Ford Motor Credit Company v. Cenance
| Decision Date | 01 June 1981 |
| Docket Number | No. 80-1205,80-1205 |
| Citation | 68 L.Ed.2d 744,452 U.S. 155,101 S.Ct. 2239 |
| Parties | FORD MOTOR CREDIT COMPANY v. Janet CENANCE et al |
| Court | U.S. Supreme Court |
¢s155¢s PER CURIAM.
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 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 ex- ecuted 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, D.C., 430 F.Supp. 1064; D.C., 458 F.Supp. 1387, 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 (CA5 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 FMCC was not a sufficient disclosure of creditor status to satisfy § 226.6(d).
The Truth in Lending Act, as it stood prior to recent amendments, defined creditors in pertinent part as those "who regularly extend, or arrange for the extension of, credit . . . ." 15 U.S.C. § 1602(f). Regulation Z, pro- mulgated pursuant to the Act, defines the term consistently with the above: " 'Creditor' means a person who in the ordinary course of business regularly extends or arranges for the extension of consumer credit . . . ." 12 CFR § 226.2(s) (1980). On the facts of this case, the above definition easily encompasses both the dealers and FMCC.3 Each dealer arranged for the extension of credit but FMCC actually extended the credit. The facts negate any suggestion that the dealers anticipated financing any of these transactions. The sales were contingent upon FMCC's approval of the credit worthiness of the buyer. The acceptance of the contract and the assignment became operational simultaneously, and the assignment divested the dealer of any risk in the transaction. In short, we agree with the Court of Appeals that it would be elevating form over substance to conclude that FMCC is not a creditor within the meaning of the Act.4
Equally formalistic, however, is the conclusion below that the statement notifying the buyer of the assignment to FMCC was an insufficient disclosure of FMCC's creditor status. As the Court of Appeals recognized, other Courts of Appeals that have addressed this precise point have held that such a statement adequately disclosed FMCC's role in the transactions. Sharp v. Ford Motor Credit Co., 615 F.2d 423, 426 (CA7 1980); Augusta v. Marshall Motor Co., 614 F.2d 1085, 1086 (CA6 1979); Milhollin v. Ford Motor Credit Co., 588 F.2d 753, 756-757 (CA9 1978), rev'd on other grounds, 444 U.S. 555, 100 S.Ct. 790, 63 L.Ed.2d 22 (1980). Those courts have reasoned that the statement notifying the buyer that the contract was, upon acceptance, assigned to FMCC served the purpose of the Act by disclosing the nature of the relationship of the finance company to the transaction. It was unnecessary precisely to characterize FMCC as a "creditor." Contrary to the court below, we agree with ...
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