Court Opinion

ID: 5049445
Source: CourtListenerOpinion
Date Created: 2021-10-01 07:45:04.813485+00
Date Added: 2024-06-11T08:18:55.532001
License: Public Domain

ON MOTION FOR REHEARING
On Motion for Rehearing General Electric Credit Corporation and Crawford again maintain that their installment contract-security agreement did not violate 12 C.F.R. § 226.801(b). They also contend that any violations were excused by jury findings that the defendants had substantially complied with the regulation.
We concluded that the document violates the regulation. When a creditor elects to combine a contract, security agreement, and required disclosures in a single document, the disclosures may be made on either or both sides of the document. However, the regulation mandates that the finance charge and annual percentage rate appear on its face and,
if the reverse side is used, the printing on both sides of the document shall be equally clear and conspicuous, both sides shall contain the statement, “NOTICE: See other side for important information,” and the place for the customer’s signature shall be provided following the full content of the document.
12 C.F.R. § 226.801(b) (1974) (emphasis added). Defendants GECC and Crawford contend, however, that these provisions apply only if the reverse side is used for required disclosures.
The regulation does not contain such limiting language. Moreover, the language specifically referring to the violations in question clearly states that the place for the customer’s signature shall be provided “following the full content of the document.” The specific mandate that the signature follow the document’s full content preempts any assertion that the regulation can be satisfied by merely placing all required disclosures on the front page and having the customer sign beneath them. Such an interpretation would permit the contract and security agreement to be inconspicuously *391printed on the back of the document with nothing to call the consumer’s attention to its presence. We do not believe the regulation intended such a result. Instead section 226.801(b) permits a creditor to integrate the contract, security agreement and disclosures into one document. If the reverse side of that document is used, its printing must be as clear and conspicuous as that on its face, both sides must contain notice of important information on the other side, and the signature line must be below its full content.
The availability of the defense of “substantial compliance” to the Federal or State consumer protection statutes is not settled. Compare Dixon v. D. H. Holmes Company, Limited, 566 F.2d 571 (5th Cir. 1978) and Hight v. Jim Bass Ford, Inc., 552 S.W.2d 490, 492 (Tex.Civ.App.—Austin 1977, writ granted) (holding that literal compliance is not necessary) with Grant v. Imperial Motors, 539 F.2d 506, 510 (5th Cir. 1976) and Ford Motor Credit Company v. Blocker, 558 S.W.2d 493, 499 (Tex.Civ.App. —El Paso 1977, writ ref’d n. r. e.) (requiring literal compliance). Nonetheless, from the facts before us it is sufficient to say that GECC and Crawford did not substantially comply with the requirements of section 226.801(b). The document contains the notations, “THE TERMS OF THIS CONTRACT ARE ON BOTH SIDES OF THIS PAGE” at the top of the first page, and “ADDITIONAL TERMS AND CONDITIONS” at the top of the back page. These captions are not printed or phrased in a manner calculated to seize the consumer’s attention like the word “NOTICE.” And they do not advise the consumer that the items on the other side are important. Merely advising the consumer of the presence of additional terms and conditions does not substantially comply with the required notice provision.
Likewise, the small parenthetical notation near the bottom of the back page, “(See other side for Buyer’s signature)” does not substantially comply with the regulation’s signature line requirement. A mere reference to the signature’s location is no substitute for a buyer’s signature following the full contents of the document.
These requirements are calculated to assure the buyer an opportunity to examine the full content of the document prior to signing it. We are not at liberty to re-write the regulation to permit the signature following only the required disclosures. This would thwart the intent of the regulation. Cf. Anguiano v. Jim Walter Homes, Inc., 561 S.W.2d 249, 255 (Tex.Civ.App.— San Antonio 1978, no writ).
We adhere to our former opinion and find that General Electric Credit Corporation and Crawford Mobile Homes violated 12 C.F.R. § 226.801(b) as a matter of law. Appellees’ Motions for Rehearing are overruled.
The Appellants have also filed a Motion for Rehearing. The points raised were fully considered in our original opinion. Appellants’ Motion for Rehearing is overruled.