Jackson v. Shawl

California Supreme Court Jul 1, 1865Published

Before: Currey

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Holding. The court held that a contract for interest exceeding the statutory limit for pawnbrokers is unenforceable as to the excess, but the valid portion of the contract remains enforceable, allowing the pledgor to recover pledged property upon tendering the principal and lawful interest. The court further held that the statute regulating pawnbrokers is constitutional.

Issues

Whether the Act defining the duties and liabilities of pawnbrokers is constitutional.
Whether a contract for interest exceeding the statutory limit is entirely void or only void as to the excess.
Whether a tender of the principal and lawful interest entitles a pledgor to the return of pledged property.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The constitutional objection which is made to this Act of the Legislature has been settled adversely to the views of the defendant”

“The plaintiff’s promise was to repay to the defendant the sum borrowed in one month, and also to pay him seven per cent per month on the principal sum for its use. Here the contract between the parties was legal as to the principal sum, but illegal as to the interest.”

“The plaintiff tendered to the defendant all that was due him by the law of the land, and was thereupon entitled to the possession of the property deposited in pledge.”

Synopsis

Interest to be charged by Pawnbrokers.—The Act of 1861, prohibiting pawnbrokers or pledgees from charging more than four per cent per month on loans made on property pledged as security, is not in violation of Section 2 of Article I of the Constitution, which provides that “ all laws of a general nature shall have a uniform operation.”

Enforcement of Contract with Pawnbroker. — Where a pawnbroker loans money upon property pledged, and the borrower contracts to pay him more than four per cent interest per month, he can recover possession of the property by tendering him the principal and four per cent per month interest.

Same.—Query?—Could the borrower in such case recover the property by making a tender of the principal sum without interest ?

Contract Good in Part and Bad in Part.—If a contract is had in part, for being in violation of law, but good in part, and the good part of the contract can be separated from the had, that which is good can he enforced in law.

By the Court, Currey, J. This is an action of replevin in the detinet for a gold watch, two diamond rings and two diamond pins, the property of the plaintiff, of. the value of nine hundred and fifty dollars. On the 21st of August, 1864, the defendant loaned to plaintiff five hundred dollars, in consideration of which the latter promised to pay the former one month thereafter said sum with interest thereon at the rate of seven per cent per month; and to secure the payment of the principal and interest, the plaintiff delivered to the defendant, who was a pawnbroker, the property above mentioned, in pledge. On the 4th of the following September the plaintiff tendered to the defendant five hundred and twenty dollars for the payment of the sum borrowed and the interest thereon for one month at the rate of four per cent per month, and thereupon demanded the property pledged. The defendant refused to comply with the demand. Hence this action.

To the complaint setting forth the facts, the defendant demurred on the grounds : First—Because by the complaint, it appears the plaintiff contracted to pay seven per cent interest per month on the sum borrowed, while the alleged tender was at the rate of only four per cent per mouth. Second— Because the Act entitled “An Act to define the duties and liabilities of pawnbrokers and pledgees,” passed April 17th, 1861, is in violation of section eleven of Article I of the Constitution, and therefore void. The demurrer was overruled with leave to the defendant to answer, which he declined to do, and in due time judgment by default, and also final judgment was entered against him.

Bate of interest pawnbrokers may charge.

The second and third sections of the Act, to which the defendant refers in his demurrer, are as follows:

“ Sec. 2. The rate of interest or percentage which shall be lawfully charged by any pawnbroker or pledgee shall not [271]exceed four per cent per month in advance on all loans exceeding twenty dollars, which shall include all charges for discount, commissions, storage, brokerage, wasting and all and every charge or charges thereupon; nor shall said interest at any time be compounded.

“ Sec. 3. Any pawnbroker or pledgee who shall directly or indirectly charge or receive any interest greater than four per cent per month, or by charging commissions, discount, brokerage, storage, wastage or other charge, or shall attempt to increase said interest, or shall compound said interest, shall forfeit three times the value of the article pledged or to be pledged, to be recovered by the owner or pledger in a civil action, which may be brought by the party aggrieved.”

Jackson v. Shawl

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