CECIL v ALLIED STORES

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No. 12308 I N THE SUPREME C U T O TEE STATE O M N A A OR F F OTN 1973 BETTY JANE CECIL, ON BEHALF O HERSELF F AND ALL OTHERS SIMILARLY SITUATED, P l a i n t i f f and Respondent, ALLIED STORES CORPORATION, a Delaware Corporation, and "THE PARIS O MONTANA", F a d i v i s i o n of A l l i e d S t o r e s Corporation, Defendants and Appellants. Appeal from: D i s t r i c t Court of t h e Eighth J u d i c i a l D i s t r i c t , Honorable Paul G . Hatf i e l d , Judge p r e s i d i n g . Counsel o f Record : For A p p e l l a n t s : J a r d i n e , Stephenson, Blewett and Weaver, Great F a l l s , Montana, John D. Stephenson argued, Great F a l l s , Montana. For Respondent : Smith, Emmons and B a i l l i e , Great F a l l s , Montana. Robert J . Emons argued and Marvin J. Smith and William L , B a i l l i e appeared, Great F a l l s , Montana, AMICUS CURIAE Wesley Wertz , argued, Helena, Montana. Kendrick Smith argued, B u t t e , Montana. Edward Alexander argued, Great F a l l s , Montana. C a l e Crowley appeared, Billings. A. W. S c r i b n e r appeared, Helena, Montana. Geoffrey B r a z i e r appeared, Helena, Montana. Submitted: L F i l e d : m 2 6 1373 Decided : March 26, 1973 2 6.1913 PER CURIAM: This is a class action by a revolving charge account customer against a retail department store seeking a declaratory judgment (1) that the Montana Retail Installment Sales Act is unconstitutional, or in the alternative (2) that the revolving charge account plan of the store violated the Act prior to its amendment in 1971, and ( ) that relief should be granted to all revolving 3 charge account customers of the store in the form of refunds of finance charges, punitive damages, attorney's and accountant's fees, interest and costs. The district court of the eighth judicial district, Cascade County, granted summary judgment to the customers; the store appeals. Plaintiff is Betty Jane Cecil who has had a revolving charge account for several years with a retail department store in Great Falls, The Paris of Montana, one of the defendants. The other defendant is the parent corporation of The Paris, Allied Stores Corporation. Plaintiff has incurred and paid finance charges on her revolving charge account with The Paris for the past several years. Also appearing either by brief, oral argument, or both as Amicus Curiae were: Cale Crowley, Esq. (Montana Retailers Association); Kendrick Smith, Esq. (numerous Montana retail stores); Geoffrey L. Brazier, Esq. (State and local Chambers of Commerce); Edward C. Alexander, (oil companies); A. W. Scribner, Esq. (Montana Automobile Dealers Association); and Wesley FJ. Wertz, Esq. (Montana Bankers Association). The Paris has operated its revolving charge account plan since about 1955. Under the plan the customer and The Paris enter into a written agreement covering future retail purchases of merchandise on credit. If the customer does not wish to pay cash for a particular item of merchandise, the sale is recorded for billing purposes subject to the prior revolving charge account agreement. The purchase i s recorded on t h e customer's account and a monthly statement i s mailed t o him. P r i o r t o J u l y 1, 1971, t h e finance charge was imposed upon t h e balance from t h e previous monthly b i l l i n g c y c l e ; s i n c e then finance charges have been compiled on t h e average d a i l y balance i n the account during t h e b i l l i n g c y c l e (excluding c u r r e n t purchases and unpaid finance charges). Thus, t h e customer can avoid payment of any finance charges by paying t h e unpaid balance of h i s account w i t h i n t e n days a f t e r r e c e i p t of t h e b i l l i n g following t h e c l o s e of t h e b i l l i n g cycle. I f t h e customer chooses t o pay t h e unpaid balance of h i s account over a longer period of time, he does so i n accordance with t h e payment schedule i n t h e revolving charge account agreement. The minimum monthly payment under t h e agreement i s t e n percent of t h e unpaid balance, s u b j e c t t o a f l a t minimum charge of f i f t y c e n t s per month i n any case. I n e x e r c i s i n g h i s choice t o make i n s t a l l m e n t s payments over a longer period of time, t h e customer agrees t o pay a finance charge of one and one-half percent per month (computed on t h e previous month's unpaid balance p r i o r t o J u l y 1, 1971 and computed on t h e average d a i l y balance i n t h e b i l l i n g cycle thereafter). A l l revolving charge account customers of The P a r i s a r e s u b j e c t t o t h i s plan. The revolving charge account agreement has been r e v i s e d from time t o t i m e over t h e years but i t s e s s e n t i a l f e a t u r e s have remained unchanged. The o r i g i n a l complaint i n t h i s case was f i l e d on January 6 , 1971, i n t h e d i s t r i c t c o u r t of Cascade County. Two months l a t e r an amended complaint was f i l e d which forms t h e b a s i s of t h i s a c t i o n . Count I a l l e g e d t h e revolving charge account finance charges of The P a r i s were i l l e g a l because those s e c t i o n s of t h e Montana R e t a i l I n s t a l l m e n t Sales Act permitting such charges were u n c o n s t i t u t i o n a l , Count I1 presented an a l t e r n a t i v e theory of recovery: t h a t presuming t h e Act i s c o n s t i t u t i o n a l , The P a r i s nonetheless v i o l a t e d i t s terms p r i o r t o t h e 1971 amendment i n imposing and c o l l e c t i n g finance charges on i t s revolving charge accounts. Following defendants' answer containing a denial, a variety of other defenses unnecessary to detail herein, and extensive pretrial discovery proceedings, plaintiff filed a motion for summary judgment and a motion seeking determination of whether the case was maintainable as a class action. The district court granted both motions and entered summary judgment for Betty Jane Cecil and all members of her class. The summary judgment on Count I declares the maximum finance charges contained in the Montana Retail Installment Sales Act (other than those applicable to motor vehicles) unconstitutional on three grounds: (1) Violation of Art. V,, Sec. 26, 1889 Montana Constitution, prohibiting special laws regulating interest. (2) Violation of Art. V., Sec. 26, 1889 Montana Constitution, prohibiting grants of special or exclusive privileges, immunities or franchises. (3) Violation of Art. IIL, Sec. 3, 1889 Montana Constitution, permitting every person to acquire or possess property. The summary judgment on Count I accordingly requires The Paris to refund to all its revolving charge account customers all finance charges collected from January 6, 1966 to date of judgment, less a credit of six percent interest on delinquent accounts during the period of delinquency. The summary judgment on Court I1 alternatively declares that The Paris violated sections 74-607 and 74-608, R.C.M. 1947, of the Montana Retail Installment Sales Act prior to the 1971 amend- ment, and consequently was barred from charging or receiving any finance charges collected between March 9, 1969 through June 30, 1971, and requires refund of such charges. It held in abeyance, pending appeal, determination of whether revolving charge account customers were entitled to punitive damages. The summary judgment on Count I1 was expressly made operative only in the event the judgment on Count I was reversed on appeal. This appeal is from the summary judgment of the district court. I n view of our r u l i n g s h e r e i n a f t e r set f o r t h , t h e c o n t r o l l i n g i s s u e s can be summarized i n t h i s fashion: (1) Is t h e Montana R e t a i l I n s t a l l m e n t Sales Act u n c o n s t i t u t i o n a l ? (2) Did t h e revolving charge account plan of The P a r i s v i o l a t e t h e Act p r i o r t o i t s 1971 amendment? The a d d i t i o n a l i s s u e s assigned f o r review concern damages, t h e e x i s t e n c e of genuine i s s u e s of m a t e r i a l f a c t precluding summary judgment f o r p l a i n t i f f , and the maintenance of t h i s s u i t a s a class action. None of t h e s e a d d i t i o n a l i s s u e s a r e m a t e r i a l t o our d e c i s i o n herein. By way of background we note t h a t Montana has a general usury s t a t u t e p r o h i b i t i n g t h e charging o r r e c e i v i n g of any r a t e of " i n t e r e s t " exceeding t e n percent per year. R.C.M. 1947. Section 47-125, It a l s o has a s t a t u t e d e f i n i n g i n t e r e s t a s "the compensation allowed by law o r f i x e d by t h e p a r t i e s f o r t h e use, o r forbearance, o r d e t e n t i o n of money." 1947. Section 47-122, R.C.M. Since 1959, Montana has had a R e t a i l I n s t a l l m e n t Sales Act, s e c t i o n 74-601, e t . s e q . , R.C.M. 1947, containing finance charge l i m i t a t i o n s f o r covered r e t a i l i n s t a l l m e n t t r a n s a c t i o n s which allows finance charges i n excess of t h e maximum i n t e r e s t r a t e permitted under t h e foregoing general usury s t a t u t e , The Act g e n e r a l l y covers s a l e s of goads and s e r v i c e s by r e t a i l s e l l e r s t o r e t a i l buyers pursuant t o i n s t a l l m e n t t r a n s actions. I t covers i n d e t a i l t h e requirements, p r o h i b i t i o n s , and c o n t e n t s of such c o n t r a c t s , imposes c e i l i n g s on finance and s e r v i c e charges, and provides t h e method of computation of finance charges. The c e i l i n g s on automobiles vary according t o t h e age of t h e automobile from $ 7 per $100 per year f o r new c a r s t o $11 per $100 per year on used c a r s over two years old. The c e i l i n g s on o t h e r goods and s e r v i c e s vary according t o t h e p r i n c i p a l balance owed: on t h a t p o r t i o n of t h e p r i n c i p a l balance owed up t o $300 a t t h e r a t e of $11 per $100 per year; on t h a t p o r t i o n of t h e p r i n c i p a l balance owed from $300 t o $1,000 a t t h e r a t e of $9 per $100 per year; and on t h a t p o r t i o n of t h e p r i n c i p a l balance owed exceeding $1,000 a t t h e r a t e of $7 per $100 per year. The Act a l s o provides f o r a system of licensing and regulation of sales finance companies engaged in the business of purchasing retail installment contracts from retail sellers. Civil and criminal penalties are provided for violations of the Act. The Act was amended effective July 1, 1971 to expressly cover revolving charge account transactions and to prohibit finance charges thereon exceeding one and one-half percent per month. plaintiff's constitutional attack is directed against the finance charges authorized in section 74-608 of the Act, both before and after the 1971 amendment. threefold: Plaintiff's contentions are (1) The finance charges violate that part of Art. V., Sec. 26, 1889 Montana Constitution, prohibiting enactment of local or special laws 11 regulating the rate of interest on money"; (2) the finance charges violate that part of Art. V., Sec, 26, 1889 Montana Constitution, prohibiting enactment local or special laws granting 11any special or exclusive privilege, immunity or franchise"; and (3) the finance charges violate that part of Art. III., Sec. 3, 1889 Montana Constitution, permitting all persons to acquire and possess property. The district court held the finance charges contained in the Act unconstitutional on each of the above grounds, summarizing its rationale in this language: I t+< * My conclusion on the constitutional questions is based principally on the conclusion the interest rates granted by Sec. 74-608, supra, are special interest rates. From this conclusion flows the conclusion the special interest rates are a special privilege or franchise to retail sellers or banks resulting in their being immune from the general usury law penalties. As a result of this special privilege, franchise and immunity, all other citizens of Montana are prohibited from acquiring property, i.e. money, by charging such rates. If they were to do so, and were not within the privileged class of retail sellers and banks issuing credit cards, they would be subject to the usury penalties of this state. 1 I -*a It is thus apparent the district court's ruling that the Act is unconstitutional rests on a dual foundation (1) that the finance charges authorized by the Act constitute interest, and (2) that the Act is a special law. IJe hold t h a t t h e f i n a n c e charges permitted by t h e Act a r e time p r i c e d i f f e r e n t i a l s included i n t h e p r i c e of goods purchased on c r e d i t and payable i n i n s t a l l m e n t s , and a s such a r e n o t s u b j e c t t o c o n s t i t u t i o n a l o r s t a t u t o r y l i m i t a t i o n s on i n t e r e s t r a t e s . The time p r i c e d o c t r i n e exempting bona f i d e s a l e s from maximum i n t e r e s t r a t e s has been f i r m l y embedded i n t h e common law of England s i n c e t h e eighteenth century. Floyer v. Edwards, (K.B. Rep. 995; Beete v. Bidgood, (K.B. 17741, 98 Eng* 1827), 108 Eng. Rep. 792. It h a s l i k e w i s e been a f i r m l y e s t a b l i s h e d r u l e o f law throughout most of t h e United S t a t e s f o r over 100 y e a r s , t h e United S t a t e s Supreme Court having recognized i t i n 1861 i n t h e l e a d i n g c a s e of Hogg v. Ruffner, 66 U.S. 115, 17 L ed 38. I t i s considered t h e e s t a b l i s h e d g e n e r a l r u l e by some t e x t a u t h o r i t i e s , 45 Am J u r 2d, I n t e r e s t & Usury, 5 123; a recognized p r i n c i p l e of law by o t h e r s , 91 C.J.S. Usury, 5 1 8 ( b ) ; and a n e x c e p t i o n t o usury p r o h i b i t i o n s because t h e r e i s no loan o f money by Restatement of t h e Law of C o n t r a c t s , 5 526, I l l u s t r a t i o n 4. Perhaps t h e b e s t summary s t a t e m e n t of t h e time p r i c e d o c t r i n e i s found i n t h e following statement from 6 he s t a t u t e of Anne a p p l i e d only t o a loan o r forbearance of money, and i n t h e c o n s t r u c t i o n of t h i s s t a t u t e i t was h e l d t h a t where p r o p e r t y was s o l d , even though t h e c o n t r a c t provided i n terms f o r t h e payment of a f i x e d p r i c e payable I n the future with i n t e r e s t a t a g r e a t e r r a t e than t h a t allowed by t h e s t a t u t e , t h e t r a n s a c t i o n was, n e v e r t h e l e s s , n o t u s u r i o u s s i n c e e v e r y t h i n g t h e buyer promised must be deemed c o n s i d e r a t i o n f o r t h e s a l e of p r o p e r t y , n o t i n t e r e s t on a l o a n o r forbearance of money. I n t h e United S t a t e s l i k e s t a t u t e s have been s i m i l a r l y c o n s t r u e d , so t h a t where p r o p e r t y i s s o l d t h e p a r t i e s may a g r e e t h a t t h e p r i c e , i f paid a f t e r a c e r t a i n time, s h a l l b e a sum g r e a t e r by more than l e g a l i n t e r e s t than t h e p r i c e payable a t an e a r l i e r day; and though t h e d i f f e r e n c e between an agreed p r i c e f o r cash and t h a t f o r c r e d i t i s i n terms s t a t e d i n t h e form of i n t e r e s t a t g r e a t e r than t h e l e g a l r a t e , t h e cont r a c t i s not usurious. II E most j u r i s d i c t i o n s i n t h e United S t a t e s a time p r i c e s a l e n i s beyond t h e ambit of usury l i m i t a t i o n s simply because i n t e r e s t i s n o t involved and t h e usury laws a p p l y t o loans and n o t t o s a l e s . For recent examples see: Maine Merchants Association, Inc. v. Campbell (~aine1972), 287 A.2d 430; Sliger v. R. H. Macy & Co., (1971) 59 N.J. 465, 283 A.2d 904; Zachary v. R. H. Macy Inc., (1972), 31 N.Y.2d 443, 340 N.Y.S.2d & Co., 908; Dennis v. Sears, Roebuck & Co., (1969) 223 Tenn, 415, 446 S.W.2d 260; Mandelino v. Fribourg, (1968) 23 M.Y.2d 145, 242 N.E.2d 823; Steffenauer v. Xytelka & Rose, Inc., (1965) 87 N.J.Super, 506, 210 A.2d 88, ~ff'd1966 46 N.J. 299, 216 A.2d 585; Manufacturer's Advertising Inc. v. Pancoast, (1967) 4 Conn. Cir. 668, 238 A.2d 810; Equipment Finance Inc. v Grannas, (1966) 207 Pa,Super 363, 218 A. 2d 81; . Lundstrom v. Radio Corporation of America, (1965) 17 Utah 2d 114, 405 P. 2d 339; Smith v. Sherwood & Roberts, Spokane Inc., (1968) 92 Idaho 248, 441 P.2d 158; Theodore Roosevelt Agency v. General Motors Acc. Corp., (1965) 156 Colo. 237, 398 P.2d 965; Howell v. Mid-State Homes, Inc., (1970) 13 Ariz.App. 371, 476 P.2d 892; c; .!A/- ,t,c/i el 1 ALR3d 1077; Kass v. G x i d ~ e f -(D.C. 1973), 299 A. 2d 542; 4 ~ -1 Standard Oil Company v. Williams, (1ndyi972), 288 N.E. 2d 170. However, the courts of a few states, while recognizing the time price doctrine, have held that finance charges authorized in installment sales acts are not bona fide time price differentials but are in fact interest and subject to limitations in the usury laws. Elder v. Doerr, (1963), 175 Neb. 483, 122 N.W.2d 528; Lloyd v. Gutgsell, (1963), 175 Neb. 775, 124 N.W.2d 198; State v . J.C. A25, 179 N.GJ.2d Denney Co., (1970) 48 Wisc' 641; Rollinger v. J.C. Penney Company, (S.Dak. 1971), 192 N.W.2d 699. The reasoning behind these minority holdings is that finance charges in installment sales acts are charges for the forbearance of money which falls within statutory definitions of interest; that installment sales acts containing finance charges based on a percentage or ratio of the unpaid balance do not qualify as true time price sales; and that finance charges authorized under installment sales acts are simply a device to evade usury laws. Directing our attention to the Montana Retail Installment Sales ~ c and The P a r i s r e v o l v i n g charge account p l a n , we n o t e t h e d i s t t r i c t c o u r t h e l d t h a t t h e Act was n o t a c o d i f i c a t i o n of t h e time p r i c e d o c t r i n e ; t h a t t h e f i n a n c e charges a u t h o r i z e d by t h e Act were compensation f o r t h e 1' forbearance of money" w i t h i n t h e s t a t u t o r y d e f i n i t i o n of i n t e r e s t found i n s e c t i o n 47-122, R.C.M. 1947; and t h a t t h e r e v o l v i n g charge account plan of The P a r i s was simply t o o g r e a t a d e p a r t u r e from e s t a b l i s h e d concepts of a time p r i c e s a l e t o be brought w i t h i n t h e exemption. The d i s t r i c t c o u r t ' s holding was based p r i n c i p a l l y on t h e c a s e s l i s t e d i n t h e preceding paragraph, t h e p e r t i n e n t c o n s t i t u t i o n a l and s t a t u t o r y p r o v i s i o n s of t h e 1889 Montana C o n s t i t u t i o n , and t h e s e a d d i t i o n a l a u t h o r i t i e s : Ulvilden v. Sorken, 58 S.D. 466, 237 N.W. 565; Sloan v. S e a r s , Roebuck and Co., 228 Ark. 464, 308 S.W.2d 802; Stanton v. Mattson, 175 Neb. 767, 123 N.W.2d 844. W have r e a d and c o n s i d e r e d t h e s e e a u t h o r i t i e s b u t remain unimpressed. I n our view, t h e Montana R e t a i l I n s t a l l m e n t S a l e s Act i s a c o d i f i c a t i o n of t h e time p r i c e d o c t r i n e . S e c t i o n 74-602, R.C.M. 1947, a s o r i g i n a l l y enacted c o n t a i n e d t h e s e d e f i n i t i o n s : Retail installment contract' o r 1contract' means an agreement evidencing a r e t a i l i n s t a l l m e n t t r a n s a c t i o n e n t e r e d i n t o i n t h i s s t a t e pursuant t o which a buyer promises t o pay i n one o r more d e f e r r e d i n s t a l l m e n t s t h e time s a l e p r i c e of goods and/or s e r v i c e s . 9; 9: 9 ~ " "(g) I ' ~ i n a n c echarge' means t h e amount, a s l i m i t e d "(k) by s e c t i o n 74-608, i n a d d i t i o n t o t h e p r i n c i p a l balance, agreed upon between t h e buyer and t h e s e l l e r , t o be paid by t h e buyer f o r t h e p r i v i l e g e of purchasing goods o r s e r v i c e s t o be paid f o r by t h e buyer i n one o r more d e f e r r e d i n s t a l l m e n t s . "(1) 'Time s a l e p r i c e ' means t h e t o t a l of t h e cash s a l e p r i c e of t h e goods o r s e r v i c e s and t h e amount, i f any, included f o r i n s u r a n c e and o t h e r b e n e f i t s i f a s e p a r a t e i d e n t i f i e d charge i s made t h e r e f o r and t h e amounts of t h e o f f i c i a l f e e s and t h e f i n a n c e charge.,I I (Emphasis s u p p l i e d ) These d e f i n i t i o n s were c a r r i e d forward a f t e r t h e 1971 amendments which s p e c i f i c a l l y p e r t a i n t o r e t a i l charge account agreements i n d i c a t i n g l e g i s l a t i v e r e c o g n i t i o n t h a t f i n a n c e charges upon r e t a i l charge accounts a r e time p r i c e d i f f e r e n t i a l s . Sec- t i o n 74-607(j) of both t h e o r i g i n a l and amended Act provides t h a t when t h e buyer d e f a u l t s i n t h e payment of an i n s t a l l m e n t of t h e time s a l e p r i c e , the buyer i s s u b j e c t t o e i t h e r a d e f i c i e n c y charge o r i n t e r e s t upon such defaulted i n s t a l l m e n t . i s a charge f o r forbearance This i n t e r e s t of money and i s payable i n a d d i t i o n t o t h e finance charges i n t h e Act. Thus t h e l e g i s l a t u r e has d i s t i n g u i s h e d between i n t e r e s t charges f o r t h e forbearance of money a f t e r d e f a u l t and finance charges included i n t h e time s a l e price. The finance charges i n the Act a r e n o t compensation f o r t h e forbearance of money w i t h i n t h e s t a t u t o r y d e f i n i t i o n of i n t e r e s t i n s e c t i o n 47-122, R . C . M . 1947. Forbearance i s t h e a c t by which a c r e d i t o r w a i t s f o r payment of a debt due him a f t e r i t becomes due. - lack's Law Dictionary, 4 t h Ed., o r a s put by t h e c o u r t i n Hafer v. Spaeth, 22 Wash.2d 378, 156 P.2d 408, 411: "The term ' forbearancef a s used i n t h e law of usury, s i g n i f i e s a c o n t r a c t u a l o b l i g a t i o n of lender o r c r e d i t o r t o r e f r a i n , during a given period of time, from r e q u i r i n g t h e borrower o r debtor t o pay a loan o r debt then due and payable." (Emphasis supplied) Where a customer purchases goods under a revolving charge account such a s The P a r i s p l a n , t h e debt c r e a t e d by t h e purchase i s a time o b l i g a t i o n and i s n o t then due because of t h e express provisions of t h e revolving charge account agreement which allows t h e customer t o pay f o r t h e purchase i n i n s t a l l m e n t s over a period of time. To hold t h a t s a l e s under revolving charge account plans do n o t q u a l i f y a s t r u e time p r i c e s a l e s i s t o subordinate substance t o form. While i t i s t r u e t h a t t r a d i t i o n a l l y time p r i c e s a l e s included "closed end" t r a n s a c t i o n s wherein one o r more a r t i c l e s w e r e s o l d a t t h e same time under one c o n t r a c t i n which t h e charge f o r c r e d i t was merged i n t h e s a l e p r i c e which was s t a t e d a s a time p r i c e , the substance of a time p r i c e s a l e i s simply a c r e d i t p r i c e repayable i n i n s t a l l m e n t s . W perceive no l o g i c i n denying e a p p l i c a t i o n of t h e time p r i c e d o c t r i n e t o revolving charge account s a l e s simply because they a r e governed by t h e terms of one p r i c e ' agreement covering all future purchases from time to time rather than a series of identical individual agreements entered into at the time of each individual sale. For the foregoing reasons we hold that the finance charges in the Montana Retail Installment Sales Act are not interest but are time price differentials and accordingly the Act is not legislation "regulating the rate of interest on money" proscribed by Art. V., Sec. 26, 1889 Montana Constitution. Nor is it a special law within the same constitutional prohibition. It is clear that reasonable classifications and distinctions in legislative enactments which operate equally upon every person or thing in a given class are constitutionally permissible and do not violate the constitutional prohibition against special laws found in Art. V., Sec. 26, 1889 Montana Constitition. State ex rel, Hamrnond v. Hager, . Mont -* P 503 P.2d 52, 29 St.Rep. 945 (upholding constitutionality of exclusion of agricultural works from the workmen's Compensation Act); Calvert v. City of Great Falls, 154 Mont. 213, 462 P.2d 182 (upholding constitutionality of exemptions of land used for specific enterprises from compulsory annexation statute); Great Falls National Bank v. McCormick, 152 Mont. 319, 448 P.2d 991 (upholding constitutionality of Small Tract Financing Act applicable only to tracts of land less than three acres); Montana Meat Co. v. Missoula Livestock Auction Co., 125 Mont. 66, 230 P.2d 955 (upholding constitutionality of statute exempting livestock auctioneers from liability for conversion of mortgaged livestock); Rutherford v. City of Great Falls, 107 Mont. 512, 86 P.2d 656 (upholding constitutionality of statute for construction of housing for 11 low income ~ersons"). It is equally clear from the foregoing cases that legislative classifications carry a presumption of constitutionality which can only be overcome by an affirmative showing that there is no valid reason or basis for singling out a h articular class or thing for different legislative treatment. Here the legislature has singled out a particular class of persons, i,e. retail sellers who sell to retail buyers, and a particular subject matter, i.e. installment sales of personal property under written contract, for special legislative treatment. The legislature has subjected these persons and trans- actions to special regulatory measures and has established ceilings on finance and service charges. Is there a reasonable basis for this classification and different treatment? Clearly there is. In economic terms, the cost of extending consumer credit is substantially higher than extending wholesale credit to a few business firms, for example. The sheer volume of consumer credit accounts entails substantially higher costs in servicing such accounts. For more detailed treatment of the economic basis for differentiation see: 63 Harvard Law Review, Regulation of Retail Installment Sales , 877, 878; Consumer Installment Credit, Federal Reserve System 1957, Vol. 1, part 1; Economic Characterization of Department Store Credit, National Retail Merchants Ass'n 1969, The remaining constitutional objections to the Act can be dealt with summarily. The district court concluded that the Act is a special law granting II special or exclusive privileges, immunities or franchises" within the prohibitions of Art. V., Sec, 26, 1889 Constitution of Montana, and that the Act interferes with the right of non-retail sellers to "acquire property" guaranteed by Art. III., Sec. 3, 1889 Montana Constitution, because they are allegedly denied the right to charge the same finance charge rates as retail sellers. These alleged violations both depend on whether the legislative classifications in the Act are constitutionally permissible. Having found the classification reasonable and constitutionally permissible for the reasons heretofore set forth, the Act is not a "special" law and the constitutional attack must fail, For t h e foregoing reasons we hold t h a t t h e Montana R e t a i l I n s t a l l m e n t Sales Act, both before and a f t e r i t s amendment i n 1971, i s c o n s t i t u t i o n a l and the d i s t r i c t c o u r t ' s holding t o t h e c o n t r a r y must be s e t a s i d e . D i r e c t i n g our a t t e n t i o n t o t h e second i s s u e f o r review, p l a i n t i f f contends t h a t t h e Montana R e t a i l I n s t a l l m e n t Sales Act preempted t h e f i e l d of a l l i n s t a l l m e n t s a l e s and a s t h e revolving charge account plan of The P a r i s d i d n o t comply with i t s provisions p r i o r t o t h e 1971 amendment, The P a r i s was n o t authorized t o charge and r e c e i v e t h e finance charges i t did. I n i t i a l l y i t i s c l e a r t h a t revolving charge account s a l e s could n o t and d i d n o t conply with t h e requirements of t h e Act p r i o r t o i t s amendment i n 1971, Section 74-608(b) of t h e o r i g i n a l Act r e q u i r e d t h e finance charge t o be computed from t h e d a t e of i n s t a l l m e n t purchase u n t i l maturity; i n revolving c r e d i t s a l e s finance charges cannot be precomputed. Section 74-607(f) required t h e finance charge t o be s t a t e d i n d o l l a r s and c e n t s ; i n revolving c r e d i t s a l e s t h i s i s impossible because such charges cannot be precohputed. Section 74-608(b) required computing of t h e finance charge from d a t e of s a l e t o maturity; revolving charge accounts compute t h e finance charges on a monthly b a s i s and add them t o t h e balance before i n s t a l l m e n t payments a r e c r e d i t e d t o t h e account. Section 74-607 required t h e i n s t a l l m e n t c o n t r a c t t o c o n t a i n e i g h t s p e c i f i c elements showing computation of t h e cash p r i c e , down payment, amount of finance charge, t o t a l t i m e balance and o t h e r items, most of which have no a p p l i c a t i o n t o revolving charge accounts. But does t h i s mean t h a t The P a r i s v i o l a t e d t h e Act p r i o r t o t h e 1971 amendment? Not a t a l l . Contrary t o t h e viewpoint of p l a i n t i f f , t h e Act i s a r e g u l a t o r y measure on finance charges and n o t a s t a t u t e c o n f e r r i n g s p e c i a l b e n e f i t s i n the form of high finance charges f o r t h e p r i v i l e g e d few f a l l i n g w i t h i n i t s provisions. The Act p r i o r t o amendment simply d i d n o t attempt o r purport t o r e g u l a t e revolving charge account s a l e s o r t h e finance charges thereon. It simply r e g u l a t e d "closed end" r e t a i l i n s t a l l - ment c o n t r a c t s such a s c o n d i t i o n a l s a l e s c o n t r a c t s , c h a t t e l mortgages, bailments o r l e a s e s with option t o purchase and t h e l i k e . This i s c l e a r from t h e provisions of s e c t i o n 74-602, d e f i n i n g r e t a i l installment transactions, r e t a i l installment contracts, r e t a i l Subsections (d) , (e) , ( f ) , and ( g ) , buyers, and r e t a i l s e l l e r s . s e c t i o n 74-602. There i s nothing i n t h e Act, p r i o r t o i t s amend- ment, which purports t o r e g u l a t e o r p r o h i b i t s a l e s under revolving charge accounts o r t h e finance charges on such s a l e s . Finance charges on revolving charge account s a l e s w e r e simply unregulated p r i o r t o 1971. Limitations on i n t e r e s t r a t e s under t h e general usury s t a t u t e d i d not apply because of t h e time p r i c e d o c t r i n e c o d i f i e d i n t h e Act. The l e g i s l a t u r e , viewing t h i s s i t u a - t i o n i n 1971, amended t h e Act s p e c i f i c a l l y t - d mver revolving charge account s a l e s and r e g u l a t e t h e maximum permissible finance charges thereon. Chapter 416, Session Laws 1971. The 1971 amendment maintains a d i s t i n c t i o n between r e t a i l i n s t a l l m e n t c o n t r a c t s account covered p r i o r t o t h e amendment, and r e t a i l chargelagreements specif i c a l l y included f o r t h e f i r s t time i n t h e 1971 amendment. D i f f e r e n t finance charge r a t e s t r u c t u r e s a r e presented f o r each, s e c t i o n 4 74-608 ( a ) , (b), and (c) f o r r e t a i l i n s t a l l m e n t c o n t r a c t s ; s e c t i o n 74-608(d) and ( e ) f o r r e t a i l charge account agreements. The formal c o n t r a c t provisions r e q u i r e d by s e c t i o n 74-607 and t h e provisions r e l a t i n g t o s a l e s finance companies, s e c t i o n s 74-603 and 74-604, apply only t o r e t a i l i n s t a l l m e n t c o n t r a c t s and do n o t a f f e c t r e t a i l charge account agreements. The l e g i s l a t u r e , a t l e a s t , d i d n o t consider t h a t revolving charge account s a l e s and t h e finance charges permissible thereon t o have been covered by t h e Act p r i o r t o 1971. W concur i n t h i s assessment of t h e e situation. W hold t h a t The P a r i s d i d n o t v i o l a t e t h e Montana R e t a i l e I n s t a l l m e n t S a l e s Act p r i o r t o t h e 1971 amendment by r e a s o n of i t s r e v o l v i n g charge account o p e r a t i o n and t h e f i n a n c e c h a r g e s imposed and r e c e i v e d . The judgment of t h e d i s t r i c t c o u r t i s r e v e r s e d and p l a i n t i f f ' s complaint i s dismissed.

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