of the National Currency Act (13 Stat. at Large, 108), the taking or
charging a rate of interest greater than six per cent per annum, in ad-
vance, by a National bank located in Ohio, is a forfeiture of the entire
interest which the note or other evidence of debt carries with it, or
which has been agreed to be paid thereon; as well the interest accru-
ing after maturity and before judgment, as the interest which accrued
before the maturity thereof. Shunk v. First Nat. Bank, 820; Lucas v.
Bank, 872.
11. Set off, amount of.] In an action by a National bank on negotable paper dis-
counted by it, the defendant may set off the amount of interest in excess
of the lawful rate paid on other transactions. The interest paid by the
defendant beyond that authorized by the act of Congress belongs to him,
and the bank can hold it only for his use. Lucas v. Bank, 872.
--] Where National banks stipulate for an illegal rate of interest all
payments of interest, and not merely the excess, is illegal. Overholt v.
Nat. Bank, 883.
] In an action by a National bank to recover the amount of a note
which was given in renewal of other notes, the defendant is entitled,
where illegal interest has been exacted, to credit for all the interest he
has paid from the beginning on the loan and not merely to the excess
above the lawful rate. Ib.
-] In an action by a National bank on a promissory note the defend-
ant cannot set off the entire interest agreed to be paid on another and
independent note although such interest was usurious. lb.
-] Where there has been a series of renewal notes given for the
continuation of the same original loan, a taint of usury in the first
transaction follows down through the whole, and in an action by a Na-
tional bank on the last of the series, the borrower is entitled to credit for
ali the interest he has paid from the beginning. Cake v. First Nat. Bank,
890.
16. Recovery or recoupment of excessive interest.] If a National bank discount
a note at a usurious rate of interest, paying the borrower the proceeds
less the interest, it can recover only the face of the note less the entire
interest received. But if such note be renewed, the borrower paying
the usurious interest out of his pocket, in advance, the defendant may
recoup, or recover, in an independent action, double the amount of the
entire interest paid at the renewal. If, instead of paying the usurious in-
terest at each renewal, it be added to the principal and included in the re-
newal notes, the bank can only recover the amount originally paid to the
borrower, i. e., the amount of the last of the renewal notes less all inter-
est included in it. Nat. Bank of Madison v. Davis, 350.
-.] 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. Brown v. The Second Nat.
Bank, 849.
18.-] Semble, that the "forfeiture of the entire interest" imposed for
taking illegal interest is enforced only in actions brought upon or to
enforce the usurious contract. Hintermister v. First Nat. Bank, 741.
19. Recoupment of interest paid in advance.] In an action on a note given
for money borrowed of a National bank, the defendant cannot recoup il-
legal interest paid in advance. The remedies given by the National Bank-
ing Act for the taking of unlawful interest are exclusive and cannot be
supplemented by the statutes of the State. Wiley v. Starbuck, 436.
20. Counter-claim for excessive interest.] In an action by a National bank the
defendant cannot be allowed a counter-claim for unlawful interest paid by
him more than two years prior thereto. Nat. State Bank v. Boylan, 798.
when right of, barred.] The knowingly taking or receiving by a
National bank of a rate of interest greater than is allowed by law
upon a loan of money does not entitle the person paying the same to
have it applied as a payment of so much of the principal, in an action
brought to recover the principal debt more than two years after such
payment was made. The rights and liabilities of the parties in such
case are prescribed in the National Bank Act, and cannot be controlled by
State legislation, Higley v. The First Nat. Bank of Beverly, 833.
-] Where the two years within which an action lies to recover back
twice the amount of illegal interest paid to a National bank have elapsed,
the right to offset such interest against any claim of the bank is also
barred. Shinkle v. First Nat. Bank, 824.
23. Actions for penalty.] 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. Brown v. Bank, 849.
24. Limitation of.] 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. Ib.
] Where a National bank has taken usurious interest on a loan or
discount, it may elect to apply the excess of interest on the principal at
any time before the loan is paid in full, or before judgment is entered
for the full amount. Therefore, the two years within which an ac
tion may be brought to recover twice the amount of interest paid, do
not begin to run until the principal has been paid or a judgment entered
for the full amount thereof. Ib.; Duncan v. First Nat. Bank, 360.
26. Limitation of actions for excessive interest.] In an action by a National
bank on negotiable paper discounted by it, a State statute limiting the
time within which action to recover excessive interest may be brought
does not apply. Ib.; Lucas v. Bank, 872.
27. Amount of recovery in actions for penalty.] In an action against a National
bank to recover the penalty imposed by the act of Congress for taking
a greater rate of interest than is allowed by law, the plaintiff is entitled
to recover only twice the amount taken in excess of the legal interest,
and not twice the amount of the entire interest paid. Hintermister v.
First Nat. Bank, 741.
-.] In an action to recover the penalties imposed for taking unlawful
interest, the plaintiff is entitled to recover twice the amount he has
paid for usury within two years prior to the commencement of the action,
whether the amount was paid in one or several payments. Ib.
29. Revised Statutes, 5197, 5198, construed-rate of interest.] A National
bank located in Kansas charged and received interest at the rate of eigh-
teen per cent per annum. Held, that it was liable under the National
Banking Act (Rev. Stats., SS 5197, 5198) to pay back twice the amount of
interest thus received. Crocker, assignee, v. First Nat. Bank of Chetopa,
317.
30. Extent of recovery.] The amount of the recovery is twice the full amount
of interest paid, and is not limited to twice the excess of interest paid over
the legal rate. Ib.
31. Right of action to recover back illegal interest passes to assignee in bankruptcy.]
If the person who paid such illegal interest is adjudged a bankrupt, the
right of action passes to his assignee in bankruptcy, such assignee being
his "legal representative" within the meaning of section 5198 of the
Revised Statutes. Ib.
32. To whom the remedies for usury are available.] When note or bill is an
existing security in the hands of the holder the usury exacted by the
bank in its acquisition is not available, by way of defense, to the ante-
cedent parties. Their rights and liabilities are not affected by the usurious
character of a transaction in which they did not participate. Smith v.
Exchange Bank, 836.
] The party with whom the bank had the usurious transaction is
the party to whom, under the National Banking Act, the forfeiture of
interest is to be adjudged; and who, in case the interest has been paid, is
authorized to recover back twice the amount. Ib.
34. Interest on claims against insolvent banks.] Where a National bank is
declared in default by the Comptroller of the Currency, and a receiver is
appointed, and a sufficient fund is realized from its assets to pay all
claims against it and leave a surplus, the Comptroller should allow
interest on the claims, during the period of administration, before appropri-
ating the surplus to the stockholders of the bank. Chemical Nat. Bank
v. Bailey, 260.
-.] An action of assumpsit to recover such interest will not lie against
the Comptroller of the Currency or the receiver of the bank, but will lie
against the bank. Ib.
36. On deposits.] Where a bank has, by reason of its own default, been placed
in the hands of a receiver, a demand of payment by a depositor is no
longer a necessary condition precedent to a right of action for the deposit;
and the deposit bears interest from the time of such default. lb.
37. Usury does not avoid collateral security.] A National bank extended the
time of payment of indebtedness at a usurious rate of interest, and took
therefor notes and a mortgage made by the debtor to a third person, the
notes being indorsed by the latter. Held, that the usury only avoided
the interest, and that to the extent the debt was valid the mortgage
was a bona fide security, and that the bank, by becoming the owner of the
notes, acquired the equity in the mortgage. Allen v. First Nat. Bank, 828.
38. Jurisdiction of action for penalties.] The courts of one State have no juris-
diction of an action against a National bank located in another State to
recover penalties imposed by the National Banking Act for taking unlaw-
ful interest. Missouri, etc., Co. v. First Nat. Bank, 401.
-] Semble, that State courts will not enforce the penalties imposed by
the National Banking Act for exacting unlawful interest. Ib.; Newell v.
Nat. Bank, 501.
-] An action lies in a State court against a National bank to recover
the penalties imposed by Congress for exacting unlawful interest. Ord-
way v. Central Nat. Bank, 559.
On deposits.] See DEPOSITS.
INTERNAL REVENUE.
See EXAMINATION.
1. Of actions against National banks to recover penalties.] The courts of one
State have no iurisdiction of an action against a National bank located
in another State, to recover the penalty imposed by the act of Congress
for the taking of unlawful interest. Missouri River Telegraph Company
v. First Nat. Bank of Sioux City, 401.
-] Semble, that State courts have no jurisdiction of actions to recover
penalties imposed by the National Banking Act. Ib.; Newell v. Nat. Bank,
501.
] A State court has jurisdiction of an action against a National bank
to recover the penalties imposed by Congress for taking unlawful interest.
Ordway v. Central Nat. Bank, 559.
4. Of District Court to order compromise.] A District Court of the United
States may order the receiver of a National bank to compromise doubt-
ful debts under section 50 of the National Banking Act (13 Stat. at Large,
115), which authorizes receivers to compromise such debts "on the order
of a court of record of competent jurisdiction." Petition of Platt, 181.
5. Of action to collect claim due bank.]
The receiver of a National bank
appointed by the Comptroller of the Currency is an officer of the United
States, and therefore the District Court has jurisdiction of an action at
common law to collect a claim due the bank at the time of the receiver's
appointment. Platt v. Beach, 182.
6. Of court to appoint a receiver.] A receiver of a National bank may be
appointed by the court. Irons v. Manufacturers' Nat. Bank, 203;
Wright v. Merchants' Nat. Bank, 321.
7. Of suit to enjoin misapplication of funds by officers.] The Circuit Court of
the United States has jurisdiction of a suit to enjoin the officers of a
National bank from any misapplication of funds which might result from
any act not warranted by its charter, or which would amount to a breach
of trust. Shoemaker v. Nat. Mechanics' Bank, 169.
8. Over deposits to secure circulation — courts cannot control disposition of.]
The Circuit Court has no jurisdiction of a suit by a private person, to
restrain, interfere with, or control the Treasurer of the United States,
or the Comptroller of the Currency, in the discharge of their duties, in
respect to bonds deposited with the Treasurer to secure the redemption
of circulating notes of a National bank. Van Antwerp v. Hulburd, 208-
-] The provisions of sections 56 and 57 of the National Banking Act
explained. Ib.
Of actions by and against National banks.] See ACTIONS.
Of State court over receiver.] See RECEIVER, 792.
Of indictments against National bank officers.] See EMBEZZLEMENT AND LAR-
See EMBEZZLEMENT AND LARCENY.
1. Loans and discounts on security of bank's own stock.] National banks can
make valid loans or discounts on the securityof their own stock only when
necessary to prevent loss on debts previously contracted in good faith.
Bank v. Lanier, 70.
-] The placing by one bank of its funds on permanent deposit with
another bank is a loan within the prohibition. Ib.
3. Lien on stock.] Loans by National banks to their stockholders do not give
them a lien on the stock of such stockholders. Ib.
-] A bank issued two certificates of stock to C, declaring him the
owner of one hundred and fifty shares, and that they were transferable
on the books of the bank " only on the surrender of the certificate." A
purchased some of these shares of C, and received the certificate regularly
assigned. The bank refused to transfer the stock on the books, on the
ground that the shares had been pledged to it by C, as security for de-
posits made by it with him, and had already been sold and transferred to
other parties under a power of attorney from C before the bank had
notice of A's purchase. A sued to obtain damages. Held, that the action
would lie, and that the pledge of the stock by C to the bank being
illegal, the previous transfer was no defense. Ib.
5. National banks cannot acquire lien on their own stock.] The articles of as-
sociation and the by-laws of a National bank prohibited the transfer of
stock owned by any stockholder indebted to the bank until such indebted-
ness should be satisfied. Held, that the prohibition was invalid, under
section 35 of the National Banking Act, and that the bank could not thus
acquire a lien on the shares of the stockholders. Bullard v. Bank, 93;
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