## Facts

- A Washington corporation sold quarry equipment located in Oregon to two Washington residents, Roy E. Goble and J. F. Wallace, under a conditional sale contract.
- The seller’s Oregon lawyer prepared the contract, and the parties executed it in Oregon.
- The purchasers paid $6,000 down, then promptly moved the equipment to Washington, where it was used.
- The purchasers paid a total of $20,000, leaving an unpaid balance of $20,000, and then defaulted.
- The seller sued in Washington for the unpaid balance against the husbands, their wives, and both marital communities.
- The trial court applied Oregon law as the place of contracting and ruled only the husbands were liable; it dismissed the claims against the wives and communities.
- The seller appealed only the dismissal of the wives and marital communities.

## Issues

1. In an action on a contract executed in Oregon but performed and economically centered in Washington, which law governs whether Washington marital communities are liable: Oregon law under lex loci contractus or Washington law under the most-significant-relationship approach?
2. If Washington law applies, are the marital communities liable for the unpaid contract balance incurred by the husbands during marriage for property used in Washington?

## Decision

- The Washington Supreme Court reversed the dismissal of the wives and marital communities and remanded.
- The court applied the “most significant relationship” rule for contractual choice-of-law questions rather than lex loci contractus.
- Washington law governed the question of community liability.
- Under Washington community-property law, the marital communities were liable for the debt arising from the purchase and use of the equipment.

## Legal Principles

- Contractual choice-of-law disputes are resolved by applying the law of the state with the most significant relationship to the transaction and the parties, not automatically the place of contracting.
- In determining the most significant relationship, relevant contacts include the parties’ domicile, where the transaction is carried out and has its economic effect, and the forum’s interest in regulating the rights and obligations at issue.
- Washington has a strong interest in defining and enforcing the liability of Washington marital communities for obligations incurred by spouses domiciled in Washington.
- When Washington law governs, a debt incurred during marriage for community purposes may be enforced against the marital community, even if the contract was executed in a non-community-property state.

## Conclusion

The court held that Washington had the most significant relationship to the dispute over community liability, applied Washington community-property law, and required that the husbands’ marital communities be held liable for the unpaid balance on the conditional sale contract.


Pacific States Cut Stone Co. v. Goble, 425 P.2d 631 (Wash. 1967)