Court Opinion

ID: 3944003
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:07:11.925771+00
Date Added: 2024-06-11T13:52:50.580486
License: Public Domain

The prosecution is for violation of the Act of the Thirty-fourth Legislature, Chapter 28, defining "Loan Broker's" and providing regulations therefor and punishment for violations thereof.
A loan broker is defined in the act as follows: "A `loan broker' is a person, firm or corporation who pursues the business of lending money upon interest and taking as security for the payment of such loan and interest an assignment of wages, or an assigment of wages with power of attorney to collect the same or other order for unpaid chattel mortgage or bill of sale upon household or kitchen furniture." Other provisions, making conditions precedent to the engagement in the business, require a bond of five thousand dollars, prescribing its terms; that a book registering the transactions shall be kept open to inspection; the filing of power of attorney, making the county judge the agent upon whom service of process may be had; penalizing the continuance of the pursuit of the business when in default of the payment of the judgment rendered on the bond; requiring that in securities pledged by a married man the wife shall join; fixing an annual tax; declaring compromises for usury void, and prescribing a penalty.
The appeal is maintained on the proposition that appellant in lending money at the legal rate on chattel mortgage security was exercising an inalienable right, and that the Act abridging it *Page 65 
is void for want of power in the legislative department of the government, and its terms unreasonable.
He urges various reasons for his contentions. These cannot within the limits of an opinion be followed in detail. All of them are referable to the scope and limits of the police power of the State. This power has been the subject of much comment by text writers and judges, so much that it would be futile to attempt its review. No more satisfactory statement of it has been found than that made by Justice Williams of the Supreme Court of this State in the opinion in H.  T.C. Ry. Co. v. Dallas,98 Tex. 396, from which we quote as follows:
"The power is not an arbitrary one, but has its limitations. It is commensurate with, but does not exceed the duty to provide for the real needs of the people in their health, safety, comfort and convenience, as consistently as may be with private property rights. As those needs are extensive, various and indefinite, the power to deal with them is likewise broad, indefinite and impracticable of precise definition or limitation."
Courts have not undertaken to catalogue the subjects upon which the police power may operate, nor to define in precise terms the measures that may be lawfully taken, but are guided by previous decisions and pass upon particular cases as they arise, and determine whether they fall within or without the proper limits. See Hudson v. McCarter, 209 U.S. 349; Chicago v. R.R., 53, Am. St. Rep., 557; State v. Harrington, 34 L.R.A., 100; Ives v. South Buffalo Ry. Co., Ann. Cas., 1912-B, p. 156; Stone v. Mississippi,101 U.S. 814, 25 L.Ed., 1079; Dunn v. Commonwealth, 43 L.R.A., 701; Aubrey's Case, 104 Am. St. Rep., 952; People v. Budd, 5 L.R.A., 559. It follows that the decisions of courts passing upon laws similar to those before it in a given case become important subjects of investigation.
It cannot be questioned that the State, under its police power, has the right to regulate the conduct of business to protect the public health, morals and welfare, observing constitutional limitations, reasonable classification, and terms of control. This is recognized in constructions of both the Federal and State Constitutions. Tiedeman on Lim. Police Power, Sec. 102; Mugler v. Kansas, 123 U.S. 623, 31 L.Ed., 205; Murphy v. People of Cal.,225 U.S. 623, 56 L.Ed., 1229, 41 L.R.A. (N.S), 153, St. Louis v. Fisher, 167 Mo., 654, 99 Am. St. Rep., 614, 64 L.R.A., 679,194 U.S. 361, 48 L.Ed., 1018, and other cases listed in Ruling Case Law. Vol. 6, p. 198.
Callings that cannot be regulated except by license tax are those which cannot in their operation be dangerous to the public. Teidman on Lim. Police Power, p. 273; Ex parte Dickey, 144 Cal. 234, 1 Ann. Cas., 428, 66 L.R.A., 928. All others may be restricted. Tiedeman on Lim. Police Power, Sec. 102; Ex parte Drexel, 2 L.R.A. *Page 66 
(N.S.), 588; Stone v. Mississippi, 101 U.S. 814, notes 15 and 16, and other cases listed in 6 Ruling Case Law, p. 218, note 16. And those essentially harmful may be prohibited. Commonwealth v. Frooman, 25 L.R.A., 250; Ruling Case Law, Vol. 6, p. 194, note 6 and cases cited.
The calling of lending money at interest is subject to regulation. From 22 Cyc., 1471, we quote the following:
"The taking of interest, or as it was then called, `usury,' was looked upon in early times with great disfavor; and actually prohibited, not only by the Mosaic law among the Jews, but also under severe penalties by the old English Laws. The church uttered its anathema and the State leveled its forfeitures, against the taking of any interest, great or small. But notwithstanding the denunciations and punishments to which it was subjected, it could not be suppressed, and it was finally, in 1545, sanctioned in England by 37 Henry VIII, chapter 9."
The right to lend money at interest is a creature of statute, not an inherent right, and in our Constitution there is a limitation of the right prohibiting contracts for interest exceeding ten per cent per annum. Many restrictions and regulations with reference to lending money and touching the security that may be taken therefor will be found in the banking laws of the United States and the several States. Laws identical in purpose and similar in detail to that involved in this appeal have been passed by more than thirty of the States of the Union and in the District of Columbia. So far as we have examined the authorities they have, except in the case of Massie v. Cessna,239 Ill. 352, been sustained. People v. Stokes, 118 N.W. Rep., 87; Mutual Loan Co. v. Martell, 200 Mass. 482, 128 Am. St. Rep., 446; Knoxville v. Hobson, 182 U.S. 813; Hancock v. Yaden,121 Ind. 366; State v. Peel, 36 W. Va. 802; State v. Wear, 79 Ore., 367; Commonwealth v. Crosson, 248 Penn. St. Rep., 11; In re Stevens, 170 Cal. 48; Heath v. Millican, 207 U.S. 338; Telephone Co. v. Los. Angeles, 214 U.S. 268; Edwards v. State,62 Fla. 40; King v. State, 136 Ga. 709; State v. Sherman, 27 L.R.A. (N.S.), 898; Wessell v. Timberlake, 116 N.E. Rep., 43 (Ohio); Commonwealth v. Puder, Supreme Court of Pennsylvania, decided April, 1918.
In the case of People v. Stokes, 118 N.W. Rep., 87, that of Massie v. Cessna, 239 Ill. 352, is distinguished, and in Mutual Loan Co. v. Martell, supra, the Supreme Court of Massachusetts and the Supreme Court of the United States, 222 U.S. 231 Law Ed. Vol. 56, p. 178, refused to follow it.
The States having similar laws are as follows: California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi Missouri, Nebraska, New Hampshire, New Jersey, New York, Ohio, Oklahoma, Oregon, Pennsylvania, *Page 67 
Rhode Island, Tennessee, Texas, Utah, Virginia, Wisconsin, and Wyoming. The major portion of them require a bond as a condition precedent for the pursuit of the business and other regulations varying in terms, but not different in substance from those in our statute. The law on the subject enacted by Congress for the District of Columbia varies from ours in no essential particular, and contains the criticised requirement that an agent upon whom service of process may be made shall be appointed, requires a bond in the sum of five thousand dollars, and is more restrictive than the Texas statute in that it requires the bond shall be made by a surety company. U.S. Statute at Large, Vol. 37, post 1, p. 657. In amount of bond and other provisions this statute is not unlike that in many of the other states. The classification of occupations for the purpose of police regulation, based upon the character of surety company. U.S. Statutes at Large, Vol. 37,post 1, p. 657. 218 U.S. 562, 54 L.Ed., 1151, and the principle recognized in the dcisions construing our Constitution, Art. 8, Sec. 2. See Fahey v. State, 27 Texas Crim. App., 146; Texas v. Stephens, 100 Tex. 628; Craddock v. Express Co., 125 S.W. Rep., 59; Fahey v. State, 57 Tex.Crim. Rep..
The case of Owens v. State, 53 Tex.Crim. Rep., is relied on by appellant as sustaining his contention throughout. The decision condemned the statute concerning the pursuit of the business of procuring and purchasing assignments of wages. Its terms were a manifest discrimination in excepting from its operation persons of the same class as others who were affected by its restrictions. We think it was also correctly determined therein that the statute was an unauthorized and unreasonable exercise of the police power. By fixing the license tax at five thousand dollars annually, to be collected by the State, and two thousand and five hundred dollars additional by the county, it manifestly prohibited the pursuit of the business at which it was directed. The right to license and regulate an occupation which may under such restrictions be conducted in a manner not harmful to the public, does not include the right to prohibit its pursuit. Tiedeman on Lim. Police Power, Sec. 102; Freund on Police Power, Secs. 492, 494, 498; Hirshfeld v. City of Dallas, 15 S.W. Rep., 124; 8 Cyc., 886; 38 Am. Rep., 689; Millican v. Weatherford, 54 Tex. 388; Commonwealth v. Atlantic Coast Ry., 7 L.R.A. (U.S.), 1086; State v. Phelp, 35 L.R.A. (U.S.), 353. The restrictions upon the wage earner and the purchaser were unreasonable in that they put a prohibitive tax upon the purchaser, and made one subject to the tax who took as many as three assignments of wages. The distinction between that case and this one is obvious. Here the license tax is $150 a year. The obligation in the bond is contingent and not absolute. It creates no liability against one who *Page 68 
pursues the occupation in accordance with the law. It regulates but does not prohibit the business. A bond in substance such as that required by this statute was required by the State of Michigan as a condition precedent to engaging in the business of pawn broker. A pawn broker's occupation is lending money upon personal property pledged. That of a loan broker, under our statute, is lending money upon personal property mortgaged and upon wages assigned. The principles applicable in the control of pawn brokers by similar statutes are obviously applicable to those in the instant case. The Supreme Court of Michigan, in a pawn broker's case, held the bond, which was for five thousand dollars, — very like that in our statute, — valid, and the law not obnoxious to the various constitutional provisions urged. See Grand Rapids v. Braudy, 32 L.R.A., 116, and note. Our statutes regulate pawn brokers in a manner quite similar to the statutes here in question. See Title 102, Vernon's Sayles' Civil Statutes. The validity of these regulations has been recognized by this court in Heitzelman v. State, 26 S.W. Rep., 729. Other cases upon the subject will be found in 30 Cyc., 1165; Solomon v. Denver, 55 Pac. Rep., 199; Butt v. Paltrovich, 104 Am. St. Rep., 698; Elsner v. Hawkins, Ann. Cas., 1913-D, p. 1278, and note.
The pawn brokers statute embraces practically the same elements that are the basis of complaint against the loan brokers' statute and render the right to regulate and furnish an example of an approved method therefor. In street traffic regulations in this and other States the requirement of a bond of indemnity against violations has been held not unreasonable. See Ex parte Cardnell, 150 Pac. Rep., 348, L.R.A., 1915-B, p. 850; Memphis v. State, L.R.A. 1916-B, p. 158; Willis v. State, 182 S.W. Rep., 275; Lablank v. New Orleans, 70 So. Rep., 212; Dickey v. Davis, L.R.A. 1915-F, p. 41; Greene v. City of San Antonio, 178 S.W. Rep., 6; Ex parte Parr, 82 Tex.Crim. Rep., and other Texas cases there listed.
A provision permitting revocation of licenses has often been held not unreasonable. 53 Am. Rep., 620; 26 L.R.A. (N.S.), 686; Lane v. Chappell, 159 S.W. Rep., 905; Fisher v. State,194 U.S. 361; 48 L.Ed., 1018; Davis v. Mass., 167 U.S. 43, 42 L.Ed., 31; Kissinger v. Hay, 113 S.W. Rep., 1005.
The United States Supreme Court has held that as a condition precedent for a license to do business, a foreign corporation may be required to designate an agent within the State upon whom process may be served, and that such requirement may be applied to an individual stockholder who is a non-resident. Wilson v. Seligman, 144 U.S. 339, 36 L.Ed., 42. It would seem a fair analogy that the State having authority to prescribe regulations as a condition. precedent to the pursuit of a given avocation, would have the right to include as a part of the regulation the requirement that *Page 69 
an agent upon whom process might be served be designated as a condition precedent to the issuance of the license.
Concerning the police power of the State and the relation of the courts to its exercise, we take the following quotation from the opinion of the Supreme Court of the United States in Mugler v. Kansas City, 123 U.S. 623, 31 L.Ed., 210:
"It does not at all follow that every statute enacted ostensibly for the promotion of these ends is to be accepted as a legitimate exertion of the police power of the State. There are, of necessity, limits beyond which legislation cannot rightfully go. While every possible presumption is to be indulged in favor of the validity of a statute, Sinking Fund Cases,99 U.S. 718 (25:501), the courts must obey the Constitution rather than the law-making department of government, and must, upon their own responsibility, determine whether, in any particular case, these limits have been passed. `To what purpose,' it was said in Marbury v. Madison, 5 U.S. 1 Cranch, 137, 167 (2:60, 70), `are powers limited, and to what purpose is that limitation committed to writing, if these limits may, at any time, be passed by those intended to be restrained? The distinction between a government with limited and unlimited powers is abolished, if those limits do not confine the persons on whom they are imposed, and if acts prohibited and acts allowed are of equal obligation.' The courts are not bound by mere forms, nor are they to be misled by mere pretenses. They are at liberty — indeed, are under a solemn duty — to look at the substance of things, whenever they enter upon the inquiry whether the Legislature has transcended the limits of its authority. If, therefore, a statute purporting to have been enacted to protect the public health, the public morals, or the public safety, has no real or substantial relation to those objects, or is a palpable invasion of rights secured by the fundamental law, it is the duty of the courts to so adjudge, and thereby give effect to the Constitution. . . .
"No one may rightfully do that which the law-making power, upon reasonable grounds, declares to be prejudicial to the general welfare.
"This conclusion is unavoidable, unless the Fourteenth Amendment of the Constitution takes from the states of the Union those powers of police that were reserved at the time the original Constitution was adopted. But this court has declared, upon full consideration, in Barbier v. Connolly, 113 U.S. 31
(28:924) that the Fourteenth Amendment had no such effect. After observing, among other things, that that amendment forbade the arbitrary deprivation of life or liberty, and the arbitrary spoliation of property, and secured equal protection to all under like circumstances, in respect as well to their personal and civil rights as to their acquisition and enjoyment of property, the court said: `But neither the amendment *Page 70 
— broad and comprehensive as it is — nor any other amendment was designed to interfere with the power of the State, sometimes termed its police power, to prescribe regulations to promote the health, peace, morals, education, and good order of the people, and to legislate so as to increase the industries of the State, develope its resources, and add to its wealth and prosperity.'"
Numerous cases applying the principles herein announced to particular statutes will be found in Ruling Case Law, Vol. 6, p. 240, note 20, p. 241, notes 1, 2 and 3; p. 243, note 13. Having no precise limits defined in advance, the unrestrained exercise of the police power would endanger constitutional government. It being an essential and useful attribute of government, the courts can no more arbitrarily deny its proper exercise than they can tolerate its arbitrary application.
The statutes regulating loan brokers are founded on the idea that there exists a real basis for the classification adopted, and that in the conduct of the business of lending money on mortgages on household effects and assignment of wages there are abuses both on the part of the lender and the borrower, which require restrictions in the public interest.
Giving scope to the presumption in favor of the Validity of laws, having regard for the numerous instances in which the lawmaking power of the State and Nation have found it expedient to enact laws with the same object as that under consideration, observing that the courts in numerous instances have upheld these laws as a legitimate and proper exercise of the police power of the State, we regard ourselves unauthorized to declare that the Legislature of this State was inhibited by the State or Federal Constitution from enbracing the subject within its police regulations, or that the conditions existing did not furnish occasion therefor, or that the provisions of the Act are unreasonable.
The fact that the record discloses that the appellant has not been able to make the bond required cannot, in view of the finding of the trial court against him, nor in view of the general application of similar laws throughout the country as pointed out above, be taken as conclusive that the requirement is unreasonable. Similar bonds have been held reasonable requirements; statutes demanding them have been enforced for years. The object of the demand is primarily to furnish assurance that the individual who seeks the license is of a type that will conduct the business permitted in a legal, manner, and secondarily, to furnish indemnity to those injured by his failure to do so. This court upheld the same statute in the case of Ex parte Hutsell, 78 Tex.Crim. Rep.. The opinion was not unanimous, though there was no dissenting opinion written. There has been development of the subject since that time, and in view of the dissent of the Presiding Judge, for whose opinion the writer has great respect, the subject has been gone into with *Page 71 
as great detail as practicable, with the result that our conclusion is that the law is not shown invalid, and that the judgment entered should be affirmed.
Affirmed.