Some of the cases even go further, laying hold of the slightest circumstances in connection with the transaction to show that the parties intended to enter into a contract free from the taint of usury, though the rate of interest charged be usurious both by the lex celebrationis and the lex solutionis of the contract. Thus, the fact that the note is secured by a mortgage on land in a State where the rate of interest charged is legal,3 or that the borrowed money is to be used in a State whose law permits the rate charged, has sometimes been held sufficient to uphold the contract.

But, notwithstanding much confusion in the terms used and in the statement of the controlling principles, the current of decision seems to look rather to the actual situs of the acts in question to furnish the "proper law" than to the intention of the parties.

Passing by the intent then, in order to ascertain the situs that shall furnish the proper law we must first determine to what element in the validity of a contract the matter of usury pertains. Does it relate to the making of the contract itself, to its performance, or to the consideration?

Although there are a few cases holding that the validity of a contract alleged to be usurious is to be governed by the lex

Cromwell v. County of Sac, 96 U. S. 51, 62; Cockle v. Flack, 93 U. S. 344. This may probably be said to be the view of the United States Supreme Court. See also Kilgore v. Dempsey, 25 Ohio St. 413, 18 Am. Rep. 306; American Mortg. Co. v. Sewell, 92 Ala. 163, 9 So. 143, 145-146; Dugan v. Lewis, 79 Tex. 246, 14 S. W. 1024, 1026; Nickels v. Association, 93 Va. 380, 387, 25 S. E. 8; Scott v. Perlee, 39 Ohio St. 63, 48 Am. Rep. 421, 422; Morris v. Hockaday, 94 N. C. 286, 55 Am. Rep. 607, 608; Mott v. Rowland, 85 Mich. 561, 48 N. W. 638; Smith v. Parsons, 55 Minn. 520, 57 N. W. 311, 312; Hunt v. Jones, 12 R. I. 265, 34 Am. Rep. 635, 637; B. & L. Association v. Logan, 14 C. C. A. 133, 66 Fed. 827, 829; New England Mortg. Co. v. Vaden, 28 Fed. 265.

Chapman v. Robertson, 6 Pai. Ch. (N. Y.) 627, 31 Am. Dec. 264; Dugan v. Lewis, 79 Tex. 246, 14 S. W. 1024; Jackson v. Mortg. Co., 88 Ga. 756, 15 S. E. 812; Arnold v. Potter, 22 Ia. 195; Kellogg v. Miller, 13 Fed. 198. But see Mortg. Co. v. Jefferson, 69 Miss. 770, 12 So. 464; Odom v. Mortg. Co., 91 Ga. 505, 18 S. E. 131; De Wolf v. Johnson, 10 Wheat. 367, 383.

4 Scott v. Perlee, 39 Ohio St. 63, 48 Am. Rep. 421; Kellogg v. Miller, 13 Fed. 198, 200. But see Central Trust Co. v. Burton, 74 Wis. 329, 43 N. W.

celebrationis of the contract, regardless of the lex solutionis or lex considerationis, reason, as well as the great mass of authority, indicates that the effect of the exaction of usurious interest upon the contract to repay does not depend upon the law of the place where such contract is made (apart from the locus solutionis or locus considerationis).*

We are brought then to the consideration of the question whether the matter of usury affects the performance of the contract to pay, or whether it affects the consideration. In other words, why is a contract to pay excessive interest invalid? Does the usury consist in the borrower's promise to repay the principal with excessive interest? Or does it consist in the loan or forbearance of money upon condition that the borrower will repay the principal with excessive interest? The distinction here is close but important, if we regard the situs of the transaction, not the intent of the parties, as furnishing the proper law.

If the first view is correct, the alleged usuriousness and invalidity of the contract to pay relates to its performance, the payment of the excessive interest, and the validity of the payment of the interest agreed upon should be determined by the law of the place where the act of payment is to be performed, that is, by the lex solutionis of the contract to pay."

If the second view is correct, the usury relates to the con

New England Mortg. Co. v. McLaughlin, 87 Ga. 1, 13 S. E. 81; Thornton v. Dean, 19 S. C. 583, 45 Am. Rep. 796; Kellogg v. Miller, 13 Fed. 198. Even these cases are based upon the intention of the parties or upon some other ground than merely that the lex celebrationis of the contract governs.

6 The authorities cited below amply sustain this proposition.

7 A number of courts take this view and hold that the lex solutionis of the contract, of itself, without regard to the lex celebrationis or the lex considerationis, will govern the matter of usury. See Hosford v. Nichols, 1 Pai. Ch. (N. Y.) 220; Chapman v. Robertson, 6 Pai. Ch. (N. Y.) 627, 630, 31 Am. Dec. 264; Odom v. Mortg. Co., 91 Ga. 505, 18 S. E. 131; Connor v. Donnell, 55 Tex. 174; Dickinson v. Edwards, 77 N. Y. 573, 578, 582, 33 Am. Rep. 671; Nickels v. Association. 93 Va. 380, 25 S. E. 8; National, etc. Association v. Ashworth, 91 Va. 706, 22 S. E. 521; Freese v. Brownell, 35 N. J. L. 285, 10 Am. Rep. 239, 241; Pioneer Sav. & L. Co. v. Cannon, 96 Tenn. 599, 36 S. W. 386; Kellogg v. Miller, 13 Fed. 198, 199. See Bigelow v. Burnham, 83 la. 120, 49 N. W. 104.

8

sideration (the loan of the money), and the law of the place where the money is delivered to the borrower governs the validity of the contract to pay. Just as the validity of a note made and payable in one State, given in payment for liquor sold, depends not upon the lex celebrationis or lex solutionis of the note, but upon the lex loci considerationis (the law of the situs of the sale); so, in this case, the validity of the note or promise to repay the money borrowed, will depend not upon the lex celebrationis or lex solutionis of the note or other promise, but upon the lex loci considerationis (the law of the situs of the loan). This is believed to be the better view. The policy of the usury laws is aimed against the exaction of usurious interest by the lender, not against the promise by the debtor to pay usurious interest. The great majority of the decided cases have held that the law of the place where the money is lent governs the question of usury, though comparatively few have rested their decision expressly upon this ground."

8 See ante, § 178.

9 In some of the cases emphasis is laid upon the lex considerationis as gov. erning the question, though the lex celebrationis and the lex solutionis of the note, or one of them, were the other way. See Akers v. Demond, 103 Mass. 318, 323-324; Bowman v. Miller, 25 Gratt. (Va.) 331, 18 Am. Rep. 686; Sheldon v. Haxtun, 91 N. Y. 124, 128-129, 131; Pratt v. Adams, 7 Pai. Ch. (N. Y.) 615, 632; Kilcrease v. Johnson, 85 Ga. 600, 11 S. E. 870; Martin v. Johnson, 84 Ga. 481, 10 S. E. 1092, 8 L. R. A. 170; Matthews v. Paine, 47 Ark. 54, 14 S. W. 463; Hiatt v. Griswold, 5 Fed. 573, 575; DeWolf v. Johnson, 10 Wheat. 367, 383. In some, the loan was made in the State where the contract was payable, though the contract itself was made elsewhere. The law of the situs of the loan prevailed. See Bennett v. B. & L. Association, 177 Penn. St. 233, 34 L. R. A. 595, 35 Atl. 684, 685; Sands v. Smith, 1 Neb. 108, 93 Am. Dec. 331; Roberts v. McNeely, 7 Jones L. (N. C.) 506, 78 Am. Dec. 261; Pugh v. Cameron, 11 W. Va. 523. In most of the cases that have arisen, the locus celebrationis of the contract and the locus considerationis (the place where the money was advanced) have been identical, and have been different from the locus solutionis of the promise to repay. The lex loci considerationis has again prevailed, though the decision is often, indeed generally, rested upon other grounds. See Andrews v. Pond, 13 Pet. 65, 78; Tilden v. Blair, 21 Wall. 241; Sturdivant v. Bank, 9 C. C. A. 256, 60 Fed. 730; Buchanan v. Bank, 5 C. C. A. 83, 55 Fed. 223, 227; Kuhn v. Morrison, 75 Fed. 81; Van Vleet v. Sledge, 45 Fed. 743; Brown v. Finance Co., 31 Fed. 516, 519; Hiatt v. Griswold, 5 Fed. 573, 575; Watson v. Lane, 52 N. J. L. 550, 20 Atl. 894;

In no case has this view been brought out more plainly than in Akers v. Demond.10 In that case, bills of exchange, drawn in New York, and payable in Massachusetts, were accepted in Massachusetts for the accommodation of the drawer, and returned to New York, where they were discounted at a rate of interest usurious in New York. Suit was brought against the acceptor in Massachusetts by the holder (the lender). Here it will be seen that while Massachusetts was the lex solutionis of the acceptor's contract, New York was the place where the money was advanced (locus considerationis) and the locus celebrationis of the acceptor's contract. The court, holding that

Lane v. Watson, 51 N. J. L. 186, 17 Atl. 117; Depau v. Humphreys, 20 Mart. (La.) 1; Holmes v. Manning (Mass.), 19 N. E. 25; Akers v. Demond, 103 Mass. 318, 323; Staples v. Nott, 128 N. Y. 403, 28 N. E. 515; Sheldon v. Haxtun, 91 N. Y. 124, 128; Wayne County Bank v. Low, 81 N. Y. 566, 37 Am. Rep. 533; Merchants' Bank v. Griswold, 72 N. Y. 472, 480, 28 Am. Rep. 159; Curtis v. Leavitt, 15 N. Y. 9, 86; Pratt v. Adams, 7 Pai. Ch. (N. Y.) 615, 632 Balme v. Wombough, 38 Barb. 352; Kilgore v. Dempsey, 25 Ohio St. 413, 18 Am. Rep. 306; Findley v. Hall, 12 Ohio, 610; Bascom v. Zediker, 48 Neb. 380, 67 N. W. 148; Joslin v. Miller, 14 Neb. 91, 15 N. W. 214; Olmstead v. Mortg. Co., 11 Neb. 493, 9 N. W. 650, 652; Overton v. Bolton, 9 Heisk. (Tenn.) 762, 24 Am. Rep. 367, 374-375; Klinck v. Price, 4 W. Va. 4, 6 Am. Rep. 268; U. S. Sav. & L. Association v. Scott, 98 Ky. 695, 34 S. W. 235; Southern B. & L. Association v. Harris, 98 Ky. 41, 32 S. W. 261; Pryse v. Association (Ky.), 41 S. W. 574; Underwood v. Mortg. Co., 97 Ga. 238, 24 S. E. 847; New England Mortg. Co. v. McLaughlin, 87 Ga. 1, 13 S. E. 81; Kilcrease v. Johnson, 85 Ga. 600, 11 S. E. 870; Martin v. Johnson, 84 Ga. 481, 10 S. E. 1092, 8 L. R. A. 170; Meroney v. B. & L. Association (N. C.), 17 S. E. 637; Falls v. Sav. & L. Co., 97 Ala. 417, 13 So. 25, 27; American Mortg. Co. v. Sewell, 92 Ala. 163, 9 So. 143. A fortiori, in the cases where the locus celebrationis, the locus solutionis, and the locus considerationis all coincide, the law of that State, not the lex fori, will govern the question of nsury. See Glidden v. Chamberlin, 167 Mass. 486, 46 N. E. 103; Bowman v. Miller, 25 Gratt. (Va.) 331, 18 Am. Rep. 686; Backhouse v. Selden, 29 Gratt. (Va.) 581; Fant v. Miller, 17 Gratt. (Va.) 47; Berrien v. Wright, 26 Barb. (N. Y.) 208; Pomeroy ». Ainsworth, 22 Barb. 118; Maynard v. Hall, 92 Wis. 565, 66 N. W. 715; Central Trust Co. v. Burton, 74 Wis. 329, 43 N. W. 141, 142; Kennedy v. Knight, 21 Wis. 340, 94 Am. Dec. 543; Armistead v. Blythe (Miss.), 20 So. 298; Hubbell v. Morristown Land & Imp. Co., 95 Tenn. 585, 32 S. W. 965; Hart v. Wills, 52 Ia. 56, 35 Am. Rep. 255; Lockwood v. Mitchell, 7 Ohio St. 387, 70 Am. Dec. 78.

10 103 Mass. 318.

the New York law governed, said: "When a usurious or other illegal consideration is declared by the law of any State to be incapable of sustaining any valid contract, and all contracts arising therefrom are declared void, such contracts are not only void there, but void everywhere. They never acquire a legal existence. Contracts founded on a usurious consideration in New York are of this nature. The fact that the bills were accepted in Boston and were payable there does not exempt them from this operation of the New York law. They were mere ' nude pacts' with no legal validity or force as contracts until a consideration was paid. The only consideration ever paid was the usurious loan made by these plaintiffs in New York. That, then, was the legal inception of the alleged contracts. By the New York law that transaction was incapable of furnishing a legal consideration; and so far as the bills depend upon that, they are absolutely void. The original validity of such a contract must be determined by the law of the State in which it is first negotiated or delivered as a contract." 11

The fact that usury is a matter of the consideration, not of the performance, of the contract, becomes more evident, if we suppose the excessive interest to be reserved out of the principal sum at the time of the loan, or upon discounting paper. It is manifest in such a case that the subsequent execution of a note as security, whether made in the same State or elsewhere, cannot affect the legality or illegality of the original act. That is over and done with, and its effect must be determined by the law of the State where the reservation is made, that is, where

11 Even in this case, it will be observed, while the court gives full effect to the lex considerationis as determining the matter of usury, the last sentence of the extract above quoted reverts to the fallacy that the law of New York should govern, not because it is the lex considerationis, but because it is the lex celebrationis, of the contract. It is true that the locus celebrationis of the contract will usually be identical with the locus considerationis (as it was in Akers v. Demond), and in such case, save for the sake of clearness, it is immaterial whether the proper law is called the lex celebrationis or the lex considerationis. But these two loci are not necessarily identical, as shown by the cases cited in note 9, supra. Confusion must inevitably arise if these vari ous loci are not kept clear and distinct.