Ervin v. First National Bank

Allen, J. No question is raised by this appeal except as to the effect of the payment of $146.75, and as to that there is no allegation of usury, nor is there any demand in the complaint for the recovery of double this amount, the penalty prescribed by statute for receiving usurious interest. In the complaint, the plaintiff charges that, from 1 January, 1908, to 11 November, 1910, he paid $684, “the same being usu *47 rious, unlawful, and forbidden by law,” and lie demands tbat be be credited witb double tbat amount, and tbis is tbe only allegation of usurious payments. Tbe item of $146.75 cannot be a part of tbe sum of $684, because it was paid on 6 September, 1911. Again, be alleges tbat in addition to tbe credit of twice tbe sum of $684, usurious interest, be is entitled to be credited witb $1,005, “wbicb plaintiff paid defendant,” without any allegation tbat illegal interest was included in tbe payment, and tbis amount is made up of $858.25 and $146.75, both paid on 6 September, 1911. It follows, therefore, tbat as tbe plaintiff has not alleged tbat tbe payment of $146.75 was usurious, and has not brought tbis action to recover the penalty for receiving tbe same, be is not entitled to be credited witb double tbat amount. We are, however, of tbe opinion tbat be is entitled to have the payment credited on tbe principal sum due by him, as be demands in bis complaint. Commenting on tbe section of tbe National Banking Act dealing witb usury, wbicb in tbis respect is almost identical witb our statute, tbe Supreme Court of tbe United States says, in Brown v. Bank, 169 U. S., 416: “Tbe forfeiture declared by tbe statute is not waived or avoided by giving a separate note for tbe interest, or by giving a renewal note in wbicb is included tbe usurious interest. No matter bow many renewals may have been made, if tbe bank has charged a greater rate of interest than tbe law allows, it must, if tbe forfeiture clause of tbe statute be relied on, and tbe matter is thus brought to tbe attention of tbe court; lose tbe entire interest wbicb tbe note carries or wbicb has been agreed to be paid. By no other construction of the statute can effect be given to tbe clause forfeiting tbe entire interest which tbe note, bill, or other evidence of debt carries, or wbicb was agreed’to be paid, but wbicb has not been actually paid.” The same Court says, in Haseltine v. Bank, 183 U. S., 130: “Two separate and distinct classes of eases are contemplated by tbis section: first, those wherein usurious interest has been *48 taken, received, reserved, or charged, in which case there shall 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’; second, in case usurious interest has been paid, the person paying it may recover back twice the amount of the interest 'thus paid from the association taking or receiving the same.’ While the first class refers to interest taken and received, as well as that reserved or charged, the latter part of the clause apparently limits the forfeiture to such interest as the evidence of debt carries with it, or which has been agreed to be paid, in contradistinction to interest actually paid, which is covered by the second clause of the section”; and in Bank v. Watt, 184 U. S., 151: "The argument that the recovery should have been limited to twice the amount by which the usurious interest exeee'ded the legal rate is predicated on what is assumed to be the correct construction of the second sentence of section 5198 above quoted. The sentence relied on is as follows: 'In case the greater rate of interest has been paid, the person by whom it has been paid, or his legal representatives, may recover back, in an action in the nature of an action of debt, twice the amount of the interest thus paid from the association taking or receiving the same, provided such action is commenced within two years from the time the usurious transaction occurred.’ It is urged that the statute is penal in its character and must be strictly construed; therefore the sentence relied upon must be interpreted as relating solely to die usurious portion of the interest paid, and not to so much of the rate of interest as was lawful. Although it be conceded that the statute is penal in character, we do not consider, even under the strictest rule of construction, it is possible to give to it the meaning contended for without departing from its unambiguous letter, and thereby frustrating its obvious intent. The first sentence of the section provides that 'the taking, receiving, reserving, or charging a rate of interest greater than is allowed, when knowingly done, shall be deemed 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.’ This, without the slightest *49 ambiguity, provides for tbe forfeiture, not of tbe amount by wbicb tbe usurious bas exceeded tbe lawful rate, but of tbe entire interest.” As tbe renewals, according to these authorities, do not change tbe nature of tbe transaction, and interest is forfeited when usury is charged, tbe debt became, after that time, simply a loan of money bearing no interest (Smith v. B. and L. Assn., 119 N. C., 255). Applying these principles to tbe facts, tbe credit of $146.75 must be allowed to tbe plaintiff, as it is not denied that tbe amount was paid to tbe defendant and bas been credited on tbe note, and as tbe note bears no interest by reason of tbe usury. It is, therefore, ordered that tbe judgment of tbe Superior Court be reformed by deducting from tbe amount recovered $146.75, and as thus modified, that it be affirmed. Let tbe costs be divided. Modified and affirmed.