Miller v. Tiffany

• Decision Date: 01 December 1863
• Citation: 1 Wall. 298,68 U.S. 298,17 L.Ed. 540
• Parties: MILLER v. TIFFANY
• Court: U.S. Supreme Court

68 U.S. 298

17 L.Ed. 540

1 Wall. 298

MILLER v. TIFFANY.

December Term, 1863

TIFFANY filed a bill against Miller and wife, in the Circuit Court for the District of Indiana, to foreclose a mortgage which the last-named persons had given to Palmer, a merchant of New York, and Wallace, an attorney at law of Cleveland, Ohio, as assignees of two insolvent firms; which mortgage they, the said Palmer and Wallace, had assigned to him, the complainant.

The facts of the case were essentially these: Two mercantile firms, closely connected with each other and in part composed of the same persons—one in Cleveland, Ohio, and one in New York City being unfortunate in business, had made an assignment of their effects, dry goods chiefly, to these two persons, Wallace and Palmer; Palmer being a large creditor of the firms. About $50,000 worth of the goods were at Cleveland under Wallace's charge, and about $73,000 worth in New York, under Palmer's.

In this state of things, Miller, a German trader, resident at Fort Wayne, in Indiana, who had a valuable, unincumbered real estate in that State, but who was largely in debt and much embarrassed for ready money, employed two personal friends, Turner and Rufner, to go to New York and raise him money. They went there in February, 1858, and after making, according to Rufner's account, 'desperate efforts, for at least four weeks, by publication in the Herald and Tribune,' fell in with a broker, named Anthony, who introduced them to Palmer. The result was, that Palmer entered into a treaty to sell Miller $20,000 worth of that part of the assigned goods in New York, at six months' credit, and to receive in payment for them a mortgage on Miller's real estate in Indiana, payable in five years; the mortgage to provide, however, that if there should be any default in paying the interest, the principal should become due at once. Palmer wrote, on the 15th of February, 1858, to Wallace at Cleveland what he had agreed on, requested him to go to Fort Wayne in Indiana, examine the property and title, and if satisfied with both to have the papers prepared; after which the goods should be delivered to Miller or his agents. Wallace, accordingly, went to Fort Wayne, in Indiana, and being satisfied with the security, a note for the term mentioned was given by Miller, with interest at ten per cent., payable, not in New York, where Palmer lived, and where the goods were bought, nor yet in Fort Wayne, the residence of Miller, but in Cleveland (at the Commercial Branch Bank there), the residence of Wallace, with the current rate of exchange on New York.¹ Matters being thus concluded, Rufner, the friend of Miller, went to New York and selected the goods out of the assigned stock there. They were then shipped to Fort Wayne, where Miller received them.

Six per cent., it is necessary to state, was apparently the lawful rate of interest in Indiana. Ten was allowable in Ohio, under a statute of 14th March, 1850, at that time in force. Whether on a sale of goods ten was in New York, was not so clear. On the loan of money it was not.

The interest not being paid, and the present bill filed to foreclose the mortgage, Miller set up two principal defences:

1. That the goods were not worth anything like the sum at which they had been sold to him.

2. That the contract for ten per cent. was usurious and void.

As respected the value of the goods, the testimony was conflicting. Evans, a trader of Fort Wayne, who on Miller's invitation had looked through the goods, 'without any special motive, but the same as he would look through any other stock of goods in town, to see what I had to compete with,' when interrogated as to their value replied, 'This is a difficult question to answer, one in which, perhaps, no two men would agree. Their value to any man depends upon his facilities for getting rid of them. I should estimate their value to me, considering the fact that the stock was an old stock of goods, a great portion of them out of style, being poorly assorted, a large quantity of goods of a particular kind, and few or none of other kinds necessary to make up an assortment in proportion to the whole amount of stock, at from sixty to sixty-five per cent. of the invoices.'

Walker, another resident of Fort Wayne, who had been 'engaged in trading goods for about seven years, railroading some, and a part of the time engaged in outside trading,' confirmed this estimate between invoice and cash values; adding, 'the principal objections to the stock were, that the goods were badly selected; large amounts of some kinds, and a few or none of others to make them saleable. A considerable quantity of them were out of style, which is a bad objection in selling goods. Part of the goods were worth more than the invoice price, and a part of them less, making the average value about two-thirds invoiced price.'

Gilford, who was a clerk of Miller, when the goods arrived at Fort Wayne, thought that 'the general character of the goods was not very good. The goods were principally old styles, and was a hard stock to sell, and the majority of them were billed to Miller at too high prices for retailing purposes. They were worth, in my opinion, about sixty cents on the dollar.'

As respected the matter of usury. It appeared that Mr. Hough, an attorney of Fort Wayne, where Miller lived, was employed by Wallace, on his visit to Fort Wayne, to draw the papers in the case. In giving an account of the circumstances under which the note was made payable, Hough's testimony was, that on the morning of the day when the note was drawn, Miller introduced him to Wallace. The witness stated as follows: 'The note and mortgage were drawn up in my office on the 22d of February, 1858. I first wrote a note payable in New York for the amount specified, with ten per cent. interest, upon which some conversation ensued between Wallace and Miller, when Miller remarked in substance that he would rather pay it to Wallace: 'I know you, Wallace; you are a clever fellow; I would rather pay you, as I don't know Palmer;' and asked if it could not be paid in Cleveland, adding that he expected to trade there, and it would be easier for him to pay it in Cleveland. Upon the request of Miller, Wallace wrote a note, and made it payable at the Commercial Branch Bank at Cleveland, which was and is the residence of Wallace.'

There was no evidence to contradict this, except so far as it might be found in a correspondence between Palmer in New York and Wallace in Cleveland. Palmer, after concluding the negotiation with Rufner and Turner (Miller's agents in New York), gave Rufner, then on his way through Cleveland to Fort Wayne, an open letter to Wallace—the one already mentioned, and dated 15th February, 1858 and to be delivered by Rufner to him. It ran thus:

'This will be handed to you by Mr. Rufner, one of the parties who have been negotiating with me for the purchase of part of our stock of goods here; the purchase-money to be secured by mortgage on Mr. Miller's property at Fort Wayne. My proposal to them is, to sell $20,000 of our goods, at our regular prices to the country, at six months' credit, and to receive in pay therefor, a bond and mortgage on Mr. Miller's property,—provided it affords satisfactory security for the amount, and the title is undoubted; the mortgage to be the first lien on the property, and payable on or before five years, bearing ten per cent. semiannual interest; the first interest to be payable in twelve months from the date of the delivery of the goods here; the principal and interest to be payable here,' etc.

On the 22d February, 1858, Wallace, who, in pursuance of this letter, went, as already mentioned, to Fort Wayne, in Indiana, having, as he says, 'concluded the business for which I came here,' writes to his co-assignee Palmer, from that place, late in the evening and when 'tired,' a long letter and 'in full,' 'how he found things and what he had done.' He gives an account of some accidents on the way, his being detained by 'a blockade of snow,' how he had examined the property thoroughly with Mr. Hough, a full account of the character and value of the property, &c., and after a mention of some other things proper enough to be reported to his co-assignee or principal, his letter contained this sentence, the only one having any reference whatever to the place where the interest on the mortgage-note was to be paid, or as to why Palmer's instructions on that point had been departed from:

'I have taken the liberty to vary from your instructions in reference to the place where the note is made payable. Seven per cent. being, as I understand, the legal rate of interest in New York, and six per cent. being the rate in Indiana, the note would seem to be open to the plea of usury both here and in New York if made for ten per cent. So, to avoid this, I made it payable in Ohio, and dated it there, where ten per cent. is the legal rate with exchange on New York, which results the same.'

Wallace, who was himself examined as a witness, gave this account. After confirming Hough's statement that the note was originally drawn so as to make interest payable in New York, and that it was by Miller's request that it was finally made payable in Cleveland, Wallace continued:

'Upon this request of Mr. Miller, I consented that I would take his note, payable as he had desired, with exchange on New York to which he agreed; and the note in suit was thus drawn up by myself, and executed by Mr. Miller. The note was so executed by Miller, and received by me in the utmost good faith, on my part, as to the place where it was dated and made payable, and mainly for the reason expressed by Miller, that it would enable him to pay it in his home currency. Perhaps another reason which induced me to consent to the change proposed by Miller was, that I understood that by the laws of New York seven per cent. was the legal rate of interest; and as Mr. Palmer had informed me...