Tennant v. Joerns

• Citation: 160 N.E. 160,329 Ill. 34
• Decision Date: 24 February 1928
• Docket Number: No. 17000.,17000.
• Parties: TENNANT v. JOERNS et al.
• Court: Supreme Court of Illinois

329 Ill. 34

160 N.E. 160

TENNANT

v.JOERNS et al.

No. 17000.

Supreme Court of Illinois.

Feb. 24, 1928.

Action by W. G. Tennant against Arnold Joerns and others. From a judgment for defendants, plaintiff appeals.

Reversed and remanded, with directions.

Appeal from Circuit Court, Cook County; Phillip L. Sullivan, Judge.

William McKinley and Paul E. Price, both of Chicago, for appellant.

James Edgar Brown, of Chicago, for appellees.

PER CURIAM.

Appellant, as plaintiff below, brought an action of assumpsit against appellees, as defendants, who were guarantors of certain promissory notes made by the Knickerbocker Manufacturing Company, a corporation. To the declaration appellees filed a plea of usury, alleging that the Knickerbocker Manufacturing Company on March 24, 1922, executed eleven notes, of $1,000 each, for a loan to the corporation of $10,000; that the eleven notes were due consecutively from one to eleven months after their date; and that appellees guaranteed their payment. The plea alleges that the eleventh note for $1,000 was given pursuant to a contract for usurious interest; that the maker and the guarantors of the notes had paid appellant $10,000, with legal interest thereon, as stipulated in the notes; that the note in excess of $10,000 was for usurious interest and was void. Appellant filed a demurrer to the plea of usury. The court overruled the demurrer and appellant elected to abide by his demurrer. The court thereupon rendered judgment in favor of defendants against plaintiff for costs. The court certified the validity of a statute was involved and granted an appeal to this court. In the order granting the appeal the court stated that plaintiff (appellant) asserted that paragraph 7 of section 6 of the General Corporation Act, authorizing a corporation to borrow money at such rate of interest as it may determine, without regard to the Usury Law, prohibits the corporation or its surety from availing itself of the defense of usury, and authorizes a corporation to bind itself to pay interest that may be agreed upon, and repeals pro tanto the Usury Law of this state; that defendants (appellees) disputed the validity of section 6 of the Corporation Act in so far as it attempted to repeal pro tanto the Usury Law of the state.

The Interest Act of this state as amended in 1891 and as it existed when this loan was made, permitted contracting for 7 per cent. interest. Smith's Stat. 1921, § 4, p. 1150. The notes sued on here were executed in 1922. Section 5 of the act provided that no person or corporation shall directly or indirectly accept to receive any greater sum for a loan, forbearance, or discount of money than as prescribed therein. Section 6 made the violation of the act a forfeiture of all interest contracted and the holder of the contract entitled only to recover the principal sum due.

In 1919 our entire Corporation Act was revised and a new act adopted in relation to corporations for pecuniary profit. The new act was entitled ‘The General Corporation Act.’ In the 1919 act, among the powers granted to corporations was the right ‘to borrow money at such rate of interest as the corporation may determine without regard to or restrictions under any usury law of this state and to mortgage or pledge its property, both real and personal, to secure the payment thereof.’ Smith's Stat. 1921, § 6, par. 7, p. 470. That paragraph is inconsistent with the provisions of the Interest Act of 1891. Appellant insists it was a repeal pro tanto of the Usury Law of the state. Appellees insist that it was invalid as such repeal; also that it contravenes section 13 of article 4 of the Constitution, which provides that:

‘No act hereafter passed shall embrace more than one subject, and that shall be expressed in the title. * * * No law shall be revived or amended by reference to its title only, but the law revived, or the section amended, shall be inserted at length in the new act.’

One question presented is whether paragraph 7 of section 6 of the Corporation Act, which section sets forth the powers of a corporation, authorizes the corporation to borrow money at such rate of interest as it may determine, without regard to the Usury Law of this state, and the constitutional question presented is whether, if that section is construed to authorize a corporation to contract for a greater rate of interest than 7 per cent., it violates section 13 of article 4 of the Constitution. Prior to July 1, 1919, corporations were authorized to ‘borrow money at legal rates of interest, and pledge their property, both real and personal,to secure the payment thereof’ (Hurd's Stat. 1917, c. 32, § 5, p. 700), and could by contract, under the provisions of the Interest Act, receive or pay interest not exceeding 7 per cent.

Upon the constitutional question raised, appellees seem to assert that paragraph 7 of section 6 of the Corporation Act is invalid as an amendment to the Usury Law because of the constitutional requirement that ‘no law shall be revived or amended by reference to its title only, but the law revived, or the section amended, shall be inserted at length in the new act,’ and People ex rel. v. Stevenson, 272 Ill. 325, 111 N. E. 1018;People v. Clark, 301 Ill. 428, 134 N. E. 95;People v. ex rel. Stuckart v. Knopf, 183 Ill. 410, 56 N. E. 155; and other cases, are cited in support of that contention. Appellees further contend paragraph 7 of section 6 contravenes the Constitution because the title to the Corporation Act does not embrace the subject of paragraph 7.

The Corporation Act of 1919 does not purport to be amendatory of any act, but is a new and independent act, entitled ‘The General Corporation Act.’ It empowers corporations, among other things, to borrow money at any rate of interest they may determine upon. Not purporting to be an amendment to any prior statute, but being a complete and independent act, paragraph 7 of section 6 is germane to the act. In Timm v. Harrison, 109 Ill. 593, the court said:

‘The repeal of a statute on a given subject, it is held, is properly connected with the subject-matter of a new statute on the same subject, and therefore a repealing section in the new statute is valid, notwithstanding the title is silent on that subject. [Citing cases.] We think the same may be said of an amendment by implication.’

In People v. McBride, 234 Ill. 146, 84 N. E. 865,122 Am. St. Rep. 82, the court said:

‘The requirement that an act shall embrace but one subject is not intended to hamper the Legislature or embarrass honest legislation, but it is intended to prevent incorporating in an act matters not related to the subject of legislation and of which the title gives no hint. An act may contain may provisions and details for the accomplishment of the legislative purpose, and if they legitimately tend to effectuate that object the act is not contrary to the constitutional provision. Town of Manchester v. People, 178 Ill. 285 ;Meul v. People, 198 Ill. 258 . The constitutional prohibition against more than one subject not being directed against the title but against the act itself, the question now being considered is to be determined by the body of the act, and there is in the act but one general subject.’

Again, in People ex rel. v. School Directors of Dist. No. 8, 267 Ill. 172, 107 N. E. 892, the court said:

‘If a statute can properly be held to be a complete act of the Legislature on the subject with which it deals, it will be deemed good and not subject to the operation of section 13 of article 4 of the Constitution, providing that no act shall be amended by reference to its title, only. People v. Knopf, 183 Ill. 410 . Whether an act is amendatory of a prior act or is an independent act must be determined, not by the title alone or by the question whether the provisions to be amended are existing laws, but by examination and comparison with prior laws. Hollingsworth v. Chicago & Carterville Coal Co., 243 Ill. 98 . Where a new act on a subject has no reference to any prior law and is complete in itself and entirely intelligible it will not contravene section 13 of article 4 of the Constitution.’

Also in Union Trust Co. v. Trumbull, 137 Ill. 146, 27 N. E. 24, this court says:

‘Undoubtedly the effect of this section is to repeal so much of section 122, supra, as is in conflict with it; but since this is only a repeal by implication, because both cannot at the same time be law upon the same subject, and the act embracing this section is perfect in itself, it is not in violation of the provision of the Constitution requiring the subject of the act to be expressed in its title. People v. Wright, 70 Ill. 388;Timm v. Harrison, 109 Ill. 597.’

The rate of interest which may be lawfully contracted for is entirely a matter of legislative control, and the penalty for contracting for a greater rate of interest than the law allowed at the time the contract sued on was made was forfeiture of all...