Title: CECIL v ALLIED STORES

State: montana

Issuer: Montana Supreme Court

Document:

No. 12308 I N THE S U P R E M E C O U R T O F TEE STATE O F M O N T A N A 1973 B E T T Y JANE CECIL, ON B E H A L F O F HERSELF AND A L L O T H E R S SIMILARLY SITUATED, P l a i n t i f f and Respondent, ALLIED STORES CORPORATION, a Delaware Corporation, and " T H E PARIS O F M O N T A N A " , a division of Allied Stores Corporation, Defendants and Appellants. Appeal from: D i s t r i c t Court of the Eighth J u d i c i a l D i s t r i c t , Honorable Paul G. Hatf i e l d , Judge presiding. Counsel of Record : For Appellants : Jardine, Stephenson, Blewett and Weaver, Great F a l l s , Montana, John D. Stephenson argued, Great F a l l s , Montana. For Respondent : Smith, Emmons and B a i l l i e , Great F a l l s , Montana. Robert J. Emons argued and Marvin J. Smith and William L, B a i l l i e appeared, Great F a l l s , Montana, A M I C U S CURIAE Wesley Wertz , argued, Helena, Montana. Kendrick Smith argued, Butte, Montana. Edward Alexander argued, Great F a l l s , Montana. C a l e Crowley appeared, Billings. A. W. Scribner appeared, Helena, Montana. Geoffrey Brazier appeared, Helena, Montana. Filed : m L 2 6 1373 Submitted: March 26, 1973 Decided : 2 6.1913 PER CURIAM: This is a class action by a revolving charge account custo- mer against a retail department store seeking a declaratory judg- ment ( 1 ) that the Montana Retail Installment Sales Act is uncon- stitutional, or in the alternative ( 2 ) that the revolving charge account plan of the store violated the Act prior to its amendment in 1971, and ( 3 ) that relief should be granted to all revolving charge account customers of the store in the form of refunds of finance charges, punitive damages, attorney's and accountant's fees, interest and costs. The district court of the eighth judicial district, Cascade County, granted summary judgment to the customers; the store appeals. Plaintiff is Betty Jane Cecil who has had a revolving charge account for several years with a retail department store in Great Falls, The Paris of Montana, one of the defendants. The other defendant is the parent corporation of The Paris, Allied Stores Corporation. Plaintiff has incurred and paid finance charges on her revolving charge account with The Paris for the past several years. Also appearing either by brief, oral argument, or both as Amicus Curiae were: Cale Crowley, Esq. (Montana Retailers Association); Kendrick Smith, Esq. (numerous Montana retail stores); Geoffrey L. Brazier, Esq. (State and local Chambers of Commerce); Edward C. Alexander, (oil companies); A . W. Scribner, Esq. (Montana Automobile Dealers Association); and Wesley F J . Wertz, Esq. (Montana Bankers Association). The Paris has operated its revolving charge account plan since about 1955. Under the plan the customer and The Paris enter into a written agreement covering future retail purchases of mer- chandise on credit. If the customer does not wish to pay cash for a particular item of merchandise, the sale is recorded for billing purposes subject to the prior revolving charge account agreement. The purchase i s recorded on the customer's account and a monthly statement i s mailed t o him. Prior t o July 1, 1971, the finance charge was imposed upon the balance from the previous monthly b i l l i n g cycle; since then finance charges have been compiled on the average daily balance i n the account during the b i l l i n g cycle (excluding current purchases and unpaid finance charges). Thus, the customer can avoid payment of any finance charges by paying the unpaid balance of h i s account within ten days a f t e r receipt of the b i l l i n g following the close of the b i l l i n g cycle. I f the customer chooses t o pay the unpaid balance of h i s account over a longer period of time, he does so i n accordance with the payment schedule i n the revolving charge account agree- ment. The minimum monthly payment under the agreement i s ten percent of the unpaid balance, subject t o a f l a t minimum charge of f i f t y cents per month i n any case. In exercising h i s choice t o make installments payments over a longer period of time, the customer agrees t o pay a finance charge of one and one-half percent per month (computed on the previous month's unpaid balance prior t o July 1, 1971 and computed on the average daily balance i n the b i l l i n g cycle thereafter). A l l revolving charge account customers of The Paris are subject t o t h i s plan. The revolving charge account agreement has been revised from time t o t i m e over the years but i t s essential features have remained unchanged. The original complaint i n t h i s case was f i l e d on January 6 , 1971, i n the d i s t r i c t court of Cascade County. Two months l a t e r an amended complaint was f i l e d which forms the basis of t h i s action. Count I alleged the revolving charge account finance charges of The Paris were i l l e g a l because those sections of the Montana Retail Installment Sales Act permitting such charges were unconstitutional, Count I1 presented an alternative theory of recovery: that pre- suming the Act is constitutional, The Paris nonetheless violated i t s terms prior to the 1971 amendment i n imposing and collecting finance charges on i t s revolving charge accounts. Following defendants' answer containing a denial, a variety of other defenses unnecessary to detail herein, and extensive pretrial discovery proceedings, plaintiff filed a motion for summary judgment and a motion seeking determination of whether the case was maintainable as a class action. The district court granted both motions and entered summary judgment for Betty Jane Cecil and all members of her class. The summary judgment on Count I declares the maximum finance charges contained in the Montana Retail Installment Sales Act (other than those applicable to motor vehicles) unconstitutional on three grounds: ( 1 ) Violation of Art. V , , Sec. 26, 1889 Montana Constitution, prohibiting special laws regulating interest. ( 2 ) Violation of Art. V . , Sec. 26, 1889 Montana Constitution, prohibiting grants of special or exclusive privileges, immunities or franchises. ( 3 ) Violation of Art. IIL, Sec. 3, 1889 Montana Constitution, permitting every person to acquire or possess property. The summary judgment on Count I accordingly requires The Paris to refund to all its revolving charge account customers all finance charges collected from January 6, 1966 to date of judgment, less a credit of six percent interest on delinquent accounts during the period of delinquency. The summary judgment on Court I1 alternatively declares that The Paris violated sections 74-607 and 74-608, R.C.M. 1947, of the Montana Retail Installment Sales Act prior to the 1971 amend- ment, and consequently was barred from charging or receiving any finance charges collected between March 9, 1969 through June 30, 1971, and requires refund of such charges. It held in abeyance, pending appeal, determination of whether revolving charge account customers were entitled to punitive damages. The summary judgment on Count I1 was expressly made operative only in the event the judgment on Count I was reversed on appeal. This appeal is from the summary judgment of the district court. In view of our rulings hereinafter set forth, the controlling issues can be summarized i n t h i s fashion: (1) Is the Montana Retail Installment Sales Act unconstitutional? (2) Did the revolving charge account plan of The Paris violate the Act prior t o i t s 1971 amendment? The additional issues assigned for review concern damages, the existence of genuine issues of material fact precluding summary judgment for p l a i n t i f f , and the maintenance of t h i s s u i t a s a class action. None of these additional issues are material t o our decision herein. B y way of background we note that Montana has a general usury s t a t u t e prohibiting the charging or receiving of any r a t e of "interest" exceeding ten percent per year. Section 47-125, R.C.M. 1947. It also has a statute defining interest as "the compensation allowed by law or fixed by the parties for the use, o r forbearance, or detention of money." Section 47-122, R.C.M. 1947. Since 1959, Montana has had a Retail Installment Sales Act, section 74-601, et.seq., R.C.M. 1947, containing finance charge limitations for covered r e t a i l installment transactions which allows finance charges i n excess of the maximum interest r a t e permitted under the foregoing general usury statute, The Act generally covers sales of goads and services by r e t a i l s e l l e r s t o r e t a i l buyers pursuant t o installment trans- actions. It covers i n d e t a i l the requirements, prohibitions, and contents of such contracts, imposes ceilings on finance and service charges, and provides the method of computation of finance charges. The ceilings on automobiles vary according t o the age of the auto- mobile from $7 per $100 per year for new cars t o $11 per $100 per year on used cars over two years old. The ceilings on other goods and services vary according t o the principal balance owed: on that portion of the principal balance owed up t o $300 a t the r a t e of $11 per $100 per year; on that portion of the principal balance owed from $300 t o $1,000 a t the r a t e of $9 per $100 per year; and on that portion of the principal balance owed exceeding $1,000 a t the r a t e of $7 per $100 per year. The Act also provides for a system of licensing and regulation of sales finance companies engaged in the business of purchasing retail installment contracts from retail sellers. Civil and criminal penalties are provided for violations of the Act. The Act was amended effective July 1, 1971 to expressly cover revolving charge account transactions and to prohibit finance charges thereon exceeding one and one-half percent per month. plaintiff's constitutional attack is directed against the finance charges authorized in section 74-608 of the Act, both before and after the 1971 amendment. Plaintiff's contentions are threefold: ( 1 ) The finance charges violate that part of Art. V., Sec. 26, 1889 Montana Constitution, prohibiting enactment of local 11 or special laws regulating the rate of interest on money"; ( 2 ) the finance charges violate that part of Art. V., Sec, 26, 1889 Montana Constitution, prohibiting enactment local or special 11 laws granting any special or exclusive privilege, immunity or franchise"; and ( 3 ) the finance charges violate that part of Art. III., Sec. 3, 1889 Montana Constitution, permitting all persons to acquire and possess property. The district court held the finance charges contained in the Act unconstitutional on each of the above grounds, summarizing its rationale in this language: I t+< -*a * My conclusion on the constitutional questions is based principally on the conclusion the interest rates granted by Sec. 74-608, supra, are special in- terest rates. From this conclusion flows the conclusion the special interest rates are a special privilege or franchise to retail sellers or banks resulting in their being immune from the general usury law penalties. As a result of this special privilege, franchise and immunity, all other citizens of Montana are prohibited from acquiring property, i.e. money, by charging such rates. If they were to do so, and were not within the privileged class of retail sellers and banks issuing credit cards, they would be subject to the usury penalties of this state. 1 I I t is thus apparent the district court's ruling that the Act is unconstitutional rests on a dual foundation ( 1 ) that the finance charges authorized by the Act constitute interest, and ( 2 ) that the Act is a special law. IJe hold that the finance charges permitted by the Act a r e time price d i f f e r e n t i a l s included i n the price of goods purchased on c r e d i t and payable i n installments, and a s such a r e not subject t o constitutional o r s t a t u t o r y limitations on i n t e r e s t r a t e s . The time price doctrine exempting bona f i d e s a l e s from maximum i n t e r e s t r a t e s has been firmly embedded i n the common law of England since the eighteenth century. Floyer v. Edwards, (K.B. 17741, 98 Eng* Rep. 995; Beete v. Bidgood, (K.B. 1827), 108 Eng. Rep. 792. It has likewise been a firmly established r u l e of law throughout most of the United States f o r over 100 years, the United States Supreme Court having recognized i t i n 1861 i n the leading case of Hogg v. Ruffner, 66 U.S. 115, 17 L ed 38. It i s considered the established general r u l e by some t e x t a u t h o r i t i e s , 45 Am Jur 2d, I n t e r e s t & Usury, 5 123; a recognized principle of law by others, 91 C.J.S. Usury, 5 18(b); and an exception t o usury prohibitions because there is no loan of money by Restatement of the Law of Contracts, 5 526, I l l u s t r a t i o n 4. Perhaps the b e s t summary statement of the time price doctrine i s found i n the following statement from 6 he s t a t u t e of Anne applied only t o a loan o r forbearance of money, and i n the construction of t h i s s t a t u t e it was held t h a t where property was sold, even though the contract provided i n terms f o r the payment of a fixed p r i c e payable I n the future with i n t e r e s t a t a greater r a t e than t h a t allowed by t h e s t a t u t e , the transaction was, nevertheless, not usurious since everything the buyer promised must be deemed consideration for the s a l e of property, not i n t e r e s t on a loan o r forbearance of money. I n t h e United States l i k e s t a t u t e s have been similarly construed, so t h a t where property i s sold the p a r t i e s may agree t h a t the price, i f paid a f t e r a c e r t a i n time, s h a l l be a sum g r e a t e r by more than l e g a l i n t e r e s t than the price payable a t an e a r l i e r day; and though the difference between an agreed price f o r cash and t h a t f o r c r e d i t i s i n terms s t a t e d i n the form of i n t e r e s t a t greater than the l e g a l r a t e , the con- t r a c t i s not usurious. I I E n most jurisdictions i n the United States a time price s a l e is beyond t h e ambit of usury limitations simply because i n t e r e s t i s not involved and the usury laws apply t o loans and not t o sales. For recent examples see: Maine Merchants Association, Inc. v . Campbell (~aine 1972), 287 A.2d 430; Sliger v . R . H. Macy & Co., (1971) 59 N.J. 465, 283 A . 2 d 904; Zachary v . R. H. Macy & Co., Inc., (1972), 31 N.Y.2d 443, 340 N.Y.S.2d 908; Dennis v . Sears, Roebuck & Co., (1969) 223 Tenn, 415, 446 S.W.2d 260; Mandelino v. Fribourg, (1968) 23 M.Y.2d 145, 242 N.E.2d 823; Steffenauer v . Xytelka & Rose, Inc., (1965) 87 N.J.Super, 506, 210 A.2d 88, ~ff'd 1966 46 N.J. 299, 216 A.2d 585; Manufacturer's Advertising Inc. v . Pancoast, (1967) 4 Conn. Cir. 668, 238 A.2d 810; Equipment Finance Inc. v . Grannas, (1966) 207 Pa,Super 363, 218 A . 2d 81; Lundstrom v . Radio Corporation of America, (1965) 17 Utah 2d 114, 405 P. 2d 339; Smith v. Sherwood & Roberts, Spokane Inc., (1968) 92 Idaho 248, 441 P.2d 158; Theodore Roosevelt Agency v . General Motors Acc. Corp., (1965) 156 Colo. 237, 398 P.2d 965; Howell v . Mid-State Homes, Inc., (1970) 13 Ariz.App. 371, 476 P.2d 892; c ; . ! A / - ,t,c/i el -1 1 4 ALR3d 1077; Kass v . G x i d ~ e f - ~ (D.C. 1973), 299 A . 2d 542; Standard Oil Company v . Williams, (1ndyi972), 288 N.E. 2d 170. However, the courts of a few states, while recognizing the time price doctrine, have held that finance charges authorized in installment sales acts are not bona fide time price differentials but are in fact interest and subject to limitations in the usury laws. Elder v . Doerr, (1963), 175 Neb. 483, 122 N.W.2d 528; Lloyd v. Gutgsell, (1963), 175 Neb. 775, 124 N.W.2d 198; State v. J.C. Denney Co., (1970) 48 Wisc' A 25, 179 N . G J . 2 d 641; Rollinger v . J . C . Penney Company, (S.Dak. 1971), 192 N.W.2d 699. The reasoning behind these minority holdings is that finance charges in installment sales acts are charges for the forbearance of money which falls within statutory definitions of interest; that installment sales acts containing finance charges based on a per- centage or ratio of the unpaid balance do not qualify as true time price sales; and that finance charges authorized under installment sales acts are simply a device to evade usury laws. Directing our attention to the Montana Retail Installment Sales ~ c t and The Paris revolving charge account plan, we note the d i s - t r i c t court held t h a t the Act was not a codification of the time price doctrine; t h a t the finance charges authorized by the Act 1' were compensation f o r t h e forbearance of money" within the s t a t u t o r y d e f i n i t i o n of i n t e r e s t found i n section 47-122, R.C.M. 1947; and t h a t the revolving charge account plan of The Paris was simply too great a departure from established concepts of a time price s a l e t o be brought within the exemption. The d i s t r i c t c o u r t ' s holding was based principally on the cases l i s t e d i n the preceding paragraph, the pertinent constitutional and statutory provisions of the 1889 Montana Constitution, and these additional a u t h o r i t i e s : Ulvilden v. Sorken, 58 S.D. 466, 237 N.W. 565; Sloan v. Sears, Roebuck and Co., 228 Ark. 464, 308 S.W.2d 802; Stanton v. Mattson, 175 Neb. 767, 123 N.W.2d 844. W e have read and considered these a u t h o r i t i e s but remain unimpressed. I n our view, the Montana Retail Installment Sales Act i s a codification of the time price doctrine. Section 74-602, R.C.M. 1947, a s o r i g i n a l l y enacted contained these definitions: I 1 "(g) Retail installment contract' o r contract' means an agreement evidencing a r e t a i l installment transaction entered i n t o i n t h i s s t a t e pursuant t o which a buyer promises t o pay i n one o r more deferred installments the time s a l e p r i c e of goods and/or services. 9; 9 : 9 ~ " "(k) ' ~ i n a n c e charge' means the amount, a s limited by section 74-608, i n addition t o the principal balance, agreed upon between the buyer and the s e l l e r , t o be paid by the buyer f o r the p r i v i l e g e of purchasing goods o r services t o be paid f o r by the buyer i n one o r more deferred installments. "(1) 'Time s a l e price' means t h e t o t a l of the cash s a l e price of the goods o r services and the amount, i f any, included f o r insurance and other benefits i f a separate i d e n t i f i e d charge i s made therefor and the I I amounts of the o f f i c i a l fees and the finance charge., (Emphasis supplied) These definitions were carried forward a f t e r the 1971 amendments which s p e c i f i c a l l y pertain t o r e t a i l charge account agreements indicating l e g i s l a t i v e recognition t h a t finance charges upon r e t a i l charge accounts a r e time price d i f f e r e n t i a l s . Sec- t i o n 74-607(j) of both t h e original and amended Act provides t h a t when the buyer defaults i n the payment of an installment of the time sale price, the buyer i s subject t o either a deficiency charge or interest upon such defaulted installment. This interest i s a charge for forbearance of money and i s payable i n addition t o the finance charges i n the Act. Thus the legislature has distinguished between i n t e r e s t charges for the forbearance of money a f t e r default and finance charges included i n the time sale price. The finance charges i n the Act are not compensation for the forbearance of money within the statutory definition of interest i n section 47-122, R.C.M. 1947. Forbearance i s the a c t by which a creditor waits for payment of a debt due him a f t e r it becomes due. lack's Law Dictionary, 4th Ed., or as put by the court i n - Hafer v. Spaeth, 22 Wash.2d 378, 156 P.2d 408, 411: "The term ' forbearancef as used i n the law of usury, signifies a contractual obligation of lender or creditor t o refrain, during a given period of time, from requiring the borrower or debtor t o pay a loan or debt then due and payable." (Emphasis supplied) Where a customer purchases goods under a revolving charge account such as The Paris plan, the debt created by the purchase i s a time obligation and i s not then due because of the express provisions of the revolving charge account agreement which allows the customer t o pay for the purchase i n installments over a period of time. To hold that sales under revolving charge account plans do not qualify a s true time price sales i s t o subordinate substance t o form. While it i s true that traditionally time price sales included "closed end" transactions wherein one or more a r t i c l e s w e r e sold a t the same time under one contract i n which the charge for credit was merged i n the sale price which was stated a s a time price, the substance of a time price sale i s simply a credit price repayable i n installments. W e perceive no logic i n denying ' application of the time price doctrine t o revolving charge account sales simply because they are governed by the terms of one price agreement covering all future purchases from time to time rather than a series of identical individual agreements entered into at the time of each individual sale. For the foregoing reasons we hold that the finance charges in the Montana Retail Installment Sales Act are not interest but are time price differentials and accordingly the Act is not legislation "regulating the rate of interest on money" proscribed by Art. V., Sec. 26, 1889 Montana Constitution. Nor is it a special law within the same constitutional prohibition. It is clear that reasonable classifications and distinctions in legislative enactments which operate equally upon every person or thing in a given class are constitutionally permissible and do not violate the constitutional prohibition against special laws found in Art. V., Sec. 26, 1889 Montana Constitition. State ex rel, Hamrnond v . Hager, Mon t . P -* 503 P.2d 52, 29 St.Rep. 945 (upholding constitutionality of exclusion of agricultural works from the workmen's Compensation Act); Calvert v. City of Great Falls, 154 Mont. 213, 462 P.2d 182 (upholding constitutionality of exemptions of land used for specific enterprises from compulsory annexation statute); Great Falls National Bank v . McCormick, 152 Mont. 319, 4 4 8 P.2d 991 (upholding constitutionality of Small Tract Financing Act applicable only to tracts of land less than three acres); Montana Meat Co. v . Missoula Livestock Auction Co., 125 Mont. 66, 230 P.2d 955 (up- holding constitutionality of statute exempting livestock auctioneers from liability for conversion of mortgaged livestock); Rutherford v. City of Great Falls, 107 Mont. 512, 86 P.2d 656 (upholding constitutionality of statute for construction of housing for 1 1 low income ~ersons"). It is equally clear from the foregoing cases that legislative classifications carry a presumption of constitutionality which can only be overcome by an affirmative showing that there is no valid reason or basis for singling out a h articular class or thing for different legislative treatment. Here the legislature has singled out a particular class of persons, i,e. retail sellers who sell to retail buyers, and a particular subject matter, i.e. installment sales of personal property under written contract, for special legislative treat- ment. The legislature has subjected these persons and trans- actions to special regulatory measures and has established ceilings on finance and service charges. Is there a reasonable basis for this classification and different treatment? Clearly there is. In economic terms, the cost of extending consumer credit is substantially higher than extending wholesale credit to a few business firms, for example. The sheer volume of consumer credit accounts entails substantially higher costs in servicing such accounts. For more detailed treatment of the economic basis for differentiation see: 63 Harvard Law Review, Regulation of Retail Installment Sales , 877, 878; Consumer Installment Credit, Federal Reserve System 1957, Vol. 1, part 1; Economic Characterization of Department Store Credit, National Retail Merchants Ass'n 1969, The remaining constitutional objections to the Act can be dealt with summarily. The district court concluded that the Act I I is a special law granting special or exclusive privileges, immunities or franchises" within the prohibitions of Art. V., Sec, 26, 1889 Constitution of Montana, and that the Act interferes with the right of non-retail sellers to "acquire property" guaranteed by Art. III., Sec. 3, 1889 Montana Constitution, because they are allegedly denied the right to charge the same finance charge rates as retail sellers. These alleged violations both depend on whether the legislative classifications in the Act are constitutionally permissible. Having found the classification reasonable and constitutionally permissible for the reasons here- tofore set forth, the Act is not a "special" law and the constitu- tional attack must fail, For the foregoing reasons we hold that the Montana Retail Installment Sales Act, both before and a f t e r i t s amendment i n 1971, i s constitutional and the d i s t r i c t court's holding t o the contrary must be s e t aside. Directing our attention t o the second issue for review, p l a i n t i f f contends that the Montana Retail Installment Sales Act preempted the f i e l d of a l l installment sales and as the revolving charge account plan of The Paris did not comply with its provisions prior t o the 1971 amendment, The Paris was not authorized t o charge and receive the finance charges it did. I n i t i a l l y it is clear that revolving charge account sales could not and did not conply with the requirements of the Act prior t o its amendment i n 1971, Section 74-608(b) of the original Act required the finance charge t o be computed from the date of installment purchase u n t i l maturity; i n revolving credit sales finance charges cannot be precomputed. Section 74-607(f) required the finance charge t o be stated i n dollars and cents; i n revolving credit sales t h i s is impossible because such charges cannot be precohputed. Section 74-608(b) required computing of the finance charge from date of s a l e t o maturity; revolving charge accounts compute the finance charges on a monthly basis and add them t o the balance before installment payments a r e credited t o the account. Section 74-607 required the installment contract t o contain eight specific elements showing computation of the cash price, down payment, amount of finance charge, t o t a l t i m e balance and other items, most of which have no application t o revolving charge accounts. But does t h i s mean that The Paris violated the Act prior to the 1971 amendment? Not a t a l l . Contrary t o the viewpoint of p l a i n t i f f , the Act is a regulatory measure on finance charges and not a s t a t u t e conferring special benefits i n the form of high finance charges for the privileged few f a l l i n g within its pro- visions. The Act prior t o amendment simply did not attempt or purport t o regulate revolving charge account sales or the finance charges thereon. It simply regulated "closed end" r e t a i l i n s t a l l - ment contracts such as conditional sales contracts, chattel mort- gages, bailments or leases with option t o purchase and the like. This i s clear from the provisions of section 74-602, defining r e t a i l installment transactions, r e t a i l installment contracts, r e t a i l buyers, and r e t a i l sellers. Subsections (d) , (e) , ( f ) , and (g), section 74-602. There i s nothing i n the Act, prior t o its amend- ment, which purports t o regulate o r prohibit sales under revolving charge accounts or the finance charges on such sales. Finance charges on revolving charge account sales w e r e simply unregulated prior t o 1971. Limitations on interest rates under the general usury statute did not apply because of the time price doctrine codified i n the Act. The legislature, viewing t h i s situa- tion i n 1971, amended the Act specificallyt-d mver revolving charge account sales and regulate the maximum permissible finance charges thereon. Chapter 416, Session Laws 1971. The 1971 amendment maintains a distinction between r e t a i l installment contracts account covered prior t o the amendment, and r e t a i l chargelagreements speci- f i c a l l y included for the f i r s t time i n the 1971 amendment. Different finance charge r a t e structures are presented for each, section 74-608 (a), (b), and (c) for r e t a i l installment contracts; section 4 74-608(d) and ( e ) for r e t a i l charge account agreements. The formal contract provisions required by section 74-607 and the provisions relating t o sales finance companies, sections 74-603 and 74-604, apply only t o r e t a i l installment contracts and do not affect r e t a i l charge account agreements. The legislature, a t l e a s t , did not consider that revolving charge account sales and the finance charges permissible thereon t o have been covered by the Act prior t o 1971. W e concur i n t h i s assessment of the situation. W e hold that The Paris did not violate the Montana Retail Installment Sales Act p r i o r t o the 1971 amendment by reason of its revolving charge account operation and the finance charges imposed and received. The judgment of the d i s t r i c t court i s reversed and p l a i n t i f f ' s complaint i s dismissed.