Johnson v. Alabama Power Co.

• Decision Date: 19 May 1995
• Citation: 664 So.2d 877
• Parties: Charles JOHNSON, et al. v. ALABAMA POWER COMPANY. ALABAMA POWER COMPANY v. Charles JOHNSON, et al. 1921696, 1921722.
• Court: Alabama Supreme Court

Page 877

664 So.2d 877

Charles JOHNSON, et al. v. ALABAMA POWER COMPANY.

ALABAMA POWER COMPANY v. Charles JOHNSON, et al.

1921696, 1921722.

Supreme Court of Alabama.

May 19, 1995.

Rehearing Denied July 14, 1995.

Appeals from Shelby Circuit Court; D. Al Crowson, Judge.

Michael J. Evans and Thomas W.H. Buck of Longshore, Evans & Longshore, Birmingham, for appellants (Johnson et al.).

John P. Scott, Jr. and Alan T. Rogers of Balch & Bingham, Birmingham, Oakley Melton, Jr. of Melton, Espy, Williams & Hayes, Montgomery, Hewitt L. Conwill of Conwill & Justice, Columbiana, Frank C. Ellis, Jr. of Wallace, Ellis, Head & Fowler, Columbiana, for appellee (Alabama Power Co.).

PER CURIAM.

AFFIRMED. NO OPINION.

See Rule 53(a)(1) and (a)(2)(F), Ala.R.App.P.

MADDOX, ALMON, KENNEDY, INGRAM, COOK, and BUTTS, JJ., concur, in case 1921696.

HOUSTON, J., concurs specially, in case 1921696.

SHORES, J., dissents, in case 1921696.

MADDOX, ALMON, SHORES, HOUSTON, INGRAM, and COOK, JJ., concur, in case 1921722.

KENNEDY and BUTTS, JJ., dissent, in case 1921722.

HOUSTON, Justice (concurring specially).

I concur; however, I write specially to address Justice Shores's dissent.

I must first comment on and agree with Justice Shores's statement regarding a principle of statutory construction that was most recently applied in Justice Maddox's dissent in the answer to the certified question concerning absentee ballots. See Roe v. Mobile County Appointment Board, [Ms. 1940461, March 14, 1995] --- So.2d ---- (Ala.1995) (Maddox, J., dissenting). It is the settled law, as I wrote, with eight Justices concurring, in answer to a certified question, in IMED Corp. v. Systems Engineering Associates Corp., 602 So.2d 344, 346 (Ala.1992):

"Words used in a statute must be given their natural, plain, ordinary, and commonly understood meaning, and where plain language is used a court is bound to interpret that language to mean exactly what it says."

This rule of statutory construction is not relevant in this case, because this case does not turn upon the plain language, or, for that matter, upon any language, of Ala.Code 1975, § 5-19-11 (as originally enacted). Interestingly enough, § 5-19-11 is styled "Affidavit to be filed by creditor before bringing action." This was amended by Ala. Acts 1990, Act No. 90-384; and, as amended, this section is styled "Affidavit to be filed by creditor before bringing action; consequences of certain violations." In 1990, for the first time, the legislature proscribed remedies for violation of the rights it had created 19 years before.

The Legislature enacted the "Mini-Code" in 1971, 70 years after the Constitution of 1901 had been ratified, giving by that legislation certain specific rights to debtors in consumer credit transactions. However, the Legislature provided no specific remedy in the Mini-Code to consumers/debtors seeking to enforce their legislatively created rights. Therefore, in Derico v. Duncan, 410 So.2d 27 (Ala.1982), this Court applied in a Mini-Code case the general common law rule that contracts made in derogation of a regulatory licensing statute are void and, thus, unenforceable. In so doing, this Court afforded debtors a specific remedy, because the Legislature had provided no remedy. The common law rule applied in Derico, however, has no application within the context of the present action, which was filed on September 26, 1990, because of the Legislature's April 17, 1990, amendment to Ala.Code 1975, § 5-19-11. See Ala. Acts 1990, No. 90-384. The revised § 5-19-11, in subsection (b), specifies that a debtor may recover only for actual damage sustained by the debtor as a result of the creditor's violation of the Mini-Code. Subsection (b) makes it very clear that the judicially enforced common law remedy of voiding an entire consumer credit transaction is no longer available in cases such as this one. See, also, In re Crotzer, 147 B.R. 252 (Bankr.N.D.Ala.1992). The last sentence of subsection (b) states that a debtor may be compensated for the "actual damage" sustained as a result of the creditor's failure to comply with "any requirement imposed under this chapter." The "chapter" referred to is Chapter 19 (consisting of 31 sections) of Title 5, governing consumer credit transactions. Subsection (b) is applicable in cases of this kind unless a "specific remed[y]" is otherwise provided in Chapter 19 to a debtor for the particular violation involved. Neither § 5-19-22, the licensing provision that was violated in this case; § 5-19-29, which authorizes the state banking superintendent to seek an injunction to enforce the licensing requirements; nor § 5-19-30, which deals with the criminal penalties applicable to creditors operating in violation of the licensing requirements, provides for such a "specific remed[y]" to the debtor. Therefore, because Alabama Power Company was not licensed under § 5-19-22 to make consumer loans before June 23, 1989, it had no statutory authority to charge interest in connection with the financing of its heat pumps or other merchandise sold before that date. The only actual damage sustained by the plaintiffs as a result of the licensing violation was the contractual requirement that they pay interest on their loans. Thus, the trial court's order requiring a refund of the interest paid by the plaintiffs to Alabama Power Company, but otherwise leaving intact the plaintiffs' contractual obligations to pay for the merchandise purchased, was proper. I also note that subsection (b) of § 5-19-11 is applicable in cases, such as this one, filed after the effective date of April 17, 1990, even if the cause of action involves a Mini-Code violation that took place before the amendment. Section 4 of Act No. 90-384 provides:

"This Act shall become effective upon its passage and approval by the Governor or upon its otherwise becoming a law, but shall not apply to claims alleging violations of this Chapter which have been asserted in litigation pending as of the effective date of this Act."

Subsection (b) of § 5-19-11 did not create, enlarge, diminish, or destroy any vested, substantive rights; instead, it cured a legislatively perceived defect in the Mini-Code with respect to the remedies available in cases involving Mini-Code violations. The Legislature created specific rights for debtors when it enacted the Mini-Code, and it did nothing more in amending § 5-19-11 than to provide a specific statutory remedy to enforce those rights. Subsection (b) falls within this Court's definition of remedial legislation and operates retroactively, absent clear language to the contrary. See Ex parte Burks, 487 So.2d 905 (Ala.1985). The Act contains no prohibition against retroactive application. To the contrary, § 4 of the Act indicates that the Legislature clearly contemplated application of the new remedy provision in cases other than those pending on April 17, 1990.

SHORES, Justice (concurring in case 1921722 and dissenting in case 1921696).

I respectfully dissent from that portion of the majority's summary affirmance that affirms the trial court's decision not to follow the common law rule of Derico v. Duncan, 410 So.2d 27 (Ala.1982), and I concur with that portion of the summary affirmance that affirms the trial court's holding that the class members are entitled to recover interest payments they have made to Alabama Power Company ("APCo") and its order enjoining APCo from collecting interest on the loans.

The lawsuit was filed as a class action on September 26, 1990, on behalf of all persons who, before June 23, 1989, had become financially obligated to APCo when the company financed for them the purchase of heat pumps and other merchandise, without first obtaining a license from the Alabama State Banking Department as required under § 5-19-22, Ala.Code 1975, a portion of the Mini-Code. The class members sought to void the debt agreements with APCo and to obtain a refund of the principal and interest they have paid APCo.

The trial court held a hearing on cross motions for summary judgment; the motions were supplemented with briefs and oral arguments. On June 14, 1993, the trial judge entered a partial summary judgment in favor of the class members and a partial summary judgment in favor of APCo. He held that the amendment to § 5-19-11(b) of the Mini-Code overruled Derico v. Duncan by implication, and, thus, that the class members were liable for the principal on the contracts, but that APCo must refund all interest paid by the class members. The class members appealed; APCo cross-appealed.

The majority summarily affirms the trial court's judgment. I dissent in part, because I believe that the rule of Derico v. Duncan controls in the present case and voids the contracts. Derico v. Duncan addressed a certified question from the United States District Court for the Middle District of Alabama. The question was:

"Does defendant's failure, which was not willful, to obtain a license according to Section 5-19-22 affect plaintiff's obligation under the loan contract between plaintiff and defendant, and if so, to what extent?"

410 So.2d at 28. We answered:

"We conclude that the provisions of Code 1975, § 5-19-1 et seq., 'Consumer Finance,' known collectively as the Mini-Code, are regulatory in nature and are for the protection of the public, specifically, the consumer/debtor.

"In this context, then, we have examined the Mini-Code in the light of applicable Alabama law and we hold that contracts made in violation of the requirements of the Mini-Code are null, void, and unenforceable as a matter of public policy. Further, we hold that, notwithstanding Defendant's non-willfulness in failing to obtain a license to engage in the business of making consumer loans, that failure was in direct violation of § 5-19-22(a). Therefore, that portion of Plaintiff's indebtedness represented by the loan (as distinguished from the debt on the contract to repair) is void, including both the...