Thorne v. Walker-Thomas Furniture Company

District of Columbia Court of Appeals
198 A.2d 914 (1964)

ELI5:

Rule of Law:

Absent a specific statute or a finding of fraud or misrepresentation, a court must enforce a contract as it is written and cannot declare it unenforceable on public policy grounds or for being unconscionable.

Facts:

Over a four-year period, appellee Walker-Thomas Furniture Company sold various items of merchandise to appellants on credit.
The total value of the merchandise purchased was $1,855.
The credit contracts contained a 'cross-collateral' clause that allocated payments pro-rata across all items ever purchased, effectively keeping a balance due on every item until the entire account was paid off.
This clause purported to give Walker-Thomas the right to repossess all items ever purchased by a customer upon default on any single item.
Appellants made payments totaling $1,422.
After making these payments, appellants defaulted on their remaining payment obligations.
Walker-Thomas then asserted its right under the contract to replevy (repossess) all items the appellants had purchased.

Procedural Posture:

Appellee Walker-Thomas Furniture Company sued appellants in the trial court (Court of General Sessions) to replevy merchandise.
The trial court entered a judgment in favor of Walker-Thomas.
Appellants appealed the judgment to the District of Columbia Court of Appeals, an intermediate appellate court.

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Issue:

Can a court refuse to enforce a consumer credit contract on public policy grounds where a 'cross-collateral' clause allows a seller to repossess all goods ever purchased by a buyer upon a single default, in the absence of fraud or a governing statute?

Opinions:

Majority - Per Curiam

No. A court cannot refuse to enforce a contract on public policy grounds alone. This case is factually identical to the companion case, Williams v. Walker-Thomas Furniture Co., 198 A.2d 914 (D.C. App. 1964), where the court held that it was bound to enforce a contract as written unless there was a finding of fraud or misrepresentation. Although such 'exploitive' contracts may be unfair, the court determined that creating protections against them is the role of the legislature, not the judiciary. Therefore, because the appellants' arguments are the same as those rejected in Williams, the trial court's judgment in favor of the seller is affirmed.

Analysis:

This decision exemplifies a traditional, formalist approach to contract law, prioritizing the enforcement of written agreements over judicial considerations of substantive fairness. It reflects the judiciary's reluctance to intervene in private contracts on public policy grounds without explicit legislative authorization. This specific holding, however, was later reversed by the U.S. Court of Appeals for the D.C. Circuit, which in a landmark decision established the common law doctrine of unconscionability, empowering courts to police and refuse enforcement of such one-sided contracts.

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