Case ID: ohio-st_69/html/0351-01.html
Source: Caselaw Access Project
Author: {"author": "Davis, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Montana Coal & Coke Co. v. The Cincinnati Coal & Coke Co. et al.
    
      Contract made in one state to be performed in another—Governed' by laws of latter—Promissory note made in Ohio payable in Kentucky—Indorsers in Kentucky and Pennsylvania—Law of' indorsement.
    
    1. A contract made in one state or country to be performed in another, is governed by the laws of the latter, which determine its. validity, obligation and effect. The Pittsburg, Cincinnati, Chicago & St. Louis Railway Co. v. Sheppard, 56 Ohio St., 68, and Kanaga v. Taylor, 7 Ohio St, 142, approved and followed.
    2. A promissory note for the payment to the payee of a certain sum' of money “payable at Northern Bank, Covington, Ky,” signed by the principal debtor in Ohio, and before delivery, which was in Ohio, signed in blank on the back by another party in Kentucky and by one in Pennsylvania, is a contract by all the parties, •thereto that the contract shall be performed in Kentucky; and as to its nature, validity, interpretation and obligation is governed by the laws of that state.
    (No. 7946
    Decided January 5, 1904.)
    Error to- the Circuit Court of Hamilton county. ■
    On February 1, 1896, the defendant in error, The-Cincinnati Coal & Coke Co., executed and delivered to the plaintiff in error, The Montana Coal & Coke Co.,, a promissory note of which the following is a copy:
    “$1,654.39. Cincinnati, Feb. 1, 1896.
    “Ninety days after date the Cinti. Coal & Coke Co.. promise to pay to the order of Montana Coal & Coke-Co. sixteen hundred fifty-four and thirty-nine onehundreth dollars, payable at Northern Bank, Covington, Ky., value received.
    “A. Montgomery,, Pres.
    “L. Stock, Sec’y & Treas.”
    
      On the back of said note appear the following indorsements :
    “A. Montgomery & Co. Marshall McDonald.”
    The consideration for the note was coal sold by the plaintiff in error to the defendant in error, The Cincinnati Coal & Coke Co., prior to its date. The Cincinnati Coal & Coke Co., Avhen the money was due, requested an extension of time for payment and the plaintiff in error agreed to extend the time for payment, provided that the Cincinnati Coal & Coke Co. would execute and deliver to the plaintiff a ninety-day note,, indorsed by A. Montgomery & Co. and Marshall McDonald; A. Montgomery & Co. did so indorse said note on the back thereof at Covington, Kentucky, prior to the delivery of the note to the plaintiff in error; the Cincinnati Coal & Coke Co. thereupon sent said note to Marshall McDonald, at Pittsburg, Pennsylvania, and he there indorsed his name on the back of said note after the indorsement of A. Montgomery & Co., and returned the said note to the Cincinnati Coal & Coke Co., at Cincinnati, Ohio, after which the Cincinnati Coal & Coke Co. delivered the note to the plaintiff in error, The Montana Coal & Coke Co., at Cincinnati, Ohio. The note, on default, was not protested, nor was notice of nonpayment given to Alexander Montgomery, the surviving partner of A. Montgomery & Co.; nor to Marshall McDonald or his legal representatives. The note was never discounted or negotiated at any bank in the state of Kentucky; no ■suit was instituted to compel the Cincinnati Coal & ■Coke Co. to pay the note in any court prior to this ■suit; each of the circuit courts of the state of Kentucky, being courts of general jurisdiction in all actions at law, held a term subsequent to May 1, 1896, at which an action might have been brought by the plaintiff in error to recover any sum that might have been due upon the note set out in the petition; the plaintiff, The Montana Coal & Coke Co., has always been the owner and holder of the note set forth in the petition.
    On the trial of this action in the court of common pleas of Hamilton county, the court held upon these facts, that the liability of Alexander Montgomery and Marshall McDonald was to be determined by the laws of the state of Kentucky; and that by the laws of that state said indorsers were to be regarded as assignors, merely, and were released from all liability to the payee of the note in suit, because the payee had failed to prosecute the maker to insolvency at the next term of the circuit court in that state after the maturity of the note. The petition of. the .plaintiff in error was, therefore, dismissed as to Montgomery and McDonald, and this judgment was affirmed on error to the circuit court of Hamilton county.
    
      Mr. Nathaniel Wright, for plaintiff in error.
    In the case at bar the indorsers, Alexander Montgomery and Marshall McDonald, have not clearly and literally expressed their intention as to what jurisdiction they were contracting with reference to. We must therefore look to the rules and principles which the law has established to discover their intention on. this point. According to these rules then, the debatable question is, what forum did the payee and the indorsers agree should furnish. the rule to test the liability of the indorsers to the payee?
    
    First. It is a principle too well established to ad: mit of argument that the interpretation, validity and effect of a contract is tó be determined by the law of the place where it is made, unless the parties otherwise- stipulate. Daniels on Neg. Inst., secs. 86.7, 869:
    
      
      Stanford v. Pruet, 27 Ga., 243; Cook v. Litchfield, 9 N. Y., 288; Lee v. Sellick, 33 N. Y., 615; Trabue v. Short, 5 Cold. (Tenn.), 293.
    Second. The place where a contract is made depends not upon the place where it is written, signed or dated, bnt upon the place where it is delivered, as consummating the bargain.
    Daniels on Neg. Inst., sec. 868; Briggs v. Latham, 36 Kan., 255; Young v. Harris, 14 B. Mon. (Ky.), 556; Lawrence v. Bassett, 5 Allen (Mass.), 140; Stanford v. Pruet, 27 Ga., 243; Gay v. Rainey, 89 Ill., 221 Stubbs v. Colt, 30 Fed. Rep., 419; Tilden v. Blair, 21 Wall., 241.
    The maker in express terms has stipulated to pay at maturity at the place of performance, to-wit, Covington, Kentucky. Have the indorsers made a like stipulation? The record fails 'to show that they have done so in express terms; it follows that the indorsers’ intention on the matter under discussion must be' inferred. The rule is that the presumption is inf favor of the lex loci contractus, unless the parties otherwise stipulate. Daniels on Neg. Inst., sec. 867.
    The indorsers have the same right to designate the forum which shall furnish the rule by which their liability is to be tested as the maker. If they do so, the court will respect their intention; if they do not,, the law presumes that they contract with reference to the law of the place of their contract. Hyde v. Goodnow, 3 N. Y., 270; Weil v. Lange, 6 Daly (N. Y.), 549; Staples v. Nott, 128 N. Y., 405; Bell v. Packard, 69 Me., 105.
    
      Mr. A. G. Shattuck, for defendant in error.
    Do not the parties—the maker, the indorsers before delivery, and the payee, too, by accepting the note— 
      “otherwise stipulate” in the note in question, and say the place of performance shall be Kentucky, instead. of Ohio, the place of the contract?
    Unless there can be said to be two separate and distinct contracts in the case presented to the court, one executed by the maker of the note, The Cincinnati Coal & Coke Co., and another executed by Montgomery and McDonald, the blank indorsers, this admission destroys the force and effect of the entire argument of plaintiff in error.
    We maintain that there is only one contract, and there is no fact in the record that will tend to show that there was an intention even, much less a consummation, on the part of the blank indorsers to enter into any other contract than the contract of the maker. Pingrey on Sur. & Guar., secs. 36, 347; Cincinnati Court Index, Jan. 22, 1902.
    We maintain that this note is purely and unequivocally a Kentucky contract, and as to its nature, validity, interpretation and obligation is governed by Kentucky laws, lex loci solutionis. Dicey on Conflict of Laws, p. 570; 1 Daniels on Neg. Inst., p. 886; 1 Daniels on Neg. Inst., p. 898, sec. 879; Story on Conflict of Laws (8 ed.), sec. 242 (1) and sec. 280; 1 Brandt on Sur. & Guar. (2 ed.), sec. 144; Tiesdeman on Com. Paper, sec. 506; Randolph on Com. Paper, secs. 29, 31 and 39; Stevens v. Gregg, 89 Ky., 461; Kanaga v. Taylor, 7 Ohio St., 142; Knowlton v. Railway Co., 19 Ohio St, 263; Alexander v. Pennsylvania Co., 48 Ohio St, 623; Railway Co. v. Sheppard, 56 Ohio St, 68; Dyke v. Railway Co., 45 N. Y., 116; Stix v. Mathews, 63 Mo., 371; Williams v. Wade, 42 Mass., 82; Shoe & L. N. B. v. Wood, 142 Mass., 567; Bank v. Talbot; 154 Mass., 213; Andrews v. Pond, 38 U. S., 65; Scudder v. Bank, 91 U. S., 406; Ogden v. Saunders, 12 Wheat (U. S.), 213.
    1. By the laws of Kentucky, both Montgomery and McDonald, each of whom signed “his name upon the back of a promissory note,” because of the character of said indorsement, became liable and “shall be treated as assignors as to the parties holding it” ' General Statutes of Kentucky, sec. 481; Steinharter v. Wolfstein, 13 Rep. (Ky.), 871; Stafford v. Bruce, 12 Ky. Law Rep., 374; Thomas v. Taylor, 25 Ky., 217; Carlisle v. Chambers, 67 Ky., 268; Kracht v. Obst, 77 Ky., 34; Francis v. Gant, 80 Ky., 190; Citizens Nat. Bank v. Hubbert, 97 Ky., 768.
    2. By the laws of Kentucky both Montgomery and McDonald (or the latter’s legal representatives) were entitled to immediate notice of the nonpayment, of this note at maturity. No notice was given or attempted. They are each therefore absolutely released from all liability on said note. They were accommodation indorsers, which fact was known to plaintiff when it received the note. Slack v. Longshane, 8 Rep. (Ky.), 166; Risk v. Ridgeford, 15 Rep. (Ky.), 206; Taylor v. Bank, 23 Ky., 580; McClane v. Fitch, 43 Ky., 599; Chenowith v. Chamberlain, 45 Ky., 60; Piner v. Clary, 56.Ky., 664; Harmon v. Wilson, 62 Ky., 324; Bank v. Moreland, 96 Ky., 150; Bank v. Hays, 96 Ky., 365; Moreland v. Bank, 97 Ky., 211.
    3. Whether protest is required or not is governed "by the laws of the state where the same must be mada Story on Conf. of Laws (8 ed.), sec. 360; Tiedeman >on Com. Paper, sec. 509; 2 Parsons on Notes & Bills, 344; 1 Daniels on Neg. Inst., sec. 911; Woods Byles on N. & B., 404; Randolph on Com. Paper, sec. 52; Scudder v. Bank, 91 U. S., 412; Bank v. Gray, 2 Hill (N. Y.), 227; Ross v. Bedell, 5 Duer (N. Y.), 462; Carter v. Bank, 26 Tenn., 548.
    4. “Whatever constitutes a good defense by the law of the place where the contract is made or is to be performed, is equally good in every other place where the question is litigated.” 2 Kent, p. 459; Story on Conf. of Laws,- sec. 331; Hall v. Castello, 48 N. H. 179; Harrison v. Edwards, 12 Vt., 652; Conahan v. Smith, 2 Disn., 9; Dicey on Conf. of Laws, 726; 1 Daniels on Neg. Inst., sec. 889.
   Davis, J.

This court has already committed itself to the doctrine that “a contract made in one state or country to be performed in another, is governed by the laws of . the latter which determine its validity, obligation and effect.” The Pittsburgh, Cinncinnati, Chicago & St. Louis Railway Co. v. Sheppard, 56 Ohio St, 68; Kanaga v. Taylor, per Bowen, J., 7 Ohio St., 142. This rule is so well established upon reason and authority that it requires no discussion here. . The note which is the subject of controversy in. this case, was signed by one of the parties in Ohio, and before delivery by another in Kentucky and by another in Pennsylvania; but it was delivered to the agent of the payee in Ohio. The contract was within the control of the parties who are bound by it and did not become effective until it was delivered. Therefore, the loci contractus is Ohio. But the place of performance, the loci solutionis, is Kentucky; because the note is expressly made “payable at Northern Bank, Covington, Ky.” The plaintiff in error insists that this stipulation binds only the principal debtor, The Cincinnati Coal & Coke Co., which signed underneath the note and upon the face of it; and that the contract of the parties who signed in blank on the back of the note, although before its delivery, is like the engagement of an indorser, an independent contract which contains no stipulation as to the place of performance. Hence, it is argued, that as to these parties the case is controlled by the lex loci contractus, that is, the law of Ohio. From our point of view, Montgomery & Co., and McDonald were no.t indorsers in the regular way, and in the course of business as the owners or holders of the note. All of the defendants were, original parties to the note, having signed it before it came into the possession of the first owner, the payee. The facts are undisputed and the obvious deduction therefrom is that the parties to the note at the time of its utterance all understood, and meant to be governed by, its terms; for at the time Montgomery & Co. and McDonald put their signatures on the back of the note the stipulation that the money should be “payable at Northern Bank, Covington, Ky.,” was as much a part of the original contract as the promise to pay to the order of plaintiff the sum of money which is stated. There was, in short, no separate contract after the making of the note; but the note came to the payee signed by all of the defendants and with the place of performance- distinctly expressed. There was therefore no error in the judgments of the courts below, and the judgment of the circuit court is

Affirmed.

Burket, C. J., Spear, Shauoic, P'rice and Crew, JJ., concur.