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    Terrie Harman v. New Hampshire Savings Bank, 638 F.2d 280, 1st Cir. (1981)

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    This document is a court case regarding whether a bank violated the Truth in Lending Act by failing to make required disclosures in a repayment agreement it presented to a borrower for her student loan. The court found that the bank did not violate the Act because credit was not actually extended, as the borrower refused to sign the repayment agreement. The Act only requires disclosures when credit is extended, which the court determined refers to the completed act of giving credit, not just offering credit. Therefore, the unsigned repayment agreement did not trigger the disclosure requirements and the bank was not liable.

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    Terrie Harman v. New Hampshire Savings Bank, 638 F.2d 280, 1st Cir. (1981)

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    This document is a court case regarding whether a bank violated the Truth in Lending Act by failing to make required disclosures in a repayment agreement it presented to a borrower for her student loan. The court found that the bank did not violate the Act because credit was not actually extended, as the borrower refused to sign the repayment agreement. The Act only requires disclosures when credit is extended, which the court determined refers to the completed act of giving credit, not just offering credit. Therefore, the unsigned repayment agreement did not trigger the disclosure requirements and the bank was not liable.

    Original Description:

    Filed: 1981-01-22 Precedential Status: Precedential Citations: 638 F.2d 280 Docket: 80-1369

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    This document is a court case regarding whether a bank violated the Truth in Lending Act by failing to make required disclosures in a repayment agreement it presented to a borrower for her student loan. The court found that the bank did not violate the Act because credit was not actually extended, as the borrower refused to sign the repayment agreement. The Act only requires disclosures when credit is extended, which the court determined refers to the completed act of giving credit, not just offering credit. Therefore, the unsigned repayment agreement did not trigger the disclosure requirements and the bank was not liable.

    Copyright:

    Public Domain
    Download as PDF or read online from Scribd
    Download as pdf
    71 views4 pages

    Terrie Harman v. New Hampshire Savings Bank, 638 F.2d 280, 1st Cir. (1981)

    Uploaded by

    Scribd Government Docs
    This document is a court case regarding whether a bank violated the Truth in Lending Act by failing to make required disclosures in a repayment agreement it presented to a borrower for her student loan. The court found that the bank did not violate the Act because credit was not actually extended, as the borrower refused to sign the repayment agreement. The Act only requires disclosures when credit is extended, which the court determined refers to the completed act of giving credit, not just offering credit. Therefore, the unsigned repayment agreement did not trigger the disclosure requirements and the bank was not liable.

    Copyright:

    Public Domain
    Download as PDF or read online from Scribd
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    of 4

    638 F.

    2d 280

    Terrie HARMAN, Plaintiff, Appellant,


    v.
    NEW HAMPSHIRE SAVINGS BANK, Defendant, Appellee.
    No. 80-1369.

    United States Court of Appeals,


    First Circuit.
    Submitted Sept. 12, 1980.
    Decided Jan. 22, 1981.

    Howard B. Myers and Myers & Laufer, Concord, N. H., on brief for
    plaintiff, appellant.
    Warren C. Nighswander, R. Carl Anderson, and Sulloway, Hollis &
    Soden, Concord, N. H., on brief for defendant, appellee.
    Before COFFIN, Chief Judge, CAMPBELL and BOWNES, Circuit
    Judges.
    BOWNES, Circuit Judge.

    The district court dismissed this action under the Truth in Lending Act, 15
    U.S.C. 1601 et seq., for failure to state a claim. We affirm.

    In her complaint plaintiff-appellant alleged that in August 1977 she applied for
    a federally guaranteed student loan in the amount of $3,000. Upon receipt of
    the loan plaintiff "entered into a Promissory Note by which the plaintiff agreed
    to repay the loan in accordance with a Repayment Agreement to be executed
    not more than nine months after the plaintiff ceased to be a full-time student."
    She completed her studies in May 1978 and in February 1979 the bank tendered
    to her a Repayment Agreement for signature. Plaintiff refused to sign the
    agreement. Under the terms of the 1977 Promissory Note "(f)ailure of the
    Borrower to execute a Repayment Agreement as provided within the time
    specified" would render the "principal of this note, together with any unpaid
    interest and insurance premium" immediately due at the option of the bank. The
    record is otherwise silent about the present status of plaintiff's loan repayment

    obligation.
    3

    The complaint alleges further that the Repayment Agreement's disclosures were
    deficient in various particulars under Truth in Lending Act and the Federal
    Reserve Board's Regulation Z, 12 C.F.R. 226. For purposes of this appeal, the
    parties have stipulated that "(i)t may be assumed ... that the Repayment
    Agreement failed to make disclosures required by the Truth in Lending Act."1
    However, the bank vigorously denies that the Repayment Agreement ever
    became actionable since plaintiff never signed it.

    The Truth in Lending Act provides a cause of action for damages against "any
    creditor who fails to comply with any requirement imposed under this ... (Act)."
    15 U.S.C. 1640(a). Although the complaint cites numerous sections of the
    Act and Regulation Z which were allegedly violated by the bank, appellant's
    brief relies on only three sections to support her claim of non-disclosure:

    5
    "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 ... (Act)." Id., 1631(a).
    6 Any creditor making a consumer loan or otherwise extending consumer credit in
    (a)
    a transaction which is neither a consumer credit sale nor under an open end
    consumer credit plan shall ... (make certain disclosures).
    7 Except as otherwise provided in this part, the disclosures required by subsection
    (b)
    (a) of this section shall be made before the credit is extended, and may be made by
    disclosing the information in the note or other evidence of indebtedness to be signed
    by the obligor. Id., 1639.
    8 General Rule. Any creditor, when extending credit other than open end credit
    (a)
    shall ... make the disclosures required by this section with respect to any transaction
    consummated on or after July 1, 1969. Except as otherwise provided in this section,
    such disclosures shall be made before the transaction is consummated. Regulation Z,
    12 C.F.R. 226.8(a).
    9

    Each of the above-quoted sections, read closely, creates a duty to disclose only
    where "credit" is "extended." The Act defines "credit" as "the right granted by a
    creditor to a debtor to defer payment of debt." 15 U.S.C. 1602(e). The
    deferred payments contemplated by the Repayment Agreement in this case
    clearly constitute "credit." The Act nowhere defines "extend" or "extension." If
    "extend" were to be interpreted as "offer," then the tender of the Repayment
    Agreement in this case would trigger the Act's disclosure requirements.

    However, while the term "extend credit" or "extension of credit" is used


    frequently in the Act, it nowhere is used unequivocally to connote "offer." In
    some instances the term is ambiguous.2 In all other instances Congress
    unequivocally equated "extension" with the completed act of giving credit.3 In
    light of a familiar principle of statutory construction, this consistent usage of
    the term throughout the statute is persuasive evidence that Congress intended it
    to carry the same meaning in the sections under scrutiny. See Fortin v.
    Marshall, 608 F.2d 525, 527-28 (1st Cir. 1979); United States v. Nunez, 573
    F.2d 769, 771 (2d Cir.), cert. denied, 436 U.S. 929, 98 S.Ct. 2828, 56 L.Ed.2d
    774 (1978). We therefore agree with the Ninth Circuit panel that "(t)here can be
    no violation of the Act until the transaction is consummated." Waters v.
    Weyerhauser Mortgage Co., 582 F.2d 503, 505 (9th Cir. 1978) (citing cases).
    See also Goldman v. First National Bank, 532 F.2d 10, 18 (7th Cir.), cert.
    denied, 429 U.S. 870, 97 S.Ct. 183, 50 L.Ed.2d 150 (1976).4
    10

    Affirmed.

    11

    COFFIN, Chief Judge, (dubitante).

    12

    I confess that I do not understand the regulatory network applying to student


    loan enough to agree or disagree with the court. To cite one source of
    uncertainty, I am not sure of the intendment of 12 C.F.R. FC-0102 at pages
    680-82 (1980), which speaks of disclosures "for both the interim and repayment
    periods". To cite another, Public Letter No. 117, cited at 12 C.F.R. page 681,
    may point to a disclosure required at the beginning of the repayment period.
    And 12 C.F.R. 226.809 (1980) may require this "prior to the time the final
    note is executed or repayment schedule is agreed upon". In short, there seems
    to me that there is a possibility that the bank was obligated to make a second
    disclosure, prior to the execution of the repayment agreement.

    The complaint may also be read to allege that the 1977 Promissory Note's
    disclosures violated the Act. In its motion to dismiss defendant timely raised
    the statute of limitations as to these allegations. Such allegations are clearly
    time-barred. 15 U.S.C. 1640(e). Since we conclude, see text infra, that the
    tendered Repayment Agreement was not actionable under the Act, plaintiff
    may not use it to resurrect the claims based on the Promissory Note

    E. g., 15 U.S.C. 1601(a), 1602(f), (g) & (h), 1603(1), 1605(a), 1610(b),
    1638(d)

    See 15 U.S.C. 1605(b)(1) & (2), 1605(c), 1606(a), 1635(a), 1636, 1637(a),

    1638(a)(4) & (10), 1640(g), 1663(1), 1664(a), 1664(d)(3), 1666(b)(1) & (2),
    1666b(a), 1666f(a)(1)
    4

    None of the cases cited by appellant support her theory that an unconsummated
    credit offering can create liability under the Act. Contrary to the assertion in her
    brief, the Fourth Circuit panel in White v. Arlen Realty & Dev. Corp., 540 F.2d
    645 (1975), did not hold that a suit was actionable "even though the plaintiff
    had neither been injured nor actually received credit." In that case a
    consummated transaction was the basis for liability. See id. at 647. Nor is the
    statutory policy of encouraging enlightened shopping for credit, see 15 U.S.C.
    1601(a), enough to overcome the language of the statute and Regulation Z. See
    Bissette v. Colonial Mortgage Corp., 477 F.2d 1245, 1246-47 (D.C.Cir.1973).
    Moreover, the one year statute of limitations, 15 U.S.C. 1640(e), would begin
    to run against a plaintiff earlier under appellant's interpretation, a factor cutting
    against an expansive interpretation

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