First Nat Bank of Uniontown v. Stauffer

• Decision Date: 13 February 1880
• Citation: 1 F. 187
• Parties: THE FIRST NATIONAL BANK OF UNIONTOWN v. STAUFFER.
• Court: U.S. District Court — Western District of Pennsylvania

1 F. 187

THE FIRST NATIONAL BANK OF UNIONTOWN v. STAUFFER.

United States Circuit Court, W.D. Pennsylvania.

February 13, 1880

J. M Stoner, for plaintiff.

T. C Lazear, for defendant.

McKENNAN J.

This case was tried before the late Judge Ketcham, and, under his instructions, a verdict was rendered in favor of the plaintiff for the amount of the note in suit, with interest from its maturity to the date of the verdict. A motion for a new trial was made by the defendant, for the reason that, under the circumstances, no interest was recoverable upon the note, and that it was error in the judge to instruct the jury otherwise.

It is admitted that more than the legal rate of interest was charged and received by the plaintiff for the period which elapsed between the date and maturity of the note, and the question is whether this subjects the plaintiff to a forfeiture of the interest which accrued afterwards.

The National Currency Act furnishes a clear answer to this question. After fixing the rate of interest to be taken by national banks at that allowed by the local law, the thirtieth section of that act (Rev. St. Sec. 5198) enacts 'And the knowingly taking, receiving, reserving or charging a rate of interest greater than aforesaid shall be held and adjudged to be 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 it is further provided that, where excessive interest has been paid, twice the amount may be recovered by an action commenced within two years.

The 'entire' interest which the note 'carries with it' is forfeited; and, if this means all the interest which accrues upon it, as I think it clearly does, it is difficult to understand how any part of it is recoverable. By the operation of the act an usurious contract is inherently vicious, so that it cannot 'carry' any interest 'with it;' hence it would inadequately effectuate the intent of the act to hold that such a contract is purged of its taint and is invested with a capacity denied to it before by the failure of the debtor to pay the debt, evidenced by it at maturity.

This view of the effect of the act of congress is not inconsistent with the opinion of the court in Barnet v. The Nat. Bank 8 Otto, 555, as was urged in the argument, but is in entire harmony with it. There it was sought to set off usurious interest paid upon a series of...