## Facts

- Vern Klingbiel purchased a new 1966 Ford Galaxie 500 under a retail installment contract with a time sales price of $4,907.56, paying $400 down and agreeing to monthly payments of $125.21.
- The contract permitted acceleration if the seller “should feel itself insecure,” stating the balance would become payable “upon demand,” and contained language relied on by the creditor to justify repossession without notice or demand.
- The dealer assigned the contract to Commercial Credit Corporation for $3,400.
- Before the first installment became due and with no payment default, Commercial directed a repossession company to take the vehicle from in front of Klingbiel’s home at night, without prior notice or demand.
- Klingbiel discovered the car missing the next morning and initially believed it had been stolen; he later learned it had been repossessed at Commercial’s direction.
- Klingbiel’s personal property was in the car at the time of repossession, and evidence supported that Commercial did not promptly return all of it.
- A Kansas jury awarded $770 in actual damages and punitive damages in an amount almost twice the purchase price of the car; Commercial appealed.

## Issues

1. Whether the installment contract and applicable UCC provisions authorized repossession without prior demand or notice based solely on the creditor’s asserted insecurity, where no default had occurred and no payment was yet due.
2. Whether punitive damages were properly awarded and, if so, whether Kansas or Missouri law governed the punitive-damages standard.

## Decision

- The Tenth Circuit affirmed the judgment for Klingbiel.
- The court held the repossession was wrongful because it occurred before default and without the demand or notice contemplated by the contract, notwithstanding the “insecurity” acceleration clause.
- The court rejected the argument that acceleration rights automatically carried an immediate right to self-help repossession without demand.
- The court applied Kansas law to punitive damages and concluded the evidence supported the jury’s award.

## Legal Principles

- A contractual right to accelerate payment upon a creditor’s good-faith insecurity does not, by itself, authorize repossession without satisfaction of contractual prerequisites such as demand for payment or surrender.
- UCC “insecurity” provisions operate within good-faith limits and do not eliminate contractual procedures or justify self-help repossession absent default where the contract contemplates demand.
- Wrongful repossession conducted without default, without notice or demand, and in a manner showing disregard for the debtor’s rights can support punitive damages.
- In diversity cases, the forum state’s punitive-damages law may apply where the forum has substantial interests, particularly when the relevant punitive standards are not materially different across competing states.

## Conclusion

The court upheld liability and substantial punitive damages where a finance company repossessed a consumer’s car before any installment was due, relying on an insecurity clause but making no demand or notice; acceleration and repossession were treated as distinct remedies, and the evidence supported punitive damages under Kansas law.


Klingbiel v. Commercial Credit Corp., 439 F.2d 1303 (10th Cir. 1971)