In re Brown

• Decision Date: 04 August 1938
• Docket Number: No. 42475.,42475.
• Citation: 24 F. Supp. 166
• Parties: In re BROWN.
• Court: U.S. District Court — Northern District of Alabama

24 F. Supp. 166

In re BROWN.

No. 42475.

District Court, N. D. Alabama, S. D.

August 4, 1938.

Herbert Ward, of Birmingham, Ala., for bankrupt.

William Westbrook, Jr., of Birmingham, Ala., for reviewant.

MURPHREE, District Judge.

This is a petition by the Local Finance Co. for review of an order of the Referee that the petitioner cause its assignment of the wages of the Bankrupt to be dismissed. The certificate of review indicates that the Referee made this order for two reasons: (1) The petitioner had not paid a license to engage in the business of taking wage assignments under Schedule 195 of Section 1 of the License Code of City of Birmingham for 1937, as the Referee held he should have; and the lack of such license vitiated contracts made in pursuance of that business. (2) The Referee held that, despite the fact that the papers signed by the Bankrupt were nominated wage-purchases and expressly stated not to be loans, the Bankrupt had in fact borrowed as a loan $80 and had paid $8 semimonthly as interest over a period of at least ten months, or $160, at each payment executing a new nominal wage assignment as security for the loan; and that the loan was usurious and had been more than repaid and therefore there was no legal debt left for the wage assignment to secure.

With the Referee's first ground for ordering the wage-assignment to be dismissed we do not agree. While a license statute that provides for regulation of a business will make a contract by one operating in that business without a license a void contract (Talladega Fertilizer & Mfg. Co. v. Farmers' Union Warehouse Co., 2 Ala.App. 307, 56 So. 595; Brown & Oakley v. Raisin Fertilizer Co., 124 Ala. 221, 26 So. 891), if the license statute is solely for the purpose of raising revenue, failure to have a license will not vitiate a contract by one operating without a license. Morgan v. Whatley & Whatley, 205 Ala. 170, 87 So. 846; Sunflower Lumber Co. v. Turner Supply Co., 158 Ala. 191, 48 So. 510, 132 Am.St.Rep. 20; Gann v. W. R. Long & Son, 2 Ala.App. 274, 56 So. 606.

The license schedule of the City of Birmingham for money brokers engaged in taking wage assignments contains no provisions regulatory of that business, and appears to be exclusively for revenue purposes. Therefore, even if the petitioner should have a license under Schedule 195 and does not have such a license—matters which we see no occasion to determine— such lack of license would not vitiate the wage assignment given here.

But we believe the Referee properly caused the wage assignment to be dismissed for the second reason set out above. The petitioner contends that each successive wage assignment taken was a separate transaction, and that under the so-called Morrow Law, General Acts of Alabama of 1932, Ex.Sess., page 331, defenses under one loan cannot be used as to a separate loan. The clause of the Morrow Law relied upon is in Section 18...