609 F.2d 1255 (7th Cir. 1979), 78-2023, Bulger v. Thorp Credit Inc. of Illinois

Docket Nº:78-2023, 78-2024.
Citation:609 F.2d 1255
Party Name:Richard M. BULGER and Nancy L. Bulger, Plaintiffs-Appellees, v. THORP CREDIT INC. OF ILLINOIS, Defendant-Appellant. John BAUGHMAN and Cathy Baughman, Plaintiffs-Appellees, v. ITT THORP CORPORATION, Defendant-Appellant.
Case Date:December 03, 1979
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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Page 1255

609 F.2d 1255 (7th Cir. 1979)

Richard M. BULGER and Nancy L. Bulger, Plaintiffs-Appellees,

v.

THORP CREDIT INC. OF ILLINOIS, Defendant-Appellant.

John BAUGHMAN and Cathy Baughman, Plaintiffs-Appellees,

v.

ITT THORP CORPORATION, Defendant-Appellant.

Nos. 78-2023, 78-2024.

United States Court of Appeals, Seventh Circuit

December 3, 1979

Argued April 16, 1979.

Page 1256

Barry M. Barash, Galesburg, Ill., for plaintiffs-appellees.

Aaron Kramer, William T. Kirby, Chicago, Ill., Barney Olson, II, Galesburg, Ill., William V. Altenberger, Peoria, Ill., for defendant-appellant.

Before SWYGERT, SPRECHER and BAUER, Circuit Judges.

SPRECHER, Circuit Judge.

Thorp Credit Inc. of Illinois appeals from two lower court judgments imposing liability for violations of the Truth in Lending Act, 15 U.S.C. § 1601 et seq. The questions presented in both appeals are identical: was the district court correct in concluding that Thorp violated the Act by failing to reveal on its disclosure statement a claimed security interest in boats and recreational vehicles even though the debtors had no interest in any such property at the time the transaction occurred? Alternatively, if such an interest did have to be disclosed, was that disclosure accomplished by language in the disclosure statement referring the reader to the terms of the security agreement? We conclude that such a disclosure must have been made, that the general referential language was not a sufficient disclosure, and that therefore the judgment of the district court must be affirmed.

I

On December 2, 1976, Richard and Nancy Bulger borrowed $3112.87 from Thorp Credit Inc. of Illinois. John and Cathy Baughman borrowed $1297.35 from Thorp on December 8, 1977, and $1495.15 on May 3, 1978. These three transactions were identical in all respects material to this appeal.

The loans were all documented by a security agreement and a disclosure statement. The security agreement used in each of the transactions granted a security interest in "(a)ll of the household goods, Boats and recreational vehicles now located in or about the Debtors premises . . . , all unearned credit insurance premiums and the following additional specific items of personal property. . . ." (Emphasis added). The agreements thereafter itemized a list of specific household goods subject

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to the security interest. The agreement also includes as security all "goods, personal property and chattels of the same or similar type or kind to that described above now owned or hereafter acquired, excepting only after-acquired consumer goods acquired more than 10 days after the date hereof."

In contrast to the security agreement, the disclosure statement reveals a security interest in "(H)ousehold Goods, Appliances, Furniture and all unearned credit insurance premiums" including after-acquired property and "excepting only consumer goods acquired more than 10 days after the date hereof." The disclosure statement does not reveal any security interest in "boats and recreational...

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