Tom Benson Chevway Rental & Leasing, Inc. v. Allen

• Decision Date: 16 August 1978
• Docket Number: No. 6718,6718
• Citation: 571 S.W.2d 346
• Parties: TOM BENSON CHEVWAY RENTAL & LEASING, INC., Appellant, v. Kenneth Wayne ALLEN et ux., Appellees.
• Court: Texas Court of Appeals

Page 346

571 S.W.2d 346

TOM BENSON CHEVWAY RENTAL & LEASING, INC., Appellant, v. Kenneth Wayne ALLEN et ux., Appellees.

No. 6718.

Court of Civil Appeals of Texas, El Paso.

Aug. 16, 1978.

Rehearing Denied Sept. 13, 1978.

Oppenheimer, Rosenberg, Kelleher & Wheatley, Inc., Carl Robin Teague, San Antonio, for appellant.

Bayne, Snell & Krause, Don Krause, San Antonio, for appellees.

OPINION

STEPHEN F. PRESLAR, Chief Justice.

This is a suit under the Texas Consumer Credit Code and the Federal Truth-in-Lending Act involving the acquisition of an automobile by Appellees from Appellant. The trial Court, sitting without a jury, found violations of both Acts and awarded judgment to Appellees. The principal question involved is whether the two Acts apply to the transaction between Appellant and Appellees because of the nature of that transaction. We affirm the judgment of the trial Court.

Appellees, Kenneth Allen and wife, Dolores Allen, brought suit against Appellant alleging violations of the Truth-in-Lending Act, 15 U.S.C.A. Sec. 1601, et seq., Regulation Z, 12 C.F.R. Sec. 226.1, et seq., and Chapter 7 of the Texas Consumer Credit Code, Art. 5069-7.01, et seq., Tex.Rev.Civ.Stat.Ann. One Cliff Dowd, d/b/a Padgett's Used Cars, was also named as a party Defendant, and he defaulted. The trial Court entered judgment jointly and severally awarding Appellees judgment in the amount of $2,960.00 for violations of the Texas Consumer Credit Code, and $1,000.00 for violation of the Federal Truth-in-Lending Act and Regulation Z, plus $700.00 attorney's fees. The Court found that Appellant was entitled to possession of the car involved in the transaction. Cliff Dowd, d/b/a Padgett's Used Cars, does not appeal.

On February 10, 1976, Appellee, Kenneth Allen, entered into a written contract to purchase a 1975 Plymouth from Padgett's Used Cars. He paid $700.00 cash and also executed two other instruments; their interpretation is involved here. All of the Appellee's dealings were with Padgett's Used Cars, but these two instruments are between Appellee and Tom Benson Chevway Rental and Leasing, Inc., being executed by them as well as Appellee. One of the instruments is entitled "Motor Vehicle Lease" and the other is entitled "Finance Lease Addendum," and the trial Court found these two instruments together to be the contract between Appellant and Appellee. Appellant asserts that this is a lease transaction, and the Texas Consumer Credit Code, the Truth-in-Lending Act, and Regulation Z do not apply. If these Acts are applicable, there were many violations of them, and Appellant does not contend otherwise. The question, then, is whether or not the Acts are applicable.

To invoke the Truth-in-Lending Act and Regulation Z, four conditions must be satisfied:

" * * * First, there must a 'creditor' one who regularly extends or arranges for the granting of consumer credit. Second, the debtor must be a natural person. Third, the transaction must be a 'consumer credit transaction' consisting of three component characteristics: (1) it must be a credit transaction; (2) it must require the payment of a finance charge Or be payable in more than four installments; and, (3) it must be conceived for a consumer or agricultural purpose. Finally, the credit extension must not come within the statutory exemptions * * * ." Boyd, "Consumer Law," 8 Tex.Tech.L.Rev. 1077 (1977).

Appellant contends that there is an absence of two of these controlling issues; that is, that the transaction between the Appellee, Kenneth Allen, and Appellant was not a consumer credit sale, and that the lessor was not a creditor. The trial Court found that the transaction between the parties was a "credit sale" as defined by Section 226.2(n) of Regulation Z, which states in part:

"(n) 'Credit sale' means any sale with respect to which consumer credit is extended or arranged by the seller. The term includes any contract in the form of a * * * lease if the * * * lessee contracts to pay as compensation for use a sum substantially equivalent to or in excess of the aggregate value of the property and services involved and it is agreed that the * * * lessee * * * for no other or for a nominal consideration has the option to become * * * the owner of the property upon full compliance with his obligations under the contract."

On the same day that Appellee contracted for this automobile, the Appellant advertised it for sale in the newspaper for a price of $4,620.00. In addition to the $700.00 which Appellee paid to Padgett's Used Cars, the Lease Addendum instrument which he signed obligated him to pay to Appellant 36 monthly installments of $150.00 each. These installments totalled $5,400.00. This Finance Lease Addendum provided that at the end of 36 months, the book value of the car would be $1.00. And it had this provision:

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