Klaxon Co v. Stentor Electric Mfg Co, No. 741

CourtUnited States Supreme Court
Writing for the CourtREED
Citation313 U.S. 487,85 L.Ed. 1477,61 S.Ct. 1020
PartiesKLAXON CO. v. STENTOR ELECTRIC MFG. CO., Inc
Docket NumberNo. 741
Decision Date02 June 1941

313 U.S. 487
61 S.Ct. 1020
85 L.Ed. 1477
KLAXON CO.

v.

STENTOR ELECTRIC MFG. CO., Inc.

No. 741.
Argued May 1, 2, 1941.
Decided June 2, 1941.

Page 488

Messrs. John Thomas Smith, of New York City, and James D. Carpenter, Jr., of Jersey City, N.J., for petitioner.

[Argument of Counsel from pages 488-489 intentionally omitted]

Page 490

Mr. Murray C. Bernays, of New York City, for respondent.

[Argument of Counsel from Pages 490-493 intentionally omitted]

Page 494

Mr. Justice REED delivered the opinion of the Court.

The principal question in this case is whether in diversity cases the federal courts must follow conflict of laws rules prevailing in the states in which they sit. We left this open in Ruhlin v. New York Life Insurance Company, 304 U.S. 202, 208, note 2, 58 S.Ct. 860, 862, 82 L.Ed. 1290. The frequent recurrence of the problem, as well as the conflict of approach to the problem between the Third Circuit's opinion here and that of the First Circuit in Sampson v. Channell, 110 F.2d 754, 759—762, 128 A.L.R. 394, led us to grant certiorari.

In 1918 respondent, a New York corporation, transferred its entire business to petitioner, a Delaware corporation. Petitioner contracted to use its best efforts to further the manufacture and sale of certain patented devices covered by the agreement, and respondent was to have a share of petitioner's profits. The agreement was executed in New York, the assets were transferred there, and petitioner began performance there although later it moved its operations to other states. Respondent was voluntarily dissolved under New York law in 1919. Ten years later it instituted this action in the United States District Court for the District of Delaware, alleging that petitioner had failed to perform its agreement to use its best efforts. Jurisdiction rested on diversity of citizenship. In 1939 respondent recovered a jury verdict of $100,000, upon which judgment was entered. Respondent then moved to correct the judgment by adding in-

Page 495

terest at the rate of six percent from June 1, 1929, the date the action had been brought. The basis of the motion was the provision in section 480 of the New York Civil Practice Act directing that in contract actions interest be added to the principal sum 'whether theretofore liquidated or unliquidated.'1 The District Court granted the motion, taking the view that the rights of the parties were governed by New York law and that under New York law the addition of such interest was mandatory. 30 F.Supp. 425, 431. The Circuit Court of Appeals affirmed, 3 Cir., 115 F.2d 268, 275, and we granted certiorari, limited to the question whether section 480 of the New York Civil Practice Act is applicable to an action in the federal court in Delaware. 312 U.S. 674, 61 S.Ct. 734, 85 L.Ed. —-.

The Circuit Court of Appeals was of the view that under New York law the right to interest before verdict under section 480 went to the substance of the obligation, and that proper construction of the contract in suit fixed New York as the place of performance. It then concluded that section 480 was applicable to the case because 'it is clear by what we think is undoubtedly the better view of the law that the rules for ascertaining the measure of damages are not a matter of procedure at all, but are

Page 496

matters of substance which should be settled by reference to the law of the appropriate state according to the type of case being tried in the forum. The measure of damages for breach of a contract is determined by the law of the place of performance; Restatement, Conflict of Laws § 413.' The court referred also to section 418 of the Restatement, which makes interest part of the damages to be determined by the law of the place of performance. Application of the New York statute...

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9315 practice notes
  • McNeilab, Inc. v. North River Ins. Co., Civ. A. No. 82-3934.
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • October 31, 1986
    ...of Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) as developed in Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941), New Jersey rules govern choice of law questions in this court. Piper Aircraft Co. v. Reyno, 454 U.S. 235......
  • In re Assicurazioni Generali S.P.A. Holocaust Ins., No. MDL 1374.
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • September 25, 2002
    ...to apply foreign law. Under New York choice-of-law rules, which govern in a federal diversity case, Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941), New York substantive law applies unless there is a true conflict requiring a conflicts analysis. ......
  • Pearce v. EF Hutton Group, Inc., Civ. A. No. 86-0008.
    • United States
    • United States District Courts. United States District Court (Columbia)
    • July 14, 1987
    ...light claim, the forum must apply the choice of law principles of the state in which it sits. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941). This court must therefore apply the District of Columbia's choice of law rules to the problem.......
  • Johnson v. Wells Fargo Home Mortgage Inc., Nos. 09–15937
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • February 15, 2011
    ...applying state substantive law is bound to follow the choice-of-law rules of the forum state. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496–97, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Day & Zimmermann, Inc. v. Challoner, 423 U.S. 3, 4, 96 S.Ct. 167, 46 L.Ed.2d 3 (1975). Under Nev......
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9295 cases
  • McNeilab, Inc. v. North River Ins. Co., Civ. A. No. 82-3934.
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • October 31, 1986
    ...of Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) as developed in Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941), New Jersey rules govern choice of law questions in this court. Piper Aircraft Co. v. Reyno, 454 U.S. 235......
  • In re Assicurazioni Generali S.P.A. Holocaust Ins., No. MDL 1374.
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • September 25, 2002
    ...to apply foreign law. Under New York choice-of-law rules, which govern in a federal diversity case, Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941), New York substantive law applies unless there is a true conflict requiring a conflicts analysis. ......
  • Pearce v. EF Hutton Group, Inc., Civ. A. No. 86-0008.
    • United States
    • United States District Courts. United States District Court (Columbia)
    • July 14, 1987
    ...light claim, the forum must apply the choice of law principles of the state in which it sits. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941). This court must therefore apply the District of Columbia's choice of law rules to the problem.......
  • Johnson v. Wells Fargo Home Mortgage Inc., Nos. 09–15937
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • February 15, 2011
    ...applying state substantive law is bound to follow the choice-of-law rules of the forum state. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496–97, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Day & Zimmermann, Inc. v. Challoner, 423 U.S. 3, 4, 96 S.Ct. 167, 46 L.Ed.2d 3 (1975). Under Nev......
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7 books & journal articles
  • Combating Internet Trolls: The Right of Publicity and Section 230
    • United States
    • Landslide Nbr. 13-1, September 2020
    • September 9, 2020
    ...288 (D.N.H. 2008). 21. Id. at 291–92. 22. See Restatement (Second) of Torts §§ 652A–652E (Am. Law Inst. 1977). 23. 304 U.S. 64 (1938). 24. 313 U.S. 487 (1941). 25. 28 U.S.C. § 1404. 26. Wash. Rev. Code § 63.60.010. 27. Id. § 63.60.050. 28. See, e.g. , Lewis v. Physicians & Dentists Credit B......
  • Rethinking the Supreme Court’s Interstate Waters Jurisprudence
    • United States
    • Georgetown Environmental Law Review Nbr. 33-2, January 2021
    • January 1, 2021
    ...note 338, at 1068–72; Kramer, supra note 272, at 319–38. Erie carried the duty over to federal courts. See Klaxon Co. v. Stentor Mfg. Co., 313 U.S. 487, 496 (1941) (holding that the law providing the cause of action should provide the choice of law rules in ordinary diversity cases); Griff‌......
  • SUBSTITUTED SERVICE AND THE HAGUE SERVICE CONVENTION.
    • United States
    • William and Mary Law Review Vol. 63 Nbr. 5, April 2022
    • April 1, 2022
    ...Gardner, Alyssa King, and Aaron Simowitz for their comments, suggestions, and insights. (1.) See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941) (holding that federal courts exercising diversity jurisdiction must apply state conflicts rules); DeJoria v. Maghreb Petroleum Expl......
  • HORIZONTAL CHOICE OF LAW IN FEDERAL COURT.
    • United States
    • University of Pennsylvania Law Review Vol. 169 Nbr. 8, August 2021
    • August 1, 2021
    ...of sixty-three pages to it...."). (14) See Erie R.R. v. Tompkins, 304 U.S. 64 (1938). (15) See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (16) See infra Section I.B. (17) Id. (18) See infra notes 145-46 and accompanying text. (19) See infra notes 134-35 and accompanying text. (20) R......
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