Veazie Bank v. Paulk

Rice, J. These actions were submitted together, and depend upon substantially the same principles. Chapter 69, § 1, R. S., establishes the legal rate of interest, in this State, at six dollars upon one hundred dollars, for one year; and at that rate for a greater or less sum, and for a longer or shorter term. By § 49 of Bank Act, passed in 1841, no bank in this State is permitted to take any greater rate of interest or discount, on any note, draft or security, than at the rate of six per cent, a year. These Acts went into operation at the same time, and their [113] provisions, so far as the rate of interest is concerned, are entirely consistent with each other, except in this, that interest or discount may be calculated by banks according to the established rules of banking, and when the securities discounted are payable at another place, they may, in addition to said interest, charge the then existing rate of exchange between the place of discounting and the place where such security may be payable. The two statutes are to be construed together, the general law being modified by the specific provision of the banking law, so far, and only so far, as the latter varies from the former. Banking companies are within the provisions of the statute against usury. Maine Bank v. Butts, 9 Mass., 49. Formerly, the penalty for taking usurious interest, was the forfeiture of the entire sum loaned. On general principles, a contract made in violation of law, cannot be enforced in a court of law. But it is competent for the Legislature to provide a penalty less severe for an infraction of law, and it has so done in relation to usurious contracts. By § 2, c. 69, B. S., the penalty provided for usurious contracts, is a forfeiture of the excess over and above the legal rate of interest. This statute is general in its terms, and applies as well to corporations as to natural persons, and in all cases, unless modified by specific statute provisions. Where accommodation paper, no matter what may be its form, is discounted by a party, with knowledge of its true character, the defence of usury may be set up between the parties to such paper, and the party by whom it is originally discounted, and the excess of interest above the legal rate avoided. The penalty of the statute cannot be evaded by a mere change of form. The actions in this case were not prematurely commenced. According to the terms of the report, the actions are to be defaulted, the defendants to be heard in damages by the Court.