# Appellants Reply Brief — Quinn-Moore v. Lambert

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385007_2573%3A3

## Record

- **Collection:** Supreme Court brief
- **Document type:** Appellants Reply Brief
- **Published:** January 1, 1981
- **Citation:** 454 U.S. 805

## Text

————

Office Supreme Court, US.

Se ee ees Gee we ee
Pen [SEP a1 1981
Supreme Court Of The United States.”
NO. 81-131

OCTOBER TERM 1981

Quinn-Moore, a Joint Venture d/b/a Texaco

Truck Center, Luke Quinn; Mildred Quinn; Ed

Moore; Carolyn Moore; The First National Bank in
Little Rock; American State Bank; Arkansas Bankers
Association; Arkansas Savings & Loan League;
Arkansas Mortgage Bankers Association; Arkansas
Credit Union League; Arkansas State Chamber of
Commerce; Arkansas Automobile Dealers Association,
Inc.; Commercial National Bank; First Arkansas
Bankstock Corporation; First National Bank in Hot
Springs; Fausett & Company; Rector-Phillips-Morse,
Inc.; The Stephens Security Bank of Stephens,
Arkansas; Union National Bank; Austin Wiggins
Company; Worthen Bank & Trust Company...... Appellants

VS.

Beverly J. Lambert, Bank Commissioner, State of
Arkansas; Steve Clark, Attorney General, State of
Arkansas; Arkansas State AFL-CIO; Acorn;

Arkansas Consumer Research, Inc.; and Elizabeth
A ORO eee Appellees

ON APPEAI FROM
THE SUPREME COURT OF ARKANSAS

BRIEF IN OPPOSITION TO MOTION TO DISMISS

HERSCHEL H. FRIDAY, JR.
FRIDAY, ELDREDGE & CLARK
Twentieth Floor

First National Building

Little Rock, Arkansas 72201

(501) 376-2011

Counsel of Record for Appellants

OTHER COUNSEL FOR APPELLANTS

GEORGE PIKE, JR.

FRIDAY, ELDREDGE & CLARK
Twentieth Floor

First National Building

Little Rock, Arkansas 72201

DARRELL D. DOVER
HOUSE, HOLMES & JEWELL
1550 Tower Building

Little Rock, Arkansas 72201

C. J. GIROIR, JR. and

HILLARY RODHAM

ROSE, NASH, WILLIAMSON,
CARROLL, CLAY & GimvIR, P.A.
720 West Third Street

Little Rock, Arkansas 72201

TERRY MATTHEWS

WRIGHT, LINDSEY & JENNINGS
2200 Worthen Bank Building

Little Rock, Arkansas 72201

JAMES M. McHANEY

OWENS, McHANEY & McHANEY
1902 First National Building

Little Rock, Arkansas 72201

JOHN B. PLEGGE
PLEGGE & WEBER

1004 Pyramid Life Building
Little Rock, Arkansas 72201

GRIFFIN SMITH
1955 Union National Bank
Little Rock, Arkansas 72201

ROBERT D. SMITH, III
SMITH & JERNIGAN

1000 Tower Building

Little Rock, Arkansas 72201

W. J. WALKER
601 Rock Street
Little Rock, Arkansas 72203

L.. SRY C. WALLACE

WALLACE, HILBURN, CLAYTON,
MAY & CALHOUN

Twin City Bank Building

North Little Rock, Arkansas 72114

STEPHEN A. WHITE
Post Office Box 85
Charleston, Arkansas 72933

TABLE OF CONTENTS

TABLE OF AUTHORITIES ............... ... Index

THE QUESTIONS ARE SUBSTANTIAL ....

A. INTRODUCTION........ccsccccsccsccsvees 1

B. THE ARKANSAS USURY LAW DEPRIVES
APPELLANTS OF THEIR LIBERTY AND
PROPERTY WITHOUT DUE PROCESS OF
LAW IN VIOLATION OF THE DUE
PROCESS CLAUSE OF THE FOURTEENTH
AMENDMENT TO THE CONSTITUTION OF
THE UNITED STATES...........:ceeeeeees 2

C. THE ARKANSAS USURY LAW IS AN
UNDUE BURDEN ON INTERSTATE
COMMERCE IN VIOLATION OF THE
COMMERCE CLAUSE OF _ THE

CONSTITUTION OF THE UNITED
STATES. ...cccccccccccccccccscccvevccccens 6

D. THE ARKANSAS USURY LAW DENIES AP-
PELLANTS EQUAL PROTECTION OF THE
LAW UNDER THE EQUAL PROTECTION
CLAUSE OF THE FOURTEENTH AMEND-
MENT TO THE UNITED STATES CONSTI-
DEMO csvecveseceseubonccverienydieeves 8

TABLE OF AUTHORITIES

CASES page
A. B. Small Company v. American Sugar Refining
Company, 267 U.S. 233 (1925) ....... 0... eee ee 3
Aldens, Inc. v. Packel, 524 F.2d 38 (3rd “ir 1975) ......... 8
Alsup v. State, 178 Ark. 170, 10 S.W.2d 9 (1928) ..........3
Berger v. State Board of Hairdressing, 118 R.1. 55,
Re enn rrr 3

Brotherhood of Locomotive Firemen and
Enginemen v. Chicago R.I. & P.R. Co., 393 U.S.

NT a a 4
Cesary v. Second National Bank of North Miami,

369 So.2d 917 (Fla. 1979)... 0... eee 5
Culberson v. Ashford, 118 Tex. 491, 18 S.W.2d

eects datas os eWe kee a cecnecseesenaes 3
Ferguson v. Skrupa, 372 U.S. 722 (1966)... 06. 5
Gold v. Lorenzo, 425 F.2d 949 (2nd Cir. 1979) ............, 3
Griffith v. Connecticut, 218 U.S. 563 (1910) ............... 5
Karrick v. Cantrill, 277 F. 578 (Ct. App. D.C. 1922) ........ 3

Kassel v. Consolidated Freightways Corporation of
Delaware, US. , 101 S.Ct. ___, 67 L.Ed.

580 (Decided March 24, 1981) ............0..000000000.. 5
Lewis v. BT Investment Managers, Inc., 447 U.S.

te CAs Ran ae 6A pM 46 Cb Od eee Katee 7
Minnesota v. Clover Leaf Creamery Co., US. ,

NOE GUE. TAS (IOSD) ccc ccc cece cc cncccccccecs 3
Mora v. Majas, 223 F.2d 814 (1st Cir. 1955) .......0......, 6
Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970) ....... 6
Southern Pacific Company v. Arizona, 325 U.S.

are aCe aWeNAs oboe 4 Aan oa see vevacees 7
Sproles v. Binford, 286 U.S. 374 (1982)... 0.00.66 5

State v. Spiegel, 623 P.2d 1147 (Wash. 1981) ............... 5

United States v. L. Cohen Grocery Company, 255
if Ro. eran

Whitaker v. Spiegel, 623 P.2d 1147 (Ww ash. 1981) .

Williams v. Illinois, 399 U.S. 235 (1970)

CONSTITUTIONAL PROVISIONS

1874 Constitution of Arkansas, Article 19,
RE SSE SS ee

The Due Process and Equal Protection Clauses of
the Fourteenth Amendment to the United States
ee ee a UN kak eke eae a

Commerce Clause of the United States Constitution,
Article I, Section 8 (3) ..............

eo ul cw

IN THE

Supreme Court Of The United States

NO. 81-131
OCTOBER TERM 1981

Quinn-Moore, a Joint Venture d/b/a Texaco

Truck Center, Luke Quinn; Mildred Quinn; Ed

Moore; Carolyn Moore; The First National Bank in
Little Rock; American State Bank; Arkansas Bankers
Association; Arkansas Savings & Loan League;
Arkansas Mortgage Bankers Association; Arkansas
Credit Union League; Arkansas State Chamber of
Commerce; Arkansas Automobile Dealers Association,
Inc.; Commercial National Bank; First Arkansas
Bankstock Corporation; First National Bank in Hot
Springs; Fausett & Company; Rector-Phillips-Morse,
Inc.; The Stephens Security Bank of Stephens,
Arkansas; Union National Bank; Austin Wiggins
Company; Worthen Bank & Trust Company...... Appellants

vs.

Beverly J. Lambert, Bank Commissioner, State of
Arkansas; Steve Clark, Attorney General, State of
Arkansas; Arkansas State AFL-CIO; Acorn;

Arkansas Consumer Research, Inc.; and Elizabeth
SUN bio .c ce aclu wort cerineeeee liane: Appellees

ON APPEAL FROM
THE SUPREME COURT OF ARKANSAS

BRIEF IN OPPOSITION TO MOTION TO DISMISS

THE QUESTIONS ARE SUBSTANTIAL

A.
INTRODUCTION

The motion to dismiss filed by the Attorney General
draws into sharp focus the issue before this Court. Basically,

2

the Attorney General is taking the rather startling position
that because a state may enact usury laws under its police
power, that the manner and level of that price regulation is
not subject to judicial review and may be totally arbitrary
and capricious! Appellants continue to maintain, on the other
hand, that even though a state may determine as a matter of
public policy, not subject to judicial review, to have usury
laws, when it does so, however, it must establish rates in a
rational manner at rational levels, or the usury laws may be
successfully challenged as being in violation of the United
States Constitution.

B. THE ARKANSAS USURY LAW DEPRIVES
APPELLANTS OF THEIR LIBERTY AND
PROPERTY WITHOUT DUE PROCESS OF
LAW IN VIOLATION OF THE DUE

PROCESS CLAUSE OF THE FOURTEENTH
AMENDMENT TO THE CONSTITUTION OF
THE UNITED STATES.

There is no question but that Arkansas and other
states may regulate their economy, including charges for
the use of money, under their police power. The basic thrust
of the Attorney General's motion to dismiss is to justify that
a state may so regulate its economy. This argument misses
the point. The question is whether a state may irrationally,
arbitrarily regulate its economy by fixing prices for the use
of money at a destructive, prohibitive level which has no
rational connection with the purpose of the law, namely to
present excessive charges for the use of money. The
Arkansas law forbids borrowing and lending when the
national market price for the use of money exceeds 10%.

The Attorney General makes the very erreneous
statement that the cases relied upon by appellants
concerned only the setting of public utility rates and the

3

establishment of minimum price schedules, rather than
cases involving the seiting of maximum prices in non-utility
cases. (motion to dismiss, pages 6-8)

Contrary to this analysis of appellants’ cases, in their
jurisdictional statement appellants cited the following cases
not involving railroad or public utilities in which courts
struck the particular setting of a maximum rate or price as
being arbitrary and unconstitutionally low: United States +.
L. Cohen Grocery Company, 255 U.S. 581 (1922) ‘maximum
price for sugar); A.B. Small Company v. American Sugar
Refining Company, 267 U S. 233 (1925) (maximum price for
sugar); Gold v. Lorenzo, 425 F.2d 949 (2nd Cir. 1979)
(maximum rate for real estate brokers’ fees); Mora +. Majas,
223 F.2d 814 (1st. Cir. 1955) (maximum price for rice);
Karrick v. Cantrill, 277 F. 578 (Ct. App. D.C. 1922)
(maximum residential rent rates); Culberson v. Ashford, 118
Tex. 491, 18 S.W.2d 585 (1929) (maximum agricultural rent
rates); Berger v. State Board of Hairdressing, 118 R.I. 55,
371 A.2d 1053 (1977) (maximum fees for hairdressing school);
Alsup v. State, 178 Ark. 170, 10 S.W.2d 9 (1928) (maximum
rate for employment agency).

Moreover, the cases cited by appellants in their
jurisdictional statement which did involve railroad and
utility rates are precisely in point. As the Court stated Gold
v. Lorenzo, 425 F.2d 949 (2nd Cir. 1979):

Gold's attack on the level of the commission seems
indistinguishable from claims by railroads and other
public utilities that state administrative orders are
depriving them of their property without due
process of law (425 F.2d 949 at 961)

If there were any different considerations in such
cases, those considerations would cause an even stricter

4

review of interest rate limitations, because a public utility is
guaranteed a rate of return. A lender is not guaranteed a
rate of return, and therefore should not be arbitrarily
hampered in his effort to make a profit.

Moreover, unlike a public utility or railroad which must
provide gas, electricity, water, and service to its customers,
if a rate is set arbitrarily low against a lender, the borrower
will not receive the use of the money at all. A lender cannot
be forced to lend in a state with confiscatory usury laws.
The adverse impact upon the customers is even the more
reason why any price regulation for the use of money must
be rational.

The cases cited by the Attorney General also fully
support the position of appellants.

The only issue before the Court at the present time is
whether the questions presented are substantial enough to
warrant plenary consideration. The Attorney General cited
case after case in which this Court considered questions
only after plenary consideration, with opinions that
detailed the many factors that must be considered.

Further, in each of the cases the Court did judicially
review the reasonableness of the challenged regulation,
where the reasonableness of that regulation was at issue.
For example, in Brotherhood of Locomotive Firemen and
Enginemen v. Chicago R.I. & P.R. Co., 393 U.S. 129 (1958)
(motion, p. 8) it was only after a very detailed judicial
review by this Court of the reasons given by the state to
justify the Arkansas full crew law tha‘, the law was upheld.
Like the present case, the Court pointed out that whether
to have a full creW law or not is a matter of public policy, but
once such a law is enacted, it will be judicially reviewed for
reasonableness.

5

In none of the cases cited by the Attorney General was
any issue raised, as in the present case, regarding the
reasonableness of the rates set. In Ferguson v. Skrupa, 372
U.S. 722 (1966); State v. Spiegel, 277 N.W.2d 298 (S.D. 1979);
and Whitaker v. Spiegel, 623 P.2d 1147 (Wash. 191)
(motion, pgs 8, 9) there was a challenge to the state's right to
forbid debt adjusting except by lawyers and the state's
right to have usury laws where interstate commerce is
involved. The rates set by the debt adjusters and the rate
set by the states for interest was not even questioned.

Likewise, in Griffith v. Connecticut, 218 U.S. 563 (1910)
and Cesary v. Second National Bank of North Miami, 369
So.2d 917 (Fla. 1979) there was no challenge to the level of
interest rates set by the state. Rather, in each case, the
challenge was to the classification scheme adopted by the
legislature. By contrast with the Arkansas law which
contains no classification and attempts to set a flat rate for
all times, for all lenders, for all borrowers, for all types of
loans, both of these cases support the position of appellants.
Both cases demonstrate how legislatures can properly
classify in an effort to rationally, rather than arbitrarily
regulate interest rates.

Finally, the case of Sproles v. Binford, 286 U.S. 374
(1932), (motion, p. 9) upholding the validity of a state statute
forbidding truck lengths over fifty-five feet has apparently
been overruled by the decision of this Court in Kassel v.
Consolidated Freightways Corporation of Delaware,
U.S. ___, 101 S.Ct. ___., 67 L.Ed. 850 (Decided March 24,
1981).

The Attorney General, then, has totally failed to
overcome the showing made in apellants’ jurisdictional
statement that the due process question indeed is
substantial and requires plenary consideration.

6

C. THE ARKANSAS USURY LAW IS AN
UNDUE BURDEN ON INTERSTATE COM.
MERCE IN VIOLATION OF THE COM.
MERCE CLAUSE OF THE CONSTITUTION
OF THE UNITED STATES

The Attorney General's arguments and cases cited
under this heading of his brief likewise totally fail to
overcome appellants’ position that the question is so
substantial as to require plenary consideration.

The first case cited by the Attorney General under this
heading, Minnesota v. Clover Leaf Creamery Co., U.S.
—__., 101 S.Ct. 715 (1981), (motion, p. 10) is seriously
misinterpreted by the Attorney General. He states in his
brief that the case stands for the proposition that if a state
law “visits its effects equally upon both interstate and local
business it cannot be challenged as being violative of
Commerce Clause.” This Court made no such statement.
Rather, in fact, it stated just the opposite. Following is the
pertinent portion of this Court's opinion:

Even if a statute regulates ‘even-handedly, and
imposes only ‘incidental’ burdens on interstate
commerce, the courts must nevertheless strike it
down if ‘the burden imposed on such commerce is
clearly excessive in relation to the putative local
benefits.’ Pike v. Bruce Church, Inc., 397 U.S. 137,
142 (1970). Moreover, ‘the extent of the burden that
will be tolerated will of course depend on the nature
of the local interest involved, and on whether it could
be promoted as well with a lesser impact on
interstate activities.’

Other cases cited by the Attorney General regarding
the Commerce Clause issue fully support the position of
appellants because this Court, after carefully weighing the

7

local interests against the impact on interstate commerce
found that the state law was an undue burden on interstate
commerce, Lewis v. BT Investment Managers, Ine., AAT
U.S. 27 (1980); Southern Pacifie Company v. Arizona, 325
U.S. 761 (1945); Pike ». Bruce Church, Inc. 397 U.S, 137
(1970), (motion, pgs 10, 11, 13).

The Attorney General further contends that because
Congress has not yet entirely preempted all state usury
laws, that Congress has blessed the state laws that remain,
Appellants do not believe this Court will seriously consider
the suggestion that Congress intended by not preempting
all state usury laws to have made a determination that any
particular state usury law remaining was or was not a
rational regulation of interest rates. As pointed out in
appellants’ jurisdictional statement, pages 22 - 26, there are
broad areas where Congress has always left to the states
the power to enact reasonable laws even though those laws
affect interstate commerce. However, where a law is
challenged as being an unreasonable regulation affecting
interstate commerce, Congress has properly deferred to the
courts as the proper branch of government to review on a
case by case basis the rationality of the law. As Chief
Justice Stone made clear in Southern Pacific Co. v. Arizona,
325 U.S. 761 (1945):

But in general Congress has left it to the courts to
formulate the rules thus interpreting the commerce
clause in its application, doubtless because it has
appreciated the destructive consequences to the
commerce of the nation if their protection were with-
drawn. ... (Emphasis added) (325 U.S. 761 at 770)

The Attorney General's citation of the case of Aluens,
Inc, v. Packel, 524 F.2d 38 (3rd Cir. 1975) (motion, page 12) is
inapplicable for the same reasons given previously for the

8

reliance on the Spiegel cases, Alden, like Spiegel,
challenged broadside the right of a state to enact any usury
law. The rate was not in question,

Therefore, there is a substantial question that the
Arkansas usury law not only is a burden on interstate
commerce but completely prohibits the flow of money in
interstate commerce in times such as have existed during
the past few years. Since there are innumerable rational
alternatives for regulating interest rates, the Arkansas
usury law cannot pass the required test under the
Commerce Clause.

D. THE ARKANSAS USURY LAW DENIES AP.
PELLANTS EQUAL PROTECTION OF THE
LAW UNDER THE EQUAL PROTECTION
CLAUSE OF THE FOURTEENTH
AMENDMENT TO THE UNITED STATES
CONSTITUTION.

In his motion to dismiss, the Attorney General totally
ignores the principal case relied upon by appellants in their
jurisdictional statement which established beyond any
doubt that a law, although applying equally to all on its face,
is an unconstitutional denial of equal protection if it
operates unequally. This principle was reaffirmed by this
Court in Williams v. Illinois, 399 U.S. 235 (1970) cited at
page 27 of appellants’ jurisdictional statement. No further
citation is needed to establish this point.

The fact that the law does operate unequally on citizens
of Arkansas and citizens of other states desiring to borrow
or lend in Arkansas is not denied by the Attorney General.
Thus the position of appellants that the Arkansas usury law
denies them equal protection of the law is also not overcome
by the Attorney General's motion.

9
bE.
CONCLUSION

In their jurisdictional statement, appellants
demonstrated beyond any doubt the severe economic
impact of the irrational Arkansas usury law upon Arkansas
citizens and those attempting to de business with Arkansas
citizens. The jurisdictional statemen, also demonstrated
beyond any doubt the substantial nature of the questions
presented, The motion to dismiss filed by the Attorney
General actually emphasizes the accuracy of appellants
original position, This case should, therefore, be scheduled
for plenary consideration,

Respectfully submitted,

HERSCHEL H. FRIDAY, JR.
FRIDAY, ELDREDGE & CLARK
Twentieth Floor

First National Building

Little Roek, Arkansas 72201

(501) 376-2011

Counsel of Record of Appellants

Darrell D, Dover
HOUSE, HOLMES & JEWELL CARROLL CLAY & GIROIR, P.A.

720 West Third Street
1850 Tower Building Little Rock, Arkansas 72201
Little Rock, Arkansas Att for Fi
Attorneys for Commercial orneye Tor First Arkansas
National Bank Bankstock Corporation, Worthen
Bank & Trust Company, First
National Bank in Hot Springs,
C, J. Giroir, Jr. and
Hillary Rodham The Stephens Security Bank of

Stephens, Arkansas, and
ROSE, NASH, WILLIAMSON, Arkansas Mortgage Bankers Assn.

10

Terry Matthews Robert D. Smith, III

WRIGHT, LINDSEY & JENNINGS SMITH & JERNIGAN

Worthen Bank Building 1000 Tower Building

Little Rock, Arkansas 72201 Little Rock, Arkansas 72201

Attorneys for Fausett & Co. Attorneys for Arkansas Savings & Loan

James M. McHaney League and Arkansas Financial Services,

I
OWENS, McHANEY & McHANEY
1902 First National Building

Little Rock, Arkansas 72201 W. J. Walker

Attorneys for Arkansas Bankers 601 Rock Street

A i a Little Rock, Arkansas 72203
ayy Attorney for Arkansas Credit

John B. Plegge Union League

PLEGGE & WEBER

P ram d Life Bu d ng ° N, CLAY TON,

Attorneys for Arkansas Automobile Twin City Bank Building

Dealers Association North Little Rock, Arkansas
Attorneys for Arkansas Financial
Services, Inc.

Larry C. Wallace

Griffin Smith
1955 Union Nationa! Bank
Little Rock, Arkansas 72201 :

n , Stephen A. White
Attorney for Union National Bank Post Office Box 85

of Little Rock Charleston, Arkansas 72933
Attorney for American State Bank

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385007_2573%3A3. Public record. Not legal advice.