State v. Ware

• Decision Date: 08 February 1916
• Citation: 79 Or. 367,154 P. 905
• Parties: STATE v. WARE.
• Court: Oregon Supreme Court

154 P. 905

79 Or. 367

STATE v. WARE.

Supreme Court of Oregon

February 8, 1916

In Banc.

Appeal from Circuit Court, Multnomah County; Henry E. McGinn, Judge.

E. E Ware was convicted of the statutory offense of engaging in the business of making loans at an interest greater than 10 per cent. without having first obtained a license from the state banking board, and he appeals. Affirmed.

The defendant was convicted of violating the provisions of chapter 278 of the Laws of 1913. The charging part of the indictment reads as follows:

"The said E. E. Ware, J. J. Wiesen, O. O. Grovier and J Richards, on the 14th day of July, A. D. 1914, in the county of Multnomah and state of Oregon, then and there being, did then and there unlawfully, knowingly and willfully engage in the business of making loans of money and of personal credit upon which the said defendants did then and there directly and indirectly charge and receive interest, discount and consideration greater than ten per cent. per annum without having first and theretofore obtained and procured license from the state banking board of the state of Oregon authorizing and permitting the said defendants to engage in the said business."

The defendant Ware was the only one arrested and tried. A demurrer to the indictment, for the reason that the facts therein stated do not constitute a crime, was overruled, and from the judgment of conviction the defendant Ware appeals.

Burnett and McBride, JJ., dissenting.

G. E Hamaker, of Portland, for appellant. Martin L. Pipes, of Portland (George A. Pipes, of Portland, on the brief), amicus curiæ. George Mowry, Deputy Dist. Atty., of Portland (Walter H. Evans, Dist. Atty., and John A. Collier, Deputy Dist Atty., both of Portland, and George M. Brown, Atty. Gen., on the brief), for the State.

BENSON J. (after stating the facts as above).

The assignments of error are numerous; the first, third, seventh, and ninth being chiefly directed to the contention that the act under which the prosecution is maintained is unconstitutional and void. This contention is first raised in the demurrer to the indictment. The statute in controversy contains, inter alia, the following clause:

"No license shall be granted to any such person, firm or voluntary association unless said person and the members of any such firm or voluntary association shall be bona fide residents of the state of Oregon, and no license shall be issued to any joint stock company, incorporated society, or corporation unless and until such company, society or corporation shall, in writing and in due form, to be

first approved by and filed with the state banking board, appoint an agent, resident in the state of Oregon, upon whom all judicial and other process of legal notice directed to such company, society or corporation may be served."

The question arises: Does this provision violate the spirit of article 4, § 2, of the Constitution of the United States wherein it is provided that:

"The citizens of each state shall be entitled to all privileges and immunities of citizens in the several states"

--or of Amend. 14, § 1, of the same document, wherein it declares that:

"No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States."

Usury has been looked upon with disfavor for ages, and it has been uniformly held that the state may either regulate or absolutely prohibit the taking of usurious interest. It follows that no citizen has an inherent or common right to exact the same. This being true, the state has ample power to regulate the taking of excessive interest and confine the privilege to those whose residence within its borders renders them subject to its process. State v. Catholic, 75 Or. 367, 147 P. 372; White v. Holman, 44 Or. 180, 74 P. 933, 1 Ann. Cas. 843; Sandys v. Williams, 46 Or. 327, 80 P. 642. It is a fact of common knowledge that in the larger cities and towns there are men whose business it is to prey upon the necessities of the improvident and the unfortunate by lending money at exorbitant rates of interest with the effect that in many instances the borrower becomes the bond slave of the lender, if, indeed, he possesses enough character to prevent his desperation from driving him into overt acts of crime. These lendings and borrowings are usually so small in amount that the banking institutions make no pretense of engaging in the business, and hence arises the duty of the state to protect the unfortunate victim of rapacity so far as it is practicable. It requires no argument to establish the truth that this is a proper exercise of the police power. The state owes a duty in this regard just as clearly as it does to protect the ignorant and the unwary from the machination of the confidence man or the extortion of the highwayman, and if the lender under such circumstances is a nonresident of the state he may work through devious methods to accomplish his purpose and laugh at the statutory efforts of law enforcement. We conclude that the statute under consideration is not subject to the objection suggested.

We next consider the question as to whether or not the act is unconstitutional as being discriminatory class legislation. Section 8 thereof reads as follows:

"That nothing contained in this act shall be held to apply to the legitimate business of state and national banks, licensed bankers, trust companies, savings banks, building and loan associations, or real estate brokers."

Speaking of a somewhat similar statute, the United States Supreme Court, speaking by Mr. Justice McKenna, says:

"This contention attacks section 6 of the statute which exempts from its provisions certain banks, banking institutions and loan companies. It is urged that the provision is discriminatory and therefore denies to plaintiff the equal protection of the laws. We have declared so often the wide range of discretion which the Legislature possesses in classifying the objects of its legislation that we may be excused from a citation of the cases. We shall only repeat that the classification need not be scientific nor logically appropriate, and if not palpably arbitrary and is uniform within the class, it is within such discretion. The legislation under review was directed at certain evils which had arisen, and the Legislature, considering them and from whence they arose, might have thought or discerned that they could not or would not arise from a greater freedom to the institutions mentioned than to individuals. This was the view that the Supreme Judicial Court took, and, we think, rightly took. The court said that the Legislature might have decided that the dangers which the statute was intended to prevent would not exist in any considerable degree in loans made by institutions which were under the supervision of bank commissioners, and 'believed rightly that the business done by them would not need regulation in the interest of employés or employers.' * * * But even if some degree of evil which the statute was intended to prevent could be ascribed to loans made by the exempted institutions, their exception would not make the law unconstitutional. Legislation may recognize degrees of evil without being arbitrary, unreasonable, or in conflict with the equal protection provision of the Fourteenth Amendment to the Constitution of the United States." Mutual Loan Co. v. Martell, 222 U.S. 225, 235, 32 S.Ct. 74, 75 (56 L.Ed. 175, Ann. Cas. 1913B, 529).

We regard this quotation from the highest court of our country as a wise and correct declaration of the true doctrine of interpretation.

We come then to a consideration of defendant's contention that the court...