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etc., they can control tbe place of contract.

The courts almost invariably determine the The term "lex loci contractus" (the law of question as to where the contract was made the place of making a contract) has given rise by the question "when did the transaction to much confusion because of the double sense first become binding upon the parties as a in which the term is used by the courts, some contract.” The place of contract is where of them using it to denote the law of the this occurred. Now, by the insurance complace where the contract was made, and panies inserting these phrases designating others to denote the law by which the con when the policies shall become binding upon tract is to be governed. It is the first of

the company, the courts usually hold that these uses which will be treated of in this when the policies are signed by the designated article, the purpose being to determine where

person, and not until then, they become bindthe contract is made in cases where the con ing upon the parties as contracts. The questract in dispute is made partly in one State tion then, is, what authority did the agent or country and partly in another, or where it bave; was his action final, or did the comis made in one State or country to be per pany reserve the right to accept or reject the formed in another. In the following classes insurance contract. This principle is well of contracts the proper determination of this illustrated by a case decided in 1846,' in the question is of the first importance to fix the Scotch Court of Sessions, in which a citizen rights and liabilities of the parties to the con of Scotland made proposals for insurance tract: A. Insurance Contracts. B. Prom

upon the life of a Scotchman, and thereafter issory Notes. C. Bills of Exchange. D. received a policy wbich was prepared at the Acceptance of Drafts. E. Usurious Con head office in London, England, and then tracts. F. Contracts for the Sale of Intoxi transmitted to the Edinburg agents, by whom cating Liquors, when Such Sales are Subject it was delivered to the insured, and to whom to Statutory Regulations.

the insured paid the premium. It was held A. Insurance Contracts.-1. Life Insur by the whole court, the judges delivering ance.—Life insurance has attained such a vast

opinions seriatim, that the contract was an growth during the last fifty years as to pos- English contract because the Edinburg agents sess important public relations. It has be were not authorized to complete contracts come a usual and a favorite means for mak

binding upon the company. Speaking of the ing provisions for the relatives and creditors

agents and the importance they bore in the of the assured. Life insurance companies transaction, the learned justice (Lord Cockare in the nature of savings banks in which burn) said, page 375 :

"The agent are invested much of the surplus earnings of had no power to complete insurances. He the people. It is because of the growth and was a mere hand to transmit, very probably importance of life insurance that many, if not with his opinion of them, proposals, and to all, of the States have statutes regulating the receive and deliver policies. He did nothing conditions under which insurance business that might not have been done by the post may be carried on.

As these conditions vary office; yet this was all that was Scotch in the in the different States it often becomes im. transaction. It is said that delivery comportant to both the insurer and the insured

pletes such a contract, and that here the deto know just where the contract was made in livery was in Edinburg. True, but what was contemplation of law, as upon this will de delivered? An English contract-a policy pend the law which is to govern the contract; granted by a company having its place of for the well-known rule is that a contract is business in London, executed according to to be governed by the law of the State where the forms of the law of England, and bearing the contract is made. As the insurance com no reference to any foreign locus solutionis, panies draw up the contract of insurance this either of the premium or of the sum insured. matter is practically under their control, as The delivery or the acceptance of such a by inserting the clause “not binding until did not make it express a contract according countersigned by the agent at "not binding until signed by the secretary of

i Parken v. Royal Exchange Assurance Co. (1846), 8 this company at their home office in

Session Cases, 365, 375.


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to the law of France, America, Holland, Ger the contract; the countersigning and delivery many, or wherever the insurer happened to in this case was as much a ministerial act as receive the ipsum corpus of the writing. the delivery alone in the other case. But

In short, I can scarcely conceive a this is not the construction usually put upon contract more entirely devoid of all Scotch this requirement; the rule is that where the features, or one more deeply impressed by policy expressly provides that it sball not be all the features of England.” This case was binding until countersigned and delivered by cited with approval in the federal court for the agent, the contract is held to be made in the District of Massachusetts,? Justice Clif the State where this takes place, whether the ford giving the opinion. In this case, & company's home office is in such State or not. policy was issued by a New Jersey insurance The underlying principle of all these insurcompany, insuring the life of a citizen of ance cases is so well stated by Judge Deady Massachusetts. The question to be decided in a case decided by him in 1880, that I quote was whether the non-forfeiture statute of from his opinion: “Where, then, was the Massachusetts controlled the policy. It was contract made, in Wisconsin or Oregon? The held that the policy was a New Jersey con answer to this question involves the inquiry, tract, and therefore not governed by the where did the final act take place which made Massachusetts statute. The contract was the transaction a contract birding upon the completed in New Jersey when the company parties. The premium was paid to the agent accepted the risk; the premium and loss were of the plaintiff at Portland, who then and payable there; and all that was done in there countersigned and delivered the policy. Massachusetts was the delivery of the policy This was the consummation and the compleunder the instructions of the company by an tion of the contract. But to put this beyond agent who had no authority to make or alter a doubt, the policy itself declares that it shall contracts, waive forfeitures, or grant permits. not be binding on the company until these In May of the same year the same judge held acts are performed. And, until it was bindthat the place or seat of the contract of in- ing on the company, it was not binding on surance is the place where the proposals of the applicant; in short, it was not yet a conone party have been accepted by the other, tract, but only a proposition." Most of these the contract in the case at bar being complete cases are brought in the federal courts bewhen the proposals of insurance submitted by cause of diverse citizenship, but the federal the decedent were accepted by the company cases above cited are supported by the deat its home office, and such acceptance made cided weight of authority in the State courts.6 known to the applicant in the accustomed No objection can be made to the logic of way. The agent in this case not having the these decisions, but there is a danger of folpower "to make, alter, or discharge contracts | lowing too closely the letter of the contract or waive forfeitures,” the, contract was not which, in all of these cases, is drawn up by binding until accepted by the company. the insurance company. Under these very til then no suit could have been brought on the policy. In 18794 the same court, by

5 N. W. Mut. Life Ins. Co. v. Elliott (1880), 5 Fed. Judge Lowell, referred to the Desmazes case Rep. 225, 228. See also Knights Templar, etc. Co. v. as deciding the case then at bar, the differ Berry (1892), 50 Fed. Rep. 511; Phinney v. Mut. Life

Ins. Co. (1895), 67 Fed. Rep. 493; Penn Mut. Ins. Co. ence in the facts of the two cases being of

v. Bank Co. (1896), 72 Fed. Rep. 413; Equitable Life slight importance; in the later case the agent etc. v. Nixon (1897), 81 Fed. Rep. 796, 798; Equitable was required to countersign and deliver the Life, etc. v. Trimble (1897), 83 Fed. Rep. 85; Mutual

Life Ins. Co. v. Hill (1899), 97 Fed. Rep. 263, 267. policies, but the court held that this was only

6 Alabama-Continental Life Insurance Co. v. Webb for the purpose of preserving written evidence

(1875), 54 Ala. 688. Illinois-Pomeroy v. Manhattan of the agent's transactions, and not for the Life Ins. Co. (1866), 40 Ill. 398. Kentucky-St. Louis

Mut. Life Ins. Co. v. Kennedy (1869), 6 Bush, 450. purpose of giving him authority to conclude

Louisiana-Hardy v. St. Louis Mut. Life Ins. Co

(1874), 26 La. Ann. 242. Maryland-Fidelity Mut. Life 2 Desmazes v. Mutual Benefit Life Ins. Co. (1878), Ins. Assn. v. Ficklin (189!), 74 Md. 172, 179. OhioFed. Cas. No. 3,821.

Moore v. Charter Oak Life Ins. Co. (1879), 8 Ins. Law 3 Shattuck v. Mutual Life Ins. Co. (1878), 4 Cliff, Journal, 78 (Cincinnati Superior Court). Virginia598, Fed. Cas. No. 12,715.

Manhattan Life Ins. Co. v. Warwick (1871), 20 Gratt. 4 Whitcomb v. Phænix Mutual Ins. Co. (1879), Fed. 614, 623. Wisconsin-Estate of Breitung (1890), 78 Cas. No. 17,530.

Wis. 33.

decisions the companies are permitted to, and agent is given the power to bind the comof course do, insert clauses in the policies pany, or where it is expressly stipulated that withdrawing themselves from the operation of the policy shall not be binding until counterthe statutes of States in which they are per- signed by the agent, the contract is not committed, by courtesy, to do business, while plete until such countersigning and delivery obtaining all the advantages of its license. by the agent takes place; and where this ocIt is not the place of a foreign corporation to curs is the place of contract.10 dictate to a State, that unless its laws please 3. Marine Insurance. In contracts of mathe said corporation it will withdraw itself, rine insurance, the place of contract is the by special contract with the insured, from the State or country where the premium is paid operation of such distasteful laws. But it is and the policy delivered, as this is held to be the place, and furthermore the duty, of the the formal conclusion of the contract.11 A State to protect its citizens by declaring on very peculiar case arose in 1861,12 where an inwhat terms these foreign corporations shall be surance policy was made in New York by a permitted to do business within its borders. New York insurance company in favor of A corporation undertaking to do business be American citizens, in pursuance of an agreeyond the territorial limits of the State creat ment abroad by the company's agent. The ing it does so only by comity. The legisla-policy was countersigned in China by such tures of the various States should enact laws agent, as was required by its terms to render declaring that all policies of insurance deliv the policy binding. It was held that the reered in the State should be governed by the quirement of the agent's counter-signature law of such State. When delivered these was merely for the purpose of authenticating policies are local transactions and should be the issuance and delivery of the policy, the governed by local law. Though the weight president and secretary of the insurance comof authority, both State and federal, is de- pany being the proper officers to execute the cidedly the other way, I think this is the contract. 13

contract.13 But I think the true reason for more reasonable and the better way to treat this peculiar decision can be seen by examinthis vexed question; and a number of able ing the first sentence of the opinion given by decisions of the federal courts support this Judge Hoffman, which I quote: “If the theory.

contract can at all be regarded as a Chinese 2. Fire Insurance. As in life insurance contract we are without information as to there are two classes of cases, each decided the law which would govern it in China, and by reference to the authority given the agent must therefore interpret and decide upon it of the insurance company. Where he is au- according to our own."14 thorized to receive applications of insurance, B. Promissory Notes.-An interesting and but not to finally bind the company, it is held that the contract is complete when the com

574; Lamb v. Bowser (1876), 7 Biss. 315, 372, Fed. Cas. pany accepts the risk and manifests such ac Nos. 8,008, 8,009; Northampton Mutual Ins. Co. y. ceptance by issuing its policy. The place of

Tuttle (1878), 40 N. J. Law, 476; Clarke v. Union Fire

Ins. Co. (1884), 6 Ontario, 223, 227; Western . Genesee contract is the State or country where such

Mut. Ins. Co. (1885), 2 Kern. (12 N. Y.), 258; Marden acts occur, irrespective of where the home v. Hotel Owners' Ins. Co. (1892), 85 Iowa, 584. office of the company is.' But where the

10 Daniels v. Hudson River Fire Ins. Co. (1853), 12 Cush. (Mass.) 416; Bailey v. Hope Ins. Co. (1869), 56

Me. 474; Todd & Co. v. The State Ins. Co. of Mo. 7 Paul v. Virginia (1868), 8 Wall. 168, 181.

(1876), 3 Week. No. Cas. 330, 11 Phila. 355; Cromwell 8 White v. Connecticut Mut. Life Ins. Co. (1877), 4 v. Royal Canad. Ins. Co. (1878), 49 Md. 366; Crunow Dill. 177, Fed. Cas. No. 15,745; Fletcher v. New York y. Ins. Co. (1892), 37 $. Car. 406. Life Ins. Co. (1882), 13 Fed. Rep. 526, 528 (1885), 117 11 Meagher v. Ætna Ins. Co. (1861), 20 U. C. Q. B. U. S. 519; Wall v. Equitable Life Assur. Soc. (1887), 607, 617; Pattison v. Mills (1828), 2 Bligh. (N. S.) 519, 32 Fed. Rep. 273 (1890), 140 U. S. 226, 232; Berry v. 567, affirming Albion Fire Ins. Co. v. Mills (1828), 3 Knight Templars' & Masons' Lite Indem. Co. (1891), W. & S. (Sc. App.) 218; St. Patrick Assn. Co. v. Brad. 46 Fed. Rep. 439; Mutual Benefit Life Ins. Co. v. Rob. ner (1829), 8 Shaw & Dun. 51; Heebner v. Eagle Ins. ison (1893), 54 Fed. Rep. 580, 684; Equitable Life Co. (1867), 10 Gray (Mass.), 131; Thwing v. Gt. West. Assur. Soc. v. Winning (1893), 58 Fed. Rep. 541; Hicks Ins. Co. (1872), 111 Mass. 93, 109; In re Insurance Co. v. National Life Ins. Co. (1894), 60 Fed. Rep. 690. (1884), 22 Fed. Rep. 109.

9 Hyde v. Goodnow (1850), 3 Comst. (8 N. Y.) 266; 12 Huth v. N. Y. Mut. Ins. Co. (1861), 8 Bosw. (N. Wright v. Sun Mutual Ins. Co. (1858), 23 How. 412; Y.) 538. Ford v. Buckeye State Ins. Co. (1869), 6 Bush (Ky.), 18 p. 551, 133; Eureka Ins. Co. v. Parks (1871), 1 Cinn. Sup. Ct. 14 p. 546.


important question often arises as to the hands of the original maker and before it was place of contract of a promissory note which delivered to the payee. It was subsequently is written and signed in one State or country passed to the payee in this State for a valand delivered in another. In a much cited uable consideration and then for the first time English case the following were the facts. became a valid promise to pay money. UnThe defendant was a British subject, residing til such delivery it was not a binding and in Florence, Italy. He became surety for operative contract, upon which the defendant his brother, who wrote two promissory notes could have been beld as a party to the note. and sent them to the defendantin Florence, who It was therefore the delivery to the plaintiff there signed and returned them by post to his which consummated and completed the conbrother. The brother in England then signed tract. When he lent his money upon it in and delivered them to the Union Bank of this commonwealth he entered into a conLondon. Suit was brought on the notes. tract with the parties to the note, of which it Defendant claimed that the cause of action was the written evidence. It follows that the did not arise within the jurisdiction of the lex loci contractus regulates and governs its English court, thus fairly and squarely pre-interpretation.” This case was cited as desenting the question which country was the ciding the same point in Bell v. Packard, 18 place of contract. The court, per Martin, and the rule as laid down in it is supported B., said: “The question is, where was the by both State and federal courts. 19 contract made by the defendants, in London C. Bills of Exchange.—The general rule is or in Florence? There can be no doubt that that the place of contract of a bill of exchange the contract was made in London, for there is the State in which it first comes into legal was no contract until the notes were deliv existence by being negotiated. The lex ered to the plaintiffs by the agent of the de- loci contractus depends upon the place fendants in London.” English law governed where the bill is delivered; not where it the case. In an early case in the federal is made, drawn, or dated.20 There is, howsupreme court!6 an action was brought on ever, a recognized exception to the rule, well promissory notes which had been dated and illustrated by the case of Lennig v. Ralston. 21 signed at Baltimore, Maryland, where the In that case a purchaser for value in good maker resided. The notes were then sent by faith relied upon the appearances given to a mail to the maker's agent in New York and bill of exchange, no fact being exhibited to were delivered there to the payee, in payment of goods purchased in New York. Defend

18 (1879) 69 Me. 105. ant claimed that the notes were Maryland con 19 Hitchcock v. U. S. Bank (1845), 7 Ala. 387, 429; tracts and that he had been discharged from Cook v. Litchfield (1853), 9 N. Y. 279, 290; Young v.

Harris (1854), 14 B. Mon. (Ky.) 447; Standford v. liability on the notes by a Maryland court,

Purett (1859), 27 Ga. 243; Lee v. Shelleck (1865), 33 N. under the insolvent laws of that State. It Y. 615, 618; Mott v. Wright (1865), 4 Biss. 53, Fed Cas. was held that the notes were New York con No. 9,883; Faut v. Miller (1866), 17 Gratt. (Va.) 47;

Campbell v. Nicholls (1868), 33 N. J. Law, 81; Sands tracts, and therefore beyond the jurisdiction

v. Smith (1871?), 1 Neb. 108; Overton v. Bolton of the Maryland courts; the court basing its (1872), 9 Heisk. (Tenn.) 762; National Bank v. Smoot decision on the ground that although the (1876), 2 MacArthur (D. C.), 371; Milliken v. Pratt notes purported to have been made at Balti

(1878), 125 Mass. 374; Gay y. Rainey (1878), 89 Ill. 221;

Hart v. Wills (1879), 52 Iowa, 56, 2 N. W. Rep. 619; more they were delivered in New York. New

Hiatt v. Griswold (1881), 50 Fed. Rep. 573; Johnston York and not Maryland was the place of con v. Gawtry (1884), 83 Mo. 339, 11 Mo. App. 322; Heffle. tract. Chief Justice Bigelow states the rule

bower v. Detrick (1885), 27 W. Va. 16; Hill v. Chase

(1886), 143 (Mass.) 129, 9 N. E. Rep. 30; Briggs v. in this class of cases in the following extract

Latham (1887), 36 Kan. 255, 13 Pac. Rep. 393; Stubb's from an opinion given by him in 1862:17 Exr. v. Colt (1887), 30 Fed. Rep. 417; Buchanan v. “The defendant put his name on the back of

Drosers' Nat. Bank (1893), 55 Fed. Rep. 223; Wells,

Fargo & Co. v. Vansickle (1894), 64 Fed. Rep. 944; the note in another State, while it was in the

Kuhn v. Morrison (1894), 75 Fed. Rep. 81.

20 Davis, etc. Co. v. Clemson (1855), 6 McLean, 622;

Freese v. Brownell (1871), 35 N. J. Law, 285; Gal. 15 Chapman v. Cottrell (1865), 3 Hurl. & Colt. landet v. Sykes (1874), 1 MacArthur (D. C.), 489; Til. (Exch.) 865, 34 L. J. Rep. (N. S.) (Exch.) 186, 187. den v. Blair (1874), 21 Wall. 241; Scudder v. Union 16 Cook v. Moffat (1847), 5 How. 295.

Bank (1875), 91 U. S. 406; Farmers' Bank v. Sutton 17 Lawrence v. Bassett (1862), 5 Allen (Mass), 140, Mfg. Co. (1892), 52 Fed. Rep. 191. 141.

21 (1854) 23 Pa. St. 137.

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show the contrary. It was held that he was being raised if the delivery of the note and entitled to deal with it upon the assumption its payment takes place in a State where the that the law of the place was that of Pennsyl. rate of interest charged by it is usurious. 25 vania, as indicated by the appearance of the According to a recent Pennsylvania case26 bill, and not that of England where it was in this intent to evade the usury laws will not be fact negotiated. The question of morals en presumed from the naked fact of a loan of tered to some degree into the opinion of the money being made at a rate of interest which court, as did also the desire to carry out the is usurious by the laws of the State where the manifest intention of the parties to the con borrower resides, if it is stipulated that the tract.

money is to be repaid in the State where the D. Acceptance of Drafts.-The contract to lender resides, such rate being there unlawaccept a draft is governed by the laws of the ful. This case is criticised in 10 Harvard State where the contract is made, which is Law Review, 311, as follows: "There is the State where the contract first becomes a much confusion among the authorities on this binding obligation.22

question. On principle, the decision seems E. Usurious Contracts.-It is an estab wrong. The sovereign power in Pennsyllished principle of law that a contract for a vania has declared usurious contracts to be loan of money made in one State to be per illegal. Such contracts made in Pennsylformed in another is governed by the laws of vania never acquire a legal existence. They the place of performance, provided that the are not only void in that State but void place of performance was not fixed different in every State, and everywhere.' Akers v. from the place of contract for the purpose of Demond, 103 Mass. 323; Scudder v. Union evading the usury laws of the State where the Bank, 91 U. S. 406, 10 Harvard Law Review, contract was in fact made.23 The reason for 170." I think that this criticism is a just one, this is that, as we have already seen, the courts if the contract is made in Pennsylvania. But hold that by their stipulations the parties the court decides that by the agreement of have determined where the place of contract the parties to repay the money in New York is. The courts will endeavor to ascertain the the contract was in contemplation of law intent of the parties, and an unlawful intent made in New York; and this once admitted will not be presumed if it is clear that a law it follows that the law of New York controlled ful one could have been present. In a case the contract. The same objection arises in in Texas, 24 a resident of Texas being tempo- this class of agreements that I pointed out in rarily in New York there executed a number discussing the insurance cases that by their of promissory notes but dated them at his own stipulations the parties set at naught Texas residence, stipulating on the face of the express provisions of the sovereign the notes to pay twelve per cent. interest, a power, under the protection of which they rate illegal under the laws of New York but are making the contract. legal in Texas. No place of payment was F. Contracts for the Sale of Intoxicating designated. It was held that from the fact Liquors.-An important practical question of dating the notes as if payable in Texas a presents itself when residents of different strong implication arose that it was the mak States negotiate for the purchase and sale of er's intention that they should be paid accord-intoxicating liquors, the statutes of the ing to the laws of Texas, under which the rate various States differing so much in their atof interest to be charged was lawful. But tempts to prohibit or regulate such sales. the mere fact of dating the note in another For example, Michigan may have a statute State will not prevent the defense of usury providing that such contracts shall not be en

forcible, while Ohio may permit them to be

enforced. The question is thus raised as to 22 Garrettson v. North Atchison Bank (1891), 47 Fed. Rep. 867; Hubbard v. Exchange Bank (1896), 72 Fed.

the place of contract. The rule is that the Rep. 234.

place of contract is determined by the ques-
23 Miller v. Tiffany (1863), 1 Wall. 298; Building,
etc. Assn. v. Logan (1895), 66 Fed. Rep. 827.

24 Bullard v. Thompson (1871), 35 Tex. 313. See 26 Hart v. Wills (1879), 52 Iowa, 56, 2 N. W. Rep.
also Tillotson v. Tillotson (1867), 34 Conn. 335, 367; 619.
National Bank v. Smoot (1876), 2 MacArthur (D. C.), 26 Bennett v. Eastern Building & Loan Co. (1896)
371, 373.

177 Pa. St. 233, 239, 35 Atl. Rep. 684.

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