Grigg v. Robinson Furniture Co.

• Decision Date: 10 October 1977
• Docket Number: Docket Nos. 22374-22379,AFL-CIO
• Parties: Richard GRIGG, for himself, and the Metropolitan DetroitCouncil, an unincorporated voluntary association, on behalf of all other retail charge customers of Robinson Furniture Company, who have incurred finance charges in the State of Michigan, Plaintiffs-Appellees and Cross-Appellants, v. ROBINSON FURNITURE COMPANY, a Michigan Corporation, Defendant-Appellant and Cross-Appellee. Jose L. REYES, for himself, and the Metropolitan DetroitCouncil, an unincorporated voluntary association, on behalf of all other retail charge customers of E. J. Korvette, Inc., and Spartans Industries, Inc., who have incurred finance charges in the State of Michigan, Plaintiffs-Appellees and Cross-Appellants, v. E. J. KORVETTE, INC., a New York Corporation, and Spartan Industries, Inc., a New York Corporation, jointly and severally, Defendants-Appellants and Cross-Appellees. John J. MURPHY, for himself, and the Metropolitan DetroitCouncil, an unincorporated voluntary association, on behalf of all other retail charge customers of Winkelman Stores, Inc., who have incurred finance charges in the State of Michigan, Plaintiffs-Appellees and Cross-Appellants, v. WINKELMAN STORES, INC., a Michigan Corporation, Defendant-Appellant and Cross-Appellee. Frank J. MALLON, for himself, and the Metropolitan DetroitCouncil, an unincorporated voluntary association, on behalf of all other retail charge customers of Federal's, Inc., who have incurred finance charges in the State of Michigan, Plaintiffs-Appellees and Cross-Appellants, v. FEDERAL'S INC., a Michigan Corporation, Defendant-Appellant and Cross- Appellee. John CICELSKI, for himself, and the Metropolitan DetroitCouncil, an unincorporated voluntary association, on behalf of all other retail charge customers of Sears, Roebuck and Company, who have incurred finance charges in the State of Michigan, Plaintiffs-Appellees and Cross-Appellants, v. SEARS, ROEBUCK AND COMPANY, a New York Corporation, Defendant-Appellant and Cross-Appellee. John CICELSKI, for
• Court: Court of Appeal of Michigan — District of US

Page 898

260 N.W.2d 898

Richard GRIGG, for himself, and the Metropolitan Detroit

AFL-CIO Council, an unincorporated voluntary association, on

behalf of all other retail charge customers of Robinson

Furniture Company, who have incurred finance charges in the

State of Michigan, Plaintiffs-Appellees and Cross-Appellants, v. ROBINSON FURNITURE COMPANY, a Michigan Corporation,

Defendant-Appellant and Cross-Appellee.

Jose L. REYES, for himself, and the Metropolitan Detroit

AFL-CIO Council, an unincorporated voluntary association, on

behalf of all other retail charge customers of E. J.

Korvette, Inc., and Spartans Industries, Inc., who have

incurred finance charges in the State of Michigan, Plaintiffs-Appellees and Cross-Appellants, v. E. J. KORVETTE, INC., a New York Corporation, and Spartan

Industries, Inc., a New York Corporation, jointly

and severally, Defendants-Appellants and

Cross-Appellees.

John J. MURPHY, for himself, and the Metropolitan Detroit

AFL-CIO Council, an unincorporated voluntary association, on

behalf of all other retail charge customers of Winkelman

Stores, Inc., who have incurred finance charges in the State

of Michigan, Plaintiffs-Appellees and Cross-Appellants, v. WINKELMAN STORES, INC., a Michigan Corporation,

Defendant-Appellant and Cross-Appellee.

Frank J. MALLON, for himself, and the Metropolitan Detroit

AFL-CIO Council, an unincorporated voluntary association, on

behalf of all other retail charge customers of Federal's,

Inc., who have incurred finance charges in the State of

Michigan, Plaintiffs-Appellees and Cross-Appellants, v. FEDERAL'S INC., a Michigan Corporation, Defendant-Appellant

and Cross- Appellee.

John CICELSKI, for himself, and the Metropolitan Detroit

AFL-CIO Council, an unincorporated voluntary association, on

behalf of all other retail charge customers of Sears,

Roebuck and Company, who have incurred finance charges in

the State of Michigan, Plaintiffs-Appellees and Cross-Appellants, v. SEARS, ROEBUCK AND COMPANY, a New York Corporation,

Defendant-Appellant and Cross-Appellee.

John CICELSKI, for himself, and the Metropolitan Detroit

AFL-CIO Council, an unincorporated voluntary association, on

behalf of all other retail charge customers of Montgomery

Ward and Company, Inc., who have incurred finance charges in

the State of Michigan, Plaintiffs-Appellees and Cross-Appellants, v. MONTGOMERY WARD AND COMPANY, INC., an Illinois Corporation,

Defendant- Appellant and Cross-Appellee.

Docket Nos. 22374-22379.

78 Mich.App. 712, 260 N.W.2d 898

Court of Appeals of Michigan.

Oct. 10, 1977.

Released for Publication Jan. 12, 1978.

[78 MICHAPP 715] Joseph N. Brown, Detroit, for Robinson Furniture in No. 22374.

Honigman, Miller, Schwartz & Cohn by Avern Cohn and Sheldon S. Toll, Detroit, for Korvette, Inc. and Federals in Nos. 22375 and 22377.

Butzel, Levin, Winston & Quint by Erwin S. Simon and Wm. H. Yager, Detroit, for Winkelmans in No. 22376.

Miller, Canfield, Paddock & Stone by Geo. Bushnell, Jr., Gilbert Gove, Emmett Eagan, Jr., Detroit, for Sears in No. 22378.

Dykema, Gossett, Spender, Goodnow & Trigg by Natham Goodnow, James Collier, Detroit, Hopkins, Sutter, Owen, Mulroy & Davis by Thomas R. Mulroy, Jr., John L. Conlon, Richard Bromley, Chicago, Ill., for Montgomery Ward in No. 22379.

Kratchman & Kratchman by D. Michael Kratchman, Detroit, for all appellees in Nos. 22374 thru 22379.

Before ALLEN, P. J., and T. M. BURNS and BEASLEY, JJ.

ALLEN, Presiding Judge.

I. FACTUAL BACKGROUND.

These six consolidated class actions are de facto companions of (Sarah) Grigg v. Michigan National Bank, 72 Mich.App. 358, 249 N.W.2d 701 (1976). Richard Grigg, one of the named plaintiffs in the [78 MICHAPP 716] present series of cases, is the husband of the plaintiff in Grigg v. Michigan National Bank, supra. Mrs. Grigg is employed by the attorneys who represent the plaintiffs in the six cases now before us.

Grigg v. Michigan National Bank, supra, sought recovery of allegedly excess finance charges ¹ paid by users of the Michigan BankAmericard service operated by the defendant bank. This Court affirmed the trial court's dismissal of the class action in Grigg v. Michigan National Bank, supra, primarily because use of the GCR 1963, 208, class action device would have imposed too great a burden upon the defendant and the judicial system as compared with the benefits which might have been conferred upon members of the plaintiff class.

The trial judge in the present case deferred a ruling on the propriety of a class action format in order to first address the substantive questions raised by the complaints. We have serious doubts about the wisdom of that choice. If we were operating under Federal Rules of Civil Procedure (F.R.Civ.P. 23), the trial judge's failure to consider the class action question would be clear reversible error. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974). Our own Rule 208, supra, was copied directly from an earlier version of F.R.Civ.P. 23, supra. But Michigan has not yet adopted the subsequent amendment to the Federal rule which Eisen interpreted as mandating that the propriety of the class action be considered before the merits in all cases. That failing at [78 MICHAPP 717] least left the door ajar for the procedure followed by the trial judge in the present cases. Northview Construction Co. v. St. Clair Shores, 395 Mich. 497, 236 N.W.2d 396 (1975), reversing 44 Mich.App. 614, 205 N.W.2d 895 (1973), reh. granted 395 Mich. 924 (1976), aff'd on reh., 399 Mich. 184, 249 N.W.2d 290 (1976). We recognized precisely such a possibility in Grigg v. Michigan National Bank, supra.

"We hold that shortly after a class action is filed, and after discovery, a trial court should usually first determine whether a class action can be maintained before any findings on the merits. * * * There may, however, be instances where considerations of judicial economy will dictate that at least a partial ruling on the merits should precede certification of the class." (Emphasis supplied.) 72 Mich.App. at 381-82, 249 N.W.2d at 712.

But, even if the opportunity theoretically exists, we believe, for reasons more fully outlined in Eisen, Grigg v. Michigan National Bank, supra, and Kass v. H. B. Shaine & Co., Inc., 71 Mich.App. 101, 246 N.W.2d 396 (1976), that the trial judge abused his discretion by deferring the class action question in this case. However, in all fairness to plaintiffs we recognize that we have been presented with something of a fait accompli. Given the present posture of the case, we believe that the interests of justice will be better served if we address the merits of the case and resist the inclination to summarily reverse.

The defendants in the present cases are all large retail stores which make credit sales pursuant to revolving charge account agreements. The plaintiffs are seeking recovery of allegedly excess finance charges paid pursuant to those agreements since August 4, 1964. The plaintiffs contend that a monetary recovery is possible under M.C.L.A. § [78 MICHAPP 718] 445.868; M.S.A. § 19.416(118) or one of several equitable causes of action. The trial judge appears to have recognized a combined statutory and equitable cause of action. We affirm that ruling at least to the extent of authorizing recovery of excess finance charges. The August 4, 1964, date was apparently chosen in recognition of the six-year limitation period imposed by M.C.L.A. § 600.5813; M.S.A. § 27A.5813. The complaints in these cases were filed in August and September of 1970.

Ignoring minor variations, there are four generally recognized methods of computing finance charges on revolving charge accounts. Those methods are ending balance, ² previous balance, ³ average daily balance, ⁴ and adjusted balance. ⁵

[78 MICHAPP 719] The defendants were using the previous balance method on August 4, 1964. At that time, there was no statute specifically regulating the amount of finance charges which could be imposed on revolving charge accounts. Michigan's principal usury law, 1948 CL 438.51 (since repealed and replaced by M.C.L.A. § 438.31; M.S.A. § 19.15(1)) provided that interest rates on loans of money could not exceed 5% for oral agreements, and 7% for written agreements; but the traditional rule has been that the usury laws controlled only "interest" and not "time-price differentials", ⁶ the label applied to finance charges on retail credit sales. Keefe v. Bush & Lane Piano Co., 247 Mich. 82, 225 N.W. 585 (1929), Silver v. International Paper Co., 35 Mich.App. 469, 192 N.W.2d 535 (1971). Since the revolving charge account is a comparatively recent innovation, no Michigan court has as yet expressly decided whether that traditional immunity from the usury laws extends to the time-price differentials charged on revolving accounts. Plaintiffs in these cases argue that the immunity is not so extensive and that on August 4, 1964 and for some time before that the defendants' use of the previous balance method resulted in violations of the usury laws.

The next significant event occurred on March [78 MICHAPP 720] 10, 1967, the effective date of Michigan's Retail Installment Sales Act (MRISA), 1966 P.A. 224; M.C.L.A. § 445.851 et seq.; M.S.A. § 19.416(101) et seq. Unlike the old usury laws, MRISA was expressly designed to regulate finance charge rates on revolving charge accounts.

Section 12 of MRISA, M.C.L.A. § 445.862; M.S.A. § 19.416(112), limited time-price differentials to "1.7% of the unpaid balance per month". Plaintiffs in these lawsuits allege that beginning with the effective date of MRISA on March 10, 1967, the defendants were in violation of that limitation by virtue of their use of the previous balance method.

On August 11, 1970, in response to a legislative inquiry, the Attorney General released an opinion concluding that the previous balance method as then employed by the defendants and other retailers violated the maximum rate limitation in § 12 of...