SYLLABUS
(This syllabus is not part of the opinion of the Court. It has
been prepared by the Office of the Clerk for the convenience of the
reader. It has been neither reviewed nor approved by the Supreme Court. Please
note that, in the interests of brevity, portions of any opinion may not
have been summarized).
Argued November 7, 2005 -- Decided March 15, 2006
LONG, J., writing for a majority of the Court.
The issue before the Court is whether the following consumer protection statutes: the Retail Installment Sales Act (RISA), N.J.S.A. 17:16C-1 to -61; the interest rate cap in the criminal usury statute, N.J.S.A. 2C:21-19; and the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -135, are applicable to rent-to-own contracts.
Between March 2001 and May 2002, Hilda Perez, entered into five rent-to own
contracts with Rent-A-Center, in order to become the owner of used furniture, a
used washer and new dryer, a used DVD player and television, a new
computer, and a used large screen television and cabinet. Under the rental contracts
with Rent-A-Center, Perez paid a pre-calculated weekly rental amount, a portion of which
defrayed the price of the goods. She could return the goods at any
time and stop making payments. However, in order to purchase them, Perez agreed
that she would pay an amount equal to or in excess of their
value along with a purchase option price. If she chose to purchase the
rental property early, Perez was required to pay a prorated portion of the
remaining rental payments and option price. All the items Perez rented had a
total cash price of $9,301.72; however, if she paid the weekly rates and
the additional option payments, Perez would assume ownership after having expended $18,613.32. The
difference between the market value of the goods and their ultimate cost was
Rent-A-Center’s interest charge for the consumer’s privilege of buying the products over time.
Perez had paid $8,156.72 by May 2002, when she ceased payments.
Rent-A-Center filed a small-claims complaint, seeking money damages against Perez resulting from her
failure to pay for or return the rental items. In response, Perez sued
Rent-A-Center in Superior Court, alleging that her rent-to-own contracts violated RISA and the
CFA because the contracts imposed an interest rate in excess of the criminal
usury statute 30% cap. Rent-A-Center counterclaimed for breach of contract and conversion. In
2004, Perez moved for partial summary judgment, declaring the applicability of RISA and
the usury cap. Rent-A-Center filed a cross-motion for dismissal of the complaint, which
the trial judge granted, dismissing Perez’s entire complaint.
Perez appealed to the Appellate Division arguing that: 1) Rent-A-Center is collaterally estopped
from defending against the RISA claim; 2) RISA, by its plain terms, applies;
and 3) the usury limitations are applicable to Rent-A-Center’s operations. The Appellate Division
rejected Perez’s collateral estoppel argument and ruled in favor of Rent-A-Center on the
merits.
The Supreme Court granted certification.
HELD: Based on the statutory language as well as established principles of statutory
interpretation, Rent-A-Center’s rent-to-own contracts are subject to the Retail Installment Sales Act, the
interest rate cap in the criminal usury statute, and the Consumer Fraud Act.
1. The threshold issue is whether the summary judgment in Robinson v. Thorn
Am., another case involving Rent-A-Center, constituted a final judgment on the merits warranting
issue preclusion in this case. Settlement after the entry of judgment does not
automatically relieve the party against whom the judgment was entered from its legal
effects. In order to assure that the judgment will not be used against
it in the future, the losing party should file a vacatur motion. In
Robinson, no vacatur motion was made or vacatur order entered. Nonetheless, despite the
absence of an unequivocal vacatur order, the “Final Order and Judgment” entered in
Robinson was intended to supersede the earlier partial summary judgment. Although the better
course would have been for Rent-A-Center to more to vacate the earlier judgment,
the settlement order was intended by the parties and the judge who approved
it to operate to vacate the earlier summary judgment. Thus, Rent-A-Center is not
collaterally estopped from defending against the RISA claim filed against it. (Pp. 11-16)
2. The leased goods at issue are of the type described in RISA.
Whether Rent-A-Center fits the definition of “retail seller” and whether Perez fits the
definition of “retail buyer,” depends on whether their transaction is consistent with RISA’s
description of a “retail installment contract.” It is fair to say that Perez’s
rent-to-own contracts are not a perfect fit with the language of the RISA
statute. Thus, the Court’s obligation is to interpret that statute reasonably to serve
its apparent legislative purpose. As such, the Court is satisfied that the language
of RISA was intended to cover agreements like the ones between Rent-A-Center and
Perez. The leases can be viewed as a form of conditional sale as
that term is used in RISA. At the very least, Perez’s leases were
instruments “similar” to conditional sales. Reference in RISA to “similar instruments” was intended
to incorporate cleverly drafted agreements like this one so that “subtle distinctions” are
not allowed to defeat the manifest purpose of the law. (Pp. 16-30)
3. The cancellation provision did not so alter the fundamental nature of the
transaction that it insulated Perez’s leases from the protections of RISA. That conclusion
is bolstered by the fact that the majority of rent-to-own contracts are intended
for and do result in ownership, not cancellation. To exclude such purchases from
the protections of RISA by merely providing a cancellation option that few would
exercise would be an intolerably narrow interpretation of the statute. Thus, RISA applies
to the rent-to-own contracts here. (Pp. 30-31)
4. The criminal usury statute prohibits the taking of any money or other
property as interest on a loan or forbearance of any money in excess
of 30% per year. At the time of its enactment, RISA contained a
cap of 10% interest in connection with a retail installment sales agreement. In
1981, Senate Bill No. 3005 (S. 3005) amended RISA to allow the parties
to negotiate the amount of the time price differential (interest rate). In addition,
Senate Bill No. 3101 (S. 3101), enacted at the same time, amended the
criminal usury statute to lower the interest rate cap from 50% to 30%.
Pursuant to the language of the amendment, RISA is subject to the 30%
cap. The legislative history, including the governor’s message, demonstrates a legislative intent to
create a seamless scheme wherein consumers and sellers are accorded flexibility to negotiate
interest rates to reflect market conditions subject to a 30% safety cap. Because
the language used and the circumstances surrounding the enactment of S. 3101 and
S. 3005 clearly establish a relationship between the statutes, the Court interprets RISA
as incorporating the 30% cap. Thus, Rent-A-Center’s contracts, which are governed by RISA,
are subject to the cap. Therefore, the counts of Perez’s complaint that allege
a violation of those statutes should be reinstated. (Pp. 31-41)
5. The CFA should be applied in conjunction with other statutes or common
law and is to be applied broadly in order to accomplish its remedial
purpose of rooting out consumer fraud. As there is no conflict between CFA
and RISA, the statutes must be construed in concert with each other. Because
the Court disagrees with the Appellate Division on the fundamental issue of the
applicability of RISA and the usury cap, to the extent that Perez’s CFA
claim is linked to them, it must be reinstated. (Pp. 41-44)
Judgment of the Appellate Division is REVERSED and the matter is REMANDED to
the trial judge for reinstatement of Perez’s complaint and for such further proceedings
as are warranted.
JUSTICE RIVERA-SOTO, concurring in part and dissenting in part, agrees with the majority’s
holding that Rent-A-Center is not collaterally estopped from defending against Perez’s RISA claim.
However, he dissents from the majority’s conclusions that RISA applies to the rent-to-own
contracts at issue; that the 30% interest rate cap in the criminal usury
statute applies to the time price differential is RISA; and that Perez’s individual
and class claims under the CFA must be reinstated.
CHIEF JUSTICE PORITZ and JUSTICES LaVECCHIA, ZAZZALI, ALBIN and WALLACE join in JUSTICE
LONG’S opinion. JUSTICE RIVERA-SOTO filed a separate opinion concurring in part and dissenting
in part.
SUPREME COURT OF NEW JERSEY
A-
124 September Term 2004
HILDA PEREZ, on Behalf of Herself and All Others Similarly Situated,
Plaintiff-Appellant,
v.
RENT-A-CENTER, INC.,
Defendant-Respondent.
Argued November 7, 2005 – Decided March 15, 2006
On certification to the Superior Court, Appellate Division, whose opinion is reported at
375 N.J. Super. 63 (2005).
Seth R. Lesser argued the cause for appellant (Locks Law Firm, Williams Cuker
& Berezofsky and William A. Riback, attorneys; Mr. Lesser, Mr. Riback and Mark
R. Cuker, on the briefs).
Ezra D. Rosenberg argued the cause for respondent (Dechert, attorneys; Mr. Rosenberg, David
A. Kotler and Thomas Kane, on the briefs).
Melville D. Miller, Jr., President, argued the cause for amicus curiae Legal Services
of New Jersey (Mr. Miller, attorney; David G. McMillin and Christopher Hill, on
the briefs).
Michaelene Loughlin submitted a brief on behalf of amicus curiae Consumers League of
New Jersey (Loughlin & Latimer, attorneys).
Steven L. Wittels submitted a brief on behalf of amici curiae National Consumer
Law Center, Consumer Federation of America, New Jersey Public Interest Research Group Citizen
Lobby and U.S. Public Interest Research Group (Sanford Wittels & Heisler, attorneys).
JUSTICE LONG delivered the opinion of the Court.
On this appeal, we have been asked to determine whether rent-to-own contracts are
subject to certain consumer protection statutes. Specifically, the parties question whether the Retail
Installment Sales Act (“RISA”), N.J.S.A. 17:16C-1 to -61; the interest rate cap in
the criminal usury statute, N.J.S.A. 2C:21-19; and the Consumer Fraud Act (“CFA”), N.J.S.A.
56:8–1 to -135, apply to such arrangements. The trial judge answered those questions
in the negative and the Appellate Division affirmed. Having concluded, based on the
plain language of the relevant statutes and established principles of statutory interpretation, that
Rent-A-Center’s rent-to-own contracts are subject to each of the denominated acts, we now
reverse.
I
The rent-to-own industry, in its present iteration, is generally traced back to a
“retail appliance store owner whose customers were being denied credit to purchase washers
and dryers.” Susan Lorde Martin & Nancy White Huckins, Consumer Advocates vs. the
Rent-to-Own Industry: Reaching a Reasonable Accomodation,
34 Am. Bus. L.J. 385, 385 (1997).
Today, rent-to-own is a multi-billion dollar business that consists of
dealers that rent furniture, appliances, home electronics, and jewelry to consumers. Consumers enter
into a self-renewing weekly or monthly lease for the rented merchandise, and are
under no obligation to continue payments beyond the current weekly or monthly period.
At the end of each period, the consumer can continue to rent by
paying for an additional period, or can return the merchandise. The lease provides
the option to purchase the goods, either by continuing to pay rent for
a specified period of time, usually 12 to 24 months, or by early
payment of some specified proportion, usually 50 to 60 percent, of the remaining
lease payments.
Rent-to-own transactions offer immediate access to household goods for a relatively low weekly
or monthly payment, typically without any down payment or credit check. These terms
are attractive to many consumers who cannot afford a cash purchase, may be
unable to qualify for credit, and are unwilling or unable to wait until
they can save for a purchase.
[Federal Trade Commission, Bureau of Economics Staff Report: Survey of Rent-to-Own Customers 1-2
(April 2000)(footnotes omitted)(hereinafter FTC Report).]
Generally, rent-to-own customers engage in such transactions in order to possess consumer goods
that they need and cannot obtain through ordinary means. Price Waterhouse LLC, THORN
Americas – New Jersey Customer Survey Report III-17 (November 19, 1996)(hereinafter Price Waterhouse Survey)(Rent-A-Center
survey showing over 72% of New Jersey Rent-A-Center customers could not afford to
purchase item at traditional retail store); Kathleen E. Keest et al., Interest Rate
Regulation Developments: High-Cost Mortgages, Rent-to-Own Transactions, and Unconscionability,
50 Bus. Law. 1081, 1086
(1995)(“Rent-to-own agreements are typically entered into by customers who can neither afford to
purchase the merchandise outright nor obtain credit.”). Indeed, nationally, rent-to-own customers are more
likely to be "African American, younger, less educated, have lower incomes, have children
in the household, rent their residence, live in the South, and live in
non-suburban areas." FTC Report, supra, at ES-1.
Although some consumers enter into rent-to-own transactions to fill a temporary need or
to try a product out before buying it, id. at 2, the vast
majority are the working poor whose incomes are on the margin of economic
stability; they engage in rent-to-own for ownership purposes. Id. at ES-2 (“Sixty-seven percent
of customers intended to purchase the merchandise when they began the rent-to-own transaction.”);
Lynn Drysdale & Kathleen E. Keest, The Two-Tiered Consumer Financial Services Marketplace: The
Fringe Banking System and its Challenge to Current Thinking About the Role of
Usury in Today's Society,
51 S.C. L. Rev. 589, 635-36 (2000); see also
Price Waterhouse Survey, supra, at III-17. In fact, studies, including those by Rent-A-Center,
have concluded that between 64% and 70% of all rent-to-own merchandise is ultimately
purchased by the customers. FTC Report, supra, at ES-1; Patrick A. Gaughan, Ph.D.
& Henry L. Fuentes, C.P.A., An Analysis of the Product Offerings of Rent-A-Center,
Inc. Perez et al. v. Rent-A-Center, Inc. 8 (Oct. 3, 2003).
Rent-A-Center is the nation’s largest rent-to-own company, Gaughan, supra, at 4, with approximately
fifty stores in New Jersey alone. Id. at 9-10. Between March 2001 and
May 2002, Plaintiff, Hilda Perez, entered into five rent-to-own contracts with Rent-A-Center in
order to become the owner of used furniture, a used washer and new
dryer, a used DVD player and television, a new computer, and a used
large screen television and cabinet. Perez v. Rent-A-Center, Inc.,
375 N.J. Super. 63,
70 (App. Div. 2005). Those transactions were documented by the Appellate Division as
follows:
Agreement Number
Date
Product
Cash Price
Weekly Rate
See footnote 1
Weeks to Ownership
Total Rent-to-Own Cost
See footnote 2
Amount Perez Paid
See footnote 3
34413833
03/03/01
furniture
$1,951.43
$38.99
91.4
$3,902.76
$2,573.34
34414122
04/23/01
washer/dryer
987.47
21.99
95.3
1,984.90
1,418.71
34414671
08/03/01
DVD/TV
1,160.99
22.99
92.0
2,321.99
1,264.39
34415383
11/17/01
computer
2,235.48
42.99
95.0
4,470.96
1,934.49
34416433
05/06/02
big-screen TV & cabinet
2,966.35
45.99
120.0
5,932.71
965.79
Totals
$9,301.72
$172.95
$18,613.32
See footnote 4
$8,156.72
[Id. at 70.]
The contract for the washer and dryer is representative of all others. It
states:
RENTAL AGREEMENT ONLY
This is a rental agreement only. You will not acquire any equity in the property by making rental payments. You have not agreed to purchase this property, and will not acquire any ownership rights in it unless you have, at your option, paid the total of rental payments plus the option payment necessary to acquire ownership.
. . . .
4. OWNERSHIP: We own the property you are renting. You will not acquire any ownership rights in the property unless you have, at your option, paid the total of payments plus the purchase option price necessary to acquire ownership as set forth below, or exercise the early purchase option described below. If you want to purchase this or similar property now, you may be able to get cash or credit terms from other sources which will result in a lower total cost than the rental payments, plus the purchase option price provided for below.
OPTION TO PURCHASE: If you renew this Agreement for 95.3 successive weeks, you will pay a total of $1,820.33 or if you renew this Agreement for 44.0 successive semi-months, you will pay a total of $1,793.07 or if you renew this Agreement for 22.0 successive months, you will pay a total of $1,671.12 and you will have the option to purchase the property for its then fair market value. For purpose of this option, this price will not exceed $164.57. Thus, in order to acquire ownership of this item, you must pay the total amount of $1,984.90 if you pay weekly rental payments, or $1,957.64 if you pay semi-monthly rental payments, or $1,835.69 if you pay monthly rental payments. Figures do not include tax.
COST OF RENTAL WITH OPTION TO PURCHASE: The difference between the amount of the cash price and the total amount of all the rental payments under this agreement is $997.43 if you pay weekly, or $970.17 if you pay semi-monthly, or $848.22 if you pay monthly, which includes the option to purchase price described above. Figures do not include tax.
5. OUR CASH PRICE FOR THIS PROPERTY is $987.47. This price may be different from the MSRP or other available retail prices.
6. EARLY PURCHASE OPTION: If you wish to purchase the rental property, you
may do so at any time by the payment of 50% of the
remaining rental payments calculated at that time, plus 50% of the option to
purchase amount described above.
Under the contracts, Perez paid a pre-calculated weekly rental amount, a portion of
which defrayed the price of the goods. She could return the goods at
any time and stop making payments. However, in order to purchase them, Perez
agreed that she would pay an amount equal to or in excess of
their value along with a purchase option price. If Perez chose to purchase
the rental property early, she was required to pay a prorated portion of
the remaining rental payments and option price. Together, all the items Perez rented
had a cash price of $9,301.72; however, if she paid the weekly rates
and the additional option payments, she would assume ownership having expended $18,613.32. The
difference between the market value of the goods and their ultimate cost was
Rent-A-Center’s interest charge for the privilege of buying the products over time.
See footnote 5
By
May 2002, Perez had paid $8,156.72. It was at that point that she
stopped paying.
Rent-A-Center thereafter filed a small claims complaint seeking money damages against Perez arising
out of her failure to pay for or return the rental items.
See footnote 6
Perez,
supra, 375 N.J. Super. at 67. In turn, Perez sued Rent-A-Center in the
Superior Court, alleging that her rent-to-own contracts violated RISA and the CFA because
the contracts imposed an interest rate in excess of the 30% permitted under
the criminal usury statute. Id. at 68. Rent-A-Center counterclaimed for breach of contract
and conversion. Ibid. In 2004, Perez moved for partial summary judgment declaring the
applicability of RISA and the usury cap, and Rent-A-Center filed a cross-motion for
dismissal of the complaint. Ibid. The trial judge granted the relief sought by
Rent-A-Center and dismissed Perez’s complaint in its entirety. Ibid.
Perez appealed arguing (1) that Rent-A-Center was collaterally estopped from defending against the
RISA claim;
See footnote 7
(2) that RISA, by its plain terms, applies; and (3) that
the usury limitations are applicable to Rent-A-Center’s operations. The Appellate Division rejected Perez’s
collateral estoppel argument and ruled in favor of Rent-A-Center on the merits. We
granted Perez’s petition for certification,
183 N.J. 586 (2005), along with the application
of Legal Services of New Jersey and National Consumer Law Center et al.,
to appear as amicus curiae.
II
Perez argues that Rent-A-Center is barred under the doctrine of collateral estoppel from
defending against the RISA claim and that RISA and the usury cap are
applicable to Rent-A-Center’s contracts. She also contends that the Appellate Division erred in
failing to separately address her CFA claim. Amici support Perez’s arguments.
Rent-A-Center counters that because the prior litigation was settled, the doctrine of
collateral estoppel does not apply; that its transaction with Perez constitutes a series
of short term leases to which neither RISA nor the usury statute applies;
and that if RISA is held to apply, Perez cannot maintain a CFA
claim.
III
We turn first to Perez’s procedural claim that Rent-A-Center is barred by the
doctrine of collateral estoppel from arguing that its contracts are not governed by
RISA. At the heart of that claim is the disposition in Robinson v.
Thorn Am., Inc., a case involving Rent-A-Center. There, the trial judge ruled on
summary judgment that Rent-A-Center’s contracts fit within RISA’s definition of “retail installment contract.”
See N.J.S.A. 17:16C-1(b). Rent-A-Center appealed and the execution of the judgment was stayed.
During the pendency of the appeal, the case settled. With the consent of
the parties, the Appellate Division dismissed the case without prejudice and remanded it
to the trial judge for further proceedings.
On remand, the details of the settlement were hammered out. Rent-A-Center consented to
pay money damages to plaintiffs and to amend its New Jersey rental agreements
to conform to RISA, on the condition that the settlement be construed neither
as an admission nor as evidence of wrongdoing. After a hearing pursuant to
R. 4:32-4, final judgment was entered in accordance with the settlement, dismissing plaintiff’s
claims against Rent-A-Center “in their entirety, with prejudice and without costs to any
party.”
Perez argues that the summary judgment order entered in Robinson collaterally estops Rent-A-Center
from relitigating the RISA issue. Under New Jersey law
[c]ollateral estoppel applies if the issue decided in the prior action is identical
to the one presented in the subsequent action, if the issue was actually
litigated--that is, there was a full and fair opportunity to litigate the issue--in
the prior action, if there was a final judgment on the merits, if
the prior determination was essential to the judgment, and if the party against
whom preclusion is asserted was a party, or in privity with a party,
to the proceeding.
[Fama v. Yi,
359 N.J. Super. 353, 359 (App. Div.), certif. denied,
178 N.J. 29 (2003)(citing Pace v. Kuchinsky,
347 N.J. Super. 202, 215 (App. Div.
2002); Barker v. Brinegar,
346 N.J. Super. 558, 567 (App. Div. 2002)).]
Although issue preclusion may be denied on equitable grounds even when the five
elements of collateral estoppel are satisfied, ibid., when they are not satisfied, the
inquiry ends. The threshold concern here is whether the summary judgment in Robinson
constituted a final judgment on the merits warranting issue preclusion. Rent-A-Center argues, and
the Appellate Division agreed, that the summary judgment was effectively, if not explicitly,
vacated by the later judgment dismissing plaintiff’s claims in accordance with the settlement.
The Appellate Division ruled:
Entry of the judgment based upon the court-approved settlement agreement had the effect
of superceding the initial “final judgment” on the merits. Whether or not the
second final judgment explicitly stated this effect is irrelevant. The parties in settling
the matter, and the court in approving the settlement, clearly intended to supercede
the initial final judgment, and the court effected that result through entry of
the second final judgment.
[Perez, supra, 375 N.J. Super. at 77 n.10.]
Although we agree that collateral estoppel was properly rejected by the trial judge,
some additional comments are in order.
It is well-established that the mere happenstance of settlement does not automatically warrant
the conclusion that a prior judgment entered in a case has been vacated:
Where mootness results from settlement . . . the losing party has voluntarily
forfeited his legal remedy by the ordinary processes of appeal or certiorari, thereby
surrendering his claim to the equitable remedy of vacatur . . . .
The denial of vacatur is merely one application of the principle that a
suitor’s conduct in relation to the matter at hand may disentitle him to
the relief he seeks.
. . . .
. . . Judicial precedents are presumptively correct and valuable to the legal
community as a whole. They are not merely the property of private litigants
and should stand unless a court concludes that the public interest would be
served by a vacatur.
[U.S. Bancorp. Mortgage Co. v. Bonner Mall P’ship,
513 U.S. 18, 25-26,
115 S. Ct. 386, 392,
130 L. Ed.2d 233, 242-43 (1994) (internal quotations
and citations omitted)(emphasis added).]
In other words, the settlement of a case after the entry of judgment
does not automatically relieve the party against whom the judgment was entered from
its legal effects. In order to assure that that judgment will not be
used against it in the future, the losing party should file a vacatur
motion.
See footnote 8
Ibid. Obviously, once a vacatur motion is granted, collateral estoppel will not
apply, because the requisite judgment on the merits will be lacking. Aetna Cas.
& Sur. Co. v. Ply Gem Indus., Inc.,
313 N.J. Super. 94, 107
(Law. Div. 1997)(holding a vacated judgment has no preclusive effect).
In Robinson, no motion was made to vacate the summary judgment and consequently
no vacatur order was entered. Generally, that would end the matter because judicial
precedents are important to lawyers and judgments ordinarily should not be obliterated by
implication. U.S. Bancorp., supra, 513 U.S. at 25-26, 115 S. Ct. at 392,
130 L. Ed.
2d at 242-43. However, we agree with the Appellate Division
that, despite the absence of an unequivocal vacatur order, the “Final Order and
Judgment” entered upon the settlement in Robinson was intended to supercede the earlier
partial summary judgment.
Indeed, the settlement order specifically references the summary judgment yet declares: “[T]his is
a Final Order and Judgment for purposes of appeal.” The order goes on
to state that if “the Settlement is not consummated for any reason whatsoever,
then the Final Order and Judgment shall be null and void ab initio,
and of no force or effect, and that the matter shall be returned
to the Appellate Division for continued pursuit of the appeal.” That provision in
turn, reflects ¶ 53 of the stipulation of settlement, which prescribes that in the
event that the settlement is nullified, “the Robinson case shall stand in the
same position, without prejudice, as if [the] stipulation had not been made or
filed with the Court.” The fair implication of that language is that the
earlier summary judgment was to be considered void if the settlement stood but
revived if it failed.
Most importantly, the settlement order states in ¶ 21:
This Order and Judgment and the Stipulation of Settlement and all papers related
to them are not, and shall not be construed to be, an admission
by any of the Defendants of any liability or wrongdoing whatsoever, and shall
not be offered as evidence of any such liability or wrongdoing in this
or any future proceeding.
In other words, the parties agreed that the settlement itself would not be
used against Rent-A-Center either as an admission or by way of collateral estoppel.
In the face of that language, it seems clear that they had no
expectation that the earlier summary judgment would survive and continue to trigger issue
preclusion. To be sure, the better course would have been for Rent-A-Center to
move to vacate the earlier judgment. Nevertheless, we are satisfied that the settlement
order was intended by the parties and the judge who approved it to
operate to vacate the earlier summary judgment. In short, we hold that Rent-A-Center
is not collaterally estopped from defending against the RISA claim Perez has leveled
against it.
IV
We turn next to the merits and address the question of whether the
rent-to-own contracts between Rent-A-Center and Perez are “retail installment contract[s]” within the meaning
of RISA. N.J.S.A. 17:16C-1(b). We begin with that issue because, although RISA itself
does not expressly contain an interest rate cap, Perez argues that it is
the vehicle through which the Legislature imposed the 30% cap in the criminal
usury statute
See footnote 9
on retail installment sales.
A.
Historically, the law treated the taking of interest in connection with the sale
of goods as entirely different from the taking of interest on a loan
of money per se. Indeed, in the nineteenth and early twentieth centuries, courts
first distinguished between the two kinds of loans and decided that the latter
required regulation but the former did not. Beete v. Bidgood,
7 B. &
C. 453,
108 Eng. Rep. 792 (K.B. 1827) (usury laws inapplicable to higher
purchase price charged in exchange for buyer’s ability to pay purchase price in
installments over time); Hogg v. Ruffner,
66 U.S. 115, 118-19,
17 L. Ed. 38, 39-40 (1861)(same). The rationale behind those cases was the notion that the
compulsion facing an individual who owes or needs money is much more compelling
than that motivating a person who seeks to buy goods, the latter having
the option of foregoing the purchase. See, e.g., General Motors Acceptance Corp. v.
Weinrich,
262 S.W. 425, 428 (Mo. Ct. App. 1924)(“[A] purchaser is not like
the needy borrower, a victim of a rapacious lender, since he can refrain
from the purchase if he does not choose to pay the price asked
by the seller.”). On that basis, courts concluded that although money lenders were
subject to the usury laws, those who made loans to sell their merchandise
were not. James A. Ackerman, Interest Rates and the Law: A History of
Usury,
27 Ariz. St. L.J. 61, 94 (1981).
The idea that the two types of loans were distinct was reflected in
the judicial coining of the term “time price differential.” James P. Nehf, Effective
Regulation of Rent-to-Own Contracts,
52 Ohio St. L.J. 751, 785 n.144. Courts used
that term to refer to interest incurred in connection with the time sales
of goods thus guaranteeing that such sales would escape the usury statutes that
by their terms only governed “interest.” See Eric A. Posner, Contract Law in
the Welfare State: A Defense of the Unconscionability Doctrine, Usury Laws, and Related
Limitations on the Freedom to Contract,
24 J. Legal Stud. 283, 303 (1995)(“[C]ourts
generally upheld retail installment contracts, on the ground that usury laws prohibit excessive
interest on money loans, not on loans of goods.”). Eventually the term “time
price differential” made its way into the statutes.
See footnote 10
Legal scholars have challenged the economic basis for drawing a distinction between interest
and a time price differential – concluding that the time price differential is nothing
more than interest on a loan in the amount of the purchase price
extended by a seller to a borrower. Steven W. Bender, Rate Regulation at
the Crossroads of Usury and Unconscionability: The Case for Regulating Abusive Commercial and
Consumer Interest Rates Under the Unconscionability Standard, 31 Hous. L. Rev. 721, 727
(1994)(“[T]he ‘time price’ exemption . . . employed the strained judicial fiction that
merchants don’t receive ‘interest’ when selling their goods on time. Merchants charging more
for goods paid over time than goods purchased for cash were thus freed
from usury.”); see 15 Corbin on Contracts § 87.4 (Bender ed. 2003); National Consumer
Law Center, The Cost of Credit: Regulation and Legal Challenges 50 (hereinafter Cost
of Credit)(2d ed. 2000); Ackerman, supra,
27 Ariz. St. L.J. at 88; see
also Hare v. General Contract Purchase Corp.,
249 S.W.2d 973, 978 (Ark. 1952)(“Buying
at a credit price, as distinguished from a cash price . . .
is being used as a cloak for usury in many cases by such
words as ‘time price differential,’ or some other such language.”). Commentators have also
debunked the “compulsion” rationale, concluding that the need for the basic necessities of
life is no less compelling than the need for money per se. See
Cost of Credit, supra, at 50; Ackerman, supra,
27 Ariz. St. L.J. at
88.
However, the view that the time price doctrine insulated retail installment sales from
usury continued to have currency in America through the mid-twentieth century. See, e.g.,
Hogg, supra, 66 U.S. at 118-19, 17 L. Ed. at 39-40; Steffenauer v.
Mytelka & Rose, Inc.,
87 N.J. Super. 506, 511 (Ch. Div. 1965)(citing New
York, Pennsylvania, Delaware, District of Columbia, Connecticut, and Rhode Island cases subscribing to
the time price doctrine). In fact, the charges associated with the credit sale
of goods went generally unregulated up until the 1950s. At that point, in
response to the drumbeat of scholarly criticism and consumer complaints, some states, including
New Jersey, recognized that the credit sale of goods required regulation and began
to adopt retail installment sales acts that set interest rate limits on credit
sales transactions. See 15 Corbin on Contracts § 87.4 (Bender ed. 2003); Ackerman, supra,
27 Ariz. St. L.J. at 94; Nehf, supra,
52 Ohio St. L.J. at
785 n.144 (citing Jordan & Warren, Disclosure of Finance Charges: A Rationale,
64
Mich. L. Rev. 1285, 1295 (1966)). Through the incorporation of interest rate caps,
those enactments effectively repudiated the historic treatment accorded the credit sale of goods
and essentially replaced the usury laws that had been previously declared off-limits.
Like other state initiatives, New Jersey’s RISA, which became law in 1960, was
“part of a package of laws designed to protect consumers from overreaching by
others, to protect consumers from overextending their own resources and also to promote
the availability of financing to purchase various goods and services.” Girard Acceptance Corp.
v. Wallace,
76 N.J. 434, 439 (1978). Among other things, the statute prescribed
the general form that retail installment contracts should take, N.J.S.A. 17:16C-21 to -25;
required certain financial disclosures, N.J.S.A. 17:16C-27; detailed prohibited practices, N.J.S.A. 17:16C–35 to -39;
and imposed a 10% cap on the time price differential (interest) chargeable in
connection with a sale, L. 1960, c. 40, § 41. Penalties for violation were
also provided. N.J.S.A 17:16C-38.3.
B.
At issue is whether Perez’s transaction with Rent-A-Center constitutes a retail installment sales
contract.
See footnote 11
RISA defines a "retail installment contract" as follows:
“Retail installment contract” means any contract, other than a retail charge account or
an instrument reflecting a sale pursuant thereto, entered into in this State between
a retail seller and a retail buyer evidencing an agreement to pay the
retail purchase price of goods or services, which are primarily for personal, family
or household purposes, or any part thereof, in two or more installments over
a period of time. This term includes a security agreement, chattel mortgage, conditional
sales contract, or other similar instrument and any contract for the bailment or
leasing of goods by which the bailee or lessee agrees to pay as
compensation a sum substantially equivalent to or in excess of the value of
the goods, and by which it is agreed that the bailee or lessee
is bound to become, or has the option of becoming, the owner of
such goods upon full compliance with the terms of such retail installment contract.
[N.J.S.A. 17:16C-1(b).]
The first sentence of the Act describes a covered sale. Briefly, the contract
must be entered into between a retail seller and a retail buyer; it
must evidence an agreement to pay the retail purchase price of goods in
installments; and the goods must be for personal, family, or household use. The
second sentence of the Act is a catch-all by which the Legislature declared
that instruments analogous but not identical to pure retail installment sales would also
fall within the Act. By way of example, the Legislature named security agreements,
chattel mortgages, and conditional sales. Also included was the category of “similar instruments,”
which was obviously intended to sweep in agreements that might not squarely fit
into one of the previously described categories but which approximated them. Certain leases
were included as well, presumably because the Legislature recognized that a transaction denominated
as a lease could be, in substance, a retail installment sale. The question
presented is whether Perez’s rent-to-own contracts with Rent-A-Center are instruments covered by RISA.
It is uncontroverted that the leased goods at issue here are of the
type described in RISA – for family, personal, or household use and that that
provision of the Act requires no further explication by us. Neither are the
definitions of “retail seller” and “retail buyer,” standing alone, of special interest. RISA
defines a “retail seller” as
a person who sells or agrees to sell goods
See footnote 12
or services under a
retail installment contract or a retail charge account to a retail buyer, and
shall include a motor vehicle installment seller.
[N.J.S.A. 17:16C-1(c).]
RISA defines a “retail buyer” as
a person who buys or agrees to buy goods or services from a
retail seller, not for the purpose of resale, pursuant to a retail installment
contract or retail charge account.
[N.J.S.A. 17:16C-1(d).]
As the Appellate Division acknowledged, those “definitions
are circular because they refer back
to the phrase ‘retail installment contract,’ which is a separately defined term under
RISA.” Perez, supra, 375 N.J. Super. at 80. In other words, whether Rent-A-Center
fits the definition of “retail seller” and Perez fits the definition of “retail
buyer” depends on whether their transaction is consistent with RISA’s description of a
“retail installment contract.” That issue of statutory interpretation is the nub of the
case.
C.
We turn again to the second sentence of N.J.S.A. 17:16C-1(b):
This term includes a security agreement, chattel mortgage, conditional sales contract, or other
similar instrument and any contract for the bailment or leasing of goods by
which the bailee or lessee agrees to pay as compensation a sum substantially
equivalent to or in excess of the value of the goods, and by
which it is agreed that the bailee or lessee is bound to become,
or has the option of becoming, the owner of such goods upon full
compliance with the terms of such retail installment contract.
[N.J.S.A. 17:16C-1(b).]
Rent-A-Center first argues, and the Appellate Division agreed, that the lease with Perez
falls outside of RISA because it does not reflect “an absolute and unequivocal
obligation on the part of Perez to purchase the items she leased.” We
disagree. There is nothing in RISA that mandates an “absolute and unequivocal obligation”
to purchase. Indeed, the last clause of N.J.S.A. 17C:16-3(b) says just the opposite.
It states that a RISA contract includes a lease, pursuant to which the
bailee or lessee is “bound to become or has the option of becoming,
the owner of such goods upon full compliance with the terms of such
retail installment contract.” N.J.S.A. 17:16C-1(b) (emphasis added). Obviously, if the lessee has the
“option” to purchase goods, then, by definition, he or she has the “option”
not to purchase them. Accordingly, reading the statute as a whole, it seems
clear that the Legislature never intended an “absolute” or “unequivocal” obligation on the
part of the customer to buy the goods.
Alternatively, Rent-A-Center contends that even if RISA does not require an absolute obligation
to purchase the goods, it plainly requires an obligation by the lessee to
pay “a sum equivalent to or in excess of the retail value of
the goods.” According to Rent-A-Center, that is a condition separate from the option
to purchase, as evidenced by the Legislature’s conjoining the phrases with the word
“and.” Because Rent-A-Center’s leases do not obligate a lessee to pay a sum
certain and the lessee is free to cancel at any time without having
incurred debt, Rent-A-Center maintains that the transaction falls outside the plain language of
RISA.
Perez counters that she agreed to pay “a sum substantially equivalent to or
in excess of the value of the goods” in order to exercise the
option to purchase, and that that broadly satisfies the statutory language. She further
argues that the right to cancel is of no consequence.
Certainly, it would be fair to say that in this respect Perez’s rent-to-own
contracts are not a perfect fit with the words of the statute. Consequently,
we are faced with the problem recognized by Chief Justice Weintraub in New
Capitol Bar & Grill Corp. v. Div. of Emp. Sec.,
25 N.J. 155
(1957), when he said:
It is frequently difficult for a draftsman of legislation to anticipate all situations
and to measure his words against them. Hence cases inevitably arise in which
a literal application of the language used would lead to results incompatible with
the legislative design.
[Id. at 160.]
Our obligation in such a circumstance is to interpret the statute reasonably to
serve its apparent legislative purpose. In furtherance of that goal, we long ago
established that
in the quest for the intention, the letter gives way to the rationale
of the expression. The words used may be expanded or limited according to
the manifest reason and obvious purpose of the law. The spirit of the
legislative direction prevails over the literal sense of the terms. The particular words
are to be made responsive to the essential principle of the law. When
the reason of the regulation is general, though the provision is special, it
has a general acceptation. The language is not to be given a rigid
interpretation when it is apparent that such meaning was not intended. The rule
of strict construction cannot be allowed to defeat the evident legislative design. The
will of the lawgiver is to be found, not by a mechanical use
of particular words and phrases, according to their actual denotation, but by the
exercise of reason and judgment in assessing the expression as a composite whole.
The indubitable reason of the legislative terms in the aggregate is not to
be sacrificed to scholastic strictness of definition or concept. Wright v. Vogt,
7 N.J. 1 (1951). It is not the meaning of isolated words, but the
internal sense of the law, the spirit of the correlated symbols of expression,
that we seek in the exposition of a statute. The intention emerges from
the principle and policy of the act rather than the literal sense of
particular terms, standing alone. Caputo v. Best Foods, Inc.,
17 N.J. 259 (1955).
[Alexander v. N.J. Power and Light Co.,
21 N.J. 373, 378-79 (1956).]
In enacting RISA, the stated legislative purpose was protection of the public interest
through the regulation of the charges associated with the time sale of goods.
By including conditional sales, chattel mortgages, security interests, leases, and similar instruments within
RISA’s protective ambit, the Legislature signaled that it intended to sweep into the
Act as many cognate agreements as possible, even those that did not strictly
fall within a denominated category. That broad mandate, along with the well-established notion
that remedial statutes like RISA should be liberally construed to achieve their salutary
aims, Barratt v. Cushman & Wakefield,
144 N.J. 120, 127 (1996), require questions
regarding the applicability of the statute to be resolved in favor of consumers
for whose protection RISA was enacted.
So instructed, we are satisfied that the language of RISA was intended to
cover agreements like the ones between Rent-A-Center and Perez. Like most rent-to-own consumers,
Perez entered into the transactions with Rent-A-Center in order to become the owner
of the goods. She took possession of the goods pursuant to instruments that
renewed automatically and that were reflected on Rent-A-Center’s books, not as weekly leases,
but as long term arrangements of 90 to 120 weeks, respectively. A portion
of each of Perez’s payments was assigned to defray the cost of the
goods. The remainder of each payment was interest for the privilege of paying
for the goods in installments. Perez “agreed” that she would have to pay
the value of the goods in order to own them. In fact, she
would receive title upon the fulfillment of the lease provisions: payment of the
value of the goods and exercise of the option by the proffer of
the option price. Although Perez could choose not to complete the contract, the
entire transaction was structured with ownership as its goal. Thus, on the continuum
from pure lease to pure sale, we view Perez’s arrangements with Rent-A-Center as
closer to the latter than to the former.
Our conclusion is undergirded by the lease clause when read in the context
of two of the denominated RISA categories: “conditional sales” and “similar instruments.” A
sale is conditional when possession of the goods is transferred to the buyer
who will receive title at some future time upon payment of the full
price or upon the happening of some other condition or contingency. If the
contingency or condition is not satisfied, title will not pass.
See footnote 13
That definition is
fully descriptive of Perez’s leases. Possession of the goods was transferred to her
with title to pass upon the satisfaction of the lease terms and the
payment of the option price. If she ceased paying, title would not pass.
Indeed, Perez’s leases are similar in form to transactions that have been judicially
recognized as conditional sales. Nat’l Cash Register Co. v. Daly,
80 N.J.L. 39
(N.J. Sup. Ct. 1910)(finding cash register contract giving lessee option to purchase for
deposit amount at end of lease conditional sale); Lauter Co. v. Isenreath,
77 N.J.L. 323 (N.J. Sup. Ct. 1909)(finding piano contract retaining title in lessor until
all payments made and allowing repossession at any time upon any non-payment conditional
sale); Albert Lifson & Sons, Inc. v. Williams,
10 N.J. Misc. 982, 984
(Ct. Equity 1931)(finding furniture lease agreement ending in repossession upon non-compliance and ownership
upon compliance conditional sale); see also In re Vandewater & Co.,
219 F. 627 (D.N.J. 1915)(finding contract giving lessee option to purchase property during or after
installment period with deduction for lease payments conditional sale).
Although RISA does not define the term “conditional sale,” when the legislature utilizes
words that have previously been the subject of judicial construction, it is deemed
to have used those words in the sense that has been ascribed to
them. State v. Thomas,
166 N.J. 560, 567-68 (2001); Quaremba v. Allan,
67 N.J. 1, 14 (1975)(noting that in interpreting statute, it is assumed legislature is
conversant with its own legislation and judicial construction placed thereon). Thus, we view
Perez’s leases as a form of conditional sale as that term is used
in RISA.
At the very least, Perez’s leases were instruments “similar” to conditional sales. N.J.S.A.
17:16C-1(b). Indeed, it seems to us that RISA’s reference to “similar instruments” was
intended to sweep in cleverly drafted agreements like the one before us so
that “subtle distinctions” are not allowed to defeat the manifest purposes of the
law. Vandewater, supra, 219 F. at 629.
We are simply not satisfied that the cancellation provision so altered the fundamental
nature of the transaction that it insulated Perez’s leases from the protections of
RISA. That conclusion is bolstered by the fact that the majority of rent-to-own
contracts are intended for and in fact result in ownership, not cancellation. To
exclude the many purchasers from the protective sweep of RISA by providing a
cancellation option that few would exercise would be an intolerably narrow interpretation of
a statute limned for consumer protective purposes.
See footnote 14
As the Minnesota Supreme Court observed
of rent-to-own contracts like the one before us:
[A]lthough these transactions purport to be short-term leases, they operate in substance much
like ordinary installment sales. Consumers who purchase goods through rent-to-own agreements may not
incur debt, but they still implicitly pay interest in return for the ability
to pay for goods over time. Moreover, rent-to-own customers may not have an
absolute obligation to repay a principal amount, but their situation is analogous to
that of ordinary buyers on credit in that they must either forfeit possession
of a good or continue paying for it.
[Miller v. Colortyme, Inc.,
518 N.W.2d 544, 549 (Minn. 1994).]
We agree, and hold that RISA applies to the rent-to-own contracts at issue
here.
V
We turn next to Perez’s contention that the 30% interest rate cap in
the criminal usury statute, N.J.S.A. 2C:21-19(a), applies to the time price differential in
RISA.
A.
Our point of departure is the language of the act. The criminal usury
statute prohibits the taking of “any money or other property as interest on
the loan or on the forbearance of any money” in “excess of 30%
per annum.” N.J.S.A. 2C:21-19(a). As we have previously noted, the time price differential
is interest. Indeed, the terms interest and time price differential are used interchangeably
within RISA, see, e.g., 17:16C-41, and we have judicially declared them to mean
the same thing. See Singer Co. v. Gardner,
65 N.J. 403, 409 (1974)(“[t]he
interest, and thus the time-price differential”) (majority opinion); id. at 419 n.1 (“[t]he
effective interest or time price differential.”) (Pashman, J., dissenting); see also Stanton v.
Mattson,
123 N.W.2d 844, 847 (Neb. 1963)(finding time price differential to be interest
and usurious).
At the time of its enactment, RISA contained its own limitation on the
time-price differential that could be charged in connection with a retail installment sales
agreement. With the exception of motor vehicles, the cap was 10%. L. 1960,
c. 40, § 41. In 1981, as a result of escalating market interest rates
during the prior decade, Ackerman, supra,
27 Ariz. St. L.J. at 105-107, New
Jersey, like many other jurisdictions, enacted an omnibus bill, Senate Bill No. 3005
(“S. 3005”), L. 1981, c. 103, to remove interest rate caps in a
passel of different lending statutes.
See footnote 15
Specifically, in connection with RISA, S. 3005 removed
the 10% limitation on time-price differentials and adopted the present statutory language:
A retail seller and a motor vehicle installment seller, under the provisions of
this act, shall have authority to charge, contract for, receive or collect a
time price differential as defined in this act, on any retail installment contract
evidencing the sale of goods or services in an amount or amounts as
agreed to by the retail seller or motor vehicle installment
seller and the buyer on motor vehicles and on all other goods or
services.
[N.J.S.A. 17:16C-41 (emphasis added).]
That language authorizes parties to agree to the amount of a time price
differential. According to Rent-A-Center, the statute, as written, entitles it to charge what
the proverbial traffic will bear. We disagree. That might be the answer had
S. 3005 been enacted in a vacuum and had Senate Bill No. 3101
(“S. 3101”), L. 1981, c. 104, to which it was tethered, not specifically
addressed the same subject.
Indeed, at the same time that S. 3005 replaced the specific interest rate
ceilings in the lending statutes with an “agreed to” provision, the Legislature adopted
S. 3101 and amended the criminal usury statute to lower the interest rate
cap from 50% to 30%. S. 3101 was introduced by Senators Weiss, Merlino,
and Parker, the sponsors of S. 3005, during the same time frame in
which they were moving S. 3005 through the legislative process. Most importantly, S.
3101 addressed the “agreed to” language in S. 3005 and stated that its
cap would trump that language:
For the purposes of this section and notwithstanding any law of this State
which permits as a maximum interest rate a rate or rates agreed to
by the parties of the transaction, any loan or forbearance with an interest
rate which exceeds 30% per annum shall not be a rate authorized or
permitted by law . . . .
[N.J.S.A. 2C:21-19 (emphasis added).]
Because RISA is, in substance, a “law of this state which permits as
a maximum interest rate a rate or rates agreed to by the parties,”
it is subject to the 30% cap in N.J.S.A. 2C:21-19.
Apart from the very language of those acts, we think the circumstances surrounding
their passage are powerful interpretative aids. Indeed, in Fried v. Kervick,
34 N.J. 68 (1961), we noted that statutes that are adopted on the same day
should be read in pari materia:
The statute being assailed . . . was adopted by the Legislature on
the same day as the amendment to [the other statute]. The similarity of
their subject matter, even though the latter is general in scope while the
former is special, renders inescapable the conclusion that they are in pari materia,
at least to the extent that both are reflective of the same type
of legislative philosophy.
Id. at 70-71; accord State v. Tillem,
127 N.J. Super. 421, 427 (App.
Div. 1974) (observing the particular importance of considering together statutory provisions “passed at
the same time to effectuate a given result or to overcome a certain
evil”); Norman J. Singer, 2A Sutherland Statutes and Statutory Construction § 51:3 (6th ed.
2000) (“[T]he rule that statutes in pari materia should be construed together has
the greatest probative force in the case of statutes relating to the same
subject matter passed at the same session of the Legislature, especially if they
were passed or approved or to take effect on the same day.”) (citations
omitted).
Applying those principles to S. 3005 and S. 3101, it seems clear to
us from the identity of language and sponsorship and the lockstep enactment of
those statutes that the Legislature intended, on the one hand, to free parties
to retail installment sales contracts to agree to interest rates reflective of market
conditions and, on the other, to protect consumers from overreaching merchants by imposing
an absolute cap of 30% within which the parties to a RISA contract
could negotiate.
If there was any doubt about that conclusion, Governor Byrne laid it to
rest in his statement upon signing the bills. He recognized concerns over the
elimination of interest rate ceilings in S. 3005:
Some believe that this bill will ruin many consumers. I disagree. I expect
that our banks and other lenders will behave responsibly; competitive pressures should prevent
lenders from setting artificially high interest rates. Similarly, I believe that most New
Jersey consumers will avoid excessive indebtedness.
[Statement of Governor Brendan Byrne in Signing S. 3005 and S. 3101 (March
31, 1981).]
Significantly, he also declared that those concerns by opponents of S. 3005 were
ameliorated by the lowering of the criminal usury rate to 30%. See id.
In that connection, it is well-established that “the governor’s action in approving or
vetoing a bill constitutes a part of the legislative process, and the action
of the governor upon a bill may be considered in determining legislative intent.”
Sutherland Statutory Construction, supra, § 48.05, cited approvingly in State v. Sutton,
132 N.J. 471, 483 (1993); Fields v. Hoffman,
105 N.J. 262, 270 (1987). We take
from the legislative history, including the governor’s message, a legislative intent to create
a seamless scheme pursuant to which consumers and sellers are accorded flexibility to
negotiate interest rates to reflect market conditions subject to the 30% safety cap. B.
Rent-A-Center’s arguments that the criminal usury statute cannot have been intended to apply
to RISA do not withstand scrutiny. First, there is nothing in the usury
statute to suggest that its specific reference to the “agreed to” language was
intended to exclude RISA. Second, as we have noted, and despite Rent-A-Center’s contrary
argument, the time price differential is, in fact, “interest,” which is the operative
term in the usury statute. Thus, there is nothing on the face of
the statute that would be viola