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In my spare time, I used to love to build cars and make them

"better than new" condition....
In my spare time, I used to love to build cars and make them "better than new" condition. Anyway, Living in New Mexico 2 years ago, a so called friend came to me and asked if I would build him a car, a 2007 Mustang GT from a salvage auction, which I said I would. We made a VERBAL agreement that he would front all the money for the project, and then upon the sale of the car, we would split the profit of the car sale 70/30, with me getting the 30% for my labor. OK, towards the end of the project he decided to hold off for a while financing the project, so I ended up putting about 5,000 dollars of my own money into it, on top of all my labor, just to get it done and out of my garage and into his so we can sell it. Shortly after that, I got called to work in San Antonio, TX thus having to move, and we decided that he should just put the car in his name so he could just do the sale without me being there to sign anything.. Well, 2 years later and still no sale. He has since (without telling me ) moved to Houston, and I have now relocated to Chicago. I actually flew down to Texas to confront him, and not only did I find him, He was actually driving the car to the car wash, and an additional 3500 miles had been put on the car, not to mention a scratch on the rear bumper !! He told me that he has 12,600 into the car, and he would take that amount to sell the car. I had a guy willing to give 13,500 for the car, and now I get no response at all from him, as if he just wants to keep it. I have every receipt for this car, and I'm not sure what I can do to get any of my money back, as I'm pretty sure I'm going to have to chalk up the hundreds of hours of labor to experience. It's fine with me if he wants to keep it, I just would like something back for the cash that I have put into it. Can i take him to small claims court, and if so, where ? Chicago, where I live, Houston, where He lives with the Mustang, or where it all started... New Mexico ? Thank you
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Answered in 10 minutes by:
5/10/2013
Barrister
Barrister, Attorney
Category: Legal
Satisfied Customers: 39,469
Experience: 17 yrs practice, Civil, Criminal, Domestic, Realtor, Landlord 26 yrs
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Hello and thank you for using JA! My goal is to provide you with excellent service and help with your legal problem.
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If you had a verbal agreement to partner up on the car and he has breached it by not selling it to reimburse you for your time and expenses, then he would be in breach of an oral contract. The state where the agreement was originally entered into would control with regard to a statute of limitations to pursue this. In NM, there is a 4 year SOL on an oral contract, so if you don't take action to sue him within that time, you lose the right to pursue this at all.
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With regard to where you would sue, since TX has a $10,000 limit and that is where he and the car are located, that would be where to sue in because you need personal jurisdiction over him in order to be able to force him into court. If it were me, I would sue for the maximum amount and see if you could at least get your $5K back at a minimum.
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Thanks.

Barrister

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If you need further help, just reply to me via the “REPLY” button and I will be happy to continue.

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I cannot enter into an attorney client relationship, this is a public forum, and all posts are available for public viewing.There is no duty of confidentiality that attaches to any posts. The information provided is not a substitute for a local attorney’s legal advice.

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Customer reply replied 4 years ago

To make sure his money was safe when he gave it to me to build this Mustang, He gave me the cash, along with a contract to sign that states, "for value received 10,139.00, shall be repaid by 12/22/10, in event of default, the interest rate shall accrue at 18% per annum., and in case suit or action is instituted to collect this note, borrower promises to pay additional sum as the court may adjudge reasonable for attorneys fees in said hearings. This note is made and executed under, and is in all respects governed by the laws of the state of New Mexico". The one problem that I see is that it says nothing about our verbal agreement, and then when the car was completed, the TITLE went into his name, and He's had the car in his possession driving it around town instead of trying to sell it. I also have a copy from the DMV of the title, and all receipts to build this car. Does any of this change anything that you can see ? Also, one more thing I actually just noticed, is that the contract that I signed was between his Wife Sharon, and Me... But the title of the car, and the verbal was all done between her husband and myself.

Yes, that is pretty much an incredibly important detail that you left out and changes the entire outcome..
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If you signed a generic note that says you owe his wife the money, then she can actually sue you for that money if it wasn't repaid. Since it mentions nothing about the car, it is just a promise from you to repay her for a loan. The guy is nowhere in the transaction.
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So if he got the car, and you got the money, you could argue that the finished car was transferred to him in full satisfaction of the note to wife at the 18% interest rate. At the 18% on the $10,129 for just 2 years you are already over $14K. If the car is only worth $13,500 you are already in the hole if the wife comes after you for repayment of the note. If my math is correct, you have your time, plus $10K of his money, plus $5K of your money in this deal for a $13,500 car.
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With all that said, I don't think that you are going to be able to recover on this deal due to you signing the note to repay wife at an incredibly high 18% and could actually come out owing wife if she came after you.
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I think I would quietly walk away from this whole situation and hope the statute of limitations expires on the note you signed, which is 6 years in NM.
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Thanks.

Barrister

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If you need further help, just reply to me via the “REPLY” button and I will be happy to continue.

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I cannot enter into an attorney client relationship, this is a public forum, and all posts are available for public viewing. There is no duty of confidentiality that attaches to any posts. The information provided is not a substitute for a local attorney’s legal advice.

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Customer reply replied 4 years ago


I really appreciate your answer. The only question that I have now is, does the verbal contract get wiped out because written, and if the receipts I have for the purchase of the car are exactly 10,129.oo, which is the amount f the money in the contract. Would they even have a case if they were evil enough to go after me, knowing that I'm out money and labor when they have the car ?

Here is the problem....you have two contracts. One with the wife for a loan of $10K that is written and a second oral contract with the guy regarding the car. The wife contract has nothing to do legally with the car, it is just a loan that you promised to repay by a certain date or pay 18% interest on it. So it would have been up to you to come up with that money by that date to not be in breach. The oral contract with the guy was for the 70/30 split.
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The way it should have gone down is you take the money, buy and rebuild the car, sell it, and then repay the $10K out of the proceeds and then split the rest 70/30. But for some reason, you trusted the guy and put the car in his name while you still owe the wife the $10K. When you transferred the car, you should hae gotten a written release from wife for the $10K.
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If you sued and won against guy and the court ordered him to give you the car back so you could sell it, it wouldn't sell for enough to pay off the note at 18%, which is well over $14K.
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So you could sue the guy under your oral agreement, and the wife could sue you under the written one. Since hers results in a much higher award against you, it would be best to not "stir the pile", so to speak.
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Thanks.

Barrister

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If you need further help, just reply to me via the “REPLY” button and I will be happy to continue.

.

I cannot enter into an attorney client relationship, this is a public forum, and all posts are available for public viewing. There is no duty of confidentiality that attaches to any posts. The information provided is not a substitute for a local attorney’s legal advice.

Barrister
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