
    APPLICATION OF THE LICENSE STATUTE RELATING TO CHATTEL LOANS.
    Common Pleas Court of Montgomery County.
    Charles Houser v. State of Ohio.
    Decided, March, 1915.
    
      Loans on Chattels ancl Wages — Application of the Statutory Requirement as to the Licensing of Lenders — Evasions which Constitute a Violation of the Statute — Section 6364-1. ■
    The statutory provision that all persons, firms or corporations making loans upon chattels, salaries or wages must first obtain a license from the Secretary of State so to do, applies to all loans which, through^ intentionally deceptive words or acts on the part of the lender, are accepted by the borrower with the conviction and under the belief that his chattels or salary are answerable therefor.
    
      Boy G. Fitzgerald, for plaintiff in error.
    
      H. A. Fstabrook and Beuben B. Holmes, contra.
   Sprigg, J.

This ease is before the court upon error to a ruling of tihe criminal division of the municipal court of the city of Dayton, Ohio, in an effort to reverse the judgment and conviction of Charles Houser, the plaintiff in error, for an alleged violation of Section 6346-1 of the General Code of Ohio laws.

The court has indulged in much careful research and granted this case considerable thought, not only because of its importance to the plaintiff in error and the public, but more especially since the arguments and briefs of counsel would seem to present at first blush a marked difference between the law of our state and the dictates of sound judgment and common sense, under the proofs as offered in municipal court.

The plaintiff in error, who was the defendant below, was charged with the violation of Section 6346-1 of the General Code of Ohio in that without a license he engaged in the business of making loans upon chattels or personal property. The -law upon which this prosecution was based is to be found in Sections 6346-1 to 6346-7 inclusive, of the General Code of Ohio. Section 6346-1 reads as follows:

"No person, firm or corporation except banks and building and loan associations, shall engage or continue in the business of making loans upon chattels or personal property of any kind whatsoever, or of purchasing or making loans upon salaries or wage earnings, without first having obtained a license so to do from the Secretary of State.”

Section 6346-6 provides that:

"Any person, firm or corporation or any agent, officer or employee thereof, violating any provision of this act, or that carries on the business of making loans upon chattels or personal property of any kind whatsoever, or of purchasing or making loans upon salaries or wage'earnings, without first obtaining license as provided in this act, shall for the first offense be fined, ’ ’ etc.

The plaintiff in error contends that, "while it is admitted that a loan was made by him to one Mary Brown, in the amount claimed,” said loan was not made upon "chattels or personal property, but was solely a moral risk and absolutely unsecured in any way or manner whatsoever.”

At this point it might be stated by the court that the testimony below shows no mortgage or pledge upon either real or personal property to have been made between the parties. The evidence does show, however, that one Mary Brown, a citizen of Dayton, Ohio, having stored her household goods with a ceriain storage company in said municipality, was desirous of repossessing herself of the same, so that she might engage in the rooming house business; that being without funds, and therefore unable to release her property from storage, upon the advice of a friend, she repaired to the Dayton Credit Company in the city of Dayton, of which Charles ITouser, the plaintiff in error, was the agent, and requested a loan of nineteen dollars so that she might release her goods from storage and obtain immediate possession of the same for.her own use; that at the time the said Houser suggested to her that he could not loan her the sum of nineteen dollars, but would accommodate her with the sum of twenty dollars if she could satisfy him as to the kind, amount and condition of her possessions; that in pursuance thereof she agreed to borrow the sum of twenty dollars from the Dayton Credit Company through its agent, Charles Houser, and for that purpose gave to the latter a list of her furniture and household effects together with a statement of her domestic, social and financial condition; that thereafter the said Charles Houser, upon her information that she had purchased her household goods from William Byrne, a credit and installment house in the city of Dayton, telephoned the said William Byrne for the purpose of discovering the credit of said Mary Brown, and probably as to whether she had paid for the furniture in question; that thereupon certain statements were made to her in relation to her liability for the indebtedness about to be incurred, and to all in-1ents and purposes she was led to believe that her household effects were to be security for the loan she sought. That in the final negotiation of said loan she signed two promissory notes, one being for the principal thereof, and the other ostensibly for interest and costs, and also a certain paper writing which, while' it contained no list of her chattel property, was described to her as being a chattel mortgage and was in every way such, excepting that in small print it contained the provision that “Nothing herein contained shall be construed as to convey any title to the property herein described to the said L. N. Clark or to the Dayton Credit Company, or to any person or persons represented by them, or to create any lien thereon in favor of the said L. N. Clark or in favor of the said Dayton Credit Company or in favor of any person or persons by them represented.”

The loan was. made and thereafter certain payments were had either upon the principal or the interest, although the same were not kept up in accordance with the terms; also several demands would seem to have been made either for punctual payment or the possession of the chattels alleged to have been mortgaged.

Then came the flood and the property of Mary Brown was swept away thereby, as was'that of most other citizens of Dayton. Thereafter many claims were made upon her by the Dayton Credit Company through' its agent and collectors and various importunities upon the said Mary Brown induced her to offer to turn over to said, the Dayton Credit Company, her range or cook stove, the only article which she had saved from the waters, in payment of the debt. This was refused, however, and payment insisted upon, and by reason of such insistence the ease came into the court below.

The contention of counsel for the plaintiff in error is, that the loan in question was not made upon chattels or personal property, but merely upon a moral risk; that the section of the code, namely, 6346-1, upon which the state bases its affidavit, only applies to those persons who engage in the business of making-loans upon chattels or personal property, and that no act of the General Assembly can be broader than its title, particularly if the same be penal and not remedial in its nature. In support of this proposition counsel for the plaintiff in error relies to a great extent upon the case of State v. Myers, 56 O. S., 740.

In that case our Supreme Court holds in effect that a statute defining a crime or offense can not be extended by construction to persons or things not within its descriptive terms, though they be within the reason and spirit of the statute; and further, that persons can not be made subject to such statute by implication, since only those transactions are included in them which are within both their spirit and letter, and all doubts in the interpretation of suelr statutes are to be resolved in favor of the accused.

This in general is undoubtedly the law, not only in the state of Ohio ,but in most of our other jurisdictions as well. However, as times change and the ideas of the public change in due proportion, the courts are forced to take a wider and perhaps more intelligent view of the law, both common and statutory. This has been recognized by our own Supreme Court since the seemingly inexorable ruling in the Myers case.

In the case of Baker v. State of Ohio, 69 O. S., at page 68, particularly at page 74, Judge Spear says:

“We are quite aware that the rule of law and of this court is that a statute defining an offense is not to be extended by construction to persons not within its descriptive terms. Yet it is just as well settled that penal provisions are to be fairly construed according to the expressed legislative intent, and mere verbal nicety or forced construction is not to be resorted to in order to exonerate persons plainly within the terms of the statute.”

And to like effect, see the case of Conrad v. State of Ohio, 75 O. S., 52, in which the Supreme Court holds that the rule as to strict construction of the penal statutes does not require the courts to go to the extent of defeating the purpose of the statute hy a severely technical application of the rule.

Also the case of State v. Vance, in the 84th Ohio State, at page. 207, which absolutely affirms the proposition laid down in the foregoing cases.

Tn other words, while penal statutes are to be strictly construed in favor of the accused, and are not presumed to include persons or offenses which their titles would not seem to indicate, still the courts are not to go out of their,way by vain construction or forced" interpretation so as to preclude those persons or offenses from the operation of the statutes, which'the Legislature in its wisdom and desire fully intended to include.

Counsel for plaintiff in error bases his contentions more especially upon State v. Cotton, reported in 123 La., at page 750, a ease practically in point, and perhaps the only one which either counsel or the court has been able to discover. In .Louisiana there was a statute against loaning upon salaries. It was shown that the defendant loaned to wage earners, sometimes charging as high as 30 per cent, in a month. However, he took no assignment or .pledge of the salaries of those to whom he made his loans. The court held that an act can not be broader than its title; in so far as it is, it is unconstitutional. The act in question was declared in its title to be for the purpose of levying a license on the business of lending money .on or purchasing time, wages or salaries from wage earners. The license, therefor, was to be upon those who purchased time or lent money on wages and salaries. The court said:

“According to the contention of the state the phrase ‘lend money on wages or salaries’ has the same meaning as ‘lend money to wage or salary earners. ’ We do not-think so. To lend money on something means to lend money on the.hypothecation of something. A money lender applied to for a loan on something (especially the kind of money lender which the State contends the defendant in this case is), would certainly understand the thing on which the loan was solicited would be placed in his hands as security for the loan. A loan on real estate, on bonds, means a loan on a mortgage upon the real estate, on a pledge of the bonds. Defendant’s business, therefore, does not come within the puiwiew of said act.”

With due respect to the Supreme Court of Louisiana and counsel for plaintiff in error in this case, we can not agree with such reasoning. Tt is not to be thought that the legislative intent in the drafting of the statute before us, included only those who actually received chattel mortgages upon personal property and excluded those who by every word and deed strove to impress the mind of the borrower with the fact that the loan was made upon chattel security although in reality it was not. To so hold would be tantamount to saying that the evil which the Legislature sought to correct was the business of accepting chattel mortgages and not that of making loans to indigent persons at excessive rates of interest. To us this would be an absurdity. Such actions and conversations as were employed by the plaintiff in error in this case, would as effectually force the unlettered and untutored mind of the average borrower of the class under consideration to the conclusion, that a failure to pay the debt no matter how unconscionable the contract, would eventuate in the loss of his property as would the mere execution and delivery of a chattel mortgage. A chattel mortgage of itself is certainly sufficiently innocent, but loans of the class before us are not, whether secured by mortgage, ingenuousness or fear. It is oúr opinion that the Legislature intended to include all such loans which, through deceptive words or acts upon the part of the lender, are accepted by the borrower with the conviction and under the belief that his chattels are answerable therefor. Counsel would seem to feel that Judge Dillon, of Franklin county, in his decision in the case of Thuma v. State of Ohio, 15 N.P. (N. S.) at page 625, was not properly advised in the premises. We believe, however, that he was guided by sound judgment, good conscience, common sense, and the settled law of Ohio, when he said upon page 629 of that decision:

"And it is claimed upon the part of counsel for Bighamm that this loan was made, not upon theory of pledge or mortgage upon his personal property, but solely upon the credit and standing of the borrower and therefore was made purely upon a moral risk. I am sure that a court might close its eyes and ignore the real transaction, and by some strict and unnecessarily technical construction arrive at that conclusion; but a review of the. transcript of the evidence in the case precludes any such conclusion herein. The conviction, therefore, is not for evading the law. Counsel are correct in the statement that there is no statute providing for a punishment for evading the law. It is the fact that they have transgressed this law in substance which is the basis of the court’s decision.”

This case was affirmed by our court of appeals without report.

And this we believe to be the gravamen of the case before us. Tt is idle to speak of the court’s having moral courage to face the rancor of public opinion when public opinion stands for that which is obviously and conscientiously correct. The sole time a court need fear the urge of public clamor is when it desires to do that which is right in the face of a misguided public sentiment.

In the case before us there is no such situation. We are satisfied from having read the record, that every act of the plaintiff in error and of his principal was for the purpose of circumtenting and evading those just statutory provisions which were passed by the Legislature for the protection of unfortunate and impoverished individuals who require financial assistance to the extent of submitting to almost any injustice in order to obtain the same. In doing so they certainly- transgressed the law in substance.

We do not believe that this court, sitting either in equity or at law, in a supposed enlightened age of civilization, should allow the machinery of justice to be utilized for the purpose of its own defeat.

The ruling of the court below will, therefore, be sustained and judgment may be entered accordingly.  