DocketNumber: No. 39382
Citation Numbers: 15 Ohio Misc. 196
Judges: Kelleher
Filed Date: 4/8/1968
Status: Precedential
Modified Date: 7/21/2022
Referee in Bankruptcy. This cause came on for consideration upon an application filed by the trustee herein on December 7, 1966 by which he seeks an order requiring Columbus Finance, Inc., to refund to him for the benefit of this estate the sum of $6,800. A trial has been held, evidence received and briefs have been filed.
The controversy arose out of the sale of real estate and disposition of the sale proceeds. The sequence of events is important to determination of the matter.
On June 4, 1965 Columbus Finance, Inc., loaned to Ross B. Hollingsworth $6,500 evidenced by a demand note
By their brief, counsel for the trustee have withdrawn the previous contention of the trustee that the mortgage of Columbus Finance, Inc., was defectively executed. Accordingly, they assert there remain but two issues, which they have stated as follows :
I. Is a loan in excess of two thousand dollars ($2,000) made by a small loan licensee upon which it charges or receives charges or interest in excess of eight per cent (8%) simple interest per annum void?
II. Is a real estate mortgage taken as security for a loan by a licensee under the Small Loan Act void?
Question No. I as posed by counsel for the trustee, in all probability requires an affirmative answer. As argued by counsel, Section 1321.15, Revised Code, inferentially permits a licensee, as defined in the Small Loan Act, to make loans in excess of $2,000. If a licensee does so it may not charge or receive interest in excess of that permitted to nonlicensees, which maximum permissible rate is 8% per annum under Section 1343.01, Revised Code. Charging or receiving more, either directly or indirectly, is prohibited by Section 1321.15, Revised Code, but such statute does
However well-established the legal argument, it can only apply to this case, if the facts warrant. Clearly, Columbus Finance, Inc., is a licensee restricted in lending transactions by the law above reviewed. It did make a loan in excess of $2,000.00 to the bankrupt. Therefore, the question is: Did Columbus Finance, Inc., charge, contract for, or receive interest in excess of 8% per annum? If it did, the loan is void and it has no right to collect or receive or retain any principal, interest or charges. If it did not, then the legal argument so well-presented by trustee’s counsel simply does not apply.
The chronology set out at the beginning of this opinion provides the answer. First of all, Columbus Finance, Inc., did not contract for excessive interest. The note (joint exhibit “A”) provides for interest at 8% per annum, the legal permissible maximum. Trustee’s counsel contend that Columbus Finance, Inc., received charges for interest in excess of 8% per annum. The facts do not bear out this contention. It must be remembered that the order of December 10, 1965 was entered by approval of attorneys representing parties other than Columbus Finance, Inc., and nothing was, in fact, then paid to Co
Question No. II, as posed by counsel for the trustee, requires a negative answer. They contend that Section 1321.12, Revised Code, requires that the mortgage of Columbus Finance, Inc., be declared void because of the language contained in that section, as follows: “No licensee shall take a lien upon real estate as security for any loan made under such sections except such lien as is created upon the filing or recording of a certificate of judgment.” But, this loan was not made under the Small Loan Act sections. It was made pursuant to its general corporate powers as set forth in its Articles of Incorporation. The thrust of Section 1321.15, Revised Code, on the situation was that, being a licensee, it could not charge more than 8% on the loan which was in excess of $2,000.00. The thrust of Section 1321.12, Revised Code, is that a licensee may not take real estate mortgages as security for loans under $2,000.00 upon which such licensees are permitted to charge higher rates than can nonlicensees, that is, upon loans made under the Small Loan Act sections.
The same question was raised and decided in favor of the Small Loan licensee in another case presently pending in this court. Columbus Finance, Inc., was also
“A corporation licensed and controlled by the state of Ohio for the purpose of granting loans under the Small Loan Act, and thereby excepted from usury laws as to loans not exceeding $2,000.00, is not precluded from exercising general corporate powers to grant loans in excess of the $2,000.00 small loan limitations, and may accept real estate mortgages as security on such loans. In re Frontier Ranch, Inc., No. 37776, S. D. Ohio (Opinion dated August 10, 1967).
Although the facts were different in that case, the legal conclusion is applicable to this case and I agree with Referee Anderson. No consideration is given, nor need it be, to Sections 1321.51 to 1321.60, inclusive, Revised Code, which sections were enacted after the mortgage now in question was given. I find that the mortgage in issue was valid and that payment thereon by way of settlement in the amount of $6,800.00 was proper and necessary.
Based upon the foregoing opinion, findings and conclusions, it is therefore
Ordered that the trustee’s application should be and it hereby is denied; that Columbus Finance, Inc., and its surety, Travelers Indemnity Company, respectively, be and they hereby are released from any claim by the trustee and/or this bankrupt estate growing out of the factual situation herein set forth; and that the bond in the amount of $6,800.00 upon which Columbus Finance, Inc., is the principal and Travelers Indemnity Company is surety, be and it hereby is cancelled and released, effective this date.