TIMBERLAKE tl.FmST NAT. SAMIt.
the conviction and sentence ofAllen was rightful; but if the justice erred in his view of the law, then the conviction was erroneous? Under the facts of this case, I do not think that the writ of habeas coryU8 is the proper proceeding to determine the questions involved. The decision of the justice complained of could have been carried by appea.l to the higher state courts, and thence to the supreme court of the United States, and thus the rights of the state and of the defendant could alike have been protected. The present proceeding is before me as a judge and not as the circuit court, and hence no appeal can be taken to the supreme court from the ruling now to be made. Certainly I would not be justified in holding the action of the justice in sentencing Allen to imprisonment to be illegal and void unless such illegality is made clear, and I do It may not think it can be fairly said that such illegality is be that it will ultimately appear that the ruling of the justice in construing the rights of Allen under the federal constitution was erroneous, but it is certainly yet a debatable question, and under these circumstances I do not think he has established his right to be by meansaf a writ of lutbeas corpus. The writ will be discharged, and Allen will be remanded to the custody of the sheriff.
TIMBERLAKE
et 01. v.
FIRST NAT. BAR.
(Circuit Court, N. D. MiBll't8s1.ppf" E. D. April 25, 1890;)
1.
USURy-WHAT CoNSTITUTES-BANXS.
I.
Where drafts. are from time to time depO'sited in a bank, some of them able on demand and some on time, an agreement between the bank and the depositor that credit shall be given for such drafts on the day after their deposit, the depositor being charged the full legal rate for any overdraft, does not constitJ1teusu17 when such agreement is made in good faith in order to save involved calculations. . .
.
BAME-COMPOUND INTEREST.
.Chargingja depositor, by agreement, at the end of each month, with. interest at the full rate on his overdraft, and adding suoh oharge to the overdraft. dOllll not constitute usury. . . Under Code Miss. 1880, whioh only allows interest on the amount of money actu. 8.11y lent, a: national'bank in that state cannot deduct interest in advance. In an action for the recovery. of interest alleged to have been charged in exces' of the legal rate for oral contrllcts, a plea setting up a writ1;en agreement to pay the interest charged, without denying that the charges alleged in the declaration were made before tile written agreement was entered ioto, and without stating the date of the written contract. is bad. . BANK. ..
B.
BA14E-PISCOUNT-NATIONAL ·BANK.
B.UIE-AcTIoN TO RECOVER BACK-PLEADING.
Ullder Rev. St. U. S. § 5198, which empowers one paying illegal Interest:. to a. national bank to recover double the amount paid, one of the joint makers of a note on which illegal ioterestis charged cannot recover the penalty from the bank where the illegal interest was paid by the other maker. : .
At Law. Sullivan k Whitfield and Beall & McClelland, for plaintiffs. Barry & Becket and Fw & Roane, for defendant.
, FE.QERAL REPORTER,
vol. 43.
',HILL;J.' On the 1st day of September, 1887, the ·defendant was organized under the laws of the United States asa national bank. and the plaintiffs drew checks on the bank in payment of t}w cotton purchased by them, and deposited with defendant, in payment, drafts or checks on the }llurties to whom the cotton was sold or shipped. The declaration charges that defendant charged plaintiff with interest onthe sums so checked out by them, Jess the interest on their deposits, at a greater rate of interest than that allowed by the laws of the state of Mississippi, the accounts bElingbalanced at the end of flach month, and interest charged on the balance found; that during said transaction the interest charged on such balances amounted to the sum of $5,174.72; that the rate of interest charged in said transaction was greater than the rate allowed by law. The second count in declaration avers that the plaintiffs, together with T·. C. King, negotiated a loan with the defendant for $10,000, to secure the payment of which they executed their two notes,-one for the sum.oJ:$5,OOO, payable in eight months after date; and the other for $5;000, payable in ten months after date,-..,each note to bear 10 per eent,i,nferestper annum after dueuntilpnid; that 10 per cent. per num interest from the date of .the notes until the maturity thereof, amounting to the sum of $758.30, was retained by the defendant as such interest. The third count in the declaration further avers that on April 25, 1889, the defendants charged plaintiffs with $251.96, on a balance before that time due defendant, which charge embraced more interest than was then allowecj. by the laws of tbe ,state., The declaration further avers that all the intei'est so charged to the plaintiffs, and which was paid by them, embl'aced interelltgr.,eaterthan was then allowed by the laws of the state of Mississippi, arid was so knowingly charged, and was in violation of sections 5197, 5198, Rev. St. U. S., by which the whole interest' sO charged' became forfeited; and that, the same ha.ving been paid, by the pr;ovisions of section 5198 an action has aocrued to the plaintiff to have atid recover of alldfrom the defendant double the amount of said interest; to-wit, the sum of $12,547.70. ' ' ,1; The first plea is the general issue. The secolldplea avers that on September, 23, 1887, the defendant had with the plaintiffs an agreement in writing, which provided that the plaintiffs should pay to the defendant 10 per cent. pp,r annum on all overdrafts drawn on it, and that the plaintiffs' aocount with defendant was to be due at any time on de.. mand'with three days'notice. during the time averred in the declaration the overdrafts were paid by drafts on Boston, Providence, Philadelphia, and other places, sometimes on demand drafts, sometimes on cash drafts, and sometimes on sight or time draHa, on which there three days of grace allowed j and toeqmilize these drafts, and to save numerous calcuJations of interest, it was ll,greed that the plaintiffs should be creditedwith their drafts on the day succeeding the day on which they were drawn, which was to the advantage of plaintiffs. That the plaintiffs were charged with interest at the rate of 10 percent. upon the sums checked and from the date of the payments, aed credited with interest at the same rate for the proceeds ofsaid drafts, thus, adopting the commerical instead onhe
Tn:U3ERLAKE V. FIRST NAT. BANK.
233
·
statutory role, which was to the advantage of the defendant; and that it was under this rule thatthesumof$84.25was charged for the month of ber, the same not having been paid on the 1st of October, 1887, and was charged to plaintiffs in their account as principal, by their consent; ana that in the same way the other interest was charged on their monthly settlements. That plaintiffs were furnished with a bank or pass book, in which an debits and credits, including the interest charges, were entered and accepted, and they promised to pay the same. The third plea, in substance, avers that two notes of $5,000 each were executed after banking hours had closed, and the proceeds were not placed to the credit of plaintiffs until the next day, and that the notes were not paid until the 25th of April, 1889; the amount paid on one being $5,088.10, and on the other, $5,002.76; and that in said tramaction there was no intentioh to charge usury. The fourth plea avers that the interest on the overdrafts for September, 1888, was the of $40.25, which wasadde4 to the sum of $3,697.94, making the sum of $3,720.19, which plaintiffs promised to pay, but which was not paid until April 25, 1889: and that there was no purpose to evade the usury laws or the statute. The fifth plea to the declaration in substance avers that T. C. King & Co., a firm composed of T. C. King, was, in September, 1888, 'astlCcessor of Timberlake & Nance, and so continued until after April 25, 1889, and if any usury was paid as alleged it was paid by T. C. King & Co., and not by the plaintiffs, Timberlake & Nance. ' The demurrer to the pleas sets out several grounds of demurrer; towit: (1) A general demurrer; (2) that neither of the pleas sets up a complete defense to the action; (3) that the second plea does not state the date ofthe agreement, how long to continue in force, and what drafts it included; (4) that the agreement set out in the second plea was void, and could not justify the taking of interest at 10 per cent. per annum. The fifttl ground is also a general demurrer. Several grounds are insisted upon by plaintiffs' counsel in support of the den'lurrer, which will be considered in the following order: ' First. 'It is insisted that the taking of 10 per cent. per annum interest, priorto October 1, 1887, in the absence of a written contract, was usurious, and avoided all interest in the dealings (jf the parties quentto that time. The national bank law is a law nnto itself, which congress had the power to enact; and in express terms it allows the banks organized and doing business under its provisions to take and ceive the highest rate of interest 'allowed by the state in which they are located and doing business. The rate of interest allowed by the law 'of this state is 6 per cent. per annum, but 10 per cent. per annum may be contracted for in writing. I This may be in the ,note or other written contract, Or in a separate paper governing or embracing their subsequent dealings,' stated in the written agreement. The charging, taking, ceivingof more than 6 per cent. interest per annum, in the absence of such writtf)ll agreement, if none, was a violation of the act of and forfeited the interest due on the debt, and its ,_ being paid rendered the defend/tnt liable to an action for double the amount of the interest
234
.'
i
pa.yingit;as the penalty for the violation .ot the law. Congress, in the act, did not adopt the state law on ,the ofusury further to adopt the rate of interest allowed by the laws of the states; and 10 per cent; per annum.is the highest rate allowed by the statute of this state, when the contract in writing, and 6 per cent. when it is not; so that the question ,is;WlclE! there 6 percent. paid when there was no contract or than 10 per cent. when there was? To subject the de,in :fend!IDt to the penalty there must have been paid not only a largerrate of intlfrdst than, that allowed bylaw" but that larger rate knowingly re,c,elved; that is, ,the officers of the bank nimst, at the time they received the money, have known that the, amount was in excesfl of the interest allQwed, by law.. . . . , alleges that the checks drafts received by the bank ,be on the day !sllcceeding the day on· which were grawn; that some Of were cash or dell,lan,d drafts, and :spme sight or time drafts" 9n;..wpich three days were allowed; that this don,e to 'equalize the El81U,e, and to S,avethe ,numerous calculaand ,n()t for the p,urposEl qf obtll.iningany additional interest; that charged wifh ,ili1te,res,t on the made on the cpecks drawn by them on. the of 10 per capt. on tlledra(tS,orchecks ,recllived in payment as above stated, thus adopting of the stat\],tory rule. The plea alleges that the 'the Jllode above was to the advantage of the phl.intiffs; that the intereafwa.$ caJculatlld according to ,thl'! commercial ruleallo,wing 360 days :f.p;ihe' year or '30. days to the was to the advantage of the this mode 'Was, adopted for cQnvenience,and to save }l,umerous qljlJ,ql.ll!1tions of interest,and nott,o receive IIlore than the legal I am satisfied that the parties .a .dght to agree ,rate .of the time the crf;l4its should be made, and, if obje,qtionaF the time, the agreeQ:lent willbepresurried; and, if made 'good {aithto equalize .the interest, and not for the pQrppse of receivi,ng"a rate of interest than that. allo.wed by law, that any differof the ence ill theresQIt, one way or theotber, will pot subject the defendant. t.o, penalty,.. Therefore this ground of is well taken. It insisted. on the part of the, plaintiffs ]{eeping th(;l ;a1?9ountsand balancing them lJ,tthe end m()nth ·. a.nd chljlrging to the plaintiffs, including inof t!ll'eflt, as s,eLovt in the secoqd,p}/:l!1,was compounding the interest. the thp,t tlie ;each preceding month. was so much, . t.in.g . an d. tho at. by cqn.,se.nt of .. . Plal."nti.ffi. i,t. was, on a cer,s .. dayof'eaql1,month, principatl:and so on during the con.. tinqance .of die .. But; it does not state whether this· was the and the credit the account, 'Jr .pp'Iy, ;Q,1e the aclv;anges made by tlle 4efendant's bank. interest may by the parties debt, ,and, part of the of OIltPeother
or
in
its
TIMBERLAKE V. FIRST NAT. BANK.
hand, when the transactions are very frequent, they may be held as a <:'ompounding of the interest. But I am in doubt whether the transaeactions in this cause, as shown by the accounts of the bank, shall be held as a compounding of the interest; but, as the statute under which the penalty is claimed is quite penal in its character, the doubt wi1lbe resolved in favor of the validity of the transactions, so that the defendant will not be subjected to the penalty provided in the statute. ' The second plea does not deny that 10 per cent. interest was charged upon the advances made before the written agreement was entered into, and does nllt distinctly state the date of the written contract, and for this reason the demurrer to the plea must be sustained. The third plea admits that the sum of $758.30 was retained by it out of the two notes of $5,000 each at the time the same were disc,ounted, and that the balance of the amount of the two notes, being $9,241.70, waS then paid to the plaintiffs,' The Code of 1880 of this state only allows interest on the amount of money actually loaned, and does not allow it retained in advance,· as is provided in the national bank .law, where no rate of interest is fixed by the state statute. It follows that under the law of the only 10 per cent. interest could be ",charged upon the amount actually advanced, and that the interest on the amollnt retained until the maturity of the rioteswas that mu<.;h over and above the 10 per centum interest on the money loaned, and a violation of tion 5197, and subjects. the defendants to the penalty prescribed in section 5198, Rev. St. U. S. The.statute aIso forfeits all the subsequent interest on the notes, which is added to the penalty. The defense set up in the fourth plea' is governed oy the same rules stated in relation to the se('ond plea, and, if proven, is a valid defense toihe action so far' fl.sitrelates to the matter set up in the plea. The fifth plea alleges that T. C. King & Co. were the successors of Timberlake & Nnnce, and that whatever amount of interest was paid, if any, over andabo\'e the interest allowed by law, was paid by T. C. King & Co., who alone are entitled to recover the penalty therefor'. Seetion 5198 confers the right to recover the penalty to the party paying it, or to his legal representatives, so that this plea sets up a valid de-· fense to this action if sustained by the proof. The result is that the demurrer to the second and third pleas must be sustained, and to the fourth and fifth pleas must be overruled, with leaveto plead over.' .. . The queatibns as presented in this cause have been ably argued by the learnedeounsel on both sides, and numerous authorities read and commented upon; but the view of the question as presented to my trlind depends upon the proper construction to be put upon the sections of the Revised Statutf1S of the United States referred to, and a few general and we11-recognizedrules, rendering citations to authority .
FEDERAL REfORTER,
FRANCOEUR
v.
NEWFJOUSE.
(Oircuit Oourt, N. D. OalijrYrnia. August 6, 1890.1
PUBLIC LANDR-RAILROAD GRANT-ExCEPTION-MINERAL LAND.
Where a grant to a railroad company excepts mineral land, the term "mineral land" means land known to be mineral land when the grant took effect or which there was then satisfactory reason to be believe to be such.
2-, ADVERSE POSSESSION-GOVERNMENT TITLE.
Possession held in subordination to the title of the United States may be adverse as to another claimant.
At Law. This is the same case, the decision in which-on demurrer-is :reported'lu 40 Fed. Rep. 6is, where, the facts alleged in the complaint siated.Sometpree months before the commencement of the suit, eqna,l to the government price of land, the'Central Pacific Railroad Qompany executed a quitclaim deed to plaintj'Winwhich they "doremise, release, and quitclaim to the G. H. J[rancqeur, his heirs, ,and assigns, all the right, title andintereat that (he said cOlnpany, or the trustees now have, or may herea.lter acfrom the governmeIit of the United States in and to" the premises in'questioll, however, all claim of the United States to the sa'me as m.ineral land." 'A.'L. Hart,and Geo., I!. Francoettr,for pJaintiff J. M. SMweU alid J. E. Reinstein, for defendant. Circuit Judge.
SAWYF;a, J..,(orally jury.) I announce to you that I have soxpe special issues in addition to the general verdict, upon w,hich I desire you to find. It may save future litigation. I will read thernto you so trat you will be prepared to appreciate wht I havl'l to S&Y upon these points. The first is-"We the jury in the above-entitfe,d .911$e.find. for or defendant, whichever it tumsoutto bt;l. ';You :wj]l write in either or "defendant," according as you {ilid 'on all the issues in the case, \: , " !, ! ;.':"
SPECIAL ISSUES.
'The' next one is: (1) Was the land in question known to' be min-: end, pr wail there good reason to beHeve itwas mineral, at the datEl!of i¥ji,lg' ri;lap of general location ofthe route of the road, and the with.,: d,awalo£ the lanas by order of theseqrl'ltary interior, on August 2:,18$2? ,(2) Was the land in question known to be mineral, or was .reason to that it at the time that the line of ,tJIeroap. was locate4 ;mJ,866? (8) Is the land inquestion, in 'faCt, mineral land? (4) Had the defendant and his grantors been in the continuous, open and notorious adverse possession of the premises in question, claiming to be in the rightful possession under the laws, and afterwards under a patent of the United States adverse to