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December 8, 1970
Honorable August P. Mardesich
Chairman, Interim Committee on Banking,
Insurance & Transportation
3731 University Way Northeast ‑ Nos. 201-202
Seattle, Washington 98105
Cite as: AGLO 1970 No. 155
By letter previously acknowledged you have requested an opinion of this office on a question pertaining to the eligibility for licensing of certain institutions under the provisions of a proposed bill relating to installment loans. Your question regarding this bill reads as follows:
"Specifically, which of the following are eligible for licenses under the present wording of the bill:
"1. Commercial Banks
"2. Sales Finance Companies, e.g. G.M.A.C.
"3. Retail sellers, e.g. Sears, Penney's
"4. Mutual Savings Banks
"5. Savings and Loan Associations."
As we understand it, the bill to which your question refers would be identical to Senate Bill No. 278, denominated the "Washington Installment Loan Act," which was considered but not passed by the 1970 legislative session. Section 3 (1) thereof, if enacted into law, would provide that:
"Any licensee under this act shall have the right to make loans under the provisions of this act at the rates authorized herein on such loans notwithstanding any other statute and without having to apply for or obtain a license under any other statute regulating loans."
The term "licensee" is defined in § 2 (3) of the bill as meaning
". . . a person to whom one or more licenses have been issued."
[[Orig. Op. Page 2]]
The term "person" is defined by § 2 (1) as meaning
". . . an individual, copartnership, association, trust, corporation, or any other legal entity."
Other terms defined within this section are "license" and "supervisor"; these two terms are defined by subsections (2) and (4) as follows:
"'License' shall mean a single license issued under the authority of this chapter with respect to a single place of business."
"'Supervisor' shall mean the duly appointed supervisor of banking of the division of banking, department of general administration of the state of Washington."
Lastly, in so far as is material to your question, the qualifications which must be met by any "person" applying for a license to make loans under the provisions of the proposed act, as well as the procedures to be followed with respect to the issuance of such a license, are set forth in subsections (2) ‑ (7) of § 3, as follows:
"(2) The application for a license shall be in writing, under oath and in the form prescribed by the supervisor. It shall state the approximate location where the business of making loans under this act is to be conducted, the names and addresses of the individual owner, partners, or the names and addresses of the members if an association or if a corporation, the names and addresses of the officers and directors, the name under which such business is to be conducted and shall contain such further relevant information as the supervisor may reasonably require.
"(3) The applicant shall at the time of making such application evidence, in form satisfactory to the supervisor, that the applicant has and will maintain liquid assets of at least fifty thousand dollars devoted to the business or readily available for use in the business of making loans under this act at the proposed location.
[[Orig. Op. Page 3]]
"(4) Upon the filing of such application and payment by the applicant of two hundred dollars as an investigation fee and one hundred dollars as an annual license fee, the supervisor shall investigate the relevant facts; and, if he shall find (a) that the financial responsibility, character and general fitness of the applicant are such as to command the confidence of the general public and to warrant the belief that the applicant's business will be operated honestly and fairly in compliance with and within the purpose of this chapter, and (b) that allowing such applicant to engage in the business of making loans under this chapter would promote the convenience and advantage of the community in which the business of the applicant is to be conducted, he shall thereupon issue a license to the applicant.
"(5) If the supervisor shall not so find, he shall notify the applicant, who shall, on request within thirty days, be entitled to a hearing on such application within sixty days after the date of said request. The investigation fee shall be retained by the supervisor, but the annual license fee shall be returned to the applicant if a license is denied.
"(6) The supervisor shall grant or deny a license within sixty days after the filing of an application unless the time is extended by written agreement between the applicant and the supervisor. When granting or denying an application, the supervisor shall send to the applicant a copy of his findings and shall also file his findings in his office where such shall be kept as public record.
"(7) Any small loan licensee or any chartered industrial loan company, authorized to do business in this state, who files an application for, or written notice or intention to apply for, a license, within one hundred twenty days of the effective date of this act, and who has not been denied shall be subject to all the provisions of this act relating to licensees as though such license had been granted and may make regulated installment loans, and contract for, charge and receive the charges herein authorized as if he were a licensee."
[[Orig. Op. Page 4]]
Nowhere within any of these provisions, nor within the remainder of the act, do we find any identification of eligibility or ineligibility for licensing expressed in terms of whether or not the applicant is a "commercial bank," a "sales finance company," a "retail seller," a "mutual savings bank," or a "savings and loan association." However, it seems apparent that any of the foregoing enterprises or institutions would constitute "persons" within the meaning of § 2 (1), supra.
Therefore, in the absence of any disqualifying provision within the body of the proposed act,1/ it would be our opinion that any of these enterprises or institutions which can meet the financial requirements, etc. of § 3 (2) ‑ (7), supra, must be regarded as being eligible for licensing if the proposed bill is enacted in its present form. However, to avoid the possibility of litigation on the question should the bill be enacted, we would recommend in any event the inclusion of a clarifying amendatory section declaring your intention as to the bill's applicability to the various enterprises and institutions discussed.
[[Orig. Op. Page 5]]
We trust the foregoing will be of some assistance to you.
Very truly yours,
FOR THE ATTORNEY GENERAL
RICHARD A. HEATH
Assistant Attorney General
*** FOOTNOTES ***
1/E.g., such as the exclusionary provision contained in chapter 31.08 RCW, the "Small Loan Act," after which the bill here in question appears to have been patterned. While the definitions contained in RCW 31.08.010 are identical to those set forth in § 2 of the bill, supra, we have found nowhere within the body of the bill any provision comparable to RCW 31.08.220, which states (in terms of the applicability of the Small Loan Act):
"This chapter shall not apply to any person doing business under and as permitted by any law of this state or of the United States relating to banks, savings banks, trust companies, savings and loan or building and loan associations, industrial loan companies or credit unions, nor to any pawnbroking business lawfully transacted under and as permitted by any law of this state regulating pawnbrokers."