Courts of one state do not take judicial notice of the laws of
another state, whether written or unwritten. Statutes and decisions
must be proved as facts, but, when proved, their construction and
meaning are for the consideration and judgment of the court, and
the fact that an attorney of the enacting state has testified
without contradiction as to the construction of a law of that state
floes not conclude the court and make it its duty to find as a fact
that such was the true construction.
Page 189 U. S. 123
While this Court does not take judicial notice of the decisions
of the courts of one state in a case coming from the courts of
another state, it may properly refer to the opinion of the highest
court of a state as to the construction of a statute of that state
when such statute is involved in a case before this Court, and this
applies to a decision rendered after the judgment appealed from was
rendered.
The construction given by the Supreme Court of South Carolina
and by the Court of Appeals of New York to the building and loan
law of New York, to the effect that it does not relieve a building
and loan association from an obligation to pay the full par value
of certificates at a date stated therein, whether earned or not,
commends itself to this Court as a correct construction
thereof.
This action was commenced on January 12, 1898, in the Circuit
Court of Darlington County, South Carolina, by Bright Williamson
against the Eastern Building & Loan Association of Syracuse,
New York, to recover the face value of twenty-five shares of stock
in the defendant association, less a sum theretofore borrowed by
the plaintiff from the association. Judgment in his favor for the
full amount claimed was rendered in the trial, affirmed by the
supreme court of the state, 62 S.C. 390, 38, and thence brought
here on this writ of error.
The case is similar to that of
the same plaintiff in error
v. Ebaugh, 185 U. S. 114.
Here, as there, the stock certificates contained an absolute
promise to pay "the sum of one hundred dollars for each of said
shares at the end of seventy-eight months from the date hereof."
Here, as there, circulars were shown to the plaintiff to induce his
subscription, one of which contained this statement:
"
For the investor"
"This association issues three classes of certificates,
designated as installment, paid-up, and fully paid. All of which
are guaranteed to mature in six and one-half years."
"Amply secured by first mortgages on real estate."
"Paid-up stock doubles in six and one-half years."
"Fully paid certificates guaranteed."
"Quarterly dividends, 7 percent per annum."
"
For the borrower"
"This association has no auction sales. "
Page 189 U. S. 124
"No bidding for loans."
"And a definite time for repaying a loan."
Another, the following:
"Only association giving investor and borrower definite maturity
contract in seventy-eight months. Only association issuing definite
contracts."
The defendant pleaded that there was no absolute promise to pay
at the end of seventy-eight months, but only an estimate of the
time at which the stock would mature; that an absolute promise to
pay at the end of seventy-eight months was inconsistent with the
nature of the corporation as a mutual company, and against the
provisions of its charter and bylaws, and also illegal by the laws
of New York under which the company was incorporated.
On the trial before a jury, defendant, in support of its answer,
introduced the charter and bylaws of the company, the statutes of
New York under which it was incorporated, certain decisions of the
courts of that state, and the testimony of the assistant secretary
and actuary of the defendant that the shares of stock had not, in
fact matured; also the deposition of its general attorney, who,
after affirming his familiarity with the law of that state
regarding building and loan associations, of which, as he said, he
had made a special study, testified that, under the defendant's
articles of incorporation and bylaws, and the laws and decisions of
New York, the heretofore-referred-to clause in the certificate of
stock "is not to be construed or held as a guaranty period of
maturity, but, on the other hand, an estimated period," and that
the association is not required to pay the face value of the
certificates until "the amount paid by the plaintiff on his shares
of stock, augmented by the earnings apportioned and credited
thereto, equal the par value." Upon this testimony, the defendant
asked the court to charge the jury that full faith and credit must
be given to the laws of New York as construed by its courts, and
that, by reason thereof,
"under the terms of the contract of membership, and the contract
of loan, bylaws, and charter, the transaction between the plaintiff
and defendant does not terminate merely upon making a fixed number
of payments, but only when the dues paid in by
Page 189 U. S. 125
him, with the profits apportioned to his shares, make them equal
their par value of $100 per share."
Other instructions of a similar nature, or looking to the same
result, were also asked, but all were refused.
MR. JUSTICE BREWER delivered the opinion of the Court.
The federal question presented arises on the contention that the
South Carolina courts did not give "full faith and credit . . . to
the public acts, records, and judicial proceedings" of the State of
New York, as required by ยง 1, Article IV, of the Constitution of
the United States.
Courts of one state do not take judicial notice of the laws of
another state, whether written or unwritten. They must be proved as
facts.
Talbot v. Seaman,
1 Cranch 1,
5 U. S. 38;
Livingston v. Maryland
Insurance Co., 6 Cranch 274;
Ennis v.
Smith, 14 How. 400,
55 U. S. 426;
Pierce v. Indseth, 106 U. S. 546,
106 U. S. 551;
Chicago & Alton Railroad v. Wiggins Ferry Co.,
119 U. S. 615,
119 U. S. 622,
30 L. Ed. 519, 522;
Lloyd v. Matthews, 155 U.
S. 222;
Building & Loan Association v.
Ebaugh, 185 U. S. 114,
185 U. S. 121;
Nashua Savings Bank v. Anglo-American Co., post, p.
189 U. S. 221.
The law of New York was so proved in this case, and the
contention is that it was not rightly construed by the South
Carolina courts; that the law of New York which entered into and
formed a part of the contract sued on was not given by those courts
the same force and effect that it had in New York, and that, hence,
the rights secured by the Constitution of the United States to the
plaintiff in error were denied. If it appeared that the South
Carolina courts, without questioning the validity, simply construed
a statute of New York, no federal question would be presented.
Glenn v. Garth, 147 U. S. 360;
Lloyd v.
Page 189 U. S. 126
Matthews, 155 U. S. 222;
Bankolzer v. New York Life Insurance Co., 178 U.
S. 402;
Johnson v. New York Life Ins. Co.,
187 U. S. 491.
But it is contended that the construction of the New York
statutes, as applicable to this contract, was shown by the
decisions of the courts of that state and the opinion of one
learned in its laws; that there was no contradictory testimony, and
therefore it was the duty of the South Carolina courts to find as a
fact that such was the true construction.
The promise to pay $100 at the end of seventy-eight months is
plain and unambiguous. It is a positive promise to pay at a fixed
time. The circulars presented by the company to the plaintiff as an
inducement for his subscription only emphasize the certainty of the
promise. So, if the inquiry were limited to the mere language of
the promise and the representations which led up to it, but one
decision was possible. It is said that the promise made in the
certificate is expressly based upon "full compliance with the
terms, conditions, and bylaws printed on the front and back of this
certificate;" that one of the conditions expressed on the face of
the certificate is:
"The shareholder agrees to pay, or cause to be paid, a monthly
installment of seventy-five cents on each share named in this
contract, the same to be paid on or before the last Saturday of
each month until such share matures or is withdrawn;"
that it contained this further stipulation: "Payable in the
manner and upon the conditions set forth in said terms, conditions,
and bylaws hereto attached," and that these matters thus referred
to had the effect of changing the absolute promise to a conditional
one. All these were received in evidence, and, when so received, it
became a matter of judicial construction to determine whether they
had such effect, and that was a question which, nothing else being
shown, was for the consideration of the courts in which the
litigation was pending. In like manner, after the decisions of the
courts of New York were received in evidence, their meaning and
scope became matters for the same consideration. While statutes and
decisions of other states are facts to be proved, yet, when proved,
their construction and meaning are for the consideration and
judgment of the courts
Page 189 U. S. 127
in which they have been proved. Nor is the rule changed by the
testimony given in the deposition of defendant's counsel, for, as
he states, his opinion is based on the statutes, the articles of
incorporation, and the decisions admitted in evidence, together
with similar decisions of other states under like statutes,
articles of incorporation, and bylaws. No witness can conclude a
court by his opinion of the construction and meaning of statutes
and decisions already in evidence.
Laing v. Rigney,
160 U. S. 531. The
duty of the court to construe and decide remains the same. It must
be remembered that the effort here made is to change the
obligations which the defendant apparently assumed by the issue to
plaintiff of its certificates of stock, and to justify such change
by its articles of incorporation, the statutes of the State of New
York under which it was created, and the decisions of the courts of
that state. There is no suggestion of any peculiar local law in New
York independent of that created by these articles and statutes and
shown by its decisions, and their effect upon the terms of the
contract was a matter for judicial construction by the courts of
South Carolina. That the defendant so understood the matter is
apparent from the instructions it asked.
The conclusion reached by the courts of South Carolina that the
articles of incorporation and bylaws and the statutes of New York
did not alter the apparent meaning of the contract was correct. The
absolute promise was not so inconsistent with the articles of
incorporation or bylaws as to be void. The bylaws at the time of
making this contract contained no such provision as appears in
Daley v. People's Building &c. Association, 172 Mass.
533. There, the provision was that "whenever the dues paid and
dividends declared shall equal the par value of the shares held by
any shareholder, said shares of stock shall be cancelled," and the
shareholder "shall be entitled to receive . . . the par value of
the shares named . . . and no more." Here "all shareholders shall
pay or cause to be paid a monthly installment of seventy-five cents
on each share named in their certificate, until the same shall be
fully paid." Article 14, section 14. But in sections 21 and 22 of
the same article are these provisions for a different mode and
amount of payment:
Page 189 U. S. 128
"SEC. 21. And it is hereby expressly agreed between all
shareholders and this association, that a payment of one hundred
dollars per share, named in their certificate, that has been in
force till maturity, shall be accepted as full payment of all
claims on their certificate or against this association."
"SEC. 22. Paid-up and nonassessable stock may be issued and sold
at the price of fifty dollars per share, payable on date of issue.
Any parties holding such paid-up stock, wanting to withdraw the
same before maturity, may do so and receive six percent annual
interest from the date of issue of said stock."
Neither was the promise
ultra vires the corporation. We
are saved from the necessity of an extended discussion of these
questions by a recent opinion of the Court of Appeals of New York
in the case of
Vought v. Eastern Building & Loan
Association, decided December 2, 1902, 172 N.Y. 508. It is
true that the decision was not offered in evidence on the trial of
this case in the South Carolina court. It had not then been
announced. And it is also true that we do not take judicial notice
of the decisions of the courts of one state in a case coming to us
from the courts of another.
Hanley v. Donoghue,
116 U. S. 1,
116 U. S. 6;
Chicago & Alton Railroad v. Wiggins Ferry Co.,
119 U. S. 615,
119 U. S. 622;
Lloyd v. Matthews, 155 U. S. 222,
155 U. S. 227.
But nevertheless we may properly refer to the opinion as a
construction of the law, and the views therein expressed not only
commend themselves to our judgment as intrinsically sound, but
also, as the views of the law of New York entertained by the
justices of its highest court, have a peculiar and persuasive
appropriateness. Referring to the contention that the terms of the
articles of incorporation were inconsistent with the absolute
promise contained in this certificate, that court said:
"In other words, the defendant's contention is that those
provisions were sufficient to change an absolute promise to pay
into a conditional one, dependent upon the success of its
enterprise. We find nothing in these provisions which would justify
any such conclusion. The provision in paragraph 1 that the
plaintiff should pay until the share is paid or withdrawn is
entirely consistent with the agreement for absolute payment for the
shares by the defendant at the time named, as by its contract
Page 189 U. S. 129
it agreed that the plaintiff's shares should mature at that
time."
Again, referring to the contention that the absolute promise
contained in such certificate was
ultra vires the
corporation, it observed:
"We deem it unnecessary at this time to determine whether the
defendant was authorized by that statute to enter into such
contracts, for, if we assume that the making of them was in excess
of the express power conferred upon the corporation by that
statute, still, as the contracts involved no moral turpitude, and
did not offend any express statute, they were not illegal in a
sense that would prevent the maintenance of an action thereon. It
is now well settled that a corporation cannot avail itself of the
defense of
ultra vires when the contract has been, in good
faith, fully performed by the other party, and the corporation has
had the benefit of the performance and of the contract. As has been
said, corporations, like natural persons, have power and capacity
to do wrong. They may, in their contracts and dealings, break over
the restraints imposed upon them by their charters, and when they
do so, their exemption from liability cannot be claimed on the mere
ground that they have no attributes or facilities which render it
possible for them thus to act. While they have no right to violate
their charters, yet they have capacity to do so, and are bound by
their acts where a repudiation of them would result in manifest
wrong to innocent parties, and especially where the offender
alleges its own wrong to avoid a just responsibility. It may be
that, while a contract remains unexecuted upon both sides, a
corporation is not estopped to say in its defense that it had not
the power to make the contract sought to be enforced; yet, when it
becomes executed by the other party, it is estopped from asserting
its own wrong, and cannot be excused from payment upon the plea
that the contract was beyond its power.
Bissell v. Mich. So.
& No. Ind. R. Cos., 22 N.Y. 258;
Whitney Arms Co. v.
Barlow, 63 N.Y. 62;
Rider Life Raft Co. v. Roach, 97
N.Y. 378;
Holmes, Booth & Haydens v. Willard, 125 N.Y.
75, 80;
Buffalo v. Balcom, 134 N.Y. 532;
Bath Gas L.
Co. v.
Page 189 U. S. 130
Claffy, 151 N.Y. 24;
Moss v. Cohen, 158 N.Y.
240, 249;
Hannon v. Siegel-Cooper Co., 167 N.Y. 244."
We deem it unnecessary to add any observations of our own to
these satisfactory declarations of the law of New York.
A single matter remains to be noticed. It is contended that the
contract evidenced by the certificates was changed by a loan
subsequently obtained by the plaintiff from the defendant upon the
security of the shares -- a loan obtained after the bylaws had been
amended to make, as alleged, more clear the obligations assumed by
the issue of share certificates. That amendment is found in section
3, article 8, which, as amended, reads:
"SEC. 3. Installment stock shall mature and be payable when the
dues paid thereon, with the profits apportioned and credited
thereto, shall equal one hundred dollars per share. Paid-up stock
shall mature and be payable when the dues thereon, with the profits
apportioned and credited thereto in excess of any cash dividends,
if any, that may be paid, shall equal one hundred dollars per
share, and, unless otherwise provided, all other stock shall be
payable as provided by the bylaws or certificates of shares."
But it is not shown that there was any express agreement between
the parties to change the terms of the original contract; the
amendment was clearly prospective in its operation,
Knights
Templars' & M. L. Indemnity Co. v. Jarman, 187 U.
S. 197, and we are unable to perceive that the mere
borrowing or the promise to return the money so borrowed had in
themselves any effect upon the prior contract.
We see no error in the record, and the judgment of the Supreme
Court of South Carolina is
Affirmed.
MR. JUSTICE HARLAN and MR. JUSTICE WHITE concurred in the
result.
