National State Bank of Camden v. Pierce.

Held (WELKER, J.), that the officers of National banks cannot be compelled to present for inspection, either to the auditor or probate judge, their books showing the deposits of the bank, and therefore defendants were restrained from compelling the same to be done.

NATIONAL STATE BANK OF CAMDEN V. PIERCE.

(18 Albany Law Journal, 16.)

National bank can be located in but one place.

A National bank located in New Jersey, for the convenience of persons in Philadelphia kept a clerk in that city who received deposits. Held, that the bank did not become located in Philadelphia so as to be liable to taxation.

(Circuit Court, Eastern District of Pennsylvania, 1878.)

ILL to procure an injunction to restrain the bank assessors of

BILL

the State of Pennsylvania from returning an assessment upon the capital stock to the Auditor-General of the State, and to have the assessment declared illegal. It appeared from the bill set forth that the plaintiff was a National bank engaged in business in New Jersey; that for the convenience of persons in Philadelphia desiring to deposit money therein, it kept a clerk in an office in that city, to receive deposits and to deliver them to the bank in Camden, N. J., at the close of each day; that the defendants, who were the bank assessors of the State of Pennsylvania, had served on the plaintiff a notice of an assessment of a tax upon the entire capital stock of the bank; that said assessment, which was made under acts of the assembly of Pennsylvania of April 12, 1867, April 2, 1868, and December 22, 1869, was contrary to law and void; that the plaintiff had taken an appeal from the assessment in due time, but the assessors refused to vacate or alter the assessment.

John Goforth (with him C. S. Carson), for plaintiff.

S. G. Thompson, for defendants.

VOL. II-23

First National Bank of Uniontown v. Stauffer.

MCKENNAN, J. (CADWALLADER, J., concurring.) We have decided, after full discussion, that even when a corporation carries on business in a State, it does not thereby become an inhabitant of it, and we cannot go farther and say that by similar conduct a corporation becomes located therein.

Injunction granted.

FIRST NATIONAL BANK OF UNIONTOWN V. STAUFFER.

(1 Federal Reporter, 187.)

Usury.

The receipt by a National bank of an usurious rate of interest upon the discount of a note works a forfeiture of interest accruing after the maturity of the note, as well as before maturity.

(Circuit Court, Western District of Pennsylvania.)

A

CTION upon a promissory note against an accommodation indorser. The opinion states the case.

J. M. Stoner, for plaintiff.

T. C. Lazear, for defendant.

MCKENNAN, J. This case was tried before the late Judge KETCHAM, and under his instructions, a verdict was rendered in favor of the plaintiff for the amount of the note in suit, with interest from its maturity to the date of the verdict. A motion for a new trial was made by the defendant, for the reason, that under the circumstances no interest was recoverable upon the note, and that it was error in the judge to instruct the jury otherwise.

It is admitted that more than the legal rate of interest was charged and received by the plaintiff for the period which elapsed between the date and maturity of the note, and the question is whether this subjects the plaintiff to a forfeiture of the interest which accrued afterward.

First National Bank of Uniontown v. Stauffer.

The National Currency Act furnishes a clear answer to this question. After fixing the rate of interest to be taken by National banks at that allowed by the local law, the thirtieth section of that act (Rev. Stat., § 5198) enacts: "And the knowingly taking, receiving, reserving or charging a rate of interest greater than aforesaid shall be held and adjudged to be a forfeiture of the entire interest which the note, bill or other evidence of debt carries with it, or which has been agreed to be paid thereon;" and it is further provided, that where excessive interest has been paid, twice the amount may be recovered by an action commenced within two years.

The "entire" interest which the note "carries with it" is forfeited; and if this means all the interest which accrues upon it, as I think it clearly does, it is difficult to understand how any part of it is recoverable. By the operation of the act an usurious contract is inherently vicious, so that it cannot " carry" any interest "with it;" hence it would inadequately effectuate the intent of the act to hold that such a contract is purged of its taint, and is invested with a capacity denied to it before, by the failure of the debtor to pay the debt evidenced by it, at maturity.

This view of the effect of the act of Congress is not inconsistent with the opinion of the court in Barnet v. Nat. Bank, 8 Otto, 555 (ante, 18), as was urged in the argument, but is in entire harmony with it. There it was sought to set off usurious interest paid upon a series of renewed bills, and also twice the amount of such interest, and it was held that the only remedy of the debtor was a penal action, as provided by the last clause of section 30. In expounding this section the court say: "Two categories are thus defined, and the consequences denounced:

"1. Where illegal interest has been knowingly stipulated for, but not paid, then only the sum lent, without interest, can be recovered.

"2. Where such illegal interest has been paid, then twice the amount so paid can be recovered, in a penal action of debt or suit in the nature of such action against the offending bank. **" It is thus declared that the effect of a mere stipulation for illegal interest by a National bank is to deprive it of the right to

Mitchell, for use of First National Bank of Butler, v. Walker.

recover more than "the sum lent, without interest; " but surely the "receiving" of illegal interest in furtherance of a stipulation to that effect cannot place the bank upon any better footing. It will undoubtedly preclude the recovery, by the debtor, of the penalty for an usurious payment, by way of set-off against his debt, but it cannot invest the creditor with a right to recover what the law declares he shall forfeit by reason of his unlawful agreement.

In this case it was agreed that usurious interest should be paid, and was paid to the plaintiff, and the jury should have been instructed that this worked a forfeiture of all the interest upon the note, and that the plaintiff was entitled to recover only its face amount. A new trial will therefore be ordered, unless the plaintiff, within ten days, shall remit the excess of the amount found by the jury on the principal of the debt. Upon the entry of such remitter, judgment will be entered on the verdict for the amount so rendered.

MITCHELL, for use or First National Bank of Butler, v. WALKER.

(25 Internal Revenue Record, 64.)

Jurisdiction of Federal courts.

The Federal Circuit Court has unconditional jurisdiction of all suits to which a National bank is a party, irrespective of amount or citizenship.

A. N. Sutton and W. S. Purviance, for rule.

Miller and McBride and Charles McCandless, contra.

MCKENNAN, J. A careful examination of the main question involved in this motion has constrained me to change the opinion which I entertained at the argument. Under the Pennsylvania decisions, the instrument on which the suit and confession of judg ment here are founded is a non-negotiable promissory note. Such

Mitchell, for use of First National Bank of Butler, v. Walker.

instruments are not assignable at common law, and hence they are suable only in the name of the original payee. The State statute of May 28, 1715, provided for the assignment of "bonds, specialties and notes in writing," by the persons to whom they are made payable, and that the assignee thereof may maintain suit thereon in his own name. Under the first section of the act, any form of assignment expressive of the purpose of the assignee to vest the ownership of the instrument in the assignor would effectuate its intent, but the eighth section requires a seal and attestation by two witnesses of "bonds and specialties," while the assignment of the remaining subjects of the act "notes in writing"-is not restricted by any prescribed formula. The note in this case was duly assigned by "the person to whom it is made payable" to the First National Bank of Butler, so as to enable the bank to bring suit on it, in its own name, according to the provisions of the act of 1715.

Can such suit be maintained in this court, both parties being citizens of Pennsylvania? Under the Judiciary Act of 1789 it is clear that it could not, both because the legal parties are not citizens of different States, and because the assignor of the note in suit could not maintain it on account of his residence in the district. But the National Currency Act seems to have abrogated these conditions so far as they may affect National banks organized under it.

The 57th section of that act enacts that Circuit Courts shall have original jurisdiction" of all suits by or against any banking association established in the district for which the court is held, under any law providing for National banking associations, and this clause is re-enacted by the Revised Statutes, in chapter 7, defining the jurisdiction of the Circuit Courts. The enactment of the clause was clearly unnecessary to confer jurisdiction upon the Circuit Courts of suits by and against banking associations, because as corporate bodies they might sue or be sued in such courts, under the Judiciary Act, when the conditions prescribed by that act existed. That was manifestly not its object. But it is an unconditional grant of jurisdiction of all suits by or against National banks to the Circuit Courts of the district in which such