Lynch v. Merchants' Nat. Bank of West Virginia

• Decision Date: 17 November 1883
• Citation: 22 W. Va. 554
• Parties: LYNCH v. MERCHANTS NATIONAL BANK OF WEST VIRGINIA, AT CLARKSBURG.
• Court: West Virginia Supreme Court

22 W.Va. 554

LYNCH v. MERCHANTS NATIONAL BANK OF WEST VIRGINIA, AT CLARKSBURG.

Supreme Court of West Virginia.

November 17, 1883

Submitted Jun. 12, 1883.

1.A State court has jurisdiction in an action brought by a borrower against a National bank to recover the penalty prescribed by the National Currency Act--Sec. 5198, Rev Stat. U. S.--for exacting and receiving usurious interest on loans made by such bank.(p. 556.)

2.When a statute creates a new offence and denounces the penalty, or give a new right and declares the remedy, the punishment or the remedy can be only that which the statute prescribes.(p 557.)

3.An action for the recovery of the penalty prescribed by said sec. 5198, must be commenced within two years from the time the usurious transaction occurred.Each payment of such interest is a transaction, within the meaning of said section, and the prescribed limitation commences to run from that time, although the debt on which such interest was paid remains unpaid.(p. 559.)

The facts of the case are fully stated in the opinion of the Court.

P H. Keck for plaintiff in error.

Harrison for defendant in error.

SNYDER, JUDGE:

This is an action of assumpsit brought by James Lynch, on April 28, 1881, in the circuit court of Harrison county against the Merchants National Bank of W.Va. at Clarksburg to recover fifteen thousand dollars, the penalty for usurious interest alleged to have been paid by the plaintiff to, and received by, the defendant between January 1, 1865, and January 1, 1881, on certain loans effected by the plaintiff from the defendant and by renewals from time to time continued during the same period.The defendant demurred to the plaintiff's declaration and the court overruled said demurrer.Issue was joined on the plea of non-assumpsit, and also on the plea of the statute of limitations which averred that the plaintiff's action did not accrue within two years.At the May term 1882, a trial was had by jury, a verdict of four hundred and eighty-seven dollars and seventy-two cents rendered for the plaintiff and judgment given thereon by the court.During the trial the plaintiff saved three several bills of exceptions and upon petition he obtained a writ of error to this Court.

This action is founded on section 30 of the Act of Congress, passed June 3, 1864, known as the National Currency Act, and which, as now incorporated in the Rev. Stat. of U.S., sections 5197and5198, is as follows:

" Section 5197--Any associationo may take, receive, reserve and charge on any loan or discount made, or upon any note, bill of exchange, or other evidences of debt, interest at the rate allowed by the laws of the State, territory or district where the bank is located, and no more.* * * * When no rate is fixed by the laws of the State, or territory, or district, the bank may take, receive, reserve, or charge a rate not exceeding seven percentum, and such interest may be taken in advance, reckoning the days for which the note, bill or other evidence of debt has to run.And the purchase, discount, or sale of a bona fidebill of exchange, payable at another place than the place of such purchase, discount, or sale, at not more than the current rate of exchange for sight-drafts in addition to the interest, shall not be considered as taking or receiving a greater rate of interest.

Section 5198--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.In case the greater rate of interest has been paid, the person by whom it has been paid, or his legal representatives, may recover back, in an action in the nature of an action of debt, twice the amount of the interest thus paid from the association taking or receiving the same; provided such action is commenced within two years from the time the usurious transaction occurred."

The defendant in error contends in this Court that the circuit court erred in overruling its demurrer to the plaintiff's declaration.This position is sought to be maintained on two grounds, first, that said court had no jurisdiction in this action, and second, that assumpsit is not the action authorized by the statute.

While the decisions of the different State courts upon the question, whether or not such courts have jurisdiction of actions against national banks for penalties and forfeitures, prescribed by the act of Congress, for exacting and receiving usurious interest, are not entirely uniform, I am of opinion that the decided weight of the more recent decisions are in favor of sustaining such jurisdiction; especially where the actions are by private persons for the recovery of the penalty of twice the amount of interest prescribed by the statute above quoted-- Hade v. McVay,31 Ohio St. 231;Pickett v. Merchants Nat. Bank,32 Ark. 346;Bletz v. Columbia Nat. Bank,87 Pa. St. 87;Dow v. Irasburg Nat. Bank,50 Vt. 112;Ordway v. Central Nat. Bank, Tho.Nat. Bk. Cas. 559.

This question is most important to the people, who are citizens alike under both the State and national governments; for if they are driven into the federal courts for redress the inconvenience and expense in many instance will be greater than the relief sought.National banks are intended to do the business of the country in the midst of the people just as others lending money and discounting paper do, whose places they have filled nearly everywhere.They can sue and be sued in the State courts on all business done by them, secure themselves, and purchase property held by them as security when sold under State laws, and otherwise enjoy the advantages of those laws as fully as any citizen of the State.Therefore, if the question were at all doubtful, both justice and reason would require our decision to be favorable to our own jurisdiction.But I do not think the question doubtful and consequently feel no hesitation in sustaining the jurisdiction.

Nor do I think there can be any serious question as to the propriety of the form of action in this case.Our statute has to a great extent made the action of assumpsit concurrent with the action of debt. § 10ch. 99 Code, p. 537.Assumpsit is an equitable action and may be substituted for several other forms of action.The act of Congress authorizes any " action in the nature of an action of debt."Assumpsit has more of the characteristics of an action of debt than any other form of action in our practice.I think, therefore, as the act does not confine the action to debt, that assumpsit, which is more of the nature of the action of debt than any other form of action in our practice, will lie for the penalty provided by the said act.The form of action being declared by the act it is unnecessary to enquire whether or not assumpsit would lie at common law for the recovery of a penalty.Where a statute creates a new offence and denounces the penalty, or gives a new right and declares the remedy, the punishment or the remedy can be only that which the statute prescribes.Stafford v. Ingersoll,3 Hill 38;Farmers Bank v. Dearing,91 U.S. 29;Dow v. Irasburg Nat. Bank, supra.

The question raised by the bills of exceptions of the plaintiff in error and relied on in this Court involve the true interpretation of the proviso in the aforesaid act of Congress--Sec.5198 Rev. Stat. U. S.--as regards the statute of limitations.The said bills of exceptions, after a proper statement of what the evidence tended to prove, show, that the plaintiff requested two instructions and the defendant one, that the court refused to give either of the instructions of the plaintiff, and gave that of the defendant to the jury, and that the plaintiff duly excepted to these rulings of the court.As both the plaintiff's instructions raise the same point it is only necessary to give one of them.The said instruction of the plaintiff and that of the defendant are respectively as follows:

PLAINTIFF'S INSTRUCTION.

" The court is asked to instruct the jury that if they believe from the evidence that the defendant knowingly reserved and charged the plaintiff interest at the rate of eight per centum per annum on and for said discounts and loans, and that the plaintiff in fact paid the same to the said bank at and about the time or times of said several loans or discounts or renewals, and...