Alves v. Henderson National Bank. must be affirmed on the cross-appeal. But the appellee, the bank, contends, that as each note was silent as to interest from and after its maturity, the six per cent interest that the same bore after maturity was by virtue of the law, and not by contract. Therefore the usurious interest that said notes bore from their respective dates until maturity did not under said act forfeit the interest arising on the notes after maturity, by virtue of the law, and not by contract. The appellant Alves contends for the reverse of this proposition. A scrutiny of the clauses of the section, supra, will show that the appellant's contention is correct. To knowingly take, receive, reserve or charge a rate of interest greater than that allowed by the State law, 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." The expression "carries with it" means any interest that the note, bill or other evidence of debt may carry by operation of law; for the next succeeding clause, to-wit: "or which has been agreed to be paid thereon," leaves no doubt as to the meaning of said expression. In many States of the Union, as was the case in this State at one time, there was at the time of the passage of said act of Congress a fixed rate of interest to be charged in the absence of contract, and by contract a greater rate of interest might be charged. It seems clear therefore the expression "carries with it" refers to such interest as the note, etc., may carry without reference to any agreement, and that the succeeding clause refers to such conventional legal rate of interest as the parties may have agreed on; both of which shall be forfeited if any usurious interest has been taken, received, reserved or charged. Also the language clearly means that if usury has been agreed to be paid for any part of the time that the note is entitled to run, or that it may by indulgence run, such agreement forfeits the entire interest that the note or bill carries with it; or if the note or bill bears a conventional rate of interest, such as some States allow, and in addition thereto usury has been charged for any part of the time, such conventional rate of interest is thereby forfeited. The framers of the act of Congress under consideration doubtless understood that much of the business of the banks created by the act would consist in lending money secured by 456 KENTUCKY COURT OF APPEALS, 1888. Alves v. Henderson National Bank. notes, etc., made due and payable not exceeding four months from date, and if need be, renewed from time to time; that the usurious contracts would relate to the time such notes were to run, and in case of their renewal, so also would the usurious contracts be renewed. Hence the act provides, in substance, that in case usury is taken, received, reserved or charged, the entire in terest that the note carries, or that may exist by agreement, shall be forfeited. The foregoing views accord with the case of Bank v. Stauffer, 1 Fed. Rep. 187-189; 2 Nat. Bank Cas. 178. In that case the bank had received usurious interest for the time. that the note was maturing. The question was, did that fact forfeit the interest accruing on. the note after its maturity? Judge MCKENNAN, delivering the opinion of the court, held in substance, that according to the clause, supra, declaring the tak ing of usury a forfeiture of the entire interest that the note carries with it, the taking of usurious interest during the maturity of the note forfeited the interest accruing thereon after its maturity, as well as that accruing before its maturity. But if we are mistaken in reference to the forfeiture of the interest that accrued upon these notes by virtue of the law, after their maturity, nevertheless the question is put at rest by the fact that it is expressly stipulated in the mortgage given to the appellee by Reutlinger, etc., to secure these notes, that eight per cent interest was to be paid thereon from the maturity of each note until paid. The bank accepted this agreement, which, under the laws of this State, leaving out of view the act of Congress, supra, was valid, and upon a sufficient consideration, except two per cent thereof, which was usurious and invalid. But under the said act of Congress it is not necessary, in order to effect a forfeiture of the entire interest, that the agreement to pay usury should appear in the note, or that the agreement should be made simultaneously with the agreement to lend the money. Were the law so construed, the effect would be to enable the bank to evade the law every day by reducing the usurious contract to writing on a separate piece of paper, or by making it after the contract to loan the money was entered into. So the agreement set forth in the mortgage to pay usurious interest being, as contended by counsel, collateral, and having been made after the maturity of the notes, New Orleans National Bank v. Raymond. does not affect the question; for the agreement to pay a legal rate of interest was as binding as the agreement to additionally secure the debt itself, and the fact that the agreement was collateral did not change the agreed interest into principal. It was accruing every day as interest on the principal, and was in fact and in law interest, although expressed in the mortgage, and not in the notes; and as the agreement included usurious interest, it comes within the act of Congress which forfeits the entire interest. The judgment of the lower court is affirmed on the cross-appeal of the bank; and the judgment on the appeal of Alves, trustee, is reversed and the case is remanded, with directions to disallow the interest on each note from its maturity until the judgment was rendered thereon. NEW ORLEANS NATIONAL BANK V. RAYMOND. (29 La. Ann. 355; 29 Am. Rep. 335.) Mortgage-power to take, on sale of real estate. A National bank may sell its real estate and take a mortgage for the purchase-money. PROCEEDING ROCEEDING to cancel a conveyance as a cloud upon title. The opinion states the facts. Charles Louque and Carleton Hunt, for Joseph Billgery, appellee. McGloin & Nixon and Magruder & Richardson, for appel lant. SPENCER, J The Union National Bank of New Orleans sold to Joseph Raymond by authentic act of date the 27th of February, 1873, a certain parcel of ground in the square bounded by First, Second, Dryades and Baronne streets, for the price of $14,666.66, one-fifth of which was paid in cash, and for the balance Raymond executed notes at one, two, three and four years, VOL III-58. New Orleans National Bank v. Raymond. secured by special mortgage and pact of non alienando on the property. On the 10th of April, 1873, Raymond entered into a contract with the city of New Orleans, acting through its mayor under ordinance No. 2041, administration series. By that contract Raymond bound and obligated himself in substance to erect on said grounds a market-house according to certain specifications; to free the property of all mortgages and incumbrances on or before the completion of said building, and to keep the market as required by the city ordinances, etc. Raymond during the first ten years was to receive all the rents and revenues. At the expiration of the first ten years the city was for the next ten years to farm out the market and take all the rents and revenues in excess of $500 per month, or $6,000 per year, the rents up to said amounts to be paid to Raymond, his heirs or assigns. At the end of the second term of ten years Raymond was to transfer the grounds and market in full ownership to the city, binding himself not to alienate or incumber the same to the prejudice of this agreement. * * * On the 10th of March, 1874, the New Orleans National Bank obtained judgment on a bill of exchange for $700 against Joseph Raymond, issued execution thereon, seized, and on the 24th of July, 1876, sold and purchased for $150 "all the right, title and interest of Joseph Raymond in, to and under the contract made with the city of New Orleans of date April 10, 1873." "The said act of April 10, 1873, conferring upon him the right to the revenues of a market constructed by him at the corner of Second and Dryades streets, in the square bounded by Second, First, Dryades and Baronne streets, for the term of twenty years," etc. On the 5th of September, 1876, said New Orleans National Bank sold and transferred, in consideration of the amount due it, with subrogation, to Mrs. Baranco, all its rights in, to and under said judgment and purchase. On the 24th of May, 1876, the Union National Bank, under executory process against Raymond upon said vendor's mortgage, seized the above-described lots of ground, "together with all the buildings and improvements thereon," and advertised the same for sale on the 1st of July, 1876. New Orleans National Bank v. Raymond. On June 29, 1876, Joseph Billgery purchased and was subrogated to the judgment in the case of "Andrew G. Downey v. Joseph Raymond," for some $1,250, being for work done on said market buildings. On the 1st of July, 1876, the day of sale, Joseph Billgery paid to the Union National Bank the mortgage note due, and the sale was not made. Subsequently he took up and paid the remaining outstanding vendor's note held by the Union Bank. Billgery did not take a formal act of subrogation at the time of his payment on the 1st of July, but on the 2d of August, 1876, the bank gave him a receipt and subrogation to his rights. Billgery, as subrogee of the Union National Bank, caused said property to be re-advertised for sale on February 10, 1877, and re-advertised again for sale on March 3, 1877. On the 24th of February, 1877, he commenced the proceeding now before us, being a rule taken on Mrs. Baranco to show cause why the act of adjudication by the sheriff to the New Orleans National Bank above described (to which she had been subrogated) should not be erased and canceled from the books of the office of conveyances, for the reason that the same is null and void and operates injuriously to him (Billgery) as a cloud upon the title of said property. Mrs. Baranco pleads by way of exception and answer in substance as follows: First. That plaintiff in rule, not being a party to the suit of New Orleans National Bank v. Joseph Raymond, cannot proceed in this summary manner to set aside the adjudication, and should proceed by direct action. Second. That the pretended mortgage to the Union National Bank is void, as taken in contravention of the laws of the United States creating National banks; that said bank under said laws is prohibited from owning real estate and from taking or holding mortgages thereon under the circumstances of this case. Third. That the mortgage to the Union National Bank has been extinguished by payment, and that said Billgery was not subrogated thereto. Fourth. She alleges her ownership of the rights of Raymond under the said contract with the city, and that she is entitled |