Grosman v. Union Trust Co.

• Decision Date: 04 January 1916
• Docket Number: 2831.
• Citation: 228 F. 610
• Parties: GROSMAN et al. v. UNION TRUST CO. [1]
• Court: U.S. Court of Appeals — Fifth Circuit

228 F. 610

GROSMAN et al. v. UNION TRUST CO. ^[1]

No. 2831.

United States Court of Appeals, Fifth Circuit.

January 4, 1916

Rehearing Denied February 1, 1916.

F. M Etheridge, Joseph M. McCormick, and H. L. Bromberg, all of Dallas, Tex., for appellants.

Wm. H Atwell, of Dallas, Tex., for appellee.

Before PARDEE and WALKER, Circuit Judges, and SPEER, District Judge.

WALKER Circuit Judge.

On May 23, 1914, the appellant Mrs. Minnie Kahn Grosman, who has been a resident of Texas since her birth, while on a visit to Chicago, accompanied by her husband, Hiram Grosman, also a resident citizen of Texas, executed a guaranty or suretyship contract, signed by her alone, by the terms of which she made herself a surety for a debt of her husband's firm, Hiram Grosman & Co., evidenced by its note, signed in the firm name by her husband. Some months after Mrs. Grosman's return to her home in Texas, and after the maturity of the obligation of Hiram Grosman & Co. which was referred to in the suretyship contract, this suit was brought against her against her husband's firm, and against the individuals composing it. The objects of the suit were a recovery against the defendants other than Mrs. Grosman on the obligation for which she signed as surety or guarantor, and also on other obligations, the foreclosure of an asserted lien on personal property by which those obligations were secured, and a recovery against Mrs. Grosman on her contract above mentioned. At the time of the institution of the suit a writ of attachment was issued, which was levied on real estate in the city of Dallas which belonged to Mrs. Grosman and was her separate property. Mrs. Grosman duly pleaded her coverture and raised the question of the right of the plaintiff to have enforced by the court in which the suit was brought the liability which was asserted against her. By the decree appealed from the court adjudged in favor of the plaintiff and against Mrs. Grosman the amount called for by her guaranty or suretyship contract, less a credit allowed on account of the application upon the demand of the plaintiff of the proceeds of the sale of personal property upon which a lien in its favor was decreed, and for the amount decreed against Mrs. Grosman ordered the foreclosure of the lien of the writ of attachment levied on her separate property and the sale of that property.

Evidence was adduced to the effect that under the law of Illinois, the state in which Mrs. Grosman signed the instrument sought to be enforced against her, her act had the effect of creating a valid and enforceable contract. It is contended in behalf of Mrs. Grosman that, notwithstanding the validity of the contract where it was made, the decree appealed from was unwarranted, because the effect of it was to contravene a public policy of Texas, established by express legislative enactment. The doctrine which this contention invokes is a well-settled one. A statement and application of it are found in the opinion in the case of The Kensington, 183 U.S. 263, 22 Sup.Ct. 102, 46 L.Ed. 190. That case involved the question of the enforceability in the courts of the United States of a provision of a contract of a carrier made in Belgium; the provision being valid there, and the contract expressly providing that 'all questions arising hereunder are to be settled according to the Belgium law, with reference to which this contract is made. ' It was insisted that the law of Belgium should be applied, though the provision in question contravened a public policy applied by the courts of the United States. With reference to this position the court said:

'The contention amounts to this: Where a contract is made in a foreign country, to be executed at least in part in the United States, the law of the foreign country, either by its own force or in virtue of the agreement of the contracting parties, must be enforced by the courts of the United States, even although to do so requires the violation of the public policy of the United States. To state the proposition is, we think, to answer it. It is true, as a general rule, that the lex loci governs, and it is also true that the intention of the parties to a contract will be sought out and enforced. But both these elementary principles are subordinate to and qualified by the doctrine that neither by comity nor by the will of contracting parties can the public policy of a country be set at naught. ' The Kensington, supra, 183 U.S. 269, 22 Sup.Ct. 104, 46 L.Ed. 190.

The result was that the court, concluding that the provision in question was one which contravened a rule of public policy applied in the forum in which the provision came into question, decided that it was not there enforceable. In a much earlier case in the same court the ruling was to the effect that the enforcement of a contract, no matter where made or where to be executed, if that contract is in violation of the law or contravenes the public policy of the government in a forum of which its enforcement is sought, cannot be compelled in that forum. Kennett et al. v. Chambers, 14 How. 38, 52, 14 L.Ed. 316. For other statements and applications of the same rule, see Emery v. Burbank, 163 Mass. 326, 39 N.E. 1026, 28 L.R.A. 57, 47 Am. St. Rep. 456; 5 Ruling Case Law, 944, and notes. In an action to enforce any kind of liability, the law of the forum is material in so far as it sets a limit of policy beyond which such obligations as the one asserted will not be enforced there. Cuba R.R. Co. v. Crosby, 222 U.S. 473, 478, 32 Sup.Ct. 132, 56 L.Ed. 274, 38 L.R.A. (N.S.) 40. We do not understand that there is a controversy in this case as to the proposition that a court charged with the administration of the laws of Texas is not required to enforce a contract made in another jurisdiction, and valid there, when to do so involves a disregard of an established public policy of Texas. But it is contended by the counsel for the appellee that the statute law of Texas, which is invoked by the counsel for the appellant, does not evidence the existence of a public policy of that state which would be contravened by the enforcement of the contract in question by a court which administers the laws of that state.

This brings us to a consideration of the statute laws of Texas, to which our attention is directed. Before the taking effect of an act of the Legislature of Texas which was approved March 21, 1913 (Acts 33d Leg. c. 32), article 4621 of the Revised Statutes of Texas of 1911 defined the separate property of the husband and of the wife; article 4622 defined the community property of the husband and wife; and article 4624 specified what contracts could be made by the wife. Under the law as it existed while the three articles mentioned were in force, a married woman could only bind herself by a contract entered into for necessaries of herself or children or for the benefit of her separate estate. Cruger v McCracken, 87 Tex. 584, 30 S.W. 537; Noel v. Clark, 25 Tex.Civ.App. 136, 60 S.W....