Opinion
No. 6982.
May 3, 1951.
APPEAL FROM THE CIRCUIT COURT, SCOTT COUNTY, R. B. OLIVER, III, J.
Not to be published in State Reports.
J. Grant Frye, Cape Girardeau, for appellant.
Blanton Blanton, Sikeston, for respondent.
This is a suit in two counts, the first asking judgment on a promissory note, by an endorsee thereof, and to foreclose a chattel mortgage securing the same, and the second count seeks to replevin the automobile upon which the mortgage was given. From a judgment for the plaintiff on both counts, defendant has appealed.
The petition alleges that plaintiff was the owner of a certain promissory note dated March 31, 1949 in the sum of $1,604.19, payable in 21 equal monthly installments of $76.39, beginning May 1, 1949, one installment becoming due the first day of each month thereafter. The payments were to draw interest, at the highest lawful rate, if unpaid at maturity, and the note provided that if any installment was not paid when due the entire amount should, at the election of the holder, become due and, also, the maker agreed to pay an attorney's fee of 15 percent, if placed in the hands of an attorney for collection. That plaintiff was the holder of the note, having purchased it from the Jarvis Motor and Equipment Company, Inc., in due course and without notice of any infirmity in its execution. It was further alleged that defendant had failed to pay the installment due December 1, 1949, that plaintiff elected to declare the entire amount due which was $1,069.46, and that a chattel mortgage had been given upon a 1947 Dodge motor car to secure the payment of the note.
The prayer asked judgment for $1,069.46 with interest at 8% from December 1, 1949, plus 15% attorney's fee and that the judgment to be rendered be declared a lien upon the automobile, that the same be foreclosed and sold and the proceeds applied upon the note.
The second count was for replevin of the automobile which the defendant had in his possession. Attached to the verified petition was a copy of the note and mortgage securing it. Bond was given and plaintiff took possession of the automobile.
The first count of the answer admitted the execution of the note and mortgage but stated that they were executed in blank with the understanding that the purchase price of the automobile was $1,225 and an insurance premium of $126, making a total of $1,351 payable in 21 equal monthly installments, but that the note and mortgage were filled in by an agent of payee for a different amount exceeding the agreed price, and that plaintiff had knowledge thereof. It admitted the seven monthly payments thereon, as alleged in the petition, but further alleged that the note was usurious and that the chattel mortgage securing the same was therefore void. The prayer was for the return of the automobile seized and for $250 damages for the wrongful taking and detention thereof.
The second count of the answer was a counterclaim asking for the return of the $534.73, which defendant had paid to the plaintiff. See: Rukavina v. Accounts Supervision Corp., Mo.App., 237 S.W.2d 503.
A reply was filed denying in effect all of the allegations of the answer.
The evidence on the part of the plaintiff was that it was the holder in due course of the note in question; that it had paid $1,225 to the Jarvis Motor and Equipment Company for the note which was in the sum of $1,604.19, payable in 21 equal monthly installments of $76.39 each, seven of which installments had been paid, leaving a balance due of the amount sued for. That during these seven months defendant made no complaint as to the amount or number of payments. The evidence further showed that the defendant had a discussion with Mr. Jarvis of the Jarvis Motor and Equipment Company about purchasing an automobile; that he was later told that they had the Dodge in question, the cash purchase price of which was $1,225. The defendant could not pay cash, in fact could not even make a down payment. He did not desire to make as few as 12 or 18 monthly payments, but wanted to buy it on the 21 month payment plan without any payment down. The cash price was less than the 21 payment price. The chattel mortgage and note were entirely filled out when the defendant signed them and the next day after the note and mortgage were signed and the deal made, the note was negotiated by the Jarvis Motor and Equipment Company to plaintiff. Plaintiff, at the time the note was purchased, sent a form letter to the defendant with a book of 21 coupons in the sum of $76.39 each, asking the defendant to present or mail one of the coupons each time a payment was made. Each coupon showed the amount due monthly ($76.39) the date when due and each, upon return to plaintiff, was to be signed by the defendant.
In the form letter, which specified the date of the note, the number of installments and amount of each, the plaintiff told the defendant it was sending the outline of the time payment contract, which it had purchased from the Jarvis Motor and Equipment Company. The letter further stated: "We would appreciate your examination of this and unless we hear from you to the contrary within one week, we will assume that the note, lien instruments and terms as shown here, are correct and in accord with your understanding."
Defendant received this form letter and the coupons and made seven monthly payments to the plaintiff, presenting or mailing at each time the appropriate coupon. On December 1, 1949, defendant became delinquent in his payments, tried to borrow additional money from plaintiff on the motor vehicle, and later, no further payments being made, this action was started. The evidence further showed that the Jarvis Motor and Equipment Company sold most if not all of its time payment notes to the plaintiff, that it sold this note, the next day after its execution, for the sum of $1,225, which was the cash price of the automobile. It also endorsed the note with recourse and the assets of the Jarvis Motor and Equipment Company were approximately $120,000. There was a cash price for the automobile and a time payment price, which was different. The 21 payment price included insurance, interest and a carrying charge for the period covered by the note. This note was made out for the installment price divided into 21 equal payments.
Upon cross examination of plaintiff's witnesses, it was developed when notes were sold to the plaintiff by Jarvis Motor and Equipment Company, that before absolute and final acceptance, they were sent in to the main office located in St. Louis. where they were inspected and either approved or rejected; that if a note were sent in where there had been no down payment in the transaction out of which it grew, it would, in all probability, be rejected by the home office and therefore the sale of the note would not be completed. For that reason there was inserted in this mortgage the statement that there was a down payment, by way of exchange, of a 1940 Model Ford Coupe of the value of $650 and it showed the balance of the cash purchase price was $1,225 but the time price differential, including insurance, was $379.19, which made a balance due on the time price, after deducting the $650 for the 1940 Ford (which was non-existent) of $1,604.19, payable in 21 equal monthly installments of $76.39. The Dodge Motor Car was listed in the mortgage as a 1947 Model. This date was taken from the title and the evidence shows this was probably a mistake as it seems to have been a 1946 Model. The difference between the cash price and the 21 installment price was made up of interest, insurance for the whole period and handling charges, and was taken from a finance schedule furnished by the plaintiff, for the use of the Jarvis Motor and Equipment Company.
The evidence further showed that the difference in a cash price and a time payment price was thoroughly explained to defendant and understood and agreed to by him. The evidence also showed that the plaintiff received the note and mortgage without any knowledge of its infirmities, if any, and that it paid $1,225 in cash for the note.
The evidence on the part of the defendant was that when he signed the note and mortgage, the blanks therein had not been filled in but that his understanding was that the purchase price was to be $1,225 plus the insurance premium and "a certain amount of interest to that." He denied knowing anything about one price for cash and another when purchased on time payment plan. He testified however:
"Q. When was the first time you learned that this note was for $1604.19 instead of $1225 with whatever the interest would be? A. Approximately ten to fifteen days after I bought the car. When I received my book I noticed the payments were pretty high for the amount I paid for the car and I went to talk to Jarvis and he wasn't there, and I asked Ross why the payments were so high. He said, `The interest and insurance and all is considered in that.' I left it at that and didn't take time to go into it further.
"Q. At that time did you know it called for $1600.00? A. No. I was going by the payments — 21 payments of $76.00. I didn't figure the amount up. I thought the payment was high.
"Q. Mr. Ross told you the interest and insurance were figured in and you didn't figure it out? A. That is right.
"Q. You took his word for it? A. Yes, sir."
* * * * * *
"Q. Did you make any down payment when you bought this car? A. No, sir.
"Q. When you signed these papers, I believe you testified on direct examination, you knew there was going to be something added to the $1225.00? A. The only thing I would have expected in my own mind to be added would be a reasonable rate of interest.
"Q. You knew there was to be an additional charge? A. Yes, sir. * * *
"Q. Did you expect to pay an additional amount on a credit transaction? A. Yes. Interest.
"Q. You expected also to pay for the insurance? A. Yes, sir.
"Q. Were you told how much the insurance would be? A. No, sir.
"Q. Were you told how much the carrying charge would be? A. No, sir.
"Q. Were you told how much the interest would be? A. No, sir.
"Q. But you signed this note and mortgage in blank, you say? A. Yes, sir.
"Q. How much education do you have? A. High school."
He admitted the receipt of the letter and coupons from the plaintiff immediately after the transaction and before any payment had been made on it and admitted making seven consecutive payments at the agreed rate, and with each payment the appropriate coupon was surrendered. He said he did not thoroughly read plaintiff's letter sent with the coupons. He also admitted receiving the insurance policy.
Defendant's evidence further showed that before default in the note, he had decided to trade the Dodge for another make of car but when it was ascertained by the seller of the other car that there was still a large amount due on the 21 payments, he refused to go ahead with the deal. It was then that defendant quit making the installment payments and the suit was brought and the car replevined.
Where a law case is tried by the court, after a jury is waived, it is decided de novo by this court on appeal the same as an equity case. Sec. 510.310, R.S.Mo. 1949. Matthews v. McVay, Mo.App., 234 S.W.2d 983.
When the evidence is conflicting, due deference should be given to the decision of the trial court because of the advantage he has in being able to observe and hear the witnesses as they testify, Abbott v. Record, Mo.App., 233 S.W.2d 793, and his decision will not be set aside unless clearly erroneous. Adams v. Gardener, Mo.App., 237 S.W.2d 495.
Bearing these rules in mind, we believe the preponderance of the evidence shows that the blanks in the note and chattel mortgage securing it were filled out when it was signed by the defendant and that he knew there was a difference between the cash price and the installment price on the automobile he purchased. He admitted receiving the letter, accompanied by 21 coupons, from the plaintiff immediately after the purchase of the note, and while he says he made some inquiry about the amount of the payments before he had made the first one, yet with all of the information before him for seven months, without further complaint, he made the payments and it was only when he wanted to get another make of automobile that he quit making them and appeared to be dissatisfied with the transaction.
The law is well settled that there may be a cash price for property and another and higher price where the payments therefor are to be made in installments. This court in Holland-O'Neal Milling Co. v. Rawlings, 217 Mo.App. 466, 268 S.W. 683, loc. cit. 686, said: "The owner of property, whether real or personal, has a right to name the price at which he is willing to sell. He may offer to sell at a designated price for cash, or at a much higher price on a credit, and a credit sale will not constitute usury, however great the difference between the cash price and the credit price, unless the whole transaction was in fact a mere pretense and a sham in order to camouflage the real facts."
To the same effect is the case of General Motors Acceptance Corporation v. Weinrich, 218 Mo.App. 68, 262 S.W. 425, 428, decided by the Kansas City Court of Appeals and which is based upon facts very similar to those in the present case. We must bear in mind that this was not a loan of money, it was a bona fide sale of a motor vehicle. In the last cited case, it was said: "And if the sale be a real and not a pretended transaction, it will not make any difference even though the seller have a cash price and a larger price where the sale is on time or credit. If the buyer chooses to purchase on time and pay the larger price, the taking of a note for the latter will not constitute usury." See also In re Bibbey, D.C., 9 F.2d 944.
Defendant complains because the chattel mortgage recited that he had exchanged, as a down payment, a Ford automobile that he never owned and in fact, did not exchange. This was a rather strange procedure, but the reason for doing so was explained by the witnesses and while we do not wish to be considered as approving transactions of that character, it in no way affected the rights of defendant except it enabled him to complete the time purchase of the Dodge automobile. He had no money to make a down payment, which was one of the requirements before the home office would approve the purchase of the negotiable paper. But with that fictitious transaction included in the chattel mortgage, it still left the bona fide cash price at $1,225 and the time payment price at $1,604.19. It in no way affected defendant's rights, except beneficially.
The evidence shows that plaintiff paid the cash price of the automobile, in cash, to the Jarvis Motor and Equipment Company. The whole transaction enabled the defendant to get his Dodge on payments, the Jarvis Motor and Equipment Company to get the cash price of the automobile and the plaintiff to purchase the negotiable paper executed in the transaction, at a discount, which was the character of the business in which it was engaged.
Defendant chose to purchase the Dodge automobile on the time purchase price and he now has no right to complain. The judgment of the trial court should be affirmed.
It is so ordered.
BLAIR and McDOWELL, JJ., concur.