dissenting. The reconstituted majority in this case has, in my judgment, granted considerable license to the facts and law in reversing our decision of December 22, 1980. I file this dissent with the knowledge that it will not change any minds but perhaps it will in some regards clarify the issue.
The issue, as I see it, is whether a private real estate developer can avoid Arkansas constitutional provisions on usury through a federal law that deals in some regard with state usury laws.
First, it must be emphasized, as it was in our opinion dated December 22, 1980, that this is an appeal from a summary judgment. Cooper Communities, Inc., put on no evidence at all that it spent or received one dollar in interstate commerce. It put on no evidence at all that it had to borrow any money in order to stay in business. The facts, as they were presented, were that Cooper is an Arkansas real estate developer and it sold a lot in Arkansas to an Arkansan, took a promissory note from that individual and retained a lien on the lot. It was stipulated that Cooper sold lots in its real estate development aggregating over one million dollars in one year. By virtue of these facts alone it claimed that it qualified as a “creditor” under 15 U.S.C., § 1602(f), and, consequently can avoid Arkansas usury laws.
On appeal these facts were presented to us and Cooper relied solely on the interstate commerce clause of the United States Constitution as justification that this federal legislation preempted the Arkansas Constitution regarding usury.
In deciding whether this legislation was intended to preempt Arkansas law, as it is claimed in this case, we should be able to presume that Congress was fully aware of the usury provisions of the Arkansas Constitution which is unique among all the states. It provides for a penalty which forfeits the amount of the loan, not just the illegal interest charged or some other lesser penalty. For that reason, more than any other, it has been the subject of attack. It is one thing to make a loan where the only risk is the loss of a few dollars, which is the case in most states, as opposed to a lender in Arkansas making a loan where the risk is losing the amount of the loan. This court has fairly and consistently applied that usury provision to institutions as well as individuals.
Clearly Congress can preempt state law in certain areas and no doubt interest is a matter where it could elect to preempt all state laws, but it is not an area where the federal government has exercised such a predominance that the state cannot act. The question is, was this particular provision of this act intended to preempt any state action?
Based on the facts we have before us, I cannot presume that Congress intended the result that the majority has reached. I reach that conclusion with some understanding of the reason for the legislation. The particular law in question, as its predessor known as the Brock Bill, was addressed primarily to banks and savings and loan associations. According to the legislative history of these laws, the need was primarily caused by the loss of funds across state lines to other states where the institutions were paying more interest on funds than Arkansas banks or institutions could.
Regarding banks and savings and loan associations the act seems to be nondiscriminatory in every regard. It applies equally to state and federal chartered banks. It does not appear to discriminate as to the amount of the loan or the size of a bank. The same is not true regarding the provision that Cooper relies upon to avoid the Arkansas Constitution. That portion of the law is decidely discriminatory and if Cooper is permitted to use that portion to avoid Arkanas law, it will result in the law being applied in an unequal manner to a substantial group of individuals and lenders in the State of Arkansas. That provision as applied to Cooper, and as the majority holds, means that real estate developers who sell over a million dollars worth of property a year in Arkansas can avoid the usury provisions of the Arkansas Constitution. That is the way the majority defines “creditor.” Also Cooper Communities claims it has “federally-related” business under the federal law simply because it keeps a lien on the land it sells. Most lenders keep a lien on land that is sold. If such an act is “federally-related” then brushing your teeth is federally-related. Cooper Communities offered no proof that it will lose any business because of the Arkansas law. Indeed it would seem to the contrary. Its sales should flourish since it cannot charge over ten percent. It offered no proof that it would lose any funds to other states or that it had to borrow money at more than ten percent. It offered no proof as to any reason why it should come under the protection of the federal law. By granting Cooper this protection the majority necessarily holds that all other individuals or businesses in this same classification (people who sell real estate lots) who do not do over a million dollars worth of business are stuck with Arkansas’s usury law. That means that this court will have to tell that class of individuals that they must abide by Arkansas law. When it is all boiled down, it can only mean that one class is allowed to make more money than another class. One class is granted what may amount to the right to succeed in business while another class may well fail. I would suggest that it was not Congress’ intention to preempt a state law which would work such a decidely unfair result.
Was this what Congress intended? There is no doubt that Congress recognized that its law could result in discriminatory treatment. For this reason the act granted state banks equal treatment with federal banks. Section 27 (a) of 94 Stat. 164 reads: “In order to prevent discrimination against State chartered insured banks, ..." [Emphasis added.] There is no such provision that applies to that part of the act that Cooper seeks to use to avoid Arkansas law.
There is no doubt in my judgment that federal laws must, to some degree, be subject to the same tests as state laws when it comes to equal protection of the rights of citizens. While I can find no authority that says that the Equal Protection Clause of the Fourteenth Amendment to the Constitution applies to the federal government, the United States Supreme Court has indicated that federal acts are not entirely free from some constitutional test of equal treatment. See Bolling v. Sharpe, 347 U.S. 497 (1954). Furthermore, the classification imposed by Congress in its laws must be a rational one and must be one that serves a proper governmental purpose. United States Department of Agriculture v. Moreno, 413 U.S. 528 (1973). Also, the class must be one in which all are treated equally. It could be said that all million dollar developers are treated the same but I doubt Congress intended any court to enforce that provision to a perverted result. Even if it did, I would submit that Cooper has failed to make a case to fall within the classification of “creditors.” After all, we still decide cases on the basis of facts submitted to us and as we said in our opinion of December 22, 1980, we assumed that all the evidence was presented to the trial court that the parties intended to be presented.
There are several things this case is not. It is not a case where this court must decide if Arkansas’s Constitution is unconstitutional and must be changed because of due process of law or some other constitutional guarantee. It is not a case where; the federal government intended to enact legislation to totally dominate a field of law heretofore regulated by a state. I would submit that what we have here is one part of a piece of special interest legislation in an area, which may or may not have been introduced to obviate state law.
The majority’s statement that Arkansas has not rejected this law is meaningless. To suggest that the people of Arkansas should have voted on this federal law and rejected it is nonsense. They did not know about the law. To suggest that the Arkansas General Assembly should have rejected this law is to say that it should have violatd the Arkansas Constitution. I cannot agree with the majority’s premise that the law is binding on Arkansas in every regard simply because Arkansas did not act. Arkansas has acted for many years in retaining its usury provision and its constitution should only be overriden in a case where the intent is clear and the treatment is fair and equal for all affected.
Numerous amicus curiae briefs have been filed in this case, largely by businesses or enterprises that are not directly affected by our decision. I share their concern with the state of the law. I trust that they share my concern that this court is charged with the duty of enforcing the Arkansas and United States Constitutions in an equal any even-handed manner.
I would deny the rehearing.