53 Kan. 614 | Kan. | 1894
The opinion of the court was delivered by
On October 20, 1888, H. E. Shafer borrowed $1,400 from the First National Bank of Russell, Kas., and executed a note for that amount, due in 90 days after date, which was signed by J. 0. Youngman, as surety, and which upon its face bore interest at the rate of 12 per cent, per an-num from maturity. The bank charged and received from Shafer for the use of the money 18 per cent, per annum from the date of the note to the maturity of the same, namely, the sum of $84. The principal of the note was not paid, nor has any further payment of interest been made by the makers of the note. After its maturity, Shafer brought an action against the bank to recover double the amount of usurious interest which had been collected from him by the bank, and in that action recovered a judgment for the sum of $1,249.40, which was double the amount of the whole rate of interest charged and received by the bank from Shafer on the note in question, and other notes which he had given to the bank. When action was brought by the bank upon the $1,400 note, Shafer and Youngman answered that, by reason of the bank having charged a rate of interest in excess of the legal rate, there was a forfeiture of the entire interest which the note carried with it, and they also set up certain claims alleged to be due Shafer for services rendered in behalf of the bank as a set-off.
Upon the trial, the court found the facts hereinbefore stated, and also that there was due to Shafer, upon one of the defenses set up by him, for services rendered the bank the sum of $34.14. The court ruled that the bank was entitled to interest on the $1,400 note from its maturity, and that there was due thereon, after deducting the $34.14 found to
The action of-the bank in charging and collecting a rate of interest in excess of the legal rate allowed in this state operated as a forfeiture of the entire interest which the note carried with it. The national-currency act expressly so provides. It forbids national banks from charging a greater rate of interest than is allowed by the laws of the state where the bank is located, and then provides that
“The taking, receiving or charging of a rate of interest greater than is allowed by the preceding section, when knowingly done, shall be deemed a forfeiture of the entire interest which the note, bill or other evidence of debt carries with it, or which has been agreed to be paid thereon.” (Rev. Stat. U. S., §§ 5197, 5198.)
In this case, the bank charged and collected 18 per cent, per annum until the maturity of the note, and it was agreed that after that time it should carry interest at the rate of 12 per cent, per annum. It will be observed that usurious interest, whether collected in advance or stipulated to be paid in the future, forfeits the entire interest agreed to be paid, or which the note carries with it.
■ The judgment of the lower court will, therefore, be modified in accordance with the views herein expressed, and the cause will be remanded to the district court, with direction to enter judgment in favor of the defendant in error for $1,365.86, and the judgment so rendered shall bear interest at the rate of 6 per cent, per annum from the time of its rendition.