The opinion of the court was delivered by: MUIR
Plaintiff Aldens, Inc. (Aldens), an Illinois corporation engaged in the business of interstate mail order sales to purchasers who are located in all states of the Union, filed this action seeking a declaratory judgment that application of the Pennsylvania Goods and Services Installment Sales Act, 69 P.S. § 1101 et seq. (the Act), to Aldens' transactions with Pennsylvania residents is unconstitutional. Defendant, Attorney General for the Commonwealth of Pennsylvania, threatens to enforce the Act against Plaintiff. The Act provides, inter alia, for the form and content of retail installment contracts and monthly billing statements and prohibits finance charges for revolving charge accounts in excess of an annual rate of 15%.
Aldens utilizes a standard credit agreement for all transactions involving customers throughout the United States. This credit agreement does not comply with the form and content requirements of the Act, and provides for a monthly finance charge of 1.75% on balances of $350.00 or less (annual percentage rate of 21%). Because Plaintiff deals from Illinois with its Pennsylvania customers solely through the use of the United States mails and common carriers, it contends that application of the Act to the transactions with Pennsylvania residents is prohibited by the commerce clause, the due process clause of the 14th Amendment, and the postal clause of the United States Constitution.
Defendant Packel answered the complaint denying the unconstitutionality of the Act as applied to Aldens, and asserted a counterclaim in which he seeks declaratory judgment that the Act is constitutional as applied to Aldens and requests an injunction against Aldens' future non-compliance with the Act. Before the Court are cross-motions for summary judgment and Plaintiff's motion for judgment on the pleadings as to Defendant's counterclaim. The parties have entered into a stipulation of facts which contains all facts necessary for the determination of the issues in this proceeding and the Court has ruled on Defendant's objections that certain of the stipulated facts are irrelevant in this case. The following constitutes the factual record in this case:
1. Aldens, Inc. (Aldens), is an Illinois corporation with its only physical location in Chicago, Illinois. The business was established in Chicago in 1902 and has been conducted as a general retail merchandise mail order business in Chicago ever since.
2. Aldens sells merchandise to customers who reside in all fifty states.
3. The credit agreement in use nationally by Aldens provides that it is an Illinois contract governed by Illinois law. The credit agreement provides for a monthly finance charge of 1.75 percent on balances of $350.00 or less (annual percentage rate of 21 percent) which exceeds the rate permitted by § 904 of the Act, 69 P.S. § 1904, and a monthly finance charge of 1 percent on that portion of the account balance in excess of $350.00 (annual percentage rate of 12 percent). The annual rates are expressed in conformity with Section 226.7(b)(5) of Regulation Z, promulgated by the Federal Reserve Board under the Federal Truth-in-Lending Act. The credit agreement complies with Illinois law and with the Federal Truth-in-Lending Act.
4. Aldens retains title only in the nature of a purchase money security interest in merchandise sold pursuant to the credit agreement with its customers. Aldens does not file any security interest documents, does not enforce any security interest, and has a security interest in merchandise unpaid for only to the extent provided by law.
5. Approximately 7.6 percent of Aldens' annual sales are made to Pennsylvania customers. Sales to Pennsylvania customers amount to approximately $14,900,000 per year. Approximately 27 percent of this amount is derived from cash sales and 73 percent from credit sales. Aldens has approximately 90,000 Pennsylvania credit customers; the average credit account balance is approximately $169.00.
6. Were Aldens to comply with the Pennsylvania Goods and Services Installment Act, it would incur additional annual costs and expenses, and would sustain revenue losses directly attributable to the burden imposed by that Act in excess of the following:
a. Approximate additional cost of preparing catalogs, advertising materials, and credit agreements containing Pennsylvania credit terms; special computer processing and handling costs for Pennsylvania customers in setting up accounts and producing monthly statements. $53,000
b. Approximate loss of finance and service charge revenue from Pennsylvania customers 750,000
7. Were Aldens to comply with the provisions of the varying statutes in those states which presently regulate revolving charge agreements, Aldens would incur additional costs and expenses, aside from the effect of revenue losses due to the reductions in service and finance charges, in an amount in excess of $320,000, annually.
9. Aldens does not have in Pennsylvania any agent, salesman, canvasser, solicitor or any other type of representative to sell or take orders, to deliver merchandise, to accept payments or to service merchandise it sells.
10. Subject to the security interest described in paragraph 4 hereof, Aldens does not own any tangible property, real or personal, in Pennsylvania.
11. Aldens has no telephone listing in Pennsylvania.
12. Pennsylvania customers are solicited solely by mail from outside Pennsylvania. They order primarily by mail, or occasionally by ...