Martorano v. Capital Finance Corp.

Townley, J. The facts are stated in the opinion of Mr. Justice O’Malley. Section 352 of the Banking Law reads in part as follows: “ In addition to the maximum rate or amount of interest, consideration, or charges above specified, no further or other charge or amount whatsoever for any examination, service, brokerage, commission, expense, fee, or bonus or other thing or otherwise shall be directly or indirectly charged, contracted for, or received, except the lawful fees, if any, actually and necessarily paid out by the licensee to any public officer for filing, recording, or releasing in any public office any instrument securing the loan, which fees may be collected when the loan is made or at any time thereafter. If any interest, consideration or charges in excess of those permitted by this act are charged, contracted for, or received the contract of loan shall be void and the licensee shall have no right to collect or receive any principal, interest, or charges whatsoever.” When a lender requires that the collateral shall be insured and that the insurance must be paid out of the money being advanced for the loan, the lender is exacting an “ expense,” the benefit of which runs exclusively to the lender and, therefore, he receives an advantage beyond what the statute contemplates. [80] The statute gives the lender the advantage of an interest rate many times in excess of the normal legal rate. In this case plaintiff Salvatore Martorano was obligated to pay over a period of twenty months $397.60 for a loan of $300. He was also required to give an assignment of his wages, a chattel mortgage covering his household furniture and bis automobile. It seems plain that the intention of the statute was that the interest fixed therein should completely compensate the lender for all charges and expenses of every character attached to the loan with the exception of those specifically set forth in the statute. To hold otherwise would open the door to the imposition of charges and alleged expenses which would add to . the burden of the borrower and confer upon the lender compensation in excess of that contemplated by the statute. Judgment should be directed for the plaintiffs. Martin, P. J., and Dore, J., concur; O’Malley and Cohn, JJ., dissent.