Curtis v. Western Reporting Etc. Co.

This action was instituted by the receiver of a failed bank to enforce payment of the principal and interest of three promissory notes. At the close of all the evidence, the court directed a verdict for the respondent (plaintiff below) for the principal of the notes; and a judgment was made and entered in favor of respondent and against appellants for the principal amount of the three notes, together with an attorney's fee and costs. At the outset of the trial, the parties stipulated that respondent was entitled to an agreed attorney's fee in the event of judgment in its favor. This appeal is from the judgment and from an order overruling a motion for new trial.

It appearing that the notes to enforce the payment of which this action was instituted were usurious, the court refused to allow the recovery of interest. Appellants contend that it was error for the court to allow the recovery of either the principal sum, attorneys' fees or costs, it being their contention that the notes are illegal and void in that they grew out of a contract between the defunct bank and appellants, the purpose of which was to violate the law in charging an usurious rate of interest. Appellants' contention is without merit. Respondent was a National Banking Association. It is within the exclusive power of Congress to determine the penalty to be exacted of a national bank for taking, receiving, reserving or charging an usurious rate of interest. (Farmers' Mech. Nat. Bank etc. v. Dearing, 91 U.S. 29,23 L.ed. 196; Schuyler Nat. Bank, etc., v. Gadsden, 191 U.S. 451,24 Sup. Ct. 129, 48 L. ed. 258; 3 R. C. L., p. 663, sec. 294, and cases cited; 7 C. J., p. 820, sec. 765.) It is provided (sec. 5198, U.S. Rev. Stats.; U.S. Comp. Stats., sec. 9759; 6 Fed. Stats. Ann., 2d ed., p. 747) that "The taking, receiving, reserving, or charging a rate of interest greater than is allowed . . . . (by the statutes of this state) . . . . when knowingly done, shall be deemed a forfeiture of the entire interest which the note . . . . carries with it, or which has been agreed to be paid thereon." Where the interest has not been paid, Congress has limited the penalty for the usurious contracts of national banks to a forfeiture of the entire interest provided therein. The penalty is the fine or forfeiture imposed for the offense of usury. (Sanford v. Kunz, 9 Idaho 29, 71 P. 612.) No other or greater penalty or forfeiture could have been imposed by the trial court.

Despite their stipulation that respondent was entitled to an agreed sum as attorneys' fees in the event of a judgment in its favor, appellants, upon the authority of Fidelity Sav. Assn. v.Shea, 6 Idaho 405, 55 P. 1022, contend that the court erred in allowing the attorneys' fees. The Shea decision was based on a statute different from the statute now in force and different from the federal statute above quoted, and it is not authority in this case. See, however, American Mortgage Co., etc., v.Woodward, 83 S.C. 521, 65 S.E. 739; Matzenbaugh, v. Troup,36 Ill. App. 261; Ramsey v. Thomas, 14 Tex. Civ. 431, 38 S.W. 259;Union Mortgage, Banking Trust Co. v. Hagood et al., 98 Fed. 779.

During the trial appellants sought to introduce evidence relating to other alleged usurious transactions, but the trial court restricted such evidence to the notes which were the subject of the action. Appellants then offered an amendment relating to the other transactions. There was no occasion for the admission of evidence of other usurious transactions and the court properly refused the amendment. Even under the proposed amendment, no other penalty could have been imposed than the forfeiture of the interest. This was accomplished. Appellants obtained the ultimate relief to which they were entitled.

The judgment is affirmed. Costs to respondent.

McCarthy, C.J., and William A. Lee and Dunn, JJ., concur.