Union Nat. Bank of Chicago v. Chapman

Decision Date31 January 1902
Citation62 N.E. 672,169 N.Y. 538
CourtNew York Court of Appeals Court of Appeals

Appeal from supreme court, appellate division, Fourth department.

Action by the Union National Bank of Chicago against Elizabeth J. Chapman and others. Judgment for plaintiff. From judgment of the appellate division (64 N. Y. Supp. 1053), defendant Chapman appeals. Reversed.

Bartlett and Vann, JJ., dissenting.

David B. Hill and O. P. Hurd, for appellant.

John A. Barhite, for respondent.


This action was brought upon a promissory note made at Tuscumbia, in the state of Alabama, by the defendants, Chapman, Reynolds & Co., a copartnership engaged in business at that place, in the building of a lock in the Tennessee river for the government of the United States, of which note the following is a copy: ‘$5,000. Tuscumbia, Alabama, May 1st, 1894. Six months after date, we promise to pay to the order of E. P. Reynolds, Jr., five thousand and no 100ths dollars, value received, with interest at eight per cent. per annum from date, payable at Union National Bank, Chicago, Illinois. Chapman, Reynolds & Co. W. P. Chapman. Elizabeth J. Chapman. Ella Howard. C. W. Howard.’ The trial court has found as facts that the defendant Elizabeth J. Chapman was the wife of William P. Chapman, who was a member of the firm; that she signed the note at the request of her husband as surety for the firm, and that, while it was the intention of the firm that the note should be negotiated and discounted in the state of Illinois, she did not know of such intention, except from what appeared on the face of the note; that she signed the note for the purpose of raising money for the firm, to enable it to continue its work upon the government contract in Alabama, and after the note was executed it was delivered to Reynolds, the payee therein named, who took it to the plaintiff's bank, in Chicago, Ill., indorsed it, and delivered it to the bank for the purpose of securing loans already made to the firm, and for the purpose of procuring additional loans. The defense interposed by the defendant Elizabeth J. Chapman was that she had no capacity to make the contract in question, under section 2349 of the Code of 1886 of the state of Alabama, which provides that ‘the wife shall not, directly or indirectly, become surety for her husband,’ and it was therefore invalid and of no binding force against her. On behalf of the plaintiff it is contended that the note had no legal inception until it was discounted by the plaintiff's bank in Illinois, and that it then became a valid contract of that state, and under its laws the wife was not disqualified from becoming surety for her husband. The question thus presented is as to whether this was an Alabama or an Illinois contract.

As we have seen, the note was drawn, signed, and delivered to the payee at Tuscumbia, Ala., and Mrs. Chapman signed as surety for her husband. She did not authorize it to be discounted in Illinois, or know that the members of the firm intended to have it negotiated there. She only knew that it was payable at the plaintiff's bank, in that state. It is true, the note did not have a valid inception, in such a sense as to create a liability on the part of the makers, until it was discounted and passed over to the bank; but this does not necessarily make it an Illinois contract, so far as the surety is concerned. Mrs. Chapman's contract to become surety was complete when the instrument was signed and delivered to the payee. It was then a contract beyond her recall, upon which she in the future might become liable when negotiated by the payee, if otherwise valid; and the place of the negotiation could not, under the circumstances, in any manner change the force or effect of her contract. One of the essential elements in a contract is the meeting of the minds of the contracting parties upon the matter which is the subject of the contract. In this contract Mrs. Chapman agreed with the payee of the note that she would become surety for her husband to the amount thereof, and this agreement was made in the state of Alabama. She did not agree that is should be negotiated in Illinois and made an Illinois contract. Her mind did not meet the intention of the payee upon that subject, and she cannot, therefore, be held to have agreed that it should become a contract of the state. She knew by the terms of the instrument that it was payable at the plaintiff's bank, but this did not advise her that it was intended to discount it there or to constitute it a contract of that state. It appears from the evidence that the firm kept its accounts with, and made its deposits in, the plaintiff's bank, and she might well have assumed that it was made payable there for the convenience of the firm.

We have had occasion to examine many cases bearing upon the question under consideration. It may not be profitable to here indulge in an extended discussion of the authorities, for we have found none that are exactly in point. We shall therefore extract from them some general principles which appear to be settled beyond controversy, and apply them to the question under consideration: (1) All matters bearing upon the execution, the interpretation, and the validity of contracts, including the capacity of the parties to contract thereto, are determined by the law of the place where the contract is made; (2) all matters connected with its performance, including presentation, notice, demand, etc., are regulated by the law of the place where the contract, by its terms, is to be performed; (3) all matters respecting the remedy to be pursued, including the bringing of suits and the service of process, depend upon the law of the place where the action is brought. In the case of Scudder v. Bank, 91 U. S. 406, 23 L. Ed. 245, a bill of exchange was drawn by a party in Chicago upon a firm in St. Louis, and verbally accepted by a member of the St. Louis firm, then present in Chicago. Under the law of Missouri, acceptances were required to be in writing, but under the law of Illinois a parol acceptance was valid. The bill of exchange, as we have seen, was drawn in Chicago, Ill., and therefore all matters pertaining to its execution, interpretation, and validity had to be determined by the laws of that state. It was made payable in St. Louis, Mo., and ordinarily the laws of that state would control with reference to acceptance and performance; but a member of the firm in that state was present in Chicago, and he there accepted the bill of exchange, without waiting for it to be sent on to St. Louis, to his firm in that...

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