. 

i 

OFFICE OF THE ATTORNEY GENERAL OF TEXAS 

AUSTIN 

l d iOt.Nlt. 

.*Intthr8 ia ol f p v a 

JE 

Oa tlOf8P r la juno - 

tio a und8tr h lr &t thmr a 

tut th 8 .a tua Y% z%L 

r r y l twh loan tam ba t el. 08 ) 
Honorable Den Y. Jaakaon, pagr 2 

Dollar r0r raoh r’irtr (#50.00) Dollarr, or fraotfonal part thereoi loanedj but thir prim 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 not apply t0 w r4lU3V8l 

Or : lXten8iOn thGl'4Of lUll488 th0 Ori@ll&~ not4 

or debt and all sxt8nsionr thereof vero for a 

period of not 1488 than 8ixtJ (60) dayr.' 

US qUOt8 from YOUr letter8 tV0 Of YOUr rubmittsd 

QU48tiOn8: 

'@48tiOll - Yhat 18 Or VI8 the intention Of 

the bgi8hltUN in permitting the OoleOtlon of 

oharger of $1.00 for eaoh $50.00 loaned or fraotion thereor?' 

8ion8a$etd&on t Can a lender under thr provl8 Aot Ohprg8 a borrover iOr aotual 

out-or-pocket exp4nre necearary in meklng the 

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 0r an alternative 

QU48tiOn TOU 8Uhitt8d. sin08 th8 rOliOVing di8OU88iOLI COll8titUt88 OUr MlV4r t0 the above QU48tiOn8, it become8 unn40488&P~ t0 M8VOl’ ~0ll.l’ 8lt8l’MtiVe QU4rx bared On the 4Xample8 8Ubmitted therrmader. 

Tha Aot 8peOirtCall~ provider that aharger may be 

made ror l otuxl and n4Oe888ry 8xpen888, nov. or herearter permitted and l uthorlxed by lav and rhall not be 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'48UlQtiOn that th8 aOtIS and n4C888Uy 4Xpen8e8 in nrakw ang 

ruch loan V48 41.00 ror eaoh 450.00, or rraotional part thereof loaned, 18 a llmltatlon 48 to the amount that may be oolleoted ror the84 aotual md neoerrary expenres. Hovev8r, 

thlr prime f8014 preiumptlon 18 raid to eXi8t in the trial 

of any l ppllcatl.on for injunction under the Act. X4 interpret 
, 

Honor&b18 Dm Y. Jaokaon, pag8 3 

thlr pqwtlon or SeotIon 24 to mean that b a trial or an 

l p 

P 

11oatiQa r0r an lnnjunatlon under th8 pFOVi8iOn8 of thi8 

bl 1, thW8 Vi11 8XiXt 4 priu i4Ol4 p88U@iOIi t&t Oh-g48 

bared on the abolr ratio Vera 4Otual and n4ao88ary, and the 

lender I8 reli8red 0r producing rush p0r unlera thi8 prr8UDlptIo3i I8 rebutted br OCmtradiOtOr~ 8VIdenoe. MO bOli8V8 

that thl8 I8 the OOlutrUOtiOn t&t V&8 Intended t0 be pleO8d 

on thlr portltm of th8 Aot and t&t it8 pUFpO84 V&l not to 

plaoe a oelllng on the amount that a lender oould Oolleot 

for actual and n8o er r al q xpen888. A8 long a8 the expenrer 

V8rO aotual and neoesrar~ the rum My br gr84tOr than th8 

ratI<~~.OO for aray 450.00 or fraotlonal part thereof 

loaned, but vhen the expense8 are ior a 811111 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 8xpen888 oan be ool~ect8d if th87 be prov8d 48 being l otual and 

M O8884 r y. 

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 expen848 v8re lnourr8d In makIng a loan, no oharge at all oan 

be 4884684d 4g4in8t the borrover rOr eXpen488, regardle8r 

or the amount loaned. 

Uo rurther quote rr0pl your 18itOr8 48 fOiiOV8: 

%l48tIoTAI 18 thi8 bill retroeotlve 48 to 

4~17 1OaU8 made prior t0 it8 df8OtiVe date?” 

l Quertlm - 18 the oolleation or wury on 

oontraot8 ti 8XI8tenoe prior to the l naotment of 

the bill and prior to the raid bill beoomlng offeotlre, vlx: the oolleotlon 0r urury on pre-exlrtlng oontr6ot8, a violation of the Aott' 

- If 4 loan ooiapay quit8 buriners 

8frOOtiV8 date 0r the bill, and in 
590 

Honorable Den Y. Jaokxon, page 4 

11QUidatIXQ it8 bU8inr88 OOlbOt8 U8UrJ On OUtrtandhg 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 bualne881rn 

In thr 0484 0r fielllnger v. Cltr 0r 80u8ton, 68 

T8x. 37, 3 S. V. 249, Judge Stay'ton 8aidr 

.In the l b8enoe 0r oon8titutional reetrlatiOIA8 UpOO th8 8Ubj8Ot it I8 4&08t UlliVOr8allJ 

l ooipted a8 a round ruie 0r oon8truotlo.n that a 

rtatute 8h4ll hare only a pro8peotIvs operation, 

unlrrr It8 term8 rhou olearly a leglrlatiV4 intently that It r&11 havr a retroaotIv8 4rreot. 

l . . 

Taxi 175, 

TO the 8aEI4 8ffOOt ar8 State v. Railvay Co., 100 

8. U. 637 9 

7 S. Y. 71~ Fr8eman T, V. 8. Walker end Bono, 212 

Corn.. App.). 

There 18 nothing In thlr Aot vhlch vould ole8rly 

IndIoatr or 8hov an lntontlon of the Legislature that It 

8hould not 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 Aot 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 the borrover, 

rrm demanding, reoeloing or tythe ~88 0r any aa-8 attemptlug to oolleot from the borrover wurlou8 interart on acCOW Or 9 10&I, or rrarn thereattar charging arq borrower uayrlour lnterert or oontraoting for any wurlou8 Lnterert. 

. . . (undery~,oring ourr) 

Section 2 Or the AOt prOVid88 48 fO11OV81 
Honorable Den V. Jaak8on, pag8 5 

"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.riour interrrt 18 ohar ed 

in R period of 81x (6 '3 

or oontraoted iOr vlthmonth8 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 ex0488 or t8n (10%) per oentum per annum." 

By eaylng the Act 18 not retroaotivs, ve mean~the 

making of the loan8 reierred to in geotlon 2, quoted above, 

mutt have occurred rubrequently to the l 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 0r 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 etrectlve date or the Aot. After 8uCh faot ha8 been ertabllrhed, 

the guilty party niay be enjoined irom oolleotlng ururiou8 lnterert OA any loexs, vhether lame VP8 8xeouted before or subrequent to the date the Act vent into efteot. 

It fO11OV8 from what ve have 8aid that a loan oompazq which qultr bU8in488 prior to th8 l f'feotive date of the 

Act may not be enjoined r"rom demanding, reoelving or &tte!Ept1n.g to collect rrm borrover8 urur1ou8 interert on loan8 made 

prior to ruch date, for it 18 no longer engaged in the bwIne88 

of habitually loaning money at a u8uriour rate of interest, a 

burine88 vhioh 818~ be 8njOinOd only rhen oonduoted after the 

A& beoomer afieotlve. 

Ve trust the roregolng fully 6n8ver8 your questlonr. 

Very truly your8 

I. ‘Cf, 

,. ‘_....,.d_ 

* ‘r ;y.;,.& A8818t=t 

By / ( ' '* - 

ROKldb Robert 0. Koh j =OMM,