Buchanan v. Drovers' Nat. Bank

• Decision Date: 17 April 1893
• Docket Number: 47.
• Citation: 55 F. 223
• Parties: BUCHANAN et al. v. DROVERS' NAT. BANK OF CHICAGO.
• Court: U.S. Court of Appeals — Sixth Circuit

55 F. 223

BUCHANAN et al. v. DROVERS' NAT. BANK OF CHICAGO.

No. 47.

United States Court of Appeals, Sixth Circuit.

April 17, 1893

Statement by SEVERENS, District Judge This cause comes here from the circuit court for the middle district of Tennessee, on a writ of error prosecuted by the defendants in the court below, where, upon a trial before Circuit Judge Taft and a jury, the verdict and judgment were rendered for the bank. The facts shown by the record, so far as they are material for consideration upon the errors alleged and relied upon, are these:

In May 1885, Buchanan and Parkes, residents of Tennessee, and Hill a resident of Mississippi, the defendants below, associated with one Thompson, then resident in the Indian Territory were engaged in buying, grazing, fattening, and selling cattle. The grazing and fattening the cattle for the market was carried on in the Indian Territory, into which they were brought for that purpose. The market principally had in view was that of Chicago. Needing funds for the prosecution of their business, they applied to James H. Campbell, who was engaged in the live stock and commission business at Chicago, under the name of Campbell, Lancaster & Co., to procure from or through him an advancement of money upon the joint note of the four for $25,000, payable to his order in Chicago in four months from its date, which was May 20, 1885. The note was dated at Franklin, Tenn. As an inducement to Campbell to aid them in raising the money, they promised to ship all their cattle to him for disposition so long as their business relations with him remained pleasant. Contemporaneously with the making of this note the makers executed to Campbell, or his assignee, a chattel mortgage on a large number of cattle, to secure that note and all other liabilities they might incur to the mortgagee. This note was discounted at some bank-- what one does not appear-- by Campbell, upon his indorsement, and the proceeds were placed by him to the credit of Buchanan, who was the manager of this branch of the business, for all the parties interested in raising the money.

The note not having been paid at maturity, Campbell drew up two notes, each for the sum of $12,500, and sent them to Buchanan in Tennessee, with the request that he should sign them, and, after getting the signatures of Parkes and Hill, and signing them himself as Thompson's attorney, return them to himself (Campbell) at Chicago. The manifest purpose of this was to provide the means for taking up the unpaid note for $25,000. The two $12,500 notes were signed by all the makers, except Hill, in Tennessee, and by him lastly, in Mississippi, and thereupon Hill transmitted them to Campbell at Chicago, as the latter had requested, by mail. One of these latter notes was discounted by Campbell with the Third National Bank of St. Louis. The other, which is the note in suit, was, upon his indorsement, discounted with the defendant, the Drovers' National Bank of Chicago. With the proceeds of the two notes Campbell paid off the $25,000 note. The following is a copy of the note on which the present action was brought:

'$12,500.

Franklin, Tenn., Nov. 6, 1885.

'On or before August 1st we promise to pay to the order of Campbell, Lancaster & Co. twelve thousand five hundred dollars, for value received, negotiable and payable without defalcation or discount, and with interest from date at the rate of ten per cent. per annum until paid, payable at the Drovers' National Bank, U.S. Yards, Chicago, Illinois.

'G. L. Thompson.

'By R. G. Buchanan, Attorney in Fact.

'R. G. Buchanan. 'J. L. Parkes. 'G. R. Hill.'

Campbell was well aware of the purpose for which the money obtained on the original note for $25,000 was to be used, and it inferentially appears that it was in fact used for that purpose, though this is not positively shown; but there is nothing in the record tending to show that the Drovers' National Bank had any knowledge of the purpose of the original note, or, indeed, of its existence. Buchanan and his associates never at any time obtained a permission from the Indians or their officials, or from the United States, to graze cattle upon the grounds of the Cherokee nation, the country in which that part of the business was prosecuted.

Various grounds of defense were taken at the trial, only two of which are now relied upon, but these are strenuously urged, namely:

First, that the business in which these notes, all of them, were employed, was an unlawful one, in that the bringing cattle into the territory of the Cherokee nation and keeping them for grazing there was in violation of the laws of the United States and of said Cherokee nation; that Campbell, the payee, knew the facts which showed the unlawful use intended to be, and in fact, made of the moneys raised on said notes, and was a party to such use, and that the note in question was therefore void in its inception; and--

Second, that the note in suit must be deemed to have been made in Tennessee, and as, by its terms, it is made payable with interest at a rate prohibited by the law of that state, it is void by that law, which declares that consequence upon usurious contracts.

The circuit judge ruled that neither of these defenses was maintainable, and, no other sufficient defense being offered, instructed the jury that the contract manifested by the note was an Illinois contract, and while, by the law of that state, it was usurious, and the consequence was that no interest was recoverable, yet that the plaintiff was entitled to recover the principal of the note. The jury rendered a verdict accordingly, and judgment was entered for the sum of $12,500.

By the law of Tennessee, interest at 6 per cent. is allowable, and an agreement for a higher rate renders the contract void. By the law of Illinois, 8 per cent. is allowable, and an agreement for more forfeits all interest, but does not invalidate the agreement for the principal.

Vertrees & Vertrees and J. G. Wallace, for plaintiffs in error.

Albert D. Marks, for defendant in error.

Before BARR, SAGE, and SEVERENS, District Judges.

SEVERENS District Judge, (after stating the facts.)

Upon these facts we are clearly of opinion that the defendants could not maintain their defense upon either ground taken by them. In respect to the contention that the note in suit is void because of illegality in the consideration, it must be answered that the facts fall far short of establishing it. Extended reference is made by counsel for the plaintiffs in error to various acts of congress enacted for the purpose of protecting the Indian tribes and their lands from a great variety of wrongful aggressions, and where penalties are imposed upon transgressors, for the purpose of showing the general policy of legislation in regard to the Indians; and special reference is made to sections 2118, 2127, 2138, and 2147, of the Revised Statutes, and to the act of July 4, 1884, which, it is said, prohibit the introduction of cattle into the territory of the Cherokee nation or of the interior department of the United States. We do not deem it necessary to determine whether those acts rendered the business carried on by these parties, without the consent of the Indians or of the United States, so far unlawful as to invalidate their contracts made with other parties for means to prosecute it, where such other parties knew of the intended use of such means, and actually promoted it, because, assuming that to be so, we think this defense must fail for other reasons.

It is argued for the defendant in error that whether or not the legislation, taken together, does in fact prohibit the introduction of cattle, (which is denied,) the bringing them into the territory for such purpose being lawful in some instances, a party dealing with persons so employed might properly suppose that such conditions existed, and that he was not bound to suppose that they were acting in...