*1 MOTORS, O. R. MITCHELL
INC., Appellant,
v. BELL, Appellee.
Charles R.
No. 15288. Texas, Appeals
Court of Civil San Antonio. 13,
Nov. 1974. 8, Denied 1975.
Rehearing Oct. Rehearing Denied Motion for
Second 29,
Oct. 1975. *2 opinion,
In this when reference is made to Code, pertinent provisions num- a refer- ber “5069” will be omitted. Thus 7.02(2)” ence to “Article shall understood 5069-7.02(2). as a reference to Article *3 The trial found the court contract documents in this case did not meet the print- the of the Code in that portion ed of the retail installment contract eight- to equal was not in at least a size 7.02(2); point type, by required Article as Gresham, Davis, Worthy, Gregory, A. W. acknowledgment by buyer of re- Moore, Antonio, Worthy appel- & San for ceipt copy aof of the contract did not lant. buyer’s signa- appear “directly above” the required 7.02(4); by ture as Article and the Morriss, Antonio, ap- Morriss for & San specifically out contract did not set pellee. “aggregate for insurance, amount” included required 7.02(6)(d). as Article by CADENA, Justice. judgment The is on Article below based Plaintiff, Bell, R. Charles filed this suit to Code, provides 8.01 of the which as follows: recover from O. Mitchell Mo- R. “Any person who violates this Subtitle tors, Inc., statutory penalties of double for, by contracting charging receiving or price the time in- differential on a retail interest, or other price time differential stallment for the contract sale of an auto- greater charges are than the which plaintiff by mobile to defendant. Follow- Subtitle, by or by amount this authorized ing findings a nonjury trial and on based failing any duty specifically perform to that defendant had violated Article 5069-7.- imposed any provision on him this (Articles 02 of the Consumer Credit Code Subtitle, obligor to twice shall forfeit Tex.Rev.Civ.Stat.Ann.) 5069-1.01 seq., et price dif- interest or time amount of respects, three court rendered ferential default and deferment and judgment plaintiff sum recover the for, charged or re- charges contracted $675.02, equal representing an amount attorneys’ ceived, fees reasonable and price provided double the differential time court, provided that there fixed contract, in the sum for and the further for a violation which penalty shall be no judg- attorneys’ fees. This is the $700.00 and bona fide results from accidental an appeals ment from which defendant and added.) (Emphasis error.” plaintiff, by cross-point, way of asserts that awarding that, the trial court erred in not even if it be Defendant first asserts statutory penalty for each fail violation. documents assumed that the contract comply requirements in the with the Code Code,” term, The “Consumer Credit is court, particulars by the trial three found generally applied to Title 79 of the Revised liability it. imposing no for basis Civil this are Statutes of State. We here language of on the argument This is based primarily Chapters 7 and concerned 8 Article 7.02 8.01. and Article Chapter 79. 7 Subtitle 2 of Title provisions relating to contents (Articles through 2 5069- Subtitle 5069—7.01 forms of retail installment 7.10) applies to motor vehicle installment pertinent provide: which are here sales, (Articles Chapter while 5069-8.01 through 5069-8.05) primarily . printed portion deals 1. “The contract, equal to penalties . size applicable to violations of Subtitle . . shall be in 2. 7.02(2). eight-point type.” least Article at 2. “The seller shall deliver buyer, lending to the financing or institution ac- or mail to him at his address shown on the quires obligation by assignment from contract,
. copy a of such contract seller, reason, this as accepted by the seller. Until the seller legislature impose “specifical- chose not so, buyer does who has not received deliv- ly” on sellers of on credit the automobiles ery of the motor right vehicle shall have the “duty” prepare complete the con- to rescind his contract Any . . . ac- documents, any precau- tractual or to take knowledgment by buyer delivery tion to see to it that the contractual docu- copy of the . . contract shall be in a statutory require- ments conformed to equal size to at ten-point least bold may legislature ments. It real- appear directly shall above the buyer’s ized that credit vendors of motor vehicles signature.” 7.02(4). Article (Emphasis not, fact, prepare do the documents *4 added requirement to indicate the by found embody which the terms and conditions of the court to have been case.) violated in this but, instead, rely the credit transaction person they regularly assign to whom
3. “The . specifi- contract shall likely such it documents. But is at least as cally set out the following items: . legislature buyer, that the knew that the (d) aggregate amount, any, if included person whose interests were intended for separate insurance if a charge identified protected, necessary be did not furnish the therefor, is made specifying the type or documents, and that in all such transactions types and the coverage; term of . . . .” the buyer merely signed instruments hand- 7.02(6)(d). Article seller, by completed ed to him the who Defendant contends portions that the of buyer, instruments handed them to the the code applicable here merely provide form, in purportedly complete with the re- that the written instrument shall meet cer- quest here.” Much buyer “sign that requirements tain and contain no language lip-service, course, given been to the has imposing on the seller duty to assure imposes penal- canon that a a statute which that the contract conforms statutory to the ty “strictly” should be construed. Van specifications. 8.01, Since Article defend- Press, 893, Zandt v. Fort Worth 359 S.W.2d ant’s argument continues, imposes penal- a (Tex.1962). simply 895 is a But this canon ty only person on a perform” who fails “to guide to it furthers be used when resort to “duty a specifically imposed by on him any the legislative purpose. The cardinal rule provision 2, of” Subtitle no penalty can be which, significantly, construction has imposed on case, it in this perti- since the by been expressly adopted legislature, provisions nent of Article 7.02 “spe- do not diligently that “the court shall look cifically” impose a duty on the seller. Legislature, keeping intention of the argument Defendant’s is insufficient to law, view at all times the old the evil and persuade us to legislative construe the the remedy.” Tex.Rev.Civ.Stat.Ann. Arti- scheme, which was prevent intended to 10(6) (1969). cle legislative None of the deceptive “abusive and practices in the con- concerning mandates construction duct of their businesses” “lenders and speak which are embodied in Article (Acts 1967, 608, vendors” Leg. p. 1) 60th § construction,” exception “strict with the as consisting of no more than a series of 8, Paragraph express contains precatory incantations. command, courts, ignored by our often urges Defendant the rule that a retail of the common law that statutes seller, or, credit least, at derogation “in strictly defendant in this thereof” shall be con- case, does ordinarily prepare the strued application” con “shall have no and fur- tractual documents which contain the ther terms commands that the statutes “shall be transaction, conditions of the credit liberally a view construed with to effect but, instead, uses documents prepared by a objects. legisla- their .” A similar contract conforms to the statu- construction” can- installment
tive distaste for a “strict respect expression, support on first found finds in the re- tory specifications and, statutes, 1856, judi- despite 7.02(4), criminal that the seller quirement, in Article legislative pro- accept cial reluctance buyer copy of “such shall deliver to nouncement, into has been carried forward contract” can The term “such contract.” Penal Code in provisions present of our contract, retail installment only refer to the forthright to the effect statement and, installment contract clearly, the retail penal statute law rule “that a the common is a con- legislature had in mind which the apply to strictly construed does not is to to the which conforms tract 1.05(a) Ann. this code.” Tex.Penal Code § Delivery by to the the seller of the statute. (1974) accompanying Practice Commen- which is not in a size at buyer of a contract tary. type, eight-point in which equal least receipt copy acknowledgment of legislative In view of the clear directly appear above contract does not protect buyers by preventing abu intent to spe- which does not signature, and buyer’s sellers, deceptive practices sive and in- aggregate amount cifically set out regulating the objective by to achieve this delivery is not a insurance cluded for sellers, there can conduct and activities contemplated by “such contract” intended to legislature be no doubt statute. on the goal by imposing duties achieve its who, judgment, legislative
persons in the *5 point is overruled. Defendant’s first law, guilty had, been of abu under the old challenge the trial Thus, Defendant does not practices. deceptive sive and portion printed finding that the purpose of Article court’s can be no doubt that sellers, at equal to not in a size impose to duties on the contract was 7.02 was But, by who, ordinary of busi its persons eight-point type. in the course second least here, ness, present error, to the insists that point as did defendant defendant buyer’s buyer ready for to the document to conform of the documents failure presupposes control signature. Regulation type cannot concerning size to be by imposition of rules and standards against it judgment of a be made the basis followed, to would be nonsensical and it establishes undisputed evidence because the impose sought to legislature hold that the of acciden- the result violation was by sell standards to be followed rules and tal bona fide error. and duty regulat imposing a on ers without 8.01, provisions of Article plain Under rules and comply with such persons ed to a violation for penalty there can no regulate the con attempt To to standards. and bona accidental from an “which results imposing without persons duct of a class of not define does The statute fide error.” regulated members of duties on the error.” fide and bona “accidental regulate by attempt be an class would that, if the It regulating. not is obvious selling the business is in Defendant the credit legislative attempt protect in documents The contract automobiles. regarded vehicles is to be buyers of motor Invest- by Bankers prepared this case were in futili than an exercise anything as other en- partnership Company, a limited ment legislative pronouncements concern ty, the financing business gaged in the automobile of the retail ing the form and contents The evi- supplied by it to defendant. and construed as contract must be installment en- made the shows that defendant dence seller, since it is the imposing duties on the necessary for the com- judged tries which it legislature which the conduct of the seller spaces which in the pletion of the contract regulate. sought to instruments. printed were left blank in the by plaintiff of the duty it is the After execution conclusion Our assigned the con- defendant, defendant it that the retail and of the seller to see to brief, out, pointed tract Company, Bankers Investment defendant. In its which, trial, at the time of the was the speaks part defendant mistake on the holder of the contract. printer. of the There is no evidence to type by indicate that the use of a smaller The trial court found that defendant re- printer the result of a was mistake lied on Bankers Investment Company to event, part. any his In the mistake of the furnish to defendant “forms complied printer cannot be treated as the mistake of with Code,” the Texas Consumer Credit and and, assuming printer defendant Miller, that Nelson general one of the part- mistake, did, fact, make a and that such ners of Bankers Investment Company, had printer good mistake was made ordered the forms which subsequently were faith, imputing we find no basis supplied to According defendant. to the defendant, good printer any faith of the findings, court’s Miller instructed the impute more than we would the bad faith printer to use a minimum size of not printer, who had no connection with eight-point less than type, and that Miller defendant, to defendant. printer relied on the in good faith be- lieved that size conformed to the be, too, may It that the evidence estab- statutory requirements. The court further lishes the of an accidental and existence found that Miller relied on the advice of part of Bankers bona fide error on the forms, counsel that such when properly officer, Company Investment and of its Mil- completed signed, comply would ler. But neither Bankers Investment Com- provisions of the Code. The trial court Miller, pany nor who had no connection made no findings concerning the bona fides defendant, defendants, are named as defendant, except insofar as the- above liability and when we consider the of de- findings might be issue, relevant to that fendant, our sole must be with the concern expressly refused to find that defend- good faith of some ant good “believed in faith” that the forms testimony in this case is party. third furnished to it complied with the *6 reading lengthy, not a record requirements. indicating discloses no evidence that de- brief, In its defendant asserts that fendant, any employees, actually or of its findings show that the forms were ordered type eight- was at least believed that with a type minimum meeting size the stat- point type. explains This the refusal of the utory requirements and were believed to believed court to find that defendant comply with the statute and with the in- good printed in forms com- faith that the given structions printer. The actual plied to the effect with the Code. Evidence finding was to the effect that the forms Y and gave that X certain instructions to ordered, were and the instructions relating good that Y had that X in faith believed given, by size Bankers Investment followed such instructions is not evidence Company, defendant. Defendant good that Z in faith. acted that, then asserts concerned, as far as it is point Defendant’s second is without mer- “the mistaken printer, inclusion con- it. trary given him, to the instructions of a smaller, type, but heavier face only can agree We with defendant the con- attributed to an accidental error made in question tract complies in require-
good faith.” ment buyer’s acknowledgment of receipt
The evidence does not copy establish as of a a of the appears contract “directly matter of law that the defect in the docu above” the buyer’s signature and therefore, ment as to the of size was the result of the trial court erred in find- part ing an accidental or bona fide error on the a violation 7.02(4). of Article pertinent printed portion 7.02(6)(d) of the violated Article because it did not form as follows: is amount, specifically aggregate “the set out ” “Buyer acknowledges (she) included for . . he has insurance. completed copy read and received a Sale heading, Under the “Credit Disclo- agreement including this the conditions Statement,” appear sure there 20 state- on the reverse side. ments. The first four set out the cost of Salesman_ ($1,295.00), the vehicle state and local taxes Buyer ($51.80), ($1.25), “titles” license and fees Signs_ ready charge and installation and/or make Co-buyer ($10.00). The total of these amounts is Signs_ line with the designa- entered on the fifth Approved By tion, ($1,358.05). price” “cash The next five n _" amount pay- entries disclose total of down case, In this on the blank designating line ($300.00),and the eleventh ment disclosure appears signature, “Salesman” apparently unpaid price balance of the cash shows that of the salesman. theOn line immedi- $1,058.05. being as ately appears below this signature plaintiff, buyer, and on the line immedi- the amount of 12 sets out $328.00 Line ately below this appears there signature damage insurance for 12 physical of plaintiff’s mother. signature Another a subtotal of months, line 13 shows appears on the next and last line. unpaid $1,386.05,representing the balance true,
It plaintiff as points out, price plus physical the cost of cash that between signature of the Lines 14 and 15 show buyer damage insurance. and the acknowledgment of receipt ($24.64)and health and of deliv credit life insurance ery of a receipt copy ($42.68), with the state- accident insurance appears signature are re- types the sales of insurance ment that both But, man. even if accept plaintiff’s we contract. Line term of the quired for the definition “directly” being as any “without “amount financed” 16 shows the thing intervening,” unpaid we $1,453.37, conclude the total of which is receipt of acknowledgment ($1,058.05), price this case the cash does balance of appear directly buyer’s ($328.00), above the signature. damage insurance physical cost of A reasonable interpretation ($24.64) insurance credit life the cost of language, bearing ($42.68). legislative mind the insurance and accident and health purpose and the evil was the concern of the charge” of a “finance 17 shows Line lawmakers, compels the conclusion that it *7 designates the “total $337.51, line while was intended that the acknowledgment of Line 20 ($1,790.88). payments” of amount receipt of a copy of the contract not be payment price,” “deferred the discloses “buried” among provisions other of the con payment down the of the sum which is Here, tract. provision, term, no contractual pay- amount “total the ($300.00) and condition or recital intervenes between the $2,090.88. final The or ($1,790.88), ments” acknowledgment buyer’s signature. and the rate percentage the annual shows disclosure Except for “salesman,” the word there is no 22.36%. to be printing buyer’s signature between the and re- that the plaintiff’s contention It is the acknowledgment. We find no basis for set specifically quirement holding intervening that the line for the amount, any, included if “aggregate out the signature of the salesman had the effect of case, the means, that in this for insurance” diverting the buyer’s attention from the charges of the the sum agreement disclose paragraph last of the contract itself which insurance; is, that type of each made for contains acknowledgment. separate included a have been should urges that the trial Finally, defendant $395.32, repre- showing the amount entry concluding that the contract court erred in senting by dam- error Bankers. We not concern physical combined cost of need age ($328.00), insurance credit life insurance ourselves with the conduct or state of mind ($24.64) and accident insurance and health printer, evidence of the since there is no ($42.68). printer indicating that did not inten-
tionally deliberately the smaller and use agree We with defendant that and, therefore, type size there is no evi- complies the contract require here with the error on dence of accidental bona fide ments 7.02(6)(d). of Article cannot It part printer. of the persuasively argued that the instrument is specifically We hold that defendant did deceptive any way the charges insofar as discharge proof not burden of estab- its for insurance are concerned. There is a lishing accidental bona fide error on the specific identification of each element of part of The relevant conduct is Bankers. buying additional cost of credit in defendant, the con- the conduct of and not stead of paying cash. There is a full disclo party. example, duct of For if a third sure of type types or of insurance and defendant that violation established of the terms coverage of such insur was the an result of accidental bona ance. differently, Stated we hold that the part, plaintiff fide error could on its requirement Code concerning the cost of by showing circumvent defense that that insurance is satisfied if the instrument dis deliberate, Bankers intentional acted in closes aggregate cost of each and fraudulent manner. insurance. We here concern ourselves with defend- Since we have concluded that finding ant’s that that it contention record establishes but one violation of the relied on Bankers to furnish with it forms Code, it is unnecessary to plain consider complied tiff’s contention involving cases necessarily the Code that establishes violations, multiple plaintiff is entitled to violation was result of an accidental and recover penalty for each vio bona despite fide error lation. court’s deliberate refusal make a judgment of the trial is af- court finding attributing the violation acciden- firmed. part tal and error on the bona fide defendant. Rehearing.
On Motion for out, points dictionary As defendant confidence, “To rest “rely” defines In rehearing, its appellant motion for in- veracity, integrity as when of the satisfied sists, among things, other that the evidence certainty or ability persons, or establishes that the use of smaller evidence; confidence; to have facts or of than required by the Consumer Credit trust; depend; ..” Code was the result an accidental and bona fide error. As in original opinion, Even if it be assumed defendant was *8 appellant we shall refer to as “defendant.” Bankers; justified having in confidence in that defendant was satisfied of veraci-
Our discussion of the of defense acciden- Bankers; ty, ability integrity or and that tal and bona fide error will be based on the on, in, assumption dependence defendant’s trust that Bankers Investment Com- knowledge pany, Bankers which furnished rested on defendant’s the form used defendant, good faith, doing in business and acted Bankers’ methods and that the failure reputation, would not estab- instrument to meet the statu- such reliance tory requirements relating good size was lish faith belief defendant’s the result of an accidental bona anticipated fide Bankers in performed had
manner. It is one thing to believe that a
person perform will in a certain manner. It DAVIES, Bishop Episcopal A. Donald thing another person believe that a has Texas, Appellant, Diocese North performed in that manner. To establish v. faith, that defendant acted good it is MEYER, County Judge, Milton et necessary that, to show after Bankers had al., Appellees. delivered defendant, the forms to defendant believed that forms were correct and No. 17647. statutory requirements. Certainly, met the Texas, Appeals Court of Civil it be seriously argued cannot that defend- Fort Worth. good if, despite ant acted in justi- faith its 3, Oct. 1975. Bankers,
fied confidence defendant knew, receiving forms, after they 7, Rehearing Denied Nov. 1975. did not meet requirements. the Code Justi- justify
fied reliance does conduct en-
gaged in knowledge that one’s re-
liance, justified, however much initially was
misplaced. establishing
Since burden of the de-
fense was on it necessary was produce
that defendant only evidence not
that it right relied on Bankers to do
thing, but subsequent that defendant’s ac-
tion was based on belief that Bankers
had acted in accordance with defendant’s
expectations. differently, it was Stated
necessary produce that defendant evidence knowledge it effect that had no size,
the fact respect require-
forms did not meet the
ments. In view of the total absence concerning knowledge,
evidence defendant’s
it cannot said that the evidence estab-
lishes the defense of accidental and bona
fide error as a law. matter of
The motion for rehearing is overruled.