3. The external form of the contract.

The personal capacity of parties to contract depends upon those personal qualities which are annexed to their civil condition, by the municipal law of their own State, and which travel with them wherever they go, and attach to them in whatever foreign country they are temporarily resident. Such are the privileges and disabilities conferred by the lex domicilii in respect to majority and minority, marriage and divorce, sanity or lunacy, and which determine the capacity or incapacity of parties to contract, independently of the law of the place where the contract is made, or that of the place where it is sought to be enforced.

It is only those universal personal qualities, which the laws of all civilized nations concur in considering as essentially affecting the capacity to contract, which are exclusively regulated by the lex domicilii, and not those particular prohibitions or disabilities, which are arbitrary in their nature and founded upon local policy; such as the prohibition, in some countries, of noblemen and ecclesiastics. from engaging in trade and forming commercial contracts. The qualities of a major or minor, of a married or single woman, &c., are universal personal qualities, which, with all the incidents belonging to them, are ascertained by the lex domicilii, but which are also everywhere recognized as forming essential ingredients in the capacity to contract. (a)

§ 144. How far bankruptcy ought to be considered as

Bank

a privilege or disability of this nature, and thus be re- ruptcy. stricted in its operation to the territory of that State under whose bankrupt code the proceedings take place, is, as already stated, a question of difficulty, in respect to which no constant and uniform usage prevails among nations. Supposing the bankrupt code of

(a) Pardessus, Droit Commercial, Part VI. tit. 7, ch. 2, § 1.

[93 Extra-territorial Effect of Bankrupt Laws. - The main question as to what are termed bankrupt or insolvent laws is, whether they attempt to relieve the bankrupt ever afterwards. from the obligation of his contract, or only regulate the remedies creditors may afterwards pursue to enforce contracts still legally valid and enforceable. If the latter, they belong to the laws of remedies; if the former, to the laws of contracts and of property. If a contract is made and to be executed in a certain country, it derives its character from the laws of that country, and may be dissolved by its laws. But the laws of one country cannot operate to dissolve a contract made and to be performed in another, and against parties not within its jurisdiction. This is the rule in the courts of the United States. Kent, ii. 393. Story's Conflict of Laws, Redfield's note, § 341 a. Baldwin v. Hale, Wallace, Sup. Ct. Rep. i, 223. Ogden v. Saunders, Wheat. xii. 213. If the laws in question can fairly be held to be merely

any country to form a part of the obligation of every contract made in that country with its citizens, and that every such contract is subject to the implied condition, that the debtor may be discharged from his obligation in the manner prescribed by the bankrupt laws, it would seem, on principle, that a certificate of discharge ought to be effectual in the tribunals of any other State where the creditor

regulative of the remedies upon contracts admitted to be valid, the law of the forum must prevail; as each country can control the remedial processes to be pursued or permitted in its own courts. The bankrupt-laws of most countries seek to sequestrate and transfer to assignees all personal property wherever situated. But, in the United States, it is held, that, as such transfer is not an act of the owner in the course of business or in the exercise of his will, but an operation of municipal law, proprio vigore, and often in invitum, the law of nations does not give it an operation in foreign countries over personal property situated there, so as to transfer the title. If a foreign creditor finds, in his own country, personal property of a bankrupt, and proceeds against it to satisfy a debt which his own country does not hold to have been dissolved by the laws of the bankrupt's domicil, he can satisfy his debt in full from this property. The title of the assignee in bankruptcy will, however, be respected by comity, if the rights of no citizen entitled to proceed against the property are involved. It is matter of State policy how far a title to personal property derived from the act of law of a foreign country as part of its municipal remedial system, and not from the act of the owner, shall be respected in the country where the property is situated. The rule of reciprocity should always be favored, if it be actual and just, and is not a nominal reciprocity offered by the gaining party. If the foreign assignee in bankruptcy, claiming by act of law of his own State, seeks to get into his possession property of the bankrupt lying in another country, by aid of the courts of that country, it is a question of the policy of the country where the suit is brought, whether the assignee may sue in his own name, or shall be required to sue in that of the bankrupt; for the difference may materially affect defences and set-offs. Kent's Comm. ii. 400-408, and cases there cited. The British bankrupt-acts contemplate a transfer of the title of all property wherever situated, and of debts due the bankrupt wherever the debtor may be; and the British courts are compelled, on principles of reciprocity, to allow validity to bankrupt titles, under foreign laws, to personal property in England, as against English creditors. Real property in England is not subject to distribution under foreign bankrupt-laws. No country is obliged to recognize a foreign bankrupt appointment as a valid transfer of lands within its own jurisdiction. Each nation is entitled to determine for itself the forms and requisites for the transfer of lands. In the United States, the separate States determine for themselves those forms and requisites. The result would seem to be, that a foreign bankrupt assignment would have no effect to transfer title in lands. If, however, the foreign assignee in bankruptcy should procure conveyances from the bankrupt in accordance with the laws of the State where the lands lie, and thus effect a transfer of them, in order to add the proceeds to the fund under his control, there would be no obstacle except direct proceedings against the land by resident creditors. In such case, their attachments of the lands to satisfy their debts would prevail over such conveyances recorded subsequently to the attachments, and over all conveyances made and recorded prior thereto, unless they be bonâ fide transfers from the bankrupt to a creditor or a purchaser for a valuable consideration, such as would have been valid against the attaching creditor if there had been no bankrupt proceedings. See, on all the points embraced in this note, 226

may bring his suit. If, on the other hand, the bankrupt code merely forms a part of the remedy for a breach of the contract, it belongs to the lex fori, which cannot operate extra-territorially within the jurisdiction of any other State having the exclusive right of regulating the proceedings in its own courts of justice; still less can it have such an operation where it is a mere partial modification of the remedy, such as an exemption from arrest, and imprisonment of the debtor's person on a cessio bonorum. Such an exemption being strictly local in its nature, and to be administered, in all its details, by the tribunals of the State creating it, cannot form a law for those of any foreign State. But if the exemption from arrest and imprisonment, instead of being merely contingent upon the failure of the debtor to perform his obligation through insolvency, enters into and forms an essential ingredient in the original contract itself, by the law of the country where it is made, it cannot be enforced in any other State by the prohibited means. Thus by the law of France, and other countries where the contrainte par corps is limited to commercial debts, an ordinary debt contracted in that country by its subjects cannot be enforced by means of personal arrest in any other State, although the lex fori may authorize imprisonment for every description of debts. (a)95

Story's Conflict of Laws, § 403-423. Kent's Comm. ii. 392, 400-408. Ogden v. Saunders, Wheat. xii. 213. Oakley v. Bennet, How. xi. 44. Woolsey's Intern. Law, §§ 71, 72. Belton v. Valentine, Curtis's Rep. i. 168. Booth v. Clark, How. xvii. 322. Milne v. Moreton, Binney, vi. 353. Holmes v. Remsen, Johnson, xx. 229. Blake v. Williams, Pickering, vi. 286. Merlin, Répertoire, § 1, 3, art. 10, pp. 412-416. Henry on For. Law, 127-135, 175. As to the extra-territorial effect of a discharge under proceedings in bankruptcy, see infrà, note 94.]—D.

[94 In the United States, the discharge of a debtor from the obligation of his contract, given by the bankrupt-law of the State of his domicil, is recognized only as to contracts made and to be performed in that State. Supra, note 93. In other words, such a discharge is recognized only in cases where a law affecting the contract itself, in its construction and obligation, would be recognized. A discharge in bankruptcy is held to be a proceeding judicial in its nature, and binding only on persons subject to the jurisdiction of the State, or who have voluntarily submitted themselves to it. As to debts really contracted within a State by debtors residing abroad, or debts contracted before the passage of the bankrupt-law, a foreign bankrupt discharge is no defence. Baldwin v. Hale, Wallace, Sup. Ct. Rep. i. 223. Story's Conflict of Laws, Redfield's note, § 341 a. The English rule seems not to differ from this. Potter v. Brown, East. v. 124. Smith v. Buchanan, Ib. i. 6. Shallcross v. Dyzort, Glyn & J. ii. 87. Quin v. Keefe, H. Bl. ii. 553. Lewis v. Ogden, B. & A. iv. 654.]—D. (a) Bosanquet & Puller's Rep. i. 131, Melan v. The Duke of Fitz-James. [35 The question of the liability of the body to arrest is now considered as part of the law of remedy, and to be sought for in the law of the forum, both in England and

Obligation

§ 145. The obligation of the contract consists of the will of a contract. of the parties, expressed as to its terms and conditions. The interpretation of these depends, of course, upon the lex loci contractûs, as do also the nature and extent of those implied conditions which are annexed to the contract by the local law or usage. Thus the rate of interest, unless fixed by the parties, is allowed by the law as damages for the detention of the debt, and the proceedings to recover these damages may strictly be considered as a part of the remedy. The rate of interest is, however, regulated by the law of the place where the contract is made, unless, indeed, it appears that the parties had in view the law of some other country. In that case, the lawful rate of interest of the place of payment, or to which the loan has reference, by security being taken upon property there situate, will control the lex loci contractûs. (a)

Form of a § 146. The external form of the contract constitutes an essential part of its obligation.

contract.

This must be regulated by the law of the place of contract, which determines whether it must be in writing, or under seal, or executed with certain formalities before a notary, or other public officer, and how attested. A want of compliance with these requisites renders the contract void ab initio; and being void by the law of the place, it cannot be carried into effect in any other State. But a mere fiscal regulation does not operate extra-territorially; and therefore the want of a stamp, required by the local law to be impressed on an instrument, cannot be objected where it is sought to be enforced in the tribunals of another country.

There is an essential difference between the form of the contract and the extrinsic evidence by which the contract is to be proved. Thus, the lex loci contractûs may require certain contracts to be in writing, and attested in a particular manner, and a want of compliance with these forms will render them entirely void. But if these forms are actually complied with, the extrinsic evidence, by which the existence and terms of the contract are to be proved in a foreign tribunal, is regulated by the lex fori.

in America. It was formerly confounded with the question of liability to personal actions. Story's Conflict of Laws, § 571. Henry on For. Law, 81-86. Westlake, Pr. Intern. Law, § 411.]—D.

(a) Kent's Comm. on American Law, ii. 459, 5th edit. Fölix, Droit International Privé, § 85.

Conclusiveness of

§ 147. The most eminent public jurists concur in asserting the principle that a final judgment, rendered in a foreign personal action, in the courts of competent jurisdiction judgments in personal of one State, ought to have the conclusive effect of a res actions. adjudicata in every other State, wherever it is pleaded in bar of another action for the same cause. (a)

But no sovereign is bound, unless by special compact, to execute within his dominions a judgment rendered by the tribunals of another State; and if execution be sought by suit upon the judgment, or otherwise, the tribunal in which the suit is brought, or from which execution is sought, is, on principle, at liberty to examine into the merits of such judgment, and to give effect to it or not, as may be found just and equitable. (b) The general comity, utility, and convenience of nations have, however, established a usage among most civilized States, by which the final judgments of foreign courts of competent jurisdiction are reciprocally carried into execution, under certain regulations and restrictions, which differ in different countries. (c)

§ 148. By the law of England, the judgment of a foreign Law of tribunal, of competent jurisdiction, is conclusive where the England. same matter comes incidentally in controversy between the same parties; and full effect is given to the exceptio rei judicata, where it is pleaded in bar of a new suit for the same cause of action. A foreign judgment is primâ facie evidence where the party claiming the benefit of it applies to the English courts to enforce it; and it lies on the defendant to impeach the justice of it, or to show that it was irregularly obtained. If this is not shown, it is received. as evidence of a debt, for which a new judgment is rendered in the English court, and execution awarded. But if it appears by the record of the proceedings, on which the original judgment was founded, that it was unjustly or fraudulently obtained, without actual personal notice to the party affected by it; or if it is clearly and unequivocally shown, by extrinsic evidence, that the judgment has manifestly proceeded upon false premises or inadequate reasons, or upon a palpable mistake of local or foreign law; it will not be enforced by the English tribunals. (a)

(a) Vattel, liv. ii. ch. 7, §§ 84, 85. Martens, Droit des Gens, §§ 93, 94, 95. Klüber, Droit des Gens, § 59. Deutsche Bundes Recht, § 366.

(b) Kent's Comm. ii. 119, 5th edit.

(e) Fölix, §§ 292–311.

(a) Knapp's Rep. in the Privy Council, i. 274, Frankland v. McGusty; Barnewall & Adolphus's Rep. ii. 757, Novelli v. Rossi; Ib. iii. 951, Becquet v. M‘Carthy.