Source: http://openjurist.org/638/f2d/147
Timestamp: 2015-11-27 21:35:12
Document Index: 767531961

Matched Legal Cases: ['§ 1601', '§ 226', '§ 1631', '§ 226', '§ 1640', '§ 4', '§ 1638', '§ 226']

638 F2d 147 James v. Ford Motor Credit Company | OpenJurist
638 F. 2d 147 - James v. Ford Motor Credit Company HomeFederal Reporter, Second Series 638 F.2d.
638 F2d 147 James v. Ford Motor Credit Company 638 F.2d 147
Jody JAMES and Barbara James, Plaintiffs-Appellants,v.FORD MOTOR CREDIT COMPANY and Del Norte Motor Company,Defendants-Appellees.
No. 78-1806.
Argued May 6, 1980.Decided June 24, 1980.Rehearing Denied July 21, 1980.
Richard J. Rubin, Santa Fe, N. M. (with him on the briefs were Paul L. Biderman, Santa Fe, N. M., and Timothy Meehan, Albuquerque, N. M., attorneys for Northern New Mexico Legal Services, Inc. and Le Roy Cordova), for plaintiffs-appellants.
Lawrence W. Treece, Denver, Colo. (with him on the briefs were Holme, Roberts & Owen, Richard L. Schrepferman and Jeffrey A. Chase, Denver, Colo.), for defendants-appellees.
Before SETH, Chief Judge, and BREITENSTEIN and DOYLE, Circuit Judges.
This action, which arose in Colorado, seeks recovery of a statutory civil liability for failure to disclose in an automobile installment purchase contract the right of the seller to a returned and unearned insurance premium on a policy covering physical damage insurance. The claim is made under the Truth in Lending Act, TILA, 15 U.S.C. § 1601 et seq. as implemented by Federal Reserve Board Regulation Z, 12 C.F.R. § 226. The district court granted a motion to dismiss and the plaintiffs-buyers appeal. We affirm.
The plaintiffs-appellants, Jody and Barbara James, purchased a pick-up truck from defendant-appellee Del Norte Motor Company and executed an installment purchase contract which was assigned to Ford Motor Credit Corporation. The contract shows a cash price of $5395.00, down payments of cash and trade-in totalling $900.50, and a balance due of $4,494.50. To this are added other charges consisting of $359.84 for insurance and $5.50 registration fee. Also added is a finance charge of $1,238.92, at an annual interest rate of 15.40%. The balance due is payable in monthly installments of $169.41.
Paragraph 13 of the signed face page of the contract reads:
"Security Interest: Seller shall have a security interest under the Uniform Commercial Code in the Property (described above) and to the proceeds thereof to secure the payment in cash of the Total of Payments and all other amounts due or to become due thereunder."
Paragraph 15 on the face page provides that the terms and conditions on the reverse side are incorporated by reference. Paragraph 18 on the reverse side relates to insurance and among other things provides:
"Buyer hereby assigns to Seller any monies payable under such insurance, by whomever obtained, including returned or unearned premiums, and Seller hereby is authorized on behalf of both Buyer and Seller to receive or collect same, * * *. The proceeds from such insurance, by whomever obtained, shall be applied toward replacement of the Property or payment of the indebtedness hereunder in the sole discretion of the Seller."
TILA requires, 15 U.S.C. § 1631(a), that a creditor "clearly and conspicuously, in accordance with the regulations of the Board" disclose the information mandated by the Act. Reg. Z, 12 C.F.R. § 226.8(a) provides that all the disclosures be made on either:
"(1) The note or other instrument evidencing the obligation on the same side of the page and above the place for the customer's signature; or
(2) One side of a separate statement which identifies the transaction."
Failure to disclose properly the required information subjects the offender to a civil liability of not more than $1,000.00 plus reasonable attorneys' fees. 15 U.S.C. § 1640(a). The purchasers sue for the statutory liability and attorneys' fees. The trial court held that the assignment of the returned and unearned portion of the insurance premium was not a security interest under the Colorado version of the Uniform Commercial Code. See Colo.Rev.Stat. (1973) § 4-9-102.
TILA requires, 15 U.S.C. § 1638(a)(10), the disclosure of "(a) description of any security interest held or to be retained or acquired by the creditor in connection with the extension of credit, and a clear identification of the property to which the security interest relates." The act does not define "security" or "security interest." Reg. Z provides, 12 C.F.R. § 226.2(gg):
" 'Security interest' and 'security' means any interest in property which secures payment or performance of an obligation. The terms include, but are not limited to, security interests under the Uniform Commercial Code, real property mortgages, deeds of trust and (various liens and a lease interest securing performance of an obligation)."
The reference to the Uniform Commercial Code specifically declares that it is not a limitation. Although the interplay of federal and state law presents problems, the right to the TILA civil liability for nondisclosure rests on federal law. TILA is remedial legislation, designed to prevent predatory creditor practices,