Haseltine v. Central Nat. Bank

• Decision Date: 20 February 1900
• Citation: 155 Mo. 66,56 S.W. 895
• Parties: HASELTINE et al. v. CENTRAL NAT. BANK.
• Court: Missouri Supreme Court

56 S.W. 895

155 Mo. 66

HASELTINE et al. v. CENTRAL NAT. BANK.

Supreme Court of Missouri, Division No. 1.

February 20, 1900.

NATIONAL BANKS — USURY — ACTION — FEDERAL STATUTES — CONSTRUCTION — STATE COURTS.

1. Under Rev. St. U. S. § 5198, providing that, where a national bank knowingly charges a greater rate of interest than is permitted by the laws of the state where it is located, the person paying it may, within two years from the transaction, recover back twice the amount of such interest, in an action in the nature of debt, such an action cannot be maintained where plaintiff does not allege or prove that he has paid or tendered the principal sum due.

2. The construction given a federal statute in the United States supreme court must be followed in the state courts.

Appeal from circuit court, Greene county; James T. Neville, Judge.

Action by S. A. Haseltine and others against the Central National Bank to recover twice the amount of usury charged on a note. From a judgment in favor of plaintiffs, defendant appeals. Reversed.

Massey & Tatlow, for appellant. Geo. S. Rathburn and S. A. Haseltine, for respondents.

MARSHALL, J.

This case is the counterpart of the case of Bank v. Haseltine (just decided) 55 S. W. 1015. It is an action, under section 5198, Rev. St. U. S. 1878, to recover $831.70; that being double the amount of the usurious interest paid by the plaintiffs to the defendant on a note for $2,240, on which the defendant obtained judgment against the plaintiffs in the other case referred to. It is conceded that the plaintiffs paid the defendant the sum of $415.85 to procure extensions of the note for $2,240, from time to time, between October 29, 1894, and June 14, 1896. It is also conceded that such payments were for usurious interest, and that the defendant, in accepting and receiving the usury, has violated the federal statute. The sole defense is that the party who has paid usurious interest cannot maintain an action under that statute to recover twice the amount so paid, until he has paid the principal sum due, or, at least, unless he tenders the principal; and it is admitted that the plaintiffs have not done this. In support of this contention the defendant relies upon Wheaton v. Hibbard, 20 Johns. 293; Hawkins v. Welch, 8 Mo. 490; Rutherford v. Williams, 42 Mo. 18; Livingston v. Burton, 43 Mo. App. 272; and McBroom v. Investment Co., 153 U. S. 318, 14 Sup. Ct. 852, 38 L. Ed. 729. In the New York case it was pointed out that the statute of that state permitted a borrower to recover the excess of interest, over the legal rate paid, in an action of debt, if the suit was begun within one year, and, if the borrower did not sue within such year, then any other person could institute such an action within the second year, and one half of the recovery went to the person suing, and the other half to the poor of the town in which the offense was committed. It was also shown that at common law, under the statute of 12 Anne, c. 16, "the party receiving more than the legal rate of interest, forfeited the treble value of the moneys or things lent," to be recovered in an action for money had and received. "But the party injured cannot recover any part of the principal and legal interest, and, to entitle him to maintain the action, he must show that he has done all that equity requires. Bacon, Abr. tit. `Usury' (G); 1 Term R. 153." And it was held that the statutory remedy did not supersede the common-law remedy, but that the remedies were concurrent. The suit was not brought until more than two years after the offense was committed, and it was held that the action was under the common-law remedy, and that at common law the suit could not be maintained so long as the principal and legal interest remained unpaid, but, as the defendant had not pleaded or proved that it had not been paid, it would be inferred that it had been paid. Hawkins v. Welsh, 8 Mo. 490, was an action to recover usurious interest paid, and Wheaton v. Hibbard, 20 Johns. 290, was followed. The whole of the principal had not been paid, and the court said: "And if the plaintiff now obtain a judgment against the defendant for $90, and collect that money from the said defendant, the plaintiff may himself become insolvent, and be unable to pay the principal, or, rather, what remains of the principal." Rutherford v. Williams, 42 Mo. 18, was a suit by a grantor against the cestui que trust in a deed of trust, for the value of the property sold under the deed of trust, less the debt secured thereby, which it was alleged had been fraudulently foreclosed. There was an allegation that usurious interest had been exacted. In the course of the opinion it was noted that usurious interest, once paid, could not be recovered. Ransom v. Hays, 39 Mo. 445. But it was held that equity would not aid a borrower, except on condition that the principal and legal interest were paid. Livingston v. Burton, 43 Mo. App. 272, was an injunction to restrain a sale of real estate under a mortgage, and for a cancellation of the mortgage. The circuit court found that usurious interest had been paid, which equaled the amount of the debt, and therefore canceled the mortgage. The Kansas City court of appeals reversed that decree, and held that usurious interest, once paid, could not be recovered or applied in extinguishment of the principal, and that the plaintiff was not entitled to have the mortgage in question canceled unless he offered to pay what was due on the principal debt, "leaving out of consideration the amount of usurious interest paid."

McBroom v. Investment Co., 153 U. S. 318, 14 Sup. Ct. 852, 38 L. Ed. 729, was an action, under the statute of New Mexico, by a borrower, to recover double the amount alleged to have been paid by him to the lender as usurious interest. The statute of New Mexico in this regard is very much like the national banking act, except that the limitation is three years, instead of two. The plaintiff borrowed of the defendant $65,000, evidenced by his notes, maturing at stated times, and secured it by a mortgage on land, live stock, etc. For securing the loan, the plaintiff paid the agent of the defendant $6,500, which the defendant knew of, and afterwards received from the agent. The plaintiff paid one interest note, and then quit paying, but at once sued the defendant for $13,000, — double the $6,500 so paid, — as usury. He recovered judgment for that amount in the lower court, but on appeal the supreme court of New Mexico reversed the judgment below (30 Pac. 859), and held "that the borrower was not entitled to recover the statutory penalty while any portion of the amount really loaned, with legal interest, after crediting all payments, remained unsatisfied." The case then went to the supreme court of the United States, where Mr. Justice Harlan delivered the opinion of the court. After calling attention to the similarity between the statute of New Mexico and the national banking act, and holding that the taking of usurious interest did not cut off a right to recover the sum actually loaned, he said: "The contract of loan not being void, except as to the excess of interest stipulated to be paid, the question arises whether the lender is liable to an action for the penalty prescribed by the statute, so long as the principal debt, with legal interest thereon, after deducting all payments, is unpaid. We are of opinion that this question must be answered in the negative. While, under the statute, the mere charging of usurious interest may be a misdemeanor, for which the lender can be fined, whether such usurious interest is or is not collected or received, the borrower has no cause of action until usurious interest has been actually collected or received from him. Such is the mandate of the statute. And...