The parties to this action on December 11, 1916, in New York City, entered into a contract, the essential terms of which appear in the following letter from petitioner to respondent:
'Referring to our conversation this afternoon, I beg to advise that you are authorized to offer the steamer Eskasoni for sale for four hundred and seventy-five thousand dollars, $475,000.
'Details as to terms of payment, transfer of steamer, etc., can be talked over when you have purchasers.'
Respondent was a citizen of the state of New York and a resident of New York City. Petitioner was a foreign corporation, organized and existing under the laws of the Dominion of Canada. The steamship referred to was a Britsh steamship of St. Johns, Newfoundland, owned by the petitioner. It was agreed that the respondent should receive 2 1/2 per cent. commission for securing a purchaser for the ship. Respondent undertook the employment and subsequently introduced to petitioner two prospective purchasers, with whom petitioner entered into a written contract for the charter and sale of the ship for the sum mentioned. Five thousand dollars was paid down on account, out of which respondent received 2 1/2 per cent., or $125.
Subsequently it appeared that the petitioner was bound by a contract with the British government to comply with the instructions and rules of that government in the operation of its vessels, and whereby it agreed not to charter any vessel to any one to whom that government should object. Among the governmental regulations then in force was one which provided that:
'A person shall not without permission in writing from the shipping comptroller directly or indirectly and whether on his own behalf or on behalf of or in conjunction with any other person, purchase or enter into or offer to enter into any agreement or any negotiations with a view to an agreement for the purchase of any ship or vessel.'
Any act in contravention of this regulation was declared to be an offense.
Permission to make the sale in question was never obtained and the petitioner was notified by its consul that such permission would be withheld by the British government. The petitioner thereupon refused to consummate the sale and returned to the purchasers the $5,000 which they had paid.
The respondent brought an action against petitioner in the District Court of the United States, Southern District of New York, to recover the balance of his commission, which resulted in a judgment in his favor. On error to the Circuit Court of Appeals for the Second Circuit that court affirmed the judgment of the lower court, and the petitioner brings the case here on writ of certiorari.
The District Court declined to charge, as requested by petitioner, that if the jury believed the evidence to the effect that the contract under British law was illegal and void, that this would constitute a good defense to the action. On the contrary, that court instructed the jury in effect that the invalidity of the contract under British law would constitute no defense to the action and directed a verdict for the respondent, which was returned in the sum of $11,750, and judgment was entered accordingly.
The contract, as stated, was made in New York, and it does not appear that the contracting parties in making it had in view any other law than that of the place where it was made. It is therefore to be governed as to its validity and operation by the law of the state of New York. Bulkley v. Honold, 19 How. 390, 392, 15 L. Ed. 663; Scudder v. Union National Bank, 91 U.S. 406, 412, 23 L. Ed. 245. Tested by that law the contract is valid. By the terms of the contract respondent was 'authorized to offer the steamer Eskasoni for sale for $475,000.' Nothing was said as to where the ship then was, what flag she carried nor what law was to govern the transaction. The contract of charter and sale provided for the payment of the consideration in several installments in New York City and for the delivery of the ship to the purchasers at that port.