621 F.2d 130 (5th Cir. 1980), 79-2227, Cenance v. Bohn Ford, Inc.

Docket Nº:79-2227, 79-2340, 79-2449 and 79-2672.
Citation:621 F.2d 130
Party Name:Janet CENANCE, Plaintiff-Appellee, v. BOHN FORD, INC., Defendant-Appellant, Ford Motor Credit Company, Defendant-Appellant. Nicole ANTONIO, Plaintiff-Appellant, v. CANAL MOTORS, INC., Defendant, Ford Motor Credit Company, Defendant-Appellee. Marion SHROPSHIRE, Plaintiff-Appellee, v. GEORGE THOMPSON FORD, INC., Defendant-Appellee, v. FORD MOTOR CRED
Case Date:July 09, 1980
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 130

621 F.2d 130 (5th Cir. 1980)

Janet CENANCE, Plaintiff-Appellee,

v.

BOHN FORD, INC., Defendant-Appellant,

Ford Motor Credit Company, Defendant-Appellant.

Nicole ANTONIO, Plaintiff-Appellant,

v.

CANAL MOTORS, INC., Defendant,

Ford Motor Credit Company, Defendant-Appellee.

Marion SHROPSHIRE, Plaintiff-Appellee,

v.

GEORGE THOMPSON FORD, INC., Defendant-Appellee,

v.

FORD MOTOR CREDIT CORPORATION, Defendant-Appellant.

Solomon WIGGS, Plaintiff-Appellee,

v.

FORD MOTOR CREDIT CORPORATION, Defendant-Appellant.

Jimmy W. FARRELL, Plaintiff-Appellee, Cross-Appellant,

v.

FRANK JACKSON MOTORS, INC., d/b/a Jackson AMC-Jeep,

Defendant-Appellant, Cross-Appellee.

Randolph BOOKER, Jr., Plaintiff-Appellee, Cross-Appellant,

v.

FORD MOTOR CREDIT COMPANY, Defendant-Appellant, Cross-Appellee.

Nicholas STRZELECKI, Plaintiff-Appellee,

v.

TERRY FORD COMPANY and Ford Motor Credit Company,

Defendants-Appellants.

Michael Duane CULVER, Plaintiff-Appellee,

v.

GREENBRIAR LINCOLN MERCURY SALES, INC. and Ford Motor Credit

Company, Defendants,

Ford Motor Credit Company, Defendant-Appellant.

Dennis VISSICHELLI, Plaintiff-Appellee,

v.

TERRY FORD COMPANY and Ford Motor Credit Company,

Defendants-Appellants.

Thomas J. ROGERS and Phyllis Rogers, Plaintiffs-Appellees,

v.

FRANK JACKSON LINCOLN-MERCURY and Ford Motor Credit Company,

Defendants-Appellants.

Nos. 77-2200, 77-3508, 78-2369, 78-2914, 79-1139, 79-1584,

79-2227, 79-2340, 79-2449 and 79-2672.

United States Court of Appeals, Fifth Circuit

July 9, 1980

Page 131

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Peter A. Feringa, Jr., Norris S. L. Williams, New Orleans, La., for Ford Motor Credit Co. in Nos. 77-2200 and 77-3508.

John M. Hollingsworth, Jr., Dearborn, Mich., for Ford Motor Credit Co. in No. 77-2200.

William J. Wegmann, New Orleans, La., for Bohn Ford, Inc. in No. 77-2200.

David S. Willenzik, New Orleans, La., for The Consumer Bankers Association, Wash., D. C., et al.

Larry Samuel, New Orleans, La., for Louisiana Consumers' League, Inc.

Joseph W. Thomas, New Orleans, La., for Cenance.

Keith A. Rodriguez, New Orleans, La., for Antonio.

Chaffe, McCall, Phillips, Toler & Sarpy, New Orleans, La., for Ford Motor Credit Co. in No. 77-3508.

Morton P. Levine, Atlanta, Ga., for Ford Motor Credit Corp. in Nos. 78-2369, 78-2914, 79-2227, 79-2340, 79-2449 and 79-2672.

E. Penn Nicholson, Paul W. Bonapfel, Atlanta Ga., for George Thompson Ford, Inc.

Edward L. Baety, Atlanta, Ga., for Marion Shropshire and Solomon Wiggs.

Burgess W. Stone, Atlanta, Ga., for Ford Motor Credit Corp. in Nos. 78-2369, 78-2914, 79-1139, 79-1584, 79-2227, 79-2340, 79-2449 and 79-2672.

Hill, Jones & Farrington, Atlanta, Ga., for Wiggs.

Joseph H. King, Jr., Atlanta, Ga., for Farrell.

Bowen, Derrickson, Goldberg & West, Ralph S. Goldberg, Atlanta, Ga., for Booker.

Graydon W. Florence, Jr., Atlanta, Ga., for Strzelecki and Vissichelli.

Burgess W. Stone, Morton P. Levine, Atlanta, Ga., for defendant-appellant.

Frank L. Derrickson, Atlanta, Ga., for Culver.

Hill, Jones & Associates, Atlanta, Ga., for Rogers.

Appeals from the United States District Court for the Eastern District of Louisiana.

Appeals from the United States District Court for the Northern District of Georgia.

Before COLEMAN, Chief Judge, PECK [*], and KRAVITCH, Circuit Judges.

KRAVITCH, Circuit Judge.

The common issues binding these consolidated cases are whether a finance company, Ford Motor Credit Co. (Ford), which routinely finances the sale of automobiles by dealers in exchange for assignment of the original note from the purchaser (1) is a creditor within the meaning of the Truth-in-Lending Act, and (2) whether designation of Ford as "subsequent assignee" adequately

Page 133

describes its relationship with the consumer debtor. We answer the first question "yes," the second "no."

All plaintiffs involved purchased automobiles on credit from various party automobile dealers. Each of the dealers had a similar standing agreement with Ford: as a prerequisite for the extension of credit, purchasers were required to submit a credit application to Ford on a form printed by Ford. If the application met with Ford's approval, Ford would purchase the credit instrument after execution by the dealer and purchasers without further participation or risk on the part of the dealer.

The Truth-in-Lending statement did not disclose Ford as a creditor but rather referred to Ford as a "subsequent assignee." The final portion of the statement provided:

The foregoing contract hereby is accepted by the Seller and assigned to Ford Motor Credit Company in accordance with the terms of assignment set forth on the reverse side thereof.

In all cases the district courts held that Ford was a creditor under the Truth-in-Lending Act and that such status had not been adequately disclosed in the Truth-in-Lending statement.

  1. Ford's Status as Creditor

    The Truth-in-Lending Act, 15 U.S.C. § 1601 et seq., and Regulation Z thereunder define a creditor as one who, in the ordinary course of business, "regularly extends or arranges for the extension of consumer credit or offers to extend or arrange for the extension of such credit . . ." Reg. Z, 226.2(s), 12 C.F.R. § 226.2(s) (1976).

    In Meyers v. Clearview Dodge, 539 F.2d 511 (5th Cir. 1976), this Court was first confronted by the question whether a downstream finance company was a creditor or subsequent assignee within the above provision of Regulation Z. In Meyers, the automobile dealer prearranged credit with one of several institutions, unlike the instant cases in which a standing agreement with only a single finance company existed. Holding that the dealer was the arranger of credit but that the finance company, Chrysler Credit, was the extender of credit, the court stated:

    Chrysler Credit argues . . . that it is merely a "subsequent assignee" within the meaning of that term in section 1641 of the Act. Appellant insists that Clearview is the original creditor in this transaction, since at the moment the transaction was consummated Clearview was the holder of the note and chattel mortgage, and consequently the only one to whom appellee was obligated. However, appellant's argument elevates form over substance in an effort to avoid the realities of the credit transaction. Clearview never assumed any of the risks normally associated with the extension of credit in its dealings with appellee. By prearranging the assignment of the installment contract to Chrysler Credit, or any other institutional lender, Clearview merely arranged to sell the automobile for cash to be supplied by another. There is little doubt that in this transaction "credit," "the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment," was extended by Chrysler Credit and arranged for by Clearview.

    539 F.2d at 515, 516.

    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...

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