The semi-weekly messenger. [volume] (Wilmington, N.C.) 1897-1908, 1898-03-01
:OF INTEREST TO BANKERs
Supreme Court Decision Regarding the
Recovery of Interest Charged At Usuri-
Gus Rates
washington Dispatch.)

The supreme court today, in an
opinion announced by Justice Harlan.
gave a radical construction TO the sec
tons Of the Revised Statutes regulaI-
ing the rate of interest to be charged
at usurious rates. The case at bar
came from Kentucky, where the court
| Of appeals twice found in favor of the
bank involved, the Marion National
bank, OF The sections in is
| sue provided that a bank may charge a
legal rate Of interest allowed by the
laws Of he state in which it is located;
that he charging Of any rate in ex-
cess thereof works a forfeiture Of the
entire amount of interest, and that
twice the amount paid may be recover
| ed by the person paying it. Discussing
/ these sections, the opinion says:
l Interest included in a renewal note,
1 or evidenced by a separate note. does
not cease thereby to be interest within
the meaning Of the section and become
principal, so as to escape the forfeiture
declared for knowingly taking. receiv-
ing, reserving, or contracting an lille
gal rate of interest.
If the bank sues upon the note. bill
or other evidence Of debt held by it, the
| debtor may insist that the entire inter
est. legal and usurious. included in
written obligation and agreed to be
| paid, but which has not been actually
| paid, shall be either credited on the
note or eliminated from it, and judg-
ment given Only for the original princi-
| pal debt, with Interest at the legal rate
from the commencement of the suit.
THE forfeiture declared by the stat
ute is not waive by giving a renewal
note, in which is included the usurious
interest No matter how many renew
ais may be made, if the bank has
| charged a greater rate Of interest than
the law allows, it must, if the forfeit
ure clause of the statute be relied on,
and the matter is thus brought to the
attention Cd the court, lose the entire
interest which the note carries or
| which has been agreed to be paid By
no other construction of the statute a
effect be given to the clause fOrfeiting
the entire interest which the note, bill,
or other evidence of debt carries, or
which was agreed to be paid, but which
has not been actually paid.
1T is said that within the meaning of
the statute, interest is paid when it
in inclOsed in q renewal note; so that
when suit is brought upon the last note
calling for interest from it's date, only
the interest accruing on the apparent
principal of that note is subject to for
FIXTURE. We think that the statute can
not be so construed. If interest is paid
simply by including it in a renewal
note, it would follow that as soon as
the uSuriOuS interest agreed to be paid
was included in a renewal note, the
borrower or opligor could sue the lem
der or Obligee and recover back twice
the amount of the interest thus paid,
when he had not, in fact, paid the debt
or any part of the interest as such.
This cannot be a sound Interpretation
of the statute. The words in case the
greater rate of interest has been paid
refer to interest actually paid, as dis
tinguished from interest included in the
note and agreed to be paid
IF, for instance, one executes his
note to a national bank for a named
sum as evidence of a lOan to him of
that amount, to be paid in one year at
10 per cent. interest, such a rate OF in
terest being illegal, and if renewal
notes are executed each year for five
years, without any money being i'm fact
paid by the bOrrOWer-each renewal
note including past interest, legal and
usurious-the sum included in the last
note, in excess of the sum originally
loaned, would be interest which that
note carried or which was agreed to be
paid, and not, as to any part OF 1t, IN
terest paid.
1T is difficult to tell from the record
when there were actual payments OF
usuriOus interest as such. Sometimes
interest is said to nave been paid when
it is evident that it was only included
in a renewal note, but that was not
payment within the meaning of the
statute. Driesbach VS.. National Bank
104 U. S. 52.) If the note when sued or
includes usurious interest, or interest
upon usurious interests, agreed to be
paid, the holder nay elect to remit
such interest, and it cannot then be
aid that usurious interest was paid to
him"
The Judgment of the Kentucky court
of annealS WAS reversed.