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MANNING v. PRINCETON CONSUMER DISCOUNT CO.

January 31, 1975

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

 Newcomer, D.J.

 Plaintiff, Janet Manning, alleges that defendants violated the federal Truth-in-Lending Act *fn1" by treating the credit sale of an automobile to her as a consumer loan, thus depriving her of certain information which the Act requires to be disclosed in credit sales but not in consumer loans. *fn2" Plaintiff seeks to be certified as the representative of a class of those who have had credit purchases written as though they were separate sale and loan transactions, but she asks that we postpone deciding the class action question until after we determine her pending motion for summary judgment on her individual claim. Defendant Springfield Dodge opposes summary judgment on the grounds that certain material facts remain to be decided. Defendant Princeton has moved for summary judgment on the grounds that the Truth-in-Lending Act imposes on Springfield, and not on it, the duty of making any disclosures not made to plaintiff.

 We cannot accept plaintiff's argument that we may postpone class certification until after liability is decided. Therefore we address the class action question first, and conclude that this suit is a proper class action suit under Rule 23(b)(2). Finding that no disputes as to material facts exist, we grant summary judgment on plaintiff's behalf against Springfield Dodge, and on Princeton's behalf against plaintiff, on the question of liability. We award plaintiff $1,000., as well as a reasonable attorney's fee and costs, and we enter an injunction on behalf of plaintiff and the members of her class against future violations of the Truth-in-Lending Act by Springfield Dodge.

 FACTS

 The following facts are undisputed. On March 2, 1974, plaintiff agreed to purchase an automobile from defendant Springfield Dodge. Plaintiff made a downpayment of $300., and it was agreed that Springfield would obtain financing for the balance. In order to do this, a Springfield employee obtained information from plaintiff concerning her income, assets, and expenses.

 Approximately one week later plaintiff was instructed to return to Springfield Dodge, from where she was driven by a Springfield employee to the offices of defendant Princeton Consumer Discount Company. Plaintiff had never done business with, nor heard of, Princeton prior to this time. When plaintiff arrived at Princeton, the contract documents concerning a loan to her in the amount of the unpaid balance on the car were already prepared.

 Plaintiff had already been informed of the terms of the loan contract by a Springfield officer prior to her trip to Princeton. Before signing the contract she was informed by a Princeton employee that Princeton assumed no liability for the condition of the car and that she should make certain she was satisfied with the car before she endorsed Princeton's check over to Springfield. After she signed the contract, the Princeton employee gave directly to the Springfield salesman a check made out to the plaintiff and to Springfield Dodge for $1,191.00 and gave to the plaintiff a 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 over to Springfield, which she did.

 Plaintiff does not allege that the seller, Springfield Dodge, extended credit to her, but rather that the seller arranged for the extension of such credit, which would bring the transaction within the definition of a credit sale under Section 103(g) of the Truth-in-Lending Act, 15 U.S.C. § 1602(g). *fn3" To determine whether the seller did arrange for credit as that phrase is to be construed, we must turn to regulation Z of 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. . . ."

 Plaintiff asserts that the undisputed facts compel that Springfield arranged for the extension of credit within the meaning of regulation Z. Defendants argue that the regulation is intended to require both the receipt of a fee and participation in the preparation of the contract documents required in connection with the extension of credit. Defendants have offered no support for this interpretation, and we believe that it is a strained and unconvincing one. A much more logical explanation is that the regulation requires either receipt of a fee or knowledge of the contract's terms and participation in drawing it up. See, Starks v. Orleans Motors, Inc., 372 F. Supp. 928 (E.D. La. 1974).

 CLASS ACTION

 Plaintiff seeks to represent, under Rule 23 (a) (1-4) and (b) (2), a class of all those who have been, are being, or will be denied the disclosures required under Section 128 of the Truth-in-Lending Act by having their credit purchases treated as separate sale and loan transactions. In addition, plaintiff seeks to have the defendants certified as representatives of a class of those seller and creditor institutions who write credit sales as if they were separate sales and loans.

 Plaintiff, relying on the case of Katz v. Carte Blanche Corp., 496 F.2d 747 (3rd Cir. 1974), cert. denied, 419 U.S. 885, 95 S. Ct. 152, 42 L. Ed. 2d 125 (1974), asks us to defer ruling on her class certification motion until after we rule on her pending summary judgment. We do not feel that the circumstances of this ...


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