Kelleher v. Minshull

• Decision Date: 27 November 1941
• Docket Number: 28546.
• Parties: KELLEHER v. MINSHULL, Supervisor of Banking, et al.
• Court: Washington Supreme Court

119 P.2d 302

11 Wn.2d 380

KELLEHER v. MINSHULL, Supervisor of Banking, et al.

No. 28546.

Supreme Court of Washington

November 27, 1941

Department 1.

Action by J. J. Kelleher, doing business as Credit Finance Company against J. C. Minshull, as Supervisor of Banking of the State of Washington, and another, to test the constitutionality of the Small Loan Act. From an adverse judgment, plaintiff appeals.

Affirmed.

Appeal from Superior Court, Thurston County; John M. Wilson, Judge.

Dillard & Powell and O. C. Marler, all of Spokane, and Bertil E Johnson, of Tacoma, for appellant.

B Franklin Reno, Jr., of Bellingham, and Joseph E. Hurley, of Spokane, Amici Curiae for respondents.

Smith Troy, Clifford O. Moe, and Max Kaminoff, all of Olympia, for respondents.

STEINERT Justice.

Plaintiff brought this action to test the constitutionality of chapter 208, Laws of 1941, known as the Small Loan Act. A demurrer to the complaint was sustained and, plaintiff having elected to stand upon his pleading, the action was dismissed. Plaintiff has appealed.

As stated in appellant's brief, the precise question now to be decided is this:

Is the Small Loan Act, chapter 208, Laws of 1941, unconstitutional and void,

(1) in that it makes an arbitrary classification denying the equal protection of the laws;

(2) in that it sanctions an illegal delegation of arbitrary authority, or

(3) in that it authorizes unlawful searches and seizures?

The general purpose and scope of the Small Loan Act are set forth in the title thereof, which reads as follows:

'An Act to define, license, and regulate the business of making loans in the amount of five hundred dollars ($500) or less; to permit the licensing of persons engaged in such business; to authorize such licensees to make charges at a greater rate than unlicensed lenders; to prescribe maximum rates of charge which licensees are permitted to make; to regulate assignments of wages or salaries, earned or to be earned, when given as consideration[11 Wn.2d 382] for a payment of five hundred dollars ($500) or less; to exempt certain persons otherwise regulated; to provide for the administration of this act and for the issuance of rules and regulations therefor; to authorize the making of examinations and investigations and the publication of reports thereof; to provide for a review of decisions and findings of the Supervisor under this act; to prescribe penalties; and to repeal all acts and parts of acts in conflict herewith.'

The act is patterned upon and adopts the cardinal principles and provisions of the Sixth Draft of the Uniform Small Loan Law proposed by the department of remedial loans of the Russell Sage Foundation, which in 1907 undertook, and since then has continued, an energetic and comprehensive study of the general small loan business, together with its various ramifications, throughout the United States and elsewhere. A full exposition of the historical development of regulatory small loan laws, culminating in the Sixth Draft recommended by the Foundation will be found in Hubachek, Annotations on Small Loan Laws (1938), particularly at page 192, et seq., and in an article by the same author appearing in 8 Law and Contemporary Problems 108 (1941), published by Duke University School of Law. See, also, an article by Professor Warren L. Shattuck, 'Regulation of Small Loans in Washington' (1941), 16 Wash. L.Rev. 117.

At least forty-one states (including Washington), the territory of Hawaii, and the District of Columbia have adopted some form of regulation with respect to small loans, and all but five of those jurisdictions have enacted laws substantially similar to, or in part resembling, one or more of the six drafts of the proposed Uniform Small Loan Law. Furthermore, during the last thirty years there has been extensive litigation bearing upon legislative acts patterned upon one or another of the drafts recommended by the Foundation. Our recently adopted Small Loan Act therefore comes to us with a considerable background of legislative enactment and judicial decision.

Prior litigation in the various states with respect to such legislative enactments has usually taken the form of an attack upon their constitutional validity, and the chalenges against them have been rested on many grounds, including the due process clause, the equal protection clause, and the privileges and immunities clause of the United States constitution and corresponding provisions of the several state constitutions. Whatever may have been the form or ground of attack, however, the basic question in each instance has been whether or not the classification embodied in the challenged statute was reasonable. With the exceptions hereinafter noted and explained, small loan acts similar to the one here involved have been upheld in every court, both federal and state, wherein the constitutional question has been raised. Because of the importance of the subject, and as a basis from which we shall proceed, we list the cases that have been called to our attention as sustaining the constitutionality of such legislation:

Federal Courts: In re Home Discount Co. D.C.N.D.Ala.1906, 147 F. 538; National Accounting Co. v. Dorman, D.C., E.D.Ky.1935, 11 F.Supp. 872, affirmed 1935, 295 U.S. 718, 55 S.Ct. 835, 79 L.Ed. 1673.

Alabama: Bullard Investment Co. v. Ford, 1921, 18 Ala.App. 167, 89 So. 837; Ex parte Alabama Brokerage Co., 1922, 208 Ala. 242, 94 So. 87, denying certiorari to review Alabama Brokerage Co. v. Boston, 1922, 18 Ala.App. 495, 93 So. 289.

Arkansas: Jernigan v. Loid Rainwater Co., 1938, 196 Ark. 251, 117 S.W.2d 18.

California: Eaker v. Bryant, 1914, 24 Cal.App. 87, 140 P. 310, review denied, Cal.Sup.Ct.1914; In re [11 Wn.2d 384] Halck, 1932, 215 Cal. 500, 11 P.2d 389; Beneficial Loan Society v. Haight, 1932, 215 Cal. 506, 11 P.2d 857; In re Fuller, 1940, 15 Cal.2d 425, 102 P.2d 321.

Colorado: Cavanaugh v. People, 1916, 61 Colo. 292, 157 P. 200; Warner v. People, 1922, 71 Colo. 559, 208 P. 459; Rice v. Franklin Loan & Finance Co., 1927, 82 Colo. 163, 258 P. 223.

Delaware: State v. Wickenhoefer, Del.Ct. of Gen.Sess.1906, 6 Pennewill 120, 64 A. 273.

District of Columbia: Newman v. United States ex rel. Prender, 1913, 41 App.D.C. 37, writ of error dismissed United States ex rel. Prender v. Newman, 1915, 238 U.S. 642, 35 S.Ct. 602, 59 L.Ed. 1502; Reagan v. District of Columbia, 1914, 41 App.D.C. 409, writ of error to the United States Supreme Court denied.

Florida: Edwards v. State, 1911, 62 Fla. 40, 56 So. 401; Beasley v. Cahoon, 1933, 109 Fla. 106, 147 So. 288; Jannett v. Windham, 1933, 109 Fla. 129, 147 So. 296, 153 So. 784, affirmed Jannett v. Hardie, 1933, 290 U.S. 602, 54 S.Ct. 345, 78 L.Ed. 529.

Georgia: King v. State, 1911, 136 Ga. 709, 71 S.E. 1093; Badger v. State, 1922, 154 Ga. 443, 114 S.E. 635; Morgan v. Lowry, 1929, 168 Ga. 723, 149 S.E. 37, appeal dismissed Morgan v. Georgia, 1930, 281 U.S. 691, 50 S.Ct. 238, 74 L.Ed. 1120; Morgan v. Shepherd, 1930, 171 Ga. 33, 154 S.E. 780; Family Finance Co. v. Allman, 1932, 174 Ga. 467, 163 S.E. 143; Cole v. Franklin Plan Co., 1933, 176 Ga. 561, 168 S.E. 261.

Illinois: People v. Stokes, 1917, 281 Ill. 159, 118 N.E. 87; Harbison v. Stamer, 1917, 281 Ill. 450, 118 N.E. 94.

Indiana: Financial Aid Corp. v. Wallace, 1939, 216 Ind. 114, 23 N.E.2d 472, 125 A.L.R. 736.

[11 Wn.2d 385] Iowa: Miller v. Schuster, 1940, 227 Iowa 1005, 289 N.W. 702.

Kentucky: Ravitz v. Steurele, 1934, 257 Ky. 108, 77 S.W.2d 360.

Louisiana: State v. Hill, 1929, 168 La. 761, 123 So. 317, 69 A.L.R. 574.

Maryland: Palmore v. Baltimore & Ohio R. Co., 1928, 156 Md. 4, 142 A. 495.

Massachusetts: Commonwealth v. Morris, 1900, 176 Mass. 19, 56 N.E. 896; Dewey v. Richardson, 1910, 206 Mass. 430, 92 N.E. 708.

Missouri: Ex parte Berger, 1906, 193 Mo. 16, 90 S.W. 759, 3 L.R.A.,N.S., 530, 112 Am.St.Rep. 472, 5 Ann.Cas. 383.

Nebraska: Althaus v. State, 1916, 99 Neb. 465, 156 N.W. 1038.

New Jersey: Richmond v. Conservative Credit System of New Jersey, Sup.Ct.1931, 157 A. 446, 10 N.J.Misc. 14, reversed on other grounds, 1933, 110 N.J.L. 73, 164 A. 563; Levin v. Morris Plan Corp., 1934, 174 A. 237, 12 N.J.Misc. 666; State v. Guida, 1938, 119 N.J.L. 464, 196 A. 711.

New York: People v. Blumenthal, Sup.Ct.1936, 157 Misc. 943, 284 N.Y.S. 873; Gregg v. Personal Finance Co. of New York, Sup.Ct.1937, 164 Misc. 392, 298 N.Y.S. 266.

North Carolina: State v. Davis, 1911, 157 N.C. 648, 73 S.E. 130, 39 L.R.A., N.S., 136.

Ohio: Sanning v. Cincinnati, 1909, 81 Ohio St. 142, 90 N.E. 125, 25 L.R.A., N.S., 686; Wessell v. Timberlake, 1916, 95 Ohio St. 21, 116 N.E. 43, Ann.Cas.1918B, 402; Dunn v. State, 1930, 122 Ohio St. 431, 172 N.E. 148, affirming, 1930, 36 Ohio App. 170, 173 N.E. 22, appeal dismissed and certiorari denied Dunn v. Ohio, 1930, 282 U.S. 801, 51 S.Ct. 84, 75 L.Ed. 721; [11 Wn.2d 386] State ex rel. Downing v. Powers, 1932, 125 Ohio St. 108, 180 N.E. 647.

Oklahoma: Shinn v. Oklahoma City, 1936, 59 Okl.Cr. 433, 61 P.2d 1126; Shinn v. Oklahoma City, 1939, 184 Okl. 236, 87 P.2d 136 (both involving city ordinances).

Oregon: State v. Ware, 1916, 79 Or. 367, 154 P. 905, rehearing denied, 1916, 79 Or. 377, [119 P.2d 305] 155 P. 364; Wrenn v. Portland Loan Co., 1937, 155 Or. 395, 64 P.2d 520.

Pennsylvania: Commonwealth v. Puder, 1918, 261 Pa. 129, 104 A. 505, affirming, 1917, 67 Pa.Super. 11; Wheeler v. Remedial Loan Co., 1918, 261 Pa. 139, 104 A. 508, affirming, 1917, 67 Pa.Super. 21.

Tennessee: Koen v. State, 1931, 162 Tenn. 573, 39 S.W.2d 283.

Texas: Brand v. State, 1927, 109 Tex.Cr.R. 96, 3 S.W.2d 439; Hubbard v. State, 1928, 109 Tex.Cr.R. 320, 4 S.W.2d 971.

Virginia: Sweat v. Commonwealth, 1929, 152 Va. 1041, 148 S.E. 774.

West Virginia: Cash Service Co. v. Ward, 1937, 118 W.Va. 703, 192 S.E.

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