# Fletcher v. Tuscaloosa Federal Savings & Loan Ass'n

> Supreme Court of Alabama · May 22, 1975 · 294 Ala. 173

URL: https://www.frixlaw.com/law-library/cases/9689133

## Case

- **Full name:** Thomas F. FLETCHER Et Al., Etc. v. TUSCALOOSA FEDERAL SAVINGS AND LOAN ASSOCIATION
- **Court:** Supreme Court of Alabama
- **Decided:** May 22, 1975
- **Citations:** 294 Ala. 173; 314 So. 2d 51; 1975 Ala. LEXIS 1165
- **Precedential status:** Published
- **Opinion:** Dissent by Faulkner
- **Judges:** Almon, Merrill, Bloodworth, Maddox, Shores, Embry, Jones, Faulkner
- **Cited by:** 55 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9689133

## How later opinions describe it (automated extraction)

- stating that implied repeals are not favored and will be allowed only when a conflict between a prior act and a subsequent act shows a clear intention to repeal the prior act
- finding implied repeal based on legislative intent

## Opinion text

FAULKNER, Justice
(dissenting).
As Alice said, “Dear, dear! How queer everything is today! And yesterday things went on just as usual. I wonder if I’ve changed in the night.” 1 I have not changed from my position in State of Alabama, ex rel. William J. Baxley, as Attorney General v. Leonard C. Johnson, Ala., 300 So.2d 106 (1974). I therefore dissent.
This case presents the same issue as was presented in Baxley, i. e. whether Act 2052, Acts of Alabama, 1971, Vol. IV, p. 3290 (Mini-code) repealed § 60, Title 9, Code of Alabama 1940. In Baxley, subsequently withdrawn as a “sweetheart” suit, it was held there was no repeal by implication. Today, the court holds that § 60 was repealed by implication.
It is my opinion that the Mini-Code does not repeal § 60 of Title 9 by implication. *181 Repeal of an act by implication is not favored by the courts. Ex parte State, In re State of Alabama v. Franco, Ala., 299 So. 2d 737 (1974); Board of Revenue v. State, 241 Ala. 175 , 1 So.2d 904 (1941); Thompson v. Chilton County, 236 Ala. 142 , 181 So. 701 (1938). Courts can only learn what the legislature intended by what it has said, and have no right to stray into the maze of conjecture or search for an imaginary purpose in construing the statutes. Alabama Industrial Bank v. State, ex rel. Avinger, 286 Ala. 59 , 237 So.2d 108 (1970). The Mini-code provides no glaring or irreconcilable repugnance to § 60 of Title 9. The effect of the decision of this court until this opinion is that for a later statute to repeal an earlier one by implication, the repugnance between the two must be glaring and irreconcilable so that the two statutes cannot stand together. Bates v. State, 240 Ala. 609 , 200 So. 779 (1941). Section 60 specifically provides for the rate of interest payable on a loan. Section 1(a) of the Mini-code provides for the payment of a finance charge which is defined as including “all charges as an incident to the extension of credit, including interest, time price differential, points or discounts . . . service, carrying or other charge . . . loan fee, credit or investigation fee . . . .” (Emphasis added.) How could there be any irreconcilable repugnance here? How shall a borrower compute interest on his loan when it is included in the above conglomeration of charges? Interest is only one item in the make-up of the finance charge. The majority opinion permits a charge of 9% interest in this case. Is this true interest or is it a portion of the finance charge? The majority has permitted 8% add on interest without taking into consideration the other elements that go to make up the finance charge. From the record we do not know if there were any other charges. This goes beyond the statute. This will become a very common thing with money lenders. They will charge 8% add on interest and as side effects will charge survey fees, credit fees, investigation fees, title examination fees, points, and a host of other charges that the borrower may or may not see on his closing statement. The draftsman of the findings of fact and conclusion of law in Baxley very skillfully included all items including interest in the finance charge in arriving at a maximum. Not so here. The majority concludes that 8% add on interest plus the other elements of the finance charge constitute the maximum. If this not be so, why state the finance charge to be the “sole indicia of what constitutes the maximum legal amount allowable for the use of money loaned.” (Emphasis added.) Interest is a charge for the use of money. The conclusion of the majority is incredible.
In another area of no repugnance between the two statutes it is to be noted in § 1(a) that only discounts or points are required to be spread over the stated period of the loan. There is no provision for amortization of the interest. So, if interest is added on for a full term of say, 10 years, and the borrower wants to prepay his balance at the end of 5 years, what is his prepayment figure? The real estate borrower does not enjoy the prepayment privileges of receiving a refund of interest under § 3 of the Mini-code because the “bank” lender is exempt from all sections except § 1 (a) and § 2.
The Constitution Issue
The appellant, in brief, argues denial of equal protection of the laws. The argument is skimpy and one wonders why no citations or references were made. Was the appellant sincere in this area? Since the appellant has raised the issue I feel that it should be discussed.
Section 25 of the Mini-code specifically exempts state and national banks, savings and loan associations, credit unions, life insurance companies, and federally constituted agencies from all provisions of the Act *182 except subsection (a) of § 1, and § 2. Section 18 exempts those organizations from licensing. Therefore, those organizations are exempt from any of the penalty provisions of the Act for usurious charges (§§ 15 and 24) and they are exempt from control of the Superintendent of Banks under § 17. The borrower has no recourse against the lender for overcharges under § 65, Title 9 because that section only applies to penalties for overcharges of interest prescribed in “this chapter.” Interest, by this majority opinion, has no meaning. We are now dealing with finance charges. Since part of “this chapter” has now been held to be repealed, § 65 has no application. And, the borrower cannot look to the Act and the Superintendent of Banks for any help against abuse for overcharges, because of the exemption of those lenders.
The exemption of banks and savings and loan associations from licensing and penalties, while at the same time enjoying the privilege of charging “finance charges” as other creditors, is in violation of Article 1, § 22, Constitution of 1901. This constitutional provision states that the legislature shall not pass a law of exclusive or special privileges or immunities. The Mini-code not only grants special privileges to the exempted money lenders, but also grants them immunity for abuse of the law. This is repugnant to our form of government and out of harmony with the genius of our free institutions. Furthermore, by not granting a borrower a remedy for any abuse of the law by the exempted organizations and exacting penalties from other creditors for the same violation, the Mini-code runs afoul of § 6 and § 13, Article 1, Constitution of 1901, by denying equal protection and due process of law. These constitutional provisions distinctly prohibit the type of discrimination allowed the exempt organizations under the Mini-code. Since there is no severability clause in the Mini-code, I would hold the entire Act constitutionally void. I would not pretermit this issue on the flimsy excuse of “want of standing.”
The brief of appellant did not argue the violation of § 45, Article 4 of the Constitution. But, the Act clearly violates this constitutional provision. The title of the Act states,
“An Act
“To provide maximum finance charges for loans and credit sales; to regulate extensions of credit, including consumer loans, consumer credit sales and consumer leases; to provide penalties for violations of this Act; and to authorize the Superintendent of Banks to administer this Act.”
It clearly omits any reference to a consumer protection council provided for in § 26 of the body of the Act. Section 45, Article. 4 of the Constitution provided that “Each law shall contain but one subject, which shall be clearly expressed in its title . ” Even though the Act is colloquially called “Mini-code” it is not a “code of laws” and does not fall within the exception of § 45 providing for “bills adopting a code, digest or revision of statutes.”
A code implies first a compilation of existing laws, their systematic arrangement into chapters or articles and sections with subheads, table of contents and index for ready reference; second, a revision such as to harmonize conflicts, supply omissions, and generally clarify and make complete the body of laws designed to regulate completely so .far as a statute may, the subjects to which they may relate. Gibson v. State, 214 Ala. 38 , 106 So. 231 (1925).
Section 45 has two requirements. First, “each law shall contain but one subject;” second, “the subject shall be clearly expressed in its title.” This Act does not conform with these constitutional requirements. No liberal construction of the Act will correct this constitutional deficiency. Our cases have said in construing “each law shall contain but one subject” that if the title contains more than one subject and the entire Act refers to one of those
*183 subjects, the other will be treated as surplusage and the Act will be upheld. Hawkins v. Roberts & Son, 122 Ala. 130 , 27 So. 327 (1898); Robinson v. Moseley, 93 Ala. 70 , 9 So. 372 (1890). That construction cannot be applied here.
The majority opinion indicates that the constitutionality of the Act cannot be considered “for want of standing.” I believe that they should not put off deciding the inevitable. One of these days an irate borrower is going to go to the money lender and say, “You have been charging me high interest under an unconstitutional statute.” The lender will give him a gracious smile, sit back, and wait for a summons to court. Meanwhile, the usury law becomes “curiouser and curiouser.”
Conclusion
It is my opinion that conventional mortgage loans to individuals on real estate are still subject to the maximum interest rates found in §§ 60 and 61, Title 9, Code of Alabama. The 6% add on rate stated in § 61 will permit a rate of up to 12% on a declining balance. Surely, this should be enough for the “criers” and “whimperers.” Experiences in other states of this Union have shown that when interest on real estate loans for a long period exceeds 9% simple interest, loans go begging and foreclosures run rampant. It is an unlearned borrower who will obligate himself to a 30-year loan at an interest rate of 10% or 12%. Interest is the largest single item in the cost of a home. It cannot be passed on by the borrower as it can by the bank, the builder, or the materialman. To a business man, a bank or builder, interest is a commodity — another item in the cost of doing business. The home buyer is stuck with it. We are told by the amicus curiae that Alabama is a borrower state and high interest rates are needed to shore up the economy. They appear to be short-sighted and oblivious to the fact that Alabama’s per capita
income ranks at the bottom of the list. Before a borrower can pay high interest, he must be given an income commensurate therewith. Increased incomes do not appear on the horizon, because every time a worker or union demands increased wages, the cry of inflation is heard. It is not increased wages — but high interest, the dominant evil of inflation.
No respectable and sound banker will make long-term loans at high interest rates. But, with no fear of penalties under the Mini-code, and no recourse by the borrower against abuse, the sharks will move in. So, how queer it is today, and yesterday was just as usual.
The Majority Holding
The majority holds:
1. Real estate mortgages fall within the Mini-code on loans of over $2,000 and less than $100,000.
2. The interest on those mortgages can be 8% add on which can amount to 16% simple interest on a declining balance in equal payments, but may be an astronomical rate if the lender decides to demand interest repaid in unequal installments, which is permitted by the Mini-code.
3. The mortgage bankers, banks, savings and loan associations, insurance companies, etc., who are exempt from the Mini-code except those provisions permitting the interest charge, have a free rein without fear of any penalties for overcharge of interest or abuse of the law.
4. As those institutions are not subject to any control by the Superintendent of Banks, nor is there any penalty provisions in the Mini-code relating to them, the consumer borrower is at their mercy and the devil take the hindmost.
I would reverse the trial court.
. Lewis Carrol, “Alice’s Adventure in Wonderland”, The Complete Works of Lewis Carrol, Modern Library, New York, p. 28.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9689133. Public record. Not legal advice.