If the contract in restraint of trade is general with respect to locality, covering a territory embracing many different States, but specifically mentioning none, it is quite certain that this should be regarded as a contract to be performed generally, like a promise to pay money naming no place of payment, and the lex celebrationis should govern. Thus, in South African Breweries v. King, an injunction was sought against the violation in Natal, South Africa, of a contract made in the Transvaal not to engage in the brewing business in any part of South Africa for five years. The injunction was refused on the ground that the stipulation was void by the law of the Transvaal.

§ 176. Validity of Consideration -Lex Loci Considerationis - Executory Consideration The invalidity of a contract may spring, not only from its unlawful making, or from the illegality of the act to be performed in pursuance thereof, but from the illegality or insufficiency of the consideration which supports it. The legality or sufficiency of the consideration depends upon the law of the situs of the consideration. Furthermore the consideration may be either executed or executory.2 If executory, it may be a promise to be performed where made, or made in one place and to be performed in another, whose validity will be determined by the lex celebrationis or the lex solutionis of the consideration, in accordance with the principles discussed in the preceding sections of this chapter. The locus celebrationis of the consideration (the promisee's contract) will usually coincide with the locus celebrationis of the promisor's contract, but the locus solutionis of the promisee's contract (the consideration) may be entirely distinct from the locus solutionis of the promisor's contract. In such cases the validity of the executory consideration (the promisee's contract) will depend upon its lex celebrationis or its lex solutionis, according as the invalidity alleged relates to the making of the promisee's contract or to its performance.

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In Ford v. Ins. Co., suit was brought in Kentucky upon certain notes given by the defendants as premiums for insurance on certain boats. The notes were made in Indiana in consideration

7 2 Ch. D. 173.

2 Ante, § 162.

1 Ante, § 161.

36 Bush (Ky.), 1 33, 99 Am. Dec. 663.

of a contract of insurance there entered into. The policy of insurance was one prohibited by Indiana law to be there made. It was held that the validity of the notes depended upon the validity of the contract of insurance; and as that contract was entered into in Indiana, where its making was prohibited, it was invalid, and the notes were therefore also invalid.

So, in Blackwell v. Webster, suit was brought in New York upon a contract, the consideration for which was a promise made in Maine to prosecute a suit for a legacy in New York upon shares. The making of a champertous contract was prohibited by the Maine law, and though such contracts were not unlawful in New York (the locus solutionis of the consideration) it was held that the contract sued upon was void because of the illegality of the consideration therefor under the Maine law.

On the other hand, the lex solutionis of the executory consideration will determine the validity of the promisor's contract, whenever the performance of the promisee's contract (consideration) is alleged to be illegal, without regard to the lex celebrationis or lex solutionis of the promisor's contract.

Thus in Blackwell v. Webster, supra, if the Maine statute had not interdicted the making of champertous contracts, the validity of the champertous consideration would have depended upon the New York law (lex solutionis of the consideration), and the promisor's contract would have been valid or invalid, according as the New York law permitted or condemned the champertous contract of the promisee."

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So, in Peet v. Hatcher, a note was made in Georgia, payable in Georgia to certain cotton brokers of New Orleans to cover margins upon speculations in cotton. The note was secured by a mortgage of land in Alabama, and suit was brought there to foreclose the mortgage. It was held that the law of Georgia (lex celebrationis et solutionis) should not prevail, but since the objectionable dealings with the cotton were to take place in Louisiana, the law of Louisiana must govern the validity of the

4 29 Fed. 614. See ante, § 168.

Hickox v. Elliott, 27 Fed. 830. See Richardson v. Rowland, 40 Conn.

6112 Ala. 514, 21 So. 711, 712.

note and mortgage, the consideration for which was the speculative dealings in Louisiana. The court said: "The defense mainly relied on is that the dealings between Hatcher and Peet & Co. (the brokers) were gambling transactions, such as the courts will not enforce. It is pleaded and insisted that those transactions were governed by the laws of Georgia, where the arrangement under which they were had was entered into . . . by force of which laws the contracts made in the purchase of cotton were mere wagers and void. It is settled by the decision of this court in a case precisely like the present, except that the dealings were on the New York, instead of the New Orleans, stock exchange,' that the contract under which the cotton dealings were to be had, as to its validity, was governed by the laws of the State wherein it was to be performed (in that case, New York)." "

In Commonwealth of Kentucky v. Bassford,' a Kentucky statute authorized a lottery for a certain college. The law of New York forbade lotteries. A bond was entered into in New York conditioned for the faithful performance of duties in Kentucky touching the sale of lottery tickets authorized by the above Kentucky statute. It was held that as the bond was valid at the place when the consideration was to be performed, the courts of New York would uphold it.10

7 Hawley v. Bibb, 69 Ala. 52.

The course of this decision is very curious. The court held, as above stated, that the law of Louisiana should govern the validity of the note. But the law of Louisiana was not in evidence. Under these circumstances the court assumed that the law of Georgia (where the note was made and payable) should govern. But neither was the Georgia law in evidence. The jurisprudence of Georgia being based upon the common law (it was otherwise in the case of Louisiana) the court assumed the common law to prevail there, by which the particular transaction was sustained. See post, § 214. It is submitted that the court erred in principle in substituting the Georgia law for that of Louisiana, merely because the latter was not in evidence. Georgia was not the situs of the consideration, nor could it be made so merely by a failure to prove the law of Louisiana (lex loci considerationis).

96 Hill (N. Y.), 526.

10 In this case there was some doubt whether the bond was executed in New York or in Kentucky, but the court held it to be immaterial.

§ 177. Executed Considerations Sufficiency of Consideration. In the majority of cases perhaps the consideration is not executory, but executed, consisting either of a pre-existing liability, an act done, or an executed contract entered into. In such cases, the situs of the consideration is not difficult to ascertain, and when once ascertained the same rules prevail as before; the law of the situs of the consideration will determine the validity of the promisor's agreement, so far as its validity depends upon the validity of the consideration.

If the consideration is malum in se, or universally deemed contra bonos mores, the lex fori will generally be substituted in the place of the lex loci considerationis. This principle occasionally creates a doubt as to what law should govern the validity of a contract for the reason that it is sometimes a matter of doubt whether a consideration valid by its proper law, though condemned in the forum, is so generally deemed immoral as to give rise to the operation of the lex fori. Thus gaming, wagers, lotteries, the sale or hire of slaves, contracts relating to the slave-trade, etc., constitute considerations which, though condemned by many States, are not forbidden by all. We find the cases somewhat divided here upon the law which should govern. The weight of authority is in favor of the lex loci considerationis as the proper law, unless the consideration is one which the policies of all (or almost all) civilized States unite in prohibiting. Bearing in mind the occasional operation of the lex fori in these cases, we will proceed to examine the "proper law" governing the validity of a contract in respect of the consideration.

In the first place it seems clear that if there is no consideration at all to support the contract, the effect of this upon the validity of the contract must depend upon the law of the place where the promisor's contract is entered into, not upon the lex

1 Ante, § 9.

2 Story, Confl. L. §§ 114, 258; Commonwealth of Kentucky v. Bassford, 6 Hill (N. Y.), 526; Thatcher v. Morris, 11 N. Y. 437; Greenwood v. Curtis, 6 Mass. 358, 4 Am. Dec. 145; Roundtree & Baker, 52 Ill. 241, 4 Am. Rep. 597. But see Flagg v. Baldwin, 38 N. J. Eq. 219, 48 Am. Rep. 308; Gist v. Tel. Co., 45 S. C. 344, 23 S. E. 143; Oscanyon v. Arms Co., 103 U. S. 261.

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solutionis; for if the contract is invalid in the locus celebrationis, it will be void ab initio, just as in the case where a contract is formally invalid by the lex celebrationis; there will never have been any contract to perform, and therefore nothing for the lex solutionis to operate upon. On the other hand, since the matter of the want of consideration enters into the making of the contract, so to speak, in other words, since its effect operates upon the contract at the time it is made, if the contract is then and there valid the want of consideration should not be open to question thereafter or under any other law. Thus, if a bond is given in one State without any consideration, no consideration being there required to support a contract under seal, and the bond is payable in another State where a contract, even though under seal, must be supported by a consideration, the proper law to determine the validity of the contract is the lex celebrationis of the contract, not the lex solutionis.*

If the question is not one of a total want of consideration in the incipiency of the contract, but of a subsequent failure of the consideration, the lex celebrationis having performed its function in determining the original validity of the contract, it would seem that the subsequent failure of consideration must be regarded as affecting not the making of the contract but the obligation to perform it, and the lex solutionis of the contract 3 Ante, § 172.

4 In Pritchard v. Norton, 106 U. S. 124, 135, 136, a somewhat similar question was decided in accordance with the law of the assumed place of performance of the contract. But in that case there had been a benefit conferred upon the promisor. There was a past consideration, and the question was whether it was sufficient. This case will be presently explained.

The example given above in the text is based upon the theory that the effect of a seal in importing a consideration is part of the contract itself, which is the view taken in Pritchard v. Norton, supra. Upon the theory that the presence of the seal only affords a conclusive presumption that there is a consideration, it may be that as a mere matter of evidence, relating to the remedy, the lex fori would control. If by that law no such presumption obtains, there must be other proof. See Williams v. Haines, 27 Iowa, 251. But even if this view is sound (as it is believed not to be), no progress is here made. The question still remains, if there is no proof of consideration, what law shall govern the effect of a want of consideration. The first theory seems altogether preferable.