111 Ky. 228 | Ky. Ct. App. | 1901
Opinion or the court by
Reversing.
This appeal is on the record of three cases which were consolidated and heard together in the Madison circuit court. We shall first make a statement in the manner in which the cases originated, adopting in the main the statement of facts on behalf of the bank in regard to the dates and amounts of the money transactions; that being supported by the weight of the testimony, and the basis upon which the circuit court rendered its judgment:
The Penalty Suit. On January 9, 1896, C. N. Fitzpatrick filed his action to recover of the appellant,' which is a national bank, a penalty of twice the amount of the interest paid by him on a note which he paid January 11, 1895, amounting as of that date to $2,283.51, the penalty claimed being $2,967.02. This note was a renewal of several small loans by the bank to Fitzpatrick, and included also the sum of $385, interest at an illegal rate for one year upon the larger note hereinafter referred to. The court adjudged that there was included in the amount of this note, as paid by Fitzpatrick, $1,063.15 of interest at illegal rates, and rendered judgment for twice that amount, $2,126.30, with interest from the date of the judgment,
The Suit upon the Larger Note. On January 10, 1896,, the day after the filing of the penalty suit, the bank filed its action on a note of C. N. Fitzpatrick for the sum of $6,296.95. This note was in renewal of a number of smaller loans by the bank to Fitzpatrick, to the amount of which interest had from time to time been added and carried in the renewals. The court gave judgment in favor of the bank for $5,170, as the amount of money actually loaned by the bank to Fitzpatrick, and remaining unpaid in the note, after eliminating and forfeiting all-interest contained therein. On this note, it appears, there were a number of payments, which the court appears to have held were payments of interest as -such. Two installments of the interest upon this debt were, at the-dates of the execution of two renewals, added to and included in the amounts of smaller notes which were subsequently paid to the bank, one of them being the note the payment of which is the basis of the penalty suit.
The ’Suit on the Smaller Note. On the same day on which the suit was filed upon the larger note the bank brought its action on a note for $1,648.75. This note, also, was in renewal of several smaller obligations. Two payments were made upon this consolidated indebtedness, and these appear by the judgment to have been considered as applied first to the payment of the usurious interest charged, and then to the reduction of the principal, the only interest which was eliminated being that which accrued after the last payment. The court gave judgment for $1,540.24, with interest from the date of the judgment.
The questions presented by the original appeal are: First. From what date should interest be allowed upon the judgments in favor of the bank? Second. In the penalty suit, should judgment go for twice the amount of the entire interest paid at the illegal rate, or only for twice the amount of the interest paid in excess of the legal rate? Upon the cross appeal the questions presented are: First. Whether the court erred in the application of payments upon the two notes sued upon by the bank, it being contended that a part, at least, of such payments should be applied to the reduction of the principal. Second. Whether the trial court should have dismissed the attachments sued out by the bank. This' question has been already disposed of.
It may be observed here that the contention of appellant that the cross appeal was not sued out in time is not sustained by the record, which shows that appeal to have been taken within two years from the rendition of the judgment. Elizabethtown, L. & B. S. R. Co. v. Catlettsburg Water Co., 110 Ky. 175 (22 Ky. L. R., 1632) (61 S. W., 47). It will be observed that the only questions presented on the construction of the Federal statute which have not been disposed of by the opinion in Citizens’ National Bank of Danville v. Forman’s Assignee (this day decided), 111 Ky., 206 (63 S. W., 454; 23 Ky. L. R., 613), are those of the time at which interest should commence, and of the basis of recovery in the penalty suit; the remaining question raised on the cross ap
The question of the date from which the judgment should bear interest seems to us to have been settled by the case of Brown v. Bank, 169 U. S., 416 (18 Sup. Ct., 390; 42 L. Ed., 801). Said the court, through Mr. Justice Harlan, in that case: “If a bank which violates that section sues upon the note, bill or other evidence of debt held by it, the debtor may insist that the entire interest, legal and usurious, included in his written obligation and agreed to be paid, but which has not been actually paid, shall be either credited on the note or eliminated from it, and judgment given only for the original principal debt, with interest at the legal rate from the commencement of the suit.” The question of the recovery of interest was before the supreme court in that case, and was decided by it. The reason for the fixing of this interest period is not stated in the opinion, but it seems to have been fixed upon the theory that when suit is brought upon such a note the demand, while in fact for more than the legal indebtedness, is, as of that date, to be treated as a demand for the amount of the legal obligation, and consequently bears interest from the date of putting the legal obligation in suit. The judgment of the trial court in this regard was therefore error. The interest should also have been allowed in the penalty suit from the date of filing the petition, that being the date of the first demand for the penalty.
It is contended that in a suit for the double penalty no recovery can be had unless it is alleged and proved that the principal sum due has been paid or tendered; and Hazeltine v. Bank, 56 S. W., 895, from the supreme court
It is also contended that, as penal statutes must be strictly construed, the Federal statute should be so construed- as to allow a penalty for twice the excess only, and not for twice the amount of interest paid -at the illegal rate. Upon this proposition appellant relies on certain cases from Pennsylvania and one supreme court cas'e. Of the Pennsylvania, cases it may be said that they are in direct conflict with the great weight of authority and with the uniform rulings of this court in that behalf. Moreover, the supreme court case relied upon does1 not support its contention. That case (Bank v. Johnson, 104 U. S., 271 [26 L. Ed., 742]) was a case in which, judgment having been rendered by the New York court for twice the -amount of interest in excess1 of the interest paid above the legal rate, the bank took the case to the supreme court, assigning for error that the New York court held that it was not* entitled to the same rights as natural persons in New York to acquire business paper at any rate of interest agreed upon between the parties to the negotiation. Johnson, who was injured by the amount
There remains the question of the application of the payments upon the two notes upon which suit was brought by the bank. Certain of these payments appear to have
The circuit court will have no difficulty in appropriating the payments in accordance with the views expressed here and in the Danville Bank case, supra.
For the reasons given, the judgment is reversed upon the original and cross appeals, and cause remanded with directions to the circuit court to enter a judgment in accordance herewith.