Chuck St. Germain v. Bank of Hawaii

The thorny question presented on this appeal is whether the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601 , et seq., requires disclosure of an acceleration clause in a retail installment contract. The district court held that disclosure was not required (St. Germain v. Bank of Hawaii (D.Hawaii 1976) 413 F.Supp. 587 ), and it granted the Bank of Hawaii’s motion for summary judgment. We reverse, holding that TILA compels a creditor making a consumer loan to disclose the creditor’s right to accelerate full payment of the debt upon the debtor’s default or late payment.

The contract is a standard form “Retail Installment Contract (Automobile).” The face of the contract recites in simple language important rights and duties of the parties. Section four, captioned in large type “DELINQUENCIES AND OTHER CHARGES,” states that the debtor will incur a 5 percent delinquency charge, plus a part of the creditor’s attorney’s fees and/or collector’s fees in the event of default or late payment. Section three, captioned “PREPAYMENT PRIVILEGE,” states that the debtor is entitled to a refund of unearned finance charges if he pays the debt before maturity. Nothing is said about the creditor’s…