Walker v. Associates Commercial Corp.

• Decision Date: 09 December 1983
• Citation: 673 S.W.2d 517,39 UCCRep.Serv. 724
• Parties: William K. WALKER, Plaintiff-Appellee, v. ASSOCIATES COMMERCIAL CORPORATION and Tom Taylor, Defendants-Appellants. 673 S.W.2d 517, 39 UCC Rep.Serv. 724
• Court: Tennessee Court of Appeals

Page 517

673 S.W.2d 517

William K. WALKER, Plaintiff-Appellee, v. ASSOCIATES COMMERCIAL CORPORATION and Tom Taylor Defendants-Appellants.

673 S.W.2d 517, 39 UCC Rep.Serv. 724

Court of Appeals of Tennessee,

Western Section, at

Knoxville.

Dec. 9, 1983.

Application for Permission to Appeal

Denied April 2, 1984.

Raymond E. Lacy, Knoxville, for plaintiff-appellee.

George F. Legg, W. Dale Amburn, Knoxville, for defendants-appellants.

CRAWFORD, Judge.

Defendants, Associates Commercial Corporation (Associates) and Tom Taylor (Taylor), appeal from the judgment of the trial court on a jury verdict. The jury returned a verdict against Associates and Taylor in favor of plaintiff, William K. Walker (Walker), for $45,000 compensatory damages and $80,000 punitive damages which the trial court later remitted to $45,000 compensatory damages and $30,000 punitive damages. Walker accepted the remittitur under protest.

The suit as originally filed included Peterbilt of Knoxville, Inc., as a party defendant, but Walker voluntarily dismissed this defendant during the trial of the cause.

The material allegations of the complaint follow: By virtue of a document entitled Security Agreement (Conditional Sale Contract)--hereinafter referred to as the contract--dated October 24, 1979, Walker purchased a 1978 Peterbilt truck from Peterbilt of Knoxville, Inc., and the contract was then assigned to Associates. The total sale price was $61,117.71 to be paid in 36 monthly installments of $1,447.92 each with the first installment due on November 24, 1979. Prior to the due date of the first installment the vehicle was wrecked and required repairs that kept the tractor out of service. Because of these circumstances Walker obtained an extension of time to pay Associates the first installments. Afterwards, installment payments were made through February, however, in March of 1980 the truck broke down in Kansas necessitating repairs, and the installment due in March of 1980 was not made by Walker. Walker further alleges that the amount due for repairs was only partially covered by warranty. Concerning the remaining amount of $1,500 due on the repair bill, Walker, on April 21, 1980, informed Taylor, an employee of Associates, that he could borrow this amount from friends and relatives in order to obtain the release of the truck from the repair facility in Kansas. Walker and Taylor discussed the past due installment and the necessity of "working" the truck. Taylor informed Walker that he should "go get it, put it to work and then catch this up." Walker avers that as a direct result of the representations of Taylor, he did procure a loan from his friends and relatives, went to Kansas and paid the amount due of $1,500. Therefore, Walker had obtained the truck and was in the process of going to work for another company when he was told on April 28, 1980, that the truck would be repossessed. Associates did in fact pick up the truck on April 29, 1980. Walker states that this repossession breached the oral agreement reached between himself and Taylor that he could work the vehicle and make up the payments. The complaint specifically avers that there was an express modification and waiver of the written contract provisions by virtue of these conversations between Walker and Taylor, the agent of Associates, and that therefore the vehicle was wrongfully repossessed. As an additional cause of action, or in the alternative, the complaint alleges that Taylor acting within the scope of his authority made material misrepresentations of fact concerning Walker's right to work the truck on which he justifiably relied, and that these misrepresentations were willfully, wrongfully and intentionally made with the design and intent to deceive and defraud the plaintiff into paying off the lien on the repairman. The complaint further avers that the truck was damaged through the negligence of the defendant, that Walker received a notice of a public sale which did not take place and that later the vehicle was sold by Associates to Peterbilt, constituting a conversion.

The answer filed by Associates joins issue on the allegations of the complaint and further avers that it repossessed the vehicle pursuant to the contract, that no extension had been given as averred by Walker and that no fee had been paid for an extension. Associates generally denies breaching the contract. The answer further denies any misrepresentation as alleged and avers that the vehicle was sold pursuant to the notice of sale to Peterbilt for $40,762.42. Associates further avers that Walker breached the contract of sale by failing to pay the installment payments as due and that the repossession of the vehicle was pursuant to the contract. Taylor's answer to the complaint joins issue on the material allegations thereof. He denies making any representation creating an extension of the contract terms and states that no fee was paid for any extension. Taylor further asserts that he did not cause the repossession, nor did he cause the sale.

Associates and Taylor present eight issues with various subparts for review by the court. The first issue presented on behalf of Taylor and Associates is whether the trial court should have directed a verdict for these parties at the end of all of the proof in the cause. For the reasons hereinafter set out we feel that the trial court should have directed a verdict for the defendants in part.

On considering a motion for directed verdict, the court is required to take the strongest legitimate view of the evidence in favor of the plaintiff, including all reasonable inferences in the plaintiff's favor, and disregarding any evidence to the contrary. A verdict may be directed only if there is no material evidence in the record which would support the verdict for the plaintiff under any of the theories which plaintiff had advanced. Wharton Transport Corp. v. Bridges, 606 S.W.2d 521 (Tenn.1980); Cecil v. Hardin, 575 S.W.2d 268 (Tenn.1978); Callahan v. Town of Middleton, 41 Tenn.App. 21, 292 S.W.2d 501 (1954).

The suit is premised basically on the contract between Peterbilt as a seller, Walker as a purchaser and subsequently Associates as the assignee of Peterbilt. Taylor is in no way a party or involved in any manner with the written contract and therefore the minds of reasonable men could not differ as to whether he breached a contract to which he was not even a party. Consequently, the trial court should have directed a verdict for Taylor on the breach of contract claim.

Associates, by virtue of the assignment from Peterbilt, is a party to the contract. The contract clearly provides that time is of the essence, and that a default occurs, among other things, when the buyer fails to pay when due any amount owed to the seller. The contract also provides "no waiver or change in this agreement or in any related note shall bind seller unless in writing signed by one of its officers. The term 'seller' shall include any assignee of seller who is the holder of this agreement." The provision just quoted is in the body of the contract signed by Walker.

Tenn.Code Ann. Sec. 47-2-209 (1979), provides in part:

(1) An agreement modifying a contract within this chapter needs no consideration to be binding.

(2) A signed agreement which excludes modification or recission except by a signed writing cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party. (Emphasis supplied).

We feel the provision concerning modification of the contract quoted above is not enforceable in view of this section of the UCC. According to the contract before this court, the modification clause not allowing parol changes to be binding on the seller was not separately signed by Walker as explicitly stated by Tenn.Code Ann. Sec. 47-2-209(2) (1979). Walker contends that Taylor on behalf of Associates extended the time for payment and thus modified the contract by parol, a situation resulting in no default by Walker and therefore no breach by Walker. With this theory he contends that Associates breached the contract by wrongfully repossessing the truck.

The dispositive issue in this case boils down to whether the contract was modified by parol. If so, Walker was not delinquent and Associates breached the contract by repossessing the truck. The undisputed proof is that at the time Walker allegedly obtained the oral extension from Taylor he was in default on the March, 1980, installment. The proof is equally undisputed that while there was some mention of an extension fee, no fee or other consideration passed to...