Jernigan v. Loid Rainwater Co
Decision Date | 23 May 1938 |
Docket Number | 4-4966 |
Citation | 117 S.W.2d 18,196 Ark. 251 |
Parties | JERNIGAN, BANK COMMISSIONER, v. LOID RAINWATER CO |
Court | Arkansas Supreme Court |
Appeal from Pulaski Circuit Court, Second Division; Richard M. Mann Judge; reversed.
Judgment reversed.
Jack Holt, Attorney General, John, P. Streepey, Assistant, and G B. Segraves, Jr., for appellant.
E. R Parham and Taylor Roberts, for appellee.
OPINION
On June 10, 1937, appellee filed with the Securities Division of the State Banking Department an application for a license to operate as a loan broker pursuant to act 135 of the Acts of 1937, p. 467.
In denying the application the following finding of fact was made:
Appellee appealed from this order to the circuit court of Pulaski county, where the order denying appellee a license was reversed and the Bank Commissioner was directed to issue a license as prayed, and this appeal is from that order and judgment.
The accuracy of the finding above recited does not appear to be questioned. Indeed, it is based upon appellee's own testimony as to the manner in which he has operated his loan business and proposes to continue. The briefs discuss at length the question whether appellee's plan results in the exaction of usurious interest. If it did, this, of itself, would justify and fully support the refusal to grant a license; but it is not essential that this finding be made to support the action of the banking department.
Section 22 of this act 135, supra, states the grounds upon which a license granted may thereafter be revoked, and among other grounds upon which that action may be taken is that the licensee ". . . is making any charges for any services in connection with any financial transactions covered by this act which services were not actually rendered, or at rates which are exorbitant when considered in connection with the services rendered, or for services not reasonably required in connection with such transaction." It is apparent that conduct which would justify the revocation of a license to do business would justify the refusal to issue a license in the first instance.
The manner of appellee's operations, as appears from his own records and testimony, is as follows: Only one loan in excess of $ 500 was made. This was to one Vittilow. He borrowed $ 526.94, and executed his note for $ 907.32. There were, altogether, 47 borrowers, who received the aggregate amount of $ 3,091.81, and gave notes aggregating $ 6,816.59. One Wilson borrowed $ 25, and gave a note for $ 54.71. One Massey borrowed $ 25, and gave his note for $ 61. One Kortke borrowed $ 20, and gave a note for $ 49.56. One Shirley borrowed $ 30, and gave a note for $ 66.55. No one could borrow any sum of money without taking life insurance for the minimum amount of $ 1,000. It was not required that any insurance policy be assigned as security for the loan made, and it is obvious that this was not the purpose of taking out the insurance, as the policies bore no just proportion to the sum of money loaned. The examining officer of the banking department was fully justified in concluding that so much of each note as was in excess of the sum loaned was not reasonably required in connection with such transaction, and, if this be true, just reason existed, not only to refuse to issue a license, but to cancel one which had been issued. The inference is fairly deducible that it is not insurance which the borrowers want, but that their need for the small loans made them is such that they accept these loans on any terms that may be imposed. It must be true that many of these borrowers do not want insurance, and are not able to carry it, and they have no intention of doing so beyond the period of time covered by the premium which becomes a part of the notes they signed. This is not a service reasonably required in connection with the transaction, as it furnishes no security for the service rendered and the loan made.
It does not appear, from the record before us, what per cent. of the premium which becomes a part of the borrower's note, belongs to appellee as the agent of the insurance company, but it is shown what sum was borrowed and what premium was charged. For instance, in the case of Kortke he borrowed $ 20 and gave a note for $ 49.56, of which amount $ 27.20 was for the insurance premium. It is a matter of common knowledge that a large, if not the greater, part of this first premium is paid to or retained by the agent who writes the insurance.
It is argued on behalf of appellee that the insurance is worth what it costs, and that no more is charged these borrowers than is charged others who take out similar insurance. This may be true, but the fact cannot be disguised that it is not insurance which the borrower wants. His pressing need is for a small loan, which he accepts upon any terms that may be imposed, and it is no service to the borrower to require him to take something he may not want and can ill afford to have, but which he accepts because his necessity permits no alternative.
Section 3 of the act 135 requires the Securities Division of the Banking Department to make investigation before granting a license and to issue a license "If such investigation warrants the belief that said business will be operated honestly, fairly, and efficiently," and a bond in proper form is given and approved. Appellee's honesty is not questioned, nor is his efficiency, but it has been found that his plan of operation is not fair to the hapless borrower with whom he proposes to deal.
The act clothed the Securities Division of the Banking Department with a discretion in making this investigation and determination, and the preamble of the act recites the conditions which induced its enactment. It is there recited that ". . . whereas the constitutional inhibition (against exacting usurious interest) has been systematically and consistently flouted by money lenders who have perpetrated the grossest abuses in contracting and collecting small loans from necessitous borrowers whose poverty and need enabled the lender to extort unconscionable rates of interest, . . ." The obvious purpose of this legislation, read in the light of this preamble, was to protect a class of citizens who are unable to protect themselves, and to impose upon a Department of the State Government the duty of determining whether a person proposing to deal with this class would do so fairly.
It must be remembered that the duty imposed by law of investigating and determining whether a license should be granted or refused is not imposed upon this court nor upon the learned judge from whose order this appeal comes. He, in the first instance, and we, upon appeal, may review this action to determine whether there has been an arbitrary decision, or an abuse of discretion, but we should regard and uphold the decision of the Securities Division of the State Banking Department unless it be made to appear that there was an abuse of discretion or an arbitrary decision. St. Louis S.W. Ry. Co. v. Stewart, 150 Ark 586, 235 S.W. 1003; Rural Special School Dist. v. Common School Dist., 183 Ark. 329, 335, 35 S.W.2d 587; sections 170 and 171, chapter Public Officers, 22 R. C. L. 490; sections 290, 291 and 293, chapter Officers, 42 C. J....
To continue reading
Request your trial-
Cochran v. State ex rel. Gallion
...344, 23 L.Ed. 949; Missouri, Kansas & Texas Trust Co. v. Krumseig, 172 U.S. 351, 356, 19 S.Ct. 179, 43 L.Ed. 474; Jernigan v. Loid Rainwater Co., 196 Ark. 251, 117 S.W.2d 18.' We are not to be understood as condemning all forms of insurance in all cases where loans are made. But the practic......
-
Piggott State Bank v. State Banking Bd., 5--4194
...that it was arbitrarily exercised. Missouri Pac. R. Co. v. Williams, 201 Ark. 895, 148 S.W.2d 644; Jernigan, Commissioner v. Loid Rainwater Co., 196 Ark. 251, 117 S.W.2d 18; Lion Oil Refining Co. v. Bailey, 200 Ark. 436, 139 S.W.2d 683; Department of Public Utilities v. Arkansas Louisiana G......
- Jernigan v. Loid Rainwater Co., 4-4966.
-
Willis v. Buchman
... ... Grauman v. Continental Co., Inc., 275 Ky. 238, 121 ... S.W.2d 49; Jernigan, Bank Com'r v. Loid Rainwater ... Co., 196 Ark. 251, 117 S.W.2d 18; Commonwealth of ... Kentucky ... ...