MOTOR CAR FINANCE

Southland Times, Issue 21275, 22 December 1930, Page 5

MOTOR CAR FINANCE

HIRE PURCHASE AGREEMENTS.

AN IMPORTANT JUDGMENT. (Per United Press Association.) Hamilton, December 20. An important reserved judgment,. affecting the whole system of motor car finance, was delivered at Hamilton to-day by his Honour, Mr Justice Smith, in the case in which Leonard James O'Reilly, a farmer of Taumarunui, sued the General Motors Acceptance Corporation for the recovery of the value of a car, seized by the defendant corporation, which car the plaintiff purchased from Messrs Bishara Bros., who went bankrupt, J. M. Bishara (principal of the firm) subsequently being sent to gaol for fraud. The hire-purchase agreement provided, in effect, for an actual sale, the purchase of the car being subject to the usual conditions of a conditional hire-purchase agreement. The total purchase price was £283 (comprising a deposit) and the balance was payable by 18 instalments of £1 5/9 each. Upon the same date, Bishara Bros, signed a form of assignment, assigning their rights to the Traders’ Finance Corporation Limited. Plaintiff made three instalments which were duly accepted. Although the plaintiff was in arrear with the September payment, neither the Traders’ Finance Corporation Limited nor Bishara Bros, took any step to determine the agreement. On September 19 the car was seized by the representative of the General Motors Acceptance Corporation. The arrangement between General Motors New Zealand Limited and their distributing agents was that a distributor, if he could pay cash, paid General Motors direct. If he could not pay cash, he could trade through the General Motors Acceptance Corporation or some corporation which could arrange the finance in respect of cars sold out of stock. A distributor -would, in the case of credit sales, endeavour to arrange credit for the purchaser, through the General Motors Acceptance Corporation not through General Motors New Zealand Limited.

His Honour said that, notwithstanding the existence of the hire-purchase agreement, General Motors, not the General Motors Acceptance Corporation, appeared to have the exercise of the sole right to van’ the price at which a new car would ultimately be sold. Samuel Bishara, from his father, J. M. Bishara, was the actual distributor appointed in this case, but Bishara Bros, appeared clearly to undertake the selling work and correspondence written on the defendant corporation’s note-paper addressed “Samuel Bishara” was sent to Bishara Bros, the latter clearly having authority from Samuel Bishara Limited to sell cars which could have been sold by Samuel Bishara Limited if that firm had been actively operating. His Honour proceeded to review the transaction between Bishara Bros, and O'Reilly and said: “It is clear that, until the sale of the Chrysler to the General Motors Acceptance Corporation had been effected, General Motors Acceptance Corporation had no title to the car. His Honour found, on the facts, that, on May 1, 1929, Bishara Bros, had authority from Samuel Bishara Lijnited to dispose of the car in the ordinary course of trade and that the plaintiff acquired a valid interest in the car with the right to possession unless the right was determined by default. Even then he had the right to re-delivery within 24 hours. Plaintiff’s interest included the right to complete the purchase. He had no right to return it and so cancel his liability for the remaining payments. Bishara Bros, also, on May 1, 1929, executed a form of assignment of their rights in favour of the Traders’ Finance Corporation. He thought the assignment bound Samuel Bishara Ltd. It was clear that the plaintiff was an innocent purchaser; that his interest under the hire-purchase agreement was valid and that in seizing the car and selling it for £175, the General Motors Acceptance Corporation wrongfully converted it.

His Honour’s view was that the car was worth, at the time of its seizure, £220. He gave judgment for the plaintiff' for this sum together with costs.