531 F.2d 797 (7th Cir. 1976), 75--1637, Allen v. Beneficial Finance Co. of Gary, Inc.

Docket Nº:75--1637.
Citation:531 F.2d 797
Party Name:Dorothy ALLEN, Plaintiff-Appellee, v. BENEFICIAL FINANCE COMPANY OF GARY, INC., Defendant-Appellant.
Case Date:February 09, 1976
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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Page 797

531 F.2d 797 (7th Cir. 1976)

Dorothy ALLEN, Plaintiff-Appellee,

v.

BENEFICIAL FINANCE COMPANY OF GARY, INC., Defendant-Appellant.

No. 75--1637.

United States Court of Appeals, Seventh Circuit

February 9, 1976

Argued Nov. 6, 1975.

Rehearing and Rehearing En Banc Denied May 11, 1976.

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[Copyrighted Material Omitted]

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Joseph S. Reid, Hammond, Ind., for defendant-appellant.

Frederick J. Ball, East Chicago, Ind., for plaintiff-appellee.

Before CUMMINGS, ADAMS [*] and SPRECHER, Circuit Judges.

SPRECHER, Circuit Judge.

This appeal primarily concerns whether the disclosure statement made in connection with a consumer credit loan by the defendant finance company presented in 'meaningful sequence' the disclosures required by Regulation Z, 12 C.F.R. § 226.1 et seq. and the Truth in Lending Act, 15 U.S.C. § 1601 et seq.

I

On April 2, 1974, the plaintiff Dorothy Allen and her ex-husband Mr. Aurelius J. Allen renegotiated a consumer loan from the defendant, Beneficial Finance Company of Gary, Inc. As a result of the renegotiation, Mr. Allen received a check for $453.09, and both Mr. Allen and the plaintiff became liable on a loan for $2,484.00 spread over 36 monthly payments of $69 each. A finance charge of $714.42 was imposed on an amount financed of $1,769.58 leaving an annual percentage rate of 23.54%.

On January 3, 1975, the plaintiff filed the complaint in this action charging, inter alia, that the defendant had not made the required disclosures to her in the credit transaction 'in meaningful sequence' as required by Regulation Z. Both parties made motions for summary judgment claiming that there were no material issues of fact left for trial. The trial court granted plaintiff's motion, denied defendant's and awarded plaintiff the statutory penalty of $1,000 and attorney's fees. The court found that the plaintiff signed the note as a 'co-borrower' and that by signing the disclosure statement she had acknowledged that she had received a copy of it. The court then went on to find that the disclosures required to be made in the disclosure statement had not been made in 'meaningful sequence.' The defendant appeals from that decision.

II

As a preliminary issue, the defendant claims that the trial court made a procedural error in granting the plaintiff's motion for summary judgment without allowing oral argument or the submission of materials in opposition to the motion. The defendant filed its motion for summary judgment on March 4, 1975. The plaintiff's motion was filed six days later on March 10. The trial court entered its Memorandum Opinion and Order on May 1, 1975 over one and a half months later.

Rule 56 of the Federal Rules of Civil Procedure allows a party to move for summary judgment at any time (except that the plaintiff must wait 20 days after the commencement of the action) with or without supporting affidavits. Fed.R.Civ.P. 56(a) and (b). The motion must be served at least 10 days prior to the time for hearing. Fed.R.Civ.P. 56(c). This was certainly complied with as more than a month and a half passed between motion and judgment. If the defendant had wished to file any

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other affidavits or had sought oral argument, it had adequate time to request it. Furthermore, the local rules of the Northern District of Indiana foreclose any argument on the defendant's part. Local Rule 7(b) provides:

Motions to dismiss, to strike, for judgment on the pleadings, for more definite statement, and for summary judgment shall be accompanied by supporting briefs and proof of service upon opposing counsel of record. An adverse party shall have fifteen (15) days after service of the movant's brief to file an answer brief with proof of service, and the moving party shall have five (5) days after service of the answer brief to file a reply brief with proof of service. Motions for summary judgment may be accompanied by affidavits and exhibits with proof of service thereof upon opposing counsel. An adverse party may file opposing affidavits and exhibits with proof of service within fifteen (15) days after service of the movant's brief in support of a motion for summary judgment. Failure to file timely briefs in support of or in answer to the motions covered in this rule shall subject such motions to summary ruling, unless any other party who has timely filed a brief requests a hearing which may then be granted in the discretion of the court. Failure to file a reply brief within the time prescribed shall be deemed a waiver of the right to make such filing.

The defendant failed to request a hearing. Thus, no procedural error was committed.

III

Congress passed the Truth in Lending Act to promote 'the informed use of (consumer) credit.' 15 U.S.C. § 1601. The Act was designed 'to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit . . .' Id. To accomplish these purposes, Congress set out broad disclosure requirements with which creditors must comply before completing a consumer credit transaction. It entrusted the construction of these broad requirements to the Board of Governors of the Federal Reserve System and gave the Board power to prescribe regulations to carry out the purposes of the Act. 15 U.S.C. § 1604. This was a broad grant of power. Section 1604 provides in part:

These regulations may contain such classifications, differentiations, or other provisions, and may provide for such adjustments and exceptions for any class of transactions, as in the judgment of the Board are necessary or proper to effectuate the purposes of this subchapter, to prevent circumvention or evasion thereof, or to facilitate compliance therewith.

To comply with this mandate, the Federal Reserve Board issued Regulation Z, 12 C.F.R. § 226.1 et seq. The defendant in this case challenges the validity and constitutionality of one provision of Regulation Z and challenges the propriety of the district court's interpretation of that provision. The provision deals with general disclosure requirements. 12 C.F.R. § 226.6(a) provides in part:

Disclosures; general rule. The disclosures required to be given by this part shall be made clearly, conspicuously, In meaningful sequence, in accordance with the further requirements of this section, and at the time and in the terminology prescribed in applicable sections. (Emphasis supplied.)

A regulation issued under the broad mandate given here will be sustained so long as it is reasonably related to the purposes of the enabling legislation. Mourning v. Family Publications Service, Inc., 411 U.S. 356, 369, 93 S.Ct. 1652, 36 L.Ed.2d 318 (1973). The specific section of the underlying Act which supports the challenged provision of the regulation requires creditors to 'disclose clearly and conspicuously, in accordance with the regulations of the Board,. . . the information required under this part. . . .' 15 U.S.C. § 1631(a). The Board, through Regulation Z, merely added a meaningful sequence requirement. This addition harmonizes well with both the aim of Congress in

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achieving 'meaningful disclosure of credit terms' and the Act itself. Certainly, if understandable credit disclosure is to be achieved, disclosure statements must use clear language arranged in an order which provides ease of...

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