Show THE USURY LAWS OF UTAH pr drw thed the american merican banker may 13 in utah there is no absolute rate of interest except that when no rate has been agreed upon by the contracting persons eight per cent is the legal lecal charge borge a the law allows any rate or of interest which has been COL coi traded for in writing the national bank ct cl commerce of provo utah was sued ened for the recovery of sums claimed by the ane plaintiff to be usurious judge blackburn of the first district court heard the ibe cause and decided against the be banks bank holding that according to the ruling of the united states supreme court in national bunk bank vs johnson Joh neon national banks are restricted from chargi oh argi a higher rate ot of interest thau than that fixed by the statutes of the respective states in which the banks are located ati aiu where the ft statutes atutes of ane state do not fix a rate of interest national banks are limited to charging 7 per cent the court was waa undecided ds it appears as to whether this 8 per cent of the utah statute could be termed a fixed rate of 01 interest or not if it were a fixed rate national banks in utah could charge 8 per cert but it kit it were not a fixed rare race but 7 per cent could be ch ageo but as the plaintiff ban bad been charged at a higher rate thau either he was wa in any event entitled to recover double the amount of in terest paid jt it is natural in view of this decie decision loll that national banks in utah and elsewhere should be anxious to know whether this will be sustained by a higher court the judge himself appears t have doubted the correct correctness nees of his hie conclusions A little time might therefore be profitably spent in examining this interesting case io in somewhat further detail first firs of all what does the national banking law say on the question of interest we may sum up the clause covering that point by stat lag ing that a national bank may take whatever interest the local law allows to go the state and other banbor the exact words of the statute upon which the above case turns are as fo lows when no rate is fixed by the laws 01 the state or territory or district the bank may take receive or charge a rate not exceeding 7 per cent the intent of this clause was the stone for tumbling to which judge blackburn confessed essed in ati adopting opting the clause relating to Int interest arest congress did not intend to limit the earning power of the national banks and thereby relegate them to a disadvantageous position oom compared pared to state banking institutions its unmistakable purpose was to te permit the national banks band s to contract for high a rate of interest as that per to banks regulated by the state fate laws this principle must not bo be overlooked iu in an attempt to find a just juet and reasonable application of the statute fatute ta tute but congress was also influenced fluen ced by the moral import c if f its attitude on this question under the i fluence of this sentiment it could not keep wholly silent where tile the state uw law tailed failed absolutely to provide for usurious undertakings thus it 7 per cent as the legal rate for national banks in states and territories where the local laws are silent wb wac assy ay that fixing a separate rate as legal interest for national banks was ex of the th moral sense of congress which was not to interfere when the local laws allowed a higher rate or provided that any rate may be contracted for this thie at least is our view of the quest question iOD and it remains to be seen how far it is supported by the courts two judgments were cited by the national bank of Coir Corri meroe nerce as supporting its case they are rational national bank vs bruhn 74 texas page and hinds vs carmolo Mar Marmo molo hlo 60 cal in the latter case judge ross boss said the true interpretation of the act 0 congress is in that iu in those states and territories having no statute upon the subject or of interest the national banks are allowed a rate not exceeding 7 per cent while in those states fiR having statutes they are authorized to charge and receive interest at the rate allowed to other banks a aid d individual prom from this view it follows that inasmuch iua as ae we have in california a statute p u viding that parties may agree in writing for the payment of any interest and it shall be allowed according to the terms of the agreement until the entry of judgment the national batke bat ke are allowed to charge and receive such rates of Inter interest tat as may be agreed the ruling in the I 1 exas case is founded on the same argument that the rule rate established by congress bines binds a 8 national bank only where the state law to is completely silent does the ladof law of utah make any provisions for the taking of interest by a bank we have shown that it does the I 1 he law says bays that any rate may be contracted for shall we not say then that whatever the rate nominated in the contract that to is the fixed rate which the law ol of the ecate will enforce upon the parties to the same but the in the care under consideration cites the supreme court it f the united states in national banks vs ve johnson in opposition to this but in that case the court upheld the state law which provided a penalty for charging over 7 per cent in discounts and ana loans by banks the bank held th that t it was a natural person and as sug sidn came within the terms of the new york statute which allowed natural perlous to acquire and purchase commercial paper at any rate above 7 per cent the court found no essential difference between puro purchase hase anddie and discount so far so as banking operations are concerned and held the bank down to the legal rate the court denied that where natural persons were allowed to charge over 7 per cent but state banks were limited to this rate that a national bank could charge the higher percentage but the court did in that case interpose a brief hypo thesis in which it said that it if the bank had claimed that the rate is allowed by the law jaw of the state when it permits the parties to reserve and receive whatever they may agree upon then ihen the section furnishes the conclusive answer when no rate to is fixed by the laws or of the state etc the bank may take or charge a rate not elcee ing 7 per cent P so that the transaction in question in either aspect is in within the prohibition of the statute 0 but if a case directly bearing on that points point as the one under our hand should come before that court oo 00 art would it uphold this dictum following its ito rule to sustain state laws lawa when they do not absolutely fllch with the federal statutes statute mp would it not make the interest law of the state or territory in which the national bank la is situated the governing principle for national banks in discounting and loaning their faudt should the courts hypothetical question and its ito insufficient answer involving a point not directly in issue and the espres giorg upon which are therefore to be taken as aa more mere dictum be regarded as conclusive we think not may we not feel confident then that it will not put a barrier in the way of the clear purpose of the federal statute it if the interpretation of it as we have given it is correct that purpose is to place state and national banks on the same footing as regards regarda permissible interest charges in utah that rate is the fixed axed and legal rate which is contracted for in writing and the court will not interpose to prevent national banks from taking advantage or of a territorial statute which in no ED wise interferes with the federal jaw if there was a radical coi co filet here between the act of congress and the law jaw of utah the latter would earile become invalid inva liu but in this question of allowable interest we have found no shadow of conflict therefore we believe that it if this case cam should come before the supreme court for adjudication that tribunal will uphold the territorial law in questions of in te terest restus as the rule and guidance for national banks bank |