110 S.W.2d 95 | Tex. App. | 1937
L. Berry and some sixteen others, plaintiffs, have prosecuted this appeal from a judgment of a district court of Tarrant County denying them any relief in their suit to restrain the City of Fort Worth, defendant, from enforcing an ordinance hereinafter shown.
The case was tried on its merits in conjunction with a motion of the city to dissolve a temporary writ of injunction theretofore issued in chambers on the same day the suit was filed, and this appeal is from a final judgment dissolving the temporary writ and denying plaintiffs any relief on the merits of the suit.
The ordinance was duly passed and adopted by the city council of the City of Fort Worth in regular session on January 20, 1937, and reads as follows:
"Whereas, persons, firms and corporations are engaged in the business of lending money without security and are demanding and receiving exorbitant and unconscionable rates of interest, in violation of the state law, and such persons, firms and corporations so engaged in the business of lending money, in an attempt to obtain payment of the moneys so loaned, do wilfully and maliciously annoy the employers of their borrowers by continuous telephone calls to the annoyance and harassment of the employers and their employees in the ordinary course of business, and generally affects the public interest, all of which requires strict supervision and inspection of such money-lending business; and
"Whereas, it is deemed expedient and in the interest of the public welfare to regulate and inspect such persons, firms and corporations engaged in the business of lending money without security; Now, Therefore,
"Be it ordained by the City Council of the City of Fort Worth, Texas.
In plaintiffs' petition their names, trade-names, and places of business are stated as follows: "L. Berry, who resides in Fort Worth, Tarrant County, Texas, doing business under the trade names of Capital Realty Company, Able Loan Company and Peoples Realty Company; B. J. Harris, Trustee for J. H. Taylor Trust, who resides in Nashville, Tennessee, doing business under the trade names of Peoples Loan Company, Employees Loan Company, and Personal Finance Company; C. E. Crowe, who resides in Bexar County, Texas, doing business under the trade names of Crowe Loan Company and Gulf Finance Company; J. L. Wilson, who resides in Bexar County, Texas, and E. J. Baxter, who resides in Dallas County, Texas, partners doing business under the trade names of Modern Finance Company and Union Finance Company; J. H. Reagan and L. Berry, partners, who reside in Fort Worth, Tarrant County, Texas, doing business under the trade name of City Realty Company; Installment Finance Company, a corporation; Charles R. Tate, who resides in Fort Worth, Tarrant County, Texas, doing business under the trade name of Tate Financial Collection Service; W. L. Moore, who resides in Dallas County, Texas, doing business under the trade name of Ace Loan Company; D.C. Johnson, who resides in Fulton County, Georgia; Walter Watts, who resides in Tarrant County, Texas; J. H. Taylor, who resides in Fulton County, Georgia; H. B. Hicks, who resides in Dallas County, Texas, doing business under the trade name of Jackson *99 Finance Company; E. A. Bean, who resides in Tarrant County, Texas, doing business under the trade name of Surety Finance Company; E. B. Terrell, who resides in Bexar County, Texas, doing business under the trade name of Terrell Company; A. A. Kennedy, Jr., who resides in Harris County, Texas, doing business under the trade name of Texas Securities Company; O. A. Cotten, who resides in New Orleans, Louisiana, doing business as the Nu-Way Loan Company; and Acme Finance Company, Inc., a corporation, whose president is Mrs. F. W. Johnson, who resides in Dallas County, Texas."
It was alleged that the ordinance had been duly passed at a regular session of the city council and had become effective; that plaintiffs and each of them are engaged in a lucrative business of lending money without security within the corporate limits of the City of Fort Worth, and have investments of many thousands of dollars in said business; that they will be affected by the enforcement of the ordinance; and that they had been so engaged for a number of years prior to the passage of the ordinance in conformity with the laws of the United States and the State of Texas; that the ordinance places unlawful burdens upon them and their business, and was passed "with the design of imposing oppressive, confiscatory and prohibitive restrictions upon their continued pursuit of such business so as to make it impractical, if not impossible, to continue in the pursuit of the business of these plaintiffs, if they are compelled to comply with the terms and provisions of said Ordinance, as will hereinafter more fully appear."
Those allegations were followed by a general attack on the ordinance as a whole, and specifically on several sections hereinafter noted. It was alleged that the ordinance and its several sections operated to deprive plaintiffs of their property without due process of law and of equal protection of the laws in violation of the guaranty of the Fourteenth Amendment of the Federal Constitution and art. 1, §§ 3 and 19, of our State Constitution, the latter section including within its protection "privileges or immunities" as well as "life, liberty and property."
The principal basis for all of those attacks is the contention that the ordinance and the several sections challenged are arbitrary and unreasonable and discriminatory in that they apply to plaintiffs, but do not apply to others of the same class pursuing a like business under like conditions in other words that they constitute what is generally termed "class legislation," forbidden by the provisions of the Federal and State Constitutions noted.
Defendant's motion to dissolve the temporary writ of injunction and answer to the merits of plaintiffs' petition included numerous special exceptions to its sufficiency, none of which were ruled on by the trial court, nor does it appear such a ruling was invoked by the city. The answer also included admissions of the truth of plaintiffs' allegations as to the passage of the ordinance and the transactions of plaintiffs' businesses within the City of Fort Worth, but specifically denied all other material allegations in plaintiffs' petition.
Plaintiffs' petition and defendant's motion to dissolve the temporary injunction and its answer to the merits were all duly verified.
The case was tried before the court without a jury, and the following agreement of facts was filed before judgment was rendered:
"It is agreed and stipulated by the parties to this case, acting through attorneys of record, that this case, at this time, is to be heard on its merits and all parties announce ready for trial on the merits and that this hearing shall constitute a final hearing in this case.
"It is further stipulated and agreed that the following facts may be taken as proved, without the introduction of sworn testimony thereon, as follows:
"That the plaintiffs, as described in the plaintiffs' original petition, are doing business in the City of Fort Worth under various trade names, and in various capacities, as alleged in said petition and are residents of the cities, counties and states as set out in said petition, and that the plaintiffs and each of them are engaged in the business of lending money to individuals without security, in the City of Fort Worth and are conducting said business in twenty-four separate offices; that the plaintiffs and each of them have in excess of one thousand dollars invested in their respective business of lending money to individuals without security and have at this time debts and obligations owing to them in excess of said amount; that plaintiffs, in the aggregate, have approximately the sum of two hundred thousand dollars invested in said businesses of lending *100 money to individuals without security, and have outstanding obligations of approximately one hundred and fifty thousand dollars owing by individuals in the City of Fort Worth.
"It is further stipulated that it is admitted that Section 7, Chapter XXVI of the Charter of the City of Fort Worth reads as follows:
"Ordinances to contain only one subject : —
"All ordinances and resolutions, except ordinances making appropriations, shall be confined to one subject, which shall be clearly expressed in the title. The ordinance making appropriations shall be confined to the subject of appropriations.
"It is further stipulated that the sum of Fifteen Dollars provided as an annual license fee, under Section 6 of Ordinance 1937 is not more than is reasonably necessary to enforce the provisions of said ordinance and is a license fee and not an occupation tax."
The City of Fort Worth is operating as a home rule city under provisions of article 11, § 5, of the State Constitution, reading in part as follows: "Cities having more than five thousand (5000) inhabitants may, by a majority vote of the qualified voters of said city, at an election held for that purpose, adopt or amend their charters, subject to such limitations as may be prescribed by the Legislature, and providing that no charter or any ordinance passed under said charter shall contain any provision inconsistent with the Constitution of the State, or of the general laws enacted by the Legislature of this State."
By article
Article 1175 of the same title and chapter reads:
"Cities adopting the charter or amendment hereunder shall have full power of local self-government, and among the other powers that may be exercised by any such city the following are hereby enumerated for greater certainty: * * *
"23. To license any lawful business, occupation or calling that is susceptible to the control of the police power."
This announcement in 30 Tex.Jur., § 49, p. 104, under the heading "Home Rule Cities," is sustained by numerous decisions cited in the footnotes: "The powers of such cities are derived, not from the Legislature, but directly from the people. The amendment substitutes the rule of the local inhabitants of the city for the rule of the Legislature; and it is no longer necessary for the Legislature to confer power upon them to act. Nor is it necessary to look to the acts of the Legislature for a grant of power; only limitations on the power to act need be considered. The Constitution, the Enabling Act, and the general laws of the state in pari materia constitute the fundamental laws of home rule cities, ranking in the order named. In addition, the cities themselves may legislate, subject only to the restriction that they may not enact any laws inconsistent with the general laws of the State."
We quote further from section 16, page 129, as follows: "An ordinance is general and uniform in its operation, and not open to attack on the ground of being class legislation, where it affects equally every one engaged in the same business. A reasonable, sound and just classification of persons and things for the various purposes of legislation is permissible where the ordinance applies alike to all similarly situated. A municipality may classify persons, organizations and corporations according to their businesses, and apply different rules to different classes, without violating either the state or federal Constitution. The controlling test of the validity of an ordinance directed against a particular class is that the same means and methods shall be impartially applied to all the constituents of the particular class, so that the ordinance shall operate equally and uniformly upon all persons therein. All that is required is that the legislation must be made to apply to all persons alike under the same conditions. Mere difference is not enough to form the basis for classification, but it must rest upon some reasonable and just difference, having relation to the act or thing with respect to which the discrimination is made. It must not be based upon an insidious and unreasonable distinction, or differ with reference to similar kinds of conditions; but with such limitations the powers of municipal bodies are supreme."
In Borden's Farm Products Co., Inc. v. Baldwin,
In Pacific States Box Basket Co. v. White,
To the same effect was the decision in Hardware Dealers Mutual Fire Ins. Company of Wisconsin v. Glidden Co.,
In 9 Tex.Jur. § 58, p. 475, § 60, p. 479, many decisions of our state courts are noted in support of this announcement: "Upon the issue as to whether or not an act of the Legislature is unconstitutional, the burden rests upon the party who attacks its validity to show that the act is forbidden by a provision of the constitution. While a law is not to be held constitutional where a question arises as to whether the legislature has acted within its powers, the presumption is that it has done so. That is to say, a statute is presumed to be constitutional, or as it has been expressed, `every presumption is in favor of the validity of legislative acts.' Indeed, it is said that every reasonable doubt as to the validity of the act must be resolved in favor of sustaining it, and that the enactment will not be held to be invalid unless the court finds it absolutely necessary so to hold."
It is also a general rule that, when the validity of an ordinance depends upon the existence of certain facts, the finding of those facts by the city council cannot be set aside except when clearly unreasonable or overcome by evidence adduced. 19 R.C.L. § 113, p. 807.
The facts recited in the ordinance as a basis for its enactment were not controverted by any evidence and must be accepted as true. Accepting them as true, we cannot say that the ordinance based thereon is unreasonable.
Many decisions of our appellate courts and of the Supreme Court of the United States support this announcement in 9 Tex.Jur. p. 507: "Neither the `contract' clause nor the `due process' clause has the effect of overriding the power of the state to establish all regulations that are reasonably necessary to secure the health, safety, good order, comfort or general welfare of the community. The exercise of the police power upon subjects lying within its scope, in a proper and lawful manner, is due process of law. The decisive question is whether or not the action is sustained by the existence of facts affecting the public welfare sufficient to justify such an application of the police power. The answer to this question determines whether or not the action constitutes due process of law. The mere fact that a law necessary for the welfare of society regulates trade or business, or to some degree operates as a restraint thereon, does not make it unconstitutional."
The manifest purpose of the ordinance was to protect wage earners or others in financial straits who are unable to borrow money in the usual way, from the burden of paying exorbitant interest on usually small loans, and from the danger of the wage earner of losing his job on account of annoyances of his employer through complaints to him by the lender of failure of his employee to pay his loan; all of which facts are recited in the ordinance. In view of those fact findings, it cannot be said there is no reasonable basis for distinguishing the business pursued by plaintiffs from that of other money lenders expressly excluded from the scope of the ordinance. As said in the opinion of the Supreme Court in Union Bank Trust Co. v. Phelps,
"We cannot say that the state Legislature exceeded its power to make reasonable classification when it directed that moneyed capital or the property and shares of building and loan associations, industrial loan corporations, industrial banks, mortgage companies, etc., should be exempt from ad *102 valorem taxation or taxed on a different basis from the one prescribed for banks accepting deposits and doing a general commercial business, notwithstanding actual competition between them.
"Mere competition between them is not enough to show two concerns must be burdened alike. The state Legislature reasonably might have determined that there was fair ground for distinction; and upon the record we may not hold that its action was arbitrary, capricious, or wholly unreasonable."
Attacks on the constitutionality of various statutes, on the ground of unwarranted discrimination, were overruled in the following cases:
Dorris Griffith v. State of Connecticut,
State v. Wickenhoefer, 6 Pennewill 120, 64 A. 273, by the Supreme Court of Delaware. The statute in question there placed certain restrictions on loans of less than $100 which did not apply to those in excess of that sum.
Dewey v. Richardson,
Louis K. Liggett Co. v. Lee, Comptroller of the State of Florida,
Union Central Life Ins. Co. v. Chowning,
See, also, Mims v. City of Fort Worth (Tex.Civ.App.)
Article 2026, Rev.Civ.Statutes, requiring personal service of citation on the defendant in a suit against him, is a general statute, but many other statutes authorize service upon agents of defendants.
Article 2026a, Vernon's Ann.Civ.St., requires foreign corporation, as a prerequisite for permit to do business in the State, to file in the office of the Secretary of the State a power of attorney designating some individual resident of the State as its service agent on whom process may be served.
Article 2039a, Vernon's Ann.Civ.St., provides that the operation of motor vehicles on the public highways of the State through an agent shall be deemed equivalent to appointment of the chairman of the State Highway Commission as his agent upon whom service of judicial process may be had, and that such service shall be of the same legal force and validity as if served personally.
Articles 2039 and 2040, Rev.Civ.Statutes, provide for service by publication against a defendant whose residence is unknown or is a transient person or a nonresident of the State.
Articles 2033b and 2033c, Vernon's Ann.Civ.St., provide that, where an individual, *103 partnership, or incorporated association is doing business in the State, service may be had upon any agent employed in any county other than the county in which the principal may reside or have his or its legal domicile.
It cannot therefore be said, as insisted by appellants, that the provision in the ordinance, requiring the appointment of a local agent on whom judicial process may be served, is prohibited by the limitations expressed in the Home Rule Amendment to the Constitution merely because inconsistent with article 2026, Rev.Civ.Statutes.
In Black's Law Dictionary, page 613, the term "inconsistent" is thus defined: "Mutually repugnant or contradictory; contrary, the one to the other, so that both cannot stand, but the acceptance or establishment of the one implies the abrogation or abandonment of the other; as, in speaking of `inconsistent defenses,' or the repeal by a statute of `all laws inconsistent herewith.' See In re Hickory Tree Road,
A like definition is given in Webster's Dictionary.
In Wessell v. Timberlake,
In Henry L. Doherty Co. v. Goodman,
"Doherty voluntarily established an office in Iowa and there carried on this business. Considering this fact, and accepting the construction given to section 11079, we think to apply it as here proposed will not deprive him of any right guaranteed by the Federal Constitution.
"Flexner v. Farson,
"The power of the states to impose terms upon nonresidents, as to activities within their borders, recently has been much discussed. Hess v. Pawloski,
"There is not only `reasonable probability,' but practical moral certainty, that the defendant will receive actual notice of the pendency of the action."
Those decisions are distinguishable on the issues involved from Pennoyer v. Neff,
The requirement of plaintiffs to acquire a license to pursue their business as money lenders was specifically authorized by article 1175, subd. 23, Rev.Civ.Statutes. The further requirement to execute the bond specified was not inconsistent with any state statute. Indeed, such bonds are specifically required by many statutes of persons and corporations transacting business in the State, including the following: article 6147, Pawnbrokers; article 6165, Loan Brokers; article 4925, Foreign Insurance Corporations; article 4969, Fidelity, Guaranty and Surety Companies; article 4982, Certain Trust Companies; articles 4739, 4740 and 4741, Life, Accident and Health Corporations; article 911a (Vernon's Ann.Civ.St.), requiring motorbus companies transporting passengers for hire to carry policies of insurance to cover liability to such persons *104
In Juhan v. State,
"There is no provision in this law requiring the county judge to notify, or in any other way acquaint, the loan broker with the fact that he has accepted service or been served with citation in any suit against him, which fact may result from the consideration that it would do the loan broker no good, inasmuch as he could not take any steps to release himself by reason of any defect in the citation. It might be very questionable, if necessary to a decision of this case, as to whether the county judge could in any event be compelled to act as such agent or attorney in fact, or put himself to any trouble by reason thereof, or take any action with regard thereto. * * *
"It thus appears that the bond and sureties would not only be held for the acts of appellant while actually engaged in the line of his business as a loan broker, but also for any other sum for which he might be liable under the laws of this state."
However, the loan broker statute was later so amended as to eliminate those objections. See further Ex parte Ferguson,
The word "security" is a word in common use and the failure to define it did not render the ordinance invalid as further insisted by appellant.
The manifest purpose of the requirement to procure license, execute a bond, and appoint an agent upon whom service of judicial process may be had, was to prohibit the charge and collection of usurious interest denounced by the Constitution and statutes as unlawful. Those requirements were well within the police powers of the city and were not inhibited by any constitutional or statutory provision. 30 Tex.Jur. § 57, p. 119; 43 C.J. § 202, p. 203, and decisions there cited.
For the reasons stated, all assignments of error are overruled and the judgment of the trial court is affirmed.
