Sinclair, Scott Co. v. Miller

The facts in this case are precisely analogous to those presented in Morin v. Newbury, 79 Conn. 338,65 A. 156, save that here there was executed and delivered, as security for the note given for a greater sum than that actually loaned, an instrument in writing in the form of a mortgage of personalty, while in the former case the instrument was in the form of an absolute bill of sale but intended as security for the note. In that case we commented upon the possible difference in the effect which might be given to the two forms of intended security; but we said that whatever that difference might be, it would be without importance as bearing upon the question before the court, which was one as to the true meaning and intent of § 4134 of the General Statutes, then, as now, appealed to to invalidate an apparent obligation, since it was clear that the only reasonable construction to be given to its penal provisions was one which limited their application to cases where the chattel mortgage of our statutes, effective when recorded as against the world, was given. Certain of the reasons for that conclusion, having a special relation to the condition disclosed in that case, were then indicated. They were, however, by no means exhaustive. It has been urged upon us in the present case that the purpose of the statute, first enacted in 1899 (Public Acts of 1899, p. 1084, Chap. 165), was not, as might be inferred from the opinion in the former case, either the denial of the benefits of the chattel mortgage statute to those who would use its provisions to further their unconscionable purposes, or the protection of the public from false information conveyed by the public records, but rather the protection of the individual borrower from the exactions of those who might take advantage of his necessities to accomplish extortion.

If the General Assembly entertained any such purpose as the one thus indicated as its sole or partial reason for the enactment of the statute, is it not strange that its penalties were not extended to all cases where security for the unconscionable obligation is taken, whether that security be in the form of a mortgage of chattels, a pledge, or a mortgage of real estate? The inherent vice of one of these forms of safeguarding a harsh contract would seem to be as great as another. But is it, after all, the taking of security for the extortionate obligation which constitutes the real vice to be eradicated, if it is the aim of the legislator to shield the individual from the exactions of others resulting from the enforcement of obligations assumed? Does not the real vice consist in the creation of the harsh obligation to pay the unconscionable sum? Why, then, did not the statute, if its aim was to protect the unfortunate from the consequences of their own acts and contracts, seek to punish him who should exact from his fellow the obligation condemned as unreasonable? Had this apparently logical course been pursued, a situation calling for explanation would have at once developed, and one significant of the legislative purpose. By the accepted policy of our law, the usurer, however extortionate his demands, incurs no forfeiture or penalty. The only hazard he assumes with his extortionate bargain is that in the event of an action he will be unable to recover more than the amount he has loaned and legal interest. The suggested regulation would leave this general policy unchanged, save that the condemnation of the law would fall, and fall heavily, upon him who reserved interest at the rate of from twenty-four to sixty per cent. per annum, depending upon the amount loaned, as also upon him who added to the principal sum agreed to be repaid so much as even a single dollar. Public Acts of 1905, Chap. 235, p. 440, § 7. In this, consistency would be hard to discover.

Again, under the law as it was when the statute under consideration was enacted, the pawnbroker or other loaner of money upon pledge, if he exacted more than the permitted interest charge, rendered himself liable to a quitam forfeiture and no other penalty. General Statutes, §§ 4659, 4661. Under the existing statute imprisonment cannot be imposed for any first or second violation by him of any regulation of his calling. Public Acts of 1905, p. 438, Chap. 235. If our § 4134 is to have the construction claimed for it, its far more drastic penalties attach to the making of a similar loan, if only it be secured, not after the methods of the pawnbroker, but by the means of a chattel mortgage. Reasons for thus lifting the pawnbroker and his methods into a position of comparative favor are not apparent, although it would doubtless be a source of gratification to him to feel that his calling, which had so long been regarded as one peculiarly demanding special regulation, had at last come to be considered as no longer deserving preeminence in that regard, or at least as respects the incurrence of penalties.

These suggestions as to the consequences which would flow from the claimed construction of the statute clearly indicate that the legislative purpose in its enactment was other than that urged in support of that construction, and that some other interpretation must be given to its uncertain language. That other interpretation, which makes the enactment a consistent one, is that which has been referred to as embodied in Morin v. Newbury, 79 Conn. 338,65 A. 156. That interpretation renders the statute inapplicable to the present situation.

There is no error.

In this opinion the other judges concurred.