Goldstein v. Rhode Island Hospital Trust Nat. Bank

Citation110 R.I. 580,296 A.2d 112
Decision Date26 September 1972
Docket NumberNo. 1587-A,1587-A
PartiesBurton GOLDSTEIN et al. v. RHODE ISLAND HOSPITAL TRUST NATIONAL BANK. ppeal.
CourtUnited States State Supreme Court of Rhode Island
David Hassenfeld, Providence, for plaintiffs
OPINION

KELLEHER, Justice.

Sometime prior to February, 1970, plaintiff (sometimes hereafter referred to by his last name) like thousands of the inhabitants of this state received in the mail from the defendant bank (hereafter called the bank) a plastic passport to, depending on one's point of view, instant credit or instant debt. This plasticized wonder is better known as a credit card. The credit cards were not solicited by the recipients but rather the defendant bank, together with other banks in this area, made a wholesale distribution of the cards as they attempted to make an auspicious entry into a new and presumably attractive field of consumer credit.

Goldstein used his credit card to make various purchases and in the process incurred a debt to the bank of $242. He did not or could not pay the debt. Consequently, on September 8, 1970, the bank obtained a judgment in the District Court against Goldstein in the amount of $323. This figure represented the $242 balance plus an attorney's fee of $81. Goldstein made a series of payments to the bank which reduced the amount of the judgment to $110. At this point, he consulted an attorney and in January, 1971, the District Court granted his motion to vacate the judgment and recall the execution.

The plaintiff then instituted this class action which challenges the interest rates and counsel fees charged delinquent debtors. In his effort to recover some $3,000,000 in damages, plaintiff has filed an original complaint, an amended complaint and a second amended complaint. At two separate hearings held in the Superior Court, two different justices of that court granted various motions filed by the bank so that Goldstein is presently out of court. He is before us trying to reopen the courtroom doors.

Before proceeding, we shall detail the initial distribution plan referred to earlier. Goldstein received his credit card in the mail. 1 It was attractively packaged. Two credit cards were inserted in a cardboard folder. The cardboard is folded in half. Three-quarters of the surface of the cardboard contains printed messages extolling the virtues of the card, such as, 'It's free,' 'Extend your payments if you wish,' 'It's all you'll ever need!' These pleasant exhortations appear in boldface print. When the card is removed from its enclosure, there appears the word 'Important' in large boldface print and a direction to read the 'enclosed agreement.' On the reverse side of this bottom-half of the card is set out the 'Cardholder Agreement.' We have attached to this opinion an appendix showing that half of the cardboard folder which contains the cards and the agreement. They were made part of the bank's brief but the best of our knowledge they were not before either trial justice.

On one side, the credit card contains at its top the name 'BankAmericard' in large bold print, a space for the authorized signature and the lower third has the holder's name embossed thereon. The reverse side of the credit cards looks like this:

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

The plaintiff's original complaint was met with the bank's motion for a more definite statement. The motion was granted and an amended complaint was filed. It contains three counts.

In essence, Goldstein contends in his first count that, because of the packaging of the card, the placing of the terms on the Cardholder Agreement and the microscopic type which is found on the credit card and cardboard folder, he never had actual or constructive notice of the provisions relating to interest charges and other costs, particularly attorney's fees. His second count charges the bank with an abuse of process while the third count describes the bank as being engaged in the illegal practice of the law. The bank filed a motion to dismiss based upon the ground that Goldstein failed in either of the three counts to set forth a claim upon which relief could be granted. Super.R.Civ.P. 12(b)(6).

The trial justice granted the motion as it related to the first count and the first portion of the second. He denied the motion as it sought to invalidate the second portion of the second count and the third count. The plaintiff was afforded an opportunity to replead the second part of his abuse of process count.

The second amended complaint contains an abuse of process count and repeats the illegal practice of the law count. The bank filed another motion to dismiss. It relied upon Rule 12(b)(6) and for the first time claimed that plaintiff was not truly representative of the class for whose benefit he brought the suit. This motion was heard by another justice of the Superior Court. He granted the motion because of an alleged failure to state a proper claim but he made no finding as to plaintiff's status.

We shall first review the grant of the dismissal of the first count and then consider the subsequent dismissal of the counts charging an abuse of process and the illegal practice of law.

The trial justice, who dismissed the first count, relied on the general rule that the furnishing of a credit card which contains certain terms and conditions constituted an offer which ripened into an expressed contract by Goldstein's retention and use of the card. This was so, said the trial court, even though the terms relating to counsel fees and interest charges were set forth on a different document, to wit, the Cardholder Agreement. We have no quarrel with the rule as cited by the first trial justice. We are, however, concerned with a 12(b)(6) motion whose sole function is to challenge the sufficiency of the complaint. Palazzo v. Big G Supermarkets, Inc., R.I., 292 A.2d 235 (1972). In such circumstances, our guiding light has ever been the principle that a motion to dismiss brought pursuant to Rule 12(b)(6) should not be granted unless it appears beyond a reasonable doubt that the plaintiff would not be entitled to any relief no matter what state of facts could be proved in support of his claim. In determining whether there is such a doubt as will warrant the termination of litigation in the pleading stage, we are bound to resolve all doubts in the plaintiff's favor and accept all his allegations as true. Noble Co. v. Mack Financial Corp., 107 R.I. 12, 264 A.2d 325 (1970); Warren Education Ass'n v. Lapan, 103 R.I. 163, 235 A.2d 866 (1967); Bragg v. Warwick Shoppers World, Inc., 102 R.I. 8, 227 A.2d 582 (1967).

The rule of law referred to by the trial justice has been followed in numerous instances where court have held the holder of the credit card liable for unauthorized purchases because the contract called for liability until the card was surrendered or its loss reported to the company. Texaco, Inc. v. Goldstein, 34 Misc.2d 751, 229 N.Y.S.2d 51, aff'd, 39 Misc.2d 552, 241 N.Y.S.2d 495 (1963); Union Oil Co. v. Lull, 220 Or. 412, 349 P.2d 243 (1960); Magnolia Petroleum Co. v. McMillan, 168 S.W.2d 881 (Tex.Civ.App.1943).

Although we do not quarrel with the law as cited by the trial justice, we do disagree with his dismissal of the first count. A dismissal under Rule 12(b) (6) is to be granted only in the unusual instance in which a plaintiff includes allegations that show on the face of the complaint that there is some insuperable bar to relief. 5 Wright & Miller, Federal Practice and Procedure § 1357 at 604 (1969). There is no such bar apparent in plaintiff's first count.

In the Union Oil case, the court observed that the credit cardholder had failed to raise either in his pleadings or by way of evidence the argument that he was not aware of the conditions printed on the back of the credit card and so he was bound by them. It noted that juries could pass on whether or not '* * * the terms of the contract were put in deceptive form which would mislead a reasonable person, and that defendant was so misled * * *.' 220 Or. at 420, 349 P.2d at 247. The plaintiff here has not made the...

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