The plaintiffs, Barbara B. Sack, a resident of Massachusetts, and three other residents of that state, acting as trustees of a Massachusetts profit sharing trust, brought this action in the District Court for the Southern District of New York in March 1972 against the partners of Bear, Stearns & Co., a brokerage firm which has its principal place of business in New York City, and Richard W. Silverman, an employee having the title of Vice President, alleging that defendants had committed various violations of federal securities laws. .Defendants immediately moved for summary judgment on the ground that a previous action between the same parties on the identical claim had been dismissed by the District Court for Massachusetts because of the running of the statute of limitations; defendants argued that this was a dismissal “on the merits” which barred relitigation here under the principle of res judicata. The late Judge McLean granted summary judgment, and plaintiffs appealed. For an understanding of the issues, we must set out the procedural history of this litigation in some detail.
In July 1969 the Bay State Smelting Co., a Massachusetts corporation, brought an action in the District Court for Massachusetts against the same defendants alleging essentially the same violations of the securities laws on the basis of the same course of conduct as is involved here. Bay State moved in December 1970 for leave to join the Sack plaintiffs, who were represented by the same counsel as Bay State, as additional plaintiffs in its action and to file a “consolidated, substitute bill of complaint.” These motions were denied by Judge Murray in September 1971.
Shortly thereafter, on October 13, 1971, the Sack plaintiffs filed a separate complaint in the District Court for Massachusetts. After stating that “the acts and transactions complained of occurred in-substantial part within the District of Massachusetts,” the complaint alleged that in February 1969 defendants had purchased shares of Armour & Co. common stock for plaintiffs’ accounts; that defendants had failed to sell these shares when payment had not been received within a week, as required by § 4(c) of Regulation T of the Board of Governors of the Federal Reserve System, 12 C.F.R. § 220.4(c), although Barbara Sack was six days and the Trust was four days late in making payment; that, also in violation of said Regulation, defendants purchased the Armour shares with the intent to exchange them for debentures and warrants of General Host Corporation, pursuant to a tender offer then outstanding, before payment was received from the plaintiffs, and in fact did so; that the General Host securities subsequently declined in value; and that some of the General Host securities were sold at a substantial loss and others are still being held with a market value lower than the amount paid. The complaint also alleged that Silverman had falsely represented in a telephone call from New York City to the plaintiffs in Massachusetts that the purchase was a riskless arbitrage transaction since the General Host securities, which were selling at a higher price than the Armour shares, would be sold promptly, and that defendants failed to reveal they *362 were making a market in the Armour and General Host securities and were trading in them for their own account, in violation of sections 9, 10, and 15 of the Securities Exchange Act and Rules 10b-5 and 15c-l through 7. The complaint further alleged that defendants’ failure to sell the General Host securities promptly was a breach of their agreement with plaintiffs. Somewhat inconsistently with the allegations that the purchases were made on the basis of Silverman’s misrepresentations and an agreement, the complaint also alleged that the purchases were made by Silver-man in the exercise of a discretionary power which, in violation of Rule 408 of the New York Stock Exchange, was not in writing.
Defendants then moved for summary judgment dismissing the complaint on the ground that it sounded in tort and was barred by the two-year Massachusetts statute of limitations, Mass.Gen. Laws ch. 260, § 2A, which had run while the motion to intervene in the Bay State action had been pending, since the last transactions in plaintiffs’ accounts took place prior to March 31, 1969 and the last of the General Host securities were sent to the plaintiffs not later than April 15, 1969. Not disputing the facts, the plaintiffs asserted that the six-year contract statute of limitations applied. On January 4, 1972, Judge Murray held that the tort statute of limitations applied, and granted summary judgment for the defendants.
On March 22, 1972, the plaintiffs filed the instant action in the Southern District of New York. The complaint was substantially identical with that filed in Massachusetts except for an allegation that “the acts and transactions complained of occurred in substantial part within the Southern District of New York.” On April 14, defendants moved for summary judgment, claiming that the Massachusetts judgment was a bar. Judge McLean granted the motion on September 28, on the authority of Bertha Building Corp. v. National Theatres Corp.,
Plaintiffs appealed to this court. At the same time, they also moved before Judge Murray in the District of Massachusetts for an amendment of his order of January 14, 1972. On January 9, 1973, Judge Murray entered the following order:
Summary judgment for defendants ordered on January 14, 1972 is not an adjudication upon the merits and is without prejudice to plaintiffs’ rights to bring another action in another jurisdiction based upon the transactions or occurrences which are the subject matters of their claims herein subject to the appropriate statute of limitations of such other jurisdiction.
Plaintiffs thereupon moved that we remand to the District Court to enable it to vacate its order of September 28, 1972, on the basis of the subsequent Massachusetts order. 1 Defendants *363 moved for summary affirmance, claiming that the amendment of the Massachusetts order was without legal effect in the Southern District of New York and that in any event the action was barred by the New York “borrowing statute,” C.P.L.R. § 202, which reads as follows:
An action based upon a cause of action accruing without the state cannot be commenced after the expiration of the time limited by the laws of either the state or the place without the state where the cause of action accrued, except that where the cause of action accrued in favor of a resident of the state the time limited by the laws of the state shall apply. .
I.
Prior to the
Bertha Building
decision, the law in this circuit, as set out by Judge A. N. Hand for our court’s “first team” in Warner v. Buffalo Drydock Co.,
The issue in
Bertha Building
concerning the effect of a dismissal on the basis of the statute of limitations arose in a rather peculiar way. The precise question, as stated by the court, was whether, in a treble damage action brought in the Eastern District of New York under the antitrust laws for an injury suffered in California, it was “proper for the judge instead of a jury to decide whether the defendant could have been sued in the Southern District of California between July 20, 1935 and July 20, 1938,”
A determination of this defense has a reach and a finality not inhering in any decision as to venue. For if the defense of the statutory bar is sustained, the resulting judgment of dismissal operates as a final adjudication of the merits of the controversy; a decision as to venue, however, of course leaves the plaintiff free thereafter to seek an adjudication on the merits of his claim. Fed.Rules Civ'. Proc. rule 41(b), 28 U.S.C.A.
When the defendant petitioned for rehearing, the court said this,
We are unmoved by the petitioner’s contention that we were wrong in asserting that a dismissal based upon a defense of the statute of limitations is an adjudication on the merits. Warner v. Buffalo Drydock Co., 2 Cir.,67 F.2d 540 , which is cited in support of that contention, we think is distinguishable. And moreover, it has been superseded by the clear mandate of Rule 41(b) of the Federal Rules of Civil Procedure, 28 U.S.C.A. which in its last sentence directly contradicts the holding of the Warner case. Although under the rule in a proper situation the District Judge may specify that his order be without prejudice, Judge Galston did not so qualify his order of dismissal.
These remarks have been taken to establish the rule in this circuit that a dismissal on the ground of the statute of limitations would bar a second action on the same claim in a different forum. See Murphy v. A/S Sobral,
supra,
We must own to some discomfort with these statements in Bertha Building; they seem to go either too far or not far enough. While the statements cannot properly be characterized as dicta, they may have gone beyond the necessities of the case. In addition to the possibility of holding that a plaintiff in an action which would formerly have been “at law” was entitled to a jury trial on an issue of fact relevant to the defense of the statute in the forum of his choice, it might very well have been true in Bertha Building that, with the long lapse of time between September, 1951, when the New York action was brought, and the district court’s decision in 1956 dismissing the action as time-barred, it would have been too late to sue elsewhere, quite apart from the effect in another forum of a judgment of the district court sustaining the New York statute of limitations as a defense. The opinion on rehearing says that Warner is distinguishable but not why. The provision in F.R.Civ.P. 41(b) permitting a judge to specify that dismissal is without prejudice would seem to have been designed for cases in which the judge has discretion whether to dismiss, e. g., for want of prosecution, where his decision might be affected by determination whether dismissal should be with or without prejudice, not for cases which he must dismiss as a matter of law. Indeed, it would be possible to read the district judge’s power to specify that dismissal be without prejudice under the “unless” clause in the final sentence of Rule 41(b) as limited to “a dismissal under this subdivision,” with the result that all other dismissals save the three mentioned — lack of jurisdiction, improper venue, or failure to join a party under Rule 19 — and particularly a dismissal on limitations grounds, would necessarily be with prejudice. Finally, we have some doubt whether the last sentence of Rule 41(b) was intended to authorize a judge to dictate to another forum that a dismissal should have a different effect there than in his own court. However, Bertha Building said he could do exactly that. So long as that decision stands, we are thus obliged to hold that Judge Murray’s later order undercut the basis for Judge McLean’s grant of summary judgment for the defendants.
*365 II.
Defendants argue that Judge McLean’s dismissal of the complaint was in any event correct because the action is barred by the New York borrowing statute. Plaintiffs do not dispute that the reference to New York limitations law required in the absence of a statute of limitations in the federal securities laws, Holmberg v. Armbrecht,
Defendants’ first response is that, in light of the allegations in the Massachusetts complaint, plaintiffs may not now be heard to say that the cause of action accrued in New York. We disagree. The doctrine of collateral estoppel is not applicable here. Clearly the District Court for Massachusetts did not
decide
that the cause of action arose there. The rule in Massachusetts, as in most jurisdictions, is that a general statute of limitations applies to all actions brought in the forum, regardless of where the cause of action accrued. Clarke v. Pierce,
The traditional view has been that a cause of action for tort arises when and where “the last event necessary to make an actor liable . . . takes place.” Restatement of the Conflict of Laws § 377 (1934). Since a tort action traditionally has not been viewed as complete until the plaintiff suffers injury or loss, the cause of action has been considered to arise at the place where this damage was sustained. As applied to a cause of action for fraud or deceit, the closest common law analogy to an action under Rule 10b-5, see Klein v. Auchincloss, Parker & Redpath,
6. A, in state X, owns shares in the M company. B, in state Y, fraudulently persuades A not to sell the shares. The value of the shares falls. The place of wrong is X.
While we have found no New York decision directly in point, we believe that the New York courts would follow this traditional approach. This prediction follows almost inevitably from New York’s long held view, Hibernia Nat’l Bank v. Lacombe,
This view is strengthened by the weight of authority in other jurisdictions, which generally adopts the view of the First Restatement of Conflicts that a cause of action for fraud arises where the loss is sustained and that loss from fraud is deemed to be suffered where its economic impact is felt, normally the plaintiff’s residence. Trussell v. United Underwriters, Ltd.,
We recognize that the rigid rules of the First Restatement have been largely discredited as a sensible approach to solving choice of law problems; it may well be that if this were a common law action for fraud rather than one based on federal law, New York, under the principles of Babcock v. Jackson,
The impact of the conflict of laws decisions discussed above [i. e., Bab-cock v. Jackson, et al.] on the New York State “borrowing statute” has been non-existent. Except for a few commentaries to the effect that these decisions should affect the borrowing statute, there has been no actual impact on the statute by these decisions.
The result which we thus reach in our interpretation of the New York borrowing statute is neither wholly unexpected nor unique. In George v. Douglas Aircraft Co.,
supra,
However, even with these general principles as to where the New York courts would hold the cause of action to accrue established, we cannot properly affirm Judge McLean’s order on the ground that the cause of action here accrued in Massachusetts. The problem is that the record does not contain sufficient facts to enable us to apply our prediction of New York law with complete confidence. We do not know exactly how plaintiffs paid for the securities— whether by check sent from Massachu *368 setts or in some other fashion; perhaps if the plaintiffs maintained an open account at defendant’s New York offices, and the loss was reflected in that account, this might make some difference. Similarly, we do not know the details as to how the securities were handled. Although on what is now before us, it seems unlikely that plaintiffs can demonstrate that the cause of action arose in New York under the traditional test, they should not be foreclosed from an opportunity to do so.
We add a reference to a point that the district court will have to consider if it should conclude the cause of action accrued in New York under the traditional test. In an effort to escape from the collateral estoppel effect that plaintiffs feared would attach to Judge Murray’s decision if we held it to include a determination that their cause of action accrued in Massachusetts, plaintiffs suggested at oral argument that the cause of action could be deemed to have “arisen” both in New York and in Massachusetts. The conclusion the plaintiffs would apparently have had us draw is that since the cause of action could be said to have accrued in both states, the borrowing statute would not apply. However, application of the statute depends on whether it can be said that the cause of action accrues “without the state,” and if it could fairly be said that the cause of action arose in both New York and Massachusetts, then, under the letter of the borrowing statute, the action would be barred.
Indeed, several states have held, in applying their borrowing statutes, that notwithstanding that the traditional rules would indicate that the cause of action accrued in the forum state, the borrowing statute would bar the action if it could be said that the action also arose in a second state where the statute of limitations had run. The courts of Minnesota, which have a statute virtually identical to New York’s, have held this. Pattridge v. Palmer,
There is much to be said for thus recognizing that a cause of action can arise in more than one place and, under an appropriate borrowing statute, is barred if the statute of limitations has run in one where the defendant was available for suit, at least when the one is the state of plaintiff’s residence. Such a rule avoids the mechanical nature of the single place of arising theory, allows the defendant to ascertain the applicable time period with certainty while affording the plaintiff a fair opportunity to sue in a convenient forum, and prevents local courts from being cluttered with actions that could have been brought elsewhere but are now time-barred there —particularly actions by out-of-state plaintiffs who had a fair opportunity to sue in their home state but delayed too long, as was the case here. Compare Fullmer v. Sloan’s Sporting Goods Co.,
supra,
The order dismissing the complaint is vacated and the cause remanded for further proceedings consistent with this opinion.
Notes
. Defendants have not questioned the timeliness of plaintiffs’ application for the amendatory order, but since the question is jurisdictional, we must consider it. The motion purported to be made under F.R. Civ.P. 60(b), of which the most pertinent subdivision seems to be (6), and, if properly so made, it was timely. On the other band, if the motion were in fact one under F.R.Civ.P. 59(e) “to alter or amend the judgment,” which was what in fact was asked, the ten-day limit of that rule had long since expired. The Advisory Committee notes make it plain that a principal purpose of Rule 59(e), which was added in 1946, was to make clear that a
*363
district court had power to amend a judgment dismissing without prejudice so that the dismissal should be with prejudice, as held in Boaz v. Mutual Life Ins. Co.,
. The same considerations would support a prediction that New York would hold that plaintiffs’ claims for violations of Regulation T arose where the loss was suffered rather than where the wrongful conduct occurred, even though fraud is not an ingredient of an action for violation of § 7 of the Securities Exchange Act of 1934. See Junger v. Hertz, Neumark & Warner,