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Show PAGE FIVE INTERMOUNTAIN COMMERCIAL RECORD MONDAY, NOVEMBER 25, 1974 In the Supreme Court of The State of Utah was obligated to answer within 10 days thereafter. It did not do so but belatedly filed a motion for permission to do so on March 6, 1974. Whether the motion should have been granted lay within the sound discretion of the trial court. Inasmuch as trial was set for March 13, we cannot say that the court abused its discretion in refusing to permit Terra, Inc. , to do that which it had a right to do some eight days earlier. Thelma B. Waieicha, Plaintiff and Respondent, v. Terra, Inc. , and LaMar S. Wasescha, Defendants and Appellant. Terra, Inc. , a C ron -- No. Utah Corporation, Other assignments of error relate to remedies afforded Mrs. Wasescha under the Uniform Consumer Credit Code. 13668 FILED Claimant and Appellant, Terra, Inc. , claims that it was not a person regularly engaged in the business of making loans. It is true that most of its business activities con- November 14, 1974 v. However, it did make' sisted of buying real' estate contracts at a discount.' loans and had a license! so to do. LaMar S. Wasescha, Cross -- Defendant. Allan E. Mecham, Clerk Terra, Inc. , also contends that the court erred in finding that not make disclosure or give notice of the right to rescind. ELLETT, Justice: 2 it did The Waseschas borrowed $5,000 from Terra, Inc., on October 8, 1970, and gave a note secured by a mortgage on realty which Mrs. Wasescha owned jointly with her prior husband. The Waseschas promised to pay 18 per cent interest per year on unpaid balances. They made some payments but later became in arrears pursuant to the terms of the note and mortgage. The transaction was made October 8, 1970. No disclosure or notice of right to rescind was given at the time. It was not until the State made an audit of the books of Terra, Inc. , that a notice was sent, to wit: on or about June 30, 1971. Both of the Waseschas denied ever receiving the notice. However, it is not material to this case whether they did or did not receive it. The notice purportedly given June 30, 1971, informed the Waseschas that they might rescind the agreement at any time prior to midnight of October 11, 1970. January 4, 1972, the Waseschas got a release of the mortgage and borrowed money from a savings and loan association in order to buy the interest of Mrs. Wasescha1 s former husband. Terra, Inc., released its mortgage in order for the loan to be obtained from the savings and loan association and then took a subsequent mortgage from the Waseschas and filed it with the county recorder. While the statute provides that the debtor has three days after notice in which to rescind, it further provides:3 ". . . The creditor shall clearly the rights of the debtor to the debtor and conspicuously disclose, under this section. 1973, Mrs. Wasescha filed a suit against Terra, Inc., and her husband, wherein she alleged that the mortgage was obtained by fraud and 1 She law. of excess was that in that the interest rate prayed that permitted by the transaction of October 8, 1970, be rescinded, that excessive interest charges collected by Terra, Inc. , be set off against any amount found to be due on the note, and that the mortgage be declared to be null and void. Mr. Wasescha did not appear at trial, and Terra, Inc. , assigns as the failure of the trial court to award attorney's fees against him. On , On June 15, Issues were joined by answer of Terra, Inc. A counterclaim was filed against Mrs. Wasescha and a cross claim made against Mr. Wasescha whereby Terra, Inc. , sought to foreclose its mortgage, etc. On February 16, 1974, Mrs. Wasescha and Terra, Inc. , through their counsel, stipulated that Mrs. Wasescha might file a supplemental complaint showing that she had paid off ..." ... ... the debtors might rescind up until The notice given to the effect-tha- t not does to notice months some eight clearly inform them of their rights. prior 2. Section 70B-5-20- 4, U. error C. A. 1953, as amended (Replacement Vol. 7B, 1973 Pocket Supplement). 3. Id. The answer to that matter is that the president of Terra, Inc. , told Mr. Wasescha when he gave a pay-o- ff figure that he did not want anything save his He got that, and the only party to be awarded anything principal and interest. in the judgment is Mrs. Wasescha. the note and mortgage held by Terra, Inc. , and Terra, Inc. , acknowledged receipt of a copy of the supplemental complaint as of that day. Three days later Mrs. Wasescha and her husband entered into a similar stipulation. Leave to file the supplemental complaint was granted by the court pursuant to stipulation on March 4, 1974, and the order recited: The Waseschas wished to sell their home and requested a pay-o- ff figure from Terra, Inc. In order to sell, they had to pay off the mortgage held by Terra, Inc. This they voluntarily did while their suit to rescind was pending. Terra, Inc. , now contends that the right to rescind the contract pursuant to was waived by the Waseschas when they voluntarily paid the Section 70B-5-2note and obtained release of the mortgage. They made no protest, and there was nothing to advise Terra, Inc. , that the matter was not being settled. 04 Service of the supplemental pleadings shall be deemed to have been made upon defendant Terra, Inc. , on February 16, 1974, and on defendant LaMar S. Wasescha on February 19, The Waseschas now claim that they were economically duressed into paying the note because they were being transferred away from Utah and had to sell their home. 1974. U. C. A. 1953, as amended (Replacement Vol. 7B, 1973 1, Section Pocket Supplement). On March 6, 1974, Terra moved to file an amendment to its pleadings to set forth an accord and satisfaction, which motion was by the court denied on March 12, 1974. 1. 70B-3-20- There are two answers to that contention. In the first place, there was no compulsion to sell the home. They could have rented it. In the second place, Terra, Inc. , had nothing whatsoever to do with their need or desire to sell. Terra, Inc. , appeals from an adverse judgment. Its first assignment of error is directed at the refusal of Trial was had on March 13, 1974, and The question then poses itself: Can a party fully execute a voidable contract and then rescind it? the court to permit it to file an amendment to set forth accord and satisfaction. Rule 8(c) of the Utah Rules of Civil Procedure provides that the affirmative defense of accord and satisfaction must be set forth affirmatively. This Terra, Inc., attempted to do. However, Rule 15, Utah Rules of Civil Procedure, provides: this case the right to rescind is given by the statute, and that right continues until three days after notice is given by the creditor to the debtor In that he has a right to rescind. Since the notice dated June 30, 1971, even if given, did not comply with the statute,' was received by the Waseschas. party shall plead in response to an amended pleading within the time remaining for response to the original pleadwhiching or within 10 days after service of the amended pleading, ever period may be the longer, unless the court otherwise orders. .. , , A Other assignments of error are made by appellant, We have, cons id- ered them and find them to be without merit. The judgment is affirmed. Respondent is entitled to costs on appeal. In this case the court did not otherwise order. Here the amended comand Terra, Inc., plaint was served upon Terra, Inc., on February 16, 1974, No. 13533 Westinghouse Credit Corporation, Plaintiff and Respondent, FILED November 14, 1974 v. Hydroswift Corporation, Defendant and Appellant. CROCKETT. Allan E. Mecham, Clerk Justice; Plaintiff Westinghouse Credit Corporation sued upon a written agreement by which defendant Hydroswift Corporation guaranteed payments on trust receipts on boats and equipment which were assigned to plaintiff as security for money it advanced under a financing plan. Hydroswift asserted two de- -j fenses: (1) that it was not shown that execution of the guaranty was authorized the by corporate resolution; and (2) that after plaintiff had knowledge that of its In violation agreement, purchaser was in default and selling equipment the to to measures take failed and repossess fraudulently plaintiff negligently reto the a it trial court, the of loss. Upon security, which was the cause made and contentions defendant's findings and judgment in favor of the jected plaintiff. Defendant appeals. Boat Company, Inc., aetall dealer In Great Falls, Montana, and the defendant Hydroswift, boat manufacturer In Salt Lake City, sought a financing arrangement by which Hydroswift would sell its boats to Lie S Boat; would then assign trust receipts to plaintiff Westinghouse Credit, for which the latter would advance money to Hydroswift. Thus, Instead of having Its capital tied up In merchandise it had sold, Hydroswift would use the proceeds to continue Its manufacturing operations. As a part of this arrangement, sometimes referred to as "floor plan financing," L It S Boat In the early part of 1972, the L Ik S 4. Id. agreed to keep boats and equipment in the showroom as security for payment out of the contracts; and when removed Westinghouse Credit. was to be paid. This plan continued in operation with numerous transactions until December 20, 1972. At that time the plaintiff was advised, through Its agent, that a floor check showed that L fc S Boat was in violation of its agreement for two boats and two trailers valued at $4, 255. 37 and was not able to make payment. Plaintiff then notified Mr. Ludlow, president of Hydroswift, by telephone of the default; and a few days later, December 27, 1972, made demand by letter for payment of the L fc S Boat account. Defendant refused and requested that Westinghouse itself should repossess the merchandise. Plaintiff reiterated its stand that the guaranty was unconditional and made several demands upon defendant Hydroswift to perform. Refusal and L It S Boat's subsequent bankruptcy resulted in this lawsuit. In regard to the contention of Hydroswift that it was not shown that the guaranty agreement was executed by the corporation, these observations are pertinent: It Is not to be doubted that entering Into such a contract by a corpo-- v ration not only usually Is, but should be done, by authorization of its board of directors. 1 But like all generalities, this Is subject to exceptions according to the requirements of justice and equity in individual cases. There is also a well recognized rule that a corporation may not represent to another party that It has executed a valid contract. Induce the other to' perform, accept the benewhen it suits Its Interest, renege and escape the burdens of the fits, and then 2 contract. By so engaging in the business and enjoying Its advantages the corporation is deemed to ratify the contract, wherefore it cannot then repudiate and Am. Jur. 2d 607, Corporations, Sec. 1183. 2. Whitten v. Republic National Bank of Dallas, 397 S.W. 2d 415 (Tex. 1965); Pendleton v. Williams, 198 So. 2d 235 (Miss. 1967). avoid its obligations. 1. 19 We turn to the facts in the light of what has just been said. I A key one |