Court Opinion

ID: 9729529
Source: CourtListenerOpinion
Date Created: 2023-08-26 14:41:12.497064+00
Date Added: 2024-06-11T18:25:59.314099
License: Public Domain

Carter, J.,
concurring.
We are here dealing with a constitutional provision which states: “The Legislature shall not pass local or special laws in any of the following cases, that is to say: * * * Regulating the interest on money.” Art. Ill, § 18, Constitution of Nebraska. The effect of this provision, as I see it, is that any charge for the use of money must be uniform and within maximum limits as to all loan transactions upon the class of persons within the scope *263of the constitutional inhibition. The class was clearly intended to include any person within the state who loans money and exacts interest for its use.
Classification for the purposes of legislation must, of course, operate uniformly upon persons in the same class to avoid the discriminatory and uniformity provisions of the Constitution. But what may be a proper classification for one purpose might be wholly improper in another. Where the Constitution operates to limit the maximum charge for the use of money without exception, the inhibition requires that legislation must apply to all cases within the state in which a charge for the use of money is involved. The very purpose of the constitutional prohibition was to prevent favoritism in interest rates over and above the general maximum rate, either as to classes of persons or classes of property. Since this is the plain intent of the Constitution, the Legislature may not create lesser classes of persons or property not permitted by the Constitution as a basis for legislation. If such a method were permitted, the restriction upon the Legislature contained in the Constitution would be reduced to a shambles with a meaningless effect.
The Legislature appears to be laboring under the misapprehension that it may legislate on classes of lenders, borrowers, or property with reference to charges for the use of money when such classifications may be general for some purposes, even though contrary to the constitutional classification inherent in the constitutional prohibition. This it cannot do.
This court has made some contribution in the past to such an erroneous assumption. In Althaus v. State, 99 Neb. 465, 156 N. W. 1038, this court held that a statute permitting an additional charge where the class of borrowers were poor, necessitous, and without credit, and the cost of making, servicing, and collecting small loans was great, constituted a general class not within the purview of a special law regulating interest. The theory of *264that case appears to be that the constitutional prohibition was against lenders of money, and not against borrowers where it was shown to be for the benefit of the borrower. The holding was upheld by a divided court on very dubious reasoning. The holding was adhered to in State ex rel. Beck v. Associates Discount Corp., 162 Neb. 683, 77 N. W. 2d 215; Mack Investment Co. v. Dominy, 140 Neb. 709, 1 N. W. 2d 295; Nitzel & Co. v. Nelson, 144 Neb. 662, 14 N. W. 2d 197. It appears to be the established law of this state.
But we are not here dealing with small loans within the classification approved in the Althaus case. We aré dealing with classifications of persons and property where such classifications are not permitted by the inhibitory provision contained in Article III, section 18, of the Constitution, even though they might be adequate general classifications for some legislative purposes.
In addition to the reasons stated by the majority, it is my opinion that L. B. 11 is unconstitutional in that the prohibition of the Constitution against the regulation of interest on money by special law is offended whether or not the loan is secured, and whoever the lender might be, except, of course, when made under the provisions of the Small Loan Act. The constitutional prohibition denies to the Legislature the power to grant maximum rates of interest to some and not to others for the use of money.