This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
In determining what system of law controls, it may become necessary to determine in what jurisdiction a contract is entered into. If the contract is an oral one, made by the parties in person, no difficulty is found, as soon as the facts are established, in determining as a matter of law where the contract was made. So if the contract is in writing, executed by the parties in person and delivered between them, at a personal interview, no difficulty exists as a matter of law in determining where the contract was made. The difficulties presented by this branch of the subject are generally found in one of two classes of cases: (1) where the parties are in different jurisdictions and enter into the contract by correspondence; and (2) where one party to the contract deals with the agent of the adversary party, and the latter party is in another jurisdiction. In many cases both these facts exist in combination. The general rule is the place where the last act is done which is necessary to give the contract validity, is the place of the execution of the contract.1 Thus if A signs a contract and delivers it to B's agent C, who sends it to B in another county; and B signs it and returns it to C, who delivers it to A, the county where C delivers it to A is the county where such contract is made.2 Illustrations of this principle are often found in insurance contracts. If the parties to the insurance contract are in different jurisdictions the place where the last act is done which is necessary to give validity to the contract is the place where the contract is entered into. 3 If the policy is signed by the insurer in one state and the policy is delivered and the premium paid in another, the policy first takes effect in the latter state and the law of such latter state controls in the absence of a provision in the policy showing a contrary intent.4 Under such circumstances the law of the domicile of the insurer where such policy was signed does not control as to forfeiture and lapse;5 while the law of the state where such policy is delivered and the premium is paid, does control.6 On the other hand, if the offer of the insured is accepted7 and the policy is mailed to the agent of the insurance company under unconditional orders to him to deliver it to the insured, the agent having no discretion,8 or is mailed direct to the insured,9 the place of the chief office of the insurer where such offer is thus accepted is the place where such contract is made. A specific provision that premiums were to be paid and losses adjusted at the domicile of the insurer is held to show the intention of the parties to make such domicile the place of performance and hence to make such law control.10 A note signed in one state and sent to payee in another state,11 or first delivered in another state,12 or first negotiated in another state,18 if accommodation paper,14 is in effect executed in such other state. So a contract for the sale of intoxicating liquors is made where the order of the vendee is accepted as a finality,15 even if a prior conditional arrangement to take effect when the vendee should make an order has been made elsewhere.16 If the contract is made through an agent, and the principal is in another jurisdiction, the question where the contract is made depends upon the authority of the agent, and the manner in which he attempts to bind his principal. If he has authority to bind his principal, and he does so as a finality, the place where he enters into the contract is the place where the contract is made.17 If, on the other hand, the agent merely transmits orders to his principal which are in effect offers, and the principal accepts them in another state, the contract is considered as made where the principal accepts the offer.18 ' This is true even if the adversary party does not know of the limitation on the agent's authority, as long as he is not actively misled.19 Even if the agent has authority to make a binding contract, but in fact holds the order and has the party who gives the order transmit it direct to his principal in another state and it is accepted there, it is in legal effect made in such other state.20 If the application for a loan is sent to the lender's domicile and there accepted, the law of such state controls as to usury.21
10 National, etc., Association v. Farnham, 81 Miss. 364; 33 So. 2; National, etc., Association v. Hulett, - Miss. - ; 33 So. 3.
11 Note. Barrett v. Dodge, 16 R. I. 740; 27 Am. St. Rep. 777; 19 Atl. 530. Note and mortgage. New York, etc., Co. v. Davis, 96 Md. 81; 53 Atl. 669.
1 lvey v. Land Co., 115 Cal. 196; 46 Pac. 926.
2 Ivey v. Land Co., 115 Cal. 196; 46 Pac. 926.
3 Mutual Life Ins. Co. v. Cohen, 179 U. S. 262; Ford v. Ins. Co., 6 Bush. (Ky.) 133; 99 Am. Dec. 663; Galloway v. Ins. Co., 45 W. Va. 237; 31 S. E. 969.
4 Mutual Life Ins. Co. v. Cohen, 179 U. S. 262; Equitable Life Assurance Society v. Clements, 140 U. S. 226; Carrollton Furniture Co. v. Indemnity Co., 124 Fed. 25; affirming on rehearing, 115 Fed. 77; Albro v. Ins. Co., 119 Fed. 629; Reliance Mutual Ins. Co. v. Sawyer, 160 Mass. 413; 36 N. E. 59; Perry v. Ins. Co., 67 N. H. 291; 68 Am. St. Rep. 668; 33 Atl. 731; Wood v. Ins. Co., 8 Wash. 427; 40 Am. St. Rep. 917; 36 Pac. 267.
5 Mutual Life Ins. Co. v. Cohen, 179 U. S. 262.
6 Equitable Life Assurance Society v. Clements, 140 U. S. 226.
7 Seamans v. Knapp, etc., Co., 89 Wis. 171; 46 Am. St. Rep. 825; 27 L. R. A. 362; 61 N. W. 757.
8 Fidelity Mutual Life Association v. Harris, 94 Tex. 25; 86 Am. St. Rep. 813; 57 S. W. 635.
9 State Mutual Fire Ins. Association v. Heading Co., 61 Ark. 1; 54 Am. St. Rep. 191; 29 L. R. A. 712; 31 S. W. 157; Commonwealth Mutual Fire Ins. Co. v. Mfg. Co., 171 Mass. 265; 50 N. E. 516; Davis v. Ins. Co., 67 N. H. 218; 34 Atl. 464; Galloway v. Ins. Co., 45 W. Va. 237; 31 S. E. 969.
10 Franklin Life Ins. Co. v. Gal-ligan, 71 Ark. 295; 73 S. W. 102; Fidelity Mutual Life Association v. Harris, 94 Tex. 25; 86 Am. St. Rep. 813; 57 S. W. 635.
11 Bell v. Packard, 69 Me. 105; 31 Am. Rep. 251; Hewitt v. Bank, 64 Neb. 463; 90 N. W. 250; reversed on rehearing on another point, 64 Neb. 468; 92 N. W. 741. Contra, on the theory that if the instrument is sent by mail it takes effect on deposit in the post-office. Win. Glen-ny Glass Co. v. Taylor, 99 Ky. 24; 34 S. W. 711; Shoe, etc., Bank v. Wood, 142 Mass. 563; 8 N. E. 753; Wayne County Savings Bank v. Law, 81 N. Y. 566; 37 Am. Rep. 533; Barrett v. Dodge, 16 R. I. 740; 27 Am. St. Rep. 777; 19 Atl. 530.
12 Hart v. Wills, 52 la. 56; 35 Am. Rep. 255; 2 N. W. 619; Lawrence v. Bassett, 5 All. (Mass.) 140; Johnson, etc., Bank v. Mann, 94 Term. 17; 27 L. R. A. 565; 27 S. W. 1015.
13 See Sec. 577 et seq.
14 Thompson v. Taylor, 66 N. J. L. 253; 88 Am. St. Rep. 485; 54 L. R. A. 585; 49 Atl. 544; reversing, 65 N. J. L. 107; 46 Atl. 567.
15 Bacon v. Hunt, 72 Vt. 98; 47 Atl. 394.
16 Fred Miller Brewing Co. v. De France, 90 la. 395; 57 N. W. 959.
17 Taylor v. Pickett, 52 la. 467; 3 N. W. 514; Erman v. Lehman, 47 La. Ann. 1651; 18 So. 650.
18 Brown v. Wieland, 116 la. 711; 61 L. R. A. 417; 89 N. W. 17; Sachs v. Garner, 111 la. 424; 82 N. W. 1007; Engs v. Priest, 65 la. 232; 21 N. W. 580; Mack v. Lee, 13 R. I. 293.
19 Sachs v. Garner, 111 la. 421; 82 N. W. 1007.