No. 482 and 483 April Term, 1977, Consolidated Appeals From the Orders of the Court of Common Pleas of Beaver County, Civil Division, at Nos. 1832 and 1616 of 1976.
John W. Dineen, Aliquippa, for appellant.
No appearance entered nor brief submitted for appellee, at No. 482.
John H. Morgan, Pittsburgh, with him Howard D. Schwartz, Pittsburgh, for appellee, at No. 483.
Watkins, President Judge, and Jacobs, Hoffman, Cercone, Price, Van der Voort and Spaeth, JJ. Watkins, former President Judge, did not participate in the consideration or decision of this case.
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This appeal has been taken from Judge KLEIN's orders, dated January 14, 1977, sustaining appellees' preliminary objections to appellant's counterclaims for alleged violations
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of the Truth-In-Lending Act,*fn1 in assumpsit actions filed by Appellees Household Consumer Discount Company and American Finance Corporation to recover the balance due on loans made to appellant.*fn2 Although the initial actions and the counterclaims were filed after the one-year period of limitations set forth in Section 130(e) of the Act had expired,*fn3 appellant contends that her counterclaims should have been allowed under the common law doctrine of recoupment. For the reasons that appear below, we affirm.
We agree with the contention advanced by both appellant and appellees that the lower court erred in applying state rather than federal law. When a suit on a federally created cause of action is brought in a state court and there is a federal period of limitations specified, state courts should apply the federal period as well as any federal rules on tolling and other ancillary matters. 51 Am.Jur.2d Limitation of Actions § 75, at 654, citing Burnett v. New York Central Railroad Co., 380 U.S. 424, 85 S.Ct. 1050, 13 L.Ed.2d 941 (1964). The Supremacy Clause, U.S.Const. Art. VI, cl. 2, mandates that state courts not usurp the role of Congress by applying state law in matters demanding a uniform national application such as consumer credit regulation. See Engel v. Davenport, 271 U.S. 33, 39, 46 S.Ct. 410, 70 L.Ed. 813 (1926). The enactment of the Truth-In-Lending Act constitutes an exercise of Congress' power to regulate commerce, Sosa v. Fite, 465 F.2d 1227, 1229 (5th Cir. 1972), and when Congress legislates on a subject within its powers it preempts state regulation of the matter. See Perez v. United States, 402 U.S. 146, 91 S.Ct. 1357, 28 L.Ed.2d 686 (1971). The interjection of state law concerning tolling of the statute of limitations and ancillary matters would impermissibly impinge upon a constitutional power granted to Congress and would
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create needless diversity in the application of the Act*fn4 by "making identical transactions subject to the vagaries of the laws of the several states." Clearfield Trust Co. v. U. S., 318 U.S. 363, 367, 63 S.Ct. 573, 575, 87 L.Ed. 838 (1943). The intended beneficiaries of a federal protective statute must be afforded "the full benefit of federal law." McAllister v. Magnolia Petroleum Co., 357 U.S. 221, 226, 78 S.Ct. 1201, 1205, 28 L.Ed.2d 1272 (1958).
In applying a statutory period of limitations to a Truth-In-Lending cause of action, we are mindful of the fact that the cause of action for an alleged violation of the Act accrues at the time the parties contract.*fn5 Wachtel v. West, 476 F.2d 1062 (6th Cir. 1973), cert. den., 414 U.S. 874, 94 S.Ct. 161, 38 L.Ed.2d 114; Chevalier v. Baird Savings Association, 371 F.Supp. 1282 (E.D.Pa.1974). We are thus squarely faced with the question of whether the ...