Court Opinion

ID: 9541564
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:26:39.441885+00
Date Added: 2024-06-11T15:03:29.042423
License: Public Domain

Pashman, J.
(dissenting). Pending resolution of this lawsuit, the plaintiff’s claim only has matured into mootness by virtue of the 1971 amendment to the Retail Installment Sales Act, N. J. S. A. 17:16C-1 et seq. This legislation concededly includes a revolving charge account such as the Singer Company utilized when it sold the goods to Gardner in 1969. But the defendant’s counterclaim presents a justiciable issue.
Notwithstanding, we have undertaken to evaluate the merits of this District Court ease in its entirety.
Presenting its inexplicable thesis, this Court has justified a deceptive scheme to avoid the Retail Installment Sales Act. In doing so, it has taken a giant step backward in the world of consumerism.
I subscribe substantially to the reasoning in the very thoughtful opinion of County Court Judge Wood (A.C.). 121 N. J. Super. 261 (Cty. D. Ct. 1972). I differ with the trial judge in the disposition of the counterclaim.
The charge of $10 per $100 per year is an effective annual finance charge of 17.92% over the 36-month period. The 1.5% per month which was the Singer finance charge is 18% per year on the declining balance. However, the nuances of late payments (which is a fact of life in the installment world) on the unpaid balance under the Singer plan will inevitably result in more interest being paid than late payments under the Retail Installment Sales Act. N. J. S. A. 17:16C-42. But the more serious distinction between the Retail Installment Sales Act and the Singer plan is the necessity to comply with the provisions of the Act hereinafter set forth which are so important for the protection of *417the purchaser. These requirements truly speak for the consumer. The requirements for detailed statements and the allocation of payments on a continuing agreement as to further purchases are some of the statutory provisions which give solace to an installment buyer. None of these is required under the Singer plan.
The strained interpretation to which the majority has resorted to justify the subterfuge of the Singer Company does not withstand careful analysis. This defendant went to Singer to purchase a number of appliances and to pay for them in installments. He had paid $65 on account of the purchase of a sewing machine which cost $400. His acquisition of a vacuum cleaner for $70 reflected a downpayment of $2.10 (amount of sales tax). Two more vacuum cleaners were purchased with a deposit of $4.50 (again, the amount of sales tax).
This consumer did not intend to open a continuing charge account similar to those employed by department stores. It is impossible to form a conclusion other than the fact that defendant was “forced” into the transaction if he wanted to make the purchase. He did not ask for this, and surely he never understood the details of this sophisticated transaction.
I
In 1960, when the Retail Installment Sales Act, N. J. S. A. 17:16C-1 et seq., was initially adopted, a retail installment contract was defined as:
* * * any contract entered into in this State between a retail seller and a retail buyer evidencing an agreement to pay the retail purchase price of goods, or any part thereof, in 2 or more installments over a period of time, and pursuant to which title to or a lien upon the goods is retained or taken by the retail seller for the payment of the retail buyer’s obligation.
My Brother Justices seem to believe that the Singer plan failed to fit within the confines of this definition when in *418fact it does in every detail. The majority further proceeds to distinguish an installment sales plan from a revolving charge by the method in which interest is paid. However, the statutory definition clearly does not make this distinction; in fact, it never mentions interest. The time-price differential or interest is first mentioned in N. J. S. A. 17:16C-41 where:
* * * any retail installment contract evidencing the sale of goods [shall not exceed]
* >'r * * * *
Class IV. On all other goods, an amount not to exceed $10.00 per $100.00 per year.
Therefore, the Singer plan easily conformed to the statutory definition of a retail installment sale, resulting in violation of the statute herein set forth.1 Subsequent amendments in *4191971 (particularly N. J. S. A. 17:16C-44.1) specifically dealt with and included the retail charge account or revolving charge plan. Initially, however, no particular treatment was afforded the instant hybrid charge plan. Thus, if covered by the original Act, the charge plan would be controlled under the general provisions of the statute previously noted.
The Singer plan included four elements pertinent to the present matter:
1. The customer is issued a “Singer Credit Card.” The card is to remain “the property” of Singer and is to be returned by the customer upon “termination” of the account.
2. Payments are to be “the larger of” the agreed monthly payment or “the company’s minimum monthly payment listed on an annexed schedule.” The scheduled monthly payment does not decline as the unpaid balance is reduced.
3. Title to the goods purchased remains iu the company until the unpaid balance of each separate purchase is fully paid. The goods may not be encumbered or disposed of without the consent of the seller.
4. In the event of default in payment the entire unpaid balance shall, at the seller’s option, become immediately due and is to be paid on demand or the seller may “in the manner and as provided by law retake any goods not then paid for” and pursue other remedies, including recovery of attorney’s fees. [121 N. J. Super. at 268-209].
The majority would have the consumer believe he was getting a better deal with the revolving charge account for reasons which are nebulous. The same majority and the plaintiff concede that Singer’s plan failed to:
1. Specify the time-price differential, time-balance and time-sales price as required by N. J. S. A. 17:160-27;
2. Apportion each payment among the separate purchases in proportion to the cash price of the items purchased, as required by N. J. 8. A. 17:160-29;
*4203. Call for appropriate statements for each purchase, as required by N. J. S. A. 17.16C-28;
4. Abide by permissible time-price differential by exceeding 10% per year, the maximum under N. J. S. A. 17:16C-41.
By reason of the foregoing definition of an installment sale, it is crystal clear that the transactions called for by the revolving charge account were exactly the same as those covered by the Retail Installment Sales Act. N. J. S. A. 17:16C-1 et seq. Consequently, they were retail installment sales intended to be covered by the Act. It follows that the “credit card” device was a subterfuge which plaintiff hopefully expected would avoid the Act. If plaintiff’s plan receives judicial sanction, then the seller could have imposed a time-price differential greater than that permitted by the Act. In addition, other requirements of the Retail Installment Sales Act could be avoided by this device. Singer v. Gardner, supra, 121 N. J. Super, at 269. The basic plan was undoubtedly devised to circumvent and defeat the 10% maximum interest a retail seller could charge a buyer and avoid compliance with all other requirements of law.
With the Retail Installment Sales Act, the Legislature gave us one of our first glimpses of consumer legislation which was, as indicated previously, couched in very broad and all-inclusive language. (See definition of a retail installment contract, supra.) At that time, credit schemes were relatively simple since they knew no bounds. But they grew increasingly complex, sophisticated, devious, flexible and open-ended after the Legislature’s initial venture into this field in 1960. Plaintiff believes, as does the majority, that there was a tacit or negative approval of the present plan since it was not explicitly mentioned by name in the original Act. I, however, believe that the terms of the 1960 statute were certainly broad enough to include this type of retail installment contract masked in the garb of a retail charge account.
*421The plan retained a cross-collateral security interest in the purchased merchandise, allowing Singer to repossess every item without first determining whether any one piece had been fully paid for. Mr. Dunn, the store manager, affirmatively testified to this effect. Following repossession, a buyer could not even redeem these items, in contravention of the statute.
The effort expended by the majority to jitstify this scheme would be better placed in behalf of the world of consumerism which cries out for protection. A subterfuge should be so labelled to deter others from avoiding strict compliance with the consumer statutes. Eortunately, the Legislatures of New Jersey have championed various bills to keep unscrupulous business entities from ripping off the public or engaging in deceptive practices. The 1971 amendment is a clear recognition of this evil which required statutory attention.
This defendant made various purchases totaling $619.60. He was charged $228.87 as the time-price differential, and paid a premium for life insurance to protect Singer. He repaid $469.60; Singer received an additional $180.94 as proceeds from repossession sales, all of which totaled $650.54. Eor this, the purchaser received nothing by way of retaining any one purchase. And plaintiff never informed defendant as to allocation of payments of balances due on individual items. Perhaps the cost of one vacuum cleaner had been fully paid in the repayment total of $469.60.
In addition to being in violation of the statute, I repeat, this scheme was unconscionable. It should not receive judicial blessing. I cannot agree to the strained and erroneous definition of installment sales adopted by the majority, which would exclude the Singer plan as not being within the reach of the Act as it stood before 1971. The cross-collateral security2 retained by Singer was not justified because *422$469.60 was paid by defendant who received nothing for that sum. All these facts, viewed singly, and more importantly in their totality, form a set of circumstances evidencing gross inequity. I am compelled to support a finding of unconscionability. N. J. S. A. 12A:2-302; 18 A. L. R. 3d 1305.
II
The majority unnecessarily has addressed itself to the issue of constitutionality of the Replevin Act. Of course, as matters stand, the Rules of the Supreme Court, R. 4:61-1 (a), as amended in response to Fuentes v. Shevin, 407 U. S. 67, 92 S. Ct. 1983, 32 L. Ed. 2d 556, reh. denied 409 U. S. 902, 93 S. Ct. 177, 34 L. Ed. 2d 165 (1972), set forth the required notice and hearing prior to seizure of chattels. However, the viability of Fuentes has been questioned. Mr. Justice White, speaking for the majority, in Mitchel v. W. T. Grant Company, 416 U. S. 600, 94 S. Ct. 1895, 40 L. Ed. 2d 406 (1974), distinguished that case from Fuentes. He held the Louisiana procedure constitutional although it is remarkably similar to the statutory provisions in Fuentes (which provisions the majority in our case concede are similar to New Jersey). If Mitchell is constitutionally indistinguishable from Fuentes as four Justices clearly hold, I *423would pause and not address myself to- the constitutional issue unnecessarily. See discussion 45 A. L. R. 3d 1233.
But to the extent that the majority has held the Replevin Act unconstitutional based on Fuentes, I respectfully disagree that it should be applied prospectively — meaning from the date of the majority decision. Fuentes was decided June 12, 1972. The rule change in New Jersey was adopted June 29, 1973, becoming effective September 10, 1973. The writ of replevin issued July 13, 1971. Judge Wood’s decision was rendered on October 27, 1972. The notice of appeal was filed December 6, 1972. We certified the case on our own motion on January 16, 1974.
The Singer Company argues that Fuentes should not be applied retroactively to these replevin proceedings since the writ of replevin issued almost a year before Fuentes was decided. The courts, however, have taken different approaches to the retroactivity issue.
Where the replevin preceded Fuentes, some courts applied the principle with no discussion of the retroactivity issue. Turner v. Colonial Finance Corp., 467 F. 2d 202 (5 Cir. 1972) (Mississippi replevin statute); Sena v. Montoya, 346 F. Supp. 5 (D. N. M. 1972) (New Mexico replevin statute); McClellan v. Commercial Credit Corp., 350 F. Supp. 1013 (D. R. I. 1972) (Rhode Island pre-judgment attachment statute); Thorp Credit, Inc. v. Barr, 200 N. W. 2d 535 (Iowa Sup. Ct. 1972) (Iowa replevin statute); Inter City Motor Sales v. Szymanski, 42 Mich. App. 112, 201 N. W. 2d 378 (1972) (Michigan replevin act); State ex rel. Williams v. Berrey, 492 S. W. 2d 731 (Mo. Sup. Ct. 1973) .
In other cases, the courts have decided that their decisions were prospective only, except as to the cases then before them. Schneider v. Margossian, 349 F. Supp. 741 (D. Mass. 1972); Trapper Brown Construction Co., Inc. v. Electromech, Inc., 358 F. Supp. 105 (D. N. H. 1973) (New Hampshire replevin statute); Gunter v. Merchants Warren National Bank, 360 *424F. Supp. 1085 (D. Maine 1973) (Maine pre-judgment attachment statute).
■ Pure prospectivity was not enunciated; this course would deny a remedy to the parties involved in the case being decided. Stovall v. Denno, 388 U. S. 293, 87 S. Ct. 1967, 18 L. Ed. 2d 1199 (1967). It appears equitable to change the law as to the parties before the court to encourage others to challenge unfair legislation.
The Constitution certainly neither prohibits nor requires retrospective application. Linkletter v. Walker, 381 U. S. 618, 85 S. Ct. 1731, 14 L. Ed. 2d 601 (1965); State v. Smith, 37 N. J. 481 (1962), cert. den. 374 U. S. 835, 83 S. Ct. 1879, 10 L. Ed. 2d 1055 (1963). The question is one of policy. What is the effect of retroactivity on this case and others similarly pending? What is fair and reasonable?
This Court decided State v. Nash, 64 N. J. 464 (1974). Defendant was charged with a quasi-criminal infraction in 1969. He was sentenced on December 12, 1969. An appeal from this conviction was argued in the Appellate Division on January 11, 1971. On April 8, 1971, we decided State v. De Bonis, 58 N. J. 182 (1971). On May 12, 1971, the Appellate Division affirmed defendant's conviction; certification was denied by this Court on July 7, 1971 (58 N. J. 597). Thereafter, on April 28, 1972, probation was revoked and a jail term re-imposed; other appeals followed. The Appellate Division held that Be Bonis was not retroactive. With the assistance of strained reasoning (with which I agreed), Be Bonis was applied retroactively to Mr. Nash.
A middle course is available to us. We may apply Fuentes to all cases still on direct appeal at the time that case was decided. That would include the Singer case. Or, we can certainly apply Fuentes to the Singer case alone. The defendant who prevailed as to the declaration of uneonstitu-tionality of the Beplevin Act should be rewarded in some fashion for his effort in successfully attacking unconstitutional legislation. In the most restrictive sense, the defend*425ant, at least, should prevail as to the dismissal of the complaint in replevin by reason of Fuentes.
Contrary to the majority holding (and without waiting for any court adjudication), Singer disposed of the chattels, which now prevents the return of the items. But the counterclaim of the defendant should be respected to bring about an equitable result. In accordance with N. J. S. A. 17:16C-543, all costs and charges in connection with the contract should be rendered void. However, by reason of the chattels having been sold by Singer, the “void and unenforceable” charges cannot be applied to the unpaid balance. Since the complaint must be dismissed, said unlawful costs and charges should be recovered by the purchaser. N. J. S. A. 12A:2-302.
Accordingly, on plaintiff’s appeal, the judgment of the District Court should be affirmed, thereby dismissing the complaint. On defendant’s cross-appeal, the judgment of dismissal of the counterclaim for damages should be reversed and the claim remanded to the Burlington County District Court to ascertain the amount of the “void and unenforceable” costs and charges received by Singer in connection with the sales contract and revolving charge plan; judgment should be entered in favor of defendant for that amount.
For reversal and remandment — Chief Justice Hughes and Justices Jacobs, Mountain, Sullivan and Clieeobd — -5.
.For affirmance — Justice Pashman — 1.

N. J. S. A. 17:16C-27
Every retail installment contract shall set forth the following separate items:
■ (a) The cash price of the goods which are the subject matter of the retail installment contract;
(b) The down payment made by the retail buyer, indicating whether made in cash or in goods or partly in cash and partly in goods. The amount of the payment in cash and in goods shall be shown separately. A description of the goods, if any, sufficient for identification, shall be shown;
(c) The unpaid cash balance which shall be the difference between the cash price (subsection (a)) and the down payment (subsection (b)) ;
(d) The amount, if any, if a separate charge is made therefore, included for insurance and other benefits, specifying the coverages and benefits;
(e) The amount of official fees;
(f) The principal balance, which is the sum of subsections (c), (d) and (e) ;
(g) The amount of the time price differential;
(h) The time balance, which is the sum of subsections (f) and
(g) , owed by the retail buyer to the retail seller,' the number of installments required, the amount of each installment expressed in dollars and the due date or period thereof;
(i) The time sales price, which is the sum of subsections (b) and (h) .
*419The effective interest or time price differential is limited to 10% annually. N. J. S. A. 17:16C-41.
Particulars as to separate items must be set forth in additional statements annexed to the contract. N. J. S. A. 17:16C-28.
The purchaser must be informed as to the allocation of payments or balances due on individual items. N. J. S. A. 17:16C-29.

The pertinent portions of the Singer sales agreement state that:
3. Title to the goods purchased hereunder shall remain in you until the unpaid balance of each separate purchase is fully paid.
*422And, in reference to replevying the goods, the contract partially provides:
4. * * in the manner and as provided by law, retake any goods not then paid for * * *.
These passages are unquestionably ambiguous and certainly are not as clear-cut as my colleagues on the majority believe. As a matter of fact, Singer has presently altered its contract and has added this sentence:
3. * * Payments shall be applied first to the unpaid finance charge and any insurance premiums, then to merchandise of which that first purchased shall be deemed first paid for.
If the initial contract was so self-explanatory, why was it amended in that fashion?

N. J. S. A. 17:16C-54. Unauthorized costs and charges
Whenever, in any retail installment contract under this act, the retail seller or any subsequent holder has knowingly charged, contracted for or received from the retail buyer any costs or charges not authorized by this act, all costs and charges in connection with such contract, other than for insurance and other benefits, shall be void and unenforceable, and any such costs or charges other than for insurance and other benefits shall be applied to the unpaid balance or, if the account has been fully paid, remitted to the retail buyer, and the retail buyer shall be entitled to recover all such costs or charges.