Court Opinion

ID: 9589777
Source: CourtListenerOpinion
Date Created: 2023-08-21 23:48:33.854979+00
Date Added: 2024-06-11T18:01:04.140789
License: Public Domain

Justice HtrSKlNS
dissenting.
The controlling question presented by this appeal is whether the debt collection activities of defendant Company fall within the purview of G.S. 75-1.1. The pertinent subsections of that statute read as follows:
“ (a) Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.
*321(b) The purpose of this section is to declare, and to provide civil legal means to maintain, ethical standards of dealings between persons engaged in business, and between persons engaged in business and the consuming public within this State, to the end that good faith and fair dealings between buyers and sellers at all levels of commerce be had in this State.”
In order to apply the provisions of G.S. 75-1.1 to transactions between persons engaged in business and the consuming public, as here, it must be shown (1) that the company has committed “unfair or deceptive acts or practices,” and (2) that these acts or practices were “in the conduct of any trade or commerce.” With respect to the first requirement, it is my opinion that the debt collection activities of J. C. Penney Company, Inc., revealed by the affidavits included in the record, constitute unfair acts or practices.
The affidavit of Narcissus Marrow discloses that she and her husband applied for and received two J. C. Penney credit cards in 1973. A year later the Marrows separated. At that time Mrs. Marrow wrote to Penney advising that due to the change in her marital status she would be unable to pay the $190.00 balance of her credit account at the usual rate, but she intended to pay the balance due as soon as possible. Defendant did not acknowledge this letter. After missing two payments Mrs. Marrow began to receive letters from Penney concerning her delinquency, and during the next year she made payments as she could afford them. In September 1975 she received a call at her place of employment from a Mrs. Spence who represented herself to be employed by the Collection Department of J. C. Penney Company. Mrs. Marrow asked Mrs. Spence not to call her at her office again and apparently worked out a payment schedule for the balance of her account. Nevertheless, Mrs. Spence called her again a day or so later at her place of employment and demanded more money. Mrs. Spence threatened to garnish her wages or turn her account over to a collection agency if the new sum was not forthcoming. Mrs. Marrow again asked Mrs. Spence not to call her at work.
A few days later a Mrs. Morris from the Collection Department of Penney called her office eight times attempting to locate Mrs. Marrow. During this time Mrs. Morris called the employment office to verify Mrs. Marrow’s employment, told *322the switchboard operator at the office that she was “tired of getting the run around,” made the same statement to a fellow employee of Mrs. Marrow, and twice attempted to get her supervisor on the phone. During this time Mrs. Marrow received monthly statements from Penney in which Penney attempted to induce her to make more purchases!
The affidavit of Judi Fenderson disclosed that Mrs. Fen-derson is divorced, the mother of two small children, and that she receives no support from her former husband. In 1973 she opened a charge account with J. C. Penney. A year later she was forced to change jobs, leaving her with a $348 per month cut in salary and, as a result, she was unable to make proper payments to Penney. She did pay as much as possible but began to receive threatening letters from that company. On 14 July 1975 she received a phone call at work from a Ms. Brown, employed by Penney, and worked out a payment agreement. A week later she received a phone call from a Ms. Betanzos demanding that she pay all accounts in full. Ms. Betanzos threatened that if she did not pay, Penney could garnish her wages and contact her employer. In addition, Ms. Betanzos told her of other debtors “who had been fired from their jobs just because they didn’t pay Penney’s.” She received subsequent phone calls similar in nature.
Mr. Donald Poole, a delinquent debtor of J. C. Penney Company, received several calls at work concerning his debt and culminating with a call from a J, C. Penney employee to his supervisor, Mary Kay Creech. Ms. Creech’s affidavit reveals that a Mr. Barrow from J. C. Penney called her and stated that Mr. Poole was uncooperative with Penney’s, either on the phone or by mail, asked if North Carolina permitted Penney to garnish the wages of Mr.. Poole, and finally stated that apparently Penney would have to take Poole to civil court. He then asked Ms. Creech to tell Mr. Poole of the conversation he had with her. regarding this matter.
The affidavits of Sandra and William Wheeler reveal that when they became delinquent in their accounts, Penney continually harassed them with letters and phone calls threatening to garnish their wages, repossess the furniture, put liens on their house and car and talk to their employer and supervisor about “counselling” them in the matter of their delinquent accounts. None of these threats were acted upon.
*323Numerous other affidavits were filed, all reflecting a similar pattern of threats and harassment.
These sworn affidavits of those who have dealt with the J. C. Penney Company reveal a nightmarish pattern of harassment and other unscrupulous and unethical tactics. In particular, the threat and, indeed, the actual practice of informing the debtor's employer, supervisors and fellow workers of the debtor’s credit status is an intolerable practice, bordering on blackmail and serving only to coerce the payment of the debt through fear and intimidation of the debtor. In my opinion these tactics show that the J. C. Penney Company has engaged in unfair acts and practices.
The majority, however, never reaches the question whether the acts, as alleged, are unfair. Rather, the majority has apparently decided that, regardless of whether the enumerated activities amount to unfair acts or practices, such acts are not “in the conduct of any trade or commerce.” This conclusion is reached through close and narrow construction of the term “trade and commerce” and, in my opinion, is erroneous.
As construed by the majority these words are read as an indivisible term having a single meaning different from the sum of its parts. Thus the majority states that “the two words, when used in conjunction, ‘include practically every business occupation carried on for subsistence or profit, and into which the elements of bargain and sale, barter, exchange, or traffic, enter.’ Black’s Law Dictionary (4th Ed. 1968).”
I agree with the quoted definition but think the meaning of the phrase “trade or commerce” is more clearly understood by examination of the longer statement in State v. Tagami, 195 Cal. 522, 234 P. 102 (1925), from which the abbreviated definition quoted by the majority is lifted. In that case the California Supreme Court, dealing with a 1911 international treaty, stated:
“ . . . [W]hen so used in the conjunctive, they [“trade” and “commerce”] are held to impart to each other an enlarged signification which would include practically every business occupation carried on for the purpose of procuring subsistence or profit and into which, or any material part of which, the elements of bargain and sale, barter, exchange, or traffic enter.” (Emphasis added.)
*324It seems clear from this more complete statement that “trade or commerce,” by the majority’s own authority, is not to be artificially limited to only those parts of a business in which elements of bargain and sale enter or which induce bargain or sale, but rather extends to the whole of any business or occupation of which bargain and sale is a material part. As to what comprises the “whole” of the business or occupation, I would suggest that, in a retail sales business such as Penney’s, the business extends from the inducement to enter the buyer-seller relationship, generally advertising, through the termination of the buyer-seller relationship, generally final payment.
I am at a loss as to what position the majority adopts on this issue. At one point the opinion states that the “unfair and deceptive acts and practices forbidden by G.S. 75-1.1 (a) are those involved in the bargain, sale, barter, exchange or traffic.” (Emphasis added.) In the next paragraph it is said that “it is only those activities surrounding the ‘sale' that are regulated by G.S. 75-1.1.” (Emphasis added.) Elsewhere, the majority speaks of legislative intent to “prohibit only unfair and deceptive practices affecting sales.” (Emphasis added.) Later, the majority implies that prohibited acts are those which are related to the sale. Finally, the majority quotes with approval language from another jurisdiction holding that, under a similar law, only “acts or practices ‘designed to effect a sale’ are covered.” (Emphasis added.)
The majority seems to envision some relationship — between the act or practice and the element of bargain and sale — as the touchstone for coverage under G.S. 75-1.1. Whatever the nature of that relationship, the majority does not find it to be present in this case.
By stating that the act must be “surrounding” or “related to” the bargain or sale element, the majority seems to adopt the same test that I expressed earlier; that is, that coverage extends to the whole of the business of which the bargain and sale element is a material part. If this is true, then the majority must have found that where a retail sales company permits customers to purchase goods on a time payment or credit basis, final payment is not an integral part of the sales system.
Support for this position, if it is indeed the position adopted by the majority, may be found in the discussion of G.S. 75-1.1(b). That section reads:
*325“(b) The purpose of this section is to declare, and to provide civil legal means to maintain, ethical standards of dealings between persons engaged in business, and between persons engaged in business and the consuming public within this State, to the end that good faith and fair dealings between buyers and sellers at all levels of commerce be had in this State.”
The majority singles out the words “between buyers and sellers” and, on that basis, states that the Legislature is “concerned with openness and fairness in those activities which characterize a party as a seller.”
Language in the majority opinion suggests that once the promise to pay is made, the consumer and Penney change hats and become debtor and creditor rather than buyer and seller. In this vein the majority states that debt collection is not an activity necessarily typical or unique to sellers — a conclusion contrary to reality. Debt collection may not be unique to sellers, as indeed advertising (which is conceded to be under G.S. 75-1.1) is not unique to sellers; but if debt collection is not typical of credit sellers, then bankruptcy soon will be.
Nevertheless, I do not quarrel with the concept that a company may be both a seller and a creditor and that these activities may be distinct businesses. J. C. Penney Company, Inc., for example, could be in the business of lending money for automobile purchases or home improvements as well as being a retail sales company; and, absent direct connection with those retail sales, the credit collection activities stemming from its lending would not be subject to the provisions of G.S. 75-1.1 solely because some corporate arm was involved in retail sales. Such is not the case here. Here the credit is extended as a direct result of the sale. The promise to pay is what the consumer has exchanged for the goods. I reject the implication that in this situation payment for the goods pursuant to the promise to pay is separate and distinct from the sales transaction itself. Such a position defies the realities of modern commercial transactions and chooses to apply technical legal distinctions where none exist. It has been said that it “is a matter of common knowledge that the collection of accounts is a part, and a vital part, of any merchandising business in which credit is extended.” Ocean Accident & Guaranty Corp. v. Rubin, 73 F. 2d 157 (9th Cir. 1934). As Justice Lake ably points out, dissenting in Gardner *326v. Reidsville, 269 N.C. 581, 597, 153 S.E. 2d 139, 151 (1967), our Legislature has a keen awareness of conditions in North Carolina and a demonstrated competency in fiscal matters. To suggest that they intended that acts “surrounding” or “related to” a sale do not include payments made to the store under a credit plan established arid operated by that store attributes to that body a degree of naivety not justified by its record.
It is possible, however, that the majority does not reach this question. Under certain language in the opinion the majority seems to adopt the position that the act must “affect,” “involve” or “effect” the sale or bargain — language which would require that the act induce the sale. For reasons already-stated, I do not agree with this construction of the phrase “in the conduct of any trade or commerce.” Assuming for the moment, however, that this construction is proper, the majority leaves many questions unanswered.
Primarily the majority opinion does not resolve the issue whether the unfair or deceptive act or practice must itself induce the sale or bargain in order for G.S. 75-1.1 to apply, or whether that statute applies where the unfair act in itself did not induce the sale but the activity out of which the act arose induced the sale. For example, if the State demonstrated with competent evidence that extension of credit was offered to induce the sale, would later unfair acts, in enforcing the credit terms, as demonstrated in this case, be proscribed by G.S. 75-1.1?
If this question is answered in the affirmative then, although there is no clear proof in the record that the J. C. Penney Company extends credit as an inducement to sales, it should be a simple matter for the State to allege and prove such inducement in future proceedings under G.S. 75-1.1. Moreover, it is my view that if G.S. 75-1.1 is construed to proscribe unfair acts arising out of activities which induce the sale or bargain, this Court should take judicial notice of the fact that where credit is extended in retail sales by a major merchandising corporation, as in this case, such credit is extended as an inducement to the buyer to make a purchase.
Judicial notice may be taken of “the general business methods of railway and other well-known or qwm'-public corporations when these methods are universally practiced or commonly known to exist.” Furniture Co. v. Express Co., 144 N.C. 639, *32757 S.E. 458 (1907); accord, U-Haul Co. v. Jones, 269 N.C. 284, 152 S.E. 2d 65 (1967); Lichtenfels v. Bank, 260 N.C. 146, 132 S.E. 2d 360 (1963); Comrs. v. Prudden, 180 N.C. 496, 105 S.E. 7 (1920); cf. Ocean Accident & Guaranty Corp. v. Rubin, 73 F. 2d 157 (9th Cir. 1934) (collection of accounts is a vital part of any merchandising business in which credit is extended); Kansas Com’n. on Civil Rights v. Sears, Roebuck & Co., 216 Kan. 306, 532 P. 2d 1263 (1975) (extension of credit is commonplace in merchandise sales); Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 161 A. 2d 69 (1960) (automobile manufac-surers, including Chrysler Corporation, use large scale media advertising to induce sales); Wetherington v. Motor Co., 240 N.C. 90, 81 S.E. 2d 267 (1954) (marketing practices of automobile manufacturers); General Bronze Corp. v. Schmeling, 213 Wis. 150, 250 N.W. 412 (1933) (employees frequently receive a portion of the net profits of a company as a part of their compensation).
In my opinion the use of credit by major retail sales coryo-rations as a sales inducement is so commonplace and well known as to fall into that category of facts of which judicial notice may be taken. In this regard the majority opinion impliedly recognizes the sales inducement aspect of credit extension when it states in a footnote that “[a]s time passed, competition apparently required that credit be extended for sales made,”
If indeed the majority holds that G.S. 75-1.1 proscribes unfair acts ¿rising out of activities which induce the sale or bargain, then, taking judicial notice of the inducement to buy which credit produces, it is my view that the trial court erred in holding, as a matter of law, that the conduct of the defendant J. C. Penney Company is not proscribed by G.S. 75-1.1.
If the majority holds that the unfair act itself must induce the sale, then the Court today effectively deletes “unfair” practices from the purview of G.S. 75-1.1, and “deceptive” practices only are now prohibited. It is not amiss to say that many “immoral, unethical, oppressive, or unscrupulous” acts which are not deceytive may nonetheless be unfair. See F.T.C. v. Syerry & Hutchinson Co., 405 U.S. 233, 31 L.Ed. 2d 170, 92 S.Ct. 898 (1972). In my opinion, limiting the proscriptions of G.S. 75-1.1 to those acts which “induce” a sale deals a grievous blow to the encouragement of “good faith and fair dealings between buyers and sellers at all levels of commerce” envisioned by G.S. *32875-1.1 (b). Nevertheless, if G.S. 75-1.1 be so construed, I would hold that the promise of “fair” credit collection is included by implication in the extension of credit and thus covered by the statute.
For the reasons stated, I respectfully dissent from the majority opinion and vote to uphold the decision of the Court of Appeals.
Justice ExuM joins in this dissenting opinion.