1 Mass. App. Ct. 569 | Mass. App. Ct. | 1973
This action was brought to establish that the defendant, in selling a Massachusetts motor vehicle liability insurance policy to the plaintiff, is subject to disclosure requirements of the Truth-in-Lending Act, G. L. c. 140C
To the declaration are annexed the premium bill and the policy declaration sheet.
The plaintiff asserts that the sale to him of the monthly billing plan was a “Consumer credit” transaction as defined in § l(j) of the act,
Under the act a “creditor” is defined as “a person who in the ordinary course of business regularly extends or arranges for the extension of consumer credit, or offers to extend or arrange for the extension of such credit” (§ 1[1J). “Credit” is “the right granted by a creditor to a customer to defer payment of debt, incur debt and defer its payment, or purchase property or services and defer payment therefor” (§ l[k]). A “customer” is “a natural person to whom consumer credit is offered” (§ l[nj). Assuming arguendo that a motor vehicle insurance policy is “property or service” under § l(j) of the act (see Couch, Insurance [2d ed.J § 1.11), the questions are whether the facts alleged are sufficient to show that the payment plan is one in which payment is deferred, a debt created and a creditor-debtor relationship established between the defendant and the plaintiff so that the plan falls within the scope of the act. The act has thus far not been construed, nor are we advised whether rules or regulations under § 11 have been promulgated by the Commissioner of Banks.
Correspondence releases of the Federal Reserve Board have consistently taken the position that insurance premium financing plans “in which the customer is not obligated to make remaining payments but may elect to cancel at any time by simply not paying an instalment when due, would not create the creditor-debtor relationship required before a transaction becomes subject to [the disclosure requirements of] Regulation Z.” FRB Letter of March 18, 1970, 4 C. C. H. Consumer Credit Guide, par. 30,406. See releases published in 4 C. C. H. Consumer Credit Guide, pars. 30,041, 30,051, 30,176 and 30,339. In
Order sustaining demurrer affirmed.
Inserted by St. 1969, c. 517, § 1. Under Regulation Z (12 C. F. R. §§ 226.1, et seq.) of the Federal Truth-in-Lending Act (15 U. S. C. §§ 1601, et seq. U970J), the Federal Reserve Board has authority to grant exemptions from the Federal act for classes of transactions which, under the laws of a State, are subject to “requirements substantially similar” to those imposed under the Federal act, provided that there is adequate provision for enforcement. 12 C. F. R. § 226.12. Massachusetts was granted such an exemption effective July 1, 1970. 35 F. R. 10358, June 25, 1970. Thus, disclosure requirements of the Massachusetts act have supplanted those of the Federal act insofar as they are material to this litigation.
The policy itself is not included in the declaration.
The premium bill requires a deposit of twenty-five percent of the premium with the application or a first monthly payment in an amount sufficient to bring the initial deposit up to twenty-five percent.
“Credit offered or extended to a natural person, in which the money, property or service which is the subject of the transaction is primarily for personal, family, household or agricultural purposes ....”
We do not take into consideration the letter from the Commissioner of Banks appended to the briefs dealing with the applicability of the act to instalment purchase of motor vehicle insurance since it does not have the force of a rule or regulation. Furthermore, reliance in the briefs upon previous litigation between the parties with respect to this transaction is also misplaced. Nothing in reference
These releases, though not legally binding, have been treated as persuasive. Stefanski v. Mainway Budget Plan Inc. 326 F. Supp. 138, 142 (S.D. Fla. 1971). Gerlach v. Allstate Ins. Co. 338 F. Supp. 642, 648-649 (S.D. Fla. 1972). Bissette v. Colonial Mortgage Corp. of D. C. 477 F. 2d 1245, 1246 (D.C. Cir. 1973).