Selover, Bates & Co. v. Walsh

226 U.S. 112, 33 S. Ct. 69, 57 L. Ed. 146, 1912 U.S. LEXIS 2135

• Court: Supreme Court of the United States
• Decided: December 2, 1912
• Docket: 22
• Status: Published

Opinion

Mr. Justice McKenna

delivered the opinion of the court.

Error to the Supreme Court of Minnesota to review a judgment of that court awarding damages to defendant in error for a breach by plaintiff in error of an executory contract for the salé of land' situated in the State of Colorado.

The contract was made by one Bates- for plaintiff in error at the office pf the látter,in the city of Minneapolis, he being one of its officers, with P. D. Walsh, the husband' of .defendant in'"error: Walsh, however, actually signed the contract at his residence-in South Dakota. He subsequently assigned his interest tp her' as Bates did to plaintiff in error.

Plaintiff in; error, asserting that Walsh had made default of the terms of the contract, canceled it and subsequently sold the land to other parties. This action was then brought by defendant in error, resulting in a judgment for, her which was affirmed, by the Supreme Court. 109 Minnesota, 136.

By the contract Bates, the assignor of plaintiff in error, covenanted to convey the land to Walsh, the assignor of defendant in error, reserving certain-mining-rights therein. . Payments were to be made in installments at. the office of ■ plaintiff in error in Minneapolis, .punctually) and it was' stipulated “that time and punctuality-” were “material and essential ingredients” of the contract.- It wás covenanted that in case of failure to make the payments “punctually and upon the strict terms and times” limited, and upon default thereof or in the strict and literal performance of any other covenant, the contract, at the option of the party of the first part (Bates) should become utterly null and void and the rights of the party of the second part (Walsh) should.“at the option of the party of the first part utterly cease and determine” as if “the contract had never been made.” There was forfeiture of the sums paid and a reversion of all rights conveyed,, including the right to take immediate possession of the land “without process of law,” and it was covenanted that no court should “relieve the party of the second part upon failure to comply strictly and literally” with the contract..

The default of Walsh 'consisted in the failure. to pay taxes, and .plaintiff in error elected to terminate the contract, and gave notice of such election to him in writing in the State of North Dakota. Against the effect of such default and notice'defendant in error opposed Chapter 223, Laws of Minnesota (Laws of 1897, p. 431), which provides that a vendor in a contract, for the sale of land' shall have no right to cancel, terminate or declare a forfeiture of the contract except upon thirty days’ written notice to the venden and that , the latter, shall have thirty days after service of such notice in which to perform the conditions .or comply with the. provisions upon which default shall have occurred'.

The trial court and the Supreme Court held the statute applicable and judgment went, as -we have said, for defendant in error. This ruling is attacked on the ground -that as so applied the statute offends .against the Fourteenth Amendment of the Constitution of the United States in that it deprives plaintiff in error Of its property without due process of law and of the equal protection of the laws.

With the ruling of the court as to the applicability of the statute to the coiitract we have nothing to do. We are only concerned with the contention that, as so applied, it violates the Fourteenth Amendment. Of this the Supreme Court said (p. 138):

“There can be no serious question as to the constitutionality of the statute. It in effect prescribes a period of redemption in contracts of this character, and was within the power and authority of the legislature. Defendants’ principal contention on this, branch of the case is. not so much that the statute is unconstitutional as that it should, not be construed to apply to contracts .made in Minnesota for the sale of land .in another state. There is force in this contention; but within the rule .of the Firmes Cáse, which a majority of the court do not feel disposed to reconsider, the action does not involve the title to the land, is purely personal, and the rights of the parties are controlled by the laws of this State. Under the decision in that case, defendants had no right arbitrarily to declare the contract at an end and refuse to perform it, and are liable for such damages as their refusal caused plaintiff. Following the Firmes Caée, we have no alternative but to affirm the action of the court below.”

. This excerpt clearly presents the ground of the court’s decision, and we may put in contrast to it the contention of plaintiff, in error. Its contention is that the contract itself provided for the manner of its termination and made exact punctuality the essence of its obligation, and that the statute of the State, as it exempts from such obligation, deprives plaintiff in error of its property without due process "of law. The argument to support the contention is somewhat confused, as it mingles .with the right of contract simply a consideration of the State’s jurisdiction over the land which was the subject of the contract. As to, the contract simply we have no doubt of the State’s power over it, and the law of the State, therefore,. constituted part of it. It is elementary that the obligation of a contract is the law under which it was made, and we aré not disposed to expend much time to show that the Minnesota statute was a valid exercise of the police power of the State. C., B. & Q. R. R. Co. v. McGuire, 219 U. S. 549; Broadnax v. Missouri, Id. 285. Whether it had extra-territorial effect, is another question. The conteh.tion is that the statute as applied affected the transfer of land situated in another State and outside of, therefore, the jurisdiction of the State of Minnesota. In other words, it is contended that the law of Colorado, the situs of the property, is the law of the contract. The principle is asserted in many'ways and with an affluent citation of eases.. The principle cannot be contested, but plaintiff in error pushes it too far.' Courts in many ways through action upon or constraint of the perspn affect property in other States (Fall v. Eastin, 215 U. S. 1), and in the case at bar the action is strictly personal. It in no way affects the land or seeks any remedy against it. The land had been conveyed to another by plaintiff in error and it was secure in the possession.of the purchaser. Redress was sought in' a Minnesota court for the violation of a Minnesota contract, and, being such, the law of Minnesota gave the right and measure of recovery!

In Polson v. Stewart, 167 Massachusetts, 211, a contract niade in North Carolina between a husband and wife, who were domiciled there, by which, he covenanted to surrender, convey and transfer all of his rights to lands owned by her in- Massachusetts, was declared to be a North Carolina contract and enforceable in Massachusetts notwithstanding that under the law of the latter State husband and wife, wére incapable of contracting with each other. To the objection that the'laws of the parties’ domicile could not authorize a contract between them as to lands in Massachusetts, it was answered (p. 214), “ Obviously this is not true. It is true that the laws of other States cannot, render valid conveyances to property within our borders which our laws say are void, for the plain reason that we have exclusive power over the res But the same reason inverted establishes that the lex rei.sitce cannot control personal covenants, not purporting to be conveyances, between persons outside the jurisdiction, although' concerning a thing within it. Whatever the covenant, the laws of North Carolina could subject the defendant’s property to seizure on execution, and his person to., imprisonment, for a failure to perform it. Therefore, on principle, the law of North Carolina déter-mines; the validity of the contract.” Precedents against the -view were noted and contrasted withdhose supporting it.

The case at bar is certainly within the principle expressed in Polson v . Stewart . The Minnesota Supreme -Court jollowed the prior- decision in Finnes v. Selover, Bates & Co., 102 Minnesota, 334, in which it said (p. 337) that upon repudiation of a” contract by the seller of land two courses were open to the purchaser: "He might stand by the contract and. seek to recover the land, or he could declare upon a breach of the contract and recover the amount of his'damages.’’ If he elected the former, it was further said, the courts óf Colorado alone could give him relief; if he sought redress in damages the courts of Minnesota, were open to him. And this, it was observed, was in .accordance with the principle that the.law of the situs governs as to thé land, and the law of the contract as to the rights of- the parties in the contract.

Plaintiff in error bases a contention upon the difficulty of complying vdth the provisions of the statute with regard to giving notice. Written notice is, as we have seen;necessary to be given of any default, and the time when the cancellation, of the contract shall take effect, which must not be less than thirty days after the service; and it is provided that the notice must be served in the manner provided for service' of summons in the District Court if the vendee resides in the county where the real estate covered by the contract is situated. If the vendee is not within the county where the real estate i¡? situated, then notice must be served by publication in a weekly newspaper within the county, or, if there is none in the county, then in a newspaper published at the capital of the State. And it is provided that the vendee shall have thirty days after service to perform the conditions or comply with the provisions. The contention is that these provisions cannot be complied with either in Minnesota or Colorado and that plaintiff in error is brought to the dilemma of not being able to cancel the contract whatever be the default.

The dilemma was not presented to the Supreme Court of the State for resolution, as plaintiff in error hacl made no attempt to comply with the statute in any way; As that court held the statute applicable to contracts such as that under review, it will, bó doubt,' in a proper case,' so construe the statute as to make it effective. •- We are not called upon to anticipaté its ruling.

It is manifest from these views that plaintiff:in error, was not by the enforcement of .the Minnesota statute deprived of its property without due process of law.

It is further contended that the Minnesota statute denies plaintiff in error the equal protection of the laws and is therefore void." In specification of the way in which this is done plaintiff in error says: “In so far as the State of Minnesota penalizes its resident owner because he has obeyed thé' laws of the State or country wherein the land is situated1 — the law which he must be subject to — just so' far does it exceed its powers and deny to its citizens .the equal protection of the laws.” This manifestly .'is but another way of presenting the argument, which we have answered, that the law of Colorado controls the contract and not the law of Minnesota.1 Discrimination is not' made out by -saying that resident owners of Minnesota land are given a right to foreclose their contracts and that, residents of-Minnesota owning land in other States are not given the same right, even, if this were true. The plaintiff in error is not treated differently from any other, seller of 'land iñ his situation. This is the-test of the application of the equal protection clause of the Constitution of the United. States,. !

Plaintiff in error further charges that the Supreme Court of the State refused to give full faith and credit to the acts and records of Colorado. The contention was not made in the court below and cannot be made here. The same comment is applicable to the contention that privileges and immunities of plaintiff in error as a citizen of the United States are abridged. We may say of the contentions that they are but' a repetition of the view that the law of Colorado and not that of Minnesota governs the contract. And we may say further it is well settled that a corporation cannot claim the protection of the clause of the Fourteenth Amendment which secures the privileges and immunities of-, citizens of the United- States against abridgment or impairment by the law of a State. Western Turf Asso. v. Greenberg, 204 U. S. 359.

Judgment affirmed.

The Chief Justice and Mr. Justice Van Devanter dissent.