Opdyke v. Merwin

Davis, P. J.: A verdict was directed in tbis case at Circuit, and tbe exceptions were ordered to be beard in tbe first instance in tbis court. One Winterfield, wbo resided at Stamford, in tbe State of Connecticut, made tbe drafts in suit in that State. They were drawn upon tbe defendants in tbis action, in tbe firm name of George A. Merwin & Co., at No. 160 Duane street, in tbe city of New York, wbicb was tbeir place of business. Tbe defendants then resided in tbis city. Tbe drawer forwarded the drafts to tbe defendants, wbo accepted tbe same in tbeir. firm name and returned them to him. Tbe acceptance was purely for tbe accommodation of tbe drawer, and without any consideration between him and tbe acceptors. After receiving back tbe accepted drafts, tbe drawer forwarded them for discount to one Beach, a banker, at New Haven, Connecticut, by whom they were discounted, at tbe rate of three per cent per month, and tbe proceeds were used by tbe drawer in bis business at New Haven. Tbe drafts were afterwards indorsed by Beach to tbe plaintiffs, and on presentation for payment, payment was refused. By tbe laws of Connecticut, wbicb were proved on tbe trial, the rate of interest in that State is seven per cent a year, but tbe effect of receiving more, is tbe forfeiture of tbe “ money or property so received to any person wbo shall sue therefor, within one year thereafter.” Tbe plaintiffs’ counsel asked tbe court to direct a verdict for tbe plaintiffs, in accordance with tbe provisions of tbe statute of Connecticut. Tbe court so directed, deducting tbe excess of interest over and above seven per cent, and to tbis direction tbe defendants excepted. The defendants’ counsel moved to dismiss tbe complaint for want of proof of ownership of tbe drafts by tbe plaintiffs. He also moved, that tbe court direct a verdict for tbe defendants, on tbe ground that the rate of discount was usurious under tbe laws of tbis State and tbe acceptances were invalid. Tbe court refused and tbe defendants duly excepted. As to tbe exception of tbe defendants to tbe denial of tbe first motion to dismiss tbe complaint it is enough to say that tbe pro [404] duction of the note, and the indorsement thereon by Beach to the plaintiffs, was prima facie evidence of ownership, and sufficient to entitle the plaintiffs to recover under the evidence in this case, unless the alleged defense of usury was established. (Mechanics and Traders' National Bank v. Crow, 60 N. Y., 85.) As to the exception to the second motion of the defendant, unless the case is distinguishable from Jewell v. Wright (30 N. Y., 259) and Clayes v. Hooker (4 Hun, 231), it must be deemed to be disposed of by the case of Dickinson v. Edwards, decided at the present term of this court (post p. 405), holding the above cases to be sta/re decisis of the question therein involved. But that case and this are not precisely analogous in their facts. In this case the drawer resided in Connecticut, he drew the drafts in that State; they were accepted in the State of New York by the defendants, solely for his accommodation, and returned to him, of course, with authority to use them in the State of Connecticut, and doubtless with the expectation that they would be so used. They were discounted in that State, and in that act each of them had its legal inception. Inasmuch as the acceptances had no legal existence as contracts until the delivery of them to Beach upon the discounting, and as such delivery must be held to be authorized by the acceptors, the acceptances must be regarded as contracts made in the State of Connecticut, notwithstanding the signatures of the defendants to the acceptances were given in New York. The drafts under the facts proved, were mere waste paper in the hands of the drawer until the delivery to Beach, and in legal effect the acceptances can only be considered a consummated contract by such delivery. The transaction of discount under the laws of Connecticut was a lawful one, so far as the validity of the paper is concerned, for the only effect of reserving more than seven per cent under those laws is a forfeiture of the excessive interest when sued for within a year. The acceptances were, however, payable at the place of business of the defendants in the city of New York, where alone they could lawfully be presented and payment demanded. But it has been held that the mere fact that paper is payable in this State which has been made and discounted in another State, at a rate of interest greater than is allowed by our statute, does not render it void by our laws if Valid by the laws [405] of tbe State where it was made and discounted. (Balme v. Wambough, 38 Barb., 352; Bank of Georgia v. Lewin, 45 id., 340; First National Bank v. Morris, 1 Hun, 680, and cases there cited.) It must be conceded that these cases, impugn the general rule that contracts are to be governed by the law of the place where they are to be performed; but the severe consequences of usury have often been deemed a sufficient,reason for making such exceptions. Under the authorities already cited, we feel ourselves justified in holding that the drafts in suit are contracts governed by the laws of Connecticut, and that the question of usury was properly disposed of by the court below; leaving it for the court of last resort to determine whether Jewell v. Wright disposes of the question adversely to this view. The result is, that the plaintiffs are entitled to judgment upon the verdict, with costs. Ordered accordingly. Ingalls, J., concurred; Brady, J., dissented. Judgment ordered for the plaintiff on the verdict, with costs.