OUELLETTE v. STURM, RUGER & CO.
AND JONES v. NORTH AMERICAN
AERODYNAMICS: THE EFFECTIVENESS
OF MAINE'S BORROWING STATUTE IN
CASES INVOLVING CORPORATIONS
Maine's borrowing statute' provides that a person may not bring
an action in Maine that has been barred by the laws of another jurisdiction wherein all parties resided. In effect, the statute permits
"borrowing" the limitation period of the other jurisdiction. In Ouellette v. Sturm, Ruger & Co.,2 the Maine Supreme Judicial Court,
sitting as the Law Court, interpreted the residency requirement of
the borrowing statute as it relates to a corporation and held that for
purposes of the statute a corporation is a resident of only the state
in which it is incorporated.3 Because of the peculiar wording of the
statute, the Law Court's decision in Ouellette raises questions as to
the effectiveness of the borrowing statute in the majority of cases
involving corporations, especially in light of Jones v. North American Aerodynamics, Inc.4 On its facts, Jones presented a strong argument for application of the borrowing statute, but as a result of the
Ouellette decision, the Law Court held that the statute did not apply. A juxtaposition of the two cases illustrates some fundamental
problems with Maine's borrowing statute and the Law Court's interpretation of it.
Borrowing statutes are a legislative response to problems which
develop when more than one statute of limitations could apply to a
particular cause of action.5 The traditional rule is that the limitation
1. The borrowing statute is the last sentence of Ms. REv.
(1980), which reads in full:
STAT. ANN.
tit. 14, § 866
§ 866. Defendant out of State when action commenced;
insolvency
If a person is out of the State when a cause of action accrues against him,
the action may be commenced within the time limited therefor after he
comes into the State. If a person is absent from and resides out of the
State, after a cause of action is accrued against him, the time of his abs3ence
from the State shall not be taken as a part of the time limited for the commencement of the action. If a person is adjudged an insolvent debtor after a
cause of action has accrued against him, and such cause of action is one
provable in insolvency, the time of the pendency of his insolvency proceedings shall not be taken as a part of the time limited for the commencement
of the action. No action shall be brought by any person whose cause of
action has been barred by the laws of any state, territoryor country while
all the parties have resided therein. (emphasis added).
2.
3.
4.
5.
466 A-2d 478 (Me. 1983).
Id. at 481.
468 A.2d 623 (Me. 1983).
Note, Statutes of Limitation: Lex Loci or Lex Fori, 47 VA. L. RE%. 299, 308
MAINE LAW REVIEW
[Vol. 37:211
period of the forum state is used.' In some instances, this rule allows
a plaintiff to circumvent a time bar by bringing suit in a jurisdiction
with a longer limitation period. In order to eliminate this opportunity for forum shopping, a majority of states have enacted some
type of borrowing statute.' Although the wording and operation of
the different statutes vary considerably,' borrowing statutes gener(1961).
6. This is a result of the rule that the procedural laws of the forum apply, see
RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 122 (1971), and the classification of
statutes of limitations as procedural law. Maine follows this traditional classification
of statutes of limitations as procedural law. See Hossler v. Barry, 403 A.2d 762, 766
(Me. 1979); Alropa Corp. v. Britton, 135 Me. 41, 44, 188 A. 722, 723 (1936).
There has been considerable academic criticism of the classification of statutes of
limitations as procedural law because it permits a forum state to apply its own statute of limitations regardless of the significance of contacts between the forum state
and the litigation. See, e.g., R. WEINTRAUB, COMMENTARY ON THE CONFLICT OF LAWS §
9.2B at 517 (2d ed. 1980); Grossman, Statutes of Limitations and the Conflict of
Laws: Modern Analysis, 1980 ARIZ. ST. L.J. 1 (1980); Martin, ConstitutionalLimitations on Choice of Law, 61 CORNELL L. REV. 185, 221 (1976). The United States Supreme Court recently acknowledged this criticism but stated "we find it unnecessary
to express an opinion at this time as to whether any arguable unfairness rises to the
level of a due process violation." Keeton v. Hustler Magazine, Inc., 104 S. Ct. 1473,
1480 n.10 (1984).
A number of jurisdictions have abandoned the automatic application of the forum
state's statute of limitations. In the leading case, a New Jersey court applied North
Carolina's statute of limitations despite the absence of a borrowing statute. Heavner
v. Uni-Royal, Inc., 63 N.J. 130, 305 A.2d 412 (1973). See also Schum v. Bailey, 578
F.2d 493 (3d Cir. 1978); Dindo v. Whitney, 429 F.2d 25 (1st Cir. 1970); Horton v.
Jessie, 423 F.2d 722 (9th Cir. 1970); Harrison v. Wyeth Laboratories, 510 F. Supp. 1
(E.D. Pa. 1980); Sibley v. KLM-Royal Dutch Airlines, 454 F. Supp. 425 (S.D.N.Y.
1978); Farrier v. May Dep't Stores Co., 357 F. Supp. 190 (D.D.C. 1973); Myers v.
Cessna Aircraft Corp., 275 Or. 501, 553 P.2d 355 (1976); Air Products & Chemicals,
Inc. v. Fairbanks Morse, Inc., 58 Wis. 2d 193, 206 N.W.2d 414 (1973).
7. Thirty-eight states have borrowing statutes in effect. See ALA. CODE § 6-2-17
(1975); ALASKA STAT. § 09.10.220 (1983); ARIZ. REV. STAT. ANN. § 12.506 (1982); ARK.
STAT. ANN. § 37-230 (1962); CAL. CIv. PROC. CODE § 361 (West 1982); COLO. REv.
STAT. § 13-80-118 (1973); DEL. CODE ANN. tit. 10, § 8121 (1974); FLA. STAT. ANN. §
95.10 (West 1982); HAWAII REV. STAT. § 657-9 (1976); IDAHO CODE § 5-239 (1979); ILL.
ANN. STAT. ch. 83, § 21 (Smith-Hurd 1966); IND. CODE ANN. § 34-1-2-6(b) (Burns
1973); IOWA CODE ANN. § 614.7 (West 1950); KAN. STAT. ANN. § 60-516 (1983); Ky.
REV. STAT. § 413.320 (1970); LA. CIv. CODE ANN. art. 3532 (West 1953); ME. REV.
STAT. ANN. tit. 14, § 866 (1980); MASS. GEN. LAWS ANN. ch. 260, § 9 (West 1959);
MICH. Corip. LAwS ANN. § 600.5861 (West 1968); Miss. CODE ANN. § 15-1-65 (1972);
Mo. ANN. STAT. § 516-190 (Vernon Supp. 1984); MONT. CODE ANN. § 27-2-104 (1983);
NEB. REV. STAT. § 25-215 (1979); NEV. REV. STAT. § 11.020 (1979); N.Y. CIV. PRAC.
LAW § 202 (McKinney 1972); N.C. GEN. STAT. § 1-21 (1983); OKLA. STAT. ANN. tit. 12,
§§ 104-108 (West Supp. 1983-1984); OR. REV. STAT. § 12.260 (1983); PA. STAT. ANN.
tit. 42, § 5521 (Purdon 1981); R.I. GEN. LAWS § 9-1-18 (1969); TENN. CODE ANN. § 281-112 (1980); TEX. REV. Civ. STAT. ANN. art. 4678 (Vernon Supp. 1984); UTAH CODE
ANN. § 78-12-45 (1976); VA. CODE § 8.01-247 (1984); WASH. REV. CODE ANN. § 4.16.290
(1962); W. VA. CODE § 55-2-17 (1981); Wis. STAT. ANN. § 893.07 (West 1983); WVo.
STAT. § 1-3-117 (1983).
8. Some commentators have categorized borrowing statutes based upon their par-
1985]
BORROWING STATUTE
ally provide that a cause of action is barred locally if it is barred
either in the jurisdiction where the cause of action arose or accrued,
or where one or both of the parties reside.'
Maine enacted its borrowing statute in 188510 in response to the
decision in Thompson v. Reed." In Thompson, a plaintiff brought
suit in Maine on a promissory note, executed and payable in New
York, after both the plaintiff and the defendant had continued to
reside in New York past the time any action was barred by that
state's statute of limitations. The Maine court noted that other
states had enacted borrowing statutes, but held that since Maine
had no such statutory provision the suit was not barred in Maine
despite the fact that the suit was barred in New York.12 The Legislature then enacted the borrowing statute, adopting the language of
the Thompson court almost verbatim.1 3 Clearly, the purpose of the
statute was to prevent the type of forum shopping allowed in
Thompson.""
Although Maine's borrowing statute was modeled on a similar
Massachusetts provision,1 5 the wording and particular requirements
ticular requirements. See, e.g., Note, supra note 5, at 308-309. One author classifies
borrowing statutes based on their treatment of the following factors: whether the
claim accrued outside the enacting state; whether the claim is barred where it accrued; whether the plaintiff has held the claim from its accrual; whether the bar became effective while the defendant or plaintiff resided in the place of accrual; whether
the claim involved a contract or personal injury- and whether the defendant is amenable to process. Id. See also Ester, Borrowing Statutes of Limitation and Conflict of
Laws, 15 U. FLA. L. REv. 33, 79-84 (1962); Vernon, Statutes of Limitation in the
Conflict of Laws: Borrowing Statutes, 32 RocKY MTN. L. REv. 287, 294-96 (1960).
9. Grossman, supra note 6, at 14. See also supra note 8.
10. Act of Mar. 6, 1885, ch. 376, 1885 Me. Laws 317.
11. 75 Me. 404 (1883).
12. The court stated:
Some of the states have statutory provisions allowing the interposition of
the statute bar of another state where the defendant had resided for the
requisite period. Thus Massachusetts, in 1880, enacted a statute providing
in substance that no action shall be brought by any person whose cause of
action has been barred by the laws of any state, territory or country while
he has resided therein. Pub. stat. c. 197, § 11. But the statutes of this state
contain no provision of like character.
Thompson v. Reed, 75 Me. at 406-407.
13. Compare supra note 12 with text accompanying note 16.
14. No legislative record exists which indicates the legislature's intent to prevent
forum shopping. The Ouellette court, however, acknowledged that the circumstances
surrounding the statute's enactment made the legislature's intent obvious. The court
noted that "it is clear that the legislature sought to prevent forum shopping in enacting the borrowing statute. That statute was enacted in response to this Court's decision in Thompson v.Reed, 75 Me. 404 (1883)." Ouellette v. Sturm, Ruger & Co., 466
A.2d at 481.
15. The Massachusetts statute in effect at the time provided "no action shall be
brought by any person whose cause of action has been barred by the laws of any
state, territory, or country, while he has resided therein." MAss. GEN. Lws ch. 197, §
11 (1882). The principal difference in Maine's statute is the wording of the last
MAINE LAW REVIEW
[Vol. 37:211
of Maine's statute are unique. The statute reads: "No action shall be
brought by any person whose cause of action has been barred by the
laws of any state, territory or country while all the parties have re'
sided therein.""6 Unlike many borrowing statutes,17
Maine's statute
contains no reference to the place where the cause of action arose or
accrued. Rather, it bars in Maine an action which was barred in another jurisdiction while all the parties resided there.
Prior to the Ouellette decision, the Law Court had considered the
state's borrowing statute only twice. In Frye v. Parker,", a case
where both parties were natural persons, the court interpreted the
residency requirement to mean that "[t] he parties must reside in the
same state at the same time."' 9 In a more recent opinion, Hossler v.
Barry,'0 the court affirmed the Frye interpretation of the residency
requirement. 2' As in Frye, both parties in Hossler were natural
persons.
The precise question before the Law Court in Ouellette was
whether, for purposes of the statute, a corporation may be deemed
to reside in a state other than the one of its incorporation. The defendant, Sturm, Ruger & Co., Inc. ("Ruger"), was a Delaware corporation with its principal place of business in Connecticut.22 The
plaintiff, Charles Ouellette, was a Massachusetts resident who
bought a gun manufactured by the defendant from a Massachusetts
gun retailer. He moved to Maine within one month of purchasing
the gun, and was later injured when the gun accidentally discharged
during a hunting trip in Plymouth, Maine.13 After several weeks in
the hospital Ouellette returned to Massachusetts.
phrase. The phrase was changed to "while all the parties have resided therein." See
1885 Me. Laws 376 (current version at ME. REV. STAT. ANN. tit. 14, § 866 (1980)). See
infra text accompanying note 16.
16. ME. REV. STAT. ANN. tit. 14, § 866 (1980). See supra note 1.
17. See Grossman, supra note 6, at 14. See also supra text accompanying note 9.
18. 84 Me. 251, 24 A. 844 (1892). In Frye, the court held the borrowing statute did
not apply. There, the parties had not resided in the same state since one year after
the execution of the note which was the subject of the suit. Id. at 254, 24 A. at 844.
19. Id.
20. 403 A.2d 762 (Me. 1979). In Hossler, the Law Court reaffirmed the traditional
rule that statutes of limitations are procedural and the procedural law of the forum
applies despite Beaulieu v. Beaulieu, 265 A.2d 610, 617 (Me. 1970). Beaulieu adopted
a significant contacts choice of law analysis. 403 A.2d at 766.
21. Hossler v. Barry, 403 A.2d at 765.
22. Ouellette v. Sturm, Ruger & Co., 466 A.2d at 479. Ruger was registered to do
business in Connecticut and New Hampshire, where it had manufacturing plants; in
all other states, including Maine and Massachusetts, it conducted business solely
through independent local distributors. Id. at 479-80.
23. Id. at 480. At the time of the accident, Ouellette had accepted a job in Jay,
Maine and was engaged to be married. The couple had inquired about obtaining a
Maine marriage license and had started searching for a home in the Lewiston area. As
it turned out, the couple was married while Ouellette was in the hospital in Waterville, Maine. Id.
1985]
BORROWING STATUTE
A little over five years later, Ouellette commenced suit in the
United States District Court in Maine seeking recovery based on
strict liability in tort and breach of implied warranty. The district
court, concluding that Maine's borrowing statute applied, granted
the defendant's motion for summary judgment. 2' The plaintiff appealed to the United States Court of Appeals for the First Circuit.
The First Circuit certified the question of the borrowing statute's
applicability to the Maine Law Court.-'
Ruger maintained that because it had been amenable to process in
Massachusetts, the plaintiff's home state, during a period of time
sufficient for that state's limitation period to run, it satisfied the
residency requirement of the Maine borrowing statute. Ruger argued that such an interpretation of the residency requirement was
the only way to preserve the statute's purpose. Since the plaintiff
had had ample opportunity to pursue his claim in Massachusetts,
allowing Ouellette now to bring the action in Maine would permit
precisely the type of forum shopping the borrowing statute was
designed to prevent. 26 The Law Court rejected Ruger's argument,
relying on a Maine case which established that a corporation is a
resident of only that state in which it is incorporated. 7 The court
then "construe[d] the borrowing statute as requiring that both the
plaintiff and the defendant reside in the same state at the same time
24. Id. Massachusetts law provides for a three-year statute of limitations for tort
actions or "actions of contract to recover for personal injuries," MAss. GEN. Lws
ANN. ch. 260, § 2A (West 1980), and a four-year statute of limitations for a breach of
warranty claim. M4ss. GEN. LAWS ANN. ch. 106, § 2-275 (West 1976). Maine provides
for a six-year statute of limitations for all civil actions. ME. Ray. STAT. ANN. tit 14, §
752 (1980).
25. Certification was pursuant to ME. Rv. STAT. ANN. tit. 4, § 57 (Supp. 19821983) and ME. R. Civ. P. 76B. The court of appeals certified five questions:
1. Is the defendant subject to long-arm jurisdiction and service of procez-s in
Maine in this case?
2. Is plaintiff's action barred in Maine by the borrowing provision of 14
M.R.S.A. § 866?
3. If plaintiff's actions are not barred by the provisions of 14 M.R.SA. §
866, do Maine's conflict of laws rules require application of the statute of
limitations of Maine, Massachusetts or Connecticut?
4. If plaintiff's action was timely brought under Maine's applicable statute
of limitations, is plaintiff's breach of warranty claim specifically timebarred under Maine law?
5. Is plaintiff's claim for strict liability in tort viable under Maine law?
Ouellette v. Sturm, Ruger & Co., 466 A.2d at 480-82 (emphasis omitted).
26. Replacement Brief of Appellee Sturm, Ruger & Co., at 10, 14-15, Ouellette v.
Sturm, Ruger & Co., 466 A.2d 478 (Me. 1983). See also id. at 481.
27. The court cited Chafee v. Fourth Nat'l Bank, 71 Me. 514, 528-29 (1880), quoting the following language: "'A corporation can exist only within the soverignty
which created it, although, by comity, it may be allowed to do busines in other jurisdictions, through its agents. It can have but one legal residence, and that must be
within the State or sovereignty creating it."' Ouellette v. Sturm, Ruger & Co., 466
A.2d at 481.
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rather than merely being amenable to service of process in that
state."2
The Law Court was right not to apply the borrowing statute in
Ouellette. The need for borrowing statutes arises from the traditional rule that, because statutes of limitations are considered procedural rules rather than substantive law, the forum's limitation period applies even if another state's substantive law governs the
merits of the case.29 In the absence of a borrowing statute, a plaintiff
could shop for a forum with a favorable limitation period while retaining the substantive law of another state. In Ouellette, however,
Maine's substantive law applied because the injury occurred in
Maine while the plaintiff was a resident of the state.2 0 Thus, regardless of whether the limitation period is determined by the applicable
substantive law or by the traditional rule applying the limitation period of the forum state,3 1 the Maine statute of limitations would be
used. This is an appropriate result; when a case is to be tried in
Maine under Maine law, it is sensible to apply the Maine statute of
limitations. To allow the borrowing statute to operate in this circumstance would impose a limitation period unrelated to either the
forum or the applicable law.
There is an underlying problem with the court's holding in Ouellette, however. Although the court acknowledged that the clear legislative intent of the borrowing statute was to prevent forum shop28.
Ouellette v. Sturm, Ruger & Co., 466 A.2d at 481-82. The court reasoned that
to hold otherwise would be unmanageable and would lead to uncertain results. As an
illustration, the court explained:
If two corporations were involved in litigation and both were amenable to
service of process in several of the same states, the proffered interpretation
would require the court to determine: (1) which states could exercise personal jurisdiction over both parties consistent with the laws of that state
and due process under the United States Constitution; (2) what the appli-
cable period or periods of limitation were in each of those states; and (3)
whether the suit would have been barred had it been brought in any one of
those states.
Id. at 481.
29. See supra note 6 and accompanying text.
30. In Adams v. Buffalo Forge Co., 443 A.2d 932 (Me. 1982), the Law Court en-
dorsed the flexible "most significant contacts and relationships" test as set forth in
RESTATEMENT (SECOND)
OF CONFLICT OF LAWS
§§ 145, 146 (1971) to determine which
state law should apply to personal injury actions sounding in tort and involving products liability. In Adams, a case involving the privity requirement in negligence actions, the court applied Maine law, noting that "[t]hough not dispositive of the issue,
it is not denied that the injury here did, in fact, occur in Maine." Adams v. Buffalo
Forge Co., 443 A.2d at 934. The court attached importance to the place of injury
when combined with other factors. Id.
In Ouellette, not only did the accident occur in Maine, but the plaintiff also resided
in Maine at the time. Further, the plaintiff alleged that he was compelled to return to
Massachusetts because of the injury. Ouellette v. Sturm, Ruger & Co., 466 A.2d at
480. Presumably, but for the accident he would still live in Maine.
31. See supra note 6 and accompanying text.
19851
BORROWING STATUTE
ping, 32 that is precisely what its interpretation of the statute's
residency requirement allows in some cases. The court apparently
was unaware of this potential consequence. After noting that the
adoption of defendant Ruger's interpretation of the statute's residency requirement might require the court to examine the limitation periods of many different states,33 the court stated that "[s]uch
an absurd result is not required in order that the legislative purpose
be served." 34 Thus, the Law Court failed to recognize that its interpretation of the statute's residency requirement did threaten the
legislative purpose to prevent forum shopping. A case which illustrated that fact came before the Law Court shortly after the Ouellette decision.3 5
That case, Jones v. North American Aerodynamics, Inc.,3 0 also
involved a products liability suit. Bernice Jones, a resident of Louisiana, was parachute jumping in Louisiana when her jumpsuit or
parachute came in contact with live electrical wires. The jumpsuit,
manufactured by defendant North American Aerodynamics, caught
fire. Three years after moving to Maine and six years after the accident, the plaintiff commenced a suit in the United States District
Court in Maine alleging that the flammability of the jumpsuit made
it unreasonably dangerous. The defendant moved for dismissal on
the ground that because the action was barred by Louisiana's oneyear statute of limitations,37 it was also barred under Maine's borrowing statute. As in Ouellette, the court certified the question of
the borrowing statute's applicability to the Maine Law Court.s After the certification, the Law Court decided Ouellette; it then declined to answer the question certified in Jones, citing Ouellette as
clear and controlling precedent.39
Due to factual distinctions between the two cases, the application
of the Ouellette holding to the Jones case frustrates the intent of
32.
33.
34.
See supra note 14.
See supra note 28.
Ouellette v. Sturm, Ruger & Co., 466 A.2d at 481.
35. Ouellette was decided October 6, 1983. Id. at 478. Jones v. North American
Aerodynamics, Inc., 468 A.2d 623 (Me. 1983) was argued on November 8, 1983.
36. 468 A.2d 623 (Me. 1983).
37. LA. Cirv. CODE ANN. arts. 2534, 2546, 3536 (West 1952). Article 3536 has since
been repealed and renumbered as Article 3495. LA. Civ. CODE ANN. art. 3495 (West
Supp. 1984).
38. Pursuant to ME. Rv. STAT. ANN. tit. 4, § 57 (1979 & Supp. 1983), the district
court certified the following question of Maine law:
Does Maine's borrowing statute, 14 M.RS.A. § 866, require application of
Louisiana's one-year statute of limitations to an action instituted in Maine
when the cause of action arose in Louisiana and when all parties were amenable to suit in Louisiana during the period authorized for bringing the
action in Louisiana?
Jones v. North American Aerodynamics, Inc., 468 A.2d at 623.
39. Id.
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the borrowing statute. Whereas in Ouellette Maine had significant
contacts with the litigation because the accident had occurred in the
state,'40 in Jones Maine's only contact with the litigation was the
plaintiff's current residence. 41 Pursuant to the applicable choice of
laws analysis, 42 it is clear that Louisiana substantive law applied.
Since statutes of limitations are considered procedural and the procedural laws of the forum apply, 43 if the borrowing statute is not
operative, Maine's longer limitation period is combined with the
substantive law of Louisiana simply because the plaintiff had moved
to Maine and was able to bring the action in the United States District Court in Maine.
There was no dispute in Jones that the action was barred in Louisiana by the Louisiana statute of limitations when the suit was
brought in Maine. Although the parties in Jones agreed that Bernice
Jones' move to Maine was not motivated by forum shopping, 44 as a
result of the application of the Ouellette holding to the facts in
Jones there is nothing to stop such a maneuver in a majority of
cases involving corporations. Under the court's strict construction of
corporate residency, Maine's borrowing statute will operate to prevent forum shopping only in the fortuitous event that a corporation
is incorporated in the same state in which all other parties to the
litigation reside. In light of the interstate character of modern corporations and the common practice of incorporating in the state
with the most favorable corporation laws, common residency of the
parties will be the exception, not the rule. Thus, the language of the
Law Court's holding with respect to corporate residency will often
make the statute ineffective as a means to prevent forum shopping.
The principal problem that the court faced in Ouellette and Jones
was a poorly drafted statute.' 5 Because of the particular wording of
40. See supra note 30.
41. The accident occurred in Louisiana. The plaintiff was a Louisiana resident at
the time of the accident. Neither defendant was a Maine resident. North American
Aerodynamics, Inc. was a New Jersey corporation with its sole place of business in
New Jersey. West Point-Pepperell was a Georgia corporation with its principal place
of business in Georgia. The plaintiff purchased the product in question while in Louisiana via mail order. Brief of Plaintiff at 1-3, Jones v. North American Aerodynamics,
Inc., 468 A.2d 623 (Me. 1983).
42. See supra note 30. See also Baybutt Constr. Corp. v. Commercial Union Ins.
Co., 455 A.2d 914 (Me. 1983) (adopting a "most significant contacts and relationship"
test for resolving choice of law questions in contract cases); Beaulieu v,Beaulieu, 265
A.2d 610 (Me. 1970) (adopting a "most significant contacts and relationship" test for
resolving choice of substantive law questions).
43. See supra note 6 and accompanying text.
44. Bernice Jones grew up in Maine, and the parties stipulated that her return to
Maine was not motivated by forum shopping. Brief of Plaintiff at 1, 4, Jones v. North
American Aerodynamics, Inc., 468 A.2d 623 (Me. 1983).
45. Maine's borrowing statute is one of the few that makes no reference to the
place where the action accrued, and the only one containing its type of residency
1985]
BORROWING STATUTE
the statute, either interpretation of a corporation's residence available to the court in Ouellette could lead to incorrect results. On the
one hand, if the court adopted the broader interpretation urged by
the defendant Ruger it would have reached the wrong result for the
facts of the case in controversy. On the other hand, by giving the
residency requirement a strict interpretation, the court made the
borrowing statute ineffective in the majority of cases involving
47
corporations.
One alternative open to the court was to acknowledge the
problems created by the wording of the statute. Instead of maintaining that the legislative intent could be preserved while adhering to a
strict interpretation of the residency of a corporation,"5 the court
could have identified the negative consequences that were possible
under either position available to it in Ouellette. At that point, the
opposing policy objectives could have been considered. If the Law
Court felt compelled to hold as it did in Ouellette due to the language of the borrowing provision, at least the Legislature would be
on notice that there were problems with the statute. Instead, the
court identified the negative consequences of the alternative it rejected 9 while maintaining that its holding preserved the legislative
intent. When the negative consequence of its holding became apparent in Jones,50 the Law Court was boxed in by its decision in Ouellette. In effect, it had put itself in the position of endorsing a statute
with inherent weaknesses.
Another alternative, one which would not have resolved the fundamental problem created by the wording of the statute but would
have preserved its function, was for the court in Ouellette to hold
that, for purposes of the statute, a corporation is a resident of any
state where it is amenable to process. There was room for the Law
Court to make such a decision. In other situations where the law is
better served by a broader interpretation of corporate residency,
courts and legislatures have adopted such an interpretation. For example, a corporation is regarded for venue purposes as a resident of
any judicial district in which it is incorporated or licensed to do business or is doing business. 5' In the instance of the tolling provision
contained in the same statutory section as the Maine borrowing prorequirement. See supra text accompanying notes 16-17. It is obvious that the wording
of the statute was modeled after the Massachusetts statute then in effect. See supra
notes 15-16 and accompanying text. There is no legislative record, however, indicating
why that model was used and why the changes from the model were made.
46. See supra notes 30-31 and accompanying text.
47. See supra notes 40-44 and accompanying text.
48. See supra text accompanying note 34.
49. See supra note 28.
50. See supra text following note 44.
51. 28 U.S.C. § 1391 (1982).
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[Vol. 37:211
vision, 52 the court has interpreted the phrase "absent from and re-
sides out of state" to mean whether a corporation is amenable to
process.53 If amenability to process determines whether a corporation "resides out of state" for the purposes of a statute's tolling provision, arguably it should also determine whether all the parties
have "resided" in another state under the same statute's borrowing
provision.
Despite clear authority in Maine for the proposition that a corporation is a resident of only the state in which it is incorporated, the
court should not have felt bound by this precedent. The case which
held that a corporation is a resident of only the state in which it is
incorporated was decided in 1880,14 a time when the interstate character of corporations was less pronounced. The Law Court has explicitly stated that "earlier pronouncements of law which are unsuited to modern experience and which no longer adequately serve
the interests of justice"'5 are not irrevocable. In light of the purpose
of the borrowing statute and the degree of interstate corporate activity today, amenability to suit seems a more significant factor than
the state of incorporation for determining corporate residency for
purposes of the statute.
Although the wording of Maine's version might be particularly
problematic, borrowing statutes have been generally criticized for
being confusing and giving rise to more problems than they solve.""
52. See ME. REV. STAT. ANN. tit. 14, § 866 (1980). See supra note 1.
53. Willey v. Brown, 390 A.2d 1039 (Me. 1978). Willey involved a question of
whether a dissolved corporation had been amenable to process. The Law Court held
that the defendant "had a sufficient corporate identity during its period of dissolution
over which a Maine court could assert jurisdiction. It therefore necessarily follows
that defendant was not 'absent' for purposes of tolling the statute of limitations." Id.
at 1042-43. The court's holding in Wiley that amenability to suit is the key factor in
the tolling clause of statutes of limitations reflects the majority position:
The modern rule and the one most consonant with reason is that a foreign
corporation doing business within the state is not to be deemed "out of
state" or a "nonresident" thereof within the saving clause of the statute of
limitations when it maintains an agent within such state upon whom service
of process may be made for it.
8 W. FLETCHER, CYCLOPEDIA OF THE LAW OF PRIVATE CORPORATIONS § 4039 (1982).
54. Chafee v. Fourth Nat'l Bank, 71 Me. 514 (1880). For the holding of Chafee,
see supra note 27.
55. Beaulieu v. Beaulieu, 265 A.2d 610 (Me. 1970). In Beaulieu, the Law Court
abandoned the traditional rule that the place of the injury applies in tort claims and
adopted the significant contacts and relationship analysis of RESTATEMENT (SEcoND)
OF CONFLICT OF LAWS § 379 (1971). Id. at 613.
56. See generally Ester, supra note 8, at 73; Grossman, supra note 6, at 15; Leflar,
Choice-of-Law Statutes, 44 TENN. L. REV. 951, 961 (1977); Milhollin, Interest Analysis and Conflicts Between Statutes of Limitations, 27 HASTINGS L.J. 1, 25 (1975);
Vernon, supra note 8, at 323; Wurfel, Statutes of Limitations in the Conflict of
Laws, 52 N.C.L. REV. 489, 533 (1974); Developments in the Law-Statutes of Limitations, 63 HARv. L. REV. 1177, 1263 (1950); Note, supra note 5, at 311.
1985]
BORROWING STATUTE
Most legal commentators identify the root of the problem to be the
classification of statutes of limitations as a matter of procedural law,
which in the absence of a borrowing statute would result in the automatic application of the forum's statute of limitations. 17 Borrowing statutes, in all their various forms, simply make a different limitation period automatically apply in certain circumstances; the
results are not necessarily any less arbitrary. For that reason, many
critics of borrowing statutes suggest abandoning the classification of
statutes of limitations as procedural law, thereby making them subject to the same choice-of-law analysis accorded substantive law
questions.58
The defendant in Jones urged the Law Court to reconsider
Maine's designation of statutes of limitations as procedural law and
to apply the "significant contacts and relationship" test adopted in
substantive choice of law questions. 9 The court declined to do so,
but instead summarily affirmed the traditional rule.00 Having given
the borrowing statute a narrow construction in Ouellette to make
57. See supra note 6 and accompanying text.
58. One commentator recently concluded:
Despite the established tradition of treating statutes of limitations as
procedural issues controlled by forum law, it has become evident that such
procedural treatment is not always appropriate. The resolution of the limitation issue by the mechanical selection of forum law poses the danger of
permitting the plaintiff to litigate a suit already barred in the jurisdiction
most concerned with its outcome. When the forum jurisdiction has only
minimal contact with the litigation, the danger posed by such mechanical
selection may escalate to the level of a violation of the defendant's right to
due process or of a sister state's right to full faith and credit.
Modem conffict-of-laws analysis, with its evaluation of governmental interests and its search for the jurisdiction with the most significant relationship with the litigation, aids courts in making an intelligent and reasoned
choice of law. In some jurisdictions, that modern analysis has replaced the
traditional characterization of statutes of limitations. Without doubt, the
application of modern conflict-of-laws principles to the limitation issue
leads to rational, logical results.
Grossman, supra note 6, at 64.
59. Reply Brief of Defendant at 8-13, Jones v. North American Aerodynamics,
Inc., 468 A.2d 623 (Me. 1983). There are arguments both for and against clrification
of limitation questions as procedural. A careful consideration of their relative merits
is beyond the scope of this Note.
60. The Ouellette court simply stated:
Under traditional choice of law rules, the forum state generally applies its
own statute of limitations to a cause of action, even though it may apply
the substantive law of another state. See Alropa Corp. v. Britton, 135 Me.
41, 44, 188 A. 722, 723 (1936). We have recently reaffirmed this principle
and the well-established exceptions in Hossler v. Barry, 403 A.2d 762, 766
(Me. 1979). The present case falls squarely within the general rule and
Maine's conflict of laws rules requires the application of the Maine statute
of limitations.
Ouellette v. Sturm, Ruger & Co., 466 A.2d at 482.
MAINE LAW REVIEW
[Vol. 37:211
the Maine limitation period applicable, a correct result,"' the court
in Jones should have addressed the question of adopting the more
flexible "significant contacts" analysis in statute of limitations questions to reach a proper result there. The juxtaposition of Ouellette
and Jones illustrates the problems with the borrowing statute and
the need for a more sensible approach to the selection of the applicable statute of limitations. In the alternative, the court in Jones
could have reevaluated its determination of corporate residency in
Ouellette so as to avoid frustrating the intent of the borrowing statute by allowing Mrs. Jones to circumvent the Louisiana statute of
limitations by the fortuity of her having moved to Maine.0 2 A different interpretation of corporate residency would not resolve the inherent weakness of the borrowing statute, but would better preserve
the legislative purpose of the statute.
J. Gordon Scannell, Jr.
61.
62.
See supra notes 30-31 and accompanying text.
See supra notes 51-55 and accompanying text.