Case Name: Cooper, Caruthers & Co. vs. Sandford, Adm'r, &c.
Court: Tennessee Supreme Court
Jurisdiction: Tennessee
Decision Date: 1833-03
Citations: 4 Yer. 452
Docket Number: 
Parties: Cooper, Caruthers & Co. vs. Sandford, Adm’r, &c.
Judges: 
Reporter: Tennessee Reports
Volume: 12
Pages: 452–455

Head Matter:
Cooper, Caruthers & Co. vs. Sandford, Adm’r, &c.
A bill of exchange drawn by A. of Tennessee, on B. of New Orleans, will carry interest according to the laws of Louisiana.
By the laws of Louisiana, interest is either legal or conventional; by the former it is fixed; by the latter it may be contracted for, provided it does not exceed ten per cent, if the contract be in writing. Held, that the custom of New Orleans merchants to charge eight per cent by way of damages was illegal, and cannot be enforced upon protested bills accepted for the accommodation of the drawers.
James Sandford, on the sixth of October, eighteen hundred and thirty, drew two bills of exchange on the firm of Cooper, Caruthers & Co. of New Orleans; one for three thousand dollars, and the other for two thousand five hundred dollars, payable six months after date, which were accepted by them, for the accommodation of said Sandford, and for the purpose of getting their said acceptance two and a half per cent was allowed; his cotton crop was also to be forwarded to them, which they were to sell upon commission, and out of the proceeds of said cotton they were to take up and pay the bills when they fell due; no cotton had been forwarded, nor received by Cooper, Caruthers & Co. to meet them; nor was any arrangement made by Sandford to pay the bills in his lifetime, nor since his death, he having in the meantime died, by his administrator.
Cooper, Caruthers & Co. sued Sandford’s personal representative, in Maury county court, in an action on the case. There are many counts in the declartion, shaped to meet all the claims of the plaintiffs. Plaintiffs pleaded non assumpsit; a verdict was found for plaintiffs, and appeal taken to the circuit court.
The plaintiffs as commission merchants charged Sand-ford two and a half per cent for accepting, and two and a half for advancing their own funds to meet said bills at maturity, as compensation for their trouble, labour, risk, &c., it being the custom of commission merchants in New Orleans (the place where said bills were payable) so to charge.
The bills were produced upon the trial, and the payment of them found to have been made by plaintiffs out of their own funds; they were also proved to be commission merchants in New Orleans," the custom of charging two and a half per cent for accepting, and two and a half for paying out of their own funds, was also proven, and the rate of interest in such cases from six to ten per cent.
The judge charged the jury, that if it were customary for the commission merchants to charge two and a half per cent for accepting, and also two and a half for advancing, where they pay the money out of their own funds, as compensation for the trouble, labour, risk, &c. it would be legal, and the jury would have the right to allow it, and also the eight per cent interest, if such was the custom in New Orleans, as that was the place where the bills were payable. The jury found a verdict for the plaintiffs, allowing the amount paid on the accepted bills, and also the two and a half for accepting and two and a half for advancing the amount, and interest at eight per cent.
Motion for new trial, upon the ground that the jury ought not to have allowed the two and a half for accepting and two and a half for advancing, and because one of the jurors was related to Cooper', one of the plaintiffs, and that it was not known in time. New trial refused, and exception taken, &c. and writ of error to this court.
F. B. Fogg, for plaintiffs in error.
J. P. Clarke, for defendant in error,
cited the following authorities:
As to usage and customs of merchants; 2 Starkie’s Ev. 445-6, 450-2-3-4-5: Doug. 513: 5 Term. R. 373: 1 Term. R. 490: Palm. 201: Doug. R. 519: 4 Esp. Cases, 53: 5 Munf. 483: 5 Bin. 287: 1 Black. Com. 75: 1 Caine’s Rep. 43: 3 Con. Rep. 9: 2 Bur. Rep. 1228: i Call, i47. As to eran tin a; a new trial because one of . ° , the jurors was related to plaintiii and be not excepted to; 1 Yerger’s Rep. 206, and authorities there cited: Chit. Grim. Law, 545: 2 Haw. C. 43: 1 Inst. 158; Hob. 235: 2 Term. R.7 18: Yel. 24: 4 Black. Com. 352: 5 Hay. 31-2.

Opinion:
Catron, Ch. J.
delivered the opinion of the court.
Sandford had drawn a bill of exchange on the house of Cooper, Caruthers & Co. at New Orleans, in anticipation of his crop, being a cotton planter of Maury county, Tennessee. At maturity, the bill was not paid, and the acceptors, Cooper, Caruthers & Co. had to take it up. They now sue for money paid to Sandford's use. Interest is charged at the rate of eight per cent, per annum, on the cash advanced, and the circuit court let in evidence to show that this was the custom of commission merchants in New Orleans; and charged the jury, that if it was proved, that the custom was to charge eight per cent, interest, to allow this item in the account, which was allowed of course. On this and other grounds, exception was-taken, and anew trial moved for, but refused.
Whether interest can be recovered by way of damages, and to what extent, depends on the local laws of Louisiana. Interest there is either legal or conventional. Legal interest is fixed at five per cent, on all sums which are the object of judicial demand; whence this is called judicial interest; and six per cent, for interest of sums discounted by banks.
The amount of conventional interest cannot exceed ten per cent; the same must be fixed in writing, and testimonial proof of it is not admitted in any case. Digest of the Civil Law, ch. 3, p. 408. These rules apply to res-titutions of moneys paid by the third person to the creditor in discharge of the debtor, the present case; and those damages are due without the creditor's being required to prove any loss. Ib. 270. This is the general law of the land, and the commission merchants of New , , . , , . . , . Orleans cannot be permitted to alter it m this case. If they be allowed to do so, every village may make a law of damages for itself. The creditors here have not proved any loss, and can only recover judicial interest, five per cent. To recover conventional interest, parol proof was inadmissible; all that, proving the custom to be to charge eight per centum per annum, on sums paid for the drawer of the bill, was illegal. For this reason, the judgment will be reversed, and' the cause remanded for another trial.
On the other points raised, we give no opinion.
Judgment reversed.