The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1875-11-09
!. state tts,1ry LAWS.

n the tnStttutt0n3 9fSaEL1su unuoA w. 49,
THO plaintiff In error IL one OF those iesutu.
IONS. The 8oth section Of the act ueaases
sts,et every assccsstsen may take. rec1ee, sc.
erye, and charge on any loan or uisSO COUNT
made. or upon abg npte, bill or exchange, or
,ther evidence OF debt, interest 1T the rate
flowed by the laws or tho 81 ate or Terri
ory where the bank is located, and no
more, except that where by the laws OF
my State a different rate is limited ZOE
backs iof issue organized under State laws
he rates SO limited shall be iowea JOE
organized 10 any, such state
under this act. And when-no rate 1s nxed
by the laws OF the State or Territor5 the
bank nag take, receive, or charge rate .uot
exceeding z per centum, and such interest,"
nav be sssen in advance; reckcntbg the days
for " hich the note bill, or other evidence OF
debt has to run. And the kno wingiy taxing,
reserVing, or charging rate OF
interest greater than aforesaid shall oe helq
a nd a6j1dged q forfeiture Of the entire inter.
est which The note, bill, or other evidence 2,
debt carries with it, or which has peen agteelai
to be paid thereon. Aud 10 clse q greater I
rate Of Interest has been paid the person OF
persons paying the same. OF. their legal repre-;
sentatiyes, may recover back IN any action Q,
de5t twice the aaiouat OF fnterestihps paid
fnom The association taking or receiving the
"a me. Provided, that such action ID begun
within two years from The time The us sl
transaction occurred. 1.-THE purchase us
count, Or issle of bona tide bill OF exchange,
payable at another place than. the pace OF
such purchase, discount, or sale at not more
fhan the current rate Of exchange for sight
drafts, Ia addition to the interest, shall not
beconsidered as tsking or receiving greater
rate OF interest ;'''A :. ,4-,a-;,...,,.
The facts OF the case are few and simple.
On the I'd Of September, 1874, 1t was agreed
between. the parties that bearing should
make his pr6missory note to one Deitnan for
1900. ipaga Sic one month from date, and
hat the bank should discount the note for
bearing at the rate or interesrof 10 per cent.
Der anauu. This agreement was carried out.
The bank received the note and paid TO Dear.
ms; the sum Of $1,98f.67. The discount re-.
served and taken was 1888. The rate. Of
interest which the bank was legally author
lied to take was per cent. per annnm. The
excess reserved over that rae was S. so.
Dearipg failed to pay the note at maturity.
The bank thereupon sued him in the Supe-
perior Court Of Buffalo. Heans wered that
the agreement touching the discount was
usuriouss, corrupt, and illegal that it avoided
the note :; and that he was In no wise liable
to the plaintiff. The court sustained this, de-
fence and gave judgment for the defendant.
The decision was approved by the higher
courts. :. - $3.50 - - .....',F.,a.:-
The several provisions of the section to be
considered are as follows:
= First. The rate of interest chargeable by
each. bank is to be that allowed by; the law
or the Suite or Territory where the bank
is situated. 2" 3,t. t..
Second. When, by the laws Of the State
or Terrtory,a different rate is limited for
banks Of issue organized under the local
laws, the rate so limited is allowed for the
national banks. :. g" ,.--.,,,.,,
Third. Where no rate of interest is fixed
by the laws of the State or Territory the
national banks may charge at rate not eX'
ceedipg seven per cent. per aDnum. :
Fourth. Such interest may be reserved or
taken in advance. 49, 90" ~ il.
Fifth. Knowingly reserving, receiving, OF
charging ga rate of interest greater than
aforesaid shall be held and adjudged a for
fixture of the interest which the note, bill, OF
other evidence Of debt carries with it, OF
which has been agreed to be paid thereon
Sirth. If a greater rate has been paid
twice the amount SO paid may be recovered
back, provided suit be brought within two
years from the time the usurious transaction;
occurred. - 80 ~ - -' 49,.
Seaenth. The purchase, discount, or sale
, ir q bill of exchange, payable at another
lace, at not more than the current rate Of
g. ychaage on sight drafts, in addition to the
in terest, shall not be considered as taking OF
re :erving greater rate of interest than that
Del 'mitted. >.
I hese clauses, examined by their own
lich t, seem to Us too clear TO admit Of doubt
But it is eonterded that the phrase ga rate
of Interest greater than aforesaid" as il
stas0 S ia the context, has reference only to
the preceding sentence, which relates to
banks where no rate of interest is fixed by
law. q nd that hence it leaves the conse-
ouence, OF usu'ry, where such rate is fixed,
to he G, Verned wholly by the local law upon
the subj ect.
THIS, in the Slate of New York, would in
all such cases re nder the contract Dulity
and forfeit the debt. Such the Court of APP.
peals held to be the law Of this ease, and aG-
Judged acc ordingll'.
Neither t,f these views can be maintained.
The coIloc ition OF the terms in question
does not era inmate ally require such con-
Viewed in this light the phrase
is as much ap plicsbie to both the foregoing
clauses as to the next preceding one. The
point to be sol ght is the intent of the law
power Tue offence Of usury under
this seclIon is rs great where the local law
does not as whe re it does define the rate oil
interest. The sa me considerations apply in
both cases. Whjv should Congress punish
in enc class of cas- es and, SO far as its action
is concerned, exc npt in the otherf Why
such discrimination, ? The result would be
that in PeDnsylva uia, where the contract
would be void OILY as 10 the unlawful 'ex.
cess, the bank would lose nothing but such
excess, while in New York. under contract
precisely the same, exc ept IS to the identity
of the lender, the entir' dehS would be lost
10 the bank. asi" ". -.
The second proposit> ion-that the State
law, including its penalt les, would apply il
The first proposition be sol lad is equaify uu.
Lenable. Ii the construct ion contended for
were correct the State Law wcnid have no
bearing whatever upon the case. The con-
of the act of 1, s64 is not CUES.
toned. 1t rests on the same principle as the
net creating the Second Bark of the United
States. The reasoning of Sec rotary HaDii-
ton aud of this court in McCl lloch against
Mary land a Wheat, 316) and Os. borne against
The Bank Of the United States % Wheat,
70S) therefore applies. The matt onal banks.
organic ID under the act are instr iments de.
signed to be used to aid the Cover nment In
The administration of an important I'ranch OF
The public SERVICE They are means appro.
pirate to that end. or the degree Of the
necessity which existed for creating them
Congress is the sole judge.
Being such means, brought into exist ence
for this purpose aud intended to be SO en-
ployed, the States can exercise 20 control
over them, nor In any wise affect their opera.
ton, exeeptin 80 far as Congress may seepro-
per to permit.
The power to create carries with 1t the