First National Bank of Carlisle v. Graham.

tory to a jury, but the necessity is inevitable of submitting the question to them whether that action involved gross neglect.

The remaining question arises out of the answer of the court to the second point of the defendants. The mere voluntary act of the cashier in receiving the plaintiff's securities would not subject the bank to liability. But if the deposit was known to the directors, and they acquiesced in its retention, a contract relation was created, by which the defendants should be held bound. The question arose in Foster v. The Essex Bank, 17 Mass. 479. That was an action to recover the value of a special deposit. The bank had no express power by charter to receive deposits of any kind, but the verdict found that the practice had been to receive them always; and PARKER, C. J., said: "As the bank from the time of its incorporation has received money and other valuable things in this way, and as the practice was known to the directors, and we think must be presumed to have been known to the company, as far as a corporation can be affected with knowledge; and as the buildings and vaults of the company were allowed to be used for this purpose, and their officers employed in receiving into custody the things deposited, the corporation must be considered the depositary, and not the cashier or other officer through whose agency commodities may have been received into the bank. The rule thus stated has been uniformly applied by this court in cases involving the rights and duties of the National banks. The principle announced in the recent New York and Vermont cases of The First National Bank of Lyons v. The Ocean National Bank, 19 Am. Rep. 181 (ante, p. 728), and Wiley v. The First National Bank of Brattleboro, id. 122 (post, p. 905), has never been adopted here, so far as it is in conflict with the rule. If the question here had grown out of an act prohibited by law, the principle of these recent authorities would be applicable, as it was applied in Fowler v. Scully, 22 P. F. Smith, 456; S. C., 13 Am. Rep. 699 (ante, p. 854). But the question arises out of an act which has been neither directly nor impliedly forbidden by statute. The answer of the court was accurate, and the complaint alleged against it in the supplemental assignment of error is unfounded.

Judgment reversed, and a venire facias de novo awarded. 111

De Haven v. Kensington National Bank

DE HAVEN V. KENSINGTON NATIONAL BANK.

(81 Pennsylvania State. 95.)

Negligence in keeping deposits for safe-keeping.

Whether or not a National bank has the power to take bonds, etc., on deposit for safe-keeping, it is not liable for the loss of such property so taken without compensation, unless it has been guilty of gross negligence contributing to the loss.*

A

CTION against a National bank to recover the value of certain bonds which plaintiff had deposited with the defendant for safe-keeping and which had been stolen from defendant's possession. Defendant was a gratuitous bailee of such property. The evidence tended to show that during the day on which the bonds were stolen a man dressed as a police officer told the cashier, in presence of a watchman of the bank, that he had been directed by the lieutenant of the police to warn him that there were "suspicious characters about;" the cashier told the watchman to admit no one, but he made no inquiry of the lieutenant. After the bank was closed, there then being another watchman there, the first was called from the outside by name; he opened the door; a man dressed as a policeman and two others in ordinary dress came in; they overpowered the watchman, took securities, etc., from the vault, including plaintiff's.

On the evidence the court directed a nonsuit and plaintiff took a writ of error.

D. W. Sellers, for plaintiff in error.

A. D. Campbell & R. C. McMurlee, for defendant in error.

Per CURIAM. We discover no sufficient evidence in this case to charge a mere voluntary bailee, without reward, for a loss by robbery. Waiving the question of the want of power in a National bank to take bonds, etc., on a deposit for safe-keeping, the officers here took as much care of them as they did of the property of the

*See Wiley v. First National Bank, post.

Overholt v. National Bank of Mt. Pleasant.

bank. The robbery was effected by a most ingenious and unexpected device, calculated to succeed with the most careful of persons, and made successful by its very openness and apparent freedom from design. The cashier had no reason to suspect an attack on his bank, the message of the pseudo police officer being merely that there were suspicious persons about; that is, in the city. Hence his omission to call at the police precinct was no evidence of such carelessness as would charge the bank. He took all proper precautions. The nonsuit was properly granted. Judgment affirmed.

OVERHOLT V. NATIONAL BANK OF MT. PLEASANT.

(82 Pennsylvania State,

Usury-Effect of- What interest forfeited-Set-off of illegal interest.

Where National banks stipulate for an illegal rate of interest all payments of interest, and not merely the excess, is illegal.

In an action by a National bank to recover the amount of a note which was given in renewal of other notes, the defendant is entitled, where illegal interest has been exacted, to credit for all the interest he has paid from the beginning on the loan and not merely to the excess above the lawful rate. In an action by a National bank on a promissory note the defendant cannot set off the entire interest agreed to be paid on another and independent note although such interest was usurious.*

* See Farmers and Mechanics' National Bunk v. Dearing, ante, pp. 117, 122, 123; Tiffany v. National Bank, ante. p. 90; Central National Bank v. Pratt, ante, p. 595; Davis v. Randall, ante, p. 600; First National Bank v. Garlinghouse, ante, p. 811; Shinkle v. Bank, ante, p. 824.

In Crocker v. First National Bank, ante, p. 317, it was held that in an action to recover the penalty for taking illegal interest, the recovery should be twice the full amount of interest paid, and not twice the excess of interest paid over the legal rate. The same rule was held in National Bank v. Davis, ante,

p. 350.

On the other hand in Hintermister v. First National Bank, ante, p. 741, it was decided that in an action to recover such penalty the recovery could only be twice the amount taken in excess of the legal interest. ALLEN, J., who delivered the opinion of the court, said: With great hesitation we incline to favor this interpretation of the penal clause under consideration," and Brown

A

Overholt v. National Bank of Mt. Pleasant.

CTION of assumpsit by the First National Bank of Mt. Pleasant against Overholt and others, upon two promissory notes. which were discounted by said bank.

Defendants in their affidavit of defense alleged that upon various renewals on the first note in suit they had paid the plaintiffs $1,057.16 as interest, at the rate of nine per cent per annum; upon renewals on the second note in suit, $1,087.30 as interest, at the rate of eight and nine per cent per annum; and upon the renewals upon a third note not in suit, for $4,000, dated April 3d, 1872, they had paid plaintiffs $1,314.09 interest, at the rate of nine per cent, and claimed to set off double the amount so paid as interest on each note, making an aggregate of $6,917.10, or so much thereof as would extinguish plaintiff's claim.

A rule for judgment for want of a sufficient affidavit of defense was taken by plaintiffs, which the court made absolute, and delivered the following opinion:

"The cases of Brown v. Second National Bank of Erie, 22 P. F. Smith, 209 (ante, p. 849), and Lucas v. Government National Bank, 28 id. 228 (ante, p. 872), establish that whilst all the interest is forfeited upon the obligation in suit, yet that the forfeiture of double the interest cannot be defalked until acquired Ly recovery in action of debt. The affidavit of defense, therefore, in this case is good as to the interest of the obligation in suit, but not good in so far as it seeks to defalk double that interest. The same principle makes the affidavit at fault in trying to set off double the interest on previous renewals. As to these having been paid by the renewals, the liability to forfeiture of double the interest was incurred, but this, as we have seen, can only be enforced after recovery by action. Still the excess over the legal rate retained in these renewals can be set off.

"The $4,000 note has its origin since the notes in suit, and is yet unpaid. Its excess interest, as well as penalty, if recovered, can be defalked against its principal. The affidavit and its schedule advise us that this note is mature, and it is not alleged to be out of first hands. The balance yet due upon it exceeds the entire v. Second National Bank, ante, p. 849, was cited as an authority for that conclusion, but the case can hardly be considered an authority therefor.

As to the recoupment of interest, see National Bank v. Davis, ante, p. 350; Wiley v. Starbuck, ante, p. 436; Brown v. Second National Bank, ante, p. 849. As to actions for recovery of penalties, see Missouri, etc., Co. v. First National Bank, ante, p. 401; Newell v. National Bank, ante, p. 501; Ordway v. Central National Bank, ante, p. 559.

Overholt v. National Bank of Mt. Pleasant.

penalty, and no equity invites us to allow the usurious interest collected upon its renewals to be used as set off here. One danger of doing so is illustrated by the fact that this same note is sought to be used as a defense between the same parties in Nos. 513 and 514 of the same term as this. Wherefore [judgment is entered in favor of the plaintiff for $3,485.18 (being principal of notes in suit, less excess interest paid), to which amount no sufficient affidavit of defense has been filed, and with the usual per cent attorney's commission, and with leave to plaintiff to file forthwith his præcipe under Rule 13 as to balance of his claim.]"

There were three other cases: one against an indorser on one of the notes in suit; one against B. F. Overholt & Co. on other notes: and one against the indorser of the latter, which were ruled by the court as above in the same opinion, and which it was agreed should be determined by the decision in this cause.

1.

The defendants took this writ and the errors assigned were: In entering judgment for want of a sufficient affidavit of defense. 2. In entering judgment as above in brackets. 3. In refusing to allow defendants credit for the whole amount of interest charged, whether paid or not, both on the notes in suit, the previous renewals thereof, and on note or notes not in suit. 4. In refusing to decree forfeiture of all the interest paid on the several notes set forth in the affidavit of defense. 5. In refusing to allow the defendant to set off the excess of interest paid upon the $4,000 note, and the series of renewals of which it was the last, said note being dated 14th February, 1875, is unpaid, and not yet sued upon.

Edgar Cowan and Markle & McCullough, for plaintiffs in error.

A. M. Fulton, for defendant in error.

SHARSWOOD, J. The 30th section of the act of Congress of June 3d, 1864, under which the defendants in error were organized and incorporated as a National bank declares that "the knowingly receiving, reserving or charging," by a National bank, "a rate of interest greater than" that lawful in the State in which such bank may be located, "shall be held and adjudged a forfeiture of the entire interest which the note, bill or other evidence carries with it, or which was agreed to be paid thereon; and in case a greater interest has been paid, the person or persons paying the same or their legal representatives may recover back in any action of debt