Assignment:
Dodson v. Shrader 824 S.W.2d 545 (Tenn. S.Ct. 1992)
Justice O'Brien In early April of 1987, Joseph Eugene Dodson, then 16 years of age, purchased a used 1984 pickup truck from Burns and Mary Shrader. The Shraders owned and operated Shrader's Auto Sales in Columbia, Tennessee. Dodson paid $4,900 in cash for the truck, using money he borrowed from his girlfriend's grandmother. At the time of the purchase there was no inquiry by the Shraders, and no misrepresentation by Dodson, concerning his minority. However, Shrader did testify that at the time he believed Dodson to be 18 or 19 years of age.
In December 1987, nine months after the date of purchase, the truck began to develop mechanical problems. A mechanic diagnosed the problem as a burnt valve, but could not be certain without inspecting the valves inside the engine. Dodson did not want, or did not have the money, to effect these repairs. He continued to drive the truck despite the mechanical problems. One month later, in January, the truck's engine "blew up" and the truck became inoperable. Dodson parked the vehicle in the front yard at his parents' home, where he lived. He contacted the Shraders to rescind the purchase of the truck and requested a full refund. The Shraders refused to accept the tender of the truck or to give Dodson the refund requested. Dodson then [sued] to rescind the contract and recover the amount paid for the truck. Before the circuit court could hear the case, the truck, while parked in Dodson's front yard, was struck on the left front fender by a hit-and-run driver. At the time of the circuit court trial, according to Shrader, the truck was worth only $500 due to the damage to the engine and the left front fender.
The case was heard in the circuit court in November 1988. The trial judge, based on previous common-law decisions, and under the doctrine of stare decisis, reluctantly granted the rescission. The Shraders were ordered, upon tender and delivery of the truck, to reimburse the $4,900 purchase price to Dodson. The Shraders appealed. [T]he rule in Tennessee is in accord with the majority rule on the issue among our sister states. This rule is based on the underlying purpose of the "infancy doctrine," which is to protect minors from their lack of judgment and "from squandering their wealth through improvident contracts with crafty adults who would take advantage of them in the marketplace." There is, however, a modern trend among the states, either by judicial action or by statute, in the approach to the problem of balancing the rights of minors against those of innocent merchants.
As a result, two minority rules have developed that allow the other party to a contract with a minor to refund less than the full consideration paid in the event of rescission. The first of these minority rules is called the "Benefit Rule." The rule holds that, upon rescission, recovery of the full purchase price is subject to a deduction for the minor's use of the merchandise. This rule recognizes that the traditional rule in regard to necessaries has been extended so far as to hold an infant bound by his contracts, where he failed to restore what he has received under them to the extent of the benefit actually derived by him from what he has received from the other party to the transaction. The other minority rule holds that the minor's recovery of the full purchase price is subject to a deduction for the minor's "use" of the consideration he or she received under the contract, or for the "depreciation" or "deterioration" of the consideration in his or her possession.
We are impressed by the statement made by the Court of Appeals of Ohio: At a time when we see young persons between 18 and 21 years of age demanding and assuming more responsibilities in their daily lives, when we see such persons emancipated, married, and raising families; when we see such persons charged with the responsibility for committing crimes; when we see such persons being sued in tort claims for acts of negligence; when we see such persons subject to military service; when we see such persons engaged in business and acting in almost all other respects as an adult, it seems timely to reexamine the case law pertaining to contractual rights and responsibilities of infants to see if the law as pronounced and applied by the courts should be redefined.
We state the rule to be followed hereafter, in reference to a contract of a minor, to be where the minor has not been overreached in any way, and there has been no undue influence, and the contract is a fair and reasonable one, and the minor has actually paid money on the purchase price, and taken and used the article purchased; that he ought not be permitted to recover the amount actually paid, without allowing the vendor of the goods reasonable compensation for the use of, depreciation, and willful or negligent damage to the article purchased, while in his hands. If there has been any fraud or imposition on the part of the seller or if the contract is unfair, or any unfair advantage has been taken of the minor inducing him to make the purchase, then the rule does not apply.
Whether there has been such an overreaching on the part of the seller, and the fair market value of the property returned, would always, in any case, be a question for the trier of fact. . . . This rule is best adapted to modern conditions under which minors are permitted to, and do in fact, transact a great deal of business for themselves, long before they have reached the age of legal majority. Many young people work and earn money and collect it and spend it oftentimes without any oversight or restriction. The law does not question their right to buy if they have the money to pay for their purchases. It seems intolerably burden some for everyone concerned if merchants and business people cannot deal with them safely, in a fair and reasonable way.
Amount between the purchaser and the vendor, as well as the fair market value of the vehicle at the time of tender, are also an issue for the jury. [Reversed and remanded.]
Questions
1. What was the issue in this case?
2. Distinguish the two minority rules that are summarized in this case.
3. To achieve justice in contract cases involving a minor and an adult, what would you want to know about the adult's behavior toward the minor?
4. White, a 17-year-old high school sophomore, operated a trucking business, including hiring drivers, securing jobs, and so forth. He lived with his parents and received his food, clothing, and shelter from them. Valencia operated a garage and repaired White's equipment until they had a disagreement over replacement of a motor. White then disaffirmed his contract with Valencia and refused to pay what he owed. At trial the jury found that White had caused the damage to the motor, but the court held that White could disaffirm the contract and required Valencia to refund any money paid to White under the contract. Valencia appealed.
a. Is the fact that White was in business for himself in any way relevant to the outcome of this case? Explain.
b. Decide the case. Explain. See Valencia v. White, 654 P.2d 287 (Ariz. Ct. App. 1982).