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Argument for the Equitable Trust Co.

sonally liable to the lender for any loss sustained through defective title or overvaluation of the security, and the court found he was the agent of the lender and his taking a commission from the borrower in excess of the legal rate rendered the contract usurious. But in Iloyt v. Pawtucket Institution for Savings, 110 Illinois, on page 394, it is expressly said that Payne v. Newcomb was not intended to decide that a broker loaning the money of others, could not take a commission from the borrower without rendering the loan usurious. See also Kihlholz v. Wolf, 103 Illinois, 362; Meers v. Stevens, 106 Illinois, 549; McGovern v. Union Mutual Insurance Co., 109 Illinois, 151.

Hoyt v. Pawtucket Institution for Savings, 110 Illinois, 390. Taylor was a loan broker in Chicago. Hoyt made application to the Institution for Savings for a loan of $5000 at 10 per cent, which being forwarded by Taylor to the Institution, at its residence in Rhode Island, was there accepted, and the loan was paid by the Institution, (less $250, one half-year's interest, deducted in advance,) by a draft to the order of Hoyt himself. Taylor charged Hoyt $250 for commissions for securing the loan, which was paid. This commission, and the agreement therefor, was without the knowledge of the lender, and the Institution got no part thereof, and received no more than 10 per cent on the money loaned, as evidenced by the note given therefor. The court held: 1. Taking interest in advance was not usurious; and 2. That the commissions charged by Taylor did not make the transaction usurious, saying: “The Institution for Savings has never received, or agreed to receive, more than the legal rate of interest upon this loan, and whatever in addition thereto Hoyt has paid Taylor, has been in compensation for services of Taylor in procuring the loan for Hoyt, which was something entirely between themselves, independent of the Institution for Savings, with which the latter had no connection. We fail to discover anything of usury in the transaction."

Brown v. Mortgage Co., 110 Illinois, 235. Hale & Co., of Chicago, procured a loan from capitalists in Scotland, for Brown, of $1500 for 5 years at 9 per cent, and the latter gave

Argument for Fowler.

his note therefor. Brown paid Hale & Co., or the latter deducted from the sum loaned, a commission of $225, and this, it was charged, rendered the loan usurious. The evidence, the court said, did not show Hale & Co. to have been the agents of the lender, adding: “If they were not the company's agents, but were the agents of Brown, in that transaction, although he might have paid them an amount which, added to the current interest upon the note, largely exceeded legal interest, it would not prove usury in the loan. It cannot concern the lender what the borrower pays to his own agents. Kihlholz v. Wolf, 103 Illinois, 362; Phillips v. Roberts, 90 Ilinois, 492. The burden of proving a transaction usurious rests upon the party alleging it. Boylston v. Bain, 90 Illinois, 283; Kihlholz v. Wolf, supra. In the next place, at the time this loan was made, it was lawful to exact 10 per cent per annum interest on money loaned. The note given bears interest only at the rate of 9 per cent per annum, and runs for 5 years. It has been held that it is not usurious to exact the payment of interest in advance. Mitchell v. Lyman, 77 Ilinois, 525; Goodrich v. Reynolis, 31 Illinois, 490; S. C. 83 Am. Dec. 240; McGill v. Ware, 4 Scammon, 21. One per cent on $4500 (the amount borrowed) for 5 years makes just $225; and so in any view, interest has not been exacted beyond the rate of 10 per cent per annum

the then legal rate.

Me Govern v. Union Mutual Life Ins. Co., 109 Illinois, 151." See also Ammond son v. Ryan, 111 Illinois, 506; Cox v. Maså. Mutual Life Ins. Co., 113 Illinois, 382; Ilaldeman v. Mass. Mutual Life Ins. Co., 120 Illinois, 390 ; Jass. Mutual Life Ins. Co. v. Boggs, 121 Illinois, 119; Telford v. Garrels, 132 Illinois, 550 ; Sanford v. Kane, 133 Illinois, 199; Ryan v. Sanford, 133 Illinois, 291.

Mr. Robert G. Ingersoll and Mr. William Ritchie for Fowler argued as to the law which was to govern the construction of the contract:

These are all New York contracts, to be governed by the New York statutes, and the securities are, consequently, void.


Argument for Fowler.

In 1873, 1874, and 1876 the statutes of New York provided as follows:

SECTION 1. The rate of interest upon the loan or forbearance of any money, goods or things in action shall continue to be seven dollars upon one hundred dollars for one year, and at that rate for a greater or less sum, or for a longer or shorter time.

SEC. 2. No person or corporation shall, directly or indirectly, take or receive any money, goods or things in action, or in any other way, any greater sum or greater value for the loan or forbearance of any money, goods or things in action, than is above prescribed.

Sec. 5. All bonds, bills, notes, assurances, conveyances and all other contracts or securities whatsoever, ... whereupon or whereby there shall be reserved or taken, or secured, or agreed to be reserved or taken, any greater sum or greater value, for the loan or forbearance of any money, goods or other things in action, than is above prescribed, shall be void.

Sec. 8. Whenever any borrower of any money, goods or things in action shall file a bill in chancery for the discovery of the money, goods or things in action taken or received in violation of either of the foregoing provisions, it shall not be necessary for him to pay or offer to pay any interest whatever on the sum or thing loaned; nor shall any court of equity require or compel the payment or deposit of the principal sum or any part thereof as a. condition of granting relief to the borrower in any case of a usurious loan forbidden by this chapter. Rev. Stats. N. Y. (Banks & Bros.) 6th ed. vol. 2, pp. 1164-6.

This is a suit to enforce a security. If the debt or contract for the performance of which that security was given be void, it is plain the security fails likewise and cannot be enforced. In Illinois, as elsewhere, the debt or contract is the principal while the mortgage is the mere incident. A contract void in the place where it is made and to be performed, is void everywhere. If this is a New York contract and is void under the laws of New York, it cannot be enforced in any court in Illinois, not withstanding it may be in strict accord with the laws


Opinion of the Court.

of the latter state. As to the intent of the parties, with respect to which set of laws should govern the contract, we have here no express or explicit declaration from either. We must resort entirely to circumstantial evidence and inference to ascertain what that intent was. Upon this point we note the fact that the rate of interest adopted is not the Illinois rate but the New York rate. Now, a security bearing only 7 per cent could not have been meant for use in Illinois, where 10 per cent securities were at that time not only lawful, but common. The funds loaned were at New York, being obtained by draft on New York. The trustee in the trust deeds was a resident of New York. There is no evidence whatever that the

money when obtained was to be used in Illinois. Complainant's charter permitted it to “have such officer and agencies in other States as may be necessary for the transaction of its legitimate business," and accordingly it maintains an agent in Illinois, but only the officers in New York have power to make binding contracts for loans.

A security intended for negotiation and use, as such, at a certain place should be governed by the laws of that place. These bonds received their final shape and character in New York and were intended evidently for circulation there. These facts have always been deemed most significant in determining the locus of a contract. Dickinson v. Edwards, 77 N. Y. 573; Wayne County Savings Bank v. Low, 81 N. Y. 566; Merchants' Bank v. Southwick, 67 lIow. Pr. 324; Tilden v. Blair, 21 Wall. 241; Gay v. Rainey, 89 Illinois, 221.

MR. JUSTICE Harlan, after stating the case, delivered the opinion of the court.

1. The appellant Fowler contends that as no order was made at the term when the first decree was entered, continuing until the succeeding term the motion and petition for rehearing, the decree of October 20, 1884, became final, and, consequently, the order at the June term, 1885, entered as of October 31, 1884, which granted a rehearing, as well as the decree of January 11, 1887, are to be treated as improvidently made, or as


Opinion of the Court.

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nullities. We do not concur in this view. It is not disputed that if, in October, 1884, a rehearing was granted and the clerk omitted to enter an order to that effect, it would have been within the power of the court, at the succeeding term, by an order nunc pro tunc, to make the record speak the truth. But as the order granting a rehearing was entered under date of October 31, 1884, the presumption must be indulged, in support of the action of a court having jurisdiction of the parties and the subject matter — nothing to the contrary affirmatively

appearing — that the facts existed which justified its action; and, therefore, that the court granted the application for a rehearing at the term at which the first decree was rendered. Stockton v. Bishop, 4 How. 155, 167; Townsend v. Jemison, 7 How. 706, 718. Besides, the exception taken by the defendants to the proceedings of June 30, 1885, was not, in terms, that the order, then formally made, was directed to be entered as of October 31, 1884, but that it granted a rehearing. If they intended to deny that the rehearing had been, in fact, ordered at the previous term of the court, the point should have been distinctly made upon the record.

2. The appellants Fowler and wife also contend that the contract of loan was a New York contract, and void under the laws of that State; and that neither the debt thus created, nor the mortgage given to secure the bonds, can be recognized, nor any recovery thereon had, in Illinois or elsewhere, for principal or interest. This contention rests upon the statute of New York, in force when the debt was created, providing that all bonds, bills, notes, assurances, conveyances and all other contracts or securities whatsoever, whereupon or whereby there shall be reserved or taken, or secured, or agreed to be reserved or taken, any greater sum or greater value, for the loan or forbearance of any money, goods or things in action, than at the rate of seven per cent per annum, shall be void. 1 Rev. Stats. N. Y. part 2, c. 4, title 3, $ 5; vol. 2, 6th ed. (Banks & Brothers) 1164-6. The suggestion that by the contract of loan a rate of interest was reserved in excess of that allowed by the laws of New York, is based upon the ground that, although the bonds in suit call only for seven per cent interest,

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