National Accounting Co. v. Dorman, 808.

• Decision Date: 19 January 1935
• Docket Number: No. 808.,808.
• Citation: 11 F. Supp. 872
• Parties: NATIONAL ACCOUNTING CO. v. DORMAN, Banking Com'r.
• Court: U.S. District Court — Eastern District of Kentucky

11 F. Supp. 872

NATIONAL ACCOUNTING CO. v. DORMAN, Banking Com'r.

No. 808.

District Court, E. D. Kentucky.

January 19, 1935.

Allen & Duncan, of Lexington, Ky., E. C. O'Rear, of Frankfort Ky., Woodward, Hamilton & Hobson, of Louisville, Ky., and Fred R. Wright, of Milwaukee, Wis., for plaintiff.

Bailey P. Wootton, Atty. Gen., H. Hamilton Rice, Asst. Atty. Gen., Arthur B. Bensinger and John S. Milliken, both of Louisville, Ky., and Daniel W. Davies, of Newport, Ky., for defendant.

Before HICKS, Circuit Judge, and NEVIN and DAWSON, District Judges.

PER CURIAM.

This case involves the constitutionality of chapter 17 of the Acts of the 1934 General Assembly of the Commonwealth of Kentucky, which is commonly known as the "Kentucky Small Loan Act."

The act is attacked as violative of section 3 of the Bill of Rights of the Constitution of Kentucky, of section 59 of that instrument, and also of the due process and equal protection provisions of the Fourteenth Amendment to the Constitution of the United States (section 1).

Since this case has been pending before us, the Court of Appeals of Kentucky, in an opinion in the case of Morris Ravitz v. Clarence J. Steuerle, Justice of the Peace of Jefferson County, Ky., 257 Ky. 108, 77 S.W.(2d) 360, delivered December 21, 1934, has held that the act does not violate either the Constitution of Kentucky or the Constitution of the United States. This opinion, as counsel for the plaintiff frankly concede, is binding upon us in so far as it holds that the act does not offend against the State Constitution. However, it does not conclude us on the question of the constitutionality of the act under the Federal Constitution, nor relieve us of the duty of an independent consideration of that question.

We are in entire accord with the conclusion of the Court of Appeals of Kentucky that the classification adopted in the act is neither unreasonable nor arbitrary, and is based upon grounds of difference having a fair and substantial relation to the object of the legislation involved. Generally speaking, we are also in accord with the reasoning of the Court of Appeals of Kentucky; but in view of the insistence of counsel for the plaintiff in their original brief and in their supplemental brief that section 12 of the act clearly amounts to an unreasonable and arbitrary classification, and in view of the further fact that the opinion of the Court of Appeals of Kentucky apparently does not fully meet this contention of counsel for the plaintiff, we deem it proper to further discuss this point.

Section 12 reads as follows: "This Act shall not apply to any person, partnership, association, or corporation doing business under and as permitted by any law of this Commonwealth or of the United States relating to banks, savings banks, trust companies, trust banking and title insurance companies, building and loan associations, co-operative marketing associations, credit unions, or licensed pawnbrokers, nor to any person, partnership, association or corporation engaged in the business of purchasing direct from dealers, notes arising from the sale of motor vehicles or of financing or refinancing individuals through the medium of loans upon the sole security of liens upon motor vehicles."

It is the contention of the plaintiff that by this section those financing or refinancing individuals through the medium of loans upon the sole security of liens upon motor vehicles are exempt from the operation of the act, while those engaged in financing partnerships or corporations through...