Madewell v. Marietta Dodge, Inc., Civ. A. No. C79-2081A.

• Decision Date: 18 December 1980
• Docket Number: Civ. A. No. C79-2081A.
• Citation: 506 F. Supp. 286
• Parties: Kathy D. MADEWELL and Charles M. Grove, II, Plaintiffs, v. MARIETTA DODGE, INC., Defendant.
• Court: U.S. District Court — Northern District of Georgia

506 F. Supp. 286

Kathy D. MADEWELL and Charles M. Grove, II, Plaintiffs, v. MARIETTA DODGE, INC., Defendant.

Civ. A. No. C79-2081A.

United States District Court, N. D. Georgia, Atlanta Division.

December 18, 1980.

Frank L. Derrickson, Bowen, Derrickson, Goldberg & West, Atlanta, Ga., for plaintiffs.

Gregory J. Digel, Daniel A. Angelo, Greene, Buckley, DeRieux & Jones, Atlanta, Ga., for defendant.

ORDER

SHOOB, District Judge.

Presently before the Court in this truth-in-lending action is the recommendation of the United States Magistrate that defendant's motion for summary judgment be denied. Defendant has objected to that recommendation and asks the Court to find that there was no consumer credit sale between the parties to this action and that the transaction between the parties was accordingly not subject to the disclosure requirements of truth-in-lending law. The Magistrate found that a question of fact as to the intent of the parties precluded a ruling on that issue as a matter of law.

There is no objection to the Magistrate's statement of the facts from which this action arose or of the contentions of the parties with regard to defendant's motion for summary judgment. On October 8, 1979 plaintiffs signed a retail installment contract for the purchase from defendant of a used 1978 Dodge Omni. Plaintiffs additionally made a down payment of $100.00 by check and gave defendant possession of a 1969 Opel GT. Defendant gave plaintiffs possession of the Omni but did not sign the retail installment contract. Defendant contends that the understanding of the parties was that all dealings between them were contingent upon defendant's ability to sell the retail installment contract to a financial institution; plaintiffs contend that their understanding was that they had purchased a car. Approximately one week after the October 8, 1979 transaction, defendant returned the Opel and the $100.00 check to plaintiffs and plaintiffs returned the Omni to defendant. Plaintiffs allege that the retail installment contract which they signed violated truth-in-lending law in certain respects and defendant contends that truth-in-lending law is inapplicable to the transaction because there was no consumer credit sale nor any extension of credit.

Defendant asks this Court to rule that there was no consumer credit sale between the parties to this action because there was no written, signed agreement between them setting forth the details of the transaction as required by Ga.Code Ann. § 109A-2-201.¹ There is, however, a written agreement which sets forth the details of the transaction between the parties and which is signed by plaintiffs. The document does not recite that it is an offer which becomes a contract only upon acceptance by defendant. There is no reference in the document to a condition that defendant sell it to a financial institution. The retail installment contract signed by plaintiffs is in fact a writing enforceable against them under Ga. Code Ann. § 109A-2-201(1), and plaintiffs can be considered to have obligated themselves to accept specified credit terms upon signing the contract. Such an obligation has been found sufficient to necessitate the disclosures required by truth-in-lending law. Copley v. Rona Enterprises, Inc., 423 F.Supp. 979 (S.D.Ohio 1976). This Court finds that the transaction before it was likewise subject to the disclosure requirements of truth-in-lending law.²

In Copley v. Rona Enterprises, Inc., the parties signed a purchase agreement pursuant to which defendant was to sell and did sell a mobile home to plaintiffs. The agreement provided that it was subject to acceptance of financing by a bank or finance company, and it was signed by plaintiffs and defendant. Although a separate retail installment contract and security agreement were contemplated, the purchase agreement set forth a trade-in allowance, a cash downpayment, an unpaid balance, a finance charge, a charge for credit life insurance, a total deferred payment price and an annual percentage rate. The retail installment contract was never executed and defendant contended that there was accordingly no evidence of indebtedness and that the transaction was therefore outside the application of the disclosure requirements of truth-in-lending law.

The court in the Copley case found that although the defendant's approval of the purchase agreement was contingent upon acceptance of financing, plaintiffs had no corresponding way to escape their agreement to purchase the mobile home. The court accordingly considered the plaintiffs contractually bound to purchase a mobile home. Furthermore, because the purchase agreement set forth credit terms, the court found that it was a contract for the extension of credit and that plaintiffs had contractually bound themselves to accept particular credit terms. The court concluded that truth-in-lending disclosure requirements were therefore applicable, relying on the following language from Wachtel v. West, 476 F.2d 1062, (6th Cir.), cert. denied 414 U.S. 874, 94 S.Ct. 161, 38 L.Ed.2d 114 (1973):

It thus appears that a credit transaction which requires disclosures under the Act is completed when the lender and borrower contract for the extension of credit. The disclosures must be made sometime before this event occurs.

476 F.2d at 1065.

The retail installment contract in the present action sets forth the credit terms for the transaction contemplated and is therefore found to be a contract for the extension of credit for purposes of the disclosure requirements of truth-in-lending law. Accordingly, before plaintiffs signed the contract and obligated themselves to the credit terms set forth in it, they were entitled to the disclosures required by truth-in-lending law. 15 U.S.C. § 1638.³ The Court finds this to be true...