111 N.E.2d 871 (1953); Stone, "The Common Law in the United States," 50 Harv. L. Rev. 4, 12-18 (1936).
I need not reach the question of whether a separate private right of action for damages under § 396-p(3) apart from a suit for the penalties mentioned in § 396-p(4) can be inferred.
A further question is whether the electronic transfer of funds sent by the plaintiff-buyer to the defendant automobile dealer constitutes part performance of a contract for an indivisible item and therefore takes the transaction out of the Statue of Frauds under UCC 2-201(3)(c). It does not, for several reasons.
First, Wide World's own purchase order, referred to in part II above, makes it clear that Wide World's intention, communicated to Jones, was that no bilateral binding purchase agreement would exist unless the purchase order was signed by the purchaser as well as by Wide World: it was never signed by the purchaser.
Second, General Business Law § 396-p(3), quoted in part V, precludes use of down payments for automobiles as a substitute for a written contract signed by the buyer.
Third, ordinary public expectation would be flouted by a ruling that one who puts money down, becomes committed to a transaction for which the details have yet to be established. See generally N.Y. Gen. Oblig. Law § 5-702 (plain language law for consumer contracts). Cases dealing with the binding effect of down payments such as Thomaier, supra, have held the seller recipient of the down payment bound, but not the purchaser.
Fourth, cases under the statute of frauds itself suggest that it is the recipient accepting a down payment, not a buyer parting with the money, who may be bound. In Starr v. Freeport Dodge, Inc., 54 Misc. 2d 271, 282 N.Y.S.2d 58, 4 UCC Rep. Serv. 644 (Dist.Ct. 1967), a purchaser claimed to have signed an order form for a new automobile which described the vehicle and also made a $ 25 down payment for the vehicle. The court found that acceptance of the deposit permitted the seller to be held bound. In Thomaier v. Hoffman, supra, the court held that the seller was bound when the plaintiff paid a $ 1,000 down payment and the defendant seller placed a signed order with the manufacturer for such a vehicle. In Cohn v. Fisher, 118 N.J. Super. 286, 287 A.2d 222, 10 UCC Rep. Serv. 372 (N.J. Super Ct. 1972), the court held that a check which bore the legend "deposit on Aux. Sloop D'Arc Wind, full amount $ 4,650", was sufficient. No such indicia of intention to form a binding purchase and sale contract are present here.
Thus the distinction between this case and those in which a deposit was considered part performance of an asserted binding contract was that in the cases finding a binding contract based on a deposit, it was the acceptor of the funds which was held bound, or that there were "plus factors" beyond the deposit alone to support the conclusion that a contract was made, or both. Plus factors have included a signed order form, a descriptive legend on a check, or an order from a dealer to a manufacturer.
A consumer putting down a payment is making a monetary sacrifice and showing good faith seriousness to encourage the seller to take the potential sale seriously and to hold the goods. To find that the down payment irrevocably commits the potential buyer when the details of the arrangement may still be shrouded in mystery would be contrary to ordinary experience and elementary fairness. See generally Songbird Jet Ltd., Inc. v. Amax Inc., 605 F. Supp. 1097 (S.D.N.Y. 1985) (Weinfeld, J.).
A consumer down payment on a product not specially made for the buyer, standing alone, is entirely consistent with an articulated or implicit agreement that it would serve as "earnest money" to be refunded if the transaction was called off. It and cannot do duty in lieu of a writing to establish a binding purchase and sale contract. Bordeau v. Oakley, 185 A.D.2d 417, 585 N.Y.S.2d 623 (3d Dept. 1992).
Since there never was a contract enforceable against him, Jones is entitled to restitution of his $ 50,000 deposit and Wide World's motion to include a counterclaim for breach of contract must be denied. Wide World was obligated to return the deposit when Jones rejected its offer and demanded a refund. In failing to do this, Wide World incurred liability for conversion.
"Conversion is an unauthorized assumption and exercise of the right of ownership over goods belonging to another to the exclusion of the owner's rights." Peters Griffin Woodward, Inc. v. WCSC, Inc. 88 A.D.2d 883, 452 N.Y.S.2d 599, 600 (1st Dep't 1982). Money can be the subject of a conversion action if it is specifically identifiable. Id. This condition is met here since Wide World acknowledges withholding Jones' $ 50,000 wire transfer.
Jones alleges violations of N.Y. Gen. Bus. Law §§ 349 and 350, providing that deceptive practices and false advertising done in the course of business, trade or commerce are unlawful. Unlike § 396-p(3), both statutes contain identical provisions authorizing private causes of action:
. . . any person who has been injured by reason of any violation of this section may bring an action . . . to enjoin such unlawful act or practice, an action to recover . . . actual damages or fifty dollars, whichever is greater, or both such actions. The court may, in its discretion, increase the award of damages to an amount not to exceed three times the actual damages up to one thousand dollars, if the court finds the defendant willfully or knowingly violated this section. The court may award reasonable attorney's fees to a prevailing plaintiff.
N.Y. Gen. Bus. Law § 349(h), 350-d(3).
Under these provisions, in addition to refund of Jones' deposit, which I have already determined is necessary, Jones may obtain injunctive relief if appropriate, and the court may award legal fees to a prevailing plaintiff.
The elements of a claim under these consumer protection statutes are that 1) the practice or advertising was misleading in a material respect, and 2) that the plaintiff was injured. See McDonald v. North Shore Yacht Sales, Inc. 134 Misc. 2d 910, 513 N.Y.S.2d 590 (Sup.Ct. 1987). It need not be shown that a deceptive act or false advertising amounted to fraud. See Allstate Ins. Co. v. Foschio, 93 A.D.2d 328, 462 N.Y.S.2d 44 (2d Dep't 1983); compare N.Y. Penal Law§§ 190.60, 190.65 (state scheme to defraud statute based upon federal mail fraud section, 18 USC § 1341).
There is evidence in this case which raises the inference that defendant's conduct may have constituted a deceptive practice, and that its advertising may have been misleading, but I find it would be premature to rule prior to trial that no genuine issue of material fact as to these claims exists.
Under Fed. R. Civ. P. 56(e), "affidavits" should be based upon personal knowledge or they should state sources of information and belief. Affidavits have been submitted in this caseby both sides harshly criticizing their adversary, rather than merely providing facts, in ways that do not appear to meet these criteria.
Affidavits of this type do not promote the objectives of Fed.R.Civ.P. 1 (the just, speedy and inexpensive determination of every action) and are contrary to Canon 25 of the Canons of Professional Ethics, calling for adherence to customary behavior expected by the court of members of its Bar unless departure is justified.
To sanction either party in such a way as to benefit the other would be inappropriate since both appear to have engaged in such behavior.
It is also contrary to the objectives of Fed.R.Civ.P. 1 to permit side litigation over sanctions to interfere with adjudication of the merits where this unfortunate result can be avoided.
I am confident that these gentle comments will suffice to encourage the attorneys to refraim from filing further material of this type, and that I shall not hereafter need to consider other sanctions under Fed.R.Civ.P. 11 or under the court's inherent power, set forth in Chambers v. NASCO, 111 S. Ct. 2123, 115 L. Ed. 2d 27 (1991). See Roberts v. Lyons, 131 F.R.D. 75 (E.D. Pa. 1990) (reprimand as sanction).
Consideration of the applications for sanctions which have already been filed is deferred until conclusion of the case.
My ruling that Wide World is required to refund Jones' deposit is made pursuant to Fed.R.Civ.P. 56(d). The parties are directed to consider and discuss with each other whether this case may now be settled.
If settlement is not attainable at this time, the parties are directed to consider whether a separate judgment pursuant to Fed.R.Civ.P. 54(b) concerning payment of the deposit, or an expedited trial of the remaining issues in the case would be appropriate. A motion for a certificate pursuant to Rule 54(b) may be made without further leave if appropriate.
A further pretrial conference will be held on July 15, 1993 at 10 A.M. to establish a schedule for further steps in this litigation.
Dated: White Plains, N.Y.
May 6, 1993
VINCENT L. BRODERICK, U.S.D.J.