The Nonpartisan Leader Newspaper, May 4, 1916, Page 9

By Staff Correspondent Bismarck, May 1.—The supreme court has just made two important decisions . affecting “usury in North Dakota, neither of which ‘have had any adequate publicity although both vitally affect the farmers; the larg- est borrowing class in the state. One of the decisions, which decides the extent of-the penaly to be in- - flicted on money lenders who exact usury, has . caused Chief Justice Charles J. Fisk, candidate for reelec~ tion this year, to take a stand strong- ly apposed to inflicting as strong ‘a enalty as a liberal reading of the aw would - permit, and he dissents from -the ‘majority opinion of the court. 2 . The other decision settles the way in which is ‘to be computed and makes it possible for money lend- ers to colleet, in fact, over 11 per cent on loans, while the.usury limit is 10 per cent. This decision makes it im- perative for the farmers of the state, when they get control of the legisla- Aure; to amend some of the existing l{aw?iftheywdshtokeeptheusm'y limit at l%eger cent and- prevent it being viola ed by roundabout ways. . The decision which puts Chief Jus- tice 'Fisk squarely on record as op- Posed-to as severe a penalty for usury as the law would warrant was in the case of Allen Person against John Mattson, a case appealed to the sup- reme court from Divide county: Two notes for $2000 each were given, bean ing interest at 12 }:er cent, being is- sued before the law was changed making over 10 per cent usury. These two notes were made up of two other previous loans, one for $356 and one Tor $966, and a new cash loan of $678. In the previous. $356 loan which helped to make .up the two new notes for $2000 each, bonus’ of $45. There was therefore.a bonus of $45 in: the two. new: notes, bonus. : 7 3 . The supreme court, following de- cisions -in, other states and well-set- tled law, held that this usurious bonus - tainted both $2000 notes and justified the borrower in refusing't the person D 0 usury can co lect back twice the amount of . the interest. So v ] i interest on the two $2000 notes was declared forfeited by the'supreme cou¥f. ~=' - JUDGE FISK WOULD'" SPARE USURERS S 5udge fisk,~ however, declared in his dissenting. opinion that ‘this was- too severe a penalty for usurers. ~He held that the $45 bonus/given on the small- er-note and includéd!in the new $4000 loan did not; ‘taint the whole of ‘that loan. He said:that interest could be forfeited only on'‘the small note of $356 and that “it:‘would be unfair to the money lender ‘to'exact the heavier penalty which::the 'majority of the court - iisisted upon. - Jiods How ' prevalent usury is in North Dakota has been:shown: in a previous article in the Leader, based on the re- port of the United States comptroller of . the currency. The penalty pro- vided by law is merely the forfeiture of the interest,-or twice the interest _can:be collected back -if it’ has been ‘paid. Usury is not a‘crime. Under the light penalty existing usury has flourished. ' The majority of the court doubtless thought that its decision in the case above described would help in m " “ness policy in * cision was fully warranted by the facts and the law. Yet, light as the - isk -would usury. penalty.is, Judge Kis haye had the!court in'this decision-" make it lighter. :Had Judge - Fiskis. " opimion: ed usury. would have North :Bakota than:it: bey a Ao oL mpovwesie 4 You voted to saddle the Louisiana. The other.decision’ concerns Adolph-: un r . county. - Sun= dahl:- was: a-farmer.: He ‘borrowed '$300. for a year, also/at.a time before: the usury limit had been reduced from 12 to 10 %eent. The: First State Bank -‘of , from: which “he made the loan, had him sign a note - for $340.90, due in one year without interest. The bank therefore “collect- ed $40.90 for -interest on the $300: " borrowed. To.. pay this, and_other o loans_Mr. Sundahl had to sell ‘his farm. 'He is now doing _earpentez_' there was a wmsurious: because they also eontained this $45 b; ‘ifhe;'_majority- of usury -an unpleasant ‘busi- - is state, ‘and the de-' ‘2 marck Tribune., SUry 1s Not If Interest is Collected “In Advance” Banks Can Charge More Than Limit work at. Jamestown. Tt occurred to him finally that perhaps he had been. charged .usury on this $300 loan. He figul:ed it out and found that $40.90, the-interest he was charged, figured between 13 and 14 per cent on $300, the amount he had borrowed. - The limit of usury was then 12 per cent. He engaged M. C. Freerks of James- town, a lawyer, and brought suit to collect from the bank twice the inter- est he had paid, the penalty for usury under the law. - : District Judge 'J. A. Coffey at Jamestown, who presided at the jury trial of the case, instrueted the jury as follows: 4 . “The interest rate should be figured upon the money or -value received by the borrower and can not exceed 12 per cent per annum.” X The jury found for Sundahl "but made a mistake in computing the amount due him under the usury " statute, giving hlm too much. Sun- ahl later came into court. and remit- ted the amount granted him by the _jury in excess of what he was entitled " The case was appealed to the sup- reme court by the bank. It was of utmost . importance to the banks of North Dakota that this view of usury established by the judge and jury in the lower court should be overthrown. It would be a matter that would naturally interest the banking asso- ciation of the state. It was too im-. ortant to trust to local lawyers at gamestown, who had defended the banks in the lowér court. So Enge- rud, Holt & Frame, lawyers of state- wide reputation at Fargo and attor- neys for some of the big banks, sup- planted the lawyers at -Jamestown and took the case to appeal-for the bank at Edmunds. The supreme court reversed Judge Frazier’s First Home in North Dakota * ‘'Fhis is & pho! the candidate indorsed. ation for governor. To this miles from Hoeple, W «the spring of ‘1881, The house sto 3 “WHO OWNS gang presS is greatly agitated these . days regarding the ownership of the Nonpartisan Leader. Many of them have asked the question again and again, “Who owns the Leader?” Let 'us ask a few questions, for. surely it is'now our turn. Who owns the Grand Forks Herald? Who owns the Courier-News? . Who owns - the Normanden? Who owns, the Bis- marek Tribune?. @ All' of these papers are demanding to know, “Who owns the Leader?” Now, speaking of ownership, let us cast some glances at the policy of the papers mentioned. Who does the Grand = Forks Herald: serve? What farmers’ arganization has favored?. 'Will Jerry Bacon, owner of the Hotel Dakota and ‘the Grand Forks Herald, please answer? Will his man Davies, editor of the Herald, please cease his abuse of Loftus and the' Equity and Townley and the Non- partisan League long enough to tell us what kind of a farmers’ organiza- tion Mr. Bacon would favor? ‘same question ? C. B. Little of Bismarck; may we have your attention a moment? :You have territorial been very close to: Alex: McKenzie. lottery-on this state. You have been as consistent a:stalwart as North:Da< ‘Tkota: has /known.- :You own the Bis- - This Tribune is financially bankrupt and you, Mr. Little, are receiver for your .own paper! Tell us, Mr. Little, does ~'the fact that you are the president of the First National Bank of Bismarck and-close to Alex McKenzie have any- thing to do with your Bismarck Trib- une attacks onthe Farmers’ Non- artisan League? ' i e And further, Mr. Little, after your b + THE PAPERS THAT FIGHT THE LEAGUE? * Editor Nonpartisan' Leader: The - it ever. ' partisan Lea : _ for the Leader. ‘Will Normanden' please answer the Andthe Bismarck ‘Tribune? Mr: « long been in politics. You were in the legislature.. You - have - same Bismarck Mammon.” - paper has ugh bankruptcy. and-has paid its-creditors a few cents on the dollar, then, “who will own the Tribune?” o 3 “Ye can not serve two masters.” - Now: for "some newspaper facts. Mr. Gang Editor, you are jealous, that’s all. You are jealous of the Nonpartisan. Leader. You. know soniething about the newspaper busi- ness. ' You know that a great shadow ' has failen across your paper. You ' did know that ‘the farmers had little corifidence in your papers.” You now: know- that they have lost that little. : You know that the Leader is the first paper which ever opened the farmers’ eyes to the necessity of standing sol- =~ ° idly. together at the ballot box. That is where the shoe pinches, eh, Mr. Little? You are a candidate for the state senate in’ Burleigh county. How far do you think you’ll get at the %fimaries if the farmers stand together ?: The members_of the Farmers’ Non- i e have each paid $1.50 THEY- believe they have' received the full value of that $1.60. They have been reading your gang sheet for 30 years and what * ‘have -they-received? = Ask any mems= . ber of the Eeague in Burleigh county. The Leader believes the farmers should ‘have a hand in controlling North Dakota. It is the official organ ‘of -the Farmers’ Nonpartisan League, which is going to make a farmer ad~ minjstration possible ‘ in this state. & These gang papers are opposing the fartrzers in this attempt to contxrol th state. - ; e One thing is evident:' The Nonpar- . tisan Leader is controlled by one oup in this fight, the Herald, - ourter-News, Normanden marck 7 know whom these papers serve—now ' who owns them? _*Ye: can “not I J..D. BOWMAN, ' - PR A . exact from Sundahi:™" and: Bis- . privilege state . Tribune by another. ‘We - Coffey and sent the case back for re trial, and. incidentally decided how usury shall be figured in this state. There is a law that permits statg banks and state savings banks to col« lect "a year’s interest in advances National banks and other money lend<« ers, including private individiials, do not have this right. It is a special: privilege of state banks, which the latter have had put in the law for their benefit. The law is as followssy Section 5166, compiled laws of North Dakota, edition of 1913.— “Rate of Interest. Such association (a state bank) may demand and res ceive for loans on personal security, - or for notes, bills or other evidences of debt, discounted, such rate of inters est as may be agreed upon, not ex< ceeding the amount authorized by law to be contracted for, and it shall be lawful to receive such interest ace. cording to the ordinary usage of bank= ing associations ' and for not more than one year in advance.” . Under this statute the supreme: court decided that the $40.90 Mr, Sundahl paid on his loan of $300 was not usurious, although it figured be- tween 13 and 14 per cent and 12 per cent was then the limit of legitimate interest. The Ligh court decided that Jdnasmuch as the law provides that interest can be collected IN AD- VANCE, the bank, when advancing money to the borrower, might - de- duct 12 per:cent of the entire face of the note given by the borrower. For instance, on his note for $100 for one year the borrower would get $100, less 12 "per eent, or $88. When he eame to pay at the end of the year he would have to %ay $100, ‘and thus he would actually. be paying $12 on $88, or nearly 14 per cent interest. Approached from another angle it will be found that the $12 on $88— which, according to the supreme court, is “interest in advance”—is in reality interest at 12 per cent, plus intert_ast on the interest at 12 per cent, plus ine terest on the interest on the interest at 12 per cent, plus interest on the interest on the interest on the interest at 12 per cent. This is far enough to carry the calculation for practical purposes, as it brings it to ‘within a fraction of a cent of the amount actus in“the case of Sundahl and his $40.90 interest on $300. Here is what the court“said the bank'had a right to Interest for year at 12 .' DEr cent on $300. Interest for ‘year 'at 12 “‘per cent on the $36 interesti.. il imSiiy ST 4.32 Interest for yearv t-12° iper cent on' the $4.32 . ssinterest on the:inter- siteste e i i .52 Interest for year ‘at 12 ~iper cent on the 52 *+cents interest/:on the interest on ‘the inter- esbicia ) st " Dotal interest charged.......$40.90 The supreme court may or may not have been able, under the law and precedents, to have refused to have. made this interpretation of the in- terest-in-advance statute. have: been some- ground, for instance, to have Held that only interest on the interest could be collected in advance, - instead of including also interest on . the interest on the interest and inter- est on the interest on the interest on the interest. Regardless - of i:his, héwevei,' tixe-_ 8t charge interest in .advance; thus .vig-.: special: privilege: of -state bank lating 'the letter. and spirit. of. the . usury laws, should be repealed, if the . . Deople desire fo keep the present- usury law of 10 per cent in force. . . Otherwise between 11 and 12 per cent . can be collected and the 10 per cent limit/ will ‘mean’ nothing: * The- supreme court refused to rule ° on the constitutionality of the - Inferest. for 'a year in advance. The case has gone back for retrial, how- xv . ever, and the court has indicated it : serve God and; will make a ruling on this point when the case comes up again, Sy 2 s Tt is interesting to see how the * supreme: court’s figuring worked out” There may - banks /have to collect : - B o