Int'l Harvester Co. of Am. v. McAdam

• Decision Date: 22 February 1910
• Citation: 142 Wis. 114,124 N.W. 1042
• Parties: INTERNATIONAL HARVESTER CO. OF AMERICA v. MCADAM ET AL.
• Court: Wisconsin Supreme Court

142 Wis. 114

124 N.W. 1042

INTERNATIONAL HARVESTER CO. OF AMERICA

v.MCADAM ET AL.

Supreme Court of Wisconsin.

Feb. 22, 1910.

Syllabus by the Judge.

As to mere personal contracts, their validity and interpretation is referable to the lex loci contractus, unless the parties intended they should be governed by the lex loci solutionis or that of some other place, the real place of the contract being a matter of mutual intention, except in exceptional circumstances evincing a purpose in making the contract to commit a fraud on the law.

What the intent was, mentioned in No. 1, as to the place of the contract in any case, is generally determinable by presumption of fact that the place of the contract was intended to be that where it was actually made, unless the place of performance was elsewhere, then the presumption is that the latter was intended, but such presumptions are rebuttable. In this the term “place of the contract” means the place mutually intended for reference as to validity and interpretation.

The law as to manner of performance, is referable to the place of performance, while remedies for nonperformance are referable to the law of the forum where performance is sought to be enforced.

A contract valid by the law of the place thereof is valid everywhere.

The affording of remedies in one country for enforcing a contract which would not be valid if made in such country, but is valid by the law of the place where it was made, depends upon judicial comity of nations.

The comity mentioned is uniformly extended, unless such contracts as the one sought to be enforced are contrary to the public policy of the country of the forum, as declared by its courts or its lawmaking power on grounds of good morals, of the state or its citizens would be injured.

The scope of the comity spoken of, within reasonable limitations, is determinable, as a matter of judicial policy, by each state for itself.

The rule that the law of a place of a contract governs, as to its validity and interpretation, applies to the capacity, including that of married women, to contract.

The rule that a contract, valid by the law of the place thereof, is valid everywhere, is without exception, notwithstanding in some cases a foreign contract is not enforceable.

A foreign contract, of a class which if it were made in the country of the forum would be contrary to the law thereof, is not necessarily unenforceable in such forum because such a contract is contrary to public policy. To be so, the contract must be, by moral standards in the judgment of the court, pernicious and injurious to the public welfare.

The contract of a married woman as accommodation maker of commercial paper having not been judicially declared unenforceable in this state on grounds of public policy, nor prohibited by legislation as pernicious, is enforceable in our courts, in case of its having been made in another state where such contracts are valid, unless such contracts are, in fact, inherently bad in the sense indicated in the foregoing rules.

The general legislative policy of this state as to relieving married women from common-law disabilities to contract, and other considerations, negative the idea that full right in that regard would involve anything inherently bad and warrant our courts in refusing to enforce the foreign contract of a married woman as accommodation maker of a promissory note on grounds of public policy.

Appeal from Circuit Court, Jefferson County; George Grimm, Judge.

Action by the International Harvester Company of America against Gertrude McAdam and others. Judgment for defendants, and plaintiff appeals. Reversed and remanded, with directions.

Action to recover on a promissory note against Gertrude McAdam, a married woman, who signed, as accommodation maker, with her husband and another. At the time of such execution all the makers were residents of South Dakota and that was also the place of performance. When the action was commenced respondent and her husband were residents of Wisconsin. She pleaded, separately, incompetency to bind herself as an accommodation maker because of her being a married woman. By the law of South Dakota, she had such competency, while by the law of this state she had not.

The court held that the note could not be enforced against respondent in this state, because of incapacity of a married woman to so bind herself here, and, therefore, she was entitled to judgment dismissing the action as to her with costs, without prejudice to plaintiff seeking a remedy elsewhere. Judgment was so rendered.

Herbert J. Piper (J. C. McMath, of counsel), for appellant.

Charles E. Williams (Tullar & Lockney, of counsel), for respondents.

MARSHALL, J. (after stating the facts as above).

The appeal raises for decision this proposition: Is a married woman's contract as accommodation maker of a promissory note, which is valid in the place where made, enforceable in the courts of this state, such a contract not being valid if made here? The proposition, in the main, is governed by a few quite elementary principles.

The first principle is this: As to mere personal contracts the law thereof as to their validity and interpretation, is that of the place where they were made; the lex loci contractus, unless the parties thereto intended that they should be governed by the law of the place of performance; the lex loci solutionis, or of some other place. That is, the place of the contract is, generally speaking, a matter of mutual intention, but the intended place, as determined by legal presumption in some cases and evidentiary circumstances in others, settles all questions as to the legal test of validity and interpretation. Such presumption, in the absence of evidence to the contrary, is that the place of making and performance, in a physical sense, is the place in a legal sense, but the place of performance when different from that of the actual making, is the place in such legal sense, subject to the presumption being rebutted by clear evidence of intention, this being again subject to some exceptions in case of intention to commit a fraud on the law, such exceptions being possible but rare and not concerned in the case in hand. Davis v. Chicago, M. & St. P. Ry. Co., 93 Wis. 470, 67 N. W. 16, 1132, 33 L. R. A. 654, 57 Am. St. Rep. 935;Shores Lumber Company v. Stitt, 102 Wis. 450, 78 N. W. 562;Bartlett v. Collins, 109 Wis. 477, 85 N. W. 703, 83 Am. St. Rep. 928;Brown v. Gates, 120 Wis. 349, 97 N. W. 221, 98 N. W. 205.

Another rule is this: The law of the place of performance regulates the matter in that regard, while matters respecting remedies depend upon the law of the forum. Brown v. Gates, supra.

A third rule results, logically, from those mentioned, viz.: A contract which is valid in the place thereof is valid everywhere.

A fourth rule is this: The law of one state having, ex proprio vigore, no validity in another state, the enforcement of a foreign contract which would not be valid by the law of the forum where its enforcement is judicially attempted, depends upon comity which is extended for that purpose, unless the agreement is contrary to the public policy of the state of the forum, in that it is contrary to good morals, or the state or its citizens would be injured by the enforcement, or it perniciously violates positive written or unwritten prohibitory law; the extent to which comity will be extended being very much a matter of judicial policy to be determined within reasonable limitations by each state for itself. Finney v. Guy, 106 Wis. 256, 276, 82 N. W. 595, 49 L. R. A. 486;Hunt v. Whewell, 122 Wis. 33, 42, 99 N. W. 599;Fox v. Postal Telegraph-Cable Co., 138 Wis. 648, 120 N. W. 399. In the last case cited, referring to The Kensington, 183 U. S. 263, 22 Sup. Ct. 102, 46 L. Ed. 190, the court said:

“Every state, within certain limitations not necessary here to indicate, has a constitutional right to establish its own peculiar policy. That may be done by legislative enactment or by judicial conception and interpretation of the common law,” and we may add here of what is injurious to the welfare of the state or its citizens. “ ‘The general principle that the lex loci governs as to the validity of contracts is subordinate to and qualified by,’ * * * the supreme principle which inheres in the very nature of sovereignty, that comity cannot set at naught the public policy of a country.”

A further rule is this: The doctrine that the law of the place of a contract governs as to its interpretation and validity, applies to the capacity of parties, including that of married women, to bind themselves in the manner attempted. Story on Conflict of Laws, §§ 103, 241; Milliken v. Pratt, 125 Mass. 374, 28 Am. Rep. 241.

We may well say, in passing, that, while contracts which, though valid in the place thereof are not enforceable in the country where enforcement is attempted for reasons above suggested, are often spoken of in text-book and other authorities, as exceptions to the rule that the validity of a contract is referable to the place which the parties thereto at the time of making intended should be incorporated into it, they are not exceptions strictly so called. The rule in a technical sense is without exception. In practical effect, the rule of the forum supersedes it leaving the contract without remedy there to enforce it and, in that sense, void.

The last rule that need be stated is this: A contract under the foregoing is not, necessarily, contrary to the public policy of a state, merely because it could not validly have been made there, nor is it one to which comity will not be extended, merely because the making of such contracts in the place of the forum is prohibited, general statements to the contrary notwithstanding. In Milliken v. Pratt, supra, the court remarked substantially, even a contract expressly prohibited by the statutes of the state in which the suit is brought, if not in itself immoral (the term “immora...