Hinds v. Marmolejo

Ross, J.: The sole point made by the appellants in this case is that, in this State, a national bank has no right to charge or receive a higher rate of interest upon money loaned than seven per cent per annum. Section 30 of the National Banking-Act provides:

“ 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 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 seven per centum.”

By the first clause of this section national banks are authorized to charge and receive interest at the rate allowed by the laws of the State or Territory where the bank is located, and, by the last clause, when no rate is fixed by the laws of the State or Territory, they are allowed a rate not exceeding seven per centum. Beading the entire section, and considering the two clauses together, as they must be considered, we are of the opinion that the word “fixed” used in the last clause is used in the same sense as the word “allowed” in the first clause, and that by the words “the laws of [232]the State or Territory” is meant statute laws. In other words, that the true interpretation of the Act of Congress is, that in those States and Territories having no statute upon the subject of interest, the national banks are allowed a rate not exceeding seven per centum, while in those States and Territories having a statute on the subject, they are authorized to charge and receive interest at the rate allowed other banks and individuals. From this view it follows that inasmuch as we have in California a statute (Civil Code, Section 1918), providing “that parties may agree, in writing, for the payment of any rate of interest, and it shall be allowed according to the terms of the agreement until the entry of judgment,” the national banks are also allowed to charge and receive such rates of interest as may be agreed on.

We do not find any of the authorities cited by either of the parties to this controversy directly in point, but think the views here expressed find support in the ease of Tiffany v. National Bank of Missouri, 18 Wall. 409, and are not in conflict with the decision in Johnson v. National Bank of Gloversville, 74 N. Y. 329.