Sherman v. Gassett

• Decision Date: 31 December 1847
• Citation: 4 Gilman 521,9 Ill. 521,1847 WL 3887
• Parties: ORRIN SHERMAN et al.v.HENRY GASSETT et al.
• Court: Illinois Supreme Court

4 Gilman 521

9 Ill. 521

1847 WL 3887 (Ill.)

ORRIN SHERMAN et al.

v.HENRY GASSETT et al.

Supreme Court of Illinois.

December Term, 1847.

Error to Cook Co. Court.

SCIRE FACIAS, to foreclose a mortgage, issued from the Cook county court, at the instance of the defendants in error, against the plaintiffs in error. The cause was heard before the Hon. HUGH T. DICKEY, on demurrers to pleas. The demurrers were sustained, and the defendants brought their writ of error to reverse the decision of the court.

The substance of the pleas are stated in the opinion of this court. A. T. BLEDSOE, argued orally for the plaintiffs in error. Written arguments were submitted by J. Y. SCAMMON & N. B. JUDD, upon the same side, and by A. COWLES & W. H. BROWN, for the defendants in error, both of which were mislaid and were not received by the reporter.

L. TRUMBULL argued orally for the defendants in error.

1. The pleas of usury are defective in not averring that the law of Massachusetts, set out in said plea, was in force at the time of the execution of said mortgage, and of filing said pleas.

None of said pleas, or the plea of payment profess to answer the whole cause of action, and the plaintiffs were at liberty to treat all of said pleas as nullities, and take judgment as by nil dicit, or they might demur. Gould's Pl. 363; Fitzgerald v. Hart, 4 Mass. 429; 11 Pick. 75; Sterling v. Sherwood, 20 Johns. 206; Hickok v. Coates, 2 Wend. 421; Slocum v. Despard, 8 do. 617; Phelps v. Sowles, 19 do. 547; Mee v. Tomlinson, 31 Eng. Com. Law R. 66.

The judge who tried this cause below, certifies that the plea of payment was not passed upon by him upon the argument, and the attention of the court below not being called to said plea, it is too late to urge in this court for the first time, that said plea was sufficient. Gelston v. Hoyt, 13 Johns. 575; Bell v. Bruen, 1 Howard's (U. S.) R. 187; 3 do. 530.

2. The mortgage being made and executed in Illinois, must be governed by the laws of Illinois. Chapman v. Robinson, 6 Paige, 627.

3. The statute of Massachusetts does not make a contract for taking more than six per cent. void, but applies to the remedy and inflicts a penalty. Rev. Stat. Mass. 307.

Penal laws are local. Story's Confl. of Laws, § 619, et seq. Remedies upon contracts are governed by the law of the place where the action is instituted. 2 Kent's Com. 462.

That the statute of Massachusetts is penal, and applies to the remedy only, is established by her own courts. Gale v. Easton, 7 Metc. 14.

Opinion of the court by LOCKWOOD, J.

The plaintiff below sued out of the county court of Cook county, a scire facias against Sherman & Pitkin, to foreclose a mortgage, dated September 1st, 1842. The mortgage was duly acknowledged and recorded on the day it bears date, and was executed to secure the payment by the mortgagors to the mortgagees of three several promissory notes, amounting to the sum of $7000, dated the 15th of June, 1842. The time when the notes were to fall due, is not stated in the mortgage, but the scire facias avers they had all fallen due. The mortgage recites that Sherman & Pitkin are residents of the county of Cook, in the state of Illinois, and the plaintiffs below are residents of the state of Massachusetts. Sherman & Pitkin pleaded four special pleas of usury, in violation of the laws of Massachusetts, and a plea of part payment. To all these pleas, Gassett & Co. severally demurred, and the court sustained the demurrers, and rendered judgment for the plaintiffs for the amount due on the mortgage, and that the mortgaged premises be sold.

The errors relied on, are the sustaining the demurrers to all the pleas of the defendants. The four pleas of usury are substantially alike, and aver that Sherman & Pitkin being largely indebted to Gassett & Co., who were merchants, residing and doing business in the city of Boston, for goods previously sold to them, on the 15th day of June, 1842, in order to obtain forbearance on said indebtedness, it was corruptly agreed that Sherman & Pitkin should execute to Gassett & Co. three several promissory notes, payable in twelve, twenty-four and thirty-six months, at Gassett & Co's. office in Boston, with interest at the rate of ten per cent. per annum, payable semi-annually. The pleas state that the notes, although they appear on their face to have been executed in Chicago, in this state, yet were executed in Boston.

These pleas further aver, that the mortgage recited in the scire facias, was executed to secure the payment of said notes. The pleas further aver, that on the 15th of June, 1842, it was provided and enacted by the laws and statute of the commonwealth of Massachusetts, of which commonwealth Boston was the capital, “that the interest of money should be six dollars and no more upon one hundred dollars for a year, and at the same rate for a greater or less sum, and for a longer or shorter time;” and that, “whenever an action shall be brought upon any contract or assurance, and it shall appear upon special plea to that effect, that a greater rate of interest has been directly or indirectly reserved, taken or received, the plaintiff shall forfeit three-fold the amount reserved or taken, and shall have judgment for the balance only, which shall remain due after deducting said three-fold amount.” The defence set up in the defendants' pleas of usury, is unconscientious and inequitable, and should not be sustained unless some stern rule of law requires it. In equity the original debt and legal interest are justly due, notwithstanding an agreement to pay more than legal interest. Where a creditor, however, has acted oppressively towards his debtor, or has evinced a manifest disposition to violate the laws of the country where the contract is made or to be performed, justice requires that courts should be astute in ascertaining if there be not some rule of law that will enable them to punish the oppressive creditor, or the willful violator of the law. These pleas, instead of disclosing any oppression on the part of Gassett & Co. towards Sherman & Pitkin, clearly evince a great degree of forebearance and lenity. Sherman & Pitkin were residents of the state of Illinois, where it was legal to stipulate for the payment of twelve per cent. interest; consequently, the agreement to pay ten per cent. did not violate any law of this state. What law, then, has been violated by the contract between the parties? It is apparent that the mortgage was executed in Illinois, for it was acknowledged and recorded in Cook county, on the day it bears date, and as it does not specify any place of payment, were it not for the notes recited in the pleas, the legal presumption would be, that the mortgage was payable in Illinois, where the land was situated and the mortgagors resided, and in that event, the mortgage would be free from any taint of usury. The pleas, however, aver that the mortgage was executed to secure the payment of three promissory notes, with ten per cent. interest, which notes, it is alleged, were executed in Boston and made payable there.

It is a well settled rule of jurisprudence, that the courts of one country will not enforce either the criminal or penal laws of another. Nor will the courts of one country carry out or be guided by the laws of another, regulating the forms of actions, or the remedies provided for civil injuries. But it is equally well settled, that in the construction of contracts and in ascertaining whether they are valid, the law of the country where the contract was made or to be performed shall in general govern. It might in this case be urged, with great propriety, that a mortgage on real estate should be governed by the lex situs, and consequently not be affected by the usury laws of the place where it may have been executed, or where the money is to be paid; the presumption being that the parties must have had the laws of the country in view where the land was situated, and where suit must be instituted in case of foreclosure. The case of Chapman v. Robinson, 6 Paige 627, wasdecided on this principle. In that case a loan was negotiated in England, where the creditor lived, to be secured by personal security and a mortgage on real estate in New York where the borrower resided. Seven per cent. interest was reserved in the mortgage, which was higher than the rate of interest allowed by law in England, although authorized by the laws of New York. Chancellor Walworth, in delivering his opinion, says: “Upon a full examination of all the cases to be found upon the subject, either in this country or in England, none of which, however, appear to have decided the precise question which arises in this case, I have arrived at the conclusion that the mortgage executed here, and upon property in this state, being valid by the lex situs, which also is the law of the domicil of the mortgagor, it is the duty of this court to give full effect to the security, without reference to the usury laws of England, which neither party intended to violate, by the execution of a mortgage upon the lands here.” The Chancellor in that opinion, further says: “But if a contract for the loan of money is made here, and upon a mortgage of lands in this State, which would be valid if the money was payable to the creditor here, it can not be a violation of the English usury laws, although the money is made payable to the creditor in that country, and at a rate of interest which is greater than is allowed in England.” This question was fully and ably examined by Judge Martin, in the case of Depeau v. Humphreys, in the supreme court of Louisiana (20 Martin 1), and that court came to the conclusion, in which the Chancellor says he fully concurs, “that in a note given at New Orleans, upon a loan of money made there, the creditor might stipulate for the highest legal rate of conventional interest allowed by the laws of Louisiana, although the rate of interest thus agreed to be paid was higher...