argued as amended april 21 1976.: February 3, 1976.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA.
Seitz, Chief Judge, Van Dusen and Weis, Circuit Judges.
The Truth In Lending Act is intended to provide sufficient data to the consumer so that he can make informed judgments on credit transactions. This appeal is concerned with interpretation of the Act and administrative regulations in connection with the purchase of an automobile. We conclude that an automobile dealer has the statutory duty to disclose credit terms when he receives a commission for referring a customer to the financing agency which advances the necessary funds.
Plaintiff, Mrs. Janet Manning, agreed to purchase a used car from defendant Springfield Dodge, Inc. on March 2, 1974. Springfield's credit manager obtained the necessary information for financing from the plaintiff, and arranged for a $1,191.00 loan from defendant Princeton Consumer Discount Company. Prior to this incident, Mrs. Manning had never transacted any business with Princeton, but on occasion Springfield had directed customers to the loan company, receiving a commission in return.
On March 11, 1974, after informing Mrs. Manning that all the preparations had been made, Springfield arranged to have its employee drive Mrs. Manning to Princeton's office. There she signed a number of documents and received a check in the amount of $1,191.00 payable to her and to Springfield Dodge. She then returned to the automobile dealer, endorsed the check and took possession of the car.
Princeton made the consumer loan disclosures to the plaintiff required by § 129 of the Truth In Lending Act, 15 U.S.C. § 1639, including, inter alia : the amount of credit; the charges; the finance charge, expressed in dollars and annual percentage rate; the default provisions; and the security interest acquired by the lender. However, neither Springfield nor Princeton made the "credit sale" disclosures listed in § 128, 15 U.S.C. § 1638. This section requires disclosure of matters identical to those in § 129 and, in addition, specifies several others.
Asserting a violation of the Truth In Lending Act, plaintiff filed suit in the district court seeking the statutory penalty, attorneys' fees, and injunctive relief for a class which she sought to represent. For purposes of injunctive relief, plaintiff was certified as "the representative of all those who had been, or will be, denied their rights under 15 U.S.C. § 1638 by defendant Springfield Dodge." Her request for certification of the defendants as representatives of all creditors who participated in transactions in which the seller arranged credit, but in which only § 129 disclosures were made, was denied because of failure of proof.
After an exchange of interrogatories and answers, the plaintiff and Princeton moved for summary judgment. The district court found that Princeton, as lender, was not required to make any further disclosures, but that Springfield, as seller, was liable to the plaintiff for failure to comply with § 128. The court entered judgment in the amount of $1,000.00 together with a counsel fee of $1,980.00 in favor of the plaintiff and against Springfield. On appeal, plaintiff renews her contention that the seller Springfield and lender Princeton had joint and several obligations to make the credit sale disclosures, and that the defendants should have represented a class.
Plaintiff's motion to certify Springfield as a class representative was denied because she failed to substantiate her allegation that there is an industry-wide practice of treating credit sales as if they were loan transactions. Nor did she establish the number of sellers whose conduct was the same as defendants. We find no error in the district court's conclusion that the plaintiff did not present adequate evidence to supply the "numerosity" and "typicality" requirements of FED. R. CIV. P. 23.
The district court found that, on the undisputed facts, the transaction was a "credit sale" as defined by the Truth In Lending Act. We agree.
Section 103, 15 U.S.C. § 1602, defines a "credit sale" as one in "which credit is extended or arranged by the seller." Regulation Z of the Federal Reserve Board*fn1 interprets "arranging credit" as follows:
"'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. . . ." 12 C.F.R. § 226.2(f).
Although it admits receiving a commission from Princeton as a result of the Manning loan, Springfield interprets the regulation to apply only if the seller has participated in the preparation of the contract documents in addition to accepting a fee. Concededly, the regulation is not a model of clarity; but we accept the district court's view that the interpretation Springfield urges is strained and unconvincing. If the seller either accepts a fee or participates in the preparation of contract documents for extension of credit with knowledge of ...