Koen v. State

• Decision Date: 10 June 1931
• Citation: 39 S.W.2d 283,162 Tenn. 573
• Parties: KOEN v. STATE.
• Court: Tennessee Supreme Court

39 S.W.2d 283

162 Tenn. 573

KOEN v. STATE.

Supreme Court of Tennessee.

June 10, 1931

Appeal from Criminal Court, Shelby County; T. W. Harsh, Judge.

J. W Koen was convicted of engaging in the small loan business and exacting usury, in violation of statute, and he brings error.

Affirmed.

Charles M. Bryan, of Memphis, for plaintiff in error.

J. M Gardenhire, Asst. Atty. Gen., for the State.

Aust Cornelius & Wade, of Nashville, Holmes, Canale, Loch & Glankler, and Hamilton E. Little, all of Memphis, and Thos A. Shriver, Jr., of Nashville, amici curiae.

COOK J.

Plaintiff in error, hereafter referred to as the defendant, was convicted and fined for engaging in the small loan business and exacting usury, in violation of section 1, chapter 153, Pub. Acts of 1925. He appealed and assigned errors. All of the assignments, save one, challenge the constitutionality of the act. Through the other assignment of error it is insisted that the act applies only to persons engaged in the business of lending money on assignments of wages and salaries, and does not extend to defendant's business of lending money on the personal obligation of the borrower.

Defendant kept an office or place of business in the city of Memphis, under the trade-name of Dixie Trading Company, where he engaged in the small loan business, taking notes from the borrower, coupled with a power of attorney authorizing the confession of judgment after maturity for the amount of principal and for an attorney fee.

While the notes were made payable thirty days after date, the payees testified that they were required to pay every two weeks. For a $5 loan, the borrower repaid $6, and the $5 was reloaned to him upon the same terms. For a $10 loan, the borrower paid $12 and the $10 was reloaned on the same terms, and at the same ratio in transactions for greater sums. The record shows twelve transactions running for different periods where the defendant exacted $1 for the loan of $5 for two weeks and increased the charge accordingly as the loan increased.

In the trial court defendant's counsel stated: "He admits that within twelve months prior to the filing of this indictment he was engaged in the business of lending money at greater rates of interest than 6 per cent. and he has not complied with the provisions of chapter 153, Pub. Acts of 1925. He admits, if the statute is valid, he has violated it."

A reference to the evidence shows that none of the loans by defendant exceeded $300, and that the rate of interest charged by him exceeded in some instances 400 per cent. per annum. These facts bring the defendant within the provisions of the statute.

The statute was designed to regulate the business of making small loans to persons in need of funds to meet immediate necessities, and to protect them from the rapacity of the small loan shark and his accomplices in graft, who might be employed to abusively use the processes of attachment and garnishment for the enforcement of the usurious contract. The statute extends to all who engage in the business of making such loans, including within the definition of persons engaged in the small loan business those who lend money at usurious rates under the guise of an advancement upon wages and take assignments to secure the advancement. See McWhite v. State, 143 Tenn. 222, 226 S.W. 542.

The act is open to no other reasonable construction, as may be seen from section 1, which reads:

"No person, firm, or corporation shall engage in the business of making loans of money, credit, goods or things in action in the amount of Three Hundred Dollars ($300.00) or less and charge, contract for or receive a greater sum than six per cent. (6%) per annum therefor, except as authorized by this Act and without first obtaining a certificate from the Superintendent of Banks and a license from the County Court Clerk (hereinafter called the licensing official) of the county in which the said person, firm or corporation proposes to do business. The provision of this Act shall apply to all persons, firms and corporations engaged in the business of buying, purchasing or taking assignments of any wages, or salary due or to any future salary or wages, who for the purposes of this Act shall be deemed to be engaged in the business of loaning money."

The act conforms to the requirements of article 2, § 17, of the Constitution. We quote the title:

"An act to license and regulate the business of making secured or unsecured loans in the sums of Three Hundred Dollars ($300.00) or less, prescribing the rate of interest and charge therefor and penalties for the violation thereof, and regulating the assignment of sale of wages or salaries earned or to be earned when given as securities for such loan or transaction."

Under this general title the Legislature wrote an act to regulate the small loan business, a business that has made itself distinctive in our social and economic system by its practices toward the ignorant and helpless members of society who are its patrons. In the act to regulate that distinctive business, the Legislature could, of course, embody the regulations required to accomplish the object designed. House v. Creveling, 147 Tenn. 589, 250 S.W. 357. See, also, State v. Persica, 130 Tenn. 55, 168 S.W. 1056, and cases cited.

The act does not purport to be, and is not, an amendatory or repealing act. It is independent and complete within itself, and the fact that it might impliedly impair the force of some other statute would not affect its validity because the antecedent law impliedly affected was not mentioned in the caption. Such an act is not within the constitutional requirement of article 2, § 17, as to amendments. 1 Lewis' Sutherland, Statutory Construction, § 239; State v. Taylor, 119 Tenn. 229, 104 S.W. 242.

The act embodies but one general subject, that of regulating the small loan business, and therefore does not violate the two-subject clause of article 2, § 17, of the Constitution. Its validity is questioned upon the ground that the...