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: 61
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GEORGE V. OSCAR SMITH & SONS CO.
instruments made, although the instruments were delivered elsewhere,
and notwithstanding, also, that the notes were made payable in a still
different state than that wherein they were given or delivered, or
wherein either party resided.
Contract Illegal in Place of Making and Performance
In Miller v. Tiffany, 1 Wall. 298, 17 L. Ed. 540, it is said:
"The general principle in relation to contracts made in one place to be per-
formed 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 law 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 penal-
ties of usury. The converse of this proposition is also well settled. If the
rate of interest be higher at the place of the contract than at the place of
performance, the parties may lawfully contract, in that case also, for the
See, also, Bedford v. Eastern Bldg. & Loan Ass'n, 181 U. S. 243, 21
Sup. Ct. 597, 45 L. Ed. 834; R. R. Co. v. Ashland, 12 Wall. 226, 20
L. Ed. 385; Scotland County v. Hill, 132 U. S. 107, 10 Sup. Ct. 26, 33
L. Ed. 261; Cromwell v. Sac County, 96 U. S. 57, 24 L. Ed. 681;
Cockle v. Flack, 93 U. S. 344, 33 L. Ed. 949.
The principles just stated are not universally recognized, or, at least,
not applicable in all cases, as indicated by the cases just reviewed.
Undoubtedly, the courts will go far to defeat the claim of usury, espe-
cially where the consequences are completely fatal to the contract.
Where the contract conflicts, both with the law where it was made
and the law where it is to be performed, the principles just announced
can have no application, and it becomes increasmgly difficult and in-
creasingly important to determine the law with reference to which it
The contract here under consideration is, in part, at least, invalid,
both under the laws of Pennsylvania and under the laws of Missis-
sippi. In both states a rate of interest is fixed which it is illegal to ex-
Where the consequences of the infraction of the law in the place of
the making are comparatively unimportant, and the consequences in
the place in which the contract is to be performed are the complete
avoidance of the contract, it is not to be assumed that the courts of the
place of performance, if they are also those of the place of the remedy,
will acquiesce in the limited consequences of the law of the place of
the making of the contract.
"The law, however, is usually thus stated: When the contract is found to
be usurious, both by the law of the state where it is made and by that in
which it is payable, the parties are law-breakers in any event, and can scarce-
ly be allowed to choose their own penalties. By the weight of authority the
general rule applies that the law of the place of the contract governs." 39
Cyc. p. 908. U. S. Mortgage Co. v. Sperry (C. C.) 24 Fed. 838; Jewell v.
Wright, 30 N. Y. 259, 86 Am. Dec. 372.
The proposition that where a contract is usurious, both by the law
of the place where the note is made and of the place where it is to be
paid, the consequences are to be measured by the law of the place of
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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/m1/76/: accessed September 19, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.