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Supreme Court of New Hampshire Carroll,

RESIDENTS OF NEW HAMPSHIRE AND THE ACCIDENT HAPPENED


IN MAINE.
THE DEFENDANT FILED A SPECIAL PLEA THAT "UNDER THE
LAWS OF SAID STATE OF MAINE, THE PLAINTIFF BEING THE
WIFE OF SAID DEFENDANT IS BARRED FROM MAINTAINING
THIS ACTION." THE PLAINTIFF'S DEMURRER TO THIS PLEA
WAS OVERRULED BY SAWYER, C. J., WHO TRANSFERRED THE
CASE UPON EXCEPTION TO THAT RULING.
Coulombe Coulombe and Crawford D. Hening (Mr. Hening
orally), for the plaintiff.
Gay Gleason (of Massachusetts) and Bernard Jacobs (Mr.
Jacobs orally), for the defendant. *8383

ELSERCE A. GRAY V. FRANK M. GRAY, 87 N.H. 82 (N.H. 1934)


DECIDED SEPTEMBER 4, 1934.
If there is no ground of action in the sovereignty where a
tort is alleged to have occurred, there is none anywhere.
Whatever would be a bar to an action for tort if brought in
the state of its occurrence is a bar in this state although
the matter pleaded would not be a bar if the cause of action
had arisen here. A New Hampshire wife injured by the
negligence of her husband while driving with him in Maine is
barred from recovery against him in this state because under
Maine law a wife has no cause of action for negligence
against her husband. Persons having the status of husband
and wife take that status with them into a sister state but
the incidents of that status are those prescribed by the law
of the place where transactions take place. The theory of a
foreign vested right or obligatio as a test for the
enforcement of an alleged foreign tort is not based upon the
idea that a sovereignty is under legal compulsion to
recognize the foreign cause of action but such recognition
has resulted from the idea that it was the just and politic
course to follow. The foreign law is enforced because the
law of the forum is that the foreign law shall govern the
transactions in question and thus for the purposes of the
case the foreign law becomes the local law. Where no
evidence is presented that the lex loci includes the
doctrine of renvoi the foreign domestic law should be
applied; if the doctrine of renvoi were a part of the
foreign law the question whether it should be applied would
demand determination.

PEASLEE, C. J.
I. "If there is no ground of action in the sovereignty where
the tort is alleged to have occurred, there is none
anywhere. . . . To ascertain the rights resulting from acts
done or omitted, attention must be paid to the circumstances
under which the events took place; and one of the governing
circumstances is the law of the place which characterizes
the act. . . . In like manner, when a right is claimed upon
acts occurring in another country, courts look to the law of
that country, not to extend the binding force of a foreign
law beyond the territorial limits of the sovereignty to
which it belongs, but to ascertain whether the right claimed
exists or not. It is not the foreign law, but the rights
acquired under it, which are enforced by the courts of
another country; and this is true whether the question be
one of contract, tort, or status." MacDonald v. Railway,71
N.H. 448, 450, 451.
"If there is a conflict between the lex loci and the lex
fori, the former governs in torts the same as in contracts,
in respect to the legal effect and incidents of acts. . . .
Therefore, whatever would be a defence to this action if it
had been brought in the state of Maine is a defence here,
although it would not be if the cause of action had arisen
in this state." Beacham v. Portsmouth Bridge, 68 N.H. 382.

CASE,
TO
RECOVER
DAMAGES
FOR
PERSONAL
INJURIES
ALLEGED TO HAVE BEEN CAUSED BY THE DEFENDANT'S
NEGLIGENCE.
THE
PARTIES
ARE
HUSBAND
AND
WIFE,

For more than a hundred years this theory of the law has
been followed in this state, whenever there has been
occasion to apply it, or any part of it. Wilson v. Rich, 5
N.H. 455; French v. Hall, 9 N.H. 137; Henry v. Sargeant, 13
N.H. 321; Laird v. Railroad, 62 N.H. 254; Leazotte v.
Railroad, 70 N.H. 5; Kimball v. Kimball, 75 N.H. 291; Young
v. Company,76 N.H. 582; Hill v. Railroad, 77 N.H. 151;
Stinson v. Railroad,81 N.H. 473; Marshall v. Railroad, 81
N.H. 548; Lee v. Chamberlin,84 N.H. 182; Precourt v.
Driscoll, 85 N.H. 280; Small v. Railroad,85 N.H. 330;
Richards v. Richards, 86 N.H. 273; Blanchette v. Sargent,
ante, 15.
It has the final approval of the American Law Institute,
Restatement, Conflict of Laws, s. 382 et seq. It is
supported by all our eminent text writers upon the subject.
Story, Conflict of Laws, s. 558; Dicey, Conflict of Laws,
21; Beale, Conflict of Laws, 112; Goodrich, Conflict of
Laws, 189; Wharton, Conflict of Laws, s. 478 b; Minor,
Conflict of Laws, s. 194. The American decisions are almost
uniformly to the same effect. They are collected in 12 C. J.
452, and cross references. In three recent cases the precise
question here involved has been decided adversely to the
plaintiff. Buckeye v. Buckeye, 203 Wis. 248; Dawson v.
Dawson, 224 Ala. 13; Howard v. Howard, 200 N.C. 574. *8484
Against this array of authority it is strenuously argued
that the decided cases are distinguishable; that much which
has been said is dicta; that the theory is contrary to the
English law, unsound in principle, unworkable in many
situations and criticized by a group of present day writers.
It is true that none of our decisions involve the precise
facts
here
presented,
but
several
of
them
are
indistinguishable in principle. In Beacham v. Portsmouth
Bridge, 68 N.H. 382, the defendant was a wrongdoer, and by
New Hampshire law the plaintiff was free from contributory
fault. But since by Maine law his driving contrary to the
Sunday law barred a recovery, he had no remedy here for an
accident happening there.

In Lee v. Chamberlin, 84 N.H. 182, Richards v. Richards, 86


N.H. 273 and Blanchette v. Sargent, ante, 15 the defendants
were held not to be accountable for ordinary negligence
towards guest passengers, although they would be by the law
of this state. The different law as to the incidents
attaching to their status in Massachusetts and Vermont was
held to determine the rights of the parties as to events
occurring in those jurisdictions.
In Precourt v. Driscoll, 85 N.H. 280, the plaintiff was
called upon to prove her own freedom from fault, in
accordance with the law of Vermont, although by New
Hampshire law she would have made a case by merely showing
the defendant's negligence.
It is sought to distinguish the present case upon the ground
that the act complained of was a delict, in the sense that
it was not made innocent by Maine law; and the only reason a
recovery could not be had in Maine is the spousal relation
of the parties. As the parties are residents of New
Hampshire, where spousal incapacity to sue has been
abolished, it is argued that the wife's complaint for acts
done in Maine may be brought into this state and suit upon
it maintained here.
The argument fails to distinguish between status and the
incidents which local law attaches to the status. The
parties are husband and wife. That status they took with
them into Maine. But the incidents of that status are those
prescribed by the law of the place where transactions take
place. As before pointed out, this rule has frequently been
applied in tort actions where other relations were involved.
The guest passenger in an automobile remains such after
crossing the state line into Massachusetts. But his recovery
here for injuries caused by his host's ordinary negligence
depends upon which side of the state line the accident
occurred. If it happened in Massachusetts, *8585 there could
be no recovery, even though the parties are residents here
and the suit is in this jurisdiction. Lee v. Chamberlin,

supra; Richards v. Richards, supra; Blanchette v. Sargent,


supra.
Every argument urged in favor of this plaintiff is
applicable to these decided cases. The defendant's act is a
delict by the lex loci. It would have been actionable if
committed here; and, as to persons in general, it is
actionable there. But because of the particular relation of
the parties, the law there is that there is no cause of
action in the special instance. The plaintiff fails here, as
those plaintiffs failed, because there is no cause of action
at the place where the acts complained of were done.
It should be observed that much of the plaintiff's argument
is based upon the assertion that inability to recover in
Maine is merely because suits between husband and wife are
forbidden. Hence it is urged that recovery may be had by
resort to a jurisdiction where such suits are allowed. But
an examination of the Maine law shows that the rule is much
broader. The theory adopted there is not merely that there
is a prohibition of suit, but that the acts complained of do
not give rise to any cause of action. There has been no
breach of legal duty.
A suit for false imprisonment during coverture was brought
by a divorced wife against her former husband. The court
said: "The theory upon which the present action is sought to
be maintained is, that coverture merely suspends and does
not destroy the remedy of the wife against her husband. But
the error in the proposition is the supposition that a cause
of action or a right of action ever exists in such a case.
There is not only no civil remedy but there is no civil
right, during coverture, to be redressed at any time. There
is, therefore, nothing to be suspended. Divorce cannot make
that a cause of action which was not a cause of action
before divorce. The legal character of an act of violence by
husband upon wife and of the consequences that flow from it,
is fixed by the condition of the parties at the time the act
is done. If there be no cause of action at the time, there
never can be any." Abbott v. Abbott, 67 Me. 304, 306, cited

with approval in Sacknoff v. Sacknoff, 131 Me. 280. In the


latter case a wife was denied recovery from the employer of
her husband for injuries caused by the negligence of that
employee.
II. The claim that the American rule is opposed to the
practice in England is well founded. But the English law
upon the subject is by no means clearly defined. All that is
here claimed for it is that in a suit for a foreign tort
recovery may be had according to English*8686 law, unless
the lex loci has made the act complained of innocent. This
seems to be a splitting of the rule of accountability. The
foreign law is noted and applied, in so far as treating the
act as innocent is concerned; but if that obstacle is
passed, the English law is then used, or may be, to
supplement the foreign and give a cause of action. This
theory never attained any recognition in this country. "No
case in this country has been found where recovery in tort
has been allowed for what was not the basis of an action by
the lex loci delicti." Goodrich, Conflict of Laws, 190.
III. Much objection has been made, both by some recent
writers and in argument here, against any theory of vested
right or obligatio. If such theory were based upon the idea
that a sovereignty is under legal compulsion to recognize
the foreign cause of action, there might be force in the
argument. While the proposition may sometimes have been
stated in that extreme form, the common theory is that such
recognition has resulted from the idea that it was the just
and politic course to follow. It has been developed under
the impulses of neighborliness and orderliness. It has
become an accepted rule precisely as liability for
negligence, once unknown, became a part of the common law.
Wrong theories for the rule may have been advanced. But the
destruction of such men of straw does not affect the
validity of the line of procedure they were supposed to
defend. It stands upon its own intrinsic merits. No one
denies that the parties may have vested rights, or
obligations, in the jurisdiction where the transaction
3

occurred. But because another sovereignty adopts the rule


that it will enforce the right or deny recovery as the event
would be according to the lex loci, it by no means follows
that it is the law of the forum that such course is
obligatory upon such sovereignty.
In reaching the conclusions stated in Beacham v. Portsmouth
Bridge,68 N.H. 382, it was not deemed essential to enter
into a discussion of the territoriality of law, of the
concept of it spatially, or of the claims of parties as
vested rights, accrued in a foreign jurisdiction. The
situation was a practical one. The problem was "one of
judicial expediency" (Saloshin v. Houle, 85 N.H. 126, 130).
Forty odd separate jurisdictions had given rise to pressing
questions as to how rights and wrongs originating in one
should be dealt with in another. A few simple ideas were
sufficient to indicate the course to be taken. Local conduct
should be governed by local law. Rules of conduct have no
force to regulate acts done outside the jurisdiction which
made the rules, save as their operation is enforced by
control over parties found within the jurisdiction. In the
great *8787 majority of cases complaints of conduct are
adjusted in the jurisdiction where the conduct took place.
It is desirable that the remedy be the same, wherever the
action is brought.
IV. It is contended that there is unpardonable inconsistency
in enforcing foreign rights, whether of prosecution or
defence, and at the same time declaring that the foreign law
is not in force here. The ground has been gone over many
times. The local law is that the foreign rights will be
enforced. What those rights are depends upon the facts, and
a part of the facts consists in the law under which the
transactions took place.
But if it is still insisted that a proper designation of the
process is that we thus enforce foreign law (Saloshin v.
Houle, 85 N.H. 126), it does not affect the soundness of the
procedure. We enforce the foreign law because it is our law
that the foreign law shall govern the transactions in

question. "For the purposes of the case the foreign law


becomes the local law." Saloshin v. Houle, supra, 130. It
has been concluded that it shall so govern for the reasons
before stated. This is not importing foreign law. It is only
giving to it the legitimate effect upon transactions
occurring where it is in force. The logical alternative is
not found in the application of local law to a foreign
transaction, but in a refusal to deal with that transaction
at all. If it is to be justiciable here, it should be upon
the basis of what it is there.
The other view, that to some indefinite degree our law
should govern the foreign transaction, would export our law
into foreign territory. The reasonable conclusion which has
been reached is that there should be neither export nor
import, that, generally speaking, the law is territorial,
conceived of spatially as governing within the jurisdiction,
and creating there rights and obligations which will be
respected and enforced elsewhere. Judge Cardozo sums the
matter up in a sentence. "The plaintiff owns something and
we help him to get it." Louks v. Company,224 N.Y. 99, 110.
V. The critics of the American rule affect to find much
inconsistency in the suggested refusal (Goodrich, Conflict
of Laws, 24; Am. Law Inst., Restat., Conflict of Laws, s. 7)
to follow the lex loci as to the applicability of foreign
law to local transactions. The proposition advanced here is
that if by the lex loci the plaintiff could recover there if
he would have that right by the law of his domicil, though
not
if
domesticated,
he
should
recover
in
other
jurisdictions, if they profess to apply the lex loci. This
is upon the theory that the whole or none of the lex loci
should be applied. *8888
It being the rule in some jurisdictions that in a suit by a
non-resident upon a cause arising locally his capacity to
sue will be determined by looking to the law of his domicil
rather than to the local law, it is urged that this feature
(called the doctrine of renvoi) should be treated the same
as the rest of the lex loci. If that law looks beyond local
4

limitations to broader or otherwise different rules of the


party's domicil, it is argued that the same course should be
followed by the court in another jurisdiction when called
upon to adjudicate disputes which arose under such
circumstances. That is, in determining the applicability of
foreign law, the court should be governed by that foreign
law as to the applicability of foreign law. This idea is
urged as calling for the recognition of renvoi under such
circumstances. It has not as yet met with judicial approval.
We do not understand it is claimed that the doctrine of
renvoi ought to be adopted. One of the authors upon whose
reasoning the plaintiff relies says: "The renvoi doctrine
is, therefore, no part of the Conflict of Laws of the United
States. Its introduction into our law would be most
unfortunate on account of the uncertainty and confusion to
which it would give rise in the administration of justice
and its demoralizing effect upon the future development of
the Conflict of Laws." The Renvoi Theory (Lorenzen), 10 Col.
Law Rev. 344. It is advanced in argument here as a feature
of existing law, in some foreign jurisdictions, and its
recognition where existing is urged as a logical part of the
vested right theory, and as showing that, thus encumbered,
that theory should be rejected. It is unnecessary to
determine the validity of the argument. If its soundness
were assumed, and recognition of renvoi should be treated as
a part of our rule applying the lex loci, there would be two
sufficient answers here. The plea demurred to states "that
under the laws of the State of Maine, the plaintiff being
the wife of said defendant is barred from maintaining this
action." This leaves no room for speculation upon the
matter. Beyond this, it is conceded in the plaintiff's
argument that there is no decision in Maine bearing upon the
doctrine of renvoi. Nor is there any claim that it is a part
of a generally prevailing common-law doctrine. If the matter
were open for consideration, the plaintiff would fail for
lack of proof that the doctrine prevails in Maine.

But it will be said that these conclusions do not meet the


whole issue. The argument that consideration of renvoi
should be a part of any theory of applying the lex loci, and
that the theory thus embarrassed is unworkable, has not been
answered. The conclusion sought to be drawn from these
propositions is that they show that *8989 the whole theory
of applying the lex loci is unsound and should therefore be
abandoned, and actions for foreign torts should be decided
according to local law.
One answer to this is that the rule that the lex loci shall
apply is so firmly established that it should be followed,
unless very grave defects therein call for reform. We see no
such defects. Whether it should include renvoi or not is a
matter to be decided when a case arises which presents that
question. In the instant case there is no occasion to go
further than to inquire whether the obstacle proposed is
insuperable. If it does not appear to be so, we need not be
apprehensive that adherence to the present line of procedure
will unduly embarrass the court of the future when called
upon to decide the propounded problem.
It is undoubtedly true that following the doctrine of renvoi
to a logical extreme can, in some situations, result in an
endless reference back and forth. The dilemma thus presented
is something of an answer to the theorists who justify the
application of the lex loci upon the idea of a vested right.
The writers relied upon by the plaintiff have used it
largely for this limited purpose. They recognize the
desirability of a general application of the lex loci in
actions for torts. Their quarrel has been with the theory of
those who would account for such procedure upon the basis of
a vested right or obligatio.
Once the doctrine of obligatio is disregarded, and
recognition of the lex loci is put upon its true foundation,
there is no difficulty. The lex loci is applied because this
is deemed to be the sensible course to pursue. When a point
is reached where further application is futile and
ridiculous the process is cut short.
5

No rule or set of rules has yet been devised which will make
the conflict of laws a logical whole. There are places where
logic has to give way to evident facts. In these places
horse sense has prevailed over the deductions of the
schoolmen. It should continue to do so.
Whether, upon the issue of applying foreign law we should
follow our own views entirely, or adopt those expressed in
the lex loci which are pertinent, is, like most of the
questions involved in this case, a matter of what is sound
policy. That problem will no doubt be solved in the future,
and some definite rules will be evolved, as there have been
already on the main issue of following the lex loci.
As before stated, there is no occasion here to determine
whether we should apply a Maine doctrine of renvoi, since
there is no evidence that such a doctrine exists.
VI. The novel complaint is made that the foregoing
conclusions *9090 upon the application of the lex loci set
up fixed rules. The proposal is that instead thereof the
whole matter be left to the discretion of the court to apply
either the foreign or the domestic law to the individual
case as "reason, justice and expediency" require. That might
well be taken as the guide for determining what should be
done in the first stages of the development of the law. But
as the law progresses definite rules are evolved in the
course of the frequent application of those tests. That is
the situation here. It has become settled that reason,
justice and expediency require that causes of action for
foreign torts be dealt with as hereinbefore indicated.
Exception overruled.
All concurred.
11
97 Ala. 126 - 1892

So.

Alabama
v.
Carroll.

Great

Southern

Rail

Road

Co.

[126] Action by Employe for Injuries Sustained in Another


State.
1. Negligence of fellow-Servant not cause of action against
master at common-law.Underthe common-law, both in Alabama
and Mississippi, the master is not liable for an injury
inflicted through the negligence of a fellow-servant.
2. Section 2590 of the Code has no extra territorial
operation.There can be no recovery in Alabama for injuries
to the person sustained in another State, unless actionable
by the law of the State where received, and this rule is not
varied because the negligence which produced the casualty
transpired in Alabama, where the common-law liability of the
master is modified, nor by the facts that both master and
employee reside in this State and services were required of
the employee in both States.
3. Section 2590 imposes no contractual obligations. The
liability of the employer under Section 2590 of the Code,
does not spring from the contract of employment, the only
office of which is to establish the relation of master and
servant, and it is alone upon the incidents of that relation
that the statute operates. Hence, a servant injured in
another State by the negligence of a fellow-servant, under
such circumstances as would create no right of action
against the master in that State, cannot recover against the
latter in Alabama, although the contract was entered into
and the services partly performed here

803

Appeal from City Court of Birmingham. Tried before Hon. H.


A. SHARPE.

Alabama to Meridian in the State Mississippi. At the time of


the casualty complained of, plaintiff was in the service of
the defendant in the capacity of brakeman on freight trains
running from Birmingham, Alabama, to Meridian, Mississippi,
under a contract which was made in the state of Alabama. The
injury was caused by the breaking of a link between two cars
in a freight train which was proceeding from Birmingham to
Meridian. The point at which the link broke and the injury
was suffered was in the State of Mississippi. The evidence
tended to show that the link which broke was a defective
link and that it was in a defective condition when the train
left Birmingham. It was shown that this link, had come to
the defendant's road at Chattanooga, Tennessee, with a car
which belonged to and came to that point over a road which
was foreign to the A.G.S. road. That at Chattanooga, this
foreign car was coupled into a train of the defendant by
means of this link, the destination of the car next in rear
of it being Birmingham, and the destination of the second
car in the rear of it, which belonged to defendant, being
Meridian, to which point the foreign car was also bound. At
Birmingham the car between this foreign car and the A.G.S.
car which were billed to Meridian was cut out, and these two
were coupled together by means of the link which had come to
the defendant with the foreign car. The evidence went also
to show that the defect in this link consisted in or
resulted from its having been bent while cold, that this
tended to weaken the iron and in this instance had cracked
the link somewhat on the outer curve of the bend, and that
the link broke at the point of this crack. It was shown to
be the duty of certain employees of defendant stationed
along its line to inspect the links attached to cars to be
put in trains or forming the couplings between cars in

J. W. FEWELL, and A. G. SMITH, for appellant.


That the action is not for breach of contract, nor for
breach of duty growing out of contract.-R. R. Go. v.
Doyle, 60 Miss. 977; A .T. & R. R. v. :Moore, 11 Am. & Eng.
R.
R.
cases
243; LeForest
v.
Tolman, 19
Am.
Rep.
400;McMaster v. R. R. Co., 65 Miss. 264; Davis v. N. Y. R.
R. 143 Mass. 301; 33 Kan. 83; 98 N. Y. 377; 61 Iowa 441; 61
Tex. 432; 72 Ind. 220; 10 Ohio St. 121; E. T. V. & G. Rwy.
v. Lewis, 14 S. W. Rep. 603; 23 N. Y. 465; 5 Am. & Eng.
Encyc. 127; 3 lb. 522; 10 S. Rep. 661; 2 Thomp. on Neg. p.
1282.
BROOKS & BROOKS, for appellee, as to jurisdiction,
cited Denw1ck v. R. R. Go. 103 U. S. 18; Knight v. R.
R. Co.108 Pa. St. 38; Am. Rep. 492; A. G. S. v. Thomas, 89
Ala. 293.
That the law is part of the contract, Hanrick v. Andrews, 9
Port.
9;
McDougald
v.
Rutherford, 30
Ala.
253; Walker vForbes, 31 Ala. 9; Brouqhton v. Bradley, 36
Ala. 689; Cubbedge v. Napier, 62 Ala. 518; 100 U . S . 213;
116lb. 647; 3 Am. & Eng. Encyc. 545.
McCLELLAN, J.
The plaintiff W. D. Carroll is, and was [127] at the time of
being injured in that service, a citizen of Alabama. The
defendant is an Alabama corporation operating a railroad
extending from Chattanooga in the State of Tennessee through
7

trains at Chattanooga, Birmingham, and some points between


Birmingham and the place where this link broke, and [128]
also that it was the duty of the conductor of freight trains
and the other train-men to maintain such inspection as
occasion afforded throughout the runs or trips of such
trains; and the evidence affords ground for inference that
there was a negligent omission on the part of such employees
to perform this duty, or if performed, the failure to
discover the defect in and to remove this link was the
result of negligence..

doctrine of the common-law and wholly irrespective of


statutory provisions. These doctrines are presumed, and also
shown by the evidence in this case, to obtain in the State
of Mississippi; and the defendant being an Alabama
corporation it can not be questioned that an action may be
maintained in this State to recover damages for an injury
sustained in Mississippi, by one of its servants, if the
facts present a good cause of action under the law of that
State. It is manifest beyond adverse inference on the
evidence, conceding the link, the breaking of which caused
the accident, to have been in a defective condition when it
came to defendant's road at Chattanooga attached to, and
intended to be used in the further transportation, of the
foreign car, that it was so used from that point to the
place of the accident, that this defective condition of the
link was patent to such observation as should have been
bestowed upon it and that the defect in it was the proximate
cause of the injury to the plaintiff, it [129] is, we say
clear upon every aspect of the testimony, conceding all this
to be true, that the use of that link in coupling the
foreign car to the defendant's train and also in its use
throughout the voyage from Chattanooga into Mississippi was
due to the negligence of employees of the defendant who were
charged by it with the duty of inspecting the link before
and at the time of incorporating the foreign car into this
train and at the several points in Alabama where inspectors
were stationed as shown by the evidence, and also of the
train-men charged with the duty of inspection as the train
was en route. There is no pretense that the defendant had
not been sufficiently careful in the selection of these
inspectors or that they were incompetent. It is not
pretended that they were insufficient in number or stationed

The foregoing statement of facts, either proved or finding


lodgment in the tendencies of the evidence, together with.
the evidence of the law of Mississippi, as to the master's
liability for injuries sustained by an employee in his
service,
will
suffice
for
the
consideration
and
determination of the question which is of chief importance
in this case, namely, whether the defendant is liable at all
on the facts presented by this record for an injury
sustained by the defendant in the State of Mississippi. The
affirmative of this inquiry is sought to be rested and
maintained upon two distinct propositions. In the first
place, it is insisted that the. negligence which one aspect
of the evidence tends to establish Is that of the defendant
m respect of a duty which the law imposes upon the master
and which whether performed or undertaken to be performed in
the particular instance by the hand of the master or by the
hand of one to whom he had delegated its performance is yet
to be taken as being performed or attempted to be performed
by the master himself, in such sort that the employer is
responsible for its misperformance or non-performance
whereby injury results to one of his employees under the
8

at points too widely separated along the line. There is no


such idea advanced as that the defendant was negligent in
the purchasing of links of adequate strength, and supplying
them to these inspectors and to trains gene rally; or that
there was any necessity for the continued use of this link
upon a discovery of its defective condition; but on the
contrary it is affirmatively shown that the defend ant
purchased and supplied its trains and employees with all
necessary links of good quality and perfect condition to be
used in its trains, to supply the places of links which be
came defective from use, and to substitute for defective
links coming to this road with foreign cars. The only
negligence, in other words and in short, which finds support
by direction or inference in any tendency of the evidence,
is that of per sons whose duty it was to inspect the links
of the train, and remove such as were defective and replace
them with others which were not defective. This was the
negligence not of the master, the defendant, but of fellowservants of the plaintiff, for which at common-law the
defendant is not liable. Thus it is said in McKinney on
Fellow-Servants, 127 : "It is a very common thing for
train hands to receive injury through the negligence of
persons employed by the company to inspect their cars to
discover defects and repair them. The weight of authority,
perhaps, is to the effect that the negligence of such
employees in the performance of such duties cannot be
attributed to the company, and it is consequently not liable
for it." Citing among other cases Smith v. Potter, 46 Mich.
258; s. c. 2 Am. & Eng. R. R. Cas. 140; Mackin v. Railroad
Co., 135 Mass. 201; s. c.

15 Am. & Eng. R. R. Cas. 196; Railroad Co. v. Webb, 12 Ohio


St. 475; Railroad Co. v. Rice, 11 So. West Rep. (Ark.)
699; Kidwell v. Railroad Co. 3 Wood (U. S.) 313; and our own
case
[130] of Smoot v. Mobile & Montgomery R. R. Co. 67 Ala. 13;
and these and other cases are cited to the same proposition
in 7 Am. & En. Encyc. of Law p. 864, note.
There are cases which hold to the contrary, but the law is
and has long been settled in this State as we have stated
it, the case of Smoot v. Mobile (t Montgomery R. R. Co.
supra, being directly in point.Mobile & Ohio R. R. Co. v.
Thomas, 42
Ala.
672,
720 et
seq;
Mobile & Montgomery
Ry. Co. v. Smith, 59 Ala. 245; Louisville & Nashville R. R.
Co. v. A.llen, 78 Ala. 494.
This being the common-law applicable to the premises as
understood and declared in Alabama, it will be presumed in
our courts as thus declared to be the common-law of
Mississippi, unless the evidence shows a different rule to
have been announced by the Supreme Court of the State as
being the common-law thereof. The evidence adduced here
fails to show any such thing; but to the contrary it is made
to appear from the testimony of Judge Arnold and by the
decisions of the Supreme Court of Mississippi which were
introduced on the trial below that that court is in full
accord with this one in this respect. Indeed, if any thing,
those decisions go further than this court has ever gone in
applying the doctrine of fellow-servants to the exemption of
railway companies from liability to one servant for injuries
resulting from the negligence of another, holding in one
9

case that a hostler whose only duty it was to supply an


engine with sufficient sand before turning it over to the
engineer to go on the road is a fellow-servant of the
engineer for whose negligent failure to supply the same the
company would not be liable.L. & N. R. R. Co. v. Petty,67
Miss. 255; in another, that a section foreman and a laborer
working under him were fellow-servants in such sort that
their common master would not be liable for the negligence
of the former in attempting to repair a fishbar which he
ought to have discarded and applied for a new one.Lagrave
v. Mobile & Ohio R. R. Co. 67 Miss. 532; and in yet another
case, that a section foreman and train-man are fellowservants in respect of the Ifegligence of the former unknown
to the company in failing to keep the track in repair, and
that an engineer on a passing train who was injured in
consequence could not recover against common employer.N.
0. J. & G. N. R. R. Co. v. Hughes, 49 Miss. 258; and the
doctrine of this case is said by Mr. McKinney to be
"substantially the rule recognized by the English common-law
decisions." McKinney on Fellow-servants, p. 82 29. See
also McMaster v. Illinois Central R. R. Co.65 Miss. 264.

It is, however, further contended that the plaintiff, if his


evidence be believed, has made out a case for the recovery
sought under the Employer's Liability Act of Alabama, it
being clearly shown that there is no such, or similar law of
force in the State of Mississippi. Considering this position
in the abstract, that is dissociated from the facts of this
particular case which are supposed to exert an important
influence upon it, there can not be two opinions as to its
being unsound and untenable. So looked at, we do not
understand appellee's counsel even to deny either the
proposition or its application to this case, that there can
be no recovery in one State for injuries to the person
sustained in another unless the infliction of the injuries
is actionable under the law of the State in which they were
received. Certainly this is the well established rule of law
subject in some jurisdictions to the qualification that the
infliction of the injuries would also support an action in
the State where the suit is brought, had they been received
within that State. 3 Am. & Eng. Encyc. of Law, p. 5089; Hydes Admr. v. Wabash, St. Louis & Pacfic Ry. Co. 61
Iowa, 441; East Tenn. Va. & Gu. R. R. Co. v. Lewis., 14 S.
W. Rep. 603; Buckles v. Ellers, 72 Incl. 220; Willis v. Mo.
Pac. Ry. Co. 61 Texas, 432; Woodward v. M.S. & N. I R. R.
Co. 10 Ohio St. 121; Whitford v. Panama Railroad Co. 23 N.
Y. 465; Debovois v. .N. Y. L. E. & W. R. R. Co. 98 N. Y.
377; N C. & St. L. Ry. Co..v. Foster, 11 Amer. & Eng. R. R.
Cas. 180; 2 Rover on Railroads, p. 1149 ; Kahl v. M & C. R.
R. Co. 95 Ala. 337; C. St. L. & JJio.R. R. Co. v. Doyle, 60
Miss. 977; Davis 1'. N. Y. & N E. R. R. Co. 143 Mass.
301; LeForest v. Tolman, 117 Mass. 109; s. c. 19 Amer. Rep.
400; Lime killer v. H. & St. J. R. R. Co. 33 Kan. 83; The
Scotland, 105 U. S. 24; The Santa Cruz, 1 C. Rob. 50; A.

[131] Proceeding therefore on the presumptions we are


authorized to indulge and also on the evidence adduced in
this case as to the law of Mississippi in this connection,
and upon the testimony most favorable to the plaintiff as to
the cause of his injuries, we feel entirely safe in
declaring that plaintiff has shown no cause of action under
the common-law as it is understood and applied both here and
in Mississippi.

10

'1'. & S. F. R. R. Co. v. Moore, 11 Am. & Eng. R. R. Cas.


243.

left Nashville as well as during its passage through


Tennessee. While the train was running through Alabama, a
brakeman was killed in consequence of the defect in this
brake. All this is precisely on all fours with our case in
those of its aspects most favorable to the plaintiff. That
plaintiff, the court conceded, would have had a good cause o
action under the law of Tennessee, the place of the
negligence, if his intestate had been injured within its
limits. So here, the plaintiff on one aspect of the evidence
would have had a good cause for ac ion in Alabama, the place
of the negligence, had he been injured in Alabama. But it
was found in that case that the law of Alabama gave no cause
of action for the negligent failure to inspect the
appliances used in operating a train, but held the brakeman
and the inspectors to be fellow-servants in respect thereto,
just as here the laws of Mississippi afforded no redress for
the consequence of such negligence, though our statutes have
since the Tennessee decision provided therefor; and it was
held on the authority of Mobile & Ohio R. R. Co. v.
Thomas, 42 Ala. 672, that there could have been no recovery
in Alabama and that of consequence no cause of action
existed in Tennessee, the court saying: 'There is no
question but the laws of Alabama controlled the rights
of the parties in this case, and whether there was error in
this part of the charge (referring to an instruction as to
defendant's liability on the negligence shown) as given, or
the refusal of the specific instructions asked for
(substantial-[133]-ly that the negligence of a car inspector
from which a brakeman suffers injury is no ground for action
against their common employer,) depends wholly upon the laws
of that State. Nashville, Chattanooga & St. Louis By. Co.
v. Foster, 10 Lea, 352 ; s. o. 11 Amer. & Eng. E. E. Ca's.

But it is claimed that the facts of this ease take it out of


the general rule which the authorities cited above
abundantly support, and authorize the courts of Alabama to
subject the defendant to the payment of damages under
section 2590 of the Code, although the injuries counted on
were sustained in Mississippi under circumstances which
involved no liability on the defendant by the laws of that
State.
[132] This insistence is in the first instance based on that
aspect of the evidence which goes to show that the
negligence which produced the casualty transpired in
Alabama, and the theory that wherever the consequence of
that negligence manifested itself, a recovery can be had in
Alabama. We are referred to no authority in support of this
proposition, and exhaustive investigation on our part has
failed to disclose close any. There are at least two well
considered cases against it, one of which involved an effort
to recover for personal injuries sustained in Alabama under
circumstances which afforded no cause of action in Alabama
in the courts of Tennessee where the causal negligence
occurred and where also had the negligence manifested itself
in the results complained of there, the plaintiff would have
been entitled to recover. The accident happened on a train
going from Nashville to Chattanooga, in Tennessee, on a
railway which runs for a comparatively short distance
through Alabama. The negligence relied on consisted in the
failure of employees of the defendant charged in that behalf
to discover and remedy a defective brake before the train
11

180. In the other case the precise point here under


consideration was brought before the Supreme Court of
Mississippi, in an action instituted in that State sounding
in damages for fatal injuries inflicted upon plaintiff's
intestate in the State of Tennessee. It was insisted that
inasmuch as the death of the deceased resulted from the
negligent failure of a train dispatcher in Mississippi to
give requisite orders to the trainmen at a certain point in
Tennessee, the rights of the parties were de terminable by
the laws of Mississippi the place of the disastrous
negligent omission. But the court held to the contrary,
saying: "The right of the appellee is determinable by the
laws of Tennessee, in which State the killing of her husband
occurred. The view that no recovery could be had here,
except for a result traceable to an omission of duty in
Mississippi is unfounded. Physical force proceeding from
this State and inflicting injury in another State might give
rise to an action in either State, and vice versa but the
omission
of
duty
in
Mississippi
cannot
transfer
a
consequence of it manifested physically in another State to
Mississippi. The cases of injuries commenced in one
jurisdiction and completed in another illustrate our views
on this subject. The true view is that the legal entity
called the corporation is omni-present on its railroad, and
the presence or absence of negligence with respect to an
occurrence at any point of the line is not to be resolved by
the place at which an officer or employe was stationed for
duty. The question is as to duty operating effectually at
the place where its alleged failure caused harm to result.
The locality of the collision was in Tennessee. It was
there, if any where, that the company was remiss in duty,
for there is where its proper caution should have been

used."Chicago, St. Louis & New Orleans R. R. Co. v.


Doyle, 60 Miss. 977, 984. If this doctrine was properly
applied to the facts of that case where the act to be
performed, the failure to perform which caused the in jury,
could only be performed at a point in Mississippi and by an
employe who was stationed and remained at that place, it
would seem to address itself with more force to the case at
bar where it appears the corporation was in fact present
with the train and with the defective link every inch of the
journey from Birmingham to the point of the accident in the
person of the conductor and other trainmen who were charg[134]-ed with the duty all along the line of discovering and
removing the unsafe appliances.
The position of the Mississippi court appears to us to be
eminently sound in principle and upon logic. It is admitted,
or at least cannot be denied, that negligence of duty
unproductive of damnifying results will not authorize or
support a recovery. Up to the time train passed out of
Alabama no injury had resulted. For all that occurred in
Alabama, therefore, no cause of action whatever arose. The
face which created the right to sue, the injury without
which confessedly no action would lie anywhere, transpired
in the State of Mississippi. It was in that State,
therefore, necessarily that the cause of action, if any,
arose; and whether a cause of action arose and existed at
all or not must in all reason be determined by the law which
obtained at the time and place when and where the fact which
is relied on to justify a recovery transpired. Section 2590
of the Code of Alabama had no efficiency beyond the lines of
Alabama. It cannot be allowed to operate upon facts
occurring in another State so as to evolve out of them
12

rights and liabilities which do not exist under the law of


that State which is of course paramount in the premises.
where the facts occur in Alabama and a liability becomes
fixed in Alabama, it may be enforced in another State having
like enactments, or whose policy is not opposed to the
spirit of such enactments, but this is quite a different
matter. This is hut enforcing the statute upon facts to
which it is applicable all of which occur within the
territory for the government of which it was enacted.
Section 2590 of the Code, in other words is to be
interpreted
in
the
light
of
universally
recognized
principles of private international or interstate law, as if
its operation had been expressly limited to this State and
as if its first line read as follows: ''When a personal
injury is received in Alabama by a servant or employee,"
&c., &c. The negligent infliction of an injury here under
statutory circumstances creates a right of action here,
which, being transitory, may be enforced in any other State
or country the comity of which admits of it; but for an
injury inflicted elsewhere than in Alabama our statute gives
no right of recovery, and the aggrieved party must look to
the local law to ascertain what his rights are. Under that
law this plaintiff had no cause of action, as we have seen,
and hence he has no rights which our courts can enforce,
unless it be upon a consideration to be presently adverted
to. We have not been inattentive to the suggestions of
counsel in this connection, which are based upon that rule
of the statutory and common crim-[135]-inal law under which
a murderer is punishable where the fatal blow is delivered,
regardless of the place where death ensues.Green v.
State, 66 Ala. 40. This principle is patently without
application here. There would be some analogy if the

plaintiff had been stricken in Alabama and suffered in


Mississippi, which is not the fact. I here is, however, an
analogy which is afforded by the criminal law, but which
points away from the conclusion appellee's counsel desire us
to reach. This is found in that well established doctrine of
criminal law, that where the unlawful act is committed in
one jurisdiction or State and takes effect-produces the
result which it is the purpose of the law to prevent, or, it
having ensued, punish for-in another jurisdiction or State,
the crime is deemed to have been committed and is punished
in that jurisdiction or State in which the result is
manifested, and not where the act was committed. 1 Bish. Cr.
Law, 110 et seq.; 1 Bish. Cr. Pro. 53 et seq.
Another consideration-that referred to above-it is insisted,
entitles this plaintiff to recover here under the Employer's
Liability Act for an injury inflicted beyond the territorial
operation of that act. This is claimed upon the fact that at
the time :plaintiff was injured he was in the dis charge of
duties which rested on him by the terms of a contract
between him and defendant which had been entered into in
Alabama, and, hence, was an Alabama contract, in connection
with the facts that plaintiff was and is a citizen of this
State, and the defendant is an Alabama corporation. These
latter facts-of citizenship and domicile respectively of
plaintiff and defendantare of no importance in this
connection, it seems to us, further than this: they may tend
to show that the contract was made here, which is not
controverted, and if the plaintiff has a cause of action at
all, he, by reason of them, may prosecute it in our courts.
They have no bearing on the primary question of existence of
a cause of action, and as that is the question before us, we
13

need not further advert to the


citizenship or defendant's domicile.

fact

of

plaintiff's

astounding to the profession. For instance: If the act of


1885 becomes a part of every contract of service entered
into since its passage, just "as if such law were in so many
words expressly included in the contract as a part thereof,"
as counsel insist it did, so as to make the liability of the
master to pay damages from injuries to a fellow-servant of
his negligent employe, a contractual obligation, no reason
can be conceived why the law existing in this regard prior
to the pas sage of that act did not become in like manner a
part of every contract of service then entered into, so that
every such contract would be deemed to contain stipulations
for the non-liability of the master for injuries flowing
from the negligence of a fellow-servant, and confining the
injured servant's right to damage to a claim against his
negligent
fellow-servant-the
former,
in
other
words,
agreeing to look alone to the latter. There were many
thousands of such contracts existing in this country and
England at the time when statutes similar to section 2590 of
our Code were enacted, there were indeed many thousands of
such contracts existing in Alabama when that section became
the law of this State. Each of these contracts, if the
position of plaintiff as to our statute being embodied into
the terms of his contract so that its duties were
contractual
duties,
and
its
liabilities
contractual
obligations to pay money can be maintained, involved the
assurances of organic provisions, State and Federal, of the
continued non-liability of the master for the [137]
negligence of his servants, notwithstanding the passage of
such statutes. Yet these statutes were passed, and they have
been applied to servants under pre-existing contracts as
fully as to servants under subsequent contracts, and there
has never been a suggestion even in any part of the

The contract was that plaintiff should serve the defendant


in the capacity of a brakeman on its freight train between
Birmingham, Alabama, and Meridian, Mississippi, and should
receive as compensation a stipulated sum for each trip from
Birmingham to Meridian and return. The theory is that the
Employer's Liability Act became a part of this contract;
that the duties and liabilities which It prescribes became
contractual
duties
and
liabilities,
or
duties
and
liabilities springing out of the contract, and that these
duties [136] attended upon the execution whenever its
performance was requiredin Mississippi as well as in
Alabamaand that the liability prescribed for a failure to
perform any of such duties attached upon such failure and
consequent injury wherever it occurred, and was enforceable
here because imposed by an Alabama contract notwithstanding
the remission of duty and the resulting injury occurred in
Mississippi, under whose laws no liability was incurred by
such remission. The argument is that a contract for service
is a condition precedent to the application of the statute,
and that "as soon as the contract is made the rights and
obligations of the parties, under the Employer's Act, became
vested and fixed," so that "no subsequent repeal of the law
could deprive the injured party of his rights nor discharge
the master from his liabilities," &c., &c. I this argument
is sound, and it is sound if the duties and liabilities
pre scribed by the act can be said to be contractual duties
and obligations at all, it would lead to conclusions the
possibility of which has not hitherto been suggested by any
court or law writer, and which, to say the least, would be
14

commonlaw world that they were not rightly so applied. If


plaintiff's contention is well taken, many a judgment has
gone on the rolls in this State, and throughout the country,
and has been satisfied, which palpably overrode vested
rights without the least suspicion on the part of court or
counsel that one of the most familiar ordinances of the
fundamental law was being violated. Nay more, another result
not heretofore at all contemplated would ensue. Contracts
for serving partly in Alabama might be now entered into in
adjoining States where the common-law rule still obtains, as
in Mississippi, for instance, where the servant has no right
to recover for the negligence of his fellow, and the
assumption of this risk under the law becoming, according to
the argument of counsel, a contractual obligation to bear
it, such contracts would be good in Alabama and as to
servants entering into them, our statute would have no
operation even upon negligence and resulting injury within
its terms occurring wholly in Alabama. And on the other
hand, if this defendant is under a contractual obligation to
pay the plaintiff the dam ages sustained by him because of
the injury inflicted in Mississippi, the contract could be
of course enforced in Mississippi and damages there awarded
by its courts, not withstanding the law of that State
provides that there can be no recovery under any
circumstances whatever by one servant for the negligence of
his fellow employe. We do not suppose that such a
proposition ever has been or ever will be made in the courts
of Mississippi. Yet that it should be made and sustained is
the. natural and necessary sequence of the position advanced
in this case. These considerations demonstrate the infirmity
of plaintiff's position in this connection, and serve to
show the necessity and propriety of the conclusion we

propose to announce on this part of the case. That


conclusion is, that the duties and liabilities incident to
the relation between the plaintiff and the defendant which
are involved in this case, are not imposed by and do not
rest in or spring from the contract between the parties. The
only office of the contract, under section 2590 of the Code,
is the establishment of a relation between them, that of
master and servant; and it is upon that relation, that
incident or consequence of the contract, and not upon the
rights of the parties under the contract, that our statute
operates. The law is not con-[138]-cerned with the
contractual stipulations, except in so far as to determine
from them that the relation upon which it is to operate
exists. Finding this relation the statute imposes certain
duties and liabilities on the parties to it wholly
regardless of the stipulations of the contract as to the
rights of the parties under it, and, it may be, in the teeth
of. such stipulations. It is the purpose of the statute and
must bethe limit of its operation to govern persons standing
in the relation of master and servants to each other in
respect of their conduct in certain particulars within the
State of Alabama. Mississippi has the same right to
establish govern mental rules for such persons within her
borders as Alabama; and she has established rules which are
different from those of our law. And the conduct of such
persons toward each other is, when its legality is brought
in question, to he adjudged by the rules of the one or the
other States as it falls territorially within the one or the
other. The doctrine is like that which prevails in respect
of other relations, as that of man and wife. Marriage is a
contract. The entering into this contract raises up certain
duties and imposes certain liabilities in all civilized
15

countries. What these duties and liabilities are at the


place of the contract are determinable by the law of that
place ; but when the parties go into other jurisdictions,
the relation created by the contract under the laws of the
place of its execution will he recognized, but the personal
duties, obligations and liabilities incident to the relation
are such as exist under the law of the jurisdiction in which
an act is done or omitted as to the legality, effect or
consequence of which the question arises. It might as well
he said where there is a marriage in Alabama and the parties
remove to Mississippi, and the wife there makes a contract
which is void in Mississippi but valid under our statute,
and subsequently they return to Alabama, that our courts
will enforce that contract, or if such husband while in
Mississippi does an act which is innocuous and lawful in
that State, but which if done here would entail liability
upon him, and the parties afterwards return here, that the
liability imposed by our laws could be enforced here,
because the parties entered into the contract here, as that
a master is liable here for conduct towards his servant
which was proper, or at least involved no liability, where
it took place, simply because the contract which created the
relation was entered into in this State. The whole argument
is at fault. The only true doctrine is that each
sovereignty, state or nation, has the exclusive power to
finally determine and declare what acts or [139] omission in
the conduct of one to another, whether they be strangers or
sustain relations to each other which the law recognizes, as
parent and child, husband and wife, master and servant, and
the like, shall impose a liability in damages for the
consequent injury, and the courts of no other sovereignty
can impute a damnifying quality to an act or omission which

afforded no cause of action where it transpired. These


propositions find illustration and support in the case
of Whitford v. The Panama R. R. Co., 23 N.Y. 465, where the
relation involved was that of carrier and passenger, a
relation which had been created by a contract made in New
York, between a corporation and a citizen thereof for
carriage, commencing in that State and ending in San
Francisco, via Panama and over the Panama railroad. The
passenger was killed through the fault of the corporation's
servants while being transported along this railroad. The
law of New York gave to the personal representative of a
person whose death was caused by the wrongful act or
omission of another, a right of action therefor in all cases
where the deceased, had the injury fallen short of death,
could have recovered. It did not appear that the laws of New
Granada where the injury was inflicted, authorized any
recovery on the facts alleged and proved. It was urged, as
here, that the domicile of the parties and the fact that
they contracted in New York took the case out of general
rules as to territorial limitations upon the operation of
statutes, but the plaintiff was non-suited, it being held in
effect that the laws of New Granada where controlling as to
the duties and liabilities incident to the relation which
existed between them, while the contract of carriage was
being performed in that country, and that the carrier so far
as care and diligence were concerned owed the passenger no
duties there except such as were imposed upon the relation
by the local law, and that no liability for negligence and
its results not prescribed by that law rested on the
company. And the court, inter alia, said: 'Suppose the
government of New Granada to have enacted that the
proprietors of a railroad company should not be responsible
16

for the negligence of its servants, provided there was no


want of due care in selecting them; it could not be
pretended that its will could be set at naught by
prosecuting the corporation in the courts of another State
where the law was different. . . . The true theory is, that
no suit whatever respecting this injury could be sustained
in the courts of this State, except pursuant to the law of
international comity. By that law foreign contracts and
foreign transactions, out of which liabilities have arisen,
[140] may be prosecuted in our tribunals by the implied
assent of the government of this State ; but in all such
cases, we administer the foreign law as from the proofs we
find it to be, or as without proofs, we presume it to be."
So, in the case of Gray v. Jackson & Co., 51 N. H., 9, there
was a contract of affreightment by the terms of which goods
were to be carried out of one State into and through other
States. They were lost in a State other than that in which
the con tract was made and the carriage commenced. By the
law of the place of the contract the carrier was liable for
the loss under the circumstances shown in evidence had it
occurred in that State. By the law of the State where the
loss occurred, however, the carrier was not liable. In an
action for the loss prosecuted in the State of the
contract, the law, not of that State, but of the place of
the loss which operated as to the particular transaction on
the relation of shipper and carrier and prescribed the
duties and liabilities incident to that relation in that
State, regardless of the place where the contract creating
the relation was entered into, was applied and made to
determine the rights of the parties to be other than they
were under the law of the place of the contract which was
also, as here, the place of the forum.

The foregoing views will suffice to indicate the grounds of


our opinion that the rights of this plaintiff are
determinable solely by the law of the State of Mississippi,
and of our conclusion that upon no aspect or tendency of the
evidence as to the circumstances under which the injury was
sustained and as to the laws of Mississippi obtaining in the
premises was the plaintiff entitled to recover.
The general affirmative charge requested for defendant
should have been given. The other very numerous assignments
of error need not be considered.
For the error in refusing to instruct the jury to find for
the defendant if they believed the evidence, the judgment is
reversed and the cause will be remanded.

U.S. Supreme Court


Home Insurance Co. v. Dick, 281 U.S. 397 (1930)
Home Insurance Co. v. Dick
No. 232
Argued February 27, 1930
Decided May 5, 1930
281 U.S. 397
APPEAL FROM THE SUPREME COURT OF TEXAS
Syllabus
17

A contract of fire insurance issued by a Mexican company,


made and to be performed in Mexico, and covered in part by
reinsurance effected there or in New York with New York
companies licensed to do business in Texas, was assigned by
the insured to a citizen of Texas who was present in Mexico
when the policy issued and continued to reside there until
after a loss had occurred. He then returned to Texas and
sued on the policy in a Texas Court naming the Mexican
company, which was never present in Texas and did not
appear, as principal defendant, and the two New York
companies, because of their reinsurance liability, as
garnishees. The policy stipulated that no suit should be
brought under it unless within one year of the loss, but a
defense based on this was overruled by the Texas Supreme
Court, and recovery against the garnishees affirmed, by
applying a Texas statute which forbade any agreement
limiting the time for suit to a shorter period than two
years

policy, relates to the remedy, and not to the substance.


P. 281 U. S. 405.

Page 281 U. S. 398

5. When the parties to a contract have expressly agreed upon


a time limit on their obligation, a statute which
invalidates the agreement and directs enforcement of the
contract after that time has expired increases their
obligation and imposes a burden not contracted for. P. 281
U. S. 408.

2. That the federal questions were not raised in the trial


court is immaterial, since the Court of Civil Appeals and
the supreme court of the state considered them as properly
raised in the appellate proceedings and passed on them
adversely to the federal claim. P. 281 U. S. 407.
3. The case is properly here on appeal, and petition for
certiorari is therefore denied. Id.
4. The statute as construed and applied deprives the
garnishees of property without due process of law, since the
state was without power, under the circumstances, to affect
the terms of the insurance contract by imposing a greater
obligation than that agreed upon and to seize property in
payment of the imposed obligation. Id.

and declared that no agreement for such shorter limitation


should ever be valid in that state.
Held:

6. The statute, as here involved, is not one dealing with


remedies and procedure merely; it purports to create rights
and obligations. P.281 U. S. 409.

1. The objection that, as applied to contracts made and to


be performed outside of Texas, the statute violates the
federal Constitution, raises federal questions of substance,
and the existence of the federal claim is not disproved by
saying that the statute, or the one-year provision in the

7. Assuming that a state may properly refuse to recognize


foreign rights that violate its declared policy, or restrict
18

the conduct of persons within its limits, this does not mean
that it may abrogate the rights of parties beyond its
borders having no relation to anything done or to be done
within them. P. 281 U. S. 410.

The controversy here is wholly between Dick and the


garnishees. The defendant has never been admitted to do
business in Texas, has not done any business there, and has
not authorized anyone to receive service of process or enter
an appearance for it in this cause. It was cited by
publication, in accordance with a Texas statute, attorneys
were appointed for it by the trial court, and they filed on
its behalf an answer which denied liability. But there is no
contention that thereby jurisdiction in personam over it was
acquired. Dick's claim is that, since the obligation of a
reinsurer to pay the original insurer arises upon the
happening of the loss, and is not conditional upon prior
payment of the loss by the insurer, Allemannia Fire
Insurance Co. v. Firemen's Insurance Co., 209 U. S.
326; Hicks v. Poe,269 U. S. 118, the New York companies are
indebted to the Mexican company, and these debts are subject
to garnishment in a proceeding against the latter quasi in
rem, even
though
it
is
not
suable in
personam. The
garnishees concede that inability to sue the

15 S.W.2d 1028 reversed.


Appeal from a judgment of the
affirming a judgment of the Court
2d 354, which affirmed recoveries
garnishment proceedings ancillary
insurance policy.

Supreme Court of Texas


of Civil Appeals, 8 S.W.
against the appellants in
to an action on a fire

Page 281 U. S. 402


MR. JUSTICE BRANDEIS delivered the opinion of the Court.
Dick, a citizen of Texas, brought this action in a court of
that state against Compania General Anglo-Mexicana de
Seguros S.A. a Mexican corporation, to recover on a policy
of fire insurance for the total loss of a tug. Jurisdiction
was asserted in rem through garnishment, by ancillary writs
issued against the Home Insurance Company and Franklin Fire
Insurance Company, which reinsured, by contracts with the
Mexican corporation, parts of the risk which it had assumed.
The garnishees are New York corporations. Upon them, service
was effected by serving their local agents in Texas
appointed pursuant to Texas statutes, which require the
appointment of local agents by foreign corporations seeking
permits to do business within the state.

Page 281 U. S. 403


Mexican corporation in Texas in personam is not material if
a cause of action against it existed at the time of
garnishment and there was within the state a res belonging
to it. But they deny the existence of the cause of action or
of the res.
Their defense rests upon the following facts: this suit was
not commenced till more than one year after the date of the
loss. The policy provided:

19

"It is understood and agreed that no judicial suit or demand


shall be entered before any tribunal for the collection of
any claim under this policy unless such suits or demands are
filed within one year counted as from the date on which such
damage occurs."

being open to them, New York state Marine Ins. Co. v.


Protection Ins. Co., 1 Story, 458, 460, and that they
consequently owed no debt to the Mexican company subject to
garnishment. [Footnote 3] To this defense, Dick demurred on
the ground that Article 5545 of the Texas Revised Civil
Statutes (1925) provides:

This provision was in accord with the Mexican law to which


the policy was expressly made subject. [Footnote 1] It was
issued by the Mexican company in Mexico to one Bonner, of
Tampico, Mexico, and was there duly assigned to Dick prior
to the loss. It covered the vessel only in certain Mexican
waters. The premium was paid in Mexico, and the loss was
"payable in the City of Mexico in current funds of the
United States of Mexico, or their equivalent elsewhere."
[Footnote 2] At the time the policy was issued,

"No person, firm, corporation, association or combination of


whatsoever kind shall enter into any stipulation, contract,
or agreement,
Page 281 U. S. 405
by reason whereof the time in which to sue thereon is
limited to a shorter period than two years. And no
stipulation, contract, or agreement for any such shorter
limitation in which to sue shall ever be valid in this
state."

Page 281 U. S. 404


when it was assigned to him, and, until after the loss, Dick
actually resided in Mexico, although his permanent residence
was in Texas. The contracts of reinsurance were effected by
correspondence between the Mexican company in Mexico and the
New York companies in New York. Nothing thereunder was to be
done, or was in fact done, in Texas.

The trial court sustained Dick's contention and entered


judgment against the garnishees. On appeal, both in the
Court of Civil Appeals (8 S.W.2d 354) and in the supreme
court of the state (15 S.W.2d 1028), the garnishees asserted
that, as construed and applied, the Texas statute violated
the due process clause of the Fourteenth Amendment and the
contract clause. Both courts treated the policy provision as
equivalent to a foreign statute of limitation; held that
Article 5545 related to the remedy available in Texas
courts; concluded that it was validly applicable to the case
at bar, and affirmed the judgment of the trial court. The
garnishees appealed to this Court on the ground that the
statute, as construed and applied, violated their rights

In the trial court, the garnishees contended that, since the


insurance contract was made and was to be performed in
Mexico, and the one-year provision was valid by its laws,
Dick's failure to sue within one year after accrual of the
alleged cause of action was a complete defense to the suit
on the policy; that this failure also relieved the
garnishees of any obligation as reinsurers, the same defense
20

under the federal Constitution. Dick moved to dismiss the


appeal for want of jurisdiction. Then the garnishees filed
also a petition for a writ of certiorari. Consideration of
the jurisdiction of this Court on the appeal and of the
petition for certiorari was postponed to the hearing of the
case on the merits.

as making the commencement of a suit within the year a


condition precedent to the existence of a cause of action,
or as making failure to sue within the year a breach of a
condition subsequent which extinguishes the cause of action,
is not of legal significance here. [Footnote 4] Nor are we
concerned with the question whether the provision is
properly described as relating to remedy or to substance.
However characterized, it is an express term in the contract
of the parties by which the right of the insurer and the
correlative obligation of the insurer are defined. If effect
is given to the clause, Dick cannot recover from the Mexican
corporation, and the garnishees cannot be compelled to pay.
If, on the other hand, the statute is applied to the
contract, it admittedly abrogates a contractual right

First. Dick contends that this Court lacks jurisdiction of


the action, because the errors assigned involve only
questions of local law and of conflict of laws. The argument
is that, while a provision requiring notice of loss within a
fixed period is substantive because it is a condition
precedent to the existence of the cause of action, the
provision for liability only in case suit is brought within
the year is not substantive, because it relates only to the
remedy after accrual of the cause of action; that, while the
validity, interpretation, and performance of the substantive
provisions of a contract are determined by

Page 281 U. S. 407


and imposes liability, although the parties have agreed that
there should be none.

Page 281 U. S. 406


The statute is not simply one of limitation. It does not
merely fix the time in which the aid of the Texas courts may
be invoked. Nor does it govern only the remedies available
in the Texas courts. It deals with the powers and capacities
of persons and corporations. It expressly prohibits the
making of certain contracts. As construed, it also directs
the disregard in Texas of contractual rights and obligations
wherever
created
and
assumed,
and
it
commands
the
enforcement of obligations in excess of those contracted
for. Therefore, the objection that, as applied to contracts
made and to be performed outside of Texas, the statute
violates the federal Constitution raises federal questions

the law of the place where it is made and is to be


performed, matters which relate only to the remedy are
unquestionably governed by the lex fori, and that, even if
the Texas court erred in holding the statute applicable to
this contract, the error is one of state law or of the
interpretation of the contract, and is not reviewable here.
The contention is unsound. There is no dispute as to the
meaning of the provision in the policy. It is that the
insurer shall not be liable unless suit is brought within
one year of the loss. Whether the provision be interpreted
21

of substance, and the existence of the federal claim is not


disproved by saying that the statute, or the one-year
provision in the policy, relates to the remedy and not to
the substance.

or in New York. And likewise, all things in regard to


performance were to be done outside of Texas. Neither the
Texas laws nor the Texas courts were invoked for any purpose
except by Dick in the bringing of this suit. The fact that
Dick's permanent residence was in Texas is without
significance. At all times here material, he was physically
present and acting in Mexico. Texas was therefore without
power to affect the terms of contracts so made. Its attempt
to impose a greater obligation than that agreed upon and to
seize property in payment of the imposed obligation violates
the guaranty against deprivation of property without due
process of law.Compania General De Tabacos v. Collector of
Internal Revenue, 275 U. S. 87; Aetna Life Ins. Co. v.
Dunken, 266 U. S. 389; New York Life Ins. Co. v. Dodge, 246
U. S. 357. Compare Modern Woodmen of America v. Mixer, 267
U. S. 544, 267 U. S. 551. [Footnote 5]

That the federal questions were not raised in the trial


court is immaterial. For the Court of Civil Appeals and the
supreme court of the state considered the questions as
properly raised in the appellate proceedings, and passed on
them adversely to the federal claim.Chicago, Rock Island &
Pacific Ry. Co. v. Perry, 259 U. S. 548, 259 U. S.
551; Sully v. American National Bank, 178 U. S. 289, 178 U.
S. 298. The case is properly here on appeal. The motion to
dismiss the appeal is overruled, and the petition for
certiorari is therefore denied.
Second. The Texas statute as here construed and applied
deprives the garnishees of property without due process of
law. A state may, of course, prohibit and declare invalid
the making of certain contracts within its borders.
Ordinarily, it may prohibit performance within its borders.
even of contracts validly made elsewhere, if they are
required to be performed within the state and their
performance would violate its laws. But, in the

The cases relied upon, in which it was held that a state may
lengthen its statute of limitations, are not in point.
Page 281 U. S. 409
See Atchafalaya Land Co. v. Williams Cypress Co., 258 U. S.
190; National
Surety
Co.
v.
Architectural
Decorating
Co., 226 U. S. 276;Vance v. Vance, 108 U. S. 514. In those
cases, the parties had not stipulated a time limit for the
enforcement of their obligations. It is true that a state
may extend the time within which suit may be brought in its
own courts if, in doing so, it violates no agreement of the
parties. [Footnote 6] And, in the absence of a contractual
provision, the local statute of limitation may be applied to
a right created in another jurisdiction even where the

Page 281 U. S. 408


case at bar, nothing in any way relating to the policy sued
on, or to the contracts of reinsurance, was ever done or
required to be done in Texas. All acts relating to the
making of the policy were done in Mexico. All in relation to
the making of the contracts of reinsurance were done there
22

remedy in the latter is barred. [Footnote 7] In such cases,


the rights and obligations of the parties are not varied.
When, however, the parties have expressly agreed upon a time
limit on their obligation, a statute which invalidates the
agreement and directs enforcement of the contract after the
time has expired increases their obligation and imposes a
burden not contracted for.

enforcement of such rights. Bothwell v. Buckbee, Mears


Co., 275 U. S. 274, 275 U. S. 277-279; Union Trust Co. v.
Grosman, 245 U. S. 412; compare Fauntleroy v. Lum, 210 U. S.
230. But the Mexican corporation never was in Texas, and
neither it nor the garnishees invoked the aid of the Texas
courts or the Texas laws. The Mexican corporation was not
before the court. The garnishees were brought in by
compulsory process. Neither has asked favors. They ask only
to be let alone. We need not consider how far the state may
go in imposing restrictions on the conduct of its own
residents, and of foreign corporations which have received
permission to do business within its borders, or how far it
may go in refusing to lend the aid of its courts to the
enforcement of rights acquired outside its borders. It may
not abrogate the rights of parties beyond its borders having
no relation to anything done or to be done within them.

It is true also that a state is not bound to provide


remedies and procedure to suit the wishes of individual
litigants. It may prescribe the kind of remedies to be
available in its courts and dictate the practice and
procedure to be followed in pursuing those remedies.
Contractual
Page 281 U. S. 410
provisions relating to these matters, even if valid where
made, are often disregarded by the court of the forum,
pursuant to statute or otherwise. But the Texas statute
deals neither with the kind of remedy available nor with the
mode in which it is to be pursued. It purports to create
rights and obligations. It may not validly affect contracts
which are neither made nor are to be performed in Texas.

Fourth. Finally, it is urged that the federal Constitution


does not require the states to recognize and protect rights
derived from the laws of foreign countries -- that as to
them the full faith and credit clause has no application.
Page 281 U. S. 411
See Aetna Life Ins. Co. v. Tremblay, 223 U. S. 185. The
claims here asserted are not based upon the full faith and
credit clause.Compare Royal Arcanum v. Green, 237 U. S.
531. Modern Woodmen of America v. Mixer, 267 U. S. 544. They
rest upon the Fourteenth Amendment. Its protection extends
to aliens. Moreover, the parties in interest here are
American companies. The defense asserted is based on the
provision of the policy and on their contracts of

Third. Dick urges that Article 5545 of the Texas law is a


declaration of its public policy, and that a state may
properly refuse to recognize foreign rights which violate
its declared policy. Doubtless a state may prohibit the
enjoyment by persons within its borders of rights acquired
elsewhere which violate its laws or public policy, and,
under some circumstances, it may refuse to aid in the
23

reinsurance. The courts of the state confused this defense


with that based on the Mexican Code. They held that, even if
the effect of the foreign statute was to extinguish the
right, Dick's removal to Texas prior to the bar of the
foreign statute removed the cause of action from Mexico, and
subjected it to the Texas statute of limitation. And they
applied the same rule to the provision in the policy.
Whether or not that is a sufficient answer to the defense
based on the foreign law we may not consider, for no issue
under the full faith and credit clause was raised. But, in
Texas, as elsewhere, the contract was subject to its own
limitations.

to suits brought against them as defendants. For this


objection was not made or considered below on constitutional
grounds.
Reversed.
[Footnote 1]
The policy contained also the provision:
"The present policy is subjected to the disposition of the
Commercial Code in that it does not alter or modify the
stipulations which that same contains."

Fifth. The garnishees contend that the guaranty of the


contract clause relates not to the date of enactment of a
statute, but to the date of its effect on contracts; that,
when issued, the policy of the Mexican corporation was
concededly not subject to Texas law; that, although the
statute relied upon by Dick was passed prior to the making
of the contract, it did not operate upon the contract until
this suit was brought in the Texas court, and that hence the
statute violates the contract clause. Since we hold that the
Texas statute, as construed and applied, violates the due
process clause, we have no occasion to consider this
contention. Nor have we considered their further contention,
in reliance upon Morris & Co. v. Skandinavia Ins. Co., 279
U. S. 405, that there was lack of jurisdiction over them for
purposes of garnishment, because the authorization of
service upon their local agents is limited

The dispositions of the Commercial Code thus incorporated


are:
"Article 1038. The rights of action derived from commercial
acts shall be subject to prescription in accordance with the
provisions of this Code."
"Article 1039. The periods fixed for the enforcement of
rights of action arising out of commercial acts shall be
fatal except restitution against same is given."
"* * * *"
"Article 1043. One year shall prescribe actions derived from
contracts of life insurance, sea and land."
[Footnote 2]

Page 281 U. S. 412

24

The loss was made payable to Dick and the Texas & Gulf
Steamship Company as their interests might appear. The
steamship company and Suderman & Young, Inc., assignee of
part of the cause of action, intervened as plaintiffs, and
are joined with Dick as appellees. As there are no rights
peculiar to them, they need not be further referred to. Dick
contends that, since the policy was payable to the Texas &
Gulf Steamship Company, the contract was performable in
Texas. The contention is in conflict with the quoted
language of the policy, and there is no provision otherwise
lending support to the argument. Texas is nowhere mentioned
in the policy. Moreover, there is nothing in the record to
show that the steamship company's sole place of business was
in Texas. The state courts made no findings on this claim.

same
footing
was
held
in Riddlesbarger
v.
Hartford
Insurance Co., 7 Wall. 386, 74 U. S. 390. Compare 74 U.
S. Hartford Insurance Co., 13 Wall. 158, 80 U. S. 161. The
validity and effectiveness of a clause limiting the time for
suit, in the absence of a controlling statute, was
recognized also in Texas, Suggs v. Travelers' Insurance Co.,
71 Tex. 579. In that case, decided before the enactment of
article 5545, the Texas court upheld a similar provision in
an insurance policy against the claim of an infant without
capacity to sue. The court described the nature of the
provision thus (p. 581):
"It is said to differ from the statutory limitation in this:
that it does not merely deny the remedy, but forfeits the
liability, when the suit is not brought within the
stipulated time."

[Footnote 3]
Besides the defense here discussed, the answers both of the
Mexican corporation and of the garnishees alleged: (2) that
the suit was not brought within the period provided by the
Commercial Code of Mexico, and that thereby the right of
action was completely barred upon the expiration of one
year; (3) that the policy was void because of plaintiff's
misrepresentations as to the value of the vessel; (4) that
the vessel was not a total loss, and was abandoned in
violation of the terms of the policy. None of these defense
needs to be considered.

[Footnote 5]
The division of this Court in the Tabacos and Dodge cases
was not on the principle here stated, but on the question of
fact whether there were in those cases things done within
the state of which the state could property lay hold as the
basis of the regulations there imposed. Compare Bothwell v.
Buckabee, Mears Co., 275 U. S. 274; Palmetto Fire Ins. Co.
v. Conn, 272 U. S. 295. In the absence of any such things,
as in this case, the Court was agreed that a state is
without power to impose either public or private obligations
on contracts made outside of the state and not to be
performed there. Compare Mutual Life Insurance Co. v.
Liebing, 259 U. S. 209; E. Merick Dodd, Jr., "The Power of

[Footnote 4]
That a provision requiring notice of loss within a fixed
period and one requiring the bringing of suit stand upon the
25

the Supreme Court to Review state Decisions in the Field of


Conflict of Laws," 39 Harv.L.Rev. (1926) 533, 548.

No. 465
Argued February 8, 11, 1935

[Footnote 6]
Decided March 11, 1935
The state courts placed some reliance on Campbell v.
Holt, 115 U. S. 620. Whether, as there held, a statute of
limitations may also be lengthened so as to affect
liabilities already barred is not here pertinent. There is a
clear difference between the revival of a liability which is
unenforceable only because a statute has barred the remedy
regardless of the will of the parties, and the extension of
a liability beyond the limit expressly agreed upon by the
parties. Compare National Surety Co. v. Architectural
Decorating Co., 226 U. S. 276, 226 U. S. 282; William
Danzer & Co. v. Gulf Island R. Co., 268 U. S. 633, 268 U. S.
636.

294 U.S. 532


APPEAL FROM THE SUPREME COURT OF CALIFORNIA
Syllabus
1. The terms, obligations and sanctions of a contract are
subject, in some measure, to the legislative control of the
State in which it is made, even though it is to be performed
elsewhere. P. 294 U. S. 540.
2. Where a contract of employment is made in a State, though
for work in another jurisdiction and though the parties
expressly
stipulate
to
be
bound
by
the
workmen's
compensation law of that other jurisdiction, if the State
where it is made has a legitimate public interest of its own
to insure that the workman shall be compensated for injuries
suffered in the course of his employment beyond its borders,
it is not prevented by the due process clause of the
Fourteenth Amendment from allowing him its own compensation
remedy for such injuries, and from declining to remit him to
his remedy in the other jurisdiction or to substitute that
remedy in its own forum. Cf. Bradford Electric Light Co. v.
Clapper, 286 U. S. 145. Pp. 294 U. S. 540-542.

[Footnote 7]
Whether a distinction is to be drawn between statutes of
limitation which extinguish or limit the right and those
which
merely
bar
the
remedy
we
need
not
now
determine. Compare Davis v. Mills, 194 U. S. 451, and Texas
Portland Cement Co. v. McCord, 233 U. S. 157, with Canadian
P. Ry. Co. v. Johnston, 61 F. 738.
Alaska Packers Assn. v. Industrial Accident Comm'n, 294 U.S.
532 (1935)
Alaska Packers Association v.

The improbability that workers employed in California for


seasonal occupation in Alaska, 3,000 miles away, and not to

Industrial Accident Commission of California


26

be paid until their return, would be able to apply for


compensation when injured in Alaska, or, once returned to
California, would be able to go back to Alaska and
successfully prosecute their claims, and the probability
that, if without a remedy in California courts, they

subordinate its own statutes to those of the other, but by


appraising the governmental interests of each jurisdiction
and determining the question accordingly. P. 294 U. S. 547.
6. Upon the facts of this case, which involves a conflict in
the California courts between the workmen's compensation
laws of California and Alaska, the interest of Alaska is not
shown to be superior to that of California, and therefore
the Alaska statute cannot be given the effect of denying to
the courts of California the right to apply the law of that
State. Pp. 294 U. S. 544, 294 U. S. 550.

Page 294 U. S. 533


would be remediless and likely to become public charges on
that State, suggest that California has a legitimate public
interest in imposing liability for such injuries upon the
employer, and in providing a remedy for such employees
available in California.

In so deciding, the Court assumes that, by R.S., 905,


906, the command of the full faith and credit clause is made
applicable to territorial statutes with the same force and
effect as that of the constitutional provision with respect
to statutes of the States.

3. Legislation affecting the status of employer and


employee, within the scope of acknowledged state power and
not unreasonable in its exercise, cannot be condemned
because it curtails the power of the individual to contract.
P. 294 U. S. 543.

1 Cal.2d 250, 34 P.2d 716, affirmed.

4. The extent to which the statute of one State may qualify


or deny rights asserted under the statute of another
presents a question under the full faith and credit clause
which this Court, upon review of a judgment of a state
court, must determine for itself, equally whether the
statute of the forum is set up as a defense to a suit
brought under the foreign statute or the foreign statute is
set up as a defense to a suit or proceedings under the local
statute. P. 294 U. S. 547.
5. A conflict thus arising is to be resolved not
automatically compelling the courts of each State

Appeal from a judgment affirming an award made by


Industrial Accident Commission of California under
workmen's compensation law of that State.

the
the

Page 294 U. S. 537


MR. JUSTICE STONE delivered the opinion of the Court.
This is an appeal under 237 of the Judicial Code from a
judgment of the Supreme Court of California, 34 P.2d 716,
upholding an award of compensation, by the state Industrial
Accident Commission to appellee Palma against appellant, his
employer, and holding that the award does not infringe

by
to
27

prohibitions of the federal Constitution. The award was made


in conformity to the statutes of California, where the
contract of employment was entered into, rather than those
of Alaska, where the injury occurred.

California, since the privileges and immunities clause of


the Federal Constitution prevented giving any effect to the
requirement that the employee be a resident. The California
Workmen's Compensation Act also provides, 27(a):

Page 294 U. S. 538

"No contract, rule or regulation shall exempt the employer


from
liability
for
the
compensation
fixed
by
this
act. . . ."

On May 13, 1932, Palma, a nonresident alien, and appellant,


doing business in California, executed at San Francisco a
written contract of employment. Palma agreed to work for
appellant in Alaska during the salmon canning season; the
appellant agreed to transport him to Alaska, and, at the end
of the season, to return him to San Francisco, where he was
to be paid his stipulated wages, less advances. The contract
recited that appellant had elected to be bound by the Alaska
Workmen's Compensation Law, [Footnote 1] and stipulated that
the parties should be subject to and bound by the provisions
of that statute. Section 58 of the California Workmen's
Compensation Act [Footnote 2] was then in force, which
provides:

In August, 1932, after his return from Alaska to California,


the employee applied for and later received an
Page 294 U. S. 539
award by the California Commission in compensation for
injuries received by him in the course of his employment in
Alaska. On petition for review by the state Supreme Court,
appellant assailed the California statute, as he does here,
as invalid under the due process and the full faith and
credit clauses of the federal Constitution. Insofar as the
California statute denies validity to the agreement that the
parties should be bound by the Alaska Workmen's Compensation
Act, and attempts to give a remedy for injuries suffered by
a nonresident employee without the state, it is challenged
as a denial of due process. Petitioner also insists that, as
the Alaska statute affords, in Alaska, an exclusive remedy
for the injury which occurred there, the California courts
denied full faith and credit to the Alaska statute by
refusing to recognize it as a defense to the application for
an award under the California statute.

"The
commission
shall
have
jurisdiction
over
all
controversies arising out of injuries suffered without the
territorial limits of this state in those cases where the
injured employee is a resident of this state at the time of
the injury and the contract of hire was made in this
state. . . ."
At that time, the California Supreme Court had held,
in Quong Ham Wah Co. v. Industrial Accident Commission, 184
Cal. 23, 36-44, 192 P. 1021 (writ of error dismissed, 255 U.
S. 445), that this section was applicable to nonresidents of
28

In refusing to set aside the award of the state commission,


the Supreme Court of California ruled, as in Quong Ham Wah
Co. v. Industrial Accident Commission, supra, that 58 of
the California compensation act was applicable to Palma,
although a nonresident alien; that, as the contract of
employment
was
entered
into
within
the
state,
the
stipulation that the Alaska Act should govern was invalid
under 27(a). It concluded that the Alaska statute afforded
a remedy to the employee in Alaska, and held that, by
setting up the defense of the Alaska statute in California,
the two statutes were brought into conflict, and that, in
the circumstances, neither the due process clause nor the
full faith and credit clause denied to the state the power
to apply its own law, to the exclusion of the Alaska Act, in
fixing and awarding compensation for the injury.

the state supreme court give it any. The statute assumes


only to provide a remedy to be granted by the California
Commission for injuries, received in the course of
employment entered into within the state, wherever they may
occur.Compare Bradford Electric Light & Power Co. v.
Clapper, 286 U. S. 145, 286 U. S. 153. We assume that, in
Alaska, the employee, had he chosen to do so, could have
claimed the benefits of the Alaska statute, and that, if any
effect were there given to the California statute, it would
be only by comity or by virtue of the full faith and credit
clause. Bradford Electric Light & Power Co. v. Clapper,
supra.
The due process clause denies to a state any power to
restrict or control the obligation of contracts executed and
to be performed without the state as an attempt to exercise
power over a subject matter not within its constitutional
jurisdiction. New York Life Insurance Co. v. Head, 234 U. S.
149, 234 U. S. 162-164; New York Life Insurance Co. v.
Dodge, 246 U. S. 357, 246 U. S. 377; Home Insurance Co. v.
Dick, 281 U. S. 397, 281 U. S. 407-408; compare National
Union Fire Insurance Co. v. Wanberg, 260 U. S. 71, 260 U. S.
75. Similarly, a state may not penalize or tax a contract
entered into and to be performed outside the state, although
one
of
the
contracting
parties
is
within
the
state. Allgeyer v. Louisiana, 165 U. S. 578; St. Louis
Cotton Compress Co. v. Arkansas, 260 U. S. 346, 260 U. S.
348; Compania
General
de
Tabacos
de
Filipinas
v.
Collector, 275 U. S. 87.

1. The question first to be considered is whether a state,


which may constitutionally impose on employer and employee a
system of compensation for injuries to the employee in the
course of his employment within the state, New York Central
R. Co. v. White, 243 U. S. 188; Mountain
Page 294 U. S. 540
Timber Co. v. Washington, 243 U. S. 219, is precluded by the
due process clause, in the special circumstances of this
case, from imposing liability for injuries to the employee
occurring in Alaska.
The California statute does not purport to have any
extraterritorial effect, in the sense that it undertakes to
impose a rule for foreign tribunals, nor did the judgment of
29

But where the contract is entered into within the state,


even though it is to be performed elsewhere, its terms, its
obligation, and its sanctions are subject, in some measure,

obligation to compensate for injuries sustained


amounting to a sort of compulsory insurance."

abroad,

Quong Ham Wah Co. v. Industrial Accident Commission,


supra, p. 36. Obviously, the power of a state to effect
legal consequences is not limited to occurrences within the
state if it has control over the status which gives rise to
those consequences. That it has power, through its own
tribunals, to grant compensation to local employees, locally
employed, for injuries received outside its borders, and
likewise has power to forbid its own courts to give any
other form of relief for such injury, was fully recognized
by this Court in Bradford Electric Light & Power Co. v.
Clapper, supra, 286 U. S. 156. Objections which are founded
upon the Fourteenth Amendment must therefore be directed not
to

Page 294 U. S. 541


to the legislative control of the state. The fact that the
contract is to be performed elsewhere does not, of itself,
put these incidents beyond reach of the power which a state
may constitutionally exercise. Selover, Bates & Co. v.
Walsh, 226 U. S. 112, 226 U. S. 123;Mutual Life Insurance
Co. v. Liebing, 259 U. S. 209, 259 U. S. 214; Manhattan
Life Insurance Co. v. Cohen, 234 U. S. 123, 234 U. S.
136; compare Aetna Life Insurance Co. v. Dunken, 266 U. S.
389, 266 U. S. 397-400.
While similar power to control the legal consequences of a
tortious act committed elsewhere has been denied, Western
Union Telegraph Co. v. Brown, 234 U. S. 542, 234 U. S.
547; Western Union Telegraph Co. v. Chiles, 214 U. S.
274, 214 U. S. 278;compare Western Union Telegraph Co. v.
Commercial Milling Co., 218 U. S. 406, the liability under
Workmen's Compensation Acts is not for a tort. It is imposed
as an incident of the employment relationship, as a cost to
be borne by the business enterprise, rather than as an
attempt to extend redress for the wrongful act of the
employer. See Bradford Electric Light & Power Co. v.
Clapper, supra, 286 U. S. 157-158. The California court has
declared:

Page 294 U. S. 542


the existence of the power to impose liability for an injury
outside state borders, but to the manner of its exercise as
being so arbitrary or unreasonable as to amount to a denial
of due process.
We cannot say that the statutory requirement of California,
that the provisions for compensation shall extend to
injuries without the state when the contract for employment
was entered into within it, is given such an unreasonable
application
in
the
present
case
as
to
transcend
constitutional limitations. The employee, an alien more than
2,000 miles from his home in Mexico, was, with fifty-three
others, employed by petitioner in California. The contract

"The contract creates a relationship under the sanction of


the law, and the same law attaches as an incident thereto an
30

called for their transportation to Alaska, some 3,000 miles


distant, for seasonal employment of between two and three
months, at the conclusion of which they were to be returned
to California, and were there to receive their wages.

interest in affording adequate protection to this class of


its population as to employees injured within the state.
Indulging
the
presumption
of
constitutionality
which
attaches to every state statute, we cannot say that this
one, as applied, lacks a rational basis or involved any
arbitrary or unreasonable exercise of state power.

The meager facts disclosed by the record suggest a practice


of employing workers in California for seasonal occupation
in Alaska under such conditions as to make it improbable
that the employees injured in the course of their employment
in Alaska would be able to apply for compensation there. It
was necessary for them to return to California in order to
receive their full wages. They would be accompanied by their
fellow workers, who would normally be the witnesses required
to establish the fact of the injury and its nature. The
probability is slight that injured workmen, once returned to
California, would be able to retrace their steps to Alaska
and
there
successfully
prosecute
their
claims
for
compensation. Without a remedy in California, they would be
remediless, and there was the danger that they might become
public charges -- both matters of grave public concern to
the state.

It is unnecessary to consider what effect should be given to


the California statute if the parties were domiciled in
Alaska, or were their relationship to California such as to
give it a lesser interest in protecting the employee by
securing for him an adequate and readily available remedy.
In providing a remedy for a liability which the state was
authorized to impose, California was not required by the
Fourteenth Amendment to prescribe the Alaska remedy, rather
than its own. Only the full faith and credit clause imposes
on the courts of one state the duty so to enforce the laws
of another.
Nor did the State of California exceed its constitutional
power by prohibiting any stipulation exempting the employer
from liability for the compensation prescribed by the
California statute. Legislation otherwise within the scope
of acknowledged state power, not unreasonably or arbitrarily
exercised, cannot be condemned because it curtails the power
of the individual to contract. Hardware Dealers Mutual Fire
Insurance Co. v. Glidden Co., 284 U. S. 151, 284 U. S. 157158. As the state had the power to impose the liability in
pursuance of state policy, it was a rational, and therefore
a permissible, exercise of state power to prohibit any
contract in evasion of it. Chicago, Burlington & Quincy R.

California therefore had a legitimate public interest in


controlling
and
regulating
this
employer-employee
relationship in such fashion as to impose a liability upon
the
Page 294 U. S. 543
employer for an injury suffered by the employee, and in
providing a remedy available to him in California. In the
special circumstances disclosed, the state had as great an
31

Co. v. McGuire, 219 U. S. 549, 219 U. S. 571; see Second


Employers' Liability Cases, 223 U. S. 1, 223 U. S.
52; Philadelphia,
Baltimore
&
Washington
R.
Co.
v.
Schubert, 224 U. S. 603, 224 U. S. 609.

it, 1, 31, 35, which, in this case, they have not done.
The California Act is administered by a Commission; the
Alaska Act provides for recovery by suit in the courts of
the Territory, brought in the Judicial division where the
injury occurs ( 24, 25). Each act provides that the
liability imposed and the remedy given by it are in lieu of
all others for the injury suffered. Sections 6(a), 27(a) of
the California Act; 1, 10, 28 of the Alaska Act. While
58 of the California statute authorizes the Commission to
make an award for injuries suffered without the state when
the contract of employment is entered into within, it does
not purport to provide, by regulation of the contract

Page 294 U. S. 544


2. Even though the compensation acts of either jurisdiction
may, consistently with due process, be applied in either,
the question remains whether the California court has failed
to accord full faith and credit to the Alaska statute in
refusing to allow it as a defense to the award of the
California Commission. Appellant contends that, as the
provisions of the Alaska statute conflict with those of the
California statutes, the full faith and credit clause and
R.S. 905, 906, U.S.C. Title 28, 687, 688, requiring
that full faith and credit be accorded to territorial
statutes, see Atchison, T. & S.F. Ry. Co. v. Sowers, 213 U.
S. 55, 213 U. S. 64-65, compel recognition of the Alaska
statute as a defense to the proceedings before the
California Commission; that the award of the Commission
should accordingly be set aside, leaving the employee to his
remedy under the Alaska statute in California, if California
provides the remedy, or remitting the parties to their
proceeding in Alaska under the territorial statute.

Page 294 U. S. 545


of employment or otherwise, that the parties may not resort,
without the state, to other remedies given by the statutes
in force at the place of injury. Compare Bradford Electric
Light & Power Co. v. Clapper, supra, 286 U. S. 153. The
Alaska Act, 25, provides that no action shall be brought
under the statute in any court outside the territory, except
in the case where it is not possible to obtain service of
process on the defendant within the territory; it is
conceded that appellant may there be served.
Petitioner, in relying on the Alaska statute as a defense in
California, points out that it makes no distinction between
residents and nonresidents, but gives a remedy to every
employee injured in the course of his employment in Alaska,
and invokes the rule, often followed in this Court, that
suits to recover for personal injury are transitory, and
that the jurisdiction creating the right may not, by

Both statutes are compensation acts, substituting for the


common law recovery for negligence a right to recover
compensation at specified rates for injuries to employees in
the course of their employment. The California Act is
compulsory, 6(a); the Alaska act is similarly effective,
unless the employer or employee elects not to be bound by
32

restricting the venue, preclude recovery in any court


outside the state having jurisdiction. See Atchison, T. &
S.F. Ry. Co. v. Sowers, supra, 213 U. S. 70; Tennessee
Coal, Iron & R. Co. v. George, 233 U. S. 354. The Supreme
Court of California, accepting this view, nevertheless
refused to give effect to the Alaska statute because of its
conflict with the California compensation act. Since each
statute provides a different remedy, the court recognized
that, by setting up the Alaska statute as a defense to the
award of the Commission, the two statutes were brought into
direct conflict. It resolved the conflict by holding that
the courts of California were not bound by the full faith
and credit clause to apply the Alaska statute, instead of
its own.

inquiry is therefore whether the full faith and credit


clause requires the state of California to give effect to
the Alaska statute, rather than its own.
It has often been recognized by this Court that there are
some limitations upon the extent to which a state will be
required by the full faith and credit clause to enforce even
the judgment of another state, in contravention of its own
statutes or policy. See Wisconsin v. Pelican Insurance
Co., 127 U. S. 265; Huntington v. Attrill, 146 U. S.
657; Finney v. Guy, 189 U. S. 335; see also Clarke v.
Clarke,178
U.
S.
186; Hood
v.
McGehee, 237
U.
S.
611; compare Gasquet v. Fenner, 247 U. S. 16.
Page 294 U. S. 547

To the extent that California is required to give full faith


and credit to the conflicting Alaska statute, it must be
denied the right to apply in its own courts a statute of the
state, lawfully enacted in pursuance of its domestic policy.
We assume, as did the state court, that the remedy provided
in the Alaska statute is one which could also be applied by
the California courts except for the conflict.

In the case of statutes, the extra-state effect of which


Congress has not prescribed, where the policy of one state
statute comes into conflict with that of another, the
necessity of some accommodation of the conflicting interests
of the two states is still more apparent. A rigid and
literal enforcement of the full faith and credit clause,
without regard to the statute of the forum, would lead to
the absurd result that, wherever the conflict arises, the
statute of each state must be enforced in the courts of the
other, but cannot be in its own. Unless, by force of that
clause, a greater effect is thus to be given to a state
statute abroad than the clause permits it to have at home,
it is unavoidable that this Court determine for itself the
extent to which the statute of one state may qualify or deny
rights asserted under the statute of another. See Olmsted

Page 294 U. S. 546


We also assume, as the parties concede, that, by R.S.,
905, 906, the command of the full faith and credit clause is
made applicable to territorial statutes with the same force
and effect as that of the constitutional provision with
respect to statutes of the states, see Embry v. Palmer, 107
U. S. 3, 107 U. S. 8-10; Atchison, T. & S.F. Ry. v. Sowers,
supra, 213 U. S. 64-65. [Footnote 3] The subject of our
33

v. Olmsted, 216 U. S. 386; Aetna


Dunken, supra, 266 U. S. 393.

Life

Insurance

Co.

v.

may sometimes override the conflicting statute of another,


both at home and abroad; and, again, that the two
conflicting statutes may each prevail over the other at
home, although given no extraterritorial effect in the state
of the other.

The necessity is not any the less whether the statute and
policy of the forum is set up as a defense to a suit brought
under the foreign statute or the foreign statute is set up
as a defense to a suit or proceedings under the local
statute. In either case, the conflict is the same. In each,
rights claimed under one statute prevail only by denying
effect to the other. In both, the conflict is to be resolved
not by giving automatic effect to the full faith and credit
clause, compelling the courts of each state to subordinate
its own statutes to those of the other, but by appraising
the governmental interests of each jurisdiction and turning
the scale of decision according to their weight.

This was fully recognized by this Court in Bradford


Electric Light & Power Co. v. Clapper, supra, 286 U. S. 157162. There, upon an appraisal of the governmental interests
of the two states, Vermont and New Hampshire, it was held
that the compensation act of Vermont, where the status of
employer and employee was established, should prevail over
the conflicting statute of New Hampshire, where the injury
occurred and the suit was brought. In reaching that
conclusion, weight was given to the following circumstances:
that liability under the Vermont Act was an incident of the
status of employer and employee created within Vermont, and,
as such, continued in New Hampshire, where the injury
occurred; that it was a substitute for a tort action, which
was permitted by the statute of New Hampshire; that the
Vermont statute expressly provided that it should extend to
injuries occurring without the state, and was interpreted to
preclude recovery by proceedings brought in any other state,
and that there was no adequate basis for saying that the
compulsory recognition of the Vermont statute by the courts
of New Hampshire would be obnoxious to the public policy of
that state. [Footnote 4]

The enactment of the present statute of California was


within state power, and infringes no constitutional
provision. Prima facie, every state is entitled to enforce
in its own courts its own statutes, lawfully enacted. One
who challenges that right because of the force given to a
conflicting statute of another state by the full faith and
credit clause assumes the burden of showing, upon some
rational
Page 294 U. S. 548
basis, that, of the conflicting interests involved, those of
the foreign state are superior to those of the forum. It
follows that not every statute of another state will
override a conflicting statute of the forum by virtue of the
full faith and credit clause; that the statute of a state

If, for the reasons given, the Vermont statute was held to
override the New Hampshire statute in the courts of
Page 294 U. S. 549
34

New Hampshire, it is hardly to be supposed that the


Constitution would require it to be given any less effect in
Vermont, even though the New Hampshire statute were set up
as a defense to proceedings there. Similarly, in the present
case, only if it appears that, in the conflict of interests
which have found expression in the conflicting statutes, the
interest of Alaska is superior to that of California, is
there rational basis for denying the the courts of
California the right to apply the laws of their own state.
While, in Bradford Electric Light & Power Co. v. Clapper,
supra, it did not appear that the subordination of the New
Hampshire statute to that of Vermont, by compulsion of the
full faith and credit clause, would be obnoxious to the
policy of New Hampshire, the Supreme Court of California has
declared it to be contrary to the policy of the state to
give effect to the provisions of the Alaska statute, and
that they conflict with its own statutes.

to the interest of Alaska in having its statute enforced in


California. We need not repeat what we have already said of
the peculiar concern of California in providing a remedy for
those in the situation of the present employee. Its interest
is sufficient to justify its
Page 294 U. S. 550
legislation and is greater than that of Alaska, of which the
employee was never a resident and to which he may never
return. Nor should the fact that the employment was wholly
to be performed in Alaska, although temporary in character,
lead to any different result. It neither diminishes the
interest of California in giving a remedy to the employee,
who is a member of a class in the protection of which the
state has an especial interest, nor does it enlarge the
interest of Alaska, whose temporary relationship with the
employee has been severed.

There are only two differences, material for present


purposes, between the facts of the Clapper case and those
presented in this case: the employee here is not a resident
of the place in which the employment was begun, and the
employment was wholly to be performed in the jurisdiction in
which the injury arose. Whether these differences, with a
third -- that the Vermont statute was intended to preclude
resort to any other remedy even without the state -- are,
when taken with the differences between the New Hampshire
and Alaska compensation laws, sufficient ground for
withholding or denying any effect to the California statute
in Alaska we need not now inquire. But it is clear that they
do not lessen the interest of California in enforcing its
compensation act within the state, or give any added weight

The interest of Alaska is not shown to be superior to that


of California. No persuasive reason is shown for denying to
California the right to enforce its own laws in its own
courts, and, in the circumstances, the full faith and credit
clause does not require that the statutes of Alaska be given
that effect.
Affirmed.
[Footnote 1]
L. 1929, c. 25; Comp.Laws 1933, c. XXXII, art. IV.
[Footnote 2]
35

L. 1913, c. 176; L. 1917, c. 586; L. 1919, c. 471; L. 1923,


cc. 161, 379; L. 1929, c. 227; L. 1931, c. 944.

MARGARITE AUTEN, Appellant, v. HAROLD AUTEN, Respondent.


Court of Appeals of New York

[Footnote 3]

308 N.Y. 155;


A.L.R.2d 246

Section 1, article IV, of the Constitution provides:


"Full Faith and Credit shall be given in each State to the
public Acts, Records, and judicial Proceedings of every
other State. And the Congress may be general Laws prescribe
the Manner in which such Acts, Records and Proceedings shall
be proved, and the Effect thereof."

124

N.E.2d

Argued
October
December 31, 1954, decided

99;

1954

22,

N.Y.

LEXIS

930;

50

1954.

PRIOR
HISTORY: [***1]
Auten v. Auten,
281
App.
Div.
740,
reversed.
APPEAL from a judgment, entered December 1, 1953, upon an
order of the Appellate Division of the Supreme Court in the
first judicial department, which (1) affirmed an order of
the Supreme Court at Special Term (SCHREIBER, J.), entered
in New York County, granting a motion by defendant for
summary judgment dismissing the complaint and (2) granted
leave to serve an amended complaint. (See 306 N.Y. 752.)

The Act of May 26, 1790, c. 11, 1 Stat. 122, provided for
the proper authentication of the acts, records, and judicial
proceedings, and declared:
"And
the
said
records
and
judicial
proceedings,
authenticated as aforesaid, shall have such faith and credit
given to them in every court within the United States as
they have by law or usage in the courts of the state from
whence the said records are or shall be taken."

DISPOSITION: LEWIS, Ch. J., CONWAY, DESMOND, DYE, FROESSEL


and
VAN
VOORHIS,
JJ.,
concur.
Judgments

reversed,

etc.

HEADNOTES: Conflict of laws - husband and wife - repudiation


of separation agreement - (1) wife and husband entered into
separation agreement in New York providing that husband pay
stated amount monthly for support of wife and children, that
neither should sue in any action relating to separation, and
that wife should not sue in any jurisdiction by reason of
prior Mexican divorce; thereafter wife sued for separation
in England; action herein by wife to recover arrears due her
under agreement; husband's motion for summary judgment based
on defense that wife's separation action in England operated
as repudiation of agreement, [***2] denied; law of England

That of March 27, 1804, c. 56, 2 Stat. 298, extended the


provisions of this statute to the public acts, records, and
judicial proceedings of the territories of the United
States. These enactments subsequently became 905, 906 of
the Revised Statutes, U.S.C. Tit. 28, 687, 688.
[Footnote 4]
The case arose in the federal District Court for New
Hampshire. The state court had not spoken on the subject.
36

applicable and thereunder issue exists as to effect of


commencement of separation action on separation agreement (2) under "grouping of contacts" theory of conflict of laws,
English law would be applied - (3) parties could not have
expected that law other than English law would be applied (4) moreover, under rule that matters of performance and
breach are governed by law of place of performance, English
law would control - (5) husband's contention that wife's
commencement of English action amounted to breach of her
covenant not to sue also governed by English law.

dispute. Examination of the respective contacts with New


York and England indicates that the English law should be
applied to determine the effect to be given the wife's
institution of the separation suit in England. The parties
were married in England, had children there and lived there
as a family for fourteen years. The husband allegedly had
willfully deserted and abandoned the
[***4]
wife and
children in England, and was in this country on a temporary
visa when the agreement was signed. The sole purpose of the
wife's trip to New York was to arrange for defendant to
agree to support his family, and she returned to England
immediately after the agreement was executed. The agreement,
effecting a separation between British subjects, was drawn
with an understanding that the wife and children would live
in England. The only relation of this state with the matter
is that it is the place where the agreement was made and
where
the
trustee
had
his
office.

1. Defendant husband, who had procured a Mexican divorce,


and plaintiff wife entered into a separation agreement in
1933 in New York providing that the husband pay a stated
amount monthly to a New York trustee for the account of his
wife, for the support of herself and their children; that
neither should sue "in any action relating to their
separation", and that the wife should not "cause any
complaint to be lodged against * * * [the husband], in any
jurisdiction, by reason of the said alleged divorce".
Immediately after the signing of the agreement, the wife
returned to England, where she [***3] has since lived with
the children. In 1934, the wife filed a petition for
separation in an English court, but the action never
proceeded to trial. In 1947, the wife brought the present
action to recover arrears allegedly due her under the
agreement. Since the law of England must be applied, and
since, at the least, an issue exists whether the courts of
that country treat the commencement of a separation action
as a repudiation of an earlier-made separation agreement,
the husband's motion for summary judgment, based on his
defense of an alleged repudiation by the wife of the
separation agreement, should not have been granted.

3. The parties could not have expected or believed that any


law other than that of England would govern the effect of
the
wife's
institution
of
a
separation
action.
4. If the rule that matters of performance and breach are
governed by the law of the place of performance should be
applied,
the
law
of
England
would
still
control.
5. The husband's contention that plaintiff's commencement of
the English action amounted to a material breach of his
wife's covenant not to sue, barring recovery on the
agreement,
is
also
governed
by
English
law.
COUNSEL: Michael Alexander, Bernard B. Smith and Leonard H.
Steibel [***5] for appellant. I. The effect of the English
separation action upon the separation agreement must be
determined in accordance with the rule of law applied by the
English
courts.
( Rennie v. Rennie,
287
N.Y.
86; Lynde v. Lynde, 41 App. Div. 280, 162 N.Y. 405, 181 U.S.

2. The "center of gravity" or "grouping of contacts" theory


of the conflict of laws emphasizes the law of the place
which has the most significant contacts with the matter in
37

183; Swift
&
Co. v. Bankers
Trust
Co.,
280
N.Y.
135; Myles v. Cuba R.R. Co., 182 Misc. 169; Lann v. United
States Steel Works Corp., 166 Misc. 465; Matter of Palmer,
192 Misc. 385, 275 App. Div. 792; Graham v. First Nat. Bank
of Norfolk, 84 N.Y. 393; Hutchinson v. Ross, 262 N.Y. 381.)
II. Even assuming, arguendo, that the effect of the English
separation action upon the separation agreement must be
determined in accordance with the rule of law applied by the
courts of New York, the judgment of the Appellate Division
affirming Special Term cannot be sustained. ( Woods v. Bard,
285 N.Y. 11; Krell v. Krell, 192 Misc. 1; Clark v. Kirby,
243 N.Y. 295; Dimick v. Dimick, 230 App. Div. 99; Van
Horn v. Van Horn, 196 App. Div. 472; Chamberlain v. Cuming,
37 Misc. 815; Estin v. Estin, 296 N.Y. 308, 334 U.S. 541;
[***6] Gifford v. Corrigan,
117
N.Y.
257;Rosmarin v. Rosmarin,
238
App.
Div.
798; De
Brauwere v. De Brauwere, 203 N.Y. 460; Patino v. Patino, 195
Misc. 887, 278 App. Div. 756, 278 App. Div. 921.)

1; Schmelzel v. Schmelzel, 287 N.Y. 21; Dimick v. Dimick,


230 App. Div. 99; Van Horn v. Van Horn, 196 App. Div. 472.)
V. In any event, appellant's breach of the covenants of the
agreement
barred
any
subsequent
recovery
thereunder.
(Duryea v. Bliven, 122 N.Y. 567; Haskell v. Haskell, 207
App. Div. 723; Muth v. Wuest, 76 App. Div. 332; Matter of
Noel,
173
Misc.
844; Cole v. Addison,
153
Ore.
688; Harwoodv. Harwood, 182 Misc. 130; Roth v. Roth, 77
Misc. 673; Schmidt v. Schmidt, 74 Misc. 423.) VI. No rights
survive to appellant after her repudiation of the separation
agreement.
OPINIONBY: FULD
OPINION: [*158]
[**100]
FULD, J. In this action to
recover
installments
allegedly
due
for
support
and
maintenance under a separation agreement executed in this
state in 1933, the wife's complaint has been dismissed, on
motion for summary judgment, upon the ground that her
institution of an action for separation in England
constituted a repudiation and a rescission of the agreement
under New [***8] York law. Determination of the appeal,
involving as it does a question of conflict of laws,
requires examination of the facts disclosed by the papers
before
us.

Saul Hammer for respondent. I. The separation agreement sued


upon is governed by the law of the State of New York.
( Bitterman v. Schulman,
265
App.
Div.
486; Stumpf v.Hallahan, 101 App. Div. 383, 185 N.Y.
550; Vander
Horst v. Kittredge,
229
App.
Div.
126; Aronson v. Carobine, 129 Misc. 800; Rennie v. Rennie,
287 N.Y. 86.) II. The law of the contract also governs the
interpretation and legal effect of any acts urged as a
defense or discharge of the agreement. ( Benton v. Safe
Deposit Bank, 255 N.Y. 260; Pritchardv. Norton, 106 U.S.
124.) III. The law of domicile does not govern. ( Vander
Horst v. Kittredge, 229 App. Div. 126; Graham v. First Nat.
Bank of Norfolk, 84 N.Y. 393;Hutchinson v. Ross, 262 N.Y.
381.) IV. Appellant repudiated the agreement sued upon by
instituting suit against respondent for judicial separation.
( O'Brien v. O'Brien,
252
App.
Div.
427;
[***7] Hettich v. Hettich,
278
App.
Div.
518; Woods v. Bard, 285 N.Y. 11; Krell v. Krell, 192 Misc.

Married in England in 1917, Mr. and Mrs. Auten continued to


live there with their two children until 1931. In that year,
according to plaintiff, defendant deserted her, came to this
country and, in the following year, obtained a Mexican
divorce and proceeded to "marry" another woman. Unable to
come to terms with the ocean between them, plaintiff made a
trip to New York City to see and talk to defendant about
adjustment of their differences. The outcome was the
separation agreement of June, 1933, upon which the present
action is predicated. It obligated the husband to pay to a
trustee, for the "account of" the wife, who was to return to
38

England, the sum of 50 a month for the support of herself


and the children. In addition, the agreement provided that
the parties were to continue to live separate and apart,
that neither should sue "in any action relating to their
separation" and that the wife should not "cause any
complaint to be lodged against * * * [the husband], in any
jurisdiction, by reason of the said alleged [***9] divorce
or
remarriage".

[**101]
In his answer, defendant admitted making the
agreement, but, by way of a separate defense - one of
several - claimed that plaintiff's institution of the
separation suit in England operated as a repudiation of the
agreement and effected a forfeiture of her right to any
payments under it. Following a motion by the wife for
summary judgment and a cross motion by the husband for like
relief, the court at Special Term granted the husband's
cross motion and dismissed the complaint. The Appellate
Division affirmed, with leave to the wife, however, to serve
an amended complaint, asserting any cause of action which
accrued prior to the date of the commencement of the English
suit. The ensuing judgment, dismissing all of the wife's
claims which accrued subsequent to that date, is a final
judgment of modification, and the wife's appeal therefrom is
properly before us as of right. (306 N.Y. 752; see, also,
[***11] Cohen and Karger, Powers of the New York Court of
Appeals,
pp.
88-91,
222-223.)

Immediately after the agreement was signed, plaintiff


returned to England, where she has since lived with her
children, and it is alleged by her - but disputed by
defendant - that the latter is also domiciled in that
country. Be that as it may, defendant failed to live up to
his agreement, making but a few payments under it, with the
result that plaintiff was left more or less destitute in
England with the children. About a year after the agreement
had been executed, in August of 1934, plaintiff filed a
petition for separation in an English court, charging
defendant with adultery. Defendant was served in New York
with process in that suit on December 4, 1936, and, in July,
1938, an order was entered requiring defendant to pay
alimony pendente lite. This English action - which, we are
told [*159] never proceeded to trial - was instituted upon
advice of English counsel that it "was the only method" by
which she "could collect money" from defendant; it was done,
plaintiff expressly declares, to "enable" her "to enforce"
the separation agreement, and not with any thought or
intention
of
repudiating
it.

Both of the courts below, concluding that New York law was
to be applied, held that under such law plaintiff's
commencement of the English action and the award of
temporary alimony constituted a rescission and repudiation
of the separation agreement, requiring dismissal of the
complaint. Whether that is the law of this state, or whether
something more must be shown to effect a repudiation of the
agreement
(cf. Hettich v. Hettich,
304
N.Y.
8,
1314; Woods v. Bard, 285 N.Y. 11; Butler v. Butler, 206 App.
Div. 214), need not detain us, since in our view it is the
law of England, not that of New York, which is here
controlling.

The years passed, and in 1947, having realized


[***10]
nothing as a result of the English action and little by
reason of the New York separation agreement, plaintiff
brought the present suit to recover the sum of $26,564,
which represents the amount allegedly due her, under the
agreement, from January 1, 1935 to September 1, 1947.

Choosing the law to be applied to a contractual transaction


with elements in different jurisdictions is a matter not
free from
[*160]
difficulty. The New York decisions
evidence a number of different approaches to the question.
(See, e.g., Jones v. Metropolitan Life Ins. Co., 158 Misc.
39

466.)

the law of the place "which has the most significant


contacts with the matter in dispute". ( Rubin v. Irving
Trust
Co.,
305
N.Y.
288,
305;
see,
also, Jones v. Metropolitan Life Ins. Co., supra, 158 Misc.
466, 469-470; Jansson v. Swedish American Line, 185 F. 2d
212;
[*161] Barber
Co. v. Hughes,
supra,
223
Ind.
570; Boissevain v. Weil, [1949] 1 K.B. 482, 490-492; Cook,
"Contracts" and the Conflict of Laws: "Intention" of the
Parties, 32 Ill. L. Rev. 899, 918-919; Harper, Policy Bases
of the Conflict of [***14] Laws: Reflections on Rereading
Professor Lorenzen's Essays, 56 Yale L.J. 1155, 1163-1168;
Note, Choice of Law Problems in Direct Actions Against
Indemnification Insurers, 3 Utah L. Rev. 490, 498-499.)

Most of the cases rely upon the generally accepted rules


that
"All
matters
bearing
upon
the
execution,
the
interpretation and the validity of contracts [***12] * * *
are determined by the law of the place where the contract is
made", while "All matters connected with its performance * *
* are regulated by the law of the place where the contract,
by its terms, is to be performed." ( Swift & Co. v. Bankers
Trust Co., 280 N.Y. 135, 141; Union Nat. Bank v. Chapman,
169 N.Y. 538, 543; see, also, Zwirn v. Galento, 288 N.Y.
428; United States Mtge. & Trust Co. v. Ruggles, 258 N.Y.
32, 38; Restatement, Conflict of Laws, 332, 358; Goodrich
on Conflict of Laws [2d ed., 1938], p. 293.) What
constitutes a breach of the contract and what circumstances
excuse a breach are considered matters of performance,
governable, within this rule, by the law of the place of
performance. (See Richard v. American Union Bank, 241 N.Y.
163, 166-167; Restatement, Conflict of Laws, 370;
Goodrich, op.
cit.,
p.
293.)

Although this "grouping of contacts" theory may, perhaps,


afford less certainty and predictability than the rigid
general rules (see Note, op. cit., 3 Utah L. Rev. 490, 498),
the merit of its approach is that it gives to the place
"having the most interest in the problem" paramount control
over the legal issues arising out of a particular factual
context, thus allowing the forum to apply the policy of the
jurisdiction "most intimately concerned with the outcome of
[the] particular litigation" (3 Utah L. Rev., pp. 498-499).
Moreover, by stressing the significant contacts, it enables
the court, not only to reflect the relative interests of the
several
jurisdictions
involved
(see Vanston
Committee v.Green, 329 U.S. 156, 161-162), but also to give
effect to the probable intention of the parties and
consideration to "whether one rule or the other produces the
best practical result". ( Swift & Co. v. Bankers Trust Co.,
supra,
280
N.Y.
135,
141;
see Vanston
Committee [***15] v. Green, supra, 329 U.S. 156, 161162.)

Many cases appear to treat these rules as conclusive. Others


consider controlling the intention of the parties and treat
the general rules merely as presumptions or guideposts, to
be considered along with all the other circumstances.
(See Wilson v. Lewiston Mill Co., 150 N.Y. 314, 322323; Stumpf [***13] v. Hallahan, 101 App. Div. 383, 386,
affd. 185 N.Y. 550; Grand v. Livingston, 4 App. Div. 589,
affd. 158 N.Y. 688.) And still other decisions, including
the most recent one in this court, have resorted to a method
- first employed to rationalize the results achieved by the
courts in decided cases (see Barber Co. v. Hughes, 223 Ind.
570, 586) - which has come to be called the "center of
gravity" or the "grouping of contacts" theory of the
conflict of laws. Under this theory, the courts, instead of
regarding as conclusive [**102] the parties' intention or
the place of making or performance, lay emphasis rather upon

Turning to the case before us, examination of the respective


contacts with New York and England compels the conclusion
that it is English law which must be applied to determine
40

the impact and effect to be given the wife's institution of


the separation suit n1. It hardly needs stating that it is
England which has all the truly significant contacts, while
this state's sole nexus with the matter in dispute entirely fortuitous, at that - is that it is the place where
the agreement was made and where the trustee, to whom the
moneys were in the first [*162] instance to be paid, had
his office. The agreement effected a separation between
British subjects, who had been married in England, had
children there and lived there as a family for fourteen
years. It involved a husband who, according to the papers
before us, had willfully deserted and abandoned his wife and
children in England and was in the United States, when the
agreement was signed, merely on a temporary visa. And it
concerned an English wife who came to this country at that
time because it was the only way she could see her husband
to discuss their differences. The sole [***16] purpose of
her trip to New York was to get defendant to agree to the
support of his family, and she returned to England
immediately after the agreement was executed. While the
moneys were to be paid through the medium of a New York
trustee, such payments were "for account of" the wife and
children, who, it was thoroughly understood, were to live in
England. The agreement is instinct with that understanding;
not only does it speak in terms of English currency in
providing for payments to the wife, not only does it recite
that the first payment be made to her "immediately before
sailing for England", but it specifies that the husband may
visit the children "if he should go to England".

[**103] In short, then, the agreement determined and fixed


the marital responsibilities of an English husband and
father
and
provided
[***17]
for
the
support
and
maintenance of the allegedly abandoned wife and children who
were to remain in England. It merely substituted the
arrangements arrived at by voluntary agreement of the
parties for the duties and responsibilities of support that
would otherwise attach by English law. There is no question
that England has the greatest concern in prescribing and
governing those obligations, and in securing to the wife and
children essential support and maintenance. And the
paramount interest of that country is not affected by the
fact that the parties separate and provide for such support
by a voluntary agreement. It is still England, as the
jurisdiction of marital domicile and the place where the
wife and children were to be, that has the greatest concern
in defining and regulating the rights and duties existing
under that agreement, and, specifically, in determining the
circumstances that effect a termination or repudiation of
the
agreement.
[*163] Nor could the parties have expected or believed
that any law other than England's would govern the effect of
the wife's institution of a separation action. It is most
unlikely that the wife could have intended to subject her
[***18]
rights under English law to the law of a
jurisdiction several thousand miles distant, with which she
had not the slightest familiarity. On the contrary, since it
was known that she was returning to England to live, both
parties necessarily realized that any action which she took,
whether in accordance with the agreement or in violation of
it, would have to occur in England. If any thought was given
to the matter at all, it was that the law of the place where
she and the children would be should determine the effect of
acts
performed
by
her.

n1. Our decision in Rennie v. Rennie (287 N.Y. 86) casts no


light on the problem. The court did not there consider
whether it is the law of the place where the separation
agreement was made or of the jurisdiction where the
separation suit or other judicial proceeding was brought
which determines the effect that such action may have upon
the
agreement.
41

It is, perhaps, not inappropriate to note that, even if we


were not to place our emphasis on the law of the place with
the most significant contacts, but were instead simply to
apply the rule that matters of performance and breach are
governed by the law of the place of performance, the same
result would follow. Whether or not there was a repudiation,
essentially a form of breach (see Restatement, Contracts,
318; 4 Corbin on Contracts [1951], 954, pp. 829-834), is
also to be determined by the law of the place of performance
(cf. Wester v. Casein Co. of America, 206 N.Y. 506;
Restatement, Conflict of Laws, 370, Caveat [***19]
),
and that place, so far as the wife's performance is
concerned, is England. Whatever she had to do under the
agreement - "live separate and apart from" her husband,
"maintain, educate and support" the children and refrain
from bringing "any action relating to [the] separation" -
was to be done in England. True, the husband's payments were
to be made to a New York trustee for forwarding to plaintiff
in England, but that is of no consequence in this case. It
might be, if the question before us involved the manner or
effect of payment to the trustee, but that is not the
problem; we are here concerned only with the effect of the
wife's performance. (Cf. Zwirn v. Galento, supra, 288 N.Y.
428,
433.)

the present
[***20]

action

to

recover

amounts

due

under

it.

As to defendant's further contention that, in any event,


plaintiff's commencement of the English action amounted to a
[**104]
material breach of her covenant not to sue,
barring recovery upon the agreement, we need but say that
this question, too, must be governed by English law, and for
the
same
reasons
already
set
forth.
The judgment of the Appellate Division and that of Special
Term insofar as they dismiss the complaint should be
reversed, with costs in all courts, and the matter remitted
for further proceedings in accordance with this opinion.
Court of Appeals of the State of New York.

9 N.Y.2d 554 (N.Y. 1961)


HAAG V. BARNES
DOROTHY
HAAG,
ALSO
KNOWN
AS
DOROTHY
HAWTHORNE,
APPELLANT, V.NORMAN BARNES, RESPONDENT.
COURT OF APPEALS OF THE STATE OF NEW YORK.
ARGUED APRIL 24, 1961

Since, then, the law of England must be applied, and since,


at the very least, an issue exists as to whether the courts
of that country treat the commencement of a separation
action as a
[*164]
repudiation of an earlier-made
separation agreement, summary judgment should not have been
granted
n2.

DECIDED MAY 18, 1961 *555555


APPEAL FROM THE APPELLATE DIVISION OF THE SUPREME
COURT IN THE FIRST JUDICIAL DEPARTMENT, ALFRED J.
CAWSE,
JR.,
JOSEPH
V.
LOSCALZO
AND
JOSEPH
A.
MARTINIS, JJ.
Alfred A. Rosen for appellant. *556556 Phoenix Ingraham for
respondent.

n2. In point of fact, the English lawyers, whose affidavits


have been submitted by plaintiff, unequivocally opine that
the institution of a separation suit and the award of
alimonypendente lite did not, under the law of England,
constitute a repudiation of the separation agreement or bar

FULD, J.
42

This appeal is concerned with the effect in New York of an


agreement made in another State for the support of a child
born out of wedlock.
The complainant Dorothy Haag alleges that in 1947 she moved
from Minnesota and took up residence in New York City and
that since then she has been a resident of this State. The
defendant *557557 Norman Barnes, on the other hand, is now
and was, during the period involved in this litigation, a
resident of Illinois.
According to the statements contained in the complainant's
affidavits, she met the defendant in the spring of 1954 in
New York. She was a law secretary and had been hired by the
defendant through an agency to do work for him while he was
in New York on one of his business trips. The relationship
between the man and the girl soon "ripened into friendship"
and, on the basis of representations that he loved her and
planned to divorce his wife and marry her, she was
"importuned" into having sexual relations with him.
The complainant further alleges that she became pregnant as
a result of having sexual relations with the defendant and
that, upon being informed of this, he asked her to move to
Illinois to be near him. She refused and, instead, went to
live in California with her sister to await the birth of her
child. Fearing that the defendant was losing interest in
her, however, she returned to Chicago before the child was
born and, upon attempting to communicate with the defendant,
was referred to his attorney. The latter told Dorothy to
choose a hospital in Chicago, which she did, and the baby
was born there in December, 1955, the defendant paying the
expenses.
Shortly after the birth of the child, her attempts to see
the defendant in New York failed and she was advised by his
attorney to return to Chicago in order that an agreement
might be made for the support of her and her child.
Returning
to
that
city,
she
procured
an
attorney,
recommended by a friend in New York, and signed an agreement

on January 12, 1956. The agreement provides, in pertinent


part, as follows:
1. It recites payment to the complainant by the defendant of
$2,000 between September, 1955 and January, 1956 and a
willingness on his part to support her child in the future,
on condition that such payments "shall not constitute an
admission" that he is the child's father;
2. The defendant promises to pay $50 a week and $75 a month,
i.e., a total of $275 a month, "continuing while [the child]
is alive and until she attains the age of sixteen years";
3. The complainant agrees "to properly support, maintain,
educate, and care for [the child]"; *558558
4. The complainant agrees to keep the child in Illinois for
at least two years, except if she marries within that
period;
5. The complainant "remise[s], release[s] and forever
discharge[s] NORMAN BARNES * * * from all manner of actions
* * * which [she] now has against [him] or ever had or which
she * * * hereafter can, shall or may have, for, upon or by
reason of any matter, cause or thing whatsoever * * *
including * * * the support of [the child]"; and
6. The parties agree that their agreement "shall in all
respects be interpreted, construed and governed by the laws
of the State of Illinois".
Shortly after the agreement was signed, the complainant
received permission, pursuant to one of its provisions, to
live in California where she remained for two years. She
then returned to New York where she and her child have ever
since been supported by the defendant in full compliance
with the terms of his agreement. In fact, he has provided
sums far in excess of his agreement; all told, we were
informed on oral argument, the defendant has paid the
complainant some $30,000.
The present proceeding was instituted in 1959 by the service
of a complaint and the defendant was thereafter arrested
pursuant to section 64 of the New York City Criminal Courts
Act. A motion, made by the defendant, to dismiss the
43

proceeding was granted by the Court of Special Sessions and


the resulting order was affirmed by the Appellate Division.
The ground urged for dismissal was that the parties had
entered into an agreement providing for the support of the
child which has been fully performed; that in this agreement
the complainant relinquished the right to bring any action
for the support of the child; and that, in any event, the
action is precluded by the laws of the State of Illinois
which, the parties expressly agreed, would govern their
rights under the agreement. In opposition, the complainant
contended that New York, not Illinois, law applies; that the
agreement in question is not a sufficient basis for a motion
to dismiss under either section 63 of the New York City
Criminal Courts Act or section 121 of the Domestic Relations
Law, since both of these provisions provide that "An
agreement or compromise made by the mother * * * shall be
binding
only
when
the
court
shall
have
determined *559559that adequate provision has been made";
and that, even were the Illinois law to apply, it does not
bar the present proceeding.
The motion to dismiss was properly granted; the complainant
may not upset a support agreement which is itself perfectly
consistent with the public policy of this State, which was
entered into in Illinois with the understanding that it
would be governed by the laws of that State and which
constitutes a bar to a suit for further support under
Illinois law.
The complainant is correct in her position that, since the
agreement was not court approved, it may not be held to be a
bar to her suit under New York internal law. (See N.Y. City
Crim. Cts. Act, 63; Domestic Relations Law, 121.) On the
other hand, it is clear that the agreement is a bar under
the internal law of Illinois since it provides, in the
language of that State's statute, for a "sum not less than
eight hundred dollars". (See Ill. Rev. Stat., former ch. 17,
18, amd. by former ch. 17, 52 [now ch. 106 3/4, 65].)

The simple question before us, therefore, is whether the law


of New York or of Illinois applies.
The traditional view was that the law governing a contract
is to be determined by the intention of the parties.
(See Wilson v. Lewiston
Mill
Co., 150
N.Y.
314,
322323; Stumpf v.Hallahan, 101 App. Div. 383, 386, affd. 185
N.Y. 550; Grand v. Livingston, 4 App. Div. 589, affd. 158
N.Y. 688.) The more modern view is that "the courts, instead
of regarding as conclusive the parties' intention or the
place of making or performance, lay emphasis rather upon the
law of the place `which has the most significant contacts
with the matter in dispute'". (See Auten v. Auten, 308 N.Y.
155, 160; see, also, Rubin v. Irving Trust Co., 305 N.Y.
288, 305.) Whichever of these views one applies in this
case, however, the answer is the same, namely, that Illinois
law applies.
The agreement, in so many words, recites that it "shall in
all respects be interpreted, construed and governed by the
laws of the State of Illinois" and, since it was also drawn
and signed by the complainant in Illinois, the traditional
conflicts rule would, without doubt, treat these factors as
conclusive and result in applying Illinois law. But, even if
the parties' intention and the place of the making of the
contract are not given decisive effect,*560560 they are
nevertheless to be given heavy weight in determining which
jurisdiction "`has the most significant contacts with the
matter
in
dispute'".
( Auten v. Auten, 308
N.Y.
155,
160, supra.) And, when these important factors are taken
together with other of the "significant contacts" in the
case, they likewise point to Illinois law. Among these other
Illinois contacts are the following: (1) both parties are
designated in the agreement as being "of Chicago, Illinois",
and the defendant's place of business is and always has been
in Illinois; (2) the child was born in Illinois; (3) the
persons designated to act as agents for the principals
(except for a third alternate) are Illinois residents, as
are the attorneys for both parties who drew the agreement;
44

and (4) all contributions for support always have been, and
still are being, made from Chicago.
Contrasted with these Illinois contacts, the New York
contacts are of far less weight and significance. Chief
among these is the fact that child and mother presently live
in New York and that part of the "liaison" took place in New
York. When these contacts are measured against the parties'
clearly expressed intention to have their agreement governed
by Illinois law and the more numerous and more substantial
Illinois contacts, it may not be gainsaid that the "center
of gravity" of this agreement is Illinois and that, absent
compelling public policy to the contrary (see Straus
Co. v. Canadian Pacific Ry. Co.,254 N.Y. 407, 414), Illinois
law should apply.
As to the question of public policy, we would emphasize that
the issue is not whether the New York statute reflects a
different public policy from that of the Illinois statute,
but rather whether enforcement of the particular agreement
before us under Illinois law represents an affront to our
public policy. (Cf. Loucks v. Standard Oil Co., 224 N.Y. 99,
111; Mertz v. Mertz, 271 N.Y. 466, 471; Restatement 2d,
Conflict of Laws, Tentative Draft No. 6, 332a, comment g.)
It is settled that the New York Paternity Law requires
something more than the provision of "the bare necessities
otherwise required to be supplied by the community", that,
"although providing for indemnification of the community,
[it] is chiefly concerned with the welfare of the child".
(See Schaschlo v. Taishoff, 2 N.Y.2d 408, 411.) In our
judgment, enforcement of the support agreement in this case
under Illinois law and the refusal to allow its provisions
to be reopened in the present proceeding does not do
violence to this policy. *561561
As matter of fact, the agreement before us clearly goes
beyond "indemnification of the community" and the provision
of "bare necessities". Whether we read it as a whole, or
look only to the financial provisions concerned ($275 a
month until the child reaches the age of 16), we must

conclude that "the welfare of the child" is fully protected.


(See Rhynev. Katleman, 285 App. Div. 114 0, affg. 206 Misc.
202 [$10,000 lump sum held sufficient].) The public policy
of this State having been satisfied, there is no reason why
we should not enforce the provisions of the parties' support
agreement under Illinois law and treat the agreement as a
bar to the present action for support.
The order of the Appellate Division should be affirmed.
Chief Judge DESMOND and Judges DYE, FROESSEL, VAN VOORHIS,
BURKE and FOSTER concur.
Order affirmed.
FIRST DIVISION
[G.R. No. 122191. October 8, 1998]
SAUDI ARABIAN AIRLINES, petitioner, vs. COURT OF APPEALS,
MILAGROS P. MORADA and HON. RODOLFO A. ORTIZ, in his
capacity as Presiding Judge of Branch 89, Regional
Trial Court of Quezon City, respondents.
D E C I S I O N
QUISUMBING, J.:
This petition for certiorari pursuant to Rule 45 of the
Rules of Court seeks to annul and set aside the
Resolution[1] dated
September
27,
1995
and
the
Decision[2] dated April 10, 1996 of the Court of Appeals [3] in
CA-G.R. SP No. 36533,[4] and the Orders[5] dated August 29,
1994[6] and February 2, 1995[7] that were issued by the trial
court in Civil Case No. Q-93-18394.[8]
The pertinent antecedent facts which gave rise to the
instant petition, as stated in the questioned Decision [9],
are as follows:
On January 21, 1988 defendant SAUDIA hired plaintiff
as a Flight Attendant for its airlines based in
Jeddah, Saudi Arabia. x x x
On April 27, 1990, while on a lay-over in Jakarta,
Indonesia, plaintiff went to a disco dance with
fellow crew members Thamer Al-Gazzawi and Allah AlGazzawi, both Saudi nationals. Because it was almost
45

morning when they returned to their hotels, they


agreed to have breakfast together at the room of
Thamer. When they were in te (sic) room, Allah left
on some pretext. Shortly after he did, Thamer
attempted to rape plaintiff. Fortunately, a roomboy
and several security personnel heard her cries for
help and rescued her. Later, the Indonesian police
came and arrested Thamer and Allah Al-Gazzawi, the
latter as an accomplice.
When plaintiff returned to Jeddah a few days later,
several SAUDIA officials interrogated her about the
Jakarta incident. They then requested her to go back
to Jakarta to help arrange the release of Thamer and
Allah. In Jakarta, SAUDIA Legal Officer Sirah Akkad
and base manager Baharini negotiated with the police
for the immediate release of the detained crew
members but did not succeed because plaintiff refused
to cooperate. She was afraid that she might be
tricked into something she did not want because of
her inability to understand the local dialect. She
also declined to sign a blank paper and a document
written in the local dialect. Eventually, SAUDIA
allowed plaintiff to return to Jeddah but barred her
from the Jakarta flights.
Plaintiff learned that, through the intercession of
the
Saudi
Arabian
government,
the
Indonesian
authorities agreed to deport Thamer and Allah after
two weeks of detention.Eventually, they were again
put in service by defendant SAUDI (sic). In September
1990, defendant SAUDIA transferred plaintiff to
Manila.
On January 14, 1992, just when plaintiff thought that
the Jakarta incident was already behind her, her
superiors requested her to see Mr. Ali Meniewy, Chief
Legal
Officer
of
SAUDIA,
in
Jeddah,
Saudi
Arabia. When she saw him, he brought her to the
police station where the police took her passport and

questioned her about the Jakarta incident. Miniewy


simply stood by as the police put pressure on her to
make a statement dropping the case against Thamer and
Allah. Not until she agreed to do so did the police
return her passport and allowed her to catch the
afternoon flight out of Jeddah.
One year and a half later or on June 16, 1993, in
Riyadh, Saudi Arabia, a few minutes before the
departure of her flight to Manila, plaintiff was not
allowed to board the plane and instead ordered to
take a later flight to Jeddah to see Mr. Miniewy, the
Chief Legal Officer of SAUDIA. When she did, a
certain Khalid of the SAUDIA office brought her to a
Saudi court where she was asked to sign a document
written in Arabic. They told her that this was
necessary to close the case against Thamer and
Allah.As it turned out, plaintiff signed a notice to
her to appear before the court on June 27,
1993. Plaintiff then returned to Manila.
Shortly
afterwards,
defendant
SAUDIA
summoned
plaintiff to report to Jeddah once again and see
Miniewy
on
June
27,
1993
for
further
investigation. Plaintiff
did
so
after
receiving
assurance from SAUDIAs Manila manager, Aslam Saleemi,
that the investigation was routinary and that it
posed no danger to her.
In Jeddah, a SAUDIA legal officer brought plaintiff
to the same Saudi court on June 27, 1993. Nothing
happened then but on June 28, 1993, a Saudi judge
interrogated plaintiff through an interpreter about
the
Jakarta
incident. After
one
hour
of
interrogation, they let her go. At the airport,
however, just as her plane was about to take off, a
SAUDIA officer told her that the airline had
forbidden her to take flight. At the Inflight Service
Office where she was told to go, the secretary of Mr.
Yahya Saddick took away her passport and told her to
46

remain in Jeddah, at the crew quarters, until further


orders.
On July 3, 1993 a SAUDIA legal officer again escorted
plaintiff to the same court where the judge, to her
astonishment
and
shock,
rendered
a
decision,
translated to her in English, sentencing her to five
months imprisonment and to 286 lashes. Only then did
she realize that the Saudi court had tried her,
together with Thamer and Allah, for what happened in
Jakarta. The court found plaintiff guilty of (1)
adultery; (2) going to a disco, dancing and listening
to the music in violation of Islamic laws; and (3)
socializing with the male crew, in contravention of
Islamic tradition.[10]
Facing conviction, private respondent sought the help of
her employer, petitioner SAUDIA. Unfortunately, she was
denied any assistance. She then asked the Philippine Embassy
in
Jeddah
to
help
her
while
her
case
is
on
appeal. Meanwhile, to pay for her upkeep, she worked on the
domestic flight of SAUDIA, while Thamer and Allah continued
to serve in the international flights.[11]
Because she was wrongfully convicted, the Prince of
Makkah dismissed the case against her and allowed her to
leave Saudi Arabia. Shortly before her return to Manila,
[12]
she was terminated from the service by SAUDIA, without
her being informed of the cause.
On November 23, 1993, Morada filed a Complaint[13] for
damages against SAUDIA, and Khaled Al-Balawi (Al- Balawi),
its country manager.
On January 19, 1994, SAUDIA filed an Omnibus Motion To
Dismiss[14] which raised the following grounds, to wit: (1)
that the Complaint states no cause of action against Saudia;
(2) that defendant Al-Balawi is not a real party in
interest; (3) that the claim or demand set forth in the
Complaint
has
been
waived,
abandoned
or
otherwise
extinguished; and (4) that the trial court has no
jurisdiction to try the case.

On February 10, 1994, Morada filed her Opposition (To


Motion to Dismiss)[15] Saudia filed a reply[16] thereto on
March 3, 1994.
On
June
23,
1994,
Morada
filed
an
Amended
Complaint[17] wherein
Al-Balawi
was
dropped
as
party
defendant. On
August
11,
1994,
Saudia
filed
its
Manifestation and Motion to Dismiss Amended Complaint[18].
The trial court issued an Order[19] dated August 29, 1994
denying the Motion to Dismiss Amended Complaint filed by
Saudia.
From the Order of respondent Judge[20] denying the Motion
to Dismiss, SAUDIA filed on September 20, 1994, its Motion
for Reconsideration[21] of the Order dated August 29,
1994. It alleged that the trial court has no jurisdiction to
hear and try the case on the basis of Article 21 of the
Civil Code, since the proper law applicable is the law of
the Kingdom of Saudi Arabia. On October 14, 1994, Morada
filed
her
Opposition[22] (To
Defendants
Motion
for
Reconsideration).
In the Reply[23] filed with the trial court on October 24,
1994,
SAUDIA
alleged
that
since
its
Motion
for
Reconsideration raised lack of jurisdiction as its cause of
action, the Omnibus Motion Rule does not apply, even if that
ground is raised for the first time on appeal. Additionally,
SAUDIA alleged that the Philippines does not have any
substantial interest in the prosecution of the instant case,
and hence, without jurisdiction to adjudicate the same.
Respondent
Judge
subsequently
issued
another
Order[24] dated February 2, 1995, denying SAUDIAs Motion for
Reconsideration. The pertinent portion of the assailed Order
reads as follows:
Acting on the Motion for Reconsideration of defendant
Saudi Arabian Airlines filed, thru counsel, on
September 20, 1994, and the Opposition thereto of the
plaintiff filed, thru counsel, on October 14, 1994,
as well as the Reply therewith of defendant Saudi
Arabian Airlines filed, thru counsel, on October 24,
47

1994, considering that a perusal of the plaintiffs


Amended Complaint, which is one for the recovery of
actual, moral and exemplary damages plus attorneys
fees, upon the basis of the applicable Philippine
law, Article 21 of the New Civil Code of the
Philippines, is, clearly, within the jurisdiction of
this Court as regards the subject matter, and there
being nothing new of substance which might cause the
reversal or modification of the order sought to be
reconsidered, the motion for reconsideration of the
defendant, is DENIED.
SO ORDERED.[25]
Consequently, on February 20, 1995, SAUDIA filed its
Petition for Certiorari and Prohibition with Prayer for
Issuance of Writ of Preliminary Injunction and/or Temporary
Restraining Order[26] with the Court of Appeals.
Respondent Court of Appeals promulgated a Resolution
with Temporary Restraining Order[27] dated February 23, 1995,
prohibiting the respondent Judge from further conducting any
proceeding, unless otherwise directed, in the interim.
In another Resolution[28] promulgated on September 27,
1995, now assailed, the appellate court denied SAUDIAs
Petition for the Issuance of a Writ of Preliminary
Injunction dated February 18, 1995, to wit:
The Petition for the Issuance of a Writ of
Preliminary Injunction is hereby DENIED, after
considering the Answer, with Prayer to Deny Writ of
Preliminary Injunction (Rollo, p. 135) the Reply and
Rejoinder, it appearing that herein petitioner is not
clearly
entitled
thereto
(Unciano
Paramedical
College, et. Al., v. Court of Appeals, et. Al.,
100335, April 7, 1993, Second Division).
SO ORDERED.
On October 20, 1995, SAUDIA filed with this Honorable
Court the instant Petition[29] for Review with Prayer for
Temporary Restraining Order dated October 13, 1995.

However, during the pendency of the instant Petition,


respondent Court of Appeals rendered the Decision[30] dated
April 10, 1996, now also assailed. It ruled that the
Philippines is an appropriate forum considering that the
Amended Complaints basis for recovery of damages is Article
21 of the Civil Code, and thus, clearly within the
jurisdiction
of
respondent
Court. It
further
held
that certiorari is not the proper remedy in a denial of a
Motion to Dismiss, inasmuch as the petitioner should have
proceeded to trial, and in case of an adverse ruling, find
recourse in an appeal.
On May 7, 1996, SAUDIA filed its Supplemental Petition
for
Review
with
Prayer
for
Temporary
Restraining
Order[31] dated April 30, 1996, given due course by this
Court. After both parties submitted their Memoranda,[32] the
instant case is now deemed submitted for decision.
Petitioner SAUDIA raised the following issues:
I
The trial court has no jurisdiction to hear and try Civil
Case No. Q-93-18394 based on Article 21 of the New Civil
Code since the proper law applicable is the law of the
Kingdom of Saudi Arabia inasmuch as this case involves what
is known in private international law as a conflicts
problem. Otherwise, the Republic of the Philippines will sit
in judgment of the acts done by another sovereign state
which is abhorred.
II.
Leave of court before filing a supplemental pleading is not
a jurisdictional requirement. Besides, the matter as to
absence of leave of court is now moot and academic when this
Honorable Court required the respondents to comment on
petitioners April 30, 1996 Supplemental Petition For Review
With Prayer For A Temporary Restraining Order Within Ten
(10) Days From Notice Thereof. Further, the Revised Rules of
Court should be construed with liberality pursuant to
Section 2, Rule 1 thereof.
III.
48

Petitioner received on April 22, 1996 the April 10, 1996


decision in CA-G.R. SP NO. 36533 entitled Saudi Arabian
Airlines v. Hon. Rodolfo A. Ortiz, et al. and filed its
April 30, 1996 Supplemental Petition For Review With Prayer
For A Temporary Restraining Order on May 7, 1996 at 10:29
a.m. or within the 15-day reglementary period as provided
for under Section 1, Rule 45 of the Revised Rules of
Court. Therefore, the decision in CA-G.R. SP NO. 36533 has
not yet become final and executory and this Honorable Court
can take cognizance of this case.[33]
From the foregoing factual and procedural antecedents,
the following issues emerge for our resolution:
I.
WHETHER RESPONDENT APPELLATE COURT ERRED IN HOLDING
THAT THE REGIONAL TRIAL COURT OF QUEZON CITY HAS
JURISDICTION TO HEAR AND TRY CIVIL CASE NO. Q-9318394 ENTITLED MILAGROS P. MORADA V. SAUDI ARABIAN
AIRLINES.
II.
WHETHER RESPONDENT APPELLATE COURT ERRED IN RULING
THAT IN THE CASE PHILIPPINE LAW SHOULD GOVERN.
Petitioner SAUDIA claims that before us is a conflict of
laws that must be settled at the outset. It maintains that
private respondents claim for alleged abuse of rights
occurred in the Kingdom of Saudi Arabia. It alleges that the
existence of a foreign element qualifies the instant case
for the application of the law of the Kingdom of Saudi
Arabia, by virtue of the lex loci delicti commissi rule.[34]
On the other hand, private respondent contends that
since her Amended Complaint is based on Articles 19 [35] and
21[36] of the Civil Code, then the instant case is properly a
matter of domestic law.[37]
Under the factual antecedents obtaining in this case,
there is no dispute that the interplay of events occurred in
two states, the Philippines and Saudi Arabia.
As
stated
by
private
respondent
in
her
Amended
Complaint[38] dated June 23, 1994:

2. Defendant SAUDI ARABIAN AIRLINES or SAUDIA is a


foreign airlines corporation doing business in the
Philippines. It may be served with summons and other
court processes at Travel Wide Associated Sales
(Phils.), Inc., 3rd Floor, Cougar Building, 114
Valero St., Salcedo Village, Makati, Metro Manila.
x x x x x x x x x
6. Plaintiff learned that, through the intercession
of the Saudi Arabian government, the Indonesian
authorities agreed to deport Thamer and Allah after
two weeks of detention. Eventually, they were again
put in service by defendant SAUDIA. In September
1990, defendant SAUDIA transferred plaintiff to
Manila.
7. On January 14, 1992, just when plaintiff thought
that the Jakarta incident was already behind her, her
superiors requested her to see MR. Ali Meniewy, Chief
Legal
Officer
of
SAUDIA,
in
Jeddah,
Saudi
Arabia. When she saw him, he brought her to the
police station where the police took her passport and
questioned her about the Jakarta incident. Miniewy
simply stood by as the police put pressure on her to
make a statement dropping the case against Thamer and
Allah. Not until she agreed to do so did the police
return her passport and allowed her to catch the
afternoon flight out of Jeddah.
8. One year and a half later or on June 16, 1993, in
Riyadh, Saudi Arabia, a few minutes before the
departure of her flight to Manila, plaintiff was not
allowed to board the plane and instead ordered to
take a later flight to Jeddah to see Mr. Meniewy, the
Chief Legal Officer of SAUDIA. When she did, a
certain Khalid of the SAUDIA office brought her to a
Saudi court where she was asked to sign a document
written in Arabic. They told her that this was
necessary to close the case against Thamer and
Allah.As it turned out, plaintiff signed a notice to
49

her to appear before the court on June 27,


1993. Plaintiff then returned to Manila.
9. Shortly afterwards, defendant SAUDIA summoned
plaintiff to report to Jeddah once again and see
Miniewy
on
June
27,
1993
for
further
investigation. Plaintiff
did
so
after
receiving
assurance from SAUDIAs Manila manager, Aslam Saleemi,
that the investigation was routinary and that it
posed no danger to her.
10. In Jeddah, a SAUDIA legal officer brought
plaintiff to the same Saudi court on June 27,
1993. Nothing happened then but on June 28, 1993, a
Saudi
judge
interrogated
plaintiff
through
an
interpreter about the Jakarta incident. After one
hour of interrogation, they let her go. At the
airport, however, just as her plane was about to take
off, a SAUDIA officer told her that the airline had
forbidden her to take that flight. At the Inflight
Service Office where she was told to go, the
secretary of Mr. Yahya Saddick took away her passport
and told her to remain in Jeddah, at the crew
quarters, until further orders.
11. On July 3, 1993 a SAUDIA legal officer again
escorted plaintiff to the same court where the judge,
to her astonishment and shock, rendered a decision,
translated to her in English, sentencing her to five
months imprisonment and to 286 lashes. Only then did
she realize that the Saudi court had tried her,
together with Thamer and Allah, for what happened in
Jakarta. The court found plaintiff guilty of (1)
adultery; (2) going to a disco, dancing, and
listening to the music in violation of Islamic laws;
(3) socializing with the male crew, in contravention
of Islamic tradition.
12. Because SAUDIA refused to lend her a hand in the
case, plaintiff sought the help of the Philippine
Embassy in Jeddah. The latter helped her pursue an

appeal from the decision of the court. To pay for her


upkeep, she worked on the domestic flights of
defendant SAUDIA while, ironically, Thamer and Allah
freely served the international flights.[39]
Where the factual antecedents satisfactorily establish
the existence of a foreign element, we agree with petitioner
that the problem herein could present a conflicts case.
A factual situation that cuts across territorial lines
and is affected by the diverse laws of two or more states is
said to contain a foreign element. The presence of a foreign
element is inevitable since social and economic affairs of
individuals and associations are rarely confined to the
geographic limits of their birth or conception.[40]
The forms in which this foreign element may appear are
many.[41] The foreign element may simply consist in the fact
that one of the parties to a contract is an alien or has a
foreign domicile, or that a contract between nationals of
one State involves properties situated in another State. In
other cases, the foreign element may assume a complex form.
[42]

In the instant case, the foreign element consisted in


the fact that private respondent Morada is a resident
Philippine national, and that petitioner SAUDIA is a
resident foreign corporation. Also, by virtue of the
employment of Morada with the petitioner Saudia as a flight
stewardess, events did transpire during her many occasions
of travel across national borders, particularly from Manila,
Philippines to Jeddah, Saudi Arabia, and vice versa, that
caused a conflicts situation to arise.
We thus find private respondents assertion that the case
is purely domestic, imprecise. A conflicts problem presents
itself here, and the question of jurisdiction[43] confronts
the court a quo.
After a careful study of the private respondents Amended
Complaint,[44] and the Comment thereon, we note that she
aptly predicated her cause of action on Articles 19 and 21
of the New Civil Code.
50

On one hand, Article 19 of the New Civil Code provides;


Art. 19. Every person must, in the exercise of his
rights and in the performance of his duties, act with
justice give everyone his due and observe honesty and
good faith.
On the other hand, Article 21 of the New Civil Code
provides:
Art. 21. Any person who willfully causes loss or
injury to another in a manner that is contrary to
morals,
good
customs
or
public
policy
shall
compensate the latter for damages.
Thus, in Philippine National Bank (PNB) vs. Court of
Appeals,[45] this Court held that:
The aforecited provisions on human relations were
intended to expand the concept of torts in this
jurisdiction by granting adequate legal remedy for
the untold number of moral wrongs which is impossible
for human foresight to specifically provide in the
statutes.
Although Article 19 merely declares a principle of law,
Article 21 gives flesh to its provisions. Thus, we agree
with private respondents assertion that violations of
Articles 19 and 21 are actionable, with judicially
enforceable remedies in the municipal forum.
Based on the allegations[46] in the Amended Complaint,
read
in
the
light
of
the
Rules
of
Court
on
jurisdiction[47] we find that the Regional Trial Court (RTC)
of Quezon City possesses jurisdiction over the subject
matter of the suit.[48] Its authority to try and hear the
case is provided for under Section 1 of Republic Act No.
7691, to wit:
Section 1. Section 19 of Batas Pambansa Blg. 129,
otherwise known as the Judiciary Reorganization Act
of 1980, is hereby amended to read as follows:
SEC. 19. Jurisdiction in Civil Cases. Regional Trial Courts
shall exercise exclusive jurisdiction:
x x x x x x x x x

(8) In all other cases in which demand, exclusive of


interest, damages of whatever kind, attorneys fees,
litigation expenses, and costs or the value of the property
in
controversy
exceeds
One
hundred
thousand
pesos
(P100,000.00) or, in such other cases in Metro Manila, where
the demand, exclusive of the above-mentioned items exceeds
Two hundred Thousand pesos (P200,000.00). (Emphasis ours)
x x x x x x x x x
And following Section 2 (b), Rule 4 of the Revised Rules
of Courtthe venue, Quezon City, is appropriate:
SEC. 2 Venue in Courts of First Instance. [Now Regional
Trial Court]
(a) x x x x x x x x x
(b) Personal actions. All other actions may be
commenced and tried where the defendant or any of the
defendants resides or may be found, or where the
plaintiff or any of the plaintiff resides, at the
election of the plaintiff.
Pragmatic considerations, including the convenience of
the parties, also weigh heavily in favor of the RTC Quezon
City
assuming
jurisdiction. Paramount
is
the
private
interest of the litigant. Enforceability of a judgment if
one is obtained is quite obvious. Relative advantages and
obstacles to a fair trial are equally important. Plaintiff
may not, by choice of an inconvenient forum, vex, harass, or
oppress the defendant, e.g. by inflicting upon him needless
expense or disturbance. But unless the balance is strongly
in favor of the defendant, the plaintiffs choice of forum
should rarely be disturbed.[49]
Weighing the relative claims of the parties, the court a
quo found it best to hear the case in the Philippines. Had
it refused to take cognizance of the case, it would be
forcing plaintiff (private respondent now) to seek remedial
action elsewhere, i.e. in the Kingdom of Saudi Arabia where
she no longer maintains substantial connections. That would
have caused a fundamental unfairness to her.

51

Moreover, by hearing the case in the Philippines no


unnecessary difficulties and inconvenience have been shown
by either of the parties. The choice of forum of the
plaintiff (now private respondent) should be upheld.
Similarly, the trial court also possesses jurisdiction
over the persons of the parties herein. By filing her
Complaint and Amended Complaint with the trial court,
private respondent has voluntary submitted herself to the
jurisdiction of the court.
The records show that petitioner SAUDIA has filed
several motions[50] praying for the dismissal of Moradas
Amended Complaint. SAUDIA also filed an Answer In Ex
Abundante Cautelam dated February 20, 1995. What is very
patent and explicit from the motions filed, is that SAUDIA
prayed for other reliefs under the premises. Undeniably,
petitioner SAUDIA has effectively submitted to the trial
courts jurisdiction by praying for the dismissal of the
Amended
Complaint
on
grounds
other
than
lack
of
jurisdiction.
As held by this Court in Republic vs. Ker and Company,
Ltd.:[51]
We observe that the motion to dismiss filed on April
14, 1962, aside from disputing the lower courts
jurisdiction over defendants person, prayed for
dismissal of the complaint on the ground that
plaintiffs
cause
of
action
has
prescribed. By
interposing such second ground in its motion to
dismiss, Ker and Co., Ltd. availed of an affirmative
defense on the basis of which it prayed the court to
resolve controversy in its favor. For the court to
validly decide the said plea of defendant Ker & Co.,
Ltd., it necessarily had to acquire jurisdiction upon
the latters person, who, being the proponent of the
affirmative defense, should be deemed to have
abandoned its special appearance and voluntarily
submitted itself to the jurisdiction of the court.

Similarly, the case of De Midgely vs. Ferandos, held


that:
When the appearance is by motion for the purpose of
objecting to the jurisdiction of the court over the
person, it must be for the sole and separate purpose
of objecting to the jurisdiction of the court. If his
motion is for any other purpose than to object to the
jurisdiction of the court over his person, he thereby
submits himself to the jurisdiction of the court. A
special appearance by motion made for the purpose of
objecting to the jurisdiction of the court over the
person will be held to be a general appearance, if
the party in said motion should, for example, ask for
a dismissal of the action upon the further ground
that the court had no jurisdiction over the subject
matter.[52]
Clearly, petitioner had submitted to the jurisdiction of
the Regional Trial Court of Quezon City. Thus, we find that
the trial court has jurisdiction over the case and that its
exercise thereof, justified.
As to the choice of applicable law, we note that choiceof-law
problems
seek
to
answer
two
important
questions: (1) What legal system should control a given
situation where some of the significant facts occurred in
two or more states; and (2) to what extent should the chosen
legal system regulate the situation.[53]
Several theories have been propounded in order to
identify
the
legal
system
that
should
ultimately
control. Although ideally, all choice-of-law theories should
intrinsically
advance
both
notions
of
justice
and
predictability, they do not always do so. The forum is then
faced with the problem of deciding which of these two
important values should be stressed.[54]
Before a choice can be made, it is necessary for us to
determine under what category a certain set of facts or
rules fall. This process is known as characterization, or
the doctrine of qualification. It is the process of deciding
52

whether or not the facts relate to the kind of question


specified
in
a
conflicts
rule.[55] The
purpose
of characterization is to enable the forum to select the
proper law.[56]
Our starting point of analysis here is not a legal
relation, but a factual situation, event, or operative fact.
[57]
An essential element of conflict rules is the indication
of a test or connecting factor or point of contact. Choiceof-law rules invariably consist of a factual relationship
(such as property right, contract claim) and a connecting
factor or point of contact, such as the situs of the res,
the place of celebration, the place of performance, or the
place of wrongdoing.[58]
Note that one or more circumstances may be present to
serve as the possible test for the determination of the
applicable law.[59] These test factors or points of contact
or connecting factors could be any of the following:
(1) The nationality of a person, his domicile, his
residence, his place of sojourn, or his origin;
(2) the seat of a legal or juridical person, such as
a corporation;
(3) the situs of a thing, that is, the place where a
thing is, or is deemed to be situated. In particular,
the lex situs is decisive when real rights are
involved;
(4) the place where an act has been done, the locus
actus, such as the place where a contract has been
made, a marriage celebrated, a will signed or a tort
committed. The lex
loci
actus is
particularly
important in contracts and torts;
(5) the place where an act is intended to come into
effect, e.g., the place of performance of contractual
duties, or the place where a power of attorney is to
be exercised;
(6) the intention of the contracting parties as to
the law that should govern their agreement, the lex
loci intentionis;

(7) the place where judicial or administrative


proceedings are instituted or done. The lex forithe
law of the forumis particularly important because, as
we have seen earlier, matters of procedure not going
to the substance of the claim involved are governed
by it; and because the lex fori applies whenever the
content of the otherwise applicable foreign law is
excluded from application in a given case for the
reason that it falls under one of the exceptions to
the applications of foreign law; and
(8) the flag of a ship, which in many cases is
decisive of practically all legal relationships of
the ship and of its master or owner as such. It also
covers
contractual
relationships
particularly
contracts of affreightment.[60] (Underscoring ours.)
After a careful study of the pleadings on record,
including allegations in the Amended Complaint deemed
submitted for purposes of the motion to dismiss, we are
convinced that there is reasonable basis for private
respondents assertion that although she was already working
in Manila, petitioner brought her to Jeddah on the pretense
that she would merely testify in an investigation of the
charges she made against the two SAUDIA crew members for the
attack on her person while they were in Jakarta. As it
turned out, she was the one made to face trial for very
serious charges, including adultery and violation of Islamic
laws and tradition.
There is likewise logical basis on record for the claim
that the handing over or turning over of the person of
private respondent to Jeddah officials, petitioner may have
acted beyond its duties as employer. Petitioners purported
act contributed to and amplified or even proximately caused
additional humiliation, misery and suffering of private
respondent.Petitioner thereby allegedly facilitated the
arrest, detention and prosecution of private respondent
under the guise of petitioners authority as employer, taking
advantage of the trust, confidence and faith she reposed
53

upon it. As purportedly found by the Prince of Makkah, the


alleged conviction and imprisonment of private respondent
was wrongful. But these capped the injury or harm allegedly
inflicted upon her person and reputation, for which
petitioner
could
be
liable
as
claimed,
to
provide
compensation or redress for the wrongs done, once duly
proven.
Considering that the complaint in the court a quo is one
involving torts, the connecting factor or point of contact
could be the place or places where the tortious conduct
or lex loci actus occurred. And applying the torts principle
in a conflicts case, we find that the Philippines could be
said as a situs of the tort (the place where the alleged
tortious conduct took place). This is because it is in the
Philippines where petitioner allegedly deceived private
respondent, a Filipina residing and working here. According
to her, she had honestly believed that petitioner would, in
the exercise of its rights and in the performance of its
duties, act with justice, give her her due and observe
honesty and good faith. Instead, petitioner failed to
protect her, she claimed. That certain acts or parts of the
injury allegedly occurred in another country is of no
moment. For in our view what is important here is the place
where the over-all harm or the fatality of the alleged
injury to the person, reputation, social standing and human
rights of complainant, had lodged, according to the
plaintiff below (herein private respondent). All told, it is
not
without
basis
to
identify
the
Philippines
as
the situs of the alleged tort.
Moreover,
with
the
widespread
criticism
of
the
traditional rule of lex loci delicti commissi, modern
theories and rules on tort liability[61] have been advanced
to offer fresh judicial approaches to arrive at just
results. In keeping abreast with the modern theories on tort
liability, we find here an occasion to apply the State of
the most significant relationship rule, which in our view

should be appropriate to apply now, given the factual


context of this case.
In applying said principle to determine the State which
has the most significant relationship, the following
contacts are to be taken into account and evaluated
according to their relative importance with respect to the
particular issue: (a) the place where the injury occurred;
(b) the place where the conduct causing the injury occurred;
(c)
the
domicile,
residence,
nationality,
place
of
incorporation and place of business of the parties, and (d)
the place where the relationship, if any, between the
parties is centered.[62]
As already discussed, there is basis for the claim that
over-all
injury
occurred
and
lodged
in
the
Philippines. There is likewise no question that private
respondent is a resident Filipina national, working with
petitioner, a resident foreign corporation engaged here in
the business of international air carriage. Thus, the
relationship between the parties was centered here, although
it should be stressed that this suit is not based on mere
labor law violations. From the record, the claim that the
Philippines has the most significant contact with the matter
in
this
dispute,[63] raised
by
private
respondent
as
plaintiff below against defendant (herein petitioner), in
our view, has been properly established.
Prescinding from this premise that the Philippines is
the situs of the tort complaint of and the place having the
most interest in the problem, we find, by way of
recapitulation, that the Philippine law on tort liability
should have paramount application to and control in the
resolution of the legal issues arising out of this
case. Further, we hold that the respondent Regional Trial
Court has jurisdiction over the parties and the subject
matter of the complaint; the appropriate venue is in Quezon
City, which could properly apply Philippine law. Moreover,
we find untenable petitioners insistence that [s]ince
private respondent instituted this suit, she has the burden
54

of pleading and proving the applicable Saudi law on the


matter.[64] As aptly said by private respondent, she has no
obligation to plead and prove the law of the Kingdom of
Saudi Arabia since her cause of action is based on Articles
19 and 21 of the Civil Code of the Philippines. In her
Amended Complaint and subsequent pleadings she never alleged
that Saudi law should govern this case.[65] And as correctly
held by the respondent appellate court, considering that it
was the petitioner who was invoking the applicability of the
law of Saudi Arabia, thus the burden was on it [petitioner]
to plead and to establish what the law of Saudi Arabia is.

Annex A, PETITION, October 13, 1995, rollo, p. 36.


Annex A, SUPPLEMENTAL PETITION, April 30, 1996, rollo,
pp. 88-102.
[3]
Penned by Associate Justice Bernardo Ll. Salas, and
concurred in by Associate Justice Jorge S. Imperial and
Associate Justice Pacita Caizares-Nye.
[4]
Entitled Saudi Arabian Airlines vs. Hon. Judge Rodolfo A.
Ortiz, in his capacity as Presiding Judge of Branch 89 of
the Regional Trial Court of Quezon City and Milagros P.
Morada.
[5]
Issued by respondent Judge Hon. Rodolfo A. Ortiz of
Branch 89, Regional Trial Court of Quezon City.
[6]
Annex B, PETITION, October 13, 1995, rollo, pp. 37-39.
[7]
Annex B, PETITION, October 13, 1995, rollo, p. 40.
[8]
Entitled Milagros P. Morada vs. Saudi Arabian Airlines.
[9]
Supra, note 2.
[10]
Decision, pp. 2-4; See Rollo, pp. 89-91.
[11]
Private respondent's Comment; rollo, p. 50.
[12]
Ibid., at pp. 50-51.
[13]
Dated November 19, 1993 and docketed as Civil Case No.
Q-93-18394, Branch 89, Regional Trial Court of Quezon City.
[14]
Dated January 14, 1994.
[15]
Dated February 4, 1994.
[16]
Reply dated March 1, 1994.
[17]
Records, pp. 65-84.
[18]
Rollo, p. 65.
[19]
Supra, note 6.
[20]
Hon. Rodolfo A. Ortiz.
[21]
Dated September 19, 1994.
[22]
Records, pp. 108-116.
[23]
Records, pp. 117-128.
[24]
Supra, note 7.
[25]
Ibid.
[26]
Dated February 18, 1995; see supra note 4.
[1]
[2]

[66]

Lastly, no error could be imputed to the respondent


appellate court in upholding the trial courts denial of
defendants (herein petitioners) motion to dismiss the
case. Not only was jurisdiction in order and venue properly
laid, but appeal after trial was obviously available, and
the expeditious trial itself indicated by the nature of the
case at hand.Indubitably, the Philippines is the state
intimately concerned with the ultimate outcome of the case
below not just for the benefit of all the litigants, but
also for the vindication of the countrys system of law and
justice in a transnational setting. With these guidelines in
mind, the trial court must proceed to try and adjudge the
case in the light of relevant Philippine law, with due
consideration
of
the
foreign
element
or
elements
involved. Nothing said herein, of course, should be
construed as prejudging the results of the case in any
manner whatsoever.
WHEREFORE, the instant petition for certiorari is hereby
DISMISSED. Civil Case No. Q-93-18394 entitled Milagros P.
Morada vs. Saudi Arabia Airlines is hereby REMANDED to
Regional Trial Court of Quezon City, Branch 89 for further
proceedings.
SO ORDERED.
Davide,
Jr.,
(Chairman),
Bellosillo,
Vitug, and Panganiban, JJ., concur.
55

Supra, note 7.
Records, p. 180.
[29]
Rollo, pp. 1-44.
[30]
Supra, note 2.
[31]
Rollo, pp. 80-86.
[32]
Memorandum for Petitioner dated October 9, 1996; rollo,
pp. 149-180; and Memorandum for Private Respondent, 30
October 1996, rollo, pp. 182-210.
[33]
Rollo, pp. 157-159. All caps in the original.
[34]
Memorandum for Petitioner, p. 14, rollo, p. 162;.
[35]
Art. 19. Every person must, in the exercise of his
rights and in the performance of his duties, act with
justice, give everyone his due, and observe honesty and good
faith.
[36]
Art. 21. Any person who wilfully causes loss or injury
to another in a manner that is contrary to morals, good
customs or public policy shall compensate the latter for the
damages.
[37]
Memorandum for Private Respondent, p. 9, rollo, p. 190.
[38]
Records, pp. 65-71.
[39]
Supra, note 17, at pp. 65-68.
[40]
Salonga, Private International Law, 1995 edition, p. 3.
[41]
Ibid., citing Cheshire and North, Private International
Law, p. 5 by P.M. North and J.J. Faucett (Butterworths;
London, 1992).
[42]
Ibid.
[43]
Paras, Philippine
Conflict
of
Laws,
sixth
edition
(1984), p. 24, citing Leflar, The Law of Conflict of
Laws, pp. 5-6.
[44]
Supra, note 17.
[45]
83 SCRA 237, 247.
[46]
Supra, note at 17, at p. 6. Morada prays that judgment
be rendered against Saudia, ordering it to pay: (1) not less
than P250,000.00 as actual damages; (2) P4 million in moral
damages;
(3) P500,000.00
in
exemplary
damages;
and
(4) P500,000.00 in attorneys fees.
[47]
Baguioro v. Barrios, 77 Phil. 120.

Jurisdiction over the subject matter is conferred by law


and is defined as the authority of a court to hear and
decide cases of the general class to which the proceedings
in question belong. (Reyes v. Diaz, 73 Phil. 484,487)
[49]
Supra, note
37,
p.
58,
citing
Gulf
Oil
Corporation v. Gilbert, 350 U.S. 501, 67 Sup. Ct. 839
(1947).
[50]
Omnibus Motion to Dismiss dated January 14, 1994; Reply
(to Plaintiffs Opposition) dated February 19, 1994; Comment
(to Plaintiffs Motion to Admit Amended Complaint dated June
23, 1994) dated July 20, 1994; Manifestation and Motion to
Dismiss Amended Complaint dated June 23, 1994 under date
August 11, 1994; and Motion for Reconsideration dated
September 19, 1994.
[51]
18 SCRA 207, 213-214.
[52]
64 SCRA 23, 31.
[53]
Coquia and Pangalangan, Conflict of Laws, 1995 edition,
p. 65, citing Von Mehren, Recent Trends in Choice-of-Law
Methodology, 60 Cornell L. Rev. 927 (1975).
[54]
Ibid.
[55]
Supra, note 40 at p. 94, citing Falconbridge, Essays on
the Conflict of Laws, p. 50.
[56]
Ibid.
[57]
Supra, note 37, at p. 136; cf. Mussbaum, Principle of
Private International Law, p. 173; and Rabel, The Conflict
of Laws: A Comparative Study, pp. 51-52.
[58]
Supra, note 37, at p. 137.
[59]
Ibid.
[60]
Supra, note 37, at pp. 138-139.
[61]
Includes the (1) German rule of elective concurrence;
(2) State of the most significant relationship rule (the
Second Restatement of 1969); (3) State interest analysis;
and (4) Cavers Principle of Preference.
[62]
Supra, note 37, p. 396.
[63]
Supra, note 59, at p. 79, citing Ruben v. Irving Trust
Co., 305 N.Y. 288, 305, 113 N.E. 2d 424, 431.
[64]
Memorandum for Petitioner, p. 22; Rollo, p. 170.

[27]

[48]

[28]

56

Memorandum for Private Respondent, pp. 21-22; rollo, pp.


202-203.
[66]
CA Decision, p. 10; rollo, p. 97.

any loss or damage resulting from bodily injury to, or the


death of any person being carried in * * * the motor
vehicle" (Highway Traffic Act of Province of Ontario
[Ontario Rev. Stat. (1960), ch. 172], 105, subd. [2]). Even
though no such bar is recognized under this State's
substantive law of torts (see, e.g., Higgins v. Mason, 255
N. Y. 104, 108; Nelson v. Nygren, 259 N. Y. 71), the
defendant moved to dismiss the complaint on the ground that
the law of the place where the accident occurred governs and
that Ontario's guest statute bars recovery. The court at
Special Term, agreeing with the defendant, granted the
motion and the Appellate Division, over a strong dissent by
Justice Halpern, affirmed the judgment of dismissal without
opinion.
The question presented is simply drawn. Shall the law of
the place of the tort [2] invariably govern the availability
of relief for the tort or shall the applicable choice of law
rule also reflect a consideration of other factors which are
relevant to the purposes served by the enforcement or denial
of the remedy?
The traditional choice of law rule, embodied in the
original Restatement of Conflict of Laws ( 384), and until
recently unquestioningly followed in this court (see,
e.g., Poplar v. Bourjois, Inc., 298 N. Y. 62, 66; Kaufman
v. American Youth Hostels, 5 N Y 2d 1016,modfg. 6 A D 2d
223), has been that the substantive rights and liabilities
arising out of a tortious occurrence are determinable by the
law of the place of the tort. (See Goodrich, Conflict of
Laws [3d ed., 1949], p. 260; Leflar, The Law of Conflict of
Laws [1959], p. 207; Stumberg, Principles of Conflict of
Laws [2d ed., 1951], p. 182.) It had its conceptual
foundation in the vested rights doctrine, namely, that a
right to recover for a foreign tort owes its creation to the
law of the [*478] jurisdiction where the injury occurred and
depends for its existence and extent solely on such law.
(See Hancock, Torts in the Conflict of Laws [1942], pp. 3036; Reese, The Ever Changing Rules of Choice of Law,

[65]

Georgia
W.
v
Mabel B. Jackson, as
Deceased, Respondent.

Babcock,
Executrix

Court
of
Appeals
Argued
January
Decided May 9, 1963
12
NY2d
CITE TITLE AS: Babcock v Jackson

of

Appellant,
William

of

New
23,

H.

Jackson,
York
1963
473

[*476] OPINION OF THE COURT


FULD, J.
On Friday, September 16, 1960, Miss Georgia Babcock and
her friends, Mr. and Mrs. William Jackson, all residents of
Rochester, left that city in Mr. Jackson's automobile, Miss
Babcock as guest, for a week-end trip to Canada. Some hours
later, as Mr. Jackson was driving in the Province of
Ontario, he apparently lost control of the car; it went off
the highway into an adjacent stone wall, and Miss Babcock
was seriously injured. Upon her return to this State, she
brought [*477] the present action against William Jackson,
alleging
negligence
on
his
part
in
operating
his
automobile. [1]
At the time of the accident, there was in force in
Ontario a statute providing that "the owner or driver of a
motor vehicle, other than a vehicle operated in the business
of carrying passengers for compensation, is not liable for
57

Nederlands Tijdschrift Voor Internationaal Recht [1962],


389.) Although espoused by such great figures as Justice
Holmes (see Slater v. Mexican Nat. R. R. Co., 194 U. S. 120)
and Professor Beale (2 Conflict of Laws [1935], pp. 12861292), the vested rights doctrine has long since been
discredited because it fails to take account of underlying
policy considerations in evaluating the significance to be
ascribed to the circumstance that an act had a foreign situs
in determining the rights and liabilities which arise out of
that act. [3]"The vice of the vested rights theory", it has
been aptly stated, "is that it affects to decide concrete
cases upon generalities which do not state the practical
considerations involved". (Yntema, The Hornbook Method and
the Conflict of Laws, 37 Yale L. J. 468, 482-483.) More
particularly, as applied to torts, the theory ignores the
interest which jurisdictions other than that where the tort
occurred may have in the resolution of particular issues. It
is for this very reason that, despite the advantages of
certainty, ease of application and predictability which it
affords (see Cheatham and Reese, Choice of the Applicable
Law, 52 Col. L. Rev. 959, 976), there has in recent years
been increasing criticism of the traditional rule by
commentators [4]and a judicial trend towards its abandonment
or modification. [5][*479]
Significantly,
it
was
dissatisfaction
with
"the
mechanical formulae of the conflicts of law" (Vanston
Committee v. Green, 329 U. S. 156, 162) which led to
judicial departure from similarly inflexible choice of law
rules in the field of contracts, grounded, like the torts
rule, on the vested rights doctrine. According to those
traditional rules, matters bearing upon the execution,
interpretation and validity of a contract were determinable
by the internal law of the place where the contract was
made, while matters connected with their performance were
regulated by the internal law of the place where the
contract was to be performed. (See Swift & Co. v. Bankers
Trust Co., 280 N. Y. 135, 141; see, also, Restatement,

Conflict of Laws, 332, 358; Goodrich, Conflict of Laws


[3d ed., 1949], pp. 342-343.)
In Auten v. Auten (308 N. Y. 155), however, this court
abandoned such rules and applied what has been termed the
"center of gravity" or "grouping of contacts" theory of the
conflict of laws. "Under this theory," we declared in
the Auten case, "the courts, instead of regarding as
conclusive the parties' intention or the place of making or
performance, lay emphasis rather upon the law of the place
'which has the most significant contacts with the matter in
dispute' " (308 N. Y., at p. 160). The "center of gravity"
rule of Auten has not only been applied in other cases in
this State, [6]as well as in other jurisdictions, [7]but has
supplanted the prior rigid and set contract rules in the
most current draft of the Restatement of Conflict of Laws.
(See Restatement, Second, Conflict of Laws, 332b
[Tentative Draft No. 6, 1960].)
Realization of the unjust and anomalous results which
may ensue from application of the traditional rule in tort
cases has also prompted judicial search for a more
satisfactory alternative in that area. In the much discussed
case of Kilberg v. Northeast Airlines (9 N Y 2d 34), this
court declined to apply the law of the place of the tort as
respects the issue of the quantum of the recovery in a death
action arising out of an airplane crash, [*480] where the
decedent had been a New York resident and his relationship
with the defendant airline had originated in this State. In
his opinion for the court, Chief Judge Desmond described,
with force and logic, the shortcomings of the traditional
rule (9 N Y 2d, at p. 39):
"Modern conditions make it unjust and anomalous to subject
the traveling citizen of this State to the varying laws of
other States through and over which they move. * * * An air
traveler from New York may in a flight of a few hours'
duration pass through * * * commonwealths [limiting death
damage awards]. His plane may meet with disaster in a State
he never intended to cross but into which the plane has
58

flown
because
of
bad
weather
or
other
unexpected
developments, or an airplane's catastrophic descent may
begin in one State and end in another. The place of injury
becomes entirely fortuitous. Our courts should if possible
provide protection for our own State's people against unfair
and anachronistic treatment of the lawsuits which result
from these disasters."
The emphasis in Kilberg was plainly that the merely
fortuitous circumstance that the wrong and injury occurred
in Massachusetts did not give that State a controlling
concern or interest in the amount of the tort recovery as
against the competing interest of New York in providing its
residents or users of transportation facilities there
originating with full compensation for wrongful death.
Although the Kilberg case did not expressly adopt the
"center of gravity" theory, its weighing of the contacts or
interests of the respective jurisdictions to determine their
bearing on the issue of the extent of the recovery is
consistent with that approach. (See Leflar, Conflict of
Laws, 1961 Ann. Sur. Amer. Law, 29, 45.)
The same judicial disposition is also reflected in a
variety of other decisions, some of recent date, others of
earlier
origin,
relating
to
workmen's
compensation,
[8]
tortious
occurrences
aristing [*481] out
of
a
[9]
contract,
issues affecting the survival of a tort right of
action [10]and
intrafamilial
immunity
from
tort [11]and
situations involving a form of statutory liability. [12]These
numerous cases differ in many ways but they are all similar
in two important respects. First, by one rationale or
another, they rejected the inexorable application of the law
of the place of the tort where that place has no reasonable
or relevant interest in the particular issue involved. And,
second, in each of these cases the courts, after examining
the particular circumstances presented, applied the law of
some jurisdiction other than the place of the tort because
it had a more compelling interest in the application of its
law to the legal issue involved.

The "center of gravity" or "grouping of contacts"


doctrine adopted by this court in conflicts cases involving
contracts impresses us as likewise affording the appropriate
approach for accommodating the competing interests in tort
cases with multi-State contacts. Justice, fairness and "the
best practical result" (Swift & Co. v. Bankers Trust
Co., 280 N. Y. 135, 141, supra) may best be achieved by
giving controlling effect to the law of the jurisdiction
which, because of its relationship or contact with the
occurrence or the parties, has the greatest concern with the
specific issue raised in the litigation. The merit of such a
rule is that "it gives to the place 'having the most
interest in the problem' paramount control over the legal
issues arising out of a particular factual context" and
thereby allows the forum to apply "the policy of the
jurisdiction 'most [*482] intimately concerned with the
outcome of [the] particular litigation.' " (Auten v.
Auten, 308 N. Y. 155, 161, supra.)
Such, indeed, is the approach adopted in the most recent
revision of the Conflict of Laws Restatement in the field of
torts. According to the principles there set out, "The local
law of the state which has the most significant relationship
with the occurrence and with the parties determines their
rights and liabilities in tort" (Restatement, Second,
Conflict of Laws, 379[1]; also Introductory Note to Topic
1 of Chapter 9, p. 3 [Tentative Draft No. 8, 1963]), and the
relative importance of the relationships or contacts of the
respective jurisdictions is to be evaluated in the light of
"the issues, the character of the tort and the relevant
purposes of the tort rules involved" ( 379[2], [3]).
Comparison of the relative "contacts" and "interests" of
New York and Ontario in this litigation, vis-a-vis the issue
here presented, makes it clear that the concern of New York
is unquestionably the greater and more direct and that the
interest of Ontario is at best minimal. The present action
involves injuries sustained by a New York guest as the
result of the negligence of a New York host in the operation
59

of an automobile, garaged, licensed and undoubtedly insured


in New York, in the course of a week-end journey which began
and was to end there. In sharp contrast, Ontario's sole
relationship with the occurrence is the purely adventitious
circumstance that the accident occurred there.
New York's policy of requiring a tort-feasor to
compensate his guest for injuries caused by his negligence
cannot be doubted as attested by the fact that the
Legislature of this State has repeatedly refused to enact a
statute denying or limiting recovery in such cases (see,
e.g., 1930 Sen. Int. No. 339, Pr. No. 349; 1935 Sen. Int.
No. 168, Pr. No. 170; 1960 Sen. Int. No. 3662, Pr. No. 3967)
and our courts have neither reason nor warrant for
departing from that policy simply because the accident,
solely affecting New York residents and arising out of the
operation of a New York based automobile, happened beyond
its borders. Per contra, Ontario has no conceivable interest
in denying a remedy to a New York guest against his New York
host for injuries suffered in Ontario by reason of conduct
which was tortious under Ontario law. The object of
Ontario's guest statute, it has been said, is "to prevent
the fraudulent assertion [*483] of claims by passengers, in
collusion with the drivers, against insurance companies"
(Survey of Canadian Legislation, 1 U. Toronto L. J. 358,
366) and, quite obviously, the fraudulent claims intended to
be prevented by the statute are those asserted against
Ontario defendants and their insurance carriers, not New
York defendants and their insurance carriers. Whether New
York defendants are imposed upon or their insurers defrauded
by a New York plaintiff is scarcely a valid legislative
concern of Ontario simply because the accident occurred
there, any more so than if the accident had happened in some
other jurisdiction.
It is hardly necessary to say that Ontario's interest is
quite different from what it would have been had the issue
related to the manner in which the defendant had been
driving his car at the time of the accident. Where the

defendant's exercise of due care in the operation of his


automobile is in issue, the jurisdiction in which the
allegedly wrongful conduct occurred will usually have a
predominant, if not exclusive, concern. In such a case, it
is appropriate to look to the law of the place of the tort
so as to give effect to that jurisdiction's interest in
regulating conduct within its borders, and it would be
almost unthinkable to seek the applicable rule in the law of
some other place.
The issue here, however, is not whether the defendant
offended against a rule of the road prescribed by Ontario
for motorists generally or whether he violated some standard
of conduct imposed by that jurisdiction, but rather whether
the plaintiff, because she was a guest in the defendant's
automobile, is barred from recovering damages for a wrong
concededly committed. As to that issue, it is New York, the
place where the parties resided, where their guest- host
relationship arose and where the trip began and was to end,
rather than Ontario, the place of the fortuitous occurrence
of the accident, which has the dominant contacts and the
superior claim for application of its law. Although the
rightness or wrongness of defendant's conduct may depend
upon the law of the particular jurisdiction through which
the automobile passes, the rights and liabilities of the
parties which stem from their guest-host relationship should
remain constant and not vary and shift as the automobile
proceeds from place to place. Indeed, such a result, we
note, [*484] accords with "the interests of the host in
procuring liability insurance adequate under the applicable
law, and the interests of his insurer in reasonable
calculability of the premium." (Ehrenzweig, Guest Statutes
in the Conflict of Laws, 69 Yale L. J. 595, 603.)
Although the traditional rule has in the past been
applied by this court in giving controlling effect to the
guest statute of the foreign jurisdiction in which the
accident occurred (see, e.g., Smith v. Clute, 277 N. Y.
407; Kerfoot
v.
Kelley, 294
N.
Y.
288; Naphtali
v.
60

Lafazan, 8 N Y 2d 1097, affg. 8 A D 2d 22), it is not amiss


to point out that the question here posed was neither raised
nor considered in those cases and that the question has
never been presented in so stark a manner as in the case
before us with a statute so unique as Ontario's. [13]Be that
as it may, however, reconsideration of the inflexible
traditional rule persuades us, as already indicated, that,
in
failing
to
take
into
account
essential
policy
considerations and objectives, its application may lead to
unjust and anomalous results. This being so, the rule,
formulated as it was by the courts, should be discarded.
(Cf. Bing v. Thunig, 2 N Y 2d 656, 667; Woods v. Lancet, 303
N. Y. 349, 355.) [14]
In conclusion, then, there is no reason why all issues
arising out of a tort claim must be resolved by reference to
the law of the same jurisdiction. Where the issue involves
standards of conduct, it is more than likely that it is the
law of the place of the tort which will be controlling but
the disposition of other issues must turn, as does the issue
of the standard of conduct itself, on the law of the
jurisdiction which has the strongest interest in the
resolution of the particular issue presented. [*485]
The judgment appealed from should be reversed, with
costs, and the motion to dismiss the complaint denied.

that defense from the answer, based upon Oregon law.


Concerning, as it did, solely the status of the defendant
corporation, Kaufman v. American Youth Hostelspresented a
stronger case for the application of New York law than does
the present. The case of Auten v. Auten (308 N. Y. 155),
involving a separation agreement between English people and
providing for the support of a wife and children to continue
to live in England, accomplished no such revolution in the
law as the present appeal. Auten v. Auten dealt with
contracts, the agreement was held to be governed by the law
of the country where it was mainly to be performed, which
had previously been the law, and the salient expressions
"center of gravity", "grouping of contacts", and similar
catchwords were employed as a shorthand reference to the
reconciliation of such rigid concepts in the conflict of
laws as the formulae making applicable the place where the
contract was signed or where it was to be performed rules
which themselves were occasionally in conflict with one
another. In the course of the opinion it was stated that
"even if we were not to place our emphasis on the law of the
place with the most significant contacts, but were instead
simply to apply the rule that matters of performance and
breach are governed by the law of the place of performance,
the same result would follow" (308 N. Y., p. 163). The
decision in Auten v. Auten rationalized and rendered more
workable the existing law of contracts. The name "grouping
of
contacts"
was
simply
a
label
to
identify
the
rationalization of existing decisions on the conflict of
laws
in [*486]contract
cases
which
were
technically
inconsistent, in some instances. The difference between the
present case and Auten v. Auten is that Auten did not
materially change the law, but sought to formulate what had
previously been decided. The present case makes substantial
changes in the law of torts. The expressions "center of
gravity", "grouping of contacts," and "significant contacts"
are catchwords which were not employed to define and are

VAN VOORHIS, J. (Dissenting).


The decision about to be made of this appeal changes the
established law of this State, one of the most recent
decisions the other way being Kaufman v. American Youth
Hostels (5 N Y 2d 1016), where all of the "significant
contacts" were with New York State except the mountain which
plaintiff's intestate was climbing when she met her death.
The defense of immunity of a charitable corporation under
the
Oregon
law,
where
the
accident
occurred,
was
inapplicable under the law of New York where the defendant
corporation was organized and staffed, and plaintiff and his
intestate resided. Nevertheless the court declined to strike
61

inadequate to define a principle of law, and were neither


applied to nor are they applicable in the realm of torts.
Any idea is without foundation that cases such as the
present render more uniform the laws of torts in the several
States of the United States. Attempts to make the law or
public policy of New York State prevail over the laws and
policies of other States where citizens of New York State
are concerned are simply a form of extraterritoriality which
can be turned against us wherever actions are brought in the
courts of New York which involve citizens of other States.
This is no substitute for uniform State laws or for
obtaining uniformity by covering the subject by Federal law.
Undoubtedly ease of travel and communication, and the
increase in interstate business have rendered more awkward
discrepancies between the laws of the States in many
respects. But this is not a condition to be cured by
introducing or extending principles of extraterritoriality,
as though we were living in the days of the Roman or British
Empire, when the concepts were formed that the rights of a
Roman or an Englishman were so significant that they must be
enforced throughout the world even where they were otherwise
unlikely to be honored by "lesser breeds without the law."
Importing the principles of extraterritoriality into the
conflicts of laws between the States of the United States
can
only
make
confusion
worse
confounded.
If
extraterritoriality is to be the criterion, what would
happen, for example, in case of an automobile accident where
some of the passengers came from or were picked up in States
or countries where causes of action against the driver were
prohibited, others where gross negligence needed to be
shown, some, perhaps, from States where contributory
negligence
and
others
where
comparative
negligence
prevailed? In the majority opinion it is said that "Where
the defendant's exercise of due care in the operation of his
automobile is in issue, the jurisdiction in which the
allegedly wrongful conduct occurred [*487] will usually have
a predominant, if not exclusive, concern." This is hardly

consistent with the statement in the footnote that gross


negligence would not need to be established in an action by
a passenger if the accident occurred in a State whose
statute so required. If the status of the passenger as a New
Yorker would prevent the operation of a statute in a sister
State or neighboring country which granted immunity to the
driver in suits by passengers, it is said that it would also
prevent the operation of a statute which instead of granting
immunity permits recovery only in case of gross negligence.
There are passenger statutes or common-law decisions
requiring gross negligence or its substantial equivalent to
be shown in 29 States. One wonders what would happen if
contributory negligence were eliminated as a defense by
statute
in
another
jurisdiction?
Or
if
comparative
negligence were established as the rule in the other State?
In my view there is no overriding consideration of
public policy which justifies or directs this change in the
established rule or renders necessary or advisable the
confusion which such a change will introduce.
The
judgment
dismissing
the
complaint
should
be
affirmed.
Chief Judge Desmond and Judges Dye, Burke and Foster
concur with Judge Fuld; Judge Van Voorhis dissents in an
opinion in which Judge Scileppi concurs.
Judgment reversed, with costs in all courts, and matter
remitted to Special Term for further proceedings in
accordance with the opinion herein.
Footnotes
Footnote 1: Jackson having died after the commencement
of the suit, his executrix was substituted in his place as
defendant.
Footnote 2: In this case, as in nearly all such cases,
the conduct causing injury and the injury itself occurred in
the same jurisdiction. The phrase "place of the tort," as
distinguished from "place of wrong" and "place of injury,"
is used herein to designate the place where both the wrong
and the injury took place.
62

Footnote 3: See Cavers, A Critique of the Choice-of-Law


Problem, 47 Harv. L. Rev. 173, 178; Cheatham, American
Theories of Conflict of Laws: Their Role and Utility, 58
Harv. L. Rev. 361, 379-385; Cook, The Logical and Legal
Bases of the Conflict of Laws, 33 Yale L. J. 457, 479 et
seq.; Hill, Governmental Interest and the Conflict of Laws,
27 U. Chi. L. Rev. 463; Lorenzen, Territoriality, Public
Policy and the Conflict of Laws, 33 Yale L. J. 736, 746-749;
Yntema, The Hornbook Method and the Conflict of Laws, 37
Yale L. J. 468, 474 et seq.
Footnote 4: See Dicey, Conflict of Laws (7th ed., 1958),
p. 937 et seq.; Leflar, The Law of Conflict of Laws (1959),
p. 217 et seq.; Stumberg, Principles of Conflict of Laws (2d
ed., 1951), p. 201 et seq.; Morris, The Proper Law of a
Tort, 64 Harv. L. Rev. 881; Ehrenzweig, Guest Statutes in
the Conflict of Laws, 69 Yale L. J. 595; Currie, Survival of
Actions: Adjudication versus Automation in the Conflict of
Laws, 10 Stan. L. Rev. 205.
Footnote 5: See, e.g., Richards v. United States, 369 U.
S. 1, 12-13; Grant v. McAuliffe, 41 Cal. 2d 859; Schmidt v.
Driscoll Hotel, 249 Minn. 376; Haumschild v. Continental
Cas. Co., 7 Wis. 2d 130.
Footnote 6: See, e.g., Haag v. Barnes, 9 N Y 2d
554; Zogg v. Penn Mut. Life Ins. Co., 276 F. 2d 861 (2d
Cir.).
Footnote
7: See,
e.g., Jansson
v.
Swedish
Amer.
Line, 185 F. 2d 212, 218-219; Barber Co. v. Hughes, 223 Ind.
570, 586; Kievit v. Loyal Protective Life Ins. Co., 34 N. J.
475, 491-493; Estate of Knippel, 7 Wis. 2d 335, 343-345.
Footnote
8: See,
e.g., Alaska
Packers
Assn.
v.
Industrial Acc. Comm., 294 U. S. 532; Matter of Nashko v.
Standard Water Proofing Co., 4 N Y 2d 199;Kennerson v.
Thames Towboat Co., 89 Conn. 367; Pierce v. Bekins Van &
Stor. Co., 185 Ia. 1346; Aleckson v. Kennedy Motor Sales
Co., 238
Minn.
110; see, also,
2
Larson,
Workmen's
Compensation Law, 84.

Footnote 9: See Dyke v. Erie Ry. Co., 45 N. Y.


113; see, also, Bowles v. Zimmer Mfg. Co., 277 F. 2d 868
(breach of warranty).
Footnote
10: See Grant
v.
McAuliffe,
41
Cal.
2d
859, supra; Herzog v. Stern, 264 N. Y. 379; see, also,
Currie, Survival of Actions: Adjudication versus Automation
in the Conflict of Laws, 10 Stan. L. Rev. 205.
Footnote 11: See Emery v. Emery, 45 Cal. 2d 421; Koplik
v. C. P. Trucking Corp., 27 N. J. 1; Mertz v. Mertz, 271 N.
Y. 466; Haumschild v. Continental Cas. Co., 7 Wis. 2d
130, supra; see, also, Ehrenzweig, Parental Immunity in the
Conflict of Laws, 23 U. Chi. L. Rev. 474; Ford, Interspousal
Liability for Automobile Accidents in the Conflict of Laws,
15 U. Pitt. L. Rev. 397. But cf. Coster v. Coster, 289 N. Y.
438.
Footnote 12: See Schmidt v. Driscoll Hotel, 249 Minn.
376, supra; Osborn v. Borchetta, 20 Conn. S. 163; Levy v.
Daniels' U-Drive Auto Renting Co., 108 Conn. 333. See,
also, Daily v. Somberg, 28 N. J. 372 (effect of release to
one of several parties jointly liable for plaintiff's
injury).
Footnote 13: We note that the Supreme Court of Canada
has upheld the refusal of the Quebec courts to apply the
Ontario guest statute to an accident affecting Quebec
residents which occurred in Ontario. (See McLean v.
Pettigrew, [1945] 2 D. L. R. 65.) This decision was dictated
by the court's resort to the English choice of law rule,
whereby the foreign tort is deemed actionable if actionable
by the law of the forum and not justifiable by the law of
the place of the tort. (See Phillips v. Eyre, [1870] L. R. 6
Q. B. 1, 28-29; see, also, Dicey, Conflict of Laws [7th ed.,
1958], p. 940.) However that may be, it would seem
incongruous for this court to apply Ontario's unique statute
in circumstances under which its own sister Provinces would
not.
Footnote 14: It of course follows from our decision
herein that, given the facts of the present case, the result
63

would be the same and the law of New York applied where the
foreign
guest
statute
requires
a
showing
of
gross
negligence.
United States Supreme Court
ALLSTATE INS. CO. v. HAGUE, (1981)
No. 79-938
Argued: October 6, 1980
Decided: January 13, 1981

disallow stacking, concluded that Minnesota's choice-of-law


rules required the application of Minnesota law permitting
stacking, and granted summary judgment for respondent. The
Minnesota Supreme Court affirmed.

Respondent's husband died of injuries suffered when a


motorcycle on which he was a passenger was struck by an
automobile. The accident occurred in Wisconsin near the
Minnesota border. The operators of both vehicles were
Wisconsin residents, as was the decedent, who, however, had
been employed in Minnesota and had commuted daily to work
from Wisconsin. Neither vehicle operator carried valid
insurance, but the decedent held a policy issued by
petitioner covering three automobiles owned by him and
containing an uninsured motorist clause insuring him against
loss incurred from accidents with uninsured motorists, but
limiting such coverage to $15,000 for each automobile. After
the accident, respondent moved to and became a resident of
Minnesota, and was subsequently appointed in that State as
personal representative of her husband's estate. She then
brought an action in a Minnesota court seeking a declaration
under Minnesota law that the $15,000 uninsured motorist
coverage on each of her late husband's three automobiles
could be "stacked" to provide total coverage of $45,000.
Petitioner defended on the ground that whether the three
uninsured motorist coverages could be stacked should be
determined by Wisconsin law, since the insurance policy was
delivered in Wisconsin, the accident occurred there, and all
persons involved were Wisconsin residents at the time of the
accident. The trial court, interpreting Wisconsin law to

The judgment is affirmed. Pp. 307-320; 322-331.

Held:

289 N. W. 2d 43, affirmed.


JUSTICE BRENNAN, joined by JUSTICE WHITE, JUSTICE MARSHALL,
and JUSTICE BLACKMUN, concluded that Minnesota has a
significant aggregation of contacts with the parties and the
occurrence, creating state interests, such that application
of its law is neither arbitrary nor fundamentally unfair,
and, accordingly, the choice of law by the Minnesota Supreme
Court does not violate the Due Process Clause of the
Fourteenth Amendment or the Full Faith and Credit Clause.
Pp. 307-320. [449 U.S. 302, 303]
(a) Respondent's decedent was a member of Minnesota's work
force.
The
State
of
employment
has
police
power
responsibilities towards nonresident employees that are
analogous to those it has towards residents, as such
employees use state services and amenities and may call upon
state facilities in appropriate circumstances. Also, the
State's interest in its commuting nonresident employees,
such as respondent's decedent, reflects a state concern for
the safety and well-being of its work force and the
concomitant effect on Minnesota employers. That the decedent
was not killed while commuting to work or while in Minnesota
does not dictate a different result, since vindication of
the rights of the estate of a Minnesota employee is an
important state concern. Nor does the decedent's residence
in
Wisconsin
constitutionally
mandate
application
of
Wisconsin law to the exclusion of forum law. Employment
64

status is not a sufficiently less important status than


residence, when combined with the decedent's daily commute
across state lines and the other Minnesota contacts present,
to prohibit the choice-of-law result in this case on
constitutional grounds. Pp. 313-317.
(b) Petitioner was at all times present and doing business
in Minnesota. By virtue of such presence, petitioner can
hardly claim unfamiliarity with the laws of the host
jurisdiction and surprise that the state courts might apply
forum law to litigation in which the company is involved.
Moreover, such presence gave Minnesota an interest in
regulating the company's insurance obligations insofar as
they affected both a Minnesota resident and court-appointed
representative (respondent) and a longstanding member of
Minnesota's work force (respondent's decedent). Pp. 317-318.
(c) Respondent became a Minnesota resident prior to
institution of the instant litigation. Such residence and
subsequent
appointment
in
Minnesota
as
personal
representative of her late husband's estate constitute a
Minnesota contact which gives Minnesota an interest in
respondent's recovery. Pp. 318-319.
JUSTICE STEVENS concluded:
1. The Full Faith and Credit Clause did not require
Minnesota, the forum State, to apply Wisconsin law to the
contract-interpretation question presented. Although the
Minnesota courts' decision to apply Minnesota law was
unsound as a matter of conflicts law, no threat to
Wisconsin's sovereignty ensued from allowing the substantive
question as to the meaning of the insurance contract to be
determined by the law of another State. Pp. 322-326.
2. The Due Process Clause of the Fourteenth Amendment did
not prevent Minnesota from applying its own law. Neither the
"stacking" rule itself nor Minnesota's application of it to
these litigants raised any [449 U.S. 302, 304]
serious
question of fairness. Nor did the Minnesota courts' decision
to apply this rule violate due process because that decision
frustrated the contracting parties' reasonable expectations.

The decision was consistent with due process because it did


not result in unfairness to either litigant, not because
Minnesota had an interest in the plaintiff as resident or
the decedent as employee. Pp. 326-331.
BRENNAN, J., announced the judgment of the Court and
delivered an opinion, in which WHITE, MARSHALL, and
BLACKMUN, JJ., joined. STEVENS, J., filed an opinion
concurring in the judgment, post, p. 320. POWELL, J., filed
a dissenting opinion, in which BURGER, C. J., and REHNQUIST,
J., joined, post, p. 332. STEWART, J., took no part in the
consideration or decision of the case.
Mark M. Nolan
petitioner.

argued

the

cause

and

filed

brief

for

Andreas F. Lowenfeld argued the cause for respondent. With


him on the brief were Samuel H. Hertogs and Bruce J.
Douglas.
JUSTICE BRENNAN announced the judgment of the Court and
delivered an opinion, in which JUSTICE WHITE, JUSTICE
MARSHALL, and JUSTICE BLACKMUN joined.
This Court granted certiorari to determine whether the Due
Process Clause of the Fourteenth Amendment 1 or the Full
Faith and Credit Clause of Art. IV, 1, 2 of the United
States Constitution bars the Minnesota Supreme Court's
choice of substantive Minnesota law to govern the effect of
a provision in an insurance policy issued to respondent's
decedent. 444 U.S. 1070 (1980). [449 U.S. 302, 305]

65

"stacked" to provide total coverage of $45,000. Petitioner


defended on the ground that whether the three uninsured
motorist [449 U.S. 302, 306]
coverages could be stacked
should be determined by Wisconsin law, since the insurance
policy was delivered in Wisconsin, the accident occurred in
Wisconsin, and all persons involved were Wisconsin residents
at the time of the accident.

Respondent's late husband, Ralph Hague, died of injuries


suffered when a motorcycle on which he was a passenger was
struck from behind by an automobile. The accident occurred
in Pierce County, Wis., which is immediately across the
Minnesota border from Red Wing, Minn. The operators of both
vehicles were Wisconsin residents, as was the decedent, who,
at the time of the accident, resided with respondent in
Hager City, Wis., which is one and one-half miles from Red
Wing. Mr. Hague had been employed in Red Wing for the 15
years immediately preceding his death and had commuted daily
from Wisconsin to his place of employment.

The
Minnesota
District
Court
disagreed.
Interpreting
Wisconsin law to disallow stacking, the court concluded that
Minnesota's choice-of-law rules required the application of
Minnesota law permitting stacking. The court refused to
apply Wisconsin law as "inimical to the public policy of
Minnesota" and granted summary judgment for respondent. 4

Neither the operator of the motorcycle nor the operator of


the automobile carried valid insurance. However, the
decedent held a policy issued by petitioner Allstate
Insurance Co. covering three automobiles owned by him and
containing an uninsured motorist clause insuring him against
loss incurred from accidents with uninsured motorists. The
uninsured motorist coverage was limited to $15,000 for each
automobile. 3

The Minnesota Supreme Court, sitting en banc, affirmed the


District Court. 5 The court, also interpreting Wisconsin law
to
prohibit
stacking, 6 applied
Minnesota
law
after
analyzing the relevant Minnesota contacts and interests
within the analytical framework developed by Professor
Leflar. 7 See Leflar, Choice-Influencing Considerations in
Conflicts Law, 41 N. Y. U. L. Rev. 267 (1966). The state
court, therefore, examined the conflict-of-laws issue in
terms of (1) predictability of result, (2) maintenance of
interstate order, (3) simplification of the judicial task,
(4) advancement of the forum's governmental interests, and
(5) application of the better rule of law. Although stating
that the Minnesota contacts might not be, "in themselves,
sufficient to mandate application of [Minnesota] law," 8 289
N. W. 2d 43, 49 [449 U.S. 302, 307]
(1978), under the
first four factors, the court concluded that the fifth
factor - application of the better rule of law - favored

After the accident, but prior to the initiation of this


lawsuit, respondent moved to Red Wing. Subsequently, she
married a Minnesota resident and established residence with
her new husband in Savage, Minn. At approximately the same
time, a Minnesota Registrar of Probate appointed respondent
personal representative of her deceased husband's estate.
Following her appointment, she brought this action in
Minnesota District Court seeking a declaration under
Minnesota law that the $15,000 uninsured motorist coverage
on each of her late husband's three automobiles could be
66

selection of Minnesota law. The court emphasized that a


majority of States allow stacking and that legal decisions
allowing stacking "are fairly recent and well considered in
light of current uses of automobiles." Ibid. In addition,
the court found the Minnesota rule superior to Wisconsin's
"because it requires the cost of accidents with uninsured
motorists to be spread more broadly through insurance
premiums than does the Wisconsin rule." Ibid. Finally, after
rehearing en banc, 9 the court buttressed its initial
opinion by indicating "that contracts of insurance on motor
vehicles are in a class by themselves" since an insurance
company "knows the automobile is a movable item which will
be driven from state to state." 289 N. W. 2d, at 50 (1979).
From this premise the court concluded that application of
Minnesota law was "not so arbitrary and unreasonable as to
violate due process." Ibid.

(1964) (hereinafter cited as Clay II). As a result, the


forum State may have to select one law from among the laws
of several jurisdictions having some contact with the
controversy.
In deciding constitutional choice-of-law questions, whether
under the Due Process Clause or the Full Faith and Credit
Clause, 10 this
Court
has
traditionally
examined
the
contacts of the State, whose law was applied, with the
parties and with the occurrence or transaction giving rise
to the litigation. See Clay II, supra, at 183. In order to
ensure that the choice of law is neither arbitrary nor
fundamentally unfair, see Alaska Packers Assn. v. Industrial
Accident Comm'n, 294 U.S. 532, 542 (1935), the Court has
invalidated the choice of law of a State which has had no
significant contact or significant aggregation of contacts,
creating state interests, with the parties and the
occurrence or transaction. 11
[449 U.S. 302, 309]

II
It is not for this Court to say whether the choice-of-law
analysis suggested by Professor Leflar is to be preferred or
whether we would make the same choice-of-law decision if
sitting as the Minnesota Supreme Court. Our sole function is
to determine whether the Minnesota Supreme Court's choice of
its own substantive law in this case exceeded federal
constitutional limitations. Implicit in this inquiry is the
recognition, long accepted by this Court, that a set of
facts giving rise to a lawsuit, or a particular issue within
a lawsuit, may justify, in constitutional terms, application
of the law of more than one jurisdiction. See, e. g., Watson
v. Employers Liability Assurance Corp., 348 U.S. 66, 72 -73
(1954); n. 11, infra. See generally Clay v. Sun Insurance
Office, Ltd., 377 U.S. 179 , [449 U.S. 302, 308]
181-182

Two instructive examples of such invalidation are Home Ins.


Co. v. Dick, 281 U.S. 397 (1930), and John Hancock Mutual
Life Ins. Co. v. Yates, 299 U.S. 178 (1936). In both cases,
the selection of forum law rested exclusively on the
presence of one nonsignificant forum contact.
Home Ins. Co. v. Dick involved interpretation of an
insurance policy which had been issued in Mexico, by a
Mexican insurer, to a Mexican citizen, covering a Mexican
risk. The policy was subsequently assigned to Mr. Dick, who
was domiciled in Mexico and "physically present and acting
in Mexico," 281 U.S., at 408 , although he remained a
nominal, permanent resident of Texas. The policy restricted
67

coverage to losses occurring in certain Mexican waters and,


indeed, the loss occurred in those waters. Dick brought
suit [449 U.S. 302, 310]
in Texas against a New York
reinsurer. Neither the Mexican insurer nor the New York
reinsurer had any connection to Texas. 12 The Court held
that application of Texas law to void the insurance
contract's
limitation-of-actions
clause
violated
due
process. 13

standing alone - was insufficient to justify application of


forum law. Although instructive as extreme examples of
selection of forum law, neither Dick nor Yates governs this
case. For in contrast to those decisions, here the Minnesota
contacts with the parties and the occurrence are obviously
significant. Thus, this case is like Alaska Packers,
Cardillo v. Liberty Mutual Ins. Co., 330 U.S. 469 (1947),
and Clay II - cases where this Court sustained choice-of-law
decisions based on the contacts of the State, whose law was
applied, with the parties and occurrence.

The relationship of the forum State to the parties and the


transaction was similarly attenuated in John Hancock Mutual
Life Ins. Co. v. Yates. There, the insurer, a Massachusetts
corporation, issued a contract of insurance on the life of a
New York resident. The contract was applied for, issued, and
delivered in New York where the insured and his spouse
resided. After the insured died in New York, his spouse
moved to Georgia and brought suit on the policy in Georgia.
Under Georgia law, the jury was permitted to take into
account oral modifications when deciding whether an
insurance
policy
application
contained
material
misrepresentations. Under New York law, however, such
misrepresentations were to be evaluated solely on the basis
of the written application. The Georgia court applied
Georgia law. This Court reversed, finding application of
Georgia law to be unconstitutional.

In Alaska Packers, the Court upheld California's application


of
its
Workmen's
Compensation
Act,
where
the
most
significant contact of the worker with California was his
execution of an employment contract in California. The
worker, a nonresident alien from Mexico, was hired in
California for seasonal work in a salmon canning factory in
Alaska. As part of the employment contract, the employer,
who was doing business in California, agreed to transport
the worker to Alaska and to return him to California when
the work was completed. Even though the employee contracted
to be bound by the Alaska Workmen's Compensation Law and was
injured in Alaska, he sought an award under the California
Workmen's Compensation Act. The Court held that the choice
of California law was not "so arbitrary or unreasonable as
to amount to a denial of due process," 294 U.S., at 542 ,
because "[w]ithout a remedy in California, [he] would be
remediless," ibid., and because of California's interest
that the worker not become a public charge, ibid. 15
[449
U.S. 302, 312]

Dick and Yates stand for the proposition that if a State has
only an insignificant contact with the parties and the [449
U.S. 302, 311]
occurrence or transaction, application of
its law is unconstitutional. 14 Dick concluded that nominal
residence - standing alone - was inadequate; Yates held that
a postoccurrence change of residence to the forum State 68

In Cardillo v. Liberty Mutual Ins. Co., supra, a District of


Columbia resident, employed by a District of Columbia
employer and assigned by the employer for the three years
prior to his death to work in Virginia, was killed in an
automobile crash in Virginia in the course of his daily
commute home from work. The Court found the District's
contacts with the parties and the occurrence sufficient to
satisfy constitutional requirements, based on the employee's
residence in the District, his commute between home and the
Virginia workplace, and his status as an employee of a
company "engaged in electrical construction work in the
District of Columbia and surrounding areas." Id., at
471. 16

neither arbitrary nor fundamentally unfair. Application of


this principle to the facts of this case persuades us that
the Minnesota Supreme Court's choice of its own law did not
offend the Federal Constitution.
III
Minnesota has three contacts with the parties and the
occurrence giving rise to the litigation. In the aggregate,
these contacts permit selection by the Minnesota Supreme
Court of Minnesota law allowing the stacking of Mr. Hague's
uninsured motorist coverages.
First, and for our purposes a very important contact, Mr.
Hague was a member of Minnesota's work force, having been
employed by a Red Wing, Minn., enterprise for the 15 [449
U.S. 302, 314]
years preceding his death. While employment
status may implicate a state interest less substantial than
does resident status, that interest is nevertheless
important. The State of employment has police power
responsibilities towards the nonresident employee that are
analogous,
if
somewhat
less
profound,
than
towards
residents. Thus, such employees use state services and
amenities and may call upon state facilities in appropriate
circumstances.

Similarly, Clay II upheld the constitutionality of the


application of forum law. There, a policy of insurance had
issued in Illinois to an Illinois resident. Subsequently the
insured moved to Florida and suffered a property loss in
Florida. Relying explicitly on the nationwide coverage of
the policy and the presence of the insurance company in
Florida and implicitly on the plaintiff's Florida residence
and the occurrence of the property loss in Florida, the
Court sustained the Florida court's choice of Florida law.
The lesson from Dick and Yates, which found insufficient
forum contacts to apply forum law, and from Alaska Packers,
Cardillo, and Clay II, which found adequate contacts to
sustain the choice of forum law, 17 is that for a State's
substantive [449 U.S. 302, 313]
law to be selected in a
constitutionally permissible manner, that State must have a
significant contact or significant aggregation of contacts,
creating state interests, such that choice of its law is

In addition, Mr. Hague commuted to work in Minnesota, a


contact which was important in Cardillo v. Liberty Mutual
Ins. Co., 330 U.S., at 475 -476 (daily commute between
residence in District of Columbia and workplace in
Virginia), and was presumably covered by his uninsured
motorist
coverage
during
the
commute. 18 The
State's
interest in its commuting nonresident employees reflects a
69

state concern for the safety and well-being of its work


force and the concomitant effect on Minnesota employers.

company automobile which Mr. Hague was permitted to drive,


and if a Wisconsin court sought to apply Wisconsin law,
certainly Mr. Hague's residence in Wisconsin, his commute
between Wisconsin and Minnesota, and the insurer's presence
in Wisconsin should be adequate to apply Wisconsin's
law. 22 See generally Cardillo v. Liberty [449 U.S. 302,
317]
Mutual Ins. Co., supra; Alaska Packers Assn. v.
Industrial Accident Comm'n, 294 U.S. 532 (1935); Home Ins.
Co. v. Dick, 281 U.S., at 408 , n. 5. Employment status is
not a sufficiently less important status than residence, see
generally Carroll v. Lanza, 349 U.S. 408 (1955); Alaska
Packers Assn. v. Industrial Accident Comm'n, supra, when
combined with Mr. Hague's daily commute across state lines
and the other Minnesota contacts present, to prohibit the
choice-of-law result in this case on constitutional grounds.

That Mr. Hague was not killed while commuting to work or


while in Minnesota does not dictate a different result. To
hold that the Minnesota Supreme Court's choice of Minnesota
law violated the Constitution for that reason would require
too narrow a view of Minnesota's relationship with the
parties and the occurrence giving rise to the litigation. An
automobile accident need not occur within a particular
jurisdiction for that jurisdiction to be connected to the
occurrence. 19
[449
U.S.
302,
315]
Similarly,
the
occurrence of a crash fatal to a Minnesota employee in
another State is a Minnesota contact. 20 If Mr. Hague had
only been injured and missed work for a few weeks, the
effect on the Minnesota employer would have been palpable
and Minnesota's interest in having its employee made whole
would be evident. Mr. Hague's death affects Minnesota's
interest still more acutely, even though Mr. Hague will not
return to the Minnesota work force. Minnesota's work force
is surely affected by the level of protection the State
extends to it, either directly or indirectly. Vindication of
the rights of the estate of a Minnesota employee, therefore,
is an important state concern.

Second, Allstate was at all times present and doing business


in Minnesota. 23 By virtue of its presence, Allstate can
hardly claim unfamiliarity with the laws of the host
jurisdiction and surprise that the state courts might apply
forum law to litigation [449 U.S. 302, 318]
in which the
company is involved. "Particularly since the company was
licensed to do business in [the forum], it must have known
it might be sued there, and that [the forum] courts would
feel bound by [forum] law." 24 Clay v. Sun Insurance Office
Ltd., 363
U.S.
207,
221 (1960)
(Black,
J.,
dissenting). 25 Moreover, Allstate's presence in Minnesota
gave Minnesota an interest in regulating the company's
insurance obligations insofar as they affected both a
Minnesota resident and court-appointed representative respondent - and a longstanding member of Minnesota's work

Mr. Hague's residence in Wisconsin does not - as Allstate


seems to argue - constitutionally mandate application of
Wisconsin law to the exclusion of forum law. 21 If, in the
instant [449 U.S. 302, 316]
case, the accident had
occurred in Minnesota between Mr. Hague and an uninsured
Minnesota motorist, if the insurance contract had been
executed in Minnesota covering a Minnesota registered
70

force - Mr. Hague. See Hoopeston Canning Co. v. Cullen, 318


U.S. 313, 316 (1943).

respondent's recovery, an interest which the court below


identified as full compensation for "resident accident
victims" to keep them "off welfare rolls" and able "to meet
financial obligations." 289 N. W. 2d, at 49. [449 U.S. 302,
320]

Third, respondent became a Minnesota resident prior to


institution of this litigation. The stipulated facts reveal
that she first settled in Red Wing, Minn., the town in
which [449
U.S.
302,
319]
her
late
husband
had
worked. 26 She subsequently moved to Savage, Minn., after
marrying a Minnesota resident who operated an automobile
service station in Bloomington, Minn. Her move to Savage
occurred "almost concurrently," 289 N. W. 2d, at 45, with
the initiation of the instant case. 27 There is no
suggestion
that
Mrs.
Hague
moved
to
Minnesota
in
anticipation of this litigation or for the purpose of
finding a legal climate especially hospitable to her
claim. 28 The stipulated facts, sparse as they are, negate
any such inference.

In sum, Minnesota had a significant aggregation 29 of


contacts with the parties and the occurrence, creating state
interests, such that application of its law was neither
arbitrary nor fundamentally unfair. Accordingly, the choice
of Minnesota law by the Minnesota Supreme Court did not
violate the Due Process Clause or the Full Faith and Credit
Clause.
Affirmed.
JUSTICE STEWART took no part in the consideration or
decision of this case.
Footnotes
[ Footnote 1 ] The Due Process Clause of the Fourteenth
Amendment provides that no State "shall . . . deprive any
person of life, liberty, or property, without due process of
law . . . ."

While John Hancock Mutual Life Ins. Co. v. Yates, 299 U.S.
178 (1936), held that a postoccurrence change of residence
to the forum State was insufficient in and of itself to
confer power on the forum State to choose its law, that case
did not hold that such a change of residence was irrelevant.
Here, of course, respondent's bona fide residence in
Minnesota was not the sole contact Minnesota had with this
litigation. And in connection with her residence in
Minnesota, respondent was appointed personal representative
of Mr. Hague's estate by the Registrar of Probate for the
County of Goodhue, Minn. Respondent's residence and
subsequent
appointment
in
Minnesota
as
personal
representative of her late husband's estate constitute a
Minnesota contact which gives Minnesota an interest in

[ Footnote 2 ] The Full Faith and Credit Clause, Art. IV, 1,


provides:
"Full Faith and Credit shall be given in each State to the
public Acts, Records, and judicial Proceedings of every
other State. And the Congress may by general Laws prescribe
the Manner in which such Acts, Records, and Proceedings
shall be proved, and the Effect thereof."

71

[ Footnote 3 ] Ralph Hague paid a separate premium for each


automobile including an additional separate premium for each
uninsured motorist coverage.

e. g., Nevada v. Hall, 440 U.S. 410, 424 (1979). Although at


one time the Court required a more exacting standard under
the Full Faith and Credit Clause than under the Due Process
Clause for evaluating the constitutionality of choice-of-law
decisions, see Alaska Packers Assn. v. Industrial Accident
Comm'n, 294 U.S. 532, 549 -550 (1935) (interest of State
whose law was applied was no less than interest of State
whose law was rejected), the Court has since abandoned the
weighing-of-interests requirement. Carroll v. Lanza, 349
U.S. 408 (1955); see Nevada v. Hall, supra; Weintraub, Due
Process and Full Faith and Credit Limitations on a State's
Choice of Law, 44 Iowa L. Rev. 449 (1959). Different
considerations are of course at issue when full faith and
credit is to be accorded to acts, records, and proceedings
outside the choice-of-law area, such as in the case of
sister state-court judgments.

[ Footnote 4 ] App. C to Pet. for Cert. A-29.


[ Footnote 5 ] 289 N. W. 2d 43 (1978).
[ Footnote 6 ] Respondent has suggested that this case
presents a "false conflict." The court below rejected this
contention and applied Minnesota law. Even though the
Minnesota Supreme Court's choice of Minnesota law followed a
discussion of whether this case presents a false conflict,
the fact is that the court chose to apply Minnesota law.
Thus, the only question before this Court is whether that
choice was constitutional.
[ Footnote 7 ] Minnesota had previously adopted the
conceptual model developed by Professor Leflar in Milkovich
v. Saari, 295 Minn. 155, 203 N. W. 2d 408 (1973).

[ Footnote 11 ] Prior to the advent of interest analysis in


the state courts as the "dominant mode of analysis in modern
choice of law theory," Silberman, Shaffer v. Heitner: The
End of an Era, 53 N. Y. U. L. Rev. 33, 80, n. 259 (1978);
cf. Richards v. United States, 369 U.S. 1, 11 -13, and nn.
26-27 (1962) (discussing trend toward interest analysis in
state courts), the prevailing choice-of-law methodology
focused on the jurisdiction where a [449 U.S. 302,
309]
particular event occurred. See, e. g., Restatement of
Conflict of Laws (1934). For example, in cases characterized
as contract cases, the law of the place of contracting
controlled the determination of such issues as capacity,
fraud, consideration, duty, performance, and the like. Id.,
332; see Beale, What Law Governs the Validity of a Contract,
23 Harv. L. Rev. 260, 270-271 (1910). In the tort context,

[ Footnote 8 ] The court apparently was referring to


sufficiency as a matter of choice [449 U.S. 302, 307]
of
law and not as a matter of constitutional limitation on its
choice-of-law decision.
[ Footnote 9 ] 289 N. W. 2d, at 50 (1979).
[ Footnote 10 ] This Court has taken a similar approach in
deciding choice-of-law cases under both the Due Process
Clause and the Full Faith and Credit Clause. In each
instance, the Court has examined the relevant contacts and
resulting interests of the State whose law was applied. See,
72

the law of the place of the wrong usually governed


traditional choice-of-law analysis. Restatement, supra, 378;
see Richards v. United States, supra, at 11-12.

for it by the trial court; and they filed on its behalf an


answer which denied liability." 281 U.S., at 402 . There
would be no jurisdiction in the Texas courts to entertain
such a lawsuit today. See Rush v. Savchuk, 444 U.S.
320 (1980);
Shaffer
v.
Heitner, 433
U.S.
186 (1977);
Silberman, supra, at 62-65.

Hartford Accident & Indemnity Co. v. Delta & Pine Land


Co., 292 U.S. 143 (1934), can, perhaps, best be explained as
an example of that period. In that case, the Court struck
down application by the Mississippi courts of Mississippi
law which voided the limitations provision in a fidelity
bond written in Tennessee between a Connecticut insurer and
Delta, both of which were doing business in Tennessee and
Mississippi. By its terms, the bond covered misapplication
of
funds
"by
any
employee
`in
any
position,
anywhere . . . .'" Id., at 145. After Delta discovered
defalcations by one of its Mississippi-based employees, a
lawsuit was commenced in Mississippi.

[ Footnote 13 ] The Court noted that the result might have


been different if there had been some connection to Texas
upon "which the State could properly lay hold as the basis
of the regulations there imposed." 281 U.S., at 408 , n. 5;
see Watson v. Employers Liability Assurance Corp., 348 U.S.
66, 71 (1954).
[ Footnote 14 ] See generally, Weintraub, supra n. 10, at
455-457.
[ Footnote 15 ] The Court found no violation of the Full
Faith and Credit Clause, since California's interest was
considered to be no less than Alaska's, 294 Page 312 U.S.,
at 547 -548, 549-550, even though the injury occurred in
Alaska while the employee was performing his contract
obligations there. While Alaska Packers balanced the
interests of California and Alaska to determine the full
faith and credit issue, such balancing is no longer
required. See Nevada v. Hall, 440 U.S., at 424 ; n. 10,
supra.

That case, however, has scant relevance for today. It


implied a choice-of-law analysis which, for all intents and
purposes, gave an isolated event - the writing of the bond
in Tennessee - controlling constitutional significance, even
though there might have been contacts with another State
(there Mississippi) which would make application of its law
neither unfair nor unexpected. See Martin, Personal
Jurisdiction and Choice of Law, 78 Mich. L. Rev. 872, 874,
and n. 11 (1980).
[ Footnote
12 ]
Dick
sought
to
obtain
quasi-in-rem
jurisdiction by garnishing the reinsurance obligation of the
New York reinsurer. The reinsurer had never transacted
business in Texas, but it "was cited by publication, in
accordance with a Texas statute; attorneys were appointed

[ Footnote 16 ] The precise question raised was whether the


Virginia Compensation Commission "had sole jurisdiction over
the claim." 330 U.S., at 472 -473. In finding that
application of the District's law did not violate either due
73

process or full faith and credit requirements, the Court in


effect treated the question as a constitutional choice-oflaw issue.

[ Footnote 17 ] The Court has upheld choice-of-law decisions


challenged on constitutional grounds in numerous other
decisions. See Nevada v. Hall, supra [449 U.S. 302,
313]
(upholding California's application of California law
to automobile accident in California between two California
residents and a Nevada official driving car owned by State
of Nevada while engaged in official business in California);
Carroll v. Lanza, 349 U.S. 408 (1955) (upholding Arkansas'
choice of Arkansas law where Missouri employee executed
employment contract with Missouri employer and was injured
on job in Arkansas but was removed immediately to a Missouri
hospital);
Watson
v.
Employers
Liability
Assurance
Corp., 348 U.S. 66 (1954) (allowing application of Louisiana
direct action statute by Louisiana resident against insurer
even though policy was written and delivered in another
State, where plaintiff was injured in Louisiana); Pacific
Employers Ins. Co. v. Industrial Accident Comm'n, 306 U.S.
493 (1939) (holding Full Faith and Credit Clause not
violated where California applied own Workmen's Compensation
Act in case of injury suffered by Massachusetts employee
temporarily in California in course of employment). Thus,
Nevada v. Hall, supra, and Watson v. Employers Liability
Assurance Corp., supra, upheld application of forum law
where the relevant contacts consisted of plaintiff's
residence and the place of the injury. Pacific Employers
Ins. Co. v. Industrial Accident Comm'n, supra, and Carroll
v. Lanza, supra, relied on the place of the injury arising
from the respective employee's temporary presence in the
forum State in connection with his employment.
[ Footnote 18 ] The policy issued to Mr. Hague provided that
Allstate
would
pay
to
the
insured,
or
his
legal
74

representative, damages "sustained by the insured, caused by


accident and arising out of the ownership, maintenance or
use of [an] uninsured automobile. . . ." No suggestion has
been made that Mr. Hague's uninsured motorist protection is
unavailable because he was not killed while driving one of
his insured automobiles.

Minnesota and garaged there for a substantial portion of the


day. The former statement is hardly more significant than
the latter since the accident in any event did not involve
any of the automobiles which were covered under Mr. Hague's
policy. Recovery is sought pursuant to the uninsured
motorist coverage.

[ Footnote 19 ] Numerous cases have applied the law of a


jurisdiction other than the situs of the injury where there
existed some other link between that jurisdiction and the
occurrence. See, e. g., Cardillo v. Liberty Mutual Ins.
Co., 330 U.S. 469 (1947); Alaska Packers Assn. v. Industrial
Accident Comm'n, 294 U.S. 532 (1935); Rosenthal v. Warren,
475 F.2d 438 (CA2), cert. denied, 414 U.S. 856 (1973); Clark
v. Clark, 107 N. H. 351, 222 A. 2d 205 [449 U.S. 302,
315]
(1966); Tooker v. Lopez, 24 N. Y. 2d 569, 249 N. E.
2d 394 (1969); Babcock v. Jackson, 12 N. Y. 2d 473, 191 N.
E. 2d 279 (1963).

In addition, petitioner's statement that the contracts were


"underwritten . . . by Wisconsin residents" is not supported
by the stipulated facts if petitioner means to include
itself within that phrase. Indeed, the policy, which is part
of the record, recites that Allstate signed the policy in
Northbrook, Ill. Under some versions of the hoary rule of
lex loci contractus, and depending on the precise sequence
of events, a sequence which is unclear from the record
before us, the law of Illinois arguably might apply to
govern contract construction, even though Illinois [449 U.S.
302, 316]
would have less contact with the parties and the
occurrence than either Wisconsin or Minnesota. No party
sought application of Illinois law on that basis in the
court below.

[ Footnote 20 ] The injury or death of a resident of State A


in State B is a contact of State A with the occurrence in
State B. See cases cited in n. 19, supra.

[ Footnote 22 ] Of course Allstate could not be certain that


Wisconsin law would necessarily govern any accident which
occurred in Wisconsin, whether brought in the Wisconsin
courts or elsewhere. Such an expectation would give
controlling significance to the wooden lex loci delicti
doctrine. While the place of the accident is a factor to be
considered in choice-of-law analysis, to apply blindly the
traditional, but now largely abandoned, doctrine, Silberman,
supra n. 11, at 80, n. 259; see n. 11, supra, would fail to
distinguish between the relative importance of various legal

[ Footnote 21 ] Petitioner's statement that the instant


dispute involves the interpretation of insurance contracts
which were "underwritten, applied for, and paid for by
Wisconsin residents and issued covering cars garaged in
Wisconsin," Brief for Petitioner 6, is simply another way of
stating that Mr. Hague was a Wisconsin resident. Respondent
could have replied that the insurance contract was
underwritten, applied for and paid for by a Minnesota
worker, and issued covering cars that were driven to work in
75

issues involved in a lawsuit as well as the relationship of


other jurisdictions to the parties and the occurrence or
transaction. If, for example, Mr. Hague had been a Wisconsin
resident and employee who was injured in Wisconsin and was
then taken by ambulance to a hospital in Red Wing, Minn.,
where he languished for several weeks before dying,
Minnesota's interest in ensuring that its medical creditors
were
paid
would
be
obvious.
Moreover,
under
such
circumstances, the accident itself might be reasonably
characterized as a bistate occurrence beginning in Wisconsin
and ending in Minnesota. Thus, reliance by the insurer that
Wisconsin law would necessarily govern any accident that
occurred in Wisconsin, or that the law of another
jurisdiction would necessarily govern any accident that did
not occur in Wisconsin, would be unwarranted. See n. 11,
supra; cf. Rosenthal v. Warren, supra (Massachusetts
hospital could not have purchased insurance with expectation
that Massachusetts law would govern damages recovery as to
New York patient who died in hospital and whose widow
brought suit in New York).

antistacking rule would govern any particular accident in


which the insured might be involved and thus cannot claim
unfair surprise from the Minnesota Supreme Court's choice of
forum law.
[ Footnote 23 ] The Court has recognized that examination of
a State's contacts may result in divergent conclusions for
jurisdiction and choice-of-law purposes. See Kulko v.
California Superior Court, 436 U.S. 84, 98 (1978) (no
jurisdiction in California but California law "arguably
might" apply); Shaffer v. Heitner, 433 U.S., at 215 (no
jurisdiction in Delaware, although Delaware interest "may
support the application of Delaware law"); cf. Hanson v.
Denckla, 357 U.S. 235, 254 , and n. 27 (1958) (no
jurisdiction
in
Florida;
the
"issue
is
personal
jurisdiction, not choice of law," an issue which the Court
found no need to decide). Nevertheless, "both inquiries `are
often closely related and to a substantial degree depend
upon similar considerations.'" Shaffer, 433 U.S., at 224 225 (BRENNAN, J., concurring in part and dissenting in
part). Here, of course, jurisdiction in the Minnesota courts
is unquestioned, a factor not without significance in
assessing the constitutionality of Minnesota's choice of its
own substantive law. Cf. id., at 225 ("the decision that it
is fair to bind a defendant by a State's laws and rules
should prove to be highly relevant to the fairness of
permitting that same State to accept jurisdiction for
adjudicating the controversy").

If the law of a jurisdiction other than Wisconsin did


govern, there was a substantial likelihood, with respect to
uninsured motorist coverage, that stacking would be allowed.
Stacking was the rule in most States at the time the policy
was issued. Indeed, the Wisconsin Supreme Court, in [449
U.S. 302, 317]
Nelson v. Employers Mutual Casualty Co., 63
Wis. 2d 558, 563-566, and nn. 2, 3, 217 N. W. 2d 670, 672,
674, and nn. 2, 3 (1974), identified 29 States, including
Minnesota, whose law it interpreted to allow stacking, and
only 9 States whose law it interpreted to prohibit stacking.
Clearly then, Allstate could not have expected that an

[ Footnote 24 ] There is no element of unfair surprise or


frustration of legitimate expectations as a result of
Minnesota's choice of its law. Because Allstate was doing
76

business in Minnesota and was undoubtedly aware that Mr.


Hague was a Minnesota employee, it had to have anticipated
that Minnesota law might apply to an accident in which Mr.
Hague was involved. See Clay II, 377 U.S. 179, 182 (1964);
Watson v. Employers Liability Assurance Corp., 348 U.S., at
72 -73; Alaska Packers Assn. v. Industrial Accident
Comm'n, 294 U.S., at 538 -543; cf. Home Ins. Co. v.
Dick, 281 U.S., at 404 (neither insurer nor reinsurer
present in forum State). Indeed, Allstate specifically
anticipated that Mr. Hague might suffer an accident either
in Minnesota or elsewhere in the United States, outside of
Wisconsin, since the policy it issued offered continental
coverage. Cf. id., at 403 (coverage limited to losses
occurring in certain Mexican waters which were outside of
jurisdiction whose law was applied). At the same time,
Allstate did not seek to control construction of the
contract since the policy contained no choice-of-law clause
dictating application of Wisconsin law. See Clay II, supra,
at 182 (nationwide coverage of policy and lack of choice-oflaw clause).

[ Footnote 27 ] These proceedings began on May 28, 1976.


Mrs. Hague was remarried on June 19, 1976.
[ Footnote 28 ] The dissent suggests that considering
respondent's postoccurrence change of residence as one of
the Minnesota contacts will encourage forum shopping. Post,
at 337. This overlooks the fact that her change of residence
was
bona
fide
and
not
motivated
by
litigation
considerations.
[ Footnote 29 ] We express no view whether the first two
contacts, either together or separately, would have sufficed
to sustain the choice of Minnesota law made by the Minnesota
Supreme Court.
JUSTICE STEVENS, concurring in the judgment.
As I view this unusual case - in which neither precedent nor
constitutional language provides sure guidance - two
separate questions must be answered. First, does the Full
Faith and Credit Clause 1 require Minnesota, the forum
State, to apply Wisconsin law? Second, does the Due Process
Clause 2 of the Fourteenth Amendment prevent Minnesota from
applying its own law? The first inquiry implicates the
federal interest in ensuring that Minnesota respect the
sovereignty of the State of Wisconsin; the second implicates
the litigants' interest in a fair adjudication of their
rights. 3
[449 U.S. 302, 321]

[ Footnote 25 ] Justice Black's dissent in the first Clay


decision, a decision which vacated and remanded a lowercourt determination to obtain an authoritative construction
of state law that might moot the constitutional question,
subsequently commanded majority support in the second Clay
decision. Clay II, supra, at 180-183.
[ Footnote 26 ] The stipulated facts do not reveal the date
on which Mrs. Hague first moved to Red Wing.

I realize that both this Court's analysis of choice-of-law


questions 4 and
scholarly
criticism
of
those
decisions 5 have treated these two inquiries as though they
77

were
indistinguishable. 6
[449
U.S.
302,
322]
Nevertheless,
I
am
persuaded
that
the
two
constitutional provisions protect different interests and
that proper analysis requires separate consideration of
each.

state court's choice of forum law unless that choice


threatens the federal interest in national unity by
unjustifiably infringing upon the legitimate interests of
another State. 10
[449 U.S. 302, 324]
In this case, I think the Minnesota courts' decision to
apply Minnesota law was plainly unsound as a matter of
normal conflicts law. Both the execution of the insurance
contract and the accident giving rise to the litigation took
place in Wisconsin. Moreover, when both of those events
occurred, the plaintiff, the decedent, and the operators of
both vehicles were all residents of Wisconsin. Nevertheless,
I do not believe that any threat to national unity or
Wisconsin's sovereignty ensues from allowing the substantive
question presented by this case to be determined by the law
of another State.

I
The Full Faith and Credit Clause is one of several
provisions in the Federal Constitution designed to transform
the several States from independent sovereignties into a
single, unified Nation. See Thomas v. Washington Gas Light
Co., 448 U.S. 261, 271 -272 (1980) (plurality opinion);
Milwaukee County v. M. E. White Co., 296 U.S. 268, 276 -277
(1935). 7 The Full Faith and Credit Clause implements this
design by directing that a State, when acting as the forum
for litigation having multistate aspects or implications,
respect the legitimate interests of other States and avoid
infringement upon their sovereignty. The Clause does not,
however, rigidly [449 U.S. 302, 323]
require the forum
State to apply foreign law whenever another State has a
valid interest in the litigation. See Nevada v. Hall, 440
U.S. 410, 424 (1979); Alaska Packers Assn. v. Industrial
Accident Comm'n, 294 U.S. 532, 546 -548 (1935); Pacific
Employers Ins. Co. v. Industrial Accident Comm'n, 306 U.S.
493, 501 -502 (1939). 8 On the contrary, in view of the fact
that the forum State is also a sovereign in its own right,
in appropriate cases it may attach paramount importance to
its own legitimate interests. 9 Accordingly, the fact that a
choice-of-law decision may be unsound as a matter of
conflicts law does not necessarily implicate the federal
concerns embodied in the Full Faith and Credit Clause.
Rather, in my opinion, the Clause should not invalidate a

The question on the merits is one of interpreting the


meaning of the insurance contract. Neither the contract
itself, nor anything else in the record, reflects any
express understanding of the parties with respect to what
law would be applied or with respect to whether the separate
uninsured motorist coverage for each of the decedent's three
cars could be "stacked." Since the policy provided coverage
for accidents that might occur in other States, it was
obvious to the parties at the time of contracting that it
might give rise to the application of the law of States
other than Wisconsin. Therefore, while Wisconsin may have an
interest in ensuring that contracts formed in Wisconsin in
reliance upon Wisconsin law are interpreted in accordance
with that law, that interest is not implicated in this
case. 11
[449 U.S. 302, 325]
78

Petitioner has failed to establish that Minnesota's refusal


to apply Wisconsin law poses any direct 12 or indirect
threat to Wisconsin's sovereignty. 13 In the absence of any
such [449 U.S. 302, 326]
threat, I find it unnecessary to
evaluate the forum State's interest in the litigation in
order to reach the conclusion that the Full Faith and Credit
Clause does not require the Minnesota courts to apply
Wisconsin law to the question of contract interpretation
presented in this case.

dramatic departure from the rule that obtains in most


American jurisdictions, or if the rule itself was unfair on
its face or as applied.15
The application of an otherwise acceptable rule of law may
result in unfairness to the litigants if, in engaging in the
activity which is the subject of the litigation, they could
not reasonably have anticipated that their actions would
later be judged by this rule of law. A choice-of-law
decision that frustrates the justifiable expectations of the
parties can be fundamentally unfair. This desire to prevent
unfair surprise to a litigant has been the central concern
in this Court's review of choice-of-law decisions under the
Due Process Clause. 16

II
It may be assumed that a choice-of-law decision would
violate the Due Process Clause if it were totally arbitrary
or if it were fundamentally unfair to either litigant. I
question whether a judge's decision to apply the law of his
own State could ever be described as wholly irrational. For
judges are presumably familiar with their own state law and
may find it difficult and time consuming to discover and
apply correctly the law of another State. 14 The forum
State's interest in the fair and efficient administration of
justice is therefore sufficient, in my judgment, to attach a
presumption of validity to a forum State's decision to apply
its own law to a dispute over which it has jurisdiction.

Neither the "stacking" rule itself, nor Minnesota's


application of that rule to these litigants, raises any
serious question of fairness. As the plurality observes,
"[s]tacking was [449 U.S. 302, 328]
the rule in most
States at the time the policy was issued." Ante, at 316, n.
22. 17 Moreover, the rule is consistent with the economics
of a contractual relationship in which the policyholder paid
three separate premiums for insurance coverage for three
automobiles, including a separate premium for each uninsured
motorist coverage. 18 Nor am I persuaded that the decision
of the Minnesota courts to apply the "stacking" rule in this
case can be said to violate due process because that
decision frustrates the reasonable expectations of the
contracting parties.

The forum State's interest in the efficient operation of its


judicial system is clearly not sufficient, however, to
justify the application of a rule of law that is
fundamentally unfair to one of the litigants. Arguably, a
litigant could demonstrate such unfairness in a variety of
ways. Concern about the fairness of the forum's choice of
its own rule might arise [449 U.S. 302, 327]
if that rule
favored residents over nonresident, if it represented a

Contracting parties can, of course, make their expectations


explicit by providing in their contract either that the law
79

of a particular jurisdiction shall govern questions of


contract interpretation, 19 or that a particular substantive
rule,
for
instance
"stacking,"
shall
or
shall
not
apply. 20 In the absence [449 U.S. 302, 329]
of such
express provisions, the contract nonetheless may implicitly
reveal the expectations of the parties. For example, if a
liability insurance policy issued by a resident of a
particular State provides coverage only with respect to
accidents within that State, it is reasonable to infer that
the contracting parties expected that their obligations
under the policy would be governed by that State's law. 21

accident move to Minnesota and the decedent's Minnesota


employment - are either irrelevant to or possibly even tend
to
undermine
the
plurality's
conclusion.
When
the
expectations of the parties at the time of contracting are
the central due process concern, as they are in this case,
an
unanticipated
postaccident
occurrence
is
clearly
irrelevant for due process purposes. The fact that the
plaintiff became a resident of the forum State after the
accident surely cannot justify a ruling in her favor that
would not be made if the plaintiff were a nonresident.
Similarly, while the fact that the decedent regularly drove
into Minnesota might be relevant to the expectations of the
contracting parties, 24 the fact that he did so because he
was employed in Minnesota adds nothing to the due process
analysis. The choice-of-law decision of the Minnesota courts
is consistent with due process because it does not result in
unfairness to either litigant, not because Minnesota now has
an interest in the plaintiff as resident or formerly had an
interest in the decedent as employee.

In this case, no express indication of the parties'


expectations is available. The insurance policy provided
coverage for accidents throughout the United States; thus,
at the time of contracting, the parties certainly could have
anticipated that the law of States other than Wisconsin
would
govern
particular
claims
arising
under
the
policy. 22 By virtue of doing business [449 U.S. 302,
330]
in Minnesota, Allstate was aware that it could be
sued in the Minnesota courts; Allstate also presumably was
aware that Minnesota law, as well as the law of most States,
permitted "stacking." Nothing in the record requires that a
different inference be drawn. Therefore, the decision of the
Minnesota courts to apply the law of the forum in this case
does not frustrate the reasonable expectations of the
contracting parties, and I can find no fundamental
unfairness in that decision requiring the attention of this
Court. 23
[449 U.S. 302, 331]

III
Although I regard the Minnesota courts' decision to apply
forum law as unsound as a matter of conflicts law, and
there [449 U.S. 302, 332]
is little in this record other
than the presumption in favor of the forum's own law to
support that decision, I concur in the plurality's judgment.
It is not this Court's function to establish and impose upon
state courts a federal choice-of-law rule, nor is it our
function to ensure that state courts correctly apply
whatever
choice-of-law
rules
they
have
themselves
adopted. 25 Our authority may be exercised in the choice-oflaw area only to prevent a violation of the Full Faith and

In terms of fundamental fairness, it seems to me that two


factors relied upon by the plurality - the plaintiff's post80

Credit or the Due Process Clause. For the reasons stated


above, I find no such violation in this case.

See also Reese, Legislative Jurisdiction, 78 Column. L. Rev.


1587, 1589-1590 (1978). While it has been suggested that
this same minimum-contacts analysis be used to define the
constitutional limitations on choice of law, see, e. g.,
Martin, Personal Jurisdiction and Choice of Law, 78 Mich. L.
Rev. 872 (1980), the Court has made it clear over the years
that the personal jurisdiction and choice-of-law inquiries
are not the same. See Kulko v. California Superior
Court, 436 U.S. 84, 98 (1978); Shaffer v. Heitner, 433 U.S.
186, 215 (1977); id., at 224-226 (BRENNAN, J., dissenting in
part); Hanson v. Denckla, 357 U.S. 235, 253 -254 (1958);
id., at 258 (Black, J., dissenting).

[ Footnote 1 ] Article IV, 1, provides:


"Full Faith and Credit shall be given in each State to the
public Acts, Records, and Judicial Proceedings of every
other State. And the Congress may by general Laws prescribe
the Manner in which such Acts, Records and Proceedings shall
be proved, and the Effect thereof."
[ Footnote 2 ] Section
provides, in part:

of

the

Fourteenth

Amendment

[ Footnote 4 ] Although the Court has struck down a state


court's choice of forum law on both due process, see, e. g.,
Home Ins. Co. v. Dick, 281 U.S. 397 (1930), and full faith
and credit grounds, see, e. g., John Hancock Mutual Life
Ins. Co. v. Yates, 299 U.S. 178 (1936), no clear analytical
distinction between the two constitutional provisions has
emerged. The Full Faith and Credit Clause, of course, was
inapplicable in Home Ins. Co. because the law of a foreign
nation, rather than of a sister State, was at issue; a
similarly clear explanation for the Court's reliance upon
the Full Faith and Credit Clause in John Hancock Mutual Life
Ins. cannot be found. Indeed, John Hancock Mutual Life Ins.
is probably best understood as a due process case. See
Reese, supra, at 1589, and n. 17; Weintraub, Due Process and
Full Faith and Credit Limitations on a State's Choice of
Law, 44 Iowa L. Rev. 449, 457-458 (1959).

"No State shall . . . deprive any person of life, liberty,


or property, without due process of law . . . ."
[ Footnote 3 ] The two questions presented by the choice-oflaw issue arise only after it is assumed or established that
the defendant's contacts with the forum State are sufficient
to support personal jurisdiction. Although the choice-of-law
concerns - respect for another sovereign and fairness to
the [449 U.S. 302, 321]
litigants - are similar to the two
functions performed by the jurisdictional inquiry, they are
not
identical.
In
World-Wide
Volkswagen
Corp.
v.
Woodson, 444 U.S. 286, 291 -292 (1980), we stated:
"The concept of minimum contacts, in turn, can be seen to
perform two related, but distinguishable, functions. It
protects the defendant against the burdens of litigating in
a distant or inconvenient forum. And it acts to ensure that
the States, through their courts, do not reach out beyond
the limits imposed on them by their status as coequal
sovereigns in a federal system."

[ Footnote 5 ] See R. Leflar, American Conflicts Law 5, p.


7, 55, pp. 106-107 (3d ed. 1977). The Court's frequent
failure to distinguish between the two Clauses in the
choice-of-law context may underlie the suggestions of
81

various commentators that either the Full Faith and Credit


Clause or the Due Process Clause be recognized as the single
appropriate source for [449 U.S. 302, 322]
constitutional
limitations on choice of law. Compare Martin, Constitutional
Limitations on Choice of Law, 61 Cornell L. Rev. 185 (1976)
(full faith and credit), with Reese, supra (due process);
see also Kirgis, The Roles of Due Process and Full Faith and
Credit in Choice of Law, 62 Cornell L. Rev. 94 (1976).

[ Footnote 8 ] As the Court observed in Alaska Packers,


supra, an overly rigid application of the Full Faith and
Credit Clause would produce anomalous results:
"A rigid and literal enforcement of the full faith and
credit clause, without regard to the statute of the forum,
would lead to the absurd result that, wherever the conflict
arises, the statute of each state must be enforced in the
courts of the other, but cannot be in its own." 294 U.S., at
547 .

[ Footnote 6 ] Even when the Court has explicitly considered


both provisions in a single case, the requirements of the
Due Process and Full Faith and Credit Clauses have been
measured by essentially the same standard. For example, in
Watson v. Employers Liability Assurance Corp., 348 U.S.
66 (1954), the Court separately considered the due process
and full faith and credit questions. See id., at 70-73.
However, in concluding that the Full Faith and Credit Clause
did not bar the Louisiana courts from applying Louisiana law
in that case, the Court substantially relied upon its
preceding analysis of the requirements of due process. Id.,
at 73. By way of contrast, in Alaska Packers Assn. v.
Industrial Accident Comm'n, 294 U.S. 532, 544 -550 (1935),
the Court's full faith and credit analysis differed
significantly from its due process analysis. However, as
noted in the plurality opinion, ante, at 308, n. 10, the
Court has since abandoned the full faith and credit standard
represented by Alaska Packers.

[ Footnote 9 ] For example, it is well established that "the


Full Faith and Credit Clause does not require a State to
apply another State's law in violation of its own legitimate
public policy." Nevada v. Hall, 440 U.S. 410, 422 (1979)
(footnote omitted).
[ Footnote 10 ] The kind of state action the Full Faith and
Credit Clause was designed to prevent has been described in
a variety of ways by this Court. In Carroll v. Lanza, 349
U.S. 408, 413 (1955), the Court indicated that the Clause
would be invoked to restrain "any policy of hostility to the
public Acts" of another State. In Nevada v. Hall, supra, at
424, n. 24, we approved action which "pose[d] no substantial
threat
to
our
constitutional
system
of
cooperative
federalism." And in Thomas v. Washington Gas Light Co., 448
U.S. 261, 272 (1980), the plurality opinion described the
purpose of the Full Faith and Credit Clause as the
prevention of "parochial entrenchment on the interests of
other States."

[ Footnote 7 ] See also Sumner, The Full-Faith-and-CreditClause - Its History and Purpose, 34 Or. L. Rev. 224, 242
(1955); Weintraub, supra, at 477; R. Leflar, supra, 73, p.
143.

[ Footnote 11 ] While the justifiable expectations of the


litigants are a major concern for purposes of due process
82

scrutiny of choice-of-law decisions, see Part II, infra, the


decision in John Hancock Mutual Life Ins. Co. v. Yates, 299
U.S. 178 (1936), suggests that this concern may also
implicate state interests cognizable under the Full Faith
and Credit Clause. In John Hancock Mutual Life Ins., the
Court struck down on full faith and credit grounds a Georgia
court's choice of Georgia law over a conflicting New York
statute in a suit on a New York life insurance contract
brought after the insured's death in New York. Central to
the decision in that case was the Court's apparent concern
that application of Georgia law would result in unfair
surprise to one of the contracting parties. The Court found
that [449 U.S. 302, 325]
the New York statute was "a rule
of substantive law which became a term of the contract, as
much so as the amount of the premium to be paid or the time
for its payment." Id., at 182 (footnote omitted). This
statute "determine[d] the substantive rights of the parties
as fully as if a provision to that effect had been embodied
in writing in the policy." Id., at 182-183. The insurer had
no reason to expect that the New York statute would not
control all claims arising under the life insurance policy.
The parties to a life insurance contract normally would not
expect the place of death to have any bearing upon the
proper construction of the policy; by way of contrast, in
the case of a liability policy, the place of the tort might
well be relevant. For that reason, in a life insurance
contract relationship, it is likely that neither party would
expect the law of any State other than the place of
contracting to have any relevance in possible subsequent
litigation. See generally C. Carnahan, Conflict of Laws and
Life Insurance Contracts 15, pp. 51-52, 47, pp. 264-265,
267-268, 60, pp. 325-327 (2d ed. 1958).

Paul Freund has aptly characterized John Hancock Mutual Life


Ins. as perhaps this Court's "most ambitious application of
the full faith and credit clause." Freund, Chief Justice
Stone and the Conflict of Laws, 59 Harv. L. Rev. 1210, 1233
(1946). Like Bradford Electric Light Co. v. Clapper, 286
U.S. 145 (1932), on which the Court relied, see 299 U.S., at
183 , John Hancock Mutual Life Ins. was one of a series of
constitutional decisions in the 1930's that have been
limited by subsequent cases. See Carroll v. Lanza, 349 U.S.,
at 412 ; Thomas v. Washington Gas Light Co., supra, at 272273, n. 18 (plurality opinion). See also Traynor, Is This
Conflict Really Necessary?, 37 Texas L. Rev. 657, 675
(1959).
[ Footnote 12 ] Compare Nevada v. Hall, supra, in which the
Court permitted a California court to disregard Nevada's
statutory limitation on damages available against the State.
The Court found this direct intrusion upon Nevada's
sovereignty justified because the Nevada statute was
"obnoxious" to California's public policy. Id., at 424.
[ Footnote 13 ] It is clear that a litigant challenging the
forum's application of its own law to a lawsuit properly
brought in its courts bears the burden of establishing that
this choice of law infringes upon interests protected by the
Full Faith and Credit Clause. See Alaska Packers Assn. v.
Industrial Accident Comm'n, 294 U.S., at 547 -548.
It is equally clear that a state court's decision to apply
its own law cannot violate the Full Faith and Credit Clause
where the application of [449 U.S. 302, 326]
forum law

83

does not impinge at all upon the interests of other States.


Cf. Reese, supra n. 3, at 1601.

[ Footnote 16 ] Upon careful analysis, most of the decisions


of this Court that struck down on due process grounds a
state court's choice of forum law can be explained qas
attempts to prevent a State with a minimal contact with the
litigation
from
materially
enlarging
the
contractual
obligations of one of the parties where that party had no
reason to anticipate the possibility of such enlargement.
See, e. g., Home Ins. Co. v. Dick, 281 U.S. 397 (1930);
Hartford Accident & Indemnity Co. v. Delta & Pine Land
Co., 292 U.S. 143 (1934); cf. John Hancock Mutual Life Ins.
Co. v. Yates, 299 U.S. 178 (1936) (similar concern under
Full Faith and Credit Clause, see n. 11, supra). See
generally Weintraub, supra n. 4, at 457-460.

[ Footnote 14 ] This task can be particularly difficult for


a trial judge who does not have ready access to a law
library containing the statutes and decisions of all 50
States. If that judge is able to apply law with which he is
thoroughly familiar or can easily discover, substantial
savings can accrue to the State's judicial system. Moreover,
an erroneous interpretation of the governing rule is less
likely when the judge is applying a familiar rule. Cf.
Shaffer v. Heitner, 433 U.S., at 225 -226 (BRENNAN, J.,
dissenting in part) (such concerns indicate that a State's
ability to apply its own law to a transaction should be
relevant for purposes of evaluating its power to exercise
jurisdiction over the parties to that transaction).

[ Footnote 17 ] See also Nelson v. Employers Mutual Casualty


Co., 63 Wis. 2d 558, 563-566, and nn. 2, 3, 217 N. W. 2d
670, 672-674, and nn. 2, 3 (1974), discussed ante, at 316317, n. 22.

[ Footnote 15 ] Discrimination against nonresident would be


constitutionally suspect even if the Due Process Clause were
not a check upon a State's choice-of-law decisions. See
Currie & Schreter, Unconstitutional Discrimination in the
Conflict of Laws: Equal Protection, 28 U. Chi. L. Rev. 1
(1960); Currie & Schreter, Unconstitutional Discrimination
in the Conflict of Laws: Privileges and Immunities, 69 Yale
L. J. 1323 (1960); Note, Unconstitutional Discrimination in
Choice of Law, 77 Colum. L. Rev. 272 (1977). Moreover, both
discriminatory and substantively unfair rules of law may be
detected and remedied without any special choice-of-law
analysis; familiar constitutional principles are available
to deal with both varieties of unfairness. See, e. g.,
Martin, supra n. 5, at 199.

[ Footnote 18 ] The "stacking" rule provides that all of the


uninsured motorist coverage purchased by an insured party
may be aggregated, or "stacked," to create a fund available
to provide a recovery for a single accident.
[ Footnote 19 ] For example, in Home Ins. Co. v. Dick,
supra, at 403, and n. 1, the insurance policy was subject,
by its express terms, to Mexican law.
[ Footnote 20 ] Home Ins. Co., supra, again provides a
useful example. In that case, the insurance policy expressly
provided a 1-year limitations period for claims arising
thereunder. Id., at 403. Similarly, the insurance policy at
84

issue in Hartford Accident & Indemnity Co. v. Delta & Pine


Land Co., supra, at 146, also prescribed a specific
limitations period.

In Watson v. Employers Liability Assurance Corp., 348 U.S.,


at 68 , the insurance policy expressly provided that an
injured party could not maintain [449 U.S. 302, 329]
a
direct action against the insurer until after the insured's
liability had been determined. The Court found that neither
the Due Process Clause nor the Full Faith and Credit Clause
prevented the Louisiana courts from applying forum law to
permit a direct action against the insurer prior to
determination of the insured's liability. As in Clay, the
Court noted that the policy provided coverage for injuries
anywhere in the United States. 348 U.S., at 71 -72. An
additional, although unarticulated, factor in Watson was the
fact that the litigant urging that forum law be applied was
not a party to the insurance contract. While contracting
parties may be able to provide in advance that a particular
rule of law will govern disputes between them, their
expectations are clearly entitled to less weight when the
rights of third-party litigants are at issue.

While such express provisions are obviously relevant, they


are not always dispositive. In Clay v. Sun Insurance Office,
Ltd., 377 U.S. 179 (1964), the Court allowed the lower
court's choice of forum law to override an express
contractual limitations period. The Court emphasized the
fact that the insurer had issued the insurance policy with
the knowledge that it would cover the insured property
wherever it was taken. Id., at 181-182. The Court also noted
that the insurer had not attempted to provide in the policy
that the law of another State would control. Id., at 182.

[ Footnote 21 ] In Home Ins. Co., supra, the insurance


policy was issued in Mexico by a Mexican corporation and
covered the insured vessel only in certain Mexican waters.
Id., at 403.
[ Footnote 22 ] In Clay v. Sun Insurance Office, Ltd.,
supra, at 182, and Watson v. Employers Liability Assurance
Corp., supra, at 71-72, the Court considered it significant,
in upholding the lower courts' choice of forum law, that the
insurance policies provided coverage throughout the United
States. See n. 20, supra. Of course, in both Clay and Watson
the loss to which the insurance applied actually occurred in
the forum State, whereas the accident in this case occurred
85

in Wisconsin not Minnesota. However, as the dissent


recognizes, post, at 336-337, because the question on the
merits is one of contract interpretation rather than tort
liability, the actual site of the accident is not
dispositive with respect to the due process inquiry. More
relevant is the fact that the parties, at the time of [449
U.S. 302, 330]
contracting, anticipated that an accident
covered by the policy could occur in a "stacking" State. The
fact that this particular accident did not occur in
Minnesota does not undercut the expectations formed by the
parties at the time of contracting.

[ Footnote 23 ] Comparison of this case with Home Ins. Co.


v. Dick, 281 U.S. 397 (1930), confirms my conclusion that
the application of Minnesota law in this case does not
offend the Due Process Clause. In Home Ins. Co., the
contract expressly provided that a particular limitations
period would govern claims arising under the insurance
contract and that Mexican law was to be applied in
interpreting the contract; in addition, the contract was
limited in effect to certain Mexican waters. The parties
could hardly have made their expectations with respect to
the applicable law more plain. In this case, by way of
contrast, nothing in the contract suggests that Wisconsin
law should be applied or that Minnesota's "stacking" rule
should not be applied. In this case, unlike Home Ins. Co.,
the court's choice of forum law results in no unfair
surprise to the insurer.

In Hartford Accident & Indemnity Co. v. Delta & Pine Land


Co., supra, the Court struck down a state court's choice of
forum law despite the fact that the insurance contract's
coverage was not limited by state boundaries. While Hartford
Accident may indeed have "scant relevance for today," ante,
at 309, n. 11, it is nonetheless consistent with a due
process analysis based upon fundamental fairness to the
parties. One of the statutes applied by the Mississippi
courts in Hartford Accident was offensively broad, providing
that "[a]ll contracts of insurance on property, lives or
interests in this state shall be deemed to be made
therein." 292 U.S., at 148 . No similar statute is involved
in this case. In addition, the Mississippi courts applied
the law of the forum to override an express contractual
provision, and thus frustrated the expectations of the
contracting parties. In the present case, the insurance
contract contains no similar declaration of the intent of
the parties.

[ Footnote 24 ] Even this factor may not be of substantial


significance. At the time of contracting, the parties were
aware that the insurance policy was effective throughout the
United States and that the law of any State, including
Minnesota, might be applicable to particular claims. The
fact that the decedent regularly drove to Minnesota, for
whatever purpose, is relevant only to the extent that it
affected
the
parties'
evaluation,
at
the
time
of
contracting, of the likelihood that Minnesota law would
actually be applied at some point in the future. However,
because the applicability of Minnesota law was perceived as
possible at the time of contracting, it does not seem
especially significant for due process purposes that the
parties may also have considered it likely that Minnesota

86

law would be applied. This factor merely reinforces the


expectation revealed by the policy's national coverage.

I
At least since Carroll v. Lanza, 349 U.S. 408 (1955), the
Court has recognized that both the Due Process and the Full
Faith and Credit Clauses are satisfied if the forum has such
significant contacts with the litigation that it has a
legitimate state interest in applying its own law. The
significance of asserted contacts must be evaluated in light
of the constitutional policies that oversight by this Court
should serve. Two enduring policies emerge from our cases.

[ Footnote 25 ] In Kryger v. Wilson, 242 U.S. 171,


176 (1916), after rejecting a due process challenge to a
state court's choice of law, the Court stated:
"The most that the plaintiff in error can say is that the
state court made a mistaken application of doctrines of the
conflict of laws in deciding that the cancellation of a land
contract is governed by the law of the situs instead of the
place of making and performance. But that, being purely a
question of local common law, is a matter with which this
court is not concerned."
JUSTICE POWELL, with whom THE CHIEF JUSTICE and JUSTICE
REHNQUIST join, dissenting.

First, the contacts between the forum State and the


litigation should not be so "slight and casual" that it
would be fundamentally unfair to a litigant for the forum to
apply its own State's law. Clay v. Sun Ins. Office,
Ltd., 377 U.S. 179 . 182 (1964). The touchstone here is the
reasonable expectation of the parties. See Weintraub, Due
Process and Full Faith and Credit Limitations on a State's
Choice of Law, 44 Iowa L. Rev. 449, 445-457 (1959)
(Weintraub). Thus, in Clay, the insurer sold a policy to
Clay "`with knowledge that he could take his property
anywhere in the world he saw fit without losing the
protection of his insurance.'" 377 U.S., at 182 . quoting
Clay v. Sun Ins. Office Ltd., 363 U.S. 207, 221 (1960)
(Black, J., dissenting). When the insured moved to Florida
with the knowledge of the insurer, and a loss occurred in
that State, this Court found no unfairness in Florida's
applying its own rule of decision to permit recovery on the
policy. The insurer "must have known it might be sued
there." Ibid. See also Watson v. Employers Liability
Assurance Corp., 348 U.S. 66 (1954). 1
[449 U.S. 302,
334]

My disagreement with the plurality is narrow. I accept with


few reservations Part II of the plurality opinion, which
sets forth the basic principles that guide us in reviewing
state choice-of-law decisions under the Constitution. The
Court should invalidate a forum State's decision to apply
its own law only when there are no significant contacts
between the State and the litigation. This modest check on
state power is mandated by the Due Process Clause of the
Fourteenth Amendment and the Full Faith and Credit Clause of
Art. IV, 1. I do not believe, however, that the plurality
adequately analyzes the policies such review must serve. In
consequence, it has found significant what appear to me to
be trivial contacts between the forum State and the
litigation. [449 U.S. 302, 333]

87

Second, the forum State must have a legitimate interest in


the outcome of the litigation before it. Pacific Ins. Co. v.
Industrial Accident Comm'n, 306 U.S. 493 (1939). The Full
Faith and Credit Clause addresses the accommodation of
sovereign power among the various States. Under limited
circumstances, it requires one State to give effect to the
statutory law of another State. Nevada v. Hall, 440 U.S.
410, 423 (1979). To be sure, a forum State need not give
effect to another State's law if that law is in "violation
of its own legitimate public policy." Id., at 422.
Nonetheless, for a forum State to further its legitimate
public policy by applying its own law to a controversy,
there must be some connection between the facts giving rise
to the litigation and the scope of the State's lawmaking
jurisdiction.

determine if the contacts form a reasonable link between the


litigation and a state policy. In short, examination of
contacts addresses whether "the state [449 U.S. 302,
335]
has an interest in the application of its policy in
this instance." Currie, The Constitution and the Choice of
Law: Governmental Interests and the Judicial Function, in B.
Currie, Selected Essays on the Conflict of Laws 188, 189
(1963) (Currie). If it does, the Constitution is satisfied.
John Hancock Mut. Life Ins. Co. v. Yates, 299 U.S.
178 (1936), illustrates this principle. A life insurance
policy was executed in New York, on a New York insured with
a New York beneficiary. The insured died in New York; his
beneficiary moved to Georgia and sued to recover on the
policy. The insurance company defended on the ground that
the insured, in the application for the policy, had made
materially false statements that rendered it void under New
York
law.
This
Court
reversed
the
Georgia
court's
application of its contrary rule that all questions of the
policy's validity must be determined by the jury. The Court
found a violation of the Full Faith and Credit Clause,
because "[i]n respect to the accrual of the right asserted
under the contract . . . there was no occurrence, nothing
done, to which the law of Georgia could apply." Id., at 182.
In other words, the Court determined that Georgia had no
legitimate interest in applying its own law to the legal
issue of liability. Georgia's contacts with the contract of
insurance were nonexistent. 2 See Home Ins. Co. v. Dick, 281
U.S. 397, 408 (1930).

Both the Due Process and Full Faith and Credit Clauses
ensure that the States do not "reach out beyond the limits
imposed on them by their status as coequal sovereigns in a
federal system." World-Wide Volkswagen Corp. v. Woodson, 444
U.S. 286, 292 (1980) (addressing Fourteenth Amendment
limitation on state-court jurisdiction). As the Court stated
in Pacific Ins. Co., supra: "[T]he full faith and credit
clause does not require one state to substitute for its own
statute, applicable to persons and events within it, the
conflicting statute of another state." Id., at 502 (emphasis
added). The State has a legitimate interest in applying a
rule of decision to the litigation only if the facts to
which the rule will be applied have created effects within
the State, toward which the State's public policy is
directed. To assess the sufficiency of asserted contacts
between the forum and the litigation, the court must

In summary, the significance of the contacts between a forum


State and the litigation must be assessed in light of [449
88

U.S.
302,
336]
these
two
important
constitutional
policies. 3 A contact, or a pattern of contacts, satisfies
the Constitution when it protects the litigants from being
unfairly surprised if the forum State applies its own law,
and when the application of the forum's law reasonably can
be understood to further a legitimate public policy of the
forum State.

The more doubtful question in this case is whether


application of Minnesota's substantive law reasonably
furthers a legitimate state interest. The plurality attempts
to give substance to the tenuous contacts between Minnesota
and this litigation. Upon examination, however, these
contacts are either trivial or irrelevant to the furthering
of any public policy of Minnesota.

II

First, the post accident residence of the plaintiffbeneficiary is constitutionally irrelevant to the choice-oflaw question. John Hancock Mut. Life Ins. Co. v. Yates,
supra. The plurality today insists that Yates only held that
a postoccurrence move to the forum State could not "in and
of itself" confer power on the forum to apply its own law,
but did not establish that such a change of residence was
irrelevant. Ante, at 319. What the Yates Court held,
however, was that "there was no occurrence, nothing done, to
which the law of Georgia could apply." 299 U.S., at
182(emphasis added). Any possible ambiguity in the Court's
view of the significance of a postoccurrence change of
residence is dispelled by Home Ins. Co. v. Dick, supra,
cited by the Yates Court, where it was held squarely that
Dick's post accident move to the forum State was "without
significance." 281 U.S., at 408 .

Recognition of the complexity of the constitutional inquiry


requires that this Court apply these principles with
restraint. Applying these principles to the facts of this
case, I do not believe, however, that Minnesota had
sufficient contacts with the "persons and events" in this
litigation to apply its rule permitting stacking. I would
agree that no reasonable expectations of the parties were
frustrated. The risk insured by petitioner was not
geographically limited. See Clay v. Sun Ins. Office,
Ltd., 377 U.S., at 182 . The close proximity of Hager City,
Wis., to Minnesota, and the fact that Hague commuted daily
to Red Wing, Minn., for many years should have led the
insurer to realize that there was a reasonable probability
that the risk would materialize in Minnesota. Under our
precedents, it is plain that Minnesota could have applied
its own law to an accident occurring within its borders. See
ante, at 318, n. 24. The fact that the accident did not, in
fact, occur in Minnesota is not controlling because the
expectations of the litigants before the cause of [449 U.S.
302,
337]
action
accrues
provide
the
pertinent
perspective. See Weintraub 455; n. 1, supra.

This rule is sound. If a plaintiff could choose the


substantive rules to be applied to an action by moving to a
hospitable forum, the invitation to forum shopping would be
irresistible. Moreover, it would permit the defendant's
reasonable expectations at the time the cause of action
accrues to be frustrated, because it would permit the
choice-of-law
question
to
turn
on
a
postaccrual
89

circumstance. Finally, postaccrual residence has nothing to


do with facts to which the forum State proposes to apply its
rule; it is unrelated to the substantive legal issues
presented by the litigation.

The insured's place of employment is not, however,


significant in this case. Neither the nature of the
insurance policy, the events related to the accident, nor
the immediate question of stacking coverage is in any way
affected or implicated by the insured's employment status.
The
plurality's
opinion
is
understandably
vague
in
explaining how trebling the benefits to be paid to the
estate of a nonresident employee furthers any substantial
state interest relating to employment. Minnesota does not
wish its workers to die in automobile accidents, but
permitting stacking will not further this interest. The
substantive issue here is solely one of compensation, and
whether the compensation provided by this policy is
increased or not will have no relation to the State's
employment policies or police power. See n. 5, supra.

Second, the plurality finds it significant that the insurer


does business in the forum State. Ante, at 317-318. The
State [449 U.S. 302, 338]
does have a legitimate interest
in regulating the practices of such an insurer. But this
argument proves too much. The insurer here does business in
all 50 States. The forum State has no interest in regulating
that conduct of the insurer unrelated to property, persons,
or contracts executed within the forum State. 4 See
Hoopeston Canning Co. v. Cullen, 318 U.S. 313, 319 (1943).
The plurality recognizes this flaw and attempts to bolster
the significance of the local presence of the insurer by
combining it with the other factors deemed significant: the
presence of the plaintiff and the fact that the deceased
worked in the forum State. This merely restates the basic
question in the case.

Neither taken separately nor in the aggregate do the


contacts asserted by the plurality today indicate that
Minnesota's application of its substantive rule in this case
will further any legitimate state interest. 6 The plurality
focuses [449 U.S. 302, 340]
only on physical contacts vel
non, and in doing so pays scant attention to the more
fundamental reasons why our precedents require reasonable
policy-related contacts in choice-of-law cases. Therefore, I
dissent.

Third, the plurality emphasizes particularly that the


insured worked in the forum State. 5 Ante, at 313-317. The
fact that the insured was a nonresident employee in the
forum [449 U.S. 302, 339]
State provides a significant
contact for the furtherance of some local policies. See, e.
g., Pacific Ins. Co. v. Industrial Accident Comm'n, 306 U.S.
493 (1939) (forum State's interest in compensating workers
for employment-related injuries occurring within the State);
Alaska Packers Assn. v. Industrial Accident Comm'n, 294 U.S.
532, 549 (1935) (forum State's interest in compensating the
employment-related injuries of a worker hired in the State).

[ Footnote 1 ] Home Ins. Co. v. Dick, 281 U.S. 397 (1930),


is a case where the reasonable expectations of a litigant
were frustrated. The insurance contract confined the risk to
Mexico, where the loss occurred and where both the insurer
and the insured resided until the claim accrued. This Court
found a violation of the Due Process Clause when Texas, the
90

forum State, applied a local rule to allow the insured to


gain a recovery unavailable under Mexican law. Because of
the geographic limitation on the risk, and [449 U.S. 302,
334]
because there were no contacts with the forum State
until the claim accrued, the insurer could have had no
reasonable expectation that Texas law would be applied to
interpret its obligations under the contract. See Weintraub
455.

fundamentally unfair." Ante, at 313. But this general


prohibition does not distinguish questions of choice of law
from
those
of
jurisdiction,
or
from
much
of
the
jurisprudence of the Fourteenth Amendment.
[ Footnote 4 ] The petitioner in John Hancock Mut. Life Ins.
Co. v. Yates, 299 U.S. 178 (1936), did business in Georgia,
the forum State, at the time of that case. See The Insurance
Almanac 715 (1935). Also, Georgia extensively regulated
insurance practices within the State at that time. See Ga.
Code 56-101 et seq. (1933). This Court did not hint in Yates
that this fact was of the slightest significance to the
choice-of-law question, although it would have been crucial
for the exercise of in personam jurisdiction.

[ Footnote 2 ] "It is manifest that Georgia had no interest


in the application to this case of any policy to be found in
its laws. When the contract was entered into, and at all
times until the insured died, the parties and the
transaction were beyond the legitimate reach of whatever
policy Georgia may have had. Any interest asserted by
Georgia must relate to the circumstance that the action is
tried there, and must arise not from any policy directed to
the business of life insurance but from some policy having
to do with the business of the courts. This was apparently
recognized even by the Georgia court; hence the disingenuous
characterization of the matter as one of `procedure' rather
than of `substance.'" Currie 236. See also id., at 232-233.

[ Footnote 5 ] The plurality exacts double service from this


fact, by finding a separate contact in that the insured
commuted daily to his job. Ante, at 314-315. This is merely
a repetition of the facts that the insured lived in
Wisconsin and worked in Minnesota. The State does have an
interest in the safety of motorists who use its roads. This
interest is not limited to employees, but extends to all
nonresident motorists on its highways. This safety interest,
however, cannot encompass, either in logic or in any
practical sense, the determination whether a nonresident's
estate can stack benefit coverage in a policy written in
another State regarding an accident that occurred on another
State's roads.

[ Footnote 3 ] The plurality today apparently recognizes


that the significance of the contacts must be evaluated in
light of the policies our review serves. It acknowledges
that the sufficiency of the same contacts sometimes will
differ in jurisdiction and choice-of-law questions. Ante, at
317, n. 23. The plurality, however, pursues the rationale
for the requirement of sufficient contacts in choice-of-law
cases no further than to observe that the forum's
application of its own law must be "neither arbitrary nor

Cardillo v. Liberty Mutual Ins. Co., 330 U.S. 469 (1947),


hardly establishes commutation as an independent contact;
the case merely approved the application of a forum State's
91

law to an industrial accident occurring in a neighboring


State when the employer and the employee both resided in the
forum State.

- versus - Chairman,
Austria-Martinez,
Callejo, Sr.,
Tinga, and
Chico-Nazario, JJ.
M/V LOK MAHESHWARI,
THE SHIPPING CORPORATION
OF INDIA, and PORTSERV LIMITED Promulgated:
and/or TRANSMAR SHIPPING, INC.,
Respondents. November 11, 2005
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
*

[ Footnote 6 ] The opinion of JUSTICE STEVENS concurring in


the judgment supports my view that the forum State's
application of its own law to this case cannot be justified
by the existence of relevant minimum contacts. As JUSTICE
STEVENS observes, the principal factors relied on by the
plurality are "either irrelevant to or possibly even tend to
undermine the [plurality's] conclusion." Ante. at 331. The
interesting analysis he proposes to uphold the State's
judgment is, however, difficult to reconcile with our prior
decisions and may create more problems than it solves. For
example, it seems questionable to measure the interest of a
State in a controversy by the degree of conscious reliance
on that State's law by private [449 U.S. 302, 340]
parties
to a contract Ante, at 324. Moreover, scrutinizing the
strength of the interests of a nonforum State may draw this
Court back into the discredited practice of weighing the
relative interests of various States in a particular
controversy.
See
ante,
at
308,
n.
10
(plurality
opinion). [449 U.S. 302, 341]

DECISION
PUNO, J.:
This petition for review on certiorari under Rule 45 seeks
the (a) reversal of the November 28, 2001 Decision of the
Court of Appeals in CA-G.R. No. CV-54920, [1]which dismissed
for want of jurisdiction the instant case, and the September
3, 2002 Resolution of the same appellate court,[2] which
denied petitioners motion for reconsideration, and (b)
reinstatement of the July 25, 1996 Decision[3] of the
Regional Trial Court (RTC) in Civil Case No. CEB-18679,
which held that respondents were solidarily liable to pay
petitioner the sum prayed for in the complaint.
The facts are as follows: Respondent M/V Lok Maheshwari
(Vessel) is an oceangoing vessel of Indian registry that is
owned by respondent Shipping Corporation of India (SCI), a
corporation organized and existing under the laws of India
and principally owned by the Government of India. It was
time-chartered by respondent SCI to Halla Merchant Marine
Co. Ltd. (Halla), a South Korean company. Halla, in turn,
sub-chartered the Vessel through a time charter to Transmar
Shipping, Inc. (Transmar). Transmar further sub-chartered
the Vessel to Portserv Limited (Portserv). Both Transmar and

SECOND DIVISION

CRESCENT PETROLEUM, LTD., G.R. No. 155014 Petitioner,


Present:
Puno, J.,
92

Portserv are corporations organized and existing under the


laws of Canada.
On or about November 1, 1995, Portserv requested
petitioner
Crescent
Petroleum,
Ltd.
(Crescent),
a
corporation organized and existing under the laws of Canada
that is engaged in the business of selling petroleum and oil
products for the use and operation of oceangoing vessels, to
deliver marine fuel oils (bunker fuels) to the Vessel.
Petitioner Crescent granted and confirmed the request
through an advice via facsimile dated November 2, 1995. As
security for the payment of the bunker fuels and related
services, petitioner Crescent received two (2) checks in the
amounts of US$100,000.00 and US$200,000.00. Thus, petitioner
Crescent contracted with its supplier, Marine Petrobulk
Limited (Marine Petrobulk), another Canadian corporation,
for the physical delivery of the bunker fuels to the Vessel.
On or about November 4, 1995, Marine Petrobulk
delivered the bunker fuels amounting to US$103,544 inclusive
of barging and demurrage charges to the Vessel at the port
of Pioneer Grain, Vancouver, Canada. The Chief Engineer
Officer of the Vessel duly acknowledged and received the
delivery receipt. Marine Petrobulk issued an invoice to
petitioner Crescent for the US$101,400.00 worth of the
bunker fuels. Petitioner Crescent issued a check for the
same amount in favor of Marine Petrobulk, which check was
duly encashed.
Having paid Marine Petrobulk, petitioner Crescent
issued a revised invoice dated November 21, 1995 to Portserv
Limited, and/or the Master, and/or Owners, and/or Operators,
and/or Charterers of M/V Lok Maheshwari in the amount of
US$103,544.00 with instruction to remit the amount on or
before December 1, 1995. The period lapsed and several
demands were made but no payment was received. Also, the
checks issued to petitioner Crescent as security for the
payment
of
the
bunker
fuels
were
dishonored
for
insufficiency
of
funds. As
a
consequence,
petitioner

Crescent incurred additional expenses of US$8,572.61 for


interest, tracking fees, and legal fees.
On May 2, 1996, while the Vessel was docked at the
port of Cebu City, petitioner Crescent instituted before the
RTC of Cebu City an action for a sum of money with prayer
for temporary restraining order and writ of preliminary
attachment against respondents Vessel and SCI, Portserv
and/or Transmar. The case was raffled to Branch 10 and
docketed as Civil Case No. CEB-18679.
On May 3, 1996, the trial court issued a writ of
attachment against the Vessel with bond at P2,710,000.00.
Petitioner Crescent withdrew its prayer for a temporary
restraining order and posted the required bond.
On May 18, 1996, summonses were served to respondents Vessel
and SCI, and Portserv and/or Transmar through the Master of
the Vessel. On May 28, 1996, respondents Vessel and SCI,
through Pioneer Insurance and Surety Corporation (Pioneer),
filed an urgent ex-parte motion to approve Pioneers letter
of undertaking, to consider it as counter-bond and to
discharge the attachment. On May 29, 1996, the trial court
granted the motion; thus, the letter of undertaking was
approved as counter-bond to discharge the attachment.
For failing to file their respective answers and upon motion
of petitioner Crescent, the trial court declared respondents
Vessel and SCI, Portserv and/or Transmar in default.
Petitioner Crescent was allowed to present its evidence exparte.
On July 25, 1996, the trial court rendered its decision in
favor of petitioner Crescent, thus:
WHEREFORE, premises considered, judgment is
hereby rendered in favor of plaintiff [Crescent]

93

and
against
the
defendants
Portserv and/or Transmar].

[Vessel,

SCI,

submitted a copy of Part II of the Bunker Fuel Agreement


between petitioner Crescent and Portserv containing a
stipulation that New York law governs the construction,
validity and performance of the contract. They likewise
submitted certified copies of the Commercial Instruments
and Maritime Lien Act of the United States (U.S.), some
U.S. cases, and some Canadian cases to support their
defense.

Consequently, the latter are hereby ordered to


pay plaintiff jointly and solidarily, the
following:
(a)

the
sum
of
US$103,544.00,
representing
the
outstanding
obligation;
(b) interest of US$10,978.50 as of
July
3,
1996,
plus
additional
interest at 18% per annum for the
period
thereafter,
until
the
principal account is fully paid;
(c) attorneys fees of P300,000.00; and
(d) P200,000.00
as
litigation
expenses.

On November 28, 2001, the Court of Appeals issued its


assailed Decision, which reversed that of the trial
court, viz:
WHEREFORE,
premises
considered,
the
Decision dated July 25, 1996, issued by the
Regional Trial Court of Cebu City, Branch 10, is
hereby REVERSED and SET ASIDE, and a new one is
entered DISMISSING the instant case for want of
jurisdiction.

SO ORDERED.
The appellate court denied petitioner Crescents motion
for reconsideration explaining that it dismissed the
instant action primarily on the ground of forum non
conveniens considering
that
the
parties
are
foreign
corporations
which
are
not
doing
business
in
the
Philippines.

On August 19, 1996, respondents Vessel and SCI


appealed to the Court of Appeals. They attached copies of
the charter parties between respondent SCI and Halla,
between Halla and Transmar, and between Transmar and
Portserv. They pointed out that Portserv was a time
charterer and that there is a clause in the time charters
between respondent SCI and Halla, and between Halla and
Transmar, which states that the Charterers shall provide
and pay for all the fuel except as otherwise agreed. They

Hence, this petition submitting the following issues for


resolution, viz:

94

1.

Philippine
courts
have
jurisdiction over a foreign vessel found
inside
Philippine
waters
for
the
enforcement of a maritime lien against
said
vessel
and/or
its
owners
and
operators;

5.

The arbitration clause in


the contract was not rigid or inflexible
but
expressly
allowed
petitioner
to
enforce its maritime lien in Philippine
courts provided the vessel was in the
Philippines;

2.

The principle of forum non


conveniens is inapplicable to the instant
case;

6.

The law of the state of New


York
is
inapplicable
to
the
present
controversy as the same has not been
properly pleaded and proved;

3.

The trial court acquired


jurisdiction over the subject matter of
the
instant
case,
as
well
as
over
the res and
over
the
persons
of
the
parties;

7.

Petitioner
has
legal
capacity to sue before Philippine courts
as it is suing upon an isolated business
transaction;

8.

Respondents were duly served


summons although service of summons upon
respondents
is
not
a
jurisdictional
requirement, the action being a suitquasi
in rem;

9.

The trial courts


has factual and legal bases; and,

4.

The
enforcement
of
a
maritime lien on the subject vessel is
expressly
granted
by
law.
The
Ship
Mortgage Acts as well as the Code of
Commerce provides for relief to petitioner
for its unpaid claim;

95

decision

10.

A contract for furnishing supplies like the one


involved in this case is maritime and within the
jurisdiction of admiralty.[6] It may be invoked before our
courts through an action in rem or quasi in rem or an
action in personam. Thus: [7]
x x x
Articles 579 and 584 [of the Code of
Commerce] provide a method of collecting or
enforcing not only the liens created under
Section 580 but also for the collection of any
kind of lien whatsoever.[8] In the Philippines,
we have a complete legislation, both substantive
and adjective, under which to bring an action in
rem against
a
vessel
for
the
purpose
of
enforcing liens. The substantive law is found in
Article 580 of the Code of Commerce. The
procedural law is to be found in Article 584 of
the same Code. The result is, therefore, that in
the Philippines any vessel even though it be a
foreign vessel found in any port of this
Archipelago may be attached and sold under the
substantive law which defines the right, and the
procedural law contained in the Code of Commerce
by which this right is to be enforced.[9] x x
x. But where neither the law nor the contract
between the parties creates any lien or charge
upon the vessel, the only way in which it can be
seized before judgment is by pursuing the remedy
relating to attachment under Rule 59 [now Rule
57] of the Rules of Court.[10]

The respondents should be held


jointly and solidarily liable.

In a nutshell, this case is for the satisfaction of


unpaid supplies furnished by a foreign supplier in a
foreign port to a vessel of foreign registry that is owned,
chartered and sub-chartered by foreign entities.
Under Batas Pambansa Bilang 129, as amended by
Republic Act No. 7691, RTCs exercise exclusive original
jurisdiction (i)n all actions in admiralty and maritime
where the demand or claim exceeds two hundred thousand pesos
(P200,000) or in Metro Manila, where such demand or claim
exceeds four hundred thousand pesos (P400,000). Two (2)
tests have been used to determine whether a case involving a
contract
comes
within
the
admiralty
and
maritime
jurisdiction of a court - thelocational test and the subject
matter test. The English rule follows the locational test
wherein maritime and admiralty jurisdiction, with a few
exceptions, is exercised only on contracts made upon the sea
and to be executed thereon. This is totally rejected under
the American rule where the criterion in determining whether
a contract is maritime depends on the nature and subject
matter of the contract, having reference to maritime service
and transactions.[4] In International Harvester Company of
the Philippines v. Aragon,[5] we adopted the American rule
and held that (w)hether or not a contract is maritime
depends not on the place where the contract is made and is
to be executed, making the locality the test, but on the
subject matter of the contract, making the true criterion a
maritime service or a maritime transaction.

But, is petitioner Crescent entitled to a maritime


lien under our laws? Petitioner Crescent bases its claim of
a maritime lien on Sections 21, 22 and 23 ofPresidential
Decree No. 1521 (P.D. No. 1521), also known as the Ship
Mortgage Decree of 1978, viz:

96

Sec. 21. Maritime Lien for Necessaries;


persons entitled to such lien. - Any person
furnishing repairs, supplies, towage, use of dry
dock or maritime railway, or other necessaries,
to any vessel, whether foreign or domestic, upon
the order of the owner of such vessel, or of a
person authorized by the owner, shall have a
maritime lien on the vessel, which may be
enforced by suit in rem, and it shall be
necessary to allege or prove that credit was
given to the vessel.

Section 22 of this Decree shall be taken to


include such officers and agents when appointed
by a charterer, by an owner pro hac vice, or by
an agreed purchaser in possession of the vessel;
but nothing in this Decree shall be construed to
confer a lien when the furnisher knew, or by
exercise of reasonable diligence could have
ascertained, that because of the terms of a
charter party, agreement for sale of the vessel,
or for any other reason, the person ordering the
repairs, supplies, or other necessaries was
without authority to bind the vessel therefor.

Sec. 22. Persons Authorized to Procure


Repairs,
Supplies
and
Necessaries.
The
following persons shall be presumed to have
authority from the owner to procure repairs,
supplies, towage, use of dry dock or marine
railway, and other necessaries for the vessel:
The managing owner, ships husband, master or any
person to whom the management of the vessel at
the port of supply is entrusted. No person
tortuously or unlawfully in possession or charge
of a vessel shall have authority to bind the
vessel.

Petitioner Crescent submits that these provisions


apply to both domestic and foreign vessels, as well as
domestic and foreign suppliers of necessaries. It contends
that the use of the term any person in Section 21 implies
that the law is not restricted to domestic suppliers but
also includes all persons who supply provisions and
necessaries to a vessel, whether foreign or domestic. It
points out further that the law does not indicate that the
supplies or necessaries must be furnished in the Philippines
in order to give petitioner the right to seek enforcement of
the lien with a Philippine court.[11]
Respondents Vessel and SCI, on the other hand,
maintain that Section 21 of the P.D. No. 1521 or the Ship
Mortgage Decree of 1978 does not apply to a foreign supplier
like petitioner Crescent as the provision refers only to a
situation where the person furnishing the supplies is
situated inside the territory of the Philippines and not
where
the
necessaries
were
furnished
in
a
foreign
jurisdiction like Canada.[12]
We find against petitioner Crescent.

Sec. 23. Notice to Person Furnishing


Repairs,
Supplies
and
Necessaries.
The
officers and agents of a vessel specified in
97

I.

employment, he was negligently injured. He sued the


shipowner in a federal district court in New York for
damages under the Jones Act. In holding that Danish law and
not the Jones Act was applicable, the Supreme Court adopted
a multiple-contact test to determine, in the absence of a
specific Congressional directive as to the statutes reach,
which jurisdictions law should be applied. The following
factors were considered: (1) place of the wrongful act; (2)
law of the flag; (3) allegiance or domicile of the injured;
(4) allegiance of the defendant shipowner; (5) place of
contract; (6) inaccessibility of foreign forum; and (7) law
of the forum.

P.D. No. 1521 or the Ship Mortgage Decree of 1978 was


enacted to accelerate the growth and development of the
shipping industry and to extend the benefits accorded to
overseas shipping under Presidential Decree No. 214 to
domestic shipping.[13] It is patterned closely from the U.S.
Ship Mortgage Act of 1920 and the Liberian Maritime Law
relating to preferred mortgages.[14] Notably, Sections 21, 22
and 23 of P.D. No. 1521 or the Ship Mortgage Decree of 1978
are identical to Subsections P, Q, and R, respectively, of
the U.S. Ship Mortgage Act of 1920, which is part of the
Federal Maritime Lien Act. Hence, U.S. jurisprudence finds
relevance to determining whether P.D. No. 1521 or the Ship
Mortgage Decree of 1978 applies in the present case.
The various tests used in the U.S. to determine
whether a maritime lien exists are the following:
One. In a suit to establish and enforce a maritime
lien for supplies furnished to a vessel in a foreign port,
whether such lien exists, or whether the court has or will
exercise jurisdiction, depends on the law of the country
where the supplies were furnished, which must be pleaded and
proved.[15] This principle was laid down in the 1888 case
of The
Scotia,[16] reiterated
in The
Kaiser
Wilhelm
[17]
II
(1916), in The Woudrichem[18] (1921) and in The City of
Atlanta[19] (1924).
Two. The Lauritzen-Romero-Rhoditis trilogy of cases,
which replaced such single-factor methodologies as the law
of the place of supply.[20]

Several years after Lauritzen, the U.S. Supreme Court


in the case of Romero v. International Terminal Operating
Co.[22] again considered a foreign seamans personal injury
claim under both the Jones Act and the general maritime law.
The Court held that the factors first announced in the case
of Lauritzen were applicable not only to personal injury
claims arising under the Jones Act but to all matters
arising under maritime law in general.[23]
Hellenic Lines, Ltd. v. Rhoditis[24] was also a suit
under the Jones Act by a Greek seaman injured aboard a ship
of Greek registry while in American waters. The ship was
operated by a Greek corporation which has its largest office
in New York and another office in New Orleans and whose
stock is more than 95% owned by a U.S. domiciliary who is
also a Greek citizen. The ship was engaged in regularly
scheduled runs between various ports of the U.S. and the
Middle East, Pakistan, and India, with its entire income
coming from either originating or terminating in the U.S.
The contract of employment provided that Greek law and a
Greek collective bargaining agreement would apply between
the employer and the seaman and that all claims arising out
of the employment contract were to be adjudicated by a Greek

In Lauritzen v. Larsen,[21] a Danish seaman, while


temporarily in New York, joined the crew of a ship of Danish
flag and registry that is owned by a Danish citizen. He
signed the ships articles providing that the rights of the
crew members would be governed by Danish law and by the
employers contract with the Danish Seamens Union, of which
he was a member. While in Havana and in the course of his
98

court. The U.S. Supreme Court observed that of the seven


factors listed in the Lauritzen test, four were in favor of
the shipowner and against jurisdiction. In arriving at the
conclusion that the Jones Act applies, it ruled that the
application of the Lauritzen test is not a mechanical one.
It stated thus: [t]he significance of one or more factors
must be considered in light of the national interest served
by the assertion of Jones Act jurisdiction. (footnote
omitted) Moreover, the list of seven factors in Lauritzen
was not intended to be exhaustive. x x x [T]he shipowners
base of operations is another factor of importance in
determining whether the Jones Act is applicable; and there
well may be others.

99

The principles enunciated in these maritime tort cases


have been extended to cases involving unpaid supplies and
necessaries such as the cases of Forsythe International
U.K., Ltd. v. M/V Ruth Venture,[25] and Comoco Marine
Services v. M/V El Centroamericano.[26]
Three. The factors provided in Restatement (Second) of
Conflicts of Law have also been applied, especially in
resolving cases brought under the Federal Maritime Lien Act.
Their application suggests that in the absence of an
effective choice of law by the parties, the forum contacts
to be considered include: (a) the place of contracting; (b)
the place of negotiation of the contract; (c) the place of
performance; (d) the location of the subject matter of the
contract; and (e) the domicile, residence, nationality,
place of incorporation and place of business of the parties.

a maritime lien. It ruled that the facts in the case call


for the application of the Restatement (Second) of Conflicts
of Law. The U.S. Court gave much significance to the
congressional intent in enacting the Maritime Lien Statute
to protect the interests of American supplier of goods,
services or necessaries by making maritime liens available
where traditional services are routinely rendered. It
concluded that the Maritime Lien Statute represents a
relevant policy of the forum that serves the needs of the
international legal system as well as the basic policies
underlying maritime law. The court also gave equal
importance to the predictability of result and protection of
justified expectations in a particular field of law. In the
maritime realm, it is expected that when necessaries are
furnished to a vessel in an American port by an American
supplier, the American Lien Statute will apply to protect
that supplier regardless of the place where the contract was
formed or the nationality of the vessel.
The same principle was applied in the case of Swedish
Telecom Radio v. M/V Discovery I[29] where the American court
refused to apply the Federal Maritime Lien Act to create a
maritime lien for goods and services supplied by foreign
companies in foreign ports. In this case, a Swedish company
supplied radio equipment in a Spanish port to refurbish a
Panamanian vessel damaged by fire. Some of the contract
negotiations occurred in Spain and the agreement for
supplies between the parties indicated Swedish companys
willingness to submit to Swedish law. The ship was later
sold under a contract of purchase providing for the
application of New York law and was arrested in the U.S. The
U.S. Court of Appeals also held that while the contactsbased framework set forth in Lauritzen was useful in the
analysis of all maritime choice of law situations, the
factors were geared towards a seamans injury claim. As
in Gulf Trading, the lien arose by operation of law because
the ships owner was not a party to the contract under which
the goods were supplied. As a result, the court found it

[27]

In Gulf Trading and Transportation Co. v. The Vessel


Hoegh Shield,[28] an admiralty action in rem was brought by
an American supplier against a vessel of Norwegian flag
owned by a Norwegian Company and chartered by a London time
charterer for unpaid fuel oil and marine diesel oil
delivered while the vessel was in U.S. territory. The
contract was executed in London. It was held that because
the bunker fuel was delivered to a foreign flag vessel
within the jurisdiction of the U.S., and because the invoice
specified payment in the U.S., the admiralty and maritime
law of the U.S. applied. The U.S. Court of Appeals
recognized the modern approach to maritime conflict of law
problems introduced in the Lauritzen case. However, it
observed that Lauritzen involved a torts claim under the
Jones Act while the present claim involves an alleged
maritime lien arising from unpaid supplies. It made a
disclaimer that its conclusion is limited to the unique
circumstances surrounding a maritime lien as well as the
statutory directives found in the Maritime Lien Statute and
that the
initial
choice
of
law
determination
is
significantly affected by the statutory policies surrounding
100

more appropriate to consider the factors contained in


Section 6 of the Restatement (Second) of Conflicts of Law.
The U.S. Court held that the primary concern of the Federal
Maritime Lien Act is the protection of American suppliers of
goods and services.
The same factors were applied in the case of Ocean
Ship Supply, Ltd. v. M/V Leah.[30]
II.
Finding guidance from the foregoing decisions, the
Court cannot sustain petitioner Crescents insistence on the
application of P.D. No. 1521 or the Ship Mortgage Decree of
1978 and hold that a maritime lien exists.

lien under our laws even if they are not entitled to a


maritime lien under their laws will encourage forum
shopping.
Finally. The submission of petitioner is not in
keeping with the reasonable expectation of the parties to
the contract. Indeed, when the parties entered into a
contract for supplies in Canada, they could not have
intended the laws of a remote country like the Philippines
to determine the creation of a lien by the mere accident of
the Vessels being in Philippine territory.
III.
But under which law should petitioner Crescent prove the
existence of its maritime lien?

First. Out of the seven basic factors listed in the


case of Lauritzen, Philippine law only falls under one the
law of the forum. All other elements are foreign Canada is
the place of the wrongful act, of the allegiance or domicile
of the injured and the place of contract; India is the law
of the flag and the allegiance of the defendant shipowner.
Balancing these basic interests, it is inconceivable that
the Philippine court has any interest in the case that
outweighs the interests of Canada or India for that matter.

In light of the interests of the various foreign elements


involved, it is clear that Canada has the most significant
interest in this dispute. The injured party is a Canadian
corporation, the sub-charterer which placed the orders for
the supplies is also Canadian, the entity which physically
delivered the bunker fuels is in Canada, the place of
contracting and negotiation is in Canada, and the supplies
were delivered in Canada.

Second. P.D. No. 1521 or the Ship Mortgage Decree of


1978 is inapplicable following the factors under Restatement
(Second) of Conflict of Laws. Like the Federal Maritime Lien
Act of the U.S., P.D. No. 1521 or the Ship Mortgage Decree
of 1978 was enacted primarily to protect Filipino suppliers
and was not intended to create a lien from a contract for
supplies between foreign entities delivered in a foreign
port.
Third. Applying P.D. No. 1521 or the Ship Mortgage
Decree of 1978 and rule that a maritime lien exists would
not promote the public policy behind the enactment of the
law to develop the domestic shipping industry. Opening up
our courts to foreign suppliers by granting them a maritime

The arbitration clause contained in the Bunker Fuel


Agreement which states that New York law governs the
construction, validity and performance of the contract is
only a factor that may be considered in the choice-of-law
analysis but is not conclusive. As in the cases of Gulf
Trading and Swedish Telecom, the lien that is the subject
matter of this case arose by operation of law and not by
contract because the shipowner was not a party to the
contract under which the goods were supplied.
It is worthy to note that petitioner Crescent never
alleged and proved Canadian law as basis for the existence
of a maritime lien. To the end, it insisted on its theory
101

that Philippine law applies. Petitioner contends that even


if foreign law applies, since the same was not properly
pleaded and proved, such foreign law must be presumed to be
the same as Philippine law pursuant to the doctrine of
processual presumption.
Thus, we are left with two choices: (1) dismiss the
case for petitioners failure to establish a cause of
action[31] or (2) presume that Canadian law is the same as
Philippine law. In either case, the case has to be
dismissed.
It is well-settled that a party whose cause of action
or defense depends upon a foreign law has the burden of
proving the foreign law. Such foreign law is treated as a
question of fact to be properly pleaded and proved.
[32]
Petitioner Crescents insistence on enforcing a maritime
lien before our courts depended on the existence of a
maritime lien under the proper law. By erroneously claiming
a maritime lien under Philippine law instead of proving that
a maritime lien exists under Canadian law, petitioner
Crescent failed to establish a cause of action.[33]
Even
if
we
apply
the
doctrine
of
processual
presumption, the result will still be the same. Under P.D.
No. 1521 or the Ship Mortgage Decree of 1978, the following
are the requisites for maritime liens on necessaries to
exist: (1) the necessaries must have been furnished to and
for the benefit of the vessel; (2) the necessaries must have
been necessary for the continuation of the voyage of the
vessel; (3) the credit must have been extended to the
vessel; (4) there must be necessity for the extension of the
credit; and (5) the necessaries must be ordered by persons
authorized to contract on behalf of the vessel.[34] These do
not avail in the instant case.
First. It was not established that benefit was
extended to the vessel. While this is presumed when the
master of the ship is the one who placed the order, it is
not disputed that in this case it was the sub-charterer
Portserv which placed the orders to petitioner Crescent.

Hence, the presumption does not arise and it is


incumbent upon petitioner Crescent to prove that benefit was
extended to the vessel. Petitioner did not.
[35]

Second. Petitioner Crescent did not show any proof


that
the
marine
products
were
necessary
for
the
continuation of the vessel.
Third. It was not established that credit was extended
to the vessel. It is presumed that in the absence of fraud
or collusion, where advances are made to a captainin a
foreign port, upon his request, to pay for necessary
repairs or supplies to enable his vessel to prosecute her
voyage, or to pay harbor dues, or for pilotage, towage and
like services rendered to the vessel, that they are made
upon the credit of the vessel as well as upon that of her
owners.[36] In this case, it was the sub-charterer Portserv
which requested for the delivery of the bunker fuels. The
issuance of two checks amounting to US$300,000 in favor of
petitioner Crescent prior to the delivery of the bunkers as
security for the payment of the obligation weakens
petitioner Crescents contention that credit was extended to
the Vessel.
We also note that when copies of the charter parties
were submitted by respondents in the Court of Appeals, the
time charters between respondent SCI and Halla and between
Halla and Transmar were shown to contain a clause which
states that the Charterers shall provide and pay for all
the fuel except as otherwise agreed. This militates against
petitioner Crescents position that Portserv is authorized
by the shipowner to contract for supplies upon the credit
of the vessel.
102

Fourth. There was no proof of necessity of credit. A


necessity of credit will be presumed where it appears that
the repairs and supplies were necessary for the ship and
that they were ordered by the master. This presumption does
not arise in this case since the fuels were not ordered by
the master and there was no proof of necessity for the
supplies.

IN VIEW WHEREOF, the Decision of the Court of Appeals


in CA-G.R. No. CV 54920, dated November 28, 2001, and its
subsequent Resolution of September 3, 2002 are AFFIRMED.
The instant petition for review on certiorari is DENIED for
lack of merit. Cost against petitioner.
SO ORDERED.

Finally. The necessaries were not ordered by persons


authorized to contract in behalf of the vessel as provided
under Section 22 of P.D. No. 1521 or the Ship Mortgage
Decree of 1978 - the managing owner, the ships husband,
master or any person with whom the management of the vessel
at the port of supply is entrusted. Clearly, Portserv, a
sub-charterer under a time charter, is not someone to whom
the management of the vessel has been entrusted. A time
charter is a contract for the use of a vessel for a
specified period of time or for the duration of one or more
specified voyages wherein the owner of the time-chartered
vessel retains possession and control through the master
and crew who remain his employees.[37] Not enjoying the
presumption of authority, petitioner Crescent should have
proved that Portserv was authorized by the shipowner to
contract for supplies. Petitioner failed.
A
discussion
on
the
conveniens is unnecessary.

principle

of

[1]

Penned by Associate Justice Juan Q. Enriquez, Jr.,


concurred in by Associate Justices Delilah VidallonMagtolis and Candido V. Rivera; Rollo, pp. 72-81.

[2]

Penned by Associate Justice Juan Q. Enriquez, Jr.,


concurred in by Associate Justices Delilah VidallonMagtolis and Josefina Guevara-Salonga; id., pp. 83-85.

[3]

Penned by Judge Leonardo B. Canares, Regional


Court, Branch 10, Cebu City; id., pp. 87-90.

[4]

Hernandez, Eduardo F. and Peasales, Antero A., Philippine


Admiralty and Maritime Law (1987 ed.), pp. 910, citing New England Mutual Marine Insurance Co. v.
Dunkan 8 U.S. (11 Wall) 1 (1870).

Trial

forum non

103

[5]

G.R. No. L-2372, August 26, 1949.

[13]

1st and 4th Whereas Clauses, P.D. No. 1521.

[6]

2 C.J.S. Section 39, p. 100.

[14]

See note 4, p. 133.

[7]

Agbayani, Aguedo F., Commentaries and Jurisprudence on


the Commercial Laws of the Philippines IV (1987), p.
178, citing McMicking v. Banco Espaol-Filipino, 13
Phil. 429 (1909), Ivanvich v. Odlin, 1 Phil. 284
(1902), and Heather v. Steamer San Nicholas, 7 Phil.
532 (1907).

[15]

The Woudrichem, 278 F. 568.

[16]

35 F. 907.

[17]

230 F. 717.

[18]

278 F. 568.

[19]

17 F.2d 308.

[20]

Dougherty, William F., Multi-contact analysis for a


multinational industry: The United States approach to
choice of law analysis in the enforcement of maritime
liens, University of San Francisco Maritime Law
Journal (2000-2001), p. 89.

[8]

Mcmicking v. Banco Espaol-Filipino, id.

[9]

Ivancich vs. Odlin & Pacific Lumber Co., supra.

[10]

[11]

[12]

Heather vs. Steamer San Nicholas, supra.

Rollo, p. 315.

Id., p. 469.

104

[21]

345 U.S. 571 (1953).

[22]

358 U.S. 354, 1959 AMC 832 (1959).

[23]

See Dougherty, p. 82.

[24]

398 U.S. 306, 1970 AMC 994 (1970).

[25]

633 F.Supp. 74 (1985). A British corporation based in


London brought an in rem action against the vessel M/V
Ruth Venture to enforce a maritime lien. A Liberian
sub-charterer contracted for the supply of bunkers in
London with Forsythe as its broker. The bunkers were
furnished to the vessel at Richards Bay, South Africa
but was not paid. The vessel was arrested in Portland,
Oregon. In ruling that English law applies, it held
that the Lauritzen/Rhoditis factors should be applied
in a balancing analysis. [T]he choice of law questions
involving maritime liens is to be resolved by weighing
and evaluating the points of contract between the
transaction and the sovereign legal systems touched
and affected by it The interests of competing
sovereigns may be taken into account without rejecting
altogether the contacts the bar and the maritime
industry are accustomed to weigh in making the initial

determination of governing law. Because English law


disallows a lien for bunkers, the court held there was
no lien.

[26]

1983 WL 602 (D.Or.) (1983). This involves a suit by a


Singaporean corporation against a Panamanian vessel
that is owned by Costa Ricans for supplies furnished
in Singapore. The court, applying the Lauritzen
factors, held that U.S. law did not apply to determine
whether there exists a maritime lien. The case was
dismissed under the doctrine of forum non conveniens.
(SeeTetley, William, Maritime Liens, Mortgages and
Conflict of Laws, University of San Francisco Maritime
Law Journal [Fall, 1993], p. 17.)

[27]

Gulf Trading and Transportation Co. v. The Vessel Hoegh


Shield, 658 F.2d 363 (1981).

[28]

Id.

[29]

712 F.Supp 1542 (1988).

[30]

729 F.2d 971 (1984).

Coquia, J. R. and Aguiling-Pangalangan, E., Conflict of


Laws (2000), p. 129.
[31]

[32]

105

Id., p. 121, citing Beale, The Conflict of Laws, Section


621.2 (1935).

See note 31.

Thomas D. Allen, Robert E. Haley, Kathy P. Saxton, Wildman,


Harrold, Allen & Dixon, Chicago, Ill., for American
Airlines, Inc.

Agbayani, p. 631.

Lee S. Kreindler, Melvin I. Friedman, Frank G. Fleming,


Kreindler & Kreindler, New York City, and George F. Archer,
Chicago, Ill., for plaintiffs.

[35]

TSN, p. 6.

Charles F. Thompson, Jr., John M. Lamont, Richard L.


Horwitz, Reid, Ochsenschlager, Murphy & Hupp, Aurora, Ill.,
for Lloyd's Bank, Cal.

[36]

Agbayani, p. 631, citing 70 Am Jur 2d, 479.

Before SPRECHER, BAUER and CUDAHY, Circuit Judges.

[33]

[34]

SPRECHER, Circuit Judge.


[37]

Litonjua Shipping Inc. v. National Seamen Board, G.R.


No. 51910, August 10, 1989.

This case presents complex conflicts-of-law questions


regarding the allowance of punitive damages in wrongful
death actions arising out of an air crash disaster. The law
of the place of the disaster, the law of the place of
manufacturer of the airplane, and the law of the primary
place of business of the airline do not allow punitive
damages; but, the law of the primary place of business of
the manufacturer of the airplane and the law of the place of
maintenance of the airline do allow punitive damages. We
find that, under each of the applicable state choice-of-law
rules, punitive damages cannot be allowed against either the
manufacturer or the airline.

644 F.2d 594 (1981)


In re AIR CRASH DISASTER NEAR CHICAGO, ILLINOIS ON MAY 25,
1979. Appeal of McDONNELL DOUGLAS CORPORATION. In re AIR
CRASH DISASTER NEAR CHICAGO, ILLINOIS ON MAY 25, 1979.
Appeal of PLAINTIFFS IN ALL THE CONSOLIDATED CASES IN MASTER
FILE NO. MDL 391. In re AIR CRASH DISASTER NEAR CHICAGO,
ILLINOIS ON MAY 25, 1979. Appeal of LLOYD'S BANK CALIFORNIA
as Executor of Estates of Williard R. Nary and Julia T.
Nary, Deceased.
United States Court of Appeals, Seventh Circuit.
Decided January 5, 1981.

Norman J. Barry, Joseph P. Della Maria, Jr., Roger J.


Guerin, Christopher G. Walsh, Jr., Rothschild, Barry &
Myers, Chicago, Ill., for McDonnell Douglas.

The stark facts of the tragedy resulting in this litigation


are undisputed. On May 25, 1979, a DC-10 jet airplane,
106

designed and built by McDonnell Douglas Corporation ("MDC"),


operated by American Airlines ("American") was scheduled to
fly from Chicago, Illinois to Los Angeles, California as
American's Flight 191. Shortly after takeoff from O'Hare
International Airport, however, the plane lost an engine and
crashed in the immediate vicinity of the airport. All two
hundred seventy-one persons aboard the plane, and two
persons on the ground, were killed.

The defendants in these cases are MDC and American. MDC is a


Maryland corporation having its principal place of business,
now and at the time of the accident, in Missouri. The
plaintiffs contend MDC's conduct in the design and
manufacture of the DC-10 was egregious. That alleged
misconduct occurred in California. American is a Delaware
corporation. American's place of business prior to 1979 was
New York. During 1979, American moved its principal place of
business to Texas. Some plaintiffs contend that, on the date
of the crash, American's principal place of business was in
Texas, but American contends that its principal place of
business on that date was New York. The plaintiffs contend
that American's conduct regarding the maintenance of the DC10 was egregious.

Now there are one hundred eighteen wrongful death actions


arising out of the crash. These cases were originally filed
in Illinois, California, New York, Michigan, Hawaii, and
Puerto Rico.1 Many of the complaints allege wrongful death
counts which request awards of punitive as well as
compensatory damages. The plaintiffs and their decedents are
and were residents of California, Connecticut, Hawaii,
Illinois, Indiana, Massachusetts, Michigan, New Jersey, New
York, Vermont, Puerto Rico, Japan, the Netherlands, and
Saudi Arabia.

[644 F.2d 605]


That alleged misconduct occurred
American's maintenance base.

in

Oklahoma,

site

of

Both defendants moved in district court to strike the claims


for punitive damages on the ground that such claims failed
to state legally sufficient claims for relief. The parties
disputed many issues: whether certain states allowed
punitive damages, the choice-of-law theories to be used
regarding certain states, and the results of the application
of the choice-of-law theories which were used.
Using the choice-of-law rules of each state where these
actions had originally been filed, the district court
arrived at the following results. Under the Illinois "most
significant relationship" test, the district court found
that the law of the state of the principal place of business
should prevail with regard to the issue of punitive damages.
107

Finding that New York was American's principal place of


business at the time of the crash and does not allow
punitive damages, and that Missouri, MDC's principal place
of business, does allow the equivalent of punitive damages,
the court allowed the motions to strike punitive damage
claims against American but not against MDC.

necessary to determine the conflict-of-law theories of the


forum states and to apply those theories.
Illinois is the place of the injury and, under various
theories, its law regarding punitive damages might be used.
The Illinois Supreme Court has clearly held that Illinois
does not permit the recovery of punitive damages in a
wrongful death action. Mattyasovszky v. West Towns Bus
Co., 21 Ill.App.3d 46, 313 N.E.2d 496, 502 (1974), aff'd, 61
Ill.2d 31, 330 N.E.2d 509, 512 (1975).

Under the California "comparative impairment" test, the


district court held that the policies of the state of the
principal place of business would be impaired more than the
policies of the state of misconduct if those policies were
not applied. Thus, the court allowed the motion to strike
punitive damage claims with regard to American but not with
regard to MDC. The district court reached the same result
with regard to the actions filed in New York, Michigan,
Puerto Rico, and Hawaii.

Plaintiffs argue that the Illinois law on punitive damages


is in a state of flux, citing recent cases allowing punitive
damages in survival actions. National Bank of Bloomington
v. Norfolk & Western Ry. Co., 73 Ill.2d 160, 23 Ill.Dec.
48, 383 N.E.2d 919 (1978); Churchill v. Norfolk & Western
Ry. Co., 73 Ill.2d 127, 23 Ill.Dec. 58, 383 N.E.2d
929 (1978). But in these Norfolk cases, damages were sought
under the Public Utilities Act, which expressly provides for
punitive damages.3 In National

Although generally agreeing with the district court


regarding which states allow punitive damages and the
choice-of-law theories to be used, we reach a different
result in applying those theories. For the reasons discussed
below, we find that the motions to strike claims of punitive
damages should be granted with regard to both MDC and
American.

[644 F.2d 606]


Bank of Bloomington, the Wrongful Death Act was not at
issue; and in Churchill, the surviving plaintiff sought
recovery for her own loss, not on the basis of the loss of
life of her husband. The Illinois Supreme Court held in
the Norfolk cases that where a statute specifically provides
for punitive damages, nothing in the Survival Act,
Ill.Rev.Stat. ch. 3, 339 (1964) now Ill.Rev.Stat. 110
1/2, par. 27-6 (1977), or in the Mattyasovszkydecision
operates to abate that statutory liability for punitive
damages.4 Thus, the Norfolkcases do not vitiate the holding
of the Mattyasovszky case. Moreover, the argument that
the Norfolk cases overturned the rule against recovery of

II
At the outset, we must first determine whether we confront
"real" rather than "apparent" conflicts between the laws to
be applied.2 This requires a determination, first, of the
law regarding punitive damages in the relevant states:
Illinois, Missouri, California, Oklahoma, New York, Texas
and Hawaii. After this determination, it will then be
108

punitive damages in a wrongful death action was impliedly


rejected by an Illinois court in Rusher v. Smith, 70
Ill.App.3d 889, 26 Ill.Dec. 405, 410, 388 N.E.2d 906, 911-12
(1979).5 To be sure, the Rusher case is not binding because
it is an Appellate Court decision. But it does nothing to
detract from the voice of the Illinois Supreme Court
in Mattyasovszky. That declaration of state law is, of
course, binding on this Court. Erie RR Co. v. Tompkins, 304
U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).

[644 F.2d 607]


17 L.Ed.2d 5 (1966), conclusively establishes that damages
awarded
because
of
"aggravating
circumstances"
are not punitive. But MDC's argument, based on selective
quotation, is not persuasive. In Glick, a wrongful death
case, the plaintiffs attempted to recover damages in excess
of the then existing statutory monetary limit. The Missouri
Supreme Court disallowed the excess amount requested. In so
doing, the Missouri Court stated that there was no recovery
under Missouri law for punitive damages, "as such," but that
"aggravating circumstances" could be considered by the jury
so long as the total verdict did not exceed the statutory
limit.
396
S.W.2d
at
616-17.7 Thus,
we
find,
and
theGlick decision is not inconsistent with our finding, that
the damages allowed under Missouri law with regard to
"aggravating circumstances" can be considered within the
meaning of "punitive" damages as sought by the plaintiffs.

Whether Missouri, MDC's principal place of business, allows


the equivalent of punitive damages is hotly disputed by the
litigants. Although Missouri's wrongful death act does not
by its express terms provide for punitive damages,
Mo.Ann.Stat. 537.080 et seq.(Vernon 1979), it does
authorize the trier of fact to consider the "mitigating or
aggravating circumstances attending the death." Mo.Ann.Stat.

537.090
(Vernon
1979).
Damages
for
"aggravating
circumstances" have been permitted by Missouri wrongful
death statutes since 1855, and have consistently been
considered punitive or exemplary by the Missouri Supreme
Court. Parsons v. Missouri Pacific Ry., 94 Mo. 286, 6 S.W.
464, 466-67 (1888);Haehl v. Wabash Ry. Co., 119 Mo. 325, 24
S.W.
737,
741
(1893).
Damages
for
"aggravating
circumstances" in death cases depend on proof of "willful
misconduct, wantonness, recklessness, or want of care
indicative of indifference to consequences,"Wiseman v.
Missouri Pacific Railroad, 575 S.W.2d 742 (Mo.App.1978), a
standard commonly associated with the award of punitive
damages.6

California is the place of MDC's conduct in the design and


manufacture of the DC-10. California courts have uniformly
held that the statute which allows punitive damages
generally in tort actions8 applies with regard to survival
actions only and not with regard to wrongful death
actions. See Tarasoff v. Regents of the University of
California, 17 Cal.3d 425, 450, 131 Cal.Rptr. 14, 33, 551
P.2d 334, 353 (1976); Pease v. Beech Aircraft Corp.,38
Cal.App.3d 450, 113 Cal.Rptr. 416 (1974); and Note, 15 Santa
Clara Law., 507 (1975).See also In Re Paris Air Crash, 622
F.2d 1315 (9th Cir.1980). Although the plaintiffs question
the strength of this policy, see discussion in Part VI, they
do not question the fact that the California courts do deny
punitive damages in death cases. Pl. Br. 80-1812, at 35.
Thus, we find that California law does not allow punitive
damages in wrongful death cases.

MDC argues that the case of Glick v. Ballentine Produce


Inc., 396 S.W.2d 609 (1965),appeal dismissed, 385 U.S. 5, 87
S.Ct. 44,
109

Oklahoma is the site of American's maintenance headquarters.


The parties do not dispute the fact that Oklahoma does allow
punitive
damages.
12
Okl.Stat.Ann.
1053(C)
(1979-80
Cum.Supp.).

Hawaii law regarding punitive damages will be discussed in


Part X of this opinion.
In summary, we find that the "line-up" of the states
involved regarding the issue of punitive damages is as
follows: Illinois, place of the injury, does not allow
punitive damages. Missouri, MDC's principal place of
business, does allow punitive damages, but California, place
of MDC's conduct, does not. New York, one principal place of
business of American, does not allow punitive damages while
Texas, another principal place of business of American,
does. Oklahoma, the place of American's conduct, does allow
punitive damages.

New York was American's principal place of business during


part of 1979. We find that New York does not allow an award
of punitive damages in wrongful death actions. See Robert
v. Ford Motor Co., 73 App.Div.2d 1025, 424 N.Y.S.2d 747
(1980); Barrett v. State,85 Misc.2d 456, 378 N.Y.S.2d 946
(Ct.Claims 1976). See also N.Y.Est., Powers & Trusts L. 54.3 (McKinney 1967).
Texas was American's principal place of business during part
of 1979 and has been its principal place of business
thereafter. It is undisputed that Texas does allow a
punitive damage recovery, by spouses or descendants, in
wrongful death actions. See Tex.Const. Art. 16 26
(1976). See also Scoggins v. Southwestern Elec. Service
Co., 434 S.W.2d 376 (Tex.Civ.App.1968); Pace v. McEwen, 574
S.W.2d 792 (Tex.Civ.App.1978).

III
It is now necessary
to the disallowance
no conflict at all
punitive damages in

to examine the constitutional objections


of punitive damages. For there would be
if it is unconstitutional to disallow
wrongful death actions.

In the district court below, plaintiffs raised two general


constitutional objections. First, they argued that the
preclusion of punitive damages in wrongful death actions,
where they are permitted in personal injury survival
actions, is a violation of the equal protection clause of
the federal and of the Illinois, Michigan, and California
constitutions. In addition, certain plaintiffs argued that
the existence in Illinois of the difference in damages
between survival and wrongful death actions represents
"special legislation" of the type prohibited by Art. 4, 13
of the Illinois Constitution. The district court rejected
both arguments.

Hawaii is the domicile of one of the plaintiffs; one action


was originally filed there. The parties have not been able
to identify the governing choice-of-law rule that would be
applied by Hawaii courts in personal injury actions. The
defendants argue that,
[644 F.2d 608]
absent an affirmative showing to the contrary, a court
should presume that the forum state would apply its own law
concerning punitive damages in a wrongful death action. The

110

On this appeal, the only specific constitutional attack is


the argument that New York's denial of punitive damages
violates the federal equal protection clause. Proceeding to
the federal equal protection analysis, we affirm, for the
reasons below, the district court's holding that statutes
which deny punitive damages in wrongful death cases but
allow such damages in other personal injury actions do not
run afoul of the federal Constitution.9

injury cases but not in wrongful death cases. In Huff, we


found the legislation was rationally related to a legitimate
state interest and therefore passed equal protection
scrutiny. The plaintiffs here argue that the treatment of
this question in Huff was perfunctory and request that we
review the question again. We agree the discussion of this
issue in Huff was not elaborate. But in reexamining the
issue, we reach the same result.

[644 F.2d 609]


The
wrongful
death
statutes
in
question
involve
a
legislative classification which allows punitive damages in
certain personal injury actions but denies punitive damages
in wrongful death cases. This classification does not
involve any suspect class. See Parham v. Hughes, 441 U.S.
347, 351, 99 S.Ct. 1742, 1745, 60 L.Ed.2d 269 (1979)
andHuff v. White Motor Corp., 609 F.2d 286, 298 (7th Cir.
1979). Nor does this classification affect fundamental
rights. See Huff, 609 F.2d at 298. Thus, the classification
is not to be examined with "strict" or even "intermediate"
scrutiny10 but
is
to
be
examined
by
the
"rational
relationship" test. The classification must be rationally
related to a legitimate state purpose in order to pass
constitutional muster with regard to the equal protection
clause. Huff;
Parham;
Duke
Power
Co.
v.
Carolina
Environmental Study Group, 438 U.S. 59, 98 S.Ct. 2620, 57
L.Ed.2d 595 (1979); Mobil Oil Corp. v. Higginbotham, 436
U.S.
618,
98
S.Ct.
2010,
56
L.Ed.2d
581
(1978);
and Williamson v. Lee Optical, 348 U.S. 483, 75 S.Ct. 461,
99 L.Ed. 563 (1955).

Very recently, the Ninth Circuit Court of Appeals confronted


a similar equal protection challenge to a state's denial of
punitive damages in wrongful death actions. In its decision
in In Re Paris Air Crash, 622 F.2d 1315 (9th Cir. 1980), the
Ninth Circuit found the classification denying punitive
damages to survive the rational relationship test. We find
the Ninth Circuit opinion persuasive and reach the same
result here for the following reasons.
First, the United States Supreme Court recently has
sustained tort liability limitations inDuke Power Co. v.
Environmental Study Group, 438 U.S. 59, 98 S.Ct. 2620, 57
[644 F.2d 610]
L.Ed.2d 595 (1979), and Mobil Oil Corp. v. Higginbotham, 436
U.S. 618, 98 S.Ct. 2010, 56 L.Ed.2d 581 (1978). In those
cases, the damage limitations were more severe than the
damage limitation here. There, the challenged laws limited
the types or amounts ofcompensatory relief. Here, the
limitation is the denial of punitive relief; compensatory
damages are unaffected. Thus, the limitations themselves are
not irrational.

Recently, this Court considered this same issue in Huff, 609


F.2d 286, which involved an equal protection challenge to
Indiana's wrongful death statute. That law, like the laws
challenged here, allowed punitive damages in other personal

Second, the purpose of denying punitive damages is to avoid


excessive liability. Such denial represents a legislative
111

determination that a state's interest in protecting


defendants from excessive damages outweighs its interest in
punishing or deterring misconduct. See In Re Paris Air
Crash, 622 F.2d at 1319, and Jackson v. K. L. M., 459
F.Supp. 953, 956 (S.D.N.Y.1978). The state has legitimate
interests in both the amount of damages paid to survivors of
persons
wrongfully
killed
and
in
protection
of
11
defendants. The denial of punitive damages is clearly a
rational method of limiting damages in wrongful death
cases. See In Re Paris Air Crash, 622 F.2d at 1319. For
these reasons, then, we find that a state's decision to
limit punitive damages does pass constitutional muster under
the rational relationship test. We note also that in every
case of which we are aware, every court which has confronted
this question has arrived at this same conclusion. See, e.
g., In re Paris Air Crash; Huff; Johnson v. International
Harvester Corp., 487 F.Supp. 1176 (D.N.D.1980); and Robert
v. Ford Motor Co., 73 App.Div.2d 1025, 424 N.Y.S.2d 747
(1980).12

outset that the tests to be used, although containing


significant differences, mandate an analytical inquiry which
is basically the same. As Professor Leflar has stated:
[I]t appears that the various scholarly views concerning
choice of law, developed during the last couple of decades,
are being accepted by the courts as though they constituted
one somewhat multi-faceted approach to the subject.
Essentially, they are consistent with each other. Any one of
them is likely to produce about the same result on a given
set of facts as will another ....The point to be emphasized
is that the modern decisions, regardless of exact language,
are substantially consistent with each other.
Leflar, American Conflicts Law, 109, p. 218 (3d ed. 1977).
In general, we must attempt to determine which, if any, of
the states having some relationship to the parties or to the
crash has the most significant interest in the application
of its own substantive law to the merits of the punitive
damage issue. The application of choice-of-law

IV

[644 F.2d 611]


rules is not a mechanical process of cranking various
factors through a formula. Critical to conflicts analysis is
the notion that we must examine the choice-of-law rules not
with regard to various states' interests in general, but
precisely, with regard to each state's interest in the
specific question of punitive damages. Thus, we approve the
concept of "depecage": the process of applying rules of
different states on the basis of the precise issue
involved.13

We now confront the actual conflicts issues among the


various states. It is not disputed that, since federal
jurisdiction is based on diversity of citizenship, the
choice-of-law rules to be used are those choice-of-law rules
of
the
states
where
the
actions
were
originally
filed. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S.
487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); VanDusen v.
Barrack, 376 U.S. 612, 84 S.Ct. 805, 11 L.Ed.2d 945
(1964); In
Re
Air
Crash
Disaster
of
Boston,
Massachusetts, 399 F.Supp. 1106 (D.Mass.1975). We will
consider the law of each state in turn. We emphasize at the

The depecage process has recently been approved and utilized


by the Court of Appeals for the Third Circuit in an aircraft
112

products liability case involving a choice between standards


of liability. Reyno v. Piper Aircraft Co., 630 F.2d 149 (3d
Cir. 1980), petit. for cert. filed (1980).14 Depecage has
also been endorsed by many conflicts scholars.15 The task of
conflicts analysis using depecage requires creativity and
precision. With this admonition in mind, we begin our
analysis.

of the injury; (2) the place of misconduct; (3) the


domicile, residence, nationality, place of incorporation and
place of business of the parties; and (4) the place where
the relationship between the parties is centered.18 These
contacts are to be evaluated according to their relative
importance to the issue involved and according to the
purposes sought to be achieved by the relevant rules of the
interested states.19
A

Turning to defendant MDC, the precise issue, of course, is


which state's law regarding the availability of punitive
damages should apply. The states having contacts to be taken
into account are: Illinois, place of injury; California,
place of MDC's alleged misconduct; Missouri, MDC's principal
place of business; and, if it can be determined, the states
where the relationship between the parties is centered.

We begin with the actions filed in Illinois. The Illinois


courts apply the "most significant relationship" test of the
Restatement (Second) of Conflict of Laws ("Restatement
(Second)") to determine the applicable law in wrongful death
actions. This test incorporates a presumption that the local
law of the state where the injury occurred should govern,
unless another state has a "more significant relationship"
to the occurrence or to the parties.16 Ingersoll v.
Klein, 46 Ill.2d 42, 48, 262 N.E.2d 593, 596 (1973).

It is unclear where the relationship of the parties is


"centered". As the district court noted, most of the
Illinois actions involve Illinois decedents who purchased
their tickets in Illinois for a flight which began in
Illinois. But the flight was to California. Surely the
importance of the place of destination of a journey is just
as great as the importance of the place of departure. This
issue need not detain us, however, because neither
California nor Illinois allows punitive damages.20

The Restatement (Second) provides two sets of criteria for


the measurement of the "most significant relationship." The
first set of criteria includes general factors such as the
needs of the interstate system; relevant policies of the
forum and other interested states; protection of justified
expectations; the basic policies underlying the particular
field of law; certainty, predictability

We next turn to the interests of the states of domicile of


the plaintiffs. The domiciliary states do not have an
interest in disallowing punitive damages because the
decision to disallow such damages is obviously designed to
protect the interest of resident defendants, not to
effectuate the interest of the domiciliary states in the

[644 F.2d 612]


and uniformity of result; and ease in the determination and
application of the law to be applied. 17 The second set of
criteria includes the contacts to be taken into account in
applying these principles. These contacts are: (1) the place
113

welfare of plaintiffs. E. g., Hurtado v. Superior Court, 11


Cal.3d 574, 114 Cal.Rptr. 106, 110, 522 P.2d 666, 670
(1974).

and deterrence of future wrongdoing. The purpose underlying


the disallowance of punitive damages is protection of
defendants from excessive financial liability. Two states
which very definitely have an interest in punishment or
protection are California and Missouri, the states in which,
respectively, the conduct occurred and the principal place
of business is located. Both states have an obvious interest
in preventing future misconduct; both states have an obvious
interest in protecting businesses located or acting within
its borders. Illinois, the place of injury, also has an
interest in the punitive damages question; its interest will
be discussed after the discussion of Missouri's and
California's interests.

Nor do the domiciliary states have an interest in imposing


punitive damages
[644 F.2d 613]
on the defendants. The legitimate interests of these states,
after all, are limited to assuring that the plaintiffs are
adequately compensated for their injuries and that the
proceeds of any award are distributed to the appropriate
beneficiaries. E. g., Hurtado, 11 Cal.3d at 584, 114
Cal.Rptr. at 112, 522 P.2d at 672. Those interests are fully
served by applying the law of the plaintiffs' domiciles as
to issues involving the measure of compensatorydamages
(insofar as that law would enhance the plaintiffs' recovery)
and the distribution of any award. Once the plaintiffs are
made whole by recovery of the full measure of compensatory
damages to which they are entitled under the law of their
domiciles, the interests of those states are satisfied.

MDC's wrongful conduct here complained of involved the


design and manufacture of the DC-10. Because the corporate
headquarters of MDC is located in Missouri, Missouri has an
obvious interest in deterring wrongful conduct in such
design and manufacture, even if the actual work was
performed in California. To find otherwise would be to gut
the very concept of corporate accountability. Moreover, to
say that Missouri has no interest in the imposition of
punitive damages as defendants do would encourage
rampant subterfuge and confusion. For example, many
corporations have corporate headquarters in one state and
far-flung operations in many others.22 If courts held that
the place of "conduct" had the critical interest in punitive
damages and that the place of corporate headquarters had no
interest in punitive damages, then litigation would center

We thus return to the interests of the three relevant


states, Illinois, California, and Missouri. Illinois and
California do not allow punitive damages but Missouri does.
If the interests of these three states were to be weighed
equally, the tally would be two-to-one against allowing
punitive damages. But the process of weighing states'
interests requires more than merely tabulating the states
pro and con. We must examine the precise interest of each
state with regard to the purpose of punitive damages.21

[644 F.2d 614]


around exactly where activities and decisions occurred. The
practical effect of such a holding would be to require

The purposes underlying the allowance of punitive damages,


as the district court noted, are punishment of the defendant
114

extensive examinations of numerous employees and to require


complex investigations into the precise locations of many
areas of corporate decision. Corporations seeking to avoid
potential punitive damages would be encouraged to structure
decisions so that no specific locus for a major decision
could ever be proved to have occurred in a "punitive" state.

damages, the court was not confronted with the need to


determine whether the place of conduct had a greater or
lesser interest than the principal place of business in the
punitive damages question.23 Thus, these cases do not
provide support for the argument that, in our case, Missouri
has any less interest than California.

MDC
argues
that Jackson
v.
K.L.M., 459
F.Supp.
953 (S.D.N.Y.1978)
and Sibley
v.
KLM-Royal
Dutch
Airlines, 454 F.Supp. 425 (S.D.N.Y.1978) establish the
proposition that, as between the state of misconduct and the
primary place of business, the state of misconduct is the
only state with an interest in awarding punitive damages.
Citing these cases, it argues that Missouri, as the state of
its corporate headquarters and principal place of business,
has an interest only in the decision to disallow punitive
damages but not in the decision to allow punitive damages.
But the defendants misread the Jacksonand Sibley opinions
and their argument seems comparable to "heads, I win; tails,
you lose" logic.

California, place of MDC's conduct in manufacture and design


of the DC-10, also has a strong interest in the issue of
punitive damages. California, as does every state, has a
substantial interest in the economic health of corporations
which do business within its borders. It derives substantial
sales and income taxes, as well as other revenues, directly
and indirectly from a corporation's activities within the
state. Indeed, California's interest is strong with regard
to a rule disallowing punitive damages because such a rule
protects the economic well-being of the corporations and
therefore enhances the economic well-being of the state.
Moreover, the rule may have been a factor in various
corporations' decisions to move to California.

Jackson and Sibley are companion cases which involved suits


by representatives of decedents who had been domiciled in
states allowing punitive damages. The suits were brought
against a Dutch airline for personal injuries arising from
an air crash in Spain. The holding for these cases was that
the states of the decedents had a proper interest only in
adequate compensation, but not in punitive damages. The only
jurisdictions found to have an interest in punitive damages
were the Netherlands, place of the airline's incorporation
and principal place of business, and Spain, the country in
which the accident and the tortious conduct occurred. But
because both the Netherlands and Spain disallowed punitive

The district court concluded that where, with regard to


punitive damages, the law of the principal place of business
conflicted with the law of the place of misconduct, the
[644 F.2d 615]
former
should
prevail.
The
court
reasoned
that
responsibility for corporate conduct should be uniform,
regardless of where individual instances of that conduct
took place. But the district court's analysis only looked at
the purpose behind the decision to allow punitive damages.
As we have discussed, both the decision to allow punitive

115

damages and the decision to disallow punitive damages must


be accorded great respect.

interests
in
protecting
nonresident
excessive financial liability.

Thus, we find that the balance on the scales of significant


contacts is even: we cannot say that either California or
Missouri has a "greater" interest in the decision whether to
allow punitive damages against MDC. This situation involves
a total and genuine conflict: one jurisdiction allows
punitive damages, the other does not. There does not seem to
be any way to arrive at a "moderate and restrained"
interpretation of either policy so as to avoid a true
conflict.24

But the fact that the interest of the place of injury is


less than the interest of the principal place of business
and the interest of the place of alleged misconduct does not
mean that Illinois has no interest in the punitive damages
question. Illinois has very strong interests in not
suffering air crash disasters and also in promoting airplane
safety. This Court takes judicial notice that the DC-10
crash sent shock waves throughout the metropolitan Chicago
area. Illinois special emergency disaster units responded to
the crash. The state certainly incurred significant expense
in attempted rescue operations, clean-up operations, and the
necessary tasks of identifying the deceased and notifying
next-of-kin.

With the scales evenly balanced, we now turn to the interest


of Illinois, the place of injury. The old rule in many
jurisdictions, developed from torts other than air crashes,
was that where there was nothing fortuitous about the fact
that the injury occurred in a given state, great weight
would be given to the law of the place of injury. But air
crash disasters often present situations where the place of
injury is largely fortuitous. See Cousins v. Instrument
Flyers, Inc., 44 N.Y.2d 698, 405 N.Y.S.2d 441, 443, 376
N.E.2d 914, 915 (1978), and sources cited therein. That the
injury in our case occurred in Illinois can only be
described as fortuitous. Had the DC-10's engine fallen off
later, the injury might have occurred in one of any number
of states. Because the place of injury is much more
fortuitous than the place of misconduct or the principal
place of business, its interest in and ability to control
behavior by deterrence or punishment, or to protect
defendants from liability, is lower than that of the place
of misconduct or principal place of business. Also, merely
as the place of injury, Illinois would not have strong

defendants

from

Also, in this case Illinois is more than merely the place of


injury. As noted before, many of the other contacts of
significance were in Illinois. With regard to the actions
filed in Illinois, all but two of the decedents resided in
Illinois. As the home of O'Hare International Airport, one
of the world's busiest airports, Illinois certainly has
strong
interests
in
encouraging
air
transportation
corporations to do business in the state.
Because Illinois has such strong interests in promoting
airline safety, it would have a strong interest in allowing
punitive damages to deter corporate misconduct relating to
air safety. But because Illinois also has such strong
interests in having

116

[644 F.2d 616]


airlines fly into and out of the state, and having related
air transportation companies do business within the state,
it would have a strong interest in protecting air
transportation companies by disallowing punitive damages.
Thus, the decision made by the Illinois legislature must be
accorded special weight.

Future defendants cannot predict, of course, where airplane


disasters will occur. But air transportation companies will
now be on notice that, under the "most significant
relationship" test, when there is a true conflict between
laws of states having equal interests in the issue of
punitive damages, and when the place of injury has a strong
interest
in
air
safety
and
in
protection
of
air
transportation corporations, the law of the place of injury
will apply. Our result also comports with the Restatement
(Second)'s principle that choice-of-law rules should be
relatively simple and easy to apply. Restatement (Second)
6, at 10. We conclude, therefore, that under the "most
significant relationship" test, the law of Illinois should
apply. For the above reasons, we grant MDC's motion to
strike punitive damages claims.

As noted earlier, Illinois' choice-of-law law gives


presumptive importance to the place of injury. The law of
the place of injury is to be supplanted only when another
state has a more significant relationship than the place of
injury. Restatement (Second) 175. Although either
California or Missouri, taken separately, would have a
greater interest than Illinois, the fact that the laws of
these states are in absolute conflict indicates that neither
state has an interest greater than the other's. Thus, in
terms of a principled basis upon which a choice can be made,
neither state has a "more significant interest" than
Illinois. Since neither California nor Missouri can be
chosen on a principled basis, the application of the "most
significant relationship" test leads to the use of Illinois
law.

B
We now apply the Illinois "most significant relationship"
test to American. The significant contacts to be examined
are the place of injury, the place of alleged misconduct,
the principal place of business, and the place where the
relationship between the parties is centered. As discussed
with regard to MDC, the place of injury is Illinois and the
place where the relationship between the parties is centered
is either Illinois or California. Neither of these states
allows punitive damages. The place of American's alleged
misconduct is Oklahoma, site of its maintenance base, which
does allow punitive damages.

Finally, application of Illinois law comports with the


general criteria of the Restatement (Second) which emphasize
certainty, predictability, uniformity of result, and ease in
the determination and application of the law to be
applied.25 In this case, it is important to resolve the
conflict between states by a principled means. Determining
that all other factors being equal, the law of the place of
injury shall be used, provides a principled means of
decision which also creates certainty.

The place of American's principal place of business for


purposes of this analysis is disputed. Prior to 1979 and
during part of
117

[644 F.2d 617]


1979, American's principal place of business was New York,
which does not allow punitive damages. Subsequently,
American moved to Texas, which does allow punitive damages.
Plaintiffs argue, first, that the law of American's present
principal place of business, Texas, should govern the
punitive damages issue. Second, plaintiffs argue that, if
the principal place of business on the date of the crash
must be used, American's principal place of business on that
date was Texas.

punitive damages, which would have raised the question of


Maine's
interest
in
protecting
its
defendants
from
liability. Moreover, by the time of trial, Maine had changed
its compensatory damage law so that the previous statutory
limit had been removed. Thus, the court was not confronted
with a situation where Maine had any actual interest in
protection of its former resident from financial liability.
22 N.Y.2d at 21, 290 N.Y.S.2d at 742, 237 N.E.2d at 882.
In the case at bar, however, New York has not changed its
law, as Maine had. New York does have a definite interest in
protecting its residents from excessive liability at the
time that the event giving rise to the liability occurred.
To hold otherwise would be a virtual absurdity because the
purpose of a decision to impose or not impose punitive
damages has to do with regulation of conduct. If a state's
interest in punitive damages "vested" not at the time of
conduct but only at trial, a state choosing to allow
punitive damages could never deter conduct. It is true, of
course, that New York made the decision to give more
importance to protection of defendants than to punishment
and deterrence. But the issue confronted punishment or
protection only has meaning in terms of the time of the
conduct. Otherwise, both the decision to allow and the
decision to disallow punitive damages would have the effect
of providing protection from punitive damages for the
commission of any misconduct, so long as a corporation
timely moved thereafter. A corporation would not be deterred
from engaging in questionable conduct because it would know
that it merely had to move corporate headquarters before
trial in order to escape liability. Thus, the Miller case
does not have decisive persuasive value for our situation.

First, plaintiffs argue that since the purpose of allowing


punitive damages is to control future conduct by deterrence,
the current principal place of business is the only state
that can control future conduct; the principal place of
business on the date of the accident can no longer do so. As
support for their argument, plaintiffs rely on Miller v.
Miller, 22 N.Y.2d 12, 290 N.Y.S.2d 734, 237 N.E.2d 877
(1968), remittitur denied, 22 N.Y.2d 722, 292 N.Y.S.2d 107,
239 N.E.2d 104 (1968), in which the New York court found
that a defendant who moved from Maine to New York, shortly
after an automobile accident in Maine involving a New York
resident, should be considered a New York resident for the
purpose of determining the applicable law.
The Miller case
is
distinguishable
from
this
case.
In Miller, the plaintiffs were seeking to avoid a Maine
statutory limit on compensatory damages in wrongful death
actions. Because the Miller situation involved the policies
of compensation of survivors, the court was concerned with
determining which state had the greatest interest in
compensating the New York wife and children of a New York
resident. 22 N.Y.2d at 17, 290 N.Y.S.2d at 738, 237 N.E.2d
at 879. The court was not confronted with the question of
118

As the district court indicated, the probability of


corporate moves after misconduct is a major policy reason
why the principal place of business at the time of the crash
not at the time of trial must be used. If the "time of
trial" rule were to prevail, defendants in "punitive" states
could always easily escape such damages by moving their
corporate headquarters to a "non-punitive" state. Moreover,
the "time of trial" rule should be rejected because, under
that rule, there would be no certainty regarding when the
"current" principal place of business should be determined.
Even "innocent" corporate moves could occur at any number of
times: between the

longer be achieved with regard to a defendant who has moved,


it can still be achieved with regard to other defendants
within the state. For these reasons, we find the principal
place of business to be used in the "most significant
relationship" test must be determined on the date of the
crash.
Plaintiffs next argue that American's principal place of
business on the date of the crash was Texas, not New York,
as held by the district court. Plaintiffs advance two
subarguments. First, they argue that American's corporate
headquarters had moved to Texas by the date of the accident.
Second, they argue that even if the corporate headquarters
had not moved by that date, the operations base was in Texas
and some cases have held that the operations base, not the
corporate headquarters, determines where the principal place
of business of an airline is located.

[644 F.2d 618]


accident and the beginning of trial, during lengthy
litigation, and also during lengthy appeals. The use of the
date of the accident provides clarity regarding exactly when
the principal place of business is to be determined.

Plaintiffs allege, correctly, that there are inconsistencies


in the pleadings regarding American's principal place of
business. They allege, and American does not deny, that in
the pleadings in these consolidated cases, American gave
inconsistent answers, stating in some cases that its
principal place of business was in Texas and denying in
other cases that its principal place of business was in
Texas. Part of the problem seems to be that neither the
complaints nor the answers specifically zeroed in on the
question of "when" American's principal place of business
was "where". Thus, American argues that in those answers
admitting that its principal place of business was Texas,
the answers referred to the principal place of business at
the date of the filing of the complaint, not at the time of

Plaintiffs' final argument for the use of the current


principal place of business is that the decision on punitive
damages deals with future behavior and the only state that
has an interest in future behavior is the state where the
defendant now lives, not the state where the defendant used
to live. This argument must be rejected for two reasons.
First, since the New York legislature has decided not to
allow punitive damages, it has determined that protection of
defendants is more important than deterrence of future
conduct. Second, the goal of deterrence is not limited to
the defendant in question. The entire theory of deterrence
assumes that the punishment of one person will cause other
persons not to engage in acts similarly punishable. Thus, in
a "punitive" state, even if the goal of deterrence can no
119

the crash. Because of the lack of precision by both


defendants and plaintiffs regarding the date of the
allegations and denials of principal place of business, we
cannot overturn the district court's finding merely on
grounds of inconsistent pleadings.

But the error made by the district court on this matter must
be considered harmless for two reasons. First, plaintiffs
misunderstand the scope of the protection of Rule 56. Rule
56 provides that a defendant in a lawsuit may "at any time,
move with or without supporting affidavits for a summary
judgment in his favor as to all or any part thereof."
Fed.R.Civ.P. 56(b). Thus, even if the district court had
treated the motion as one for summary judgment, it could
have decided the question exactly as it did and there could
be no objection to the defendant's failure to provide
supporting affidavits.

Plaintiffs
next
argue
that
the
district
court's
determination that American's principal place of business on
the date of the crash was New York was made on the basis of
matters
outside
the
pleadings:
American's
unverified
assertion in its reply brief that its place of business on
the date of the crash was New York. Because the issue was
American's motion to dismiss punitive damage claims for
failure to state a claim upon which relief can be granted,
the governing rule is Rule 12(b) of the Federal Rules of
Civil Procedure. Rule 12(b) requires that, if matters
outside the pleading are presented with regard to a motion
to dismiss for failure to state a claim, then the motion
shall be treated as one for summary judgment and all parties
shall be given reasonable opportunity to present all
material made pertinent to such a motion by Rule 56.26

Second, plaintiffs argue that American's principal place of


business was determined before discovery was taken on the
matter. But subsequent discovery on this issue has proven
fatal to the plaintiffs' argument.
The unrefuted deposition testimony of Donald Lloyd-Jones,
Senior Vice President of Operations of American, the
transcript of which was made a part of the Record on Appeal
at plaintiffs' request, disproves plaintiffs' assertion that
Texas was American's principal place of business on May 25,
1979:

[644 F.2d 619]


Plaintiffs correctly argue that, because the district court
did consider matters outside the pleadings within the
meaning of Rule 12(b), the motion should have been treated
as one for summary judgment and disposed of in accordance
with Rule 56. The district court did err in that it
considered the motion as a motion to strike under Rule 12(b)
and not as a motion for summary judgment under Rule 56.
Plaintiffs argue that this error was significant because,
thus, neither affidavits nor certified papers were filed and
no reference to discovery was made by any party.

Q. Tell me about the move from New York if you will. Was it
done in steps, throughout 1979?A. No, we did the entire move
in approximately six weeks time period. The first function
moved to Dallas was the systems operations control center.
That was about July 9th or 10th.Q. When was the decision
made to move to Dallas?A. November of '78.Q. Was anything
done to implement that move until July of '79?A. Could you
be specific? There was planning obviously going on. I am not
sure what you mean.Q. Were any departments moved down there
before July of 1979?A. No sir.
120

Deposition of Donald Lloyd-Jones, Record MDL 391 # 2, 2, at


42.27

Second, even if we look to diversity rules, this circuit


applies the "nerve center" test to determine diversity
issues.28 See
Celanese
Corp.
of
America
v.
Vandalia
Warehouse Corp., 424 F.2d 1176, 1178 (7th Cir. 1970); Sabo
v. Standard Oil Co. of Indiana, 295 F.2d 893, 895 (7th Cir.
1961). The mere fact that American's operations base was
located in Texas on the date of the crash does not suggest
that the operations center was the true "nerve center" of
American's activities. Indeed, American's "system operations
control center" was in New York on the date of the crash and
did not move to Texas until July, 1980. Deposition of Donald
Lloyd-Jones, Record, MDL 391 # 2, at 42.

Plaintiffs also rely on the fact that American supplied a


Texas address as the "address of principal executive
offices" on the form 10-Q filed by American with the
Securities and Exchange Commission for the quarter ending
June 30, 1979. But the form 10-Q was dated August 10, 1979,
and was filed on August 14, 1979. The information supplied
on the form contains no reference to the crash on May 25,
1979. Thus, the inference is stronger that the address
refers to American's address on the date
[644 F.2d 620]
the form was signed than on the date of the crash.
Therefore, we find the district court's conclusion that
American had not yet moved its corporate headquarters to
Texas on the date of the crash was correct.

For the foregoing reasons, plaintiffs have a very weak


argument for placing American's principal place of business
in Texas on the date of the crash. Plaintiffs request a
remand for additional discovery. But such a remand would
seem to be a useless exercise whose only purpose would be to
delay this litigation. Moreover, denial of such a remand is
appropriate because plaintiffs did not seek to respond in
the court below to American's assertion that its principal
place of business was New York; nor did they file a motion
to vacate after the district court's ruling was announced.
Rather, the plaintiffs waited to announce their surprise in
this Court.29

Finally,
the
plaintiffs,
citing Herschel
v.
Eastern
Airlines, Inc., 216 F.Supp. 347(S.D.N.Y.1963) and Clothier
v. United Airlines, Inc., 196 F.Supp. 435 (E.D.N.Y.1961),
argue that even if American's corporate headquarters was not
in Texas on the date of the crash, its operations base was
located in Texas and the operations base, not the corporate
headquarters, should determine where the principal place of
business of an airline is located. But the cases relied on
by the plaintiffs are not persuasive. First, these cases
involved a determination of principal place of business for
purposes of establishing diversity, not applicability of
punitive damages.

It is true the record certainly could have been developed


more to specify precise facts regarding where various
activities of American were carried out. But, given the
unrefuted deposition of Mr. Lloyd-Jones clearly establishing
that American had not yet moved its headquarters to Texas on
the date of the crash, we conclude that the need for
121

finality on this matter outweighs the faint possibility that


further discovery would change the district court's
conclusion. Therefore, we affirm the district court's
conclusion that American's principal place of business on
the date of the crash was in New York.

decision to strike the claims for punitive damages against


American with regard to the actions filed in Illinois.
VI
We now turn to the actions filed in California. California
follows the "comparative impairment" approach to choice-oflaw questions. Offshore Rental Co., Inc. v. Continental Oil
Co., 22
Cal.3d
157, 148
Cal.Rptr.
867, 583
P.2d
721 (1978); Bernhard v. Harrah's Club, 16 Cal.3d 313, 128
Cal.Rptr. 215, 546 P.2d 719 (1976).30 The resolution of
conflicts under this test is as follows. First, the
respective laws of interested states are examined to ensure
that there is an apparent conflict. Offshore Rental, 148
Cal.Rptr. at 870, 583 P.2d at 724. There is such a conflict
with regard to both MDC and American because, in both
situations, the law of the place of alleged misconduct
differs from the law of the principal place of business.

We now turn to the specific conflict of laws regarding


American. Oklahoma, the place of American's alleged
misconduct does allow punitive damages, but New York,
American's principal place of business does not. Just as we
concluded with regard to MDC, we conclude that the place of
conduct and the principal place of business each have strong
interests in having its law
[644 F.2d 621]
applied to the punitive damages question; we are unable to
say that one state's interest is greater than the other.
Thus, we follow the same analysis used above in concluding
that, under the "most significant relationship" test, when
the interests of the states of alleged misconduct and
primary place of business are equal and in a true and total
conflict, the law of the place of injury is to be used.

Second, when an apparent conflict is found to exist, the


court reexamines the applicable laws and circumstances to
see if a "moderate and restrained interpretation" of both
the policy and the circumstances reveals that only one state
has a legitimate interest in the application of its
policy. Bernhard, 16 Cal.3d at 320, 128 Cal.Rptr. at 219,
546 P.2d at 723.31 But as discussed with regard to the
actions filed in Illinois, both the principal place of
business and the place of alleged misconduct have strong
interests in the protection of defendants and the deterrence
of wrongful conduct. We see no restrained or moderate
interpretation of either state's policy which can resolve
this conflict.

Again, we emphasize that this result in no way signifies a


return
to
the
mechanical,
wooden
law
of lex
loci
delicti. Rather, it emphasizes the fact that there must be
some principled method of decision when the standard
"interest analysis" of conflicts law cannot settle the
question. Moreover, as discussed above, the choice of
Illinois law is particularly appropriate here. Illinois has
strong interests in both protection of airline corporations
and in the deterrence of wrongful conduct by those
corporations. Therefore, we affirm the district court's
122

When, as here, the reexamination of an apparent conflict


reveals no way in which the conflict can be resolved by a
restrained or moderate interpretation, the conflict is
indeed a "true" conflict. The comparative impairment
analysis "proceeds on the principle that true conflicts
should be resolved by applying the law of the state whose
interest would be the more impaired if its law were not
applied." Bernhard, 16 Cal.3d at 320, 128 Cal.Rptr. at 219,
546 P.2d at 723; see also Offshore Rental, 22 Cal.3d at 165,
148 Cal.Rptr. at 872, 583 P.2d at 726. This approach does
not involve the court in "weighing" the conflicting
governmental interests in the sense of determining which

misconduct or protection of local corporations, as discussed


above. Illinois, the state in which the injury occurred,
also has an important interest in the application of its law
because it is a state in which both the policies of
protection of airline corporations and deterrence of
misconduct are peculiarly important. Also as discussed with
regard to the Illinois test, the domiciliary states of the
plaintiffs and their representatives do not have significant
interests in the punitive damages question.
The comparative impairment theory requires that the court
attempt to determine the relative commitment by each
interested state to the law involved. Offshore Rental, 22
Cal.3d at 165-66, 148 Cal.Rptr. at 873, 583 P.2d at 727.
This examination of relative commitment examines two
factors: (1) the current status of a statute and the
intensity of interest with which it is held; 32 and (2) the
"comparative pertinence" of the statute: the "fit" between
the purpose of the legislature and the situation in the case
at hand; id., 22 Cal.3d at 166, 148 Cal.Rptr. at 872, 583
P.2d at 726, quoting Baxter, 16 Stan.L.Rev. 1, 12 (1963).33

[644 F.2d 622]


law represents "better" social policies. Such an approach
would vitiate the policies of federalism which, within
constitutional limits, allow states to determine their own
policies as they wish. Offshore Rental, 22 Cal.3d at 165,
148 Cal.Rptr. at 872, 583 P.2d at 726.See Horowitz, The Law
of
Choice
of
Law
in
California:
A
Restatement, 21
U.C.L.A.L.Rev. 719, 753 (1974). Rather, the process used by
the comparative impairment approach is "`essentially a
process of allocating respective spheres of lawmaking
influence.'"Offshore Rental, 22 Cal.3d at 165, 148 Cal.Rptr.
at 872, 583 P.2d at 726, quoting Baxter,Choice of Law and
the Federal System, 16 Stan.L.Rev. 1, 11-12 (1963). This
process of allocation involves several steps. First, of
course, the states with relevant interests must be
identified.

A
Applying California's "comparative impairment" analysis to
MDC, we begin with Missouri. We look first to the current
status of its interest in the application of its
[644 F.2d 623]
punitive damages law. Despite defendants' arguments to the
contrary, discussed and rejected in Part II, above, we find
that
Missouri
permits
recovery
in
death
cases
for
"aggravating circumstances" when there has been a showing of

As discussed in relation to the Illinois "most significant


relationship" test, the principal place of business and the
place of alleged misconduct have strong and equal relevant
interests. These states have the interests of deterrence of
123

"wilful misconduct, wantonness, recklessness, or a want of


care indicative of indifference to consequences."Williams
v. Excavating and Foundation Co., 230 Mo.App. 973, 93 S.W.2d
123, 127 (1936); Wiseman v. Missouri Pacific Railroad, 575
S.W.2d 742, 752 (Mo.App.1978); Mo.Rev.Stat. 537.090
(1978).

the "fit" between the purpose of Missouri's legislation and


the facts here. The general purposes of allowing punitive
damages are punishment of defendants and deterrence of
future wrongful conduct. Those purposes are pertinent to the
facts of this case. If the claims for punitive damages are
allowed and are proven at trial, damages awards against MDC
will be larger, perhaps significantly larger, than they
would be if the claims are not allowed. Such an increase
will certainly be felt by MDC to be "punishment". Similarly,
such awards could be expected to deter future wrongful
conduct, of the type alleged in this case, both by MDC and
by other corporations based in Missouri.

Recovery for "aggravating circumstances" has been permitted,


and the provision has been maintained in the statute through
many amendments, the most recent ones being in 1978 and
1979. Mo.Stat.Ann. 537.090 (Vernon, 1980). When a
statutory provision that has received judicial construction
is reenacted, it is presumed that the intention of the
legislature was to adopt the construction given by the
court. See 73 Am.Jur.2d, Statutes 331 (1974); see also
American National Ins. Co. v. Keitel, 353 Mo. 1107, 186
S.W.2d 447 (1945); and Gray v. McDonald, 104 Mo. 303, 16
S.W. 398, 401 (1891). Thus, the current status of Missouri's
interest in the application of its punitive damages statute
seems strong.

Another aspect of the "comparative pertinence" test is


whether Missouri's policy of deterrence can be satisfied by
some means other than allowance of punitive damage
claims.35 Theoretically, it may be possible that Missouri
could initiate a criminal prosecution against MDC for MDC's
alleged wrongful conduct. Presumably such a criminal
prosecution, if successful, could allow Missouri to achieve
its goals of punishment and deterrence. But we should not
overemphasize this possibility, because to do so would
vitiate the "private attorney general" concept inherent in
the allowance of punitive damages in civil suits.

Another factor of the "current status" test is whether a


statute is "archaic and isolated" in the context of the laws
of other states, see Offshore Rental, 22 Cal.3d at 165, 148
Cal.Rptr. at 873, 583 P.2d at 727. But, because the states
in the United States are about equally divided on the
punitive damages question,34 it is not the case that either
allowance or disallowance of such damages is "archaic and
isolated" among other state laws.

Thus, the application of the "comparative impairment" test


to Missouri produces the following results. Missouri has a
strong current interest in its punitive damages law; there
is a solid "fit" between the purpose of that law and its
application to a Missouri-based corporation such as MDC;
but, there is some slippage in that "fit" in the sense that

We look, second, to the "comparative pertinence" of


Missouri's punitive damages rule to this case, involving a
corporation headquartered in Missouri. That is, we look to
124

Missouri can theoretically achieve at least some of the


purposes of its law by other means.

Plaintiffs argue that the legislature did not need to amend


the wrongful death statute because the 1962 amendment to
that statute had in effect, overturned the rule against
punitive damages.37 These arguments might be persuasive if
the
question
before
us
was
whether
California
courts should have a policy of disallowing punitive damages
in wrongful death cases. But of course that question is not,
cannot be, and should not be, before us. The question before
us is whether California courts do have a policy against
awarding punitive damages in wrongful death cases. The
California Supreme Court answered that question, "yes",
in Tarasoff, 17 Cal.3d 425, 450, 131 Cal.Rptr. 14, 33, 551
P.2d 334, 353. We are bound to follow that decision under
the rule of Erie R. R. v. Tompkins, 304 U.S. 64, 58 S.Ct.
817, 82 L.Ed. 1188 (1938). Thus, we conclude that California
has a strong commitment to its policy against allowing
punitive damage claims in wrongful death cases.

We now examine California's interest under the comparative


impairment test.
[644 F.2d 624]
First, we consider the current status of its policy against
allowing punitive damages in wrongful death cases. Case law
indicates that California seems to have a strong commitment
to its policy of denying punitive damages in wrongful death
cases. As the court stated in In re Paris Air Crash, 622
F.2d 1315 1317 n.2 (9th Cir. 1980), "California courts have
uniformly held that the statute allowing punitive damage
recoveries generally in tort actions is available for death
recovering only in survival actions and not in wrongful
death suits." See Tarasoff v. Regents of the University of
California, 17 Cal.3d 425, 450,131 Cal.Rptr. 14, 33, 551
P.2d 334, 353 (1976); Pease v. Beech Aircraft Corp., 38
Cal.App.3d 450, 113 Cal.Rptr. 416 (1974).

Second, we now examine the "comparative pertinence" of


California's legislation to the facts of this case. First,
if California's no-punitive-damages rule is used in this
case, the purpose of that rule, protection of defendants
from excessive financial liability, will certainly be
achieved. If punitive damages are disallowed, damages

In addition to case law, the refusal of the California


legislature to change the law also indicates that California
has a strong commitment to its no-punitive-damages rule for
wrongful death cases. Although plaintiffs set forth
historical and policy arguments designed to show that
California has no commitment to its policy against allowance
of punitive damages,36 these arguments have not been
persuasive with the California legislature. That legislature
failed to amend California's wrongful death statute to
include punitive damages after attention had been drawn to
that omission. See In re Paris Air Crash, 622 F.2d 1318 n.2.

[644 F.2d 625]


cannot be assessed
damages.

beyond

the

award

for

compensatory

The second aspect of the "comparative pertinence" test is


whether the state can achieve its policy by means other than
enforcement of the statute in question. The allowance of
insurance is an alternative means of vindication of a
125

state's protective policy. As the court stated in Offshore


Rental, "[t]he fact that parties may reasonably be expected
to plan their transactions with insurance in mind may
therefore constitute a relevant element in the resolution of
a true conflict." 22 Cal.3d at 166, 148 Cal.Rptr. at 873,
583 P.2d at 727. California law permits defendants to insure
against punitive damages.38

availability of insurance, as significant enough to outweigh


each state's interest in application of its respective
policy. Moreover, to the extent that these theoretical
possibilities do exist, they cancel each other out. Thus, we
are unable to say that either state's interest would be
impaired less by the failure to apply its policy.
We now turn to the place of injury, Illinois. As discussed
above, Illinois does have significant interests under the
facts of this case. Under the comparative impairment test,
we first consider the current status of the Illinois policy
disallowing punitive damages. This policy was examined in
Part II of this opinion and, as discussed there, it is
strongly held. The rule against punitive damages in wrongful
death cases was recently affirmed inMattyasovszky v. West
Towns
Bus
Co., 21
Ill.App.3d
46, 313
N.E.2d
496 (1974), aff'd, 61 Ill.2d 31, 330 N.E.2d 509 (1975).

Having applied the "comparative impairment" test to


California, we arrive at the following results. California
has a strong current interest in its policy disallowing
punitive damages; there is a solid "fit" between the
purposes of that policy and its application to a corporation
engaging in conduct in California; but, there is some
slippage in that "fit" in the sense that at least some of
the purposes of California's policy of financial protection
theoretically can be achieved by other means, such as
insurance.

The second aspect of a state's commitment to its policy


involves the "comparative pertinence" of the state's policy
to the facts of the case. Here, the "fit" between the
purpose of the Illinois rule and our facts is strong. The
purpose of the no-punitive-damages rule is to protect
defendants from excessive liability. If Illinois law is
applied, MDC, a company which designs airplanes which fly
from and over Illinois, will be protected from excessive
liability related to a crash that occurred in Illinois.
Perhaps merely as the fortuitous place of an injury alone,
Illinois might not have a special interest in protecting
this corporation, headquartered in Missouri, which performed
its alleged misconduct in California. But as noted in Part
III, with regard to the actions filed in Illinois, Illinois

Thus,
the
application
of
California's
"comparative
impairment" analysis to the states with the greatest
interest in application of their laws reveals that both
states have strong commitments to their respective policies.
Both policies are clearly pertinent to the issue in this
case: Missouri would wish to punish MDC, a Missouri-based
corporation, for any wrongdoing related to the DC-10 crash;
California would want to shield MDC, a corporation doing
business in California, from excessive liability regarding
any wrongdoing committed in California related to the DC-10
crash. We do not regard the fact that, in each state, there
is a theoretical possibility that the state can vindicate
its policy by, respectively, the criminal sanction or the
126

was severely affected by this major disaster and Illinois


also has strong interests in the protection of airplanerelated industries. Because Illinois does have unique
interests

identify a state whose interest would be "more greatly"


impaired by the failure to apply its laws. But the
California Supreme Court has not confronted a situation
where, under the comparative impairment test, the states
with the most relevant interests also were determined to
have equal interests. Perhaps in such a situation, the
California Supreme Court would apply the test used prior to
comparative impairment. Whether it applied the rule of lex
loci delicti, see Bernhard, 128 Cal.Rptr. at 216, 546 P.2d
at 720, or Professor Currie's rule that in a true conflict,
the law of the forum should always be applied, see id., at
722-23; see also Kay, Comparative Impairment, supra note 2,
at 583, the result would be a decision not to allow the
punitive damage claims. For all of the foregoing reasons,
therefore, we reverse the district court and grant MDC's
motion to strike the punitive damage claims with regard to
the actions filed in California.

[644 F.2d 626]


in both the awarding and the denial of punitive damages, the
decision of its legislature to deny punitive damages must be
given special attention. For these reasons, then, we find
that, all other factors being equal, the interests of
Illinois tip the scales against the allowance of punitive
damages.
The use of Illinois' interests as the deciding factor
regarding the substantive question of punitive damages also
comports with principles of certainty and uniformity. Our
result under current California choice-of-law law is
consistent with our result under Illinois choice-of-law law,
which requires the adoption of the law of the place of
injury, unless another state has a greater interest in the
application of its law. Although California choice-of-law
law does not require this result, nothing in our approach is
inconsistent with California law.

B
We now considered the punitive damage claims sought against
American, with regard to the actions filed in California. As
discussed above, the first step in California's analysis is
to determine that there is an apparent conflict of laws
between the states having relevant interests in the
application of their laws. The states which have the
relevant interest are: the principal place of business; the
place of misconduct; and, under the unique facts of this
case, the place of injury.

Finally, although the California "comparative impairment"


test is relatively new, the result we reach is also
consistent with the result a California court probably would
have reached prior to the recent adoption of comparative
impairment analysis. Comparative impairment has only been
used in two cases by the California Supreme Court, Offshore
Rental, 22 Cal.3d 157, 148 Cal.Rptr. 867, 583 P.2d 721,
and Bernhard, 61 Cal.3d 313, 128 Cal.Rptr. 215, 546 P.2d
719. Using the test in those cases, the court was able to

American's principal place of business at the time of the


crash, as discussed above, was New York, which does not
allow punitive damages. The place of American's alleged
127

misconduct is Oklahoma, site of its maintenance base, which


does allow punitive damages. Thus, we have a clear clash of
law regarding interested states. As discussed above with
regard to MDC's principal place of business and place of
alleged misconduct, we see no way to reach a compromise via
a moderate and restrained interpretation of either policy.
Thus, we now examine each state's relative commitment to its
policy in order to determine whether either state's interest
would be less impaired by the failure to apply its law.

a strong "fit" between the purpose of the rule and the facts
before us. The next question is whether that state's
interest can be achieved in other ways, such as through the
availability of insurance. As discussed with regard to MDC,
this factor is not of critical importance, but can add
another dimension to the analysis of a state's interest. It
is not clear whether a corporation can acquire insurance
against punitive damages in New York.39 For the foregoing
reasons, then, it does appear that the current status of New
York's law against punitive damages is strong and that there
is a good "fit" between New York's policy and the facts of
this case.

Under the "comparative impairment" test, the first aspect of


a state's commitment to its policy is the current status of
that policy. The current status of the New York rule against
punitive damages seems strong. In Robert v. Ford Motor
Co., 73 App.Div.2d 1025, 424 N.Y.S.2d 747 (1980), the court
clearly held that punitive damages were not allowed under
the wrongful death statute. The court stated that "[t]he
remedy provided by the statute, the recovery of compensatory
damages, is exclusive and may not be expanded by the
courts." 424 N.Y.S.2d at 749. See also Ratka v. St. Francis
Hosp., 44 N.Y.2d 604,

We now examine Oklahoma's interest in its policy allowing


punitive damages. The Oklahoma wrongful death statute
recently
was
amended
to
specify, inter
alia, the
40
availability of punitive damages. Thus, the Oklahoma
legislature seems to have a strong and current interest in
the availability of punitive damages.
Second, regarding "comparative pertinence," the policies
behind allowing punitive damages are, as discussed above,
punishment
of
wrongdoers
and
deterrence
of
future
wrongdoing. If punitive damages are assessed against
American,
those
damages
will
be
larger,
perhaps
substantially
larger
than
compensatory
damages
only.
American will undoubtedly perceive those additional damages
as "punishment". Other corporations performing conduct in
Oklahoma will certainly be deterred from engaging in similar
conduct. Thus, there is a strong "fit" between the purpose
of the policy allowing punitive damages and the facts of
this case. Of course, as with Missouri, there is the

[644 F.2d 627]


610, 612, 407 N.Y.S.2d 458, 460, 462, 378 N.E.2d 1027, 1030,
1032 (1978).
The second aspect of a state's commitment to its policy is
whether that policy is "comparatively pertinent" to the
facts of the case. The purpose of a rule disallowing
punitive damages is to protect defendants from excessive
financial liability. If New York's law is applied, American,
a corporation headquartered in New York, will be protected
from any damages beyond compensatory damages. Thus there is
128

theoretical possibility that the state could achieve its


policies of punishment and deterrence through the use of the
criminal sanction.41 Although this

As we did in the analysis regarding MDC, we now turn to the


state with the next strongest relevant interest, Illinois.
For the reasons discussed with regard to the claims against
MDC, it seems proper that Illinois law, which does not allow
punitive damages, should be the deciding factor. For the
foregoing reasons, therefore, we hold that, with regard to
the actions filed in California, the motions to strike
punitive damage claims against American are granted.

[644 F.2d 628]


possibility is relevant, it is not of great importance
because, as discussed earlier, overreliance on this factor
would vitiate the "private attorney general" concept
inherent in all actions for punitive damages.

VII

Thus, the application of the "comparative impairment" test


to Oklahoma leads to the following conclusions. The current
status of Oklahoma's policy allowing punitive damages is
strong; that policy is comparatively pertinent to the facts
of this case; but, there is the remote possibility that the
state could vindicate its interest through use of the
criminal sanction.

We turn now to the actions filed in New York. Although the


New York Court of Appeals has characterized its choice-oflaw approach in varying terms, that Court has applied a
relatively consistent rule. That rule was formulated
in Babcock v. Jackson, 12 N.Y.2d 473, 240 N.Y.S.2d 743, 749,
191
N.E.2d
279,
283
(1963).
In Babcock, the
court
specifically rejected the rule of lex loci delicti and
announced a rule it viewed as equivalent to the Restatement
(Second)'s "most significant relationship" test. The court
stated that the law to be applied should be that of the
state with "the greatest concern with the specific issue."
12 N.Y.2d at 481, 240 N.Y.S.2d at 749, 191 N.E.2d at
283.43 The Babcock rule

Regarding American, then, we are now confronted with


virtually the same situation as with regard to the
California actions filed against MDC. There is a true and
equal conflict between the punitive damage rules of the
principal place of business and of the place of alleged
misconduct. Each state's interest would be equally impaired
if the rule of the other state were used. The only
difference between the analysis regarding MDC and the
analysis regarding American is that it seems clear that
insurance may be sold to cover punitive damages in
California, but it is not clear that such insurance may be
sold in New York. But even if the sale of such insurance is
not allowed in New York, we do not deem this factor to be
strong enough to tip the scales in favor of the application
of New York Law.42

[644 F.2d 629]


has been followed in Long v. Pan American World Airways, 16
N.Y.2d 337, 266 N.Y.S.2d 513, 213 N.E.2d 796 (1965), Tooker
v. Lopez, 24 N.Y.2d 569, 301 N.Y.S.2d 519, 249 N.E.2d 394
(1969),44 and Neumeier
v.
Kuehner, 31
N.Y.2d
121,
335
N.Y.S.2d 64, 286 N.E.2d 454 (1972).45

129

Because the New York test is the functional equivalent of


the Restatement (Second) test, the Illinois test, the
conflicts analysis with regard to New York law is the same
as the conflicts analysis with regard to Illinois. Thus, for
the reasons discussed with regard to Illinois law, we grant
the motion to strike New York punitive damage claims against
both MDC and American.

conflicts questions regarding such accidents. 236 N.W.2d at


742.46 Thus, it appears that under Michigan law, a court
would attempt to determine which state had the most
significant relationship to the parties or to the occurrence
such that its law should be applied. But if that test did
not resolve the question, because of Michigan's strong
history
of
following
the lex
loci
delicti rule
see Sweeney, 262
N.W.2d
at
625-27,
and
because
the Sweeney court declined to completely abandon that rule,
we conclude that the Michigan court would then consider the
law of the place of injury to be determinative.

VIII
We turn now to the actions filed in Michigan. For many
years, Michigan had followed the traditional rule that the
substantive law of the place of injury governed all issues
in tort actions. Abendschein v. Farrell,

Since, in this case, the place of conduct and the principal


place of business have equal interests in the application of
their laws, we conclude a Michigan court would resolve this
matter by applying the law of the place of injury, Illinois,
because of Michigan's strong history of following the lex
loci delicti rule. Thus, we grant the motions to strike
punitive damage claims against both defendants with regard
to the actions filed in Michigan.

[644 F.2d 630]


382 Mich. 510, 170 N.W.2d 137 (1969); Kaiser v. North, 292
Mich. 49, 289 N.W. 325 (1939). In recent years, however, the
Michigan courts' adherence to this lex loci delictirule has
weakened. Although it is now clear that Michigan Courts have
rejected automatic application of the rule of lex loci
delicti, it is not clear what the new choice-of-law law is.

IX
In Sweeney v. Sweeney, 402 Mich. 234, 262 N.W.2d 625 (1978),
the Michigan Supreme Court declared that the lex loci
delicti rule would not be applied when to do so would
frustrate Michigan public policy. In discussing exceptions
to
the lex
loci
delicti rule,
theSweeney court
cited
approvingly the case of Branyan v. Alpena Flying Service,
Inc., 65
Mich.App.
1, 236
N.W.2d
739 (1975).
The Branyan case held that the lex loci delicti rule did not
apply to airplane accidents and concluded that the "most
significant relationship" test should be used to resolve

As the district court determined, Puerto Rico applies


the lex loci delicti test to tort actions.Jimenez Puig v.
Avis
Rent-A-Car
System, 574
F.2d
37,
40
(1st
Cir.
1978); DeVane
v.
United
States, 259
F.Supp.
18,
20
(D.P.R.1966). The law of the place of injury, Illinois, does
not permit punitive damages in wrongful death actions.
Moreover, denying punitive damages here does not frustrate
the public policy of Puerto Rico, since Puerto Rico does not
allow punitive damages in tort actions. Ganapolsky v. Park
Gardens Development Corp., 439 F.2d 844, 846 (1st Cir.
130

1971); Cooperativa de Seguros Multiples v. San Juan,289


F.Supp. 858, 859-60 (D.P.R.1968). Therefore, the district
court's grant of the motions to strike punitive damage
claims against both MDC and American is affirmed.

interest of justice." Restatement (Second) 136, Comment h,


at 378.
Hawaii's law regarding punitive damages is disputed. The
Hawaii Wrongful Death Act, Haw.Rev.Stat. 663-3 (1976
Repl.), authorizes the recovery of "such damages ... as
under the circumstances shall be deemed fair and just
compensation, with reference to the pecuniary injury and
loss of love and affection, including" itemized elements of
loss.47The statute makes no reference to punitive damages.

X
Finally, we turn to Hawaii. Neither the parties nor the
district court have been able to identify the choice-of-law
law of Hawaii. The district court concluded that under any
of the conflicts rules it considered, the law of New York or
Illinois would apply to American. For that reason the
district court struck all punitive damage claims against
American in actions filed in Hawaii. But the district court
denied the motion to strike punitive damage claims against
MDC because it concluded that, under some conflicts rules,
punitive damages might be assessed against MDC. We must
reject the district court's reasoning.

Although the question of whether punitive damages are


recoverable under the Act has never been squarely decided by
the Hawaii Supreme Court, that Court has on several
occasions declared that the purpose of the Act is
"compensation for loss rather than punishment." Greene v.
Texeria, 54
Haw.
231,
236, 505
P.2d
1169,
1173
(1973). Accord,
Ginoza
v.
Takai, 40
Haw.
691,
704
(1955), rehearing denied, 40 Haw. 734; Young v. Honolulu
Constr. & Draying Co., 34 Haw. 426 (1938); United States v.
Harue Hayashi, 282 F.2d 599, 603 n.4 (9th Cir. 1960)
(applying Hawaii law). Moreover, the longstanding rule of
construction followed by the Hawaii courts for "statutes
creating a new cause of action for death" is that "damages
must be limited strictly to the pecuniary loss to the
beneficiaries caused by such death." Enos v. Motor Coach
Co., 34 Haw. 5, 6-7 (1934).

[644 F.2d 631]


The inability to determine the governing choice-of-law law
does not justify placing the burden on one of the parties to
disprove the possibility that a choice-of-law rule would
impose liability on it. We conclude that where the choiceof-law law cannot be determined, absent an affirmative
showing to the contrary, the court should presume that the
forum would apply its own law. See Com'l Ins. Co. v.
Pacific-Peru Const. Corp., 558 F.2d 948, 952 (9th Cir.
1977). We agree with the authors of the Restatement (Second)
who
state,
"where
either
no
information,
or
else
insufficient information, has been obtained about the
foreign law, the forum will usually decide the case is
accordance with its own local law except when to do so would
not meet the needs of the case or would not be in the

Plaintiffs argue that Hawaii has long recognized the award


of punitive damages, but none of the cases which they cite
for this proposition involved the Hawaii Wrongful Death Act
here in issue.48 Plaintiffs also embark on a tortuous
argument based on a series of cases and legislative actions,
131

concerning computation of damages at the time of death in


personal injury cases, which attempts to show that Hawaii
does allow punitive damages. But the series of court
decisions and subsequent legislative action detailed by the
plaintiffs
did
not
involve
punitive
damages.49 The
plaintiffs'

XI
In conclusion, we agree with the district court's comments
on the problems involved in determining choice-of-law issues
in airplane crash cases. Airline corporations and airplane
manufacturers are subject to uniform federal regulation in
almost every aspect of their operations, except their
liability in tort. As recently as 1978, a bill was
introduced in Congress to establish a federal cause of
action
for
injuries
suffered
through
aviation
activity. See H.R.10917, 124 Cong.Rec.No.17 (February 14,
1978). If this bill, or any of its predecessors, had passed,
those actions would all be governed by federal law, uniform
as to liability and damages, rather than by the varying laws
of a number of states. SeeNote, 28 Vand.L.Rev. 621, 625
(1975). Along with the district court, we conclude that it
is clearly in the interests of passengers, airline
corporations, airplane manufacturers, and state

[644 F.2d 632]


argument shows only that one element of compensatory damages
future earnings was specifically allowed by the
legislature. It does not establish the proposition that
Hawaii would allow punitive damages. For the above reasons,
we conclude that Hawaii does not allow such damages.
Having determined that Hawaii law does not authorize
punitive damages in wrongful death cases, we must now
consider whether the application of that law would "not meet
the needs of the case or would not be in the interest of
justice." Restatement (Second) 136, Comment h, at 378.
Since we have denied the availability of punitive damages
with regard to each other state in which actions have been
filed, we do not find that the application of Hawaii law
would fail to meet the needs of the case or would not be in
the interest of justice.50 In addition, we have found that
the use of two modern choice-of-law theories, as well as the
old rule of lex loci delicti, all lead to the same result in
this case. We see no reason why the result with regard to
the Hawaii plaintiffs should be different, especially since
Hawaii does not allow punitive damages. For these reasons,
we grant the motions to strike Hawaii punitive damage claims
against both defendants.

[644 F.2d 633]


and federal governments, that airline tort liability be
regulated by federal law. Of course, we are well aware of
the fact that it is up to Congress, and not the courts, to
create the needed uniform law.
For the foregoing reasons,51 the orders of the district
court in denying the motions to strike punitive damage
claims against MDC are reversed, while its orders granting
such motions with regard to American are affirmed.
Therefore, this case is
REVERSED IN PART AND AFFIRMED IN PART.

132

CUDAHY, Circuit Judge, concurring:

questions raised about state policy toward extraterritorial


torts underline the need for a federal law to govern tort
liability for these unthinkable air disasters.

I join without reservation in the result and commend the


insight and creativity of Judge Sprecher's probing analysis.
Decisive in the district court's disposition of the punitive
damages problem and of considerable analytical prominence in
our own is the concept that the two states of the
defendants' principal places of business have a weighty
interest in their respective policies toward either awarding
or denying punitive damages. This view may be most
significant in the case of McDonnell Douglas, domiciled in
Missouri. The district court found that claims for punitive
damages against this defendant could stand because of
Missouri's position that tort-feasors in wrongful death
cases could be subjected to damages punitive in character if
"aggravating circumstances" were shown. We, in turn, have
determined that major weight should be accorded to
Missouri's position favoring such exemplary damages under
the principle of "corporate accountability." Some question
remains for me whether Missouri would, in fact, have a
strong interest in imposing financial sanctions on its own
corporate domiciliary, employing Missouri citizens and
paying
Missouri
taxes,
as
punishment
for
that
corporation's extraterritorialtorts affecting non-residents
of Missouri. The finding of such a Missouri interest may
impute an unusual level or altruism to Missouri policy and
may overstate the commitment of Missouri (or any other
state) to "corporate accountability" in circumstances where
both the misconduct and the injuries took place outside the
borders of the domiciliary state. Nevertheless, I am
willing, arguendo and for present purposes, to indulge these
assumptions (which seem enlightened in theory). But the

FootNotes
1. The cases have been transferred to the Northern District
of Illinois for pretrial purposes by order of the Judicial
Panel on Multidistrict Litigation.
2. See Currie, The Disinterested Third State, 28 L. &
Contemp.Prob. 754, 757-58 (1963). Professor Currie's use of
the terms "true conflict," "false conflict" and "apparent
true conflict" refers specifically to his theory of
government interest analysis. See generally Kay, The Use of
Comparative Impairment To Resolve True Conflicts: An
Evaluation of the California Experience, 68 Cal.L.Rev. 577
(1980)
[hereinafter
referred
to
as
Kay, Comparative
Impairment]. Our use of this terminology will not be so
narrow. All laws must be carefully examined to determine
that a conflict actually exists, under any choice-of-law
theory, before application of the theory.
3. The Public Utilities Act, Ill.Rev.Stat.1969, ch. 111 2/3,
77 provides:[I]f the court shall find that the act or
omission was willful, the court may in addition to the
actual damages, award damages for the sake of example and by
way of punishment.
4. The Illinois Supreme Court stated:In Mattyasovszky, where
the decedent died instantly, his estate sought to recover
punitive damages which the decedent, under the common
law, might have recovered had he survived. The court
summarily denied recovery of punitive damages because the
Survival Act itself has "never been thought to authorize the
award of punitive damages." ... The court, however, did not
base its denial of common law punitive damages on the broad
proposition that punitive damages are unrecoverable when
injury
results
in
death
....Here,
in
contrast
to Mattyasovszky, punitive recovery was sought, not under
133

the common law, but directly under the Public Utilities


Act.... The Survival Act itself neither authorizes nor
prohibits punitive damages. It is merely the vehicle by
which the cause of action, created by the Public Utilities
Act, survives the death of the injured person when the
action would otherwise have abated at common law.

nor are they to be submitted separately, nor in any total


verdict and judgment to exceed the statutory limit.Within
that total limit the jury may exercise a broad discretion.

383 N.E.2d at 924 (emphasis in original).

8. Cal.Civil Code, 3294 (West, 1970), provides:In an


action for the breach of an obligation not arising from
contract, where the defendant has been guilty of oppression,
fraud, or malice, express or implied, the plaintiff, in
addition to the actual damages, may recover damages for the
sake of example and by way of punishing the defendant.
9. The district court first held that the equal protection
clauses of the Illinois and Michigan constitutions were
coextensive with the equal protection clause of the federal
constitution, citing Friedman & Rochester, Ltd. v. Walsh, 67
Ill.2d
413,
10
Ill.Dec.
559, 367
N.E.2d
1325 (1977);Commissioners of Highways of Town of Annawan v.
United States, 466 F.Supp. 745, 769 (N.D.Ill.1979); Moore
v. Spanglar, 401 Mich. 360, 258 N.W.2d 34 (1977).

396 S.W.2d at 616-17 (emphasis added) (emphasized material


was deleted in MDC quotation).

5. The majority opinion stated that "[t]he law is well


settled that a party cannot recover punitive damages in a
wrongful
death
action
in
Illinois."
The
majority
cited Mattyasovszky but did not discuss the Norfolk cases.
388
N.E.2d
at
911-12.
But
the
dissent
had
cited
both Mattyasovszky and theNorfolk cases for the proposition
that it was not "well-settled that a party cannot recover
punitive
damages
in
a
wrongful
death
action
in
Illinois." Id. at 912. Thus, the majority opinion rejected
the argument that the Norfolk cases changed the law barring
punitive damages in wrongful death cases.
6. See also Williams v. Excavating and Foundation Co., 230
Mo.App. 973, 93 S.W.2d 123, 127 (1936) ("to whatever extent
the damages are increased by reason of aggravating
circumstances attending the death of the deceased, such
increase is punitive in its nature ....") and Contestible
v.
Brookshire, 355
S.W.2d
36,
42
(Mo.1962), cert.
denied and appeal dismissed, 371 U.S. 68, 83 S.Ct. 155, 9
L.Ed.2d 119 (1962).
7. The court stated:There is no recovery in a death case for
punitive damages, as such. Such a petition may plead, and
appropriate instructions may submit, the question of
"mitigating or aggravating circumstances," if the evidence
justifies it. Williams v. Excavating & Foundation Co., 230
Mo.App. 973, 93 S.W.2d 123, 127; Hertz v. McDowell, 358 Mo.
383, 214 S.W.2d 546. While added damages because of
"aggravating circumstances" may, in a sense, be considered
as punitive in nature, they are not to be submitted as such

The district court then turned to California. It found that


the California equal protection clause was fundamentally
equivalent to that of the federal Constitution but that it
required "some rationality" in the nature of the class
singled out. The court held that the denial of punitive
damages was rational and that, therefore, such denial did
not offend the California constitution.
Finally, the district court examined the prohibition of
"special legislation" in the Illinois Constitution, Art. 4,
13. The court rejected the argument that Illinois' denial
of
punitive
damages
constituted
"special
legislation," citing Smith v. Hill, 12 Ill.2d 588, 147
134

N.E.2d 321 (1958); Siegall v. Soloman, 19 Ill.2d 145, 166


N.E.2d
5 (1960); Adams
v.
Continental
Cas.
Co., 21
Ill.App.3d 111, 314 N.E.2d 495 (1974), aff'd McRoberts v.
Adams, 60 Ill.2d 458, 328 N.E.2d 321 (1975); Rincon v.
License Appeal Commission of City of Chicago, 62 Ill.App.3d
600, 19 Ill.Dec. 406, 378 N.E.2d 1281 (1978); and Friedman
& Rochester, Ltd. v. Walsh, 67 Ill.2d 413, 10 Ill.Dec.
559, 367 N.E.2d 1325 (1977).

First, because we are not confronted with a specific


challenge to the district court's finding that the Illinois
equal protection guarantee is coextensive with the federal
equal protection guarantee, we decline to disturb the
district court's finding.
Second, we find that abstention is not appropriate. As the
United States Supreme Court stated in Babbitt v. Farm
Workers, 442 U.S. 289, 306, 99 S.Ct. 2301, 2313, 60 L.Ed.2d
895 (1979), a case cited by the Plesas, there is a
fundamental prerequisite for abstention. "[T]he abstention
doctrine `contemplates that deference to state court
adjudication only be made where the issue of state law is
uncertain.'" Harman v. Forssenius, 380 U.S. 528, 534, 85
S.Ct. 1177, 1181, 14 L.Ed.2d 50 (1965). But as we discussed
in Part II, we do not find the issue of whether Illinois
denies punitive damages to be uncertain. To the contrary, we
find
the
Illinois
Supreme
Court's
affirmation
of Mattyasovszky clear authority for the fact that Illinois
does deny punitive damages in wrongful death cases. Thus, we
decline plaintiffs' invitation to abstain.

The plaintiffs do not directly challenge any of these


findings by the district court. Illinois plaintiffs Plesas
do, however, raise some arguments which, inter alia, imply a
challenge based on Illinois constitutional grounds. The
Plesas' first argument is not a constitutional argument but
a response to MDC's argument that Illinois would refuse to
enforce Missouri's law allowing punitive damages. They argue
that it is not the case that Illinois would refuse to
enforce Missouri's law. Since our analysis of the conflicts
issue does not rely on this MDC argument, we do not reach
the Plesas' first argument.
The Plesas' second argument seems to be that the denial of
punitive damages is unconstitutional under Illinois law. But
they do not press this argument as such. Rather, they seem
to argue that this Court should abstain from deciding the
Illinois constitutional challenge and allow Illinois courts
to decide it. Plaintiffs request abstention under Circuit
Rule 13 of this Court which provides the power to certify
"questions arising under the laws of that state which will
control the outcome of a case pending in federal court."
This second argument, then, presents two issues for
resolution by this Court.

10. In In re Paris Air Crash, 622 F.2d 1315, 1319 n. 4


(1980), the Ninth Circuit Court of Appeals held that the
"rational relationship" test and not any higher level of
scrutiny should be used in examining the denial of
punitive damages in wrongful death actions. The court
stated:We do not apply a middle-tier analysis for three
reasons. First, both state and federal Supreme Courts have
declined frequent invitations to announce or articulate such
an analysis. Second, both courts have analyzed tort recovery
limits in terms of a rational bearing upon a legislative
objective. Third, the relatively nongrievous deprivation, if
indeed it can be called such, of a limit on who may act as a
135

private attorney general by seeking punitive damages makes


this case particularly inappropriate to inaugurate such an
analysis. Additional drawbacks of this proposed innovation
are discussed in Hawkins v. Superior Court, 22 Cal.3d 584,
607-10, 150 Cal.Rptr. 435, 450-51, 586 P.2d 916, 931-32
(1978) (Bird, C. J., concurring); Linde, Due Process of Law
Making, 55 Neb.L.Rev. 197 (1976).

Professor Reese stated:Amidst the chaos and tumult of choice


of law there is at least one point on which there seems to
be general agreement in the United States. This is that
choice of the applicable law should frequently depend upon
the issue involved. The search in these instances is not for
the state whose law will be applied to govern all issues in
a case; rather it is for the rule of law that can most
approximately
be
applied
to
govern
the
particular
issue....It also seems probable that greater use of depecage
will be an inevitable by-product of the development of
satisfactory rules of choice of law. In contrast to the
broad rules that have been tried and found wanting, the new
rules, if we are indeed to develop such rules, are likely to
be narrow in scope and large in number....In short, a
willingness to make a liberal use of depecage would seem a
prerequisite to the satisfactory development of narrow rules
of choice of law.
14. Referring to depecage and the Reese article, id., the
court said, with regard to California choice-of-law:Although
the California Supreme Court has not explicitly adopted this
method, it is implicit in that court's analysis of cases and
it is consistent with modern governmental interest analysis
to examine comparative governmental interests as to each
issue, to the extent the issues are separable and the
balance of comparative interests may vary.

622 F.2d 1315, 1319 n. 4.


11. A state may even determine, for example, that its
interest in maintaining accurate and efficient disposition
of property at death is best served by limiting damages to
exclude punitive damages.See Parham v. Hughes, 441 U.S. at
357, 99 S.Ct. at 1748.
12. Finally, plaintiffs argue that this Court must find the
denial of punitive damages in wrongful death cases
unconstitutional because, so long as this denial continues,
there will continue to be some truth to the adage that "it
is cheaper to kill a victim than to injure him."
Unfortunately, this adage has become an adage because there
is some truth to it.
The decision of under what circumstances punitive damages
should be allowed is for the state legislatures and not this
Court. Neither with regard to the constitutional argument,
nor with regard to the conflicts analysis, do we take into
consideration the wisdom of specific decisions regarding
punitive damages.

Reyno, at 167.
15. See Reese, Depecage, id.; Leflar, American Conflicts
Law, 109, pp. 221-22 (3d ed. 1977)citing Wilde, Depecage
in the Choice of Tort Law, 41 S.Cal.L.Rev. 329 (1968).
16. The Restatement (Second) 175, 178 (1971) provides as
follows: 175. Right of Action for Death. In an action for
wrongful death the local law of the state where the injury
occurred determines the rights and liabilities of the
parties unless, with respect to the particular issue, some
other state has a more significant relationship under the

13. In our case, there is only one relevant issue: the


choice of law regarding punitive damages. Thus, we use the
term here to mean a precise focus on the purpose of and
policies behind the decision to either allow or disallow
punitive damages. See Reese, Depecage: A Common Phenomenon
In Choice of Law, 73 Colum.L.Rev. 58, 59-60 (1973).
136

principles stated in 6 to the occurrence and the parties,


in which event the local law of the other state will be
applied. 178. Damages. The law selected by application of
the rule of 175 determines the measure of damages in an
action for wrongful death.
17. The Restatement (Second), 6, (1971), provides: 6
Choice
of
Law
Principles(1)
A
court,
subject
to
constitutional
restriction,
will
follow
a
statutory
directive of its own state on choice of law.(2) When there
is no such directive, the factors relevant to the choice of
the applicable rule of law include(a) the needs of the
interstate and international systems,(b) the relevant
policies of the forum,(c) the relevant policies of other
interested states and the relative interests of those states
in the determination of the particular issue,(d) the
protection of justified expectation,(e) the basic policies
underlying the particular field of law,(f) certainty,
predictability and uniformity of result, and(g) ease in the
determination and application of the law to be applied.
18. The Restatement (Second), 145, provides: 145 The
General Principle(1) The rights and liabilities of the
parties with respect to an issue in tort are determined by
the local law of the state which, with respect to that
issue, has the most significant relationship to the
occurrence and the parties under the principles stated in
6.(2) Contacts to be taken into account in applying the
principles of 6 to determine the law applicable to an
issue include:(a) the place where the injury occurred,(b)
the place where the conduct causing the injury occurred,(c)
the domicil, residence, nationality, place of incorporation
and place of business of the parties, and(d) the place where
the relationship, if any, between the parties is centered.

20. Moreover, the place where the relationship is centered


would seem to have a low interest in either punishment or
protection merely because the parties' relationship was
centered within its borders. The alleged egregious acts
would not have occurred there; thus, the state would have a
low interest in controlling nonresident corporate behavior.
Also, because the corporations were not located in that
state, it would have a low interest in the protection of
nonresident defendants.
21. For this reason, we reject the defendants' "grouping"
theory. Defendants argue that because the law of the place
of injury and the law of the place of misconduct are the
same, the case must be analyzed for choice-of-law purposes
as if conduct and injury occurred in the same state. Then,
defendants argue, punitive damages must be disallowed. But
the very "grouping" process that defendants advocate would
vitiate the entire process of weighing states' interests.
The result of defendants' approach would be the application
of rules as wooden and mechanical as the old lex loci
delicti rule
itself,
which
the
Restatement
(Second)
balancing process is designed to supplant. The Restatement
(Second) 6, at 14, states:In determining a question of
choice of law, the forum should give consideration not only
to its own relevant policies ... but also to the relevant
policies of all other interested states. The forum should
seek to reach a result that will achieve the best possible
accommodation of these policies. The forum should also
appraise the relative interests of the states involved in
the determination of the particular issue. In general, it is
fitting that the state whose interests are most deeply
affected should have its local law apply.
22. In this case, for example, American maintained its
corporate headquarters in New York, its operations base in
Texas, its maintenance department in Oklahoma, and conducts
business throughout the country.
23. The Jackson court did state that the domiciliary states
had a lower interest in punitive damages than the place of

These contacts are to be evaluated according to their


relative importance with respect to the particular issue.
19. See Id., 145, Comment c, at 416-17.
137

injury because "the California Supreme Court had recognized


that the interest in regulation of conduct in tort cases is
primarily local in character and is the concern of the
jurisdiction in which the conduct occurred." 459 F.Supp. at
955. But the Jackson court did not use this reasoning to
downplay the interest of the Netherlands, KLM's principal
place of business. Nor did the court say that Spain and the
Netherlands had an interest only in protecting KLM from
excessive financial burdens. The court was not confronted
with the question of the countries' interests had they
chosen to allow the financial burdens of punitive damages.
The court, which found for the defendants, characterized the
defendants'
argument
as
follows:KLM
asserts
that
Netherlands, the place of KLM's incorporation and its
principal place of business, and Spain, the country in which
the accident occurred, are the only jurisdictions with a
significant interest in the issue of punitive damages.
459 F.Supp. at 955 (emphasis added). By
phrase
"issue
of
punitive
damages,"
defendants' argument, which the court had
also have been accepted had the countries
damages.

compromise. See Trautman, A Comment on Twerski and Mayer: A


Pragmatic Step Towards Consensus As a Basis For Choice-ofLaw Solutions, 7 Hofstra L.Rev. 833 (1979).
25. The Restatement (Second) also lists other policies
including the needs of the interstate system, the policies
of the forum and other interested states, the protection of
justified expectations, and the basic policies underlying
the particular field of law. See note 17, supra. These other
principles are not helpful in the resolution of this issue
because their application can cut either way. Neither a
decision for nor a decision against punitive damages will
make the interstate system work better or worse. The
relevant policies of the forum, as we have seen, are
countered by the relevant policies of Missouri. "Justified
expectations" are not an issue because MDC's corporate
headquarters are in Missouri. MDC does not argue, nor
reasonably could it, that it somehow justifiably expected it
would not be held Missouri law for its corporate decisions.
Finally, the basic policies underlying the field of punitive
damages are in conflict. Each state legislature weighs the
balance of deterring wrongful conduct or protecting
defendants from excessive liability and then makes its
decision accordingly.
26. Federal Rule of Civil Procedure 12(b) provides:If, on a
motion asserting the defense numbered (6) to dismiss for
failure of the pleading to state a claim upon which relief
can be granted, matters outside the pleading are presented
to and not excluded by the court, the motion shall be
treated as one for summary judgment and disposed of as
provided in Rule 56, and all parties shall be given
reasonable opportunity to present all material made
pertinent to such a motion by Rule 56.

the use of the


presumably
the
accepted, would
allowed punitive

24.
Kay, Comparative
Impairment,
supra note
2,
at
578, quoting W. Reese & M. Rosenberg, Cases and Materials on
Conflict of Laws 470 (7th ed. 1978). Also, we are unable to
fathom a procedural compromise, such as a shift in the
burden
of
proof,
which
could
accommodate
both
policies. SeeTwerski & Mayer, Toward a Pragmatic Solution
of Choice of Law Problems At the Interface of Substance
and Procedure, 74 Nw.L.Rev. 781 (1979); Sedler, On Choice
of Law and the Great Quest: A Critique of Special
Multistate Solutions to Choice-of-Law Problems, 7 Hofstra
L.Rev. 807 (1979). Nor are we able to determine a consensus
on shared values or policies which could lead to a

Fed.R.Civ.P. 12(b).
27. The deposition of Mr. Lloyd-Jones continued:Q. Was any
space taken down here before July '79?Mr. Long: Do you mean
138

physically moved into or contracts signed?Mr. Morgan:


Leased, bought, built?Mr. Long: All of those?Mr. Morgan: All
of those.Mr. Long: The question is compound, ambiguous and
vague.Mr. Morgan: Leased? How is that?Mr. Long: That is
fine.A. Lease was entered into, it's certainly a matter of
record when that was signed. I don't honestly remember when
that was signed. But it is a matter of record.No one moved,
however, until July. There was no work done on preparation
of the facility, until starting some time in June, to the
best of my recollection.Q. I guess we can't move you down
here into punitive country, then.

(1978); and Note, After Hurtado and Bernhard; Interest


Analysis and the Search for a Consistent Theory for Choiceof-Law Cases, 29 Stan.L.Rev. 127 (1976).
31. Professor Kay argues that the step of moderate and
restrained interpretation was integral to Professor Currie's
governmental interest approach and that its use in the new
comparative impairment approach announced by the California
Supreme Court in Bernhard was improper. Kay,Comparative
Impairment, supra note 2, at 583. Although some doctrinal
inconsistencies do exist between the two theories, id., at
583-86, we are not convinced that this combination of
theories is inappropriate. As we understand it, the point is
that the reviewing court must look behind an apparent
conflict to the precise issue and the precise interest of
each state. This approach seems to be the very essence of
the depecage concept. See Leflar, American Conflicts Law,
109, 221-22 (3d ed. 1977).
32. The Offshore Rental Court stated:[W]hile "[i]t is not
always possible to say fairly, whether [the] policy
[underlying
a
state's
law]
is
one
that
was
much
more strongly held in the past than it is now, ... this
ground of analysis should not be ignored." (Emphasis added.)
(Von
Mehren
&
Trautman, The
Law
of
Multistate
Problems (1976) p. 337.)Professor Freund has pointed out
that "Statutes [in a domestic case], by reason of their
pattern or their prevalence, may evidence a legal climate of
opinion which makes less oppressive the responsibility of
the judge in choosing between ... two possible rules of
law .... A similar resort may be made in multistate
cases. If one of the competing laws is archaic and isolated
in the context of the laws of the federal union, it may not
unreasonably have to yield to the more prevalent and
progressive law, other factors of choice being roughly
equal ...." (Emphasis added.) (Freund, Chief Justice Stone
and the Conflict of Laws (1946) 56 Harv.L.Rev. 1210,
1216.) ....Moreover, a particular statute may be an antique
not only in comparison to the laws of the federal union, but

Record, MDL 391 # 2, 2, at 42-3.


28.
In
the Herschel case,
the
court
did
not
even
characterize the facts as involving a direct conflict
between the "nerve center" and the place of operations since
both were found to be in Miami. 216 F.Supp. at 349.
29. Plaintiffs Nary argue that they accepted American's
answer that its principal place of business was Texas and
that they have never had the opportunity to reply to
American's Reply Memorandum which contained the assertion
that American's principal place of business at the time of
the crash was New York. But, as noted above, the confusion
regarding principal place of business in the pleadings is
due in part to the fact that plaintiffs' original complaint
did not refer to any date regarding American's principal
place of business. American's answer, similarly, did not
refer to any date. Thus, the cause of much of the lack of
precision must be placed at the plaintiffs' own doorstep.
The plaintiffs' argument that they never had the opportunity
to respond to American's later, more precise, assertion is
also weakened by the fact that they did not file a motion to
vacate the district court's judgment because of this issue.
30. See Kay, Comparative
Impairment,
supra note
2;
Kanowitz, Comparative Impairment and Better Law: Grand
Illusions in the Conflict of Laws, 30 Hastings L.J. 255
139

also as compared with the laws of the state of its


enactment. Such a statute may be infrequently enforced or
interpreted even within its own jurisdiction, and, as an
anachronism in that sense, should have a limited application
in a conflicts case.

"Recommendation and Study Relating to Survival of Actions,"


the Commission concluded that there was no valid reason for
an exclusion of punitive damages in death cases. Plaintiffs
argue that the Commission recommended that there be a new
survival statute, known as 573 of the Probate Code, which
would specifically preserve a decedent's right to sue for
punitive damages, and that the wrongful death statute
(Cal.Civil Proc.Code 377) be amended to exclude damages
recoverable under 573.

22 Cal.3d at 165-66, 148 Cal.Rptr. at 872, 583 P.2d at 726


(emphases by the Offshore Rental court).
33. The Offshore Rental court stated:The policy underlying a
statute may be less "comparatively pertinent" if the
original object of the statute is no longer of pressing
importance: a statute which was once intended to remedy a
matter of grave public concern may have fallen in
significance
to
the
periphery
of
the
state's
laws
....Moreover, the policy underlying a statute may also be
less "comparatively pertinent" if the same policy may easily
be satisfied by some means other than enforcement of the
statute itself.

Both of those changes were enacted by the California


legislature in 1962. Plaintiffs assert that although nothing
in the legislative record indicates that the amendment to
377 was to overturn the earlier rule against punitive
damages, that is the only possible interpretation of the
amendment because the only damages recoverable under 573
that could otherwise have been duplicated were punitive
damages.
Plaintiffs argue that the Commission found that the object
of awarding punitive damages was to punish a wrongdoer, and
that it would be particularly inappropriate to deny such
damages in a case in which the victim was killed, rather
than merely injured. In the face of these conclusions,
plaintiffs argue, the purpose of the 1962 amendment could
only have been to end the discrimination between wrongful
death cases and survival cases regarding punitive damages.
Plaintiffs argue that the subsequent California cases which
have recited the rule against punitive damages in wrongful
death cases have failed to consider the true purpose of the
1962 amendment to 377.

Offshore Rental, 22 Cal.3d at 166, 148 Cal.Rptr. at 872-73,


583 P.2d at 726-727.
34. Plaintiffs assert, and defendants do not dispute, that
no more than 22 states deny punitive damages in death cases:
Alaska, California, Colorado, Georgia, Illinois, Kansas,
Louisiana,
Maine,
Michigan,
Minnesota,
Nebraska,
New
Hampshire, New Jersey, New York, North Dakota, Ohio, South
Dakota, Utah, Vermont, Virginia, Washington, and Wisconsin.
35. See note 33 supra.
36. Plaintiffs argue that analysis of legislative changes
made in 1962 to the California wrongful death and survival
statutes, combined with analysis of the California Law
Revision Commission recommendations on which those changes
were based, reveals that California policy does not truly
oppose punitive damages. Plaintiffs state that in its 1960

37. See note 36 supra.


140

38. Plaintiffs assert, ad defendants apparently concede,


App.Reply Br. at 20, that California law does allow
defendants to insure against punitive damages. See 39
Cal.Jur.3d 319, at 580-81 (Insurance for "liability
imposed by law ... would appear to cover exemplary as well
as
compensatory
damages
when
so
imposed
by
final
judgment.").
39. This issue was not addressed in the briefs of any of the
parties.
40. Until 1979, Oklahoma's wrongful death act, in its
entirety, provided as follows: 1053. Death action for.
When the death of one is caused by the wrongful act or
omission of another, the personal representative of the
former may maintain an action therefor against the latter,
or his personal representative, if he is also deceased, if
the former might have maintained an action had he lived,
against the latter, or his representative, for an injury for
the same act or omission. The action must be commenced
within two years. The damages must issue to the exclusive
benefit of the surviving spouse and children, if any, or
next of kin; to be distributed in the same manner as
personal property of the deceased.

wrongful death or his representative if such person be


deceased. Such damages, if recovered, shall be distributed
to the surviving spouse and children, if any, or next of kin
in the same proportion as personal property of the decedent.
12 Okla.Stat.Ann. 1053 (1979-80 Cum.Supp.). Section 9 of
Title 23 of the Oklahoma Statutes states:
9. Jury may give exemplary damages when in any action for
the breach of an obligation not arising from contract, where
the defendant has been guilty of oppression, fraud or
malice, actual or presumed, the jury, in addition to the
actual damages, may give damages for the sake of example,
and by way of punishing the defendant.
23 Okla.Stat.Ann. 9 (1977).
41. Defendants suggest that Oklahoma could effectuate its
interests in punishment and deterrence through a prosecution
for murder or manslaughter under 22 Okla.Stat.Ann. 134
(1969),
which
provides
as
follows:
134. Murder
or
manslaughter,
jurisdiction
in
certain
cases. The
jurisdiction of a prosecution for murder or manslaughter,
when the injury which caused the death was inflicted in one
county, and the party injured dies in another county, or out
of the State, is in the county where the injury was
inflicted.

12 Okla.Stat.Ann. 1053 (1977). In 1978, the wrongful death


statute was expanded, by amendment to specify the damages
recoverable. In addition to specifically allowing damages
for loss of consortium and grief of the surviving spouse,
mental pain and anguish suffered by the decedent, pecuniary
loss to survivors, the grief and loss of companionship of
the children and parents of the decedent, the amendment
specifically referred to the availability of punitive
damages:

22 Okla.Stat.Ann. 134 (1969).


applicability of this statute.

We

do

not

decide

42. In this case, even if New York law were applied,


result would not be different because both New York
Illinois disallow punitive damage claims.
43. Although the Babcock court also characterized
choice-of-law test as "[t]he `center of gravity'

C. In proper cases, as provided by Section 9 of Title 23 of


the Oklahoma Statutes, punitive or exemplary damages may
also be recovered against the person proximately causing the
141

the

the
an
its
or

`grouping of contacts' doctrine," 12 N.Y.2d at 481, 240


N.Y.S.2d at 749, 191 N.E.2d at 283, the court viewed its
test as the same test used in the Restatement (Second)'s
"most significant relationship" test:Justice, fairness and
"the best practical result" ... may best be achieved by
giving controlling effect to the law of the jurisdiction
which, because of its relationship or contact with the
occurrence or the parties has the greatest concern with the
specific issue raised in the litigation. The merit of such a
rule is that "it gives to the place `having the most
interest in the problem' paramount control over the legal
issue arising out of a particular factual context" and
thereby allows the forum to apply "the policy of the
jurisdiction `most intimately concerned with the outcome of
[the] particular litigation'" ....Such, indeed, is the
approach adopted in the most recent revision of the Conflict
of Laws Restatement in the field of torts. According to the
principles there set out, "The local law of the state which
has the most significant relationship with the occurrence
and with the parties determines their rights and liabilities
in tort" ....

on contact counting a method open to the same criticism of


unreasonableness as the earlier lex loci delicti rule. This
analysis has been rejected in subsequent opinions. (Matter
of Crichton's Estate, 20 N.Y.2d 124, 133-34, 281 N.Y.S.2d
811, 819-20, 228 N.E.2d 799, 805-6 [1967], adopting the
approach of the concurring opinion in Macey v. Rozbicki
which adhered to theBabcock rule; .... )
24 N.Y.2d at 576, 301 N.Y.S.2d at 524-25, 249 N.E.2d at 398
(citation omitted).
Presumably the defendants mistakenly read the statement
"[t]his
analysis
has
been
rejected,"
to
refer
to
the Babcock rule.
That
statement,
however,
refers
to
the Macey result. Further evidence of the fact that it
is Macey which is being rejected and Babcock which is being
approved is seen in the Tooker court's approving citation
of Crichton's Estate,which the Tooker court characterizes as
"adopting the approach of the concurring opinion in Macey
v.
Rozbicki which
adhered
to
the Babcock rule," id. Moreover,
the Tooker court
immediately
proceeded
to
apply
the Babcock, "greatest
interest" rule, finding that New York had the only real
interest. 24 N.Y.2d at 576, 301 N.Y.S.2d at 525, 249 N.E.2d
at 398.

12 N.Y.2d at 481-82, 240 N.Y.S.2d at 749, 191 N.E.2d at 28384 (citations omitted).
44. Defendants argue that the New York Court of Appeals
apparently abandoned the Restatement (Second) approach
in Tooker. But the defendants misread the Tooker opinion. In
outlining the history of choice-of-law decisions in New
York, the Tooker court emphasized that the court had
rejected the lex loci delicti rule in favor of the "greatest
interest" rule of Babcock, supra, and Dym, supra. Then,
referring to the case of Macey v. Rozbicki, 18 N.Y.2d 289,
274 N.Y.S.2d 591, 221 N.E.2d 380 (1966), the Tooker court
criticized
the Macey decision.
Referring
to
the Macey decision, the court said that:[s]ubstituted for a
rational choice-of-law rule was a method of decision based

45. Defendants cite Neumeier for the proposition that the


New
York
Court
of
Appeals
is
turning
away
from
the Babcock rule and returning to the rule of lex loci
delicti. But defendants misreadNeumeier. Defendants quote
the Neumeier court
as
saying
the
court's
postBabcock opinions have "lacked consistency." But a full
reading of the passage from which plaintiffs selectively
quote reveals that the Neumeier court continued to endorse
142

the Babcock approach and concluded that in certain types of


multi-state highway cases,
narrower
rules
could
be
formulated
which
would
remain
consistent
with
the Babcock "greatest interest" test. 31 N.Y.2d at 127, 335
N.Y.S.2d at 69, 286 N.E.2d at 457. Although the principle
used in the Neumeier case did give preference to the place
of the injury, this preference was not a return to the
wooden approach of lex loci delicti.
Defendants finally argue that the decision
Instrument Flyers, Inc., 44 N.Y.2d 698, 405
376 N.E.2d 914 (1978), indicates that the New
holds that lex loci delicti is the general
cases. But there are three significant
reliance on the Cousins opinion.

the court is free to consider the interests of the state of


injury and also matters pertaining to equity and judicial
efficiency. 44 N.Y.2d at 699, 405 N.Y.S.2d at 442, 376
N.E.2d at 915.
46. The Branyan court stated:We agree with [the] line of
authority that the strict lex loci delicti rule should be
abandoned in favor of the more flexible rule which permits
analysis of the policies and interests underlying the
particular issue before the court. More particularly, we
think that considerations of public policy and analysis of
the respective interests of the jurisdictions involved
should accompany the judicial decision-making process in
these types of conflict-of-laws cases, and that the rule
of lex loci delicti should no longer serve to automatically
determine which body of law should govern.

in Cousins v.
N.Y.S.2d 441,
York Court now
rule in tort
problems with

First, defendants quote the Cousins case with selectivity.


To be sure, the court stated that the rule of lex loci
delicti was the general rule. But the court immediately
added its opinion that the lex loci delicti rule, even if it
applied to other tort cases, did not mechanically apply to
airplane crash cases because of the fortuity of the place of
injury. 44 N.Y.2d at 699, 405 N.Y.S.2d at 442-43, 376 N.E.2d
at 915.

236 N.W.2d at 742-43.


47. Hawaii Revised Statutes 663-3 (1976 Repl.) provides,
in relevant part, as follows:
In any action under this section, such damages may be given
as under the circumstances shall be deemed fair and just
compensation, with reference to the pecuniary injury and
loss of love and affection including (1) loss of society,
companionship, comfort, consortium, or protection, (2) loss
of marital care, attention, advice, or counsel, (3) loss of
filial care or attention, or (4) loss of parental care,
training, guidance, or education, suffered as a result of
the death of the person by the surviving spouse, children,
father, mother, and by any person wholly or partly dependent
upon the deceased person.

Second, based on the foregoing argument, the Cousins court


indeed, refused to apply thelex loci delicti rule to the
airplane crash in issue. Thus, its remark regarding the
general rule must be considered dicta.
Third, the approach used by the Cousins court is consistent
with our conclusion that when the test for the state with
the greatest interest cannot resolve the conflicts issue,
143

48. Plaintiffs cite the following cases: Bernard v. Loo


Ngawk, 6 Haw. 214 (1877); Bright v. Quinn,20 Haw. 504
(1911); Glover, Ltd. v. Fong, 40 Haw. 503 (1954); Howell v.
Associated
Hotels,
Ltd.,40
Haw.
492 (1954); Goo
v.
Continental Casualty Co., 52 Haw. 235, 473 P.2d 563 (1970);
andAnderson v. Knox, 297 F.2d 702 (9th Cir. 1961), cert.
denied, 370 U.S. 915, 82 S.Ct. 1555, 8 L.Ed.2d 498 (1962).
49. In Rohlfing v. Moses Akiona, Ltd., 45 Haw. 373, 369 P.2d
96 (1962), the Hawaii Supreme Court held that a decedent's
representative had a right to recovery, on behalf of the
decedent, of all future earnings lost as a result of the
injury and that the right to such future earnings survived
in a wrongful death action. In Greene v. Texeria, 54 Haw.
231, 505 P.2d 1169 (1973), the Hawaii Supreme Court
overruled this aspect of Rohlfing and held that a decedent's
representative could not recover for probable future
earnings. Neither case involved punitive damages, but in
theGreene case the court emphasized that the purpose of
damage
awards
in
wrongful
death
actions
was
only
compensation for loss and not punishment. The plaintiffs
argue that Greene is inapposite because the court was
concerned with duplication of compensatory benefits as
"punishment". The plaintiffs argue that in the case of
punitive damages, the intent is precisely to punish the
defendant. But the Hawaii Supreme Court seemed to strongly
express the opinion that excess damages damages beyond
actual compensation in order to punish a defendant were
not appropriate under the Hawaii Wrongful Death Act. Such
reasoning implies that outright punitive damages would not
be countenanced.

Damages, Future Earnings, Together with other damages which


may be recovered by law, and legal representative of the
deceased person may recover where applicable under section
663-7 the future earnings of the decedent in excess of the
probable cost of the decedent's own maintenance and the
provision decedent would have made for his or her actual or
probable family and dependents during the period of time
decedent would have likely lived but for the accident.
To be sure, the legislature did express disapproval of the
court's rejection of future earnings and allowed recovery
for such damages. But the legislature went no further. The
Hawaii legislature did not reject the Greene rationale that
damages are only compensatory and not punitive. Rather, the
legislature held only that future earnings were a proper
item of compensation. Thus, there is nothing in the
legislature's action which suggests that Hawaii courts may
now award punitive damages.
Plaintiffs cite Hennigan v. Atlantic Refining Co., 282
F.Supp. 667 (E.D.Pa.1967), aff'd, 400 F.2d 857 (3rd Cir.
1968), cert. denied, 395 U.S. 904, 89 S.Ct. 1739, 23 L.Ed.2d
216 (1969), and Reynolds v. Willis, 58 Del. 368, 209 A.2d
760 (1965), for the proposition that when a statute does not
mention punitive damages, it should not be read to exclude
such damages. But the Hennigan case construes Pennsylvania
law and the Reynolds case construes Delaware law. Both cases
seem at odds with the reasoning of Greene and the admonition
of Enos, 34 Haw. 5, 6-7, that damages must be limited
strictly to pecuniary loss.

The plaintiffs next argue that the Hawaii legislature acted


to reject Greene by enacting 663-8 of the Hawaii Revised
Statutes to specifically reinstate the element of damages
rejected in Greene. Haw.Rev.Stat. 663-8 provides:

50. The Hawaii plaintiffs do not even present any argument


as to Hawaii's choice-of-law law. They only argue that if
144

Hawaii law is controlling, Hawaii law does allow punitive


damages. We have rejected this argument.
51. Matters not expressly discussed in this opinion have
nevertheless been duly considered. They have been found
either wanting merit or insufficiently important to warrant
discussion. Their discussion would not have altered this
decision.

9A contract, made in another state by a married woman


domiciled here, which a married woman was not at the time
capable of making under the law of this Commonwealth, but
was then allowed by the law of that state to make, and which
she could now lawfully make in this Commonwealth, will
sustain an action against her in our courts, although the
contract was made by letter sent from her here to the other
party there.

125 Mass. 374 - 1878


2Seth
M.
v.
Sarah A. Pratt.

Milliken

&

10[374] CONTRACT to recover $500 and interest from January


6,1872. Writ dated June 30, 1875. The case was submitted to
the Superior Court on agreed facts, in substance as follows:

others

3SUPREME COURT OF MASSACHUSETTS

11The plaintiffs are partners doing business in Portland,


Maine, under the firm name of Deering, Milliken & Co. The
defendant is and has been since 1850, the wife of Daniel
Pratt, and both have always resided in Massachusetts. In
1870, Daniel, who was then doing business in Massachusetts,
applied to the plaintiffs at Portland for credit, and they
required of him, as a condition of granting the same, a
guaranty from the defendant to the amount of five hundred
dollars, and accordingly he procured from his wife the
following instrument:

4Worcester. Oct. 4, 1877. Sept . 12, 1878. ENDICOTT &


LORD , JJ absent.
5The validity of a contract, even as regards the capacity of
the parties, is generally to be determined by the law of the
state in which it is made.
6If an inhabitant of this Commonwealth buys goods personally
in another state, or

12"Portland, January 29, 1870. In consideration of one


dollar paid by Deering, Milliken & Co., receipt of which is
hereby acknowledged, I guarantee the payment to them by
Daniel Pratt of the sum of five hundred dollars, from time
to time as he may wantthis to be a continuing guaranty.
Sarah A. Pratt."

7orders them by letter mailed here, and they are delivered


to a carrier for him there, the contract is made in that
state.
8A contract of guaranty, signed in this Commonwealth and
sent by mail to another state, and assented to and acted on
there, for the price of goods sold there, is made in that
state.
145

13This instrument was executed by the defendant two or three


days after its date, at her home in Massachusetts, and there
delivered by her to her husband, who sent it by mail from
Massachusetts to the plaintiffs in Portland; and the
plaintiffs received it from the post office in Portland
early in February, 1870.

15By a statute of Maine, duly enacted and approved in 1866,


it is enacted that "the contracts of any married woman, made
for any lawful purpose, shall be valid and binding, and may
be enforced in the same manner as if she were sole." The
statutes and the decisions of the court of Maine may be
referred to.

14[375] The plaintiffs subsequently sold and delivered goods


to Daniel from time to time until October 7, 1871, and
charged the same to him, and, if competent, it may be taken
to be true, that in so doing they relied upon the guaranty.
Between February, 1870, and September 1, 1871, they sold and
delivered goods to him on credit to an amount largely
exceeding $ 500, which were fully settled and paid for by
him. This action is brought for goods sold from September 1,
1871, to October 7, 1871, inclusive, amounting to $ 860.12,
upon which he paid $ 300, leaving a balance due of $560.12.
The one dollar mentioned in the guaranty was not paid, and
the only consideration moving to the defendant therefor was
the giving of credit by the plaintiffs to her husband. Some
of the goods were selected personally by Daniel at the
plaintiffs' store in Portland, others were ordered by
letters mailed by Daniel from Massachusetts to the
plaintiffs at Portland, and all were sent by the plaintiffs
by express from Portland to Daniel in Massachusetts, who
paid all express charges. The parties were cognizant of the
facts.

16Payment was duly demanded of the defendant before the date


of the writ, and was refused by her.
17The Superior Court ordered judgment for the defendant; and
the plaintiffs appealed to this court.
18OPINION: Gray, C. J.
19The general rule is that the validity of a contract is to
be determined by the law of the state in which it is made;
if it is valid there, it is deemed valid everywhere, and
will sustain an action in the courts of a state whose laws
do not permit such a contract. Scudder v. Union National
Bank, 91U.S. 406. Even a contract expressly prohibited by
the statutes of the state in which the suit is brought, if
not in [**4] itself immoral, is not necessarily nor usually
deemed so invalid that the comity of the state, as
administered by its courts, will refuse to entertain an
action on such a contract made by one of its own [376]
citizens abroad in a state the laws of which permit
it. Greenwoodv. Curtis, 6 Mass. 358. M'Intyre v. Parks, 3
Met. 207.
20If the contract is completed in another state, it makes no
difference in principle whether the citizen of this state
goes in person, or sends an agent, or writes a letter,
146

across the boundary line between the two states. As was said
by Lord Lyndhurst, "If I, residing in England, send down my
agent to Scotland, and he makes contracts for me there, it
is the same as if I myself went there and made
them." Pattison v. Mills, 1 Dow & Cl. 342, 363. So if a
person residing in this state signs and transmits, either by
a messenger or through the post-office, to a person in
another state, a written contract, which requires no special
forms or solemnities in its execution, and no signature of
the person to whom it is addressed, and is assented to and
acted on by him there, the contract is made there, just as
if the writer personally took the executed contract into the
other state, or wrote and signed it there; and it is no
objection to the maintenance of an action thereon here, that
such a contract is prohibited by the law of this
Commonwealth. M'Intyre v. Parks, above cited.

22The law of Maine authorized a married woman to bind


herself by any contract as if she were unmarried. St.of
Maine of 1866, c. 52. Mayo v. Hutchinson, 57 Me. 546. The
law of Massachusetts, as then existing, did not allow her to
enter into a contract as surety or for the accommodation of
her husband or of [377] any third person. Gen. Sts. c. 108,
3. Nourse v. Henshaw,123 Mass. 96. Since the making of the
contract sued on, and before the bringing of this action,
the law of this Commonwealth has been changed, so as to
enable
married
women
to
make
such
contracts.
St.
1874, c. 184. Major v. Holmes,
124
Mass.
108. Kenworthy v. Sawyer, ante, 28.
23The question therefore is, whether a contract made in
another state by a married woman domiciled here, which a
married woman was not at the time capable of making under
the law of this Commonwealth, but was then allowed by the
law of that state to make, and which she could now lawfully
make in this Commonwealth, will sustain an action against
her in our courts.

21The guaranty, bearing date of Portland, in the State of


Maine, was executed by the defendant, a married woman,
having her home in this Commonwealth, as collateral security
for the liability of her husband for goods sold by the
plaintiffs to him, and was sent by her through him by mail
to the plaintiffs at Portland. The sales of the goods
ordered by him from the plaintiffs at Portland, and there
delivered by them to him in person, or to a carrier for him,
were made in the State of Maine. Orcutt v. Nelson, 1 Gray
536. Kline v. Baker, 99 Mass. 253. The contract between the
defendant and the plaintiffs was complete when the guaranty
had been received and acted on by them at Portland, and not
before. Jordan v. Dobbins, 122 Mass. 168. It must therefore
be treated as made and to be performed in the State of
Maine.

24It has been often stated by commentators that the law of


the
domicil,
regulating
the
capacity
of
a
person,
accompanies and governs the person everywhere. But this
statement, in modern times at least, is subject to many
qualifications; and the opinions of foreign jurists upon the
subject, the principal of which are collected in the
treatises of Mr. Justice Story and of Dr. Francis Wharton on
the Conflict of Laws, are too varying and contradictory to
control the general current of the English and American
authorities in favor of holding that a contract, which by
the law of the place is recognized as lawfully made by a
147

capable person, is valid everywhere, although the person


would not, under the law of his domicil, be deemed capable
of making it.

England in the case of a foreigner who had been declared a


lunatic, and as such put under guardianship in the country
of his domicil. Morison's Dict. Dec. 4595. 1 Cr. & Stew.
454, 459. Thorne v. Watkins, 2 Ves. Sen. 35, 37. Both those
cases,
therefore,
rightly
understood,
are
in
exact
accordance with the later decisions, by which it is now
settled in Great Britain and in the United States, that the
appointment of a guardian of an infant or lunatic in one
state or country gives him no authority and has no effect in
another, except so far as it may influence the discretion of
the courts of the latter, in the exercise of their own
independent jurisdiction, to appoint the same person
guardian, or to decree the custody of the ward to him. Ex
parte Watkins, 2 Ves. Sen. 470. In re Houstoun, 1 Russ.
312. Johnstone v. Beattie,10 Cl. & Fin. 42. Stuart v. Bute,
9 H. L. Cas. 440; S. C. 4 Macq.1. Nugent v.Vetzera, L. R. 2
Eq. 704. Woodworth v. Spring,4 Allen 321. Story Confl.
499.

25Two cases in the time of Lord Hardwicke have been


sometimes supposed to sustain the opposite view. The first
isEx parte Lewis, 1 Ves. Sen. 298, decided in the Court of
Chancery in 1749, in which a petition, under the St. of 4
Geo. II. c. 10, that a lunatic heir of a mortgagee might be
directed to convey to the mortgagor, was granted by Lord
Hardwicke, on the ground of "there having been a proceeding
before a proper jurisdiction, the Senate of Hamburgh, where
he resided, upon which he was found non compos, and a
curator or guardian appointed for him and his affairs, which
proceeding the court was obliged to take notice of." But the
foreign adjudication was thus taken notice of as competent
evidence of the lunacy only; and that the authority of the
foreign guardian was not recognized as extending to England
is evident from the fact that the conveyance prayed for and
ordered was from the lunatic himself. The other is
[378] Morrison's case, in the House of Lords in 1750, for a
long time principally known in England and America by the
imperfect
and
conflicting
statements
of
counselarguendo in Sill v. Worswick,1 H. Bl. 677, 682; but
in which, as the Scotch books of reports show, the decision
really was that a committee, appointed in England, of a
lunatic residing there, could not sue in Scotland upon a
debt due him, but that, upon obtaining a power of attorney
from the lunatic, they might maintain a suit in Scotland in
his name; and Lord Hardwicke said that the law would be the
same in England evidently meaning, as appears by his own
statement afterwards, that the same rule would prevail in

26Lord Eldon, when Chief Justice of the Common Pleas, and


Chief Justice Kent and his associates in the Supreme Court
of New York, held that the question whether an infant was
liable to an action in the courts of his domicil, upon a
contract made by him in a foreign country, depended upon the
question whether by the law of that country such a contract
bound
an
infant. Male v. Roberts,
3
Esp.
163. Thompson v. Ketcham, 8 Johns. 189.
27Mr. Westlake, who wrote in 1858, after citing the decision
of Lord Eldon, well observed, "That there is not more
authority on the subject may be referred to its not having
been questioned;" and summed up the law of England thus:
148

"While the English law remains as it is, it must, on


principle, be taken as excluding, [379] in the case of
transactions having their seat here, not only a foreign age
of majority, but also all foreign determination of status or
capacity, whether made by law or by judicial act, since no
difference can be established between the cases, nor does
any exist on the continent." "The validity of a contract
made out of England, with regard to the personal capacity of
the contractor, will be referred in our courts to the lex
loci contractus; that is, not to its particular provisions
on the capacity of its domiciled subjects, but in this
sense, that, if good where made, the contract will be held
good here, and conversely." Westlake's Private International
Law, 401, 402, 404.

contracts to be made at twenty-one, whereas by the laws of


his domicil he was incapable of contracting under twentyfive.Baldwin v.
Gray16
Martin
192,193. Saul v. His
Creditors, 17 Martin 569, 597. The same doctrine was
recognized as well settled in Andrews v. His Creditors, 11
La. 464, 476.
30In other cases of less note in that state, the question of
personal capacity was indeed spoken of as governed by the
law of the domicil. Le Breton v. Nouchet, 3 Martin 60,
70. Barrera v. Alpuente, 18 Martin 69, 70.Garnierv. Poydras,
13 La. 177, 182. But in none of them was the statement
necessary to the decision. In Le Breton v.Nouchet, the point
adjudged was, that where a man and woman domiciled in
Louisiana [380] (by the law of which the wife retains her
separate property) were married, with the intention of
returning to Louisiana, in the Mississippi Territory, (where
the rule of the common law prevailed, by which the wife's
personal property became her husband's,) the law of
Louisiana, in which the parties intended to continue to
reside, governed their rights in the wife's property; and
the further expression of an opinion that the rule would be
the same if the parties intended to remain in the
Mississippi Territory was purely obiter dictum, and can
hardly be reconciled with later decisions of the same
court.Gale v. Davis, 4 Martin 645. Saul v. His Creditors, 17
Martin
569.
See
also Read v. Earle,
12
Gray
423.
In Barrera v. Alpuente, the case was discussed in the
opinion upon the hypothesis that the capacity to receive a
legacy was governed by the law of the domicil; but the same
result would have followed from holding that it was governed
by the law of the place where the right accrued and was

28In a recent case, Lord Romilly, M. R., held that a legacy


bequeathed by one domiciled in England to a boy domiciled
with his father in Hamburgh, by the law of which boys do not
become of age until twenty-two and the father is entitled as
guardian to receive a legacy bequeathed to an infant, might
be paid to the boy at his coming of age by the law of
England, although still a minor by the law of his domicil,
and in the meanwhile must be dealt with as an infant's
legacy. In re Hellmann's Will, L. R.2 Eq. 363.
29The Supreme Court of Louisiana, in two cases which have
long been considered leading authorities, strongly asserted
the doctrine that a person was bound by a contract which he
was capable by the law of the place, though not by the law
of his own domicil, of making; as, for instance, in the case
of a contract made by a person over twenty-one and under
twenty-five years of age, in a state whose laws authorized
149

sought to be enforced. In Garnier v. Poydras, the decision


turned on the validity of a power of attorney executed and a
judicial authorization given in France, where the husband
and wife had always resided.

thedictum of Lord Justice Cotton, "It is a well-recognized


principle of law that the question of personal capacity to
enter into any contract is to be decided by the law of
domicil," is entitled to little weight here.

31In Greenwood v. Curtis, Chief Justice Parsons said, "By


the common law, upon principles of national comity, a
contract made in a foreign place, and to be there executed,
if valid by the laws of that place, may be a legitimate
ground of action in the courts of this state; although such
contract may not be valid by our laws, or even may be
prohibited to our citizens;" and that the Chief Justice
considered this rule as extending to questions of capacity
is evident from his subsequent illustration of a marriage
contracted abroad between persons prohibited to intermarry
by the law of their domicil. 6 Mass. 358. The validity of
such marriages (except in case of polygamy, or of marriages
incestuous according to the general opinion of Christendom)
has
been
repeatedly
affirmed
in
this
Commonwealth. Medway v. Needham,
16
Mass.
157. Sutton v. Warren, 10 Met. 451.Commonwealth v. Lane, 113
Mass. 458.

33It is true that there are reasons of public policy for


upholding the validity of marriages, that are not applicable
to ordinary contracts; but a greater disregard of the lex
domicilii can hardly be suggested, than in the recognition
of the validity of a marriage contracted in another state,
which is not authorized by the law of the domicil, and which
permanently affects the relations and the rights of two
citizens and of others to be born.
34Mr. Justice Story, in his Commentaries on the Conflict of
Laws, after elaborate consideration of the authorities,
arrives at the conclusion that "in regard to questions of
minority or majority, competency or incompetency to marry,
incapacities
incident
to
coverture,
guardianship,
emancipation, and other personal qualities and disabilities,
the law of the domicil of birth, or the law of any other
acquired and fixed domicil, is not generally to govern, but
the lex loci contractus aut actus, the law of the place
where the contract is made, or the act done;" or as he
elsewhere sums it up, "although foreign jurists generally
hold that the law of the domicil ought to govern in regard
to the capacity of persons to contract; yet the common law
holds a different doctrine, namely, that the lex loci
contractus is to govern." Story Confl. 103, 241. So
Chancellor Kent, although in some passages of the text of
his Commentaries he seems to incline to the doctrine of the
civilians, yet in the notes after wards added unequivocally

32The recent decision in Sottomayor v. De Barros, 3 P. D. 1,


by which Lords Justices James, Baggallay and Cotton, without
referring to any of the cases that we have cited, and
reversing the judgment of Sir Robert Phillimore in 2 P. D.
81, held that a [381] marriage in England between first
cousins, Portuguese subjects, resident in England, who by
the law of Portugal were incapable of intermarrying except
by a Papal dispensation, was therefore null and void in
England, is utterly opposed to our law; and consequently
150

concurs in the conclusion of Mr. Justice Story. 2 Kent Com.


233 note, 458, 459 & note.

dispensed with by their agreement; that all civilized states


recognize the incapacity of infants and married women; and
that a person, dealing with either, ordinarily has notice,
by the apparent age or sex, that the person is likely to be
of a class whom the laws protect, and is thus put upon
inquiry how far, by the law of the domicil of the person,
the protection extends. On the other hand, it is only by the
comity of other states that laws can operate beyond the
limit of the state that makes them. I n th egreat majority
of cases, especially in this country, where it is so common
to travel, or to transact business through agents, or to
correspond by letter, from one state to another, it is more
just, as well as more convenient, to have regard to the law
of theplace of thecontract, as a uniform rule operating on
all contracts of thesame kind, and which thecontracting
parties may be presumed to have in contemplation when making
their contracts, than to require them at their peril to know
thedomicil of those with whom they deal, and to ascertain
the law of that domicil, however remote, which in many cases
could not be don [383] without such delay as would greatly
cripple the power of contracting abroad at all.

35In Pearl v. Hansborough, 9 Humph. 426, the rule was


carried so far as to hold that where a married woman
domiciled with her husband in the State of Mississippi, by
the law of which a purchase by a married woman was valid and
the property purchased went to her separate use, bought
personal property in Tennessee, by the law of which married
women were incapable of contracting, [382] the contract of
purchase was void and could not be enforced in Tennessee.
Some authorities, on the other hand, would uphold a contract
made by a party capable by the law of his domicil, though
incapable by the law of the place of the contract. In re
Hellmann's Will, and Saul v. His Creditors, above cited. But
that alternative is not here presented. In Hill v. Pine
River Bank, 45 N.H. 300, the contract was made in the state
of the woman's domicil, so that the question before us did
not arise and was not considered.
36The principal reasons on which continental jurists have
maintained that personal laws of the domicil, affecting the
status and capacity of all inhabitants of a particular class
bind them wherever they may go, appear to have been that
each state has the rightful power of regulating the status
and condition of its subjects, and, being best acquainted
with the circumstances of climate, race, character, manners
and customs, can best judge at what age young persons may
begin to act for themselves, and whether and how far married
women may act independently of their husbands; that laws
limiting the capacity of infants or of married women are
intended for their protection, and cannot therefore be

37As the law of another state can neither operate nor be


executed in this state by its own force, but only by the
comity of this state, its operation and enforcement here may
be restricted by positive prohibition'of statute. A state
may always by express enactment protect itself from being
obliged to enforce in its courts contracts made abroad by
its citizens, which are not authorized by its own laws.
Under the French code, for instance, which enacts that the
laws regulating the status and capacity of persons shall
bind French subjects, even when living in a foreign country,
151

a French court cannot enforce a contract made by a Frenchman


abroad, which he is incapable of making by the law of
France. See Westlake, 399, 400.

enlarge their capacity in this respect, and in many states


they have nearly or quite the same powers as if unmarried.
In Massachusetts, even at the time of the making of the
contract in question, a married woman was vested by statute
with a very extensive power to carry on business by herself,
and to bind herself by contracts with regard to her own
property, business and earnings, and, before the bringing of
thepresent action, the power had been extended so as to
include the making of all kinds of contracts, with any
person but her husband, as if she were unmarried. There is
therefore no reason of public policy which should prevent
the maintenance of this action.

38It is possible also that in a state where the common law


prevailed in full force, by which a married woman was deemed
incapable of binding herself by any contract whatever, it
might be inferred that such an utter incapacity, lasting
throughout the joint lives of husband and wife, must be
considered as so fixed by the settled policy of the state,
for the protection of its own citizens, that it could not be
held by the courts of that state to yield to the law of
another state in which she might undertake to contract.

40Judgment for the plaintiffs.


39But it is not true at the present day that all civilized
states recognize the absolute incapacity of married women to
make contracts. The tendency of modern legislation is to

152