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WEEKLY NOTES OF CASES.
VOL. VI.] THURSDAY, AUG. 15, 1878.
ceive, reserve or charge a rate not exceeding seven per centum, and such interest may be taken in advance, reckoning the days for which the note, bill or other evidence of the debt has to run. And the knowingly taking, receiving, reserving or charging a rate of interest greater [No. 1. than aforesaid shall be held and adjudged 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. And in case a greater rate of interest has been paid, the person or persons paying the same, or their legal representatives, may recover back, in action of debt twice the amount of the interest thus paid from the association taking or receiving the same; Provided, That such action is commenced within two years from the time the usurious transaction occurred. But the purchase, discount or sale of a bona fide bill of exchange, payable at another place than the place of purchase, discount or sale, at not more than the current rate of exchange of sight drafts in addition to the interest, shall not be considered as taking or receiving a greater rate of interest."
Section 57. "That suits, actions and proceedings, against any association under this Act, may be had in any circuit, district, or territorial Court of the United States held within the district in which such association may be established; or in any State, county, or municipal court in the county or city in which said association is located, having jurisdiction in similar cases.”
May, '77, 193.
May 7, 1878. Bletz v. The Columbia National Bank.
Constitutional law Jurisdiction National
The Courts of this State have jurisdiction in an action of debt, by a borrower to recover back under the provisions of the Act of Congress of June 3, 1864, % 30(National Bank Act)-twice the amount of illegal interest paid contrary to the provisions of said Act, from the Association taking or receiving the same.
Per AGNEW, C. J. The form of action is within the jurisdiction of the State Court and the right claimed in this form is private, belonging to the borrower alone. It is, therefore, immaterial whether the source of the right is a State or a Federal law. In either case, it is a law binding upon the State, which has given birth to the right.
The result of the discussion is to affirm the jurisdiction (of State Courts to enforce private rights conferred by Act of Congress) when it is not excluded by express provision, or by incompatibility in its exercise, arising from the nature of the particular case.
The Act of June 3, 1864, section 30, gives to the party aggrieved by the taking of usurious interest, the right to recover back double the amount of interest unlawfully taken in an action of debt. There is no doubt that the Court below has jurisdiction in actions of debt, whether for penalties or otherwise, and the question is whether
Debt, by Frederick S. Bletz against the Columbia National Bank to recover $6678.66, being twice the amount of interest or discount paid to the bank by plaintiff, on one hundred and sixty-it has jurisdiction in a case where the right of five notes, discounted for him, within two years action arises under the laws of the United prior to the bringing of the suit-the rate of dis- States? count being in each case higher than six per cent. per annum-ranging between 7 and 12 per cent.
Error to the Common Pleas of Lancaster County.
The suit was based upon the provisions of the Act of Congress of 3d June, 1864, § 30-commonly known as the National Bank Act. The following are material sections of the Act:
The defendant filed pleas to the jurisdiction of the Court; and a replication having been filed, the Court below thereupon entered judgment pro forma for the defendant, in order that the question of jurisdiction might be decided by the Supreme Court.
The plaintiff took this writ, assigning for error the decree of the Court below entering judgment for the defendant.
G. M. Kline (with whom were J. F. Frueauff and S. H. Reynolds), for plaintiff in error.
Section 30. "That every association may take, receive, reserve, and charge on any loan or discount made, or upon any note, bill of exchange, or other evidence of debt, interest at the rate allowed by the laws of the State or Terntory where the bank is located, and no more, except that where by the laws of any State a different rate is limited for banks of issue organized under State laws, the rate so limited shall be allowed for associations organized in any such State under this Act. And when no rate is fixed by the laws of the State or Territory, the bank may take, reVOL. VI.-1
The right of action given by the statute is not a penalty in the ordinary sense of that term. It is remedial and not criminal; government is not concerned, but the right of action is a private and personal one, which can be asserted only by the party aggrieved. And the mode of enforcing it is by an action of debt. Generally speaking, therefore, the subject-matter-a private right and the form of action are both within the jurisdiction of the Court below.
Congress could, by appropriate language, have conferred exclusive jurisdiction under the statute upon the Federal Courts, if it had seen fit to do so; but, instead, the State Courts are in express terms permitted to take jurisdiction. It is true that Congress cannot create jurisdiction in State:
Courts which did not already exist in them by virtue of the State constitution and laws, but where an Act of Congress creates a private right, unless there are words or necessary implication of exclusion, the State Courts, having jurisdiction in similar cases, have jurisdiction to enforce such right, at least concurrent with the Federal Courts.
The Federalist, No. 82.
Tiffany v. Nat. Bank of Missouri, 18 Wall. 412. Farmers' and Mech. Bank v. Dearing, I Otto, 29. Claflin v. Houseman, 3 Ib. 130.
Buckwalter v. U. S., 11 S. & R. 193. Ordway v. The Central Nat. Bank of Baltimore, (Ct. of App. of Md.) Cul. L. J., July 27, 1877. Chesapeake Bank v. The First Nat. Bank, 40 Md. 269.
Jordan v. Downey, Ib. 410.
Cook v. The State Nat. Bank, 52 N. Y. 96.
It was held in The Bank of United States v. De Veaux (5 Cr. 61), that the right to sue given by a Federal statute does not imply the right to sue in the Federal Courts, unless it be expressed.
The distinction between an action given by a statute to the party aggrieved and an action given to any one who will sue, the former being remedial and the latter penal," is pointed out in Moore v. Jones (23 Vt. 739).
And the same distinction has been repeatedly recognized in this State.
Comm'th v. Bennett, 16 S. & R. 243.
Mevay v. Edmiston, I R. 457.
Comm'th v. Betts, 26 Sm. 465.
That the exaction of twice the amount of the interest which has been received is a penalty seems too clear to be questioned. The Act declares the interest, if unpaid, shall be adjudged forfeiture. The recovery back of twice the amount of interest when it has been paid is still more a penal infliction.
Burrill Law Dic., Tit. "Penalty."
Curtis' Comm., 247.
Buckwalter v. The U. S., cited on the other side, was overruled in Huber v. Reily (3 Sm. 118).
Congress cannot constitutionally give to State Courts jurisdiction over cases of penalties inflicted solely by the laws of the United States. To confer such jurisdiction requires at least the concurrent legislation of the United States and the State.
Jackson v. Rose (Gen. Ct. of Va.), 9 Niles' Register Supplement, 173; 2 Va. Cas. 34.
Comm'th v. Feely, I Va. Cas. 321.
U. S. v. Campbell (TAPPAN, J., in Ohio), 10 Niles' Reg. 405. Tappan's R. 29.
The State v. Rutter (Baltimore County Court), 12 Niles' Reg., 115, 231.
U. S. v. Lathrop, supra.
Teal v. Felton, 1 Comst. 546 (affrmed 12 How. S. C. 284).
Ely v. Peck, 7 Conn. 239.
State v. Tuller, 34 Conn. 280.
Haney v. Sharp, 1 Dana (Ky.) 442.
Miss. Tel. Co. v. First Nat. Bank (S. C. of Ill.), 7 Chicago Leg. News, 158.
3 Story Const., 1750.
I Kent. Comm. 403-4.
May 20, 1878. THE COURT. The question before us is, whether a State Court has jurisdiction in "an action of debt" (in the language of the National Bank Act) "to recover back twice the amount of the interest thus paid, from the association taking or receiving the same;" that is to say, when illegal interest is taken contrary to its provisions. The 30th section of the Act of Congress of June 3, 1864, allows national banks to charge and take interest at the rate allowed by the laws of the State where they are located, and no more, and then proceeds: "And the knowingly taking, receiving, reserving, or charging a rate of interest greater than aforesaid shall be held and adjudged 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. And in case a greater rate of the State Courts having jurisdiction over similar interest has been paid, the person or persons subjects. Thus the rights and wrongs of indipaying the same, or their legal representatives,viduals growing out of the laws of Congress were may recover back, in an action of debt, twice the left to be enforced and redressed concurrently. amount of the interest thus paid from the asso- This line of civil remedies for individuals is ciation taking or receiving the same." one clearly marked; but the Courts of the United Bearing in mind the words of the Act, that a States have gone even beyond it. Thus in Housright of action, in debt, is given to the debtor ton v. Moore (5 Wheaton, 1), a Pennsylvania and those who represent him only, and not to the case, it was held that the State Court had jurisgovernment or the public, let us see what reason diction to enforce an Act of Congress upon a would prevent the action from being brought in delinquent under the Act for the organization. a State Court, to recover back money paid to and training of the militia-"Not (says Justice the extent of twice the interest paid. The ques- BRADLEY) but that these Courts might exercise tion is most important to the people who are jurisdiction on cases authorized by the laws of citizens alike under both State and national gov- the State, and not prohibited by the exclusive ernments, for if they are driven into the Federal | jurisdiction of the Federal Courts.' So in a suit Courts, the evil will be a monstrous one. The in a State Court, against a postmaster for neglect national banks are intended to do the business of of duty to deliver a newspaper under the postal the country in the midst of the people, just as laws of the United States, the jurisdiction was others lending money and discounting paper do, affirmed. (Teal v. Fulton, 12 Howard, 292.) whose places they have filled every where. And indeed the legislation of Congress for the They can sue and be sued in the State Courts on removal of causes from the State Court into the all business done by them, secure themselves, Federal, is founded on the admitted jurisdiction and purchase under State laws for the sale of of the former. property, and enjoy the advantages of State laws as fully as our own citizens. Therefore, unless the Federal jurisdiction is exclusive, it is clear that, even in a doubtful case, our decision should be favorable to our own jurisdiction, leaving the doubt to be solved by the Federal Judiciary; for if our judgment be against it, the citizen has no appeal to the Federal Courts. If, however, the Federal jurisdiction be clearly exclusive, it is our duty so to declare, for the laws of the United States are our laws, and are "the supreme laws of the land, and the Judges in every State shall be bound thereby." The relations of the States and the United States are so clearly defined in two recent decisions, none others need be cited; Farmers and Mechanics' Bank v. Dearing (1 Otto, 29); Claflin v. Houseman (3 Otto, 130). Justice SWAYNE says in the former, "that this law is as much a part of the law of each State, and as usurpation of power, yet as the Court does not binding upon its authorities and people, as its see how this conflicts with the Constitution of the own constitution and laws." In the latter, Jus-United States, the inconvenience may be contice BRADLEY, quoting Alexander Hamilton, says: sidered, and it would be an intolerable inconve“When, in addition to this, we consider the nience and grievance in an action for a penalty State governments and the national government, to drag a man from the most remote corner of as they truly are, in the light of kindred systems, the State to the seat of the Federal Judiciary." and as parts of one whole, the inference seems to The remark of Justice STRONG in Huber v. Reily be conclusive that the State courts would have (3 Smith, 118), was not intended to overrule concurrent jurisdiction in all cases arising under Buckwalter's case, but to distinguish it, as shown the laws of the Union, where it was not expressly by his own language, that the latter was an acprohibited." The learned Justice then shows tion for penalties declared to be recoverable as that the Judiciary Act of Sept. 24, 1789, was other debts; while he was treating of the disfranframed in this view, giving exclusive jurisdiction chisement of a deserter, and the necessity of to the Federal Courts in certain cases of national conviction by a court-martial, before the disaimport, and concurrent in certain others of bility could be enforced. doubtful. A large mass of subjects was thereby left, which necessarily fell into the hands of
We may now refer to some of our own decisions and laws. Thus it was held that our Courts had jurisdiction of a forgery of a power of attorney to obtain a pension under an Act of Congress. (Commonwealth v. Schaffer, 4 Dallas xxvii.) In White v. Commonwealth (4 Binney, 418) this Court decided that passing a counterfeit note of the Bank of the United States was indictable under the Act of 22d April, 1794, specially including the notes of that Bank. Buckwalter v. United States (11 S. & R., 193), was the case of penalty under an Act of Congress sued for in the name of the United States. Justice DUNCAN said: "On the matter of jurisdiction it is sufficient to observe this Court has often sustained actions on penal Acts of Congress, where the penalty is recoverable in the State Courts, and though convenience is no justification for the
The case of Houston v. Moore has been already cited, where a penalty was inflicted under
an Act of Congress by a State court-martial. | interest. (Lucas v. Government National Bank,
It is not a penalty to be adjudged to the United
In our sister States the power to maintain an action in the name and behalf of the United States for a penalty, has been denied. United States v. Lathrop (17 Johnson, 4), a case relied on by the defendant in error, may be taken as an example, but Justice BRADLEY, in Claflin v. Houseman, supra, comments on this case, and remarks that the State Courts having declined the jurisdiction does not militate against the weight of the argument, referring with apparent approbation to the dissenting opinion of PLATT, Justice. The result of the discussion, in the language of the learned Justice, is to affirm the jurisdiction when it is not excluded by express provision, or by incompatibility in its exercise, arising from the nature of the particular case.
The question of jurisdiction may be resolved now by an examination of the precise nature of the case before us. We have seen that there are two provisions in the 30th section of the law. By the first the taking, receiving, or charging a rate of interest greater than is allowed, "shall be held and adjudged a forfeiture of the entire interest." It will be noticed that the word forfeiture is used, yet the uniform practice has treated this not as pure penalty, but as a defence which may be set up to the recovery of
The form of action is within the jurisdiction of the State Court, and the right claimed in this form is private, belonging to the borrower alone. It is therefore immaterial whether the source of the right is a State or Federal law. In either case it is a law binding on the State, which has given birth to the right. On this point the language of the courts in Claflin v. Houseman has marked pertinency: "Every citizen of a State is subject of two distinct sovereignties, having concurrent jurisdiction, in the State-concurrent as to place and persons, though distinct as to the subject matter. Legal or equitable rights acquired under either system of laws may be enforced in any court of either sovereignty competent to hear and determine such kind of rights, and not restrained by its constitution in the exercise of such jurisdiction." Again, the opinion says there is "no reason why the State Courts should not be open for the prosecution of rights growing out of the laws of the United States, to which their jurisdiction is competent and not denied." Whatever doubts, therefore, have been expressed by some State Courts as to penalties to be sued for by the United States, or some one in their behalf, in order to vindicate the federal law, they do not extend to the case before us, of a private right sued for by the citizen for himself.
The debtor having paid his debt with usury, may "recover back" twice the amount of the interest paid, in a State Court. It is in this sense it was said in the Farmers' and Mechanics' Bank v. Dearing (1 Otto, 35), that the 30th section of the law is remedial, and to be liberally construed to effect the object Congress had in view in enacting it. This view has been taken by the Maryland Courts of Appeal, in the case of Ordway v. The Central National Bank of Baltimore (Law Journal, July 27, 1877). The able opinion of Judge ALVEY discusses the subject very fully.