General Electric Credit Corp. v. Tenna Corp. (In re Tenna Corp.)

9 B.R. 903, 1981 Bankr. LEXIS 5036
CourtUnited States Bankruptcy Court, N.D. Ohio
DecidedJanuary 28, 1981
DocketBankruptcy, No. B 79-2521; Adv. No. B 80-0226
StatusPublished
Cited by1 cases

This text of 9 B.R. 903 (General Electric Credit Corp. v. Tenna Corp. (In re Tenna Corp.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
General Electric Credit Corp. v. Tenna Corp. (In re Tenna Corp.), 9 B.R. 903, 1981 Bankr. LEXIS 5036 (Ohio 1981).

Opinion

MEMORANDUM OF OPINION AND DECISION

WILLIAM J. O’NEILL, Bankruptcy Judge.

This cause is before the Court on the complaint of General Electric Credit Corporation and the answer and counterclaim of Tenna Corporation, hereinafter referred to as GECC and TENNA, respectively. The parties were involved in two transactions for manufacturing equipment. The filing of TENNA’S Chapter 11 reorganization proceedings precipitated GECC’S “Complaint for Reclamation or for Relief from Stay and Request for Adequate Protection” for the equipment. TENNA’S answer and cross-complaint maintains GECC is entitled to no relief since the transactions violated the Ohio Retail Installment Sales Act, commonly referred to as ORISA. The issue is whether the transactions denominated as “Lease Agreements” are loans as GECC alleges or sales covered by ORISA with its attendant penalties as TENNA asseverates.

Attorneys Edward R. Brown and Marvin A. Sicherman representing GECC and TEN-NA, respectively, have stipulated the facts, [905]*905submitted extensive briefs and presented cogent oral arguments. The approved stipulations with pertinent documents annexed are attached hereto. [Matter omitted for purposes of publication.] The Court adopts them and finds the facts to be as follows:

“1. Plaintiff, General Electric Credit Corporation (‘GECC’), offers prospective customers several formats for the purpose of structuring financing arrangements, including security agreements, leases without options to purchase, and leases with options to purchase at the end of the terms of such leases for a nominal consideration. Defendant, Tenna Corporation (‘Tenna’), selected the format of a lease with an option to purchase for a nominal consideration.

2.Attached hereto and identified as ‘Stipulation Exhibits’ are the following:

S-l ‘Chattel Lease Agreement’ dated September 25, 1979.
S-2 Promissory Note relating to Exhibit ‘S-l’.
S-3 Letter dated September 21,1979 regarding ‘S-l’ purchase obligation of Defendant.
S-4 Financing Statements filed with the Secretary of State and County Recorder relative to Exhibit ‘S-l’.
S-5 ‘Chattel Lease Agreement’ dated October 24, 1979.
S-6 Promissory Note relating to Exhibit ‘S-5’.
S-7 Purchase Agreement between the parties relative to Exhibit ‘S-5’ evidencing the obligation of Defendant to purchase the equipment described in Exhibit ‘S-5’ at the end of the purported lease term.
S-8 Financing Statements filed with the Secretary of State and County Recorder relative to Exhibit ‘S-5’.
S — 9 Letter of March 25, 1980 from Plaintiff to Defendant which relates to Exhibit ‘S-5’.
S — 10 The Amended Proof of Claim filed by Plaintiff purporting to be a creditor of the Debtor in the case under Title 11 of the U. S. Code.

3. The items of equipment described in Exhibits ‘S-l’ and ‘S-5’ were manufactured and delivered to Defendant, Tenna, pursuant to orders entered by it with the manufacturers previous to such delivery, and as follows:

a. Harper Buffing Machine — manufactured and shipped by Harper Buffing Machine Company.
b. Stud Driving Machine — manufactured and shipped by Dial X Automated Equipment Company.
c. Reader-Printer — manufactured and shipped by Oce Industries, Inc.

4. GECC upon delivery of the above-described equipment to Tenna, paid to the manufacturers of such equipment the full purchase price of the equipment. GECC paid the purchase price for the equipment described in Exhibit ‘S-5’ on October 26, 1979, and for the equipment described in Exhibit ‘S-l’ on September 25, 1979.

5. Concurrent with the payment of GECC described in Stipulation No. 4 Tenna paid to GECC the following sums:

a. $908.01 plus $44.94 purportedly for Ohio Sales or Use tax for a total sum of $957.95 as relates to Exhibit‘S — 1’.
b. $13,693.80 as relates to Exhibit ‘S-5’.

6. Thereafter on November 1,1979 Ten-na paid Plaintiff $302.67 plus $16.65 purportedly for Ohio Sales or Use tax for a total of $319.22 as relates to Exhibit ‘S-l’.

7. Subsequent thereto Tenna has not paid any additional sums to Plaintiff relative to Exhibit ‘S-l’.

8. If Tenna had continued to pay monthly installments to Plaintiff as relates to Exhibit ‘S-l’ it would have been required to include Ohio Sales or Use taxes computed at the rate of five and one-half (5%%) percent on each such installment which would have been thirty-two installments of $302.67 and a thirty-third installment of $303.67 or including the purported Ohio Sales or Use tax, payment of $319.32 per month for thirty-two months, and a final installment of $320.37.

9. Describing the transaction contemplated in the document identified as Exhibit [906]*906‘S-l’ as a ‘lease’ would require Ohio Sales or Use taxes in the sum of $599.45 to be paid.

10. If the transaction contemplated in Exhibit ‘S-l’ were classified as a sale the aggregate Ohio Sales or Use taxes assessable against Defendant, Tenna, would have been $497.20.

11. Tenna has made no payments to Plaintiff as relates to Exhibit ‘S-5’ after the payment of the sum of $13,693.80.

12. If Tenna had continued to make payments relative to Exhibit ‘S-5’ it would have paid eighty-two consecutive monthly installments of $2,375.35, and a final installment of $2,376.76, all of which are exclusive of Ohio Sales or Use Taxes, as Tenna had claimed to be exempt from such taxes as the equipment was to be used for manufacturing.

13. The aggregate Ohio Use Tax assessable against Tenna, if it had made installment payments to Plaintiff as relates to Exhibit ‘S-5’ as a purported lease of chattels and was not exempted from such taxes, would have been in the aggregate sum of $11,597.18.

14. If the transaction contemplated by Exhibit ‘S-5’ had been denoted as a sale the aggregate Ohio Sales or Use taxes that would have been payable by Defendant, Tenna, would have been the sum of $7,531.59, provided Tenna was not exempted from such taxes as above mentioned.

15. Without Plaintiff admitting that the Retail Installment Law of Ohio as found in Chapter 1317 of the Ohio Revised Code or the finance and service charge limitations set forth therein, are applicable, the following represents the disclosure material necessary and the computations of permissible charges thereunder particularly Section 1317.06 thereof based upon a 33 month amortization schedule, as relates to Exhibit ‘S-l’.

Cash Price $ 9,040.00 ‘Finance Charge Computations '
Down Payment Unpaid Balance 908.01 $ 8,131.99 8% -s-12 months = .0066666 per month
Official Fees _6.00 x 83 months = .5533278 $ 8,137.99 x $123,250.20 = $68,197.76
‘Finance Charge 1,790.34
“Service Charge 57.75
Time Balance $ 9,986.08
Total Time Price $10,888.09
‘Finance Charge Computations

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Bluebook (online)
9 B.R. 903, 1981 Bankr. LEXIS 5036, Counsel Stack Legal Research, https://law.counselstack.com/opinion/general-electric-credit-corp-v-tenna-corp-in-re-tenna-corp-ohnb-1981.