Legal Document

452 U.S. 205 101 Supreme Court Reporter 2266 68 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 783 ANDERSON BROS. FORD and Ford Motor Credit Company, Petitioners,v.Olga VALENCIA Miguel Gonzalez. Number 80-84. Argued March 23, 1981. Decided June 8, Syllabus Section 128(a)(10) of the Truth in Lending Act (TILA) provides that connection with closed-end consumer credit transactions, creditor must disclose "any security interest held or to be retained acquired by extension credit, a clear identification property which relates." Regulation Z Federal Reserve Board (Board), promulgated pursuant Board's authority under TILA, essentially repeats statute's disclosure requirement, defines "security interest" "security" as secures payment performance an obligation," sets forth nonexhaustive list interests included terms. In 1977, respondents purchased automobile from petitioner dealer retail installment contract was assigned company A provision on face disclosed seller but did not refer back whereby buyers, who were required purchase physical damage insurance protecting both buyers seller, any unearned premiums might returned if policy canceled. Before making payments policy, filed suit federal court alleging violated TILA for failure its had premiums, seeking statutory damages, attorney's fees, costs. The District granted summary judgment respondents, holding assignment created within meaning § 128(a)(10), Appeals affirmed. Held: Such does create TILA. Pp. 211-223. (a) proposed official staff interpretation, has expressly stated require right receive proceeds policy. Also revised Z, issued Simplification Reform 1980, including "incidental interests" such premium rebates. This definition purport change original respect whether incidental disclosed, thus is persuasive should unrevised regulation. Neither nor 1980 term interest," legislative history fully supports regulation interpretation 211-219. (b) Although neither Act's construction conclusively establishes these words implementing this legislation, well own regulation, accepted courts since they are repugnant Cf. versus Milhollin, 444 555, 100 790, 63 22. position supported Act, permissible used 219-223. 617 Reporter, 2nd 1278, reversed remanded. Aaron Judge Kramer, Chicago, Ill., petitioners. Alan Atlantic Alop, Countryside, respondents. Justice WHITE delivered opinion Court. 1 issue presented case certain have been (TILA), 82 Statutes-at-Large 146, amended, 15 Code KF62 1601 et seq.1 2 * September, Anderson Bros. Ford. They signed dealer's standard contract. value automobile.2 buyer maintain automobile, "protecting Buyer Seller," further stated: 3 "Buyer hereby assigns Seller monies payable insurance, whomever obtained, authorized behalf collect same, endorse checks drafts thereof, cancel release settle claim thereto. shall applied toward replacement Property indebtedness hereunder sole discretion Seller." If canceled reason prior expiration would permit apply remaining debt.3 4 October, before subsequently brought action court,4 alleging, inter alia, sales because it premiums.5 based pertinent part: 5 "In each sale open end plan, following items applicable: 6 7 "A description 155, 1638(a)(10). 8 requirement repeated 226.8(b)(5) 105 TILA.6 Under disclose: 9 type relates . ." 12 Regulations (1980). 10 Respondents sought costs.7 11 creates 128(a)(10). App. 33-35. Seventh Circuit 1278 Recognizing define relied contained Z: "Security interest' 'security' mean obligation. terms include, limited to, Uniform Commercial Code, real mortgages, deeds trust, other consensual confessed liens recorded, mechanic's, materialmen's, artisan's, similar liens, vendor's personal property, lien arising operation law, lease when secure obligation." 226.2(gg) 13 concluded "interest secure[d] obligation" accordingly affirmed below.8 14 We certiorari TILA.9 449 981, 395, 66 242 reverse. II Appeals' shared three four Courts ruled question,10 view, plain language statute requires result reached below, recently challenged several fronts. First, part amendments see infra, at 218-219, Tenth so creditor's need either Z. James Co., 638 147 16 Second, September Board, agency published comment Official Staff Interpretation FC-0173, regarding disclosures transactions. 45 Fed.Reg. 63295. recognized contrary clearly expressed policy: 17 "The believes [§ 226.8(b)(5)] named loss payee beneficiary meant provide useful information consumers enhance shopping. Consumers do know risk default. inform subject time decision being made. believe comparison technical reading cover our covered 226.8(b)(5)." Ibid. 18 concluded, "better serves purpose convey meaningful way can shopping credit." 19 aware after we case, deferred final FC-0173; cannot agree staff's views ruling wholly without significance. period expired October 24, proposal withdrawn revised, appears public statement only "inappropriate" otherwise light intervening grant certiorari. Id., 84074. 20 not, however, rest FC-0173 scope requirement. On 31, President approved (1980 Act) Title VI Depository Institutions Deregulation Monetary Control 1980. 94 168. will effective April 1, 1982, amend many respects leave substantial portions unchanged. It make transaction: 21 "Where secured, taken (A) transaction, (B) transaction identified item type." 614(a)(9), 179. 22 Like interest." 23 all regulations least one year date may comply Act. 625, 185-186. 1981, compliance optional until 1982. 46 20848 (1981). 226.18(m) transactions 24 "[t]he fact acquire 20903. 25 226.2(a)(25) follows: 26 " 'Security means obligation state law. include proceeds, accessions, additions, fixtures, (whether beneficiary), rebates, after-acquired property. For purposes §§ 226.6 226.18, arises solely However, rescission 226.15 226.23, arise law." 20894. 27 new changes some respects,11 there no indication changed premiums. When explained distinguishes disclosed: 28 "[T]here difference between essence transaction. example, financed, primary interest, automobile. hand, financing just like money interest."12 29 Since reasoning applies understand disclosed.13 construes appears, undefined, Act; also appearing same seems us As it, versions this. 30 prescribe regulations, "may contain classifications, differentiations, provisions, adjustments exceptions class necessary proper" carry out statute.14 authority, implication invalidate concerning interests, reiterates view provision.15 31 Report Senate Committee Banking, Housing, Urban Affairs explained: 32 "When section purchased. intends listing securing related loan secured (not loan) indicating rights under, waived accord accessories, proceeds." S.Rep.No.96-368, Page (1979), U.S.Code Cong. & Admin.News 1979, 236, 266.16 33 Furthermore, floor member responsible observed: 34 "Many cases resulted complex requirements An illustrative Gennuso Bank Trust 455 F.Supp. 461 (W.D.Pa.1976); 566 437 (3rd Cir. 1977), 'security interest.' presently written law result, S. 108 prevent ludicrous interpretations requiring merely positive simply general interests." 125 Cong.Rec. 9160 (1979). 35 With exception, here, Chairman, Senator Proxmire, sponsor agreed remarks. 9159, 9972. indications history, unlikely provisions FC-0173. III 36 Of course, But plainly (1980), absent obvious repugnance statute, legislation courts, discern 37 promote "informed use credit" consumers. 1601. See Ford- supra, 559, 568, 794-798, 22; Mourning Family Publications Service, Inc., 411 356, 363-368, 93 1652, 1657-1660, 218 (1973). Congress assure "a able compare more readily various available him." 38 enacted May 1968. originally drafted, House truth-in-lending bills focused primarily cost credit.17 bill January 1968, while consideration House, Representative Cahill, reported bill, offered designed "to improve mortgage transactions." 114 1611 (1968). One amendments, adopted debate, transactions: 39 "[A] 1610.18 40 became 41 Cahill principally homeowners victimized "vicious secondary schemes." 1611. "in [a homeowner entering into transaction] never informed his home made mortgage." amendment he acquiring borrower's residence. Insofar finally adopted.19 Despite focus second problem. limit creditor." uncontested purchasing retains 42 Unaided administrative could easily conclude, characterized disclosed. But, defining commentary evident consider hold TILA.20 guidance drafted deal interests; added Congress' particular concern about warn acquisition interest—a home. measurably TILA's aiding shop construed consistent underlying strikes balance "meaningful disclosure" "informational overload."21 emphasized task striking proper "an empirical process entails investigation psychology presupposes broad experience practices." Administrative agencies suited than [the] engage process." U.S., 568-569, S.Ct., 798-799. 43 Accordingly, reversed, remanded proceedings opinion. 44 So ordered. STEWART, whom THE CHIEF JUSTICE, BRENNAN, MARSHALL join, dissenting. correctly states "that below." Ante, 211-212. Yet nowhere attempts direct answer respondents' contention. elementary principle starting point construing itself, ignores equally applicable it. Instead, contrives discover intent dubious materials subsequent implement inapplicable unofficial which, express terms, mere intended legal effect.1 47 my opinion, here unequivocally Appeals, itself dispose case. Wiltberger, Wheat. 76, 95-96, L.Ed. (Marshall, C. J.). even justified leaping over search conflicting congressional intent, relies withstand examination. settled principles construction—damage extend issues far greater moment very narrow question here. 48 49 "[a] 1638(a)(10) (emphasis added).2 50 word "any" exactly what says, company's consumer's buy grants "applied unaided common sense identify seller's clause quickly unmistakably so: 51 (1980) added). 52 Ford's meets definition. annual $215, instances considerably higher. amount depend timing cancellation triggers clause. except rare repossession car precisely coincides term, recover refund sort, occur begins, represents equal itself.3 53 "secure[s] refunded "replacement hereunder." Even correct asserting continue coverage during life loan, ante, 208, n. 3, still buyer's coverage.4 declare contract.5 54 Virtually ignoring Z—the pronouncement effectively settles favor respondents—the instead entitled weight whatsoever. released Proposed 63295, asking comments statute. 55 "(2) letter proposal, rather form, interested persons invited submit relevant comment. 56 "(3) After considered, remain unchanged." 57 went tell creditors November mailing "[t]his upon taken." notes, action. December 16, indefinitely.6 Court's reliance therefore directly contravenes intention itself—that effect.7 58 Whatever significance present approach threatens important interpretation. proposals invoke evaluate assimilate formulating regulations. infer ascribed significant decisive litigation involving governing agency, take extremely unfortunate courses. decide fear binding future rush ill-conceived hope affecting decisions conduct regulated persons, evading risks responsibilities submitting rulemaking procedures. Third, frame interrogative, declarative, thereby denying benefit interpret precise hypothetical rule. FC-1073 undermine procedures.8 59 continues attack established invoking help years earlier. considers sections remarkable ipse dixit, pronounces definition, excludes reveals "no premiums." 215. is, utterly inconsistent earlier then mistakenly declares explanation Register 1981 "applies Act." 216.9 60 To compound error, goes examine There suggestion retroactively, be. Rather, "fully regulation." nonretroactive N Dec. Immigration Nationality Decisions how 61 cited Court, proves perfectly reasonable—and irrelevant proposition properly excluding interests. nothing suggests construe old "If indicates anything, thought changing Plesha, 352 202, 77 275, 279, 254. Doubtless deficient, why wrote 62 cites Garn purportedly attributing language. 218-219. postenactment pronouncements individual legislators purporting little, any, judicial E. g., Quern Mandley, 436 725, 736, 10, 98 2068, 2075, 658. And according single legislator particularly unjustified legislator, Member enacted. Mine Workers, 330 258, 281-282, 67 677, 690, 91 884.10 gratuitous overload" consumer. 223. speak unambiguously contrary, independent economics make.11 64 respectfully dissent. Consumer Protection 146. Interest: (described above) thereof cash Total Payments amounts due become "Property" defined contend quoted above, replace debt. Petitioners assert "[u]nder [insurance] debt." Brief 4. coverage," citing petitioners' brief appeal. 1281 (CA7 1980). resolve us. authorizes suits against their assignees. 1614 1640. provides: "Each conspicuously, accordance person extended, Defendant subchapter." 1631(a). provide: "All [required] together either: "(1) note instrument evidencing side page above place customer's signature; separate identifies transaction." 226.8(a) challenge validity applicability set 1604, subchapter. These effectuate subchapter, circumvention evasion facilitate therewith." files twice finance charge, minimum recovery $100 maximum $1,000, actual damages sustained disclose. 1640(a). suffered alleged violation. Two judges concurring opinions, joining panel expressing prominent "incidental" increasing complexity furthering Cudahy opinion: "I read [the panel] seriously suggesting reach furthers Among meritorious costs alerting customers possibility satisfy incurred. "Here esoteric (protecting property), debt event insurance. normal circumstances entirely principal "To (which here) add virtually inconsequential information—lengthening, complicating trivializing apparent benefit." F.2d, 1293. contention prospective only. required, address issue. Murphy 629 556 (CA8 1980); Edmondson Allen-Russell Ford, 577 291 (CA5 1978); (CA3 1977). 20853 analysis demonstrates conflict FRB Public Information Letter 377, 377 informal 1970. requested whose lifetime accidental death dismemberment policies loans. designated owner unpaid customer defaulted loan. responded: "Under circumstances, think appropriate ownership Commerce Clearing [1969-1974 Transfer Binder] Cons.Cred.Guide ¶ 30,555. differs "was subordinate loan." Reply 9, 12. petitioners situation described distinguishable referred 1263, responded inquiry identified. pointed fundamental matter [is] exists all" suggested determine [1974-1977 31,736. "[A]ssuming determination State 20894 clarified "certain questions" questions adequate 80731, 80733 accompanying (1981), noted narrower excluded number considered Some observe "there Only latter indicate altered involved 1604. renumbered 1604(a) 170. Because exclusion worked change, decided Bradley Richmond School 416 696, 711, 2006, 2016, 476 (1974); Thorpe Housing Authority, 393 268, 281-283, 89 518, 525-526, 474 (1969); Schooner Peggy, Cranch 103, 110, (1801). sensible applying different rule acquired. 1967 "by uniform manner, additional mandatory charges imposed incident [to] computation percentage rate, American given needs best H.R.Rep.No.1040, 90th Cong., 1st Sess., 13; S.Rep.No.392, (virtually identical language). 203(b) H.R.11601, open-end plan. later 128 1638. He 203(c) extensions 129 1639. drawing Senate's attention Cahill's "Congressman CAHILL, New Jersey, tightens up racket. 3-day waiting completed. homeowner's increases those mortgages improvement contractor." 5024 presenting Conference Sullivan conferees succeeded retaining protections amendments. She series strike racketeers trick homeowners, poor, signing contracts exorbitant rates, turn family residences. Any involves lien; residence—other purchase-money first home—carries right." 14388. Similarly, Senate, providing "additional safeguards area" "describe property—such mortgage—arising 14488. frequently thing yet spirit, makers." Holy Trinity Church States, 143 457, 459, 226 (1892). See, e. Steelworkers Weber, 443 193, 201, 99 2721, 2726, 480 (1979); Foundation, Incorporated Forman, 421 837, 849, 95 2051, 2059, 621 (1975). aid words, [or regulation], available, certainly 'rule law' forbids use, however appear 'superficial examination.' Trucking Assns., 310 534, 543-544, 1059, 1063, 84 1345 (1940) (footnote omitted). stressed seeks terms: "Meaningful disclosure. describes 'competing considerations complete avoid [informational overload].' 798, quoting S.Rep.No.96-73, (1979) (accompanying Act). indirectly concedes "[u]naided disclosed." 222. rely resolves possible uncertainty language, explains necessary. duplicates minor buyer. allow attach, full procedure, perhaps hundreds dollars spent longer possesses. want giving right, advance goal event, where covers assess interest. quotes, apparently approval, laments "virtually information" trivializes "for 211, 8. he, unlike today's appraisal obscure unequivocal comprehensive version begins insufficient demonstrate falls two enumerated examples Clauses assigning qualify "consensual recorded," Code," Ill.Rev.Stat., ch. 26, &Par; 1-201(37), 9-102(2), 9-306, 9-312 find support restrictive introduced combat second-mortgage schemes fallen prey, sponsors Houses reinforced view. statements explanations specific generalized declarations preclude situations Indeed, agree, recognizing problem estate possibly explain Conceding, must, took offers unpersuasive reasons nevertheless interpreting 213. notes ended That hardly justifies treating final, received, speculate hand. inappropriate purported ground deferral done assume unnecessary impending so, curious proposal. effect finds proof unusual procedure issuing Normally, requests regulatory provision. request received; otherwise, stands. 567, FC-1073, immediately supra. "absent expression, becomes implicit character scheme." 560, 793 found expression acceleration agreement, defer Here, contrast, definitional combine Moreover, inferred preference resolving interpretive "uniform decision." 798 "technical premiums," concludes "it 212-213 What calls reading" 1638(a)(10), speaks exclude higher indeed, conflicts Board. 30,555, told inquiring debtor default money, Contrary suggestion, 215-216, 12, notion instance, opposed extended enable states: "This [of interest'] current much narrower. lists (1981) Garn's merits little weight. inserted Congressional Record, Senate. reflected Committee, member. proffer practical necessity disclosure, questionable. Disclosing considerable credit-shopping creating overload," replacing convoluted simple "the gives vehicle charges," response nationwide issue, now includes contracts.

Classification Label: 7