
    Thomas Cook, David Lanfair, Bryant G. Whitehead and William L. Pickens vs. The Bank of Lexington.
    The Bank of Mississippi, discounted the note of C. and others, and paid them in the notes of the Brandon Bank, which were from twenty to twenty-five per cent, below specie par at the time, though received generally at par, in payment of debts, and used by C. and others at par, in payment of an execution against them: Held, that the transaction was usurious, and the bank could only recover the specie value of the notes at the time they were lent, without interest.
    In such case the contract must be judged of by its own terms, not by the use which was made of the borrowed money.
    ERROR from the circuit court of Holmes county; Hon. John H. Rollins, judge.
    This was an action of assumpsit brought to the October term, 1839, of the circuit court of Holmes county, by the-Bank of Lexington, against Thomas Cook, David Lanfair-, Bryant G. Whitehead and William L. Pickens, on a promissory note, for two thousand and ten dollars. The defendants pleaded the general issue. Upon the trial the plaintiff read in evidence the note sued on, and rested her case. The defendants then introduced Israel W. Pickens, who testified that at the date of the note sued on, he was one of the directors of the Bank of Mississippi, and sheriff of Holmes county; that he presented the note for discount, and it was discounted by the board of directors of the bank, upon the condition that the notes of the Brandon Bank would be received by the borrowers at their nominal value;' that the plaintiff was paying out upon discounts no other money at that time, except the Brandon Bank. That in a few hours after the note was ordered to be discounted, he saw Cook come from towards the bank with the notes of'the Brandon Bank in his hand, and he paid the same over to witness, in satisfaction of an execution which witness held as sheriff against him; that witness immediately offered the notes to plaintiff’s attorney in said execution, who refused to take them, unless at a discount of ten per cent. But upon witness telling him that in all probability he would get nothing else, he received them. Witness further stated, that at the time of the discount of the note, the plaintiff reserved the usual rate of interest allowed by the charter. The notes of the Brandon Bank were then fifteen or twenty per cent, below specie par, which fact was well known to all the directors of the Bank of Mississippi. The object of witness, and he believed of the other directors of the bank, also, in paying out the notes of the Bra(ndon Bank on discounts, was to get them off their hands, as it was apprehended they would continue to depreciate, and that they might by that means make the depreciated notes count dollar for dollar, with interest, in good money, when the notes taken therefor should be collected. Upon cross-examination, witness stated that at that time, the people of the county were much embarrassed, and the notes of the Brandon Bank were generally received in the payment of debts; that he as sheriff received them in executions, unless instructed to the contrary; that said notes constituted the greatest part of the circulating medium of the country. Witness further stated, that Cook could not have obtained said loans in any other funds than the notes of the Brandon Bank: That he knew of no instance of a sale of the notes of the Brandon Bank being made for gold or silver; and that the banks in the state at that time, had generally suspended specie payment. Specie was very scarce and property would not bring .its intrinsic value in specie. The defendants were not present when the note was discounted. Witness was not present when the money was paid out by the bank. Edmund Pursell, a witness for defendants testified that the plaintiff at, the date of the note sued on, was loaning no other funds except the notes of the Brandon Bank, which were under par and known to the directors of the plaintiff to be so. But they were taken in payment of executions and debts, and he believed it was the object of the directory in making such loans, to relieve the people who were at that time much embarrassed, and that some of the directory believed the money would be good.
    This was all the evidence introduced. After argument of counsel, the attorney for plaintiff, moved the court to instruct the jury as follows, to wit:
    “1st. That if the jury believe, from the evidence, that the contract sued on, was made on the part of the bank, fairly and with no intention of avoiding the prohibitions of its charter, or the statute against usury, by taking a greater interest than that allowed by law, but was made at the instance and for the accommodation and benefit of the said defendants; and that it was understood and believed by the parties at the time the contract was made, that the notes paid by the plaintiff to the defendants, passed at par in the discharge of debts, although at less value than gold or silver, such contract was not usurious, and they must find for the1 plaintiff.”
    “ 2d. That if the jury find from the evidence, that the notes paid by the plaintiff to defendants, as the consideration of the note sued on, passed currently in the payment of debts, executions and taxes, and that the loan was not made by plaintiff with the intention of avoiding the statute against usury, or the prohibition of its own charter, by a shift or a device, the law is for the plaintiff, and they must find accordingly.”
    “ 3d. That, unless the jury believe from the evidence in this case, that there was a corrupt agreement upon the part of the plaintiff to take, and the defendant to give a greater interest than that allowed by law, then there is no usury, and they must find for plaintiff.”
    “ 4th. That if the jury believe from the evidence in this case, that the note sued on, was offered by the defendants to the bank for discount, and was discounted by the plaintiff in the usual course of business, without any agreement as to the kind of funds to be received by defendants, and the proceeds so discounted placed to the credit of the defendants, then the law is for the plaintiff and the jury must find accordingly.”
    
      “ 5th. If the jury find that the contract was illegal as being against the statute of usury, it avoids only the illegal and legal interest. And if against the charter, only the excess of interest taken.”
    “ 6th. That the defendants by pleading non assumpsit, or the general issue, acknowledged the plaintiff to be a corporation, and cannot under the issue dispute it.” All of which instructions were given by the court.
    The counsel for the defendants then requested the court to give the following instructions to the jury.
    “1st. The court will instruct the jury, that if they believe from the evidence, that the consideration of the note sued upon, .was a loan of the notes of the Brandon Bank, by the plaintiff to the defendants, and at the time the note was discounted by the plaintiff, the notes of the Brandon Bank were at a discount, and not worth as much as gold and silver, and that fact known to the directors of the plaintiff, and that the plaintiff received the usual rate of discount upon said loan, that the contract is -usurious, and a violation of the charter of plaintiff, and the plaintiff cannot recover.”
    
      “ 2d. That if the jury believe from the evidence, that the consideration of the note sued upon, was a loan of the notes of the Brandon Bank by plaintiff to defendants; and that at the time the note was discounted by the plaintiff, the said notes of the Brandon Bank were at a discount, and not worth as much as gold and silver, and that fact known by the directors of the plaintiff, and that plaintiff received the usual rate of discount upon said loan; and if they further believe from the evidence, that the plaintiff would not have made the loan, or discount in any other funds than the depreciated notes'of the Brandon Bank, and that fact was declared by the plaintiff, and known to the defendant, then, the note is void, and the plaintiff cannot recover.”
    “ 3d. That if the jury believe, from the evidence, that the consideration of the note sued on, was a loan by the board of directory, of the notes of the Brandon Bank, and that said notes were under par, and below the value of gold and silver, and that fact known by plaintiff and defendants, and that plaintiff received the usual rate of interest at the time of the loan, and the consideration of said loan, was that it should be paid in said depreciated bank notes, that the consideration is usurious, and avoids the legal and illegal interest.” All of which instructions the court refused to give. To which said several opinions of the court, in giving the instructions asked for by the plaintiff’s counsel, and refusing to give the instructions asked by the defendants’ counsel, the defendants excepted.
    The jury found a verdict for the plaintiff for the full amount of the note sued on, with interest, and judgment was entered accordingly. To reverse which judgment, the defendants now prosecute this writ of error.
    
      J. C. Mitchell, for plaintiff in error,
    contended, that the charter of a corporation is an enabling statute; and a corporation can do nothing, therefore, that it is not expressly authorized to do, or which is necessary to carry into execution some expressly delegated power. That the general statute against usury, does not embrace banks and artificial persons, and if a bank exacts and receives a greater rate of interest than her charter. authorizes, the contract is wholly void. He also insisted that the charter of the Bank of Lexington conferred no power to loan the notes of other banks, and especially those so greatly depreciated as were the notes of the Brandon Bank. And he cited, H. & H. 374, sect. 14; Bank of the United States v. Owens et al., 2 Peters, 535 ; Aubert v. Maze, 2 B. & P. 374; Watts v. Brooks, 3 Yesey, jr., 612; Webb v. Pritchett, 1 B. & P. 264; Charter of the Bank of Lexington, section 6; Angelí and Ames on Corporations, 1; 1 Balls, 38 ; Hob. 72 ; Dyer, 356 ; 4 Term Rep. 353 ; 2 Cowen’s Rep. 699; 13 Peters, 65; 4 lb. 168; 8 John. Rep. 424; Kyd on Corporations; 7 Cowen’s Rep. 465; 15 John. Rep. 382; 19 Ib. 1; 8 Gill & John. 249, 318; 11 Peters Rep. 420, 424; Sugden on Powers, 269; 2 Cowen, 419.
    
      James M. Dyer, for defendant in error, contended,
    
      1st. That the note sued on, is not usurious. 2d. That if the contract is usurious, that the excess, or interest, is alone to be deducted, and that she is entitled to a judgment for the balance.
    Then to the first point. The proof in the record is that the bank reserved only the rate of interest allowed by its charter, which is nine per cent. Reprint of the Laws of Mississippi, 673, sect. 5. But the plaintiffs in error allege, that the consideration of the note was a loan of Brandon money, and that it was ten, or fifteen per cent, below specie, and that the contract is, therefore, usurious and void. Does that stamp the note with usury? Certainly not. In 4 How. 621, usury is defined to be a corrupt agreement between the lender and borrower of money by which the latter knowingly gives or promises and the former knowingly receives or takes a higher rate of interest than the statute allows and with intention to violate the statute. This definition is in substance, the one adopted by all the authorities. Great stress, it will be seen, is here laid upon the corrupt agreement, the intention, the quo animo. There must be a contract to give and take usury. The minds of the parties must meet. The parties must design to commit usury. It would be contrary to both human and divine law, to punish a man for what he did not intend doing. See 4 How. 621; 9 Peters: Hammett v. Yea, 1 Boss. & Pull. 144; Price et al. v. Campbell, 2 Call, 123; 1 Yesey, jr.; Smith v. Beach, 3 Day’s Cases, 26.
    If the intent or quo animo is to determine the character of the contract, how is that intent to be ascertained ? By the circumstances attending the transaction. If closely scanned in the present case they will show the bank acted bona fide, innocently, and not with the intention or the design of violating the statute against usury, or stepping over the limits of her charter.
    The money being below specie, does that ipso facto make the contract usurious and void. If so, no bank paper can be safely loaned, for none of it, no matter how solvent the bank is, and though it pays specie, is equal to gold and silver, except at the counter of the bank. Specie undergoes no change, is durable, is of the same value in all countries, hence it is of higher value than paper. If the only question whether the money is equal to specie is to settle the matter, it is useless to talk about the intention and the corrupt agreement, about which, all the books speak so much. ( But the ablest court, or at least as able as any in this union, has decided that the money loaned, being in the market below specie, does not necessarily amount to usury. I allude to the decision in the case of Wag-gener et al v. The United ¡States Bank. There the bank loaned the paper of another bank between thirty-three and fifty per cent, below par, yet the court held as the transaction was fair and bona fide, and the money worth to the bank what it called for on its face, as in the case at bar, that it was not usurious. There are, it is true, cases conflicting with this, but this one in soundness of doctrine, strength of argument, and correctness of principle, outweighs them all. Upon this decision we confidently rely; and which, we think, clearly sustained the verdict of the jury, in the case now before the court.
    I will now pass to the second proposition, that if the contract is usurious, that we are entitled to a judgment for all save the interest.
    The charter of the bank fixes the interest at nine per cent., but imposes no penalty, or forfeiture if it exceeds that rate. Can the courts increase the penalty imposed by law. If so, they possess legislative power of the most dangerous character. But the authorities are well settled, that the court cannot imply or create or extend a penalty. 1 Mass. Rep. 167; 2 John. 380’. Yet if the court declares this contract entirely void on the ground of usury, they certainly create a penalty unknown to the charter, or to our statute against usury.
    The statute of this slate against usury, provides that if “any person or persons” take a greater rate of interest than that allowed by law, the interest shall be forfeited. This statute we insist includes corporations. We can see no good reason, or sound policy why it should not.
    In Angel and Ames on Corporations, it is said that “the words inhabitants, occupiers, or persons, may include incorporated companies;” not in all cases I will admit but in many; in all where propriety would seem to require it. The statute says if any person or persons shall exceed the legal rate of interest that the principal only shall be recovered. If then the word person, according to the above authority, includes a corporation, our judgment, so far as the principal goes, must stand.
    In 3 Peters, 36, 42, it is said banks are within the statute of usury. To the same effect, see 15 Johnson, 338, 358; also, Maine Bank v. Butts, 9 Mass. Rep. 49. To the last case, we particularly call the attention of the court; also see the opinion of Justice Turner, in the case of the Planters Bank v. Snodgrass, in the Appendix of 5 Howard, 809.
    The case in 2 Peters, 527, is much relied on, on the other side. That case is entitled to but little weight, because the judges were divided, the reasoning is by no means satisfactory, and the decision was in effect overruled in the same case in 9 Peters. It was, at all events, determined under different circumstances from the one now before the court, and it is not applicable. The court considered the bank had been guilty of usury. The United States had no general statute on usury. The court therefore, had to resort to general principles, and upon them, declared the contract in that case void. Mississippi has a general law on the subject of usury. If the Bank of Lexington is guilty of usury, as her charter is silent on it, she mitst be tried by that law. That statute declares the interest alone to be forfeited. No public policy demands a greater punishment. If the interest is taken away, all inducement to lend is gone, and the fear of the loss of it will, and has in this state prevented usury, as far as it is possible by law to restrain the cupidity of man. Against the case in 2 Peters we cite The Bank of the United States v. Fleckner, 8 Wheat. 354.
   Mr. Justice Clayton

delivered the opinion of the court.

The note of the plaintiffs in error, sued on in this case, was discounted by the bank, and paid in notes of the Brandon Bank. These notes were twenty to twenty-ñve per cent, under specie par, at the time, though received at par in payment of debts. The judgment below was for the plaintiff, for principal and interest. There was proof that the defendants, used the notes .which they received at par in payment of an execution against them.

The case of Bondurant v. Commercial Bank of Natchez, ante, p. 533, settles all the points involved in this. The contract must be judged of by its own terms, not by the use which was made-of the borrowed money. If the defendants had kept the notes, till they became wholly worthless, the plaintiff would notwithstanding be entitled to their value, at the time they were paid out.

The judgment must be reversed, and cause remanded for new trial. If the defendants below satisfy the jury of the truth of their defence, then no more can be recovered, than the specie value of the notes at the time they were lent by the plaintiff’in the court below to the defendants, without interest.

Judgment reversed and new trial awarded.

Thacher J. dissented, and referred for reasons to his dissenting opinion in the case of the Grand Gulf Bank v. Richard T. Archer et als. ante, 151.  