Miller v. Schuster

• Decision Date: 16 January 1940
• Docket Number: 44799.
• Citation: 289 N.W. 702,227 Iowa 1005
• Parties: MILLER v. SCHUSTER et al. (HOUSEHOLD FINANCE CORPORATION OF AMERICA, Intervener).
• Court: Iowa Supreme Court

289 N.W. 702

227 Iowa 1005

MILLER v. SCHUSTER et al. (HOUSEHOLD FINANCE CORPORATION OF AMERICA, Intervener).

No. 44799.

Supreme Court of Iowa.

January 16, 1940

Appeal from District Court, Polk County; John J. Halloran, Judge.

Suit to enjoin the enforcement of Chapter 419-f1 of the Code, 1935 because it was not constitutionally enacted by the legislature and further to enjoin the enforcement of sub-paragraph a-2 of Section 9438-f13 of the Code, 1935 contained within said chapter, on the grounds that the same constitutes an unconstitutional delegation of legislative authority. The court denied the injunction. Plaintiff appeals.

Affirmed.

H Pierce Witmer and C. S. Missildine, both of Des Moines, for appellant.

Fred D. Everett, Atty. Gen., and John E. Mulroney and Floyd Philbrick, Asst. Attys. Gen., for appellees.

Hubachek & Kelly, of Chicago, Ill., and Brammer, Brody, Charlton & Parker, of Des Moines, for intervener-appellee.

MILLER, Justice.

Plaintiff's petition alleges that he is licensed to make loans under $300 and is engaged in such business; that the defendants are members of the State Banking Board and as such threaten to enforce the provisions of Chapter 419-f1 of the Code, 1935. Plaintiff seeks an injunction, asserting that said chapter is invalid because the legislature failed to comply with mandatory provisions of the constitution in attempting to enact the legislation and further because sub-paragraph a-2 of Section 9438-f13 of the Code, 1935, contained in such chapter, constitutes an invalid delegation of legislative power. The Household Finance Corporation intervened, asserting that it is a licensee to make loans under $300, is engaged in such business, and has a vital interest in this litigation. The answers of the intervener and the defendants admitted certain allegations of the petition, denied others, and asserted that the legislation which plaintiff attacks does not violate the constitutional provisions specified by plaintiff.

At the trial it was stipulated that the plaintiff and the intervener are duly licensed under the laws of Iowa to make loans under $300, and are engaged in such business; that the defendants, as the State Banking Board, threaten, intend and expect to enforce Chapter 419-f1 of the Code, 1935, intend to continue to collect and review information, statistics, facts and records pertaining to the small loan business for the purpose of determining and fixing the maximum rate of interest to be permitted under said Chapter 419-f1. There was introduced in evidence a statement of Leon Henderson, formerly of the Russell Sage Foundation, which reviews the history and purpose of small loan legislation and regulation. Objections were made to its introduction. We find it unnecessary to discuss or decide the merits of such objections. There were also introduced the house and senate journals showing the steps taken to secure the enactment of H. F. 40 by the 45th G.A., Extra Session, which statute is now known as Chapter 419-f1 of the Code, 1935.

The court found that provisions for a method and system of regulation and control of the small loan business for the protection of a borrower of money from illegal, extortionate acts and demands on the part of the lendor constitutes a proper field for legislation, that the chapter attacked herein was constitutionally enacted and the provisions of said chapter do not constitute improper delegation of legislative power. The legislation was sustained, injunction denied, and decree entered accordingly. From such decree plaintiff appeals.

I.

Appellant does not seriously dispute the correctness of the court's holding that regulation and control of the small loan business is a proper field for legislation. We are in accord with the Supreme Court of Indiana, which recently sustained an act of the Indiana legislature, substantially identical with the act here challenged, in the case of Financial Aid Corp. v. Wallace, Ind.Sup., 23 N.E.2d 472, decided November 14, 1939, wherein the court states, 23 N.E.2d at page 476:" In the enactment of a regulatory law the Legislature has in mind the evils to be prevented or corrected and the purpose to establish safeguards for the protection of citizens. Doubtless the knowledge of the history of Shylock operations in this state convinced the Legislature of the necessity of the provisions of the 1933 act. It cannot be doubted that some persons took an undue and illegal advantage of those in need of funds."

II.

In support of his contention that Chapter 419-f1 of the Code, 1935, is invalid because the legislature failed to comply with the mandatory provisions of the constitution in the course of its enactment, appellant relies upon our holding in the case of Smith v. Thompson, 219 Iowa 888, 906, 258 N.W. 190, 200, wherein we state: " We are firm in the judgment that any mandatory provision of the Constitution should not be annulled by judicial pronouncement, and the holding must be that the act in question in the case at bar is unconstitutional and invalid. We are of the opinion that the rule should be that an enrolled bill which bears the signature of the presiding officers of both houses and the Governor, and filed in the office of the secretary of state, is the exclusive and conclusive proof and evidence of the text of the law as announced in such bill. And that such bill cannot be impeached except and unless it shows upon its face that it violates some constitutional provision, or that it be shown, by records which the Constitution requires be kept by the Legislature, that some mandatory provision of the Constitution has not been complied with in its passage by the Legislature, or the signing by the officers whose signatures the Constitution requires to be attached thereto."

Pursuant to the above pronouncement, we there held that the statute, known as the Salary Reduction Act, was void because the legislature failed to follow certain mandatory provisions of the constitution in the course of its enactment. Since such decision we have had occasion to review the legislative history of several other statutes, but our later decisions have uniformly been to the effect that the mandatory provisions of the constitution were complied with by the legislature. In the case of Scott v. Board of Assessment & Review, 221 Iowa 1060, 267 N.W. 111, we upheld the enactment of Chapter 329-f1 of the Code, 1935, which imposes a personal net income tax, a business tax on corporations, and a retail sales tax. In the case of State v. Arluno, 222 Iowa 1, 268 N.W. 179, 182, we held that constitutional mandates were not violated in the enactment of the Iowa Liquor Control Act. In the case of Brown v. West, 222 Iowa 331, 268 N.W. 525, we sustained Chapter 211 of the Acts of the 47th G.A., relating to the recording of a conditional sales contract. In the case of State v. Woodbury County, 222 Iowa 488, 269 N.W. 449, we held that the constitutional mandates were complied with in the enactment of Chapter 56 of the Acts of the 45th G.A., Extra Session, providing a tax on motor fuel. In the case of Witmer v. Polk County, 222 Iowa 1075, 270 N.W. 323, we sustained the Public Bidder Law, when subjected to similar attack.

The record in reference to the enactment of Chapter 419-f1 of the Code, 1935, comprises over 70 pages of the abstract. For us to specifically pass upon the various contentions of appellant in regard to such record, it would be necessary to set forth, interpret and explain much of the record in this opinion. All of the propositions urged by appellant are fully answered by our holdings in the cases above cited. We do not deem it necessary to reassert the positions there taken by us. Appellant's contentions in reference to the constitutionality of the enactment of Chapter 419-f1 of the Code, 1935, have been carefully considered by the court, and are found to be without merit.

III.

Whereas appellant's contention regarding the constitutionality of the enactment of Chapter 419-f1 of the Code, 1935, challenges the validity of the entire chapter, the contentions in reference to the constitutionality of the provisions of the chapter are limited to sub-paragraph a-2 of Section 9438-f13 of the Code, 1935, included within such chapter. Appellant's position is that, by said sub-paragraph a-2, the legislature undertook to delegate to the State Banking Board legislative power in contravention of Article III, Section 1, of the constitution of Iowa.

A proper interpretation of the statute attacked requires consideration of other provisions. The chapter provides that a person, co-partnership, association or corporation engaged in making loans of $300 or less may not charge a greater rate of interest than that permitted by law unless he be a licensee under the chapter. Provision is made for making application for such license, fixing the fee, requiring a bond, authorizing the superintendent to make an investigation and approve or deny the application, providing for renewal, suspension, revocation or surrender of the license once granted, providing for examination of the business conducted, and the making of annual reports by the licensee. The superintendent is also authorized to make reasonable rules and regulations necessary for the enforcement of the chapter and may employ assistants necessary to enforce the provisions of the chapter. In other words, the chapter provides for rather extensive regulation and control of the business of making loans of $300 or less. Such is its general purpose.

Section 9438-f13 provides that the State Banking Board created by Chapter 412-a1 of the Code shall have power, jurisdiction and authority to enforce the conditions and find the facts with reference to the business of making small loans, and report to the...