Acme Finance Co. v. Huse

Decision Date27 October 1937
Docket Number26723.
Citation192 Wash. 96,73 P.2d 341
PartiesACME FINANCE CO. v. HUSE, Director of Licenses et al.
CourtWashington Supreme Court

Appeal from Superior Court, Thurston County; D. F. Wright, Judge.

Action under the Declaratory Judgment Act (Rem.Rev.Stat. §§ 784-1 to 784-16) by the Acme Finance Company against Harry C. Huse, as Director of Licenses of the State of Washington, and another wherein the Thompson Securities Company and J. Hurwitz intervened as parties plaintiff, for the purpose of testing the constitutionality of a certain statute. Judgment declaring the statute in question and each and every section thereof unconstitutional, but failing to declare the obligations of the intervener Hurwitz in response to his special request, and the defendants and the intervener Hurwitz appeal.


G. W Hamilton and George G. Hannan, both of Olympia, for appellants.

Bogle Bogle & Gates, Ray Dumett, George F. Kachlein, Jr., Mifflin & Mifflin, and Stern & Stern, all of Seattle, for respondents.

H. E. T. Herman and Robert R. Pence, both of Spokane, Carkeek, McDonald & Harris, Beverly S. Wilkerson, and Wright, Jones & Bronson, all of Seattle, and Bartlett Rummell, of Tacoma, amici curiae.


This action was instituted by the Acme Finance Company on May 7, 1937, under the Uniform Declaratory Judgment Act of the state of Washington, Rem.Rev.Stat. §§ 784-1 to 784-16, inclusive, for the purpose of testing the constitutionality of chapter 213, p. 1034, Laws of 1937, the title to which is as follows: 'An act relating to small loans; providing for the licensing and regulating the business of making loans under three hundred dollars ($300.00); prescribing a maximum rate of interest; providing for the regulation of the business of making such loans, for examination, investigations and licensing of persons engaged in such business; providing penalties for violation of the act and repealing all acts in conflict.'

Plaintiff alleged, in substance, that for more than nine years it had been engaged within the state of Washington in the business of making loans, including loans in amounts of less than $300.00; that chapter 213, p. 1034, Laws of 1937, would go into effect on June 9, 1937; that the defendants Harry C. Huse, director of licenses of the state of Washington, and G. W. Hamilton, Attorney General thereof, would then require and compel the plaintiff, in order to continue in its said business, to take out a license, as provided in the act, and, upon its failure to comply with each and every provision in the act, would prosecute the plaintiff criminally and enforce against it other penalties therein described; that the act is void because so vague, ambiguous, and indefinite that it is impossible to determine what acts are lawful or unlawful thereunder, or to determine its meaning and scope, and will, if enforced, deprive plaintiff of its property and its officers, agents, and employees of their liberty without due process of law and deny them the equal protection of the laws.

The complaint goes on to specifically allege that the act is an unreasonable and invalid attempted exercise of the police power, and it is contended that it violates a number of other sections of both the Federal and State constitutions.

Subsequent to the filing of the complaint, a supplemental complaint was filed, which prayed, in the alternative, that, if the act should be held constitutional, the court would then make answer to a list of questions, thereto attached, designed to clarify the act. For the purpose of illustration, we quote questions 5, 6, and 7:

'5. Does the Director have power and authority to require the deposit of $100, mentioned in S. 2 of the Act, by an applicant for a license?
'6. Is the Director required to pay the $100 deposit into the State Treasury, or may he retain it in his own possession?
'7. Has the Director power and authority to expend said $100 deposit, or any portion thereof; and, if so, for what purpose?'

The remaining nine questions proposed are of a somewhat similar character.

On May 14th Thompson Securities Company, also engaged in the business of making small loans, intervened in the action by filing a complaint very similar to the complaint of the original plaintiff, and on May 19th J. Hurwitz also intervened, setting up that he was a licensed pawnbroker, and that, in addition to loaning money on the security of personal property, secured and pledged he had been engaged in making other and different loans of less than $300, and asked that the court determine what his obligations and duties and under the act, if any, and specifically what acts are lawful and what acts are unlawful thereunder.

A demurrer was interposed by defendants to the plaintiff's original and supplemental complaint, upon the grounds that the court had no jurisdiction of the subject-matter of the action; that several causes of action had been improperly united; and that the complaint did not state facts sufficient to constitute a cause of action or to entitle the plaintiff to any relief whatever. By stipulation in open court, it was agreed that this demurrer should go to the intervening complaints also. On June 4, 1937, the court ordered the demurrers overruled, and, reciting that the defendants elected to stand upon the demurrers and refused to plead further, entered judgment in the case, in which it was ordered, adjudged, and decreed that chapter 213, p. 1034, Laws of 1937, and each and every section thereof, is unconstitutional and void. Since the lower court had determined to hold the act wholly unconstitutional, it refused to pass upon the matters raised by the intervener Hurwitz, to which objection was duly made, and he also appeals, contending that the court should have ruled on the matter so that, in the event the law is held constitutional in this court, his status thereunder might be reviewed.

It appears from the foregoing brief statement of the case that it presents a matter, important in and of itself and of even greater importance as affecting procedure in this state; for the plaintiff has succeeded in having a law declared unconstitutional Before it actually went into effect, whereas in the past such a result could only be arrived at as incidental to giving injunctive or other relief to a litigant adversely affected by the actual operation of a law. It is also noted that the plaintiff contended, as the intervener Hurwitz still contends, that, if the law were held constitutional, it would then be the duty of the court to go ahead and make a great number of constructions concerning its administration. It seems proper, and indeed necessary, that we make a general inquiry into whether or not this great departure from former practice is, in fact, commanded by chapter 113, p. 305, Laws of 1935, known as the Declaratory Judgment. Act (Rem.Rev.Stat.§§ 784-1 to 784-16).

As a sanction for the maintenance of this action and for the relief demanded, the plaintiff and the interveners especially rely on Rem.Rev.Stat. § 784-2, Supp., which reads as follows: 'A person interested under a deed, will, written contract or other writings constituting a contract, or whose rights, status or other legal relations are affected by a statute, municipal ordinance, contract or franchise, may have determined any question of construction or validity arising under the instrument, statute, ordinance, contract or franchise and obtain a declaration of rights, status or other legal relations thereunder.'

It has been frequently mistakenly asserted that the Constitutional Convention of 1787 four times refused to grant to the courts the right of declaring laws unconstitutional. What actually occurred, as may be seen from an examination of Madison's journal, was that the convention four times rejected a proposal to give the Supreme Court of the new nation the right to participate, with the President, in the exercise of the veto power, or, as it was then called, the 'revisionary' power. If the Declaratory Judgment Act means all that the plaintiff and interveners say that it means, we have adopted a method of procedure somewhat akin to that. For, while the act does not provide that the courts shall share in the veto power of the executive, it prima facie appears to provide a procedure whereby they may declare an act of the Legislature unconstitutional Before it becomes effective. In the instant case, the Small Loans Act was to have become effective on June 9th. The Governor vetoed sections 3, 4, 6, and 12 on March 19th. His veto of those sections, as will be later seen, rendered a number of other sections completely inoperative. The remainder of the act, that is, those sections not vetoed or endered inoperative as a necessary consequence of the veto, was, on June 4th, declared unconstitutional by the judgment appealed from. Hitherto, an act duly passed by the Legislature was sure to go into effect if it escaped the executive veto. If the judgment appealed from be affirmed, it is reasonable to suppose that in the future many legislative acts will be forced to also undergo the scrutiny of the courts Before they go into effect; for persons interested in preventing such acts from becoming effective will be quick to invoke the procedure used in this action, and the courts will be besought to declare many a legislative act unconstitutional the moment it has received the approval of the Governor. For these and other reasons, although the matter was not briefed or argued in the case at bar, it seems advisable to proceed with caution in determining whether the relief sought in this action may properly be afforded.

The first effective American statute providing for declaratory judgments was enacted in New Jersey in 1915 (...

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