Cannaday v. Atl. Coast Line R. Co

• Decision Date: 22 December 1906
• Parties: CANNADAY . v. ATLANTIC COAST LINE R. CO.
• Court: North Carolina Supreme Court

55 S.E. 836

143 N.C. 439

CANNADAY .

v.ATLANTIC COAST LINE R. CO.

Supreme Court of North Carolina.

Dec. 22, 1906.

1. Contracts — Validity — What Law Governs.

The validity of a contract is determined by the law of the place where it is made.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 11, Contracts, § 2.]

2. Same—Construction.

A contract is to be interpreted in accordance with the law of the place where it is made.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 11, Contracts, §§ 724-727.]

8. Master and Servant—Injuries to Servant — Contracts Releasing Liability — What Law Governs.

An action against a railroad company by an employe to recover damages for personal injuries cannot be sustained in North Carolina, where a contract was entered into in another state whereby the employe agreed, at the time of his employment, that his acceptance of certain benefits from the relief department of the company would operate as a release of all claims against the company, and the employe did, after his injury, receive such benefits; the law of the state where the contract was made being that he would have no cause of action under those circumstances.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 34, Master and Servant, § 137.]

4. Same.

A contract exempting a railroad company in advance from liability to an employe for negligence is void.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 34, Master and Servant, §§ 166, 167.]

Clark, C. J., dissenting.

Appeal from Superior Court, Guilford County; Ferguson, Judge.

Action by James Cannaday against the Atlantic Coast Line Railroad Company. From a judgment for plaintiff, defendant appeals. Reversed.

This was an action for the recovery of damages for personal injury. The facts material to the decision of the appeal were as follows: The jury found, upon issues submitted to them, that the plaintiff was injured by the negligence of the defendant and that he did not by his own negligence contribute thereto. By way of further defense defendant alleged that prior to his employment plaintiff entered into a contract pursuant to which he became a member of the relief department, an organization formed by the several companies constituting the Atlantic Coast Line Railroad Company, for the purpose of establishing and managing a fund for the payment of definite amounts to the employes contributing thereto, entitling them, when disabled by accident or sickness, or their families in case of death, to certain amounts, the basis of which was fixed in said contracts. The said contract Is set out In full, and among other provisions contains the following: "I also agree that, In consideration of the amounts paid and to be paid by said company for the maintenance of said relief department, and of the guaranty by said company of the payment of said benefits, the acceptance by me of benefits for injury shall operate as a release and satisfaction of all claims against said company, and all other companies associated therewith in the administration of their relief departments, for damages arising from or growing out of said injury; and, further, In the event of my death, no part of said death benefit or unpaid disability benefit shall be due or payable unless and until good and sufficient releases shall be delivered to the superintendent of said relief department of all claims against said relief department as well as against said company and all other companies associated therewith as aforesaid, arising from or growing out of my death, said releases have been duly executed by all who might legally assert such claims; and, further, if any suit shall be brought against said company, or any other company associated therewith as aforesaid, for damages arising from or growing out of injury or death occurring to me, the benefits otherwise payable and all obligations of said relief department and of said company, created by my membership in said relief fund, shall thereupon be forfeited, without any declaration or other act by said relief department or said company." It was further alleged that after the injuries sustained plaintiff received benefits pursuant to the said contract, evidence of which was set out in the record. Upon this defense the following issues were submitted to and found by the jury: "Was the plaintiff, at the time of his alleged injury, a member of the relief department of the Atlantic Coast Line Railroad Company in South Carolina, and did he agree to be bound by the rules and regulations of said relief department? Answer: Yes. Did the plaintiff, after his injury, and before the bringing of this action, accept and receive benefits from said relief department for said injury? Answer: Yes." It is admitted that the contract of employment was made in South Carolina, and that the contract by which plaintiff became a member of the relief department was also made in said state; that the service into which plaintiff entered was "as engineer to run an engine and train of cars from Florence, in said state, to Augusta, in the state of Georgia"; that the injury for which the action is brought occurred in the state of South Carolina; and that the acceptance of benefits under the provisions of the contract as found by the jury was in said state. There was judgment for plaintiff upon the verdict, and defendant appealed.

Rose & Rose & Son and King & Kimball, for appellant.

Z. V. Taylor and E. J. Justice, for appellee.

CONNOR, J. (after stating the case). It is settled that "matters bearing upon the execution, interpretation, and validity of a eon-tract are determined by the law of the place where it is made." Scudder v. Nat Union Bank, 91 U. S. 406, 23 L. Ed. 245. "The in terpretation of a contract, and the rights and obligations under it of the parties thereto, are to be determined In accordance with the proper law of the contract Prima facie the proper law of the contract is to be presumed to be the law of the country where it is made. Dicey, Conf. Law, 563. Bowen, L. J., in Jacobs v. Credit Lyonnais, 12 Q. B. 589, says: "It Is generally agreed that the law of the place where the contract is made is prima facie that which the parties intended, or ought to be presumed to have adopted, as the footing upon which they dealt, and that such law ought therefore, to prevail, in the absence ofcircumstances Indicating a different intention." 9 Cyc. 667. The principle is illustrated, in Bridger v. Asheville, etc., R. R. Co., 27 S. C. 456, 3 S. E. 860, 13 Am. St Rep. 653. The action was for injuries alleged to have been sustained in North Carolina by the negligence of defendant. The defense of contributory negligence being pleaded, the question was whether, as held by the courts of this state, the age of the plaintiff precluded the defendant from relying upon it, and the decision of this question was made to depend upon the decisions of the courts of North Carolina. Simpson, C. J., said: "The injury was inflicted there, and, if the parties had remained in that state and brought action there, they would have been compelled to stand or fall by the law there. And we cannot see, upon principle, how stepping over the line could give the plaintiffs a new and altogether enlarged cause of action—in fact, a cause of action which he did not have before, and, therefore, which he could not have enforced in the tribunals having jurisdiction of the matter at its origin. * * * In such case, the plaintiff having no cause of action in North Carolina, where the injury was inflicted, he could have none here." The principle has been recognized and enforced by this court in Watson v. Orr, 14 N. C. 661, Anderson v. Doak, 32 N. C. 295, Williams v. Carr, 80 N. C. 294, Hancock v. Telegraph Co., 137 N. C. 497, 49 S. E. 952, and Hall v. Telegraph Co., 139 N. C. 369, 52 S. E. 50. The exceptions to the general rule are thus stated by Mr. Lawson, the editor of the excellent and exhaustive article on "Contracts" in 9 Cyc. 674: "The general doctrine that a contract valid when it is made, Is valid also in the courts of any other country or state, when it is sought to be enforced, even though, had it been in the latter country or state, it would be illegal and hence unenforceable, is subject to several exceptions: (1) When the contract in question Is contrary to good morals; (2) when the state of the forum, or its citizens, would be injured by the enforcement by its courts of contracts of the kind in question; (3) when the contract violates the positive legislation of the state of the forum—that is, is contrary to Its Constitution or statutes; and (4) when the contract violates the public policy of the state of the forum." These exceptions are grounded on the principle that the rule of comity Is not a right of any state or country, but Is permitted and accepted by all civilized communities from mutual interest and convenience, and from a sense of the Inconvenience which would otherwise result and from moral necessity to do justice In order that justice may be done In return. Note 49; Gooch v. Faucette, 122 N. C. 270, 29 S. E. 362, 39 L. R. A. 835.

We are thus brought to a consideration of the question whether the courts of South Carolina have interpreted the contract and passed upon the effect, upon his cause of action, of the election made by the plaintiff to accept benefits from the relief department by reason of his injuries. This inquiry Invites an examination of two questions: First, does the contract, as interpreted by the courts of South Carolina, undertake to release the defendant in advance from all claim or demand for injury sustained by reason of its negligence? Or, second, is it an agreement to elect. In the event of such in-Jury, either to accept the benefits provided by the contract and release the company, or waive the benefit and sue on the cause of action? If the first be the proper interpretation of the contract, the question would arise whether It Is not within one of the exceptions to the general rule of comity...