Court Opinion

ID: 3522941
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:35:07.692322+00
Date Added: 2024-06-11T13:26:33.840762
License: Public Domain

[5] I concur in the opinion of Clark, J., herein that the Small Loan Act (Sections 8150-8171) violates Section 44 of Article III of the Constitution because it provides for licensing persons to engage in the business of loaning money up to $300.00 at a greater rate of interest than 8% and prohibits all others from loaning any amount [739] at more than 8%. By thus authorizing such persons to charge more than 8%, "rates of interest" are fixed for a "particular group or class engaged in lending money", which is prohibited by the first sentence of Section 44. Lenders cannot be classified and licensed on the basis of the rates they charge. However, I think it should be made clear that Section 44 does not prohibit all licensing or regulation of those who engage in the business of making loans.
The Attorney General contends that the Constitutional Convention "intended to do away with all classifications of lenders and, therefore, *Page 818 
prevent any classification of interest rates, size or types of loans and also to prevent the classification of borrowers." This is a matter of great importance to the people of this state at this time. Recent legislative history and the debates of the Convention show that the principal purpose of enacting Section 44 was to prevent any qualified person or corporation from being barred from the high rate small loan field and thus to allow competition to keep down interest rates therein. Many people thought small loan rates were too high, the field too restricted and some of the business practices oppressive; but regulation had long been considered necessary to protect borrowers from imposition and fraud. Surely Section 44 cannot reasonably be construed as completely wiping out the police power of the state in this field by prohibiting the legislature from undertaking any regulation of the business of lending money. This would make the cure far worse than the condition sought to be relieved.
In construing Section 44, some consideration must be given to the rest of the Constitution and to general principles of constitutional law. Section 3, Article I states that the police power of the state remains exclusively in the people; and Section 3, Article XI provides that "the exercise of the police power of the state shall never be surrendered." It is a familiar principle that "the state constitution is not a grant of power, but only a limitation, as far as the legislature is concerned"; and therefore, except for the limitations imposed thereby "the power of a state legislature is unlimited and practically absolute." [11 Am. Jur. 894, Sec. 193.]
Therefore, in determining the meaning and effect of Section 44, it will be helpful to take into consideration what it does not prohibit as well as what it does. It does not say that no rates of interest shall be fixed for different classes, kinds or sizes of loans. It does not say that rates fixed shall be applicable to all borrowers without regard to the type or classification of loans made to them. It does not say that no law shall be valid regulating the business of making loans. And it does not say that no law shall be valid requiring a license to engage in the business of making loans. All it prohibits is a law "fixingrates of interest . . . (and other charges in connection with the use of money) . . . for any particular group or classengaged in lending money." To make this prohibition clear, it also affirmatively states that "rates of interest fixed by law shall be applicable generally and to all lenders without regard to the type or classification of their business." Thus Section 44 does not prohibit the Legislature from requiring a license to engage in the business of making loans or particular classes of loans or from regulating such business, if all persons, licensed or unlicensed, including those who occasionally loan their own money as their own investments, may charge the same interest rate for the same loans. (For regulatory legislation exempting from licensing those dealing with their own property, or only occasionally *Page 819 
buying or selling, see Missouri Real Estate Commission Act, Laws 1941, p. 424; Laws 1945, p. 1421.) Certainly the Legislature, in enacting any regulatory legislation, could reasonably define the term "engaged in lending money," which undoubtedly means doing so as a business (the word "engaged" means "occupied" or "employed", Webster's New International Dictionary, 2d Ed.), just as it defined the occupation of real-estate broker in the Real Estate Commission Act.
In other words, Section 44 does not abrogate the police power of the state to regulate and license the business of lending money. It only restricts regulation to the extent that it prohibits fixing different interest [740] rates to be charged by different classes of lenders. No class of lenders may now be given a monopoly or special privileges as to interest rates; but all the rest of the field is as open to the Legislature as it was before. It may fix different maximum rates for different classes, kinds and sizes of loans but all lenders may charge the rate fixed for such loans. It may provide any other reasonable limitations and regulations on loans and lenders. It may classify the lenders to which any limitations or regulations (other than interest rates) shall apply. It may require licenses for all engaging in the business of lending money or for those making certain classes, kinds or sizes of loans, so long as it does not make the classification depend upon the interest rate charged. If the Legislature deems any such regulation and licensing necessary for the protection of the public welfare, Section 44 should not be construed to prevent it.
Conkling and Ellison, JJ., and Tipton, C.J., concur. *Page 820