Milliken v. Pratt

Brief Fact Summary

Pratt (Defendant) was a resident of Massachusetts and signed a guaranty for the benefit of Milliken (Plaintiff), her husband’s creditor and a Maine supplier.  At the time of the signing, she was incapable of entering into such a contract, due to Massachusetts law, although no such disability existed in Maine.

Synopsis of Rule of Law

A contract that is valid by the law of the state where it was made is enforceable everywhere including states where such contracts are invalid by statute.

Facts

Mr. Pratt obtained a signed guaranty for his debts from his wife, Mrs. Pratt (Defendant), as a condition of his buying on credit from Milliken (Plaintiff).  When the signing occurred, Pratt (Defendant) was a resident of Massachusetts and by the law of that state a married woman was statutorily incapable of acting as surety for her husband.  The guaranty was mailed to Plaintiff in Maine, his place of business, where he shipped goods as relied on.  When her husband subsequently defaulted, Pratt (Defendant) refused demand on the guaranty and Plaintiff brought suit against her in Massachusetts.  The court ordered judgment for Defendant.  Plaintiff appealed.

Issue

May a contract that is valid by the law of one state be enforceable against the citizens of another state in the courts of the second state where such contracts are statutorily invalid?

Held

(Gray, C.J.)  Yes.  A contract’s validity is to be determined by the law of the state where the contract was made.  If a contract was valid in one state, then it is valid and enforceable in every state.  If enforcement is sought in the courts of a state where such contracts are held invalid, it is still enforceable unless the contract is immoral in nature.  The acceptance of this contract occurred in Maine when Milliken (Plaintiff) acted on the guaranty.  The sales occurred in Maine since delivery was made by common carrier paid for by Pratt (Defendant).  If the incapacity of a married woman were a universal and unchanging situation, then enforcement of this contract in Massachusetts might be denied.  But the contractual capacity of women is constantly expanding and, in fact, Massachusetts has subsequently allowed married women to enter into such contracts.  Therefore, the guaranty is properly enforceable in Massachusetts.  Reversed.

Discussion

The traditional rules governing when a contract is formed have also been deemed to show where it was made.  Since this contract was accepted by shipment, the place of shipment determined where the contract was made.  The “vested rights†approach to contract led to strange results such as when a Mississippi woman, with full rights to contracts, was allowed to void a purchase in Tennessee since Tennessee did not recognize her contractual capacity.