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CHALLEN v. TOWN AND COUNTRY CHARGE

August 18, 1982

JAMES CHALLEN, ET AL., PLAINTIFFS,
v.
TOWN AND COUNTRY CHARGE, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Shadur, District Judge.

MEMORANDUM OPINION AND ORDER

James and Cecelia Challen ("Challens") sue Continental Illinois National Bank and Trust Company of Chicago ("Continental") and its Town and Country Charge division ("Town and Country")*fn1 based on an allegedly tortious letter sent by defendant to Cecelia Challen's employer concerning an outstanding debt. Continental has moved under Fed.R.Civ.P. ("Rule") 12 for an order dismissing Counts I, II, III and V of the Complaint.*fn2 For the reasons stated in this memorandum opinion and order Continental's motion is granted in part and denied in part.

Counts I and V

Count I and part of Count V attempt to state a cause of action under the Fair Debt Collection Practices Act (the "Act," 15 U.S.C. § 1692-1692o). By its terms the Act applies only to "debt collectors," defined in 15 U.S.C. § 1692a(6):

  The term "debt collector" means any person who uses
  any instrumentality of interstate commerce or the
  mails in any business the principal purpose of which
  is the collection of any debts, or who regularly
  collects or attempts to collect, directly or
  indirectly, debts owed or due or asserted to be owed
  or due another.

Thus the critical issue is whether Continental*fn3 is collecting its own or another creditor's debts.*fn4

Challen's ill-drawn Complaint is really unclear on that score (as on numerous others). Paragraph XII alleges:

  Town and Country . . . has an independent function
  separate and apart from [Continental] namely the
  issuance of credit based on Visa and Mastercharge
  trade-names which credit is kept separate and apart
  from other lending and collecting functions conducted
  by [Continental]. . . .

That allegation alone could be fatal to Challens' claim for reasons similar to those discussed at n. 3. But Complaint ¶ VIII states a basically contradictory allegation, under which "Visa" may be a legal entity rather than a trade name, or alternatively might make Continental a "debt collector" under the other branch of Section 1692a(6):

  Defendants are persons using the mails toward
  collecting debts on a regular basis owed or due to be
  asserted to be owed or due to Visa, and Visa is an
  organization known or identified as Visa,
  U.S.A. . . .

Count II

Cecelia Challen owes a debt to Continental. Complaint ¶¶ V-VI allege Continental wrongfully sent a letter to Cecelia's employer saying she (1) owed a debt that was overdue and (2) was unresponsive and unwilling to discuss the delinquency. Finally, Complaint ¶ VI alleges the letter was sent after an agreement had been reached that placed Cecelia "in substantial compliance toward the payment of the debt."

Challens allege sending the letter constituted an unlawful violation of Cecelia's right to privacy.*fn6 But a creditor does not violate a debtor's right to privacy when it sends a letter to an employer informing the employer of the outstanding debt. Midwest Glass Co. v. Stanford Developments Co., 34 Ill.App.3d 130, 134, 339 N.E.2d 274, 277 (1st Dist. 1975); Housh v. Peth, 165 Ohio St. 35, 133 N.E.2d 340 (1956); Patton v. Jacobs, 118 Ind. App. 358, 78 N.E.2d 789 (1948). To escape that rule Challens ...


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