Taylor v. RH Macy & Company, Inc., 72-2119.
| Decision Date | 13 August 1973 |
| Docket Number | No. 72-2119.,72-2119. |
| Citation | 481 F.2d 178 |
| Parties | Earl W. TAYLOR, Plaintiff-Appellant, v. R. H. MACY & COMPANY, INC., Defendant-Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Earl W. Taylor, pro. per.
Don T. Hibner, Jr. (argued), Terence M. Murphy, of Sheppard, Mullin, Richter & Hampton, Los Angeles, Cal., McEnerney & Jacobs, San Francisco, Cal., for defendant-appellee.
Before MERRILL and HUFSTEDLER, Circuit Judges, and HILL,* District Judge.
In this action, the Appellant Taylor (Plaintiff below) challenges the method by which Appellee R. H. Macy & Company, Inc. (Defendant below) computes charges on unpaid balances in its customers' revolving charge accounts. Appellant claims that Appellee is violating the Truth in Lending Act, 15 U.S.C. § 1601 ff., and Regulation Z of the Federal Reserve Board, issued pursuant to the Act, 12 C.F.R. § 226. Appellee's method of computing finance charges is commonly referred to as the "previous balance" method.
Appellant is not an attorney and appears in pro. per. His contentions are not stated with complete clarity in his brief. He appears to contend first, that the previous balance method is not sanctioned by the Act and the Regulation and, second, if the method is sanctioned Appellee's disclosures to its customers do not meet the standards of the Act and the Regulation. The trial Court found against Appellant in both respects as do we.
The facts were not in dispute at the time of trial and are not in dispute before us. The sole question presented is one of law. This appears to be a case of first impression.
It is worthwhile to illustrate what the previous balance method is, and how it operates, by stating a hypothetical example. Assume a charge account to have been opened June 1 with purchases of $50 on June 1 and $50 on June 15. Assume no payments were made during June. As of June 30, the balance due would be $100. In the subsequent month, that balance is referred to as the "previous balance". Assume further that during the month of July, payments of $50 were made and new charges of $100 were incurred. The balance at the end of July would be $150, which is called the "new balance". Assume that the store's finance charge is computed at 1 ½% per month (which is the rate actually employed by Macy's in the instant case). A finance charge of $1.50 would also be imposed on the billing at the end of July. This finance charge is not imposed on the new balance but is imposed on the entire previous balance of $100, despite the fact that a part of that $100 balance, which was due on June 30, was paid during the month of July. Under the previous balance method, the finance charge is imposed on all of the previous balance unless all of it has been paid in the following month. If all of it is paid in the following month, no finance charge is imposed.
The above hypothetical presents the controversy involved in the instant case although the figures of charges and payments are different. Appellant makes much of the fact that the finance charge is imposed on the entire previous balance even though some payments were made in the month following its rendition. He correctly points out that the effective rate of interest is much more than the nominal rate of 1 ½% per month where, as in the hypothetical, a substantial payment was later made.
Section 107(a)(2) of the Truth in Lending Act, 15 U.S.C. § 1606, provides with respect to open end credit that the annual percentage rate shall be determined:
"as the quotient (expressed as a percentage) of the total finance charge for the period to which it relates divided by the amount upon which the finance charge for that period is based, multiplied by the number of such periods in a year."
Appellant can point to no legislative history or other authority to support his contention that the previous balance method is not sanctioned under the Act and Regulation Z.1 To the contrary, it seems abundantly clear that both the Act and the Regulation envisage and approve the previous balance method, as burdensome and expensive as that method is to the customer. See particularly 15 U.S.C. § 1637 and Section 226.5(a)(1) (i) of Regulation Z. Our construction is reinforced by the fact that both the Federal Trade Commission and the Federal Reserve Board have interpreted the statute and regulation as authorizing the previous balance method. See FTC Consumer Policy Statement No. Four of May 7, 1970, CCH Consumer Guide ¶ 130,369, and Federal Reserve Board letter of January 14, 1974, CCH Consumer Credit Guide ¶ 130,793. Both of those agencies are given important interpretive and enforcement powers under the statutory scheme and their interpretations are entitled to substantial weight. It would thus appear that any action to outlaw the previous balance method under Federal law must come from Congress.
We pass now to the question of whether the disclosures of Appellee meet the requirements of the statute. Section 127, Sections 127(a)(4)...
To continue reading
Request your trial
-
Johnson v. Sears Roebuck & Co.
...here have determined and disclosed the annual percentage rate. We note that the 9th Circuit Court of Appeals in Taylor v. R. H. Macy & Co., 481 F.2d 178, 1973, concerning the permissibility of the previous balance method under the Federal Truth in Lending Act, '(I)t seems abundantly clear t......
-
Bryson v. Bank of New York
...the finance charge is imposed on all of the previous balance unless all of it has been paid in the following month." Taylor v. R.H. Macy & Co., 481 F.2d 178, 179 (9th Cir.), cert. denied, 414 U.S. 1068, 94 S.Ct. 577, 38 L.Ed.2d 473 This legislative history suggests that § 1637(b)(8) was aim......
-
Philbeck v. Timmers Chevrolet, Inc.
...Telephone & Telegraph Co. v. United States, 299 U.S. 232, 236, 57 S.Ct. 170, 172, 81 L.Ed. 142 (1936); see Taylor v. R. H. Macy & Company, Inc., 9 Cir., 1973, 481 F.2d 178, 180, cert. denied, 414 U.S. 1068, 94 S.Ct. 577, 38 L.Ed.2d 473; Roy Bryant Cattle Co. v. United States, 5 Cir., 1972, ......
-
Young v. Northland Mortg. Co.
...527 F.2d 257, 267 (3d Cir. 1975); Anthony v. Community Loan & Investment Corp., 559 F.2d 1363, 1367 (5th Cir. 1977); Taylor v. R. H. Macy & Co., 481 F.2d 178 (9th Cir.), cert. denied, 414 U.S. 1068, 94 S.Ct. 577, 38 L.Ed.2d 473 Plaintiffs argue that a written agreement is present in defenda......