Walsh, Joseph F., P.J.D.C.
Recovery is sought of monies due and owing on a claimed deficiency to a plaintiff who is a new and used automobile dealer, after a default, by defendant on a retail installment contract for his purchase of a used automobile. Defendant seeks a setoff under the Federal Truth in Lending Act.
On or about June 7, 1973 defendant agreed to purchase a used automobile at a price of $1,848. At the request of defendant, plaintiff provided an application for financing with the First National State Bank of New Jersey which was completed and filed, with the required information supplied by defendant.
On or about June 15 defendant delivered an additional deposit of $500 and completed the transaction with the agent for plaintiff. Defendant was presented with, and had explained to him, a document entitled "Retail Installment Contract-Security Agreement and Disclosure Statement," which, in addition to the usual terms contained therein, further advised as to the amount of the monthly payments, the date
due and place for payments, and penalties for late payments. Terms of optional credit life, accident and health insurance were also explained to defendant and he signed his acceptance of the insurance although the signature was not dated.
After signing the contract defendant was given a copy which was identical to the original except that the reverse side of the buyer's copy did not include a section which was entitled "ASSIGNEE AND SELLER'S WARRANTIES." This is a contract of assignment between the seller and the bank and in no manner is made obligatory upon the buyer.
Thereafter a default occurred and recovery is sought on the deficiency resulting after public sale of the repossessed automobile.
Defendant contends that the contract is violative of the Consumer Credit Protection Act's subchapter entitled "Truth in Lending Act," 15 U.S.C.A. § 1601 et seq., and "Regulation Z" enacted thereunder by the Federal Reserve Board, 12 C.F.R. 226.1 et seq.
The specific violations alleged are: (1) failure to make required disclosures before signing of the document; (2) nondisclosure of the assignee of the contract; (3) lack of date on the separate credit insurance authorization; (4) failure to make sequential and meaningful disclosure of the acceleration clause in the body of the contract at a place prior to or adjacent the signatures.
A setoff in double the amount of the charges is claimed under the statute, 15 U.S.C.A. § 1640(a).
The law of New Jersey is devoid of any case dispositive of the problem. Both sides agree that the Truth in Lending Act and the federal regulations issued thereunder cover the situation: N.J.S.A. 17:3B-2 provides:
When under any law of this State, a civil action is expressly provided for any act or failure to act which constitutes a violation of any provision of such law, and such act or failure to act also constitutes a violation of the Truth in Lending Act, Title I of the Consumer Credit Protection Act (Public Law 90-321, 82 Stat. 146) for which a civil action may be brought under the provisions of the Truth in
Lending Act, the provisions of the Truth in Lending Act shall supersede the provisions of State law when the penalty for violation of the Truth in Lending Act is more severe than the penalty for violation of the State law, to the end ...