## Facts

- A lender sued a husband and wife on a promissory note and sought to foreclose a mortgage.
- The note and mortgage were executed in Ohio, but the mortgaged real property was located in Indiana.
- The wife alleged she was married when she signed and that she executed the mortgage only as surety for her husband’s debt.
- The Indiana land encumbered by the mortgage was owned by the wife.
- Indiana law then in force restricted a married woman’s ability to encumber her separate Indiana real estate as surety for her husband.
- The lender argued Ohio law should control because the instruments were executed in Ohio and would be valid there.

## Issues

1. Whether the enforceability of a mortgage on Indiana land, executed in another state by a married woman as surety for her husband, is governed by the law of the place of execution or by Indiana law as the situs of the land.
2. Whether the wife’s capacity to mortgage her Indiana real estate is a question of contract construction (lex loci contractus) or capacity/power governed by the law of the land’s situs.

## Decision

- The Indiana Supreme Court affirmed the trial court’s refusal to enforce the mortgage against the Indiana land.
- The court held that Indiana law, as the law of the situs, governs the wife’s capacity to mortgage Indiana real property.
- Because Indiana law denied a married woman capacity to mortgage her Indiana land merely as surety for her husband, the mortgage was unenforceable in Indiana.
- On rehearing, the court reiterated that the dispositive question was capacity, not construction of the contract.

## Legal Principles

- The law of the situs governs the validity of conveyances and mortgages of real property, including a party’s capacity or power to execute the instrument.
- A conflict-of-laws rule applying the place-of-contracting to contract construction does not control when the issue is a party’s capacity to encumber land in another state.
- If the situs state’s law withholds capacity to mortgage land in the manner attempted, an instrument executed elsewhere cannot be enforced against that land in the situs state, even if valid where executed.

## Conclusion

The court held that a married woman’s capacity to mortgage Indiana land is determined by Indiana law, and a mortgage executed out of state as surety for her husband cannot be foreclosed in Indiana when Indiana law denies her capacity to make that encumbrance.


Swank v. Hufnagle, 111 Ind. 453, 12 N.E. 303 (Ind. 1887)