Walker v. Lovitt

Decision Date20 June 1911
Citation250 Ill. 543,95 N.E. 631
PartiesWALKER v. LOVITT.
CourtIllinois Supreme Court

OPINION TEXT STARTS HERE

Appeal from Circuit Court, Pike County; Harry Higbee, Judge.

Action by A. M. Walker against William P. Lovitt. Judgment for plaintiff for less than the relief demanded, and he appeals. Reversed and remanded.

Anderson & Matthews, for appellant.

W. E. Williams and A. Clay Williams, for appellee.

DUNN, J.

To an action on a promissory note the appellee set up the defense of usury as to all except a certain amount which was tendered to the plaintiff. The note on its face bore 8 per cent. interest, to be compounded annually if not paid annually. The note was dated Louisiana, Mo., and was payable generally. The payee was a citizen and resident of Missouri, and the appellee a citizen and resident of Illinois. The rate of interest was lawful in Missouri. The note was secured by a mortgage on real estate in Illinois, and the appellee contends that, by virtue of section 8 of chapter 74 of Hurd's Statutes of 1909, the interest contracted to be paid was forfeited. The circuit court sustained this contention, and the plaintiff has appealed from the judgment directly to this court on the ground that the constitutionality of the section mentioned is involved. That section is as follows: ‘When any written contract, wherever payable, shall be made in this state, or between citizens or corporations of this state, or a citizen or corporation of this state and a citizen or corporation of any other state, territory or country (or shall be secured by mortgage or trust deed on lands in this state), such contract may bear any rate of interest allowed by law, to be taken or contracted for by persons or corporations in this state or which is or which may be allowed by law on any contract for money due or owing in this state: Provided, however, that such rate of interest shall not exceed seven per cent. per annum. And if any such person or corporation shall contract to receive a greater rate of interest or discount than seven per cent. upon any such contract, such person or corporation shall forfeit the whole of said interest so contracted to be received, and shall be entitled only to recover the principal sum due to such person or corporation.’ If the note was an Illinois contract, it was usurious on its face without reference to this section. If it was a Missouri contract it was enforceable in this state according to the stipulated rate, though in excess of the rate allowed by our law, unless the interest was forfeited by the application of this section. Phinney v. Baldwin, 16 Ill. 108, 61 Am. Dec. 62;Smith v. Whitaker, 23 Ill. 367;Morris v. Wibaux, 159 Ill. 627, 43 N. E. 837;Dearlove v. Edwards, 166 Ill. 619, 46 N. E. 1081. The question of the application of the section was preserved by propositions of law submitted to the court.

[1] The rule is well settled that the validity, construction, and obligation of a contract must be determined by the law of the place where it is made or is to be performed. The law of the place becomes a part of the contract, and the courts of another jurisdiction will enforce it in accordance with its legal effect where made or to be performed. Evans v. Anderson, 78 Ill. 558;Barnes v. Whitaker, 22 Ill. 606;Mumford v. Canty, 50 Ill. 370, 99 Am. Dec. 525;Roundtree v. Baker, 52 Ill. 241, 4 Am. Rep. 597;Coats v. Chicago, Rock Island & Pacific Railway Co., 239 Ill. 154, 87 N. E. 929.

[2] When a contract for the payment of money is silent on the subject, the place of payment is presumed to be the place of making, and the debtor must seek the creditor at his domicile or place of business. Esmay v. Gorton, 18 Ill. 483;De Wolf v. Johnson, 10 Wheat. 367, 6 L. Ed. 343.

[3] The place where a contract is made depends, not upon the place where it is actually written, signed, or dated, but upon the place where it is delivered, as consummating the bargain. Gay v. Rainey, 89 Ill. 221, 31 Am. Rep. 76. The note here was delivered by the agent of the appellee to the payee at her residence in Louisiana, Mo., and she then delivered to such agent a check for the face of the note. The contract was thus consummated in Missouri, and the note then took effect as the appellee's obligation to repay the money there where he had borrowed it. The disposition the appellee's agent may afterward have made of the money cannot affect the rights of the parties to the note.

[4] The substance of section 8 above mentioned, omitting the clause referring to security on lands in this state, first appeared in our statutes in 1857. The conventional rate of interest in this state was then 10 per cent., which was higher than the rate permissible in other states and countries from whose citizens and corporations the citizens of this state were accustomed to borrow money, secured by mortgages on land in this state. Under the laws of these other states and countries various results followed a usurious contract, ranging from a forfeiture of the excess of interest to the complete avoidance of the contract. Where a contract or loan was made in this state, or between citizens of this state and citizens of such foreign state, and performance or payment was to be made in such foreign state, the contract or loan was governed by the law of such foreign state, and was valid or invalid as and to the extent determined by such foreign law. McAllister v. Smith, 17 Ill. 328, 65 Am. Dec. 651;Adams v. Robertson, 37 Ill. 45;Andrews v. Pond, 13 Pet. 65, 10 L. Ed. 61. Thus a note given in New York by a citizen of this state and payable there bearing interest at a rate in excess of 7 per cent., was void because so declared by the law of New York, though in Illinois it was competent to contract for 10 per cent. To meet this situation and enable citizens of this state to borrow money in other states whose usury laws were more stringent, and to give obligations and security for loans so made that should be legally binding and enforceable here against the borrowers and their property though not enforceable where made, the General Assembly passed two acts. One, which went into effect February 12, 1857, provided that when any contract or loan should be made in this state or between citizens of this state and any other state or country, bearing interest at a rate lawful in this state, it should be lawful to make the principal and interest of such contract or loan payable in any other state or territory of the United States or in the city of London, in England, and in all such cases the contract or loan should be governed by the laws of this state and not affected by the laws of the state or country where the same should be made payable, and that no contract or loan theretofore made bearing interest at a rate lawful in this state when...

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  • Reighley v. Cont'l Illinois Nat. Bank & Trust Co. of Chicago
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    • May 21, 1945
    ...in the bank might have the effect of performance of the contract in Illinois. Such is not the law, as we the held in Walker v. Lovitt, 250 Ill. 543, 95 N.E. 631, 633, ‘the mere taking of foreign security does not necessarily draw after it the consequence that the contract is to be fulfilled......
  • Palmer v. Beverly Enterprises
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    • August 20, 1987
    ...then the law of the place of contracting applied. Oakes v. Chicago Fire Brick Co., 388 Ill. 474, 58 N.E.2d 460 (1944); Walker v. Lovitt, 250 Ill. 543, 95 N.E. 631 (1911). However, this Court held in P.S. & E., Inc. that based on "the analogous modern tort cases relying upon the 'most signif......
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