Mourning v. Family Publications Service, Inc. Petitioner's Reply Memorandum

    §ujirmp (Euurt nf %  littfrft States
O ctober T e r m , 1971 

No. 71-829

In the

L e ila  M o u r n in g ,

v.
Petitioner,

F a m il y  P u b lic atio n s  S ervice , I n c .,

Respondent.

ON PETITION EOR A WRIT OF CERTIORARI TO THE 
UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

PETITIONER’S REPLY MEMORANDUM

J a c k  G reenberg  
J am e s  M. N a b r it , III 
E ric  S c h n a p p e r

10 Columbus Circle, Suite 2030 
New York, New York 10019

M. D onald  D resch er

Suite 207, Sunset House 
5825 Sunset Drive 
South Miami, Florida 33143

L eonard  H elfand

Legal Services Senior Citizen Center
833 Sixth Street
Miami Beach, Florida 33139

Counsel for Petitioner





In the

H a m a t e  © c u r t  n f  t l j?  M n xtth  i$ t a t ? s
O ctober  T e r m , 1971 

No. 71-829

L e ila  M o u r n in g ,

v .
Petitioner,

F a m il y  P u b lic a tio n s  S ervice , I n c .,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO THE 
UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

PETITIONER’ S REPLY MEMORANDUM

Respondent, in its opposing brief in No. 71-829, urges that 
certiorari should be denied because the decision of the 
Court of Appeals is sustainable on independent grounds 
not reached by the court below.

Regardless of the existence of other grounds on which 
the decision below might be affirmed, this Court should grant 
the writ of certiorari to review the important question 
reached by the Court of Appeals regarding the validity of 
the four instalment rule, 12 C.F.R. §226.2 (k). Only this 
Court can resolve the commercial and governmental un­
certainty which have been wrought by the decision of the 
Fifth Circuit. In the event that section 226.2 (k) is upheld 
and that Respondent’s other contentions appear substan­
tial, the case can be remanded to the Court of Appeals for



2

consideration of any remaining issues not appropriately 
considered by this Court. Compare N.L.R.B. v. Scrivener, 
------ U .S .------- , ------  (1972).

The independent grounds advanced by Respondent for 
affirming the judgment of the Court of Appeals are not 
persuasive.

Respondent contends that the civil liability provision of 
the Truth in Lending Act is inapplicable because no finance 
charge was imposed in the instant case. Respondent of 
course did not disclose any finance charge to Petitioner, but 
whether there was a finance charge hidden in the total price 
of the magazines is a question of fact not resolved by 
either court below. Respondent now concedes that cash 
customers may have paid less than installment customers 
(Respondent’s Brief, p. 9, note), which is substantial evi­
dence of a hidden finance charge. Compare 15 TT.S.C. 
§1605(a), 12 C.F.R. §226.4(a).

Section 1640(a), 15 U.S.C., on which Respondent relies, 
does not make imposition of a finance charge a precondi­
tion of liability, but merely uses the finance charge to com­
pute the amount of liability under certain circumstances. 
While the section provides that liability shall generally be 
“ twice the amount of the finance charge in connection with 
the transaction,” it adds “ except that the liability under 
this paragraph shall be not less than $100 nor greater than 
$1,000.” (Emphasis added) This latter clause creates an 
exception to the former, and the $100 minimum is literally 
as applicable whether the finance charge was one cent or 
nothing at all. The only federal court reaching this question 
has held that the actual imposition of a finance charge is 
not a precondition to liability under section 1640(a). Rai­
ner v. Chemical Ranh New York Trust Company, 329 P. 
Supp. 270, 280 (S.D.N.Y. 1971).



3

Respondent further urges that the Truth in Lending Act 
is inapplicable to the transaction in question because Re­
spondent did not in fact extend credit to Petitioner. The 
District Court concluded on the basis of the facts before it 
that Respondent had indeed extended credit to Petitioner, 
and the Court of Appeals did not reach this question. 
(Petitioner’s Appendix, p. 4a) This Court does not gener­
ally undertake on petitions for certiorari to correct errors 
of fact finding or to review evidence, compare United States 
v. Johnston, 268 U.S. 220, 227 (1926); Graver Mfg. Co. v. 
Linde Co., 336 U.S. 271, 275 (1949), and should decline 
Respondent’s invitation to do so in this case. The District 
Court in reaching its conclusion took particular note of 
evidence that Respondent, in its dunning letters to Peti­
tioner, had stated “This is a credit account, and as such 
must be repaid by you on a monthly basis, much the same 
as if you had purchased any other type of merchandise on 
a monthly budget plan” (letter of December 4, 1969), and 
“ The contract you signed is : Not subject to cancellation . . . ” 
(letter of December 16, 1969). It would be inappropriate 
for Respondent to succeed in avoiding a hearing before 
this Court by urging that these representations which it 
made to Petitioner when she was without counsel were tech­
nically incorrect.

Respondent founds its legal contention that no credit was 
involved in this ease on the fact that Respondent was re­
quired to pay for the magazines before they arrived and 
the allegation, not supported by anything in the record, or 
ever disclosed to Petitioner, that Respondent did not “gen­
erally” pay for the magazines in a lump sum in advance 
(Respondent’s Brief, p. 22). Whatever the significance 
of these factors in determining the existence of a debt at 
common law or under the tax code, they have little relevance 
to the purposes of the Truth in Lending Act. That Act was



4

passed so that a consumer like Petitioner, in trying to decide 
whether and from whom to purchase magazine subscrip­
tions, would know that the contract offered by Respondent 
would cost a total of $122.45. Petitioner’s need for that 
information was the same regardless of whether she or 
Respondent paid for the 60 month subscription in 30, 60, or 
90 months. The Act should be construed accordingly.

Respectfully submitted,

J a c k  G reenberg

J am e s  M. N a b r it , III
Ebic S c h n a p p e r

10 Columbus Circle, Suite 2030 
New York, New York 10019

M. D onald  D resch eb

Suite 207, Sunset House 
5825 Sunset Drive 
South Miami, Florida 33143

L eonard  H elpan d

Legal Services Senior Citizen Center
833 Sixth Street
Miami Beach, Florida 33139

Counsel for Petitioner

March 15, 1972





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