to this property, in undertaking to cover it with this mortgage, of these laws, as well as of the facts he had reasonable cause. t(} that bri,ng the conveyance which he took within their opera,tion. Being charged with knowledge of the,facts, he is to be presumed to know thE' laws applicable to them. , The point is made in the that this law of Vermont is con· trary,t9 tbat provision of the constitution of the United States which prohibits any state from making any law impairing the obligation of contracts. This law does not,however, impair the obligation ;of any cOntract. It regulates conveYllnces, which it does not seem to be doubtfulthatany may do, as tp any property within its jurisdiction, notwithstapding clause the constitution of the United States. be a decree that this mortgage is void as to the defendant Carney, as assignee of Haines, aJ;ld that the bill be dismissed as to him, with costs.
AMERICAN FINANCE Co. and others.
(Oircuit Oowrt, 8. D. New York. May 11,1887.)
The law of the place,;wbere the contract is made, not that of the place of performance of the contract, is the law which determines whether the con· tract is void for illegality.
2. SAME-CONFLICT OF LAWS. lfthe contract is sanctioned by the law of the state in which it is made, and is not immoral, the courts of another state will treat it as lawful, although the laws of that state prohibit such a :lontract.
SAME-USURIOUS CONTRACT-PLACE OF MAKING.
A contract was made in the state of Rhode Island, and promissory notes were given thereunder and negotiated in thEj same state. The notes purported to be made at New York, were payable there, and New York was the place for substantial performance of the contract. The maker of the notes subsequently alleged usury in the transaction" and filed a bill on this ground for a surrender and cancellation of the contract and notes. Held, that the same being:valid and free from usury in Rhode Island, where they were made, the comDlainant waS not entitled to the relief prayed for.
Burton N. Harrison, for complainant. Robert I;udlow Fowler, for defendants.
W ALJ.ACE, J. The relief(sought by the bill is, among other things, (1) the cancellation of a contract of the date of April 14, 1884, entered Finance into hetween the complainant and the defendant the Company, or that the agreement be reformed; (2) that an agreement of the date ,of September 24, 1884, between the complainant, party of the first part, the defendant .the American Finance Company, party of the second part, and the defendants MaI;lon and Jillson, parties of the third usurious ,and void, and surrendered up for canpart, be adjudged to cellation; (3) that certain notes, executed by the complainant pursuant
BROWN V. AMERICAN FINANCE CO.
to the agreement last mentioned, be adjudged usurious and void, and surrendered for cancellation; (4) that the defendants be restrained from .selling or negotiating certain railway mortgage bonds received as a pledge .to secure the payment of the notes, and be decreed to deliver the same to the complainant. A motion has been made to restrain the defendants pendente lite from "Ioing any of the acts which are sought to be permanently enjoined by the prayer of the bill. Since the motion was heard, an adjustment has been made between the parties, except as between the complainant and the defendant the American Finance Company, with the result, as stated in the brief of counsel, to narrow the original matters of the bill to a controversy between complainant and the finance company, in respect to one note for $10,000, and 102 bonds for $1,000 each. The defendant derives title to the note and to 22 of the bonds in question from Mason and Jillson, who acquired the same from the complainant to secure the payment of the loan contemplated by the agreement of September 24, 1884. Its title to the remaining 80 bonds is derived by the same agreement, but not from Mason and Jillson. The agreement of September 24, 1884, known as the "tripartite" ltgreement, was intended by the parties to be in further performance of the agreement of April 14,1884. It is idle for·either party to assert mistake or misrepresentation as a ground for assailing the rights of the other under either agreement, upon any facts which have thus -far been made to appear. Those who entered into these agreements were shrewd l-,usiness mep, speculators on both sides, who did not cOlllmit themselves without a full understanding of the situation. By these agreements the complainant was recognized as the beneficial owner of all the bonds and stock of the Toledo & Indianapolis Railway Company not appropriated as a bonus by Mason and Jillson, or as commissions by the finance company, and. became entitled to a corresponding amount of the securities of the new corporation which the parties contemplated organizing. Whether under the tripartite agreement the finance company was to be treated as the absolute owner of $80,000 of the bonds in satisfaction of any claim it might be entitled to make growing out of the first contract, or whether it was to hold these bonds until it should negotiate the bonds of the complainant at not less than 90 cents on the dollar under the conditions of that agreement, and then have absolute title, would not be altogether clear, were it not for the letter of the president of the finance company to complainant of the date of September 16, 1884. In view of that letter, it seems reasonably plain that it was the understanding of the as expressed in the tripartite agreement, that the finance company should acquire the absolute title to the bonds in consideration of servIces already performed. This conclusion disposes of the controversy, so far as it relates to 80 of the bonds. The finance company has no title to the remaining 22 bonds, if the note made by the complainant pursuant to the scheme of the tripartite agreement is void for usury. Twenty of the bonds were acquired by Mason and Jillson as a pledg) to secure payment of the note, and the
518 , . other 2 were "appropriated"'as a'bonus for the loan evidenced by the note. The noteipurports to be ina.de at New York, is dated September 24, 1884; is signed by,thecomplainant, and reads as follows: "On or befure September 24, '1.886. and upon the return of securities pledged, I promise to pay to my own order, at the office of the American Loan & Trust Company, Ne,w York, ten thousand dollars, for value received, with interest at the rate ofsbe per cent. per annum.from date, having deposited with the holder therElof, as collateral security, twenty first-mortgage bonds, 'of the Toledo &i Indianapolis Railway Company, for 1,000 each, with coupons for 'April 1, 1885, with authority to sell the same, or other securities subsequently substituted at the board of brokers, or at publid 'or private sale,'at holder's option, on the non-performance of this promise, and without further notice; applyinK the net proceeds to the payment of this note, including interest, !lnd aC(',(lunting ·to me for the surplUS, iiany.In case of deficiency, the maker promises to pay to tIle holders thereof the amount thereof forthwith after such sale, with legal interest." ,t; On the twenty-fourth day of September, 1884, the plaintiffsigned and delivered to the president of the finance company, at Providence, Rhode Island, a number of notes of the same tenor, for the aggregate amount of $325,000.! ,. This note was one of the series. They were made to secure the payment of a loan to that amount which Mason and Jillson had consented to make to the complainant upon the conditions expressed in the tripartite agreement. By that ag'reement Mason and Jillson promised to loan $325,000 to complainant upon his notes, to be made in form approved by them, with mortgage bonds of the Toledo & Indianapolis Railway Company in double the amount as collateral. For making the loan they were to receive a large bonus in excess of interest at the rate of 6 per cent. per annum. The negotiations leading to the,contract were closed at Providence, Rhode Island, that being the domicile of Mason and Jillson,and the contract was formally executed there. After the contract was signed, the notes were delivered there by plaintiff to Mason and Jillson. The bonds to be put up as collateral were not delivered. It was understood between the parties that the complainant did not then have the bonds, but that they were to be acquired subsequently, and that the money to be loaned by Mason and Jillson was to be remitted by them to the finance company in New York city, to be used by that company for the purpose of acquiring the bonds. The bonds at that time were in the hands of variouseorporations and individuals, who had supplied matel"ials for furnishing and equipping the railway which had been recently constrncted by the Toledo & Indianapolis Railway Company. One Dowling had been the contractor for building the railway, and under his contract with the railway company' became entitled to all the bonds ($800,000 in amount) and capital stock of the railway company upon payment of the claims ofihose to whom the bonds had been pledged. The complainant had acquired Dowling's rights, and had applied to the finance company to assist him in raising, money to pay up the claims of those to whom the bonds were pledged, and the other claims against' the railway company, his intention being to acquire all the capital stock' and mortgage bonds of the railway company, and to