Hodges v. Community Loan & Investment Corp.
| Decision Date | 30 April 1975 |
| Docket Number | No. 29643,29643 |
| Citation | 216 S.E.2d 274,234 Ga. 427 |
| Court | Georgia Supreme Court |
| Parties | Reuben HODGES et al. v. COMMUNITY LOAN & INVESTMENT CORPORATION. |
Antonio L. Thomas, David A. Webster, Charles M. Baird, H. Winthrop Pettigrew, Atlanta, for appellants.
Schwall & Heuett, Lee S. Alexander, Hansell, Post, Brandon & Dorsey, W. Rhett Tanner, Trammell Newton, Atlanta, for appellee.
Syllabus Opinion by the Court
This court granted certiorari to review the two rulings by the Court of Appeals in this case. Hodges v. Community Loan &c. Corp., 133 Ga.App. 336, 210 S.E.2d 826.
Community Loan and Investment Corporation brought an action for money had and received, alleging that it loaned $1,164.41 to Reuben V. and Dorothy Hodges and that a principal balance of $683.74 was due on the loan, on which interest of $54.01 had accrued at the rate of 7% per annum. The borrowers denied liability on the ground that the action was predicated upon a contract which was null and void because its provisions violated the Industrial Loan Act. (Ga.L.1955, pp. 431-445; Code Ann. Chapters 25-3, 25-99.) A counterclaim was also filed by the borrowers which alleged that the lender failed to meet the requirements imposed by the Federal Truth-In-Lending Act. 15 U.S.C.A. § 1601 et seq.
The first question dealt with by the Court of Appeals was whether an Industrial Loan Act lender can recover from a borrower the balance of principal owing from a loan when the loan contract is null and void because its terms violate the provisions of the Industrial Loan Act.
The second question dealt with the effect on counterclaims of the statute of limitation in the Federal Truth-In-Lending Act.
After further consideration, it is our opinion that the Court of Appeals correctly decided the issue on the second question to the effect that the borrower's counterclaim was barred and there is no necessity of a further discussion of this question.
In this opinion we will deal only with the first question decided by the Court of Appeals. The Court of Appeals determined that, even though the loan contract between the parties was null and void under the Industrial Loan Act, the lender could recover from the borrowers the principal due on the loan, as money had and received, and interest thereon at 7%.
The penalty provision of the Industrial Loan Act (Code Ann. § 25-9903) is as follows: (Emphasis supplied).
The Court of Appeals has repeatedly stated that an obligation made in contravention of the Industrial Loan Act is void and unenforceable. In Service Loan &c. Corp. v. McDaniel, 115 Ga.App. 548(3), 154 S.E.2d 823, it was held: 'If, however, it should appear on the trial that the loan was in fact made under the (Industrial Loan) Act, and there has been a failure to plead or prove that plaintiff was licensed thereunder, the obligation is void and no recovery can be had thereon.' See also: Colter v. Consolidated Credit Corp., 116 Ga.App. 520(2), 157 S.E.2d 812; Lewis v. Termplan, Inc., Bolton, 124 Ga.App. 507, 184 S.E.2d 473; Culverhouse v. Atlanta Assn. for Convalescent Aged Persons, Inc., 127 Ga.App. 574(2), 194 S.E.2d 299.
In Abrams v. Commercial Credit Plan, Inc., 128 Ga.App. 520, 197 S.E.2d 384, the Court of Appeals in a statement which, admittedly, was not necessary for a ruling in that case, suggested that an action for money had and received might be available to a lender violating the terms of the Industrial Loan Act to recover the principal due on the loan.
In Georgia Invest. Co. v. Norman, 231 Ga. 821, 827, 204 S.E.2d 740, Mr. Justice Ingram in a concurring opinion (in which he was joined by Mr. Justice Gunter) developed the suggestion in the Abrams case, supra. The concurring opinion of Mr. Justice Ingram was quoted and adopted by the Court of Appeals in the case now under review.
The first reason given for the view that the violation of the Industrial Loan Act would not cause the forfeiture of the principal amount loaned is that the 1920 Small Loan Act (Ga.L.1920, pp. 215, 219; Code of 1933, § 25-313) specifically provided the penalty of forfeiture of the principal, whereas this provision was omitted from the 1955 statute, leading to the conclusion that the General Assembly intended to omit the forfeiture of principal as a penalty for the violation of the statute.
It is, of course, an established principle of construction of legislative intent that where a statute is amended by omitting words, it must be presumed that the words were intentionally omitted. Miller v. Southwestern R. Co., 55 Ga. 143.
This principle is not applicable to the penalty provision of the Industrial Loan Act. It is true that among the several statutes repealed by the Industrial Loan Act of 1955 was the Small Loan Act of 1920 (Chapter 25-3 of the Code of 1933). However, the 1955 Act was an entirely new Act with completely different provisions, expressed in different language, from the 1920 Act.
Former Code § 25-313 provided in part: 'If interest or charges in excess of those permitted by this Chapter shall be charged, contracted for or received, the contract of loan shall be null and void and the licensee shall have no right to collect or receive any principal, interest or charges whatsoever.'
The penalty provision of the 1955 Industrial Act first provided for the punishment of violations of the statute as a misdemeanor, and then provided: 'Any loan contract made in violation of such Chapter shall be null and void.'
It is only where an amending Act uses substantially the same language, except for the omission of certain words, that the principle stated in Miller v. Southwestern R. Co., 55 Ga. 143, supra, is applicable. It is unreasonable to hold that where the General Assembly repeals a former law, and enacts completely new legislation with entirely different provisions and language, that the omission of certain words which were in the former Act should have any special significance in determining legislative intent. Particularly is this true where the omitted words were surplusage in the former law. The Industrial Loan Act also omits the words 'interest or charges' which were in the Small Loan Act, but this has not persuaded the Court of Appeals to presume that the General Assembly did not intend these items to be forfeited.
The declaration in the Industrial Loan Act (Code Ann. § 25-9903) that any loan contract made in violation of the Act is 'null and void' has a legal effect, long recognized by the courts, which needs no further explanation. It means that the contract is illegal and against the public policy of the state, and that any money loaned under such a contract cannot be recovered. See Dorsett v. Garrard, 85 Ga. 734(1), 11 S.E. 768; Hanley v. Savannah Bank & Trust Co., 208 Ga. 585, 587, 68 S.E.2d 581.
It is fruitless to debate whether a contract violating the Industrial Loan Act is as evil as some other contract to engage in an immoral or illegal act. The General Assembly has the right to declare what is void as against the public policy of the state.
Historically, the laws regulating the loaning of money and charging of interest have been changed many times. For a history of the Colonial and State Laws of Georgia up to the time of 1899 see Union Savings Bank & Trust Co. v. Dottenheim, 107 Ga. 606, 609(1), 34 S.E. 217. The present general usury statute (Code § 57-112) provides specifically for the forfeiture of interest only. This court has recognized that the General Assembly may deal with different classes of lenders in divergent laws. Cole v. Franklin Plan Co., 176 Ga. 561, 168 S.E. 261.
It might be argued that it is inequitable that in one class of loans the lender violating the laws governing such loans will lose only its interest, whereas in another class of loans the lender, for violation of the laws governing those loans, will forfeit principal, interest, and charges. This is a matter that addresses itself to the wisdom of the General Assembly. This court has no right to substitute its judgment for the judgment of the General Assembly in regard to the penalty to be imposed for the violation of the Industrial Loan Act.
There is no logic in holding that where the General Assembly has declared that a loan contract made in violation of the Industrial Loan Act is void, this means that only the interest and...
To continue reading
Request your trial
-
Kerby v. Mortgage Funding Corp., CIV.A. CCB-97-1509.
... ... Am. Compl. ¶ 22.) The loan was, however, "pre-sold" to defendant Countrywide Funding Corporation, ... v. Neal, 29 N.C.App. 78, 223 S.E.2d 831 (1976); Hodges v. Community Loan and Investment Corp. of North Georgia, 133 Ga.App. 336, ... ...
-
Garza v. Allied Finance Co.
...129 (1977). But see, Hewlett v. John Blue Employees Federal Credit Union, 344 So.2d 505 (Ala.App.1976); Hodges v. Community Loan & Investment Corp., 234 Ga. 427, 216 S.E.2d 274 (1975), affirming, 133 Ga.App. 336, 210 S.E.2d 826 (1974). In Black's Law Dictionary, they say: ". . . While there......
-
Plant v. Blazer Financial Services, Inc. of Georgia
...208 S.E.2d 453 (1974). Any contract violative of the Act is "null and void." Ga.Code Ann. § 25-9903. 15 Hodges v. Community Loan & Investment Corp., 234 Ga. 427, 216 S.E.2d 274 (1975). In the Lawrimore line of cases relied on by plaintiff, however, the contractual language unambiguously ind......
-
Beneficial Finance Co. of Atlantic City v. Swaggerty
...v. Community Loan & Investment Corp., 133 Ga.App. 336, 210 S.E.2d 826 (Ga.App.1974), aff'd in part and rev'd in part, 234 Ga. 427, 216 S.E.2d 274 (Sup.Ct.1975) (under Georgia law a counterclaim for a TILA violation is barred after one year); Empire Fin. Co. of Louisville v. Ewing, Ky., 558 ......