Jensen v. Ray Kim Ford, Inc.
| Decision Date | 07 December 1990 |
| Docket Number | No. 90-1721,90-1721 |
| Citation | 920 F.2d 3 |
| Parties | Michael V. JENSEN and Patricia A. Jensen, Plaintiffs-Appellants, v. RAY KIM FORD, INCORPORATED, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Cary R. Rosenthal, Chicago, Ill., for plaintiffs-appellants.
Richard Karr, Elliot B. Pollack, Hardt & Stern, Chicago, Ill., for defendant-appellee.
Before POSNER and FLAUM, Circuit Judges, and FAIRCHILD, Senior Circuit Judge.
Michael and Patricia Jensen bought a car from Ray Kim Ford and have brought this suit against Ray Kim Ford for violation of the Truth in Lending Act, 15 U.S.C. Sec. 1601 et seq., and for common law fraud. The district court dismissed the Truth in Lending Act claim for failure to state a claim upon which relief could be granted, Fed.R.Civ.P. 12(b)(6), and the common law fraud claim for lack of subject matter jurisdiction. The Jensens appealed.
For the purposes of reviewing the granting of a motion to dismiss, we take all the facts alleged in the complaint to be true, and we resolve all inferences in favor of the plaintiff. On February 3, 1989, the Jensens purchased a new 1989 Ford Tempo from Ray Kim Ford. The Jensens signed a Retail Installment Contract which disclosed an Annual Percentage Rate of 15%, a Finance Charge of $7110.06, an Amount Financed of $16,636.14, a Total of [scheduled] Payments of $23,746.20, and a Total Sale Price of $26,546.20 (including a down payment of $2800). Eight hundred dollars of the down payment represented the value of the Jensens' trade-in. The Jensens allege this was only an estimate, with an agreement that they would owe the difference if the trade-in was worth less, and Ray Kim Ford would refund if more. The Jensens do not allege that this contract failed to make any disclosure which 15 U.S.C. Sec. 1631 requires.
After the trade-in turned out to be worth $1388.08, or $588.08 more than the estimate, Ray Kim Ford did not make a refund, but prepared a second Retail Installment Contract. The second contract gave credit for the full value of the trade-in, but added $225 for the service contract, increased the Annual Percentage Rate to 16%, increased the Finance Charge by $360.61, decreased the Amount Financed by $363.40, decreased the Total of [scheduled- The Jensens allege that the second contract was a forgery. Ray Kim Ford sold it to Citicorp. The Jensens made payments to Citicorp until they noticed the five cents difference in monthly payments, asked for a copy of the contract, and realized it was not the contract they had signed.
] Payments by $3.00, and increased the Total Sale Price by $585.08. In net substance, the second contract called for future cash payments by the Jensens of about the same amount and gave almost no benefit to them for the increased value of their trade-in. Ray Kim Ford ultimately tendered the $588.08, but only after this action was brought.
The Jensens' Truth in Lending theory must be that the second contract represented their credit transaction, and the credit terms were not disclosed to them. The fallacy, as pointed out by the district judge, is that the forged document was a nullity and created no obligation. Their obligation was measured by the first contract, and its credit terms were properly disclosed.
The plaintiffs' complaint clearly alleges wrongdoing by Ray Kim Ford, but wrongdoing alone does not establish a Truth in Lending Act violation. The Truth in Lending Act encourages the informed use of credit by requiring lenders to disclose terms that will allow consumers to compare different offers and enter into contracts intelligently. 15 U.S.C....
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Landcastle Acquisition Corp. v. Renasant Bank
...contracts can be ratified, see id. at 1239, other courts have reached the opposite conclusion, see, e.g. , Jensen v. Ray Kim Ford, Inc ., 920 F.2d 3, 4 (7th Cir. 1990) (holding that a "contract is a nullity and does not bind" the plaintiffs because "a forged note is by the common law absolu......
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Walker v. Michael W. Colton Trust
...such allegedly forged documents cannot, as a matter of law, be utilized as a basis for a claim under TILA, citing Jensen v. Ray Kim Ford, Inc., 920 F.2d 3 (7th Cir.1990) and First Nat'l Bank v. Shaw, 149 Mich. 362, 112 N.W. 904 In Jensen, the Seventh Circuit affirmed the district court's di......
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Graham v. Rrr, LLC
...S.Ct. 2505. 4. Graham relies on Jensen v. Ray Kim Ford, Inc., to support his proposition that the VCPA is not preempted by TILA. 920 F.2d 3 (7th Cir.1990)(finding that alleged forged retail installment contract was a nullity and therefore TILA did not apply). However, Graham's reliance is m......
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Anthony v. Anthony
...to plaintiff. Id. at *3-*4. Other circuits have, however, ruled that TILA liability cannot arise from forgeries. In Jensen v. Ray Kim Ford, Inc., 920 F.2d 3 (7th Cir.1990), the plaintiffs purchased a new car and later discovered, due to a discrepancy in the monthly payments, that the contra......