U.S. Supreme Court
Pritchard v. Norton, 106 U.S. 124 (1882)
Pritchard v. Norton
Decided November 13, 1882
106 U.S. 124
A. and B. executed and delivered to C., in New York, a bond of indemnity, conditioned to hold harmless and fully indemnify him against all loss or damage arising from his liability on an appeal bond, which he had signed in Louisiana as surety on behalf of a certain railroad company, defendant in a judgment rendered against it in the courts of the latter state, and which, being affirmed, he was compelled to pay. By the law of New York, any written instrument, although under seal, was subject to impeachment for want of consideration, and a preexisting liability, entered into without request, which was the sole consideration of that bond of indemnity, was insufficient. It was otherwise in Louisiana. A suit on the bond was brought in Louisiana.
1. That the question of the validity of the bond as dependent upon the sufficiency of its consideration is not a matter of procedure and remedy to be governed by the lex foci, but belongs to the substance of the contract, and must be determined by the law of the seat of the obligation.
2. In every forum, a contract is governed by the law with a view to which it is made, because, by the consent of the parties, that law becomes a part of their agreement, and it is therefore to be presumed, in the absence of any express declaration or controlling circumstances to the contrary, that the parties had in contemplation a law according to which their contract would be upheld, rather than one by which it would be defeated.
3. The obligation of the bond of indemnity was either to place funds in the hands of the obligee wherewith to discharge his liability when it became fixed by judgment or to refund to him his necessary advances in discharging it in the place where his liability was legally solvable, and as this obligation could only be fulfilled in Louisiana, it must be governed by the law of that state as the lex loci solutionis.
This action was brought by Eliza D. Pritchard, a citizen of Louisiana, executrix of Richard Pritchard, deceased, against Norton, a citizen of New York, in the court below, upon a writing obligatory, of which the following is a copy:
"STATE OF NEW YORK"
"County of New York"
"Know all men by these presents that we, Henry S. McComb, of Wilmington, Delaware, and Ex Norton, of the City of New York, New York, are held and firmly bound jointly and severally unto Richard Pritchard, of New Orleans, his executors, administrators, and assigns in the sum of fifty-five thousand ($55,000) dollars lawful money of the United States, for the payment whereof we bind ourselves, our heirs, executors, and administrators firmly by these presents. Sealed with our seals and dated
this thirtieth day of June, A.D. eighteen hundred and seventy-four."
"Whereas the aforesaid Richard Pritchard has signed an appeal bond as one of the sureties thereon, jointly and severally, on behalf of the defendant, appellant in the suit of J. P. Harrison, Jr. v. The New Orleans, Jackson & Great Northern Railroad Co., No. 9,261 on the docket of the Seventh District Court for the Parish of Orleans:"
"Now the condition of the above obligation is such that if the aforesaid obligors shall hold harmless and fully indemnify the said Richard Pritchard against all loss or damage arising from his liability as surety on the said appeal bond, then this obligation shall be null and void; otherwise shall remain in full force and effect."
"H. S. McCOMB [L.S.]"
"EX NORTON [L.S.]"
The appeal bond mentioned was executed.
A judgment was rendered on that appeal in the supreme court of the state May 30, 1876, against the railroad company, in satisfaction of which Pritchard became liable to pay and did pay the amount, to recover which his executrix brought this action. The condition of this appeal bond was that the railroad company
"shall prosecute its said appeal and shall satisfy whatever judgment may be rendered against it, or that the same shall be satisfied by the proceeds of the sale of its estate, real or personal, if it be cast in the appeal, otherwise that the said Pritchard et al., sureties, shall be liable in its place."
The defendant set up by way of defense that the bond of indemnity sued on was executed and delivered by him to Pritchard in the State of New York and without any consideration therefor, and that by the laws of that state, it was void by reason thereof. There was evidence on the trial tending to prove that the appeal bond was not signed by Pritchard at the instance or request of McComb or Norton, and that there was no consideration for their signing and executing the bond of indemnity passing at the time, and that the latter was executed and delivered in New York. There was also put in evidence the provisions of the Revised Statutes of that state, 2 Rev.Stat. 406, as follows: chanroblesvirtualawlibrarychanroblesvirtualawlibrary
"SEC. 77. In every action upon a sealed instrument, and when a setoff is founded upon any sealed instrument, the seal thereof shall only be presumptive evidence of a sufficient consideration, which may be rebutted in the same manner and to the same extent as if the instrument were not sealed."
"SEC. 78. The defense allowed by the last section shall not be made unless the defendant shall have pleaded the same or shall have given notice thereof at the time of pleading the general issue or some other plea denying the contract on which the action is brought."
At the request of the defendant, the circuit court charged the jury that the indemnifying bond, in respect to its validity and the consideration requisite to support it, was to be governed by the law of New York, and not of Louisiana, and that if they believed from the evidence that the appeal bond signed by Richard Pritchard as surety was not signed by him at the instance or request of McComb and Norton, or either of them, and that no consideration passed between Pritchard and McComb and Norton for the signing and execution of the indemnifying bond by them, then that said bond was void for want and absence of any consideration valid in law to sustain it, and no recovery could be had upon it. The plaintiff requested the court to charge the jury that if they found from the evidence that the consideration for the indemnifying bond was the obligation contracted by Pritchard as surety on the appeal bond, and that the object of the indemnifying bond was to hold harmless and indemnify Pritchard from loss or damage by reason of or growing out of said appeal bond, then that the consideration for said indemnifying bond was good and valid, and is competent to support the action upon the bond for the recovery of any such loss or damage sustained by Pritchard. This request the court refused. Exceptions were duly taken to these rulings which are now assigned for error, there having been a verdict and judgment for the defendant, now sought to be reversed. chanroblesvirtualawlibrarychanroblesvirtualawlibrary
Page 106 U. S. 128