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Justia › US Law › US Case Law › US Supreme Court › Volume 411 › Mourning v. Family Publications Svc., Inc.
Mourning v. Family Publications Service, Inc.
Petitioner, who contracted to purchase magazine subscriptions from respondent, brought this action in District Court, alleging that respondent had failed to comply with the disclosure provisions of the Truth in Lending Act, as implemented by Federal Reserve Board "Regulation Z." The District Court found that respondent had failed to comply with Regulation Z, in that respondent had extended credit to petitioner, payable in more than four installments, without making the disclosures required by the Act. The Court of Appeals reversed, holding that the Board had exceeded its statutory authority in issuing Regulation Z, since the regulation required disclosure in some credit transactions in which a finance charge had not been made, and, alternatively, that the regulation violated due process by creating a conclusive presumption that credit payments made in more than four installments included a finance charge.
1. The "Four Installment Rule" of Regulation Z is a valid exercise of the Federal Reserve Board's rulemaking authority under the Truth in Lending Act. Pp. 411 U. S. 363-375.
(a) Congress, which was well aware that merchants could evade the disclosure requirements of the Act by concealing credit charges, gave the Board broad rulemaking power to prevent such evasion, and, in the exercise of that power, the Board issued the challenged rule to deal with the practice of concealing finance charges in the cash price of merchandise sold. Pp. 411 U. S. 363-369.
(b) No conflict arises from the fact that the Act mentions disclosure only in regard to transactions in which a finance charge is imposed, while the disclosure requirements of the rule sometimes apply where no such charge exists, since Congress did not attempt to specify all types of situations under which the Board's regulations might apply, and the deterrent effect of the rule clearly implements the objectives of the Act. Pp. 411 U. S. 372-373.
prevent circumvention, even if the rule embraces some transactions that the provisions of the Act might not, on their face, reach. Village of Euclid v. Ambler Realty Co., 272 U. S. 365. Pp. 411 U. S. 373-374.
(d) Existence of penalty provisions in the Act does not require a narrow construction of the Act's nonpenalty provisions. FCC v. American Broadcasting Co., 347 U. S. 284, distinguished. Pp. 374-375.
2. Imposition, pursuant to § 130 of the Act, of a minimum penalty of $100 in cases such as this where the finance charge is nonexistent or undetermined, but where disclosure has not been made, is a permissible sanction. P. 411 U. S. 376.
3. In imposing a disclosure requirement on all members of a defined class to discourage evasion by a substantial portion of that class, the challenged regulation does not create a conclusive presumption violative of the Fifth Amendment. Pp. 411 U. S. 376-377.
449 F.2d 235, reversed and remanded.
BURGER, C.J., delivered the opinion of the Court, in which BRENNAN, WHITE, MARSHALL, and BLACKMUN, JJ., joined. DOUGLAS, J., filed an opinion dissenting in part, in which STEWART and REHNQUIST, JJ., joined, post, p. 411 U. S. 378. POWELL, J., filed a dissenting opinion, post, p. 411 U. S. 383.
Respondent is a Delaware corporation which solicits subscriptions to several well known periodicals. In 1969, one of respondent's door-to-door salesmen called on the petitioner, a 73-year-old widow residing in Florida, and sold her a five-year subscription to four magazines. Petitioner agreed to pay $3.95 immediately and to remit a similar amount monthly for 30 months. The contract form she signed contained a clause stating that the subscriptions could not be canceled and an acceleration provision similar to that found in many installment undertakings, providing that any default in installment payments would render the entire balance due. The contract did not recite the total purchase price of the subscriptions or the amount which remained unpaid after the initial remittance, and made no reference to service or finance charges. The total debt assumed by the petitioner was $122.45; the balance due after the initial payment was $118.50.
of the statutory penalty and reimbursement for the costs of the litigation, including reasonable attorney's fees.
"After making the terms of our contract clear to you, we went ahead in good faith and had your subscriptions entered for the entire periods you had agreed to take. The contract you signed is: Not subject to cancellation after acceptance or verification."
"Knowing, therefore, the obligations we have incurred in your name, we feel confident that you will continue your magazine subscriptions and make the convenient monthly payments regularly and promptly. [Footnote 3]"
"After an account is three months delinquent it is brought to my attention. I feel that you should realize that you are receiving our merchandise which we have paid for. Had you dealt directly with the publishers yourself, you would have had to pay them in advance for the magazines."
budget plan. [Emphasis supplied; underlined words are emphasized in the original letter]. [Footnote 4]"
terms of the contract has paid for more magazines than he has received. Respondent did not, however, submit any affidavit to the court contesting any of the facts stated in its "dunning" letters. On this record, both parties moved for summary judgment, declaring explicitly that no factual question remained undecided.
are necessary or proper to effectuate the purposes of [the Act], to prevent circumvention or evasion thereof, or to facilitate compliance therewith."
"for which either a finance charge is or may be imposed or which pursuant to an agreement, is or may be payable in more than four installments. [Footnote 15]"
Relying on the rule governing credit transactions of more than four installments, the District Court granted summary judgment for petitioner. The court found that respondent had extended credit to petitioner [Footnote 16] which, by agreement, was payable in more than four installments, but had failed to comply with the disclosure provisions of the Act.
not been imposed. As an alternative ground for its decision, the Court of Appeals held that the regulation created a conclusive presumption that credit payments made in more than four installments included a finance charge. Relying on Schlesinger v. Wisconsin, 270 U. S. 230 (1926), and Heiner v. Donnan, 285 U. S. 312 (1932), the court concluded that such an irrebuttable presumption of fact violated the Due Process Clause of the Fifth Amendment.
"[B]y requiring all creditors to disclose credit information in a uniform manner, and by requiring all additional mandatory charges imposed by the creditor as an incident to credit be included in the computation of the applicable percentage rate, the American consumer will be given the information he needs to compare the cost of credit and to make the best informed decision on the use of credit. [Footnote 22]"
compare more readily the various credit terms available to him and avoid the uninformed use of credit. [Footnote 23]"
cash price or delivery price of the property or service to be acquired. Both things are to be stated, price and finance charges, and the judgment of the consumer can be on the basis of both of these factors, not merely on one alone; and if a merchant tries to have a low finance charge and bury it in a high cash price or delivered price, then the purchaser can shop on price just as much as on the finance charges. [Footnote 29]"
under the Regulation, since, without this provision, the practice of burying the finance charge in the cash price, a practice which already exists in many cases, would have been encouraged by Truth in Lending. Obviously this would have been directly contrary to Congressional intent. [Footnote 33]"
The standard to be applied in determining whether the Board exceeded the authority delegated to it under the Truth in Lending Act is well established under our prior cases. Where the empowering provision of a statute states simply that the agency may "make . . . such rules and regulations as may be necessary to carry out the provisions of this Act," [Footnote 35] we have held that the validity of a regulation promulgated thereunder will be sustained so long as it is "reasonably related to the purposes of the enabling legislation." Thorpe v. Housing Authority of the City of Durham, 393 U. S. 268, 393 U. S. 280-281 (1969). See also American Trucking Assns. v. United States, 344 U. S. 298 (1953).
"shall contain such terms and conditions as the Administrator finds necessary to carry out the purposes of such orders, to prevent the circumvention or evasion thereof, and to safeguard the minimum wage rates established therein. [Footnote 37]"
neither such limitation nor such abuse exists, but the necessity is conceded to be well founded in fact, there would seem to be an end of the matter."
324 U.S. at 324 U. S. 255.
In light of our prior holdings and the legislative history of the Truth in Lending Act, we cannot agree with the conclusion of the Court of Appeals that the Board exceeded its statutory authority in promulgating the Four Installment Rule. Congress was clearly aware that merchants could evade the reporting requirements of the Act by concealing credit charges. In delegating rulemaking authority to the Board, Congress emphasized the Board's authority to prevent such evasion. To hold that Congress did not intend the Board to take action against this type of manipulation would require us to believe that, despite this emphasis, Congress intended the obligations established by the Act to be open to evasion by subterfuges of which it was fully aware. As in Gemsco, the language of the enabling provision precludes us from accepting so narrow an interpretation of the Board's power.
be chosen, courts should defer to the informed experience and judgment of the agency to whom Congress delegated appropriate authority. Northwestern Co. v. FPC, 321 U. S. 119, 321 U. S. 124 (1944); National Broadcasting Co. v. United States, 319 U. S. 190, 319 U. S. 224 (1943); American Telephone & Telegraph Co. v. United States, 299 U. S. 232, 299 U. S. 236 (1936).
Respondent contends, however, that the Four Installment Rule must be abrogated, since it is "inconsistent" with portions of the enabling statute. The purported conflict arises because the statute specifically mentions disclosure only in regard to transactions in which a finance charge is, in fact, imposed, [Footnote 38] although the rule requires disclosure in some cases in which no such charge exists. Respondent argues that, in requiring disclosure as to some transactions, Congress intended to preclude the Board from imposing similar requirements as to any other transactions.
they bring to their work the expert's familiarity with industry conditions which members of the delegating legislatures cannot be expected to possess."
344 U.S. at 344 U. S. 309-310 (citations omitted). Neither the sections of the Truth in Lending Act which refer specifically to transactions involving finance charges nor any other sections of the Act indicate that Congress attempted to list comprehensively all types of transactions to which the Board's regulations might apply. To the contrary, § 105's broad grant of rulemaking authority reflects an intention to rely on those attributes of agency administration recognized in American Trucking. We cannot then infer that references in the Act to transactions involving credit charges were intended to limit the deterrent measures which the Board might choose.
expressly nor implies that he is to do only what will achieve the stated ends, and nothing more. The statute does not direct the Administrator to make the rate effective by all necessary means except those which may have other social or economic consequences."
324 U.S. at 324 U. S. 257.
There, the Court was referring to the regulation of subject matter not specifically mentioned in the enabling legislation. A similar rule applies when a remedial provision requires some individuals to submit to regulation who do not participate in the conduct the legislation was intended to deter or control. In Village of Euclid v. Ambler Realty Co., 272 U. S. 365, 272 U. S. 388-389 (1926), the Court held that, in defining a class subject to regulation, "[t]he inclusion of a reasonable margin to insure effective enforcement will not put upon a law, otherwise valid, the stamp of invalidity." See also North American Co. v. SEC, 327 U. S. 686 (1946). Nothing less will meet the demands of our complex economic system. Where, as here, the transactions or conduct which Congress seeks to administer occur in myriad and changing forms, a requirement that a line be drawn which insures that not one blameless individual will be subject to the provisions of an act would unreasonably encumber effective administration and permit many clear violators to escape regulation entirely. That this rationale applies to administrative agencies as well as to legislatures is implicit in both Gemsco and American Trucking Assns. In neither case was every individual engaged in the regulated activity responsible for the specific consequences the agency sought to eliminate.
"If we should give [the criminal provision] the broad construction urged by the Commission, the same construction would likewise apply in criminal cases."
Id. at 347 U. S. 296. Since, in drafting its regulation, the Commission had failed to apply the well established rule that penal provisions must be construed narrowly, the Court held the regulation invalid.
"a fair warning [has first been] given to the world in language that the common world will understand of what the law intends to do if a certain line is passed."
McBoyle v. United States, 283 U. S. 25, 283 U. S. 27 (1931). [Footnote 40] Where, as here, the language of the challenged rule is explicit, that risk is not present. See Kraus & Bros., Inc. v. United States, 327 U. S. 614, 327 U. S. 621-622 (1946).
We are also unable to accept respondent's argument that § 130 [Footnote 41] does not allow imposition of a civil penalty in cases where no finance charge is involved, but where a regulation requiring disclosure has been violated. Section 130 provides that the penalty assessed shall be twice the amount of the finance charge imposed, but not less than $100. Since the civil penalty prescribed is modest and the prohibited conduct clearly set out in the regulation, we need not construe this section as narrowly as a criminal statute providing graver penalties, such as prison terms. We have noted above that the objective sought in delegating rulemaking authority to an agency is to relieve Congress of the impossible burden of drafting a code explicitly covering every conceivable future problem. Congress cannot then be required to tailor civil penalty provisions so as to deal precisely with each step which the agency thereafter finds necessary. In light of the emphasis Congress placed on agency rulemaking and on private and administrative enforcement of the Act, we cannot conclude that Congress intended those who failed to comply with regulations to be subject to no penalty or to criminal penalties alone. As the District Court concluded, imposition of the minimum sanction is proper in cases such as this, where the finance charge is nonexistent or undetermined.
Heiner v. Donnan, 285 U. S. 312 (1932). In Schlesinger and Heiner, we held that certain taxing provisions violated the Due Process Clauses of the Fifth and Fourteenth Amendments because they conclusively presumed the existence of determinative facts. The challenged rule contains no comparable presumption. The rule was intended as a prophylactic measure; it does not presume that all creditors who are within its ambit assess finance charges, [Footnote 42] but, rather, imposes a disclosure requirement on all members of a defined class in order to discourage evasion by a substantial portion of that class.
The Truth in Lending Act reflects a transition in congressional policy from a philosophy of "Let the buyer beware" to one of "Let the seller disclose." By erecting a barrier between the seller and the prospective purchaser in the form of hard facts, Congress expressly sought "to . . . avoid the uninformed use of credit." 15 U.S.C. § 1601. Some may claim that it is a relatively easy matter to calculate the total payments to which petitioner was committed by her contract with respondent; but at the time of sale, such computations are often not encouraged by the solicitor or performed by the purchaser. Congress has determined that such purchasers are in need of protection; the Four Installment Rule serves to insure that the protective disclosure mechanism chosen by Congress will not be circumvented.
That the approach taken may reflect what respondent views as an undue paternalistic concern for the consumer is beside the point. The statutory scheme is within the power granted to Congress under the Commerce Clause.
It is not a function of the courts to speculate as to whether the statute is unwise or whether the evils sought to be remedied could better have been regulated in some other manner.
82 Stat. 148, 15 U.S.C. § 1604.
12 CFR § 226.2(k) (1972 rev.).
"Whereas, FPS, acts initialy [sic] as agent for the various publishers; upon acceptance of her contract, FPS thereafter acts solely as financier, and co-guaranter [sic] of service with the various publishers; whereas FPS has fully invested in Mrs. Mourning's contract, and does not receive refund in part or full from any, or, all publishers; for said FPS, investment, we therefore, must insist on compliance of your client to the terms of said contract until fullfilment [sic] of said terms in the aforementioned contract result [sic] in mutual resolve [sic] of liability."
App. 14. Respondent admitted that this letter had been written on its stationery by its employee, but denied that the employee was authorized to send it. Consequently, we do not consider the facts stated in the letter to have been admitted by respondent.
Affidavit of Stanley R. Swanson, Vice President of Family Publications Service, Inc., Aug. 26, 1970, p. 2 (District Court Record 198, 199). The affidavit also stated that, while customers of respondent were free to pay the entire price of their magazine subscriptions when their contract with respondent was signed, the price charged would be equal to the aggregate of the payments that would have been made had the customer elected to pay in installments. Respondent now admits that this statement was not true. In some cases, customers who agreed to pay the entire contract price immediately were charged less than the aggregate amount of the installment payments.
§ 103(f), 15 U.S.C. § 1602(f). Certain transactions, not here relevant, are exempt under § 104, 15 U.S.C. § 1603.
§ 128, 15 U.S.C. § 1638.
§ 130, 15 U.S.C. § 1640.
§ 112, 15 U.S.C. § 1611.
512 CFR § 226.2(k) (1972 rev.).
Respondent challenges the finding of the District Court that credit was extended to petitioner. In some cases in which a consumer pays in installments for a magazine subscription, credit may not have been extended to the consumer. However, in view of the admissions by respondent which were before the District Court, respondent's failure to controvert those admissions by affidavit, and the litigation posture which respondent has consistently maintained beginning in the District Court, i.e., that no factual matters remained unresolved, we conclude that summary judgment on this issue was properly granted. Fed.Rule Civ.Proc. 56(e).
H.R.Rep. No. 1040, 90th Cong., 1st Sess., 10-11 (1967).
Id. at 13; S.Rep. No. 392, 90th Cong., 1st Sess., 2-3 (1967).
H.R.Rep. No. 1040, supra, n 18, at 13; S.Rep. No. 392, supra, n19, at 1-2.
Hearings on H.R. 11601 before the Subcommittee on Consumer Affairs of the House Committee on Banking and Currency, 90th Cong., 1st Sess., pt. 1, p. 76 (1967).
H.R.Rep. No. 1040, supra, n 18, at 13.
See letter from Paul R. Dixon, Chairman of the Federal Trade Commission, to Senator A. Willis Robertson, Chairman of the Senate Committee on Banking and Currency, Feb. 18, 1964, in Hearings on S. 750 before the Subcommittee on Production and Stabilization of the Senate Committee on Banking and Currency, 88th Cong., 1st and 2d Sess., pt. 2, p. 1303 (1963-1964).
For example, two merchants might buy watches at wholesale for $20 which normally sell at retail for $40. Both might sell immediately to a consumer who agreed to pay $1 per week for 52 weeks. In one case, the merchant might claim that the price of the watch was $40 and that the remaining $12 constituted a charge for extending credit to the consumer. From the consumer's point of view, the credit charge represents the cost which he must pay for the privilege of deferring payment of the debt he has incurred. From the creditor's point of view, much simplified, the charge may represent the return which he might have earned had he been able to invest the proceeds from the sale of the watch from the date of the sale until the date of payment. The second merchant might claim that the price of the watch was $52 and that credit was free. The second merchant, like the first, has forgone the profits which he might have achieved by investing the sale proceeds from the day of the sale on. The second merchant may be said to have "buried" this cost in the price of the item sold. By whatever name, the $12 differential between the total payments and the price at which the merchandise could have been acquired is the cost of deferring payment.
Hearings on S. 1740 before the Subcommittee on Production and Stabilization of the Senate Committee on Banking and Currency, 87th Cong., 1st Sess., 49, 56-57, 127, 389-390, 447-448, 563, 1155-1156 (1961); Hearings on S. 1740 before the Subcommittee on Production and Stabilization of the Senate Committee on Banking and Currency, 87th Cong., 2d Sess., 16, 45, 265, 267-268, 287, 341-342, 360-361, 365-367, 376, 407, 415 (1962); Senate Hearings on S. 750, 88th Cong., 1st and 2d Sess., supra, n 24, pt.s. 1 and 2, pp. 13-14, 749, 1284-1285; Hearings on S. 5 before the Subcommittee on Financial Institutions of the Senate Committee on Banking and Currency, 90th Cong., 1st Sess., 41-42, 123-134, 377-379, 513, 699 (1967); House Hearings on H.R. 11601, 90th Cong., 1st Sess., supra, n 21, pts. 1 and 2, pp. 583, 590-591, 802, 825-826.
Senate Hearings on S. 1740, 87th Cong., 2d Sess., supra, n 27, at 287; Senate Hearings on S. 750, 88th Cong., 1st and 2d Sess., supra, n 24, pt. 1, pp. 13-14; House Hearings on H.R. 11601, 90th Cong., 1st Sess., supra, n 21, pt. 2, p. 596.
Senate Hearings on S. 1740, 87th Cong., 1st Sess., supra, n 27, at 447-448. See also Senate Hearings on S. 1740, 87th Cong., 2d Sess., supra, n 27, at 45.
33 Fed.Reg. 15506 15516 (1968).
Compare § 226.2(h), 33 Fed.Reg. 15507 (1968), with § 226.2(k), 34 Fed.Reg. 2003 (1969).
Federal Reserve Board Advisory Letter of Mar. 3, 1970, by J. L. Robertson. See also Federal Reserve Board Advisory Letter of Aug. 26, 1969, by J. L. Robertson.
Statement of J. L. Robertson, Vice Chairman, Board of Governors of the Federal Reserve System, in Hearings on Consumer Credit Regulations before the Subcommittee on Consumer Affairs of the House Committee on Banking and Currency, 91st Cong., 1st Sess., pt. 2, pp. 380-381 (1969).
E.g., § 8 of the United States Housing Act of 1937, as amended, 42 U.S.C. § 1408.
§ 103(f), 15 U.S.C. § 1602(f); § 121, 15 U.S.C. § 1631; § 130(a), 15 U.S.C.§ 1640(a).
§ 112, 15 U.S.C. § 1611; § 130, 15 U.S.C. § 1640.
See Kordel v. United States, 335 U. S. 345 (1948). See also W. LaFave A. Scott, Criminal Law 72 (1972).
15 U.S.C. § 1640. This section refers only to the failure to provide "information required under this part to be disclosed. . . ." (Emphasis supplied.) The italicized language was added to the statute to distinguish disclosure required in regard to sales transactions from that required in regard to advertising. H.R.Rep. No. 1040, supra, n 18, at 19, 30. The penalty provision applies both to the failure to disclose information specifically required by the statute and to the failure to abide by regulations promulgated by the Board to govern such disclosure.
In regard to some transactions to which the Four Installment Rule applies, merchants need not report the amount and rate of finance charges. Federal Reserve Board Advisory Letter of July 24 1969, by J. L. Robertson; Federal Reserve Board Letter No. 30, July 8, 1969, by Frederic Solomon.
MR. JUSTICE DOUGLAS, with whom MR. JUSTICE STEWART and MR. JUSTICE REHNQUIST concur, dissenting in part.
I have concluded that this is not a proper case for summary judgment under Fed.Rule Civ.Proc. 56(c), which provides that summary judgment only may be granted if there is "no genuine issue as to any material fact" and "the moving party is entitled to a judgment as a matter of law." As I interpret the present record in light of our decisions, see, e.g., Adickes v. S. H. Kress & Co., 398 U. S. 144; White Motor Co. v. United States, 372 U. S. 253; United States v. Diebold, Inc., 369 U. S. 654, there remains unresolved a genuine issue of material fact. Although I agree with the majority that Regulation Z is valid, and accordingly would reverse the decision of the Court of Appeals, I would remand this case to the District Court for resolution of that material issue.
The disclosure provisions of the Truth in Lending Act apply only to an extension of "consumer credit." 15 U.S.C. § 1631. Thus, in order to assert successfully a claim under the Act for the statutory penalty and reimbursement for the costs of the action, see id., § 1640, petitioner, inter alia, must satisfy her burden of proving that respondent extended consumer credit within the meaning of the Act. Section 103(e) of the Act, 15 U.S.C. § 1602(e), defines "credit" as "the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment." In her complaint, petitioner merely alleges that respondent "extends Consumer Credit as defined in Regulation Z, 12 C.F.R. [§] 226.2(K). . . ."
"Under the contract executed by the customer and Defendant, the customer agrees to pay a stated amount per month for half of the life of the contract and Defendant agrees to supply the magazines for the full term of the contract. At all times, the customer has prepaid for the magazines to be delivered. Under its arrangement with most of the publishers, Defendant reimburses the publisher periodically during the full term of the subscription."
"At no point during the life of the contract has Defendant paid money to a third person or supplied goods or services to the customer for which reimbursement is expected from the customer in the future."
"A transaction may be an installment contract without being a credit transaction at all. Both parties may agree to perform in installments without promising to render any performance in advance of full payment of the price of each installment so rendered. [Footnote 2/4]"
"that we have ordered these magazines in advance, and that you have incurred an obligation to repay us. This is a credit account, and as such must be repaid by you on a monthly basis, much the same as if you had purchased any other type of merchandise on a monthly budget plan."
Respondent formally admitted that it had sent this letter to petitioner. Accordingly, it was properly considered by the District Judge. [Footnote 2/7] But I do not view this "admission"
as conclusive or sufficient proof that respondent had extended credit within the meaning of the Act at the time the contract between petitioner and respondent was entered into. [Footnote 2/8] First, this is not an admission in terms that credit was extended within the meaning of the Act. Second, since petitioner, at the time the letter was sent, was three months in arrears, it may be that respondent had advanced money on her account only after she failed to meet her contractual obligation. It is settled under our decisions that material lodged by the moving party "must be viewed in the light most favorable to the opposing party." Adickes v. Kress & Co., 398 U.S. at 398 U. S. 157, 398 U. S. 158-159; United States v. Diebold, Inc., 369 U.S. at 369 U. S. 655.
"[w]hen a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him."
does not establish the absence of a genuine issue, summary judgment must be denied even if no opposing evidentiary matter is presented."
We cited this comment with approval in Adickes v. Kress & Co., supra, at 398 U. S. 160. The moving party, in this case petitioner, [Footnote 2/9] must meet her burden of showing the absence of a genuine issue as to any material fact. Id. at 398 U. S. 157. I cannot conclude that she met that burden. The District Judge was not possessed of sufficient information to resolve properly the issue whether credit had been extended. Under these circumstances, he should not have granted summary judgment. Cf. White Motor Co. v. United States, 372 U.S. at 372 U. S. 263.
There are suggestions in the record that respondent is a wholly owned subsidiary of Time, Inc. Respondent, however, sold not only Life, a Time, Inc., publication, but magazines of other publishers.
In a free enterprise system, one must presume that there is a "finance charge" for the advance of credit. It would nonetheless be a "finance charge" although it were wholly undisclosed or not separately stated in an account rendered to the customer.
S.Rep. No. 392, 90th Cong., 1st Sess., 14; H.R.Rep. No. 1040, 90th Cong., 1st Sess., 25.
3A A. Corbin, Contracts § 687, p. 246 (1960). A published opinion of the Federal Reserve Board recognizes that installment payment plans may not involve an extension of credit when charges for services rendered do not exceed prior payments. FRB Opinion Letter No. 262 (1970).
3A A. Corbin, Contracts § 691 (1960).
My Brother POWELL asserts that, given the undisputed fact that petitioner agreed to pay in advance, respondent, as a matter of law, could not have extended credit. Post at 411 U. S. 383-384. We do not, however, know what the financial relationships in this tripartite arrangement are. For example, it may be that respondent advances the full five-year subscription price to the publisher on the subscriber's behalf when the contract between the subscriber and respondent is executed. If that is so, the subscriber may receive an unconditional right to receive magazines from the publisher over the five-year period, whether or not he meets his contractual obligations with respondent. Under these circumstances, respondent will be acting as a financier, enabling the subscriber to take advantage of the publisher's five-year subscription offer, but yet to defer payment on the subscription price. Any "profit" respondent receives will be largely attributable to its services as a financier. I do not see that such a financial arrangement differs substantially from the case where a subscriber borrows the full subscription price from a bank and pays the publisher directly, obligating himself to repay the bank in equal installments, with interest, over two and one-half years. As my Brother POWELL argues, the subscriber under those circumstances will be advancing credit to the publisher because he has paid for all magazines in advance, but it cannot be doubted that, at the same time, the bank has advanced credit to the subscriber.
"Whereas, FPS, acts initialy [sic] as agent for the various publishers; upon acceptance of her contract, FPS thereafter acts solely as financier, and co-guaranter [sic] of service with the various publishers; whereas, FPS, has fully invested in Mrs. Mourning's contract and does not receive refund in part or full from any, or, all publishers; for said FPS, investment, we therefore, must insist on compliance of your client to the terms of said contract. . . ."
Although respondent admitted that the letter appeared on its stationery and was written by an employee. it denied that the employee was authorized to send the letter. Accordingly, since there was an issue of fact whether the letter was authorized, and thus a binding admission, the letter could not be considered properly on petitioner's motion for summary judgment. Cf. 3 W. Barron & A. Holtzoff, federal Practice and Procedure § 1231, p. 75 (1971 Supp.).
We need not resolve here whether, if the contract was not originally a credit transaction, petitioner's own breach could have converted it retroactively into a credit transaction within the meaning of the Act.
Both parties moved for summary judgment. That does not relieve the District Judge of his responsibility to consider each motion separately in light of the theories advanced by each party, and to proceed to trial if he concludes that there is a genuine issue of material fact to be resolved. See 6 J. Moore, Federal Practice ¦ 56.13 (2d ed.1972).
and respondent did not involve an extension of consumer credit. For the same reason, while I am in agreement with much of MR. JUSTICE DOUGLAS' dissenting opinion, I see no reason to remand the case for the taking of evidence.
"The Congress finds that economic stabilization would be enhanced and the competition among the various financial institutions and other firms engaged in the extension of consumer credit would be strengthened by the informed use of credit."
to render any performance in advance of full payment of the price of each installment so rendered."
3A A. Corbin Contracts 687 p. 246 (1960).
The transaction before the Court may well have been a credit transaction, but it was not respondent that extended the credit. Petitioner obligated herself to pay in advance for the magazines she was to receive. The contract required petitioner to pay equal installments over a 30-month period, but respondent was obligated only to provide magazines over 60 months. In effect, petitioner paid every month for two months' worth of magazines. Until the last magazine had been delivered, petitioner would have paid for more magazines than she received. Thus, the contract called for the extension of credit by petitioner to respondent. For this reason, it was not an "extension of consumer credit" within the meaning of the Act. See 1 U.S.C. § 1602(h).
"[a]s long as there are no finance charges assessed, and at no point do the charges for the services rendered exceed the payments to the extent that it would require more than of the periodic installments to repay the obligation, then the plan would not fall within the provisions of Regulation Z. [Footnote 3/3]"
"if respondent advanced all or part of the subscription price to the publishers, respondent would be advancing 'credit' for the benefit of the customer."
"[i]n some cases in which a consumer pays in installments for a magazine subscription, credit may not have been extended to the consumer."
The controlling facts therefore are not in dispute, having been admitted by the cross-motions for summary judgment, and I can perceive of no way in which they can be construed as an extension of consumer credit by respondent to petitioner. A remand, unnecessarily burdening the parties and the court below, would serve no useful purpose. As a matter of law, respondent did not extend credit within the meaning of the Truth in Lending Act. I would affirm the judgment below.
Having this view of the case, I find it unnecessary to address the other two issues, namely: (i) whether the Federal Reserve Board exceeded its authority in adopting Regulation Z, which extends the coverage of the Act to transactions in which no finance charge can be identified; and (ii) whether the civil penalty provision of 15 U.S.C. § 1640(a) may validly be imposed in a case where, by concession of the parties on cross-motions for summary judgment, the transaction does not involve a finance charge.
"The term 'credit' means the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment."
FRB Opinion Letter No. 262 (1970); 4 CCH Consumer Credit Guide ¦ 30,516.
"any contract . . . of sale of property or services, either for present or future delivery, under which part or all of the price is payable subsequent to the making of such sale or contract; . . . any contract or arrangement for the hire, bailment, or leasing of property. . . ."
"The original S. 5 language was deleted because it was somewhat cumbersome and sweeping, and referred to various types of lease situations which might not be true extensions of credit."
S.Rep. No. 392, 90th Cong., 1st Sess., 12 (1967). In fact, a lease, like the "paid during service" magazine contracts offered by respondent, often imposes a noncancellable obligation on the lessee or consumer to pay in a series of installments. Yet the lessor does not extend credit, because the lessee ordinarily pays in advance for each period during which he enjoys the use of the property. Petitioner, by the same reasoning, was no more the recipient of credit than is the ordinary lessee or bailee. It would be inconsistent with this legislative history to read "extension of credit" to include every noncancellable installment obligation.
The District Court found that there was no issue as to any material fact in this case. The Court of Appeals did not disturb this finding. Whether one agrees with this finding, as does the majority, or disagrees for reasons stated by MR. JUSTICE DOUGLAS, the District Court's conclusion that the uncontroverted facts establish a consumer credit transaction is clearly a conclusion of law, and therefore is entitled to no presumption of correctness. Nor do respondent's dunning letters to petitioner describing her obligation as a credit account create any such presumption. Again, such statements only express a legal conclusion, and do not establish the existence of a consumer credit transaction within the meaning of the Act.
"A contract for the sale of goods may be an installment contract with respect to the goods sold as with respect to payments of the price. The nondelivery of an installment or delivery of a nonconforming installment when required by the contract is a breach for which an action can be maintained at once. There is no doubt also that the buyer is privileged to withhold payment of the price of the undelivered installment or of a nonconforming installment that is rightfully rejected. . . . [T]he buyer does not have to extend such credit [beyond that which was agreed upon] to the seller by making payments without receiving the agreed goods."
3A A. Corbin, Contracts § 691, p. 264 (1960). See Fla.Stat.Ann. §§ 672.2-612 672.2-711, 672.2-717 (1966).
Indeed, petitioner's complaint avers that the installment contract for the purchase and sale of the magazines is "the only instrument executed and existing between the parties," and that respondent thereby "extend[ed] Consumer Credit as defined in Regulation Z. . . ." There is no allegation as to extension of credit by the publishers or by any third person. Second Amended Complaint, App. 3, 4.

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