Court Opinion

ID: 3513881
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:25:02.605213+00
Date Added: 2024-06-11T14:05:41.693804
License: Public Domain

Section 90 of our Constitution prohibits, among other things, the legislature from passing special laws regulating the rate of interest on money. It was held in Loan Association v.McElveen, 100 Miss. 16, 56 So. 187, that interest Laws were of general public concern; that, under this constitutional provision, special laws regulating the rate of interest on money could not be passed. In Halsell v. Insurance Company,105 Miss. 268, 62 So. 235, 645, Ann. Cas. 1916E, 229, it was held that, although no special law could be passed regulating the rate of interest, under this constitutional provision, the legislature could make a class of building and loan associations, on account of the distinctive character of their business, and authorize them to charge a rate of interest higher than the general rate others were authorized to charge; that, under the Constitution, such a law was not a special law, regulating the rate of interest, but a general law, applying to all that came within the designated class; that therefore the classification of building and loan associations was a reasonable, and not an arbitrary, classification. *Page 713 
The rule established by the authorities, including the decisions of this court, is that, while it is competent for the legislature to classify, the classification, to be valid, must rest on some reasonable public policy, some substantial differences of situation and circumstances, that would naturally suggest the justice and expediency of special legislation with respect to the objects classified. Substantially the same rules govern with reference to the classification of subjects of legislation by the states in order to meet the requirements of the equal protection clause of the Fourteenth Amendment of the Federal Constitution. In my judgment, the classification of banks receiving deposits of tax collections from the county tax collectors, made by the statute involved, is arbitrary and unreasonable. R.R. Company
v. Ellis, 165 U.S. 150, 17 S.Ct. 255, 41 L.Ed. 666; Rodge v.Kelly, 88 Miss. 209, 40 So. 552, 11 L.R.A. (N.S.) 635, 117 Am. St. Rep. 733; Ins. Co. v. City of Philadelphia, 262 Pa. 439, 105 A. 630, 2 A.L.R. 1573; Bayha v. Carter, 7 Tex. Civ. App. 1,26 S.W. 137; R.R. Co. v. Head, 26 Ariz. 259, 224 P. 1057. In the Ellis case, the supreme court of the United States said:
"That [the classification] must always rest upon some difference which bears a reasonable and just relation to the act in respect to which the classification is proposed, and can never be made arbitrarily and without any such basis. . . . It is, of course, proper that every debtor should pay his debts, and there might be no impropriety in giving to every successful suitor attorney's fees. Such a provision would bear a reasonable relation to the delinquency of the debtor, and would certainly create no inequality of right or protection. But, before a distinction can be made between debtors, and one be punished for a failure to pay his debts, while another is permitted to become in like manner delinquent without any punishment, there must be some difference in the obligation to pay, some reason why the duty of payment is more imperative in the one instance than in the other." *Page 714 
The case of Insurance Company v. Philadelphia, involved a statute which provided that, in all cases where private property was taken, injured, or destroyed by a municipality for public purposes, the amount of damages thereby caused should bear interest at a rate of six per cent per annum from the time of such taking, injury, or destruction. The Constitution of Pennsylvania provided that the legislature should not pass any local or special law fixing the rate of interest. The defense of the municipality was that the statute fixing the rate of interest was a special law in violation of that constitutional provision. The court held the statute unconstitutional; that the classification of municipalities by the statute was arbitrary, and was without any just, reasonable foundation.
The statute here involved singles out and classifies certain banks, and also singles out and classifies certain public funds. It provides that a special rate of interest, two per cent perannum, on daily balances, is to be charged against those banks alone receiving deposits of tax collections from county tax collectors. All banks receiving other deposits than public funds are exempt from the special rate of interest provided by the statute. All other public funds, from every other source, are left out of the class. It is a matter of common knowledge that many of the public officers of this state, including state county, and municipal officers, having the collection and custody of public funds, deposit such funds in banks between the time of their collection, and the time of the settlements required to be made by such officers. Under the statute in question, none of these funds bear interest except tax collections by county tax collectors. The result of the enforcement of the statute will be that banks having on deposit tax collections made by county tax collectors must pay the special rate of interest, while banks having on deposit other public funds get them interest free. If there is any just reason for such a classification, I am unable to see it. *Page 715 
For the same reasons that the classifications made by the statute are arbitrary and insufficient under the provision of our Constitution prohibiting special legislation regulating the rate of interest, it is condemned by the equality clause of the Fourteenth Amendment of the Federal Constitution.
It seems clear to me that the penalty provided by the statute of five per cent per month imposed upon the banks which fail to pay the special rate of interest at the times fixed by the statute is so enormous as to amount to a denial to such banks of due process, in violation of section 24 of our Constitution, and the due process clause of the Fourteenth Amendment to the Federal Constitution. Section 24 of our Constitution provides, in substance, that all courts shall be open, and that every person, for any injury done himself, his lands, goods or reputation, shall have a remedy by due course of law. A penalty of five per cent per month is sixty per cent per year. Litigation going through the trial courts, and also the supreme court, usually takes something like two or three years, sometimes less, sometimes longer. The imposition of the five per cent penalty under the statute for a period of three years would amount to about double the original indebtedness. An original indebtedness of one thousand dollars would, in three years, amount to something like three thousand dollars. A statute which subjects an intending litigant to such excessive and unreasonable penalties for its violation as to intimidate him, and thereby deter him from contending for his rights in the courts, is a denial to him of due process of law. Such a statute practically closes the door of the courts to those desiring to have their rights settled in the courts. Railroad Company v. Georgia,235 U.S. 651, 35 S.Ct. 214, 59 L.Ed. 405; Van Dyke v. Geary
(D.C.), 218 F. 111; Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714, 13 L.R.A. (N.S.) 932, 14 Ann. Cas. 764; Kern v.Pipe Line Co. (D.C.) 217 F. 273; Willcox v. Consolidated GasCo. of New York, 212 U.S. 19, 29 S.Ct. *Page 716 
192, 53 L.Ed. 382, 48 L.R.A. (N.S.) 1134, 15 Ann. Cas. 1034;State v. Crawford, 74 Wn. 248, 133 P. 590, 46 L.R.A. (N.S.) 1039; Coal  Coke Ry. Co. v. Conley, 67 W. Va. 129, 67 S.E. 613.
The majority opinion takes the position that the appellants could have avoided the penalties by paying, under protest, the amount sued for, and then bringing suit to recover it back. Probably the penalties imposed by the statute could have been avoided in that manner, but, if that would not be a denial of due process of law to appellants, I do not see how one could be denied due process. If a person must turn over to an adverse claimant all the latter is claiming, before the former will be admitted to the courts to test his rights, can it be said that the courts are open to him? I think not. My opinion is that they would be closed to him pretty tight.
I agree with the majority opinion that chapter 328, Laws of 1924, has no application to this case, but for a different reason than that given in the majority opinion. That act is applicable only to those made custodians of public funds by law. It applies only to public officers and banks which have qualified, under the law, as depositories of public funds. Appellants, in this case, were not depositories or custodians of public funds in the sense of the statute. The relationship only of debtor and creditor existed between appellants and the public. The failure of appellants to pay the special rate of interest, two per cent perannum, on daily balances, was not a failure to perform a public duty on the part of appellants, but only a failure to pay a debt which they owed. The statute imposing the penalties was therefore not a statute imposing a punishment for failure to perform a public duty, but a statute imposing penalties for failure to pay a debt. *Page 717