Court Opinion

ID: 9425254
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:14:12.371916+00
Date Added: 2024-06-11T17:22:54.324257
License: Public Domain

Me. Justice Powell,
dissenting.
I would affirm the judgment of the Court of Appeals on the ground that there was no extension of consumer credit within the meaning of the Truth in Lending Act.1 The majority takes the position that the credit issue is a question of fact properly resolved against respondent on petitioner’s motion for summary judgment below. I cannot agree. In my view, the undisputed facts establish as a matter of law that the transaction between peti*384tioner and respondent did not involve an extension of consumer credit. For the same reason, while I am in agreement with much of Mr. Justice Douglas’ dissenting opinion, I see no reason to remand the case for the taking of evidence.
I
Clearly the Act applies only to transactions involving the extension of credit. The congressional declaration of purpose is explicit:
“The Congress finds that economic stabilization would be enhanced and the competition among the various financial institutions and other firms engaged in the extension of consumer credit would be strengthened by the informed use of credit.” 15 U. S. C. § 1601.
The phrase “extension of consumer credit” is not defined in the Act. Nor does the Act’s definition of “credit” provide any enlightenment.2 However, a transaction is commonly understood to involve credit when one party receives value in exchange for his unconditional promise to pay the other party for such value in the future. The mere fact that a party obligates himself in a contract to pay for goods or services in installments over a period of time does not render the contract a credit transaction:
“A transaction may be an instalment contract without being a credit transaction at all. Both parties may agree to perform in instalments without prom*385ising to render any performance in advance of full payment of the price of each instalment so rendered.” 3A A. Corbin, Contracts § 687, p. 246 (1960).
The transaction before the Court may well have been a credit transaction, but it was not respondent that extended the credit. Petitioner obligated herself to pay in advance for the magazines she was to receive. The contract required petitioner to pay equal installments over a 30-month period, but respondent was obligated only to provide magazines over 60 months. In effect, petitioner paid every month for two months’ worth of magazines. Until the last magazine had been delivered, petitioner would have paid for more magazines than she received. Thus, the contract called for the extension of credit by petitioner to respondent. For this reason it was not an “extension of consumer credit” within the meaning of the Act. See 15 U. S. C. § 1602 (h).
The Federal Reserve Board, upon whose authority to interpret the Act the majority so heavily relies in sustaining Regulation Z, has-indicated that a necessary element in a consumer credit transaction is the consumer’s obligation to pay after he has received the bargained-for goods or services. In a published Opinion Letter dealing with the practice of assessing obstetrical services in periodic installments, the Board stated that “[a]s long as there are no finance charges assessed, and at .no point do the charges for the services rendered exceed the payments to the extent that it would require more than Jf of the periodic instalments to repay the obligation, then the plan would not fall within the provisions of Regulation Z.”3 (Emphasis supplied.) This statement implicitly recognizes that credit is extended only when the *386value of goods or services provided exceeds the payments made.4
II
Implicit in the positions both of Mr. Justice Douglas and of the majority is the assumption that, even admitting petitioner was to pay for each magazine before receiving it, under some factual circumstances respondent *387might nevertheless have extended credit.5 Thus, Mr. Justice Douglas states that “if respondent advanced all or part of the subscription price to the publishers, respondent would be advancing ‘credit’ for the benefit of the customer.” The majority is less clear on this point, stating only that “[i]n some cases in which a consumer pays in installments for a magazine subscription, credit may not have been extended to the consumer.” Ante, at 362 n. 16. The implication, however, is that in some such transactions, though the consumer pays for the magazines in advance, he may be the recipient of credit. I am unable to agree that under any set of circumstances, given the undisputed fact that petitioner agreed to pay in advance for each magazine, respondent might have extended credit. Petitioner did not obtain a loan from respondent which she would be unconditionally obligated to repay. She entered into a contract imposing continuing, mutually dependent obligations on both parties.6 *388Whether respondent advanced any part of the subscription price to magazine publishers is quite immaterial to a determination of the legal effect of the only transaction involved in this case: whether there was extension of consumer credit by respondent to petitioner. The only contract at issue is that between the parties; how and upon what terms respondent may have arranged to obtain the magazines for delivery to petitioner in fulfillment of its contractual obligations is of no concern to petitioner. Nor can any such arrangement by respondent with a third party change the nature of the transaction between the parties to this litigation.7
The controlling facts therefore are not in dispute, having been admitted by the cross-motions for summary judgment, and I can perceive of no way in which they can be construed as an extension of consumer credit by respondent to petitioner. A remand, unnecessarily burdening the parties and the court below, would serve no useful purpose. As a matter of law respondent did not extend credit within the meaning of the Truth in Lending Act. I would affirm the judgment below.

 Having this view of the case, I find it unnecessary to address the other two issues, namely: (i) whether the Federal Reserve Board exceeded its authority in adopting Regulation Z, which extends the coverage of the Act to transactions in which no finance charge can be identified; and (ii) whether the civil penalty provision of 15 U. S. C. § 1640 (a) may validly be imposed in a case where, by concession of the parties on cross-motions for summary judgment, the transaction does not involve a finance charge.

 “The term 'credit’ means the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment.” 15 U. S. C. § 1602 (e). The Act provides no gloss on the terms “debtor” and “debt,” and the definition of “creditor” is limiting rather than explanatory. (“The term 'creditor’ refers only to creditors who regularly extend, or arrange for the extension of, credit for which the payment of a finance charge is required . . . .” 15 U. S. C. § 1602 (f).)

 FRB Opinion Letter No. 262 (1970); 4 CCH Consumer Credit Guide ¶ 30,516.

 Legislative history bolsters the view that Congress assumed “credit” meant the receipt of goods or services in advance of paying for them. In earlier versions of the Act, the definition of credit included “any contract ... of sale of property or services, either for present or future delivery, under which part or all of the price is payable subsequent to the making of such sale or contract; . . . any contract or arrangement for the hire, bailment, or leasing of property . . . .” S. 1740, 87th Cong., 1st Sess.; S. 5, 90th Cong., 1st Sess. (as introduced Jan. 11, 1967). During the Senate hearings, a question was raised as to whether any finance charge would be attributable to certain included transactions, particularly ordinary bailment and lease arrangements. Hearings on S. 5 before the Subcommittee on Financial Institutions of the Senate Committee on Banking and Currency, 90th Cong., 1st Sess., 663 (1967) (statement of J. L. Robertson, Vice Chairman, Board of Governors of the Federal Reserve System). This criticism was heeded and the final version of the bill substituted the language now found in the Act (15 U. S. C. § 1602 (e)) with the following explanation: “The original S. 5 language was deleted because it was somewhat cumbersome and sweeping and referred to various types of lease situations which might not be true extensions of credit.” S. Rep. No. 392, 90th Cong., 1st Sess., 12 (1967). In fact a lease, like the “paid during service” magazine contracts offered by respondent, often imposes a noncancellable obligation on the lessee or consumer to pay in a series of installments. Yet the lessor does not extend credit because the lessee ordinarily pays in advance for each period during which he enjoys the use of the property. Petitioner, by the same reasoning, was no more the recipient of credit than is the ordinary lessee or bailee. It would be inconsistent with this legislative history to read “extension of credit” to include every noncancellable installment obligation.

 The District Court found that there was no issue as to any material fact in this case. The Court of Appeals did not disturb this finding. Whether one agrees with this finding as does the majority or disagrees for reasons stated by Mr. Justice Douglas, the District Court’s conclusion that the uncontroverted facts establish a consumer credit transaction is clearly a conclusion of law and therefore is entitled to no presumption of correctness. Nor do respondent’s dunning letters to petitioner describing her obligation as a credit account create any such presumption. Again, such statements only express a legal conclusion and do not establish the existence of a consumer credit transaction within the meaning of the Act.

 If respondent failed to deliver the magazines as agreed prior to completion of the specified payments, petitioner would have no further obligation to pay:
“A contract for the sale of goods may be an instalment contract with respect to the goods sold as with respect to payments of the price. The non-delivery of an instalment or delivery of a nonconforming instalment when required by the contract is a breach for which an action can be maintained at once. There is no doubt also *388that the buyer is privileged to withhold payment of the price of the undelivered instalment or of a nonconforming instalment that is rightfully rejected. . . . [T]he buyer does not have to extend such credit [beyond that which was agreed upon] to the seller by making payments without receiving the agreed goods.” 3A A. Corbin, Contracts § 691, p. 264 (1960). See Fla. Stat. Ann. §§ 672.2-612, 672.2-711, 672.2-717 (1966).

 Indeed, petitioner’s complaint avers that the installment contract for the purchase and sale of the magazines is “the only instrument executed and existing between the parties,” and that respondent thereby “extend [ed] Consumer Credit as defined in Regulation Z ... .” There is no allegation as to extension of credit by the publishers or by any third person. Second Amended Complaint, App. 3, 4.