The Anderson intelligencer. [volume] (Anderson Court House, S.C.) 1860-1914, 1875-11-25
Usurlous Interest Decision Of, th
United States Supreme Court.

Usurious Interest Decision Of, the
United States Supreme Court.
The recent decision of the Supreme
Court of the United States, in the case OF
the Farmers and Mechanics National
Bank of Buffalo, N. Y, against Peter @.
Des.ing, makes State Usury laws dead
letter, so far as they nullify the contract
and forfeit the debt where a National
Bank charges what, under the State laws,
is usurious interest. -. .,..,:......
The Farmers and Mechanics Bank
discounted the note of Dearihg for $4,000,
it being agreed that the rate of interest
should be ten per cent. per annum. By
the State law the legal rate of interest is
seven per cent. Dearing failed to pay
the note at maturity. The Bank there
upon sued him in the Superior Court
Dearing answered that the agreement
touching the discount was usurious, cor
rupt and illegal; that it avoided the
note, and that he was in no wise liable
to the plaintiff: The Court sustained
this defence, and the decision was ap-
proved by the higher Courts of the State.
The Bank. appealed. The Supreme
Court of the United States say that the
provisions of the Sd Section of the Ma
tional Bank Act of June 8, 1864, to be
considered are as follows: -.
First. The rate of interest chargeable
by each bank is to be that allowed by
the law of the State or Territory where
the bank,is situated.
Second. When, by the laws of the State
or Territory, a different rate is limited
for banks of Issue organized under the
local laws, the rate so limited is allowed
for the national banks. =
Third Where no rate of interest is
fixed by the laws Of the State or Terrific
ry; the national banks may charge at a
rate not exceeding seven per cent. per
annum.
Fourth. Such interest may be reserved
or taken in advance.
Fifth. Knowingly reserving, receiving,
or charging "a rate of interest greater
than aforesaid shall be held and ajudged
forfeiture of the interest which the note,
bill, or other evidence of debt carries
with it, or which has been agreed to be
paid thereon" -.<e--e.
Si9th Ifa greater rate has been paid;
twice the amount so paid may, be recoy-
cred back; provided suit be brought
within two years from the time the usu-
Iious transaction occurred. -.
Seventh. The purchase, discount, or
sale Of bill of exchange, payable at an
ether place, at not more than the current
rate of exchange on sight drafts, in addi-
ton to the interest, shall not be consider
ed as taking or reserying greater rate of
interest than that permitted.
It was contended by Dearing that the
phrase "a rate of interest greater than
aforesaid" as it stands in the context,
has reference only to the third clause of
the third section of the Bankrupt Act,
which relates to the banks where no rate
OF interest is fixed by law, and that hence
it leaves the consequences Of usury,
where such rate is fixed, to be governed
wholly by the local law uponthe subject.
This, in the State of New York, would
in all such cases render the contract. a
nullity and forfeit the debt. Such the
Court of Appeals held to be the law of
this case, and adjudged accordingly
But the Supreme Court say that this
view cannot be maintained, and that the
'parase is applicable to both the>frst and
ttlird clauses. The second proposition
that the State law, with its penalties,
would apply if the first proposition be
sounds equally untenable. ''The Ma
.tional Banks organized under the act are
instruments designed to be used to aid
the Government in the administration of
All important branch of the public SER
vice. They are means appropriate to
that end Of the degree of necessity
which existed for creating them Congress
is the sole judge. Being such means,
brought into existence for this purpose,
and intended to be so employed, the
States can exercise no control over them,
nor in any wise affect their operation,
except in so far as Congress may see
proper to permit" ~ - 'i''
The Supreme Court in conclusion say :
"In any view that can be taken of the
thirtieth section the power to supple.
'ment it by State legislation is conferred
neither expressly nor by implication
There was reason why the rate of in.
terisst should be governed by the law of
the State where the bank is situated, but
there is none why usury should be visited
with the forfeiture of the entire debt in
one State, and with no penal consequence
whatever in another. This We think,
would be unreasonable and contrary to
the manifest intent of Congress. Where
a statute prescribes a rate of interest, and
simply forbids the taking of more, and
more is contracted for, the contract is
good for what might be lawfully taken,
and void only as to excess. Forfeitures are
not favored in the law. Courts always
incline against them. When either of
two constructions can ibg given to stat
ute, and one of them involves forfeiture,
the other is to be preferred. The plain
tiff below was entitled to recover the
principal Of the note sued upon, less the
amount, of the interest unlawfully re.
served. Whether he was entitled to re-
cover interest upon the amount of. the
principal 80 reduced, after the maturity
of the note, is a point which has not been
argued, and upon which we express no
opinion" = n mJ'.r,' ="
The forfeiture of the principal of the
debt, where usurious interest is charged,
is. the chief penalty relied. upon by the
States to prevent the charging of high
er rate than the legal rate of interest,
and this forfeiture, under the decision we
have noticed, is>illegal and cannot be
enforced. This, we presume, will practi-
cally end the futile efforts of the States
to regulate the price of money.-Ne'0s
and Courier. ~
Nor AFRAID OF THE DEvIL.-A col
ored man named Nelson is owing a
butcher on Beaubien street, five or six
dollars, and after trying in vain to collect
the money the butcher and friend put
their heads torether the other night and