The D.C. Court of Appeals has thrown out a $150,000 libel judgment against the Ford Motor Credit Co. won by a Laurel couple whose refusal to pay for what they termed a defective new car damaged their credit rating.
The three-judge appellate panel ruled Monday that the case should never have gone to a jury because the car owners failed to show that the Ford financing firm acted with malice or in reckless disregard for the truth in notifying a Washington credit bureau when the car was repossessed for lack of payments.
The appeals anel in an opinion by Judge Catherine B. Kelly, cited recent court rulings in newspaper libel cases to support its finding that the Laurel coupleM Reginald L. and Jyl C. Holland, had not been defamed by the report to the credit company.
Since the 1974 jury award the Federal Trade Commission has issued new regulations that make the financing company equally responsible with the seller for a roduct's defects. Prior to this, the finance firms could repossess a car whatever its defects as the "holder in due course" of the car loan.
The new FTC rules come too late for the Hollands. Nor do they affect the D.C. Court of Appeals ruling, which deals only with the dispute at the time it occurred.
According to the undisputed facts, the Hollands bought a new Ford Maverick from Academy Ford in Laurel in April, 1970. They financed $1,900 of the total $2,465.50 sales price through Ford Motor Credit. The rest was paid in cash.
Soon afterward the car's engine "blew up" while the couple was driving on the New Jersey Turnpike. The car was towed to a New Jersey Ford dealership and left there.
The Hollands complained at both the Laurel Ford dealer and Ford Motor Credit. The Ford dealer was unresponsive. Holland, an Army accountant at Ft. Meade, testified Ford Motor Credit said the condition of the car was not its problem, only the financing.
The Hollands refused to make any payments, and, in August, 1970, Ford Motor Credit "repossessed" the car in New Jersey. A new motor was installed and the car was resold by Ford, but the proceeds fell $1,000 short of what the Hollands owed.
The Hollands settled the debt for $600 and were surprised when, in July, 1971, they were refused credit by Ft. Meade's Commercial Credit plan.They aslo were refused a mortgage on credit grounds.
They traced their rejections through written inquiries to the 1970 Ford "repossession," and in 1972 filed a $1.25 million damage suit.
"The credit reporting system is so cold and impersonal," their attorney, Solomon L. Margolis, remarked after the 1974 jury verdict. "In the computer age, when you get a black mark on your record, you're dead." Yesterday, Margolis said, "the Court of Appeals has spoken. We're not happy, that's about all we can say. They call them as they see them."
Laidler B. Mackall, Ford's Motor Credit's Lawyer, had argued that the communication to the credit bureau was "qualifiedly privileged" - in effect, immune from libel action unless there was not only blatant disregard for the facts but also that "malice" was shown. The appeals court said it found "simply no evidence" of inaccuracy or malice in the case.
The court said the repossession report to the credit bureau was accurate, "routine" and "a standard procedure" required by Ford Credit's manual.
"There is nothing," the court said "to show the (Ford Motor Credit) clerk was inadvertently careless, much less reckless, in sending out the report without including an explanation of the Holland's refusal to make payments."
The court said that "the Hollands could not have reasonably expected that any credit information Ford Credit might provide to interested parties would say anything other than that the car as repossessed . . . the consequences were foreseeable."