Where two or more persons offer to pay a bill for the honor of different parties, the person whose payment will discharge most parties to the bill is to be given the preference.1

Where a bill has been paid for honor, all parties subsequent to the party for whose honor it is paid are discharged, but the person paying for honor is subrogated for and succeeds to both the rights and duties of the holder as regards the party for whose honor he pays and all parties liable to the latter."

Where the holder of a bill refuses to receive payment supra protest, he loses his right of recourse against any party who would have been discharged by such payment.3

The person paying for honor, on paying to the holder the amount of the bill and the notarial expenses incidental to its dishonor, is entitled to receive the bill itself and the protest.*

CHAPTER XX.

CONFLICT OF LAWS.

§ 1. GENERAL DOCTRINE.

QUESTIONS of the conflicting laws of different States and countries are common enough to require attention in a cou Subject for con- cluding chapter of this book. Such questions resideration: In- late to the liability (1) of maker or acceptor, (2) of drawer or indorser; they will be considered in

tention of

parties.

that order.

There is, however, a general doctrine of the conflict of laws, applicable in one way or another to all the contracts of paper of the law merchant, which may be thus stated: The contract, whether as a whole or in part, is governed by the law which the parties actually or presumptively intended should govern, if the intention was not illegal.1

It should be understood, at the same time, that that is a very modern way of stating the general doctrine, a way reached only after much doubt and tentative effort. Statements of the law, in the older books, and now and then in the more recent ones, will be found at variance with it. But the pressure of business is strong towards freedom of contract, and it is sound theory in the law to follow business. This idea has not always prevailed. It has indeed been common in the past to say that the law which governs is the lex loci contractus, or, where performance is to be had in another State or country, the lex loci solutionis; but

2

1 Hamlyn v. Talisker Distillery, 1894, A. C. 202; Law Quarterly Rev. 1894, pp. 290, 291.

2 'Where a contract is entered into between parties residing in different places, where different systems of law prevail, it is a question, as it appears to me, in each case, with reference to what law the parties contracted, and according to what law it was their intention that their rights, either under the

that the law of the place where the contract was made, or where it is to be performed, does not always prevail is now well settled. That, in reality, is the meaning in part of the separation of the subject into the two branches above designated; different rules prevail, by the better authorities, in regard to questions of liability of parties primarily liable and of parties secondarily liable.

§ 2. MAKER OR ACCEPTOR.

First, then, of the conflict of laws touching the liability of maker or acceptor.

Consider in the first place the question of the plaintiff's title under an indorsement in another State than that of the holder, the law of indorsement being different in the two Various cases States; which law is to govern? The test, it put. seems, will be this: Did the title pass by indorsement according to the law contemplated, when the indorsement was made? For example: A promissory note is made by the defendant in another State, payable to the order of A. A writes upon it in that State, I hereby assign this note to B,' signing his name, which is proper indorsement there, but not in the State in which suit is brought or in which B lives. There is no evidence that A did not intend to indorse according to the law of the State in which he acted. The title is duly passed to the plaintiff. Again: A promissory note is made and indorsed abroad, or in some other State than that in which the holder and plaintiff resides and sues, there being a conflict of laws between the two States, in regard to the holder's title. In such a case presumptively the law of the State or country in which the indorsement was made will govern; if it was not good by that law, though it would be whole or any part of the contract, should be determined.' Herschel, L. C., in Hamlyn v. Talisker Distillery, supra, at p. 207. The House of Lords was unanimous that the intention should govern unless the intention was opposed to the public policy of the country whose law was contemplated as governing. In determining the intention both the lex loci solutionis and the lex loci contractus are of importance; but neither is conclusive. Id. Further see Corbin v. Planters' Bank, 87 Va. 661; Fant v. Miller, 17 Gratt. 47; Woodruff ». Hill, 116 Mass. 310.

1 Hamlyn v. Talisker Distillery, supra.

good by the domestic law, the plaintiff will not be entitled to recover.1

Suppose that a promissory note was made in the State or country of the holder and of the forum, and that it is payable there, but that it has been indorsed abroad, there being the same conflict of laws as that last mentioned. Now, the title of the plaintiff, according to recent and well-considered authority, will depend upon the question whether the indorsement would pass a title by the domestic law. That law must naturally have been the one contemplated by the parties; there is nothing on the face of such an instrument to indicate that the parties contemplated that it might come under the operation of foreign law; it is made and payable at home. The fact that it happens to be in circulation in a foreign State cannot affect the question of the plaintiff's title.

Suppose that the note is made abroad, that it is payable in the State of the holder, and that it is indorsed by the payee abroad. In that case it is plain that the parties contemplated that the note would be indorsed abroad, where it was made; and hence the holder must have acquired title by the foreign law. Here, in principle then, the law of the place of contract governs.

Once more suppose that the subject of litigation is a bill of exchange, that the bill was drawn abroad, accepted and payable in the State of the holder, and then indorsed where drawn. That makes a somewhat more complex question, and to solve it correctly this fact must be remembered, that the liability of the drawer and that of the acceptor go hand in hand; if the drawer cannot be made liable, the acceptor could not on payment charge the sum against him. The question then should be, whether the drawer is liable by the indorsement, or rather whether the holder has acquired a title which is good against the drawer of

Long after this case was debeen mistaken. Bradlaugh.

1 Trimbey v. Vignier, 1 Bing. N. C. 151. cided it was found out that the foreign law had De Rin, L. C. 3 C. P. 538; s. c. 5 C. P. 473. But the principle applied was

correct.

2 Lebel v. Tucker, L. R. 3 Q. B. 77.

8 Lebel v. Tucker, L. R. 3 Q. B. 77, Lush, J. See Woodruff v. Hill, 116 Mass. 310; Everett v. Vendryes, 19 N. Y. 436; Story, Conflict of Laws, p. 442, 8th ed.

the bill; and that question, it is clear, must be decided by the law of the State or country in which the bill was drawn, unless it appears that the law of some other country was contemplated. There is nothing to indicate that any foreign law was in mind. The bill will probably be indorsed where it is drawn; hence the law of the State or country in regard to the validity of the indorsement will govern in the suit against the acceptor.1

Consider in the next place the question simply of the liability of the maker or acceptor, not of the plaintiff's title, where the instrument is made payable in another State than that where it was made or accepted. Now presumptively the law of the place of payment, the lex loci solutionis, will govern. Greater weight is given, on the question of intention, to the place of payment; and if nothing is to be done at the place of making or accepting the instrument, plainly the parties intend the place of payment, and that will govern.2

In regard to questions of interest, usury, and damages, in an action against the maker or the acceptor, the law of the State or country in which the note or bill is payable accordingly governs, unless there is indication that some other law was contemplated.* The mere fact then that the contract would, for example, be usurious by the law of the State in which it was made, would not necessarily require the courts, even of that State, to treat it as usurious; the question would everywhere be whether it was usurious by the law of the State in which it was made payable. However, if it should turn out that the making the instrument payable in some other State than that in which it was made was a mere subterfuge of the parties, to evade the usury laws of their own State, the contract would be treated as usurious. And it has been held that the same would be true in case such contracts

1 Bradlaugh v. De Rin, supra.

2 Hamlyn v. Talisker Distillery, 1894, A. C. 202, 208, 212.

Railroad Co. v. Ashland, 12 Wall. 226; Dickinson v. Edwards, 77 N. Y. 573; Hibernia Bank v. Lacombe, 84 N. Y. 367, 377.; Hunt v. Hall, 37 Ala. 702. In Massachusetts, non-stipulated interest and damages are treated as matters of the remedy, and are accordingly governed by the law of the place of suit, the lex fori. Ayer v. Tilden, 15 Gray, 178. But that is plainly wrong. Ex parte Heidelback, 2 Lowell, 526.

♦ Story, Confl. Laws, pp. 442, 443, 8th ed.