48 Mo. 189 | Mo. | 1871
delivered the opinion of the court.
This is a proceeding in the nature of a writ quo warranto, prosecuted by the attorney-general in behalf of the State, with a view to forfeiture of the defendant’s charter. Supposed violations of the charter, in loaning money and discounting paper at usurious rates, constitute the groundwork of the prosecution.
As showing such violation, it is alleged that said banking institution, in willful disregard of the restrictions of its charter, has^ for a long time past, been in the constant practice of loaning its money by discounting promissory notes at exorbitant and usurious rates of interest, far exceeding the rate of eight per cent, per annum prescribed in the charter, and at the rate of eighteen per cent, per annum; and that defendant has also, in repeated instances during the years 1868, 1869 and 1870, been in the “ constant practice” of loaning its money at a rate of interest exceeding eight per cent, per annum; and further, that said defendant, during said years, has been in the constant practice of buying bills of exchange at a far greater rate than the current rates of exchange, with intent thereby to evade and violate the provisions of said charter.
Three classes-of facts are here set out as constituting violations of the charter: first, the loaning of money in the way of dis
The relator’s replication, in which these facts are alleged, is demurred to, and the question is thus raised whether the facts set out in the pleading, assuming them to be true, show violations of the defendant’s charter of a character to warrant its forfeiture. If the facts show a violation pf the charter at all, it has not been contended that they are not of a character to warrant this proceeding. The defendant’s proposition is that no violations of the charter are shown; in other words, that the facts alleged do not, under the charter, constitute usury.
By the charter the bank was authorized to “lend money at any rate of interest not exceeding eight per cent, per annum,” and also “ to discount, buy and sell promissory notes, bonds, bills of exchange, and other securities.” (Adj. Sess. Acts 1855, P-149, §3.)
One point made by the defendant’s counsel is that the eight per cent, restriction has no relation to the discounting of commercial paper, and that the charter therefor imposed no restrictions respecting rates of ■ discount. A distinction is thus sought to be drawn between loans and discounts as regards the charter restrictions upon the reservation of interest.
The distinction is unsubstantial. The term “ discount,” as a substantive, means the interest reserved from the amount lent at the time of making the loan; as a verb, it is used to denote the act of giving money for a note or bill of exchange, deducting the interest. In a discount the interest is reserved, or collected in advance; while in ordinary loans the interest is paid, or agreed to be paid, after it is earned. In either case the transaction constitutes a loan, and a reservation of interest beyond the specified eight per cent, is usury, and the payment of interest in advance does not change the usurious character of the transaction. It cannot he imagined that the Legislature in granting the charter
Again, it is objected that the relator’s replication, although it may abundantly show the making of usurious contracts, fails to show that the usurious interest reserved by these contracts was in fact collected and realized by the bank.
The charter says nothing about collecting interest. The prohibition is against the loaning of money at usurious rates — against the making of usurious contracts. But the replication not only shows that the bank loaned its funds at rates in excess of the prescribed eight per cent., but that it in fact collected interest at the agreed rates, and collected it in advance, for that is what is meant by discounting. The discount, as already remarked, is the interest reserved and paid at the date of the loan. The collection or reservation of the interest in advance is of the substance of the thing. Besides, the replication follows and adopts the very language of the statute.
A strong argument might be made against the wisdom of usury laws in general. It might be better for society if they were all abolished. But that presents a question of public policy which it is alone for the legislative department of the government to consider and adjust. In granting the charter in question, the Legislature saw fit to restrict the rates of interest to eight per cent. ; and this restriction, if the averments of the replication are true, the defendant, in the exercise of its corporate powers, has failed to respect. The form of the replication may be subject to criticism, but the material facts, showing willful and long-continued violations of the charter in making loans, are sufficiently averred, and that is all we are called upon to declare on the present occasion.
The other averments of the replication, however, sufficiently affirm violations of the charter, and the demurrer will therefore be overruled.