Editor's notes.

- In light of the similarity of the statutory provisions, and in light of subsection (h) of O.C.G.A. § 7-3-29, decisions rendered prior to amendment of this Code section by Ga. L. 1980, p. 1784, §§ 1, 2 have been retained in the annotations. Georgia Inv. Co. v. Norman, 231 Ga. 821, 204 S.E.2d 740 (1974).

Construction.

- This law, being in derogation of common law, must be strictly construed. Landmark Fin. Corp. v. Cox, 2 Bankr. 739 (S.D. Ga. 1980).

Georgia courts have strictly construed the Georgia Industrial Loan Act (see now O.C.G.A. § 7-3-1 et seq.) since its provisions are in derogation of common law. Moore v. Beneficial Fin. Co., 158 Ga. App. 535, 281 S.E.2d 293 (1981).

Forfeitures and penalties are not favored and statutes relating to them must be strictly construed, and in manner as favorable to person against whom forfeiture or penalty would be exacted as is consistent with fair principles of interpretation. Landmark Fin. Corp. v. Cox, 2 Bankr. 739 (S.D. Ga. 1980).

Section does not discourage judicial or other interpretation of chapter.

- O.C.G.A. § 7-3-29 evinces a recognition on the part of the General Assembly that the Georgia Industrial Loan Act, O.C.G.A. § 7-3-1 et seq., is ambiguous in certain sections. It in no way discourages judicial or other valid authority from seeking interpretations of that Act which further its purpose, despite prior inconsistent interpretations. Ford v. Termplan, Inc., 528 F. Supp. 1016 (N.D. Ga. 1981).

Contracts violating act are null and void.

- As originally enacted, this section provided that contracts violating this act were null and void. Landmark Fin. Corp. v. Cox, 2 Bankr. 739 (S.D. Ga. 1980).

The 1978 additions to the penalty provision did not eliminate the null and void language. In describing the purpose of these additions, the General Assembly stated that the former provisions (see now O.C.G.A. § 7-3-29(f)) were intended to exempt from certain penalties contracts made in reliance upon certain rules, regulations, or interpretations of the act. Landmark Fin. Corp. v. Cox, 2 Bankr. 739 (S.D. Ga. 1980).

Recovery of principal in action on "null and void" loan contract.

- Lender as licensee may recover principal amount of loan in action solely on loan contract when such contract is considered "null and void" under O.C.G.A. § 7-3-29 as a result of inclusion of usurious amount of interest even though a lender does not seek recovery of principal in cause of action for money had and received. United States Life Credit Corp. v. Johnson, 248 Ga. 852, 287 S.E.2d 1 (1982).

"Null and void" provision does not work penalty of forfeiture of principal as well as interest. Moore v. Beneficial Fin. Co., 158 Ga. App. 535, 281 S.E.2d 293 (1981).

Former provisions (see now O.C.G.A. § 7-3-29(f)) did not bear upon method of enforcement but rather conforms with general purpose of penalty provision to deter lender abuse. Landmark Fin. Corp. v. Cox, 2 Bankr. 739 (S.D. Ga. 1980).

Chapter is applicable to loan contracts, not merely notes.

- Statutory language of the Georgia Industrial Loan Act, (see now O.C.G.A. § 7-3-1 et seq.), refers to loan contracts and not merely notes. General Fin. Corp. v. Sprouse, 577 F.2d 989 (5th Cir. 1978).

Subsection (c) of section cannot be retroactively applied to sanction loan fees which are excessive and which were contained in loan contracts made before the March 14, 1978, effective date of section. Sanders v. Liberty Loan Corp., 153 Ga. App. 859, 267 S.E.2d 286 (1980), overruled on another point, FinanceAmerica Corp. v. Drake, 154 Ga. App. 811, 270 S.E.2d 449 (1980).

Interaction of Chapter and Truth-in-Lending Act.

- Industrial Loan Act (see now O.C.G.A. § 7-3-1 et seq.) penalties do not condition or limit application of federal Truth-in-Lending Act, 15 U.S.C. § 1601 et seq. Williams v. Public Fin. Corp., 609 F.2d 1179 (5th Cir. 1980).

Industrial Loan Act (see now O.C.G.A. § 7-3-1 et seq.) and federal Truth-in-Lending Act, 15 U.S.C. § 1601 et seq., provide separate remedies for separate wrongs. The former limits what a lender subject to its provisions can charge for use of its money; the latter is designed to penalize and deter an independent wrong arising from nondisclosure. Williams v. Public Fin. Corp., 609 F.2d 1179 (5th Cir. 1980).

Lenders violating Industrial Loan Act, (see now O.C.G.A. § 7-3-1 et seq. and federal Truth-in-Lending Act, 15 U.S.C. § 1601 et seq., are subject to penalties of both. Williams v. Public Fin. Corp., 609 F.2d 1179 (5th Cir. 1980).

Charge of notary fee is a violation of Industrial Loan Act (see now O.C.G.A. § 7-3-1 et seq.) and entitles borrower to have contract declared null and void. Motor Fin. Co. v. Harris, 150 Ga. App. 762, 258 S.E.2d 628 (1979).

Violation of chapter's regulations subject lender to administrative penalties; loan remains enforceable.

- Loans which violate the Industrial Loan Act, O.C.G.A. § 7-3-1 et seq., are void under this section; United States Courts of Appeals have held that violations of the regulations subject lender only to administrative penalties, and that the loan remains enforceable. Robinson v. Central Loan & Fin. Corp., 609 F.2d 170 (5th Cir. 1980) (decided prior to 1980 amendment of this section).

Borrower may only recover money paid which exceeds actual cash advance.

- Borrower may only recover moneys paid to the lender under contracts violative of the Industrial Loan Act, O.C.G.A. § 7-3-1 et seq., in excess of cash actually advanced to the borrower. Motor Fin. Co. v. Harris, 150 Ga. App. 762, 258 S.E.2d 628 (1979) (decided prior to 1980 amendment of this section).

No recovery permitted on loan which is usurious on face.

- If note or loan contract made under Industrial Loan Act (see now O.C.G.A. § 7-3-1 et seq.) shows on its face that it is infected with usury it is absolutely void and there can be no recovery on it. Robinson v. Colonial Disct. Co., 106 Ga. App. 274, 126 S.E.2d 824 (1962) (decided prior to 1980 amendment of this section).

Amendment of complaint.

- When creditor demanded usurious interest, amendment to the creditor's complaint does not erase objection of usuriousness. Liberty Loan Corp. v. Childs, 140 Ga. App. 473, 231 S.E.2d 352 (1976), cert. dismissed, 239 Ga. 220, 236 S.E.2d 373 (1977).

Good faith offer by lender suing on loan which violated Industrial Loan Act (see now O.C.G.A. § 7-3-1 et seq.) to amend complaint to correct excessive time price differential had no effect on penalty provisions. Douglas v. Dixie Fin. Corp., 139 Ga. App. 251, 228 S.E.2d 144 (1976).

Forfeiture of interest, but not principal.

- Lender who violates the Georgia Industrial Loan Act (see now O.C.G.A. § 7-3-1 et seq.) shall forfeit all interest and other charges, but not the principal sum advanced to borrower. Southern Disct. Co. v. Ector, 246 Ga. 30, 268 S.E.2d 621 (1980); United States Life Credit Corp. v. Johnson, 161 Ga. App. 864, 290 S.E.2d 280 (1982).

Forfeiture of interest and other charges may be avoided. Southern Disct. Co. v. Ector, 246 Ga. 30, 268 S.E.2d 621 (1980) (decided prior to 1980 amendment of this section).

Cited in Securities Inv. Co. v. Pearson, 111 Ga. App. 761, 143 S.E.2d 36 (1965); Brown v. Quality Fin. Co., 112 Ga. App. 369, 145 S.E.2d 99 (1965); Coile v. Finance Co. of Am., 221 Ga. 863, 148 S.E.2d 328 (1966); Community Fin. Co. v. Lloyd, 114 Ga. App. 230, 150 S.E.2d 845 (1966); Colter v. Consolidated Credit Corp., 115 Ga. App. 408, 154 S.E.2d 713 (1967); Colter v. Consolidated Credit Corp., 116 Ga. App. 520, 157 S.E.2d 812 (1967); Lewis v. Termplan, Inc., 124 Ga. App. 507, 184 S.E.2d 473 (1971); Abrams v. Commercial Credit Plan, Inc., 128 Ga. App. 520, 197 S.E.2d 384 (1973); Patman v. General Fin. Corp., 128 Ga. App. 836, 198 S.E.2d 371 (1973); Mason v. Service Loan & Fin. Co., 128 Ga. App. 828, 198 S.E.2d 391 (1973); Roberts v. Allied Fin. Co., 129 Ga. App. 10, 198 S.E.2d 416 (1973); Garrett v. G.A.C. Fin. Corp., 129 Ga. App. 96, 198 S.E.2d 717 (1973); Cullers v. Home Credit Co., 130 Ga. App. 441, 203 S.E.2d 544 (1973); Cook v. First Nat'l Bank, 130 Ga. App. 587, 203 S.E.2d 870 (1974); Sellers v. Alco Fin., Inc., 130 Ga. App. 769, 204 S.E.2d 478 (1974); Gray v. Quality Fin. Co., 130 Ga. App. 762, 204 S.E.2d 483 (1974); Lawrimore v. Sun Fin. Co., 131 Ga. App. 96, 205 S.E.2d 110 (1974); Hardy v. G.A.C. Fin. Corp., 131 Ga. App. 282, 205 S.E.2d 526 (1974); G.A.C. Fin. Corp. v. Hardy, 232 Ga. 632, 208 S.E.2d 453 (1974); Hobbiest Fin. Corp. v. Spivey, 135 Ga. App. 353, 217 S.E.2d 613 (1975); Carreker v. National Diversified, Inc., 135 Ga. App. 511, 218 S.E.2d 117 (1975); Hughes Motor Co. v. First Nat'l Bank, 136 Ga. App. 295, 220 S.E.2d 782 (1975); HFC v. Raven, 136 Ga. App. 424, 221 S.E.2d 488 (1975); Dukes v. HFC, 137 Ga. App. 474, 224 S.E.2d 107 (1976); Moore v. American Fin. Sys., 236 Ga. 610, 225 S.E.2d 17 (1976); Credithrift of Am., Inc. v. Mason, 143 Ga. App. 793, 240 S.E.2d 158 (1977); Southern Disct. Co. v. Heide, 144 Ga. App. 481, 241 S.E.2d 599 (1978); Marshall v. Fulton Nat'l Bank, 145 Ga. App. 190, 243 S.E.2d 266 (1978); Shaver v. Aetna Fin. Co., 148 Ga. App. 740, 252 S.E.2d 684 (1979); Sapp v. ABC Credit & Inv. Co., 243 Ga. 151, 253 S.E.2d 82 (1979); Wessinger v. Kennesaw Fin. Co., 151 Ga. App. 660, 261 S.E.2d 649 (1979); Layton v. Liberty Loans, 152 Ga. App. 504, 263 S.E.2d 167 (1979); Commercial Credit Plan, Inc. v. Parker, 152 Ga. App. 409, 263 S.E.2d 220 (1979); Plant v. Blazer Fin. Servs., Inc., 598 F.2d 1357 (5th Cir. 1979); Gainesville Fin. Servs., Inc. v. McDougal, 154 Ga. App. 820, 270 S.E.2d 40 (1980); Southern Disct. Co. v. Ector, 155 Ga. App. 521, 271 S.E.2d 661 (1980); Sanders v. Liberty Loan Corp., 156 Ga. App. 628, 276 S.E.2d 49 (1980); Whitfield v. Termplan, Inc., 651 F.2d 383 (5th Cir. 1981); Aetna Fin. Co. v. Brown, 172 Ga. App. 537, 323 S.E.2d 720 (1984); Harlow v. Walton Loan Corp., 174 Ga. App. 311, 329 S.E.2d 616 (1985); Ford Motor Credit Co. v. London, 175 Ga. App. 33, 332 S.E.2d 345 (1985).

Acceleration clause enforceable unless rendering note usurious.

- Acceleration clause not providing for rebate of unearned interest is enforceable absent finding that clause, as applied, renders note violative of state usury laws. Once such finding has been made, however, the note becomes void. Barrett v. Vernie Jones Ford, Inc., 395 F. Supp. 904 (N.D. Ga. 1975), rev'd on other grounds sub nom. McDaniel v. Fulton Nat'l Bank, 543 F.2d 568 (5th Cir. 1976), aff'd, 578 F.2d 1185 (5th Cir. 1978) (decided prior to 1980 amendment of this section).

Acceleration clause which includes unearned interest voids the contract.

- Provision for acceleration of unearned interest is a contract authorizing collection of more than is provided or approved by the Industrial Loan Act, (see now O.C.G.A. § 7-3-1 et seq.) and thus authorizes a result contrary to its terms, and is in violation of the Act; thus, the loan is void. Frazier v. Courtesy Fin. Co., 132 Ga. App. 365, 208 S.E.2d 175 (1974);(decided prior to 1980 amendment of this section).

When acceleration of a debt, combined with a claim of unearned interest, renders obligation usurious, the obligation becomes void under the provisions of the Industrial Loan Act, (see now O.C.G.A. § 7-3-1 et seq.). Barrett v. Vernie Jones Ford, Inc., 395 F. Supp. 904 (N.D. Ga. 1975), rev'd on other grounds sub nom. McDaniel v. Fulton Nat'l Bank, 543 F.2d 568 (5th Cir. 1976), aff'd, 578 F.2d 1185 (5th Cir. 1978);(decided prior to 1980 amendment of this section).

Acceleration clause in Industrial Loan Act, (see now O.C.G.A. § 7-3-1 et seq.) contract which upon default permits the collection of entire balance due on contract without excluding unearned interest is violative of the Act and voids contract. Diggs v. Swift Loan & Fin. Co., 154 Ga. App. 389, 268 S.E.2d 433 (1980) (decided prior to 1980 amendment of this section).

When acceleration clause renders note usurious, note is unenforceable.

- If effect of an acceleration clause is to render note as a whole usurious, the note is unenforceable in Georgia courts. Barrett v. Vernie Jones Ford, Inc., 395 F. Supp. 904 (N.D. Ga. 1975), rev'd on other grounds sub nom. McDaniel v. Fulton Nat'l Bank, 543 F.2d 568 (5th Cir. 1976), aff'd, 578 F.2d 1185 (5th Cir. 1978) (decided prior to 1980 amendment of this section).

Invalid acceleration clause in security agreement portion of contract voids obligation.

- Provision found in security agreement portion of loan contract providing for acceleration of unaccrued interest voids contract notwithstanding presence of valid acceleration provision in note portion of contract. General Fin. Corp. v. Sprouse, 577 F.2d 989 (5th Cir. 1978).

Provision authorizing usurious collection voids obligation even though not enforced.

- Provision in note authorizing usurious collection alone is sufficient to void obligation even when the creditor does not attempt enforcement. Barrett v. Vernie Jones Ford, Inc., 395 F. Supp. 904 (N.D. Ga. 1975), rev'd on other grounds sub nom. McDaniel v. Fulton Nat'l Bank, 543 F.2d 568 (5th Cir. 1976), aff'd, 578 F.2d 1185 (5th Cir. 1978) (decided prior to 1980 amendment of this section).

Accelerated unearned interest usurious.

- When the plaintiff accelerated and claimed unearned interest on unmatured installments, this amount was usurious. Liberty Loan Corp. v. Childs, 140 Ga. App. 473, 231 S.E.2d 352 (1976), cert. dismissed, 239 Ga. 220, 236 S.E.2d 373 (1977).

Am. Jur. 2d.

- 53A Am. Jur. 2d, Moneylenders and Pawnbrokers, § 34 et seq.

C.J.S.

- 47 C.J.S., Interest and Usury; Consumer Credit, § 460 et seq.

ALR.

- Constitutionality of statutes regulating the business of making small loans, 69 A.L.R. 581; 125 A.L.R. 743; 149 A.L.R. 1424.

Doctrine of in pari delicto as applied to borrower seeking affirmative relief from loan contract made in violation of small loan act, 142 A.L.R. 644.

Usury as affected by acceleration clause, 66 A.L.R.3d 650.

What constitutes Truth in Lending Act violation which "was not intentional and resulted from bona fide error not withstanding maintenance of procedures reasonably adapted to avoid any such error" within meaning of § 130(c) of Act (15 USCA § 1640(c)), 153 A.L.R. Fed. 193.

Validity, construction, and application of Truth in Lending Act (TILA) and regulations promulgated thereunder - United States Supreme Court cases, 67 A.L.R. Fed. 2d 567.