GASTON, WILLIAMS & WIGMORE OF CANADA, LTD.
v.
WARNER
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A Canadian steamship company contracted with a New York resident to find a buyer for a British vessel in exchange for a 2.5% commission, and the resident successfully introduced purchasers with whom the company executed a sale contract; however, the company later refused to complete the sale because British law prohibited the transaction without government permission. The Supreme Court held that the resident was entitled to recover his full commission because the contract between the resident and the company was valid under New York law (where it was made and performed) and the resident had fulfilled his obligation by procuring willing buyers, regardless of whether the subsequent sale contract became unenforceable due to foreign legal restrictions.
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Mr. Justice Sutherland delivered the opinion of the Court.
The parties to this action on December 11, 1916, in New York City, entered into a contract, the essential terms of which appear in the following letter from petitioner to respondent:
'“Referring to our conversation this afternoon, I beg to advise that you are authorized to offer the steamer Eskasoni ’ for sale for four hundred and seventy-five thousand dollars, $475,000.
“Details as to terms of payment, transfer of steamer, etc., can be talked over when you have purchasers.”
Respondent was a citizen of the State of New York and a resident of New York City. Petitioner was a foreign corporation, organized and existing under the laws of the Dominion of Canada. The steanaship referred to was a British steamship of St. Johns, Newfoundland, owned by the petitioner. It was agreed that the respondent should receive two and one-half per cent, commission. for securing a purchaser for the ship. Respondent undertook the employment and subsequently introduced to petitioner two prospective purchasers, with' whom petitioner entered into a written contract for the charter and sale, of the ship for the sum mentioned. Five thousand dollars was paid down on account, .out of which respondent received two 'and one-half, per cent., pr $.125.
Subsequently it appeared that the petitioner was bound by a contract with the British Government to comply with the instructions and lilies o’f that governjnent in the operation of its vessels, and whereby it agreed not to charter any vessel to anyone to whom that government should object. Among the governmental regulations then in force was one whjch provided that:
". “A person shall not, without permission in writing from the Shipping Cotiiptroller,. directly or -indirectly^ and whether'on his own behalf or on behalf of or in conjunction with any other person, purchase, or enter into or offer to enter into any agreement or any negotiations with a view to an agreement for the purchase of any ship or •vessel.”
Any act in contravention of this regulation was declared to be an offense.
Permission to make the sale in question was never obtained and the petitioner was notified by its Consul that such permission would be withheld by the British Government. The petitioner thereupon refused to consummate the sale and returned to the purchasers the $5,000 which they had paid.
The respondent brought ah action against petitioner in the District Court of the United States, Southern District of Ne,w York, to recover the balance of his commission, which resulted in a judgment in his favor; On error from the Circuit Court of Appeals for the Second Circuit, that court affirmed the judgment of the lower court, and the petitioner brings the case here on writ of certiorari.
The District Court declined to charge, as requested by petitioner, that, if the jury believed the evidence to the effect that the contract under British law was illegal and void, this would constitute a good defense to the action. .On the contrary, that court instructed the jury in effect that the invalidity of the contract’ under British law would constitute no defense to the action, and directed a verdict for the respondent, which was returned in the sum of $11,750; and'judgment was entered accordingly.
The contract, as stated, was made in New York, and it does not appear that the contracting.parties in making it. had in view any other law than that of the place where it was made. It is, therefore, to -be governed as to its validity and operation by the. law of the State of New York. Bulkley v. Honold, 19 How. 390, 392; Scudder v. Union National Bank, 91 U. S. 406, 412. Tested by that law the contract is valid. By the terms of the contract respondent was “ authorized to offer the steamer ‘ Eska-soni ’ for sale for four hundred and seventy-five thousand dollars.” Nothing was said as to where the ship then was, what flag she-carried nor what law was to govern the transaction. The contract of charter and sale provided for the payment of the consideration in several installments in New York City and for the delivery of the ship to the purchasers at that port.
When, in pursuance of this contract, respondent procured purchasers for the ship at the stated sum, with whom petitioner entered into contract, the transaction, so far as the respondent was concerned, was completed and he became entitled to the payment of the stipulated commission. The fact that the contract of charter and sale was subsequently canceled because petitioner was unable to secure the consent of the British Government to. the sale could have no effect upon the respondent’s rights. The' contract with respondent, as well as the contract of charter and sale, was made and was to be performed within the State of New York, and being valid under the law of that' State, the respondent is not to be deprived of his compensation simply because petitioner found itself unable to consummate the latter contract by reason of its inability to perform,a condition made necessary by the provisions of the law of another country. See Aber v. Pennsylvania Co., etc., 269 Pa. St. 384.
Even if the contract of sale was void by British law, all other questions aside, respondent’s connection with it was not such as to deprive him of his commission. His action was not to enforce that contract, but his own. Irwin v. Williar, 110 U. S. 499, 509-510.
We find no error in the judgment of the Circuit Court of Appeals and it is
Affirmed.
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Hogue-Kellogg Co., Inc. v. G. L. Webster Canning Co., Inc., 22 F.2d 384 (4th Cir. 1927)….” [3] The case of Scudder v. Union National Bank, has never been overruled, but, on the contrary, has been repeatedly cited as binding authority, the latest citation by the Supreme Court of the United States being in Gaston, etc., Ltd., v. Warner, 260 U. S. 201, 43 S. Ct. 18, 67 L. Ed. 210. The following cases are also of interest as sustaining the rule stated: Liverpool, etc., Steam Co. v. Phenix Ins. Co., 129 U. S. 397, 458, 9 S. Ct. 469, 32 L. Ed. 788; Pritchard v. Norton, 106 U. S. 124, 1 S. Ct. 102, 2…
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Schram v. Smith, 97 F.2d 662 (9th Cir. 1938)…at of the place where they were made, the lex loci contractu, unless the parties thereto intended they should be governed by the law of some other place”. Forgan v. Bainbridge, 34 Ariz. 408, 274 P. 155, 158. See, also, Gaston, etc., Ltd., v. Warner, 260 U.S. 201, 203, 43 S.Ct. 18, 67 L.Ed. 210. Therefore, we think that the Arizona courts would apply the law of Michigan, interpreting the provision in the articles of association. Appellees contend here, as was contended in Schram v. Poole, 9 Cir., supra, t…1 / 2
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Previewing 3 of 7 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Scudder v. Union Nat'l Bank, 91 U.S. 406 (U.S. 1875)
- Irwin v. Williar & Another, 110 U.S. 499 (U.S. 1884)
- Bulkley v. Honold, 19 How. 390 (U.S. 1856)