Shafer v. First Nat. Bank of Russell

• Decision Date: 09 June 1894
• Citation: 36 P. 998,53 Kan. 614
• Parties: SHAFER et al. v. FIRST NAT. BANK OF RUSSELL.
• Court: Kansas Supreme Court

36 P. 998

53 Kan. 614

SHAFER et al. v. FIRST NAT. BANK OF RUSSELL.

Supreme Court of Kansas

June 9, 1894

Syllabus

1. Where a national bank makes a loan, and knowingly charges and receives a greater rate of interest than is allowed by the laws of the state where the bank is located, up till the maturity of the note, after which time it was agreed that the note should bear interest at a rate which was lawful, the receipt of the usurious rate will work a forfeiture of the entire interest which the note carries with it, including that which accrues after the maturity thereof.

2. A judgment rendered upon such a debt will bear interest from the time of its rendition, at the rate of 6 per cent. per annum.

Error from district court, Russell county;

Action by the First National Bank of Russell against H. E. Shafer and J. C. Youngman. Judgment for plaintiff, and defendants bring error. Modified.

Ira E Lloyd, for plaintiffs in error.

H. L Pestana and H. G. Laing, for defendant in error.

OPINION

JOHNSTON, J.

On October 20, 1888, H. E. Shafer borrowed $1,400 from the First National Bank of Russell, Kan., and executed a note for that amount, due in 90 days after days, which was signed by J. C. Young man, as surety, and which, upon its face, bore interest at the rate of 12 per cent. per annum from maturity. The bank charged and received from Shafer, for the use of the money, 18 per cent. per annum from the date of the note to the maturity of the same, namely, the sum of $84. The principal of the note was not paid, nor has any further payment of interest been made by the makers of the note. After its maturity, Shafer brought an action against the bank to recover double the amount of usurious interest which had been collected from him by the bank, and in that action recovered a judgment for the sum of $1,249.40, which was double the amount of the whole rate of interest charged and received by the bank from Shafer on the note in question, and other notes which he had given to the bank. When action was brought by the bank upon the $1,400 note, Shafer and Youngman answered that, by reason of the bank having charged a rate of interest in excess of the legal rate, there was a forfeiture of the entire interest which the note carried with it; and they also set up certain claims, alleged to be due Shafer for services rendered in behalf of the bank, as a set-off. Upon the trial the court found the facts hereinbefore stated, and also that there was due to Shafer, upon one of the defenses set up by him,— for services rendered the bank,— the sum of $34.14. The court ruled that the bank was entitled to interest on the $1,400 note from its maturity, and that there was due thereon, after deducting the $34.14 found to be due to Shafer for services, the sum of $1,603.86, for which judgment was given. And it was further adjudged that the judgment so rendered should bear interest at the rate of 10 per cent. per annum. Complaint is made of these rulings, and plaintiffs in error insist that, upon the findings, no interest whatever should have been allowed upon the note, and, further, that the court erred in allowing interest upon the judgment that was rendered.

The action of the bank, in charging and collecting a rate of interest in excess of the legal rate allowed in this state operated as a forfeiture of the entire...