Shelton v. Mutual Savings & Loan Ass'n, F.A. (738 F. Supp. 1050, 1990)

OPINION AND ORDER

ROSEN, District Judge.

Presently before the Court is the Defendant’s Motion for Summary Judgment. The parties filed briefs and appeared for oral argument before the Court on April 12, 1990.

I. FACTS

Plaintiffs, Haskell Shelton and Joy S. Shelton, are husband and wife who borrowed approximately $108,000.00 from the Defendant, Mutual Savings and Loan (the “Bank”). The rate of interest was approximately 10.4 % a.p.r., repayable over 15 years in 180 monthly installments, and the loan was secured by a first mortgage on the Plaintiffs’ home. This new loan refinanced an existing loan and mortgage on their residence.

The gravamen of the Plaintiffs’ first amended complaint is that the Bank charged Plaintiffs interest during the period from December 22, 1988, which was the time that the Plaintiffs executed their note and mortgage, through December 28, 1988, which was the date that the loan was actually closed and the proceeds from the loan were disbursed by the Bank. During this period, pursuant to Regulation Z of the federal banking laws, 12 C.F.R. § 226.23, the Plaintiffs had a unilateral right to rescind the loan agreement. The Plaintiffs claim that the Bank had no right to charge interest during the 3-day rescission period nor even, in fact, during any period until the loan proceeds were actually disbursed by the Bank.

There is no dispute over the fact that the amount by which these Plaintiffs claim they have been damaged is $184.50, and the Court notes that the fact that this is a relatively small amount is not in any way an influence upon the Court’s view of the importance of these proceedings.

According to the deposition testimony of Plaintiff Haskell Shelton, which was taken on July 18, 1989, Plaintiffs were informed by the Bank at their December 22, 1988 closing that the interest was being charged on the new loan starting effective December 22, 1988. The following colloquy took place in the deposition:

Q: Is this line 901 something that Mr. Lovely [the Bank’s employee and the closing officer] went over with you at the time of this matter on December 22 when you and your wife were there with him?

A: Yes, sir. I recall that vividly.

Q: Tell me what you recall.

A: As he was explaining the items, he was very careful to explain each of the items. He came to that and stated that that was the interest for that period. I said, “Wait a minute. I’m not going to receive the money until the date that we actually close on December 28, 1988. How can you charge me interest during the rescission period when I haven t actually received the money?” I told him, “Dave, that’s wrong.”

Did you say anything else? ,©

No, sir. I waited for his reply.

What did he reply? .©

He looked kind of sheepish and he said, “I'know. I’ve talked that over with the people at the Bank, and we do it as a matter of policy for all of our customers.” í>

Did you say anything else? .©

I said, “Whose policy is this?” And he told me it was Mr. Bruce Cook’s policy, and he gave me Mr. Cook’s telephone number, wrote his name down. t>

Who is Mr. Cook?

Apparently he’s either the president or the chairman of the board of Mutual Savings and Loan. «1

Did you know at the time who he was?