Opinion ID: 1736596
Heading Depth: 1
Heading Rank: 2

Heading: The Mini-Code

Text: Chapter 19 of Title 5 of the Code, commonly referred to as the Mini-Code, applies to substantially all consumer credit transactions in Alabama. Ala.Code 1975, § 5-19-1.1(1). Credit transaction is defined as [a] loan or credit sale made by a creditor. § 5-19-1(9). The Code defines [c]reditor as [a] person who regularly extends or arranges for the extension of credit for which the payment of a finance charge is required, whether in connection with loans, sales of property or services, or otherwise. § 5-19-1(3). Watkins argues that a genuine issue of material fact exists and, therefore, that the trial court improperly entered the summary judgment in favor of the System. Specifically, he contends that when the court entered the summary judgment there was a question of fact as to whether the System had required him to obtain credit-life insurance in violation of § 5-19-20(a) of the Mini-Code. The System argues that the Mini-Code does not apply to the transaction with Watkins because, it says, the transaction was not a credit transaction as defined by the statute. The System contends that it did not lend Watkins money; instead, it claims, it merely advanced Watkins his retirement benefits. However, we conclude that because the transaction at issue in this case entailed the System's giving Watkins money and Watkins's repaying that amount with 6% interest, the transaction was indeed a loan. The Court of Civil Appeals has defined loan as a sum of money lent at interest. Edwards v. Alabama Farm Bureau Mut. Cas. Ins. Co., 509 So.2d 232, 235 (Ala.Civ.App.1986) (quoting American Heritage Dictionary of the English Language 413 (1981)). Black's Law Dictionary 947 (7th ed.1999) defines loan as A thing lent for the borrower's temporary use; esp., a sum of money lent at interest. Additional support for this conclusion includes the enabling legislation authorizing the System to extend credit to eligible employees; that legislation characterizes this credit-extension as a participant loan. 1973 Ala. Acts, Act No. 1272, Art. VII (Reg.Session). The System also argues that the Mini-Code does not apply to the transaction with Watkins because, it argues, it is not a creditor because, it says, it does not regularly extend credit to the City's employees. (See § 5-19-1(3), quoted above.) The record indicates that the System makes over 100 loans each year to a select and limited group of persons (qualified current and retired employees of the City of Birmingham). [4] Therefore, despite the fact that the System makes not many more than 100 loans a year, we must conclude, given the small group of persons eligible to obtain such loans, that the System's pattern of making loans is a regular practice. Thus, we conclude that the Mini-Code applies to Watkins's transaction with the System.