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

GENERAL MOTORS ACCEPTANCE CORPORATION, a corporation, Plaintiff and Appellant, v. Ronald M. KYLE, Defendant and Respondent.*

Civ. 23790.

Decided: December 28, 1959

Getz, Aikens & Manning and Harold T. Tredway, Los Angeles, for appellant. Arkin & Weissman and Stuart N. Arkin, Culver City, for respondent.

The present suit in claim and delivery to recover possession of a 1957 Chevrolet Sport Coupe was instituted by appellant as the assignee of a contract of conditional sale entered into between Milliken Chevrolet, Inc., the seller, and respondent Kyle, the buyer of the car. Following commencement of the action, the Chevrolet was delivered to appellant and was resold by Milliken. Kyle answered the complaint, alleging that the contract was void because it did not comply with section 2982(a) of the Civil Code, and by way of counterclaim he sought recovery of the vehicle or its value. The court made findings that appellant was guilty of conversion of the car and entered judgment adverse to appellant on its complaint and in favor of Kyle on his counterclaim in the sum of $2,643, which was stipulated to be the reasonable value of the car at the time of repossession.

On December 21, 1956, Kyle purchased the Chevrolet from Milliken, giving as a trade-in a 1951 Ford convertible. The contract provided that Kyle was to pay for the Chevrolet a cash sales price of $3,637.66, including a cash down payment of $787.47, less $250, the agreed trade-in value of the Ford; plus $180 for insurance, $54 for registration, transfer and other fees and a time price differential of $455.91; the contract balance of $3,290.10 was payable in 30 equal monthly installments of $109.67. The contract also provided for repossession by the seller in the event of the buyer's default in any payment. The copy of the contract delivered to Kyle was received in evidence; it did not bear the signature of Milliken or its authorized representative nor did the contract specifically set forth to whom the charges for fees were to be paid. The court found that the cash down payment actually made by Kyle amounted to only $285. This finding was based upon his uncontradicted testimony.

Kyle paid the first two installments due under the contract. He then consulted an attorney who sent a letter to Milliken and to appellant, stating the opinion of the attorney that the contract was void under section 2982(a) of the Civil Code and advising that since a tender of the Chevrolet had been refused by Milliken, his client would retain possession of the car but make no further payments on the contract balance. The present action was begun shortly thereafter.

Judgment was entered in favor of Kyle upon a theory that the contract was invalid and unenforceable by Milliken; that appellant, as Milliken's assignee, could not enforce it by repossession or otherwise; that appellant converted the car; and that the car having been resold, Kyle was entitled to recover its reasonable value as damages for the conversion.

Section 2982(a) of the Civil Code provides that every contract for the conditional sale of a motor vehicle shall be in writing and shall contain a complete statement of the terms of the contract. The statute also provides: ‘It [the contract] shall be signed by the buyer * * * and by the seller * * *, and when so executed an exact copy thereof shall be delivered by the seller to the buyer at the time of its execution.’ There are 10 items chiefly relating to the selling price of the vehicle which must be stated in the contract. One of them is the amount of the cash down payment, if any, made by the buyer. Another is 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 * * *.’ Failure to comply with these requirements renders the contract unenforceable by the seller. Carter v. Seaboard Finance Co., 33 Cal.2d 564, 203 P.2d 758; Estrada v. Alvarez, 38 Cal.2d 386, 240 P.2d 278; Lewis v. Muntz Car Co., 50 Cal.2d 681, 328 P.2d 968; City Lincoln-Mercury Co. v. Lindsey, 52 Cal.2d 267, 339 P.2d 851.

It is clear that the contract in the present case was invalid by reason of the failure of Milliken to comply with the provisions of the statute and that the invalidity of the contract would have furnished Kyle with a complete defense to an action brought by Milliken on the contract. Furthermore, Kyle could have recovered from Milliken the amount of his down payment and his payments on the contract balance, less an offset to the seller representing the detriment occasioned by his use of the Chevrolet. City Lincoln-Mercury Co. v. Lindsey, supra, 52 Cal.2d 267, 339 P.2d 851.

We will assume for the purpose of our discussion that appellant purchased the contact subject to the statutory defense which Kyle could have asserted in an action brought by the seller. Our first question is therefore whether, having determined that the repossession was wrongful, the court erred in awarding Kyle a judgment in an amount equal to the value of the car. In our opinion, the judgment cannot be sustained.

As stated in section 3336 of the Civil Code, the detriment presumably caused by the wrongful conversion of personal property is, in addition to fair compensation for the time and money expended in pursuit of the property, either its value at the time of the conversion or an amount sufficient to indemnify the injured party for the loss which is the natural, reasonable and proximate result of the injury and which could not have been avoided by the exercise of reasonable care.

It is settled that a buyer under a conditional sales contract may recover from the wrongdoer the full value of converted property if the latter is not the holder of the contract, since the former remains liable to the holder for the unpaid balance of the purchase price. Goldberg v. List, 11 Cal.2d 389, 79 P.2d 1087, 116 A.L.R. 900. But where the guilty party is the holder of the contract, the buyer may recover damages only to the extent of his limited interest in the property. Driver v. Acquisto, 145 Cal.App.2d 304, 302 P.2d 387. Although the Driver case did not involve a contract invalid because of the seller's noncompliance with section 2982(a) of the Civil Code, the principle of that case is applicable to this one. The judgment awarding Kyle the full value of the Chevrolet implies that he was the owner of the car. But he had no right to acquire the car except by virtue of the contract and title could not pass until he paid the final installment due on the contract balance and, as we have said, Kyle discontinued making payments. If he did not own the car, plaintiff owned it and had a right of possession. It seems incongruous that Kyle could claim acquisition of title by virtue of a contract and at the same time repudiate that contract. As we interpret the judgment, it means that Kyle became the owner of the car by the simple expedient of refusing to pay for it. The statute, of course, gives him no such right. Such a result finds no support either in the law or in fairness.

The loss suffered by Kyle due to the conversion consisted only of his equity in the Chevrolet. At most he would have been entitled to recover the agreed value of his trade-in automobile, $250, plus the amount of his cash down payment, $285, together with his two payments of $109.67 on the contract balance, or a total of $754.34. As mentioned earlier, this is the measure of recovery awarded to a buyer seeking relief from a conditional sales contract void uner section 2982(a) of the Civil Code. City Lincoln-Mercury Co. v. Lindsey, supra, 52 Cal.2d 267, 339 P.2d 851.

Our next question is whether the court should have awarded appellant an offset against the $754.34 to compensate for the detriment caused appellant resulting from Kyle's possession and use or misuse of the car. We believe that the court should have allowed appellant an offset. As assignee of the conditional sales contract it may assert its right of set-off.

The evidence established that Kyle had the Chevrolet in his possession for approximately five and a half months and drove it over 5,600 miles. When the car was repossessed, the right rear fender was damaged and scratches were found on the hood, trunk and sides. The car was repaired by Milliken, the reasonable value of the repairs being $145.64. As we have siad, the cash sale price of the Chevrolet was $3,637.66 and its value at the time of repossession was $2,643; it was resold for $2,540. Expert testimony was introduced by appellant to the effect that the Chevrolet had a daily rental value of $8 per day and 8 cents per mile and a monthly rental value of $105. However, the court made no finding or determination with respect to appellant's right of offset or the amount that might properly be offset against Kyle's right of recovery.

We are convinced that appellant is entitled to an offset in a substantial amount not exceeding the $754.34 to be awarded to Kyle. But we would not be justified in making a finding as to the amount of the offset unless the evidence on that point was conclusive. Since the judgment must be reversed, it will be the duty of the court upon a retrial to calculate the amount of the offset to which appellant is entitled in accordance with the rule stated in the Lindsey case, supra.

Appellant contends that it was a bona fide purchaser of the contract and in its hands the contract must be deemed a valid one. The record does not disclose that the contention was urged at the trial as a defense to Kyle's counterclaim unless it was in the arguments, which were not reported. Consequently, the court made no finding with respect to the question. Upon the present record it does not appear as a matter of law that appellant was or was not a bona fide purchaser of the contract. Upon a retrial appellant should be permitted to offer evidence on that issue.

The judgment is reversed.

SHINN, Presiding Justice.

VALLEE and FORD, JJ., concur.

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