Ravitz v. Steurele

• Court: Court of Appeals of Kentucky
• Writing for the Court: RICHARDSON, Justice.
• Citation: 77 S.W.2d 360,257 Ky. 108
• Parties: RAVITZ v. STEURELE, Justice of the Peace. LISSAUER v. DORMAN.
• Decision Date: 21 December 1934

77 S.W.2d 360

257 Ky. 108

RAVITZ
v.
STEURELE, Justice of the Peace.

LISSAUER
v.
DORMAN.

Court of Appeals of Kentucky

December 21, 1934

Appeal from Circuit Court, Jefferson County.

Proceedings between Morris Ravitz and Clarence J. Steurele, Justice of the Peace of Jefferson County, Ky. and between A. W. Lissauer and J. R. Dorman, Banking Commissioner of the Commonwealth of Kentucky. From the judgments rendered, Morris Ravitz and A. W. Lissauer appeal.

Affirmed.

Emmet R. Field and William F. Clarke, Jr., both of Louisville, for appellants.

Arthur B. Bensinger and John S. Milliken, both of Louisville, Bailey P. Wootton, Atty. Gen., and Stites & Stites and Norris McPherson, all of Louisville, for appellees.

Stoll, Muir, Townsend & Park, of Lexington, Eugene R. Attkisson, of Louisville, Edward C. O'Rear, of Frankfort, John R. Allen, of Lexington, and Fred R. Wright, of Milwaukee, Wis., amici curiae.

RICHARDSON, Justice.

These appeals present identical questions, and will therefore be disposed of as one.

In the first entitled action a motion to dismiss, because the questions involved in it are moot, is overruled. The paramount question to be determined is the constitutional validity of an Act of 1934, c. 17, p. 32, entitled:

"An Act to define, license, and regulate the business of making loans or advancements in the amount or of the value of three hundred dollars ($300) or less, secured or unsecured at a greater rate of interest, consideration, or charge than six per centum (6%) per annum, prescribing the rates of interest and charges therefor and penalties for the violation thereof, regulating the assignment of wages or salaries, earned or to be earned, when given as security for any such loan or as consideration for a payment of three hundred dollars ($300) or less, providing for the administration of this Act, authorizing the making of examinations and investigations and the publication of reports thereof, providing for a review of decisions and findings of the Banking Commissioner under this Act, and repealing so much of Section 4224a, Carroll's Kentucky Statutes (1930) as applies to persons licensed under this Act, and limiting the application of Sections 2218 and 2219, Carroll's Kentucky Statutes (1930), and repealing all Acts and parts of Acts whether general, special, or local, which relate to the same subject matter as this Act."

Section 1 thereof defines terms used therein. Section 2 provides no person, except as authorized by the act and without first obtaining a license from the banking commissioner as provided in the act, shall engage in this state in making loans in the amount of value of $300 or less at a greater rate of interest or consideration therefor than 6 per cent. per annum. Section 3 defines the manner of making application for license there under and what it shall contain; also, stating the net worth of the applicant to be at least $20,000, etc., and requires the applicant to pay the banking commissioner a license fee of $50 to cover his expense of investigating the applicant and an additional annual license fee of $250 proportioned to the year the application is made. This section imperatively requires, as therein set forth, the licensee to file a bond to be approved by the banking commissioner in the sum of not more than $1,000. Section 4 confers authority on the banking commissioner to approve the bond and the "financial responsibility," experience, character, and fitness of the licensee and a standard for the measurement of his fitness. It confers on the commissioner power to approve or deny an application for a license including the other powers therein defined. Section 5 limits the right of the licensee to advertise. Section 6(a) contains this provision:

"Every licensee hereunder may lend any sum of money not exceeding three hundred dollars ($300) in amount and may charge, contract for, and receive thereon interest at a rate not exceeding three and one-half per centum (3 1/2%) per month on any part of the unpaid principal balance of the loan not in excess of one hundred and fifty dollars ($150) and two and one-half per centum (2 1/2%) per month on any remainder of the unpaid principal balance of the loan."

Following the above section, is set forth in detail how interest shall be computed by the licensee on his loan and prohibits splitting or dividing loans. The section sets forth in detail the duties of the licensee to the borrower [77 S.W.2d 363] and requires him to have at all times a net worth of at least $20,000 and its maintenance. It forbids the licensee taking a lien on any real estate except obtained by virtue of a judgment or decree. It declares any "loan in the amount or of the value of three hundred dollars ($300) or less for which there has been charged, contracted for, or received a greater rate of interest, or consideration than licensees are permitted to charge, contract for, or receive under this Act" (section 7(b) to be against public policy and forbids the enforcement of a loan made outside of this state in violation of the act. It contains this clause:

"No person, except as authorized by this Act, shall, directly or indirectly, by any device, subterfuge, or pretence whatsoever charge, contract for, or receive, or participate, as agent, broker, or in any other capacity, in charging, contracting for, or receiving, any interest, discount, or consideration greater than six per centum (6%) per annum upon any loan in the amount or of the value of three hundred dollars ($300) or less, and no loan made in violation of the provisions of this Act shall be valid or enforceable within this Commonwealth." Section 7(a).

"No licensee shall, directly or indirectly, charge, contract for or receive any interest, or consideration greater than six per centum (6%) per annum upon any loan in the amount or of the value of more than three hundred dollars ($300), or in any case in which the licensee permits any individual as borrower or as indorser, guarantor, or surety for any borrower, or otherwise, to owe directly or contingently, or both, to the licensee at any time the sum of more than three hundred dollars ($300) for principal." Section 8.

The power to enforce the provisions of the act is conferred on the banking commissioner including the duty to make annual examinations, etc., of the business of the licensee.

All moneys collected by the banking commissioner under the provisions of the act for license fees and examinations or otherwise are to be paid into the state treasury, credited to the account of the state banking commissioner. Each licensee is required on or before the 15th day of March each year to file with the banking commissioner a report made under oath giving such information as the commissioner may require relative to the business during the preceding calendar year. It imposes the duty on the banking commissioner to make and publish annually an analysis and recapitulation of the reports. The licensee is imperatively required to keep and use in his business and preserve for at least two years, after making the final entry of his loan, books, accounts, etc., from which it may be determined whether he has complied with the provisions of the act and the rules and regulations of the banking commissioner. It provides for a punishment on conviction of the licensee for a violation of designated sections and subsections of the act. Also, that a "contract of loan not invalid for any other reason, in the making or collection of which any act shall have been done which constitutes a misdeameanor *** shall be void and the lender have no right to collect or receive any principal, interest or charges whatsoever." Section 11.

Section 12 exempts from its operation corporations doing business under any law of the commonwealth or of the United States, "relating to banks, savings banks, trust companies, trust banking and title insurance companies, building and loan associations, cooperative 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 repeals so much of sections 4224a, Kentucky Statutes (1930), as applies to persons licensed under the act. It expressly provides it shall not be construed as repealing or amending sections 2218 or 2219, Kentucky Statutes (1930), and provides these sections shall not apply to loans made under the authority of the act. It declares all acts and parts of acts, whether general, special, or local, which relate to the same subject-matter as this act, are repealed. Section 13 regulates the assignment of or order for payment of any salary, wages, commissions, or compensation for services, earned or to be earned, when taken as security for any loan made under the act, and declares the same shall be invalid unless the amount of the loan is paid to the borrower simultaneously with its execution and "there shall not at any time be collectible from the employer of the borrower more than a sum equal to ten per centum (10%) of the amount then owing the borrower for any such salary," etc. Section 14 carries a partial invalidity provision.

The validity of the act is assailed on every conceivable ground and sustained by adroit and ingenious, skillful arguments with the citation of a multitude of authorities. It is [77 S.W.2d 364] declared in the briefs as well as in the oral argument that the title does not meet the requirements of section 51 of our Constitution; it is a special law and violates subdivision 21 of section 59 of our Constitution; and violates equality and confers exclusive privileges and, therefore, violates section 3...