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WHITEMAN v. DEGNAN CHEVROLET (11/13/70)

decided: November 13, 1970.

WHITEMAN, APPELLANT,
v.
DEGNAN CHEVROLET, INC.



Appeal from order of Court of Common Pleas, Trial Division, of Philadelphia, Jan. T., 1969, No. 345, in case of Roger M. Whiteman, guardian for Wallace G. Krawczyk, an incompetent person, v. Degnan Chevrolet, Inc.

COUNSEL

Michael J. Pepe, Jr., for appellant.

Robert H. Malis, with him Malis, Tolson & Malis, for appellee.

Wright, P. J., Watkins, Montgomery, Jacobs, Hoffman, Spaulding, and Cercone, JJ. Opinion by Hoffman, J.

Author: Hoffman

[ 217 Pa. Super. Page 426]

In October of 1965, Wallace G. Krawczyk, now adjudicated an incompetent (appellant), purchased a new Chevrolet automobile from Degnan Chevrolet, Inc. (appellee), for $3,555.00. Appellant traded in two used motor vehicles at the time of purchase. A conditional sale contract was executed which, after deducting the trade-in allowance, had a balance of $1,172.00. Appellee assigned the conditional sale contract to the Central Penn National Bank of Philadelphia (Central Penn). A total of $612.00 was paid to Central Penn to be applied under the terms of the conditional sale contract, thus reducing the balance of $560.00.

Appellant subsequently defaulted on the conditional sale contract; therefore Central Penn repossessed the Chevrolet. Central Penn later reassigned the contract to appellee; and, in consideration of the balance due of $560.00 plus a repossession charge of $30.00, delivered the automobile to appellee.

Thereafter appellee resold the car for $2,079.00, thereby creating an overage of $1,489.00. Appellant's guardian demanded the return of this surplus; appellee refused, and this suit resulted. Appellee filed preliminary objections in the nature of a demurrer to appellant's complaint on the ground that the complaint failed to set forth a cause of action upon which relief may be granted. The court below sustained appellee's preliminary objections. From this decision the instant appeal followed.

The question presented is whether appellee is entitled to keep the surplus derived from the sale of the automobile. In determining this issue, two Pennsylvania

[ 217 Pa. Super. Page 427]

    statutes are relevant: the Uniform Commercial Code as adopted in Pennsylvania, Act of April 6, 1953, P. L. 3, § 1-101 et seq., as amended, 12A P.S. § 1-101 (Supp. 1970) (hereinafter Code) and the Motor Vehicle Sales Finance Act, Act of June 28, 1947, P. L. 1110, §§ 1-37, 69 P.S. §§ 601-637.

Section 9-504 of the Code provides that "(1) A secured party after default may sell, lease or otherwise dispose of any or all of the collateral in its then condition or following any commercially reasonable preparation or processing. . . . (2) If the security interest secures an indebtedness, the secured party must account to the debtor for any surplus. . . ." (emphasis added).

Since in the instant case, the conditional sale contract signed by appellant created a security interest which secured payment of the indebtedness on the car, § 9-504 requires that appellee return any surplus to appellant. There is no doubt that a substantial surplus was created by the sale of the Chevrolet. Thus, under the Code, appellant did allege a cause of action in his ...


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