150 So. 499 | Ala. | 1933
The appeal in this case is prosecuted by the city of Tuscaloosa from a judgment of the circuit court, holding invalid an ordinance of the city imposing a license upon certain classes of money lenders; upon one class the ordinance attempts to impose a license tax (annual) of $250, while on the other the tax was fixed at $100.
The ordinance is as follows: "Each and every person, firm, corporation, or association lending or advancing money on personal property or taking waive notes of exemption on personal or real estate property, wages, salaries, endorsements, or personal securities or charging for making examination or inspection, making out transfers or liens of any description or discounting notes or other evidences of debt; where interest and other charges collected by the lender or agreed or stipulated to be paid by or for the borrower is greater than at the rate of two per cent. per month, $250.00. Where interest and other charges collected by the lender or agreed or stipulated to be paid by or for the borrower is equal to or less than at the rate of two per cent. per month, $100.00. (In determining the rate of interest charged, all charges of every kind by whatever name called or for whatever service performed in any manner connected with any such transaction shall be included in the term interest and other charges.)"
It will appear from the foregoing that, where interest and other charges collected by the lender or agreed or stipulated to be paid by or for the borrower is greater than at the rate of 2 per cent. per month, the tax imposed is $250, and where the interest and charges are equal to, or less than, 2 per cent. per month, the tax is fixed at $100.
The demurrer takes the point that the ordinance is highly discriminatory, arbitrary, and capricious in its classification, and unreasonable. It also takes the point, but not pressed in brief, that the ordinance is in contravention of certain designated sections of the Constitution, and also contravenes the general public policy of the state as expressed in its statute laws. And, specifically, that the ordinance is void in that it licenses the lending of money at usurious rates of interest.
We are not impressed by the argument advanced by appellee that the classification attempted by the ordinance is unreasonable or capricious, or an unjust or unwarranted discrimination between the two classes — one who would confine their charges and interest to 2 per cent. per month, and the other with no limitation as to charge whatever — with the sky, so to speak, as the limit. It is but natural to suppose that the latter class would reap a larger harvest from its loan business unbridled as to interest rate, and would undoubtedly require closer scrutiny from the municipality. Such a tax is not imposed simply for revenue but also to pay the reasonable and legitimate expense of supervision of the business.
"The only limitation on the discretion in making classification is that the classification must not be arbitrary, a mere subterfuge to shield one class and burden the other." Woco Pep Co. of Montgomery v. Butler, Chairman of State Tax Commission, et al.,
In the case of Kennamer v. State,
In the ordinance before us the city has attempted to place in one class all who would charge borrowers, by way of interest and charges, at a rate not in excess of 2 per cent. per month, and into another class those who would charge borrowers, at any rate the lender might see proper, in excess of 2 per cent. per annum. In one, the rapacity of the lender *515 is bridled; while in the other the lender might go to any extreme that conscience would dictate, or the need of the borrower would permit.
We do not think there is anything in the contention that the ordinance is void because of an unreasonable, unjust, or capricious classification. However, there is an objection to the validity of the ordinance, which is fatal, in our judgment.
The ordinance in question attempted to license lenders of money at a greater rate of interest than 8 per cent. per annum.
Section 8563 of the Code declares: "The rate of interest upon the loan or forbearance of money, goods or things in action, is eight dollars upon one hundred dollars for one year; and at that rate for a greater or less sum, or for a longer or shorter time." The taking of a greater rate of interest than the law allows for the use of money is usury.
The above-quoted statute shows the spirit of the law in this state and the general policy of the state with respect to the subject under inquiry.
In the case of City of Marengo v. Rowland,
In the case of Dunn v. Court of County Revenues of Wilcox County,
In Town of Greensboro v. Ehrenreich,
In the case of Ward v. Markstein,
There is nothing in the case of Ex parte Alabama Brokerage Co.,
We are at the conclusion that the ordinance in question infringes the spirit of section 8563 of the Code, and is repugnant to the policy of the state as declared in said section, which fixes the legal rate of interest at 8 per cent. per annum, and it was not within municipal competence to legalize, by license, a higher rate of interest. We must therefore hold the ordinance void.
The judgment of the circuit court is affirmed.
Affirmed.
ANDERSON, C. J., and THOMAS and BROWN, JJ., concur.