Palmer Nat. Bank v. Van Doren

• Decision Date: 03 October 1932
• Docket Number: No. 5.,5.
• Citation: 244 N.W. 485,260 Mich. 310
• Parties: PALMER NAT. BANK v. VAN DOREN.
• Court: Michigan Supreme Court

260 Mich. 310

244 N.W. 485

PALMER NAT. BANK

v.VAN DOREN.

No. 5.

Supreme Court of Michigan.

Oct. 3, 1932.

Appeal from Circuit Court, Wayne County; William B. Brown, Judge.

Action by the Palmer National Bank against Verla E. Van Doren. Judgment for plaintiff, and defendant appeals.

Affirmed.

Argued before the Entire Bench.Edmund M. Sloman, of Detroit (Arthur H. Ratner, of Detroit, of counsel), for appellant.

Clark, Klein, Ferris & Cook, of Detroit (Sydney A. Jacobs and Joseph H. Parsons, both of Detroit, of counsel), for appellee.

BUTZEL, J.

In 1925 George M. McCray owed the Palmer National Bank of Danville, Ill., approximately $53,000, which included $2,400 due for interest and $7,400 representing his liability on indorsements of certain notes made by residents of Canada and discounted at the bank. The bank informed McCray that the bank examiner had objected to the Canadian notes, which had been due for over a year. When the bank insisted upon the payments, McCray invoked the aid of his sister Verla E. Van Doren, a married woman, defendant herein. She resided in Michigan, and, in response to her brother's request, went to Danville, Ill., for the very purpose of assisting him. After a conference with the bank officials, who told her of the order of the bank examiner, she gave plaintiff her note for $9,800. Thereupon McCray's liability on the Canadian notes was discharged and the notes were placed in an envelope, upon which defendant's name was written, and left with plaintiff for collection, the payments made thereon to be applied on defendant's note. Defendant claims that, when she signed the note for $9,800, she was assured by plaintiff's president, who died prior to the trial, that she would not be called upon to pay the note; that it was simply being substituted for the Canadian notes in order to satisfy the bank examiner. We are not impressed with this claim, for, as the trial judge found, even if this were true and the testimony admissible, it would constitute an attempt to work a fraud upon the bank examiner.

Defendant returned to Michigan and mailed several renewals of her note to the bank. Several payments made on the Canadian notes were applied on defendant's obligation. The last renewal note for $9,082.75, dated April 1, 1927, at Danville, Ill., became due October 1, 1927, at plaintiff bank. The renewal notes were prepared by plaintiff bank and mailed to defendant in Michigan. It is conceded that the amount of the note is correct, that defendant is a married woman and a resident of Michigan, and that under the laws of Illinois a married woman may become a surety. When the $9,800 note was discounted by the bank, $7,337.59 was used to take up the Canadian notes and the balance of $2,462.41 was credited by the plaintiff to the account of defendant's brother, George McCray, and used almost entirely to pay up the past-due interest owed by him to plaintiff. On defendant's refusal to meet the last renewal note, suit was brought by plaintiff in the Wayne circuit court. Defendant claims that plaintiff cannot recover because defendant is a married woman, and under the laws of Michigan cannot be held liable as a surety. She claims that the contract was made in Michigan, and that, therefore, the law of this state is applicable as the lex loci contractus, that in any event the lex fori is applicable in the present case, and that the public policy of Michigan is opposed to holding a woman responsible on a contract of suretyship, no matter where made. She further contends that plaintiff cannot recover because the note is an accommodation paper given for the benefit of the bank without consideration to plaintiff.

The contract is an Illinois contract. The law of the place of making ‘or place of performance,’ rather than the law of the domicile of a married woman, governs as to her capacity to contract. A renewal note is regarded as a continuation of the original note. Molsons Bank v. Berman, 224 Mich. 606, 195 N. W. 75, 35 A. L. R. 1289,N. J. Title Guarantee & Trust Co. v. McGrath, 246 Mich. 553, 562, 224 N. W. 755. In John A. Tolman Co. v. Reed, 115 Mich. 71, 72 N. W. 1104, we held a contract of guaranty dated in Illinois, signed in Michigan, and mailed to the guarantee in Illinois, where payments, if any, were to be made, was an Illinois contract. See Proposed Final Draft No. 2, § 336, and comment B thereunder of the American Law Institute Restatement of the Conflict of Laws. The law of the place of contracting controls on the question of the capacity of the parties to contract. Bissell v. Lewis, 4 Mich. 450;Wheeler v. Constantine, 39 Mich. 62, 33 Am. Rep. 355;State Bank of Eldorado v. Maxson, 123 Mich. 250, 82 N. W. 31,81 Am. St. Rep. 196;Millar v. Hilton, 189 Mich. 635, 155 N. W. 574, 576;John A. Tolman Co. v. Reed, 115 Mich. 71, 72 N. W. 1104;Amos v. Walter N. Kelley Co., 240 Mich. 257, 215 N. W. 397;Buckeye Com. Sav. Bank v. Protogere, 250 Mich. 652, 231 N. W. 65.

The question whether the courts of this state will enforce a contract of suretyship made in a foreign state by married woman and a resident of Michigan, when such foreign state permits a married woman to become surety, is one of first impression in this state. It has been frequently passed upon, however, by federal courts and tribunals in many other states. Defendant relies on the case of Union Trust Co. v. Grosman, 245 U. S. 412, 38 S. Ct. 147, 62 L. Ed. 368, and decisions in a very few other states. The case of Union Trust Co. v. Grosman, supra, is against the great weight of authority in this country. See 18 Columbia Law Review, 482;27 Yale Law Review, 814; Goodrich on Conflict of Laws, 217. In Millar v. Hilton, supra, liability was enforced against a married woman domiciled in Michigan on a note executed by her in Ontario as surety for her husband at a time when her domicile was in Ontario. In that case Mr. Justice Steere stated:

‘It is also well settled in this state, in harmony with the prevailing rule elsewhere, that foreign contracts, when the subject of litigation in this jurisdiction, are to be given effect, interpreted, and the contractual rights of the contending parties determined according to appropriate statutes and decisions of the territory where the contract was entered into, unless by some provision of the contract it is manifest the parties have otherwise intended and agreed. Douglass v. Paine, 141 Mich. 485, 104 N. W. 781. The promissory note upon which the action is based is clearly a foreign contract without qualification, intended to be performed where made. It was negotiated, dated, signed, indorsed, delivered, and made payable in Toronto, Ontario, where all parties in interest then resided. It was not paid there or elsewhere. Actions upon commercial paper are transitory, and the creditor may pursue and sue the debtor in any state where his person or property can be found; but the contractual rights of the parties are tested by the law of the place of contract, as before stated.’

The facts in this case differ somewhat from those in the instant case, in that defendant was domiciled in Ontario when the contract was made.

In Thompson v. Taylor, 66 N. J. Law, 253, 258, 49 A. 544, 546,54 L. R. A. 585, 88 Am. St. Rep. 485, the court said:

‘The distinction between...