Case Name: William Shunk et al. v. The First National Bank of Galion
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1872-12
Citations: 22 Ohio St. 508
Docket Number: 
Parties: William Shunk et al. v. The First National Bank of Galion.
Judges: White, C. J., and West, J.. concurred. Day, J., did not sit in this case.
Reporter: Ohio State Reports, New Service
Volume: 22
Pages: 508–516

Head Matter:
William Shunk et al. v. The First National Bank of Galion.
1. Under section 30 of the act of Congress of June 3, 1864, commonly called the national currency act, national banks, located in a state where, by the laws thereof, a certain rate of interest is limited for banks of issue organized under state laws, are allowed to take, receive, reserve, and charge interest at the rate so limited, and no more, although a greater rate is allowed by the laws of such state to parties other than such state banks.
2. The provisions of the act of the general assembly of this state, passed May 4, 1869 (G6 Ohio L. 91), viz: “that the parties to any bond, bill, promissory note, or other instrument of writing for the forbearance or payment of money at any future time, may stipulate therein for the payment of interest on the amount of such bond, bill, note, or other such instrument of writing, at any rate not exceeding eight per centum per annum, payable annually,” were not intended to embraco banks of issue organized under state laws, whose powers in relation to taking and charging interest on loans and discounts wore conferred and limited by prior and special enactments.
3. Section 30 of the national currency act provides that “the knowingly taking, receiving, reserving, or charging a rate of interest greater than aforesaid shall be held and adjudged a forfeiture of tho entire interest which tho note, bill, or other evidenoe of debt carries with it, or which has been agreed to be paid thereon.” Held, that, under this provision, such taking or charging a rate of interest greater than six per centum per annum in advance, by a national bank- located in this state, forfeits all interest accruing on such note, bill, or other evidonce of debt, after maturity and before judgment thereon, as well as interest accruing before tho maturity thereof.
Error to the District Court of Cuyahoga county.
Several questions raised in this case have been considered and disposed of in connection with like questions in other cases decided at the present term, and reported in this volume. Reference is made to the fourth proposition of the syllabus in Shinkle et ux. v. The First National Bank of Ripley, also the first proposition in National Bank v. Garlinghouse.
The following statement will be sufficient for an understanding of the other points made in the case and considered in the opinion.
The original judgment was rendered upon a cognovit, in the Court of Common Pleas of Cuyahoga county, on the 23d day of November, 1871, in favor of defendant in error and against plaintiffs in error, for the sum of $2,183.50 and costs, on a note for $2,000, dated October 1, 1870, payable to defendant in error, one year after date, with interest at the rate of eight per cent, from date.
During the same term of the court, the defendants in the action moved the court to vacate the judgment for the reason, among others, that usurious interest had been included therein. Pendiug this motion, the plaintiff in the action entered a remittitur upon the record for the sum of $165.83, being the interest at the rate of eight per cent, from the date to the maturity of said note, aud two per cent, of the interest thereon from its maturity to the date of the judgment. Thereupon the court overruled the motion aud awarded execution on the judgment for the sum of two thousand and seventeen dollars and sixty-seven cents, being the principal of the note and six per cent, interest thereon from its maturity to the date of the judgment.
The defendants excepted to the ruling and judgment of the court and tendered a bill of exceptions, setting out the testimony offered on the hearing of the motion, which was made part of the record; and afterward prosecuted their petition in error in the District Court, which resulted in an affirmance of the judgment below.
This action is prosecuted to reverse the judgment of affirmance rendered in the District Court, and also the original judgment of the Common Pleas.
It is alleged, among other things, that it was error to include in the judgment on said note any interest whatever accruing before the rendition of the judgment.
A. K. Dunn and James Marshman, for plaintiff in error:
1. The bank had no power to make the contract, and was, by statute, prohibited from making it. Secs. 30, 9, 53, of the Banking Law; 2 Kent (2 ed.), 298; 2 Cranch, 127; 4 Wheat. 636; 4 Pet. 152; 15 Johns. 358; 5 Conn. 560; 3 Pick. 232; Bank of Chillicothe v. Swayne et al., 8 Ohio, 257.
2. The contract itself is void by reason of the want of power. Miami Exporting Co. v. Clark, 13 Ohio, 1; Creed v. Commercial Bank of Cincinnati, 11 Ohio, 489; U. S. Bank v. Owens, 2 Pet. 257; Bank of Chillicothe v. Swayne, 8 Ohio, 277; Preble County Bank v. Russell et al., 1 Ohio St. 313; Bank of Wooster v. Stevens et al., 1 Ohio St. 233; Busby v. Finn, Ib. 409; State v. Wash. Soc. Library Co., 11 Ohio, 96.
3. It is also void because it was made in violation of the statutory prohibition. Roll v. Raguet, 4 Ohio, 400; Raguet v. Roll, 7 Ohio, 77; Moore v. Adams & Newkirk, 8 Ohio, 372; Trimble v. Doty, 16 Ohio St. 118; Widoe v. Webb, 20 Ohio St. 431; 14 Mass. 322; 17 Mass. 281; U. S. Bank v. Owens, 2 Pet. 527; Spaulding v. Bank of Muskingum, 12 Ohio, 544; Miami Exporting Co. v. Clark, 13 Ohio, 1; Preble County Bank v. Russell et al., 1 Ohio St. 313; Bank of Wooster v. Stevens, Ib. 233; Union Bank of Massillon v. Bell et al., 14 Ohio St. 200; Cowp. 341; Doty v. Knox County Bank, 16 O. St. 133.
4. The change of the special penalty attached to usurious loans could not enlarge the power of the bank. The power claimed is nowhere expressly given, and is not necessary to carry into effect any power so given. See authorities cited under our first point.
5. Section 8 of the banking law must be construed as limited by the prohibition in section 30.
6. The provision in section 46 of the original act forfeit ing the debt, only declared what the law then was. Preble County Bank v. Russell et al., 1 Ohio St. 321.
7. Eor the rules to be followed in construing statutes, we refer to Sedgwick on Stat: and Const. Law, 242, 243, 247; Dwaris’ Treatise on Statutes, 553, 563.
8. The- act of March 10, 1850, S. & C. 149, and other Ohio statutes, in pari materia, as heretofore construed by this court, although some of them are not now in force, must be considered together in giving effect to any that is in force. See Preble County Bank v. Russell, and other cases cited supra; Sedgwick on Stat. and Const. Law, 247.
H. C. Carhart and Jacob Scroggs, for defendant in error:
I. The general corporate powers of the bank are enumerated in section 8 of the banking law, approved June 3, 1864, and section 30 of that act prescribes the rate of interest that it may receive, reserve, and charge. A construction of these sections is all that is required in this case.
2. The inteut of Congress, as gathered from the whole act, must coutrol. Harris v. Runnels, 12 How. 79; Vining v. Brinker, 14 Ohio St. 331; Wilbur v. Paine, 1 Ohio, 251, 256; McCormick v. Alexander, 2 Ohio, 65, 74.
3. Section 30, imposing a penalty, must be strictly construed ; hence no greater forfeiture than the one named therein can be incurred for the offense there described. Turner v. The State, 1 Ohio St. 422, 424; Bond v. Swearingen, 1 Ohio, 403; McCormick v. Alexander, cited supra.
4. Section 8 gave full power to make loans and discount notes, and in the absence of section 30, the bank could have reserved any rate of interest. Congress, by the latter section, prescribed at once the rate to be allowed and the penalty for contracting for a greater rate; and its intent is made clear beyond all doubt by comparing section 46 of the act of February 25, 1863, with said section 30 of the act of Juno 3, 1864. The former forfeited the entire debt; the latter, the entire interest; and the former was repealed.
But if doubt remain, resort may be had to extraneous matters. State v. McAllister, 11 Ohio, 46-55; 5 Ohio, 358-363. The official history of the legislation of Congress in regard to the national currency, made up of its enactments and of reports made to it by the Comptroller of the Currency under its requirements, demonstrates the intent to leave the principal loaned unaffected by the usury.
Our construction is supported by First National Bank of Whitehall v. Lamb, 57 Barb. 429; 1 Dillon’s C. C. 141; 1 Bankrupt Register, 123, and a case decided by Judge Miller, in the United States Circuit Court for Missouri, reported in Bankers’ Magazine for December, 1870, p. 418.

Opinion:
McIlvaine, J.
Was the plaintiff in the original action entitled to have interest at the rate of six per centum per annum, from the maturity of the note to the date of judgment, included in the judgment?
The First National Bank of Galion was.organ!zed within the State of Ohio, under the act of Congress of June 3, 1864, commonly called the national currency act. The 30th section of this act provides certain rules by which the rate of interest is to be ascertained and fixed, which national banks are allowed to take, receive, reserve, aud charge on loans and discounts made on notes, bills of exchange, or other evidences of debt, and then declares that " the knowingly taking, receiving, reserving, or charging a rate of interest greater than aforesaid, shall be held and adjudged a forfeiture of the entire interest which the note, bill, or other evidence of debt carries with it, or which has been agreed to be paid thereon." According to our understanding of this provision, it is made the duty of the court having jurisdiction of an action brought on a note, bill, or other evidence of debt, discounted by a national bank at a rate of interest greater than that allowed by law, or if an agreement has been made to pay such greater rate of interest thereon, to hold and adjudge the entire interest which the note, bill, or other evidence of debt carries with it, or which has been agreed to be paid thereon, to be forfeited; as well, the interest accruing after maturity and before judgment,, as the interest which accrued before the maturity thereof.
The rate of interest, which the note in this action carried with it, and which was agreed to be paid thereon, was- " eight per cent, from date." Was this rate of interest greater than that allowed to the defendant in error under-the rules established-by section 30 of the currency act?
The section reads as follows:
" That every association may take, receive, reserve, and charge on any loan or discount made upon any note, bill of exchange, or other evidences of debt, interest at the rate-allowed by the laws of the state or territory where the-bank is located, and no more, except that where, by the-' laws of any state, a different rate is limited for banks of issue organized under state laws, the rate so limited shall be allowed for associations organized in any such state under this act, and when no rate is fixed by the laws of the state or territory, the bank may take, receive, reserve,, or charge a rate not exceeding seven per centum, and such interest may be taken in advance, reckoning the days for which the note, bill, or other evidence of debt has to run."
It is quite certain, we think, that the defendant in error was limited, by the provisions of this section, in its right-to take or charge interest on its loans and discounts, either to the rate of interest fixed by the first rule named therein,, or to the rate fixed by the exception to that rule. In other words, it was limited to the rate of interest allowed by the state laws to banks of issue organized under the laws of the state, if the rate so allowed was different from' the general rate allowed by the laws of the state; but if there was-no difference between such rates, or if there was no rate limited for banks of issue organized under state laws, then, and only then, was the defendant in error entitled to take or charge the general rate allowed by the laws of the state.
By the act of the legislature of this state, passed March 21, 1851, known as the free banking act (S. & C. 168), and. also the act of March 9,1850 (S. & C. 149), which contain special provisions for the organization and regulation of banks of issue, and limit their powers in respect to taking •and charging interest on loans and discounts, the maximum rate allowed is fixed at six per centum per annum in advance. Such also was the rule under the act of February 24,1845, known as the State Bank of Ohio act (S. & O. 117), which was in force at the date of the passage of the national currency act. Indeed, the general policy of the state has ever been to limit the rate of interest allowed for banking corporations at six per centum per annum. True, we are not advised in the record of this case whether banks organized under the act of March 21,1851, or under .any other statute, are still engaged in issuing bank paper. But we suppose it matters not, as' that act, at least, is still in force.
Now, from what we have already said, it must follow that national banks located iu this state are limited by the six per ceut. rule thus established by these special enactments, unless the provisions of the first section of the geueral act of May 4, 1869 (66 Ohio L. 91), extend to and embrace banks of issue organized under those special and particular statutes. It provides " that the parties to any bond, bill, promissory note, or other instrument of writing for the forbearance or payment of money at any future time, may stipulate therein for the payment of interest upon the amount of such bond, bill, note, or other instrument of writing, at any rate not exceeding eight per centum per .annum payable annually."
Although the terms of this section are sufficiently comprehensive to include banks of issue among the parties .authorized to stipulate for eight per cent, interest, yet inasmuch as this statute was passed as a substitute for one that clearly did not relate to such banks, and, inasmuch as the provisions of prior statutes specially limiting the rate of interest allowed to such banks were not expressly repealed or modified thereby, we are of opinion that the legislature did not intend to change the rule or enlarge the powers of banking corporations in respect to the taking or charging of inter •est on loans and discounts. In thus holding, we adopt and approve the principle of the rule laid down in Fosdick v. Perrysburg, 14 Ohio St. 472, and other cases, to wit: "That a subsequent statute treating a subject in general terms, and not expressly contradicting the provisions of a prior act, shall not be considered as intended to affect the more particular and positive provisions of the prior act, unless it be absolutely necessary to do so in order to give' its words any meaning."
Our attention has been called to the case of Parks et al. v. First National Bank of Missouri, as reported in the Bankers' Magazine (from July, 1870, to June, 1871), page 416, wherein it is said that the Circuit Court of the United States for Missouri held, in substance, that a national bank located in a state where one rate of interest is allowed by law generally, and another is fixed for banks of issue organized under the state laws, may take, receive, reserve, or charge the greater rate. We can not approve this construction of the 30th section of the national currency act. The clause, "except where by the laws of any state a different rate is limited for banks of issue' organized under state laws, the rate so limited shall be allowed for associations organized in any such state under this act," is not a mere qualification of the preceding phrase "and no more." But, on the contrary, it was intended as an exception to the preceding rule, and as a substitute for such rule in all cases where a national bank is located in a state where a different rate of interest is fixed for local banks, from that allowed generally. We are satisfied that Congress not only intended to place national banks and state banks upon a perfect equality in this respect, but further intended to adopt the policy and views of the people of the several states as expressed by their legislation in regard to the rate of interest to be allowed for banking corporations.
The judgment of the District Court must he reversed, and unless the defendant in error, within thirty days, remit from the judgment of the Court of Common Pleas all in terest included therein, that judgment will also be reversed.
White, C. J., and West, J.. concurred. Day, J., did not sit in this case.