Georgia Inv. Co. v. Norman, 28532

• Decision Date: 25 February 1974
• Docket Number: No. 28532,28532
• Citation: 204 S.E.2d 740,231 Ga. 821
• Parties: GEORGIA INVESTMENT COMPANY v. Nathaniel NORMAN.
• Court: Georgia Supreme Court

Page 740

204 S.E.2d 740

231 Ga. 821

GEORGIA INVESTMENT COMPANY v. Nathaniel NORMAN.

No. 28532.

Supreme Court of Georgia.

Feb. 25, 1974.

Rehearing Denied March 8, 1974.

Syllabus by the Court

Where, after charging a borrower every charge legally permissible under the terms of the Industrial Loan Act, a lender disburses one dollar of the amount loaned to the borrower to an employee of the lender as a notary public fee, such disbursement, not being permitted by the Industrial Loan Act, results in usurious interest being charged the borrower.

This appeal arises from the grant of a summary judgment which held that Georgia Investment Company, d/b/a Dixie Loan Company had violated the Industrial Loan Act (Ga.L. 1955, p. 431; Code Ann. Ch. 25-3) as amended, by charging Nathaniel Norman, a borrower, a sum greater than permitted by such law for a loan. The overcharge resulted when a fee of $1 on each loan was disbursed out of the proceeds payable to the borrower to a notary public for witnessing the borrower's signature. In addition to the enumeration of error which complains of the granting of the summary judgment, error is enumerated specifically upon the finding that the notary fee caused the charges to violate such Act, that the trial court erred in holding the defendant not entitled to recover any amount on its counterclaim, that the trial court erred in resolving ambiguities or contradictions and in drawing inferences contrary to its position in ruling on the motion for summary judgment, that the trial court erred in not giving great weight to the regulation, practice and interpretation of the administrator vested with statutory authority to administer and regulate loan companies under the Industrial Loan Act, and that the court erred in not applying the principle of de minimis non curat lex to this case.

Smith & Smith, Douglas E. Smith, Gainesville, Hansell, Post, Brandon & Dorsey, W. Rhett Tanner, Atlanta, for appellant.

Palmour & Palmour, James E. Palmour, III, Gainesville, for appellee.

Michael H. Terry, Robert N. Dokson, David A. Webster, Steven Gottlieb, Richard K. Greenstein, H. Winthrop Pettigrew, Charles M. Baird, John L. Cromartie, Jr., Atlanta, amicus curiae.

NICHOLS, Justice.

Appellant loan company concedes that the Industrial Loan Act, supra, is to be strictly construed and that if such Act is violated by the making of a loan in violation of such chapter, such loan contract is null and void. See Code Ann. § 25-9903.

The trial court, in passing upon the plaintiff's motion for summary judgment, prepared an extensive opinion dealing with each contention made by the plaintiff. The material parts of such opinion are as follows: 'In what constitutes a reversal of the usual situation, the Borrower (Plaintiff) in this case brings his suit against the Loan Company (Defendant) seeking to have the loan contract between the Borrower and the Loan Company declared void, a security deed canceled and money refunded, contending that the contract and acts of the Loan Company pursuant thereto were in violation of provisions of the 'Industrial Loan Act' of Georgia and therefore null and void. The contract here involved is the last of 16 similar contracts between the Borrower and the Loan Company over a period of 9 years, beginning with an original loan of $198.00 and culminating in the final note between the parties in theamount of $2,640.00 which included a 'renewal loan' in the amount of $2,275.87. The Loan Company by its 'cross-action' seeks to recover $2,015.50, the amount it claims Borrower still owes under the contract.

'The plaintiff filed his motion for summary judgment. If any one of the following three questions can be answered in the affirmative then there would remain no genuine issue as to any material fact and the motion must be granted: . . . (Two questions were answered in the negative and there was no appeal from that part of the judgment) . . .

'3. Did the Loan Company 'charge, contract for, or receive' the notary fee collected from the Borrower in violation of the provisions of the Industrial Loan Act?

'Able counsel on both sides have done extensive research, discovery and preparation, and have vigorously and thoroughly presented their authorities, theories and arguments both orally and by written briefs. We have considered carefully all their authorities, arguments, the interrogatories, answers thereto and admissible parts of the affidavits. We are persuaded that . . . the third question must be answered in the affirmative, thereby entitling the Borrower to Summary Judgment . . .

'Did the Notary Fee constitute an unauthorized charge? Interrogatory No. 21 of Plaintiff's First Interrogatories to Defendant was as follows: 'State whether or not a notary public fee was charged by Defendant to Plaintiff and if so, state: a) The name of the person who witnessed the loan made by Plaintiff with Defendant dated February 28, 1970 or any previous loan; b) The amount of the notary fee charged; c) To whom the notary fee was paid, when, and by what method, i.e. check, cash, etc.; d) Whether or not a notary fee was charged on any other evidence of indebtedness by Plaintiff to Defendant and if so, all details surrounding the charge and collection of said notary fee.'

'The Defendant answered as follows: 'yes. a) Gene Pethel b) $1.00, c) Gene Pethel by check. d) Yes. The notary fee was charged on the loan made the Plaintiff on June 16, 1969.'

'However, in Paragraph 10 of the affidavit filed by Pete Pethel as President of the Loan Company he states, 'The notation 'Notary Fee-$1.00' which is shown on the face of the contract of February 28, 1970, in the column 'Disbursements to Others' records a disbursement made to pay the charge of a third-party notary public, one Gene Pethel, who witnessed Plaintiff's signature pursuant to Regulation 120-1-10.03(4) of the Georgia Industrial Loan Commissioner. Said notary fee was not charged by the defendant, Georgia Investment Company, d/b/a Dixie Loan Company and, of course, therefore, was never earned by said Georgia Investment Company.'

' There is some ambiguity or contradiction between the answer to the interrogatory and the affidavit; and it must be construed against the Loan Company and in favor of the Plaintiff. However, the contradiction is not actually substantial. Gene Pethel was an employee of the Loan Company and had been since September, 1947, at the time of the transaction here involved. While the Loan Company states that Gene Pethel's regular compensation was not affected by receipt . . . of notary fees, in our view the Loan Company received benefit from the collection of notary fees at least indirectly, in that the job held by Gene Pethel would be more attractive and easier to fill with a qualified person by reason of the additional compensation or supplement to (the) regular salary in the form of notary fees. The wording of Legislative Act is explicit: 'No licensee shall charge, contract for, or (emphasis ours) receive any other or further amount in connection with any loans . . . in addition to those hereinbefore provided . . . Georgia Code Ann. Sec. 25-316.'

'Notary fees are not authorized.

' Georgia Code Ann. Sec. 25-9903 provides in part, '. . . Any loan contract made in violation of (this) chapter shall be null and void.' This law, being in derogation of the common law, must be strictly construed. Denson v. Peoples Bank, 186 Ga. 619, 198 S.E. 666.

' The fact that the Industrial Loan Commissioner may require contracts to be motarized is immaterial; he does not and could not, contrary to the Statute, require the Loan Company to collect a notary fee.

' Although the Loan Company here did not retain, it did 'charge'; it did 'receive' the notary fee and then disbursed it by check to its employee. This was not authorized by the Industrial Loan Act. To approve this charge would open the door to other charges not authorized by the Act and imposed by Loan Companies for the purpose of being passed on to third parties.

' Counsel for the Loan Company strenuously argue that because of the minimal size of the notary fee here involved, the doctrine of de minimus non curat lex should be applied. They cite in support of their position the case of Dean et al. v. Avco Financial Services, Inc., 128 Ga.App. 256, 196 S.E.2d 415. We do not believe this case is applicable to the instant case. In the Dean case the Court of Appeals applied to doctrine where there was an alleged insufficient disclosure as to the insurance coverage provided by a renewal contract, which referred, for description to a previous contract. And even in the Dean case, the Court of Appeals stated they 'might well reach a different conclusion' if repossession or seizure of the property had been involved. In the instant case a different and more serious defect is alleged, charging a violation of the law prohibiting usury; the instant case is distinguishable from the Dean case.

Urging upon us the decision in Orme v. Lendahand, 76 U.S.App.D.C. 49, 128 F.2d 756 (1942), (which is not binding on this Court) counsel for the Loan Company arrgue that to enforce in this case the Georgia Law declaring contracts in violation of provisions of the Industrial Loan Act null and void would be 'confiscatory' and would approach 'confiscation of property.' But the decision relied upon itself recognizes that this penalty imposed by the Legislature, is '. . . apparently valid as a preventive against usurious interest.'

'In essence, the Defendant in seeking the application of the doctrine de minimis non curat lex and in urging the 'confiscation of property' argument, is asking the court to weigh the equities between the Borrower and the Loan Company. In the first place, we do not believe we have that discretion in this matter-whatever the...