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nascar
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Attention Illinois residents and potentially lots of others. This case is scheduled for trial next spring. Take a look! MAJOR, MAJOR potential impact on written contract status of credit cards. Case hinges on plaintiff's contention that since terms of credit card agreement are subject to unilateral amendment (interest rate and term changes), that credit card agreement cannot be construed as written contract, but is instead a "standing offer to extend credit" that is "subject to modification at will". Therefore, statute of limitations for written contracts would not extend to credit cards.

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nascar

Thank you for providing this link ... I haven't had a good laugh in a long time. #28 in the link and reading Credigy's Affirmative Defenses made me fall off my chair laughing. #2 Affirmative Defense -- they are not a collection agency as defined by the FDCPA ... priceless as MasterCard touts on their commercials.

Has lawyer for these JDB ever read the law and advised their clients that when they buy PAST DUE debt (read default accounts), they are not Original Creditors and are considered debt collectors.

Thanks once again for the link ... will watch this case.

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Guest E. Normis Debtor

It will be interesting to see the outcome, if it makes it to trial. Harris v. McCray has withstood many assualts as defining a bank credit card as a written contract.

If you never read the American Law Review on the Harris case, you should.

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Thanks,

It will be interesting. Harris doesn't claim there was no written contract and Rawson isn't trying to use UCC. Perhaps that's enough to distinguish the two.

IIRC, Harris used the UCC SOLC for sale of goods (4 year), claiming that the merchant extended credit and immediately factored his receivables to the bank... something of that nature.

The 5 year Illinois SOLC was never contemplated by the court in Harris v McCray which IS being contemplated by this current court. Rawson cited SCOTUS caselaw to support his argument that Harris v McCray is not binding precedent, since only the 4 year SOLC was raised.

Most of the relevant cases cited by both parties are posted over at floridadebtor.com if you're interested in reading them.

I think Rawson has a good case here, with a much more sound argument that parallels the logic in Portfolio v Fernandes case out of Florida.

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Guest E. Normis Debtor

I dug the ALR up from my archives:

American Law Reports ALR4th

The ALR databases are made current by the weekly addition of relevant new

cases.

What statute of limitations governs action arising out of transaction consummated by use of credit card

Debra T. Landis, J.D.

TABLE OF CONTENTS

Article Outline

Table of Cases, Laws, and Rules

Research References

ARTICLE OUTLINE

§ 1. Generally

RESEARCH REFERENCES

Table of Cases, Laws, and Rules

Illinois

Harris Trust and Sav. Bank v. McCray, 21 Ill. App. 3d 605, 316 N.E.2d 209, 14 U.C.C. Rep. Serv. 1338, 2 A.L.R.4th 671 (1st Dist. 1974) -- § 1

Louisiana

Carte Blanche Corp. v. Pappas, 216 So. 2d 917 (La. Ct. App. 2d Cir. 1968) -- § 1

§ 1. Generally

This annotation collects and analyzes the state and federal cases in which the courts have discussed or decided the applicable statute of limitations governing a civil action to recover an amount allegedly owed from a transaction in which a credit card[FN1] was used. Cases involving both the 3-party type of credit card commonly used by banks and the 2-party type of credit card commonly used by department stores are within the scope of this annotation.

Since relevant statutes are included only to the extent that they are reflected in the reported cases within the scope of this annotation, the reader is advised to consult the latest enactments of pertinent jurisdictions.

The use of credit cards is a comparatively recent development of major commercial significance. Surprisingly, there is little case law on the statute of limitations which applies to an action to collect a balance due on a credit card account, either by the credit card issuer or an assignee of the account. In accordance with the general view that the nature of the cause of action, or of the rights sued on, and not the form of the action, is the test to determine the applicable statute of limitations,[FN2] the courts in cases involving credit card use have analyzed the nature of the cause of action, viewing it as either a loan based on a contractual obligation or as a sale. Furthermore, the language used in the credit card agreement between the issuer and the cardholder may be significant in the determination.

In the following case the payments made by an issuer of a credit card to participating merchants were viewed as a loan of money to the cardholder, and the applicable statute of limitations in an action for the balance due on the credit card account was held governed and not barred by the statute of limitations applicable to written contracts, including promises to pay money, rather than the statute governing contracts for the sale of goods.

Construing payments made to participating merchants by a bank-credit card issuer pursuant to an agreement with the cardholder as a loan of money to the cardholder, the court, in Harris Trust & Sav. Bank v McCray (1974) 21 Ill App 3d 605, 316 NE2d 209, 14 UCCRS 1338, 2 ALR4th 671, held that a bank's action for the amount of money due on the credit card account was governed by the 10-year limitation applicable to written contracts, including promises to pay money, and that the action was not barred by the 4-year statute of limitations governing contracts for the sale of goods under Uniform Commercial Code § 2-725. Thus, the court affirmed a judgment in the bank's favor and denying the cardholder's motion to dismiss the action filed more than 4 years after the cause of action accrued. Concluding that the payments constituted a loan, the court noted that the cardholder promised to repay the bank for money it paid to the merchant for her benefit; the credit card allowed her to make use of the resources of the issuer bank; the merchant was in the same financial position as if he were receiving cash from the bank at a small discount for its service; and the bank, which had no recourse against the merchant, assumed the risk that the cardholder would not pay the debt. The court rejected the cardholder's argument that, since the agreement recognized a difference between a cash advance made directly to her and payment for merchandise purchased through use of the credit card, the former was a loan and the latter was an assignment of a retail installment sales contract from the merchant to the bank. The court concluded that the statutory definition of a retail installment sales contract, in effect at the time of the transaction in question, did not include the tripartite agreement involved, noting that title to the goods passed to her when she signed the sales slip and took possession of them, no lien was retained thereon, and the payment of the purchase price did not involve two or more installments.

In the following case debts owed by a credit card holder to participating merchants were viewed as open accounts of the merchants of which the credit card issuer was the assignee and thus an action to recover the balance due on a three-party type of credit card account was held governed by the 3-year prescriptive period provided for open accounts rather that a 10-year "omnibus" statute of limitations and was barred.

Thus, in an action by a credit card issuer against cardholders for amounts allegedly due for purchases made from various business establishments, the court held, in Carte Blanche Corp. v Pappas (1968, La App) 216 So 2d 917, that the debt was an open account governed by the 3-year prescription applicable thereto, rather than a personal action governed by the 10-year prescriptive period applicable to all personal actions not otherwise governed by other prescriptive periods. The court stated that it was apparent from the language of the petition of the credit card issuer that; (1) the debts originated as accounts for merchandise sold by merchants to their customers; (2) at the time of origin they were open accounts for which purchasers customarily received monthly statements and as such constituted nothing more than a charge account belonging to the assignor; and (3) the credit card issuer was the assignee of these accounts and stood in no better position than the assignor who would necessarily had to have brought suit within 3 years. The court found that there was insufficient evidence to prove an oral acknowledgement of the debt to interrupt the running of the 3-year prescription and affirmed the judgment sustaining the plea of the 3-year prescription.

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nascar

Thank you for providing this link ... I haven't had a good laugh in a long time. #28 in the link and reading Credigy's Affirmative Defenses made me fall off my chair laughing. #2 Affirmative Defense -- they are not a collection agency as defined by the FDCPA ... priceless as MasterCard touts on their commercials.

Has lawyer for these JDB ever read the law and advised their clients that when they buy PAST DUE debt (read default accounts), they are not Original Creditors and are considered debt collectors.

Thanks once again for the link ... will watch this case.

Though you laugh, under Michigan's law this is true. Asset had a court ruling in it's favor about this very thing. However, under federal it applies.

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nascar

Thank you for providing this link ... I haven't had a good laugh in a long time. #28 in the link and reading Credigy's Affirmative Defenses made me fall off my chair laughing. #2 Affirmative Defense -- they are not a collection agency as defined by the FDCPA ... priceless as MasterCard touts on their commercials.

Has lawyer for these JDB ever read the law and advised their clients that when they buy PAST DUE debt (read default accounts), they are not Original Creditors and are considered debt collectors.

Thanks once again for the link ... will watch this case.

I dunno if they threw that in there to dick around or what. Their only real affirmative defense is #3. What does the 7th circuit say about mistakes of law being adequate to prove a bona fide error defense? I know at least one circuit allows this.

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