Court Opinion

ID: 3884229
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:14:44.248721+00
Date Added: 2024-06-11T13:55:30.612495
License: Public Domain

The following opinion was written by the late Mr. Justice Fraser and concurred in by the Chief Justice and myself. I now adopt it as my opinion in the case:
This was an action to foreclose a mortgage. The defendant set up usury.
The facts, in brief, are: Miss Heyward, the defendant, sent her brother, who was her agent, to the plaintiff Bank to borrow money. The agent negotiated the loan with Mr. Brown, the president of the Bank, who was fully authorized by his Bank to make loans. The contract between Mr. Heyward and Mr. Brown, the president of the Bank, and also a director of the Bank, was that Miss Heyward should pay eight per cent. to the Bank and two per cent. to Brown, personally. This loan went on for years. The eight per cent. was paid to a clerk of the Bank and the two per cent. was paid to the president. These two were to run with the life of the loan. Was it usury? The trial Court held that it was not usury. We think it was usury.
In Mayfield v. Mortgage Co., 104 S.C. 157, 159;88 S.E., 372, we find:
"(a) When a Court is probing a contract for unlawfulness, the mere name by which it is called does not work an estoppel. It is the substance, and not the name, that governs. There are some cases in this State that have not stated the true test of usury. It does not change the practical result to come back to the true rule, but it tends to confusion to call things by the wrong name. People have the right to make any contract the law does not forbid. A contract may work a hardship on one of the contracting parties; but, unless the law forbids the contract, the Courts of Law must enforce it. People must take care of themselves, or the Legislature must protect them by making the contract unlawful.
"When a litigant goes into a Court of Equity, the Court *Page 210 
may refuse its aid to enforce an unconscionable demand. `He who seeks equity must do equity.' Neither the Court of Equity nor the Court of Law has the right to take money or any kind of property from one and give it to another, except in obedience to some law. There is no law that forbids or penalizes the charging of an unreasonable commission or an unreasonable fee. An unconscionable commission or fee being paid, there is no remedy at law or in equity. The Courts have, however, the right to uncover the hidden unlawfulness of a contract and declare its true character. A sum of money retained or paid in an attempt to evade the law against usury may be declared to be in fact usurious interest; and, when it is adjudged to be usurious interest then the law against usurious interest applies, and should be enforced. The practical result is not changed, but it is well to give logical and lawful names to the matters with which we deal. The question for the Court is, was the payment of this fee a cloak to hide usurious interest? If so, the penalty of usury attaches to the transaction. * * *
"Voluntary payment.
"The mere fact that a payment is made voluntarily is not sufficient, because any one may pay usurious interest voluntarily and then bring suit for and recover it. No effective circumstances accompanying this voluntary payment have been relied upon by appellant."
It does not need the citation of authority to show that a principal is responsible for the tortious acts of his agent, performed within the scope of his authority. The principal is responsible for the unlawful manner in which the agent does an authorized act. It makes no difference by what name a thing may be called, when we are uncovering a violation of the law, but what is its nature. It makes no difference that two checks were made instead of one. In theMayfield Case the fee was so large as to indicate that it was not intended as a fee, only a cloak for usury. In that case there was a basis for the charge of a fee. Here the plaintiff *Page 211 
did not do the law the reverence to even claim that there was a basis of service for which two per cent. was charged. But the contract was that the two per cent. was to continue during the life of the loan. The contract was that the president and a clerk in the Bank should receive ten per cent. for the loan, during the life of the loan, and is usurious. We have seen that even though the payment was voluntarily made, it is immaterial.
If this case is affirmed, the statutes against usury are dead. Any money-lending concern can employ a loan agent who will charge for himself unlimited usury, and no one can show that behind closed doors the money-lender himself not only got his legal eight per cent., but another eight per cent. too.
MR. CHIEF JUSTICE GARY concurs.
MR. FEATHERSTONE, Circuit Judge: I concur in the result of the opinions of the Chief Justice and Mr. Justice Watts, and think the judgment of the Circuit Court ought to be reversed for the following reasons:
The loan was made by the Bank through its president, Mr. Brown, Miss Heyward agreeing to pay eight per cent. to the Bank and two per cent. to the president of the Bank.
The record shows that no other officer of the Bank had anything to do with making the contract. In so far as the transaction was concerned, the president was the Bank and his knowledge must be imputed to the Bank.
The general rule beyond doubt is that notice to the agent is notice to his principal, and this rule is probably more stringent in the case of corporations than natural persons.
To this rule there are some well-defined exceptions, but we are concerned with the facts in the present case, which, in my opinion, do not place it within any of the exceptions to the general rule. *Page 212 
The Circuit Judge relied upon some South Carolina cases, which do not seem to me to control.
In Akers v. Rowan, 33 S.C. 451; 12 S.E., 165; 10 L.R.A., 705, it was sought to charge the bank with the knowledge of Col. Sloan, one of its directors and its attorney, which knowledge he had obtained while acting as attorney for one Robbins, which the Court said could not be done. Col. Sloan was not acting for the bank, and the Court said he could not have imparted the information without a breach of duty to his client.
In Rapley v. Klugh, 40 S.C. 150; 18 S.E., 680, the Court held that the knowledge of the president acquired in the purchase of land conveyed to the corporation, and afterwards conveyed by it to the president and another, must be imputed to the grantees of the bank.
In Knobelock v. Bank, 50 S.C. 259; 27 S.E., 962, Jacob Small was president of the bank and committed a breach of trust, drawing out certain funds, which were on deposit in his name as Trustee, and it was sought to hold the bank responsible. The Court, speaking through Mr. Justice Jones, said:
"The seventh exception alleges error in the refusal to charge plaintiff's eighth request to charge. This request to charge, as we understand it, was that if Small dealt with the bank as to this deposit ostensibly as a Trustee, but secretly as an individual, his knowledge of his own fraudulent intent, with reference to this deposit is imputable to the bank of which he was president. We are unable to see the merit of this distinction. The question was not whether Small was acting for himself as trustee, or for himself as an individual, but whether, in the transaction of drawing out the deposit, he was in any way acting for the bank. Knowledge of Small's fraudulent intent with reference to the deposit was not imputable to the bank, unless, in the particular transaction of paying out and receiving the deposited money, Small acted for the bank." *Page 213 
Again, Mr. Justice Jones said:
"`That in order to charge a bank with notice of the facts of which its president or other officer has knowledge in reference to a transaction, he must have acted in the transaction on behalf of the bank,' to which the Judge added, `if he was acting either wholly or partially for the bank.' When, therefore, he qualified the request under consideration, he meant to correct it in the same particular. The expression, `knowledge of an agent of a corporation or other principal, while engaged in a fraud for his own benefit,' without explanation, might have been supposed by the jury not to exclude any participation by the principal in the profits of the fraud; hence the Judge, to avoid such impression, added the qualifying words, thereby making it clear to the jury that knowledge of an agent while engaged in a fraud for his own benefit, in which the principal is not in any way a participant, cannot be imputed to the principal. Participation by the principal in the fruits of the agent's fraud is not the test whether the agent's knowledge is imputable to the principal, but it affords evidence on the question whether the agent in the fraudulent transaction was acting within the scope of his agency previously authorized or subsequently ratified, which is the test."
A careful reading of the entire opinion in the KnobelockCase will reveal that it is not controlling in the case now under consideration.
In none of the cases decided by our Court has it been held that the notice of the agent must not be imputed to the principal where he was acting solely for the principal with reference to the transaction in which the knowledge was obtained.
In 2 Pomeroy's Equity (4th Ed.), § 675, the author says:
"The Courts have carefully confined the operation of this exception to the condition described where a presumption *Page 214 
necessarily arises that the agent did not disclose the real facts to his principal, because he was committing such an independent fraud that concealment was essential to its perpetration; it has never been extended beyond these circumstances. It follows, therefore, that every fraud of an agent in the course of his employment, and in the very same transaction, does not fall within this exception; and, most emphatically, it does not apply when the agent's fraud consists merely in his concealment of material facts within his own knowledge from his principal."
Again, in Section 676, the same author says:
"True Rationale of the Rule — Based Wholly Upon Policyand Expediency. — The rule of constructive notice through agent to principal, like the doctrine of constructive notice in general, must find its ultimate foundation and only support in motives of policy and expediency. It will not aid us in the least to inquire whether it should be derived from the notion that the agent is identical with the principal — is the principal's alter ego — or from the notion that the principal cannot be allowed to acquire and retain a benefit through means of an act or proceeding which his agent knew to be wrong. The true rationale is, as I have already shown, that the agent's knowledge of material facts — not necessarily of the ultimate facts — or what the law assumes to be his knowledge, must always, from considerations of expediency be regarded and treated as the principal's knowledge; otherwise the business affairs of society could not be safely transacted. Whenever the knowledge of the agent is actual — that is, whenever he has obtained actual information of certain facts, and has, therefore, received actual notice — this imputation of his knowledge to the principal is evident and reasonable. Whenever the agent's knowledge of certain facts facts exists only in contemplation of law — that is, when he has received a constructive notice — the imputation thereof to the principal is no less reasonable and clear. If, under any circumstances, a party, *Page 215 
while dealing for himself, must be treated, in contemplation of law, as one who has acquired certain information, and must be charged with constructive notice thereby, the same result must follow when, under like circumstances, the party is dealing by means of an agent. If that assumed information called constructive notice shall affect a party acting for himself, it should equally affect him acting through an attorney. As the doctrine is thus based entirely on motives of policy, it should never in its application transcend the scope and limits of those motives. Whenever its operation in a given state of facts would produce manifest injustice, the Courts should, if not absolutely compelled to express authority, withhold such operation. A tendency to restrict the doctrine — to confine it within the limits already established — is clearly exhibited by many of the recent decisions. Some of the ablest Judges now on the English bench have even expressed a strong dissent from the doctrine itself, in some of its phrases and applications, especially where a principal is charged with notice of information acquired by his agent in a former transaction, and which such agent is assumed to have remembered. The English cases in which this branch of the rule commonly arises are more frequent, involve a different condition of circumstances, and are consequently much more harsh in their effects, than the analogous class of cases which come before the American Courts."
In McCaskill Co. v. United States, 216 U.S. 514;30 S.Ct., 391; 54 L.Ed., 596, the Court said:
"Undoubtedly a corporation is, in law, a person or entity entirely distinct from its stockholders and officers. It may have interest distinct from theirs. Their interests, it may be conceived, may be adverse to its interest, and hence has arisen against the presumption that their knowledge is its knowledge, the counter presumption that, in transactions with it, when their interest is adverse, their knowledge will not be attributed to it. But while this presumption should *Page 216 
be enforced to protect the corporation, it should not be carried so far as to enable the corporation to become a means of fraud or a means to evade its responsibilities. A growing tendency is, therefore, exhibited in the Courts to look beyond the corporate form to the purpose of it, and to the officers who are identified with that purpose. Illustrations are given of this in Cook on Corporations, § 663, 664, and 727. The principle was enforced in this Court in SimmonsCreek Coal Co. v. Doran, 142 U.S. 417; 12 S.Ct., 239;35 L.Ed., 1063. In that case a corporation claimed title to land through a deed of its corporators, one of whom became its president. Of the effect of this the Court said: `Associated together to carry forward a common enterprise, the knowledge or actual notice of all these corporators and the president was the knowledge or notice of the company; and, if constructive notice bound them, it bound the company.'"
In the notes to Brookhouse v. Publishing Co., 2 L.R.A. (N.S.), 993, the annotator says that Mr. Pomeroy probably lays the rule down a little too broadly, but on page 994 he (the annotator) says:
"There is, however, good authority, if not the weight of authority, in favor of a qualification of the foregoing exception so as to exclude therefrom, and, therefore, to bring within the general rule which charges the principal with knowledge possessed by the agent, cases where the officer, though he acts for himself or for a third person, is the sole representative of the corporation in the transaction in question. None of the cases above cited expressly denies, and few of them are necessarily inconsistent with, the existence of such qualification to the exception; and some of them — e. g., English-American Loan  T. Co. v. Hiers, 112 Ga. 823;38 S.E., 103. National Bank v. Feeney, 9 S.D., 550;70 N.W., 874; 46 L.R.A., 732, and Commercial Bank v.Burgwyn, 110 N.C. 267; 14 S.E., 623; 17 L.R.A., 326 — expressly admit the qualification. By reason of such qualification *Page 217 
the application of the exception was denied in Brobstonv. Penniman, 97 Ga. 527; 25 S.E., 350, holding that a bank was chargeable with knowledge of its president and cashier, that the proceeds of the note of a firm, of which they were members, were to be used for their private purposes, and not for the purposes of the firm, they having represented the bank in making the loan and taking the note. So, in Morris v. Georgia Loan, Savings  Banking Co.,109 Ga. 12; 34 S.E., 378; 46 L.R.A., 506, where the cashier of a bank, as an individual, had an interest in a promissory note which he knew was given without consideration, and, as cashier, discounted the note without reference to, or consultation with, any other officer of the bank, it was held that the bank was not a bona fide purchaser of the note, without notice. The case of English-American Loan  T. Co. v.Heirs, supra, was distinguished from the last two cases upon the ground that the person whose knowledge was sought to be charged to the bank was merely a director, and had no active participation in the management of the bank's affairs. In Black Hills National Bank v. Kellogg, 4 S.D., 312;56 N.W., 1071, it was held that the knowledge of the cashier of a bank as to defenses against a promissory note made to him in his individual capacity, and by him transferred to the bank, was chargeable to the bank, it appearing that he transacted the business in behalf of the bank. The case of NationalBank v. Feeney, supra, was subsequently distinguished upon the ground that the cashier in that case was not a member of the discount committee by which the loan was made. In Steam Stonecutter Co. v. Myers,64 Mo. App. 527, the Court said, in effect, that the rule that where an officer of a corporation deals with it in his individual capacity the corporation is not chargeable with his uncommunicated knowledge of facts affecting the validity of the transaction, does not apply where the officer is acting for the corporation as well as himself, and distinguished the case of Merchants' National Bank v. Lovitt, 114 Mo., 520; *Page 218 21 S.W., 825; 35 Am. St. Rep., 770, supra, upon the ground that in that case one officer of the corporation, acting as an individual, dealt with another officer, representing the corporation. The foregoing qualification of the exception is also supported by Witter v. McCarthy, 5 Cal. Unrep., 267; 43 P., 969. Barksdale v. Finney, 14 Grat. (Va.), 338. Smith v. Wilson  B. Savings Bank, 1 Tex. Civ. App. 115;  20 S.W. 1119; and Anderson v. Kinley,90 Iowa, 554; 58 N.W., 909."
Lea v. Mercantile Co., 147 Ala., 421; 42 So., 415; 8 L.R.A. (N.S.), 279; 119 Am. St. Rep., 93, is a strong case in point, and the Court held that the corporation must take knowledge of the information possessed by one Riddle, its agent. Some parts of Judge Tyson's opinion are pertinent here and, to my mind, unanswerable. Thus, on page 98 of 119 Am. St. Rep.; 147 Ala., 428; 42 So., 417:
"It is, in effect, conceded that Riddle did have the fullest notice; but it is insisted that his knowledge was not acquired in the course of his agency for or management of the complaint corporation, and, therefore, his knowledge cannot affect the rights of that company. Conceding the soundness of the insistence in a proper case, it is but a rule of evidence, and has its limitations. Under the facts of this case, the rule has no application, and, therefore, can exert no influence in its decision. Here Riddle was personally interested and concerned in the agreement by which the debt now sought to be collected originated. Besides, he was the sole manager and controller of the creditor company at his will — its alterego — and, it seems, was it sole stockholder but one, the other being a nonresident. Indeed, it is difficult to consider him as other than the creditor corporation itself, so completely were the affairs of it subject to his will and under his immediate control. But in this particular transaction he acted both for himself and for his company. The result of that transaction was the acquisition by him personally of $30,000 of bank stock and the note for his company evidencing *Page 219 
the loan, and of some $90,000 of collateral. All of this he and his company acquired as part of the consideration for making the loan, constituting the debt which his corporation is now attempting to collect by this proceeding. So, then, we must look upon Riddle in two capacities — one as an individual, and the other as manager of his company. Riddle, as an individual, and Riddle, as manager, are found entering into a joint transaction for their joint benefit with the agent of the Piedmont Land  Improvement Company, with full legal knowledge of the details of the organization of that company. In short, he as an individual and as manager co-operated in doing an act for their joint interest. As to this particular act or transaction they became as one person, and the knowledge of the one must be imputed to the other. For Riddle as an individual and Riddle as general manager of his corporation could not do a single act for their mutual benefit from different standpoints. It would be a psychological impossibility for him to have had a different consciousness respecting the affairs of the debtor corporation, as general manager of his company, from what he had individually; and so we hold that as general manager he had the same familiarity with the affairs of the debtor company that he undoubtedly possessed individually. Andersonv. Kinley, 90 Iowa, 554; 58 N.W., 909. Huron Printing B. Co. v. Kittleson, 4 S.D., 520; 57 N.W., 233."
Again, on page 99 of 119 Am. St. Rep.; 147 Ala., 430;42 So., 418, he said:
"Suppose Riddle had acquired the knowledge while manager of his company, in a transaction for it prior to the one here involved, and desired to communicate it to his corporation, to whom would he have communicated it? He was, as we have said, to all intents and purposes the corporation itself. It could be nothing but the sheerest nonsense to say that as agent he should communicate the knowledge to himself as the managing representative of his corporation. Since the corporation could acquire notice in no other way *Page 220 
than by and through its managing head or officer, it will scarcely be doubted that notice to such officer is of necessity notice to it."
See, also, notes to Lilly v. Hamilton Bank, 29 L.R.A. (N.S.), 561, 562, and 563. Also, First National Bank v.Burns, 88 Ohio St., 434; 103 N.E., 93, and notes; 49 L.R.A. (N.S.), 764. These cases hold that the knowledge of agent must be imputed, when he is sole representative. See, also, 2 C.J., 870.
A very illuminating reason for the rule that notice to the agent is notice to the principal is found in Machine Co. v.Furniture Co., 174 Ala., 190; 56 So., 726; L.R.A. 1918B, 924. Said the Court:
"Constructive notice to the principal through the actual knowledge of the agent is not a rule of evidence, but one of substantive law. Given notice to or knowledge of the agent, received while so acting, and the principal is conclusively bound by it; not because he ever knows it in fact, because his actual knowledge is utterly immaterial, but because as to the thing which the agent is doing the agent is in law the principal, and the principal is in law the agent. Their legal identity is complete. Nor can it matter, in this aspect of the rule, whether the agent has or has not, private reasons or interests which make it unlikely or even certain that he will not inform his principal."
In the case at bar, Brown, who made the trade with Miss Heyward, was the Bank. What he knew the Bank knew. If he had wanted to impart the information to the Bank, to whom would he have imparted it? Would he have had to say: "I, as an individual, hereby notify myself, as president, that I have made a usurious contract with Miss Heyward?"
Atlantic Mills v. Ind. Orchard Mills, 147 Mass. 268;17 N.E., 496; 9 Am. St. Rep., 698, is a strong case in point. There Gray was the agent of the corporation sought to be *Page 221 
charged with notice. At page 700 of 9 Am. St. Rep.;147 Mass. 273; 17 N.E., 501, the Court said:
"It is true that no officer of the plaintiff besides Gray knew of the fraudulent origin of these checks; but in the very transaction of receiving them, the plaintiff was represented by Gray, and by him alone, and is bound by his knowledge. * * * There was no transaction whatever between Gray and the plaintiff in respect to the transfer of this money, in which the plaintiff was represented, either in whole or in part, by any other person than by Gray; and, therefore, * * * plaintiff must be deemed to have had knowledge of the true ownership, because, in receiving the funds, it acted solely through Gray's agency. It must be deemed to have known what he knew, and it cannot retain the benefit of his act without accepting the consequences of his knowledge."
Again (at page 707 of 9 Am. St. Rep; 147 Mass. 280;17 N.E., 505):
"It cannot adopt so much of Gray's act as was beneficial, and reject the rest."
So the Bank in the present case is seeking to recover upon a contract made through Brown, its agent, which it cannot do without taking it along with his knowledge.
The case of Curtis, C.  H. Co. v. United States,262 U.S. 216; 43 S.Ct., 570; 67 L.Ed., 956, is a strong case in point. Chief Justice Taft said, page 960 of 67 L.Ed.;262 U.S. 224; 43 S.Ct., 573:
"In the case at bar, Holbrook was the sole agent acting for the company in securing titles to land for it. It is true that the more titles he got the more profit he would make out of the agency, and we may assume that, as between him and the company, in securing fraudulent titles for the company, he was violating his instructions; but he and the company were in a common adventure, and if the company insists on retaining the fruits of that adventure, it must be *Page 222 
charged with the knowledge of the agent through whom the fruits came."
First National Bank v. Burns, 88 Ohio St., 434;103 N.E., 93; 49 L.R.A. (N.S.), 764, is one of the best considered cases to be found on the subject. Nearly all of the cases on the subject are discussed. The syllabus is as follows:
"A corporation can act only through its officers and agents, and the knowledge of such officers and agents in the transaction of the corporation's business within the scope of their authority becomes at once the knowledge of the corporation without any actual or presumptive communication from agent to principal.
"Where the officer is acting both for himself as an individual and as manager of a banking corporation in the purchase of a note from himself by the Bank, and his action in that behalf is adopted and ratified by the Bank, the manager's knowledge as a man is equally his knowledge as manager of the Bank. He cannot unknow as manager what he knows as a man. To hold otherwise would be to promote fraud rather than prevent it." (Headnotes by the Court.)
Some of Judge Wannamaker's remarks are very striking, and they seem to me unanswerable. In 49 L.R.A. (N.S.), to the bottom of page 768 (88 Ohio St., 422;103 N.E., 95), quoting from Mechem on Agency:
"Whatever notice or knowledge, then, reaches the agent under these circumstances (matters within the scope of his authority), in law reaches the principal."
Judge Wannamaker proceeds:
"This case is distinguishable from many of those cited in the plaintiff in error's brief, for several reasons. The agency of Boesel as president and active manager of the Bank, is admitted; second, what he did as such agent was fully authorized by the Bank. This is conclusively established by the fact that the Bank at no time repudiated the transaction or questioned the agent's authority, but, on the *Page 223 
contrary, continued to hold said notes, brought suit upon them, and is now prosecuting error for a reversal of the judgment below. Again, in this case it is admitted not only that Boesel as president and active manager of the Bank was fully authorized as such to purchase the notes, but that no other person, officer, committee, or board of directors needed to take any action whatsoever to complete such purchase. Again, this is a case in contract, whereas many of the case cited are those of tort."
Again, says Judge Wannamaker, in 49 L.R.A., (N.S.), at page 770 (88 Ohio St., 445; 103 N.E., 96):
"In First National Bank v. Blake (C.C.), 60 F., 78: "A large number of cases are cited in support of this view, and it is well settled that an officer or agent, dealing with a corporation or his principal on his own account, is not presumed to communicate knowledge which it would be to his interest to conceal, and the corporation or principal is not chargeable with such knowledge. But there is no room for the application of this principle where the agent is the sole representative of both parties in the transaction. If Cornish was the sole representative of the Bank in the transaction with himself, there was no one from whom information could have been concealed, or to whom it could have been communicated. If he was the sole representative of each party, each must have had equal knowledge."
"To hold otherwise," said Judge Wannamaker, "would open the widest possible door for all sorts of fraud; the more atrocious and aggravated the fraud, the less the likelihood of fixing the liability upon the principal. Why? Because the agent would be the less likely to communicate the fact to the principal. Such a holding has no place in sound business or good morals and ought not to be encouraged by our Courts."
It may be also said that Brown's conduct was not fraudulent. The Bank was satisfied to get eight per cent. Therefore, it was no fraud on the Bank for Brown to get the two *Page 224 
per cent. He was not defrauding the Bank out of one cent. He was not engaging in a transaction which would necessarily result in injury to the Bank, for Miss Heyward was not bound to plead usury; it was a personal right with her; she could or could not, as she chose.
In the opinion of Mr. Justice Cothran, the position is taken that the Act of 1916, now Section 3640, Code 1922, repealed the penalty for the violation of the Usury Law, in so far as the present case is concerned, and that, therefore, although the contract was made before 1916, the Court cannot apply the penalty. In answer to this position, it is sufficient to say that Section 3640 is not the section which fixes the penalty. That is done by Section 3639. It cannot be contended that the Act of 1916 repealed Section 3639. It does not undertake to do so. Therefore, the section which fixes the penalty and which covers all cases of usury, is still in existence.
It is true that where an Act fixing a penalty is repealed, there can be no punishment inflicted, even though the provisions of the Act were violated before the repeal. This is true where a criminal statute has been violated and a conviction is had after the repeal of the statute creating the offense and fixing the penalty. The reason for that is obvious: There is no power left to impose the penalty. A complete answer, it seems to me, to the position of Mr. Justice Cothran, is the statement that the section (3639) prescribing the penalty for usury was never repealed. That section condemns all usurious transactions and provides a penalty therefor.
Again, Section 3640, by its express terms, provides that —
"No lender shall be charged with usury under the preceding section, by reason of money paid or agreed to be paid others by the borrower in order to obtain a loan, where the lender neither took nor contracted to take more than lawful interest." *Page 225 
This Act (1916) clearly defines what should not constitute usury, in a given state of facts. It did not undertake to repeal the usury statute, but, on the contrary, expressly refers to and recognizes Section 3639. Under these circumstances, all of the authorities quoted by Mr. Justice Cothran manifestly have no application.
Next, does Section 3640 relieve the Bank from liability for usurious interest received, on the contract made before the passage of the Act of 1916? It is a rule of statutory construction that all statutes are to be construed as having only a prospective operation, unless the purpose and intention of the Legislature to give them a retrospective effect is expressly declared, or is necessarily implied from the language used. This rule is so universal and thoroughly understood that it is useless to cite authority to support it. The reader will search in vain to find any expression in the Act of 1916, which will make it operate retrospectively. We must, therefore, read it as referring only to transactions occurring after its adoption and approval.
For these reasons, I think that the judgment should be reversed.
MR. SHIPP, Circuit Judge, concurs.