Anderson Bros. Ford v. Valencia

452 U.S. 205, 101 S. Ct. 2266, 68 L. Ed. 2d 783, 1981 U.S. LEXIS 30, 49 U.S.L.W. 4635

• Court: Supreme Court of the United States
• Decided: June 8, 1981
• Docket: 80-84
• Status: Published

Opinions

Justice White

delivered the opinion of the Court.

The issue presented in this case is whether an assignment of certain unearned insurance premiums created a “security-interest” that should have been disclosed pursuant to the Truth in Lending Act (TILA), 82 Stat. 146, as amended, 15 U. S. C. § 1601 et seq.1

I

In September 1977, respondents purchased an automobile from petitioner Anderson Bros. Ford. They signed the dealer’s standard automobile retail installment contract. This contract was assigned for value to petitioner Ford Motor Credit Co. A provision on the face of the contract disclosed that the seller retained a security interest in the automobile.² A provision on the back of the contract stated that the buyer was required to purchase and maintain physical damage insurance on the automobile, “protecting the interests of Buyer and Seller,” and further stated:

“Buyer hereby assigns to Seller any monies payable under such insurance, by whomever obtained, including returned or unearned premiums, and Seller hereby is authorized on behalf of both Buyer and Seller to receive or collect same, to endorse checks or drafts in payment thereof, to cancel such insurance or to release or settle any claim with respect thereto. The proceeds from such insurance, by whomever obtained, shall be applied toward replacement of the Property or payment of the indebtedness hereunder in the sole discretion of Seller.”

If the insurance policy on the automobile were canceled for any reason prior to the expiration of the term of the policy, this provision would permit the creditor to apply any unearned insurance premiums toward payment of the remaining debt.³

In October 1977, before making any payments on the installment contract or on the insurance policy, respondents returned the automobile to Anderson Bros. Ford. They subsequently brought this action in federal court,⁴ alleging, inter alia, that the sales contract violated the TILA because it did not disclose on the face of the contract that the seller had acquired a “security interest” in unearned insurance premiums.⁵

This claim was based on § 128 (a) (10) of the TILA, which provides in pertinent part:

“In connection with each consumer credit sale not under an open end credit plan, the creditor shall disclose each of the following items which is applicable:

“A description of any security interest held or to be retained or acquired by the creditor in connection with the extension of credit, and a clear identification of the property to which the security interest relates.” 82 Stat. 155, 15 U. S. C. § 1638 (a) (10).

This disclosure requirement is essentially repeated in § 226.8 (b)(5) of Regulation Z, a Federal Reserve Board regulation promulgated pursuant to the Board’s authority under § 105 of the TILA.⁶ Under the regulation, a creditor must disclose:

“A description or identification of the type of any security interest held or to be retained or acquired by the creditor in connection with the extension of credit, and a clear identification of the property to which the security interest relates . . . 12 CFR § 226.8 (b)(5) (1980).

Respondents sought statutory damages, attorney’s fees, and costs.⁷

The District Court granted summary judgment for respondents, holding that an assignment of unearned insurance premiums creates a “security interest” within the meaning of § 128 (a) (10). App. 33-35. The Court of Appeals for the Seventh Circuit affirmed. 617 F. 2d 1278 (1980). Recognizing that the TILA does not define the term “security interest,” the Court of Appeals relied on the definition contained in Regulation Z:

“ ‘Security interest’ and ‘security’ mean any interest in property which secures payment or performance of an obligation. The terms include, but are not limited to, security interests under the Uniform Commercial Code, real property mortgages, deeds of trust, and other consensual or confessed liens whether or not recorded, mechanic’s, materialmen’s, artisan’s, and other similar liens, vendor’s liens in both real and personal property, the interest of a seller in a contract for the sale of real property, any lien on property arising by operation of law, and any interest in a lease when used to secure payment or performance of an obligation.” 12 CFR § 226.2 (gg) (1980).

The Court of Appeals concluded that the assignment of unearned insurance premiums created an “interest in property which secure [d] payment or performance of an obligation” within the meaning of Regulation Z, and thus created a “security interest” that must be disclosed under § 128 (a) (10). The Court of Appeals accordingly affirmed the judgment below.⁸

We granted certiorari to settle whether such an assignment of unearned insurance premiums must be disclosed as a “security interest” under the TILA.⁹ 449 U. S. 981 (1980). We reverse.

II

Although the Court of Appeals’ construction of the Act and of Regulation Z is shared by three of the four other Courts of Appeals that have ruled on the question,¹⁰ this view, which is essentially a claim that the plain language of the statute and the regulation requires the result reached by the court below, has recently been challenged on several fronts. First, based in part on the legislative history of the 1980 amendments to the TILA, see infra, at 218-219, the Court of Appeals for the Tenth Circuit has concluded that the meaning of the term “security interest” as used in the TILA is not so plain and has held that the creditor’s interest in unearned insurance premiums need not be disclosed as a security interest under either the statute or Regulation Z. James v. Ford Motor Credit Co., 638 F. 2d 147 (1980).

Second, in September 1980, the Board, the agency that issued Regulation Z, published for comment Official Staff Interpretation FC-0173, regarding security interest disclosures in closed-end consumer credit transactions. 45 Fed. Reg. 63295. Although the staff recognized that several courts held a contrary view, its clearly expressed position was that neither § 226.2 (gg) nor § 226.8 (b) (5) requires a creditor to disclose as a security interest its right to receive insurance proceeds or unearned premiums from a property insurance policy:

“The staff believes that a creditor is not required by [§ 226.8 (b)(5)] to disclose its right to receive insurance proceeds or unearned insurance premiums nor to disclose that it is named as loss payee or beneficiary on an insurance policy. Truth in Lending disclosures are meant to provide useful information to consumers to enhance credit shopping. Consumers do need to know that they risk the loss of certain property if they default. The disclosures under § 226.8 (b)(5) inform consumers of which property is subject to that risk at the time the credit decision is being made. We believe that information regarding the creditor’s interest in insurance proceeds and unearned premiums would not be used in comparison shopping. Although a technical reading of the security interest definition might cover a creditor’s interest in insurance proceeds and unearned premiums, it is our opinion that such incidental interests are not the type of interests meant to be covered by § 226.8 (b) (5).” Ibid.

This construction of Regulation Z, the staff concluded, “better serves the purpose of the statute and the regulation to convey in a meaningful way information that can be used by consumers in shopping for credit.” Ibid.

We are aware that after we granted certiorari in this case, the Board deferred final action on FC-0173; but we cannot agree that the staff’s views expressed in the proposed ruling are wholly without significance. The comment period on the proposed interpretation expired on October 24, 1980, the proposal has not been withdrawn or revised, and it appears from the Board’s public statement that final action was deferred only because it was “inappropriate” to do otherwise in the light of our intervening grant of certiorari. Id., at 84074.

We need not, however, rest on FC-0173 for the Board’s construction of the statute or of Regulation Z with respect to the scope of .the security interest disclosure requirement. On March 31, 1980, the President approved the Truth in Lending Simplification and Reform Act (1980 Act) as Title VI of the Depository Institutions Deregulation and Monetary Control Act of 1980. 94 Stat. 168. The 1980 Act, which will be fully effective on April 1, 1982, will amend the TILA in many respects but will leave substantial portions of the TILA unchanged. It will amend § 128 (a) (10) of the TILA to require a creditor to make the following disclosure with respect to any “security interest” acquired by the creditor in a closed-end consumer credit transaction:

“Where the credit is secured, a statement that a security interest has been taken in (A) the property which is purchased as part of the credit transaction, or (B) property not purchased as part of the credit transaction identified by item or type.” § 614 (a) (9), 94 Stat. 179.

Like the TILA, however, the 1980 Act does not define the term “security interest.”

The 1980 Act provides that all implementing regulations must be promulgated at least one year prior to the effective date of the Act and that any creditor may comply with the revised regulations prior to the effective date of the Act. § 625, 94 Stat. 185-186. The Board accordingly revised Regulation Z, effective April 1, 1981, but with compliance being optional until April 1, 1982. 46 Fed. Reg. 20848 (1981). Section 226.18 (m) of revised Regulation Z requires the creditor to disclose in connection with closed-end consumer credit transactions

“[t]he fact that the creditor has or will acquire a security interest in the property purchased as part of the transaction, or in other property identified by item or type.” Id., at 20903.

Section 226.2 (a) (25) defines the term “security interest” as follows:

“ ‘Security interest’ means an interest in property that secures performance of a consumer credit obligation and that is recognized by state or federal law. It does not include incidental interests such as interests in proceeds, accessions, additions, fixtures, insurance proceeds (whether or not the creditor is a loss payee or beneficiary), premium rebates, or interests in after-acquired property. . For purposes of disclosure under §§ 226.6 and 226.18, the term does not include an interest that arises solely by operation of law. However, for purposes of the right of rescission under §§226.15 and 226.23, the term does include interests that arise solely by operation of law.” Id., at 20894.

Although the new regulation changes the Board’s prior definition of a “security interest” in some respects,¹¹ there is no indication that the definition was being changed with respect to unearned premiums. When the Board issued revised Regulation Z, the Board explained that it distinguishes an incidental interest in unearned insurance premiums from a “security interest” that must be disclosed:

“[T]here is a difference between an incidental interest and an interest that is the essence of the transaction. For example, when an automobile is financed, the insurance proceeds are incidental to the primary security interest, the automobile. The creditor’s interest in such insurance would not be a security interest under the regulation. On the other hand, when the credit transaction is the financing of an insurance policy, the creditor’s interest in that policy is just like a purchase money security interest and would be disclosed as a security interest.”¹²

Since this reasoning applies to the TILA as well as to the 1980 Act, we do not understand the Board to have revised Regulation Z with respect to whether an incidental interest in unearned insurance premiums must be disclosed.¹³ The Board’s revised regulation construes the statutory term “security interest” which appears, undefined, in both the TILA and the 1980 Act; it also defines the term “security interest” appearing in the revised-regulation. The same term had been used in the original Regulation Z, and it seems to us that the Board’s definition of “security interest” in the revised regulation is persuasive authority as to whether an interest in unearned insurance premiums should be disclosed as a “security interest” under the unrevised regulation. As we see it, the term “security interest” as used in both the revised and unrevised versions of Regulation Z does not include an interest in unearned insurance premiums in a transaction such as this.

Under the TILA and the 1980 Act, the Board is authorized to prescribe regulations, which “may contain such classifications, differentiations, or other provisions, and may provide for such adjustments and exceptions for any class of transactions, as in the judgment of the Board are necessary or proper” to carry out the purposes of the statute.¹⁴ In light of this statutory authority, we should not expressly or by implication invalidate as contrary to the statute the Board’s revised regulation concerning disclosure of security interests, which with respect to the disclosure of interests in unearned premiums did not purport to change the original Regulation Z and reiterates the view expressed in FC-0173 that an interest in unearned premiums is not a “security interest” for purposes of the disclosure provision.¹⁵

The legislative history of the 1980 Act fully supports the Board’s revised regulation regarding disclosure of a creditor’s interest in unearned insurance premiums and its proposed interpretation of the unrevised regulation. The Report of the Senate Committee on Banking, Housing, and Urban Affairs on the 1980 Act explained:

“When a security interest is being taken in property purchased as part of the credit transaction, this section requires a statement that a security interest has been or will be taken in the property purchased. When a security interest is being taken in property not purchased as part of the credit transaction, the Committee intends this provision to require a listing by item or type of the property securing the transaction, but not a listing of related or incidental interests in the property. For example, a loan secured by an automobile (not being purchased with the proceeds of the loan) would require a statement indicating that the loan is secured by an automobile but would not require a listing of incidental or related rights which the creditor may have such as insurance proceeds or unearned insurance premiums, rights arising under, or waived in accord with state law, accessions, accessories, or proceeds.” S. Rep. No. 96-368, p. 30 (1979).¹⁶

Furthermore, on the floor of the Senate a member of the responsible Committee observed:

“Many cases have resulted from the complex security interest disclosure requirements under the law. An illustrative case is Gennuso v. Commercial Bank and Trust Co., 455 F. Supp. 461 (W. D. Pa. 1976); 566 F. 2d 437, (3rd Cir. 1977), which required the creditor’s right in property insurance proceeds and unearned property insurance premiums, to be disclosed as a ‘security interest.’ Although as presently written the law does not require that result, S. 108 should prevent such ludicrous interpretations by requiring merely a positive indication if a security interest is being taken in the property purchased and if it is in property not being purchased in the transaction, simply a general listing of the type of property without a listing of incidental related interests.” 125 Cong. Rec. 9160 (1979).

With one exception, not pertinent here, the Committee Chairman, Senator Proxmire, who was the sponsor of the TILA, agreed with these remarks. Id., at 9159, 9972. In light of these indications from the 1980 Act’s history, it is unlikely that the courts would invalidate as contrary to the 1980 Act or the TILA either the security interest disclosure provisions with respect to unearned insurance premiums in revised Regulation Z or the interpretation of the unrevised regulation contained in FC-0173.

Ill

Of course, neither the legislative history of the 1980 Act nor the Board’s construction of the term “security interest” under either the TILA or the 1980 Act conclusively establishes the meaning of these words in the TILA. But as we so plainly recognized in Ford Motor Credit Co. v. Milhollin, 444 U. S. 555 (1980), absent some obvious repugnance to the statute, the Board’s regulation implementing this legislation should be accepted by the courts, as should the Board’s interpretation of its own regulation. We discern no such repugnance with any provision in the TILA.

The purpose of the TILA is to promote the “informed use of credit” by consumers. 15 U. S. C. § 1601. See Ford Motor Credit Co. v. Milhollin, supra, at 559, 568; Mourning v. Family Publications Service, Inc., 411 U. S. 356, 363-368 (1973). Congress sought to assure “a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him.” 15 U. S. C. § 1601.

The TILA was enacted in May 1968. As originally drafted, the House and Senate truth-in-lending bills focused primarily on the cost of credit.¹⁷ Neither bill required disclosure of security interests acquired by a creditor in connection with a consumer credit transaction. In January 1968, while the legislation was under consideration in the House, Representative Cahill, who was not a member of the Committee that had reported out the bill, offered several amendments designed “to improve the truth-in-lending provisions with respect to mortgage transactions.” 114 Cong. Rec. 1611 (1968). One of the amendments, which was adopted without debate, required the following disclosure in closed-end consumer credit transactions:

“[A] description of any security interest held or to be retained or acquired by the creditor in connection with the extension of credit, and a clear identification of the property to which the security interest relates.” Id., at 1610.¹⁸

This provision became § 128 (a) (10) of the TILA.

The Cahill amendments were principally designed to prevent homeowners from being victimized by “vicious secondary mortgage schemes.” Id., at 1611'. It was explained that “in many cases [a homeowner entering into a consumer credit transaction] is never informed nor aware that his home is being made subject to a mortgage.” Ibid. The amendment would require the creditor to disclose that he was acquiring a security interest in the borrower’s residence. Insofar as pertinent here, the Cahill amendments were accepted by the Senate and became part of the TILA as finally adopted.¹⁹ Despite the focus on the second mortgage problem, Congress did not limit § 128 (a) (10) to security interests in real property. The statutory language requires disclosure of “any security interest held or to be retained or acquired by the creditor.” It is thus uncontested that § 128 (a) (10) requires a creditor to disclose to a consumer purchasing an automobile or other property on credit that the creditor retains a security interest in the property purchased.

Unaided by an administrative construction of the TILA and Regulation Z, a court could easily conclude, based on the language of the statute and of Regulation Z, that the interest in unearned insurance premiums acquired by the creditor in this case should be characterized as a “security interest” that must be disclosed. But, in light of the proposed official staff interpretation of Regulation Z, the revised regulation defining a “security interest,” and the Board’s commentary on the difference between an “incidental interest” in unearned insurance premiums and a “security interest,” it is evident that the Board does not consider the creditor’s interest in unearned insurance premiums in a transaction such as this one to be a “security interest” that must be disclosed under the TILA. The Board’s position is supported by the legislative history of both the TILA and the 1980 Act, and we hold that it is a permissible interpretation of the term “security interest” as used in the TILA.²⁰ Although designed to provide meaningful guidance to consumers in shopping for credit, the TILA as originally drafted did not require disclosure of or otherwise deal with security interests; and the security interest disclosure provision was added to the TILA because of Congress’ particular concern about the need to warn consumers of the creditor’s acquisition of a particular type of security interest — a second mortgage on the borrower’s home. The Board’s view that disclosure of a creditor’s incidental interest in unearned insurance premiums would not measurably further the TILA’s purpose of aiding consumers to shop for credit, and that the term “security interest” as used in the TILA, the 1980 Act, and in Regulation Z should not be construed as including such an interest, is consistent with the underlying purpose of the TILA. This interpretation of the term “security interest” strikes a balance between “meaningful disclosure” and “informational overload.”²¹ As we emphasized in Milhollin, the task of striking the proper balance is “an empirical process that entails investigation into consumer psychology and that presupposes broad experience with credit practices.” Administrative agencies are “better suited than [the] courts to engage in such a process.” 444 U. S., at 568-569.

Accordingly, the judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.

So ordered.

1 The Truth in Lending Act was enacted as Title I of the Consumer Credit Protection Act, 82 Stat. 146.

2 The provision stated:

“Security Interest: Seller shall have a security interest under the Uniform Commercial Code in the Property (described above) and in the proceeds thereof to secure the payment in cash of the Total of Payments and all other amounts due or to become due hereunder.”

The “Property” was defined as the automobile.

3 Respondents contend that under the contract provision quoted above, unearned insurance premiums could only be used to replace the automobile or to make payments on the buyer’s debt. Petitioners assert that “[u]nder the assignment provision . . . any unearned [insurance] premiums will be used to provide replacement insurance coverage or applied to the debt.” Brief for Petitioners 4. The Court of Appeals stated that the unearned premiums “may be used to purchase replacement insurance coverage,” citing petitioners’ brief on appeal. 617 F. 2d 1278, 1281 (CA7 1980). We need not resolve the proper interpretation of this contract provision to decide the issue before us.

4 The TILA authorizes suits against original creditors and their assignees. 15 U. S. C. §§ 1614 and 1640.

5 The TILA does not state that the disclosure required by the statute must be made on the face of the contract. It simply provides:

“Each creditor shall disclose clearly and conspicuously, in accordance with the regulations of the Board, to each person to whom consumer credit is extended, the information required under this part or part D of this subchapter.” 15 U. S. C. § 1631 (a).

However, the applicable Federal Reserve Board regulations provide:

“All of the [required] disclosures shall be made together on either:

“(1) The note or other instrument evidencing the obligation on the same side of the page and above the place for the customer’s signature; or

“(2) One side of a separate statement which identifies the transaction.” 12 CFR §226.8 (a) (1980).

See also 12 CFR §226.8 (b)(5) (1980). Petitioners do not challenge the validity or applicability of this regulation.

6 Section 105 of the TILA, as set forth in 15 U. S. C. § 1604, provides:

“The Board shall prescribe regulations to carry out the purposes of this subchapter. These regulations may contain such classifications, differentiations, or other provisions, and may provide for such adjustments and exceptions for any class of transactions, as in the judgment of the Board are necessary or proper to effectuate the purposes of this subchapter, to prevent circumvention or evasion thereof, or to facilitate compliance therewith.”

7 A consumer who files an individual action against a creditor for failure to make the disclosures required by the TILA may recover twice the amount of the finance charge, with a minimum recovery of $100 and a maximum recovery of $1,000, or may recover any actual damages sustained as a result of the failure to disclose. 15 U. S. C. § 1640 (a). Respondents did not contend that they had suffered any actual damages as a result of the alleged TILA violation.

8 Two judges filed separate concurring opinions, joining in the opinion for the panel but expressing concern that by requiring the prominent disclosure of an “incidental” security interest, the court was increasing the complexity of the disclosures required by the TILA without furthering the purposes of the statute.

Judge Cudahy stated in his concurring opinion:

“I do not read [the opinion for the panel] as seriously suggesting that the result we reach furthers the underlying purposes of the Truth in Lending Act. Among these meritorious purposes are the disclosure to buyers of the costs of credit and the alerting of customers to the possibility that their property may be reached to satisfy the obligation which they have incurred.

“Here we require the prominent disclosure of a rather esoteric right to unearned premiums for physical damage insurance (protecting both the seller’s and the buyer’s interest in the property), which may be used to provide replacement insurance coverage or applied against the buyer’s debt in the event of cancellation of the insurance. This 'security interest’ is normal in the circumstances but is entirely incidental to the principal consumer credit transaction. . . .

“To disclose this ‘security interest’ on the face of the contract (which is the point here) is merely to add virtually inconsequential information — ■ lengthening, complicating and trivializing the disclosure for no apparent benefit.” 617 F. 2d, at 1293.

9 We also granted certiorari to consider petitioners’ contention that if we were to hold that disclosure of an assignment of unearned insurance premiums is'' required under the TILA, our ruling should be made prospective only. Since we hold that such disclosure is not required, we need not address that issue.

10 See Murphy v. Ford Motor Credit Co., 629 F. 2d 556 (CA8 1980); Edmondson v. Allen-Russell Ford, Inc., 577 F. 2d 291 (CA5 1978); Gennuso v. Commercial Bank & Trust Co., 566 F. 2d 437 (CA3 1977).

11 For example, the revised regulation excludes a creditor’s interest in after-acquired property from the definition of a “security interest.” The regulations implementing the TILA, however, expressly require disclosure of a creditor’s interest in after-acquired property. See 12 CFR §226.8 (b)(5) (1980).

12 46 Fed. Reg. 20853 (1981).

The Board’s analysis demonstrates that the staff’s proposed official interpretation of Regulation Z does not conflict with FRB Public Information Letter No. 377, cited by respondents. FRB Public Information Letter No. 377 is an informal staff interpretation of Regulation Z that was issued in 1970. The interpretation was requested by a loan company whose customers purchased single premium lifetime accidental death and dismemberment policies with the proceeds of their loans. The loan company was designated as the owner of the policy and retained the right to cancel the policy and apply any premium refund to the unpaid balance of the loan if the customer defaulted on the loan. The staff responded: “Under the circumstances, we think it would be appropriate to disclose the loan company’s ownership of the policy as a type of ‘security interest’ . . . .” CCH [1969-1974 Transfer Binder] Cons. Cred. Guide ¶ 30,555.

Petitioners contend that the loan company’s interest in the policy differs from petitioners’ interest in the unearned insurance premiums in this ease. The loan company’s interest “was not merely incidental or subordinate to some far more significant interest securing payment of the loan.” Reply Brief for Petitioners 9, n. 12. We agree with petitioners that the situation described in the letter is distinguishable from this case.

One other informal staff interpretation of Regulation Z referred to disclosure of unearned insurance premiums. In FRB Public Information Letter No. 1263, the staff responded to an inquiry regarding how an interest in unearned insurance premiums should be identified. The letter pointed out that “a more fundamental matter [is] whether a security interest exists at all” and then suggested that the creditor determine whether as a matter of state law he had acquired an interest in property securing payment of the debt. CCH [1974-1977 Transfer Binder] Cons. Cred. Guide ¶31,736. “[A]ssuming this is a security interest for purposes of Regulátion Z, the determination of what type of security interest it is should be made in accordance with State law.” Ibid. This informal interpretation did not resolve whether disclosure of a creditor’s interest in unearned insurance premiums is required under the TILA. Although this letter focused on state law, revised Regulation Z defines a “security interest” as an “interest in property that secures performance of a consumer credit obligation and that is recognized by state or federal law.” 46 Fed. Reg. 20894 (1981).

13 When the Board issued proposed regulations implementing the 1980 Act, it stated that the 1980 Act had clarified “certain complex legal questions” regarding the proper interpretation of the TILA, including questions about adequate disclosure of security interests. 45 Fed. Reg. 80731, 80733 (1980).

In its commentary accompanying the revised regulations, 46 Fed. Reg. 20853 (1981), the Board noted that its definition of “security interest” was considerably narrower than § 226.2 (gg) of the unrevised regulation, in that it excluded a number of interests that would have been considered security interests under the unrevised regulation. Some of these interests were identified. The Board went on to observe that “there is a difference between an incidental interest and an interest that is the essence of the transaction.” Ibid. Only the latter must be disclosed as a “security interest.” We do not understand the Board’s commentary to indicate in any way that the revised regulation altered the meaning of Regulation Z with respect to whether a creditor must disclose an interest in unearned insurance premiums in a transaction such as is involved in this case.

14 15 U. S. C. § 1604. This section will be renumbered § 1604 (a) under the 1980 Act. 94 Stat. 170.

15 Because we do not understand the exclusion of unearned insurance premiums from the definition of “security interest” to have changed the administrative construction of the statute, we need not consider whether if the revised regulation had worked such a change, the case should be decided under the revised regulation which was effective as of April 1, 1981. See Bradley v. Richmond School Board, 416 U. S. 696, 711 (1974); Thorpe v. Housing Authority, 393 U. S. 268, 281-283 (1969); United States v. Schooner Peggy, 1 Cranch 103, 110 (1801).

16 Although the Committee Report states that the creditor is not required to disclose his “incidental interest” in unearned insurance premiums if the loan is secured by an automobile that is not purchased with the proceeds of the loan, there is no sensible reason for applying a different rule if the loan is secured by an automobile that is purchased with the proceeds of the loan. In either situation the 1980 Act requires the creditor to disclose any “security interest” he has acquired.

17 The 1967 Committee Reports explained that “by requiring all creditors to disclose credit information in a uniform manner, and by requiring all additional mandatory charges imposed by the creditor as an incident to credit [to] be included in the computation of the applicable percentage rate, the American consumer will be given the information he needs to compare the cost of credit and to make the best informed decision on the use of credit.” H. R. Rep. No. 1040, 90th Cong., 1st Sess., 13; S. Rep. No. 392, 90th Cong., 1st Sess., 3 (virtually identical language).

18 Representative Cahill proposed that this language be added to § 203 (b) of H. R. 11601, governing disclosures for consumer credit sales other than sales under an open-end credit plan. Section 203 (b) later became § 128 of the TILA, 15 U. S. C. § 1638. He proposed that the same language be added to §203 (c) of H. R. Í1601, governing disclosures for extensions of credit other than sales under an open-end credit plan. Section 203 (c) later became § 129 of the TILA, 15 U. S. C. § 1639.

19 In drawing the Senate’s attention to Representative Cahill’s amendments, the sponsor of the Senate truth-in-lending bill, stated:

“Congressman Cahill, of New Jersey, has offered an important amendment to the truth-in-lending bill which tightens up on the second mortgage racket. First, it would require a 3-day waiting period before a second mortgage transaction can be completed. Second, it would require a disclosure of the fact that credit is being secured by a mortgage on the homeowner’s property. Third, the amendment increases the legal rights of consumers with respect to those who purchase mortgages from the original home improvement contractor.” 114 Cong. Rec. 5024 (1968).

In presenting the Conference Report on the TILA to the House, Representative Sullivan explained that the House conferees had succeeded in retaining the protections created by the Cahill amendments. She described those amendments as “a series of amendments in the House, to strike at home improvement racketeers who trick homeowners, particularly the poor, into signing contracts at exorbitant rates, which turn out to be liens on the family residences. Any credit transaction which involves a security interest in property must be clearly explained to the consumer as involving a mortgage or lien; any such transaction involving the consumer’s residence — other than in a purchase-money first mortgage for the acquisition of the home — carries a 3-day cancellation right.” Id., at 14388.

Similarly, Senator Proxmire, presenting the Conference Report on the truth-in-lending bill to the Senate, described the Cahill amendments as providing “additional safeguards in the second mortgage area” and explained that the security interest disclosure provisions would require creditors to “describe any security interest in real property — such as a second mortgage — arising from the credit transaction.” Id., at 14488.

20 This Court has frequently relied* on the principle that “a thing may be within the letter of the statute and yet not within the statute, because not within its spirit, nor within the intention of its makers.” Holy Trinity Church v. United States, 143 U. S. 457, 459 (1892). See, e. g., Steelworkers v. Weber, 443 U. S. 193, 201 (1979); United Housing Foundation, Inc. v. Forman, 421 U. S. 837, 849 (1975). “When aid to construction of the meaning of words, as used in the statute [or regulation], is available, there certainly can be no ‘rule of law’ which forbids its use, however clear the words may appear on ‘superficial examination.’ ” United States v. American Trucking Assns., 310 U. S. 534, 543-544 (1940) (footnote omitted).

21 In Ford Motor Credit Co. v. Milhollin, 444 U. S. 555 (1980), we stressed that the TILA seeks to provide “meaningful disclosure” of credit terms:

“Meaningful disclosure does not mean more disclosure. Rather, it describes a balance between 'competing considerations of complete disclosure ... and the need to avoid . . . [informational overload].’ ” Id., at 568, quoting S. Rep. No. 96-73, p. 3 (1979) (accompanying the 1980 Act).