*1 MOURNING v. FAMILY PUBLICATIONS
SERVICE, INC. Argued 24, No. 71-829. April November 1972 Decided *2 J., opinion Court, Burger, C. delivered in which Doug- JJ., joined. Brennan, White, Marshall, and Blacicmun, las, J., opinion dissenting part, filed in which and Stewart dissenting joined, J., Rehnquist, JJ., post, p. a filed Powell, opinion, post, p. 383.
Eric Schnapper argued With petitioner. cause M. Greenberg, Jack James Nabrit him on the briefs were Drescher, III, M. Donald Leonard and Helfand. Robert respondent. argued the cause Rifkind Larry Frates and the brief were William 8. him on With 8. Stewart. Jr.,
A. Raymond Randolph, hac pro argued the cause vice for the as amicus curiae re urging United States General brief were Solicitor versal. him. on With Griswold, Wood, Attorney Assistant General Alan 8. Rosenthal, Greer 8. Goldman.* and Foster, Hesse,
* Edward Donald A. C. Richard Blair Shick Inc., Center, filed brief for the National Consumer Law as amicus urging curiae reversal. Burger opinion delivered
Mr. Chief Justice Court. to resolve in this case the writ certiorari granted We authority- exceeded its Reserve Board Federal whether promulgating Act1 in Lending of the Truth under commonly referred Z portion Regulation Rule.” “Four Installment which solicits corporation Delaware Respondent is a periodicals. well-known subscriptions to several called door-to-door salesmen respondent's one Florida, residing petitioner, 73-year-old widow subscription to four five-year magazines. her a sold remit pay immediately and to agreed $3.95 Petitioner The contract monthly for months. a similar amount *3 the sub- stating form she contained a clause signed scriptions could not be canceled and an acceleration many found in installment under- provision similar to that any pay- default installment takings, providing the entire due. The contract ments would render balance purchase price of subscriptions did not recite the total or re- unpaid the amount which remained after the initial no mittance, and made reference to service or finance charges. petitioner total debt assumed was $122.45; the payment balance due after the initial $118.50. payment,
Petitioner made the initial began receive the magazines for which she had then contracted, and Respondent defaulted. declared the entire balance $118.50 due and threatened action. legal Petitioner brought this suit in United Court, States District alleging comply had failed to with the disclosure provisions of Act. Lending Truth sought She re-
1 82 Stat. C. U. S. § (1972 rev.). (k) CFR 226.2 statutory and reimbursement covery penalty including attorney’s the costs of reasonable litigation, fees.
In support petitioner of her submitted to the claim, “dunning” District Court which a series letters she had from respondent. letter, received One dated Decem- ber 16, 1969, stated:
“After of our making the terms clear to contract you, we your went faith and had good ahead subscriptions periods entered for the entire you had you take. The agreed contract is: signed subject Not acceptance cancellation after verification.
“Knowing, therefore, obligations we have in- your curred we feel confident that name, you will your continue magazine subscriptions and make the convenient monthly payments regularly and promptly.” A second received a week letter, later from respondent’s agent, declared:
“After an account is three months it delinquent is brought my attention. I you feel that should you realize that are our receiving merchandise paid we have for. you Had dealt directly with the publishers yourself, you would have had to pay them *4 magazines. advance for
“Again, let me remind you that we have ordered
these magazines in advance
you
and that
have in-
curred
obligation
repay
to
us. This is a credit
account, and as such must be repaid by
a
you on
monthly basis, much the
you
same as if
pur-
had
any
chased
type
other
of
monthly
merchandise on a
budget
in the
emphasized
original
letter].”4
are
of the
letters
above
Respondent
sending each
admitted
one
respondent
In
submitted
petitioner.5
addition,
to
of
nature
describing the
Court,
affidavit
to the District
it offered
its clients. The affidavit
to
contracts
subscrip-
magazine
customer who ordered
stated
pay
maga-
respondent
required
tions from
was
for all
during
Thus,
first half
contract
zines
of the
term.6
according
affidavit,
at
course
during
all times
purchaser
complied
of a
who has
with the
contract,
terms of however, Respondent did not, has received. than he any court any contesting submit affidavit to the record, “dunning” letters. On facts its this stated summary declaring parties judgment, both moved undecided. remained explicitly question that no factual requires mer- Lending 121 of the Truth in Act Section finance regularly chants who extend attendant credit, “to certain contract information each charges,7 disclose person upon whom credit is extended and consumer may whom finance ...”8 charge imposed be . Among other relevant the merchant where facts, must, list the price cash the merchandise or service applicable, the amount sold, charges, of finance and other and the rate of the charges.9 Failure to renders the disclose seller liable to the penalty consumer twice amount of the finance charge, but in no than event less $100 or more than $1,000.10 may The creditor also assessed for the costs of the litigation, including reason- attorney’s able fees11 and, certain circumstances not subject relevant here, may be the of criminal charges.12 Section 105 of provides: the Act13
“The prescribe [Federal Board shall reg- Reserve] carry ulations to out the purposes of [the Act]. regulations These may contain such classifications, differentiations, or other provisions, may pro- vide for adjustments such and exceptions for any class transactions, as the judgment of the Board (f), (f). 15 U. S. C. transactions, § Certain not here § relevant, exempt 104, 15 are under U. S. C. 1603. § § 8 15 U. C. 1631. § 9 128, 15 U. S. C. § 1638. § 10 130, 15 U. S. C. § 1640. § 11Ibid.
12 112, 15 U. S. C. § 1611. §
13 15 C. U. S. *6 purposes to effectuate necessary proper or
are evasion circumvention prevent Act], [the therewith.” compliance or to facilitate thereof, Z, Regulation promulgated Board has Accordingly, who a seller in which circumstances defines the which out- the disclosures must make extends credit regularly that disclosure provides in The regulation 128.14 § lined a consumer is offered to necessary whenever credit may imposed be is or charge finance “for which either a may payable is or agreement, to an pursuant or which in more than four installments.” credit transactions governing on the rule Relying granted the District Court installments, more than four The court found summary petitioner. judgment which petitioner,16 had extended credit to respondent by payable in than install- agreement was more four pro- comply but had failed to with the disclosure ments, of the Act. visions of Appeals holding
The Court that the Board reversed, had statutory authority exceeded its promulgating upon regulation which the District Court relied. regulation was found to conflict with 121 of § the Act17 required since it that disclosure be made in regard to some credit transactions in which a finance charge had
1415 U. S. C. 1638. § (1972 (k) rev.). 15 12 CFR 226.2 § 16Respondent challenges finding of the District Court petitioner. credit was extended to In some cases which a con pays sumer magazine subscription, may installments for a have been However, not extended to the consumer. in view of the by respondent admissions Court, which were before the District re spondent’s failure to controvert those affidavit, admissions litigation posture consistently has maintained e., beginning Court, in the District i. that no factual matters re unresolved, mained we summary conclude that judgment on this properly granted. issue was Fed. Rule (e). Civ. Proc. 56 17 15 U. S. C. de As alternative its imposed. ground
not been an held Appeals regulation the Court of cision, payments presumption that credit created conclusive a finance included made more than four installments Wisconsin, Schlesinger v. 270 U. S. charge. Relying Donnan, Heiner v. U. (1926), (1932), the court concluded presumption that such irrebuttable Fifth of fact violated the Due Process Clause of the Amendment.
I *7 Passage of the Truth in 1968 culmi- Lending Act nated years study debate several of and as congressional to the propriety mandatory and imposing usefulness of disclosure requirements credit to on those who extend By pas- consumers the American of market. the time sage, abundantly it had become of clear that use consumer credit extremely rapid was at an expanding rate. From the end of World II through 1967, War amount such credit from outstanding had increased $5.6 $95.9 billion billion, to a rate of than growth more times as great economy.18 as that Yet, as 4% congressional hearings revealed, consumers remained remarkably ignorant the nature their credit obli- gations and of the costs of payment.19 deferring Be- cause of the divergent, and at practices times fraudulent, by which consumers were informed of the terms of the credit extended to them, many consumers prevented were from shopping the best terms available and, at times, were prompted to assume they liabilities could not meet.20 Joseph Barr, then Under Secretary of the Treasury, noted testifying before a Senate sub- Rep. 1040, H. R. No. Cong., Sess., 90th (1967). 1st 10-11 19Id., 13; Rep. 392, at Cong., Sess., S. No. 90th 1st 2-3 Rep. H. 1040, supra, 18, R. No. 13; Rep. n. 392, supra, at No. n. at 1-2. activity is incon- blind economic committee that such of a free economic functioning with the efficient sistent provide desired ability to system such whose ours, as on the asserted dependent cost is material at the lowest informed consumers.21 and choices preferences remedy the designed Act Lending The Truth in was developed. House Committee problems had the then Currency regard Banking reported, proposed legislation: in-
“[B]y all creditors to disclose requiring and by requiring formation in uniform manner, by the mandatory imposed all charges additional in the creditor an incident credit be included computation applicable rate, percentage American will given consumer the information he make compare needs to of credit cost best informed on the use of credit.” decision purpose explicitly This stated in 102 of legisla- tion enacted:
“The finds Congress that economic stabilization *8 would be competition enhanced and the among the various financial institutions and other firms en- gaged of the extension consumer would be strengthened by the of The informed use credit. informed use of credit from results awareness by the cost thereof purpose consumers. It is the subchapter this to a meaningful assure disclosure of credit terms so the will consumer be able to 21Hearings on H. 11601 R. before the Subcommittee on Consumer Affairs of the Banking House Committee Currency, on and 90th Cong., Sess., pt. 1, p. 1st Rep. 1040,supra, H. R. No. n. at 13. avail- credit terms readily the various
compare more use the uninformed him and avoid able to credit.” difficulty of reflect Congress The held the hearings legislation accomplish. to Whatever sought the task it forms myriad with the had deal not passed to with occurred, also then but which credit transactions To accom- future.24 which would be devised those lay determined to plish objective, Congress desired its its con- broadly and to entrust of the Act structure and necessary experience agency struction to an dele- operation. Section 105 monitor its resources to to authority Board Federal broad gated to the Reserve effec- Act necessary to render the regulations promulgate evinces awareness language employed tive. to charac- attempt would that some creditors Congress step one outside as to fall terize their transactions so establish. boundary attempted Congress whatever to insure the clear Congress as well desire It indicates with such to deal adequate power had Board the Board In addition to attempted granting evasion. normally authority agencies to administrative given “carry out regulations designed to promulgate specifically provided, as Congress purposes” Act, regulations may define classifica- earlier, noted exceptions compliance and Act.25 tions insure with the 23 15 U. S. C. 24 Dixon, letter from Paul Chairman of Federal Trade
See R. Commission, Robertson, to Senator A. Chairman of the Senate Willis Hearings Banking Currency, 18, 1964, in Committee on Feb. on Subcommittee Stabilization S. 750 before the on Production and Banking Currency, Cong., 1st of the Senate Committee 88th 2, p. (1963-1964). Sess., pt. and 2d *9 25 15 U. C. thereby em- The Board was supra,
See at 361-362. reasonably were powered to define such classifications as the Act were necessary objectives the of insure that practices fulfilled, unscrupulous no matter what adroit or employed were extending those credit consumers. One objectives means of of circumventing the the Truth in Lending passed by Congress, was Act, of of “burying” price the cost credit in the of goods sold. in many Thus credit transactions which creditors claimed that no finance charge imposed, had been the merely creditor the extending assumed cost of credit as an expense of doing business, part to be of recouped as price charged in the transaction.26 Congress was aware, well from its of studies, possibility extensive that merchants could such use devices to evade the dis requirements closure of the Act. The Committee hear ings replete are suggestions manipulation that such example, might buy For two merchants watches at wholesale for normally $20 might $40. sell at retail for Both sell im mediately agreed pay to a per $1 consumer who week for 52 weeks. case, might In one price merchant claim that the of the watch was remaining $40 and charge extending $12 constituted a credit to point view, the consumer. From the consumer's of the credit charge represents the cost pay privilege which he must for the de ferring payment of the debt has he incurred. From the creditor’s point view, simplified, charge may represent much the return might which he have earned had proceeds he been able to invest the from the sale of the from watch the date of the sale until the date payment. might The second merchant price claim that $52 the watch merchant, was free. The second first, forgone like the profits might has which he have achieved by investing proceeds day the sale from the of the sale on. The may second merchant price be. said have “buried” this cost in the By name, item $12 sold. whatever differential between payments price the total and the at which the merchandise could acquired deferring payment. have been is the cost of
367 of goods a the case gesture would render the Act futile Opponents normally sold installment contract.27 would provisions contended the reporting the bill formerly actually segre- had encourage merchants who They predicted their credit costs not to do so. gated amount the effect of the Act would be to reduce the thus directly a of information available to the result consumer, Proponents of contrary to that which was intended.28 legislation claimed that the Act would enhance ability if consumer’s to make an informed choice even charges response were to a claim finance hidden. incorporated price that credit costs would be in the Truth in goods, proposed Senator who first Douglas, Lending Act, stated:
“I your would like to call attention, Senator, purposes pro- the record, that this bill does not solely vide judgment on of the . . the basis . annual interest rate or total finance It charges. provides also there shall be a statement of the 27Hearings S. 1740 before the Production Subcommittee on Currency, Banking and Stabilization of the Senate and Committee on Sess., Cong., 49, 56-57, 127, 389-390, 447-448, 563, 87th 1st 1155- (1961); Hearings 1156 1740 on S. before on Pro the Subcommittee Banking duction and and Stabilization Senate Committee on Currency, Cong., Sess., 16, 45, 265, 267-268, 341-342, 287, 87th 2d 360-361, 365-367, 376, 407, (1962); Hearings 750, 415 Senate on S. supra, Cong., Sess., 749, 24, pts. 2, 13-14, 88th 1st and 2d pp. n. and 1284-1285; Hearings on S. 5 on Financial before Subcommittee Banking Currency, Institutions of the Senate Committee on and Cong., Sess., 41-42, 123-134, 377-379, 513, (1967); 90th 1st Sess., supra, Hearings 11601, 21, Cong., House on H. R. 90th 1st n. pts. 2, pp. 583, 590-591, 802, and 825-826. Sess., supra, Hearings 1740, Cong., 27, Senate on S. 87th 2d n. 287; Hearings 750, Sess., at Cong., Senate on S. 88th 1st and 2d supra, 1, 24, pt. pp. 13-14; Hearings n. House on H. R. 90th Sess., supra, Cong., 21, pt. 2, p. 1st n. or property service delivery price or price cash price stated, are be things Both acquired. to be of the con- and finance and the charges, judgment factors, can on the basis both of these sumer if merely alone; not on one merchant tries bury high to have a low finance it charge purchaser then the can price cash delivered price, *11 on shop price just much on the finance as 29 charges.” against background It was legislative this Federal Reserve Board promulgated regulations govern- ing enforcement of the Truth in Lending Sep- Act. 1968, tember aid an advisory composed with the board representatives of diverse con- retail, lending, sumer groups, compiled the Board and released a draft of proposed regulations.30 Comments from criticisms parties interested were invited. 1,800 After more than responses were received and considered the Board, the regulations were reviewed and published in the Federal Register.31
The Four Installment Rule was included in the original published draft of regulations and was not amended prior to its final adoption.32 The objective Board's in promulgating the rule was to prevent the Act from ful- filling the prophecy which its opponents had forecast. As L. J. Robertson, vice chairman of the Board of Gov- ernors, stated in advisory an year letter issued a later:
“The Board felt it imperative to include transactions involving more than four instalments 29 Hearings Senate on 1740, S. Cong., 87th Sess., supra, 1st 27, n. at 447-448. See Hearings also Senate 1740, Cong., 87th 2d Sess., supra, n. at 45. 30 Reg. 33 Fed. (1968). 15506-15516 Reg. 31 34 Fed. (1969). 2002-2011 32Compare (h), 226.2 Reg. (1968), Fed. with §226.2 (k), Reg. 34 Fed. provision this without since Regulation under the charge the finance burying practice many already exists practice price, cash a. in Lend- by Truth encouraged been would have cases, directly con- been have this would ing. Obviously trary intent.” to Congressional impossible which it was even as sales Furthermore, recom- price if portion what, any, to determine regulation deferring payment, the creditor pensed provided with consumer be required that at least him to make enable which would information some economic choice.34 informed
II whether determining applied to be standard it under authority delegated the Board exceeded our under well Truth in established Lending Act is aof statute provision prior empowering Where the cases. *12 rules “make . . . such may simply agency states carry may necessary to out as regulations and 35 validity Act,” of this we have held that provisions will be regulation promulgated of thereunder sustained of “reasonably purposes is to the long as it related so Authority Thorpe Housing legislation.” the enabling v. Durham, (1969). S. 280-281 City 268, 393 U. of of American 344 Trucking States, also United See Assns. v. (1953). 298 U. S.
33 Advisory 3, 1970, Federal Reserve Board Letter of Mar. Advisory Letter J. L. Robertson. See also Federal Reserve Board 26, 1969, by Aug. J. L. Robertson. 34 Chairman, Robertson, J. of Gov Statement L. Vice Board Hearings System, Consumer ernors of Federal Reserve Regulations Affairs Credit before Subcommittee on Consumer Cong., Banking Currency, 1st 91st the House Committee on Sess., pt. 2, pp. 380-381 35 g., amended, Housing E. United States Act § 42 U. S. C. § similar to provisions enabling construed
We have also Congress in which Lending Act, Truth in § 105 of the attempts counteract agency’s power to has stressed Gemsco, Inc. v. to of a purposes evade statute. Walling, 324 asked to deter (1945), U. we were mine whether the Administrator of the and Hour Wage Department empowered Division of Labor was pro under the Fair Labor Act of 1938 to Standards companies hibit em allowing requiring from their ployees to do industrial homework. The Act required approve the Administrator designed orders which were to raise the minimum wage to 40 an hour. While cents specifically the Act did not mention industrial homework, § 8 (f) stated that the Administrator’s orders
“shall contain such terms and conditions as the Administrator necessary carry pur finds out the poses of such orders, prevent the circumvention or evasion thereof, and safeguard the minimum wage rates established therein.” After hearings, the Administrator determined that home- work furnished ready “a means” of his evading orders, prohibited certain companies subject thereto from employing production. this means of con- Court cluded that the Administrator had not exceeded his au- thority under the Act, noting that a more restrictive interpretation of provision the enabling would ren- have dered the inoperable. Act Focusing on the mandate provided by 8 (f), the Court stated:
“When command is so explicit and, moreover, reinforced by necessity in order to make it operative, *13 nothing short of express limitation or abuse of dis- cretion in finding that the necessity exists should undermine the action taken to execute it. When 3652 Stat. 1060.
3752 Stat. 1065. exists, nor but such abuse
neither such limitation necessity fact, be well founded is conceded to the matter.” end the seem to be of there would atS.,U. legislative his prior holdings
In of our and the light tory Lending agree of Truth in we cannot Act, Board Appeals of of conclusion the Court authority in statutory promulgating exceeded its clearly aware Congress Four Installment Rule. requirements that merchants the reporting could evade by delegating the Act concealing charges. emphasized authority to the rulemaking Board, Congress authority To hold prevent the Board’s such evasion. did not Board to take action Congress intend the manipulation against type require this us to would that, despite believe emphasis, Congress this intended the obligations open established the Act to be evasion by subterfuges fully of which it was aware. As Gemsco, precludes language provision the enabling us from accepting so narrow an interpretation power. Board’s
Given that remedial authorized, some measure was question remaining is whether the measure chosen reasonably objectives. related to see its We no reason to doubt the Board’s conclusion that rule will deter creditors from engaging in the conduct which the Board sought to eliminate. The imposed burdens on creditors are not when measured severe, against the evils which are Furthermore, avoided. were it possible or financially feasible delve into every intricacies credit trans- it action, is clear many creditors to whom the rule applies would be found to have charged deferring payment, while they had claiming not. That some other provision remedial preferable might be is irrelevant. We have consistently'held that where reasonable minds may differ as to which of several remedial measures should *14 372 experience defer to the informed courts should chosen, judgment Congress delegated of the to whom agency authority. FPC,
appropriate Northwestern Co. v. 321 Broadcasting National Co. v. (1944); U. S. 119, States, United Tele- 190, (1943); 319 U. S. American phone States, & Co. Telegraph v. United 299 U. S.
Respondent contends, however, that the Four Install- ment Rule be abrogated must since it is “inconsistent” with portions of the enabling purported statute. conflict arises specifically because statute mentions disclosure in regard to in transactions which a finance charge is in fact although the imposed,38 requires rule disclosure some in which no cases such charge exists. Respondent argues that, requiring disclosure as to some transactions, Congress preclude intended to Board from imposing requirements similar any as to other transactions. accept
To respondent’s argument would undermine the flexibility sought vesting broad rulemaking au- thority in an agency. administrative In American Trucking Assns. v. United States, supra, we noted that it was not
“a reasonable canon of interpretation that the drafts- men of acts delegating agency practical as a powers, and realistic can or matter, do include specific consid- eration of every evil sought to be . corrected. . . great acquaintance [N]o with practical affairs is re- quired to know that such prescience, either fact or in the minds of Congress, does not exist. very Its absence, moreover, is precisely one of the reasons why regulatory agencies such as the Commission are created, for it is the hope fond of their authors that 38 103(f), 15 U. S. (f); § 121, § C. § 15 U. S. 1631; C. § (a), 15 U. §130 (a). C. 1640 expert’s familiarity
they to their work the bring industry delegating which members conditions *15 possess.” expected cannot be legislatures omitted). (citations at S.,U. 309-310 which the in Act Lending Neither of the Truth sections charges involving refer finance specifically to transactions Congress nor other of any the indicate sections Act of types all transac- attempted comprehensively to list apply. To to which the regulations might tions Board’s au- rulemaking of contrary, grant § 105’s broad thority rely an intention to on those attributes reflects Truck- agency administration in American recognized ing. We cannot Act then infer references to transactions were intended involving charges to limit the might deterrent which the Board measures choose.
Since the clearly deterrent rule challenged effect implements the objectives of con- Act, respondent’s tention is reduced to claim that the rule is void be- cause it requires by disclosure some not creditors who do charge for credit and thus need fact not deterred. The regulation may affect such not individuals does impair its otherwise valid A purpose. similar contention Gemsco, was made in rejected by the Court. Gemsco claimed that the Administrator was not en- attempting to force the requirements of the statute but was attempting “experimental to advance legislation” social Con- which gress approved. had not Responding to that argument the Court stated: (f),
“Section 8 directing Administrator include ‘such terms and conditions’ as he ‘finds neces- sary carry out the purposes orders,’ such did not forbid him to only take the measures which would be effective, merely because other consequences neces- sarily would follow. The language neither states will do what implies nor that he is to expressly more. The nothing the stated ends and achieve to make the Administrator statute does not direct except those necessary the rate effective all means may economic conse- have other social or quences.” S., 324 U. at 257.
There the Court referring regulation subject specifically matter not mentioned in the ena- bling legislation. rule when a remedial applies similar A provision requires regula- individuals to submit to some tion participate legisla- who do not the conduct Village tion Euclid was intended to deter or control. Co., v. Ambler Realty (1926), U. S. 388-389 Court held that, subject to defining regulation, a class *16 inclusion of a reasonable insure effective margin “[t]he to enforcement, will put upon law, valid, not a otherwise stamp of invalidity.” North See also American Co. v. SEC, 327 U. 686 (1946). Nothing less will meet the demands of complex our system. economic Where, as here, the transactions or conduct which Congress seeks administer myriad occur in and changing forms, require- a ment that a line be drawn which insures that not one blameless individual subject will be provisions an act would unreasonably encumber effective adminis- tration and permit many clear escape violators regula- tion entirely. That this applies rationale to administra- tive agencies as well as to legislatures is implicit in both Gemsco and American Trucking Assns. In neither case every individual engaged in the regulated activity responsible for the specific consequences the agency sought to eliminate.
Respondent argues that such an interpretation of the
Truth in Lending Act is inconsistent with our holding
in FCC v. American Broadcasting Co.,
establishing govern regulations prohibiting interpreted provision had a criminal properly a given After that noting lotteries. broadcasting way purposes statute could not be construed one criminal and another proceeding administrative prosecution, Court stated:
“If we broad give provision] should criminal [the Commission, construction the same urged apply construction would likewise cases.” criminal Id., at 296.
Since, in drafting its the Commission had regulation, failed to apply penal pro- that well-established rule visions must be narrowly, construed the Court held the regulation invalid. on American
Relying Broadcasting, con- tends that Truth be Lending Act must construed narrowly penal since it provisions,39 contains and that interpretation narrow requires that the Board’s rule nullified. We agree, however, every cannot section of an act establishing regulatory broad scheme must be construed a “penal” provision, as term used in American Broadcasting, merely because two sections of the Act provide for penalties. civil and criminal Penal statutes are narrowly construed to insure that no individ- ual is convicted fair warning unless “a first [has been] given to the world in language the common world *17 will of what the understand, law intends to do if a certain passed.” line is McBoyle v. United 283 U. States, 25, S. 27 (1931).40 as Where, here, the of the language chal- lenged rule is explicit, risk present. is not See Kraus & Bros,, Inc. States, v. United 327 U. S. 621- 614, 622 (1946). 39 112, 1611; 130, 15 U. S. C. 15 U. § S. C. § § § See Kordel v. United States, 335 U. (1948). S. 345 See also Scott,
W. LaFave & A. Criminal Law accept respondent’s argument unable to We are also penalty- imposition not allow civil § 130 does but where charge in where no finance is involved cases violated. requiring disclosure has been Sec- regulation provides penalty tion 130 that the assessed shall twice imposed, but charge the amount of the finance not less penalty prescribed the civil $100. than Since modest prohibited clearly and the conduct out in the regu- set lation, narrowly we need not construe this as as section penalties, a criminal statute such providing graver as prison objective terms. We have noted above that in sought delegating authority to rulemaking agency Congress impossible is to relieve burden of drafting explicitly every a code covering prob- conceivable future Congress lem. cannot then be required to tailor civil penalty provisions precisely so as to deal step with each which the agency necessary. thereafter finds In light of emphasis placed Congress on agency rulemaking and private administrative enforcement of the Act, we conclude that Congress cannot intended those who failed to comply regulations be subject to no penalty or penalties criminal alone. As the District Court con- cluded, imposition of the minimum proper sanction is this, cases such where charge finance is nonexistent or undetermined.
Finally, the Four Installment Rule does not conflict with the Fifth Amendment under our holdings Schlesinger Wisconsin, v. 270 U. (1926), 41 15 U. S. C. 1640. This section refers to the failure to provide part under this required “information to be disclosed . . . .” (Emphasis supplied.) The italicized language was added to the distinguish statute required disclosure regard to sales transac required tions from that regard to advertising. H. Rep. R. No. 1040, supra, 18, n. at penalty provision 30. The applies both to the failure to disclose required information specifically by the statute and to the failure to regulations promulgated by abide the Board govern such disclosure. *18 Schlesinger In Donnan, 285 U. S.
Heiner v. vio- provisions taxing certain Heiner, held that we and Four- Fifth Clauses Process Due lated conclusively presumed they because Amendments teenth challenged The facts. determinative the existence rule The presumption. comparable no rule contains pre- not it does measure; prophylactic aas intended ambit assess its are within who creditors all sume that re- a disclosure rather, imposes charges,42 but, finance in order defined class of a all members quirement of that portion by a substantial evasion discourage class. in con- a transition reflects Lending
The Truth Act buyer “Let philosophy from a policy gressional erecting a By seller disclose.” to one of “Let the beware” purchaser prospective the seller barrier between expressly sought Congress facts, in the form of hard C. uninformed credit.” U. “to . . . avoid the use relatively easy claim that it is may 1601. Some peti- payments the total matter to calculate by respondent; her contract with tioner was committed computations are often not sale, but at time of such by by performed pur- the solicitor encouraged purchasers determined that such chaser. has Congress Four Rule are in Installment protection; need disclosure mecha- protective serves to insure that will not be circumvented. Congress nism chosen approach may taken reflect what That paternalistic views as an undue concern for the consumer point. statutory scheme is within the beside power granted Congress under the Commerce Clause. regard to some transactions to which the Four Installment report need applies, Rule merchants not the amount and rate of Advisory July 24, charges. Federal Board finance Reserve Letter of Robertson; 1969, by Federal J. L. Reserve Board Letter No. July 8, 1969, by Frederic Solomon. *19 speculate of the courts not a function
It is sought evils or whether the is unwise whether the statute in some regulated have been could better remedied other manner. and remanded.
Reversed whom Mr. Justice Stew- Douglas, with Justice Mr. Rehnquist concur, dissenting art Justice Mr. part. proper
I not a case for sum have concluded that is this mary Rule judgment (c), under Fed. Civ. Proc. 56 if provides summary may be judgment only granted that any material fact” and genuine there is “no issue as to a moving party judgment “the is entitled to a as matter I interpret present law.” As the record in of our light g., e. Adickes v. S. H. Kress & decisions, see, Co., 398 U. S. States, White Motor Co. 144; v. United 253; U. S. Diebold, Inc., United States v. re U. S. there 654, genuine unresolved a issue of material fact. Al mains I with though agree majority the Z Regulation valid and accordingly would reverse the decision of the I Court of Appeals, would remand this case to the District
Court for resolution of that material issue. provisions
The disclosure of the Truth in Act Lending apply to an extension of “consumer credit.” U. S. C. 1631. Thus, successfully § order to assert claim under the statutory Act for penalty the and reim- bursement id., costs the action, § see alia, inter petitioner, satisfy must her burden of proving respondent extended consumer credit within the meaning the Act. Section 103 (e) of Act, S. C. 1602 (e), U. defines “credit” as “the right granted aby creditor to a debtor to defer payment of debt or to incur debt and defer payment.” its In her complaint, peti- tioner merely alleges “extends Consumer Credit as defined in Regulation 12Z, C. F. R. 226.2 [§] its Respondent . denies its answer that
(K) . . petitioner involved a “credit transaction.” contract with In one avers: the contract paragraph respondent “Under Defendant, customer executed customer and pay per stated for half of the agrees to amount month supply life of contract and Defendant agrees magazines for the full term of contract. At all times prepaid the customer has to be de- magazines livered. its pub- Under most of the arrangement publisher lishers, periodically Defendant reimburses the during subscription.” the full term another *20 paragraph point during avers: “At no the life it paid money contract has Defendant person to a third supplied goods or services to the customer reimbursement from expected the customer in the future.” solely
On the basis these one would allegations, conclude that petitioner contract between the respondent did not a constitute credit transaction. If respondent merely per $3.95 collected month from each customer and receipts periodically sent the to the pub- lisher,1 respondent's less the respondent commission, never would have made any advances for the customer, and the customer would respondent owe to the nothing for the loan of money or, the words of the Act, a “finance charge.” On the hand, other if respondent ad- part vanced all or of the subscription price pub- to the respondent lishers, would be advancing “credit” for the benefit of the customer.2 The legislative history indi-
1 suggestions There are in. respondent wholly the record that is a subsidiary Time, owned Respondent, however, Ine. sold not Life, Time, Inc., a publication, magazines publishers. but of other 2 free-enterprise In a system, presume one must there is a charge” “finance advance of credit. It would nonetheless be charge” although wholly a “finance it sep were undisclosed or not arately stated an account rendered to the customer. apply would not requirement disclosure cates “the commonly of as thought to transactions which are not Professor has credit . As Corbin transactions may transaction be an instalment contract stated: “A parties without a credit transaction at all. Both being may agree perform instalments without promising any performance-in payment to render advance of full price of each instalment so rendered.” The Act, in defining “credit,” payment refers to the deferred of a A debt, however, “debt.” a binding is more than con- obligation pay money tractual in the future sum upon performance of certain conditions the other party to the contract. It is an obligation unconditional pay.5 my Thus, view, proper resolution respondent issue whether extended petitioner at least in depends, part, on relationships the contractual between respondent publishers. The con- tracts between publishers and the are not in present record.6 3 Rep. Cong., Sess., No. 90th 14; Rep. 1040; 1st H. R. No. Cong., Sess., 90th 1st Corbin, 3A 687, p. A. Contracts published opin A ion of the Federal recognizes Reserve Board payment that installment *21 plans may not an involve extension of charges credit when for services prior rendered do payments. Opinion not exceed FRB Letter No. (1970). Corbin, 5 3A A. Contracts 691§ 6My that, given undisputed Brother asserts fact that Powell petitioner agreed pay advance, respondent to as a matter of law Post, not, could not have extended credit. at 383-384. do how We ever, tripartite arrange know relationships what the financial in this may example, ment are. respondent For it be full advances five-year subscription price publisher to the behalf on the subscriber’s when respondent the contract between the subscriber and is executed. so, may right If that is the subscriber receive an unconditional to magazines five-year publisher period, receive from the over the obligations respondent. whether or not he meets his contractual with acting circumstances, respondent financier, Under these will be as a course, only papers are not pleadings, by be considered the District Court in determining party one summary whether or the other entitled to judgment. (c) Under Rule 56 the court consider must “the pleadings, depositions, answers to interrogatories, and file, admissions on together with the if affidavits, any . . .”. During collection period, petitioner had sent a dunning letter her “that reminding we have ordered these magazines you in advance and that have incurred an obligation is a credit us. This repay account, and as such must be repaid by you monthly on a basis, much the if you same purchased any as had other type of merchandise monthly on a budget plan.” Re- spondent formally admitted that it had sent this letter petitioner. Accordingly, properly it was considered by the District Judge.7 I do But, not view this “ad- enabling advantage five-year subscriber to take publisher’s subscription offer, yet payment subscription but to defer on the price. Any “profit” respondent largely will receives attributable to its services as a financier. I do not see that such a financial arrangement substantially differs from the case where a subscriber borrows full subscription price pays pub- bank from a directly, obligating lisher repay equal himself the bank in install- ments, interest, years. my over two and one-half As Brother argues, the subscriber under those circumstances will be Powell advancing publisher paid maga- credit to the because he for all has advance, zines in but it cannot be doubted that at the same time the bank has advanced credit to the subscriber. 7Respondent petitioner mailed another letter to which stated: “Whereas, FPS, initialy agent publishers; acts as for the various [sic] upon acceptance contract, solely of her FPS thereafter acts financier, co-guaranter pub of service with the various [sic] lishers; whereas, FPS, fully Mourning’s has invested Mrs. contract part any, or, publishers; and does not receive refund in full from all FPS, investment, therefore, compliance for said we must insist on your client to the terms of said contract Although respondent appeared admitted that the letter on its sta- tionery employee, employee denied and was written it that the *22 respondent that proof mission” as conclusive or sufficient had extended within the of the Act at meaning credit petitioner respondent the time the contract between was entered into.8 is not an First, this admission terms that credit was extended within the meaning of the Act. petitioner since Second, at the time the letter was in arrears, may sent three months it money had advanced on her account after she failed to meet her contractual It obligation. is settled under our decisions that material lodged party moving “must be viewed in the light most favorable party.” to the opposing Co., Adickes v. Kress & Inc., U. at S., 158-159; Diebold, United States v. S.,U. at 655. Respondent deprived not prin- benefit of this ciple of interpretation merely because did not file an it affidavit controverting contents of the letter. Rule (e) provides “[wjhen a motion summary judgment is made and supported provided in this rule, an party adverse may not rest upon the mere alle- gations or denials of his but pleading, his response, by affidavits or as provided otherwise in this rule, must set forth specific facts showing there is genuine issue for trial. If he not so does respond, summary judg- if ment, appropriate, shall be entered against him.” The Advisory Committee note on the amendment which provision added this to the Rule, however, stated that the evidentiary “[w]here matter in support of the mo- was authorized to send the letter. Accordingly, since there was an issue of fact whether the letter was authorized binding and thus a admission, the letter could properly not be considered petitioner’s summary motion judgment. Cf. 3 Holtzoff, W. Barron & A. Fed- eral Practice and 1231, p. (1971 Procedure Supp.). 8 We need whether, not resolve here if the origi contract was not nally a transaction, petitioner’s own breach could have con retroactively verted it into a credit transaction meaning within the of the Act. *23 genuine of issue, the absence
tion does not establish if even no summary judgment opposing must be denied com- evidentiary presented.” We cited this matter Co., supra, in Adickes Kress & approval ment with v. petitioner,9 at must moving party, 160. The this case her absence of a showing genuine meet burden of Id., any I issue material fact. at 157. cannot conclude she met that burden. The District Judge not possessed sufficient information to resolve properly the issue whether credit had been extended. circumstances, granted Under these he should not have summary White Motor Co. United judgment. Cf. v. States, S., 372 U. at
Me. Justice dissenting. Powell, I Appeals would affirm the of the Court of judgment on the ground that there was no of consumer extension credit within the Lending of the Truth in Act.1 meaning majority position takes the credit issue is a question of fact properly against respondent resolved on petitioner’s summary motion I judgment below. cannot agree. my view, undisputed facts estab- lish as a matter of law peti- that the transaction between parties summary judgment. Both moved for does That not Judge responsibility relieve the District his to consider each motion separately light by party advanced theories each and to proceed genuine if trial he concludes that there is a issue Moore, material fact be resolved. See 6 J. Federal Practice 56.13 ¶ (2d 1972). ed.
1Having case, unnecessary this view of the I find it to address the issues, namely: (i) other two whether the Federal Reserve Board authority adopting Regulation exceeded its Z, which extends the coverage of the Act charge to transactions in which finance can no identified; (ii) be penalty provision whether the civil of 15 (a) may where, validly imposed U. S. C. case parties judgment, concession of summary on cross-motions for does charge. transaction not involve a finance extension did not involve tioner and I reason, am in while credit. For same consumer Douglas’ dis- much of Mr. agreement Justice the case for I no reason to remand senting see opinion, taking evidence. I Clearly applies only involving to transactions Act *24 the extension of credit. The declaration congressional purpose explicit: is
“The finds that economic stabilization Congress would competition among be enhanced and the various financial institutions and other firms en- gaged in the extension of consumer credit would be by strengthened the informed use of credit.” 15 U. S. §C. 1601. phrase
The “extension of credit” is consumer not defined in the Act. Nor does Act’s definition of “credit” provide any enlightenment.2 a transaction is However, commonly to understood involve when party credit one receives value in exchange for promise his unconditional pay to party the other for such value in the future. The mere fact that a party obligates in a himself to contract pay for goods or services installments over period a time does not render the contract a credit transaction:
“A may transaction be an instalment contract with- out being a credit transaction at all. parties Both may agree perform to in instalments prom- without 2“The term right granted 'credit’ means by a a creditor to payment debtor to defer of debt or to incur pay debt and defer its ment.” 15 (e). U. S. C. 1602 provides gloss The Act § no on the terms “debt,” “debtor” and the definition of “creditor” is limit ing explanatory. rather (“The than only term 'creditor’ refers to regularly creditors extend, arrange who of, for extension credit payment for charge required of a finance . . . .” (f).) U. C. § full performance advance of
ising any to render each so ren- payment price instalment p. A. § dered.” 3A Contracts Corbin, may have been The before the Court well transaction it transaction, respondent but was not ex- pay to obligated tended credit. Petitioner herself advance she was to receive. con- magazines required petitioner pay tract installments over equal 30-month period, obligated but provide magazines petitioner over months. In effect, paid every magazines. month for two months’ worth Until the last had been magazine delivered, petitioner paid would have for more magazines than she received. Thus, the contract called the extension of credit petitioner respondent. For this reason it was not “extension consumer meaning credit” within the of the Act. See 15 S. C. 1602 (h). U. upon authority
The Federal Reserve Board, whose *25 interpret the Act majority heavily so in relies sus- taining Regulation Z, necessary has-indicated that a ele- ment in a consumer credit transaction is the consumer’s obligation pay he has received bargained-for after goods published or services. In a Opinion dealing Letter practice with the of assessing obstetrical services periodic installments, the Board long stated that “[a]s as there are no finance charges assessed, point and at .no do charges the services pay- rendered exceed the ments it require extent that would than more ofJf the periodic instalments to repay the obligation, then the plan would not fall within the provisions Regula- of tion (Emphasis Z.”3 supplied.) This statement im- plicitly recognizes that credit is extended when the
3 Opinion FRB (1970); 4 Letter No. CCH Consumer Credit 30,516. Guide ¶ provided goods payments or services exceeds the
value made.4
II Douglas in the both Mr. Justice Implicit positions ad majority assumption that, and of is the even petitioner pay before mitting magazine was for each receiving it, under factual some circumstances
4 Legislative history Congress bolsters the view assumed goods paying meant receipt “credit” or services advance of Act, for them. earlier versions of the definition of credit “any services, property included of sale either contract ... or present delivery, part price or or future under which all of the subsequent contract; payable making . to the of such sale or . . any arrangement hire, leasing contract or for the bailment, property 1740, Cong., 5, Cong., Sess.; . . . .” S. 87th 1st 90th 1st (as During 11, 1967). Sess. introduced Jan. hear the Senate ings, question any a charge was as to finance raised whether would be particularly attributable to certain included ordinary transactions, arrangements. bailment and Hearings lease on S. 5 the Sub before committee Financial Institutions of the Senate Committee on Banking Currency, Sess., (1967) (statement Cong., 90th 1st Robertson, Chairman, of J. L. Vice Board of Governors of the Fed System). eral Reserve This criticism was heeded and the final ver sion of bill language (15 substituted the now found in the Act (e)) U. following S. C. with the explanation: original “The language S. 5 was deleted because it somewhat cumbersome sweeping and referred types to various of lease situations which might not true Rep. extensions of credit.” S. No. 90th Cong., Sess., lease, 1st In fact a “paid during like the magazine service” offered respondent, contracts imposes often obligation noncancellable on the lessee or pay consumer series of installments. Yet the lessor does not extend credit be cause ordinarily pays the lessee period advance for each during enjoys which he property. use of the Petitioner, by the same *26 reasoning, was no recipient more the of credit than ordinary is the lessee or bailee. It would be inconsistent with legislative this his tory to read “extension of credit” to every include noncancellable obligation. installment Thus, Mr. credit.5
might nevertheless have extended Douglas advanced respondent “if all states that Justice price or re part subscription publishers, of the to the ‘credit’ the benefit of spondent advancing would be for point, majority the customer.” The is clear this less a consumer stating only cases in which some “[i]n pays in magazine subscription, installments for a may Ante, not been to the at have extended consumer.” 362 n. 16. The in some implication, is that such however, transactions, though pays magazines the consumer for the he advance, may recipient be the of credit. I am unable any to that under agree circumstances, given set the undisputed pay fact to petitioner agreed ad vance each respondent for magazine, might have ex tended credit. did a Petitioner not obtain loan from respondent which unconditionally she be would obligated to repay. She entered a into contract imposing continu mutually ing, dependent obligations parties.6 on both 5The District Court any found there was no issue as to ma terial in this Appeals fact case. The Court of not did disturb this finding. agrees finding one majority Whether with this as does the disagrees by for reasons stated the District Douglas, Mr. Justice Court’s conclusion that uncontroverted facts establish a consumer clearly credit transaction is a conclusion of law and therefore is presumption entitled no respondent’s of correctness. do Nor dunning petitioner describing obligation letters to her as a credit any presumption. Again, account such create such statements express legal conclusion and do not establish existence meaning consumer credit transaction the Act. within magazines agreed prior If failed to deliver completion specified payments, petitioner would have no obligation pay: further may goods
“A be an contract contract the sale of instalment payments respect goods respect to the with sold as delivery price. non-delivery instalment or of a noncon- of an forming required is a breach instalment when the contract can maintained at once. There no doubt also which an action *27 subscrip part of the any advanced respondent Whether immaterial to publishers quite is magazine to price tion transac only of the legal effect of the determination there extension case: whether this tion involved The petitioner. respondent to by credit of consumer how parties; is that between the only at contract issue respondent may arranged and what terms have upon petitioner fulfill magazines delivery obtain the of no concern to obligations ment of its contractual is petitioner. any respondent Nor can arrangement by such party change a third nature of the transaction parties between the to this litigation.7 controlling are dispute, facts therefore not by having summary been admitted cross-motions I can judgment, perceive way no they in which can be construed as an by extension of credit consumer respondent petitioner. A remand, unnecessarily bur- parties dening and the court would serve no below, useful purpose. aAs matter respondent of law did not extend credit within the meaning of Truth in Lending Act. I would affirm the judgment below. buyer privileged is payment price withhold of the
undelivered nonconforming instalment or of a instalment rightfully rejected. . buyer . . does not [T]he have to extend such [beyond agreed which was upon] by to the seller making payments without receiving agreed goods.” 3A Corbin, A. Contracts p. (1960). See Fla. Stat. §§ 672.2-612, Ann. 672.2-711, 672.2-717 7 Indeed, petitioner’s complaint avers that the installment contract purchase for the magazines sale is “the instrument existing executed and parties,” between the and that thereby “extend Consumer Regulation Credit as [ed] defined in Z ... .” There is no allegation to extension of credit publishers by any person. third Complaint, Second Amended App. 3, 4.