Cannaday v. Railroad

CoNNOR, J.,

after stating the case: It is settled that “Matters bearing upon'the execution, interpretation and validity of a contract are determined by the law of the place where it is made.” Scudder v. Nat. Union Bank, 19 U. S., 406. “The interpretation of a contract and the rights and obligations under it, of the parties thereto, are to be determined in accordance with the proper law of the contract. Prima facie the proper law' of the contract is to be presumed to be the law of the country where it is made.” Dicey Conft. Law, 563. Bowen, L. J., in Jacobs v. Credit Lyonnais, 12 Q. B., 589, says: “It is generally agreed that the law of the place where the contract is made is prima facie that which the parties intended, or ought to be presumed to- have adopted, as the footing upon which they dealt, and that such law ought, therefore, to prevail in the absence of circumstances indicating a different intention.” 9 Cyc., 667.

••The principle is illustrated in Bridger v. Asheville, etc., Railroad Co., 27 S. C., 456 (13 Am. St. Rep., 653). The action was for injuries alleged to have been sustained in North Carolina by the negligence of defendant. The defense of contributory negligence being pleaded, the question was whether, as held by the courts of this State, the age of the plaintiff precluded the defendant from relying upon it, and the decision of tbis question was made to depend upon tbe decisions of tbe courts in North Carolina. Simpson, G. J., said: “Tbe injury was inflictéd there, and if tbe parties bad remained in tbat State and brought action there, they would have been compelled to stand or fall by tbe law there. And we cannot see, upon principle, bow stepping over tbe line could give tbe plaintiff a new and altogether enlarged cause of action — in fact, a cause of action which be did not have before, and, therefore, which be could not have enforced in the tribunals having jurisdiction of the matter at its origin. * * * In such case, the plaintiff having no cause of action in North Carolina, where the injury was inflicted, he could have none here.”

The principle has been recognized and enforced by this Court in Watson v. Orr, 14 N. C., 661; Anderson v. Doak, 32 N. C., 295; Williams v. Carr, 80 N. C., 294; Hancock v. Tel. Co., 137 N. C., 497; Hall v. Tel. Co., 139 N. C., 369.

The exceptions to the general rule are thus stated by Mr. Lawson, the editor of the excellent and exhaustive article on “Contracts,” in 9 Cyc., 6Y4: “The general doctrine that a contract, valid when it is made, is valid also in the courts of any other country or State, when it is sought to be enforced, even though had it been in the latter' country or State, it would be illegal and hence unenforcible, is subject to- several exceptions: (1) When the contract in question is contrary to good morals; (2) when the State of the forum, or its citizens, would be injured by the enforcement by its courts of contracts of the kind in question; (3) when the contract violates the positive legislation of the State of the forum, that is, is contrary to- its Constitution or statutes, and (4) when the contract violates the public policy of the State of the forum. These exceptions are grounded on the principle that the rule of comity is not a right' of any State or country, but is permitted and accepted by all civilized communities from mutual interest and convenience, and from a sense of the inconvenience which would otherwise result, and from moral necessity to do justice in order that justice may be done in return.” Note 49 ; Gooch v. Faucett, 122 N. C., 270 (39 L. R. A., 835).

We are thus brought to a consideration 'of the question whether the courts of South Carolina have interpreted the contract and passed upon the effect, upon his cause of action, of the election made by the plaintiff to accept benefits from the Relief Department by reason of his injuries'. This inquiry invites an examination of two questions: First, does the contract, as interpreted by the courts of South Carolina, undertake to release the defendant in advance from all claim or demand for injury sustained by reason of its negligence ? Or, second, is it an agreement to elect, in the event of such injury, either to accept the benefits provided by the contract and release the company, or waive the benefit and sue on the cause of action ? If the first be the proper interpretation of the contract, the question would arise whether it is not within one of the exceptions to the general rule of comity as stated by Mr. Lawson. If the second is the correct view, no such question can arise- The answer, of course, is dependent not upon the interpretation which we would put upon it, but what interpretation the courts of South Carolina have put upon the contract.

< The defendant relies upon the case of Johnson v. Railroad, 55 S. C., 152 (44 L. R. A., 645). The plaintiff insists that, by reason of the course which that case took in the courts of South Carolina, the final result did not “become the law of the State, but merely of that case.” This contention renders it necessary for us to notice the history of the case.

The action was brought by the plaintiff, an employee, for the purpose of recovering damages for injuries sustained by the alleged negligence of the defendant. In addition to denial of liability on tbe alleged cause of action, tbe defendant by way of special defense set np a contract in all respects as tbe one before ns, alleging tbe receipt of benefits under it and release from all claim or demand for damages. Tbe plaintiff demurred orally to tbe “second affirmative defense,” assigning as grounds of demurrer that tbe contract set out therein “was contrary to law and against public policy, and a release thereunder cannot be pleaded as a defense to an action for damages caused by tbe defendant’s negligence.” Tbe demurrer was overruled by Judge Watts, Circuit Judge, who said: “There is no question in my mind that a contract of this bind, whereby a railroad company attempts to relieve itself of any liability on account of negligence, is contrary to public policy, and when tbe party enters into tbe contract beforehand, be would not be estopped from bringing bis action for damages against tbe railroad company. It seems in this case that tbe plaintiff bad entered into that agreement, relieving the railroad company, before be was injured. After be was injured, be was put to bis election as to whether be would sue the company or go ahead and carry out tbe contract, and receive tbe benefits of that contract. It seems to me that tbe decision in tbe case of Price v. Railroad Co. would control in this case, and I think the plaintiff, having elected to receive tbe benefits under that contract, is now estopped • from bringing bis action against the railroad company.” Tbe basis of bis Honor’s judgment overruling tbe demurrer becomes material because of tbe subsequent course which tbe case took. Tbe plaintiff appealed, stating five separate exceptions to tbe judgment. It is not necessary to set them out here. Tbe Supreme Court of South Carolina consists of a Chief Justice and three Associates. To provide for the contingency arising when, upon appeal, tbe Justices were equally divided in opinion, it is declared by section 12, Article V, of tbe Constitution, that tbe concurrence of three of the Justices shall be necessary to a reversal of the judgment below. Provision is made for the decision in such contingency when a constitutional question is involved, by which the Circuit' Judges are called to the assistance of the Justices in the decision of such question. In Johnson's case, supra, the Justices were equally divided. Mr. Justice Pope, writing an opinion concurred in by Mr. Justice Gary, for reversal of the judgment. Ohief Justice Melver, writing an opinion referred to as “dissenting,” concurred in by Mr. Justice Jones, for affirming.

In this condition of the case it is held by a unanimous Court in City of Florence v. Berry, 62 S. C., 469, that when “a judgment is affirmed by a divided Court, such a judgment must be regarded as a judgment of the Supreme Court, and as such is binding authority in all subsequent cases, until it is overruled by competent authority.” In view of the rule of comity, therefore, the interpretation and validity of the contract must be treated by us as settled by the courts of South Carolina. The principle announced by Simpson, C. J., in Bridger v. Railroad, supra, applies with peculiar force. The plaintiff had no cause of action in South Carolina, and therefore has none here. Merely crossing the State line cannot enlarge or give a cause of action which he did not have in the State whence he came. Every fact and circumstance affecting the cause of action occurred in South Carolina.

This is conclusive of the appeal unless, as contended by' the plaintiff’s counsel, the form of the pleading presents the question whether the defendant is seeking to use, not as a shield, but as a weapon, a contract which violates the settled policy of this State, or is prohibited by our Employer’s Liability Act. Eevisal, sec. 2646. The plaintiff’s view is that he has established by the vei’diet of the jury a cause of action for an injury sustained by reason of the defendant’s negligence, upon which he would recover but for the affirmative defense, relied on by the defendant, wbioh, being executory, this Court is asked to specifically enforce. That, in respect to the contract, the defendant is the actor demanding affirmative relief. We do not concur in this view. "Whatever may have been the character of the contract prior to the execution of the release by the plaintiff, by that act the cause of action was released for all legal and practical purposes, and extinguished.

In the courts of South Carolina the defendant pleads release by way of affirmative defense, and not as a counterclaim or cross-action. It is as if it had pleaded payment or accord and satisfaction, by which it avers that the plaintiff had at the time of bringing the suit no cause of action. This was the status of the matter in South Carolina, and it is in no respect different here. ■ Did the Court in South Carolina enforce the original contract, holding it not to be against public policy, or did it so interpret it' that no release of a cause of action for negligence was affected by the contract, but that the release executed after the injury, in consideration of benefits received, operated to extinguish the cause of action?

While there is apparently some divergence of view between the learned Justices who wrote opinions in Johnson’s case, the prevailing opinion by the then Chief Justice, although called in the reports of the case “dissenting,” clearly indicates that the decision, following the language used by Judge Watts, is put upon the interpretation of the contract1. The Chief Justice says: “In the outset I desire to say what would seem to be needless, but for the fact that it appears to have been thought necessary to expend much time and labor upon the point, that I do not suppose any one doubts that a contract, whereby a railroad corporation or any other common carrier undertakes to secure immunity from liability for damages resulting from the negligence of the carrier or any of its servants or agents, is contrary to public policy, and therefore void. But the question here is whether the contract or arrangements set up in the affirmative defense is a contract for immunity from damages. I do not think it can be so regarded, for, on the contrary, the very terms of the contract necessarily assumed that the defendant is liable, and the whole scope and effect of the contract is to fix the measure of such liability and the manner in which such liability shall be satisfied.” The learned Ghief Justice proceeds to quote from a case decided by the Supreme Court of Pennsylvania, “He is not agreeing to exempt the company from liability for negligence, but accepting compensation for an injury already caused thereby.” Johnson v. Railroad, 163 Pa. St., 121. He then proceeds to analyze the terms of the contract, setting forth clearly and forcibly his interpretation of it.

We have no doubt that the decision is based upon two propositions: (1) That a contract made in advance to exempt a railroad company from liability for its negligence is contrary to public policy and void. It is so, independent of the constitutional provision in South Carolina, or our statute, which’ is in almost the same terms. Harrill v. Railroad, 135 N. C., 601. (2) That the contract as interpreted by the Court does not have that effect. The case was heard before the special tribunal provided by the Constitution of South Carolina upon the suggestion that a constitutional question was involved. By a per curiam opinion, the judgment was affirmed for the reason that no constitutional question was presented. This view relieves us from considering the other branch of the controversy.

It is conceded that the courts which have passed upon this form of contract have almost uniformly sustained it, upon the ground stated by Judge Mclver.

Id. deciding this appeal, we do not express any opinion upon the question, except to say that we fully concur in the opinion that a contract to exempt a railroad company from liability for negligence is void. We have uniformly and frequently so held. The question as to the interpretation of this contract, when, if ever, presented to this Court in a manner making it our duty to pass upon it, will be approached as an open question. We are informed that the question has been removed from the sphere of litigation by legislation in South Carolina. By the Act of Congress, the contract or acceptance of benefits under it is declared not to be a bar to an action for damages. It may not be improper to say that the contract does not commend itself to our judgment'. In this case it appears that the plaintiff paid into the Relief Department $12 and received by way of benefits $68.

We must in obedience to the well-settled law of comity declare that the plaintiff, having no cause of action in South Carolina, has none in this forum. The judgment must be reversed, and judgment upon the verdict be entered for the defendant.

Reversed.