Stern's Response
Young on Erie's Suppressed Premise

Renvoi and the Situs Rule

I’ve been working on sending out a paper this season and so have been a negligent blogger. But I wanted to (finally) respond to some of James’s comments. It is useful to distinguish between a non-situs state perspective and the perspective of the situs state. James is arguing that a non-situs state court should adopt a renvoi approach—that is, make the choice-of-law decision that a situs state court would. The puzzle is that precisely in the circumstances where the non-situs state court has a reason to adopt renvoi (that is, when its judgment purports to be in rem), it should dismiss for lack of jurisdiction. It is true that if it is set on making a judgment in rem, it should decide as a situs state court would. But it shouldn’t really be in the business of making such a judgment at all. On the other hand, if its judgment won’t interfere with the in rem quality of the property, who needs renvoi?

This issue came up in class concerning In re Schneider’s Estate. The property at issue (which was in Switzerland) had been sold and the proceeds were before a NY court. Whoever bought the property in Switzerland owns it. The question the NY court was answering was who owns the money. So what argument is there for renvoi? 

Curiously, I think the argument for the situs rule being used by the situs state may be stronger than the argument for non-situs state courts using renvoi. The reason has less to do with what situs state courts should do. Whatever judgment they come to will itself have the in rem quality that we want. The problem is the countless decisions that people make concerning property outside a litigation context. James is right that property rules are different. Because property is good against the world, we want property rules to be very simple, and any deviation from the situs state’s law will not be simple. This is tied to the argument that anyone doing a title search should be able to rely on situs state law applying.

But, to repeat, the same arguments don't seem applicable in litigation or to cases in which we know ownership of the property will be decided in litigation. 

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