Delaware gazette. [volume] (Delaware, Ohio) 1855-1886, 1870-10-21
AN TEPoRTAar pEoIgIoN.

tional Bank for usurious interest,"
The decision Is one affecting very ex-
tensfve interests and therefore one of
great importance:
The First National Bank Of Column
bus Is. George Clearinghouse, et- al. in
Delaware Court of Common Pleas.
The plaintiffs case is founded upon
promisory note and is now submitted
to the court upon q demurrer to all the
pleaded by the defendent ex-
cept the ID.
The first and fourth of these pleas,
are substantially the same, and the
demurrer to them raises the interest
ing and important question whether
a note discounted by one of the Ma
tional Banks at a greater rate of inter-
est than is allowed by law, Is valid for
the amount OF money advanced,
against parties who have signed the pa
per as sureties only, having no inter-
est in the lOan7
In the consideration of this question
our attention has been directed to two
classes of authorities
Ist. Those which hold that contracts
made in violation of the law, will not
be enforced in its courts.
I'd. The decisions which have been
made especially in our own courts, up
on contracts made by incorporated
banks for the loan of money at higher
rates of interest than those preserib-
ed by their charters.
we shall avoid confusion by eonsid-
ering separately these two classes of au-
thorities in their application to the ques-
tion submitted. is this contract within
the rule established by the old adjudi-
cations and found in allthe text books,
which declares that agreements pro-
hibited by statutes shall be held void?
There is some conflict in the authori-
- off
rule, arising / apprehend chiefly from
disposition in the courts, in extreme
cases, which are merely y n1dtIfl1 prohibit
tltly1. not allow a man to reap the full
benefit of a contract while refusing to
pay what it is honestly worth.
But the general doctrine that must
now be considered as establ1-hed by
an overwhelming preponderance of
authority, is 'sthat person shall not be
assisted by the law in enforcing a de-
mand originating in q breach Of its
principles or enactments.n Pick. r.
314. II Wheat. r. 25S.
It is not for the benefit of the de-
fendant that the defence is ever allow
ed, bnt from considerations Of public
policy, by which the defendant has the
advantage, in many instances contrary
to the real justice of the case as be-
tween him and the plaintiff. NO court
will lend its aid to man who fOunds
an illegal act" Lord Mansfield in
Holmon as. johnson. Cowp. 343.
1t is not necessary that the prohibitO-
ry enactment should declare contracts
made in violation of it's provisions to
be void-the general rule being that
the prohibited act must be held inval-
id. And it is settled that q penalty i'm
plies a prohibition though no prohibit
tory words in the statute. lid. Hold in
BARTLETT Us. Viner, Garth. 252, & Chief
J. Tindall in De Berquis as. Armis-
bead 10, Bing. 1919
did the Legislature intend to prohibit
the act In the case at bar, we
find it extremely difficult to find argu-
ments in support of the negative of
this proposition. The Bank is author
lied to make contracts for the loan of
money at the rate paid by the State
law (6 per cent ttand no more" II
more is contracted for, the Bank for
feits the whole amount, and if paid,
the forfeiture is double the amount
Can it be fairly claimed that subject to
these forfeitures the Legislature in
tended to allow contracts to be made
at the illegal rates? Ifinstead of max
ing the amount of interest, contracted
or paid, the measure of the penalty,
Congress had provided paid penalty
of say one hundred dollars, ] think it
would hardly be claimed that a loan at
GA6 4AlCEAL LGAkb " ats not QEOn4DAL6Q anu
void. But our attention is directed to
the well recognized rule, that the
whole act must be considered to ascer-
tain the legislative intent, and that
the provision for q forfeiture of the
amount of the interest implies that
there is to be no other forfeiture. And
it is insisted that if this be not the
true construction this provision can
have no effect at all. But this can
scarcely be correct, for without the
provision the usuriOus interest vOlun-
tarily paid could not be recovered
back.
It will be observed that the phras-
ologY employed by the Legislators is
pecpliar-the same as is used in stat
utes defining offenses and which make
usurY a cause for avoiding contracts.
Hthe knowingly taking, reserving, DC,
a greater rate of interest shall be held
and adjudged a forfeiture of the inter
est DC"
Now if the Legislature had intended
only to provide that in the case of a
contract for the payment of illegal in
terest that no interest should be recOV-
cred, and in the case where the illegal
rate had been paid, double the amount
should be recovered back-it is diff
cult to understand why they should
have employed terms so apt to
describe an Illegal, prohibited and
usurious contract.
A forfeiture is the effect, or that
which follows a crime or offense, and
the use of the term here would seem to
imply that Congress regarded the loan
ing of money by the Banks organized
under this act at an Illegal rate of in
terest, as something nearer q crime
than similar transaction by a pri-
vate Individual. And our own SUI
preme court in the case of the
Miami Exporting Co. Us. Clark 18th,
nized this distinction. It was held in
That case that loan made by a Bank
az an illegal rate ofinterest was "taint-
81 81 win fraud and illegality," and void,
DSca1se fraud upon the law under
llIllthe wLilSn the Bank existed. And it will
De oDserVed ca that there was in the char
Ser OF the Bank no provision deelariIIo,
such a loan to be void. but -Sino-1J11 g
restriction as to the rate of Interest to
be charged.
And the same distinction seems to
have been made by the Supreme Court
of the United States in the case of the
Bank OF U. =. 0S. Owens ct. al. I'D Pc
ters $50. which, like the case at bar,
was a suit upon a note against sureties
where illegal interest had been
charged. The statute did not declare
the Illegal contract void, nor did the
case has well argued) place their decis-
ion upon the ground that the contract
was void for want of power-but, as
stated by the judge who delivered the
opinion, because, "such contracts are
void in law on general principles''-
"that no court Of Justice can in its ma
ture be made the hand-maid of iniqui-
typ Courts are made TO carry
into effect the laws Of a country-hoW
can they become auxiliary to the con-
summation of violations of the law -
And this doctrine as applied to actions
like the present upon, and 20 enforce q
prohibited contract (for the defendants
who who interpose these pleas, being
sureties. can only be held by the letter
OF their contract) rests upon the sound-
est principles. These banks are quasi
pupl1c institutions, organized under
national authority with Important and
valuable privileges on the assumption
That they benefit the public as we'll as