Opinion ID: 1441151
Heading Depth: 4
Heading Rank: 1

Heading: The scope of the Alaska Small Loans Act.

Text: Alaska Statute 06.20.300(a) prohibits unlicensed persons from making small loans, or similar transactions, at a greater interest rate than that allowed under Alaska's general usury statute. The statute states: Except as authorized in this chapter, a person may not directly or indirectly charge, contract for, or receive any interest, discount, or consideration greater than that which the person would be permitted by law to charge if the person were not a licensee, upon the loan, use, or forbearance of money, goods, or things in action, or upon the loan, use, or sale of credit of the amount or value of $25,000 or less. AS 06.20.300(a). The superior court ruled that Berger violated the plain language of AS 06.20.300(a): [Berger] contracted for a consideration upon the forbearance of a thing in action. The contract entered into between [Berger] and the individual applicant provided that [Berger] would receive consideration in the form of the applicant's 1989 Dividend (a thing in action) or its cash equivalent. [Berger] would forbear the right to receive the Dividend or payment until January 1, 1990. Therefore, AS 06.20.300 required that the consideration received by [Berger] in these transactions not be greater than authorized by law. This misconstrues AS 06.20.300. Berger will receive a handsome return on his purchases. However, the statute only forbids handsome returns  those in excess of the legal rate  where there is (1) a loan/use/forbearance of money/goods/things in action, or (2) a loan/use/sale of credit. In this case Berger relinquished money. Thus, AS 06.20.300 only prohibits the transaction if, when Berger paid each PFD seller, he was engaging in the loan or forbearance of money. [10] It is clear that Berger did not engage in the forbearance of money; [11] whether he loaned money is less clear. There are two methods for determining whether Berger loaned money. First, did Berger's transactions fit the objective definition of a loan? Second, were the transactions loans disguised as sales? If the answer to either question is yes, Berger loaned money in violation of ASLA. [12]