Within the related thread "Thinking About Allonges Under the UCC and New York Law", Bill has presented a question (02/05/11 at 11:29 PM) as to the authority for my assertion that the place of delivery controls the law of the negotiation.
It should first be noted that almost ALL of the conflict of law cases relating to negotiability are really ANCIENT. There is a very logical and practical reason why such would be the case.
With the adoption by the various states of uniform laws relating to commerical transactions (the UCC and its predecessors), commerical law became, as intended, more UNIFORM. And where the law is actually uniform, conflict of law questions rarely arise.
To put it another way, what difference does it make whether New York or Florida law is to be applied if exactly the SAME law prevails in both places?
Consequently, differences in state commercial laws which were previously resolved by conflict of law principals tended to dwindle. One of the remaing areas of disagreement between the various states, as to laws concerning usury, were virtually wiped out by Federal preemption of state usuary laws when the laon was secured by real property, as a consquence of the enactment of the Depository Institutions Deregulation and Monetary Control Act of 1980 more than thirty years ago.
Moreover, in the modern era, almost all standard contracts and promissory notes contain an express choice of law provision. So each transaction begins with an agreement as to choice of law, is generally subject to almost universally consistent law between jurisdictions and higher value transactions secured by real estate which are more likely to be the subject of contested litigation have the benefit of uniform federal preemption of prior diverse state enactments which might have affected enforceability.
I would therefore submit that one of the most central and authoritative of the ancient cases would be the decision of the United States Supreme Court in the case Bank of United States v. Donnally:
"But whatever may be the legislation of a state, as to the obligation or remedy on contracts, its acts can have no binding authority beyond its own territorial jurisdiction. Whatever authority they have in other states, depends upon principles of international comity, and a sense of justice. The general principle adopted by civilized nations is, that the nature, validity and interpretation of contracts, are to be governed by the law of the country where the contracts are made, or are to be performed. But the remedies are to be governed by the laws of the country where the suit is brought; or, as it is compendiously expressed, by the lex fori. No one will pretend, that because an action of covenant will lie in Kentucky, on an unsealed contract made in that state; therefore, a like action will lie in another state, where covenant can be brought only on a contract under seal. It is an appropriate part of the remedy, which every state prescribes to its own tribunals, in the same manner in which it prescribes the times within which all suits must be brought. The nature, validity and interpretation of the contract may be admitted to be the same in both states; but the mode by which the remedy is to be pursued, and the time within which it is to be brought, may essentially differ. The remedy, in virginia, must be sought within the time, and in the mode and according to the descriptive characters of the instrument, known to the laws of Virginia, and not by the description and characters of it, prescribed in another state. An instrument may be negotiable in one state, which yet may be incapable of negotiability by the laws of another state; and the remedy must be in the courts of the latter on such instrument, according to its own laws."
Bank of United States v. Donnally, SUPREME COURT OF THE UNITED STATES, 33 U.S. 361; 8 L. Ed. 974; 1834 U.S. LEXIS 595, March 17, 1834, Decided
It is difficult to summarize all of the various sometimes conflicting arguments and authorities on conflict of laws as they apply to negotiation. It is easier to cite by way of reference some of the leading text on this subject, though it is often a century or more in age.I would begin by recommending a reading of §§ 895 - 907 of A treatise on the law of negotiable instruments, Vol I, by John Warwick DANIEL (NY: Baker, Voorhis & Co., 1886), appearing at pages 851-64 and especially § 903 (at page 860):
Another definitive exposition on conflict of laws may be found within Commentaries on the Conflict of Laws: Foreign and Domestic, 6th Ed. by Justice Joseph STORY (Boston: Little, Brown & Co., 1865). Note that Justice STORY wrote the Bank of United States v. Donnally decision in 1834.
I would particularly recommend § 242(a) at page 306. See:
I would suggest that the language of the principle illustrated by Justice STORY suggests that a purported allonge indorsed in the State of New York when space was available for the indorsement on the instrument, being impermissible in New York (as with a then impermissible indorsement in blank in France), affixing such a purported allonge could not possibly serve to effect a negotiation, even when the instrument was actually delivered into another jurisdiction!
That is to say that since it is impermissible under the common law to make out an allonge where room exists on the instrument for an indorsement that the creation of such a purported allonge is a nullity in New York State and that it might not be effective anywhere.
But I would also argue that while it might very well be permissible elsewhere (perhaps in Ohio or Maryland) to effect an indorsement by affixing another sheet to the instrument even when space exists, that negotiation is COMPLETED by the delivery. While the indorsement on a separate, but attached sheet might have been LAWFUL in Ohio and/or Maryland, to the extent that it is NOT lawful within New York, the otherwise VALID allonge executed and affixed in Ohio or Maryland would seem to be wholly INEFFECTIVE to negotiate the instrument in New York, since the law of the place of delivery COMPLETES the negotiation and otherwise then controls.
While in the former instance, the purported allonge executed in New York would presumably be INEFFECTIVE everywhere, in the latter instance if the instrument with the separate affixed sheet containing an otherwise valid indorsement might be valid as a negotiation simply by delivering the instrument into another different jurisdiction where it is unnecessary to fill up the space on the original instrument (e.g. the instrument and purported allonge executed in Ohio and delivered into New York would be invalid while if delivered to Maryland might be valid.).By this analysis, in the former instance (excution in NY), the purported allonge itself would be a totally ineffective and a nullity. In the latter, the purported allonge (executed in OH or MD) might be valid EXCEPT when delivered into an impermissible jurisdiction.
I should note that this is MY LAY interpretation! I know of NO CASES which expressly reach such a holding.
A much more concise explanation of the law of negotiability is set forth within the book The Kentucky negotiable instruments law: annotated, though this purports only to describe commercial law as it pertains to the State of Kentucky:
"The place of indorsement is important in fixing the rights of the parties. The indorsement is a new contract and the rights and liabilities of the indorser are fixed by the law of the place where the indorsement is made and completed. Piner v. Clary, 17 B. Mon. 645; Short & Co. v. Trabue & Co., 4 Met. 299; Carlisle v. Chambers, 4 Bush 268; Hyatt v. Bank of Kentucky, 8 Bush 193; Wettlaufer v. Baxter, 137 Ky. 362, 125 S.W. 741.
But the contract of indorsement is not completed until delivery. The law of the place of delivery governs even though the physical act of writing be done elsewhere. Goddin v. Shipley, 7 B. Mon. 575; Young v. Harris, 14 B. Mon. 447; Hyatt v. Bank of Kentucky supra."
The Kentucky negotiable instruments law: annotated, by John Cochran MILLER (Louisville, KY: Baldwin Law Book Co., 1915), §46 at p. 71.
But another exponent as to the conflict of laws resolution of the liability of the indorser asserts that the critical question is the place where the indorsement is made:
The Law of Negotiable Instruments: Including Promissory Notes, Bills . . ., by James Matlock OGDEN (Chicago: Callaghan & Company, 1909) § 197 at page 180
It may be that the distinguishing characteristic is that the indorsement itself may effect a guaranty immediately upon signature, while the negotiation is completed by the delivery.
The application of conflict of law principles to the note itself as it regards usury is discussed within:
A Treatise on Bills of Exchange, Promissory Notes, Coupon Bonds and Other Negotiable Instruments, 3rd edition, Vol. 2, by Isaac EDWARDS, Revised and Enlarged by Dudley, Dennison & Dudley (NY: Banks & Brothers, 1882), § 1011 at page 718.
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This post does NOT purport to be a thorough exposition on this subject, but rather to furnish a basis for further research and inquiry.
Note that most of the law cited is more than a century old and that the UCC came into existence and has been altered several times since. There are many much more recent references, though these are subject to copyright protections which preclude their online publication. It would be a good idea to consult these if pursuing an argument along the lines outlined!
For a better understanding, we need to look to both more recent cases, to the extent that these are available, together with cases from particular jurisdictions appropriate to the facts of particular cases. While the older cases are readily available in law libraries and on the full subscription version of Lexis, they are generally NOT available on LexisOne or Google Scholar. I have refrained from PAYING to view the cases cited, though I will at least endeavor to append better and more current citations, and when possible with greater economy, to add appropriate text.
Those seeking to better research and understand cases for their jurisdictions, might want to consult digests from their states, as well as perfroming appropriate Lexis keyword searches.
To the extent that others identify cases and decisions which can inform our further inquiry and understanding, I would appreciate your posting links to such cases.
NOTE: I AM NOT AN ATTORNEY AND THIS IS NOT LEGAL ADVICE!