Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

MANNING v. PRINCETON CONSUMER DISCOUNT CO.

August 8, 1974

JANET M. MANNING, on behalf of herself and all others similarly situated
v.
PRINCETON CONSUMER DISCOUNT COMPANY, INC., and SPRINGFIELD DODGE, INC.



The opinion of the court was delivered by: NEWCOMER

 Plaintiff, on behalf of herself and all others similarly situated, alleges that there is an industry-wide practice of writing installment sales of automobiles as if they were a separate cash sale and loan transaction. She further alleges that this practice violates both the federal Truth-in-Lending statute and state law. Both defendants have moved to dismiss the action for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b) (6). Defendants' motion is granted as to the state law claim but denied as to the federal law claim.

 Factual Background.

 Plaintiff's complaint alleges that on March 2, 1974 the plaintiff agreed to purchase a 1969 Ambassador automobile from defendant Springfield Dodge, Inc. Plaintiff agreed to make a down payment of $300.00, and financing for the balance was to be arranged by Springfield Dodge. On March 11, 1974, the plaintiff received a call from the salesman at Springfield inviting her to come in and complete the transaction. Upon arriving at Springfield Dodge, plaintiff was taken by the Dodge salesman to the offices of defendant Princeton Consumer Discount Company, Inc. The complaint alleges that the plaintiff had never dealt with Princeton previously.

 The complaint states that the documents concerning the loan that was to be used to pay the balance of the purchase price of the automobile were typed and prepared for the plaintiff before she arrived. After a short discussion with a Princeton employee, the plaintiff signed the papers. The Princeton employee gave a check made out to the plaintiff and to Springfield Dodge for $1,191.00 to the Dodge Salesman, and gave the plaintiff the check made out to her for $11.84. The salesman then drove plaintiff back to Springfield Dodge, where they picked up the automobile. He directed her to endorse the check for $1,191.00, and she did so.

 Plaintiff's Contentions.

 a. Federal law claim.

 The plaintiff alleges in the first count of her complaint that Springfield Dodge and Princeton violated section 128 of the Truth-in-Lending Act, 15 U.S.C. § 1638, in that they entered into a credit sale with plaintiff without disclosing the information which that section requires to be disclosed. Section 128 of the Truth-in-Lending Act requires the same disclosures as plaintiffs received under § 129 plus the additional disclosures of cash price, cash downpayment, total downpayment, and the unpaid balance of cash price. Plaintiff does not allege that the seller, Springfield Dodge, extended credit to her, but that the seller arranged for the extension of such credit, which would bring the transaction within the definition of a credit sale under § 103(g) of the Truth-in-Lending Act, 15 U.S.C. § 1602 (g). *fn1"

 To determine whether the seller did arrange for credit as that phrase is to be construed, we must turn to regulation Z, the regulations promulgated by the Federal Reserve Board pursuant to the Act. In regulation Z is found a definition of the phrase "arrange for the extension of credit", 12 C.F.R. § 226.2(f):

 
"' Arrange for the extension of credit' means to provide or offer to provide consumer credit which is or will be extended by another person under a business or other relationship pursuant to which the person arranging such credit receives or will receive a fee, compensation, or other consideration for such service or has knowledge of the credit terms and participates in the preparation of the contract documents required in connection with the extension of credit. . . ."

 Although plaintiff's complaint does not specifically allege any of the elements necessary to establish an arrangement for the extension of credit under regulation Z, the facts alleged in the complaint, seen as they must be in a light most favorable to plaintiff, support such a claim. The inference could reasonably be made from the facts alleged that a business relationship existed between defendant Springfield Dodge and Princeton Consumer Discount pursuant to which Springfield had knowledge of the credit terms and participate in the preparation of the contract documents required in connection with the extension of credit. In addition, as plaintiff argues, it is doubtful that plaintiff would have a more detailed knowledge of defendants' business or compensation arrangements prior to discovery.

 Defendant Princeton argues that even if the automobile in question was purchased by plaintiff as part of a credit sale within the meaning of § 128 rather than by a consumer loan within the meaning of § 129, the duty of making the disclosures required by Section 128 rested solely on the seller, in this case, Springfield Dodge. In support of this contention Princeton submits a letter propounded by the Director of the Federal Reserve Board on June 4, 1970, in response to an inquiry by a private party. *fn2"

 This inquiry was made by a party in a situation resembling the one alleged here, in that a seller arranged for credit to be supplied to the buyer by a lending institution. The Director's letter states while the arranger of credit, the seller, must comply with section 128, the lending institution is only required to comply with the provisions concerning consumer loans (§ 129). Princeton contends that since plaintiff has conceded in her complaint that Princeton complied with the consumer loan provisions of the act, she has failed to state a cause of action against Princeton. However, we do not believe that this letter resolves all questions ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.