« ForrigeFortsett »
WEEKLY NOTES OF CASES.
VOL. VI.] THURSDAY, AUG. 15, 1878.
May, '77, 193.
May 7, 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 The Courts of this State have jurisdiction in an action in the county or city in which said association is located, established; or in any State, county, or municipal court of debt, by a borrower to recover back under the provis-having jurisdiction in similar cases." ions of the Act of Congress of June 3, 1864, 8 30(National Bank Act)-twice the amount of illegal interest The defendant filed pleas to the jurisdiction of paid contrary to the provisions of said Act, from the Association taking or receiving the same.
Bletz v. The Columbia National Bank.
Jurisdiction. National Act-Usury-Jurisdiction of State Courts in an action of debt under the National Bank Act to recover back twice the amount of usurious interest paid.
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.
Error to the Common Pleas of Lancaster County.
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 sixtyfive notes, discounted for him, within two years prior to the bringing of the suit-the rate of discount being in each case higher than six per cent. per annum-ranging between 7 and 12 per cent.
Section 30. "That every association may take, receive, reserve, and charge on any loan or discount made, or any note, bill of exchange, or other evidence of debt, interest at the rate allowed by the laws of the State or Territory 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, re
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.
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 it has jurisdiction in a case where the right of action arises under the laws of the United States?
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.
White v. Comstock, 6 Vt. 405.
Lapham v. Almy, 105 Mass. 391.
Morrell v. Fuller, 8 Johns. 218.
Webster v. The People, 14 Ill. 365.
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.
Spicer v. Rees, 5 Ib. 122.
Comm'th v. Betts, 26 Sm. 465.
H. M. North, for defendant in error. 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 a 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.
First Nat. Bank of Plymouth v. Price, 33 Md. 487. The Supreme Court of the United States, interpreting the section, has declared that an action of this kind under it, is brought to recover what is substantially a statutory penalty; and that therefore the statute must receive a strict construction.
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
Comm'th v. Feely, I Va. Cas. 321.
U. S. v. Campbell (TAPPAN, J., in Ohio), 10 Niles'
The State v. Rutter (Baltimore County Court), 12
U. S. v. Lathrop, supra.
Teal v. Felton, 1 Comst. 546 (affrmed 12 How. S. C. 284).
Ely v. Peck, 7 Conn. 239.
Davidson v. Champlin, Ib. 244.
State v. Tuller, 34 Conn. 280.
Haney v. Sharp, 1 Dana (Ky.) 442.
Ward v. Jenkins, 10 Met. 587.
Martin v. Hunter's Less., I Wheat. 337.
Prigg v. Pennsylvania, 16 Pet. 617-8, 664.
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 association taking or receiving the same."
This line of civil remedies for individuals is 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 binding upon its authorities and people, as its own constitution and laws." In the latter, Justice BRADLEY, quoting Alexander Hamilton, says: "When, in addition to this, we consider the State governments and the national government, as they truly are, in the light of kindred systems, and as parts of one whole, the inference seems to be conclusive that the State courts would have concurrent jurisdiction in all cases arising under the laws of the Union, where it was not expressly prohibited." The learned Justice then shows that the Judiciary Act of Sept. 24, 1789, was framed in this view, giving exclusive jurisdiction to the Federal Courts in certain cases of national import, and concurrent in certain others of bility could be enforced. doubtful. A large mass of subjects was thereby The case of Houston v. Moore has been alleft, which necessarily fell into the hands of ready cited, where a penalty was inflicted under
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 usurpation of power, yet as the Court does not see how this conflicts with the Constitution of the United States, the inconvenience may be considered, and it would be an intolerable inconvenience and grievance in an action for a penalty to drag a man from the most remote corner of the State to the seat of the Federal Judiciary." The remark of Justice STRONG in Huber v. Reily (3 Smith, 118), was not intended to overrule Buckwalter's case, but to distinguish it, as shown by his own language, that the latter was an action for penalties declared to be recoverable as other debts; while he was treating of the disfranchisement of a deserter, and the necessity of conviction by a court-martial, before the disa
an Act of Congress by a State court-martial. | interest. (Lucas v. Government National Bank, The legislation of our State has run in the same 28 P. F. Smith, 231; Overholt v. National Bank direction. In 1829, Judge King, Thomas I. Mt. Pleasant, 1 Norris, 490.) The word forWharton and Judge Shaler reported the penal feiture is viewed simply as conferring a right Act of that year. The Act of 23d April, 1829, [which may be asserted by the defendant. provided for forging and uttering any gold or The second clause on which this case rests, is, silver coin then or thereafter passing or in cir- where "a greater rate of inrerest has been paid, culation in this State, and for forging, counter- the person paying the same, or his legal reprefeiting or uttering a counterfeit note of the Bank sentatives, may recover back, in an action of of the United States. In 1860 the same great debt, twice the amount of the interest thus paid, criminal lawyer, Judge KING, with Judge KNOX from the association taking or receiving the and another, was upon a commission to codify same." Here we find no declaration of a forthe criminal law, and reported the new sections feiture as such, but a provision to recover back of the Act of 31st March, 1860, from 156 to money paid, in an action of debt. This vests a 163 inclusive, punishing offences relating to the right in the borrower of reclamation in a comcoin; and in the report referred to the laws of mon law form of action to be brought by himself the United States, and the case of Fox v. Ohio and in his own right. (3 Howard, 410), deciding upon an elaborate argument that the clauses of the Constitution of the United States, relating to the power to coin money and regulate its value, do not prevent the State from enacting a law to punish the offence of passing counterfeit coin of the United States. These laws have remained unquestioned, yet I do not assert that none of the provisions applied to the coin of the United States can be questioned. In view of Fox v. Ohio, and other cases, there may be a doubt whether the provisions against making and debasing these coins can be sustained as to the question of jurisdiction. This, however, does not touch the present inquiry, which concerns only the civil jurisdiction of the State Courts.
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
It is not a penalty to be adjudged to the United States, or vested in the public, for which any citizen may sue.
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.