Case Information
*1 . i
OFFICE OF THE ATTORNEY GENERAL OF TEXAS AUSTIN
l d iOt.Nlt. .*Inth8 trial of pv a OatlOP f8r lajuno- tioa und8r thlr &t th mra JE
tut th8 .atuaY% z%L r ry l twh loan tam ba el. t 08 ) *2 Honorable Den Y. Jaakaon, pagr 2
Dollar raoh r’irtr (#50.00) Dollarr, or frao- r0r tfonal loanedj but prim part thereoi thir raole prO8\ElpptiOn 8halZ 8Xt8nd Otir t0 th8 fir8t not8 or d8bt ovlng at the 84m8 f-4 by an lndlvldual t0 My p8ClOIl, firla, OOrpOratiOn, piWtn8r8hlp OF &88OOi&tiOn, and 8h11 apply t0 w r4lU3V8l Or: l Xten8iOn thGl'4Of lUll488 th0 Ori@ll&~ not4 or debt and all sxt8nsionr thereof vero for a period of not than [1488] 8ixtJ (60) dayr.'
US qUOt8 from YOUr letter8 tV0 Of YOUr rubmittsd QU48tiOn8:
'@48tiOll - Yhat [18] Or VI8 the intention Of bgi8hltUN in permitting the OoleOtlon of of $1.00 for eaoh $50.00 loaned or frao- oharger tion thereor?' 8ion8a$etd&on t Can a lender under thr provl-
[8] Aot Ohprg8 borrover iOr aotual exp4nre necearary in meklng the out-or-pocket loan, ruch oharge to be over and above the $1.00 for eacih $50.00 or fraction thereof advanced to the borrover?'
4he latter per7 18 a portion an alternative th8 rOliOVing QU48tiOn TOU 8Uhitt8d. sin08 di8OU88iOLI COll- t0 the above QU48tiOn8, it become8 un- OUr MlV4r 8titUt88 QU4rx bared On the 4X- t0 M8VOl’ ~0ll.l’ 8lt8l’MtiVe n40488&P~ ample8 8Ubmitted therrmader.
Tha 8peOirtCall~ provider that aharger may be made ror l otuxl and n4Oe888ry 8xpen888, nov. or herearter per- mitted and uthorlxed by lav and rhall not OOlI81dered a8 int8l'48t. Th4r4 i8 IlO l&~U&g8 in the blll t&It plaO48 8 limltatlon on ths amount that ma)- be oharged for the actual and lleO8884ry 4Xp4PX48, WI1488 48 YOU 8w48t, that Part Of SeOtiOn 2a providing th8re Ihell 8Xi8t a prima ia pI'48UlQ- tiOn that th8 aOtIS and n4C888Uy in nrakw ang 4Xpen8e8 ruch loan V48 41.00 ror eaoh 450.00, or rraotional part there- of loaned, 18 a llmltatlon to the amount that may be ool- leoted ror the84 aotual md neoerrary expenres. Hovev8r, thlr prime f8014 preiumptlon 18 raid to eXi8t in the trial of any ppllcatl.on for injunction under the Act. X4 interpret *3 ,
Honor&b18 Dm Y. Jaokaon, pag8 3
thlr pqwtlon or SeotIon 24 to mean that b a trial or an l p 11oatiQa r0r an lnnjunatlon under th8 pFOVi8iOn8 of thi8 bl 1, thW8 Vi11 8XiXt 4 priu t&t Oh-g48 i4Ol4 p88U@iOIi P bared on the abolr ratio Vera 4Otual and n4ao88ary, and the lender I8 reli8red 0r producing rush p0r unlera thi8 prr- 8UDlptIo3i I8 rebutted br OCmtradiOtOr~ 8VIdenoe. MO bOli8V8 that thl8 I8 the OOlutrUOtiOn t&t V&8 Intended t0 be pleO8d V&l not to on thlr portltm of th8 and t&t it8 pUFpO84 plaoe a oelllng on the amount that a lender oould Oolleot for actual and n8oer raq l xpen888. A8 long a8 the expenrer V8rO aotual and neoesrar~ the rum My br gr84tOr than th8 for aray 450.00 or fraotlonal part thereof ratI<~~.OO loaned, but vhen the expense8 are ior a greater thaa that of the 8414 ratio, the prima faole pre8umptIon a8 to the aotuallt~ and neoesrity 0r the expen888 i8 not availabl8 to thr lender In the trial for an lnjunotlon, yet there 8x- pen888 oan be ool~ect8d if th87 prov8d 48 being l otual and MO8884 ry.
The above dirourrlon I8 bared upon the arrumptlon that the oondltlona set forth In the Act creating the pr8- 8UlU~tiOn 4OtUall~ 8Xi8t.
WO turther oonrtrue thin Aot to the 8ffeOt that no oharge VhlLtroeTer aan be 4884884d agaIn8t the borrover ror 8xpenae8, unlerr thr 8xpen848 Vera aotually and in ract inOUrr8d and vme neoe88ary In making the loan. If no ex- pen848 v8re lnourr8d In makIng a loan, no oharge at all oan be 4884684d 4g4in8t the borrover regardle8r rOr eXpen488, the amount loaned. or
Uo rurther quote rr0pl your 18itOr8 fOiiOV8: %l48tIoTAI 18 thi8 bill retroeotlve 48 to 4~17 1OaU8 made prior df8OtiVe t0 it8 date?” Quertlm - 18 the oolleation or wury on
oontraot8 ti 8XI8tenoe prior to the naotment of the bill and prior to the raid bill beoomlng of- feotlre, vlx: the oolleotlon 0r urury on pre-exlrt- lng oontr6ot8, violation of the Aott' buriners - If 4 loan ooiapay quit8
8frOOtiV8 date bill, and in *4 590 Honorable Den Y. Jaokxon, page 4
11QUidatIXQ it8 bU8inr88 OOlbOt8 U8UrJ On OUt- rtandhg aaoounta 00 pr8-•xlirtlng oontraot8,
VOdd i.njUMtiOIl u8 4@hXt 8UOh OOQMZlr, Or
it8 Uquidatiag agent, ror the oollrotlon 0r
U8Ur7 On 8Uch a4eOUllt8 in vlndlng Up 1t8 bual-
ne881rn
In thr 0484 0r fielllnger v. Cltr 0r 80u8ton, 68 T8x. 37, 3 S. V. 249, Judge Stay'ton 8aidr
.In the b8enoe 0r oon8titutional reetrla- tiOIA8 UpOO th8 8Ubj8Ot it I8 4&08t UlliVOr8allJ ooipted a8 round ruie 0r oon8truotlo.n that a rtatute 8h4ll hare only a pro8peotIvs operation, unlrrr It8 term8 rhou olearly a leglrlatiV4 in- tently that It r&11 havr a retroaotIv8 4rreot.
l . .
TO the 8aEI4 8ffOOt ar8 State v. Railvay Co., 100 7 S. Y. 71~ Fr8eman T, V. 8. Walker end Bono, 212 Taxi 175, 8. U. 637 9 Corn.. App.).
There 18 nothing In thlr Aot vhlch vould ole8rly IndIoatr or 8hov an lntontlon of the Legislature that It 8hould retroaotIrely. Ther8fore it 18 th8 opfnlon 0r thlr department that raid Senatr Blli 43 18 not retroaotIve.
mt Ye mean by thi8 i8 explained in the rOllOVing d18OU8- 8100.
S8OttOn 1 of the under di8OU88iO11 provider that 4 8uit Ear be iMttitut8d br eOrt&ln part188 named th4rOin 'to onjoln an7 p8r80nr rirm, or oorporatlon or any orrioer, agent, 8ervant or 8mployee 0r ruch perlon, rim, or oorporatlon vho 18 engaged in the bWilU388 Or habitual17 loan1 for the uIe a& detention Or vhloh u8urlOU8 intsr48 3 ~?~een
oharged &g&inlt or contraoted to b8 pa-id by borrover, rrm demanding, reoeloing or tythe ~88 any aa-8 attempt- lug to oolleot from the borrover wurlou8 interart on ac- COW Or or rrarn thereattar charging arq borrow- 10&I, er uayrlour lnterert or oontraoting for any wurlou8 Lnterert.
. . . (undery~,oring ourr)
Section Or the AOt prOVid88 fO11OV81 *5 Honorable Den V. Jaak8on, pag8
"By the term thabitually' a8 u8ed in thl8 Act, 18 meant the m8klng Oi ae many 88 three (3) loan8 on vhiah or in oonneotion vith uhioh u8u.r- iour interrrt 18 ohar ed or oontraoted iOr vlth- in R period of 81x (6 '3 month8 next preceding the riilag Of MY 8UOh Itit*
'By the term ~ururlou8 interart a8 u8ed la thir Aot, 18 m8ant int8rert at a rate in ex- 0488 or t8n (10%) per oentum per annum."
By eaylng the Act retroaotivs, ve mean~the making of the loan8 reierred to in geotlon 2, quoted above, mutt have occurred rubrequently to the Pfeotive date of the Act. Hovever , a parron, rem, or oorporatIon 80 engaged in the buSin of 'habituelly" loaning money, a8 defined by Section 2, m8y be enjoined, after the effective date of the Act, rr0m OOll8Oting U8UriOU8 lnter8rt on aooount an vhether executed prior or rubrequent to ruoh effective -%at'r In other vord8, to 8eaure an lnjuuotion under the term8 of thIs'Act, the *er8on, iem1 or oorporatlon mu8t be guilty of loaning money habitually, 88 80 defined by the Aot, and the loan8 referred to therein mu8t havr been Bade after the et- rectlve date or the Aot. After 8uCh faot ha8 been ertabllrhed, the guilty party niay be enjoined irom oolleotlng ururiou8 ln- terert OA any loexs, vhether lame VP8 8xeouted before or sub- requent to the date the Act vent into efteot. fO11OV8 from what ve have 8aid that a loan oom- It
pazq which qultr bU8in488 prior to th8 f'feotive date of the Act may not be enjoined r"rom demanding, reoelving or &tte!Ept- 1n.g to collect rrm borrover8 urur1ou8 interert on loan8 made prior to ruch date, for it no longer engaged in the bwIne88 of habitually loaning money at u8uriour rate of interest, a burine88 vhioh 818~ 8njOinOd only rhen oonduoted after the A& beoomer afieotlve.
Ve trust the roregolng 6n8ver8 your questlonr. fully Very truly your8 ,. I. ‘_....,.d_ ‘Cf, [*] ‘r ;y.;,.& A8818t=t ' '* - By / ( Robert 0. Koh j =OMM,, ROKldb