121 U.S. App. D.C. 315, 350 F.2d 445 (1965)
Appellee Walker-Thomas Furniture Company operates a retail furniture store in the District of Columbia. During the period from 1957 to 1962, each appellant purchased several household items from the company, with payment to be made in installments.1 The terms of each purchase appeared in a printed form contract that set forth the value of the item and purported to lease it to the purchaser for a stipulated monthly rent payment. Title remained in the company until the total of all monthly payments equaled the stated value, after which the purchaser could take title. In the event of default on any monthly installment, the company could repossess the item.2
The contract further provided that the amount of each periodical installment payment would be inclusive of and not in addition to payments under prior leases, and that all payments made would be credited pro rata on all outstanding leases, bills, and accounts due the company. This provision kept a balance due on every item purchased until the balance due on all items was liquidated.3 As a result, the debt from each purchase was secured by the right to repossess all items previously purchased by the same buyer, and each new item became subject to a security interest from previous dealings.4
On May 12, 1962, appellant Thorne purchased a Daveno, three tables, and two lamps with a total stated value of $391.10. Shortly after this purchase, Thorne defaulted on the monthly payments, leading the company to seek replevin of all items purchased since the first transaction in 1958. On April 17, 1962, appellant Williams bought a stereo set of stated value $514.95.5 At that time her account showed a balance of $164 from prior purchases.6 The total of all purchases over the years came to $1,800 with total payments of $1,400.7 Williams also defaulted shortly thereafter, prompting the company to seek replevin of all items purchased since December 1957.8
The Court of General Sessions granted judgment for the company in these cases. The District of Columbia Court of Appeals affirmed the judgments. This court granted the appellants' motion for leave to appeal.9
Prior to the last purchase by Williams, she had reduced her account balance to $164. The reverse side of the stereo contract listed the name of her social worker and her $218 monthly stipend from the government. At the time of the purchases, the company was aware of Williams's financial position and her need to support herself and seven children on that amount.10
Whether the District of Columbia courts have authority to refuse enforcement of contracts found to be unconscionable?11
Where the element of unconscionability is present at the time a contract is made, the contract should not be enforced.12 Unconscionability includes an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.13 Whether a meaningful choice is present can only be determined by consideration of all the circumstances surrounding the transaction, including gross inequality of bargaining power and whether important terms were hidden in a maze of fine print.14
Yes. Appellee Walker-Thomas Furniture Company operates a retail furniture store in the District of Columbia. During the period from 1957 to 1962, each appellant purchased several household items from the company, with payment to be made in installments under printed form contracts that retained title in the company until full payment.15 The contracts contained a provision crediting all payments pro rata on all outstanding accounts, which kept a balance due on every item until all were paid off, thereby securing each debt with the right to repossess all previously purchased items.
On May 12, 1962, appellant Thorne purchased items valued at $391.10 and defaulted shortly thereafter, prompting the company to seek replevin of all items since 1958.16 On April 17, 1962, appellant Williams bought a stereo set for $514.95 when her account balance was $164, with total purchases of $1,800 and payments of $1,400; she too defaulted, leading to an attempt to replevy all items since 1957.17 The company knew of Williams's $218 monthly stipend and her obligation to support seven children on that amount.18
The Court of General Sessions granted judgment for the company, and the District of Columbia Court of Appeals affirmed.19 Because the lower courts did not consider unconscionability, the record lacks findings on whether the appellants had a meaningful choice or whether the terms were unreasonably favorable.20 The cross-collateralization clause and the disparity in bargaining power, evidenced by the buyers' limited income and the seller's knowledge of it, indicate that the contracts may meet the test for unconscionability, but the cases must be remanded for proper findings under the rule.21
The District of Columbia courts have the authority to refuse enforcement of unconscionable contracts.22