Meadows v. Charlie Wood, Inc.

Decision Date07 April 1978
Docket NumberCiv. A. No. 77-74-MAC.
PartiesSamuel M. MEADOWS, Plaintiff, v. CHARLIE WOOD, INC., Defendant.
CourtU.S. District Court — Middle District of Georgia

Robert E. Steele, Jr., Macon, Ga., for plaintiff.

Bruce M. Hofstadter of Westmoreland, Patterson & Moseley, Macon, Ga., for defendant.

BOOTLE, Senior District Judge:

This case presents two questions:

First, whether the disclosure statement reflecting the sale of a boat, motor and trailer violated the Truth in Lending Act (TIL) requirements by listing $391.35 as a "Cash Down Payment", rather than adding it to the "Amount Financed", and

Second, whether this court has jurisdiction over the vendor's counterclaim for balance due as purchase price.

In response to plaintiff's complaint seeking $1,000 plus costs and attorney's fees under 15 U.S.C.A. § 1640, the defendant denies the alleged TIL violation and counterclaims for $1287.52 principal plus attorney's fees and costs. To said counterclaim, plaintiff alleges that the defendant is seeking a deficiency judgment and is not entitled thereto because of its failure to follow the provisions of Ga. Code Ann. § 96-909, which must be complied with in order to entitle one to a deficiency judgment.

Truth in Lending

The first question involves a factual determination. The defendant had the boat, motor and trailer on display in a boat show at the Macon Mall. The plaintiff was attracted to this display on Wednesday, April 21, or Thursday, April 22, 1976, and discussed with Mr. Charles Wood, Jr. its purchase. Plaintiff testifies that Wood in their first conversation told him that the down payment would be $400; that he replied he did not have $400; that Wood then said plaintiff need not worry about the $400 and "could hold the down payment"; that later on Friday night, April 23rd when the papers were signed, "not a lot was said about the down payment." Plaintiff then testified that "nothing" was at that time said about it; that roughly three days after he picked up the equipment on Monday or Tuesday, April 26th or 27th, he paid Wood $50 and a week or so later another $30; that Wood was present at the time of both payments and on one of these occasions told him that plaintiff would have an open account on the down payment and could pay "a little at a time"; that Wood at no time pressed him for the balance or for any definite terms. Plaintiff recalls that the contract (which is also the disclosure statement) was signed Friday night, April 23rd, and that the down payment of $391.35 was on the contract when he signed it and that he did not ask Wood to change it. Then he adds in his testimony that "Wood said it had to be there."

All negotiations concerning the sale were conducted by plaintiff pro se and by Mr. Wood on behalf of the defendant. Mr. Wood's account differs sharply from that of the plaintiff. Wood says when the plaintiff first approached him, Wood had with him the bank chart and that he was specific telling plaintiff that the down payment would be $391.35 and what the installment payments would be, etc.; that one or two days later Wood took from plaintiff a credit application and after the bank approved that application, Wood telephoned plaintiff's wife, telling her of the approval; that plaintiff then returned and after the contract was prepared, Wood went over it and discussed it with plaintiff, item by item. Plaintiff looked it over and signed it. Wood then explained to the plaintiff that the property would not be delivered until Monday because it had to remain in the boat show. The plaintiff, up until this point, had never indicated any inability or non intention to make the down payment. On the contrary, when he signed the contract he stated he had $300 in his pocket and could have the balance by Monday when he got the equipment. On Monday afternoon, or Tuesday, plaintiff came for the boat, motor and trailer. Wood wired the car to the trailer, gave plaintiff the warranty card, etc. and made up the bill of sale. The plaintiff then fumbled in his pockets and said he had left his checkbook at home. Plaintiff inquired whether it would be all right if he made the down payment the next day. Wood did not object to that suggestion, thinking that it sounded reasonable. Then too, all was hitched up and ready to go and plaintiff's wife was there waiting for him. Next day came, but not plaintiff. Wood telephoned and plaintiff said he would be in on Friday. Ever since then Wood has been demanding the down payment. Plaintiff came in once and paid $50 on it and Wood asked him where was the balance and plaintiff said he had some bills to come up and asked if he could pay it on the next Friday. Wood did not object to that suggestion, again thinking it sounded reasonable. Plaintiff came in once more, this time in Wood's absence, and left $30. Wood called him after that and gave him "a hard time". Plaintiff would always promise payment within the next few days. Wood never agreed to accept installments on the down payment and always demanded payment in full.

Put to a credibility choice, this court finds that Wood's account is more probable, more reasonable, and indeed correct.

This being so, this factual situation is expressly covered by 15 U.S.C.A. § 1634 and 12 C.F.R. 226.6(g), which are identical and read:

If information disclosed in accordance with this part is subsequently rendered inaccurate as the result of any act, occurrence, or agreement subsequent to the delivery of the required disclosures, the inaccuracy resulting therefrom does not constitute a violation of this part.

12 C.F.R. 226.6(g) in a footnote states more specifically:

Such acts, occurrences, or agreements include the failure of the customer to perform his obligations under the contract and such actions by the creditor as may be proper to protect his interests in such circumstances. Such failure may result in the liability of the customer to pay delinquency charges, collection costs, or expenses of the creditor for perfection or acquisition of any security interest or amounts advanced by the creditor on behalf of the customer in connection with insurance, repairs to or preservation of collateral.

In Anthony v. Community Loan & Inv. Corp., 559 F.2d 1363, 1369 (5th Cir. 1977), it is held that a borrower cannot be heard to say he was "required" to purchase insurance after she had signed documents clearly advising her that she was not so required. The court stated that "Absent a claim of illiteracy, fraud or duress, no extraneous oral evidence can be presented by the plaintiff to prove that the defendant gave her the impression that the insurance was required. . . . In this situation therefore Georgia's parole evidence rule is not in conflict with the purposes of the federal statute." Similarly, the plaintiff Meadows cannot be heard to say that prior to his signing the disclosure statement he was told there would be no cash payment required.

It results therefore that the disclosure statement is not subject to the attack made upon it.

Jurisdiction of Counterclaim1

We are not concerned here with "pendent jurisdiction", a term which as generally used refers only to joinder of state and federal claims which "derive from a common nucleus of operative fact" and are such that a plaintiff "would ordinarily be expected to try them all in one judicial proceeding." United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966); Wright, The Law of Federal Courts, § 19 (1970). Even if it were true, as it is not that this court could be said to have "pendent jurisdiction" over this counterclaim, it would be a discretionary jurisdiction. Its exercise would be determinable by the sound discretion of the court.2 It has been held that pendent state law claims should not be routinely allowed in truth in lending cases. Solevo v. Aldens, Inc., 395 F.Supp. 861 (D.Conn. May 29, 1975); Ball v. Conn. Bank & Trust Co., 404 F.Supp. 1 (D.Conn. Nov. 11, 1975).

We are concerned with "ancillary jurisdiction" and however "ill-defined" that concept may be, it is clear that "ancillary jurisdiction permits courts to hear compulsory counterclaims, under Rule 13(a) . . but permissive counterclaims, under Rule 13(b), require independent jurisdictional grounds." Wright, The Law of Federal Courts, § 19 (1970); Revere Copper and Brass, Inc. v. Aetna Cas. & Surety Co., 426 F.2d 709, 714 (5th Cir. 1970); United States v. Heyward-Robinson Co., 430 F.2d 1077, 1080 (2nd Cir. 1970).

Inasmuch as the counterclaim suggests no independent jurisdictional grounds, the question becomes whether the counterclaim is compulsory or permissive only.

Rule 13(a) in effect says that a counterclaim is compulsory "if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim." In determining whether a counterclaim is compulsory, "four tests have been suggested:

1) Are the issues of fact and law raised by the claim and counterclaim largely the same?
2) Would res judicata bar a subsequent suit on defendant's claim absent the compulsory counterclaim rule?
3) Will substantially the same evidence support or refute plaintiff's claim as well as defendant's counterclaim?
4) Is there any logical relation between the claim and the counterclaim?"
6 Wright and Miller, Federal Practice and Procedure, § 1410 (1971).

The cited text indicates that in each of these tests, an affirmative answer to the question posed indicates that the counterclaim is compulsory. It points out also the inexactitude and weaknesses of these criteria.

The defendant's counterclaim can not measure up to any of the four standards.

Obviously the issues of fact and law raised by the claim and counterclaim are not "largely the same." They are entirely different. Plaintiff's claim is uniquely discrete, factually and legally. The only factual inquiry is whether the defendant made a proper disclosure of the terms of the credit sale. The only law involved...

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5 cases
  • Walker v. New Mexico at Hobbs Ctr.
    • United States
    • U.S. District Court — District of New Mexico
    • May 20, 2011
    ...Truth in Lending Act. 15 U.S.C. s 1601 et seq. See e.g., Basham v. Finance America Corp., 583 F.2d 918 (7th Cir.1978); Meadows v. Charlie Wood, Inc., 448 F.Supp. 717 (M.D. Great American.1978); Daughtrey v. First Bank & Trust Co. of South Bend, 435 F.Supp. 218 (N.D.Independent.1977); Gammon......
  • Plant v. Blazer Financial Services, Inc. of Georgia
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • July 23, 1979
    ...actually two counterclaims in the case and the other, based on Georgia usury statutes, was clearly compulsory. Meadows v. Charlie Wood, Inc., 448 F.Supp. 717, 722 (M.D.Ga.1978). In the second case, Spartan Grain & Mill Co. v. Ayers, 581 F.2d 419 (5th Cir. 1978), the district court had held ......
  • Whigham v. Beneficial Finance Co. of Fayetteville, Inc., s. 78-1433
    • United States
    • U.S. Court of Appeals — Fourth Circuit
    • June 20, 1979
    ...other hand, requires the court to determine the contractual rights of the parties in accordance with state law. Meadows v. Charlie Wood, Inc., 448 F.Supp. 717, 721 (M.D.Ga.1978); See Spartan Grain & Mill Co. v. Ayers, 581 F.2d 419, 430 (5th Cir. Second, the evidence needed to support each c......
  • Ector v. Southern Discount Co.
    • United States
    • U.S. District Court — Northern District of Georgia
    • August 1, 1979
    ...of state claims appended to federal truth-in-lending actions." Solevo, supra at 864, cited with approval in Meadows v. Charlie Wood, Inc., 448 F.Supp. 717, 720 (M.D.Ga.1978). The Courts have sometimes held state law claims to be pendent to a truth-in-lending claim but usually only if the st......
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