A. and B. executed and delivered to C., in New York, a bond of
indemnity, conditioned to hold harmless and fully indemnify him
against all loss or damage arising from his liability on an appeal
bond, which he had signed in Louisiana as surety on behalf of a
certain railroad company, defendant in a judgment rendered against
it in the courts of the latter state, and which, being affirmed, he
was compelled to pay. By the law of New York, any written
instrument, although under seal, was subject to impeachment for
want of consideration, and a preexisting liability, entered into
without request, which was the sole consideration of that bond of
indemnity, was insufficient. It was otherwise in Louisiana. A suit
on the bond was brought in Louisiana.
Held:
1. That the question of the validity of the bond as dependent
upon the sufficiency of its consideration is not a matter of
procedure and remedy to be governed by the
lex foci, but
belongs to the substance of the contract, and must be determined by
the law of the seat of the obligation.
2. In every forum, a contract is governed by the law with a view
to which it is made, because, by the consent of the parties, that
law becomes a part of their agreement, and it is therefore to be
presumed, in the absence of any express declaration or controlling
circumstances to the contrary, that the parties had in
contemplation a law according to which their contract would be
upheld, rather than one by which it would be defeated.
3. The obligation of the bond of indemnity was either to place
funds in the hands of the obligee wherewith to discharge his
liability when it became fixed by judgment or to refund to him his
necessary advances in discharging it in the place where his
liability was legally solvable, and as this obligation could only
be fulfilled in Louisiana, it must be governed by the law of that
state as the
lex loci solutionis.
This action was brought by Eliza D. Pritchard, a citizen of
Louisiana, executrix of Richard Pritchard, deceased, against
Norton, a citizen of New York, in the court below, upon a writing
obligatory, of which the following is a copy:
"STATE OF NEW YORK"
"
County of New York"
"Know all men by these presents that we, Henry S. McComb, of
Wilmington, Delaware, and Ex Norton, of the City of New York, New
York, are held and firmly bound jointly and severally unto Richard
Pritchard, of New Orleans, his executors, administrators, and
assigns in the sum of fifty-five thousand ($55,000) dollars lawful
money of the United States, for the payment whereof we bind
ourselves, our heirs, executors, and administrators firmly by these
presents. Sealed with our seals and dated
Page 106 U. S. 125
this thirtieth day of June, A.D. eighteen hundred and
seventy-four."
"Whereas the aforesaid Richard Pritchard has signed an appeal
bond as one of the sureties thereon, jointly and severally, on
behalf of the defendant, appellant in the suit of
J. P.
Harrison, Jr. v. The New Orleans, Jackson & Great Northern
Railroad Co., No. 9,261 on the docket of the Seventh District
Court for the Parish of Orleans:"
"Now the condition of the above obligation is such that if the
aforesaid obligors shall hold harmless and fully indemnify the said
Richard Pritchard against all loss or damage arising from his
liability as surety on the said appeal bond, then this obligation
shall be null and void; otherwise shall remain in full force and
effect."
"H. S. McCOMB [L.S.]"
"EX NORTON [L.S.]"
The appeal bond mentioned was executed.
A judgment was rendered on that appeal in the supreme court of
the state May 30, 1876, against the railroad company, in
satisfaction of which Pritchard became liable to pay and did pay
the amount, to recover which his executrix brought this action. The
condition of this appeal bond was that the railroad company
"shall prosecute its said appeal and shall satisfy whatever
judgment may be rendered against it, or that the same shall be
satisfied by the proceeds of the sale of its estate, real or
personal, if it be cast in the appeal, otherwise that the said
Pritchard
et al., sureties, shall be liable in its
place."
The defendant set up by way of defense that the bond of
indemnity sued on was executed and delivered by him to Pritchard in
the State of New York and without any consideration therefor, and
that by the laws of that state, it was void by reason thereof.
There was evidence on the trial tending to prove that the appeal
bond was not signed by Pritchard at the instance or request of
McComb or Norton, and that there was no consideration for their
signing and executing the bond of indemnity passing at the time,
and that the latter was executed and delivered in New York. There
was also put in evidence the provisions of the Revised Statutes of
that state, 2 Rev.Stat. 406, as follows:
Page 106 U. S. 126
"SEC. 77. In every action upon a sealed instrument, and when a
setoff is founded upon any sealed instrument, the seal thereof
shall only be presumptive evidence of a sufficient consideration,
which may be rebutted in the same manner and to the same extent as
if the instrument were not sealed."
"SEC. 78. The defense allowed by the last section shall not be
made unless the defendant shall have pleaded the same or shall have
given notice thereof at the time of pleading the general issue or
some other plea denying the contract on which the action is
brought."
At the request of the defendant, the circuit court charged the
jury that the indemnifying bond, in respect to its validity and the
consideration requisite to support it, was to be governed by the
law of New York, and not of Louisiana, and that if they believed
from the evidence that the appeal bond signed by Richard Pritchard
as surety was not signed by him at the instance or request of
McComb and Norton, or either of them, and that no consideration
passed between Pritchard and McComb and Norton for the signing and
execution of the indemnifying bond by them, then that said bond was
void for want and absence of any consideration valid in law to
sustain it, and no recovery could be had upon it. The plaintiff
requested the court to charge the jury that if they found from the
evidence that the consideration for the indemnifying bond was the
obligation contracted by Pritchard as surety on the appeal bond,
and that the object of the indemnifying bond was to hold harmless
and indemnify Pritchard from loss or damage by reason of or growing
out of said appeal bond, then that the consideration for said
indemnifying bond was good and valid, and is competent to support
the action upon the bond for the recovery of any such loss or
damage sustained by Pritchard. This request the court refused.
Exceptions were duly taken to these rulings which are now assigned
for error, there having been a verdict and judgment for the
defendant, now sought to be reversed.
Page 106 U. S. 128
MR. JUSTICE MATTHEWS, after stating the case, delivered the
opinion of the Court.
It is claimed on behalf of the plaintiff in error that by the
law of Louisiana, the preexisting liability of Pritchard as surety
for the railroad company would be a valid consideration to support
the promise of indemnity, notwithstanding Pritchard's liability had
been incurred without any previous request from the defendant
below. This claim is not controverted, and is fully supported by
the citations from the Civil Code of Louisiana of 1870, arts.
1893-1960, and the decisions of the supreme court of that state.
Flood v. Thomas, 5 Martin N.S. (La.) 562;
N.O. Gas Co.
v. Paulding, 12 Rob. (La.) 378;
N.O. & Carrollton
Railroad Co. v. Chapman, 8 La.Ann. 98;
Keane v.
Goldsmith, 12 La.Ann. 560. In the case last mentioned, it is
said that "the contract is, in its nature, one of personal
warranty, recognized by articles 378 and 379 of the Code of
Practice." And it was there held that a right of action upon the
bond of indemnity accrued to the obligee when his liability became
fixed as surety by a final judgment, without payment on his part,
it being the obligation of the defendants upon the bond of
indemnity to pay the judgment rendered against the surety, or to
furnish him the money with which to pay it.
The single question presented by the record, therefore, is
whether the law of New York or that of Louisiana defines and fixes
the rights and obligations of the parties. If the former applies,
the judgment of the court below is correct; if the latter, it is
erroneous.
The argument in support of the judgment is simple, and may be
briefly stated. It is that New York is the place of the contract
both because it was executed and delivered there and because, no
other place of performance being either designated or necessarily
implied, it was to be performed there, wherefore the law of New
York, as the
lex loci contractus in both senses, being
lex loci celebrationis and
lex loci
solutionis,
Page 106 U. S. 129
must apply to determine not only the form of the contract, but
also its validity. On the other hand, the application of the law of
Louisiana may be considered in two aspects, as the
lex
fori, the suit having been brought in a court exercising
jurisdiction within its territory and administering its laws, and
as the
lex loci solutionis, the obligation of the bond of
indemnity being to place the fund for payment in the hands of the
surety or to repay him the amount of his advance in the place where
he was bound to discharge his own liability.
It will be convenient to consider the applicability of the law
of Louisiana, first, as the
lex fori and then as the
lex loci solutionis.
1.
The lex fori.
The circuit court of the United States sitting in the district
of Louisiana, in a cause like the present, in which its
jurisdiction depends on the citizenship of the parties, adjudicates
their rights precisely as would a tribunal of the state according
to the laws of the state, so that, in that sense, there is no
question as to what law must be administered. But in case of
contract, the foreign law may, by the act and will of the parties,
have become part of their agreement, and in enforcing this, the law
of the forum may find it necessary to give effect to a foreign law
which, without such adoption, would have no force beyond its own
territory.
This, upon the principle of comity for the purpose of promoting
and facilitating international intercourse and within limits fixed
by its own public policy, a civilized state is accustomed and
considers itself bound to do, but, in doing so, nevertheless
adheres to its own system of formal judicial procedure and
remedies. And thus the distinction is at once established between
the law of the contract, which may be foreign, and the law of the
procedure and remedy, which must be domestic and local. In respect
to the latter, the foreign law is rejected, but how and where to
draw the line of precise classification it is not always easy to
determine.
The principle is that whatever relates merely to the remedy and
constitutes part of the procedure is determined by the law of the
forum, for matters of process must be uniform in the courts of the
same country, but whatever goes to the substance
Page 106 U. S. 130
of the obligation and affects the rights of the parties, as
growing out of the contract itself or inhering in it or attaching
to it, is governed by the law of the contract.
The rule deduced by Mr. Wharton in his Conflict of Laws, as best
harmonizing the authorities and effecting the most judicious
result, and which was cited approvingly by Mr. Justice Hunt in
Scudder v. Union National Bank, 91 U.
S. 411, is that
"Obligations in respect to the mode of their solemnization are
subject to the rule
locus actum regit; in respect to their
interpretation, to the
lex loci contractus; in respect to
the mode of their performance, to the law of the place of their
performance. But the
lex fori determines when and how such
laws, when foreign, are to be adopted, and, in all cases not
specified above, supplies the applicatory law."
This, it will be observed, extends the operation of the
lex
fori beyond the process and remedy, so as to embrace the whole
of that residuum which cannot be referred to other laws. And this
conclusion is obviously just, for whatever cannot, from the nature
of the case, be referred to any other law must be determined by the
tribunal having jurisdiction of the litigation according to the law
of its own locality.
Whether an assignee of a chose in action shall sue in his own
name or that of his assignor is a technical question of mere
process, and determinable by the law of the forum, but whether the
foreign assignment, on which the plaintiff claims, is valid at all,
or whether it is valid against the defendant, goes to the merits,
and must be decided by the law in which the case has its legal
seat. Wharton, Conflict of laws, secs. 735-736. Upon that point,
Judge Kent, in the case of
Lodge v. Phelps, 1 Johns.Cas.
(N.Y.) 139, said:
"If the defendant has any defense authorized by the law of
Connecticut, let him show it and he will be heard in one form of
action as well as in the other."
It is to be noted, however, as an important circumstance that
the same claim may sometimes be a mere matter of process, and so
determinable by the law of the forum, and sometimes a matter of
substance going to the merits, and therefore determinable by the
law of the contract. That is illustrated in the application of the
defense arising upon the statute of limitations. In the courts of
England and America, that
Page 106 U. S. 131
defense is governed by the law of the forum as being a matter of
mere procedure, while in continental Europe the defense of
prescription is regarded as going to the substance of the contract,
and therefore is governed by the law of the seat of the obligation.
"According to the true doctrine," says Savigny,
"the local law of the obligation must determine as to the term
of prescription, not that of the place of the action, and this
rule, which has just been laid down in respect to exceptions in
general, is further confirmed in the case of prescription by the
fact that the various grounds on which it rests stand in connection
with the substance of the obligation itself."
Private Inter.Law, by Guthrie, 201. In this view Westlake
concurs. Private Inter.Law, ed. 1858 sec. 250. He puts it, together
with the case of a merger in another cause of action, the
occurrence of which will be determined by the law of the former
cause,
Bryans v. Dunseth, 1 Martin, N.S. (La.) 412, as
equal instances of the liability to termination inherent by the
lex contractus. But notwithstanding the contrary doctrine
of the courts of England and this country, when the statute of
limitations of a particular country not only extinguishes the right
of action, but the claim or title itself,
ipso facto, and
declares it a nullity after the lapse of the prescribed period, and
the parties have been resident within the jurisdiction during the
whole of that period, so that it has actually and fully operated
upon the case, it must be held, as it was considered by Justice
Story, to be an extinguishment of the debt, wherever an attempt
might be made to enforce it. Conflict of Laws, sec. 582. That rule,
as he says, has the direct authority of this Court in its support
in
Shelby v. Guy,
11 Wheat. 361,
24 U. S. 371;
its correctness was recognized by Chief Justice Tindal; in
Huber v. Steiner, 2 Bing. N.C. 202-211, and it is spoken
of by Lord Brougham in
Don v. Lippmann, 5 Cl. & Fin.
16, as "the excellent distinction taken by Mr. Justice Story."
Walworth v. Routh, 14 La.Ann. 205. The same principle was
applied by the Supreme Court of Ohio in the case of the
P., C.
& St. L. Railway Co. v. Hine's Adm'x, 25 Ohio St. 629,
where it was held that under the act requiring compensation for
causing death by wrongful act, neglect, or default, which gave a
right of
Page 106 U. S. 132
action, provided such action should be commenced within two
years after the death of such deceased person, the proviso was a
condition qualifying the right of action, and not a mere limitation
on the remedy.
Bonte v. Taylor, 24 Ohio St. 628.
The principle that what is apparently mere matter of remedy in
some circumstances, in others, where it touches the substance of
the controversy, becomes matter of right, is familiar in our
constitutional jurisprudence in the application of that provision
of the Constitution of the United States which prohibits the
passing by a State of any law impairing the obligation of
contracts, for it has been uniformly held that
"any law which in its operation amounts to a denial or
obstruction of the rights accruing by a contract, though professing
to act only on the remedy, is directly obnoxious to the prohibition
of the Constitution."
McCracken v.
Hayward, 2 How. 608,
43 U. S. 612;
Cooley, Const.Lim. 285.
Hence, it is that a vested right of action is property in the
same sense in which tangible things are property, and is equally
protected against arbitrary interference. Whether it springs from
contract or from the principles of the common law, it is not
competent for the legislature to take it away. A vested right to an
existing defense is equally protected, saving only those which are
based on informalities not affecting substantial rights, which do
not touch the substance of the contract and are not based on equity
and justice. Cooley, Const.Lim. 362-369.
The general rule, as stated by Story, is that a defense or
discharge, good by the law of the place where the contract is made
or is to be performed is to be held of equal validity in every
other place where the question may come to be litigated. Conflict
of Laws, sec. 331. Thus, infancy, if a valid defense by the
lex
loci contractus, will be a valid defense everywhere.
Thompson v. Ketcham, 8 Johns. 146;
Male v.
Roberts, 3 Esp. 163. A tender and refusal, good by the same
law, either as a full discharge or as a present fulfillment of the
contract, will be respected everywhere.
Warder v. Arell, 2
Wash. (Va.) 282. Payment in paper money bills or in other things,
if good by the same law, will be deemed a sufficient payment
everywhere. 1 Brown Ch. 376;
Searight v. Calbraith,
Page 106 U. S. 133
4 Dall. 325 [omitted];
Barstsch v. Atwater, 1 Conn.
409. And on the other hand, where a payment by negotiable bills or
notes is, by the
lex loci, held to be conditional payment
only, it will be so held even in states where such payment under
the domestic law would be held absolute. So if by the law of the
place of a contract equitable defenses are allowed in favor of the
maker of a negotiable note, any subsequent endorsement will not
change his rights in regard to the holder. The latter must take it
cum onere. Ory v. Winter, 16 Martin, 277;
Evans v. Gray, 12 Martin 475;
Chartus v. Caines,
16 Martin 1; Story, Conflict of Laws sec. 332.
On the other hand, the law of the forum determines the form of
the action, as whether it shall be assumpsit, covenant, or debt.
Warren v. Lynch, 5 Johns. 239;
Andrews v.
Herriot, 4 Cowen 508;
Trasher v. Everhart, 3 Gill.
& J. 234;
Adams v. Ker, 1 Bos. & Pul. 360;
Bank of the United States v.
Donally, 8 Pet. 361;
Douglas v. Oldham, 6
N.H. 150. In
Le Roy v.
Beard, 8 How. 451, where it was held that
assumpsit, and not covenant, was the proper form of action brought
in New York upon a covenant executed and to be performed in
Wisconsin, and by its laws sealed as a deed, but which in the
former was not regarded as sealed, it was said by this Court that
it was so decided
"without impairing at all the principle that in deciding on the
obligation of the instrument as a contract, and not the remedy on
it elsewhere, the law of Wisconsin, as the
lex loci
contractus, must govern."
It also regulates all process, both mesne and final.
Ogden v.
Saunders, 12 Wheat. 213;
Mason v.
Haile, 12 Wheat. 370;
Beers
v. Haughton, 9 Pet. 359;
Von
Hoffman v. Quincy, 4 Wall. 535. It also may admit,
as a part of its domestic procedure, a setoff or compensation of
distinct causes of action between the parties to the suit, though
not admissible by the law of the place of the contract. Story,
Conflict of Laws sec. 574;
Gibbs v. Howard, 2 N.H. 296;
Ruggles v. Keeler, 3 Johns. 263. But this is not to be
confounded, as it was in the case of
Second National Bank of
Cincinnati v. Hemingray, 31 Ohio St. 168, with that of a
limited negotiability, by which the right of setoff between the
original parties is preserved as part of the law of the contract
notwithstanding an assignment. The rules of
Page 106 U. S. 134
evidence are also supplied by the law of the forum.
Wilcox v.
Hunt, 13 Pet. 378;
Yates v. Thompson, 3
Cl. & Fin. 544;
Bain v. Whitehaven &c. Railway
Co., 3 H. of L.Cas. 1;
Don v. Lippmann, 3 Cl. &
Fin. 1. In
Yates v. Thompson, supra, it was decided by the
House of Lords that in a suit in a Scotch court to adjudge the
succession to personalty of a decedent domiciled in England, where
it was admitted that the English law governed the title,
nevertheless it was proper to receive in evidence, as against a
will of the decedent, duly probated in England, a second will which
had not been proved there, and was not receivable in English courts
as competent evidence, because such a paper, according to Scottish
law, was admissible. In the case of
Hoadley v. Northern
Transportation Co., 115 Mass. 304, it was held that if the law
of the place where a contract signed only by the carrier is made
for the carriage of goods requires evidence other than the mere
receipt by the shipper to show his assent to its terms, and the law
of the place where the suit is brought presumes conclusively such
assent from acceptance without dissent, the question of assent is a
question of evidence, and is to be determined by the law of the
place where the suit is brought. In a suit in Connecticut against
the endorser on a note made and endorsed in New York, it was held
that parol evidence of a special agreement, different from that
imputed by law, would be received in defense, although by the law
of the latter state no agreement different from that which the law
implies from a blank endorsement could be proved by parol.
Downer v. Chesebrough, 36 Conn. 39. And upon the same
principle it has been held that a contract, valid by the laws of
the place where it is made although not in writing, will not be
enforced in the courts of a country where the statute of frauds
prevails unless it is put in writing.
Leroux v. Brown, 12
C.B. 801. B ut where the law of the forum and that of the place of
the execution of the contract coincide, it will be enforced
although by the law of the place of performance required to be in
writing, as was the case of
Scudder v. Union National
Bank, 91 U. S. 406,
because the form of the contract is regulated by the law of the
place of its celebration, and the evidence of it by that of the
forum.
Williams v. Haines, 27 Ia. 251, was an action upon a
note
Page 106 U. S. 135
executed in Maryland, and so far as appears from the report
payable there, where the parties thereto then resided, and which
was a sealed instrument, according to the laws of that state, in
support of which those laws conclusively presumed a valid
consideration. By the laws of Iowa, to such an instrument the want
of consideration was allowed to be proved as a defense. It was held
by the supreme court of that state in an opinion delivered by Chief
Justice Dillon that the law of Iowa related to the remedy merely,
without impairing the obligation of the contract, and, as the
lex fori, must govern the case. He said:
"Respecting what shall be good defenses to actions in this
state, its courts must administer its own laws and not those of
other states. The common law rules do not so inhere in the contract
as to have the portable quality ascribed to them by the plaintiff's
counsel, much less can they operate to override the plain
declaration of the legislative will."
The point of this decision is incorporated by Mr. Wharton into
the text of his Treatise on the Conflict of Laws sec. 788, and the
case itself is referred to in support of it. He deduces the same
conclusion from those cases already referred to, which declare that
assumpsit is the only form of action that can be brought upon an
instrument which is not under seal, according to the laws of the
forum, although by the law of the place where it was executed or
was to be performed it would be regarded as under seal, in which
debt or covenant would lie, on the ground that a plea of want or
failure of consideration is recognized as a defense in all actions
of assumpsit. Wharton, Conflict of Laws sec. 747.
It the proposition be sound, its converse is equally so, and the
law of the place where a suit may happen to be brought may forbid
the impeachment of a contract for want of a valid consideration
which, by the law of the place of the contract, might be declared
invalid on that account.
We cannot, however, accept this conclusion. The question of
consideration, whether arising upon the admissibility of evidence
or presented as a point in pleading, is not one of procedure and
remedy. It goes to the substance of the right itself, and belongs
to the constitution of the contract. The difference between the law
of Louisiana and that of New York presented
Page 106 U. S. 136
in this case is radical, and gives rise to the inquiry what,
according to each, are the essential elements of a valid contract,
determinable only by the law of its seat, and not that other, what
remedy is provided by the law of the place where the suit has been
brought to recover for the breach of its obligation.
On this point, what was said in the case of
The Gaetano
& Maria, L.R. 7 P.D. 137, is pertinent. In that case, the
question was whether the English law, which was the law of the
forum, or the Italian law, which was the law of the flag, should
prevail, as to the validity of a hypothecation of the cargo by the
master of the ship. It was claimed that because the matter to be
proved was whether there was a necessity which justified it, it
thereby became a matter of procedure, as being a matter of
evidence. Lord Justice Brett said:
"Now the manner of proving the facts is matter of evidence, and
to my mind is a matter of procedure, but the facts to be proved are
not matters of procedure; they are matters with which the procedure
has to deal."
It becomes necessary, therefore, to consider the applicability
of the law of Louisiana as --
2. The
lex loci solutionis.
The phrase
lex loci contractus is used in a double
sense, to mean sometimes the law of the place where a contract is
entered into, sometimes that of the place of its performance. And
when it is employed to describe the law of the seat of the
obligation, it is on that account confusing. The law we are in
search of, which is to decide upon the nature, interpretation, and
validity of the engagement in question, is that which the parties
have, either expressly or presumptively, incorporated into their
contract as constituting its obligation. It has never been better
described than it was incidentally by Chief Justice Marshall in
Wayman v.
Southard, 10 Wheat. 1,
23 U. S. 48, where
he defined it as a principle of universal law -- "the principle
that in every forum, a contract is governed by the law with a view
to which it was made." The same idea had been expressed by Lord
Mansfield in
Robinson v. Bland, 2 Burr. 1077. "The law of
the place," he said, "can never be the rule where the transaction
is entered into with an express view to the law of another country,
as the rule by which it is to be governed." And in
Lloyd v.
Guibert, L.R. 1 Q.B. 115, 120,
Page 106 U. S. 137
in the Court of Exchequer Chamber, it was said that
"it is necessary to consider by what general law the parties
intended that the transaction should be governed, or rather by what
general law it is just to presume that they have submitted
themselves in the matter."
Le Breton v. Miles, 8 Paige 261.
It is upon this ground that the presumption rests that the
contract is to be performed at the place where it is made, and to
be governed by its laws, there being nothing in its terms or in the
explanatory circumstances of its execution inconsistent with that
intention.
So Phillimore says:
"It is always to be remembered that in obligations it is the
will of the contracting parties, and not the law, which fixes the
place of fulfillment -- whether that place be fixed by
express
words or by
tacit implication -- as the place to the
jurisdiction of which the contracting parties elected to submit
themselves."
4 Int.Law 469.
The same author concludes his discussion of the particular topic
as follows:
"As all the foregoing rules rest upon the presumption that the
obligor has voluntarily submitted himself to a particular local
law, that presumption may be rebutted either by an express
declaration to the contrary or by the fact that the obligation is
illegal by that particular law, though legal by another. The
parties cannot be presumed to have contemplated a law which would
defeat their engagements."
4 Int.Law sec. DCLIV, pp. 470-471.
This rule, if universally applicable, which perhaps it is not,
though founded on the maxim
ut res magis valeat quam
pereat, would be decisive of the present controversy as
conclusive of the question of the application of the law of
Louisiana, by which alone the undertaking of the obligor can be
upheld. At all events, it is a circumstance highly persuasive in
its character of the presumed intention of the parties, and
entitled to prevail unless controlled by more express and positive
proofs of a contrary intent.
It was expressly referred to as a decisive principle in
Bell
v. Packard, 69 Me. 105, although it cannot be regarded as the
foundation of the judgment in that case.
Milliken v.
Pratt, 125 Mass. 374.
Page 106 U. S. 138
If now we examine the terms of the bond of indemnity and the
situation and relation of the parties, we shall find conclusive
corroboration of the presumption that the obligation was entered
into in view of the laws of Louisiana.
The antecedent liability of Pritchard as surety for the railroad
company on the appeal bond was confessedly contracted in that state
according to its laws, and it was there alone that it could be
performed and discharged. Its undertaking was that Pritchard
should, in certain contingencies, satisfy a judgment of its courts.
That could be done only within its territory and according to its
laws. The condition of the obligation, which is the basis of this
action, is that McComb and Norton, the obligors, shall hold
harmless and fully indemnify Pritchard against all loss or damage
arising from his liability as surety on the appeal bond. A judgment
was in fact rendered against him on it in Louisiana. There was but
one way in which the obligors in the indemnity bond could perfectly
satisfy its warranty. That was, the moment the judgment was
rendered against Pritchard on the appeal bond, to come forward in
his stead and, by payment to extinguish it. He was entitled to
demand this before any payment by himself, and to require that the
fund should be forthcoming at the place where otherwise he could be
required to pay it. Even if it should be thought that Pritchard was
bound to pay the judgment recovered against himself before his
right of recourse accrued upon the bond of indemnity, nevertheless
he was entitled to be reimbursed the amount of his advance at the
same place where he had been required to make it. So that it is
clear beyond any doubt that the obligation of the indemnity was to
be fulfilled in Louisiana, and consequently is subject in all
matters affecting its construction and validity to the law of that
locality.
This construction is abundantly sustained by the authority of
judicial decisions in similar cases.
In
Irvine v. Barrett, 2 Grant's (Pa.) Cas. 73, it was
decided that where a security is given in pursuance of a decree of
a court of justice, it is to be construed according to the
intention of the tribunal which directed its execution, and, in
contemplation of law, is to be performed at the place where the
court
Page 106 U. S. 139
exercises its jurisdiction, and that a bond given in another
state, as collateral to such an obligation, is controlled by the
same law which controls the principal indebtedness. In the case of
Penobscot & Kennebec Railroad Co. v. Bartlett, 12 Gray
244, the Supreme Judicial Court of Massachusetts decided that a
contract made in that state to subscribe to shares in the capital
stock of a railroad corporation established by the laws of another
state, and having their road and treasury there, is a contract to
be performed there, and is to be construed by the laws of that
state. In
Lanusse v.
Barker, 3 Wheat.
16 U. S. 146,
this Court declared that
"where a general authority is given to draw bills from a certain
place on account of advances there made, the undertaking is to
replace the money at that place."
The case of
Cox v. United
States, 6 Pet. 172, was an action upon the official
bond of a navy agent. The sureties contended that the United States
were bound to divide their action and take judgment against each
surety only for his proportion of the sum due, according to the
laws of Louisiana, considering it a contract made there, and to be
governed in this respect by the law of that state. The Court,
however, said:
"But admitting the bond to have been signed at New Orleans, it
is very clear that the obligations imposed upon the parties thereby
looked for its execution to the City of Washington. It is
immaterial where the services as navy agent were to be performed by
Hawkins. His accountability for nonperformance was to be at the
seat of government. He was bound to account, and the sureties
undertook that he should account, for all public moneys received by
him, with such officers of the government of the United States as
are duly authorized to settle and adjust his accounts. The bond is
given with reference to the laws of the United States on that
subject. And such accounting is required to be with the Treasury
Department at the seat of government, and the navy agent is bound
by the very terms of the bond to pay over such sum as may be found
due to the United States on such settlement, and such paying over
must be to the Treasury Department, or in such manner as shall be
directed by the Secretary. The bond is therefore in every point of
view in which
Page 106 U. S. 140
it can be considered, a contract to be executed at the City of
Washington, and the liability of the parties must be governed by
the rules of the common law."
This decision was repeated in
Duncan v.
United States, 7 Pet. 435.
These cases were relied on by the supreme court of New York in
the case of
Kentucky v. Bassford, 6 Hill 526. That was an
action upon a bond executed in New York conditioned for the
faithful performance of the duties enjoined by a law of Kentucky
authorizing the obligees to sell lottery tickets for the benefit of
a college in that state. It was held that the stipulations of the
bond were to be performed in Kentucky and that, as it was valid by
the laws of that state, the courts of New York would enforce it
notwithstanding it would be illegal in that state.
Boyle v.
Zacharie, 6 Pet. 635, is a direct authority upon
the point. There, Zacharie and Turner were resident merchants at
New Orleans, and Boyle at Baltimore. The latter sent his ship to
New Orleans, consigned to Zacharie and Turner, where she arrived,
and, having landed her cargo, the latter procured a freight for her
to Liverpool. When she was ready to sail, she was attached by
process of law at the suit of certain creditors of Boyle, and
Zacharie and Turner procured her release by becoming security for
Boyle on the attachment. Upon information of the facts, Boyle
promised to indemnify them for any loss they might sustain on that
account. Judgment was rendered against them on the attachment bond,
which they were compelled to pay, and brought suit against Boyle in
the Circuit Court for Maryland, upon his promise of indemnity, to
recover the amount they had been compelled to pay. A judgment was
rendered by confession in that cause, and a bill in equity was
subsequently filed to enjoin further proceedings on it, in the
course of which various questions arose among them whether the
promise of indemnity was a Maryland or a Louisiana contract. Mr.
Justice Story, delivering the opinion of the Court, said:
"Such a contract would be understood by all parties to be a
contract made in the place where the advance was to be made, and
the payment, unless otherwise stipulated, would also be understood
to be made there; . . . that the contract would clearly refer for
its execution to Louisiana. "
Page 106 U. S. 141
The very point was also decided by this Court in
Bell v. Bruen,
1 How. 169. That was an action upon a guarantee written by the
defendant in New York, addressed to the plaintiffs in London, the
latter having made advances in the latter place of a credit to
Thorn. The operative language of the guarantee was "that you may
consider this, as well as any and every other credit you may open
in his favor, as being under my guarantee." The Court said: "It was
an engagement to be executed in England, and must be construed and
have effect according to the laws of that country," citing
Bank of the United States v.
Daniel, 12 Pet. 54. As the money was advanced in
England, the guarantee required that it should be replaced there,
and that is the precise nature of the obligation in the present
case. Pritchard could only be indemnified against loss and damage
on account of his liability on the appeal bond, by having funds
placed in his hands in Louisiana wherewith to discharge it, or by
being repaid there the amount of his advance. To the same effect is
Woodhull v. Wagner, Baldw. 296.
We do not hesitate, therefore, to decide that the bond of
indemnity sued on was entered into with a view to the law of
Louisiana as the place for the fulfillment of its obligation, and
that the question of its validity, as depending on the character
and sufficiency of the consideration, should be determined by the
law of Louisiana, and not that of New York.
For error in its rulings on this point, consequently, the
judgment of the circuit court is reversed, with directions to grant
a new trial.
New trial ordered.