Lloyd v. First National Bank

5 Kan. App. 512 | Kan. Ct. App. | 1897

Gilkeson, P. J.

Can Shafer’s claim against the Bank for usurious interest be set off? This question has been answered by our Supreme Court in the negative. Fraker v. Cullum, 24 Kan. 679.

Mr. Justice Brewer, delivering the opinion of the court, says :

‘ ‘ This depends upon the nature of the cause of action, for unless it is one arising upon contract, it cannot, under our statute, be made a matter of set-off. The cause of action is clearly not founded upon express contract. The bank never promised to pay Fraker double the usurious interest it had received from him. The only express contract was the other way, and that contract had been performed. Is it founded upon an implied contract? The authorities say not. Hade v. Mc Vay, Allisson & Co., 31 Ohio St. 231; Lucas v. Bank, 78 Pa. St. 228; Wiley v. Starbuck, 44 Ind. 298. The section creates a forfeiture, and in case the party wronged has actually parted with his money, allows him to recover double damages. Usury, says the statute, forfeits all interest. That is the penalty for the forbidden act. It is in the nature of punishment for an infraction of the law. If no interest has been paid, but only contracted to be paid, that is the only effect of the statute. It thus far nullifies the contract, and forbids recovery of such interest. But if it has been paid, the party may recover it back, and as much more. The forfeiture is not avoided by the fact that the contract has been performed ; but, as though performance had increased the wrong, the damages are doubled. The cause of action is really one to enforce a forfeiture, but a forfeiture implies no contract. . . It cannot be justly said that an action to enforce a forfeiture or recover a penalty is one founded upon contract, no matter who is the party chiefly benefited by the recovery.”

It is admitted by the defendant in error that Shafer's cause of action against the Bank was not a cause of action arising upon contract, and for this reason the defendant in error contends that it was not assignable. This has been answered in our comments upon the right of a set-off. And as we have there held that the cause of action did not arise upon contract, we are compelled to answer this, under the decisions of the Supreme Court of this State, in the negative.

“At common law no chose in action was negotiable, or even assignable. In equity every chose in action, except a tort, was assignable; but it was assignable subject to all equities that might be set up against it. Under our statutes every chose in action is assignable except a tort the same as it was in equity.” Mc Crum v. Corby, 11 Kan. 465, 470 ; K. M. Rly. Co. v. Brehm, 54 id. 751.

It will therefore be seen, that the first conclusion of law made by the trial court, is erroneous as to the foundation of the defendant’s cause of action, and the reason assigned for allowing the counterclaim or set-off. While the claim for usury was not assignable, yet, as soon as it was reduced to a judgment, the nature of the claim was changed. The judgment was of a different nature from a bare, naked, open claim, and could be used as a set-off. But as the decision is correct, it should not be disturbed if a wrong reason is assigned.

The judgment of the trial court will be affirmed.