106 U.S. (16 Otto) 124, 1 S. Ct. 102, 27 L. Ed. 104 (1882)
The dispute in this case arose from a surety arrangement in Louisiana.1 Pritchard had previously become liable as surety for a railroad company by executing an appeal bond in that state.2 Under Louisiana law, this obligation could be performed and discharged only within Louisiana.3
Subsequently, McComb and Norton executed a separate bond of indemnity in New York.4 The terms of this bond required them to hold Pritchard harmless and to fully indemnify him against any loss or damage that might arise from his earlier liability as surety on the appeal bond.5
After a judgment was rendered against Pritchard on the appeal bond in a Louisiana court, he instituted an action on the indemnity bond in a federal circuit court.6 Because the court's jurisdiction rested on the diverse citizenship of the parties, it was required to apply the appropriate state law to the controversy.7 The circuit court determined that New York law governed the validity of the indemnity contract and accordingly entered judgment in favor of the defendants.8
Whether the law of New York or that of Louisiana defines and fixes the rights and obligations of the parties?9
The principle that in every forum a contract is governed by the law with a view to which it was made determines the rights and obligations of the parties to the contract.10 The obligation of the bond of indemnity is to place the fund for payment in the hands of the surety in the place where he was bound to discharge his own liability.11 Therefore, the law of that place governs the validity of the consideration supporting the promise of indemnity.12
Yes. The law of Louisiana defines and fixes the rights and obligations of the parties.1314 The antecedent liability of Pritchard as surety was contracted in Louisiana according to its laws and could be performed and discharged only there.15
Therefore, the contract was entered into with a view to the law of Louisiana as the place for the fulfilment of its obligation, making the question of the sufficiency of the consideration determinable by Louisiana law rather than New York law.16
The law of Louisiana defines and fixes the rights and obligations of the parties.