Chapter 2: Traditional Approaches to Choice of Law

Question 1

Three eras in American Choice of Law

Answer 1

• Justice Joseph Story’s principles of comity
• First Restatement of Conflicts: reflecting the common law of the time; emphasizes territory and vested rights
• Second Restatement of Conflicts: emphasizes the government interest analysis

Question 1

Non-intentional Torts: Alabama Great Southern Railroad v. Carroll

Answer 1

Facts: Defendant was injured when a link between two freight train cars broke. He was injured in Mississippi. It was the duty of railroad employees to inspect the links and remove defective links. He sued Plaintiff under common law and under the Employer’s Liability Act of Alabama. The trial court found for Defendant.
Rule: There can be no recovery in one state for injuries to the person sustained in another unless the infliction of the injuries is actionable under the law of the state in which they were received.

Question 2

Elements of a Tort

Answer 2

• Duty
• Breach
• Causation
• Injury

Question 3

§377 The Place of Wrong

Answer 3

In the state where the last event necessary to make an actor liable for an alleged tort takes place:
- When a person sustains bodily harm, the place of wrong is the place where the harmful force takes effect upon the body (except poison)
- When a person causes another voluntarily to take a deleterious substance which takes effect within the body, the place of wrong is where the substance takes effect and not where it is administered
- When harm is caused to land or chattels, the place of wrong is the place where the force takes effect on the thing
- When a person sustains loss by fraud, the place of wrong is where the loss is sustained, not where fraudulent representations are made
- Where harm is done to the reputation of a person, the place of wrong is where the defamatory statement is communicated

Question 4

Non-Intentional Torts: Tolman v. Stryker

Answer 4

• In diversity cases, a federal court applies the choice of law rules of the state in which the federal court sits
• Regarding tort claims like negligence and products liability, Wyoming applies the traditional choice of law rule lex loci delicti: The case is governed by the substantive law of the place where the “wrong” occurred
• Mr. Tolman’s injury occurred in Wyoming when the gamma nail snapped while he was at his home in Big Horn County
• Stryker’s argument reflects a misunderstanding of the lex loci delicit rule. The First Restatement defines place of wrong as the “state where the last event necessary to make an actor liable for an alleged tort takes place”
• Here, the last event necessary to give rise to Mr. Tolman’s negligence and strict products liability claims was an injury. Because this last necessary act took place in Wyoming, Wyoming is the place of wrong and thus its law applies under the lex loci delicti rule

Question 5

§378 Law Governing Plaintiff’s Injury

Answer 5

The law of the place of wrong determines whether a person has sustained a legal injury

Question 6

§385 Contributory Negligence

Answer 6

Whether contributory negligence of the plaintiff precludes recovery in whole or in part in an action for negligent injury is determined by the law of the place of the wrong

Question 7

Intentional Torts: Bullard v. MRA Holdings, LLC

Answer 7

Facts: 14-year-old Plaintiff exposed her breasts to two unknown men in a parking lot in Panama City, Florida. She was aware that the men were videotaping her at the time and expressed no objection. They had no discussion about what future use the men might make of the videotape. Defendant obtained the recording and included it in its “College Girls Gone Wild” video series. They also used a still photo of her that was taken from the video clip and placed it in a prominent position on the cover of the video box for the “College Girls Gone Wild” video that it later marketed and sold nationwide.

Rule: The doctrine of lex loci delicti has served the resolution of conflict of laws issues in tort actions in Georgia for nearly 100 years. The place where the tort was committed, or the locus delicti, is the place where the injury sustained was suffered rather than the place where the act was committed, or, as it is sometimes more generally put, it is the place where the last event necessary to make an actor liable for an alleged tort takes place.

Question 8

Intentional Torts: Nunes v. CNN

Answer 8

• Former congressman sues for defamation
• He originally files in federal court in VA. This is a diversity case
• VA uses the First Restatement approach
• Accordingly, VA would identify the place of the wrong as the place where the last event necessary for a tort action took place. In defamation cases, this is generally where the statement is “communicated”, heard, or seen
• Under such circumstances, the VA Supreme Court would apply the substantive law of the state where the plaintiff incurred the greatest reputational injury, with a presumption that absent countervailing circumstances, a plaintiff suffers the most harm in his state of domicile
• Because he lived in California and California law required him to request a retraction before suing, which he never did, Nunes loses.

Question 9

Torts Key Takeaways

Answer 9

• In a case where the laws of two (or more) different states are potentially involved, the forum court’s first job is to consult the forum state’s law of conflicts
• In a state that subscribes to the R1 approach, the court will apply the substantive law of the state that was the “place of wrong”
• The “place of wrong” usually means the state where the injury occurred, thus completing the elements for a tort
• That state’s law determines whether a “vested right” – here, the right to sue for injury – was created for the plaintiff. It will then govern most tort-law questions
• The R1 approach is criticized for being mechanical and formalistic, putting ease of application above such concerns as justice and analysis of states’ interests in seeing their own law applied

Question 10

Validity of a Contract

Answer 10

• In a choice of law situation under the First Restatement of Conflicts approach, the first question for a forum court is: “what state’s law properly governs whether there is a contract?”
• Per §311, the forum courts consult the “general law of contracts” meaning traditional common law, as exposited by cases, treatise writers, or the Restatement – to determine the principal event that would result in a contract

Question 11

§311 Place of Contracting

Answer 11

• The law of the forum decides as a preliminary question by the law of which state questions arising concerning the foundation of a contract are to be determined
• Comments: The forum ascertains the place in which the principal event necessary to make a contract occurs

Question 12

§332 Law Governing Validity of Contract

Answer 12

The law of the place of contracting determines the validity and effect of a promise with respect to
- Capacity to make the contract
- The necessary form, if any, in which the promise must be made.
- The mutual assent or consideration, if any, required to make a promise binding.
- Any other requirements for making a promise binding.
- Fraud, illegality, or any other circumstances which make a promise void or voidable
- The nature and extent of the duty for the performance of which a party becomes bound
- The time when and the place where the promise is by its terms to be performed
- The absolute or conditional character of the promise

Question 13

§333 Capacity to Contract

Answer 13

The law of the place of contracting determines the capacity to enter a contract
- Distinction between capacity to make a contract and capacity to transfer property
* Capacity to transfer land is governed by the law of the state where the land is
* Capacity to make a contract for the transfer of land is governed by the law of the place of contracting
* Capacity to transfer a chattel is governed by the law of the state where the chattel is at the time of the conveyance‚ but capacity to make a contract for the transfer of a chattel is governed by the law of the place of contracting

Question 14

§355 Place of Performance

Answer 14

The place of performance is the state where, either by specific provision or by interpretation of the language of the promise, the promise is to be performed.
- Place of performance is often fixed by the contract
- If the place is not stated in specific words in the contract, it must be determined by construction and interpretation

Question 15

§358 Law Governing Performance

Answer 15

The duty for the performance of which a party to a contract is bound will be discharged by compliance with the law of the place of performance of the promise with respect to
- The manner of performance
- The time and locality of performance
- The person or persons by whom or to whom performance shall be made or rendered
- The sufficiency of performance
- Excuse for non-performance

Question 16

Poole v. Perkins

Answer 16

Facts: Plaintiff and his wife, then residing in Tennessee, executed a promissory note that said it was payable at a bank in Virginia. In Tennessee, at the time of the execution of the note, the contracts of a married woman were voidable and could not be enforced against her. After the execution of the note but before the creditor filed suit to enforce the note, the debtors as a couple moved to Virginia. The creditor filed suit and obtained a money judgment against the wife. She obtained a writ of error to the judgment. Note was dated, signed, and delivered in Tennessee‚ but upon its face was payable at a bank in Virginia
Rule: Every contract as to its validity, nature, interpretation, and effect, or, as they may be called, the right, in contradistinction to the remedy, is governed by the law of the place where it is made, unless it is to be performed in another place, and then it is governed by the law of the place where it is to be performed. If the note had been made payable in Tennessee, her plea of coverture would have been good. Does not relate specifically to the capacity of the parties to make a contract.

Question 17

Linn v. Employers Reinsurance Corp

Answer 17

Facts: Defendant, through its agent, telephoned plaintiff insurance broker and accepted a contract offer to provide reinsurance. Subsequently, plaintiffs sued, contending the defendant did not pay plaintiffs the commissions agreed upon in the contract. The trial court found for the defendant and held that the contract had been made in New York and was invalid under the New York Statute of Frauds. Plaintiffs appealed.
Rule: The formal validity of a contract is determined by the law of the state in which the contract was made. Since the provisions of the statute of frauds relate to formal validity, it is to the statute of the place of contracting that a court must refer.

Question 18

Contracts under R1: Key Takeaways

Answer 18

• The law of the place of contracting governs the basic legal validity of a contract and some issues concerning the promises made
• This contrasts with the “party intent” or “party autonomy” approach (Poole)
• How to determine the place of contracting: “general law” of contracts
• A uniform rule for determining the place of contracting is useful in a time of multistate business transactions (Linn)
• The law of the place of performance governs who performs, sufficiency, excuse
• The same results are often produced by the Second Restatement’s focus on interest analysis and identifying the state with the “most significant relationship”

Question 19

Domicile definition and its elements

Answer 19

• The idea of “domicile” recognizes that everyone needs one place, and only one place, that can be considered their “headquarters” for certain legal purposes. It is a term with fixed legal meaning, and it may not necessarily be the same thing as being a “resident”
• “Place with which a person has a settled connection for certain legal purposes.” Usually this is where “home” is, the center of your life
• Normally determined according to the law of the forum
• Elements
• Physical presence. Indispensable, but the requirement can be satisfied by even the briefest presence
• Intent to establish a new home; sometimes more importantly, the lack of intent to return to the previous home
• Everyone has a domicile, and no more than one at any given time
• Once established, a domicile continues until superseded by a new one

Question 20

White v. Tennant

Answer 20

Facts: The decedent, Joseph S. White, died intestate in West Virginia, on a farm of which about forty acres was in Pennsylvania. He was born and had his domicile in West Virginia all his life until about a year before his death, when he sold his farm and then rented a house on the forty acres in Pennsylvania. He left his former home without any intention of returning and moved with his family and effects to his new home in Pennsylvania with the intention of making it his residence for an indefinite time. His wife fell ill, and he moved her to the warmer residence in West Virginia. The trial court held that the laws of West Virginia controlled the distribution of the estate. The heirs of the decedent sought a review of the said judgment, arguing that the personal estate of the decedent should be settled and distributed according to the laws of the State of Pennsylvania.

Rule: The law of the state, in which the decedent had his domicile at the time of his death, will control the succession and distribution of his personal estate. The Court held that the laws of the State, in which the domicile of a decedent was at the time of his death, control and govern the distribution of his personal estate, although he may die in another State. According to the Court, where a person entirely abandoned his former residence in one State with no intention of resuming it and went with his family to another residence, which he has rented in another State, with the intention of making the latter his residence for an indefinite time, the latter State was his domicile. The fact that the decedent left the Pennsylvania house, after he had moved to it with his family and goods, to spend the night in West Virginia did not revive his domicile at his former residence

Question 21

Rodriguez Diaz v. Sierra Martinez

Answer 21

Rule: Plaintiff was involved in a motor vehicle accident in Puerto Rico when he was 17 years old, where he suffered bodily injuries. All the defendants resided in Puerto Rico. However, between the time of the accident and the commencement of the action, Diaz moved from his family’s home in Puerto Rico to New York and turned 18. He then sued the defendants for negligence and medical malpractice in the United States District Court for the District of Puerto Rico, on his own behalf and through his parents as next friends, alleging that he was a citizen of New York and that there was diversity of citizenship under 28 U.S.C. § 1332 (1982). The District Court dismissed Diaz’s complaint for lack of diversity jurisdiction under 28 U.S.C.S. § 1332 because under 1 P.R. Laws Ann. § 8 (1967) the domicile of an unemancipated minor was ordinarily that of his parents, who in this case still resided in Puerto Rico. The age of majority under 31 P.R. Laws Ann. § 971 (1967) was 21, whereas under N.Y. C.P.L.R. 105(5) (1988) the age of majority was 18. Diaz challenged the District Court’s decision.

Rule: State citizenship for diversity purposes is ordinarily equated with domicile. A person’s domicile is the place where he has his true, fixed home and principal establishment, and to which, whenever he is absent, he has the intention of returning. Domicile generally requires two elements: 1) physical presence in a state, and 2) the intent to make such a state a home. It is the domicile at the time the suit is filed which controls, and the fact that the plaintiff has changed his domicile with the purpose of bringing a diversity action in federal court is irrelevant.

Question 22

Marriage: Place of Celebration Rule

Answer 22

Default rule: the legal validity of a marriage is determined by the law of the place where the marriage took place
- Ex. A couple is domiciled in State A, marry in State A, and move to State B. State B should recognize the validity of the marriage, even if State B’s own law wouldn’t have allowed it
- Ex. A couple is domiciled in State A and unable to marry, go to State B temporarily to marry, return to State A. State A should recognize the marriage

Question 23

Marriage: Public Policy Exception

Answer 23

• While the place-of-celebration rule makes good sense, the rules of the Restatement are not binding. When push comes to shove, absent a federal constitutional right, a state controls its own marriage laws, including what marriages are recognized and thus given legal effect
• Thus, if a state feels strongly enough that a certain type of marriage is odious – against its “strong public policy” – it may ignore the POC rule and refuse to recognize it, regardless of whether the marriage was “evasive” or “migratory”

Question 24

Ghassemi v. Ghassemi

Answer 24

Facts: Plaintiff, Tahereh Ghassemi, filed suit in the East Baton Rouge Parish Family Court (family court) seeking a divorce, spousal support, and a partition of community property. In her petition, she alleged that she and the defendant, Hamed Ghassemi, were married in Barn, Iran in 1976, at which time both parties were citizens of Iran. They were first cousins. The family court declined to consider Iranian law or Iranian documents and ruled that the marriage was invalid.

Rule: Although Louisiana law expressly prohibits the marriages of first cousins, such marriages are not so odious as to violate a strong public policy of this state. Accordingly, a marriage between first cousins, if valid in the state or country where it was contracted, will be recognized as valid pursuant to La. Civ. Code Ann. art. 3520.

Question 25

In re May’s Estate

Answer 25

• Decedent and her uncle were residents of NY but went briefly to Rhode Island, where they were married by a rabbi. They had 6 children and lived in NY for 32 years until her death
• RI generally forbade marriage between uncle and niece, but expressly excepted “any marriage which shall be solemnized among the Jews, within the degrees of affinity or consanguinity allowed by their religion.” According to Biblical law and Jewish tradition at the time, uncle and niece may marry
• NY law expressly prohibited uncle/niece and aunt/nephew marriages, and provided: “if a marriage prohibited by the foregoing provisions of this section be solemnized it shall be void, and the parties thereto shall each be subject to fine and possible imprisonment
• Since the marriage was valid where celebrated (RI), NY high court says the marriage will be recognized in NY for purposes of allowing the husband to administer his late wife’s estate
• The legality of a marriage… is determined by the law of the place where the marriage is solemnized
• Our legislature could have regulated within the State the marriages of its domiciliary solemnized in another State, or it could have declared that marriages contracted in another State which would be void if contracted here should have no force here; but it did not do so
• Where NY law does not expressly void a marriage of its domiciliary solemnized in a foreign State where such marriage is valid, the statute’s scope should not be extended by judicial construction

Question 26

In re Dalip Singh Bir’s Estate

Answer 26

• Decedent married two wives in Punjab Province, where this was legal. He later moved to CA and dies. The wives petition jointly for the money in his estate
• CA law says a foreign marriage, if valid where celebrated, is valid in CA. However, CA law also prohibits bigamy. Thus, trial court says only the first marriage can be recognized.
• Court of appeals reverses. CA’s public policy against bigamy is not implicated by dividing the money equally between the two wives, particularly since there is no contest between them and they are the only interested parties
• Court strongly suggests the outcome would have been different if all parties were alive, living in CA, and seeking to have the polygamous marriage recognized for some other purpose

Question 27

People v. Ezeonu

Answer 27

Facts: Defendant was indicted for the crimes of rape in the first degree and rape in the second degree. Plaintiff (State of New York) contended that the complainant was 13 years old at the time of the alleged crimes. For this part, defendant, a Nigerian national, moved in limine and raised as a defense to the charge of rape in the second degree that at the time of the alleged crimes, the complainant was his second or junior wife, given to him by her parents in Nigeria pursuant to the laws and tribal customs of that country. Defendant acknowledged that he already was legally married under both New York and Nigerian law at the time he entered the purported second marriage, however, defendant asserted that the laws and tribal customs of Nigeria allowed one man to have multiple wives. Thus, raising the defense of marriage pursuant to N.Y. Penal Law § 130.30.

Rule: A person is guilty of rape in the second degree when, being eighteen years old or more, he or she engages in sexual intercourse with another person to whom the actor is not married less than fourteen years old.

Question 28

Federal Respect for Marriage Act

Answer 28

• Contemplates the possibility Obergefell or Loving could be overruled
• While the federal government has no power to order states to license SSMs, the Constitution’s Full Faith and Credit Clause contains a grant to power to Congress to “prescribe” the “effect” of state laws across state lines
• Under the RFM, every state would be required to recognize and give legal effect to SSMs, or interracial marriages validly created in other states
• In effect, the RFM federalizes the place-of-celebration rule for such marriages and overrides a state’s power to invoke a public-policy exception

Question 29

Marriage under R1: Key Takeaways

Answer 29

• All states have some version of the “place of celebration” rule. Just because a state won’t license a certain type of marriage doesn’t necessarily mean it won’t recognize one from another state
• At the same time, all states claim the right to not recognize marriages that violate their strong public policy
• The possible checks on this authority are rights granted by the Constitution or a rule passed by Congress under its Full Faith and Credit power
• In practice, states today rarely void out of state marriages
• If a state law only prohibits licensing certain marriages, a court must analyze whether recognizing an out of state marriage would violate the state’s strong public policy
• Public policy can be declared expressly by statute or can be inferred by state courts. With the latter, courts tended to construe the public policy exception narrowly and, in a fact-specific manner, and to parse the individual vs. state interests involved
• If a statute clearly says a certain type of marriage is void, that is usually the end of the matter

Question 30

Property under R1

Answer 30

• The “situs” rule for real property – where most questions of ownership, conveyance, mortgage, land use, etc. are governed by the law of the state where the land is – remains in wide use today
• But be alert to the difference between what law applies to promissory notes or other contracts involving land vs. the law governing interests or conveyances of the land
• By contrast, rights to personal/moveable property generally are governed by the law of the state where the item is located at the time the conveyance, or attempted conveyance was made

Question 31

Land Interests: Burr v. Beckler

Answer 31

Facts: Plaintiff sued defendant to foreclose a deed of trust made by defendant in Florida conveying real estate in Chicago to secure a note. Defendant answered, alleging that she was induced to execute the note and trust deed by the false and fraudulent representation of her husband, and that plaintiff had notice of the fraud. Defendant further alleged that the note and trust deed were void since they were executed in the State of Florida while she was a feme covert and incapable by the laws of Florida of executing the same. The trial court found the deed of trust and note invalid and entered judgment in favor of the defendant. The appellate court reversed. Defendant challenged the appellate court’s judgment.

Rule: The validity, construction, force, and effect of instruments affecting the title to land depend upon the law of the State where the land lies.

Question 32

Land Interests: Thomson v. Kyle

Answer 32

Facts: Della K. Thomson, a married woman, executed a mortgage conveying her separate statutory real estate located in Florida, as security for her husband’s debt. The mortgage was executed in the State of Alabama. The mortgagee filed an action against Thomson, seeking the foreclosure of the real estate mortgage. As a defense, Thomson alleged that under the laws of Alabama, the real estate mortgage she executed for her husband’s debt was null and void, and incapable of enforcement. Thus, since the note and the mortgage were void as to her in the State of Alabama, they were likewise void in the State of Florida.

Rule: So far as real estate or immovable property is concerned, the court must look to the laws of the state where it is situated for the rules which govern its descent, alienation and transfer, and for the construction, validity and effect of conveyances thereof, and it is to the same law that the court must look for the rules governing the capacity of the parties to such contracts or conveyances, and their rights under the same.

Question 33

Personal/Movables: Blackwell v. Lurie

Answer 33

Facts: Appellee husband was a general partner in a Missouri law firm that filed bankruptcy, and the trustee obtained a deficiency judgment. Appellees, husband and wife, acquired a sketch jointly in Missouri, and while domiciled in Missouri, placed the sketch on consignment at a gallery in New Mexico. Appellees then relocated to Montana, their present domicile. The trustee filed a writ of execution in New Mexico, and appellees moved to quash the petition, arguing that they owned the sketch as tenants by the entirety, such that it was exempt from execution in satisfaction of the deficiency judgment. The district court quashed the appellant’s petition for writ of execution. Appellant challenged the decision.

Rule: Tenancy by the entirety property is deemed inaccessible to all creditors except those to whom husband and wife are jointly indebted.

Question 34

Personal/Movables: Morson v. Second National Bank of Boston

Answer 34

Facts: The husband and wife were traveling in Italy. The husband gave the wife an envelope containing a certificate for 150 shares of stock in the corporation, which was incorporated in Massachusetts. The husband signed the certificate and gave it to the wife. The wife then delivered the certificate to the bank. The husband died and the wife alleged that the certificate was hers based upon the husband’s gift. The estate initiated an action for injunctive relief against the defendants - corporation, bank, and the wife to enjoin the transfer of the stock and for recovery of the certificate. The trial court entered judgment for the estate, finding that there was no completed gift of stock.

Rule: Whether or not there is a completed gift of an ordinary tangible chattel is to be determined by the law of the situs of the chattel. Shares of stock, however, are not ordinary tangible chattels. A distinction has been made between the shares and the certificate, regarded as a piece of paper which can be seen and felt, the former being said to be subject to the jurisdiction of the state of incorporation and the latter subject to the jurisdiction of the state in which it is located. The shares are part of the structure of the corporation, all of which was erected and stands by virtue of the law of the state of incorporation. The law of that state determines the nature and attributes of the shares. If by the law of that state, the shares devolve upon one who obtains ownership of the certificate it may be that the law of the state of a purported transfer of the certificate will indirectly determine share ownership.

Question 35

Real Property: Key Takeaways

Answer 35

The “situs” rule for land is governed by the law of the state where the land is – comes from the common law and the Restatement
- But be alert to the difference between what applies to contracts involving land vs. the law governing interests or conveyances of the land

Question 36

Forum/Personal Jurisdiction

Answer 36

To serve as the forum, a court must have proper jurisdiction. Jurisdiction is different than what state’s law applies
- Two types of personal jurisdiction:
o In personam: power of court over a legal person, usually the defendant. A court’s power over a defendant is usually what’s relevant to tort, contract, corporate law, family law, and most other civil litigation
o In rem: power of a court over property within its state. This is usually relevant when a court needs to adjudicate disputed title or ownership of real or personal property

Question 37

We transact business in IN. You are domiciled in IL. Assume both states follow the First Restatement. In IN, we draw up a contract for me to sell you my car, which is in IL. If we have a dispute, what state’s law will govern whether our contract was valid?

Answer 37

Indiana. Would be the same with land

Question 38

We transact business in IN. You are domiciled in IL. Assume both states follow the First Restatement. In IN, we draw up a contract for me to sell you my car, which is in IL. What state’s law will govern whether I have legal ownership of the car I am attempting to sell/convey to you?

Answer 38

Illinois. Would be the same with land

Question 39

We transact business in IN. You are domiciled in IL. Assume both states follow the First Restatement. In IN, we draw up a contract for me to sell you my car, which is in IL. If my sale to you is proper and there are no questions about ownership, what state’s law will govern whether your spouse also acquires an ownership interest in the car?

Answer 39

Indiana. Might be different with land

Question 40

We transact business in IN. You are domiciled in IL. Assume both states follow the First Restatement. In IN, we draw up a contract for me to sell you my car, which is in IL. After the sale goes through, you find evidence I defrauded you during our dealings in Indiana. Fraud is a form of tort. You plan to sue me for fraud asking $10k in damages. In what state’s courts can you sue me?

Answer 40

Indiana or Illinois

Question 41

We transact business in IN. You are domiciled in IL. Assume both states follow the First Restatement. In IN, we draw up a contract for me to sell you my car, which is in IL. After the sale goes through, you find evidence I defrauded you during our dealings in Indiana. Fraud is a form of tort. You plan to sue me for fraud asking $10k in damages. In either forum, what state’s law will apply to determine whether I committed fraud as well as other tort matters?

Answer 41

Indiana

Question 42

We transact business in IN. You are domiciled in IL. Assume both states follow the First Restatement. In IN, we draw up a contract for me to sell you my car, which is in IL. After the sale goes through, you find evidence I defrauded you during our dealings in Indiana. Fraud is a form of tort. You plan to sue me for fraud asking $10k in damages. Assuming Indiana is the forum. You win a $10k judgment against me. I refuse to pay up. All my property assets are in Illinois. What do you do?

Answer 42

Take the IN judgment to an IL court, ask it to domesticate the judgment, then ask it to use IL law to seize my property necessary to satisfy the IN judgment

Question 43

We transact business in IN. You are domiciled in IL. Assume both states follow the First Restatement. In IN, we draw up a contract for me to sell you my car, which is in IL. Assume we completed the sales transaction. You die before you can transport the car from IL. In your will, you name your friend Ron as the heir to all your personal property. What state’s law will govern whether Ron exercised undue influence over you in making your will?

Answer 43

Indiana

Question 44

We transact business in IN. You are domiciled in IL. Assume both states follow the First Restatement. In IN, we draw up a contract for me to sell you my car, which is in IL. Assume we completed the sales transaction. You die before you can transport the car from IL. In your will, you name your friend Ron as the heir to all your personal property. What state’s law would govern whether there was a lien on the car that prevented its testamentary disposition?

Answer 44

Illinois

Question 45

Assume we’re in Indiana and I purported to sell you some land in Illinois. You discover I might not have had good title. What state’s law would apply to a “quiet title” action?

Answer 45

Illinois

Question 46

Moveable Property: Key Takeaways

Answer 46

Ownership interests in a chattel/moveable is generally governed by the law of the state where the item is located at the time the conveyance, or attempted conveyance, was made. This may be different than the state where the contract is made, where the parties are domiciled. But note:
- Choice of law is a separate question from jurisdiction
- A spouse may still acquire rights based on the spouses’ domicile (§290)
- A will of moveables is governed by the law of the deceased’s domicile (§306)

Question 47

Corporations: Internal Affairs Doctrine

Answer 47

The law of the state of incorporation governs matters “peculiar to the corporate entity” i.e., “those matters which are peculiar to the relationship among or between the corporation and its current officers, directors, and shareholders”
- Such matters are distinguished from those involving contracts, torts, consumer affairs, and other matters of corporate conduct
- Example: whether a subsidiary may vote stock in its parent company. Law where parent company is incorporated will apply
- Example: DE company’s actions violate IN consumer fraud law. IN law, not DE law, will apply
- Common law doctrine which a state may override by statute

Question 48

Corporations: McDermott, Inc v. Lewis

Answer 48

Facts: Plaintiff shareholders, Harry Lewis, and Nina Altman, of defendant McDermott Incorporated, a Delaware Corporation, sought to enjoin or rescind a reorganization under which McDermott became a majority owned subsidiary of a Panamanian corporation and owned approximately 10 percent of the parent corporation’s common stock. The trial court granted partial summary judgment in favor of plaintiffs, and defendant McDermott appealed.

Rule: Full faith and credit commands application of the internal affairs doctrine except in the rare circumstance where national policy is outweighed by a significant interest of the forum state in the corporation and its shareholders.

Question 49

Corporations: Irving Trust Co v. Maryland Casualty Co

Answer 49

• Bankrupt company (Empire) is incorporated in DE but does business in NY
• Anticipating bankruptcy, Empire sought to pay off debts of four surety companies by entering contracts in NY to transfer real and personal property to them. The property was in NY and three other states. This gave the surety companies an improper advantage over other creditors
• Normally, how a corporation distributes its property in bankruptcy would be an internal affairs matter. NY law prohibits NY corporations from doing what Empire did
• But Empire is a DE corporation. However, the NY legislature enacted §114 of its stock corporation law, which makes it illegal the transfer of property in contemplation of insolvency when it’s done by a foreign corporation. §114 overrides the internal affairs doctrine
• Bankruptcy trustee (Irving Trust) is suing the surety companies to recover the property
• A NY court can’t void conveyances of property located in other states, since those properties are governed by the laws of the states where the land or chattels are located. Presumably those other states regard the conveyances as proper under their own law and want to protect their own citizens
• Moreover, actions about ownership of land are in rem not in personam. Only a court in a state where the land would have in rem jurisdiction to directly affect title to land in that state
• But the NY court can find the surety companies liable for a wrong under NY law – they knowingly received deeds in a transaction that was illegal for Empire to undertake. The deeds were received in NY, making NY the site of the wrong
• The bankruptcy trustee isn’t entitled to have the conveyances voided as a matter of property law. But what he can do is ask the trial court to enter a decree requiring the surety companies to reconvey the property back to Empire as a remedy under tort law

Question 50

Substance

Answer 50

• that part of the law which creates, defines, and regulates rights, or which creates duties or obligations
• lex loci

Question 51

Procedure

Answer 51

• the rules by which the litigation is conducted; how a state’s judicial machinery functions and how its court processes are administered; nature of remedies
• lex fori

Question 52

Substantive v. Procedure: Sampson v. Channell

Answer 52

• The court must view the question through the lens of Eerie: if the burden of proof for contributory negligence outcome determinative is potentially, it must be substantive for federal diversity purposes, even if the state in which the federal court sits classifies it as procedural for conflicts of law purposes
• Forum is federal court in Massachusetts. Parties from MA and Maine, thus diversity jurisdiction
• Accident in ME. Thus, under R1, ME tort law applies
• In ME, the burden of proof for contributory negligence is on plaintiff and is considered substantive. Thus, it seems the MA federal court should use the ME’s law of contributory negligence
• But MA puts the burden of contributory negligence on the defendant and considers the matter procedural. So, if the same case were litigated in MA state court, MA’s law would apply
• The difference between the two states’ approaches to contributory negligence is potentially “outcome-determinative”
• Having decided it must apply the MA law that the burden of proof for contributory negligence is a matter of procedure, it follows that forum law (MA), not ME law, must govern that issue

Question 53

Substantive v. Procedure: O’Leary v. Illinois Terminal Railroad

Answer 53

Facts: The passenger was injured when the car in which she was traveling was struck by the railroad’s train in Granite City, Illinois. The trial court entered a judgment for the passenger after a jury found in her favor.

Rule: The law of Illinois makes it incumbent upon the plaintiff to allege and prove that she was in the exercise of ordinary care for her own safety at the time of the accident.

Question 54

Substantive v. Procedure: Boswell v. RFD-TV Theater

Answer 54

• Plaintiff performer from TN alleges breach of contract by a theater in Branson, MO. He sues in TN
• In a choice of law clause, their contract specified Nebraska as the governing-substantive law. Thus, the parties agree NE law will govern the substantive contract claims, while forum law (TN) will govern substantive issues
• Plaintiff wins breach claim
• Now he wants attorney’s fees, as called for in the contract
• NE law prohibits contractual awards of attorney fees. But TN law would allow contractual attorney fees
• Are attorney fee awards substantive or procedural?
  o In this case, court holds that they are substantive because the attorney fee provision was part of the contract, which made it part and parcel of his substantive claim for breach of contract. And the contract says it is governed by NE law.
• Thus, we cannot use forum law. Troy is stuck with his choice of law. No attorney fees

Question 55

If State A (Place of Governing Law) and State B (Forum) are both Substantive, what is the result?

Answer 55

Forum should apply A’s law; No Conflict

Question 56

If State A (Place of Governing Law) and State B (Forum) are both Procedural, what is the result?

Answer 56

Forum should apply its own law; No conflict

Question 57

If State A (Place of Governing Law) is Substantive, and State B (Forum) is Procedural, what is the result?

Answer 57

Forum would be within its rights to apply its own law, or it could choose to take the more deferential approach and apply the other state’s view of the governing law, making it substantive

Question 58

If State A (Place of Governing Law) is Procedural, and State B (Forum) is Substantive, what is the result?

Answer 58

We would expect the forum to apply State A’s governing law on the issue.

Question 59

The Eerie Doctrine

Answer 59

Policy: outcome of a case should not be potentially determined by the fortuitous existence of diversity. The law governing should be the same regardless

Question 60

Substantive v. Procedure: Grant v. McAuliffe

Answer 60

• CA supreme court characterizes the question: survival of actions is not a matter substantive tort law, and thus not a conflicts problem, but rather matter of estate/probate law
• Estate/probate matters will always be governed by the law of the decedent’s domicile. It’s a claim against the estate and its administrator, and thus would normally be brought in the decedent’s domicile
• So, CA law applies. Plaintiff’s’ claims survive

Question 61

Substantive v. Procedure: Cort v. Steen

Answer 61

• Holding: law on survival of actions, which didn’t exist until 1949, did not apply retroactively to an accident/death that occurred in 1947. No cause of action
• Logically, this means the law of survival of actions is substantive for purposes of retroactivity. The law creates and defines rights. The right didn’t exist in 1947. Substantive rights typically don’t apply retroactively
• By contrast, a procedural rule ordinarily would apply in litigation even if it had not been enacted after the events giving rise to the litigation
• This was not an interstate case; there is no conflicts issue

Question 62

Public Policy and Conflict of Laws

Answer 62

• A state is a sovereign. If it has some minimal interest through a connection to the facts of the case, it is entitled to apply its own law in its own courts
• In the interest of comity, and to create rational rules for interstate litigation, states voluntarily adopt choice of law rules
• If a state can’t tolerate recognizing and applying another state’s view of a particular legal question, it can escape doing so through the “public policy exception”
• The PPE is often associated with marriage, but it is potentially relevant to any area of substantive law
• A SPP can be found through judicial analysis or expressed by a statute

Question 63

§380 Application of Standard of Care (First Restatement)

Answer 63

Whereby the law of the place of wrong, the liability-creating character of the actor’s conduct depends upon the application of a standard of care, and such standard has been defined situations by statute or judicial decision of the law of the place of the actor’s conduct, such application of the standard will be made by the forum

Question 64

Public Policy: Laboratory Corp of America v. Hood

Answer 64

Facts: Karen and Scott Hood, Maryland residents, argued that LabCorp, were negligent in misreading an amniotic fluid specimen extracted from Karen and erroneously reporting that a fetus was not likely to be affected by cystic fibrosis. Relying on the erroneous report, Karen elected to continue with the pregnancy, and the child was diagnosed with the disease. LabCorp performed the testing in North Carolina. The Hoods filed an action against LabCorp alleging wrongful birth.

Rule: Unlike most other States, which have abandoned the lex loci delicti approach in favor of the significant contacts test, Maryland continues to adhere generally to the lex loci delicti principle in tort cases. Under that approach, where the events giving rise to a tort action occur in more than one state, courts apply the law of the state where the injury, the last event required to constitute the tort, occurred. If NC law has established a standard of care for situations like this lab negligence, NC law would govern whether those employees breached a duty owed to the Hoods.

Question 65

Public Policy: Holzer v. Deutsche Reichsbahn-Gesellschaft

Answer 65

Facts: Plaintiff, a German national, and Schenker & Co. G. m. b. H., a German corporation, entered an employment contract whereby the plaintiff would render services in Germany and other locations outside New York. It was alleged that the contract stipulated that if the plaintiff should die or become unable, without fault on his part, to serve during the period of the contract, the defendants would pay to him or his heirs the sum of 120,000 marks, in discharge of their obligations. Plaintiff filed a breach of contract claim, alleging two causes of action. The first cause of action alleged that the corporation discharged the employee on the sole ground that he was Jewish, and that because of such discharge, he was damaged in a sum upwards of $50,000. The second cause alleged that, due to incarceration in a concentration camp, the plaintiff became unable, without any fault on his part, to continue his employment. In its defense, the corporation alleged that it was required by German law to discharge the plaintiff because the latter was Jewish. Plaintiff filed a motion to strike out the corporation’s defense, which was granted by the trial court. The decision was affirmed by the Appellate Division of the Supreme Court in the First Judicial Department. The corporation challenged the order.

Rule: Within its own territory every government is supreme and New York courts are not competent to review its actions. This is true “however objectionable” the court may consider the conduct of a foreign government. Every sovereign state is bound to respect the independence of every other sovereign state, and the courts of one country will not sit in judgment on the acts of the government of another done within its own territory. It cannot be against the public policy of the State of New York to hold nationals to the contracts which they have made in their own country to be performed there according to the laws of that country.