                                    No. 12308

        I N THE SUPREME C U T O TEE STATE O M N A A
                         OR    F           F OTN

                                       1973



BETTY JANE CECIL, ON BEHALF O HERSELF
                             F
AND ALL OTHERS SIMILARLY SITUATED,

                             P l a i n t i f f and Respondent,



ALLIED STORES CORPORATION, a Delaware
Corporation, and "THE PARIS O MONTANA",       F
a d i v i s i o n of A l l i e d S t o r e s Corporation,

                             Defendants and Appellants.



Appeal from:         D i s t r i c t Court of t h e Eighth J u d i c i a l D i s t r i c t ,
                     Honorable Paul G . Hatf i e l d , Judge p r e s i d i n g .

Counsel o f Record :

     For A p p e l l a n t s :

             J a r d i n e , Stephenson, Blewett and Weaver, Great F a l l s ,
              Montana,
             John D. Stephenson argued, Great F a l l s , Montana.

     For Respondent :

             Smith, Emmons and B a i l l i e , Great F a l l s , Montana.
             Robert J . Emons argued and Marvin J. Smith and William
              L , B a i l l i e appeared, Great F a l l s , Montana,

            AMICUS CURIAE

            Wesley Wertz , argued, Helena, Montana.
            Kendrick Smith argued, B u t t e , Montana.
            Edward Alexander argued, Great F a l l s , Montana.
            C a l e Crowley appeared, Billings.
            A. W. S c r i b n e r appeared, Helena, Montana.
            Geoffrey B r a z i e r appeared, Helena, Montana.



                                                   Submitted:        March 26, 1973

                                                    Decided :
                                                                        2 6.1913
F i l e d : m 2 6 1373
             L
PER CURIAM:

     This is a class action by a revolving charge account custo-
mer against a retail department store seeking a declaratory judg-
ment (1) that the Montana Retail Installment Sales Act is uncon-
stitutional, or in the alternative (2) that the revolving charge
account plan of the store violated the Act prior to its amendment
in 1971, and ( ) that relief should be granted to all revolving
              3
charge account customers of the store in the form of refunds of
finance charges, punitive damages, attorney's and accountant's
fees, interest and costs. The district court of the eighth judicial
district, Cascade County, granted summary judgment to the customers;
the store appeals.
     Plaintiff is Betty Jane Cecil who has had a revolving charge
account for several years with a retail department store in Great
Falls, The Paris of Montana, one of the defendants.    The other
defendant is the parent corporation of The Paris, Allied Stores
Corporation.   Plaintiff has incurred and paid finance charges on
her revolving charge account with The Paris for the past several
years.   Also appearing either by brief, oral argument, or both
as Amicus Curiae were:    Cale Crowley, Esq. (Montana Retailers
Association); Kendrick Smith, Esq. (numerous Montana retail stores);
Geoffrey L. Brazier, Esq. (State and local Chambers of Commerce);
Edward C. Alexander, (oil companies); A. W. Scribner, Esq. (Montana
Automobile Dealers Association); and Wesley FJ. Wertz, Esq. (Montana
Bankers Association).
     The Paris has operated its revolving charge account plan
since about 1955.    Under the plan the customer and The Paris enter
into a written agreement covering future retail purchases of mer-
chandise on credit.     If the customer does not wish to pay cash for
a particular item of merchandise, the sale is recorded for billing
purposes subject to the prior revolving charge account agreement.
The purchase i s recorded on t h e customer's account and a monthly
statement i s mailed t o him.            P r i o r t o J u l y 1, 1971, t h e finance
charge was imposed upon t h e balance from t h e previous monthly
b i l l i n g c y c l e ; s i n c e then finance charges have been compiled on
t h e average d a i l y balance i n the account during t h e b i l l i n g c y c l e
(excluding c u r r e n t purchases and unpaid finance charges).                       Thus,
t h e customer can avoid payment of any finance charges by paying
t h e unpaid balance of h i s account w i t h i n t e n days a f t e r r e c e i p t
of t h e b i l l i n g following t h e c l o s e of t h e b i l l i n g cycle.
        I f t h e customer chooses t o pay t h e unpaid balance of h i s
account over a longer period of time, he does so i n accordance
with t h e payment schedule i n t h e revolving charge account agree-
ment.     The minimum monthly payment under t h e agreement i s t e n
percent of t h e unpaid balance, s u b j e c t t o a f l a t minimum charge
of f i f t y c e n t s per month i n any case.           I n e x e r c i s i n g h i s choice
t o make i n s t a l l m e n t s payments over a longer period of time, t h e
customer agrees t o pay a finance charge of one and one-half percent
per month (computed on t h e previous month's unpaid balance p r i o r
t o J u l y 1, 1971 and computed on t h e average d a i l y balance i n t h e
b i l l i n g cycle thereafter).        A l l revolving charge account customers
of The P a r i s a r e s u b j e c t t o t h i s plan.    The revolving charge
account agreement has been r e v i s e d from time t o t i m e over t h e
years but i t s e s s e n t i a l f e a t u r e s have remained unchanged.
        The o r i g i n a l complaint i n t h i s case was f i l e d on January 6 ,
1971, i n t h e d i s t r i c t c o u r t of Cascade County.          Two months l a t e r
an amended complaint was f i l e d which forms t h e b a s i s of t h i s a c t i o n .
Count I a l l e g e d t h e revolving charge account finance charges of
The P a r i s were i l l e g a l because those s e c t i o n s of t h e Montana R e t a i l
I n s t a l l m e n t Sales Act permitting such charges were u n c o n s t i t u t i o n a l ,
Count I1 presented an a l t e r n a t i v e theory of recovery: t h a t pre-
suming t h e Act i s c o n s t i t u t i o n a l , The P a r i s nonetheless v i o l a t e d
i t s terms p r i o r t o t h e 1971 amendment i n imposing and c o l l e c t i n g
finance charges on i t s revolving charge accounts.
      Following defendants' answer containing a denial, a variety
of other defenses unnecessary to detail herein, and extensive
pretrial discovery proceedings, plaintiff filed a motion for
summary judgment and a motion seeking determination of whether
the case was maintainable as a class action.    The district court
granted both motions and entered summary judgment for Betty Jane
Cecil and all members of her class.
      The summary judgment on Count I declares the maximum finance
charges contained in the Montana Retail Installment Sales Act
(other than those applicable to motor vehicles) unconstitutional
on three grounds:   (1)   Violation of Art. V,, Sec. 26, 1889 Montana
Constitution, prohibiting special laws regulating interest. (2)
Violation of Art. V., Sec. 26, 1889 Montana Constitution, prohibiting
grants of special or exclusive privileges, immunities or franchises.
(3)   Violation of Art. IIL, Sec. 3, 1889 Montana Constitution,
permitting every person to acquire or possess property.    The
summary judgment on Count I accordingly requires The Paris to
refund to all its revolving charge account customers all finance
charges collected from January 6, 1966 to date of judgment, less
a credit of six percent interest on delinquent accounts during the
period of delinquency.
      The summary judgment on Court I1 alternatively declares that
The Paris violated sections 74-607 and 74-608, R.C.M. 1947, of
the Montana Retail Installment Sales Act     prior to the 1971 amend-
ment, and consequently was barred from charging or receiving any
finance charges collected between March 9, 1969 through June 30,
1971, and requires refund of such charges.     It held in abeyance,
pending appeal, determination of whether revolving charge account
customers were entitled to punitive damages.    The summary judgment
on Count I1 was expressly made operative only in the event the
judgment on Count I was reversed on appeal.
      This appeal is from the summary judgment of the district
court.
         I n view of our r u l i n g s h e r e i n a f t e r set f o r t h , t h e c o n t r o l l i n g
i s s u e s can be summarized i n t h i s fashion:                      (1) Is t h e Montana
R e t a i l I n s t a l l m e n t Sales Act u n c o n s t i t u t i o n a l ?    (2)   Did t h e
revolving charge account plan of The P a r i s v i o l a t e t h e Act p r i o r
t o i t s 1971 amendment? The a d d i t i o n a l i s s u e s assigned f o r review
concern damages, t h e e x i s t e n c e of genuine i s s u e s of m a t e r i a l f a c t
precluding summary judgment f o r p l a i n t i f f , and the maintenance of
t h i s s u i t a s a class action.               None of t h e s e a d d i t i o n a l i s s u e s a r e
m a t e r i a l t o our d e c i s i o n herein.
         By way of background we note t h a t Montana has a general
usury s t a t u t e p r o h i b i t i n g t h e charging o r r e c e i v i n g of any r a t e
of " i n t e r e s t " exceeding t e n percent per year.                        Section 47-125,
R.C.M.      1947.      It a l s o has a s t a t u t e d e f i n i n g i n t e r e s t a s "the
compensation allowed by law o r f i x e d by t h e p a r t i e s f o r t h e use,
o r forbearance, o r d e t e n t i o n of money."                   Section 47-122, R.C.M.
1947.       Since 1959, Montana has had a R e t a i l I n s t a l l m e n t Sales Act,
s e c t i o n 74-601, e t . s e q . ,    R.C.M.      1947, containing finance charge
l i m i t a t i o n s f o r covered r e t a i l i n s t a l l m e n t t r a n s a c t i o n s which
allows finance charges i n excess of t h e maximum i n t e r e s t r a t e
permitted under t h e foregoing general usury s t a t u t e ,
         The Act g e n e r a l l y covers s a l e s of goads and s e r v i c e s by
r e t a i l s e l l e r s t o r e t a i l buyers pursuant t o i n s t a l l m e n t t r a n s -
actions.        I t covers i n d e t a i l t h e requirements, p r o h i b i t i o n s , and
c o n t e n t s of such c o n t r a c t s , imposes c e i l i n g s on finance and s e r v i c e
charges, and provides t h e method of computation of finance charges.
The c e i l i n g s on automobiles vary according t o t h e age of t h e auto-
mobile from $ 7 per $100 per year f o r new c a r s t o $11 per $100 per
year on used c a r s over two years old.                         The c e i l i n g s on o t h e r goods
and s e r v i c e s vary according t o t h e p r i n c i p a l balance owed:                       on t h a t
p o r t i o n of t h e p r i n c i p a l balance owed up t o $300 a t t h e r a t e of
$11 per $100 per year; on t h a t p o r t i o n of t h e p r i n c i p a l balance
owed from $300 t o $1,000 a t t h e r a t e of $9 per $100 per year; and
on t h a t p o r t i o n of t h e p r i n c i p a l balance owed exceeding $1,000 a t
t h e r a t e of $7 per $100 per year.                    The Act a l s o provides f o r a
system of licensing and regulation of sales finance companies
engaged in the business of purchasing retail installment contracts
from retail sellers.     Civil and criminal penalties are provided
for violations of the Act.     The Act was amended effective July 1,
1971 to expressly cover revolving charge account transactions and
to prohibit finance charges thereon exceeding one and one-half
percent per month.
     plaintiff's constitutional attack is directed against the
finance charges authorized in section 74-608 of the Act, both
before and after the 1971 amendment.     Plaintiff's contentions are
threefold:      (1) The finance charges violate that part of Art. V.,
Sec. 26, 1889 Montana Constitution, prohibiting enactment of local
                   11
or special laws     regulating the rate of interest on money"; (2)
the finance charges violate that part of Art. V., Sec, 26, 1889
Montana Constitution, prohibiting enactment        local or special
laws granting 11any special or exclusive privilege, immunity or
franchise"; and (3) the finance charges violate that part of Art.
III., Sec. 3, 1889 Montana Constitution, permitting all persons
to acquire and possess property.
     The district court held the finance charges contained in
the Act unconstitutional on each of the above grounds, summarizing
its rationale in this language:
     I t+< * My conclusion on the constitutional questions
          -*a




     is based principally on the conclusion the interest
     rates granted by Sec. 74-608, supra, are special in-
     terest rates. From this conclusion flows the conclusion
     the special interest rates are a special privilege or
     franchise to retail sellers or banks resulting in their
     being immune from the general usury law penalties. As
     a result of this special privilege, franchise and immunity,
     all other citizens of Montana are prohibited from acquiring
     property, i.e. money, by charging such rates. If they
     were to do so, and were not within the privileged class of
     retail sellers and banks issuing credit cards, they would
     be subject to the usury penalties of this state. 1 I
     It   is thus apparent the district court's ruling that the Act
is unconstitutional rests on a dual foundation (1) that the finance
charges authorized by the Act constitute interest, and (2) that
the Act is a special law.
        IJe hold t h a t t h e f i n a n c e charges permitted by t h e Act a r e
time p r i c e d i f f e r e n t i a l s included i n t h e p r i c e of goods purchased
on c r e d i t and payable i n i n s t a l l m e n t s , and a s such a r e n o t s u b j e c t
t o c o n s t i t u t i o n a l o r s t a t u t o r y l i m i t a t i o n s on i n t e r e s t r a t e s .        The
time p r i c e d o c t r i n e exempting bona f i d e s a l e s from maximum i n t e r e s t
r a t e s has been f i r m l y embedded i n t h e common law of England s i n c e
t h e eighteenth century.                  Floyer v. Edwards, (K.B.                    17741, 98 Eng*
Rep. 995; Beete v. Bidgood, (K.B.                          1827), 108 Eng. Rep. 792.                         It
h a s l i k e w i s e been a f i r m l y e s t a b l i s h e d r u l e o f law throughout most
of t h e United S t a t e s f o r over 100 y e a r s , t h e United S t a t e s Supreme

Court having recognized i t i n 1861 i n t h e l e a d i n g c a s e of Hogg v.
Ruffner, 66 U.S.             115, 17 L ed 38.                I t i s considered t h e e s t a b l i s h e d
g e n e r a l r u l e by some t e x t a u t h o r i t i e s , 45 Am J u r 2d, I n t e r e s t &
Usury, 5 123; a recognized p r i n c i p l e of law by o t h e r s , 91 C.J.S.
Usury, 5 1 8 ( b ) ; and a n e x c e p t i o n t o usury p r o h i b i t i o n s because
t h e r e i s no loan o f money by Restatement of t h e Law of C o n t r a c t s ,
5 526, I l l u s t r a t i o n 4.         Perhaps t h e b e s t summary s t a t e m e n t of t h e
time p r i c e d o c t r i n e i s found i n t h e following statement from 6


           he s t a t u t e of Anne a p p l i e d only t o a loan o r
        forbearance of money, and i n t h e c o n s t r u c t i o n
        of t h i s s t a t u t e i t was h e l d t h a t where p r o p e r t y
        was s o l d , even though t h e c o n t r a c t provided i n
        terms f o r t h e payment of a f i x e d p r i c e payable
        I n the future with i n t e r e s t a t a g r e a t e r r a t e
        than t h a t allowed by t h e s t a t u t e , t h e t r a n s a c t i o n
        was, n e v e r t h e l e s s , n o t u s u r i o u s s i n c e e v e r y t h i n g
        t h e buyer promised must be deemed c o n s i d e r a t i o n
        f o r t h e s a l e of p r o p e r t y , n o t i n t e r e s t on a l o a n o r
        forbearance of money. I n t h e United S t a t e s l i k e
        s t a t u t e s have been s i m i l a r l y c o n s t r u e d , so t h a t
        where p r o p e r t y i s s o l d t h e p a r t i e s may a g r e e t h a t
        t h e p r i c e , i f paid a f t e r a c e r t a i n time, s h a l l b e
        a sum g r e a t e r by more than l e g a l i n t e r e s t than t h e
        p r i c e payable a t an e a r l i e r day; and though t h e
        d i f f e r e n c e between an agreed p r i c e f o r cash and
        t h a t f o r c r e d i t i s i n terms s t a t e d i n t h e form of
        i n t e r e s t a t g r e a t e r than t h e l e g a l r a t e , t h e con-
        t r a c t i s not usurious. II
         E most j u r i s d i c t i o n s i n t h e United S t a t e s a time p r i c e s a l e
          n
i s beyond t h e ambit of usury l i m i t a t i o n s simply because i n t e r e s t

i s n o t involved and t h e usury laws a p p l y t o loans and n o t t o s a l e s .
For recent examples see: Maine Merchants Association, Inc. v.
Campbell (~aine1972), 287 A.2d 430; Sliger v. R. H. Macy & Co.,
(1971) 59 N.J. 465, 283 A.2d 904; Zachary v. R. H. Macy       &   Co.,
Inc., (1972), 31 N.Y.2d 443, 340 N.Y.S.2d    908; Dennis v. Sears,
Roebuck & Co., (1969) 223 Tenn, 415, 446 S.W.2d 260; Mandelino
v. Fribourg, (1968) 23 M.Y.2d 145, 242 N.E.2d 823; Steffenauer v.
Xytelka   &   Rose, Inc., (1965) 87 N.J.Super, 506, 210 A.2d 88,
~ff'd1966 46 N.J. 299, 216 A.2d 585; Manufacturer's Advertising
Inc. v. Pancoast, (1967) 4 Conn. Cir. 668, 238 A.2d 810; Equipment
Finance Inc. v Grannas, (1966) 207 Pa,Super 363, 218 A. 2d 81;
              .
Lundstrom v. Radio Corporation of America, (1965) 17 Utah 2d 114,
405 P. 2d 339; Smith v. Sherwood & Roberts, Spokane Inc., (1968)
92 Idaho 248, 441 P.2d 158; Theodore Roosevelt Agency v. General
Motors Acc. Corp., (1965) 156 Colo. 237, 398 P.2d 965; Howell v.
Mid-State Homes, Inc., (1970) 13 Ariz.App. 371, 476 P.2d 892;
                       c; .!A/- ,t,c/i el
 4                           -1
1 ALR3d 1077; Kass v. G x i d ~ e f -(D.C. 1973), 299 A. 2d 542;
                                          ~
Standard Oil Company v. Williams, (1ndyi972), 288 N.E. 2d 170.
     However, the courts of a few states, while recognizing the
time price doctrine, have held that finance charges authorized in
installment sales acts are not bona fide time price differentials
but are in fact interest and subject to limitations in the usury
laws. Elder v. Doerr, (1963), 175 Neb. 483, 122 N.W.2d 528; Lloyd
v. Gutgsell, (1963), 175 Neb. 775, 124 N.W.2d 198; State v . J.C.
Denney Co., (1970) 48 Wisc'   A25, 179 N.GJ.2d   641; Rollinger v. J.C.
Penney Company, (S.Dak. 1971), 192 N.W.2d 699.
     The reasoning behind these minority holdings is that finance
charges in installment sales acts are charges for the forbearance
of money which falls within statutory definitions of interest; that
installment sales acts containing finance charges based on a per-
centage or ratio of the unpaid balance do not qualify as true time
price sales; and that finance charges authorized under installment
sales acts are simply a device to evade usury laws.
     Directing our attention to the Montana Retail Installment Sales
~ c and The P a r i s r e v o l v i n g charge account p l a n , we n o t e t h e d i s -
     t
t r i c t c o u r t h e l d t h a t t h e Act was n o t a c o d i f i c a t i o n of t h e time
p r i c e d o c t r i n e ; t h a t t h e f i n a n c e charges a u t h o r i z e d by t h e Act
                                           1'
were compensation f o r t h e                   forbearance of money" w i t h i n t h e
s t a t u t o r y d e f i n i t i o n of i n t e r e s t found i n s e c t i o n 47-122, R.C.M.
1947; and t h a t t h e r e v o l v i n g charge account plan of The P a r i s was
simply t o o g r e a t a d e p a r t u r e from e s t a b l i s h e d concepts of a time
p r i c e s a l e t o be brought w i t h i n t h e exemption.                 The d i s t r i c t c o u r t ' s
holding was based p r i n c i p a l l y on t h e c a s e s l i s t e d i n t h e preceding
paragraph, t h e p e r t i n e n t c o n s t i t u t i o n a l and s t a t u t o r y p r o v i s i o n s
of t h e 1889 Montana C o n s t i t u t i o n , and t h e s e a d d i t i o n a l a u t h o r i t i e s :
Ulvilden v. Sorken, 58 S.D. 466, 237 N.W.                           565; Sloan v. S e a r s ,
Roebuck and Co., 228 Ark. 464, 308 S.W.2d 802; Stanton v. Mattson,
175 Neb. 767, 123 N.W.2d                 844.      W have r e a d and c o n s i d e r e d t h e s e
                                                    e
a u t h o r i t i e s b u t remain unimpressed.
        I n our view, t h e Montana R e t a i l I n s t a l l m e n t S a l e s Act i s a
c o d i f i c a t i o n of t h e time p r i c e d o c t r i n e .   S e c t i o n 74-602, R.C.M.

1947, a s o r i g i n a l l y enacted c o n t a i n e d t h e s e d e f i n i t i o n s :
        "(g)      I
                      Retail installment contract' o r 1contract'
        means an agreement evidencing a r e t a i l i n s t a l l m e n t
        t r a n s a c t i o n e n t e r e d i n t o i n t h i s s t a t e pursuant t o
        which a buyer promises t o pay i n one o r more d e f e r r e d
        i n s t a l l m e n t s t h e time s a l e p r i c e of goods and/or
        s e r v i c e s . 9; 9: 9 ~ "

        "(k)     ' ~ i n a n c echarge' means t h e amount, a s l i m i t e d
        by s e c t i o n 74-608, i n a d d i t i o n t o t h e p r i n c i p a l
        balance, agreed upon between t h e buyer and t h e s e l l e r ,
        t o be paid by t h e buyer f o r t h e p r i v i l e g e of purchasing
        goods o r s e r v i c e s t o be paid f o r by t h e buyer i n one
        o r more d e f e r r e d i n s t a l l m e n t s .
        "(1) 'Time s a l e p r i c e ' means t h e t o t a l of t h e cash
        s a l e p r i c e of t h e goods o r s e r v i c e s and t h e amount,
        i f any, included f o r i n s u r a n c e and o t h e r b e n e f i t s i f
        a s e p a r a t e i d e n t i f i e d charge i s made t h e r e f o r and t h e
        amounts of t h e o f f i c i a l f e e s and t h e f i n a n c e charge.,I I
        (Emphasis s u p p l i e d )
        These d e f i n i t i o n s were c a r r i e d forward a f t e r t h e 1971
amendments which s p e c i f i c a l l y p e r t a i n t o r e t a i l charge account
agreements i n d i c a t i n g l e g i s l a t i v e r e c o g n i t i o n t h a t f i n a n c e charges
upon r e t a i l charge accounts a r e time p r i c e d i f f e r e n t i a l s .               Sec-
t i o n 74-607(j) of both t h e o r i g i n a l and amended Act provides t h a t
when t h e buyer d e f a u l t s i n t h e payment of an i n s t a l l m e n t of t h e
time s a l e p r i c e , the buyer i s s u b j e c t t o e i t h e r a d e f i c i e n c y
charge o r i n t e r e s t upon such defaulted i n s t a l l m e n t .             This i n t e r e s t
i s a charge f o r forbearance               of money and i s payable i n a d d i t i o n
t o t h e finance charges i n t h e Act.                Thus t h e l e g i s l a t u r e has
d i s t i n g u i s h e d between i n t e r e s t charges f o r t h e forbearance              of
money a f t e r d e f a u l t and finance charges included i n t h e time s a l e
price.
        The finance charges i n the Act a r e n o t compensation f o r t h e
forbearance         of money w i t h i n t h e s t a t u t o r y d e f i n i t i o n of i n t e r e s t
i n s e c t i o n 47-122, R . C . M .   1947.       Forbearance         i s t h e a c t by which
a c r e d i t o r w a i t s f o r payment of a debt due him a f t e r i t becomes

-
due.      lack's Law Dictionary, 4 t h Ed., o r a s put by t h e c o u r t i n
Hafer     v. Spaeth, 22 Wash.2d 378, 156 P.2d 408, 411:
        "The term ' forbearancef a s used i n t h e law of
        usury, s i g n i f i e s a c o n t r a c t u a l o b l i g a t i o n of
        lender o r c r e d i t o r t o r e f r a i n , during a given
        period of time, from r e q u i r i n g t h e borrower o r
        debtor t o pay a loan o r debt then due and payable."
        (Emphasis supplied)
       Where a customer purchases goods under a revolving charge
account such a s The P a r i s p l a n , t h e debt c r e a t e d by t h e purchase
i s a time o b l i g a t i o n and i s n o t then due because of t h e express
provisions of t h e revolving charge account agreement which allows
t h e customer t o pay f o r t h e purchase i n i n s t a l l m e n t s over a period
of time.
        To hold t h a t s a l e s under revolving charge account plans do
n o t q u a l i f y a s t r u e time p r i c e s a l e s i s t o subordinate substance
t o form.      While i t i s t r u e t h a t t r a d i t i o n a l l y time p r i c e s a l e s
included "closed end" t r a n s a c t i o n s wherein one o r more a r t i c l e s
w e r e s o l d a t t h e same time under one c o n t r a c t i n which t h e charge
f o r c r e d i t was merged i n t h e s a l e p r i c e which was s t a t e d a s a
time p r i c e , the substance of a time p r i c e s a l e i s simply a c r e d i t
p r i c e repayable i n i n s t a l l m e n t s .    W perceive no l o g i c i n denying
                                                      e                                                   '



a p p l i c a t i o n of t h e time p r i c e d o c t r i n e t o revolving charge account
s a l e s simply because they a r e governed by t h e terms of one p r i c e
agreement covering all future purchases from time to time rather
than a series of identical individual agreements entered into
at the time of each individual sale.
        For the foregoing reasons we hold that the finance charges
in the Montana Retail Installment Sales Act are not interest
but are time price differentials and accordingly the Act is not
legislation "regulating the rate of interest on money" proscribed
by Art. V., Sec. 26, 1889 Montana Constitution.
        Nor is it a special law within the same constitutional
prohibition.      It is clear that reasonable classifications and
distinctions in legislative enactments which operate equally upon
every person or thing in a given class are constitutionally
permissible and do not violate the constitutional prohibition
against special laws found in Art. V., Sec. 26, 1889 Montana
Constitition.      State ex rel, Hamrnond v. Hager,   P
                                                            .
                                                       Mont -*
503 P.2d 52, 29 St.Rep. 945 (upholding constitutionality of
exclusion of agricultural works from the workmen's Compensation
Act); Calvert v. City of Great Falls, 154 Mont. 213, 462 P.2d 182
(upholding constitutionality of exemptions of land used for specific
enterprises from compulsory annexation statute); Great Falls
National Bank v. McCormick, 152 Mont. 319, 448 P.2d 991 (upholding
constitutionality of Small Tract Financing Act applicable only
to tracts of land less than three acres); Montana Meat Co. v.
Missoula Livestock Auction Co., 125 Mont. 66, 230 P.2d 955 (up-
holding constitutionality of statute exempting livestock auctioneers
from liability for conversion of mortgaged livestock); Rutherford
v. City of Great Falls, 107 Mont. 512, 86 P.2d 656 (upholding
constitutionality of statute for construction of housing for
11   low income ~ersons").   It is equally clear from the foregoing
cases that legislative classifications carry a presumption of
constitutionality which can only be overcome by an affirmative
showing that there is no valid reason or basis for singling out
a h articular class or thing for different legislative treatment.
        Here the legislature has singled out a particular class of
persons, i,e. retail sellers who sell to retail buyers, and a
particular subject matter, i.e. installment sales of personal
property under written contract, for special legislative treat-
ment.     The legislature has subjected these persons and trans-
actions to special regulatory measures and has established ceilings
on finance and service charges.
        Is there a reasonable basis for this classification and
different treatment? Clearly there is.         In economic terms, the
cost of extending consumer credit is substantially higher than
extending wholesale credit to a few business firms, for example.
The sheer volume of consumer credit accounts entails substantially
higher costs in servicing such accounts.        For more detailed
treatment of the economic basis for differentiation see:        63
Harvard Law Review, Regulation of Retail Installment Sales          ,
877, 878; Consumer Installment Credit, Federal Reserve System
1957, Vol. 1, part 1; Economic Characterization of Department
Store Credit, National Retail Merchants Ass'n 1969,
        The remaining constitutional objections to the Act can be
dealt with summarily. The district court concluded that the Act
                             II
is a special law granting         special or exclusive privileges,
immunities or franchises" within the prohibitions of Art. V.,
Sec, 26, 1889 Constitution of Montana, and that the Act interferes
with the right of non-retail sellers to "acquire property"
guaranteed by Art. III., Sec. 3, 1889 Montana Constitution, because
they are allegedly denied the right to charge the same finance
charge rates as retail sellers.        These alleged violations both
depend on whether the legislative classifications in the Act are
constitutionally permissible.        Having found the classification
reasonable and constitutionally permissible for the reasons here-
tofore set forth, the Act is not a "special" law and the constitu-
tional attack must fail,
       For t h e foregoing reasons we hold t h a t t h e Montana R e t a i l
I n s t a l l m e n t Sales Act, both before and a f t e r i t s amendment i n
1971, i s c o n s t i t u t i o n a l and the d i s t r i c t c o u r t ' s holding t o t h e
c o n t r a r y must be s e t a s i d e .
       D i r e c t i n g our a t t e n t i o n t o t h e second i s s u e f o r review,
p l a i n t i f f contends t h a t t h e Montana R e t a i l I n s t a l l m e n t Sales Act
preempted t h e f i e l d of a l l i n s t a l l m e n t s a l e s and a s t h e revolving
charge account plan of The P a r i s d i d n o t comply with i t s provisions
p r i o r t o t h e 1971 amendment, The P a r i s was n o t authorized t o
charge and r e c e i v e t h e finance charges i t did.
       I n i t i a l l y i t i s c l e a r t h a t revolving charge account s a l e s
could n o t and d i d n o t conply with t h e requirements of t h e Act
p r i o r t o i t s amendment i n 1971,           Section 74-608(b) of t h e o r i g i n a l
Act r e q u i r e d t h e finance charge t o be computed from t h e d a t e of
i n s t a l l m e n t purchase u n t i l maturity; i n revolving c r e d i t s a l e s
finance charges cannot be precomputed.                      Section 74-607(f) required
t h e finance charge t o be s t a t e d i n d o l l a r s and c e n t s ; i n revolving
c r e d i t s a l e s t h i s i s impossible because such charges cannot be
precohputed.         Section 74-608(b) required computing of t h e finance
charge from d a t e of s a l e t o maturity; revolving charge accounts
compute t h e finance charges on a monthly b a s i s and add them t o
t h e balance before i n s t a l l m e n t payments a r e c r e d i t e d t o t h e account.
Section 74-607 required t h e i n s t a l l m e n t c o n t r a c t t o c o n t a i n e i g h t
s p e c i f i c elements showing computation of t h e cash p r i c e , down
payment, amount of finance charge, t o t a l t i m e balance and o t h e r
items, most of which have no a p p l i c a t i o n t o revolving charge
accounts.
       But does t h i s mean t h a t The P a r i s v i o l a t e d t h e Act p r i o r t o
t h e 1971 amendment? Not a t a l l .              Contrary t o t h e viewpoint of
p l a i n t i f f , t h e Act i s a r e g u l a t o r y measure on finance charges and
n o t a s t a t u t e c o n f e r r i n g s p e c i a l b e n e f i t s i n the form of high
finance charges f o r t h e p r i v i l e g e d few f a l l i n g w i t h i n i t s pro-
visions.       The Act p r i o r t o amendment simply d i d n o t attempt o r
purport t o r e g u l a t e revolving charge account s a l e s o r t h e finance
charges thereon.             It simply r e g u l a t e d "closed end" r e t a i l i n s t a l l -
ment c o n t r a c t s such a s c o n d i t i o n a l s a l e s c o n t r a c t s , c h a t t e l mort-
gages, bailments o r l e a s e s with option t o purchase and t h e l i k e .
This i s c l e a r from t h e provisions of s e c t i o n 74-602, d e f i n i n g r e t a i l
installment transactions, r e t a i l installment contracts, r e t a i l
buyers, and r e t a i l s e l l e r s .          Subsections (d) , (e) , ( f ) , and ( g ) ,
s e c t i o n 74-602.      There i s nothing i n t h e Act, p r i o r t o i t s amend-
ment, which purports t o r e g u l a t e o r p r o h i b i t s a l e s under revolving
charge accounts o r t h e finance charges on such s a l e s .
        Finance charges on revolving charge account s a l e s w e r e simply
unregulated p r i o r t o 1971.              Limitations on i n t e r e s t r a t e s under t h e
general usury s t a t u t e d i d not apply because of t h e time p r i c e
d o c t r i n e c o d i f i e d i n t h e Act.     The l e g i s l a t u r e , viewing t h i s s i t u a -
t i o n i n 1971, amended t h e Act s p e c i f i c a l l y t - d mver revolving charge
account s a l e s and r e g u l a t e t h e maximum permissible finance charges
thereon.        Chapter 416, Session Laws 1971.                      The 1971 amendment
maintains a d i s t i n c t i o n between r e t a i l i n s t a l l m e n t c o n t r a c t s
                                                                           account
covered p r i o r t o t h e amendment, and r e t a i l chargelagreements speci-
f i c a l l y included f o r t h e f i r s t time i n t h e 1971 amendment. D i f f e r e n t
finance charge r a t e s t r u c t u r e s a r e presented f o r each, s e c t i o n
                                                                                                            4


74-608 ( a ) , (b), and (c) f o r r e t a i l i n s t a l l m e n t c o n t r a c t s ; s e c t i o n
74-608(d) and ( e ) f o r r e t a i l charge account agreements.
        The formal c o n t r a c t provisions r e q u i r e d by s e c t i o n 74-607
and t h e provisions r e l a t i n g t o s a l e s finance companies, s e c t i o n s
74-603 and 74-604, apply only t o r e t a i l i n s t a l l m e n t c o n t r a c t s and
do n o t a f f e c t r e t a i l charge account agreements.                   The l e g i s l a t u r e ,
a t l e a s t , d i d n o t consider t h a t revolving charge account s a l e s
and t h e finance charges permissible thereon t o have been covered
by t h e Act p r i o r t o 1971.           W concur i n t h i s assessment of t h e
                                            e
situation.
        W hold t h a t The P a r i s d i d n o t v i o l a t e t h e Montana R e t a i l
         e
I n s t a l l m e n t S a l e s Act p r i o r t o t h e 1971 amendment by r e a s o n of
i t s r e v o l v i n g charge account o p e r a t i o n and t h e f i n a n c e c h a r g e s
imposed and r e c e i v e d .
       The judgment of t h e d i s t r i c t c o u r t i s r e v e r s e d and p l a i n t i f f ' s
complaint i s dismissed.
