## Facts

- Rollin Burnham signed a promissory note promising to pay Rufus Burnham, or bearer, about $1,858 plus 7% interest.
- The note was dated May 2, 1885, and on its face stated: “Storm Lake, Buena Vista Co., Iowa.”
- Rollin Burnham lived in Storm Lake, Iowa.
- Rufus Burnham lived in New York.
- The note was signed and delivered in New York.
- The record contained no evidence showing what underlying debt or consideration the note was intended to repay, or where that transaction occurred.
- Eveline Bigelow later became the holder of the note and sued Rollin Burnham to recover on it.
- Rollin Burnham defended by arguing that New York law governed because the note was signed and delivered there, and that the 7% interest term was usurious under New York law.
- Bigelow argued that Iowa law governed and that 7% interest was lawful under Iowa law.
- The trial court entered judgment for Rollin Burnham, and Bigelow appealed.

## Issues

1. When a promissory note is dated at a place in Iowa and the maker resides there, but the note is signed and delivered in New York, which state’s law governs the note’s validity against a usury defense?
2. When the record is silent on the underlying transaction, may the court treat the place stated on the face of the note as evidence of the place of contracting for choice-of-law purposes?

## Decision

- The Iowa Supreme Court reversed the judgment for Rollin Burnham and remanded.
- The court held that Iowa law governed the note.
- Because 7% interest was lawful under Iowa law, the note was not invalid for usury on the theory that New York law controlled.

## Legal Principles

- In determining which state’s law governs a negotiable instrument, courts may look first to the instrument’s face, including the place stated in its date line, along with other objective indicators such as the maker’s residence.
- When the record does not establish the nature or location of the underlying transaction, a court may rely on the note’s stated place (and related circumstances) to infer that the parties contracted with reference to that state’s law.
- For a usury defense, the governing law is generally the law of the state with which the contract is treated as made in contemplation of performance, as shown by the contract’s terms and the surrounding, proven facts; where those facts are missing, the written instrument may control the inference.

## Conclusion

Because the note identified “Storm Lake, Buena Vista Co., Iowa” and the maker lived there, and because no evidence showed a different transaction center that would require applying New York law, the Iowa Supreme Court treated the note as governed by Iowa law and rejected the usury defense, reversing the judgment for the maker and sending the case back for further proceedings consistent with enforcement of the note.


Bigelow v. Burnham, 49 N.W. 104 (1891)