Austin v. Imus

The opinion of the court was delivered by Kellogg, J. The questions arising in the case relate to the rate of interest to be allowed upon the notes described in the mortgage deed, and to the manner of computing the interest. The notes in question were executed at Moriah, in the state of New York, where the maker then resided, and were given for the farm embraced in the mortgage. They were made payable to Wellington, (who then resided upon the farm,) or bearer, and without designating any particular place of payment. And the question arises, is the holder of the notes entitled to seven per cent, interest, — the rate allowed by the laws of New York, where the notes were made, — or to six per cent., — the rate of interest allowed by the laws of the state, where the consideration for the notes was situated and where the payee then resided. It is well settled, as a general rule, that the lex loci contractus must govern the rate of interest, where the contract does not provide for its performance in another jurisdiction, or where the contract has nothing upon its face, and there is nothing in the circumstances attending the making of the contract, indicating that it is to be performed in another jurisdiction. It is equally well settled, that where the contract provides for its performance in another jurisdiction, the [290] rate of interest will be controlled by the laws of the latter place; and, as between the immediate parties to the contract, if there are any circumstances attending the transaction, which render it reasonably certain, that the parties, at the time, contemplated its performance in a different jurisdiction from the one where the contract was made, the rate of interest will be regulated by the laws of the place, where the parties expected and intended it should be performed. But it is said, that the plaintiff cannot be affected by any circumstances, (if such exist,) indicating the understanding of the parties, that the contract was to be performed at a place other than the one where it was made, inasmuch as this does not appear upon the face of the contract, and it being negotiable paper, taken by the plaintiff in the ordinary course of business, and without knowledge of such understanding. This proposition is certainly entitled to consideration, and we are not prepared to say, it is not sound, when applied to a case of the purchase of negotiable paper, while current, and before it comes to maturity. In such case, there would seem to be great propriety in sustaining the proposition. But it does not, as we think, become necessary to decide that point in disposing of the case. It is deemed a sufficient answer to the ground thus assumed by the plaintiff, that the notes, when he purchased them, were not current, but were overdue from two to four years, — as appears by the deed of assignment. Consequently, the plaintiff took them subject to all equities, and the defendant may avail himself of the matter relied upon, the same as if the suit were in the name of Wellington, the payee. The inquiry then arises, do the facts and circumstances disclosed-in the case justify the conclusion, that the parties, at the- time the contract was executed, had in contemplation its performance in this state? It is open to remark, that the notes in question contain a singular and unusual expression, calculated to attract the attention of those who should see them. Instead of their being written in the usual form, they read thus, — “For value received in Moriah,” &c. What the design was, in drawing the notes in this peculiar manner, does not appear, nor is it,, perhaps, important to determine. It was calculated to attract attention, but does not affect the validity of the notes. It will be borne in mind, that the land, the conveyance of [291] which formed the consideration of the notes, was situated in this state, that Wellington, the payee, then resided upon the farm, and, from the reservations cdntained in the deed, reserving to himself one half the house and half the fruit for three years, and the farther fact, which appears, that he and his family did reside there one year after the sale, we think it quite evident, that the parties, at the time of the contract, contemplated- that Wellington would continue to reside in the house the entire three years, during which time all the notes would fall due. Upon these facts we can hardly entertain a doubt, that at the making of the contract the parties contemplated and understood, that its performance was to be in Vermont. Such, we think, was the intention of the parties. Consequently, the interest upon the notes should be cast at six per cent, in conformity to the law of this state. A farther question is made, as to iYm'manner in which the interest upon two of the notes should he cast, — they being payable with annual interest. It is not claimed, that there is any difference between “ annual interest” and interest annually. There is no legal distinction. Both mean the same thing. They entitle the party to have his interest computed in conformity to the rule laid down in ] Aik. 410. It is, however, insisted, that by that rule the computation of annual interest must be limited to the time, when the contract falls due. Such is not the construction put upon the rule by this court. In Dunshee v. Parmelee, 19 Vt. 172, this question was before the court, upon a computation of interest precisely like the one adopted by the county court in this case; and although the point was not decided, (though noted upon the briefs of counsel,) for the reason that it was not argued, the court express no disapprobation of the rule; but the computation was in conformity to long established usage. Such we believe to have been the construction generally put upon the rule in Aikens, and it seems to us to be the correct construction. “ Interest upon a contract for the payment of interest annually is to be cast upon that interest after the same falls due, up to the time of payment.” Up to the time of payment, as here used, means the time when the contract is actually paid. It is not to be limited to the time, when the contract falls due. The computation of the annual [292] interest having been- made by the court below in conformity to this, it is satisfactory. The judgment of the county court, directing the interest upon the notes to be cast at seven per cent., is reversed, and the interest will be cast upon all the notes at six per cent., and interest upon the annual interest up to the time of the decree, and judgment entered for the amount, according to the agreement of the parties.