Opinion ID: 2374701
Heading Depth: 1
Heading Rank: 2

Heading: Consumer Credit Sale

Text: The Superintendent charges that the Hawkes rent-to-own agreement violates Code provisions limiting the amount of finance charge that a seller may contract for and receive in a consumer credit sale. [5] The pertinent provisions of the Code defining consumer credit sale are as follows: `Consumer credit sale': A. Except as provided in paragraph B [not here relevant], a `consumer credit sale' is a sale of goods ... in which: (i) credit is granted ... by a seller who regularly engages as a seller in credit transactions of the same kind; . . . . (iv) either the debt is payable in installments or a finance charge is made; and (v) with respect to a sale of goods ... the amount financed does not exceed $25,000. 9-A M.R.S.A. § 1-301(11) (1980 & Supp. 1982). Credit is defined in Code subsection 1-301(15) as follows: `Credit' means the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment. As pertinent to this case, finance charge is defined in subsection 1-301(19) to mean the sum of all charges payable... by the consumer and imposed ... by the creditor as an incident to or as a condition of the extension of credit .... Finally, sale of goods is defined in subsection 1-301(33) as follows: `Sale of goods' includes any agreement in the form of a bailment or lease of goods if the bailee or lessee agrees to pay as compensation for use a sum substantially equivalent to or in excess of the aggregate value of the goods involved and it is agreed that the bailee or lessee will become, or for no other or a nominal consideration has the option to become, the owner of the goods upon full compliance with his obligations under the agreement. The narrow issue is whether the Hawkes rental agreement constitutes a consumer credit sale within the meaning of subsection 1-301(11) of the Code. If so, it violates the Code's usury provisions; if not, those provisions are inapplicable. Most of the arguments of counsel have addressed whether the Hawkes agreement constitutes a sale of goods within the meaning of subsection 33 of section 1-301. If that were the crucial question in this case, we might be able to affirm the decision of the Superior Court. However, other definitions require reversal. Subsection 11 requires that a consumer credit sale be one in which the seller grants credit for the debt, and the definition of credit in subsection 15 confirms the inference from subsection 11 that a debtor-creditor relationship between consumer and seller must be created by the sale. Hawkes extends no credit to its rental customers. Without doing violence to the statutory language, we cannot hold that the Hawkes rental lessees are debtors of Hawkes in the sense of the Code or that Hawkes has extended them credit. It is apparent that a Hawkes rent-to-own customer pays dearly for the privilege of renting his television set. In that respect his condition resembles the plight of a victim of usury. Nevertheless, the Code definition of consumer credit sale cannot possibly bear the meaning the Superintendent has assigned to it to bring the Hawkes rent-to-own agreements within the reach of the Code. It is true that the Code must be liberally construed and applied to promote its underlying purposes and policies, 9-A M.R.S.A. §§ 1-102(1). Yet, if the Hawkes agreements cannot come within the scope of the definitional language by any rational interpretation, the fact that the Code must be given a liberal construction does not avail. If the definitional provisions of the Code even left some doubt about the applicability of the Code, the Superintendent's interpretation would be entitled to due deference. Here section 1-301 leaves no room for doubt. This was not a credit sale under the Code. The mandate for liberal construction does not give the Superintendent or the courts authority to enlarge the coverage of the statute. The entry is: Judgment reversed. Motion to dissolve the injunction granted. All concurring.