American Express Company v. Koerner

PETITIONER: American Express Company
LOCATION: 1980 Democratic National Convention, Madison Square Garden

DOCKET NO.: 80-202
DECIDED BY: Burger Court (1975-1981)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 452 US 233 (1981)
ARGUED: Apr 20, 1981
DECIDED: Jun 08, 1981

Louis R. Koerner, Jr. - on behalf of the Respondent
Ronald J. Greene - on behalf of the Petitioner

Facts of the case


Media for American Express Company v. Koerner

Audio Transcription for Oral Argument - April 20, 1981 in American Express Company v. Koerner

Warren E. Burger:

We will hear arguments first this morning in American Express Co. v. Koerner.

Mr. Greene, you may proceed whenever you are ready.

Ronald J. Greene:

Mr. Chief Justice, and may it please the Court:

This case turns on what we view as a relatively simple question of statutory construction.

It requires the Court to construe the meaning of Section 104(1) of the Truth-in-Lending Act.

That section provides an exemption from the entire Act for business credit transactions.

The precise statutory language is,

"transactions involving extensions of credit for business or commercial purposes. "

The question before the Court today is whether this language makes the Truth-in-Lending Act inapplicable to the business credit cards issued by American Express to the company for which Respondent works.

Now American Express says that the exemption applies because the cards in question were business cards, obtained by a business enterprise for business purposes.

Respondent counters that the exemption should not apply because he, together with his employer, was jointly liable for any charges on the account and because allegedly, on some occasions he used the card to make personal purchases.

Now, time permitting, there are three basic points that I'd like to cover this morning.

First, I'd like to review briefly the precise statutory language that we feel is dispositive.

It is our position that this language clearly and without any equivocation, exempts all business card systems from the Truth-in-Lending Act.

Second, I'd like to discuss the position that the Federal Reserve Board has taken on the issues before the Court.

Under this Court's decision in Ford Motor v. Milhollin, the rulings of the Federal Reserve Board are, we think, dispositive.

And finally, I'd like to touch on the fundamental policy considerations that we think are reflected in the business credit exemption.

And the Fifth Circuit decision which we've asked this Court to reverse is particularly troublesome because it reflects an insensitivity to these fundamental policy considerations.

And also, because it might lead to the imposition of an exceptionally complicated and convoluted regulatory scheme in an area where Congress and the Federal Reserve Board never thought that it should be applied.

Application of those regulations in this area would impose wholly unnecessary regulatory costs in an area that Congress specifically decided it was not going to regulate.

Now, there are no disputes about the facts in this case; it comes here on a motion for summary judgment that was granted by the District Court.

Mr. Koerner, the Respondent, was an officer of the John E. Koerner & Co. In 1965, the company applied to American Express for issuance of a company card for Mr. Koerner's use.

Other employees also were to receive cards; five cards were ultimately issued on this account.

American Express checked out the company's credit, and issued all five cards.

It also obtained Mr. Koerner's individual signature, and that made him liable together with the company for any charges on his particular card... not on the other four cards, but on his particular card.

Potter Stewart:

Did the company investigate the credit rating of any of Mr. Koerner... or of any of the other four employees?

Ronald J. Greene:

No, Mr. Justice, just the company.

If you look at the application form which is in the joint appendix on page 27a, you will see that there are listed there credit references of the company, Whitney National Bank, Hibernia National Bank, and so on.

International Milling Company.

These are credit references of the company and it was the company's credit that stood behind the account.