Title: Ex Parte Stem

State: alabama

Issuer: Alabama Supreme Court

Document:

571 So. 2d 1112 (1990)
Ex parte William M. STEM, Jr.
(Re Grady W. BRADEN v. William M. STEM, Jr.)
89-506.

Supreme Court of Alabama.
September 28, 1990.
D. Edward Starnes III of Lanier, Ford, Shaver & Payne, Huntsville, for petitioner.
R. Wayne Wolfe of Wolfe, Jones & Boswell, Huntsville, for respondent.
KENNEDY, Justice.
William Stem filed an action against Gary Braden, seeking to rescind a contract for the sale of an automobile and to obtain the return of the purchase price plus interest. The trial court granted Stem that relief, but the Court of Civil Appeals reversed the trial court's judgment.
On February 26, 1987, Stem purchased a used automobile from Braden for $6,600. Braden indicated to Stem that, to the best of his knowledge, the car had not been wrecked and that the car was in good condition. Less than a week after purchasing the car, Stem discovered a disconnected plug that, when it was connected, caused the oil sensor warning light on the dashboard to glow. When Stem had the automobile examined because of the disconnected plug, the mechanics who examined the automobile discovered problems with the automobile that Stem did not realize existed. Among other problems, the mechanics discovered that the automobile was composed of the front end of a 1979 BMW and the rear end of a 1975 BMW. On March 10, 1987, Stem sent Braden a letter informing *1113 him that Stem refused the automobile and that he intended to rescind the sale. Further investigation revealed that the front half of the automobile actually had been driven 170,000 miles; Stem thought this automobile had 70,000 miles.
The trial court, after hearing ore tenus evidence, ordered Braden to pay Stem $6,600, an amount equal to the purchase price, plus interest of $726. The trial court wrote:
The Court of Civil Appeals reversed the trial court's judgment. That court stated that Stem, after he sent the letter refusing the automobile and attempting to rescind the sale, drove the automobile for 7 months and nearly 9,000 miles before commencing this action. The court then held that that use constituted an "acceptance" under Ala. Code 1975, § 7-2-606, which precluded Stem from receiving the relief the trial court granted:
Braden v. Stem, 571 So. 2d 1110 (Ala.Civ. App.1989).
Because there are numerous grounds for rescission of a contract, we do not agree that if Stem accepted the automobile then rescission necessarily was "not available," as the Court of Civil Appeals implies. That court, however, did address whether Stem revoked his acceptance of the automobile, which is the starting point for a proper analysis of this case.
Revocation of acceptance of goods is addressed by Ala.Code 1975, § 7-2-608, which provides:
The Official Comments to that provision provide additional information concerning the provision:
The record would support a finding by the trial court that Stem revoked his acceptance of the automobile pursuant to § 7-2-608. The trial court could properly have determined that Stem's acceptance of the automobile had been reasonably induced by Braden's assurances. The record indicates that the vehicle had been previously involved in at least one accident, that the vehicle was composed of two welded-together halves of other vehicles, that the speedometer had been disconnected for three and one-half months while Braden owned the car, that the vehicle had 100,000 more miles on its front half than Stem thought it had, and that the mileage on the back half was not known for certain. Although the trial court permissibly could have considered Stem's use of the car as evidence that its value was not substantially impaired, Dickson v. U-J Chevrolet Co., 454 So. 2d 964, 967 (Ala.1984), it was not compelled to do so. Accordingly, the trial court could have determined that the automobile's nonconformities substantially impaired its value to Stem. There is no substantial dispute either that Stem's revocation occurred within a reasonable time or that Stem properly notified Braden, and the trial court could have found that Stem revoked his acceptance within a reasonable time and that he met the notice requirements of § 7-2-608.
When Stem revoked his acceptance, he had the same rights and duties with regard to the automobile that he would have had had he rejected it. § 7-2-608(3). Section 7-2-602 addresses the manner and effect of rejection, and § 7-2-602(2)(a) provides that "after rejection any exercise of ownership by the buyer with respect to any commercial unit is wrongful as against the seller." Accordingly, although Stem revoked his acceptance, his continued use of the automobile was "wrongful" against Braden. There is no definition of "wrongful" as it is used in § 7-2-602(2)(a), either in statutes or in Alabama case law, to explain the consequences of Stem's continued use of the vehicle.
The Court of Civil Appeals held that Stem's use of the vehicle constituted "acceptance"; however, the opinion did not state that Stem's use constituted a "second acceptance" after revocation, or a "waiver of revocation" resulting in an acceptance, or that the record would not support a finding of revocation and that the use of the automobile constituted acceptance. Even if any of those holdings would be proper, the opinion in no way addresses what is "wrongful" under § 7-2-602(2)(a). Accordingly, the opinion assumes that the only way to address Stem's continued use of the automobile is in terms of whether he accepted ownership of the automobile.
Sections 7-2-602 and 7-2-606 through -608 are derived from the Uniform Commercial Code and, accordingly, many states have enacted similar provisions into statutory law. A review of the case law construing similar provisions indicates that the Court of Civil Appeals' treatment of the issue of Stem's use of the automobile only in terms of acceptance of the automobile is inappropriately simple. Many cases involve extensive use of automobiles and motor homes after revocation; the cases emphasize the practical consideration that an individual who buys an automobile or a motor home may very well be unable, without extraordinary financial difficulty, to tender the automobile or motor home and do without it until the litigation concerning it is completed. For example, in Johnson v. General Motors Corp., 233 Kan. 1044, 668 P.2d 139 (1983), the buyers of a truck drove that vehicle 14,619 miles after revocation of acceptance, and the Kansas Supreme Court held that that use of the vehicle was not an acceptance. For additional examples, see Jorgenson v. Presnall, 274 Or. 285, 545 P.2d 1382 (1976); Stroh v. American Recreation & Mobile Home *1115 Corp., 35 Colo.App. 196, 530 P.2d 989 (1975); Johannsen v. Minnesota Valley Ford Tractor Co., 304 N.W.2d 654 (Minn. 1981). These courts, construing provisions similar to § 7-2-602, held that continued use after revocation was "wrongful" but did not constitute acceptance.
With uniformity, the courts have held that the "wrongful" use entitles the seller to prove the reasonable value of the buyer's use and to recover that amount as a setoff, and many courts have awarded setoffs in circumstances similar to those of the present case. Johnson v. General Motors Corp., supra; Stroh v. American Recreation & Mobile Home Corp., supra; Johannsen v. Minnesota Valley Ford Tractor Co., supra; Jorgenson v. Presnall, supra; Gawlick v. American Builders Supply, Inc., 86 N.M. 77, 519 P.2d 313 (1974); Lawrence v. Modern Mobile Homes, Inc., 562 S.W.2d 729 (Mo.App. 1978); Moore v. Howard Pontiac-American, Inc., 492 S.W.2d 227 (Tenn.App.1972).
The Colorado Court of Appeals in Stroh, supra, used the following rationale to explain the setoff:
The ruling of the Colorado court is sound, and we accept its rationale. Additionally, we note that if Stem had exercised any of his options available under Alabama's commercial code concerning storing or returning the vehicle, he would have been put in the position of doing without a vehicle for transporting his child, which was one of the primary purposes for which he bought the vehicle, until trial of this case or else he would have been required to purchase or lease an additional suitable vehicle. Under these circumstances Stem's continued use of the automobile was not an act of continued use that constituted an acceptance of ownership after revocation. Johnson v. General Motors Corp., 233 Kan. at 1049, 668 P.2d  at 143.
The judgment of the Court of Civil Appeals is due to be reversed and the cause remanded. The trial court is directed to determine any appropriate setoff in a manner consistent with this opinion.
REVERSED AND REMANDED WITH INSTRUCTIONS.
HORNSBY, C.J., and MADDOX, JONES, ALMON, SHORES, ADAMS and HOUSTON, JJ., concur.
STEAGALL, J., concurs in the result.