Court Opinion

ID: 9674682
Source: CourtListenerOpinion
Date Created: 2023-08-24 04:33:41.830948+00
Date Added: 2024-06-11T18:16:29.016433
License: Public Domain

NYE, Chief Justice,
dissenting.
I respectfully dissent. The majority of this Court has reasoned that no violation of Article 5069-7.07(1) has occurred. This reasoning circumvents the legislative intent and permits the seller and/or the finance company to “deceive the very individuals the legislature intended to protect; namely, the ‘uneducated, the unsophisticated, the poor and the elderly’ . . . Southwestern Investment Company v. Mannix, 557 S.W.2d 755 (Tex.Sup.1977).
The Credit Code, Tex.Rev.Civ.Stat.Ann. art. 5069-2.01 et seq., provides, inter alia, that the seller may not accelerate the maturity of the indebtedness unless “the buyer is in default on the performance of any of his obligations.” The Code further provides a second ground for acceleration of the maturity of a note, when: the seller or holder in good faith believes that the prospect of payment or performance is impaired.
My objection stems from the broad and inventive “terms” that the sellers and their finance companies have concocted to permit them to go outside of the Credit Code’s base (the two limitations named above) for an excuse to accelerate the maturity of the debt of the buyers. Rather than using the language of the Credit Code, which states that if the buyer is in default in the performance of “any of his obligations”, the seller and/or the finance company, in the case before us, changed the Credit Code language to say if the buyer “fails to comply with any other provision hereof”, the seller may accelerate, etc. In the “fine print”, the seller and/or finance company had a list of “thou shalt nots”, which included the taking of the vehicle outside of the county without their permission, or transferring any ownership of the vehicle to any other party, etc. In one of these situations, if a newly married person, for instance, should transfer his interest in his Ford Motor Credit Company financed car to his wife after marriage without the Company’s consent, he would be violating the “extra terms” of the contract and the finance company could accelerate the maturity and *35foreclose on the security. Many other ex-ampies could be fashioned by the sellers or their assigns if this opinion was permitted to stand and be the law.
The majority reasons that the courts should not penalize the seller or the finance company for their inventiveness in fashioning stricter terms than the Code provides because the courts can take each contract on a “case-by-case approach” after the acceleration has occurred and then make the buyer “prove” that the seller and/or the finance company did not act in “good faith.” They reason that if a court can rearrange any of the inventiveness of the finance company’s language to comport with legality, we should do so and uphold the finance company as against the buyer. This shift of the burden of proof was not intended by the legislature. The Code was enacted to prohibit certain actions by the sellers from ever happening, rather than trying to rectify the sellers’ actions after the fact.
This Credit Code was the result of consumer legislation that was supposed to restrict the freedom of the seller from fashioning his own definition of default that might give rise to acceleration. The legislation limited the opportunity for acceleration to the two essential conditions: default of the obligations (i. e., of the note and mortgage) or the good faith belief (on the part of the seller and/or finance company) that the prospect of payment or performance had been impaired. The majority has legislated beyond these limitations.
The majority, in its opinion, also endorses the Federal court’s approach (Sheppard Federal Credit Union v. Palmer, 408 F.2d 1369 [5th Cir. 1969]) that broad and inventive acceleration clauses are “all right” unless the buyer can prove that the seller and/or the finance company fabricated such clauses in bad faith. Not only does such approach emasculate the legislative intent, but it is, in my opinion, against the public policy of this State.
The approach that the majority has taken is not unlike that which was condemned by our Texas Supreme Court in Southwestern Inv. Co. v. Mannix, supra. I would affirm the judgment of the trial court as it pertains to Art. 5069-7.07(1).