Memphis daily appeal. [volume] (Memphis, Tenn.) 1847-1886, 1870-02-22
IMPORTANT DECISION.
A Case Wherein Usury was Pleaded IS
a Set-oH.
The Court Refuses to Grant ii and
Orders Payment of Mites with
Legal Interest.

n MefCnanLS' National Bank of Mem,
phis VS.. j. II. Waggener, r. Hough and
Henry Laird, No. l22, II. D., and sam
VS.. j. II. Waggener and Horny Laird.
No. I22, T. d.
These causes, by consent Of parties, are
tried together. The defendant, Wagon.
err, having withdrawn his pleas, making
no defense, judgments hive been taken
against hiR and, after ~impanneling a
jury and submitting a part of tho proof
by consent of parties, the jury is dis.
Z charged and the matters OF fact sub
mitted 70 the Court for its determination.
together with the law, as provided by the
code, section 1856.
In the first case, the pllintin declares
upon a promissory note for $500, dated
July 81, 1869, executed by the defendant
Waggener, under the stthe of j. II.
Waggener IL Co, to defendant Hough,
and by him Endorsed to defendant Laird,
and by him to the plaintiff. and due three
months after date, payable at the bank OF
the plaintiff and, in the second case, it
declares upon two promisOry notes, exc
cuted by said Waggoner, i'm like form, to
said Laird, and by him endorsed to the
plaintiff one of said notes being for
5000, dated April q, 1867, at four months.
payable at the bank of the plaintiff. and
The other for 5000, dated June5, 1867, at
five months, and payable at the Metro
RgAAA@A 1-AAAH - 4gAA a.
The necessary demand was made and
notice given, in order to charge the in
dOrsers on each Of said notes. They re-
sist recovery on several grounds as set
forth in their several pleas of NIL de5et.
n~On-assumpsit, payment, set-of, and
usury. To the defense Of set-off. the
plaintiff pleads the pendelcv of another
suit in the Chancery Court, brought bv
said Waggoner TO settle all the matters of
set-Off herein pleaded.
The proof, so far as necessary to be re-
cited, IS substantially as follows Laird
was b accommodation indorser for
Waggener on all said notes, and the
said notes were renewals Of other liabili-
ties Of Waggener to the bank. Waggener,
who had been a stOckholdsr and director
in the bank, had, for a considerable time,
the bank, obtaining money therefrom,
sometimes upon paper sold to the bank,
and sometimes upon paper made express
~ for the purpose, upon all which he be-
liable to the bank. These transac-
tons were sometimes for purposes of re-
newal. Among them are the notes
in these cases sued on. The result
these transactions shows Waggener
indebted to the bank many thousands of
in excess of all usury claimed or
alleged, and many thousands more thar
the amount of these notes. Waggener,
as a witness, states that, in all these trans
actions, excepting one which it is not
TO mention, the bank charged
him interest not less than, but often ex-
ceeding, Z per cent. per annum. Cherry,
the president OF the bank, states,
after a careful examination u the books
Of the bank involving these transactions.
that the legal discount, eKcHdnge, usury
profits on all his TRANSACTIONS with
Jheb bank only amounted 10 ST. 81 95. of
which h usury was 1887 OIL. Waggen-
sr's bill hoes not state the gross amount
DR. rate of interest. The answer of the
bank, given in evidence by the defendant,
TO which the bill is Introductory. is
substantially to the same effect as the tes-
imOny of Cherry before the court. Wag-
present Indebtedness to the bank,
not including usury, the proof shows, is
above this usury On the $1,000
sued on, payable in New York at
our months, the bank and witness Cherry
admit usurY to the extent of S2ll 56, and
on the note for $500 at three months,
o the extent OFFS . so. On the other note
.ued on, no usury is proved. The total
mount of money, therefore, on these two
notes, is SPA VI.
Because of his usury. it is claimed for
he defense, that the said two notes faint
ID thereby, though not expressing the
on their face, are utterly void, so
not even the principal is ~collectable,
nd to support this proposition the act of
congress, giving existence to the bank, is
elied upon. The 50th section Of said act
being an Act to provide a National Cur
ency, oh. lO6. passed. n 1851 provides,
that every association may take, re-
Give, reserve, and charge, on any lOan or
iscount made, or upon any note, etc,
interest at the rate allowed by the laws OF
he State or territory where TIE bank is
Ocated, and no mOre,' etc. "And the
knowingly taking, receiving, reserving,
r charging a rate Of interest greater than
fOresaid, shall be held and adiudged a
)rfeitUre Of the entire interest which the
Ote, bill, or other evidence Of debt car
les with it, or which has been agreed to
q paid thereon" Six per cent. being the
of interest in this State, the two notes
certainly come under the prohibit
above, and are tainted; and there can
e no question, under the law, that the
interest, legal and illegal. is for
by the bank. 1t is further claimed
II the defense, however. that the entire
Otes themselves are illegal and void, be-
ause the contract itself involving the I
Otcs vas prohibited by the act, and be-
the corporation, having only grant
q powers, and those necessarily implied,
ould not make such a contract, it being
IRA UjreS. a vast amount Of learning IS
NG1NN1 eAAA 81 6hNab 1DhAANN DntesD-
shing these general principles, which
indeed, not contrOvertible. But we
look to the entire act and to the
ontent, 10 get The meaning Il intention
f the legislative mind, and, if in these
asses W. lind that IL was not meant or in
ended 90 invalidate as well the principal ,
3 the interest of the notes, then, whilst
he latter must fail, the former must
land. Effect must be given to ali the
'ords of the act, so as 10 make its several
arts consistent and of force. BY declar-
X the forfeiture of the entire interest,
lereforo, it must have been and was
and intended not TO forfeit the
rincipsl, but to allow the recovery of so
luch OF the notes. 1t must be conceded ,
rat the act of Congress, in pursuance Of
he Constitution OF the United States, is F.
ne paramount law, and not to be con-
in pdrt aJdteTiG with the State ,
.atutes, or governed by the rulings Of ,
State courts thereon. Yet, upon gem ,
raj principles, by tine common law. it is
Iually to be conceded, that a contract,
prohibited by the federal act, is
OF, for thar, necessarily void. AS said
efOre, this must be determined by the
aud intentional the act. "Where
ne statute is silent and contains nothing
which the contrary can be inferred,
c~ontrayention Of it is void."-I2 How. a.,
:. 5. Rep. 81. Whatever may be the
ructure of the statute in respect TO pro- {
ibition and penalty, or penalty alone, it S
not to be taken for granted that the [
legislature meant that contracts IN con- [
'aVention of it were to be void, in the I
that they were not to be enforced in
court Of justice. Ibid. The act must ,
sclare or intend that the contract is void. !
he case Of Fletcher, in Sth Wheaton, u. !
Rep. 464, is directly in point. For the =
collation. Of the charter, the remedy must :
applied by the government, and not !
a proceeding like this, between the /.
ank and parties dealing with it. This :
~,asoning applies as we'll to the argument
r the defense, that there was no capac- :
Y in the Bank to make the contract, and :
iat hence it was void. !
The principal OF the two notes tainted :
it'll usuTy, and the principal and interest )
the third one, not SO tainted, are, there r
re, recoverable. =
The remaining question is that ofset-off. c
defendant, Laird, claiming the whole q
Mount of the usurY, on all the transac- a
)ns, TO be a debt due TO Waggener, in /
SITS that, as his accommodation indOrser o
iving the rights of a surety, the same g
Iould be applied, so far AS adequate, TO @
10 notes here sued on. The proposition G
ere a good one il the usury debt and L
Iese notes were the only matters of
edit and debit between the parties.
'aggener, the principal, consenting, {
ode, Sec. $50, withthe right to the Bank, <
)Weyer, to meet such set-off in the same
ay as If made by Waggener. Sec. 1921.
as seen, Waggener owes the Bank an S
mount exceeding the usury very many O
.ousands Of dollars. besides these notes: Il
I'd the latter insists that itmay apply the
sury to the general Indebtedness Of
'aggener as it may see proper to do, the
md being already in its hands Tor charged
standing against Waggener in its