Zachary v. R. H. Macy & Co., Inc.

• Decision Date: 23 May 1972
• Docket Number: Nos. 1,2,3,4 and 5,s. 1
• Citation: 332 N.Y.S.2d 425,39 A.D.2d 116
• Parties: Doris E. ZACHARY, Plaintiff, Frank Salacuse, etc., Plaintiff-Appellant, v. R. H. MACY & CO., INC., Defendant-Respondent. Doris E. ZACHARY and Marie Swital, etc. with Abraham & Straus, Plaintiffs- Appellants, v. FEDERATED DEPARTMENT STORES, INC., Defendant-Respondent. Margaret J. BURMAN, etc. with Bloomingdale Bros., Plaintiffs-Appellants, v. FEDERATED DEPARTMENT STORES, INC., Defendant-Respondent. Doris E. ZACHARY, etc. with E. J. Korvette, Plaintiffs-Appellants, v. SPARTANS INDUSTRIES, INC., Defendant-Respondent. Lloyd ZACHARY, etc. with Gimbel Brothers, Inc., Plaintiff-Appellant, v. GIMBEL BROTHERS, INC., Defendant-Respondent. New York State Council of Retail Merchants, Amicus Curiae. The State of New York, Amicus Curiae. Action
• Court: New York Supreme Court — Appellate Division

Page 425

332 N.Y.S.2d 425

39 A.D.2d 116

Doris E. ZACHARY, Plaintiff, Frank Salacuse, etc., Plaintiff-Appellant, v. R. H. MACY & CO., INC., Defendant-Respondent.

Doris E. ZACHARY and Marie Swital, etc. with Abraham &

Straus, Plaintiffs- Appellants, v. FEDERATED DEPARTMENT STORES, INC., Defendant-Respondent.

Margaret J. BURMAN, etc. with Bloomingdale Bros., Plaintiffs-Appellants, v. FEDERATED DEPARTMENT STORES, INC., Defendant-Respondent.

Doris E. ZACHARY, etc. with E. J. Korvette, Plaintiffs-Appellants, v. SPARTANS INDUSTRIES, INC., Defendant-Respondent.

Lloyd ZACHARY, etc. with Gimbel Brothers, Inc., Plaintiff-Appellant, v. GIMBEL BROTHERS, INC., Defendant-Respondent.

New York State Council of Retail Merchants, Amicus Curiae.

The State of New York, Amicus Curiae.

Action Nos. 1, 2, 3, 4 and 5.

Supreme Court, Appellate Division, First Department.

May 23, 1972.

Sheldon V. Burman, New York City, for appellants.

Carl D. Lobell, New York City, of counsel (Herbert M. Hellman, New York City, with him on the brief; Weil, Gotshal & Manges, New York City, attorneys), for defendant-respondent R. H. Macy & Co., Inc.

Jacob Imberman, New York City, of counsel (Michael A. Cardozo and Jeffrey C. Cohen, New York City, with him on the brief; Proskauer Rose Goetz & Mendelsohn, New York City, attorneys), for defendant-respondent Federated Department Stores, Inc.

Alvin M. Stein, New York City, of counsel (Jordan M. Newman, New York City, with him on the brief; Parker, Chapin & Flattau, New York City, attorneys), for defendant-respondent Spartans Industries, Inc.

Eugene H. Gordon, New York City, of counsel (John C. Grosz, New York City, with him on the brief; Solinger & Gordon, New York City, attorneys), for defendant-respondent Gimbel Brothers, Inc.

John Carter Rice, Albany, of counsel (DeGraff, Foy, Conway & Holt-Harris, Albany, attorneys), for the New York State Council of Retail Merchants, Amicus curiae.

Samuel A. Hirshowitz, New York City, of counsel (Philip Weinberg and Paul S. Shemin, New York City, with him on the brief; Louis J. Lefkowitz, Atty. Gen.), for the State of New York, Amicus curiae.

Before STEVENS, P.J., and NUNEZ, MURPHY, McNALLY and EAGER, JJ.

EAGER, Justice:

These actions were brought as representative or class actions challenging, as contrary to statute, the method used by defendants (retail sellers) in computing finance charges owing by purchasers of goods under retail installment credit agreements.

We agree with Special Term, 66 Misc.2d 974, 323 N.Y.S.2d 757, that the actions are not maintainable as class or representative actions to the extent that they seek an accounting and recover, pursuant to Personal Property Law, § 414, of the amount equal to the finance charges alleged to have been illegally charged against all members of an alleged class of persons who have entered into retail installment credit agreements with defendants. (See Gaynor v. Rockefeller, 15 N.Y.2d 120, 256 N.Y.S.2d 584, 204 N.E.2d 627; Coolidge v. Kaskel, 16 N.Y.2d 559, 260 N.Y.S.2d 835, 208 N.E.2d 780; Onofrio v. Playboy Club of New York, Inc., 15 N.Y.2d 740, 257 N.Y.S.2d 171, 205 N.E.2d 308, reversing on dissenting opinion of Stevens, J., 20 A.D.2d 3, 6, 244 N.Y.S.2d 485, 488; Hall v. Coburn Corp. of Amer., 26 N.Y.2d 396, 311 N.Y.S.2d 281, 259 N.E.2d 720; see, also, opinion of Special Term below, 66 Misc.2d 974, 323 N.Y.S.2d 757.) We conclude, however, that the actions are maintainable as representative actions for a declaratory judgment as to the construction and effect of subdivision 3 of section 413 of the Personal Property Law and for the incidental relief of an injunction. (See Kovarsky v. Brooklyn Union Gas Co., 279 N.Y. 304, 314, 18 N.E.2d 287, 290; Hall v. Coburn Corp. of Amer., Supra, 26 N.Y.2d pp. 401--402, 311 N.Y.S.2d p. 283--285, 259 N.E.2d p. 721--722.)

Subdivision 3 of section 413 of the Personal Property Law, authorizing finance charges by retail sellers against purchasers, provides:

'A seller may, in a retail instalment credit agreement, contract for and, if so contracted for, the seller or holder thereof may charge, receive and collect the service charge authorized by this article. The service charge shall not exceed the following rates computed, for the purposes of this section, on the Outstanding indebtedness from month to month:

(a) On so much of the Outstanding indebtedness as does not exceed five hundred dollars, one and one-half per centum per month;

(b) If the Outstanding indebtedness is more than five hundred dollars, one per centum per month on the excess over five hundred dollars of the outstanding indebtedness * * *.' (Emphasis supplied.)

The statute is clear and unambiguous and we are bound to construe and apply it according to its terms. 'It is a cardinal principle to be observed in construing legislation that the court should neither limit nor extend its plain language and that, whenever practicable, 'effect must be given to all the language employed" (Cahen v. Boyland, 1 N.Y.2d 8, 14, 150 N.Y.S.2d 5, 9, 132 N.E.2d 890, 892). Resort is to be had first to the words and language of the statute to determine its construction and application and '(i)t is not allowable to interpret what has no need of interpretation, and when the words have a definite and precise meaning, to go elsewhere in search of conjecture in order to restrict or extend the meaning.' (Meltzer v. Koenigsberg, 302 N.Y. 523, 525, 99 N.E.2d 679, 680.)

The defendants, however, in disregard of the plain statutory wording requiring the computation of charges at the stated rate upon the 'outstanding indebtedness', utilize a so-called 'previous balance' method. Under this method, the defendants impose a charge at the maximum rate on a 'previous balance' shown in a purchaser's account; the charge is calculated and imposed for a month or other billing period on the total indebtedness as it existed on the first day of the month or other period without any consideration being given to the payments made during the month or other period.

According to the terms of the statute, finance charges may be levied at a specified rate computed '* * * on the outstanding indebtedness from month to month'. We may not reject as meaningless the word 'outstanding' appearing in the statute. We are bound to give effect to all the language employed; we are bound to assume that the words used were inserted for a purpose. (See Palmer v. Van Santvoord, 153 N.Y. 612, 616, 47 N.E. 915, 916; Crayton v. Larabee, 220 N.Y. 493, 501, 116 N.E. 355, 357; Matter of Tonis v. Board of Regents of University of State of N.Y., 295 N.Y. 286, 293, 67 N.E.2d 245, 248; see, also, McKinney's Consol.Laws of N.Y., Book 1, Statutes, § 231.)

As used here to qualify the term 'indebtedness from month to month', the word 'outstanding' plainly means owing and unpaid; 'outstanding indebtedness' is that amount which a debtor owes 'month to month'. Indebtedness or a part thereof which has been paid is not 'outstanding'. This is clear and, plainly, the statute was not intended to and does not authorize finance charges at the specified maximum rate 'from month to month' on any indebtedness which has been paid. The fact is that defendants' credit plans conform to the law merely to the extent that they recognize that no finance charge may be levied where the entire prior balance was paid during the prior billing cycle or monthly period. It defies logic that the defendants failed to recognize a Pro tanto reduction of the outstanding indebtedness for the purpose of calculating the finance charges where there are substantial payments on account during a billing cycle or month.

The plain meaning of the statute may not be circumvented for the purpose of approving a convenient method of computing finance charges. Nor should we be unduly concerned with the arguments of the retail sellers based upon their additional inconvenience and expense in computing the charges on the basis of an indebtedness which is 'outstanding'. The wisdom of the Legislature in enacting the statute in its particular terms is not to be questioned by the courts. Our duty is to...