Flushing National Bank v. Pinetop Building Corp.

In an action inter alia upon a promissory note, defendants appeal from a judgment of the Supreme Court, Queens County, entered April 27, 1976, which is in favor of plaintiff. Judgment affirmed, with costs. The plaintiff is a national bank which loaned money to defendant Pinetop Building Corp., the maker of a promissory note. The individual defendants are guarantors of that note. At the trial, it was adduced that the loan was at an interest rate of 27.5% per year. Defendants contend that under section 190.40 of the Penal Law, which makes loans at an interest rate in excess of 25% per annum criminally usurious, the entire loan, principal and interest, is illegal and void, and hence unenforceable. Under subdivision 6 of section 108 and section 235-b of the Banking Law, the sole penalty for any usurious loan by a banking institution is the forfeiture of interest. Section 190.40 of the Penal Law was not intended to cover loans by banks (see Franklin Nat. Bank of L. I. v De Giacomo, 20 AD2d 797; Reisman v Hartmann & Son, 51 Misc 2d 393). Martuscello, Acting P. J., Latham, Margett, Rabin and Hawkins, JJ., concur.