Mr. and Mrs. Archie DAVIS, Plaintiffs-Appellees Cross Appellants, v. UNITED COMPANIES MORTGAGE AND INVESTMENT OF GRETNA, INC., Defendant-Appellant Cross Appellee.
No. 75-1486.
United States Court of Appeals, Fifth Circuit.
May 9, 1977.
Rehearing and Rehearing En Banc Denied June 7, 1977.
551 F.2d 971
Michael Osborne, Patrick A. Rankin, New Orleans, La., for plaintiffs-appellees cross appellants.
Before JONES, WISDOM and GODBOLD, Circuit Judges.
GODBOLD, Circuit Judge:
The defendant made a consumer loan to plaintiffs for the purpose of financing repairs and renovations to plaintiffs’ home, secured by a first mortgage on the home.
The lender‘s copy of the disclosure statement disclosed a $7.35 per month
We affirm the award of $3,500 attorney fees to plaintiffs.
The court awarded a statutory penalty of $1,000 pursuant to
Each creditor shall disclose clearly and conspicuously, in accordance with the regulations of the Board, to each person to whom consumer credit is extended, the information required under this part . . . (Emphasis added.)
In this case, under Louisiana law, credit was extended to both husband and wife. The civil liability section of the Act,
any creditor who fails to comply with any requirement imposed under this part . . . with respect to any person is liable to such person in an amount equal to the sum of— . . . (2)(A)(i) in the case of an individual action twice the amount of any finance charge in connection with the transaction, . . . except that the liability under this subparagraph shall not be less than $100 nor greater than $1,000 . . . (Emphasis added.)
The trial court found and we have affirmed that appellant violated the Truth in Lending Act by failing to comply with all the requirements of the Act in this transaction. The creditor did not fulfill the dictates of the Act to either borrower involved in this credit transaction. Section 1640 makes the creditor liable to “any person” with respect to whom it fails to meet the requirements of the Act. Here, since there were two borrowers and hence failure to comply with the Act as to two persons, two statutory penalties will be imposed. Mason v. General Finance Corp. of Virginia, 401 F.Supp. 782 (E.D.Va., 1975). See also, Allen v. Beneficial Finance Co., 531 F.2d 797 (CA7, 1976); Simmons v. American Budget Plan, Inc., 386 F.Supp. 194 (E.D.La., 1974); Gillard v. Aetna Finance Co., Inc., 414 F.Supp. 737 (E.D.La., 1976); Rivers v. Southern Discount Co., 4 CCH Consumer Credit Guide ¶ 98,796 (N.D.Ga., 1973).
We are aware that some courts have allowed only one recovery in cases similar to
AFFIRMED on the appeal. AFFIRMED as modified on the cross-appeal.
JONES, Circuit Judge, dissenting in part:
But for the precedents1 by which I am bound I might have thought that the penal statute here involved should be strictly construed and if so construed would not apply to an insurance premium which was no part of the hire of the money loaned. However stare decisis requires my concurrence in the conclusion that the statute permits the imposition of a penalty for the omission of the insurance premium from the disclosure statement furnished to the appellees.
There was a legal joint and several liability of both the husband and the wife for payment of the single loan made to them as a family unit. They knew, of course, that the insurance premiums had to be paid, but because of the omission from the disclosure the maximum penalty was imposed and then doubled because the husband and wife family unit was composed of two persons.
The legislative history of the statute shows that it was not intended that a double penalty should be imposed. In H. R. Rep. No. 1040, 90th Cong., 1st Sess. (1967) (to accompany H. R. 11601), 1968 U.S. Code Cong. & Admin. News, pp. 1962, 1976 it is said:
“Any creditor failing to disclose required information would be subject to a civil suit with a penalty equal to twice the finance charge, with a minimum penalty of $100 and a maximum penalty not to exceed $1,000 on any individual credit transaction.”
The cases cited in the opinion of the majority present different theories for imposing dual penalties. Mason v. General Finance Corp. of Virginia, 401 F.Supp. 782 (E.D.Va., 1975), and Allen v. Beneficial Finance Co., 531 F.2d 797 (CA7, 1976) rely upon the “any person” language found in Sec. 1640(a), and hold that since both a husband and wife are technically obligors who deserve disclosure both qualify as a “person” to whom the creditor has failed to fulfill the disclosure requirements, entitling each to a penalty. Simmons v. American Budget Plan, Inc., 386 F.Supp. 194 (E.D.La., 1974), and Gillard v. Aetna Finance Co., Inc., 414 F.Supp 737 (E.D.La., 1976) hold that when the loan involves a security interest in the principal residence of the obligors each is entitled to receive a disclosure statement and therefore each has been harmed by the failure of the creditor.
It is conceded in the majority opinion that some courts have allowed only one penalty recovery in such cases as this. In St. Marie v. Southland Mobile Homes, Inc., 376 F.Supp. 996 (E.D.La., 1974) it is recognized that both husband and wife are technically separate obligors, but it is held that where a single transaction creates an indebtedness of a single family, the unitary nature of the transaction and harm to the husband and wife as a family is best remedied by a single penalty.
The framers of the legislation intended to limit the penalty to $1000 in any individual credit transaction. This decision permits that maximum to be multiplied by the number, however many, of joint and several obligors. I would limit recovery to a single obligor.
The insertion of footnote 3 in the majority opinion, after the foregoing portion of this dissent was submitted, requires the comment that none of the dictionaries to which I have access indicate that, prior to this decision, the word “individual” has been regarded as ambiguous.