Ford v. Bates

This is a suit to foreclose a mechanic's lien for labor and material upon an automobile. A decree was rendered in favor of plaintiff. Defendant appeals.

The plaintiff C.J. Ford was engaged in the automobile repair business in the city of Portland, Oregon. The Local Loan Company was a corporation engaged in the loan business, making loans and charging three per cent interest per month, being licensed under chapter 385, Oregon Laws, 1931, known as the "Small Loan Act". Mitchell Vukovich was the owner of a Buick sedan automobile, and on July 7, 1933, borrowed $125 from the Local Loan Company, paying three per cent interest per month. The loan was secured by a chattel mortgage on the motor vehicle, and, on August 14, Vukovich made a payment on the mortgage in the amount of $11.13, which was credited as follows: $4.63 interest and $6.50 on the principal. Between August 1 and August 5 of that year, plaintiff Ford repaired the automobile. The reasonable value of the material and labor done on the automobile was $52. He filed a lien on said automobile for that amount on August 17, 1933, in the clerk's office in Multnomah county, Oregon. On September 14, 1933, plaintiff proceeded to foreclose his lien on the Buick sedan and duly caused the sheriff to take possession thereof. Thereafter defendant Bates, who claims to be the present owner of said Buick sedan, filed a general denial of said lien notice and foreclosure filed by plaintiff. Bates deposited with the sheriff of Multnomah county, Oregon, the sum of $125, in lieu of an undertaking for the redelivery of said Buick sedan. Subsequent to the foreclosure by the Local Loan Company of its mortgage, it sold the Buick sedan to Kupp Motor Company, Inc., which in turn sold the automobile to defendant on or about January 23, 1934.

It was stipulated by plaintiff and defendant in open court as follows:

"That Local Loan Company had been licensed to transact a small loan business under Chapter 385 of the laws of 1931 and was qualified to do business under that section when it loaned the sum of $125.00 to one Mitchell Vukovich on July 7, 1933, at an interest rate of 3% per month from that date until paid and took from the said Vukovich a mortgage on his automobile described as Buick Sedan, motor number 1629927; that said mortgage was duly recorded July 12, 1933, in the county records of Multnomah County, Oregon; and that Local Loan Company was not licensed under chapter 377 of the laws of 1931."

Chapter 377, Laws of 1931, is entitled:

"An Act To define, license and regulate the business of making loans on motor vehicles, including those required by law to be registered with the secretary of state, at a rate of interest, consideration or charge in excess of ten (10) per centum per annum; to prescribe the maximum rate which may be charged, contracted for or received and the maximum amount which may be loaned to any one person at such rate; to provide for the administration and enforcement of this act and penalties for violation thereof."

The act, so far as material here, reads as follows:

"Section 1. This act shall be known as the `motor vehicle finance act.'

Section 2. It shall be unlawful for any person, copartnership, association or corporation to engage or continue in the business of making loans on motor vehicles, including those required by law to be registered with the secretary of state, for which there is charged, contracted for or directly or indirectly received any sum or value at a rate in excess of ten (10) per centum per annum, except as authorized by this act and without first procuring a license in accordance with the provisions of this act. * * *

Section 4. * * * Such applicant at the time of making such application shall pay to the licensing official for the state banking fund the sum of one hundred dollars ($100) as an annual license fee for a period terminating on the last day of the current calendar year; provided, that if the application is filed after June 30 in any year such license fee shall be fifty dollars ($50). * * *

Section 21. * * * It shall be unlawful for a licensee to charge, contract for or receive any interest or consideration at a greater rate than three (3) per centum per month on any loan or loans made to any one person in the aggregate sum of eight hundred dollars ($800) or less the security for which consists of a chattel mortgage or a title retaining contract upon a motor vehicle, including such as are required by law to be registered with the secretary of state. * * * No further or other charges or amounts whatsoever in addition to the interest herein provided for shall be directly or indirectly charged, contracted for or received except the following:

Fees actually and necessarily paid out by the licensee to any public officer for filing or recording or releasing in any public office any instrument securing the loan or in connection therewith, which fees may be collected when the loan is made or at any time thereafter;

Insurance premiums in connection with any loan actually paid out by the licensee to any insurance company or agent duly licensed and authorized to do business in the state of Oregon;

Not more than the sum of fifteen dollars ($15) as a premium to cover vendor's single interest, collision, conversion and embezzlement protection to be retained by the licensee or paid out by the licensee to any insurance company or agent duly licensed and authorized to do business in the state of Oregon as the licensee may elect.

Section 23. If any licensee or agent, member, officer or employe thereof or any other person shall have been convicted by a court of competent jurisdiction of having charged, contracted for or received any interest, fees or other charges in excess of those permitted by this act, then any such loan shall be void and the licensee shall forfeit the right to collect or receive any principal, interest or charges whatsoever on such loan and he shall, upon order of the court, return to the borrower free from the licensee's lien any collateral security which the borrower may have deposited with the licensee and release any lien taken to secure such loan and shall pay into the common school fund of the county wherein the loan was made all payments of principal and interest and all fees or other charges previously collected under such loan."

Chapter 385, known as the "Small Loan Act", provides that it shall be unlawful for any person, copartnership, association or corporation to engage or continue in the business of making loans in amounts of $300 or less, secured or unsecured, for which there is charged for or directly or indirectly received, any sum or value at a rate in excess of 10 per centum per annum, except as authorized by the act and without first procuring a license in accordance with the provisions of the act. The act provides for the issuing of licenses to residents of the state and copartnerships or associations, or an Oregon corporation, in good standing, or a foreign corporation qualified to do business in the state. The fee for such license is $100 per annum. The act authorizes a charge of three per centum per month for a loan not exceeding $300; and for a loan of less than $30, any agreed rate of interest. Each act contains the following section:

"Nothing in this act shall be construed or held to limit the rights, powers or privileges granted to any person, copartnership, association or corporation by any law of this state or of the United States whereby the loaning of money or extending of credit is regulated; provided, that such person, copartnership, association or corporation is operating in compliance with the provisions of such law." (§ 26, Ch. 377, and § 28 of Ch. 385, Laws of 1931).

Both the Small Loan Act and the Motor Vehicle Finance Act were passed by the 1931 legislature. Both were approved by the governor and filed in the office of the secretary of state March 11, 1931, and both became effective on the same date.

The sole question presented on this appeal is whether plaintiff's lien is superior or inferior to the chattel mortgage above mentioned by reason of the fact that the mortgagee was not licensed under the Motor Vehicle Finance Act. Defendant contends that as a licensee under the Small Loan Act the mortgagee was privileged to loan up to $300 to any one person at a rate of interest not to exceed three per centum per month upon the security of a motor vehicle. Plaintiff contends that, in order to authorize a loan secured by a mortgage on an automobile where the interest is three per centum per month, the person loaning must obtain a license under the Motor Vehicle Finance Act.

Plaintiff submits that the statute, chapter 377, Laws of 1931, is plain and unambiguous and needs no interpretation: CitingRathfon v. Payette-Oregon S. Irr. Dist., 76 Or. 606, 610 (149 P. 1044); Portland Loan Co. v. La France, 139 Or. 565 (9 P.2d 1051).

The mandate contained in the second section of chapter 377, that it shall be unlawful for any person to engage in the business of making loans on motor vehicles for which there is charged or directly or indirectly received any sum at a rate in excess of 10 per cent per annum "except as authorized by this act and without first procuring a license in accordance with the provisions of this act", is plain and mandatory. It seems to us that this takes the matter of financing automobiles or loaning money and taking security upon an automobile out of the provisions of chapter 385, known as the "Small Loan Act".

One obtaining a license and paying $100 for it, under chapter 377, is authorized to make loans secured on automobiles in any sum from $1 to $800 and charge three per cent per month. If a person, who has obtained a license under chapter 385, the Small Loan Act, is allowed to make loans and take security upon automobiles up to the sum of $300, this would be in contravention of the provisions of the Motor Vehicle Finance Act, when section 2 of that act plainly forbids the same. Such an arrangement would tend greatly to confusion.

In Black on Interpretation of Laws, page 36, it is stated:

"It is beyond question the duty of courts, in construing statutes, to give effect to the intent of the law-making power, and to seek for that intent in every legitimate way. But in the construction, both of the statutes and contracts, the intent of the framers and parties is to be sought, first of all, in the words employed, and if the words are free from ambiguity and doubt, and express plainly, clearly and distinctly the sense of the framers of the instrument, there is no occasion to resort to other means of interpretation."

Practically the same rule is enunciated in Sutherland on Statutory Construction, § 234, in the following words:

"If a statute is valid it is to have effect according to the purpose and intent of the law-maker. The intent is the vital part, the essence of the law. This is the intention embodied and expressed in the statute. * * * If a statute is plain, certain and unambiguous, so that no doubt arises from its own terms as to its scope and meaning, a bare reading suffices; then interpretation is needless."

We think these two statutes should be construed in the same manner as the Small Loan Act was construed in an opinion by Mr. Justice ROSSMAN in the case of Portland Loan Co. v. La France, supra; that is, by ascertaining the legislative intent.

Some of the provisions in section 21 of the Motor Vehicle Finance Act are not applicable to the Small Loan Act, particularly that relating to insurance premiums in connection with the loan paid out by the licensee, and that limiting to the sum of $15 as a premium to cover the vendor's single interest, collision, conversion and embezzlement protection, to be retained by the licensee, or paid out by the licensee to any insurance company; while some of the provisions in the Small Loan Act, such as making reports of small loans that have been made, are wholly inapplicable to the Motor Vehicle Finance Act.

Section 22 of the Small Loan Act as amended by chapter 426, Oregon Laws, 1933, provides that on unsecured loans in the aggregate sum of $30 or less, made to any one person without the additional signature, indorsement or guaranty of another, a licensee may charge or receive a consideration in the amount to be agreed upon between the borrower and the licensee. This provision is entirely in conflict with the provisions of the Motor Vehicle Finance Act.

Taking the two acts and giving each an appropriate meaning, we think it was the intention of the law-makers that the provisions of the Motor Vehicle Finance Act should govern loans made to the amount of $800 where security is taken upon a motor vehicle, without regard to the provisions of the Small Loan Act.

According to such construction each act is given effect when applied to its respective sphere and each act is workable. The classification of the business of making loans on motor vehicles, the requiring of licenses therefor and the regulating of the same is a legislative prerogative. The classification is based upon a reason that the law-makers deemed sufficient. There being apparently some reason for such classification, the legislative decree should be enforced. SeeSafeway Stores, Inc., v. Portland (decided March 12, 1935),149 Or. 581 (42 P.2d 162).

The Local Loan Company had no license, as provided by the Motor Vehicle Finance Act, and the taking of the chattel mortgage on the Buick sedan was illegal and void. The defendant concedes that, if the Local Loan Company was required to obtain a license according to the provisions of the Motor Vehicle Finance Act, the chattel mortgage on the Buick sedan was void.

Section 23 of chapter 377 provides that if any licensee shall have been convicted of having charged, contracted for, or received, any interest or fees in excess of those permitted by the act, then any such loan shall be void, and the licensee shall forfeit the right to collect principal, interest or charges on such loan, and he shall, upon order of the court, "return to the borrower free from the licensee's lien any collateral security which the borrower may have deposited with the licensee and release any lien taken to secure such loan", and provides for the licensee paying into the common school fund of the county all payments of principal and interest, and all fees or other charges previously collected under such loan. Because of the fact that the loan company or its officers have escaped conviction would not indicate that the mortgage taken to secure the loan was valid. If the mortgage was valid, the court would not require a return to the borrower, free from the licensee's lien, of any collateral security or release of any lien taken to secure the loan. The chattel mortgage would be invalid before any such conviction or order of the court, as well as afterwards.

We make no provision for the payment of the principal and interest into the common school fund, as the Local Loan Company, which made the loan, is not a party to this suit.

The section common to both acts relating to not limiting the rights granted to any persons loaning money under any other law seems to be a precautionary provision and would not prevent one from obtaining a license under the Small Loan Act and also the Motor Vehicle Finance Act, or under any other act that may hereafter be passed, so long as they do not conflict.

It perhaps should be noted that the two acts considered here were amended in a material way at the legislative session in 1935, which of course would not affect the present case.

Plaintiff's lien upon the Buick sedan described is valid and superior to the claim of defendant. The judgment of the circuit court should be affirmed.

BELT and RAND, JJ., concur in this opinion.