Petition — DeJaynes v. General Finance Corp.
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Supreme Cort, U. &
ELLEQOD
| nov 18 197
JR.CLERK
IN THE ;
Supreme Court of the Anited States ’
OCTOBER TERM, 1978
No. 78-787
KEITH A. DEJAYNES, DIANE M. DEJAYNES, Anpb
RAYMOND E. BURGER, WAGE EARNER TRUSTEE,
Petitioners,
vs.
GENERAL FINANCE CORPORATION OF ILLINOIS,
A CORPORATION,
Respondent.
PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT.
BARRY M. BARASH,
BARASH & STOERZBACH,
P. O. Box 1328,
139 South Cherry Street,
Galesburg, Illinois 61401,
Counsel for the Petitioners.
Gunthorp-Warren Printing Company, Chicago e Financial 6-6565
INDEX.
PAGE
NEE Lis 6. ows ahowa vasccuene aeeekeceakes 1
EE Sie aha enn ty dei eee ed ee D 2
IN ne Oh Sloe buns o> CeNeR Nowe eee Ns 2
Statutes and Regulations Involved ......... 0.0.00 0es 2
SE TEMED. Sveeos neeees Cerccdscncuseccenns 3
SE SU SEN WHEE nw ee cccccwecesvecseeess 6
REE Karas ee andenn ved hikes anenvedeehe pens 9
Appendix A. Opinion of District Court for the Southern
_—__ District of Illinois, Northern Division, in DeJaynes v.
General Finance Corp., 442 F. Supp. 377 (N. D. Il.
EL CCA eR ChAs sau cden an doubase.shedee cbs Al
Appendix B. Judgment of District Court for the Southern
District of Illinois, Northern Division, in DeJaynes v.
General Finance Corp., 442 F. Supp. 377 (N. D. IIL.
PEE a anee eRe cuca thea nuevesecaaaeae A10
Appendix C. Opinion of the United States Court of Appeals
for the Seventh Circuit in Basham, et al. v. Finance
America Corporation, et al., ....... ic a anced (7th
ee La dah webenive eae ee eww. All
Appendix D. Judgment of the United States Court of
Appeals for the Seventh Circuit in Basham et al. v.
Finance America Corporation, et al., ....... = A peaeen
ke Se | errr ere Seer re rrr rer ree A33
Appendix E. Copy of loan disclosure statement involved
in DeJaynes v. General Finance Corp. ..........5: A35
ii
TABLE OF CASES.
Basham, et al. v. Finance America Corporation, et al.,
iy Me dade STU BPOED os tab ee cur cab ere ,
DeJaynes v, General Finance Corporation, 442 F. Supp.
S70 CB. BP Ee UDTT) venvccescvedstces l, 2, 3, 9, 6, 7,9
Liner v. Aetna Finance Corp., 555 F, 2d 1241 (Sth Cir.
Ts Sib cs eek ae ree wee eed kee aie eat 6
Pollock v, General Finance Corp., 535 F, 2d 295 (Sth
Cir. 1976), affirmed on rehearing 552 F, 2d 1142 (Sth
Cir. 1977), cert. den. 434 U. S, 891 (Oct. 11, 1977)
Rae Bea Pi TA a Ae my OE EA a An a A 6, 7,9
STATUTES.
oe Me BS re era 2, 5, 6, 7, 8, 9, 10
we oe ae | a arene omnes ie Se
REGULATION.
12 C. F. R. § 226.8(d)(1) (“Regulation Z”) ...... 3,7, 8,9
le
a
IN THE
Supreme Court of the Cited States
OCTOBER TERM, 1978
No.
KEITH A. DEJAYNES, DIANE M. DeJAYNES, Aanp
RAYMOND E. BURGER, WaGE EARNER TRUSTEE,
Petitioners,
vs,
GENERAL FINANCE CORPORATION OF ILLINOIS,
A CORPORATION,
Respondent.
PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT.
To the Honorable, the Chief Justice and Associate Justices of
the Supreme Court of the United States:
Keith A. DeJaynes, Diane M. DeJaynes and Raymond E.,
Burger, Wage Earner Trustee, the petitioners herein, PRAY
that a Writ of Certiorari issue to review the judgment of the
United States Court of Appeals for the Seventh Circuit entered
on August 16, 1978.
OPINIONS BELOW.
The opinion of the District Court for the Southern District
of Illinois, Northern Division, in the case of DeJaynes v. Gen-
eral Finance Corporation of Illinois is officially reported at 442
2
F. Supp. 377 (S. D. Ill. 1977), and is printed in Appendix A
hereto, infra, at page Al. The judgment of the District Court
in said case is printed in Appendix B hereto, infra, at page A10.
The opinion of the Court of Appeals for the Seventh Circuit in
Basham vy, Finance America Corp., which includes DeJaynes v.
General Finance Corporation of Illinois, No. 78-1067, ...........
F, 2d ......... (7th Cir., August 16, 1978), is as yet unreported,
but is printed in Appendix C hereto, infra, at page All. The
judgment of the Court of Appeals for the Seventh Circuit in
said case is printed in Appendix D hereto, infra, at page A33.
JURISDICTION.
The judgment of the Court of Appeals for the Seventh Circuit
in DeJaynes v. General Finance Corporation, No. 78-1067, was
entered on August 16, 1978. The jurisdiction of the Supreme
Court is invoked under 28 U. S. C. § 1254(1).
QUESTION PRESENTED.
The sole question presented for review is:
Whether the lender in a closed-end consumer loan is required
to state, under 15 U. S. C. § 1639(a), as a separate item of
disclosure, the amount of money which the consumer will ac-
tually receive “in fist”, i.c., the aggregate total of sums paid
directly to him or paid to other persons on his behalf.
STATUTES AND REGULATIONS INVOLVED.
This case involves the following statutes and regulations:
1. 15 U.S.C. § 1639(a)(1), (2), (3):
“(a) Any creditor making a consumer loan or otherwise
extending consumer credit in a transaction which is neither
a consumer credit sale nor under an open-end consumer
credit plan shall disclose each of the following items, to the
extent applicable:
3
(1) The amount of credit of which the obligor will
have the actual use, or which is or will be paid to him or
for his account or to another person on his behalf.
(2) All charges, individually itemized, which are in-
cluded in the amount of credit extended but which are not
part of the finance charge.
(3) The total amount to be financed [the sum of the
amounts referred to in paragraph (1) plus the amounts
referred to in paragraph (2)].”
2. 15 U.S.C. § 1640(f):
No provision of this section or section 1611 of this
title imposing any liability shall apply to any act done or
omitted in good faith in conformity with any rule, regula-
tion, or interpretation thereof by the Board or in conformity
with any interpretation or approval by an official or
employee of the Federal Reserve System duly authorized
by the Board to issue such interpretations or approvals
under such procedures as the Board may prescribe therefor,
notwithstanding that after such act or omission has oc-
curred, such rule, regulation, interpretation, or approval is
amended, rescinded, or determined by judicial or other
authority to be invalid for any reason.
3. 12 CFR § 226.8(d) (1) (“Regulation Z”):
“(d) Loans and other nonsale credit. In the case of a loan
or an extension of credit which is not a credit sale, in
addition to the items required to be disclosed under para-
graph (b) of this section, the following items, as applicable,
shall, be disclosed:
(1) The amount of credit, excluding items set forth in
paragraph (e) of this section, which will be paid to the
customer or for his account or to another person on his
behalf, including all charges, individually itemized, which
are included in the amount of credit extended but which
are not part of the finance charge, using the term ‘amount
financed.’ ”
STATEMENT OF THE CASE.
The case that is subject of this petition, DeJaynes v. General
Finance Corp. of Illinois, 442 F. Supp. 377 (S. D. Ill. 1977),
4
was initially filed in the District Court for the Southern District
of Illinois, Northern Division, and involves violations of the
Truth-in-Lendng Act.
The facts are not in dispute. On November 20, 1976,
Keith A. DeJaynes and Diane M. DeJaynes (“consumers”)
borrowed approximately $854 from the defendant, General
Finance Corporation of Illinois (“General”). Prior to con-
summation of the transaction, General delivered to con-
sumers a copy of its Truth-in-Lending disclosure form. No other
documents were delivered to consumers which purported to
make the required Truth-in-Lending disclosures. On the face
of the Truth-in-Lending disclosure form, General failed to dis-
close to consumers the net proceeds of the loan, i.e., the “net
cash in fist”, that they received from General. Specifically,
consumers actually received $853.62 as the net loan proceeds.
They were charged $37.20 for credit disability insurance and
$28.02 for credit life insurance. The “amount financed” was
disclosed as $918.84. The finance charge was shown as $290.30,
and the total of payments was disclosed as $1,209.14. The
gravamen of consumers’ complaint is that although the “amount
financed” is disclosed as $918.84, consumers actually had the
use of $65.22 less, or $853.62, which was the amount of credit
of which they had the actual use, or which was paid to them or
for their account or to another person on their behalf.
On January 11, 1977, consumers filed a voluntary petition
under Chapter XIII of the Bankruptcy Act. A plan of arrange-
ment under the Chapter XIII proceedings was confirmed on
March 10, 1977. Raymond E, Burger was appointed as con-
sumer’s Wage Earner Trustee.
On September 6, 1977 consumers and the trustee filed a Truth-
in-Lending complaint in the United States District Court, alleg-
ing that General, inter alia, failed to disclose to them the net
proceeds of the loan. Plaintiffs and defendant filed cross-
motions for summary judgment, both alleging that no genuine
err ee Be ee
5
issue of material fact existed, and that each was entitled to
judgment in his favor as a matter of law. District Judge Robert
D. Morgan ruled that General was not required to disclose the
“net proceeds” of the loan to the borrowers.
Consumers and the trustee then appealed the District Judge’s
decision to the United States Court of Appeals for the Seventh
Circuit. In the Court of Appeals, DeJaynes v. General Finance,
No. 78-1067, was consolidated with 18 other Truth-in-Lending
cases involving a number of different issues. The 19 consoli-
dated Truth-in-Lending cases were entitled Basham, et al Vv.
Finance America Corp., et al, Nos, 77-2029 to 77-2032, 77-
2179, 77-2180, 78-1058 to 78-1069 and 78-1198, 0... F. 2d
adios (7th Cir., August 16, 1978). With respect to the DeJaynes
appeal, the Seventh Circuit affirmed the District Court's ruling.
With regard to the “net proceeds” or “net cash in fist” issue, the
Court of Appeals held that although 15 U. S. C. § 1639(a) (1)
requires a lender to disclose the net proceeds of a loan in a
closed-end situation, Regulation Z does not require that this
disclosure be made, and that therefore the lender was excused
for any violation by 15 U. S. C. § 1640(f). This section states
in part that:
“No provision of this section or § 112 [15 U. S. C. § 1611]
imposing any liability shall apply to any act done or omitted
in good faith in conformity with any rule, regulation, or
interpretation thereof by the board... .”
In this petition, the petitioners ask the court to review that
portion of the holding of the United States Court of Appeals
for the Seventh Circuit which found that General did not vio-
late the Truth-in-Lending Act by failing to disclose to con-
sumers, prior to consummation of the transaction, the net pro-
ceeds of the loan or “net cash in fist”.
The basis for federal jurisdiction in the District Court in
DeJaynes v. General Finance Corp. of Illinois, 442 F. Supp.
377 (S. D. Ill. 1977) is 15 U. S. C. § 1640(e).
6
‘REASONS FOR GRANTING THE WRIT.
I. Conflict Between Circuits,
The decision of the United States Court of Appeals in
DeJaynes V, General Finance Corp, of Illinois, No, 78-1067,
noon F, 2d ......... (7th Cir,, August 16, 1978), should be re-
viewed by this court because the Seventh Circuit’s ruling con-
flicts with the ruling of the Fifth Circuit Court of Appeals in
Pollock v. General Finance Corp., 535 F, 2d 295 (Sth Cir.
1976), reheard and affirmed 552 F, 2d 1142 (Sth Cir, 1977),
cert. den. 434 U, S, 891 (Oct, 11, 1977), and with Liner v,
Aetna Finance Corp., 555 F. 2d 1241 (Sth Cir, 1977),
The loan disclosure form construed by the Fifth Circuit in
Poliock v. General Finance Corp., op. cit, supra, which is re-
produced at 535 F, 2d at 297, cannot be factually distinguished
from the loan disclosure form used by General Finance Corpo-
ration in this case, A copy of the DeJuynes loan disclosure state-
ment is printed in Appendix E, infra at page ...........
The United States Court of Appeals for the Fifth Circuit in
Pollock v. General Finance Corp., 535 F, 2d 295 at 297 (Sth
Cir. 1976), expressly held that 15 U, S, C, § 1639(a) requires
a lender to disclose to the borrower the amount of credit of
which the obligor will have the actual use (“net cash in fist’’),
and that a mere disclosure of the “amount financed”, which in-
cludes both the net proceeds of the loan and any charges for
law.
The Fifth Circuit reaffirmed its position after rehearing in
Pollock v.-General Finance Corp., 552 F, 2d 1142 (Sth Cir,
1977) and in Liner vy, Aetna Finance Co., 555 F.*2d 1241 (Sth
Cir. 1977). In these later cases, the Court stated unequivocally
that a lender must disclose the amount of cash given to the
debtor or disbursed by the lender on the debtor’s behalf,
It is clear in examining the Pollock decisions that the Fifth
Circuit requires that a lender disclose the “net proceeds of a
credit life and disability insurance is insufficient as a matter of
7
loan”, in strict conformity with the requirement of 15 U. S. C.
§ 1639(a)(1), regardless of any provision in Regulation Z.,
As stated by District Judge Robert D. Morgan in DeJaynes v.
General Finance Corp, of Illinois, 442 F, Supp. 377 (S. D. Ill.
1977),
“The disclosure statement which gave rise to this suit
cannot be distinguished from the debt which was before
the court in Pollock, The one intervening circumstance is
the effect of Section 1640(f) of the Act, which the Pollock
court held that it need not consider, That circumstance pro-
vides no meaningful basis to distinguish Pollock, inasmuch
as it is yet inherent in the Pollock decision that disclosure
made in strict reliance upon the Regulation itself was held
to be in violation of the Act, Thus, the Pollock decision
must be respectfully rejected.” Id, at 381,
In DeJaynes, the Seventh Circuit attempted to distinguish
Pollock by holding that although 15 U. S. C. § 1639(a) (1)
required a lender to disclose the net proceeds of the loan, Regu-
lation Z (12 C, F. R. § 226.8(d)(1)) did not impose this
requirement on the lender, and that therefore the lender was
excused from liability under 15 U, S, C, § 1640(f). This section
insulates the lender from liability for Truth-in-Lending viola-
tions whenever it has acted in good faith conformity with any
“rule, regulation or interpretation thereof by the Board”,
However, as District Judge Morgan noted in his opinion,
Pollock cannot be distinguished from the instant case, The
first Pollock opinion, 535 F, 2d 295, was decided in 1976,
almost two years after original 15 U. S. C. § 1640(f) became
effective. The court, in Pollock, if it had so decided, could have
held that 15 U. S. C. § 1640(f) provided a good defense for
the creditor in that case, But it refused to do so, Therefore it is
clear’ that under Pollock a lender must disclose the net proceeds
of a loan to the consumer pursuant to 15 U. S, C, § 1639(a)
(1), regardless of any provision contained in Regulation Z,
Furthermore, the first Pollock opinion was decided by the
Fifth Circuit on July 16, 1976, Keith and Diane DeJaynes
8
entered into the transaction which is the subject of this suit
on November 19, 1976, some four months later, Without
question, w!en consumers entered into the present transaction,
General was on notice that its form, at least in the Fifth Circuit,
violated the Truth-in-Lending Act and Regulation Z, For Gen-
eral now to argue that it was acting in “good faith” when it
failed to promptly withdraw its disclosure statement from cir-
culation and to revise it to comply with the law is inconsistent
with the intent of 15 U.S. C, § 1640(f),
In summary, the Seventh Circuit and the Fifth Circuit are in
conflict on the “net cash in fist’ issue, and petitioners ask that
the conflict vetween the circuits be resolved by this court,
II. Disclosure of “Net Cash in Fist” Is Required by the
Truth-In-Lending Act and Regulation Z.
Both Regulation Z at 12 C, F, R. § 226.8(d)(1) and 15
U, S, C. § 1639(a)(1) require that a lender in a closed-end
loan transaction disclose the net proceeds of the loan to the
borrower,
15 U. S, C, § 1639(a)(1) requires a creditor to disclose to
the consumer,
“(1) The amount of credit of which the obligor will have
the actual use, or which is or will be paid to him or for his
account or to another person on his behalf.”
15 U.S. C. § 1639(a)(2) requires the lender to disclose to
the borrower,
“(2) all charges, individually itemized, which are included
in the amount of credit extended but which are not part
of the finance charge.”
The corresponding provision of Regulation Z, 12 C, F. R.
§ 226.8(d)(1) requires the borrower to disclose,
“(1) The amount of credit, excluding items set forth in
paragraph (e) of this section, which will be paid to the
— a ee a ia i i NNN NN Pi i i
9
customer or for his account or to another person on his
behalf, including all charges, individually itemized, which
are included in the amount of credit extended but which
are not part of the finance charge, using the term ‘amount
financed’,”
The requirement to disclose the net amount of loan credit, or
“net cash in fist” is mandated both by the statute and by
Regulation Z, Petitioners sharply disagree with the Seventh Cir-
cuit’s conclusion that 12 C, F, R. § 226.8(d)(1) does not
require the lender to disclose the net proceeds of the loan,
Petitioners argue that a clear reading of Regulation Z demon-
strates that this section, like 15 U, S.C. § 1639(a)(1), (2) and
(3), requires the lender to disclose separately (A) the amount
of credit which will be paid to the customer; (B) all charges,
individually itemized, which are included in the amount of
credit extended but which are not part of the finance charge;
and (C) the total of said two items, using the term “amount
financed”, To hold that 12 C, F, R, § 226.8(d)(1) requires
anything different would be to hold that the Federal Reserve
Board knowingly drafted a regulation which conflicts with the
terms of the Truth-in-Lending Act as passed by Congress,
The Seventh Circuit’s construction ignores the fact that the
Federal Reserve Board was given the power to draft Regulation
Z to implement the Truth-in-Lending Act as passed by
Congress, not to contradict it.
CONCLUSION,
The decision of the Seventh Circuit Court of Appeals in
DeJaynes v, General Finance Corporation of Illinois (78-1067),
conflicts with the decision of the Fifth Circuit Court of Appeals
in Pollock v, General Finance Corporation, 535 F, 2d 295
(1976), rehearing 552 F, 2d 1142 (Sth Cir. 1977), cert. den.
434 U.S, 891 (Oct, 11, 1977). Moreover, the Seventh Circuit
has ruled that 12 C. F, R. 226.8(d)(1) and 15 U, S, C.
10
§ 1639(a)(1) do not require a lender to disclose to the
borrower the net proceeds of a Joan. This conclusion is clearly
violative of the plain language of the statute and of the regula-
tion, or these reasons, petitioners pray that a Writ of Certiorari
be granted in this case,
Respectfully submitted,
Barry M. BARASH,
Counsel for the Petitioners.
October 15, 1978.
BARRY M. BARRASH for
BARASH & STOERZRACH,
P. O. Box 1328,
139 South Cherry Street,
Galesburg, Illinois 61401.
Al
APPENDIX A.
UNITED STATES District Court,
S. D. Illinois, N. D.
Dec. 7, 1977,
KEITH A, DEJAYNES, DIANE M, DEJAYNEs,
and RAYMOND E, BurGER, Wage
Earner Trustee,
Plaintiffs,
vs,
GENERAL FINANCE CORPORATION,
OF ILLINOIS, a corporation,
Defendant,
No. 77-1107.
Barry M. Barash, Galesburg, IIl., for plaintiffs.
Barney Olson II, Galesburg, IIl., for defendant.
DECISION AND ORDER
RoBert D, MorGAan, Chief Judge.
The complaint herein arises under the Federal Truth in
Lending Act, 15 U. S. C. § 1639, and Regulation Z issued by
the Federal Reserve Board in implementation of that Act.
12 C. F. R, 226.6(a), 226.8(a), (b)(2), and (d)(1). Juris-
diction rests upon 15 U. S. C. § 1640(e).
A2
The complaint alleges that the plaintiffs DeJaynes’ bor:owed
money from defendant, General Finance, on November 19,
1976, and on that date received from defendant a loan disclo-
sure statement which is attached to the complaint as an exhibit.
It is contended that such statement violates the Act and/or
Regulation Z, in that: (1) It does not disclose the amount of
credit of which the borrowers will have the actual use, either
by direct payment to them or by payments to others on their
behalf; (2) The disclosures are not made in a logically mean-
ingful sequence, and the same are made in “subtractional” form
rather than “additional” form; and (3) The finance charge
expressed as an annual percentage rate is not clearly disclosed.
Defendant answered, denying any violation of the Act and
affirmatively averring that its disclosures were made in good
faith reliance upon regulations and directives issued by the
Federal Reserve Board, as the administrator of the Act.
Both parties have moved for summary judgment. There is no
dispute as to any material fact. The issue is limited to the
question whether the disclosure statement delivered to plaintiffs
is legally sufficient to satisfy the requirements of the law.
Plaintiff's complaint rests upon the theory that the statute
requires that a disclosure statement must state, as a separate item
of disclosure, the amount of money which a borrower will
actually receive “in fist,” i.e., the aggregate total of sums paid
directly to him and sums paid to other persons on his behalf.
This position is based wholly upon the decision in Pollock v.
General Finance Corporation, 535 F. 2d 295 (Sth Cir. 1976),
on pet, reh., 552 F. 2d 1142 (1977), cert. denied, October 11,
1977. That basis of reliance is clear both from their statement
of authority filed November 11, 1977, in opposition to defend-
ant’s motion, and their motion for summary judgment filed
November 14, 1977, Since Pollock dealt only with what plain-
1. Plaintiff Raymond E. Burger is the Wage Earner Trustee for
the DeJaynes plaintiffs, duly appointed and acting pursuant to the
provisions of Chapter XIII of the Bankruptcy Act.
A3
tiffs call the “cash in fist” question, it would thus appear that
they are not pressing the “meaningful sequence” or “clear dis-
closure of rate” contentions. Nevertheless, this decision will deal
with the whole range of issues legitimately stated by the
complaint.
At the outset, it must be noted that Pollock is not a controlling
authority in the Seventh Circuit, but that opinion is here fully
considered, analyzed and weighed to determine what bearing,
if any, it should be given in this case of first impression in
this court.
The appeal in Pollock sought review of a decision which
found several substantive violations of the Act in the disclosure
statement there in issue. Included was the failure of such state-
ment to disclose, as a separate item of information, the
proceeds of the loan which the borrower would actually receive
in the transaction. The disclosures made in the latter regard
conformed fully to the requirements of Regulation Z promul-
gated by the Board, The court held, inter alia, that the failure
to separately itemize and disclose that figure was a violation
of the Act “because the regulation must be read in light of the
statute which requires separate disclosures of the amount bor-
rowed.” 535 F. 2d at 298.
A petition for rehearing was filed, Therein the creditor argued
that it had a good defense to the action under the provisions of
§ 1640(f)? of the Act, in that it had relied in good feith upon a
Staff Opinion Letter® issued by an employee of the k ard, That
statute had been enacted while the appeal was pending. In that
regard, the court states its opinion that the defense was available
2. “No — of this section or section 112 imposing any
liability shall apply to any act done or omitted in good faith in con=
formity with any rule, regulation, or interpretation thereof by the
Board, notwithstanding that after such act or omission has occurred,
such rule, regulation or interpretation is amended, rescinded or de«
termined by judicial or other authority to be invalid for any reason,”
eaeenet). -495, § 406, effective October 28, 1974, 15 U. §, C.
1 ).
3. Staff Opinion Letter 870, dated April 10, 1974,
A4
to the defendant, but it held that it need not consider the issue
because the penalty imposed against the defendant was justified
by other violations of the Act. 552 F. 2d at 1144.
The Board appeared as amicus curiae in support of the
petition, arguing in its brief that its Regulation Z reflected the
Board's expertise as to the requirements for implementation of
the Act, that the Regulation was designed to establish a national
standard to guide both creditors and consumers on the require.
ments of the Act, and that the Regulation was designed to
abridge certain apparent contradictions embodied in the literal
language of Section 1639 of the Act.’ Although the court
recognized that the disclosure statement did comply with the
requirements of Regulation Z, it nevertheless adhered to its
decision that the proceeds of the loan must be specifically
itemized, /bid, at 1143-1144,
The hallmark of any construction of the Act must be the
principle of liberal construction for the protection of the consum-
ing public, Meaningful disclosure “is the byword of the” Act,
and rigorous application to insure that the borrower is fully
advised in the “frequently incomprehensible jungle” of con-
sumer credit is required, Johnson vy, Assoctates Finance, Ine,,
369 F, Supp, 1121, 1122 (S, D, Ill, 1974), However, rigorous
application should not negate reality, The Act imparts the neces-
sary implication that there must be an amalgamation of both
conflicting and compatible interests, Paramount is the interest
that the consumer of credit be fully and intelligibly informed
about the credit transaction in every event, To that end, demon.
strable violations must be strictly penalized, A second, but
equally essential, interest is that the purveyors of consumer credit
be sufliciently appraised of their obligations under the statute
that they may act with confidence that their compliance with ex-
4, It appears that the court did recognize the existence of that
contradiction in its initial pa See reference to language at.
tributed to District Judge O'Kelley, 535 F, 2d at 298, Yet it held
in both the initial opinion and the — denying rehearing that
the literal language of the statute must be read into Regulation Z.
AS
isting regulations will protect them from multifarious litigation.
In the absence of a construction of the statute which will accom-
modate both of those interests, that of the consumer and that of
the lender, the national interest becomes a victim,
Congress designated the Board of Governors of the Federal
Reserve System as the agency charged with implementation and
enforcement of the Act, In that context, it gave the Board broad
authority to adopt regulations to implement the Act, 15 U, 8, C,
§ 1604," “To accomplish its desired objective, Congress [by
enacting 1604] determined to lay the structure of the Act
broadly and to entrust its construction to an agency with the
necessary experience and resources to monitor its operation,”
Mourning v, Family Publications Service, Inc,, 411 U, 8, 356,
364, 93'S, Ct, 1652, 1658, 36 L, Bd, 2d 318 (1973),
Regulation Z was adopted and became effective on July 1,
1969, the effective date of the Act itself, Pub, L, 90-321, § 504
(b), 82 Stat, 167,
The Pollock rationale would have the effect of constituting
each federal court a super legislature and a super administrator,
superimposed above the power and authority which Congress
has entrusted to the Board, The purpose of the Act, as defined
by Congress, was to assure “a meaningful disclosure of credit
terms” to enable the consumer to shop for the best credit terms
and “avoid the uninformed use of credit,” 15 U, 8, C, § 1601,
It selected the Board to administer the Act, and accorded to the
Board the broad power to promulgate regulations to implement
the Act to achieve that purpose, It enjoined lending agencies to
comply with the regulations promulgated by the Board, 15
~§, Section 1604 provides; tsts—S
“The Board shall prescribe regulations to carry out the purposes
of this subchapter, These regulations may contain such classi-
fications, differentiations, or other provisions, and may provide
for such adjustments and exception for any class of transac.
tions, a8 in the judgment of the Board are necessary or proper
to effectuate the purposes of this subchapter, to prevent cireum-
veanee or evasion thereof, or to facilitate compliance there-
with,”
A6
U.S. C. § 1631(a). The obvious intent of the Act was to create,
through Board regulations, national standards governing con-
sumer credit. That result can only be achieved by interaction
between the chosen administrative agency and the legislative
body, All else is chaos, If each court has the power to determine
that a regulation of the Board is incomplete, or that it omits
some element which the particular court deems essential, then
uniform, national application of the Act is an unattainable
myth, The construction of the Act would certainly be as diver-
gent as the several views which each of the courts of appeals
might espouse,
Thus, it appears to this court that Pollock presumes to usurp
a function which is beyond the pale of judicial power, It must
be assumed that the Congress has knowledge of the fact and
content of Regulation Z, It must be further assumed that the
Congress is fully cognizant of the actions taken by the Board in
the implementation of the Act, Regulation Z has now been in
effect for a period in excess of eight years, During that period
of time Congress has amended the Act on several occasions, but
none of those amendments has touched or affected the provision
of the Regulation with which this litigation is concerned,*
Congressional acquiescence in the Board's construction of the
Act imports congressional approval of what the Board has done,
E.e,, National Labor Relations Board v, Bell Aerospace Co.,
416 U, S, 267, 274, 94S, Ct, 1757, 40 L, Ed, 2d 134 (1974),
Against the historical background of this Act and this regula.
tion, a decision imposing disclosure requirements which tran-
scend those mandated by the Regulation would entail a
legislative determination under the guise of judicial decision,
The assumption of such a power by the courts would place each
lending agency in a position of acting at its peril on every
consumer loan, Though there be scrupulous compliance with
every requirement of the Board's regulation in the consumer
———o—
6, Pub, L, 91-508, October 26, 1970; Pub, L, 93-495, October
28, 1974; Pub, L, 94-205, January 2, 1976; Publ, L, 94-222, Feb-
ruary 27, 1976; Pub, L, 94-240, March 23, 1976,
A7
credit disclosure made, no such agency could ever be assured
that its action could survive the critical scrutiny of some court
further down the line in some controversy which would be
beyond the realm of foreseeable contemplation.
The disclosure statement which gave rise to this suit cannot
be distinguished from that which was before the court in
Pollock, The one intervening circumstance is the effect of
Section 1640(f) of the Act, which the Pollock court held that it
need not consider, That circumstances provides no meaningful
basis to distinguish Pollock, inasmuch as it is yet inherent in the
Pollock decision that disclosure made in strict reliance upon the
Regulation itself was held to be a violation of the Act. Thus, the
Pollock decision must be respectfully rejected."
It is patent upon the face of the disclosure statement given to
these plaintiffs that the defendant did meet every requirement
of the Board’s regulation. Its failure to state, as a separate item
of information, the net proceeds of the loan cannot be held to be
a violation of the Act.*
There is no merit to the further allegations that the disclosures
were not made in meaningful sequence in violation of 12
C, F. R. § 226.8(a). The disclosure statement contains a logi-
cally sequential series of disclosures beginning with the total
amount of required payments, the amount of the finance charge,
the amount financed, the charge for credit life insurance, the
charge for credit disability insurance, the total number of
7. Plaintiffs’ contention that the doctrine of stare decisis should
influence this court to follow Pollock is a misguided invocation of a
wholly inapposite legal principle, That doctrine presumes a common
identity of jurisdiction in separate causes of action, presenting a
common question of law related to identical fact situations. That doc-
trine can have no application in this cause, inasmuch as the cause
presents a legal question of first impression in this jurisdiction.
8. It is not re age that these plaintiffs were denied this infor-
mation, A relatively simple mathematical computation would disclose
to them the net proceeds figure.
It is also noted that the disclosure form used by this defendant is
substantially identical to the form which the Board disseminated to
the public as a model form for compliance with Regulation Z,
A8
payments and the annual percentage rate. It further sets forth
the date and amount of the first payment required, the amount
of each payment subsequent to the first, and the date upon
which the last required payment would become due. The court
can find no legal deficiency in the sequential presentation, and
the court is not really advised by the plaintiffs in what manner
the disclosures were alleged to be not “meaningfully sequential.”
Nor is there any merit in the second prong of this position
that the statements are made “subtractionally” as opposed to an
“additional” form, The disclosed items of information proceed
in the sequence above recited, beginning with a statement as to
the tetal amount required to be paid, and continuing with dis-
closures as to the amount of the finance charge and other
numbers which are a part of that total figure. The Regulation
does require full and meaningful disclosure, but it cannot be
construed to prescribe any particular form,
The court is cognizant of certain language in Allen v, Bene-
ficial Finance Company of Gary, Inc., 531 F. 2d 797 (7th Cir.
1976), which might be thought to discredit the subtractional
method of disclosure. However, each disclosure statement must
be considered upon its own merit, The statement involved in
Allen contained illogical groupings of unrelated numbers, a
wholly confusing proliferation and placement of numbers, and a
duplication of numbers in one instance. The Allen disclosure
statement is nowise comparable in form to the disclosure state-
ment with which this court is concerned.
In commentary on Allen, the Board, on May 20, 1976, issued
its Position Letter No, 1047 stating that the Regulation does not
dictate any particular form of statement so long as the placement
of disclosure terms used “makes clear the relationship among
the various disclosure terms.”” CCH, Consumer Credit Guide,
13,387, That position was reiterated in an Official Staff inter-
pretation dated March 21, 1977. CCH, Consumer Credit Guide,
13,552."
9. Also pertinent is Public Position Letter 780, dated April 10,
1974, defining “meaningful sequence.”
A9
The Allen decision and that stated Board position are not
deemed to be incompatible. What cach requires is that the
disclosure form used does state, in a logically meaningful
sequence which the average person can comprehend, the in-
formation which Regulation Z requires a creditor to disclose.
The contention in this complaint that the annual percentage
rate is not clearly disclosed is wholly specious; and it, also, is
apparently abandoned by the plaintiffs. The number is to a
degree obscured upon the exhibit attached to the complaint, but
the same is wholly discernible,
IT IS ORDERED, therefore, that the defendant's motion for
summary judgment is Allowed, and the plaintiffs’ motion is
Denied, Judgment is entered in favor of the defendant at
plaintiff's cost,
Al0
APPENDIX B.
Unrrep STates District Court
For the Southern District of Illinois, Northern Division
Keith A, DBJAYNEs, DIANE M.,
DeJAYNES, and RAYMOND E,
BuRGER, Wage Earner Trustee,
Civil Action File
vs, j No, 77-1107
GENERAL FINANCE CORPORATION
OF ILLINOIS
JUDGMENT
This action came on for decision before the Court, Honorable
Robert D. Morgan, United States District Judge, presiding, and
the issues having been duly decided and a decision having been
duly rendered,
It is Ordered and Adjudged that Defendant's Motion for
Summary Judgment is ALLOWED, and the Plaintiff's Motion
for Summary Judgment is DENIED, Judgment is entered in favor
of the Defendant, General Finance Corporation of Illinois, and
against Plaintiffs, Keith A, DeJaynes, Diane M, DeJaynes, and
Raymond E, Burger, Wage Earner Trustee, at Plaintiff's costs,
Dated at Peoria, Illinois, this 7th day of December, 1977,
/s/ ROBERT J, KAUFFMAN
Robert J. Kauffman
Clerk of Court
All
APPENDIX C,
IN THE UNITED STATES COURT OF APPEALS
For the Seventh Circuit
Nos, 77-2029 and 77-2030
Davib J, BASHAM, LINDA C, BASHAM, GREGORY D, VOGELSANG
and DONNA I, VOGELSANG,
Plaintiffs-A ppellants,
VS.
FINANCE AMERICA CORPORATION, |XX
Defendant-Appellee,
No, 77-2031
Carey R, Cups, on behalf of himself and all others similarly
situated,
Plaintiff-A ppellant,
vs,
First NATIONAL BANK OF PEORIA,
Defendant-A ppellee.
No, 77-2032
SUSAN M, STEELE,
Plaintiff-Appellant,
vs.
TuHorP Crepit, INC,, OF ILLINOIS,
Defendant-A ppellee.
(Caption continued on following page)
Al2
No, 78-1059
Vickie SHOLL and DEBBIE BRASCHE, on behalf of themselves
and all others similarly situated,
Plaintiffs-A ppellants,
VS,
GENERAL FINANCE CORPORATION OF ILLINOIS, a corporation,
Defendant-Appellee.
No, 78-1060
Bruce P, Doretuy, on behalf of himself and all others similarly
situated,
Plaintiff-Appellant,
vs.
BUSHNELL FINANCE COMPANY,
Defendant-A ppellee.
No, 78-1061
JAMES E, ROUNDs,
Plaintiff-Appellant,
vs,
HOUSEHOLD FINANCE CORPORATION,
Defendant-Appellee.
No, 78-1062
DEAN BRASCHE and CHARLENB BRASCHE,
Plaintiffs-A ppellants,
A
GENERAL FINANCE CORPORATION OF ILLINOIS, a corporation,
Defendant-Appellee.
No, 78-1063
JAMES E, ROUNDS,
Plaintiff-Appellant,
Vs,
GENERAL FINANCE CORPORATION OF ILLINOIS, a corporation,
Defendant-Appellee.
(Caption continued on following page)
—_ a Ben 2s
Al3
No, 78-1064
RoBert N, SHARP and Mary E, SHARP,
Plaintiff-A ppellant,
vs,
GENERAL FINANCE CORPORATION OF ILLINOIS, a corporation,
Defendant-Appellee.
No, 78-1065
RICHARD D, CorBIN and CHER! CorRBIN,
Plaintiffs-A ppellants,
vs,
GENERAL FINANCE CORPORATION OF ILLINOIS, a corporation,
Defendant-Appellee.
No. 78-1066
Frep H, Tinsits, Vickey L, Tispits, and JAMEs S, BRANNON,
Trustee in Bankruptcy for Fred H. Tibbits,
Plaintiffs-A ppellants,
vs,
GENERAL FINANCE CORPORATION OF ILLINOIS, a corporation,
Defendant-A ppellee.
No, 78-1067
KeitH A, DeJAYNEs, DIANE M. DeJAYNES, and RAYMOND E,
BurGER, Wage Earner Trustee,
Plaintiffs-Appellants,
vs,
GENERAL FINANCE CORPORATION OF ILLINOIS, a Corporation,
Defendant-A ppellee.
No, 78-1068
JerrREY C, BROWN and Cinpy S, BRown,
Plaintif{s and Counter-Defendants-A ppellants,
vs,
GENERAL FINANCE CORPORATION OF ILLINOIS, a corporation,
Defendant and Counter-Plaintiff-A ppellee.
(Caption continued on following page)
Al4
No. 78-1069 °
Rick JOHNSON,
Plaintiff-Appellant,
VS,
Mip AMERICA CREDIT, INC., now HEIGHTS FINANCE
CORPORATION,
Defendant-Appellee.
No. 77-2179
ROBERT N, SHARP and Mary E. Suarp,
Plaintiffs-A ppellants,
vs,
THE First NATIONAL BANK OF PEORIA,
Defendant-Appellee.
———-
No, 77-2180
FORT MADISON BANK & Trust Co.,
Plaintiff and Counter-Defendant-Appellee,
vs.
CHARL?S E, Coins and Patricia D. CoLtins,
Defendants and Counter-Plaintiffs-A ppellants
and Third-Party Plaintiffs,
WS.
HART MosiLe Homes, INC.,
Third-Party Defendant-A ppellee.
¢
No. 78-1058
In the Matter of:
WILLIAM ERNEST ANDERSON,
Debtor.
Appeal of:
WILLIAM ERNEST ANDERSON,
Debtor, and
RAYMOND E, BurGER,
Wage Earner Trustee.
(Caption continued on following page)
Ne ee o_o
Al5
No. 78-1198
SHERYL K. HAWK and FRANKLIN HAWK,
Plaintiffs-A ppellants,
VS.
GENERAL FINANCE CORPORATION OF ILLINOIS, a corporation,
Defendant-Appellee.
Appeals from the United States District Court for the
Southern District of Illinois, Peoria Division.
Civil Nos, 77-1053 and 77-1059, 77-1072,
77-1060, 77-1080, 77-1081, 77-1083,
77-1088, 77-1089, 77-1090, 77-1093,
77-1102, 77-1107, 77-1116, 77-1117,
77-1087, 77-1119 and 77-1120, 77-1139
and 78-1007—Bankruptcy Nos, 77-10547 and 77-10548.
Robert D. Morgan, Judge.
Argued June 14, 1978—Decided August 16, 1978
Before CUMMINGS, SPRECHER, and BAUER, Circuit Judges.
SPRECHER, Circuit Judge, This case is a consolidation of
nineteen Truth in Lending actions which were either dismissed
or upon which summary judgment was granted for defendants.
Numerous issues are raised, the primary ones being the liability
of creditors when disclosures are made in conformity with
Federal Reserve Board (“Board”) regulations, afficial staff
interpretations or unofficial staff letters; the extent of required
disclosure by a creditor of a security interest in after-acquired
property; the compliance of various loan forms with the
requirement that the disclosures therein be made clearly, con-
spicuously and in meaningful sequence; and whether the one-
year statute of limitations on Truth in Lending actions applies
to counterclaims filed by a debtor in response to a secured
creditor’s claim or a claim for reclamation.
Al6
I
These appeals arise out of alleged violations of the Truth in
Lending Act (“TILA”), 15 U. S. C. §§ 1601, ef seqg., the
regulations promulgated thereto (“Regulation Z”), 12 C. F. R.,
part 226, the Illinois Uniform Commercial Code (“UCC”),
Illinois Revised Statutes 1975, chapter 26, §§ 1-101, et seq., and
the Illinois Consumer Fraud Act, Illinois Revised Statutes 1975,
chapter 121%, §§ 261, et seq.
All of the creditors and the transactions described in the
complaints are subject to regulation under TILA, Regulation Z,
the Uniform Commercial Code and the Consumer Fraud Act.
All of the transactions were consumer credit transactions within
the meaning of 15 U. S. C. § 1602(h), in that the party to
whom credit was offered or extended was a natural person, and
the money, property, or services which were the subject of the
transaction were primarily for personal, family, household, or
agricultural purposes. All but one of the nineteen appeals involve
close-end consumer loans under 15 U. S. C. § 1639.2
All of these cases were decided adversely to plaintiffs upon
motions to dismiss or motions for summary judgment and there-
fore turn almost entirely on the resolution of questions of law
involving construction of the statute, regulations and loan docu-
ments, For this reason, combined with the fact that most of the
legal issues involve more than one case, the facts of individual
cases will be discussed only where necessary to resolve an issue
or where differing facts would dictate a different result. Other-
wise, in the interest of brevity, only a general description of the
transaction involved will be ‘given.
1, One of the appeals, Fort Madison Bank and Trust Co. v.
Collins (No, 77-2180), is a sale by a mobile home dealer under 15
U. S. C. § 1638. The contract in the Fort Madison Bank case was
immediately assigned by the dealer to the bank in a typical dealer-
paper transaction. No appeal here involves the extension of “open-
end” credit under 15 U. S. C. § 1637.
Al7
II
Plaintiffs’ first claim’? is that defendants failed to disclose
“(t]he amount of credit of which the obligor will have the actual
use, or which is or will be paid to him or for his account or to
another person on his behalf” in violation of 15 U, S, C, §1639
(a).* This section of the statute requires that a creditor disclose
that amount designated by the above quotation in addition to all
charges for insurance or other purposes, individually itemized,
Finally, these two figures must be added together and disclosed
to determine the total amount financed.
2. The twelve cases involving this claim are 78-1059 through
78-1069 and 78-1198. Plaintiffs also argue that cases 77-2029 and
77-2030 involve this claim. A perusal of the record indicates that
the original complaints raised only the issue of an improper security
interest on the part of defendants in these latter cases, While a motion
to amend the complaint in each case was filed, these motions, ac-
cording to the docket sheet, were withdrawn by plaintiffs on Sep-
tember 2, 1977. Therefore, this irsue was neither raised nor ruled
upon in the district court and is therefore not before us on appeal in
those two cases. For the same reason, plaintiffs’ additional claim in
he eg that credit life insurance charges were not disclosed is not
before us.
Plaintiffs also argue that 78-1058 involves this issue, That case,
however, was decided solely on a statute of limitations question and
this is the only issue before us on appeal of that case, See Part V
infra.
3. 15 U.S.C. § 1639(a) provides in relevant part;
(a) Any creditor making a consumer loan or otherwise ex-
tending consumer credit in a transaction which is neither a
consumer credit sale nor under an open end consumer credit
plan shall disclose each of the following items, to the extent
applicable:
(1) The amount of credit of which the obligor will
have the actual use, or which is or will be paid to him or
for his account or to another person on his behalf,
(2) All charges, individually itemized, which are in-
cluded in the amount of credit extended but which are not
part of the finance charge.
(3) The total amount to be financed (the sum of the
amounts referred to in paragraph (1) plus the amounts
referred to in paragraph (2)).
Al8
Defendants do not deny that they failed to disclose the
amount required by § 1639(a)(1), Rather, they contend that
their disclosure forms, Which only included the individual item-
ized charges and the total amount financed, were in full compli-
ance with the Board's Regulation Z §226,8(d)(1), 12 C, F, R,
§ 226,.8(d)(1), which requires disclosure of;
The amount of credit, , , , which will be paid to the cus-
tomer or for his account or to another person on his behalf,
including all charges, individually itemized, which are in-
cluded in the amount of credit extended but which are not
part of the finance charge, using the term ‘amount financed,’
A careful reading of this portion of Regulation Z indicates that
it requires only the disclosures spelled out in §§ 1639(a) (2)
and (a)(3) of the TILA, which defendants here gave, thereby
implicitly allowing the actual proceeds of the loan to remain
undisclosed,*
Assuming, without deciding, that defendants must comply
with the statute even where it differs from the Board's regula-
tions,” it is clear that failure to disclose the actual proceeds of
the loan violates § 1639(a)(1) of the TILA, Thus we are
presented with a situation, accounted for by Congress in 15
4, This conclusion is also reached in Pollock v, General Finance
Corp, 535 F, 2d 295, 298-99 (Sth Cir, 1976), aff'd on rehearing,
552 FP, 2d 1142, 1143-44 (Sth Cir, 1977), cert, denied, 434 U, §,
891 (1977), It is to be noted, however, that the simple arithmetical
procedure of subtraction will yield the “undisclosed” figure,
5, Defendants argue that the Board has authority under 15
U. S, C, § 1604 to provide for variations and exceptions to the
Statute such as that involved here, While we need not decide that
issue in this case, we note that a similar argument was rejected in
Pollock Vv, General Finance Corp,, 552 F, 2d 1142, 1143-44 (Sth
Cir, 1977), cert, denied, 434 U, §, 891 (1977), Defendants also
claim that Congress has acquieseed in the Board’s construction of
the statute in this manner since 1969 and therefore this construction
must be given weight, See generally Norwegian Nitrogen Co, vy, United
States, 288 U, 8, 294, 313 (1933); Zemel v, Rusk, 381 U.S, 1, 11
(1965), Given our disposition of the broader issue of liability, we
ned not address this argument,
= ——-
Al9
U, 8, C, § 1640(f), where action in good faith conformity with
Regulation Z is found violative of the TILA:
No provision of this section or section 1611 of this title
imposing any liability shall apply to any act done or
omitted in good faith in conformity with any rule, regula.
tion, or interpretation thereof by the Board or in con.
formity with any intepretation or approval by an official or
employee of the Federal Reserve System duly authorized by
the Board to issue such interpretations or approvals under
such procedures as the Board may prescribe therefor, not-
withstanding that after such act or omission has occurred,
such rule, regulation, interpretation, or approval is
amended, rescinded, or determined by judicial or other
authority to be invalid for any reason,
Since defendants’ disclosures have followed the requirements
of Regulation Z" no civil liability may be imposed upon them
according to § 1640(f) for having failed to make the disclosure
required by § 1639(a)(1), Therefore, the district court properly
concluded that no claims existed on this basis,"
eee ee me
6, See also Federal Reserve Board Letter No, 982 (December
24, 1975) CCH Consumer Credit Guide 4 31,321, to the effect that
loan proceeds need not be disclosed, The statute itself mandates
that disclosures be “in accordance with the regulations of the Board,”
15 U.S, C, § 1631(a),
7, Section 1640(f) limits its exemption from liability to “good
faith” conformity to regulations and interpretations, We do not reach
the issue of whether continued adherence by the creditors to their
resent form of disclosure after at least one circuit has ruled that it
8 illegal vitiates their “good faith,” See Pollock vy, General Finance
Corp,, 535 F, 2d 295 (Sth Cir, 1976), aff'd on rehearing, 552 F, 2d
1142 (7th Cir, 1977), cert, denied, 434 U.S, 891 (1977),
Nor do we decide whether mere coincidental conformity with
ihe Board’s regulations are suflicient for exculpation under § 164061),
See Jones V, Community Loan & Inv, Corp,, 544 F, 2d 1228, 1231-
32 (Sth Cir, 1976), cert, denied, 431 U, S, 934 (1977), The regula.
tion relied upon here became effective on ay RE 1969, the same day
as the TILA, and has never been amended, Reliance on this regula:
tion as initial and continuous guidance in complying with the statute
is apparent from the disclosure forms used by defendants,
Finally, in No, 78-1198, the issue of whether a TILA claim passes
to the wage earner trustee in a Chapter XIII er nd proceeding
is argued, In light of our conclusion that no civil liability exists here,
we do not decide that issue, See also Matter of Dickson, 432 F,
Supp. 752 (W, D, N, C, 1977),
Il
Plaintiffs claim that defendants’ loan documents attempt to
grant the creditor an overbroad and unlawful security interest
in the debtors’ after-acquired consumer goods," A creditor desir-
ing to hold a security interest must make the following disclosure
under 15 U, §, C, § 1639(a) (8);
A description of any security interest held or to be re-
tained or acquired by the creditor in connection with the
extension of credit, and a clear identification of the prop-
erty to which the security interest relates,
Regulation Z, § 226.8(b)(5), 12 C. F. R, § 226.8(b)(5) re-
quires:
A description or identification of the type of any security
interest held or to be retained or acquired by the creditor
in connection with the extension of credit, and a clear iden-
tification of the property to which the security interest re-
lates or, if such property is not identifiable, an explanation
of the manner in which the creditor retains or may
acquire a security interest in such property which the
creditor is unable to identify, In any such case where a
clear identification of such property cannot properly be
made on the disclosure statement due to the length of such
identification, the note, other instrument evidencing the
obligation, or separate disclosure statement shall contain
reference to a separate pledge agreement, or a financing
Statement, mortgage, deed of trust, or similar document
evidencing the security interest, a copy of which shall be
furnished to the customer by the creditor as promptly as
practicable, If after-acquired property will be subject to
the security interest, or if other or future indebtedness is
or may be secured by any such property, this fact shall be
clearly set forth in conjunction with the description or
identification of the type of security interest held, retained
or acquired,
8. This issue involves appeals 77-2029 through 77-2032, Plaintiffs
claim that 77-2180 is also involved, A perusal of the record indicates
that 77-2180 was decided solely on a statute of limitations question
and is therefore the issue of a security interest and that case is not
before us on appeal, See Part V infra,
A21
The legal extent of a security interest is determined according
to state law and section 9-204(2) of the Illinois Uniform Com-
mercial Code (UCC) ILL. Rev, Stat. ch, 26, § 1-101 ef seq.,
provides in relevant part:
No security interest attaches under an after-acquired
property clause to consumer goods other than accessions
(Section 9-314) when given as additional security unless
the debtor acquires rights in them within 10 days after the
secured party gives value.
Therefore, plaintiffs argue that defendants violated section
1639(a)(8) of the TILA and section 226.8(b) (5) of Regula-
tion Z by claiming to cover more than UCC section 9-204(2)
allows and by failing to disclose the time limitation imposed on
such clauses by this section of the UCC,
The leading case in this circuit on the after-acquired property
security interest is Tinsman, v, Moline Beneficial Finance Co.,
531 F. 2d 815 (7th Cir. 1976). There this court held that dis-
closures of security interests that fail to indicate state law limita-
tions on such security interests do not fulfill the disclosure re-
quirements of the TILA and Regulation Z. In particular, debtors’
security interest there covered more property than allowed by
the statute and also did not disclose that any security interest
was limited to property acquired within 10 days after the se-
cured party gives value,
The security interest clauses in three of the four cases in-
volved here do not contain any reference to a time limitation.’
— ee
9, Nos, 77-2029, 77-2030 and 77-2031. No 77-2031 also ap-
ars to improperly claim an interest in more than — accessions.
The security agreement states flatly that it “will cover after acquired
roperty,” no fimitation of the kind of property covered ser Sgt
befendants argue that they have in good faith relied on Exhibit E of
the Model Forms provided with a pamphlet entitled, “What You
Ought to Know About Truth in Lending” and therefore should be
immune from liability under 15 U. S. C, § 1640(f). These forms,
however, are merely samples “solely for purposes of demonstration
as the disclaimer at the bottom of the form states. See Johnson vy.
(Footnote continued on next page)
A22
This failure to indicate this limitation on the security interest
violates the TILA and Regulation Z under our holding in
Tinsman. See also Pollock v, General Finance Corp., 535 F. 2d
295, 300 (Sth Cir, 1976), aff'd on rehearing, 552 F. 2d 1142,
1144-45 (Sth Cir, 1977), cert. denied, 434 U. S. 891 (1977);
Johnson v, Associates Finance, Inc,., 369 F, Supp. 1121, 1122-
23 (S. D. Ill. 1974).
Defendants, however, claim reliance on unofficial staff opin-
ions of the Board for the contention that the disclosure here
was made in good faith reliance upon Board interpretations of
the TILA and therefore subject to no civil liability under section
1640(f). See Federal Reserve Letters Nos, 829, 983 and 1053,
CCH Consumer Credit Guide #4 31,151, 31,323, and 31,393,"
This ignores the fact that these unofficial staff opinion letters are
explicitly excepted from reliance under Regulation Z, section
226.1(d) (4) (iii). The latest interpretation from the Board,
post-dating the staff letters relied on by defendants, is an Official
Staff Interpretation which concludes that the statement that a
creditor holds “a security interest under the Uniform Commer-
cial Code” is a sufficient description when the creditor obtains
a security interest under the UCC, See Federal Reserve Board
—
(Footnote continued from preceding page.)
Associates Finance, Inc,, 369 F, Supp. 1121, 1123 (S. D. Ill. 1974);
Bone Vv. Hibernia Bank, 354 F. Supp. 310, 311 (N. D. Cal. 1973),
reversed on other grounds, 493 F, 2d 135 (9th Cir. 1974). Reliance
on such a form, where it is contrary to the law of the jurisdiction,
is not sufficient to insulate defendants from liability under § 1640(f).
10. The extent of reliance on these letters to support defendant's
position is itself open to question, Letier 829, August 22, 1974,
seems to indicate that the strictures of state law must be followed in
describing the security interest. While Letter 983, December 30,
1975, seems to backtrack from this position, Letter 1053, May 28,
1976, followed and stated:
It appears from your letter that these creditors are disclos-
ing a security interest in “all after-acquired property” or “all
after-acquired pro o including all attachments, substitutions,
and replacements.” If, in fact, the applicable State law only
permits acquisition of a security interest in after-acquired
property acquired within a certain period of time, then such a
statement would be improper under Regulation Z.
A23
Official Staff Interpretation (November 19, 1976), CCH Con-
sumer Credit Guide 4 31,491. Without deciding whether this
Official Staff Interpretation is consistent with Tinsman, we note
that defendants cannot rely on this Official Interpretation since
the language in their disclosure forms makes no mention of the
ucc,
In holding that defendants cannot rely on the unofficial staff
letters under the facts of this case, we realize that such letters
are an important informative function of the staff of the Board
which, although not binding on a court, are entitled to deference
and may prove helpful to a decision in a given case, Philbeck vy,
Timmers Chevrolet, Inc., 499 F, 2d 971, 976-77 (Sth Cir.
1974) ; Frank yv, Reserve Consumer Discount Co,, 398 F. Supp.
703 (D. Pa. 1975). In the instant cases, however, the disclosure
forms give a clearly mistaken impression of the extent of time
the security interest may be in effect. As we stated in Tinsman
Vv. Moline Beneficial Finance Company, 531 F. 2d 815, 818
(7th Cir, 1976):
A reading of the form would lead the debtors to conclude
erroneously that the security interest extends to all [con-
sumer] goods , . . at any time the loan agreement is in
effect, even though Illinois law precludes such a security
interest covering consumer goods acquired more than 10
days after the secured party gives value.
The disclosures required here are not onerous and their uni-
formity is enhanced by the fact that the UCC has been adopted
by 49 states. Moreover, the fact that defendants cannot in ac-
tuality claim any greater security interest than is allowed by
state law is of no consequence. Although the inclusion of
language in the forms which does not limit the security interest
to 10 days fails to extend that interest beyond the limited period,
it does mislead the consumer. As was stated in /ves v, W. T.
Grant Company, 522 F. 2d 749, 761 (2d Cir, 1975):
Whether [a debtor] actually retains a security interest is
irrelevant, On its face, the contract provides for a security
A24
interest and for [a debtor] to reveal later that there is none
is hardly the type of disclosure Congress thought would
“permit consumers to compare the cost of credit among
different creditors and to shop effectively for the best
credit buy.”
Therefore the district court erred in dismissing these claims,
In the fourth case, No, 77-2032, the security agreement ex-
plicitly excepts “after acquired consumer goods acquired more
than 10 days after the date hereof,” Defendant in this case has
complied with the TILA and Regulation Z,'' Dismissal of the
complaint was properly allowed by the district court,
IV
The next contention is that defendants” violated the TILA
and Regulation Z, 12 C, F. R. § 226,6(a), which provides in
relevant part;
(a) Disclosures; general rlue, The disclosures required
to be given by this part shall be made clearly, conspicu-
ously, in meaningful sequence, in accordance with the
further requirements of this section, and at the time and
in the terminology prescribed in applicable sections,
———
11. Plaintiffs also attempt to premise a claim on language in the
security interest purporting to cover “all substitutions and replace-
ments.” Assuming that substitutions and replacements for collateral
cannot be the subject of a security interest after 10 days (See Tins.
man V. Moline Beneficial Finance Co,, 531 F. 2d 815, 816 (7th Cir,
1976), such goods must, by definition, be considered as being “of
the same or similar type” as those secured, Thus the 10-day limita-
tion contained in the agreement covers these goods as well:
Debtor further grants to Secured Party a security interest in all
goods, personal property and chattels of the same or similar
type or kind to that described above now owned or hereafter
acquired, excepting only after acquired consumer goods acquired
more than 10 days after the date hereof,
No valid claim of violation is therefore made,
12. This issue involves Nos, 78-1059 and 78-1061 through 78-
1069, Plaintiffs also claim that Nos, 77-2029, 77-2030 and 78-1058
involve this issue, For the reasons discussed in note 2 supra, how-
ever, - issue Was not reached in those cases and is not before us on
appeal.
A25
See also 15 U. S.C, § 1631(a), This regulation is designed to
insure that the disclosures follow a logical order and are not
scattered throughout the agreement, See Staff Opinion Letter
No, 780 (April 10, 1974), CCH Consumer Credit Guide
4 31,102,
Allen v, Beneficial Finance Company of Gay, 531 F, 2d 797
(7th Cir.), cert, denied, 429 U. S, 885 (1976), deals with the
issue of meaningful disclosure, According to Allen, 531 F, 2d
at 801, “meaningful sequence” requires that disclosure state-
ments basically must follow two criteria:
Thus, meaningful sequence first requires groupings of logi-
cally related terms, Second, meaningful sequence requires
that the terms in these groupings be arranged in a logically
sequential order emphasizing the most important terms,
Plaintiffs complain that the discloure statements make dis-
closures horizontally instead of vertically, This fact does not,
however, make the disclosures misleading, The key factor is
reasonable proximity and comprehensibility, As Staff! Opinion
Letter 780 (April 10, 1974) states:
We realize that it is not always practical to list the items
in vertical order, but in keeping with the purpose of the
Truth in Lending Act, they should be placed in reasonable
proximity to each other so that the customer will not be
required to search for any arithmetical items which should
logically follow a previous one,
The forms involved here satisfy this requirement even though
the disclosures are horizontal in nature,
Plaintiffs next suggest that the use of a subtractional dis-
closure in several of the forms violates the “meaningful se-
quence” rule, While it was noted in Allen, 531 F, 2d at 802,
804, that the substractional method is not favored, the court
stated that the “requirements of meaningful sequence cannot
be applied mechanically or rigidly.” In Allen the statement
13. Subsequent to the decision in Allen, the Board issued Staff
Opinion Letter No, 1047 (May 20, 1976), CCH Consumer Credit
Guide ¢ 13,387, commenting on Allen that no particular form of
(Footnote continued on next page)
A26
contained some figures listed horizontally and others listed in
two vertical columns, Groupings of terms were located at ran-
dom, The columns of numbers appeared to add up when in
reality they did not, The same charge was listed twice under two
different titles, The court, 531 F, 2d at 802, described this
attempt at disclosure as follows:
The present defendant has failed in almost every respect
to provide disclosures in meaningful sequence in the present
disclosure statement, The court below cited ten instances
in which the disclosure statement failed to set forth the
required information in a meaningful sequence,
In contrast, the subtractional disclosure statements here con-
tain a logically sequential series of disclosures beginning with
the total amount of required payments, the finance charge, the
amount financed, the charges for credit life, and credit disability
insurance, the total number of payments and the annual per-
centage rate, Perusal of the forms indicate that while this par-
ticular sequence is not additional, it is logical and meaningful,
This is all that the TILA, Regulation Z and the Allen decision
require," See also Oflicial Staff Interpretation (March 21, 1977),
CCH Consumer Credit Guide 4 31,552, Therefore, the decision
of the district court that the disclosures in these forms were
made in a “meaningful sequence” must be sustained,
ws - weet eee
(Footnote continued from preceding page.)
statement was required so long as the relationship among the terms
is clear, thereby providing the consumer with a clear and adequate
basis on which to shop for credit,
I4, See generally Annotation, “Meaningful Sequence” Require-
ment of Regulation Z (12 C, F. R,, pt. 226.6(a)), 33 A. L. R. Fed,
751 (1977),
A27
Vv
Two of the cases'® concern the issue of whether, after filing a
petition under Chapter XIII of the Bankruptcy Act, the debtors
may respond to a filing of a claim or a reclamation petition by
alleging TILA violations on the part of the creditor, even though
the TILA claim is beyond the statutory limitation period, Plain-
tiffs contend that their action is not time barred since their
claim is one of recoupment,
The limitation period for TILA claims provides 15 U, S, C,
§ 1640(e);:
Any action under this section may be brought in any
United States district court, or in any other court of com-
petent jurisdiction, within one year from the date of the
occurrence of the violation,
There is no dispute that debtors failed to make a claim within
one year from the date of the occurrence, See also Goldman v,
First National Bank of Chicago, 532 F, 2d 10 (7th Cir.), cert.
denied, 429 U.S, 870 (1976), Rather, debtors claim that some-
how their action was revived when creditors made claims in
response to debtors filing for voluntary bankruptcy under Chap-
ter XIII, The bankruptcy judge and the district court rejected
this claim in both cases,
Failure to bring an action for damages within the one-year
limitation period bars the action, See Jamerson vy, Miles, 421
F, Supp. 107 (N. D. Tex, 1976); Fenton v, Citizens Savings
Association, 400 F, Supp. 874 (C, D, Mo, 1975), Where a
counterclaim seeks to assert a separate cause of action for an
independent wrong, it generally may not be instituted after the
we Sa ame
15, Nos, 77-2180 and 78-1058, In 77-2180, plaintiffs also argue
that the creditors violated Regulation Z § 226.8(a). For the reasons
discussed in note 8 supra, this issue is not before us, Also, in light
of our disposition of the statute of limitations issue, plaintiffs’ further
argument relating to the vacating of the default judgment need not be
addressed, In any case, the district court has wide discretion in
— such relief, See Feo, R, Civ, P, 60(b) and Bankruptcy
ules 755(b) and 294,
A28
applicable statute of limitations has expired. See Smith-Joh ison
Steamship Corp. v. United States, 231 F. Supp. 184 (D. Del.
1964).
We believe that this rule applies to these cases as well. Debtors
argue, however, that a counterclaim is not barred where it seeks
“recoupment” rather than affirmative relief. This argument must
fail there even assuming that the doctrine of recoupment may
assist the claming party in a given situation. See Bull v. United
States, 295 U. S, 247, 262 (1935). The TILA claim presented
by debtors seeks affirmative damages under 15 U. S. C. § 1640
(a)(2). They do not claim however that they were actually
damaged in any way as a result of the claimed TILA violation.”
Nor do they: claim that the alleged TILA violations somehow
negate the validity of the underlying loan transaction.'’ The
TILA claim is not directed at or an answer to the underlying
debt."*
Viewed in this manner, debtors in bankruptcy have brought
suit for affirmative relief based on alleged TILA violations. The
fact that the creditors being sued have filed claims in the bank-
ruptcy proceeding has no material relevance. Debtors action
is barred by the one-year statute of limitations containéd in
16. See 15 U.S. C. § 1640(a)(1). We express no opinion con-
cerning the availability of a counterclaim after the limitation period
where debtors would seek to have the recovery by creditor reduced
by the amount of actual damages sustained by debtors in, for ex-
ample, overpayment of finance charges. See also 15 U. S. C.
§ 1640(h). Certainly, however, such a claim is much closer to the
concept of “recouping” something unlawfully takcn by the creditor.
17. It has been held that a TILA claim and the underlying loan
transaction are not so related as to be the subject of a compulsory
counterclaim under Rule 13(a), Federal Rules of Civil Procedure.
See Gammons v. Domestic Loans of iWnston-Salem, Inc., 423 F.
Supp. 819 (M. D. N. C. 1976), and cases cited therein.
18. It has been held that a TILA claim and the underlying loan
does not apply to an action for rescission under 15 U. S. C. § 1635.
- oe Vv. Domestic Loans of Winston-Salem, Inc., 423 F.
).
ll te i i) a a a A OS De I ly, SO Ee
are
A29
15 U. S. C. § 1640(e).*° The design of TILA was to provide
protection to consumers by affording them meaningful disclosure
and thereby an opportunity to shop for credit. It was not de-
signed, nor should it be used to thwart, the valid claims of
creditors. The district court properly dismissed these claims on
the authority of the statute of limitations.
IV
In Sharp v. First National Bank of Peoria, No. 77-2197,
plaintiffs, husband and wife, allege that defendant failed to
give them any documents or discloure statements necessary to
comply with the TILA or the Motor Vehicle Retail Installment
Sales Act of Illinois, ILL. Rev. Svat., ch. 121%, § 573. De-
fendant filed a motion to dismiss and attached a copy of a loan
document signed by Robert N. Sharp. Plaintiffs responded by
filing only an affidavit by Mary Sharp. The district court granted
defendant’s motion to dismiss,
Plaintiffs’ claim under the Illinois Statute is without merit.
The statute is designed to apply where a retail automobile sales
establishment provides or procures financing for the vehicles it
sells, not where independent bank fiancing is obtained. See
generally Rivera v, Dick McFeely Pontiac, Inc., 431 F. Supp.
506 (N. D. Ill. 1977); Lucas v. Park Chrysler Plymouth, Inc.,
62 F. R. D. 399 (N. D. Ill. 1974). Thus, the section which plain-
tiffs claim defendant violated provides in relevant part:*°
19. We recognize that the state courts have split on this question.
See generally Annotation, Time Limitations Under 15 VY. S. C.
§ 1640(e) on Truth In Lending Suits, 36 A. L. R. Fed. 657 (1978);
Note, Restrictions on Defenses and Counterclaims Based on Truth
In Lending Violations, 13 Wake Forest L. Rev. 189 (1977). This
split is attributable mainly to a variation in state statutes. Even
ignoring the questionable use of state statutes to modify a federal
cause of action controlled by an explicit federal limitation period,
such statutes do not bind the federal courts. See also 15 U. S. C.
§ 1640(h), which denies any offset under § 1640(a)(2) unless the
liability has been judicially determined.
20. Itz. Rev. Stat., ch. 121%, § 573.
A30
The seller shall deliver to the buyer a copy of the retail
installment contract signed by the seller. Any acknowledg-
ment by the buyer of delivery of a copy of the contract
must be printed or written in a size equal to at least 10
point bold type and, if contained in the contract, must
appear directly above the legend required above the buyer’s
signature by paragraph (1) of Section 3, The Buyer's
written acknowledgment of delivery of a copy of the con-
tract conforming to the requirements of this Act is conclu-
sive proof of such delivery and of compliance with this
Section in any action by or against an assignee of the
contract without knowledge to the contrary when he
purchases the contract.
This section clearly contemplates the situation where the
automobile dealer, the “seller,”*’ arranges the financing and is
therefore not applicable to the bank in this case,
Regarding the TILA claim, defendant filed a motion to
dismiss and attached a copy of the loan agreement signed by
Robert Sharp. The loan document provides, above Mr. Sharp's
signature, that debtor “acknowledges receipt of a completely
filled in copy prior to execution thereof.” This acknowledgment
by Mr. Sharp created a rebuttable presumption that the required
disclosures were made.** Mr. Mr. Sharp failed to rebut this
presumption by filing an affidavit or otherwise pleading further.
21, ILL. REV. STAT. ch, 121%, § 562.3, defines this term:
“Retail seller” or “seller” means a person engaged in the
business of selling motor vehicles to retail buyers in retail! in-
stallment transactions.
The bank is not in the business of selling motor vehicles. See also
ILL. Rev. Stat., ch. 121%, § 562.4:
“Retail installment transactions” means a credit sale of a
motor vehicle by a retail seller to a retail buyer for a deferred
payment price payable in one or more installments.
22. 15 U.S.C. § 1635(c) provides:
Notwithstanding any rule of evidence, written acknowledg-
ment of receipt of any disclosures required under this subchapter
by a person to whom a statement is required to be given pur-
suant to this section does no more than create a rebuttable pre-
sumption of delivery thereof.
ee
ee ee ed
et ee
A31
The dismissal of the TILA claim was therefore proper.” See
Whitlock v, Midwest Acceptance Corp., 76 F, R, D, 190
(E. D. Mo. 1977).
Vil
Plaintiffs’ final claim is that the district court improperly
dismissed the class action request in Childs v. First National
Bank of Peoria, No. 77-2031.** In this case the complaint
consisted of six counts, three of which were for class action relief
and three of which were for individual relief. The district court
dismissed the entire compaint, including the class action counts.
While the reasons for the dismissal of the class action counts
by the district court are not clear from the record provided on
appeal,”® the district judge was not required to reach the issue
since the individual substantive claims by plaintiff were dis-
missed.*° In light of our holding in Part III that this plaintiff has
23. Plaintiffs argue that the filing of an affidavit by Mary Sharp
should be sufficient. However, both the purchase agreement and
the loan documents are signed by Robert Sharp alone. The loan agree-
ment provides a place for a second debtor or co-signer to sign, but
this space is left blank. It appears that Mary Sharp did not obligate
herself in any way to defendant and therefore would not be entitled
to disclosure. Her affidavit adds nothing to Robert Sharp’s claim.
In addition, if plaintiffs could have stated a claim under the Illinois
Motor Vehicle Retail Installment Act, Mr. Sharp’s acknowledgment
would provide “conclusive proof” of delivery according to the terms
of that statute.
24. Plaintiffs also argue that this issue involves No. 78-1060.
iu light of our holding in Part II of this opinion that the substantive
cause of action was properly dismissed, we need not reach the class
action issue in that case. In addition, defendants seem to believe that
No. 78-1059 is also involved (Defendants’ Brief p. 62). Plaintiffs do
not argue this issue in their briefs with regard to this case ( Plaintiffs’
Brief pp. 93-102; but see p. 9). In any case, because of our conclu-
sions in Parts II and IV that the substantiive claims in this case were
properly dismissed, we need not reach the class action issue.
25. Apparently the motion to dismiss was granted at an oral
hearing on September 6, 1977. The transcript of that hearing has
not been provided to this court.
26. For example, the district court may have concluded that,
since plaintiff's individual claims were meritless, plaintiff could not
adequately represent the class for purposes of securing relief. Since
the district court’s reasons have not been presented to us, however,
this is merely a surmise.
A32
stated a cause of action under TILA, we direct the district
court, on remand, also to consider the class action allegations
of the complaint in this case,
Vill
The disposition of the cases in this appeal is as follows:
Nos, 77-2032, 77-2197, 77-2180, 78-1058 through 78-1069,
and 78-1198 are affirmed; Nos. 77-2029, 77-2030 and 77-2031
are reversed and remanded for further proceedings consistent
with this opinion.
AFFIRMED IN PART;
REVERSED IN PART.
A true Copy:
Teste:
Clerk of the United States Court of
Appeals for the Seventh Circuit
A33
APPENDIX D.
OPINION BY JUDGE SPRECHER
UNITED STATES CouRT OF APPEALS
For the Seventh Circuit
Chicago, Illinois 60604
August 16, 1978.
Before
Hon. WALTER J. CUMMINGS, Circuit Judge
Hon. RoBertT A. SPRECHER, Circuit Judge
Hon. WILLIAM J. BAUER, Circuit Judge
Appeals from the
United States Dis-
trict Court, for the
Southern District of
Illinois, Peoria Divi-
sion,
Nos. 77-2029 through 77-2032, 78- | Nos. CV 77-1053,
1059 through 78-1069, 772179, CV 77-1059,
77-2180, 78-1058, and 78-1198 CV 77-1072,
CV 77-1060,
Davip J. BASHAM and LINDA C. CV 77-1080
BASHAM, et al.,
CV 77-1081,
Plaintiffs-A ppellants, s CV 77-1083,
CV 77 1088,
vs. CV 77-1089,
CV 77-1090,
FINANCE AMERICA, CORPORATION, CV 77-1093,
et al., CV 77-1102,
Defendants-A ppellees. CV 77-1107,
CV 77-1116,
CV 77-1117,
CV 77-1087,
CV 77-1119,
CV 77-1120,
CV 77-1139,
CV 78-1007,
A34
These causes came on to be heard on the transcript of the
record from the United States District Court for the Southern
District of Illinois, Peoria Division, and were argued by counsel,
On consideration whereof, it is ordered and adjudged by this
court that the judgments of the said District Court in these
as to cases Nos. 77-2032, 77-2197, 77-2180, 78-1058 through
causes appealed from be, and the same hereby, Affirmed as to
cases Nos, 77-2032, 77-2197, 77-2180, 78-1058 through
78-1069, and 78-1198; and are Reversed and Remanded as
to Nos. 77-2029, 77-2030, and 77-2031, all cases are with
costs, in accordance with the opinion of this court filed this date.
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“paté i ALIS querer 1' e.dEe-> AQ pasinhay sasnsayosig peer
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Weymeanr shall be made in consecutive monthly lostaliments as
woe oo this vote et any time shall be apol
ethee ss nor
sbove indicated beginning on the stated due date for the (iret int
iv 10 installments in the order they fall due, un
open for business on a stated due date, such due date
theres! may, ai the option of the Borrower, be paid at any time,
FSR Hereol, without notice of demand,
sy ™Tens Of any installment may be
aliment, All peyments
til the indebtedness hereunder is pad in full. When the holder's
shall be the next succeeding business dy, The unpaid balance of this note, OF any part
Default in the payment ef ony installment, or any part thereof, shall, at the option of the
render the then unpaid balance hereof, loss Finance Cherge tebate, at once due and payable Default in the
discussed with any present or future employer, The undersigned severally waive demond for peyment, notice of
HUnBeryment, protest and notice of protest of this note and consent to extension of tire of peyment without notice,
To secure payment hereof, the undersigned, jointly and severally, irrevocably authorize any attorney of any court of record to eppear for any one or more
of thers in such court, in term time or vacation, after default in payment hereof, and confess a judgment without process in fevor of the holder Sereot for
eech amount a3 may then appear unpaid hereon; to release all errors which may intervene in any such proceectings; and to consent to immediate execution
Lyon such judgment; hereby ratifying every act of such attorney hereunder. Notwithstanding any provision hereof or of epplicable law, holder irrevocably
waives and releases all right to make a judgrnent confessed hereon a lien on any real property Mow or hereafter Owned by the undersigned or in which the
we Cersioned may now or hereafter have an interest.
This agreement binds the successors, heirs, and essigns of the parties hereto. The construction, validity, and effect hereof shall be qoverneac by the lows of
Ulnois, except 2s modified by the Feceral Consumer Credit Protection Act.
LORROWERS ACKNOWLEDGE RECEIPT OF AN EXACT AND COMPLETELY FILLED IN COPY OF THIS DOCUMENT AND CERTIFICATES
VIDENCING ANY REQUESTED INSURANCE,
SATE Me ht ae FE. r
wITNESS! & arn ae ee he 4 es (SVAL)
7 S , ~\. . 7 *s _
WH \ CALM) ee - Se . on ~ ‘ JS
alg
oe age ee. (SEAL)
OM TYLON
Ee ae —— ee cen (9) AL)
BO! ROVIER'S COPY
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This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.