long ago abandoned, had it not been for the unfortunate misstep that was made in the opinion in Swift v. Tyson, 16 Pet. 1. Since then the courts of the United States have persisted in the recognition of a mythical commercial law, and have professed to decide so-called commercial questions by it, in entire disregard of the law of the State where the question arose. It is argued now that, as to such questions, the State courts also have similar liberty. It would be sufficient answer to this argument that such a course, by reading into a contract a new duty not in contemplation of the parties, and not part of it by the law of the place where it is made, is, in principle and in practical effect, impairing the obligation of the contract, which even the sovereign power of a State is prohibited from doing. But we prefer to rest the matter on the broader ground that the doctrine itself is unsound. The best professional opinion has long regarded it as indefensible on principle, and is thus very recently summed up by the most learned of living jurists: "Questions growing out of contracts made and to be performed in a State are decided by the national court of last resort, not in accordance with the unwritten or customary law of the State where they originated, as expounded by its courts, but agreeably to some theoretic view of a general commercial law, which does not exist, and is not to be found in the books. The State courts, on the other hand, adhere to their own precedents, and do not consider themselves entitled to impair the obligation of contracts that have been made in reliance on the principles which they have laid down through a long series of years. The result is a conflict of jurisdiction which there are no means of allaying. Whether a recovery shall be had on a promissory note which has been taken as collateral security for an antecedent debt against a maker from whom it was obtained by fraud, is thus made to turn in New York, Pennsylvania, and Ohio, not on any settled rule, but on the tribunal by which the cause is heard; and, if that is federal, the plaintiff will prevail; if it is local, the defendant. Such a result tends to discredit the law. . . . The enumeration might be carried further, but enough has, perhaps, been said to show that no uniform rule can be deduced from the decisions of the English and American courts under the commercial law, and that the certainty requisite to justice can be obtained only by following the local tribunals as regards the contracts made in each locality. The several States of this country are collectively one nation, but they are as self-governing in all that concerns their purely internal commerce as if the general government did not exist; and when the will of the people of New York or Pennsylvania is declared on such matters, through their representatives in the local legislatures, expressly or by long-continued acquiescence in the rules enunciated by their judges, it cannot be set aside by Congress short of an amendment of the Constitution. Had the New York legislature declared that notes made and negotiated in that State should follow the rule laid down in Coddington v. Bay [20 Johns. 637], the federal tribunals would have been bound to carry it into effect, notwithstanding any attempt of the national legislature ... to introduce a different principle; and it is inconceivable that the judicial department of the government can exercise a greater authority in this regard than the legislature." Hare, Const. Law, 1107, 1117, and see Lecture 51, passim. We conclude, therefore, that the distinction between the binding effect of decisions on commercial law and on statutes is utterly untenable; that the law declared by State courts to govern on contracts made within their jurisdiction is conclusive everywhere; and the departure made by the United States courts is to be regretted, and certainly not to be followed. In entire accordance with this view are our own cases of Brown v. Railroad Co., 83 Pa. St. 316, and Brooke v. Railroad Co., 108 Pa. St. 530, 1 Atl. Rep. 206; and the decisions in Ohio: Knowlton v. Railway Co., 19 Ohio St. 260; in Illinois : Pennsylvania Co. v. Fairchild, 69 Ill. 260; Railroad Co. v. Smith, 74 Ill. 197; in Iowa: Talbott v. Transportation Co., 41 Iowa, 247; Robinson v. Transportation Co., 45 Iowa, 470; in Connecticut: Hale v. Navigation Co., 15 Conn. 539; in Kansas: Railroad Co. v. Moore, 29 Kan. 632; in South Carolina: Bridger v. Railroad Co., 27 S. C. 462, 3 S. E. Rep. 860; in Georgia: Railroad Co. v. Tanner, 68 Ga. 390; in Mississippi: McMaster v. Railroad Co., 65 Miss. 271, 4 South. Rep. 59; in Texas: Cantu v. Bennett, 39 Tex. 303; Ryan v. Railway Co., 65 Tex. 13, and perhaps in other States. I will not notice them in detail further than to quote the terse and forcible summary made by Scott, J., in Knowlton v Railway Co.: "As the contract was made within the jurisdiction of New York, and contemplated no action outside of that jurisdiction, it is clear that the question of its validity must be determined solely by the laws of New York. The rights and obligations of the parties to such a contract, and in respect to the manner of its execution, cannot be affected by the laws or policy of other States. If no cause of action arose to the plaintiff under his contract when the accident occurred, the transaction cannot be converted into a cause of action by the fact that the parties have subsequently come within the jurisdiction of Ohio." Holding, therefore, that the validity of this contract is to be determined by the law of New York, as decided by the courts of that State, is there any reason why the courts of this State should not enforce it? The general rule is that courts will enforce contracts valid by the law of the place where made, unless they are injurious to the interests of the State, or of its citizens. Story, Confl. Laws, §§ 38, 244. The injury may be indirect by offending against justice or morality, or by tending to subvert settled public policy (2 Kent, Com. 458; Greenwood v. Curtis, 6 Mass. 358; Bliss v. Brainard, 41 N. H. 256); but this does not imply that courts will not sustain contracts that would not be valid if made within their jurisdiction, or will not enforce rights that could not be acquired there. Thus, for example, the courts of Pennsylvania have always enforced contracts for a higher rate of interest than would be valid under the laws of this State. Ralph v. Brown, 3 Watts & S. 395; Wood v. Kelso, 27 Pa. St. 243; Irvine v. Barrett, 2 Grant, Cas. 73. The con tract in the present case does not directly affect the State or its citizens in any way. Nor is it in any way contrary to justice or morality. It may be doubted whether it is even so far contrary to the policy of the State that it would have been invalid if it had been made here. It has some exceptional features, which, it is argued, take it out of the ordinary rules governing the contracts of common carriers; and the case of Coup v. Railroad Co., 56 Mich. 111, 22 N. W. Rep. 215, is a strong authority for that position. But without stopping to discuss that point, which our general view renders unnecessary, it is sufficient to say that, even if it would not have been valid if made here, its enforcement as a New York contract does not in any way derogate from the laws of Pennsylvania, or injure or affect the policy of the State, any more than would a foreign contract for what would be usurious interest here, and that, as already said, the courts have never hesitated to enforce. The argument of duress may be briefly dismissed for want of any evidence in the case to sustain it. There is no evidence that defendant was unwilling to accept the ordinary and usual rates for the transportation of plaintiff's cars and property. If they had been offered by plaintiff and refused, there might have been some ground for the present argument, though, in view of the peculiar nature of the property, and the special facilities required, even that is far from clear. But in fact plaintiff got a large reduction of rates, and part of the consideration for such reduction was the agreement that he should be his own insurer against loss by accident. There was nothing compulsory about such a contract, and plaintiff comes now with a very bad grace to assert a right that he expressly relinquished for a substantial consideration. The learned court below was right in entering judgment for the defendant on the facts found in the special verdict. Judgment affirmed. WILLIAMS, J. (dissenting). I dissent from the judgment in this case because I cannot agree that a well-settled rule of public policy of this commonwealth must give way to considerations of mere comity. The contract set up as a defence to this action is a release to a common carrier from liability for its own negligence. It is well settled in this State that such a release is against public policy. Comity does not require more of us than to give effect to the lex loci contractus, when not subversive of the public policy of our own State. This has been distinctly held by the Court of Appeals of New York, in which this release was executed, and in whose behalf comity is asked. I would follow the Court of Appeals, because comity can require no more of us in any given case than the courts of the place of the contract would yield to us for comity's sake, and because I believe the rule to rest on solid ground. STERRETT, J., Concurs in the foregoing dissent. ST. NICHOLAS BANK v. STATE NATIONAL BANK. COURT OF APPEALS OF NEW YORK. 1891. [Reported 128 New York Reports, 26.] EARL, J.1 This action was brought to recover the proceeds of a draft for $473.57 sent for collection by the plaintiff to the defendant, and paid to the defendant's correspondents. The trial resulted in the direction of a verdict for the plaintiff for the amount demanded. Upon appeal to the general term, the judgment entered upon the verdict was reversed, and a new trial ordered. From the order of reversal the plaintiff appealed to this court. . . . The rule has long been established in this State that a bank receiving commercial paper for collection, in the absence of a special agreement, is liable for a loss occasioned by the default of its correspondents or other agents selected by it to effect the collection. Allen v. Bank, 22 Wend. 215; Montgomery County Bank v. Albany City Bank, 7 N. Y. 459; Commercial Bank v. Union Bank, 11 N. Y. 203; Ayrault v. Pacific Bank, 47 N. Y. 570; Naser v. Bank, 116 N. Y. 498, 22 N. E. Rep. 1077. And the same rule prevails in some of the other States, in the United States Supreme Court, and in England. Titus v. Bank, 35 N. J. Law, 588; Wingate v. Bank, 10 Pa. St. 104; Reeves v. Bank, 8 Ohio St. 465; Tyson v. Bank, 6 Blackf. 225; Simpson v. Waldby (Mich.), 30 N. W. Rep. 199; Mackersy v. Ramsays, 9 Clark & F. 818. In such a case the collecting bank assumes the obligation to collect and pay over or remit the money due upon the paper, and the agents it employs to effect the collection, whether they be in its own banking-house or at some distant place, are its agents, and in no sense the agents of the owner of the paper. Because they are its agents, it is responsible for their misconduct, neglect, or other default.. ... The defendant, however, claims that the contract with the plaintiff is to be treated as a Tennessee contract, and that by the law of that State it cannot be made liable for this loss. Upon the trial, for the purpose of showing the law of that State, it put in evidence a decision of the Supreme Court in the case of Bank of Louisville v. First Nat. Bank of Knoxville, 8 Baxt. 101. . . . That decision was not based upon any statute law, but upon the principles of the common law, supposed to be applicable to the facts of the case. It did not make or establish law, but expounded the law, and furnished some evidence of what the law applicable to that case was, evidence which other courts might or might not take and receive as reliable and sufficient; and even the same court, upon fuller discussion and more mature consideration, might, in some subsequent case, refuse to take the same view of the law. There is no common law peculiar to Tennessee. But the 1 Part of the opinion is omitted. - ED. common law there is the same as that which prevails here and else where, and the judicial expositions of the common law there do not bind the courts here. The courts of this State, and of other States, and of the United States, would follow the courts of that State in the construction of its statute law. But the courts of this State will follow its own precedents in the expounding of the general common law applicable to commercial transactions, and so it has been repeatedly held. Faulkner v. Hart, 82 N. Y. 413; Swift v. Tyson, 16 Pet. 1; Oates v. Bank, 100 U. S. 239; Ray v. Gas Co., 20 Atl. Rep. 1065 (decided in Pennsylvania Supreme Court, Jan. 12, 1891). We must, therefore, hold that the obligation resting upon the defendant was that which the principles of the common law, as expressed by the courts of this State, placed upon it. If it be said that the contract between these parties was made in view of the common law, then we must hold that it was the common law as expounded here. But it cannot be maintained that the contract between these parties was a Tennessee contract. It is by no means clear, even, that it can be held that the contract was made there.1 . . . Our conclusion, therefore, is that the order of the general term should be reversed, and the judgment entered upon the verdict affirmed with costs. All concur. SECTION V. COMITY. The MARSHALL, C. J., in The Nereide, 9 Cr. 388, 422 (1815). court is decidedly of opinion that reciprocating to the subjects of a nation, or retaliating on them its unjust proceedings towards our citizens, is a political, not a legal measure. It is for the consideration of the government, not of its courts. The degree and kind of retaliation depend entirely on considerations foreign to this tribunal. It may be the policy of the nation to avenge its wrongs in a manner having no affinity to the injury sustained, or it may be its policy to recede from its full rights and not to avenge them at all. It is not for its courts to interfere with the proceedings of the nation and to thwart its views. It is not for us to depart from the beaten track prescribed for us, and to tread the devious and intricate path of politics. TANEY, C. J., in BANK OF AUGUSTA v. EARLE, 13 Pet. 519, 589 (1839). It is needless to enumerate here the instances in which, by the general The court found that the contract was not a Tennessee contract. - ED. |