Bank of America National Trust & Savings Ass'n v. Nielsen

AGEE, J. Plaintiff-appellant bank appeals from a judgment in favor of defendants-respondents Crnkovich and Nielsen in an action to recover a deficiency balance of $747.95 under an automobile conditional sale contract which had been assigned to the bank by the seller, Mendocino Motor Sales Co.

Crnkovich bought the automobile from the seller on May 7, 1956, and signed a conditional sale contract in blank, which did not then contain the data required by section 2982, subdivision (a), of the Civil Code, nor was an exact copy of the contract delivered to him at the time of its execution. The contract was therefore illegal and unenforceable insofar as the recovery of any deficiency thereon is concerned. (City Lincoln-Mercury Co. v. Lindsey, 52 Cal.2d 267, 274 [339 P.2d 851].) The rule applies to a bona fide purchaser of the contract for value (the bank) as well as to the seller. (General Motors Accept. Corp. v. Kyle, 54 Cal.2d 101, 108 [4 Cal.Rptr. 496, 351 P.2d 768].)

About two weeks after he signed the conditional sale contract, Crnkovich received a completed copy in the mail. As completed, the contract contained defects which violated the provisions of section 2982, subdivision (a). The contract failed to recite, “5. A description and itemization of amounts . . . which will actually be paid by the seller ... to any public officer as fees in connection with the transaction, which are included in the contract balance” (Civ. Code, § 2982, subd. (a) 5) but simply states “5. Pees paid: Notary Public $_, Registration and Transfer $2.00, other $29.86, [total] $31.86.” Similar defects were held to constitute material violations of section 2982, subdivision (a), in General Motors Accept. Corp. v. Kyle, supra, and in Stasher v. Harger-Haldeman (1961), *(Cal.App.) [16 Cal.Rptr. 557]. There was testimony at [134]the trial that the $29.86 classed as “other” fees was not a charge for fees of public officials but was a charge for life insurance on the contract. Section 2982, as then in effect, required that the cost to the buyer of any insurance, the premium for which is included in the contract balance, shall be recited separately and in order as item 4 in the contract.

The contract is also deficient in this particular: Item 7 in the contract reads as follows: 11 Finance Charge: Is Life Ins. Desired ? Yes_No__If yes $- Time Price Differential $_$271.46.” This was the figure typed on the copy of the contract mailed to Crnkovich. In some of the other copies contained in the record is superimposed the handwritten figure “3” over the typed “2.” Witness Davis, president of Mendocino Motor Sales, who signed the conditional sale contract, testified that the only reason he could see for the change was that the “2” was a typographical error. It was argued that this error was apparent, since the correct figure of $371.46 might be arrived at by mathematical computation involving items 6 and 8 on the form, and that therefore there was a substantial compliance with section 2982, subdivision (a). (It is tacitly conceded that $371.46 is the correct figure.) However, the courts have held that 11 The very purpose of the code section would be defeated and nullified if the buyer was required to determine the time price differential by a mathematical process arrived at from an analysis of the seller’s figures. The law requires that this item must be recited in the contract and not left to a mathematical compilation by the buyer.” (Adams v. Caruso Enterprises Inc. (1955) 134 Cal.App.2d 403, 408-409 [285 P.2d 1022].) “The intended warning will not be effective if the buyer cannot see at first glance the data which the statute requires to be called to his attention.” (City Lincoln-Mercury Co. v. Lindsey (1959) 52 Cal.2d 267, 273 [339 P.2d 851].) Moreover, it appears from the contract form that the figure entered in this item is a “Finance Charge.” The space provided for and designated “Time Price Differential” is left blank.