Court Opinion

ID: 7889398
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:47:02.418744+00
Date Added: 2024-06-11T16:31:51.650100
License: Public Domain

The opinion of the court was delivered by
JohnstoN, J.:
Under the national-banking act, a national bank cannot charge a higher rate of interest than is allowed by the laws of the state where the bank is located; and if a greater rate of interest is knowingly charged and received, it operates as a forfeiture of the entire interest which the note or other evidence of debt carries with it.
“In case a greater rate of interest has been paid, the person by whom it has been paid, or his legal representatives, may recover back in an action in the nature of an action of debt twice the amount of interest thus paid from the association taking or receiving the same, providing such action is commenced within two years from the time the usurious transaction occurred.” (Rev. Stat. U. S., §5198.)
Rowley asks to have the penalty of these provisions enforced, and by their terms his right of recovery must be measured. The bank, having charged and collected usurious interest, has become liable for double the amount of the illegal interest that was paid. The liability, however, is to the person who paid it. The penalty can only be enforced in the manner and under the circumstances provided in the act of congress, which provides that the right of recovery rests only in “the person by whom it has been paid, or his legal representatives.” Prom the evidence, it appears that Rowley and Groves were joint makers of the note upon which the illegal interest was charged and paid. While the loan was made to Rowley, both of them were liable upon the note, and the bank, at its option, might have brought an action against one or both of them. The court has found that Groves, and not Rowley, paid the illegal interest, and that the payments were made by Groves out of his own money. The money having *398been paid by him, the liability arises in his favor, and no recovery can be had except by him or his legal representatives. The right of recovery is not affected by the fact that Rowley requested Groves to pay the debt and interest. Groves being-jointly liable, and having used his own money in making the payment, it cannot be said that the payment was made by Rowley. It does not appear that Rowley has ever contributed the amount paid by Groves, nor any portion of the same. Under the facts of this case, a clear right of recovery is shown to be in Groves, and as he is nof a party to this-action, he would not be bound by any judgment that was given therein. The right of action is in the person by whom the money is paid, and it has been held, under the same statute, that the joint maker of a note on which illegal interest is charged cannot recover the penalty from the bank, where the illegal interest was paid by the other maker. (Timberlake v. National Bank, 43 Fed. Rep. 231.)
The judgment must therefore be reversed, and the cause remanded, with instructions to enter judgment in favor of the plaintiff in error.
All the Justices concurring.