In re Addison Moore. forfeiture of double the interest charged should be the penalty for the illegal act, without invalidating the right of the bank to enforce the payment of the principal debt? It was clearly within the legislative power to have declared that the penalty for charging or receiving illegal interest, should be the forfeiture of both principal and twice the amount of interest. But if this had been intended, would not such an intention have been expressed in explicit language? There is no reason to doubt that if the section referred to had stopped with the prohibition of taking or receiving interest in excess of the rate prescribed, a loan made by a bank in conflict with such prohibition could not be enforced. It would unquestionably be held to be an illegal and void act. But the legislature has chosen to prescribe a specific penalty for the illegal act, namely, the forfeiture of double the sum of the entire interest charged or paid, and have not declared that the principal debt should be forfeited. It is certainly not reasonable to infer that it was the intention of congress to provide a double penalty for the illegal reservation on loans. Yet such would be the effect of the construction of the section referred to, as insisted on by the counsel for the alleged bankrupt. So far as the court is advised, there is no law in any of the states of the Union on the subject of usurious interest, which provides for the forfeiture of the entire debt on which such interest has been charged and paid, together with the interest, and a liability on the part of the creditors to pay twice the amount of the interest to the debtor. I am therefore led to the conclusion that, by a fair implication, it was not intended by congress, in the enactment of the section referred to, to punish a bank for reserving interest in excess of the statute, by the forfeiture, not only of the principal debt, but double the interest charged or received. It was held by the supreme court of the United States, in the case of the United States v. Babbit, 1 Black R. 61, that "what is implied in a statute, pleading, contract, or will, is as much a part of it as if it were expressed." From the provision of the 13th section, it would seem to be fairly In re Addison Moore. implied, that while the specific forfeiture named is enforceable, the transaction as to the principal debt is not invalidated. This view, in my judgment, violates no principle of sound morality, or of public policy. It was clearly competent for the congress of the United States, in the creation of the national banking system, to visit the banks with a severe penalty for taking excessive interest without a forfeiture of the debt. In this age of commercial enterprise and activity, many solvent and perfectly responsible persons find that they can make profit by borrowing money at a rate of interest above the legal standard. If the rate charged is not so high as to be unconscionable and oppressive, no wrong is perpetrated on the borrower, and no just reason is perceived for absolving him from his liability to pay the principal debt, unless the legislative will to that effect is clearly expressed. It may be right and expedient that proper guards should be provided by law against extortionate charges for the loan of money. Usury, in its odious sense, is immoral and reprehensible; but if one voluntarily borrows money from a bank or an individual, and, in good faith, promises payment, with interest beyond the legal rate, there is no justice in visiting upon the lender the forfeiture, not only of the debt, but subjecting him to a liability at the suit of the borrower, to double the amount of interest charged. If there is culpability in such a transaction, both parties are equally implicated; but the construction of the statute insisted upon, places it in the power of the borrower, not only to relieve himself from the entire debt, but to make dishonorable gain by suing for and recovering double the amount of interest reserved. In the absence of any clear statutory provision for this purpose, I am unwilling to sanction such a construction of the section of the law referred to as will lead to the results indicated. There is high judicial authority for the doctrine that an act may be unlawful as within the prohibition of a statute, and yet a debt or obligation growing out of the act be valid, unless it appears by a fair construction of the statute that it was the intention of the legislature that it should be void. In re Addison Moore. The case of Harris v. Runnells, 12 Howard S. C. R. 79, seems to be directly in point on this proposition. The defendant was sued on a promissory note, the consideration of which was the price of certain slaves taken to the State of Mississippi, in violation of a law of that state. Upon the question whether the note was void, the court held that the intention of the legislature as to the validity of the note must be decisive of the question. In their opinion the court say: "Whatever may be the structure of the statute in respect to prohibition and penalty, or penalty alone, it is not to be taken for granted that contracts in contravention of it were to be void, in the sense that they were not to be enforced in a court of justice." And further," it is true that a statute containing a prohibition and a penalty, makes the act which it punishes unlawful, and the same may be implied from a penalty without a prohibition; but it does not follow that the unlawfulness of the act was meant by the legislature to avoid a contract made in contravention of it. When the statute is silent and contains nothing from which the contrary can be inferred, a contract in contravention of it is void. It is not necessary, however, that the reverse of that should be expressed in terms to exempt a contract from the rule. The exemption may be inferred from those rules of interpretation to which, from the nature of legislation, all of it is liable when subjected to judicial scrutiny. That legislators do not think the rule one of universal obligation, or that, upon grounds of public policy, it should always be applied, is very certain. For in some statutes, it is said in terms that such contracts are void; in others, that they are not so. In one statute, there is no prohibition expressed, and only a penalty; in another there is prohibition and penalty, in some of which contracts in violation of them are void or not, according to the subject matter and object of the statute; and there are other statutes in which there are penalties and prohibitions, in which contracts made in contravention of them will not be void, unless one of the parties to them practises a fraud upon the ignorance of the other. It must be obvious, from such In re Addison Moore. diversities of legislation, that statutes forbidding or enjoining things to be done, with penalties accordingly, should always be fully examined, before courts should refuse to give aid to enforce contracts in contravention of them." The case cited seems strongly to sustain the principle that unless it is clear from the words of a prohibitory statute, that an agreement in violation of it is void, the courts will not so declare it, but will give effect to the agreement. The intention of the legislature is to be made out by referring to the whole statute, and such intention will control the courts in giving it a construction. And, as before remarked, there being nothing in the national banking act from which an intention to invalidate a contract by which illegal interest is reserved, is fairly implied, and there being ground for the presumption from the specific penalty provided, that such effect was not intended, I am led to the conclusion that the note in question is not void, and must be recognized as a provable debt under the bankrupt law. The case of the Bank of the United States v. Owens et al. 2 Peters R. 527, is cited by counsel as sustaining the doctrine that all contracts prohibited by law are unconditionally void, and not to be enforced, even if there is no express provision declaring their nullity. The principle held in that case is, however, explained and modified by the later case of Harris v. Runnells, before referred to. And it may be remarked that the facts in the case in 2d Peters were of a character requiring the most stringent application of law, to secure the ends of justice. There was a flagrant and oppressive usury on the part of the bank, as well as a clear violation of its charter. The interest reserved, as stated in the opinion of the court, was equivalent to forty-five per cent. for three years, being about fifteen per cent. per annum in excess of the legal interest. Every instinct of justice required that relief from this hardship should be afforded the injured party. But the case before this court does not present any of the repulsive features of the case referred to. It involves no moral turpitude, vitiating the contract on general prin In re Addison Moore. ciples. It is simply the 'case of a voluntary indorsement of a promissory note, in the discount of which interest was reserved at the rate of ten per cent. per annum. There is no pretence that any unjust advantage was taken of the necessities of the borrower, or that anything transpired which would shock the conscience of the most upright person. If, therefore, the note in question is void, it must be because the statute makes it so, and not on the general principles of the common law. sons. * It is insisted, however, by the counsel for the alleged bankrupt, that the discounting the note in question, with a reservation of illegal interest, was beyond the corporate power of the bank, and implies an excess of authority which invalidates the notes. It is, doubtless, true as a general principle, that every corporation must adhere strictly to the law of its creation, and can exercise no power not expressly granted or necessarily implied. But the cases are numerous to 125 the effect, that where a banking institution is vested, by its charter, with authority to make loans by the discount of paper, its legal rights and responsibilities as to such a transaction are the same as those applicable to private perThe laws of all the states of the Union prescribe the rate of interest which may be charged in the ordinary transactions of life, and affix a penalty for any excess beyond the rates fixed. But the same rule applies to such transactions as applies to corporations deriving their authority from their charters. In this respect there seems to be no difference between natural persons and corporations. This principle was fully discussed and settled in two cases, to which the attention of the court has been called, after full consideration. The cases referred to are the Farmers' Bank v. Burchard, 33 Vermont Rep. 346, and the Bank of Manchester v. Nolan et al. 7 Howard's Miss. Rep. 508. These cases, with many others that might be cited, distinctly hold that where a bank reserves illegal interest in its loans, unless its charter expressly declares that the contract of loan shall be void, it is void only as to the excess of interest charged, and not as to the principal. And it may not be inaptly |