Hildreth v. Shepard

By the Court, Ingraham, P. J. This action is brought to recover the amount of two bills of exchange, dated at Boston, drawn by James Gould to his own order, and endorsed by him and Moulton, on William A. Shepard. The drafts were accepted by Shepard payable at 109 West street, New York. The drafts were negotiated in Boston and sold to the plaintiff at a, discount of about $60 or $70 on each draft. There was a difference in the testimony on the part of the plaintiff and of the defendant, as to the consideration of the drafts; but that question was submitted to the [269] jury, and. they have found, the drafts to be acctimmoda tian paper. An objection was made to the admission of Shepard as a witness on the part of the defendant, to prove that the drafts were accommodation paper.' He had previously read the testimony of Grould, called by himself, which showed there was a consideration for the same; and an objection was made to the examination of the defendant to show that there was no consideration. Upon this point it is sufficient to say, that such an examination was not necessarily an impeachment of Grould. He had testified to the sale of some phosphate to Shepard and Moulton, and that these acceptances were given in consideration of the sale and delivery of the phosphate. It is to be observed that the sale was not to Shepard alone, while the drafts were drawn on Shepard individually; and the evidence shows that Shepard and Moulton gave acceptances in reference to the business they had with Grould. It was admissible to show that Grould was mistaken, as to the consideration. These remarks apply as well to the testimony of Moulton as to that of Shepard. I am at a loss to see the propriety of admitting the letters of Grould, (exhibits 1, 2, 3 and 4,) in evidence. They were addressed to Moulton. Grould was not a party to the action, and they were nothing but the mere declarations of Grould, not even sworn to. The contents of them were very material on the question of consideration, and should have been proved by Grould, as a witness, if he had knowledge of the contents. For the purpose of impeachment they could not be read, because Grould was the defendant’s witness, and could not be impeached by him. The material question in the case appears to be whether the laws of New York or Massachusetts are to govern in the application of the law against usury. The judge held, and so charged the jury, that the drafts [270] were void if they were sold at a, higher rate of interest than seven per cent—thus applying the law of New York to the drafts in suit. There can be no doubt but that the law of this State is settled, by repeated decisions, that the law of the State where the contract is dated and is to be performed is to govern as to its construction and validity. This was held in Jacks v. Nichols, (5 N. Y. 178.) The judge says: ;t Concede that the contract was made in Connecticut, if it was to be performed in New York, it must be regarded as having beeb. made with reference to the laws of New York.” In Davis v. Garr, (6 N. Y. 124,) the contract was made in Florida, and there was no proof that it was to be performed elsewhere; and it was held to be governed by the laws of Florida. So, in Bowen v. Newell, (13 N. Y. 290,) the check was drawn on a bank in Connecticut, and payable there ; and it was held that the laws of Connecticut controlled it. So, in Curtis v. Leavitt, (15 N. Y. 21,) it was held that a contract for the loan of money, to be repaid in Pennsylvania, was to be governed by the laws of that State. And at page 230, it was said the usury law of that State must apply. See also Everett v. Vendryes, (19 N. Y. 436;) Cutler v. Wright, (22 id. 472.) In Jewell v. Wright, (30 N. Y. 259,) the note was made at Lockport, N. Y., and was payable at a bank in that place, was negotiated in Connecticut, and discounted at a usurious rate of interest. The laws of New York were held to be applicable to it. In Dyke v. The Erie Railway Co., (45 N. Y. 113,) Allen, J., says : “ The rule for the interpretation of contracts is that they are to be construed according to the laws of the State in which they are made, unless from their terms it is perceived that they were entered into with a view to the laws of some other State.” [271] ' The plaintiff relies upon two or three cases as conflicting with these rules. Balme v. Wombough, (38 Barb. 352.) In that case, a loan had been made at a rate of interest allowed by the laws of Minnesota, and notes were given payable in New York, but secured by a mortgage on land in Minnesota, and it was held that these facts were sufficient to take the case out of the rule above stated. The justice, in his opinion, states the rule to be as is given in the cases above cited. The case of The Bank of Georgia v. Lewin, (45 Barb. 340,) was upon a note given in payment of a previous indebtedness, and was decided upon the peculiar facts in that case. The whole transaction took place in Georgia, and was intended as a transfer of moneys which the drawer had in New York for the purpose of making such payment. It was decided on the same principle that was stated in Balme v. Wombough, (38 Barb. 352,) and in Chapman v. Robertson, (6 Paige, 634,) that parties might agree upon a rate of interest in the State where the contract was made, if in accordance with the law of that State. See also Pratt v. Adams, (7 Paige, 632.) The true rule to be drawn from these cases seems to be that where the note is dated and made payable in one State, and taken out of that State into another for negotiation or sale, it is still to be considered as a contract made subject to the laws of the State where dated and made payable. But where the note is made in one State, negotiated and sold in that State at a rate of interest allowed by the laws of the State wkere sold, then the same is to be governed by .the laws of that State, and not of the State where it is payable It certainly would have been more simple, and equally consistent with equity and justice, to have adopted the plainer rule of lex loci contractus as governing in all [272] cases of this character; but the remedy is with the Court of Appeals, and not the other courts. [First Department, General Term, at New York, January 6, 1873. Ingraham and Danis, Justices.] For the reason before stated, however, we think a new trial must be granted; costs to abide the event.