MYRTLE M. THOMPSON, Respondent,
THE ERIE RAILROAD COMPANY, Appellant.
APPEAL by the defendant, The Erie Railroad Company, from a judgment of the Municipal Court of the city of New York, borough of Brooklyn, in favor of the plaintiff, rendered on the 24th day of January, 1911.
William C. Cannon [Lansing P. Reed with him on the brief], for the appellant.
Frederick H. Cunningham, for the respondent.
In the month of February, 1910, one John E. Doherty, an employee of the defendant, applied to the Chester Kirk Company of New York city for a loan of thirty-seven dollars. Doherty was given a blank to be signed by him, which appears to have been a power of attorney, in and by which he constituted one Stella Blanding his true and lawful attorney to make notes, assignments of wages and any instrument or instruments to repay the said loan, this power of attorney to be exercised in the State of Maine. On the 28th day of February, 1910, Stella Blanding, acting under this power of attorney within the State of Maine, made, executed and delivered a promissory note for the sum of forty-five dollars, due on the fourth day of
April of that year. This note the said Stella Blanding sold to the N.W. Hasten Company of Portland, Me., and Doherty was given thirty-six dollars and eighty-five cents as the avails of such note. The note was not paid at maturity, whereupon the said Stella Blanding, still acting under the power of attorney, made an assignment of Doherty's wages to become due from the Erie Railroad Company to the N.W. Hasten Company in the sum of ninety dollars. This assignment was dated on the twenty-first day of April, and on the twenty-second day of April a copy of this assignment was sent to the Erie Railroad Company, together with a statement that if sixty dollars and fifty cents were paid under the assignment promptly, and before the claim was placed in the hands of an attorney, the notice of assignment would be withdrawn, and no other notice or copy of any other instrument was sent to the defendant. Subsequently the N.W. Hasten Company assigned this claim to the plaintiff, who brought this action to recover the sixty dollars and fifty cents, and she has a judgment for this amount against the Erie Railroad Company, which appeals from the judgment.
There can hardly be a doubt that at common law Doherty would have a complete right to give a power of attorney to a resident of the State of Maine to do any lawful act within that State. Doherty would himself have had a perfect right to go into the State of Maine and there enter into a contract for the loan of money at any rate of interest lawful in that State, and it appears to be conceded that there is no limit upon the rate of interest there except that agreed upon between the parties. As collateral to such a contract it can hardly be doubted that Doherty would have a perfect right to make an assignment of his wages, or of wages to be earned, and if he could do these things himself, if personally present within the State of Maine, we see no good reason why he could not empower his attorney in fact to do them for him, even though this should result in a contract which, if done and performed in the State of New York, would involve no obligation. Doherty did not make or authorize the making of any contract within the State of New York; he authorized a contract lawful in the State of Maine, and no rule of law suggests itself why a man within the State of New
York may not authorize his agent to enter into a lawful contract in a sister State, even though such a contract would be opposed to the public policy of this State and would not be enforced here. The contract authorized was lawful where made; no part of the contract was made here, or authorized to be made here, and, in so far as the original note was concerned, no one within the State of New York, other than Doherty, had any interest in the transaction. An action against Doherty on the note would not be open to the defense of usury, either in this State or in Maine, for it was not usurious where the contract was made, and the assignment of Doherty's wages, earned or to be earned, was made for the purpose of securing the payment of a valid legal obligation owing by Doherty. The original transaction not being tainted with usury, could not operate to vitiate the collateral transaction, and so there was a valid and binding assignment of Doherty's wages, earned or to be earned from the Erie Railroad Company, and it is admitted that the defendant has paid to Doherty considerably more than the amount claimed since receiving notice of the assignment. The Municipal Court has held that the defendant is liable to the plaintiff in this action, and the appeal of the defendant brings up the question whether this otherwise lawful transaction has been outlawed by reason of the provisions of section 42 of the Personal Property Law (Consol. Laws, chap. 41; Laws of 1909, chap. 45). This section provides as follows:
'1. Any person or persons, firm, corporation or company, who shall after March eighteenth, nineteen hundred and four, make to any employee an advance of money, or loan, on account of salary or wages due or to be earned in the future by such individual, upon an assignment or note covering such loans or advances, shall not acquire any right to collect or attach the same while in the possession or control of the employer, unless within a period of three days after the execution of such assignment or notes and the making of such loan or loans, the party making such loan and taking such assignment shall have filed with the employer or employers of the individual so assigning his present or prospective salary or wages, a duly authenticated copy of such agreement or assignment or notes under which the claim is made.