The Federal Reporter with Key-Number Annotations, Volume 250: Cases Argued and Determined in the Circuit Courts of Appeals and District Courts of the United States, August-October, 1918. Page: 54
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250 FEDERAL REPORTER
reference to what law should govern. This stipulation is not neces-
sarily effective, and, indeed, not necessarily a reflection of the minds of
the parties. The parties cannot, by intention or stipulation, change the
essential character of the transaction between them; they cannot, by
intention or stipulation in all cases, determine the law to be applied.
They cannot, by stipulating that the law of a particular state shall gov-
ern, thereby make that valid which would otherwise be illegal. But
where there is a diversity in the situs of the several elements entering
into the contract or its performance, the stipulation or understanding
of the parties may have an important, or even a controlling, effect.
The parties may not, however, disregard the place of making, the place
of performance, and the place of enforcement, and select for them-
selves a system of laws that has no relation to either of these places,
and thereby nullify or evade the provisions of the law which would
otherwise be applicable.
"When the several transactions connected with the loaning of money have,
taken place in two or more states, the problem of determining what law
shall govern, in deciding whether the contract is usurious or not, is largely
one of ascertaining what law the parties had in mind in fixing their rights
under the contract." 39 Cyc. p. 891.
"In many cases the courts have declared that the law of the place where
the contract Is made determines the rights of the parties, without reference
to intent. In nearly all instances where this holding has been made, the im-
portant elements of the transaction had their situs in the place where the
contract was made." Junction R. Co. v. Ashland Bank, 12 Wall. 226, 20 L.
There is no occasion to develop in detail the principles by which the
courts called upon to enforce contracts made elsewhere, or to be per-
formed elsewhere, or where the consideration arises elsewhere, are to
be governed. The only present consideration is with reference to the
law of the forum as an element in determining the law with reference
to which the contract must be held to have been made. Necessarily
the parties in entering into contracts must be assumed to give some con-
sideration to the laws of the state in which the contract is to be en-
forced. While it may not always be possible to determine at the time
of the making of the contract as to where it will be necessary to insti-
tute suit, in case of a failure of the promisor to perform, yet the place
of payment and the residence of the payor, or the location of the land
given as security, can very well be considered by the parties as prob-
ably indicating the place of suit, in case suit should be necessary. In
consideration of these facts it should be held that the laws of such
a state were necessarily in contemplation by the parties, and nec-
essarily an element to be considered in determining the applicable
"In general, the law of the forum, being also that of the place where the
landed security lies, will prevail over the place of the contract to defeat the
instrument." 8 Corpus Juris, 5 165, p. 97; Flagg v. Baldwin, 38 N. J. Eq. 219,
48 Am. Rep. 308.
"While, as a general rule, a contract valid where it is made, or under the
law with reference to which it is made, is valid everywhere, the courts of one
state will not enforce a contract made in another, where to do so would.
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The Federal Reporter with Key-Number Annotations, Volume 250: Cases Argued and Determined in the Circuit Courts of Appeals and District Courts of the United States, August-October, 1918., legislative document, 1918; Saint Paul, Minnesota. (digital.library.unt.edu/ark:/67531/metadc38821/m1/69/: accessed February 21, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.