2. When claimed in Damages.

Conflict of

opinion as ages.

to dam

§ 512. According to Judge Story, the law which determines what interest is due determines what is to be the assessment of damages. On the other hand, there is a line of cases tending to show that that which is processual, and partakes of the character of special damages imposed by the court of process, is governed by the lex fori.2

3. Moratory Interest.

interest to be deter

mined by use.

place of

§ 513. Moratory interest, as has been stated, is that which comes from delay in due performance of a contract. Moratory According to the views just expressed, the law which is to regulate such interest is that which obtains in the place where the money was used. A., for instance, is to pay money to B. at C. He makes default; and, if there be no tort involved in the non-payment, and the fund was not by agreement invested in another state, the interest is to be determined by the rate that obtains at C. But the whole question changes its aspect on the introduction of the element of tort. Does a guardian hold back his ward's money, employing it for his own use? Then all the profits he could make by such use belong to his ward. Does a vendor wrongfully hold back stock from a vendee? Then all the interest or profits made by the vendor by such retention belong to the vendee. In other cases the rule already stated applies: that the interest to be allowed is that which obtains at the place where the money is used.

legal local limits assigned by usury statutes. Fiore, Op. cit. § 343; Pardessus, Contrat de change, No. 361.

Supra, § 460; Story, § 307; Courtais v. Carpentier, 1 Wash. C. C. 376; Slocum v. Pomeroy, 6 Cranch, 22; Hazelhurst v. Keen, 4 Yeates, 19.

2 Lindsay v. Hill, 66 Me. 212; Lougee v. Washburn, 16 N. H. 134; Porter v. Munger, 22 Vt. 437; Ives v. Farmers' Bank, 2 Allen, 236. Supra § 460.

& Story, § 307.

541

Determined by place of payment.

IX. CURRENCY IN WHICH PAYMENTS ARE TO BE MADE.

§ 514. The currency in which a contract is payable is to be that of the place where the money called for is payable. If suit is brought in another country, the judg ment must be for an amount sufficient to enable the plaintiff to purchase the allotted amount of currency at the place of performance.2

Real not formal

value to be

4

§ 515. The true course, according to Judge Story, is to allow "that sum in the currency of the country in which the suit is brought, which should approximate most nearly recovered. to the amount to which the party is entitled in the country where the debt is payable, calculated by the real par, and not by the nominal par of exchange." In Pennsylvania it has been ruled that in such cases the value is to be fixed "according to the rate of exchange at the time of the trial."5 § 516. On the other hand, in New York and Massachusetts it has been held that in such case the plaintiff can only recover for the debt according to the par of exchange, established as established by law, and not according to the actual rate of exchange necessary to remit the amount to the foreign country where the debt was payable.

Otherwise

when exchange is

by law.

§ 517. When a currency at the place of payment has depreciBut inter- ated between the time of contract and the period when nationally plaintiff payment is claimed, then, viewing the matter accordentitled to ing to the principles of international law, the plaintiff, full equivalent. if the question arises before a foreign court, is entitled to recover that which would give him an equivalent in currency

1 See Boullenois, pp. 496-498; Bar, pp. 241, 253; Story, § 270; Rosetter r. Cahlmann, 8 Exch. 361; De Wolf v. Johnson, 10 Wheaton, 323; Benners v. Clemens, 58 Penn. 24. Supra, § 437.

2 Story, § 308, citing Scott v. Bevan, 2 Barn. & Ad. 78; Delegal v. Naylor, 7 Bing 460; Ekins v. East India Co. 1 P. Will. 396; Cockerill v. Barber, 16 Ves. 461. See Stanwood v. Flagg, 98 Mass. 124; Cushing v. Wells, 98

to that which he would have been entitled to had no such depreciation taken place.1

Legal ten

der acts not extra

territorial.

§ 518. By Massé the question whether a foreign creditor is to accept, under compulsory domestic legislation, depreciated paper, is negatived; 2 at all events, the creditor (according to this author) is to be debited with such money only at its actual value. Hence, although the creditor, in the land where the legal tender act is in force, cannot compel the debtor to pay beyond this amount, he is nevertheless entitled, on this view, to proceed for the difference, or, in other words, for the actual amount of the indebtedness, in the courts of any other land where the debtor may have property. Bar, however, dissents from this conclusion. If it is good, then no extra-territorial force, he argues, is to be ascribed to other methods of barring contracts, such as bankrupt discharges, or the statute of limitations. But the view taken by Massé may be sustained by the rulings of courts in reference to bankrupt assignments. When the parties litigating an assignment are all domiciled citizens of the state under whose legislation it is executed, they may be held by a foreign state precluded by that legislation from disputing its effects. So the domiciled citizens of a state are precluded from contesting its taxation, unequal though that taxation may be. But such legislation does not bind foreigners, and no foreigner can be internationally compelled to take a depreciated currency in payment of a debt, even though such currency be a legal tender in the debtor's domicil.

X. HOW OBLIGATIONS MAY BE BARRED.

§ 519. According to Roman law, an obligation is barred (tollitur) by the following processes:

(a.) Payment Solutio. The mode of payment, when there is a conflict of territorial law, is considered under prior heads.

1 See Story, § 313 a, for a full discussion of this point. See, also, Warder v. Avell, 2 Wash. Va. R. 282; Searight v. Calbraith, 4 Dall. 325; Bartsch v. Atwater, 1 Conn. 409; Descadillas v. Harris, 8 Greenl. 298. 2 Op. cit. p. 170.

Op. cit. p. 277.

4 Infra, § 523.

Modes of barring by

Roman law.

5 See Mackenzie's Roman Law, p.

248.

6

Supra, § 514. See, as to solutio, supra, § 401, note.

(b.) Compensation.

This is the reciprocal extinction of debts

(or set-off) between two persons.1

(c.) Novation.

This occurs either when the debtor grants

a new obligation to the creditor in lieu of an old one which is extinguished, or when a new debtor is substituted for an old one who is discharged by the creditor, in which case the old debt merges in the new.2

(d.) Confusion, which arises when the same person becomes both creditor and debtor, and the debt is thus extinguished.3 (e.) Acceptilation, which is release without payment, operating as would a sealed release with us.1

place of perform

ance good

everywhere.

§ 520. The general position laid down by the jurists is that Barring in the extinction or bar of an obligation in the place of performance is its extinction or bar everywhere; 5 and this rule has been frequently approved by the English and American courts. It is true that in many cases the rule is said to be, that a discharge in the place of contract is a discharge everywhere. But this is on the assumption that the place of contract is the place of performance. When the two conflict, the law of the place of performance prevails. And this obtains as to the effect of the release of one partner of the indebtedness of another.7

Conditioned upon fair

§ 521. Of course this is on the hypothesis that such bar or discharge is in conformity with the principles of international law. If this be not the case (e. g. if the creditor had no hearing, or if the decree contravene natural justice, or if it be a gross imposition on a foreign creditor), it will not be recognized as binding by the state of which such creditor is a subject.8

ness of procedure.

1. Bankrupt and Insolvent Discharges.

Discharge by state without ju

risdiction inoperative.

Federal

discharges

§ 522. A discharge by a state other than that of the performance of the obligation will not be elsewhere binding.1 That with debts the state of performance is the state of the domicil of the creditor will be presently seen. $523. United States. The conclusiveness in the United States of bankrupt decrees, when made in conformity with constitutional federal legislation, cannot be ques- bankrupt tioned; nor is there any question, when there is a effective bankrupt or insolvent discharge of a debtor by the the United court of a state in which an obligation is to be performed, and in which both obligor and obligee are domiciled, that by such decree the debt is discharged. Other questions arise, however, when the state in which the obligation is to be performed is not that in which the obligor is discharged, or when the obligee is a citizen of some other state.

throughout

States.

State insolvent discharges operative as between

citizens of

§ 524. A state has the constitutional power to pass insolvent laws, in the nature of bankrupt laws, which will discharge all contracts made or existing between citizens of the state which enacted the law, and whose tribunals granted the discharge; nor, as we will see, is this affected by a change of residence by the creditor after the contract was made.2 The same rule applies to parties who, though foreigners, assent to the operation of an insolvent discharge by participating in the insolvent procedure.3 In Louisiana, however, actual notice to a resident creditor is required in order to bring him within the bar.

state and validating creditors.

§ 525. It was always agreed that such a discharge will not bar an action between a citizen of one state and a citizen of another

1 Smith v. Buchanan, 1 East, 6; Phil. iv. 563; Phillips v. Allen, 8 B. & C. 477; Lewis v. Owen, 4 B. & Ald. 654. Infra, §§ 525, 804.

2 Ogden v. Saunders, 12 Wheat. 213; Stone v. Tibbetts, 26 Me. 110; Stevens v. Norris, 10 Foster (N. H.), 466; Brigham v. Henderson, 1 Cush. 430; Smith v. Smith, 2 Johns. 241; Smith v. Parsons, 1 Ohio, 226; Stod

dard v. Harrington, 100 Mass. 87; Einer v. Beste, 32 Mo. 240; 3 Parsons on Cont. 439.

That the creditor becomes domiciled in the state at any time before the decree precludes him, see Brown v. Bridge, 106 Mass. 563.

8 Infra, § 528.

4 See Breedlove v. Nicolet, 7 Pet. 413.