Ewing v. Toledo Sav. Bank

• Citation: 43 Ohio St. 31,1 N.E. 138
• Parties: EWING v. TOLEDO SAVINGS BANK.
• Decision Date: 03 March 1885
• Court: United States State Supreme Court of Ohio

43 Ohio St. 31

1 N.E. 138

EWING

v.TOLEDO SAVINGS BANK.

Supreme Court of Ohio.

Filed March 3, 1885.

Error. Reserved in the district court of Lucas county.

The original action was brought by the Toledo Savings Bank & Trust Company, a corporation of the state of Ohio organized under the act of February 26, 1873, entitled ‘An act to incorporate savings and loan associations,’ as amended March 3, 1875, against Alexander H. Ewing and others in the court of common pleas of Lucas county. The first cause of action stated in the petition was for the recovery of $10,000 and interest on three promissory notes, payable in three, four, and five years from date, and dated February 5, 1876. The following is a copy of the note payable in three years:

‘$3,333.00.

CHICAGO, ILL., February 5, 1876.

‘On or before three years after date I promise to pay to the order of the Toledo Savings Bank & Trust Company three thousand three hundred and thirty-three dollars, with interest at ten (10) per cent. per annum, payable annually at the First National Bank, Chicago, Ill., value received.

ALEX. H. EWING.'

The notes payable in four and five years are of like tenor and effect, except that the last note is for the payment of $3,334.

The second cause of action is to foreclose a mortgage on certain real estate situate in Lucas county, given on February 5, 1876, to secure the payment of the above-described promissory notes. The mortgage contained the following stipulation: ‘That if said Alexander H. Ewing should fail to pay any of said notes, either principal or interest, within six months after the same becomes due, the whole sum of money herein secured may become due and payable at once, at the election of said mortgagee, its successors, or assigns; and this mortgage may thereupon be foreclosed immediately for the whole of said money, interest, and costs.’

The defendant, Alexander H. Ewing, among other things, by way of defense, alleged that said contract was usurious and wholly void. It appears from the record that the notes and mortgage upon which suit was brought were given for a loan of money, and although negotiations for the loan were made in Toledo, in the state of Ohio, where the plaintiff had its principal office, the notes and mortgage were in fact executed in the state of Illinois, by the laws of which state it is lawful to contract for interest at the rate of 10 per cent., as stipulated in said notes. In the court of common pleas judgment was rendered for the plaintiff for the full amount claimed. To reverse this judgment a petition in error was filed in the district court, where the case was reserved for decision in this court.

[Ohio St. 35]McILVAINE, C. J.

If the contract sued on had been made by a natural person, and in the state of Ohio, instead of a corporation, it would not be denied that under the laws of the state of Ohio it would be usurious, and that the plaintiff could recover thereon only the principal actually advanced, with interest at the rate of 6 per cent. per annum. The plaintiff, however, being a corporation of this state, we must look to the general statute under which it was incorporated for its power to contract, and for the consequences which follow an abuse of its franchise in this respect.

Section 16 of the act of February 26, 1873, as amended March 3, 1875, provides: ‘Such associations may discount notes and bills of exchange, and may take, receive, reserve, and charge upon any loan or discount made upon note, bill of exchange, or other evidence of debt, interest at the rate allowed, or that may be allowed, by the laws of Ohio, and shall be subject for the violation thereof to the same penalties as natural persons.’

It must be conceded that the rate of interest stipulated for in this contract exceeded the rate allowed by the laws of...