Atwood v.

Walk
61 N.E. 58

Doctrine: Where contract was made in one state for purchase of land in another,
and suit for breach was brought in state where land is located, the law of the state
where the contract was executed governs.

Facts: This action was brought for breach of a contract for failure of the
defendants to convey to plaintiff certain land and personal property situated in
Massachusetts. Atwood, the plaintiff was a resident of New Have, Connecticut,
temporarily residing in Springfield, and Walker, the defendant was a resident of
New York. Atwood and Walker never met and the negotiations on the part of
Walker were conducted by William Man of New York City. The latter is his agent
and attorney there. There were various letters between the Atwood and Man, which
contain the alleged contract. Also, there were verbal negotiations between Atwood
and Man at the office of the latter in New York. However, Walker failed to make
good her title to the real estate, but Walker was in good faith. Atwood also made
no payment.

Atwood is now seeking for damages in a Massachusetts court. Under the

Massachusetts law, whether or not there was good faith on the part of defendant,
plaintiff can recover damages. On the other hand, New York law states that if the
contract was made and to be executed there, when the defendant being in good
faith, the plaintiff who has paid nothing, can recover nothing.

The jury found for Atwood, awarding an amount based on the instruction of the
judge who said that “if the contract was made, and the defendant failed to carry it
out, or refused to do so, by reason of inability to give a good title, the plaintiff
can’t recover damages. This is now an appeal to that decision.

Issue: Which law shall apply, Massachusetts or New York law?

Held: New York law applies. Although the land and the action for breach was
brought in Massachusetts, it is to be remembered that the contract was made in
New York. It is a general rule that in all that related to the nature, validity and
interpretation of a contract the lex loci contractus governs, and the contracts are
presumed to be made with reference to the law of the place where they are entered
into, unless they are entered into with reference to the law of some other state or
country. So the lex loci contractus governs in all matters relating to the substantive
rights of the parties, and these rights will be enforced by a foreign jurisdiction, if
there is nothing in them against its view of public policy.

In the present case, the New York contract was to convey a certain piece of land.
Its meaning and effect, according to the New York law applicable to it, is that the
defendant who was acting in good faith, turns out to be unable to make a good title,
should not give to the plaintiff the profits of his bargain, but should save him from
loss, and put him in as good a position as if the contract had not been made. This is
the true interpretation of the contract, reading it in connection with the law that
determines its effect, which is New York law. The contract cannot be made a
different contract, or given a greater effect, by bringing an action upon it in the
writing and the law by which it is to be interpreted. When the breach occurred, the
details of the damages were immediately fixed by the writing, the law, and the
conditions then existing. When the present action was brought, it was to recover
the damages due under the contract. These damages grew out of a contract and
transactions which had been concluded in New York, and were the cause of action
on which the plaintiff seeks to recover here. The ruling of the trial court, awarding
damages based on Massachusetts law, is therefore incorrect.
 Lewisohn v. Steamship Co.
56 Fed. 602

Doctrine: Void stipulations for being against the public policy of the United States
are not made valid by the stipulations of the parties.

Facts: This is an action upon a bill of lading to recover for injuries to certain bales
of hair shipped from London on board the steamship Spain, and transported therein
to the port of New York. The hair was damaged. The liability of the claimants for
this damage seems clear, unless they are exempted by the provision of the bill of
lading.

These bales were originally intended to be transported in the steamship Greece,

owned by the claimants, but were left over from that vessel for the Spain. The bill
of lading given for the Greece was deemed to be the bill of lading for the Spain, in
which ship the goods were actually transported. The bill of lading exempts the ship
from liability for damage by stowage or contact with or smell or evaporation from
other goods, and provides, in terms for exemption from liability for damage, loss
or injury arising from such causes whether caused by the negligence, default or
error in judgment of the pilot, master mariners, engineers, stevedores. Lightermen
or their servants, or any persons in the service of or employed by the shipowner.
The bill of lading also contains this clause: "In accepting this bill of lading, the
shipper, or other agent of the owner of the property carried, expressly agrees that
this contract shall be governed by the law of the flag of the ship carrying the goods
after delivery to the ship." By the law of England, such provision, in a bill of
lading relieves the shipowner from the liability sued for.

Issue: Whether or not such provision can be enforced in the courts of the United
States?

Held: It has been established the Supreme Court of the United States that a
provision which exempts the carrier from damage caused by negligence is
void, and will not be enforced, because contrary to public policy; the principle laid
down by the Supreme Court in Oscanyan v Arms, 103 U.S. 261, requires this court
to decline to enforce such provision in this bill of lading, notwithstanding the bill
of lading was lawful by the law of the place where the goods were shipped. Void
stipulations for being against the public policy of the United States are not made
valid by the stipulations of the parties.
 Young v. Harris
61 Am. Dec. 170

Doctrine: The place where a note is endorsed or assigned is the place where the
law regards the contract or assignment to have been made, but the mere indorsing
the name at one place does not amount to a transfer or contract of transfer. If the
physical act of writing the name be at one place, and the delivery at another, the
latter is the place of the contract. 


Keene issued a promissory note and of which Young was assignee or indorsee and
the latter brought this action to recover the amount with interest, etc., against H. C.
Harris, his immediate indorser. 


The note is dated at Cincinnati (Ohio), and payable nine months after date at the La
Fayette Bank of Cincinnati, to J. M. Tipton. 


It was written by Young and signed by Keene, in Cincinnati, in the absence of

Tipton, the payee, and it remained in the hands of Keene that he might procure
good indorsers in Covington, Kentucky, and then to be delivered to Young in lieu
of a note previously held by him on Keene, his debtor. 


The note in the hands of Keene was indorsed in blank by Tipton and Harris at
Covington, in Kentucky, and was shortly afterward delivered in Cincinnati to
Young, who may be supposed to have resided in that city. 


By the law of Ohio, in which state the note is dated and made payable, it is
admitted that such a note is placed on the footing of a bill of exchange, and timely
presentation at the place of payment, and due notice of non-payment, are
conditions on which the liability of the indorser, prima facie, depends. Young, the
holder of the note, considering the liability of the indorser and the mode of fixing it
as dependent upon the law of Kentucky, in which state Harris indorsed his name on
the note, prosecuted the maker to insolvency by suit, and with such diligence as
according to the law of Kentucky would authorize a recovery against the assignor,
and did not pursue the course required by the law of Ohio. Harris maintains that
the law of Ohio furnishes the proper test of diligence, and that, as according to that
test, proper diligence has not been used, he is not liable, and the plaintiff cannot
recover. 

Issue: Which law shall be applied in this case?
Held: It is the Ohio law that should be applied. Where one, for the accommodation
of the maker, writes his name on the back of a note

in Kentucky, and it is afterwards delivered to one in Ohio, it is this delivery which

consummates the contract, and the law of Ohio governs it. The liability of an
indorser does not attach until the delivery of the note.

The general principle determining the law by which a contract is to be construed is,
that unless the place appointed for its payment be different from that in which it is
made, it is to be governed by the law of the place where it is made, which is the lex
loci contractus. 


The place where a note is endorsed or assigned is the place where the law regards
the contract or assignment to have been made, but the mere indorsing the name at
one place does not amount to a transfer or contract of transfer. If the physical act of
writing the name be at one place, and the delivery at another, the latter is the place
of the contract. 


If one indorses a note in Kentucky, as an accommodation note, which is

subsequently delivered to one in Ohio, the law of Ohio governs the contract and
responsibility of the indorser. 

 Harrison v. Sterry
3 L. Ed. 104

Doctrine: The law of a place where a contract is made is, generally speaking, the
law of the contract and the law by which the contract is expounded. The right of
priority of claim forms no part of contract on which claim is based, and is rather a
personal privilege dependent on the law of the place where the property lies, and
where the court sits which is to decide the cause.

Facts: This suit was instituted to determine the proper distribution of funds located
in South Carolina, which were the property of Bird, Savage & Bird (in trading
company in England operating under the firm name Robert Bird & Co. in
America), which underwent bankruptcy proceedings both in USA and England.
The United States claims a preference to all other creditors.

Issue: It was suggested that American law/jurisprudence providing for such

preference does not apply as the contract of the firm was made with foreigners, in a
foreign country.

Held: The court can discern no such principle. The law of the place where a
contract is made is, generally speaking, the law of the contract. However, the right
of priority forms no part of the contract. It is an extrinsic and personal privilege
dependent on the law of the place where the property lies, and the law of the forum
court.

The bankruptcy law of a foreign country cannot operate as a legal transfer of

property w/in the USA.
 Noble v. Oil Co
21 Am. Rep. 68

Doctrine: The plaintiff in a foreign attachment stands on no better footing as to the

thing attached than his debtor, the defendant, whose property is sought to be
seized. All that can be seized by virtue of the attachment, is the property of the
debtor. The original plaintiff in this judgment having disposed of it in good faith
and for a valuable consideration to the defendants in error, no creditor of the
assignor could set aside the assignment by proceedings in foreign attachment.

Facts: This was an action of debt upon a recognizance by The Thompson Oil
Company against Orange Noble, Ambrose Snow and Theodore Wright. Before the
Court of Common Pleas of Erie county, Noble and companions acknowledged to
owe The Thompson Oil Company $54,000. The Thompson Oil Company,
thereafter "for a full and valuable consideration, to wit, for money due" by the
company to Conrad Brown, assigned to Brown (citizen and resident of
Pennsylvania) the sum of $23,723.50 of the judgment, and also "for a full and
valuable consideration, to wit, for professional services as attorneys at law,"
assigned to John H. Walker, James C. Marshall and Francis F. Marshall, $3000 of
the judgment.

On the 13th of December 1873, the defendants pleaded, that on the 25th of January
1868, The Woods & Wright Oil Company, a corporation of the state of New York,
claiming to be a creditor of The Thompson Oil Company to the amount of
$75,000, petitioned the Supreme Court of that state that a writ of attachment, in the
nature of foreign attachment, might issue to attach the debt due by Snow, Burgess,
Wright & Woods to The Thompson Company. An attachment was issued and was
served on Snow, Burgess, Wright & Woods, then resident in the state of New
York, by which the debt due by them was, according to the law of New York, and
the practice of the Supreme Court of that state, attached for the benefit of The
Woods & Wright Company. A final judgment was rendered against The Thompson
Company in favor of the Woods & Wright Company for $56,251.88, in accordance
with the laws and practice aforesaid; that by reason of the attachment and the laws
of New York, The Woods & Wright Company acquired a lien on the claim of The
Thompson Company against Snow and his co-defendants and garnishees, in the
Supreme Court of New York, who became absolutely liable to the plaintiffs in the
attachment for the amount owing by them to The Thompson Company.

The lower court ruled that the assignment by Thompson Oil Company to estate of
Conrad Brown and others, transferred to the assignees, from the date of the
assignment, all the interest of the legal plaintiffs in the judgment against Snow,
Burgess, Woods and Wright, so that it was not attachable as the property of The
Thompson Oil Company in the hands of said defendants (Woods and Wright Co)
after the date of said assignment; that the said assignees, being non-residents of the
state of New York, and actually residents in and citizens of the state of
Pennsylvania, at the time of the proceedings against the said The Thompson Oil
Company in the Supreme Court in and for the city and county of New York, the
situs of the property follows the residence of its then owners, and was never within
the jurisdiction of the courts of the state of New York, nor were the persons of said
assignees, and that therefore the said Supreme Court never acquired jurisdiction of
either the persons or the property of the said assignees, and any judgment of said
court affecting their rights was wholly ex parte and invalid.

Issue: Whether or not the New York Court had jurisdiction and whether or not the
garnishment was valid?

Held: No. The Thompson Oil Company was a corporation formed under the laws
of this Commonwealth and doing business therein. The assignees were citizens and
residents of Pennsylvania. The judgment assigned was of record in a court of this
state. When the assignment was made, the assignor, the assignees, and the property
assigned, were all within this commonwealth and governed by its laws. That the
assignment was for a full consideration and in good faith are unquestioned. It was a
purchase, by persons having a right to buy from a party having a right to sell, of
property, of which no rule or policy of law forbids the sale. It was not fraudulent,
either in law or fact. It was not a statutory transfer of the judgment, but a voluntary
sale and assignment of it. It was then beyond all doubt a valid transfer here. Being
a valid assignment when and where made, it is valid everywhere.

By this transfer the whole property of the Thompson Oil Company in the judgment
passed to the assignees. Thenceforth the oil company had no attachable interest in
the judgment, but held it as a mere naked legal trustee of their assignees. The
defendants (Noble, Snow and Wright) in that judgment no longer owed or were
indebted to the original plaintiff (Thomson Oil Company) herein, but they owed it
to the assignees (Brown).

It is contended that insomuch as the foreign attachment was served on the

garnishees (Woods and Wright Co) before they had notice of the assignment, the
claim of the assignees is postponed to that of the attaching creditors. This
conclusion is not sustained by the authorities in this country.
The reason on which these authorities rest, is that the plaintiff in a foreign
attachment stands on no better footing as to the thing attached than his debtor, the
defendant, whose property is sought to be seized. All that can be seized by virtue
of the attachment, is the property of the debtor. The original plaintiff (Thompson)
in this judgment having disposed of it in good faith and for a valuable
consideration to the defendants in error (Brown), no creditor of the assignor could
set aside the assignment by proceedings in foreign attachment.

We have already showed that the judgment as well as the parties to the assignment
were within this state at the time of the transaction. They so continued at the time
of the issuing of the writ of foreign attachment, and during the pendency of all the
proceedings thereon. Neither the defendants in error (Brown), nor the judgment
which they purchased, was within the state of New York. The court then had no
jurisdiction of the persons or property of the defendants in error.

A judgment in rem in foreign attachment is void if the court have no jurisdiction of

the property. Notice by the garnishees of the pendency of the proceedings, to
assignor and assignee after the judgment had been obtained in the attachment
against the assignor, would not change the result; the assignees were not parties or
privies and were not bound to appear and contest.
 Smith v. Alabama
124 U.S. 465

Doctrine: The grant of power to Congress in the Constitution to regulate commerce with
foreign nations and among the several States, it is conceded, is paramount over all
legislative powers which, in consequence of not having been granted to Congress, are
reserved to the States. It follows that any legislation of a State, although in pursuance of an
acknowledged power reserved to it, which conflicts with the actual exercise of the power of
Congress over the subject of commerce, must give way before the supremacy of the
national authority.

Facts:
The Legislature of Alabama enacted a law entitled "An act to require locomotive
engineers in this state to be examined and licensed by a board to be appointed for
that purpose," in which it was provided that it should be: "unlawful for the
engineer of any railroad train in this state to drive or operate or engineer any train
of cars or engine upon the main line or roadbed of any railroad in this state which
is used for the transportation of persons, passengers or freight without first
undergoing an examination and obtaining a license as hereinafter provided." 


Smith was an engineer in the service of the Mobile and Ohio Railroad Company.
His duty was to "drive, operate, and engineer" a locomotive engine drawing a
passenger train on that road, regularly plying in one continuous trip between
Mobile in Alabama and Corinth in Mississippi, and vice versa, 60 miles of which
trip was in Alabama, and 265 in Mississippi. 


He never "drove, operated, or engineered" a locomotive engine hauling cars from

one point to another point exclusively within the Alabama. After the statute of
Alabama took effect, he continued to perform such regular duties without taking
out the license required by that act. He was proceeded against for a violation of the
statute, and was committed to jail to answer the charge. 


He petitioned a state court for a writ of habeas corpus upon the ground that he was
employed in interstate commerce, and that the statute, so far as it applied to him,
was a regulation of commerce among the states, and repugnant to the Constitution
of the United States. The writ was refused, and the Supreme Court of the Alabama
on appeal affirmed that judgment.

Issues: Whether or not the Alabama Statute was a regulation of commerce among
the states which must be annulled?
Held: No. The grant of power to Congress in the Constitution to regulate
commerce with foreign nations and among the several states, it is conceded, is
paramount over all legislative powers which, in consequence of not having been
granted to Congress, are reserved to the states. It follows that any legislation of a
state, although in pursuance of an acknowledged power reserved to it, which
conflicts with the actual exercise of the power of Congress over the subject of
commerce must give way before the supremacy of the national authority. As the
regulation of commerce may consist in abstaining from prescribing positive rules
for its conduct, it cannot always be said that the power to regulate is dormant
because not affirmatively exercised. And when it is manifest that Congress intends
to leave that commerce which is subject to its jurisdiction free and unfettered by
any positive regulations, such intention would be contravened by state laws
operating as regulations of commerce as much as though these had been expressly
forbidden. In such cases, the existence of the power to regulate commerce in
Congress has been construed to be not only paramount but exclusive, so as to
withdraw the subject as the basis of legislation altogether from the states. There are
many cases, however, where the acknowledged powers of a state may be exerted
and applied in such a manner as to affect foreign or interstate commerce without
being intended to operate as commercial regulations. If their operation and
application in such cases regulate such commerce, so as to conflict with the
regulation of the same subject by Congress, either as expressed in positive laws or
implied from the absence of legislation, such legislation on the part of the state, to
the extent of that conflict, must be regarded as annulled.

There is no common law of the United States in the sense of a national customary
law, distinct from the common law of England as adopted by the several states
each for itself, applied as its local law and subject to such alteration as may be
provided by its own statutes. 


There is, however, one clear exception to the statement that there is no national
common law. The interpretation of the Constitution of the United States is
necessarily influenced by the fact that its provisions are framed in the language of
the English common law, and are to be read in the light of its history. The code of
constitutional and statutory construction which therefore is gradually formed by
the judgments of this Court, in the application of the Constitution and the laws and
treaties made in pursuance thereof, has for its basis so much of the common law as
may be implied in the subject, and constitutes a common law resting on national
authority.
The statute of Alabama the validity of which is drawn in question in this case does
not fall within this exception. It would indeed be competent for Congress to
legislate upon its subject matter and to prescribe the qualifications of locomotive
engineers for employment by carriers engaged in foreign or interstate commerce. It
has legislated upon a similar subject by prescribing the qualifications for pilots and
engineers of steam vessels engaged in the coasting trade and navigating the inland
waters of the United States while engaged in commerce among the states and such
legislation undoubtedly is justified on the ground that it is incident to the power to
regulate interstate commerce.

But the provisions on the subject contained in the statute of Alabama under
consideration are not regulations of interstate commerce. It is a misnomer to call
them such. Considered in themselves, they are parts of that body of the local law
which, as we have already seen, properly governs the relation between carriers of
passengers and merchandise, and the public who employ them, which are not
displaced until they come in conflict with express enactments of Congress in the
exercise of its power over commerce, and which, until so displaced, according to
the evident intention of Congress, remain as the law governing carriers, in the
discharge of their obligations, whether engaged in the purely internal commerce of
the state or in commerce among the states. 


No objection to the statute as an impediment to the free transaction of commerce

among the states can be found in any of its special provisions. It requires that every
locomotive engineer shall have a license, but it does not limit the number of
persons who may be licensed nor prescribe any arbitrary conditions to the grant.
The fee of five dollars to be paid by an applicant for his examination is not a
provision for raising revenue, but it is no more than an equivalent for the service
rendered, and cannot be considered in the light of a tax or burden upon
transportation. The applicant is required, before obtaining his license, to satisfy a
board of examiners in reference to his knowledge of practical mechanics, his skill
in operating a locomotive engine, and his general competency as an engineer, and
the board, before issuing the license, is required to inquire into his character and
habits and to withhold the license if he be found to be reckless or intemperate. 


We find, therefore, first that the statute of Alabama the validity of which is under
consideration is not, considered in its own nature, a regulation of interstate
commerce, even when applied as in the case under consideration; secondly, that it
is properly an act of legislation within the scope of the admitted power reserved to
the states to regulate the relative rights and duties of persons being and acting
within its territorial jurisdiction, intended to operate so as secure for the public
safety of person and property; and thirdly that so far as it affects transactions of
commerce among the states, it does so only indirectly, incidentally, and remotely,
and not so as to burden or impede them, and, in the particulars in which it touches
those transactions at all, it is not in conflict with any express enactment of
Congress on the subject nor contrary to any intention of Congress to be presumed
from its silence.