Court Opinion

ID: 9794920
Source: CourtListenerOpinion
Date Created: 2023-08-31 03:14:11.712287+00
Date Added: 2024-06-11T08:22:22.327305
License: Public Domain

*18GOODWIN, J.,
dissenting.
I am unable to agree with the conclusion of the majority.
“Public policy” as a basis for decision has an 'overtone of predestination which sometimes tends to limit analysis. See Paulsen and Sovem, “Public Policy” in the Conflict of Laws, 56 Colum L Rev 969, 988 (1956). In a situation in which the law of the forum differs from the law of the jurisdiction having the majority of contacts with the transaction, the invocation of “public policy” may also produce a result that is contrary to generally accepted principles. 56 Colum L Rev at 988.
In Loucks v. Standard Oil Co., 224 NY 99, 120 NE 198 (1918), Mr. Justice Carduzo discussed the situation in which an action’s contacts with the forum state are so important that foreign law should not be applied. He pointed >out that foreign law would not be applied if it “would violate some fundamental principle of justice, some prevalent conception of good morals, some deep-rooted tradition of the common weal.” 224 NY at 111, 120 NE at 202.
In the instant case, the majority finds in effect that to apply the law of California would be to violate some deep-rooted tradition of our common weal. On the facts of this case, I believe the mere assertion of such a proposition suffices to refute it.
As a general rule the power conferred by a statute providing for the guardianship of a spendthrift’s property is an extraordinary one, and should be exercised with great caution. See Guardianship of Reed, 173 Wis 628, 182 NW 329, 17 ALR 1063 (1921). I am aware of no compelling public reason for saving spendthrifts from the result of their folly at the expense of innocent merchants.
*19The case of Gates v. Bingham, 49 Conn 275 (1881), involved a spendthrift statute. The defendant had been declared a 'spendthrift in Connecticut, and a conservator had been appointed. The defendant moved to Massachusetts and failed to pay the rent for his house in Massachusetts. The plaintiff knew that the defendant was under a conservatorship in Connecticut. The defendant returned to Connecticut and continued to live in that state until the time of the action. The plaintiff brought the action in Connecticut. The court found that while the defendant was residing in Massachusetts he was sui juris, and “if incapable of managing his own affairs the only mode of securing a legal supervision for him was by proceeding under the laws of that state in the same manner as in the case of any other of its inhabitants * # 49 Conn at 278. The court also stated:
“* * # The disability under which one is placed, with regard to his power to make contracts, by having a conservator appointed over him, is created wholly by statute, and can have no operation where the statute does not operate. It is a well settled principle that no statute can operate beyond the territorial limits of the state in which it was enacted i! * 49 Conn at 278.
Because the facts in the Bingham case are so different from the facts in the instant case, I allude to the Bingham case only to illustrate one way in which a court has refrained from giving a spendthrift statute extraterritorial effect.
The majority opinion acknowledges that at common law a spendthrift was not considered incapable of contracting. The majority also points out that “[tjhis court has decided that Oregon’s policy voiding spendthrifts’ contracts is not so strong as to void an Oregon *20spendthrift’s marriage contract made in Washington.” These two statements suggest that the protection of Oregon spendthrifts is not “some deep-rooted tradition of the common weal.” Furthermore, in the instant case, no “fundamental principle of justice” or “prevalent conception of good morals” would he violated if the law of California were applied.
The plaintiff was a merchant in California who was approached in the ordinary course of business by a seemingly competent person and asked to enter into a business arrangement. The notes were executed, delivered, and made payable in California. If the parties gave any thought to law at all, which is unlikely, they would have assumed that California law would apply to their business. Consequently, if California law were to be applied, it would neither surprise the parties nor shock the conscience of the court. It would hardly violate any “fundamental principle of justice” or “prevalent conception of good morals.”
Because the majority opinion has presented a thorough outline of the different choice-of-law doctrines applicable to contract cases, I shall discuss only those doctrines that I think ‘should be determinative in the instant case.
In Principles of Conflict of Laws (3d ed, 1963), Prof. George Wilfred Stumberg argues that the law which upholds the contract should determine the outcome of a choice-of-law problem in a contract case. He states:
“* * * Jt would seem to be more desirable to uphold the contract if it satisfies the law of any place with which it has a substantial connection, unless performance at the place of performance is prohibited * * Stumberg, supra at 238.
*21While discussing the principle of the law that upholds the contract, Stumberg points out that whatever theory of choice of laws is adopted, there is a danger that “public policy” may be argued against the foreign law. Stumberg states his view of the “public policy” argument in the following words:
“* * * Policy as a ground for refusal of relief, it is believed, should be confined within narrow limits. As between the states, it should seldom, if at all, apply * * Stumberg, supra at 239, footnote 59.
For the contrary view, see Currie and Schreter, Unconstitutional Discrimination in the Conflict of Laws: Privileges and Immunities, 69 Tale L J 1323 (1960).
In Contracts in the Conflict of Laws, Part One: Validity, 59 Colum L Rev 973 (1959), Professor Albert A. Ehrenzweig also favors the rule that would uphold the contract, and points out:
“* * * To be sure, courts have since been forced, while seeking common sense solutions, to pay lip service to the rigid formulas of official doctrine * * *, but they have in effect continued to apply the lex validitatis, namely that law among the ‘proper’ laws under which the contract could be held valid in accordance with the parties’ presumed intention * * 59 Colum L Rev at 992.
See also Ehrenzweig, The Conflict of Laws (1962) at page 353; Kossick v. United Fruit Co., 365 US 731, 81 S Ct 886, 6 L Ed2d 56 (1961); and Pritchard v. Norton, 106 US 124, 1 S Ct 102, 27 L Ed 104 (1882).
The transaction in the case at bar has adequate contacts with the state of California to make California law appropriate, and the law of California would uphold the validity of the contract. The pre*22sumed intentions of the parties would he carried out if the contract were enforced.
In recent years a number of courts have adopted the “center of gravity” or “points of contact” approach to solve problems concerning contracts and the conflict of laws. Stumberg, supra, at 240. These courts rely on the law of the place which has the most significant contacts with the matter in dispute. Auten v. Auten, 308 NY 155, 161, 124 NE2d 99, 50 ALR2d 246 (1954). The merit of the center-of-gravity approach is that the place having the most interest in the problem is given control over the legal issues arising out of the factual situation. Auten v. Auten, supra at 161. One difficulty with this approach is that it is somewhat wanting in predictability because of the subjective evaluations that may enter into the finding of the “center of gravity.” See Currie and Sehreter, supra at 1328.
The tentative draft of the Restatement (Second) adopts the eenter-of-gravity theory to determine the validity of contracts:
“(1) The validity of a contract is determined by the local law of the state with which the contract has its most significant relationship, except in the case of usury (see §334d).” Restatement (Second), Conflict of Laws § 332 (Tent. Draft No. 6, 1960) at 6.
The proposed draft also sets out guidelines to determine, in particular instances, the state “with which the contract has its most significant relationship.” The draft adopts the following language:
“(a) if the place of contracting and the place of performance are in the same state, the local law of this state determines the validity of the contract, except in the case of usury (see § 334d) *23and as stated in §§ 346e to 346n * * Eestatement (Second), Conflict of Laws § 332b (Tent. Draft No. 6, 1960) at 30.
In Jansson v. Swedish American Line, 185 F2d 212, 30 ALR2d 1385 (1st Cir, 1950), the United States Court of Appeals discussed the application of the center-of-gravity theory in contract cases. The court stated:
“* * * But at least where the contract contains no explicit provision that it is to be governed by some particular law, what the courts applying this intention test actually seem to do is to examine all the points of contact which the transaction has with the two or more jurisdictions involved, with a view to determine the ‘center of gravity’ of the contract, or of that aspect of the contract immediately before the court; and when they have identified the jurisdiction with which the matter at hand is predominantly or most intimately concerned, they conclude that this is the proper law of the contract which the parties presumably had in view at the time of contracting * * 185 F2d at 218-219.
See also Kievit v. Loyal Protect. Life Ins. Co., 34 NJ 475, 492, 170 A2d 22, 32 (1961); Boston Law Book v. Hathorn, 119 Vt 416, 423-424, 127 A2d 120, 125 (1956); Note, 17 Vand L Eev 283, esp. footnote 18 at page 286.
On the basis of the general theory adopted by the Eestatement (Second), supra, the guidelines presented in the Eestatement, and the method of application of the center-of-gravity principle outlined in the Jansson case, the law of California would be the law applicable if the trial of the instant case were being held in a neutral state. The majority opinion virtually concedes that both the rule of validation and the center-of-*24gravity theory point to the application of California law. The majority says, however, that these established principles of conflict of laws should give way to the “public policy” of Oregon.
The case of Haag v. Barnes, 9 NY2d 554, 175 NE2d 441, 87 ALR2d 1301 (1961), illustrates the way in which the Court of Appeals of New York dealt with a somewhat similar situation. Although the facts in the Haag case were unlike those in the instant case, the reasoning of the court is instructive. In the Haag case, a legal secretary who lived in New York worked for an Illinois lawyer whenever he came to New York on business. The secretary alleged that during the course of this relationship they became intimate and she became pregnant by the defendant. She went to Illinois to have her child, and the parties entered into an agreement in Illinois whereby the defendant agreed to pay $275 per month to the plaintiff until the child reached the age of sixteen. The parties stipulated that the laws of Illinois were to govern the validity of the contract. Under the law of Illinois the agreement was valid.
The plaintiff contended later that the agreement was unenforceable because it did not receive court approval as required by New York statute. The court held that she was bound by it, notwithstanding the failure of the agreement to meet the requirements of the New York statute. While contrary to a local statute, the agreement did not offend the public policy of New York. See 16 Okla L Rev 427, 430 (1963).
In Bernkrant v. Fowler, 55 Cal2d 588, 360 P2d 906 (1961), the court weighed the various considerations involved in making a choice of law and enforced an oral agreement made in Nevada against the con*25tention that it was unenforceable under the California statute of frauds. The opinion, by Traynor, J., carefully considered the precedents, and concluded that by enforcing the agreement as the parties made it, the common policy of both states in favor of enforcing contracts should prevail in the face of the local statute which made unenforceable certain oral contracts when made in California.
In both the Haag case and the Fowler case, local statutes'announced a “public policy.” In each case, however, the local court recognized the validity of considerations that were of greater legal importance than the local policy. In each case the contract in question had substantial relationships with a state other than that of the forum. These relationships created interests deserving of protection.
In the case before us, I believe that the policy of both states, Oregon and California, in favor of enforcing contracts, has been lost sight of in favor of a questionable policy in Oregon which gives special privileges to the rare spendthrift for whom a guardian has been appointed.
The majority view in the case at bar strikes me as a step backward toward the balkanization of the law of contracts. Olshen v. Kaufman, 285 Or 423, 385 P2d 161 (1963), held that there was a policy in this state to help keep spendthrifts out of the almshouse. I can see nothing, however, in Oregon’s policy toward spendthrifts that warrants its extension to permit the taking of captives from other states down the road to insolvency.
I would enforce the contract.
Sloan, J., joins in this dissent.