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Full Opinion
LEO WONG, as Executor, etc., et al., Plaintiffs, Cross-defendants and Appellants,
v.
TENNECO, INC., et al., Defendants, Cross-complainants and Appellants.
Supreme Court of California.
*128 COUNSEL
Donald C. Thuesen for Plaintiffs, Cross-defendants and Appellants.
Hufstedler, Miller, Carlson & Beardsley, Shirley M. Hufsteder, Robert S. Thompson, Burton J. Gindler and Hillyer & Irwin for Defendants, Cross-complainants and Appellants.
OPINION
REYNOSO, J.
May a produce grower enlist the aid of the California courts to recover damages allegedly suffered as a result of losing his illegal farming operations in Mexico? We conclude that under principles of comity he may not.
I
This case traces the exploits of Lee Wong (Wong),[1] an accomplished produce grower best known for his green onions. In 1969, Wong, a United States citizen and a California resident, moved his farming operations to Mexico.
*129 Wong was aware that Mexican law and policy prohibited foreign ownership and control of farming operations except in limited circumstances.[2]*130 Accordingly, he recruited Mario Cota, a Mexican citizen, to act as his "front man" in running the operation. Legal title to the Mexican operation and its assets was placed in Cota's name and the names of other Mexican citizens hired to assist Cota. The land was leased in the names of these *131 individuals. The Mexican citizens grew, packed and shipped the produce under Wong's name and label using machinery, equipment and money provided by Wong. In 1973, Wong and Cota formed "Legumbres de Baja," a Mexican corporation with stock held by Mexican citizens for Wong, to run the farming operation.[3]
Wong's financial picture, gloomy prior to the move to Mexico, continued to deteriorate after operations got underway. To secure needed financing and to insure future crop sales, Wong entered into a series of agreements with Heggeblade-Marguleas-Tenneco, Inc. (H-M-T), a California corporation and wholly owned subsidiary of Tenneco, Inc. H-M-T, a produce broker, marketed produce throughout the United States and Canada. From the beginning of their relationship, H-M-T had full knowledge of the illicit nature of Wong's interest in the Mexican operation.
The first marketing contract, entered into in August 1971, gave H-M-T the exclusive right to market Wong's produce in exchange for business management and financial assistance. After deducting its commission and expenses, H-M-T was to remit the balance of the sales proceeds to Wong. Wong admittedly requested this financial set up as "a necessary part of doing business in Mexico... the only practical means by which an investor can exercise some degree of control over the enterprise and protect his interest in Mexico."
The parties renewed their marketing agreement an undetermined number of times, each time incorporating essentially the same terms. The last such contract, the basis for Wong's ultimate claim of breach of contract, was dated March 3, 1973.
Despite the success of the marketing arrangement, Wong's financial fortunes continued to dim, while his debt to H-M-T grew steadily to approximately $500,000. A self-confessed poor businessman, Wong apparently exacerbated his already weakened financial condition by diverting funds away from the Mexican operation for his own personal use. As a result, on July 24, 1974, at H-M-T's request, Wong executed a $300,000 promissory note to H-M-T, secured by a deed of trust on residential property in Laguna Niguel, California.[4]
*132 Wong's financial situation reached a crisis point in 1974 when the Mexican Government and other creditors began threatening the Mexican "front men" with foreclosure on personal assets for nonpayment of taxes and other debts related to the farming operations. Additional pressure from Tenneco, Inc., H-M-T's parent corporation, to lower the outstanding debt convinced the parties to set up an "imprest account" through which sales proceeds were funnelled to creditors. This system was maintained for the last three months of 1974.
It appears that this stopgap measure failed to remedy the situation. On January 10, 1975, H-M-T yielded to the Mexican growers' demands to sever its relationship with Wong and remit the sales proceeds directly to the growers. This move deprived Wong of control of the Mexican farming operation, effectively installing the Mexican growers as the "true owners." Operations ceased some time in 1976. The record is unclear whether the machinery was retained by the growers or impounded by the Mexican Government for nonpayment of taxes.
Wong then brought suit in San Diego County Superior Court against the Tenneco group,[5] alleging misrepresentation, breach of the marketing contract, breach of an oral contract to credit the produce sales proceeds against the note on the Laguna Niguel property, intentional interference with advantageous business relations, negligence, conversion and conspiracy. On each cause of action Wong sought $10,350,000 in compensatory damages representing $1.6 million in produce sales, which Wong claims H-M-T wrongfully diverted to the Mexican growers after January 10, 1975, and the fair market value of the Mexican operation, including machinery, equipment, facilities, brand names and labels. He also prayed for $1 million in punitive damages. The Tenneco group cross-complained for recovery of the $500,000 debt and foreclosure on the deed of trust.
While the case was pending, the Laguna Niguel property sold for $682,500. Pursuant to a stipulated agreement filed with the court on October 31, 1979, Tenneco West, successor in interest to H-M-T, retained the proceeds pending the outcome of the litigation. The parties further stipulated that the court, not the jury, would determine the ultimate disposition of the funds.
Trial was bifurcated, with the court reserving judgment on the Tenneco group's motion for nonsuit based on the defense of illegality under Mexican *133 law, until after the jury rendered its verdicts.[6] After a six-week trial, the jury returned a verdict for Wong in the amount of $1,691,422 for breach of a written and oral contract, interference with an advantageous business relationship and negligence.[7] The jury also returned a verdict for the Tenneco group on the cross-complaint in the amount of $595,510.
Following the verdicts, the trial court ruled that Wong was barred from recovery under the "unclean hands" doctrine because the entire transaction was illegal under the laws of the Republic of Mexico. The court concluded, as a matter of law, that "all of plaintiffs' claims and alleged damages are based upon their past and the assumed continuing violations of the laws and public policy of Mexico and, under the principle of comity, the public policy of the State of California.... The Court leaves the parties where it finds them. No party is entitled to judgment on its claims." To preserve the status quo ante litem motam, the court ordered Tenneco West to return the proceeds for the sale of the real property to Wong together with interest at the rate of 7 percent per annum.
II
(1a) Instead of a standard contract claim we deal with a question of the respect due the constitution and statutory laws of a sovereign nation. The parties entered into this produce marketing/financing arrangement with full knowledge that the farming operations upon which the agreement depended were being carried out in violation of Mexican law.[8] When one party abandoned the floundering scheme, the other sought redress in the California *134 courts, to recover that which was unrecoverable under Mexican law. The trial court properly declined to involve our courts in this flagrant effort to circumvent Mexican law.
The doctrine of comity is fully applicable in the present case. (2) Under that longstanding principle of the law of nations, the forum state will generally apply the substantive law of a foreign sovereign to causes of action which arise there. (Loranger v. Nadeau (1932) 215 Cal. 362, 366 [10 P.2d 63, 84 A.L.R. 1264]; Blythe v. Ayres (1892) 96 Cal. 532, 561 [31 P. 915]. See Stockton v. Ortiz (1975) 47 Cal. App.3d 183, 200 [120 Cal. Rptr. 456].) The philosophy behind the comity doctrine is easily identified: respect for the sovereignty of other states or countries, "`considerations of mutual utility and advantage'" (Blythe, supra, 96 Cal. at p. 561), and "business and social necessity" (Hutchinson v. Hutchinson (1941) 48 Cal. App.2d 12, 22 [119 P.2d 214]). It is the first of these factors that is central to our inquiry today and compels the application of Mexican law.
Since 1917, Mexico's Constitution has expressly prohibited alien ownership or control of Mexico's land or waters. This restriction represents that country's abiding commitment to the preservation and management of scarce resources for the benefit of the Mexican people, a commitment fostered by a sobering history of exploitation of the land, and its people, by foreign interests.
Mexico's statutory law governing foreign investment contains ownership limitations similar to those expressed in its Constitution. However, neither the Constitution nor the statute wholly preclude foreign investment in Mexico's resources. Foreigners who agree to respect the autonomy and ultimate authority of the Mexican government may acquire ownership interests in many of the country's natural resources.[9] Thus, Mexico has sought to strike a balance between the needs of its people, the country's developmental requirements and the desires of foreign investors for economic advantage.
(1b) Consistent with our duty to respect Mexico's right to determine her own internal policies, we should defer to her laws implementing those policies when they are directly implicated in the case at hand. To do otherwise would unnecessarily upset the relationship of friendship and mutual respect we enjoy with our southern neighbor. In seeking to achieve substantial justice we must not overlook any international interests that may be affected by our decisions.
*135 In the instant case, purposeful violation of Mexican law is clear. Wong made no effort whatsoever to comply with the requirements of Mexican law. Instead, he concocted an elaborate scheme by which the Mexican authorities were kept in the dark as to his ownership interest while he reaped the benefits of the illicit operation. He then sought to enlist the aid of our courts, claiming that since he was the "true owner" of the Mexican operation, he was entitled to anticipatory damages representing the profit he would have realized but for H-M-T's breach of the marketing contract which resulted in the Mexican growers' takeover of the project. Although comity does not absolutely mandate application of foreign law (Whitney v. Dodge (1894) 105 Cal. 192, 195 [38 P. 636]), on these facts we can do no less.
(3) Comity teaches that "a contract ... made with a view of violating the laws of another country, though not otherwise obnoxious to the law ... of the forum ... will not be enforced." (15 Williston on Contracts (3d ed. 1972) § 1748, p. 121.) Such contracts are treated as against the public policy of the forum. (Ibid.) This principle is simply the logical extension of the well-settled rule that the courts will not aid a party whose claim for relief rests on an illegal transaction. As this court emphasized in Lee On v. Long (1951) 37 Cal.2d 499 [234 P.2d 9], a case in which a group of gamblers unsuccessfully sought to recover the spoils of their illicit activities: "`No principle of law is better settled than that a party to an illegal contract cannot come into a court of law and ask to have his illegal objects carried out; ....' Nor is this established rule limited in its application to parties to the illegal transaction as distinguished from an attempt to set up a claim against a third party based on the law's violation. [Citations.] `[T]he test [is] whether the plaintiff can establish his case otherwise than through the medium of an illegal transaction to which he himself is a party.'" (Italics added.) (Id., at p. 502; see also Hamilton v. Abadjian (1947) 30 Cal.2d 49, 52 [179 P.2d 804] and Lane & Pyron, Inc. v. Gibbs (1968) 266 Cal. App.2d 61, 64-65 [71 Cal. Rptr. 817] (neither California nor Nevada courts will lend their process to recovery of gambling debts).) As Wong is unable to satisfy this test, comity requires us to reject his claim.
(4) The "public policy" exception to the comity doctrine is inapplicable in the present case. That exception precludes application of a foreign state's law where to do so would violate California's public policy. (Severn v. Adidas Sportschufabriken (1973) 33 Cal. App.3d 754, 763 [109 Cal. Rptr. 328]. See Estate of Lathrop (1913) 165 Cal. 243, 248 [131 P. 752]; Whitney, supra, 105 Cal. 192, 199.) The standard, however, is not simply that the law is contrary to our public policy, but that it is so offensive to our public policy as to be "`prejudicial to recognized standards of morality and to the general interests of the citizens....'" (Knodel v. Knodel (1975) 14 Cal.3d 752, 765, fn. 15 [122 Cal. Rptr. 521, 537 P.2d 353], quoting Biewend *136 v. Biewend (1941) 17 Cal.2d 108, 113 [109 P.2d 701, 132 A.L.R. 1264].) Moreover, even where it is agreed that a foreign law offends public policy, it may still be applied in a limited context where the potential harm is minimal. (See, e.g., Nevcal Enterprises, Inc. v. Cal-Neva Lodge, Inc. (1961) 194 Cal. App.2d 177 [14 Cal. Rptr. 805] [contract for purchase of Nevada casino accomplishes a legal objective in Nevada and does not conflict with California public policy because California permits other types of gambling]; Estate of Bir (1948) 83 Cal. App.2d 256 [188 P.2d 499] [in the context of intestate succession only, India's law permitting polygamy will be applied under principles of comity].)
(1c) California public policy is not offended by the application of Mexican law in the present case. California constitutional and statutory law expressly provide that noncitizens may own land within the state.[10] However, the land with which we deal is situated in Mexico and it is a fundamental principle of the law of conflicts that questions relating to control of real property are to be determined by the law of the jurisdiction in which the property is located. (See Barber v. Barber (1958) 51 Cal.2d 244, 247 [331 P.2d 628]; Estate of Patmore (1956) 141 Cal. App.2d 416, 424 [296 P.2d 863]; Cummings v. Bullock (9th Cir.1966) 367 F.2d 182, 183.) Mexico's history, we have noted, has led to a different approach. That California public policy regarding land ownership differs from the equivalent Mexican policy does not suggest that long-established conflicts principles should be abandoned.
Moreover, we cannot say that the Mexican law is so antagonistic to California public policy interests as to preclude the extension of comity in the present case. The protectionist sentiment that the law reflects has no prejudicial impact upon "recognized standard of morality" in this state. Nor does it adversely affect the "general interests of Californians." Law abiding Californians wishing to invest in Mexico or California will be unimpeded by application of Mexican law in this instance.
In Biewend, supra, 17 Cal.2d 108, a case involving the enforceability of an order for payment of alimony rendered by a Missouri court, this court cautioned: "To hold that the right created in Missouri is so immoral as to be unenforceable here would involve a complacent attribution of moral superiority to this state." (Id., at p. 114. See also Hutchinson v. Hutchinson (1941) 48 Cal. App.2d 12, 22 [119 P.2d 214].) This concern takes an even *137 greater importance in the context of international relations.[11] Consistent with this reasoning, we conclude that the Mexican law in question is not violative of California public policy.
Protection of persons, like Wong, who wrongfully seek to circumvent the substantive laws of one jurisdiction by enlisting the aid of the courts in another violates and offends the public policy of both jurisdictions.[12] In the interest of comity, our courts must vigilantly resist such recruitment efforts.[13]
III
Applying principles of comity, we conclude that Wong's failure to comply with the requirements of Mexican law casts a pall of illegality over all of *138 his business transactions tied to the Mexican farming operation, including the marketing/financing arrangement with H-M-T. Although this court has identified several exceptions to the general rule that the courts will not grant relief under the terms of an illegal contract (Tri-Q, Inc. v. Sta-Hi Corp. (1965) 63 Cal.2d 199, 216-220 [45 Cal. Rptr. 878, 404 P.2d 486]), none is applicable in the present case.
The necessity of discouraging these types of arrangements "outweighs equitable considerations of possible injustice as between the parties" (Southfield v. Barret (1970) 13 Cal. App.3d 290, 294 [91 Cal. Rptr. 514]). As the trial court pointed out: "[Wong] seeks anticipatory damages resulting from the discontinuance of an illegal transaction ... [the jury awarded] damages for loss of profits Wong would have received had the illegal arrangement continued and ... for the loss of equipment he did not own and had no right to control under Mexican law. [Wong] had been at it for some time ... [b]ut H-M-T was well aware of the problem and cooperated with [Wong] in an effort to circumvent Mexican law."
California public policy dictates that we leave the parties as we found them.[14] Only one exception applies: the Tenneco group is entitled to retain $108,816 of the sales proceeds from the Laguna Niguel property. This represents the amount the Tenneco group expended to protect the property, thereby preserving the asset for the benefit of both parties. To return it to Wong would constitute unjust enrichment.
The San Diego County Superior Court is ordered to modify the judgment to permit the Tenneco group to retain proceeds from the sale of the Laguna Niguel property in the amount of $108,816. As so modified the judgment is affirmed. Each party to bear their own costs.
Bird, C.J., Broussard, J., Grodin, J., Panelli, J.,[*] and Channell, J.,[*] concurred.
MOSK, J.
I dissent. The majority predict their result by improperly framing the question: they repeatedly refer to the produce grower's "illegal farming operations." It is my opinion that this grower did nothing illegal, and that his operation was consistent with the method of land holding used by thousands of American investors and residents in Mexico.
*139 Furthermore, from the outset Tenneco was completely familiar with Wong's operation and acquiesced in its technique. Only when the farming project failed to make money did Tenneco become strangely righteous.
I.
The majority rely on sections of the Mexican Constitution which purport to restrict land ownership to Mexicans by birth or naturalization. At the same time, Mexico encourages foreign investment. A report published for distribution in Mexican consulates declares: "Mexico welcomes foreign investment, provided that the prospective foreign investors comply with laws and regulations which control such investments in accordance with the needs of the Mexican economy. The applicable legal provisions are the following: Law to Promote Mexican Investment and to Regulate Foreign Investment (published on March 9, 1973 Official Journal of the Federal Government in force since May 8, 1973); Regulations of the National Registry of Foreign Investment (Of. Jour. XI/6/75-VII/27/77-IX/6/77); Mexican Immigration Law (Ley General de Poblacion Of. Jour. I/7/74); Regulations to the Immigration Law (Of. Jour. XI/17/76)."
There are specific areas in which foreign investment is prohibited and funding is reserved to the government in accordance "with the needs of the Mexican economy." These are oil, basic petrochemicals, radioactive products, nuclear energy, direct mining, electric power, railroads, radio and wire communications. Other areas are reserved to Mexican investors exclusively: radio and television, bus transportation, air and sea transportation, forestry, distribution of gas and liquified gas. Conspicuously absent from those reserved occupations is farming, the occupation involved herein.
Thousands of Americans, many of them retired persons, live in Mexico. They invest in, and occupy, homes and farms, but in order not to offend the Mexican constitutional restriction, title is held in trust for them by a Mexican bank, title company, or individual. This is not done covertly, but openly, and it is accepted as an appropriate policy by Mexican officials. Indeed, the process is frequently advertised in publications in order to encourage Americans to live south of our border and to help stimulate the Mexican economy.
As the majority relate, Wong invested in Mexican farm land, though title was held as an accommodation by one Mario Cota, a Mexican citizen. Wong and Cota then formed a Mexican corporation, with stock held by Mexican nationals, to run the farming operation. There was nothing improper, immoral or illegal about that enterprise. And Tenneco, which entered into marketing agreements in California for the produce of the enterprise, was *140 fully aware of the manner in which title was held. Until Wong's financial fortunes waned, Tenneco was happy to accept the benefits of successive marketing contracts. Its sense of misguided morality appears to have risen in direct proportion to its decline in revenue.
The trial court's procedure is puzzling. It originally declined to dismiss the complaint on defendant's motion on the ground of illegality. An entire trial was held, and the matter submitted to a jury. Only after the jury returned a substantial verdict for plaintiff did the purported illegality of the transaction suddenly appear to the court. While one must accept wisdom even if it appears late, I cite the foregoing sequence to show that any purported illegality of the transaction was too subtle to be readily manifest.
II.
Assuming arguendo that there had been some illegality in Wong's original operation in Mexico a fact I do not concede the transaction there has long since terminated. This is not a situation in which California courts have been asked to lend their dignity to a continuing transaction. "[W]hen the illegal transaction has been consummated; when no court has been called upon to give aid to it; when the proceeds of the sale have actually been received, and received in that which the law recognizes as having had value; and when they have been carried to the credit of the plaintiffs, the case is different. The court is there not asked to enforce an illegal contract." (Planters' Bank v. Union Bank (1872) 83 U.S. 483, 499-500 [21 L.Ed. 473, 479-480], cited with approval in Denning v. Taber (1945) 70 Cal. App.2d 253, 257 [160 P.2d 900], and in Norwood v. Judd (1949) 93 Cal. App.2d 276, 287 [209 P.2d 24].)
Here the contractual relation had ended five and a half years before the judgment. The breaches of contract and the torts terminating the relationship between the parties occurred on January 10, 1975. The trial court found the purported illegality in June of 1981. Wong had been dead five years when the court ruled. Those facts do not indicate the court is condoning a continuation of illegality, even if there had been such conduct previously.
In Asdourian v. Araj (1985) 38 Cal.3d 276 [211 Cal. Rptr. 703, 696 P.2d 95], a majority of this court, including the author of the present majority opinion, held that illegal conduct in the form of violation of a statute does not necessarily deprive a party of the benefit of his contractual arrangements. As the chief justice wrote at page 289, "Defendant attempts to rely on a technicality to defeat plaintiff's claims. This technicality is unrelated to defendant's real dispute with plaintiff the terms of the ... agreements. That dispute was resolved by the trial court [here the jury] in plaintiff's *141 favor. To allow defendant to prevail on a technicality would be to allow [the law] to be used as a `"shield for the avoidance of a just obligation."'" (Accord, Poorman v. Mills & Co. (1870) 39 Cal. 345, 353.)
The majority in Asdourian found there was nothing malum in se about the contract between the parties, that the defendant was a sophisticated businessman, and that to deprive the plaintiff of his remedy would provide the defendant with unjust enrichment. (Asdourian v. Araj, supra, 38 Cal.3d at p. 293.) The case before us is much stronger. The California parties violated no California law, and even in Mexico their conduct was, under the majority's theory, at most arguably malum prohibitum. Tenneco was hardly an unsophisticated victim of the plaintiff, a struggling grower. And to deprive this plaintiff of the verdict reached by a jury that heard all the evidence produced by both sides would indeed magnanimously bestow an unjust enrichment on Tenneco. The unjust enrichment is substantial: remission of a jury verdict of more than a million and a half dollars. Under any standard, that is an egregious sanction to impose on a Californian who violated no law of California and whose contractual dealings in California were undertaken with a knowledgeable California corporation fully advised of all his operations.
III.
I sharply disagree with the majority's reliance on Mexican law to uphold Tenneco's defense of illegality under a theory of comity.
Comity is based on the concept of interstate courtesy, by which a forum state will permit application of a foreign law in the interest of promoting justice or out of respect for the laws and institutions of a foreign state. (Estate of Lund (1945) 26 Cal.2d 472, 489 [159 P.2d 643, 162 A.L.R. 606].) However, a well established exception to the rule of comity precludes application of foreign laws that are contrary to the public policy of the forum state.
Comity does not require application of Mexican law in this case. California's public policy, as expressed in its Constitution and statutes, is to allow ownership of property without regard to citizenship. (Cal.Const., art. I, § 20: "Noncitizens have the same property rights as citizens"; Civ. Code, § 671: "Any person, whether citizen or alien, may take, hold, and dispose of property, real or personal, within this state.") We have come a long way since the days of alien land laws (Sei Fujii v. California (1952) 38 Cal.2d 718 [242 P.2d 617]) and must not retreat now by submitting to xenophobia from any source, however well intentioned.
*142 The citizenship-based Mexican law invoked by the trial court and the majority is directly contrary to the foregoing California policy, under which a Mexican citizen may own property in California. The "rule of comity is subject to the principle that foreign laws will not be given effect when contrary to the settled public policy of the forum." (Biewend v. Biewend (1941) 17 Cal.2d 108, 113 [109 P.2d 701, 132 A.L.R. 1264], overruled on another ground in Worthley v. Worthley (1955) 44 Cal.2d 465, 470 [283 P.2d 19]; accord, Severn v. Adidas Sportschuhfabriken (1973) 33 Cal. App.3d 754, 763 [109 P.2d 328]; Victor v. Sperry (1958) 163 Cal. App.2d 518, 525 [329 P.2d 728]; Thome v. Macken (1943) 58 Cal. App.2d 76, 78-81 [136 P.2d 116]; see also 15 Williston on Contracts (3d ed. 1972) § 1748, pp. 124-126, § 1792, pp. 371-373.)
Under the majority's inflexible concept of comity, we would be required to recognize and enforce in our courts the racial laws of South Africa, the religious laws of Iran and the sexually discriminatory laws of Saudi Arabia. But discrimination on the basis of nationality is just as repugnant to our public policy as discrimination because of race, religion or sex. Indeed, the Unruh Civil Rights Act specifically prohibits discrimination on the basis of "sex, race, color, religion, ancestry or national origin" in all business enterprises. (Civ. Code, § 51, italics added.)
IV.
The citizenship-based law of Mexico is also suspect under controlling international instruments. The Universal Declaration of Human Rights was adopted by the General Assembly of the United Nations on December 10, 1948. It was subsequently ratified by both the United States and Mexico. A treaty, of course, is universally recognized as the highest law of the land. Article 17 of the Universal Declaration provides in section 1 that "Everyone has the right to own property alone as well as in association with others." (Italics added.) No limitation as to citizenship is provided as an exception. Section 2 of the article declares further that "no one shall be arbitrarily deprived of his property."
The United States and California are plainly in conformity with the foregoing declaration: we permit no nationality or citizenship barrier to the ownership of property. By contrast, there is a serious question whether Mexico's restrictions remain consistent with its international obligations.
V.
The judgment cannot be affirmed under California's governmental-interest approach to conflict of law issues. "The governmental interests approach is *143 applicable not only to situations involving multistate contacts but also to those involving a state of the United States vis-a-vis a political entity of a foreign country." (Hurtado v. Superior Court (1974) 11 Cal.3d 574, 580, fn. 2 [114 Cal. Rptr. 106, 522 P.2d 666].) The 1973 marketing contract was legal and enforceable under California law but arguably, according to the majority, not under Mexican law. In light of these differing laws, we first examine the underlying policies to determine whether both California and Mexico have an interest in application of their respective laws. (Offshore Rental Co. v. Continental Oil Co. (1978) 22 Cal.3d 157, 163 [148 Cal. Rptr. 867, 583 P.2d 721]; Bernhard v. Harrah's Club (1976) 16 Cal.3d 313, 317-318 [128 Cal. Rptr. 215, 546 P.2d 719].)
California's policy of allowing ownership of property without regard to citizenship is involved here more as a matter of principle than as a practical matter, given the foreign location of Wong's farming operation. However, California's general policies of affording relief to its citizens who have suffered a breach of contract or a tort (see Civ. Code, §§ 3300, 3333) and of punishing and deterring wrongful conduct (see Civ. Code, § 3294, subd. (a)) give it a strong interest in application of its law. Similarly, Mexico could contend its policy preserving domestic ownership and control of its natural resources gives it an interest in application of its law. Thus it can be argued that there is a true conflict.
"Once [a] preliminary analysis has identified a true conflict of the governmental interests involved as applied to the parties under the particular circumstances of the case, the `comparative impairment' approach to the resolution of such conflict seeks to determine which state's interest would be more impaired if its policy were subordinated to the policy of the other state. This analysis proceeds on the principle that true conflicts should be resolved by applying the law of the state whose interest would be the more impaired if its law were not applied." (Bernhard v. Harrah's Club, supra, 16 Cal.3d at p. 320; also see Reich v. Purcell (1968) 67 Cal.2d 551, 553-554 [63 Cal. Rptr. 31, 432 P.2d 727].) Application of Mexican law in this case would completely impair California's interests in compensation, punishment and deterrence. Application of California law, however, would not affect Mexico's interests in any respect.
Even if Mexico has a governmental interest in protecting land holdings within its borders, in the present instance it has given no indication that it regards this business, or any similar operations, improper. If the government of Mexico had any concern about this litigation, it could have requested participation. No Mexican interest has been asserted in this lawsuit except by Tenneco, a wholly unaffected non-Mexican entity.
*144 On the other hand, California has an overwhelming governmental interest in this case. The contract was made in California, between California citizens, with respect to a loan made in California, secured by real property situated in California. The receipt and sale of the produce, the essential part of performance, took place in California. The negligence of Tenneco, as found by the jury, occurred in California. The intentional interference with business relations occurred in California. The forum, selected by the parties, was California. To maintain that conflict of law principles compel application of the law of Mexico is to ignore all the foregoing facts as well as unwa