Court Opinion

ID: 7839893
Source: CourtListenerOpinion
Date Created: 2022-09-08 16:58:18.10553+00
Date Added: 2024-06-11T16:01:30.215505
License: Public Domain

Shea, J.,
dissenting in part. Although I agree with part I and part III of the majority opinion, I disagree *122with part II, which effectively imposes a penalty on the plaintiff, unrelated to any loss suffered by the defendants, for a nonwilful violation of the Retail Instalment Sales Financing Act, General Statutes §§ 42-83 through 42-100a (RISFA), contrary to the evident legislative intent to afford only the remedy of rescission for such violations, as this court implicitly held in Keyes v. Brown, 155 Conn. 469, 476, 232 A.2d 486 (1967).
This backhanded award of punitive damages, which the trial court, Schaller, J., denied after finding that misstatements of the defendants “were a major contributing factor to, if not the producing cause of, the violations involved,” is achieved by permitting the defendants to receive the payments they made without any allowance for the benefits they received from the transaction. The value of these benefits, based upon the defendants’ use of the car for a twenty-six month period at a reasonable rental value of $625 per month, according to testimony not rejected by the trial court, was $16,150.1 The majority opinion approves the action of the trial court in making no allowance in its decree of rescission for this substantial benefit that the defendants have retained, thus ignoring the principle that he who seeks equity must first do equity. “It is the general rule that, where one seeks the advantage of a rescission of a contract ... he should not be permitted to retain the consideration received by him.” Beckwith v. Cowles, 85 Conn. 567, 570-71, 83 A. 1113 (1912). We have expressly held this equitable doctrine applicable to a rescission pursuant to RISFA. Keyes v. Brown, supra. “As a condition precedent to a rescission, the [buyers] were required to allege and prove that they had restored or offered to restore [the seller] to its former condition as nearly as possible.” Id.
In order to justify the lopsided rescission ordered by the trial court, the majority opinion reaches beyond *123RISFA to article 2 of the Uniform Commercial Code, General Statutes § 42a-2-101 et seq. (UCC) relating to sales, which does not by its terms apply to statutory defects in retail instalment documents. See General Statutes § 42a-2-102. Though resort to analogous statutory principles may sometimes be useful, the practice is wholly inappropriate here because (1) the result is to create an additional punitive sanction for a violation of RISFA never contemplated by the legislature, and (2) the UCC provisions imported into RISFA are inappropriate when applied to nonconformities in contract documents rather than in goods sold, to which those statutes are addressed.
RISFA expressly provides, as a civil penalty for a “wilful violation” of any of its requirements, only that the owner or holder of the retail instalment contract shall be barred from “recovery of any finance, delinquency or collection charge.” General Statutes § 42-99. This limited forfeiture may be imposed only where “such owner or holder approved of or had knowledge of such violation and after such approval or knowledge retained the benefits, proceeds, profits or advantages accruing from such violation or otherwise ratified such violation.” General Statutes § 42-99. The trial court’s finding that these RISFA violations occurred because one of the defendants told the plaintiff “he was purchasing the vehicle for business use, not for consumer use” and that he “signed a document to that effect” would have precluded even the limited forfeiture of finance charges authorized for a wilful violation. It is incongruous, therefore, that the majority opinion imposes for this plainly nonwilful violation a harsher penalty, forfeiture of any compensation for use of the automobile for more than two years, ignoring the standard requirement of equity that a reasonable allowance be made for benefits received by the rescinding party. By effectively modifying the rescission remedy for RISFA vio*124lations, contrary to our holding in Keyes v. Brown, supra, that restoration of benefits is essential, the majority opinion has fashioned a sanction going far beyond the civil and criminal penalties2 authorized by the legislature.
The majority opinion has selected General Statutes §§ 42a-2-608 and 42a-2-711 as the UCC provisions to be employed in justifying a rescission that omits the normal offset, dictated by equitable principles, for benefits received by the buyer. Section 42a-2-608 (1) relates to a buyer who has revoked his acceptance of a product “whose nonconformity substantially impairs its value to him.” There is no evidence in this case that the nonconformity of the retail installment contract documents to RISFA in any manner reduced the value of the benefits the defendants have derived from the transaction. Where there has been a substantial nonconformity of goods, the buyer does not ordinarily receive the same practical benefit from their use as he bargained for. It is at least arguable, therefore, that an offset for benefits received is unnecessary because the buyer’s use of the defective goods prior to rescission was not sufficiently beneficial to warrant any allowance. Deficiencies in contract documents, however, cannot be said to have a like effect upon the benefits a buyer receives from use of the item purchased.
Section 42a-2-608 (2) also requires a “revocation of acceptance” to “occur within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects.” Leaving aside the question of whether the defendants should have discovered the RISFA violations more promptly, it can hardly be argued that their *125use of the automobile for 65,000 miles over a two year period did not effectuate a “substantial change” in its condition. “Perhaps because they did not contemplate long use followed by rejection or revocation, the drafters included no provision in article 2 to deal with the seller’s right to an offset for the buyer’s use of the goods before such rejection or revocation.” J. White & R. Summers, Uniform Commercial Code (2d Ed. 1980) p. 317. As the circumstances of this case demonstrate, the denial of such an offset to the seller for flaws in the transaction documents is likely to result in greater inequity than where the nonconformity affects the use of the goods. Defects in goods are more likely to be discovered in the course of their use within a reasonable time after the sale and before the decline in value from use or obsolescence has reached onerous proportions.
Section 42a-2-711, which sets forth the remedies available for a revocation of acceptance pursuant to § 42a-2-608, provides that “the buyer may cancel” and recover “so much of the price as has been paid,” in addition to other relief. Most of the courts that have considered this provision have not held it to require a one-way rescission, as does the majority opinion, where the benefits retained by the buyer are substantial. Orange Motors of Coral Gables, Inc. v. Dade County Dairies, Inc., 258 So. 2d 319, 321 (Fla. App. 1972); Pavesi v. Ford Motor Company, 155 N. J. Super. 373, 379, 382 A.2d 954 (1978); Moore v. Howard Pontiac-American, Inc., 492 S.W.2d 227, 230 (Tenn. App. 1973); see also Computerized Radiological Services, Inc. v. Syntex Corporation, 595 F. Sup. 1495, 1511 (E.D.N.Y. 1984), aff’d in part, rev’d in part, 786 F.2d 72 (2d Cir. 1986); American Container Corporation v. Hanley Trucking Corporation, 111 N.J. Super. 322, 334-35, 268 A.2d 313 (1970); Gawlick v. American Builders Supply, Inc., 86 N.M. 77, 79, 519 P.2d 313 (1974). Com*126mentators agree that, after any significant use of the goods by the buyer, an allowance for the fair value of any benefit conferred as a result of such use is not precluded by § 42a-2-711. W. Hawkland, Uniform Commercial Code Series (Sup. 1986) § 2-608:04, p. 91; J. White & R. Summers, supra, p. 317; J. Phillips, “Revocation of Acceptance and the Consumer Buyer,” 75 Com. L.J. 354, 357 (1970). In adopting this construction these authorities have resorted to § 103 of article 1 of the UCC (General Statutes § 42a-l-103), which provides that “[u]nless displaced by the particular provisions of this title, the principles of law and equity . . . shall supplement its provisions.” Relying upon this omnipresence that pervades the UCC, these authorities have concluded that the right of the buyer to “cancel” and to obtain a refund of the purchase price is implicitly subject to the standard equitable prerequisite that the party seeking a rescission restore the benefits he has received. The two cases relied upon in the majority opinion overlook the significance of § 103. Stridiron v. I.C., Inc., 578 F. Sup. 997, 1003 (D. Virgin Islands 1984); Sanborn v. Aranosian, 119 N.H. 969, 970, 409 A.2d 1352 (1979).
The majority opinion does not attempt to distinguish a rescission following revocation of acceptance pursuant to § 42a-2-608 from other situations where the equitable principle of restoration of benefits is applicable, but simply regards the failure to mention any offset in § 42a-2-711, in contrast to the express provision in § 42a-2-718 (3) for remedies available to a defaulting buyer, as conclusive of legislative intent. Regardless of how this controversy over § 42a-2-711 should be resolved in the context of sales of goods, to which it indisputably pertains, it makes little sense to select for application to RISFA a rule of law so questionable in terms of policy and fairness when applied *127to buyers who have retained substantial benefits from the use of goods returned to the seller long after the transaction.
If the UCC were at all applicable to a nonconformity of documents claimed to have had some effect on a buyer, a more appropriate provision would be § 42a-2-714, which allows a buyer to recover any provable damages, direct or consequential, that he has sustained because of a nonconformity of goods he has accepted, without the necessity of revocation, prompt or otherwise. This remedy as a supplement to the rescission approved in Keyes v. Brown, supra, would adequately redress any loss sustained by a buyer where the rescission remedy is inadequate. In seeking to go beyond compensating buyers for any losses actually sustained and to impose a forfeiture unrelated to actual injuries suffered, however, the majority opinion goes well beyond our proper judicial role. It is not for this court by creating more severe punishments to attempt to curb violations of statutes, remedial or otherwise, for which the legislature has provided specific penalties. To the extent that the present sanctions for RISFA violations may be inadequate, the forum for modificaton is the General Assembly.
I also disagree with the portion of the opinion that attempts to justify on other grounds the failure of the trial court to offset the substantial benefit received by the defendants against their recovery of their payments. It is rank speculation to assume that the $6600 received by the plaintiff in reselling the car at wholesale, plus whatever return was derived from its retention of the periodic payments during the twenty-six month period, would even approximately equal the value of the use of the car during the same period. If the defendants had rented the car from the plaintiff at a monthly rental corresponding to the $16,250 total *128rental value for the period of use that the testimony indicates, the plaintiff would have derived a greater return from the periodic rental payments.
I would remand the case for further proceedings to determine the amount of a reasonable allowance for use of the automobile to offset against the refund due the defendants, as well as for a further hearing on the award of attorney’s fees.

 See footnote 6 of the majority opinion.

 In addition to the civil penalties of General Statutes § 42-99, for a “wilful violation,” General Statutes § 42-100 provides criminal penalties for those “who wilfully and deliberately” fail to comply with or violate RISFA.