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No. 3--01--0683 

IN THE

APPELLATE COURT OF ILLINOIS

THIRD DISTRICT

A.D., 2002

In the complaint, plaintiff alleged that it had sold a 1988Chevrolet pickup truck to the defendants and that the defendantshad defaulted on the Bill of Sale/Memorandum of Installment Sale(installment contract).

The installment contract provided for a sale price of$7,540.69. The unpaid balance on the contract was $7,040.69after a $500 trade-in allowance was subtracted from the saleprice. Under the contract, defendants were required to pay "28+approx. payments of $250.00 each month," and the annualpercentage rate was 18%. However, the contract did not include astatement regarding the total amount of the finance charge or thesum of the payments due.

At some point, plaintiff regained possession of the pickuptruck. Plaintiff later sold the vehicle at auction for $1,500and claimed $375 in fees related to the sale. Plaintiff thenbrought this action, seeking recovery from defendants in theamount of $5,404.44.

Defendants filed a motion to dismiss the complaint,asserting that plaintiff was precluded from enforcing thecontract because it did not meet the requirements of the MotorVehicle Retail Installment Sales Act (Act). See 815 ILCS 375/1et seq. (West 1998). The trial court denied defendants' motionto dismiss.

At trial, an exhibit was submitted which indicateddefendants had made total payments on the contract in the amountof $2,750. The exhibit also documented interest charges, latepayment fees and two "repossession fees" which plaintiff chargedto defendants. The trial court entered judgment in favor ofplaintiff in the amount of $3,920.69, plus costs.

The parties do not dispute that a violation of the Actoccurred. Instead, they contest whether the defendants may raisea violation of the Act in defending against plaintiff's claim. In particular, plaintiff contends the Act is only enforceable bythe Attorney General or a State's Attorney and, therefore, itdoes not provide for a private cause of action. Defendantscontend they are not bringing a private cause of action, but areraising plaintiff's failure to comply with the Act as a defenseto the action for recovery on the contract.

Initially, we note the Act does provide that the AttorneyGeneral or the State's Attorney of any county may bring an actionto restrain or prevent any violation of the Act. See 815 ILCS375/23 (West 1998). However, the defendants did not file anaction to enforce the provisions of the Act in this case. Instead, the defendants are raising the violation of the Act as adefense against plaintiff's action. Therefore, section 23 of theAct is not applicable to this matter.

Regarding defendant's assertion that the Act provides adefense to plaintiff's claim, a failure to comply with theprovisions of the Act does not render the contract void orunenforceable. Ford Motor Credit Co. v. Neiser, 196 Ill. App. 3d515, 554 N.E.2d 322 (1990). The remedy for noncompliance withthe Act is limited to the penalties provided in the statute. Neiser, 196 Ill. App. 3d 515, 554 N.E.2d 322.

The statute provides that a person who violates the Act maynot recover finance charges, delinquency or collection charges,or refinance charges on the installment contract, unless theviolation is due to an accident or error of computation. 815ILCS 375/24(b) (West 1998). This section clearly provides thatany person who violates the Act cannot collect any delinquency orfinance charge on the installment contract at issue. See FirstChicago Gary-Wheaton Bank v. Gaughan, 275 Ill. App. 3d 53, 655N.E.2d 936 (1995) (plain reading of Act shows legislatureintended that violation would preclude any recovery of financecharges under the contract); Neiser, 196 Ill. App. 3d 515, 554N.E.2d 322 (Act is clear that a violation of its provisions willresult in denial of recovery of delinquency or finance charge).

In this case, the contract fails to meet the requirements ofthe Act in several respects, including failure to state the totalamount of the finance charge, failure to accurately state thenumber of payments required to repay the debt and failure tostate the sum of the payments due as a "total of payments." See815 ILCS 375/5 (West 1998). In fact, the amount due under thestated payment schedule of "28+ approx. payments of $250" wouldbe approximately $7,000, which would not even cover the principalamount of the loan. We cannot say these violations of the Actwere an accident or a computation error.

Therefore, the penalty provision of the Act may be used as apartial defense to plaintiff's claim for recovery under thecontract. While the provision does not bar recovery, itforecloses collection of finance charges and delinquency orcollection fees. A "finance charge" is defined as any chargeimposed as a condition of the extension of credit, includinginterest charges. 815 ILCS 375/2.9 (West 1998). A delinquencyor collection charge includes a charge which may be imposed fordefault on an installment payment, as well as attorney feesincurred in the collection of the contract. 815 ILCS 375/11(West 1998).

In this case, the original balance of the contract was$7,040.69. At trial, an exhibit was submitted which showsdefendants made total payments of $2,750. The exhibit alsodocuments interest charges, late payment fees and repossessionfees, which are not collectible because they are finance chargesand delinquency or collection fees. In addition, plaintiff soldthe vehicle at auction for $1,500. However, the $375 in feesclaimed by plaintiff as a result of the sale are not recoverablebecause they are in the nature of collection or delinquency fees. Based on these figures, plaintiff is entitled to $2,790.69 on thecontract. ($7,040.69 [original balance] minus $2,750 [paymentsby defendants] minus $1,500 [recovery at auction sale] equals$2,790.69). Accordingly, we modify the judgment of the trialcourt to provide for a judgment in favor of the plaintiff in theamount of $2,790.69 pursuant to our authority under Supreme CourtRule 615(b)(1). 134 Ill. 2d R. 615(b)(1).

For the foregoing reasons, we affirm the judgment of theKankakee County circuit court, but modify the judgment as setforth in this order.

Affirmed as modified.

LYTTON, P.J., and BRESLIN, J., concur.