SOUTHWESTERN INVESTMENT COMPANY, Petitioner, v. Robert W. MANNIX, Respondent, 557 S.W.2d 755

SAM D. JOHNSON, Justice. Application for writ of error was made to this court, and we handed down a per cu-riam opinion which gave our reason for refusing the writ with the notation “no reversible error.” 20 Tex.Sup.Ct.J. 216 (March 5, 1977). On motion for rehearing, the writ of error was granted, and the per curiam opinion is withdrawn. The following opinion is substituted. Robert Mannix, as debtor, sued Southwestern Investment Company [SIC] as as-signee of a retail installment contract which allegedly contained nine violations of the Texas Consumer Credit Code, Texas Revised Civil Statutes Annotated,

Article 5069-6.01, et seq., and seven violations of the federal Truth-In-Lending Act, 15 U.S. C.A.,

Section 1601, et seq., and Regulation Z, 12 C.P.R.,

Section 226.1, et seq. SIC counterclaimed for the monthly payments, totaling $499.20, which would become due under the retail installment contract. The trial court found six violations of state law and five violations of federal law and granted Mannix’ motion for

summary judgment. SIC’s counterclaim was dismissed. The trial court awarded Mannix $731.68 as statutory damages plus $1,000 attorneys’ fees. SIC appealed the

summary judgment rendered against it, but not the dismissal of its counterclaim. The court of civil appeals affirmed the

summary judgment. 540 S.W.2d 747. We affirm the judgments of the trial court and the court of civil appeals. Mannix purchased $1,181.04 worth of stereo equipment from Banner Sales Company in San Antonio. He made a cash down payment of $381.04 and executed a retail installment sales contract for the remaining balance of $800. Mannix agreed to purchase credit life insurance for $15.48, which increased the total amount financed to $815.48. The finance charge on the $815.48 was $182.92, representing an annual percentage rate of 20.24 percent and bringing the total of the twenty-four payments to $998.40.

The $998.40 total was to be paid in twenty-four monthly installments of $41.60 each, commencing on February 22, 1974. Banner assigned the sales contract to SIC, which provided the form contract to Banner. Apparently, it is a normal procedure for Banner to contact SIC prior to the sale of goods by Banner to a consumer such as Mannix. If SIC agrees to purchase from Banner any contract executed by the consumer, SIC supplies Banner with the form contract which the consumer (in this case Mannix) is to sign.

The pertinent portions of this contract are set out on following page: Subsequent to the execution of this contract Mannix instituted this litigation. When SIC filed its counterclaim alleging “[t]here is presently due and owing by Cross-Defendant [Mannix] on such contract the sum of $499.20, exclusive of attorneys fees,” Mannix was not and had not been behind in his payments. From the record it does not appear that Mannix was ever late in his payments. The trial court found a total of eleven violations of the applicable law. The trial court held the following provisions of the contract violated Texas law: 1.

The requirement that Mannix purchase fire insurance did not comply with

Article 5069-6.02(5)(d), which requires the retail installment contract to disclose any separate charge included for insurance, specifying the type of insurance and the terms of coverage, or with

Article 5069-6.-04, which allows the creditor to require the buyer to insure property sold, but which requires the contract to “state the kind, coverage, term and amount of premium for such insurance.” 2. The delinquency charge provision failed to comply with

Article 5069-6.02(11), which allows the creditor to include in the contract a provision for a delinquency charge only “on each installment in default for a period of more than ten days ..” 3. The requirement that Mannix, the buyer, pay for any damages to real estate due to repossession and the provision which allowed forceable repossession violated

Article 5069-6.05(4), which provides in pertinent part that “no retail installment contract or retail charge agreement shall: . . .

(4) Provide for a waiver of the buyer’s rights of action against the seller or holder or other person acting therefor for any illegal act committed in the . repossession of goods; . . .” 4. The deduction of unpaid delinquency charges from any refund of unearned interest upon prepayment did not comply with

Article 5069-6.02(10), which allows the buyer to prepay in full at any time before the final due date and which sets forth the formula for the refund of the unearned interest upon such prepayment. 5. The deduction of $12 from any refund of unearned interest upon prepayment also violated

Article 5069-6.02(10), and this deduction was not authorized by

Article 5069-6.02(9)(e), which provides that the minimum time-price differential, i. e., interest, which may be charged on the retail installment contract in the instant ease would be $12. 6. The acceleration of the unearned interest, if there was a default prior to the final due date, did not comply with the formula for the refund of unearned interest contained in

Article 5069-6.02(10). The trial court, in addition, held the contract violated federal law in the following manner: 7. The placement of the provision for a security interest in after-acquired property violated Regulation Z,

Section 226.8(a)(1), which provides that disclosures under the circumstances of the instant case required by

Section 226.8(b)(5) shall be on “the same side of the page and above the place for the customer’s signature; . . . ”

Section 226.8(b)(5), in pertinent part, requires: “A description or identification of the type of any security interest held or to be retained or acquired by the creditor in connection with the extension of credit . . ..If after-acquired property will be subject to the security interest, or if other or future indebtedness is or may be secured by any such property, this fact shall be clearly set forth in conjunction with the description or identification of the type of security interest held, retained or acquired.” 8. The prepayment penalty of $12 violated Regulation Z,

Section 226:6(a), which requires disclosures to be “made clearly, conspicuously, [and] in meaningful sequence,” and Regulation Z,

Section 226.8(a), and

Section 226.8(b)(6), which together require the disclosure of “any penalty charge that may be imposed by the creditor or his assignee for prepayment of the principal of the obligation . . ..” 9. The description of the security interest was inadequate and thereby violated Regulation Z,

Section 226.8(b)(5). 10. The right of the creditor to accelerate the installments was not disclosed in accordance with Regulation Z,

Section 226.-8(a)(1) and

Section 226.8(b)(4), which require under the circumstances of the instant case the disclosure of penalties for default by the debtor on “the same side of the page and above the place for the customer’s signature.” 11.The terms “finance charge” and “annual percentage rate” were not printed more conspicuously than other required terminology in violation of Regulation Z,

Section 226.6(a). SIC appealed to the court of civil appeals urging each of these eleven findings as a point of error. The court of civil appeals affirmed on the basis of three violations. Two violations of state law were found by the court of civil appeals:

Article 5069-6.-02(11) [point 2, ten-day late charge], and

Article 5069-6.02(10) [point 6, acceleration of unearned interest]. One violation of federal law was found by the court of civil appeals: Regulation Z,

Section 226.8(a)(1) [point 7, disclosure of security interest]. SIC appealed to this court contending there were not any violations of state or federal law and raised the same eleven points of error. At this juncture, we note that our disposition of this case does not require a consideration of all eleven points raised by SIC. The parties stipulated that damages in the amount of $731.68 and reasonable attorneys’ fees in the amount of $1,000 were to be awarded if there existed one violation of state law and one violation of federal law.

We also note that SIC has not raised at any point in these proceedings the defense of accidental and bona fide error nor any defense available to it because of its status as an assignee of the installment contract. “In determining the meaning of a statute, the dominant consideration is to ascertain the intention of the Legislature . This intention is to be found in the language of the statute itself.” Jones v.

Del Andersen and Associates, 539 S.W.2d 348, 350 (Tex.1976). “An equally fundamental rule of statutory construction is that the intention of the Legislature must be ascertained from the entire Act, and not from isolated portions thereof.” Calvert v. Texas Pipe Line Company, 517 S.W.2d 777, 781 (Tex.1974). When construing the statutes involved in SIC’s points of error, this court must not only be guided by these two rules of

interpretation, but also the purpose expressed by the Legislature in the following declaration of intent: “

(1) Many citizens of our State are being victimized and abused in various types of credit and cash transactions. These practices impose a great hardship upon the people of our State. “

(2) Credit in its various forms is one of the most essential and vital elements of our economy. It can be truly said that credit affects every citizen every day. Credit transactions in our State amount to many billions of dollars per year. “

(3) Credit abuses now existing in our State stem from the fact that many types of credit transactions are not now subject to effective public regulation and control and the penalties imposed for usury do not provide effective or workable safeguards in this vital area of economic activity. “

(4) Such abuses are especially prevalent in the area of consumer transactions both cash and credit. Unscrupulous operators, lenders and vendors, many of whom are transient to our State, are presently engaged in many abusive and deceptive practices in the conduct of their businesses. These unregulated practices bring great social and economic hardship to many citizens of our State. They impose intolerable burdens on those segments of our society which can least afford to bear them — the uneducated, the unsophisticated, the poor and the elderly. “

(5) These facts conclusively indicate a need for a comprehensive code of legislation to clearly define interest and usury, to classify and regulate loans and lenders, to regulate credit sales and services, and place limitations on charges imposed in connection with such sales and services, to provide for consumer education and debt counseling, to prohibit deceptive trade practices in all types of consumer transactions, and to provide firm and effective penalties for usury and other prohibited practices. “

(6) It is the intent of the Legislature in enacting this revision of Title 79 of the Revised Civil Statutes of Texas, 1925, to protect the citizens of Texas from abusive and deceptive practices now being perpetrated by unscrupulous operators, lenders and vendors in both cash and credit consumer transactions and to implement the mandate of

Section II of

Article XVI of the Constitution of Texas which authorizes the Legislature to classify loans and lenders, license and regulate lenders, define interest and fix maximum rates of interest, and thus serve the public interest of the people of this State.” Declaration of Legislative Intent, Texas Laws 1967,

Chapter 274,

Section 1, at 608. Texas Revised Civil Statutes Annotated, Volume 15, pp. 1-2 (1971). VIOLATIONS OF STATE LAW FIRE INSURANCE: At the outset, SIC urges a point not considered by the court of civil appeals. SIC argues that there was no violation of

Article 5069-6.02(5)(

d) or

Article 5069-6.04, both of which concern property insurance. Clearly there was no violation of

Article 5069-6.02(5)(d). The pertinent text of that provision is as follows: “The retail installment contract shall contain and disclose the following items: “(

d) The aggregate amount, if any, included for insurance, if a separate identified charge is made therefor, specifying the type or types of insurance and the term or terms of coverage; . . .” [Emphasis added.] The contract in issue indicates no “separate identified charge . . . made” for property insurance. Since Mannix was not charged by SIC for any property insurance, it was not necessary for the information required by

Article 5069-6.02(5)(

d) to be contained in the installment contract. Although

Article 5069-6.02(5)(

d) was not violated,

Article 5069-6.04 was. It provides in pertinent part: “

(2) A seller or holder may . . .request or require a buyer to insure property involved in such [retail installment] contract or agreement, . “

(3) When insurance is required in connection with such a contract or agreement made under this Chapter, the seller or holder shall furnish the buyer a statement which shall clearly and conspicuously state that insurance is requested or required in connection with the contract, . [and] “

(5) The contract or agreement must state the kind, coverage, term and amount of premium for such insurance.” [Emphasis added.] SIC argues there was no requirement for any insurance under this retail installment contract. An examination of the instrument refutes this contention. The following provision is contained on the back of the installment contract: “5. The Debtor agrees to insure such Goods against loss by fire in favor of the Secured Party, its successors or assigns.” There are no marks of any kind on the contract to indicate that this provision was to be deleted.

SIC maintains that the placement of what appears to be a zero in the blank opposite Item 6 [Item 6 reproduced below* refers to property insurance and appears on the front of the contract], and the failure to complete the remaining blanks contained in Item 6 indicates no insurance was required. To the contrary, it is obvious that this blank opposite Item 6 was intended to be used to comply with

Article 5069-6.02(5)(d), which requires the creditor to set forth the cost of such property insurance when acquired through the creditor; not

Article 5069-6.04, which requires the creditor to set forth the “kind, coverage, term and amount of premium for such insurance.” The failure to complete the remaining blanks in Item 6 does not in any way indicate that the provision requiring Mannix to purchase fire insurance was to be deleted from the contract. Since there was nothing, to indicate that the provision on the back of the contract was not to be applied to this transaction, that is, it was not struck out, it was necessary for the contract to state “the kind, coverage, term and amount of premium for such insurance.” The failure to include this information was a violation of

Article 5069-6.04. See McDonald v. Savoy, 501 S.W.2d 400 (Tex.Civ.App. — San Antonio 1973, no writ). DELINQUENCY CHARGE: SIC next maintains that the following provision of its contract, that “Debtor agrees to pay a delinquency and collection charge on each installment in default for 10 days or more,” does not violate

Article 5069-6.02(11). The pertinent part of

Article 5069-6.02(11) states that the “holder of any retail installment contract if it so provides may collect a delinquency charge on each installment in default for a period of more than ten days . . ..” According to SIC, the contract phrase “in default for 10 days or more” is equivalent to the statutory phrase “in default for . more than ten days.” Mannix argues that under the contract provision a penalty can be assessed on the tenth day. We reject this argument.

The installment must have been “in default for 10 days,” which plainly means that a delinquency charge cannot be imposed until the expiration of ten days. In order to be “in default for 10 days,” the tenth day must have passed without payment; the earliest that a delinquency charge could be imposed under this contract is on the eleventh day, as the statute requires. Thus, the trial court and the court of civil appeals erroneously held there was a violation of

Article 5069-6.-02(11). WAIVER OF RIGHTS: Although the trial court found a violation of

Article 5069-6.05, the court of civil appeals did not consider this third point of error. In pertinent part,

Article 5069-6.05 provides: “No retail installment contract or retail charge agreement shall: “

(4) Provide for a waiver of the buyer’s rights of action against the seller or holder or other person acting therefor for any illegal act committed in the collection of payments under the contract or agreement or in the repossession of goods; Mannix argues that this

Article is violated by the following provision contained on the back of the contract: “Nothing shall prevent the Secured Party from removing [the property] from any premises to which same may be attached, upon default or breach of this Retail Installment Contract and Security Agreement or any part thereof, and the Debtor agrees to sustain the cost of repairs, if any, of any physical injury to the real estate caused by such removal.” This provision of the contract does indeed waive the buyer’s cause of action for any tort committed in the repossession of the goods.

Since “[njothing shall prevent the Secured Party from removing [the property] from any premises to which same may be attached, upon default or breach,” SIC could, for example, forcefully enter Mannix’ home. Furthermore, in this example, Man-nix would have to absorb “the cost of repairs, if any, of any physical injury” to his home as a result of such forceable entry even though the injury was a result of intentionally tortious conduct. It is well-settled that such a provision would not be enforced by the courts of Texas. First, a breach of the peace during repossession would violate

Article 9.503, Texas Business and Commerce Code. Second, such unconscionable conduct would not be excused by a provision contained in a form contract resulting from unequal bargaining positions. See Exxon Corporation v. Brecheen, 526 S.W.2d 519 (Tex.1975); Crowell v. Housing Authority of City of Dallas, 495 S.W.2d 887 (Tex.1973); Western Union Tel. Co. v. Linn, 87 Tex. 7, 26 S.W. 490 (1894); Cameron Compress Co. v. Whitington, 280 S.W. 527 (Tex.Com.App.1926, jdgmt adopted); Comment, The Doctrine of Uncon-scionability, 29 Baylor L.R. 309 (1977).

Thus, the Legislature must not only have intended such an unconscionable contract provision to continue to be unenforceable, but also to penalize any creditor who included such a prohibited provision in a retail installment contract.

The presence of such a clause in a retail installment contract would deceive the very individuals the Legislature intended to protect; namely, “the uneducated, the unsophisticated, the poor and the elderly” into believing that their creditors could, with the law’s blessing, forcibly enter their homes at any time of the day or night and remove their goods without any concern for damages to the debtor’s real property. Accordingly, the Legislature must have intended for

Article 5069-6.05 to impose a duty upon the creditor not to include such an unconscionable provision in the installment contract. This same conclusion that the creditor has a duty to prepare a contract in accordance with the standards established by the Legislature by the Texas credit laws was reached in Mitchell Motors, Inc. v. Bell, 528 S.W.2d 856 (Tex.Civ.App.—San Antonio 1974, writ ref’d n.r.e.). Bell involved a violation of

Article 5069-7.02(2), which provided in pertinent part that the “printed portion of the [motor vehicle installment] contract . shall be in size equal to at least eight-point type.” The court reasoned: “In view of the clear legislative intent to protect buyers by preventing abusive and deceptive practices by sellers, and to achieve this objective by regulating the conduct and activities of sellers, there can be no doubt that the legislature intended to achieve its goal by imposing duties on the persons who, in the legislative judgment, had, under the old law, been guilty of abusive and deceptive practices. Thus, there can be no doubt that the purpose of

Article 7.02 was to impose duties on sellers, the persons who, in the ordinary course of business, as did defendant here, present to the buyer a document ready for the buyer’s signature. Regulation presupposes control by imposition of rules and standards to be followed, and it would be nonsensical to hold that the legislature sought to impose rules and standards to be followed by sellers without imposing a duty on the regulated persons to comply with such rules and standards.

To attempt to regulate the conduct of a class of persons without imposing duties on the members of the regulated class would be an attempt to regulate by not regulating.

It is obvious that, if the legislative attempt to protect the credit buyers of motor vehicles is to be regarded as anything other than an exercise in futility, the legislative pronouncements concerning the form and contents of the retail installment contract must be construed as imposing duties on the seller, since it is the conduct of the seller which the legislature sought to regulate.” 528 S.W.2d 856 at 860. . [Emphasis added.] See Snell, Assignee Liability Under the Texas Consumer Credit Code, 8 St. Mary’s L.J. 696 (1977).

The inclusion of this prohibited item in the contract which waived Mannix’ right of action for certain illegal acts which might be committed in the repossession of goods subjected SIC to the penalties provided for in

Article 5069-8.01, which provides in pertinent part: “Any person who violates this Subtitle . by failing to perform any duty specifically imposed on him by any provision of this Subtitle, shall forfeit to the obligor twice the amount of interest or time price differential . . . charged or received, and reasonable attorneys’ fees fixed by the court, provided that there shall be no penalty for a violation which results from an accidental and bona fide error.” [Emphasis added.] DEDUCTION OF DELINQUENCY CHARGES: Under points four and five, SIC argued the contract provisions relating to delinquency charges did not violate

Article 5069-6.02(10). Having found two violations of state law, we do not need to consider these two points raised by petitioner SIC. ACCELERATION OF UNEARNED INTEREST: Because point of error six was considered by the court of civil appeals, we feel it appropriate to comment on this item.

The contract provides: “Should the Debtor fail to pay such indebtedness or any part thereof when due, then the entire unpaid balance shall, at the Secured Party’s option, become immediately due and payable and shall bear interest thereafter at the highest lawful rate, . . . ” Mannix alleged that by using the phrase “entire unpaid balance” this provision provided for the acceleration of the principal and of the unearned interest upon default and that such provision violated

Article 5069-6.-02(10). That

Article provides in pertinent part: “. . . any buyer may prepay in full the unpaid time balance thereof at any time before its final due date and, if he does so, shall receive a refund [of unearned interest] thereon for such prepayment.” The contract provision, however, does not concern a prepayment situation. Instead, the contract provision relates to a default by the buyer. Once the debt has been accelerated upon default, it is then due and owing. It is not possible for the buyer, Mannix, to prepay at that point in time. Therefore,

Article 5069-6.02(10), which regulates prepayment, does not apply. Moreover, it is clear, from an examination of the contract, that the above-cited provision does not contemplate the acceleration of unearned interest. The term “unpaid balance” obviously refers to the unpaid principal; the unpaid portion of the amount which was originally financed. On the front of the contract the term “unpaid balance” was used in two places.

First in the phrase “UNPAID BALANCE OF CASH PRICE,” which was $800, and second in the phrase “UNPAID BALANCE — AMOUNT FINANCED,” which was $815.48, which included the cash price and the cost of credit life insurance. Thus, the phrase “unpaid balance” does not refer to the total of payments that have not been made under the contract, but rather to the unpaid principal; the amount of the “total of payments” still outstanding, less any unearned interest. Accordingly, the contract language does not violate

Article 5069-6.02(10) by accelerating unearned interest upon default. With respect to the argument that there was an attempt by SIC to accelerate the unearned interest, the court of civil appeals apparently held the assertion by SIC of a counterclaim against Mannix, which recited “[t]here is presently due and owing by Cross-Defendant [Mannix] on such contract the sum of $499.20, exclusive of attorneys fees,” was equivalent to an acceleration of the unearned interest. At the time the counterclaim was made, the sum of $499.20 included unearned interest.

It should be noted that the record in this case indicates that Mannix has never been in default. While it is clear that the court of civil appeals was correct in holding that an acceleration of unearned interest upon default in the instant case would be a violation of

Article 5069-8.01, which prohibits charging usurious interest, Moore v. Sabine National Bank of Port Arthur, 527 S.W.2d 209 (Tex. Civ.App. — Austin 1975, writ ref’d n.r.e.), we need not decide whether this counterclaim asserted by SIC was indeed an attempt to accelerate unearned interest inasmuch as we have already found two violations of state law. VIOLATIONS OF FEDERAL LAW SECURITY INTEREST: In its seventh point of error SIC maintains it did not violate Regulation Z,

Section 226.8, which provides in pertinent part as follows: “(a) ... all of the disclosures shall be made together on either: “

(1) The note or other instrument evidencing the obligation on the same side of the page and above the place for the customer’s signature; . “(b) ... In any transaction subject to this section, the following items, as applicable, shall be disclosed: “

(5) A description or identification of the type of any security interest held or to be retained or acquired by the creditor in connection with the extension of credit, . If after-acquired property will be subject to the security interest, or if other or future indebtedness is or may be secured by any such property, this fact shall be clearly set forth in conjunction with the description or identification of the type of security interest held, retained or acquired.” [Emphasis added.] Therefore, under Regulation Z,

Section 226.8, any security interest in after-acquired property and future indebtedness secured by the goods sold must have been disclosed in this case on the front or first page of the document.

The contract contained the following provisions regarding the security interest retained by SIC: 1. [Contained on the front of the document.] “For good and valuable consideration and as security for the Total of Payments, Debtor hereby acknowledges, ratifies and confirms the existence of a security interest in the Goods described above to Secured Party, to have and to hold the same forever, upon the condition that if Debtor promptly pays or causes to be paid the aforesaid indebtedness and performs all of the terms and conditions hereof at the time and in the manner specified then, and only then, title and ownership to said Goods shall vest in the Debtor and this Contract shall be void, otherwise the security interest herein created to remain in full force.” 2. [Contained on the back of the document.] “Title and ownership of said Goods, and the security interest herein created in said goods, shall remain in the Secured Party, its successors or assigns, until all sums due or which become due or owing under any clause of this contract shall have been fully paid in cash and all duties on the part of the Debtor shall have been fully performed, and thereupon the title and ownership shall pass to the Debtor and the security interest in the said goods shall terminate.

The Debtor agrees that any labor or material furnished to him shall be added to, and become a part of the purchase price hereof, and that title and ownership to the property herein shall not pass until the same is fully paid and the security interest created in the said Goods shall not be terminated until the same is fully paid.” [Emphasis added.] This second provision, which was contained on the back of the document, creates a security interest in certain after-acquired property and uses the goods sold under this contract to secure certain future indebtedness and was clearly required to be disclosed on the front of the document under Regulation Z,

Section 226.8(b)(5). Thus, the court of civil appeals correctly found a violation of this federal regulation. Having found one violation of federal law, we decline to consider the other points of error raised by petitioner SIC relating to federal law. The judgment of the court of civil appeals is affirmed. BARROW, J., not sitting. .

Article 5069-6.01, et seq., originally enacted in 1967 and effective on January 1, 1968, was amended effective May 4, 1977. Unless indicated otherwise, the references herein to

Article 5069-6.01, et. seq., pertain to the statute enacted in 1967. . References herein to federal laws or regulations pertain to those effective as of the date of the contract, January 23, 1974. . The stipulation reflects the fact that a violation of Texas credit laws results in a recovery of statutory damages of twice the finance charge [Article 5069-8.01] and a violation of the federal law results in a recovery of statutory damages of twice the finance charge with a minimum recovery of $100 and a maximum recovery of $1,000 [15 U.S.C.A. § 1640].

In this case, one violation of state law results in statutory damages of $365.84 [two times $182.92, the finance charge] and one violation of federal law results in statutory damages of $365.84, which totals $731.68.

Article 5069-8.01, et seq., which sets forth the remedies available for a violation of Texas credit laws was amended in 1977 by the 65th Legislature, Regular Session. The amendment does not affect the damages awarded in the instant case. . “Unless otherwise agreed a secured party has on default the right to take possession of the collateral. In taking possession a secured party may proceed without judicial process if this can be done without breach of the peace or may proceed by action.

If the security agreement so provides the secured party may require the debtor to assemble the collateral and make it available to the secured party at a place to be designated by the secured party which is reasonably convenient to both parties. Without removal a secured party may render equipment unusable, and may dispose of collateral on the debtor’s premises under

Section 9.504.” [Emphasis added.]