Court Opinion

ID: 9588206
Source: CourtListenerOpinion
Date Created: 2023-08-21 23:31:27.459301+00
Date Added: 2024-06-11T14:59:13.916785
License: Public Domain

Hall, Presiding Judge,
dissenting. This case involves the law on "Moneylenders and Pawnbrokers” and the construction of statutes enacted on this subject. "The small-loan acts in the various jurisdictions were enacted to mitigate rather than eradicate the evils incident to the *834business of lending money in small amounts to those who, having little to offer as security except their future earnings, or used and worn articles of little value to anyone other than the borrowers, are unable to obtain funds readily. The purpose of the acts is to afford the borrower the greatest practicable measure of protection, and since the acts are remedial in their nature they are to be given a liberal construction in order to effectuate the legislative purpose. In permitting small-loan companies to charge interest in excess of the normal commercial rate, the legislature has imposed a duty upon them to deal fairly with borrowers, and in making loans they must do so with scrupulous adherence to the terms of the statute. .. On the other hand, since the statutes are penal in character, and are intended to assist the borrower by encouraging legitimate capital, the lender is to be protected against any unreasonable extension of the small-loan statute, and a prohibition in the statute should not be extended beyond the fair import of its terms.” 54 AmJur2d "Moneylenders and Pawnbrokers” 615, 616, § 13.
I dissent to Division 3 of the opinion which holds that "level term” life insurance is not prohibited under the Industrial Loan Act. Code Ann. § 25-315 (c) provides: "A licensee may accept as security for any loans or advance made hereunder... reasonable insurance on the life . . . of the principal party obligated on any such loan or advance; provided, however, that any such insurance shall be reasonably related ... to the amount and term of the loan . . . Provided, further, the amount of life.. . insurance required as security for loans made under this Chapter shall not exceed the amount of the loan, including charges, to be secured.” The section also grants power to the Industrial Loan Commissioner to "promulgate rules and regulations to effectuate this provision in accordance with the spirit and intent thereof.”
*835The commissioner, by regulation, authorized the use of both "Reducing term life insurance” and "Level term life insurance.” The former covers the actual indebtedness at the time of death. The latter covers the face amount of the contract at all times. The former cannot exceed one percent of the face amount of the loan. The latter cannot exceed two percent of the face amount of the loan. In other words, the latter costs twice as much as the former.
The question here is whether the contract, which shows on its face that the borrower was charged for "level term life insurance,” is unreasonable under the Industrial Loan Act and therefore void as a matter of law. Code Ann. § 25-9903. The regulation cannot give that which the statute prohibits. Brown v. Quality Finance Co., 112 Ga. App. 369, 371 (145 SE2d 99); Elder v. Home Building & Loan Assn., 188 Ga. 113 (3 SE2d 75, 122 ALR 738).
What is meant by the words "reasonable insurance on life” as "security” for the indebtedness? "The word 'reasonable’ connotes action according to the dictates of reason, such as is just, fair and suitable in the circumstances. When employed to describe the means which are used to achieve a legitimate end it suggests not necessarily the best or only method, but one fairly appropriate, at least under all the circumstances, and when used in connection with legislative measures it signifies such measures as are fit and appropriate to the end in view.” 75 CJS "Reasonable, ” P. 635. The "end in view” sought by the legislature in restricting the use of credit life insurance as security for a small loan to "reasonable insurance on the life” was to provide the lender with "reasonable security” while at the same time prohibiting it from selling to the borrower, at an additional premium, any more credit insurance than is necessary to make the creditor whole should the debtor die. Any authorization or use of level term life insurance on a loan paid off in instalments is contrary to the Industrial Loan Act and void on its face.
*836In my opinion the trial court erred in denying defendants motion to set aside the default judgment.
I am authorized to state that Judges Quillian and Stolz concur in this dissent.