State ex Inf. Taylor v. Salary Purchasing Co.

• Decision Date: 14 March 1949
• Docket Number: No. 40615.,40615.
• Citation: 218 S.W.2d 571
• Parties: STATE OF MISSOURI on the Information of J.E. TAYLOR, Attorney General, Relator, v. SALARY PURCHASING COMPANY, Incorporated, of Missouri, a Corporation. Respondent.
• Court: Missouri Supreme Court

218 S.W.2d 571 STATE OF MISSOURI on the Information of J.E. TAYLOR, Attorney General, Relator,
v.
SALARY PURCHASING COMPANY, Incorporated, of Missouri, a Corporation. Respondent. No. 40615. Supreme Court of Missouri. Court en Banc, March 14, 1949.

Quo Warranto.

RESPONDENT OUSTED AND FINED.

J.E. Taylor, Attorney General, C.B. Burns, Jr., and Arthur M. O'Keefe, Assistant Attorneys General, for relator.

(1) Sec. 3356, R.S. 1939, prohibits the taking of assignments of unearned wages. Sec. 3356, R.S. 1939; McCarter v. Fireman's Ins. Co., 74 N.J. Eq. 372, 73 Atl. 80; State v. Weatherby, 344 Mo. 848, 129 S.W. (2d) 887; Witmer v. Nichols, 320 Mo. 665, 8 S.W. (2d) 63; 12 Am. Jur., p. 731. (2) In addition to forfeiture of charter a substantial fine should be assessed against respondent, and respondent should be ordered to return to the borrowers the illegal interest exacted. State on inf. of Taylor, Att. Gen. v. American Ins. Co., 200 S.W. (2d) 1.

John Hendren, Henry C. Hinkel, Harold D. Carey and Alex L. McAnally for respondent.

(1) An assignment of earned wages is a valid and enforceable transaction in the State of Missouri. Sec. 3356, R.S. 1939; Service Purchasing Co. v. Brennan, 226 Mo. App. 110; Hax v. Acme Cement Plaster Co., 82 Mo. App. 447. (2) An assignment of unearned wages is made a void and unenforceable transaction by Section 3356. R.S. 1939. Since it is a nullity, no penalty is provided for having entered into such a transaction. Sec. 3356, R.S. 1939; Vaughn v. Graham, 234 Mo. 781, 121 S.W. (2d) 222; The State v. Williamson, 118 Mo. 146; Cooley Credit Co. v. Townsend, 132 Mo. App. 390; Beal v. McVicker, 8 Mo. App. 202; Webster's Collegiate Dictionary, 5th Ed., 1947; Mobile County v. Williams, 180 Ala. 369, 61 So. 963; Kuhn v. Simmons, 126 Mo. 434; Cuneo v. Bornstein, 269 Mass. 232, 168 N.E. 810. (3) The law distinguishes loans and wage assignments. The procedure adopted by respondent was effective for the purpose of executing an enforceable assignment. Therefore, respondent was legitimately engaged in the business of purchasing salaries. Secs. 4813, 8166, R.S. 1939; Sherrill v. Brantley, 334 Mo. 497, 66 S.W. (2d) 529; Bell v. Mulholland, 90 Mo. App. 612; Service Purchasing Co. v. Brennan, 226 Mo. App. 110, 42 S.W. (2d) 39; McWhite v. State, 143 Tenn. 222, 226 S.W. 542; Cotton v. Cooper, 160 S.W. 597; State ex rel. v. Central Purchasing Co., 118 Neb. 383, 225 N.W. 46; State v. Mehaffey, 112 Ohio St. 130, 147 N.E. 506; Smith v. Sterritt, 24 Mo. 260. (4) Acceptance of partial assignments by respondent does not demonstrate that the transactions were mere subterfuges for making loans. Service Purchasing Co. v. Brennan, 226 Mo. App. 110, 42 S.W. (2d) 39; Stewart v. Kane, 111 S.W. (2d) 975. (5) Section 4813 of the R.S. Mo. 1939 is violative of Section 44, Article 3, of the Missouri Constitution. Sec. 44 of Art. 3, Mo. Constitution; Sec. 4813, R.S. 1939; Household Finance Corp. v. Harry Shaffner, 203 S.W. (2d) 734; Ex parte Berger, 193 Mo. 16, 90 S.W. 759; State v. Sherman, 18 Wyo. 169, 105 Pac. 299.

CLARK, J.

Quo Warranto filed in this court by the Attorney General, as relator, alleging that respondent has been and is violating its corporate charter and the state law by loaning money at usurious rates of interest, praying that respondent be fined, ousted from doing business in the State and required to return to its borrowers all sums illegally exacted from them. After we issued our writ and the parties filed their pleadings, we appointed an attorney, Honorable Francis Smith, as our special commissioner to hear evidence and report as to the law and the facts. His report has been filed, sustaining the allegations of the information in all important particulars, and respondent has filed exceptions.

The record is long. Many witnesses were heard and many exhibits introduced, but, as the testimony mainly follows the same pattern, the essential facts may be compressed into a comparatively small volume.

Respondent was organized as a Missouri corporation and opened an office in Jefferson City in August, 1946. Its charter powers are stated as "to buy, acquire, discount, hold, own, collect, and receive payment of any choses in action, salary or wage accounts,

218 S.W.2d 572

due or to become due to the seller or assignor, whether earned or unearned, and any and all other claims, demands, obligations, rights of action, judgment and choses in action whether evidenced by writing or not."

Respondent's customers were persons of low income, unable to procure credit from banks and other conservative money lenders. They were attracted to respondent's office by alluring advertisements and solicitation through the mail, promising easy money, without security and upon the applicant's signature alone. The usual procedure was as follows: An applicant would go to the office of respondent and ask "to make a loan" or "borrow money." Sometimes, but not always, the person in charge of the office...