Murphy v. McNamara

• Decision Date: 05 December 1979
• Docket Number: No. 173772,173772
• Citation: Murphy v. McNamara, 416 A.2d 170, 36 Conn.Supp. 183 (Conn. Super. 1979)
• Court: Connecticut Superior Court
• Parties: , 27 UCC Rep.Serv. 911 Carolyn MURPHY v. Brian McNAMARA.

Page 170

416 A.2d 170

36 Conn.Supp. 183, 27 UCC Rep.Serv. 911

Carolyn MURPHY v.Brian McNAMARA.

No. 173772.

Superior Court of Connecticut, Judicial District of New Haven.

Dec. 5, 1979.

New Haven Legal Assistance Association, Inc., for plaintiff.

Platt & McCormack, Windsor, for defendant.

BERDON, Judge.

The plaintiff has brought this action for damages and equitable relief based upon a three count complaint wherein the following is alleged: violations of the Connecticut Unfair Trade Practices Act(hereinafter the CUTPA), General Statutes §§ 42-110a et seq.; violations of the unconscionable contracts section of the Uniform Commercial Code,General Statutes § 42a-2-302; and violations of the usury law, General Statutes § 37-4.Before the court is an application to continue an ex parte temporary injunction issued on September 19, 1979.

The plaintiff is a recipient of welfare and has four minor children ranging in ages from five to sixteen.The defendant is in the business of renting and selling television and stereo sets.The plaintiff saw an advertisement placed by the defendant in a local newspaper offering color television sets and stereos.The advertisement stated, in part, the following: "Why buy when you can rent?Color TV and stereos.Rent to own!Use our Rent-to-own rental plan and let TV Rentals deliver either of these models to your home.We feature Never a repair bill No deposit No credit needed No long term obligation Weekly or monthly rates available Order by phone Call today Watch color TV tonight."As a result of this offer, the plaintiff called the defendant on January 8, 1979.The next day she entered into an agreement with the defendant which purported to provide for a lease of a twenty-five inch Philco console color television set.The agreement provided for weekly payments of $16, and further provided that if the plaintiff paid that sum for seventy-eight successive one-week terms, she would become the owner of the television set.The agreement also contained the following clause: "Termination by Renter : Renter, at its option, may at any time terminate this agreement by return of the property to owner in its present condition, fair wear and tear excepted and by payment of all rental payments due through the date of return."

The plaintiff entered into the transaction with the defendant because she was persuaded through the advertisement that she could obtain the ownership and use of the television set without establishing credit.¹Upon delivery of the set, she paid $36 to the defendant which represented $16 for the first week's rent and a $20 delivery charge.At no time did the defendant advise the plaintiff of the total amount she would be required to pay in order to own the set under the terms of the agreement, which sum amounted to $1268, including the delivery charge.The retail sale price for the same set was $499.

From the period of January 9, 1979, to July 3, 1979, the plaintiff made payments which totaled $436.On or about that date she noticed a newspaper article which criticized the lease plan, and she realized the amount she would be required to pay for the television set under the agreement.She then stopped making payments and consulted an attorney.

Thereafter, the plaintiff received threats by employees of the defendant.These threats included telephone calls and written communications.²During this period the defendant attempted to take possession of the television set.These practices of the defendant continued until the court issued an ex parte injunction on September 19, 1979.All of the foregoing resulted in the plaintiff's suffering great emotional stress.

INATURE OF THE TRANSACTION

The plaintiff first argues that the transaction which she entered into with the defendant was not a lease but, in fact, a conditional sale.It is clear that the parties intended a sale, and that intention controls the transaction."Regardless of what name the parties give to a transaction, the courts, in general, look beyond the form to the substance, and when one who is called a lessee may become the owner of the leased property at the end of a lease term on full payment of the stipulated rent or by the payment of a small additional amount, the transaction is generally held to be a conditional sale, even though it is couched in the terms of a lease."Tishman Equipment Leasing, Inc. v. Levin, 152 Conn. 23, 28, 202 A.2d 504, 507.

The agreement here was not a true lease, but merely a security agreement in disguise to serve the defendant's own purposes.SeeIn re Leasing Consultants, Inc., 486 F.2d 367, 372(2d Cir.).This interpretation of the agreement is further fortified when the agreement is read in the context of the Uniform Commercial Code.General Statutes § 42a-1-201(37), defining a "security interest," provides in part the following: "Whether a lease is intended as security is to be determined by the facts of each case; however, (a) the inclusion of an option to purchase does not of itself make the lease one intended for security, and (b) an agreement that upon compliance with the terms of the lease the lessee shall become or has the option to become the owner of the property for no additional consideration or for a nominal consideration does make the lease one intended for security."SeeGranite Equipment Leasing Corporation v. Acme Pump Co., 165 Conn. 364, 368, 335 A.2d 294.It is clear, therefore, that the agreement and transaction between the parties was in fact a conditional sale.³

IIUNFAIR TRADE PRACTICES

In 1973, the Connecticut legislature adopted the CUTPA, General Statutes §§ 42-110a et seq.It provides in part that "(n)o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce."General Statutes § 42-110b(a).It is obvious that the legislature intended to make the act at least coextensive with its federal counterpart.Section 42-110b of the General Statutes provides in part the following: "It is the intent of the legislature that in construing subsection (a) of this section, the commissioner and the courts of this state should be guided by interpretations given by the Federal Trade Commission and the federal courts to § 5(a)(1) of the Federal Trade Commission Act(15 U.S.C. 45(a)(1)), as from time to time amended."⁴

The legislature further directed that the CUTPA "be remedial and be so construed."General Statutes § 42-110b(d).The act therefore must "be liberally construed."SeeUnited Aircraft Corporation v. Fusari, 163 Conn. 401, 410, 311 A.2d 65.It is obvious that the legislature has perspicuously mandated the court to put muscle into this remedial legislation in order to protect the consuming public from unfair and deceptive trade practices.Protection is afforded not only to the consumer, but also to merchants engaged in legitimate business practices, because the act eradicates unfairness and deception employed by unscrupulous competitors.

The unfair trade practices condemned by § 42-110b are not confined to those that were illegal at common law or prohibited by statute(although in these latter situations, the public policy standards are clearly set for the court to act upon).Federal Trade Commission v. Colgate-Palmolive Co., 380 U.S. 374, 380, 85 S.C. 1035, 1040, 13 L.Ed.2d 904;seeFederal Trade Commission v. Sperry & Hutchinson Co., 405 U.S. 233, 244, 92 S.Ct. 898, 905, 31 L.Ed.2d 170.Indeed, it has been held that conduct which is legally proper may be prohibited if it is unfair to the public.Spiegel, Inc. v. Federal Trade Commission, 540 F.2d 287, 292(7th Cir.).The legislature"advisedly left the concept flexible to be defined with particularity by the myriad of cases from the field of business."Federal Trade Commission v. Motion Picture Advertising Service Co., 344 U.S. 392, 394, 73 S.Ct. 361, 363, 97 L.Ed. 426." '(T)he meaning and application of . . . (the act) must be arrived at by what this Court elsewhere has called "the gradual process of judicial inclusion and exclusion." ' "Federal Trade Commission v. R. F. Keppel & Bros., Inc., 291 U.S. 304, 312, 54 S.Ct. 423, 426, 78 L.Ed. 814.

Applying these standards can be difficult.The United States Supreme Court has referred to some guidelines which are helpful in making a determination of what constitutes an unfair trade practice." '(1)(W)hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise whether, in other words, it is within at least the penumbra of some common-law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers (or competitors or other businessmen).' "Federal Trade Commission v. Sperry & Hutchinson Co., supra, 405 U.S. 244-45 n. 5, 92 S.Ct. 905 n. 5;Spiegel, Inc. v. Federal Trade Commission, supra, 293 n. 8;Covenant Radio Corporation v. Ten Eighty Corporation, 35 Conn.Sup. 1, 9, 390 A.2d 949; annot., Practices Forbidden by State Deceptive Trade Practice and Consumer Protection Acts, 89 A.L.R.3d 449.

In the present case, the plaintiff relies on the unconscionable bargain extracted by the defendant in requiring her to pay over two and one-half times the regular retail sales price of the television set for the extension of credit, the failure to advise her of the true purchase price she would pay over the eighteen month period, and the unscrupulous collection practice of threatening her with arrest.This court has no doubt that these practices offend the CUTPA and come within its proscriptions.

In evaluating the claim that the bargain was unconscionable, the impact upon the plaintiff must be considered.The plaintiff, a welfare recipient, was lured to the defendant because of the representations that no credit was needed and that she would...