State v. . Davis

73 S.E. 130, 157 N.C. 648, 1911 N.C. LEXIS 113

• Court: Supreme Court of North Carolina
• Decided: December 20, 1911
• Status: Published

Opinion

Hoke, J\,

after stating tbe case: Tbe statute law of tbe State more directly relevant to tbe question presented, Revisa!, sec. 3712 (a), among other things, makes provision as follows:

“If any person, firm, or corporation who shall or may loan money in any manner whatsoever by note, chattel mortgage, conditional sale, or otherwise, upon any articles of household or kitchen furniture, shall take, receive, reserve, or charge a greater rate of interest than 6 per cent, either before or after such interest shall accrue,” etc., “shall be guilty of a misdemeanor,” etc.

Under a charge which correctly states the provisions of the statute, the jury have found that usurious interest has been charged by defendant; that the obligation was secured by a mortgage on the household and kitchen furniture of the debtor. There is ample evidence to justify the verdict, and the conviction must be upheld if the statute itself is a valid law. It is insisted for the defendant that the statute is in contravention of the fourteenth amendment to the Federal Constitution in that it “unlawfully divides money-lenders into two classes, those lending on household and kitchen furniture and on other kinds of property, and unlawfully discriminates against borrowers, putting borrowers, having only one class of property, to wit, household and kitchen furniture, into a class different from the borrower having other kinds of property to offer”; but the position cannot, in our opinion, be maintained.

The power of the Legislature to make the taking of usury, under certain conditions, a criminal offense is well recognized. Ex parte Edward Berger, 193 Mo., 16; S. v. Winkenhoepper, 6 Del., 120, and the right of classification, in the enforcement of reasonable and proper police regulations on this and other subjects is referred, very largely, to legislative discretion.

In Insurance Co. v. Daggs, 172 U. S., at page 362, the Supreme Court of the United States, the Court having, with us, the final «word on this subject, referred to this right of classification as follows: “It is not necessary to state the reasoning upon which classification by legislation is based or justified. This Court has had many occasions to do so, and only lately reviewed the subject in Magoun v. Illinois Trust and Savings Bank, 170 U. S., 283. We said in tbat case that ‘The State may distinguish, select, and classify objects of legislation, and necessarily the power must have a wide range of discretion.’ And this because of the function of legislation and the purposes to which it is addressed. Classification for such purposes is not invalid because not depending on scientific or marked differences in things or persons or in their relations. It suffices if it is practical, and is not reviewable unless palpably arbitrary,” the limitation being that “the classification has been made on some reasonable ground, something that bears a just and proper relation to the attempted classification, and is not a mere arbitrary selection.” Ellis v. R. R., 165 U. S., 151; Morris-Scarboro Co. v. Express Co., 146 N. C., 170, and numerous and repeated decisions of that Court are in affirmance and illustration of this principle. Avenue Coach Co. v. New York City, 221 U. S., 467; Lindsay v. Gas Co., 220 U. S., 61; Engel v. O’Mally, 219 U. S., 128; Bank v. Kansas, 219 U. S., 121; McLean v. Arkansas, 211 U. S., 540; Heath v. Mulligan Manufacturing Co., 207 U. S., 338; N. Y. v. Van DeCarr, 199 U. S., 552; Loon Hing v. Crawley, 113 U. S., 704. In Coach Co. v. N. Y., supra, it was held: “Classification based on reasonable distinctions is not an unconstitutional denial of equal protection of the laws; and so held that an ordinance of the city of New York prohibiting advertising vehicles in a certain street is not unconstitutional as denying equal protection to a transportation company operating stages on such street, either because signs of the owners may be displayed on business wagons or because another transportation company may display advertising signs on its structure. There is a purpose to be achieved, as well as a distinction, which justifies the classification.” In Lindsay v. Gas Co., the Court said: “The equal protection clause of the fourteenth amendment admits of a wide exercise of discretion, and only avoids classification which is purely arbitrary, being without reasonable basis. Nor does a classification having some reasonable basis offend because not made with mathematical accuracy or resulting in some inequality.” And in Engle v. O’Mally, supra, it is said, approving the same statement in Heath v. Mulligan Co., 207 U. S., 338: “That legislation which regulates business may well make distinctions depend upon the degree of evil, and although when size is not an index, a law may not discriminate between the great and the small proper regulations based thereon, when size is an index of the evil to be prevented, do- not offend the equal protection clause of the fourteenth amendment. In McLean v. Arkansas, 211 U. S., supra, a regulation establishing a different method of mining coal, by which the wages of laborers were to be ascertained between miners when less than ten miners were employed and those having a larger number was implied. And on this very subject of usury and in Berger’s case, supra, differing penal provisions were upheld in case of ordinary usury, and when the charge was greater than 2 per cent per month. And in Winkenhoepper’s case, supra, between loans not exceeding $100 and loans of that sum or greater.

If these various classifications have been sustained by our highest Court, assuredly a law designed and intended to protect and maintain the home of the citizen should be upheld. If the schools of thought which tend to corrupt and undermine, if the forces which make for disorder and anarchy should ever be able -to combine and so far increase as to threaten our social fabric, it is the home, the influences that hallow and emanate from it, which will arise and be potent to save.

Referring to this subject as a proper basis for classification, bur Attorney-General, in his argument before us, has well said: “Pri-or to the adoption of the present Constitution, household and kitchen furniture to the value of $200 was exempt from execution. The lawmaking power of this State has always realized that the loss of those articles necessary for comfortable and decent living entails great suffering upon women and children, .frequently resulting in the breaking up of a home and in the creation of conditions which are a menace to the public health and to the public prosperity.

“The statute under consideration is a logical and lawful extension of the protection which it has always been the policy of the law to afford this peculiar class of property. ' The General Assembly knew that the man who mortgages his household goods does so because be bas nothing else to mortgage. He is tbe poor man, tbe illiterate man, and bis poverty and bis ignorance make bim tbe easy prey of tbe usurer.

“Tbe General Assembly also knew tbat in some of tbe cities of tbe State there were springing up a class of men wbo were selling money, like furniture, on tbe installment plan. It was to save tbe things necessary to the existence of a borne from tbe grasp of such men tbat tbe act of 1907 was passed.

“We submit tbat tbe statute tends to preserve tbe domestic peace, to promote tbe family health and prosperity, and is a valid exercise of tbe police power of tbe State.

“It is not class legislation; it operates alike on all wbo take mortgages on household and kitchen furniture. It regulates a business and does not create a class.”

It was further contended tbat inasmuch as tbe property on its sale bad not repaid tbe actual amount of tbe loan, no usury bad been received and therefore no violation of tbe statute bad been established, citing Rushing v. Bevins, 132 N. C., p. 273. That was an action by tbe debtor to recover a penalty allowed by the statute of “twice tbe amount of usury paid,” and tbe Court held, in effect, tbat to justify a recovery, it must be made to appear that usurious interest bad been paid in money or money’s worth, and a note of the debtor, given therefor, did not amount to such payment. Tbe case does not apply here, when tbe statute makes it a misdemeanor to take, receive, reserve, or charge a greater rate than 6 per cent.

Tbe evidence of tbe State tends to establish that “for a loan of $10 a note of $16.75 was taken, secured by a mortgage on household and kitchen furniture worth at least $25,” which would constitute an usurious transaction within the meaning of tbe statute. 5 A. and E., p. 886, citing Bank v. Wareham Co., 49 N. Y., 635; and, in any event, it appears further that on a loan of $10 for thirty days, $1.7 5 was reserved at tbe time the money was supplied.

There is no error, and tbe judgment must be affirmed.

No error.