State ex rel. Beck v. Associates Discount Corp., 33943

• Decision Date: 25 May 1956
• Docket Number: No. 33943,33943
• Citation: 77 N.W.2d 215,162 Neb. 683
• Parties: STATE of Nebraska ex rel. Clarence S. BECK, Attorney General, and the Department of Banking of the State of Nebraska, Appellants, v. ASSOCIATES DISCOUNT CORPORATION, a Foreign Corporation, and Jack F. Kemnitz, Appellees.
• Court: Nebraska Supreme Court

Page 215

77 N.W.2d 215

162 Neb. 683

STATE of Nebraska ex rel. Clarence S. BECK, Attorney General, and the Department of Banking of the State of Nebraska, Appellants, v. ASSOCIATES DISCOUNT CORPORATION, a Foreign Corporation, and Jack F. Kemnitz, Appellees.

No. 33943.

Supreme Court of Nebraska.

May 25, 1956.

Syllabus by the Court.

1. A general demurrer admits all allegations of fact in the pleading to which it is addressed if the allegations are issuable, relevant, material, and well pleaded, but does not admit the pleader's conclusions unless they are supported by and necessarily result from the facts pleaded.

2. Plaintiff may be allowed, on notice and on such terms as to costs as the court may prescribe, to file a supplemental petition alleging facts material to the case occurring after a former petition, and if redundant, scandalous, or irrelevant matter is inserted therein, it may be stricken out on motion of the party prejudiced thereby.

3. For the purposes of determining the relevancy and materiality of allegations in a pleading, a motion to strike admits the truth of all facts well pleaded and any inferences fairly deducible therefrom.

4. Redundancy consists of the needless repetition of material allegations, or of the insertion of irrelevant matter.

5. Matter is irrelevant in a pleading which has no bearing upon the subject matter of the controversy, and cannot affect the decision of the court.

6. Under the code system of pleading, it is not necessary for plaintiff to state a cause of action in any particular form. The facts are to be stated. All that the law requires is that there shall be a cause of action.

7. A plaintiff has the right to set out his entire statement of facts constituting his alleged cause of action, and where such action is based on a series of acts, which together constitute the allegations of one complete transaction, a portion of the same may not be stricken out against plaintiff's objections.

8. Sections 45-114 to 45-158, R.R.S.1943, are not local or special laws 'regulating the interest on money' in violation of Article III, section 18, Constitution of Nebraska.

9. Sections 45-114 to 45-158, R.R.S.1943, do not violate that part of Article III, section 14, Constitution of Nebraska, which provides 'and no law shall be amended unless the new act contain the section or sections as amended and the section or sections so amended shall be repealed.'

10. The permissive provisions of sections 45-114 to 45-158, R.R.S.1943, apply to licensees, but every inhibitory provision contained therein applies alike to licensees and nonlicensees and the officers and employees of either or both, and the violation thereof by such persons in connection with any indebtedness, however acquired by them, renders such entire indebtedness void and uncollectible.

11. In that connection, section 45-157, R.R.S.1943, expressly authorizes the State of Nebraska on relation of the Attorney General and the Department of Banking, to bring an action against such persons to enjoin such violation or from doing any act or acts in furtherance thereof, and obtain the appointment of a receiver for the property and business of such violators, and, as provided by section 25-304, R.R.S.1943, such action may be brought and maintained without joining as plaintiffs the persons for whose benefit it is prosecuted.

12. Where acts sought to be enjoined are threatened or being performed by more than one, all may be joined as defendants.

13. The mere fact that more than one equitable remedy is sought does not establish that more than one cause of action is included in a plaintiff's petition. The particular nature of the wrong done by defendant may require the application of different remedies for the enforcement of plaintiff's right, in which event the rules governing joinder of causes of action do not preclude plaintiff from presenting in the same pleading distinct and different grounds for recovery upon a single primary right.

14. Since usury is generally accompanied by device, subterfuge, scheme, and circumvention of one kind or another to present the color of legality, it is the duty of the court to examine the substance of the transaction as well as its form, and the right to relief will not be denied because parol proof of the usurious character of the transaction contradicts a written instrument.

15. A dealer in automobiles may in good faith sell a car on time for a price in excess of the cash price without tainting the transaction with usury, though the difference in price may exceed lawful interest for a loan.

16. In such cases, however, the transaction between the buyer and the seller must be a completed bona fide time price sale agreement, and the foregoing rule does not apply where it is proved that the transaction was not made in good faith but was a device and subterfuge pursued to evade the operation against it of usury statutes.

17. The usurious character of a transaction is determined as of the time of its inception, and if a contract is usurious in its inception, no subsequent transaction will cure it. Hence, when a usurious contract is renewed by the giving of a renewal or substituted contract, the usury follows into and becomes a part of the latter contract, making it subject to the defense of usury to the same extent as was the original obligation. Further, any compensation paid or to be paid for any extension or forbearance of a loan may not exceed the permissible statutory maximum.

Clarence S. Beck, Atty. Gen., Robert A. Nelson, Asst. Atty. Gen., for appellants.

Matthews, Kelley & Delehant, Omaha, Woods, Aitken & Aitken, Lincoln, for appellees.

Gross, Welch, Vinardi & Kaufmann, Omaha, amicus curiae.

Heard before SIMMONS, C. J., and CARTER, MESSMORE, YEAGER, CHAPPELL, WENKE and BOSLAUGH, JJ.

CHAPPELL, Justice.

Plaintiff, State of Nebraska ex rel. Clarence S. Beck, Attorney General, and the Department of Banking of the State of Nebraska, brought this action against defendants, Associates Discount Corporation, a foreign corporation, and Jack F. Kemnitz, its resident agent and branch manager. The parties will generally be designated as plaintiff of defendants, or by name as the occasion requires.

The basis of the action was the factually alleged unlawful operation of a loan business in Omaha by defendants without having procured a license, whereby defendants, by means of described devices and subterfuges, have exacted usurious interest from the borrowers.

In its amended and supplemental petition, hereinafter generally called petition, plaintiff prayed for the court to find and adjudge that defendants and each of them have been operating an installment loan business in Nebraska wrongfully and in violation of law; that defendants' method of doing business is a device and subterfuge, engaged in with the intent of evading the usury laws of this state; that temporary and permanent injunctions be granted; that the notes, mortgages, and other instruments of indebtedness taken by defendants be declared void and uncollectible and should be cancelled; that a receiver be appointed to administer the affairs of defendants' business under the order and direction of the court; and for general equitable relief.

Defendants filed a motion to strike a portion of paragraph XI, and all of paragraphs XVII, XVIII, XIX, XX, and XXI of plaintiff's petition, and, subject to prior ruling upon such motion, defendants separately demurred to plaintiff's petition upon the following identical grounds: '1. That the plaintiffs' amended and supplemental petition does not state facts sufficient to constitute a cause of action against this defendant.

'2. That the plaintiffs' amended and supplemental petition does not state facts sufficient to constitute a cause of action against this defendant in that the Installment Loan Act, Sections 45-114 to 45-158, both inclusive, Revised Statutes of Nebraska 1943, as amended, and particularly Sections 45-137 and 45-138 thereof are violative of Article III, Section 14 of the Nebraska Constitution and therefore void in that said Statutes attempt to amend and are in conflict with Section 45-105 which is a prior act and the new act (Sections 45-114 to 45-158 and Sections 45-137 and 45-138) made no mention of or reference to or repeal of said Section 45-105.

'3. That the plaintiffs' amended and supplemental petition does not state facts sufficient to constitute a cause of action against this defendant in that the Installment Loan Act, Sections 45-114 to 45-158 both inclusive and particularly Sections 45-137 and 45-138, Revised Statutes of Nebraska, 1943, as amended, are violative of Article III Section 18 of the Nebraska Constitution and therefore void in that said statutes were passed by the Legislature as local or special laws regulating the interest on money.

'4. That several causes of action are improperly joined in said amended and supplemental petition.

'5. That plaintiffs do not have the legal capacity to sue defendants in this action and attempt thereby to secure an adjudication of the validity of various contracts to which plaintiffs are not parties and in which plaintiffs have no right, title or interest.

'6. That there is a defect of parties plaintiff necessary and indispensable to the adjudication of contract rights demanded in plaintiffs' amended and supplemental petition.

'7. That there is a misjoinder of parties defendant.'

Thereafter the trial court sitting en banc sustained defendants' motions to strike in toto, and sustained paragraphs 1, 4, 5, 6, and 7, but overruled paragraphs 2 and 3 of defendants' demurrers. Thereupon, plaintiff elected to stand upon its petition, and judgment was rendered against plaintiff and in favor of defendants, and plaintiff's action was dismissed, with costs taxed to plaintiff. Plaintiff then perfected an appeal from the sustaining of defendants' motions to strike and their demurrers, and from the judgment rendered,...