Pattridge v. Palmer , 201 Minn. 387 ( 1937 )

1. The rule of Luce v. Clarke, 49 Minn. 356, 51 N.W. 1162, reiterated in cases which follow it, is predicated upon a fundamental error that a cause of action arises, under the statute (§ 9201), only at the place of a debtor's domicile. The overwhelming weight of authority is to the effect that a cause of action consists of a primary right in the plaintiff, a corresponding duty in the defendant, and a breach by the defendant. Of these essentials of a cause of action, Pomeroy says, at page 528, § 347, Code Remedies (5 ed.):

"Every action, however complicated or however simple, must contain these essential elements. Of these elements, the primary right and duty and the delict or wrong combined constitute the cause of action in the legal sense of the term, and as it is used in the codes of the several States. They are the legal cause or foundation whence the right of action springs, this right of action being identical with the 'remedial right' as designated in my analysis."

The rule stated by the learned author was announced by this court in King v. C. M. St. P. Ry. Co. 80 Minn. 83,82 N.W. 1113, 50 L.R.A. 161, 81 A.S.R. 238. It is the universally accepted rule. Lawson v. Tripp, 34 Utah, 28, 95 P. 520; Swift v. Clay, 127 Kan. 148, 272 P. 170; Hahl v. Sugo, 169 N.Y. 109,61 L.R.A. 226, 88 A.S.R. 539; South Bend Chilled Plow Co. v. George C. Cribb Co. 105 Wis. 443, 81 N.W. 675. The cause of action is plainly different from the remedial right and from the remedy or relief itself. Pomeroy, Code Remedies (5 ed.) § 348, and cases cited in the notes.

The cause of action arises at the place where the breach occurs because that is the last essential element necessary to make a complete cause of action. A cause of action cannot be said to arise from the signing and delivery of the note alone. Then the matter is one of right or duty. It does not arise until there is a breach of the duty. That is the final essential element of the cause of action. The breach of duty gives rise to the right to sue, to the cause of action. In Patterson v. Patterson, 59 N.Y. 574,578, 17 Am. R. 384, the court said:

"Nor is there room for difference as to what is meant by the phrases 'cause of action has accrued,' or 'cause of action has arisen,' * * * They do not mean the contracting of the indebtedness, for a cause of action does not accrue or arise from the making of the contract of indebtedness alone, but out of the nonperformance of it as well."

The default or breach occurs at the place of performance. Hoyt v. McNeil, 13 Minn. 362 (390); McKee v. Dodd, 152 Cal. 637,93 P. 854, 14 L.R.A.(N.S.) 780, 125 A.S.R. 82; West v. Theis,15 Idaho, 167, 96 P. 932, 17 L.R.A. (N.S.) 472, 128 A.S.R. 58; Swift v. Clay, 127 Kan. 148, 272 P. 170; Klotz v. Angle,220 N.Y. 347, 116 N.E. 24; Whiting v. Miller, 188 A.D. 825,176 N Y S. 639; Plummer v. Lowenthal, 165 N.Y. S. 220; Lawson v. Tripp, 34 Utah, 28, 95 P. 520; Drake v. Found Treasure Min. Co. (C. C.) 53 F. 474; Pond Creek Mill Elevator Co. v. Clark (C. C. A.) 270 F. 482, 488; Auglaize Box Board Co. v. Kansas City Fibre Box Co. (C.C.A.) 35 F.2d 822. See Restatement, Conflict of Laws, § 370. There may be some exceptions to this, as, for example, anticipatory breaches of contract, but it is not necessary for us to decide that question now. The cases involving anticipatory breach of contract hold that the general rule is as stated. Wester v. Casein Co. 206 N.Y. 506,100 N.E. 488, 490, Ann. Cas. 1914B, 377, a case involving an action for anticipatory breach of contract, in which it is stated, at p. 514:

"The place where a cause of action for a breach of contract arises is generally — almost universally — the place where the contract is to be performed. The reason why the place of the breach of contract is generally the place of its performance is that unless the place of performance is waived or performance is anticipated it is only at such place that there is a breach or that it can be determined whether there is a breach."

See Restatement, Conflict of Laws, § 370:

"The law of the place of performance determines whether a breach has occurred."

These authorities all hold that a breach is the final essential element necessary to give rise to a cause of action and that the cause of action arises at the place of performance because the breach is at that place. The statute of California has been construed in harmony with this view. If plaintiff had been a resident of California and defendant a resident of Minnesota and the suit were brought in the courts of California upon a note payable there, the courts of that state would hold that the cause of action arose where the breach occurred, namely, in California, and hence would not be subject to the operation of the Minnesota statute of limitations. McKee v. Dodd, supra.

2. A cause of action cannot be said to arise, under the statute (§ 9201), at more than one place. The distinction between the place where a cause of action arises and the debtor's domicile is erased, as it must be, to reach the decision in this case. Both statute and decision law recognize the distinction. Thus, in the Restatement, Conflict of Laws, § 604, comment b, it is said:

"Statutes frequently provide that an action may not be maintained if it has been barred by the statute of limitations at the place where the action accrued or, in some cases, at the domicil of the defendant."

Riser v. Snoddy, 7 Ind. 442, 65 Am. D. 740, considers a statute which provided that the bar should be that of the state of the debtor's domicile. Under our statute, the bar is that of the place where the cause of action arises. By holding that the cause of action arises at the debtor's domicile, instead of at the place where it arises as a matter of law, the statute has been amended by judicially legislating to substitute the court's notion of what the law is or should be for the legislature's express provision. We should not forget that we are construing a statute which by its implications restrains the process of construction. It is plain that the statute contemplates that the cause of action arises in one place. Therefore it is useless to talk about the possibility of a cause of action arising in more than one place because the statute allows to be asserted here the bar "of the place where it [the cause of action] arose." It does not provide for admitting the bar of the places where the debtor might have been or resided. See 3 Beale, Conflict of Laws, § 604.2, p. 1622.

3. The doctrine of stare decisis does not compel adherence to Luce v. Clarke and other cases which have followed it. The rule of that case is not only erroneous as a legal proposition, as the court admits, but it is unjust to our citizens in that they are deprived, by our decision law, of the right to assert their claims as against citizens of California under § 9201, while citizens of California are accorded the privilege by the decision law of that state of asserting their claims against the citizens of our and other states. See McKee v. Dodd,152 Cal. 637, 93 P. 854, 14 L.R.A.(N.S.) 780, 125 A.S.R. 82. Of course no one will deny that the rule of stare decisis is a wholesome one and should not be minimized. In State v. G. N. Ry. Co. 106 Minn. 303, 335, 119 N.W. 202, 210, we held that hasty and crude decisions "ought to be examined without fear, and revised without reluctance" and that even a series of decisions is not always conclusive of what is the law. In 7 R.C.L. p. 1008, § 35, the rule is thus stated:

"But the strong respect for precedent which is ingrained in our legal system is a reasonable respect which balks at the perpetuation of error, and it is the manifest policy of our courts to hold the doctrine of stare decisis subordinate to legal reason and justice, and to depart therefrom when such departure is necessary to avoid the perpetuation of pernicious error."

Nor do I think we should be frightened by our apprehensions. Mr. Justice Cardozo minimizes them. He says that the "picture of the bewildered litigant lured into a course of action by the false light of a decision, only to meet ruin when the light is extinguished and the decision overruled, is for the most part a figment of excited brains," and that "the only rules there is ever any thought of changing are those that are invoked by injustice after the event to shelter and intrench itself." He observes that only "in the rarest instances, if ever, would conduct have been different if the rule had been known and the change foreseen." Cardozo, The Growth of the Law, p. 122.

That we have not been deterred by the doctrine from overruling decisions which we believed to have been erroneously decided is evidenced by many decisions of this court, a reference to a few of which will be illustrative. State v. Lopes, 201 Minn. 20, 275 N.W. 374, overruling State v. Howard,66 Minn. 309, 68 N.W. 1096, 34 L.R.A. 178, 61 A.S.R. 403; Midland Loan Finance Co. v. Osterberg, 201 Minn. 210,275 N.W. 681, overruling Holmes v. Schnedler, 176 Minn. 483,223 N.W. 908. Numerous other instances could be enumerated.

With this record it is hard to understand why we should adhere to rulings which are not only erroneous but which we admit to be wrong. It seems to me that this is a case in which we ought not to feel in the least restrained from overruling our prior decisions. The courts of other states which adopted the same rule as we did in Luce v. Clarke have not hesitated to overrule such decisions when they perceived their error and to adopt the correct rule. See Swift v. Clay, 127 Kan. 148,272 P. 170, overruling Bruner v. Martin, 76 Kan. 862, 93 P. 165,14 L.R.A.(N.S.) 775, 123 A.S.R. 172, 14 Ann. Cas. 39; West v. Theis, 15 Idaho, 167, 96 P. 932, 17 L.R.A.(N.S.) 472,128 A.S.R. 58. See 22 Harvard L.Rev. 62, criticizing Luce v. Clarke.

The decision below should be reversed.