615 F2d 682 Lee v. Redstone Federal Credit Union
615 F.2d 682
Aleck L. LEE, Plaintiff-Appellee,
REDSTONE FEDERAL CREDIT UNION, a Federally Chartered
United States Court of Appeals,
April 18, 1980.
Currun C. Humphrey, Huntsville, Ala., for defendant-appellant.
Griffin & Griffin, Huntsville, Ala., for plaintiff-appellee.
Appeal from the United States District Court for the Northern District of Alabama.
Before GEE, RUBIN and POLITZ, Circuit Judges.
The major issues in this case were disposed of by our opinion today in Jacklitch v. Redstone Federal Credit Union, 615 F.2d 679, (5th Cir. 1980). In finding a violation of Regulation Z, 12 C.F.R. § 226.7(a)(7), the district court held that, by analogy, the requirements of Pollock v. General Finance Corp., 535 F.2d 295, 299-399 (5th Cir. 1976), petition for rehearing denied, 552 F.2d 1142, cert. denied, 434 U.S. 891, 98 S.Ct. 265, 54 L.Ed.2d 176 (1977), were fully applicable to open-end transactions under 15 U.S.C. § 1637(a)(7).
This Court's decision in Elzea v. National Bank of Georgia, 570 F.2d 1248, 1249 (5th Cir. 1978), supports Redstone's contention that Pollock should be limited to its peculiar facts. Nevertheless, the district court's finding of a TILA violation is correct. Section 226.7(a)(7) of Regulation Z requires that a creditor disclose to the customer, in a single written statement,
The conditions under which the creditor may retain or acquire any security interest in any property to secure the payment of any credit extended on the account, and a description or identification of the type of the interest or interests which may be so retained or acquired. (Emphasis added).
The disclosure-on-the-same-page rule of Harris v. Tower Loan of Mississippi, Inc., 609 F.2d 120, 122-23 (5th Cir. 1980) and Charles v. Krauss Co., Ltd., 572 F.2d 544, 546 (5th Cir. 1978), is not applicable to open-end credit arrangements. See Charles, 572 F.2d at 546 n. 1. However, the emphasized language of the regulation clearly requires that the creditor disclose more than the fact of its retention of a security interest. Here, the disclosure statement fails to disclose on its face either the after-acquired property clause or the 10-day limitation on its operation. While the reverse side of the document discloses an after-acquired property clause, even that portion of the document fails to reveal the 10-day limitation.
Thus, neither side of the statement meets the requirement of section 226.7(a) (7) that the lender disclose "(t)he conditions under which the creditor may retain or acquire any security interest in any property to secure the payment of any credit extended on the account . . . " Therefore, the carryover application of Pollock is unnecessary, because the regulatory language itself mandates the additional disclosure by the creditor.
For these reasons, the judgment is AFFIRMED.
Fed.R.App.P. 34(a); 5 Cir. R. 18