{ "id": 1660105, "name": "Winston v. Personal Finance Company of Pine Bluff, Inc.", "name_abbreviation": "Winston v. Personal Finance Co. of Pine Bluff", "decision_date": "1952-05-19", "docket_number": "4-9760", "first_page": "580", "last_page": "589", "citations": [ { "type": "official", "cite": "220 Ark. 580" }, { "type": "parallel", "cite": "249 S.W.2d 315" } ], "court": { "name_abbreviation": "Ark.", "id": 8808, "name": "Arkansas Supreme Court" }, "jurisdiction": { "id": 34, "name_long": "Arkansas", "name": "Ark." }, "cites_to": [ { "cite": "143 A. L. R. 1323", "category": "reporters:specialty", "reporter": "A.L.R.", "opinion_index": 0 }, { "cite": "105 A. L. R. 795", "category": "reporters:specialty", "reporter": "A.L.R.", "opinion_index": 0 }, { "cite": "94 A. L. R. 669", "category": "reporters:specialty", "reporter": "A.L.R.", "opinion_index": 0 }, { "cite": "69 A. L. R. 581", "category": "reporters:specialty", "reporter": "A.L.R.", "opinion_index": 0 }, { "cite": "63 A. L. R. 823", "category": "reporters:specialty", "reporter": "A.L.R.", "opinion_index": 0 }, { "cite": "53 A. L. R. 743", "category": "reporters:specialty", "reporter": "A.L.R.", "opinion_index": 0 }, { "cite": "21 A. L. R. 797", "category": "reporters:specialty", "reporter": "A.L.R.", "opinion_index": 0 }, { "cite": "74 Pac. 2d 252", "category": "reporters:state_regional", "reporter": "P.2d", "opinion_index": 0 }, { "cite": "45 S. W. 2d 528", "category": "reporters:state_regional", "reporter": "S.W.2d", "opinion_index": 0 }, { "cite": "163 Tenn. 641", "category": "reporters:state", "reporter": "Tenn.", "case_ids": [ 8532649 ], "opinion_index": 0, "case_paths": [ "/tenn/163/0641-01" ] }, { "cite": "109 S. W. 2d 1166", "category": "reporters:state_regional", "reporter": "S.W.2d", "opinion_index": 0 }, { "cite": "172 Tenn. 69", "category": "reporters:state", "reporter": "Tenn.", "case_ids": [ 8532931 ], "opinion_index": 0, "case_paths": [ "/tenn/172/0069-01" ] }, { "cite": "94 A. L. R. 664", "category": "reporters:specialty", "reporter": "A.L.R.", "opinion_index": 0 }, { "cite": "73 S. W. 2d 694", "category": "reporters:state_regional", "reporter": "S.W.2d", "opinion_index": 0 }, { "cite": "168 Tenn. 36", "category": "reporters:state", "reporter": "Tenn.", "case_ids": [ 8532647 ], "opinion_index": 0, "case_paths": [ "/tenn/168/0036-01" ] }, { "cite": "11 Pac. 2d 857", "category": "reporters:state_regional", "reporter": "P.2d", "opinion_index": 0 }, { "cite": "215 Cal. 506", "category": "reporters:state", "reporter": "Cal.", "case_ids": [ 2237824 ], "opinion_index": 0, "case_paths": [ "/cal/215/0506-01" ] }, { "cite": "102 Pac. 2d 321", "category": "reporters:state_regional", "reporter": "P.2d", "opinion_index": 0 }, { "cite": "15 Cal. 2d 425", "category": "reporters:state", "reporter": "Cal. 2d", "case_ids": [ 2226836 ], "opinion_index": 0, "case_paths": [ "/cal-2d/15/0425-01" ] }, { "cite": "249 S. W. 2d 307", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 1660191 ], "opinion_index": 0, "case_paths": [ "/ark/220/0565-01" ] }, { "cite": "72 S. W. 2d 765", "category": "reporters:state_regional", "reporter": "S.W.2d", "opinion_index": 0 }, { "cite": "189 Ark. 411", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1425471 ], "opinion_index": 0, "case_paths": [ "/ark/189/0411-01" ] }, { "cite": "102 S. W. 697", "category": "reporters:state_regional", "reporter": "S.W.", "opinion_index": 0 }, { "cite": "83 Ark. 31", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1527126 ], "opinion_index": 0, "case_paths": [ "/ark/83/0031-01" ] }, { "cite": "50 S. W. 1002", "category": "reporters:state_regional", "reporter": "S.W.", "opinion_index": 0 }, { "cite": "66 Ark. 387", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1909827 ], "opinion_index": 0, "case_paths": [ "/ark/66/0387-01" ] }, { "cite": "35 S. W. 1107", "category": "reporters:state_regional", "reporter": "S.W.", "opinion_index": 0 }, { "cite": "62 Ark. 431", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1905682 ], "opinion_index": 0, "case_paths": [ "/ark/62/0431-01" ] }, { "cite": "205 Ark. 780", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1488307 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/ark/205/0780-01" ] }, { "cite": "61 S. W. 2d 436", "category": "reporters:state_regional", "reporter": "S.W.2d", "opinion_index": 0 }, { "cite": "187 Ark. 619", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1432007 ], "opinion_index": 0, "case_paths": [ "/ark/187/0619-01" ] }, { "cite": "91 S. W. 754", "category": "reporters:state_regional", "reporter": "S.W.", "opinion_index": 0 }, { "cite": "77 Ark. 383", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1499092 ], "opinion_index": 0, "case_paths": [ "/ark/77/0383-01" ] }, { "cite": "41 Ark. 331", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1896176 ], "opinion_index": 0, "case_paths": [ "/ark/41/0331-01" ] }, { "cite": "51 S. W. 460", "category": "reporters:state_regional", "reporter": "S.W.", "opinion_index": 0 }, { "cite": "66 Ark. 460", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1909722 ], "opinion_index": 0, "case_paths": [ "/ark/66/0460-01" ] }, { "cite": "218 Ark. 966", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1612003 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/ark/218/0966-01" ] }, { "cite": "12 S. W. 2d 890", "category": "reporters:state_regional", "reporter": "S.W.2d", "opinion_index": 0 }, { "cite": "178 Ark. 921", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1397158 ], "opinion_index": 0, "case_paths": [ "/ark/178/0921-01" ] }, { "cite": "284 S. W. 776", "category": "reporters:state_regional", "reporter": "S.W.", "opinion_index": 0 }, { "cite": "171 Ark. 529", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1369584 ], "opinion_index": 0, "case_paths": [ "/ark/171/0529-01" ] }, { "cite": "29 L. R. A. 761", "category": "reporters:federal", "reporter": "L.R.A.", "opinion_index": 0 }, { "cite": "30 S. W. 35", "category": "reporters:state_regional", "reporter": "S.W.", "opinion_index": 0 }, { "cite": "60 Ark. 288", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1903753 ], "opinion_index": 0, "case_paths": [ "/ark/60/0288-01" ] }, { "cite": "4 L. R. A. 462", "category": "reporters:federal", "reporter": "L.R.A.", "opinion_index": 0 }, { "cite": "11 S. W. 878", "category": "reporters:state_regional", "reporter": "S.W.", "opinion_index": 0 }, { "cite": "51 Ark. 534", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 8724558 ], "opinion_index": 0, "case_paths": [ "/ark/51/0534-01" ] } ], "analysis": { "cardinality": 777, "char_count": 13062, "ocr_confidence": 0.535, "pagerank": { "raw": 5.652395796494134e-07, "percentile": 0.9488524234424478 }, "sha256": "eea5cf01379edf8033bb646e427e94e5b6d698ecd46c7a3e9d3070b589d57410", "simhash": "1:d9e5dbec89ccdaf8", "word_count": 2345 }, "last_updated": "2023-07-14T17:18:21.188385+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Mr. Justice George Bose Smith not participating." ], "parties": [], "opinions": [ { "text": "agent on his trip to inspect the property. Even though the opinion did not discuss this item of $7.50, the detailing of the matter in the statement of facts, and the failure to discuss it in the opinion, constitutes approval by inference of the item charged. In Lytile v. Matthews,\nCash Received .-.\u2014 -.$95.04\ndue $9.00 per month . $108.00 Non-Interest Bearing' Note\nsupra, the opinion recites that $37.50 was charged against the borrower as the fee for having the lender\u2019s agent inspect the property. Thus these two cases seem to sanction the legality of the lender charging the borrower for the expenses of the lender\u2019s agent in inspecting the property; and we are, therefore, allowing the $3.30 expense for such item in this case. But a caveat is hereby given that in litigation concerning loans made subsequent to the effective date of this opinion, this court will feel free to consider anew this question of travel expenses and inspection fees which the lender may charge the borrower and in which the charged items go to pay the expenses of the agents or employees of the lender. The question will be reconsidered in the light of the Constitutional inhibition against usury.\nNow, we revert to the $9.66 charged for interest and service charges, as previously mentioned. The lender sought to charge the borrower for \u201c(b) Paid Retail Credit Bureau for credit report, $.50\u201d and \u201c (c) For services of the manager and other employees of Personal in \u2018 investigation, appraisal and listing household furniture, \u2019 and preparing note and mortgage, $3.76.\u201d We will refer to these as charge items \u201cb\u201d and \u201cc\u201d. The payment for the credit report was something that Personal did for its own benefit, and in no sense for the benefit of Winston. The employees who rendered the services charged in item \u201cc\u201d were each on a salary, so that whatever Personal charged Winston was only a part of Personal\u2019s overhead expense in doing business. So, these charges \u201cb\u201d and \u201cc\u201d were, in reality, nothing more or less than interest charges, because interest, as stated in Bouvier\u2019s Law Dictionary is \u201cThe compensation which is paid by the borrower of money to the lender for its use, and, generally, by a debtor to his creditor in recompense for his detention of the debt.\u201d\nAll of the $9.66 that Personal charged in this case was, in reality, compensation demanded by Personal for its own use, and agreed to by Winston, in order that Winston might obtain the use of $95.04 of Personal\u2019s money. The items \u201cb\u201d and \u201cc\u201d were the ordinary incidental expenses incurred by Personal in the course of its business. They were not items paid by Personal to a third person for the benefit of Winston. They are not like the cost of (1) an abstract paid to a third person, or (2) a title opinion paid a lawyer, or (3) recording fees paid an official, or (4) insurance premiums paid a third party. These four numbered items just mentioned may be legal and valid charges when they are paid to a third party. We have upheld such fees in a number of eases, but the facts in each of those cases were a most important those in the case at bar; because here, the fees, or \u201cservice charges\u201d, were made by Personal to cover its own overhead costs and therefore were, in all essentials, interest on the money loaned. When the \u201cservice charges\u201d in the case at bar are put in the interest column, where they justly belong, then there is no way for Personal to avoid the resulting conclusion that the loan was usurious.\nPersonal seeks to make applicable here the \u201cdiscount cases\u201d, such as Vahlberg v. Keaton, 51 Ark. 534, 11 S. W. 878, 4 L. R. A. 462, and Bank of Newport v. Cook, 60 Ark. 288, 30 S. W. 35, 29 L. R. A. 761. But these cases give Personal no real consolation, because, even if applicable, they would not reduce the interest to less than 10%. In Rose v. Hall, 171 Ark. 529, 284 S. W. 776, we held that when the monthly payments exceeded the interest due to such payment, then the excess of such monthly payment must be applied to the principal, in accordance with the Statute (now \u00a7 68-606 Ark. Stats.). In applying that holding to the facts in the case at bar, it is apparent that the so-called \u201cdiscount cases\u201d, supra, and the Statute (now \u00a7 68-604 Ark. Stats.), are of no avail to Personal, because the first payment on the loan in this case was due one month after the loan was made, and that payment so contracted to be made exceeded the interest that would be due for one month from the date of the note. So the \u201cdiscount cases\u201d could only mean that the interest could be discounted to the date of the first monthly payment. Furthermore, there was no stock subscription or investment certificate contracted to be purchased by Winston in the case at bar, as was the situation in Simpson v. Smith Savings Society, 178 Ark. 921, 12 S. W. 2d 890. But even such investment certificates or stock subscriptions cannot be used as a cloak of usury. See Commercial Credit Plan, Inc. v. Chandler, 218 Ark. 966, 239 S. W. 2d 1009.\nWith the items \u201c b \u201d and \u201c c \u201d (that is, the retail credit report, and time and services for closing the loan) placed in the interest column, it is clear that Personal has contracted for usury in the case at bar, and has brought itself within the Constitutional prohibition, and must suffer the consequences of its own acts. In Sparks v. Robinson, 66 Ark. 460, 51 S. W. 460, Mr. Justice Wood, in a decision which pierced through words used to cloak usury, said: \u201cThe law shells the covering, and extracts the kernel. Names amount to nothing when they fail to designate the facts.\u201d So here the \u201cservice charge\u201d is a mere shell to conceal'the kernel of usury.\nII. The Arkansas Installment Loan Laiw. This is Act 203 of 1951, commonly called the \u201cSmall Loans Act\u201d; and Personal seeks to justify its charges of the items \u201cb\u201d and \u201cc\u201d, sufra, by relying on said Act 203. Able briefs have been filed by the appellee and some of the amici curiae, seeking to justify the Act as constitutional. A brief by one amicus curiae seeks to have the Act declared unconstitutional in its entirety. In the briefs favorable\" to the Act, we are cited to decisions from courts of other states upholding small loans acts in the face of constitutional language similar in some respects to our own constitutional provision, which is Art. 19, \u00a7 13, as previously copied. Furthermore, we are cited to many Annotations in American law Reports on various phases of usury. But regardless of how persuasive may be opinions from our sister states, nevertheless we have in our State our own Constitution, and our own decisions, which must serve as the lodestar to guide our course, and we must refuse to allow arguments, however plausible, to lead us away from the plain wording and spirit of our Constitution. In German Bank v. Deshon, 41 Ark. 331, Mr. Justice Battle, in holding a loan to be usurious, used this language, which announces the duty of the courts in a case like this:\n\u201cThe thirteenth section of article nineteen of the constitution of this State declares that \u2018all contracts for a greater rate of interest than ten per centum per annum shall be void as to principal and interest.\u2019 This section is clear and unambiguous. With the wisdom and policy of it the courts have nothing to do. It is their duty to carry it into effect according to its true intent, to be gathered from its own words, without regard to the hardships incident to the faithful execution of such laws.\u201d\nWe unhesitatingly declare that any provisions in the said Act 203 which attempt, in any guise whatsoever, to permit an evasion of the Constitution, are null and void. It is said that \u00a7 27 of the Act 203 allows the charges here claimed. It is clear that \u00a7 34 impliedly recognizes that a registrant (that is one licensed by the State Bank Commissioner under the Act) is authorized to collect from the borrower more than a non-registered person can collect. Our answer to Personal\u2019s claim of immunity by reason of said Act 203 is, that the Constitution fixes interest at a maximum rate of 10%, and any charge for the use of money above that amount is usurious. We hold that the Legislature cannot authorize the State Bank Commissioner to grant registrants under Act 203 any license to violate the Constitution. Thus, insofar as the said \u00a7 \u00a7 27 and 34 of the said Act 203 seek to allow interest to be charged in excess of the Constitutional provision, such sections must fall as unconstitutional.\nIn the briefs of some of the amici curiae, it is claimed that the general welfare of poor people will be protected by upholding \u00a7 \u00a7 27 and 34 of said Act 203. We hold that the welfare of all people, the poor in particular, is best served by court decisions which uphold the Constitution as the bedrock of the rights and protections of people, rather than by court decisions which, on the ground of expediency or welfare, allow the Constitution to be violated or evaded. We stand on the Constitution.\nWe are asked to pass on the constitutionality of all of the provisions of the said Act 203, but there is no necessity to consider in this case any part of the Act except the sections mentioned, and it is a well settled rule that no constitutional issues are decided except those necessary to a decision in the specific case at hand. Porter v. Waterman, 77 Ark. 383, 91 S. W. 754; Honea v. Federal Land Bank, 187 Ark. 619, 61 S. W. 2d 436; and McLeod v. Dilworth, 205 Ark. 780, 171 S. W. 2d 62.\nWe conclude that the loan in this case is usurious. Therefore, the decree of the Chancery Court is reversed and the cause remanded, with directions to enter a decree awarding Winston the relief he prayed.\nSome of these cases are Shattuck v. Byford, 62 Ark. 431, 35 S. W. 1107; Sidway v. Harris, 66 Ark. 387, 50 S. W. 1002; Citizens\u2019 Bank v. Murphy, 83 Ark. 31, 102 S. W. 697; and Brown v. Fretz, 189 Ark. 411, 72 S. W. 2d 765.\nRelated questions concerning this Law are discussed in the opinion in Strickler v. State Auto Finance Co. (No. 9791). See ante, p. 565, 249 S. W. 2d 307.\nIn the Arkansas Law Review, Vol. 6, p. 34, et seq., in the article: \u201cA Partial Survey of the Usury Laws of Arkansas,\u201d there is a discussion of this Act.\nSome of the cases so cited are Ex Parte Fuller, 15 Cal. 2d 425, 102 Pac. 2d 321; Beneficial Loan Society v. Haight, 215 Cal. 506, 11 Pac. 2d 857; Family Loan Co. v. Hickerson, 168 Tenn. 36, 73 S. W. 2d 694, 94 A. L. R. 664; Williams v. Personal Finance Co., 172 Tenn. 69, 109 S. W. 2d 1166; Personal Finance Co. v. Hammack, 163 Tenn. 641, 45 S. W. 2d 528; and Penziner v. Western American Finance Co., 10 Calif. 2d 160, 74 Pac. 2d 252. In connection with the California cases, it is interesting to note that California first declared a small loans act unconstitutional, and then the constitution was amended to allow such an act; so that the final California decisions were after a constitutional amendment which allowed a small loans act. This is all explained in Ex Parte Fuller, supra.\nSome of these Annotations are 21 A. L. R. 797; 53 A. L. R. 743; 63 A. L. R. 823; 69 A. L. R. 581; 94 A. L. R. 669; 105 A. L. R. 795; and 143 A. L. R. 1323.\nSection 27 provides, inter alia,, that a registrant under the Act may make loans up to $2,500 for a term of 18 months or less, and may collect interest charges and fees and require fulfillment of conditions in accordance with the following sub-sections \u201ca\u201d to \u201ch,\u201d inclusive:\n(a) Charge interest or discount in advance at a rate not to exceed 5% of the principal amount, payable in equal installments over one year.\n(b) Charge \u201cfor services rendered or to be rendered, and expenses incurred or to be incurred, in connection with the said loan or the security thereto, such as investigating the moral and financial standing of the borrower, investigating the security ... an amount not in excess of 7% . . . of $300 . . . ,\u201d 5% on the next $300, and 4% on any part in excess of $600.\n(c) If charges in \u201cb\u201d do not bear a fair relation to services rendered, then charges in \u201cb\u201d may be scaled down.\n(d) Require repayment in periodic installments.\n(e) Collect a charge of 5% for items five days delinquent.\n(f) Collect from the borrower premiums actually incurred for life or health insurance.\n(g) Collect fees for acknowledging and filing the mortgage, and attorney\u2019s fee for title services.\n(h) Collect court costs incident to a default.\nSection 34 says of a registrant who makes a loan of more than $2,500: \u201cHe shall not be entitled to charge, contract for, or receive, either directly or indirectly, upon any such loan or aggregate of such loans, or upon any part thereof, interest charges or fees in excess of that which he would be permitted by law to charge if he were not registered hereunder.\u201d\nOther cases to the same effect are collected in West\u2019s Arkansas Digest, \u201cConstitutional Law,\u201d \u00a7 46.", "type": "majority", "author": null }, { "text": "Mr. Justice Ward\n(concurring): I concur in the result in this case; but (1) I do not approve of the caveat, and (2) I think the fifty cents, paid the Betail Credit Bureau for the report, is permissible.\nMr. Justice George Bose Smith not participating.", "type": "concurrence", "author": "Mr. Justice Ward" } ], "attorneys": [], "corrections": "", "head_matter": "" }, "file_name": "0580-01", "first_page_order": 604, "last_page_order": 613 }