Case Title: State Ex Rel. Miller v. Midwest Serv. Bur. of Topeka

Citation: 229 Kan. 322, 623 P.2d 1343

Docket Number: 52,256

State: kansas

Court: Kansas Supreme Court

Date: 1981-02-28T00:00:00Z

Document:
229 Kan. 322 (1981)
623 P.2d 1343
STATE OF KANSAS, ex rel., VERN MILLER, DISTRICT ATTORNEY OF SEDGWICK COUNTY, Plaintiff-Appellee,
v.
MIDWEST SERVICE BUREAU OF TOPEKA, INC., Defendant-Appellant.
No. 52,256

Supreme Court of Kansas.
Opinion filed February 28, 1981.
Jerry G. Elliott, of Foulston, Siefkin, Powers, and Eberhardt, of Wichita, argued the cause, and William R. Sampson, of the same firm, and Don W. Riley, of Wichita, were with him on the brief for the appellant.
E. Dwight Taylor, assistant district attorney, argued the cause, and Vern Miller, district attorney, was with him on the brief for the appellee.
The opinion of the court was delivered by
PRAGER, J.:
This is an action brought by Vern Miller, district attorney of Sedgwick County, seeking a declaratory judgment, an injunction, and civil penalties under the Kansas Consumer Protection Act (KCPA), K.S.A. 50-623 et seq. The defendant, Midwest Service Bureau of Topeka, Inc., is an independent debt collection agency. In the amended petition, the plaintiff charges the defendant with the commission of certain deceptive and unconscionable practices prohibited by the KCPA. The defendant moved to dismiss the action on the ground that the KCPA does not apply to independent debt collection agencies. The trial court overruled defendant's motion to dismiss, holding that the KCPA was applicable to the defendant. Since the issue of law was of controlling significance in the case, the defendant, with the approval of the district court, took an interlocutory appeal pursuant to K.S.A. 60-2102(b). The sole issue presented on the appeal *323 is thus one of law and is essentially this: Is the Kansas Consumer Protection Act (K.S.A. 50-623 et seq.) applicable to independent debt collection agencies?
The motion to dismiss was submitted to the trial court on a stipulation of facts which was, in substance, a summary of the legislative history of consumer protection legislation in Kansas. Attached to the stipulation were copies of various Senate and House Bills and reports and recommendations of committees on legislation pertaining to consumer protection and unfair trade practices. Minutes of the House and Senate judiciary committees and "bill briefs" published and circulated during the 1978 session of the legislature were also included. We do not consider it necessary to set forth in full each of these exhibits. Since this case was submitted on a stipulation and documentary evidence, it was not necessary for the district court to evaluate the credibility of any portion of the evidence or to determine any issue of fact. Hence, this court on appeal is in just as good a position to determine the legal issues presented as was the trial court. Accordingly, this court may take a fresh look at the central issue of law and determine that issue de novo. Clark Equip. Co. v. Hartford Accident & Indemnity Co., 227 Kan. 489, 491, 608 P.2d 903 (1980).
The Kansas Consumer Protection Act, effective January 1, 1974, repealed the 1968 Buyer Protection Act (K.S.A. 1972 Supp. 50-601 et seq.) and increased the power of both the attorney general and the private consumer to fight deceptive sales practices. The KCPA is much broader than the former law and expands both the types of transactions covered and the persons protected. K.S.A. 50-623 declares that the act is to be construed liberally to promote certain public policies, among which is included the protection of consumers from suppliers who commit deceptive and unconscionable practices. K.S.A. 50-624 includes the definitions of various terms as used in the act. The term "supplier" is defined in K.S.A. 50-624(i) as follows:
K.S.A. 50-626 prohibits any supplier from engaging in any deceptive act or practice in connection with a consumer transaction. *324 Specific deceptive acts and practices are described with particularity, but the coverage of the act is not to be limited to those specifically mentioned.
K.S.A. 50-627 proscribes "unconscionable acts and practices" by a supplier. The unconscionability of an act or practice is a question of law for the court. Section (a) of 50-627 states as follows:
The comment following K.S.A. 50-627 declares that that section forbids "unconscionable advertising techniques, unconscionable contract terms, and unconscionable debt collection practices." K.S.A. 50-628 vests in the attorney general the duty to enforce the act throughout the State of Kansas by receiving and acting on complaints. The specific remedies afforded the attorney general are set forth in 50-632. Private remedies are afforded to a consumer by K.S.A. 1980 Supp. 50-634.
The defendant does not dispute the legal principle that the KCPA applies to debt collection activities when engaged in by a creditor or an agent of a creditor. It is clear that the act does apply to debt collection activities when engaged in by a creditor or his agent. As noted above, the definition of "supplier" as contained in 50-624(i) includes any person who, in the ordinary course of business, enforces consumer transactions whether or not he or she deals directly with the consumer. A debt collector is obviously engaged in enforcing a consumer transaction. Also, as noted above, K.S.A. 50-627 defines an unconscionable act or practice as violating the act whether it occurs before, during or after the consumer transaction.
The language used in the KCPA is quite similar to that contained in the Uniform Consumer Sales Practices Act. Section 2 of the uniform act includes, within the definition of a supplier, a person who regularly enforces consumer transactions, whether or not he deals directly with the consumer. In Section 3, the uniform act declares that a deceptive act or practice by a supplier violates the act whether it occurs before, during, or after the transaction. Ohio, like Kansas, used the language of the uniform act in the enactment of its consumer practices act (Ohio Rev. Code Ann. *325 § 1345.01 et seq. [Page 1979]). The Ohio act uses language comparable to the Kansas act in defining a "supplier." There are two cases in Ohio which hold that the collection of, or attempt to collect, a claim which arose from a consumer transaction and which is owed by the consumer to the supplier, constitutes a "consumer transaction" within the purview of the Ohio Consumer Sales Practices Act. Liggins v. May Co., 44 Ohio Misc. 81, 337 N.E.2d 816 (1975), holds that an assignee, which was engaged in the business of enforcing or attempting to enforce the payment of a claim or debt which arose as a result of a consumer transaction, was engaged in the business of effecting a consumer transaction and was, therefore, a "supplier" under the Ohio Consumer Sales Practices Act. Following this decision a later Ohio case with the same title held that an independent debt collection agency was a "supplier" as the term is defined in the Ohio Consumer Sales Practices Act, when, after being hired by a seller of merchandise on credit in a consumer transaction, it attempted to enforce the seller's claim against the buyer. Liggins v. May Co., 53 Ohio Misc. 21, 373 N.E.2d 404 (1977). Counsel have not cited any other cases construing the term "supplier" under a consumer protection act nor has our research disclosed any additional cases.
From the above analysis, it logically follows that the KCPA is applicable to independent debt agencies, unless there is something in the legislative history of the act which requires us to reach a contrary interpretation. In his brief, counsel for the defendant summarizes the legislative history of the KCPA, including the pertinent predecessor bills and subsequent amendments. We quote the essential portion of counsel's summary which states his basic contentions on this appeal:
"Separately defined in § 2 was the term `supplier':
....
"Re: Proposal No. 19  DEBT COLLECTION
"Background
*328 After careful review of the legislative history, we have concluded that the district court was correct in holding that KCPA, as enacted, should be construed to include, within its application, independent debt collection agencies, and that the legislative history discussed above does not require us to find a contrary legislative intent. It is clear to us that the legislature, after much discussion and consideration, simply concluded that it wanted to adopt the basic provisions of the Uniform Consumer Sales Practices Act and not the more specific provisions covering debt collection activities as contained in the various bills which were proposed. From the beginning, these specific debt collection provisions were challenged as being worded so vaguely as to be subject to numerous and varying interpretations. We note that the debt collection sections of the proposed bills prohibited any debt collector from engaging in conduct deemed the practice of law, unless the debt collector was a licensed attorney in this state. The proposed section then set forth a list of specific acts which were to be deemed the practice of law. The provisions contained in the proposed debt collection articles prohibited a wide variety of activities and practices which were not included in the uniform act. At the hearings before the various legislative committees, representatives of the Kansas Association of Finance Companies, Kansas Bankers Association, Kansas Credit Union Leagues, and other business institutions appeared. They urged the adoption of some version of the Uniform Consumer Sales Practices Act and opposed the specific debt collection provisions as being "worded so vaguely as to be subject to numerous and varying interpretations" and being so inclusive as to limit responsible and reasonable attempts to collect legitimate debts. The pressure of these various organizations undoubtedly had its effect. It is probable that the legislature decided to adopt a consumer protection act in a form similar to the Uniform Consumer Sales Practices Act rather than enacting a wholly new statute governing debt collection agencies as a separate and distinct activity.
We have, thus, concluded that the legislative history does not require us to abrogate or nullify the plain language of the KCPA as finally enacted. Did the legislature intend to permit a creditor to do indirectly what he is not permitted by statute to do directly? We doubt it. We cannot imagine that the legislature intended that an independent debt collection agency may lawfully engage in *329 deception and unconscionable acts and practices which are prohibited if engaged in by the original creditor or one of his agents. We hold that an independent debt collection agency falls within the definition of a "supplier" and is subject to the provisions of the KCPA, if it is found that three specific conditions exist:
(1) The debt sought to be enforced came into being as a result of a consumer transaction;
(2) The parties to the original consumer transaction were a "supplier" and a "consumer" as defined in the act; and
(3) The conduct complained of, either deceptive or unconscionable, occurred during the collection of, or an attempt to collect, a debt which arose from the consumer transaction and was owed by the consumer to the original supplier.
The judgment of the district court is affirmed.
SCHROEDER, C.J., dissenting.