Facts
- A minor, Arthur Waldo Pettit, bought a motorcycle from L. C. Liston and F. M. Robinson, copartners doing business as Cycle Supply Company.
- The agreed price was $325; Pettit paid $125 down and agreed to pay $25 per month until paid in full.
- Pettit took possession, used the motorcycle for a little over a month, then returned it and demanded return of the $125 paid.
- The sellers refused a full refund and asserted that Pettit’s use caused wear, tear, damage, and depreciation totaling about $156.65.
- Pettit sued to recover the $125.
- The sellers answered with the depreciation/damage allegations as a defense; Pettit demurred to that answer.
- The trial court overruled the demurrer; Pettit stood on the demurrer, and judgment of dismissal was entered for defendants.
- Pettit appealed.
Issues
- When a minor disaffirms a fair, non-necessaries purchase after using the goods, may the minor recover all payments upon return without deduction for reasonable use and depreciation, absent fraud, undue influence, or overreaching by the seller?
- Did the sellers’ answer alleging damage and depreciation state a defense sufficient to defeat the minor’s claim on demurrer?
Decision
- The Oregon Supreme Court affirmed the judgment for defendants.
- The court held that where the transaction is fair and reasonable and the minor was not overreached, the minor cannot recover payments made without allowing the seller reasonable compensation for use and depreciation while the goods were in the minor’s possession.
- Because the answer alleged use and resulting damage/depreciation exceeding the down payment, it stated a complete defense to recovery of the full $125; the demurrer was properly overruled.
Legal Principles
- A minor may disaffirm a contract for non-necessaries, but restitution is not necessarily full when the minor has retained and used the property under a fair transaction.
- If the contract is fair and reasonable, made without fraud, undue influence, or unfair advantage, the minor’s recovery of payments upon disaffirmance is subject to an offset for reasonable value of use and depreciation (including wear and tear) during the minor’s possession.
- Allegations of material use and resulting depreciation/damage, taken as true on demurrer, can constitute a complete defense to the minor’s claim for full repayment.
Conclusion
A minor who returns used purchased goods may disaffirm the contract, but in a fair transaction free of seller misconduct the minor’s restitution must account for the reasonable value consumed through use and depreciation; pleadings alleging such depreciation defeat a claim for full refund on demurrer.