Fayetteville observer. [volume] (Fayetteville, Tenn.) 1850-1966, 1868-07-09
The Law of Usury.

~ 1850 w IA S0S&4 y
Chancellor Shackleford, of the
Nashville district, a few days since
delivered an important decision
touching the rate of interest legal
ly chargea5le by the national
banks. The following is the SUBJ
stance of the opinion in the case
OF Malone, executor, and the heirs
and creditors of Alexander Fall !:
Under the general laws upon
the subject of usury in this State,
the party loaning at a greater rate
than six per cent, where it is In
cluded in the note, forfeits the ex-
cess over six per cent. Does the
loan to Fall fall within the gene
raj rule of law prohibiting usury,
or is it construed and governed
blythe acts of Congress creating the
institution ? 1t is corporate body
and derives its powers from the
law that gave vitality, and it be-
comes necessary to examine the
law creating the corporation. All
acts within the scope of the pow
ers conferred are valid, and those
prohibited are void. By the third
section of the act of Congress, en-
titled can act to provide nation
al currency, secured by pledge
of United States bonds, and pro-
vide for the circulation and re-
demption thereof" approved June
3, 1864, it is provided that every
association may take, receive, re-
serve and charge on any loan Or
discount made upon any note, bill
of exchange, or evidence of debt,
interest at the rate allowed by the
laws of the State or Territory
where the bank is located, and no
more except where, by the laws of
any State, a different rate is limited
for banks of issue organized in any
such State under this act !; and
where no rate is fixed by the laws
of the State or Territory, the
banks may take, receive, reserve OF
charge a rate not exceeding Z pei
centum, and such interest may be
taken III advance, reckoning the
days for which the note, bill or ev.
idence of debt has to run !; and the
knowingly taking, receiving, re:
serving or charging rate of inte.
rest greater than aforesaid, shall
be held and adjudged forfeiture
of the entire interest which the
notes, bills or other evidences
of debt carries with it, or which
has been agreed to be paid thereon.
By the 53rd section of said act,
it is provided that eff the directors
of any association shall knowingly
violate or knowingly permit any
of the officers, agents or servants
: of the association to violate any OF
the provisions ofsihis act, all the
rights, privileges and franchises
of the association derived from this
act shall be thereby forfeited" -
By the provisions of the 30th Sec
-tion of the act, the association is
expressly prohibited from taking
or reserving a greater rate of inte-
rest than six per cent, that being
the rate of interest allowed in this
State. By the 53rd section, it is
declared forfeiture of the rights
and franchise of the association.
The bank, by their answer, admit
that they retained, when the loan
was made, interest at the rate of
nine per centum. Upon a review
of the authorities, / am satisfied
that the loan of the money by the
Third National Bank was in direct
violation of the act creating the
bank, and that the contract is void,
and that the bank is not entitled
to recover the principal and legal
interest. The object and purposes
of the law was to prevent the TAX
ing of usurious interest, and it
is the duty of the courts to enforce
il. 1t is demanded by every con-
sideration of public policy.
The impeachment farce will