Mourning v. Family Publications Service, Inc. , 93 S. Ct. 1652 ( 1973 )

Mr. Justice Douglas,

with whom Mr. Justice Stewart and Mr. Justice Rehnquist concur,

dissenting in part.

I have concluded that this is not a proper case for summary judgment under Fed. Rule Civ. Proc. 56 (c), which provides that summary judgment only may be granted if there is “no genuine issue as to any material fact” and “the moving party is entitled to a judgment as a matter of law.” As I interpret the present record in light of our decisions, see, e. g., Adickes v. S. H. Kress & Co., 398 U. S. 144; White Motor Co. v. United States, 372 U. S. 253; United States v. Diebold, Inc., 369 U. S. 654, there remains unresolved a genuine issue of material fact. Although I agree with the majority that Regulation Z is valid and accordingly would reverse the decision of the Court of Appeals, I would remand this case to the District Court for resolution of that material issue.

The disclosure provisions of the Truth in Lending Act apply only to an extension of “consumer credit.” 15 U. S. C. § 1631. Thus, in order to assert successfully a claim under the Act for the statutory penalty and reimbursement for the costs of the action, see id., § 1640, petitioner, inter alia, must satisfy her burden of proving that respondent extended consumer credit within the meaning of the Act. Section 103 (e) of the Act, 15 U. S. C. § 1602 (e), defines “credit” as “the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment.” In her complaint, petitioner merely alleges that respondent “extends Consumer Credit as defined in Regulation Z, 12 C. F. R. [§] 226.2 (K) . . . Respondent denies in its answer that its contract with petitioner involved a “credit transaction.” In one paragraph respondent avers: “Under the contract executed by the customer and Defendant, the customer agrees to pay a stated amount per month for half of the life of the contract and Defendant agrees to supply the magazines for the full term of the contract. At all times the customer has prepaid for the magazines to be delivered. Under its arrangement with most of the publishers, Defendant reimburses the publisher periodically during the full term of the subscription.” In another paragraph it avers: “At no point during the life of the contract has Defendant paid money to a third person or supplied goods or services to the customer for which reimbursement is expected from the customer in the future.”

On the basis solely of these allegations, one would conclude that the contract between the petitioner and the respondent did not constitute a credit transaction. If respondent merely collected $3.95 per month from each customer and sent the receipts periodically to the publisher,¹ less the respondent's commission, respondent never would have made any advances for the customer, and the customer would owe nothing to the respondent for the loan of money or, in the words of the Act, as a “finance charge.” On the other hand, if respondent advanced all or part of the subscription price to the publishers, respondent would be advancing “credit” for the benefit of the customer.² The legislative history indicates that “the disclosure requirement would not apply to transactions which are not commonly thought of as credit transactions . ³ As Professor Corbin has stated: “A transaction may be an instalment contract without being a credit transaction at all. Both parties may agree to perform in instalments without promising to render any performance-in advance of full payment of the price of each instalment so rendered.” ⁴ The Act, in defining “credit,” refers to the deferred payment of a “debt.” A debt, however, is more than a binding contractual obligation to pay a sum of money in the future upon the performance of certain conditions by the other party to the contract. It is an unconditional obligation to pay.⁵ Thus, in my view, a proper resolution of the issue whether respondent extended credit to petitioner depends, at least in part, on the contractual relationships between the respondent and the publishers. The contracts between respondent and the publishers are not in the present record.⁶

The pleadings, of course, are not the only papers to be considered by the District Court in determining whether one party or the other is entitled to summary judgment. Under Rule 56 (c) the court must consider “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any . . . .” During the collection period, respondent had sent petitioner a dunning letter reminding her “that we have ordered these magazines in advance and that you have incurred an obligation to repay us. 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.” Respondent formally admitted that it had sent this letter to petitioner. Accordingly, it was properly considered by the District Judge.⁷ But, I do not view this “admission” as conclusive or sufficient proof that respondent had extended credit within the meaning of the Act at the time the contract between petitioner and respondent was entered into.⁸ First, this is not an admission in terms that credit was extended within the meaning of the Act. Second, since petitioner at the time the letter was sent was three months in arrears, it may be that respondent had advanced money on her account only after she failed to meet her contractual obligation. It is settled under our decisions that material lodged by the moving party “must be viewed in the light most favorable to the opposing party.” Adickes v. Kress & Co., 398 U. S., at 157, 158-159; United States v. Diebold, Inc., 369 U. S., at 655.

Respondent is not deprived of the benefit of this principle of interpretation merely because it did not file an affidavit controverting the contents of the letter. Rule 56 (e) provides that “[wjhen a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him.” The Advisory Committee note on the amendment which added this provision to the Rule, however, stated that “[w]here the evidentiary matter in support of the motion does not establish the absence of a genuine issue, summary judgment must be denied even if no opposing evidentiary matter is presented.” We cited this comment with approval in Adickes v. Kress & Co., supra, at 160. The moving party, in this case petitioner,⁹ must meet her burden of showing the absence of a genuine issue as to any material fact. Id., at 157. I cannot conclude that she met that burden. The District Judge was not possessed of sufficient information to resolve properly the issue whether credit had been extended. Under these circumstances, he should not have granted summary judgment. Cf. White Motor Co. v. United States, 372 U. S., at 263.

1 There are suggestions in. the record that respondent is a wholly owned subsidiary of Time, Ine. Respondent, however, sold not only Life, a Time, Inc., publication, but magazines of other publishers.

2 In a free-enterprise system, one must presume that there is a “finance charge” for the advance of credit. It would nonetheless be a “finance charge” although it were wholly undisclosed or not separately stated in an account rendered to the customer.

3 S. Rep. No. 392, 90th Cong., 1st Sess., 14; H. R. Rep. No. 1040; 90th Cong., 1st Sess., 25.

4 3A A. Corbin, Contracts § 687, p. 246 (1960). A published opinion of the Federal Reserve Board recognizes that installment payment plans may not involve an extension of credit when charges for services rendered do not exceed prior payments. FRB Opinion Letter No. 262 (1970).

5 3A A. Corbin, Contracts § 691 (1960).

6 My Brother Powell asserts that, given the undisputed fact that petitioner agreed to pay in advance, respondent as a matter of law could not have extended credit. Post, at 383-384. We do not, however, know what the financial relationships in this tripartite arrangement are. For example, it may be that respondent advances the full five-year subscription price to the publisher on the subscriber’s behalf when the contract between the subscriber and respondent is executed. If that is so, the subscriber may receive an unconditional right to receive magazines from the publisher over the five-year period, whether or not he meets his contractual obligations with respondent. Under these circumstances, respondent will be acting as a financier, enabling the subscriber to take advantage of the publisher’s five-year subscription offer, but yet to defer payment on the subscription price. Any “profit” respondent receives will be largely attributable to its services as a financier. I do not see that such a financial arrangement differs substantially from the case where a subscriber borrows the full subscription price from a bank and pays the publisher directly, obligating himself to repay the bank in equal installments, with interest, over two and one-half years. As my Brother Powell argues, the subscriber under those circumstances will be advancing credit to the publisher because he has paid for all magazines in advance, but it cannot be doubted that at the same time the bank has advanced credit to the subscriber.

7 Respondent mailed another letter to petitioner which stated: “Whereas, FPS, acts initialy [sic] as agent for the various publishers; upon acceptance of her contract, FPS thereafter acts solely as financier, and co-guaranter [sic] of service with the various publishers; whereas, FPS, has fully invested in Mrs. Mourning’s contract and does not receive refund in part or full from any, or, all publishers; for said FPS, investment, we therefore, must insist on compliance of your client to the terms of said contract

Although respondent admitted that the letter appeared on its stationery and was written by an employee, it denied that the employee was authorized to send the letter. Accordingly, since there was an issue of fact whether the letter was authorized and thus a binding admission, the letter could not be considered properly on petitioner’s motion for summary judgment. Cf. 3 W. Barron & A. Holtzoff, Federal Practice and Procedure § 1231, p. 75 (1971 Supp.).

8 We need not resolve here whether, if the contract was not originally a credit transaction, petitioner’s own breach could have converted it retroactively into a credit transaction within the meaning of the Act.

9 Both parties moved for summary judgment. That does not relieve the District Judge of his responsibility to consider each motion separately in light of the theories advanced by each party and to proceed to trial if he concludes that there is a genuine issue of material fact to be resolved. See 6 J. Moore, Federal Practice ¶ 56.13 (2d ed. 1972).