Court Opinion

ID: 9650048
Source: CourtListenerOpinion
Date Created: 2023-08-23 15:21:45.925436+00
Date Added: 2024-06-11T18:12:17.642901
License: Public Domain

ELDRIDGE, Judge,
dissenting:
The majority, concluding that the lease in this case is not governed by the Retail Installment Sales Act (RISA), Maryland Code (1975, 1983 Repl.Vol.), Title 12, Subtitle 6 of the Commercial Law Article, upholds the decisions below in favor of the Respondent Ford Motor Credit Company. Because I believe that the lease is clearly governed by the terms of RISA, I dissent.
I.
Ford Motor Credit Company claims that the lease was not subject to the notice requirements in § 12-624(d) of RISA because it was not an “installment sales agreement.” § 12-601(Z )(2)(iii) of RISA defines an installment sales agreement as including:
“A contract for the bailment or leasing of goods under which the bailee or lessee contracts to pay as compensation a sum that is substantially equal to or is more than the value of the goods.”
The lessee contracted to pay as compensation $6,936.48, spread over 48 monthly installments. The trial court’s ruling as to the retail sales value of the car at the time of *331the contract is unclear, but the majority proceeds upon the assumption that the car had a retail value at that time of $5,629.00. Thus, the rental payments contracted for exceeded the retail sales value of the car by over $1,300.00. Yet, the majority rejects the conclusion that the sum of rental payments was “substantially equal to or ... more than the value” of the car.1
The majority’s analysis is flawed by a basic misreading of the purpose of § 12-601(7 )(2)(iii). The majority opinion states that “a lease of goods which will have a substantial residual value at the expiration of the lease does not fit the traditional pattern of a disguised sale at which § 12-601(i )(2)(iii) is aimed.” But the language and legislative history of RISA make clear that RISA was not narrowly aimed at “disguised sales” but was instead intended to encompass any lease in which rental payments “substantially equal” the value of the goods leased.
The most fundamental principle of statutory construction has been reiterated by this Court many times, as for example, in Taylor v. Dep’t of Employment, 308 Md. 468, 472-473, 520 A.2d 379, 381 (1987), where Judge Adkins stated for the Court:
“The threshold inquiry in any issue of statutory construction is whether the language is ambiguous or of uncertain meaning. If it is not, then the Court applies its plain and ordinary meaning. Tucker v. Fireman’s Fund Ins. Co., 308 Md. 69, 517 A.2d 730 (1986); Board of Educ. Mont. Co. v. Paynter, 303 Md. 22, 491 A.2d 1186 (1985).”
Although in Kaczorowski v. City of Baltimore, 309 Md. 505, 513, 525 A.2d 628, 632 (1987), we pointed out that “the *332plain-meaning rule is not rigid,” we also recognized that “[s]ometimes the [statutory] language in question will be so clearly consistent with apparent purpose (and not productive of any absurd result) that further research will be unnecessary.” 309 Md. at 515, 525 A.2d at 633.
The language of § 12 — 601(Z )(2)(iii) is non-technical, straightforward and unambiguous. It extends the coverage of RISA to any lease in which the “lessee contracts to pay as compensation a sum that is substantially equal to or is more than the value of the goods.” This is the sole inquiry called for by the provision, and it in no way suggests that it is aimed at or limited to “disguised” sales.
The limited legislative history of § 12 — 601(Z )(2)(iii) gives no support to the majority’s cramped interpretation of the provision. While it is clear that much of RISA is aimed at abuses unique to actual sales, it is equally clear that the overriding purpose of RISA was the protection of unwary consumers from “oppressive business practices that were becoming more apparent with the rising quantity of consumer credit.” Associated Acceptance v. Bailey, 226 Md. 550, 555, 174 A.2d 440, 443 (1961). Furthermore, as this Court stated in State v. Action TV Rentals, 297 Md. 531, 548, 467 A.2d 1000, 1009 (1983), § 12-601(/)(2)(iii) “seems to be intended to expand the basic definition of ‘installment sale agreement.’ ”
As the majority points out, the language of § 12 — 601(Z )(2)(iii) is borrowed from the Uniform Conditional Sales Act (UCSA). RISA adopts the first half of the UCSA definition of an installment sales agreement but omits the second half. The significance of this history in the present case, however, lies in the UCSA language which the General Assembly chose not to borrow. Had the Legislature intended to confine RISA’s coverage to transactions which were actually sales, it would have adopted the remaining language of the UCSA requiring that the lessee be “bound to become or [have] the option of becoming the owner” (§ 1, Uniform Conditional Sales Act). Had it done so, the majority’s view might be more persuasive. But the General *333Assembly’s deliberate omission of this limiting language makes it evident that the Legislature generally intended to encompass leases involving a particular level of rental payments regardless of whether the transactions were in any sense sales. The majority’s reading of the statute not only imposes limits which are not there, but imposes limits which the General Assembly considered but chose not to include.
The majority, faced with the critical difference in language between RISA and the UCSA, attempts to minimize its significance. The majority acknowledges that “the General Assembly made the RISA definition more flexible than the Uniform Act.” Then, however, the majority suggests, without citing any source, that the more “flexible” RISA extends coverage to only a very few leases not covered under the UCSA.2 While certainly RISA covers the leases enumerated by the majority, there is nothing to support the view that the increased flexibility of RISA was designed to cover only these few, specific instances. Had the Legislature meant to limit RISA in this fashion, it could have done so explicitly.
The consumer protection rationale of RISA suggests that the broad language of § 12 — 601 (Z)(2)(iii) was designed to afford lessees who had incurred substantial liability the same minimal protections afforded purchasers under the Act. RISA’s consumer protection measures are as important to lessees as they are to consumers who buy on installment plans. Like buyers, lessees of consumer goods may be liable for the entire sum contracted for, even if the *334goods leased are repossessed for non-payment. It only makes sense that, since a lessee’s liability may be no different from that of a buyer, the authors of RISA intended that the lessee’s protection be as great.
Finally, the question of whether or not a lease is intended for security is irrelevant to whether the lease is covered by § 12-601(Z )(2)(iii). The existence of a security agreement is part of the definition of an “installment sales agreement” in § 12-601(Z )(1) and is not a limitation on the leases covered by § 12 — 601(Z )(2)(iii). As this Court stated in State v. Action TV Rentals, supra, 297 Md. at 545, 467 A.2d at 1007, § 12 — 601(Z )(2) “operates to enlarge the basic definition of CL § 12-601(Z)(1) and is not set forth merely for purposes of illustration.” Thus, the majority’s discussion of whether the lease in this case was intended for security, and the fact that the lessee had no option to purchase, are not particularly germane to whether this lease is included under § 12 — 601(Z )(2)(iii).
II.
Having begun with the faulty premise that § 12 — 601(Z )(2)(iii) is aimed only at leases that are “disguised” sales, the majority opinion strays further and further. from the plain meaning of § 601(Z )(2)(iii)’s language.
The majority opinion accepts the respondent’s argument that the term “value,” as used in § 12-601(Z )(2)(iii), means “the value of the lease plus the anticipated residual value” of the leased item. Thus, in the majority’s view, the petitioner
“cannot possibly have contracted ‘to pay as compensation a sum that is substantially equal to or is more than the value of the goods’ because no matter how the ‘compensation’ paid under the lease is computed, it will fall short of the value of the vehicle by the residual value of approximately $2,900.”
As the majority notes, the word “value” has many meanings. Nevertheless, the meaning which the majority gives *335to “value” in § 12 — 601(Z )(2)(iii) ignores the plain language and purpose of the provision, and ultimately renders the provision ineffectual.
The majority’s view is that, irrespective of the amount of rental payments, as long as a leased item has substantial residual value at the end of the lease, RISA does not apply. This disregard for the amount of rental payments ignores the language of § 12-601(i )(2)(iii) which calls for a comparison of the rental payments to the value of the good. The majority opinion shifts the inquiry solely to the value of the goods at the end of the lease. Thus, even if the petitioner had contracted to pay a million dollars over the course of the lease, she would not be protected by RISA because the car had some substantial value at the end of the lease.
The majority’s reliance on residual value also ignores that part of § 12 — 601(Z )(2)(iii) which says that contracted-for rental payments “substantially equal to or ... more than the value of the goods” (emphasis added) bring a lease within the scope of RISA. Under the majority’s definition of “value,” such payments could never, even theoretically, exceed the value of the goods. At best, if the goods had no residual value, the payments could equal the value of the goods. Yet, § 12-601(i )(2)(iii) clearly envisions a definition of value in which rental payments could be more than the value of the goods.
In addition, the residual value approach completely subverts the usefulness of § 12-601(i )(2)(iii). Virtually every consumer item, including automobiles, will have some residual value at the end of a lease, even if only as scrap. Many types of consumer goods will almost always have a substantial residual value. Thus, the number of the leases to which § 12 — 601(Z )(2)(iii) applies will be negligible. The majority recognizes this but contends that the provision is aimed only at those very few items that would have no residual value at all, such as “goods which are peculiarly susceptible to early functional obsolescence.” However, there is no evidence to suggest that § 12 — 601(Z )(2)(iii) was designed to have such a narrow focus. Furthermore, lessors of the few *336items that are still covered by § 12-601(Z )(2)(iii) under the majority’s approach might be able to circumvent the protections offered by RISA simply by asserting that the leased items will have substantial residual value at the end of the lease. The mere assertion that the automobile at issue in this case would have a residual value of $2,900 has been enough for the majority to conclude that the lease is not covered by RISA. While a lessee could offer evidence to show that an item would have little or no residual value at the end of the lease, such a showing is much more difficult than showing that the payments contracted for equal or exceed the retail selling price. By declaring § 12 — 601(Z )(2)(iii) applicable to only a narrow range of leases, and by permitting easy circumvention of the provision in even those few instances, the majority renders § 12 — 601(Z )(2)(iii) virtually useless.
The majority states that nothing in RISA requires that “value” be given the meaning sought by the petitioner. Obviously, RISA is not explicit in indicating what meaning to give “value.” However, the broad consumer protection purpose of RISA, and the use of the words “substantially equivalent” in § 12-601(Z )(2)(iii), indicate that the General Assembly envisioned a simple, common sense test for determining whether a given lease was covered by RISA. An approach where the “ignorant and unwary”3 consumer could determine at a glance (based on the market price of the goods and the payments under the lease) whether RISA applies is more consistent with the language and purpose of the statute than an approach requiring the calculation of the residual value of an item several years in the future. I believe that a common sense view of this lease would be that payments totaling $6,936.48 are substantially equal to the value of a car originally worth $5,629.00.
The majority contends that automobile lessors have not been complying with the disclosure requirements of RISA, *337and that to make them do so now would result in “confusion in disclosure to those who choose to obtain the use of an automobile through leases of the subject type.” This desire to spare consumers confusion is admirable but misdirected. First of all, it is not clear how many leases would be affected if petitioners’ view was adopted. It is not self-evident that most, or even many, leases involve rental payments substantially equal to the value of the goods leased. Secondly, there is little merit to the majority’s suggestion that confusion would result if lessors, in compliance with RISA, had “to take the stream of lease payments and break out of it in some fashion a ‘cash price of the goods sold,’ ‘[t]he principal balance owed,’ and ‘[t]he finance charge stated as a sum in dollars.’ ” The majority acknowledges that some leases are, indeed, covered by RISA (e.g., those involving goods subject to early functional obsolescence). If the lessors of these items can conform their leases to the requirements of RISA, it is unclear why other lessors would be unable to do so. In any case, whatever the efficacious effects on the leasing industry of the majority’s position, it is not the role of this Court to promote business efficiency at the cost of rendering useless an enactment of the General Assembly.
Furthermore, the majority states that in its Consumer Automobile Leasing Study, the Consumer Council “gives no indication that the Consumer Protection Division considers advantageous leases to be governed by RISA.” On the contrary, the study contains language suggesting that the Council does view such leases as governed by RISA. The study, citing § 12 — 601(Z) of the Commercial Law Article, the subsection at issue in this case, states (p. 27) (emphasis added):
“In Maryland, some laws already address leasing____ Certain credit transactions, including leases in which the payments equal, substantially equal, or exceed the original purchase price, are under the jurisdiction of the Commissioner of Consumer Credit, while the Maryland *338Retail Installment Sales Act covers all retail installments sales.”
While this statement initially seems to suggest that leases are not at all related to the installment sales covered by RISA, a closer examination of the language reveals that the study’s statement strongly supports the view of the petitioner in this case. The study points out that leases in which payments equal or exceed the original purchase price are under the jurisdiction of the Commissioner of Consumer Credit. The jurisdiction of the Commissioner of Consumer Credit, as stated in § 12-631(a) of the Commercial Law Article, extends to complaints “for violation of any provision of Part II of this subtitle.” Part II of subtitle 6 contains the disclosure requirements of RISA. Furthermore, the study’s language — “leases in which the payments equal, or exceed the original purchase price” — closely tracks the language of § 12-601(i )(2)(iii). Thus, not only does the study say that leases like those described in § 12-601 (i )(2)(iii) are subject to RISA, but, in referring to payments which “substantially equal ... the original purchase price,” accepts the definition of “value” urged by the petitioner and rejected by the majority.
Finally, even if the majority’s definition of “value” is correct and the value of the automobile is “the value of the lease plus the residual value” of the automobile at the end of the lease, the payments contracted for by the petitioner are still “substantially equal” to the value of the automobile. Even using the respondent’s figure of $2,900 as the residual value of the car, the rental payments were more than % of the value of the car.
III.
Analogous cases in Maryland and elsewhere support the view that the payments contracted for in this case substantially equal the value of the car. Two Maryland cases, neither involving RISA, but both dealing with whether a purported lease was in fact a conditional sale, are illustrative. In Beckwith Machinery Co. v. Matthews, 190 Md. *339182, 57 A.2d 796 (1948), this Court held that a lease of mining machinery was actually a conditional sale where the total of the rental payments over the course of the eight month lease were 56% of the purchase price, a percentage “so great as to virtually compel the lessee to buy.” 190 Md. at 192, 57 A.2d at 800. In reaching that decision, the Court approvingly cited Williston On Sales (2nd ed.) § 336, p. 780: "... courts have disregarded the form of the transaction and have held that where payment of so-called rent nearly or quite pays the price of the goods the bargain is [a] conditional sale.”
The Beckwith court also cited In Re Rainey, 31 F.2d 197 (D.Md.1929), in which the court held that rental payments over the course of a three month lease which amounted to 60% of the entire value of the goods rendered the lease a conditional sale. Although both Beckwith and Rainey involved leases with short terms and options to purchase, they resemble the present case in that a purported lease involving payments totaling a significant percentage of the purchase price was deemed a sale.
Cases in other jurisdictions reach similar results. In United States Leasing Corp. v. Franklin Plaza Apts. Inc., 319 N.Y.S.2d 531, 65 Misc.2d 1082 (1971), lease payments totaling $4,740 over a term of 60 months for equipment with a “total list” of $3,426 were “substantially 'equivalent to or in excess’ of the value of the equipment.” 319 N.Y.S.2d at 533, 65 Misc.2d at 1084. In Thomas v. Wright, 21 Cal.App.3d 921, 98 Cal.Rptr. 874 (1971), the court held that lease payments of $3,856.32 for a vehicle with a cash value at the time of the contract of $2,325.80 were substantially equal to the car’s value. Finally, in Traylor Bros., Inc. v. Indiana Equipment Co., 336 S.W.2d 590 (Ky.1960), the court held that a lease agreement, under which the rental payments and a trade-in equaled all of the purchase price except for ten months of interest, was in fact a conditional sale.
Obviously none of these cases is dispositive of what the Maryland General Assembly intended in RISA. None*340theless, the consumer protection purpose of RISA, the language of the statute, and the Legislature’s omission of the requirement that the lessee have an option to purchase, suggest that the statute’s protection should be at least as broad as the protections afforded by the courts in the above cases. The majority’s conclusion that the petitioner is not protected by RISA runs counter to the letter and spirit of that act. The burden which RISA imposes on respondent and on lessors in general is not onerous. It merely requires that they give notice within five days of repossession so that unwary consumers can take action to protect their rights.
Judges COLE and ADKINS have authorized me to state that they concur with the views expressed herein.

. The majority’s short answer to petitioner’s claim is that the record contains insufficient evidence of the retail market value of the vehicle at issue. This Court issued a writ of certiorari to answer the question of whether RISA protects consumers who enter lease agreements which obligate them to pay the substantial value of the goods leased. If the majority believes the record is insufficient to show what the value of the goods is, the proper disposition of this case is to either dismiss the writ of certiorari as improvidently granted or to remand for the taking of additional evidence. See Maryland Rule 8 — 604(d).

. The majority opinion describes these leases as follows:
"Thus the RISA definition eliminates any argument over the inclusion of 'leases’ accompanied by an oral, side agreement that the lessee can buy at lease expiration for a nominal consideration, and over the inclusion of ‘leases’ by lessors who make no oral or written promises to sell but who, by practice, will sell at expiration for a nominal sum. Eliminating an option requirement also permits finding that ‘leases' of goods which are peculiarly susceptible to early functional obsolescence are installment sales if there will be little or no residual value at lease expiration and the lessor recovers the cost of the goods, overhead and profit in the form of rent.”

. Associated Acceptance v. Bailey, 226 Md. 550, 555, 174 A.2d 440, 443 (1961).