Case Law: James Talcott, Inc. v. Gee: Deficiency Judgment

Purpose of statute prohibiting deficiency judgments on conditional sales of consumer goods after repossession and resale was to protect consumer from abusive credit practices. West’s Ann.Civ.Code, §§ 1801 et seq., 1812.5.

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Secured Transactions

Deficiency and Personal Liability

Conditional sale of printing press was governed by Commercial Code provisions which authorized deficiency judgment after repossession and resale, and not by Unruh Act which prohibited deficiency judgments. West’s Ann.U.C.C. § 9504; West’s Ann.Civ.Code, § 1812.5.

3 There is no question but that the Unruh Act was designed to protect the consumer from abusive credit practices. Such protection, however, was not deemed to be necessary where equally competent businessmen are dealing with each other in arm’s length transactions. A perusal of the Commercial Code sections as contrasted with comparable sections of the Unruh Act clearly evidences this intent on the part of the Legislature.² Thus, Civil Code section 1804.1³ prohibits a seller from exacting a contractual waiver of defenses from a buyer, whereas Commercial Code section 9206 permits a seller to do so, and **171 the amended official comment to such section makes it clear that ‘such clauses * * * are validated outside the Consumer field’ and that ‘the validation of waivers * * * is expressly made ‘subject to any Statute or decision’ which may restrict the waiver’s effectiveness in the case of a buyer of Consumer goods.’ (Emphasis ours.) In short, the Commercial Code is replete with evidence that the Legislature intended consumer transactions to be governed by different principles than those which govern transactions among businessmen. For example, the official comment to section 9101 provides, in part: ‘Consumer installment sales and consumer loans present special problems of a nature which makes special regulation of them inappropriate in a general commercial codification.’ And section 9109, in classifying goods, provides: ‘Goods are (1) ‘consumer goods’ if they are used or bought for use primarily for personal, family or household purposes; (2) ‘Equipment’ if they are used or bought for use primarily in business * * *.’ It is not without *388 significance that the definition of goods in the Unruh Act parallels the definition of consumer goods in the Commercial Code.

4 Thus, there is a real distinction between goods purchased for personal use and goods purchased for business use. The two are mutually exclusive, and the principal use to which the property is put should be considered as determinative. Accordingly, we hold that goods purchased, as in the present case, for business use, are governed by the provisions of the Commercial Code, and not those of the Unruh Act, and a deficiency judgment, while not permitted by the latter, is authorized under the Uniform Commercial Code (s 9504).