Maine Merchants Ass'n, Inc. v. Campbell

Citation287 A.2d 430
PartiesMAINE MERCHANTS ASSOCIATION, INC., et al. v. Elmer W. CAMPBELL.
Decision Date16 February 1972
CourtMaine Supreme Court

Pierce, Atwood, Scribner, Allen & McKusick by Jeremiah D. Newbury, Gerald M. Amero, Daniel E. Boxer, Portland, for plaintiffs.

Clayton N. Howard, Asst. Atty. Gen., Augusta, for defendant.

Before DUFRESNE, C. J., and WEBBER, WEATHERBEE, POMEROY, WERNICK and ARCHIBALD, JJ.

POMEROY, Justice.

This complaint for a declaratory judgment, injunctive relief and review of the Bank Commissioner's Order under the provisions of 80B, Maine Rules of Civil Procedure, is before us on report.

The factual issues have been resolved by an agreed statement of facts. We are asked to 'render such decision as the rights of the parties require.'

The plaintiff, Maine Merchants Association, Inc., is a non-profit corporation organized without capital stock. Some 400 retail merchants through the State of Maine constitute the members. 1

Plaintiff Porteous, Mitchell & Braun Company is a corporation operating a general department store in the City of Portland.

Plaintiff A. H. Benoit & Company is likewise a corporation operating retail stores in Portland, Lewiston, Brunswick and Ogunquit.

Plaintiff Sears, Roebuck and Company is a New York corporation, qualified as a foreign corporation under 13 M.R.S.A. § 592. This corporation is engaged in the general retail business throughout the United States and owns and operates retail stores in Presque Isle, Bangor, Rockland, Waterville, Augusta, Lewiston, Brunswick and Portland, all in Maine.

The defendant is the Bank Commissioner of the State of Maine. 2

The agreed statement dates the birth of the controversy as March 19, 1971, when the then Bank Commissioner issued his 'Ruling 1971-l' and a press release. 3

The Commissioner's position is that the revolving charge accounts constitute a violation of 9 M.R.S.A. § 3086 which reads as follows:

'No person, copartnership or corporation, except as authorized by chapters 281 to 289, shall, directly or indirectly, charge, contract for or receive any interest or consideration greater than 12% per year upon the loan, use or forbearance of money, goods or choses in action, or upon the loan, use or sale of credit, of the amount or value of $2,500 or less. This prohibition shall apply to any person who, as security for any such loan, use or forbearance of money, goods or choses in action, or for any such loan, use or sale of credit, makes a pertended purchase of property from any person and permits the owner or pledgor to retain the possession thereof, or who, by any device or pretense of charging for his services, or otherwise, seeks to obtain a greater compensation than is authorized by chapters 281 to 289.'

The question we must decide becomes: Does 9 M.R.S.A. § 3086 apply to the sale of merchandise on credit pursuant to the revolving charges account plans of the plaintiffs?

The agreed statement of facts establishes plaintiff Sears, Roebuck and Company has for some 15 years used revolving charge account plans with a periodic charge of 1 1/2% per month.

Although the other plaintiffs have used such plans for a lesser period of time than Sears, the parties agree the plans of all the plaintiffs are substantially similar.

In all cases, prior to use of a revolving charge account, a customer must make application for credit and enter into a revolving charge account agreement. Approval or disapproval of the application of a customer of the plaintiffs for a revolving charge account is based on the customer's past credit history and his ability to pay.

A revolving charge account customer of the plaintiffs may purchase merchandise for cash at the cash price stated on the sales check, plus sales tax, or may charge such amounts to his revolving charge account, in which case all of the contractual rights and responsibilities of the parties are governed by the revolving charge account agreements.

The disclosure statements, required to be furnished to their customers by the plaintiffs under Regulation 6 of the State Department of Banks and Banking, promulgated pursuant to 9 M.R.S.A. § 3905, are furnished by the plaintiffs to their customers at the time of the execution of the revolving charge account agreement.

These disclosure statements disclose certain rights and responsibilities of the parties and the finance charge as required by subsection 1, section 7, of Regulation 6.

It is agreed that in the case of all plaintiffs the periodic rate of finance charge of 1 1/2% per month exceeds an annual percentage rate of 12% a year. In the case of Sears, the finance charges billed to customers under their revolving charge agreements are carried under the heading of service charges and the finance charges due from customers' closed-end retail instalment sales contracts are carried on the books of Sears under the heading 'carrying charges.'

In the case of Porteous, finance charge billed to revolving charge customers and due from closed-end instalment contract customers are both carried under the heading 'interest and carrying charges.'

In the case of Benoit's, finance charges are carried under the heading 'budget account-service charge.'

In case of all of the plaintiffs, upon purchasing merchandise under a revolving credit account the customers may obtain immediate possession 4 of the merchandise.

The Bank Commissioner is a person expected to possess expertise in the field of banking. Within the limitations provided by the various statutes he is called upon to administer, he frequently has occasion to make findings of fact. When his factual conclusions are within the realm of his acknowledged expertise, great deference must be given his conclusions by a reviewing Court.

However, in the instant case his conclusion was not one of fact.

Rather his ruling was that 9 M.R.S.A. § 3086 applied to plaintiffs' revolving charge accounts.

This was a conclusion of law.

The problem before us is not to resolve the broad policy question: Should the revolving charge accounts be made subject to regulation? But rather the question is one of statutory interpretation.

The very narrow issue we have for decision is: Are revolving charge accounts intended to be regulated by 9 M.R.S.A. § 3086?

Maine does not have a general usury statute. If such accounts are subject to regulation at all, they perforce must be regulated by 9 M.R.S.A. § 3086.

We are aware revolving charge accounts, not unlike the ones before us, have been the subject of considerable litigation.

The most recent case which has come to our attention is Rollinger v. J. C. Penney Co., Inc., 192 N.W.2d 699 (1971), decided by the South Dakota Supreme Court.

Just prior to that, the Supreme Court of New Jersey ruled in Sliger v. R. H. Macy & Co., 59 N.J. 465, 283 A.2d 904 (1971). Among the many other cases which have come to our attention are, State of Wisconsin v. J. C. Penney Co., 48 Wis.2d 125, 179 N.W.2d 641 (1970); Dennis v. Sears, Roebuck & Co., 223 Tenn. 415, 446 S.W.2d 260 (1969); Uni-Serv Corp. of Mass v. Commissioner of Banks, 349 Mass. 283, 207 N.E.2d 906 (1965).

While all these cases are helpful, none of them can be considered exactly in point.

9 M.R.S.A. §§ 3001-3162 was first enacted by Chapter 298 of the Public Laws of 1917. Section 13 of the 1917 Act provided as follows:

'Sec. 13. Interest rate greater than twelve per cent annually, except as herein provided, prohibited; attempted evasion by pretended purchases. No person, copartnership or corporation except as authorized by this act shall, directly or indirectly, charge, contract for, or receive any interest or consideration greater than twelve per centum per annum upon the loan, use or forbearance of money, goods or choses in action, or upon the loan, use or sale of credit, of the amount or value of three hundred dollars or less. The foregoing prohibition shall apply to any person who, as security for any such loan, use or forbearance of money, goods or choses in action, or for any such loan, use or sale of credit, makes a pretended purchase of property from any person and permits the owner or pledgor to retain the possession thereof, or who, by any devise or pretense of charging for his services, or otherwise, seeks to obtain a greater compensation than is authorized by this act.'

That Section which is now 9 M.R.S.A. § 3086 has undergone no substantial change other than as to the size of the loans from the original Sec. 13 of the 1917 Act.

In In Re Richards, 272 F.Supp. 480, 484 (D.Me.) (1967), rev'd on other grounds, 412 F.2d 635, (1 Cir. 1969), it was said:

'The Maine Small Loan Law was enacted in 1917 in an effort to attract established lending agencies into the small loan financing filed and to protect borrowers against 'loan sharks.' P.L. (Me.) 1917, c. 298, §§ 1-19. []8 This legislation provided for the licensing and regulation of small loan lenders and prescribed the maximum amount of interest which they could charge.'

'The Maine statute was based upon the first draft of the Uniform Small Loan Act sponsored by the Russell Sage Foundation. For a description of the history and development of small loan legislation, see generally Curran, Trends in Consumer Credit Legislation (1965); 'Combating the Loan Shark,' 8 Law and Contemporary Problems (1941); Hubachek, Annotations on Small Loan Laws (1938).'

The 1917 Act was introduced in the Legislature by Representative Garcelon. According to the 1917 Maine Legislative Record 1360, 1363, Representative Garcelon, sponsor of the bill, and Representative Redman both gave a detailed exposition of the loopholes in the...

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6 cases
  • Berry v. Daigle
    • United States
    • Maine Supreme Court
    • 12 Julio 1974
    ...in the same proceeding. Similar joining of claims for relief is an established practice in our courts. Maine Merchants Assoc., Inc. v. Campbell, Me., 287 A.2d 430 (1972) (claims for injunctive, declaratory and Rule 80B relief sought against Banking Commission); cf. Perkins v. Warren, Me., 2......
  • Cecil v. Allied Stores Corp.
    • United States
    • Montana Supreme Court
    • 20 Septiembre 1973
    ...interest is not involved and the usury laws apply to loans and not to sales. For recent examples see: Maine Merchants Association, Inc. v. Campbell (Maine 1972), 287 A.2d 430; Sliger v. R. H. Macy & Co. (1971), 59 N.J. 465, 283 A.2d 904; Zachary v. R. H. Macy & Co., Inc. (1972), 31 N.Y.2d 4......
  • Overbeck v. Sears, Roebuck & Co.
    • United States
    • Indiana Appellate Court
    • 23 Junio 1976
    ...Tenn. 415, 446 S.W.2d 260; Uni-Serv Corp. of Mass. v. Comm'r. of Banks (1965), 349 Mass. 283, 207 N.E.2d 906; Maine Merchants Ass'n., Inc. v. Campbell (1972), Me., 287 A.2d 430; Zachary v. R. H. Macy Co., Inc. (1972), 31 N.Y.2d 443, 340 N.Y.S.2d 908, 293 N.E.2d 80; Kass v. Garfinckel, Brook......
  • Waddell v. Briggs
    • United States
    • Maine Supreme Court
    • 27 Enero 1978
    ...must be construed so as to promote the policy consideration which brought about the Legislature's action. Maine Merchants Association, Inc. v. Campbell, Me., 287 A.2d 430, 435 (1972). Such construction shall be adopted as will best curb the problem which the Legislature sought to suppress. ......
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