Case Name: The Grand Gulf Bank vs. Richard T. Archer et al.
Court: Mississippi Court of Appeals
Jurisdiction: Mississippi
Decision Date: 1847-01
Citations: 8 S. & M. 151
Docket Number: 
Parties: The Grand Gulf Bank vs. Richard T. Archer et al.
Judges: 
Reporter: Mississippi Reports
Volume: 16
Pages: 151–196

Head Matter:
The Grand Gulf Bank vs. Richard T. Archer et al.
It is now the settled law, that an inquiry into á violation of its charter by a bank or other corporation, can only be had in a direct proceeding, instituted for the purpose, by the government; and not in a collateral way, by individuals.
If, therefore, a bank or other corporation, makes'a contract with individuals, which it is prohibited from making by, or which is contrary to, and in violation of, its charter, the contract is not thereby void, as between the corporation and the other partiesj; nor can they set up in their defence, when sued upon the contract, a want of power in the bank to make it; such de-fence involves the question of violation of charter, and into that the state alone can inquire, and alone can punish it.
If a bank or corporation takes more interest on a contract for a loan of money than by its charter it is authorized to take, or if it is prohibited by its charter from taking more than a specified rate, and it exceeds that rate, the whole contract is not void; the general law of usury which prevails in this state, and which, in case of the taking of usurious interest, avoids only the interest, legal as well as illegal, will apply to a corporation violating the rate of interest fixed by its charter : and thus only the interest, and not the whole contract, wall be avoided ; and this will be the law, whether the rate of interest which the corporation is prohibited from transcending, be less than the interest allowed by the general statute or not; and whether the corporation, in exceeding the rate allowed, transcend the limit allowed by the general statutes of usury or not.
The charter of the Grand Gulf Bank prohibited it from taking more than seven per cent, on a certain class of loans; the general statutes of usury provided that no person should take more than eight dollars for forbearance of one hundred dollars for one year, except on bona fide contracts for loan of money, where, if expressed in writing, ten dollars might be taken ; in either case the penalty of exceeding the rate was a forfeiture of the entire interest; the bank took more than seven per cent, usuriously; it was held, that she thereby only forfeited the interest, and could recover for the principal ; that the charter only altered the^general law of usury, so far as to provide a different rate of interest for the bank, but it did not alter the effect or consequences of violating that rate; and that the penalty for such violation would therefore remain as fixed by the general law, and be a forfeiture merely of the interest;
If a corporation makes a contract, valid in part, and invalid as to the residue for a want of power in the corporation to make the entire contract, even if such question can be collaterally inquired into, the whole contract will not be void. The contract will be valid as to the extent of the power, but void as to the excess.
By the first section of the general statute regulating usury, it was provided that “no person or persons whomsoever, shall take, directly or indirectly, for any contract, bond or note for the payment of money, founded on any bargain, sale or loan of wares and merchandise, goods and chattels, lands and tenements, or any use or occupation thereof, more than eight dollars for the forbearance or giving day of payment of one hundred dollars for one year, and after that rate for a greater or less sum, or for a longer or- shorter time.” For a violation of this statute the penalty was, “ that no interest or premium whatever should be allowed or recovered, but the principal sum only.” By the second section it was provided that “the rate of ten dollars for the forbearance or giving day of payment of one hundred dollars for one year, and after that rate for a greater or less sum, or for a longer or shorter time, may be taken, allowed, and recovered on all contracts, bonds or notes in writing, signed by the debtor for the bona fide loan of money, expressing therein the rate of interest fairly agreed on between the parties, for the use of the money so loaned.” The penalty for violating this statute, was the forfeiture of the interest, and that “ the principal sum only should be recovered.” By the third section, “ the rate of eight dollars for the forbearance or giving day of payment of one hundred dollars for one year, and after that rate for a greater or less sum, or for a longer or shorter time, may be taken, allowed and recovered, on all contracts, bonds, and notes, in writing, signed by the debtor, orders, bills of exchange, and accounts stated, which ascertain the sum due, after the same is due and payable and it also provides for the rate of interest on judgments and decrees. These are all the general statutes on the subject of usury, and were passed in the year 1822. By the law of 1805, upon usury being taken, no interest was recoverable. By the constitution of 1817 it was provided that, prior to the year 1821, parties might make contracts for the loan of money, at any rate of interest, and that the legislature should not interfere before that time. In view of the law of 1822, and the law as it stood previous thereto, it was held to be the true construction of the three sections of the law of 1822, that a contract for the loan of money, where the rate of interest was not reduced to writing, and exceeded eight per cent., was not wholly void, but that the interest reserved merely was forfeited ; that such a contract was as much within the meaning and object of the first two sections of the statute as any other contract, and was embraced by it; and that the third section was intended to apply merely to contracts, where there was no agreement at' all for interest.
Mr. Justice Thacher dissented from the foregoing conclusions, and .held that the case of a contract for the loan of money, where the rate of interest reserved was not expressed in the contract, was not included in the general law of usury; and that the penalty of total forfeiture of the contract, principal and interest, being the penalty prescribed in the common law, was affixed to and governed such contracts; and holding also, that where the charter of a hank fixed the rate of interest to be charged by the bank to a sum less than that allowed by the general law of usury, it took it entirely out of the general law of usury, and that the penalty affixed by that law did not therefore apply to a violation of the special law of the bank, (its charter,) and that therefore the common law penalty of a total forfeiture of the whole contract, principal and interest, was the only penalty for an excessive charge of interest by the bank; and holding also, that where the charter of a bank prohibited its taking more than a certain rate of interest, and it took more than that rate, the whole contract was void, both for principal and interest, for the want of right in the bank to make the contract.
Where a bank in this state, on discounting a note for the makers, took from them, as collateral security, cotton, to be shipped either to the north,.or Liverpool, on account of and at the expense of the makers, and at their risk; and also stipulated that the bank should have the benefit of the domestic exchange between this state and the north, where the cotton, or the sterling bills drawn on England, might be sold; and at the time the discount and agreement were made, the rate of exchange between this state and the north was from three to five per cent, against this state, in specie, and from fifteen to thirty per cent, in Mississippi currency, and the note was discounted in the latter currency, and it was in proof that the bank actually reaped that amount of profit, (that is, from three to five per cent.) from the exchange ; and the question was submitted to the jury on the facts, to say whether the reservation of the domestic exchange by the bank was made usuriously, and as a cover for the taking of more than seven per cent, which was the extent of interest allowed the bank by its charter; or whether it was taken only in the light of compensation, for the trouble of the receipt and sale of the cotton ; and the jury found for the makers of the note, that the reservation was usurious; it was held, that the questions were proper for the consideration of the jury, their verdict was justified by the facts proved, and would not be disturbed by the high court of errors and appeals, on that account.
t In error, from the circuit court of Claiborne county; the Hon. George Coalter, judge.
This was an action of assumpsit, brought in the Claiborne circuit court, by the Grand Gulf Bank, against Richard T. Archer and W. and É. F. Eggleston, upon their promissory note for $11,880, payable four months after date, and dated January 25, 1838, and credited on the 21st February, 1839, by $5955 89.
The defendants pleaded the general issue, payment, and a special plea, the substance of which is, that the note sued upon was given upon an illegal and corrupt agreement, and upon the express consideration that, in addition to the reservation of interest at the rate of seven per cent, taken by the bank at the time of the discount of the note, the defendants should deliver to the bank two hundred bales of cotton, to be sent by the bank, at the cost and charges of the defendants, to a foreign market, there to be sold on account of defendants. And that after the payment by said defendants of all the costs and charges upon said cotton, the bank, in consideration of said loan, should, in addition to the seven per cent, reserved at the time of the discount, receive and fake all the profits which could be made by the sale of the domestic exchange between Grand Gulf and New York, which exchange, it is averred, was then and still is, worth ten per cent, premium. Which agreement, it is averred, was fully carried out and executed, and by'which the said bank knowingly, corruptly and illegally reserved and received, a greater amount of interest upon said note than seven per cent, contrary to the statute, and in violation of the charter and fundamental law of said corporation. And the defendants further aver that, at the time of making said discount and reservation of the domestic exchange, the bank well knew that the same would exceed the rate of seven per cent, discount upon said note.
Upon these pleas issue was taken by the attorneys of the bank.
On the trial the.defendants first offered in evidence the answer of the bank to a bill of discovery filed by them.
The answer was made by John Lindsay, the president of the bank, and states that the bank commenced making advances upon cotton in November, 1837; but that no publication of its intention to do so was made, except in two editorial notices in the Grand Gulf Advertiser. That in most cases the bank advanced from fifty to sixty dollars per bale. That the proceeds of sale in Liverpool, and the premium of exchange between the United States and England, after deducting all charges, expenses, &c. on said cotton, were to be credited upon the note given for the advance. That no agreement, other than that to be inferred from the resolution of the board of directors, and the receipt given by the bank to the person taking the advance, was entered into between the bank and said parties. That the object of the bank in advancing on cotton, was to create a northern fund for the payment of debts owing by her at the north, by discounting notes at Grand Gulf, and receiving payment at the north. The bank intended to appropriate so much of this fund as was necessary, to the discharge of these debts, and to reserve the domestic exchange on the remainder. A resolution of the board of directors is here incorporated into the answer, in which it is stipulated that “ the bank is to have the benefit of exchange between Grand Gulf, and where the bills on England, or the cotton, may be sold.” This resolution, and the terms therein stated, on which the bank would advance upon cotton, were generally understood by those to whom advances were made. When settlements have been made, the bank has always reserved the domestic exchange; but she did not do so as a shift or device to obtain more interest than her charter allowed, but as a compensation for trouble, &c. The answer then goes on to state the manner in which the cotton advanced upon was disposed of by the bank, together with the instructions given to the consignees in England, the course pursued in reference to the sale of exchange on England, &c. The funds arising from the shipments of cotton by the bank, amounted to $624,730 41. She used in payment of debts, $272,664 03; and drew for $16,790 48, at three per cent., and for $335,275 90, at five per cent, premium. The bank paid dividends between February 9, 1838, and January 6, 1839, to the stockholders in New York and Philadelphia, to the amount of $144,708, and received during the same period $130,940 35 on the instalments due on the additional capital stock, which had been subscribed under the supplemental act passed in 1836.
Accompanying the answer is the form of the cotton receipt given to the shippers of cotton, and which contained the contract between the bank and the shippers.
“ COTTON RECEIPT.
“Railroad and Banking Company,
Grand Gulf,
183
“ Received this day of bales of cotton, to be shipped by this company as agent for, and on account of the said to the house of at for which this company has made an advance to the said on note, with joint drawers, payable the day of 183 for the sum of dollars. This company agree to allow to the said the net proceeds for which the sterling bills to be drawn on the credit of said cotton, may be sold in the cities of Philadelphia or New York, including tjhe premium of exchange on Liverpool, and interest on the amount from the date of reception here of advice of the sale of said bills. The said is to pay all charges and expenses of whatsoever kind, and to risk the solvency of the house to whom shipped.”
Mr. Lindsay stated in his answer that, at the time the contract sued on was made, James P..Parker was president of the bank.
The defendants then proved, by several witnesses, that at the time of the discount of the note sued on, and of the beforemen-tioned agreement, the rate of exchange between Grand Gulf and the northern cities was from three to five per cent, against Grand Gulf for specie, and from fifteen to thirty per cent, for Mississippi currency, including Grand Gulf Bank notes; they also proved that the loan to defendants was made by the bank in its own issue, which was at the time the common currency of the country, and was generally received in payment of debts, &c., although it was from fifteen to twenty-five per cent, below specie value, and that a proportionate difference existed in the price of cotton when sold for Mississippi paper, and for specie, or New Orleans currency.
The defendants then proved by Doctor Parker, who was one of the directors of the bank at the time the note sued on was discounted, that it was discounted upon a pledge of cotton, on the terms expressed in the answer of the bank, and the blank cotton receipt attached to said answer. That the bank drew bills on the north upon the proceeds of the cotton pledged to her, to the amount of $350,000, for a part of which they charged in their own issue three per cent., and for a part five per cent, higher than the rate at which they were charged. That the advance of fifty and sixty dollars per bale made by the bank was more than it was understood to be worth. And that the agreement to receive the proceeds of the cotton at the north, and the domestic exchange which might be obtained thereon, was not, so far as he knew, intended as a cover for usury; but that the object was to obtain payment in Philadelphia, and for the bank to use the fund there as her own, by drawing bills thereon, and obtaining the profit, if any, which might be made by the exchange.
The bank then read in evidence, on their behalf, the deposition of Joseph Callender.
Callender states that he was cashier of the Grand Gulf Bank, from February, 1835, till April, 1840. He then relates the manner in which the “ Cotton Books ” were kept by the bank; the mode in which the various lots were marked, so as to designate them: the manner in which the cotton was shipped to New Orleans, and then reshipped to Liverpool; and the way in which the notes discounted by the bank for advances upon cotton were marked, so as to distinguish them from notes discounted in the ordinary course of business. He then testifies, that at the time the bank commenced advancing on cotton, she was indebted to the United States Bank, and to others, to a considerable amount in specie, or specie funds, which funds she had no means of raising, except upon the shipment of cotton; and that the bank was to be at the whole trouble of shipping the cotton, corresponding with the consignees, and remitting the proceeds of sale. That the cotton pledged to the bank was shipped by her in her own name, but on account, and at the risk of the owner; but that it was constantly kept under insurance. He recollects but two instances in which, by mistake, cotton was ever shipped to any house other than that indicated by the owner, when any direction was given; and he states that five per cent, was the highest premium ever demanded or received by the bank for northern exchange. He farther states, that the consideration of the cotton notes were, in each case, an advance made by the bank on cotton pledged, which notes were discounted at the rate of seven per cent., and the proceeds of the cotton were to be credited on the note given for the advance. The cotton was to be shipped by the bank, as agent for and on account of the owner, who was to pay all the expenses and charges upon it. When it was shipped to England the owner was to have the benefit of the foreign exchange. One of the conditions of the discount of cotton notes, agreed to«in many instances, and well understood in all, was, that the bank should have the benefit and profit of the exchange between Mississippi and the north. This was the only compensation she received for her labor and trouble. This exchange was worth fifteen to twenty per cent, premium, but the bank never sold it at more than five per cent. The bank certainly believed that the domestic exchange would be profitable to her, though it was, like all exchanges, liable to fluctuation. Still, she was willing to take the risk, as her compensation for the trouble. The bank was not loaning generally in any other way, at the time she was advancing upon cotton.
The bank then proved that the credit indorsed upon the note sued on, was the net proceeds of the sales of one hundred and ninety-eight bales of cotton, pledged by the defendants to secure the said notes, including the premium of exchange between Philadelphia and Liverpool; and that Callender, the cashier of the bank, attended to receiving, marking and numbering the cotton, conducting the correspondence, &c., and that a special clerk was employed to assist him in the cotton business, at a salary of $1200 per annum.
This was all the testimony offered in the cause.
The plaintiffs then asked the court to give the following instructions to the jury:
1. That unless the jury believe from the evidence in this cause that there was a lending of money, and a reservation of a greater rate of interest, than at the rate of seven per cent, per annum, stipulated to be paid by defendants to plaintiffs, the law is for the plaintiffs, and the jury should find for them, unless they further find that there was a shift or device resorted to by the parties, with the intent and for the purpose of avoiding the law, by which a greater rate of interest than seven per centum was allowed.
,2. That if the jury believe from the evidence, that the plaintiffs agreed to discount the note sued on upon a pledge of cotton, to obtain exchange upon the North, and if they further believe from the evidence, that in discounting the note sued on, the plaintiffs deducted only at the rate of seven per cent, per annum; and if they further believe from the evidence, that it was agreed upon between the parties at the same time, that the proceeds of the cotton, including the exchange between Philadelphia and Liverpool, should be received by the plaintiffs in Philadelphia or New York, and the amount thereof, including said foreign exchange, credited on defendant’s note as payment or part payment thereof; and if they further believe, that the credit was to be given at all events, whether the exchange between Philadelphia and Grand Gulf was for or against Grand Gulf, at the time the proceeds of the cotton were received in Philadelphia; that then and in such case, such arrangement, if made in good faith and not as a cover or device for usury, would not be in violation of their charter or illegal; and in such case they must find for the plaintiffs.
3. If the jury believe from the evidence, that the agreement, on which the note sued upon was discounted, was that plaintiffs should sell the cotton as agent for defendants, and that the proceeds of the cotton pledged, including the foreign exchange, should, so soon as the cotton was sold, be received by plaintiffs in Philadelphia, and the amount credited on the note as pay ment; such agreement would not be illegal, although at the time the cotton was sold, and proceeds received by plaintiffs, the exchange between Philadelphia and Grand Gulf was against Grand Gulf, and said exchange received afterwards by plaintiffs ; unless the jury further believe from the evidence, that this arrangement was not intended as a reasonable- compensation to the plaintiffs in making the shipments of cotton, or as a bona fide mode of payment in Philadelphia of the note sued on, but was resorted to as a cover or device to cover a usurious or illegal agreement between the parties.
4. That if, by the terms of the discount, the plaintiffs only took or agreed to take seven per cent., and if they further stipulated to receive the proceeds of the cotton in payment of the note at the North, and it was a bona fide agreement, and not as a cover for additional interest; that then, although the bank may have received the domestic exchange afterwards, such contract or agreement, if not a cover for usury or illegality, would be valid; and the jury are to judge, from the evidence, whether such was the intent of the parties; and if the jury believe the contract was bona fide, and not a device for the cover of usury, that the plaintiffs agreed to receive the proceeds of the cotton at the North, they would, as a matter of course, be authorized to avail themselves of all the advantages arising from such northern funds, without being guilty of usury.
5. If the jury believe from the evidence, that the parties in this case agreed that cotton should be delivered by the defendants in pledge to the plaintiffs, as security for the money loaned them by the plaintiffs, and that it should be transmitted to England to be sold, and that only the net proceeds of the cotton returned to Philadelphia, including the premium of sterling exchange, should be credited to the debt, such agreement would be valid; and the circumstance of the plaintiffs having realized a profit on the fund in Philadelphia would not affect its validity, unless the jury further believe from the evidence, that the designation of the place of payment was resorted to as. a shift or cover of usury.
All which instructions were given by the court.
The defendants then asked the court to give the jury the following instructions:
1. If the jury believe from the evidence, that the note sued on was given upon a contract and agreement between the plaintiffs and defendants for a loan of money by plaintiffs to defendants, and that it was a part of said contract and agreement of loan, entered into knowingly between the parties, with the intent that the plaintiffs should obtain over and above the rate of seven per cent, discount upon said note, an additional profit and gain beyond said legal interest of seven per cent., to be taken by said plaintiffs out of the sale of bills of exchange upon the proceeds of certain cotton of defendants, to be placed at the North for that purpose; and that said additional profit and gain was a part of the consideration of said contract of loan, knowingly entered into, for the purpose and with the intent of obtaining upon said loan a larger interest and profit than seven per cent, discount per annum; and that said plaintiffs did afterwards, and in pursuance of said contract of loan, knowingly take and receive such additional profit and gain beyond the rate of seven per cent, per annum, such contract of loan is usurious, and in violation of the prohibition contained in the thirteenth section of the charter of said bank.
2. If the jury believe from the evidence, that the note sued on was given in pursuance of a contract between plaintiffs and defendants, for a loan of money from plaintiffs to defendants, and that by said contract, said plaintiffs and defendants knowingly agreed that said plaintiffs should take directly or indirectly a greater degree, of discount and profit than seven per cent, per annum, for and in consideration of said loan; and that said plaintiffs did, in pursuance of said contract, knowingly take a greater discount of interest and profit upon said loan than seven per cent, per annum, such contract is usurious, and in violation of the thirteenth section of plaintiff’s charter.
3. If the jury believe from the evidence, that the note sued on was given upon a usurious consideration, and in violation of the thirteenth section of the charter of the plaintiffs prohibiting them from taking more than seven per cent, per annum, upon loans upon promissory notes payable within twelve months from the time of said loan, then said contract is void, and the jury must find for the defendants.
4. If the jury believe from the evidence, that by the contract reserving the domestic exchange, it was reserved and taken upon the discount of the note sued on as a part of the consideration, and in addition to the seven per cent, reserved in said discount, and with the intent, that they should make a larger and greater profit on said loan than said seven per cent., such reserving and taking was usurious; but if the jury should believe from the evidence, that the contract was bona fide and not used as a cover or device, whereby to take a greater interest than seven per cent., and that the cotton was to be shipped to Liverpool and then sold, and the proceeds returned to Philadelphia or New York, and to be there credited to defendants, that any advantages or profits the plaintiffs might derive from said transaction, on account of the value of the northern funds over that of the south by way of exchange, would not of itself vitiate the Contract, or make it usurious and void.
5. That if the intent of the parties in the contract of loan, was to take directly or indirectly a greater interest and profit upon said loan than seven per cent., such intent was in law corrupt and usurious, and the jury are to judge of the intent from the evidence.
In connection with this last mentioned charge, the plaintiffs asked the court to instruct the jury as follows :
But if the additional profit over seven per cent, arose out of what was received in the sale of bills drawn on the proceeds of cotton agreed to be placed in Philadelphia, and as a credit on the defendants’ note, then it would not be usury, if the agreement to receive such credit and proceeds at the North in payment of the note was bona fide, and not a device to cover a corrupt agreement entered into between the parties to receive more than seven per centum.
All of which charges were given by the court. To which opinion of the court giving the several instructions asked for by the defendants, the plaintiffs excepted.
The jury found a verdict for the defendants. The plaintiifs moved for a new trial, and their motion being overruled, they prosecuted this writ of error.
George S'. Yerger, for plaintiff in error.
It is assumed on the other side that if the bank took more interest than its charter allowed, the contract is wholly void.
1. Because its charter prohibits it from taking more, and it is a violation of its charter to take it.
2. It had no capacity or power to make the contract, reserving more than the interest allowed by its charter, and having no power to make or enforce this contract it is absolutely void.
That, at common law, a corporation has no power, other than those conferred by its charter, either expressly, or by implication, to carry into effect those expressly granted, I do not deny; but, I presume it will not be contended, that the legislature may not pass a general law authorizing corporations thereafter created to exercise certain specified powers or privileges, and if these privileges or powers are not specifically set forth in the charter, the corporation would unquestionably have the power to exercise them. Angel & Ames on Corp. 139 — 142; 19 John. R. 1; 9 Cowen, 437.
It will not be disputed, that if a corporation makes a contract prohibited by the general principles of common law, it is void as to the whole contract, where it is an entire and single act. Bank of the United States v. Owens, 2 Peters, 527. And it is further admitted, that, by the common law, if a corporationhas no power or capacity to make a contract by its act of incorporation, or by some valid statutory enactment applicable to it, such contract so made cannot be enforced.
I lay it down as an incontrovertible principle, that if the legislature gives power by the charter, or by general law, to a corporation to take six per cent, interest, and gives it power to enforce a contract to the extent of the principal only, where it stipulates for more interest than is allowed to it, that the courts cannot say it shall not enforce it to the extent of the principal money, because that will be directly contravening the intention of the legislature. And it cannot be said to have no power to make such contract; for it has power to make all contracts, to the extent limited, if it has the power to enforce them.
I go further, and say the legislature may prohibit a corporation from making certain contracts, and may declare, if they do make them, they shall be valid as to the parties; but that it shall be a cause of forfeiture of the charter. In such case the corporation has power, as between the parties, to make them, although prohibited.
I come now to inquire, 1st. Whether corporations are embraced in the usury law of 1822, and the effect that law would have upon them. And 2d. What alteration or repeal of the law is made by the charter.
It is remarkable that in the many cases, which have been before the courts, in which banks were parties, the eminent judges and lawyers, who argued the cases, never for a moment supposed, that corporations authorized to loan money, were not included in the usury laws. It has uniformly been conceded by the bench and the bar that they were, where more interest has been stipulated for than allowed by the charter. The question always has been, whether the bank had violated the usury law, not the particular provisions of the charter. It was very useless to say the least of it, if the contract was void by the charter, for the courts and lawyers to place it on the general law of usury. An examination of the following cases will show both the court and counsel seem to admit that banks were embraced by usury law, though in these cases the precise point was not raised. Nashville Bank v. Grundy, 1 Yerg. R. 243 ; 2 Cowen’s R. 678; 15 John. R. 355; 8 Leigh’s R. 148; 7i Gill & John. 44; 19 John. R. 508: 12 Pick. R. 586; 1 Dev. R. 100; 11 Conn. R. 487; 1 Verm. R. 399, 430; 9 Mass. R. 49.
The act of 1822 (How. & Hutch. 374) says, that “ no person or persons, shall take directly or indirectly,” &c. more than eight per cent. &c. and if they do, they shall only recover the principal money loaned, but not the interest.
Banks are embraced in it by the word person. 15 John. R. 358, 381; 11 Wheat. R. 412; 12 Peter’s R. 135 ; 3 Peter’s R. 36, 42; Nashville Bank v. Grundy & Hays, 1 Yerger’s R. 243 ; iSlrib-ling v. Bank of ¿he Valley, 5 Rand. 132 ; 13 Conn. R. 249.
Suppose a general law afterwards passed, by which it was declared corporations should be prohibited from taking more than 6 per cent. How far would this be a repeal of the act 1 Surely it does not require argument to prove it only would repeal or modify it, as to the rate of interest. It would not repeal that part of the law, which declares if they take .more, they shall forfeit the interest. See Striblmg v. Bank of the Valley, 5 Rand. 132..
The case in Bank v. Owens, 2 Peters, does not conflict with these cases. In that case there was no law of congress, declaring the consequences of a violation of the charter. It could not be'governed by the state law; because the act of congress was paramount to all state legislation. The powers of the bank and its mode of enforcing them, depended on the charter alone; and as the charter prohibited it from taking more than six per cent, the common law principle, declared it void; and this applies to cases prohibited to individuals, as well as corporations, for all the cases cited by the court in that case, were individual cases.
But it is said the contract is void in this case on the other grounds. It is seriously argued that the bank could not loan on a pledge of cotton, &c. That the bank had capacity to discount, and take the security of cotton or anything else is well settled. See 4th, 6th and 9th sections of the charter. 18 Louisiana Rep. 447; 2 Alabama Rep. 451.
But again I contend there is no usury proved in this case. The stipulation that the bank should receive the domestic exchange, if it were proved'; and if such stipulation is illegal, cannot be enforced; but the contract of loan is good to the extent authorized by law. 2 Alabama Rep. 452.
But what was the contract proved 1 For argument’s sake admit that the bank agreed to give the planter credit for the sale of the sterling bills in New York, from the time of the sale and interest thereon. This amounts to a contract to loan money, and take personal property as security, and credit the proceeds of its sale in New York. Is this usury?
This is a legal banking operation. The bank has power to deal in exchange. It may discount a note payable in New York or London. Why is this not usury? Simply because, when the note falls due the exchange may be against New York, or for it. In the one case, the bank would lose a part of its principal, in the other it would gain; and it is not usury, if part or all of the principal is in hazard. 8 Leigh’s R. 248. Exchanges fluctuate’ daily; it is now in favor of Mississippi; a day, or week, or foreign occurrences, &c. may change it in a week. Andrews v. Pond, 13 Peters R. 76. Suppose then the stipulation in the domestic exchange to be proved, which is not. The bank stipulated' that she would loan the money, take the note, and the debtor agreed that the proceeds of her property sold in New York, should be credited on it.
Suppose, before the cotton was sold, exchange on New York was five, ten, or fifteen per cent, against New York, the contract of the bank would compel it to receive it then. But the bank wanted funds there, and this stipulation was a legal banking operation. 7 Mass. R. 433; 10 lb. 284; 19 John. R. 326.
If it had no power to make the stipulation, the stipulation is illegal; but the contract of loan is good. 10 Peters R. 358 ; 2 Alabama R. 451.
If a contract is susceptible of two constructions, one against law, and the other not, the latter ought always to be adopted and enforced by the court. Archbald v. Thomas, 3 Cowen, 284; 19 John. R. 160.
IS. N. Prentiss, for defendants in error.
Two points arise upon the record. 1st. Did the plaintiffs in the contract for the discount of the note sued on, violate the 13th section of their charter ?
2d. If said contract was in violation of said 13th section, does such violation avoid the whole contract?
1st. Was the contract of discount in violation of the charter ?
The jury found, upon the evidence embraced in the bill of exceptions, that the plaintiffs did make said contract of discount or loan knowingly, corruptly, and with the intent to receive and obtain, in consideration thereof, a larger rate of discount and profit than seven per cent, and that they did, in pursuance of said corrupt and unlawful agreement, take and receive a larger discount and profit than seven per cent, and did in so doing knowingly violate the prohibition contained in said 13th section of their charter.
It is clear that this court will not disturb the verdict, provided the evidence gave the slightest warrant for it. The question was peculiarly one for the jury, and the decisions are numerous in which the courts have laid down the doctrine that they will not interfere with the verdict in such cases where the evidence afforded a reasonable ground for it to stand upon.
It was clearly a question for the jury to say whether this domestic exchange and the other advantages derived from the cotton agreement with defendants, were bona fide intended as mere security for the payment of the loan — a fair compensation for labor and risk of agents — or a cover for usury and the violation of the charter.
The jury found the cotton agreement was a cover and device to obtain more than seven per cent. Had they found otherwise perhaps the court would not have set the verdict aside; but there is not the slightest ground for disturbing the present finding.
As to the right of a jury to find that agreements apparently bona fide are mere covers for usury, see Grimes v. Gooch, 3 B. & Aid. 664; Harris v. Boston, 2 Camp. 348; Lowe v. Waller, 2 Doug. 736; Pratt v. Willey, 1 Esp. 40.
In the case of Andrews v. Pond et al. 13 Pet. 65, it was expressly laid down that it was purely a question for the jury, whether exchange between New York and New Orleans was taken bona fide, or as a cover for usury. To same point, see Beckwith v. Windsor Manufacturing Co. 14 Conn. 594.
Even if the bank was entitled to a reasonable compensation, the jury had a right to decide what was reasonable, and what a cover for the violation of the charter. As to allowance for services, trouble, &c,, in such cases, see Steele v. Whipple, 21 Wend. 103.
2d. If said contract was in violation of the 13th section of the charter of the bank, does it avoid the whole contract?
This case differs from that of The Commercial Bank of Manchester v. Nolan, 7 How. 508. The Bank of Manchester was authorized by a permissive clause of its charter to take the common statutory rate of interest — eight per cent.
The Grand Gulf Bank is prohibited from taking more than seven per cent, by the express provision of the 13th section of its charter. ■
The court decided that the Manchester Bank was regulated by the general law of usury. Now I do not intend to attack that decision : —but I deny that the Grand Gulf Bank is embraced in the general usury law, or in any way affected by its provisions. It has a particular law of its own — different from the general law — contained in its charter, and by which alone it is to be governed. It is excluded by express prohibition from the general law. It must first violate its charter before it can reach the general law regulating interest.
The Grand Gulf Bank has a special law of its own prohibiting it from taking more than seven per cent, discount. It does not invoke the general law of interest in making its loans, because it has a special law of its own ; nor can the consequences of violating the general law be invoked upon the violation of the special law. How then can the general law apply to a case that does not come within its provisions?
I challenge the production of a single case in the United States, where the courts have decided that a contract by a corporation came within or was affected by the general law of usury, where the interest taken or reserved did not exceed the rate prescribed by such general law.
3d. The charter has prohibited this contract, but has prescribed no penalty; the general laws of usury prescribe none; there is no other statute bearing upon it. Here there is a contract prohibited by express law, and no statute prescribing the penalty. The common law then comes in and declares the contract void. It is admitted by the opposing counsel that unless the contract comes within the general usury law, and is regulated by that, it is void on common law principle — being a contract forbidden by law.
The authorities are so numerous on this point that I shall only cite the principal ones.
The case of The Bank of the United States v. Owens, 2 Peters, 527, however much it may be doubted on other points, is conclusive on this, that where no general usury law applies, a contract of loan by a bank at a rate of interest 'prohibited by its charter is wholly void. The case was precisely similar to the one before the court in this respect, and so far, has never been questioned as an authority, though much ingenuity has been exercised in excepting cases from the operation of its rule. I cite the following authorities in support of the principle there laid down. 13 Conn. R. 262 - 3 ; 5 Conn. R. 560; 2 Cowen, 679; 7 Wend. 31; 19 John. R. 1; 8 Cowen, 20; 3 Barn. & Aid. 1-9.
-j 4th. The authorities cited in the case of The Bank of Manchester v. Nolan to show that the illegality of a contract cannot be set up against a corporation, in cases of violation of its charter, are cases where the defence was set up by persons not parties to the illegal contract. In such cases the courts have decided they would not examine collaterally into the question of violation of charter. Thus in the case of Fleckner v. Bank of The United States, 8 Wheat. 3%8, the court decided that the maker of a bona fide note, which had passed by various transfers into the hands of the bank, could not set up usury between the bank and last indorser: the decision would doubtless have been different had the note itself been tainted with usury. So the case of Silver Lake Bank v. North, 4 John. Ch. R. 370, and The Banks v. Poitaux, 3 Rand. 143, and other cases cited.
5th. There is one other view of the application of the general statute of usury.
The first section of the law prescribes the rate of interest “ on any contract, bond or note,” &c., “founded on any bargain, sale or loan of wares and merchandise, goods, chattels, lands and tenements, or any use or occupation thereof,” &c. &c. This section does not apply to loans of money. The next section prescribes the rate of interest for the bona fide loan of money upon contracts, bonds or notes in writing, “expressing therein the rate of interest fairly agreed on,” (fee.
The third section merely fixes the statutory interest which shall be allowed by law upon all contracts, “ after the same are due and payable.” The only general law, then, regulating the rate of interest upon the loan of money, is the second section, and that embraces only cases where the rate of interest is expressed in the written contract. The case before the court is a written contract for the bona fide loan of money, and the rate of the interest agreed to be taken, is not expressed therein. On this account alone, the general statute cannot apply, for there is none applicable to the case.
This may seem a new view of the statutes of usury, but on examination they will be found to bear no other construction.
George 8. Yerger, in reply.
1. Mr. Prentiss says, as the prohibition is express, it differs from one where it is implied : it is consequently not a person, and embraced within the. usury law.
Lord Eldon thinks the splitting of a hair between north and northwest sides rather too refined for judicial action. He says, “ instead of struggling by little circumstances to take cases out of a general principle or rule established, it is more wholesome to struggle not to let little circumstances prevent the application of the general rule.” 6 Yesey, 441. And we are told by high authority that nice and subtle distinctions bring discredit on the administration of the law, create confusion and uncertainty, and should not be countenanced by the courts. 3 Atk. 422; 1 Yesey, Sen. 1 ; 1 Yesey, Jr. 4; 3 Bingham, 331; 5 Bingham, 153; 3 P. Wms. 286.
I agree that the two main propositions asserted by Mr. Pren-tiss are undoubted law. But there are two equally well established principles which are conclusively settled in Nolan’s case.
1st. That when the common law rule making the contract prohibited void in toto is altered by a statute in any particular case, the statutory rule, and not the common law rule, governs.
2d. That if the charter or statute creating the corporation does not furnish the rule in the given case, the existing law must be looked to, to ascertain it.
The whole error of Mr. Prentiss’s argument consists in supposing I contend that if the bank violates its charter, the act is illegal, not because it violates its charter, but because it violates some general statute. I make no such argument. I admit that it is illegal to violate its charter, but I contend if there is no penalty affixed in the charter for its violation, we must look to the general common or statutory law to ascertain the consequences of the violation.
If a corporation or bank is embraced in the general statute, it is an end to the question, because that necessarily provides the rule and measure or law to govern it, except so far as it is modified by subsequent laws or by the charter.
That the usury law applies to corporations, is well settled by all the cases. See Nolan's Case, 7 Howard, 523, 524, 528, 531, 536.
2. Mr. Prentiss argues, the general law allows eight to ten per cent.: if it was governed by this, it Would be no violation to take more than seven, unless more is allowed by the general law. The charter allows seven only, hence he says the general law does not govern.
The argument is wholly fallacious. The statute says, (if banks are in it) No person or bank shall take more than eight per cent — if they do they shall forfeit interest, but recover principal.
Here then are two rules applicable to banks — one is, they are allowed eight per cent. — the other is, if they take more they shall forfeit the interest.
If the legislature pass a subsequent law, that no bank shall take more than seven per cent, in what do they alter the first law — only in regard to the interest — leaving the consequences of violating the law applicable to it in full force.
The charter of the bank prohibits it from taking more than seven per cent — it repealed or modified it in this, leaving the other principle in full force. Stribbling v. Bank of the Valley, 5 Randolph; 13 Conn. Rep. 249; Nolan's Case, 7 Howard, 524, 525, 536, 531.
3. The points decided in Nolan’s case, as appears most clearly and conclusively, and of which there can be no dispute, are as follow:
1. That banks are persons, and as such are embraced in the statute.
2. That banks must be governed by its provisions in. regard to the amount of interest they can take, except when their charters alter it.
3. That banks taking more interest than the statute or their charters allow, are visited by the penalties of this statute, unless allowed in this respect by their charter.
4. That a bank taking more interest than is allowed by law, where the charter does not declare the contract void, are governed by the statute in regard to the consequences of the violation.
I think there is no usury proved: the jury so found, it is true — but a motion for a new trial was made, and if there is no evidence to support it, it will be set aside.
This point is also decided. The bank, when it loaned, intended to take the exchange for its compensation. It made $ 16,000 by the operation, but if five per cent, had been against the state, it would have lost.
It is expressly proved by the evidence of defendant, that this was a bona fide arrangement made to get funds at the East, and that it was not intended for a cover. See 7 Howard, 535, 521.
By Mr. Justice Thacher ; the other judges giving no opinion on the point, whether the contract was usurious or not.

Opinion:
Mr. Justice Clayton
delivered the following opinion :
This case brings up the question so often discussed in this court, as to the consequence of taking more interest by a bank than is allowed by its charter. The decision below was, that no part of the sum loaned, either principal or interest, could be recovered.
I shall enter upon no examination of the facts to show that the jury was justified in finding that the contract was usurious. I shall take it for granted, that the proof establishes the taking of more interest on the part of the bank, by the contract in this case, than the charter allowed. The consequences of such usurious contract, whether all recovery.is prevented, as was decided in the court below, or whether the principal sum may be recovered without any interest, under the provisions of our statute, is another consideration, to which this opinion will be devoted.
It may now be regarded as settled law, that an inquiry into a violation of its charter by a bank or other corporation, can only be had in a direct proceeding, instituted for the purpose by the government; and not in a collateral way, by individuals. This principle has been recognized by the supreme court of the United States, by many of the State courts, and most explicitly on more than one occasion by this court. Fleckner v. Bank United States, 8 Wheat. 388; Vidal v. Girard's Executors, 2 How. S. C. R. 127; 16 Mass. R. 102; 3 Ran. 143; 4 Shepley, 224; Bank v. Hammond, 1 Rich. Law. R. 288 ; Commercial Bank of Manchester v. Nolan, 7 How. 508; Wade v. American Colonization Society, 7 S. & M. 663; Bank of Port Gibson v. Nevitt, 6 S. & M. 513. See Reg. v. Bomlin, 2 Gale & D. cited 5 Har. Dig. 385, tit. Corporation.
In the case last cited, this court was unanimous at least upon that point. In the opinion of the majority, the principle is thus stated: — " Forfeiture or violation of charter cannot be enforced, or set up in defence by any third person, either directly or collaterally, to avoid compliance with the contract." 561. In the dissenting opinion, it is thus laid down: — "The doctrine is well established, that a corporation is not to be deemed dissolved by reason of any misuser or nonuser of its franchises, until the fault has been judicially ascertained and declared, even if the charter declare that in default of fulfilling the conditions, the corporation shall be dissolved. Hence, such a defence could not be set up to an action of assumpsit upon a promissory note." 580. Thus it would seem that with entire unanimity, this court has decided that a violation of charter, or a misuser of franchises by a bank, is no defence to an action upon a promissory note. It follows that the violation of charter by the bank in the contract in this case is to be laid out of view. That is a matter for which it is responsible only to the government which created it. This view extends asnvell to the cotton contract, as to the excess of interest; if either were a breach of charter, it can only be investigated at the instance of the state. For a violation of charter it is responsible only to the state ; for a violation of the general law of usury, it is answerable as any person would be.
Then if an investigation into the violation of charter is precluded in this cause, as a matter with which the defendant has no concern, it remains to ascertain the effect of the general law upon the contract.
It is not now to be doubted, that corporations are subject to the general laws of the land, so far as applicable to them. Louisville Railroad Company v. Litson, 2 How. S. C. R. 127; By the same court, it has been expressly decided, that-banks are within the statute of usury. Thornton v. Bank of Washington, 3 Peters, 42. A long list of cases to the same purport might be added from the state courts. Their charters may create particular exceptions, and exempt them from the operation of certain parts of the law, and from their very nature other portions are inapplicable to them. Yet where the general law may apply, it comprehends them, except so far as the charters take them out of its influence. Then the conclusion is attained, that the general law of usury applies to banks, except so far as it is modified by their charters. This charter does not provide that if the bank takes more than the rate of interest therein provided, the contract shall be avoided. If it does contract for more, we must look to the general law to ascertain the consequence. We have already stated, that the breach of charter is no defence to the action. The charter is its particular law.
The usual construction of the statute of this state in regard to interest and usury, as it stood when this contract was made, was, that on every species of contract of loan, interest at the rate of eight per cent, might be legally contracted for, and ten per cent, might be agreed on as conventional interest for money-loaned, if the agreement were expressed in the written contract. If these rates were exceeded no interest could be recovered, but the principal sum only. In the argument of this cause, however, it is insisted, that this construction is erroneous. That in regard to the loan of money, if there be not a written stipulation for ten per cent, that reservation or taking of more than eight per cent, avoids the whole contract. This result is thus worked out in the argument. The first section of the act, as it is found in Poindexter's Revisal, it is said, provides exclusively for contracts of sale or loan, of other articles than money, and fixes the rate of interest at eight per cent. The second section provides that ten per cent, may be lawfully agreed on, as the rate of interest for loaned money, if inserted in the written agreement; in each of these sections, it is provided, that an excess of the rate of interest prescribed, shall work a forfeiture of all interest, but allows the principal sum to be recovered. As to the third section, the argument says, if it do not relate exclusively to contracts matured, then it must constitute the general law, and the two former sections the exceptions; and by this section, there being no penalty for a breach of it, any such breach must fall under the common law penalty, which was a forfeiture of both principal and interest. These sections stand as 14, 15 and 16, in H. & H. p. 374.
I cannot concur in this view of the statute. Its object clearly was to prescribe a rate of interest in every possible case, and to affix the consequences to be visited on the offender for a violation of its provisions. The first section for the sake of argument, may be conceded to have the limited construction contended for. But suppose on a bona fide loan of money, nine per cent, be agreed on as the rate of interest, but it is not inserted in the written agreement. According to the argument, the whole sum must be lost, though if the rate of interest had been expressed in the agreement, the principal sum and the interest, yea, even ten per cent, if agreed on, might be recovered. An exposition which leads to such results, ought not to be hastily adopted.
I will extract a few rules for the construction of statutes, and proceed to apply them. In construing a statute you must look to the old law — the mischief and the remedy which the legislature meant to apply.
The intention of the statute is to be deduced from a view of the whole, and of every part of it, taken and compared together. It is also a rule that several acts upon the same subject, and relating to the same matter, are to be taken and construed together and compared, because they are considered as having an object in view, and as acting upon one system. And this is the rule, though some of the statutes may have expired, or been repealed, or are not referred to in the other acts. Not that a repealed law has any force, but it may aid in construction. Dwarris, 47. Where a statute is special, but the reason is general, it is to be received in a general sense. A thing which is within the intention of the makers of the statute, is as much within it as if it were within the letter.
In construing acts or statutes, judges are to look at the language of the whole act, and if they find in any particular clause an expression, not so large a'nd extensive in its import as those used in other parts of the act; and upon a view of the whole act, they can collect from the more large and extensive expressions used in other parts, the real intention of the legislature, it is their duty to give effect to the larger expressions." Dwarris on Statutes, 41-48; 1 Kent, 461, 463.
With these rules in view, we will consider the statute in question. The act of 1805 of this State, first introduced the principle, that in case of excess of the rate of interest allowed by law, no interest but the principal sum only should be.recovered. This continued to be the law until 1817, when the constitution provided, " that the general assembly should pass no law impairing the obligation of contracts, prior to the year 1821, on account of the rate of interest fairly agreed in writing between the contracting parties for a bona fide loan of money. But they shall have power to regulate the interest, when no special contract exists in relation thereto." The statute of 1818 carried out this provision, and as much as forty per cent, has been recovered, upon such contracts. Walker's R. 207. Then came the statute of 1822, the same now under consideration. By each and all of these, the policy of this state is plainly manifested and declared, that in every case, the utmost penalty for usury shall be the forfeiture of the interest only, and that the principal shall be recovered. This is admitted in the argument to be the rule, in reference to every species of contract of bargain and sale, or the loan of anything but money ; and the rule for the loan of money too, where the rate of interest is reduced to writing; but if the rate be not inserted in the written agreement, then it is said, that a case of the loan of money is not within either of the first two sections of the statute, and the whole principal and interest must be forfeited.
There is nothing in this act of 1822 to indicate that the whole policy of the state, as exhibited in its previous legislation, was to be reversed in a case of a loan of money, .where the rate of interest was not agreed on in writing, and in no other; and that in such case, an agreement for more than eight per cent, should avoid the whole contract. There could be no possible motive for such distinction. The case is as much within the meaning and object of the statute as any other. Indeed, the main if not the whole purpose of the two first sections, is-to regulate and provide for interest upon money loaned. The provisions of the first are directed against those shifts and devices often resorted to by usurers to evade such laws, and to prevent a sale or loan of any articles but money, as a subterfuge or cover for usury. The bona fide loan of money, spoken of in the second section, was to distinguish that kind of coutract from those which were colorable only.
The enlarged expressions of these statuses may comprehend' the loan of money, where the rate of interest agreed on is not reduced to writing. The greater includes the less. The legal rate of interest in such cases is eight per cent.; it stands on the same footing with all other contracts of loan. Either this is the fact, or such case is not provided for at all — it is a casus omis-sus, wholly out of the law. We cannot think, that in legislating upon this subject, and with the declared intention in the pre amble to regulate the rate of interest, it was the intention of the legislature to omit this large class of contracts. On the contrary it is our opinion, that the first two sections were intended to govern, and do govern every species of contract, in which there was a positive stipulation as to the rate of interest, whether upon a loan of money, or any other thing intended as a shift or device to cover a loan of money. The third section provides for the rate of interest in all cases, in which there is no contract for that purpose, and in those cases only. This construction is the more obvious, because the first two sections provide, that in the event of any contract for more than the legal rate of interest, the principal sum only, but no interest shall be recovered. The third section does not contain this provision, for the reason, that where there was no contract at all for interest, there could be no breach of the law, and consequently no penalty.
This construction of the law has heretofore prevailed in this state. The argument we have just been considering was urged in the case of the Planters Bank v. Snodgrass, 4 How. 616, by the same distinguished counsel who urged it in this case. It did not then prevail. True the opinion of the court turned on another point — that there was no usury — yet the court says very expressly, " that the penalty prescribed by our statute, is the loss of the entire interest, legal as well as usurious. And it is not less a penal law, because it does not provide for the whole debt, or visit the offenders with fine and imprisonment." The chief justice dissented in that case, holding that the transaction was usurious. The case of Forniquet v. West Feliciana Railroad Company, 6 How. 116, next came up. The question there was as to usury by the bank, and evidence was offered in support of the plea, which was ruled but by the court below. The chief justice, in delivering the opinion of the court, said, " the testimony was improperly ruled out, for if more than legal interest was taken, the defendants, to say the least of it, were entitled to an abatement of something, either the whole or part of the interest." But there is no intimation, that the principal was put in jeopardy. That opinion was unanimous. Next came the case of The Commercial Bank of Manchester v. Nolan, 7 How. 508, which underwent elaborate investigation. A majority of the court decided, that if usury existed, it did not avoid the whole contract, but prevented a recovery of any interest. The chief justice held that there was no usury in the transaction, and gave no opinion as to the effect of usury. Lastly, in the case of the Planters Bank v. Sharp, 4 S. & M. 75, the two judges who presided in that cause, concurred in the opinion, that the effect of usury on the part of the bank was to prevent a recovery of the interest, not of the principal. The chief justice yielded his previous impressions of the law, and acquiesced in the former decisions. I think, therefore, the matter may be regarded as res judicata, a question settled and at rest.
But it is said, the usury act can have no influence in this case, because the bank might take more than seven per cent., the amount allowed by its charter, and yet less than eight per cent., and thus not violate the statute against usury. If this were so, and if the defendant could not under these circumstances use it as a defence, and if the punishment of the bank for a violation of its charter, is to be left to the state alone; all this should not lead us to violate a rule of law that has been settled upon great consideration, — namely, that a breach of charter can only be inquired into upon a direct proceeding for the purpose. So far as the objection operates in this instance, it is in favor of the bank.
This point was not involved in the case of the Commercial Bank of Manchester v. Nolan, 7 How. 508, because the rate of interest allowed by that charter was eight per cent., the same with the general law. The case did not call for the consideration of the effect of a difference in the rate of interest between the charter and the general law. The opinion is there stated, that where a bank exceeds the rate of interest allowed by its charter, but does not transcend the general law, the contract is not void. This must be the rule. Where the charter prescribes a less rate of interest, than the general law, the general law is to that extent repealed and modified, as to such bank, and the charter takes the place of the general law. The rule is thus stated, in a case in Yirginia. " The charter of the bank does not repeal the statute against usury expressly, and the repeal of statutes by implication is not favored. If by any reasonable intendment, both statutes can have effect, such construction is given them, and where they are inconsistent in some degree the one last passed repeals the former, to the extent of such inconsistency, and no further." Stribling v. Bank of the Valley, 5 Ran. Any other rule of construction would deal out different measures of justice to different suitors, and prove a practical and melancholy exemplification of the evils of partial legislation.
The question of usury in this case, was a question of fact for the jury, under instructions from the court. If there were any, it probably exceeded eight per cent., so that after all there may be no room for the distinction.
In the charter of the Commercial Bank of Manchester there was no positive prohibition against exceeding the given rate of interest; in this charter there is. Yet the principle there established, that banks are within the general law of usury, protects the contract in this case, as well as in that, from a forfeiture of the principal sum lent. We confined the decision in that case to the facts before us, and therefore the restriction in the language employed. In either case the violation'of charter is not taken into view, but is left to the appropriate action of the state. If the charter had expressly provided that for the taking of more interest than was authorized, the contract should be void, no recovery could be had, because that would have shown an intention to repeal the general usury law, as to this bank.
The question as to the power of the bank to make this contract, may require a few words. Although the authorities are not uniform on this subject, in my view, the question of power of necessity involves the consideration of the breach of charter. To ascertain if the power exists, the charter must be looked to, and if it does not, the attempt to exercise it is a violation of charter, or an usurpation of powers not granted. For this the bank is responsible to the state, but not to those who have dealt with it.' This is .a question with which individuals have no concern. If they deal with a bank, and get all they contract for, and are not disturbed in its enjoyment, it is difficult to see on what ground, they can object a want of power in the bank to have granted it. This is the course of decision in the supreme court of the United States. In regard to the power of a corporation to take certain property upon trust, it thus speaks : " If the trusts be in themselves valid in point of law, it is plain that neither the heir of the testator, nor any other private persons, can have any right to inquire into, or contest the right of the corporation to take the property, or execute the trusts; but this right would belong exclusively to the state in its sovereign capacity, and in its sole discretion, to inquire into, and contest the right of the corporation to take the property." Vidal v. Girard's Exr's. 2 How. S. C. Rep. 191. See also, 8 Wheat. 355.
If the bank exceeds the powers granted to it, or makes contracts, or performs acts not german to the purposes for which it was created, it is certainly responsible to the government. But this of necessity involves the consideration of a breach of charter. If such act violates a general law, the bank is responsible for it, just as an individual would be.
Yet if the defendants be permitted to make the defence in this case, the result is the same. If an individual exceeds a power granted to him, the act is valid to the extent of the power, but void for the excess. See 7 How. 535, and authorities cited. If the contract be not legal, the measure and extent of the illegality must be determined by the law. The statute of usury comprehends the case according to the repeated decisions of this court, and my own deliberate convictions. By that statute the only penalty is a forfeiture of the interest. This is conceded to be the case, if the rate of interest be inserted in the written agreement, provided it do not exceed ten per cent. Nothing short of the express declaration of the legislature, could satisfy me, that it was their object and intention to exact a forfeiture of the whole principal and interest, where the rate agreed on upon a loan of money is not reduced to writing. There is no conceivable reason for such a distinction. The statute authorizes a conventional interest of ten per cent, under certain circumstances; but in the absence of those circumstances it is eight per cent. In either case a violation of the law is subject to the loss of all interest. I do not believe that there is any hiatus or omission in the statute, in regard to this class of contracts.
The charges given in the court below, not being in accordance with these views, the judgment is reversed and the cause remanded for a new trial. If on such trial the jury-should find, that the bank by its contract was to receive,. without putting the principal or any part of it to hazard, more than the rate of interest allowed by its charter, which in this instance took the place of the general law, as above shown, then they will be 'instructed to find for it, only the principal sum lent. But if they should find, that there was no contract for illegal interest, or that in regard to the cotton, no more than a just compensation for labor and trouble bestowed upon it, was stipulated for, and in regard to the exchange, that there was any real hazard, that the bank might receive less than its principal 5 then they should be instructed to find the principal sum with interest.
Judgment reversed, and'new trial granted.
Mr. Chief Justice Sharkey
delivered the following opinion.
This case originated out of a transaction which is commonly denominated a cotton contract, the nature of which is well understood, as all the banks in the state were, for a time, in the habit of making such contracts, and they have also given rise to much litigation between the banks and their debtors. The questions involved are not new in this court. The Grand Gulf Bank made a loan of money to the defendants, and was to receive and ship to-a foreign market, a quantity of cotton, on certain terms agreed on, and apply the proceeds in liquidation of the debt. This contract is said to be tainted with usury, because the bank reserved the domestic exchange over and above the legal rate of discount, by which is meant the exchange between the port of shipment, and the northern cities.
After a very careful examination and comparison, I am un able to perceive any material point in which this case differs from the case of the Commercial Bank of Manchester v. Nolan, reported in 7 How. 508, which grew out of a contract of the same kind. An effort has been made to draw a distinction, but it consists rather in the mode of presenting the questions, than in any difference in the questions themselves. In that case every feature and point was very fully considered by a majority of the court, after having heard arguments of counsel at great length and of uncommon ability. No new lights have been brought to bear on the points then decided, nor have any new questions been raised which could justify the application of a different rule of decision. We are now called on a second time to say whether the case of the Commercial Batik v. Nolan shall stand as authority, or whether it shall be disregarded and a new rule established. On a former occasion I expressed the reasons which induced me to regard this case as having finally settled all the questions decided by it. Planters Bank v. Sharp, 4 S. & M. 75. I then declared my determination to conform to the rule of decision established by the case of the Commercial Bank v. Nolan. I made this declaration after a full consideration, under a conviction prompted by a sense of duty, and I shall adhere to it. The same reasons which then induced me to acquiesce still exist, and the lapse of time has produced others no less pressing. The case of the Commercial Bank v. Nolan, was decided at January term, 1843. It was followed and approved at November term, 1844, in the case of the Planters Bank v. Sharp, and an assurance then given that it would be afterwards adhered to as furnishing the rule of decision. The community therefore had a right to consider the law as finally settled, and many of the transactions of that description were doubtless arranged by the parties in conformity with the construction which had been given to the law. We may well suppose too that much of the litigation which grew out of these contracts, has been brought to a close in the circuit courts in accordance with the decisions of this court. To alter the rule now would be attended by unfortunate, if not mischievous consequences. We should subject the same class of debtors to two different rules, by making the same description of contract valid as to one and void as to another, a course which is not very well calculated to inspire the confidence of the community in the tribunals of justice. We should give a flat denial to the theory that the law is permanent, uniform and universal. After the law has been so long settled and so well understood, I should regard it as a dangerous precedent to depart from it.
Without pretending to discuss the merits of this case, I will remark that a case of usury is not very clearly made out; but for the reasons already stated, I shall not attempt an investigation of that question.
I think the judgment ought to be reversed, and the cause remanded.