Cullers v. Home Credit Co.

Stolz, Judge,

dissenting. 1. I dissent from Division 1 of the majority opinion for the reasons expressed in the dissent in Mason v. Service Loan &c. Co., 128 Ga. App. 828 (3) (198 SE2d 391), cert. applied for.

2. I dissent from Division 2 of the majority opinion and concur with the dissent written by Judge Pannell as to Division 2.

3. I further dissent from Division 2 and also Division 3 of the majority opinion. The disclosure statement contained in the "Statement of Loan” recited in the majority opinion is insufficient as a matter of law.

While I did not share the view expressed in Division 3 of Mason v. Service Loan &c. Co., supra, I recognize that it is at present the *450prevailing view of this court. Thus, conceding that Code Ann. § 25-315 (c) (Ga. L. 1955, pp. 431, 440; 1964, pp. 288, 291) authorizes the Insurance Commissioner of Georgia (Comptroller General) to allow lenders to require either level term credit life insurance or reducing term credit life insurance as security for the loan and, further conceding that the Insurance Commissioner of Georgia has issued valid rules and regulations to that effect, the "Statement of Loan” in this case is insufficient.

The loan in question was made pursuant to the Georgia Industrial Loan Act, Code Ann. Ch. 25-3 (Ga. L. 1955, p. 431). The Statement of Loan shows on its face that the interest and other charges were in excess of the normal commercial rate. Indeed, the interest charges would be usurious but for the Georgia Industrial Loan Act. The General Assembly, in permitting licensees to operate within the Act, imposed a duty on the licensees to deal openly and fairly with borrowers. The language of Code Ann. § 25-319 (Ga. L. 1955, pp. 431, 444) is susceptible of no other conclusion.

Obviously, the purpose of the statute is to give the borrower complete information concerning the obligation about to be incurred so that the borrower can better protect himself.

In Patman v. General Finance Corp., 128 Ga. App. 836 (198 SE2d 371) this court, as noted in Judge PannelTs dissent, in a unanimous decision, declared void a loan contract which failed to disclose on its face the amount of insurance or the type of credit life insurance (level or reducing term) purchased by the borrower, holding that such a contract was, "on its face, in violation of § 25-319, it is therefore void under Code Ann. § 25-9903.” A motion for rehearing was not filed, certiorari could not be applied for and this case constitutes a binding and controlling precedent.

The Insurance Commissioner of Georgia is authorized to determine and promulgate the rates and maximum premiums permissible to be charged for life, health and/or accident insurance required as security for a loan and to make regulations incident thereto to effectuate the same. Code Ann. § 25-315 (c) (Ga. L. 1955, pp. 431, 440; 1964, pp. 288, 291). Pursuant to this statutory direction the commissioner issued regulations authorizing both the level term credit life insurance, and reducing term credit life insurance. The premiums authorized to be charged for the former was set at 2% per annum of the full amount of the loan, for the latter, 1% per annum of the full amount of the loan. See Rules and Regulations of the State of Georgia, Rules of Comptroller General, Insurance Department, Sec. 120-1-11-02 (1) (a) and (b).

*451In authorizing either level term or reducing term credit life insurance to be required for the security of the lender, it must be concluded that the commissioner intended that borrowers be advised that both types of credit life insurance were available and the cost of each. Code Ann. § 25-319 requires that the borrower receive "a written itemized statement in the English language showing ... the amount of each class of insurance carried and the premiums paid thereon ...” The primary purpose of the disclosure statute (Code Ann. § 25-319) is to afford protection for the borrower and the rules, guides and directives established by the Industrial Loan Act and implemented by the Insurance Commissioner (Comptroller General) are expressions of public policy. It would be meaningless for the commissioner to authorize the sale of both level term and declining term credit life insurance without, at the same time, providing that the borrower be advised in writing that both types of credit life insurance are available and the cost of each.1

This view is in harmony with the majority opinion in Mason v. Service Loan &c. Co., 128 Ga. App. 828, supra, where it is stated "It must not be overlooked, either, that under the commissioner’s interpretation of the statute and his regulations issued in conformity therewith, the borrower must ask for insurance coverage in writing, and he has the option as to whether he will obtain level term or declining term. ” (Emphasis supplied.) It is also in harmony with the spirit of the dissent in Mason that "[t]he purpose of the acts is to afford the borrower the greatest practicable measure of protection, and since the acts are remedial in their nature they are to be given a liberal construction in order to effectuate the legislative purpose.”

The only way to hold with the majority opinion is to overrule Patman and the above language in Mason. If we do this, we can then be looked upon as the "grand protectors” of the "money*452lenders and the pawnbrokers” — those who make money out of the misery of the poor. It should be remembered that the Industrial Loan Act was drafted by an investigating committee constituted as the result of suggestions "that a 'loan shark’ racket exists in certain sections of this State and that legislation may be necessary to cure such evil if it in fact exists.” Ga. L. 1953, Nov. Sess., p. 467. Presumably it did exist because the Industrial Loan Act followed in 1955. If "loan sharking” was an evil, we must presume that the legislature sought to restrict rather than protect those engaged in that practice.

The simple answer to this case is to follow the plain words of the statute itself. Code Ann. § 25-319 requires the contract to show "the amount and class of insurance carried and the premiums paid thereon . . .” What is meant by "class”? Surely it does not mean whether it is credit life, liability, fire or theft. Even the poor and ignorant borrower would know it did not have reference to liability, fire, theft, etc. It had reference to the class of credit life insurance — "level or declining term” — as provided for in the regulations of the commissioner which are quoted on p. 442 of the majority opinion. Where the commissioner authorizes two different classes of credit life insurance, how in the name of common sense can it be said that these are not classes of credit life insurance? The majority opinion quotes Code Ann. § 56-305 which says "For the purposes of this Chapter,” the words "Credit Life Insurance” is a class of Insurance. In Mason (p. 830) this court quoted that same chapter to say that the limitations on Credit Life Insurance "are not applicable 'to insurance regulated under the Georgia Industrial Loan Act as to loans made under that Act’ . .. Code Ann. § 56-3304 (3).” The majority opinion is inconsistent and uses a type of double standard in interpreting the Act in favor of the "money-lenders” and against the general public.

The majority opinion says that the borrower has no option as to whether he can purchase level or declining term credit life insurance. However, in Mason, this court said the borrower "has the option as to whether he will obtain level term or declining term.” (Emphasis supplied.) The inconsistency is obvious and makes the court appear to be talking out of both sides of its mouth. The majority opinion attempts to rationalize this inconsistency by saying that, while it might be desirable for the borrower to have this option (Mason says he has it), nevertheless this is a matter for the commissioner. It attempts to make the commissioner the villian here and this is wrong. He has provided two different *453classes of credit life insurance and the legislature has said that the contract must show the class.

In the understatement of the year, the majority opinion says, "There is, of course, as between level term and declining or reducing term insurance, some difference in the premium to be paid and in the benefit which may result to the borrower.” The difference is it is twice as much. To put it another way, that is certainly "some difference.”

This court should be realistic and follow the true intent of the General Assembly. It should be remembered that "the law on this question is not simply what the judges of this court think the law should be but what the General Assembly has said it is.” Horton v. Brown, 117 Ga. App. 47, 49 (159 SE2d 489).

I am authorized to state that Presiding Judge Hall and Judge Deen concur in this dissent.

On June 15, 1972, the insurance commissioner issued an order reducing the premiums allowed to be charged for both types of credit life insurance. The order stated in part: "I hereby find that an imminent peril to the public welfare exists in that borrowers in this State purchasing credit life insurance are continually assessed premiums which are unreasonable in relation to the coverage provided and that remedial measures are needed immediately to reduce premiums being charged for credit life insurance.”