411 U.S. 356 (1973) |
SCOTUS decided 1973-04-24
The “Four Installment Rule” of Regulation Z is a valid exercise of the Federal Reserve Board’s rulemaking authority under the Truth in Lending Act. In imposing a disclosure requirement on all members of a defined class to discourage evasion by a substantial portion of that class, the challenged regulation does not create a conclusive presumption violative of the Fifth Amendment.Result: Mixed
William B. Roberts, Truth in Lending — Validity of Four Installment Rule of Federal Reserve Board’s Regulation Z — Mourning v. Family Publications Service, Inc., 15 B.C.L. Rev. 394 (1973), https://lawdigitalcommons.bc.edu/bclr/vol15/iss2/6 : “[T]he majority’s reasoning in Mourning upholding the validity of the four installment rule is basically sound in that the continued effectiveness of Truth in Lending in the retail installment area depends on the rule’s being sustained. [H]owever the fact that the Mourning case came to the Supreme Court with an abbreviated factual record (because of the summary disposition at trial) makes it an unfortunate choice as a conduit for the Supreme Court’s pronouncement of the validity of the four installment rule. Finally, it will be submitted that although the Mourning decision will serve as strong precedent for coverage of installment sales by Truth in Lending when the goods or services sold are delivered before payment, the Court’s somewhat cavalier dismissal of the issue of whether FPS actually extended credit within the meaning of the Act leaves unclear the applicability of the disclosure requirements to installment sales in which delivery of merchandise, as well as payment therefor, is made over time.”
Law type: Civil
Topic(s): Consumer and Truth in Lending Act
State of origin: FL
Eric Schznapper argued the cause for petitioner. With him on the briefs were Jack Greenberg, James M. Nabrit III, M. Donald Drescher, and Leonard Helfand. (NAACP Legal Defense Fund)
Others involved: Stewart A. Raymond Randolph, Jr., argued the cause pro hac vice for the United States as amicus curiae urging reversal. With him on the brief were Solicitor General Griswold, Assistant Attorney General Wood, Alan S. Rosenthal, and Greer S. Goldman. Edward Donald Foster, Richard A. Hesse, and Blair C. Shick filed a brief for the National Consumer Law Center, Inc., as amicus curiae urging reversal.
Organization role: Sponsor
Last modified: 2020-04-08 10:36
Case internal grade: A | Case internal status: OK |
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Lists: Important cases
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CASE DETAILS(The syllabus is not part of the opinion, but is a summary prepared by the court reporter as a convenience.)
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
Petitioner, who contracted to purchase magazine subscriptions from respondent, brought this action in District Court, alleging that respondent had failed to comply with the disclosure provisions of the Truth in Lending Act, as implemented by Federal Reserve Board “Regulation Z.” The District Court found that respondent had failed to comply with Regulation Z, in that respondent had extended credit to petitioner, payable in more than four installments, without making the disclosures required by the Act. The Court of Appeals reversed, holding that the Board had exceeded its statutory authority in issuing Regulation Z, since the regulation required disclosure in some credit transactions in which a finance charge had not been made, and, alternatively, that the regulation violated due process by creating a conclusive presumption that credit payments made in more than four installments included a finance charge.
1. The “Four Installment Rule” of Regulation Z is a valid exercise of the Federal Reserve Board’s rulemaking authority under the Truth in Lending Act. Pp. 411 U. S. 363-375.
(a) Congress, which was well aware that merchants could evade the disclosure requirements of the Act by concealing credit charges, gave the Board broad rulemaking power to prevent such evasion, and, in the exercise of that power, the Board issued the challenged rule to deal with the practice of concealing finance charges in the cash price of merchandise sold. Pp. 411 U. S. 363-369.
(b) No conflict arises from the fact that the Act mentions disclosure only in regard to transactions in which a finance charge is imposed, while the disclosure requirements of the rule sometimes apply where no such charge exists, since Congress did not attempt to specify all types of situations under which the Board’s regulations might apply, and the deterrent effect of the rule clearly implements the objectives of the Act. Pp. 411 U. S. 372-373.
(c) The Board had authority to promulgate a general rule to prevent circumvention, even if the rule embraces some transactions that the provisions of the Act might not, on their face, reach. Village of Euclid v. Ambler Realty Co., 272 U. S. 365. Pp. 411 U. S. 373-374.
(d) Existence of penalty provisions in the Act does not require a narrow construction of the Act’s nonpenalty provisions. FCC v. American Broadcasting Co., 347 U. S. 284, distinguished. Pp. 374-375.
2. Imposition, pursuant to § 130 of the Act, of a minimum penalty of $100 in cases such as this where the finance charge is nonexistent or undetermined, but where disclosure has not been made, is a permissible sanction. P. 411 U. S. 376.
3. In imposing a disclosure requirement on all members of a defined class to discourage evasion by a substantial portion of that class, the challenged regulation does not create a conclusive presumption violative of the Fifth Amendment. Pp. 411 U. S. 376-377.
449 F.2d 235, reversed and remanded.
BURGER, C.J., delivered the opinion of the Court, in which BRENNAN, WHITE, MARSHALL, and BLACKMUN, JJ., joined. DOUGLAS, J., filed an opinion dissenting in part, in which STEWART and REHNQUIST, JJ., joined, post, p. 411 U. S. 378. POWELL, J., filed a dissenting opinion, post, p. 411 U. S. 383