Hull v. Bowest Corporation , 649 P.2d 334 ( 1982 )

KELLY, Judge,

dissenting.

I respectfully dissent.

While the majority acknowledges the similarity between 15 U.S.C.A. § 1635(b) and § 5-5-204(2), C.R.S.1973, it nevertheless follows a line of federal cases which apply equitable principles in fashioning a remedy — a course which I believe to be foreclosed by the Colorado Supreme Court’s interpretation of the statute in Strader v. Beneficial Finance Co., 191 Colo. 206, 551 P.2d 720 (1976). See also Varady v. White, - Colo.App. - (No. 81CA0027, announced March 11, 1982). Neither do I agree with the majority that the Supreme Court in Strader reached the result it did because of the equities of the case.

It seems evident to me, upon examination of the Court of Appeals’ version of Strader v. Beneficial Finance Co., 35 Colo.App. 284, 534 P.2d 339 (1975), that this court was attempting to apply an equitable rule when it said:

“Since Beneficial did not proceed as required by § 5-5-204(2), Straders were entitled to retain ‘possession’ of the principal balance of the loan pending the required performance by Beneficial. However, this subsection does not provide that Beneficial forfeits its right to repayment of the principal balance for failure to comply with its statutory obligations within 10 days. Further, we find no authority to sustain Straders’ position that this is what the legislature intended. To the contrary, the legislature mandated that except as otherwise specifically provided in the UCCC, a creditor’s violation of his obligations does not affect the debt. See § 5-5-202(5).”

It is equally plain to me that this “equitable” application of the statute was explicitly rejected by the Colorado Supreme Court on certiorari review.

“We simply interpret section 5-5-204(2) to be as ‘otherwise provided.’ We further note that there is a split of authority in this regard, but think the holding here is the better view in light of the purposes and policies of the UCCC. Contra, Palmer v. Wilson, 502 F.2d 860 (9th Cir. 1974).”

The Supreme Court’s view of the purposes and policies to be served by the UCCC is unmistakeable:

“The creditor is required to remove cloud on the title of the debtor’s residence within ten days. Then and only then is the debtor obligated to tender. After tender by the debtor, if the creditor fails to take possession of the property tendered ‘ownership of the property vests in the debtor without obligation to pay. ...’ We hold that this statutory provision is intended as an impetus for the creditor to take immediate action to clear title and to fulfill its obligations. If not interpreted in this way, there is no stimulus for the creditor to comply with the statutory provisions requiring him to release the security interests within the ten day period.” (emphasis added)

Consistent with this statement of policy, the Supreme Court held:

“. . . as did the court in Sosa, supra, [Sosa v. Fite, 498 F.2d 114 (5th Cir. 1974) ] that the requirement of tender arises only after the security interest is released. If it is not released within the ten days following notice of rescission, the debtor is relieved of the obligation to tender and the property vests in the debtor. As used, ‘property’ is the unpaid principal balance of the loan, and the Straders have no obligation to pay that unpaid principal.”

See Note, Consequences of the Creditor’s Failure to Acknowledge Rescission by the Debtor Under Strader v. Beneficial Finance Co., 48 U.Colo.L.Rev. 437 (1977).

I do not regard this language as supporting the view that the Supreme Court, in Strader, was moved by the equities of the case. Neither is there room for one interpretation of the federal statute and another of the state statute. Application to the creditor’s conduct of a sliding scale of egregiousness is not my idea of a workable rule of law.