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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