1 Andrews v. Pond, 13 Pet. 65, 77, 78. In this case a bill of exchange was drawn in New York, payable in Alabama, for an antecedent debt, and a discount was made from the bill greater than the interest in either State. Mr. Chief Justice Taney, in delivering the judgment of the court, said: "Another question presented by the exception, and much discussed here, is whether the validity of this contract depends upon the laws of New York or those of Alabama. So far as the mere question of usury is concerned, this question is not very important. There is no stipulation
§ 1487. The foregoing rules, however, only apply to cases where the question of usury arises, or where there is no for interest apparent upon the paper. The ten per cent in controversy is charged as the difference in exchange only, and not for interest and exchange. And if it were otherwise, the interest allowed in New York is seven per cent, and in Alabama eight; and this small difference of one per cent per annum, upon a forbearance of sixty days, could not materially affect the rate of exchange, and could hardly have any influence on the inquiry to be made by the jury. But there are other considerations which make it necessary to decide this question. The laws of New York make void the instrument when tainted with usury; and if this bill is to be governed by the laws of New York, and if the jury should find that it was given upon an usurious consideration, the plaintiff would not be entitled to recover, unless he was a bonā fide holder without notice, and had given for it a valuable consideration; while by the laws of Alabama he would be entitled to recover the principal amount of the debt, without any interest.
"The general principle in relation to contracts made in one place, to be executed in another, is well settled; They are to be governed by the law of the place of performance; and if the interest allowed by the laws of the place of performance is higher than that permitted at the place of contract, the parties may stipulate for the higher interest, without incurring the penalties of usury. And in the case before us, if the defendants had given their note to H. M. Andrews & Co. for the debt then due to them, payable at Mobile in sixty days with eight per cent interest, such a contract would undoubtedly have been valid, and would have been no violation of the laws of New York, although the lawful interest in that State is only seven per cent. And if, in the account adjusted at the time this bill of exchange was given, it had appeared that Alabama interest of eight per cent was taken for the forbearance of sixty days given by the contract, and the transaction was in other respects free from usury, such a reservation of interest would have been valid and obligatory upon the defendants, and would have been no violation of the laws of New York.
"But that is not the question which we are now called to decide. The defendants allege that the contract was not made with 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 to evade the law. Now, if this defence is time, 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 a usurious agreement, which neither will execute ? Unquestionably, it must be the law of the State where the agreement was made, and the instrument taken to secure its performance. A contract of this kind cannot stand on the same princibreach of contract, and the question is, what interest is to be allowed ? There is, however, another class 'of cases where interest is claimed by way of damages upon breach of contract, or by way of compensation for some wrong or injury done to personal property; and in respect to these cases the rule is that interest is to be reckoned according to the place where the contract is made.1 If, therefore, a bill of exchange pies with a bonā fide agreement made in one place to be executed in another. In the last-mentioned cases the agreements were permitted by the lex loci contractus, and will even be enforced there, if the party is found within its jurisdiction. But the same rule cannot be applied to contracts forbidden by its laws and designed to evade them. 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." See, also, Chapman v. Robertson, 6 Paige, 627; Pecks v. Mayo, 14 Vt. 33, previous note; Story, Conflict of Laws, § 307.
1 Story, Conflict of Laws, § 314; Gibbs v. Fremont, 20 Eng. Law& Eq. 558; 9 Exch. 25. In this case Baron Alderson said: "The general rule in all cases like the present is that the lex loci contractus is to govern in the construction of the instrument, but that applies only when the contract is not express; if it is special, it must be construed according to the express terms in which it is framed. Now, a bill drawn on a third person in discharge of a present debt is, in truth, an offer by the drawer that if the payee will give time for payment, he will give an order on his debtor to pay a given sum at a given time and place. The payee agrees to accept this order, and to give the time, with a proviso that if the acceptor does not pay, and he, the payee, or the holder of the bill gives notice to the drawer of that default, the drawer shall pay him the amount specified in the bill, and lawful interest. This is, then, the contract between the parties. If the interest be expressly or by necessary implication specified on the face of the bill, then the interest is governed by the terms of the contract itself; but if not, it seems to follow the rate of interest of the place where the contract is made; so if the mode of performing it be expressly or impliedly specified, as was the case of Rothschild v. Currie. In the case of a bill drawn at A., it prima facie bears interest as a debt at A. would, if nothing else appeared; but if that bill be indorsed at B., the indorser is a new drawer, and it may be a question whether this indorsement is a new drawing of a bill at B. or only a new drawing of the same bill, that is, a bill expressly made at A. In the former case it would carry interest at the rate at B., in the latter at the rate at A.; and on this subject we find a difference of opinion in the books, - Mr. Justice Story, in his Conflict of Laws, § 314, maintaining the former, and Pardessus, Droit du Commerce, art. 1500, maintaining the latter opinion. But this case is a contract at San Francisco, by which the defendant there offers to pay to be made in one State, indorsed in another, and payable in a third, the rate of interest being different in each, and be dishonored, the drawer would be liable for the legal interest of the State in which he drew the bill, and the indorser of the the payee, in discharge of a debt due there, the payment at Washington, by the acceptor thereof, of a given sum. That sum is not paid; the defendant's original liability then revives on notice of dishonor duly given to him, and the defendant has become liable to pay as he was liable at the first. At first he was clearly to have paid the money at San Francisco, and if he did not, he would have been liable to pay interest at the usual rate in California, for a period as long as the debt remained unpaid; and that is the amount which he ought to pay now. This point was expressly ruled in Allen v. Kemble. It was also so ruled in Cougan v Bankes; and this is not to be left to the jury, for it depends on the rule of law. The amount of interest at each place is to be so left; so is the question whether any damage has been sustained by non-payment of interest at all, for these are questions of fact. Here the jury have found interest was due, and that there was damage which ought to be recovered in the shape of interest. They also have found what the usual rate of such interest is at Washington, and what the usual rate of such interest is in California; but which rate is to be adopted by them is, so we think, a question purely of law for the direction of the judge to the jury. We think the direction in this case should have been, that the California rate of interest should be adopted by them, inasmuch as the contract was made in California; and, therefore, this rule must be absolute, to enter the verdict for the plaintiffs, with nineteen per cent additional interest to the six per cent already allowed."