G. Nicotera Loan Corp. v. Gallagher

• Decision Date: 10 May 1932
• Citation: 160 A. 426,115 Conn. 102
• Court: Connecticut Supreme Court
• Parties: G. NICOTERA LOAN CORPORATION v. GALLAGHER et al.

160 A. 426

115 Conn. 102

G. NICOTERA LOAN CORPORATION v. GALLAGHER et al.

Supreme Court of Errors of Connecticut.

May 10, 1932

Appeal from Court of Common Pleas, Fairfield County; Samuel C. Shaw Judge.

Action by G. Nicotera Loan Corporation against Mary Gallagher and others, to set aside claimed fraudulent conveyance, tried to the court. Judgment for defendant, and plaintiff appeals.

No error.

Lender's failure to comply with law authorizing small loans by showing amount received by borrower and interest charged rendered note void. Gen.St.1930, § § 4066-4082 (repealed).

A. L. J. Scanzillo, of Bridgeport, for appellant.

David R. Lessler, of Bridgeport, for appellees.

Argued before MALTBIE, C.J., and HAINES, HINMAN, BANKS, and AVERY JJ.

HAINES, J.

The plaintiff is a licensee permitted to do business in this state under the so-called Small Loan Act, General Statutes § § 4066-4082, formerly chapter 219 of the Public Acts of 1919. It took a note for $300 signed jointly and severally by John Gallagher, Sadie Gallagher, Mary Gallagher and Timothy J. Mulloy, and, default having occurred, it brought this action to recover the balance due with interest, and also to set aside a conveyance claimed to have been fraudulently made by Mary Gallagher to Mary Marcella Mitchell to avoid the grantor's obligation upon this note. By way of special defense, Mary Gallagher alleged that the note was illegal and void because it did not comply with the requirements of the Small Loan Act, in that it did not state the rate of interest charged and did not state the actual amount of the loan or the time for which the loan was made. The trial court held this defense sufficient, and gave judgment for the defendant, and the plaintiff appealed. The relevant portions of the note read as follows:

" $300 Bridgeport, Conn., Feb. 28, 1929.

" For value received, we jointly and severally promise to pay to The G. Nicotera Loan Corporation or order, at its office in the City of Bridgeport the sum of three hundred dollars in weekly installments as follows: " Six dollars on the 7th day of March, 1929, and continuing until the whole amount of three hundred dollars, being the amount of this note, is fully paid the interest at the rate stated on the receipt book which rate is hereby made part hereof."

Upon delivery of the note to the plaintiff, the latter delivered to John Gallagher, one of the makers of the note, but to none of the others, a two-page folder marked " Receipts Book," on the reverse side of which were blanks entitled " No. ___," " Amount $___." " Date issued ___," " Name ___," and " Address ___," followed by ruled blanks for the entry of payments of principal and interest as made. The record before us does not indicate whether these blanks were filled out in the instant case. The other side of the folder contained on one page the name and address of the plaintiff, and a copy of section 13 of chapter 219 of the Public Acts of 1919, now General Statutes, § 4077. On the opposite page was printed a table adopted to a rate of $100 showing the amount of principal, $2, to be paid each week, and the amount to be paid each week as interest, and the balance due on the principal. Aside from a notice that the payments could be made by mail, this folder contained no further information whatever, and no other paper of any kind was delivered to any of the signers of the note.

The purpose of our Small Loan Act was to furnish an opportunity for borrowing to persons of small means who might be in need of money and unable to obtain it to relieve their necessities, at ordinary commercial rates, and the provisions of the act indicate care and foresight on the part of the Legislature. Westville & Hamden Loan Co. v. Pasqual, 109 Conn. 110, 114, 145 A. 758, 760. We may fairly assume recognition of the fact that the privilege of loaning money at a rate of interest greatly in excess of the legal rate permitted in ordinary business transactions naturally called for strict limitations upon the lender and for measures of protection to the borrower who was forced to make such agreements by the necessities of his situation.

It is provided in section 4078 that the lender " shall deliver to the borrower at the time a loan is made, a statement in the English language showing in clear and distinct terms the amount and date of the loan and the time of maturity, the nature of the security, if any, for the loan, the...