Davis, Brooks & Co. v. William F. Clemson.

acceptors do not pay it at the maturity of the bill, provided payment shall be demanded and a legal protest made, and he shall be duly notified of the same.

There is no expression on the face of this contract, where the money was to be paid. In such an obligation, unless there was something in the negotiation of the instrument to change the effect of it, the place of payment is taken to be the domicil of the person bound. But on such a contract the party is liable wherever he shall be found. Where was the bill in question made and under what law? The plaintiffs who discounted it were citizens of New York, and so were Suydam Sage & Co. The latter were bound to pay the bill at maturity. That it was usurious and void, as to them, will not be controverted. And if this be so, how can a void act create a liability against the defendant, either as an accommodation drawer or indorser. As before shown, until the plaintiffs discounted the bill, it had no binding effect upon the defendant. And if by reason of the usury this discount imposed no obligation to pay on the acceptors, for whose benefit the bill was drawn, can it be binding on his sureties? If an instrument be void for usury as to one, it is so as to all; and any party may set up the defence. Austin v. Tuttle, 12 Barbour 360.

The case of Andrews v. Pondard, 13 Peters 65, arose on the following bill of exchange.

Exchange for $7,287 78.

New York, March 11, 1837. Sixty days after date of this first of exchange, second of same tenor and date unpaid, pay to Messrs. Pond, Converse & Wadsworth, or order, seven thousand, two hundred and eighty-seven dollars, seventy-eight cents, negotiable and payable at the Bank of Mobile, value received, which place to the account of your obedient servant.

Davis, Brooks & Co. v. William F. Clemson.

The bill was indorsed by Carpenter, the drawer, who, as well as the drawees were citizens of Alabama. The bill was drawn to pay a debt admitted to be due to H. M. Andrews & Co., of New York. But the amount stated in the bill, included a prior indebtment with ten per cent on it to cover exchange, and which appeared to have been done, to avoid the Statute of usury.

In their opinion, the Court say, "the defendants allege that the contract was not made in reference to the laws of either state, and was not intended to conform to either. That a rate of interest forbidden by the laws of New York, where the contract was made, was reserved on the debt actually due; and that it was concealed under the name of exchange, in order to evade the law. Now if this defence is true, and shall be so found by the jury, the question is not which law is to govern in executing the contract; but which is to decide the fate of a security taken upon usurious agreement, which neither will execute. Unquestionably, it must be the law of the State where the agreement was made and the int strument taken to secure its performance. A contract of this kind cannot stand on the same principles, with a bona fide agreement made in one place to be executed in another. In such cases the legal consequences of such an agreement, must be decided by the law of the place where the contract was made. If void there, it is void everywhere."

In that case it was argued by Mr. Webster, as the counsel in the case before us have argued, "that the contract is to be governed by the laws of the place where it was to be executed. The contract on the face of this bill of exchange expresses that it was to be executed elsewhere than where it was made. The parties entered into it with a view to its performance at another place. It is a foreign bill and of course is dated in one place, and in one State, and made payable in another."

In that case the usury was included in the body of the bill,

Davis, Brooks & Co. v. William F. Clemson.

but the bill was made payable in Alabama, and all the defendants were citizens of that state. It was an Alabama contract, in a much stronger point of view, than the one before us was an Ohio contract. The effect of usury in New York was to avoid the instrument; in Alabama, the interest only was avoided.

In the case under consideration, the bill, as between the parties was as blank paper, until it was negotiated to the plaintiffs on an usurious consideration. Could the plaintiffs sue the acceptors, who were and are citizens of New York? This will not be contended. They were citizens of New York, and acted under the laws of New York. They were the principals in the transaction, and the usury releases them from all liability on the bill.

Admit, that the imperfect bill was forwarded to the acceptors by the defendant to be filled up by them; to bind him must they not act in good faith; and must not the party who discounts the bill, act in good faith? Can the plaintiffs complain that they should be governed by the laws of their own State? In the defence, it is averred that they had notice, that the defendant was an accommodation drawer and indorser. He, therefore, can only be made responsible on strict principles of law.

If the bill had been a valid instrument, as between the parties to it; if an action could have been sustained against the acceptor by the drawer for non-payment, at maturity, and it had been negotiated bona fide, it is admitted, (the bill having been signed and indorsed in Ohio, from which facts the legal liability arises, on the failure of payment by the acceptors, so far as the defendant is concerned), it would have been an Ohio contract. But it is denied that any liability against the defendant can arise, he being an accommodation drawer and indorser, on an usurious negotiation of the bill, in the hands of the person who thus obtained it. It is void by the act under which it was negotiated. Not void in part,

but in whole.

Sylvanus Lathrop v. William Stewart.

Void not only as against the acceptors, for whose benefit it was negotiated, but also as against the accommodation drawer and indorser.

If the facts alleged in the pleas shall not be established before a jury, the rulings now made, will not apply. Demurrer overruled.

SYLVANUS LATHROP v. WILLIAM STEWART.

Where a record is introduced collaterally as evidence, from a Court of general jurisdiction, and where, from the face of the record, it appeared the Court had jurisdiction, no evidence will be heard, to contradict the record.

A plea of fraud, generally, is not sufficient to admit of evidence in a bankrupt case, where the bankrupt had been engaged in an extensive commercial business.

The bankrupt, in such a case, is entitled to notice of the acts which are alleged to be fraudulent.

Mr. Peck, for plaintiff.

Mr. Fox, for defendant.

OPINION OF THE COURT.

This action is founded upon four bills of exchange, one for five thousand dollars, payable to plaintiff and accepted by defendant; a second for two thousand dollars, drawn by defendant on Shannon, indorsed by Church, Lathrop and Stockton; a third drawn by defendant and indorsed as above; and a fourth drawn and indorsed as the third bill.

The defendant pleaded a discharge under the bankrupt law.

The plaintiff replied, that the Court had no jurisdiction, as the bankrupt was neither a citizen or resident at Mobile, in Alabama, where the discharge was obtained. Issue joined on the replication.

Zabulon Parker v. Thomas Bamker.

The Court held that under this issue, parol evidence could not be received to contradict the record. The bankrupt Court had general jurisdiction in bankruptcy. On the face of the record, the Court appears to have had jurisdiction of the case; and as the record is introduced collaterally, it could not be impeached.

Evidence was then offered to show the accounts of the bankrupt, and his general dealing with his creditors. But the Court held that in this case a general plea of fraud was insufficient. That the specific acts which are alleged to be fraudulent must be stated, to give notice to the bankrupt, that he may be prepared to meet them. That without such notice, in a case so complicated as a bankruptcy must be, where the bankrupt had been engaged in a large commercial business, he could not be expected to be prepared to meet the fraud, unless reasonable notice of the facts relied upon to show it, were given.

The counsel for the defendant admitted, that the ground on which he principally relied to show fraud, involved the jurisdiction of the court. The Court, in order to admit the plea to be filed, discharged the jury and gave leave to the plaintiff to amend his pleadings. But as amended pleadings were not filed, at the close of the term, the Court entered a judgment of nonsuit, with leave for the defendant, at the ensuing regular term, to move to set it aside.

ZABULON PARKER v. THOMAS BAMKER.

When no answer is made to an alleged infringement of a patent, the charge is admitted.

One-fourth of the proceeds being estimated as the profits of the mill, the damages were estimated at that amount.

Mr. Stanbery for plaintiff.