Opinion ID: 726119
Heading Depth: 3
Heading Rank: 3

Heading: Time-Price Doctrine

Text: 56 RAC contends that the plaintiff class is not entitled to judgment as a matter of law because their rental purchase contracts fall within the time-price doctrine. This doctrine was based on the central premise that there can be no usury without a loan or forbearance of money and that the sale of property in a time-price transaction involves no loan. Dunn v. Midland Loan Finance Corporation, 206 Minn. 550, 289 N.W. 411, 413 (1939); St. Paul Bank for Cooperatives v. Ohman, 402 N.W.2d 235, 238 (Minn.App.1987). The time-price doctrine was judicially created and is not an exception to usury law, but recognizes transactions which are outside the scope of usury law. St. Paul Bank v. Ohman, 402 N.W.2d at 238. 57 RAC's argument is foreclosed by the rulings of the Minnesota Supreme Court. In Fogie v. Rent-A-Center, Inc., the Court ruled in no uncertain terms that the usury statute, Minn.Stat. § 334.01 applies to rent-to-own contracts. 518 N.W.2d at 544. Accordingly, RAC cannot now argue that its rental purchase agreements are transactions which fall outside the scope of the usury law. Furthermore, the loan or forbearance element of usury, missing in time-price transactions, is satisfied in rental purchase agreements by operation of statute. Miller v. Colortyme, Inc., 518 N.W.2d at 549. In addition, the Minnesota Supreme Court has been unwilling to expand the time-price doctrine unless justified by economic needs and social attitudes making the protections of the usury statute unnecessary. Rathbun v. W.T. Grant Company, 300 Minn. 223, 219 N.W.2d 641, 647 (1974). We find no such justification here. 58 We are bound to apply state law as we are able to discern it from the rulings of the state's courts. Boner v. Eminence R-1 School Dist. 55 F.3d 1339, 1341 (8th Cir.1995), quoting Jackson v. Anchor Packing Co., 994 F.2d 1295, 1310 (8th Cir.1993). Under the applicable state case law, it is clear that RAC's rental purchase contracts do not fall within the time-price doctrine and are subject to the usury statute.