452 U.S. 155 (1981), 80-1205, Ford Motor Credit Co. v. Cenance
|Docket Nº:||No. 80-1205|
|Citation:||452 U.S. 155, 101 S.Ct. 2239, 68 L.Ed.2d 744|
|Party Name:||Ford Motor Credit Co. v. Cenance|
|Case Date:||June 01, 1981|
|Court:||United States Supreme Court|
ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE FIFTH CIRCUIT
1. Under pertinent provisions of the Truth in Lending Act, 15 U.S.C. § 1601 et seq., and an implementing regulation, petitioner company, as the assignee from automobile dealers of retail installment contracts, is a creditor within the meaning of the Act. Although each dealer arranged for the extension of credit to the automobile buyer, petitioner actually extended the credit. The sales were contingent upon petitioner's approval of the buyer's credit worthiness, and the dealer's acceptance of the sales contract and the assignment to petitioner became operational simultaneously, the assignment divesting the dealer of any risk in the transaction.
2. A statement on the retail installment contracts notifying the buyer that the contract was "assigned to [petitioner] in accordance with the terms of the Assignment set forth on the reverse side hereof," is a sufficient disclosure of petitioner's creditor status for purposes of the Act.
Certiorari granted in part; 621 F.2d 130, affirmed in part and reversed in part.
Per curiam opinion.
The motion of the American Bankers Association for leave to file a brief as amicus curiae is granted. The motion of the California Bankers Association for leave to file a brief as amicus curiae is granted.
These cases were consolidated in the Court of Appeals. Cenance v. Bohn Ford Co., 621 F.2d 130 (CA5 1980). In each, a prospective purchaser of an automobile entered [101 S.Ct. 2240] into an installment sales transaction with an automobile dealer. Prior to completion of the transaction, the dealer submitted the buyer's credit application to petitioner Ford Motor Credit Co. (FMCC). Once the dealer was notified that the buyer met FMCC's credit standards, the buyer and the dealer executed
a retail installment contract. On each contract the following legend appeared:
The foregoing contract hereby is accepted by the Seller and assigned to Ford' Motor Credit Company in accordance with the terms of the Assignment set forth on the reverse side hereof.
Pursuant to the arrangement between the dealer and FMCC, FMCC purchased each contract without recourse against the dealer. Although FMCC did not assist in the actual negotiations, it provided the dealer with credit forms, including blank retail installment contracts. Although each did so, none of the dealers was obligated to seek financing from FMCC in perfecting its sales transaction.
Subsequently, each buyer brought suit in Federal District Court, alleging violations of the Truth in Lending Act, 82 Stat. 146, as amended, 15 U.S.C. § 1601 et seq. The allegations common to all suits were that FMCC was a creditor within the meaning of the Act and that the statement concerning assignment to FMCC did not adequately disclose that status.1 The respective District Courts agreed and the Court of Appeals for the Fifth Circuit affirmed. In determining that FMCC was a creditor, the Court of Appeals relied upon its prior decision in Meyers v. Clearview Dodge Sales, Inc., 539 F.2d 511 (1976). There the court had held, under similar facts, that it would be elevating form over substance to characterize a party such as FMCC, there Chrysler Credit Corp., as anything but a creditor. In the immediate case, the court reiterated that point:
The Meyers analysis applies with even greater force
to the instant situation, because here the dealers regularly dealt only with Ford. The dealer and Ford prearranged for the assignment of the finance instrument. At no time did the risk of finance reside with the dealer. The transaction between dealer and automobile purchaser was conditioned upon acceptance of the credit application by Ford. Indeed, the credit application form was prepared by Ford. As in Meyers, it would be elevating form over substance to hold that Ford was anything but an original creditor within the meaning of the Act and Regulation Z.
621 F.2d at 133. Having concluded that FMCC was a creditor within the meaning of the Act, the Court of Appeals went on to hold that the statement in the retail sales agreement notifying the buyer of the assignment to FMCC was an insufficient disclosure of creditor status in violation of 12 CFR § 226.6(d) (1980). The court also held that FMCC was liable for certain other Truth in Lending Act violations pertinent to each particular suit.
FMCC's petition for certiorari challenges these holdings. We grant the petition in major part,2 affirm the holding that FMCC is a creditor within the meaning of the Act, but reverse the holding that the statement revealing the assignment to [101 S.Ct. 2241] FMCC was not a...
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