1. In a suit by a national bank against all the parties to a
bill of exchange discounted by it to recover the amount thereof,
the assignees of the acceptor, the latter having made an assignment
for the benefit of his creditors, cannot, having intervened as
parties, set up by way of counterclaim or setoff that the bank, in
discounting a series of bills of their assignor, the proceeds of
which it used to pay other bills, knowingly took and was paid a
greater rate of interest than that allowed by law.
2. The Act of June 3, 1864, 13 Stat. 99, sec. 30, having
prescribed that, as a penalty for such taking, the person paying
such unlawful interest, or his legal representative, may, in any
action of debt against the bank, recover back twice the amount so
paid, he can resort to no other mode or form of procedure.
ERROR to the Circuit Court of the United States for the Southern
District of Ohio.
Page 98 U. S. 556
The facts are stated in the opinion of the Court.
MR. JUSTICE SWAYNE delivered the opinion of the Court.
The bank brought this suit upon a bill of exchange, dated Nov.
18, 1873, for $4,000, drawn by David Barnet upon Barnets &
Whiteside, in favor of Robert Marshall, and payable ninety days
from date, at the Second National Bank of Cincinnati, Ohio. It was
accepted by the drawees, endorsed by the payee, and discounted by
the Muncie National Bank of Indiana. Before the maturity of the
bill, the acceptors made an assignment to David Barnet and Isaac E.
Craig, the plaintiffs in error. The suit was commenced in the Court
of Common Pleas of Preble County, Ohio, against all the parties to
the bill. The assignees intervened and made themselves parties.
After the pleadings were made up, the case was removed by the bank
to the circuit court of the United States for that district. There
new pleadings were filed on both sides. The assignees set up three
1. That Barnets & Whiteside were borrowers from the bank as
early as Jan. 11, 1866; that the indebtedness was continuous and
unbroken from April 8, 1866; that it was at no time less than
$4,000, and amounted at one time to $36,000; that at the time of
the assignment it was $28,000, upon bills of exchange which
represented it; that the bank had taken not less than $5,000 in
excess of the legal rate of interest; that for evasion the bills
were arranged in series, and that each series was terminated from
time to time by refusing to renew and the discounting of a new
bill, the proceeds of which were applied in payment of the prior
terminating one; that the bank had received satisfaction of all the
bills but the one in suit, and that there was nothing due from the
2. That the bill in suit was the last of eight renewals; that
illegal interest was taken upon the series to the amount of $1,116,
which it was claimed should be applied as a payment upon the bill
3. That fifty-one bills of exchange of $4,000 each, having
ninety days to run, were discounted by the bank for
Page 98 U. S. 557
the assignors, the first bearing date March 27, 1872, and the
last, July 27, 1873 (the date of each one is given); that illegal
interest was taken upon these bills to the amount of $6,324; and
that the assignees are entitled to recover double this sum from the
bank, to wit, $12,648.
There is a prayer for judgment accordingly, and for other proper
Marshall, the payee and endorser of the bills, also filed an
answer, but as the record discloses no question raised by him, it
need not be more particularly adverted to.
The bank demurred to the several defenses set up by the
assignees. To the first and third, the demurrer was sustained, and
overruled as to the second. Upon the latter, the plaintiff took
issue, and the case was tried by a jury. The jury rendered a
verdict in favor of the bank for $4,080.31, and judgment was given
accordingly. It does not appear that anything done by the court
touching this trial was objected to by the plaintiffs in error.
There is no bill of exceptions in the record.
But one point has been insisted upon by the plaintiffs in error
in this court, and it is that the circuit court erred in sustaining
the demurrers to their first and third defenses. That is the only
subject before us for examination.
All questions arising under the second defense have been
disposed of by the verdict and judgment. How the jury reached their
conclusion it is not easy to see, but this is not material, as
nothing relating to that part of the case is open to inquiry.
The National Currency Act of Congress of June 3, 1864, 13 Stat.
99, sec. 30, after prescribing the rate in interest to be taken by
the banks created under it, declares:
"And the knowingly taking, receiving, reserving, or charging a
rate of interest greater than aforesaid shall be held and adjudged
to be 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 any action of debt, twice the
amount of 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.
Page 98 U. S. 558
Two categories are thus defined, and the consequences
1. Where illegal interest has been knowingly stipulated for but
not paid, there only the sum lent without interest can be
2. Where such illegal interest has been paid, then twice the
amount so paid can be recovered in a penal action of debt or suit
in the nature of such action against the offending bank, brought by
the persons paying the same or their legal representatives.
The statutes of Ohio and Indiana upon the subject of usury may
be laid out of view. They cannot affect the case.
Where a statute creates a new right or offense and provides a
specific remedy or punishment, they alone apply. Such provisions
are exclusive. Farmers' & Mechanics' Nat. Bank v.
Dearing, 91 U. S. 29
The procedure in the case after it reached the circuit court, as
well as before, was governed by the Ohio Code of Practice.
Indianapolis &c. Railroad Co. v. Horst, 93 U. S.
The ground of demurrer specified as to both the defenses in
question is that the assignees had no legal capacity to defend or
prosecute by counterclaim in the case. But this does not take from
the plaintiff the right to insist that the facts set forth were
insufficient to bar the action. Swan, Plead. and Prac. 234; 1 Nash,
Plead. and Prac. 161. Under the New York code, from which the Ohio
code is largely copied, it has been held that a demurrer to an
answer may be sustained upon a ground not adverted to in the
argument by the counsel upon either side. Xenia Branch of State
Bk. of Ohio v. Lee,
2 Bosw. (N.Y.) 694. The demurrer was a
waiver of every objection not specified except the substantial and
fatal insufficiency of the pleading to which it related with
respect to the facts alleged.
An issue ought not to be tried where it would be a sheer
mistrial and a mere waste of time. The court ought sua
to strike it out of disregard it. If a frivolous issue
is left in the record, it does not therefore follow that it is to
be seriously treated.
In the first defense, the payment of the usurious interest is
distinctly averred, and it is sought to apply it by way of
Page 98 U. S. 559
offset or payment to the bill of exchange in suit. In our
analysis of the statute, we have seen that this could not be done.
Nothing more need be said upon the subject.
In the third defense as set forth the like payment is alleged,
and there is a claim to recover double the amount paid by way of
counterclaim in the pending suit on the bill.
This pleading is also fatally defective for the same reason as
the first one. The remedy given by the statute for the wrong is a
penal suit. To that the party aggrieved or his legal representative
must resort. He can have redress in no other mode or form of
procedure. The statute which gives the right prescribes the
redress, and both provisions are alike obligatory upon the
While the plaintiff in such case, upon making out the facts, has
a clear right to recover, the defendant has a right to insist that
the prosecution shall be by a suit brought specially and
exclusively for that purpose -- where the sole issue is the guilt
or innocence of the accused, without the presence of any extraneous
facts which might confuse the case, and mislead the jury to the
prejudice of either party.
The point specified in the demurrer we have had no occasion to
consider. Both defenses, as they appear in the record, are perhaps
liable to other objections, but in examining the case we have not
gone beyond the points we have discussed, and we decide nothing