a mortgage made to him by George Thrush | against the taking by a national bank of and wife. No controversy exists between the real-estate security for loans inade at the parties named. Certain other parties time. Whether that inhibition applies to a claimed liens on the mortgaged premises. case where a portion of the debt was preThe decree established a first lien in favor existent, we need not inquire, because it is of the First National Bank of Schuyler, a now settled that a violation of that enactsecond in favor of the Schuyler National ment does not afford the debtor any ground Bank, a third in favor of the Nebraska State of relief; the government alone may comBank, and a fourth in favor of the plaintiff. plain. Still, whichever motive influenced The plaintiff and Thrush appeal; the plain- the bank, the object was to evade the burdens tiff, because the court awarded the First Na- attaching to its position as a national bank. tional Bank priority over him, and Thrush It would be highly unconscionable to permit complaining against the allowance of any a person to give a contract a false form to lien to the First National Bank, and also be- evade the burdens which would follow from cause, on a plea of usury by him interposed its true expression, and then permit him to against the claim of the Schuyler National show the truth as against the form to evade Bank, the court declined to permit the rem- the burdens cast by a contract in the form edy afforded by the state law, but allowed the which has been so chosen. It is said that principal of the debt with a forfeiture only Thrush might certainly have recovered the of unpaid interest. penalty denounced by Congress by an indeWe now come to the lien of the Schuyler pendent action within the period of limitaNational Bank. Thrush was largely indebt- tions against the bank, and that, therefore, ed to that bank. He obtained a further loan, the transaction must be regarded as one withand executed to the bank a note for $5,000 to in the act of Congress. This does not folrepresent the consolidated indebtedness. At low. One may render himself liable because the same time there was made a note for a of a false aspect he throws upon his transaclike amount to William H. Sumner and a tions, and at the same time be thwarted in mortgage to Sumner to secure the latter note. his effort to evade another liability, to evade Sumner was an officer of the bank. He had which he has selected the false aspect. The no individual dealings with Thrush, and the terse headnote to Hayes v. People, 25 N. Y. sole purpose of the note and mortgage to him 390, 82 Am. Dec. 364, illustrates the prinwas to secure the debt to the bank. Certain ciple: "A married man, it seems, imagining payments were made on the bank's note, so himself to effect mere seduction, may blunthat, when it came to foreclosure, the bank der into bigamy." The decree of the district claimed as due only $3,229. To the cross court is reversed, and the cause remanded, petition of Sumner, in which the bank was with directions to ascertain the amount of permitted to join, Thrush pleaded usury. It money advanced to Thrush by the Schuyler was clearly shown that the transactions be- National Bank, deduct therefrom all paytween Thrush and the bank were tainted ments, whether of principal or interest, and with usury, and the court so found. But the award foreclosure for the remainder, if any, view was taken that, as the transaction was, to postpone the lien of the First National in effect, with a national bank, the remedies Bank to that of the plaintiff, and for such afforded by the act of Congress in that be- further proceedings as may be necessary, and half were exclusive, and that Thrush was not not inconsistent with this opinion. entitled to the benefit of the state laws, whereby he might set off against the principal all payments made of interest. Accordingly, there was allowed this bank its principal. It is now firmly established that, as against a national bank, the remedies allowed by act of Congress in case of usury are exclusive, and that payments of usurious interest may not be set off in an action for the debt. But the case before us is complicated by the fact that the mortgage and note here in question were not made to the bank, but to an individual amenable to the state laws, who joins the bank in enforcing the security. We have been cited to no authority on the precise question thus presented, nor, in the course of an independent investigation, necessarily somewhat cursory, have we discovered any. We think, however, that under the circumstances the bank is in no position to assent any privilege under the act of Congress. The inference from the direct testimony and from the circumstances is that, if the object of procuring the note and mortgage to be executed to Sumner was not to evade the penalties of the act of Congress with respect to usury, it was to evade the inhibition Messrs. Frick & Dolezal for appellants. Mr. George H. Thomas for appellee First National Bank. Messrs. J. A. Grimison and Miles Zeutmeyer for Schuyler National Bank. Ryan, C., filed the following opinion: In this case a rehearing was granted the appellees William H. Sumner and the Schuyler National Bank. The opinion originally filed is reported in 76 N. W. 1060, and therein will be found a general description of the relation of the parties and the pleadings filed by each. The present inquiry is with relation to the issues under which Sumner and the Schuyler National Bank seek relief, and accordingly we shall confine ourselves to the pleadings wherewith these parties are concerned. In his cross petition, William H. Sumner alleged that on August 8, 1890, the defendants George Thrush and Charles Thrush were indebted to the Schuyler National Bank in the sum of $5,000, evidenced by their promissory note to said bank; that said note was renewed from time to time, and on March 31, 1894, there remained due the sum of $3,229, for which amount George Thrush gave his promissory note to the bank, due 180 days after its date; and that no part of this note had been paid. It was further alleged by Sumner, that on August 8, 1890, George Thrush and Mattie Thrush executed to him their promissory note for the sum of $5,000, due two years after date, with 10 per cent interest per annum, payable annually, and that, to secure the said note, the makers of said note made a mortgage on certain described real property, which said mortgage was duly filed for record. In his said cross petition, William H. Sumner made the following averments: "This defendant further alleges that the note and mortgage, so as aforesaid executed and delivered by the defendants George Thrush and Mattie Thrush, were executed and delivered to him as trustee for the use and benefit of the Schuyler National Bank, and to secure the indebtedness of said Thrush to said bank; that said debt so secured on the 8th day of August, 1890, by said mortgage deed, was a debt previously contracted; that said mortgage was made in good faith, and in the name of this defendant, for the benefit of said Schuyler National Bank. No proceedings at law have been had for the recovery of the debt secured by said mortgage, or any part thereof, and there is now due from the defendants George Thrush and Mattie N. Thrush to this defendant, for the use and benefit of the Schuyler National Bank, the sum of $3,229, and interest at 10 per cent from September 27, 1894." The prayer of the petition of Sumner was that an account might be taken of the amount due on said note and mortgage; that the priority of liens might be determined and the lien of other defendants declared inferior to that of Sumner, and that said George Thrush and Mattie N. Thrush might be foreclosed of all equity of redemption or other interest in the premises mortgaged; that said premises might be sold according to law, and out of the proceeds thereof that the lienholders might be paid the amount adjudged to be due them, in the order of their priority; that the defendants George Thrush and Mattie Thrush might be adjudged to pay any deficiency which might remain after applying the proceeds of said sale to the payment of said debts; and for such other relief as might be just and equitable. Later, the Schuyler National Bank was allowed to become a party to the litigation, and filed a cross petition alleging substantially the same facts, and, on behalf of itself and Sumner, praying like relief with that above described as the prayer of Sumner. The defendants George Thrush and Mattie N. Thrush, in separate answers, admitted the making of the promissory note for $5,000, and of the mortgage securing the same, on August 8, 1890, but denied every other allegation of the petition of Sumner. In addition, they averred that said note and mortgage were made to Sumner as part of a usurious transaction; that the same were held by Sumner as collateral security to usurious loans, from time to time renewed at usurious rates, as in the answer more particularly described. Each successive usurious loan, at 12 per cent per annum interest, was described in a distinct paragraph, and these paragraphs were twenty-four in number. The first paragraph described a loan on August 9, 1889, and the twenty-fourth paragraph described the history of the note of $3,229, of date March 31, 1894. There was therefore a continuous chain of usurious transactions, extending over the entire period between August 9, 1889, and March 31, 1894, and the relief sought was the application of the payments of interest on the sum in satisfaction of which the foreclosure was prayed. By reply, Sumner denied the averments of the eleventh paragraph of the answer of each of the defendants Thrush, and the other paragraphs of his reply, substituting the appropriate figures to express the proper number referred to in each instance, were as follows: "That the interest payment mentioned in paragraph 10 of said answer was made to the Schuyler National Bank more than two years before the commencement of this action; and the consideration thereof in this action is barred by law." The reply of Sumner closed with this language: "He further says this court has no jurisdiction in this action to consider the questions raised in said answer as to each and every item of interest mentioned in said answer as paid to said Schuyler National Bank; that said items are not proper items to set off or counterclaim, and cannot be adjudicated, except in a suit brought expressly for that purpose, under the provisions of § 5198 of the Revised Statutes of the United States." On the trial there was a decree of foreclosure, in which there was a finding of usury in the note of $3,229, to the amount of $229, and the defendants George Thrush and Mattie N. Thrush were denied their costs. In other words, the district court held that the statute of limitations and costs were governed by the Federal statute relating to national banks, and not by § 5, chap. 44, Neb. Comp. Stat. The correctness of this ruling is the question presented by this appeal. In the former opinion it was pointed out that the taking of real-estate security for the loan of money constitutes no defense to a foreclosure; hence the citation of authorities on behalf of the bank to that proposition was not necessary. It was further pointed out in that opinion that the government might complain, and upon this proposition it is no ticeable that the bank has cited no authorities and has made no argument. There was, in view of the last consideration named, an incentive to the bank to take the security upon real property as it did in this instance, so that it might appear upon the face of the note and mortgage that the bank originally had not been a party thereto, if the governmental authorities should insist upon a strict compliance with the provisions of the Federal statute forbidding the taking of a realestate mortgage, except in certain cases, in which that under consideration is not included. In Norfolk Nat. Bank v. Schwenk, 46 Neb. 381, Norval, Ch. J., quoted, as of binding force upon this court, the following language of Swayne, J., in Farmers' & M. Nat. Bank v. Dearing, 91 U. S. 29, 23 L. ed. 196: recur. any sense, upon the note which George Thrush had given the bank. That was his individual note. The note secured by mortgage was signed by Mattie N. Thrush, who owed nothing to the bank. She did not merely sign the mortgage to release her dower right, but she signed the note as one of its makers. In case of a deficiency by sale of the mortgaged property, she was individually liable, as it is now claimed, not to Sumner, but to the Schuyler National Bank, to which she was not indebted, and had never agreed to pay a single cent. To her answer, setting up payments of usurious interest, which would release her from individual liability, there was a reply which, in effect, conceded the usury charged to have been contracted for and exacted in twenty-three instances, but sought to avoid the credits to which, under the state law, she would have been entitled, by invoking the Federal statute enacted for the protection of national banks as governmental instrumentalities. It is provided in § 5, chap. 44, Neb. Comp. Stat. that, "if a greater rate of interest than is hereinbefore allowed shall be contracted for, or received, or reserved, the contract shall not therefore be void; but if, in any action on such contract, proof be made that illegal interest has been directly or indirectly contracted for, or taken or reserved, the plaintiff shall only recover the principal, without interest, and the defendant shall recover costs; and if interest shall have been paid thereon judgment shall be for the principal, deducting interest paid." Sumner himself put in issue the amount which he was entitled to collect for the payment of the note made by George Thrush to the bank. By the answers and replies there was alleged, and practically admitted, the right to credits by reason of payments of usury by George Thrush on his indebtedness to the bank. It is now insisted, however, that the trustee should stand for the bank, and, in equity, that he is entitled to the same rights and exemptions from liabilities as are conferred by Federal statute upon the governmental instrument referred to by Judge Swayne in Farmers' & M. Bank v. Dearing, 91 U. S. 29, 23 L. ed. 196. There is no just reason for resorting to strained constructions to avoid the penalties of the statute of this state. As between these litigants, we are not measuring equities. The withdrawal of this case from the operation of our statute, as indicated by Judge Swayne, must be sanctioned by some express provision of the Federal statute. Section 5198, U. S. Rev. Stat., contains the following language: "The taking, receiving, reserving, or charging a rate of interest greater than is allowed by the preceding section, when knowingly done, shall be deemed a forfeiture of the entire interest which the note, bill, or other evidence of debt carries with it, or which has been agreed to be paid thereon. 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 interest thus "The national banks organized under the act are instruments designed to be used to aid the government in the administration of an important branch of the public service. They are means appropriate to that end. Of the degree of the necessity which existed for creating them, Congress is the sole judge. Being such means, brought into exist ence for this purpose, and intended to be so employed, the states can exercise no control over them, nor in any wise affect their operation, except in so far as Congress may see proper to permit. In the complex system of polity which obtains in this country, the powers of government may be divided into four classes: Those which belong ex- | clusively to the states; those which belong exclusively to the national government; those which may be exercised concurrently and independently by both; and those which may be exercised by the states, but only with the consent, express or implied, of Congress. Whenever the will of the nation intervenes exclusively in this class of cases, the authority of the state retires, and lies in abeyance, until a proper occasion for its exercise shall It must always be borne in mind that the Constitution of the United States, and the laws which shall be made in pursuance thereof,' are 'the supreme law of the land' (Const. art. 6), and that this law is as much a part of the law of each state, and as binding upon its authorities and people, as its own local Constitution and laws. In any view that can be taken of the 30th section [Rev. Stat. § 5198], the power to supplement it by state legislation is conferred neither expressly nor by implication, there being nothing which gives support to such a suggestion. There was reason why the rate of interest should be governed by the law of the state where the bank is situated, but there is none why usury should be visited with the forfeiture of the entire debt in one state, and with no penal consequence whatever in another. This, we think, would be unreasonable, and contrary to the manifest intent of Congress." Conformably with the doctrine above announced, it was held in Norfolk Nat. Bank v. Schwenk, 46 Neb. 381, that a national bank is not liable to the penalties imposed by the usury laws of the state. We are now asked to go a step further, and hold, in a suit to foreclose a mortgage securing a note made to, and held by, an individual, in trust for the payment of a note owing to the bank, that the provisions of $5198, Rev. Stat., are applicable, to the exclusion of the statute of this state with reference to usury. The cross petition of Sumner, in effect, was for the foreclosure of a mortgage of which the proceeds were to be applied in payment of a note made to the bank. The principal note was not sued upon. It was referred to only as showing how much was required to be realized in the foreclosure suit. The answers of each of the defendants Thrush showed that, by reason of usury, but little, if anything, was required to be realized from the foreclosure proceedings to satisfy what was due from George Thrush to the bank. It was not a suit, in 658 NEBRASKA SUPREME COURt. re- subject-matter prescribes a modification. It paid from the association taking or Reversed and remanded. OHIO SUPREME COURT. COMPANY, recover damages for injuries caused by an explosion of nitroglycerine. Affirmed. ST. MARY'S WOOLEN MANUFACTUR *1. 2. E ING COMPANY. (60 Ohio St. 560.) Nitroglycerine is a substance usu ally recognized as highly explosive and dangerous, the storage of which at any A right of action will exist in favor of all property within the circle of jured was not on premises adjacent to those on which the explosive substance was stored (Shauck, J., dissents.) (June 20, 1899.) RROR to the Circuit Court for Hancock County to review a judgment affirming a judgment of the Court of Common Pleas in favor of plaintiff in an action brought to *Headnotes by the COURT. NOTE. For note on negligence in the manu- Statement by Bradbury, Ch. J.: ter. This action was commenced before a justice of the peace by the defendant in error to recover of the plaintiff in error damages suffered on account of an explosion of a magazine of nitroglycerine owned by the lat The plaintiff in error prevailed before the magistrate, and the cause was appealed to the court of common pleas, where the error again prevailed. The plaintiff in cause was then carried to the circuit court on error, where the judgment of the court of common pleas was reversed, and a judgment rendered for the defendant in error for the damages it had sustained; whereupon proceedings were instituted in this court to reverse the judgment of the circuit court. The facts will be stated in the opinion. Mr. George H. Phelps, for plaintiff in error: One very important distinction in fact between the case at bar and Rylands v. Fletcher, L. R. 3 H. L. 330, is found in the fact that in this case there was not the slightest element of trespass. The same distinction pervades all the Ohio cases which in any degree involved the principle or in which reference to the English case is made. also Rudder v. Koopmann (Ala.) 37 L. R. A. 489; and Kinney v. Koopmann (Ala.) 37 L. R. A. 497. There is a manifest distinction in principle, and upon authority, between the impounding and presence of a dangerous and menacing substance for the purely personal convenience of the owner, and the presence of an equally dangerous agency having an element of public utility in the community in which it is kept. Webb's Pollock, Torts, 608, 609. Negligence must be the basis of liability for injury resulting from an explosion. 7 Am. & Eng. Enc. Law, p. 517, notes; Webb's Pollock, Torts, 164, notes; Cooley, Torts, 589-594; Losee v. Buchanan, 51 N. Y. 476, 10 Am. Rep. 623. Tiffin v. McCormack, 34 Ohio St. 638, 32 | county, Ohio, and was such at all times statAm. Rep. 408; Ohio Gas Fuel Co. v. Andrews, ed in the petition filed in this action. The 50 Ohio St. 695, 29 L. R. A. 337; Defiance defendant is a partnership organized for the Water Co. v. Olinger, 54 Ohio St. 532, 32 L. purpose of doing business in the state of R. A. 736. Ohio, and owning property therein. On or about January 25, A. D. 1896, the defendant was the owner of a magazine and contents containing about 50 quarts of nitroglycerine used by the defendant in its business of manufacturing, storing, and vending nitroglycerine, which magazine was situated on a tract of land belonging to one W. G. Kishler, and situated something over a mile west of the buildings so owned by the plaintiff in St. Marys, Ohio, and situated about one fourth of a mile distant from the corporation line of the village of St. Marys, Auglaize county, Ohio. That on or about said 25th day of January, A. D. 1896, while one of the defendant's servants was upon the premises upon which said magazine was located, engaged in transferring about 750 quarts of nitroglycerine from a wagon loaded with same to said magazine, the said nitroglycerine stored therein, and also the same upon the wagon aforesaid, from some cause unknown to said defendant, exploded with great force and concussion, causing vibrations in the atmosphere sufficient in power and violence to break, shatter, and destroy three plate glass and three common glass in the buildings owned by the plaintiffs aforesaid, of the value of $244.10, by reason of which explosion and the breakage of said glass the plaintiffs were injured and damaged to the extent aforesaid. That nitroglycerine is a dangerous substance, and likely to explode. That demand of payment of said sum has been made by the plaintiff to the defendant, and payment thereof has been refused." Messrs. Culliton & Smith and J. H. Goeke, for defendant in error: One who takes and keeps upon his own premises material or substance which in itself is dangerous and liable to explode and do injury to person or property on adjoining premises, or on premises in the neighborhood or vicinity, and it does explode, is liable in damages for the injury directly caused thereon by such explosion, without proof of negligence in storing or caring for such material or substance. Fletcher v. Rylands, L. R. 1 Exch. 265, 1 English Ruling Cases, 235; Tiffin v. McCormack, 34 Ohio St. 638, 32 Am. Rep. 408; Hay v. Cohoes Co. 2 N. Y. 159, 51 Am. Dec. 279; Tremain v. Cohoes Co. 2 N. Y. 163, 51 Am. Dec. 284; McAndrews v. Collerd, 42 N. J. L. 189, 36 Am. Rep. 509; Judson v. Giant Powder Co. 107 Cal. 549, 29 L. R. A. 718; Moak's Underhill, Torts, 12, 13; Addison, Torts, 308; Colton v. Onderdonk, 69 Cal. 155, 58 Am. Rep. 556; Myers v. Malcolm, 6 Hill, 292, 41 Am. Dec. 744; Wood, Nuisances, 142;ligent in handling or storing the explosive Mairs v. Manhattan Real Estate Asso. 89 N. Y. 498; Cahill v. Eastman, 18 Minn. 324, 10 Am. Rep. 184. It is not material that the glycerine company was using its land in a lawful or ordinary or usual way. Wilson v. New Bedford, 108 Mass. 261, 11 Am. Rep. 352; Heeg v. Licht, 30 N. Y. 579, 36 Am. Rep. 654. It matters not whether it is a trespass or a nuisance, the liability is the same, and one who handles this dangerous substance must see to it that it does no mischief. Hay v. Cohoes Co. 2 N. Y. 159, 51 Am. Dec. 279; Carman v. Steubenville & I. R. Co. 4 Ohio St. 417. Bradbury, Ch. J., delivered the opinion of the court: The cause was submitted to the court of common pleas on the following agreed statement of facts: "It is hereby stipulated that this case will be submitted to the court upon the following statement of facts as the evidence in this case: Plaintiff is a corporation organized under the laws of Ohio, and the owner of real estate whereon buildings are erected in the village of St. Marys, Auglaize This agreed statement of facts does not show that the plaintiff in error violated any statute of the state, or was in any degree neg substance involved. It was nitroglycerine, a well-known and highly-explosive agency, which the agreed statement of facts shows "is a dangerous substance, and likely to explode." Is one who brings upon his own premises such agency liable for damages caused by its exploding, although such owner is not chargeable with either want of care or an unlawful act in connection with the casualty? This exact question has not heretofore been considered by this court, although a number of cases have been decided by the court that bear a general resemblance to it. Ohio Gas Fuel Co. v. Andrews, 50 Ohio St. 695, 29 L. R. A. 337; Defiance Water Co. v. Olinger, 54 Ohio St. 532, 32 L. R. A. 736; Tiffin v. McCormack, 34 Ohio St. 638, 32 Am. Rep. 408. The tendency of these cases is towards holding the parties charged with the management of dangerous substances to a strict liability. In Tiffin v. McCormack, 34 Ohio St. 638, 32 Am. Rep. 408, this court held: "Where the owner of a stone quarry, by blasting with gunpowder, destroys the buildings of an adjoining landowner, it is no defense to show that ordinary care was exercised in the manner in which the quarry was worked." And the same view of the lia |