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National Exchange Bank v. Moore.

proper adjudication by a court of the United States. But it is not perceived that this provision can affect the construction of section 30, fixing the rate of interest which may be charged, and the penalty for charging a rate in excess of that prescribed. The illegal interest is made a ground for the forfeiture of the charter, but it does not follow that a contract of loan by which illegal interest is reserved shall be void as to the principal debt, or that, as between the parties to the transaction, any other result would follow, beyond the liability of the bank to forfeit twice the sum of interest received. On this subject the remark of Judge Story, in the case of Fleckner v. The Bank of the United States, 8 Wheaton, 388, seems directly in point. That learned judge, delivering the opinion of the court, says: "The taking of interest by the bank beyond the sum authorized by the charter, would doubtless be a violation of its charter, for which a remedy might be applied by the government; but as the act of Congress (the charter of the bank) does not declare that it shall avoid the contract, it is not perceived how the original defendant could avail himself of this ground to defeat a recovery."

In closing this opinion, I may remark that the pressure of other duties has prevented me from noticing in detail the several cases cited by the counsel for Moore to sustain the exception to the debt of the petitioning creditor. It did not seem to the court necessary that this should be done. The cases cited from the Ohio Reports, and the Reports of courts in other States, have no direct application to the question before this court. The decisions referred to were based on State statutes, the language of which, in relation to the reservation of illegal interest, was not in terms, or substantially, the same as that used in the national banking act under which the present question arises.

In reaching the conclusion indicated, namely, that the debt of the National Exchange Bank of Columbus, so far as the principle is concerned, was not intended to be in

Bailey v. Wright.

validated by section 30 of the national banking law, and is a debt provable under the bankrupt act, candor requires me to say that I am not altogether free from doubt. The question, as it bears upon the present proceeding, is not important to the parties. Under the bankrupt law, if the debt of the petitioning creditor is not valid, any other creditor may, by leave of the court, be made a party to the proceeding, and the petition may be brought to a final hearing on the merits. But in reference to the banking and commercial interests of the community, the question is one of vast practical importance. And doubtless it will soon be definitely settled by the court of the last resort.

The exception to the petition is overruled, and the case will be heard on the facts which it alleges.

(CIRCUIT COURT.)

WILLIAM BAILEY v. C. J. WRIGHT AND H. CRAFT.

Where a bill in equity charges acts of fraud, and sets up, among other things, an agreement by a defendant to execute a mortgage of real estate, and avers a failure and refusal to execute such mortgage, such defendant can not, by plea, aver the invalidity of such agreement as a parol agreement and void under the statute of frauds, but will be required by answer to respond to the allegations of the bill.

The court will require all the facts to be presented to enable it to decide whether the plea of the statute of frauds will be available.

R. M. Corwine, for complainant.

John L. Miner and George R. Sage, for defendants.

OPINION OF THE COURT:

The bill in this case alleges, in substance, that upon certain false and fraudulent representations by the defendants, the complainant was induced to make an advance to them

Bailey v. Wright.

of $20,000, to be invested in the purchase of cotton for the benefit of all the parties. It is averred, also, that as an inducement for making said advance, and an indemnity therefor, the defendant Wright represented himself as the owner of valuable real estate in Cincinnati, which he promised to mortgage to the complainant to secure him against loss for said advance in money. The bill contains direct allegations of fraud on the part of defendants, prays for an account, and for a decree requiring the defendant Wright to execute a mortgage on the real estate in Cincinnati, according to his promise.

The defendant Wright has filed a plea to the bill, denying all the allegations of fraud, and averring as to the averment of the bill that he promised to execute a mortgage of real estate, that if any such promise was made, it was verbal, and therefore void under the statute of frauds.

The pending motion in the case is for an order to withdraw the plea from the files, and to require an answer to the merits. The only question intended to be presented on this motion is, whether, under the allegations of the bill, the defendant Wright can rely on his averment that the promise to execute the mortgage was void under the statute of frauds, without an answer in response to the charges of fraud in obtaining the advances of money by the complainant.

The defendant has an undoubted right to set up that the agreement to mortgage was by parol, and therefore void. But the law seems now to be well settled, that where facts are asserted in a bill, the effect of which may be to take a verbal agreement out of the operation of the statute of frauds, it is incumbent on the respondent to respond by answer to such facts. This would seem to be the fair construction of the thirty-second rule of the rules of practice in chancery, adopted by the Supreme Court for the guidance of the courts of the United States. And such seems to be the law applicable to the question, as laid down by Judge Story. Story's Eq. Plead. 591.

United States v. Mason.

It is clear that a plea merely setting up the invalidity of an agreement under the statute of frauds, where other facts are averred in the bill in support of the complainant's equity, and which may be of a character to require a court to ignore the plea of the statute, the defendant should be required to file his answer to such facts. Such, it seems to the court, is in accordance with the spirit and design of the thirty-second rule before referred to. And without deeming it necessary, in deciding the present motion, to refer to the frauds alleged in the bill, and without intimating any opinion upon the question, whether, if the frauds charged were proved, the legal effect would be to supersede the plea of the statute of frauds, and present the entire transaction for inquiry on the broad principles of equity, an order will be entered requiring the defendants to file their answer to the bill. There can be no hardship in such an order. The defendants should gladly avail themselves of the opportunity of denying the frauds charged. I trust they will be able to acquit themselves of all imputations impugning their integrity in the transactions set out in the bill.

(CIRCUIT COURT.)

THE UNITED STATES v. COLUMBUS B. MASON ET AL.

Section 3 of the act of Congress of March 3, 1851, authorizes the postmaster-general to deliver postage stamps to a deputy postmaster without prepayment.

The intention of Congress by said section was to require prepayment for postage stamps of persons not deputy postmasters.

Under the said act, the sureties upon the official bond of a deputy postmaster are liable for postage stamps received by their principal.

The sureties upon the bond of a deputy postmaster, which stipulates that the principal shall faithfully account for postage stamps received by him, are liable as upon a valid contract at common law.

United States v. Mason.

Durbin Ward, District Attorney, for United States.

H. H. Hunter, for defendant.

OPINION OF THE COURT:

This is an action of debt against Columbus B. Mason, on his bond as a deputy postmaster at Circleville, Ohio, and against the other defendants, as the sureties of Mason. The declaration sets out at length the conditions of the bond, one of which is that the said Mason, as a deputy postmaster, "shall faithfully account with the United States, in the manner directed by the postmaster-general, for all moneys, postage stamps, stamped envelopes, bills, bonds, notes, drafts, receipts, vouchers, and other property and papers, which he, as postmaster, or as agent and depositary as aforesaid, shall receive for the use and benefit of the said post-office department." Various breaches of the bond are assigned; and, among others, it is averred that Mason and his sureties did not account for all the postage stamps, envelopes, etc., received by Mason from time to time, as deputy postmaster. For the purpose of a decision of the question now before the court, it is not necessary to notice the other breaches assigned.

The sureties have filed several special pleas, setting up matters of defense to the action on the bond. Among others, there is an eighth plea, which is, in substance, that Mason, as deputy postmaster, faithfully accounted for and paid over all moneys for which he was accountable, and which is claimed as due from him, "except such part thereof as may have arisen as proceeds of sales of postage stamps and stamped envelopes, if any such were placed in his hands, or furnished to him by the postmaster-general;" as to which they aver that the plaintiff is not entitled to recover against them as sureties, "because they say the said Columbus B. Mason, in his said capacity of deputy postmaster, or otherwise, was not an assistant treasurer, or a designated depositary of the United States, and that it was not lawfully

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