Citizens Nat. Bank of Orange, Va. v. Waugh

78 F.2d 325, 100 A.L.R. 939, 1935 U.S. App. LEXIS 3718
CourtCourt of Appeals for the Fourth Circuit
DecidedJune 3, 1935
Docket3854
StatusPublished
Cited by27 cases

This text of 78 F.2d 325 (Citizens Nat. Bank of Orange, Va. v. Waugh) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Citizens Nat. Bank of Orange, Va. v. Waugh, 78 F.2d 325, 100 A.L.R. 939, 1935 U.S. App. LEXIS 3718 (4th Cir. 1935).

Opinion

PARKER, Circuit Judge.

This is an appeal from .so much of a judgment on certain promissory notes -as denies recovery of the 10 per cent, attorney’s fee therein provided for.» The facts are undisputed. The makers of the notes were residents .of West Virginia, and the notes were executed and delivered to a Virginia bank, from which a loan was obtained. While the notes and accompanying deed of trust not here material were executed in West Virginia, the agreement with the bank in accordance with which the loan was obtained was made in Virginia, the notes were made payable at the bank in Virginia, and the loan was closed in Virginia by the bank’s accepting the notes there and crediting the makers on its books with the amount of the loan. The notes contained a provision, recognized as valid under the laws of Virginia, for the payment of a 10 per. cent, attorney’s fee for collection in case of default. The court below denied recovery on this provision, on the ground that the public policy of West Virginia, as declared by the Supreme Court of Appeals of that state, forbade the enforcement of such provision by the courts. From this judgment the plaintiffs have appealed.

The provision for the payment of an attorney’s fee for collection is recognized as valid by the law of Virginia where the contract was made and where it was to be performed. Conway v. American Nat. Bank, 146 Va. 357, 131 S. E. 803; Cox v. Hagan, 125 Va. 656, 100 S. E. 666, 673; Triplett v. Second Nat. Bank, 121 Va. 189, 92 S. E. 897. It is held invalid by the Supreme Court of Appeals of West Virginia on the ground that it may be used as a cloak for usurious interest and is a mere penalty, and hence contrary to the public policy of the state. Raleigh County Bank v. Poteet, 74 W. Va. 511, 82 S. E. 332, L. R. A. 1915B, 928, Ann. Cas. 1917D, 359. And the courts of West Virginia deny enforcement to such a provision, even where the contract containing it is made and to be performed in another state, on the ground that it is at variance with the public policy of the state of the forum. Campen Bros. v. Stewart, 106 W. Va. 247, 145 S. E. 381. This holding is in accord with the decisions of a number of states (see note in Ann. Cas. 1917D, at page 365), although opposed to the reasoning of the Supreme Court of Appeals of Virginia in R. S. Oglesby Co. v. New York Bank, 114 Va. 663, 77 S. E. 468.

If the public policy of the two states with respect to treating contractual provisions of this sort as valid or, invalid were embodied in statutory' law, there can be little doubt that the law of the state where the contract was made and was to be performed would be applied in determining its validity. Seeman v. Philadelphia Warehouse Co., 274 U. S. 403, 407, 408, 47 S. Ct. 626, 71 L. Ed. 1123; Hartford Accident & *327 Indemnity Co. v. Delta & Pine Land Co., 292 U. S. 143, 54 S. Ct. 634, 636, 78 L. Ed. 1178, 92 A. L. R. 928. As said in the case last cited: “A state may limit or prohibit the making of certain contracts within its own territory (Hooper v. California, 155 U. S. 648, 15 S. Ct. 207, 39 L. Ed. 297; Orient Insurance Co. v. Daggs, 172 U. S. 557, 565, 566, 19 S. Ct. 281, 43 L. Ed. 552; New York Life Ins. Co. v. Cravens, 178 U. S. 389, 398, 399 [20 S. Ct. 962, 44 L. Ed. 1116]); but it cannot extend the effect of its laws beyond its borders so as to destroy or impair the right of citizens of other states to make a contract not operative within its jurisdiction, and lawful where made (New York Life Ins. Co. v. Head, 234 U. S. 149, 34 S. Ct. 879, 58 L. Ed. 1259; Ætna Life Ins. Co. v. Dunken, 266 U. S. 389, 399, 45 S. Ct. 129, 69 L. Ed. 342). Nor may it in an action based upon such a contract enlarge the obligations of the parties to accord with every local statutory policy solely upon the ground that one of the parties is its own citizen. Home Insurance Co. v. Dick, 281 U. S. 397, 407, 408, 50 S. Ct. 338, 74 L. Ed. 926, 74 A. L. R. 701.”

Where a foreign contract is repugnant to good morals or where its enforcement would lead to disturbance and disorganization of the local municipal law, the courts will refuse to enforce it, as contrary to the public policy of the state of the forum. Bond v. Hume, 243 U. S. 15, 21, 37 S. Ct. 366, 61 L. Ed. 565; Parker v. Moore (C. C. A. 4th) 115 F. 799. And they will on like ground refuse to enforce a foreign contract affecting local property rights of persons domiciled within the state where such contract contravenes the settled law of the forum. Union Trust Co. v. Grosman, 245 U. S. 412, 38 S. Ct. 147, 62 L. Ed. 368. But they may not on grounds of public policy deny enforcement to a contract valid under the laws of the state where made in cases where the interest of the forum has but slight connection with the substance of the contract obligations. To quote again from the opinion in Hartford Acc. & Ind. Co. v. Delta & Pine Land Co., supra: “Conceding that ordinarily a state may prohibit performance within its borders even of a contract validly made elsewhere, if the performance would violate its laws (Home Insurance Co. v. Dick, supra, 281 U. S. 397, p. 408, 50 S. Ct. 338, 74 L. Ed. 926, 74 A. L. R. 701), it may not, on grounds of policy, ignore a right which has lawfully-vested elsewhere, if, as here, the interest of the forum has but slight connection with the substance of the contract obligations. Here performance at most involved only the casual payment of money in Mississippi. In such a case the question ought to be regarded as a domestic one to be settled by the law of the state where the contract was made. A legislative policy which attempts to draw to the state of the forum control over the obligations of contracts elsewhere validly consummated and to convert them for all purposes into contracts of the forum, regardless of the relative importance of the interests of the forum as contrasted with those created at the place of the contract, conflicts with the guaranties of the Fourteenth Amendment. Ætna Life Ins. Co. v. Dunken, supra; Home Insurance Co. v. Dick, supra. Cases may occur in which enforcement of a contract as made outside a state may be so repugnant to its vital interests as to justify enforcement in a different manner. Compare Bond v. Hume, 243 U. S. 15, 22, 37 S. Ct. 366, 61 L. Ed. 565. But clearly this is not such a case.”

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Geller v. Lesk
285 P.3d 972 (Court of Appeals of Arizona, 2012)
Mazaika v. Bank One, Columbus, N.A.
653 A.2d 640 (Superior Court of Pennsylvania, 1995)
Clark v. Clark
398 S.E.2d 82 (Court of Appeals of Virginia, 1990)
Island Block Corp. v. Webster
17 V.I. 29 (Supreme Court of The Virgin Islands, 1980)
Popich v. Fidelity & Deposit Co.
245 So. 2d 394 (Supreme Court of Louisiana, 1971)
Gallatin Trust and Savings Bank v. Darrah
448 P.2d 734 (Montana Supreme Court, 1968)
Tipton v. Standard Installment Finance Company
1966 OK 160 (Supreme Court of Oklahoma, 1966)
Elson Development Co. v. Arizona Savings & Loan Ass'n
407 P.2d 930 (Arizona Supreme Court, 1965)
Alcoa Edgewater No. 1 Federal Credit Union v. Carroll
210 A.2d 68 (Supreme Court of New Jersey, 1965)
American-Canadian Oil & Drilling Corp. v. Aldridge & Stroud
373 S.W.2d 148 (Supreme Court of Arkansas, 1963)
Pepperell Trust Co. v. Mehlman
154 A.2d 161 (Supreme Judicial Court of Maine, 1959)
In re Pack-It, Inc.
158 F. Supp. 148 (D. New Jersey, 1958)
Owens v. Conelly
272 P.2d 345 (Arizona Supreme Court, 1954)
GRAMATAN NAT. BANK, OF BRONXVILLE v. Backman
104 A.2d 729 (New Jersey Superior Court App Division, 1954)
United States v. Reed
31 A.2d 673 (District of Columbia Court of Appeals, 1942)
Transbel Inv. Co. v. Roth
36 F. Supp. 396 (S.D. New York, 1940)

Cite This Page — Counsel Stack

Bluebook (online)
78 F.2d 325, 100 A.L.R. 939, 1935 U.S. App. LEXIS 3718, Counsel Stack Legal Research, https://law.counselstack.com/opinion/citizens-nat-bank-of-orange-va-v-waugh-ca4-1935.