In Baldwin v. Gray, the defendant, Gray, and others owned a boat as partners, the partnership having been entered into in Pennsylvania. Suit was brought in Louisiana to recover for the expenses of the boat while it was in Louisiana. In this suit, it was sought to hold Gray, one of the partners, responsible in solido for the whole indebtedness of the firm on this account. This was the measure of his liability in Pennsylvania, where the contract of partnership was made; but by the law of Louisiana, where the indebtedness occurred, each partner was liable only for his share. It was held that the law of Louisiana (the lex celebrationis et solutionis of the indebtedness) should control. Speaking of the effect of the Pennsylvania law, the court said: "This law governs the obligations of the partners with each other, but not with third persons. It can no more affect the rights of those who contract with them in a different country than particular stipulations between the partners could. The contract entered into in the case before us was made in this State and must be regulated by the lex loci contractus."

These illustrations will suffice to show the application of the general principles by which is determined the "proper law" governing the obligation of a contract. In the succeeding sections we will examine more particularly some of the more important classes of contracts. Though the same general principle runs through them all, namely, that in the absence of evidence of a different intent the lex solutionis of the contract determines its obligation and the auties and liabilities of the promisor, it is not always easy to apply the principle to particular cases. The various contracts to be discussed are (1) Negotiable instruments; (2) Contracts calling for interest; (3) Covenants contained in conveyances of land.

§ 182. Negotiable Instruments Maker's or Acceptor's Contract. The questions that arise touching the obligations of the maker of a note or the acceptor of a bill are generally of a different order from those presented with respect to the obli

validity, it is a validity affecting the performance of the contract, namely, the establishment of a partnership in New York.

18 4 Mart. N. s. (La.) 192, 16 Am. Dec. 169. But see King v. Sarria, 69 N. Y. 24, 25 Am. Rep. 128; ante, § 158.

gations of the indorser or drawer, and they will be treated separately for this reason, not because there is any great difference in the general principles applicable. In either case the leading rule for the determination of the proper law still holds good. The lex solutionis of the particular contract in general controls its obligation. We have already considered at some length the rules by which the locus solutionis of the maker's or indorser's contract is fixed, and the reader is here advised to turn back to that discussion.1

The question whether, as to the maker, a note is negotiable, and hence whether or not the maker may plead against a bona fide holder equities existing between himself and the payee arising before notice of the transfer, is to be decided in accordance with the law of the place where the note is payable, though it is indorsed or the suit is brought in another State."

And if the maker or acceptor of a note or bill should urge his right to plead defenses against the holder on the ground that the holder is not a purchaser for value, the lex solutionis of the note or bill, not the law of the place where the holder acquired his title, will govern the question. Thus, in Woodruff v. Hill, a negotiable note was made and payable in Massachusetts, but was indorsed in another State, the indorsee receiving the note from the payee in satisfaction of a pre-existing debt. By the law of the State where the indorsement was made a note indorsed for a pre-existing debt did not constitute the holder a purchaser for value. By the law of Massachusetts (lex solutionis) it did. In a suit by the indorsee against the maker, it was held that the Massachusetts law must determine

1 Ante, §§ 164, 165.

2 Wilson v. Lazier, 11 Gratt. (Va.) 477; Hull v. Blake, 13 Mass. 153; Stevens v. Gregg, 89 Ky. 461, 12 S. W. 775; Barrett v. Dodge, 16 R. I. 740, 19 Atl. 530; Harrison v. Edwards, 12 Vt. 648, 36 Am. Dec. 364; City of Aurora v. West, 22 Ind. 88, 85 Am. Dec. 413; Rose v. Park Bank, 20 Ind. 94, 83 Am. Dec. 306; Odell v. Gray, 15 Mo. 337, 55 Am. Dec. 147; Emanuel v. White, 34 Miss. 56, 69 Am. Dec. 385; Brabston v. Gibson, 9 How. 263; Supervisors v. Galbraith, 99 U. S. 214.

3 Woodruff v. Hill, 116 Mass. 310; Woodsen v. Owens (Miss.), 12 So. 207; Webster v. Howe Machine Co., 54 Conn. 394, 8 Atl. 482.

4 116 Mass. 310.

whether the holder was a holder for value; that is, whether the maker was bound under his contract to pay him the money at all events.

In Phipps v. Harding," the plaintiffs in error indorsed a note in Wisconsin for the accommodation of the maker, the note being delivered and payable in Massachusetts. By the general commercial law, as laid down by the United States Supreme Court (and binding upon the federal courts), accommodation indorsers were to be regarded, not as indorsers, but as joint makers of the note, and as such not in general entitled to notice of dishonor. But the law of Massachusetts (lex solutionis) provided that "all persons becoming parties to notes payable on time, by signature on the back thereof, shall be entitled to notice of non-payment thereof the same as indorsers." Upon suit brought in the federal court of Wisconsin against the accommodation indorsers, it was held that the Massachusetts law should control, and, though joint makers of the note, they were entitled to notice of dishonor.

The maker's right to days of grace, and the nature and extent of that right, will also be governed by the lex solutionis of the maker's contract."

If a note or bill, drawn and payable in one State, is indorsed in another to an indorsee, the indorsement not operating to transfer the title to the indorsee by the law of the place of transfer, but transferring it fully under the lex solutionis of the contract of the defendant (the maker, acceptor, drawer, or prior indorser), it is a mooted question whether the right of the indorsee to sue the defendant is a part of the obligation of the defendant's contract, or is to be governed by the proper law of the indorsement under which the holder claims title, that is, by the law of the place where that indorsement is made. On the

6 17 C. C. A. 203, 70 Fed. 468. See Lawrence v. Bassett, 5 Allen (Mass.), 140.

6 Pierce v. Indseth, 106 U. S. 546, 550; Scudder v. Bank, 91 U. S. 406, 412; Brown v. Jones, 125 Ind. 375, 25 N. E. 452; Stebbins v. Leowolf, 3 Cush. (Mass.) 137; Bryant v. Edson, 8 Vt. 325, 30 Am. Dec. 472; Aymar v. Sheldon, 12 Wend. (N. Y.) 439, 444, 27 Am. Dec. 137; Bowen v. Newell, 13 N. Y. 290, 64 Am. Dec. 550.

one hand, it is urged that the general rule is that the validity and effect of an executed contract of transfer or indorsement is governed by the law of the place where such transfer is made. On the other hand, it is argued that the maker, acceptor, drawer, or prior indorser (the defendant) has undertaken to pay to the payee, or such persons as he may name in accordance with the law with reference to which he, the defendant, contracts (the lex solutionis of the defendant's contract), and that the mere accident that the indorsement to the holder is made abroad under a different law should not affect the defendant's obligation to pay according to his agreement.

In Bradlaugh v. De Rin,' a bill was drawn in Brussels on the defendant in London, and there accepted by him. It was afterwards indorsed by A in Brussels to C, and by C in Paris to D, and by D to E, who in Paris indorsed it in blank to the plaintiff, a resident of London. The law of France, where the bill was indorsed to the plaintiff, required that the indorsement of a bill or note should be dated and should express the value received and the name of the indorsee; and that if the indorsement failed to comply with these requirements, it should not operate as a transfer of the bill, but only as an authority to collect. By the law of England (the lex solutionis of the acceptor's contract) a blank indorsement operated to transfer title to the bill. The court held that the law of France should govern. 8 On the other hand, in Lebel v. Tucker,9 a bill of exchange,

7 L. R. 5 C. P. 473 (Exchequer Chamber).

8 The same result was reached in Trimbey v. Vignier, 1 Bing. N. c. 151, 27 E. C. L. 336, the circumstances of which were identical, except that the instrument sued on was a note, the maker of which was the defendant. See also Hibernia Nat. Bank v. Lacombe, 84 N. Y. 367, 376.

9 L. R. 3 Q. B. 77. See also Everett v. Vendryes, 19 N. Y. 436, where it was the drawee of the bill who was sued. There the bill was drawn in New Granada and there indorsed in blank, but was payable in New York, where the drawee resided. The drawee refused to accept, and the indorsee sued the drawer in New York. The law of New Granada touching indorsements was similar to the French law mentioned in Bradlaugh v. De Rin, supra. It was held that New York was the locus solutionis of the drawee's contract, and that the law of New York should govern the right of the holder to sue the drawee.

drawn, accepted, and payable in England, was indorsed in France. The circumstances were practically the same as in Bradlaugh v. De Rin, supra. But the court, taking the view that it was a matter relating to the obligation of the acceptor's contract, held that it was governed by the English, not the French, law. Much may be said in favor of either view. It is believed, however, that the sounder doctrine is that enunciated in Bradlaugh v. De Rin, supra.10

§ 183. Same

tract.

Obligation of Drawer's or Indorser's ConWe have seen in a preceding section,' that much doubt has been expressed whether the locus solutionis of the executory contract of the drawer of a bill or the indorser of a bill or note is the place where the bill or note is payable, or whether it is identical with the locus celebrationis of the drawer's or indorser's contract. It was there stated that the better view was that the locus solutionis of the drawer's or indorser's contract is the place where the bill or note is payable. The important fact to be here noted is that the difference of opinion exists. Hence it is no rebuttal of the general rule that the lex solutionis governs the obligation of his contract to find some of the courts holding that the obligations of the drawer or indorser are governed by the law of the place where the instrument is drawn or indorsed, while others hold them to be governed by the law of the place where the instrument is payable. The principle of both lines of decision is the same: the lex solutionis of the drawer's or acceptor's contract is to govern. The conflict arises in respect to what is the locus solutionis. This question has been already discussed in the section above alluded to. We shall here therefore, for the most part, treat the locus solutionis of the drawer's or indorser's contract indifferently as either identical with the locus celebrationis of that contract or identical with the locus

10 For example, if the facts of Lebel v. Tucker had been reversed, and the bill had been accepted in France and payable there, the indorsee claiming under an indorsement made in England, the doctrine of Lebel v. Tucker would have necessitated the indorsee's ascertaining the law of France before he took the bill. This would seriously interfere with the negotiability of foreign bills and notes.

1 Ante, § 165.