Boulware v. Newton

• Decision Date: 06 June 1868
• Citation: 59 Va. 708
• Parties: BOULWARE v. NEWTON.
• Court: Virginia Supreme Court

59 Va. 708

BOULWARE v. NEWTON.

Supreme Court of Appeals of Virginia.

June 6, 1868

1. N gives his bond to B, dated January 29th, 1863, by which, on demand, three months after notice to pay, he promises to pay to B five thousand dollars, without interest, in current funds; the money to be punctually paid at the end of three months after demand, and if not, to bear interest from demand; B not to be required to receive the money except at his pleasure. The bond is given for five thousand dollars Confederate notes, then delivered by B to N, which were then worth in gold but one-third of the amount. HELD:

1. The contract is valid, and B is entitled to recover five thousand dollars in the currency of the day when the money is demanded.

2. It is a contract in which the principal is at hazard, and therefore not usurious.

2. In a common law cause, a question having been decided in the court below against the appellee, the appellate court will consider it, and if it is erroneous, reverse the judgment on that ground.

This was an action of covenant in the Circuit Court of the county of Westmoreland, brought in October, 1866, by Wm. Boulware against Willoughby Newton, to recover the amount of a bond which was in the following words and figures.

$5,000. On demand, three months after notice to pay, I promise to pay to William Boulware the sum of five thousand dollars, without interest, in current funds; but it is understood and agreed that the money is to be punctually paid at the expiration of three months after demand, and if not so paid, is to carry interest from the day of demand; and the said Boulware shall not be required to receive the money except at his pleasure. Witness my hand and seal this 29th day of January, 1863.

WILLOUGHBY NEWTON, [SEAL.]

The defendant pleaded covenant performed, and also filed a plea of usury. The facts on which this plea is based are, that the bond was given for a loan of five thousand dollars of Confederate States treasury notes, the actual value of which compared with gold, was at the time twelve hundred and fifty dollars; and that the five thousand dollars was to be paid at the expiration of the three months after notice to pay in funds which should be current at that time.

The plaintiff took issue upon the pleas; and upon the trial of the cause, the jury found a verdict for the plaintiff for the sum of sixteen hundred and sixty-six dollars and sixty-six cents, with interest thereon from the 29th of January, 1863 till paid. The plaintiff thereupon moved the court for a new trial, on the ground that the verdict was contrary to the law and the evidence. But the court overruled the motion, and entered up judgment on the verdict; and the plaintiff excepted.

The facts stated are: The bond on which the suit was brought; a written notice from the plaintiff to the defendant, dated June 25th, 1865, demanding payment of the bond; the service of which was acknowledged by the defendant; and the facts that the consideration of the bond, and for which it was given, was the sum of five thousand dollars in Confederate treasury notes lent by the plaintiff to the defendant; and that the said notes, at the time when so lent by the plaintiff and received by the defendant, were worth the sum of sixteen hundred and sixty-six dollars and sixty-six cents in gold.

The plaintiff obtained a writ of error to the District Court of Appeals at Fredericksburg; where the judgment was affirmed; and he then obtained a writ of error to this court.

Halyburton, for the appellant.

Lyons, for the appellee.

RIVES J.

The verdict of the jury in this case is founded on the theory that the appellee's bond was a Confederate contract, payable in Confederate money, and to be scaled as of its date, 29th January, 1863, when such money bore to specie the relation of three to one. This led to the finding of $1,666.66, with interest from the said date. A new trial was asked for, on the ground that this verdict was contrary to law and the evidence. It was refused, and a bill of exception taken, setting forth a very meagre state of facts proven on the trial. These facts consisted of the production of the bond; a demand of payment, acknowledged on the 25th June, 1865; the loan of $5,000 in Confederate treasury notes, as the consideration of this bond; and the value of such notes at the time of the loan, ascertained to be the said sum of $1,666.66 in gold. The legal construction, therefore, which we are now required to put upon this instrument, receives no aid from extrinsic evidence, and depends wholly upon its terms, with such lights as we may derive from the situation of the parties, the subject-matter of the contract, and contemporaneous events in the history of the times.

Remarkable as this contract is, in its most distinctive feature, it is admitted on both sides, that the parties contracted on equal terms, and were men of uncommon intelligence and business capacity; so that no inequality whatsoever in their relative situations has been insisted on or pretended as a ground to impeach the contract, or ask relief from its literal enforcement. They were both citizens of Virginia, and possessing equal means of information as to the past and present future of events bearing upon their contract, and likely, according to their respective beliefs and speculations, to influence, in the same or different ways, this agreement.

Contracts are usually referable, for their construction, to the laws of the country where made. Parties must be taken to contract in reference to them; and hence, the lex loci contractus is a prevailing canon of interpretation. In order, however, to test the applicability of this doctrine to our present enquiry, we must look to the situation of the parties, as affected by the remarkable political events that were then transpiring, and which might be naturally expected to enter into their consideration, and influence in some degree their agreement.

To this end, it is not necessary to enter at all into the vexed theories and controversies which engendered and attended the late war; we have only to seek for the facts of history, about which there is and can be no dispute. A contrariety of opinion exists as to the nature, the incidents and consequences of this struggle; but however differently viewed, it may be practically characterized, without offence to any of the opposing theories, as a revolution attempted, whether rightfully or wrongfully, by the seceding States. It was so organized by these communities, and endued with the attributes and prerogatives of a separate government, as to extort for the Confederacy, from foreign nations and the United States, the recognition of belligerant rights as belonging to it; and from the Federal judiciary, its acknowledgment as a de facto government. But still, during the pendency of the war, and while its result was confessedly uncertain, it seems to me scarcely correct to say that the citizens of the Confederate States had so completely thrown off the old, and established the new government, as to refer all their contracts to interpretation by the laws of the latter, as if its existence was undisputed. I can well understand how, in a long-established government, contracting parties, in the absence of any stipulation to the contrary, are ordinarily to be considered as contracting with reference to the laws of that government, and submitting their contracts to be interpreted by such laws. But what is there in this rule to confine the parties here, involved as citizens in a doubtful war, to an interpretation of their language by the laws of their existing government, and actually to inhibit them from contracting in respect to a new order of things? It was impossible not to foresee the probability of change in the currency; whether it should be by the substitution of another by the Confederate government when established, or by the return of Federal money through the restoration of Federal authority, was a consideration that might have fairly entered into the transactions of men. It would certainly curtail the freedom of such transactions to lay down the inflexible rule that parties in such a state of society cannot, on grounds of policy, be allowed to contract for payment in anything but their existing currency, and that nothing but a clear stipulation to the contrary can take their contract without this rule.

I do not at all dispute the authority of the English cases cited by the appellee's counsel. On the contrary, I think them founded on strong reasons, and proceeding from the laudable determination of the courts of that country to construe contracts so as to effectuate the intentions of the parties. But I confidently submit, the case is a very different one here. I shall follow the principle of these adjudications in seeking for the intentions of the parties to this bond when they used the terms " current funds," and to that end can not overlook the fact that they were treating " flagrante bello. " I cannot be stopped on the threshold of this enquiry by the inexorable rule contended for by the appellee's counsel, that these words must be taken, by necessary implication of law, as importing Confederate currency alone. This would be, in my opinion, to disregard the true reason of these authorities, and to deny to our citizens at that time, under all the contingencies and uncertainties of their condition, that absolute freedom of contracting in view of all possible eventualities, which the principles of our common law secure to...