Case Name: Kirk and Lukens v. Fenwicke
Court: Constitutional Court of South Carolina
Jurisdiction: South Carolina
Decision Date: 1808-01
Citations: 2 Brev. 241
Docket Number: 
Parties: Kirk and Lukens v. Fenwicke.
Judges: 
Reporter: South Carolina Law Reports
Volume: 4
Pages: 241–246

Head Matter:
CONSTITUTIONAL COURT, CHARLESTON,
JAN., 1808.
Kirk and Lukens v. Fenwicke.
Where it appeared to be the intention of the parties to adjust the subject in dispute on protested bills of .exchange, by the laws of this country, the plaintiffs were not allowed to charge interest on the damages, &c. although it might be allowed by the laws of France.
Action on four bills of exchange, tried before Bay, J., in Charleston. The bills were dated Bordeaux, 7th November, 1800, for 36,340 livres, drawn by the defendant’s agent on him, payable in Charleston, at sixty days sight. It appeared that the considera* tion of those bills, were three "other bills of exchange, drawn by the defendant, at Bordeaux, on John Mason, of Maryland, for $21,450, dated 30th October, 1798, which were protested 7ih February, 7th March, and 7th April, 1800. Upon the return of these last men. tioned bills protested, the plaintiffs made a statement, in which they stated, in addition to the principal sum, charges of protest, five pet cent; commissions, one per cent; brokerage, fifteen per cent; da* mages, and interest on the capital at seven per cent, extended to 7th October, 1800, allowing seven months for the progress of the bills from the United States to France. After this the defend, ant’s agent came to a settlement with the plaintiff’s agent, at Bordeaux, and secured to them the principal sum, by a mortgage on the defendant’s real estate in France; and reserved the question of damages', by agreement, for the decision of the Chamber of Com. merce at Charleston; the said agreement taking notice of the bills now ¡^question, which were drawn on that settlement, and in-eluded all the charges contained in the plaintiff’s statement above-mentioned, and setting forth that the said bills were provisionally given.
It appeared that Madame Fenwicke, the authorized agent of her husband, the defendant, had also included in the bills last draws ten per cent interest on the aggregate amount of the said statement ^le plaintiffs, for ten months, i. e. to the 7th Septemper, 1801. The intention of the parties was, to secure the payment of the principal sum of $21,450, absolutely, and unconditionally, and for this purpose the mortgage abovementioned was taken, and to draw the bills in question for such an amount as would be sufficient in all events, to satisfy the plaintiffs’ demand, and to subject the application of the money drawn for, to the direction of the Chamber of Commerce at Charleston, upon a revision, and correction of the plaintiffs’ statement.
It further appeared, that the defendant early in the year 1801, attended at Charleston, about which time the bills in question were received by the plaintiffs in this State ; but as no Chamber of Commerce then existed at Charleston, the reference intended could not be effected ; and the defendant refusing to pay the whole amount of the bills, this action was brought in February, 1801.
Evidence was admitted at the trial, of the law and usage in France on the subject; and one witness said, that when a bill of exchange is drawn in France payable in a foreign country, and. is returned protested, the holder is in titled to redraw for any difference of exchange, between the place where the bill was payable and that where it was drawn ; and that on doing so, and producing, and proving a certificate from a broker, or two respectable merchants, that the negotiation was agreeable to the actual rate of exchange, the drawer is liable for the amount of the protested bill, and two per cent additional, to cover the charges for commissions, brokerage, &c. Another witness said, that the law of France and the custom of merchants is, upon a protested bill, to allow two per cent damages to cover all charges.- Another said, the damages in such case is five per cent. They all, however, agreed, that the legal interest of money in France, is five per cent per annum.
The amount of the protested bills appeared to be $6018 85, and the plaintiffs obtained a verdict for $6811 85, with interest from, the 23d May, 1801, and costs of suit. At the trial, the defendant was permitted to go into a full investigation of the charges contained in the plaintiff’s statement, to cover which the bills were drawn, as abovementioned, and to contest the propriety and justice of them.
A new trial was moved for, on the ground, that the bills in ques. tion were not subject to the laws and usages of France, but were1 governed by the laws of Maryland, and of South-Carolina, as they were payable, the first hills in Maryland, and the last in this Statej and, therefore, that many of the charges which the last bills were drawn the cover and satisfy, being charges made conformably to the law of France, and not conformably to the law of Maryland, or of So.uth-Carolina, were not legally recoverable; and, particularly, that the' charge of ten per .cent per annum on the damages, interest, &c. for ten months, was contrary to our law, and very unreason, able ; and also on the ground, that as the contemplated reference was impossible, by the abolition of the Chamber of Commerce at Charleston, at the time of the agreement to refer, and as a reference could not. take place, the whole transaction was void, or voidable, at the election of the parties, and their rights reverted; that they stood in the same position they did prior to the emission of the bills in ques. tion ; and, therefore, no action could be sustained on the foot of the said bills. But if the bills would support an action, the defendant contended, as a third ground, that there had not been given any evidence of a protest for non-acceptance or non-payment, which was necessary to be done.
The Attorney General, Pringle, and Ward, for the defendant, urged that the bills in question were not intended as absolute bills of exchange, but by the agreement of the parties were made to depend on the ulterior regulation, and infinitive decision, of a tribunal of reference, or appeal, which definitive decision had not taken place; and, therefore, that no recovery could be bottomed on the bills, till "the condition attached to them was complied with, satisfied, or discharged. The bills were drawn for the accommoda. tion of the plaintiffs, and were not intended to, operate, or take ef. feet till -sanctioned, or corrected, by the Chamber of Commerce. XJndet'the agreement, and the provisional article relative to these bills, the plaintiffs were under an obligation to hold them in their hands till they could be revised and decided on, according to the intent and spirit of the agreement; and if- they had attempted to negotiate the bills, in violation of the agreement, the defendant might have resorted to a Court of Equity for relief, and that court would have restrained the plaintiffs from passing the bills. This court ought to take the equity of the case into consideration, and not’ turn the defendant round upon the apices juris, and oblige him to seek relief in the Court of Equity. The reference was to a tribunal which did not exist. This was an error of the parties from .ignorance, not from design, and ought not to prejudice either. The assent to this agreement was yielded under an impression which was false, and therefore is not obligatory. The parties are restored to their original standing. But if it should be adjudged ^af: ac^on I'es on these bills, under the circumstances of the case, still the verdict ought to be set aside as illegal and unjust. First, because it includes charges, which are not justly chargeably either by the law of France or of South Carolina ; and secondly, because the reference being to a commercial tribunal of this country, it is clear the charges were intended to be regulated by the law of this country, and not by that of France. Besides, at the time of the reference, there was no settled law of France. The jurispru. dence of that country was all afloat, and unsettled. Again : it did not appear that the plaintiffs had sustained any damage by the return of the bills protested. The loss occasioned by the nonacceptance of the first set of bills, ought to have been proved, but was not. Yet the jury have allowed exorbitant damages, and evérv compound interest.
Ciieves, of counsel with the plaintiffs,
contended that the lex loci, or law of France, governed the transaction, because it was a transaction which took place in France. He did not mean the temporary law' which then reigned in France, by which a. maximum of price was established for every thing, payable in assignats, but the permanent and long established laws and settled usages of commerce. The statement, presented by the plaintiffs, was in conformity with the law of France. The agreement, entered into by the parties, recognized the principle upon which the statement was made generally, but referred the particular charges, the details of the statement to the decision of a college of merchants, deemed sufficiently enlightened and experienced on the subject generally', to correct any errors that might be in the statement. The subject matter, or truth of the items charged, cannot be disputed. There is no question about facts. The agreement contains a tacit acknowledgment of the foundation of the charges. Damages were incurred. A loss was sustained. The rule, according to which a reimbursement, or compensation, shall be estimated, is the question. The charges, when properly considered on mercantile principles, are not unreasonable. The jury were substituted for the Chamber of Commerce, and they have decided upon equitable principles. The plaintiffs were not obliged to admit the defence which was made ; for the condition, which the provisional agreement attached to the bills, was merely equitable. But if it could be considered as a legal condition, yet as that condition was impossible, the condition was void, and the bills, on legal principles, were absolute. Suppose the Chamber of Commerce existed, they could not interpose to restrain the negociability of these bills, or impair their validity. They could only award damages, or an indemnity to the defendant. The plaintiffs have waived all objections founded on strict law, and have consented to an investigation of the whole transaction, in as ample a manner, as though the case had bo'en brought before the tribunal referred to by the agreement. The jury have sanctioned their statement. Its incorrectness has not been demonstrated in this discussion. The charge of ten per cent., which includes interest on the damages, and which is the subject of so much complaint, was admitted by the agreement of the parties, or may be so under, stood, as a compensation for ten months delay of payment. Being a commercial transaction, regulated by the usage of merchants, it is not liable to the objection of usury. And though it may include compound interest, as it is interest on the aggregate of the plaintiffs charges, which includes interest, yet this is agreeable to the law of merchants. But if it were not, the parties were competent to make a law for themselves, if consistent with the general principles of law, and not inconsistent with any positive legislative ordinance, or rúle of the country where it is claimed to be enforced.
Note. The protested bills were drawn on J. M., payable in Maryland, and returned to France, and the defendant was called on in France, for an indemnity agreeable to the existing law of France. AH the charges added to the principal, and included in the bills last drawn, must have been such as were legal and customary in France, or they were not. The parties $t Bourdeaux had a better opportunity of satisfying themselves in that respect on the spot, than by application elsewhere.
By A. A. 1786, P. L. 408, all bills drawn on persons out of this State, but in the United States, which shall be protested, shall subject the drawer to ten per cent, damage on the sum drawn for. If drawn on a person in Canada, twelve and half per cent. If on a foreigner, notin North America, or the W est Indies, fifteen per cent. In an action on a bill, payable in another country, the jury to -qnc¡ t|le ¿ifperence 0f exchange.
The court recommended a reference to three of the former members of the Chamber of Commerce, for a report on the propriety of some of the charges in question, which was agreed to, particularly .as to ten per cent, for ten months, on the charges of damages and interest.

Opinion:
12th January, 1808, all the judges who heard the case argued, Gkimke, Waties, Bay, Brevard, and Wilds, Justices, being pre-sen1!, and nd report from the gentlemen to whom a reference was made, having been obtained, by reason of a difficulty in not knowing what the law of France on the subject was, — Grimke, J., delivered the opinion of the court, in substance, that a new trial should be granted, unless the plaintiffs would release the amount charged for interest on the damages and interest, and on bro. kerage and commissions, because such charge was not agreeable to our, law, though it might be allowed by the law of France; and it seems to have been the intention of the parties to adjust the subject of dispute by the law of this country.
Foreign bills returned protested, and the party seeks redress, his claim must be regulated by the law of the country where redress is sought, Qm. The statement transmitted by the plaintiffs to Bourdeaux, may have been founded on the law of South Carolina. The defendant may have submitted the subject of dispute to be regulated by the law of South Carolina. The court and jury were competent to determine the question referred to the Chamber of Commerce. But did they decide correctly? The bills were payable in Maryland. By our law, ten per cent, was chargeable for damages on protest, including protest, commissions, and brokerage. The additional ten per cent, on the whole, for ten months, seems to be a very unusual charge. Qu. If not usurious? But the remedy, on protest, was sought in France, and the law there governed the parties. The parties refer the matters in difference, to a foreign tribunal. By what law, or rule, shall that tribunal be governed ? The Chamber of Commerce, as arbitrators, would have been competent to decide by any reasonable and equitable principles, they might have judged proper, without considering themselves bound by the law, either of France, or of this country. The plaintiffs were not legally bound to submit the subject of reference to any other referees, nor in the present action, to a court and jury; but they did submit it to the court and jury, who decided on it. By what law was the court and jury to decide ? By the law of South Carolina, undoubtedly; because they were to decide on the charges exhibited on the return of the bills drawn on Mason, as if the bills had been re turned to the defendants in South Carolina, and not in France; for he submits to the demand against him, in that behalf to the court here, iu the same manner as if he had beenhere when the bills were returned to him protested. For what purpose did the parties refer to the Chamber of Commerce of Charleston, if they meant that the law of France should govern the subject of reference ? 1 do not see how the charges can be justified by our law. Seven per cent, interest on the principal sum drawn for, and ten per cent, damages, seem to be all the plaintiffs were legally entitled to. But, perhaps, the parties may have intended that the Chamber of Commerce should govern themselves, by the general law on the subject, and consequently that they should advert to the situation of the parties, the place where the bills were drawn, and apply the principles and rules of law, which ought to have regulated the transaction at the time and place of the reference. If thiswas their intention, it was material to ascertain what was the law of France, at the time of the reference, in relation to the subject of reference. If the evidence given at the trial, was to be relied on, the law of France was very far from warranting the charges in question.