Deseret evening news. [volume] (Great Salt Lake City [Utah]) 1867-1920, 1893-05-20
THE UsURY LAWS OF UTAH.
r,on a, Inerican Bantsr, Nay IS.


In Utah there Ia no absolute rate o
interest except that when no rate ha
been agreed upon by the contracting
persons eight per cent is the lega
charge. The law allows any rate o
interest which has been contracted fol
In writing. The National Bank o.
Commerce Of Provo, Utah, was sued
for the recovery OF sums claimed by
the plaintiff to be usurious. Judge
Blackburn, Of the First District Couri
heard the cause and decided against
the tank, holding that according 10 the
ruling OF the United States supreme
Court In National Bank vs.. Johnson,
national banks are restricted from
charging a higher rate OF interest thah
that fixed by the statutes OF ,he
respective states In when he
banks are located; aud where
the statutes OF the state DO moi NIX
rate OF interest, national banks are
limited to charging 7 per cent. Inc
court was undecided, 1t appears, ns 70
whether this "s per cent" OF the Utah
statute could be termed liked rate OF
interest or not. If II were n liked rate,
national banks In Utah could charge
per cent, but hit were not q liked
rate but per cent could DO chargeu;
but as Whitecotton, the plaintiif, hau
been charged mt n higher rate than
either, he was, In any event, entitled
10 recover double the amount OF in'
tercst paid.
II 10 natural, In view OF this
decision, that national banks In
Utah and elsewhere should be
anxious 10 know whether this ruling
will be sustained by higher
court. The Judge himself appears s..
have doubted the correctness OF hie
conclusions. A little time might
therefore be profitably spent In exam
lining this interesting case 10 somewha,
further detail. FRS. OF all, what does
the national banking law say on the
question Of INTEREST," We may sum up
the clause covering that point by stat
ing that q national bank may take
Whatever interest tho local law allows
TO the state and other banks. The
exact words Of the statute upon which
the above case turns are as follows:
"When NO rate IL fixed by the laws OF
the state or territory or district, the
bank may take, receive or charge = rate
not excseding per cent" The Intent
Of this clause was the stone for
to which Judge Blackburn
In adopting the clause rc'
lating to Interest, Congress did not In
tend 10 limit the earning power OF the
national banks and thereby relegalo
them 10 = disAdvantaReous position
com pared To state banking Institutions.
Its unmlstaknbie purpose was To per-
nit tho national banbs 10 contract for
~ high u rate OF interest rs that per
missAble to banks regulated by the
state laws. This principle must not be
overlooked IN an attempt to ind . just
and reasonable application OF the
statute. But Congress was also In
by the moral import Gifts atti.
tude on this question. Under the iu-
fiusncs Of this sentiment IL could not
keep wholly silent where the state
law failed absolutely TO provide
named per cent NJ tho legal rate for
national banks In states and territories |
where the local laws arc silent. We
Ny that liking q separate rate as legal
Interest for national banks was ex-
presaive VI thu moral sense OF Congress |
v hich was not 10 interfere when the
local laws allowed . higher rate or
expressly provided that any rate MAY
DO contracted for. This, at least, 10 |
our view OF the question, and It re-.
mains 70 be seen how far II 10 support
81 BY the courts.
Two Judgments were cited by the
National Bank Of Commerce as sup.
porting its case. They are National |
Bank W Bruhn, ~ Texas $40 page $40
and Kinds " Marmol.jo 80 Gal. 229.
In the latter case Judge Ross said:
1.-THE true Interpretation OF the act Of |
Congress 10, that In those states and
Ierritories having no statute upon the
'ubjsct OF interest the national banks
ire allowed rate not exceeding 7 per
,ont, while In those states having
ltatutes they are authorized TO charge
Ind receive interest at the rate allowed
70 other banks aud individuals. From
his view II follows that inasmuch as
We have In California a statute D o.
viding "that parties may agree In
writing for the pay msnt Of any Interest
md II shall be- allowed according TO the
.erms Of tho agreement until the entry
II Judgment" the national banks are
allowed 10 charge and receive such
rates Of interest ~ may be agreed on"
The ruling In the isxas case Is foun-
led on the same argument that the
rate established by Congress binds u
National bank only where the state
law 10 completely silent. Does She
aw Of Utah make any provisions for
he taking Of Interest by u bank? We
have shown that II does. Tho law says
hat any rate may DO contracted for.
SHALL We not say, then, that whatever
he rate nominated In the contract
hat 10 the fired rate, which the law o,
he state will enforce upon the partiei
% the same? But the plaintiff in tht
'ase under consideration cites the
supreme court Of the United Stalee
n National banks vs.. johnson, In ops
'osition to this conclusion. But
n that case the court upheld
he state law, which provided a
'enalty for charging over Z
Der cent In discounts and
oans by banks. The bank held that
I was u natural person and ms such
anne within the terms Of the New
York statute, which allowed natural
PERSONS to acquire and purchase conl-
nercial paper Mt any rate above 7 per
,ent. The court found no essential