Chap. 402.—An ACT to regulate the business of making small loans, by re
quiring persons charging directly or indirectly a greater rate of com-
pensation than the conventional legal interest rate per annum on loans
not exceeding three hundred ($300) dollars, to any person, to obtain a
license; by prescribing the maximum amount of compensation which
licensees may charge; by regulating assignments to licensees of salaries
or wages earned, or to be earned; by prohibiting false or deceptive
advertising concerning such loans; by fixing penalties for violation of
certain provisions of this act; by prescribing certain duties of the
chief examiner of banking division of the corporation commission in
respect to licensees; repealing section 81 of the revenue act and all
other acts and parts of acts inconsistent with the provisions of this act.

[H B 207]
Approved March 23, 1918.

Whereas, there is and has long been conducted in this State an
extensive business, in the making of small loans of not exceeding
three hundred dollars ($300) to persons in need of funds to meet
immediate necessities ;

And whereas, the conduct of such business has long been the
cause of general complaint and of much hardship and injustice
to the borrowers, and there is no regulation or provision of law
which has proved effective for the protection of such borrowers
and for the punishment of usurious money lenders;

And whereas, it is recognized that the business of lending smal!

sums of money upon security that is not acceptable to banks and
financial institutions, does and will exist and there is a real need
for the enactment of a law that will enable its continuance under
proper supervision and restrictions;

sind whereas, it is desired to suppress the “loan shark” evil in
this State by establishing and regulating the small loan business
upon fair and lawful terms, by providing for a bond, State license,
official supervision and examinations and thereby enabling repu-
table lenders to engage in the business; therefore this remedial act
authorizing a maximum charge by licensees under this act, it is
not intended to provide additional interest compensation for loans
of money, or necessarily an interest rate higher than the conven-
tional rate in this State, but to recognize that as the conduct of
such loan business requires the special employment of persons to
assist and investigate each application for a loan and to collect
them when made; also to provide indemnity to licensees for the
losses upon such loans to those who do not fully repay, to be con-
tributed by those who do pay in full, thereby distributing the
losses so that all borrowers who receive such loan accommodation
shall bear the losses of their class, arising from inadequate security
taken.

Section 1. What loan business shall be regulated; license re-
quired to engage in.—Be it enacted by the general assembly of Vir-

inia, That it shall be unlawful, without first having obtained a
icense from the chief examiner of banking division of the corpo-
ration commission, hereinafter called the chief examiner, for any
person, co-partnership, or corporation to charge, contract for or
receive a compensation greater than the conventional legal interest
rate per annum for interest, fees, expenses, and charges or other-
wise, either directly or indirectly, or by any device or pretense of
charging for services as principal, agent, broker or otherwise upon
the foan, use or forbearance of money or valuable things, or for
becoming surety, guarantor, or endorser upon the loan, use or
forbearance of money or valuable things, to any person, in sums not
exceeding three hundred ($300) dollars, or the value thereof.

Sec. 2. Application for license; particulars required; what fee
for year, or less—Application for such license shall be in writing
and shall contain the full name and address, both of the residence
and place of business, of the applicant and if the applicant is a
co-partnership, of every member thereof, or if a corporation of
each officer thereof, also the county and municipality, with street
and number, if any, where the business is to be conducted. Every
such applicant, at the time of making such application, shall pay
to the chief examiner $50.00 as an annual license fee and in full
payment of all expenses of examinations under and administration
of this act; provided, that if the license is issued for a period of
less than twelve months the license fee shall be pro-rated according
to the number of months that said license shall run.

Sec. 3. Bond to State and surety required; $1,000; penalty con-
ditions, official approval——The applicant shall also, at the same
time, file with the chief examiner a bond in which the a Psat
shall be the obligor, in the sum of one thousand dollars ($1,000)
with one or more sureties to be approved by said chief examiner
which bond shall run to the State of Virginia for the use of the
State and of any person or persons, who may have a cause of action
against the obligor of said bond under the provisions of this act.
Such bond shall be conditioned for the faithful performance by
the licensee of the duties and obligations pertaining to the business
so licensed and the prompt payemnt of any judgment recovered
against him, them or it, or for which any licensee may be liable
under the provisions of this act.

Sec. 4. When license shall issue; official by whom issued; when
expires; not assignable.-—Upon the filing of such application and
the approval of said bond and the payment of said fee the chief
examiner shall issue a license to the applicant to make loans in
accordance with the provision of this.act for a period which shall
expire the first day of May next following the date of its issuance.
Such license shall not be assignable.

Sec. 5. When additional bond may be required of licensee;
failure to furnish_—If in the opinion of the chief examiner the
bond shall at any time appear to be insecure or exhausted, or other-
wise doubtful, an additional bond in the sum of not more than one
thousand dollars ($1,000) satisfactory to the chief examiner shall
be filed and upon failure of the obligor to file such additional bond,
the license shall be revoked by the chief examiner.

Sec. 6. License may be revoked for violation of act; hearing
of complaint.—The chief examiner may, in his discretion, upon
notice to the licensee giving particulars of any alleged violation or
violations of this act and reasonable opportunity to be heard, revoke
such license if the licensee has violated any provision of this act:
provided that at least five days before such hearing, the licensee
shall be notified of the nature of the documentary evidence and the
names of the witnesses on whose complaint the charge is being con-
sidered; the licensee may also submit a list of witnesses desired to
appear in his defense, and they shall be officially notified to be
present; such hearings may be adjourned, from time to time, for
good cause, by the chief examiner and at any such hearing he
shall administer the usual oath or affirmation to each witness and
examine him in respect to his knowledge of any alleged violation
of this act. If the licensee is found beyond a reasonable doubt, to
have violated this act, the chief examiner may revoke such license.
but no such license shall be issued after a second revocation.

(a) Appeal from finding to court of equity.—An appeal for
such finding, or revocation of license, may be taken and the records
and transcript of evidence be filed with a court having equity juris-
diction where such business is conducted, which court shall review
the evidence and pass a decree according to the merits of the
matter involved.

_ (b) Revocation of license after second conviction.—In case the
licensee shall be convicted by a court a second time of a violation
of section fourteen (14) of this act the chief examiner shall revoke
such license; provided that the second offense shall have occurred
after a prior conviction, in which case another license shall not be
issued to such licensee.

Sec. 7. Restrictions of trade name; one place of business under
each license.—It shall be unlawful for any person, co-partnership,
or corporation so licensed to make any loan or transact any busi-
ness provided for by this act, under any other name, or at any place
of business than that named in the license. Not more than one
place of business shall be maintained under the same license, but
the chief examiner may issue more than one license to the same
licensee upon the payment of an additional license fee and the filing
of an additional bond for each license.

Sec. 8. License to be posted; how and where.—The license shall
be kept conspicuously posted in the place of business of the licensee.

Sec. 9. Changing place of business; official endorsement on
license.—Whenever any licensee shall change his place of business,
he shall at once give written notice thereof to the chief examiner
who shall endorse such change of address on said license and date
thereof.

Sec. 10. Official investigation of loans and business; right to
enter offices and examination of books, etc.; may administer oaths.—
The chief examiner, for the purpose of discovering violations of
this act, may either personally, or by a deputy or examiner, at any
time and as often as he may desire, investigate the loans and busi-
ness of every licensee and of every person, co-partnership and cor-
poration by whom, or for which any such loan shall be made,
whether such person, co-partnership, or corporation shall act, or
claim to act as principal, agent, or broker, or under, or without
the authority of this act; and for that purpose he shall have the
right to enter and remain in the offices, between nine A. M. and
five P. M., of any business day, and have free access to the books,
papers, records, desks, safes and vaults of all such persons, co-
partnerships and corporations, he shall also have authority to ad-
minister oaths or affirmations to and examine every person whom-
soever, whose testimony he may require, relative to their conduct
of such business. |

Sec. 11. Books and records; how to be kept; how long to be
preserved.—The licensee shall keep such books and records as in
the opinion of the chief examiner will enable the chief examiner
to determine whether the provisions of this act are being observed.
Every such licensee shall preserve the records of final entry used
in such business, including cards used in the card system, if any,
for a period of at least two years after the making of any loan
recorded therein.

(a) Books, papers and securities to be kept in office: not re-
moved or destroyed.—AIl books, papers, records used and securi-
ties taken in connection with the loan business of licensees shall be
kept in the office of such licensee at the licensed address thereof
and shall not be removed therefrom, or destroyed, except as pro-
vided in section eleven.
Sec. 12. License fees appropriated ; how disbursed ; official report
to treasury.—All license fees herein provided for shall be collected
by the chief examiner and shall be turned into the State treasury.
The State corporation commission shall have full power to employ
such examiners or clerks to assist the chief bank examiner as it
may from time to time deem necessary and fix their compensation,
and all salaries and expenses necessarily incurred in the adminis-
tration of this act shall be paid out of license fees collected and
turned into the State treasury under the provisions of this act,
upon the presentation of itemized vouchers, duly verified, and having
the approval of said commission. The auditor shall issue his war-
rant on the State treasurer for such salaries and expenses, and the
State treasurer shall pay the same out of said fees, and for that
purpose the said fees are hereby appropriated for use during each
iscal year.

Sec. 13. What false or deceptive advertisements prohibited.—
It shall be unlawful for any licensee, or other person, co-partner-
ship, or corporation in the business described in section one, to
print, publish, or distribute or cause to be printed, published or
distributed in any manner whatsoever, any written or printed adver-
tisement or circular containing any material statement which -is
false er deceptive, with regard to the rates, terms or conditions
respecting such loans or transactions.

Sec. 14. Maximum compensation, reimbursement of expenses
and contribution to losses allowed licensees.—It shall be lawful for
any licensee hereunder to charge, contract for, or receive for or in
connection with the making of loans of not exceeding three hun-
dred ($300) dollars, a unit charge not exceeding three and one half
(314) per cent per month, on unpaid balances, which rate shall
include (1) interest, or compensation for the use or forbearance of
money, (2) re-imbursement of expenses, approximately, incurred or
expended in the service and accommodation of borrowers, such as
preparing their applications for loans, investigating the employ-
ment and responsibility of applicants, appraising property, where
a lien upon such is offered and searching the public records for
liens and encumbrances, or otherwise verifying any claim of title
to property offered as security, accepting repayment in weekly or
monthly instalments or principal, with interest, and (3) indemnity
contribution to a fund for offsetting and sustaining losses arisin
from bad loans, or insufficient security, such as are usually pustained
by small loan companies and brokers.

(a) Higher charge authorized for loans not exceeding fifty dol-
lars; splitting or dividing loans prohibited.—On loans of not exceed-
ing fifty dollars ($50.00) it shall, however, be lawful for any licensee
hereunder to charge, contract for, or receive for or in connection
with the making of such loan, a unit charge of not exceeding five
per centum per month on unpaid balances, which rate shall include
interest, reimbursement and indemnity as set forth in the preceding
section. It shall be unlawful to divide or split loans so as to
obtain a higher rate of charges than authorized by the preceding
section under any pretext whatsoever, and no additional loan made
to the same person or persons shall be charged for at the maximum
rate authorized by this sub-section within one month thereafter, if
the total of such loans shall exceed fifty dollars ($50.00).

(a) Collecting of compensation regulated—What charges pro-
hibited and what may be reimbursed.—The charges authorized by
this act shall not be payable in advance or compounded and shall be
computed on unpaid balances. In addition to the charges herein
provided for, no further or other charge, or amount whatsoever for
any examination, service, brokerage, commission, fine or other thing,
or otherwise shall be directly or indirectly charged, contracted for
or received, except the lawful fees, if any, actually and necessarily
paid out by the licensee to any public officer, for filing, or recording
in any public office any instrument securing the loan, which fees
may be collected when the loan is made or at any time thereafter.

(b) Loan void for excess charges.—If interest and charges in
excess of those permitted by this act, shall be charged, contracted
for, or received, the contract of loan shall be void and the licensee
shall have no right to collect, or receive any principal, interest or
charges whatsoever.

(c) Debt limited to three hundred dollars principal.—No per-
son shall owe any licensee at any time more than three hundr d
($300) dollars for principal.

Sec. 15. Every licensee shall:

(a2) Each obligation to state amount and terms of loan.—State
in every note, mortgage, assignment of wages, or other evidence of
indebtedness the date of its execution, the amount of money actu-
ally lent, the compensation to be paid for interest, fees, expenses
and losses and the dates and amounts of repayment agreed upon
and the place where payable.

(b) Statement of loan to be delivered borrower; what partic-
ulars to contain.—Deliver to the borrower, at the time a loan is
made, a poss book, or card stating in the English language in clear
and distinct terms the date, amount and compensation for interest.
fees, expenses and losses for the loan and dates and amounts of
repayment agreed upon, the nature of the security given, if any:
also the names and addresses of both borrower and licensee. On
the back of such pass book, or card, there shall be printed in Eng.
lish a copy of section fourteen (14) of this act, in type not smaller
than eight (8) point.

(c) Receipts for payments as made.—Enter in such pass book
or card, or give to the borrower a plain and complete receipt fot
all payments made on account of any such loan, at the time suck
payments are made.

(d) Upon repayment obligations to be cancelled and surren.
dered with security pledged; mortgage to be satisfied—Upon repay.
ment of the loan in full, mark indelibly every obligation signed by
the borrower with the word “Paid” or “Cancelled,” and releas
or satisfy any mortgage, cancel and return any note and any assign
ment given as security and surrender any personal property i:
pledged by the borrower. In event of collection by foreclosure, sale
or otherwise, any surplus arising after payment of the expenses of
collection, sale or foreclosure and satisfaction of the debt, shall be
returned to the borrower, or whomsoever is entitled to the same.

Sec. 16. Restrictions of obligations to be taken; shall contain
no unfilled blanks.—No licensee shall take any confession of judg-
ment, or any power of attorney, nor shall he take any note, promise
to pay, or security or any instrument in which blanks are left to
be filled after execution.

Sec. 17. Restrictions of assignments of salary or wages; power
of attorney forbidden; when written assent of wife required.—No
assignment of, or order for, the payment of any salary or wages,
earned or to be earned, given to a licensee to secure a loan, shall be
valid unless such loan is contracted simultaneously with its execu-
tion; nor unless in writing signed in person by the assignor, and not
by attorney; nor when made by a married person, unless the written
assent of his or her spouse to the making of such assignment or
order is indorsed or attached; provided, that written assent of a
spouse shall not. be required when husband and wife have been liv-
ing separate and apart for a period of at least five months prior to
such assignment.

(a) Assignment of salary or wages restricted to ten per cent
of amount; regulations; notice to employer.—Every such assign-
ment or order for the payment of salary or wages earned, or to be
earned in the future, unless given as security for a loan under this
act, shall be valid for not exceeding ten per cent (10%) of the assign-
or’s salary or wages under any existing or future employment, which
ten per cent (10%) shall be collectible therefrom from the employer,
by the licensee, at the time each payment of salary or wages becomes
due, from the time that a copy thereof, verified by the oath of the
licensee, or his agent, together with a verified statement of the
amount unpaid upon such loan is served upon the employer, who
may demand to have the original of such assignment exhibited to
him at the time such copy is served.

Sec. 18. Penalties for violation of section one, seven, thirteen
and fourteen.—Any person, co-partnership, or corporation who shall
violate any of the provisions of sections one, seven, thirteen and
fourteen of this act shall be guilty of a misdemeanor and upon con-
viction thereof shall be punishable by a fine of not more than five
hundred dollars ($500) or by imprisonment of not more than six
(6) months, or by both such fine and imprisonment in the discretion
of the court.

(a) Loans made at compensation in excess of act not to be
enforced: persons participating in unlawful charges subject to act.—
No loan for which a greater compensation for interest, fees, expenses
or losses, at a greater rate than is allowed by this act, has been
charged, contracted for or received, wherever made, shall be enforced
in this State and any person in any wise participating therein in
this State shall be subject to the provisions of sections one (1) and
eighteen (18) of this act. .
Sec. 19. License not required by banks, trust companies, and
building and loan associations.—No license shall be required under
this act for loan transactions of any person, co-partnership, corpo-
ration, bank, or association doing business under any law relating
to banks, trust companies, building and loan associations and
licensed pawnbrokers of this State, or of the United States, as they
are already regulated by appropriate laws; nor shall a license be
required for loan transactions of any corporations which make loans
at a rate not exceeding the conventional legal interest rate per
annum, and which require the borrower to purchase certificates of
investment equal in amount to the sum borrowed, and to pay there-
for in uniform weekly installments for not less than fifty weeks; nor
shall this act apply to loans for which real estate security is given,
if said security is evidenced by mortgage or deed of trust.

Sec. 20. Citation of the act, or short title—This act may be
cited as the uniform small loan law.

(a) How act to be interpreted; uniformly with other States.—
This act shall be so interpreted and construed as to effectuate its
general remedial purpose and to make uniform the laws of those
States which enact it.

Sec. 21. What acts repealed; what acts shall not apply to licen-
sees.—That section eighty-one of an act entitled an act to raise rev-
enue for the support of the government and public free schools, and
to pay the interest on the public debt, and to provide a special tax
for pensions, as authorized by section one hundred and eighty-nine
of the Constitution, approved April sixteen, nineteen hundred and
three, as heretofore amended, is hereby repealed and all acts and
parts of acts in conflict with the provisions of this act are hereby
repealed.