Vermont Loan & Trust Co. v. Whithed

• Decision Date: 14 July 1891
• Citation: 49 N.W. 318,2 N.D. 82
• Court: North Dakota Supreme Court

49 N.W. 318

2 N.D. 82

VERMONT LOAN & TRUST COMPANY, Plaintiff and Respondent, v. H. L. WHITHED, Defendant and Appellant

Supreme Court of North Dakota

July 14, 1891

APPEAL from district court, Grand Forks county; Hon. CHARLES F TEMPLETON, Judge.

Action on promissory note for the purpose of testing the constitutionality of chapter 184, Laws of 1890, known as the "usury law." Judgment for plaintiff, holding the statute void under the state constitution. Defendant appeals. Reversed and district court directed to dismiss the action.

Judgment reversed and case dismissed.

H. L Whithed (Bangs & Fisk, of counsel), for appellant.

Burke Corbett (Cy Wellington and Cochrane & Feetham, of counsel), for respondent.

H. L Whithed for appellant:

The contract in this case failed to express the exact amount of money to be received by the borrower. Having failed to do this, the section is indivisable, and it is made by the statute and so declared to be usury, which would make the contract nugatory and void, and respondent would be entitled to recover nothing. McGee v. Trotter, 1 Heisk 453. The authorities are numerous to the effect that usury, under whatever guise it will be cloaked, will be detected and ferreted out by the courts. It is also equally well recognized that a principal, as in this case, cannot, by way of a fee or compensation, take to exceed the rate of interest allowed by law. If § 11 of the act is unconstitutional it leaves the balance of the act operative and valid. Mathias v. Cromer, 40 N.W. 926. An unconstitutional provision or section in a statute will not affect the other provisions of the law, unless they are essentially and inseparably connected in substance. Cooley's Const. Lim 177; Com. v. Hitchings, 5 Gray 485; People v. Briggs, 50 N.Y. 553. If the general provisions of the law are unobjectionable, the whole act will not be declared nugatory in consequence of some objectionable provisions. Smith v. Village of Adrian, 1 Mich. 495; Ames v. Booming Co., 6 Md. 266; People v. Haug, 37 N.W. 21; Woolen v. State, 5 So. Rep. 39. The taking of premiums by building and loan associations is generally considered unobjectionable. Association v. Robinson, 69 Ala. 413; Winsted, etc., v. Ford, 27 Conn. 282; Id v. Rice, 27 Conn. 293; McLaughlin v. Association, 62 Ind. 264; Hawkeye, etc., v. Blackburn, 48 Iowa 385; Merrill v. McIntyre, 13 Gray 157; Shannon v. Dunn, 43 N.H. 194; Hoboken v. Martin, 13 N.J.Eq. 427. Where the constitution provides that the legislature "shall pass no special law for any cause for which provision can be made by a general law" the Legislature is the sole judge as to whether provision by a general law is possible. State v. County Court, 50 Mo. 317, 11 Am. Rep. 415; State v. Hitchcock, 81 Am. Dec. 503.

Bangs & Fisk of counsel, for appellant:

Section 2 of article 1 of the state constitution requiring all laws of a general nature to have a uniform operation must be construed to mean that all laws of a general nature must operate equally upon all persons who are brought within the relations and circumstances provided for, though it may not affect every citizen of the state. 3 Am. & Eng. Ency. of Law, 697; McAunich v. Railroad Co., 20 Iowa 338; Railroad Co. v. Iowa, 94 U.S. 163; Cordova v. State, 6 Tex.App. 207; Sutherland on Stat. Con., § 125 and cases cited; Bumsted v. Govem, 47 N. J. Law 368; Id, 48 N. J. Law 612; State vs. Mining Co., 16 Nev. 432; Corwin v. Ward, 35 Cal. 198; Jackson v. Shawl, 29 Cal. 267; Merritt v. Boom Co., 25 N.W. 403; Ex Parte Smith, 38 Cal. 702; State v. Barker, 30 N.W. 267; People v. Henshaw, 18 P. 413. The word "operation" as used in said section refers to the practical working and effect of the law. Geebrick v. State, 5 Iowa 491. If a law acts equally and uniformly upon all parties upon whom it acts at all, it is not repugnant to the above constitutional provision. Corwin v. Ward, 35 Cal. 198. A law is general and uniform in its operation which operates equally upon all the subjects within the class of subjects for which it is adopted. Nichols v. Walter, 33 N.W. 800; Sutherland on Stat. Con., § 124. A general law is one which refers to persons and things as a class. Kilgore v. Magee, 85 Pa.St. 411; Wheeler v. Philadelphia, 77 Pa.St. 349; Walker v. Potter, 10 Ohio St. 85; McAunich v. Railroad Co., 20 Iowa 343; Barbier v. Connolly, 5 S.Ct. 357; Minn. Loan Co. v. Beebe, 41 N.W. 232. The law in question is not a special law. Holmes v. Smythe; 100 Ill. 413; Freeman v. Association, 114 Ill. 182; Ex Parte Lichenstein, 7 P. 728; Winget v. Association, 21 N.E. 12; Chicago, etc., v. Iowa, 94 U.S. 155; State v. Berker, 30 N.W. 373; People v. Meyer, 3 West. 538. Special laws are those made for individual cases, or for less than a class requiring laws appropriate to its peculiar condition and circumstances. State v. Wilcox, 45 Mo. 458. The true practical limitation of the legislative power to classify is that the classification shall be upon some reason suggested by necessity, by such a difference in the situation and circumstances of the subjects placed in different classes as suggest the necessity or propriety of different legislation with respect to them. Cobb v. Bard, 42 N.W. 396; State v. Spaud, 34 N.W. 164; Sutherland on Stat. Con., § 127 and cases cited; Cooley Const. Lim. 481 et seq. A classification may be sustained where the differences are not extreme, but exist. The test would not then be judicial, depending on whether the law was special, but legislative, whether wise or not. Wheeler v. Philadelphia, 77 Pa.St. 338; Kilgore v. Magee, 85 Id 401; Rutgus v. New Brunswick, 42 N. J. Law 51, 407. Every intendment is to be made in favor of the constitutionality of the law. Kerrigan v. Force, 68 N.Y. 381; State v. Nelson County, 1 N.D. 88; Allen v. Pioneer Press Co., 41 N.W. 936.

Burke Corbett for respondent:

The principle of permitting the lender of money to exact a bonus or commission from the borrower is amply sustained by the courts. Van Tassell v. Wood, 12 Hun 388; Dayton v. Moore, 30 N.J.Eq. 543; Morton v. Thurber, 85 N.Y. 550; Atlanta, etc., Mining Co. v. Gwyer, 48 Ga 11; Eaton v. Alger, 2 Ab. Pr. 5; Eldridge v. Reed, 2 Sweeney, 155; Cockle v. Flack, 93 U.S. 344; Trother v. Curtis, 19 Johns. 160; Thurston v. Corne, 38 N.Y. 281; Hall v. Daggett, 6 Cow, 513; Harger v. McCullough, 2 Denio 119. By § 11 of said act "none of the provisions of this act shall apply to any building and loan association incorporated under the provisions of any law of this State." Section 11 of article 1 of the State constitution provides that "all laws of a general nature shall have a uniform operation." A law is not general within the meaning of the constitution simply because it bears equally upon all persons to whom it is applicable. A general law must be as broad as its object. Ex parte Westerfield, 55 Calf. 550. A statute which selects particular individuals from a general class and subjects them to particular rules, from which others in the same class are exempt, is a special law. State v. Hermann, 75 Mo. 340. Special legislation being prohibited by the constitution, courts will not sustain statutes of which the form alone is general but whose operation and effect are special. State v. Judges, 21 Ohio St. 11. By the exemption of building and loan associations from this act it gives them the right to make their contracts in any manner they choose, and seeks to take the like privilege from all other persons and classes. It is equivalent to a special statute, and hence unconstitutional. Gordon v. Winchester, 12 Bush. 110, 23 Am. Rep. 713. Subd. 13 of article 2 of § 69 declares that the legislature shall not pass special laws regulating the rate of interest on money, yet under this act building and loan associations, and they alone of all persons and corporations, are exempt from the provisions of the statute. They would be privileged to take any rate of interest they could procure and by any device they should resort to. This they cannot do, and the law will detect and prevent the taking of usury under whatever guise it may be cloaked. Philadelphia, etc., v. McKnight, 35 Pa.St. 470; Parker v. Fulton, 42 Ga. 251; Await v. Eutaw, 34 Md. 435; Bank v. Newman, 50 Md. 62; Patterson v. Albany, etc., 63 Ga. 373. By declaring § 11 of the act in question alone unconstitutional, and holding the balance of the act good, the court would assume the functions of a legislative body by enacting a law applying to all persons, building and loan associations alike with all other persons, but such was not the intent of the legislature. The vicious part of an act must be distinct and separable, and when stricken out enough must remain to be a complete act and sufficient to accomplish the object of the law as passed, in accord with the intent of the legislature. Meshmeier v. State, 11 Ind. 485; Burkholtz v. State, 16 Lea. 71; Bittle v. Stuart, 34 Ark. 224; Allen v. Louisiana, 103 U.S. 80; People v. Porter, 90 N.Y. 68. It may be laid down generally as a sound proposition that one part of a statute cannot be declared void and leave any other part in force, unless the statute is so composite, consisting of such separable parts that when the void part is eliminated another part remains, capable by its own terms of being carried into effect, consistent with the intent of the legislature. People v. Cooper, 83 Ill. 585; Ex Parte Towles, 48 Tex. 413; State v. Clinton, 28 La.Ann. 201; Ex Parte Wells, 21 Fla. 280; Hinze v. People, 92 Ill. 406; Lombard v. Antioch College, 60 Wis. 459; Sparrow v. Commissioner, 56 Mich. 567; People v. Luby, 56 Mich. 551. When the different provisions of an act look to one object and its incidents, and are so connected with each other that if its essential provisions are repugnant to the constitution, the...