Reply Brief Supplemental Appendix — First Mercantile Consumer Discount Co. v. Stefanelli

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1970.

- Saree Cpurt oft the United | tates i Jf,

a ee ° _ OcToBER Sancag ene. — ~ es eNES

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‘FIRST MERCANTILE ‘CONSUMER DISCOUNT

_ COMPANY,

ities =

v. | :

ANTHONY B. STEFANELLI, et al.,

Appellees,

ee “and

PAUL V. DURKIN, ef al.,

.. A ppellees,

and | i ;

GEORGE F. KUGLER, JR.,

Attorney General of New Jersey,

id

ae Appellee.

oS : rz S oe

On APPEAL FroM THE Supremgé Court or NEw JERSEY

REPLY BRIEF AND SUPPLEMENTAL APPENDIX OF

_ APPELLANT FIRST MERCANTILE CONSUMER -

DISCOUNT. COMPANY: .

/

aieiea’ K. ‘Myre, ‘

RoGER S$ Capp, -

prs Counsel.for Appellant

- s . 744 Broad Street, ©

Newark, New Jersey 07102

Of Counsel:

Crape & EISENBERG,

Newark, New Jersey 07102

“a

en ; PAGE

__ Inrropuction Sie der enc eniee STN NSE Mle :

Pots’ I—The jtidgment bees is. final. te sioneahibena = ae

Powr II—There’ are sulistantial Tuestions here a ae

‘A. The ‘Commerce Clause Saengeas scion a tg 18

B. Due Process ....... dn sAipanennihaiaenidiaion oe GE

C. Full Faitli and. Credit hE A ae eae: 2» J

- Gene. ine i . spe NCEE eee Oe a ae

| . | Casés Gjted |

Alaska Packers" Ass? n v. Ihidustrial pray ey Cc omm.,

294 DLS. 532, 40- 41 (1935) vebtandbceal NaS SAS OEE RTA 24

"Avery v. Midignd County, 390 U.S.'47 Py 487 (1968) 6

Brady v. Marylapd}373 US. 83, 85) ne 1 (1963)..6, 10, 16,

Brown Shoe Co. v. United States, 370 U.S. 294, 304-

311: (1962): ...... ieee ap a eamaneta ont <a

Cohen v. Beneficial Industrial Loan Corp sik UES.

541, 545-47 (1949) 2 vielen fecal mebuns iy: Ae

Cold Metal Process Co. v. 1 nited Eng. &-F. Cb, 351,

; U.S: 445 (1956) 202s... checeeeteceeeneee wnip seen el cl gp nnnesagy 8,11

Deverman v. Stevens. Builders, 35 Nu. Super c :

302, 114 A. 2d 15, 16. (App. Div. SEWED pisscsmnerealt : .

‘Ehnes’ v. King, 50 N.J. Super. 109, 113, 11. AS ode’ a7

. 62, 64 (App. Div. 1958) Casino wnenenbebeainanie solaiamlaN N NAME 5.

_ ii . INDEX |

PAGE

Eli Lilly & Co. v. Sav-On-Drugs, 366 ‘US. |

278-79 (1961) Diisiheisciiciaanentociess a ae

‘Forgan v. Bainbridge, 34 a 408, 274 oS 1,

Co Be eeeereen cto. “Sawer ed ena Chea 15

Furst v. Brewster, 282 U.S. 493,..497-98 (1931) . Satan 20

ad

Gillespie v. United States Steel Corp., 379 U.S. 148,

152 (1964) .... A EEA ANNs Sk RES: 5, 6, 10, 16, 17

Goodall-Sanford y, U nited Textile Workers, 353 U. S.

poepaer CONT) «Wj cuka ee 6

_ Gospel Army vy, cm Angeles, ‘351 US. 543 ( 1947)... 8

Great Northern R. Co. v. Sunburst’ Gi & Ref. Co.,

287 U.S. 358, 364<(1982) .... 3,8:

Hudson Distributors v. city & Co., 377 USS. 386, : :

B89 at 1. 4 (1964) once ccennneccecceccenees panel, T, TR,

Johnson v. Muelherger, 340 U.S. 581, 583 (1951)....6,9,10

Joseph F. Hughes & Co. y. United Plumbing & Heat-

- * io Inc., 390 F. 2d 629, 630 (6 Cir. 1968)

Land v. Dollar, 330 US. 731, 734 at n. 2. (1947)

Larson v. Domestic an Foreign Commerce Cor

337 U.S. 682, 685 at n. 3 (1949). a

‘Lathrop vy. Lathrop, ol N.S. Super. 532, 541, 155 A.

2d 106, 110 (App. Div. ID sepia Sickie ents a

Local No. 438'v. Surry, 371 U.S. 542, 548-51. (1963). 6,11, 16;

Manhattan Life Ins. Co. v. Johnson, 188 N.Y. jos

111, 80 N.E. 658, 659 (1907) :

Market Street ‘R. Co. v. Railroad Com. of Cal., 324 ie

UB. 548, S5L-(1945) ss + 5,8

°

INDEX | g : iii

> : - : te PAGE

Mercantile Nat. Bank v. TLangdean, 371 U.S. “555,

997-58 I ei ee re 6, 8, 11, 16

Mills +. Alabama,-384 U.S, $14, 217-18 (1966). tees 6,7

Misani vy. Ortho Pharmaceutical Corp., 44 N.J. 552,

555, 210 A. 2d°609,"610 | (1965), appeal dismissed,

382 U.S. 203 (1965) wscniestnataialetcuciiessansasecisgeees eingeil 8,9

‘Oklahoma Tax Commisison . v. Texas Co. 336 US.

958 (1949) Par Nese decent ed Og an stlapeenitipijull-<acanesacicamuceeases

Oxford Consumer Discount Co. ¥. Stefane ‘li, DD > NJ.

489, 500, 262 A. 2d 874, 880 (1970) ............21,15, 18-20, 23

Packinghouse Workers v, Needham Packing Co., 376

U.S. 247, 249 at n..2 (196 4) ESS iesnnnoned 6,12

People v. Fairfax Family Fund, Inc., 235 Cab. App.

2d 881, 47 Cal. Rptr. 812 (Dist. Ct. App. 1964),

appeal dismissed sub nom. Fairfax , Family Finid~

“Y, California, 322 U.S. 1 wn) ast ssinttiectacressessnillly 20

Plymouth Mut. L. Ins. Co. v. Illinois *id- Continent "|

Ig. Ins. Co., 378 F. 2d 389, 391 (3 Cir. 1967) :.:......... - 14

Radio Station wow, Inc. v. Johnson; 326 US. 120,

124-25 (1945) ...:.... ee sedan 9-10, 14

Republic Mevecel . Gas Ce. inenie a al US |

62, 71 (1948) SRE DENTS en OS OOM 5, SiS 6. 7,10 -

Rosenblatt v.. American Cyvanamid Company, 15 L.

» Ed. 2d 39, 42. 43 (Goldberg, J., in chambers, 1965),

" appeal dismissed, 382 U.S. 110 rape eae 6, 7,11, 14-16

Sarsoh v. Mueller, 105 N JL, , 213, 148 A. ea

(E.&A, 1928) 20000000... pees etiat: Si Dea, ee

Sears, Roebuck & Co. v. Mackey, 351 U.S. 427

(1956) _....... procccsseoueceossngaseninesh loscnsserzsveshecenstovesstovessteeseseed 6, 8, 10

‘

iv , INDEX

. : . PAGE

Seeman y. Philadelphia Warehouse Co. » 274 US.

» 403, 408-09 (1927) 22

State Board of. Ins. v. Todd Shipyards Corp. 370

U.S. 451 (1962) sainsaaenebtemananictbeinplidactumstonemegsecien Scares . 21

Suess y. Stapp, 407 F. 2d 662, 663 (7 Cir. 1969) eb 11

- United States vy. General Motors !Corp., 323 US.

| 873, 377 (1945) ... * biebicaeneetiehs ee ),8,15 -

United States v. MeWhirter, 376 F, 24 102,°104-105

hie oo ibiacyn,. Soe nT be...

_US. Pipe, ete. v. United Steelworkers of America,

37 N.J. 343, 351- 52, 181 A. 2d 353, 357 (1962) ...... - 9g

fecaiieas Cited —

California Financial Code:

-§24458 ..... aa. inte siieiaiibdbilacamecas 19

§§24451-55 © farididedleaitutbihieaneacdioscis 19

§22459 , roll .

, ~ ne : Xe \\ 7

§24460 .. z , a

“Ohio Fair Trade Act ...... Arenas eee 13

Pennsylvy ania’s Consumer Discount Company Akt . 22 -

Secondary Mortgage Loan Act .. pienso, aii.

-§12(a) Heat se ioe

§24(e) rege Peeiesidiatiasacacsictin. Onan 22

INDEX - Ea

PAGE

‘ Rule Cited .

United States Supreme Court Bule 10(2) ..:............

NUR. Civ. Proced. No. “Pes-4) (a) and (d) aes

“Other Authorities Cited ©

. Editorial, 93 New Jersey Law Journal a: 9,

1970) : |

500 ..... a ie REELS C EA 24

Felsenfeld, Consumer Interest Rates, 23 Business

mauyes (1968) :

931 - ick caanatenietibidpapetan teehirsonsebsocbiensocs Oh

Leflar, Choice Influencing Considerations in Conflicts Hs

~ Law, 41 N.Y.U.L. Rev. 267, 286-87 (1966) 2.0.00... 15

Restatement Second, Cournot of Laws:

SS) a seta ich ile 19.

‘Seidl, “Let's Compete with Loan Sharks, 48 Mary.

~ Bus. Rev. No. 3 (May-June, 1970) :

PP. 69, 73 ,.. Gk ileabiieininiadutiepteiananrceialccal 21, 24

o,

Stern & Gressman, Sepeene Court Praetice 6311, pp.

*. 96-99 (4th ed. 1969) oo. iicenptcaabiemanemsnabic oe :. 5, 10

INDEX TO SUPPLEMENTAL APPENDIX

Order of Superior Court of New Jérsey, Law Divi-

SION—EsSex County oon... eececccccesceseeeoseoceoeeeee. 2... . Ila

. ore .-

on tt ark Introduction

This appeal is taken from a.4 to 3 decision which radi-

‘ eally departs from settled constitutional principles. The

decision is hardly explainable. except: in the context ad-

verted to by Chief Justice Weintraub in dissent, namely,

the “emotional overlay” ‘of .a case involving loans at high

interest rates. 55 N.J. at 494-95, 262 A. 2d at 877. While.

the Chief Justice and Justices Hall and Haneman were

able to esc} the emotional context—‘the case must be

decided ae light [that the interest rates have re-

-eeived legislative approval] ard vot some pérsonal one,”

55 N.J. at 495, 262 A. 2d at 878 (emphasis added)—the

implication is that the ‘other four Justices could not.

‘Appellees seek the samé @mbtional reaction here.

They use heightened language in their briefs. -They

charge the lenders with “deliberative efforts to avoid

New Jersey supervision, such as mancuvering the tradi-

tional incidents of a low transaction to an ‘out-of-state

situs” (NJAGDIY9), although there is no proof of this as-

sertion in the record.* ,

Nor is there proof of the repeated accusations of “vic-

timization” (e.g., 1d/). The 1965 report of the New Jersey

Real Estate Commission, which is relied upon by. appel-

lees and by the courts below, ¢onstitutes extra-record

evidetice—hearsay twice removed—by a.comimission con- °

sisting of New Jersey real estate brokers withe vested

interests in the protectionist legislation they proposed.

As ean be demonstrated. in a plenary brief, it is a report

*The record does show that the lenders are Pennsylvania cor-

porations, licensed and regulated by Penns¥lvania, and having

offices only in Pennsylvania. While Oxford is publicly owned,

First Mercantile is clasely held and its stockholders are Penn- —

sylvania residents.’ :

~

ey

s

> - a

“which does not relate to licensed Pennsylvania lenders,

still less to the licensed lenders involved in the case at

bar. Tmproperly influenced by this report, the courts be-

- low have‘ summarily subjected millions of dollars jn loans

to forfeiture.

In any event, First iecneiihe iil a ms try hie

issues. Indeed, it is anxious to clear its name. But a trial

on the constitutional questions, as is observed infra, will

only be possible if this Court reverses the judgment be-

low. Absent reversal, appelléés will have succeeded in

obtaining summary judgment of significant constitutional

issues despite the presence .of crucial factual disputes.

‘ POINT I

The judgment below is final.

The weakness of appellees’ position. on the merits is

manifest in their strenuous argument, placed in the first

point of each of their briefs, that this Court should not |

resolve a fundamentally important interstate controversy

_on the technical ground that there is no final judgment.

But the finality principle in 28 U.S.C. §1257 does not

hobble this Court with technicalities. It does not require

rejection of Pennsylvania’s spell that this matter be re-

viewed because Pennsylvania’s “yital interests will be ad-

versely affected if the decision . of.the New Jersey Su-

preme Court is not rev ersed” (Amicis brief, p. 2).

~ Nor do technicalities prev ent this Court from pemntaets:

ing a New Jersey judgment Which, since 1968, has effee-

tively precluded Pennsylvania. licensees from making se- |

cured loans in Pennsylvania to New Jersey borrowers, |

and which subjects millions of dollars in presently out-

standing Pennsylvania loans to arbitrary forfeiture in the

courts of New Jersey.

- Appellees: are well aware. that. they and many other

New Jersey borrowers havésceased paying back Pennsy]-

vania loans on the basis of.the judgment below. And /.

appellees are surely aware. that, if this Court declines. to

‘act, even on a technicality, numerous other borrowers.

now awaiting the final word of the highest court, will

~ likewise cease repayments. Thus, what appellees shrewdly

argue is premature now, will ‘be overripe later. Indeed,

insofar as some lenders are concerned, -it will be ey

moot, except in the bankruptey context.

Appellees’ finality argument is shrewd for another rea-

son. They are aware that the New Jersey Supreme Court:

has- ‘entered final judgment not, only with respect to all

Federal consitutiomal issues, but on the merits in ‘their

entirety.* Appellees are also aware that the’ New Jersey

Supreme Court’s remand does not involve the judgment

itself, but whether that. judgment shall be fully or only

_ partially retroactive.

_ In these eircumstanees, appellees are certainly aware

that the question of retroactivity is a State, not a Fed-

_ eral issue—the “intermediation” question will be decided

under State law, without a glance to the Commerce

Clause and its interpretation by this Court—and that it

is an issue which will not be reviewed by this Court. See

Great Northern-R. Co. x. Sunburst Oil & Ref: €o., 287

US. 358, 364 (1932). Hence, it is merely shrewd: {and

perhaps misleading) for appellees to suggest to this Court

that its failure to.act now will someow produce a. record

* Appellees’ concede that ‘‘The New Jersey Court has decided

the applicability of the statute in question. ... .’’ (Joint Mo-

tion, pp. 9-10). ees

“a

. . -

Pd e yas ji

below on tle constitutional issues;. that there’ is some

missing element which will be ,supplied on the remand

below. 8 ae

7 Tt is intei esting: to note that while the Attorney Gen-

. eral of New Jersey, strenuously argues in Point I of his

brief -that only a further trial’ will establish a complete

record on the constitutional » dssues, he has no -problem.

dealing with these issues, and supplying his own allega-

tions in lieu of facts; in Point IT of his brief. It is even .

more interesting to note that the Attorney General, while

having the right to intervene in any proceeding involving |

the constitutionality of a state statute, N.J:R. Ci iv. Proced.

No. 4:28-4(a) and (d), has. already notified the New Jer-

sey Superior Court that:he will.not participate in the trial

-of this matter on the New erence? Supreme Court’s re-

WR z : —

There is no doubt that a trial is required here: - But’

\ that trial, to be productive, must be-a trial of ‘the eonsti-

tutional issues, not of the question of partial retroac:

tivity. Andit must be a trial in the framework of. proper

. constitutional principles, not on the basis of ‘the decision

below which holds that New Jersey can regulate Pennsy]-

vania licensees and Pennsylvania. loans, without proof of

- . fraud or’ ‘substantial intrastate activities in New Jersey.

_ Appellees’ finality argument is askew, off-center. ‘They

claim that post-judgment relief, which may or may not

be granted; -renders the. judgment. itself interlocutory

(p: 10 oe a a ae They confuse purely State is-’’

; . er

&, \

* This is, reflected. in’ an Order of tke New: Jersey Saperion:

Court, entered April 28, 1970 and reprinted ‘in a Supplemental .

Appendix; attached hereto. The Order adjourns proceedings on

the remand ‘pending final disposition of the aforementioned

appeals by the Supreme Court of the United — Para

e

hg o* ae

‘ 3 a

Pe

sues, such as the meaning of “intermediation;” with mat-

ters of Federal constitutional dimension. They rely, heavi-

_ly on older, restrictive precedents and slough .off or dis- .

regard the more. recent decisions. of this Court.

A fair analysis of the practical considerations pre-.

sented by the ease at’ bar, in. the: light of the legal prin-

ciples articulated by this Court, ‘clearly demonstrates that

this is an appeal from a final judgment apd” this Cour

has jurisdiction to entertain it: i

_Further proceedings on remand: "Appellees suggest *

_that “the New Jérsey ‘Supreme ‘Court’s remand on the

. ~ question of retroactivity shows that there is.no™final

word of a final court,” Market Street R. Cov vs Railroad

Com. of Cal., 824 U.S. 548, 551 (1945), But finality is not

so simply semolve: There is a Ue ae area” Which is

not susceptible to “a mechanjeal rule.” Radio Station.

—” WOW, Ine. v. FOURSOM, 326 U.S. 120, 124-25 (1945). There

is a “twilight zone” which requires a ‘practical rather

than a technical construction” of the finality rule. Gi-

lespic v, United States Steel Corp., 379. US. 148, 152

(1964). Thus, finality “does not necessarily mean the last

order possible to be miade in a case,” Jd., pArticularly as

: has been interpreted in recent years. See United States

. McWhirter, 376 F. 2d 102, 104-05 (5 Cir. 1967); Stern .

& Gressman, Supreme Court Practice §311, -pp. 96-99 -

(4th eda 1969). Tn case after case, involving appeals from

- State as well as Federal courts, the fact that furthér pro-

ceedings below. were contemplated, e.g., that the judgment °

under appeal: involved a remand, did not of Uitself pre-

clude this Court’s “determination of important. issties.*

‘ *Unitéd States v. ad Motors Pie: 323 U.S. 373, 377

(1945) ; Radio Station wow, Ine. v. Johanson, 326. U.S. 120,

— | (Footnote continued on following page)

2: Reasons. for the finality ide: “This requirement has .

the ‘support of considerations generally applicable to good

judicial administration. It .avoids the mischief of eco-

noniie waste and of ‘delayed justice.” Radio Station

WOW, Inc. v. Johnson, supra (326 U.S. at 124). It avoids.

piecemeal review. See Gillespie vy. United States Stecl-

Corp., supra ld U.S. at 152-53) ; ITudson Distributors v.

Lilly & Co., 377 U.S. 386, 398-400 (1964). (Harlan, J., dis-

senting). ed are two aspects to this point: °

First, if the appeal could be mooted by reason of the |

result in further proceedings below, a may. be’

declined, see Republic Natural Gas Co. Prisseonipieaie 334 ©

U.S. -62, 71 (1948) ; cf. Brady vy. ae Na 373° U.S. 83, -

Sd at n. -J eho 3), although recent rulings hav e accepted

appeals notwithstanding potential mootness. See Avery —

| \. Midland County, 390U.S. 474, 487 (1968) (Harlan, J.,

9

( Footnote sonilint from preceding page)

123-27 (1945) ; Land v. Dati U.S. 731, 734 at n. 2 (1947) ;

Cohen v. Beneficial Industria@t Loan Corp., 337 U.S. 541, 545-47

. (1949) ; Larson v. Domestic and Foreign Commerce Corp., 337

U.S. 682, 685. at n. 3 (1949); Johnson v. Muelberger, 340 US...

: 581, 583 (1951); Sears; Roebuck €: Co. v. Mackey, 351 U.S. 427

(1956) ; Cold Metal Process Co. v. United Eng. & F. Co., 351

US. 445 (1956); Goodall-Sanford yv. United . Textile Workers,

353 U.S. 550, 551 (1957)! Brown Shoe Co. v. United States, 370°

“U.S. 294, 304-311. (1962) ; Local No. 438 v. Curry, 371 U.S. 542,

* 548-51 (1963); Mercantile Nat. Bank v. Langdeau, 371 US.

555, 557-58 (1963) ; Brady, v. Maryland, 373 U.S. 83, 85. at n. 1

(1963) ; Packinghouse Workers v. Needham Packing Co., 376 U.S.

247, 249 at n. 2 (1964) ; Hudson Distributors v.. Lilly & Co-,

.877 US. 386, 389 at n. 4 (1964); Gillespie v. United States Steel

Corp., 379 US. 148, 152-54 (1964) ; Rosenblatt v. American

Cyanamid Company, 15 L, Ed. 2d 39, 42-43 (Goldberg, J, in

~ ehambers, 1965); appeal dismissed, 389 U.S. 110 (1965); Mills

—* Alabama, 384 U.S. 214, 217-18 (1966); Avery v. ——

County, 390 U.S. 474, 478 at n. 2 (ans);

,

e "

difsbating); Millk y y. Alabama, 384 U.S, 214, 229-23 (1966)

(Harlan, J., dissenting) ; Rosenblatt © Vv. American Cyana- _.

mid Company, 15 L.: Md. 2d 39,42 at n. 7 ics (Gold-:

berg, J., in chambers). ee : .

In any event, the. Federal “oustitutional issues pro-

-. jeeted in the instant appeal cannot be.mooted by further

proceedings beeause such proceedings are limited to the -

single issue of full versus*partial retroactivity. of the

judgment. .No matter r What happens below, appellants

“would still be precluded: froin making sectired loans to

New Jersey residents unless: appellants: establish an office

in, New Jersey; obtain a license from’ New Jersey .and -

comply with New Jersey regulations. And no matter what’ _

~ happens below appellants could not recover interest on

- their loans to the appellee- borrowers.

Hence, there is.no potential mootness here. If juris-

- “diction is declined now, on the ground of lack of finality,” as

appellants. will be compelled ‘to appeal the same. issnes

again.

Second, there i is the ‘reluctance to review appeals where —

further proceedings: below “may ‘generate page fed-

eral questions.”. Republic Natural Gas Co. -- Oklahoma, .

~ supra (334 U.S. at 71-72); but see the more recent case

of Hudson Distributors, vy. Lilly &. Co., supra (377 US:

386), where the appeal was aceepted despite the présence

of Federal questions which were yet to be resolved by the

Ohio courts and despite the fact that “there is every likeli-

hood that the cases will be brought back to this Court nor

<

a second titfe .. .” Td. at 399 (Harlan, J “ dissenting).

_ Here, however, no such likelihood ‘exists, Rather, as in

Radio Station WOW, Inc. v. Johnson, supra (326 U.S.-at

127}; the proceeding on remand “eould not remotelr give

' rise. to a Federal, question” because it will concern the

- a Me!

single issue of retroactivity—all other issues will \.

barred by regson of res judicata. See, e.g. Misani v.

Ortho Pharmaceutical Corp., 44 NJ. 592, 555, 210 A. 2d

609, GLO (1965), appeal dismissed, 382 U.S. 203 (1965), .

and authorities cited in section 3, infra. And the single

issue of retroactivity has been held by this Court to

be a State question, not a matter of Federal constitu-

tional law. Great Northern R. Co. y. Sunburst Oil & Ref.

Co., 287. U.S. 358, 364-65 (1932); cf. Oklahoma. Taa Com-

‘mission v. Texas Co., 336 U.S. 958 (1949), \

3. The traditional, rule: The instant @peal would pass

muster even under the more restrictive traditional rule.-

As the authorities cited earlier demonstrate, that rule’

would not mechanically prohibit review. merely because

further proceedings were ordered by the courts below.

See, e.g-, Radio Station WOW S€ue. v. Johnson, supra

(326 U.S. at 123-27), a decision handed down the same

year that, Market Street R:.Co. was determined.

Nor, . in “our view, - would the traditional rule defeat

jurisdiction where, as here, there is in fact a final judg- ©

ment.on the merits—the “final word of a final court”—

and the. only open question is whether that judgment

should be. fully .or, just partially retroactive. Cf. Radio

Station WOW, Inc. vy. Johnson, supra; United States vy,

General Motors Corp., 323 U:S. 373, 377 (1945). Indeed,.

this appeal is limited to that part of the judgment of the

New Jersey Supreme Court which affirms .on the merits,

Appendiz A to First, Mercantile’s Jurisdictional State.

ment, a limitation which is permittedby Rule 10(2) of

this Court’s Rules. Cf. Sears, Recbuck & Co. v. Mackey,

3o1 U.S. 427 (1956); Cold Metal Process Co. v. United -

Eng. & F. Co., 351 U.S. 445 (1956).

This is not a case like Gospel Army v. Los Angeles,

331 U.S. 543 (1947), relied upon by appellees. . There,

9.

‘ \

under California law, the California. Supreme Court’s

reversal of a lower court’s,@ecision effectuated a remand

‘of the case for a new trial and placed the parties “in the

saine position as if the case had never been tried.” id., at

546, 1%

By contrast, in the instatyt case, as in Johnson v. Mvel-

berger, 340 U.Ss 581, 583 (1951), the Federal constitu-

tional questions, determined below and appealed here, are

“no longer open as an issue upon return of these proceed-

ings” to the lower State courts, The reason is that the.

determination of these’ questions, under well-established -

New Jersey precedents, is binding on the parties; it is

the law of the case and cannot be disturbed.*,

In short, the traditional view would’ regard. thd judg-

ment entered below as final and the possibility of paytial

post-judgment relief as ‘extraneous. .

4: The separate issue caception:. In Radio “Station

WOW, Inc. v. Johnson, supra. (326 US. at 126), this

Court reviewed a judgment which ordered rescission: of

a radio station lease apd an accounting... “In effect, such

a controversy is a multiple litigation allowing review of the

* See, ¢.g., Sarson v. Mueller, 105 N.J.L. 212, 213, 143 A. 498

(E.&A. 1928); U.8. Pipe, etc$¥. United Steelworkers of America,

87 NJ. 343, 351-52, 181 A. 2d° 353, 357 (1962); Misani v. Ortho

Pharmaccutical Corp., 44 N.J. 552, 555, 210 A. 2a 609, 610

(1965), appeal dismissed, 382 U.S. 203 ( 1965) % Deverman vy.

Stevens Builders, 35 N.J.. Super. 300, 302, 114 A. 2d 15, 16

(App. Div. 1955); Ehnes v. King, 50 N.J.. Super. 109, 113, 141

A. 2d° 62, 64 (App. Div. 1958); Lathrop v. Lathrop, 57 NJ.

Super. 532, 541, 155 A. 2d 106, 110 {App. Div. 1959). If

appellees will Yelinquish their rights under these decisions. appel-

Jant would be happy to litigate the constitutional issues at a

plenary hearing and develop .the record which appellees say is

inicomplete. |

10

adjudication which is concluded because it is independent

of, and unaffected by, another litigation with which it hap-

pens to be entangled:”*/d. | |

Gradually, this exception was enlarged and the tradi-

_tional finality rule was relaxed. Stern & Gressman,

Supreme Court, Practice §3.11, pp. 96-99 (4th ed. 1969).*

“The Court is now-more concerned with the practical im-

portance of a prompt decision by it of the federal qués-

tion decided by the state court, and less with whether the

judgment is final in the strict procedural sense.” Id: at

99; compare Republic’ Natural Gas Co. v. Oklahoma, supra

(334 U.S. 62), a 1948 5-4 decision upon which appellees

rely, with Brown Shoe Co. y. United States, 370 U.S. 294

(1962), which cits the other way. Formal severability

of the issues under appeal is no longer a rigid require-

ment. See Gillespie v. United States Steel Corp., supra

(379 U.S. at 153). ' | az

The separate issue exception has heen widely used. A’

- indicated, a rescission order was held separate and there-

fore reviewable, although the order also’ required an

accounting and the accounting was yet to take place.

Radio Station WOW, Ine. v, Johnson, supra. <A full

faith and ‘credit issue was extratted: from an estate con-

test, Johnson v. Muelberger, supra (340 U.S. at 583),

and a remand for redetermination of a criminal defend-

ant’s sentence did not preclude ‘review of whether the’

remand: should also have comprehended the qnestion of

- . guilt. Brady’ v. Maryland, supra (373 U.S. at-85, n. 1).

Appeals were allowed from the dismissal of two out of

four counts in a complaint, Sears, Roebuck & Co. y.

Mackey, supra (351 U.S. 427), and from. the adjudica-

* This is admitted by appellees, NJAGb8 ; Joint Motion, p. 10.

- ‘ l l

" -

tion of a claim, but ‘not of a related counterclaim. Cold

Metal Process Co. v.. United Eng. & F. Co., supra (351

U.S. 445);

Interlocutory questions were held separate and -‘appeal-

able in Cohen yv. Beneficial Industrial Loan Corp., 337

US. 541, 545-47 (1949) (posting of security for. costs),

in Local No. 438 y. Curry, 371 U.S. 542, 548-50 (1963) _

(jurisdiction), in Mercantile Nat. Bank vy. Langdeau, 371 |

U.S. 555, 557-58 (1963) ‘(venue), and in Rosenblatt v.

American Cyanamid Company, supra (15 I. Ed. 2d at 42.

- 43). (jurisdiction).* If these interlocutory questions, de-

termined well in advance of a trial on the merits, wert

“final judgments” for purposes of -appeal, surély. a final

judgment on the merits is reviewable, despite the exis-

tence of an open. issue as to the retroactive impact of

that judgment.

Three other decisions in oo. area should be empha-

sized. In Brown Shoe Co. vy. United States, supra (370

U.S. 294), a merger was held to violate the Clayton’ Act

but ‘the trial court reserved its rulins on the complex

qpestion of implementing divestiture. “This Court. taking

a “pragmatic approach” to finality (370 U.S. -at 306),

ruled that there was jurisdiction to review the adjudica-

tion on the merits.

The instant case is easier: the imp mentation of the

judgment below involves far less compleXity than the

divestiture problem in Brown: Shoe. Moreov er, in Brown

Shoe; the danger of piecemeal appeals. was substantial:

As Justice Harlan said-in dissent: “a second appearance

of this case on our docket is. not an imaginative possi-

* See also eines v. Stapp, 407 F. aa 662, 663 (7 Cir, 19@9)

“(lis pendens cancelled).

12

bility but a reasonable likelihood” (370 U.S. at 362).*

Here, however, that danger does not exist; as demon-

strated in paragraph 2, supra, the only remaining a

is a State question, not reviewable by this Court.

A second ‘precedent to consider is this Court’s unani-

mous decision in Packinghouse Workers vy. Needham Pack-

ing Co., 376 U.S. 247 (1964). The case arosesin an Iowa

eourt. <A labor union sued to compel wires: heed: The -

employer’s. defense was that the obligation to arbitrate.

. was terminated because the union had breached a no-

strike clause. For the same breach, the employer counter-

_ Claimed for damages.

- Pursuant .to Iowa procedure, the employer moved be-

fore trial for an order denying the. union’s claim. The

Towa trial court granted the. motion and the Iowa Su-

preme Court affirmed. . Justice Harlan, speaking for the

Court, found that “our jurisdiction was properly invoked”.

because the Towa order, although “deemed interlocutory

for purposes of appeal” under Towa procedural rules, ~

“nevertheless is a “final order . . . adjudicating the point

.8o determined, which shall not be questioned on the trial

of any part of the case of which it does not dispose,”

-according to the same rules. Jd. at 249, n. 2 (emphasis

added). abi : z

Quite obviously, the case at bar is in the same posture:

as demonstrated earlier, the judgment of the New Jersey

Supreme Court on the merits—on the Federal constitu.

tional issues—is the law of the case and cannot be dis.

turbed. And in New Jersey, unlike Towa, there is not

‘~ .

_€

*“*For if the terms of the divestiture are indeed so difficult to

_ formulate and so interrelated with- market conditions, it is most

unlikely that the decree to. be issued- by the District Court will

turn out to be satisfactory to both parties,”’ Id.

=>

> x ‘ To

even the hurdle of a procedural rule which deems the

order “interlocutory for purposes of appeal.”

A third “precedent requires attention. In. Hudson Dis- .

trihutors v. Lilly &/Co., supra (377 US. 386), an 8 to. 1

decision, with Justice Harlan dissenting, a drug retailer

sued two manufacturers of trademarked pharmaceuticals

in the Ohio courts. The relief: requested was invalida-

‘tion of the Ohio Fair Trade Act under Ohio and Federal

law. There was a counterclaim: seeking enforcement . of

the Act against the plaintiff.

The trial court invalidated the Act, but the. intermedi-

ate appellate court reversed and remanded for ‘trial of

the counterclaim. The Ohio Supreme Court affirmed. In

answer to the counterclaim, the -plaintiff raised faetual

defenses, as ‘well as defenses arising under Ohio law and”

Federal antitrust legislation. Nevertheless, this Court:

accepted jurisdiction,, holding: ated

“The fact that separate. and unresolved issues are

pending in.the Ohio courts and ‘subject to ‘further

proceedings’ therein on the cross-petition do®s not

render the judgment of the Ohio Supreme Court

on the issue. here considered and decided non-final

or unappealable .within the meaning of 28 USC

§1257.” Jd. at 389, n. 4; emphasis added. .

\

Appellees are ‘utterly wrong"in attempting to distinguish

Hudson Disvributors on the ground that the issue there

appealed was “ ‘apable of finally determining the litiga-

tion between the parties” (Joint Motion, p- 11). In faet,

the very basis of Justice Harlan’s dissent: was that the

litigation “is still in its early stages” and involved un-

resolved Federal questions with the result. that “there

is every likelihood that the cases will be breuglit back

to this Court for a seeond time, for consideration of

-14

the questions now unresolved.” Id. at 399. By contrast,

the instant appeal will not return to this Court if the—

Federal constitutional questions »resented here are ad-

judicated at this time.*

\

To eonelude, it is perfectly clear that a final judgment

on the merits has been rendered below; and that the

minor question 6f partial post-judgment relief, no matter —

how it is resolved, will not affect the final judgment.**

In such circumstances, more so than in many of the cases

cited above, jurisdiction should not be declined for lack

of finality. The separate ‘issue exception applies.

. The serious public consequences exception: Where

ie. rulings “may’ carry serious ‘public conse-

quences,” Radio Station WOW, Inc. v. Johnson, supra

(326 U.S. at 124); where there is “a threat of serious

erosion of national policy,” Rosenblatt vy... American Cy-

anamid Company, supra (15 L. Ed. 2d at 42), where

there are “compelling public considerations,” Harlap, J.,

dissenting in J/udson Distributors v. Lilly &.Co., supra .

(377 U.S. at 400), this Court will relax the. finality doe-

trine and accept jurisdiction. ’

No intermédiate ruling is involved in the case at bar,

as we have demonstrated above. Nevertheless, it is worth

noting that serious public consequences will flow from

a rejection of this appeal. é

i. :

* The point is covered in section 2, supra.

«**Tt has been noted. that oe review, against which

the rule of finality: is aimed, is not as decisive a consideration |

after. judgment as before * sudgment. ? .Joseph F. Hughes & Co.

_v. United Plumbing & Heating, Inc., 390 F. 2a 629, 630 (6 Cir.

1968); see Plymouth Mut. L. Ins. Co. v.. Illinois Mid. Continent

L. Ins. Co., 378 F. 2d 389, 391 (3 Cir. 1967).

‘ 15 .

2 e ; 22 e

Important national policies, will be’ eroded. Interstate

ecommerce has been stopped at the border of Nea. Jersey

_.and will remain that way unless this @ourt acts. The

‘ courts of New Jersey. have peremptorily refused to ‘rec-

ognize Pennsylvania’s power to license and regulate Penn-

sylvania loans and lenders; thesé courts will not, extend

full faith and: credit to Pennsylvania legislation unless

‘this Court reverses the judgment below. And the de-

nial of due process of law, which has already occurred;

will persist absent: interv ention,now. Cf. Rosenblatt, 15.

L. Ed. 2d at 42. hae ;

Moreover, this case is not merely a ‘dispute between

private litigants. ‘The State of New Jersey argues for

‘appellees and the Commonwealth of Pennsylvania, to pro-

tect its “vital interests” ‘(Amicus brief, p. 2). has’ joined

with appellants. This interstate “discord” is “at war with

the considerations of comity” and could well give’ rise to

reciprocal retaliation. Oxford Consumer Discount Co.

v. Stefanell, 55 N.J. 489, 500, 262 A. 2d 874; 880 (1970)

(Weintraub, C.J., dissenting); see Forgan v. Bainbridge,

-84 Ariz. 408, 274 Pac. 155, 158 (1928): Leflar, Choice-

Influencing Considerations in peaks Law, 41 N.Y.U.L.

Rev. 267, 286-87 (1966).

6. The exception for rulings which are “fundamental

thé further covduct of. the case’: As early as 1945,

this Court relaxed the finality requirement where the rul-

ing under appeal was “fundamental -to the further. con-

roy of the. case.” United States v. General Motors Corp.,

323 U.S. 373, 3877 (1945).* Subsequent (lecisions were ‘to:

the same effect. Land vy. Dollar, 330 U.S. 731, 734 at n..2

(A947) 5 Larson v. Domestic and Foreign. Commerce

, * The question there bivatond what items of damage . were

properly provable in a condemnation action.

16

te cies 337: US. 682, . 685 at n. 3: (1949) ; Brady: v. Mary--

. land, supra (373 U.S. at 85, n. 1); Gillespie v. casa

States .Steel Corp., supra (379 U.S. at 153- -54).~

Doubtless, the reason underlying this exception js ‘to

avoid “a totally unnecessary trial,” Rosenblatt v. Ameri-

‘can Cyanamid Company, supra (15 L.Ed. 2d: at/ 42), to.

avoid subjecting’ the litigants “to long and complex. liti-

gation which may all be for naught... .” Mercantile Nat. —

Bank v. Langdeau, supra. (371 U.S. at’ 538). / Appellees

- apparently accept this reasoning. (Joint Motioh, » Dp ‘10)..

Clearly, resolution of the Federal constitutional issues.

_presented here is “fundamental to the further eonduct

of the case”-and may avoid “a totally unnecessary trial.”

What remains to be determined below is the .extent’ to -

. which the judgment of the New Jersey Supreme Court

Sy. should. be applied retroactively. ‘Appellants contend the

judgment is’ lense” If appellants. are.. corrects it

would be ‘ “unnecessary” , indéed meaningless, to try the -

remanded issue because. the judgment could not be ‘applied |

retroactively, prospectiv ely, or at all. The proceedirig: on .

remand would “all be for naught.” ne

7. Serious prejudice to the “parties: This Court: has

also relaxed ‘the finality rule to avoid serious prejudice

to the partigs. See Local No, 438 v. Curry, supra (371° ~

_ US. at 550); Brady v. Maryland, sujpira (373 U.S. at 85, -/

n.1); Hudson Distributors v. Tally & Co., supra (377 US..

at*400-01) (Harlan,:.J., dissenting)*; Gillespie v. United

States Steel Corp., supra (379 U.S. at 153). Here, the

delay appellees seek will seriously prejudice appellant in

several ways: ;

First,*as in Gillespie v. United’ States. Bteel Corpor-

tion, “the eventual ‘costs . .. will certainly be'less if we

now pass. on the questions presented here rather than

4

ee

he

17s: | a

send the case back with those isst ues ‘xadouana” (379 US.

at 153).. The reason is that, as demonstrated, in sec-

tion 6, ‘supra, a trial on the issue of retroactivity may

be unnecessary.

Second, as appellees suggest (Joint Motion, pp. 7-8),

appellant has not made secured loans to New Jersey bor-

rowers who have sought funds in Pennsylvania since Sep-

tember 11, 1968. That was the day New Jersey’s Appel-

late. Division held that such loans—bhoth principal and

interest—would be forfeited, although legitimately. trans-

acted in Pennsylyania. To do otherwise would. have

placed, appellant at. the mercy of any. borrower ‘who

~~ wished to stop repaying his loan. Thus, there -has al-

_ ready been irreparable injury: ‘appellant: will never make

- up the business it has lost. Further delay in’ ruling on

the constitutional issues - will substantially ‘inerease - the

injury to appellant as well as to: other Pennsylvania

lenders. - ¢

Third, eepelaaie me to high risk borrpwers., Many

have stopped repaying their loans. Because of the deci-

sion. below, enforcement. of.such loans is questionable and |

would involve lengthy litigation:. The longer this pro-

ceeding is delayed, the less likely_it is that these unpaid

loans will be = recoverable, no..matter what the . ultimate :

legal result turns out to be.

s

ee “* *

There is a final judgment here.. Jurisdiction. should not

be declined. or delayed. | ere eae

e

a

4g

POINT JI

| There are substantial questions here.

A. The. Commerce Clause.

Appellees chiefly rely on--People v. ‘Fairfax Family’

Fund, Inc., 235 Cal. App. 2d 881, 47 Cal. Rptr. 812 (Dist.

Ct. App. 1964); appeal dismissed sub nom: Fairfax Family

Fund v. California, 382 US" 1 (1965). There, the Cali-

* fornia court held that, California’s Small Loan Law re-

quired the licensing of a Kentucky mail order lending

corporation which had important localized Californta ac-

tivities, This Court dismissed’ the subsequent appeal for

- want of a substantial Federal -question., Justice Douglas,

viewing the facts differently, dissented on the ground that

* - the case involved licensing of a firm “doing an exclusively

interstate business” (382 U.S. 1).

But Fdirfax is plainly distinguishable, as Chief Justice -

Weintraub pointed’ out in the dissent filed below, “with

respect to both the facts and the issue involved.” Ozford . ;

Consumer Discount. Co. v. Stefanelli, 55 N.J. 489, 495 at .

n, 1, 262 A. 2d 874, 878 at n. 1 (1970). “There a Kentucky

corporation solicited loans in California by mail and com-

pleted the loan ‘transaction by mail after having a credit

“check made locally in California . ;. .” Jd. There thé bor-

rowers never’ left California nd the California court

~ found “no doubt that negotiation for the respective loans

“takes place within the states...” (235 Cal. App. 2d at ~

885).

No such substantial contacts exist here. It is undisputed

‘that the borrowers went to Pennsylvania ‘to borrdw

money}; that the loan was made there; and that the lender

was a licensed Pennsylvania corporation. There are alle-

Df

%

. 0d N.J. 496-98,- 262. A, 2d 878- 79. fe ss

a

eS | Re

. ~~ .° . ° oN a .

gations of solicitation in New Jersey, but no trial was

held, no such allegation was proved, and the decision went

off on other factors, namely, (a) residence of the bor- _

~ rower and (b) situs .of the mortgage.* ea

Of course, the “issue involved” in Fairfax’ was also dif-

‘ferent from that presented in the instant appeal ; there

“the question was not whether the loans should. be for-

feited but whether the lengler should he restrained from ''

continuing the business until a license was obtainéd.” O2-

‘ford, 55-N.J. at 495,'n. 1, 262 A, 2d 878, n.1 (Weintraub, . |

C.J., dissenting). It is true, as appelle es argue, that the

California statute involv regulation as well’as licensing

(Joint Motion, p.. 14). But despite. appellees’ citation of

more than a‘ dozén sectiong of the California Small. Loan

Law (Id.), they somehow omit any reference. to §24458

which permits enforcement in California of small loans’

“lawfully made outside the state” with respect to prin-

cipal, interest and charges to ‘the extent allowd bile in Cali-

fornia (10% interest plus sthstantial_charges, .§§24451-

05).**. There is no analogue in New J ersey’s statute; loans

-* Tt should be noted that- this case involves’ a suit on the loan,

not on’ the mortgage; that the mortgage was ‘discharged during

__ the eourse of litigation; and that the issue is -not whether mort-

gages can - be regulated, but. whether. loans can a forfeited.

While full argument must await plenary briefs, is worth —

. ‘stating that°there is substantial authority for the ais that °

mortgages are to be regarded. as incidental to loans and not .as

: significant contacts for conflicts purposes. See e.g., Restatement

Second, Conflict of Laws §195, Comment.a; Manhattan Life Ins.

Co. v. Johnson, 188’ N.Y. 108, 111, 80° N.E: 658, 659 (1907) ;

see also Chief. Justice. Weintrgub’s: dissenting opinion below at

p

“ *. a

- ** Larger. loans taiulhe outside California are treated similarly.

eee shoes Code sasasges

+ 4 4 : «

90 °

“lawfully made’ outside the state” are renderéd wholly un-

enforceable in New Jersey under the judgment entered

below. tie “a ;

Finally, in Fairfax there was no question of competing

regulatory schemes. These were California loans and. only

California could regulate them. Kentucky did not appear

“before this Court and: assert .its interest in the transae-

tions.’ In marked contrast, the case at bar does involve

~ ~eompeting; albeit. confparable .regulatory provisions. Oz-

ford, 102 N.J. Super. at 559, 246 A. 2d at 465 (App. Div.

1968). And Pennsylvania has filtd an amicus brief which:

states (at p. 2) that “its vital interests will be adversely

affected if the decision of the New dersey Supreme Court

. is not reversed ... .” :

All that remains of appellees’ argument is a series of

bald allegations. lacking any basis in the record. Thus,

there is no proofs and appellant denies, that licensed

Pennsylvania lenders are engaged jn “victimization” of

New Jersey borrowers or in “maneuvering” ‘to avoid New

Jersey supervision (NJAGHbI9). There is no.proof, and

appellant denies, the hefming of advertising to New Jer-

sey; the participation in referral Schemes; and the use of °

agents to solicit business (NJAGH20).*

New Jersey’s Attorney General concedes: “Theré is no -

doubt that to the extent New Jersey would apply the.1965

Act to the activities of appellants there is a-‘burden’

* Moreover, appellant questions whether such solicitation of

interstate business, even if it existed, would render interstate or —

Pennsylvania loans subject to New Jersey regulation. See, e.g.

Eli Lilly & Co. v. Sav-On-Drugs, 366 US. 276, 278-79 (1961);

Furst v. Brewster, 282 US. 493, 497-98 (1931).

a

Be Ses 2

placed wpon their intexstate ‘activities involving transac-

tions with ‘New Jersey residents.” . (NJAGbI5; emphasis

added). We contend that burden is substantial and undue.

It is unconstitutional.

B. Die Process. . — . .

Can one State regulate transactions which are legiti-

_mately negotiated and concluded. in-a neighboring State

and are licensed and regulated by that neighboring State?

That is the essence of the due process issue whieh this

‘Court should resolve.

.

Appellees do not meet this issue. In the Joint Motion

(pp. 15-16), appellees cite fnapposite insurance png er

from the 1940’s and omit State Board of Ins. v. Todd

Shipyards Corp., 370 U.S. 451 (1962), a more. wml deci-

sion, and Alaska Packers Ass’n vy. Industrial Accident

Comm., 294 U.S. 532, 540-41 (1935),’ which is right in

point. And in the brief submitted by New Jersey’s “Attor-

ney General (pp. 22-23), there is the peculiar notion that

~ Pennsylvania’s courts and Attorney General will simply

defer to the State of New Jersey with resppet to regula-

tion of Pennsylvania loans and Pennsylvania: lenders.*

New Jersey’s, Attorney General also relies on a bill

which revises the Secondary ‘Mortgage’ Loan Act’ (NJAGD-

25-24). It has yet to be signed by the Governor; hence, it

> ;

%In an interesting article on loan sharks, published in: the .

May-June 1970 issue of the Harvard Business Review, there is

this observation: ‘‘How does one assign a dollar cost to the role

of loarr sharking. in maintaining large-scale criminal organiza-

tions that corrupt or undermine government, as appears to be ~

the case in New Jersey?’’ Seidl, .“‘Let’s Compete with Loan

| Sharks, 48 Harv. Buse Rev. #3, pp. 69, 73 (May-June, 1970)

(emphasis added), —

22

is hardly probative of anything. In any event, it surely

does not avoid the due process question. Indeéd, it codi-

fies what the courts below decided: the requirement that

out-of-state lenders maintain a New Jersey office” (§12(a),

NJAG10a) and the regulation of out-of-state. transactions,

notwithstanding the lack of substantial local contacts

- (§24(e), NJAG 24a). * : ;

c-

We have no difficulty with a State’s regulation of out-

of-state loans where the situs has been “maneuvered” in_

bad faith—the evil which troubles New Jersey’s Attorney

General (NJAGb24). See, ¢.g., Seeman vy. Philadelphia

Warehouse Co., 274 U.S. 403, 408-09 (1927).. For example,

the California Small Loan Law which was sustained in

Fairfax had an appropriate provision: “Any person who

contracts for or negotiates tn this State a loan to ba made

outside the State for the purpose of evading or avoiding

this division is subject to the provisions of this division.”

California Financial Code §24460 (emphasis added). -

But New Jerse \goce much ‘further. It would regulate

loans legitimately made in Pennsylvania., It would super-

sede Pennsylvania’s regulatory provisions. This, in our

view, is unconstitutional.

C. Full Faith and Credit.

This issue turns on whether Pennsylvania’s Consumer

Discount Company Act is so offensive to New Jersey pub-

lie policy as té warrant an exception to the constitutional

policy of requiring States to give full faith and credit to

the statutes and judgments of sister States. We submit

that appellees have proven-no such overriding New Jer-

sey interest here. The evidence ‘isto the contrary. ,

‘First, New Jersey's Appellate Division itself found

that: “Supervision of [Pennsylvania] licensees is com-

. — 23

prehensive and comparable to-that provided for by the

New Jersey act.” Oxford Consumer Discount ‘Co. v.

Stefanelli; supra (102 N.J. Super. at 559, 246 A. -2d at—

465). The New Jersey Attorney General’s attack on Penn-.

sylvania’s enforcement of its statutes (NJAGDb20) is “at

variance with whiat the Appellate Division’ held and, :

inore significantly, is utterly w ithout basis in the record.

We, and doubtless the Commonwealth of Pennsylvania

(Amicus brief, pp.-9-10, 14-15), are willing to- try the

- question whether New Jersey or. Pennsylvania has more

effective enforcement of loan regulations. )

Second, as to the comparative costs to the borrower,

we would strongly suggest that Pénnsylvania’s system of

17%-18% interest and insubstantial charges is far more

‘Dtneficial to high .risk borrowers who are covered by

these statutes than New Jersey’s 14% limit with substan-

tial charges. Indeed, this proposition is patently evident

in the revision of New Jersey’s Secondary Mortgage Loan

Act, now awaiting the (iovernor’ s. signature, a revision |

which generally adopts the Pennsylvania view. As the

. Statement accompanying the revision notes, the combined

impact of New Jersey interest-and allowable charges may

be equivalent to an effective rate of 50% or more: to the

borrower, far in excess of. what Pennsylvania permits.*

Third, the Piisieitisiil act is more protective than

_ New Jersey’s in other respects, Oxford, 55 N.J. at 496-97,

262 A. 2d 878-79 (Weintraub, C.J., dissenting), as.can be

demonstrated in a plenary brief.

Fourth, we submit that- - protection of New Jersey bor-

rowers from the shocking. demands of. loan - sharks on

both banks of the Delaware is not fostered by destroying

*The Statement is set forth in the Supplemental Asiouniix to

Oxford’s Reply Brief, pp. la-3a.

oa : 24

, a a

licensed,.régulated. Pennsylvania lenders. The av ailability

of legal loans in Pennsylvania ts an excellent method of

- driving the loan shark out of business. See Seidl; Let’s

Compete with Loan Sharks, 48 Harv. Bus. Rev. . #3, p. 69

(May-June, 1970) ; -Felsenfeld, Consumer Interest Rates,

23 Business Lawyer 93+ (1968); cf. Editorial, 93 ‘New

Jersey Law Journal 500°(July 9, 1970), wherein the writer

‘recommends that New Jersey “permit individuals to bor-

row at competitive market costs from private sources”

and that.the Legislature remove “unreasonable restraints

which presently deny its.[New Jersey] citizens .effective

access to borrowable funds at reasonable interest rates.”

CONCLUSION |

For the reasons ‘given above and in our Jurisdic-

tional Statément, we urge that probable jurisdiction

be noted and that — motion to dismiss this”

—— be denied.

Respectfully submitted,

Arnotp K. Myrevka,

Rocer S. Ciarr,

~ Counsel for Appellant First

Mercantile Consumer Discount

~ Compani Yy,

-744 Broad Street

Newark, New Jersey ° 07102 i

Of Counsel:

‘Ciape & EISENBERG,

Newark, New Jersey 07102

3

-SUPPLEMENTAL APPENDIX _

Order of Superior Court of New Jersey,

Law Division—Essex County

_ This matter being brought before the court upon ap-

plication-of Cummis, Kent & Radin, Esqs., attorneys for

plaintiff Oxford Consumer Discount Company of, North

Philadelphia, and it appearing that both said plaintiff

and Intervenor First Mercantile Consumer Discount Com-

pany have served upon all parties hereto. their respective

Notices of Appeal to the Supreme’ Court of the United

‘States from the judgment in this ease of. the Supreme

Court of the State of New Jersey entered. on March 17,

1970, and it further appearing that Intervenor Attorney —

General of the State of New Jersey has notified the court

in writing that he does not desire to participate in the

trial of this mattér, and the consent of the remaining |

parties in this aétion. having been obtained; ‘it on this

28th day of April, 197% *

OrpeRED, that: the pre-trial conference in this action,

originally scheduled for May 1, 1970, he and is herewith

~. adjourned without date pending final disposition, of the

aforementioned appeals by the Supreme Court’ of the

United States, and it is further

Orperep, that the pre-trial conference and any other

‘mnatter, in this action may.thereafter be heard by this

.court upon 30 days’ notiee filed Jy ane one or more par-

ties to this action./ | | -.

The consent to the form and entry of this Order by

counsel for defendants Anthony FE. Stefanelli-and Theresa

+

[la]

2a

‘Order of Superior Court of New Jersey,

Law Division—Essex County

’ |

A, Stefanelli as set forth below in no way constitutes a

. waiver of her right to object. to the participation in the

pre-trial conference and trial of this matter by any party ~

other than plaintiff Oxford Consumer Discount Company

of, North Philadelphia. ® |

/s/ Wiuiam J. Camarata,

| J.5.C.

We herewith consent to the form’ and entry of this

Order. .

eo ; Cummis, Kent & Rapiy

_ Attorneys for Plaintiff

Oxford Consumer Discount’

Company of North Philadelphia

' By: /s/ Micuar, B, Tiscuman _

' ANNAMAY T. SHEPPARD

Newark LEGAL SERVICES ProgEct

Attorneys for Defendants .

Anthony E. Stefanelli and

Theresa A: Stefanelli ,

By: /s/ AnnaMAy T.. SHEPPARD

Ciape & EIsENBERG

Attorney for Intervenor :

First Mercantile Consumer Discount Company

By: /s/ Arwoup K.. MyreKa

Kirsten, Sotomon & FRIEDMAN. a i

Attorneys for Intervenors }

Paul V. Durkin and Ellen Durkin

- /s/ Jack B. Kirsten