Ehrenzweig, Albert A.

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The Most “Significant Relationship” in the Conflicts Law of Torts—Law and Reason Versus the Restatement Second

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THE "MOST SIGNIFICANT RELATIONSHIP" IN THECONFLICTS LAW OF TORTSLAW AND REASON VERSUS THE RESTATEMENT SECONDALBERT A. EHRENZWEIG*"The object of the [American Law] Institute in preparing the Restatement is topresent an orderly statement of the general common law of the United States...."'That the Restatement of the Law of Conflict of Laws failed to reach this aim andindeed misled the courts by its "dogmatic and over-simplified character"2 as well asby its adherence to the discredited doctrine of vested rights, was recognized by theleading scholars at the time of publication and is now generally admitted.One might have hoped that this experience would preclude further attempts at"restating" a body of "rules" whose coherence as an independent branch of the lawaccessible to "orderly statement" remains subject to doubt. Unhappily, however,the American Law Institute has for more than a decade been engaged in "revising"its original product. Professor Reese, the able Reporter for this Restatement Second,has offered a description of his effort in the present symposium It is with con-siderable misgivings that I have accepted the editor's invitation to comment on thispaper. I have stated elsewhere, perhaps all too often and all too vigorously, myopposition to both the substance and the procedure of the American Law Institute'sundertaking in this field. Moreover, it is always a hateful task to attack the workof a man for whom you feel the highest personal regard. Only the remaining hopeto induce the Restaters to withdraw their latest draft on the conflicts law of torts"has prompted me to offer these comments despite my misgivings.Professor Reese expects to be able to improve upon the work of his predecessorbecause he and his Advisers "can seek guidance from the large number of cases thathave been decided, from the legislation that has been enacted, and from the booksand articles that have been written since the appearance of the original Restatement."However, for reasons no doubt inherent in his task rather than chargeable to his*Dr. Jur. 1928, Vienna, Austria; J.D. 1941, University of Chicago; LL.M. 1942, J.S.D. 1952,Columbia University. Walter Perry Johnson Professor of Law, University of California, Berkeley. Author,A TREATIsE ON THE CONFLICT OF LAws (1962).1 RESTATEMENT, CONFLICT OF LAws viii (934).2 Reese, Conflict of Laws and the Restatement Second, supra p. 679, at 68o.8 Reese, supra note 2.'ALBERT A. EHRENZWEIG, A TREATISE ON THE CONFLICT OF LAWS (1962) [hereinafter cited asTaEATIsE]. See id. at 12-13 and passim; also Ehrenzweig, American Conflicts Law in Its HistoricalPerspective: Should the Restatement be "Continued"?, 103 U. PA. L. REv. 133 (1954); and infra noteg5 and 19.'Concerning earlier drafts on other subjects, see Ehrenzweig, Restitution in the Conflict of Laws:Law and Reason versus the Restatement Second, 36 N.Y.U.L. REv. 1298 (596i); Miscegenation in theConflict of Laws: Law and Reason versus the Restatement Second, 45 CORNELL L.Q. 659 (1960);TE-ATIs 351, 463-464.' Reese, supra note 2, at 68o.THE MOST SIGNIFICANT RELATIONSHIP IN TORTSskill, he has not in fact been able to avail himself of these opportunities. In mytreatise I have attempted to show throughout that the analysis, which according tothe Reporter's Notes underlies the tentative drafts of the Restatement Second, in-cludes a vast number of cases that fail to decide conflicts between differing laws andcan therefore not properly be adduced as authorities7 I have further attemptedto show that the language of most of the remaining cases is fatally burdened by thetheories advanced by the Restatement which have now been recognized as erroneous,and is frequently, if not usually, inconsistent with the results actually reached.Finally, even casual perusal of the Reporter's Notes shows how rarely the newdrafts have heeded the nearly unanimous opposition of today's leading authors, veryfew of whom are included among his Advisers. But be this as it may, an obviouslyconclusive reason for discontinuing the Restatement Second is the Reporter's con-cession that "choice of law, even now, is not ripe for restatement in the sense thatit is rarely possible to state hard and fast rules with the reasonable assurance basedon precedent and the resources of human reasoning and imagination that these ruleswill work well in all situations to which they literally can be applied."'Although having made this concession, Professor Reese still sees justification fora continuation of his effort in the hope to formulate "rules" which at least will notmislead' and will not be in the way of progress."° But even this aim, all toomodest for this ambitious enterprise, is not reached with regard to the outstandingexample for such a "rule," namely the recurring reference to the law with "the mostsignificant relationship." In its most recent application in the conflicts law of tortsthis reference is not only misleading, being admittedly contrary to existing law, butalso in the way of progress and thus contrary to reason.Professor Reese admits that "until recently the courts with rare unanimity appliedthe law of the place of injury to determine rights and liabilities in tort,"" butdiscounts that practice because "recently ... several important courts have eitherexpressed dissatisfaction with the rule or else have reached results that are inconsistentwith it."'" That fact might have justified a detailed analysis of results actuallyreached in individual fact situations.' 3 But it does not justify the American LawInstitute under the pretext of "restating" existing law to advance a general proposi-tion which, prior to its tentative announcement, had never been adopted by anycourt. A "restatement" cannot be properly used to "aid in inducing the courts to'tSee TREATIsE § 123, at 310-I, 439 n.iO, 449 n.3, 466 n.zi, and passim.' Reese, supra note 2, at 681.91d. at 699.10 Ibid." Ibid. See also Reese, The Ever Changing Rules of Choice of Law, 1962 NED. TsjsscsR.INT. R. 389, 390; id., Comment, 63 COLUTm. L. REV. 1251, 1254 (1963).Reese, supra note 2, at 699.'5 There is only one problem among twenty "issues covered" (§§ 3791-39og) as to which the Draftis not satisfied with the law of the "most significant relationship," namely the problem of intra-familyimmunity (§ 390g). Here, where the Draft, by referring to the law of the parties' common domicile,follows prevailing opinion, it was almost immediately approved by an outstanding court. Thompson v.Thompson, 193 A.2d 439 (N.H. 1963).LAW AND CONTEMPORARY PROBLEMSdepart from [a presumably accepted rule-here the place of injury rule] ... in situa-dons where this is desirable."'14But the new "rule" is not only admittedly contrary to prevailing authority. It isquite apt to be in the way of progress. This may be shown by the analysis of thefirst decision by an outstanding court, 5 which is squarely based on the secondRestatement's formula.This case is Lowe's North Wilkesboro Hardware, Inc. v. Fidelity Mutual LifeIns. Co." decided by the United States court of appeals for the fourth circuit (NorthCarolina), speaking through Chief Judge Sobeloff. Plaintiff, a North Carolinabusiness corporation, in order to qualify for a loan of $2,ooooo for the expansion ofits business, found it necessary to seek insurance in that amount on the life of itspresident. Attempting to distribute such insurance among several companies, plaintiffapplied to defendant, a Pennsylvania company, for a $2oooo policy. Approximatelythree weeks later defendant informed plaintiff's agent that only a $50,ooo policy couldbe approved and this counter offer was accepted with the request for further con-sideration of the matter. Its president having died two days later, plaintiff soughtdamages based on defendant's allegedly negligent delay in acting on the application.Although the court assumed, without so holding, that North Carolina law wouldpermit such actions, it affirmed a summary judgment for defendant based on thelaw of Pennsylvania to the contrary.In applying the law of that state the court discounted a line of North Carolinatraffic accident cases in which foreign law had been applied as the law of the placeof wrong, on the ground that in all of those cases the place of wrongful conduct hadcoincided with that of the injury, so that the North Carolina courts had never hadoccasion to consider "the multi-state features presented here." ''1 Treating the case,1' Reese, supra note 2, at 699. Cf. Reese, supra note Ii, at 392, where the author expresses doubt asto the wisdom of the rule now advocated in his draft for the Restatement Second. The inadequacy ofthe procedure underlying the preparation of the Restatement Second is dramatically illustrated by the factthat the crucial "most significant relationship" formula was first introduced by a 13 to x2 vote of theCouncil of the American Law Institute. RESTATEMENT (SEcoND), CONFLICT OF LAWS § 332b (note)(Tent. Draft No. 6, 196o)." To be sure, that decision, infra text at notes i6 et seq., relied on Babcock v. Jackson, z2 N.Y.2d473, 482, 191 N.E.2d 279 (1963), as a precedent for the use of the Restatement Second formula. SeeLeflar, Comment, 63 COLUm. L. Rav. 1247, 1249 (1963). But Babcock goes beyond that formula byweighing state "interests" foreign to the Restatement. This technique, it should be noted, cannot beidentified with Curries analysis which precludes a weighing of his "governmental interests." SeeEhrenzweig, Comment, 63 COLum. L. Rav. 1243, 1244-1245 (1963); Currie, id. at 1233, 1234-1235,1241. Leflar, id. at 1247, 1248, rightly suggests that "in later years it will be easy to merge the ideasof 'significant relationship' and 'governmental interests,'" in what Cavers (id. at 1218, 1222-1229)would deprecate as a new "jurisdiction-selecting rule." My own views, both agreement and disagree-ment, concerning Currie's approach are stated in Ehrenzweig, Choice of Law: Current Doctrine and"True Rules," 49 CALIF. L. REv. 240, 243-248 (1961); and TREATISE S 122.". Lowe's North Wilkesboro Hardware, Inc. v. Fidelity Mutual Life Ins. Co., 319 F.2d 469 (4 th Cir.x963)."Id. at 472. But see Lowe's North Wilkesboro Hardware, Inc. v. Fidelity Mutual Life Ins. Co.,2o6 F.Supp. 427, 429 (M.D. N.C. z962), afl'd, supra note 16, where the court felt bound by "the moretraditional conflict-of-law rule" presumably adopted by North Carolina. In support of that rule, seeagain the later case of Shaw v. Lee, 258 N.C. 6o9, 129 S.E.2d 288 (1963), criticized by Currie, Com-ment, 63 CoLum. L. REv. 1233, 1236-1237 (1963).THE MOST SIGNIFICANT RELATIONSHIP IN TORTStherefore, as one of novel impression, the court would have been free to start itsanalysis with the basic law of the forum. As I have tried to show elsewhere, courtswhose jurisdiction is properly invoked have at all times and in all countries, unlessmisled by wrong dogma, applied their own law except where legislative or settledjudicial rules of choice of law or the policy of the forum's municipal rule have re-quired a different answer.' 8 If the court had followed this approach, it would haveanalyzed the policy of the initially applicable rule of the forum. It might havedetermined that the North Carolina tort rule was primarily designed to admonishinsurers to improve their practice in handling applications.'9 It might then havepermitted defendant to exculpate itself under the law of Pennsylvania as the law towhich the conduct of its business was properly adjusted,"0 or precluded such ex-culpation on the ground that defendant was admitted to do business in NorthCarolina, a fact that apparently was the basis of the court's jurisdiction. ' Inchoosing between these answers the court might have wished to ascertain whetherthe defendant or the plaintiff had initiated their relationship. Or the court mighthave interpreted the North Carolina rule as primarily designed to distribute fairlythe losses inevitably caused by modern interstate mass operations and given priorityto the law of North Carolina as the law of that state by which the plaintiff couldreasonably expect to be protected.22 In any event, the court would have establisheda new rule of choice of law on grounds of forum policy that would have been ameaningful guidepost for the future. And there is little doubt that this distinguishedcourt would have done just that-were it not for the fact that the American LawInstitute had just announced its new facile formula." Ehrenzweig, The Lex Fori-Basic Rule in the Conflict of Laws, 58 MICH. L. REv. 637 (196o);and TREATISE §§ 102-I20. For an example of judicial recognition of this "fact of life," see Judge Tate'sopinion in Universal C.I.T. Credit Corp. v. Hulett, 15X So.2d 705, 711 (La. App. x963): "...in manyinstances the courts actually choose those formal conflict-of-law principles which justify the applicationof the law of the forum whenever there are sufficient factual contacts with the forum as to justify theapplication of its own law." See also Downs v. American Mutual Liability Ins. Co., 243 N.Y.S.2d 640,644 (App. Div. 1963), per Breitel, J. P., and Leflar, Comment, 63 CoLuIm. L. REv. X247 (1963)."' Regarding the distinction, for choice-of-law purposes, between admonitory and compensatory torts,which I have advocated for some time, see, e.g., Ehrenzweig, The Place of Acting in Intentional Torts:Law and Reason versus the Restatement, 36 MINN. L. RFv. 1 (i95i); Guest Statutes in the Conflict ofLaws, 69 YA-L L.J. 595 (196o); Alienation of Aflections in the Conflict of Laws: Towards the LaxFor for Admonitory Torts, 45 CORN.L L.Q. 514 (196o); and generally TrtATiSE § 2x2. The distinctionis recognized in RESTATEMENT (SEcOND), CoNFLICT OF Laws, comment b at 9-xo (Tent. Draft No. 8,1963)." This rationale would support the decision for the defendant insurer in Killpack v. National OldLine Ins. Co., 229 F.2d 851 (xoth Cir. 1956), where the court denied the claim under the law of thelocation of the defendant's home office in erroneous reliance on the first Restatement, Beale, and Vroomanv. Beech Aircraft Corp., X83 F.2d 479 (ioth Cir. 1950) (law of place of conduct applied to productsliability claim, see TREATiSE 588 n.7). Conversely, assumption of an admonitory ("penal") purposeof a liability rule of the foreign lex actus may result in denial of liability under the lex fori. SeeConsolidated Auto Warranty Corp. v. Bankers Fire & Marine Ins. Co., 183 F. Supp. 816 (N.D. Ala. 196o)(damages claimed for delay of payment)."On the Law of the Proper Forum: Ultimate Harmony of the Rules of Conflict of Laws andChoice of Jurisdiction, see Ehrenzweig, l1 diritto del tribunale adatto, 17 Diritto Internazionale 3 (1963),and TREATIsE §§ 124, 174(5)." See Mann v. Policyholders' Nat. Life Ins. Co., 78 N.D. 724, 51 N.W.2d 853, 857-58 (1952);TREATisE 564 n.56. See also for a similar situation (attorney's fees against insurer), Tierney v. SafecoIns. Co., 216 F. Supp. 59 o , 596 (D. Ore. 1963).LAW AND CONTEMPORARY PROBLEMSPlaintiff had claimed applicability of the law of North Carolina because it was inthat state that its president had resided and died, that it was engaged in business,and that it suffered the loss. But, feeling called on "to inquire which state has themost significant relationship with the events constituting the alleged tort and withthe parties,"2 the court held that Pennsylvania law was applicable since "the impor-tant events upon which liability, if any, would rest occurred in Pennsylvania."24 Themost significant relationship was thus found in that state in which "the alleged delay,the foundation of the cause of action, took place. 25With this reasoning we are back to the first Restatement, to that very theoryof "analytical jurisprudence," of territorialism, and vested rights, which the "mostsignificant relationship" formula of the tentative draft for the Restatement Secondpurports but fails to displace 6 For again we are entangled in the circular reasoningwhich refers us to the law under which the "cause of action" is alleged to havevested, and again the place of wrong, so often fortuitous, assumes its predominantimportance. But it must be noted that this reversion to obsolete dogma is by nomeans chargeable to the court. The authors of the draft would protest in vain thatthe "most significant relationship" test, if properly applied, would discard thetheoretical basis of the first Restatement. To be sure, "in determining the relativeimportance of the contacts," the Restatement Second would among other things letthe forum also consider "the relevant purposes of the tort rules involved." 27  Butnot only has it, among the significant contacts, retained the places of injury andconduct; 28 not only has it preserved the general theory of "legislative jurisdiction";2"but it has generally maintained the concept of rules governing certain situations80in a "neutral forum."31 Conflicts rules applicable in such a court are necessarily basedon the erroneous assumption of a law that is applicable a priori wherever the suit isbrought. If the neutral court was properly invoked, its primary reference wouldalways have to be to its own law and the policies underlying itY2The actual result in the Lowe case was no doubt prompted by its peculiar facts,namely the lack of any indication of wrongful conduct by the defendant 3 and theambiguity of the law of the forum,34 in the same manner as a much-noted contractcase using the "most significant relationship" formula was no doubt prompted by" Lowe's North Wilkesboro Hardware, Inc. v. Fidelity Mutual Life Ins. Co., 319 F.2d 469, 473(4 th Cir. 1963)." Id. at 474-"Ibid."REsrATMENT (SECOND), CoNFLIcT oF LAws 1-2 (Tent. Draft No. 8, 1963); id. at 3 (Tent. DraftNo. 6, I960).27Id. 9379 (3) (Tent. Draft No. 8, 1963).2 id. 5 379(2) (a), (b). For criticism, see Currie, Comment, 63 COLUm. L. REv. 1233, 1235 (1963).'" Id. at 20 (Tent. Draft No. 3, 1956). See TREATISE 12-13, 36. For an isolated actual use of thisconcept, see RESTATEMENT (SECOND), CONFLICT OF LAWS § 151(b), comment g (Tent. Draft No. 7, 1962).SREsTATEMENT (SECOND), CONFLICT OF LAWS passim. See TREATISE H§ 103, 123.Reese, supra note 2, at 692.52 See notes 18 and 21 spra."See also Killpack v. National Old Line Ins. Co., supra note 20, where the court expressly foundlack of negligence." Supra note 16, at 472.THE MOST SIGNIFICANT RELATIONSHIP IN ToRTs 705its equities. In that case the New York court of appeals, contrary to the law ofNew York, rejected a support suit by a New York mother by reference to the lawof Illinois which permitted an alleged father to buy off his obligations to the childwithout judicial approvalY5  One may presume that the court did so because thefather had generously fulfilled his moral duties. 6 Clearly, then, the "most signifi-cant relationship" formula is readily usable as a tool to give effect to equitableconsiderations. But this formula, if recognized and applied as an abstract rulefor the choice of a governing law, may lead those courts unaware of the intricaciesand pitfalls of conflicts law to arbitrary decisions unguided by the indispensableanalysis of the primary law and policy of the forum3 7  Ceterum censeo...." Haag v. Barnes, 9 N.Y.2d 554, 175 N.E.2d 441 (596i)." See Currie, Conflict, Crisis and Confusion in New York, 1963 DUKE L.J. 1, 39-52 (1963);Ehrenzweig, The "Bastard" in the Conflict of Laws-A National Disgrace, 29 U. Cm. L. REV. 498 (1962);TREATISE 400." For critical analysis of the "most significant relationship" formula as originally advanced in theconflicts law of contracts, see particularly Cavers, Re-Restating the Conflict of Laws: The Chapter onContracts, TWENTIETH CENTURY COMPARATIVE AND CONFLICTS LAw 349-64 (Nadelmann, Von Mehren& Hazard ed. 1961), and Rheinstein, Bo k Review, ixi Am. J. Comp,. L. 632, 655-58 (1962). Seealso TREATISE § 123.

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The Most “Significant Relationship” in the Conflicts Law of Torts—Law and Reason Versus the Restatement Second

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