531 F.2d 815 (7th Cir. 1976), 75--1764, Tinsman v. Moline Beneficial Finance Co.

Docket Nº:75--1764.
Citation:531 F.2d 815
Party Name:Steve TINSMAN and Nancy Tinsman, Plaintiffs-Appellees, v. MOLINE BENEFICIAL FINANCE COMPANY, Defendant-Appellant.
Case Date:February 27, 1976
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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531 F.2d 815 (7th Cir. 1976)

Steve TINSMAN and Nancy Tinsman, Plaintiffs-Appellees,

v.

MOLINE BENEFICIAL FINANCE COMPANY, Defendant-Appellant.

No. 75--1764.

United States Court of Appeals, Seventh Circuit

February 27, 1976

Argued Jan. 9, 1976.

As Amended March 23, 1976.

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William H. Dailey, Moline, Ill., for defendant-appellant.

Tom M. Lytton, East Moline, Ill., for plaintiffs-appellees.

Before TONE and BAUER, Circuit Judges, and HOFFMAN, Senior District Judge. [*]

TONE, Circuit Judge.

The question we decide on this appeal is whether the description of the security interest in a consumer loan agreement complies with the Truth-in-Lending Act, 15 U.S.C. § 1601 et seq., and Regulation Z, 12 C.F.R. § 226 et seq., promulgated under that statute. The District Court held that it did not, and we affirm.

To obtain funds for the purchase of furniture, plaintiffs entered into a written loan agreement with the defendant finance company. Two months later they filed suit alleging that the loan agreement violated the Act and regulation in improperly describing the security interest and in two other respects which we need not consider to decide this case. 1 On plaintiffs' motion for summary judgment, the District Court determined that defendant had committed all three violations and, pursuant to 15 U.S.C. § 1640(a), awarded the statutory penalty plus attorney's fees and costs.

The Truth-in-Lending Act and Regulation Z have recently been summarized by Judge Sprecher in Allen v. Beneficial Finance Co., 531 F.2d 797 (7th Cir. 1976). The Act, it was there noted, was passed by Congress in 1968 as the result of growing congressional concern over consumers' ignorance of the nature and cost of their credit obligations. See generally Mourning v. Family Publications Service, Inc., 411 U.S. 356, 363--369, 93 S.Ct. 1652, 36 L.Ed.2d 318 (1973). The specific purpose of the Act was 'to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various terms available to him and avoid the uninformed use of credit.' 15 U.S.C. § 1601. To assist in the achievement of that goal, the Federal Reserve Board is empowered to construe the Act's broad provisions and to prescribe regulations. 15 U.S.C. § 1604. Regulation Z was prescribed by the Board pursuant to that authority. The Act further provides that upon failure of the creditor to disclose information required to be disclosed by the statute or regulations, he becomes liable to the debtor for twice the amount of the finance charge, plus costs and attorneys' fees. 15 U.S.C. § 1640(a).

The provision of Regulation Z relating to disclosure of security interests, § 226.8(b)(5), provides in pertinent part as follows:

'(b) Disclosures in sale and nonsale credit. In any transaction subject to this section, the following items, as applicable, shall be disclosed:

'(5) A description or identification of the type of any security interest held or to be retained or acquired by the creditor in connection with the extension of credit, and a clear identification of the property to which the security interest relates . . .. If after-acquired property will be subject to the security interest, or if other or future indebtedness is or may be secured by

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any such property, this fact shall be clearly set forth in conjunction with the description or identification of the type of security interest held, retained or acquired.'

The portion of the loan agreement in the...

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