Court Opinion

ID: 9731060
Source: CourtListenerOpinion
Date Created: 2023-08-26 15:31:45.425801+00
Date Added: 2024-06-11T18:26:12.683070
License: Public Domain

Mr. JUSTICE GEORGE J. MORAN, specially concurring: I concur with the opinion of the majority in this case, but I believe the contract is so abominable that I must comment on it, even though the matters I discuss are not contained in the briefs submitted by the parties. This contract violates several provisions of the Illinois Retail Installment Sales Act (Ill. Rev. Stat. 1975, ch. 121½, par. 501 et seq.). It violates section 3(c)(1) of the Act (Ill. Rev. Stat. 1975, ch. 121½, par. 503(c)(1)) because it does not contain the words “retail installment contract” in 10-point bold type at the top of the contract and directly above the space reserved for the signature of the buyer. In fact, the words “retail installment contract” do not appear anywhere in the body of the contract. It violates section 3(c)(2) of the Act (Ill. Rev. Stat. 1975, ch. 121½, par. 503(c)(2)) because it does not contain the notice required by that section in 10-point bold type in the form required. It violates section 4 of the Act (Ill. Rev. Stat. 1975, ch. 121½, par. 504) because it does not contain the name of the buyer in the body of the contract. Logan Furniture Mart, Inc. v. Davis, 8 Ill. App. 3d 150, 289 N.E.2d 228; R.S. Boston Co. v. Chapman, 131 Ill. App. 2d 385, 266 N.E.2d 767. In addition, it violates sections 5(1), 5(8) and 5(10) of the Act (Ill. Rev. Stat. 1975, ch. 121½, par. 505(1), (8), and (10)) because it does not disclose the cash price, the total amount of the finance charge and the annual percentage rate. This contract is also in violation of the Federal Truth In Lending Act (15 U.S.C. §1601 et seq.). In this case the “club” offered a service contract for a set fee, payable in a down payment which it called an “initiation fee,” and 24 installments. The contract was by its terms transferable. A note in negotiable form accompanied the contract and was also to be signed by the person signing the contract. Large type on the instrument proclaimed that there was no finance charge and no annual percentage rate of interest. See Mourning v. Family Publications Service, Inc., 411 U.S. 356, 36 L. Ed. 2d 318, 93 S. Ct. 1652 (1973); Joseph v. Normans Health Club, Inc., 386 F. Supp. 780 (E.D. Mo. 1974); Kriger v. European Health Spa, Inc., 363 F. Supp. 334 (E.D. Wis. 1973); Glaire v. La Lanne-Paris Health Spa, Inc., 12 Cal. 3d 915, 528 P.2d 357, 117 Cal. Rptr. 541 (1974). The law of Illinois provides a defense to those who oppose the enforcement of the contract if that contract is illegal — either as a matter of Illinois or of Federal law. (First Trust & Savings Bank v. Powers, 393 Ill. 97, 65 N.E.2d 377; Zeigler v. Illinois Trust & Savings Bank, 245 Ill. 180, 91 N.E. 1041.) The relevant Federal statute need not declare the contract void or unenforceable to make itself available to the defendant as a ground for the defense of illegality. (Ideal Building Material Co. v. Benson Concrete Co., 273 Ill. App. 519; Finch & Co. v. Zenith Furnace Co., 245 Ill. 586, 92 N.E. 521.) Where the performance of a contract would have defrauded the United States of income taxes due, it was held unenforceable in Dormeyer v. Haffa, 343 Ill. App. 177, 98 N.E.2d 532. Where a contract violated the policy and spirit, but not the letter of the Natural Gas Act (15 U.S.C. §717), it was held to violate Illinois public policy as well. (In re Estate of Johnson, 339 Ill. App. 110, 88 N.E.2d 886.) Hence, it is clear that a contract which violates Federal law, even where that law does not purport to (or even where it expressly denies any purpose to) affect State regulated transactions, is nevertheless subject to the defense of illegality or a violation of State public policy. Finally, I believe this contract is subject to the defense of unconscionability because it is written in a manner to evade State and Federal laws and to deceive the buyer. The contract in question is set out below: [[Image here]] [[Image here]] After reading this contract, one cannot escape the conclusion that it was designed to make the purchaser believe he was a member of a club rather than a puchaser of goods or services. The first payment is called an “initiation fee.” The remainder of the payments are called “dues.” The agreement is termed a “member benefit agreement.” However, it is apparent that there are no club benefits involved and that the purchasers are members of a club in name only. The contract does not provide for membership powers in the election of officers or directors, nor does it allow membership powers in decisions with respect to club policy or the cost of club services. The member, as he is called, may not resign if he is displeased with the operation of the club activities described other than his right to buy something wholesale. This contract gives the purchaser a great deal of words and status, but nothing of real value for his “total fee” of *495. For a scholarly discussion of the doctrine of unconscionability as applied to sales contracts, see Annot., 18 A.L.R. 3d 1305 (1968).