State ex rel. Ornstein v. Cary

• Citation: 105 N.W. 792,126 Wis. 135
• Parties: STATE EX REL. ORNSTEIN v. CARY.
• Decision Date: 14 November 1905
• Court: United States State Supreme Court of Wisconsin

126 Wis. 135

105 N.W. 792

STATE EX REL. ORNSTEIN

v.CARY.

Supreme Court of Wisconsin.

Nov. 14, 1905.

Error to Circuit Court, Milwaukee County; L. W. Halsey, Judge.

Habeas corpus proceedings by the state, on the relation of Sigmond Ornstein, against W. J. Cary. There was an order remanding relator to custody, and he brings error. Affirmed.

On the 8th day of June, 1905, plaintiff in error loaned one William Brouch and wife $100, payable in 30 days. Brouch and his wife gave their promissory note for $103, and to secure its payment executed a chattel mortgage upon their household furniture, a horse, and two wagons. On June 19th, 1905, they paid the note, and received a receipt for $100 principal, $1 interest, and $2 for commissions and examinations. On June 30, 1905, on the complaint of Brouch under chapter 278, p. 419, of the Laws of Wisconsin for the Year 1905, plaintiff in error was arrested charged with taking usurious interest on a chattel mortgage loan. While detained by the sheriff awaiting trial, he petitioned the circuit court for Milwaukee county for a writ of habeas corpus, alleging that his arrest and detention were unlawful, in that the law under which he was deprived of his liberty was unconstitutional. The writ was issued, the prisoner produced, and the sheriff in his return to the writ pleaded the note, the chattel mortgage, the complaint, and the warrant, and alleged justification for the arrest upon these proceedings under chapter 278, p. 419, Laws 1905. The plaintiff in error admitted the facts, but averred that the arrest and detention were unlawful because of the unconstitutionality of the law. Upon the hearing, the court upheld the constitutionality of the law, and remanded the plaintiff in error to the custody of the sheriff. Plaintiff in error sued out this writ of error to the order of the circuit court remanding him to the custody of the sheriff.E. M. McVicker, for plaintiff in error.

L. M. Sturdevant, Atty. Gen., and Francis E. McGovern, for defendant in error.

SIEBECKER, J. (after stating the facts).

The offense with which plaintiff in error is charged is created and defined by section 1691, Rev. St. 1898 as amended by chapter 278, p. 419, Laws 1905. The complaint charges that he violated the provisions of this law, in that, he demanded and received more than 10 per centum per annum for the forbearance or use of the sum of money actually loaned and secured by chattel mortgage, and that, he charged and received for commissions in the transacting of the business connected with such loan more than an amount equal to 14 per centum. The facts alleged are not in controversy on this appeal.

It is claimed that the proceedings are void, upon the ground that the provisions of the law involved are an infringement of the rights of personal freedom, and the liberty of contract guarantied by the provisions of the federal and state Constitutions. The right of the Legislature to prescribe a maximum rate of interest for the forbearance, use, or loan of money, and to attach penalties for the violation of such provisions, has been recognized and exercised by governments from the time the relation of borrower and lender developed in the affairs of life. Whatever policy may have been favored at different times as to such legislation, the fact is clear that this power has been generally exercised whenever the exigencies of public justice have demanded that a limit be set to the amount to be demanded and received for the forbearance, use, or loan of money, goods, or things in action. Adjudications evidencing the enforcement of such laws in the different states are so common and numerous that citation of them is entirely unnecessary. This power has been exercised for the protection of the borrower, upon the ground “that the lender and the borrower * * * do not occupy the same relations of equality, that parties do in contracting with each other in regard to the loan and sale of other kinds of property, and that the borrower's necessities deprive him of freedom in contracting, and place him at the mercy of the lender.” Prentice, Police Power, p. 43. It is upon this theory that the state is deemed to have enacted usury laws in the exercise of the police power in protection of the public interest, and for the promotion of the general welfare.

Legislation of this character has been on the statute books of this state from its early days, and has repeatedly been enforced in judicial proceedings, some of which have reached this court. Of these we may mention Lee v. Peckham, 17 Wis. 383,McArthur v. Schenck, 31 Wis. 673, 11 Am. Rep. 643,Cooper v. Tappan, 9 Wis. 361, and First National Bank of Milwaukee v. Plankinton, 27 Wis. 177, 9 Am. Rep. 453. The exercise of this legislative power being approved and sanctioned, it necessarily follows that the Legislature is vested with the power to legislate against the injurious consequences that inhere in the conduct of such business, and possesses discretion to determine what means are necessary to the accomplishment of this end, and its action is valid, unless it has exceeded its authority by imposing such arbitrary restrictions upon the individual and his business or occupation as are palpably foreign to the legitimate purposes sought to be accomplished by the legislation. Mugler v. Kansas, 123 U. S. 623, 8 Sup. Ct. 273, 31 L. Ed. 205;Lawton v. Steele, 152 U. S. 133, 14 Sup. Ct. 499, 38 L. Ed. 385;State ex rel. Zillmer v. Kreutzberg, 114 Wis. 530, 90 N. W. 1098, 58 L. R. A. 748, 91 Am. St. Rep. 934. The provisions...