Central National Bank v. Cooper

ELLISON, J.

— This is an action of replevin for the recovery of six head of horses. The court directed a verdict for defendant at the close of plaintiff’s case and the latter took a nonsuit. Plaintiff’s motion to set this aside being overruled it appeals to this court. .

Plaintiff’s title depends upon the validity of a chattel mortgage. It appears that defendant W. A. Cooper in Sullivan county, Missouri, where he resides, gave his note to Olinger & Loyd or order for $1,273 with ten per cent from maturity. This note purports to be dated at Kansas City, Kansas, and is payable at a bank in Kansas City, Kansas. It was secured by a chattel mortgage on some cattle of W. A. Cooper. The note was afterwards sold by Olinger & Loyd to the plaintiff bank. When the note became due defendant W. A. Cooper was not ready to .pay it and a new note for the amount with interest and Some other amounts for expenses, etc., added. This note was executed by defendant W. A. and his brother John A. Cooper at Sulivan county, Missouri, though it is dated as of Kansas City, Missouri, and is payable at a bank in Kansas City, Kansas, and drew ten per cent interest. A new chattel mortgage executed in Sullivan county, Missouri, was given to secure the latter note which included the horses in suit, they being the property of John A. Oooper and put in in addition to the cattle in the first mortgage.

It further appears that the cattle have been sold and the *386 proceeds applied 'on the note. Defendant John A. Cooper contends the mortgage is void as to his horses and relies on the mortgage being usurious.

The law in this state is that a greater rate of interest than eight per cent is usurious — sections 3706, 3708, Revised Statutes 1889 — and a mortgage securing a usurious rate is invalid. R. S. 1889, sec. 3710. In Kansas, the rate may be ten per cent. So, therefore, if the mortgage is to be governed by the Missouri law it is invalid; if by the Kansas law, it is a valid transfer of the property.

The record does not show where the first nóte and mortgage were executed, though the note is dated in Kansas and is payable in that state. Nothing is shown as to the mortgage. The record shows the second note and mortgage were dated and executed in Missouri, though the note is payable at a bank in Kansas. The record does not show where Olinger & Loyd and the Missouri, Kansas & Texas Commission Co. resided. The record does not show that the note was made payable in Kansas in order to evade the interest laws of Missouri.

In our opinion tire trial court erred as to the law of the case on the foregoing facts. It is frequently said that a contract is governed by the law of the place where it is made. But this is a general expression made mostly by those who regard the place of performance as in reality the place of making. At any rate, the place of perfomance, in the absence of an attempt to evade, furnishes the law governing the terms of the contract. Story on Conflict of Laws, secs. 280, 242; Wharton on Conflict of Laws, secs. 398-402. The mere fact that the contract is dated at one place does not conclude the question of where it is to be performed. Wharton’s Conflict of Laws, sec. 411. Especially is this true when the contract clearly names another place. The rule just stated is applied to contracts for the payment of money with rates of interest *387 different from that of the place of executing the note. Story on Conflict of Laws, secs. 301a, 301b, 304, 304a, 305, 306.

2. This case presents this further question: Does the fact that the mortgage was made in Missouri by residents of this state alter the rule as to which law governs ? We think it does not. If the note, payable in Kansas, is valid as to the rate of interest, though higher than allowed in Missouri, then it ought logically to follow that the mortgage, a mere incident of the debt, the principal thing, ought not to be declared invalid. Otherwise there would be a disability laid upon this class of contracts. “The situs of the debt is not lost in the situs of the security. The debt is governed by the law of the domicil of the party to whom it is due, no matter where its security may be situated.” Wharton’s Conflict of Laws, sec. 368; Id., 292.

In writing on this subject, Story say’s:

“And in cases of this sort it will make no difference that the due performance of the contract is secured by a mortgage or other security upon property situate in another county where the interest is lower. Eor it is collateral to such contract and the interest reserved being according to the law o£ the place where the contract is made and to be executed, there does not seem to be any valid objection to giving collateral security elsewhere to enforce and secure the due performance of a legal contract.” Conflict of Laws, secs. 293, 287, 304, 305. Adjudicated cases state the law in the same way. Cope v. Alden, 53 Barb. 350 ; Kanavaugh v. Day, 10 R. I. 393; Chase v. Dow, 47 N. H. 405; DeWolf v. Johnson, 10 Wheat. 367, 383 .

The statute of this state only invalidates mortgages which secure usury and since it is clearly the law that a rate of interest legal and higher in the state where the debt is to be paid than is allowed in the state where the contract was signed and delivered, is not usury; it follows that the mort *388 gage does not come under tbe ban of the statute. Under the foregoing views the plaintiff’s mortgage should not have been declared invalid.

The judgment will be reversed and the cause remanded.

All concur.