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Westfield Investment Co. v. Fellers

Decided: May 14, 1962.


Hopkins, J.c.c.


[74 NJSuper Page 576] This is a suit on a deficiency claim under a promissory note. The facts leading up to the making of the sales agreement and the execution of the conditional sales contract and promissory note were testified to by the defendants and were uncontroverted. On January 20, 1960 a Mr. Rosen, a representative of Ideal Home Food Service, contacted the defendants at their home at 137 Franklin Avenue, Nutley, New Jersey, regarding the sale

to them of a food plan and freezer deal. Mr. Rosen represented to the defendants that if they ordered $70 worth of food monthly for three years from "Ideal," the freezer in which the food was to be stored would belong to them at the end of the three year period. He represented that his company furnished the freezers to get the food business, and that the freezer in his company's proposition would not cost them a cent but would be absolutely free.

Prior to this offer by Mr. Rosen the defendants had entered into a food plan deal with L. Bamberger & Co. in which they knew they had to pay for the freezer. To the defendants, people of very limited means and obviously limited education, the prospect of securing the greater part of their food supply for their complete family of four at a rate of $70 a month and getting a freezer free, seemed not only enticing but also within their means. As a further inducement, Rosen told them they would receive one month's food supply free if they would sign immediately. Relying, therefore, on these representations, they readily accepted the Ideal proposition and, in some fashion not explored at the trial, were able to cancel their deal with Bamberger's.

Upon their acceptance of Rosen's deal, the defendants were prevailed upon to sign Ideal's "sales contract" and along with it a conditional sales contract and promissory note. The conditions under which these papers were signed, what they contained when signed, what they contained when copies were returned to the defendants, the contents of subsequent papers received by the defendants, and the events thereafter, were, to this court, not only illuminating but also distressing.

The so-called "sales contract" signed by both defendants is somewhat illustrative. At the time of the defendants' signing the only figure on the paper was that of $70, on the line and following the printed words "Total price for food and freezer monthly." Printed in the "contract" over the defendants' signatures appear the following items worthy of comment.

a. Food spoilage insurance.

b. Lifetime (in place of the words "1 year service" which are crossed out.)

c. Lifetime (in place of the words "5 year warranty" which are crossed out.)

d. Lifetime membership in food plan.

e. All food unconditionally guaranteed.

f. This contract entitles you to repurchase food at prevailing quantity discount prices.

Reference to this instrument will be made later.

With the signing of the sales contract the defendants signed a conditional sales contract and an attached promissory note, in both of which the terms of payment and other pertinent data were not filled in at the time of signing. These forms, it is to be noted, were made up for the plaintiff, Westfield Investment Company, a financing company, and were supplied to Ideal by Westfield. In fact, the very body of the conditional sales contract contains an assignment clause which in bolder type describes Westfield Investment Company as the specific assignee. As the perforation on the promissory note and the conditional sales contract would indicate, they were at one time a single sheet of paper. On the reverse side of the conditional sales contract there is a purchaser's statement, with representations by them as to their financial condition. The purpose of this statement was to secure credit from the financing company, Westfield Investment, in order to effect the food plan sale.

Needless to say, when the defendants later received their copies of these papers, and the freezer and first delivery of food were made on January 26 and January 28, 1960, respectively, the sweet deal offered by Ideal had soured considerably. Much to their chagrin, financially and otherwise, the defendants learned for the first time that under the terms of the conditional sales contract and promissory note they were purchasing a freezer for $825 and food for $111, a total of $936, to which was added a finance charge of $354.72. The food item covered three monthly installments at $37 each. The freezer had to be paid for in 36

installments of $32.77 each. No food would be delivered after the first delivery, later referred to, and all payments after the first three months were to be for the freezer only.

Their returned copy of the original "sales contract" presented by Rosen portrayed a somewhat different picture. By the terms of this instrument the defendants would appear to be committed to "Food Plan A," whereby they had to pay for food at the rate of $37.07 for four months and for the freezer at $32.93 per month for 36 months. On either basis the supposedly "free" freezer had become a costly proposition.

Upset by these circumstances, the bewildered defendants refused to make any payments, and the freezer and food were repossessed by the plaintiff and sold. The circumstances under which all of this took place will be referred to later.

At the outset it should be noted that this court, in an informal opinion delivered from the bench on January 25, 1962, held that the notice of sale of the freezer unit, given by certified mail, return receipt requested, was not in compliance with R.S. 46:32-25 and a judgment was entered for the defendants. This court, in so holding, relied on the opinion of Pacific Discount Co., Inc. v. Jackson , 68 N.J. Super. 331 (App. Div. 1961), certif. granted 36 N.J. 139 (1961). The Supreme Court reversed the Appellate Division decision in Pacific Discount Co., Inc. v. Jackson , 37 N.J. 169 (1962), and held that certified mail was not repugnant to the subject or context of R.S. 46:32-25 and was an authorized medium for the transmittal of notice of resale. However, that reversal by the Supreme Court, subsequent ...

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