82 Pa. 490 | Pa. | 1876
delivered the opinion of the court November 13th 1876.
The 30th section of the Act of Congress of June 3d 1864, under which the defendants in error were organized and incorporated as a national bank declares that “the knowingly receiving, reserving or charging” by a national bank, “ a rate of interest greater than” that lawful in the state in which such bank may be located, “ shall be held and adjudged a forfeiture of the entire interest which the note, bill or other evidence carries with it or which was agreed to be paid thereon; and in case a greater interest has been paid, the person or persons paying the same or their legal representatives may recover back in any action of debt twice the amount of interest thus paid from the association taking or receiving the same : provided, .that such action is commenced within two years from the time the usurious transaction occurred.”
It is very clear we think that Congress intended that the national banks should be effectually prevented, as far as legislation could prevent it, from either charging or receiving more than the legal rate of interest in the states in which they might be located and carry on their business. Experience had abundantly shown that to do this it would not be sufficient to provide that the excess over the lawful rate only should be illegal. These institutions of large capital would naturally exercise great power over those who should stand in need of their assistance; for it is as true now as it was in the days of Solomon, “ The rich ruleth over the poor and the borrower is servant to the lender.” It was considered no doubt that it would be too severe a measure to provide that the debt itself should be forfeited or the security given for it declared void. That too had been tried in England and some of the United States, but was found not to arrest the practice, but only to increase the unjust gain of the -usurer, who required to be indemnified by the needy borrower for the risk he run by a much increased rate. It was deemed a sufficiently' effectual prevention to enact that wherever the bank violated the law by “ knowingly receiving, reserving or charging,” more than the lawful interest, they should recover none, and that
This question was not before the court, and was not decided in Brown v. The Second National Bank of Erie, 22 P. F. Smith 209. The only matters which could avail the plaintiff in error there, were the answers to the two first points which he made below. These were, that the bank could not recover any part of its claim, and that if it could the debtor was entitled to defalk double the amount of interest paid. These the court below refused, and their judgment was affirmed. His third point was, that he was entitled to credit for the excess of interest he had paid from time to time on the renewal notes; and his fourth was, that he was entitled to an abatement of all the interest on the note in suit; and these the court below affirmed. What is stated in the syllabus as decided by the court below — if indeed it was meant to say that the debtor could only set off the excess of interest on previous notes — was not involved in the affirmance of the judgment. In Lucas v. Gover
We are of opinion that the defendant below was not entitled to defalk the interest on the four-thousand-dollar note, which was not in suit. The words of the Act of Congress, “ shall be held a forfeiture of the entire interest which the note, bill or other evidence carries with it,” as was said in Brown v. The Second National Bank of Erie, have evident reference to the enforcement of the contract by judicial process. No action is given to recover back the interest charged, and if not, there can be no defalcation against an independent claim. Non constat that the principal of the four-thousand-dollar note will eve? be sued for; but when it is, all the interest paid on the notes of which it is the last renewal will be a credit upon it.
Judgments reversed and writs of procedendo awarded.