Source: http://www.ecases.us/case/ca2/c330039/mildred-ives-v-w-t-grant-company
Timestamp: 2020-01-29 14:17:43
Document Index: 314536739

Matched Legal Cases: ['§ 36', '§ 226', '§ 36', '§ 226', '§ 36', '§ 226', '§ 36', '§ 226', '§ 334', '§ 31', '§ 37', '§ 36', '§ 226']

Mildred Ives v. W. T. Grant Company, Second Circuit, US Court of Appeals Cases, Federal Courts, COURT CASE
Moreover, the undenied expertise of the Federal Reserve Board in matters concerning the federal law must be considered. We do not suggest that the Board has the power to expand or diminish the jurisdiction of the federal courts. Indeed, our view is exactly the opposite. But we do believe that the Board's interpretation of the federal statute, for which it has the responsibility for issuing regulations, is entitled to considerable deference. See Mourning v. Family Publications Service, Inc., 411 U.S. 356, 365-66, 93 S. Ct. 1652, 36 L. Ed. 2d 318 (1973); N. C. Freed Co. v. Board of Governors of the Federal Reserve System, 473 F.2d 1210, 1217 (2d Cir.), cert. denied, 414 U.S. 827, 94 S. Ct. 48, 38 L. Ed. 2d 61 (1973). In its amicus brief in this court the Board has pointed out the importance of private enforcement in the scheme of Truth in Lending.8 In fact, while the law as finally enacted provides for federal administrative enforcement, the Senate version of the Act, Senate bill S. 5, contained no such provision. The Senate Report noted:
Grants argues that in using the term "amount financed" it relied on a Board pamphlet entitled "What you ought to know about Truth in Lending.16 Therefore, Grants claims the benefit of section 1640(c) as a defense. See Welmaker v. W. T. Grant Co., supra, 365 F.Supp. at 540-45, where Grants prevailed on this very issue. But see Johnson v. Associates Finance, Inc., 369 F. Supp. 1121, 1123-24 (S.D.Ill.1974), and Scott v. Liberty Finance Co., 380 F. Supp. 475, 479 (D.Neb.1974), where other defendants' reliance on the same pamphlet was to no avail. The "unintentional violation" provision has been the subject of substantial litigation and two different analyses have emerged. Welmaker v. W. T. Grant Co., supra; Rolader v. Georgia Power Co., 4 CCH Consumer Credit Guide P 98,684 (N.D.Ga.1974); Thrift Funds of Baton Rouge, Inc. v. Jones, 274 So. 2d 150, 161 (Sup.Ct.La.), cert. denied, 414 U.S. 820, 94 S. Ct. 115, 38 L. Ed. 2d 53 (1973); Richardson v. Time Premium Co., CCH Consumer Credit Guide P 99,272 (1969-1973 Transfer Binder) (S.D.Fla.1971), have held that good faith efforts to comply with the legal requirements of the statute will excuse unintentional violations. Thus, Grants demands that it at least be granted a hearing on its good faith attempt to follow the law.
Plaintiffs dispute the bona fides of Grants' good faith efforts, noting that both the term "amount financed" and the term "unpaid balance" are required by Conn.Reg. § 36-395-7(c)(5), cf. 12 C.F.R. § 226.8(c)(5), and Conn.Reg. § 36-395-7(c)(7), cf. 12 C.F.R. § 226.8(c)(7). Plaintiffs also rely on another line of cases, all of which follow the reasoning of Ratner v. Chemical Bank New York Trust Co., supra, 329 F.Supp. at 281-82 & n. 17, in holding that the "unintentional violation" defense applies only to clerical errors of a sort that might occur in billing or in making mathematical calculations despite established "procedures reasonably adapted to avoid any such error." See Haynes v. Logan Furniture Mart, Inc., 503 F.2d 1161, 1166-67 (7th Cir. 1974); Palmer v. Wilson, 502 F.2d 860, 861 (9th Cir. 1974); Johnson v. Associates Finance, Inc., supra, 369 F.Supp. at 1123-24; Scott v. Liberty Finance Co., supra, 380 F.Supp. at 480; Owens v. Modern Loan Co., CCH Consumer Credit Guide P 99,099 (1969-1973 Transfer Binder) (W.D.Ky.1972); Douglas v. Beneficial Finance Co., 334 F. Supp. 1166, 1178 (D.Alaska 1971), rev'd on other grounds, 469 F.2d 453 (9th Cir. 1972); Buford v. American Finance Co., 333 F. Supp. 1243, 1247-48 (N.D.Ga.1971). Finally, plaintiffs assert that good faith in the past is irrelevant since the order appealed from only enjoined Grants from entering into any coupon contracts in violation of the Truth-in-Lending law.
While we do not have to reach the issue whether a single element finance charge has to be itemized in the case of the add-on contracts, plaintiff Joyce Chapman apparently signed a new account contract in which the insurance purchase was optional within the meaning of Conn.Regs. §§ 36-395-3(a)(5) and (6), cf. 12 C.F.R. § 226.4(a)(5) and (6), and therefore was not part of the finance charge. Thus in her case the finance charge was truly comprised of a single element. But, the question arises, what was that single element? The term "finance charge" is used to cover a multitude of elements: under Conn.Regs. § 36-395-3(a), cf. 12 C.F.R. § 226.4(a), it can include interest or time-price differentials; service or transaction charges; loan fees, finders fees or points; credit report charges; and insurance charges. There is no way a consumer can tell if the finance charge includes any or all of these elements unless it is spelled out in the contract, and in a way that does not cause confusion. Thus, defendant violated the Truth-in-Lending law by failing to identify the single element finance charge as only a time-price differential.27 See Johnson v. Associates Finance, Inc., supra, 369 F.Supp. at 1122; Meyers v. Clearview Dodge Sales, Inc., 384 F. Supp. 722, 726 (E.D.La.1974).
In other states, similar Grants' coupons have been declared to be money in the usury context. See Rathbun v. W. T. Grant Co., 219 N.W.2d 641, 649 (Minn.Sup.Ct.1974); W. T. Grant Co. v. Walsh, 241 A.2d 46, 48 (N.J.Dist.Ct.1968). See also State v. W. T. Grant Co., CCH Consumer Credit Guide PP 99,135, 99,146 (Wisc.Cir.Ct.1972) (1969-1973 Transfer Binder). Grants argues that the statutes in the first two cases, Minn.Stat. § 334.01 and N.J.Stat. § 31:1-1, are not limited solely to "money" as are C.G.S.A. §§ 37-4, 36-243. Thus, those decisions are not apposite in determining whether Grants' coupons are money or its equivalent for the "narrower" Connecticut statutes. We agree that the Minnesota and New Jersey statutes are broader than the Connecticut statutes. Nonetheless, in both Rathbun And Walsh the coupons were found to be the equivalent of money, not the equivalent of something else also covered by the statutes. And there is no reason why in this context the Connecticut statute should be limited in a way the New Jersey or Minnesota statutes are not. The Connecticut Supreme Court of Errors has stated in reference to the state's usury laws "it would be difficult to conceive of a more inclusive statute." Contino v. Turello, 101 Conn. 555, 126 A. 725, 727 (1924). Connecticut's usury statutes were enacted for the benefit of those debtor groups needing special protection. In re Feldman, 259 F. Supp. 218, 221 (D.Conn.1966); State v. Griffith, 83 Conn. 1, 74 A. 1068, 1069, aff'd, 218 U.S. 563, 31 S. Ct. 132, 54 L. Ed. 1151 (1910). It is thus in keeping with the intent of the Connecticut drafters to construe the statute to protect those low-income people most likely to become enmeshed in Grants' coupon credit plan.
Rather than merely examining the technicalities of issuing an injunction, as Grants urges, we will look at the realities of the Connecticut situation. Equity decrees are to be applied flexibly to fit the needs of each situation. Hecht Co. v. Bowles, 321 U.S. 321, 329, 64 S. Ct. 587, 88 L. Ed. 754 (1944). Here we have a major retailer, a substantial portion of whose sales in fiscal 1971 were made under the coupon purchase plan, using a program which we have determined to be illegal in Connecticut. It is hard to believe that most purchasers of Grants' coupon books will avail themselves of the remedies under Connecticut law,38 or even know of them or of this suit. A somewhat similar situation was presented in State v. J. C. Penney Co., 179 N.W.2d 641, 655-57 (Wis.Sup.Ct.1970). Defendant's credit plan had been determined to violate Wisconsin's usury law but the trial court refused to enjoin its operation. It apparently felt that the usury defense was a personal one. Id. at 655-56. The state supreme court ordered an injunction anyway, noting:
Grants' second objection to the injunction lies in its application to the class of coupon plan contract holders. While admitting that notice is not required in a Fed.R.Civ.P. 23(b)(2) "injunctive relief" class action, Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177 n. 14, 94 S. Ct. 2140, 40 L. Ed. 2d 732 (1974); Lynch v. Household Finance Corp., 360 F. Supp. 720, 722 n. 3 (D.Conn.1973) (three-judge court), Grants claims that the relief here was not truly "injunctive." Instead, it argues that ordering a defendant not to collect money from the class members is the same as ordering a defendant to pay damages. Thus, notice should be required here.
Rathbun v. W. T. Grant Co., 219 N.W.2d 641 (Minn.Sup.Ct.1974); Welmaker v. W. T. Grant Co., 365 F. Supp. 531 (N.D.Ga.1972); State v. W. T. Grant Co., CCH Consumer Credit Guide PP 99,135, 99,146 (Wisc.Cir.Ct.1972) (1969-1973 Transfer Binder); W. T. Grant Co. v. Walsh, 241 A.2d 46 (N.J.Dist.Ct.1968)
Cf. Givens v. W. T. Grant Co., 457 F.2d 612 (2d Cir.), vacated, 409 U.S. 56, 93 S. Ct. 451, 34 L. Ed. 2d 266, modified, 2 Cir., 472 F.2d 1039 (1972)
See also Ratner v. Chemical Bank New York Trust Co., 329 F. Supp. 270, 280-81 (S.D.N.Y.1971)
It is interesting to note that in a Tax Court case, W. T. Grant Co. v. Commissioner, 58 T.C. 290, 293 (1972), rev'd on other grounds, 483 F.2d 1115 (2d Cir. 1973), cert. denied, 416 U.S. 937, 94 S. Ct. 1938, 40 L. Ed. 2d 288 (1974), it was found that in New York, California, Delaware and Oregon, where state law does not permit title retention in coupon merchandise, Grants in prior years omitted the security interest provisions from its coupon contract
Describing a security interest when there is none may also violate Conn.Regs. § 36-395-5(b), cf. 12 C.F.R. § 226.6(c), because it would constitute additional but misleading information. See Kenney v. Landis Financial Group, Inc., 349 F. Supp. 939, 950-51 (N.D.Iowa 1972)
Citation Numbers： 522 F.2d 749
Sandra J. Douglas, for Herself and as Representative of a ... , 469 F.2d 453 ( 1972 )
N. C. Freed Company, Inc., and International Roofing Corp. ... , 473 F.2d 1210 ( 1973 )
W. T. Grant Company v. Commissioner of Internal Revenue , 483 F.2d 1115 ( 1973 )
Austin C. Palmer and Helen M. Palmer, Husband and Wife v. ... , 502 F.2d 860 ( 1974 )
Meyers v. Clearview Dodge Sales, Inc. , 384 F. Supp. 722 ( 1974 )
Welmaker v. WT Grant Company , 365 F. Supp. 531 ( 1973 )
Scott v. Liberty Finance Co. , 380 F. Supp. 475 ( 1974 )
Buford v. American Finance Company , 333 F. Supp. 1243 ( 1971 )
Thrift Funds of Baton Rouge, Inc. v. Jones , 274 So. 2d 150 ( 1973 )
Douglas v. Beneficial Finance Co. of Anchorage , 334 F. Supp. 1166 ( 1971 )
samuel-hinkle-and-joan-hinkle-v-rock-springs-national-bank-a-bank , 538 F.2d 295 ( 1976 )
Cheryl A. Meyers, Plaintiff-Appellee-Cross v. Clearview ... , 539 F.2d 511 ( 1976 )
rose-e-jones-v-community-loan-investment-corporation-of-fulton-county , 544 F.2d 1228 ( 1977 )
Melvin McGowan v. King, Incorporated , 569 F.2d 845 ( 1978 )
John Mason Kessler v. Associates Financial Services Company , 573 F.2d 577 ( 1977 )
United States Court of Appeals, Seventh Circuit , 583 F.2d 918 ( 1978 )
Olga Valencia and Miguel Gonzalez v. Anderson Bros. Ford ... , 617 F.2d 1278 ( 1980 )
Roosevelt Williams and Dorothy Williams v. Western Pacific ... , 643 F.2d 331 ( 1981 )
Larry and Lynda Hutchings v. Beneficial Finance Company of ... , 646 F.2d 389 ( 1981 )
Robert and Christine Lapetina v. Metro Ford Truck Sales, ... , 648 F.2d 283 ( 1981 )
Philip R. Bizier v. Globe Financial Services, Inc. , 654 F.2d 1 ( 1981 )