Arrington v. Gee, 27 N.C. 590, 5 Ired. 590 (1845)

June 1845 · Supreme Court of North Carolina
27 N.C. 590, 5 Ired. 590


'The rule, as to interest payable on debts, is regulated by tSie law of the country in which the contract is made, the law presuming that the contract is to her executed there, unless the parties stipulate otherwise.

And this stipulation, to take the case eut of the -general rule, must appear o« the face of the contract.

' A contract, payable generally, naming no place of payment, is to be taken to be payable at the place of contracting the debt, and not where the domi-cil of the creditor may be.

A bond, taken simply to secure the performance of a contract, wherever it may be executed, must bear the same interest as the original contract, unless it be otherwise expressed on the face of the bond.

When. A., a citizen of North Carolina, took a number of slaves to Alabama, and there sold them to B. a citizen of Alabama, who was to give him a bond with sureties for the price of the slaves, and this bond Was executed by B. at Mobile, (Alabama) where it bore date, and afterwards brought to North Carolina and here executed by two sureties, citizens of North Carolina, the bond not expressing any place of payment: Held., that the sureties, as well as the principal, were bound for the payment of interest according’ to the laws of Alabama.

' *The case of McQueen v. Bums, 1 Hawks 478, cited and approved'.

Appeal from the Superior Court of Law of Nash County at the Spring Term, 1845, his Honor Judge Dick presiding.

*591This was an action of debt upon a bond in the, following words and figures, to wit:

Mobile, January 6th, 1837.

$ 12,000. Twenty-four months after date, we or either of us, promise to pay to Archibald H. Arrington or bearer, twelve thousand dollars, for value received.

CHAS. J. GEE, Seal.


STER. H. GEE, Seal.

The only question was, as to the rate of interest this bond should bear. The following facts were agreed upon. The obligee, A. H. Arrington, then and now a resident of this State in the year took to the State of Alabama, many slaves, and sold them there to the first named obligor, Charles J. Gee, for the sum of $ 24,000, one-half of which was paid in cash, and for the residue of the purchase money he gave the bond, agreeing at the same time to give for his sureties the other two obligors, both of whom reside in this State, and their residences were well known to the obligee Arrington. The slaves were delivered, and the bond written and signed by Charles J. Gee in Alabama, and delivered to the obligee, Arrington, who brought it to this State, where the other obligors executed it as sureties of Charles J. Gee, upon the facts aforesaid being represented to them. The rate of interest fixed and allowed by the law of Alabama, upon contracts after they become due, is 8 per cent. The defendant’s counsel prayed the Court to instruct the jury, that, there being no place of payment designated by the terms of the bond, it was, in law, to be paid where the obligee resided, and therefore bore but six per cent interest. The Court refused to give this instruction, but charged the jury, that, from the face of the bond, and the facts agreed, the plaintiff was entitled to interest on the bond according to the laws of Alabama. The jury rendered a verdict for the plaintiff allowing Alabama interest, and from the judgment thereon the defendants appealed.

B. F. Moore for the plaintiff.

*5921. The contract was made in Alabama. Clearly, it was as to the whole subiect matter thereof and as to the principal. J 11

The signing of the sureties is but a part of the contract, and, when completed, refers back to the time and place of contract. Story’s Confl. Laws, 279 & 286.

If this be not so, then there are two contracts by the same instrument and deducible from one and the same language— And if this be not so, something still more absurd, to wit, the governing the contract of the principal debtor by that of the surety, when the latter has undertaken expressly to secure the contract of the former.

Inconvenience of any other rule, as where several sureties reside in different States having different rates of interest, and different customs affecting contracts. If the interest here was' 10 per cent, would the sureties be bound for that interest, and ■the principal for 8.per cent.

2. If the contract was made in Alabama, it is governedal-together by the laws of Alabama, unless performance is to bo elsewhere. Story’s Confl. of Laws, 240, 263, 271.

In all cases where the language is not directly expressive of the actual intention of the parties, but is to be tacitly inferred. Note dated in Dublin and sued in England, and payable in pounds, is payable in Irish pounds. Story’s Confl. of Laws, 272.

If two contract in another country, the lex loci governs, unless there be a clear intention to the contrary. Story’s Confl. of Laws, 273.

Contract between foreigner and natives, in the country of the latter, is governed by the laws of the natives. Story’s Confl. of Laws, 274, 276, 278, 279. ' '

3. If performance is to be elsewhere, the contract is to be governed by the laws of the place of performance. But performance is to be niade at the place of contract, where no other place is expressly stipulated, or where the contract is payable any where. Story’s Confl. of Laws, 282 and note 3, 283, 272,317 and note 3. 2 Hay. 5.

4. Forbearance of money due is like a loan of money, *593and such advances, where no place is designated, are reimbursable at the place of advance. Story’s Confl. of Laws, 2S4, 287. Winthrop v. Carleton, 12 Biass. Rep. 4.

5. When foreign security is taken, it does not alter the locality of tile contract, with regard to interest. Story’s Confl. of Laws, 2S7, 288, 289, 290, 291 and note, and note top. 243, 293, 293c and note. 2 Foublaque Eq. 659, note at bottom •of page. C. Cond. Rep. Supreme Court, p. 146. De Wolf v. Johnson, same case, 10 Wheat.'383.

0. When there is no express contract for interest, and it is. •implied, it is payable when the principal is, and governed by the law of place of performance. Story’s Confl. of Laws, 295, 296, which before is shewn to be the place of contract.

Badger, Whitaker & Busbee for the defendants.

Ruffin, C. J.

The Court is of opinion, that there was no -error in refusing the instructions prayed by-the defendant’s counsel, or in those which his Honor gave to the jury. The contract of sale, from which the bond sued on had its origin, was made and completed in Alabama; and the money, which -the purchaser engaged to pay to the seller, would, if not paid when due, thereafter bear interest at the rate ,of 8 per cent ;1 it not being stipulated by the parties, that the payment should be in any other place. 'For it is an undoubted principle of law, that, not only the validity of a contract depends on the ■lex loci contractus, but its effects, including the right of the creditor to interest aud its amount, depend also on it. The only question in this case, then, is, which is \he locus contract-us, so as to apply to this transaction the above mentioned principle. We think clearly, that it is Alabama. Beyond question that is true of the original contract, namely, that of the purchase, sale and delivery of the negroes. And “ the rate of interest which the debtor should pay is a part of that ■contract” so that taking a new security here, expressing that the rate of interest should be at 8 per cent, or including therein 8 per cent, for interest accrued, (unless it be a new contract for further forbearance granted here,) would not be in. viola*594tion of our law, but would be valid. McQueen v. Burns, 1 Hawks 476. Such is even the case, when a loan is made in one country, and a subsequent collateral security is taken on Real Estate in another. De Wolf v. Johnson, 10 Wheat. 367. Much more must that be true, when the security taken in a foreign place is merely personal. For the original contract obliged the debtor to pay a particular rate of interest, and the new security is merely the means of more readily enforcing the performance of that obligation. If then, Charles J. Gee, the principal debtor, had executed his note for this debt in this State, that would not have altered the rate of interest, provided the note should become payable, when the debt would fall due according to the original contract, and did not designate some other place of payment: in other words, if the note was but a security merely for the pre-existing debt, and in no respect changed its character.

But, in truth, this security by bond, was given by him in Alabama, as well as the debt originally contracted there; and 1 the bond is dated at Mobile and specifies no other place of performance. Now, although it be true, that the rule of the lex loci contractus, before stated, is subject to the modification, that it must yield to the lex loci in quo solveret; yet that is so only in those cases in which it appears from the contract, that the performance is to be at some other place. For, when a contract states that the parties had in view the law of another country, when they made it, then it is but right to say, that the contract should be governed by the law the parties thus appear to have intended, rather than by that of the loci con-tractus. Thus, notes, made and dated in Dubiin for £ 100 mean Irish and not English currency, unless they be payable on the face in England ; in which latter case, the money would be English. Kearney v. King, 2 Barn. & Ald. 301.—Sprowle v. Legge, 1 Boon & Cres. 16. Dow v. Lippman, 5 Clark & Fin. 1. For debts have no situs and are payable every where, including the locus contractus ; and, therefore, the law of that place shall govern, since it does not appear from-the contract, that the parties contemplated the law of *595any other place. There cannot be any other rule, but that of the place of the origin of the debt, unless it be that where the creditor may be found; since the debtor must find the credit- or for the purpose of making payment. But, manifestly, this last can never be adopted, because it would vary with every change of domicil or residence of the creditor. Then, as was observed by Lord Brougham in Dow v. Lippman, a contract, payable generally, naming no place of payment, is to betaken to be payable at the place of contracting the debt, asii st was expressed to be there payable. Being payable every where, the rate of interest must be determined by the law of thé origin, since there is nothing else to give a rule.

That being so, certainly Charles J. Gee is bound for Alabama interest. As to him, the contract is to-to be construed as if it said upon its face, this debt shall bear 8 per cent, interest, if not paid when due, the contract being made in Alabama, and the money to be paid there. If he was sued on it in Alabama or here, there could be no hesitation in giving that rate of interest against him. Does it not follow, that the other parties to the bond are liable for the same sum ? We are to suppose that, as to Charles J. Gee, the bond expressed that it was payable at Mobile. When the others executed it, can it be also supposed, that they insisted, that, as to them, the bond should be payable in North Carolina? Certainly not; for to say nothing more, it cannot be presumed, that the same debt is payable at two different places, unless it be so expressed.— it is said, indeed, that, as in our law the .contract is several, it is the same thing, as if these parties had given distinct notes in this State for the debt. But it is to be recollected, that the bond is also joint; and therefore, that, all three of the obligors obliged themselves jointly to do the same thing, that is to say, to pay a certain sum of money; and the only question is, whether we are to understand them as contracting to pay that sum at one and the same place. For, if we are so to understand, there can be no doubt from what has been already said,, that place is Mobile; and then, according to the rule, that the interest is to be regulated by the law of the place of perform-*596anee, the bond would bear Alabama interest. There would have been nothing: unlawful in taking: a bond in this State for . ° ° . that interest, as we have before seen, as it would be merely a supplemental security for,a previous lawful contract. Now, it is impossible to suppose these defendants could have contemplated the payment being made here by them, and not at Mobile by the principal. The very statement of the case is, that they executed the bond, as the sureties of Charles J. Gee -t and in the nature of things, therefore, they expected to be only secondarily liable, and they were to be liable for what the principal had bound himself. If that were not so, it would lead to endless confusion. For, suppose a principal in Alabama and three sureties, one living and executing the bond in Louisiana, one in North Carolina, and one in New York, would there be four distinct contracts, as to the rate of interest? It would be absurd to hold so. In reality, the contract of the sureties, in reference to the question under consideration, is one of guaranty of the performance of his contract by their principal; and therefore each surety, no matter where he lives, must be liable for precisely thp same sum, which is that for which the principal is liable. Neither more nor less.

From what has been said, it follows, that his Honor was right in deciding the question, as a matter of law, and not leaving it to the jury, as a question of intention of the parties, as to the rate of interest; for the rate depended upon the question, what law governed the case, and that was a question for the Court and not the jury. The intention of the parties cap never be material in cases of this sort, except where contracts are made in one country, and securities there taken mala fide, and expressed to be performed in another, with the purpose of evading the lex loci contraetus ; as if parties, in fraud of the law and to cloak usury, upon a loan in this State take,- as a security, a bill of exchange on another State in the expectation that it will be protested, so as to accumulate interest under the name of damages, or under the pretence of a difference in exchange; then the jury must find the intention in order to apply the law to that shift and device- But here the *597 bona fides is not questioned, and the only dispute, what is the legal rate of interest on this contract; which, of course, was for the court.

PeR Cukiari, Judgment affirmed.