"The

It has, however, been held that a contract made and to be performed in S., for the discharge of a debt secured by a mortgage on an immovable in D., is governed as to its interpretation, and the appropriation of payments made under it, by the law of the place of the contract. mere fact of the money having been advanced on a mortgage in a foreign country, does not render it requisite that the contract should be governed by the law of that country in which the mortgaged land is situate." Campbell v. Dent, 2 Moore's Privy Council Rep., 292, 307, 308; Westlake Private Intern. Law, § 229.

CHAPTER XLVI.

CONTRACTS.

SECTION I. Law of place.

II. Place of making contract.

III. Formalities.

SECTION I.

LAW OF PLACE.

ARTICLE 601. Contracts made and performed in same nation.
602. Contracts made and performed in different na-

tions.

603. Law governing interpretation of contract. 604, 605. Illegality of contract.

606. Mode of charging parties to negotiable instru

ments.

Contracts made and performed in same nation.

601. A contract made and agreed expressly or tacitly,' to be wholly performed within the jurisdiction of the same nation, is governed by the law of that nation.

1

1 Story, Confl. of L., § 280. This rule of municipal law requires to be mentioned as a rule of international law, not only because the contracting parties may be foreigners, but because the effect of such a contract even when made between members of the nation is frequently drawn in question abroad, in respect to the rights of foreigners. Benners v. Clemens, 8 Pennsylvania State Rep., 24.

Contracts made and performed in different nations. 602. Subject to articles 604 and 605, a contract made within the jurisdiction of one nation, and agreed expressly or tacitly to be performed either wholly or in part within the jurisdiction of another, is governed as to its validity' by the law of the place where it is made;' and as to its interpretation by the law actually or presumptively intended by the parties for that purpose; as provided in the next article.

1 The expression "existence" of a contract has been sometimes recommended in preference to the terms "validity validity" or legality," for the reason that an invalid or unlawful contract is " no contract at all." (Coppocks v. Brower, 4 Meeson & Wellesby's Rep., 368.) "It must be a legal contract or it is nothing." Washburn v. Franklin, 28 Barbour (New York) Rep., 28. So a fraudulent transaction as between the parties "in contemplation of law. . . never had any existence at all." Bottomley v. United States, 1 Story U. S. Circ. Ct. Rep., 147. This reasoning, however, does not appear to be entirely satisfactory; for in ordinary language an agreement between parties is a contract in conscience, though not a contract in law. 2 Many cases might be cited as holding in general terms that the validity or existence of a contract depends on the law of the place of performBut no case has been found holding, for instance, that the contract of two infants of the age of 15 years, made in New York, to be wholly performed in a country where at that age they would be considered adults, is a valid contract.

ance.

The main exception to this principle is found in the cases on usury, which lay down the rule that the law of the place of performance is to govern; so that, if payment is to be made in another country, the rate prescribed by the law of either country may be stipulated for, even when the law of the place of making the contract prescribes a lower rate than that allowed in the place of payment. Andrews v. Pond, 13 Peters' (U. S. Supreme Ct.) Rep., 65; Pecks v. Mayo, 14 Vermont Rep., 38; Cope v. Allen, 53 Barbour (New York) Rep., 350; 2 Kent's Commentaries, 461; 2 Parsons on Contracts, 585, note; Story, Confl. of L., § 296; Savigny and Felix, as cited by Westlake, Private Intern. Law, § 205.

When the rate allowed by the place of making the contract is higher than at the place of performance this question does not arise. Such a contract at the rate allowed by either law is, of course, valid. Depau v. Humphreys, 8 Martin, Louisiana, (N. S.) 1; 2 Kent's Commentaries, 461, note b; Balme v. Wombough, 38 Barbour (New York) Rep., 352; Richards v. Glove Bank, 12 Wisconsin Rep., 692; Vliet v. Camp, 13 Id., 198; Fisher v. Otis, 3 Chandler, (Wisconsin) Rep., 83.

The point decided in the case of The Commonwealth of Kentucky v. Bassford, 6 Hill (New York) Rep., 438, was that a contract made and to be performed beyond the State of New York in relation to a foreign lottery, if lawful where made, will be enforced in New York, though if

made in New York it would be unlawful. Thatcher v. Morris, 11 New York Rep., 438.

The dictum of Lord MANSFIELD, in Robinson v. Bland, 2 Burrows Rep., 1077, evidently has reference to the cases provided for in Article 604.

So the validity of a voluntary assignment of movables in trust is governed by the law of the place of its origin. Speed v. May, 5 Harris (Pennsylvania) Rep., 91; Law v. Mills, 6 Id., 185; but some exceptions have been made, 6 American Law Reg., (N. S.,) 522.

It is not enough that the parties have in view a reference to the law of another State in the formation of their contract; for, if that were sufficient the statute of usury would in every case at the option of the parties become a dead letter. The rule is that the parties must have a view to the laws of another State in the execution of the contract, and then undoubtedly the contract is to be governed by such foreign law. Kent, J. Van Schaick v. Edwards, 2 Johnson's Cases, (New York,) 367.

This familiar and fundamental rule is stated by most authorities as a consequence of the independent sovereignty of States, but it has been well expounded in a recent case with reference to the principle which is also essential to it; that, men ought to be safe from civil loss and criminal liability if they conform to the laws of the place where their acts are done. An act to be punishable as an offense must be a crime where it is performed. A person who is about to enter into a contract ought to have an opportunity to take legal advice. This privilege he would be in a great measure deprived of unless he can apply to members of the legal profession in the place where the contract is to be made, and they would naturally instruct him in that law with which they are familiar. Koster v. Meritt, 32 Connecticut Rep., 246.

Law governing interpretation of contract.

1

603. The law intended by the parties to govern the interpretation of any stipulation of their contract is deemed to be:

1. The law of any nation named by them for that purpose, as a part of their contract; or,

2. If no such law is so named, the law of the place where such stipulation is agreed to be wholly performed; or,"

3. If no such law or place of performance is specified, the law of the place of making their contract; but in this case a contrary intention may be shown."

1 Where there are several stipulations to be performed in several places, the law of the place of performance of one does not govern as to anther. Pomeroy v. Ainsworth, 22 Barbour (New York) Rep., 128.

It seems that English subjects on their marriage may stipulate that their marriage rights shall be regulated by the law of a foreign country; and the courts of England will enforce such a contract. Este v. Smith, 23 Law Journ, Chanc., 705.

5

"It has been held in Louisiana that a matrimonial contract which would adopt a law foreign to the domicil must set out its provisions, and not merely refer to the law eo nomine. Bourcier v. Lanusse, 3 Martin (Louisiana) Rep.,581. But a contrary opinion has been expressed in Este v. Smith, 18 Beavan's Rep., 122." (Westlake, Private Intern. Law, § 371; citing also, Byam v. Byam, 19 Beavan's Rep., 58.)

In Millar v. Heinrick, 4 Campbell Rep., 155, a Russian contract for seaman's wages payable monthly "subject to the deductions provided for by the regulations of the Russian marine" was held to be governed in that respect by the law so named.

2 Cook v. Moffat, 5 Howard U. S. Supr. Ct. Rep., 312; Van Schaick v. Edwards, 2 Johnson's Cases, (New York,) 367. KENT, J.

"Cases may be readily conceived where it might be difficult to determine whether the parties had reference to the laws of the place where the contract was made or some other place. In such cases it is desirable that the parties should be at liberty to determine by express stipulations made in good faith by which law the rate of interest shall be governed." Townsend v. Riley, 46 New Hampshire Rep., 312.

"The law of the place," [i. e. of making,]" can never be the rule where the transaction is entered into with an express view to the law of another country as the rule by which it is to be governed. Huberi Praclectiones, 1, 3, p. 34, is clear and distinct, Voet speaks to the same effect."

"That it was competent for the parties, being citizens of Illinois, to provide by their express agreement that it should be construed by

the laws of the State is too well established by authority to admit of doubt.” (2 Burrows Rep., 1077.) Strawbridge v. Robinson, 5 Gilman (Illinois) Rep., 470. Parsons on Notes & Bills, I., p. 57.

It is the constant practice in America to name the law by which all questions of interpretation of a contract shall be determined.

3 See, Westlake, Private Intern. Law, nos. 212, 216.

A policy of marine insurance made in England, although on a foreign voyage, i. e., from England abroad,—is to be interpreted as to all matters contemplated in it, as an English contract. Dent v. Smith, Law Rep., 4 Queen's Bench, 414; and see Peninsular & Oriental Co. v. Shaw,3 Moore's Privy Council Rep., (N. S.,) 272; Hale v. N. J. Steam Navigation Co., 15 Connecticut Rep., 546–7.

See Story, Confl. of L., § 280, to the contrary.

4

1 Story, § 280; Penobscot, &c. R. v. Bartlett, 78 Massachusetts (12 Gray) Rep., 248; Cox v..United States, 6 Peter's U. S. Supreme Ct. Rep., 172; Bank of United States v. Daniel, 12 Id., 32; Bell v. Bruen, 1 Howard U. S. Supr. Ct. Rep., 169; Kanaga v. Taylor, 7 Ohio State Rep., (N. S.) 142; Pryor v. Wright, 14 Arkansas Rep., 189; Gaylord v. Johnson, 5 McLean U. S. Circ. Ct. Rep., 448; (as to grace,) Bowen v. Newell, 13 New York Rep., 290 ; (as to usury,) M'Allister v. Smith, 17 Illinois Rep., 328; (as to interest,) Hawley v. Sloo, 12 Louisiana Ann. Rep., 815; (as to amount of interest,) Vincent v. Platt, 21 Georgia Rep., 135; 2 Parsons on Notes & Bills, 320; Mason v. Dousay, 35 Illinois Rep., 424.

5 The rule of comity adopts the law of the country where the contract,

is made, in determing its nature, construction and validity, unless such construction is contra bonos mores, or against some positive law of the place where the contract is sought to be enforced.

Lloyd v. Ginbert, Law Rep., 1 Queen's Bench, 115. Forsyth's Cases & Opinions in Constitutional Law, p. 239.

It can have no validity except conformable to the law where made. The Baltimore & Ohio R. R. Co. v. Glenn, 28 Maryland Rep., 287.

No right can be derived under any contract, made in opposition to the law where it is made. Hall v. Mullin, 5 Harris & Johnson (Maryland) Rep., 193.

But where a question arises under the common law, or law merchant, the courts of one State will not be concluded as to what the common law rule in such case is, by what the courts of the State where the contract was made have decided in relation thereto. Otherwise if the decision was upon a question arising under some custom or usage of the place where the contract was made.

Franklin v. Twogood, 25 Iowa Rep., 520.

6 Perhaps other modes of indicating the intent should be allowed to provide for cases like the following: (1.) A contract made between foreigners in their foreign language; Fælix, Droit Intern. Privé, vol. 1, 158, d; (2.) A contract, subsidiary or incidental to a foreign right or obligation; as, a contract made by a manufacturer in one country, to supply goods in another to enable the other party to fulfill a contract to be performed in a third country; or, a contract in one country to give a release in another from a foreign obligation, which would mean a release good by the foreign law; or, a contract in A. to make another contract in B. for doing an act in C. : (3.) A contract where the subject relates locally to a foreign country. Robinson v. Bland, 2 Burrows' Rep., 1078, 1079.

Illegality of contract.

604. A contract, wherever made or to be performed, which is forbidden by an express' provision of the law of any nation within whose jurisdiction it is agreed to be wholly or in part performed,' is unlawful everywhere,3 so far as relates to the prohibited performance.

What is injurious to the rights of the citizens where the property is situated should be the subject of positive legislation, and not left to the discretion of the courts: (Story, Confl. of L., § 390;) and so are the au thorities generally in the United States, although the rule is somewhat more broadly expressed. Zipsey v. Thompson, 1 Gray (Massachusetts) Rep., 243; Vernam v. Camp, 1 Green (New Jersey) Rep., 326; 2 Mason, U. S. Circ. Ct. Rep., 157; 5 Greenleaf, 245; Olivier v. Townes, 2 Martin (Louisiana) Rep., 97. Guillander v. Howell, 35 New York, 657.

An express provision of law that a voluntary assignment in trust made abroad, of a debt, due by a resident, shall not be effectual, in the debtor's residence unless recorded there, as against bona fide subsequent purchasers, will render the assignment invalid to that extent. Philson v. Barnes, 50 Pennsylvania State Rep., 230.