Opinion
No. ED77979
Opinion Filed: February 13, 2001
APPEAL FROM THE CIRCUIT COURT OF ST. LOUIS COUNTY, HONORABLE PATRICK CLIFFORD
Before G. Gaertner, Sr., P.J., and L. Crahan, J.
Sunshine Enterprises of Missouri Inc., d/b/a Sunshine Title and Check Advance (hereinafter, "Sunshine") appeals from the judgment of the trial court, affirming the decision of the Board of Adjustment for the City of St. Ann (hereinafter, "the Board") denying Sunshine a business license to operate a payday loan business and declaring that an amendment to the City of St. Ann (hereinafter, "St. Ann") zoning code is valid. We reverse and remand.
We review the Board's action and not the judgment of the circuit court. Rice v. Board of Adjustment of Village of Bel-Ridge, 804 S.W.2d 821, 822 (Mo.App.E.D. 1991). Generally, our review is limited to a determination of whether the Board's action is supported by competent and substantial evidence upon the whole record, or whether it is arbitrary, capricious, unreasonable, unlawful, or in excess of its jurisdiction. Id. In determining whether substantial evidence exists to support the decision of the Board, we view the evidence, along with its reasonable inferences, in a light most favorable to the Board's findings. State ex rel. Alexander v. Board of Adjustment of City of St. Peters, 766 S.W.2d 458, 459 (Mo.App.E.D. 1989). If the decision is fairly debatable, this Court cannot substitute its opinion. State ex rel. Tucker v. McDonald, 793 S.W.2d 616, 617 (Mo.App.E.D. 1990).
Viewing the evidence in the light most favorable to the Board's decision, the facts are as follows: Sunshine is a Missouri corporation licensed by the State under Section 408.500 RSMo (1994) to operate as a small loan company. On February 5, 1999, Sunshine submitted an application to St. Ann for a business license to conduct a payday loan business and a title loan business. The City Clerk of St. Ann granted a license for the title loan business, but denied the license for the payday loan business because it would violate St. Ann Code Section 400.370. Section 400.370 enumerates the uses that are permitted within St. Ann's C-2 General Commercial District. Sunshine filed a petition for a variance on June 16, 1999, seeking approval to operate the payday loan business. On July 6, 1999, St. Ann passed an amendment to its zoning code, Ordinance 2074, defining a short-term loan establishment and prohibiting such business in any zoning district within St. Ann.
All further statutory references are to RSMo (1994) unless otherwise noted.
The Board granted Sunshine a hearing on the petition for variance on July 19, 1999. At the hearing, Sunshine's attorney and one of Sunshine's principals, Alan Ruben, testified about the nature of Sunshine's business and presented several exhibits to the Board. Sunshine specializes in providing short-term loans for a fee to consumers. Generally, the borrower goes to Sunshine to request a short-term loan. The borrower must complete an application providing Sunshine with name, address, social security number, references, and detailed information about the borrower's employment status, such as place of employment, address, phone number, salary, and how often the borrower receives a paycheck. In addition to the application, the borrower must present photo identification, proof of an active bank account, two pieces of mail verifying a mailing address, and a check stub verifying income.
The borrower then writes a post-dated check in the amount of the loan, a maximum of $300.00, plus the fee Sunshine charges, which is held for a minimum of fourteen days. Neither Section 408.500 nor the regulations require a check, but Sunshine does. Alan Ruben testified that Sunshine uses the post-dated check as documentation of a promissory note between it and the borrower, but it is not collateral or security for the loan. He emphasized Sunshine cannot deposit this check at any time prior to the fourteenth day or for the term of the loan, and it never cashes payroll, government, or personal checks of any kind unless directed by the borrower. At the end of the term, the borrower has the option of retrieving the post-dated check from Sunshine in exchange for repayment of the loan and the fee, or the borrower can direct Sunshine to deposit the post-dated check in satisfaction of the loan.
Alternatively, the borrower may choose to extend the term of the loan. In that instance, the borrower will retrieve the original post-dated check, pay the fee, and issue a new post-dated check with an additional fee to Sunshine, which in essence constitutes a new loan agreement. If the borrower fails to repay the loan, it becomes a collection issue, rather than Sunshine depositing the post-dated check.
Sunshine presented several exhibits at the hearing, which included: Missouri Statute Section 408.500; St. Ann City Code Section 400.370 which enumerates permitted uses; Missouri Code Regulations Title 4, Section 140- 11.010 (1991), Small, Small Loan Companies — Licensing and General Provisions, and Missouri Code Regulations Title 4, Section 140- 11.020 (1991), Small, Small Loan Companies — Record keeping, which are the regulations promulgated by the Director of the Division of Finance; Ordinance 2074; Certificate of Registration to operate a Small, Small Loan Company from the Division of Finance; and a letter from the City Clerk granting a license for the title loan business. St. Ann offered a certified copy of Ordinance 2074, the zoning code, and photographs of Sunshine's business location and signage.
Sunshine conceded at the hearing it was "probably subject to [Ordinance 2074]," but mentioned that it believed there were other companies licensed to do business, or not licensed, but still doing business, as either small loan companies or check cashing establishments in St. Ann. Sunshine briefly mentioned that the definition of a short-term loan establishment might be interpreted broadly and seemed "pretty vague." The Board deferred ruling on the petition at the hearing so Sunshine could submit additional documentation as requested by the Board.
The Board revisited the petition during its September 20, 1999, meeting. The Board unanimously voted to deny Sunshine's request for a business license or a variance, and expressed an opinion that Sunshine was a check cashing business, emphasizing the post-dated check requirement. The Board notified Sunshine of its decision on October 21, 1999.
Sunshine appealed the Board's decision in the circuit court pursuant to Section 89.110, alleging inter alia, that the Board's decision was against substantial and competent evidence, violated state and federal equal protection provisions, and that there was a conflict between Ordinance 2074 and Missouri Statute Section 408.500. The trial court affirmed the decision of the Board to deny the license and/or variance, it dismissed the equal protection claim, and declared, adjudged, and decreed that Ordinance 2074 was valid. Sunshine appeals.
Section 89.110 states in pertinent part: "Any person or persons jointly or severally aggrieved by any decision of the board of adjustment, any neighborhood organization as defined in section 32.105, RSMo, representing such person or persons or any officer, department, board or bureau of the municipality, may present to the circuit court of the county or city in which the property affected is located a petition, duly verified, setting forth that such decision is illegal, in whole or in part, specifying the grounds of the illegality ".
Sunshine's first point claims the trial court erred in affirming the Board's decision because the proposed payday loan business is not excluded by the generally listed permitted uses under the commercial zoning code. Sunshine urges us to construe Code Section 400.370 and its prohibition of "check cashing and related services" as meaning that those services which are of a class and directly connected to a check cashing business are prohibited, not the payday loan business Sunshine wishes to operate. Sunshine further points out that St. Ann granted a business license for the title loan company, despite the fact it is not a specifically listed permitted use. Sunshine also argues the payday loan business is similar to several other permitted uses enumerated in Code Section 400.370, including subsections B, D, and H.
The Board claims the trial court was correct in that the proposed payday loan business is not a permitted use under the commercial zoning code, and Sunshine presented no evidence that would warrant the grant of a use variance. We will not address the variance argument because Sunshine concedes that it was not technically seeking a variance, but merely appealing the City Clerk's decision not to issue a business license, even though it filed a petition for a variance.
Code Section 400.370, which enumerates several permitted uses, states in pertinent part:
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Personal services, including barbershop, beauty parlor, cleaning and laundry pick-up establishments, photographers, shoe repair, tailoring and dressmaking, but excluding pawn shops and establishments whose primary business is check cashing and related services.
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D. Banks, savings and loan associations, credit unions, stock brokers and title companies.
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H. Uses having the same or similar characteristics as the foregoing uses.
The principles of construction we use in interpreting a zoning regulation are as follows: (1) The determination of what uses are permitted under a zoning ordinance must be made on the basis of the wording of a particular ordinance and the context in which it occurs; (2) The basic rule of statutory construction is to seek the intention of the legislators and, if possible, to effectuate that intention; (3) Legislative intent must be ascertained by giving words an ordinary, plain and natural meaning, by considering the entire act and its purposes and by seeking to avoid an unjust, absurd, unreasonable or oppressive result; (4) Zoning ordinances, being in derogation of common law property rights, are to be strictly construed in favor of the property owner against the zoning authority; (5) Where a term in a zoning ordinance is susceptible of more than one interpretation, the courts are to give weight to the interpretation that, while still within the confines of the term, is least restrictive upon the rights of the property owner to use his or her land as he or she wishes; and (6) The interpretation placed upon a zoning ordinance by the body in charge of its enactment and application is entitled to great weight. St. Louis County v. Taggert, 866 S.W.2d 181, 182 (Mo.App.E.D. 1993).
Permissive zoning ordinances are drawn to show those uses which are permitted for a particular district, and any use that is not expressly permitted in a given zone is excluded. Frison v. City of Pagedale, 897 S.W.2d 129, 133 (Mo.App.E.D. 1995). Permitted uses may be explicitly expressed or may belong to a group of uses in generically expressed categories. Taggert, 866 S.W.2d at 183.
It is obvious from the face of the code that payday loan businesses are not explicitly permitted. Equally as obvious is the fact that the code explicitly excludes "establishments whose primary business is check cashing and related services." However, the code does not define "related services," and therefore these words are construed in accordance with their natural and ordinary meaning. Rice v. Board of Adjustment of Village of Bel-Ridge, 804 S.W.2d 821, 824 (Mo.App.E.D. 1991). "Related" means "having a relationship"; "connected by reason of an established or discoverable relation"; "having similar properties." Webster's Third New International Dictionary 1916 (1976).
Based on the evidence presented to the Board, we find that Sunshine's payday loan business is not an establishment whose primary business is check cashing and related services. Sunshine presented ample evidence that it did not engage in check cashing or related services. In addition to the extensive application process, the borrower uses the post-dated check as evidence of a promissory note between it and Sunshine, but it is not collateral or security for the loan. Sunshine is not permitted to deposit the check unless expressly authorized by the borrower at the end of the term of the loan, and it never cashes payroll, government, or personal checks of any kind upfront. At the end of the loan term, the borrower has the option of retrieving the post-dated check from Sunshine in exchange for repayment of the loan and the fee, or the borrower can direct Sunshine to deposit the post-dated check in satisfaction of the loan.
Moreover, Sunshine's business is regulated by Section 408.500 and other regulations promulgated by the Director of Finance. This places Sunshine's business somewhere between, but more akin to a bank or savings and loan as opposed to a check cashing business. Therefore, we hold that the Board's finding that Sunshine was a check cashing business was against the substantial weight of the evidence.
However, this finding does not end our inquiry. Even though it appears that Sunshine is a permitted use under Section 400.370 of the St. Ann Zoning Code, we must still address whether Sunshine is effectively precluded from operating its business by way of Ordinance 2074.
Sunshine's second point on appeal challenges the validity of Ordinance 2074, claiming that it has been preempted because the ordinance prohibits that which Missouri statute authorizes. Sunshine relies on Section 79.450.7 that enables municipalities to enact or make ordinances that are not inconsistent with the laws of the state, and Section 71.010 that states municipalities "shall confine and restrict its jurisdiction and the passage of its ordinances to and in conformity with the state law upon the same subject." The Board claims Ordinance 2074 is valid because Sunshine failed to overcome the presumption of validity, and the ordinance has not been preempted by Missouri statute or the rules promulgated by the Division of Finance. For convenience, Section 408.500, Mo. Code Regs. Tit. 4, Section 140- 11.010(5), and Ordinance 2074 are set forth below:
408.500. Unsecured loans under five hundred dollars, registration of lenders, interest rates allowed — penalties — cost of collection expenses, award
1. Lenders exclusively in the business of making unsecured loans under five hundred dollars and who are not otherwise registered under this chapter shall be registered with the director of the division of finance upon the payment of an annual registration fee of three hundred dollars.
The license year shall commence on January first each year and the license fee may be prorated for expired months. Such lenders shall not charge, contract for or receive on such loans interest or any fee of any type or kind whatsoever which exceed the approved rate as provided in this subsection.
Lenders shall file a rate schedule with the director who, upon review, shall approve rates comparable with those lawfully charged in the marketplace for similar loans. In determining marketplace interest rates, the director shall consider the appropriateness of rate requests made by lenders and rates allowed on similar loans in the states contiguous to Missouri.
If the director takes no action upon a filed rate schedule within thirty days of receipt, then it shall be deemed approved as filed.
The director, on January first and July first of each year, shall consider the filing of new interest rate schedules to reflect changes in the marketplace. The director may promulgate rules regarding the computation and payment of interest, contract statements, payment receipts and advertising for loans made under the provisions of this section. The provisions of this section shall not apply to pawnbroker loans and small loans as authorized under chapter 367, RSMo.
2. Any contract evidencing any fee or charge of any kind whatsoever, except for bona fide clerical errors, in excess of the rate established under this section shall be void. Any person, firm or corporation who receives or imposes a fee or charge in excess of the rate established under this section shall be guilty of a class A misdemeanor.
3. Notwithstanding any other law to the contrary, cost of collection expenses, which include court costs and reasonable attorneys fees, awarded by the court in suit to recover on a bad check or breach of contract shall not be considered as a fee or charge for purposes pursuant to this section.
Mo. Code Regs. Tit. 4, Section 140- 11.010(5) — Term. All loans made by section 500 companies shall have a minimum term of fourteen (14) days. All loans made by section 500 companies with terms exceeding one (1) month shall be payable at monthly intervals. A day in one month to the same day in the following month(s) shall be deemed a month unless that day does not appear in a subsequent month in which case the last day of the shorter month shall constitute a month. No section 500 company loan may have a term exceeding ten (10) months. Interest shall not be discounted nor deducted from the principal of the loan, nor paid nor received at the time the loan is made and shall not be compounded. Finance charges may be computed as add-ons at the inception of the loan and not necessarily as a percentage applied against the unpaid balances.
Ordinance 2074 — SHORT TERM LOAN ESTABLISHMENT: A business engaged in providing short term loans to members of the public as a primary or substantial element of its operations and which is not licensed by the appropriate state or federal agency as a bank or savings and loan association. Such business is prohibited in all zoning districts of the City of St. Ann.
Ordinances are presumed to be valid and lawful. Parking Systems, Inc. v. Kansas City Downtown Redevelopment Corp., 518 S.W.2d 11, 16 (Mo. 1974). The ordinance should be construed to uphold its validity unless the ordinance is expressly inconsistent or in irreconcilable conflict with the general law of the state. Cape Motor Lodge, Inc. v. City of Cape Girardeau, 706 S.W.2d 208, 212 (Mo. banc 1986). Moreover, it is not necessary that the ordinance follow the exact language of a statute on the same subject to avoid invalidity. McCollum v. Director of Revenue, 906 S.W.2d 368, 369 (Mo.banc 1995).
A municipal ordinance regulating matters and things on which there is a general law must be in harmony with the state law and if there is a conflict, it is void. Carter v. City of Pagedale, 982 S.W.2d 744, 746 (Mo.App.E.D. 1998). In determining whether an ordinance conflicts with general laws, the test is "whether the ordinance permits that which the statute forbids and prohibits, and vice-versa." Id. (citing Morrow v. City of Kansas City, 788 S.W.2d 278, 281 (Mo.banc 1990)). Section 71.010 plainly implies, however, that even though there is a state law on a given subject, a city is not prohibited from enacting a supplemental ordinance in relation to the same subject, so long as there is no conflict between the ordinance and the state law. Brotherhood of Stationary Engineers v. City of St. Louis, 212 S.W.2d 454, 458 (Mo.App. St. L. Dist. 1948).
A business or occupation licensed by the state may be regulated by the city within reasonable limits if the regulation does not impair the right under the state license, but it cannot entirely prohibit such licensed business or occupation. State ex rel. Collins v. Keirnan, 207 S.W.2d 49, 54 (Mo.App. K.C. Dist. 1947). Moreover, licenses and regulations that tend to discourage or even prohibit may be imposed on businesses and occupations that are inherently harmful and dangerous to society or the public welfare; but businesses and occupations that are lawful and useful may not be oppressed or prohibited by harsh enactments. Hagerman v. City of St. Louis, 283 S.W.2d 623, 628-629 (Mo. 1955).
There are several cases where Missouri courts have held that when a city sets out to prohibit that which a Missouri statute allows, thus resulting in a conflict, the city ordinance is declared void and unenforceable. See, State ex rel. Collins v. Keirnan, 207 S.W.2d 49 (Mo.App. K.C. Dist. 1947); City of Meadville v. Caselman, 227 S.W.2d 77 (Mo.App. K.C. Dist. 1950); Hagerman v. City of St. Louis, 283 S.W.2d 623 (Mo. 1955); State ex rel. Burnau v. Valley Park Fire Protection Dist. of St. Louis County, 477 S.W.2d 734 (Mo.App. St. L. Dist. 1972); Crackerneck Country Club, Inc. v. City of Independence, 522 S.W.2d 50 (Mo.App. K.C. Dist. 1974); Page Western, Inc. v. Community Fire Protection Dist. of St. Louis County, 636 S.W.2d 65 (Mo.banc 1982).
This is not an instance where St. Ann is providing additional regulation of small loan businesses, which would be permissible and would avoid conflict with Section 408.500. See, State ex rel. Hewlett v. Womach, 196 S.W.2d 809, 814 (Mo. 1946); Borron v. Farrenkopf, 5 S.W.3d 618, 623 (Mo.App.W.D. 1999). Rather, Ordinance 2074 flatly prohibits any type of short-term loan business in any zoning district within St. Ann. Obviously, Missouri contemplated the carrying on of this type of business within the State, thus providing statutory requirements and promulgating regulations further regulating this type of business. Therefore, we find that Ordinance 2074 is void as it conflicts with Section 408.500.
Since we hold that Ordinance 2074 is in direct conflict with Section 408.500 and is void, we need not address Sunshine's third and fourth points on appeal that challenged the constitutionality of Ordinance 2074. The judgment of the trial court is reversed and the cause is remanded.