Farmers' & Mechanics' Bank of Mercer v. Hoagland
| Decision Date | 10 May 1881 |
| Citation | 7 F. 159 |
| Parties | FARMERS' & MECHANICS' BANK of MERCER v. HOAGLAND. |
| Court | U.S. District Court — Western District of Pennsylvania |
W. W Shafer, for plaintiff.
Samuel H. Miller, for defendant.
ACHESON D.J.
This is a suit to recover the amount of two promissory notes, payable to the plaintiff or order 90 days after date,-- one dated July 24, 1880, for $3,618; the other dated August 25, 1880 for $3,740.50. The defendant is one of the makers, and, by a written agreement indorsed thereon, is the individual guarantor of each of the notes. The declaration is upon the guaranty, with the common counts added. The case came before the court, and was argued upon a demurrer to the defendant's plea, but the parties have filed a written stipulation that the court shall enter a final judgment conformably to the disposition which may be made of the demurrer.
The facts, as disclosed by the record, are as follows: The notes in suit are respectively the last renewals of two series of notes, the originals of which bore date October 27, 1875 were each for $3,000, one at 60 and one at 90 days, and were discounted by the plaintiff, a national bank, at the rate of 10 per centum, which was then paid to the bank. Those notes were each renewed 19 times, at intervals of 90 days, the parties to the several notes being in all instances the same. The interest charged at the several renewals, down to that of April 6, 1877, inclusive, in the case of one of the series, and down to that of May 5, 1877, inclusive, of the other series, was at the rate of 10 per centum, and it was paid to the bank, except that in three instances the discount in whole or part was included in the new notes as part of the principal. The interest charged at the several subsequent renewals, down until that of April 18, 1879, inclusive, of the one series, and that of February 15, 1879, inclusive, of the other series, (with a single exception, where 6 per centum was paid,) was at the rate of 9 per centum, which was sometimes paid to the bank and sometimes added into the new notes as principal. At the renewals on July 19, 1879, of the one series, and on May 19, 1879, of the other series, and at all renewals thereafter made, the interest charged was at the rate of 6 per centum, the rate authorized by the Pennsylvania act regulating interest, and on each occasion was included in the new note as part of its principal.
The demurrer admits that upon the discount of the original notes the bank charged and received unsurious interest, and that at the several renewals, down until those of May 19 and July 19, 1879, the bank charged more than legal interest, part of which, as already mentioned, was paid the bank, and part included in the notes given in renewal. The controversy relates to the amount recoverable by the bank in view of the provisions of sections 5197 and 5198 of the Revised Statutes. The former section limits the rate of interest chargeable by a national bank to that allowed by the local law, and the latter declares that 'the taking, receiving, reserving, or charging a rate of interest greater than is allowed by the preceding section, when knowingly done, shall be deemed a forfeiture of the entire interest which the note, bill, or other evidence of debt carries with it, or which has been agreed to be paid thereon; ' and in case the unlawful rate has been paid, a penalty of twice the amount thereof is inflicted. The pleadings suggest three questions for solution:
1. Can the defendant set off against the plaintiff's claim the usurious...
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