People v. Stokes

• Decision Date: 19 December 1917
• Docket Number: No. 11628.,11628.
• Citation: 118 N.E. 87,281 Ill. 159
• Parties: PEOPLE v. STOKES.
• Court: Illinois Supreme Court

281 Ill. 159

118 N.E. 87

PEOPLE

v.STOKES.

No. 11628.

Supreme Court of Illinois.

Dec. 19, 1917.

Error to Municipal Court of Chicago; Harry M. Fisher, Judge.

F. B. Stokes was convicted of violating the Loan Shark Act, and he brings error. Judgment affirmed.

Clark & Clark, of Chicage, for plaintiff in error.

Edward J. Brundage, Atty. Gen., Maclay Hoyne, State's Atty., and Clarence N. Boord, both of Chicago (R. K. Welsh, of Rockford, Charles R. Napier, of Chicago, F. R. Hubachek, of Minneapolis, Minn., and George C. Bliss, of Chicago, of counsel), for the People.

CRAIG, J.

This is a writ of error to review the judgment of the municipal court of the city of Chicago finding plaintiff in error guilty of violating the provisions of the act of June 14, 1917, in force July 1, 1917, regulating and licensing the business of making loans in sums of $300 or less, commonly known as the Loan Shark Act. The information was filed on July 20, 1917, charging plaintiff in error with willfully and unlawfully making a loan of $100 to Clarence W. Miller and contracting for and receiving a greater rate of interest than 7 per cent. per annum, viz. 8 1/3 per cent. per month, without obtaining a license of the department of trade and commerce, as provided by such act. A plea of not guilty was entered, a jury was waived, and the cause submitted to the court for trial. Plaintiff in error was found guilty and a fine of $50 imposed.

There is no dispute as to the facts. On July 17, 1917, plaintiff in error loaned Clarence Miller, a salesman for the C. F. Adams Company, $100, payable in installments of $25 each until $150 was paid, with interest at 10 per cent. per month. Miller gave his note for $150 and received $100 in cash, at the same time making an assignment of his wages to plaintiff in error. It was admitted that plaintiff in error is engaged in the business of loaning money in the city of Chicago in sums less than $300 and that he had no license, as required by the provisions of said act.

The only ground urged for a reversal of the judgment is the alleged unconstitutionality of the act, which is entitled ‘An act to license and regulate the business of making loans in sums of three hundred dollars ($300) or less, secured or unsecured, at a greater rate of interest than seven (7) per centum per annum, prescribing the rate of interest and charge therefor and penalties for the violation thereof, and regulating the assignment of wages or salaries earned or to be earned when given as security for any such loan.’ Laws of 1917, p. 553.

The first section of the act provides that it shall be unlawful to make nay loan of money, credit, goods, or things in action in the amount or value of $300 or less, whether secured or unsecured, and to charge, contract for, or receive a greater rate of interest than 7 per cent. per annum without a license from the department of trade and commerce. Application for such license shall be in writing, giving the name, address, and place of business of the applicant, and he shall pay an annual license fee of $50, which shall be in full of all expenses of examination and administration under the act. He shall give a bond in the sum of $1,000, with one or more sureties to be approved by said department, conditioned that he will conform and abide by the provisions of such act, and pay to the state, or such person or persons as may be entitled thereto, all sums of money that may become due or owing to the state or to such personunder and by virtue of the provisions of such act. On the filing and approval of said bond a license shall issue to the applicant to make loans, in accordance with the provisions of the act, for a period which shall expire on the 1st of January next following the date of issuance of such license. The section further provides that, if in the opinion of the department of trade and commerce the bond shall at any time become insecure, an additional bond in the sum of $1,000 may be required, and that upon failure to file such bond the license shall be revoked. Upon notice to the licensee and an opportunity to be heard the department may revoke such license if the licensee has violated any provisions of the act, and in case he shall be convicted by a court a second time of the violation of section 2 of the act the department shall revoke such license, and another license shall not issue to such licensee if the second offense occurred after a prior conviction. The section further provides that for the purpose of discovering violations of the act the department of trade and commerce may at any time investigate the loans or business of every licensee, and shall have access to the books, papers, records, and vaults of such licensee, and have authority to examine, under oath, all persons whose testimony it may require relative to such business, and the licensee shall keep such books and records as in the opinion of the department will enable it to determine whether or not the provisions of the act are observed.

Section 2 provides that every licensee may loan any sum of money, goods, or things in action not exceeding in amount or value $300, and charge, contract for, and receive interest thereon at a rate not to exceed 3 1/2 per cent. per month, which shall not be payable in advance or compounded and shall be computed on unpaid balances, and no further charge whatsoever for any examination, service, brokerage, commission, or attorney fee, except for foreclosure or entering of judgment. In no case shall a freater amount than 10 per cent. of the amount found due be directlyor indirectly charged, contracted for, or received, except the lawful fees actually and necessarily paid out to any public officer for filing or recording in a public office any instrument securing the loan. If interest or charges in excess of those permitted by the act should be charged, contracted for, or received, the contract or loan shall be void, and the licensee shall have no right to collect or receive any principal, interest or charge whatsoever. No person shall owe any licensee at any time more than $300 for principal.

Section 3 provides for the delivery to the borrower of a statement of the amount and date of the loan, when due, the rate of interest charged, the nature of security given, and for the surrendering of the note, together with any mortgage or pledge given, when the loan is paid. It prohibits the licensee from taking any power of attorney except to confess judgment, or from taking a note or promise to pay which does not state the actual amount of the loan, the time for which made and rate of interest, or any instrument in which blanks are left to be filled after execution.

Section 4 provides that no assignment of any salary or wages earned or to be earned, given to secure any loan, shall be valid unless in writing, signed by the borrower, nor unless it shall be given to secure an existing debt or one contracted simultancously with its execution, and that under such assignment or order for payment of such frture salary or wages, given as security for a loan under the act, 50 per cent. of the borrower's salary or wages may be collectible by the licensee from the time a copy of such assignment, verified by the oath of the licensee or his agent, together with a verified statement of the amount unpaid on such loan, has been served on the employer.

Section 5 provides that any person who shall, directly or indirectly, violate any of the provisions of the act, shall be guilty of a misdemeanor, and upon conviction shall be punishable by a fine of not more than $500 or by imprisonmentnot more than six months, or both such fine and imprisonment, in the discretion of the court.

Section 5a provides the act shall not apply to any person, copartnerahip, or corporation doing business under any law of this state or of the United States relating to banks, trust companies, building and loan associations, or pawnbrokers, or to wage loan corporations organized under the act to provied for the incorporation, management, or regulation of wage loan corporations, approved June 20, 1913, in force July 1, 1913.

The grounds urged against the constitutionality of the act are: (1) That it violates section 1 of the Fourteenth Amendment to the Constitution of the United States and section 2 of article 2 of the Constitution of this state, in that it is class legislation and abridges the privileges and immunities of citizens of the United States and deprives them of their property without due process of law; (2) that it grants to a corporation, association, or individual a special or exclusive privilege, immunity, or franchise, in violation of section 22 of article 4 of the Constitution of this state; (3) that the act embraces more than one subject not expressed in its title, and is a local or special law regulating the rate of interest, in violation of sections 13 and 22 of article 4 of the Constitution of this state; and (4) that it vests the department of trade and commerce with judicial powers, in violation of section 1 of article 6 of the Constitution of this state.

The first two contentions will be considered together. The argument advanced in support of them is that the act divides the citizens of this state into two classes, one class to which plaintiff in error belongs, and the other the excepted class mentioned in section 5a which is prohibited from engaging in such business; that such classification is without any real foundation in fact and is arbitrary and unreasonable; that it confers special privileges and immunities on the first class which are not and cannot be enjoyed by the second class; also, that it abridges the right to contract, in that it prohibits the lender from loaning to any borrower more than $300, or any amount to a creditor who may be indebted to him on account of merchandise purchased to that amount, and prohibits the borrower from contracting for more than 50 per cent. of his salary as security for...