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Opinion of the Court.
be liable to entry.” Notwithstanding this prohibition patents were issued for the lands, and it was beld that they were absolutely void, the court saying, p. 674: “It does not strengthen the case of the plaintiffs that they obtained certificates of entry, and that patents were subsequently issued on these certificates. It has been repeatedly decided by this court that patents for lands which have been previously granted, reserved from sale, or appropriated, are void. The executive officers had no authority to issue a patent for the lands in controversy, because they were not subject to entry, having been previously reserved, and this want of power may be proved by a defendant in an action at law.”
In that case it will be observed that the records disclosed that the lands were saline lands when the proceedings in the Land Department were bad. So the case was not one in which the department determined a fact upon parol evidence, but one in which it acted in disregard of an established and recorded fact. In Root v. Shields, 1 Woolworth, 340, decided
1 by Mr. Justice Miller, at the circuit, it was held that a patent for lands within the limits of the city of Omaha was void. It is true that case was one in equity and not in law, but so far as respects the decision that the patent was void, it is exactly in point.
Now, applying these authorities to the case at bar, the city of Minneapolis was incorporated by an act of the legislature of that State, declared in its terms to be a public act, which took effect on March 8, 1881. The record of the Land Department shows that the right of the patentee was initiated on March 27, 1883, for on that date he made his application to enter the lands. This is not a case in which the patent was founded upon actual occupancy for homestead purposes, or in wbich nothing appearing but the patent itself there might be uncertainty as to the time at which the patentee's rights were initiated -- whether before or after the incorporation of the city. It is one where, affirmatively and by the record, it is disclosed that there was no pretence or semblance of claim on the part of the patentee until two years subsequent to the organization of the city, and in that respect differs from Texas
Statement of the Case.
& Pacific Railway v. Smith, 159 U. S. 66, in which, on account of the absence of all testimony, there was suggested an uncertainty as to the time at which, by way of relation, the patentee's rights took effect. The case, there fore, comes within the general rule announced as to the invalidity of a patent issued in defiance of the expressed will of Congress.
The judgment of the Supreme Court of Minnesota was right, and it is
UNION NATIONAL BANK v. LOUISVILLE, NEW ALBANY AND CHICAGO RAILWAY COMPANY.
ERROR TO THE SUPREME COURT OF THE STATE OF ILLINOIS.
No. 254. Submitted April 29, 1896. – Decided Nay 18, 1896.
The ruling of the Supreme Court of Ilinois, on the issues in this case that
the statutes of Ilinois contain both a prohibition and a penalty, that the prohibition makes void pro tanto every contract in violation thereof, and that while section 11, prohibiting corporations from pleading the defence of usury, may prevent any claim to the benefits of the penalty, it does not give to the other party a right to enforce a contract made in violation of the probibition, brings the case within the settled law that, where the record discloses that a question has been raised and decided adversely to a party claiming the benefit of a provision of the Constitution or laws of the United States, and another question, not Federal, has been also raised and decided against such party, and the decision of the latter question is suficient, potwithstanding the Federal question, to sas. tain the judgment, this court will not review the judgment.
On September 17, 1890, plaintiff in error, plaintiff beloir, loaned the defendant $150,000, taking its note therefor, secured by collateral. The note was discounted at the rate of six per cent. The note having been paid, the plaintiff, on October 12, 1891, commenced its action in the Circuit Court of Cook County to recover upon a parol agreement for further compensation. The case came on for trial in that court, and a jury being waived the following facts were admitted by stipulation :
Statement of the Casc.
“On or about September 17, 1890, William L. Breyfogle, then president of the Louisville, New Albany and Chicago Railway Company, verbally arranged with the Union National Bank of Chicago for a loan of one bundred and fifty thousand dollars to said railway company, the repayment thereof to be secured by collateral security in the form of three hundred bonds, of the general gold bonds of the Louisville, New Albany and Chicago Railway Company, said bonds being in the denomination of one thousand dollars each.
“It was verbally agreed in this arrangement that the bank should discount from this one hundred and fifty thousand dollars interest at the rate of six per cent per annum, and that Mr. Breyfogle, president of the railway company, should endeavor to secure the Chicago, and Western Indiana Railway Company as a depositor with said Union National Bank, and in case he failed so to do the said bank should have in lieu of such deposit a commission of two and one half per cent upon said $150,000 in addition to said six per cent thereon. The deposits of the Chicago and Western Indiana Railway Com. pany would have been valuable to the said bank as a part of its business and it declined to make the said loan, except upon the terms above stated."
The Chicago and Western Indiana Railway Company failed to become a depositor, as contemplated, and the claim of the plaintiff was for the two and one half per cent, called in such parol agreement "a commission." The plaintiff asked the court to hold these two propositions of law:
“1. The court finds as a matter of law that no corporation organized under the laws of Illinois can interpose the defence of usury in any action, even though the plaintiff in such action (the lender) be a national bank organized under the act of Congress establishing national banks.
“2. The court finds as a matter of law that if, in consideration of the making of the loan in controversy by the plaintiff to the defendant, the defendant agreed that, in addition to paying six per cent interest on said loan, it would secure the Chicago and Western Indiana Railway Company as a depositor of plaintiff, wbich said deposit account would have been
Statement of the Case.
of value to plaintiff, or, failing to secure such account, would pay plaintiff a commission of two and one balf per cent on said loan, in addition to said six per cent interest, this would not constitute usury or defeat a recovery by plaintiff, unless it should appear by a preponderance of the evidence that such arrangement was a mere shift or cover or device to evade the statute against usury or the provisions of the national banking act, or that such was the intent or purpose of the parties or one of them."
But it refused to hold either of them, and, on the contrary, ruled at the instance of defendant as follows:
“The court holds as a matter of law that a national bank in Illinois has no legal right or anthority to charge or receive interest in this State to exceed the rate of eight per cent, and that the statute of this State which denies to corporations the right to plead usury cannot expand the authorities of national banks touching this subject as conferred by and fixed in the national banking act."
And thereupon it entered judgment in favor of the defendant. The Appellate Court of the State affirmed the judgment, on the ground that to sustain a recovery in favor of the plaintiff would involve the admission of a cotemporaneous parol agreement to modify and add to the terms of a written contract. The Supreme Court of the State, while recognizing fully the proposition that no parol agreement could be admitted in evidence to vary the terms of a written contract, referred to the claim that the stipulation waived defendant's right to object to the introduction of such evidence, and de clining to express its opinion as to the effect of such stipula tion affirmed the judgment on the ground that the contract, as thus modified by the parol agreement, was forbidden by the laws of Illinois, and could not be enforced.
The plaintiff is a national bank, and section 5197, Rev. Stat., authorizes such bank to charge and receive "interest at the rate allowed by the laws of the State, Territory or district where the bank is located, and no more." The laws of Illinois in force at the time of this contract authorized parties to stipulate and agree for eight per cent in all written con
Statement of the Case.
tracts, and forbade the acceptance or receiving of any greater rate. Sections 6 and 11 of the statate, Ill. Rev. Stat. 1889, c. 74, are as follows:
“Seo. 6. If any person or corporation in this State shall contract to receive a greater rate of interest or discount than eight per conty upon any contract, verbal or written, such person or corporation shall forfeit the wbole of said interest so contracted to be received, and shall be entitled only to recover the principal sum due to such person or corporation; and all contracts executed after this act shall take effect, which shall provide for interest or compensation at a greater rate than herein specified, on account of non-payment at maturity, shall be deemed usurious, and only the principal sum due thereon shall be recoverable."
“ SEO. 11. No corporation shall hereafter interpose the de fence of usury in any action.”
The Supreme Court held that, while the defendant corporation might not interpose the defence of usury and so avoid the payment of any interest, the contract was, nevertheless, within the prohibitions of the statute, and could not be enforced at the instance of the plaintiff; because it provided for more than eight per eent. In its opinion it said:
“The theory seems to be that because a corporation cannot set up usury as a defence any person or corporation dealing with a corporation may lawfully exact such rate of interest as may be agreed upon, whether in excess of the statutory limit or not, so that where a corporation is the debtor no rate of interest is fixed by the laws of this State. To this view we are totally unable to yield our assent.
“Nor does it follow that because the debtor who has agreed to pay more than the legal rate of interest is a corporation, and therefore incapable of interposing the defence of usury, the law will treat the contract as valid and enforce it according to its terms.
"In the present case, then, the section of the statute imposing a penalty may be left out of view as inapplicable, but