Under the thirtieth section of the National Banking Act, which
enacts that national banks
"may take, receive, reserve, and charge on any loan . . .
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
the act."
National banks may take the rate of interest allowed by the
state to natural persons generally, and a higher rate, if state
banks of issue are authorized by the laws of the state to take
it.
Tiffany, trustee of Darby, a bankrupt, brought an action of debt
in the court below against the National Bank of Missouri, a
corporation organized under the National Banking Act of June 3,
1864, to recover under the provisions of the thirtieth section of
the act twice the amount of interest paid by the said Darby, on
certain loans made by the bank to him before he was adjudged a
bankrupt. The ground of the action was that the interest reserved
and paid
Page 85 U. S. 410
was 9 percent; a rate averred to be greater than the amount
allowed by law, to-wit, 8 percent
The provisions of the thirtieth section of the act, under which
the suit was brought, are as follows:
"Every association organized under this act may take, receive,
reserve, and charge on any loans . . .
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 every association 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, receive, reserve or charge a rate not
exceeding 7 percentum. . . ."
"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 any action of debt, twice the amount of
interest thus paid from the association taking or receiving the
same. . . ."
In Missouri, the banks of issue, organized under the state laws,
are
limited to 8 percent, but the rate of interest
allowed by the laws of the state generally
is 10
percent. As already signified, this bank had taken 9
percent.
On demurrer, the question was whether the national banks in
Missouri were allowed to charge more than 8 percent. The court
below adjudged that they were.
MR. JUSTICE STRONG delivered the opinion of the Court.
In an action like the present, brought to recover that which is
substantially a statutory penalty, the statute must receive a
strict -- that is, a literal -- construction. The defendant is not
to be subjected to a penalty unless the words of the statute
plainly impose it. The question, therefore, is whether the
thirtieth section of the Act of Congress of June 3, 1864, relative
to national banking associations, clearly prohibits such
associations in the State of Missouri from reserving
Page 85 U. S. 411
and taking a greater rate of interest than 8 percent, the rate
limited by the laws of that state to be charged by the banks of
issue organized under its laws. It is only in case a greater rate
of interest has been paid than the national banking associations
are allowed to receive that they are made liable to pay twice the
interest. The act of Congress enacts that every such
association
"may take, receive, reserve, and charge on any loan or discount
made, or upon any note, bill of exchange, or other evidences 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
the act."
What, then, were the rates of interest allowed in Missouri when
the loans were made by the defendants that are alleged to have been
usurious? It is admitted to have been 10 percent per annum, allowed
to all persons, except banks of issue organized under the laws of
the state, and they were allowed to charge and receive only 8
percent
The position of the plaintiff is that the general provision of
the Act of Congress that national banking associations may charge
and receive interest at the rate allowed by the laws of the state
where they are located has no application to the case of these
defendants, and that they are restricted to the rate allowed to
banks of issue of the state -- that is, to 8 percent. This, we
think, cannot be maintained. The act of Congress is an enabling
statute, not a restraining one, except so far as it fixes a maximum
rate in all cases where state banks of issue are not allowed a
greater. There are three provisions in section thirty, each of them
enabling. If no rate of interest is defined by state laws, 7
percent is allowed to be charged. If there is a rate of interest
fixed by state laws for lenders generally, the banks are allowed to
charge that rate, but no more, except that if state banks of issue
are allowed to reserve more, the same privilege is allowed to
national banking associations. Such, we think, is the
Page 85 U. S. 412
fair construction of the act of Congress, entirely consistent
with its words and with its spirit. It speaks of allowances to
national banks and limitations upon state banks, but it does not
declare that the rate limited to state banks shall be the maximum
rate allowed to national banks. There can be no question that if
the banks of issue of Missouri were allowed to demand interest at a
higher rate than 10 percent national banks might do likewise. And
this would be for the reason that they would then come within the
exception made by the statute -- that is, the exception from the
operation of the restrictive words "no more" than the general rate
of interest allowed by law. But if it was intended they should in
no case charge a higher rate of interest than state banks of issue,
even though the general rule was greater, if the intention was to
restrict rather than to enable, the obvious mode of expressing such
an intention was to add the words "and no more," as they were added
to the preceding clause of the section. The absence of those words
or words equivalent is significant. Coupled with the general spirit
of the act and of all the legislation respecting national banks, it
is controlling. It cannot be doubted, in view of the purpose of
Congress in providing for the organization of national banking
associations, that it was intended to give them a firm footing in
the different states where they might be located. It was expected
they would come into competition with state banks, and it was
intended to give them at least equal advantages in such
competition. In order to accomplish this, they were empowered to
reserve interest at the same rates, whatever those rates might be,
which were allowed to similar state institutions. This was
considered indispensable to protect them against possible
unfriendly state legislation. Obviously if state statutes should
allow to their banks of issue a rate of interest greater than the
ordinary rate allowed to natural persons, national banking
associations could not compete with them unless allowed the same.
On the other hand, if such associations were restricted to the
rates allowed by the statutes of the state to banks which might be
authorized by the state laws, unfriendly
Page 85 U. S. 413
legislation might make their existence in the state impossible.
A rate of interest might be prescribed so low that banking could
not be carried on, U.S. except at a certain loss. The only mode of
guarding against such contingencies was that which, we think,
Congress adopted. It was to allow to National associations the rate
allowed by the state to natural persons generally, and a higher
rate, if state banks of issue were authorized to charge a higher
rate. This construction accords with the purpose of Congress and
carries it out. It accords with the spirit of all the legislation
of Congress. National banks have been national favorites. They were
established for the purpose, in part, of providing a currency for
the whole country, and in part to create a market for the loans of
the general government. It could not have been intended, therefore,
to expose them to the hazard of unfriendly legislation by the
states or to ruinous competition with state banks. On the contrary,
much has been done to ensure their taking the place of state banks.
The latter have been substantially taxed out of existence. A duty
has been imposed upon their issues so large as to manifest a
purpose to compel a withdrawal of all such issues from circulation.
In harmony with this policy is the construction we think should be
given to the thirtieth section of the act of Congress we have been
considering. It gives advantages to national banks over their state
competitors. It allows such banks to charge such interest as state
banks may charge, and more, if by the laws of the state more may be
charged by natural persons.
The result of this is that the defendants, in receiving 9
percent interest upon the loans made by them, have not transgressed
the Act of Congress; consequently they are under no liability to
the plaintiff.
Judgment affirmed.
