Logan County National Bank v. Townsend.

when the amount of recovery is not made an issue of fact, or left to the discretion of the jury.

In this case, after the issues of fact were settled by the jury, the amount of recovery did not depend upon the discretion of either the court or jury, but upon a simple arithmetical calculation according to the basis fixed by the pleadings; for by sub-section 4, section 126, allegations concerning value or amount of damage, accompanied by an allegation of an express promise, or by a statement of facts showing an implied promise to pay such value or damage, such as was contained in the petition in this case, need not be proved unless traversed.

It is contended by counsel that there are three distinct grounds, upon each of which the demurrer to the petition, as well as the motion for a peremptory instruction to the jury, ought to have been sustained. These we will now consider.

1. The contract is void for want of mutuality and for want of sufficient consideration. The contract, as stated in the petition, and about the nature and terms of which it seems to us there is no room for controversy, was fully executed by appellee, but only in part by appellant; and it is for a breach of the executory part this action was brought; and as there was nothing more to be done by appellee to entitle him to the right to demand a full performance by appellant of what it agreed to do, there can arise no question of a want of mutuality; for the consideration for what remained to be done, as well as what had been done by appellant, had already passed from him, and been received by it. It is not a pertinent inquiry whether either the consideration of the contract was sufficient, or, as has turned out, it was a judicious one. It was made at the instance of appellant or of its cashier, and, as we must presume, with the expectation of profit; and if the bonds had been kept, instead of being sold by appellant, no loss would have resulted from restoring them upon the demand of appellee, while a greater than the legal rate of interest would in the meantime have been realized on the amount invested in them.

2. The next ground is that the contract is not within the scope of the cashier's powers, and consequently not binding on the bank. The special finding of the jury reduces the discussion of this question to very narrow limits in fact, precludes appel

Logan County National Bank v, Townsend.

lant from denying the authority of the cashier to make the contract; for if appellee sold the bonds to appellant, the bank, it necessarily follows they were appropriated and used by it; and having thus derived, or elected to avail itself of, whatever benefit might flow from the contract, it cannot now in good faith repudiate the contract, or any part of it; nor deny the authority of the cashier to make it.

3. The last ground is that the contract is ultra vires the corporate authority of the bank, in direct violation of its charter, and consequently is no such an obligation as will charge the bank, or make it to any extent, either in law or conscience, liable in damages or otherwise for breach of the conditions. It seems to us that if the proposition be conceded, it would not avail appellant; for if it had no authority, under its charter, to purchase the bonds, it cannot in justice and conscience refuse to abide by the judgment in this case, which involves nothing more than the return of the bonds and receipt of what it paid for them. To do less cannot be justified without permitting it to profit by its own wrong in violating the law of Congress under which it exists.

Probably, according to a fair construction of the National Bank Act, the power is not expressly given to appellant to purchase and deal in bonds of the character of those in question, but neither is it expressly prohibited by the act to do so. And there is a proper and well-recognized difference between "the case of an engagement made by a corporation to do an act expressly prohibited by its charter or some other law, and a case of where legisla tive power to do the act has not been granted." See Hitchcock v. Galveston, 96 U. S. 341, and numerous authorities there cited. In that case the following, from State Board of Agriculture v. Citizens' St. Ry. Co., 47 Ind. 407, was quoted with approval: Although there may be a defect of power in a corporation to make a contract, yet if a contract made by it is not in violation of its charter, or of any statute prohibiting it, and the corporation has by its promise induced a party, relying on the promise and in execution of the contract, to expend money and perform his part thereof, the corporation is liable on the contract."

If the special findings of the jury in this case be taken as true, there needs no argument to show that the rule there laid down

Alves v, Henderson National Bank.

applies to the contract we are considering; and to adopt the opposite of that rule would invite a disregard of the provisions of the National Bank Act, as well as fraud and bad faith toward those dealing with a corporation existing under it.

It is not stated in argument or pleaded that appellee has waived his rights under the contract sued on, or that he delayed for an unreasonable length of time in demanding performance by appellant; and as the rulings of the lower court upon the pleadings, as well as regards the instructions to the jury, are consistent with the views expressed in this opinion, the judgment must be affirmed.

ALVES V. HENDERSON NATIONAL BANK.

(Ky. )

Usury-penalty — interest after due.

Under act of Congress June 3, 1864, § 30, providing that National banks knowingly receiving or charging a greater rate of interest than allowed by the State where the bank is located, shall forfeit the entire interest which the note carries with it, or which has been agreed to be paid thereon, not only is forfeited a greater sum reserved by the bank out of the money than the legal interest for the time the note has to run, but also the interest accruing by law upon non-payment after maturity.

An agreement to pay illegal interest in a mortgage given to secure the notes after maturity, forfeits both legal and illegal interest, though no interest is expressed in the notes themselves.

A

PPEAL from a judgment of the Circuit Court of Henderson county. Action by the Henderson National Bank against W. S. Alves, trustee of Reutlinger and others on promissory notes. Judgment for plaintiff for a portion of its demand, and defendants appeal. Also cross-appeal by plaintiff.

Clay & Banks and John Young Brown, for appellants.

Yeaman & Lockett, for appellee and cross-appellant.

BENNETT, J. To the appellee's (Henderson National Bank) action against Reutlinger and others on six promissory notes, each

Alves v. Henderson National Bank.

due and payable four months from its date, and each executed by said Reutlinger and others to the appellee, the appellant W. S. Alves, as trustee of said Reutlinger, etc., filed his answer, in which it was alleged in substance that said notes were executed for borrowed money; that at the respective times said money was borrowed the appellee, by an agreement with Reutlinger and others, put so much of it to their credit and retained the balance as interest for the next four months the time that each note was to run; that the sum so retained out of each loan amounted to more than the legal rate of interest thereon for the four months that each note was to run. The reply of the appellee denied that it retained as much as the alleged sums as interest, but it did not deny that the respective sums were retained out of each loan. The bank, doubtless drawing a distinction between discount and interest, called these sums discount, and therefore denied that said sums were retained as interest; but the fact nevertheless existed that the sums were retained as compensation for the use of the money that it loaned to Reutlinger, etc., and which under the law constituted interest. A simple calculation will show that each sum so retained amounted to a greater rate of interest than six per cent on the sum from which it was retained. The answer also alleges that after the maturity of said notes, Reutlinger, etc., agreed to pay to the bank eight per cent interest on each note from its maturity until paid. After the maturity of the notes Reutlinger, etc., executed to the bank a mortgage on some real estate to secure the payment of them. In said mortgage it was expressly agreed that eight per cent interest was to be paid on each note (the note itself being silent 'as to interest) from its maturity until paid, and the mortgage secures the payment of said sum. The lower court abated the face of each note by the sum that the appellee retained thereon as interest, upon the ground the sum so retained amounted to more than the legal rate of interest, and by reason thereof said sum was forfeited; but the court gave judgment for the interest on each note at the rate of six per cent per annum from the maturity of the note until judgment was rendered thereon. From the latter part of the judgment Alves has appealed to this court; from the former part of the judgment the bank has taken a cross-appeal.

Alves v. Henderson National Bank.

The conclusion is irresistible that the sum retained by the appellee out of each note amounted to more than six per cent interest, which is the legal rate of interest in this State, both in reference to individuals and State banks, for the period from the date of the note until its maturity. It is clear that the excess over six per cent was usurious, and that the appellee knew it. Section 30 of the National Currency Act of Congress of the 3d of June, 1864, after prescribing that the National banks created under the said act shall not charge a greater rate of interest than that allowed by the laws of the State or Territory where the bank is located, declares :

"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 in case a greater rate of interest has been paid, the person or persons paying the same, or their legal representatives, may recover back, in any action of debt, twice the amount of interest thus paid from the association taking or receiving the same; provided, such action is commenced within two years from the time the usurious trans action occurred."

It is held in the cases of Tiffany v. Bank, 18 Wall. 409; Bank v. Dearing, 91 U. S. 29; 1 Nat. Bank Cas. 117; Barnet v. Bank, 98 U. S. 555; 2 Nat. Bank Cas. 18; Driesbach v. Bank, 104 U. S. 52; ante 19, that under the act of Congress, supra, if a National bank knowingly takes, receives, reserves or charges a greater rate of interest than that allowed by the laws of the State or Territory in which the bank is located, such conduct shall be held and adjudged 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, etc. The perspicuity and directness of the clauses of said section leave no room to doubt as to their meaning. The courts that have passed upon them have had but little else to do, in order to evolve their meaning, than to recall and repeat their language. Having determined that the sum retained as interest on each note, for the period of four months, amounted to more than six per cent for that period, and by the laws of this State the contract was usurious, it follows that the interest for said period at least was forfeited, and that the judgment of the lower court deducting the sum so retained from each note