Althaus v. State

• Decision Date: 04 March 1916
• Docket Number: 19411
• Citation: 156 N.W. 1038,99 Neb. 465
• Parties: JULES ALTHAUS v. STATE OF NEBRASKA
• Court: Nebraska Supreme Court

156 N.W. 1038

99 Neb. 465

JULES ALTHAUS v. STATE OF NEBRASKA

No. 19411

Supreme Court of Nebraska

March 4, 1916

ERROR to the district court for Douglas county: WILLIS G. SEARS JUDGE. Affirmed.

AFFIRMED.

Smyth Smith & Schall, for plaintiff in error.

Willis E. Reed, Attorney General, and C. S. Roe, contra.

J. P Palmer, amicus curiae.

ROSE, J. SEDGWICK, J., not sitting. HAMER, J., dissenting.

OPINION

ROSE, J.

In a prosecution by the state in the district court for Douglas county, Jules Althaus was convicted of violating a statute fixing the maximum rate of interest at 10 per cent. per annum, providing for the issuance of a license, and authorizing licensed money-lenders to charge a brokerage fee not exceeding one-tenth of the money actually lent and, in exceptional cases, an examination fee of 50 cents, in addition to interest. Laws 1915, ch. 204. For that offense defendant was sentenced to pay a fine of $ 25. As plaintiff in error he now presents for review the record of his conviction.

Defendant challenges the constitutionality of the act under which he was prosecuted. In substance, the statute provides that it shall be unlawful to make a loan of money at a rate of interest in excess of 10 per cent. per annum, but empowers the secretary of state to issue to an applicant who pays an annual fee of $ 60 and executes a bond for $ 2,000 signed by a duly approved surety company a license authorizing the licensee to charge, in addition to interest, a brokerage fee equal to one-tenth of the amount of money actually lent and, in cases where the loan does not exceed $ 50 and is not secured by personal property, an examination fee of 50 cents. Laws 1915, ch. 204.

Defendant's principal objections to the act are that it violates section 15, art. III of the Constitution, prohibiting local and special laws regulating the interest on money, and creates an unreasonable and arbitrary class of money-lenders who are permitted to exact the equivalent of 20 per cent. interest per annum. The power of the legislature to regulate interest cannot be questioned. State v. Cary, 126 Wis. 135, 11 L. R. A. n. s. 174, 105 N.W. 792. Legislation like that under consideration is within the police power of the state. Griffith v. State of Connecticut, 218 U.S. 563, 54 L.Ed. 1151, 31 S.Ct. 132. The evils against which the law is directed had become a public scandal. The rapacity of money-lenders who impounded chattels and wages to secure small loans to those in pecuniary distress had become intolerable. Persons engaged in that business were practically uncontrolled. Many of their operations were secret, but the iniquity of their compensation for the use of money created a demand for the restraints of police power. The act in controversy not only puts a limit on exactions for the use of money, but provides punishment for the violation of its provisions and opens to official scrutiny the transactions of all who are authorized to charge limited fees in addition to interest at the rate of 10 per cent. per annum. The law assailed regulates the interest chargeable by two classes--unlicensed lenders of money limited to 10 per cent. per annum, and licensed lenders authorized to make an additional charge, called a "brokerage fee," not exceeding one-tenth of the money actually lent and, in exceptional cases, to charge an examination fee of 50 cents. The latter class is open to all who comply with the terms of the statute. One class of borrowers may be required to pay more for their loans than others, but this condition already existed and was not created by legislation. The lawmakers recognized a class of borrowers from whom exorbitant rates of interest had been exacted under existing conditions and attempted to afford them some measure of protection. Those making such loans are required to obtain a license. Their methods of doing business are regulated. The act makes no discrimination against any class of borrowers. It is not unconstitutional as being a "local or special law * * * regulating the interest on money." The better rule is that the classification is neither unreasonable nor arbitrary. It is also clear that the act does not deny the equal protection of the laws. Reagan v. District of Columbia, 41 App. D.C. 409; Griffith v. State of Connecticut, 218 U.S. 563, 54 L.Ed. 1151, 31 S.Ct. 132.

Defendant relies upon ...