Milliken v. Pratt
1878 Mass. LEXIS 80, 125 Mass. 374 (1878)
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Rule of Law:
The validity of a contract, including the capacity of the parties to enter into it, is determined by the law of the state where the contract is made (lex loci contractus), not the law of the state where a party is domiciled (lex domicilii).
Facts:
- The defendant, a married woman, was domiciled in Massachusetts.
- Her husband purchased goods on credit from the plaintiffs, who were based in Portland, Maine.
- While in Massachusetts, the defendant executed a written guaranty for her husband's debt to the plaintiffs.
- The defendant sent the signed guaranty by mail to the plaintiffs in Portland.
- The plaintiffs received the guaranty in Portland and, in reliance upon it, sold goods to the husband.
- At the time, Massachusetts law did not permit a married woman to enter into a contract as a surety for her husband.
- Maine law, however, authorized a married woman to bind herself by any contract as if she were unmarried.
Procedural Posture:
- The plaintiffs sued the defendant in a court in the Commonwealth of Massachusetts to enforce the guaranty contract.
- The case was submitted to the Supreme Judicial Court of Massachusetts for a decision based on an agreed statement of facts.
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Issue:
Does the law of the state where a contract is made govern a party's capacity to contract, even if that party lacks capacity under the law of their home state?
Opinions:
Majority - Gray, C. J.
Yes, the law of the state where the contract is made governs. A contract is deemed valid everywhere if it is valid in the state where it was made. The contract was not complete until the plaintiffs received the guaranty in Maine and acted upon it; therefore, the contract was made in Maine. Because Maine law permitted the defendant, a married woman, to make such a contract, it is enforceable against her in Massachusetts courts. The court rejected the doctrine that the law of a person's domicile governs their capacity to contract, favoring the common law rule of lex loci contractus for its certainty and convenience in interstate commerce. Furthermore, as Massachusetts law later changed to allow such contracts, no public policy reason exists to refuse enforcement.
Analysis:
This case firmly establishes the lex loci contractus rule for determining contractual capacity in American conflict of laws jurisprudence. It rejects the civil law tradition of using the law of the party's domicile, thereby promoting predictability and uniformity in interstate commercial transactions. By prioritizing the law of the place of contracting, the decision simplifies matters for parties who no longer need to investigate the personal capacity laws of every individual they contract with from another state. The ruling has been influential in shaping how courts handle choice-of-law issues in contract disputes involving parties from different jurisdictions.
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