Haynsworth v. South Carolina Elec. & Gas Co.

• Decision Date: 07 March 1979
• Docket Number: Civ. A. No. 76-2495.
• Parties: Elizabeth HAYNSWORTH, Plaintiff, v. SOUTH CAROLINA ELECTRIC AND GAS COMPANY, a public utility incorporated under the laws of the State of South Carolina, Defendant.
• Court: U.S. District Court — District of South Carolina

488 F. Supp. 565

Elizabeth HAYNSWORTH, Plaintiff, v. SOUTH CAROLINA ELECTRIC AND GAS COMPANY, a public utility incorporated under the laws of the State of South Carolina, Defendant.

Civ. A. No. 76-2495.

United States District Court, D. South Carolina, Columbia Division.

March 7, 1979.

Victoria L. Eslinger, Palmetto Legal Services, Columbia, S. C., Lucy M. Knowles, Aiken, S. C., for plaintiff.

George S. King, Jr., Columbia, S. C., for defendant.

ORDER

CHAPMAN, District Judge.

Plaintiff brings this action under the Equal Credit Opportunity Act (ECOA), 15 U.S.C. § 1691 et seq., seeking damages and injunctive relief. On February 8, 1979, this matter was heard before a jury, and at the close of plaintiff's case upon motion of the defendant, the Court, pursuant to Rule 50(a) of the Federal Rules of Civil Procedure, directed a verdict for defendant on the ground that plaintiff failed to show a violation of the ECOA. Still to be disposed of, however, is plaintiff's claim for declaratory and injunctive relief. Plaintiff asserts that the policy and practices of defendant as applied to her violated the provisions of the ECOA.

Plaintiff resided with her husband at their home on Springlake Road in Columbia until their separation in the spring of 1975 at which time her husband moved elsewhere. The account with defendant servicing the residence was in the name of plaintiff's husband. Plaintiff continued to live in the home with her three children and, in the autumn of 1975, requested that the defendant open a new account in her name for the utilities service to the house. At the time of this request, there existed an outstanding balance in the account in her husband's name servicing the residence for use since his departure. Defendant refused plaintiff's request because of this outstanding obligation for service to plaintiff's residence in reliance upon section 4(b) of defendant's General Terms and Conditions which states as follows:

Service will not be supplied by the Company to any applicant who is then indebted to the Company or who, at the time of application, is a member of the household of a former customer who is indebted to the Company, except upon payment of such indebtedness.

Plaintiff repeated this request through February 1976, but defendant refused for the reason already stated.

Over this period of time, although defendant threatened to terminate service to the residence, defendant maintained service. Refusing to pay the total bill for service from September 1975 to March 1976 because she considered it her husband's bill, plaintiff made "good faith" payments of $25 per month to defendant. In March 1976, plaintiff finally reached a divorce settlement with her husband that included payment of the outstanding obligation due defendant. On April 19, 1976, her husband paid defendant's bill for the Springlake home, and the following day, defendant opened an account for the residence in plaintiff's name. Plaintiff's testimony also disclosed that during December 1975 plaintiff's husband opened a new account in his name at another location. Plaintiff did state, though, that defendant admitted such action was inadvertent.

Plaintiff seeks a judgment by this Court, declaring that the practices of defendant and its section 4(b), as exhibited by the facts of this case, violate the ECOA which makes it "unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction — on the basis of . . . sex or marital status." 15 U.S.C. § 1691(a). Plaintiff also asks that the defendant be enjoined from further violations of the ECOA. Plaintiff has not sought to impress liability because of any failure of defendant to comply with the technical form requirements of the Act but, instead, argues that defendant discouraged her pursuit of credit and denied her requests for credit on the basis of plaintiff's sex and marital status, not on the basis of her own "creditworthiness". Plaintiff submits that the fact that her husband procured a new account in his own name, while plaintiff was denied the same treatment, makes out a prima facie case that she was discriminated against because of her sex.

The basis for defendant's conduct in its transactions with plaintiff and the primary target of plaintiff's declaratory action is section 4(b) of defendant's General Terms and Conditions, set out above. Plaintiff contends that its terms and application to her in the present case violate the ECOA since a person may be denied credit due to marriage to another individual without regard to that person's own creditworthiness.

It is important to note that in the instant case, defendant never denied plaintiff credit. "Credit means the right granted by a creditor to an applicant to defer payment of a debt, incur debt and defer its payment, or purchase . . . services and defer payment therefor." 12 C.F.R. § 202.2 (1978). The plaintiff was the sole adult in their Springlake Road residence,¹ and plaintiff used defendant's services with full knowledge that they were not rendered gratuitously. In a similar situation involving the consumption of water where the existing contract covering the premises was not in the name of the consumer, the Supreme Court of South Carolina found there was an implied contract by the consumer to pay for the amount of water consumed. Poole v. Paris Mountain Water Co., 81 S.C. 438, 62 S.E. 874 (1908). Thus, even though plaintiff may have considered her husband responsible for the power bills during the months in dispute, an implied contract existed that she would pay for these services. Defendant could have, at any time, proceeded against plaintiff to recover on the outstanding balance. Defendant, as a creditor, permitted plaintiff to receive services and defer payment; therefore, plaintiff did receive "credit" from the defendant.

Defendant's refusal to place the account to plaintiff's home in her name was based on the portion of section 4(b) that provides that "service will not be supplied by the Company to any applicant who is then indebted to the Company . . . except upon payment of such indebtedness." Plaintiff calls upon this Court to determine whether this provision runs afoul of the ECOA under the facts of this case. The Court decides that it does not and to hold otherwise may violate defendant's right to due process under the Fifth Amendment.

A fundamental reason why enforcement of defendant's provision toward plaintiff does not conflict with ECOA is because an applicant in the same situation as plaintiff is not discriminated against on the basis of sex or marital status. The controlling consideration in defendant's decision was the fact that plaintiff was then obligated under an implied contract with defendant and delinquent on the payment of this obligation. That plaintiff was married to the individual whose name the account was in is incidental. Had plaintiff been her husband's brother, instead of his wife, under the same circumstances of consumption, the same request would have been treated in the same manner. Plaintiff's sex or marital status was not the critical factor for consideration under defendant's section 4(b); rather, the provision prohibits those who are indebted to defendant from opening new accounts. A decision stemming from this clause is therefore made on the creditworthiness of the applicant and is not premised on one of the prohibited bases.²

Under defendant's section 4(b) all applicants who are indebted to defendant receive the same treatment. The provision, in instances characterized by plaintiff's circumstances, does not result in unlawful discrimination, for discrimination against an applicant means "to treat an applicant less favorably than other applicants". 12 C.F.R. § 202.2(n) (1978). Plaintiff submits, however, that she was treated less favorably than another applicant also indebted to the defendant when defendant opened a new account for her husband while the account for the Springlake Road home was still delinquent. Plaintiff testified that defendant admitted that her husband's success in opening this account occurred because of inadvertence and mistake on the part of defendant. The portion of defendant's General Terms and Conditions that is now being challenged bolsters a finding of inadvertence as regards her husband's transaction, since such was contrary to the clearly expressed conditions of defendant's operation. This occurrence cannot be attributed to defendant's section 4(b), because the provision requires similar treatment. The establishment of a new account in her husband's name was not due to the application of the provision in an unequal manner but, instead, to an administrative...