Selover, Bates & Co. v. Walsh, 226 U.S. 112 (1912)

226 U.S.
112
33 S.Ct. 69
57 L.Ed. 146
SELOVER, BATES, & COMPANY, Plff. in Err.,

v.
ELLA T. WALSH.
No. 22.
Submitted October 29, 1912.
Decided December 2, 1912.
Mr. Arthur W. Selover for plaintiff in error.

[Argument of Counsel from pages 113-120 intentionally omitted]
Messrs. A. B. Choate and George W. Buffington for defendant in error.
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 sale of land situated in the state of Colorado.
The contract was made by one Bates for plaintiff in error at the office of the
latter, 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 to 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 Minn. 136, 123 N. W. 291.
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 instalments 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 was
convenanted 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.
5
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, 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 vendee, 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 14th 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 contract
we have nothing to do. We are only concerned with the contention that, as so
applied, it violates the 14th Amendment. Of this the supreme court said:
'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 Finnes Case (102 Minn. 334, 113 N. W. 883), 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
Finnes Case, we have no alternative but to affirm the action of the court below.'
9
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 are not disposed to
expend much time to show that the Minnesota statute was a valid exercise of
the police power of the state. Chicago, B. & Q. R. Co. v. McGuire, 219 U. S.
549, 55 L. ed. 328, 31 Sup. Ct. Rep. 259; Brodnax v. Missouri, 219 U. S. 285,
55 L. ed. 219, 31 Sup. Ct. Rep. 238. Whether it had extraterritorial effect is
another question. The contention 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 cases. The
principle cannot be contested, but plaintiff in error pushes it too far. Courts in
many ways, through action upon or constraint of the person, affect property in
other states (Fall v. Eastin, 215 U. S. 1, 54 L. ed. 65, 23 L.R.A.(N.S.) 924, 30
Sup. Ct. Rep. 3, 17 Ann. Cas. 853), 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.
10
In Polson v. Stewart, 167 Mass. 211, 36 L.R.A. 771, 57 Am. St. Rep. 452, 45
N. E. 737, a contract made in North Carolina tetween 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 were
incapable of contracting with each other. To the objection that the laws of the
parties' domicil could not authorize a contract between them as to land in
Massachusetts, it was answered: 'Obviously this is not true. It it true that the
laws of other states cannot render valid conveyances of 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
sitae cannot control personal covenants, not purporting to be conveyances
between persons outside the jurisdiction, although concerning a thing within it.
Whatever the coveant, the law 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 determines the
validity of the contract.' Precedents against the view were noted and contrasted
with those supporting it.
11
The case at bar is certainly within the principle expressed in Polson v. Stewart.
The Minnesota supreme court followed the prior decision in Finnes v. Selover,
B. & Co. 102 Minn. 334, 113 N. W. 883, in which it said 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 of 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 the land, and the law of the contract as to the
rights of the parties in the contract.
12
Plaintiff in error bases a contention upon the difficulty of complying with 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
cancelation 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 eal estate is 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 company 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.
13
The dilemma was not presented to the supreme court of the state for resolution,
as plaintiff in error had 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, no doubt, in a proper case, so construe the statute as to make it effective.
We are not called upon to anticipate its ruling.
14
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.
15
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 the laws of the state or
country wherein the land is situated,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, 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 in his situation. This is the test of the application
of the equal protection clause of the Constitution of the United States.
16
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
14th 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, 51 L. ed. 520, 27 Sup. Ct. Rep. 384.
17
Judgment affirmed.
18
The Chief JUSTICE and Mr. Justice Van Devanter dissent.

Selover, Bates & Co. v. Walsh, 226 U.S. 112 (1912)

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Selover, Bates & Co. v. Walsh, 226 U.S. 112 (1912)

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226 U.S.

SELOVER, BATES, & COMPANY, Plff. in Err.,

Mr. Arthur W. Selover for plaintiff in error.

Error to the supreme court of Minnesota to review a judgment of that court

By the contract, Bates, the assignor of plaintiff in error, covenanted to convey

in error in Minneapolis, punctually, and it was stipulated 'that time and

'There can be no serious question as to the constitutionality of the statute. It in

The Chief JUSTICE and Mr. Justice Van Devanter dissent.

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