The Venango National Bank v. Taylor.

first object sought to be secured was the payment of the circulating notes. The money obtained by the receiver, after being paid into the treasury, is to be applied first to satisfying the government for the redemption of such notes, and next to payment of creditors of the bank, among whom, of course, are included depositors ratably. But this primary object would be defeated if depositors can transfer their deposits to the debtor of the bank, and enable them by set-off to relinquish the debts. By such process the depositors would secure payment of their claims in preference to the noteholders or the government, and ratable distribution among other creditors than the note-holders be frustrated. It need hardly be said that no construction can be given to the act of Congress so directly at war with its spirit.

The defendant has called our attention to Miller v. Black, 1 Barr. 420. There an attachment execution had been laid upon a debtor's property after he had made a voluntary application for the benefit of the Bankrupt Act of 1842, but before he was declared a bankrupt; and it was held that the lien of the attachment was preserved by the act, and that it was good against the assignee in bankruptcy.

The case has but a slight resemblance to the present. It is true, the act contained a provision that "all payments, securities, conveyances or transfers of property, or agreements made or given subsequently to the time when the act was to come into operation, by any bankrupt in contemplation of bankruptcy, and for the purpose of giving any creditor, indorser or surety, or other person, any preference or priority over the general creditors of such bankrupt, should be deemed utterly void and a fraud upon the act." This was aimed expressly against fraudulent acts of the bankrupt, alone. And the act also contained a provision preserving liens on real and personal property valid by the laws of the State, and not inconsistent with the provisions of its 2d and 5th sections. Moreover, it enacted that the property of the bankrupt should be divested and become vested in the assignee from the time of the decree in bankruptcy. The assignee was clothed with such rights as might have been exercised by the bankrupt "at the time of his bankruptcy declared." The ruling of the court appears to have rested upon the clause which preserved liens on the debtor's property. Besides it was a case of a voluntary petition. The petitioner might have withdrawn his application at any time before the decree, and the

Kelsey v. National Bank of Crawford.

fact that he could have discontinued his proceeding was given as another reason why an execution against his property should be held valid.

It is by no means certain that had he been proceeded against by a creditor with a view to having him declared a bankrupt, the same ruling would have been made. However this may be, the provisions of the Bankrupt Act were so unlike those of the Banking Act that the decision of Miller v. Black gives us no assistance in the construction of the latter.

We hold, then, that there was error in allowing the deposit made by Rynd to be used as a set-off against the claim of the Bank v. Taylor. The defendant was entitled to a credit for the $32,000, realized from the sale of the United States bonds, for there had been an understanding that the proceeds of such sale should be applied on the debt due by him, but he was entitled to no other credit.

The judgment is reversed, and judgment is entered for the plaintiff for the sum of $35,024, according to the case stated.

KELSEY V. NATIONAL BANK OF CRawford.

(69 Pennsylvania State, 426.)

Responsibility of National bank for liabilities of State bank.

A State bank was robbed and a reward was offered by the cashier for the detection of the thieves. The bank afterward became a National bank, and suit was brought against it as such for the reward. Held, that the action was properly brought, as the National bank was responsible for all the liabilities of the State bank.

A

CTION to recover a reward offered by the cashier of the Bank of Crawford county for the detection of the thieves who had robbed said bank. The plaintiff detected the thief. Afterward the bank became a National bank. There was evidence tending to show that the directors ratified the act of the cashier in offering the reward.

The plaintiff was nonsuited.

Kelsey v. National Bank of Crawford.

D. M. Farrelly & A. B. Richmond, for plaintiff in error.

P. C. & D. Derrickson, for defendant in error.

WILLIAMS, J. [After deciding that whether or not the cashier had power ex officio to offer the reward, the acquiescence of the directors amounted to a ratification.] But it is contended that the action will not lie, because it was brought against the wrong corporation. It was the State bank that was robbed and offered the reward, and the National bank is the corporation sued. But under the provisions of the act of the 22d of August, 1864 (P. L. 977), "enabling the banks of this Commonwealth to become associations for the purpose of banking, under the laws of the United States," upon the surrender of its charter all the assets of the State bank were immediately, by act of law, without any conveyence or transfer, vested in the National bank, and all its liabilities and obligations were devolved upon it. Why, then, should not the remedy for the liabilities incurred by the former be by action against the latter? It was admitted on the argument that the National bank is bound to discharge and satisfy all the obligations and liabilities of the State bank, but it was insisted that under the proviso of the enabling act, continuing the State bank a body corporate for the term of three years after the surrender of its charter, for the purpose of prosecuting and defending suits by and against it, that suits to enforce the payment of its obligations and liabilities must be brought against the State, and not against the National bank. Undoubtedly an action will lie against the State bank for any of its liabilities, if brought within the time limited in the proviso; but it does not follow that it will not lie, if brought against the National bank. Why compel the plaintiff to bring an action against the State bank when it has no assets to meet and satisfy the demand? Why not avoid circuity of action by bringing suit in the first instance against the corporation invested by act of law with all the assets, and made responsible for all the engagements of the State bank? Why bring two suits when one will suffice? We discover no provision in the act making it the duty of the plaintiff to proceed in the first instance against the State bank, and are of the opinion that the action is rightly brought against the National bank.

But it is objected that the declaration is defective.in not setting

Brown v. The Second National Bank of Erie.

out the facts, with the necessary averments, on which the liability of the corporation sued arises. And for this reason it is urged that the nonsuit was properly entered. It is admitted that the declaration is defective, but this objection was not made in the court below as one of the grounds for the nonsuit. If it had been, the plaintiff might have amended his declaration, and therefore we will allow him to amend nunc pro tunc, and treat the case as if the amendment had been made in the court below when the motion for the nonsuit was entered.

It follows from what we have said that the plaintiff is entitled to recover if the directors had notice of the offer, and did not promptly disavow it.

Judgment reversed and a procedendo awarded.

BROWN V. THE SECOND NATIONAL BANK OF ERIE.

(72 Pennsylvania State, 209.)

Usury - Forfeiture of interest — Actions for penalty — Limitation of.

Under the 30th section of the National Banking Act, the remedy of the "forfeiture of the entire interest" for the exacting of unlawful interest can only be had by way of defense to an action on the note, or to recover the loan, but no action lies for it.

Where usury has been actually paid to and received by a bank, the only remedy is an action for the penalty of "twice the amount of interest thus paid."

The limitation of two years within which an action for the penalty must be brought commences to run from the actual payment of the usury.*

A

CTION of assumpsit by the Second National Bank of Erie against the Executor of Brown, deceased, to recover the amount of three promissory notes made by one Thompson, payable to the order of said Brown, and by said Brown indorsed. The plaintiff discounted the notes for said Thompson. It appeared at the trial that Brown had an assumpsit with the bank, whereby the latter had discounted a number of notes for him at nine per cent

*See Overholt v. First National Bank, post, explaining this case; see, also, Lucas v. Government National Bank, post.

Brown v. The Second National Bank of Erie.

discount; and that the notes in suit were in renewal of other notes, and were discounted at the same rate. The amount of the notes in suit was $22,000, and each was for sixty days.

The lawful rate of interest in Pennsylvania, where the bank was located, was six per cent.

The excess of legal interest retained by discount on the notes in suit was $132. The legal questions involved in the case were thus stated in the charge of JOHNSON, P. J., viz.:

The United States Banking Law, under which the plaintiff bank was organized, forbids the taking of any more interest for the loan of money than is allowed by the State in which the particular bank is located. The plaintiff being located in Pennsylvania could, therefore, legally charge only six per cent per annum for money lent to its customers.

"If this prohibition of the act be violated by the bank a penalty is imposed. It is this:

"1. If the contract to take a greater interest than six per cent be executory the whole interest for the period of discount is forfeited, and the bank can only recover the principa. from and after the maturity of the note or contract.

"2. If the usurious interest has actually been paid, the borrower may sue and recover twice the amount so paid, provided he sues for it within two years from the time of payment.

"In neither case does the statute declare the real debt or money borrowed forfeited, or deny the right of the bank to recover it. The act of Congress having prescribed the penalty for its violation in this respect, no other or different one can be imposed by the court, nor any other consequences declared than such as its framers have ordained.

"The proof shows, without denial or contradiction, that in 1864-5-6, V. M. Thompson, whose indorser the defendant's testator was, had a continuous line of discounts at the Second National Bank of Erie, and was charged nine per cent per annum, besides exchange. His notes and bills were all made payable at New York, where some of them were paid by him and other parties. Others were paid by renewals or new discounts at the defendant bank, and the usual exchange between this city and New York charged. "From this state of undisputed facts the defendants deduce several inferences, and ask us to declare to you as the law:

"1. That the plaintiff having discounted a long series of notes