Joseph Andrews, Plaintiff In Error v. Lewis Pond, Thomas Converse, and Francis Wadsworth, Defendants In Error

Decision Date01 January 1839
Citation38 U.S. 65,13 Pet. 65,10 L.Ed. 61
CourtU.S. Supreme Court

John Delafield, President of the Phoenix Bank, examined on the part of the defendant, stated that the exchange between New York and Mobile on the 11th of March, 1837, was from three to five per cent. This knowledge of exchange was acquired from having dealt an exchange during the period, for the Phoenix Bank.

Robert White, cashier of the Manhattan Company, stated that, by a reference to the books of the company, the exchange between New York and Mobile was, during the month of March, 1837, from five to seven per cent.: and Morris Robinson, agent for the Bank of the United States in the city of New York, said, that, during the month of March, 1837, he found by a reference to the books, the dealers with the bank were charged from three to five per cent.; three for short, and five for long paper.

The plaintiff excepted to the reading of the statute and laws of New York against usury: and in order to disprove the allegation of usury in the transaction, as the contract was not made subject to the statute laws of New York, and the contract was subject only to the laws of Alabama as to its obligatory form and solidity; and was or was not usurious according to these laws. The plaintiff then offered to prove by Joseph Wood, that the banks purchased bills at a far less exchange than others; that they never bought any other than undoubted paper; that from the facility of collecting, remitting, & c. they had many advantages over the citizens at large; and that the exchange of the banks was therefore much lower than that of the community at large: that there was no fixed rate of exchange between Mobile and New York; that it varied from one to twenty per cent., according to the solvency, punctuality, risk, &c. of the parties; that exchange was ever fluctuating, and was high or low as the risk was great or small. The Court refused to admit this testimony, and the plaintiff excepted.

The plaintiffs asked the Court to instruct the jury, that if they were satisfied that the excess over legal interest retained in this bill was taken and contracted for, innocently, by the parties, without intending to violate the laws against usury; they might find for the plaintiff. The Court refused to give this instruction, and the plaintiff excepted.

The plaintiff moved the Court to instruct the jury that the contract expressed in this bill of exchange, if to be executed in Alabama, was subject, alone, to the laws of Alabama against usury; and that the usury laws of New York had no force, or any thing to do with this investigation: this was refused by the Court, and plaintiff excepted.

The plaintiff next requested the court to charge the jury, that if they believed S. Andrews received the bill before maturity, for a valuable consideration, without any notice of usury, and that the plaintiff received it from S. Andrews, without notice of usury, and before maturity, that the plaintiff might recover; notwithstanding plaintiff offered no proof of the consideration he gave for it. The plaintiff excepted to this refusal of the Court.

The plaintiff next moved the Court to charge that the variance between the bill declared on, and the one set up as the same bill by defendant's deposition, was fatal in a plea of usury; to which the Court refused, and the plaintiff excepted.

It appeared that before the bill was delivered by S. Andrews to plaintiff, it had been, while in the hands of S. Andrews, protested for non-acceptance, which appeared on the face of the bill. There was no evidence of any settled account between H. M. Andrews & Co., and S. Andrews, or which was creditor or debtor upon the statement of accounts. It was also proved that the expense of transporting specie from New York to Mobile, including insurance and interest, would not exceed one and one half per centun on the sum transported.

Upon the whole case, and the several points stated, the Court charged the jury; that if they believed from the evidence, that by the usages of trade between New York and Mobile, there was an established rate of exchange between those places, the drawers and drawees of the bill of exchange here sued on, had a right to contract for such rates of exchange; and that even a higher rate to a small amount, if under the circumstances it did not appear to have been intended to evade the statute against usury might be allowed by them; but if they believed that no such usage existed, the parties had no right to contract for more than the actual expense of transportation of specie from one place to the other, including interest, insurance, and such reasonable variations therefrom, as above stated: and further, if they believed from the evidence that the drawers of the bill of exchange contracted with the drawers in the state of New York, at the time the bill was drawn, for a greater rate of interest than seven per centum per annum, for the forbearance of the payment of the sum of money specified in the bill; although it may have been taken in the name of exchange; the contract is usurious: and unless they believe from the evidence, that the plaintiff took the bill in the regular course of business, and upon a fair and valuable consideration bona fide paid by him, and without notice of the usury, they ought to find for the defendant; otherwise for the plaintiff: to which opinion, and charge of the Court, the plaintiff, by his counsel, excepted. The jury found a verdict for the defendants; and the plaintiff prosecuted this writ of error.

The case was argued by Webster, and Mr. D. F. Webster, for the plaintiff in error; and by Mr. Ogden for the defendants.

For the plaintiff it was insisted, by Mr. D. F. Webster:

1. That the contract in all that relates to interest, was to be governed by the law of Alabama.

2. That in the Court, sitting in Alabama, the defence of usury could not be set up under the general issue.

3. That certain evidence offered by the plaintiff on the question of usury, was improperly rejected.

4. That the rulings and direction of the Court on the points of law, as stated in the bill of exceptions, were erroneous.

The provisions of the laws of New York, 1 Revised Stat. 772, on the subject of usury, declare the contract, on which usury shall be taken or received, absolutely void; with a saving from the influence of the statute as to bills of exchange, or promissory notes payable to order or to bearer in the hands of an indorsee; who shall have received the same in good faith and for a valuable consideration, and who had not at the time of discounting the bill actual notice that the bill had been originally given upon a usurious consideration, &c. By the laws of Alabama, the interest alone is forfeited.

It is contended that the contract is to be governed by the laws of the place where it was to be executed. The contract on the face of this bill of exchange expresses that it was to be executed elsewhere than where it was made. The parties entered into it with a view to its performance at another place. It is a foreign bill, (2 Peters, 586,) and of course is dated in one place, and in one state, and made payable in another state.

The lex loci is to govern, unless the parties have had in view, by the contract, another place of performance; that is to say, if the parties have in view, by the terms of the contract, the city of Mobile, for its performance, it is the law of the place of performance which is to govern and construe the terms of the agreement. 2 Burr, 1077. 8 John. 190. 4 Peters, 111. 7 Peters, 586....

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