75 N.Y.S. 131 | N.Y. App. Div. | 1902
Section 5197 of the Revised Statutes of the United States restricts the rate of interest which may be charged or reserved as discount by a national bank to the rate allowed in the State where the bank is located. Section 5198 provides, first, for the forfeiture of the entire interest as a penalty for taking usurious interest, and, secondly, that an action may be maintained by the person who has paid the excessive interest to recover “ twice the amount of the interest thus paid from the association taking or receiving the same, provided such action is commenced within two years from the time the usurious transaction occurred.”
The sole question for our determination is when did “ the usurious transaction ”' occur 1 When the first of each series of notes was given nothing was paid by the plaintiff. He received the face of the note less the discount, but he paid no interest. This was in the note which he transferred to the defendant. A different situation was presented when the note matured. The plaintiff then gave a new note of like amount with the original and paid the discount including the excessive rate. This was, therefore, a genuine payment, a parting with the interest by the plaintiff, and constituted a “ usurious transaction ” within the letter of the statute quoted. Each actual payment on each renewal was a separate, independent
It is, therefore, precisely the same as if the defendant had retained out .of the avails of the loan the bonus of $6,500 which, made up the usury. It was not money paid by the plaintiff independently of-the loan, but it was part of the note, and until he paid that obligan tion there was no payment of usury exacted. The pointed distinction between that casó and the present one is that here as each note matured and was renewed the plaintiff actually paid the discount in-cash, and of course the discount or interest was not carried along,in
In Nash v. White's Bank of Buffalo (68 N. Y. 396) the notes transferred to the bank by the plaintiff were those of third persons, and the court held this was an actual payment as the plaintiff had parted with all his title, and it was equivalent to the payment of usurious interest in cash. That case is helpful in that it indicates that if the payment is a genuine one, instead of existing as a liability against- the person seeking to recover for the overcharge of interest, it is regarded as a transaction separate from the note itself. Had the plaintiff in this action turned over the promissory note of a third person to meet the discount, when one of the notes was renewed under the Nash case, that would be regarded as a payment of the discount the same as if made in money, and in either event the transaction would be ended and the statute commence to run although the Statute of Limitations was not considered in that case. In National Bank of Auburn v. Lewis (75 N. Y. 516; 81 id. 15) the action was by the bank on its note, and the defendant answered setting up the illegal interest exacted and claiming that there was a forfeiture of the interest paid and asked for its allowance in abatement of the
It is a reasonable interpretation of the statute to hold that upon the actual payment of the interest or discount the cause of "action accrues, and the two years’ Statute of Limitations commences to rim from the date of that payment. Several of the payments made by the plaintiff and allowed by the referee were improperly allowed, as they were barred by this statute.
"While two of the series of notes were made by Julia A. Smith as maker, yet they were really for the benefit of the plaintiff and he eventually paid them, and testified that he also paid the discount or interest, and we apprehend that these loans may not be said to be those of third parties within the Nash case cited above. The payments which were charged to the account of Julia A. Smith were disallowed, while those charged to the Smith estate were treated as if made by the plaintiff. It does not appear definitely who composed the estate, and the plaintiff testified that he paid all the discounts or. interest. In view of the uncertainty of the proofs as to the person who actually made these payments, we deem it unwise to attempt to modify the judgment conformably to this opinion, believing that upon a retrial the facts can be more fully developed and dissipate the obscurity which the record shows.
The judgment should be reversed and a new trial ordered, with costs to the appellant to abide the event.
McLennan, Williams, Hisoock and Davy, JJ., concurred.
Judgment reversed and new trial ordered, with costs to the appellant to abide the event.