Lee v. Nationwide Cassel, L.P.
Case Date: 12/31/1969
Court: Supreme Court
Docket No: 80465
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filing of the opinion to request a rehearing. Also, opinions are subject to modification, correction or withdrawal at anytime prior to issuance of the mandate by the Clerk of the Court. Therefore, because the following slip opinion is being made available prior to the Court's final action in this matter, it cannot be considered the final decision of the Court. The official copy of the following opinion will be published by the Supreme Court's Reporter of Decisions in the Official Reports advance sheets following final action by the Court. Docket No. 80465--Agenda 27--September 1996. RODNEY LEE et al., Appellees, v. NATIONWIDE CASSEL, L.P., et al., Appellants. Opinion filed November 21, 1996. JUSTICE HEIPLE delivered the opinion of the court: Plaintiff Rodney Lee and counterclaimant Edelmira Rivera (hereinafter plaintiffs) sought to enjoin the enforcement of certain motor vehicle installment sales contracts by defendant/counterdefendant Nationwide Cassel, L.P., d/b/a Nationwide Acceptance Corp. and N.A.C. Management Corp. (hereinafter defendant). Plaintiffs also sought compensatory and punitive damages under the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/2 (West 1992)) and the Illinois Sales Finance Agency Act (205 ILCS 660/16 (West 1992)). The circuit court of Cook County consolidated the two cases and dismissed plaintiffs' claims on the pleadings. 735 ILCS 5/2--615 (West 1992). The appellate court reversed and remanded. 277 Ill. App. 3d 511. We allowed defendant's petition for leave to appeal. 155 Ill. 2d R. 315. For the reasons that follow, we affirm in part and reverse in part. FACTUAL AND PROCEDURAL HISTORY In August 1991, Lee's roommate, Dennis L. Davis, attempted to purchase a car from Tower Oldsmobile, Inc. Davis completed a credit application at the dealership in order to obtain financing for the vehicle. Defendant, a sales finance agency which purchases installment contracts from dealerships, was notified of Davis' application and ordered a credit report. Based on the credit information, the dealership refused to approve Davis' application unless he provided a co-signer for the purchase of the vehicle. At Davis' request, Lee agreed to act as co-signer. Lee completed a credit application at the dealership which identified him as a "co-signer for Davis." Defendant obtained a credit report on Lee, after which the dealership approved financing of the vehicle. Both Davis and Lee signed the sales contract on lines marked "buyer," even though the contract contained a separate line marked "guarantor." The facts of Rivera's claim are similar. Her friend, Rommel Gonzalez, attempted to purchase a vehicle at Olympic Hyundai. When Gonzalez applied for financing at the dealership, defendant requested credit information on him. The dealership refused to approve the loan unless Gonzalez provided a co-signer. Rivera agreed to act as co-signer, and furnished credit information to defendant. The financing was then approved. Gonzalez and Rivera signed the contract on lines marked "buyer," leaving blank the line entitled "guarantor." Sometime after Davis and Gonzalez took delivery of the vehicles, each of them failed to make scheduled loan payments to defendant. Without instituting legal proceedings against Davis, defendant demanded that Lee pay the debt, and attempted to enforce a wage assignment against him. Defendant also demanded payment from Rivera and instituted a collection action against her and Gonzalez. Lee then filed a complaint seeking to enjoin defendant's enforcement of the contract against him. Lee alleged that section 18 of the Motor Vehicle Retail Installment Sales Act (815 ILCS 375/18 (West 1992)) prevents defendant from holding him liable under the contract because he did not actually receive the vehicle and he was not the parent or spouse of a person who actually received the vehicle. Lee also sought compensatory and punitive damages under the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 1992)) and the Sales Finance Agency Act (205 ILCS 660/1 et seq. (West 1992)) for defendant's alleged attempts to create and enforce liability on his part for the debt when section 18 of the Motor Vehicle Retail Installment Sales Act precludes such liability. In the collection suit brought against her, Rivera filed a counterclaim containing substantially the same allegations as those in Lee's complaint. After consolidating the two actions, the circuit court granted defendant's motion to dismiss based on section 2--615 of the Code of Civil Procedure (735 ILCS 5/2--615 (West 1992)). The court found that under Magna Bank v. Comer, 274 Ill. App. 3d 788 (1992), the plaintiffs' signatures on the contracts as buyers made them jointly liable with their friends who also signed as buyers, notwithstanding the allegations that plaintiffs, unlike their friends, never actually received the vehicles. The court stated in its memorandum of opinion that it was obligated to "follow the decision of the Fourth District [of the] Appellate Court [in Comer] if it applies since there is no First District decision on this issue." The circuit court also dismissed the counts based on the Consumer Fraud and Deceptive Business Practices Act and the Sales Finance Agency Act because plaintiffs failed to allege any fraud or misrepresentation by defendant. The appellate court reversed and remanded. 277 Ill. App. 3d 511. It noted that since the time of the trial court's dismissal of plaintiffs' claims, two appellate court opinions from the First District had departed from Comer by holding that section 18 of the Motor Vehicle Retail Installment Sales Act limits primary liability under an automobile installment contract to those consumers who take physical possession of the vehicle. See Arca v. Colonial Bank & Trust Co., 265 Ill. App. 3d 498 (1994); Taylor v. Trans Acceptance Corp., 267 Ill. App. 3d 562 (1994). The instant appellate court panel likewise rejected Comer and followed Arca and Taylor by holding that plaintiffs were not liable under the contracts because they did not actually receive the vehicles. In addition, the court held that plaintiffs had set out facts with sufficient particularity to state a claim under the Consumer Fraud and Deceptive Business Practices Act by alleging that defendant attempted to create and enforce liability against them when it knew they could not legally be held liable under the contracts. ANALYSIS I. Co-Signer Liability In considering a motion to dismiss, we accept as true all well-pleaded facts and draw all inferences from those facts in favor of the nonmovant. Meerbrey v. Marshall Field & Co., 139 Ill. 2d 455, 473 (1990). We will sustain a dismissal for failure to state a claim only if it clearly appears that no set of facts could be proved under the allegations which would entitle the party to relief. Meerbrey, 139 Ill. 2d at 473. Section 18 of the Motor Vehicle Retail Installment Sales Act is entitled "Co-signers" and provides as follows: "18. Each person, other than a seller or holder, who signs a retail installment contract may be held liable only to the extent that he actually receives the motor vehicle described or identified in the contract, except that a parent or spouse who co-signs such retail installment contract may be held liable to the full extent of the deferred payment price notwithstanding such parent or spouse has not actually received the motor vehicle described or identified in the contract and except to the extent such person other than a seller or holder, signs in the capacity of a guarantor of collection. The obligation of such guarantor is secondary, and not primary. The obligation arises only after the seller or holder has diligently taken all ordinary legal means to collect the debt from the primary obligor, but has not received full payment from such primary obligor or obligors. No provisions in a retail installment contract obligating such guarantor is valid unless: (1) there appears below the signature space provided for such guarantor the following: `I hereby guarantee the collection of the above described amount upon failure of the seller named herein to collect said amount from the buyer named herein.'; and (2) unless the guarantor, in addition to signing the retail installment contract, signs a separate instrument in the following form: `EXPLANATION OF GUARANTOR'S OBLIGATION You ... (name of guarantor) by signing the retail installment contract and this document are agreeing that you will pay $ ... (total deferred payment price) for the purchase of ... (description of goods or services) purchased by ... (name of buyer) from ... (name of seller). Your obligation arises only after the seller or holder has attempted through the use of the court system to collect this amount from the buyer. If the seller cannot collect this amount from the buyer, you will be obligated to pay even though you are not entitled to any of the goods or services furnished. The seller is entitled to sue you in court for the payment of the amount due.' The instrument must be printed, typed, or otherwise reproduced in a size and style equal to at least 8 point bold type, may contain no other matter (except a union printing label) than above set forth and must bear the signature of the co-signer and no other person. The seller must give the co-signer a copy of the retail installment contract and a copy of the co-signer statement." 815 ILCS 375/18 (West 1992). Plaintiffs contend that they are exempt from liability under this section because they did not actually receive the vehicles that were the subject of the contracts, and because they are neither parents nor spouses of their friends who did actually receive the vehicles. Plaintiffs also allege that defendant instructed the dealership to have them sign the contracts as buyers, and that they were never shown or asked to sign an instrument entitled "Explanation of Guarantor's Obligation" as described in the statute. Defendant contends that plaintiffs are primarily obligated for the debts because they signed the contracts as buyers rather than guarantors. Defendant also argues that under section 18, plaintiffs "actually received" the motor vehicles because plaintiffs were listed as owners on the certificates of title issued for the vehicles. As originally enacted in 1967, section 18 simply provided that a person "other than the retail buyer or spouse of the buyer" could not be held liable under a motor vehicle installment contract unless that person received and signed a form entitled "Explanation of Co-Signer Obligation." This form explained that the co-signer could be sued and held liable for the full amount of the debt even though the buyer might have funds to pay the amount due. Ill. Rev. Stat. 1969, ch. 121 |