Ashland Savings Bank v. Bailey

The sum of three times the excess of six per cent. interest, the recovery of which was authorized by Gen. Laws, c. 232, s. 3, is a penalty, and more than one year having elapsed after the last payment of unlawful interest, before the commencement of this action, the right of recovery, if available as a set-off, had become barred by the statute. G. L., c. 266, s. 10.

The action was commenced April 29, 1889, before the enactment of c. 78, Laws of 1889, and the rights of the parties are to be ascertained under the law as it was at the time the payments of unlawful interest were made. The defendant, under the law as it then was, could elect, at any time within six years after making such a payment, to make a different application of it, and if not assented to, the law would enable him to enforce it. He could elect to sue for and recover the excess, or to file it as a set-off in an action by the plaintiffs against him. Peterborough Savings Bank v. Hodgdon, 62 N.H. 300; G. L., c. 227, ss. 7, 8.

The defendant could also revoke the application of the usurious interest paid on the $2,350 note at any time before it was barred by the statute of limitations, and, if not repaid on demand, could sue and recover for it. After the defendant elected not to have the usury applied in payment of the interest, he had the right to direct its application, and he might insist upon its being applied as part payment on the $7,000 note.

The plaintiffs, July 11, 1887, sold the $2,350 note, and at the time of bringing this suit, in July, 1889, held the interest above six per cent., which they had received within six years before the date of the writ, as so much money to the defendant's use, if he so elected. The plaintiffs, by selling the note, took from the defendant the right to elect to have the usury applied upon it in part payment of the principal; and no good reason appears why it was not, at the date of the writ, a debt or claim the defendant held against the plaintiffs, which he might set off in the plaintiffs' action against him as well as to bring a suit to recover it. Interest was properly disallowed on the usury prior to the date of the writ.

The defendant's exception is sustained as to the usury paid on the $2,350 note. The others are overruled.

ALLEN, J., did not sit: the others concurred.