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MANNING v. PRINCETON CONSUMER DISCOUNT CO.

May 30, 1975

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



The opinion of the court was delivered by: NEWCOMER

 Newcomer, D. J.

 On January 31, 1975, this Court certified the plaintiff, Janet Manning, as the representative, under Federal Rule 23(b)(2), of a class of all those who have been, or will be, denied their rights under 15 U.S.C. § 1638 (the "Truth-in-Lending Act") by defendant Springfield Dodge. This Court then entered summary judgment on behalf of plaintiff and her class, and at the same time entered summary judgment on behalf of defendant Princeton Consumer Discount Company against plaintiff and her class. The Court also entered summary judgment in favor of Princeton and against plaintiff on plaintiff's reformation claim. 390 F. Supp. 320. Soon after the January 31, 1975 Order was entered, the parties brought to the Court's attention the fact that the Court had scheduled oral argument upon these motions and that oral argument had never been held. In order to eliminate any prejudice which might have resulted from this oversight, the Court allowed the parties against whom judgment had been entered a period of time in which to present to the Court, in the form of motions for reconsideration, any arguments or evidence which they had reserved for oral argument. Defendant Springfield Dodge has availed itself of the time period provided by the Court; plaintiff Manning filed a motion for reconsideration within the shorter time period provided by Federal Rule 59(e), which entitles it to raise matters other than those that may have been reserved for oral argument. It is these motions for reconsideration, and the reply of defendant Princeton to them, which are dealt with in this memorandum.

 Briefly, these are the facts upon which the Court entered summary judgment in the January 31, 1975 Order. On March 20, 1974, plaintiff agreed to purchase an automobile from Defendant Springfield Dodge. Plaintiff made a downpayment of $300.00, 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. 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.

 Defendants' answers to plaintiff's interrogatories revealed that Princeton paid Springfield a 5% referral fee on the transaction involving plaintiff as well as on another 14 transactions between June, 1973 and June, 1974 involving cars sold by Springfield and financed by Princeton.

 We found that these undisputed facts established that defendant Springfield Dodge arranged for the extension of credit to plaintiff, thereby making the sale of the car to plaintiff a "credit sale" within the meaning of § 2(f) of the Truth-in-Lending Act, 15 U.S.C. § 1602(f), *fn1" and regulation Z *fn2" promulgated thereunder. Since plaintiff's transaction was a credit sale, she was entitled to more disclosures *fn3" then she had received on the "consumer loan transaction" form which she received from Princeton when she entered into the loan agreement with Princeton. The question which was then before the Court, and which has been raised anew by the motions for reconsideration, is which defendant, Springfield Dodge or Princeton, or both, was required by the Truth-in-Lending Act to provide her with these disclosures? We concluded that only defendant Springfield Dodge, the party who had arranged for the extension of credit and thus brought the transaction within the purview of the credit sale section, was required to make the credit sale disclosures. This conclusion was based partly on a published advisory letter *fn4" on regulation Z written by the Director of the Federal Reserve Board and partly on our view that little would be gained by requiring identical disclosures to the same buyer.

 
"Since, as you indicate [the corporation] appears to 'arrange for the extension of credit' as defined in section 226.2(f) so as to become a 'creditor' under section 226.2(m), in the staff's opinion, both the bank and [the corporation] would be responsible (pursuant to section 226.6(d)) for the required disclosures. They could, of course, join in making those disclosures and it would simply be necessary for both parties to be identified on the disclosure statement." CCH Consumer Credit Guide, para. 30,841. (April 28, 1972).

 In discussing the bank and the corporation's dual responsibilities for disclosures, this letter refers to § 226.6(d) of regulation Z. That regulation reads as follows:

 
" Multiple Creditors: Joint Disclosure. If there is more than one creditor in a transaction, each creditor shall be clearly identified and shall be responsible for making only those disclosures required by this Part which are within his knowledge and the purview of his relationship with the customer. If two or more creditors make a joint disclosure, each creditor shall be clearly identified. The disclosures required under paragraphs (b) and (c) of § 226.8 [the credit sale disclosure provision] shall be made by the seller if he extends or arranges for the extension of credit. Otherwise disclosures shall be made as required under paragraphs (b) and (d) of § 226.8 [the consumer loan transaction disclosure provisions]."

 This section is confusing and has caused at least one district court to reverse its interpretation of it. Boggan v. Euclid National Bank, 1975 CCH Consumer Credit Guide, para. 98,674 (N.D. Ohio 1973), vacated and remanded (6th Cir. 1975) (only seller must make credit sale disclosures); Pitts v. Society National Bank of Cleveland, (N.D. Ohio 1975) (both seller and extender of credit liable for credit sale disclosures).

 Plaintiff argues that the last two sentences of § 226.6(d) were placed in the regulation to insure that the seller as well as the lender makes the disclosures required in a credit sale. Defendant Princeton, on the other hand, contends that the last two sentences of this section make clear that in the situation where the seller arranges for the extension of ...


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