The Federal Reporter with Key-Number Annotations, Volume 250: Cases Argued and Determined in the Circuit Courts of Appeals and District Courts of the United States, August-October, 1918. Page: 42
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250 FEDERAL REPORTER
WALKER, Circuit Judge. By appeal, and also by petition to su-
perintend and revise, A. L. George, trustee of V. L. Crawford, a bank-
rupt, presents for review a decree an effect of which was to permit
the foreclosure of a deed of trust given by the bankrupt to secure the
payment to Oscar Smith & Sons Company, a corporation, of $25,000
and interest, evidenced by nine notes made by the bankrupt. The
principal ground upon which the right to enforce the deed of trust was
denied was that the contract was infected with usury; and it was con-
tended that it.is governed by the law of Mississippi, and that the rate
of interest contracted for was such as, under the law of that state
(Acts of Mississippi 1912, p. 301), results in the forfeiture of the
principal and all interest. The opposing contentions were that there
was no usury in the contract, and that it was a Pennsylvania contract,
and, if it was usurious, the result was, not to invalidate the contract,
but to render uncollectable only so much of the interest reserved as
was in excess of the legal rate.
The correspondence which passed between the lender and the bor-
rower before the deed of trust and the notes it secured were execut-
ed we think clearly shows that the lender was to be paid, as compen-
sation for the loan of the money, an amount in addition to the 6 per
cent. per annum interest which the secured notes by their terms called
for, and that this amount Was such as to make the compensation for the
use of the money for the period the loan was to run more than 8, but
less than 20, per cent. per annum.
[1, 2] The deed of trust was signed and acknowledged in Mississip-
pi, the property it covered was located in Mississippi, and the notes it
secured were made payable at the First National Bank of Meridian,
Miss. A representative of the lender, the principal place of business of
which was Philadelphia, Pa., went to Mississippi, investigated the se-
curity proposed to be given for a loan of $25,000, which was to in-
clude an unsecured amount already advanced, reported favorably to
his principal; and thereupon the deed of trust and the notes it secured
were prepared and' forwarded to Philadelphia, accompanied by Craw-
ford's draft on Oscar Smith & Sons Company for the balance of the
$25,000 to be lent, and the papers were delivered to the drawee in
Philidelphia upon its payment of the draft. The deed of trust and the
notes it was to secure were not effective until they were delivered in
Philadelphia. Delivery was required to make the contract they evi-
dence. Tilden v. Blair, 21 Wall. 241, 22 L. Ed. 632; Buchanan v.
Drovers' National Bank, 55 Fed. 223, 5 C. C. A. 83. The contract
was made in Pennsylvania and performance of it was to be in Missis-
sippi. It was usurious under the laws of both states. In such case the
legal consequences of the violation of the law by the making of the
contract for a usurious consideration are determined by the law of
the place where the contract is made. Andrews v. Pond, 13 Pet. 65,
78, 10 L. Ed. 61; Heath v. Griswold (C. C.) S Fed. 573; Minor on
Conflict of Laws, p. 433; 39 Cyc. 904, 908. Andrews v. Pond, supra,
presented the case of a contract which was usurious under the law
of New York, the state in which it was made, and under the law of
Alabama, the state in which it was to be performed. The following
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The Federal Reporter with Key-Number Annotations, Volume 250: Cases Argued and Determined in the Circuit Courts of Appeals and District Courts of the United States, August-October, 1918., legislative document, 1918; Saint Paul, Minnesota. (digital.library.unt.edu/ark:/67531/metadc38821/m1/57/: accessed January 21, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.