Court Opinion

ID: 9717668
Source: CourtListenerOpinion
Date Created: 2023-08-26 07:08:12.316466+00
Date Added: 2024-06-11T18:23:54.638087
License: Public Domain

JUSTICE STOUDER, dissenting: I agree with the majority that the motion for summary judgment in favor of Kiester’s Garage should not have been granted, and I join in the reversal of that count. I do not agree that the bank has no liability for the acknowledged breach of section 9 — 503 by breaching the peace in retaking plaintiff’s truck. There is no dispute that plaintiff Acelia Kouba was dragged from the truck by her neck during the repossession or that such an action on the part of the repossessors constituted a breach of the peace. The majority relies upon an agency theory to relieve the bank of potential liability seemingly on the premise that because the plaintiff did not specifically plead a remedy under section 9 — 507 of the Uniform Commercial Code that the Code does not apply and that the common law must be resorted to. Section 9— 507 is available “if it is established that the secured party is not proceeding in accordance with the provisions of this Part [part 5].” (Ill. Rev. Stat. 1981, ch. 26, par. 9 — 507.) Injunctive relief is clearly available as well as the liquidated amount alluded to by the majority. Merely because the relief provided for in section 9 — 507 may be inappropriate under the circumstances of this case does not affect the liability of the bank. Furthermore, because the plaintiff may choose to pursue a tort action against the bank for breach of section 9 — 503 does not change the relationship of the repossessors and the bank. As the Code states in section 1 — 103, “Unless displaced by the particular provision of the Act the principles of law and equity shall supplement its provisions.” (Ill. Rev. Stat. 1981, ch. 26, par. 1 — 103.) Therefore, a failure to plead under the Code does not reinstitute former common law displaced by the Code nor does it affect common laws, i.e., principle and agency which supplement the Code. A failure to plead section 9 — 507 has no bearing upon the relationship between the bank and the liability of the bank as the majority suggests. Furthermore, the majority refers to “two statutory remedies” one of which is section 9 — 507 and the other is the denial of a deficiency judgment. Nowhere in article 9 is there any reference to the denial of a deficiency judgment as a remedy for unlawful repossession or for anything else. The Illinois Code Comment under subsection (1) of section 9 — 507, in discussing damages available under section 9 — 507, states: “While the bulk of cases imposing damages under this subsection have concerned failure by a secured party to follow the requirements of 9 — 504(3) (particularly concerning notice of sale to the debtor), several cases have imposed damages for violation of other requirements of Part 5 of Article 9. *** in Margolin v. Franklin 132 Ill. App. 2d 527, 270 N.E.2d 140 (1st Dist. 1971), the court upheld a judgment which denied the secured party a deficiency judgment and awarded debtors damages for conversion, on the ground that the secured party, having accepted late payments for some time, could not suddenly insist on strict timeliness without warning the debtor.” (Ill. Ann. Stat., ch. 26, par. 9 — 507, Illinois Code Comment, at 360 (Smith-Hurd 1974).) This comment indicates that, contrary to the majority view, section 9 — 507 encompasses a number of remedies, i.e., conversion and denial of a deficiency judgment, which are not specifically set out in the statute. White and Summers in their treatise on the Uniform Commercial Code discuss at length not only denial of deficiency- judgment but possible tort liability incurred by a secured party for a breach of the peace under section 9 — 503. Therefore, recovery of a liquidated amount is by no means an exclusive remedy for a breach of the peace. In my opinion, in this case, where there is no dispute that a breach of the peace occurred in the attempted repossession of plaintiff’s truck by the bank, the plaintiff has its choice of remedies under 9 — 507. Merely because the plaintiff may not be effectively compensated by the liquidated amount or there has been no disposition of the collateral does not foreclose recovery under 9 — 507, nor does it means that the bank has no liability for failing to comply with 9 — 503. The proper action in this case, when the collateral has little or no value due to its destruction in the hands of the secured party, is conversion. Because the repossession was not accomplished by lawful means as acknowledged by both parties, the collateral was never rightfully in possession of the bank, although the bank certainly exercised control over the truck. Although there are no cases in Illinois where a debtor has maintained an action for conversion for a breach of the peace under 9 — 503, there is considerable authority in other jurisdictions for maintaining a conversion suit against a secured party when force or threat of force is used to obtain possession. (See A.B. Lewis Co. v. Robinson (Tex. Civ. App. 1960), 339 S.W.2d 731; Thrasher v. First National Bank (Fla. App. 1974), 288 So. 2d 288; Victor v. Fairchild Motor Corp. (La. App. 1942), 8 So. 2d 566; Douglas Motor Co. v. Watson (1942), 68 Ga. App. 335, 22 S.E.2d 766, and Thompson v. Ford Motor Credit Co. (D.S.C. 1971), 324 F. Supp. 108.) In Henderson v. Security National Bank (1977), 72 Cal. App. 3d 764, 140 Cal. Rptr. 388, a California court confronted the agency argument upon which the majority based its decision and found that conversion “[does] not depend upon authorization, or ratification, or upon the knowledge, or intent, or bad faith of the Bank.” (72 Cal. App. 3d 764, 770, 140 Cal. Rptr. 388, 391.) In Henderson, the Bank had employed an independent contractor (a licensed repossessor) to repossess plaintiff’s Cadillac. The plaintiff alleged that his garage door lock was broken during the repossession of the automobile in violation of section 9503 of the California Uniform Commercial Code. The court in Henderson found that a conversion action against the bank was proper because “the *** right of redress [in a conversion action] no longer depends upon his showing *** that the defendant did the act in question from wrongful motives, or generally speaking, even intentionally; and hence the want of such motives, or of intention, is no defense.” (72 Cal. App. 3d 764, 770-71, 140 Cal. Rptr. 388, 391.) Therefore, this is not a matter of imposing absolute liability on the bank but rather redressing the plaintiff for the injury imposed for the unlawful deprivation of his property. These cases are consistent with the law of conversion in Illinois. The essence of a conversion action is the wrongful deprivation of property to the owner or person entitled to possession. Malice is not a necessary element. (See Associates Discount Corp. v. Walker (1963), 39 Ill. App. 2d 148, 188 N.E.2d 54.) Therefore, the bank’s knowledge that the repossessors breached the peace is immaterial and, as the court stated in Henderson, the bank need not authorize or ratify the activities of the repossessor in order to be liable for conversion. In my opinion, the bank is liable for the damages to the truck after it wrongfully repossessed the truck. Section 9 — 503 provides that self-help repossession can only be accomplished if the peace is not breached. Plaintiff had a right to possession of the truck which the bank held unlawfully. The bank prevented operation of section 9 — 504, not the plaintiff, and is, therefore, liable at a minimum for the dimunition in value of the collateral while it was wrongfully held. I believe the plaintiff stated a reasonable theory for recovery against the bank under the Code, and I would reverse the trial court’s decision granting summary judgment in favor of the bank.