under which no appraisement prior to the sale is required and under which the present creditor is entitled to a deficiency judgment.² (Further, by voluntarily surrendering the vehicle to the creditor, the debtors may arguably have consented to the return of the vehicle to Indiana and to the jurisdiction of the Indiana law pertaining to repossession sales.)

In summary, it may be argued that, as between the parties to the contract, the nature and extent of the creditor's interest insofar as obtaining a deficiency judgment should be determined by the law of Indiana, where the vehicle was situated at the time the contract was executed, where the contract was executed, and where the creditor's lien was created, under principles to this effect set forth in the Restatement of Conflict of Laws, Sections 258, 261, 262, 279, 281.

Further, even if we regard this contract as governed by the law of the 'place where the contract was intended to have effect', it may occur to us that the contract contemplated several factual incidents intended to be effected in different places, including: (a) execution of the contrary in Indiana; (b)...