Dillingham v. Laughlin Laughlin v. Dillingham
| Decision Date | 07 April 1924 |
| Docket Number | Nos. 690,691,s. 690 |
| Citation | 44 S.Ct. 362,264 U.S. 370,68 L.Ed. 742 |
| Parties | DILLINGHAM et al. v. McLAUGHLIN et al. McLAUGHLIN et al. v. DILLINGHAM et al |
| Court | U.S. Supreme Court |
Messrs. O. D. Burden, of Syracuse, N. Y., and Terry A. Lyon, of Washington, D. C., for appellants and cross-appellees.
Mr. Edward G. Griffin, of Albany, N. Y., for appellees and cross-appellants.
The plaintiffs in this case are the president, vice-president and secretary and treasurer, who are also trustees, of the Mutual Benefit League of North America, described in the bill as a common law trust and sometimes denominated plaintiff. The defendants are the Superintendent of Banks of the State of New York, the Attorney General and the District Attorneys of the same State. The suit is a proceeding in equity brought to prevent the enforcement of an act of the state Legislature approved June 1, 1923, Laws of 1923, c. 895, which makes the continuance of the plaintiffs' business a misdemeanor. The ground of the bill is that the statute impairs the obligation of contracts, deprives the plaintiffs and those whom they represent of their liberty and property without due process of law, and denies them the equal protection of the law, contrary to section 10, art. 1, and the Fourteenth Amendment of the Constitution of the United States. The case was heard by three judges under section 266 of the Judicial Code (Comp. St. § 1243), and an interlocutory injunction was issued against prosecuting 'this plaintiff' and enforcing the law as to contracts actually entered into on or before June 25, 1923 THE DATE OF THE HEARING, BUT EXCEPT TO THat extent was denied. both parties appeal.
The statute forbids any individual partnership or unincorporated association to engage in the business of receiving deposits or payments of money in installments, for co-operative, mutual loan, savings or investment purposes in sums of less than $500 each; or to conduct a business similar to the business of a savings bank or a savings and loan association or to promise to make loans upon real estate security for building, etc., purposes as an inducement for the payment of such sums. There are amplifications to stop rat holes but they need not be stated as it is not denied that the plaintiffs are within the act. The plaintiffs' business consists in soliciting and receiving payments under a complicated document which it is unlikely that the applicant will understand. It is called a 3 per cent. loan contract and bears the large letters 'Face Value $——.' The so-called face value is the amount ultimately to be paid by the applicant, and is $100 or more. One per cent. of the amount is to be paid by the applicant monthly. The contracts are placed in a series which is closed at $140,000. The first 4 1/2 payments are applied by the plaintiffs to the expenses of the business. The subsequent receipts go into a fund appropriated to the series, as do also interest on loans and lapses within the series. When that fund is equal to the face value of a contract the first applicant in the order in time, if he has paid 10 per cent., may borrow the face value of his contract at 3 per cent. on an approved first mortgage of real estate, repaying at least $7 per thousand every month, or he may permit the plaintiffs to sell his right, and receive the amount that he has paid in, with a problematical bonus that need not be described. If he prefers to keep on and pay the full face value the plaintiffs 30 months later will repay it without interest but with a share in a surplus, if any, that we need not explain. Failure to pay five installments forfeits the contract, but after six payments the applicant may get a certificate for a considerably less sum than he has paid, increasing however with the increase in the number of the payments, and payable in 100 months or less at the option of...
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