Laws Applicable To Movable Property

Movables include all things, tangible or intangible, that are not immovable.  A state has absolute authority over personal or movable property within its borders.  The state has the right to regulate the transfer of such movable property[i] and only in instances where the state allows can such property be affected by the law of any other state.

According to an ancient legal fiction, movables follow the person.  Movable property was supposed to stay with the person of the owner.  Therefore, such property did not have any situs other than the domicile of the owner.  This doctrine resulted in the evolution of the universal principle that for most purposes personal property should be governed, no matter where actually situated, by the law of the domicile of the owner; which law would change with a change of domicile.  However, in certain circumstances, the law of the state where the property was actually situated, rather than the domiciliary law is applied to the transfer.

The validity of a conveyance of tangible chattels or securities is determined by the law of the state where the chattel is situated at the time of the conveyance.  Likewise, the formalities such as acknowledgement, necessary to the validity of a conveyance of a chattel, the nature of interests conveyed, the effect o the conveyance on pre-existing interests in the chattel are determined by the law of the state where the chattel is situated at the time of the conveyance.  Intangible personal property also follows the person and is governed by the law of the domicile of the owner.  In the case of debt, being an intangible, the property is governed by the domicile of the creditor.  The validity and effect of a lien on a chattel are determined by the law of the state where the chattel is at the time when the lien is created.

As a matter of public policy, a state is empowered to decide whether to apply its own rules to property, within the state, of foreigners who choose to place it there for custody or investment, and to honor or not the formal agreements or suggestions of such owners by which the state’s law would apply.  Generally, law of the place of contracting determines if a right under a contract is capable of being transferred by the owner.  Law of the state where a transfer is made governs the validity of the transfer of a chose in action.  However, if the transfer of a chose in a state other than the state wherein the chose is located conflicts with the interests of the latter state, it will not be regarded as valid in such state.

The Restatement provides that as between persons who are not both parties to the conveyance of a right embodied in a document, the effect of the conveyance depends upon the effect of the conveyance of the document, and this is determined by the law that would be applied by the courts of the state where the document was at the time of the conveyance. Such courts usually apply their own local law.

[i] Goetschius v. Brightman, 245 N.Y. 186 (N.Y. 1927)


Inside Laws Applicable To Movable Property