## Facts

- Darby borrowed money from the National Bank of Missouri, a national banking association under the National Bank Act of 1864.
- The bank reserved and received 9% interest on the loans.
- Missouri law permitted a general maximum interest rate of 10%, but limited state-chartered banks of issue to 8%.
- Tiffany, as Darby’s bankruptcy trustee, brought an action of debt seeking the federal statutory penalty of twice the interest paid under § 30 of the National Bank Act, alleging the 9% rate was unlawful.
- The bank demurred, presenting a question of statutory interpretation.
- The Circuit Court for the District of Missouri ruled for the bank, and Tiffany sought review in the Supreme Court.

## Issues

1. Under § 30 of the National Bank Act of 1864, may a national bank in Missouri charge up to the state’s general 10% rate, or is it limited to the 8% cap applicable to state banks of issue?
2. If Missouri’s 8% cap for state banks of issue applies to national banks, does charging and receiving 9% trigger § 30’s penalty allowing recovery of twice the interest paid?
3. How does the rule of strict construction apply to an action seeking § 30’s double-interest recovery?

## Decision

- The Supreme Court affirmed the judgment for the National Bank of Missouri.
- The Court held that national banks may charge the interest rate allowed by state law to natural persons generally, and may charge a higher rate if state banks of issue are authorized to take a higher rate.
- Because Missouri generally allowed 10% interest, the bank’s 9% charge was lawful.
- Since the rate was not unlawful, § 30’s double-interest penalty did not apply.

## Legal Principles

- An action to recover twice the interest paid under § 30 is penal in nature; the statute must be strictly (literally) construed, and a penalty is not imposed unless the statutory text plainly requires it.
- Section 30 permits national banks to charge the state-law interest rate allowed generally (to natural persons), and allows a higher rate only when state banks of issue are authorized to charge a higher rate.
- State-law limits that impose a lower special rate on state banks of issue do not reduce the general state rate available to national banks under § 30.

## Conclusion

The Court ruled that § 30 allowed a Missouri national bank to charge the state’s general 10% interest rate, and that the statute’s exception regarding state banks of issue did not impose Missouri’s lower 8% bank-of-issue cap on national banks; therefore, a 9% charge was lawful and the double-interest penalty was unavailable.


Tiffany v. Nat’l Bank of Mo., 85 U.S. (18 Wall.) 409 (1873)