This case presents a question of first impression in this circuit: whether a bankrupt's cause of action against a lending institution for statutory damages under section 130(a)(2) of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1640(a) (1976),1 passes to the trustee in bankruptcy pursuant to section 70a of the Bankruptcy Act, 11 U.S.C. § 110(a) (1976)2 (repealed 1978).3 In accord with other courts that have considered the precise issue before us, Murphy v. Household Finance Corp., 560 F.2d 206 (6th Cir. 1977), and Porter v. Household Finance Corp., 385 F. Supp. 336 (S.D.Ohio 1974),4 we hold that it does.

The material facts of this case are not in dispute. On November 16, 1976, Betty Lou Wood ("debtor") received a signature loan from the First National Bank & Trust Company in Macon ("lender" or "plaintiff"). On May 9, 1977, she obtained a second loan from the plaintiff and transferred to plaintiff as security a 1977 Honda automobile. On closing this second loan, she signed an "Installment Note and Disclosure Statement," as well as a security agreement.

Subsequently, on October 21, 1977, Ms. Wood was adjudicated a bankrupt upon the filing of her voluntary petition in bankruptcy. As of that date, the sum of $42.44 remained outstanding on the first loan, and the sum of $2,848.59 remained outstanding on the second loan. The 1977 Honda was scheduled as an asset of her estate, subject to the perfected security interest of the plaintiff.

On November 18, 1977, plaintiff filed a complaint against William M. Flatau ("trustee" or "defendant") as trustee of the debtor's estate, seeking reclamation of the Honda. The defendant filed his answer, generally denying the pertinent allegations of the reclamation complaint, and filed a counterclaim for statutory damages and attorneys' fees, but no actual damages, from the plaintiff for an alleged violation of the TILA and applicable regulations.

The bankruptcy judge granted the plaintiff's reclamation complaint but dismissed the trustee's counterclaim on the ground that the trustee had no standing to file a TILA counterclaim against the lender. In so holding, he relied upon an unreported district court decision, Flatau v. Bone, Civ. No. 77-8-Ath (M.D.Ga. Feb. 4, 1977), which held that TILA claims are not transferable to the trustee in bankruptcy under section 70a(5) of the Bankruptcy Act. On appeal, the trustee urged the district judge who had rendered the decision in Flatau v. Bone, supra, to reexamine its holding in that case in light of the subsequent contrary decision of the Sixth Circuit in Murphy v. Household Finance Corp., supra. The district court, however, unpersuaded by the Sixth Circuit's reasoning in Murphy, reiterated its view that a TILA claim is not transferable to a trustee in bankruptcy under section 70a of the Bankruptcy Act and that therefore the trustee had no standing to file a TILA counterclaim. Accordingly, it affirmed the decision of the bankruptcy judge.

Section 70a(5) of the Bankruptcy Act vests the trustee with the debtor's title to "property, including rights of action, which prior to the filing of the petition he (the debtor) could by any means have transferred . . . ." Bankruptcy Act, § 70a(5), 11 U.S.C. § 110(a)(5) (emphasis added). Neither the TILA nor the regulations promulgated thereunder discuss the transferability of a claim for statutory damages under section 130(a)(2)(A). For the purposes of the Bankruptcy Act, a cause of action is transferable if the action would "survive" the death of the debtor. Murphy v. Household Finance Corp., 560 F.2d at 208. The question of survivability is a matter of federal law. Id. See also Smith v. No. 2 Galesburg Crown Finance Corp., 615 F.2d 407, 413 (7th Cir. 1980); Heikkila v. Barber, 308 F.2d 558, 561 (9th Cir. 1962). It has long been established that causes of action predicated on penal statutes do not survive the death of the debtor, see Schreiber v. Sharpless, 110 U.S. 76, 28 L. Ed. 65 (1884), whereas remedial damage actions do survive. Thus, only if we are able to characterize the civil liability provisions of the TILA, see n. 1, supra, as being remedial will the trustee here have standing to press the debtor's TILA claim.5

The TILA affords a debtor statutory damages of twice the amount of any finance charge6 for a creditor's failure to disclose required information, regardless of whether the debtor has suffered any actual damages. There can be no doubt that this provision effectively imposes a penalty on the creditor. In fact, both Congress7 and the Supreme Court8 have used the term "civil penalty" to describe these statutory damages. That a penalty is imposed, however, does not end our inquiry. We must still determine whether a TILA action for statutory damages is penal for the purpose of survival. "The problem, simply put, is that the term 'penal' is used in different contexts to mean different things." Smith v. No. 2 Galesburg Crown Finance Corp., 615 F.2d at 414 (footnote omitted).

The Supreme Court discussed the multifarious meanings of the words "penal" and "penalty" in Huntington v. Attrill, 146 U.S. 567, 13 S. Ct. 224, 36 L. Ed. 1123 (1892):

In the municipal law of England and America, the words "penal" and "penalty" have been used in various senses. Strictly and primarily, they denote punishment, whether corporal or pecuniary, imposed and enforced by the State, for a crime or offense against its laws. (citations omitted). But they are also commonly used as including any extraordinary liability to which the law subjects a wrongdoer in favor of the person wronged, not limited to the damages suffered. They are so elastic in meaning as even to be familiarly applied to cases of private contracts, wholly independent of statutes, as when we speak of the "penal sum" or "penalty" of a bond.

Penal laws, strictly and properly, are those imposing punishment for an offense committed against the State, and which, by the English and American constitutions, the executive of the State has the power to pardon. Statutes giving a private action against the wrongdoer are sometimes spoken of as penal in their nature, but in such cases it has been pointed out that neither the liability imposed nor the remedy given is strictly penal.

The test whether a law is penal, in the strict and primary sense, is whether the wrong sought to be redressed is a wrong to the public, or a wrong to the individual, according to the familiar classification of Blackstone: "Wrongs are divisible into two sorts of species: private wrongs and public wrongs. The former are an infringement or privation of the private or civil rights belonging to individuals, considered as individuals; and are thereupon frequently termed civil injuries : the latter are a breach and violation of public rights and duties, which affect the whole community, considered as a community; and are distinguished by the harsher appellation of crimes and misdemeanors." 3 Bl. Com. 2.

Id. at 666-69, 13 S.Ct. at 227-228 (emphasis in original). This passage makes manifest that statutory damages under the TILA, even though they may commonly be characterized as a "penalty," are not necessarily "penal" for survival purposes. In fact, both of the courts that have considered the precise issue before us, citing Huntington, have concluded that such damages are remedial for the purpose of determining survivability.

The Sixth Circuit in Murphy v. Household Finance Corp., supra, distilled three factors from Huntington and its progeny to be used in determining whether a statute is penal or remedial: "(1) whether the purpose of the statute was to redress individual wrongs or more general wrongs to the public; (2) whether recovery under the statute runs to the harmed individual or to the public; and (3) whether the recovery authorized by the statute is wholly disproportionate to the harm suffered." 560 F.2d at 209. An examination of those factors9 led the court to conclude that a cause of action under section 130 of the TILA is remedial in nature:

The Truth in Lending Act ultimately serves the dual purpose of providing a remedy for harm to the monetary interests of individuals while serving to deter socially undesirable lending practices. Congress focused on the individual consumer of credit as a person primarily injured who should be encouraged to prosecute actions and should be allowed to recover directly and adequately for harms done. This is not the sort of statutory scheme properly characterized as penal.

Id. at 211. In reaching this conclusion the court placed particular reliance on Mourning v. Family Publications Service, Inc., 411 U.S. 356, 93 S. Ct. 1652, 36 L. Ed. 2d 318 (1973), in which the Supreme Court stated that section 130 liability was not the kind of penalty that courts were required to construe within the narrow limits reserved for strictly penal enactments.10 See Murphy, 560 F.2d at 209-10.

Murphy also drew liberally from Porter v. Household Finance Corp., supra, the seminal case on the issue of a trustee in bankruptcy's standing to bring the bankrupt debtor's section 130 claim. The district court in Porter divined in Huntington the "true test" of whether a statutorily imposed liability is penal or remedial in nature: "whether the wrong to be remedied or punished is primarily to an individual or to the State." 385 F. Supp. at 341. Candidly acknowledging that TILA liability under section 130 "does not fall neatly within the common law categories of either a penalty or a remedial action for injury to property or monetary interest," id. at 342, the court concluded that the primary purpose of section 130, a type of social welfare legislation unknown at the time of Huntington, is remedial: "The accumulative damage is meant to encourage debtors to seek their remedy under the Act, and it liquidates an uncertain damage. It is not primarily penal in the sense of a punishment imposed by the State for wrongdoing." Id. at 342-43. The court reasoned that

(t)he misrepresentation of the cost of credit may have prevented the debtor from obtaining cheaper credit after comparison shopping. The debtor's actual damages are difficult to ascertain. Nonetheless, the creditor has injured the debtor in his monetary interests by misrepresenting the cost of credit. And the Truth-in-Lending Act avoids the difficulty in calculating damages by providing for liquidated damages of twice the amount of the finance charge.

Id. at 342 (footnote omitted). Accord, Binnick v. Avco Financial Services of Nebraska, Inc., 435 F. Supp. 359, 365 (D.Neb.1977). Furthermore, the court likened suits for statutory damages under TILA to antitrust treble damage actions, which had "been held to create a civil remedy and not to impose a penalty." 385 F. Supp. at 341 (footnote omitted). See also cases cited, id.

We are persuaded by the reasoning of Murphy and Porter that the purpose of section 130 liability is remedial, that a section 130 claim therefore survives the death of the debtor, and that, consequently, such a claim can be transferred by the debtor to a trustee in bankruptcy. No argument propounded by the plaintiff here convinces us otherwise.

The plaintiff's attack on Murphy and Porter is founded in large measure on Johnson v. Household Finance Corp., 453 F. Supp. 1327 (N.D.Ill.1978). The district court there questioned the vitality of Huntington, the efficacy of analogizing TILA civil liability to antitrust treble damages, and the legitimacy of interpreting Mourning to support the proposition that section 130 is remedial. 453 F. Supp. at 1330-31. Not surprisingly, it concluded that the TILA is penal. Id. at 1331.

There are several significant reasons why we are loath to follow Johnson. First, Johnson dealt with the issue of the survival of a TILA claim but not in the context of the Bankruptcy Act. In fact, the court twice cautioned11 that it was not concerned with the issue before the court in both Murphy and Porter. Second, Johnson appears to have been overruled sub silentio by Smith v. No. 2 Galesburg Crown Finance Corp., 615 F.2d 407 (7th Cir. 1980). Third, and perhaps most significantly, we are unpersuaded by the court's reasoning that Murphy and Porter were wrongly decided, as our discussion today makes clear. Cf. James v. Home Construction Co., 621 F.2d 721 (5th Cir. 1980) (following Smith ).

Plaintiff fires several other salvos, but each is wide of the mark. It initially contends that section 130 is penal because it imposes liability beyond the amount of actual damages suffered by the debtor. This argument was summarily rejected in Murphy12 and Porter13 and is similarly rejected here, for like reasons.

Plaintiff also questions the analogy, proposed in Porter, 385 F. Supp. at 341, and followed in Murphy, 560 F.2d at 210 n. 5, of section 130 statutory damages to "remedial" antitrust treble damages. See Johnson v. Household Finance Corp., 453 F. Supp. at 1331. It submits that a plaintiff in an antitrust action who suffers no actual damages will not recover any treble damages, whereas the proponent of a TILA claim who has suffered no actual damages will nevertheless recover at least the minimum amount provided in section 130(a)(2). This distinction, it contends, vitiates the force of the analogy and requires that we hold TILA claims for statutory damage to be penal. We cannot agree. First, this argument fails to recognize that in the overwhelming majority of antitrust cases in which plaintiffs prevail treble damages will be imposed and the defendant required to compensate the plaintiff far beyond the amount of plaintiff's actual loss; yet the courts have repeatedly characterized treble damages as remedial. See cases cited in Porter, 385 F. Supp. at 341. See also Smith v. No. 2 Galesburg Crown Finance Corp., 615 F.2d at 415 & n. 22. Second, the lender's argument assumes that one who brings suit solely for statutory damages, as the trustee in the instant case has done, has suffered no actual damages. However, as the court in Porter acknowledged, statutory damages compensate the debtor for actual damages that may in fact be "difficult to ascertain." 385 F. Supp. at 342. Thus, we see no reason to distinguish the recovery of statutory damages in a TILA action from an award of antitrust treble damages; if the latter are remedial, the former must be, too.

Plaintiff further contends that we should refuse to transfer the debtor's TILA claim to the trustee in bankruptcy so that the debtor herself can bring the claim once she has been adjudicated a bankrupt. In plaintiff's view, permitting the trustee to press the debtor's TILA claim for the benefit of the creditors contravenes the purpose of the TILA by depriving the individual who was actually injured by the TILA violation of his recovery. This argument, however, cannot prevail. In pressing the TILA claim, the trustee stands in the shoes of the bankrupt debtor; any funds he recovers become part of the bankrupt's estate.14 Even if creditors do ultimately benefit from the trustee's recovery, the debtor's rights against the offending lender are nonetheless vindicated by the trustee's suit, thus effectuating, rather than thwarting, the purpose of the TILA. Moreover, claims that are rooted in a debtor's past financial plight are generally held to pass to the trustee in bankruptcy; only claims that look to the debtor's future economic rehabilitation are not transferred. See Porter v. Household Finance Corp., 385 F. Supp. at 339. We see no reason to distinguish a TILA claim from other claims that grow out of a debtor's past financial transactions.

Although not in the context of the issue before us, this court has repeatedly characterized the purpose of the TILA as remedial, very recently in Travis v. Trust Co. Bank, 621 F.2d 148, 151 (5th Cir. 1980) ("the Act has been found uniformly to be remedial in nature and thereby liberally and broadly construed in favor of the consumer"), and most recently in James v. Home Construction Co., 621 F.2d 721 (5th Cir. 1980). See also Smith v. Chapman, 614 F.2d 968, 971 (5th Cir. 1980); Cody v. Community Loan Corp., 606 F.2d 499, 505 (5th Cir. 1979), appeal docketed (446 U.S. 988, 100 S. Ct. 2973, 64 L. Ed. 2d 846 (1980); Lawson v. Conyers Chrysler, Plymouth & Dodge Trucks, Inc., 600 F.2d 465, 466 (5th Cir. 1979); Plant v. Blazer Financial Services, Inc., 598 F.2d 1357, 1362 n. 7 (5th Cir. 1979); Williams v. Public Finance Corp., 598 F.2d 349, 356 (5th Cir. 1979), on petition for rehearing, 609 F.2d 1179 (5th Cir. 1980); McGowan v. King, 569 F.2d 845, 848 (5th Cir. 1978); Martin v. Commercial Securities Co., 539 F.2d 521, 523 (5th Cir. 1976); Thomas v. Myers-Dickson Furniture Co., 479 F.2d 740, 748 (5th Cir. 1973). What is more, we have specifically found section 130 to be consistent with the remedial character of the TILA, citing Murphy and Porter in support of that proposition:

Section 1640 (section 130) does not provide for forfeiture of the creditor's property. It provides in relevant part for an award of actual damages, a reasonable attorney's fee, and twice the amount of any finance charge in an amount up to $1,000 and not less than $100. Application of § 1640 (§ 130) thus serves the congressional purpose of restoring the parties to the status quo ante and is consistent with the Act's remedial character. Murphy v. Household Finance Corp., 560 F.2d 206, 208-11 (6th Cir. 1977); Binnick v. Avco Financial Services of Nebraska, Inc., 435 F. Supp. 359, 364-66 (D.Neb.1977); Porter v. Household Finance Corp. of Columbus, 385 F. Supp. 336, 340-43 (S.D.Ohio 1974). If, after a hearing, the court determines that the consumer is entitled to rescind, the consumer will be recompensed for any additional damages and costs he has incurred as a result of the litigation.

Gerasta v. Hibernia National Bank, 575 F.2d 580, 584 (5th Cir. 1978) (emphasis added). Despite some language to the contrary in Newton v. Beneficial Finance Co., 558 F.2d 731 (5th Cir. 1977),15 we perceive no reason to depart from our long-established view expressed in decisions both antedating and postdating Newton that the TILA and its damage provisions are to be regarded for most purposes as remedial in nature.

For the reasons stated above, we conclude that the debtor's TILA claim is transferable to the trustee in bankruptcy under section 70a(5) of the Bankruptcy Act.16 The district court therefore erred in denying the trustee standing to assert the TILA claim as a counterclaim in the bank's reclamation action. Accordingly, the judgment of the district court is reversed, and this case is remanded for proceedings consistent with this opinion.

REVERSED and REMANDED.