Opinion ID: 2388509
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Heading Rank: 1

Heading: Choice of Law as to the Statute of Limitations [4]

Text: It has long been the common law conflicts rule that the statute of limitations is ordinarily a matter of procedure, affecting the remedy and not the right, and is therefore, like other procedural attributes, controlled by the law of the forum rather than that of the state whose law otherwise governs the cause of action. Restatement, Conflict of Laws §§ 603, 604 (1934); Restatement, Conflict of Laws 2 d § 142 (1971); Leflar, American Conflicts Law § 127 (1968); Goodrich, Conflicts of Laws § 85 (4th ed. 1964). New Jersey has consistently followed the rule, although not without some recent criticism. Marshall v. Geo. M. Brewster & Son, Inc., 37 N.J. 176, 180-181 (1962). It is, of course, judge-made and may be changed judicially, as we have done with respect to the matter of the substantive law to be applied to a foreign cause of action. See Mellk v. Sarahson, 49 N.J. 226 (1967); Pfau v. Trent Aluminum Co., 55 N.J. 511 (1970). We think reexamination of the rule is in order. Sound sense and practical reasons dictate that a suit on a foreign cause of action should be processed and tried according to the procedural rules of the forum state. It would be an impossible task for the court of such a state to conform to procedural methods and diversities of the state whose substantive law is to be applied. The determination of that law is a difficult enough burden to impose upon a foreign tribunal. A statute of limitations is, however, not subject to the same problems as strictly procedural matters. The limitation period of the foreign state can generally be ascertained even more easily and certainly than foreign substantive law. It came to be included in the category of procedure on the theory that the passage of the period destroys only the remedy and not the right and remedy is considered procedural and governed by the law of the forum. Historically, the thesis developed in England more than two centuries ago when English common law judges restricted as much as possible all reference to or reliance upon the law of foreign countries. Goodrich, supra, p. 152. In any event, the rule fitted very neatly into basic principles of early conflicts law which rather arbitrarily compartmentalized the incidents found in a foreign cause of action into fixed characteristics and mechanical rules in the supposed interests of uniformity and certainty, almost regardless of the justice or good sense of the particular situation  an approach recently abandoned in this and many other states, at least with respect to the substantive law to be applied. See Restatement, Conflict of Laws 2 d §§ 145, 146. This law-of-the forum rule as to the applicable period of limitations has been almost universally criticized by legal commentators, especially in recent times when the whole field of conflicts law has been undergoing so much reevaluation by both scholars and American courts. The following is a partial catalog: Leflar, supra, § 127 (1968); Goodrich, supra, § 85 (4th ed. 1964); Lorenzen, The Statute of Limitations and the Conflict of Laws, 28 Yale L.J. 492 (1919); Vernon, Statutes of Limitation in the Conflict of Laws: Borrowing Statutes, 32 Rocky Mt. L. Rev. 287, 288-293 (1960); McDonald, Limitation of Actions  Conflict of Laws  Lex Fori or Lex Loci, 35 Texas L. Rev. 95, 100-107 (1956); Sedler, The Erie Outcome Test as a Guide to Substance and Procedure in the Conflict of Laws, 37 N.Y.U.L. Rev. 813, 846-851 (1962); Ester, Borrowing Statutes of Limitation and Conflict of Laws, 15 U. Fla. L. Rev. 33, 36-39 (1962). The fundamental illogic and unsoundness of the rule are well set forth in selected excerpts from these writings. Goodrich says: There is little reason for this rule, other than historical   . As an original proposition, it could well be urged that, after suit is barred by the law to which reference is made as governing the claims of the parties, the plaintiff's claim, now deprived of its most valuable attribute, should be unenforceable by action elsewhere.    (at pp. 152-153) Dean Leflar puts it this way:    The historical explanation of these results is a theory that the passage of the period of limitations destroys only the remedy and not the right inherent in a cause of action. Remedy, classified as a procedural matter, is governed by forum law. This theory, as applied to causes of action barred where they arose, does not make very good sense. A right for which the legal remedy is barred is not much of a right. It would have made better logic if the limitations rule of the state whose substantive law is chosen to govern the right were deemed substantive also, so that both the original and the terminal existence of the right would be related to the same body of law. That, however, was not the way the law developed, save for exceptional situations to be mentioned later. The result is that plaintiffs whose claims are barred by the governing substantive law are allowed to shop around for a jurisdiction in which the statute is longer, in the hope of getting service there on the obligor. (at p. 304) Professor Lorenzen made one of the first criticisms almost 55 years ago: There is no reason, as regards statutes of limitation, either, why the internal test, which classifies them as procedural or as relating to the remedy, should be carried over into the conflict of laws. A right which can be enforced no longer by an action at law is shorn of its most valuable attribute. After the enforcement of the right of action is gone under the law governing the rights of the parties, it would seem clear upon principle that the same consequences should attach to the operative facts everywhere. Nor is there any policy pointing to a different conclusion. It follows that no court should enforce a foreign cause of action which is barred by the law governing the substantive rights of the parties. The fact that either the internal law of the forum or the internal law of the foreign state or the internal law of both states may regard statutes of limitation as relating to the remedy is therefore immaterial.    (28 Yale L.J. at pp. 496-497) (He also urged that where the forum's limitation period is shorter than that of the lex loci, the latter should be applied, an aspect we need not pass upon here.) Professor Sedler finds Lorenzen's criticism to be unanswerable. He observed: It has never been satisfactorily shown why a suit should be permitted if it cannot be maintained under the law to which the forum looks as a model. (37 N.Y.U.L. Rev. at p. 847) Professor Vernon adds another consideration against the rule: By granting relief which would not be available in the place of accrual, or in some other jurisdiction having intimate contact with the transaction or the parties, the forum is applying dual standards to the claim being presented. Whenever considerations call for the application of the contract, tort or other substantive law of a foreign jurisdiction, it would appear that its time bar should also be recognized. No special considerations of local policy are presented by the recognition of a foreign statutory bar.    (32 Rocky Mt. L. Rev. at p. 291) Courts have been indeed slow to follow the scholarly lead and candidly change the rule. Only a small handful of cases appear to have considered the possibility. In one, the United States District Court in New Hampshire suggested such a result as an alternative ground of decision. Seymour v. Parke, Davis & Company, 294 F. Supp. 1257 (D.N.H. 1969). The suit was by a Massachusetts resident against a Michigan corporation for wrongful death resulting from a drug manufactured by the defendant, who was served under New Hampshire's long-arm procedure. All incidents took place in Massachusetts and the suit was concededly brought in New Hampshire to attempt to secure the advantage of its longer statute of limitations. The court found that New Hampshire had no interest whatever in the litigation and held that in these circumstances it could not constitutionally acquire jurisdiction over the defendant. The judge went on to say, alternatively, that he would probably apply the Massachusetts statute of limitation on the theory that New Hampshire law would require it by reason of that state's abandonment of the old lex loci delicti rule for determining choice of substantive law in tort cases and adoption of the modern approach. (The Court of Appeals, in affirming the result, made no mention of this alternative ground of decision. 423 F. 2 d 584 (1 Cir.1970).) In another case, Judge Freedman, in a dissenting opinion, expressed the feeling that there is no reason not to extend the modern conflicts view as to applicable substantive law to the matter of the statute of limitations as well. Mack Trucks, Inc. v. Bendix-Westinghouse Auto A.B. Co., 372 F. 2 d 18, 21, 24 (3 Cir.1966), cert. den. 387 U.S. 930, 87 S.Ct. 2053, 18 L.Ed. 2 d 992 (1967). And in Marshall, Justice Jacobs, although following the rule, commented that considerations of convenience and practicality dictating the forum's choice of its own procedure would appear to have little pertinency to the bar of limitations (37 N.J. at 180). General dissatisfaction with the rule has, however, found concrete expression in ways other than by outright judicial change. The first of these is the judge-made principle which has developed that the foreign limitations period will be applicable where a statute creating the cause of action bars the right and not merely the remedy. Wrongful death statutes are a common example. Restatement, Conflict of Laws 2 d § 143; Leflar, supra, at pp. 305-306. Professor Sedler has characterized this effort in his previously cited article: The struggles of the courts to determine whether the locus has destroyed the right are amusing, even if the results are inconsistent and the reasoning at times most specious. (37 N.Y.U.L. Rev. at p. 848) The other method which has been utilized to counteract the law-of-the-forum rule is the enactment, by about three-quarters of the states, of so-called borrowing statutes. Generally these statutes either bar the action if it is barred by the state where the defendant, or both of the parties, resided or of the place where the cause of action arose. See Restatement, Conflict of Laws 2 d, § 142, comment f; Leflar, supra, § 128. [5] In modern days, they serve a purpose of preventing forum shopping. Although undoubtedly intended to be mechanical and certain in operation, these statutes are exceedingly diverse and complex and may well be said to have created more problems than they have solved. See Vernon, supra (32 Rocky Mt. L. Rev. 287); Ester, supra (15 U. Fla. L. Rev. 33). New Jersey has never had such a statute. But as Professor Sedler points out: The absence of a borrowing statute should not prevent application of the statute of the locus; for a policy against forum shopping can be set out by the judiciary as well as the legislature. (37 N.Y.U.L. Rev. at p. 850) We are convinced the time has come, for the reasons previously outlined, to discard the mechanical rule that the limitations law of this state must be employed in every suit on a foreign cause of action. We need go no further now than to say that when the cause of action arises in another state, the parties are all present in and amenable to the jurisdiction of that state, New Jersey has no substantial interest in the matter, the substantive law of the foreign state is to be applied, and its limitation period has expired at the time suit is commenced here, New Jersey will hold the suit barred. In essence, we will borrow the limitations law of the foreign state. We presently restrict our conclusion to the factual pattern identical with or akin to that in the case before us, for there may well be situations involving significant interests of this state where it would be inequitable or unjust to apply the concept we here espouse. [6] This conclusion alone would dispose of the case at bar, leading to an affirmance of the judgment. [7] However, it is important that the second question stated at the outset of this opinion also be decided and, since our view of it likewise leads to an affirmance, we prefer to decide the case on both bases. We therefore now turn to consideration of that question.