Shoe & Leather National Bank v. Wood , 142 Mass. 563 ( 1886 )

Gardner, J.

1. The plaintiff contends that the notes in suit were made in Massachusetts, and that the laws of this State are to govern the contracts. The defendants, the makers of the notes, resided in Kentucky. They made and signed the notes at Louisville in that State, and then sent them by mail to the payees in Massachusetts. By their terms, they were payable at the Kentucky National Bank, a bank organized in Kentucky under the banking law of the United States.

Under our decisions, these various circumstances determine the place where the contract was executed, and where it was to be consummated. It was clearly a Kentucky contract, and is to be governed by the laws of that Commonwealth. Pine v. Smith, 11 Gray, 38. Carnegie v. Morrison, 2 Met. 381. Orcutt v. Nelson, 1 Gray, 536. Milliken v. Pratt, 125 Mass. 374.

2. The defendants put in evidence the Gen. Sts. of Kentucky c. 22, §§ 6, 21, which are set forth in the exceptions. At the argument, the defendant’s counsel, without objection on the part of the plaintiff, cited cases decided in Kentucky, for the purpose of showing that promissory notes are not commercial paper in that State. Schooling v. M'Ghee, 1 T. B. Mon. 232. Sharps v. Eccles, 5 T. B. Mon. 69, 72. Caldwell v. Cook, 5 Litt. 181. Prather v. Weissiger, 10 Bush, 117, 126, 127. Hyatt v. Bank of Kentucky, 8 Bush, 193, 199. Luckett v. Triplett, 2 B. Mon. 39. Clay v. McClanahan, 5 B. Mon. 241. True v. Triplett, 4 Met. (Ky.) 57. Thompson v. Moore, 4 T. B. Mon. 79. The bill of exceptions does not find that these cases were not before the court at the trial. The Superior Court ruled, in substance, that the notes in suit are subject to any defence, discount, or offset that the defendants might have and might have used against the original obligees, Macomber and Greenwood, or any intermediate assignor, before notice of the assignment, in accordance with the provision of the Gen. Sts. of Kentucky, c. 22, § 6. An examination of the cases above cited shows that the ruling of the Superior Court was in accordance with the decisions of the courts of Kentucky upon this subject matter. But, independently of these decisions, we cannot say that the ruling of the Superior Court was incorrect.

3. After the construction put upon the statute by the court, it remained to be determined whether there was any failure of consideration of the notes in suit. The sole consideration of the notes was the agreement to deliver certain goods. The payees, Macomber and Greenwood, failed, “ and were unable to deliver the remainder of the goods to meet said notes.” The court ruled that there was no consideration except for $1128.07, which had been paid on the notes. This ruling was correct. The notes were not negotiable promissory notes, and failure of consideration could be set up as matter of defence thereto.

4. The evidence offered by the plaintiff, and excluded by the court, relative to the transactions between Macomber and Greenwood, and Wallace and Macomber, was properly rejected. It related to matters concerning which neither the plaintiff nor the defendant had any knowledge. They were clearly res inter alios.

5. The plaintiff finally contends that this Kentucky statute is in contravention of the Constitution of the United States. We see no reason why Kentucky may not enact a law making the liabilities of signers of commercial paper made and payable within its limits entirely different from the laws of other States respecting such liabilities, and by statute change absolutely the operation of the law merchant, so far as it affects contracts made and to be performed within that State. The Constitution of the United States presents no obstacle to the exercise of such power by the several States. The plaintiff has not referred us to any authorities or decisions in support of his contention that the statute of Kentucky is in conflict with the Constitution of the United States.

6. The construction of the Kentucky statute was for the court. Kline v. Baker, 99 Mass. 253, 255. On the rulings given, there was nothing in dispute which entitled the plaintiff to go to the jury.

Exceptions overruled.