Derico v. Duncan
Decision Date | 12 February 1982 |
Citation | 410 So.2d 27 |
Parties | Mattie R. DERICO v. Thomas R. DUNCAN. CER 22. |
Court | Alabama Supreme Court |
David S. Yen for Legal Services Corp. of Alabama, Montgomery, for petitioner.
Terry P. Wilson of Turner, Wilson, Christian & Dorrough, Montgomery, for respondent.
The following question was certified to this Court so that we might "... answer a question of law which is deemed determinative of an action before (the U. S. District Court and to which (there is no clear controlling precedent in the decisions of the Supreme Court of Alabama."
"Does defendant's failure, which was not willful, to obtain a license according to Section 5-19-22 affect plaintiff's obligation under the loan contract between plaintiff and defendant, and if so, to what extent?"
The order entered by the U. S. District Court contained the following statement of the underlying facts in this case:
Our answer to the question posed is based upon our interpretation of Code 1975, § 5-19-1 et seq., "Consumer Finance" (known as the Mini-Code), and of the specifically applicable provisions thereof.
It is uncontroverted that Defendant, in failing to obtain a license "to engage in the business of making consumer loans," was in direct violation of § 5-19-22(a), which states in pertinent part:
"(a) No creditor shall engage in the business of making consumer loans ... without first having obtained a license for each location from the administrator; ..."
The instant controversy arises from the parties' respective contentions as to the effect the Defendant's failure to obtain the required license has on the contract here in issue and its resulting obligations.
Defendant concedes his failure to obtain the required license, but maintains that the exclusive statutory remedy for a violation of § 5-19-22(a) is found in § 5-19-30, which states:
"(a) A creditor who ... willfully engages in the business of making loans in violation of subsection (a) of section 5-19-22 is guilty of a misdemeanor and, upon conviction, will be sentenced to pay a fine not exceeding $500.00 or to imprisonment not exceeding one year, or both." (Emphasis supplied.)
The Plaintiff, however, reasons that § 5-19-22 is a "regulatory statute" and, therefore, that Defendant's violation of that statute renders the loan agreement between the parties null and void.
The District Court, in posing the question for certification to this Court, states that Defendant's failure to obtain the required license was "not willful." 1 That being so, were we to accept Defendant's reasoning, he would avoid any and all penalty for his unlawful conduct which, during 1978, manifested itself in "approximately twenty agreements" similar to the one here. We hold that established Alabama law mandates our rejection of Defendant's contention.
As early as 1918, this Court specifically and unequivocally held:
Bowdoin v. Alabama Chemical Co., 201 Ala. 582, 583, 79 So. 4 (1918).
In succeeding years this Court has not departed from the standard as announced in Bowdoin, and contracts made in violation of regulatory statutes enacted for the protection of the public have been rendered null and unenforceable. See Southern Metal Treating Co. v. Goodner, 271 Ala. 510, 125 So.2d 268 (1960) (engineer statute); Faulkner v. Stapleton Insurance & Realty Corp., 266 Ala. 437, 96 So.2d 761 (1957) ( ); Bankers & Shippers Insurance Co. v. Blackwell, 255 Ala. 360, 51 So.2d 498 (1951) ( ); Knight v. Watson, 221 Ala. 69, 127 So. 841 (1930) ( ). 2
In turning to the statute now before us, we observe that the tenor of the Mini-Code, when the chapter is perceived as a whole, is one of consumer (public) protection. § 5-19-2 creates a Consumer Protection Council. § 5-19-6 requires that a highly visible warning be printed on instruments to be signed by debtors which cautions the borrower to "thoroughly read the contract" before signing it. § 5-19-11 requires that before bringing an action for collection a creditor must file an affidavit stating that there "has not been a violation of the provisions of this chapter." A "buyer's right to cancel" a home solicitation sale is provided for in § 5-19-12. Under the terms of § 5-19-16, if a court finds that the terms of an agreement made under this chapter are unconscionable, the court "may refuse to enforce the agreement, or it may enforce the remainder of the agreement without the unconscionable provision, or it may so limit the application of any unconscionable provision as to avoid any unconscionable result." § 5-19-19 sets out the liabilities of a creditor who makes excess finance charges. The power and authority to enforce the provisions of the Mini-Code are given to an administrator by § 5-19-21. § 5-19-22 requires that any creditor in the business of making consumer loans or taking assignments of consumer credit first obtain a license. § 5-19-23 states the grounds for the revocation or suspension of the...
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