Small Loans Act. Contract, Validity. Bills and Notes. St. 1911, c. 727, § 17, as amended by St. 1912, c. 675, § 5, providing that "Whoever not being duly licensed . . . engages in or carries on, directly or indirectly, either separately or in connection with or as a part of any other business, the business of making loans" of $300 or less on which is paid an amount exceeding twelve per cent per annum "shall be punished" and that "Any loan made . . . in violation of this act shall be void," makes criminal the carrying on by an unlicensed person of the business thus described and does not prohibit the making by an unlicensed person of a single loan of the kind described.
Thus in an action on a promissory note made to the plaintiff by the defendant for a sum less than $300 bearing interest at more than twelve per cent per annum, if it appears that this was the only time that the plaintiff lent a sum of money as small as $300, it may be found that the plaintiff was not engaged, either directly or indirectly, in the business of making small loans within the meaning of the statute, and he may be allowed to recover on the note.
In the case above described it was said that the circumstances proved might be such that the making of a single loan of the character described in the statute would be sufficient to warrant a finding that the person who made it was carrying on the business of making such loans.
RUGG, C.J.
This is an action of contract between the original parties to the instrument to recover upon a promissory note for $200. There was evidence tending to show that interest in excess of twelve per cent was charged and paid. The defence is that the loan is in violation of the small loans act.
It is provided by St. 1912, c. 675, § 5, that, "Whoever not being duly licensed . . . engages in or carries on, directly or indirectly, either separately or in connection with or as a part of any other business, the business of making loans . . . to which the provisions of this act apply, shall be punished. . . . And any loan made . . . by an unlicensed person . . . in violation of this act shall be void." Small loans are defined in the statute to be $300 or less. The plaintiff is not licensed. The evidence being uncontradicted that this was the only time the plaintiff ever lent a sum of money of an amount of $300 or less, the judge found that "the plaintiff was not engaged, either directly or indirectly, in the business of making [small] loans" under the statute. Judgment was entered for the plaintiff.
The question presented is whether a single loan for less than $300 at more than twelve per cent interest by one not engaged in the business of making small loans is void under the statute. The statute does not prohibit all such loans except by licensed persons. It simply forbids the making of such loans as a business unless one is licensed. The making of a single loan might be sufficient under appropriate circumstances to warrant a finding that the one making the loan was carrying on the business. But it does not require such a finding. The statute declares void only loans made in violation of the act, that is, those made as a part of carrying on the business of making such loans by one who is unlicensed. The statute does not inhibit the making of one such loan by a person not engaged in that business. The occupation and not the isolated act is interdicted.
Order dismissing report affirmed.