The ordinary commissions allowed by the usages of trade may be charged without taint ing a contract with usury ; but it must plain ly divea• that the commissions are charged for other services, and are not merely a de vice to evade the law ; Hopkins v. Baker's Adm'r, 2 Pat. & H. (Va.) 110. A bonus paid to an agent in addition to legal interest ren ders the loan usurious, when it enures to the benefit of the principal under the agent's con tract ; McBroom v. Investment Co., 153 U. S. 318, 14 Sup. Ct. 852, 38 L. Ed. 729. Commis sion may be charged by a merchant for ac cepting a bill ; Jones T. McLean, 18 Ark. 456; but a commission charged in addition to in terest for advancing money is usurious; Ha ven v. Hudson, 12 La. Ann. 660. Where a banker discounts a bill• payable in a distant place, he may charge the usual rate of ex change on that place ; but if such charge be an excess of the usual rate, it will, be consid ered a device to cover usurious interest; State Bank v. Rodgers, 3 Ind. 53. See Cockle v. Flack, 93 U. S. 344, 33 L. Ed. 949, where it was properly lett as a question of fact for the jury to decide whether or not there was a device to cover usury.
Where a gratuity is given to influence the making of a loan, it will be considered usuri ous ; Lockwood v. Mitchell, 7 Ohio St. 387, 70 Am. Dec. 78. The fact that an agent, au thorized to lend money for lawful interest, exacts for his own benefit and without his principal's knowledge, more than the lawful rate, does not render the loan usurious; Call v. Palmer, 116 U. S. 98, 6 Sup. Ct. 301, 29 L. Ed. 559. The burden of proof is on the person pleading usury ; Holland v. Chambers, 22 Ga. 193 ; Holt v. Kirby, 57 Ark. 251, 21 S. W. 432 ; and where the contract is valid on its face, affirmative proof must be made that the agreement was corruptly made to evade the law ; Omaha Hotel v. Wade, 97 U. S. 13,24 L. Ed. 917. Where parties exchange their notes for mutual accommodation, and both or either are sold at a higher than the legal rate, they are usurious ; Blodgett v. Wad hams, Labor's Supp. (N. Y.) 65.
The common practice of reserving the in terest on negotiable paper at the time of making the loan is very ancient, and is sanc tioned by law ; Sewell, Banking. An agree ment to pay annually in advance is not usuri ous ; Rose v. Munford, 36 Neb. 148, 54 N. W. 129; Maxwell v. Willett, 49 Ill. App. 564.
The offence of taking usury is not condon ed by the absence of intent to violate the statute; Fiedler v. Darrin, 50 N. Y. 437; but see Fay v. Lovejoy, 20 Wis. 407.
The one who has contracted to pay usury may set up the defence ; Studabaker v. Mar quardt, 55 Ind. 341; Pritchett v. Mitchell, 17 Kan. 355, 22 Am. Rep. 287 ; and so may his privies ; Merchants Exch. N. Bk. v. Ware house Co., 49 N. Y. 636 ; Lehman, Durr & Co. v. Marshall, 47 Ala. 362; and• his legal representatives ; Moses v. Loan Ass'n, 100 Ala. 465, 14 South. 412 ; and his surety ; Stockton v. Coleman, 39 Ind. 106 (but see La moille County Bank v. Bingham, 50 Vt. 105„ 28 Am. Rep. 490 ; Freese v. Brownell, 35 N. J. L. 285) ; or a guarantor ; Huntreis v. Pat ten, 20 Me. 28 ; but one who buys an equity of redemption cannot set up the defence against the mortgage ; Conover v. Hobart, 24 N. J. Eq. 120; nor can a second mortgagee set up usury as a defence to a prior mortgage ; Pritchett v. Mitchell, 17 Kan. 355, 22 Am. Rep. 287 (but see Cole v. Bausemer, 26 Ind. 94; Carow v. Kelly, 59 Barb. [N. Y.] 239).
It has been held that the maker of a note may be estopped to set up the defence of usury ; Hungerford B. & C. Co. v. Brigham,
47 Misc. 240, 95 N. Y. Supp. 867. It is said that the defence of usury is personal to the borrower ; Thomas v. Security Co., 156 Ky. 260, 160 S. W. 1037.
The defence of usury must be supported by clear proof; Frank v. Morris, 57 111. 138, 11 Am. Rep. 4; Grant v. Merrill, 36 Wis. 390 ; White v. Benjamin, 138 N. Y. 623, 33 N. E. 1037 ; which may be extrinsic to the con tract ;' Scott v. Lloyd, 9 Pet. (U. S.) 418, 9 L. Ed. 178 ; an express agreement for usury need not be proved ; Train v. Collins, 2 Pick. (Mass.) 145. Where a state law makes usury a crime, the burden is strongly on one who would avoid a debt on that ground; Hough ton v. Burden, 228 U. S. 161, 33 Sup. Ct. 491, 57 L. Ed. 780.
Usurious interest does not render a mort gage void ; Holliday v. Banking Co., 92 Ga. 675, 19 S. E. 28; where a loan is originally usurious, the defence of usury applies to all renewals ; and when action is brought on any renewal note, no matter how remote, all payments of interest on such usurious loan may be applied on the principal ; Exeter N. Bk. v. Orchard, 39 Neb. 485, 58 N. W. 144; Lukens v. Hazlett, 37 Minn. 441, 35 N. W. 265; and a second note renewiug a former one, but incluuing an additional sum, is usu rious ; Webb v. Bishop, 101 N. C. 99, 7 S. E. 698.
National banks may charge interest at the rate allowed by the laws of the state where the bank is located, and no more, except that where, by the laws of any state, a dif ferent rate is limited for banks of issue organized under state laws, they may charge such rate. When no rate is fixed by the laws of the state, the bank may charge a rate not exceeding seven per centum, and such inter est may he taken in advance. And the pur chase, discount, or sale of a bona fide bill of exchange, payable at another place than the place of such purdhase, at not more than the current rate of exchange for sight drafts, in addition to the interest, shall not be con sidered as usurious; R. S. § 5197. The charging a rate of interest greater than is allowed when knowingly done shall be deem ed a forfeiture of the entire interest. In case the greater rate of interest has been paid, the person by whom it has been paid, or his legal representatives, may recover back, in an action in the nature of an action of debt, twice the amount of the in.erest thus paid, provided such action is commenced within two years from the time the usurious action occurred; R. S. § 5198. It is now con clusively settled that the penalty declared in R. S. § 5198 is superior to and exclusive of any state penalty ; Schuyler Nat. Bank v. Gadsden, 191 U. S. 451, 24 Sup. Ct. 129, 48 L. Ed. 258; Brown v. Bank, 72 Pa. 209; Wiley v. Starbuck, 44 Ind. 298.
A national bank is not justified in charging a usurious rate of interest because the sAtt utes of the state permit usurious interest to be taken only by certain specified banks ; 11 Bank. Mag. 787. National banks are pro hibited from making usurious contracts. When sued on such a contract, the debtor may plead the usury. There is no statute of limitations as to this defence; but it runs against the debtor, when suing, from the time of payment. If the bank deducts usurious interest in advance, the debtor may plead usury, but may not recover double the amount paid; there is no locus posnitentice, except when the bank, having charged usury, refuses to accept it ; McCarthy v. Bank, 223 U. S. 493, 32 Sup. Ct. 240, 56 L. Ed. 523.
See INTEREST; 9 L. R. A. 292.