Goodowsky v. Rubenstein

Rugg, C. J. This is an action of contract between the original parties to the instrument to recover upon a promissory note for $200. There was evidence tending to show that interest in excess of twelve per cent was charged and paid. The defence is that the loan is in violation of the small loans act. It is provided by St. 1912, c. 675, § 5, that, “Whoever not being duly licensed . . . engages in or carries on, directly or indirectly, either separately or in connection with or as a part of any other business, the business of making loans ... to which the provisions of this act apply, shall be punished. . . . And any loan made ... by an unlicensed person ... in violation of this act shall be void.” Small loans are defined in the statute to be $300 or less. The plaintiff is not licensed. The evidence being uncontradicted that this was the only time the plaintiff ever lent a sum of money of an amount of $300 or less, the judge found that “the plaintiff was not engaged, either directly or indirectly, in the business of making [small] loans” under the statute. Judgment was entered for the plaintiff. The question presented is whether a single loan for less than $300 at more than twelve per cent interest by one not engaged in the business of making small loans is void under the statute. The statute does not prohibit all such loans except by licensed persons. It simply forbids the making of such loans as a business unless one is licensed. The making of a single loan might be sufficient under appropriate circumstances to warrant a finding [451] that the one making the loan was carrying on the business. But it does not require such a finding. The statute declares void only-loans made in violation of the act, that is, those made as a part of carrying on the business of making such loans by one who is unlicensed. The statute does not inhibit the making of one such loan by a person not engaged in that business. The occupation and not the isolated act is interdicted. Order dismissing report affirmed.