Riverside National Bank v. Lewis

DISSENTING OPINION

CAMPBELL, Justice.

I dissent.

Riverside contends the Deceptive Trade Practices Act (D.T.P.A.) does not apply to a loan transaction or extension of credit by a bank because:

(1) The Legislature did not intend the D.T.P.A. to apply to lenders.

(2) The trade practices of lenders are regulated by the Consumer Credit Code, Article 5069-1.01, et seq. 1

(3) Federal regulation of unfair and deceptive trade practices of national banks pre-empts the application of the D.T.P.A.

The majority holds the Act is not applicable because Lewis is not a consumer. I disagree with the contentions of Riverside and the majority holding.

Lewis’ action is based on § 17.46(a) of the D.T.P.A. which provides:

False, misleading, or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.

“Trade and Commerce” is defined in § 17.45(6) as meaning:

The advertising, offering for sale, lease, or distribution of any good or service, of any property, tangible or intangible, real, personal or mixed, and any other article, commodity, or thing of value, wherever situated, and shall include any trade or commerce directly or indirectly affecting the people of this State.

This very broad definition leaves no doubt the Legislature intended the D.T.P.A. to apply to lending practices or the extension of credit. Money is certainly “property” and it is “personal.” If it is not property, then it fits in the category of “any other article, commodity or thing of value.” It cannot be said that the banking business is not a trade or commerce and that such trade or commerce does not directly or indirectly affect the people of Texas. It is more apparent that the Act covers loan transactions when the above provisions are considered with the instructions of § 17.44 which provides:

This subchapter shall be liberally construed and applied to promote its underlying purposes, which are to protect consumers against false, misleading, and deceptive business practices, unconscionable actions, and breaches of warranty and to provide efficient and economical procedures to secure such protection.

Riverside urges the D.T.P.A. is not applicable because it applies only to a consumer who purchases goods and services and a loan transaction is neither. First, I do not agree that the Act is so limited. The definition of “trade and commerce” above quot *178 ed provides that it shall include any trade or commerce directly or indirectly affecting the people of this State. This includes loan transactions.

Second, Lewis meets the test of “services” and “consumer.” The definition of service in § 17.45(2) is of no help in defining the term as it provides “services ” means “work, labor, or service purchased or leased for use . . . .” The broad language of the Act and the mandate that the Act shall be liberally construed compels the construction that a loan transaction is a service. In Woods v. Littleton, 554 S.W.2d 662 (Tex.1977), we quoted with approval the Webster’s Third New International Dictionary definition of service as “an action or use that furthers some end or purpose: conduct or performance that assists or benefits someone or something; deeds useful or instrumental toward some object.” A loan is the obtaining of money to use to further some end or purpose. Lewis was seeking to obtain a loan to use to refinance his automobile. “Services” is defined in § 17.45(2) as “service purchased or leased for use

Having determined that lending money is a service of the trade or commerce of banking, it must now be determined if it is a service that is purchased for use. A loan is the extension of credit based on an agreement to pay interest in return. Interest is defined in Article 5069-1.01 as “compensation allowed for the use ... of money.” If interest, paid by the borrower to the lender, is compensation for the use of money, then the advancement of money for use for a specified period of time would be a service purchased for use as required by the definition.

Next, Lewis must qualify as a “consumer.” It is provided in § 17.45(4) that the term “consumer” means “an individual . . . who seeks or acquires by purchase . any . . . services.” It is undisputed that Lewis was seeking a loan from Riverside. If Lewis is a consumer under Article 5069-1.01, Consumer Credit — Consumer Protection Act, then he is also a consumer under the Deceptive Trade Practices — Consumer Protection Act. Lewis is a consumer under the Act.

Riverside argues that trade practices of lenders are exclusively regulated by the Consumer Credit Code, Tex.Rev.Civ.Stat. Ann. art. 5069-1.01 et seq. (1971). Riverside points out that the Legislature repealed Article 5069-1.01 et seq., the deceptive trade practices chapter of the Commercial Credit Code, when it amended the D.T. P.A. in 1973. Contrary to Riverside’s position, however, this does not necessarily mean the Legislature intended that “the deceptive practices of lenders and the deceptive practices of vendors should be regulated under separate and mutually exclusive statutes.” It is undisputed that the deceptive trade practices provisions of the Consumer Credit Code applied to lenders before 1973 and there is no language in the Code indicating that the amendment and movement of those provisions to the Business and Commerce Code in any way changed that result. Similarly, the D.T. P.A. as amended in 1973 and as it now exists, makes no mention of an exclusion for lenders. This lack of specific language of exclusion takes on added significance in view of Section 17.49 which provides for exemptions from the Act without mentioning lenders. Also § 17.43 provides that the remedies of the D.T.P.A. are in addition to any other procedures or remedies provided for in any other law.

Riverside next contends that federal regulation of unfair and deceptive trade practices of national banks pre-empts the application of the Texas D.T.P.A. in this case. National banks are brought into existence under federal legislation, are instrumentalities of the federal government, and are necessarily subject to the paramount authority of the United States. Nevertheless, national banks are subject to the laws of this State unless such laws interfere with the purposes of their creation, tend to impair or destroy their efficacy as federal agencies, or conflict with the paramount law of the United States. Anderson National Bank v. Luckett, 321 U.S. 233 , 64 S.Ct. 599 , 88 L.Ed. 692 (1944); Jennings v. *179 United States Fidelity & G. Co., 294 U.S. 216 , 55 S.Ct. 394 , 79 L.Ed. 869 (1935); Lewis v. Fidelity & D. Co., 292 U.S. 559 , 54 S.Ct. 848 , 78 L.Ed. 1425 (1934); First National Bank v. Missouri, 263 U.S. 640 , 44 S.Ct. 213 , 68 L.Ed. 486 (1924). See also: Citizens’ Nat. Bank of Stamford v. Stevenson, 231 S.W. 364 (Tex.Comm.App.1921, jdgm’t adopted).

There is nothing in the Texas D.T.P.A. which interferes with the purposes of the creation of national banks or which would tend to impair or destroy their efficacy as federal agencies. Riverside argues that the application of the D.T.P.A. to national banks conflicts with federal law in that it interferes with the regulatory scheme devised by the federal government to control national banks. Riverside points out that the Federal Trade Commission is expressly denied authority to regulate national banks concerning unfair or deceptive practices, 15 U.S.C.A. § 45 (a)(6) (1973); United States v. Philadelphia National Bank, 374 U.S. 321, 336 , 83 S.Ct. 1715 , 10 L.Ed.2d 915 (1963), and that such power is vested with the Board of Governors of the Federal Reserve System. 15 U.S.C.A. § 57a(f) (1973). This division of regulatory power within the federal government, however, does not reach the issue of state authority to regulate. The denial of authority to the Federal Trade Commission to regulate national banks concerning unfair or deceptive practices in no way precludes the Texas Legislature from setting up its own mechanism to regulate deceptive practices of national banks.

Under 15 U.S.C.A. § 57a(f)(1), the Board of Governors, “[i]n order to prevent unfair or deceptive acts or practices in or affecting commerce ... by banks” is given the power to promulgate regulations applying the rules of the Federal Trade Commission Act to national banks. There is no indication that Congress intended the Board to have exclusive jurisdiction in this field, and the D.T.P.A. does not conflict with the federal law to the extent that they cannot both stand in the same area. Double Eagle Lubricants v. State of Texas, 248 F.Supp. 515 (N.D.Tex.1965), appeal dismissed 384 U.S. 434 , 86 S.Ct. 1601 , 16 L.Ed.2d 670 (1966), rehearing denied 385 U.S. 890 , 87 S.Ct. 13 , 17 L.Ed.2d 122 (1966). In fact, the prohibition of “[fjalse, misleading, or deceptive acts or practices in the conduct of any trade or commerce” is in harmony with the above quoted language from the federal act. The D.T.P.A. applies to banks, and its application to national banks is not in conflict with federal law. 2

POPE, DENTON and SPEARS, JJ., join in this dissent.

. All statutory references are to Vernon’s Texas Civil Statutes Annotated.

. The 65th Legislature, 1979, amended the Act by providing that treble damages may be had only on a finding by the trier of fact that any of the acts set out in § 17.46(b) were knowingly committed. Sections 17.50(a)(1) and 17.-50(b)(2). Also § 17.46(a) was amended to provide:

False, misleading, or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful and are subject to action by the consumer protection division under Sections 17.47, 17.58, 17.60, and 17.61 of this code.

After the effective date of these amendments, damages are allowed consumers only under the enumerated acts of § 17.46(b) and treble damages are allowed only if the acts were knowingly committed.