If a bank discounts a note, where the discounting was induced by fraud, it may rescind it;1 and even where no fraud appeared it was held that a discount could be revoked, though unpresented checks had been drawn against the proceeds.2 The charging up of a note as paid and the delivery v. First Nat. Bank, Fed. Cas. No. 18,078; Crocker v. First Nat. Bank, Fed. Cas. No. 3397. A statutory penalty creates a gwem'-contract which is assignable.

6 Barrett v. Shelbyville Nat. Bank, 85 Tenn 426.

7 Timberlake v. First Nat. Bank, 43 Fed. R. 231.

8 First Nat Bank v. Gruber, 91 Pa. 377.

9 See Sec. :!44,post, for the statutes applicable to suits to recover penalties. This is not a new jurisdiction, but their ordinary jurisdiction. But the remedy is not a state remedy. Norfolk Nat Bank v. Schwenk, 46 Neb. 381. But it is governed as to form of procedure by the local law. Osborn v. First Nat. Bank, 175 Pa. 494 State courts have jurisdiction also of usury as a defense. Peterborough Nat. Bank v. Childs, 130 Mass. 519. See also section 245 for the particular state or federal court which has jurisdiction. Compare Mo. Tel. Co. v. First Nat Bank, 74 111. 217, for a very queer states rights decision. See Sec. 244, post. This last case holds the remarkable doctrine that a state court will not enforce the usury laws of the United States, because congress has not power to give the state courts such a juris diction. This is a queer freak, and of course is not the law, even in Illinois. See Ellis v. First Nat Bank, 11 I11 App. 275, ignoring it l0 Schuyler Nat Bank v. Bollong, 150 U. S. 85.

1 Bank of Antigo v. Union Trust Co., 50 111. App. 434.

2 Dougherty v. Central Bank, 93

Pa. 227. See also Lancaster Co. Bank v. Huver, 114 Pa. 216, where there was a failure of consideration or fraud.

3 Dewey v. Bowers, 4 Ired. 538; Bank v. Rolston, 3 Phila. 328.

4 Cabot Bank v. Morton, 4 Gray, 156.

5Fifth Ward Sav. Bank v. First Nat. Bank, 48 N. J. Law, 513. This was simply a case of an agent acting within the apparent scope of his authority.

6 State Bank v. Fearing, 16 Pick.

533. This case is simply one of the indorser's contract. But state courts differ as to the meaning of an irregular indorsement.

7 Lernoine v. Bank of North America, 3 Dill. 44

8 York Bank v. Asbury, 1 Biss. 230.

9 Goetz v. Bank of Kansas City, 119 U. S. 551.

10 Hoffman v. Bank of Milwaukee, 12 Wall 181.

11 Planters' Bank v. Sharp, 4 Smedes & M. 17; Lanier v. Tripp, 6 Smedes & M. 641; Commercial vention of law has been already stated.12 One case held that, where a note was made payable out of the state, the defense of unlawful banking by the issuance for the loan of illegal bank-notes by private persons was good.13 But the loaning contract is not void unless declared so by law. The note may be sued on14 or an action may be brought for money loaned,15 and where the contract is declared void some cases hold that no action at all lies.16 But it would seem that the breach of duty by an officer in taking the note cannot be set up against the note by one liable upon it.17 It was also held that a debtor could not set up the unconstitutionality of the act incorporating the bank.18