## Facts

- Richard Pritchard, a Louisiana resident, became surety on a Louisiana appeal bond for a railroad company in a state-court case; the sureties would be liable if the railroad failed to satisfy the judgment after appeal.
- In New York, Henry S. McComb and Ex Norton executed and delivered a sealed \$55,000 indemnity bond to Pritchard promising to hold him harmless for losses arising from his suretyship on the Louisiana appeal bond.
- The Louisiana Supreme Court affirmed the underlying judgment against the railroad, fixing Pritchard’s liability as surety.
- Pritchard paid the judgment and, after his death, his executrix sued Norton in federal court in Louisiana to recover under the indemnity bond.
- Norton asserted the indemnity bond was void under New York law for lack of consideration, because it was based only on a preexisting liability allegedly undertaken without Norton’s request.

## Issues

1. Whether the sufficiency of consideration for the indemnity bond is a procedural/remedial matter governed by the law of the forum, or a substantive validity question governed by the law applicable to the contract.
2. Which state’s law governs the bond’s substantive validity: New York (place of execution and delivery) or Louisiana (place where the underlying liability arose and where indemnification would be effective).

## Decision

- The Supreme Court reversed the judgment for Norton and ordered a new trial.
- The Court held that validity of the bond, including sufficiency of consideration, is a substantive issue, not a procedural or remedial one.
- The Court determined the governing law was Louisiana’s, because the indemnity obligation was to be performed and have its operative effect there.
- Applying Louisiana law, the consideration was sufficient, so the indemnity bond was not invalid for want of consideration.

## Legal Principles

- Contract validity questions, including whether consideration is sufficient, are matters of substance governed by the law applicable to the obligation, not by the forum’s remedial law.
- Absent an express choice of law or controlling contrary circumstances, a court may presume the parties contemplated application of a law under which the contract will be upheld rather than defeated.
- For an indemnity obligation tied to discharging liability in a particular state, the place of performance (lex loci solutionis) may control over the place of execution when identifying the contract’s governing law.

## Conclusion

The Court treated consideration as part of substantive contract validity and applied Louisiana law because the indemnity bond’s performance centered on satisfying or reimbursing a liability fixed in Louisiana, rendering the bond enforceable despite New York’s stricter consideration rules.


Pritchard v. Norton, 106 U.S. 124 (1882)