Williams v. Caruso Enterprises, Inc.

• Decision Date: 27 March 1956
• Citation: 295 P.2d 592,140 Cal.App.2d Supp. 973
• Parties: 140 Cal.App.2d Supp. 973 Leon C. WILLIAMS, Plaintiff and Respondent, v. CARUSO ENTERPRISES, INC., et al., Commercial Credit Corporation, Defendants and Appellants. Civ. A. 8821. Appellate Department, Superior Court, Los Angeles County, California
• Court: California Superior Court

Page 592

295 P.2d 592

140 Cal.App.2d Supp. 973

Leon C. WILLIAMS, Plaintiff and Respondent, v. CARUSO ENTERPRISES, INC., et al., Commercial Credit Corporation, Defendants and Appellants.

Civ. A. 8821.

Appellate Department, Superior Court, Los Angeles County, California.

March 27, 1956.

Roger J. Pryor, and Block, Toler, Bullock & Biggerstaff, Compton, for appellants.

Marvin Eugene Tincher, Long Beach, for respondent.

PATROSSO, Judge.

Plaintiff instituted this action to recover money paid by him on account of the purchase price of an automobile under a conditional sales contract which it is alleged did not conform to the requirements of Civil Code section 2982. Defendants' answer to plaintiff's complaint, in addition to a denial of the material allegations thereof, set up a counterclaim or offset for the reasonable value of the use of the automobile while in the possession of the plaintiff, which was alleged to be $7 per day or the total sum of $2,030. Upon the trial it was stipulated that the reasonable rental value of the car purchased by plaintiff was 'in excess of but limited to $895.00' and that the reasonable rental value of the car which plaintiff had traded in on account of the purchase price 'was in excess of but limited to $135.00.'

By its findings the court found that compliance was not had with the requirements of section 2982, in that, among other things no copy of the conditional sales contract was delivered to the plaintiff at the time of its execution, and without any finding as to the reasonable value of the use of either car, found that defendant was not entitled to an offset for the reasonable value of the use of the car purchased by plaintiff while in his possession, for the reason, as stated in the conclusions of law, that to do so 'would constitute unjust enrichment of the defendants herein, at the expense of the plaintiff here' and because defendants violated the statute referred to this precluded 'the awarding of any sum as value of the use of said automobile by plaintiff herein, in that to make such award would result in the award of an amount in excess of the value of the automobile in question and would be to permit the wrongdoer to profit by his own wrong, and further that such action would be harsh and inequitable and would vitiate the clear intendment of the legislature in the enactment of section 2982.' Upon these findings the court entered judgment in favor of plaintiff for the sum of $656.68, together with interest thereon, and defendants appeal.

Defendants contend (1) that the court's conclusion that the defendant did not conform to the requirements of section 2982 is not supported by the evidence, and (2) that the court erred in refusing to offset against the amount found due plaintiff the reasonable value of the use of the automobile purchased by plaintiff while it remained in his possession. As to the first contention we find that the evidence supports the trial court's finding of defendant's failure to comply with the statutory requirements with respect to the contract here involved.

In Carter v. Seaboard Finance Co., 1949, 33 Cal.2d 564, 203 P.2d 758, the Supreme Court directly held that section 2982 was enacted for the benefit and protection of purchasers of motor vehicles under conditional sales contracts; that conditional contracts not conforming to the requirements thereof are unenforceable by the seller, and as a purchaser is not to be regarded as in pari delicto with the seller, he may recover the consideration paid by him under the contract.

It has, however, been urged upon us that it is only violations of subdivisions (c) and (d) of Civil Code section 2982 which render conditional sales contract of an automobile unenforceable and not those set forth in subdivisions (a) and (b) of that section, in support of which we are cited to Millick v. Peer, 1955, 130 Cal.App.2d Supp., 894, 896, 279 P.2d 212. But that case has now been repudiated by the court which decided it. Baum v. Aleman, 1956, 139 Cal.App.2d Supp. 929, 293 P.2d 162. Moreover, the same contention was urged and rejected by the Supreme Court in Carter v. Seaboard Finance Co., supra, 33 Cal.2d 564, at page 573, 203 P.2d 758, at page 764, where it is said: 'Since section 2982(c) limiting the time price differential provides that a contract in violation thereof shall be unenforceable and that the buyer may recover three times the amount paid by him on the contract balance, it follows that the additional penalty applies to a violation of that subdivision only. The conclusion that a violation of other provisions renders the contract merely unenforceable is therefore not inconsistent.' This holding was re-affirmed in Estrada v. Alvarez, 38 Cal.2d 386, 388, 240 P.2d 278. These decisions of the Supreme Court are therefore controlling upon us. Nor is their force as authority overcome by reason of the 1949 amendment removing the former provision imposing an additional penalty of three times the amount paid by the buyer on the contract balance for a violation of subdivision (c).

We pass, therefore, to a consideration of the second question which is one of more difficulty. The Supreme Court in the Carter case did not undertake to consider or decide whether in an action by a purchaser to recover the money paid by him under a contract which did not conform to the requirements of section 2982, the seller was entitled to offset against plaintiff's recovery any amount for the use of the vehicle while in the possession of the buyer. And since that decision, neither the Supreme Court nor any District Court of Appeal has discussed or decided this question save in the case of United States Credit Bureau v. Sanders, 1951, 103 Cal.App.2d 806, 230 P.2d 849, and that of Adams v. Caruso Enterprises, 1955, 134 Cal.App.2d 403, 285 P.2d 1022. In the course of the opinion in the first cited case, it is said 103 Cal.App.2d at page 816, 230 P.2d at page 855: 'Cross-complainants [purchasers] were chargeable with the reasonable value of the use of the equipment [motor vehicles] while it was in their possession.' A petition for hearing was denied by the Supreme Court, and in the circumstances, we would normally accept the statement of the District Court of Appeal as final, were it not for the fact that there the purchasers (cross-complainants) affirmatively pleaded the value of the use of the equipment, and this allegation having been defectively denied by the cross-defendants (sellers), no issue was thereby presented. Buyers having, by their pleading, in effect conceded that they were chargeable with the reasonable value of the use of the vehicle while in their possession, in the amount alleged by them, no question with respect thereto arose, and the statement in the opinion quoted above may well be considered as dictum. Moreover, some doubt appears to have been case upon this statement of the District Court of Appeal by the decision of the Supreme Court in the later case of Estrada v. Alvarez, 1952, 38 Cal.2d 386, 388-391, 240 P.2d 278, wherein, in passing upon the sufficiency of a complaint by a buyer seeking to recover the money paid by him under a conditional sales contract for the purchase of an automobile, which contract was void for noncompliance with section 2982, it is held that the plaintiff need not plead compliance with the requirements of Civil Code section 1691, prescribing the conditions precedent to the right to rescind a contract (promptness and a restoration of or offer to restore 'everything of value Which he has received from him under the contract'). While it there appeared from plaintiff's complaint that the defendant had repossessed the vehicle, the complaint was silent as to any restoration or offer to restore the benefits derived by plaintiff from the use of the vehicle while in his possession. True, the Supreme Court did not there undertake to consider or discuss the right of the seller to plead an offset for the value of the use of the vehicle by him, but the necessary implication is that such an action is not to be regarded as one for rescission with its attendant strict requirement that plaintiff do or offer to do equity as a condition to its maintenance.

In Adams v. Caruso Enterprises, supra, 134 Cal.App.2d 403, 285 P.2d 1022, which was an action by a purchaser to recover from the seller the value of an automobile traded in by him and accepted as a down payment under a conditional sales contract of an automobile, which contract did not comply with section 2982, the trial court entered judgment in favor of the plaintiff against the seller for the value of the tradein, less the difference between the rental value of the purchased automobile while in the possession of the buyer and the rental value for the same period of the automobile traded in by the plaintiff. No appeal was taken from the judgment by the plaintiff purchaser, and hence no question was presented as to the propriety of allowing the seller a set-off in the amount of the rental value of the purchased car. Defendant, however, did appeal, and assigned as error the action of the trial court in reducing the offset allowed it in the amount of the rental value of the automobile traded in by the plaintiff. Without undertaking to consider the propriety of allowing an offset to the seller in the amount of the rental value of the car sold to the plaintiff, the court disposed of defendant's contention in the following language, 134 Cal.App.2d at page 409, 285 P.2d at page 1026: 'We perceive no violation of either justice or equity in the action of the court wherein the loss of use of the respective vehicles was equalized.'

As a consequence, a...