86 N.E.2d 444 (Ind. 1949), 28397, Department of Financial Institutions v. General Finance Corp.

Docket Nº28397.
Citation86 N.E.2d 444, 227 Ind. 373
Party NameDEPARTMENT OF FINANCIAL INSTITUTIONS et al. v. GENERAL FINANCE CORPORATION.
Case DateJune 09, 1949
CourtSupreme Court of Indiana

Page 444

86 N.E.2d 444 (Ind. 1949)

227 Ind. 373

DEPARTMENT OF FINANCIAL INSTITUTIONS et al.

v.

GENERAL FINANCE CORPORATION.

No. 28397.

Supreme Court of Indiana

June 9, 1949

[227 Ind. 377]

Page 445

Appeal from Marion Superior No. 5; Ralph Hamill, Judge.

Cleon H. Foust, Atty. Gen., Frank E. Coughlin and John H. Fetterhoff, Deputy Attys. Gen., for appellants.

Leo M. Gardner, Alan W. Boyd, Charles M. Wells, Jerry P. Belknap, and Barnes, Hickam, Pantzer & Boyd, Indianapolis, for appellee.

[227 Ind. 378] EMMERT, Judge.

This is an appeal from a declaratory judgment of the trial court which adjudicated that § 9 of the Indiana Retail Instalment Sales Act, as amended by Ch. 238 of the 1947 Acts, § 58-909, Burns' 1943 Replacement, Supplement, 'is unconstitutional and void in that it deprives plaintiff [appellee General Finance Corporation] of liberty and property without

Page 446

due process of law and unlawfully burdens interstate commerce.' The evidence consisted of stipulations, documentary evidence, and the testimony of three witnesses, and there is no dispute as to the facts, but only as to the law as applied to the facts.

The complaint was for a declaratory judgment and injunction. The evidence reveals that the appellee is a corporation organized under the laws of the State of Michigan, with its principal office at Detroit, and it has been duly admitted, qualified and authorized to transact business as a foreign corporation in the State of Indiana. Since February 26, 1944, it has been licensed by the Department of Financial Institutions to purchase retail instalment contracts as defined in the Retail Instalment Sales Act, § 58-901 et seq., Burns' 1943 Replacement, ch. 231, Acts 1935, and on June 26, 1946, it was again licensed 'to purchase retail instalment contracts from retail sellers and/or to loan money to retail sellers on the security of retail instalment contracts * * * from July 1, 1946, until such license and the authorization thereunder is surrendered, revoked or suspended * * *.' The corporation is licensed to and does business in approximately eighteen states and maintains offices in Chicago. Its net worth is $9,000,000 with a borrowing capacity of three times its net worth, or $27,000,000. Its annual gross business throughout the United States totals $400,000,000, of which the annual volume of business in Indiana is [227 Ind. 379] $10,000,000. It maintains an Indiana office where it buys retail instalment sales contracts.

At the time the action was commenced it had an agreement with the Harris Trust and Savings Bank of Chicago, Illinois, and the Mercantile-Commerce Bank and Trust Company of St. Louis, Missouri, to sell and assign to them without recourse retail instalment sales contracts purchased in Indiana. The Indiana contracts were transmitted to the corporation's Chicago office for the assignment and delivery to the Harris Trust and Savings Bank, which also serviced the purchases made by the Mercantile-Commerce Bank and Trust Company of St. Louis. These two banks were the only institutions available to the corporation for sale without recourse of instalment sales contracts in the large volume required by it.

The corporation also had a standing arrangement with the First National Bank of Chicago, Illinois, to pledge large amounts of such contracts with it as trustee for approximately seventy-five banks located in approximately twenty states, only one of which is licensed under the Indiana Retail Instalment Sales Act, as security for separate loans made to the appellee by such banks.

It was stipulated that because of the large quantity of credit and working capital the corporation was required to employ in its business, its business in Indiana would be seriously impaired without being able to assign or pledge the contracts in which it dealt. None of the out of state banks has ever engaged in the business of purchasing retail contracts from retail sellers, or make loans to retail sellers in Indiana on the security of such contracts, and prior to the bringing of this action each of the three named banks advised the appellee it was unwilling to become a licensee under [227 Ind. 380] the Indiana Act. However, under protest the Harris Trust and Savings Bank of Chicago and the Mercantile-Commerce Bank and Trust Company of St. Louis did obtain a license from the Department of Financial Institutions in order to protect the validity of the contracts pending the outcome of this litigation. The First National Bank of Chicago never obtained such a license.

At the time this action for declaratory judgment was commenced, Ch. 238 of the 1947 Acts, which amended § 9 of the Act, had not become effective, although it had been approved by the Governor March 12, 1947. It contained no emergency clause, and the exact time it would become effective was uncertain. It did become effective on August 20, 1947, the day the evidence was concluded upon the trial.

A declaratory judgment action will lie to determine the rights under a statute even though the act is not yet in effect. Anderson, Declaratory Judgments, p. 192, § 68; 16 Am.Jur. 301, § 27. The amendment was certain to take effect, and

Page 447

when it did become effective it would substantially impair the valuable property rights of the appellee. We cannot presume that, in the absence of adjudication declaring its invalidity, the Department of Financial Institutions would not take steps to enforce its provisions. It was stipulated that there was 'a good faith controversy' existing between the appellee and appellants as to the validity of § 9 of the Act, as amended. The complaint alleged the appellants were contending that § 9, as amended was 'in all respects valid' and will 'render unlawful the sales and pledges of the contracts to persons, firms and corporations either within or without the state of Indiana not licensed under the act' and that 'a good faith controversy exists between the plaintiff[227 Ind. 381] and defendants as to the interpretation and validity' of said section. The finding of the trial court was that the facts alleged in the complaint were true. The appellee had a present substantial interest in the relief sought, and there was in existence a real and material controversy which should be decided in order to safeguard the appellee's rights. Zoercher v. Agler, 1930, 202 Ind. 214, 172 N.E. 186, 907, 70 A.L.R. 1232. The fact that the court did not grant the injunction gives no cause for complaint to the appellants. The judgment decided the issues in controversy. 'The idea that it is necessary for one branch of the government forcibly to restrain or punish another branch or instrument of the government, in order to achieve respect for the declared law, is anomalous. In a recent case [Tirrell v. Johnston, Attorney-General (1934), 86 N.H. 530, 171 A. 641, 642], Chief Justice Peaslee for the New Hampshire Supreme Court in refusing to enjoin the attorney-general from criminally prosecuting the plaintiff for purported violation of a tax statute, but in approving the substitution of a prayer for a declaratory judgment, remarked:

"When the law is settled it will be obeyed. It is therefore immaterial whether the proper proceeding is an application for a restraining order or a petition for a declaratory judgment. A final interpretation of the law in either form of proceeding would be binding upon these parties.'

'The simplest way is the best way to bring to judicial determination the challenged validity of governmental action allegedly violating individual rights; and experience has shown that the declaratory judgment serves that purpose admirably. * * *' Borchard, Declaratory Judgments, 2d Ed., p. 967.

[227 Ind. 382] The fact that the appellee had a license under the Act does not estop it from attacking the constitutionality of the amendment. The enactment constituted an invasion of appellee's liberty and property rights and there was in substance a threat of enforcement of the unconstitutional provisions. Euclid, Ohio v. Ambler Realty Co., 1926, 272 U.S. 365, 47 S.Ct. 114, 71 L.Ed. 303, 54 A.L.R. 1016; Savage v. Jones, 1912, 225 U.S. 501, 32 S.Ct. 715, 56 L.Ed. 1182; Power Mfg. Co. v. Saunders, 1927, 274 U.S. 490, 47 S.Ct. 678, 71 L.Ed. 1165; Commonwealth of Pennsylvania v. State of West Virginia, 1923, 262 U.S. 553, 43 S.Ct. 658, 67 L.Ed. 1117, 32 A.L.R. 300. The penalties for noncompliance were severe, since if the provisions were enforced no suit could be brought upon the contract by any assignee or purchaser under § 9, and a wilful violation of the provisions of the Act under § 29...

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20 practice notes
  • 225 N.W.2d 326 (Iowa 1975), 2--57096, Bechtel v. City of Des Moines
    • United States
    • Iowa Supreme Court of Iowa
    • January 22, 1975
    ...252 Iowa 1256, 110 N.W.2d 397; Nitta v. Kuda, 249 Iowa 853, 89 N.W.2d 149; Department of Financial Institutions v. General Finance Corp., 227 Ind. 373, 86 N.E.2d 444. (b) The situation is quite different, however, as to the Commission. Plaintiffs' declaratory judgment action against that de......
  • The local law of global antitrust.
    • United States
    • William and Mary Law Review Vol. 43 Nbr. 2, December 2001
    • December 1, 2001
    ...Louisiana, 165 U.S. 578 (1897); State v. Lancashire Fire Ins. Co., 51 S.W. 633 (Ark. 1899); Department of Fin. Insts. v. Gen. Fin. Corp., 86 N.E.2d 444 (Ind. 1949). For discussion, see FLYNN, supra note 592, at 48-53; Hovenkamp, supra note 138; May, supra note 592, at 517-21. State laws wer......
  • 367 S.W.2d 312 (Tex. 1963), A-9207, Mattern v. Herzog
    • United States
    • Texas Supreme Court of Texas
    • April 17, 1963
    ...S.W.2d 307; Spann v. City of Dallas, 111 Tex. 350, 235 S.W. 513, 19 A.L.R. 1387; Department of Financial Institutions v. General Finance, 227 Ind. 373, 86 N.E.2d 444, 10 A.L.R.2d 436. Whether an option to purchase is a valid property right, or an invalid claim violating the rule against per......
  • Holcomb v. City of Bloomington, 121520 INSC, 19S-PL-304
    • United States
    • Indiana Supreme Court of Indiana
    • December 15, 2020
    ...here, the Governor will be barred from enforcing it-even without an injunction. See Dep't of Fin. Insts. v. Gen. Fin. Corp., 227 Ind. 373, 86 N.E.2d 444, 447 (1949) (citation omitted) ("When the law is settled it will be obeyed. It is therefore immaterial whether......
  • Free signup to view additional results
19 cases
  • 225 N.W.2d 326 (Iowa 1975), 2--57096, Bechtel v. City of Des Moines
    • United States
    • Iowa Supreme Court of Iowa
    • January 22, 1975
    ...252 Iowa 1256, 110 N.W.2d 397; Nitta v. Kuda, 249 Iowa 853, 89 N.W.2d 149; Department of Financial Institutions v. General Finance Corp., 227 Ind. 373, 86 N.E.2d 444. (b) The situation is quite different, however, as to the Commission. Plaintiffs' declaratory judgment action against that de......
  • 367 S.W.2d 312 (Tex. 1963), A-9207, Mattern v. Herzog
    • United States
    • Texas Supreme Court of Texas
    • April 17, 1963
    ...S.W.2d 307; Spann v. City of Dallas, 111 Tex. 350, 235 S.W. 513, 19 A.L.R. 1387; Department of Financial Institutions v. General Finance, 227 Ind. 373, 86 N.E.2d 444, 10 A.L.R.2d 436. Whether an option to purchase is a valid property right, or an invalid claim violating the rule against per......
  • Holcomb v. City of Bloomington, 121520 INSC, 19S-PL-304
    • United States
    • Indiana Supreme Court of Indiana
    • December 15, 2020
    ...here, the Governor will be barred from enforcing it-even without an injunction. See Dep't of Fin. Insts. v. Gen. Fin. Corp., 227 Ind. 373, 86 N.E.2d 444, 447 (1949) (citation omitted) ("When the law is settled it will be obeyed. It is therefore immaterial whether......
  • 886 N.E.2d 69 (Ind.App. 2008), 05A02-0707-CR-640, State v. Pollard
    • United States
    • Indiana Court of Appeals of Indiana
    • May 13, 2008
    ...without control or diminution save by the law of the land." Dep't of Fin. Inst. v. General Finance Corp., 227 Ind. 373, 384, 86 N.E.2d 444, 448 (1949) (quoting Buchanan v. Warley, 245 U.S. 60, 74, 38 S.Ct. 16, 62 L.Ed. 149 (1917) (emphasis added)). Property is “a valuable right or inte......
  • Free signup to view additional results
1 books & journal articles
  • The local law of global antitrust.
    • United States
    • William and Mary Law Review Vol. 43 Nbr. 2, December 2001
    • December 1, 2001
    ...Louisiana, 165 U.S. 578 (1897); State v. Lancashire Fire Ins. Co., 51 S.W. 633 (Ark. 1899); Department of Fin. Insts. v. Gen. Fin. Corp., 86 N.E.2d 444 (Ind. 1949). For discussion, see FLYNN, supra note 592, at 48-53; Hovenkamp, supra note 138; May, supra note 592, at 517-21. State laws wer......