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JEFFERSON CREDIT CORPORATION v. FRANCISCO MARCANO ET AL. (07/02/69)

CIVIL COURT OF THE CITY OF NEW YORK, TRIAL TERM, NEW YORK COUNTY 1969.NY.42364 <http://www.versuslaw.com>; 302 N.Y.S.2d 390; 60 Misc. 2d 138 July 2, 1969 JEFFERSON CREDIT CORPORATION, PLAINTIFF,v.FRANCISCO MARCANO ET AL., DEFENDANTS AND THIRD-PARTY PLAINTIFFS. FIESTA MOTORS CORP., THIRD-PARTY DEFENDANT Rood, Schwartz & Cohen (Jerold Ruderman of counsel), for plaintiff. Allan J. Silverman for defendants. Plotner & Glickman (Jerome Plotner of counsel), for third-party defendant. Harry T. Nusbaum, J. Author: Nusbaum


Harry T. Nusbaum, J.

Author: Nusbaum

 The plaintiff, a duly licensed finance company principally engaged in the business of purchasing installment contracts from automobile dealers, here sues to recover the unpaid balance of $796.60, plus attorney's fees of $119.49, for a total of $916.09 allegedly due on a contract after the repossession and sale of the vehicle. The defendants, Francisco and Maria Marcano by way of an answer deny all the material allegations of the complaint and have caused to be issued and served a third-party summons and complaint against Fiesta Motors Corp., the contract assignor and dealer from which the automobile was purchased.

From the testimony adduced at the trial, it would appear that on September 26, 1967, the defendants signed a retail installment contract for the purchase of a 1961 Cadillac convertible for the sum of $1,395, plus sales tax and miscellaneous fees totaling $71.75 and credit charges of $299.48, for a total of $1,766.23. On this sum the defendants made a cash down payment of $219.75 and obligated themselves to pay the balance of $1,546.48 in 104 weekly installments of $14.87 each. The contract was duly assigned and guaranteed to the plaintiff corporation on October 3, 1967, which advanced the sum of $650 thereon, holding in reserve the sum of $764.48 because of the defendants' poor credit rating.

The contract signed by the defendants was on a printed form, upon which the name of the plaintiff, Jefferson Credit Corporation was imprinted in several clauses. The contract is printed entirely in English and from this court's observation of the defendant Francisco Marcano, who testified with the aid of a Spanish interpreter, it is doubtful whether any of the clauses were within his grasp or understanding.

At the time the sale was made, the defendants allege and the third-party defendant Fiesta Motors Corp. admits, that a 30-day guarantee on the motor vehicle was given to the defendants. One week later and on two subsequent occasions during the 30-day period, the defendants returned the motor vehicle to the third-party defendant for repairs. He complained of repeated road breakdowns and specifically requested that the transmission and emergency brake be repaired and that the convertible top be fixed. On each occasion he was assured that the repairs would be made and the car put in good running condition. These assurances continued until the 30-day guarantee period had expired, after which the purchaser was advised by the dealer, Fiesta Motors, that its responsibility under the guarantee was over.

Nevertheless the defendants Marcano continued to make the payments under the contract of sale until March 11, 1968, when the car was repossessed by the plaintiff. In a further effort to straighten the matter out, the defendant Marcano on March 15, 1968 paid the plaintiff a repossession charge of $25 and subsequently thereto made regular weekly payments of $15 each on March 26, April 2 and April 9. During this period he attempted to work out an exchange for a better car. These efforts came to nought.

Thereafter the defendant Marcano lodged complaints with the license department and the Attorney-General's office, which extracted an agreement from Fiesta Motors Corp. to pay one half of the cost of repairs which was estimated to be approximately $300. However, the defendants Marcano refused the offer, maintaining that the car was defective and unfit for use on the highway from the day it was purchased. On April 16, 1968, the plaintiff Jefferson Credit Corporation notified the defendants "pursuant to Article 9, Section 504 of the Uniform Commercial Code, that the repossessed vehicle will be held in our possession until April 22, 1968, after which it will be sold." On April 26, 1968, the plaintiff, Jefferson Credit Corporation sold the car at a private sale to the third-party defendant Fiesta Motors for the sum of $348. The Fiesta Motors Corp. repaired the car's transmission and replaced the top at a cost of $402 and resold the car for $1,050.

At this point a review of the arithmetic and financial facts surrounding this transaction may prove interesting.

On September 26, 1967, the defendants purchased the car for the net sum of $1,694.48 ($1,395, plus finance charges of $299.48). Of this sum the defendants paid $219.75 to Fiesta Motors as a down payment and $401.88 to the plaintiff, Jefferson Credit in installment payments for a total of $621.63. Approximately six months later the plaintiff repossessed the car and sold it to the third-party defendant for $348. Thus the plaintiff has already received $401.88 plus $348 for a total of $749.88 to cover its outlay of $650.

The third-party defendant has received $650 from the plaintiff, $219.75 from the defendants Marcano and the additional net sum of $300 ($1,050 less $348 and $402) on the resale of the car, for a total of $1,169.75. The defendants third-party plaintiffs now have no car, have paid $621.63 for partial use of a defective motor vehicle for six months and are here being sued for the additional sum of $916.09 plus interest.

It is the opinion of this court that the contract was unconscionable from its inception, within the purview of section 2-302 of the Uniform Commercial Code and that the subsequent acts of the plaintiff and the third-party defendants were in violation of section 9-504 of the Uniform Commercial Code.

The application of the doctrine of caveat emptor presupposes some parity or equality between the bargaining parties (Jones v. Star Credit Corp., 59 Misc. 2d 189; Star Credit Corp. v. Molina, 59 Misc. 2d 290, 293). In the case at bar there is no semblance of such parity. The defendant, Francisco Marcano with whom the plaintiff's assignor conducted all its business had at best a sketchy knowledge of the English language. It can be stated with a fair degree of certainty that he neither knew nor understood he had waived the implied warranty of merchantability and the implied warranty of fitness for a particular purpose, despite the fact that those waivers are printed in large black type in the contract. It is likewise impossible to assume he knew or understood that he agreed not to set up any claims, defenses, counterclaims, setoffs or cross complaints in any action brought by the assignee of the contract.

During the past several years the constant and growing increase in the production of consumer goods of all kinds and the resulting need to find markets for the sale of these products, coupled with increased employment and general public affluence, have created unprecedented credit expansion which places these products within the reach of all persons, regardless of their economic status.

The possession of automobiles, color TV sets, freezers, stereo record players and the like, have in and of themselves become the status symbols of success and the urgent need to protect the heedless seekers of these symbols from the few unscrupulous merchants who prey upon them has been acknowledged. In 1942, in the case of United States v. Bethlehem Steel Corp. (315 U.S. 289, 326) Justice Frankfurter asked the rhetorical question, "Does any principle in our law have more universal application than the doctrine that courts will not enforce ...


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