Facts
- Salvador Valencia, age 17 and in high school, operated a trucking business set up by his father, using two truck-tractor semi-trailers and hiring drivers.
- Valencia brought one truck-tractor to White’s garage for extensive repairs, including installation work involving a Cummins engine.
- The reasonable value of the parts and labor provided was found to be $19,998.76.
- Valencia paid White $7,100 over several months but left an unpaid balance of $12,898.71.
- White asserted an artisan’s lien on the truck-tractor and began procedures to sell it after nonpayment.
- Valencia (through a guardian ad litem) sued to enjoin the sale and recover the truck; fraud counts were later dismissed at the close of Valencia’s evidence.
- Valencia’s parents provided his food, clothing, housing, medical care, and education.
- After a bench trial, the trial court permitted Valencia to repudiate the contract as not for “necessities,” ordered White to return the $7,100, allowed White to retain a disassembled engine, and denied White’s counterclaim for the repair charges.
Issues
- Whether a minor who owns and successfully operates a business may disaffirm a contract for expenses incurred in operating that business.
- If the minor may disaffirm, whether the minor must account for the value of benefits retained from the other party’s performance.
Decision
- The Court of Appeals held Valencia could disaffirm the repair contract because he was a minor and the agreement was not for personal necessities.
- The court reversed the trial court’s remedy, holding that disaffirmance did not allow Valencia to retain the benefits of the repairs without paying for them.
- The court ordered mutual restoration: White was to return parts in his possession (including the disassembled engine) to Valencia.
- The court directed entry of judgment for White for $12,898.71, calculated as the value of benefits received ($19,998.76) minus the $7,100 already paid.
Legal Principles
- A minor’s non-necessary contract is voidable at the minor’s election, but disaffirmance can be conditioned on restitution for benefits retained to avoid unjust enrichment.
- When a minor has accepted and used substantial, traceable benefits from a transaction (including benefits used in a business), equitable restoration may require the minor to account for the reasonable value of those benefits.
- Restoring the parties “as close as possible” to their pre-transaction positions can require reciprocal return of property and payment reflecting net benefits received, rather than returning only the minor’s payments.
Conclusion
The court allowed a minor to disaffirm a non-necessary repair contract but required restitution for the value of the repairs the minor retained and used, directing judgment for the repairer for the net benefit after crediting amounts already paid.