Case ID: ohio_8/html/0258-01.html
Source: Caselaw Access Project
Author: {"author": "Judge Hitchcock", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

President, Directors, and Company of the Bank of Chillicothe v. Noah H. Swayne and Wm. Miner, impleaded with Hiram Paddleford and Lyne Starling.
    Plea, that a bill of exchange was drawn and discounted for a loan made at a greater rate of interest than six per cent., and, for that reason, void. Replication does not traverse the plea, nor allege matters in avoidance, but asserts that the bill was drawn upon a good and valid consideration, and not upon a usurious agreement; and also that the plaintiffs purchased the bill for a good and valuable consideration, with a conclusion to the country. Replication bad, as multifarious, and as concluding to the country.
    
      "Where a bank charter declares chat it shall not take more than-six per cent* upon its loans, a contract for a greater rate of interest is totally void.
    This is an action of assumpsit reserved in the county of Franklin. The declaration contains four counts.
    The two first counts are upon a bill of exchange, drawn by the •defendants on one Flewelling, residing in the city of New York, for $5,000, payable six months after date, at the National Bank dn New York, dated March 14, 1837, and protested for non-payment.
    The other two counts are the common counts for money had and .received, etc.
    To this declaration the defendants filed five special pleas in bar, the first of which is in substance as follows, to wit: It is alleged, “that the said Hiram Paddleford, on March 3,1837, being in want -of money, made application to the plaintiffs to borrow of them -$5,.000, upon a note proposed to be executed by the said Hiram Paddleford, Dyne Starling, Noah H. Swayne, and William Miner; which application was taken into ^consideration by the plaintiffs, and afterward, to wit, on the 6th day of March aforesaid, the -said plaintiffs, in reply to the said application, gave the said Hiram Paddleford to understand and be informed, that the plaintiffs were not discounting notes, at the then present time, but that money might be obtained from the plaintiffs upon a bill on New York, Philadelphia, or Baltimore, payable six months after date, and -drawn by the said Paddleford, Starling, Swayne, and Miner; that thereupon and in pursuance of said suggestion of the said plaintiffs, the said bill in the declaration was signed for the purpose of being presented to the said 'plaintiffs to be by them discounted, .and thereupon afterward, to wit, on said March 14, 1837, the said Hiram Paddleford presented the said^bill so signed as aforepaid to the said plaintiffs, to be by them discounted, and thereupon, to wit, ■on the day and year last aforesaid, at Chillioothe, to wit, at the county aforesaid, it was unlawfully, usuriously, and corruptly .agreed by and between the said Hiram Paddleford and the said plaintiffs, that the said plaintiffs should then and there discount the said bill for more than six per cent, per annum, to wit, that the said plaintiffs should then and there discount the said bill and advance the said Hiram Paddleford thereupon the sum of $4,725.78 and no more; and the said Noah H. Swayne and William Miner-aver, that'in pursuance of said usurious, corrupt, and unlawful agreement, the said plaintiffs did, afterward, on the day and year last aforesaid, at Chillicothe, to wit, at the county aforesaid, discount the said bill for more than at the rate of six per cent, per annum, to wit, the said plaintiffs did then and there discount the-said bill, and advance to the said Hiram Paddleford thereupon the sum of $4,725.78 and no more, and'thereupon the said Hiram Paddleford did then and there deliver to the said plaintiffs, and the said-plaintiffs did receive and now hold, the said bill for the full amount of the said $5,000 specified therein, they, the said plaintiffs, upon the discounting the same as aforesaid, having advanced therefor, as the whole and sole consideration therefor, the said sum of $4,725.78 and no more. And the said Noah H. Swayne and William Miner further aver, that all the said several sums of money in the said-several counts of the said declaration mentioned, are the same sums of money contained and specified in said bill of exchange in the said declaration mentioned and declared upon, and not other or different; and the said bills of exchange in the said declaration mentioned, are one and the same bill of exchange and not other or different. *And the said Noah H. Swayne and William Miner further aver, that the discounting of said bill of exchange in manner aforesaid, was and is in violation of the laws of the land and of the articles of the plaintiffs’ corporation, and that the said bill in the hands of the said plaintiffs'is fraudulent and void in law, and this they are ready to verify,” etc.
    The second plea is like the first with only this difference, the sum alleged to have been received by Paddleford on the discount of the bill is stated at $4,796.67, instead of $4,725.78, as in the first plea.
    The defense set up in the third, fourth, and fifth pleas is substantially the same as in the first and second, although the facts are somewhat differently set forth.
    In reply, the plaintiffs say, they ought not to be barred because they say “that the said bill of exchange in the said declaration mentioned was drawn by the said Hiram Paddleford, etc., for a good and legal consideration, and no.t in pursuance of, or upon the said unlawful, corrupt, and usurious agreement, or for the purpose in the said plea of the said Noah H. Swayne and William Miner, mentioned in manner and form as the said Noah H. Swayne and William Miner have in their said first plea alleged, and the said president, directors, and company in fact say, that they purchased the said bill of exchange from the said drawers for a good and valuable consideration, to wit, for the sum of $4,725.78, and this the said president, directors, and company pray may be inquired of by the country,” etc.
    A similar replication was filed to the second, third, fourth, and fifth pleas, and an additional replication to the five-several pleas, precisely the same in form and substance as the replication to each plea separately.
    To these replications the defendants demur specially, assigning the following causes, to wit:
    To the first five replications.
    1. “ Each of said replications attempts to put in issue several and distinct matters, thereby tending to produce a multiplicity of suits upon the record.”
    2. “ Each of said replications tenders an immaterial issue.”
    3. “Each of said replications is multifarious, and presents a variety of points, but not one single point on which issue can be joined.”
    4. “ Each of said replications introduces new matter, and, therefore, ought to conclude with a verification.”
    *5. “Neither-of said replications set forth the time or place of the purchase of said bill, and for aught that appears, the purchase may have been made since the filing of the plea.”
    6. “Neither of said replications deny, or confess and avoid the plea which it assumes to answer.”
    7. “Each of said replications contains contradictory matter.” .
    To the sixth replication :
    1. “It tenders an immaterial issue.”
    2. “It ought to conclude with a verification.”
    To all the replications :
    1. “ The plaintiffs have put in two replications to each plea con-.taining distinct matters.”
    2. “Other causes.”
    P. B. Wilcox, for defendants, insisted:
    I. The principle which lies at the foundation of the defense is ■this:
    That a contract made by a corporation about any matter prohibited, and made unlawful, by its own charter, is a void contract.
    The modern doctrine is, to consider corporations as having such powers as are specifically granted by the act of incorporation, or-as are necessary for the purpose of carrying into effect the power® expressly granted, and as not having any other. The Supreme Court of the United States declared this obvious doctrine in 1804, and it has been repeated in the decisions of the state court. No-rule of law comes with a more seasonable application, considering-how lavishly charter privileges have been granted. As corporations are the mere creatures of the law, established for special purposes, and derive all their powers from the acts creating them, it is perfectly just and proper that they should bo obliged strictly to show their authority for the business they assume, and be confined in their operations to the mode and manner, and subject-matter prescribed. 2 Kent’s Com. 239.
    To prevent monopolies, and to confine the action of these powerful bodies strictly within their proper sphere, the acts incorporating companies, passed in this country, almost invariably limit the amount of property they shall hold, or their capital stock, and frequently prescribe in what it shall consist, the purposes for which it shall alone be purchased and held, and the mode in which it shall be applied to effect those purposes. There can be-no doubt, that if a corporation be forbidden by its charter to purchase or take lands, a deed made to it would be void, as its capacity *must- -be determined from the instrument' which gives it. existence. Ang. & Ames, 80; 7 Serg. & Rawle, 319.
    All privileged associations should be watched with argus eyes. They should be regarded with distrust. It is the duty of courts-to keep them within the bounds prescribed by the legislature. They are opposed to the genius of our government, and, if tolerated, should not be permitted to abuse the privileges with which they are intrusted. These considerations apply with peculiar-force to incorporated banks. Drawing around them, as they evidently do, a silent, yet powerful influence in the neighborhood where they are situated, they will ever be watched with jealousy by a people alive to their rights and liberties. Banks being-granted for the express purpose of loaning money, the rule of construction of the statute of usury will not be softened in their favor. If the principle contended for by the opposite counsel be correct, what salutory statute can hereafter stand against the-usages of trade ? "What law can hereafter be enacted, which may-not be trodden down by the custom of the banks? G-iiffln, arguendo, 2 Cowen, 755.
    A corporation not established for trading purposes, can not be acceptors of a bill of exchange, payable at a less period than six months from the date, because such a case falls within the provision of the several acts passed for the protection of the Bank of England, by which it is enacted; that it shall not be lawful for any body corporate to borrow, owe, or take up any money upon their bills or notes, payable at demand, or at any less time than six months from the borrowing thereof. Judge Best held the acceptance void for want of capacity in the corporation to make a contract implicitly prohibited by its charter. 3 B. & A. 1; 5 Eng.Com. Law. 215.
    So where the Hudson Insurance Company took a note for $15,000, a part of the consideration of which was not authorized by their charter, no action could be sustained on it by the company; and being void in part, was void in toto. 1 Hall, N Y. 480.
    So where the New York Firemen’s Insurance Company discounted a note contrary to the express prohibition of their charter, it was held that the company could sustain no action upon the note. They had neither the right, nor the capacity, to make such a contract. 5 Conn. 560.
    The Branch Bank of the United States at Lexington, Kentucky, discounted a promissory note, reserving interest thereon, at the *rate of six per centum per annum ; it being agreed that the owner of fhe note should receive the proceeds of the discount in notes of the Bank of Kentucky, at their nominal value, although the same were, at the time, of no greater current value than fifty-four per cent, of the said nominal value. Held, that the contract was void, and that the bank could not recover of any of the parties to the discounted note. The charter of the Bank of the United States forbids the taking of a greater rate of interest than six per centum, but it does not declare a contract on which a greater interest has been taken or reserved to be void. Yet such a contract is void upon general principles. Courts of justice are instituted to carry into effect the laws of a country, and they can not become auxilliary to the violation of those laws. There can be no civil right where there can be no legal remedy; and there can be no legal remedy for that which is itself illegal. Bank of the United States v. Owens et al, 2 Pet. 527.
    
      The case last cited is identical with that before the court, and furnishes precedents to the first two pleas. It is also adopted as sound law by the Supreme Court of New York. 7 Wend. 276.
    II. The contract declared upon, being prohibited by the gen-1 eral statute regulating interest, is a void contract.
    At common law, the reservation of any interest avoided the contract. 2 Roll, 469; 5 Law Lib. 63
    By statute 37, Hen. 8, a. d. 1546, the common law was altered, and ten per cent, interest allowed. The penalty was a forfeiture of treble value, one-half to the informer, and one-half to the king, with imprisonment of the body.
    By 5 and 6 Ed. 6, a. d. 1553, the statute 37 Hen. 8, was repealed, and all interest declared illegal, as at common law.
    By 13 Eliz., a. d. 1571, the statute 5 and 6 Ed. 6, was repealed, and the 37 Hen. 8, re-enacted.
    By 21 Jac. 1, a. jd. 1624, the rate of interest was reduced to eight per cent.
    By 12 Car. 2, a. d. 1672, the rate of interest was reduced to six per cent.
    By 12 Anne, a. d. 1714, the rate of interest was reduced to five per cent.
    The last statute is now in force in England.
    The statute of 37 Hen. 8 was adopted and in force in Ohio from 1795 to 1799. 1 Chase’s Stat. 484. It is therefore important to understand the construction put upon it by courts of justice in England,
    *The statute does not, in terms, declare a usurious contract void, yet the courts hold this language: “Every.contract assurance or security, which is founded in usury, is ipso facto void, and is extinct at its very inception.” 4 Leon. 43; 3 Leon. 205; 1 Mod. 69; Moore, 397; Shep. Touch. 63.
    The contract was held void because made against the express prohibition in the statute, and not because the statute contained a penalty. The design of the penalty was to punish the usurer when the contract was actually executed, and the usury actually received. Where the contract was executory, it was held void as • being made against the prohibition of the statute. 1 Mod. 69; Cowp. 114.
    So, where a judgment is entered on a warrant of attorney, including unlawful interest, the court, upon proper affidavits, without payment of the money actually borrowed, and the lawful interest, order the judgment to be vacated, and if the jury, upon an issue, find the warrant of attorney usurious, the court order it to be delivered up and canceled. Such, says Judge Bayley, has always been the practice of the king’s bench. A different practice, to some extent, prevailed in the common pleas. 6 Eng. Com. Law, 357.
    So, chancery will furnish no aid to him who contracts to receive unlawful interest; but when he who contracts to give unlawful interest applies to equity for relief, he is required to pay the money •actually borrowed, and the lawful interest, for it is against conscience for him to retain it. The policy of this rule has, however, been doubted by Chancellor Kent. 5 Johns. Ch. 138.
    The statutes of Ohio relating to interest are those:
    1. Statute of 37 Hen. 8, fixing the rate of interest at ten per cent., and annexing a penalty. 1 Chase’s Stat. 484, adopted 1795.
    2. Act of 1799, repealing 37 Hen. 8, and fixing the rate of interest at 6 per cent. No penalty, but permitting the defendant to plead the usury specially, and, if found in his iavor, the plaintiff could recover the amount actually loaned, but without any interest. 1 Chase’s Stat. 484.
    3. Act of 1804, repealing the act of 1799, and, in substance, reenacting the statute of 37 Hen. 8. In this act, the second section of the act of 1799 was dropped, and in its place the prohibitous words “no more” introduced into the first section.
    4. Act of 1824, dropping the penalty in the act of 1804.
    It would seem, therefore, that the statute of 37 Hen. 8, saving only the penalty, is in substance the law of Ohio at this *day. It contains an express prohibition against receiving more than six per cent, interest and therefore a contract made .against such prohibition is void.
    A contract may be void as against a statute in three ways .
    1. By declaring it void in express terms.
    
    
      2. By annexing a penalty, which is an implied prohibition
    3. By a simple prohibition.
    Cases to this point are the following: 17 Mass. 258; 1 Maule & Sel. 597; 5 Eng. Com. Law, 215; 1 Bos. & Pul. 265; 2 Pet. 539.
    Where the bills of certain foreign banks were prohibited under a penalty to be received, or in any way negotiated by the banks within the commonwealth of Massachusetts, it was held that a note payable in such bills to a banking corporation was void, and that no action could be maintained upon it. 14 Mass. 322.
    Where a bank discounts a note at the usual rate of interest, upon condition that the person offering the note for discount shall receive post-notes payable at forty-five, sixty, and ninety days, as. cash, and the post-notes are paid and received as cash for the-note’ they discounted, the note discounted is usurious and void-2 Hals. 130.
    To take interest in advance upon discounting a ninety-day note, calculated according to Rowlett’s tables, is usurious, and the note void. 2 Cow. 712.
    No action brought by an unehartered bank, on a bond given for bank-notes emitted by the said bank, can be sustained. 1 Rand. 76.
    A contract, void in part, as against a statute, is void in toto. 1 Eng. Com. Law, 263; 1 Hall, 546; 2 Pet. 527.
    III. But admitting the general statute regulating interest to be no bar to the action, still the question is open as to the validity of a contract made by a corporation in violation of its own charter.
    It may be conceded that in all cases out of their charters, corporations are to be governed by general statutes, in the same manner as individuals. But as to all matters within their charters, there springs up a new set of rights and liabilities, which are to be governed and adjudged upon by the law of corporations.
    A corporation has no powers except those expressly or impliedly granted by their charter. The charter of the Bank of Chillicothe expressly withholds the power to make the contract *set out in the record. It is therefore void in toto. 1 Hall, 480; 5 Conn. 558.
    Four things are prohibited to the plaintiffs by their charter :
    1. They shall not deal in real estate except for their convenience.
    ■ 2. They shall not deal in merchandise except for their convenience.
    3. They shall not discount bills or notes except at six per cent.
    4. They shall not loan money except at six per cent.
    Now if the plaintiffs, in purchasing a site for their banking house, had embraced in their contracts other lands for the purposes of speculation, it can hardly be insisted but such a contract would be void in toto.
    
    Or, if the plaintiffs, in purchasing furniture for their banking, house, had embraced in their contract other furniture for the purpose of supplying the town of Chillicothe, such a contract could hardly be supposed valid.
    So, here, the plaintiffs admit that the contract set out in the record embraces more interest than their charter allows; the contract therefore is void. 5 Conn. 560.
    Henry Stanbery, for the plaintiffs:
    On March 14, 1837, the plaintiff's purchased a bill of exchange,, made by the defendants on S. Flewelling, Esq., New York, at six months’ date, and dated on said March 14,1837, payable at the-National Bank of the city of New York, to the order of plaintiffs, for $5,000.
    The plaintiffs paid the defendants the proceeds of this bill, less-the discount, and one per cent, in addition thereto, which was retained for exchange.
    
    Is this transaction contrary to the charter of plaintiffs ? If so,, is it wholly void ?
    Section 20 of the charter is in these words : “ That the said corporation shall not take more than at the rate of six per centum per annum on its loans or discounts.” 3 Chase’s Stat. 2029.
    No penalty is given for a violation of this section, nor for a-violation of any other provision of the charter.
    There is no clause expressly authorizing the bank to purchase notes or bills of exchange, nor is there in any of our bank charters ^which I have examined; but there is in section 15 a special inhibition against dealing or trading in goods, wares, merchandise, or any commodities whatever. The dealing in exchange-being a legitimate business of banking, and the special prohibition not extending to it, that right is conferred by the charter.
    The first inquiry, then, is, whether this transaction is a loan or discount, or the purchase of a bill of exchange ?
    The instrument is, in form, a bill. It has a drawer, a payee, adrawee, time, place, and sum to be paid; is for money, and subject to no contingency; it is therefore a bill of exchange. The-operation on this paper is quite a different thing from what is understood by a loan or discount merely. A loan or discount (and the terms seem to be used synonymous) implies the undertaking -of the borrower to repay the lender. His is the duty of paying, and the place of payment is ordinarily the residence of the borrower ; or in bank loans, the banking house. But in this transaction the person who receives the money is not the one who is to pay. The bank can not look to him except upon the default of the drawee, and the place of payment is at a distant point, to -which the bank must convey the bill, and there receive payment. There is, then, a marked difference between a mere loan or discount and the purchase of a bill.
    Inasmuch as banks are allowed to deal in exchange; in other words, to purchase and sell exchange, can there be a doubt that they may purchase or sell on such terms as they find convenient -or advisable? If a bank has a sum of money at a distant point, may it not sell its draft or bill for that money at any rate of premium or discount which it can obtain? No one will question ■this, even if the rate of premium should exceed six per cent. If an individual have a sum of money, or expects to have, at a distant point, may a bank not purchase his draft or bill at any -rate which can be agreed upon between them? Nothing can be clearer than the right to make such purchase. If the bill purchased is what is called a sight bill, and a premium is charged by the bank for cashing it, this premium would then be a compensation to the bank for collecting the bill and taking its money ■at a distant place; or if the bill purchased by the bank was on time, there would be a charge for interest on the money to the maturity of the bill, and a charge for premium ot exchange in addition. If, in that operation, the bank should take specifically ■for the interest at a greater rate than six per cent, per annum, it *might be held a violation of its charter; but if for interest, it took only at the legal rate, it might charge for premium of ex•change an additional sum, and at any rate. There is no prohibition against purchasing or selling exchange at any other than ■one rate. Obviously, such a law would be in the highest degree impolitic. The rate of interest, in a particular coummunity, may be fixed, and, without much inconvenience, remain stationary; or, in the gradual increase or decrease of money, be, at given periods, varied; but it is impossible to fix the rates or values of exchanges, depending, as they do, upon constantly changing cir■cumstances, and fluctuating with every change. If, then, the one per cent., beyond the discount for the time, was taken by tho. bank from the amount of this bill for premium of exchange, it is. not a taking of more than six per centum per annum upon the loan or discount. If it should be said that this could not be taken for premium of exchange, because the rate of exchange was in favor of New York, and the money there, more valuable than in Ohio, the answer to that is, that it was a matter to be looked to by the-parties. As no rate of exchange is prescribed by law, the contracting parties must be left to make their own bargain. It is, however, well to observe, that the Bank of Chillicothe paid their money for this bill, in March, 1837, just at the time when there was an unusual demand for specie in Ohio. Money (that is specie), here, was more valuable at that juncture than specie-in New York, and almost all the banks incurred an expense of much more than one per cent., to bring specie from the east or south..
    The transaction upon this bill, then, involved two operations one in the form of a loan or discount, for the time the bill had to. run, and as to that, the bank charged only at the rate of six per cent, per annum, by way of interest; the other in the form of exchange, the money being paid here, to be repaid at New York and as to that, the bank charged one per cent, for premium. This-is the form of the transaction, and a ease may be imagined in. which this form is adapted solely for the purpose, and with the understanding of taking a higher rate for interest than six per cent. Eor instance, if it were proved that the agreement was simply for a loan, at the rate' of seven per cent, for interest, and that the form of a bill was adopted for a cover or device-to evade the law, and that it were well understood and agreed between the parties, that payment was not to be made at the place where the *bill expressed that payment should be made, but at the counter of the bank; that no presentment, demand, or notice, or liability for damages on non-payment was to follow, such a transaction would-come within the prohibition of the statute.
    Suppose such proof to be made as to this transaction, and that this were shown to be a taking of more than six per cent, per annum for interest, and to be directly within the prohibition of section 20 of the charter, what would be the effect of such proof upon ■the plaintiffs’ case?
    It has been already stated that the charter fixes no penalty fora violation of this section, nor does it declare what shall be the» •consequence, either as to the contract or corporate rights. The charter was created in the year 1808; at that time there was a law in force against taking more than six per cent, per annum for interest. This, was the act of 1801 (1 Chase’s Stat. 381), a general law, which prohibited the taking of a higher rate of interest than •six per cent, per annum, and declared the consequence of taking more.to be a forfeiture of the whole amount of the debt; the one-half thereof to the county, and the other half to the informer. This being the state of the law in 1808, an usurious transaction by a bank would have fallen (in the absence of any special penalty in the charter) under the operation of this statute; and the -forfeiture of the entire debt would have been the consequence. 'That forfeiture, however, would not have affected the contract; .and the usurious agreement could only be set up against the recovery of the usurious interest; such has been the construction given to that law by this court. In the case of the Lafayette, Society v. Lewis, 7 Ohio, 83, Judge Hitchcock, in delivering the opinion of the court, says:
    “It will be observed, that by the law of 1801, a contract providing for a greater rate of interest than that therein prescribed, is not declared void, although a penalty is inflicted upon such as -shall demand or receive a greater rate. By the construction put on that act, a contract stipulating the payment of a greater rate of interest than six per cent, was not void. Such contract might be -enforced so far as to compel the payment of-the principal sum and interest at the rate of six per cent, and no more.”
    If, then, this transaction had taken place whilst the act of 1801 was in force, we see what would have been the consequences. 'That act was repealed by the act of January 12, 1821, which provided, in the same language used in the act of 1801, that no more *than six per cent, should be received for interest, and repealed the penalty. So far as the contract is concerned, our court has given the same construction to this statute, that had been given to the qct of 1801, and has held that the debt and interest at the rate of six per cent, could be recovered, but no more. Lafayette Society v. Lewis, ut supra.
    
    At the time this bill was purchased by the plaintiffs, the act of 1821 was in force, and yet continues in force. There can be no .question that it applies to corporations as well as to individuals. The language is, “ all creditors shall be entitled to receive,” etc. Nor can any argument against the application of this statute to banks be drawn from the fact that the prohibition is confined to receiving more than six per cent, upon money due. We know that banks take their interest before the money is due; they are, therefore, not within the very letter of the statute if the expression ■money due is to be understood according to the letter. But that is not its meaning. If it were, it would be, in nine cases out of ten, a dead letter; for the usurious lender would always take his per cent, in advance. The observations of Judge Hitchcock, in the .case before referred to, are very applicable here. He says: “The law purports to fix the rate of interest, not for a particular class of creditor, but for all creditors, and it fixes the rate of interest upon all moneys. True, it speaks of money due, as did the act of 1804 and that of 1899, preceding it; but it is for this reason the •collection can not be enforced until it is due,-and, when collected, the interest attaches at the rate prescribed by the statute." Page 85.'
    Here, then, is a charter of a particular corporation which prohibits that corporation from taking more than six per cent, for interest;, the prohibition is a naked one, and wholly free from any penalty or forfeiture, or other consequences declared by the special law of the charter. Here, too, is a general law applicable to this corporation, upon the same subject matter, fixing the same rate of interest, and providing that no more shall be recovered; a law which establishes the policy of the state as to usury, and which was made to take the place of a previous statute establishing a forfeiture by repealing that penalty. In this condition of special and general legislation, can it be successfully argued that the general law does not apply to a bank contract? If it does, there is an end to this case, and the bank can recover its debt and interest at the legal rate, but no more.
    The case of Thornton v. Bank of Washington, 3 Pet. *36, is directly in point upon this question. That case arose in the District of Columbia, upon an alleged usurious loan by the bank. The counsel for the bank contended that the Maryland law of usury did not apply to banks: “ It was passed before the estabment of banks. The language is prohibitory as to any person .and this may include corporations sole, but not corporations aggregate. It is a criminal law, and a strict construction may be insisted on. The insertion, say they, of a prohibition against taking .more than six per cent., in the charters of banks, is a proof that the general terms of the usury laws are not considered as extending to such corporations. It would not be necessary, if this were the sound construction of the usury laws.” Page 39.
    These are the arguments of Mr. Lear and Mr. Webster for the-bank, and it is worthy of observation, in passing, that those learned counsel did not apprehend any difficulty from the charter prohibition, or imagine that the contract was void on that account-judge Story, in delivering the opinion of the court, disposes of' this distinction in a very few words. His language is as follows: “ Upon the other point suggested in the cause, whether banks are-within the statute of usury, we entertain no doubt that they' are.” Page 42.
    The argument might safely rest here, but I propose now to consider this case as if the general law upon the subject of usurious contracts did not apply to the plaintiffs. The question then arises upon the naked prohibition of the charter. What consequences-upon the contract will the court deduce from that prohibition?
    It is argued for the defendants, that this taking of the higher-rate of interest makes the entire contract void, on the ground' that such taking is prohibited by law. I admit the general rule,, that contracts forbidden by law or against the policy of the law-are void; great care is necessary in the application of that general principle, and it seems to me it does not apply to this case.
    Tbe prohibition, in this case, is not declared in any general law, but in a special act of incorporation. It is not against or in contravention of any statute settling the public policy in the subject matter. The thing done is not illegal in the sense of that term which avoids the entire contract in which it enters as an-integral part. It is not immoral in any sense of the term; for According .to tbe modern opinion, and especially to our legislation on the subject of usury, the taking of more than six per cent, for the loan of money is not prohibited; all that the law declares is that the excess shall not be recovered.
    In the English and many of the American statutes against usury, it is not merely prohibited, but the contract, tainted with usury, is declared wholly void. The policy of these laws has-been often and well questioned, but there can be no question in their construction. The entire contract, the good with the bad, is made void. If, then, the taking of more than six per cent, by the-plaintiffs is in any sense against law, it is only the taking of the-
      
      excess. That is the only thing prohibited. The loan of the money, the right to the legal interest, the capacity to sue, are all expressly given to the plaintiffs. All that is said, is that they shall not take interest beyond a certain rate. The only void thing in this transaction is the alleged taking of the one per cent, above the six per cent., and that is void, because no remedy is given for its recovery. The court will not lend its aid to recover it, because it will not assist parties to recover what the law ha.s forbidden. Every principle of justice demands that all the residue of the contract should be enforced. Both parties were consenting to the extra interest; no fraud or imposition was practiced. Why, then, should the borrower in this case be allowed to set up this defense not merely to protect himself against the payment of the excess, but also against the repayment of the money which he has received, and of which he has had the benefit? In the worst cases of fraud, deceit, and imposition, the guilty party is still allowed to recover what he is equitably entitled to.
    In all the cases which I have looked into (except the case in 2 Peters, hereafter referred to), in which the entire contract has been held void, there was either an express statute declaring that consequence, or the subject-matter was clearly immoral, contrary to the revenue laws, or to public policy, or if only wrong because merely prohibited, then it was found to be the essence of the contract itself — in other words, the entire contract was forbidden.
    The excepted case is that of the Bank of the United States v. Owens, 2 Peters, 527. In that case the bank sued upon a contract as to which it stood admitted by the pleadings that it was founded upon a corrupt and unlawful agreement to take more than six per cent, interest contrary to law and the-fundamental articles association. The charter of the bank contains a ^provision against the taking of more than six per cent, similar to the charter of the plaintiffs.. Upon this case, Justice Johnson delivers the opinion of a majority of the court, that without reference to the Kentuckv statute (the ease was from Kentucky), the provision in the charter made the contract void on general principles. In regard to this question, he says, “No court of justice can, in its nature, be made the handmaid of iniquity. Courts are instituted to carry into effect the laws of a country; how can they, then, become auxiliary to the consummation of violations of law?” Again, he says, “ There can be no civil right where there can be no legal remedy, and there can be no legal remedy for that which is itself illegal.” Ib. 538, 539.
    No one doubts these general principles, but their application in that case does not seem to be so clear.
    Is it necessary that a court should refuse to permit the lender to recover back his money and legal interest in order to avoid being the “handmaid of iniquity?” What iniquity is there in allowing such recovery? Is there not much more aid given to iniquity by permitting the usurious borrower to retain what is in fact due to his creditor?
    Certainly a court will not become “ auxiliary to the consummavtion of violations of law;” and just for that reason they will not .allow the usurious interest, which is the thing in which the violation consists, to be recovered.
    The learned judge then cites the authorities upon which, in the close of his opinion, it is stated the decision of the majority of tho •court is founded. All the cases which are cited will be found to ibe clearly distinguishable from this ease. In every one of them •.the essence and object of the contract itself were against law; the •entire contract was held void because the entire subject-matter 'was prohibited.
    For instance the case of Aubert v. Maze, 2 Bos. & Pul. 374, upon which great reliance is placed as showing that there is no distinction, in this respect, between malum in se and malum prohibitum, was an action by one partner for contribution on account of losses paid for insurance on policies underwritten by joint agreement between plaintiff and’ defendant. Such a partnership is illegal in .England, and the consequence necessarily followed, that no contract touching it could be enforced. The money so paid, being all paid ;in violation of law, could not be recovered back. All the other • cases cited stand upon the same footing.
    This case in 2 Peters can not now be regarded as authority *as it has been shaken, and in part overruled, in the case of the Bank of the United States v. Waggener and others, 9 Peters, ,378.
    So far as it expresses an opinion of even a majority of the judges -of the Supreme Court of the United States, it is undoubtedly entitled to great weight, but not to greater, .perhaps not to so great 'weight, as should be given to another opinion of the whole court, delivered by Story, Justice, in the case of Fleckner v. Bank of the United States, 8 Wheat. 338.
    That case also arose upon the same clause in the charter of the bank. The judge says, “ The taking of interest by the bank, beyond the sum authorized by the charter, would doubtless be a violation of its charter, for which a remedy might be applied by the government; but as the act of Congress does not declare that it shall avoid the contract, it is not perceived how the original defendant could avail himself of this ground to defeat a recovery.”
    But the case of the Lafayette Society v. Lewis, already referred to, is decisive of this point, and shows very conclusively that although the taking of interest beyond six per cent, be prohibited by law, the contract is not thereby avoided, but an action may be sustained to recover the money lent, and lawful interest. That ease arose under the interest act of 1824. In the previous case of Reddish’s Ex’rs. v. Watson, 6 Ohio, 516, it had been held that the act of 1824 did not prohibit the taking of interest beyond six per cent, when contracted for, and in delivering the opinion of a majority of the court in that case, Judge Wright observed that if it were to be regarded as a prohibitory law, the agreement for the excessive interest would act upon the contract and render it void. Ib. 516.
    This case was expressly overruled in the Lafayette Society v. Lewis, in which it was held that the act of 1824 was & prohibitory law; and what consequence does the court, deduce from that? That the prohibition enters into the entire contract and makes the whole void? No such thing; but only that the usurious interest shall not be recovered. See the case of Turner v. Calvert, 12 Serg. & Rawle, 46, precisely in point, and in accordance with the Layfayette Society case. Also, 2 Dallas, 92.
    1. It is urged, therefore, for the plaintiffs, that they are entitled to recover the amount due on the bill, with interest, damages, etc., because the one per cent, was received in the purchase or discouut of a bi 11 of exch ange, not by way of interest, but as premium Hn exchange, and therefore is not a taking of more than six per cent, per annum on a loan or discount.
    2. That if the one per cent, be established by proof to have been taken for interest beyond the six per cent., that the plaintiffs are, notwithstanding, entitled to recover the amount due on the bill for principal, interest, damages, etc., less the one per cent.
    
      T. Ewing, for defendants:
    It is a well-settled principle of law that if a contract be illegal, or against good morals, it is void. So also if anything that is illegal or immoral enter into the contract and form a part of it, the whole contract, which is one entire thing, is tinctured and contaminated with the vice, and is all void. Regent v. Roll, 7 Ohio, 77; Cro. Eliz. 199; Sid. 38.
    Some cases have been cited to show that when illegal interest is taken, not reserved, it does not vitiate the contract. This is true in one condition of things. If a loan be made which is not usurious, and after the term of the loan has expired, the lender exact and receive usurious interest, it does not avoid the contract which was originally good. The.subsequent illegal contract is void, it there-; fore can not vitiate a good contract, made prior to it, -and into which it in nowise entered. Floyer v. Edward, Cowp. 112.
    So likewise if there bo two independent contracts between A. and B., one of which is usurious or otherwise illegal, and therefore void, and the other legal and valid, and they are both brought into one note — the note being contaminated by an illegal ingredient, is void, but it in nowise affects the original valid contract. That remains precisely as if no void note had been given. It is the security only that is void. But when the usury or illegality of any kind enters into the contract itself and forms part of it, then the contract, as well as the instrument by which it is evidenced, is wholly and absolutely void. The court will not enforce the contract as it is, and they can not make a new contract for the parties. The modern authorities have fully established this doctrine, especially when the contract is against the prohibition of a statute. 5 B. & A. 335; 1 Taunt. 136; 14 Mass.322; 17 Mass. 281; 7 Ohio, 77.
    The cases against the usury laws of Pennsylvania and Ohio seem to-conflict with this principle, but they are founded on a supposed intent of the legislature in the enactment of their several *statutes, and a regular series of judicial decisions in both those states steadily conforming to that supposed intent.
    The usury law of Pennsylvania was copied from 12 Anne- 2, c. 16, shortly after the enactment of that statute, omitting the clause which declares the usurious contract “ utterly void.” The omission of that clause was taken by the court as an expression of the legislature of Pennsylvania, that they did not intend the usurious contract should be void in that province, and in a case decided by Judge McKean as early as the year 1775. 1 Dall. The court holds the contract void only for the excess.
    This statute of Pennsylvania was adopted in the Northwestern Territory, and the decisions with it, and the subsequent legislation in Ohio has not been holden to vary this principle thus earLy settled.
    But those statutes and decisions have no application in the case at bar. The plaintiff in this case who asks the court to enforce a contract tainted with usury, is a corporation whose law is its charter — whose existence and powers and capacities depend upon that charter, and upon that only. And in that charter there is a direct and positive prohibition against taking more than six per cent, interest. That prohibition has been disregarded. The law which gives this corporation its being has been violated in this contract; and there is no expression in legislative intent, and nothing of judicial construction in this state which stands between the party and that penalty which the general principles of law attach to its transgression.
    The charter is a law, 'and it is the only law to which this plaintiff is amenable'. 7 Ohio, 131. This contract was made in violation of that law. Not the bill of exchange merely, but the whole contract which the bill was given to secure. And the contract was one and entire, not made up of distinct parts which are capable of severance. The case stands distinctly and exactly upon the same ground with that of the Bank of the United States v. Owens and others, 2 Pet. 527.
    That case, as it stood upon the pleading, was this: The prohibitory clause in the charter of the Bank of the United States, was the same precisely as that in the Chillicothe Bank. The bank had reserved, in discounting a promissory note of defendant more than six per cent, interest, and the question was whether the usury vitiated the whole contract, or whether it was void for the excess merely and good for the money actually lent and the lawful interest. Justice Johnson, in delivering the opinion of the *eourt, says : “ The question here propounded has relation exclusively to the legal effect of a violation of the provision in the charter on the subject of interest; and does not bring in question the operation of the statute of usury of Kentucky upon the validity of the contract. To understand the gist of the question, it is necessary to observe that although the act of incorporation forbids the taking of a greater interest than six per cent., it does not declare void any contract receiving a greater sura than is permitted. Most, if not all the acts passed in England and the states upon the subject, declare such contracts usurious and void. Tha question then is, whether such contracts are void in law on general principles. The answer would seem to be obvious, that no court of justice can in its nature be made the handmaid of iniquity. Courts are instituted to carry into effect the laws of a country. How can they become auxiliary to the consummation of violations of law ?”
    The case of the Bank of United States v. Waggoner and others has been relied on by the plaintiffs’ counsel, as somewhat shaking the authority above cited. But, in my opinion, it sustains it in all the points which are material in the determination of the casa at bar. Although the transaction was the same, yet the facts of the two eases, as they were presented to the court, were materially different, and the learned judge, in delivering the opinion of the court in the latter case, 9 Wheat. 399, is careful to mark the distinction. He examines, in the first place, the question, whether the purchase of a promissory note was a dealing or trading within the prohibition of the bank charter, and refers to the opinion of the court on that point, delivered in the case of Fleckner v. United States Bank, 8 Wheat. 351, 352, and says, “to that opinion we deliberately adhere.” He then says, in substance, that in case of the United States Bank v. Owen, it is said, that in the charter of the bank, “ reserving” usurious interest must be implied in the word “taking” an “expression of opinion not called for by the certified question which arose out of the pleabut he does not say that the implication is wrong or against law. He seems merely to hold it is an undecided question, because it was not necessary to decide it in either of the cases. It is true, he says, that there is a difference between taking and reserving illegal interest; reserving it, vitiates the contract, and makes it “utterly void-” “But if usurious interest be not stipulated for, but only taken afterward, then the'contract is not void.”
    This is clearly law, upon the principle which I have already ^suggested. If the illegal interest be not stipulated for, but only taken afterward, it can not have a retroactive operation, and avoid a contract of which it forms no part. But if it be stipulated for at the time of making the contract, though it be not taken until afterward; or if it be taken in advance, or reserved in the contract so that it enter into the contract ab initio and'form a part of it, the whole contract is thereby made void.
    There is nothing, therefore, in the ease of the Bank of the United States v. Waggener, or the point therein recognized as settled, in the case of Fleckner v. United States Bank, which at all shakes the authority of the case of Owen and others v. The Bank. That case is admitted to be in point with the case at bar; it therefore ought to govern the decision, unless it be against the current of authorities, or wrong in principle or policy. I have already shown that it is fully sustained by the authorities; it is also right in principle.
    The general statute touching interest does not bear upon the case, because it was provided for by the special law creating the corporation, which, since its acceptance, has become a compact. That law is, for the term of its expressed duration, immutable, except by forfeiture, or by another compact between the same parties. The bank is out of the reach, and beyond the pale of legislation. The law-making power is suspended as to its touching all things expressly provided for in its charter; and its legal rights and legal liabilities, its powers and duties, all that it may do and all that it must suffer, are fixed and determined by the single law of its creation. It is thrown upon its charter only, and the general principles of law as applied to the prohibition in that charter which it has violated. 7 Ohio, 131.
    The taking of usury, then, is against this organic law to which the bank owes its being, and the act constitutes an offense which its own counsel admit would be adjudged criminal, perhaps capital, on a quo warranto. The contract which the court are asked to enforce, in part, has its origin in that offense, or to speak more accurately, it is itself the crime. Will the court then separate this contract into its elements — not divide, but decompose it — extract the legal ingredients from the vitiated mass, and cleanse, and purify, and make them valid? This is not done in the case of individuals, where their contracts are tainted with illegality or crime. Courts of law do not hang or imprison a man on one branch of his contract, and enforee the other in his favoi\
    Again, if this bank come into court to prosecute, it must come *with its charter in its hand, and claim a standing in court by virtue of the provisions of that charter only; by that alone it exists, and beyond and without that, it has neither capacity nor attribute. It must, therefore, show that it has contracted pursuant to the charter, and then, under the authority of that charter, the court must enforce its contracts.
    But what is the language of the bank in the case at bar? Here is my charter, by which I am authorized to contract and to sue; my compact with the state, by virtue of which I claim admission into your court; and here is my contract with the defendants, which I call upon you to enforce. It is true, in this very contract, I have violated my charter, and broken my compact with the state, by virtue of which alone I am authorized to stand as a party in your court; nevertheless I ask you to take cognizance of this contract, and enforce it, at least in part, in my behalf.
    And further, the object of the restrictive clause in the charter is to prevent or remedy a mischief which the legislature foresaw would be incident to the corporation; and the law should be so construed by the courts as to effect the object of the legislature, by avoiding the mischief and advancing the remedy, and that with the least practicable injury to the party and the public.
    Banks are created for the express purpose of lending money, and many privileges and immunities are bestowed on them that they maybe enabled to carry on the business, profitably to themselves and beneficially to the community. But the strongest temptation to which they are exposed, the sin which of all others does most easily beset them, is that of usury; therefore, the first command of their creator, at the moment he breathed into them the breath of life, is that they shall not commit usury; and the courts are empowered and required to enforce and make effectual this inhibition. How is this to be done? Not surely by holding the usurious contract good for the money advanced, and void only for the excess; that would be inflicting no penalty, which would make them eschew the attempt as unprofitable and dangerous; it would only in some few rare cases disappoint them of.their unlawful gains. In ninety-nine cases out of a hundred, they would actually get their usurious interest; in the hundredth case, they might lose the excess, but recover the debt, the legal interest and costs. The business would be still profitable. It would be for their interest -to violate the prohibition in their charters continually, and those who should oppose the recovery of the excess, in any case, would do it at the expense of costs and ^counsel fees; much beyond the amount that would be saved by the con test. The point would, therefore, be yielded by a general acquiescence, and the evil endured, or resort must be had to the quo warranto to restrain it. Whether on that writ, the facts being found, the court might pass sentence’ of punishment and prevention merely, or whether they must pronounce judgment of forfeiture and declare the corporation dissolved, I am not prepared to say ; but if the latter, it would cause injury and misfortune to the community, which it should be the object of every department of our government to avert. The simple and effectual remedy is the one which an application of the well-settled principles of law to the case indicates. Hold the illegal contract void in all its parts, refuse the aid of the court to enforce it, let the attempt at illegal gain involve a certain loss, and there is no danger that such attempts will be repeated.
    G-. Swan opened the argument for the plaintiffs, and J. C. Wright closed the argument for the defendants, but the reporter has not been furnished with their arguments, nor any brief of them
   Judge Hitchcock

delivered the opinion of the court:

In considering this case we are first to inquire whether the replications to the special pleas in bar are in law a sufficient answer to those pleas ; and, in order to settle this question, it is necessary to ascertain the substance of those pleas. Stripped of their verbiage, they contain the charge that Paddleford, being in want of money, applied to the plaintiffs for a loan, and that an unlawful, usurious, and corrupt agreement was entered into between the plaintiffs and Paddleford, whereby they undertook to furnish him with the money by discounting a bill of exchange at and for a greater rate of interest or discount than six per cent, per annum, in pursuance of which unlawful agreement the money was furnished, and the bill in controversy was discounted at a greater rate of interest than six per cent, per annum, which conduct of the plaintiffs, it is claimed, is in contravention of the general law of the land, and of their special law of incorporation.

In answering these pleas the plaintiffs neither admit nor deny this agreement, or that it was carried into effect. They neither traverse the matters set out, nor do they confess and avoid. They merely assert that the bill of exchange was drawn “for a good and legal consideration, and not in pursuance of, or upon the said ♦unlawful, corrupt, and usurious agreement, nor for the purposes ” in the first and following pleas alleged. This, so far, is no answer to the pleas. There is no allegation in the pleas that the bill was not drawn for a good and legal consideration, or that it was drawn in pursuance of any unlawful or corrupt agreement. The charge is, that after the bill was drawn, a “ corrupt ’’ agreement was entered into for its discount, and this is neither confessed nor denied by the replication. The replications next aver that the plaintiffs “purchased the bill of exchange from the said drawers (or a good and valuable consideration, to wit, for,’’ etc., and close, by tendering an issue to the country. There can be no doubt that each of the replications present a variety of points, and is multifarious. Each attempts to put in issue matters which are immaterial. The matter introduced into each is new, and, of course, they should have concluded with a verification. Two replications, too, are in effect put into each plea, which is not allowable. For these reasons, as well as for others which might be stated, we hold the replications to be defective in point of form, and bad in special demurrer.

The plaintiffs do not seem, however, to have placed much reliance upon their replications, as they have scarce made an effort to sustain them. The great question in the case is, whether the facts set forth in the pleas constitute a defense to the action. This question has been argued by the counsel with much earnestness and with great ingenuity. It is one of much importance, and is certainly not without its'difficulties. We have examined it with care, and have been enabled to come to a conclusion without any difference of opinion.

The facts set forth in the plea show that the consideration passing from the plaintiffs, a banking company, for this bill of exchange, was a loan of money, and that this loan was effected at a rate of interest greater than six per cent, per annum. It can make no difference that the contract, received by the plaintiffs to secure the payment of this money, is a bill of exchange, and not a promissory note. If, under the circumstances of this case, a promissory note would be void, then this bill of exchange must be void.

It is contended by defendants’ counsel that this contract is void, etc., being contrary to and against the statute law of the state regulating interest, and many authorities have been cited to sustain this position. Our statute regulating interest provides “that all creditors shall be entitled to interest on all money after the same *shall become due, either on bond, bill, or promissory note, or other instrument of writing, or contract for money or property, on all balances due on settlement between the parties thereto, or money withheld by unreasonable and vexatious delay of payment, and on all judgments obtained from the date thereof, and upon all decrees obtained in any court of chancery for the payment of money, from the date specified in the said decree for the payment thereof; or if no delay be specified, then from the day of the entering thereof, until such debt, money, or property is paid, at the rate of six per cent, per annum, and no more. 29 Ohio L. 451. This law fixes the rate of interest, but it does not affix a penalty if any person shall receive more than the rate thus fixed. It does not declare a contract for the payment of a greater rate void, although it does, to my apprehension, prohibit the taking of a greater rate. The authorities cited, some of them at least, show that in cases where statutes against usury do not annex any penalty, or do not declare usurious contracts void, courts have declared them void as against positive law.

We agree with counsel that contracts made.against good morals, against public policy, and against positive law, are, as a general rule, void; and it is possible that if there had been no statute in Ohio previous to the one before recited, and we were now called upon for the first time to give that statute a construction, we might say that a contract reserving more than six per cent, interest on the principal sum loaned was void, as being contrary to that statute. But this is not the first time this question has been before the court, and if the construction of any one of our statutes can be considered as settled by judicial decision and practice it is this. 7 Ohio, 83. We have hold that a contract reserving interest at the rate of more than six per cent, per annum is not void, but that upon such contract a plaintiff may recover the principal sum, together with six per cent, interest. As, however, counsel seem so confident that this principle is not in accordance with the general rules of law, it may be well to look back and see what has been the course of legislation in the state upon this subject, and inquire whether the practice of the courts has been such as to carry into effect the legislative intention.

The first law upon this subject, within the territory now constituting the State of Ohio, was enacted by the territorial legislature, and approved November 15, 1799. I say this was the first law upon the subject of interest. True, a law was published by the ^governor and judges on July 14, 1795, declaring the common law of England, and all English statutes in aid of the common law, passed prior to the fourth year of the reign of James I, to be in force in the territory. 1 Chase’s Ohio L. 190. And if this law was adopted in conformity with the authority of the tribunal publishing it, then the English statutes upon the subject of interest and usury were in force here from 1795 to 1799. By the ordinance of 1787, the governor and judges of the Noi’thwestern Territory were authorized to adopt and publish “such laws of the original states” as might be necessary for the well-being of the territory. Beyond this their legislative power did not extend. 1 Chase’s Ohio L. 67. And it might be difficult to maintain that under this authority they would have a right to adopt the English statutes in bulk, because those statutes had thus been adopted in one of the original states. The law of July 14,1799, before referred to, was adopted from Virginia. 1 Chase’s Ohio L. 190. This, however, is a question of mere curiosity, and can be of no practical importance at this late period.

The territorial act of November 15, 1799, “regulating the interest of money,” etc., fixed the rate of interest at six per cent. But it inflicted no penalty for reserving or taking a greater rate; it did not declare any contract made with that view void, nor did it create any forfeiture of the principal sum. The only forfeiture-incurred under that act was the forfeiture of the entire interest. It was expressly provided that the lender might recover the principal sum loaned, after deducting whatever • payments had been made by way interest. 1 Chase’s Ohio L. 217. This statute recognized the principle that a contract might be “ good in part and void in part.” The provisions of this statute, it is believed, were novel, and they are certainly entirely at variance with the provisions of the English statutes, and with the provisions of the pre-existing statutes of the “ original states ” upon the same subject. This difference may be accounted for in the change of opinion upon the propriety of the prohibition of usury. At tho time of the enactment of the statute of Henry VIII, and of the other English statutes, to demand or to receive usury (and all interest was considered usury), was deemed to be highly immoral, if not a deadly sin. Most of the statutes of the or'ginal states were copied from these English statutes, and enacted under the same state of feeling. This state of feeling, too, unquestionably influenced the courts in giving construction to those statutes. But in 1799, as well as since that period, it was and has been a mere question of *poliey whether interest should be regulated by law, and to what extent. ■

This law of 1799 continued in force until December 29, 1804, when it was repealed by another act upon the same subject. This act of 1804 fixes the rate of interest at six per cent, per annum, and provides, that if any person shall demand or receive more than at this rate, “such person shall forfeit the whole amount of the debt on which such illegal interest was charged or received,” the one-half to be paid into the county treasury, and the other half to the informer or the person pi’osecuting. This statute is substantially, if not literally, the same with that of Pennsylvania upon the same subject, and was probably copied from the laws of that state. In the case of Wycoff v. Langbrad, 2 Dallas, 92, decided in 1785, which was an action on a promissory note, to which the defendants pleaded the act of assembly against usury, the Supreme Court of that state held, “that when more than legal interest was included in any note, bond, or specialty, the whole amount could not be sued for and recovered; but the plaintiff was entitled, in such case, to a verdict for the just principal and lawful interest.” The same doctrine is held in a more modern case (12 Serg. & Rawle, 46), and this is considered as a settled rule in Pennsylvania.

Is it strange that when the legislature of Ohio passed a law substantially the same with that of Pennsylvania, that the courts of Ohio should put upon that law the same construction which had been put upon it by the courts of Pennsylvania? It would have been strange if they had done otherwise. Especially when it is remembered that at that early period a great plurality, if not majority,- of the citizens of Ohio, were emigrants from Pennsylvania, and had more frequent and easy intercourse with that state than with any other in the Union.

The courts of this state did put the same construction upon the statute of Ohio, and it is believed there was not, while the act of 1804 continued in force, a single case in which a contract for the payment of more than six per cent, interest was held to be void. On the contrary, in such cases, a plaintiff was allowed to recover “the just principal and lawful interest.” If this was contrary to the legislative intentions, would not the law have been changed ? It was in reference to this course of practice that the court say in Smith v. Parsons, 1 Ohio, 239, in speaking of laws against usury, “should such a law enact, that a lender may receive from a borrower six per cent, interest and no more, and should an after-^contract contain an express promise to pay ten per cent., such a contract, although voluntarily made for the payment of a specific sum of the contract, would be entirely destroyed, and the obligor released from the payment of both principal and interest.

This law of 1804 continued in force twenty years, and was then repealed by the act of January 24, 1824, which has been already recited and which continues still in.force. The act of 1824 is the same with that of 1804, with the exception of the clause of forfeiture. And it would have been strange indeed, if a court which held an usurious contract to be only void in part, under the law of 1804, which contemplated a forfeiture, should hold the whole contract void under the law of 1824, under which there can be no forfeiture. In truth, until the present case arose, the only controversy about the law of 1824 has been, whether it contained any prohibition of usury at all, it being insisted by many that it was only intended to fix the rate of interest where the parties to a contract had not themselves fixed it; and that parties might contract for the payment of any rate of interest they might think proper, which contract would be enforced in the judicial tribunals of the country. This was not the construction put upon the law immediately after its enactment; but the same practice was adopted under it, so far as the parties to a contract were concerned, as under the law of 1804. And such has been in this court, with but little variation, the uniform practice under it until the present time. 7 Ohio, 83*

From the foregoing remarks, it will be seen that from 1804 to the present period, there has been no time in which an individual might not recover the principal sum of money loaned, together with lawful interest, notwithstanding by the terms of the loan he was to have received a greater rate of interest.

But we are now urged to review former decisions, and to give such a construction to the interest law as will make all existing contracts, as well as all that may hereafter be entered into, for the payment of more than six per cent, interest, void. And what reason is urged why this should be done? Not that any injustice is done by the law as hitherto understood and construed, for it has been admitted in argument that the borrower of money at a usurious interest, although at law he might avoid the payment of the whole, yet in conscience would he be bound to repay the principal sum with lawful interest. Our law, then, only compels a man to perform that which, in conscience, he is bound to do. And of *a construction which produces no other effect than this, there certainly ought to be no complaint.

It is argued, however, that upon similar laws the courts of Great Britain and of some of our sister states have decided differently. And it is supposed that those courts would have decided differently upon our own statute. It may be, and probably is so. I would at all times pay great deference to the decisions of the courts of England and of our sister states, but I would not change the construction of a statute which has prevailed for almost forty years, and which operates justly, because originally^a different construction might have been put upon the same statute by a court of some other country. I would not do it even if I believed the original construction to have been wrong; for it would be far better to adhere to a construction thus long persevered in, and which confessedly contributed to abstract justice, but which was technically incorrect, than to make a change after so great a lapse of years. The statute regulating the rate of interest as construed by this court is now well understood. Contracts may have been made with reference to that construction, and which, according to that construction, are valid in part, if not in whole. Adopt the construction contended for by the defendants’ counsel, and the validity of these contracts would be impaired. Not, it is true, by a legislative enactment; that oould not be done (it is prohibited by the constitution), but by a judicial decision of this court, reversing the whole current of its previous decisions upon the same subject for more than thirty years. If there he anything wrong in the law, it is within the legitimate province of the legislature to correct the evil; not, it is true, so far as subsisting contracts are concerned, but so far as contracts hereafter may be made.

Upon the whole, we entertain the opinion that the contract in the ease under consideration is not void as being against the general law of the state upon the subject of interest.

The next and more important question is, whether this contract is void as having been made in violation of the act incorporating the Bank of Chilticothe. That clause in the charter which is supposed to have been violated is in section 20 of the act, and in the following words : “ The said corporation shall not take more than at the rate of six per centum per annum on its loans or discounts.” 3 Chase’s Ohio L. 20, 29. It will be observed that the language here used is substantially the same with that used in the statute regulating interest. By this latter act, all creditors are entitled to interest, “ at the rate of six per cent, per annum, and no *more;” while in the act of incorporation, the phraseology is, “The said corporation shall not take more than at the rate of six per centum per annum,” etc. And it is insisted by the plaintiffs’ counsel, that inasmuch as this court-hold that a contract between individuals, for the payment of more than this rate of interest, is only void as to the excess over and above six per cent., that the same rule shall be applied in the construction of similar contracts made by this corporation. There is certainly much plausibility and no little force in the argument. But there is another question involved in construing a contract made by a coqmration^ and that is the question of capacity of the corporation to make such contracts. There is a great difference between natural persons and corporations. Natural persons have capacity and power to make and enter into any contracts which are not prohibited by law, and will be bound by such contracts. In the absence of any law upon the subject of interest, such persons might legally make contracts for the payment of ten, fifteen, or twenty per cent, interest for the use of money, and at law such contracts must be enforced. Nor would there be any more impropriety in the conduct of a man who should demand an extravagant rate of interest, than in the conduct of him who should demand an extravagant price for his goods and chattels. He might be guilty of a violation of the laws of conscience in taking advantage of the necessities of his neighbor, but would not be guilty of a violation of the laws of the land. True, if the terms of a contract were such as to shock the feelings, a court of equity might relieve against it, but at law it would be obligatory. Still, although such are the principles which preváil with respect to natural persons, the contracts of infants and femes covert ave not in general binding upon them, but are void or voidable. There is a particular class of contracts, however, by which even infants will be bound, and-these are contracts for necessaries. Such are the general rules of law relative to the contracts of natural persons.

But it is otherwise with corporations. A corporation is a body created,by law, composed of individuals united under a common name, and having. succession while it shall exist. It is the creature of the law, and derives all its powers and capacities from the law of its creation. “ The modern doctrine is, to consider corporations as having such powers as are specifically granted by the act of incorporation, or as are necessary for the purpose of carrying into effect the powers expressly granted, and as not having any other. 2 Kent’s Com. 298; 2 East; 2 Cranch, *127; 4 Wheat. 636; 4 Pet. 152; 15 Johns. 358; 5 Conn. 560; 3 Pick. 232.

As a corporation is created by law, it is proper that in all cases where it attempts to act, it should show, by its charter of creation, it has power so to act. Eor a corporation, created for the purposes of constructing a railroad, or of acting as a library association, to carry on banking operations, and to claim to do it under its charter, would be absurd, unless the power so to do was expressly or by implication authorized in its charter. If an agent is restricted by the power received from his principal, if the legislature of the state can not transcend the powers delegated in the constitution, much less can a corporation go beyond the charter by which it exists. There is great propriety in holding corporations to the strictness of the law by which they were created when it is considered that a charter granted to a private company is in the nature of a contract, and can not subsequently be revoked by the power which granted it without a violation of the constitution of the United States, which is the supreme law of the land.

The president, directors, and company of the Bank of Chillieothe, plaintiffs in this suit, were incorporated February 18, 1808; and, by their act of incorporation, they are “ made able and capable, in law, to have, receive, purchase, enjoy, and retain to them and their successors, lands, tenements, hereditaments, goods, chattels,'and effects of what kind, nature, or quality soever, and the same to sell, demise, grant, alien, or dispose of;.to sue and be sued,” etc., and generally to do all acts it may to them appertain-to do, subject nevertheless to the restrictions and limitations in the act subsequently prescribed and declared.” 3 Chase’s Ohio-Ii. 20, 27. In section 15 of the act, it is declared “ that the lands,. tenements, and hereditaments, which it shall be lawful for said corporation to hold, shall be only such as shall be requisite for its accommodation in relation to the convenient transaction of its business; or such as shall have been bona fide mortgaged to it by way of security, or conveyed to it in satisfaction of debts previously contracted in the course of its dealings; or purchased at sales upon judgments which shall have been obtained for such debts; and the said corporation shall not, directly or indirectly, deal ór trade in buying or selling any goods, wares, or merchandise or commodities whatever, except in selling the same when truly pledged to it by way of security for any debt due the said ■corporation; or purchasing the same at sales on judgments which ■shall have been obtained for any debts previously contracted in *the course of its dealings.” And section 20 is as follows: That the said corporation shall not take more than at the rate of six per centum per annum on its loans or discounts.” The continuance of this corporation is limited to January 1,1818, but was ¡afterward extended to January 1, 1843, by the “act to incorporate «certain banks therein named, and to extend the charters of existing incorporated banks,” passed February 23, 1816. 2 Chase’s 'Ohio L. 913. And, by this latter law, this bank, with others, was ¡authorized to take interest at the rate of six per centum per annum, dn advance, upon its loans and discounts, and no more.

Taking this law in its several parts, it empowers this corporation to carry on banking operations, and to “do all acts it may ¡appertain to them to do ” as a banking company within the restrictions prescribed.

It has power to hold land, but it shall be only such and so much ,as is necessary for its accommodation, relative to the convenient ■transaction of its business; or such as may have been mortgaged ■to it to secure, or conveyed to it in satisfaction of a debt, or such ¡as shall have been purchased at sales upon judgments obtained for 'its debts.

It has power to deal in goods; but it is only in soiling such ¡as have been truly pledged to it in security for any debt due, or ■purchasing the same at sales on judgments which shall have been obtained for debts previously contracted in the course of ¡its dealings.

It has power to loan money or to discount bills or notes; but it <can only be done at a rate of interest at or under six per centum per annum, in advance. Beyond this, it has no more power or capacity to go, than it has to. engage in any commercial or manufacturing transaction.

Suppose this corporation should enter into a contract for the purchase of a tract of land, not for its convenience — not for the payment of a debt to it due, but for the purposes of speculation, could it enforce such a contract? A natural person might enforce a similar contract, but this corporation could not, for the simple reason that for the purposes of such a contract it has no existence. It has no power, no capacity.

The same would be the case with respect to a contract relative to goods, not within the terms of its charter.

If it be true that contracts authorized by the charter relative to lands or goods are void, upon what principle shall we apply a different rule as to money contracts? This corporation has power *to loan money, provided it loans it at a rate of interest not exceeding six per cent, interest per annum; but it has no power or capacity to loan money at a rate above and beyond this. And if a contract, as before stated, relative to lands or goods would be void, certainly the unauthorized, the forbidden contract with respect to money must be. That such a contract is void, is fully sustained by the opinion of the Supreme Court of the United States in the case of the Bank of the United States v. Owens and others, 2 Pet. 527.

The pleadings in the case before the court show that here WaS' a loan of money, and a contract for the repayment of the principal sum with interest, at a' greater rate than that authorized by the plaintiffs’ act of incorporation. This loan was effected by the discount of the bill of exchange now in suit. This contract is void, not because the rate of interest is greater than the rate allowed by the general law of the land, but because it is such a contract as the plaintiffs had no capacity or power to make.

In the present state of pleadings, the plaintiffs have no title to recover, but on their motion, leave is given them to amend.