Household Finance Corp. v. Shaffner

• Citation: 203 S.W.2d 734,356 Mo. 808
• Decision Date: 14 July 1947
• Docket Number: 40290
• Parties: Household Finance Corporation, a Corporation, Relator, v. Harry Shaffner, Commissioner of Finance of the State of Missouri
• Court: Missouri Supreme Court

203 S.W.2d 734

356 Mo. 808

Household Finance Corporation, a Corporation, Relator, v. Harry Shaffner, Commissioner of Finance of the State of Missouri

No. 40290

Supreme Court of Missouri

July 14, 1947

Original Proceeding in Mandamus.

WRIT QUASHED.

E R. Morrison, W. H. Hoffstot and Hubachek & Kelly for relator; Morrison, Nugent, Berger, Hecker & Buck of counsel.

(1) The language of Section 44 of Article III, interpreted according to its natural and ordinary meaning, applies only to classification of lenders. Section 44 is to be interpreted as it was understood by the voters and in accordance with the plain and ordinary meaning of the language used. State ex rel. Heimberger v. Board of Curators of University of Missouri, 268 Mo. 598, 188 S.W. 128; State ex rel Barrett v. Hitchcock, 241 Mo. 433, 146 S.W. 40; State ex rel. Kansas City v. O'Rear, 277 Mo 303, 210 S.W. 392; Kreibohm v. Yancey, 154 Mo. 67, 55 S.W. 260; Ex parte Berger, 193 Mo. 16, 90 S.W. 759; Griffith v. Connecticut, 218 U.S. 563, 54 L.Ed. 1151; 11 Am. Jur., p. 707. (2) Laws passed by the 64th General Assembly evidence legislative recognition of the continued existence of provisions of the Small Loan Act as constituting a complete, effective and workable law. S.B. No. 66 (64th General Assembly); S.B. No. 40 (64th General Assembly); Gantt v. Brown, 244 Mo. 271, 149 S.W. 644; State ex rel. O'Connor v. Riedel, 329 Mo. 616, 46 S.W.2d 131; State ex rel. Donnell v. Osburn, 347 Mo. 469, 147 S.W.2d 1065; State ex inf. McKittrick v. Williams, 346 Mo. 1003, 144 S.W.2d 98; State ex rel. Major v. Patterson, 229 Mo. 373, 129 S.W. 888. (3) The debates in the Convention show that it was not intended to prevent classification of interest rates by size or type of loan. (4) Small loan interest rates are based on size and type of loans. Ex parte Fuller, 15 Cal.2d 425, 102 P.2d 321; Wrenn v. Portland Loan Co., 155 Ore. 395, 64 P.2d 520; Equitable Credit & Discount Co. v. Geier, 342 Pa. 445, 21 A.2d 53; Commonwealth v. Puder, 261 Pa. 129, 104 A. 505; State v. Sherman, 18 Wyo. 169, 105 P. 299; Liberty Finance Co., Inc. v. Catterton, 161 Md. 650, 158 A. 16; Nicotera Loan Corp. v. Gallagher, 115 Conn. 102, 160 A. 426; State v. Wickenhoefer, 6 Pen. 120, 64 A. 273; Kelleher v. Minshull, 11 Wash. (2d) 380, 119 P.2d 302. (5) The only portion of the Small Loan Law repealed by Section 44 of Article III of the Constitution is Section 8171, which is severable. State ex rel. Baker v. Fiala, 47 Mo. 310; Marsh v. Bartlett, 343 Mo. 526, 121 S.W.2d 737; Commonwealth v. Nickerson, 236 Mass. 281, 128 N.E. 273, 10 A.L.R. 1568; Kristanik v. Chevrolet Motor Co., 335 Mo. 60, 70 S.W.2d 890; State ex rel. Bixby v. St. Louis, 241 Mo. 231, 145 S.W. 801; Moore v. Brown, 350 Mo. 256, 165 S.W.2d 657; State ex rel. v. Smith, 353 Mo. 807, 184 S.W.2d 593; 50 Am. Jur., p. 547; Laws 1927, p. 257, sec. 23. (6) Section 44 of Article III of the 1945 Constitution is void because it violates the 14th Amendment to the Federal Constitution. Truax v. Corrigan, 257 U.S. 312, 66 L.Ed. 254; Pennsylvania Co. for Ins. on Lives v. Scott, 329 Pa. 534, 198 A. 115. (7) Provisions of a State Constitution which violate the Federal Constitution are void. Clark v. Mitchell, 69 Mo. 627; Russell v. Croy, 164 Mo. 69, 63 S.W. 849; State ex rel. Johnson v. C., B. & Q. Ry. Co., 195 Mo. 228, 93 S.W. 784; Cummings v. Missouri, 18 L.Ed. 356, 4 Wall. 277; New Orleans Gas Light Co. v. Louisiana Light & Heat Producing & Mfg. Co., 115 U.S. 650, 29 L.Ed. 516; Gunn v. Barry, 15 Wall. 610, 21 L.Ed. 212; Mo. Pac. Ry. Co. v. McGrew Coal Co., 244 U.S. 191, 61 L.Ed. 1075; Coombes v. Getz, 285 U.S. 434, 76 L.Ed. 866; Downs v. Birmingham, 240 Ala. 177, 198 So. 231; State v. Darragh, 152 Mo. 522, 54 S.W. 226; 8 Cooley's Constitutional Limitation (8th Ed.), p. 89; 16 C.J.S. 28. (8) Section 44 of Article III arbitrarily singles out lenders from the entire field of creditors and discriminates against them by denial of the right of classification in the fixing of interest rates. Ex parte Smythe, 28 S.W.2d 161; State v. Julow, 129 Mo. 163, 31 S.W. 781; State ex rel. Rolston v. C., B. & Q., 246 Mo. 512, 152 S.W. 28; State ex rel. Wells v. Walker, 326 Mo. 1233, 34 S.W.2d 124; State v. Thomas, 138 Mo. 95, 39 S.W. 481; Ex parte French, 315 Mo. 75, 285 S.W. 513; State v. Taylor, 351 Mo. 725, 173 S.W.2d 902; In re Flukes, 157 Mo. 125, 57 S.W. 545; State v. Missouri Tie & Timber Co., 181 Mo. 536, 80 S.W. 933. (9) Section 44 of Article III violates the 14th Amendment by placing in one class all lenders regardless of differences as to classification for the purpose of fixing interest rates. Sams v. St. Louis & Mo. River R. Co., 174 Mo. 53, 73 S.W. 686, 61 L.R.A. 475; City of Cape Girardeau v. Fred A. Groves Motor Co., 346 Mo. 762, 142 S.W.2d 1040; Chicago, M. & St. P. Ry. Co. v. Westby, 178 F. 619; Billings v. Illinois, 188 U.S. 97, 47 L.Ed. 400; 12 Am. Jur., p 147 (10) Other statutes are invalidated without reason or excuse because of arbitrary disregard of the principles of the 14th Amendment. Sec. 5534, R.S. 1939, amended Laws 1941, p. 331; Sec. 8213, R.S. 1939, amended, Laws 1943, p. 334; Sec. 8215, R.S. 1939 (Since repealed H.B. 481, 63rd General Assembly); Art. 10, Chap. 39, R.S. 1939; Secs. 7983, 8063, R.S. 1939 (amended, Laws 1943, p. 986); Art. 8, Chap. 33, R.S. 1939 (Remedial legislation vetoed. H.B. 838, 63rd General Assembly); Sec. 15394, R.S. 1939 (Remedial legislation vetoed. H.B. 838, 63rd General Assembly). (11) The Small Loan Law is not a local or special law relating to interest. People v. Stokes, 281 Ill. 159, 118 N.E. 87; State v. Hill, 168 La. 761, 123 So. 317; Warner v. People, 71 Colo. 559, 208 P. 459; Beasley v. Cahoon, 109 Fla. 106, 147 So. 288; King v. State, 136 Ga. 709, 71 S.E. 1093; Badger v. State, 154 Ga. 443, 114 S.E. 635; Ravitz v. Steurele, 257 Ky. 108, 77 S.W.2d 360; Althaus v. State, 99 Neb. 465, 156 N.W. 1038; Gregg v. Personal Finance Co. of N.Y., 298 N.Y.S. 266; Wrenn v. Portland Loan Co., 155 Ore. 395, 64 P.2d 520; Commonwealth v. Puder, 261 Pa. 129, 104 A. 505; State v. Sherman, 18 Wyo. 169, 105 P. 299.

J. E. Taylor, Attorney General, Arthur M. O'Keefe and George W. Crowley, Assistant Attorneys General, for respondent.

(1) Section 44 of Article III of the Constitution of Missouri 1945 invalidates any law classifying lenders. Section 44, Article III, Constitution of Missouri 1945, applies to Missouri Small Loan Act which classifies a group of lenders. Sec. 44, Art. III, Constitution of Missouri 1945; Art. 7, Chap. 39, R.S. 1939. (2) Laws passed by the 64th General Assembly are not evidence of legislative construction of the Small Loan Act. (3) Constitutional Debates show that Section 44, Article III was intended to prevent classification of lenders in any way and this includes the classification of interest rates by size or type of loan. State ex rel. Donnell v. Osburn, 147 S.W.2d 1065, 347 Mo. 469; State ex rel. Heimberger v. Board of Curators, 268 Mo. 598, 188 S.W. 128; State ex rel. Montgomery v. Nordberg, 193 S.W.2d 10. (4) Courts hold that small loan laws classify lenders. Ex parte Fuller, 15 Cal.2d 425, 102 P.2d 321; Wrenn v. Portland Loan Co., 155 Ore. 395, 64 P.2d 520; Equitable Credit & Discount Co. v. Geier, 342 Pa. 445, 21 A.2d 53; Commonwealth v. Puder, 261 Pa. 129, 104 A. 505; State v. Sherman, 18 Wyo. 169, 105 P. 299; State v. Wickenhoefer, 64 A. 273; Ravitz v. Steurele, 257 Ky. 108, 77 S.W.2d 360; Koen v. State, 162 Tenn. 573, 39 S.W.2d 283; Family Finance Co. v. Allman, 174 Ga. 467, 163 S.E. 143; (5) Missouri's Small Loan Act creates a class of lenders. Sec. 8150, Art. 7, Chap. 39, R.S. 1939; Acme Finance Co. v. Huse, 192 Wash. 96, 73 P.2d 341; Althaus v. State, 99 Neb. 465, 156 N.W. 1938; Family Finance Co. v. Allman, 174 Ga. 467, 163 S.E. 143; Cole v. Franklin Plan Co., 176 Ga. 561, 168 S.E. 261; People v. Stokes, 281 Ill. 159, 118 N.E. 87; State ex rel. Downing v. Powers, 125 Ohio St. 108, 180 N.E. 647; Secs. 8152, 8156, 8157, 8158, 8159, 8160, 8163, R.S. 1939. (6) Special interest rates for lenders making loans of $ 300 or less creates a classification of lenders. Ex parte Sohncke, 14 Cal. 262, 82 P. 956; Commonwealth v. Puder, 261 Pa. 129, 104 A. 505; State v. Sherman, 18 Wyo. 169, 105 P. 299; State v. Wickenhoefer, 64 A. 273; Wrenn v. Portland Loan Co., 155 Ore. 395, 64 P.2d 520; Ravitz v. Steurele, 275 Ky. 108, 77 S.W.2d 360; Equitable Credit & Discount Co. v. Geier, 342 Pa. 445, 21 A.2d 53; Ex parte Fuller, 102 P.2d 321; Hubachek Annotations on Small Loan Laws, pp. 37, 38. (7) Section 8171, R.S. 1939, being unconstitutional renders the entire Small Loan Act void. State ex inf. McKittrick v. Cameron, 342 Mo. 830, 117 S.W.2d 1078; Gallert's Small Loan Legislation, 1932, pp. 89, 103, 161; Mutual Loan Co. v. Martell, 222 U.S. 235; Griffith v. Conn., 218 U.S. 563, 31 S.Ct. 132, 54 L.Ed. 1151; State of Conn. v. Hurlburt, 82 Conn. 232, 72 A. 1079; Equitable Credit & Discount Co. v. Geier, 342 Pa. 445, 21 A.2d 53; State ex rel. Johnson v. C., B. & Q. Ry. Co., 195 Mo. 228, 93 S.W. 784; Groesbeck v. Detroit United Ry., 177 N.W. 726, 210 Mich. 227; Sargent v. Rutland R. Co., 85 A. 654, 86 Vt. 328; Commonwealth v. Hatfield Coal Co., 217 S.W. 125, 186 Ky. 411; Connolly v. Union Sewer Pipe Co., 184 U.S. 540, 46 L.Ed. 539; 59 C.J., pp. 645, 647; 40 Am. Jur., p. 700. (8) Section 44, Article III of the Constitution of Missouri, 1945, does not violate the 14th Amendment of the Federal Constitution. Section 44, Article III, in applying only to lenders of money, sets up a reasonable classification. Ballentine v. Nester, 350 Mo. 558, 164 S.W.2d 378; Ex parte Berger, 193 Mo. 16, 90 S.W. 759; Home Discount Co., 147 F. 538; Eaker v. Bryant, 24 Cal.App. 87, 140 P. 310; Badger v. State, 154 Ga. 443, 114 S.E. 635; People v. Stokes, 281 Ill. 159, 118...