Legal Document

411 U.S. 356 93 Supreme Court Reporter 1652 36 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 318 Leila MOURNING, Petitioner,v.FAMILY PUBLICATIONS SERVICE, INC. Number 71—829. Argued Nov. 9, 1972. Decided April 24, 1973. Syllabus Petitioner, who contracted to purchase magazine subscriptions from respondent, brought this action in District Court, alleging that respondent had failed comply with the disclosure provisions of Truth Lending Act, as implemented by Federal Reserve Board 'Regulation Z.' The found Regulation Z, extended credit petitioner, payable more than four installments, without making disclosures required Act. Appeals reversed, holding exceeded its statutory authority issuing Z since regulation some transactions which a finance charge not been made, and, alternatively, violated due process creating conclusive presumption payments made installments included charge. Held: 1. 'Four Installment Rule' is valid exercise Board's rulemaking under Pp. 363—375. (a) Congress, was well aware merchants could evade requirements Act concealing charges, gave broad power prevent such evasion, power, issued challenged rule deal practice charges cash price merchandise sold. 363—369. (b) No conflict arises fact mentions only regard imposed while sometimes apply where no exists, Congress did attempt specify all types situations regulations might apply, and deterrent effect clearly implements objectives 372—373. (c) promulgate general circumvention, even if embraces on their face reach. Village Euclid versus Ambler Realty Co., 272 365, 47 114, 71 L.Ed. 303. 373—374. (d) Existence penalty does require narrow construction Act's nonpenalty provisions. FCC American Broadcasting 347 284, 74 593, 98 699, distinguished. 374—375. 2. Imposition, pursuant § 130 minimum $100 cases nonexistent or undetermined, but has permissible sanction. Pacific KF135 P2 376. 3. In imposing requirement members defined class discourage evasion substantial portion class, create violative Fifth Amendment. 376—377. 5 Cir., 449 Reporter, 2nd 235, reversed remanded. Eric Schnapper, New York City, for petitioner. Atlantic Raymond Randolph, Jr., Washington, D.C., States, amicus curiae, pro hac vice, special leave Court. Robert S. Rifkind, respondent. Mr. Chief Justice BURGER delivered opinion 1 We granted writ certiorari case resolve whether 105 Act1 promulgating commonly referred Rule.'2 2 Respondent Delaware corporation solicits several well-known periodicals. 1969, one respondent's door-to-door salesmen called 73-year-old widow residing Florida, sold her five-year subscription magazines. Petitioner agreed pay $3.95 immediately remit similar amount monthly 30 months. contract form she signed contained clause stating be canceled an acceleration provision many installment undertakings, providing any default would render entire balance due. recite total remained unpaid after initial remittance, reference service charges. debt assumed petitioner $122.45; payment $118.50. 3 payment, began receive magazines contracted, then defaulted. declared $118.50 threatened legal action. suit She sought recovery reimbursement costs litigation, including reasonable attorney's fees. 4 support claim, submitted series 'dunning' letters received One letter, dated December 16, stated: 'After terms our clear you, we went ahead good faith your entered periods you take. is: Not subject cancellation acceptance verification. 6 'Knowing, therefore, obligations have incurred name, feel confident will continue make convenient regularly promptly.'3 7 A second week later agent, declared: 8 account three months delinquent it my attention. & N Dec. Immigration Nationality Decisions should realize are receiving paid for. Had dealt directly publishers yourself, them advance 9 'Again, let me remind ordered these obligation repay us. This account, must repaid basis, much same purchased other type budget plan. (Emphasis supplied; underlined words emphasized original letter).'4 10 admitted sending each above petitioner.5 addition, affidavit describing nature contracts offered clients. stated customer during first half term.6 Thus, according affidavit, at times course contract, purchaser complied he received. not, however, submit court contesting facts letters. On record, both parties moved summary judgment, declaring explicitly factual question undecided. 11 Section 121 requires extend credit, attendant charges,7 disclose certain information 'to person whom consumer upon may . .'8 Among relevant facts, merchant must, applicable, list sold, rate charges.9 Failure renders seller liable twice charge, event less $1,000.10 creditor also assessed fees11 circumstances here, criminal charges.12 Act13 provides: 12 'The (Federal Reserve) shall prescribe carry out purposes (the Act). These contain classifications, differentiations, provisions, provide adjustments exceptions transactions, judgment necessary proper effectuate Act), circumvention thereof, facilitate compliance therewith.' 13 Accordingly, promulgated defines extends outlined 128.14 provides whenever 'for either agreement, installments.'15 14 Relying governing petitioner,16 agreement 15 relied. Act17 imposed. As alternative ground decision, held created Schlesinger State Wisconsin, 270 230, 46 260, 70 557 (1926), Heiner Donnan, 285 312, 52 358, 76 772 (1932), concluded irrebuttable Due Process Clause 16 * Passage 1968 culminated years congressional study debate propriety usefulness mandatory those consumers market. By time passage, become abundantly use expanding extremely rapid rate. From end World War II through 1967, outstanding increased $5.6 billion $95.9 billion, growth 1/2 great economy.18 Yet, hearings revealed, remarkably ignorant deferring payment.19 Because divergent, fraudulent, practices were informed them, prevented shopping best available times, prompted assume liabilities they meet.20 Joseph Barr, Under Secretary Treasury, noted testifying before Senate subcommittee blind economic activity inconsistent efficient functioning free system ours, whose ability desired material lowest cost dependent asserted preferences choices consumers.21 17 designed remedy problems developed. House Committee Banking Currency reported, proposed legislation: 18 '(B)y requiring creditors uniform manner, additional incident computation applicable percentage rate, given needs compare decision credit.'22 19 purpose 102 legislation enacted: 20 finds stabilization enhanced competition among various financial institutions firms engaged extension strengthened credit. results awareness thereof consumers. It subchapter assure meaningful so able readily him avoid uninformed credit.'23 21 reflect difficulty task accomplish. Whatever passed myriad forms occurred, devised future.24 To accomplish objective, determined lay structure broadly entrust agency experience resources monitor operation. delegated effective. language employed evinces characterize fall step outside whatever boundary attempted establish. indicates desire insure adequate evasion. addition granting normally administrative agencies 'carry purposes' specifically provided, earlier, define classifications Act.25 See supra, 361—362. thereby empowered reasonably fulfilled, matter what adroit unscrupulous extending 22 means circumventing 'burying' goods Thus claimed imposed, merely expense doing business, recouped part charged transaction.26 aware, extensive studies, possibility devices replete suggestions manipulation futile gesture contract.27 Opponents bill contended reporting actually encourage formerly segregated do so. They predicted thus reduce consumer, result contrary intended.28 Proponents enhance consumer's choice hidden. response claim incorporated goods, Senator Douglas, 23 'I like call attention, Senator, solely basis annual interest there statement delivery property acquired. Both things stated, can factors, alone; tries low bury high price, shop just charges.'29 24 against legislative background enforcement September, 1968, aid advisory board composed representatives diverse retail, lending, groups, compiled released draft regulations.30 Comments criticisms interested invited. After 1,800 responses considered Board, reviewed published Register.31 25 Four Rule amended prior final adoption.32 objective fulfilling prophecy opponents forecast. Judge L. Robertson, vice chairman Governors, letter year later: 26 felt imperative include involving instalments burying already exists cases, encouraged Lending. Obviously Congressional intent.'33 27 Furthermore, sales impossible determine what, any, recompensed least provided enable choice.34 28 standard applied determining established cases. Where empowering statute states simply 'make rules Act,'35 validity thereunder sustained long 'reasonably related enabling legislation.' Thorpe Housing Authority City Durham, 393 268, 280—281, 89 518, 525, 474 (1969). Trucking Assns. 344 298, 73 307, 97 337 (1953). 29 construed stressed agency's counteract attempts statute. Gemsco, Incorporated Walling, 324 244, 65 605, 921 (1945), asked Administrator Wage Hour Division Department Labor Fair Standards 193836 prohibit companies allowing employees industrial homework. approve orders raise wage 40 cents hour. While mention homework, 8(f) Administrator's 'shall conditions orders, safeguard rates therein.'37 31 hearings, homework furnished 'a ready means' evading his prohibited thereto employing production. noting restrictive interpretation rendered inoperable. Focusing mandate 8(f), 32 'When command explicit moreover, reinforced necessity order operative, nothing short express limitation abuse discretion finding undermine taken execute it. When neither nor conceded founded fact, seem matter.' U.S., 255, S.Ct., 612. 33 light holdings history cannot agree conclusion Rule. delegating hold intend take us believe that, despite emphasis, intended open subterfuges fully aware. precludes accepting power. 34 Given remedial measure authorized, remaining chosen objectives. see reason doubt deter engaging conduct eliminate. burdens severe, when measured evils avoided. possible financially feasible delve into intricacies every transaction, applies claiming not. That preferable irrelevant. consistently minds differ measures chosen, courts defer appropriate authority. Northwestern Elec. company FPC, 321 119, 124, 64 451, 453, 88 596 (1944); National 319 190, 224, 63 997, 1013, 87 1344 (1943); Telephone Telegraph 299 232, 236, 57 170, 172, 81 142 (1936). 35 contends, abrogated 'inconsistent' portions purported because imposed,38 although exists. argues preclude transactions. accept argument flexibility vesting agency. not: 37 canon draftsmen acts powers, practical realistic matter, specific consideration evil corrected. (N)o acquaintance affairs know prescience, exist. Its very absence, precisely reasons why regulatory Commission created, fond hope authors bring work expert's familiarity industry legislatures expected possess.' 309 310, 314 (citations omitted). 38 Neither sections refer indicate comprehensively apply. contrary, 105's grant reflects intention rely attributes administration recognized Trucking. infer references limit choose. 39 Since contention reduced void need deterred. affect individuals impair otherwise purpose. rejected Gemsco attempting enforce 'experimental social legislation' approved. Responding 'Section directing 'such conditions' 'finds orders,' forbid effective, consequences necessarily follow. expressly implies achieve ends more. direct effective except consequences.' 257, 613. 41 There referring mentioned legislation. participate control. 388—389, 118, 303 defining regulation, '(t)he inclusion margin, enforcement, put law, valid, stamp invalidity.' North SEC, 327 686, 66 785, 90 945 (1946). Nothing meet demands complex system. Where, seeks administer occur changing forms, line drawn insures blameless individual act unreasonably encumber permit violators escape entirely. rationale implicit regulated responsible 42 Company, 699 (1954). case, whether, establishing govern programing, properly interpreted prohibiting broadcasting lotteries. way proceeding another prosecution, 43 'If give provision) urged Commission, likewise cases.' Id., 296, 600. 44 Since, drafting well-established penal narrowly, invalid. 45 Broadcasting, contends narrowly contains provisions,39 nullified. agree, section scheme 'penal' provision, term used two civil penalties. Penal statutes convicted unless fair warning (has been) world common understand, law intends passed.' McBoyle 283 25, 27, 51 340, 341, 75 816 (1931).40 explicit, risk present. Kraus Bros., 614, 621—622, 705, 707—708, 894 unable 13041 allow imposition involved violated. $100. prescribed modest set construe graver penalties, prison terms. relieve burden code covering conceivable future problem. tailor thereafter necessary. emphasis placed private conclude penalties alone. concluded, sanction this, undetermined. Finally, Amendment (1932). Heiner, taxing Clauses Fourteenth Amendments conclusively presumed existence determinative facts. comparable presumption. prophylactic measure; presume within ambit assess charges,42 but, rather, imposes class. 48 transition policy philosophy 'Let buyer beware' disclose.' erecting barrier between prospective hard credit.' Code KF62 1601. Some relatively easy calculate committed respondent; sale, computations often solicitor performed purchaser. purchasers protection; serves protective mechanism circumvented. 49 approach views undue paternalistic concern beside point. Commerce Clause. function speculate unwise remedied better manner. 50 Reversed DOUGLAS, STEWART REHNQUIST concur, dissenting part. Fed.Rule Civ.Proc. 56(c), 'no genuine issue fact' 'the moving party entitled law.' interpret present record decisions, see, e.g., Adickes Haw. Hawai‘i KFH45 A2 Kress 398 144, 1598, 142; White Motor 372 253, 83 696, 738; Diebold, Inc., 369 654, 82 993, 176, remains unresolved fact. Although majority accordingly reverse Appeals, remand resolution issue. 53 'consumer 1631. assert successfully action, id., 1640, inter alia, satisfy proving meaning 103(e) 1602(e), 'credit' right debtor incur payment.' complaint, alleges 'extends Consumer Credit Regulations (s) 226.2 (K) ..' denies answer 'credit transaction.' paragraph avers: 'Under executed Defendant, agrees per month life Defendant supply full contract. At prepaid delivered. arrangement most publishers, reimburses publisher periodically subscription.' 'At point money third supplied services future.' 54 allegations, constitute transaction. If collected sent receipts publisher,1 commission, never advances customer, owe loan or, 'finance charge.' hand, advanced advancing benefit customer.2 thought ..'3 Professor Corbin 'A transaction instalment being all. perform promising performance rendered.'4 'credit,' refers deferred 'debt.' debt, binding contractual sum unconditional pay.5 view, depends, part, relationships publishers. record.6 55 pleadings, course, papers judgment. 56(c) consider depositions, answers interrogatories, admissions file, together affidavits, During collection period, dunning reminding 'that plan.' formally Judge.7 But, view 'admission' sufficient proof into.8 First, admission Second, arrears, obligation. settled decisions lodged 'must viewed favorable opposing party.' 157, 158—159, 1608; 655, 994. 56 deprived principle file controverting contents letter. 56(e) '(w)hen motion supported rule, adverse rest mere allegations denials pleading, response, affidavits forth showing trial. respond, appropriate, him.' Advisory note amendment added Rule, '(w)here evidentiary establish absence issue, denied presented.' cited comment approval 160, 1609. party, petitioner,9 1608. met burden. possessed extended. circumstances, Cf. 263, 702. POWELL, dissenting. 58 affirm Act.1 takes position resolved petitioner's below. agree. undisputed involve For reason, am DOUGLAS' opinion, taking evidence. 59 Clearly declaration explicit: 60 61 phrase 'extension credit' Nor definition enlightenment.2 However, understood receives value exchange promise future. obligates himself over period transaction: 62 rendered.' 3A Corbin, Contracts 687, Page 246 (1960). obligated herself receive. equal 30-month effect, months' worth Until last delivered, magzines 1602(h). heavily relies sustaining indicated element bargained-for services. Opinion Letter dealing assessing obstetrical periodic '(a)s assessed, exceed extent obligation, plan Z.'3 supplied.) implicitly recognizes exceeds made.4 Implicit positions DOUGLAS assumption admitting it, nevertheless credit.5 'if customer.' point, '(i)n pays subscription, consumer.' Ante, 362 n. 16. implication, though advance, recipient magazine, obtain unconditionally repay. continuing, mutually parties.6 Whether quite immaterial determination case: parties; how arranged fulfillment change litigation.7 controlling therefore dispute, having cross-motions perceive remand, unnecessarily burdening below, serve useful Statutes-at-Large 148, 1604. 226.2(k) (1972 rev.). App. 21. 20. counsel office manager. 'Whereas, FPS, initialy (sic) agent publishers; FPS financier, coguaranter whereas, invested Mrs. Mourning's refund said investment, insist client until full-filment aforementioned mutual liability.' 14. written stationery employee, employee authorized send Consequently, Affidavit Stanley R. Swanson, Vice President Family Publications Service, Aug. 26, 1970, (District Record 198, 199). customers signed, aggregate elected installments. now admits true. payments. 103(f), 1602(f). Certain here relevant, exempt 104, 1603. 128, 1638. 130, 1640. Ibid. 112, 1611. challenges consumer. failure controvert litigation posture maintained beginning i.e., matters unresolved, granted. 56(e). H.R.Rep.No.1040, 90th Cong., 1st Sess., 10—11 (1967). 13; S.Rep.No.392, 2—3 18, 19, 1—2. Hearings H.R. 11601 Subcommittee Affairs Currency, pt. 1, 13. Paul Dixon, Chairman Trade Willis Feb. 1964, 750 Production Stabilization 88th 2, 1303 (1963—1964). example, buy watches wholesale $20 sell retail $40. $1 weeks. watch $40 $12 constituted represents privilege incurred. creditor's simplified, represent return earned invest proceeds sale date payment. $52 free. merchant, first, forgone profits achieved investing day on. 'buried' item differential acquired 1740 87th 49, 56—57, 127, 389—390, 447—448, 563, 1155 1156 (1961); 45, 265, 267—268, 287, 341 342, 360—361, 365—367, 376, 407, 415 (1962); 750, pts. Pages 13—14, 749, 1284—1285; Financial Institutions 41—42, 123—134, 377—379, 513, (1967); 11601, 21, 583, 590—591, 802, 825—826. 1740, 287; 13—14; 596. 447—448. 45. Fed.Reg. 15506—15516 (1968). 2002—2011 Compare 226.2(h), 15507 (1968), 226.2(k), 2003 Mar. 3, Robertson. Statement Chairman, Governors System, 91st 380—381 E.g., 1937, amended, 1408. 1060. 1065. 1602(f); 121, 1631; 130(a), 1640(a). 1611; Kordel 335 345, 69 106, (1948). W. LaFave Scott, Criminal Law 72 (1972). 'information disclosed italicized distinguish advertising. 30. abide disclosure. applies, report July Robertson; 30, 8, Frederic Solomon. wholly owned subsidiary Time, Respondent, Life, publication, free-enterprise system, charge' nonetheless undisclosed separately customer. 14; 25. plans FRB 262 (1970). 691 My Brother POWELL asserts Post, 383—384. tripartite are. subscriber's behalf subscriber executed. so, meets acting advantage publisher's offer, yet price. Any 'profit' largely attributable financier. differs substantially borrows bank directly, obligating interest, one-half years. argues, doubted subscriber. mailed co-guaranter appeared admission, Barron Holtzoff, Practice Procedure 1231, (1971 Supp.). originally own breach converted retroactively responsibility theories proceed trial concludes resolved. Moore, 56.13 (2d ed. 1972). Having find unnecessary address issues, namely: (i) adopting coverage identified; (ii) 1640(a) validly where, concession 1602(e). gloss 'debtor' 'debt,' 'creditor' limiting rather explanatory. ('The extend, arrange of, 1602(f).) (1970); Clearing Guide 30,516. Legislative bolsters meant receipt paying them. earlier versions 'any services, delivery, subsequent contract; hire, bailment, leasing Sess.; 5, Sess. (as introduced Jan. 11, 1967). raised particularly ordinary bailment lease arrangements. 663 (1967) (statement System). criticism heeded version substituted (15 1602(e)) following explanation: deleted somewhat cumbersome sweeping true extensions lease, 'paid service' noncancellable lessee Yet lessor ordinarily enjoys property. reasoning, bailee. read case. disturb finding. disagrees Court's uncontroverted correctness. Again, statements deliver completion specified payments, further pay: respect non-delivery nonconforming once. privileged withhold undelivered rightfully rejected. (T)he (beyond upon) goods.' 691, 264 Fla.Stat.Ann. §§ 672.2—612, 672.2—711, 672.2—717 (1966). Indeed, complaint avers instrument existing parties,' 'extend(ed) person. Second Amended Complaint, 4.

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