University of Chicago v. Dater

In November, 1928, negotiations were commenced to secure a loan in the sum of $75,000 on a piece of property in Chicago. The property was owned by George R. Dater and John R. Price of Benton Harbor, Michigan, and they appointed H.S. Gray, an attorney of Benton Harbor, as their agent in the matter. Plaintiff agreed to make the loan if it could be assured that the title was good. A trust deed and certain promissory notes were drawn up with George R. Dater and Nellie E. Dater, his wife, and John R. Price and Clara A. Price, his wife, as parties of the first part and the Chicago Title Trust Company, as trustee and as party of the second part. The notes were payable in the city of Chicago and at such place as the legal holder might appoint. The trust mortgage and notes were sent by mail to the Benton Harbor State Bank for the signature of the parties involved. The papers were signed in Benton Harbor, Michigan, about December 8, 1928, and mailed to plaintiff's agent in the city of Chicago where the trust deed was placed on record, then it was found that there were some objections to certain delinquent taxes of 1927. Further negotiations followed and finally on January 3, 1929, and after the tax objections were cleared in the title, the loan was actually made and the money paid over by check made payable to Mr. and Mrs. Dater and Mr. and Mrs. Price and cashed in Chicago, Illinois.

January 29, 1929, John R. Price died and it is conceded that Mrs. Price became the actual and record owner of at least one-half of the property after the death of her husband. Subsequent to December 1, 1933, foreclosure proceedings were commenced on the property and the property purchased at chancery sale. Suit was filed in Michigan before the foreclosure suit was completed in Chicago. The cause was heard November 7, 1934, and on June 18, 1935, judgment was rendered in favor of plaintiff against George R. Dater in the amount of $15,536.32 and from which no appeal has been taken. On the same date judgment was entered in favor of Clara Price of no cause for action, from which judgment plaintiff appeals.

It is conceded that under the law of Illinois a married woman is as free to contract as a man, while in Michigan a married woman has not the legal capacity to bind herself or her separate estate by signing these notes. 3 Comp. Laws 1929, § 13057.

The plaintiff contends that the contract was an Illinois contract; that the signing of the notes in Michigan was not the final act in the making of the contract, but rather a preliminary step, the delivery of the note being conditional upon defendant's producing a satisfactory title, the approval of the title in Illinois was the last act necessary to make a legal delivery.

The general rule is well stated in John A. Tolman Co. v.Reed, 115 Mich. 71, where the court said:

"The law is well settled that contracts must be construed and their validity determined by the law of the country where they were made, unless the contracting parties clearly appear to have had some other law in view."

"The general rule is that the law of the place where the instrument was executed and delivered so as to become binding as a contract * * * governs the rights and liabilities of the parties thereto, except in so far as they are controlled by the law of the place where the instrument is payable." 8 C. J. p. 87, § 145.

"There is good authority for the broad proposition, however, that when a note is executed by a married woman in the State of her domicile but made payable in another State, if under the law of the former State she could not have entered into the contract but could have done so under the law of the latter State, it will be presumed that it was the intention of the parties that the note should be governed by the law of the latter State and being valid under such law should be enforced against her even in the State of her domicile." 13 Rawle C. L. p. 1247.

"It is a general rule that 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." Poole v. Perkins, 126 Va. 331 (101 S.E. 240, 18 A.L.R. 1509).

The next question that presents itself in the case at bar is the place where the contract was made.

"A contract is deemed to have been made in the State where the last act necessary to make it a binding agreement takes place." Goodrich, Conflict of Laws (1st Ed.), p. 218.

"When the contract is made in one jurisdiction to be performed in another the case presents a more complicated question, the rule being that if the parties to a contract are in different jurisdictions, the place where the last act is done which is necessary to the validity of the contract is the place where the contract is entered into." 5 Rawle C. L. p. 935.

In the case at bar all of the negotiations for the loan occurred in Chicago, the property upon which the mortgage was placed was located in Chicago, and no money was to be paid by plaintiff until such time as the defendants could show good title to the property. We think the mailing of the papers to Chicago was for the purpose of enabling the plaintiff to ascertain if the title to the real estate was satisfactory and was but a preliminary step in the whole transaction. The final act in the making of the loan was the payment of the money in Chicago. This concluded the negotiations and made it an Illinois contract.

The judgment of the trial court should be reversed and the cause remanded to enter a judgment in favor of plaintiff for $15,536.32 with interest from June 18, 1935. Plaintiff should recover costs.

BUSHNELL, J., concurred with SHARPE, J.