§ 173 — Rate of interest; effect of usury

§ 173. Rate of interest; effect of usury. 1. No private banker shall\ntake, receive, reserve or charge on any loan or discount made, or upon\nany note, bill of exchange or other evidence of debt, interest as\ncomputed pursuant to this section, at a rate greater than the rate\nprescribed by the superintendent of financial services pursuant to\nsection fourteen-a of this chapter, or, if no rate has been so\nprescribed, six per centum per annum, or two dollars if the interest so\ncomputed is less than that amount. Such interest may be taken in\nadvance, reckoning the days for which the note, bill or evidence of debt\nhas to run. The knowingly taking, receiving, reserving or charging a\ngreater rate of interest shall be held and adjudged a forfeiture of the\nentire interest which the note, bill of exchange or other evidence of\ndebt carries with it, or which has been agreed to be paid thereon. If a\ngreater rate of interest has been paid, the person paying the same or\nhis legal representatives may recover twice the entire amount of the\ninterest thus paid from the private banker. The purchase, discount or\nsale of a bona fide bill of exchange, note or other evidence of debt\npayable at another place than the place of such purchase, discount or\nsale at not more than the current rate of exchange for sight draft, or a\nreasonable charge for the collection of the same, in addition to the\ninterest, shall not be considered interest for the purpose of any law\nregulating the maximum rate of interest which may be charged, taken or\nreceived.\n Anything contained in this subdivision to the contrary\nnotwithstanding, the charging of interest or discount on a loan or\ndiscount at an office of a private banker located outside of the states\nof the United States of America and the District of Columbia at a rate\nallowed by the laws of the country, territory, dependency, province,\ndominion, insular possession or other political subdivision where such\noffice is located, or the acquisition by a private banker of a part\ninterest or the entire interest in any loan or discount heretofore or\nhereafter made by a bank or trust company or any other banking\ninstitution at an office located outside of the states of the United\nStates of America and the District of Columbia, shall not be a violation\nof this section.\n 1-a. Anything contained in this section to the contrary\nnotwithstanding, any private banker, in purchasing or otherwise\nacquiring, any note or other evidence of debt, which has arisen out of\nthe sale of personal property or the performance of services on credit\nand which is repayable in instalments from the payee or holder thereof,\nmay take, receive, reserve or charge an amount not exceeding twelve per\ncentum per annum, computed pursuant to this section on unpaid principal\nbalances, or the sum of ten dollars, whichever is the greater; provided,\nhowever, that nothing contained in this subdivision shall authorize a\nprivate banker to take, receive, reserve or charge upon the purchase or\nother acquisition of any two or more notes or other evidences of debt,\narising out of the same transaction, an amount greater than such private\nbanker would be entitled to take, receive, reserve or charge if all of\nsuch obligations constituted a single obligation. In the event that the\nprivate banker insures, under a group insurance policy, the life of the\nperson primarily liable on any such obligation, or in the event that the\nprivate banker requires insurance on personal property securing any such\nobligation, the actual cost of such insurance may be added to the amount\nwhich such private banker may take, receive, reserve or charge upon the\npurchase or other acquisition of such obligation. This subdivision shall\nnot be in derogation of any powers, rights or privileges possessed by\nany private banker prior to the effective date this subdivision.\n 2. Upon advances of money repayable on demand to an amount not less\nthan five thousand dollars made upon warehouse receipts, bills of\nlading, certificates of stock, certificates of deposit, bills of\nexchange, bonds or other negotiable instruments, pledged as collateral\nsecurity for such repayment, a private banker may receive or contract to\nreceive and collect as compensation for making such advances any sum\nwhich may be agreed upon by the parties to such transaction.\n 3. Upon an advance of money, whether or not repayable on demand, to an\namount not less than five thousand dollars, made upon documents of title\nwithin article seven of the uniform commercial code or negotiable\ninstruments within article three or article eight of the uniform\ncommercial code pledged as collateral security for such repayment, any\nprivate banker may receive or contract to receive and collect as\ncompensation for making such advance any sum which may be agreed upon by\nthe parties to such transaction; provided that such advance is (a) to or\nfor any partner of a firm which is a member firm of a national\nsecurities exchange registered with the securities and exchange\ncommission as a national securities exchange under the federal\nsecurities exchange act of 1934, as amended, to enable such partner to\nmake a contribution of capital to such firm or to purchase stock of an\naffiliated corporation of such firm, provided that such partner is\nactively engaged in the business of such firm and devotes the major\nportion of his time thereto, or (b) to or for any person who is or will\nbecome a holder of stock of a corporation which is a member corporation\nof such a national securities exchange to enable such person to purchase\nstock of such corporation or to purchase stock of an affiliated\ncorporation of such corporation, provided that such person is actively\nengaged in the business of such corporation and devotes the major\nportion of his time thereto.\n