William Stem filed an action against Gary Braden, seeking to rescind a contract for the sale of


William Stem filed an action against Gary Braden, seeking to rescind a contract for the sale of an automobile and to obtain the return of the purchase price plus
interest. The trial court granted Stem that relief, but the Court of Appeals reversed the trial court’s judgment. The Alabama Supreme Court then reversed the
Court of Appeals, reinstating the trial court’s decision—but with a twist.
On February 26, 1987, Stem purchased a used automobile from Braden for $6,600. Braden indicated to Stem that, to the best of his knowledge, the car had not
been wrecked and that the car was in good condition. Less than a week after purchasing the car, Stem discovered a disconnected plug that, when it was
connected, caused the oil sensor warning light on the dashboard to glow. When Stem had the automobile examined because of the disconnected plug, the
mechanics who examined the automobile discovered problems with the automobile that Stem did not realize existed. Among other problems, the mechanics
discovered that the automobile was composed of the front end of a 1979 BMW and the rear end of a 1975 BMW.
Stem sent Braden a letter informing him that Stem refused the automobile and that he intended to rescind the sale. Further investigation revealed that the front
half of the automobile actually had been driven 170,000 miles; Stem thought this automobile had 70,000 miles. The trial court found for Stem. However, the
Court of Appeals reversed. That court stated, “Stem, after he sent the letter refusing the automobile and attempting to rescind the sale, drove the automobile for 7
months and nearly 9,000 miles before commencing this action.” The Court of Appeals then held that such use constituted an “acceptance,” which precluded Stem
from receiving the relief the trial court granted:
We find that the use of the automobile by the buyer, subsequent to his attempted rescission, constituted an acceptance. Such acts were clearly inconsistent
with the seller’s ownership of the automobile. Therefore, we find that the remedy of rescission sought by the buyer is not available to him.
The Alabama Supreme Court reversed the Court of Appeals, holding that Stem’s revocation was indeed warranted. But, as soon as he revoked his acceptance
of the contract, he became a bailee for Braden’s goods—that is, the car. By keeping the vehicle and driving it for a period of time, Stem was “wrongfully using”
Braden’s property. The court opined:
We recognize that the general rule is that where a buyer is entitled to rescind the sale and elects to do so, the buyer shall thereafter be deemed to hold the
goods as a bailee for the seller. [citations omitted] Thus, if the buyer uses the goods while he holds them as a bailee, he becomes liable for the value of
that use. citations omitted This reasoning is consistent with the Uniform Commercial
law and equity which the Code provides for as supplementary to its provisions. 

citations omitted … Under these circumstances Stem’s continued use of
the automobile was not an act of continued use that constituted an acceptance of ownership after revocation.
The Alabama Supreme Court interestingly commented that the UCC is silent on having no specific provision on use of goods by a buyer after revoking an
acceptance. It seems that continued use would indeed constitute a failure of revocation as the court of appeals noted. Nonetheless, the Alabama Supreme Court
remanded the case back for determination of offsetting the refund of the purchase price to Stem less the cost of the “use” after revocation.

Here is a case in which a court supplements the UCC where the UCC is silent on a given situation. The court of appeals applied the strict language and
conclusion of the UCC, while the Alabama Supreme Court improvised. How does this disagreement drive home the importance of critical thinking?
Oftentimes we hear criticisms of judicial activism—that is, judges interpreting laws in ways the legislature did not intend or did not indicate. Is this case one of
those situations? Would it have been ethical, in light of all the issues this vehicle manifested, to indicate to Stem that his continued use of the vehicle precluded
his revocation of the acceptance?

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Dynamic Business Law

ISBN: 9781260733976

6th Edition

Authors: Nancy Kubasek, M. Neil Browne, Daniel Herron, Lucien Dhooge, Linda Barkacs

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