CARTER v. SEABOARD FINANCE CO

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District Court of Appeal, Second District, Division 3, California.

CARTER v. SEABOARD FINANCE CO.*

Civ. 16019.

Decided: May 24, 1948

A. W. Brunton and Lauren M. Handley, both of Los Angeles, for appellant. Bromley, Ritter & Lindersmith, of Los Angeles, for respondent.

This is an appeal by plaintiff Austin Carter from an adverse judgment rendered on three separate causes of action against the Seaboard Finance Company (herein called Seaboard), a personal property broker duly licensed under the laws of this state. The litigation arose in the following manner. In the early part of 1946, Carter decided to enter the trucking business with one Spurgeon, a previous business associate. Together they had about $5,000 to invest in the venture. Negotiations were entered into with one Brace, who was the local truck manager for Seaboard, resulting in the purchase on March 11, 1946 of one General Motors truck and Weber trailer, and one Sterling truck and Fruehauf trailer.

At the time of sale, the General Motors truck was the property of Charles Moose, subject to a chattel mortgage to the Bank of America, and had been parked in the System Freight Company yards in Los Angeles. The Weber trailer was in the possession of Maloney & Temple, used truck dealers, to whom it had been delivered by its owner, Northern Transportation Company, for the purpose of sale. The Sterling truck and Fruehauf trailer were the property of one Houston, subject to a chattel mortgage in favor of Seaboard. Pursuant to the terms of this mortgage, Seaboard had repossessed the two Houston vehicles after default by Houston, and, after giving the five days' notice of election to sell required by the terms of the mortgage, had placed them in the hands of the said Maloney & Temple for the purpose of sale.

The purchase of the four vehicles was consummated at the offices of Seaboard, in the presence of Mr. Lyon, the branch office manager. The transactions, however, were handled by Brace, who was the sole person with whom Carter dealt in negotiating and arranging for the purchase of the equipment. Carter paid $4,700 to Seaboard as a cash payment, and executed in Seaboard's favor a promissory note for $15,658.41 and a chattel mortgage as security, covering all four vehicles. The note called for payment in seventeen successive monthly installments of $1,000, beginning April 22, 1946, plus a final installment on September 22, 1947, in an unstated amount, covering any unpaid balance and charges then due. The charges were to be computed at the rate of 1 1/2 per cent per month on the monthly unpaid principal balances. The note stipulated that, ‘The word ‘charges' shall be deemed to include interest at 10% per annum.’

Carter also signed a ‘Statement of Loan,’ which recited the terms of the note, and designated Seaboard as agent to receive out of the loan specified amounts for disbursement to certain named persons and firms. The undisputed evidence shows that, pursuant to these directions, payments were made as follows: (a) $7,685.72 paid to Seaboard Finance Company in satisfaction of the Houston mortgage on the Sterling truck and Fruehauf trailer; (b) $1,514.28 paid to Temple, of Maloney & Temple, for sales taxes, repairs, license fees, etc. on the Sterling truck; (c) $6,918.75 to the Bank of America, as the price for release of the General Motors truck from the Moose chattel mortgage; (d) $1,947.50 to Northern Transportation Company in full payment of the price of the Weber trailer; (e) $1,000 to Charles Moose as insurance broker, for insurance covering the vehicles; (f) $1,106.76 for tires purchased from third parties; (g) $185.40 for filing fees and taxes paid to the Department of Motor Vehicles. The amount of the promissory note, $15,658.41, represented the difference between the total of these disbursements and the down payment of $4,700. The ‘Statement of Loan’ contained appropriate entries stating the ‘total amount paid for disbursement’ to be $15,658.41, the ‘total retained by borrower’ to be 0, the ‘estimated charges' to be $2,341.59, and the ‘estimated total to be repaid by borrower’ to be $18,000.

Subsequently, under date of March 11, 1946, additional disbursements of $123.31 for tires and $780.35 for insurance were made by Seaboard for Carter's benefit, and added to his principal balance, pursuant to purported written authorizations by Carter. These additions brought the amount of the balance to $16,562.07, which amount was, however, reduced by an unexplained credit to Carter of $83.73, making a total balance of $16,478.34 as of March 11, 1946.

Spurgeon, who provided $2,500 of the down payment, was not a party to any of the foregoing instruments, and the vehicles were subsequently registered in the name of Carter alone. Although Carter provided only $2,200 of the down payment, he spent an additional $300 for the purchase of new beds for the General Motors truck and Weber trailer, thereby equating his initial investment with that of Spurgeon.

In due course, possession of the vehicles was taken by Carter and Spurgeon. The Sterling truck soon developed defects which rendered it unfit for use, and in order to restore it to suitable operating condition, it was found necessary to install a new motor and make other substantial repairs, at a total cost of $2,477.40. This sum was paid by Seaboard at Carter's request, and, pursuant to a written authorization signed by Carter, was added to his existing indebtedness, increasing the principal sum to $18,955.74. Due to the delay while the repairs were being made, Carter was unable to commence regular operation of the Sterling truck or Fruehauf trailer in the trucking business until more than a month after the date of purchase.

Cal.App.rter's first payment to Seaboard was not made until May 14, 1946, at which time $400 was paid. Thereafter, five additional payments in varying amounts were made, the final one being on June 28, 1946. The six payments totaled $1,776.23. No other payments were made at any time.

About the beginning of July, Spurgeon called Brace and advised him that he did not have enough money to make the payments, and that Carter would not, and that he, Spurgeon, wasn't getting any benefit or income from the equipment and wanted to surrender possession to Seaboard. Brace directed Spurgeon to deliver the four vehicles to Maloney & Temple's lot, which was done. Brace thereafter gave Carter notice, as required in the chattel mortgage, that the equipment would be sold unless, within five days, Carter paid the entire unpaid balance and charges then due, amounting to more than $18,500.

Cal.App.rter alone, without joining Spurgeon as plaintiff, thereupon commenced this action against Seaboard, and a temporary injunction was issued restraining the sale of the equipment pending the trial. The amended complaint set forth three separate causes of action, the first alleging fraud in the sale of the Sterling truck, the second alleging violation of the conditional sales law, Civ.Code, secs. 2981–82, which allegedly rendered the contract void, and the third alleging usury and various violations of the Personal Property Brokers Act. Gen.Laws, Act 5825(2d). A subsequent amendment to plaintiff's first cause of action, permitted to be made at trial, alleged that the ‘authorization to charge’ the sum of $2,477.40 on account of repairs was filled in by defendant, without plaintiff's authorization or knowledge, on a blank form previously signed by plaintiff, and asked that it be surrendered up and cancelled.

The trial court found that Seaboard was not guilty of fraud in connection with any of the transactions here involved; that the conditional sales law was not applicable to the transaction, either in whole or in part; and that the defendant neither charged nor accepted any usurious interest from the plaintiff, and did not violate the Personal Property Brokers Act. The allegations of the amendment to the first cause of action were also found to be not true. Accordingly, judgment was rendered in favor of Seaboard on all three causes of action.

The First Cause of Action.

In reference to the cause of action for fraud, the complaint contained allegations that Seaboard had knowingly and falsely represented that the Sterling truck was in good mechanical condition suitable for operation with a heavy load, and that the motor had just been reconditioned and reworked. No other misrepresentations were charged. The allegations that these representations had been made were found to be not true. Appellant maintains that there is no evidence to support the finding. A review of the testimony will demonstrate the error in this contention. Brace denied that he made any ‘statement or representations to Carter as to the condition of the Sterling truck.’ On direct examination, Carter testified that, ‘Mr. Brace told me that this truck was in good condition. That they had spent a considerable amount of money, and he showed me some bills he had received from Garvey Truck Service in Stockton.’ On cross examination, however, Carter's testimony was somewhat altered: ‘He told me that they spent all that money on it; that the truck should be in good shape, and I shouldn't have no trouble with it for a long time.’ (Emphasis added.) Temple was the only other witness whose testimony related to the affirmative misrepresentations allegedly made by Seaboard's agents. He denied that any representations as to the condition of the Sterling motor were made by Brace or by anybody else in his presence at any time, with the exception of a statement by Brace that, ‘It should be in good condition’ because he had spent a lot of money on it.

The best that can be said for appellant's position is that the testimony was conflicting. There was evidence to support the findings that no misrepresentation was made, and it may not be disturbed on appeal. 12 Cal.Jur. 834, and cases cited. Furthermore, Carter's own testimony, corroborated by that of Temple, indicates that Brace's only statement as to the condition of the truck was an expression of opinion as to what he thought its condition should be in view of the large repair bill. There was no evidence that this opinion was not given in good faith. It is well settled that an honest expression of opinion is not actionable. Neff v. Engler, 205 Cal. 484, 489, 271 P. 744; Finch v. McKee, 18 Cal.App.2d 90, 62 P.2d 1380.

In his brief, appellant appears to largely abandon the theory upon which his complaint was founded, and argues instead that even if no material representations of fact were made, Seaboard was nevertheless guilty of fraud in suppressing material facts known to it. Civ.Code, sec. 1572, subd. 3. The chief contention is that, although Brace knew the Sterling truck had been in a wreck, thereby necessitating payment of the above mentioned repair bill in the amount of nearly $3,000, he failed to convey this information to Carter. Upon analysis, we find no merit in the argument. The concealment of a fact is only actionable when done with intent to deceive by one who has a duty to disclose that fact. Civ.Code, secs. 1572, 1709. In the present case, there was no duty on the part of Brace to mention the wreck, for the parties were dealing at arm's length with no confidential relationship existing in law or in fact. Bacon v. Soule, 19 Cal.App. 428, 439, 126 P. 384; 12 Cal.Jur. 773. Furthermore, existence of an intent to deceive is refuted by the fact that Brace exhibited the itemized repair bill to Carter showing an expenditure of nearly $3,000. Not only were the various items on this bill (e. g. ‘remove cab, fenders, radiator, and replace,’ ‘straighten and align frame, cross members,’ etc.) sufficient to give Carter notice of serious damage to the truck, but the total cost alone was so unusually large as to put Carter on inquiry as to the reason for such extensive repairs. Carter's own testimony demonstrates that he was experienced in the operation and repair of trucks, and had often helped mechanics tear down and overhaul motors. Full opportunity for a thorough examination of the Sterling was afforded him, and he personally made several inspections of the truck before purchasing it. He even drove it about, unloaded, for some thirty minutes. The evidence further reveals that Carter originally proposed, with the full consent of Brace, to tear down the motor before buying, in order to ascertain the condition of the crankshaft, pistons, rods and bearings. Later he changed his mind and decided to forego the internal examination, apparently in order to avoid additional delay and expense. The failure to pursue the investigation sufficiently to ascertain the true condition of the motor, where the means and opportunity to do so were available to him, must be charged to Carter's own negligence and he will not now be heard to say that he was deceived by any misrepresentations of the party with whom he dealt. Carpenter v. Hamilton, 18 Cal.App.2d 69, 62 P.2d 1397; Placeres de Oro Co. v. Carpender, 38 Cal.App.2d 650, 656, 102 P.2d 407; Oppenheimer v. Clunie, 142 Cal. 313, 319, 320, 75 P. 899.

A further concealment of material facts, however, is said to be the failure of Brace to reveal that the motor number on the Sterling truck had been changed. We shall dispose of this contention, although fraudulent concealment of this fact was not alleged. The evidence is undisputed that the number actually affixed to the engine denoted a model having a large crankshaft, whereas the engine was in fact an older model with a small crankshaft which would perform in a generally less satisfactory manner. However, there is not a shred of evidence in the record that at the time of sale Brace knew anything whatsoever about the discrepancy between the number on the motor and the size of the crankshaft. Appellant appears to concede this, but asserts that Seaboard would be responsible for the deception caused by the changed number, whether known to Brace or not. The cases cited in support of this proposition (Pacific Finance Co. v. McGowen, 105 Cal.App. 216, 287 P. 139; California Stearns Co. v. Treadwell, 83 Cal.App. 69, 256 P. 594; Pendell v. Warren, 76 Cal.App.2d 33, 243 P. 707) are not in point, for in each case, unlike the one at bar, affirmative misrepresentations as to the year model of a motor vehicle were made by persons having knowledge of the real facts. Appellant's contention that one may be charged with fraud for the concealment of facts of which he is totally ignorant is unsupported by legal doctrine or authority.

The trial court also found the allegations of the amendment to the first cause of action to be untrue. In this regard there was a direct conflict in the testimony of Carter and Brace, and the finding is sufficiently supported. All other points argued by appellant in reference to the cause of action for fraud have been carefully considered and found to be equally devoid of merit. Accordingly, the judgment should be affirmed as to the first cause of action.

The Second Cause of Action.

The second cause of action was predicated upon alleged violations of the provisions of the statute regulating the conditional sales of motor vehicles. Civ.Code, secs. 2981 and 2982. By reason thereof it was alleged that the note and mortgage were unenforceable and void, and that appellant was entitled to damages in three times the amount of payments thereunder on pincipal and interest.

The pertinent provisions of Civil Code, sections 2981 and 2982 are the following:

‘Sec. 2981. [Definitions] As used in this section and in Section 2982 of the Civil Code, unless the context otherwise requires:

‘(a) ‘Conditional sale contract’ shall mean:

‘1. Any contract for the sale of a motor vehicle, with or without accessories, under which possession is delivered to the buyer but the title vests in the buyer thereafter only upon the payment of all or part of the price, or upon the performance of any other condition.

‘2. Any contract for the bailment or leasing of a motor vehicle, with or without accessories, by which the bailee or lessee agrees to pay as compensation a sum substantially equivalent to the value of the property, and by which it is agreed that the bailee or lessee is bound to become, or has the option of becoming, the owner of the property upon full compliance with the terms of the contract.

‘3. Any contract for the sale of a motor vehicle, with or without accessories, under which possession is delivered to the buyer, and a lien on the property is to vest in the seller as security for the payment of part or all of the price, or for the performance of any other condition.

‘(b) ‘Seller’ shall mean the person who sells or leases the property under a conditional sale contract. * * *

‘(g) ‘Unpaid balance’ shall mean the difference between (e) and (f) [the cash price and the down payment], plus all insurance premiums, and all fees paid or to be paid to any public officer, in connection with the transaction, which are included in the contract balance.

‘(h) ‘Time price differential’ shall mean any amount which the buyer agrees to pay to the seller in excess of the unpaid balance. * * *

‘(j) ‘Motor vehicle’ shall mean any vehicle required to be registered under the Vehicle Code.'

Section 2982 provides that certain requirements are to be observed in the execution of ‘every conditional sale contract for the sale of a motor vehicle.’ In particular, the section requires the recitation of the following separate items as such in the order given:

‘1. The cash price of the personal property described in the conditional sale contract.

‘2. The amount of the buyer's down payment, and whether made in cash or represented by the net agreed value of described property traded in, or both, together with a statement of the respective amounts credited for cash and for such property.

‘3. The amount unpaid on the cash price, which is the difference between items 1 and 2.

‘4. The cost to the buyer of any insurance, the premium for which is included in the contract balance.

‘5. A description and itemization of amounts, if any, which will actually be paid by the seller or his assignee to any public officer as fees in connection with the transaction, which are included in the contract balance.

‘6. The amount of the unpaid balance, which is the sum of items 3, 4, and 5.

‘7. The amount of the time price differential.

‘8. The contract balance owed by the buyer to the seller, which is the sum of items 6 and 7.

‘9. The number of installments required to pay the contract balance, the amount of each installment, and the date for payment of the installments.’

The statute further provides that ‘(c) The amount of the time price differential in any conditional sale contract for the sale of a motor vehicle, with or without accessories, shall not exceed 1 per cent of the unpaid balance multiplied by the number of months, including any excess fraction thereof as one month, elapsing between the date of such contract and the due date of the last installment, or twenty-five dollars ($25), whichever is greater, provided that such contract may provide for interest on any delinquent installment from and after the date of delinquency, and for reasonable collection costs and fees in the event of delinquency. If the seller, except as the result of an accidental and bona fide error in computation, shall violate any provision of this subsection (c), the conditional sale contract shall not be enforceable except by a purchaser for value, and the buyer may recover from the seller in a civil action three times the total amount paid on the contract balance by the buyer to the seller or his assignee pursuant to the terms of such contract.’

The trial court held that the transaction in question was not governed either in whole or in part by the foregoing provisions of the Civil Code, basing its conclusion on two grounds: first, that the instrument executed by Carter to Seaboard was a chattel mortgage and not a conditional sale contract; and second, that Seaboard at no time owned any of the equipment purchased by Carter, and hence was not the seller of all or any part of that equipment.

The first question for consideration, then, is whether a security instrument in terms designated a chattel mortgage, and drafted in the usual form of a chattel mortgage, is within the contemplation of Sections 2981 and 2982 of the Civil Code. The definition of conditional sales contract, as found in section 2981, quoted above, is subdivided into three parts. Subdivision (1) is in accord with the well-established legal definition of such contracts. Van Allen v. Francis, 123 Cal. 474, 56 P. 339; Johnson v. Kaeser, 196 Cal. 686, 239 P. 324. The second subdivision refers to the bailment or lease device, which, with an occasional exception (see Blodgett v. Rheinschild, 56 Cal.App. 728, 206 P. 674), has generally been treated as another form of conditional sale. Lundy Furniture Co. v. White, 128 Cal. 170, 60 P. 759, 79 Am.St.Rep. 41; Silverstin v. Kohler & Chase, 181 Cal. 51, 183 P. 451, 9 A.L.R. 1177; U. S. Machinery Co. v. Intl. Metals Dev., Inc., 74 Cal.App.2d 5, 168 P.2d 37. Subdivision (3), however, departs from conventional legal conceptions of a conditional sale and employs terms traditionally associated with a purchase-money chattel mortgage. The general rule is well settled that, irrespective of the language employed by the parties, where the purpose and effect of the transaction is to recognize the obligor as the owner and to create a lien on the property as security for the payment of a debt, it constitutes a mortgage. Teater v. Good Hope Dev. Corp., 14 Cal.2d 196, 209, 93 P.2d 112. See Hannin v. Fisher, 5 Cal.App.2d 673, 43 P.2d 815; Mercantile Acceptance Corp. v. Pioneer Credit Indem. Co.' 124 Cal.App. 593, 12 P.2d 988; Bonestell v. Western Auto-Motive Finance Corp., 69 Cal.App. 719, 232 P. 734. Furthermore, it is clear that since subdivision (3) speaks of possession being delivered to the buyer, it cannot refer to the unpaid seller's lien for the price, for that lien is extinguished by such delivery. Civ.Code, sec. 1776. We are thus led to the conclusion that it was clearly the purpose, in enacting sections 2981 and 2982 of the Civil Code, to include chattel mortgages taken by the seller to secure the purchase price in whole or in part, within the meaning of ‘conditional sale contract.’

Legislative history appears to support the conclusion reached. As originally introduced in the 1945 session of the State Legislature as Assembly Bill 466, the act proposed to regulate all installment contracts for the retail sale of motor vehicles, defining such contracts as those ‘in which the price * * * is payable in one or more installments over a period of time, and in which the seller has either retained title to the goods or has taken or retained a security interest in the goods under a form of contract designated either as a conditional sale, chattel mortgage or otherwise.’ The bill was subsequently completely rewritten in committee. As reported to the assembly, on April 9, 1945, the rewritten version contained what are now subdivisions (1) and (2) of section 2981, subsection (a), but not subdivision (3). This latter definitional provision was added by amendment on April 20, 1945 in the assembly.

The foregoing course of legislation seems to indicate that subdivision (3) was expressly inserted in order to broaden the scope of the statute beyond those transactions covered by subdivisions (1) and (2), thereby returning to the wider coverage contemplated by the bill in its original form. That subdivision (3) was intended to embrace chattel mortgages is evident in the fact that, were this not so, this subdivision would not only constitute meaningless surplusage, but the statute could be easily evaded and the legislative purpose thwarted through the use of chattel mortgage forms rather than conditional sale or lease forms.

We next inquire into the soundness of the second, and alternative, ground for the trial court's determination that the statute was inapplicable, namely, that since Seaboard never owned any of the equipment, it was not a seller. Assuming the premise of non-ownership to be true, the conclusion does not follow as a matter of necessity. In order to ascertain the legal import of the word ‘seller,’ which is defined in the statute quoted above in terms of ‘the person who sells,’ reference to the general law of sales is helpful, although, of course, not controlling. The provisions of the Sales Act clearly indicate that the word ‘seller’ as used therein denotes either ownership of the goods sold, or the existence of power or authority to make a sale of goods owned by someone else. Civ.Code, secs. 1733, 1743, 1796; First State Bank of Shannon v. Harter, 301 Ill.App. 234, 22 N.E.2d 393. Hence, lack of ownership would not, ipso facto, preclude one from being a ‘seller.’

Turning to the facts of the present case, it appears that about a month before the sale to Carter, the Sterling truck and Fruehauf trailer had been repossessed by Seaboard as mortgagee pursuant to the terms of Houston's chattel mortgage. As required therein, Seaboard gave Houston five days notice of intention to sell under a power of sale conferred by the mortgage. Neither this notice nor the Houston mortgage was introduced in evidence, but in reference thereto, Brace testified, ‘After the five days has expired, we are at liberty to make any disposal we wish with that equipment.’ In this state of the evidence, we may assume for present purposes that the sale to Carter was in strict compliance with the terms of Houston's mortgage and that Seaboard had the power to make a binding sale which would validly pass title to Carter. This power, moreover, was coupled with an interest in the property itself (New York Life Ins. Co. v. Doane, 13 Cal.App.2d 233, 56 P.2d 989), measured by the amount of the unpaid debt, which amounted to $7,685.72 and was liquidated only through the sale to Carter. It may be conceded that Seaboard's interest, however substantial it may have been, was merely a lien unaffected and unenlarged by possession taken. Harper v. Gordon, 128 Cal. 489, 492, 61 P. 84; Blodgett v. Rheinschild, 56 Cal.App. 728, 737, 206 P. 674. Nevertheless, under the circumstances here shown to exist, we are persuaded that, in exercising its power of sale in respect to the Sterling and Fruehauf, Seaboard was a ‘seller’ within the meaning of sections 2981 and 2982 of the Civil Code.

This conclusion appears to be indicated also by the general purpose of the statute to protect purchasers of motor vehicles from imposition through the exaction of usury in the guise of unidentified and unjustified charges. There is no doubt that a conditional vendor, as usually understood, would, on resale after repossession taken, be deemed the ‘seller.’ See Stewart v. Norsigian, 64 Cal.App.2d 540, 548, 149 P.2d 46, 150 P.2d 554; Lynch v. Sable-Oberteuffer-Peterson, 122 Or. 597, 260 P. 222, 55 A.L.R. 180. No reason appears why a different rule should apply to chattel mortgagees after repossession, for the possibilities of imposition of the type proscribed by sections 2981 and 2982 would seem to be equally great in either case. Being a remedial statute, this act should, in any event, be liberally construed so as to bring within its embrace every case clearly contemplated by its purpose, spirit, and policy. Lande v. Jurisich, 59 Cal.App.2d 613, 616, 139 P.2d 657, and cases cited.

In respect to the finding that Seaboard was not a seller of the Weber trailer and General Motors truck, a contrary conclusion must be reached. The evidence was that Seaboard had no interest in either vehicle in the nature of a lien or otherwise. It had no right to possession, no authority or power of sale, and received no commission or other payment of any kind because of its activities in connection with the sale of either vehicle.

It is urged, however, that Carter is justified in considering Seaboard the seller of the General Motors and Weber if Brace acted as an undisclosed agent for the respective owners, Moose and Northern Transportation Company, in making the sale. It is unnecessary to determine whether this contention is sound as a legal proposition where liability is sought to be predicated under Civil Code sections 2981 and 2982, for the evidence is sufficient to support the implied finding that Seaboard was not an agent in respect to either vehicle. Testimony concerning the Weber was scant. Carter stated that, ‘I am sure Mr. Temple told me that he had that trailer there for another party to sell.’ Brace, on the other hand, stated that he didn't even know who owned this trailer until the transaction was being completed, at which time he telephoned Temple to learn in whose name the check for the price should be drawn. The general manager for Northern Transportation Company testified that he dealt solely with Temple and Malone in regard to the sale of the trailer, and never discussed its sale with Brace. It is clear that the finding that Seaboard was not the seller of the Weber is fully supported by the evidence and cannot be disturbed.

As to the General Motors truck, the evidence shows that Brace had appraised it for Moose at the time of the latter's purchase. Brace knew its condition and knew that Moose was willing to sell. He took Carter to the System Freight yards to see this truck, and suggested that he purchase it in preference to another truck which Carter was proposing to buy. Brace never revealed to Carter that Moose was the owner of the General Motors truck, and all negotiations leading to the sale were conducted by Brace. There was, however, no evidence that Moose had appointed Brace as his agent, and it is undisputed that neither Brace nor Seaboard ever received any compensation in connection with the sale. The price was the amount necessary to release the truck from the chattel mortgage thereon held by the Bank of America. Pursuant to instructions from Moose, and as stated on the ‘Statement of Loan,’ Brace paid this amount by check directly to the bank, which thereupon delivered the ownership certificate to Moose who in turn delivered it to Seaboard. The most that can be said for appellant's position is that on the evidence presented different inferences could be drawn. It would, for example, be clearly reasonable to conclude that Brace's activities in connection with the sale were motivated solely by a desire to acquire for Seaboard the additional financing business connected therewith, and were not the activities of an agent. The finding that Seaboard was not a seller of the General Motors truck implies a finding that it was not an agent. We are bound by that finding. However, upon a retrial the question whether Seaboard was a seller of the General Motors truck and Weber trailer will be open for determination upon such evidence as may be presented.

Although as we have seen, Civil Code sections 2981 and 2982 were fully applicable to the sale of the Sterling and Fruehauf, the question remains whether any violations of those sections were committed by Seaboard. Appellant urges that charges in excess of those permitted by subsection (c), quoted above, were required to be paid by the terms of the note and mortgage. The contention cannot be sustained. It is admitted in appellant's brief that, had all the installments been paid on time, the required charges at the stipulated rate of 1 1/2 per cent per month on the monthly unpaid balances would have totaled $2,481.22. On the other hand, the maximum charges permitted by section 2982, subsection (c), would have been calculated as 1 per cent of the initial unpaid balance of $15,658.41, multiplied by the number of months, including any excess fraction thereof as one month, elapsing between the date of the contract (i. e., March 11, 1946) and the due date of the last installment (i. e., September 22, 1947). Since 18 months and 11 days were to elapse, the number of months is deemed to be 19. On this basis the total permissible charges would have been $2,975.10, or nearly $500 more than was actually called for by Carter's note. The error in appellant's calculations consisted in the use of 18 as the number of months, and in considering as part of the time price differential an alleged overcharge above the cash price which Carter claimed was quoted to him before the contract was written. The first calculation is contrary to the express terms of the statute, and the second was resolved, on the basis of conflicting evidence, in favor of the respondent.

In the allocation to interest and principal of the various payments made by Carter, it is admitted that Seaboard made certain allocations to interest in excess of that prescribed by the terms of the note. Seaboard alleged these overcharges to be accidental and unintentional clerical errors, and on the basis of uncontradicted evidence, the trial court so found. Appellant, however, contends that the total charges, as corrected by Seaboard upon being apprised thereof, were nevertheless in excess of those permitted by section 2982, subsection (c). The argument overlooks the fact that these corrected charges were based for part of the time upon a principal balance substantially increased over the original figure by reason of the additional advances referred to previously. The trial court, on the basis of uncontradicted evidence, found the charges to be proper and in accordance with the terms of the note, which, as we have seen, was more lenient than required by law. Accordingly, no basis of liability for triple damages under subsection (c) of section 2982 was established.

It is not contended that any attempt was made in the drafting of the chattel mortgage and ‘Statement of Loan’ to comply with the formal requisites prescribed in section 2982, subsection (a), quoted above. There was no separate, written agreement of sale. Inspection of the chattel mortgage and statement of loan discloses several obvious particulars in which the statute was not complied with, the chief ones being a failure to state the full cash price of the various pieces of equipment either separately or in toto, or the amount of the down payment credited toward the price of each; a failure to fully itemize all motor vehicle fees and sales or other taxes; the inclusion of only part of the cost of insurance purchased; an erroneous statement of the estimated time price differential as being $2,314.59 instead of the correct figure $2,481.22; and a failure to state the amount of the last installment.

Faced with these substantial and uncontroverted violations of the statute in respect to the Sterling and Fruehauf, we must inquire into the legal consequences of such non-compliance. It is to be recalled that the statute provides express penalties solely in the event of a violation of its usury provision. Nevertheless, the contractual requirements prescribed by the statute cannot be regarded as a mere specification of formalities, purely directory in effect, but must be taken to be a mandatory regulation designed for the protection of purchasers of motor vehicles on the installment plan from excessive, usurious or other unwarranted charges by the device of insuring full disclosure by the vendor of all items of cost. The contract in question being in direct disregard of the express provisions of a statute passed for the protection of the public, is, in respect to the Sterling and Fruehauf, void, notwithstanding that the statute does not expressly declare it to be so. Civ.Code, sec. 1667; Jacks v. Taylor, 24 Cal.App. 667, 674, 142 P. 121; Smith v. Bach, 183 Cal. 259, 262, 191 P. 14; Levinson v. Boas, 150 Cal. 185, 193, 88 P. 825, 12 L.R.A.,N.S., 575, 11 Ann.Case. 661.

Under these circumstances, it is also clear that acceptance of the benefits of the transaction for some three and one-half months, during which time there was at least partial performance by the buyer, does not constitute a waiver such as would bar Carter from now asserting the illegality of the contract. Although one may waive a law designed for his personal benefit (Leonard v. Board of Education, 36 Cal.App.2d 595, 599, 97 P.2d 1032; Walberg v. Underwood, 39 Cal.App. 748, 752, 180 P. 55), even an express waiver will not be recognized in the case of a law designed for the public benefit or founded on public policy. Civ.Code, sec. 3513; California Powder Works v. Atlantic & P. R. Co., 113 Cal. 329, 336, 45 P. 691, 36 L.R.A. 648; Panzer-Hamilton Co. v. Bray, 96 Cal.App. 460, 464, 274 P. 769. In like vein, where the complaining party to an illegal contract is within the class sought to be protected by the statute, he will not be deemed to be in pari delicto and thus be denied relief. Miller v. California Roofing Co., 55 Cal.App.2d 136, 143, 130 P.2d 740; Tatterson v. Kehrlein, 88 Cal. App. 34, 50, 263 P. 285.

The rule is firmly established that in the case of a contract which, like that in the present case, is illegal by reason of being malum prohibitum only and not malum in se, while courts will not enforce the contract, they will compel a restoration of money or property as justice and equity may require in order to avoid a harsh forfeiture. Smith v. Bach, 183 Cal. 259, 263, 191 P. 14; U. S. Title Guaranty Co., v. Brown, 166 App.Div. 688, 692, 152 N.Y.S. 470; Ryan v. K. V. L., Inc., 198 Wash. 459, 88 P.2d 836; Chesnutt v. Schwartz, 293 Ill.App. 414, 12 N.E.2d 912; American—La France & Foamite Industries v. Arlington Co., 169 Va. 1, 192 S.E. 758. In the present case, then, Carter is entitled to recover the amount of money which he has paid in on the Sterling truck and Fruehauf trailer. The record, however, fails to reveal in the writings, or otherwise, what proportions of the down payment or of the subsequent installments were allocated to the price of these two vehicles and to interest thereon, and on the basis of the evidence before us, a proper and intelligent computation thereof is not possible. However, plaintiff's cause of action cannot be allowed to fail because the writings did not specify the price of each vehicle. Since, on the present evidence, the impossibility of determining the amount paid on the Sterling and Fruehauf is the direct consequence of Seaboard's failure to comply with Civil Code sections 2981 and 2982, any loss resulting therefrom should fall on it. Upon a retrial, if there is competent evidence from which the court is able to determine what was paid on the Sterling and Fruehauf purchase, that sum will be the gross amount recoverable by plaintiff. This determination would require as its basis proof of the price charged for each vehicle, including a segregation of items making up certain gross amounts specified in the statement of loan, namely, $1,514.28 to H. R. Temple, $1,000 to Chas. Moose, $1,106.76 to ‘Tire Co.,’ and sundry subsequent charges for amounts paid out by Seaboard. An allocation of the installment payments would also be necessary in order to fix the total amount paid by plaintiff on the Sterling and Fruehauf purchase. There is no legal reason why the court should not receive proof for the purpose of determining whether there were several sales or an agreed price for each vehicle. If it is shown to be severable in this respect, and if upon a retrial Seaboard should be found not to be a seller of the General Motors truck, and Weber trailer, the invalidity would apply only to the sale of the Sterling and Fruehauf vehicles. If additional proof does not establish the amount that was paid on the invalid sale of the Sterling and Fruehauf, the transaction would have to be regarded as nonseverable and the recovery should equal the amount of the total payment, plus whatever sums were allocated toward principal and interest from the subsequent installments. However, in accordance with the general rule that one who makes restitution of property must also pay a reasonable amount in compensation for the use of the property (Rest., Restitution, sec. 157), plaintiff's recovery should be diminished by the rental value of the vehicles during the period of Carter's possession. If the recovery is for the total amount paid by him he should be charged with the rental value of the four vehicles, but if for only the amount paid on the Sterling and Fruehauf, then the rental value of those vehicles alone should be charged. The recovery should be adjusted further in such amounts as, on a retrial, may be found necessary in reaching a just and equitable result. If Seaboard should be found to be a seller of the General Motors truck and Weber trailer, also, the recovery should follow the views we have expressed with respect to the basis of recovery for the sale of the Sterling truck and Fruehauf trailer. In such event the question of severability would not enter into the case. If the finding should be that Seaboard was a seller of one of these vehicles but not the other the question of severability would still be presented.

As previously stated, Spurgeon is not a party to the action, although he contributed half of the down payment and was evidently part owner. No question has been raised as to whether any recovery by Carter may properly include sums contributed by Spurgeon and paid to Seaboard, nor as to the interest of Spurgeon in any recovery. No opinion is expressed on these points.

Accordingly, the judgment on the second cause of action should be reversed for a new trial in accordance with the principles herein stated.

The Third Cause of Action.

Plaintiff's third cause of action alleges that Seaboard, as a personal property broker licensed under the Personal Property Brokers Act (Deering's Gen. Laws, 1944, Act 5825(2d), was guilty of usury in making the present loan at interest admittedly in excess of the 10 per cent per annum permitted by section 22, Article XX of the California Constitution (adopted in 1934).

The contention is devoid of merit. At the time of the enactment of the present Personal Property Brokers Act in 1939, there were no constitutional or statutory restrictions upon the rate of interest chargeable by personal property brokers in this state, for section 22, Article XX of the Constitution expressly exempted them from the general usury laws. Wolf v. Pacific S.W. Corp., 10 Cal.2d 183, 184, 74 P.2d 263; Matulich v. Marlo Investment Co., 7 Cal.2d 374, 376, 60 P.2d 842; Perlick v. Pac. Discount Corp., 53 Cal.App.2d 136, 140, 127 P.2d 647. Appellant seeks to avoid the effect of this exemption by claiming that Seaboard failed to comply with several provisions of the Personal Property Brokers Act and thereby lost its status as a personal property broker. These alleged violations were the following: (1) an overcharge in the price of the equipment above that quoted orally by Seaboard; (2) that appellant was compelled to sign blank authorizations for advances to be made by Seaboard and added to the note; (3) interest in excess of 1 1/2 per cent per month was charged; (4) the loan papers did not correctly set forth the amount of the principal balance; and (5) he was charged $255.29 as expenses, whereas the mortgage provided that additional charges for expenses not to exceed $250 could be made and would be deemed secured by the mortgage. The facts assumed in his first four points were resolved against his contentions upon conflicting evidence and we hold these findings to be conclusive. On the fifth point it is immaterial here whether the excess of expenses above $250 was secured, within the terms of the mortgage. In addition to the lack of factual basis, there is no provision of law that the failure of a personal property broker in making a loan, to comply with the law in matters of form, would deprive it of the status of personal property broker.

Seaboard was insured against loss of the mortgaged property and therefore could legally charge interest of not to exceed 2 per cent per month upon monthly balances under section 17 of the act. Therefore, the charge of 1 1/2 per cent per month on monthly balances was at a legal rate. Although Seaboard entered on its books an overcharge for interest, this was found by the court, on uncontradicted testimony, to have been made inadvertently and unintentionally. It was corrected when discovered and not having been made as an intentional overcharge could not have constituted a basis for a finding of usury. Hennessy v. Personal Finance Co., 176 Misc. 201, 26 N.Y.S.2d 1012, 1018; 66 C.J. 177. The charges for interest were not in excess of those allowed by law.

A final contention to be considered is that the above mentioned alleged violations of the act should be deemed not only violations, but also evasions which would lead to the consequence that the note and mortgage were void because of violations of the act committed by Seaboard. We will endeavor to trace the course of appellant's circuitous reasoning. The second paragraph of section 21 of the Personal Property Brokers Act provides: ‘Any contract of loan in the making or collection of which any violation of this act shall have been committed, shall be void, and neither the licensee nor any other person shall have any right to collect or receive any principal, interest of charges whatsoever.’ If, therefore, appellant had succeeded in proving violations of the act, he could have successfully maintained that the note and mortgage were void, were it not for the 1945 amendment of the act which rendered the second paragraph of section 21 inapplicable to loans of $5,000 or more. This amendment, Statutes 1945, Chapter 1221, added subdivision (d) to section 4, and reads as follows: ‘The following provisions of this act shall not apply to any bona fide loan of a principal amount of five thousand dollars ($5,000) or more, or to a duty licensed personal property broker in connection with any such loan, provided the provisions of this paragraph are not used for the purpose of evading this act: * * * the second paragraph of Section 21.’

Appellant argues that the alleged violations are also evasions of the act which render operative the proviso in the amendment, thereby making the amendment inapplicable and the second paragraph of section 21 applicable to the transaction in question. This contention is untenable. None of the alleged violations or so-called evasions would have tended in any way to bring the transaction within the provisions of the amendment. It is not pointed out in what respects they had or could have had any connection with a purpose to evade the act by claiming falsely that Seaboard was making a bona fide loan of $5,000 or more. The loan on the General Motors and Weber was for a lump sum. There was no evidence of any suggestion of separate loans on the separate vehicles. The evidence furnishes no basis for an argument that several loans were lumped together into a single loan of more than $5,000, nor evidence of any intention whatever to arrange the transaction so that Seaboard could take advantage of the 1945 amendment. On the record before us, the transaction must be deemed a bona fide loan of more than $5,000 on the General Motors and Weber. The transaction was therefore excepted from the operation of the second paragraph of section 21, and even if the alleged violations of the act had been proved, the note and mortgage as to the General Motors and Weber would still have remained valid.

The judgment is affirmed as to the first and third causes of action and reversed as to the second cause of action.

SHINN, Acting Presiding Justice.

WOOD, J., and VALLÉE, Justice pro tem., concur.