Family Finance Co v. Allman

• Decision Date: 19 February 1932
• Docket Number: No. 8436.,8436.
• Parties: FAMILY FINANCE CO. et al. v. ALLMAN.
• Court: Georgia Supreme Court

174 Ga. 467

163 S.E. 143

FAMILY FINANCE CO. et al.

v.ALLMAN.

No. 8436.

Supreme Court of Georgia.

Feb. 19, 1932.

Syllabus by the Court.

1. An allegation that a statute is "void and unconstitutional, " merely because "contrary to the public policy of the State, " without specifying the article, section, or paragraph of the Constitution which is alleged to be violated by the act, is insufficient to raise the question of the unconstitionality of the law or the statute sought to be brought in question. Morton v. Nelms, 118 Ga. 786 (5), 45 S. E. 616; Almand v. Pate, 143 Ga. 711 (2), 85 S. E. 909.

2. Nor can a statute of this state which it is sought to set aside as unconstitutional be held to be void upon the mere statement that such legislation "is an exercise of the police power of the State, * * * and this act * * * is an arbitrary and unreasonable exercise of such power, and is repugnant to the proper exercise of the police power of the State."

3. Under the rulings of this court, an allegation which (without designating the article, section, or paragraph of the Constitu tion which is alleged to be violated) merely states that a law is "class legislation, and creates a class of persons, and undertakes [authorizes?] them to charge such exorbitant rates of interest, which is not allowed or permitted by chartered and licensed banks, loan companies, and individuals making similar loans in amount, and thereby deprives plaintiffs and other persons of the equal protection of the laws, " fails to present any constitutional question for' adjudication by this court.

4. This court has held that the small-loan act of 1920 (Ga. Laws 1920, p. 215) does not violate article 1, section 4, paragraph 1, of the Constitution of this state, which provides that no special law shall be enacted in any case for which provision has been made by an existing general law; and that it does not violate the due process law clause of the state or the federal Constitution.

5. Section 13 of the small-loan act (Ga. Laws 1920, p. 219) is not unconstitutional for any reason assigned. Nor is the exercise of the state's power of reasonable classification, by which licensed lenders, operating according to the provisions of the law, are permitted to charge a rate of interest of 3¹/₂ per cent, per month, unreasonable, arbitrary, or capricious.

6. The decision in Badger v. State, 154 Ga. 443, 114 S. E. 635, substantially controls every point presented or sought to be raised by the present writ of error, except the allowance of a rate of 3¹/₂ per cent, interest. After mature consideration, we adhere to the rulings in the Badger Case; and accordingly the request that that case be reviewed and overruled is denied.

7. The court erred in granting the interlocutory injunction.

Error from Superior Court, Floyd County; James Maddox, Judge.

Suit by F. E. Allman against the Family Finance Company and others. Judgment for plaintiff, and defendants bring error.

Reversed.

F. H. Allman and his wife borrowed $90 from the Family Finance Company, executing to the lender a note and bill of sale of household furniture as security for the loan, this note providing for the payment of 3^1/₂ per cent Interest per month; the lender purporting to operate under the provisions of the small-loan act of 1920 (Ga. Laws 1920, p. 215). Subsequently the property embraced in the bill of sale, on application of Allman as the head of a family, was exempted by the ordinary of Floyd county as a short-order homestead. Later Allman filed a petition seeking to enjoin the foreclosure of the bill of sale, alleging that a levy upon theproperty thus exempted would he a trespass. He named as defendants the Family-Finance Company and O. L. Betts, sheriff of Floyd county, and prayed that they be restrained from levying upon any of said property under foreclosure of the bill of sale. The judge granted a restraining order.

The plaintiff, by amendments, made the following attack upon the act of 1920, cited above: "He shows that said act in so far as it undertakes to authorize defendant to charge such interest and any interest greater than 8% per annum, is void and unconstitutional, for the following reasons to wit: (a) That so much of said act as authorized a charge of 3¹/₂% interest per month is contrary to the public policy of the State, (b) That the fixing of the rate of interest to be charged upon any loan in this State is an exercise of the police power of the State, and any act and this act as set forth in section 13 thereof is an arbitrary and unreasonable exercise of such power, and is repugnant to the proper exercise of the police power of the State, (c) That said act and section 13 thereof, which singles out such parties as comply with said act and make loans not exceeding in amount $300, is class legislation, and creates a special class of persons, and undertakes to charge them such exorbitant rates of interest, which is not allowed or permitted by chartered and licensed banks, loan companies, and individuals making similar loans in amount, and thereby deprives plaintiffs and other persons of the equal protection of the laws, (d) That said act is a special act and law upon a subject covered by an existing general law; for that the law of this State, as set forth in code section 3426, and which was in force and effect at the time said act complained of was enacted, provides that the legal rate of interest shall remain seven per cent, where the rate is not named in the contract, and any higher rate must be specified in writing, but in no event to exceed 8 per cent, per annum. That said code section was and is a general law of uniform application throughout the State of Georgia, and applies to loans of all character and amounts, and the act complained of is a special law applying to loans made by certain firms, corporations, and individuals described in said act, and is a special law on a subject covered by said general law, and is repugnant to such general law. And, for the reason stated, said act violates art. 1, section 4, paragraph 1, of the constitution of this State, which provides that no special law shall be enacted in any case where provision has been made by an existing general law. That the act of the General Assembly of Georgia, as set forth in Acts 1920, page 215-222, violates the 14th amendment to the Constitution of the United States, in that by reason of the exceptions made in section nineteen thereof, whereby the provi sions of said act do not apply to any person, copartnership, or corporation doing business under any law of the State, or of the United States, relating to banks, trust companies, building and loan associations, or licensed pawnbrokers, petitioner and other citizens are denied the equal protection of the laws, in violation of the guaranty of the 14th amendment of the Federal constitution aforesaid." He prays "that section 13 of act referred to be declared null and void and of no effect, and that the charge of interest at 3¹/₂ per cent, per month be held illegal and void, and that the amount heretofore paid as such illegal interest be applied as a credit upon the principal sum in said note." Family Finance Company filed an answer and demurrers.

The judge being of the opinion that the act of 1920 "is subject to the attack made and is unconstitutional, " ordered that the restraining order theretofore granted remain in force and effect until further order of the court. To this judgment the defendant excepted.

Henderson Lanham, of Rome, and Howell, Heyman & Bolding and Clifford Walker, all of Atlanta, for plaintiffs in error.

M. B. Eubanks, of Rome, for defendant in error.

RUSSELL, C. J. (after stating the foregoing facts).

1-3. The rulings contained in the first, second, and third headnotes require no elaboration.

4. As held by this court in Badger v. State, 154 Ga. 443, 114 S. E. 635, the small-loan act of 1920 (Ga. Laws 1920, p. 215) does not violate article 1, section 4, paragraph 1, of the Constitution of this state, which provides that no special law shall be enacted in any case where provision has been made by an existing general law. And it was held in Morgan v. Lowry, 168 Ga. 723, 724, 149 S. E. 37, that this small-loan act does not violate the due process clause of the state and federal Constitutions. The latter case was taken by appeal to the Supreme Court of the United States, and the appeal was dismissed for want of a substantial federal question. Morgan v. Georgia, 281 U. S. 691, 50 S. Ct. 238, 74 L. Ed. 1120.

5. The main stress in this case is laid upon the provision of the act, which authorizes lenders licensed thereunder to charge interest at the rate of 3¹/₂ per cent, per month. This provision has been attacked as an abuse of the power of classification, and as class legislation which give the right to make unconscionable contracts, not only oppressive upon the borrower, but discriminatory and unfair to bankers and other lenders, who are forbidden to charge a rate of interest in excess of 8 per cent, per annum. It is also contendedthat section 13 of this act is unconstitutional, in that it violates article 1, section 4, paragraph 1, of the Constitution of this State. As to the first point, it must he borne in mind that the question whether a state shall tlx any rate of interest as a legal rate, or whether a state, if it sees proper, may limit the maximum rate of interest which may be charged for the use of money, is a matter wholly within the jurisdiction of a state, which under its police power may by law fix no rate at all, or may expressTy declare the maximum rate of interest and denounce and forbid any higher rate. To use the language of Justice White in Griffith v. Connecticut, 218 U. S. 563, 569, 31 S. Ct. 132, 133, 54 L. Ed. 1151: "It is elementary that the subject of the maximum amount to be charged by persons or corporations subject to the jurisdiction of a state for the use of money loaned within the jurisdiction of the state is one within the...