5 N.Y. 134 | NY | 1859
The action was brought upon a promissory note for $2,500, made by one of the defendants, and indorsed by the other, at the city of Buffalo, payable in the city of New York hi seventy-live days from its date. The note was discounted at the plaintiff’s bank in Buffalo for the benefit of the maker; the other defendant having indorsed for his accommodation. The defendants, in their answer, set forth and they offered to prove on the trial that, when the note was discounted, the exchange between the cities of New York and Buffalo was, and had been for a long time previous, one-half of one per cent in favor of the former place, and that both the parties expected and believed it would continue so to be until the maturity of the obligation; that both the maker and indorser resided at Buffalo; that they had no funds or business in New York; that they had no expectation of funds there to meet the note when due, except as they should provide the same at Buffalo for the particular purpose of paying the note; that these facts were known to the plaintiff’s bank; and, finally, that the transaction was entered into with the design and for the purpose, entertained by both parties, of enabling the bank to realize, in addition to the legal rate of discount, the one-half per cent exchange on the sum of $2,500. I have stated the allegations and the offer of proof, according to their substance and effect; and I am of opinion that if usury can be predicated of any obligation to pay money, made at one place and payable at another, both within this State, on account or by reason of the rate of exchange between the two places, the evidence should have been received; and if the facts had been proved according to the offer, then that the jury should have been directed to find their verdict for the defendants. The question, therefore, is, whether usury can be alleged in respect to such contracts.
A brief consideration of the subjects of exchange and reexchange, and of the damages to be recovered by suit at law on the dishonor of bills and notes, will, in the first place, be proper. In regard to bills of exchange, the undertaking of every drawer and indorser is, that the bill shall be paid at the time
It can scarcely be said, however, that these doctrines form a part of the law merchant in regard to promissory notes and commercial balances of account, although due and payable .in a State or country different from that where the debtor
This particular point need not be determined, because whatever may be the rule in regard to notes and balances due out of the State or sovereignty where the debtor resides, there is no such question in reference to inland or domestic obligations of any description. In respect to these there is not the slightest trace in the commercial law of any rule which allows to the creditor more than the face of his debt, at the par of exchange, with interest and the expenses of protest, &c. Whether it be a bill of exchange,' a promissory" note, or any other form of obligation, the rule of damages is the same, excluding from consideration in all cases the rate or difference of exchange between places in the same State. This distinction between foreign and.domestic bills, extending also, according to some authorities, to promissory notes and other debts, is founded on a difference in the circumstances. The exchange between different countries is affected by the comparative weight and purity of the coin in each. It is also liable to sudden and considerable fluctuations, in consequence of the revulsions in foreign trade and commerce; and it is more or less influenced by political and other events, which can have little or no effect upon the course of trade and exchange between different points
. In the light of these principles, the question of usury involved in the present -case is capable, I think, of a clear and satisfactory determination. The note in controversy was made and indorsed by residents of this State, and was payable within this State. It was strictly an inland, or domestic obligation. If the note had been paid at maturity in the city of New York, and the .rate of exchange had continued to be one-half of one ■per cent in favor of that place, the bank at Buffalo, which discounted and still owned it, would have realized an advantage to that extent, because the fund in New York could have been sold at Buffalo, by a draft- thereon, at a corresponding premium. Such would have been the practical result, if the maker of the note had paid it at the place specified, .when, it became due. But there is nothing in the law of the contract which secured that result, because the rule of damages, in an action brought upon the dishonor of the note, allows no indemnity for the loss of exchange. The extent of the obligation is to be ascertained according to that rule only. The law knows no- other mode of ascertaining it. At any time after the protest , of the note, the maker could tender to his creditor 'at Buffalo the sum.expressed in it, with interest, and the usual expenses, -in full discharge of the contract. The holder could demand nothing in addition for his loss in- not having the funds
This construction of the contract, which is, confessedly, the true one, can only be founded on the proposition that a given sum of money is of the same legal or theoretical value in all parts of this State. By the Constitution of the TJMted States, gold and silver only can be lawfully tendered in payment of debts; and as the same amount of coin will discharge the debt everywhere, the judgment of the law must be, that it is everywhere of the same value, although, in actual dealing, a rate of exchange may occur between different places. And if the law will not discriminate between the values at one place or another, in constrmng the contract, it seems to me a plain conclusion, that it cannot thus make the discrimination for the purpose of avoiding the contract altogether. A promissory note may be given for money lent or for goods purchased, payable at a place within the State to which the rate of exchange is favorable. In either case, the construction and effect of the instrument are the same. The measure of damages, and the legal extent of the obligation, are the face of the note and lawful interest. In the one case, no question of usury can arise, because there is no loan of money. In the other, there is no usury, because, in judgment of law, there is no agreement to pay more than the legal interest.
These conclusions may appear still more evident when we consider that a debtor, wherever he may reside within the State, can be compelled to pay the debt at the par of exchange in any city or county of the State where he may happen to have real or personal estate. The judgments of the courts for the recovery of debts are of the same force and effect everywhere, and execution may go to any county where property can be found. Thus, in this very case, the debtors may have real or personal estate in the city of Mew York liable to execu
These and other similar illustrations which might be suggested, tend, I think, greatly to strengthen the conclusion that the law does not, for any purpose affecting the construction or validity of the contract, acknowledge a difference in the value of money at different points within the territory of the State. They certainly show that the law itself, under a great variety of conditions, will produce the very results, which, being contemplated in the contract, are said to impart the taint of usury. A note made in the country and payable in the city, is said to be void for usury, when the exchange is in favor of the latter.
No one has ever supposed that contracts like the one in question were usurious, where the borrower expected funds at the place of payment arising in the course of his own business (for example, out of a consignment of property) in order to meet his obligation. ■ But the distinction between such a case and one like the present rests upon no solid foundation. In both instances, the gain to the creditor, and the loss to the debtor, if any, are precisely the same.
If there be a course of exchange in favor of the place of payment, the debtor’s funds at that place are worth a premium at the place of the contract. If he gives them to the creditor in discharge of the obligation, it would seem to be plain that the lender gains, while the borrower loses, the amount of such premium. But if we hold such transactions to be infected with usury, we unsettle the very foundations of business and credit. No one is prepared for such results; and yet there is no way of avoiding them, and at the same time of maintaining a consistent rule of law, unless we hold that the place, as well as the time, of payment may be agreed on between the parties, without bringing the validity of the contract into question and doubt.
The cases cited to sustain the defence do not conflict with these views. In The Seneca County Bank v. Schermerhorn (1 Denio, 133), the note was payable at the country bank where it was discounted. No question like the present could, therefore, arise. The usury consisted in requiring the maker to
Upon the whole, we are of opinion that the facts alleged in the answer had no tendency to establish the defence of usury, and, therefore, that the evidence was properly excluded.
The judgment must be affirmed.
The statute of usury declares that all notes, bonds, &c., whereupon or whereby there shall be reserved or taken any greater sum or greater value for the loan or forbearance of money than at the rate of seven per cent, shall be void. That is, if by the contract of the parties the borrower shall be compelled to pay, if he performs his contract,.
In the present case there was no deduction of any rate of exchange, but the note was discounted at the usual rate of interest taken in advance, and which was deemed to be lawful in the case of Marvine v. Hymers (2 Kern., 230). It is true the defendants resided at Buffalo at the time of the discount, and that the note was made payable in Hew York, not for their particular accommodation; nor does it seem to have been insisted upon by the plaintiff, that it should be so made payable as a condition of its being discounted. It was due seventy-five days after its date; and when discounted, the difference of exchange was one-half of one per cent in favor of the city of Hew York. But it did not follow, to a legal certainty, that such difference would exist when the note matured; though, “ from our knowledge of the course of
I think the decision of this court in Marvine v. Hymers) already cited, disposes of this case, and that it is unnecessary to pursue the inquiry further.
It was urged, that the question of usury was one of intent, to be derived from the facts, and that this was a question for the jury. It does not appear, upon the bill of exceptions, that the defendants insisted upon going to the jury upon the question of intent, nor that they specifically excepted to any decision of the court excluding them from the jury on that ground.
But conceding the point to be well presented by the bill, there was no question of fact on which an intent or device to avoid the statute could be inferred. Before the question of intent is arrived at, to be submitted to the jury, a contract must be proved from which it may be inferred. It has been shown that there was nothing upon the face of the note secur
. It was argued, that if the plaintiff was permitted to recover in this case, every country bank might, and probably would, require all notes presented to them for discount to be payable in the city of ¡New York, or wherever the rate of exchange would seem to favor the lender. We are not here to decide upon probabilities, or to speculate upon views which may be taken of future supposed cases. We take the present one as we find it, and discuss the question, and that only, which the facts present us. If the law is not broad enough in its provisions to correct all the evils which may be imagined to exist, the remedy is with, the Legislature, and not with the courts.
Selden and Gray, Js., dissented; all the other judges concurring,
Judgment affirmed.