Dygert v. Vermont Loan & Trust Co.

• Decision Date: 02 May 1899
• Docket Number: 501.
• Citation: 94 F. 913
• Parties: DYGERT et ux. v. VERMONT LOAN & TRUST CO.
• Court: U.S. Court of Appeals — Ninth Circuit

94 F. 913

DYGERT et ux. v. VERMONT LOAN & TRUST CO.

No. 501.

United States Court of Appeals, Ninth Circuit.

May 2, 1899

S. C Herren, for appellants.

A. E Gallagher, for appellee.

Before GILBERT, ROSS, and MORROW, Circuit and MORROW, Circuit Judges.

GILBERT Circuit Judge.

On November 17, 1892, the appellants, Albert Dygert and Flora T Dygert, his wife, executed to the appellee, the Vermont Loan & Trust Company, a promissory note, dated at Spokane, Was payable December 1, 1897, for $3,400, with interest after date at 6 per cent. per annum, both the principal and interest payable at Spokane, Wash., interest payable annually according to the six interest coupon notes made at the same time. The interest coupon notes provided for interest after maturity. To secure the payment of the notes, the appellants executed to the appellee a mortgage on real estate in Idaho. The appellee brought suit to foreclose the mortgage. The appellants answered the bill, alleging that the loan was affected by the usury laws of the state of Idaho, that the loan was for $3,000, and that the $400 added to the principal thereof was a commission for making the loan; that said commission was charged in violation of sections 1264-1266, c. 10, Rev. St. Idaho, and is therefore void. Upon the pleadings and the proofs, a decree was rendered in favor of the appellee.

On the appeal to this court, it is conceded that the contract is usurious if it is controlled by the laws of Idaho, but that it is not usurious if tested by the law of Washington, where the notes were made payable. The principal question presented is, by the law of which state is the contract governed? In Andrews v. Pond, 13 Pet. 78, Chief Justice Taney speaking for the court, said: 'The general principle in relation to contracts made in one place to be executed in another is well settled. They are to be governed by the law of the place of performance; and, if the interest allowed by the laws of the place of performance is higher than that permitted at the place of the contract, the parties may stipulate for the higher interest, without incurring the penalties of usury. ' The language so quoted was approved in Miller v. Tiffany, 1 Wall. 298, 310, and again in Coghlan v. Railroad Co., 142 U.S. 101, 110, 12 Sup.Ct. 150. In Junction R. Co. v. Ashland Bank, 12 Wall. 226, 229, the court said: 'With regard to the question what law is to decide whether a contract is or is not usurious the general rule is the law of the place where the money is made payable. ' In Bigelow v. Burnham, 83 Iowa, 120, 49 N.W. 104, the supreme court of Iowa said: 'When a contract is made in one state, to be performed in another, and in express terms provides for a rate of interest lawful in one, but unlawful in the other, state, the parties will be presumed to contract with reference to the laws of the state wherein the stipulated rate of interest is lawful. ' Of similar import are Peck v. Mayo, 14 Vt. 33; Healy v. Gorman, 15 N.J.Law, 328; Arnold v. Potter, 22 Iowa, 194; McAllister v. Smith, 17 Ill. 328; Butler v. Edgerton, 15 Ind. 15. In no decision to which our attention has been directed has a different doctrine been held except in the case of Trust Co. v. Hoffman, 49 P. 318, very recently decided by the supreme court of Idaho. In that case the court said: 'The other contention of petitioner, that the notes which the mortgage sought to be foreclosed in this case was given to secure were made payable in the state of Vermont, and that, therefore, the contract must be construed by the laws of that state, is not utterly untenable, but not one single authority of the multitude cited by counsel in his petition supports the contention. ' The appellants rely upon the ruling of the court in that case, and contend that it construes a statute of the state of Idaho, and therefore creates a precedent which is binding upon this court. But the question involved in that case did not depend upon the construction to be given to a statute of the state. It was purely a question of general law. The inquiry was, what law shall govern a contract made in Idaho, but made payable...