Sydner v. Mt. Sterling Nat. Bank

• Decision Date: 30 March 1893
• Parties: SYDNER et al. v. MT. STERLING NAT. BANK.
• Court: Kentucky Court of Appeals

21 S.W. 1050

94 Ky. 231

SYDNER et al. v. MT. STERLING NAT. BANK.

Court of Appeals of Kentucky.

March 30, 1893

Appeal from court of common pleas, Montgomery county.

To be officially reported.

Action by the Mt. Sterling National Bank against T. J. Sydner and another on a promissory note. From a judgment for plaintiff defendants appeal. Reversed.

Stone &amp Suddeth and Z. T. Young, for appellants.

Lewis Apperson, for appellee.

BENNETT C.J.

The appellee is doing a banking business in this state under the United States banking law. As such banking institution, it loaned the appellants money, and took their note therefor charging them a usurious rate of interest, and adding the same in the note; and at the maturity of the note it was renewed, and usurious interest again charged, and included in the new note. Renewals were in like manner made, and usurious interest added therein, until it resulted in the present note, when it was sued on. The appellants pleaded the foregoing facts in regard to the usury embraced in the several renewal notes, and asked that the interest be forfeited in consequence of the usury embraced in these several renewals, and that only the principal be recovered. The national banking law ^[1] provides: "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." There is no doubt that each renewal note contained usury therein and that it was "knowingly done." The question to be decided is whether the entire interest that the several renewal notes bore can be eliminated from said notes in an action on the last note so that nothing shall be recovered thereon except the principal. Upon that subject the following cases seem conclusive: In the case of Bank v. Hoagland, (U. S. Cir. Ct.) 7 Fed. Rep. 161, the court says: "By the terms of the act of congress the charging of such rates of interest worked a forfeiture of the entire interest which the several notes carry with them. Now, such forfeiture was not waived by the giving of the subsequent notes, although, as respects them, the agreed rate of interest was a legal rate. They were mere renewals, and given without any new consideration. Nor did the new notes operate as payment of the debts for which ...