Vermont Loan & Trust Co. v. Hoffman

• Citation: 49 P. 314,5 Idaho 376
• Parties: VERMONT LOAN AND TRUST COMPANY v. HOFFMAN
• Decision Date: 10 June 1897
• Court: United States State Supreme Court of Idaho

49 P. 314

5 Idaho 376

VERMONT LOAN AND TRUST COMPANY v. HOFFMAN

Supreme Court of Idaho

June 10, 1897

ACT IN VIOLATION OF STATUTE-NOT VOID WHEN FOR PROTECTION OF PUBLIC REVENUE.-To the general rule that an act in violation of a statute forbidding it is void, there is an exception when the statute is for the protection of the public revenue, does not make the act itself void, and the act is not malum in se nor detrimental to good morals.

BUSINESS OF LOANING MONEY-MUST PAY A LICENSE TAX.-The statutes of Idaho require all persons engaged in the business of loaning money at interest, to pay a license tax and obtain a license before commencing such business, makes it a misdemeanor to fail to obtain such license, and provides that suit may be instituted to recover the license tax with stated damages. Plaintiff engaged in such business without obtaining the required license, loaned money at interest to H. et ux., and took notes secured by mortgage. Held, that plaintiff could recover, the act of loaning money being neither malum in se nor malum prohibitum.

CONTRACTS-USURY-COMPOUND INTEREST.-Coupon notes given for the interest of the principal debt which, by their terms, draw interest after maturity are in controvention of section 1266 of the Revised Statutes, forbidding compound interest, and are usurious, and in such case no recovery can be had for any interest or cost.

(Syllabus by the court.)

APPEAL from District Court, Nez Perces County.

Reversed and remanded.

James E. Babb, for Appellants.

This is an appeal from the judgment and decree of foreclosure and sale of a real estate mortgage, entered in the above-entitled action. Notice of appeal was filed and served only by defendants, Bell Hoffman and Ross Hoffman, her husband. The complaint in the action alleged, so far as material, is "That plaintiff is now, and was at all the dates hereinafter named, a corporation duly organized and existing under and by virtue of the laws of the state of North Dakota and doing business in the state of Idaho under and in accordance with the laws of the state of Idaho," Then the execution of certain notes by Ross Hoffman and Bell Hoffman was alleged, and it was averred that "each of said principal notes and the interest coupons attached to each of said principal notes stipulated that they should bear interest after maturity at the rate of twelve per cent per annum." It then alleges the execution by said Ross Hoffman and Bell Hoffman, then husband and wife, of a mortgage to secure said notes and interest upon certain real estate in Nez Perces county, Idaho "of which they were then the owners and in possession." It then alleges a default upon the notes and mortgages; that the other defendants have, or claim to have, some interest, etc., in the premises, but that their interests, etc., are subordinate, etc., to the lien of plaintiff. The prayer was for judgment and decree of foreclosure and sale, and for a personal judgment for deficiency if any, against defendants Ross Hoffman and Bell Hoffman. The complaint contained no allegation that plaintiff had a known place of business in the state of Idaho or that it had an authorized agent in the state upon which process might be served, as required by section 10 of article 11 of the constitution of Idaho and no allegation showing that it had obtained a license to engage in the business of loaning money at interest in Idaho and no allegation that the debt secured was incurred for the use and benefit of the separate property of Bell Hoffman, or for her own use and benefit, as required by Dernham v Rowley, 4 Idaho 753, 44 P. 643. Defendants Ross Hoffman and Bell Hoffman filed an answer. To that answer plaintiff filed a general demurrer. The court sustained the demurrer to the answer, and Ross Hoffman and Bell Hoffman refused to plead further and their default was entered. Decree and foreclosure and sale was entered in the usual form, and contained, among other provisions, the following: "The sheriff specify the amount of such deficiency and balance due to the plaintiff in his return of said sale, and that on the coming in and filing of said return, the clerk of this court docket a judgment for such balance against the defendants, Ross Hoffman and Bell Hoffman, his wife, and that the defendants, Ross Hoffman and Bell Hoffman, pay to the plaintiff the amount of such deficiency and judgment with interest thereon at the rate of ten per cent per annum from the date of said last-mentioned return and judgment, and that the plaintiff have execution therefor against the property of the defendants, Ross Hoffman and Bell Hoffman, or either of them." Thereafter an order of sale issued on said decree, and a sale was had and return thereon made and filed showing a deficiency of $ 279.97. Sections 1636, 1644 and 6983 of the Revised Statutes of Idaho having prohibited engagement in the business of loaning money without a license and made it criminal so to do, plaintiff cannot recover on any business done without a license in violation of law. (Stevenson v. Ewing, 87 Tenn. 46, 9 S.W. 230; Cooley on Taxation, 2d ed., 572.) It is familiar law, both in England and America, that a contract prohibited either expressly or impliedly by statute is illegal, and cannot be enforced. (Perkins v. Watson, 2 Baxt. 187; Ohio Life etc. Ins. Co. v. Insurance Co., 11 Humph. 11, 53 Am. Dec. 742; Holt v. Green, 73 Pa. St. 198, 13 Am. Rep. 737; Dillon v. Allen, 46 Iowa 299; 26 Am. Rep. 145; Woods v. Armstrong, 54 Ala. 150, 25 Am. Rep. 671.) The license statute in question is not repealed by section 6 of article 7 of the constitution of Idaho but is expressly affirmed and continued in force by the provision of section 2, article 7, authorizing the "legislature" to "impose a license tax" upon persons and corporations. (State v. Camp Sing, 18 Mont. 128, 56 Am. St. Rep. 551, 44 P. 516; Yount v. Denning, 52 Kan. 629, 35 P. 208; San Jose v. San Jose etc. R. R. Co., 53 Cal. 478; 25 Am. & Eng. Ency. of Law, 14, 15.) That the deficiency decree against Bell Hoffman is error, see Dernham v. Rowley, 4 Idaho 753, 44 P. 643. That plaintiff should not have had a decree for more than the principal sum less all payments of principal and interest made and without interest or costs, see sections 1265 and 1266 of the Revised Statutes of Idaho. The statutes and constitutional provisions relied upon do not, as applied to this case, violate the interstate commerce clause of the federal constitution. (Western Paper Bag Co. v. Johnson (Tex. Civ. App., Dec. 23, 1896), 38 S.W. 364.)

A. E. Gallagher and Forney, Smith & Moore, for Respondent.

Appellants quote at length in their brief from several authorities for the purpose of showing that plaintiff cannot recover because it has not obtained the license as prescribed by sections 1636 and 1644 of the Idaho code. An examination of the authorities cited by appellants, and of the statutes upon which the decisions are based, disclose the fact that every one of these cases are clearly distinguishable from the present case, and that there is a wide and plain difference in the wording and object of the statutes on which those decisions are based and the statutes of Idaho. The statute of Idaho is clearly a revenue statute, being a part of the revenue law of the state, and was enacted solely for the purpose of raising revenue, and does not, and its language will not, bear of an interpretation which in any way tends to prohibit doing the business of loaning money at interest without first having obtained the license. Section 1644 divides the amount to be paid for the license into five classes, depending upon the amount of business done. The amount of business done determines the amount of license money required to be paid clearly showing that the purpose of the statute is to raise a revenue in proportion to the amount of business done, just as a person is taxed in proportion to his property, and not to make the business of loaning money at interest unlawful unless the license is first obtained. This conclusion is strengthened by the further fact that a license is good only for three months, when a new license must be obtained. Suppose that a license was obtained under class 5 when it should have been obtained under class 1; the party obtaining the license would not have complied with section 1644, because he only paid thirty dollars, when subdivision 1 of that section required him to pay $ 100. If appellants' theory is correct, all acts done under this license are void because he did not pay all the license money the statute required, as a partial compliance with a statutory requirement is no compliance at all. Yet section 1638 recognizes the validity of the acts by the payment of the thirty dollars, and prescribes as the penalty a double payment for a license for the succeeding quarter. That which can be accomplished for a money consideration is not a privilege. Hence the quotations from Cooley on Taxation and Dillon on Municipal Corporations are not in point. We will now take up and cite, without quoting from them at length cases which, after a careful examination, we think clearly applicable to the case at bar, and which distinguish it from cases of the classes cited by appellants. The court will notice that the following cases are under statutes similar in terms and having a similar object in view to the Idaho statute. The court will also observe that many of those cases are from the same state as some of those cited by appellants, and the courts do not cite or attempt to distinguish the cases, thereby clearly showing that the court did not consider the cases at all similar in principle. It will also be noticed that in some of the states from which cases are cited by appellants there is no penalty to the person attached to the...