Lebanon National Bank v. Karmany. the interest paid in excess of the legal rate. The statute makes the receiving or charging "a rate of interest greater than is allowed" "a forfeiture of the entire interest." "In case the greater rate of interest has been paid" the debtor may recover back "twice the amount of interest thus paid." The bank may take or charge the "rate" allowed by the laws of the State where it is located, and if no "rate" is fixed by said laws, it may take or charge a "rate" not exceeding seven per centum. It is clear the word "rate" is used in the same sense throughout. The lawful rate, measure, is certain, and a greater rate, whatever it may be, is a fixed measure by agreement of the parties. The entire interest forfeited is just the rate which was contracted. Upon payment and receipt of a greater rate than is lawful, twice the amount thus paid is twice the rate, twice the entire interest. To say that the meaning is only a part of said greater rate, only the excess over the lawful rate, may be taken to measure the penalty, is a wrestling of the words. The defendant cites and relies on the case of Hintermister v. First Nat. Bank of Chittenango, 3 Hun, 345, where it was decided that only twice the amount paid in excess of the lawful interest can be recovered. Great, weight is justly given to the decision of that court, but in this case we think its reasoning and conclusion are directly at variance with the statute. We adopt the ruling of DILLON, Circuit Judge of the United States, that 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. Crocker v. First Nat. Bank of Chetopa, 3 Cent. L. J. 527; 1 Nat. Bank Cas. 317. In answer to the defendant's twenty-seventh point the court charged that there can be no set-off in this action. The plaintiff's claim is not in the Defalcation Act, which applies where the parties are "indebted to each other upon bonds, bills, bargains, promises, accounts or the like." It arises from the defendant's violation of a statute, remedial and penal, which gives the borrower the right to recover back from the bank twice the amount of legal interest paid, for the twofold purpose of compensation and example the recovery being a recompense to the one and a punishment of the other. Monongahela Nat. Bank v. Overholt, supra. It was decided in Barnett v. National Bank, 98 Guthrie v. Reid. U. S. 555; 2 Nat. Bank Cas. 18, that in an action on a bill of exchange, the defendant could not set off a claim for twice the amount of illegal interest he had paid the bank; that his remedy for the wrong was a penal suit, and he could have redress in no other mode or form of procedure. That set-off is not allowed in such actions is well settled. When the prescribed action for recovery is debt, or action in the nature of debt, it gives no right of set-off. After the plaintiff shall have obtained judgment, if the defendant have a judgment against the plaintiff in another case, there is power in the court to order one judgment to be set off against the other, governed by equitable principles. But such principles do not apply in a suit where the claim is in the nature of a penalty for violation of a statute so as to allow defalcation. Nothing need be added to the opinion of the learned judge of the Common Pleas, wherein he gave his reasons for denying the motion in arrest of judgment. Judgment affirmed. Judgment — opening. GUTHRIE V. REID. (107 Penn. St. 251.) Usury effect on note. Attorney's commissions. A judgment creditor realized the amount of his demand from collateral security. The debtor notified him that the amount due was disputed, and required him not to apply the collateral to its payment until the amount was determined. The plaintiff, notwithstanding, applied the funds and satisfied the judgment of record. Held, that the defendant was entitled to have the entry of satisfaction struck off and be admitted to defend. Where a National bank takes, receives or charges more than the legal rate of interest in the discount of a note, the interest-bearing power of the note is destroyed, and remains destroyed until it is paid. Reid gave Guthrie a judgment note for the latter's accommodation. Guthrie procured it to be discounted by a National bank at a usurious rate of interest. Held, that defendant could avail himself of the usurious discounts charged by the bank as a defense to the payment of interest. The reasonableness of an attorney's commission stipulated for in a judgment note is a question for the court, but if submitted to the jury and their verdict is reasonable it will not be disturbed. Guthrie v. Reid. A judgment confessed, having been opened on the ground that it had been overpaid by proceeds of collaterals, the order of court provided that the judgment note should stand as a narr., and that "an issue is awarded to ascertain the amount due the plaintiff on this judgment January 7, 1881. And the amount of over-payment (if any) applied to the satisfaction of the same." Held, improper; the only proper issue was the amount due on the judgment. A docket entry of a judgment not supported by the record, and which ap pears on its face to be a clerical error, will be stricken off by the Supreme Court. BEFOR EFORE MERCUR, C. J., GORDON, PAXSON, TRUNKEY, STER- Error to the Court of Common Pleas of Clarion county. The judgment was entered in the court below in the name of J. W. Guthrie, for use of First National Bank of Clarion against John C. Reid, upon a judgment note dated June 20, 1878, for $3,050, payable ninety days after date, with five per cent attorney's fees for collection, amounting in all to $3,202.50. On January 7, 1881, the judgment was satisfied and the following receipt entered on the docket: "Received January 7, 1881, from the defendant, $3,633.94, in full of debt, interest and costs, money realized on Ralph Bagley note. "G. W. ARNOLD, Cashier." The head-note and opinion show the case. Judd & Wilson, for plaintiff in error. B. J. Reid, A. B. Reid and W. L. Corbett, for defendant in error. PAXSON, J. The court below was entirely right in opening the judgment held by the bank against John C. Reid. The satisfaction of the judgment after notice that the amount was disputed was improper, and if not corrected in some form, was calculated to work injustice to Reid, for the reason that when he should attempt to call the bank to account for the proper application of his collateral, the bank could say to him: "The judg ment which we satisfied is conclusive upon you as to the amount due thereon. Nor do we see any breach on the part of Reid of the contract with the bank by which the proceeds of the Bagley Guthrie v. Reid. note were to be applied to the claims of the bank held against him. This judgment was not specified in said contract; it was doubtless included; but this did not justify the bank in applying more money on the judgment than was due thereon, especially in the face of a notice not to do so. It is settled law that where a National bank takes, receives or charges more than the legal rate of interest in the discount of a note, the interest-bearing power of the note is destroyed. And when once so destroyed, it remains so. The taint of the usury clings to it until paid. It is a dead note thereafter, so far as interest is concerned. Lucas v. Bank, 78 Penn. St. 231; 1 Nat. Bank Cas. 872; Bank v. Karmany, 98 Penn. St. 65; ante 746. The rule thus indicated is a sound one. The object of the act of Congress is to punish National banks for such violation of the law. The obvious way to avoid the punishment is not to commit the offense. It was urged however that Reid, the maker of the note, cannot avail himself of this defense because the illegal interest was paid by Guthrie, for whom the note appears to have been discounted The answer to this is that the bank, by its act, has destroyed the interest-bearing power of the note, and can recover no interest upon it from anybody. If this had been a suit by Reid to recover back interest paid by Guthrie, we would have had a different question, and Bly v. National Bank, 79 Penn. St. 453; 1 Nat. Bank Cas. 937, and other authorities cited by plaintiff in error, might have had some application. What has been said we think sufficiently covers the first nine assignments of error. It was error however to submit to the jury the question of the amount of the attorney fee. It was settled in Daly v. Maitland, 7 Nor. 384, that this is a question for the court in the exercise of its equity powers, and is not a proper one for submission to a jury. We do not see however that any harm has been done by the submission in this particular instance, as the amount fixed by the jury is not unreasonable. We will not therefore reverse for this reason. But we point out the error that it may not be made a precedent. Some minor errors have crept into the case which must be corrected. They are due in part to the fact that the order for the VOL. III-95. Guthrie v. Reid. issue was too broad. The issue itself was exceedingly informal and vague. The order provided that the note on which judgment was entered should stand as a narr., and that "an issue is awarded to ascertain the amount due the plaintiff on this judgment January 7, 1881. And the amount of over-payment (if any) applied to the satisfaction of the same." The latter clause of the issue should have been omitted. The only proper issue was the amount due upon the judgment. That settled, the amount of over-payment becomes a mere matter of arithmetic, about which there could be no dispute, and which could not be properly determined in this proceeding. The verdict of the jury followed the vice of the order. as follows: It was "August 21, 1883. We find there was due the plaintiff on this judgment, January 7, 1881, at the date he applied a part of the proceeds of the collateral (Ralph Bagley) note, as follows: "We find the excess of application applied by plaintiff to the payment of this judgment on January 7, 1881, to be $560.15." The latter part of the finding we may reject as surplusage. The proper finding, viz.: the amount due on the judgment, is complete without it; and we can thus preserve all that is pertinent and valuable in the verdict. The finding of "the excess of application" led to another blunder. Upon it the prothonotary has entered a judgment in favor of Jno. C. Reid in the sum of $560.15. There is nothing whatever upon the record to base such a judgment upon; it was probably an error in the officer who entered it, and it is a matter of some surprise that it was not corrected below. It doubtless would have been had it been called to the attention of the learned court: As it is a mere excrescence upon the record, we can correct it here. The entry of August 21, 1883, purporting to be an entry of judgment in favor of John C. Reid for $560.15, is stricken from the record. Subject to this modification the proceedings below are affirmed. |