State
of Vermont v. Custom Pools, Chemical Bank and Gramatan Home Investors
Supreme Court of Vermont
150 Vt. 533; 556 A.2d 72; 1988 Vt.
LEXIS 232
November 18, 1988, Opinion filed
This appeal, brought by the State of Vermont, requires us to
determine the authority of the Attorney General to proceed under the
Consumer Fraud Act, 9 V.S.A. § 2451 et seq., against the holders
of notes and mortgages obtained by their assignor in violation of the
Act. The trial court found no such authority. We disagree and reverse.
I.
Defendant, Custom Pools, Inc., ("Custom") engaged in the business of
the home solicitation sale, installation and service of above-ground
swimming pools. Custom advertised quality swimming pools which would
sell for $ 629.00. Consumers who responded to the advertisements would
be visited at their home by a salesperson. The salesperson would
disparage the $ 629.00 pool and would "switch" the consumer to pools
which sold for prices ranging from $ 3,200.00 to $ 5,000.00. Various
representations concerning the pools were made by the salesperson.
Material representations proved to be false.
If a sale was made, Custom would arrange financing for the consumer
with defendant Gramatan Home Investors Corporation ("Gramatan"). The
salesperson obtained the consumer's signature on second mortgage
documents encumbering the consumer's home without the knowledge of the
consumer. This was accomplished by having the consumer sign a series of
documents attached to a clipboard in a manner that allowed only the top
sheet, usually the retail installment contract, to be fully visible.
The mortage deeds were subsequently notarized by notaries public before
whom the consumer did not appear.
The contract and mortgage forms were supplied to Custom by Gramatan.
Gramatan also instructed Custom's sales personnel as to the method of
filling out these documents. These instructions did not include a
directive to leave a copy of the mortgage documents with the consumer.
Subsequent to a sale, Gramatan would call the consumer to inquire
whether the pool had been installed. No inquiries were made concerning
the consumer's knowledge of the mortgage.
Pursuant to written agreements, Gramatan sold the installment contracts
and mortgages to Chemical Bank ("Chemical"). Chemical paid Gramatan the
net amount of the obligation paid by Gramatan to Custom plus the
difference between the finance charge which had been disclosed to the
consumer and a finance charge that would would apply at certain add-on
rates for specific terms. Within two to five days of
the execution of the documents by the consumer, Chemical directly
notified the consumer of the assignment to Chemical and provided the
consumer with a book of coupons to use when making payments.
The present action was commenced by the Attorney General on behalf of
State of Vermont and on behalf of Vermont consumers to address alleged
violations of the Consumer Fraud Act. Originally, the only defendant
was Custom. Subsequently, Gramatan intervened and Chemical was joined
as a party defendant.
At trial, Custom defaulted, and the trial court sitting without a jury
found that the mortgage transactions of Custom were unfair and
deceptive business transactions. Accordingly, judgment was entered
against Custom. However, judgment was entered against the State as to
defendants Gramatan and Chemical on the grounds that these defendants
had not committed any act or practice declared unlawful under 9 V.S.A.
§ 2453. The State appealed from the judgments in favor of Gramatan
and Chemical.
II.
Clearly, Gramatan and Chemical would be subject to all defenses which
would be available to the consumers in an action on a simple contract
brought against them by Custom. Gramatan Home Investors Corp. v.
Starling, 143 Vt. 527 (1983); Randolph
National Bank v. Vail, 131 Vt. 390 (1973). They contend,
however, that the Attorney General lacks authority to bring an action
against them under the Consumer Fraud Act.
That statute authorizes the Attorney General to commence an action
against "any person . . . using . . . any method, act or parctice
declared by [9 V.S.A. § 2453] to be unlawful . . . ." 9 V.S.A.
§ 2458(a). In such cases, "the court is authorized to render any
other temporary or permanent relief, or both, as may be in the public
interest . . . ." 9 V.S.A. § 2458(b).
The purpose of the statute is to protect the public from unfair or
deceptive acts or practices. It must be our
primary objective to give meaning and effect to this legislative
purpose. Further, the Act is clearly
remedial in nature. Therefore, we must construe the statute liberally
so as to furnish all the remedy and accomplish all the purposes
intended.
Gramatan and Chemical would have us read, as did the trial court, the
verb "using" in 9 V.S.A. § 2458(a) as being synonymous with
"doing" or "committing." Such a construction would authorize an action
brought by the Attorney General only against a person who does or
commits an act declared unlawful by 9 V.S.A. § 2453. The simple
answer, of course, is that the Legislature did not in fact use the
verbs "to do" or "to commit." Had the Legislature intended to limit its
authorization to situations where a direct act was done or committed it
could have done so with clear language to that effect.
Instead, the verb "to use" was selected. It is defined as follows: "To
make use of, to convert to one's service, to avail one's self of, to
employ." Black's Law Dictionary 1381 (5th ed. 1979). Gramatan and
Chemical clearly made use of the documents fraudulently obtained by
Custom; Gramatan and Chemical converted those documents to their
service; they employed the documents for their business purposes.
The Legislature intended to place the burden of the cost of seller
misconduct violative of the Consumer Fraud Act on the financing parties
to the transaction. Such parties, unlike consumers, are in a position
both to police the activities of the seller and to protect themselves
against misconduct. We would be derelict in our duties were we to
frustrate that intent; indeed, it is our duty to give effect and
meaning to the will of the Legislature.
Reversed and remanded.