.
                                 i




     OFFICE   OF THE ATTORNEY    GENERAL   OF TEXAS
                        AUSTIN




                   ld iOt.Nlt.
        .*Inth tr8ia olfp v a     Oa tlO f8r
                                         P la juno -
             th lr&t th m r JE
    tio aund8r               a
                    tut th 8  .a tua Y%  z%L
                     r r yltwh loan tam ba tel.08 )
Honorable Den Y. Jaakaon,                         pagr 2


           Dollar        r0r    raoh(#50.00) Dollarr, or frao-
                                        r’irtr
           tfonal        part    thereoi
                                 loanedj but thir     prim     raole
           prO8\ElpptiOn 8halZ 8Xt8nd Otir t0 th8 fir8t not8
           or d8bt ovlng at the 84m8 f-4 by an lndlvldual
           t0 My p8ClOIl,firla,OOrpOratiOn, piWtn8r8hlp OF
           &88OOi&tiOn, and 8h11     not  apply   t0 w    r4lU3V8l
           Or : lXten8iOn thGl'4OflUll488th0 Ori@ll&~ not4
           or debt and all sxt8nsionr thereof vero for a
           period   of not 1488 than 8ixtJ     (60) dayr.'
          US qUOt8 from YOUr letter8                                   tV0     Of YOUr rubmittsd
QU48tiOn8:
                    '@48tiOll - Yhat                18   Or
                                           the intention Of    VI8
           the   bgi8hltUN              in permitting   of          the OoleOtlon
           oharger of $1.00 for eaoh $50.00 loaned or frao-
           tion thereor?'

           8ion8a$etd&on    t Can a lender under thr provl-
                                 8
                            Aot Ohprg8  a borrover iOr aotual
           out-or-pocket    exp4nre  necearary in meklng the
           loan, ruch    oharge to be over and above the $1.00
           for eacih$50.00     or fraction thereof advanced to
           the borrover?'

                    4he latter          per7        18 a portion          0r     an alternative
QU48tiOn         TOU       8Uhitt8d.             sin08      th8     rOliOVing          di8OU88iOLI   COll-
8titUt88         OUr       MlV4r       t0    the    above         QU48tiOn8,      it become8 un-
n40488&P~           t0     M8VOl’      ~0ll.l’   8lt8l’MtiVe           QU4rx     bared On the 4X-
ample8 8Ubmitted therrmader.
           Tha Aot 8peOirtCall~ provider that aharger may be
made ror lotuxl and n4Oe888ry 8xpen888, nov. or herearter per-
mitted and luthorlxed by lav and rhall not be OOlI81dereda8
int8l'48t. Th4r4 i8 IlO l&~U&g8 in the blll t&It plaO48 8
limltatlon on ths amount that ma)-be oharged for the actual
and lleO8884ry 4Xp4PX48, WI1488 48 YOU 8w48t,    that  Part   Of
SeOtiOn 2a providing th8re Ihell 8Xi8t a prima ia       pI'48UlQ-
tiOn that th8 aOtIS and n4C888Uy    4Xpen8e8  in nrakw    ang
ruch loan V48 41.00 ror eaoh 450.00, or rraotional part there-
of loaned, 18 a llmltatlon 48 to the amount that may be ool-
leoted ror the84 aotual md neoerrary    expenres. Hovev8r,
thlr prime f8014 preiumptlon 18 raid to eXi8t in the trial
of any lppllcatl.onfor injunction under the Act. X4 interpret
,




    Honor&b18 Dm          Y. Jaokaon, pag8 3


    thlr   pqwtlon    or    SeotIon        24 to mean that            b     a trial      or an
    lp 11oatiQa r0r an lnnjunatlon under th8 pFOVi8iOn8 of thi8
    blP 1, thW8 Vi11 8XiXt 4 priu   i4Ol4   p88U@iOIi        t&t Oh-g48
    bared on the abolr ratio Vera 4Otual and n4ao88ary,         and the
    lender I8 reli8red 0r producing rush p0r        unlera thi8 prr-
    8UDlptIo3iI8 rebutted br OCmtradiOtOr~ 8VIdenoe. MO bOli8V8
    that thl8 I8 the OOlutrUOtiOn t&t V&8 Intended t0 be pleO8d
    on thlr portltm of th8 Aot and t&t    it8   pUFpO84    V&l not to
    plaoe a oelllng on the amount that a lender oould Oolleot
    for actual and n8o er r alqxpen888. A8 long a8 the expenrer
    V8rO  aotual and neoesrar~ the rum My br gr84tOr than th8
    ratI<~~.OO      for aray 450.00 or fraotlonal part thereof
    loaned, but vhen the expense8 are ior a 811111    greater   thaa
    that of the 8414 ratio,  the prima faole pre8umptIon a8 to
    the aotuallt~ and neoesrity 0r the expen888 i8 not availabl8
    to thr lender In the trial for an lnjunotlon, yet there 8x-
    pen888 oan be ool~ect8d if th87 be prov8d 48 being lotual and
    M O8884 r y.
              The above dirourrlon I8 bared upon the arrumptlon
    that the oondltlona set forth In the Act creating the pr8-
    8UlU~tiOn4OtUall~ 8Xi8t.

              WO turther oonrtrue thin Aot to the 8ffeOt that
    no oharge VhlLtroeTer   aan be 4884884d agaIn8t the borrover
    ror 8xpenae8, unlerr thr 8xpen848 Vera aotually and in ract
    inOUrr8d and vme neoe88ary In making the loan. If no ex-
    pen848 v8re lnourr8d In makIng a loan, no oharge at all oan
    be 4884684d 4g4in8t the borrover    rOr eXpen488, regardle8r
    or the amount    loaned.
                   Uo rurther        quote       rr0pl your       18itOr8      48     fOiiOV8:

                   %l48tIoTAI 18 thi8 bill retroeotlve 48 to
           4~17   1OaU8 made prior t0 it8 df8OtiVe date?”


                lQuertlm - 18 the oolleation or wury on
           oontraot8 ti 8XI8tenoe prior to the lnaotment of
           the bill and prior to the raid bill beoomlng of-
           feotlre, vlx: the oolleotlon 0r urury on pre-exlrt-
           lng oontr6ot8, a violation of the Aott'

                                 -    If     4   loan   ooiapay   quit8 buriners
                              8frOOtiV8 date             0r   the bill, and in
                                                             590


Honorable Den Y. Jaokxon,   page 4



     11QUidatIXQ it8 bU8inr88 OOlbOt8 U8UrJ On OUt-
     rtandhg aaoounta 00 pr8-•xlirtlngoontraot8,
     VOdd i.njUMtiOIlu8 4@hXt     8UOh OOQMZlr, Or
     it8 Uquidatiag agent, ror the oollrotlon 0r
     U8Ur7 On 8Uch a4eOUllt8in vlndlng Up 1t8 bual-
     ne881rn

          In thr 0484 0r fielllngerv. Cltr 0r 80u8ton, 68
T8x. 37, 3 S. V. 249, Judge Stay'ton8aidr

          .In the lb8enoe 0r oon8titutional reetrla-
     tiOIA8UpOO th8 8Ubj8Ot it I8 4&08t UlliVOr8allJ
     looipted a8 a round ruie 0r oon8truotlo.nthat a
     rtatute 8h4ll hare only a pro8peotIvs operation,
     unlrrr It8 term8 rhou olearly a leglrlatiV4 in-
     tently that It r&11 havr a retroaotIv8 4rreot.
     l   .   .



          TO the 8aEI48ffOOt ar8 State v. Railvay Co., 100
Taxi 175,  7 S. Y. 71~ Fr8eman T, V. 8. Walker end Bono, 212
8. U. 637 9Corn..App.).
          There 18 nothing In thlr Aot vhlch vould ole8rly
IndIoatr or 8hov an lntontlon of the Legislature that It
8hould not retroaotIrely.   Ther8fore it 18 th8 opfnlon 0r
thlr department that raid Senatr Blli 43 18 not retroaotIve.
mt   Ye mean by thi8 i8 explained  in the rOllOVing d18OU8-
8100.
           S8OttOn 1 of the Aot under di8OU88iO11provider that
4 8uit Ear be iMttitut8d br eOrt&ln part188 named th4rOin 'to
onjoln an7 p8r80nr rirm, or oorporatlon or any orrioer, agent,
8ervant or 8mployee 0r ruch perlon,  rim, or oorporatlon
vho 18 engaged in the bWilU388  Or habitual17 loan1
for the uIe a& detention Or vhloh u8urlOU8 intsr48 3 ~?~een
oharged &g&inlt or contraoted to b8 pa-id by the borrover,
rrm demanding, reoeloing or tythe ~88 0r any aa-8    attempt-
lug to oolleot from the borrover wurlou8 interart on ac-
COW   Or 9    10&I,  or rrarnthereattar charging arq borrow-
er uayrlour lnterert or oontraoting for any wurlou8 Lnterert.
. . .   (undery~,oring ourr)
             Section 2 Or the AOt   prOVid88   48 fO11OV81
Honorable Den V. Jaak8on,                         pag8 5


          "By the term thabitually' a8 u8ed in thl8
     Act, 18 meant the m8klng Oi ae many 88 three (3)
     loan8 on vhiah or in oonneotion vith uhioh u8u.r-
     iour interrrt 18 ohar ed or oontraoted iOr vlth-
     in R period of 81x (6 '3month8 next preceding the
     riilag Of MY 8UOh Itit*
          'By the term ~ururlou8 interart a8 u8ed
     la thir Aot, 18 m8ant int8rert at a rate in ex-
     0488 or t8n (10%) per oentum per annum."
          By eaylng the Act 18 not retroaotivs, ve mean~the
making of the loan8 reierred to in geotlon 2, quoted above,
mutt have occurred rubrequently to the lPfeotive date of the
Act. Hovever , a parron, rem, or oorporatIon 80 engaged in
the buSin    of 'habituelly" loaning money, a8 defined by
Section 2, m8y be enjoined, after the effective date of the
Act, rr0m OOll8Oting U8UriOU8 lnter8rt on aooount 0r an
vhether executed prior or rubrequent to ruoh effective-%at'r
In other vord8, to 8eaure an lnjuuotion under the term8 of
thIs'Act, the *er8on, iem1   or oorporatlon mu8t be guilty of
loaning money habitually, 88 80 defined by the Aot, and the
loan8 referred to therein mu8t havr been Bade after the et-
rectlve date or the Aot. After   8uCh faot ha8 been ertabllrhed,
the guilty party niaybe enjoined irom oolleotlng ururiou8 ln-
terert OA any loexs, vhether lame VP8 8xeouted before  or sub-
requent to the date the Act vent into efteot.
          It fO11OV8 from what ve have 8aid that a loan oom-
pazq which qultr bU8in488 prior to th8 lf'feotivedate of the
Act may not be enjoined r"romdemanding, reoelving or &tte!Ept-
1n.gto collect rrm borrover8 urur1ou8 interert on loan8 made
prior to ruch date, for it 18 no longer engaged in the bwIne88
of habitually loaning money at a u8uriour rate of interest, a
burine88 vhioh 818~be 8njOinOd only rhen oonduoted after the
A& beoomer afieotlve.

              Ve trust the                     roregolng   fully    6n8ver8   your questlonr.
                                                                     Very truly   your8




              I.     ‘Cf,   *   ‘r   ;y.;,.&
         ,.   ‘_....,.d_                                                          A8818t=t
                                                               By    /   (                '   '*-
ROKldb                                                                        Robert 0. Koh         j =OMM,
