Gorell Law School Library
Cornell Universit:

The law of contracts
THE LAW OF CONTRACTS.
THE

LAW OF CONTRACTS.

BY

EDWARD AVERY HARRIMAN,

 

OF THE CHICAGO BAR,

PROFESSOR OF LAW IN THE NORTHWESTERN UNIVERSITY
LAW SCHOOL,

SECOND EDITION,

REVISED AND ENLARGED.

BOSTON:
LITTLE, BROWN, AND COMPANY.
1901.
LIMO 352

Copyright, 1896, 1901,

By Epwarp AvEeRY Harriman. 5

Anibversity ress:
Joun Witson anp Soy, Camsripeg, U.S.A.
TO

MELVILLE M. BIGELOW, LL.D.,

WHOSE FRIENDSHIP HAS BEEN ITS CAUSE, AND WHOSE
EXAMPLE HAS BEEN. ITS INSPIRATION,
THIS BOOK IS DEDICATED WITH GRATEFUL AFFECTION

BY HIS FRIEND AND PUPIL

THE AUTHOR.
PREFACE TO THE SECOND EDITION.

In preparing an American treatise on the law of contracts at
the beginning of the twentieth century, the author has striven
to present that branch of the law in its true relation both to
the history of the past and to the probable developments of the
future; for the lawyer must be both historian and prophet —
must be historian, indeed, in order that he may be prophet.
Such a presentation of the law must above all things be accu-
rate; but the accuracy must often be rather that of the artist
who paints a landscape, than that of the mathematician who
states the equation of a curve.

The first edition of this work sought to make clear the fact
that our law of contracts is the natural result of the develop-
ment of legal procedure in England; that originally that law
was composed of the rules governing particular actions; and
that such symmetry as the law has attained at the present
day is the symmetry of the growing tree, not of the perfect
crystal. In particular, the fundamental distinctions between
formal and simple contracts were emphasized ; while the rules
governing offer and acceptance in simple contracts were re-
duced to their simplest terms as special instances of the theory
of consideration, the most distinctive feature of our own law |
of contracts.

In the present edition, the author has found few corrections
to make in his specific statements of the law; while the judi-
cial decisions of the last five years have served only to confirm
his belief in the fundamental theories advanced in the first
edition. The changes in this edition may be briefly stated.
viii THE LAW OF CONTRACTS.

Certain analytical and historical matter formerly placed in the
introduction has been transferred to the Appendix, and some
re-arrangement of the order of chapters has been made. The
important judicial decisions of the last five years have in-
creased the amount of matter in the book, and, to a greater
extent, the number of citations. In the first edition the im-
portance of logic in the development of the law was sometimes
over-emphasized, with the result that the criticism of illogical
and inconsistent rules of law was occasionally too dogmatic.
In the present edition, the importance of logic as tending
toward certainty and stability in the law has not been under-
estimated ; but greater liberality has been shown in the treat-
ment of decisions which are the result of those other forces in
the law to which logic so readily yields. There are many such
decisions in various American jurisdictions ; and these special
American developments of the law the writer has sought not
merely to point out, which is easy; but to explain, which is
more difficult. Among the doctrines which have received sup-
port in certain American jurisdictions are the following: the
doctrine that acceptance of a deed is necessary to its valid-
ity; the doctrine that one who has not performed conditions
precedent may still recover on a contract on the theory of sub-
stantial performance; and the doctrine that the so-called
“beneficiary ” of a contract may sue upon it. The extent to
which in these and other respects there have been departures
in this country from the principles of the common law as
applied by the English courts has been carefully explained,
together with the reasons for such departures, with the view
to an accurate portrayal of the present state of American
law.

For the convenience of the profession the citations have
duplicate references to the National Reporter System. In
many instances, also, a citation is given referring to some
collection of leading cases. Such a citation shows that the
particular scholar whose collection of cases is cited has thought
the case in question to be worthy of selection from the great
PREFACE TO THE SECOND EDITION. ix

mass of authorities, and therefore indicates to the casual
reader the probable importance of the case.

If the present-edition of this work shall furnish American
lawyers with a better key to the proper understanding of the
great and rapidly increasing number of decisions on one of the
most important branches of the law, the author’s labors will
be well repaid.

E. A. H.

329 Ture Rookery, CHICAGO,
May 1, 1901.
CONTENTS.

 

ABBREVIATIONS . . 2. 2. 2. 6 we ee ee ew te we
Cases CITED i eo Se ee ee Ga Be Se. Sie H
BOOK I.

CHAPTER

THE FORMATION OF CONTRACT.

I. CLASSIFICATION AND DEFINITION OF Conrracts

II. THe Promise, or ASSURANCE

Essentials of Contractual Obligation

Necessity of an Act — Effect of Silence

The Act must be voluntary

Certainty and uncertainty

The Act must be capable of affecting Legal R Relations .
The Requisites of Deeds .

Informal Promises — Implied Contracts bees Te ee Se
Promises implied from Acceptance of Benefits . . . .
Business Circulars and Proposals . . .

Vote of Corporation . . . 2 2 1 ew ew ee
PAUICHIONS 5b c i te ie SAL oe) Ga a BS ee Se

Time-tables . 2. 2. 1. 1 ww ee
Receipts, Tickets, Bills of Lading, etc. ‘
Written Contracts — The Parol Evidence Rule
Agreement for Future Contract .

Contractual Capacity . . 2. 2. 6. 1 2 ee
lI. THe Promiser’s Conpuct —GENERAL RULES
Reasonableness of Promisee’s Conduct . .. .
Jests and Social Engagements . . ... .
Inherent Impossibility . . . i vi a

Execution of Written Instruments — Dliteraoy, Blindness,
and Fraud . La air ene ae :

Acceptance of Deeds... . eh a

The Promisee’s Conduct in Simple Contracts

PAGE

. XXvii

. Xxix

SEcTION

1-20

21-73
21
22-25
26-27
28-31
32
33-38
39
40-48
49-50
51
52, 53
54
55-59
60-66
67
68-73

73-84
74
75
76

77-81
82, 83
84
xii CONTENTS.

CHAPTER SEcrion
IV. Tuer Promisrr’s Conpuct— Tuer ConsipERATION . . 85-148
Origin of the Doctrine of Consideration . . .. . 85
Sources of the Idea of Consideration . . . . . . 86-90
The quid proquoin Debt. . . . 2. 2... 87
The Detriment in Assumpsit . . . . .... 88
Good and Valuable Consideration . . « . . . 89
Consideration and Causa . . . 2... eee 90
Necessity of Consideration . . . . . 2... 90a
Definition of Consideration . . . 2. . 2... 91
Instances of Consideration . . . . . . 1 1. «92-98
Mutual Promises . . ..... 94, 95
The Act must be treated as a Consideration by ne Parties 96

Distinction between Consideration and Condition Prece-
dent... . . Bod wa Av asey Aeornet Cis vi 97
Adequacy of Goidideration ik ee Goupses Mer a a ENE 98
Reality of Consideration. . . . . 2. 1... 99
Contingent Consideration . . ny ta tgs Bs) be 100-1054
‘¢ Mutuality ” and Consideration oie a a eA 103
“Options” and Offers. . . . . .... 1054
Performance of Legal nes see ew ew we. 106-125
In General . . By setae ais. Gabwses tee, oa ses 106a
Payment of.Money aia. ee - « + 107-108a
Effect of Uncertainty as to one’s Rights + + + 109-116
Consideration in Wagers . . ... . 111
Compromise and Forbearance tosue . . . 112-116

Promises of Additional Compensation for the Per-

formance of Contract Obligation . . . . 117-125 |

Where the Obligation is to the Promisor . .: 117-121
Where the Obligation is toa Stranger . . 122-125
- Compositions with Creditors . . . ...... 126
Subscription Papers . . . . =. . 127-132

Consideration must be furnished in Rélience on ‘the
Promises. 4: 8 ee Oe we ee oe ae DBS,
Exceptions: (1) Mutual Promises . . . . . . 135
(2) Pre-existing Obligation . . . 136
(3) Previous Usurious Contract . . . . . 137
Past Consideration . . . oo + + e « « 188-140
Moral Obligation as a Consideration Re 141
Consideration in Deeds . . . . > eso use 142
Consideration in Negotiable Tésbrurienta 2 ches: Mea fey. Se 148
VY. Tue Promisen’s ConpucT—OrFER AND ACCEPTANCE 144-170
Relation of Offer and Acceptance to Consideration . . 144
Communication of Acceptance. . . . . . . . 145-149
In General. . 2 1. 6 ee ee ew ee 145
Guaranties 2 2. 1 6 1 6 we we ew ew we 146-149
CONTENTS. xiii
CHAPTER SEcTION
V. Tue Promisez’s Conpuct — continued.

The Consideration is determined by the Promise . . . 150-163
Mistake as to Subject-matter . 2. 2. 2. 2. 1... 151
Mistake as to Termsof Offer . . . .... 152
Acceptance in Unilateral and Bilateral Contracts . 153
Acceptance and Counter-Offer . . . . . .. 154
Conditional Acceptance . . . . . . we. 155
Manner of Acceptance. . . . « 2. sw we 156
Time of Acceptance . . . . 2... ws 157
Communication of Acceptance . . . .... 158

Acceptance by Post. . . - . « « . © | « 159-162

Acceptance by Telegraph. . . . 2. 1. 1s 160
Failure to receive Acceptance . . . . . . . 162
Attempts to accept. . . . - 2 s+ se wae 163
Acceptance after Rejection of Offer. . . . . . . 164

Revocation of Offer . . . . . -. . . . « « © 165-170
Notice of . . ROR 2 ee ee) 6s 166-169

Expiration of Offer by Limitation Bin Sd. es Seo dd 167

What constitutes Notice of Revocation . . . . 168, 169

Revocation by Operation of Law . .... | 170
BOOK II.

THE LEGALITY OF CONTRACTS.

VI. InteGaL ContRAcTS. . . . . 2 6 «© © « « s « 171-227
Introductory . . - . + 6+ e+ eas ae ar 171
Classification . 2. 2 2 6 6 ee ew ee ee 172
Prohibited Contracts . . . . . 2. . «© « . . . 178,174

Contracts against Public Policy . . . . . 175-227
Tending to injure the State in its External Relations 176
Tending to interfere with the Internal Adminis-

tration of Government. . . . .. . 177
Tending to interfere with the Election or Ap
pointment of Public Officers . . . 3 178
Tending to prevent Public Officers feu pee
forming their Duties . *. . . 179-181
Tending to obstruct the Administration. of
Fusktee ee - » 182-192
Maintenance and Chimperey - +. « « 183-188
Contracts to stifle Prosecution . . . . 189
Miscellaneous. . . . Bo Se Fk nas 8 190

Contracts ousting the J artediation oftheCourts 191
Contracts to submit to Arbitration . . . 19la
Contracts between Members of Associations

in Regard totheir Remedies . . . . 192
xiv CONTENTS.

CHAPTER
VI. InteGAL ContTRACTS — continued.

Tending to injure the Citizens of the State as Indi-

viduals.. Be oy ‘

Injurious to Public Morals ‘
Involving Sexual Immorality .

Tending to cause Suicide

.

Tending to interfere with Marriage .

Wacerss 300s ewe
History of
Insurance Contracts
Options

Brokers’ Contracts,

Contracts in Public Exchanges,

Rewards and Prizes . . .
Miscellaneous Contracts . .

Tending to injure Third Parties

Fraudulent Compositions with Creditors

Miscellaneous Contracts . .
Violating Fiduciary Obligations

“ Bohemian Oats” Contracts. .

Tending to limit necessary Individual Freedom .

Freedom of Marriage .

Freedom of Testamentary Disposition ;

Restraint of Trade

Consideration in such Contracts
Limitations as to Time and Space .
Nature of the Contract as affecting its

Validity
Patented Articles .

Legality of preventing Competition

Agreements to reduce Prices
Trade-union Contracts .
Result of the Decisions .
Recent Legislation .
Surrendering Inalienable Rights

Contracts not to sue for Future Torts .
Contracts to accept Insurance in Lieu of

Damages . :
Contracts with Attorneya .

VII. Generar Ruies as TO ILLEGALITY . . .
Object unlawful
Consideration illegal ‘
Contract legal, Intention hinooently illegal.
Tendency illegal oe
Indemnity for Illegal Acts

SEcTION

- 193-227
» 194-205
. 195.
196
197
- 198-205
199
. 200
201
202
203
204
205
- 206-211

. 207, 208

209

210

211
212-224
‘ 213
214

» 215-224
. 216
216a

217
s 218
. 219
: 220
. 221
é 222
. 223-224
« 225-227

226

. 226 a
227

- 228-251
. 228
229
230
és 231
. 232
CONTENTS.
CHAPTER ’

VII. GeneraL Rouwes as TO ILLEGALITY — continued.

Intention of one Party illesal . . . .
Vendee’s Intention illegal . . . . .
Borrower's Intention illegal. . . . . .
Illegal and Void Contracts . . . . . .
Securities for Illegal Contracts. . . . .
Effect of Illegality. . . . 2... ..,
In Pari Delicto. . ©. 1 1 ew ew es
Locus Peenitentie .
When Illegal Contracts should be eacinded
Receipt of | Proceeds of Illegal Transaction .
Partial Illegality . . . S aceseas
Securities partially slleeol
Supplemental Agreements ty ae! Lig) Se

Instruments affecting two Classes of Property

Consideration partially illegal. .

BOOK III.

THE CONSTRUCTION OF CONTRACTS.

VIII. Generat Ruues oF CONSTRUCTION ‘
The Nature of Construction . . . .
The Meaning of Words . . . .. .
Surrounding Circumstances. . . . . .
Custom or Usage ee ee ea ee
Different Docimenty, when construed fopailier’
Ambiguous Language etna? <4
General and Partienlar Words A
Construction by the Parties . . ere
Construction upholding the Tiansnetion 7
Punctuation, Writing, and Printing . . .
Alternative and Optional Contracts
Particular Contracts . . . . ..

IX. Impossipiniry . . ee ag! lee! bn 39
Inherent Tmposeibility, Oe dig. Lig. as RS
Legal Impossibility . . . ici

Existence and Destruction of Subjectumatten

Building Contracts . . . . -
Bailment Contracts . ... -
Personal Contracts... . =... »

X. REASONABLENESS «. - - s+ + + e@ «
In General . . 2. 6 1 ew ee wee
Reasonable Time . . . . + © «© © «©
Personal Satisfaction. . . - © «© « «

.

« 246-251

XV
SEcTION

233
234
235
236
237
238
238 a
239
240
241
242-252
243
244
245

. 252-263

252
253
254
255
256
257
258
259
260
261
262
263

- 264-278

264

265-269 a

270-276

» 273, 274

275, 276
277, 278

- 279-283

279

- 280-282

283
xvi
CHAPTER

CONTENTS.

SECTION
XI. THe Essence or THE ConTRACT «. « « + + « « 284-290
Meaning ofthe Term . . . «. . - we es 284
When Time is of the Essence . . . . « «© « © © 285, 286
For the Payment of Money . . . . . . .. 286
Inconsistent Descriptions . . . ... +s. - 287-290
Existence of Subject-matter . . . 2... 2. 6 © 288
Quantity, Quality, and Title. . . . 2... ., 289
Mistake as to Quality . . . . . . 2... 290
XII. Penarties AND LIQUIDATED DAMAGES .. . . . 291-294
The Question one of Construction. . . . . . . . 291
Penaltiesin Bonds. . . . . . 2. ee ew we 292
Intention, not Language, conclusive . . . . - 293
Rules of Construction. . . . ....-. 294
XIII. Demanp anp Notice. . . ....... 295-298
When Notice is unnecessary . . . . . es 295
When Notice is necessary . . . 1.» 2 ee 296
Notice to Joint Promisors . . . . . 1. « «© « « 297
When Demand is necessary . . . - . 2 + «> 298
BOOK IV.
THE OPERATION OF CONTRACTS.

XIV. Tae Operation oF ConTRACTS AS TO THE SUBJECT-

MATTER — ABSOLUTE AND CONDITIONAL Con-

TRACTS . . ele . 299-350
Nature of Conditions ba aca) k) er ws 299
Classification of Conditions. . . , . 800-305

Conditions Precedent and Gubsequent a 301
Conditions and Limitations 302
Concurrent Conditions . . . a 303
Internal and External Ganditians— Conditions in
Fact and Conditions in Law . . gle 304
Conditions affecting Formation and Ollization of
Contract. . . . . 3 we 305
Existence of Subject-matter as a Condition ae ee ee 306
Conditions in Charter-parties . 2. . 2. / e+ ee 307
Conditions in Contracts of Sale . . . 1. 2. se 308
Conditions in Insurance Policies . . . . .. .» 309
Conditions in Leases and Charter-parties . . . 310
Conditions, Representations, and Warranties . . . 8i1
Suspension and Discharge of Obligation . . "312
Conditions Precedent in Form, Subsequent in Fact . 313
CONTENTS. Xvil
CHAPTER SECTION
XIV. Tne Operation or ConTracts aS TO THE SuBsEct-
MATTER — continued.
Conditions affecting Right of Action . 314
Express and Implied Conditions 315
Dependent and Independent Promises . 316-334
Dependency a Question of Intention 317
Dependency a Question of Relative Time tor Par.
formance 7 318
Dependency and Fixed Dates for Per formance . 319
Nature of the Contract as affecting Dependency 320
New York Doctrine as to Instalment Contracts . 321
The Better Rule as to Instalment Contracts . 322
Continued Performance as affecting Dependency 323
Contingent Liability and Dependency . 324
Dependency in Contracts of Sale 325
Dependency and Promissory Warranties . 326
Dependency in Optional Contracts . . 327
Mutual Dependency . . 328-332
Dependent Promises must be Part a the same
Contract . : 333
Dependency and Unilateral Contech ; : 334
Inconsistent Descriptions : . 335, 336
Performance of Conditions . 337-340
Tender and Readiness and Willingness : 338
Substantial Performance . 889, 340
Waiver of Conditions . . 341-348
By Acceptance of Inirerton Bepiocrigius, . 842, 848
Of Conditions Subsequent . - 8484
By Prevention of Performance . .. . - 344-346
By Repudiation 347
Waiver and Dependency 2 348
Excuses for Non-performance of Conditions 349
Equitable View of Conditions 350
XV. Tue OperaTION oF ConTRACTS AS TO THE PARTIES
THERETO — JOINT AND SEVERAL CONTRACTS - 351-358
General Rules . 351
Rules of Pleading . 352
Survivorship ; 353
Discharge of Joint Conteacts . 854, 855
Joint Contracts in Equity 356
Rules of Construction . . 357
Partnership Contracts . . .. +. . 358
XVI. Tue Operation or Contracts As TO THIRD PaRTIES 359-378
As to Obligations . 360

b
Xvili CONTENTS.

CHAPTER SEcTION

XVI. THe OPERATION oF ConTRACTS AS TO THIRD PARTIES

— continued.

Asto Rights ... s+ 6 6 © 861-378
Exceptions to the Commendag Hales 362
Right of the “ Beneficiary ” to sue ‘i 363
Cases in which the Right is recognized . . 864-368
Contracts for the Benefit of the Third Party 365
Life Insurance Policies 365 a

New York Doctrine as to the Rights of a
a Beneficiary ” 366

Contracts in iaheree af the Prontaedts
Obligation to the Plaintiff ‘ . 867, 368
Contracts unenforceable by Third Party . 369-371
Nature of Beneficiary’s Right to sue . . 372-378
The Trust Theory 373
The Novation Theory 3 374
The Subrogation Theory - 375, 376
Doctrine of the Federal Courts . 377, 378
XVII. THe Operation oF Conrracts AS TO ASSIGNEES . 379-396
Assignments at Common Law 379
Assignments in Equity 380
Personal Contracts unassignable 381
Assignments of Liabilities : 382
What constitutes an Assignment . . ..... 383
Partial Assignments 384
Checks as Assignments 385
Assignment of Inchoate Rights . ae 386
Necessity of Notice to the Debtor. . . io es 387
Equitable Modification of Common-law Rules be Be 58 388
What passes by the Assignment . 389
Priorities between Successive Assignments . 390
Negotiability ; 391
Assignment by Operation of Ua ; . 392-396
By Death a Te 393
By Marriage . . ect 394
By Bankruptey and Insolvency ; 395
By the Transfer of Land 396

BOOK V.
THE RESCISSION AND REFORMATION OF CONTRACTS.

XVII. Tue Nature or ReEscission . 397-400
Rescission defined . . oe Ss 397
Rescission and Conditions Subeeauent ee eh S'S 398
Causes for Rescission——In General . . . . «. . . 899-400
CONTENTS. xix

CHAPTER SECTION
XIX. Causes ror Rescission—Inrancy . . . . . . 401-406
Who are Infants . . be Co: 88 Sede od 401

Void and Voidable Trfantst Contrasts, OS Ze! sah aah ao 402
Binding Contracts of Infants . . . . . . 1... 403
Quasi-contractual Liability of Infants . . . . . 404
Contracts for the Infant’s Benefit. . . . .... 405°
Infant’s False Representations asto Age . . . . . 406

XX. Causses ror Rescisstion — Menta Incapacity. . 407-414
Equitable Grounds for Rescission. . . 2. 2... 407
Mental Incapacity. . . soe we ww we . 408-414

The Massachusetts Tioutdiue af U.P aie A es 408

The General Doctrine - . . se Sa Cae ves 409

Unsettled Condition of Ammetiean Liaw oh. Gh Pats 410

Contracts of Necessaries . . ee ek! sth raphe 411

What constitutes Mental Incapacity le. Aap 412

Drunkards and Spendthrifts . . 2... ... 413

Judicial Declaration of Insanity. . . . . . . 414

XXI. Causes ror Rescission—MIstTakE . . . . . . 415-425
Misunderstanding . . . . ee ew ew ee 415-425
Common to both Parties — ’ Mistake 2 ae « . 416-421

As to the Subject-matter. . . . . . . . 417-420

Astothe Promisee . ......4.. 421

Of one Party . . . se ee we ww wo 422-425

Not known to the atlier ewe wh a a 422

Known tothe other . . ... . . . « 428-425
XXII. Causes ror Rescission— MISREPRESENTATION AND

FRAUD  « « 4 © Ho @ 2 4 4 + + 6 4 426-448
What constitutes a False Representution «0 8 6 4 427-436
No General Duty of Disclosure . . . . .. . 428
Duty of Disclosure . . . . « . « 6 « « « 429-482
By Fiduciaries . . . Ce ee ae ee 429
In Contracts of Tneafenes eh hve ee 8h ve 430
In Contracts of Suretyship . . . . .. . 431
Partial Disclosure. 2. . 2 1 ee ew ee 432
Expressions of Opinion . . . . . . 2 se 433
Expressions of Intention . . . . « 2 we es 434
Representations of Law . . «se es ee 435
Seller’s and Buyer’s Statements . . . . . « + 436
The Representation must induce the making of the Contract 437
The Representation must justify Action upon it by the
Injured Party. . . . - « « « « + « « 488-440
When the Representation must be acted upon . . 439
The Effect of Negligence by the Party acting . . 440
Misrepresentation and Fraud . . . - . «© « « « 441-443

The Scienter . . » - © «© + © «© © «© « «© 442, 443
xx CONTENTS.
CHAPTER

XXII. Causes ror Rescission— Duress AND UNDUE In-

FLUENCE. . . Sen 4
Contracts voidable, ant oid a a
Development of the Law of Duress
Duress by Threats. . . . . .
Duress and Undue Influence. .
Duress by Lawful Imprisonment .
Duress to Third Parties . . .
The other Party must seek to take

Duress .

"Advantage

Unfair Dealing aud Undue Tndlaence 7

Abuse of Fiduciary Relations .
Actual Undue Influence
Dealings with Expectant Heirs

XXIV. How Rescission Is EFFECTED
Modes of Rescission . . . . .
Rescission in Pais . . . .
Rescission by Plea . . . .
Rescission by Reply. .
Judicial Rescission . . .

When Judicial Rescission is necessary
Equitable and Legal Causes for Rescission .
When Rescission by Plea or in Pais is proper .

XXV. RequisitEs oF REScISSION

Of Executory and Executed Ganinacs

Of Infants’ Contracts. . . . .
Of Insane Persons’ Contracts . .
Necessity of Restitution . . . .
Partial Rescission . . . . ..

.

.

XXVI. How tHe Ricut or REscIssioON MAY BE

What will bar the aan tins, i
Ratification . . ed a

By Infants . . .
When they can ratify

What will constitute Ratification
Ratification must be voluntary
Effect of Ignorance of Law

Conditional Ratification
By Insane Persons .

Requisites of Ratification in General

Ratification and Election .
TLaches . . . :
The Statute of imitations: *
Estoppel . . . . . -

SECTION

444-454
444
445
446
447
448
449

450

- 451-454

452
453
454

455-462

- 455-459

456
457
458
459
460
461
462

463-470
463
464, 465
466

- 467-469

470

471-485 a

471

471 a-483
471 a-479

.

472

- 473-476

A477

478

479

480

481
482, 483
484

485
485a
CONTENTS.
CHAPTER
XXVII. THe REFoRMATION oF ConTRACTS
Nature and Effect of Reformation .
When Reformation will be granted
For Mistake Common to both Parties
For Mistake of one party. .
For Mistake of Fact and Mistake of Law
For Mistake as to the Subject-matter

BOOK VI.

THE DISCHARGE OF CONTRACTS.

XXVIII. THe Discuarce or ConTRACTs IN ACCORDANCE
- 497-503

WITH THEIR TERMS . .
How Contractual eee ue be discharged
Performance .
Substituted .
Conditional
Substantial .
Tender

Internal Conditions Subsequent. _ Conditions 4 in n Fact

XXIX. Tue DiscHarGe or Contracts By VOLUNTARY ACT
What Voluntary Acts will oe Contractual Obli-
ah, Me » . 504-513

gation
Waiver .
Gift. ,
Release. . . ah Wet. Be
Covenants a ‘e BUG on indies [AS Ge
Novation

By Change of Parties.
By Change ot Subject-matter
Effect of the Statute of Frauds

Formal Requisites for the Discharge of Contracts

XXX. THe DiscHarGE oF CONTRACTS BY OPERATION OF
- 515-535

Law ‘
Events discharging Contraeiual: Obligation :
Breach going to the Essence .
Distinguished from eae
Repudiation

Distinguished — Breach going ko the Baoune
Of Contracts incidental to the Tenure of

Property . . i. Sed 185
What constitutes Repudiaiien ss 8
Repudiation must be accepted . . .

. 489, 490
. 491-495

- 512, 513

. 516, 517

XXL
SECTION

- 486-496

486

- 487-496

488

496

497

- 498-501

499
500
501
502
503

504-514

505
506

- 507-509

508

» 510-518

511

513
514

515

517
- 518-522
519

520
521
522
xxii CONTENTS.
CHAPTER

XXX. Tue Discoarce or Contracts BY OPERATION OF

Law — continued.

Events discharging Contractual Obligation — continued.

“ Failure of Consideration ” é
And Dependency . . .. .
And Conditions Subsequent .
Misdescription of Property . .
Breach of Independent Contract

Specialties and Negotiable Instruments

Alteration of a Written Instrument .
Loss or Destruction of an Instrument
Negotiable Instruments .

Specialties . . . . . ..
Merger. . . Ler et tart
“And N piatbn oo ot eRe Se
And Estoppl . . . .. .
Marriage . . «se 6 ee

SEcTION

- 523-528

524
525
526
527
528
529

. 530, 581

530
531

- 532-534

XXXI. Discuarce or Rigut or ACTION FOR BREACH OF
. 586-545

ConTRAcCT ..
Modes of discharging Right of Action
By the Terms of the Contract .
By Voluntary Act . . .. .

Accord and Satisfaction .

Part Payment and Cettipoattions

Satisfaction of Specialties .
Arbitration and Award .. .

By Operation of Law . . 5
The Statute of Limitations P
Bankrupt Acts... .. .
BOOK VII.
THE ENFORCEMENT OF CONTRACTS.
XXXII. Sanctions. . . Suse due
Sanctions and Rewclice erktes: a= Aer sata 3h
Intermediate and Ultimate Sanctions .
Of Contractual Obligation . . .
XXXII. Remepizrs ... . < ee &

Remedies for Prevention and Redress_ .
Remedies for Redress

Primary and Secondary Ouliseticnl in Contracts

533
534
535

536
537

- 538-542
- 5389-541

540
541
542
543
544
545

. 546-548

546

. 547, 548

548

549-552
549
550
5B1, 552
CONTENTS.

CHAPTER

XXXIV. Anticipatory Breacu or Contract

Natureof . . . . . .
Limitations of the Doctrine. .«
Cases rejecting the Doctrine.
Measure of Damages . . . .

XXXV. Damaces .......

Object of. . 2. 2. 2...
Measure of . . . 1. 2 se
THterest: 6. a. aay Bw ee
Liquidated Damages . . . .

XXXVI. Speciric PERFORMANCE. .

Equitable View of Contractual Obligation F

Equitable Jurisdiction to enforce Contracts .

Positive and Negative Stipulations
Damages must be an Inadequate Remedy

BOOK VIII.

THE STATUTE OF FRAUDS.

XXXVII. Tue Nature anp History oF THE STATUTE

Oral Contracts at Common Law
The Statute of Frauds . . .
Fourth Section . . . .
Seventeenth Section. . .

XXXVIII. Contracts WITHIN THE STATUTE

Contracts within the Fourth Section .
Contracts of Executors and Administrators

Guaranties. . aos
Of Real Liability;

Performance of Collateral Act

Contracts of Indemnity
Contracts of Novation.
Promises to the Debtor

The ‘‘ New Consideration ” Rule

The “ Main Purpose” Rule .

To whom Credit must be given

Marriage Contracts .
Contracts concerning Lands

Joint and Partnership Contracts

.

.

Entire, Divisible, and Alternative Contracts
Contracts for Mutual Wills .

XXili
Sxcrion

. 553-556

553
554
555
556

557-561
557

. 558, 559

560
561

562-565
562
563
564
565

- 566-569

567
567
568
569

- 570-594

.

570-591
571
572-582
573
574
575
576
577
578-580
581
582
583

584-586 a

585
586
586 a
xxiv CONTENTS.
CHAPTER ; SECTION
XXXVIII. Contracts WITHIN THE STATUTE — continued.
Contracts within the Fourth Section — continued.
Agreements not to be performed within One Year . 587-591

Conditions and Limitations . . . . .. . 588

Personal Contracts . .. . ae 589
Performance on One Side within One Nene. ‘ 590

“Year” defined . . . . teat? as of 591
Contracts within the Seventeenth Bastion ~ oe « ». 591 a-594
“Contract for the Saleof” . . . ..... 592

“ Goods, Wares, and Merchandises’”” . . . . . 593

For the Price.of £10 sterling and upwards . . . 594
XXXIX, Tue Requirements or THE STATUTE. . . . . 595-605
Difference in the Requirements of the two Sections . . 595
The Memorandum. . . ...... . . . « 596-603
In General. . . . ‘ é us 596
Connected Documents anil Oral Modifications 2 597
Description of Parties . . ax Oe eS. Hes, 4 598
The Terms of the Contract saiist be sintod i ht 599
Must the Consideration be stated? . . . . . . 600, 601
The Signature . . ee seooad SS) Ge 602
When the Menvenituie sinadt bs. tiie ow oe % 603
Requirements of the Seventeenth Section . . . . 603 a-605
Acceptance and Receipt . . . . . 2. se 604
Earnest and Part Payment . . ...... 605
XL. THe Errect oF THE STATUTE . . oe oe ee. 606-609
The Statute merely a Rule of Evidenes ea 606
Part Performance at Law . . ......4. 607

Part Performance in Equity . . . . . . . « . 608, 609

APPENDIX

I. Toe Nature or ConNTRACTUAL OBLIGATION . . . ~ 610-625
Different Meanings of the Term “Contract” . . . . 610
Contract and Agreement. . . . Sous, Sie Ret Jed 38 611

“ Contract” in Legislative Buackments Gs Set oil, we ae 612
Difficulty i in defining Contracts. . . . 2. 2. . ee 613
Classification of Obligations . edt ES - « « . 614-620
Paramount or ir reensable, and eanwentnal or ecduatle 615

Definite and indefinite Be Sa a SE Re 616
Unifactoral and bifactoral. . . . . 2. 2. s 617

Contract, Estoppel, and Deceit . . . . . . 618
Contractual Obligation . . . 2. 2 2 es 619, 620

What is a “ Contract ” ‘ a eh s 621

Is the Consideration Part of ie Contract ? won % 622
CONTENTS.

APPENDIX
]. Tue Nature or ConTRACTUAL OBLIGATION — continued.

Contract, Promise, and Agreement
Contract, Promise, and Assurance . :
Whether Contractual Obligation is specific .

II. Tar History or ConrractuaL ACTIONS

INDEX .

Necessity of the Historical Treatment of Contract
Older Modes of Trial at Common Law
Compurgation, or Wager of Law
Trial by Record .
Trial by Charter .
Actions ex Contractu at outnein Law.
Debt .
Covenant
Account . . . se
Lack of General Pvineiples at Cotmion oe
Trespass on the Case . .
Trespass on the Case and Pee
Deceit and Assumpsit .
Indebitatus Assumpsit .
Quantum Meruit and Quantum Valebat
Contracts in Equity
Growth of the Action of Aasutrnpuis ;
The Common Law of Contracts based on Procedure
The Modern Theory of Simple Contracts
The Consideration Theory
Equitable Estoppel
The Estoppel Theory of Contract
Deceit oo iad Be
The Gonsonsaal Theory “os Contracts i Bort
Summary

« 631-636
- 632-634

. 646-652

XXV
SEcTION

623
624
625

- 626-652

626

+ 627-630

628
629
630

635
636
637
638
639
640
641
642
643
644
645

647
648 -
649
650
651
652

Pace
387
ABBREVIATIONS.

Tue following abbreviations, in addition to those in common
use, have been used in this book : —

CCA... .
Ewell’sL.C. . .
H&w..

Keener, Cas. Eq. .

Keener, Cas. Q. C.

uno ae
. gH.

qh.

as
Q

Woodr.
Woodr. Cas. Ins. .

Atlantic Reporter.

Circuit Court of Appeals Reports.

Ewell’s Leading Cases on Infancy, Coverture, etc.
Federal Reporter.

Huffcut and Woodruff’s American Cases on Contract.
Keener’s Cases on Contracts.

Keener’s Cases on Equity.

Keener’s Cases on Quasi-Contracts,

Langdell’s Cases on Contracts.

Northeastern Reporter.

Northwestern Reporter.

Pacific Reporter.

Southern Reporter.

Southeastern Reporter.

Southwestern Reporter.

Williston’s Cases on Contracts.

Williston’s Cases on Sales.

Woodruff’s Cases on Domestic Relations.
Woodruff’s Cases on Insurance.
TABLE OF CASES.

References are to sections.

Aaron’s Reefs v. Twiss
Abbot Walter v. Baillol
Abbott v. Doane,

v. Inski .
Achilles v. Achilles
Ackert v. Barker

Acme Mfg. Co. v. Reed 146,

Adam v. Newbigging
Adams v. Coulliar

v. Jones

v. Kuehn

v. Lindsell

v. Nichols

v. Schiffer

v. Shirk

v. Turner

469
630
122, 125
606
361
186, 238
147, 148
468
234
47
361
168
273
446
378
347

Adams Radiator Works v. Schra-

der
Adamson »v. Jarvis

283
232

Addyston Pipe Co. v. United

States
48tna Life Ins. Co. v. Sellers
Ahearn v. Ayres
Ahl v. Johnson
Aiken v. Blaisdell
Aitkin v Lang

223 a
409, 458
49

608

174, 234
170

Alabama Foundry Works v. Dallas 481

Alabama Land Co. v. Jackson
Alabaster v. Harness
Alden v. Hart
Aldrich v. Ames
Alexander v. Brogley

v. Haskins
Alfree Mfg. Co. v. Grape
Alger v. Keith

v, Thacher
Allard v. Lamirande
Allen v. Berryhill

v. Chouteau

v. Duffie
. Hammond
. Harris
. Hartfield
. Rescous

2

ees

599
184
308
575
440
410
470, 482
481
2164
186
409
67
131
288
539
434
206

 

Aller v. Aller 509
Allison v. Abendroth 108 a
Allore v. Jewell 453
Alpaugh v. Wood 357
Alsop v. Riker 484
Alt v. Groff 406
Alvord v. Smith 204
Amanda, etc. Co. v. People, etc. Co. 262

American Cotton Oil Co. v. Kirk 101

American Exchange Bank v.
Northern Pacific R. R. Co. 377

American Ex. Co. v. Pinckney 261

American Mtg. Co. v. Wright 476, 478
American Surety Co. v. Pauly 263
Ames v. Belden 276
Amsden v. Atwood 347
Amsinck ». American Ins, Co. 606

Anchor Electric Co. v. Hawkes 216a
Anderson v. Creston Land Co. 433, 434

v, Gaines 95, 98, 527, 528
v, Hayman 582
v. Martindale 351
v. May 272
v. Soward 478
v. Spence 575
v. Standard Granite Co. 540
ve. Todd 339
v. United States 223.4
Andre. v. Graebner 512
Andrews ». Franklin 299
v. New Orleans Brewing Assoc. 241
Andrus v. Blazzard 494
Angell v. Duke 66

Angle v. Chicago, ete. Ry. Co. 360
Anglo-American Provision Co. v.

Prentiss 164
Anglo-Egyptian Nav. Co. v. Ren-

nie 274
Anheuser-Busch. Brewing Assn.

v. Mason 234
Ankeny v. Clark 289
Anonymous 338
Appleby ». Myers 274

Archer v. California Lumber Co. 79
XXX

TABLE OF CASES.

References are to sections.

Archer v. Freeman 187

Arkansas Valley Smelting Co. v.

Belden Mining Co. 382
Armitage v. Insole 315
Armstrong v. American Ex. Bank 235
Arnold v. Alden 616

v. Garth 601

v. Nichols 368

v. Richmond Iron Works 480

v. Wise 47
Arnot v. Coal Co. 219
Ashmead v. Reynolds 409
Asiatic Banking Ass’n, Ex parte 389
Asplund v. Mattson 273
Atkins v. Barnstable 339
Atkinson v. Denby 238 a

v, Smith 333
Atwater v. Manville 201, 241
Atwood v. Cobb 600

v. Marshall 82
Audette v. L’Union St. Joseph 349
Augusta Southern R. v. Smith Co. 513
Austin v. Hall 354
Averill v. Hedge 157
Avery v. Bowden 522
Ayerst v. Jenkins 195, 237
Bassitt v. Bennett 36
Babcock v. Terry 232

v. Hawkins 539
Badger Paper Co. v. Rose 132

Badische Anilin Fabrik v. Schott 216a@
Bagster v. Earl of Portsmouth 411

Bailey v. Ass’n of Master Plumbers 221
v. Austrian 100, 102
v. Cromwell 334
uv. R. BR. Co. 256
Baily v. De Crespigny 267
Bain v. McDonald 590
Bainbridge v. Firmstone 92
Baird v. United States 109
Baits v. Peters 532
Baker v. Bryan 371
v. Holt 155
v. Maxwell 481
Baldey v. Parker 594
Baldwin v. Emery 375
vo. Van Deusen 95
v. Williams 593
Baldwyn v. Smith 480
Baldy v. Stratton 195

Baltimore & Ohio R. v. Voight 226
Bank v. Kennedy 259
Bank of Antigo v. Union Trust Co. 470
Bank of Australasia v. Breillat 247
Bank of China v. American ‘Trad-

ing Co. 328
Bank of Columbia v. Patterson 532

 

Bank of Hindostan v. Smith 529
Bank of New Zealand v. Simpson 254
Bankart v. Bowers : 330
Banorgee v. Hovey 532
Barclay v. Pearsons 204
Barker v. Barker 188
v. Hodgson 269 a
Barlow v. Ocean Ins. Co. 113
Barnard v. Kellogg 255
v. McLeod 342
Barnes v. Barnes 36
v. Hekla Ins. Cp. 367
v. Morrison 209, 347
v. Perine 130
v, Smith 202
uv. Strong 185
Barnes Cycle Co. v. Reed 148, 149
Barnett v. Juday 357
v. Speir 482
Barrere v. Somps 275, 276
Barrett v. Buxton 413
v. Mahnken 447
Barrie v. Earle 470
Barron v. Burnside 191
Barry v. Capen 180
v. Wixon 587, 588
Bartholomew wv. Jackson 41
Bartle v. Nutt 241
Bartlett v. Blaine 207
Barton v. Benson 209
Bascom v. Smith 148
Bassett v. Brown 467
v. Hughes 368, 375, 376
Bateman v. Phillips 598
Bates v. Ball 413
v. Hyman 466
Batterbury v. Vyse 346
Batty v. Marriott 204
Baum v. Baum 197
Baxley v. Tallassee, etc. R. 101
Baxter v. Billings 277
v. Burfield 393
Bay v. Williams 373, 376
Bayley v. Bailey 225
Bayne v. Wiggins 597
Bay View Brewing Co. v. Tecklen-

burg 528

Beach ev. Crain 270a
v. First M. E. Church 170
Beacon Lamp Co. c. Travellers’

Ins. Co. 375
Beadles v. Bliss 199°
Beale v. Hall 47
Bean v. Burbank 167, 168
Beath v. Chapoton 447
Beatty v. Western College 129

v. Howe Lumber Co. 286, 348, 519
Becket v. Gridley 296
‘Beckham v. Drake 395,
TABLE OF CASES.

References are to sections,

Beckwith v. Talbot 63, 597
Beecher v. Conradt 321
Behl v. Schuett 448

Behn v. Burness 264, 285, 299, 335, 336
Beland v. Anheuser-Busch Brewing

Ass’n 424
Belger v. Dinsmore 57
Bell v. Campbell 238 a

v. Leggett 207
v. Mendenhall 370
v. Rice 47
v. Sappington 608
v. Stocker 394
Belleville v. Citizens’ Horse R. 503
Bellows v. Sowles 571
Benge v. Hiatt 93, 865
Bennett v. Collins 476
v. Pierce 526
Bent v. Cobb 602
Bentley v. Robson 448, 449
Benton v. Springfield, etc. Ass’n, 51
Beresford v. Goudrouse 295
Bergen v. Ebey 489
v. Frisbie 180
Berkshire Life Ins. Co. v. Hutch-
ings 376
. Bernard v. Taylor 199, 239
Berry v. Brown 371
Bestor v. Hickey 446, 478
v, Wathen 181
Bettini v. Gye 516
Beveridge v. N. Y. El. R. R. Co. 370
Bibb v. Allen 208, 596
Biddle v. Pugh 375
Bierbauer ». Wirth 190
Bignall v. Gould 293
Bill v. Bament 603
Bingham v. Bingham 289
v. Madison 289
Birch v. Earl of Liverpool 588
Bird v. Jacobus 214, 608
v. Munroe 603, 606
Birks v. Trippet 298
Bisbee v. McAllen 174
Bishop v. Allen 78
v. Busse 117
v. Eaton 148
v. Merrill 236
v. Palmer 216, 236, 246
Bixby v. Mow 246
Black v. Wabash, etc. Ry. Co. 78
v. Walker 526
Blacknall v. Parish 38

Blackstock v. N. Y. & E. R. R. Co. 280

Blagden v. Bradbear 600
Blaine v. Knapp 283
Blaisdell v. Ahern 185, 186

Blake v. Hamburg-Bremen F. I. Co. 159
v. Pine Mountain Iron Co. 397

 

XxXxi

Blake v. Voigt 588
Blake’s Case 541
Blakely Ordnance Co., Re 384
Blakely v. Sousa 209, 277
Blanck v. Sadlier 289
Blanks v. Clark 436
Blass v. Terry 82
Blewett v. Bash 354
Blewitt v. Boorum 387
Bliss v. N. Y. etc. R. R. Co. 79
Bliven v. New Eng. Screw Co. 255
Block v. Darling 240
Blood v. Wilson 339
Bloomer v. Nolan 473
Blossom v. Dodd 58
Boardman v. Reed 258
Boast v. Firth 277
Bohanan v. Pope 374, 376
Boigneres v. Boulon 195
Boit v. Mabin 145
Bollnow v. Novacek 467, 470
Bona’s Appeal 201
Boody v. McKenney 473
Boone, Re 227
Booth v. People 201
v. Wiley 107
Boozer v. Addison 394
Borchsenius v. Canutson 579
Borden v. Boardman 361
v. Richmond, etc. R. R. Co. 422
Boston & Lowell R. R. v. Nashua,
etc. R. R. 542
Boston & Maine R. R. Co. v. Bart-
lett 166, 167
Boston Ice Co. v. Potter 44
Boston S. D. Co. v.Salem Water Co. 369
Bostwick ». Bostwick 47
Boulton v. Jones 44
Bourne v. Mason 362
Bowditch v. New Eng. Mut. Life
Ins. Co. 174
Bowen v. Hall 360
Bowery Bank v. Gerety 244
Bowery Nat. Bank v. Wilson 179
Bowes v. Shand 285
Bowman v. Hiller 449
v. Phillips 190
v, Stewart 349
Boyce v. Smith 412
Boyd v. Hitchcock 108 a
v. Paul 7% 584
Boydell v. Drummond 597
Boyden v. Boyden 473
Boylan v. Hot Springs R. BR. Co. 56
Boyson v. Haley 234
v. Thorn 360
Bradford v. Roulston 139
v. Williams 516
Bradley v. King 519, 521
xxxil

TABLE OF CASES.

References are to sections.

Bradner v. Roffsell 349
Brady v. Finn 440

v. Howarth 241
Bragg v. Danielson 512

v. Wetzell 352
Brahm v. Adkins 298
Brainard v. Van Dyke 282, 458
Braley v. Powers 437, 442
Braman v. Bingham 37
Brann v. Maine, etc. Ass’n 375
Brassell v. Williams 108 a
Brauer v. Shaw 159, 166
Breese v. Stanly +76
Breitling v. Marx 35
Brewer v. Horst-Lachmund Co. 597

v. Maurer 364, 369, 376
Brewster v. Brewster 458
Brice v. Bannister 886, 388
Briggs v. Sizer 155
Brill v. Tuttle 384, 386
Brindley v. Brindley 188

Bristol Aérated Bread Co. v. Maggs |
v. Sutton 607

British Waggon Co. v. Lea 381
Brock v. O'Dell 494
Brogdon v. Metropolitan Ry. Co. 145
Brooks v. Ball 92
v, Martin 241

v. White 108 a
Brophy v. Lawler 481
Brown v. Bigné 184
v. Brown 36

v. Byrne 255

v. Dobson 262

v. Duncan 174

v. Eastern R. R. Co. 58

v. Everett-Ridley-Ragan Co, 238a

v. Farmers’, etc. Bank 573

v. Farnham 126

v. First Nat. Bank 190

v. Foster 283

v. Fowler 600

v. Guarantee Trust Co. 285

v. Hartford F. I. Co. 458

v. Langley 63

v. McCreight 189

v. Muller 522

v. Nealley 207

v. Odill 213, 521, 552

v. Royal Ins. Co. 262

v. Stillman + 369

v. Whipple 597
Brumby v. Smith 274
Bryant v. Isburgh 336, 503
v. Peck & Whipple Co. 449
Bryant’s ond Co. v. Felt 132
Buchanan v. Hubbard 472
v. Tilden 362, 366
Buck v. Coward 216a

 

Buckstaff v. Russell 503
Buhl v. Stephens 588, 606
Bunun v. Postell 40°, 480
v. Winthrop 195
Bunting v. Darbyshire 578, 579
Burchell v. Marsh 542
Burck v. Taylor 582
Burdett v. Williams 406
Burke »v. Allen 409
v. Gould 446
Burkhardt v. Georgia School Tp. 268
Burnes v. Scott 188
Burr v. Beers 368
Burris v. Landers 608
Burt v. Union Central L. I. Co. 190, 268
Burtis v. Thompson 347, 521
Burton v. Larkin 370
Bush v. Breinig 413
v. Genther 36
Buswell v. Fuller 506
Bute v. Thompson 271
Butler v. Butler 535
v. Wigge 257
Butler & Baker’s Case 82
Butterfield v. Barber 438
v. Byron 274
v. Hartshorn 374
Byrd v. Rautman 436
Byrne v. Van ‘Tienhoven 166
Cazort v. Christie 442
vc. Kent 285
Cadwell v. Blake 315
Cage v. Acton 813, 535
Cahen v. Platt 839, 342, 516
Caines v. Smith 346, 521, 553
Caledonian Ins. Co. v. Gilmour 191a,
314
Callanan v. Chapin 596
Callisher v. Bischoffsheim 112
Callonell v. Briggs 338
Cambefort v. Chapman 355
Camden Amboy R. R. Co. ».
Baldauf 58
Camden v. Deering 209°
Camp v. Bruce 209
Campbell v. Heney 281, 282
v. Jones 323
v. Kauffman Milling Co. 483
v. Lacock 361
v. Mercer 144
v. Smith 368
Canal Co. v. Ray 514
Cander’s Appeal 142
Cann v, Cann 47
Cannan v. Bryce 235
Carey v. Mackey 197
Carleton v. Whitcher 246

v. Woods 246
TABLE OF CASES.

References are to sections.

Chicago, Milwaukee, & St. Paul R.

Carlill v. Carbolic Smoke Ball Co.

Carlson v. Segog __

Carlton Stp. Co. v. Castle Mail
Packets Co.

93
467

280

Carnig v. Carr 30, 217, 589
Carpenter v. Carpenter 406
v. Cresswell 323
v. Rodgers 480
Carrell v. Potter 475
Carrier v. Sears 409

Carter v. Holahan 869
v. Mayor of Albany 875
v. Nichols 384, 386
». Odom 600
v, Silber 465
v. United States Ins. Co. 888

Carter White-Lead Co. v. Kinlin 589
Cartwright v. Cartwright 197
Casey v. Leslie 329
Castlegate Stp. Co. v. Dempsey 281

Caston v. Quimby

Catlin x. Haddex

Cecil v. Spurger

Central Shade Roller Co. v, Cush-

289
476
428

man 219, 222
Chalfant v. Payton 213
Chamber of Commerce ». Sollitt 521
Chamberlain v, Grimes 188

v. Williamson 393

Chamberlain’s Wharf v. Smith 215, 236

Chambers v. Baldwin 360
v. Lancaster 384
Champion v. Plummer 598
v. Ulmer 78
Chandler v. Glover 476

Chapman v. Beltz Co. 518, 553
Chase v. Fitz 583
v. Henry 354
v. Lowell 596, 602

241
442
167

Chateau v. Singla
Chatham Furnace Co. v. Moffatt
Cheney v. Cook

vu. Libby 285
Cherry v. Heming 34
Chesebrough v. Conover 180
Chesman v. Nainbry 249

Chicago v. Babcock 508, 539
v. Sheldon 259
v. Weir 261
Chicago, etc. Ry. v. Lewis 413

Chicago Attachment Co. v. Davis

S. M. Co. 606

Chicago Building Ass’n v. Hig-
ginbotham 437, 457
Chicago Building Co. v. Graham 351
Chicago, B. & Q. R. v. Bell 226 a
v. Curtis 226 a

Chicago, Milwaukee, & St. Paul R.
v. Clark 108 a, 116

 

Cc

v. Hoyt

XXxiil

265

Chicago & Great Eastern Railway

Co. v. Dane

101

Chicago & Northwestern R. v.

Simon

59

Chicago & S. F. BR. BR. Co. v.

Price

Chicora Fertilizer Co. v. Dunan

Childers v. First National Bank

Chism v. Shipper
Choice v. Moseley
Christie v. Borelly
Chrysler v, Canaday
Chytraus v. Smith
Church v. Fowle

v. Proctor

349
108 a
428
259
349
262
324
436
162
529
209, 233

Cincinnati v. Cincinnati Gaslight Co. 259

Citizens’ 8. B. v. Babbitt 115
City N. B.v. Kusworm 449, 467, 468
Claflin v. Olstrom 371
Clapp v. Hoffmann 289 ,
Clara A. McIntyre, The 188
Clark v. Busse 274
v. Franklin 274
v. Mallory 258, 254, 354, 508
v. Marsiglia 556
v. Needham 217
v. Pendleton 583
v. Sanborn 46
v. Van Court 478
Clarke v. Watson 349
v. White 540
Clary v. Clary 43
Clason v. Bailey 602
Clay v. Yates 206
Clayton v. Andrews 592
v. Clark 108
Cleary v. Sohier 274
Cleaver v. Lenhart 139
Clement v. Swanson 442
Clements v. London & N. W. Ry.
Co. 405
Cles v. Jamieson 201
| Cleveland Rolling Mill v. Rhodes 285,
325
Clifford v. Luhring 581
v. Watts 76, 265, 271
Clipsham v. Vertue 516
Clough v. Giles 374
v. Seay 529
Clymer v. De Young 579
Coffey v. Com. 133
Coffin v. Bradbury 577
Cohen y. Berlin, etc. Co. 219, 231
Cole v. Cassidy 442
v. Gibson 213
e. Smith 436
XXxXiv

TABLE OF CASES.

References are to sections,

Coleman v. Applegarth 166

v. United States 45

v. Whitney 367
Coleman’s Estate 452
Collins v. Locke 219, 221, 222
Collyer v. Moulton 512
Colusa County v. Welch 180
Combs v. Hall 464
Comer v. Grannis 422
Comley v. Dazian 376

Commercial N. B. v. Goodrick 581, 600

v. Kirkwood 873, 376
Commings v. Heard 542
Commonwealth v. Hunt 222

v. Overby 269 a
Compton v. Bunker Hill Bank 450
Conant v. Kimball 422
Condict v. Flower 529
Condon v. Rice 78
Cone v. Russell 210
Conley v. Nailor 413
Conly v. Coffin 436
Conn v. Hagan 489

v. Thornton 299
Conn. Mut. Life Ins. Co. v. Schaefer 200
Conner v. Groh 60
Connerat v. Goldsmith 573
Connihan v. Thompson 482
Connor v. Black 201

v. Chemical Works 461

v. Stanley 412
Conrad v. Lane 406
Conrow ». Little 482

Consolidated Coal Co. v. Schneider 259
Consumers’ Oil Co. v. Nunnemaker

: 216 a, 247
Cook v. Bradley 141
Cook v. McCabe 274

v. Wright 112
Cooke v. Millard 592

v. Murphy 117, 118

v. Oxley 167
Coombe v. Greene 327
Cooper v. Coates 560

v. Cooper 47

v. Jackson 115

v, Lansing Wheel Co. 105

v. Phibbs 289
Cope v. Rowlands 174
Corcoran v. Lehigh Coal Co. 247
Cordes v. Miller 267
Cornish v. West 351
Cornwall v. Henson 286, 325, 348,

516, 519, 522
Cort v. Ambergate Ry. Co. 347

ov. Lassard 564
Cosgrove v. Cummings 142

v. Provident Inst. 57
Coster v. Mayor of Albany 365

 

Cotes v. Bennett

Cottage Street Church v. Kendall
Cotten v. McKenzie
Cotterill v. Stevens
Cottle v. Marine Bank
Coughran v. Bigelow
Council Bluffs S. B. v. Griswold
Couturier v. Hastie 264, 288, 306,

Cowan v. Milbourn
Cowles Electric Co. v. Lowrey
Cox v. Vt. Central R.
Coyne v. Avery
Coyner v. Lynde
Craft v. Kendrick

v. McConoughy
Craighead v. Wells
Crandall v. Payne
Crane v. Crane
Craus v. Hunter
Crears v. Hunter
Creed v. Sun Fire Office
Creekmore v. Baxter
Cresswell Ranch Co. v. Martindale

285,

Cribben v. Deal
Crisup v. Grosslight
Cromwell v. Grunsden
v. Tate
Cross v. Cross
Crossen v. Murphy
Crossley v. Maycock
Crofut v. Layton
Crouch v. Credit Foncier
v. Gutmann
Crum v. Sawyer
Culp v. Love
Cumberland N. B. v. St. Clair
Cummings v, Arnold
v. Union Bluestone Co.
Cunningham v. Fourth Baptist
Church
Curran v. Galen
Curry v. Kansas, etc. R. R. Co.
Curtis v. Brown
v. Innerarity
v, Sage
Cutter v. Powell

Dae v. Hamilton

zv. Lincoln
Dalton v. Poole
Dalzell v. Dueber Mfg. Co.
Daly v. People’s Building Ass’n
Daniels ». Newton
Dartmouth College v. Woodward
Dash v. Inabuiet
Dater v. Earl

337,

100, 518,

67,

255,
349,

499,

4l,

347,

375
131
246
605
298
349
354
335,
419
233
257
59
285
118
581
241
464
371
521
113
115
200
409

825

38
190

34

35
197
467
155
214
380
350
258
217
374
513
219

269
221
357
579
560
590
337

585

82
362
593
521
555
612

47
234
TABLE OF CASES. XXXV

References are to sections.

 

Daub v. Englebach 368 | Devecmon v. Shaw 92
Dauglish v. Tennent 207 | Dever v. Dever 495
Davenport v. First Congregational Devlin 7. New York 381
Society 122 | Devon v. Powlett 393
v. Newton 155 | Dewey v. Alpena School District 278
Davey v. Shannon 589 | Dexter v. Blanchard 573
Davidson v. Cooper 529 v. Hall 409
v. Hayden 232 v. Norton 272
Davies v. Davies 31, 216 a, 263 | Diamond Match Co. v. Roeber 2164
zt. Stowell 184 | Dicken v. McKinley 586
Davis v. Clinton Water Works Co. 369] Dicker v. Jackson 818, 330
v. Davis 170 | Dickerman v. Northern Trust Co. 224,
v. Grand Rapids, etc. Co. 553 241
v. Jones 214 | Dickey v. Dickinson 589
v. Patrick 581 | Dickinson v. Burrell 187
uv. Rice 446 v. Calahan 393
v. Sanderlin 355 v. Dodds 166, 168
v. Seeley 21 v, Johnson 179
v. Settle 188 v. Lee 437
v. Shields 602 | Dickson v. Frisbee 591
v. Smith 189 v. Kittson 210
v. Snider 77 | Dieckhoff v. Fox 231
v. Webber 227 | Diggle v. Higes 204
v. Wells 145, 147, 263 | Di Iorio v. Di Brasio 118
Davis Sewing Machine Co. v. Rich- Dill v. White 357
ards 147 | Dimmick v. Randolph 412
Davison v. Von Lingen 264, 288, 299, | Dingley v. Oler 521, 522
335, 336, 307 | Dinwiddle v. Self 493
Dawe v. Morris 433, 434 | District of Columbia v. Gallagher 259
Dawkins v. Sappington 133 | Dixon v. Bristol S. B. 37
Day v. Caton 40, 46 v. Clarke 502
v. Leal 532 | Doane v. Chicago City R. 181
v. McLea 540 v. Lockwood 467
Dean v. Emerson 249 | Dobson v. Collis 588
v. Newhall 508 | Dodge v. Moss 376

v. Walker 364, 369 | Dole Bros, Co. v. Cosmopolitan,
Dearborn v. Bowman 139 ,, etc. Co. 67
Dearle v. Hall 390 | Doll x, Noble 283
DeBaum v. Brand 209 | Donaldson v. Farwell 434
Debenham v. Ox 214 | Donohue v. Woodbury 109
Decker v. Livingston 354 | Donovan v. Daiber 201
De Cremer v. Anderson 148 v. Standard Oil Co. 255
Deering v. Chapman 246 | Doty v. Wilson 140
De Francesco v. Barnum 405 | Dougherty v. Catlett 584
De Groot v. United States 542 | Douglass v. Reynolds 147, 149
Delamater v. Miller 346, 521, 553 | Dowagiac Mfg. Co. v. Shroeder 440
Delano v. Blake 473 | Doyle v. Dixon 589
Delavina v. Hill 234 v. Trinity Church 446
Delaware County v. Diebold Safe Drake v. Mitchell 355
Co. 384 v. Vorse 102
Delier v. Agricultural Society 204 | Draughman v. Bunting 75
De Nicols, Re 585 | Dreifus v. Columbian, etc. Co. 121
Dennett v. Dennett 412 | Drew v. Nunn 170
Derby v. Johnson 556 | Driver v. Broad 584
Dermott v. Jones 273 | Dublin & Wicklow Ry. v. Black 465
Derry v. Peek 442 | DuBois v. DuBois WaterworksCo, 272
Derry Bank v. Webster 82 | Dubowsky v. Goldstein 249
Desmond-Dunne Co. v. Friedman- Duffy v. Metropolitan L. I. Co. 437, 447
Doscher Co. 339 | Duncan v. Charles 322, 329, 334, 528
XXXvi TABLE OF CASES.

References are to sections.

Duncan v. Willis 357
Dunham v. Griswold 446

v. Pettee 303, 338
Dunton v. Dunton 30
Duplex Safety Boiler Co.». Garden 283
Durnherr v. Rau 369
Dusenbury v. Hoyt 136
Dutchman v. Tooth 99
Dutton’s Estate 96, 150
Duval v. Wellman 238 a, 239, 240
Duvergier v. Fellows 264
Dyer v. Sutherland 354
Eaps v Carondelet 67
Eaglesfield v. Londonderry 435
Eakin v. Shultz 369
Eames v. Preston 35
Earle v. Angell 93
Early v. Burt 108 a

Eastern Advertising Co. v. McGaw 381
Eastern Arkansas, etc. Co. v. Tan-

ner 518
Easton v. Jones 337, 521
Eastwood v. Kenyon 141
Eberstein v. Willets 444
Echols v. Phillips 35
Kicker v. McAllister 113
Eckman v. Chicago, B.&Q.R.Co. 2264
Eddy v. Capron 178

v. Davis 32]
Edelman v. Latshaw 436
Eden v. Chaffee 576
Edison v. Babka 381
Edmonston v. Drake 147
Edwards v. Carter 465

v. Pyle 528

v. Randle 178
Edwards Brokerage Co. v. Steven-

son 201
Egerton v. Earl Brownlow 231

v. Mathews 601

v. Weaver 115
Ehrman v. Bartholomew 564
Eiserman v. Schneider 589
Eldredge v. Palmer 408, 466

Electric Lighting Co. v. Elder 283
Electric R. v. Tennessee Coal Co. 31

Elgin v. Joslyn . 518, 519
Eliason v. Henshaw 156
Elkhorn Valley Lodge v. Hudson 357
Ellen v. Topp 331
Eller v. Lacy 357
Ellerman v. Chicago Junction Ry.

Co. 216a
Ellett v. McGhee 375, 376
Elliott v. Bell 357

v. Caldwell 339
Ellis v. Hamlen 343
v. Johnson 368

 

Ellis v. Smith 188
Elmer v. Loper 91, 375
Elmore v. Johnson 452
Elting v. Vanderlyn 115
Ely v. Ely 2704
Embry v. Jemison 202, 236
Emerson v. Heelis 594
v. Slater 581
Emery v. Ohio Candle Co. 218
v. Smith 607
Empress Engineering Co., Re 361
Emmit v. Brophy 368
Endriss v. Belle Isle Ice Co. 118
England v. Davidson 1064
Enos v. Sanger 364, 369
Eppens, etc. Co. v. Littlejohn 279, 280,
281

Equitable Co-op. Foundry Co. v.
Hersee 481
Erie Ry. Co. v. Union Locomotive Co. 249
Esch v. White 575
Escott v. White 343
Essex v. Day 490
Esposito v. Bowden 269
Esterly, etc. Co. v. Berg 433
Evans, Re 184, 185
Evans v. Huey 449
v. McCormick 146, 147
v. Powis 539
v. Rothschild 482
v. Trenton 241
v. Ware 405
Everson v. Carpenter 479
v. International Granite Co. 424
Ewing v. Burnet 261
Exchange Bank v. Rice 361, 362
FAIRHAVEN, etc. Co. v. Owens 36
Fairplay School Tp. v. O’Neal 29
Falck v. Williams 151, 152
Fallowes v. Taylor 189
Farley v. Farley 535
Farmers’ Exchange Bank v. Morse 356
Farni v. Tesson 352, 357
Farnsworth v. Duffner 437
Farrar v. Wheeler 539
Farris v. Strong 434
Farrow v. Wilson 277, 393
Farwell v. Hanchett 434
v. Lowther 600
Faulkner v. Thomas 575
Fawcett v. Freshwater 107
Featherston v. Hutchinson 228, 246
Fehlberg v. Cosine 490
Feldman v. McGuire 368, 577
Fellows v. Wood 405
tFelthouse v. Bindley 23
Felton v. Dickinson 362
Ferguson v. Coleman 205
TABLE OF CASES.

References are to sections.

Ferguson v. Yunt 199, 232, 239
Ferris v. American Brewing Co. 217,373
Ferry v. Williams 338
Ferst v. Bank of Waycross 576, 581
Fetrow v. Wiseman 478
Fewell v. Deane 467
Fidelity, etc. Co. v. Lawlor 575
Fidelity Ins. Co. v. Roanoke St. R. 209

Field v. Brackett 275
v. Mayor 384, 386, 388
Filby v. Hounsell 598
Filson «. Himes 246
Finch v. Mansfield 145
ce. Finch 608
Fink r. Farmers’ Bank 113
v. Smith 113

Fire Ins. Ass’n v. Wickham 96, 108, 114

First National Bank v. Bennett 575
v. Chalmers 577
v, Hughes 308
v. Spear 821
v. Watkins 149
v. Wilder 530
Fish v. Cleland 435
v. Glover 378

246
237
281
133

Fishell v. Gray

Fisher v. Bridges
v. Chadwick

Fitch v. Snedaker

geitts (C. T.) Co. v. Reinhart 346
Fitzgerald v. Barker 368
Flagg v. Baldwin 202

v. Manhattan R. R. Co. 370
Fleet v. Perrins 394
Flegal v. Hoover 539
Fleming v. Bank of New Zealand 361
Flight v. Reed te 137
Flinn v. Mowry 554
Flint v. Cadenasso 368

189
108

Flower v. Sadler
Foakes v. Beer

Fogg v. Portsmouth Atheneum 40
Fogle v. St. Michael’s Church 214
Foley v. Dwyer 330

v. Platt 180

v. Speir 246
Fonseca v. Cunard S. S. Co. 57
Ford v. Beech 258, 508

v. Chicago Milk Shippers’ Ass’n 224

v. Cratty : 189
v. Phillips 472, 475, 476
v. Tiley 521

Forman v. The Ship Liddesdale 41,337
Forsyth v. Hastings 474
Forsyth Mfg. Co. v. Castlen 202
Foster v. Cockerell 390

v. Dawber 505
v. Mackinnon 78
v. Metts 113

 

XXxvii

Foster v. Thurston 234
v, Wilcox 69
Froth v. Ellenberger 491

Fort Payne Coal & Iron Co. v.

Webster 334, 528
Fouché v. Morris 539
Fouts v. Roof 608
Fowle v. Haggar 295

v, Park 2l6a
Fowler v. Black 494
v. Brooks 107

v. Coker 108 a

v. Fowler 488
Fox v. Davis 197
v. Masons’ Fraternal Ass’n_ 191 a,

192

Francis v. Hand 189
Frank v. Eltringham 598
Franklin v. Miller 286, 325, 516
Franks v. Jones 413
Frazier v. Boggs 285
Freeman v. Bernard 542
v. Freeman 47

v. Taylor 285, 516
Freeth v. Burr 286, 516, 521, 525
French v. Ryan 433

French Lumbering Co. v. Thei-

rault 409
Freyman v. Knecht 336, 503
Friend v. Miller 189
Fritzler v. Robinson 289
Frost v. Clarkson 201

v, Gage 207, 238
v. Knight 347, 521, 522, 553
Fugate v. Hansford 600
Fuller v. Dame 181
v. Kemp 540
GABLE v. Morse 296
Gage v. Lewis 434
Gaines v. Poor 197
Gaither v. Dougherty 19la
v. Slack 434
Galusha v. Sherman 118, 445, 447
Gaskell v. King 260
Gamewell Fire Alarm Tel. Co. v.

Crane 219
Garberino v. Roberts 521
Garbracht v. Commonwealth 145
Garbutt v. Watson 592
Gardner v. Gardner 34

v. Knight 433, 434
Garrard v. Frankel 424, 490
Garrett v. Trabue 161, 170
Garrison v. Technic Electrical

Works 487

v. United States 257
Garst v. Harris 217
Garvin v. Mobley 375
XxXviii

TABLE OF CASES.

References are to sections.

Gates v. Raymond 468

Gatzow v. Buening + 221
Gaylord v. Soragen 234
Geipel v. Smith i 312
Geismer v. Lake Shore & M. S.

R. Co. 280
Gelpcke v. Dubuque 247, 248
George v. Hoskins 575

v. Tate 461

Georgia Home Ins. Co. v. Warten 435

Gerli v. Poidebard Mf’g Co. 285, 325,
348

.German §. B. v. Drake Roofing

Co. 147, 149
German State Bank v. Northwest-
ern, etc. Co. 370
Gibbons v. Bente 556
v. Gibbons 197
v. Governeur 204
v. Proctor 133
Gibbs v. Baltimore Gas Co. 2164
v. Smith 209
Gibson v. Pelkie 419
v. Soper 466
Giddings v. Iowa “449
Gieve, /n re 201

Gifford v. Corrigan 368, 375, 376
Giles v. Giles 845
Gilkinson v. Miller 475
Gilles v. Mahony 581

339
190
326
343

Gillespie Tool Co, v. Wilson
Gillet v. Logan County
Gilliam v. Brown

Gillis v. Cobe 41, 337, 339,

Gilman v. Rives 352
Gilmore v. Courtney 349
Glaholm v. Hays 285
Glaspie v. Keator 442
Glass v. Hulbert 608

v, Murphy 211
Glaze v. Duson 245
Glazebrook v. Woodrow 329
Gleason v. Dyke 140
Glenn v. Marbury 379
Glubb, Re 461
Gobbie v. Linder 294
Goddard v. Binney 592
Goebel v. Linn 7
Goetter v. Pickett 78
Gold v. Phillips 577
Goldman v. Oppenheim 209
Goldsborough v. Orr 323
Goldstein v. Nathan 585
Good v. Cheesman 540
Good Fellows v. Campbell 109
Goodhart v. Pennsylvania R. 47
Goodisson v. Nunn 330
Goodrich v. Tenny 190
Goodsell v. Myers 475, 476

 

Gordon v. Butler 436
v. Manchester 54
' v, Parmelee 436
v. Third N. B. 529
Gore v. Gibson 413
Gorrell v. Greensboro, etc. Co. 369
Gorringe v. Irwell Works 387
v. Read 238 a, 448, 449
Goshen N. B. ». Bingham 389, 391
Goss v. Lord Nugent 513
Gould v. Cayuga Bank 458
Goulding v. Davidson 141
Gowen v. Klous 598
Grace v. Lynch 590
Graham v. Marks 449
v. Stanton 43, 47
Grand Lodge v. New Orleans 96, 150
Grandin v. Grandin 113
Grant v. Johnson 321
Graves v. Berdan 270a
v. Johnson 234
Gray v. Gardner 313.
v. Hook 178
v. Smith , 329, 585
v. Thacker 394
Great Berlin Steamboat Co. Re 239

Great Northern Ry. v. Witham 103, 104

Green v. Collins 234
v, Langdon 506
v. Turner 376, 377
Greenup v. Stoker 347
Greenville v. Greenville Water-
works Co. 596
Greenwood v. Bishop of London 249
v. Law 593
Gregory v. Lee 404
v. Pierce 69
Grice, Re 224
Grice v. Noble 23
Griel v. Lomax 435
Griffin v. O’Neil 422
Griffith v. Tower Pub. Co. 881
Griffiths Cycle Co, v. Hunter 602
Griggs v. Moors 306, 307, 317, 324
v. Swift 277
Grigsby v. Stapleton 428
Griswold v. Hazard 493
v. Illinois Central R. 226
Gross v. Milligan 608
Guarantee Trust Co. v. Green Cove
Springs R. 191
Guard v. Whiteside 508
Guernsey v. Cook 210
Guild v. Butler 1084
v. Conrad 575
Guilford v. Mason 338
Guinzburg v. Downs Co. 52
Guthing v. Lynn 30
Gutlon v. Marcus 100
TABLE OF CASES.

References are to sections.

Haas v. Kansas City, ete. R. R.Co. 280

Haber v. Johnson 227
Hackley v. Headley 446
Hadcock v. Osmer 442
Hadley v. Baxendale 558
v. Clarke 312
Hadlock v. Brooks 186
Hagerman v. Norton 281
Haigh v. Brooks 92, 98
Hale v. Gerrish 472, 476
zv. Sheehan 259
v. Spaulding 354
v. Trout 346
Hall v. Alford 581
v. Cox 204
v. Perkins 334
v. Solomon 584
v. Wright 277
Hall Lumber Co. v. Gastin 446
Hallenbeck v. Dewitt 78
Hallett v. Gordon 352, 607
Halstead v. Grinnan 484
Halsted v. Francis 361
Hamblin v. Bishop 289
Hamer ve. Sidway 92
Hamilton v. Gray 186
v. Home Ins. Co. 19la
v. Liverpool Ins. Co. 191 a, 314
v. Park, ete. Co. 306, 335
Hamlin v. Drummond 576
Hampden v. Walsh 239
Hanauer v. Doane 234
v. Gray 260
Hanchett v. Ives 113
Hancock v. Blackwell 458, 461
Handforth v. Jackson 467
Hanger v. Abbott 269
Hanks v. Brown 211
Hanover Nat. Bank v. Blake 208
Hansard v. Robinson 530
Hanson v. Marsh 600
v. Nelson 576
Harber Bros. Co. v. Moffat Cycle
Co. 339, 342, 518, 519, 521
Harcrow v. Harcrow 234, 241
Harding v. American Glucose Co.
216 a, 220
v. Harding 383
Harkness v, Cleaves 467
Harmer v. Killing 477
Harms v. McCormick 375
Harriman v. Harriman 108
Harrington v. Crawford 179
v. Higgins 321
v. Kloprogge 260
Harris v. Great Western Ry. Co. 57
v, Johnson 277
v, Nickerson 52
v. Scott 155

 

XXXI1X

Harris v. Venables 115
v. White 204
Harris’s Case 159
Harrison v. Muncaster 265
Hart v. Hart 29
v. Miles 97

v, Seymour 534

v. Strong 108, 141, 383, 446, 506

Hartford P. I. Co. v. Kirkpatrick 446,448
Hartford Ins. Co. v. Chicago,

etc. R. 226
Hartford L. I. Co. v. Unsell 343 a
Hartley v. Varner 582
Hartman v. Meighan 339
Hartshoru v. Day 461, 527
Hartupee v. Pittsburgh 343
Hartwell +. Hartwell 178
Harvey v. Doty 201

v. Facey 49
v. Maine Condensed Milk Co. 374

v. Merrill 199, 201, 202, 236

v. Murray 275
Haseltine v. Smith 187
Haskell v. Tukesbury 115
Hastings v. Lovejoy 514
Hatchett x. Molton 161
Hatton, Le 540
Hauser v. Harding 31
Haussman v. Burnham 587
Havelock v. Geddes 839, 342
Haverleigh v. Leighton 295
Haviland v. Willets 435
Hawkins v. Chace 602

v. Graham 283

v. Hawkins 77

v. Ottinger 204
Hayden v. Bradley 295
Hayes v. Hayes 226

v. Jackson 601

v. Philips 584
Haynie v. Knights Templars 196
Hays v. Midas 481
Hayward vr. Andrews 388

¢. Barker 141

v. Leonard 339
Hazard v. Griswold 78
Hazle v. Bondy 373
Head v. Tattersall 503
Headley v. Shaw 322, 329
Hearne v. Marine Ins. Co. 488
Heaton v. Dennis 186, 188

v. Eldridge 606
Hecht v. Batcheller 418
Heermans v. Ellsworth 387
Heffron v. Brown 11, 39
Helbreg v. Schumann 522
Helfenstein’s Estate 170
Hemmenway v. Stone 357
Henderson v. Beasley 496
é

xl

TABLE OF CASES.

References are to sections.

Henderson v. Palmer 189
v. Stevenson 58
v. Welch 380
Henderson Bridge Co. v. McGrath 29
Henehan v, Hart 514
Hennessy v. Bacon 522
v. Metzger 293
Henninger v. Heald 469
Henry v. Root 473
Hensinger v. Dyer 448, 449
Henthorn v. Fraser 159, 166, 168
Herbert v. Turbal 401
Herendeen Mfg. Co. v. Moore 582
Herman v. Jeuchner 190, 239
Herreshoff r. Boutineau 216a
v. Misch 514
Herriman v. Menzies 219, 221
Hertzler v. Geigley 241
Herzog v. Heyman 526
v. Sawyer 541
Hessick v. Hessick 452
Hewett v. Currier 113
Hibbette «. Baines 224
Hibblewhite v. M’Morine 38
Hick v. Raymond 280
Hickey v. O’Brien 31, 100, 105
Hickman v. Haynes 513
Higert v. Trustees 131
Higgins v. Brown 447
v. Gager 589
Higginson v. Weld 294
Hildebrand v. American Fine Art
Co. 41, 346
Hill v. Grigsby 821, 334
v. Hooper 589
Hinckley v. Pittsburgh Steel Co. 346,
347, 559
Hinely v. Margaritz 476, 478
Hinnen v. Newman 209
Hitchcock v. Coker 216
Hoadley v. M’Laine 600
Hoare v. Rennie 285, 325
~Hobbs v. Massasoit Whip Co. 25

Hoboken Ferry Co. v. Baldwin 458, 461

Hochster v. De la Tour 521, 453
Hockenbury v. Meyer 115
Hodges v. Malty 130
Hogan v. Stophlet 106 a
Holdipp v. Otway 318
Holladay v. Paterson 231
Holland v. John 453
Hollenbeck v. Hollenbeck 37
Hollins v. Hubbard 150
Hollis v. Chapman 274
Holloway v. Rudy 139, 141
Holmes v. McCray 585

v. McDonald 82
Holst v. Stewart 440
Holt v. Rogers 256

 

Holt x. Ward Clarencieux 95, 213
Home Benefit Society v, Muehl 458, 467

Homer v. Shaw 41
Honck v. Muller 262, 285, 325
Honeyman v. Marryatt 155
Honour v. Equitable L. I. Soc. 554
Hood v. Hampton Plains Co. 281, 346

v. Hartshorn 191 a, 314

v. Todd 289, 418
Hopkins v. Logan 139

v. United States 223 a
Horne v. Niver 156
Horschfeld 7. London, etc. Ry. Co. 79
Horton v. Bloedon 447

v, Lee 436
Hoseason v. Keegen 399, 485 a
Hoshor v. Kautz 93
Hosler v. Hursh 539
Hostetter v. Park 255
Hotham v. East India Co. 314
Hotson v. Browne 62

Household Fire Ins. Co. v. Grant 159, 162

Houser v. Planters’ Bank 137
Houston, etc. R. v. McCarty 418
v. Texas 228
Howard v. Daly 162
v. Easton 584
v, First Church 181
Howden v. Haigh 208
Llowe v. North 47
v. Taggart 115
Howell v. Coupland 272
v. Maclvers 383, 395
vo, Stuart 235
Hoyle, Re 596
Hubbard v. Haley 285
Huber'v. Johnson 186
Huckins rv. Hunt 208
Hudson, Re 130
Hudson v. Revett 37
Hudson Real Estate Co. v. Tower 132
Hugall v. McLean 296
Hughes v. Gross 277
v. Lansing 584
v. Wamsutta Mills 268
Hull v. Johnson 540
c. Ruggles 234
v. Watts 418, 496
Humble v. Mitchell 593
Hunnewell v. Duxbury 438
Hunt v. Livermore 256, 334, 528, 621
v. Massey 1386
Hunter v. Nolf 178
v, Randolph 145
v. Tollard 72
Hurt v. Ford 575
Huscombe v. Standing 449
Hussey v. Horne-Pavyne 64
Hutchinson v. Hutchinson 587
TABLE OF CASES.

References are to sections.

Hutley v. Hutley 185
Huyett Mfg. Co. v. Chicago Ed-

ison Co. 274
Hyde v. Wrench 164
Hyer v. Richmond Traction Co. 209
Hynds v. Hays 246, 251
Hysell v. Sterling Coal Co. 274

Iniinors Centra R. R. v. Read 507
Illinois Land & Loan Co. v. Speyer 187

Isley v. Jewett 136
Imperial Loan Co. v. Stone 26, 170, 409
Ingram v. Ingram 373
Insurance Co. v. Bachler 19la
v, Mowry 60
Ionides v. Pacific Ins. Co. 151
Irwin v. Lombard University 129, 131
v. Williar 199, 255
Isaacson v. Harwood 532
Ison v. Wright 19la@
Jackson v. Armstrong 436
v. Jackson 47
v. McLean 241
v. Union Ins. Co. 312
Jackson Iron Co. v. Negaunee Con-
centrating Co. 590
Jacksonville R. v. Hooper 35, 121, 265
Jacquinet v. Bontron 262
Jaffray v. Davis 108 a
James v. Burchell 346, 521
v. Isaacs 540
v. Newton 384
Jamieson v. Wallace 201, 202
Jansen v. Grimshaw 354
Janvrin vy. Exeter 357
Jasper County Electric Ry. v.
Curtis 434
Jeane v. Grand Lodge 192
Jefferson v. Asch 371
Jeffreys v. Southern R. 258
dell v. Douglas 352, 353
Jenness v. Wendell 594
Jessup v. Chicago, etc. R.R. Co. 458
Jewett v. Black 285
Jewett (C. F.) Publishing Co. v.
Butler 232
Joest v. Williams 466
Johns v. Wilson 378
Johnson v. Bamberger 369
v. Boston & Maine R. 42
v. Dodgson 602
v. Gerald 36
v. Hudson 174}
v. Hunt 213

uv, Otterbein University 128
v. St. Louis, etc. R. 66

 

xli

Johnson v. Sellers 122
v. Stockham 434
Johnson-Brinkman Co. v. Missouri
Pac. Ry. Co. 483
Johnston v. Bowersock 588
v. Boyes 52, 53
v. Miller 202
v, Schenck 281
Johnstone v. Milling 347, 520, 521, 522
Jonassohn v, Young 516
Jones v. Bacon 575
v. Barkley 316, 347
v. Brown 9la
v. Daniel 155
v. Dannenberg Co. 189
v. Davies 585
v. Houghton 446
v. Perkins 108 a
v. Rice 189
v. Risley 117
v. Stanley 360
v. Swayze 82
Jordan v. Dobbins 170
v. Kavanaugh 371
Joslin v. New Jersey Car Spring
Co. 875
Jourdain v, Fox 608
Joy v. St. Louis 256, 261, 263
Judd v. Harrington 217, 219
Judson v. Bowden 323
v. Corcoran 390
Judy v. Louderman 92
Justice v. Lang 95, 602
Kanisu v. Young 522, 556
Kalkhoff v. Nelson 277
Kane v. Hood 322, 329
Kansas City, etc. R. v. Southern :
News Co. 232
Kearley v. Thomson 239
Keck v. Hotel Owners’ Ins. Co. 540
Keeler v. Clifford 283
v. Herr 339
Keightley v. Watson 357
Keir v. Leeman 189
Keller v. Ashford 875
v. Holderman 75
Kelley v. Thuey 601
Kellogg v. Olmsted 107
Kelly v. Kelly 188
v. Roberts 376
v. Stone 145
v, Trumble 529
Kelsey v. Crowther 345
v, Hibbs 579
Kemble v. Farren 298, 294
Kendall v. Hamilton 354, 358
v. May 411
xlii

TABLE OF CASES.

References are to sections.

Kendrick v. Neisz 476, 479
Kennedy v. Baker 474

v. Rountree 174
Kerrison v. Cole 243
Kihlberg v. United States 349
Kilgore v. Northwest, etc. Soc. 521
Kimball v. Cuddy 412
Kimmeel v. Skelly 440
King v. Atkins 295

v. Duluth 349

v. Duluth M. GN. Ry. Co. 121, 552

v. Edmiston 582

v. Gillett 505

v. Hoare 354

v. Holbrook 488

v. King 213, 246

v, State Mut. Ins. Co. 200

v. Summitt 573

v. Welcome 606, 607
Kingman v. Reinemer 78
Kingsbury v. Sargent 446
Kingston v. Preston 316
Kirkland v. Benjamin 189

v. Dinsmore 59
Kirschbaum v. Jasspon 434
Kiser v. Holladay 40
Kitching v. Hicks 245
Kitson v. Farwell 434
Klein v. Ins. Co. 285, 286

v. Liverpool, etc. Ins. Co. 607
Kley v. Healy 468
Kneetle v. Newcomb 225
Knight v. Cooley 49
Knights of Honor v. Pettingall 353
Knowlton v. Campbell 60
Knox v. Gye 636

vo, Knox 414
Kowalke v. Milwaukee 418
Kramer v. Messner 527

v. Old 216a
Kraus v. Thompson 481
Krause v. Busacker 442
Kroll v. Diamond Match Co. 596
Kromer v. Heim 539
Krouskop v. Krouskop 434
Kruschke v. Stefan 447
Kyner v. Bell 492, 493, 494
Lacy v. Getman 277, 393
Ladies’ Collegiate Inst. v. French 128
Lafontain v. Hayhurst 43
Laidlaw v. Organ 428
Laird v. Pim 308, 347
Lake Ontario R. R. Co. v. Curtis 370
Lake View v. MacRitchie 63
Lakeman v. Pollard 278
Lamb v. Belden 394

v. Lathrop 502

 

Lambert v. Heath 526
Lamkin v. Baldwin, ete. Co. 596, 602
Lampleigh v. Brathwait 138
Lampman v. Cochran 294
Lancashire v. Killingworth 338
Lancaster County Bank v. Moore 409
Landa v. Shook 277
Langan r. Iverson 590
Langdon v. Hughes 576
Lange v. Werk 216a
Lanzit v. Sefton Mfg. Co. 26
Lapp v. Smith 540
Laramee v. Tanner 129
Larned v. Andrews 174
Lasar v. Johnson 128
Lasher v. McCreery 484
Lathrop v. Knapp 131
Lattimore v. Harsen 117
Laughter’s Case 262, 277
Lavery v. Pursell 608
Law v. Grant 428
v. Redditch 293
Lawrence v. Fox 366
v. McArter 402
vo. McCalmot 98, 99
v. Oglesby 141, 362
v. Stagg 289
Lawson v. Lovejoy 473
Layton v. Pearce 262
Lazit v. Sefton Mfg. Co. 217
Leal v. Terbush 289
Leather Cloth Co. v. Hieronimus 499,
513
Leavitt v. Dover 121, 273
Lee v. Butler 597
v. Dick 147
v. Griffin 592
v. Muggeridge 141
Lefferts v. Weld 285
Legh v. Legh 388
Lehigh Zinc Co. v. Bamford 486, 443
Lemon v. Grosskopf 241
v. Randall 606
Lennox v. Murphy 147, 149
Leroux v. Brown 606
Leskie v. Haseltine 52
Lester v. White 584
Lesure Lumber Co. v. Mutual F.

I. Co. 19la
Levister v. Southern R. 458
Lewin v. Folsom 560
Lewis v. Atlas Ins. Co. 103

v. Bannister 444
v. Browning 158
v. Tapman 555, 583
Lewis’s Estate 506
Lieberthal v. Montgomery 2704
Lilly v. Waggoner 413
Lincoln v. Buckmaster 410
TABLE OF CASES.

xliii

References are to sections.

Lincoln Shoe Mfg. Co. v. Sheldon 308

Lindell v. Rokes
Lindsay v. Smith

92
250

Lingenfelder v. Wainwright Brew-

ing Co.
Lininger v. Wheat
Linneman v. Moross
Linton v. National L. I. Co.
Liska v. Lodge
Little v. Banks
Littlefield v. Storey
Livingston v. Ralli

117, 552
149

361

174

78

365
388
191la

Llano Improvement Co. v. Pacific

Improvement Co.
Lloyd v. Jewell
Logan v. MeGinniss

113
526
204

London, Chatham, & Dover Ry. Co.

v, South-Eastern Ry. Co.
London & Northern Bank, Re

London & N. W. Ry. v. M’ Michael

Lonergan v. Buford
Long v. Scanlan
v. Woodman

Longshore Printing Co. v. Howell

Longworth v. Mitchell
Lord v. Goddard
Lorillard v. Clyde

Loring v. Boston

Lothrop ¢. Marble

Loud v. Pomona Land Co.
Louisiana v. New Orleans

Louisville, N. A. & C. Ry. v. Herr

Love v. Harvey
Loveren v. Loveren
Low v. Peers
Lowber v. Bangs
Lower v. Schumacher
Loxley v. Douglass
Luce v. Foster
Ludlow v. Hardy
Lufkin Rule Co. v. Fringeli
Lumley v. Gye
v. Wabash R.
vy. Wagner
Lundahl v. Hansen
Lunn v. Shermer
Lusk v. Thorp
Lyle v. Rodgers .
Lyle Shipping Co. v. Cardiff
Lyman v. Lincoln
Lynch v. Murphy
Lynn v. Lynn
Lyon v, Robertson
Lyth v. Ault

MacAnprew v. Chapple
McCabe v. Cruikshank
McCall Co. v. Icks

560
159
465
445
539
436
222
157
443
369
157
608
318
612
409
199
197
213
285
414
469
246
137
216a
360

461
549, 564
522

428

582

542

281

871

436

491

422
1084

434,

317,

259,

516
338
31, 102

McCandless v. Allegheny Steel Co. 106 a

 

McCarren v. McNulty 283
McCarty v. Carter 473
McClair v. Wilson 446
McClelland v. Citizens’ Bank 209
M'Comb »v. Wright 602
McConahey »v. Griffey 587
McCormick v. Gray 542
McCormick, etc. Co. v. Hamilton 449
v. Miller 448
McCowan v, Baine 253
McCracken v. Harned 157
McCreery v. Day 512, 514
McCrillis v. Carlton 467
McCroskey v. Ladd 3821
McCulloch v. Eagle Ins. Co. 159
McCune v. Lytle 542
McCusker v. Speir 490
Mac¥lree v. Wolfersberger 587
McFadden v. Henderson 280, 285, 516,
522
McGarvy v. Roods 47
McGinnis v. Fernandes 606
McGowan ». Griffin 342
MacGreal v. Taylor 464
Macgregor v. Macgregor 589
McGrew ce. City.Produce Exchange
Co, 201
McIntosh v. Johnson 108
Mackay v. Dick 344
McKeevor v. Beacom 174
McKenzie v. Donnell 466
v. Harrison 506
v. Rothschild 434
M’Kinnell v. Robinson 235
McKown v. Furgason 442
Maclay v. Harvey 157
McLeod v. Barnum 526

McMahon v. New York & Erie R.R. 560

McMauus v. Boston 51, 596
McMillan v. Fox 272

v. Harris 52, 209

v. Michigan, etc. R. R. Co. 59
McMullen v. Hoffman 209, 241
McNamara v. Gargett 211
MeNitt v. Clark 262, 313
McPherson v. Cox 587
McQuade v. Rosecrans 246
McRaven ». Crisler 330
Mactier v. Frith 159
Mack v. Bragg 606
Madan v. Sherard 58
Maddison v. Alderson 608
Maddox v. Rowe 596
Madison County v. Bartlett 560
Magee v. Scott Lumber Co. 283
Maggs v. Ames 573
Maguire v. Kichmeier 529
Maguire v. Smock 181
Maiden v. Webster 357
xliv

TABLE OF CASES.

References are to sections.

Main St. R. v. Los Angeles Trac-
tion Co. 117,

120

Maine v. Chicago, B. & Q. R. Co. 2264

Maine Mut. Marine Ins. Co. v.

Hodgkins
Majestic, The
Makin v. Watkinson
Malcolmson v. Wappoo Mills
Mallalieu v. Hodgson
Mallan v. May
Mallard v. Allred
Malmstrom v. Northern Pac. R.
Mandeville v. Welch
Mangles v. Dixon
Manistee Lumber Co. v. Union

N. B. 330, 518,
Manter v. Churchill
Manuel v. Campbell ;
Marble S. B. v. Mesarvey 364, 369,
Markham v. Jandon
Marsden v. Moore
Marsh v. Chown

v. Rainsford

Marston v. Bigelow 362, 590,
Martin v. Batchelder
v. Martin 47, 586,
v. Massie

v. McCormick
v. Richardson
v. Thomas
. v, Tradesmen’s Ins. Co.
Martinsburg & P. R.R. Co. v. Marsh
Mason v. Eldred

78

57
296
268
207
249
526
458
384
389

527
115
343
375
202
330
139
138
607
589
608

41
289
241
529
529
349
354

v. United States 446

v. Wickersham 108 a
Materne v. Horwitz 209
Mather v. Butler Co. 556

v. Scoles 584, 586
Matthews v. Baxter 409
Matthiessen Co, v. McMahon 410
Mattock v. Kinglake 818, 330
Maule v. Bucknell ; 579
Maury v. Waxelbaum Co. 149
May ». Platt 424, 490

v. Williams 575
Maynard v. Tabor 155
Medbury v. Watson 436
Meguire v. Corwin 178
Meigs v. Dexter 82
Mellen v. Whipple 362
Memphis v. Brown 539
Mentz v. Newwitter 598
Merchant v. O’Rourke 92, 166
Merchants’ Bank v. Weill 389
Merchants’ Fire Ins. Co. v. Grant 476
Merriam v. Cunningham 406
Merrick v. Giddings 123

Merrill v. Green
v. Packer

371
211

 

Merrill ». Peaslee 213
v. Wilson 470
Merriman v. Moore 364, 369
Merritt v. Bucknam 207
v. Clason 602

286, 325, 348,
516, 519, 521
Methuen v. Staten Island Light

Mersey Co. v. Naylor

Co. 390
Mettel v. Gales 514
Meyer v. Haas 77

v. Richards 526
Meyers v. Schemp 586
Michaelis v. Wolf 337, 349

Michigan Bolt Works v. Steel 105, 155

Middleton v. Hoge 474
Miles v. Mutual Reserve Fund
Ass’n 188
v. New Zealand Alford Estate
Co. 96, 112

v. Schmidt 19la@
Miller ». Ammon 174

v. Craig 412

v. Kreiter 389

v. Long 573

v. Minor Lumber Co. 444

v. Rice | 285

v. Rutledge 412

v, Sharp 608, 609

v. White 434

v. Wilson 606

v. Wisener 589
Miller’s Nat. Ins. Co. v. Kinneard 109
Milliken v. Skillings 503
Mills v. Dunham 263

v. Wyman 141
Millward v. Littlewood 233
Milwaukee Masons’ Ass’n v. Nie-

zerowski 221
Ming v. Woolfolk 437
Minneapolis Gaslight Co. v. Kerr-

Murray Mfg. Co. 279
Minneapolis Land Co.v. McMillan 98
Minneapolis, etc. R. R. v. Colam-

bus Rolling Mill 155, 164
Minnesota Lumber Co. v. White-

breast Coal Co. 31, 100
Minnesota Oil Co. v. Collier, etc.

0. 157, 160
Minzesheimer v. Doolittle 238, 537
Missouri, etc. R. v. Bagley 103
Missouri Pac. R. R. Co. v. Crowell

Grain Co. 422

v. Goodholm 437
Mitchell v. Dougherty 19la

v. Ryan 36
Mixer v. Howarth 592
Mobile & Ohio R. v. People 181

Moffett, etc. Co. v. Rochester 424, 490
TABLE OF CASES.

xlv

References are to sections.

Moggridge v. Jones 334, 528

Mohr v. Miesen 201, 202, 236, 239

Monarch Cycle Co. v. Royce
Wheel Co. 286, 325, 348, 516

Monongah Coal Co. v. Fleming 602
Montana Mining Co. v. St. Louis

Mining Co. 357

Montreal Gas Co. v. Vasey 29

Monys v. Leake 243

Moore v. Barksdale 433

v. Bevier 354

v. Campbell 66, 513

v, Farmers’, etc. Ass’n 37

v. Rogers 355

Moran v. Prather 258, 255

More v. Bennett 217, 221

v. Bonnet 250, 251

Morehead Bkg. Co. v. Morehead 492, 494

Morehouse v. Second N. B. 539
Morgan v. Randolph-Clowes Co. 361
v. South Milwaukee Co. 368
v. Wickliffe 587

Morris v. Great Northern R. R. 408, 466

v. Norton 141
v. Power 442
; v. Western Union Tel. Co. 201
Morrissey, Re 403
Morrison v. Bennett 241
v. Rogers 213
Morrow v. Southern Express Co. 101
Morse v. Ely : 464
v. Wheeler 478
v. Woodworth 445, 446, 447, 448,
450
Morton v. Dean 599, 602
v. Lamb 330
Moses v. Lawrence Co. Bank 600
Moss, Ex parte 384
Motherway v. Wall 435
Moulton », Camroux 410
v. Kershaw 50

Mt. Hope Cemetery Ase’n: v.
Weidenmann 641
Muir v. Schenck 890
Mulholjand v. Bartlett 118
Mulock v. Mulock 491
Munn Ernest M., The 467
Munro v. Butt 343
Munroe v. Perkins 117, 118
Munson ». Straits of Dover 191la
Munyan v. French 354
Murphy ». Liberty N. B. 273
v. Murphy 434
Musick v. Dodson 141
Musser v. Stauffer 61

Mutual Reserve Fund L. I. Ass’n
v. Taylor 522, 553
Myers v. Jenkins 192
Myrick v. Dame 354

 

Nasu v. Armstrong 514
Nassoiy v. Tomlinson 540
Nathans v. Steinmeyer 526
National Furnace Co. v. Keystone
Mfg. Co. 100
National Harrow Co. v. Hench 218
National Masonic Ass. v. Burr 191a@
National Society v. Gibbs 357
Neagle v. Kelly 577
Neblett v. Macfarland 467, 469
Neff v. Horner 529
Neldon v. Smith 121
Nelson v. Boynton 579
v, Rogers 369
Nester v. Continental Brewing Co. 219
Newbury Land Co. v.Newbury 364,
370
Newell v. Radford 598
New Haven Trust Co. v. Gaffney 279
Newington v. Levy 507
Newman v. H. B. Claflin Co. 442
v. Newman 249
Newport News Co. v. McDonald
Brick Co. 121
Newton v. Tolles 289
New York Guarantee Co. v. Mem-
phis Water Co. 388
New York Life Ins. Co. v. Aitkin 376
v. Babcock 36
v, Statham 285, 286, 312

Niagara Fire Ins. Co. v. Forehand 314

Niblack v. Park N. B. 385, 389
Nichols v. Mudgett 178

v, Scranton Steel Co. 554, 519

v, Snyder 475
Nickelson v. Wilson 189
Nickoll v. Ashton 272
Noble v. Ward 513
Nolan v. Whitney 589, 349, 498
Noland v. Bull 281
Noonan v. Bradley 257

Nordenfelt v. Maxim-Nordenfelt

Co. 216a
Nordyke v. Kehlor 306
Norrington v.’Wright 285, 325, 348,

516
North Chicago St. R. v. Ackley 187
Northrup v. Northrup 318
Northwestern Ins. Co. v. Blanken-

ship 410
Norton v. Webb 262
Norwood v. Lathrop ‘339
Noyes v. Humphreys 579
Nunez v. Dautel 281, 282
OaxKpaLe Mere. Co. v. Garst 2164
Oakes v. Merrifield 246
Obear v. First N. B. 606
xvi

TABLE OF CASES.

References are to sections.

Ocean Beach Ass’n v. Trenton

Trust Co. 487
Odessa Tramways Co. «. Mendel 244
O’Donnell v. Leeman 599, 602
Oelricks v. Ford 60
Offord v, Davies 146, 165
Ohio x. Board of Education 244
O’Keefe v. Allen 386
Olcott v. Bolton 442
Old Colony R. R. Co. v. Evans 602
Oliphaut v. Markham 445

Oliver ev. Hunting

63, 254, 597

Ollive v. Booker 285
Omaha F. I. Co. v. Thompson 539
Omaha & R. V. Ry. Co. v. Brady 188
O’Neill v. Clark 376
Ordinary v. Thatcher 37
Oregon P. R. Co. v. Forrest 444
Oregon Steam Navigation Co. v.
Winsor 216 a, 249
Ormes v. Beadel 7 444
O’Rourke ». Burke 461
Orr v. Equitable Mtg. Co. 408
Osborn v. Martha’s Vineyard
R. R. Co. 354
O’Shea v. New York, ete. R. R. 508
Ostrander v. Scott 540
Otis e. Cullum 526
Owen v. Pomona Land Co. 526
Passt Brewine Co. v. Liston 239
Pacific Guano Co. v. McMullen 246
Packet Co. v. Sickles 588
Page v. Morgan 604
v. Newman 560
v. Norfolk 67
v. Parker 436
Paget v. Marshall 490
Paine v. Brown 321
Pake v. Wilson 582
Palfrey v. Portland, ete. Ry. Co. 118
Palmer v. Meriden Britannia Co. 387,
339, 343, 514
v. Merrill 383, 384
Pangborn v. Westlake 174
Pardey v. American Ship Wind-
lass Co. 405
Parish v. United States 60
Parker v. Cowan 136
v. Enslow 113
v. Otis 201
v. Russell 555
v. 8. E. Ry. Co. 57
Parks v. Hazlerigg 34
Parmentier v. Pater 446
Parsons v. Loucks 592
v. Woodward 386, 388
Partridge v. Hood 189

 

Partridge v. Messer 208
Pass v. Brooks 608
Patch v. Collins 502
Patrick v. Bowman 166
Payne r. Brecon 243
v. Lon 529
Pead r. Trull 277
Pearce rv. Brooks 234
Pearson ». Bailey 361
Peck v. Henrich 183
Pecke v. Redman 94
Peerless Glass Co. v. Pacific, ete.

Co. 151
Peltz v. Kichele 249
Pemberton Building and Loan As-

sociation v. Adams 406
Penniman v. Hartshorn 602
Pennington v. Howland 283
Pennsylvania Co. v. Lombardo 188
Pennsylvania R. R. Co. v. Shay 78
People v. Globe Mut. Life Ins. Co. 268,

277

v. Harrison 355

v. Milk Exchange 220

v. Moores 403

v. Sheldon 219
Perkins r. Hadsell 602
v. Cheney 136, 141

v. Cummings 246

v. Lockwood 126
Perry v. Boyd 467
v. Cobb 191 a
Peters v. Westborough 587, 589
Peugh v. Porter 386
Phelps v. Sullivan 38

Philadelphia, W. & B. R. R. Co.
7, Howard 260, 317, 318

Phillips v Alhambra Palace Co. = 277
v. Cornelius 602
v. Phillips 197
» South Park Commissioners 186
v. Stevens 270 a
Phillips Construction Co. v. Sey-
mour 342, 347
Phillpotts v. Evans 556
Philpott *. Wallet 583
Pickering v. Ilfracombe Ry. 243, 247
Pickersgill v. Lahens 356
Pierce r. Corf 600
v. Indreth 35
v. Paine 590
Pillans v. Van Mierop 90 a, 150
Pillon v. Roberts 35
Pingrey v. Ins. Co. 365 a
Pinkham v. Pinkham 492, 493
Pinnell’s Case 108 a
Pioneer Cooperage Co. v. Romano-
wics 77
Pittman v. Pittman 554
TABLE OF CASES.

xvii

References are to sections.

Pittsburg, etc. R. R. v. Cox 226 a

v. Montgomery 226 a

v. Moore 226 a

v. Volkert 186
Pittsburgh, etc. Co. v. Sharp 349
Pittsburgh, Ft. W. & C. R. R. Co. 280
Pixley v. Boynton 201, 233
Plant v. Plant 453
Planters’ Bank v. Union Bank 241
Platner v. Patchin 394
Plowman v. Riddle 262
Plummer v. People 449
Polack v. Pioche 2704
Pool v. Boston 106 a
Poole v. Hill 838, 345
Pope v. Allis 336
Poppers v. Meagher 294
Porter v. Day 204

v. Richmond, ete. R. R. Co. 367

v. Woods * 368
Portner v. Kirschner 189

Portsmouth Brewing Co. v. Mudge 241

Post v. Springfield Bank 108 a
Postlethwaite v. Freeland 281
Potomac Stbt. Co. v. Upper Poto-

mac Stbt. Co. 60
Potter v. Ajax Mining Company 186,

188, 227, 243

v. Monmouth Fire I. Co. 453
Potts v. Whitehead 157
Poulton v. Lattimore 335
Poussard v. Spiers 516
Powell v. Duff 38

v. Flanary 189

v, Powell 452

Powers Dry Goods Co. v. Harlin 207, 208

Pratt v. Philbrook 481

v. Trustees 170
Presbury v. Fisher 249
Presbyterian Church v. Cooper 128,

130, 131, 366

v. Hoopes Stone Co. 343
Prewett v. Coopwood 238 a
Price v. Easton 361

v. Hay 45

v. Mitchell 107

v. Nixon 262
Prichard v. Norton 260
Proctor v. Sears 479
Prosser v. Edmonds 187
Providence Coal Co. v. Coxe 285,

. 325, 516
Pruitt v. Pruitt 373, 376
Pueblo R. v. Taylor 246
Putnam v. Grace 155

v. Woodbury 122
Pyatt v. Waldo 393

105 a

Quick v. Wheeler

 

R. v. Hobbs 204
v. Stoddart 198, 204
Rackemann v. Riverbank, etc. Co. 66
Radich v. Hutchins 445
Rae v. Hackett 315
Rafiles v. Wichelhaus 151
Railroad Co. v. Mig. Co. 59
v. Trimble 259
Rakestraw v. Lanier 216
Ralphanyder v. Shaw 209
Ramsay v. Brown 259
Ramsgate Hotel Co. v. Montefiore 157
Randall v. Randall 197
Rann v. Hughes 139, 566, 630
Ransdell v. Moore 373
Rawson v. Clark 274
v. Johnson 329, 338
Rawstorne v. Gandell 354
Rayburn v. Comstock 522
Raymond v. Colton 592, 605
v. Minton 331
Raynay v. Alexander 815, 387
Read v. Brookman 531
v. Nash 571
Redding v. Lamb 526
Redgrave v. Hurd 446
Reece v. Kyle 184
Reed v. Brewer 234, 246
v. Ins. Co. 254
v. Washington Ins. Co. 19la
Rees v. De Bernardy 183
Reese v. United States 529
Reichenbach v. Sage 273
Reid v. Wilson ; 572
Reif v. Page 106 a
Remick v. Sandford 604
Remington v. Palmer 607
Reynell v. Sprye 238 4
Reynolds v. Bridge 294
* vy. Robinson 65
Rhodes, Re All
uv. Forwood 103
Rice v. D’Arville 549, 564
v. Goddard 526
Richards v. Heather 352, 358
v. Reeves 373
Richardson v. Crandall 231
v, Richardson 583, 608
v. Rowntree 57
v. Scott’s Bluff County 180
Richeliea Hotel Co. v. Military,
etc. Co. 79, 129, 182
Richison v. Mead 283

Richmond Ice Co. v. Crystal Ice
Co. 258, 270 u, 272, 338
Richmond Union R. v. Richmond,
etc. R. 587
Riddlesbarger v. Hartford Ins. Co. 314
Ridgeway v. Herbert 406, 464
xlviii

TABLE OF CASES.

References are to sections.

Ridgway v. Wharton

63, 67, 597
Riegel v. Ormsby 91

Rigdon v. Wallcott 467, 469
Riggs v. Amer. Tract Society 410

v. Commercial Ins. Co. 200
Rioux v. Ryegate Brick Co 281, 286,

300, 304, 315, 325, 344, 348, 398, 516

Ripley v. M’Clure 347, 522
Risley v. Phenix Bank 383, 384, 385
Ritter v. Mutual Ins. Co. 196
v. N. Y. Life Ins. Co. 277
Roach v. Quick 394
Robb v. Vos 482
Robbins v. Eaton 474
Roberts v. Brett 832
v. Cambridge 562
v. Cobb 128
v. Security Co. 36, 82, 617
Robertson v. French 261
v. Davison 277
v. Glass 78,79
v. Gould 449
v. Ommanney 214
Robinson v. Robinson 178
v. United States 255
Robson v. Drummond 381

Rochester Lantern Co. v. Stiles &
Parker Press Co. 382, 558
Rock v. Perkins 258
Rockford, ete. R. R. Co. v. Shumiels 77
Rodemeier v. Brown 36
Roebling’s Sons Co. v. Lock Stitch

Fence Co. 522, 556
Roehm v. Horst 553, 556
Roesner v. Hermann 226

Roffey v. Greenwell 299
Rogers v. Burr 297, 593

v. Gosnell 864, 373

v. Marriott 202

v. Pattie 289

v, Rogers 499, 513
Rohman v. Gaiser 371
Rohrof v. Schulte 440
Rolt v. Cozens 304
Ronan v. Bluhm 466
Rondeau v. Wyatt 592
Root v. Childs 301
Roper v. Lendon 314
Roscorla v. Thomas 139
Rosema v. Porter 540

Rosenbaum v. U. S. Credit-System

Co. 215, 233, 236, 246, 277
Ross v. Drinkard 435
v. Moss 115
Roszell v. Roszell 490
Roth v. Taysen 556
Rotherham Alum Co., Re 361

Rouse v. Western Wheel Works 3434
Rousillon +, Rousillon 216a

 

Rowe v. Barnes 113
Royal Ins. Co. v. Beatty 23
Royston v. Miller 78
Ruben v. Sturtevant 470
Rucker v. Bolles 91
Ruff v. Jarrett 437
Rugg v. Moore 519
Rupley v. Daggett 152

Russ Lumber Co. v. Muscupiabe,
etc. Co. 321

Russell v. Briggs 608
v. Falls Mfg. Co. 155
v. Post 235
v. Russell

60, 452, 608
Ryan v. Springfield Bank 529

v. United States 597
SappLery Harpware Co. wv.
Hillsboro Mills 263
St. Albans v. Shore 350
St. Louis v. Von Phul 371
St. Louis Fair Ass’n v. Carmody 234
St. Louis, V. & T. H. R. Co. v.
Terre Haute & I. Co. 73, 2384
St. Louis & P. R. R. Co. v. Kerr 344,
346
St Mark’s Church v. Teed 115

Salmon Falls Mfg. Co. v. Goddard 598,

602*
Sample v. Bridgforth 290
Samuels v. Oliver 218, 255
Sanders v. Classon 579
v. Pottlitzer Bros. Fruit Co. 67
Sanderson v. Marr 402
Sanduskey v. Sidwe'l 8352
Sanford v. First National Bank 293
Sanger v. Dun 78
v. Hibbard 464, 472
Saunders v. Whitcomb 108 a
r, Saunders 362
Savage v. People’s Building Ass’n 191
v. Savage 529

Savannah Ice Delivery Co. r. Ameri-
can, ete. Co. 285, 286, 348

Savannah S&S. B. v. Logan 446
Savery vr. King 467, 469
Sawyer v. Lufkin 411
Sax v. Detroit, etc. R. 103, 589
Sayles v. Christie 475, 476, 477

478
Sayre v. Mohney 334, 528
Scanlon v. Warren 201, 233
Sceva v. True 411
Schaller v. Chicago, etc. R. 59
Schilling ». Darmody 5385
Schlee v. Guckenheimer 1054
Schley v. Fryer — 368
Schlicher v. Keeler 82
TABLE OF CASES. ;

xlix

References are to sections.

360
211
602

99

Schmaling v. Thomlinson
Schmueckle v. Waters
Schneider v. Norris
Schnell v. Nell

Schomp v. Schenck 184
School District v. Dauchy 273

v. Thomas 371
School Trustees v. Bennett 273

129
449
585

77
274
122

Schuler v. Myton
Schultz v. Catlin,

v. Waldons
Schuylkill County v. Copley
Schwartz v. Saunders
Scotson v. Pegg

Scott v. Avery 191 a, 314

v. Brown 209

v. Bryan 573

v. Littledale 422

v, Perrin 469

v. Shreeve 389
Scribner v, Schenkel 148, 149
Scully v. Kirkpatrick 277
Seaman »v. Colley 190
Sears v. Eastern R. R. Co. 54, 169
Seaton v. Burnand 430, 431

v. Heath 430, 431
Seavers v. Phelps 408, 409
Secombe v. Steele 285
Secor v. Clark 446
Seeger v. Duthie 317, 516
Seeley v. Citizens’ Traction Co. 422
Seeright v. Fletcher 78
Seevers v. Gabel 275
Seitz v. Brewers’, etc. Co. 60, 66

Selden v. Myers 77
Serviss v. McDonnell 370
Sessions v. Johnson 355
Seward v. Huntington 369

v Mitchell 110, 205

Shadwell v. Shadwell 106, 108, 122, 124

Sharp v. Taylor 241
Sharples v. Gammey 439
Sheehy v. Adarene 590

v. Mandeville 354
Sheeren v. Moses 322, 329
Sheldon v. Davidson 433
Shelly v. Mikkelson 321, 334
Shelly’s Appeal 225
Shelton v. Klis 424
Shepard v. Carpenter 67

v. Mills 339

c. Rhodes 99, 1386

69
29
128

Sheppard v. Kindle
Sherman v. Kitsmiller
Sherwin v. Fletcher

 

Sherwood v. Walker 290, 418
Shipley v. Reasoner 211
Shippey v. Henderson 136
Sholbred v. Roberts 239

d

Short v. Stone
Shrimpton v. Netzorg

346, 521, 553
79

Shuey v. United States 169
Shulter’s Case 77
Shute ». Dorr 589
Sibley v. Felton 67

v. Holeomb 17
Sibree v. Tripp 108 «
Sickles v. Herold 298
Siegel v. Eaton, etc. Co. 274
Silliman v. United States 446
Silver v. Kent 146
Silverthorn v. Wylie 139

Simmons Creek Coal Co. v. Doran 489
Simon v. Goodyear, etc. Co. 448, 481
v. Gulick 585

Simons v. Great Western Ry. Co. 58,
77

Sims v. Everhardt 406
v. Ferrill 435
Simson v. Brown 871

Singer Mfg. Co. v. Draper 174

Singerly v. Thayer 283

Sinsheimer v. Skinner Mfg. Co. 852
Sioux Nat. Bank v. Norfolk State

Bank 437

Skeate v. Beale 444, 445

Skym v. Weske Co. 77

Slade ». Multrie 506

Slaughter v. Gerson 440

Slingsby’s Case 351

Sloan v, Williams 381

Small v. Chicago 188

Smith v. Bates Machine Co, 38

v. Blachley 189

Gs Brady 343

v. Burnham 585

v. Coker 106 a

v. Hughes 428

v. Kelly 475

v. Mace 529

v. Mayo 476

v. Morse 100

v. Ocean Castle 192

v, Packard 339

v, Preston 277

v. Smith 434

v. West 608

v. Whildin 106 a

Smith’s Appeal 249

Smith’s Estate 128

Snell v. Ins. Co. 493

Snow v. Wheeler 222

Snyder v. Willey 246

Society v. Bolland 190, 268

Somerby r. Buntin 593

Soper r. Arnold 526
Soper Lumber Co v. Halsted, ete.

Co. 438
1 TABLE OF CASES.

References are to sections.

Sornborger v. Sanford
Sorsbie v. Park
Souch v. Strawbridge

444

357
607

South African Territories v. Wal-

lington

565

ae Chicago City R. v. Calumet

Sonther Development Co.
Silva

Southern Pacifie Co. v. Denton
Soutier v. Kellerman
Sowers v. Parker
Spain +. Hamilton
Spalding v, Ewing

v. Rosa
Speake v. United States
Spear v. Griffith
Speed v. Hollingsworth
Spence v. Ham

v. Healey
Spencer v. Cone

ov. Harding
Speyer v, Desjardins
Spiller v. Westlake
Spinney v. Hill
Spring v. Hamilton
Spring Co. v. Knowlton
Stacy v. Cook

v. Ross
Stallings v. Newton

433,

181

v
436
191
255
436
387
180
277
529
141
440
339
514
592
52
585

334, 528

592, 608
390

239

108 a

77

82

Standard Furniture Co. v. Van Al-

stine

Standard Oil Co. v. Hawkins
Stanford v. McGill
Starbird v. Cranston
Starin v. Kraft
State v. Associated Press

v, Binder

v. Carver

v. Chandler

234
483
555

368, 376

514
219
479
12

uv. Chicago, R. I. & P.R. R. Co 268

v. Clarke
v. Davis
v. Dimick

State Bank rv. Burton-Gardner Co.

v. Littlejohn
State L. & IT. Co. v. Cochran
State N. B. v. Butler
Stavers v. Curling
Stearns v. Hall

v. Lake Shore R.
Steeds v. Steeds
Steele v. Buck
Stees v. Leonard
Stenton v. Jerome
Stephenson v. Elliott
Stevens v. Webb
Stevenson v. Crapnell
Stewart v. Hidden

401
368
474
67
54l
225
78
317
499
113, 556
358, 514
276

273

445

368

262

37

506

 

Stewart v. Langston 126
v. Stone 272
v. Thayer 238
Stickney v. Goudy 643
Stiles v. Probst 529
Stillman v. Dresser 338, 579
Stockwell v. Hunter 2704
v. Williams 601
Stoddart v. Sager 204
Stokes v. Mackay 347
Stone v. West Jersey Ice Co. 516
v, Wilbern 412
Stone’s River N. B. v. Walter 107
Stoneburner v. Motley 139, 141
Stoney Creek Woolen Co, v, Smal-
ley 436
Storrs v. St. Luke’s Hospital 187
Stover v. Wood 436
Stowers v. Hollis 403
Streichen v. Fehleisen 857, 358
Strickland v. Turner 288, 419
Strobridge Lithographing Co. v.
Randall 67
Strong v. Lane 151, 152, 422
v. Sheffield 115
Stubbs v. Holywell 393
Studley v. Bullard 106 a
Studwell v. Shapter 406
Stuht v. Sweesy 139
Suffern v. Butler aT
Sullivan v. Eddy 36
Sullivan County v. Ruth 67
Summers v. Hibbard 272
Sumpter v. Hedges 41, 343
Sutherland v. Reeve 390
Sutter v. Rose 481
Sutton v. Grey 581
Svanburg v. Forseen 608
Swain v. Seamens 499, 608
Swanson v. Kirby 2164
Swayne v. Hiil 578, 579
Sweeny v. United States 349
Sweigart v. Berk 352
Sykes v. Chadwick 92
v. St. Cloud 342
Synge v. Synge 521

Syracuse Knitting Co. v. Blanchard 434

Taxgort v. English 540
v. Heinze 334

v, Stemmons 92
Tallman v, Hoey 383
Tappan v. Albany Brewing Co. 209
Tarrabochia v. Hickie 285, 516
Tate v. Commercial B’ld’g Ass’n 240
Tatum v. Ballard 375
Tayloe v. Merchants’ Fire Ins. Co. 159,
166
Taylor v. Blanchard
v. Bowers
v. Brewer
v, Caldwell
v. Ford
v. Hilary
v, Laird
v, Renn
v. Smith
v. Taintor
Teipel v. Meyer
Teltord v. Chicago, etc. R.
“Temple v. Johnson
Teutonia The
Thacker v. Hardy
Thackrab v. Haas
Thallhimer v. Brinckerhoff
Thaxter v. Inglis
Thayer v. Burchard
v. Daniels
v. Knote
v. Rock
Theiss v. Weiss
Thomas v. Cadwallader
v. Cook

v. Thomasville Shooting Club 42, 43

v. Watt

Thomas Mfg. Co. v. Prather

Thompson v. Charnock
v. Cheesman
. Gillespy
. Howard
Hudgins
Ins. Co.
Lay
Niggley
. Reynolds
v. Riggs
Thomson v. Poor
Thorn wv. City Rice Mills
v. Pinkham :
Thornhill v. Neats
Thornton v. Ilingworth
v. Wynn
Thoroughgood’s Case
Thorp v. Bateman
v. Thorp
Thurnell v. Balbirnie
Tidey v. Mollett
Tiernan v. Granger
Tilley v. Thomas
Tillock v. Webb
Tinn v. Hoffmann
Tisdale v. Harris

Ce he ee

Titus v. Rochester German Ins. Co. 435

Tobey v. County of Bristol
Toby v. Wood
Todd v. Meding

vu. Weber

TABLE OF CASES.

References are to sections,

li

216, 216a| Tolhurst v. Powers 106.4
239 | Tompkins v. Hill 109, 540
29| Tompson v. Noel 342
270a| Tool Co. v. Norris 180
418 | Topliff v. Topliff 259
513 | Torrence v. Shedd 188
41) Town of Grand Isle v, Kinney 129
337, 339 | Townsend v. Long 577
604 vo. Rackham 366
269 a v. Vanderwecker 608
101 | Traders’ Nat. Bank v. Parker 115
18], 231 | Trainer v. Trumbull 404
608 | Trammell v. Vaughan 277, 553
269a) Travelers’ Ins. Co. v. Mayo 355
202, 236 v, Parker 103
469 | Travis v. Nederland L. I. Co. 165
185 | Treadwell v. Torbert 189
111] Trench v. Hardin County, ete. Co. 62

101} Trenton Potteries Co. v. Oly-
390]  phant 216 a, 219

424] Trenton Terra Cotta Co. v. Clay
586| Shingle Co. 490
75 | Trevor v. Wood 160
315 | Trickey v. Lane : 528
575 | Trimble v. Hill 204
Trist' v. Child 180

482

Trounson v. Colby University 818, 320

370 | Troustine v. Sellers 163
191 a] Trower v. Elder 294
368 | Truax v. Estes 556
310} Trueblood v. Trueblood 402
481 | Trustees v. Anderson 376
141 v. Haskell 128
66 | Turk v. Ridge 371
476, 479 | Turner v. Thompson 239
447 | Turnipseed v. Serrine 586 a
186 | Tuscaloosa Ice Mfg. Co. v. Wil-
225|  liams 2lfia
513 | Tuttle y. Tuttle 113
262 | Tweddle v. Atkinson 361, 362
189 | Tyler v. Carlisle 235
512) Tyson v. Williamson 460, 528
472
528
77 | Urcxer v. Koehn 474
47 | Underwood v. Barker 216 a, 217
315, 316 | Ungley v. Ungley 608
349 | Union Bank v. Geary 113

 

310 | Union Central L. I. Co. v. Hilliard 402
590 | Union N. B. v. Louisville, ete. R. 174
285 Union Ry. Storage Co. v. McDer-
237 mott 371
154 | United States v. Beebe 469
593 v. Behan 559
v. Bostwick 108, 256
19la v. Bradley 247
475) — v. Buchanan 255
384 v. Buford 389
865 v. Charles 306
lii TABLE OF CASES.

References are to sections.

United States v. E. C. Knight Co. 223 a

v, Grossmayer 176
v. Joint Traffic Ass’n 223 u
v. Price 355, 356
v. Thomas 276
v. Trans-Missouri Freight Ass’n

223 a

United States Sugar Refining Co.

v. Edward P. Allis Co. 346, 349
Upriver Ice Co. v. Denler 216
Upton v. Tribileock 435
Urquhart v. McPherson 467
Utley v, Hill 438

VALENTINE v. Foster 136, 141
v. Stewart 190
Valley City Nutting Co. v. Prange 290,
526
Van Buren v. Digges 294
Van Clief v. Van Vechten 339
Vandenbergh v. Spooner 598
Vanderbilt v. Schreyer 117, 118
Van Housen v. Copeland 585
Van Houten v. Morse 432
Van Ness v. Washington 60
Van Valkenburg v. Rouk 78
Van Weel v. Winston 60
Varnum v. Highgate 289
Vassar v. Camp 162
Vereycken v. Vandenbrooks 107
Vermont L. & T. Co. v. Hoffman 174
Very uv, Levy 514
Vick v. Shinn 446
Vigers v. Sanderson 308
Vince, Re 29
Vinet v. Bres 376
Viney v. Bignold 191 a, 314
Virden v. Murphey 235
Virginia Hot Springs Co. v. Har-
rison 164
Vought v. Columbus, etc. Co. 361
v. Williams 349
Vrooman v. Turner 369
Vyse v. Wakefield 262, 296

Wasasu Western Ry. v. Brow 509

Walker v. Taylor 47
v. Tucker 271
Wallace v. Berdell 37
v. Chicago, etc. R. 184
v. Rappleye 93
v. Tice 529
v. Townsend 170
Wallingford v. Mutual Society 294
Wallis v. Littell 65
v. Scott 298
Walls’ Appeal 30
Walmesley v. Cooper 508
Walsh v. Featherstone 371

Walter A. Wood, etc. Co. v. Smith 283

Walters v. Eaves 442
Walton v. Horkan 886, 390
v. United States 532
Wamell v. Reed 234
Ward v. Lloyd 189
v. Scherer 471
Ware v. Allen 65
Warlow v. Harrison 52, 53
Warner v. Crouch 95
v. Texas, etc. R. 587, 588, 589
Warnock v. Davis 200
Warren v. Abbett 575
v. A. B. Mayer Mfg. Co. 513
v. Batchelder 374
v. First N. B. 384
v. Lynch 35
v. Warren 608
Washburn v. Fletcher 162

v, Interstate Investment Co. 370
Washington Cent. Imp. Co. v.

Newlands 440
Waterhouse v. Skinner 338
Waterman v. Banks 157, 285
Watson v. Brown 289

vo. Doyle 413
v. Louisville, etc. R. 57, 78
v. Silsby 434

Wattles v. South Omaha Ice Co. 2704
Watts v. British & American

Wachsmuth v. Martini 437
Wadsworth v. Sharpsteen 414
v. Warren 65
Wager v. Wagoner 408, 466
Wagner v. Meakin 101
Waidner v. Pauly 644
Waite v. O’Neil 270 a
Walker v. Bradford Old Bank 388
v. Brown 47, 189
v. Cronin 360
v. Johuson 587

 

Mtg. Co 482
Waugh v. Morris 230
Way v. Sperry 136
Weaver v. Jones 402
Webb v. Stephenson 521
Weber v. Shay 189
Webster v. Fleming 375, 378

v. Munger 234
Weeks v. Crie 594, 604
v. und 608
v. Maillardet 38
Wegg Prosser v. Evans 355
‘Weir v. Marley 225
Weiser v. Welch 447, 449
Welch v. Hoyt 528
v. Mandeville 388
TABLE OF CASES.

References are to sections.

 

lili

Welch r. Marvin 582 | Wilcox v. San José, etc. Co. 467

ve. Miller 539 | Wildes v. Savage 145

v. Sackett 82| Wiley v. Athol 342

Weller v. Goble 871 | Wilhelm v. Voss 581

Weller’s Appeal 78 | Wilkinson v. Byers 109

Wellington v. Monroe, etc. Co. 540 v. Johnson 529

Wells v. Calnan 350, uv, Stitt 204

Wells-Fargo Co. v. Enright 225 | Wilks v. Smith 818, 330

Welty v. Jacobs 564 | Willard v. Wood 375, 377

West v. Bechtel 286, 348, 516, 521} Willemin v. Batteson 190

v. Camden 210] Willey v. Hodge 491
Westerfield v. New York L. I. Co. 458] William Butcher Steel Works v.

Western, etc. R. v. Burke 458 Atkinson 607

Western Land Ass’n v. Banks 602 | Williams v. Bailey 189, 238 a

Western Paper Co. v. Comstock 189 v. Carwardine 183, 190

Western Union Tel. Co. v. B.& S. v. Chamberlain 383

Co. Ry. 249 v. Leper 580

v. Chicago & P. R. R. Co. 596 v, Moor | 136

Wharton v. Stoutenburgh 67 v. Spurr 428
v. Winch 519 ee Transportation Co. v.

Wheat v. Rice 370|  ©’Nei 275

Wheeler v. Frankenthal 606 | Wilson v. Bevans 577

v. Klaholt 25 v, Carpenter 440

v. New Brunswick, etc. R. R. v. Hundley 481

Co. 262 v. Nichols 436

v. Sage 241 v. Rowers 107

v. Stewart 361 v. Wilson 197, 406

Wheelock v. Berkley 500, 528 | Wilson S. M. Co. v. Curry 446

Whelpdale’s Case 352) Winchester v. Allen 521

Whincup v. Hughes 277 v. Newton 521

Whipple v. Parker 590 v. Nutter 205

White v. Barber 201 | Windhill Local Board v. Vint 189

v. Blnett 30 | Windmuller v. Pope 347

ce. Corlies 153 | Winn v. Bull 67

v. Cuyler 532 | Winne v. Winne 366

v. Duggan 38| Winter v. Kansas City Cable R. 108,

v. Equitable Union 213 468, 509

v. Middlesex R. R. Co. 191a@] Wisconsin, etc. Bank v. Mann 492

v. Murtland 589 | Withers v. Greene 528

v. Needham 103 v. Reynolds 825, 519, 521

v. New Bedford, etc. Corp. 464, 473 | Wittenberg v. Mollyneaux 217

v. Tripp 582 | Wolf v. Marsh 346

v. Tyndall 357 v. Pennsylvania R. Co. 19la

v. Vermont & Mass. R. R.Co. 379 | Wolff x. Bluhm 447

Whitehead v. Burgess 364 | Wolford v. Powers 92

Whitehill v. Dacus 458, 492, 524 | Wood v. Boynton 290, 418

Whitney v. Gammon 232 v. Moriarty 374

v. Hale 82 v. Roeder 435

Whiton v. Whiton 214 v..What Cheer Lodge 192

Whittaker v. Southwest Va. Imp. v. Whitehead Bros. Co. 217

Co. 446 | Woodberry v. Warner 846, 521

Whittier v. Dana 513 | Woodbridge v. DeWitt 79

Widoe v. Webb 246 | Woodcock v. Bostic 861, 375

Wieland v. Kobick 406 | Woodhaus v. Allen 238 a

Wiggins v. Bisso 241 | Woodman v. Innes 180

Wilbur v. Stoepel 210 | Woods v. Roberts 452
v. Warren 85 | Woodstock Iron Co. v. Richmond,

Wilcox v. Arnold 141 etc. Co. 180, 181, 210

v. Howland 446 | Worden v. Sharp 607
liv TABLE OF CASES.

References are to sections.

World’s Columbian Ex. Co, v.

France 226
Worsley v. Wood 349
Worthington v. Plymouth Co. R. 42
Wright v. Bank 282

v. Briggs 368
v. Dannah 602
v. Ryder 216 a
o. Waller 413
Wright, etc. Co. v. Robinson 482
Wyche v. Greene 490
Wyley v. Bull 47
Wynne v. Whisenant 189
Wyss v. Grunert 467, 468
XeEwos v. Wickham 36, 82, 617
Yeats v. Ballentine 343

Yellow Poplar Lumber Co. v. Rule 589

 

Yeomans v. Bell
Yerrington v. Greene
York v. Hinkle
Yorston v. Brown
Young v. Farwell

v. Glendenning

v. Godbe

v. Power

v. Stevens

v. Young
Young Bros. Co. v. Young
Young Men’s Christian Associa-

tion v. Croft

Youngs v. Trustees
Yundt v. Roberts

ZALESKI v. Clark
Zang v. Adams
Zeigler v. Mize

Zorn Brewing Co. v. Malott 418,

Zuck v. McClure

470
277
446
843,

31
202
560
506
410
506
342

369
376
246

283
436
188
496
522
THE LAW OF CONTRACTS.

 

BOOK I.

THE FORMATION OF CONTRACT.

CHAPTER I.
CLASSIFICATION AND DEFINITION OF CONTRACTS.

§ 1. Classification of Obligations. — The obligations which
the law enforces may be divided into two classes: those which
result from a voluntary legal act, and those which do not.
This division of obligations is generally recognized ; but there
is as yet no general agreement as to the terms by which the
two classes are to be distinguished.!

§ 2. Contractual Obligation defined. — Contractual obligation
is that legal obligation which is the result of a voluntary act
on the part of the person bound, and which is defined by that
act.

§ 8. Different Uses of the Term “Contract.” —To define a
contract is not so easy. A simple and apparently satisfactory
definition is this: “A contract is a promise or agreement
enforceable by law.” Unfortunately, the word “contract”
has been used in so many different senses, that we can only
say, in the language of Sir Frederick Pollock, that “ Every
agreement and promise enforceable by law is a contract;”

§ 1. 1 Professor Bigelow has called these two classes of obligations
‘* consensual” and ‘‘paramount.” Torts (6th ed.), p. vi. Professor
Wigmore calls them ‘recusable” and “irrecusable.” 8 Harv. Law
Rev. 200.
1
2 THE FORMATION OF CONTRACT.

which is not really a definition of contract. The reason for -
this difficulty as just stated is that the term “contract” has
been applied to so many things which are not promises or
agreements at all. Instead of defining a contract, therefore,
we shall discuss the different classes of contracts, and thus
point out the different meanings which have been given to
this common term.

§ 4, Formal, Simple, and Real Contracts. — A formal contract
is one which derives its binding force from the formal char-
acter of the act creating its obligation. Other contracts are
called simple contracts. The formal contracts of English law
are the contract of record, evidenced by the record of a court,
and the specialty, or contract under seal. Bills of exchange,
promissory notes, and checks partake to some extent of the
character of formal contracts. The law in regard to such in-
struments is made up partly of the custom of merchants, which
treated. them as formal contracts, and partly of certain com-
mon law rules governing simple contracts.

The term “real contract’ comes from the Roman law, and
refers to the obligation resulting from the receipt of a thing,
ares. The term is little used in our law, but may be applied
to cases of sale and bailment.

§ 5. Formal Contracts.— The existence of formal contracts
in our law is due to the rules of evidence governing the trial
of causes at common law. Acts were classified according to
the evidence by which they were proved.’ The highest form
of evidence known to the law is a judicial record; next comes
a deed, and last of all oral testimony. Formal contracts in our
law are those the existence of which is established either by
a record or by a deed. The former are termed contracts of

_record, the latter, specialties.

§ 6. Contracts of Record.— A judicial record is taken as
absolutely true and binding between the parties thereto and
those in privity with them, The record cannot be attacked
collaterally ; if it contains error, that error must be corrected
by special proceedings for that purpose in the court that

§ 5. 1 Post, Appendix, II.
CLASSIFICATION AND DEFINITION OF CONTRACTS. 3

rendered it, or in some other court having jurisdiction to cor-
rect the error.

Contracts of record are said to include judgments, recogni-
zances, statutes merchant and staple, and recognizances in the
nature of a statute staple. Statutes merchant and staple and
recognizances in the nature of a statute staple have long been
obsolete. A judgment is not a contract at all, but a judicial
determination of fact entered of record. The sole reason for
calling it a contract is, that an action of debt will lie upon it
at common law. Jt seems, however, that a judgment entered
by confession may be a true contract, since it is the result of
a voluntary act, and the extent of the obligation is fixed by
that act. This is certainly true of judgments entered by con-
fession in vacation.

A recognizance is a true contract. It is an obligation in
the form of an acknowledgment of a debt made before a judge
or officer having authority for that purpose, and enrolled in a
court of record.!. The recognizor acknowledges that he is
indebted in a certain sum, the obligation to be null and
void if the recognizor do some act specified in the recogniz-
ance. The recognizance is used chiefly to bind a party to
appear in court or to keep the peace, and ordinarily runs to
the sovereign.

§ 7. Specialties. — Next to a judicial record the highest form
of evidence is a charter, deed, or specialty. These are all
instruments under seal, “charter” and “deed” being generic
words, while “specialty” is applied to obligations only. The
immense weight attached to a deed as evidence in early times
was due to the fact that deeds were the customary form of
jexpression of solemn legal acts. Proof of a party’s deed was
sufficient to prove the party bound by all statements and
promises therein contained. Originally, in fact,.the deed was
the obligation, and if the deed were lost or destroyed, the obli-
gation also disappeared.

§ 8. Simple or Parol Contracts. — All other contracts than
those just discussed are called simple or parol contracts. The

§ 6. 1 Leake, Contracts, 141.
§ 7. 1 Ames, 9 Harv. Law Rev. 49.
4 THE FORMATION OF CONTRACT.

term “parol” is ambiguous, and therefore confusing. In one
connection it is used as opposed to “ written,” and means oral ;
in another connection it is used as opposed to “formal,” and
means either an oral contract or a written contract not under
seal.

§ 9. Negotiable Instruments. — Negotiable instruments com-
prise promissory notes, bills of exchange, and checks.’ Other
instruments are sometimes termed quasi-negotiable, but the
term is properly limited to the three mercantile contracts
above described. By the custom of merchants these contracts
were in their nature specialties, dependent upon their form
for their legal effect. In adopting the custom of merchants
as the law merchant, however, the English courts at-
tempted to treat these mercantile specialties as simple con-
tracts, an attempt which has had unfortunate but permanent
results.?

§ 10. Executed and Executory Contracts. — Again, contracts
have been divided into executed and executory contracts. An
executed contract represents a completed transaction between
two parties. Thus, if A. exchanges horses with B., the trans-
action is spoken of as an executed contract. In an executory
contract, on the other hand, something remains to be done by
one or both parties. Between executed and executory con-
tracts, therefore, there is the most fundamental difference.
In an “executory contract” there exists some obligation on
some one to do something; while in an “ executed contract”
there is no obligation whatever existing. The transaction is
completed.

§ 11. Express and Implied Contracts. — Contracts again are
divided by Blackstone into express and implied contracts.
“ Express contracts are where the terms of the agreement are
openly uttered and avowed at the time of the making. . . . Jm-
pled are such as reason and justice dictate, and which, there-
fore, the law presumes that every man undertakes to perform ;

. and upon this presumption makes him answerable to

§ 9. 1 For definitions of these instruments, see Bigelow, Bills, Notes,

and Cheques (2d ed.), 11.
2 Tb. 5.
CLASSIFICATION AND DEFINITION OF CONTRACTS. 5

such persons as suffer by his non-performance.”! Among
these implied contracts Blackstone includes penal statutes,
whereby a forfeiture is inflicted for transgressing the provi-
sions therein contained. ‘The party offending is here bound
by the fundamental contract of society to obey the directions
of the legislature, and pay the forfeiture incurred to such per-
sons as the law requires.” Other implied contracts “ arise
from the general implication and intendment of the courts of
judicature, that every man hath engaged to perform what his
duty or justice requires.” The idea that every man has con-
tracted to do his duty is a striking instance of those fictions
in which the older law abounds; but on examination of the
different obligations which Blackstone treats as contracts,
we find that their only common feature is that they are all
enforceable by actions ex contractu.

§ 12. Unilateral and Bilateral Contracts.— In a unilateral
contract, the contract imposes obligation on one party only.
In a bilateral contract; the contract imposes obligations on
both parties. A promissory note, an insurance policy, and a
debt are all unilateral contracts. A lease, a charter-party,
and an executory contract of sale are all bilateral contracts.
In a bilateral contract there are necessarily mutual promises
or covenants; but sometimes two unilateral contracts which
are given in consideration of each other are treated as if they
constituted one bilateral contract.

§ 13, Actions ex Contractu.— The common-law actions for
the enforcement of contracts are called actions ez contractu.
There are debt, covenant, account, and assumpsit. Jndedi-
tatus assumpsit, quantum meruit, and quantum valebat are
special forms of the action of assumpsit. The nature and
history of these different forms of action are explained in
Appendix II.

§ 14. Debt.1— A debt at common law is a specific sum of

§ 11. 1 Blackstone’s Comm. II. 443; III. 158. The distinction be-
tween express and implied contracts is really only as to the mode of
proof. Heffron v. Brown, 155 Ill. 322; 40 N. E. 583.

2 Blackstone’s Comm. ITI. 159.

§ 14. 1 See post, §§ 682-634.
6 THE FORMATION OF CONTRACT.

money or a fixed amount of chattéls due from the debtor to
the creditor. To-day the term is applied only to cases where
a fixed sum of money is due from one person to another.

§ 15. Covenant.1— A covenant is a promise under seal,
which is enforceable by the action of covenant at common
law.

§ 16, Account.!— The action of account was used to compel
an agent or partner to account for money received by him to
the use of the plaintiff. The common-law action has been
generally superseded by an equitable proceeding with the
same object.

§ 17. Assumpsit.1— The action of assumpsit is the common-
law action by which in modern times simple contracts are
generally enforced. The plaintiff declares on an asswmpsit
or promise by the defendant.

§ 18. Indebitatus Assumpsit.! — This is a form of the action
of assumpsit which is used to enforce a simple contract debt.
The plaintiff alleges that the defendant, being indebted to him
for a certain sum as the result of a certain transaction, in
consideration of such indebtedness promised to pay the plain-
tiff said sum.

§ 19. Quantum Meruit and Quantum Valebat.' — These are
special forms of the action of assumpsit, brought where the
plaintiff has rendered services or sold a chattel to the defend-
ant for which no price has been fixed; and for which, there-
fore, the plaintiff says that the defendant promised to pay as
much as the goods or services are worth.

§ 20. Quasi-Contracts.—In many cases where there is no
contract the law imposes an obligation often called quasi-
contractual. This obligation is often recognized in cases where
there is some obstacle to the enforcement of what the parties
intended as a contract. Although this obligation is thus often
connected with cases where contracts are involved, it is

§ 15. ! See post, § 635.
§ 16. 1 See post, § 636.
§ 17. 1 See post, §§ 638-640.
§ 18. 1 See post, § 641.
§ 19. 1 See post, § 642.
CLASSIFICATION AND DEFINITION OF CONTRACTS. T

entirely different from contractual obligation, aud the term
quasi-contract, though firmly established, is for that reason
unfortunate. Contractual obligation is the result of a volun-
tary act. Quasi-contractual obligation is imposed by law
upon equitable grounds. The subject of Quasi-Contracts has
been treated as a separate subject, and is not within the scope
of this work.

§ 20. 1 See Professor Keener’s ‘‘ Quasi-Contracts.”
8 THE FORMATION OF CONTRACT.

CHAPTER. II.
THE PROMISE, OR ASSURANCE.

§ 21. Essentials of Contractual Obligation. — We have defined
contractual obligation as that obligation which is imposed by
the law in consequence of a voluntary act, and which is deter-
mined as to its nature and extent by that act. From this
definition it will be seen that there are four distinct elements
essential to the existence of contractual obligation. These
are, first, that the party bound should do an act; second, that
this act should be voluntary; third, that the act should define
the extent of the obligation, and the conditions of its crea-
tion ;1 and, fourth, that the law should impose that obligation
as the consequence of such act. With these four elements we
shall deal in the order just given.

§ 22. Necessity of an Act.— And first, as to the necessity of
an act. It is a fundamental proposition that mere inaction or
silence can never subject any one to a contractual obligation.
Elementary as this proposition must seem, the fact that the
courts have been compelled more than once to pass upon it
shows that its true import has not always been clearly under-
stood. The following instances will illustrate the general
principle.

§ 28. Instances of Foregoing Rule. — A. writes to B. offering
B. $100 for his horse, and adding: “If I hear no more about
him, I consider the horse is mine at $100.” B. fails to answer
the letter, and A. claims that such silence amounts to’a con-
tract to sell the horse. But B. has done nothing, and there is
therefore no contract.!

§ 21. 1 The courts which adopt the estoppel theory of contract do not
require that the conditions of the creation of the obligation should be
defined by the promise. See post, § 129.

§ 23. 1 Felthouse v. Bindley, 11 C. B. n. s. 869; K. 82.
THE PROMISE, OR ASSURANCE. 9

A.’s agent goes to B.’s agent and asks him to renew certain
insurance policies issued by B. on A.’s property. B.’s agent
says nothing. There is no contract of renewal.?

A. buys goods of B. B. notifies C. that the goods will be
charged to C. C. says nothing. C. is not liable for goods
furnished A. before or after such notice, having done nothing?

§ 24. When Silence is an Act.—It has been said that an act
is necessary on the part of the party to be charged. The term
“act” is here used in its broadest sense to include not merely
a single act, but a course of conduct. Present silence may be
so coupled with previous speech, present inaction with previ-
ous action, that the silence and the speech, the action and the
inaction, must all be taken together in order to determine the
effect of a person’s conduct. Whenever, then, the previous
relations between the plaintiff and defendant have been such.
that silence by the defendant on a particular occasion justifies
the plaintiff in assuming that the defendant intended to bind
himself, the defendant is bound, not by his silence, but by his
silence taken in connection with his previous conduct.

§ 25. Illustrations of the Effect of Silence as a Promise. — The
principle just stated is well illustrated by the case of Hobbs v.
Massasoit Whip Co.*

The plaintiff in that case sent some eel-skins to the defend-
ant. The defendant declined to has the skins, but the plain-
tiff received no notice of its refuSal. The skins were kept by
the defendant some months, and were then destroyed. The
plaintiff then sued for the price of the skins. He had sent
ecl-skins in the same way to the defendant several times before,
and they had been accepted and paid for. In fact there was
a standing offer for such skins. “In such a condition of
things,” said the court, “the plaintiff was warranted in send-
ing the defendant skins conforming to the requirements, and
even if the offer was not such that the contract was made as
soon as skins corresponding to its terms were sent, sending

2 Royal Ins. Co. v. Beatty, 119 Pa. St. 6; 12 A. 607; W. 514; H. &
W. 21.

8 Grice v. Noble, 59 Mich. 515; 26 N. W. 688.

§ 25. 1 158 Mass. 194; 83 N. E. 495; H. & W. 24; K. 89.
10 THE FORMATION OF CONTRACT.

them did impose on the defendant a duty to act about them;
and silence on its part, coupled with a retention of the skins
for an unreasonable time, might be found by the jury to war-
rant the plaintiff in assuming that they were accepted, and
thus to amount to an acceptance.” So where A. sent goods to
B. under a mistaken supposition that B. had agreed to buy
them under a contract in regard to the terms of which the
parties disagreed, the court held that the parties were not
strangers to each other, and that B.’s retention of the goods
for an unreasonable time warranted an inference of a promise
to pay for them. On learning of his mistake A. had written
to B. offering to let him keep the goods for cash or return
them. B. contended that A.’s offer to sell for cash could not
be accepted by simply keeping the goods, but the court re-
jected this contention.?

§ 26. The Act must be Voluntary. — The act which. gives rise
to contractual obligation must be voluntary. An act is volun-
tary whenever it is caused by the will of the party doing it.
The will in this respect must be sharply distinguished from
the other functions of the mind. An insane person has a will,
although his intellect is unsound. He may be entirely unable
to appreciate the consequences of an act; but if he is capable of
a conscious intention of doing that act, he is capable of mak-
ing a contract at common law.) The validity of such a con-
tract when made is another question, which will be discussed
later, under the head of Rescission.2 Many writers attempt
to make contract rest on agreement; but whatever be the
function of agreement in the Roman law, the existence of con-
tractual obligation in the common law is to be determined
by reference to the state not of the intellect, but of the will.
Volition, not consent, is the foundation of contract in our
law; for how can consent be predicated of a lunatic? How can
there be a-“‘ meeting of minds” when one of the parties to the
contract has lost his mind ?

§ 27. What is a Voluntary Act ?—If the act is caused by the

2 Wheeler v. Klaholt, — Mass. —; 59 N. E. 756.

§ 26. 1 Imperial Loan Co. v. Stone, 1892, 1 Q. B. 599; K. 811.
2 Post, §§ 408-414.
THE PROMISE, OR ASSURANCE. 11

will of the party acting, it is a voluntary act in the legal sense,
however involuntary it may seem in the popular acceptation
of the term. Thus, an act is voluntary, although caused by
duress. The will in such a case is influenced by threats, but
still it acts. No matter what force is used by another to bring
about the act, the act is voluntary so long as that force acts
only upon the motives of the party acting. A contract is a
contract, therefore, though executed under duress. The right
of the injured party to avoid the contract does not alter the
fact that the contract exists until it is avoided.

§ 28. The Act must determine the Extent of the Obligation, —
The act which gives rise to the contractual obligation also de-
termines the extent of that obligation. The act in question,
therefore, maust be of such a character that the court can de-
termine accurately the obligation which must result from it.
This does not mean that the act giving rise to the obligation
must be of such a character that the court can determine
its meaning unaided. A contract may be made in a foreign
tongue, or may contain abbreviations or technical terms which
are utterly unintelligible to the court without further explana-
tion. The maxim of the law is, Jd certum est quod certum
reddit potest, —‘ That is certain which can be rendered cer-
tain.” All that is necessary is that the court should be able
to determine from the language or conduct of the party to be
bound what obligation he incurred, and what were the condi-
tions of that obligation.

The following instances will serve to show what the courts
have or have not regarded as being sufficient to enable them
to determine with certainty the extent of an obligation.

§ 29. Instances of Certainty and Uncertainty. —In Taylor v.
Brewer,! A. agreed with B. to perform certain services for such
remuneration as should be deemed right, and the court held
that B.’s promise was too indefinite to create a legal obliga-
tion ; while in Henderson Bridge Co. v. McGrath,? it was held
that the jury must determine whether a statement by an agent,
that his principal would “do what was right” in regard to
paying for certain work, was made with a contractual intent

¢29,11M. &S. 290; K. 3. 2 134 U. S. 260; 10S. Ct. 730.
12 THE FORMATION OF CONTRACT.

or not. In the former case, the amount to be paid was left
entirely to the option of the defendant; in the latter case,. it
seems to have been a question of fact whether there was a
promise to pay a reasonable compensation or not.

A promise to pay good wages has been held void for uncer-
tainty.® :

‘A promise to execute a deed of separation containing the
“usual covenants” has been held sufficiently certain.*

Where a trader borrowed money and agreed to pay a certain
amount of interest, ‘‘ with due allowance in a fair and reason-
able manner,” in case the borrower’s profits shouid prove defi-
cient, the court held the agreement void for uncertainty.

A promise to convey one hundred acres of land, the land
not being described, is too uncertain to be enforced.®

A promise by A., that if satisfied with B. as a customer
under a certain contract he will “favorably consider” an
application from B., for a renewal of the contract, imposes no
liability on A.’

§ 30. Further Instances of Certainty and Uncertainty. — A
promise by a man that, if his niece would live with him, he
would give her a good house as long as he lived, and provide
for her at his death, has been held too indefinite.*

Where a father made a promise to his son in consideration
that the latter would stop making complaints of unfair treat-
ment, the consideration was held too indefinite.?

Where a divorced husband promised his wife to pay her an
allowance, if she would conduct herself with sobriety, and in a
respectable, orderly, and virtuous manner, the promise was
held binding.®

Where A. bought a horse from B., and promised that if
the horse was lucky to him he would give five pounds more,

3 Fairplay School Tp. v. O’Neal, 127 Ind. 95; 26 N. E. 686.
4 Hart v. Hart, 18 Ch. D. 670.

5 Re Vince, 1892, 2 Q. B. 478.

6 Sherman v. Kitsmiller, 17 S. & R. 45; H. & W. 157.

7 Montreal Gas Co. v. Wasey, 1900, A. C. 595 (P. C.).

§ 30. 1 Walls’ Appeal, 111 Pa. St. 460; 5 A. 220.

2 White v. Bluett, 23 L. J. Ex. 36; K 355.
3 Dunton v. Dunton, 18 Vict. L. R. 114; K. 367.
THE PROMISE, OR ASSURANCE. 138

or the, buying of another horse, A.’s promise was held too
vague.*

A contract for “ permanent employment ” of B. by A. to do
certain work, is a contract for employment so long as A. has
work of that character to be done and B. is willing to do it,
and is sufficiently certain.®

§ 31. Further Instances of Certainty and Uncertainty. — A
contract for the purchase by A. from B. at a specified price
of his “requirements” of coal for the season in a certain
business is valid.1 So is a contract by A. to purchase for
a certain time at a certain price such patterns as B. may
produce.?

A contract for the purchase of certain quantities of goods
daily in a certain business has been sustained, although no
period was specified for the continuance of such contract. The
court said that, as no time was mentioned, the contract might
be terminated upon notice; but this construction makes the
contract perpetual, subject to discharge by notice, whereas it
would be more reasonable to hold the agreement void for
uncertainty.

A contract by A. to employ B. in a certain business, and
divide profits with him, is void for uncertainty where no ratio
of division is specified.*

A promise to refrain from engaging in a certain business
“as far as the law will allow” will not be enforced. The con-
tract is construed as a contract in general restraint of trade,
which is illegal; and the limitation “as far as the law will
allow ” is too indefinite to be regarded as modifying the gen-
eral restraint.6

A contract not to engage in the practice of medicine in a

4 Guthing v. Lynn, 2 B. & Ad. 282.

5 Carnig v. Carr, 167 Mass. 544; 46 N. E. 117.

§ 31. 1 Minnesota Lumber Co. v. Whitebreast Coal Co., 160 Tll. 85 ; 43
N. E. 774; Hickey v. O’Brien, — Mich. — ; 82 N. W. 241. But see post,

100.

: 2 McCall Co. v. Icks, — Wis. —; 83 N. W. 300.

2 Electric R. v. Tennessee Coal Co., 98 Ga. 189; 26 S. E. 741.

4 Young v. Farwell, 146 Ill. 466; 34 N. E. 378.

5 Davies v. Davies, 36 Ch. D. 359; W. 77.
14 THE FORMATION OF CONTRACT.

certain town and the surrounding territory is uncertain as to
such territory, and enforceable only as to the town.§

§ 32. The Act must be capable of affecting Legal Relations. —
The circumstances under which the law will impose obligation
as the result of a voluntary act vary in accordance with the
formal or simple character of the contract in question, We
shall first consider formal acts, or deeds.

§ 33. Requisites of a Deed. —In ancient times proof of the
party’s seal was sufficient proof of the genuineness of the
deed.1 To-day, however, the essential requisites of a deed
are, first, that it should be in writing on paper or parchment ; ”
second, that it should be signed; third, that it should be
sealed; and, fourth, that it should be delivered. Whether the
deed must be accepted or not is a question to be discussed
hereafter.?

§ 34. Signing. — Signing was the Saxon method of authen-
ticating a deed. After the Norman Conquest, however, seals
came into vogue, and the seal became the means of authenti-
cation, while the signature came to be regarded as unimpor-
tant. The Statute of Frauds, which required many instruments
to be writing, signed by the party executing them, did not
apply to deeds ;? so that in England the requirement of a sig-
nature seems even to-day unessential.? In this country, the
universal practice of signing deeds would seem to make sign-
ing necessary. The signature, of course, may be by mark;
and a party is bound by his signature written by another per-
son in his presence and by his direction.*

§ 35. Sealing. — As to what constitutes a seal, one must

6 Hauser v. Harding, — N. C. —; 35S. E. 586.

§ 383. 1 See post, Appendix II. :

* Sheppard’s Touchstone, 54. This requirement barred out wooden
tallies, which were once used as evidence of contracts. Pollock, Con-
tracts, 144.

® Post, §§ 82, 83.

§ 34. 1 Cromwell v. Grunsden, 2 Salk. 462; K. 691; Parks v. Hazle-
rigg, 7 Blackf. 536; K. 696.

2 Cherry v. Hemming, 4 Ex. 631, 636.

8 Anson, Contracts (8th ed.), 52; Leake, Contracts, 113.

4 Gardner v. Gardner, 5 Cush. 483,
THE PROMISE, OR ASSURANCE. 15

to-day consult the statutes and decisions of each separate
jurisdiction. According to Coke, a seal is wax impressed.
An impression on paper is now generally held sufficient.2 By
statute in many States a scrawl or scroll affixed by way of
seal is sufficient. It is generally held that in order that such
a scrawl shall constitute a seal there must be a recital in the
deed that the scrawl was affixed as a seal. The United States
Supreme Court lays down the law as follows: “Whether
an instrument is under seal or not is a question for the court
upon inspection; whether a mark or character shall be held
to be a seal depends upon the intention of the executant as
shown by the paper.” 4

§ 36. Delivery. — Delivery is to-day essential to the validity
of a deed.’ In order to constitute delivery, it is not necessary
that the maker of the deed should part with the custody of
the deed. All that is necessary is that the maker should do
or say something to show that he intends the deed to be pres-
ently binding on him.? An unexpressed intention is insuffi-
cient,’ even though the deed be recorded.4

§ 387. Delivery in Escrow.— A deed may be delivered condi-

§ 35. 1 Warren v. Lynch, 5 Johns. 239; K. 691.

2 Pierce v. Indreth, 106 U. S. 546; 1 S. Ct. 418; Pillow v. Roberts, 13
How. 472; K. 697.

3 Cromwell v. Tate, 7 Leigh, 301; Breitling v. Marx, — Ala. —;
26 S. 203; Echols v. Phillips, — Ga. —; 387 S. E. 977; contra, Eames
v. Preston, 20 Ill. 389.

4 Jacksonville R. v. Hooper, 160 U. S. 514, 519; K. 700.

§ 36. 1 See further as to delivery, Greenleaf on Evidence (16th ed.),
IT. § 297.

2 Xenos v. Wickham, L. R. 2 H. L. 296; K. 703; Mitchell v. Ryan,
3 Ohio St. 377; Rodemeier v. Brown, 169 Ill. 3847; 48 N. E. 468; New
York L. I. Co. v. Babcock, 104 Ga. 67 ; 80 S. E. 273; Roberts v. Security
Co., 1897, 1 Q. B.111; Johnson v. Gerald, 169 Mass. 500; 48 N. E. 764.
In this last case, the officer of a bank executed a bond tothe bank, of
which he retained the custody on behalf of the bank, and there was held
to be a sufficient delivery.

3 Barnes v. Barnes, 161 Mass. 381; 37 N. E. 879; Babbitt v. Ben-
nett, 68 Minn. 260; 71 N. W. 22.

4 Fairhaven, etc. Co. v. Owens, 69 Vt. 246; 37 A. 749; Bush v.
Genther, 174 Pa. 154; 34 A. 520; Sullivan v. Eddy, 154 ll. 199 ; 40N. E.
482; Brown v. Brown, 167 Ill. 681; 47 N. E. 1046.
16 THE FORMATION OF CONTRACT.

tionally, not to take effect until some condition is fulfilled.
The deed is then said to be delivered in escrow, and is called
an escrow. The general rule in America is that a deed can-
not be delivered in escrow to the grantee! The English rule
was formerly the same,” but whether it is still in force seems
doubtful.

§ 38. Delivery in Blank.— The deed must be a complete in-
strument when delivered! This rule is frequently relaxed,
however, and deeds sustained, which, when delivered by the
maker, contained blanks.2. This relaxation of the rule rests
upon the doctrine of equitable estoppel, and ought therefore to
be applied only in cases where the grantee or obligee is ignorant
of the existence of a blank in the deed at the time of delivery.

§ 39. Informal Promises. — Beside the formal method of
making a promise by deed, the ways in which a promise can
be made are innumerable. If the promise is made in words, it
is said to give rise to an express contract. If the promise is
not made in words, the contract is said to be implied. There
is no legal difference, however, between a promise made by
words and one made by conduct. The difference is merely as
to the mode of proof! Any conduct which a reasonable man
would regard as implying a promise is so regarded by the law.
Certain special cases, however, require special explanation.

§ 37. 1 Stevenson v. Crapnell, 114 Ill.19; Ordinary v. Thatcher, 41
N. J. L. 403; K. 723; Dixon v. Bristol S. B., 102 Ga. 461; 31 S. E. 96.
But see Hollenbeck v. Hollenbeck, 185 Ill. 101; 57 N. E. 36. This was
the rule laid down in the early cases in New York (Braman v. Bingham,
26 N. Y. 483; Wallace v. Berdell,97 N. Y. 18); but this rule has recently
been restricted so that it applies only to deeds relating to real estate.
Blewitt v. Boorum, 142 N. Y. 357; 37 N. E. 119; K. 733. And see
Moore v. Farmers’, etc. Ass’n, 107 Ga. 199; 33S. E. 65.

2 Sheppard’s Touchstone, 59.

3 Leake, Contracts, 115; Anson, Contracts (Sth ed.), 53; Hudson »v.
Revett, 5 Bing. 887; K. 745.

§ 38. } Weeks v. Maillardet, 14 East, 568 (546, new ed.); K. 739;
Powell v. Duff, 3 Campb. 181; K. 744; Hibblewhite v. M’Morine,
6 M. & W. 200; Blacknall v. Parish, 6 Jones’ Eq. 70.

2 White v. Duggan, 140 Mass. 18; Phelps v. Sullivan, ib, 36; Cribben
v. Deal, 21 Or. 211; 27 P. 1046.

§ 39. 1 Heffron v. Brown, 155 Ill. 822; 40 N. E. 583.
THE PROMISE, OR ASSURANCE. 17

§ 40. Promise implied from Acceptance of Benefits. —Wlhien
one person renders services to another, or furnishes him with
goods, with the expectation of being paid therefor, and the
latter has reason to know that the former was acting with that
expectation, the acceptance of the goods or services amounts
to a promise by the party accepting them that he will pay the
reasonable value of such goods or services. Thus where the
plaintiff erected a party wall, partly on his ‘own land and
partly on that of the defendant, the court held that “if the
plaintiff undertook and completed the building of the wall with
the expectation that the defendant would pay him for it, and
the defendant had reason to know that the plaintiff was so
acting with that expectation, and allowed him so to act with-
out objection, then the jury might infer a promise on the part
of the defendant to pay the plaintiff.” ?

§ 41. Defendant's Inability to reject the Benefit conferred. —
If, however, the party benefited has no opportunity to reject
the services in question, it is clear that he cannot be said
to make any promise to pay for them. The Roman law
recognized a certain obligation quasi ex contractu in such
cases, but even such obligation is unknown to the common
law.!

Thus where services are rendered under an entire con-
tract which is abandoned by the plaintiff, the defendant’s
acceptance of what has been done is unavoidable, and his
promise to pay, therefore, cannot be implied from his accept- -
ance of such services.2. This doctrine is qualified in Wiscon-
sin ;% and its effect is modified in many American jurisdictions

§ 40. 1 Day v. Caton, 119 Mass. 513; K. 86; Pattee’s Cases on Con-
tracts, 190; Fogg v. Portsmouth Atheneum, 44 N. H.115; H. & W. 10;
Kiser v. Holladay, 29 Or. 838; 45 P. 759.

§ 41.1 Taylor v. Laird, 25 L. J. Ex. 829; Bartholomew v. Jackson, 20
Johns. 28; H. & W. 14; Sumpter v. Hedges, 1898, 1 Q. B. 678.

2 Cutter v. Powell, 6 T. R. 320; Forman v. The Ship Liddesdale,

1900, A. C. 190 (P. C.); Homer v. Shaw, — Mass. — ; 58 N. E. 160;
Gillis v. Cobe, — Mass. — ; 59 N. E. 455; Martin v. Massie, — Ala.
— 428 8. 31.

3 Hildebrand v. American Fine Art Co., — Wis. — ; 85 N. W. 268;

post, § 346.
2
18 THE FORMATION OF CONTRACT.

by the allowance of recovery for benefits conferred on equi-
table or quasi-contractual grounds.*

§ 42. Plaintiff's Expectation of Payment.— The plaintiff’s
expectation of payment is ordinarily presumed from the fact
of his conferring the benefit; and this presumption is not re-
butted by evidence of the poverty of the defendant.! If the
plaintiff has no such expectation, however, he cannot recover,?
unless, perhaps, the defendant did not know of the lack of
such expectation?

§ 43. Plaintiffs Expectation of other Reward than Payment.
— If the plaintiff confers a benefit upon the defendant, expect-
ing some other benefit than payment in return, the defendant
is not bound, by reason of his acceptance of such benefit, to pay
therefor, even though the plaintiff fails to obtain the reward
which he expected; unless, perhaps, the defendant did not
know that the plaintiff did not expect payment. Thus where
a woman rendered services to a man whom she expected to
marry, and upon the refusal of the man to marry her, brought
suit for the value of such services, she was not allowed to re-
cover.2. Her remedy in such a case must be for breach of the
contract to marry, if such a contract exists. The same rule
was applied where the plaintiff rendered services to the defend-
ant under the supposition that the latter had adopted her.

§ 44. Defendant’s Knowledge of Plaintiff's Expectation. — The
rule that the defendant is not bound to pay for goods unless
he accepts them with the knowledge, or with reason to know,
that the plaintiff expects to be paid for them is well illus-
trated by the case of Boston Ice Co. v. Potter. In that case

4 Gillis v. Cobe, supra ; Keener, Quasi-Contracts, 244 et seq.

§ 42. 1 Worthington v. Plymouth Co. R., 168 Mass. 474; 47 N. E. 403.

2 Johnson v. Boston & Maine R., 69 Vt. 521; 38 A. 267.

3 Thomas v. Thomasville Shooting Club, 121 N. C. 238; 28 S. E. 293.

§ 43. 1 Thomas v. Thomasville Shooting Club, 121 N. C. 238; 28
S. E. 293.

2 Lafontain v. Hayhurst, 89 Me. 388; 36 A. 623; Clary ». Clary,
93 Me. 220; 44 A. 921.

8 Graham v. Stanton, — Mass. — ; 58 N. E. 1028.

§ 44. 1123 Mass. 28; H. & W. 243; K.189. See also Boulton ov.
Jones, 2H. & N. 564; K. 187.
THE PROMISE, OR ASSURANCE. 19

A. had bought ice of B., but, becoming dissatisfied, had ceased
to deal with B., and had made a contract for ice with C.
Afterwards B. bought C.’s business without A.’s knowledge,
and kept on delivering ice to A. as C. had done previously.
When A. learned that the ice had been supplied by B., he re-
fused to pay for it, and the court sustained him in his refusal.
A. had accepted and used B.’s ice, and B. had expected to be
paid for it; but A. had no reason to know of B.’s expectation
when he consumed the ice, so that A.’s conduct did not amount
to a promise to pay B. for the ice.

§ 45. Plaintiffs Expectation of Payment from a Third Party.
—If the plaintiff expects, or if the defendant has reason to
think he expects, payment from some one else than the defend-
ant, the defendant is not liable! Thus where A. appeared in
a suit as attorney for the United States, with the expectation
of being paid for his services by private clients who were in-
terested in the suit, it was held that the allowance by the au-
thorities of the use of the name of the United States as plaintiff
created no liability on the part of the United States to pay
for the services rendered by A.?

§ 46. Defendant's Expectation of paying. — The general prin-
ciple upon which the defendant is held liable to pay for the
benefit which he accepts, is that his conduct was such as to
justify the plaintiff, as a reasonable man, in supposing that
the defendant intended to pay therefor. The conduct of the
defendant in inducing the plaintiff to expect payment from
him is just as much a promise to make such payment as if the
defendant had said, “I promise to pay.” The actual intention
of the defendant in making an express promise is immaterial.
If he promises to pay, the fact that he intends not to pay does
not release him from liability on his promise. The same prin-
ciple holds good though the promise is made by acts instead
of by words. If the defendant’s acts constitute a promise,
that is, if they induce the plaintiff as a reasonable man to
believe that the defendant by such acts assumes a legal liabil-
ity, the fact that the defendant did not intend to assume such

$45. 1 Price v. Hay, 132 Ill. 543; 24 N. E. 620.
2 Coleman v. United States, 152 U. S. 96.
20 THE FORMATION OF CONTRACT.

liability is immaterial... In New Hampshire, however, a differ-
ent view has been taken, and it has been held that the defend-
ant is not bound to pay for a benefit which he accepts from
the plaintiff, unless he actually expects to pay for such benefit,
though he has reason to know that the plaintiff expects pay-
ment therefor? ‘

§ 47. The Effect of the Family Relation upon Implied Prom-
ises. —The general presumption that the acceptance of a bene-
fit implies a promise to pay for it does not exist where the
person conferring the benefit is a member of the same family
with the person receiving it. In order that one member of a
family should have a claim against another for board furnished
or services rendered, it must appear that the circumstances °
were such as to entitle the person conferring the benefit to
believe that the other intended to assume a legal obligation to
pay for it. The family relation, not blood relationship, is
what overcomes the ordinary presumption in such cases?

§ 48. Summary of Rules governing Defendant’s Liability for
Acceptance of Benefits. — The foregoing rules as to the liabil-
ity of the defendant on an implied promise to pay for benefits
received may be summed up as follows: The plaintiff: must
show (1) the act for which he seeks, compensation ; (2) expec-
tation of payment;1 (8) from the defendant? on the part of the
plaintiff, or, at least, ignorance on the part of the defendant

§ 46. 1 See Day v. Caton, 119 Mass. 513; K. 86.

2 Clark v. Sanborn, 68 N. H. 411; 36 A. 14.

§ 47. } Waiker v. Taylor, — Col. — ; 64 P. 192; Walker v. Brown,
104 Ga. 857; 30 8. E. 867; Freeman v. Freeman, 65 Ill. 106; McGarvy
v. Roods, 73 Ia. 363; 85 N. W. 488; Arnold v. Wise, 37 S. W. 83
(Ky.); Cooper v. Cooper, 147 Mass. 870; 17 N. E. 892; Graham v. Stan-
ton, — Mass. — ; 58 N. E, 1023; Howe v. North, 69 Mich. 272; 37
N. W. 213; Bell v. Rice, 50 Neb. 547; 70 N. W. 25; Goodhart v.
Pennsylvania R., 177 Pa. 1; 85 A. 191; Dash v. Inabuiet, 53 S. C.382;
31 S. E. 297; Jackson v. Jackson, 96 Va. 165; 31 S. E. 78; Beale v.
Hall, 97 Va. 383; 34 S. E. 53; Cann v. Cann, 40 W. Va. 188; 20 S. E.
910; Bostwick v, Bostwick, 71 Wis. 273; 37 N. W. 405; Martin v.
Martin, — Wis. — ; 84 N. W. 439.

2 Wyley v. Bull, 41 Kans. 206; 20 P. 855; Thorp v. Bateman, 37
Mich. 68; Martin v. Martin, supra.

§ 48. 1 §§ 42, 43. 2§ 45.
THE PROMISE, OR ASSURANCE. 21

of the absence of such expectation ;® (4) knowledge of the
plaintiffs expectation, or reason to know thereof on the part
of the defendant, at the time the act was done;* (5) in New
Hampshire only, that the defendant expected to pay for the
plaintiff's act.6 These rules of contract are subject, however,
in some jurisdictions, to certain rules imposing a quasi-con-
tractual liability where no contract exists.®

§ 49. Business Circulars and Proposals. — It is clear that a
mere inquiry about the price of goods does not constitute a
promise to take any of the goods.1 Nor does the statement
that one holds property at a certain price amount to a promise
to sell the property at that price. Nor do business circu-
lars and advertisements as a rule constitute representations
that the party issuing them intends to incur legal liability
thereby. To draw the line, however, between statements
which do and those which do not amount to promises in the
legal sense is by no means easy.

§ 50. Offer and Solicitation of Order distinguished. — The
case of Moulton v. Kershaw ! illustrates the practical difficulty
which such cases present. In that case A. wrote to B. as
follows :—

“Dear Sir, —In consequence of a rupture in the salt
trade, we are authorized to offer Michigan fine salt, in full
car load lots of eighty to ninety-five bbls. delivered at your
city, at 85 c. per bbl., to be shipped per C. & N. W. R. R.
only. At this price it is a bargain, as the price in general
remains unchanged. Shall be pleased to receive your order.”

The plaintiff replied ordering 2,000 barrels of salt. The
court held there was no contract, construing A.’s letter “as
a simple notice to those dealing in salt that the defendants
were in a condition to supply that article for the prices
named, and requesting the person to whom it was addressed
to deal with them.”

2 § 42, 4944, 5 § 46,

6 See Keener, Quasi-Contracts, passim.

§ 49. 1 Ahearn v. Ayres, 88 Mich. 692.

2 Harvey v. Facey, 1893, A. C. 552; K. 207; Knight v. Cooley, 34

Ia. 218.
§ 50. 1 59 Wis. 316; 18 N. W.172; H. & W. 67; K. 199,
22 THE FORMATION OF CONTRACT.

§ 51. Vote of Corporation. — The vote of a committee
appointing an architect, which was not officially communi-
cated to the architect, has been held not to be an offer which
he could accept so as to bind the corporation;1 but the vote
of a corporation to purchase certain land ata certain price of
a certain person, though not addressed to any one, has been
held to be either an offer to the owner for the land, or an
acceptance of a previous offer made by him.?

§ 52. Auctions. — An announcement that an auction sale
of property will be held at a certain time and place does not
bind the owner of the property to put it up at auction.! If,
however, the property is actually put up at auction, and the
sale is without reserve, the auctioneer is bound to knock
-down the property to the highest bidder.? Only one bid is
necessary, in spite of a popular impression to the contrary.
Bidding for the property by the owner, or the employment of
by-bidders or puffers to bid for him, is therefore a fraud on
the highest bona fide bidder.t But the mere solicitation of
proposals for the doing of work,® or for the purchase of prop-
erty,® imposes no obligation on the solicitor to accept the
lowest bid for the work, or the highest bid for the property.

§ 53. Different Legal Situations in an Auction Sale. — In
the case of an auction it must be noticed that there are three
distinct acts on the part of the auctioneer. First, there is
the announcement of the sale. This announcement, as we
have just seen, gives rise to no legal obligation. Second,
there is the actual offer of the property forsale. This offer is
a promise to sell to the highest bidder, and the man who bids

§ 51. 1 Benton v. Springfield, etc. Association, 170 Mass. 584; 49 N. E.
928.

2 2 McManus v. Boston, 171 Mass. 152; 50 N. E. 607.

§ 52. 1 Harris v. Nickerson, L. R. 8 Q. B. 286.

2 Warlow v. Harrison, 1 E. & E. 295; Johnston v. Boyes, 1899,
2 Ch. 73.

8 Guinzburg v. Downs Co., 165 Mass. 467; 43 N. E. 195.

4 As to what constitutes frandulent puffing, see McMillan v. Harris,
110 Ga. 72; 85 S. E. 334.

5 Leskie v. Haseltine, 155 Pa. St. 98; 25 A. 886.

6 Spencer v. Harding, L. R. 5 C. P. 561; W. 470.
THE PROMISE, OR ASSURANCE. 23

the highest has furnished the consideration for the promise,
which thereupon is turned into a unilateral contract on the
part of the auctioneer to knock down the property to the
highest bidder.! Finally, the bidder in turn promises to
take the property at the price which he bid, and when the
auctioneer accepts his bid by knocking down the property
to him, we have a bilateral contract, consisting of mutual
promises, — on the one side to buy, on the other to sell.

§ 54. Time-tables.— The publication of time-tables by a
railway company has been held to amount to a promise that
the company will use due care and skill to transport its pas-
sengers punctually according to such time-tables.!

§ 55. Contracts limiting Liability of Bailees, Carriers, etc.—
A bailee who receives the goods of another has certain duties
imposed upon him by law with reference to the safe-keeping
of such goods. These duties, however, may be modified by
contract between the bailor and the bailee. So, too, the duty
of a common carrier to receive goods or passengers, and to
transport them to their destination, which exists independ-
ent of contract, may be modified by contract in like man-
ner. The most common mode in which a carrier or other
bailee attempts to limit his liability is by means of written
or printed stipulations contained in a ticket, bill of lading,
receipt, or other document which is given to the bailor,
shipper, or passenger. The effect of such a document has
often been considered by the courts, and the principles above
stated applied.

§ 56. Effect of Acceptance of Documents. — When a deed,
contract, receipt, ticket, or bill of lading is signed by the
person receiving it, this of course constitutes a promise by
the signer to be bound by the terms thereof, and this though
he does not read the document, and is ignorant of its terms.!

§ 538. 1 Warlow v. Harrison, 1 E. & E. 295; Johnston v. Boyes, 1899,
2 Ch. 73.

§ 54. 1 Gordon v. Manchester, etc. R. R. Co., 52 N. H. 596; Sears v.
Eastern R. R. Co., 14 Allen, 433,

§ 56. 3 Boylan v. Hot Springs R. R. Co., 182 U. 8. 146; 10 S. Ct. 50;
K. 30.
24 THE FORMATION OF CONTRACT.

When the person receiving the document does not sign it, he
is bound by its terms if he knows what they are. He is also
bound if he knows or has reason to know that he is receiving
a document containing the terms of a contract, and those
terms are reasonably brought to his notice; and this on the
ground that the person taking such document so acts as to
represent to the other party that he has looked at it and
read it, or is content to be bound by its contents without
ascertaining them.

§ 57. When the Voucher constitutes a Contract. — The
foregoing principles are clearly illustrated by the following
cases. A. deposits money in a bank, receiving a bank-book
containing a printed by-law of the bank. The by-law is
part of the contract of the bank with the depositor.

A. deposits his luggage with B. for safe keeping, receiving
a ticket, on the face of which, together with other writing,
are the words “subject to conditions on the other side.” A.
knows that there are conditions on the ticket, but does not
read them. A. is bound by the conditions of the ticket.?

A. deposits his luggage with B., receiving a ticket contain-
ing conditions on the back, with the words “See back” on
the face of the ticket. A. knows there is writing on the
ticket, but does not know that the writing contains condi-
tions. A. is bound by the conditions if he has reasonable
notice of them; and the question of reasonable notice is for
the jury. It has been held, however, that the fact that a
ticket is sold at a reduced rate is notice to the purchaser
that it contains special conditions, by which he is therefore
bound.+

A. accepts a ticket or receipt which shows on its face that
it contains the terms of a contract. A. is bound by the
terms of the document.’ The cases of Fonseca v. Cunard

§ 57. 1 Cosgrove v. Provident Inst., — N.J. L. — ; 46 A. 617.

2 Harris v. Great Western Ry. Co., 1 Q. B. D. 515.

8 Parker v. 8. E. Ry. Co., 2 C. P. D. 416; followed and approved in
Richardson v. Rowntree, 1894, A. C. 217.

* Watson v. Louisville, etc. R., 104 Tenn. 194; 56S. W. 1024.

5 Belger v. Dinsmore, 51 N. Y. 166; Fonseca v. Cunard S. S. Co., 153
Mass. 553; 27 N. E. 665; H. & W. 15; K. 35.
THE PROMISE, OR ASSURANCE. 25

8. S. Co.® and The Majestic’ should be compared on this
point. In both cases the ticket received was the ordinary
steamship ticket, which is a contract on its face. In the
latter case, however, the ticket was given to the passenger in
an envelope, and his attention was not called to the contract.
In the former case, therefore, the passenger was held bound;
in the latter, not.

§ 58. When the Voucher fails to constitute a Contract.
— When the document is received under such circumstances
that the party receiving it has no reason to suppose that it
contains the terms of a contract, such party is not bound by
its terms.! Therefore, where a receipt containing condi-
tions is delivered to a foreigner who cannot read English,
and who has no actual notice of the conditions, he is not
bound by them.?

This principle is often applied where a ticket purports
to be a mere voucher, and not a contract. For example, A.
purchases a railway ticket bearing on its face the words
“Dublin and Whitchaven.” On the back are certain condi-,
tions limiting the liability of the railway company. A.
knows nothing of the existence of the conditions. He is not
bound by them, because there is nothing on the face of the
contract to connect the words on the face with the conditions
on the back.

§ 59. Bills of Lading.—In the case of a bill of lading,
acceptance by the shipper of the bill of lading is construed
very differently by different courts. It is held, on the one
hand, that the custom of carriers to limit their liability by
stipulations and conditions contained in the bill of lading is
so universal that the consignor is bound to know that the
receipt or bill of lading may contain such conditions, and that

6 Supra.

7 166 U. S. 375. This seems an extreme case against the carrier.

§ 58. 1 Henderson v. Stevenson, L, R. 2 Sc. App. 470; Brown v.

Eastern R. RB. Co., 11 Cush. 97; Simons v. Great Western Ry. Co., 2 C. B.
N. 8. 620; Madan v. Sherard, 73 N. Y. 329; Blossom v. Dodd, 43 N. Y.

264.
2 Camden & Amboy R. R. Co. v. Baldauf, 16 Pa. St. 67.
3 Henderson v. Stevenson, supra; Brown v. Nastern R. R. Co, supra.
26 THE FORMATION OF CONTRACT.

his acceptance of such receipt or bill of lading is a represen-
tation that he assents to its terms.! Other courts hold, how-
ever, that the acceptance of the receipt or bill of lading by
the consignor is insufficient to bind him, unless he expressly
assents to the terms thereof, and this on grounds of public
policy. Says the United States Supreme Court, “Ii the
parties were on an equality in their dealings with each other,
there might be some show of reason for assuming acquies-
cence from silence; but in the very nature of the case this
equality does not exist, and therefore every intendment should
be made in favor of the shipper when he takes a receipt for
his property with restrictive conditions annexed, and says
nothing, that he intends to rely upon the law for the security
of his rights.” ?

§ 60. Written Contracts— The Parol Evidence Rule, —
Whenever the parties have reduced the terms of the contract
to writing, that writing is regarded as finally settling their
respective rights and obligations, and all preliminary nego-
tiations are merged in the contract.1 Evidence that the
writing did not constitute a completed contract is always
admissible; but ora] evidence to vary the terms of a written
contract can never be received at law.2 Such evidence is
admitted, however, in equity, but only in those cases where
it is offered to support or to oppose the exercise of the exclu-
sive jurisdiction of equity, as in cases where the reformation
or cancellation of a contract is sought.®

§ 59. ! Kirkland v. Dinsmore, 62 N. Y. 171; McMillan v. Michigan, ete.
R. R. Co., 16 Mich. 79, 114-116; Hutchinson on Carriers, § 240; Schal-
ler v. Chicago, etc. R., 97 Wis. 31; 71 N. W. 1042; Cox v. Vt. Central R.,
170 Mass. 129; 49 N. E. 97.

2 Railroad Co. v. Mfg. Co., 16 Wall. 318, 329; Chicago & Northwest-
ern R. v. Simon, 160 Ill. 648; 43 N. E. 596.

§ 60. 1 Van Ness v. Washington, 4 Pet. 232; Potomac Stbt. Co. v.
Upper Potomac Stbt. Co., 109 U.S. 672; 35S. Ct. 445; 4 S.Ct. 15; Parish
v. United States, 8 Wall. 489; Van Weel v. Winston, 115 U. S. 228; 6 S.
Ct. 22; Ins. Co. ». Mowry, 96 U. S. 544.

2 Oelricks v. Ford, 23 How. 49; Ins. Co. v. Mowry, supra; Seitz v.
Brewers’, etc. Co., 141 U. 8. 510,

3 Leake, Contracts, 157, 158; Conner v. Groh, — Md. — ; 45 A.

1024; Knowlton ». Campbell, — W. Va. — ; 878. E. 581; Russell v.
Russell, — N. J. Eq. — ; 47 A. 387.
THE PROMISE, OR ASSURANCE, 27

§ 61. Parol Evidence Rule not a Rule of Evidence. — Pro-
fessor Wigmore has shown clearly that the “parol evidence ”
rule is not a rule of evidence at all, but a rule of substantive
law governing the formation of contracts. He puts this con-
clusion on three grounds: first, that the rule merely forbids
certain things to be proved at all, and therefore does not
concern doctrines of evidence; second, that the rule cannot
be tested by the oral nature of the facts to be proved; and,
third, that there is no one rule on the subject.!_ The sound-
ness of this conclusion is well established by a recent deci-
sion in Pennsylvania. The parol evidence rule does not
prevail in Pennsylvania, but the courts of that State treat
the rule as part of the substantive law of the contract, and
governed by the law of the place of performance.? If the
rule were really a rule of evidence, the lex fori, or the law of
Pennsylvania, would govern its application in a Pennsylvania
court.

§ 62. What constitutes a Written Contract. —-It is suffi-
cient that the terms of the contract have been reduced to
writing in order that the rules governing written contracts
should apply: it is not necessary that the writing should be
signed.!' On the other hand, if the writing does not contain
all the terms of the contract, the rules governing written con-
tracts do not apply. It has been held that where an offer was
made by mail and accepted by telegram, the offer and accept-
ance constituted a parol, and not a written contract; but this
seems unsound.?

§ 63. Connected Writings. — Writings which are suffi-
ciently connected with each other may be regarded as con-
stituting a written contract.1 The connection must be
established by a reference in one writing to the other writ-
ing which it is sought to connect with the first.2, If there is

§ 61. 1 Greenleaf on Evidence (16th ed.), I. § 805 a.

2 Musser ov. Stauffer, 192 Pa. 898; 48 A. 1018.

§ 62. 1 Hotson v. Browne, 9 C. B. n. 8. 442.

2 Trench v. Hardin County, ete. Co., 168 Ill. 135; 48 N. E. 64.
§ 63. 1 Lake View v. MacRitchie, 134 Ill. 203; 25 N. E. 663.
2 Brown v. Langley, 4 M. & G. 466.
28 THE FORMATION OF CONTRACT.

any ambiguity in such reference, oral evidence is admissible
to identify the writing referred to.®

§ 64. Oral Evidence to disprove the Contract. — Where
negotiations are carried on by correspondence, and the con-
tract has to be gathered from different letters, everything
that passed between the parties must be taken into consider-
ation. It follows, therefore, that where two letters seem on
their face to constitute a complete contract, it may still be
shown that these letters did not constitute a contract, and
that. other terms not mentioned in the letters were to be
agreed on subsequently.’ Evidence of subsequent negotia-
tions has been received to show that a contract apparently
completed by correspondence was not regarded as finally
settled by the parties.?

§ 65. Oral Evidence to show Conditional Execution of the
Instrument. — Oral evidence is admissible not only to show
that a writing is not, as it purports to be, a contract, but
also that it was executed conditionally, to be binding only
on the happening of a certain event.?

§ 66. Oral Evidence of Collateral Agreements. — Oral evi-
dence of a collateral agreement is admissible, provided such
collateral agreement does not contradict the terms of the
written contract.* .

§ 67. Agreement for Future Contract. — Persons often agree
to enter into a contract in the future, and the question then
arises whether such agreement is in itself a contract. If the

3 Oliver v. Hunting, 44 Ch. D. 205; Ridgway v. Wharton, 6 H. L. C.
238; Beckwith v. Talbot, 95 U. S. 289.

§ 64. 1 Hussey v. Horne-Payne, 4 A. C. 311.

2 Bristol Aérated Bread Co. v. Maggs, 44 C. D. 616.

§ 65. } Wallis v. Littell, 11 C. B. n. s. 369; Moore v. Campbell, 10 Ex.
323; Ware v. Allen, 128 U. S. 590; 9S. Ct. 174; Reynolds v. Robinson,
110 N. Y. 654; 18 N. E. 127; H. & W. 502; Wadsworth v. Warren, 12
Wall. 307; Burke v. Delaney, 153 U. S. 228; Greenleaf on Evidence (16th
ed.), I. $§ 284, 305 c.

§ 66. } Angell v. Duke, L. R. 10 Q. B. 174; Thompson v. Ins. Co., 104
U. 8. 252; Rackemann »v. Riverbank, etc. Co., 167 Mass. 1; 44 N. E. 990.
As to what is collateral, see Seitz v. Brewers’, etc. Co., 141 U. S. 510;

Johnson v. St. Lonis, etc. R., 141 U. S. 602; Greenleaf on Evidence (16th
ed.), I. §§ 281, 305 f.
THE PROMISE, OR ASSURANCE. 29

agreement leaves any essential terms of the future contract
to be determined, the agreement itself is not a contract.?
So if any party who is to join in the agreement is not bound
thereby ;? at least, if the omission is apparent on the face of
the instrument.’ So if the agreement shows that it was not
intended to be binding until a formal contract had been ex-
ecuted.* The fact that the agreement refers to a contract
to be drawn up in the future does not show conclusively that
the parties did not intend to bind themselves until the formal
contract was signed, although the fact that such formal con-
tract was to be drawn up is evidence of the invalidity of the
informal agreement.> Whether the informal agreement is
binding or not is to be determined by the apparent intention
of the parties in each case, taking all the circumstances into
consideration.®

§ 68. Necessity of Contractual Capacity.— An act which
would otherwise impose obligation on the party doing it
may fail to cause such obligation on account of the personal
status of such party. The person whose acts thus fail to
produce their normal result is said to lack contractual
capacity.

§ 69. Contractual Capacity of Married Women. — Married
women at common law had in general no contractual capacity,
and therefore could not incur any contractual obligation.*

§ 67. 1 Sibley v. Felton, 156 Mass. 273; 31 N. E. 10; Shepard v. Car-
penter, 54 Minn. 153; 55 N. W. 906; K. 204; Page v. Norfolk, 70 L. T.
781; K. 210.

2 Strobridge Lithographing Co. v. Randall, 43 U. 8. App. 160; 73 F.
619; Dole Bros. Co. v. Cosmopolitan, etc. Co., 167 Mass. 481; 46 N. E.
105; State Bank v. Burton-Gardner Co., 14 Utah, 420; 48 P. 402.

8 Sullivan County v. Ruth, — Tenn. — ; 59S. W. 188.

4 Eads v. Carondelet, 42 Mo. 118; Page v. Norfolk, supra; Winn »v,
Bull, 7 C. D. 29.

5 Ridgway v. Wharton, 6 H. L. C. 238; Wharton v. Stoutenburgh, 35
N. J. Eq. 266; Allen v. Chouteau, 102 Mo. 309; 148. W. 869; Crossley
v. Maycock, L. R. 18 Eq. 180; K. 217.

6 Sanders v. Pottlitzer Bros. Fruit Co., 144 N. ¥. 209; 89 N. E.75;
K. 226; and cases supra.

§ 69. | Sheppard v. Kindle, 8 Humph. 80; Woodr. 71; Foster v. Wil-
cox, 10 R. I. 443 ; Woodr. 72.
30 THE FORMATION OF CONTRACT.

Exceptions to this rule existed in the case of the wife of
the king of England; of the wife of a man civiliter mortuus ;?
in the case of contracts touching separation and divorce;
and by the custom of London in the case of a married woman’s
trading contracts.®

§ 70. Equitable Separate Estate of Married Woman. — In
equity a married woman could bind her equitable separate
estate by an act showing her intention to do so. She could
not bind herself personally, nor did her engagements create
a charge upon her estate. The peculiar character of a mar-
ried woman’s separate estate has led to the suggestion that
the separate estate “may be regarded as an artificial person
created by courts of equity, and represented by the beneficial
owner as an agent with full powers, somewhat in the same
way as a corporation sole is represented by the person consti-
tuting it for the time being.” * The power of married women
to make contracts has everywhere been enlarged by legisla-
tion, so that their legal status must be determined in every
case from the statute-book.

§ 71. Contractual Capacity of Infants. — According to some
authorities, an infant’s contracts are void if they are neces-
sarily prejudicial to him. The better view, however, as we
shall see later, is that an infant’s contracts are voidable,
and not void; that his acts may give rise to contractual
obligation, although such obligation may be imperfect.}

§ 72. Contractual Capacity of Lunatics, Drunkards, and
Spendthrifts. — The establishment by judicial proceedings of
the fact that a person is a lunatic, a drunkard, or a spend-
thrift destroys the contractual capacity of that person in
most jurisdictions.?

It is sometimes held that the contract is void where one of

2 That is, an outlaw, a convicted felon, or one “ professed in religion.”
Anson, Contracts (4th ed.),117. For a local exception in case of deser-
tion, see Gregory v. Pierce, 4 Met. 478; Woodr. 73.

3 Anson, Contracts (8th ed.), 122, 123.

§ 70. 1 See Pollock, Contracts, Appendix C, where the subject is fully
discussed.

§ 71. 1 Post, § 402,

§ 72. 1 Post, § 407.
THE PROMISE, OR ASSURANCE. 31

the parties has been deprived of his reason by drunkenness.?
The better view, however, appears to be that mere lack of
mental capacity renders a contract voidable only in any
case.

§ 73. Contractual Capacity of Corporations. — Corporations
are sometimes said to have no capacity to make contracts not
authorized by their charters. It seems’ more reasonable,
however, to say that the invalidity of ultra vires contracts
is due to a rule of public policy making such contracts
illegal, and not to want of capacity on the part of the
corporation.’

2 Hunter v. Tollard, — W. Va. — ; 34S. E. 787.

3 Post, § 408, 409.

§ 73. 1 St. Louis, V. & T. H. R. v. Terre Haute, etc. R., 145 U. S, 393;
14 Harv. Law Rev. 3382.
32 THE FORMATION OF CONTRACT.

CHAPTER III.

THE PROMISEE’S CONDUCT — GENERAL RULES.

§ 74. — Reasonableness of Promisee’s Conduct. — One funda-
mental principle of contract law is that the party who main-
tains that the act of another has resulted in a contract must
show that he himself had a right, as a reasonable man, to
suppose that the other party intended to assume legal respon-
sibility for such act.

§ 75, Jests and Social Engagements. — It follows, therefore,
that mere social engagements, and promises made in jest,!
cannot result in legal obligation. No reasonable man would
suppose that a friend who accepted an invitation to dinner
intended to assume legal liability in case of a failure to keep
his engagement.

§ 76. Inherent Impossibility.— No reasonable man would
suppose that a promise to do a thing in its nature impossible
was intended to create legal liability. Whether the impossi-
bility be physical, as in the case of a promise to go to the
moon, or legal, as in the case of a promise to discharge a
man from an obligation to a third person, is of no conse-
quence. A promise to do an impossible thing cannot in any
case impose any obligation to do that thing, but if the
impossibility is natural or legal, no responsibility whatever
can attach to such a promise; while if the thing is not in its
nature impossible, the promise may impose liability for its
non-fulfilment.*

§ 75. ! Theiss v. Weiss, 166 Pa. St.9; 31 A. 63; Keller v. Holderman,.
11 Mich. 248; K. 1.

§ 76. 1 «I think it is not competent to a defendant to say that there
is no binding contract merely because he has engaged to do something.
which is physically impossible. I think it will be found in all the cases
where that has been said that the thing stipulated for was, according to
THE PROMISEE'S CONDUCT— GENERAL RULES. 33

§ 77. Execution of Written Instruments. — The law in
regard to the execution of written instruments illustrates
elearly the general principle that an act will give rise to
contractual obligation only when the other party had a right
to assume that the party acting intended to assume legal
responsibility for such act. Thus, where an illiterate man
executes a deed, it has been held for centuries that he is
bound only by that part of the deed which is read to him.?
And if the deed is falsely read to him, his act in signing,
sealing, and delivering the instrument does not make it his
deed.2 The same rule holds in the case of a blind man,? or
of one who has no opportunity to read for want of spec-
tacles,* or of one who is unable to read the language of the
contract.° Nor does it make any difference whether the con-
tents of the deed are misrepresented by the other party or by
a stranger.®

§ 78. Effect of Ability to read.—Ifa man can read, how-
ever, he is bound by the instrument which he executes with-

the state of knowledge of the day, so absurd that the parties could not be
supposed to have so contracted.” Brett, J., in Clifford v. Watt, L. R.
5 C. P. 577; W. 19; K. II. 1751. For a further discussion of the sub-
ject of Impossibility, see post, § 264.

§ 77. 1 Year Book, 14 H. VIII. 28, 26.

2 Thoroughgood’s Case, 2 Co. Rep. 96; Rockford, etc. R. R. Co. v.
Shumiels, 65 Ill. 223; Schuylkill County v. Copley, 67 Pa. St. 386; Stacy
v. Ross, 27 Tex. 3; Davis v. Snider, 70 Ala. 315; Sibley v. Holcomb, —
Ky. — ; 47S. W. 765.

8 Shulter’s Case, 12 Co. Rep. 90.

4 Simons v. Great Western Ry. Co., 2 C. B. nN. 8. 620.

5 Pioneer Cooperage Co. v. Romanowicz, 186 Ill. 9; 57 N. E. 864.

6 Thoroughgood’s Case, supra; Schuylkill County v. Copley, supra.
In Hawkins v. Hawkins, 50 Cal. 558, the court held that an illiterate per-
son was bound by a contract which he signed, though its contents were
misrepresented by the opposite party. This case seems unsound, and
opposed to the current of authority from Thoroughgood’s Case down.
The better view is, that the burden of proof is on the party who seeks to
establish the execution of a written instrument by an illiterate person, to
show that the illiterate understood the contents of the instrument. Sel-
den v. Myers, 20 How. 506; Suffern v. Butler, 18 N. J. Eq. 220; Skym v.
Weske Co., — Cal. — ; 47 P. 116; Meyer v. Haas, 126 Cal. 560; 58 P.
1042.

3
34 THE FORMATION OF CONTRACT.

out reading.! And one who cannot read is bound by his
signature to a document which he does not ask to have
read.2 In both these cases the act of the party who executes
the instrument sufficiently signifies his intention to be
bound by it, and the actual state of his mind is therefore
unimportant.

If a man can read, his act in executing a written contract
is sufficient to establish a contract between the parties, even
though the document has been misread to him. The con-
tract in such a case may or may not be voidable, but it is
not void.3

If, however, any trick or artifice is used to prevent the
person who signs the document from reading it, the instru-
ment is null and void; as where another instrument is sur-
reptitiously substituted for the one which the signer intends
to execute.

§ 79. Contracts void and voidable for Fraud, — The ques-
tion of the liability of a person who signs a contract without
knowing its contents has been rendered unnecessarily confus-
ing by the loose use of the word “fraud.” A man is not
bound by a contract which he is induced to sign by the
fraudulent misrepresentation of the other party,? or of a third

§ 78. 1 Black v. Wabash, etc. Ry. Co., 111 Il. 851; Maine Mut.
Marine Ins. Co. v. Hodgkins, 66 Me. 109; Sanger v. Dun, 47 Wis. 615;
3 N. W. 388; Bishop v. Allen, 55 Vt. 423; Goetter v. Pickett, 61 Ala.
387; Royston v. Miller, 76 F. 50; Liska v. Lodge, 112 Mich. 685; 71
N. W. 171; State N. B. v. Butler, 149 Ill. 575; 386 N. E. 1000. .

2 Hallenbeck v. Dewitt, 2 Johns. 404; Pennsylvania R. R. Co. v. Shay,
82 Pa. St. 198; Weller’s Appeal, 103 Pa. St. 594. And see Watson v.
Louisville, etc. R., — Tenn. — ; 56S. W. 1024.

3 Seeright v. Fletcher, 6 Blackf. 380; Hazard v. Griswold, 21 F. 178 ;
Robinson v. Glass, 94 Ind. 211; Condon v. Rice, 88 Md. 720; 44 A. 169;
cf. Kingman v. Reinemer, 166 Ill. 208; 46 N. E. 786.

4 Foster v. Mackinnon, L. R. 4 C. P. 704; K. 8; Champion v. Ulmer,
70 Ill. 322; Van Valkenburgh v. Rouk, 12 Johns. 338.

§ 79. 1 Horschfeld v. London, ete. Ry. Co., 2Q. B. D.1; Blissv. N.Y.
etc. R. R. Co., 160 Mass. 447; 36 N. E. 65; Shrimpton v. Netzorg, 104
Mich. 225; 62 N. W. 343; Woodbridge v. De Witt, 51 Neb. 98; 70N. W.
506; Richelieu Hotel Co. v. Military, etc. Co., 140 Ill. 248; 29 N. E.
1044.
THE PROMISEE’S CONDUCT—GENERAL RULES. 385

person by the contrivance of the other party,? it is true.
Such contract is voidable on the ground of fraud. Where,
however, some trick is used to substitute another instrument
for the one he intends to sign, his signature has no legal
effect, and there is no contract whatever, not because the
other party was guilty of fraud, but because the person who
perpetrated the fraud knew that the other party had no in-
tention of executing the instrument in question. The latter
kind of fraud is often called fraud affecting the execution of
the contract.

§ 80. Reasons for Rules governing the Execution of Instru-
ments. — Although the rules just given are the same whether
one executes a deed or an ordinary written contract, the
reason for the existence of the rules varies according as the
instrument is or is not a deed. The binding force of a deed
results from its delivery. Now delivery is a matter of inten-
tion. If A. intends to deliver a certain deed, it is his deed,
no matter what his idea of its contents may be; but if he does
not intend to deliver the deed, but some other piece of paper,
the instrument he actually delivers is not his deed. In the
case of a simple contract, however, the only reason that the
writing is binding when it fails to express the intention of
the party is because the writing is regarded as settling the
terms of the contract, so that oral evidence is inadmissible
at law to show that the real agreement of the parties was not
that which the writing sets forth. In both cases, if one party
has no reason to suppose that the other intends to execute the
instrument, the apparent execution has no effect; and in both
cases, if one party has good reason to suppose that the other
intended to execute the instrument, the instrument is the act
of the party executing it, regardless of any fraud that may
have been perpetrated on the signer. Fraud, in such cases,
. renders the act in question voidable; lack of reason to
suppose the existence of an intention to execute the instru-
ment renders the act void.

2 Robinson v. Glass, 94 Ind. 211; Archer v, California Lumber Co., 24
Or. 341; 33 P. 526.
36 THE FORMATION OF CONTRACT,

§ 81. Rights of Third Parties may be Superior to those of
Promisee. — The foregoing rules as to the execution of written
instruments apply where the parties to such instruments are
concerned. The rights of third parties in such cases are
governed by other principles. In the case of ordinary con-
tracts, other parties may acquire rights by estoppel; in the
case of negotiable instruments, they may be given rights by
the law merchant.

§ 82. Acceptance of Deeds. — The common law rule, as we
have seen, is that delivery of a sealed instrument makes it a
deed. To the requirement that the deed must be delivered
many American courts have added the requirement that it
must be accepted by the grantee or obligee. The English
rule is, “If A. make an obligation to B., and deliver it to
C., this is the deed of A. presently. But if C. offers it to B.,
then B. may refuse it in pais, and thereby the obligation will
lose its force.” ! The deed takes effect when it is completely
executed, even though it remains in the possession of the
maker, or of a third party,2, Some of the American courts
follow the common law rule ;® others assert that the acceptance
of the deed by the grantee or obligee is essential to its valid-
ity.* It is often said the assent of the grantee or obligee to
the deed will be presumed if the deed is beneficial to him;®
but it is not very clear whether this presumption of acceptance
is a presumption of fact, from which the jury may or may not
infer the acceptance of the deed; or whether it is a disputable
presumption of law, enabling the party setting up the deed to
dispense with evidence of an actual acceptance, but allowing
the opposite party to defeat the deed by showing that there

§ 82. 1 Butler and Baker’s Case, 3 Co. Rep. 265.

* Xenos v. Wickham, L. R. 2H. L. 296; K. 703; Roberts v. Security
Co., 1897, 1 Q. B. 111.

8 Jones v. Swayze, 42 N. J. L. 279; Schlicher v. Keeler, — N. J. Eq.
— ; 48 A, 398.

4 Welch v. Sackett, 12 Wis. 243; Derry Bank v. Webster, 44 N. H.
264 ; Meigs v. Dexter, 172 Mass. 217; 52 N. E. 75; Stallings v. Newton,
— Ga. — ; 3658. E. 227.

5 Dale v. Lincoln, 62 Ill. 22; Whitney v. Hale, — N. H. — ; 30 A.
417.
THE PROMISEE’S CONDUCT—GENERAL RULES. 87

has never been any acceptance in fact;® or whether it is a so-
called conclusive presumption of law, making such a deed
binding without acceptance. Acceptance is necessary in any
case to charge the grantee or obligee with any obligation
under the deed.’

§ 88. Reasons for requiring Acceptance of Deeds, — The
idea that acceptance of a deed is necessary to charge the
maker comes from the notion that the validity of a deed rests
on the mutual assent of the parties thereto. As has already
been shown, the importance of a deed was due originally to
the rule of evidence that a party was bound by all statements
and promises therein contained. The theory that mutual
assent had any connection with the making of a deed was
unknown to the common law. The requirement of delivery,
originally unnecessary, was added in order to make the deed
what it purported to be, the act and deed of the party bound
by it. The theory that acceptance is necessary ignores the
historical development of the contract under seal as a formal
contract, dependent solely upon its execution for its valid-
ity. The advocates of this theory have attempted to. turn
the formal contract of English law into the consensual con-
tract of the Roman law, which has no place in English
jurisprudence.? In order to force an English obligation
into a Roman classification it has been necessary to set
up the extremely artificial idea that a deed is not a con-
‘tract until it is accepted, but only “an offer which cannot
be withdrawn.” In reality the rule that acceptance of a
deed is necessary is a striking instance of the modern
tendency toward a unification of the theories of formal and
of simple contracts, which have been in the past entirely
distinct.?

6 Atwood v. Marshall, 52 Neb. 173; 71 N. W. 1064; Holmes v. Mc-
Donald, 119 Mich. 563; 78 N. W. 647; Stallings v. Newton, — Ga. — ;
86 S. E. 227.

7 Blass v. Terry, 156 N. Y. 122; 50 N. E. 958.

§ 83. 1 Hare on Contracts, 86.

2 For a further discussion of this matter, see Pollock, vol. 29, Revised
Reports, preface.
388 THE FORMATION OF CONTRACT.

§ 84. The Promisee’s Conduct in Simple Contracts. —
Simple contracts always require that both parties shall act
in creating the contractual obligation. A simple contract
results from a primary act by one party, and a secondary act
by the other. The primary act is always a promise, or,
more accurately, an assurance. The secondary act consti-
tutes the consideration for the promise, and makes it bind-
ing. The requirements of the promise have already been
discussed, and the general rules governing the conduct of
the promisee. We pass now to the discussion of the partic-
ular act of the promisee which turns an offer into a simple
contract, —the consideration.
THE PROMISEE’S CONDUCT — THE CONSIDERATION. 89

CHAPTER IV.

THE PROMISEE’S CONDUCT — THE CONSIDERATION.

§ 85. Origin of the Doctrine of Consideration. — The doc-
trine of consideration has played so important a part in the
English law of contract that consideration is often spoken
of as an essential element of contract. In order to recon-
cile the idea that consideration is essential to a contract
with the well-known rule of law that a contract under seal
is binding without regard to there being a consideration
therefor, it has often been asserted that a seal “imports a
consideration,” or “is conclusive evidence of a considera-
tion.” Such statements are misleading as to the very nature
of a sealed instrument. They serve, however, to illustrate
a very common tendency among lawyers. This is a tendency
to assume the existence of some general rule much broader
than the actual law; and thus to account for the actual rules
of law by fictitious reasoning. It has been the rule for ages
that the evidence afforded by a deed can only be overcome
by evidence of an equally high character.t| The fact that a
man has bound himself by deed is conclusive evidence that
he is bound, not that he received a consideration for his
promise. Nevertheless, so wide-spread is the idea that there
is areal connection between the seal and the doctrine of con-
sideration, that statutes have been passed in New York and
other States, providing that a seal “shall be only presump-
tive evidence of a consideration.” The effect of such stat-
utes is to change, not a rule of evidence, but the very nature
of contracts under seal. A specialty is binding by reason of
its form; a promise not under seal only by virtue of some

§ 85. 1 Post, Appendix II.
"2 .N. Y. Code, § 840; Wilbur v. Warren, 104 N. Y. 192.
40 THE FORMATION OF CONTRACT.

consideration. The New York statute has the effect of
making all contracts depend for their validity upon the
existence of some consideration.

§ 86. Sources of the Idea of Consideration.—- The rule
that a simple contract requires a consideration has three
distinct sources. These are the action of debt and the action
of assumpsit in the common law courts, and the peculiar
doctrines governing the courts of equity in their administra-
tion of equitable relief.

§ 87. Consideration in Debt — Quid pro quo. — In the
action of debt, a quid pro quo was necessary in all cases
where the debt was not proved by a record or by a charter.!
This guid pro quo was the benefit conferred upon the defend-
ant by the plaintiff at the time of the creation of the debt
and was in fact the cause of the debt, which was regarded as
arising rather from the receipt of the benefit than from the
promise to pay for it. In this respect debt resembled the
contract re of the Roman law, in which the transfer of
property gave rise to an obligation. Consideration, as the
quid pro quo came to be termed, always meant in the ac-
tion of debt a benefit conferred by the plaintiff upon the
defendant.

§ 88. Consideration in Assumpsit — Detriment. — In the
action of assumpsit we find an entirely different idea of con-
sideration. The chief root of the modern action of special
assumpsit was the action on the case for deceit.1 In this
action the plaintiff alleged that the defendant had made him
a promise or representation, intending to deceive him, and
that, relying on that promise or representation, he, the plain-
tiff, had incurred some detriment. Originally this detri-
ment meant parting with money or property, or performing
services; but it was finally extended to cases where the only
detriment incurred by the plaintiff consisted in the fact that
he had bound himself to the defendant by mutual promises.

In indebitatus assumpsit, the antecedent debt was treated
as a sufficient consideration to support the promise to pay it.

§ 87. 1 Post, Appendix IT.
§ 88. 1 Post, Appendix II.
THE PROMISEE’S CONDUCT— THE CONSIDERATION. 41

When the promise, however, came to be held unnecessary,
indebitatus assumpsit lost its original character as a true con-
tractual action, and stood practically on the same footing as
debt.?

§ 89. Consideration in Equity — Good and Valuable Con-
sideration. —In equity peculiar doctrines of consideration
prevailed. Two kinds of consideration were here recog-
nized, — good consideration, which meant relationship within
certain degrees of consanguinity, and valuable consideration,
which was,the consideration recognized in the common law
courts, and meant some benefit to the promisor or some
detriment to the promisee. A court of equity would never
enforce a contract unless there were a good or valuable con-
sideration therefor; while the common law courts knew
nothing of good consideration, and did not require any con-
sideration for contracts under seal.

§ 90. Consideration and Causa. — The equitable doctrine of
consideration somewhat resembled the Roman law theory of
causa, by which the chancellors may have been influenced.
Causa, like consideration in equity, meant a sufficient legal
reason for enforcing a promise, without which a promise
was called nudum pactum. What is such a sufficient reason
is a question of positive law. Liberality in the Roman law
was a sufficient causa, as relationship was a good considera-
tion in equity for a covenant to stand seised to the use of
another. Good consideration in equity, however, did not
make a contract binding which was not binding at law; it
merely rendered a covenant to stand seised enforceable by a
court of equity, which would raise a use upon such a covenant
only where there was such consideration.

§ 90 a. Necessity of Consideration. — It was not until 1778
that the requirement of consideration for simple contracts
was definitely established. Not long before that Lord Mans-
field had held that a promise in writing was binding without
consideration, saying that the ancient notion about the want
of consideration was for the sake of the evidence only, and

2 Post, Appendix II.
§ 90. 1 Langdell, 1 Harv. Law Rev. 367.
42 THE FORMATION OF CONTRACT.

.did not apply to promises in writing. In Rann v. Hughes,?
however, the House of Lords overruled Lord Mansfield’s
decision, holding that all contracts were either by specialty
or by parol, and that for all promises not under seal a con-
sideration was necessary.

Consideration, which is now used to mean valuable con-
sideration only, is of two kinds, one antecedent, the other
subsequent to the promise which it supports. Any pecuniary
obligation will suffice for an antecedent consideration. Con-
sideration is more commonly used, however, to denote sub-
sequent consideration only, and it will be used in that sense
hereafter unless otherwise specified.

§ 91. Definition of Consideration. — Consideration has gen-
erally been defined as a benefit to the promisor or a detri-
ment to the promisee. What connection is there between
benefit to the promisor and detriment to the promisee - that
‘gives rise to such a definition in -the alternative? The
answer to this is found in the two common law sources of
the doctrine of consideration, the action of debt and the
action of assumpsit. The quid pro quo in debt was a benefit
to the debtor, while the origin of the defendant’s liability in
assumpsit was that the plaintiff had been induced to act in
reliance upon his promise. The consideration of assumpsit,
or the detriment to the promisee, is the consideration upon
which our modern theories of simple contracts are based.?

The “detriment to the promisee ” which constitutes a con-
sideration, is not necessarily a detriment at all; it is simply
the surrender of a legal right. So long as a legal right is
surrendered, there is a sufficient consideration, although the
surrender of that right may be of no value to the other party,
and may actually benefit the party surrendering such right.
In fact, any act which constitutes a change of the legal posi-
tion of the promisee may be a valid consideration. The only

§ 90a. 1 1 Pillans v. Van Mierop, 3 Burrow, 1663; L. 177; K. 824.

27 T. R. 350, note a; L. 187; K. 336.

§ 91. 1 Rucker v. Bolles, 49 U. S. App. 358; 80 F. 504; Riegel v.
Osrmby, — la. — ; 82 N. W. 482; Elmer v. Loper, — N. J. L. —;
48 A. 550.
THE PROMISEE’S CONDUCT—THE CONSIDERATION. 43

limitations upon this rule appear to be those imposed by
public policy.2. Professor Ames accordingly defines consid-
eration as “any act or forbearance given in exchange for a
promise.”

Perhaps the most accurate definition of consideration that
can be given is this, “any act or forbearance called for and
induced by the promise.” This definition emphasizes that
causal relation between the promise and the consideration
which is always essential.8

The following examples will show what an infinite variety
of things may constitute consideration.

§ 92. Instances of Consideration. — The surrender of a doc-
aament is a sufficient consideration, though that document
be a written instrument of no legal value.’ The holder of
the document is under no legal obligation to part with it;
hence his parting with it is a surrender of his legal right to
keep it.

Permission to the promisor to weigh certain boilers be-
longing to the promisee is a sufficient consideration for a
promise, the surrender of possession by the promisee being
the surrender of a legal right.?

The execution of a release of land to which the promisee
has no title is a sufficient consideration; the promisee is not
bound to execute the release.

A release from a contract within the Statute of Frauds is
a good consideration.+*

The naming of the promisee’s child after the promisor is
a sufficient consideration, the promisee having the right to
give the child any name.®

A promise to pay asum claimed to be due by one party,
and denied by the other, if the claimant will swear to the

2 12 Harv. Law Rev. 67.

3 Post, Appendix I.

§ 92. 1 Haigh v. Brooks, 10 A. & E, 323; L. 210; K. 351; Judy v.
Louderman, 48 Ohio, 562; 29 N. E. 181.

2 Bainbridge v. Firmstone, 8 A. & E. 748; L. 209; K. 350.

3 Sykes v. Chadwick, 18 Wall. 141.

4 Merchant v. O’Rourke, — Ia. — ; 82 N. W. 759.

5 Wolford v. Powers, 85 Ind. 294.
1

44 THE FORMATION OF CONTRACT.

correctness of the claim, is binding if the promisee takes the
required oath, since he is under no legal obligation to do so.®

It is of no consequence that the promisee is benefited by
the act that constitutes the consideration. Thus, where the
defendant’s testator promised the plaintiff to pay the plain-
tiff’s expenses if he would take a trip to Europe, the incur-
ring of the expense of such a trip was held a sufficient
consideration for the promise.’

So a promise to pay another a certain sum of money if he
will abstain from the use of liquor and tobacco for a given
time is binding in favor of the party who so abstains.® A
man has a legal right to use liquor and tobacco, and his
abstinence amounts to a surrender of that right.

§ 93. Further Instances of Consideration.— The surrender
by a mother of her illegitimate child is a good consideration
for a promise by the father to support the child.?

A promise to come to another’s funeral is a sufficient
consideration to support a counter-promise.?

A promise to attend college for four years is a good con-
sideration.$

A most interesting question as to the sufficiency of consid-
eration arose in Carlill v. Carbolic Smoke Ball Co.* In that
case the defendants, proprietors of a “Carbolic Smoke Ball,”
advertised in a newspaper, offering a reward of £100 to any
person who should contract influenza after having used the
ball for two weeks. The plaintiff read the advertisement,
and bought one of the balls, and after using the ball in the
prescribed manner contracted influenza; whereupon she sued
the defendants, and recovered the amount of the award. The

6 Brooks v. Ball, 18 Johns. 237; L. 200; K. 345.

7 Devecmon v. Shaw, 69 Md. 199; 14 A. 464; W. 547; H. & W. 141.

8 Hamer v. Sidway, 124 N. Y. 538; 27 N. E, 256; H. & W. 148;
K. 363; Lindell v. Rokes, 60 Mo. 249; Talbott v. Stemmons, 89 Ky. 222;
12 S. W. 297; K. 361.

§ 93. 1 Benge v. Hiatt, 82 Ky. 666; contra, Wallace v. Rappleye, 103
Tl. 229, on the ground that the mother was benefited by such surrender.

2 Farle v. Angell, 157 Mass. 294; 32 N. E. 164.

3 Hoshor v. Kautz, 19 Wash. 258; 53 P. 51.

4 1893, 1 Q. B. 256; K. 3872.
THE PROMISEE’S CONDUCT— THE CONSIDERATION. 45

court held that her performance of the conditions of the
advertisement was a sufficient consideration for the defend-
ants’ promise to pay the £100.

§ 94. Mutual Promises. — The rule that mutual promises
are the consideration for each other has been recognized since
1555.4- When the consideration is a promise, it is called
executory; when the consideration is an act performed, it
is said to be executed. It is always important, to keep in
mind the fact that where the consideration is executory it is
the promise, and not the performance, that constitutes the
consideration and makes the contract binding. This elemen-
tary proposition has sometimes been lost sight of by the
courts. Where the consideration is executed, the contract
is always unilateral; where the consideration is executory,
the contract is bilateral, provided the promises are mutual.

§ 95. Promise must impose Liability.—In order that a
promise should constitute a consideration, it must alter the
situation of the party making it by imposing some legal lia-
bility on him, or by altering his existing liability. There-
fore, a married woman’s promise, being void at common
law, would constitute no consideration.! It is not necessary,
however, that the liability imposed should be perfect. Thus,
an infant’s promise is a good consideration for an adult’s,?
although the infant’s promise is voidable. So an oral prom-
ise within the Statute of Frauds is a good consideration for a
promise in writing. So the promise of an insolvent is a
good consideration. According to Professor Ames’ defini-
tion, a consideration is “any act or forbearance given in
exchange for a promise,” so that as every promise is an act,
any promise is a consideration for any other promise.® This
definition, however, is subject, as has been pointed out, to
certain limitations on the ground of public policy, which

§ 94. 1 Ames, 8 Harv. Law Rev. 259; Pecke v. Redman, Dyer, 118 a.

§ 95. 1 Warner v. Crouch, 14 Allen, 163.

2 Holt v. Ward Clarencieux, 2 Strange, 937; L. 397; Baldwin v. Van
Deusen, 37 N. Y. 487.

3 Justice v. Lang, 42 N. Y. 493.

4 Anderson v. Gaines, — Mo. — ; 578. W. 726.

5 13 Harv. Law Rev. 29.
46 THE FORMATION OF CONTRACT.

are not indicated by the definition itself; and the real diffi-
culty arises in determining the extent of these limitations.
According to Professor Williston, a promise to do an act
will be a consideration whenever the doing of the act would
be;® but this doctrine has been criticised by Professor Lang-
dell, with apparent justice.”

§ 96. The Act must be treated as a Consideration by the
Parties. — An act may or may not be a consideration as the
parties do or do not treat it as such. Nothing is a consid-
eration that is not so treated by the parties. “The mere
presence of some incident to a contract which might under
certain circumstances be upheld as a consideration for a
promise does not necessarily make it the consideration for
the promise in that contract. To give it that effect it must
have been offered by one party and accepted by the other as
an element of the contract.” 1

§ 97. Distinction between Consideration and Condition Pre-
cedent. — In the case of a bailment for the benefit of the
bailor it is said that the delivery of possession of the prop-
erty is the consideration for the bailee’s promise to take care
of the goods.1 It has been pointed out, however, by Chief
Justice Holmes,? that, although the delivery of possession
may be a consideration, it will not necessarily be one; and
that the delivery of possession can only be regarded as.a
consideration when it is so treated by the parties. In case
the bailee accepts the charge of the goods simply as a matter
of favor to the bailor, the delivery of possession is no con-
sideration, but a mere condition precedent to the performance
of the promise.

6 8 Harv. Law Rev. 36.

7 14 id. 496.

§ 96. 1 Fire Ins. Ass’n v. Wickham,-141 U. S. 564, 579. See also
Miles v. New Zealand Alford Estate Co., 832 C. D. 266; W. 556; K. 563;
Grand Lodge v. New Orleans, 166 U.S. 148; Dutton’s Estate, 181 Pa.
426; 87 A. 582.

§ 97. 1 Hart v. Miles, 4 C. B. wn. s, 871; L. 391; K. 357; where the
plaintiff’s consent to the retention by the defendant of two bills of ex-
change was held a good consideration.

2 Common Law, 291, 292.
_ THE PROMISEE’S CONDUCT— THE CONSIDERATION. AT

§ 98. Adequacy of Consideration. — The adequacy of the
consideration has nothing to do with the validity of the con-
tract.! The fact that the consideration is of less value than
that which the promisor is to give for it is, in itself, of no
consequence. Consideration is the act of the promisee which
fixes the responsibility of the promisor. It is to the promise
what the mordant is to the dye; it renders the offer irrevoca-
ble by turning it into a contract. The theory of contract in
our law is not that of an exchange of equivalents, but that of
an act, —the promise, — which causes certain action by the
promisee, — the consideration,? — and for which legal respon-
sibility attaches, when, and only when, such action by the
promisee has been so caused. The promisor has the abso-
lute right to determine upon what consideration he will
consent to be bound; but when he has designated the consid-
eration, he is bound by his act, regardless of his wisdom or
folly in making a bargain. But though inadequacy of con-
sideration does not affect the validity of a contract, such
inadequacy may be one element in the unfair dealing for
which a court of equity may set the contract aside, or refuse
a decree for specific performance.

§ 99. Reality of Consideration. — The consideration, how-
ever inadequate, must nevertheless be real. That is to say,
there must really be an act or promise which is regarded by
the parties as a true consideration. If the consideration is
merely colorable, it will be disregarded by the courts. Thus
one cent has been held an insufficient consideration for a
promise to pay $700;1 and $1 insufficient to support a
promise to pay $1,000.2 In both these cases the considera-
tion was regarded by the courts as merely colorable. Yeta
promise to pay $1,000 for a particular dollar of great rarity

§ 98. 1 Lawrence v. McCalmont, 2 How. 426; Haigh v. Brooks, 10 A.
& E. 323; L. 210; K. 851; Minneapolis Land Co. v. McMillan, 79 Minn.
287; 82 N. W. 591; Anderson v. Gaines, 156 Mo. 664; 57 S. W. 726.

2 According to the generally accepted view, this action must be speci-
fied by the promise itself. Post, § 150.

§ 99. 1 Schnell v. Nell, 17 Ind. 29; H. & W. 138.

2 Shepard v. Rhodes, 7 R. I. 470.
48 THE FORMATION OF CONTRACT.

is unquestionably binding, the dollar in such case being a
real consideration for the promise to pay. And, vice versa,
$1 is a good consideration, it seems, for any promise except
a promise to pay a larger sum of money absolutely.

§ 100. Contingent Consideration. — Incurring a legal obliga-
tion is a good consideration, even though that obligation be
contingent.1 If a man promises to act in a certain way upon
the happening of a certain event, he thereby limits his freedom
of action in case such event occurs. Thus, if A. promises B.
to buy of him all articles of a certain kind which A. may re-
quire in his business for a given period, A.’s promise is a good
consideration for B.’s promise to sell such articles at a certain
price; for though A. may not require any of the articles dur-
ing that period, still if he does require any, he is bound to buy
them of B., and he has therefore parted with his right to buy
wherever he sees fit.2 This rule is limited, however, to cases
where the quantity of goods is “ capable of an approximately
accurate forecast,” as in the case of “the capacity of a furnace,
the needs of a railroad, or the requirements of a hotel,” and
where “the purchase is only an incident of the vendee’s
business.” It has no application to the contract of a mer-
chant or middleman to buy so much of a commodity as he
may require for his trade during a given period.? In regard
to such indefinite agreements there has been some con-
fusion of thought, but the principles governing such cases
seem clear.

§ 101. When Acceptance of Conditional Offer is no Consider-
ation. — Where an offer is made to sell goods or render ser-
vices at a fixed price, if the amount of goods or the quantity
of service to be furnished is fixed, acceptance of the offer com-
pletes a contract. This contract is bilateral, consisting of

5 Lawrence v. McCalmont, 2 How. 426; Dutchman v. Tooth, 5 Bing.
N. C. 577.

§ 100. 1 Gutlon v. Marcus, 165 Mass, 335; 43 N. E. 125.

2 Smith v. Morse, 20 La. Ann. 220; National Furnace Co. v. Keystone
Mfg. Co., 110 Ill. 427; Minnesota Lumber Co. v. White Breast Coal Co.,
160 Ill. 85; 48 N. E. 774; Hickey v. O’Brien, — Mich. — ; 82 N. W. 241;

contra, Bailey v. Austrian, 19 Minn. 535.
5 Crane v. Crane, — U. S. App. — ; 105 F. 869.
THE PROMISEE’S CONDUCT — THE CONSIDERATION. 49

mutual promises to buy and to sell, or to work and to pay. If
the amount of goods or the quantity of service is not fixed,
but is to be determined by some future event, does the offeree’s
saying, “I accept your offer,” make a contract? This depends
upon whether such an acceptance imposes any obligation on the
acceptor. If such acceptance in no way limits the freedom of
action of the acceptor, then there is no contract, because there
is no consideration for the offerer’s promise to sell the goods
or to render the services! Thus in Chicago & Great Eastern
Railway Co. v. Dane,? the defendant offered to transport from
New York to Chicago not exceeding 6,000 tons of iron at a
fixed price during a given period. The plaintiff wrote “ac-
cepting” this offer; but the court held there was no contract,
there being no consideration for the defendant’s promise to
transport the iron. The plaintiff's acceptance did not bind
him to deliver for transportation any iron whatever, either
absolutely or conditionally.

§ 102. When Acceptance of Conditional Offer completes the
Contract. — If, however, the acceptance binds the acceptor,
though only conditionally, there is a binding contract, for
there is then a consideration for the offerer’s promise. For
this reason, as just stated, if the offer is to sell all the goods
the offeree may need in his business during a given period at
a fixed price, acceptance by the offeree completes the contract.
So if the offer is to buy at a certain price such patterns as the
offeree may produce in a certain time? Such an agreement
has been held not binding in Minnesota and Iowa,’ on the
ground that the acceptor does not promise to order any goods ;
but this reasoning seems erroneous, because it ignores the fact

§ 101. } Thayer v. Burchard, 99 Mass. 508; American Cotton Oil Co.
v. Kirk, 34 U. S. App. 60; 68 F. 791; Morrow v. Southern Express Co.,
101 Ga. 810; 28 S. E. 998; Wagner v. Meakin, — U.S. App. — ; 92 F.
76; Teipel v. Meyer, 106 Wis. 41; 81 N. W. 982.

2 43 N. Y. 240; W. 510; K. 193 ; cf. Baxley v. Tallassee, etc. R., —
Ala. —; 29 S. 451.

§ 102. 1 Ante, § 100.

2 McCall Co. vu. Icks, — Wis. — ; 83 N. W. 300.

8 Bailey v. Austrian, 19 Minn. 5385; Drake v. Vorse, 52 Ia, 417;
3.N. W. 465.

4
50 THE FORMATION OF CONTRACT.

that the acceptor parts with his right to buy goods of any one
but the offerer.

§ 103. ‘“ Mutuality ” and Consideration.— A contract is often
said to be void for want of mutuality. If this term is accu-
rately used, it is merely equivalent to the term “ consideration.”
A promise for which no consideration is given does not make
a contract. There is no contract for lack of consideration ;
or, as it is often expressed, for want of mutuality. Sometimes,
however, a theory of mutuality is advanced which is not. in
accordance with well-settled rules. This theory is to the
effect that if A. makes a promise to work for B., B. must make
a corresponding promise to employ A.; that in every case B.'s
promise must correspond with A.’s. The result of such a
theory, if logically applied, is to destroy all optional contracts.!
Thus in a Kansas case? a railway company ayreed that if A.
would accept certain offers for corn received from B., it would
transport the corn at a certain rate. A. accepted the offers,
but the court held there was no contract, because A. did not
agree to ship the corn, and therefore there was no “ mutual-
ity.” This doctrine rests on a misconception of what makes
a contract binding? If the contract is bilateral, there must
be mutual promises; but in unilateral contracts there is a
promise on one side, an act on the other. A.’s acceptance of
B.’s offer was a sufficient consideration, and really made a
unilateral contract.

The supposed necessity of mutuality in a contract sometimes
leads courts to treat a unilateral contract as bilateral by impli-
cation, as in the case of contracts of employment, where the
promise of the employee to work is held to imply a corre-
sponding promise of the employer to employ, and vice versa.*
But the better rule is that either party to such a contract may
have an option thereunder, if the parties so stipulate.

§ 103. 1 See post, § 105a.

2 Missouri, etc. R. v. Bagley, 60 Kan. 424; 56 P. 759.

3 See White v. Needham, 54 S. W. 9 (Ky.); Great Northern Ry. v.
Witham, L. R. 9 C. P.16; W. 471; K. 196.

4 Lewis v. Atlas Ins. Co., 61 Mo. 534; Mechem, Cases on Agency, 269 ;
Travelers’ Ins. Co. v. Parker, — Md. — ; 47 A. 1042.

5 Rhodes v. Forwood, 1 A. C. 256; Mechem, Cases on Agency, 259;
Sax v. Detroit, ete. R., — Mich. — ; 84 N. W. 314.
THE PROMISEE’S CONDUCT —THE CONSIDERATION. 51

§ 104. Acceptance pro tanto. — Although an acceptance of
an offer which does not bind the acceptor has no effect to bind
the other party, an offer of an indefinite amount of goods at a
fixed price is rendered binding by an acceptance of the offer
as to a definite amount of the goods. Thus in Great Northern
Railway Co. ». Witham,! the defendant offered to supply the
plaintiff with such quantities of stores as the plaintiff might
order at prices named. The plaintiff wrote “accepting” this
offer. Several orders for iron were given by the plaintiff and
executed by the defendant; but at last the defendant refused
to fill any more orders, and the plaintiff sued for breach of
contract. Judgment was given for the plaintiff. The consid-
eration in this case was not the “acceptance” of the defend-
ant’s offer by the plaintiff’s letter, because such acceptance
did not bind the acceptor in any way. The consideration was
the actual sending of an order for a definite amount of the
iron. “Accepting” the defendant’s offer imposed no obliga-
tion on the plaintiff, while ordering a definite amount of iron
bound the plaintiff to take and pay for the iron so ordered.

§ 105. Contingent Consideration — The Rule in Michigan. —
In Cooper v. Lansing Wheel Co.! the plaintiff sent the defend-
ant an order for all the wheels “we may want during the
season of 1890,” at certain specified prices, and the defendant
accepted the offer. The plaintiff gave certain orders, which
were filled, but subsequent orders were not filled, and the
plaintiff sued for breach of contract. The court held the
plaintiff entitled to recover, but on grounds that are hardly
tenable. The court said that the defendant could have with-
drawn the offer to supply the goods at any time before the
plaintiff had acted upon it by ordering goods. This seems
erroneous, because the plaintiff’s agreement to buy all the
wheels he needed of the defendant was a good consideration
for the defendant’s promise to sell such wheels. The court
went on to say, however, that, though the plaintiff’s order and
the defendant’s acceptance did not constitute a contract, still, ”
when the plaintiff gave one order for wheels, the defendant

§ 104.1 L. R.9 C. P. 16: W. 471; K. 196.
§ 105. 1 94 Mich. 272; 54 N. W. 39; H. & W. 50.
52 THE FORMATION OF CONTRACT.

thereupon became bound to deliver all other wheels the plain-
tiff might thereafter order. This seems erroneous also, for if
the defendant is to be regarded as offering wheels for sale at
such a price, the plaintiff's order of a certain number of wheels
would turn such offer into a contract to deliver the wheels
ordered, and not all wheels the plaintiff might order in the
future. The Michigan court relied on the case of Great North-
ern Railway Co. v. Witham, in which the court merely held
that one who offered an indefinite amount of goods for sale at
a given price was bound by an order for a definite amount of
goods, not that such order would turn the offer into a binding
contract to fill all future orders. The facts in Cooper v. Lan-
sing Wheel Co. were similar to those in Great Northern Rail-
way Co. v. Witham, and the decision was therefore properly
in favor of the plaintiff; but the reasoning of the court in the
Michigan case is not supported by the English decision.

In Michigan Bolt Works v. Steel,? a subsequent case similar
to the preceding, the court speaks as if there were a contract
arising from the original acceptance of the offer; while in the
very recent case of Hickey v. O’Brien, such a contract is up
held. The reasoning of Cooper v. Lansing Wheel Co. seems
essentially unsound, and the Michigan law appears to-day to
be in accord with the general doctrine previously set forth.

§ 105 a. “Options” and Offers. —In a recent Illinois case?
a contract for the sale of goods gave the purchaser the right
to order a certain additional amount at the same price before
a certain date. It was urged that this contract gave the buyer
an option on the goods, and was therefore void under the Illi-
nois statute prohibiting options on goods. The court held,
however, that the provision that the buyer might order more
of the goods was merely an offer on the part of the seller to
sell the goods at that price, and was not binding until the
goods were actually ordered. The intention of the parties
appears to have been to give the buyer a legal right to demand
the goods; but the court placed a strained construction on

2111 Mich. 158; 69 N. W. 241.
8 — Mich. — ; 82 N. W. 241.
§ 105 a. 1 Schlee v. Guckenheimer, 179 Ill. 593; 54 N. E. 302.
THE PROMISEE’S CONDUCT— THE CONSIDERATION. 53

the contract in order to avoid the effect of the statute against
options. The same doctrine has been applied in New York?
where the seller in a contract of sale had the option of deliver-
ing an additional amount of the goods at a certain price. In
both these cases the contract of sale, it seems, furnished a suffi-
cient consideration for the option and should have made it bind-
ing, but the supposed requirement of “ mutuality” prevented?

§ 106. Performance of Legal Obligation as a Consideration. —
Consideration, it is commonly said, involves the surrender of
a legal right, or the incurrence of a legal obligation. We
have seen that the right surrendered or the obligation incurred
may be very slight, but some right or obligation there must
be. Accordingly, if the promisee does or promises to do only
that which he is already absolutely bound to do, it is clear
that there is no consideration for the promise of the other
party. If Professor Ames’ definition of consideration as “ any
act or forbearance given in exchange for a promise” be ac-
cepted, the case must be stated somewhat differently. Under
this theory there is a consideration in such cases, but public
policy renders such consideration invalid. Another and prob-
ably the best explanation of the rule is this. The fundamental
reason for enforcing a simple contract is that the promisee has
acted in reliance on the promise; but the law does not permit
a man to say that this performance of an absolute legal duty
has been induced by the promise of reward, and not by the
duty itself.t

§ 106 a. Illustrations of Foregoing Rule. — Tlustrations of the
foregoing principle are very numerous. Thus, it is no con-
sideration to surrender property which the possessor has no
right to retain,’ or to refrain from seizing property which one
has no right to take.2. Nor is the performance of his duty by

2 Quick v. Wheeler, 78 N. Y. 300; K. 271.

3 See § 103.

§ 106. 1 Byles, J., in Shadwell v. Shadwell, 30 L. J. C. P. 145; L. 233;
K. 469.

§ 106a. 1 Tolhurst v. Powers, 183 N. Y. 460; 31 N. E. 326; H. & W.
174; K. 500. , .

2 Smith v. Coker, — Ga. — ; 8658. E. 107.
54 THE FORMATION OF CONTRACT.

a public officer a good consideration ;* but the performance of
extra services is of course sufficient.4

§ 107. Payment of Rent or Interest as a Consideration. —
It is of no consequence whether the absolute obligation im-
posed upon the promisee is a general duty, or is the result of
his own contract; in neither case is the fulfilment of, or the
promise to fulfil, such obligation a good consideration. Thus,
the prompt payment of rent or interest due on a contract is
no consideration.! Nor is a promise by a debtor to pay in-
terest, at the same or at a less rate than his contract calls for,
a good consideration for a promise by the creditor to extend
the time of payment.? If, however, the debtor agrees to pay
interest for a fixed time after the debt is due, he thereby
deprives himself of the right to pay the debt before that
time, and thus stop the running of interest; so that a promise
to pay interest for a fixed time at the same or even at a lower
rate than the contract calls for is a good consideration.? This
‘distinction between a promise to pay interest for a definite
and for an indefinite time, though sound in principle, is not
recognized by all courts.4 A payment of interest in advance
for a fixed time is, of course, a good consideration.®

3 Pool v. Boston, 5 Cush. 219; Smith v. Whildin, 10 Pa. St. 89; H. &
W. 176; Hogan v. Stophlet, 179 Til. 150; 53 N. E. 604.

4 England v. Davidson, 11 A. & E. 856; L. 220; K. 502; Reif v. Page, 55
Wis. 496; 13 N. W. 473; K. 506; McCandless v. Allegheny Steel Co., 152
Pa. St. 139; 25 A. 579; Studley v. Bullard, 169 Mass. 295; 47 N. E. 1000.

§ 107. 1 Booth v. Wiley, 102 Ill. 84.

2 Wilson v. Powers, 130 Mass. 127; Kellogg v. Olmsted, 25 N. Y. 189;
Price v. Mitchell, — Wash. — ; 63 P. 515. In Vereycken v. Vanden-
brooks, 102 Mich. 119, 60 N. W. 687, a note drew 10 per cent, and the
creditor agreed to let the debtor have the money after maturity at 8 per
cent, no time being fixed for the payment of this 8 per cent interest. The
court said that such an agreement “ was binding when acted upon; ” the
retention of the money by the debtor being treated by the court as a con-
sideration for the creditor’s promise to reduce the interest. The opinion
of the court on this point was mere dictum, but the dictum is so astonish-
ing as to be worthy of notice. /

® Fowler v. Brooks, 138 N. H. 240; Fawcett v. Freshwater, 31 Ohio St.
637; Ames, 138 Harv. Law Rev. 39, n. 5.

4 Wilson v. Powers, supra ; Kellogg v. Olmsted, supra.

5 Stone’s River N. B. v. Walter, 104 Tenn. 11; 55 S. W. 801.
THE PROMISEE’S CONDUCT— THE CONSIDERATION. 465

§ 108. Part Payment of a Debt as a Consideration. — From
the general principle that doing what one is absolutely
bound to do is no consideration, it follows that the payment
of part of a debt already due is no consideration for a promise
to release the balance of the debt.’ This rule is firmly
established, and has not been shaken by the repeated attacks
upon it by its opponents. Lord Blackburn objected to it
on the ground that prompt payment of part is often of more
benefit to the creditor than the delayed payment of the whole.
The answer to this objection is that this’ benefit is one to
which the creditor is already entitled, and which the debtor
has no right to withhold. Professor Ames says: “The doc-
trine originated in misconception, is repugnant alike to
judges and men of business, is not applied consistently to all
the cases fairly within its scope, has been a source of highly
artificial and technical distinctions, has been changed: by
statute in India and in ten of our States, and is likely to be
generally superseded by similar legislation.” 2 The rule has
the support, however, of the highest courts in England and
the United States, and the most learned judges have deliber-
ately adhered to it in spite of every argument against it.
The truth is, the whole doctrine of consideration is purely
a technical doctrine peculiar to English law, and the rule
attacked simply illustrates the technicality of that doctrine.

The foundation for the rule requiring a consideration for a
parol promise is to be found in the fact that in the action of
assumpsit the plaintiff was required to show that he had
acted in reliance upon the defendant’s promise, and that.
such action had so changed his legal situation that he would
be injured unless the promise were enforced. A man who
pays part of a debt is in legal contemplation induced to do so

§ 108. 1 Foakes v. Beer, 9 A. C. 605; W. 335; K.407; United States
v. Bostwick, 94 U. S. 58, 67; Fire Ins. Ass’n v. Wickham, 141 U. S. 564,
577; 12S. Ct. 84; Harriman v. Harriman, 12 Gray, 341; Hart v. Strong,
183 Ill. 349; 55 N. E. 629; McIntosh v. Johnson, 51 Neb. 33; 70 N. W.
522; Winter v. Kansas City Cable R., — Mo. — ; 61S. W. 606; contra,
Clayton v. Clark, 74 Miss. 499 ; 21S. 565. In some States this rule has
been changed by statute. See 12 Harv. Law Rev. 526.

2 12 Harv. Law Rev. 531.
56 THE FORMATION OF CONTRACT.

by a desire to do his duty.? If he says that he would not
have paid the money except for the creditor’s promise to dis-
charge the balance, he in effect sets up that he would have
wronged the creditor by withholding payment, had he not
been able to extort a promise from the creditor. Professor
Ames concedes that on grounds of policy one who refuses to
keep his contract simply in order to exploit the necessities of
the other party should not be permitted to enforce the con-
tract thus obtained. This rule would involve an inquiry
into the fairness of the debtor’s conduct in every case. The
courts prefer to adopt a rule which leaves the question
whether or not the act in question is a valid consideration to
the court. If questions of motive and fairness were to be |
introduced in issue, they would have to be left to the jury in
each case, to the great contusion of the law.

§ 108a. Distinction between Part Payment and other Acts.
— The foregoing rule is admittedly technical, and is not
to be carried beyond its plain meaning. Hence, payment
of a less sum before the debt is due,? or at a different place
from that where the debtor is bound to pay,® is a good
consideration. So is the giving of a specific article,‘ or of
a negotiable security for a less amount than the debt,‘ or of
any other security.6 So is the substitution of the sole lia-
bility of one debtor for the joint liability of two.7 The

8 Byles, J.,in Shadwell v. Shadwell, 30 L. J. C. P. 145; L. 238;
K. 469.

§ 108 a. 1 Chicago, Milwaukee, & St. Paul R. v. Clark, 178 U. S. 353.

2 Brooks v. White, 2 Met. 288; Pinnel’s Case, 5 Rep. 117; Chicora

Fertilizer Co. v. Dunan, — Md. — ; 46 A. 347.
% Jones v. Perkins, 29 Miss. 1389. But see Saunders ». Whitcomb, —
Mass. — ; 59 N. E. 192.

4 Brassell v. Williams, 51 Ala. 849.

5 Sibree v. Tripp, 15 M. & W. 23; K. 398; Boyd »v. Hitchcock, 20
Johns. 76; Guild v. Butler, 127 Mass. 386.

® Jaffray v. Davis, 124 N. Y. 164; 26 N. E. 351; H. & W. 187; K.
429; Post v. eee Bank, 188 Ill. 559; 28 N. E. 978; Stacy v. Cook,
— Kan. — ; 61 P. 399.

7 Allison v. Abendroth, 108 N. Y. 470; 15 N. E. 606; Mason v.
Wickersham, 4 W. & S. 100; liyth 2. Ault, 7 Ex. 669; K. 11.1500. But
see Fowler v. Coker, — Ga. — ; 33 S. E. 661; Early v, Burt, 68 Ta. 716.
THE PROMISEE’S CONDUCT—THE CONSIDERATION. 57

reason for this is that at common law, if A. and B. are
jointly bound, A. may be discharged by death; whereas
when A. is the sole debtor, his estate remains liable. This
reason disappears when survivorship is abolished, or when
joint contracts are made joint and several.

In a recent Massachusetts case® the validity of part pay-
ment in a different manner or at a different place from that
called for by the contract is made to turn upon the actual
benefit to the creditor or detriment to the debtor by reason
of such variation. This is certainly carrying the technical
doctrine of consideration further than the technicality of
that doctrine requires. It is well enough, for the sake of
logic, to exclude the question of actual benefit to the creditor
or detriment to the debtor by reason of partial performance
of the debtor’s legal obligation, although many eminent
writers and judges have treated such a rule as harshly tech-
nical; but the universal tendency is, and has always been,
to seize any opportunity to escape .from the harshness of
this rule, and to confine the application of the rule to the
case where what the debtor does is exactly that which he is
bound to do. The case just referred to presents what appears
to be the only exception to this tendency.

§ 109. Effect of Uncertainty as to one’s Rights. — If there is
no debt, but an unliquidated sum due, payment of less than the
amount claimed is a good consideration.) In such cases
the uncertainty as to the exact rights of the parties renders
the payment of a certain amount a sufficient consideration.
Indeed, it may be laid down as a general principle, that
wherever two parties are uncertain as to their rights in a
given matter, an agreement for a definite settlement is bind-
ing, the consideration on both sides being the exchange of
an uncertainty for a certainty.?, This general principle has

8 Saunders v. Whitcomb, — Mass. — ; 59 N. E. 192.

§ 109. 1 Wilkinson v. Byers, 1 A. & E. 106; L. 208; K. 895; Tomp-
kins v. Hill, 145 Mass. 379; 14 N. E. 177; Donohue v. Woodbury, 6 Cush.
148; Baird v. United States, 96 U. S. 480; Millers’ Nat. Ins. Co. v. Kin-
neard, 136 Ill. 199; 26 N. E. 368.

2 Good Fellows +. Campbell, 17 R. I. 402; 22 A. 307.
58 THE FORMATION OF CONTRACT.

been subjected to certain limitations which will soon be
considered.

§ 110. Tilustration of Uncertainty as affecting the Question
of Consideration. —-In accord with the foregoing principle it
has been held that where a tract of land is sold by metes and
bounds, as containing a certain number of acres, a subse-
quent agreement between grantor and grantee that the land
shall be surveyed, and that in case the actual amount of land
exceeds that mentioned in the deed the grantee shall pay
the grantor so much per acre for the excess, while in case of
a deficiency the grantor shall pay the grantee so much per
acre for the deficiency, is binding.’ The grantor’s promise
to pay for the possible deficiency is the consideration for
the grantee’s promise to pay for the excess, and vice versa.
If, however, one of the parties knew the exact amount of
land, and knew that he would not be obliged to pay anything
under such an agreement, his promise would be without con-
sideration, because there could be no uncertainty on his part,
and therefore his promise could not possibly be regarded as
a legal detriment.

§ 111. Consideration in Wagers. — The same rule held at
common law in regard to wagers upon present or past facts.
If the facts are unknown to the parties there is a valid
consideration for the bet; otherwise not.1 Uncertainty in
regard to existing facts is treated on the same basis as
uncertainty in regard to the future.2 The assumption of a
risk is a good consideration, and a risk may just as truly be
assumed with reference to an unknown fact in the present
or past as with reference to an uncertain event in the future.
Indeed, if one accepts the theory of predestination, the future
is as certain as the past, and what we call uncertainty is in all
cases simply lack of knowledge. The fact that public policy
has altered, and now condemns wagers as illegal, does not alter
the fundamental principles governing the assumption of risks.

§ 110. 1 Seward v. Mitchell, 1 Coldwell, 87; W. 554. This case seems
to possess all the elements of a wager.

§ 111. 1 Ames, 13 Harv. Law Rev. 34.

2 See Thaxter v. Inglis, 121 Cal. 593; 54 P. 86.
THE PROMISEE’S CONDUCT—THE CONSIDERATION. 659

§ 112. Compromise and Forbearance to sue. — It would
seem that the foregoing reasoning might be universally
applied, so that the surrender of a supposed legal right, in
regard to the existence of which the party surrendering it is
uncertain, would in any case constitute a good consideration.
The courts, however, have not always carried out the general
principle above stated to its full extent. The question of
consideration often arises in the case of a compromise of a
disputed claim, and the authorities are not in harmony.
The English courts hold that the abandonment of a serious
claim honestly made is a good consideration; and a claim is
said to be honest if the claimant does not know that his
claim is unsubstantial, or if he does not know facts, to his
knowledge unknown to the other party, which show that
his claim is a bad one.! This is on the ground that, if an in-
tending litigant bona fide forbears a right to litigate a ques-
tion of law or fact which it is not vexatious or frivolous to
litigate, he thereby gives up something of value; and that
“the reality of the claim which is given up must be meas-
ured, not by the state of the law as it is ultimately discovered
to be, but by the state of the knowledge of the person who at
the time has to judge and make the concession.” ? The same
principle applies to cases where there is a forbearance to sue
on a bona fide claim.®

§ 113. American Authorities on Compromise and Forbear-
ance. — The doctrine of the English cases seems sound, and
the weight of American authority is to the same effect.*

§ 112. } Miles v. New Zealand Alford Estate Co., 32 C. D. 266; W.
556; K. 563; Callisher v. Bischoffsheim, L. R. 5 Q. B. 449; L. 281; K.
550; Cook v. Wright, 1 B. & S. 559; L. 308; K. 544.

2 Bowen, L. J., in Miles v. New Zealand Co., supra, at p. 291.

3 Callisher v. Bischoffsheim, supra.

§ 113. 1 Union Bank v. Geary, 5 Pet. 99; Llano Improvement Co. v.
Pacific Imp. Co., 30 U. S. App. 253; 66 F. 526; Parker v. Enslow, 102
Ill. 272; Hanchett v. Ives, 171 Ill. 122; 49 N. E. 206; Rowe v. Barnes,
101 Ta. 302 ; 70 N. W. 197; Scans Lake Shore R., 112 Mich. 651; 71
N. W. 148; Grandin_v. J. L. 508; 9 A. 756; Gvans uw
Hunter, 28 N Y. 389; Fink v. Farmers’ Bank, 178 Pa. 154; 35 A. 636;

i Tori i 10 21 R. I. 208; 42 A. 1114; Galusha v. Shera, 105
Wis. 263; 81.N. W. 495; Hewett v. Currier, 63 Wis. 386; 23 N. W. 884.
60 THE FORMATION OF CONTRACT.

Other American decisions hold that forbearance to insist
upon a claim is a good consideration only when the claim is
valid,? or at least when the claim seems doubtful to the
court.®

§ 114. Test of Validity of Compromise and Forbearance as
a Consideration. — The real question involved in such cases is
this: Has a man aright to litigate a claim which he honestly
believes to be good, or only a claim which a reasonable man
might honestly believe to be good? It is the surrender of
this right to litigate which constitutes the consideration, and
by the extent of that right to litigate is to be determined the
question whether or not his abandonment of or forbearance
to prosecute his claim is or is not a good consideration.*

§ 115. Forbearance to sue and Promises to forbear. — The
actual forbearance, or a promise to forbear to prosecute a
claim which one has a right to litigate, is universally held a
good consideration. Nor need a promise to forbear to sue
state a definite time for forbearance, a reasonable time being
understood in such cases.!_ Buta promise to forbear for such

2 Ecker v. McAllister, 54 Md. 362; Palfrey v. Portland, etc. Ry. Co.,
4 Allen, 55; Foster»—Metts65Miss. 77; H. & W. 164; Fink v. Smith,
170 Pa. 124; 32 A. 566. /

3 Barlow v. Ocean Ins. Co., 4 Met. 270; Tuttle v. Tuttle, 12 Met. 551;
Mulholland v. Bartlett, 94 Ill. 58.

§ 114. 1 In Fire Ins. Ass’n v. Wickham, 141 U. §. 564, at p. 577,
Brown, J., says: “If there be a bona fide dispute as to the amount due,
such dispute may be the subject of a compromise and payment of a cer-
tain sum as a satisfaction of the entire claim; but where the larger sum
is admitted to be due, or the circumstances of the case show that there was
no good reason to doubt that it was due, the reason of the whole upon
payment of part will not be considered as a compromise, but will be
treated as without consideration and void.” The distinction between
good faith (“a bona fide dispute”) and reasonable conduct (‘‘no good
reason to doubt’’) seems here, as in many other cases, to be entirely
overlooked. Yet such distinction is of the utmost importance, for honesty
and reasonableness are by no means inseparable.

§ 115. 1 Traders’ Nat. Bk. v. Parker, 180 N. Y. 415; 29 N. E. 1094;
K. 582; Howe v. Taggart, 133 Mass. 284; Hockenbury v. Meyer, 34 N.J.
L. 346; Elting v. Vanderlyn, 4 Johns. 237; Haskell v. Tukesbury, 92 Me.
551; 48 A. 501; Citizens’ S. B. v. Babbitt, 71 Vt. 182; 44 A. 71; Cooper
v. Jackson, 57 S. W. 254 (Ky.).
THE PROMISEE’S CONDUCT—THE CONSIDERATION. 61

time as the plaintiff shall elect is not a good consideration,
since it imposes no obligation to forbear for any length of
time.2 Actual forbearance is a sufficient consideration with-
out a promise to forbear, if such forbearance be at the request
of the promisor and in reliance on his promise.2 The mere
withdrawal of a petition? or a caveat® is likewise a sufficient
consideration, even though a new suit may be begun at
once.

§ 116. Set-off of Unliquidated against Liquidated Claim. —
In a recent case! A.’s claim against -B. was liquidated and
undisputed, and B.’s claim against A. was unliquidated and
disputed. B. rendered A. an account, and tendered pay-
ment of the apparent balance only on condition that A. would
allow B.’s claim. A. gave B. a receipt in full upon the
payment of such balance. The Circuit Court of Appeals
held that this receipt was not binding, and did not prevent
A.’s disputing B.’s account, on the ground that B. parted
with nothing, “not even with a right to litigate.” This
decision seems open to question. The net amount which B.
was bound to pay A. was unliquidated, and the acceptance
of a fixed amount might well have been held to be a valid
compromise. The decision was reversed by the Supreme
Court of the United States,? whether because of a different
view of the law, or of the facts, is not entirely clear.

§ 117. Promises to pay Additional Compensation for the
Performance cf an Existing Contract between the Same Par-
ties. — There are certain cases that may seem inconsistent
with the rule that doing what one is absolutely bound to do
is not a sufficient consideration. Thus, it has been held
that, if A. is bound by a contract with B. to build a house

2 Strong v. Sheffield, 144 N. Y. 392; 39 N. E. 330; K. 586.

3 Edgerton v. Weaver, 105 Ill. 43; Crears v. Hunter, 19 Q. B. D. 341;
K. 578 ; contra, Manter v. Churchill, 127 Mass. 81; K. 552.

* Harris v. Venables, L. R. 7 Ex. 235; disapproving Ross v, Moss,
Cro. Eliz. 560.

6 St. Mark’s Church v. Teed, 120 N. Y. 583; 24 N. E. 1014.

§ 116. 1 Chicago, Milwaukee, etc. R. v. Clark, — U.S. App. — ; 92
F, 968.

2178 U. S. 353.
62 THE FORMATION OF CONTRACT.

for $5,000, and A. refuses to complete the house unless B.
will agree to pay him $1,000 extra, a promise by B. to pay
A. this extra $1,000 is binding. The courts which sustain
the validity of B.’s promise reason as follows. A. is under
no legal obligation to perform his contract; he has the right
‘to break it if he chooses, and pay damages; hence, if A.
consents to perform his contract instead of paying damages,
he is doing something which he is not legally bound to do,
and there is therefore a sufficient consideration for B.’s
promise.! Other courts take the position that A. is legally
bound to perform his contract, and that there is therefore
no consideration for B.’s promise to give him additional com-
pensation.2. The latter view seems more in accordance with
justice, and with the equitable theory of contractual obliga-
tion; but the former view has the support of Professor Ames,
on the ground that as the value of the consideration for a
promise is immaterial, the fact that the consideration is
something which the promisee has already bound himself
to do is immaterial.®

§ 118. Necessity of rescinding Former Contract. — Even in
those jurisdictions where a promise to perform what the
promisor had bound himself to do by a previous contract
is held a good consideration, it is generally held that the
promise to pay additional compensation for such perform-
ance is binding only when the transaction amounts to the
substitution of a new contract for the old one.1 Whether
there has been such a substitution or not is a question for the

§ 117. 1 Cooke v. Murphy, 70 Ill. 96; Bishop v. Busse, 69 IIL. 403; Goe-
bel v. Linn, 47 Mich. 489; 11 N. W. 284; W.308; Munroe v. Perkins,
9 Pick. 298; W. 302; Lattimore v. Harsen, 14 Johns. 330; K. 440.

2 Vanderbilt v. Schreyer, 91 Nv ¥. 392; K. 454; Lingenfelder ».
Wainwright Brewing Co., 103 Mo. 578; 15 S. W. 844; H. & W. 181;
Jones v. Risley, — Tex. — ; 32S. W. 1027; Main St. R. v. Los Angeles
Traction Co., 129 Cal. 301; 61 P. 987. :

3 12 Harv. Law Rev. 530.

§ 118. ! Munroe v. Perkins, 9 Pick. 298; W. 302; oe Belle
Tsle Ice Co., 49 Mich. 279; 18 N. W. 590; W. 310; H. & W. 180; Van-
derbilt x. Schreyer, 91 N.Y. 392; K. 454; contra, Cooke v. Murphy, 70
Ill, 96.
THE PROMISEE’S CONDUCT—THE CONSIDERATION. 63

jury.2 Professor Ames takes the view that the nature of the
transaction implies a rescission of the old contract in such
cases ;2 but the consideration for the rescission of’the old
contract is the substitution of a new one; and there is no
new contract unless there is a valid consideration to support
the promise of additional compensation; so that we have the
question whether there is a new contract dependent upon
the question whether the old contract has been rescinded;
and the question of rescission dependent in turn upon the
validity of the new contract.

§ 119. Minnesota Doctrine as to Promises for Additional
Compensation. — A peculiar doctrine has recently been enun-
ciated in Minnesota. The court adopts the view that the
obligation imposed by a contract is an obligation to perforin
the contract, and not merely to pay damages; that the party
who performs his contract is simply doing what he is legally
bound to do, and that there is therefore no consideration for
a promise by the other party to pay additional compensation
for such performance. So far the court seems right in
its decision. The court goes on, however, to say, “But
where the party refusing to complete his contract does so by
reason of some unforeseen and substantial difficulties in the
performance of the contract, which were not known or an-
ticipated by the parties when the contract was entered into,
and which cast upon him an additional burden not contem-
plated by the parties, and the opposite party promises him
extra pay or benefits if he will complete his contract, and he
so promises, the promise to pay is supported by a valid con-
sideration.”1 The fallacy here is apparent. “An addi-
tional burden not contemplated by the parties” cannot mean
any increased difficulty in the performance of the contract,
for the “burden contemplated by the parties” is that one

2 Endriss_v. Belle Isle Ice Co., supra; Coyner v. Lynde, 10 Ind. 282;
H.& W.177. 0 eo
8 12 Harv. Law Rev. 528. |
§ 119. 1 King v, Duluth, M. & N. Ry. Co., 61 Minn. 482; 63 N. W.
(Go

1105; K. 463.
64 THE FORMATION OF CONTRACT.

person shall perform his part of the contract, and the other
shall pay him for it.2. To hold, for example, that an unex-
pected increase in the price of bricks will render valid a
promise by A. to B. to pay B. $6,000 for building a house,
when such promise would not be binding if the price of
bricks had remained stationary, by reason of a pre-existing
contract on B.’s part to build the house for $5,000, is to
overthrow any logical theory of contractual obligation. Such
a proposition can rest only on the notion that unexpected
difficulties in the performance of a contract alter the obli-
gation to perform that contract, ignoring the fact that the
object of the contract is to throw ald such risks on the party
who promises to perform.

§ 120. Result of the Decisions enforcing Promises of Addi-
tional Compensation. — The result of the decisions enforcing
promises to pay additional compensation for the same per-
formance is certainly a curious one. The courts hold that
the promise to pay an additional amount for the perform-
ance of work which the promisee has bound himself to
perform by a previous contract is not binding for lack of
consideration, unless such promise forms part of a new con-
tract. If there is a new contract, the promise of perform-
ance by the one party is the consideration for the promise of
payment by the other. Now if we regard a contract as im-
posing an obligation to perform, and not simply to pay dam-
ages in case of non-performance, the obligation to perform
still exists under the old contract, until the old contract is
discharged. The discharge of the old contract, however, is
supposed to take place by the substitution of a new contract;
but the new agreement is no contract, because the only con-
sideration for A.’s promise to pay is B.’s promise to perform,
and B. is already bound to perform under the old contract.!
On the other hand, if B.’s obligation is only to pay damages

2 See Leavitt v. Dover, 67 N. H. 94; 82 A. 156; Jacksonville, etc. R.
v. Hooper, 160 U. 8. 514; Newport News Co. v. McDonald Brick Co., —
Ky. — ; 59S. W. 332. 5

§ 120. 1 Main St. R. v. Los Angeles Traction Co., 129 Cal. 801; 61 P.
937.
THE PROMISEE’S CONDUCT—THE CONSIDERATION. 65°

in case he fails to perform his contract, then his second
promise of performance can impose no greater obligation
than his first, so that even this view does not justify one in
regarding the new agreement as a contract.

§ 121. Distinctions when the Obligation of the Former Con-
tract has changed its Character. — The generally accepted view
of contractual obligation is that the promisor is bound to
perform his promise, if performance is within his power. The
obligation is not necessarily discharged by the promisor’s
own act in breaking his promise. If substantial performance
of the contract is still possible, the promisor is still bound
to perform as far as he can. This is constantly shown in
the cases where equity decrees specific performance, with
compensation for defects in title, for delay in conveying,
etc. If A. agrees to convey Blackacre to B. on a cer-
tain day, and fails to make the conveyance on that day,
equity will compel him to convey at some subsequent day,
so long as the contract can be substantially carried out. If
in such a case, upon A.’s failure to convey on the appointed
day, B. promises him additional compensation to complete
the conveyance, it seems clear that B.’s promise is without
consideration. If, however, A.’s breach of contract is such
that substantial performance has become impossible, then
A.’s only obligation is to pay damages for such breach.
Thus, if A. promises to deliver to B. ten tons of coal on
August 1st for $50, and fails to deliver the coal on that day,
his only obligation is to pay damages; for time in the case
of the sale of goods is of the essence of the contract, and the
day having passed, substantial performance is impossible.
In such a case A.’s subsequent delivery of ten tons of coal
-- may properly be treated, if so accepted by B., as a valid con-
sideration for the satisfaction of B.’s claim for damages;!
or a new contract for such delivery may equally be accepted
as satisfaction;? and the consideration which will support
the satisfaction may equally support a promise of additional
compensation.

§ 121. |! Neldon v. Smith, 86 N. J. L. 148.
2 Dreifus v. Columbian, etc. Co., 194 Pa. 475; 45 A. 370.
5
66, THE FORMATION OF CONTRACT.

§ 122. Promises of Additional Compensation for Performance
of Contract with Third Person.— Whether a promise by A. to
B., to perform a contract already existing between A. and
C., is a good consideration or not, is a question upon which
the authorities are divided. The English courts treat such a
promise as a good consideration,! while the American courts,?
with the exception of the Supreme Court of Massachusetts,?
adhere to the opposite view. Various views on this point
have been advanced by learned writers, and there is no con-
sensus of opinion as to the validity of such contracts, It is
true, of course, that a promise to perform, or the actual per-
formance of, a legal obligation is, in general, not a valid con-
sideration; but there seems to be no satisfactory reason why
this rule should not be limited to cases where the obligation
is imposed by law, or is to the promisor, or to the public of
whom the promisor is one. The rule might then be thus
stated: a promise to perform, or actual performance of, an
obligation imposed by law, or an obligation to the public or to
the promisor, is not a valid consideration.

§ 123. Distinction between Unilateral and Bilateral Con-
tracts. — A brief mention of some of the views taken by differ-
ent writers will show the wide diversity of opinion. Professor
Langdell maintains that a promise to perform a contract with
a third party is a good consideration, although actual per-
formance would not be, on the ground that such promise gives
a right of action against the promisor, which constitutes a
legal detriment.!' This distinction between unilateral and
bilateral contracts has been attacked by Sir William Anson,?
and by Professor Williston? and seems to have no support
either in England or America, with the exception of one

§ 122. 1 Shadwell v. Shadwell, 9 C. B. nw. s. 159; L. 233; K. 469;
Scotson v. Pegg, 6 H. & N. 295; L. 240; K. 473.

2 Johnson v. Sellers, 33 Ala. 265; H. & W. 185; Davenport v. First
Congregational Sociéty, 33 Wis. 887; Putnam v. Woodbury, 68 Me. 58;
and see Professor Williston’s article in 8 Harv. Law Rev. 27.

8 Abbott v. Doane, 163 Mass. 433; 40 N. E. 197; K. 485.

§ 123. 1 Summary, § 84.

2 Contracts (4th ed.), 88.

3 8 Harv. Law Rev. 27.
THE PROMISEE’S CONDUCT—THE CONSIDERATION. 67

case.* Recently Professor Langdell has enlarged upon this dis-
tinction. His argument seems to establish satisfactorily the
validity of the promise of the plaintiff to perform his contract
with a third person as a consideration for the defendant’s
promise, It fails, however, to show that the actual perform-
ance by the plaintiff would be an insufficient consideration,
Although the distinction between doing an act and promising
to do it is clear, it seems hardly possible that any court should
treat the mere promise as of greater weight than the actual
performance. In other words, the distinction is logical, not
legal, in its character.

Sir William Anson at one time attempted to support
the English doctrine by treating the consideration in such
cases as the promise by A. to B. to abandon his right
to induce C. to release him from the existing contract.6
Professor Williston attacks this view on two grounds: first,
because it can apply only to cases where B. is aware of A.’s
contract with C.; and, secondly, because it is of no con-
sequence to B. whether: C. releases A. or not, so long as A.
actually performs his agreement. Both these criticisms seem
just ; and Sir William Anson now takes the ground that there
is no consideration in such cases.7

§ 124. Reasons for upholding such Contracts. — Professor
Williston goes further, however, and adopts the doctrine of
most American courts, that A.’s promise to B. to perform his
contract with C., or the actual performance of such contract,
is not a good consideration for a promise by B. The effect of
this reasoning is, of course, to prevent B. from acquiring any
security that A. will perform his contract with C., no matter
how much B. may be interested in securing such performance
by A.; and also to prevent A. from relying in the least upon
B.’s promise in his further dealings with C. True, A. can
give B. his covenant to perform; but even this would be in-
sufficient to give B. any rights in those States where seals are
abolished, and all contracts require consideration. The effect

4 Merrick v. Giddings, 1 Mack. (D. C.) 394; K. 479.
5 14 Harv. Law Rev. 496.
® Contracts (4th ed.), 88. ; 7 Contracts (8th ed.), 92.
68 THE FORMATION OF CONTRACT.

of holding that a promise by A. to B. to perform a public duty
is no consideration, is to prevent A. from extorting money for
the performance of his duties. To hold that a promise by A.
to B. to perform an existing contract with B. is no considera-
tion, is to enforce the maxim pacta sunt servanda. But to say
that A. and B. cannot make a binding agreement that A. shall
perform his contract with C., and that B. shall pay A. in con-
sideration of A.’s promise or performance, seems to produce
no desirable results. If a man is engaged to marry, but has
not the means, and his uncle promises to pay him an annuity
if he marries, why should not the nephew marry in reliance
upon the uncle’s promise, and why should the uncle, after
having induced his nephew to marry, be allowed to repudiate
this promise?! The sole reason for such a conclusion seems
to be that it necessarily follows from the statement that per-
formance of a legal obligation is no consideration. This broad
statement must rest either on principle or on authority. On
principle it seems too broadly stated, for the reasons just given.
The authorities, however, are, as has been secn, divided.?

§ 125. Massachusetts Doctrine as to Promises of Additional
Compensation for Performances of Contract with Third Party.—

The Supreme Court of Massachusetts has recently expressed
its views as follows: “If A. has refused or hesitated to per-
form an agreement with B., and is requested to do so by C.,
who will derive a benefit from such performance, and. who
promises to pay him a certain sum therefor, and A. thereupon
undertakes to do it, the performance by A. of his agreement,
in consequence of such request and promise by C., is a good
consideration to support C.’s promise.”1 This statement of
the law makes the question of consideration depend upon the
benefit to the promisor, which in the case of an ordinary con-
tract is manifestly unsound. Moreover, the court does not
make it clear whether it is A.’s promise, or his performance,

§ 124. ! Shadwell v. Shadwell, 9 C. B. nx. s. 159; L. 283; K. 469.

2 Professor Ames’ definition of consideration already given (ante,
§ 91) naturally induces him to uphold the validity of the consideration in
these cases. 12 Harv. Law Rev. 519; 18 id. 29.

§ 125. ! Abbott v. Doane, 163 Mass. 433; 40 N. E. 197; K. 485.
THE PROMISEE’S CONDUCT—THE CONSIDERATION. 69

which constitutes the consideration for C.’s promise ; while it
would seem from the language used that A.’s conduct in re-
fusing or hesitating to perform his contract with B. is an
essential element in the case.

§ 126. Compositions with Creditors. — Two special kinds of
contracts involve difficult questions in regard to considera-
tion. These are compositions with creditors, and subscrip-
tion papers. A promise by a creditor to accept part of a
debt in satisfaction of the whole is, as we have seen, not
binding; but when several creditors join in an agreement
with their debtor to accept part payment in satisfaction of
the whole, such a composition is binding. The reasons given
by the courts for holding such compositions binding are
hardly satisfactory. According to the language used by
Parke, J., in the leading English case of Good v. Chees-
man,? the consideration of each creditor’s promise to release
the debtor is the forbearance by all the other creditors who
are parties to insist upon their claims. The same view has
been taken in several American cases.? Now it is perfectly
clear that a promise by A. to B. to accept one-half of his
claim against C. in full satisfaction of the debt, in consider-
ation that B. will do the same with his claim, is a binding
contract between A. and B., the two creditors. It is an
elementary principle of the common law, however, that a
man who is not a party to a contract has no rights by virtue
of that contract. To allow the debtor to take advantage of
such an agreement between his creditors is therefore to
violate this fundamental principle; yet that is what the
courts seem to do. The consideration for the creditor’s
promise to the debtor cannot be the payment of a part of the
debt, because the debtor is bound to pay the whole; nor
can it be the promise of another creditor, because the con-
sideration must move from the debtor in order that a contract

§ 126.12 B. & Ad. 328; W. 320.

2 Perkins v. Lockwood, 100 Mass. 249; H. & W. 197; Stewart v.
Langston, 103 Gz. 290; 30 S. E. 35; Brown v: Farnham, 48 Minn. 317;
51 N. W. 377. In jurisdictions where the ‘‘ beneficiary ”’ of a contract is
allowed to sue upon it, this doctrine presents no difficulties.
70 THE FORMATION OF CONTRACT.

between creditor and debtor may exist. The real considera-
tion on the part of the debtor may be regarded as consisting
either in his procuring the assent of the other creditors to
the composition, or in his agreeing to treat them all on an
equal footing.

§ 127, Consideration in Subscription Papers. — As to the
consideration which makes subscription papers enforceable,
there has been some difference of opinion. There are four
distinct theories upon which subscriptions are enforced.
These are, first, the ordinary contract theory; second, the
estoppel-contract theory; third, the: request theory; and,
fourth, the mutual-promises theory.

§ 128. Subscription Papers— The Ordinary Contract Theory.
— If the subscription is a promise to pay a certain sum of
money, upon condition that the promisee will doa certain
act, as, for example, procure additional subscriptions to a
certain amount, the doing of that act by the promisee is
a sufficient consideration to turn the promise to pay into a
contract, and to render the subscription enforceable.! This
is simply one of the examples of an ordinary unilateral con-
tract. Again, if the subscription is a promise made in con-
sideration of a counter-promise by the promisee, we have an
example of an ordinary bilateral contract, consisting of
mutual promises. In case the subscription is addressed to a
person who is to receive and expend the money for a given
object, it is held by some courts that his acceptance of the
subscription paper imposes on him a legal liability to apply
the money in accordance with the terms of the subscription,
and that the subscription is therefore binding when thus
accepted. ?

§ 129. Subscription Papers— The Estoppel-Contract Theory.
— The subscription, however, may not be conditioned upon

§ 128. 1 Roberts v. Cobb, 103 N. Y¥. 600; 9 N. E, 500; Lasar v, John-
son, 125 Cal. 417; 58 Pt 61.

2 Ladies’ Collegiate Inst. v. French, 16 Gray, 196, 201; Sherwin ».
Fletcher, 168 Mass. 413; 47 N. E. 197; Trustees v. Haskell, 73 Me. 140;
contra, Johnson v. Otterbein University, 41 Ohio St. 527; Presbsterian

‘Church v. Cooper, 112 N. Y.517; 20 N. E. 352; W. 544; K. 386; Smith’s
Estate, 69 Vt. 382; 38 A. 66.
THE PROMISEE’S CONDUCT— THE CONSIDERATION. 71

any definite act or counter-promise. In this case, according
to the strict theory of consideration, there can be no contract,
because no consideration is specified. The promise is merely
a promise of a gift. A different theory of contract finds
some support, however, especially in these cases of subscrip-
tion papers. It is the theory that a promise becomes a con-
tract when any action is taken in reliance upon it, even
though no consideration is specified. This theory makes the
resemblance between contract and equitable estoppel very
striking. Under this theory, if the subscription is for a
certain object, and the promisee acts in reliance upon the
subscription, by spending money or incurring liabilities for
the promotion of that object, the subscription thereupon
becomes binding.!

§ 130. Subscription Papers —The Request Theory. —If A.
requests B. to render-services or pay money for a certain
object, this request ordinarily implies a promise to pay for
the services so rendered, or to repay to B. the money so
spent. If, then, A. subscribes money for a certain object,
as, for example, the building of a church, and requests B. to
spend the amount of money so subscribed, A.’s request to B.
amounts to a promise to pay to B, the amount thus expended.!
In such a case the subscription is enforceable to the extent
that money has been so paid. In some cases, the subscrip-
tion has been treated as itself a request; but the better rule
is that a mere subscription does not imply any request to the
party to whom the subscription is addressed.? In a recent
Wisconsin case® the court held that the subscribers are
severally liable on their subscriptions for their pro rata

§ 129. 1 Irwin v. Lombard University, 56 Ohio St. 9; 46 N. E. 63;
Richelieu Hotel Co. v. Military Encampment Co., 140 Ill. 248; 29 N. E.
248; Beatty v. Western College, 177 Il]. 280; 52 N. E. 432; Town of
Grand Isle v. Kinney, 70 Vt. 381: 41 A. 180; Laramee v. Tanner, 69
Minn. 156; 71 N. W. 1028; Schuler v. Myton, 48 Kans. 282; 29 P. 163;
W. 549.

§ 130. 1 Re Hudson, 54 L. J. Ch. 811; Barnes v. Perine, 12 N. Y. 18.

2 Presbyterian Church v. Cooper, 112 N.Y. 517; 20 N. E. 352 ; W.
544; K. 386.

3 Hodges v. Malty, 104 Wis. 464; 80 N. W. 726.
72 THE FORMATION OF CONTRACT.

share of the expenses and liabilities incurred on the faith of
such subscriptions.

§ 181. Subscription Papers—The Mutual-Promises Theory.
— There are cases holding that the consideration which
makes a subscription paper binding consists of the promises
of the other subscribers, mutual promises being the consider-
ation for each other. Unquestionably, if A. subscribes #100
to the building of a church, in consideration that B. will
subscribe an equal amount, and B. does so subscribe, there
is a binding contract between A. and B. by which each is
bound to pay $100 to the church. The promises of A. and
B. are made in consideration of each other, and are really
mutual. In such a case the only difficulty arises when the
church seeks to enforce the subscription. Being “a stranger
to the consideration,” as the phrase goes, the church cannot
recover on the subscription where the common-law doctrine
prevails; and although the common law has been modified
in many States so that the beneficiary of a contract may sue
upon it, the right of the beneficiary of a subscription paper
to enforce the subscription has been denied even by the court
which has most widely departed from the rule that the con-
sideration must move from the plaintiff.1 The theory that
a subscription paper is a contract consisting of mutual prom-
ises has, moreover, been misapplied in some cases ;? for the
mere fact that A., B., and C. all sign the same subscription
paper does not necessarily make their promises in any sense
mutual; and unless two promises are given in consideration
of each other, they do not constitute a contract.®

§ 132. Subscriptions to Future Corporations. — A subscrip-
tion to the stock of a corporation not yet organized is not
a contract, but merely an offer to the corporation, and may
be withdrawn at any time before the corporation is organized,

§ 181. 1 Presbyterian Church v. Cooper, 112 N. Y. 517; 20 N. E. 352;
W. 544; K. 386. ee

2 Higert v. Trustees, 53 Ind. 236; Allen v. Duffie, 43 Mich. 1; 4 N. W.
427; Lathrop v. Knapp, 27 Wis. 214; Irwin v, Lombard University, 56
Ohio St. 9; 46 N. E. 63.

8 Cottage Street Church v. Kendall, 121 Mass. 528.
THE PROMISEE’S CONDUCT—THE CONSIDERATION. 173

and the subscription accepted.1. The same rule applies to
other subscriptions for the benefit of a future corporation. ?

§ 183. The Consideration must be furnished in Reliance on
the Promise. — With the exceptions hereafter to be noted, the
consideration must be an act done in reliance on the prom-
ise. Hence a person who furnishes information for which a
reward is offered, in ignorance of the offer, cannot claim the
reward.! But if the information is furnished with knowl-
edge of the offer, the motive of the party furnishing it does
not in any way affect his right to recover.?

§ 184, Reason for Foregoing Rule. — The historical reason
for the rule that the consideration must be furnished in
reliance on the promise is found in the development of the
action of assumpsit from the action on the case for deceit.
It has always been necessary in deceit to allege and prove
that the plaintiff acted in reliance upon the defendant’s
representations; and the origin of assumpsit in the action
of deceit for breach of a paro] promise sufficiently explains
this very important rule in regard to consideration.! The
exceptions to the rule may be briefly stated.

§ 135. Exceptions to the Rule — Mutual Promises. — Where
a contract consists of mutual promises, each of the promises
is the consideration for the other. To say that each promise
is given in reliance upon the other would not seem to be
stretching legal theory too far; yet it may seem simpler to

§ 132. 1 Hudson Real Estate Co. v. Tower, 156 Mass. 82; 30 N. E.
465; s. c. 161 Mass. 10; 36 N. E. 680; Bryant’s Pond Co. »v. Felt, 87 Me.
234; 32 A. 888; Badger Paper Co. v. Rose, 95 Wis. 145; 70 N. W. 302.

2 Richelieu Hotel Co. v. Military Encampment Co., 140 Il. 248; 29
N. E. 1044.

§ 183. 1 Fitch v. Snedaker, 38 N. Y. 248; H. & W. 62; L. 118; K.
45; contra, Dawkins v. Sappington, 26 Ind. 190; H. & W. 68.

2 Williams v. Carwardine, 4 B. & Ad. 621; L. 12; K. 4. In Gibbons
v. Proctor, 64 L. T. 594, the conditions of the offer were fulfilled after its
publication, but it did not affirmatively appear.that the plaintiff had seen
the offer. In Coffey v. Com., (Ky.), 87 S. W. 575, it did not affirma-
tively appear that the plaintiff knew of the offer of the reward at the
time the conditions of the offer were fulfilled, but the plaintiff was allowed
to recover. These decisions seem erroneous.

§ 134. 1 See post, Appendix II.
74 THE FORMATION OF CONTRACT.

some to regard the case of mutual promises as an excep-
tion to the general rule. It must be remembered that in
the early days of assumpsit an executory consideration was
insufficient.

§ 186. Pre-existing Obligation as a Consideration. — An
apparent exception to the rule that the consideration must
be furnished in reliance on the promise is in the case where
a promise is given in consideration of the receipt of a benefit
which created at the time of its receipt some legal obliga-
tion, which may have been conditional, as in the case of an
infant’s contract,! or may have become barred by some posi-
tive provision of law, as by the statute of limitations,? or by
the debtor’s discharge in bankruptcy.? In such cases the
promise is said to be made in consideration of the pre-
existing obligation, and is treated as binding. The true
theory, however, upon which such promises are treated as
binding is, not that they create any contractual obligation,
but that they amount to a waiver of a personal defence
against an existing contract.4 The action in such cases is
on the original liability, and not on the subsequent promise,®
unless the promise is a negotiable instrument.* It therefore
follows, that, if the original liability has been absolutely
destroyed, a subsequent promise to perform the original con-
tract is not binding. Thus, if a creditor voluntarily releases
his debtor from the debt, a subsequent promise by the debtor
to pay the debt is not binding, and will not revive the debt.?

§ 186. 1 Williams v. Moor, 11 M. & W. 256.

2 Tisley v. Jewett, 3 Met. 489; L. 380 ; K. 655; Perkins v. Cheney, 114
Mich. 567; 72 N. W. 595.

8 Shippey v. Henderson, 14 Johns. 178; L. 868; Dusenhyry v. Hoyt,
53 N. Y. 521; L. 387; H. & W. 208; K. 682; Way v. Sperry, 6 Cush.
938; L. 384.

+ Shepard v. Rhodes, 7 R. I. 470; H & W. 210; Ilsley v. Jewett,
supra; Dusenbury v. Hoyt, supra: Way v. Sperry, supra.

5 See Hunt v. Massey, 5 B. & Ad. 902; Woodr. 387; and cases in pre-
cediyg note,

6 Parker v. Cowan, 1 Heisk. 518; Woodr. 67.

7 Valentine v. Foster, 1 Metc. 520; L. 374; K. 658; Shepard ».

Rhodes, supra.
THE PROMISEE’S CONDUCT—THE CONSIDERATION. 75

The distinction is between cases where the debt is discharged’
and where the debtor is merely entitled to a personal defence.

§ 187. Consideration — Previous Usurious Contracts. — An
exception to the general rule was made in the case of Flight
v. Reed,! where the court held that bills of exchange were
binding, though given in renewals of other bills which were
void. The original bills had been given for a loan which
was usurious at the time by reason of a statute that had
been repealed prior to the execution of the bills sued on.
This case is a peculiar one, and seems to rest on the idea
that usury laws are intended merely for the personal protec-
tion of the debtor, who may renounce the benefit of them.?
It is clear that the consideration of a contract which is illegal
at the time it is made will not in general support a promise
made after the illegality has been removed.3

§ 188. Past Consideration. If the consideration for a
promise is an act done before the making of the promise, the
promise is not binding, since the consideration is not fur-
nished in reliance on the promise. In the early stages of
the action of assumpsit, when it was sought to substitute the
new action for the action of debt on simple contract, it
became customary to declare that the defendant, being in-
debted to the plaintiff, in consideration of that indebtedness
promised to pay the debt to the plaintiff. When the promise
in indebitatus assumpsit became a fiction, the real question at
issue came to be the existence of a debt, and not the promise
to pay it. From the fact that the consideration in such
cases, to wit, the indebtedness, was alleged to have accrued
before the promise, the idea naturally arose that an act per-
formed at the defendant’s request would support a subsequent
promise.?

§ 189. Past Consideration — The Modern Doctrine. — It is
now settled, however, that a pre-existing obligation will

§ 187.1 1H. & C. 703; L. 359; K. 661.

2 Houser v. Planters’ Bank, 57 Ga. 95.

3 Ludlow v. Hardy, 38 Mich. 690.

§ 138. ! Marsh v. Rainsford, 2 Leon. 111; L. 409 ; Lampleigh v. Brath-
wait, Hob. 105; L. 418; K. 592; Langdell, Summary, §§ 90-94.
76 THE FORMATION OF CONTRACT,

support only the promise to perform that obligation which
the law, in the case of a debt, will imply;! and that a past
consideration, which did not create an obligation at the time
it was furnished, will support no promise whatever. There
are a few modern cases? which follow the old case of Lamp-
leigh v. Brathwait,4 holding that a consideration executed
at the defendant’s request is sufficient to support any sub-
sequent promise. These cases are of doubtful authority.
A request for services, however, may be made under cir-
cumstances from which a promise to pay the value of those
services may be inferred; in which case a subsequent prom-
ise to pay a definite sum may be evidence of the actual value
of the services.

§ 140. Ratification and Past Consideration. — In one class
of cases an executed consideration may be coupled with a
promise, so as to impose contractual obligation on the prom-
isor. Where A. renders services or pays money for B.
without any request or authority from B., B. may subse-
quently ratify A.’s acts, and since by the law of agency,
“omnis ratihabitio retrotrahitur et mandato priori cequt-
paratur,” B.’s ratification is treated as equivalent to a pre-
vious request to A. to perform the services or pay the money.
A subsequent promise by B. to repay A. in such a case is
held to amount to a ratification of A.’s act.1 It has been
said that when the plaintiff voluntarily does that which the

§ 189. 1 Hopkins v. Logan, 5 M. & W. 241; L. 421; K. 594; Rann ».
Hughes, 7 T. R. 350, note a; L. 187; K. 336; Cleaver v. Lenhart, 182 Pa.
285; 387 A. 811.

2 Roscorla v. Thomas, 3 Q. B. 234; L. 423; K.597; Dearborn » Bow-
man, 3 Met. 155; L. 377; H. & W. 199; Marsh v. Chown, 104 Ia. 556;
73 N. W. 1046; Walker v. Brown, 104 Ga. 857; 30 S. E. 867; Stone-
burner v. Motley, 95 Va. 784; 30 S. E. 364; Holloway v. Rudy, (Ky.),
60 S. W. 650; Langdell, Summary, § 93; Anson, Contracts (Sth ed.),
100; Pollock, Contracts, 170.

3 Bradford v. Roulston, § Ir. C. L. R. 468; L. 482; K. 606: Sterkt v.
Sweesy, 48 Neb. 767; 67N. W. 748; Silverthorn v. Wylie, 96 Wis. 69 ;
71 N. W. 107. ‘anaes:

4 Hob. 105; L. 413, K. 592.

§ 140. 1 Gleason v. Dyke, 22 Pick. 390; H. & W. 206; Doty v, Wilson,
14 Johns. 378.
THE PROMISEE’S CONDUCT—THE CONSIDERATION. 77

defendant was legally bound to do, and the defendant after-
wards in consideration thereof promises to pay the plaintiff
tor what he has done, such a promise is binding.? This
doctrine does not seem clearly established by authority ;? and
on principle the defendant’s liability in such cases ought, it
seems, to be governed by the rules of agency, rather than by
the theory of consideration.* If this be the correct view, the
liability of the defendant upon a promise to pay the plaintiff
for acts previously done must depend on the fact that those
acts were done on behalf of the defendant rather than on the
fact that the plaintiff. did what the defendant was bound to
do; and this seems to be the law.

§ 141. Moral Obligation as a Consideration. — There are
cases holding that a mere moral obligation is a sufficient
consideration for a promise. This theory was advanced in
Lee v. Muggeridge,! but was exploded in Hastwood v. Ken-
yon;? and the law to-day is settled both in England and in
most American jurisdictions that mere moral obligation is
no consideration for a promise. The reason is obvious; the
consideration must be furnished in reliance on the promise.
An obligation existing at the time the promise is made
will support, as we have seen, only such promise as the law
will imply from the existence of the obligation. Inasmuch
as the law implies no promise to fulfil a moral obligation,
such obligation cannot, of course, be a consideration at all.

2 1 Smith’s L. C. 286 (9th Am. ed.).

% Anson, Contracts (8th ed.), 100-102.

4 Langdell, Summary, § 74.

5 Doty v. Wilson, supra ; Gleason v. Dyke, supra.

§ 141. 1 5 Taunt. 36; L. 333; K. 630.

211A. & E. 438; L. 343; K. 641.

8 Wilcox v. Arnold, 116 N.C. 708; 21 S. E. 484; Mills » Wyman,
3 Pick. 207; L. 870; H. & W. 201; K. 636; Cook v. Bradley, 7 7 Conn. 57;
H. & W. 133; Musick v. Dodson, 76 Mo. 624; Hayward v. Barker, 52
Vt. 429; K. 684; Valentine v. Foster, 1 Met.520; L. 874; K. 658; Mor-
ris v. Norton, oe U. S. App. 739; 75 F. 912; "Thompson v. Hudgins,
116 Ala. 93; 22 S. 632; Stoneburner v. Motley, 95 Va. 784; 30 S. E.
364; Hartv. Strong, 183 Tl. 349 ; 55 N. E. 629; Holloway v. Rudy (Ky.),
60S. W. 850 ; contra, Goulding v. Davidson, 26 N. Y. 604; K. 669; Spear
v. Griffith, 86 Ill. 552 ; Lawrence v. Oglesby, 178 Ill. 122; 52 N. E. 945.
78 THE FORMATION OF CONTRACT.

Promises made in consideration of some pre-existing legal
obligation which has. become imperfect by reason of some
statutory provision are sometimes said to be made in consid-
eration of moral obligation. Such cases have been already
explained. That the question of moral obligation is subor-
dinate to that of legal obligation is shown by the rule that
where a surety’s contract is barred by the statute of limita-
tions, his new promise to pay the debt is binding.®

§ 142. Consideration in Deeds. — The rules of considera-
tion heretofore stated apply only to simple contracts. In
the case of deeds, no consideration is necessary,! except in
the single case where the deed is a contract in restraint of
trade. If a promise is made upon a given consideration,
and that promise is under seal, the contractual obligation is
created by the signing, sealing, and delivery of the deed, and
not by the furnishing of the consideration. The considera-
tion in such cases may be merely an unessential recital, or
it may amount to a condition affecting the obligation of the
deed, but it cannot affect the existence of the deed ; whereas
in a simple contract the furnishing of the consideration by
the promisee is a condition precedent to the existence of a
contract. In some States consideration is required by statute
even in deeds.

§ 143. Consideration in Negotiable Instruments. —In the
case of negotiable instruments, such as bills of exchange,
promissory notes, and checks, the rules of consideration are
peculiar. In many respects these instruments possess the
characteristics of formal contracts. By the custom of mer-
chants, indeed, they were formal contracts; but the courts of
Westminster Hall, though recognizing in some degree the
formal character of such instruments, refused to adopt the
custom of merchants in its entirety. To the formal require-
ments of the merchants the courts added the requirement that

4 Perkins v. Cheney, 114 Mich, 567; 72 N. W. 595.

5 Ante, § 136.

® Perkins v. Cheney, supra.

§ 142. 1 Cosgrove v. Cummings, 195 Pa. 497; 46 A. 69; Cander’s Ap-
peal, 27 Pa. St. 119; K. 752.
THE PROMISEE’S CONDUCT—THE CONSIDERATION. 179

these mercantile contracts must have a valuable consider-
ation.!_ Nevertheless, the ordinary rules of consideration
were not strictly applied to negotiable instruments. In or-
dinary simple contracts the party setting up the contract
must prove the consideration, while in the case of a negoti-
able instrument the holder of the instrument makes out his
case by proving its execution, the other party being allowed,
however, to prove that there was no consideration given for
the instrument. Although a valuable consideration is re-
quired, such consideration may be antecedent to the promise;
while in the case of ordinary contracts the consideration
must be subsequent, and furnished in reliance on the promise.
If, therefore, a bill or note is given in consideration of an
existing legal liability, it is binding without regard to the
amount of such liability; whereas, as we have seen, such
antecedent liability will ordinarily support only such a
promise as the law will imply. Negotiable instruments have
this in common with specialties, that delivery brings the
instrument into existence. They differ from specialties,
however, in this, that, while delivery of a sealed instru-
ment makes such instrument binding without more, delivery
of a negotiable instrument makes such instrument binding
only when there is a valuable consideration for the instru-
ment. This valuable consideration, however, differs from
the consideration which exists in ordinary simple contracts,
in that it may be either antecedent or subsequent to the
promise.

§ 143. 1 See Bigelow, Bills and Notes (2d ed.), 3, 8.
80 THE FORMATION OF CONTRACT.

CHAPTER V.
‘THE PROMISEE’S CONDUCT — OFFER AND ACCEPTANCE.

§ 144. Relation of Offer and Acceptance to Consideration.
—TIf A. and B. agree to marry each other, they make a
bilateral contract. A. promises to marry B. in consideration
that B. promises to marry A. This contract may be re-
garded as resulting from A.’s offer of marriage and B.'s
acceptance of his offer. Again, if C. says to D., “I will give
you $5 if you will cut my grass,” and D. cuts the grass, D.’s
act in cutting the grass is the consideration for C.’s promise,
and we have a unilateral contract. A unilateral simple
contract may therefore be regarded as originating in the offer
of a promise for an act, and as completed when that offer is
accepted by the performance of the specified act.1 And soa
bilateral simple contract may be looked upon as originating
in the offer of a promise for a promise, and in the acceptance
of that offer by the giving of the required promise. In both
cases, it is commonly said that the contract is complete when
the offer is accepted. The reason for this rule is that what
is called the acceptance of the offer is really the furnishing
of the consideration for the promise. From this it follows
that all the rules governing offer and acceptance can and
should be reduced to rules of consideration.?

§ 145. Communication of Acceptance. —It is frequently
said that the acceptance of an offer must be communicated.
This statement is as inaccurate and misleading as is the
reason usually given for it, namely, that such communication
is necessary in order that the minds of the contracting par-
ties may meet. Neither in unilateral nor in bilateral con-

§ 144. ! Campbell v. Mercer, 108 Ga. 103; 33 S. E. 871.
2 Holmes, Common Law, 803.
THE PROMISEE’S CONDUCT—OFFER AND ACCEPTANCE. 81

tracts is the communication of acceptance an essential
element. When an offer is made it is made in consideration
either of an act to be done, or of a promise to be made by
the offeree, and as soon as that act is done or that promise
made the contract is complete. Thus, if A. writes to B.
ordering B. to ship certain goods, the contract is complete
as soon as the goods are shipped.! So, if A. employs B. to
procure a purchaser for A.’s land, and promises to pay B. a
commission in case he finds a purchaser, A. is liable to B.
for his commission if B. sends A. a purchaser who buys the
land of A., although A. did not know that the purchaser was
sent by B.?

§ 146. Guaranties. — An apparent exception to the rule that
communication of acceptance is unnecessary is found in some
of the decisions in regard to guaranties. If A. promises C.
to guaranty an indebtedness thereafter to be incurred by B.,
what C. must do to render A.’s promise binding is not
entirely clear. If the guaranty is made in consideration of
money paid or other act done by the guarantee at the time of
the execution of the guaranty, we have a binding unilateral
contract.1 If the guaranty is made in consideration of the
guarantee’s promise to supply money or goods to the person
whose indebtedness is to be guarantied, we have a bilateral
contract. The consideration for the guarantor’s promise is
the promise of the guarantee, and vice versa.? If, however,
there is no such present consideration for the guaranty, the
guaranty is not a contract at all, but a mere offer to guar-
anty.? What, then, is necessary to turn this offer to guaranty
into a binding contract of guaranty ?

§ 145. 1 Lord Blackburn, in Brogden v. Metropolitan Ry. Co., 2 A. C.
666, 691; Boit »v. Maybin, 52 Ala. 252; K. 172; Finch v. Mansfield, 97
Mass. 89; Garbracht v. Commonwealth, 96 Pa. St. 449; Hunter v. Ran-
dolph, — N.C. — ; 38S. E. 288.

2 Kelly v. Stone, 94 Ia. 455; 62 N. W. 842.

§ 146. 1 Davis v. Wells, 104 U. S. 159; Silver v. Kent, 105 F. 840;
but see Acme Mfg. Co. v. Reed, — Pa. — ; 47 A. 205.

2 Wildes v. Savage, 1 Story, 22.

8 Evans v. McCormick, 167 Pa. 247; 31 A. 563; K. 184; Offord v.
Davies, 12 C. B. n. s. 748; L. 338; K. 247.

6
82 THE FORMATION OF CONTRACT.

§ 147. Why Acceptance of Guaranty must be communi-
cated. — The decisions do not afford a very satisfactory
answer to the foregoing question. In Edmonston v. Drake,}
Marshall, C. J., laid down the doctrine that in the case of a
letter of credit the custom of merchants requires that the
person making advances on the strength of such letter must
notify the party issuing it within a reasonable time. The
rule requiring such notice has been repeatedly reiterated.?
In the earlier cases the rule is said to rest on the custom of
merchants; in the later cases, it is said to be an instance of
the rule “entering in the very nature and definition of every
contract, which requires the assent of a party to whom a
proposal is made to be signified to the party making it, in
order to constitute a binding promise.”® In the common
law, however, whatever may be the rule in the jurisprudence
of the Continent, no such rule as that just quoted from
Matthews, J., exists,4 although it has been repeated so often
that, if repetition could make the law, such a rule might have
been established.

§ 148. When Acceptance of Guaranty must be communi-
cated. — The true rule in regard to such guaranties seems to
be well stated by the Supreme Court of Massachusetts in a
recent case.! Speaking of the case of the offer of a promise
for an act, the court says: “Ordinarily there is no occasion
to notify the offerer of the acceptance of such’ an offer, for
the doing of the act is a sufficient acceptance,’and the promisor
knows that he is bound when he sees that action has been
taken on the faith of his offer? But if the act is of such a

§ 147. 1 5 Pet. 624.

2 Douglass v. Reynolds, 7 Pet. 113; Lee.v. Dick, 10 Pet. 482; Adams
v. Jones, 12 Pet. 207; Davis Sewing Machine Co. v. Richards, 115 U.S.
524; 6S. Ct. 1738; K. 176; Evans v. McCormick, 167 Pa. 247; 31 A. 563;
K. 184; German S. B. v. Drake Roofing Co., — Ia. — ; 83 N. W. 960;
Acme Mfg. Co. v. Reed, — Pa. — ; 47 A. 205.

8’ Matthews, J., in Davis v. Wells. 104 U. S. 159, 164.

4 Lennox v. Murphy, 171 Mass. 370; 50 N. E. 644, citing text.

§ 148. 1 Bishop v. Eaton, 161 Mass. 496; 87 N. E. 665; K. 181.

2 Bascom v. Smith, 164 Mass. 61; 41 N. E. 130; K. 39; Scribner ».
Schenkel, 128 Cal. 250: 60 P. 860.
THE PROMISEE’S CONDUCT—OFFER AND ACCEPTANCE. 83

kind that knowledge of it will not quickly come to the prom-
isor, the promisee is bound to give him notice of his accept-
ance within a reasonable time after doing that which constitutes
the acceptance. In such a case it is implied in the offer that,
to complete the contract, notice shall be given with due
diligence, so that the promisor may know that a contract has
been made. But where the promise is in consideration of an
act to be done, it becomes binding upon the doing of the act
so far that the promisee cannot be affected by a subsequent
withdrawal of it, if within a reasonable time afterward he
notifies the promisor. In accordance with these principles,
it has been held in cases like the present, where the guaran-
tor would not know of himself, from the nature of the trans-
action, whether the offer has been accepted or not, that he is
not bound without notice of the acceptance, seasonably given
after the performance which constitutes the consideration.” 3
In the same case, however, the court holds that actual notice
is not necessary, and that “if that is done which is fairly to
be contemplated from their relations to the subject-matter
and from their course of dealing, the rights of the parties are
fixed, and a failure actually to receive the notice will not
affect the obligation of the guarantor.”

§ 149. Summary of Rules governing Communication of
Acceptance of Guaranties. — The law in regard to the commu-
nication of acceptance may be summed up as follows. In
the case of unilateral contracts the performance of the act
specified in the offer as the consideration makes the promise
binding. Notice of acceptance is generally unnecessary.!
The acceptor, however, is bound to conform to the terms of
the offer, and to act reasonably. If, then, the offer itself
calls for notice of acceptance, such notice is essential. If
the offer does not call for notice of acceptance, such notice

3°De Cremer v. Anderson, 113 Mich. 578; 71 N. W. 1090; Barnes Cycle
Co. v. Reed, 84 F. 608; Acme Mfg. Co. v. Reed, — Pa. — ; 47 A. 205.

§ 149. 1 Knowlton, J., in First Nat. Bk. v. Watkins, 154 Mass. 385,
387 ; 28 N. E. 275; K. 173; Lininger v. Wheat, 49 Neb. 567; 68 N. W.
941; Lennox v. Murphy, 171 Mass. 370; 50 N. E. 644; Maury v. Waxel-
baum Co., 108 Ga. 14; 33 S. E. 701; Scribner v. Schenkel, 128 Cal. 250;
60 P. 860. .
84 THE FORMATION OF CONTRACT.

may be rendered necessary by custom. In the case of letters
of credit and other commercial guaranties the custom of mer-
chants requires such notice, or, rather, requires that the
guarantee should take reasonable steps to notify the guaran-
tor that he.has acted on the guaranty.2 The contract is
complete when the consideration is furnished, that is, when
the guarantee makes advances; but failure on the part of the
guarantee to take reasonable steps to notify the guarantor of
such advances within a reasonable time will discharge the
guarantor. Failure to give notice is therefore a condition
subsequent, putting an end to the contract; yet the anoma-
lous rule has been laid down by the highest authority that
the guarantee is bound to prove that he has given notice.
Logically, of course, it should be for the guarantor to show
that he has received no notice, and is therefore discharged
from the obligation which comes into existence as soon as
the advances are made by the guarantee. Knowledge that
the offer has been accepted is equivalent to notice where
notice is necessary. In regard to the whole subject of notice
of acceptance of guaranties there has been much diversity of
judicial opinion, but “the conflict seems to be founded pri-
marily on the construction of the contract, and in the diver-
gent views as to what constitutes an absolute guaranty.”

§ 150. The Consideration is determined by the Promise. —
The consideration which makes a parol promise binding must
be that which is fixed by the promise itself. The promisee
can turn the promise into a contract only by doing that
which the promisor has designated as the consideration for
such promise. An offer or promise which does not specify
any consideration cannot become a contract, though the
promisee acts in reliance upon it.1 This rule has been re-
‘laxed in some jurisdictions, at least in the case of subscrip-

? But see the preceding cases.

8 Douglass v. Reynolds, 7 Pet. 113.

4 Barnes Cycle Co. v. Reed, — U.S. App. — ; 91 F. 481.

5 German S. B. v. Drake Roofing Co., — Ia. — ; 88 N. W. 960.

§ 150. 1 Grand Lodge v. New Orleans, 166 U. S. 143; Hollins v. Hub-
bard, 165 N. Y. 534; 59 N. E. 317; and see Dutton’s Estate, 151 Pa.
426; 37 A. 582.
THE PROMISEE’S CONDUCT— OFFER AND ACCEPTANCE. 85

tion papers, and the promisee has been allowed to recover
simply because he had acted in reliance on the promise, al-
though that promise specified no consideration.?

§ 151. Mistake as to Subject-matter.— There are cases
where the consideration furnished by the promisee, though
apparently in accordance with the requirements of the prom-
isor, is in reality something different. For example, A.
agrees to sell and B. to buy a certain amount of cotton “ex
‘ Peerless’ from Bombay.” There are two: ships named
“ Peerless,” sailing from Bombay. A. means one ship, and
B. the other. There is no contract, in spite of the apparent
agreement, because there is no consideration for A.’s promise
to sell or for B.’s promise to buy. A.’s promise in effect is,
“J will sell you cotton from ship Peerless No. 1 if you will
buy that cotton.” B.’s promise is, “I will buy cotton from
ship Peerless No. 2 if you will sell me that cotton.” It
follows, therefore, that, while there is an apparent contract
consisting of mutual promises, in reality the promises are
not mutual at all, and there is therefore no contract. It is
just as if A. were to say to B., “I will sell you my horse for
$100,” and B. should reply, “I will give you $100 for your
cow.” This case is often treated as if the agreement were
void on the ground of mistake; in reality, there is no con-
tract, because there is no consideration for either A.’s or B.’s
promise. If in the case just put there had been only one
ship “Peerless,” but one of the parties had used the name
by mistake for that of another ship, the contract would have
been good. A. and B.’s promises would have been mutual,
and would each have been-a good consideration for the other,
in spite of the mistake.?

2 See ante, §§ 127-131; post, Appendix II. Had the reasoning in
Pillans v. Van Mierop, 3 Burr. 1663; L. 177; K. 324, been followed
by the later cases, this doctrine might now be the rule instead of the
exception.

§ 151. } Raffles v. Wichelhaus, 2 H. & C. 906; L. 39; K. 7. See Peer-
Jess Glass Co. v. Pacific, etc. Co., 121 Cal. 641; 54 P. 101; Falck v. Wil-
liams, 1900, A. C. 176 (P. C.).

2 Tonides v. Pacific Ins. Co., L. R. 6 Q. B. 674, 686. See also Holmes,
Common Law, 809; Strong v. Lane, 66 Minn. 94; 68 N. W. 765.
86 THE FORMATION OF CONTRACT.

§ 152. Mistake as to Terms of Offer. — Again, where A.
agrees orally to sell B. a horse for $165, and B. accepts A.’s
offer, thinking that A. has offered the horse for $65, there
is no contract.!. A.’s promise is, “I will sell you my horse
for $165.” B.’s promise is, “I will give you $65 for your
horse.” These two promises are both without consideration,
and the apparent agreement is therefore not a contract. If,
however, A.’s offer is in writing, and B. accepts it, the fact
that B. makes a mistake in reading A.’s offer does not pre-
vent the formation of a contract, as we have already seen.”
Where the offer is in writing, B.’s acceptance is construed as
a promise to pay the amount specified in the writing. Where
A.’s offer is made orally, however, B.’s acceptance is con-
strued only as a promise to pay the amount which B. thinks
A. offers the horse for. In this case also the invalidity of
the oral agreement. is due, not to mistake, which exists
equally where the contract is in writing, but to the fact that
the promises on each side are not mutual, and therefore fur-
nish no consideration for each other. Even if the offer is in
writing, if it is ambiguous, and A. means one thing and B.
another, there is no contract, for the same reason.?

§ 153. Acceptance in Unilateral and Bilateral Contracts. —
The consideration may be a promise or an act; but if the
promisor has specified as the consideration a promise to do
a certain act, it is the promise, and not the doing of the act,
which constitutes the consideration. For example, A. fur-
nishes estimates to B. for the fitting up of B.’s offices. B.
writes to A., “Upon an agreement to finish the fitting up of
the offices in two weeks, you can begin at once.” <A. does
not answer B.’s letter, but goes ahead and buys lumber for
the offices and begins work thereon. 8B. then countermands
his order, and A. sues B. for breach of contract. A. cannot
recover. The consideration for B.’s promise to pay for the
work was not the performance of the work, but the making

§ 152. 1 Rupley v. Daggett, 74 Tl. 351; K. 18. See also Strong v.
Lane, 66 Minn. 94; 68 N. W. 765.

2 Ante, § 78.

8 Falck v. Williams, 1900, A. C. 176 (P. C.).
THE PROMISEE’S CONDUCT—OFFER AND ACCEPTANCE. 87

of an agreement to perform the work; and as A. has never
promised to perform the work, B.’s promise is without con-
sideration, and is therefore not binding.!

§ 154. Acceptance and Counter Offer.— The promise is
always the primary, and the consideration the secondary,
act. When A. makes a promise to B., therefore, in consid-
eration that B. will make a certain promise to A. in order
that A.’s promise shall bind him, it is necessary that B.’s
promise should be made in response to A.’s; in other words,
B.’s promise must be an acceptance of A.’s promise, and not
a counter offer, even though such counter offer be the exact
promise called for by A. “If I write to a person and say,
‘If you can give me £6,000 for my house, I will sell it you,’ -
and on the same day, and before that letter reaches him, he
writes to me, saying, ‘If you will sell me your house for
£6,000, I will buy it,’ that would be two offers crossing each
other, and cross offers are not an acceptance of each other.” }

§ 155. Conditional Acceptance. — Since the consideration
must be that which the promisor has specified, if A. makes a
promise in consideration that B. will make a certain promise,
B. must make that specific promise in order to bind A.
Hence a conditional acceptance by B. of A.’s offer does not
bind A; nor does an acceptance varying in any respect
from the terms of the offer complete the contract.2. Thus,
an offer of a “season’s supply” of goods is not accepted by
an order of a definite amount of goods.2 Such acceptance
amounts merely to a counter offer.

§ 153. 1 White v. Corlies, 46 N. Y. 467; W. 512; H. & W.7; K. 170.

§ 154. 1 Brett, J., in Tinn v, Hoffmann, 29 L. T. Nn. s. 271, 278; W.
473; K. 52.

§ 155. ! Harris v. Scott, 67 N. H. 437; 82 A. 770; Putnam v. Grace,
161 Mass. 237; 87 N. E. 166; Honeyman v. Marryatt, 6 H. L. C. 112;
Briggs v. Sizer, 30 N. Y. 647.

2 Minneapolis, etc. R. R. v. Columbus Rolling Mill, 119 U. S. 149;
7 8. Ct. 168; H. & W. 74; K. 298; Baker v. Holt, 56 Wis. 100; 14
N. W. 8; K. 218; Maynard v. Tabor, 53 Me. 511; Crossley v. Maycock,
L. R. 18 Eq. 180; K. 217; Jones v. Daniel, 1894, 2 Ch. 382; Davenport
v. Newton, 71 Vt. 11; 42 A. 1087; Russell v. Falls Mfg. Co., 106 Wis.

329; 82 N. W. 134.
3 Michigan Bolt Works v. Steel, 111 Mich. 153; 69 N. W. 241.
88 THE FORMATION OF CONTRACT.

§ 156. Manner of Acceptance. — The acceptance, moreover,
must be made in the manner specified by the person making
the offer. Thus where A. makes an offer to B., requesting
an acceptance by return of the wagon which brings the offer,
an acceptance sent to another place has no effect.1_ So where
an answer by telegram is requested, an answer by mail is
insufficient.?

§ 157. Time of Acceptance. — The offer must be accepted,
that is to say, the consideration must be furnished, within
the time specified by the offer.! If no time for acceptance
of the offer is specified, the offer must be accepted within a
reasonable time.2- What is a reasonable time depends entirely
upon circumstances.? The offer comes to an end by self-
limitation at the expiration of the prescribed time, or of a
reasonable time, as the case may be.‘

§ 158. Communication of Acceptance. — The contract is
complete, and the offer becomes binding, as soon as the offer
is accepted, that is to say, as soon as the consideration is
furnished. It has often been said that the acceptance must
be communicated, but this statement has been shown to be
misleading.! If the offerer expressly makes the formation
of the contract dependent on the actual communication to
him of the acceptance, then, of course, the acceptance must
be so communicated.? In other cases the question is, not
“Has the acceptance been communicated?” but “Has the
acceptor done an overt act manifesting an intention to bind

§ 156. 1 Eliason v. Henshaw, 4 Wheat. 225; L. 70; H. & W. 38.

2 Horne v. Niver, 168 Mass. 4; 46 N. E.393; K. 286.

§ 157. 1 Longworth v. Mitchell, 26 Ohio St. 384; Potts v. Whitehead,
20 N. J. Eq. 55; Maclay v. Harvey, 90 Ill. 525; H. & W. 41; K. 280;
Waterman v. Banks, 144 U. S. 394; 12S. Ct. 646.

2 McCracken v. Harned, — N. J. L. — ; 48 A. 513.

8 Averill v. Hedge, 12 Conn. 424; L. 90; Ramsgate Hotel Co. v. Mon-
tefiore, L. R. 1 Ex. 109; L. 40; K. 278; Loring v. Boston, 7 Met. 409;
L. 99; K. 273; Minnesota Oil Co. v. Collier, etc. Co., 4 Dill. 481; H. &
W. 46.

4 Pollock, Contracts, 24.

§ 158. 1 Ante, §§ 146-149. See an article by Professor C. N. Gregory,
39 Am. Law Register, n. s. 354.

2 Lewis v. Browning, 130 Mass. 173; W. 505; K. 166.
THE PROMISEE’S CONDUCT—OFFER AND ACCEPTANCE. 89

himself, and is that act one which, according to the ordinary
usages of mankind, or according to the course of dealing
between the parties, the offerer must have contemplated as an
acceptance ? ”

§ 159. Acceptance by Post. — Many cases have arisen in
the case of contracts by correspondence involving the ques-
tion when a contract is completed. After some uncertainty,!
it was finally settled in England? that “where the circum-
stances are such that it must have been within the contem-
plation of the parties that, according to the ordinary usages
of mankind, the post might be used as a means of communi-
cating the acceptance of an offer, the acceptance is complete
as soon as it is posted.”® The same rule prevails throughout
the United States. An early Massachusetts case® laid down
the doctrine that actual communication of the acceptance is
necessary to complete the contract; but this case has recently
been overruled.6 There has been much artificial reasoning
on this point, caused by a desire on the part of judges and
text-writers to make every case harmonize with the subjective
consensual theory of contract, that there must be a “ meeting
of minds” to constitute a contract. ‘It would seem as if the
simple and straightforward reasoning of Lord Herschell in
Henthorn v. Fraser,’ a late English case on this point, ought
to sweep away the fog which has so long obscured this simple
though important question.

Within the meaning of the foregoing rule the letter is
posted only when it has been placed in the control of the
post-office authorities. Delivery of the letter to a postman
who is not authorized to receive letters is insufficient.6 The

§ 159. 1 Harris’s Case, L. R. 7 Ch. 587; L. 54.

2 Household Fire Ins. Co. v. Grant, 4 Ex. D. 216; W. 481; K. 118.

2 Lord Herschell, in Henthorn v. Fraser, 1892, 2 Ch. 27, 88; W. 498;
K. 141.

4 Tayloe v. Merchants’ Fire Ins. Co., 9 How. 390; L. 106; H. & W.
29; K. 107; Mactier v. Frith, 6 Wend. 103; L. 77.

5 McCulloch v. Eagle Ins. Co., 1 Pick. 278; L. 72; K. 95.

6 Brauer v. Shaw, 168 Mass. 198; 46 N. E. 617; K. 269. See an
article by Professor C. N. Gregory, 39 Am. Law Reg. w. s. 354.

7 Supra.

8 Re London & Northern Bank, 1900, 1 Ch. 220.
90 THE FORMATION OF CONTRACT.

letter must also be in condition to reach the addressee in due
course, 7. e. duly addressed and stamped.?®

§ 160. Acceptance by Telegraph. — So where the parties have
agreed to transact business by telegraph, the contract is com-
plete as soon as the telegram accepting the offer is delivered
to the telegraph company.?

§ 161. Acceptance by Post—-The Alabama Doctrine. — In
Alabama the peculiar doctrine prevails that when an offer is
sent by mail and properly accepted, the contract becomes
binding as of the date that the offer was mailed.’ This doc-
trine seems to be unknown in other jurisdictions.

§ 162. Failure to receive Acceptance. Since the contract
is complete when the letter of acceptance is posted, the sub-
sequent fate of the letter is of no consequence.’ The same
reasoning applies where an offer is accepted in some other way
than by post. Thus, where A., in compliance with the usual
or occasional practice, deposits a letter accepting B.’s offer in
B.’s letter-box, such deposit completes the contract, though
the acceptance is never received.?

§ 168. attempts to accept. — Mere determination to accept
an offer is of no effect, and even the doing of some act in pur-
suance of that determination, as, for instance, starting on a
journey to meet the offerer, is insufficient, unless that act be
the act called for by the offeree.!

§ 164. Acceptance after Rejection of Offer.— An offer can-
not be accepted after it has once been rejected ; and a proposal
to accept, or an acceptance varying from the terms of the offer,
amounts to a rejection.!

® Blake v. Hamburg Bremen F. I. Co., 67 Tex. 163; 2 S. W. 321;
K. 158.

§ 160. 1 Trevor v. Wood, 36 N. Y. 306; K. 138; Pattee’s Cases on Con-
tracts, 212; Minnesota Oil Co. v. Collier, ete. Co., 4 Dill. 431; H. & W. 46.

§ 161. 1 Hatchett v. Molton, 76 Ala. 410; Garrett v. Trabue, 82 Ala.
227; 3S. 159.

§ 162. } Household Fire Ins. Co. v. Grant, 4 Ex. D. 216; W. 481; K.
118; Vassar v. Camp, 11 N.Y. 441; L. 110; Washburn v. Fletcher, 42
Wis. 152; Chytraus v. Smith, 141 Ill. 231; 30 N. E. 450.

2 Howard v. Daly, 61 N. Y. 362.

§ 163. 1 Troustine v. Sellers, 35 Kans. 447; 11 P. 441.
§ 164. 1 Hyde v. Wrench, 3 Beav. 334; 1. 18; K. 287; Minneapolis,
THE PROMISEE’S CONDUCT—OFFER AND ACCEPTANCE. 91

§ 165. Revocation of Offer.— Since the consideration must
be furnished in reliance on the promise, the offer, or promise,
may be withdrawn at any time before the consideration has
been furnished.1 When the promisor wishes to revoke his
promise, he may attempt to do so in one of two ways: by
notifying the promisee, or by doing some act rendering the
performance of such promise impossible. A modification of
an offer is a withdrawal of the original offer2 -

§ 166. Notice of Revocation. — If an offer is made which by
its terms is to remain open for a specified time, or for a reason-
able time, acceptance of the offer within that time completes
the contract, unless the offeree is actually notified of the rev-
ocation of such offer before acceptance, or unless the offerer
has done some act rendering the performance of his promise
impossible, and the offeree has actual knowledge of the fact
that performance has become impossible.?

§ 167. Expiration of Offer. — As to the proposition that the
aeceptance of an offer before that offer has expired by self-
limitation completes the contract, there can hardly be any
dispute. It is important to notice very carefully, however, the
exact time during which an offer is to remain open. As has
already been stated, if no time is specified in the offer within
which it must be accepted, a reasonable time will be implied ;
but a reasonable time to accept an offer on the stock exchange
might be a few seconds, while that for the acceptance of an

etc. R. R. v. Columbus Rolling Mill, 119 U. 8. 149; 75S. Ct. 168; H. &
W. 74; K. 293; Virginia Hot Springs Co. v. Harrison, 938 Va. 569; 25
S. E. 888; Anglo-American Provision Co. v. Prentiss, 157 Ill. 506; 42
N. E. 157.

§ 165. 1 Offord v. Davies, 12 C. B. nw. s. 748; L. 38; K. 247.

2 Travis v. Nederland L. I. Co., — U.S. App. — ; 104 F. 486.

§ 166. 1 Boston & Maine R. R. Co. v. Bartlett, 3 Cush. 224; L. 103;
K. 245; Merchant v. O’Rourke, — Ia. —; 82 N. W. 759.

2 Byrne v. Van Tienhoven, 5 C. P. D. 344; Henthorn »v. Fraser, 1892,
2 Ch. 27; W. 498; K. 141; Tayloe v. Merchants’ Fire Ins. Co., 9 How.
390; L. 106; H.& W.29; K.107; Patrick v. Bowman, 149 U.S. 411; 13
S. Ct. 811, 866; Brauer v. Shaw, 168 Mass. 198; 46 N. E. 617; K. 269.

8 Dickinson v. Dodds, 2 C. D. 463; L. 61; K. 252, Coleman »v. Ap-
plegarth, 68 Md. 21; 11 A. 284; H. & W. 57; K. 264.
92 THE FORMATION OF CONTRACT.

offer to sell a farm might be days, or even weeks. Moreover,
a distinction has been drawn between the case where an offer is
made to remain open for a given time, and the case where an
offer is made which in the ordinary course of things ought to be
accepted within a certain time, but where there is a collateral
promise to leave the offer open for a longer time. In the for-
mer case, acceptance within the given time completes the
contract; in the latter case, acceptance of the offer after the
ordinary time, but before the expiration of the time specified
in the collateral promise, has no effect, such collateral promise
not being binding for want of consideration. The case of
Cooke v. Oxley,? which is the leading authority for this dis-
tinction, has been sharply criticised, but has been ably de-
fended by Mr. Benjamin.? Although often cited, the decision
is of slight consequence at the present day, the discussion of
the subject in the report being too brief, and turning on a ques-
tion of pleading.

§ 168. What constitutes Notice of Revocation.— That a
promise cannot be turned into a contract by the promisee,
when he knows that the promisor has put it out of his power
to perform such promise, seems to be the logical conclusion
from the case of Dickinson v. Dodds.! In that case the de-
fendant offered to sell a certain piece of land to the plaintiff,
the offer to remain open till Friday morning. On Thursday
the defendant sold the land to another party. The plaintiff
accepted -the defendant’s offer, and notified the defendant of
his acceptance before the time for acceptance had expired, but
after the plaintiff had learned of the sale. The court held
there was no contract. Various reasons have been suggested
for the decision,? but a recent reference to the case? seems to

§ 167. ! Boston & Maine R. R. Co. v. Bartlett, 3 Cush. 224; L. 103;

K. 245; Cheney v. Cook, 7 Wis. 418; contra, Bean v. Burbank, 16 Me.
458.

237. RB. 653, L. 2.

3 Sales, §§ 64-66.

§ 168. 1 2Ch. D. 463; L. 61; K. 252.

2 Anson, Contracts (4th ed.), 29. :

8 See opinion of Lord Herschell, in Henthorn v. Fraser, 1892, 2 Ch,
27; W. 498; K. 141.
THE PROMISEE’S CONDUCT—OFFER AND ACCEPTANCE. 93

show that the English courts regard the fact that the plaintiff
knew of the sale before he sent his acceptance as the important
element in the case. Nice questions as to whether the offerce
must have actual knowledge of the fact that it is impossible
for the offerer to perform, or whether the means of knowledge
are sufficient to deprive him of the right to accept the offer,
still remain unanswered. It seems, however, if notice of revo-
cation is to be dispensed with, that the offeree ought at least
to have actual knowledge of the withdrawal of the offer.
Whether the mere fact that the offerer has put it out of his
power to perform his promise is in itself ever a sufficient revo-
cation is perhaps doubtful. Such conduct on the part of
the promisor can have no effect where the parties are doing
business by correspondence ;* and even where they are in
immediate communication with each other, it seems that
knowledge on the part of the offeree of the change in the
offerer’s position ought to be deemed essential to constitute
a revocation.® ,

§ 169. Manner of revoking Offer.— Where an offer is made
to the public, as in the case of an offer of a reward, or of
the publication of time-tables by a railway company, the
offer may be revoked in the same manner in which it was
made;! otherwise, actual notice of revocation must be
given.” ;

§ 170. Revocation of Offer by Operation of Law. — An offer
may be terminated not only by self-limitation and by revoca-
tion, but also by operation of law.

An offer is terminated by operation of law when the offerer
dies. It is generally held that the offeree’s ignorance of the

4 Adams v. Lindsell, 1 B. & Ald: 681; L. 4; K. 93.

5 Bean v. Burbank, 16 Me. 458, might seem an authority to the con-
trary; but the reasoning of the court puts that decision on a different
ground.

§ 169. 1 Shuey v. United States, 92 U. S. 73; K. 249; Pattee’s Cases
on Contracts, 216.

2 Sears v. Eastern R. R. Co., 14 Allen, 438.

§ 170. 1 Pratt v. Trustees, 93 Ill. 475; H. & W. 35; Helfenstein’s
Estate, 77 Pa. St. 828; Wallace v. Townsend, 43 Ohio St. 537; 3 N. E.
601. And see Jordan v. Dobbins, 122 Mass, 168 ; K. 299.
94 THE FORMATION OF CONTRACT.

offerer’s death is of no consequence ;? but in Alabama a dif-
ferent view seems to prevail.

An offer is also terminated by operation of law when the
offerer becomes insane ;4 but in such case knowledge of the
insanity on the part of the offeree seems essential.®

2 Wallace v. Townsend, supra; Aitken v. Lang, 21 Ky. 247; 51S. W.
154.

8 Garrett v. Trabue, 82 Ala. 227; 3S. 159; Davis v. Davis, 93 Ala.
173; 9 8. 7386. These are cases of agency, but they seem to support the
statement in the text.

4 Beach v. First M. E. Church, 96 Ill. 177; K. 309.

5 See Drew v. Nunn, 4 Q. B. D. 661; K. 301 (a case of agency) ;
Imperial Loan Co. v. Stone, 1892, 1 Q. B. 599; K. 311; Woodr. 433.
BOOK II.

THE LEGALITY OF CONTRACTS.

CHAPTER VI.

ILLEGAL CONTRACTS.

§ 171. Introductory. — Hitherto we have examined the in-
ternal structure of contracts, and have seen what elements
are required in our law to constitute a contract. These ele-
ments may all be present, however, and yet fail to create any
contractual obligation, by reason of some external limitation
imposed by the law upon individual freedom of contract. If
the elements discussed in the previous chapters are lacking,
there is no contract; if these elements are present, but some
rule of law prevents their giving rise to contractual obligation,
we have an illegal contract.

Contracts are enforced by the courts, not for the benefit of
the parties, but because the law regards the enforcement of
contracts in general as essential to the welfare of the com-
munity. Whenever, therefore, it appears that it would be
prejudicial to the public interest to enforce a particular kind
of contracts, the courts refuse to enforce contracts of that
character.

§ 172. Classification of Illegal Contracts. — The different
classes of illegal contracts to be considered may be divided
into three elasses: prohibited contracts; contracts to do a
prohibited act; and contracts against public policy.

§ 173. Prohibited Contracts. — All contracts the making of
which is expressly forbidden by legislative authority, or which
are expressly declared void by such authority, are necessarily
unenforceable.
96 THE LEGALITY OF CONTRACTS.

§ 174. Contracts to do a Prohibited Act. — Contracts to do
an act prohibited by law are illegal and void.t Under this
head come contracts to commit any kind of crime. It is gen-
erally held that an act is prohibited if a statute provides a
penalty for its commission,? unless such penalty is imposed
solely for the purpose of protecting the revenue ;? as in the
case of stamp acts,! but the distinction between revenue and
other statutes has been criticised. The real question in such
cases is whether the legislature has intended to prohibit the
contract or not, and the courts differ in their construction of
the legislative intention.2 Even in cases where only the rev-
enue laws are involved, if the agreement amounts to a fraud
on the revenue it is illegal.®

§ 175. Contracts against Public Policy.—In addition to
these specific classes of illegal contracts, there are many con-
tracts which the courts refuse to enforce on grounds of “ pub-
lic policy.” Such contracts tend in one way or another to
injure the public welfare, and are therefore illegal. Such
contracts may be divided into three classes: first, contracts
tending to injure the State in its external relations; second,
contracts tending to interfere with the internal administration
of the government; third, contracts tending to injure the pub-
lic welfare by injuring the citizens of the State.

§ 174, } Miller v. Ammon, 145 U. S. 421; Union N. B. »v. Louisville,
etc. R., 145 Tl. 208; 34 N. E. 135.

2 Union N. B. v. Louisville, etc. R., 145 Til. 208; 34 N. E. 135;
Cope v. Rowlands, 2 M. & W. 149; W. 258; Singer Mfg. Co. v. Draper,
108 Tenn. 262; 52 S. W. 879.

8 Johnson v. Hudson, 11 East, 180; Brown v. Duncan, 10 B. & C. 98;
Larned v. Andrews, 106 Mass. 435; Aiken v. Blaisdell, 41 Vt. 655; W.
264; Vermont L. & T. Co. v. Hoffman, — Idaho —; 49 P. 814; McKeever
v. Beacom, 101 Ia. 173; 70 Mo. 112.

4 Linton v. National L. I. Co., — U. 8. App. — ; 104 F. 584; Ken-
nedy v. Rountree, — 8. C. — ; 878. E. 942.

5 Larned v. Andrews, supra; Cope v. Rowlands, supra; Miller v. Am-
mon, 145 U. S. 421; 12 S. Ct. 884; Pangborn v. Westlake, 86 Ia. 546;
H. & W. 315; Bowditch v. New Eng. Mut. Life Ins. Co., 141 Mass.
292; 4. N. E. 798; W. 259; Bisbee v. McAllen, 89 Minn. 143; 39 N. W.
299; W. 263.

§ Johnson v. Hudson, supra.
ILLEGAL CONTRACTS. 97

§ 176. Contracts tending to injure the State in its External Re-
lations. — The first class of contracts is generally treated in con-
nection with the subject of International Law. Trading withan
alien enemy is the most common example of such contracts.

§ 177, Contracts tending to interfere with the Internal Ad-
ministration of the Government. — The second class of contracts
includes, first, contracts tending to interfere with the elcc-
tion or appointment of public officers; second, contracts
tending to prevent public officers from performing their
duties properly; third, contracts tending to obstruct the
administration of justice.

§ 178. Contracts tending to interfere with the Election or
Appointment of Public Officers. — Contracts tending to inter-
fere with the election or appointment of public officers are
illegal. Among such contracts are included contracts for the
sale of public offices ;1 contracts tending to diminish competi-
tion for public office ;2 contracts to pay for securing an office,
or a recommendation thereto ;* contracts to pay the holder of
an office for resigning ;° and contracts tending to prevent the
exercise by a voter of his best judgment in voting.®

§ 179. Contracts tending to prevent Public Officers from per-
forming their Duties. — Contracts tending to prevent persons
holding public office from performing their duties are of great
variety. First may be mentioned contracts for the assign-
ment of the emoluments of a public office before they are
earned.! If such emoluments could be assigned, the public
service would suffer from the fact that the assignor had no
interest in the compensation to be paid for his work. Again,

§ 176. ! United States v. Grossmayer, 9 Wall. 72; H. & W. 215.

§ 178. 1 Robertson v. Robinson, 65 Ala. 611.

2 Gray v. Hook, 4 N. Y. 449; Hunter v. Nolf, 71 Pa. St. 282.

3 Meguire v. Corwine, 101 U. S. 108 ; W. 216.

4 Hartwell v. Hartwell, 4 Ves. 811; Edwards v. Randle, 63 Ark. 318;
38 S. W. 343.

§ Eddy v. Capron, 4 R. I. 394; Edwards v. Randle, supra.

6 Nichols v. Mudgett, 32 Vt. 546.

§ 179. 1 Dickinson v. Johnson, — Ky. — ; 618. W. 267; Bowery Nat.
Bk. v. Wilson, 122 N. Y. 478; 25 N. E. 855; holding that there is no
difference in this regard between fees and salaries.

7
98 THE LEGALITY OF CONTRACTS.

a contract to indemnify an officer for not levying process
which the law requires him to levy is illegal.?

§ 180. Contracts to influence Official Action.— A contract
is illegal when it involves a promise to pay for any official act
by one holding executive, legislative, or judicial office. If
there is a promise to pay the officer for doing his duty, this
promise is, as we have seen, without consideration! If the
promise, however, is to pay for the doing of an official act in
regard to which the officer is bound to exercise his best judg-
ment, the contract is illegal, since it tends to deprive the pub-
lic of the exercise of the officer’s discretion, to which the public
is entitled. Such transactions amount simply to bribery,
and are corrupt in their very nature. The mere fact that the
agreement in question has a tendency to produce corruption
is sufficient to render it illegal. Thus a contract to control
legislative, executive, or judicial action is illegal ;? though a
contract for professional services in presenting a claim to the
proper authorities is valid,? even though the contract provides
for a contingent feet There seems to be no distinction in
principle between agreements to influence the conduct of
private agents and public officials. “Indeed, the law is gen-
eral that agreements upon pecuniary considerations, or the
promise of them, to influence the conduct of officers charged
with duties affecting the public interest, or with duties of a
fiduciary character to private parties, are against the true
policy of the State, which is to secure fidelity in the discharge
of all such duties. Agreements of that character introduce
mercenary considerations to control the conduct of parties,
instead of considerations arising from the nature of their

2 Harrington v. Crawford, 186 Mo. 467; 38S. W. 80. As to indem-
nity for levying process, see post, § 232.

§ 180. ! And has also been held against public policy. Foley v. Platt,
105 Mich. 635; 63 N. W. 520.

2 Trist v. Child, 21 Wall. 441; W.210; H. & W.340; Spalding v. Ewing,
149 Pa. St. 375; 24.A. 219; Tool Co. v. Norris, 2 Wall. 45; Woodman
v- Innes, 47 Kans. 26; 27 P. 125; Colusa County v. Welch, 122 Cal. 428; 55
P. 243; Richardson v. Scott’s Bluff County, 59 Neb. 400; 81 N. W. 309.

8 Barry v. Capen, 151 Mass. 99; 23 N. E. 735; Chesebrough v. Con-
over, 140 N. Y. 382; 35 N. E. 6038.

4 Bergen v. Frisbie, 125 Cal. 168; 57 P. 784.
ILLEGAL CONTRACTS. 99

duties and the most efficient way of discharging them. They
are therefore necessarily corrupt in their tendency.”

§ 181. Contracts improperly influencing Individuals in Cases
involving the Public Welfare. — A contract is against public
policy for like reasons whenever it introduces mercenary con-
siderations to control the conduct of a private individual in a
case where such conduct ought to be influenced only by a
regard for the public welfare. As has been seen, an agree-
ment to say a voter for his vote is illegal; and the same prin-
ciple applies where there is a contract to pay a man for his
action in a matter where the public interest is concerned.
Thus a contract to pay a property-owner for signing a petition
to secure action by public officers, as in the case where a fran-
chise is sought, or a public improvement to be made, is illegal.
A contract limiting the exercise of a public franchise to the
injury of the public is illegal? So is a contract to pay for
establishing a particular route for a railroad, or for locating a
station at a particular place.2 In a recent case such a con-
tract was sustained because it did not appear to be actually
injurious to the public or to the stockholders of the railway
company. This test, however, seems unsatisfactory, for rea-
sons to be stated hereafter.®

§ 182. Contracts tending to obstruct the Administration of
Justice. — Any contract tending to obstruct the administration
of justice is illegal. Under this head come contracts involving
maintenance and champerty ; contracts tending to stifle prose-
cution; contracts for procuring or suppressing evidence; and
contracts ousting the jurisdiction of the courts.

5 Field, J., in Woodstock Iron Co. v. Richmond, etc. Co., 129 U. S.
643, 662; W. 219.

§ 181. 1 Maguire v. Smock, 42 Ind. 1; Howard v. First Church, 18
Md. 451; Doane v. Chicago City R., 160 Ill. 22; 45 N. E, 507.

2 Doane v. Chicago City R., 160 Il. 22; 45 N. E, 507; South Chicago
City R. v. Calumet Co., 171 Ill. 391; 49.N. E. 576.

8 Fuller v. Dame, 18 Pick. 472; Bestor v. Wathen, 60 Il]. 188; Mobile
& Ohio R. v. People, 132 Ill. 559; 24 N. E. 648; and see Woodstock &
Iron Co. v. Richmond, etc. Co., 129 U. 8S. 648; W. 219.

4 Telford v. Chicago, etc. R., 172 Ill. 559; 50 N. E. 105.

§ See post, § 231.
100 THE LEGALITY OF CONTRACTS.

§ 183. Maintenance and Champerty.— A contract is regarded
as obstructing the administration of justice when it involves
the encouragement of litigation. by means of maintenance or
champerty. Maintenance consists in aiding the suit of an-
other without lawful excuse. An agreement to divide the
proceeds of the suit between the plaintiff and the party main-
taining him constitutes champerty at common law.}

§ 184. Essentials of Maintenance. — The rules against main-
tenance and champerty are of ancient origin, and were in-
tended to prevent the encouragement of litigation by the
interference of parties who had no interest therein. The es-
sential feature of maintenance is that it involves an officious
intermeddling with litigation. Hence if a person has an in-
terest in the outcome of a suit he cannot be guilty of main-
tenance.’ Belief that one has an interest in the suit, however,
is not sufficient, unless such belief is founded on a mistake of
fact.2 The interest must be a legal as distinguished from a
sentimental interest in the result of the action. Hence it is
maintenance for A. to assist B. in a suit against C. for libel-
ling B., although the verdict might affect A.’s reputation
indirectly?

In America the rules against champerty and maintenance
are in some jurisdictions said not to exist. In other juris-
dictions the existence of such rules is recognized, but the
extent of the rules is much narrowed by the courts.5 The
tendency in America is to diminish the force of these rules;
in England, to adhere strictly to the common law.§

§ 183. 1 Peck v. Henrich, 167 U. S. 624; Rees v. De Bernardy, 1896,
2 Ch. 487.

§ 184. 1 Davies v. Stowell, 78 Wis. 334; 47 N. W. 370.

2 Alabaster v. Harness, 1895, 1 Q. B. 339. 3 Thid.

4 Schomp »v. Schenck, 40 N. J. L. 195, 202-206. °

5 Reece v. Kyle, 49 Ohio St. 475; 81 N. E. 747; Re Evans, — Utah,
— ; 62 P. 913; Wallace v. Chicago, etc. R., — Ia. — ; 84 N. W. 662;
Brown »v. Bigné, 21 Or. 260; 28 P. 11, where the court limits the rules
against champerty and maintenance to cases of oppression, gambling, and
extortion.

® Alabaster v. Harness, 1895, 1 Q. B.339; Rees v. De Bernardy, 1896,
2 Ch. 437.
ILLEGAL CONTRACTS. 101

§ 185. Bxcuses for Maintenance and Champerty.-— The fol-
lowing excuses for champerty and maintenance are recognized:
Consanguinity,! affinity,? the relation of landlord and tenant,?
or of master and servant,! charity to the poor? and the exer-
cise of the legal profession.®

§ 186. Essentials of Champerty. — It is essential in order to
constitute champerty that the compensation for the services
rendered should consist of a part of the proceeds of the liti-
gation.! Where the right to compensation is not confined
to an interest in the thing recovered, but gives a right of ac-
tion against the party, although pledging the avails of the suit,
ora part of them, as security for payment, the agreement is
not champertous.?

It is generally held that in order to make an agreement
champertous the party who is to receive a portion of the pro-
ceeds of the suit must also agree to contribute to the expense
thereof; that the mere rendering of services without advanc-
ing money is insufficient. Signing a prosecution bond as
surety, however, has been held sufficient. In Utah, even the
‘advancement of money by the attorney does not make the
contract champertous, if the money is advanced as a loan, and

§ 185. 1 This excuse applies in England only to maintenance, and
not to champerty. Hutley v. Hutley, L. R. 8 Q. B. 112; W. 162; Re

Evans, — Utah, — ; 62 P. 913; and see Barnes v. Strong, 1 Jones Eq.
100. :

‘© Thallhimer v. Brinckerhoff, 3 Cow. 623. See preceding note.

3 Thid. “4 Jhid.

5 The idea of charity excludes champerty, of course. Re Evans,
supra.

6 This excuse applies only to maintenance. Blaisdell v. Ahern, 144
Mass. 393; 11 N. E. 681; W. 167.

§ 186. 1 Blaisdell. v. Ahern, supra ; Hadlock v. Brooks, — Mass. — ;
59 N. E. 1009.

2 Thompson v. Reynolds, 73 Ill. 11; W. 169; Blaisdell v. Ahern,
supra ; contra, Huber v. Johnson, 68 Minn. 74; 70 N. W. 806.

3 Phillips v. South Park Commissioners, 119 Ill. 626; 10 N. E. 230;
Pittsburg, ete. R. v. Volkert, 58 Ohio, 362; 50 N. HE. 924; Allard v.
Lamirande, 29 Wis. 502; Hamilton v. Gray, 67 Vt. 233; 31 A. 315;
contra, Ackert v. Barker, 131 Mass. 436; W. 165; H. & W. 354.

4 Heaton v. Dennis, 103 Tenn. 155; 52S. W. 175.
102 THE LEGALITY OF CONTRACTS.

there is no contract indemnifying the client against liability
for costs.®

§ 187. Champertous Assignments. —The assignment of a
chose in action is in some cases void on the ground of main-
tenance. The ancient law was very strict in this respect, but
in modern times the courts have shown a more liberal ten-
dency in recognizing the validity of assignments. The assign-
ment of a right to recover money due on a contract is almost
universally legal. But the assignment of a right to file a bill
in equity on the ground of fraud is void for maintenance.!
Nor can thé right to file a bill to contest a will be assigned.?
And in general rights of action for personal injuries cannot
be assigned.’ As to the sale of property which is in litigation,
“ the sale of an interest to which a right to sue is incident is
good ; but the sale of a mere right to sue is bad.”’4

§ 188. Champerty between other Parties. The question of
champerty can be raised only in a controversy between the
parties to the champertous contract. It is no defence to an
action that the attorney for the plaintiff is prosecuting the
suit under a champertous agreement with his client,! but no
decree for attorney’s fees will be entered against the defend-

5 Potter v. Ajax Mining Co., — Utah — ; 61 P. 999.

§ 187. 1 Illinois Land & Loan Co. v. Speyer, 138 Il. 187; 27 N. E.
931; Prosser v. Edmonds, 1 Y. & C. Ex. 481; Archer v. Freeman, 124
Cal. 528; 57 P. 474.

2 Storrs v. St. Luke’s Hospital, 180 Ill. 368; 54 N. E. 185.

8 North Chicago St. R. v. Ackley, 171 Tl. 100; 49 N. E. 222.

4 Pollock, Contracts, 299; Prosser v. Edmonds, supra ; Dickinson v.
Burrell, L. R. 1 Eq. 387, 342; Haseltine v. Smith, 154 Mo. 404; 55S. W.
633.

§ 188. 1 Small v. Chicago, ete. R. R. Co., 55 Ia. 583; 8 N. W. 437;
W. 175; Burnes v. Scott, 117 U. 8. 582; 6S. Ct. 865; Chamberlain v.
Grimes, 42 Neb. 701; 60 N. W. 948; Omaha & R. V. Ry. Co. v. Brady,
39 Neb. 27; 57 N. W. 767; Zeigler v. Mize, 182 Ind. 403; 31 N. E. 945;
Torrence v. Shedd, 112 Ill. 466; Pennsylvania Co. v. Lombardo, 49 Ohio
St.1; 29 N. E. 573; Davis v. Settle, 43 W. Va. 17; 26 S.. E. 557 ; Pot-
ter v. Ajax Mining Co., — Utah — ; 61 P. 999; Ellis v. Smith, — Ga.
— ; 378. E. 739; contra, Barker v. Barker, 14 Wis. 131; Kelly v. Kelly,
86 Wis. 170; 56 N. W. 637; Miles v. Mutual Reserve Fund Ass’n, —
Wis. — ; 84 N. W. 159; Heaton c. Dennis, 103 Tenn. 155; 52 S. W.
175,
ILLEGAL CONTRACTS. 103

ant in such a suit.2 It has been held, however, that where the
plaintiff claims under an assignment, champerty in the assign-
ment may be set.up as a defence to the action.’

§ 189. Contracts tending to stifle Prosecution. — An agree-
ment tending to stifle the prosecution of a crime is illegal ;}
as, for example, a contract to pay attorneys for services in
preventing the finding of an indictment. Whether the fact
that no crime has actually been committed makes the con-
tract to stifle prosecution legal is a question upon which the
courts are divided.? It has been held that an agreement to
compromise a prosecution for a misdemeanor is legal.+ This
doctrine is unsound in principle, and is generally rejected in
this country ;° while in England it is now limited to cases
in which the offence is not a matter of public concern. A
contract not to sue for damages for a public nuisance is ille-
gal.” An agreement to recommend a nolle prosequi in con-
sideration that an accused person will give evidence against
others is not illegal.® Nor is it illegal for a creditor to take
payment or security from a debtor who has committed a
crime, or from a third person,® if there is no agreement to
stifle the prosecution./? But if the security is given for the

2 Brindley v. Brindley, 121 Ala. 429; 258. 751.

® The Clara A. McIntyre, 94 F. 552.

§ 189. 1 Williams v. Bayley, L. R. 1 H. L. 200; W. 177; Henderson
v. Palmer, 71 Ill. 579; Friend v. Miller, 52 Kans. 139; 34 P. 397; Kirk-
land v. Benjamin, 67 Ark. 480; 55 S. W. 840.

2 Weber v. Shay, 56 Ohio, 116; 46 N. E. 377.

8 That the contract in such a case is legal, see Smith v. Blachley, 188
Pa. 550; 41 A. 619; Treadwell v. Torbert, 122 Ala. 297; 25 8.216. That
it is illegal, see State v. Carver, 69 N. H. 216; 39 A. 973.

+ Fallowes v. Taylor, 7 T. R. 475.

5 Jones v. Rice, 18 Pick. 440; Partridge v. Hood, 120 Mass. 403; H. &
W. 848; Wynne v. Whisenant, 37 Ala. 46; Jones v. Dannenberg Co.,
— Ga. — ; 87S. E. 729; State v. Carver, 69 N. H. 216; 39 A. 973.
For the statutory rule in Pennsylvania, see Brown v. McCreight, 187 Pa.
181; 41 A. 45.

® Keir v. Leeman, 6 Q. B. 308; 9 Q. B. 871; Windhill Local Board v.
Vint, 45 C. D. 371.

7 Western Paper Co. v. Comstock, — Ind. — ; 58 N. E. 79.

8 Nickelson v. Wilson, 60 N. Y. 362; W. 189.

9 Francis v. Hand, 113 Mich. 250; 71 N. W. 582.

10 Flower v. Sadler, 10 Q. B. D. 572; W. 187; Ward v. Lloyd, 6M. &
104 THE LEGALITY OF CONTRACTS.

purpose of preventing prosecution it is void." A contract is
illegal not merely when made in consideration of the stifling
of the prosecution, but also when it is made in such a way as
to induce the promisor to believe that the prosecution will be
stopped. Mere expectation, however, that the prosecution
will be stopped is insufficient. 8
§ 190. Miscellaneous Contracts interfering with the Adminis-
_tration of Justice. — An agreement to pay for procuring! or
suppressing? evidence is illegal, except where a reward is
offered for the detection of crime ;® but an agreement to with-
draw opposition to a civil proceeding is not in itself illegal,
though the court is not informed of it.4
The following contracts have also been held illegal as tend-
ing to interfere with the administration of justice: A con-
tract by an attorney with his client to defend the latter
against all prosecutions for violation of the liquor law, in
consideration of a stipulated salary ;° a contract by a justice
of the peace with an attorney not to charge his lawful fees ; 6
an agreement to indemnify the surety on a bail-bond in case
of the escape of criminal;7 an agreement to pay a justice of
the peace a certain percentage of the stolen property recov-
ered from one accused of larceny before him;® a contract of
insurance against death by legal process.°®
G. 785; Thorn uv. Pinkham, 84 Me. 101; 24 A. 718; Portner v. Kirschner,
169 Pa. St. 472; 32 A. 442; Powell v Flanary, — Ky. — ; 59S. W. 5.
11Kirkland v. Benjamin, 67 Ark. 480; 55 S. W. 840.
12 Williams v. Bayley, supra: Davis v. Smith, 68 N. H. 253; 44 A. 384;
but see Portner v. Kirschner, supra; Ford v. Cratty, 52 Ill. 318.
18 Ward v. Lloyd, supra.
§ 190, } Gillet v. Logan County, 67 Ill. 256; Goodrich ». Tenney, 144
Tll. 422; 33 N. E. 44.
2 Valentine v. Stewart, 15 Cal. 387; Bierbauer v. Wirth, 5 F. 336;
Crisup v. Grosslight, 79 Mich. 380; 44 N. W. 621.
8 Williams v. Carwardine, 4 B. & Ad. 621; L. 12.
4 Seaman v. Colley, — Mass. — ; 59 N. E. 1017.
5 Bowman »v. Phillips, 41 Kans. 364; 21 P. 280.
6 Willemin v. Batteson, 63 Mich. 309; 29 N. W. 784.
7 Herman v. Jeuchner, 15 Q. B. D. 561.
8 Brown v. First Nat. Bank, 1387 Ind. 655; 37 N. E. 158.
9 Society v. Bolland, 4 Bligh (N. R.), 194, 211; Burt v. Union Central
L. I. Co., — U. S. App. —; 104 F. 419.
ILLEGAL CONTRACTS. 105

§ 191. Contracts ousting the Jurisdiction of the Courts. —
Any contract ousting the jurisdiction of the courts is against
public policy and void. Thus a contract providing against
the use of judicial remedies in the enforcement of a mortgage
will not prevent the court from applying those remedies.?
For this reason a provision in a stock certificate that any
action against the corporation by the stockholder shall be
brought in a certain county is void.2. So a contract by a
foreign corporation with the State licensing it to do business,
that the corporation shall not remove any case from the
State to the Federal courts, is void.?

§ 1914. Contracts to submit to Arbitration. — Contracts to
refer matters in dispute to arbitration have sometimes been
said to be contrary to public policy. The effect of such a
contract, however, is this: the contract itself is not illegal,
and damages will be awarded for the breach of it;! but for a
mere refusal to submit to arbitration the damages will be
nominal.? The contract, however, will not be specifically
enforced,? and will not in any way oust the ordinary jurisdic-
tion of the courts.* If, however, the contract provides that
no action shall be brought upon it until the matter has been
referred to arbitration and an award made, the making of the
award is in such case a valid condition precedent to a right

§ 191. ! Guaranty Trust Co. v. Green Cove Springs R., 139 U. S.
187.

2 Savage v. People’s B’ld’g Ass’n, 45 W. Va. 275; 31S. E. 991.

3 Barron v. Burnside, 121 U. S. 186; Southern Pacific Co. v. Denton,
146 U. S. 202.

§ 191 a. } Livingston v. Ralli, 5 E. & B. 132.

2 Munson v. Straits of Dover, etc. Co., 99 F. 787; affirmed, — U. S.
App. — ; 102 F. 926.

3 Tobey v. County of Bristol, 3 Story, 800.

* Thompson v. Charnock, 8 T. R. 139; Reed v. Washington Ins. Co.,
138 Mass. 572; W. 207; White v. Middlesex R. R. Co., 185 Mass. 216;
W. 203; Miles v. Schmidt, 168 Mass. 839; 47 N. E.115; Jones v. Brown,
171 Mass. 318; 50 N. E. 648; Lesure Lumber Co. v. Mutual F. I. Co.,
101 Ia. 514; 70 N. W. 761; Gaither v. Dougherty, 18 Ky. 709; 88 S. W.
2; Ison v. Wright (Ky.), 55 S. W. 202; Mitchell v. Dougherty, —
U.S. App. — ; 90 F. 639; Hamilton v. Home Ins. Co., 187 U. S. 370.
But see Wolf v. Pennsylvania R., 195 Pa. 91; 45 A. 986.
106 THE LEGALITY OF CONTRACTS. \

of action for breach of contract. The Nebraska courts alone
seem to deny the validity of such a condition,® although in
some other jurisdictions there is sometimes a failure to
distinguish between an agreement ousting the jurisdiction of
the courts entirely, and one merely making an award a con-
dition precedent to a right of action.? A distinction is
sometimes said to exist between contracts making arbitration
as to the amount of liability a condition precedent to a right
of action, and contracts making arbitration as to the fact
of liability a condition precedent to aright of action;® but
this distinction has no foundation in reason and little in
authority.® .

§ 192. Contracts requiring Members of an Association to
exhaust their Remedies within the Association. — It is common
for the by-laws of an association to provide that any member
seeking redress shall exhaust his remedies within the asso-
ciation itself before applying to the courts for relief. Such
by-laws, according to the weight of authority, constitute a
valid contract between the members of the association, and
render the exhaustion of the remedies of the member within
the association a condition precedent to an action in the
courts.’ The case is analogous to that of contracts to sumbit
to arbitration, discussed in the preceding section.

5 Scott v. Avery, 5 H. L. C. 811; W. 195; Viney v. Bignold, 20 Q. B.
D. 172; W. 201; Caledonian Ins. Co. v. Gilmour, 1893, A. C. 85;
Hamilton v. Liverpool Ins. Co., 186 U. S. 242; 10 S. Ct. 945; H. & W.
352; Hood v. Hartshorn, 100 Mass. 117; A. C. Burnham, 11 Harv. Law
Rey. 234. ‘

6 National Masonic Ass’n v. Burr, 44 Neb. 256; 62 N. W. 466; Ins.
Co. v. Bachler, 44 Neb. 549;-62 N. W..911. See also Perry v. Cobb, 88
Me. 435; 34 A. 278; and 11 Harv. Law Rev. 234.

‘ See Mitchell v. Dougherty, — U.S. — ; 90 F. 639; Fox v. Masons’
Fraternal Ass’n, 96 Wis. 390; 71 N. W. 363; Miles v. Schmidt, 168
Mass. 339; 47 N. E. 115; Jones v. Brown, 171 Mass. 318; 50 N. E. 648.

8 See cases in preceding note.

9 See A. C. Burnham, 11 Harv. Law Rey. 234.

§ 192. 1 Smith v. Ocean Castle, 59 N. J. L. 198; 35 A. 917; Wood v.
What Cheer Lodge, 20 R. I. 795; 38 A. 895; Jeane v. Grand Lodge, 86
Me. 434; 80 A. 70; Myers v. Jenkins, — Ohio — ; 57 N. E. 1089; con-
tra, Fox v. Masons’ Fraternal Ass’n, 96 Wis. 390; 71 N. W. 363.
ILLEGAL CONTRACTS. 107

§ 193. Contracts tending to injure the Citizens of the State
as Individuals. — The State may be injured not merely by a
contract hindering the proper administration of its affairs,
but also by a contract injurious to its citizens as individuals.
A contract is against public policy when it tends to injure
the morals of the community, or to interfere with the legal
rights of others, or to deprive individuals of that freedom
which is regarded as essential to the welfare of the State, or
to create a monopoly injurious to the public welfare.

§ 194. Contracts injurious to. Public Morals. — Contracts
which are illegal because they tend to injure the morals of
the community comprise contracts tending to promote sexual
immorality, contracts tending to cause suicide, contracts
tending to interfere with the marriage relation, and wager-
ing or gambling contracts.

§ 195. Contracts involving Sexual Immorality.— As regards
the first class of these contracts the reasons for their ille-
gality are sufficiently obvious. A contract involving future
illicit relations is illegal,’ but a contract made in considera-
tion of past cohabitation is not illegal, having no tendency to
produce immoral results.?

§ 196. Contracts tending to cause Suicide. — A provision in
a life insurance policy that suicide, “sane or insane,” shall
be no defence to an action on the policy, tends to induce the
insured to commit suicide, when in desperate straits, in
order to provide for his wife and family. Such a provision
is therefore void.

§ 197. Contracts tending to: interfere with the Marriage Re-
lation. — Contracts tending to interfere with the marriage
relation are regarded as injurious to the welfare of society,
in which the family is so important an institution. Con-
tracts looking to a future separation of husband and wife are
regarded as tending to offer inducements for the breach of

§ 195. 1 Ayerst v. Jenkins, L. R. 16 Eq. 275; Baldy v. Stratton, 11
Pa. St. 816; Boigneres v. Boulon, 54 Cal. 146; H. & W. 357.

2 Bunn v. Winthrop, 1 Johns. Ch. 329.

§ 196. 2 Ritter v. Mutual Ins. Co., 169 U. S. 139. See, however,
Haynie v. Knights Templars, 1389 Mo. 416; 41 S. W. 461. ,
108 THE LEGALITY OF CONTRACTS.

marital duties, and are illegal! But contracts for immediate
separation are valid, the breach of duty in such cases being
past.? Contracts facilitating divorce, such as agreements
for the withdrawal of opposition to divorce proceedings, are
illegal;? but contracts with reference to the amount of ali-
mony are valid.

§ 198. Wagering Contracts.— A wagering contract is one
in which one party for a consideration! assumes a risk by
promising to de something upon the happening of some future
event, which is uncertain, or the time of which is uncertain,
or upon the ascertainment of the existence of a present or
past state of facts as to the existence of which there is a differ-
ence of opinion between the parties, unless the object of the
contract is to protect or advance some interest of the prom-
isee, which the law recognizes as an “ insurable interest,” or
to offer a reward for the exercise of strength, skill, or judg-
ment.

§ 199. The History of Wagers. — Wagers were not regarded
as illegal at common law unless they led to indecent evidence,
or were calculated to injure the rights or feelings of a third
person, or to induce one to violate the law, or to interfere
with the administration of the government.! In England the
common law has been changed by various statutes.2 In this
country the courts have generally treated all wagers as against
public policy. Two reasons for this doctrine are given: first,
that the time of the courts ought not to be taken up with

§ 197. 1 Cartwright v. Cartwright, 3 D. M. & G. 982; Gaines v. Poor,
8 Met. (Ky.) 503, 507; Randall v. Randall, 37 Mich. 563, 571.

2 Wilson v. Wilson, 1H. L. C. 538; Fox v. Davis, 113 Mass. 255; Carey
v. Mackey, 82 Me. 516 ; Woodr. 88; contra, Baum v. Baum, — Wis. —; 85
N. W. 122.

8 Phillips v. Phillips, 10 Or. 494 ; Loveren v. Loveren, 106 Cal. 509; 89
P. 801; Cross v. Cross, 58 N. H. 373; H. & W. 361.

4 Gibbons v. Gibbons (Ky.), 54 S. W. 710.

§ 198. 1 R. v. Stoddart, 1901, 1 Q. B. 177.

§ 199. 1 Beadles v. Bliss, 27 Il. 820.

2 Yor the history of wagers in England, see Anson, Contracts (8th ed.),
pp. 189 et seq.

8 Trwin v. Williar, 110 U. 8S. 499; 4S. Ct. 160; Harvey v. Merrill, 150
Mass. 1; 22 N. E. 49; W. 147; IL. & W. 3888.
ILLEGAL CONTRACTS. 109

settling idle bets ;4 second, that gambling is a vice, and wagers
therefore immoral.’ In the present state of public sentiment
in this country the latter is the chief reason for holding wagers
ilegal.§

§ 200. Contracts for Insurance.-—Contracts for insurance
are wagering contracts unless the insured has what is termed
“an insurable interest in the property or person insured.” 4
An insurable interest in property need not be an equitable or
legal title. A stockholder has an insurable interest in the
property of the corporation’ although he has no title what-
ever to the corporate property. “A man has an insurable
interest in his own life,t and in that of his wife and children ;
a woman in the life of her husband; and the ereditor in the
life of his debtor. Indeed it may be said generally that any
reasonable expectation of pecuniary benefit or advantage from
the continued life of another creates an insurable interest in
such life.’ 4

§ 201. Contracts for Options. — Contracts for “ options” in
commodities, that is, pretended sales for future delivery, in
which the intention of the parties is not to deal in the com-
modity, but to perform the contract by paying the difference
between the contract price and the actual price when the time
for delivery arrives, are gambling contracts,! although the pur-

4 Love v. Harvey, 114 Mass. 80; H. & W. 324.

5 Bernard v. Taylor, 23 Or. 416; 31 P. 968.

6 Ferguson v. Yunt, 13 8. D..115; 82 N. W. 509.

§ 200. } King v. State Mut. Tne. Ca, 7 Cush. 1, 10; Warnock v. Davis,
104 U. S. 775; H. & W. 333.

2 Creed v. Sun Fire Office, 101 Ala. 522; 14 S. 323; Woodruff, Cas.
Ins. 38.

3 Riggs v. Commercial Mut. Ins. Co., 125 N. ¥. 7; 25 N. E. 1058;
Woodruff, Cas. Ins. 41.

4 Bradley, J., in Connecticut Mut. L. I. Co. v. Schaefer, 94 U. S. 457,
460.

§ 201. 1 Harvey v. Merrill, 150 Mass.1; 22 N. E. 49; W. 147; H. &
W. 383; Bona’s Appeal, 55 Pa. St. 294; White v. Barber, 123 U. S. 392;
8S. Ct. 221; Mohr v. Miesen, 47 Minn. 228; 49 N. W. 862; H. & W.
325; Jamieson v. Wallace, 167 Ill. 888; 47 N. E. 762; Clews v. Jamieson,
— U.S. App. —; 96 F. 648 ; Atwater v. Manville, 106 Wis. 64; 81 N. W.
985; Morris v. Western Union Tel. Co, — Me. —; 47 A. 926.
110 THE LEGALITY OF CONTRACTS.

chaser has the option of taking the property.2 If one of the
parties is innocent of any illegal intent, he can enforce the
contract,’ unless the statute provides otherwise.* Statutory
provisions often enlarge the scope of these rules by making
all contracts for options, or even sales on margin, illegal.
The extent to which such statutes are within the constitu-
tional power of the legislature is not fully settled.

§ 202. Brokers’ Contracts. A contract between principal
and agent by which the latter is to make legal contracts for
the sale or purchase of goods, but the principal is not to be
required to deliver or receive any goods, but simply to settle
with the agent by receiving or paying differences, has been
sustained in England! and declared illegal in this country.?

In England, wagers were not illegal at common law, and as
the contract between principal and agent did not violate the
statute the contract was held good. In this country, wagers
being illegal in their very nature, the contract between prin-
cipal and agent is tainted by the illegality of the principal’s
intention to speculate, if such intention is known to the agent.®
A distinction has been drawn between the case of principal
and agent and the case of customer and broker,‘ but this dis-
tinction seems of doubtful validity.5 If there is a mere ex-

2 In re Gieve, 1899, 1 Q. B. 794.

8 Frost v. Clarkson, 7 Cow. 24; Pixley v. Boynton, 79 Ill. 351; W.
155; K. II. 1595; Jamieson v. Wallace, 167 Il]. 388; 47 N. E. 762; Scanlon
v. Warren, 169 Ill. 142; 48 N. E. 410; Donovan v, Daiber, — Mich. — ;
82 N. W. 848; Edwards Brokerage Co. v. Stevenson, — Mo.—; 61
S. W. 617. See post, § 233.

4 As in Missouri: Connor v. Black, 119 Mo. 126; 24S. W. 184; Ten-
nessee: McGrew v. City Produce Exchange, 85 Tenn. 572; 4 S. W. 38;
and South Carolina: Harvey v. Doty, 54 S. C. 882; 32S. E. 501.

5 See Parker v. Otis, — Cal. —; 62 P.571; Booth v. People, 186 Ill. 43;
57 N. E. 798.

§ 202.1 Thacker v. Hardy, 4 Q. B. D. 685; W. 132.

2 Harvey v. Merrill, 150 Mass. 1; 22 N. E. 49; W. 147; H. & W. 383;
Mohr v. Miesen, 47 Minn. 228; 49 N. W. 862; H. & W. 325; Embrey
v. Jemison, 131 U. S. 836; 9S. ‘Ct. 776; Pages v. Baldwin, 38 N. J. Eq.
219; Jamieson v. Wallace, 167 Ill. 888; 47 N. E. 762; Rogers v. Marriott,
— Neb. —; 82N. W. 21.

8 But see Young v. Glendenning, 194 Pa. 550; 49 A. 364.

4 Markham v, Jandon, 41 N. Y. 235, 256; Flagg v. Baldwin, supra.

5 Mohr v. Miesen, supra.
ILLEGAL CONTRACTS. 111

pectation on the part of the principal and broker that the
persons from whom stocks are bought or to whom stocks
are sold will be willing to settle the transactions by the pay-
ment of differences, there is no illegality in the contract even
in this country.6 Mere knowledge of the broker that his cus-
tomer is financially unable to pay for goods bought for future
delivery does not charge him with notice of the customer’s
intention to speculate, according to the better view of the
case ;7 though there is a conflict of authority on this point.
Nor does the fact that one contracts to sell goods which he
does not possess render the contract illegal, in the absence of
statute.8

§ 208. Contracts on Public Exchanges.— The ordinary con-
tracts which are made on the Board of Trade, the Stock Ex-
change, and in similar places are not gambling contracts, but
simple purchases and sales for future delivery.’ The Ameri-
can decisions in the cases above cited of contracts between
principal and agent are to be supported not on the ground
that the agent is employed to make an unlawful contract, but
on the ground that the unlawful intention of the principal
to speculate, known to the agent, taints the contract between
them.

§ 204. Rewards and Prizes. — The offer of a reward for the
exercise of strength, speed, skill, or judgment is not a wager.!
But if A. and B. put up a purse of $100 in C.’s hands, the
entire amount to go to the one whose horse shall win in a
given race, this constitutes a wager.2. As to the effect of a
race which is run for stakes consisting of the entrance fees

® Barnes v. Smith, 159 Mass. 344; 34 N. E. 403.

7 Johnston v. Miller, 67 Ark. 172; 53S. W. 1052; contra, Rogers v.
Marriott, — Neb. —; 82 N. W. 21.

8 Forsyth Mfg. Co. v. Castlen, — Ga. —; 37 S. E. 485.

§ 203. 1 Bibb v. Allen, 149 U. S. 481; 18S. Ct. 950.

§ 204. 1! Harris v. White, 81 N. Y. 5382; Alvord v. Smith, 63 Ind. 58;
Delier v. Agricultural Society, 57 Ia. 481; 10 N. W. 872; Porter v. Day,
71 Wis. 296; 37 N. W. 259; Wilkinson »v. Stitt, 175 Mass. 581; 56 N. E.
830.

2 Digegle v. Higgs, 2 Ex. D. 422; overruling Batty v. Marriott, 5C. B.
818; Trimble v. Hill, 5 A. C. 342; Gibbons v. Gouverneur, 1 Denio, 170
112 THE LEGALITY OF CONTRACTS.

paid by each contestant, it has been held that there is no ille-
gality in such a contest,’ but it seems hard to reconcile this
doctrine with the preceding rule. A distinction should be:
drawn between cases where the stakes are made up of the
entrance fees, and cases where a prize is offered and the en-
trance fees are charged simply to cover the expenses of the
race. If the money is received by the persons offering the
prize as the consideration for the promise to give the prize,
the transaction is a bet.t If different persons contribute to a
fund to be awarded to the winner, the transaction seems to be
a bet between those persons, if the result of the contest is to
be determined by superiority ; a lottery, if the result depends
upon chance. In England, however, this distinction does not
seem to be recognized. The test there seems to be whether
the prize is offered as a reward for some act requiring indi-
vidual superiority,> or whether it is to go to a winner to be
determined by chance.®

§ 205. Wagers — Miscellaneous Contracts.— A contract to
furnish goods to two persons is not rendered illegal by the
fact that the two vendees have made a bet as to which should
pay for the goods.!

A contract to pay a certain sum for property purchased, and
to pay more if some subsequent event tending to increase its
value shall occur, is valid. And a contract between the
vendor and the vendee of a tract of land which was supposed
at the time of the sale to contain a certain number of acres,
that the land should be surveyed, and that the vendor should
pay the vendee so much per acre in case of a deficiency, while
in case of an excess the vendee should pay the vendor the

8 Harris v. White, 81 N. Y. 582.

4 Hawkins v. Ottinger, 115 Cal. 454; 47 P. 254.

5 R. v. Stoddart, 1901, 1 Q. B. 177; cf. Hall v. Cox, 1899, 1Q. B. 198.

6 See Barclay v. Pearsons, 1893, 2 Ch. 154; W. 140; R. v. Stoddart,
supra; R. v. Hobbs, 1898, 2 Q. B. 647; Stoddart v. Sager, 1895, 2 Q. B.
474. These English decisions turn upon the construction of particular
statutes, and the results reached in the different cases are not entirely
consistent either with the text or with each other.

§ 205. 1 Winchester v. Nutter, 52 N. H. 507; W. 157.

2 Ferguson v. Coleman, 3 Richardson (Law), 99; W. 160.
ILLEGAL CONTRACTS. 113

same amount per acre, has been sustained ;% though no
point was made as to the wagering character of the trans-
action.

§ 206. Contracts contemplating an Injury to the Legal Rights
of a Third Party. — The following are instances of such illegal
contracts: An agreement to beat another ;! to publish a libel ;?
to commit a fraud on a third party.

§ 207. Fraudulent Compositions with Creditors.—The com-
mission of a fraud on a third party may be brought about in a
great variety of ways. One of the most common instances of
such fraudulent contracts is found in the case of compositions
by insolvent debtors with their creditors where one creditor
tries to get a larger share of his claim than the rest. A secret
agreement that one creditor shall receive more than the others
who sign a composition with the debtor is illegal, since the
effect of such an agreement is to defraud the other creditors.!
The agreement to pay one creditor for his assent to the com-
position is a fraud on the other creditors, because they have a
right to suppose that all creditors stand on an equal footing.?
The agreement is therefore void, even though it does not in
any way diminish the debtor’s estate; as when a third party
promises the creditor an additional amount if he will sign the
composition with the other creditors.? It is held in Illinois,
however, that the fraud on the creditors does not invalidate
the composition unless they receive some other injury than
the understanding that all are to share equally.*

§ 208. Effect of Fraudulent Composition. —Such a fraud on
the creditors renders the whole composition void, and they

8 Seward v. Mitchell, 1 Coldwell, 87; W. 554.

§ 206. 1 Allen v. Rescous, 2 Lev. 174.

2 Clay v. Yates, 1 H. & N. 73.

§ 207. } Mallalieu v. Hodgson, 16 Q. B. 689; Frost v. Gage, 3 Allen,
560; W. 241; Brown v. Nealley, 161 Mass.1; 86 N.E. 464; Merritt v.
Bucknam, 90 Me. 146; 37 A. 885.

2 Dauglish v. Tennent, L. R. 2 Q. B. 49, 54; Frost v. Gage, supra ; Bell
v. Leggett, 7 N. Y.176; Powers Dry Goods Co. v. Harlin, 68 Minn. 193;
71 iN. W. 16.

3 Frost v. Gage, supra; Bell v. Leggett, supra.

4 Bartlett v. Blaine, 83 Ill. 28.

8

’
114 THE LEGALITY OF CONTRACTS.

may recover their entire claims.1 The debtor, nevertheless,
can set up the composition in defence to an action on the
original claim by the creditor to whom the fraudulent prefer-
ence has been given.2? In a recent New York case,? however,
the facts were as follows: A., a debtor, entered into a compo-
sition deed with his creditors, whereby he was to pay 40 per
cent of his indebtedness in instalments, payable by four notes,
due at different dates, the last two notes to be indorsed by
C. D.,a creditor, procured C.’s indorsement to all the notes
which A. gave him, without the knowledge of the other cred-
itors. In an action on the third note by D. judgment was
given for D. The court held that the agreement for the in-
dorsement of the first two notes by C. was a fraud on the
other creditors, and therefore void, but that such agreement
was separable from the composition agreement, and that the
latter could be enforced. The New York court refuses to
follow the English rule* that the creditor who obtains a
fraudulent preference cannot recover the amount of the com-
position, because the whole agreement is vitiated by his fraud.
Nevertheless, the English rule seems more logical.®

§ 209. Miscellaneous Contracts injurious to others. — The
following are further instances of contracts which are illegal
because contemplating a fraud on third persons: A contract
by which a musical director agrees to allow the use of his
name by a band with which he has no connection ;! a con-
tract to bid in property for the auctioneer at an auction sale ;?
a contract by a bidder at judicial sale for resale before con-
firmation at an advance ;° to pay one co-tenant for failing to

§ 208. 1 Partridge v. Messer, 14 Gray, 180; Powers Dry Goods Co. v.
Harlin, 68 Minn. 193; 71 N. W. 16.

2 Tluckins v. Hunt, 138 Mass, 366.

8 Hanover Nat. Bank v. Blake, 142 N. Y. 406; 37 N. E. 519; criticised
in Powers Dry Goods Co. v. Harlin, supra.

4 Howden v. Haigh, 11 A. & E. 103838.

5 See Powers Dry Goods Co. v. Harlin, supra.

§ 209. 1 Blakely v. Sousa, — Pa. — ; 47 A. 286.

2 Hinnen v. Newman, 85 Kans. 709; 12 P. 144. As to what consti-
tutes fraudulent puffing, see McMillan v. Harris, — Ga. —; 35 S. E. 334.

3 Camp v. Bruce, 96 Va. 521; 31 8. E. 901.
ILLEGAL CONTRACTS. 115

oppose the confirmation of a partition sale at an inadequate
price ;# not to bid at an auction for the purpose of stifling
competition ;5 not to compete for any public franchise or con-
tract ;® to purchase shares at a fictitious premium in order to
deceive others as to the value of the shares ;7 to sell goods
with false labels attached for the purpose of deceiving the
public.®

§ 210. .Contracts violating Fiduciary Obligations. — Another
class of contracts illegal by reason of infringing the rights of
others is found in those cases where agreements are made
tending to cause a breach ‘of duty by an agent, trustee, or
other fiduciary. It has been said that such agreements are
against public policy, it being public policy to secure fidelity
in the discharge of their duties by such fiduciaries; but it
seems more accurate to say that such agreements tending to
cause unfaithful conduct by fiduciaries are illegal because they
are in effect agreements to wrong the persons whose interests
the fiduciaries have in charge.

§ 211. “Bohemian Oats” Contracts. — The “ Bohemian Oats”
contracts furnish an interesting example of ingenuity in de-
vising new means for defrauding others. The substance of

4 Tappan v, Albany Brewing Co., 80 Cal. 570; 22 P. 257.

5 Barton v. Benson, 126 Pa. St. 431; 17 A. 642; Goldman v. Oppen-
heim, 118 Ind. 95; 20 N. E. 635; Gibbs v. Smith, 115 Mass. 592; W. 244;
McClelland v. Citizens’ Bank, — Neb. —; 82 N. W. 319; De Baum »v.
Brand, 60 N. J. L. 283; 37 A. 726; Ralphanyder v. Shaw, 45 W. Va. 680;
31S. FE. 953. As to the limitations of the right of persons to combine
to purchase property at auction or otherwise, see Fidelity Ins. Co. v.
Roanoke St. R., 98 F. 475 ; Camden v. Deering, — W. Va. —; 34S. E.911;
Barnes v. Morrison, 97 Va. 372; 34 S. E. 938.

6 McMullen v. Hoffman, 174 U. S. 639; Hyer v. Richmond Traction
Co., 42 U. S. App. 522; 80 F. 889.

T Scott v. Brown, 1892, 2 Q. B. 724; W. 238.

8 Materne v. Horwitz, 101 N.Y. 469; 5 N. E. 331; H. & W. 338;
Church v. Proctor, 33 U.S. App. 1; 66 F. 240.

§ 210. 1 West v. Camden, 135 U. S. 507; 10 S. Ct. 838; Guernsey v.
Cook, 120 Mass. 501; W. 226; Wilbur v. Stoepel, 82 Mich. 344; 46 N. W.
724; Dickson v. Kittson, 75 Minn. 168; 77 N. W. 820; Cone v. Russell,
48 N. J. Eq. 208; 21 A. 847; Woodstock Iron Co. v. Richmond & Danville
Extension Co., 129 U. S. 648; 9S. Ct. 402; W. 219.
116 THE LEGALITY OF CONTRACTS.

such contracts is as follows: <A. sells to B. 25 bushels of
“ Bohemian oats” at $10 a bushel, and agrees to sell 50
bushels of the same kind of oats for B. the next year at the
same price, which is many times the value of the oats. Such
a contract is illegal. It is held in Michigan to be a gambling
contract,! while the Iowa decisions are to the contrary ;2 but
aside from the question of gambling, the contract is illegal
because it contemplates defrauding some one by selling him
the oats at a fictitious value.®

§ 212. Contracts tending to limit Necessary Individual Free-
dom.— Every contractual obligation limits the freedom of
action of the party on whom that obligation is imposed. Now
although the law is very liberal in allowing persons to make
what contracts they choose, there are certain matters in regard
to which it is deemed by the courts that the public welfare
requires individual action to remain untrammelled by con-
tractual obligation. Under this head come contracts affecting
the freedom of marriage, of testamentary disposition, and of
trade; and contracts depriving an individual of rights with
which public policy requires he should not part.

§ 213. Contracts affecting Freedom of Marriage. — A con-
tract may be illegal either because it restrains the freedom
of the individual to marry, or because it contemplates the
use of influence to bring about a marriage for a pecuniary
consideration. A contract to marry a particular person is
good, of course;! but a contract not to marry,? or a contract
tending to prevent marriage within a given time,? or a con-

§ 211. 1 McNamara v. Gargett, 68 Mich. 454; 36 N. W. 218.

2 Hanks v. Brown, 79 Ia. 560; 44 N. W. 811; Merrill v. Packer,
80 Ia. 542; 45 N. W. 1076; Shipley v. Reasoner, 80 Ia. 548; 45 N. W.
1077.

3 Davis v. Seeley, 71 Mich. 209; 38 N. W. 901; Glass v. Murphy, 30
N. E. 1097; 31 N. E. 545; 4 Ind. App. 580; Schmueckle v. Waters, 125
Ind. 265; 25 N. E. 281; and Iowa cases supra.

§ 213. 1 Holt v. Ward Clarencieux, 2 Strange, 937; L. 897; Brown »v.
Odill, 104 Tenn. 250; 56S. W. 840.

2 Low v. Peers, Wilmot, 871; King v. King, — Ohio —; 59 N, Ji.
111.

3 Chalfant v. Payton, 91 Ind. 202; White v. Equitable Union, 76 Ala.
251. These were also wagering contracts.
ILLEGAL CONTRACTS. 117

tract to marry no one but A., is void. Marriage brokage
contracts are also void, even though the parties are already
engaged,® because they tend to bring about marriages by
means of influence which is moved by pecuniary consid-
erations. °

It has been held that an agreement by a husband to pay his
wife a certain sum if she would not sue for divorce is illegal ;*
but this decision seems questionable. It would seem that
public policy is subserved rather than antagonized by such
an agreement.

§ 214. Contracts affecting Freedom of Testamentary Dispo-
sition. — Contracts to procure a third person to make a will
in favor of a particular person or object, or to use influence
to procure such testamentary disposition, are illegal.1 A
contract whereby one person binds himself to make a certain
will is valid ;? but not a contract to make another one’s “ heir-
at-law.” 3

§ 215. Contracts in Restraint of Trade.— Contracts in re-
straint of trade may be illegal as against public policy, either
because they tend to prevent individuals from earning their
living by working in a given way, or because they tend to
destroy competition, and thereby subject the public to the
extortions of monopolies. The subject of contracts in re-
straint of trade is one of vast importance, but legislation is
constantly altering the common law; and the great diversity
of judicial opinion makes the whole law on this question very
uncertain. In England contracts in restraint of trade are
affected by the Trade Union Act, 1871, which renders trade-

4 Low v. Peers, supra.

5 Morrison v. Rogers, 115 Cal. 252; 46 P. 1072.

6 Cole v. Gibson, 1 Ves. Sr. 503; Johnson v. Hunt, 81 Ky. 821.

7 Merrill v. Peaslee, 146 Mass. 460; 16 N. E. 271. Three judges
dissented.

§ 214. } Debenham v. Ox, 1 Ves. Sr. 276.

2 Robinson v. Ommanney, 23 C. D. 285; Logan v. McGinniss, 12 Pa.
St. 27; Crofut v. Layton, 68 Conn. 91; 35 A. 783; Fogle v. St. Michael’s
Church, 48 S. C. 86; 26'S. E. 99; Whiton v. Whiton, 179 Ill. 32; 53
N. E. 722; Bird v. Jacobus, — Ia. — ; 84 N. W. 1062. ;

3 Davis v. Jones, 94 Ky. 320; 22 S. W. 381.
118 THE LEGALITY OF CONTRACTS.

union agreements lawful but unenforceable. This act ap-
plies both to combinations of employers and to combinations
of workmen.! In New Jersey contracts in restraint of trade
are not illegal, but merely unenforceable if unreasonable.?
The policy of that State has been to attract capital by the
liberality of its rules in regard to the conduct of private busi-
ness. In most American jurisdictions, however, the tendency
is to regard contracts in restraint of trade, if unreasonable,
as illegal; and in some States the making of such contracts
is treated as a serious crime. 7

§ 216. Consideration in Contracts in Restraint of Trade, —
As has already been seen, contracts in restraint of trade
require consideration even though under seal, but the ade-
quacy of the consideration is of no more importance than in
the case of other contracts.

§ 216 a. Limitations as to Time and Space. — A contract by
which a person agrees never to engage in a certain business
is void.’ If the contract is limited, however, in its restraint
of trade, and the restraint is reasonably necessary for the
protection from competition of the promisee, the contract is
valid. It was formerly held that if the restraint extended
throughout a State, it was unreasonable, and the contract
void;? but most of the later cases take a different view,
and recognize no arbitrary limitations as to space.? As to
whether a restraint can be reasonable which is limited in
time but unlimited as to space the authorities differ. It was

§ 215. 1 Chamberlain’s Wharf v. Smith, 1900, 2 Ch. 605.

2 Rosenbaum v. U. S. Credit-System Co., — N. J. Eq. — ; 48 A.
237.

§ 216. 1 Hitchcock v. Coker, 6 A. & E. 438.

§ 216a. 1 Davies v. Davies, 86 C. D. 859; W. 77; Alger v. Thacher,
19 Pick. 51.

2 Wright v. Ryder, 36 Cal. 342; Taylor v. Blanchard, 13 Allen, 370.

2 Oregon Steam Navigation Co. v. Winsor, 20 Wall. 64; Herreshoff v.
Boutineau, 17 R. I. 3; 19 A. 712; W.95; Diamond Match Co. v. Roeber,
106 N. Y. 473; 13 N. E. 419; W. 112; H. & W. 362. The following
recent cases adhere to the earlier rule: Lufkin Rule Co. v. Fringeli, 57
Ohio, 596; 49 N. E. 1030; Lanzit vo. Sefton Mfg. Co., 184 Ill. 827; 58
N. E. 393.
ILLEGAL CONTRACTS. 119

formerly thought in England that the restraint must be lim-
ited as to space in any case, but after some wavering‘ the
law is now settled to the contrary, and the reasonableness
of the restraint in the particular case is made the test.6 In
this country there are authorities to the effect that a contract
in restraint of trade is void if unlimited as to space. The
tendency of most of the later cases, however, is in accord
with the latest decisions in England; reasonableness is the
sole test of the validity of the restraint, and a restraint un-
limited as to space’ or time ® is not necessarily unreasonable.
It is held in Georgia that a reasonable limit as to time is
necessary where the contract is to desist from the practice
of a learned profession,? but not where the contract is to
refrain from carrying on a certain business. !°

§ 217. The Nature of the Contract as affecting its Validity.
—AIt has beén held in Illinois that the only contracts in re-
straint of trade which the law will enforce are contracts in
which the vendor of a business, or an employee therein,
agrees not to enter into competition with his vendee or

4 Davies v. Davies, supra.

5 Rousillon v. Rousillon, 14 C. D. 3851; W.70; Badische Anilin Fabrik
v. Schott, 1892, 8 Ch. 447; W. 93; Nordenfelt v. Maxim-Nordenfelt Co.,
1894, A. C. 585; Underwood v. Barker, 1899, 1 Ch. 300.

6 Bishop v. Palmer, 146 Mass. 469; 16 N. E. 299; W. 104; Hl. & W.
380; K. I]. 1624; Lange v. Werk, 2 Ohio St. 519; Wright v. Ryder,
supra: Taylor v. Blanchard, supra; Lufkin Rule Co. v. Fringeli, supra:
Lanzit v. Sefton Mfg. Co., supra; Harding v. American Glucose Co., 182
Ill. 551; 55 N. E. 577.

7 Consumers’ Oil Co. v. Nunnemaker, 142 Ind. 560; 41 N. E. 1048;
Diamond Match Co. v. Roeber, supra; Oakdale Mgf. Co. v. Garst, 18
R. I. 484; 28 A. 973; Gibbs v. Baltimore Gas Co., 1380 U. S. 396, 409;
9 S. Ct. 553; Fowle v. Park, 131 U. S. 88; 9 S. Ct. 658; Ellerman »v.
Chicago Junction Ry. Co., 49 N. J. Eq. 217; 23 A. 287; Kramer v. Old,
119 N. C. 1; 25 S. E. 813; Anchor Electric Co. v. Hawkes, 171 Mass.
101; 50 N. E. 509; Buck v. Coward, — Mich. — ; 81 N. W. 3828; Trenton
Potteries Co. v. Olyphant, 58 N. J. Eq. 507; 48 A. 723; Tuscaloosa Ice
Mfg. Co. v. Williams, — Ala. — 3 28S. 669.

8 Swanson v. Kirby, 98 Ga. 586; 26 8. E. 71; Up River Ice Co. v.
Denler, 114 Mich. 296 : 72 N. W. 157.

9 Rakestraw v. Lanier, 104 Ga. 188; 80S. E. 735.

10 Swanson v. Kirby, supra.
120 THE LEGALITY OF CONTRACTS.

employer.! The relation between the parties has led the
courts to uphold a contract by a lessee with his lessor to sell ©
only a certain person’s beer on the premises;? and a con-
tract restricting the price at which a vendee may sell the
vendor’s secret patent medicine. Even in the case of such
agreements the protection of the covenantee is subordinated
by the Illinois courts to the “interest and welfare of the
public,” or, in other words, to the economic views of the
court in each case.4 A mere agreement between two manu-
facturers or vendors not to compete in the manufacture or
sale of an article is unreasonable and void.®

§ 218. Restraint of Competition in Patented Articles. — A
patent is a monopoly granted by law. It has been held,
however, that where persons holding different patents for the
manufacture of the same article assign those patents to a
corporation and take back licenses from the corporation to
make and sell the article at a uniform price, the contract is
alleged as tending to stifle competition.}

§ 219. Is the Prevention of Competition illegal? — The law
in regard to agreements made for the purpose of preventing
competition is generally in an unsettled state. It is clear
that an attempt to “corner” the market is illegal.1 Agree-
ments tending to create a monopoly of staple articles of com-
merce,? or of any article of necessity, are also undoubtedly

§ 217. 1 More v. Bennett, 140 Ill. 69; 29 N. E. 888; W. 120. Reason-
able agreements of this kind are universally upheld. Carnig v. Carr, 167

Mass. 544; 46 N. E. 117; Wittenberg v. Mollyneaux, — Neb. — ; 83
N. W. 842.

2 Ferris v. American Brewing Co., — Ind. — ; 58 N. E. 1071.

3 Garst v. Harris, — Mass. — ; 58N. E. 174.

4 Lanzit v. Sefton Mfg. Co., 184 Ill. 326; 56 N. E. 393. See also the
dissenting opinion of Vaughan Williams, L. J., in Underwood v. Barker,
1899, 1 Ch. 300.

5 Clark v. Needham, — Mich. — ; 83 N. W. 1027; Culp v. Love, —
N.C. — ; 38758. E.477. But see Wood v. Whitehead Bros. Co., — N. Y.
— ; 59N. E. 357.

§ 218. 1 National Harrow Co. v. Hench, 76 F. 667; 838 F. 86; 55 U.S.
App. 53.

§ 219. 1! Samuels v. Oliver, 130 Ill. 73; 22 N. E. 499.
2 Emery v. Ohio Candle Co., 47 Ohio St. 320; 24 N. E. 660; W. 124;
ILLEGAL CONTRACTS. 121

illegal. Whether the mere fact that an agreement is in-
tended to prevent competition renders it illegal is unsettled.
It is held on the one hand, in Massachusetts, that since
undue competition is injurious to the public, an agreement
limiting such competition is valid. The business in that
case was the manufacture and sale of shade-rollers. A
recent case in New Jersey,® following the same line of rea-
soning, allows one corporation to buy the business of all its
competitors, although such purchases may diminish, or for
a time, at least, destroy competition; and holds that con-
tracts for such purchases are valid and must be enforced.
In England ® and California? an agreement by members of a
stevedores’ association to fix prices has been held lawful where
the rates fixed were not unreasonable. Such decisions recog-
nize clearly that the question of the existence of monopo-
lies must be determined by the laws of political economy,
which are not subject to judicial or legislative control; and
that the proper regulation of such monopolies as do exist is
a matter of administration, which can properly be determined '
only by the legislature. In New York it has been held that
agreements entered into for the purpose of enhancing the
price of coal® and of mutton® are unlawful; and the latest
cases in that State holds that this rule is not limited to arti-
cles of prime necessity, but extends to all useful commodi-
ties.1° There can be no monopoly, however, in anything but

Nester v. Continental Brewing Co., 161 Pa. St. 473; 29 A. 102; Trenton
Potteries Co. v. Olyphant, 58 N. J. Eq. 507; 43 A. 723.

8 Gamewell Fire Alarm Tel. Co. v. Crane, 160 Mass. 50; 35 N. E.
98; W. 108; Judd v. Harrington, 139 N. Y.105 ; 34 N. E. 790.

4 Central Shade Roller Co. v. Cushman, 143 Mass. 353; 9 N. E. 629;
W. 99.

5 Trenton Potteries Co. v. Olyphant, 58 N. J. Eq. 507; 43 A.728.

6 Collins v. Locke, 4 A. C. 674; W. 62.

7 Herriman v. Menzies, 115 Cal. 16; 46 P. 730.

8 Arnot v. Coal Co., 68 N. Y. 558; People v. Sheldon, 139 N. Y. 251;
34 N. E. 785.

9 Judd v. Harrington, supra.

10 Cummings v. Union Bluestone Co.,— N. Y.—; 58 N. E. 525;
Cohen v. Berlin, ete. Co., — N. Y. —; 59 N.E. 906.
122 THE LEGALITY OF CONTRACTS.

‘property; and news is not a subject of property rights until
published and copyrighted.

§ 220. Agreement to reduce Prices. —It has also been
held that an agreement to control the price of milk is unlaw-
ful, though the agreement was formed by dealers in order to
reduce the price. “The price was fixed,” says the court,
“for the benefit of the dealers, and not the consumers, and
the logical effect upon the trade of so fixing the price by the
combination was to paralyze the production and limit the
supply, and thus leave the dealers in a position to control
the market, and at their option to enhance the price to be
paid by the consumers.” 4

§ 221. Trade-union Contracts. — In Illinois a combination
of stenographers to fix a uniform scale of payment for their
work has been held illegal,! a decision which places all
trade-unions under the ban of the law. The better rule is,
however, that the mere agreement to fix prices or rates is
not unlawful, if the prices or rates fixed are not unreason-
able.2 But if the agreement provides that no member of the
association shall work for a person who refuses to employ
the member designated by the association ;? or that no mem-
ber shall do business with any one who does not employ its
members exclusively ;+ or that no person shall be permitted
to work for an employer for more than a certain period with-
out joining a trade-union,® — it is void.

§ 222. Result of the Decisions on Contracts in Restraint
of Trade. — No principles can be stated which will harmonize
the varying decisions, but it seems that public policy ought

11 State v. Associated Press, — Mo. —; 60 S. W. 91.

§ 220. 1 People v. Milk Exchange, 145 N. Y. 267; 89 N. E. 1062;
Harding v. American Glucose Co., 182 Ill. 551 ; 55 N. E. 577.

§ 221. 1 More v. Bennett, 140 Ill. 69; 29 N. E. 888; W. 120.

2 Collins v. Locke, 4 A. C. 674; W. 62; Herriman v. Menzies, 115 Cal.
16; 46 P. 730. See, however, Milwaukee Masons’ Ass’n v. Niezerowski,
95 Wis. 129 ; 70 N. W. 166; Bailey v. Ass’n of Master Plumbers, 103 Tenn.
99; 52S. W. 853.

® Collins v. Locke, supra.

* Gatzow v. Buening, 106 Wis. 1, 81 N. W. 1003.

5 Curran v. Galen, 152 N. Y. 33; 46 N. E. 297.
ILLEGAL CONTRACTS. 123

to be satisfied with the rule that agreements in restraint of
trade are valid if reasonable; that it makes no difference
what the nature of such agreements may be; whether between
vendor and vendee, employer and employee, or between dif-
ferent employers on the one hand,‘ and different employees
on the other.2 Such a statement of the law seems in accord-
ance with the best authorities; but so dominant has been the
Manchester school of political economy that competition is
still regarded by some courts and most legislatures as an
unmixed blessing, and any interference with it as illegal.

§ 223. Recent Legislation touching Contracts in Restraint
of Trade. — The recent developments in the conduct and
organization of business have all tended toward the suppres-
sion of competition and the establishment of monopolies.
To some extent the growth of these monopolies has been due
to artificial causes, to some extent to the operation of natural
economic laws. The popular feeling against monopolies
is and has always been very strong; and that feeling has
found abundant expression in recent legislation. Most of
this legislation, however, has been so ill-considered as to be
merely an annoyance in the ordinary conduct of business,
without in any respect diminishing the evils at which it is
aimed. Instead of attempting the removal of the artificial
causes favoring the growth of monopolies, which result
from the ability of such monopolies to obtain special privi-
leges from the national, State, and local governments, and
from corporations having public duties, such as common car-
riers, this legislation has attempted to proscribe and outlaw
reputable business men who conduct their business in accord-
ance with the rules necessitated by economic conditions.

§ 223 a. Federal Legislation. — Al] contracts in restraint of
trade or commerce among the several States or with foreign
nations are made illegal by the act of 1890, known as the

§ 222. 1 Asin Central Shade Roller Co. v. Cushman, 143 Mass. 353;
9 N. E. 629; W. 99.

2 Collins v. Locke, 4 A. C. 674 ; W. 62; Commonwealth v. Hunt, 4 Met.
111; Snow v. Wheeler, 113 Mass. 179; Longshore Printing Co. v. Howell,
26 Or. 527; 38 P. 547.
124 THE LEGALITY OF CONTRACTS.

Sherman Anti-Trust Act. Under this act it is immaterial
whether the contract is reasonable or not.! It is not within
the scope of this work to consider what contracts are em-
braced by this act.?

§ 224, State Legislation. — The State legislatures have been
extremely active in dealing with combinations and contracts
in restraint of trade. Some statutes make all contracts in
restraint of trade illegal; but these acts appear to be un-
constitutional, as the right to contract is protected by the
Fourteenth Amendment to the Federal Constitution. Some-
times the statute provides that one who buys goods from a
“trust” or combination need not pay for them.2 Sometimes
exceptions are made for the benefit of farmers or laborers.
Much of this legislation is clearly unconstitutional.

§ 225. Contracts to surrender Inalienable Rights. — The
attempted surrender of rights which public policy requires
should not be surrendered is ineffectual. Thus in some
States it is held that a debtor cannot waive the statutory
exemptions in his favor.’ So a mortgagor cannot waive his
equity of redemption.2 But a contract to waive the statute
of limitations is valid to postpone the running of the statute.

A contract by a parent for the surrender of the custody of a
child is void, except in the case of apprenticeship or adoption.

It is against public policy that persons pursuing public
vocations, such as common carriers, telegraph companies,

§ 223 a. 1 United States v. Trans-Missouri Freight Ass’n, 166 U. S.
290; United States v. Joint Traffic Ass’n, 171 id. 505.

2 See on this point United States v. E. C. Knight Co., 156 U. S. 1;
Hopkins v. United States, 171 id. 578; Anderson v. United States, ib.
604; Addyston Pipe Co. v. United States, 175 id. 211.

§ 224.1 Re Grice, 79 F. 627.

2 Ford v. Chicago Milk Shippers’ Ass’n, 155 Jl. 166; 39 N. E. 651.
See, however, Dickerman v. Northern Trust Co., 176 U.S. 181.

§ 225. 1 Kneetle v. Newcomb, 22 N. Y. 249; contra, Shelly’s Appeal,
36 Pa. St. 373.

2 Bayley v. Bailey, 5 Gray, 505.

8 Wells-Fargo Co. v. Enright, — Cal. — ; 60 P. 439 ; State L. & T. Co.
v. Cochran, — Cal. — ; 62 P. 466.

4 Weir v. Marley, 99 Mo. 124; 12 8. W. 798; Hibbette v. Baines, —
Miss. — ; 29S 80.
ILLEGAL CONTRACTS. 125

and others, should impose unreasonable terms upon those
who employ them. The freedom of contract allowed to
others is restricted in the case of those pursuing public voca-
tions, for the reason that the undertaking of a public vocation
imposes duties which can be avoided by contract only toa
reasonable extent. The nature and extent of such duties is
beyond the scope of this work.

§ 226. Contracts not to sue for Future Torts,— A contract
by which one party seeks to prevent himself from recovering
damages for a future tort is against public policy and void.!
A contract for exemption from liability for the negligence of
one’s servants, however, has been sustained.?

§ 226 a. Contracts for the Acceptance of Insurance in Lieu
of Damages. — A contract that if the employee of a railway
company shall accept the benefit of insurance in a company
to which the railway company contributes, his right of action
against the railway company for damages caused by an
accident shall be discharged, is binding.! The contract in
such case does not bar the right of action; it is the accept-
ance of the insurance which discharges it.

§ 227. Contracts with Attorneys. — A contract releasing an
attorney from all the obligations incident to the relation of
attorney and client is against public policy and void.! So is
a contract binding the client not to settle the claim without
the attorney’s consent, for public policy favors settlements.?

§ 226. 1 Hayes v. Hayes, 8 La. Ann. 468; Roesner v. Hermann, 8 F.
782.

2 World’s Columbian Exposition Co. v. France, — U. S. App. —;
96 F. 687; Griswold v. Illinois Cent. R., 90 Ia. 265; 57 N. W. 848; Hartford
Ins. Co. v. Chicago, etc. R., 175 U. 8. 91; Baltimore & O. R. v. Voight,
176 id. 498.

§ 226 a. 1 Chicago, B. & Q. R. Co. v. Bell, 44 Neb. 44; 62 N. W. 314;
Pittsburg, ete. R. v. Cox, 55 Ohio, 497; 45 N. E. 641; Chicago, B. & Q.
R. v. Curtis, 51 Neb. 442; 71 N. W. 42; Maine v. Chicago, B. &Q. R.,
— Ia. — ; 70 N. W. 630; "Bekman v. Ghieago, B. &Q. R., 169 Ill. 312;
48 N. E. 496; Pittsburg, etc. R. v. Moore, 152 Ind. 345; 53 N. E. 290,
overruling Pittsburg, etc. R. v. Montgomery, 49 N. E. 582.

§ 227. 1 Re Boone, 83 F. 944.

2 Haber v. Johnson, 68 Minn. 74; 70N. W. 806; Davis v. Webber, 66
Ark. 190; 49 S. W. 822; Potter v. Ajax Min. Co., — Utah —; 61 P. 999.
126 THE LEGALITY OF CONTRACTS,

CHAPTER VII.
GENERAL RULES AS TO ILLEGALITY.

Havine seen what classes of contracts the law regards as
illegal, we have now to consider certain general rules as to
the nature and effect of illegality.

§ 228. Object unlawful. — When the object of an agree-
ment is the accomplishment of an unlawful purpose, the
agreement is of course unlawful. That purpose, however,
must clearly appear, and “ will not be inferred simply because
the performance of the contract might possibly result in a
remote, incidental, and unintentional aid to an illegal
transaction.” 4

§ 229. Consideration illegal. — When the consideration for
a promise is illegal, the contract is illegal.! In a very large
number of the cases already considered the illegality was
in the consideration.

§ 230. Contract legal, intention innocently illegal. — When
a contract can be legally performed, and there is an intention
on the part of the parties to perform it in an illegal manner,
the performance of the contract in a legal manner will be
enforced if the parties contracted in ignorance of the law
and with no intention of violating it.! But if the intention
is to violate the law, ignorance of the law does not render
the contract valid.?

§ 231. Tendency illegal. —If the tendency of the contract
is to accomplish an illegal result, or a legal result by illegal

28. 1 Houston, etc. R. v. Texas, 177 U. S. 66, 95.
29.1 Featherston v. Hutchinson, Cro. Eliz. 199.

30. 1 Waugh v. Morris, L. R. 8 Q. B. 202; W. 257; K. IT. 1590.
State v. Carver, 69 N. H. 206; 89 A. 973.
GENERAL RULES AS TO ILLEGALITY. 127

means, the contract is illegal,! although nothing illegal is
actually done under it. Thus where there was printed on
the back of a lottery ticket an offer of a reward to any person
who would produce a ticket that had drawn a prize and not
been promptly cashed, it was held that the offer could not be
enforced.?

§ 232. Indemnity for Illegal Acts. —An agreement to in-
demnify one against the consequences of an illegal act is
illegal, unless it appears that there is no intention to commit
such illegal act. Thus an indemnity bond given to a sheriff
to induce him not to levy on property described in the writ
is void, where the sheriff’s duty is to make the levy.2, On
the other hand, if the bond is given to the sheriff to induce
him to levy on property the title to which is in doubt, it is
valid, the sheriff having no intention of trespassing.2 So
where an innocent agent is induced by his principal to make
an unlawful sale of another’s property, the principal must
indemnify the agent. For the same reason persons are
allowed to insure against damages caused by the negligence
of their servants.®

Where A. agreed to publish a book to be written by B.,
and B. agreed to hold A. harmless from all libel suits, the
agreement was held valid because it did not appear that there
was any intention to publish libellous matter.®

§ 231. ! Egerton v. Earl Brownlow, 4 H. L. C. 1 (not a contract case);
Richardson v. Crandall, 48 N. Y. 348, 362; Holladay v. Paterson, 5 Or.
177, 180; Cohen v. Berlin, etc. Co. — N. Y. —; 59 N. E. 906; but see
Telford v. Chicago, ete. R., 172 Ill. 559; 50 N. E. 105.

2 Dieckhoff v. Fox, 56 Minn. 438; 57 N. W. 930.

§ 232. ! Babcock v. Terry, 97 Mass. 482; Ferguson v. Yunt, 13
S. D. 120; 82 N. W. 509; Davidson v. Hayden, 18 Ky. 931; 38S. W.
679.

2 Davidson v. Hayden, supra.

3-Whitney v. Gammon, 103 Ja. 863; 72 N. W. 552.

# Adamson v. Jarvis, 4 Bing. 66.

5 Kansas City, etc. R. v. Southern News Co., 151 Mo. 878; 528. W.
205.

6 C. F. Jewett Publishing Co. v. Butler, 159 Mass. 517; 34 N. E. 1087;
\W. 245.
128 THE LEGALITY OF CONTRACTS.

§ 233. Intention of one Party illegal. — Where the con-
tract is to do a thing lawful in itself, but where the intention
of one party is to accomplish an unlawful object,! or where
some fact known to one party and not to the other renders
the performance of the contract unlawful,? the innocent.
party may recover damages against the other for breach of
contract, and may refuse to perform the contract on discov-
ering the illegal intention of the other party.

§ 234. Vendee’s Intention illegal. — When property is sold
“with a view” to an illegal use,! or for an illegal purpose,?
the transaction is illegal. :

When property is sold with knowledge by the vendor that
the vendee intends to use it “for the perpetration of a hei-
nous crime,” the transaction is illegal.®

When the vendor has knowledge of the illegal intention of
the vendee, and aids him in any way in the accomplishment
of his unlawful purpose, he cannot enforce payment for the
property ;* as where the vendor reserves the title and the
right to take possession of the property if he deems himself
insecure.§

When the vendor knows that the vendee intends to use the
property for an illegal purpose other than the commission of
‘a heinous crime,” there is a conflict of authority as to the

§ 233. ! Pixley v. Boynton, 79 Tl. 851; W. 155; K. IT. 1595; Scanlon
v. Warren, 169 Ill. 142; 48 N. E. 410. But see ante, § 201, n.

2 Millward v. Littlewood, 5 Ex. 775; W. 255 ; Rosenbaum v. United
States, etc. Co., —N. J. L. —; 44 A. 966.

3% Cowan v. Milbourn, L. R. 2 Ex, 230; W. 235; K. IJ. 1585; Church
v. Proctor, 33 U. 8. App. 1; 66 F. 240.

§ 234. 1 Webster v. Munger, 8 Gray, 584; Graves v. Johnson, 156 Mass.
211; 30 N. E. 818; H. & W. 391; K. IT. 1611.

2 Reed v. Brewer, 90 Tex. 144; 37S. W. 418. As to whether there can
be a recovery on a note given for property sold in fraud of creditors, see
Harcrow v. Harcrow, — Ark. —; 588. W. 553.

8 Hanauer v. Doane, 12 Wall. 342; K. II. 1602.

* Hull v. Ruggles, 56 N. Y. 424; K. II. 1616; Gaylord v. Soragen, 32
Vt. 110; Foster v. Thurston, 11 Cush. 322; Wamell v. Reed, 5 T. R. 599;
Aiken v, Blaisdell, 41 Vt. 655; W. 264; St. Louis Fair Ass’n v. Carmody,
151 Mo. 566; 52S. W. 365. ;

5 Standard Furniture Co. v. Van Alstine, — Wash. — ; 62 P. 145.
GENERAL RULES AS TO ILLEGALITY. 129

right of the vendor to enforce payment for the property. It
is held in England that the vendor’s knowledge of the ven-
dee’s illegal intention renders the transaction illegal.6 In
this country the opposite rule prevails, both with regard to
the sale of property’ and the rendition of services.® If
knowledge on the part of the vendor of the vendee’s illegal
purpose is insufficient to render the contract illegal, a jfor-
tiori, reasonable cause to know of such intention is insuffi-
cient.®

8 235, Borrower's Intention illegal — Where money is
loaned for the purpose of accomplishing an illegal object,
the contract is illegal, and the money cannot be recovered.!
It seems that the rules as to the effect of the lender's knowl-
edge of the borrower’s illegal intention are the same as in
the case of a vendor’s knowledge of his vendee’s illegal
intention.? If the borrower is to be repaid out of the profits
of the illegal business, the transaction is illegal.

§ 236. Ilegal and Void Contracts. —It is important to
notice here a distinction between two classes of contracts,
both of which are ordinarily called illegal. External limi-
tations upon freedom of contract are imposed by the law
either because the object of the contract is the accomplishment
of some purpose which the law regards as injurious to the
public welfare, or because the contract is one which the law
does not deem it proper to enforce, although the accomplish-

6 Pearce v. Brooks, L. R. 1 Ex. 218; W. 231; K. II. 1597.

7 Green v. Collins, 3 Cliff. 494; Dater v. Earl, 3 Gray, 482 ; Anheuser-
Busch Brewing Ass’n v. Mason, 44 Minn. 318; 46 N. W. 558; K. IT. 1608;
Delavina v. Hill, 65 N. H. 94; 19 A. 1000. But see Reed v. Brewer, 90
Tex. 144; 387 S. W. 418. As to the distinction between knowledge and
intention as to the use to which the property may be put, see St. Louis
Fair Ass'n v. Carmody, supra.

8 Boyson v. Haley, 68 N. H. 337; 38 A. 1006.

® Adams v. Coulliard, 102 Mass. 167.

§ 235. 1 Cannan v. Bryce, 3 B. & Ald. 179; M’Kinnell v. Robinson,
3M. & W. 435; K. II. 1614; Russell v. Post, 188 U. S. 425.

2 Tyler v. Carlisle, 79 Me. 210; 9 A. 356; W. 249; H. & W. 390;
Howell v. Stuart, 54 Mo. 400; Armstrong v. American Exchange Bank,
133 U. S. 433; 10 S. Ct. 450; Russell v. Post, supra.

3 Virden vy. Murphey, — Miss. —; 28 S. 851.

9
4

130 THE LEGALITY OF CONTRACTS.

ment of the object of the contract is not regarded as against
public policy. In the former case the contract is always
called illegal; in the latter case it is sometimes called ille-
gal, and sometimes simply void. In so far as the contract
itself is concerned the distinction is of little consequence.
So long as no contractual obligation results from the acts of
the parties it matters little for what reason the law refuses to
recognize the validity of the contract. Nevertheless, the dis-
tinction in question has most important results. If the
contract is merely one which the law refuses to enforce, the
invalidity of the contract does not affect other transactions
or other rights and obligations. This is the case with con-
tracts in restraint of trade under the English Trade Union
Act, 1871,1 and under the law of New Jersey.2 If, how-
ever, an unlawful object is contemplated, the illegality of
such object is sufficient to taint other transactions not
otherwise illegal. The distinction in question is well illus-
trated by the different views taken of wagers in this coun-
try and in England. In this country wagers are regarded as
detrimental to public morality. It follows, therefore, not
merely that wagering contracts are illegal, but also that
other contracts are rendered illegal when the object of such
contracts is to accomplish a purely speculative purpose.*? In
England, on the other hand, wagers are declared void by
statute; but they are not regarded in general as immoral or
unlawful transactions. It follows, accordingly, that in Eng-
land, while the wagering contract is invalid, other contracts
which do not come within the prohibition of the statute are
sustained, even though their object is purely speculative.*
In considering the effect of illegality, therefore, on other
rights and obligations of the parties than those springing

§ 236. 1 As to what constitutes ‘* enforcing the agreement,” see Cham-
berlain’s Wharf v. Smith, 1900, 2 Ch. 605.

2 Rosenbaum ». United States Credit System Co., — N.J.L. — ; 48
A. 237.

3 Harvey v. Merrill, 150 Mass. 1; 22 N. E.49; W. 147; H. & W. 383;
Embrey v. Jemison, 131 U. 8. 386; 9 S. Ct. 776; Mohr v. Miesen, 47
Minn. 228; 49 N. W. 862; H. & W. 325.

4 Thacker v. Hardy, 4 Q. B. D. 685; W. 182.
‘
,

GENERAL RULES AS TO ILLEGALITY. 1381

from the contract itself, it is always necessary to bear in
mind this distinction between contracts whose object is
unlawful, and contracts which the law simply refuses to
“enforce. It seems that all contracts void as against public
policy at common Jaw are illegal,® and that all contracts
which the courts think the legislature intended to prohibit
are illegal, in the strict sense; but that the mere fact that
the contract is declared by the legislature to be void does
not render it illegal unless the legislative intention is to
prohibit the making of the contract. ®

§ 237. Securities for Illegal Contracts. — All securities given
for money due or to become due on illegal transactions are
themselves illegal contracts ;! but a bond to secure the pay-
ment of money due on a contract that is merely void is valid.?

§ 238. Effect of Ilegality.— The courts will never lend
their aid to enforce an illegal contract; nor will they allow
an illegal contract to be set up as a defence to an action on a
legal obligation,’ but the illegality of a contract apparently
legal may be shown to defeat an action on such contract.?
The illegality of the cause of action on which a judgment
has been obtained will prevent the judgment creditor from
obtaining the assistance of a court of equity to enforce his
judgment; even though the judgment was rendered in a
State where the contract sued upon was valid.

§ 288 a. The Maxim “In pari delicto.” — The courts will
not assist a party who seeks their aid to avoid an illegal
contract where he is himself at fault. The legal maxim is,

5 Harvey v. Merrill, supra; Bishop v. Palmer, 146 Mass. 469; 16 N. E.
299; W. 104; H. & W. 380; K. II. 1624. See, however, Rosenbaum v.
United States Credit System Co., supra, in which unreasonable contracts
in restraint of trade are held to be not illegal, but merely unenforceable.

6 Thacker v. Hardy, supra. ;
§ 237. 1 Tillock v. Webb, 56 Me. 100; W. 248; Fisher v. Bridges,

3 E. & B. 642.
2 Ayerst v. Jenkins, 16 Eq. 275. ;
§ 238. 1 Ackert v. Barker, 131 Mass. 486; W. 165; H. & W. 354.
2 Frost v. Gage, 3 Allen, 560; W. 241; Stewart v. Thayer, 170 Mass.

560; 49 N. E. 1020.
8 Minzesheimer v. Doolittle, — N. J. Eq. — ; 45 A. 611.
132 THE LEGALITY OF CONTRACTS,

“In pari delicto potior est conditio defendentis.”1 This rule,
however, is not an absolute one, and its limitations are not
entirely clear. The rule proceeds on the ground that it is
contrary to public policy that the courts should interfere, not’
only to enforce illegal contracts, but also to assist in any
way the parties who have made such contracts. The rule
requires that the parties shall be in pari delicto, If, there-
fore, one of the parties has been persuaded to enter into the
illegal contract by the fraud, duress, oppression, or undue
influence of the other, the rule does not apply, and the party
who is relatively innocent can call upon the court to relieve
him from the consequences of his act.”

§ 239, Locus Poenitentiee.— Inasmuch as the object of the
foregoing rule is to protect the public interest, the courts will
not apply the rule where their interference will tend to pre-
vent the accomplishment of the illegal purpose. If money is
paid or goods delivered for an illegal purpose, the person who
has so paid the money or delivered the goods may recover
them back whenever such recovery will tend to defeat the
illegal object of the contract.! This rule is frequently applied
in cases of wagers, where either party is allowed to recover
the money he has deposited with a stakeholder at any time
before it has been paid over, and the stakeholder is liable for
paying over the money after notice from the owner.2 So

§ 238 a. 1 St. Louis, V.& T. H.R. Co. v. Terre Haute & I. R. Co.
145 U. 8. 893; 12S. Ct. 953. The maxim in that case was applied to an
ultra vires contract of a corporation. As to the meaning of this maxim,
see 14 Harv. Law Rev. 344.

2 Williams v. Bayley, L. R.1 H. L. 200; W.177; Atkinson v..Denby,
7H. & N. 934; Reynell v. Sprye, 1 D. M. & G. 660; Prewett ». Coop-
wood, 30 Miss. 369; Bell v. Campbell, 123 Mo. 1; 25 S. W. 359; Duval v.
Wellman, 124 N. Y. 156; 26 N. E. 343; H. & W. 402; Brown »v. Ever-
ett-Ridley-Ragan Co., — Ga. — ; 868. E. 813; Woodhaus v. Allen, —
Cal. — ; 62 P. 398; Gorringe v. Read, — Utah — ; 63 P. 902.

§ 239. 1 Duval v. Wellman, 124 N. Y. 156; 26 N. E. 343; H. & W.
402 ; Bernard v. Taylor, 23 Or. 416; 31 P. 968; H. & W. 407.

2 Bernard v. Taylor, 23 Or. 416; 31 P. 968; H. & W. 407; Hampden
v. Walsh, 1 Q. B. D. 189; W. 126; Turner v. Thompson, 21 Ky. 1414;
55S. W. 210; Shoolbred v. Roberts, 1900, 2 Q. B. 497; Pabst Brewing
Co, v. Liston, — Mich. — ; 83 N. W. 448. Contra, by statute, Fer-
guson v. Yunt, 138. D. 120; 82 N. W. 509.
GENERAL RULES AS TO ILLEGALITY. 138

where A. makes a fictitious assignment of goods for the pur-
pose of defrauding his creditors, he may recover the goods
from his assignee before anything has been done to defraud
his creditors.* In such cases there is said to be a locus peni-
tentie. If, however, the illegal object has been actually ac-
complished by the payment of the money or the delivery of
the goods, the money or goods cannot be recovered. Thus if
A. deposits money with B. in order to indemnify B. for going
bail for him, he cannot recover the money from B., even
though the time for which the bail-bond was given has not yet
expired. The illegal purpose is accomplished by the simple
deposit of the money, which deprives the public of the interest
which the surety would otherwise have to prevent the for-
feiture of the bond. Public policy in New York, however,
does not forbid such indemnity to the bail. So where A. de-
posits money in a bank in B.’s name in order to give B. a fic-
titious credit, he cannot recover the money after B. becomes
insolvent, since the illegal purpose has been accomplished.®
Part accomplishment of the illegal purpose will destroy any
locus penitentie that might otherwise exist.’ If the illegal
agreement has been abandoned before the accomplishment of
any part of the illegal purpose, one who has paid money there-
under can recover the money.8

§ 240. When Rescission of Illegal Contract should be allowed.
— It is sometimes said that a party can recover money paid on
an illegal contract whenever the illegal purpose has not been
accomplished ; but the true test is not the accomplishment or
non-accomplishment of the illegal purpose, but the actual
effect of the restoration of the money! Thus if money is
paid to induce one to commit a crime, to allow the recovery

8 Taylor v. Bowers, 1 Q. B. D. 291.

4 Herman v. Jeuchner, 15 Q. B. D. 561.

® Moloney v. Nelson, 158 N. Y. 851; 53 N. E. 381.

6 Re Great Berlin Steamboat Co., 26 C. D. 616.

7 Kearley v. Thomson, 24 Q. B. D. 742.

8 Spring Co. v. Knowlton, 103 U. 8. 49.

§ 240. 1 Duval v. Wellman, 124 N. Y. 156; 26 N. E. 348; H. & W.
402; Block v. Darling, 140 U. S. 234. See also Tate v. Commercial
B’ld’g Ass’n, 97 Va, 74; 33 8. E. 382.
134 THE LEGALITY OF CONTRACTS.

of the money before the commission of the crime would tend
to induce the recipient of the money to commit the crime,
and thereby insure the retention of the money; while if A.
were to transfer a ship to B. in order that B. might commit
piracy, to allow A. to recover the ship would tend to pre-
vent ely crime by depriving B. of the means of committing
piracy.”

941. Receipt of Proceeds of Illegal Transaction.—- Where
there is an illegal contract of agency or partnership no ac-
counting will be decreed, either of profits or losses! But
where money is paid or goods delivered to A. for the use of
B., A. must account for the money or goods, although they
were received as the proceeds of an illegal transaction.?
Theoretically there is a distinction between enforcing the
illegal contract and enforcing a duty not springing from the
contract, but arising solely from the receipt of the money or
goods. Practically it seems impossible to reconcile the actual
decisions on this point, though the rules laid down are those
just stated.’

Where the profits of an illegal transaction have been actu-
ally divided or invested in other property the illegality of the
original transaction in no way affects the title to such prop-
erty or subsequent dealings in regard to it* So where a cor-
poration has been formed for an illegal purpose, the illegality

2 Anson, Contracts (4th ed.), 200.,

§ 241. 1 Wheeler v. Sage, 1 Wall. 518; Bartle v. Nutt, 4 Pet. 184;
Craft v. McConoughy, 79 Til. 346; Jackson v. McLean, 100 Mo. 130; 13
S. W. 393; 36 F. 213; Morrison v. Bennett, 20 Mont. 560; 52 P. 553;
Atwater v. Manville, 106 Wis. 64; 81 N. W. 985; Wiggins v. Bisso, 92
Tex. 219; 47 S. W. 637.

2 Lindley, Partnership, I. 107; Evans v. Trenton, 24 N. J. L. 764;
Sharp v. Taylor, 2 Ph. 801; Planters’ Bank v. Union Bank, 16 Wall.
483; Martin v. Richardson, 94 Ky. 188; 21S. W.1039; Andrews v. New
Orleans Brewing Ass’n, 74 Miss. 362; 20 S. 837; Brady v. Howarth, 167
Ill. 610; 47 N. E. 757; Hertzler v. Geigley, 196 Pa. 419; 46 A. 866; Har-
crow v. Harcrow, — Ark. — ; 58S. W. 553; contra, Lemon v. Grosskopf,
22 Wis. 447; Chateau v. Singla, 114 Cal. 91; 45 P. 1015.

3 The cases are fully discussed in McMullen v. Hoffman, 174 U.S. 639.

£ Brooks v. Martin, 2 Wall. 70; Portsmouth Brewing Co. v. Mudge, 68
N. TI. 462; 44 A. 600; Harrow o. Harcrow, supra.
GENERAL RULES AS TO ILLEGALITY. 185

does not affect the validity of a mortgage upon the corporate
property.®

§ 242. Partial Megality.— An agreement may consist of
several distinct and independent contracts contained in one .
instrument. In such case the connection between the differ-
ent contracts is physical, not legal; and the illegality of one
contract will not affect the validity of another unless they are
connected with each other in such a way that the illegality of
one contract must taint the other.

§ 243. Securities partially illegal.— Where security is given
for a debt, and that security is in the form of an instrument
which is prevented from accomplishing its intended result by
the operation of some positive rule of law, though the security
itself be void, a covenant or agreement to pay the debt, con-
tained in such instrument, will be upheld Thus where a
rent-charge created by a vicar was illegal and void, a personal
covenant to pay the amount of the rent-charge contained in
the same instrument was held binding? So where a mortgage
given by a corporation was ultra vires, a covenant in the mort-
gage to repay the money borrowed was enforced.2 So where
a contract for attorney’s fees provided that no settlement
should be made by the client without the attorney’s consent,
the illegality of that particular provision did not affect the
rest of the agreement.*

§ 244. Supplemental Agreements.-— Where an agreement is
lawful and complete on its face, and another agreement is
made supplemental to the first, and substantially a part of the
same transaction, which second agreement is unlawful, the law
will enforce the first agreement in spite of the illegality of the
second =

5 Dickerman v. Northern Trust Co., 176 U. S. 181.

§ 243. 1 Kerrison v. Cole, 8 East, 231; K. II. 1629; Pickering v. Ilfra-
combe Ry. Co., L. R. 3 C. P. 235.

2 Monys v. Leake, 8 T. R. 411.

8 Payne v. Brecon, 38 H. & N. 572.

* Potter v. Ajax Mining Co., — Utah — ; 61 P. 999.

§ 244. 1 Odessa Tramways Co. v. Mendel, 8 C. D. 235; Ohio v. Board
of Education, 35 Ohio St. 519; K. II. 1644; Bowery Bank v. Gerety, 153
N. Y. 411; 47 N. E. 7938.
186 THE LEGALITY OF CONTRACTS.

§ 245. Instruments affecting Two Classes of Property. —
Where an instrument operates upon two classes of property,
as to one of which the instrument is illegal, or void for want
of compliance with some legal requirement, while in regard to
the other class of property the instrument would be valid, the
instrument will be upheld as to that kind of property upon which
it may lawfully operate. Thus where a debtor made an assign-
ment of his goods and book-debts, which was void as to the
goods for want of the registration required by law, the assign-
ment was held valid as to the book-debts.! So in Louisiana,
where a husband gave his wife a dation en paiement of land
and movables, which were valued separately, the dation, though
void as to the land was upheld as to the movables, by reason
of the separate valuation.?

§ 246. Partial Illegality of Consideration. — Where the con-
sideration for a promise is in part illegal, the entire contract
is illegal.1. Thus where notes are illegal, and new notes are
given, partly in renewal of the old notes, and partly for a new
consideration, the new notes are void.?, Where, however, part
of the consideration is a valid promise, and part a void prom-
ise which is not illegal, the contract, with the exception of the
void promise, is binding.’

Ԥ 245. } Kitching v. Hicks, 6 Ont. Rep. 739.

2 Glaze v. Duson, 40 La. Ann. 692; 4S 861.

§ 246. 1 Featherston v. Hutchinson, Cro. Eliz. 199; K.IT. 1619; Carle-
ton v. Whitcher, 5 N. H. 196; Foley v. Speir, 100 N. Y. 552; 3 N. E.
477; K. II. 1620; Bixby v. Mow, 51 N. H. 402; H. & W. 878; Filson v.
Himes, 5 Pa. St. 452; Perkins v. Cummings, 2 Gray, 258; Snyder »v.
Willey, 33 Mich. 483; Widoe v. Webb, 20 Ohio St. 431; McQuade
v. Rosecrans, 36 Ohio St. 442; Deering v. Chapman, 22 Me. 488; Cotten
v. McKenzie, 57 Miss, 418; Pacific Guano Co. v. McMullen, 66 Ala. 582;
Carleton v. Woods, 28 N. H. 290; Pueblo R. R. Co. v. Taylor, 6 Col. 1;
Bishop v. Palmer, 146 Mass. 469; 16 N. E. 299; W. 104; H. & W. 380;
K. IT. 1624; Luce v. Foster, 42 Neb. 818; 60 N. W. 1027; Reed v. Brewer,
90 Tex. 144; 37 S. W. 418; contra, Yundt v. Roberts, 5 S. & R. 139.
And see Hynds v. Hays, 25 Ind. 31; Fishell v. Gray, 60 N. J. L. 5; 387
A. 606; King v. King, — Ohio — ; 59 N E. 111.

2 Oakes v. Merrifield, 93 Me. 297; 45 A. 31.

3 Rosenbaum v. United States Credit Systern Co., — N. J. L. — ; 48
A, 237.
GENERAL RULES AS TO ILLEGALITY. 187

§ 247. The Doctrine of Pigot’s Case. — In a dictum in Pigot’s
Case,! it was resolved by the judges, “that if some of the
covenants of an indenture, or some of the conditions indorsed
upon a bond, are against law, and some good and lawful; that
in this case the covenants or conditions which are against law
are void a initio, and the others stand good.” From this
dictum has sprung the generally accepted doctrine that where
there is a promise to do two things, one of which is legal and
the other illegal, the promise to do the legal act will be en-
forced, and the illegal act will be disregarded.2 At one time
it was supposed that there was a difference between partial
illegality due to a prohibitory statute, and partial illegality at
common law. It is now recognized, however, that there is no
such difference, except where a statute expressly declares that
any instrument containing an agreement which it prohibits
shall be void.®

§ 248. Malum in se and Malum prohibitum.-— The United
States Supreme Court has said that “ where there is no imputa-
tion of malum in se, the bad parts (of a contract) do not affect
the good. The valid may be enforced.”! The exact force of
the qualification that there must be no imputation of malum
in se is not quite clear. If the covenants or agreements are
clearly separable, it is hard to see how one illegal agreement
can under any circumstances impute malum in se to the entire
contract; while, of course, if the legal part of the contract
cannot be separated from the illegal part, the contract must
fail in any case.

§ 249. Confusion between Divisible Contracts and Divisible
Promises. — Under the rule in Pigot’s Case, as developed by the
modern authorities, it makes no difference whether there be

§ 247. 1 11 Co. Rep. 27. :

2 Bank of Australasia v. Breillat, 6 Moore P. C. 201; Pickering v. Ilfra-
combe Ry. Co., L. R. 3 C. P. 235; United States v. Bradley, 10 Pet. 343 ;
Gelpcke v. Dubuque, 1 Wall. 221; Corcoran v. Lehigh Coal Co., 138 IIL.
390; 28 N. E. 759. If the promise is indivisible, the whole contract is
of course illegal. Consumers’ Oil Co. v. Nunnemaker, 142 Ind. 560; 41
N. E. 1048.

3 Pickering v. Ilfracombe Ry. Co., supra.

§ 248. 1 Gelpcke v. Dubuque, supra.
1388 THE LEGALITY OF CONTRACTS.

two distinct promises, or whether there be one promise which
is divisible ; nor does it matter whether the consideration for
the two promises be an entire consideration or an apportionable
one.t One of the most common instances of the application
of this rule is in the case of agreements in restraint of trade.
Where an agreement imposes restrictions upon trade which
are unreasonable and exceed the limits allowed by law, if the
unreasonable part of the restriction can be separated from
that which is reasonable, the agreement will be enforced
within such reasonable limits. Thus where it was agreed be-
tween A. and B. that A. should become assistant to B. in his
business of surgeon dentist for four years, that B. should in-
struct A. in the business, and that at the expiration of the
term A. should not carry on that business in London, or in
any of the towns in England and Scotland where B. might
have been practising before the expiration of said service; it
was held that the covenant in restraint of trade was unreason-
ably broad, but that being divisible, it was binding on A. as
far as practising in London was concerned.?

§ 250. Divisible Promises and Divisible Contracts distinguished.
— The reasoning in these cases is, that the covenant in re-
straint of trade, if divisible, is equivalent to two distinct cove-
nants, one of which is legal and the other illegal, and that
therefore, under the rule in Pigot’s Case, the illegal covenant
should be disregarded, and the legal covenant enforced. In
California, however, this reasoning is disapproved where the
covenant sued on, though divisible, is yet founded upon an
entire consideration.2, And in North Carolina the rule in

§ 249. 1 Greenwood v. Bishop of London, 5 Taunt. 727; Newman »v.
Newman, 4 M. & S. 66; K. II. 1684; Presbury v. Fisher, 18 Mo. 50; Erie
Ry. Co. v. Union Locomotive Co., 35 N. J. L. 240; H. & W. 873; K. II.
1636.

2 Mallan v. May, 11 M. & W. 652; Chesman v. Nainbry, 2 Strange, 739;
2 Lord Raym. 1456; Dubowski v. Goldstein, 1896, 1 Q. B. 478; Dean v.
Emerson, 102 Mass. 480; Peltz v. Eichele, 62 Mo. 171; Smith’s Appeal,
113 Pa. St. 579; 6 A. 251; Western Union Tel. Co. v. B. & S. Ry. Co.,
3 McCrary, 130 ; Oregon St. Nav. Co. v. Winsor, 20 Wall. 64. And see
post, § 263.

§ 250. 1 11 Co. Rep. 27 8.

2 More v, Bonnet, 40 Cal. 251.
GENERAL RULES AS TO ILLEGALITY. 139

Pigot’s Case is not followed where the consideration for the
divisible promise is not apportionable.8

§ 251. Inconsistencies in the Decisions concerning Partial Ille-
gality. — In applying the rule in Pigot’s Case most courts have
been led into décisions which are plainly inconsistent. In
consideration of X., A. promises B. to do two acts, M. and N.,
of which M. is legal and N. illegal. If X. is an executory
consideration, that is,a promise, such promise is void because
the consideration for it, viz.: A’s promise to do M. and N. is
partly illegal. But mutual promises are the consideration for
each other, so that as B.’s promise is not binding, A.’s promise
is not binding. Yet if A.’s promise is under seal, or if X. is
an executed consideration, the courts generally hold that A.’s
promise todo M. is enforceable. In California! and North Car-
olina,? however, a different view is taken, and when there is
one entire consideration for two promises, and one promise
is for the performance of an illegal act, the entire contract is
illegal. This seems a more logical view, since it recognizes the
distinction between a divisible promise and a divisible contract,
which most courts fail to recognize.

The inconsistency just pointed out has led the Indiana
cvurt to hold that if the consideration is divisible, the promise,
though entire, will be enforced to the extent of the legal con-
sideration, though part of the consideration is illegal.®

3 Lindsay v. Smith, 78 N. C. 328; K. II. 1642.

§ 251. 1 More v. Bonnet, 40 Cal. 251.

2 Lindsay v. Smith, 78 N. C. 328; K. IL. 1642.

3 Hynds v. Hays, 25 Ind. 81. For a further discussion of partial
illegality, see 1 Northwestern Law Rev. 42.
BOOK IIL.

THE CONSTRUCTION OF CONTRACTS.

CHAPTER VIII.
GENERAL RULES OF CONSTRUCTION.

§ 252. The Nature of Construction. — The extent of the obli-
gation of a contract is determined by the construction placed
by the law on the conduct of the parties which gives rise to the
contract. From our definition of contractual obligation the
act which creates that obligation must define the extent of
the obligation. Given, then, the voluntary act from which a
contract springs, we must always inquire into the meaning of
that act. The general principle governing the courts in their
construction and interpretation of such legal acts is that such
acts are to be regarded as bearing that construction which a
reasonable man would place upon them. This broad general
principle has given rise to numerous special rules which must
here be considered.

§ 253. The Meaning of Words. — The primary rule for the
construction of language is that words are to be construed ac-
cording to their natural meaning.}

The literal meaning of the words must yield to that mean-
ing in which the parties must be regarded as having used those
words. The ordinary meaning does not apply where the con-
text shows that a different interpretation is proper.

Where the conventional meaning of the words is not the
same as their legal sense, the construction to be placed upon

§ 253. 1 Moran v. Prather, 23 Wall. 492; Clark v. Mallory, 185 Tl.
227; 56 N. E. 1099.
GENERAL RULES OF CONSTRUCTION. 141

the language depends on whether or not the parties had the
law in contemplation in making the contract.?

§ 254. Evidence of Surrounding Circumstances. — In any case
the circumstances surrounding the parties at the time of mak-
ing the contract must be taken into consideration to determine
the meaning of the words used! “ You are always entitled
in regarding the construction and meaning of a written docu-
ment to inquire into the circumstances under which it was
written, not in order to find an interpretation by the writer of
the language, but to ascertain from the surrounding facts and
circumstances with reference to what, and with what intent,
it must have been written.”? “ Extrinsic evidence is always ad-
missible, not to contradict or vary the contract, but to apply
it to the facts which the parties had in their minds and were
negotiating about.” “Still, when the language employed is
unequivocal, although the parties may have failed to express
their real intention, there being no room for construction, the
legal effect of the instrument will be enforced as written. In-
tention of the parties is not to be determined from previous
understandings or agreements, but must be ascertained from
the instrument itself which they execute as their final agree-
ment, otherwise written evidence of an agreement would
amount to nothing.” *

§ 255. Evidence of Custom or Usage. — It follows, therefore,
that it may always be shown that the parties contracted with
reference to a particular custom or usage.’ In fact, it is often
necessary to resort to custom to determine the details of a
contract general in form.2, Thus where A. sold B. four thou-
sand shingles, evidence was received to show that the term

2 Per Lord Watson, McCowan v. Baine, 1891, A. C. 408.

§ 254. 1 Reed v. Ins. Co., 95 U. 8. 23; H. & W. 511.

2 Kekewich, J., in Oliver v. Hunting, 44 C. D. 209.

3 Lord Davey, in Bank of New Zealand v. Simpson, 1900, A. C. 182,
Ley (P.O:

4 Clark v. Mallory, 185 Ill. 227, 232; 56 N. E. 1099.

§ 255. 1 Brown v. Byrne, 3 E. & B. 703; Hostetter v. Park, 137 U.S.
30; 11S. Ct. 1; Robinson v. United States, 13 Wall. 363; Bliven v. New
Eng. Screw Co., 23 How. 420.

2 Donovan v. Standard Oil Co., 155 N. Y. 112; 49 N. E. 678.

.
142 THE CONSTRUCTION OF CONTRACTS.

“thousand ” was ordinarily used in the lumber trade to mean
two packs of shingles of certain dimensions, without regard to
the number of pieces in the pack?

The custom must not, however, be absolutely repugnant to or
incunsistent with the contract,‘ or contrary to any rule of law.®

The existence of the custom or usage is admissible solely
for the purpose of showing that such custom or usage formed
part of the contract into which the parties entered, although
not expressed in terms in such contract; it is not admissible
for the purpose of varying the contract actually made® It
must therefore be shown that the party against whom the
custom is alleged had knowledge thereof,’ and that he con-
tracted with reference thereto.2 The existence of a custom,
‘ however, if sufficiently general, may raise a presumption that
the parties contracted with reference to it,? as where one em-
ploys another to buy or sell in a certain market.

§ 256. Documents Parts of the same Transaction. — Several
writings executed between the same parties, substantially at
the same time, relating to the same subject-matter, are to be
construed together if they are parts of the same transaction.
So where two parties simultaneously execute bonds to each
other the bonds are to be construed together.2. And in a con-
tract made by correspondence the whole correspondence must
be construed.2 In many cases the courts in applying these
rules have ignored the real nature of the rules. A rule of con-
struction can only be applied when there is something to con-

5 Soutier v. Kellerman, 18 Mo. 509; H. & W. 508.

* Moran v. Prather, 23 Wall. 492; Barnard v. Kellogg, 10 id. 383.

5 Crouch v. Credit Foncier, L. R. 8 Q. B. 874; United States v.
Buchanan, 8 How. 83; Thompson »v. Riggs, 5 Wall. 663.

® Barnard v. Kellogg, supra: Oelricks v. Ford, 23 How. 49.

7 Irwin v. Williar, 110 U. S. 499; 4S. Ct. 160.

8 Bliven v. New Eng. Screw Co., supra.

° Soutier v. Kellerman, supra ; Hostetter v Park, supra ; Robinson v.
United States, supra. '

10 Samuels v. Oliver, 130 Ill. 78; 22 N. E. 469.

§ 256. 1 Bailey v. R. R. Co., 17 Wall. 96; Joy v. St. Louis, 138 U.S.
1; 11S. Ct. 243.

2 Holt v. Rogers, 8 Pet. 420.

8 United States v. Boswick, 94 U. S. 53.
GENERAL RULES OF CONSTRUCTION. 143

strue. To determine the meaning of language used in one
instrument by reference to another instrument executed at
the same time and with reference to the same subject-matter
is perfectly proper. When, however, the court goes beyond
this, and attempts to make one bilateral contract out of two
unilateral contracts, on the alleged ground that the two instru-
ments are to be “ construed ”’ together, the bounds of construc-
tion are clearly ignored. Yet it is very common for courts to
say that two unilateral contracts executed at the same time
are to be “construed” as one contract.4 It may or may not
be legitimate, for example, to say that an absolute promise
contained in a unilateral contract, such as a promissory note,
shall be treated by the court as conditional upon the perform-
ance of some other promise by the payee; but to say that the
court in laying down such a rule is “ construing” the contract,
is to disregard the very meaning of the term “ construction.”
What the court really does in such cases is to recognize the
equitable effect of one instrument upon the right to enforce
another.

§ 257. Ambiguous Language. —In case the construction of
an instrument is doubtful, the language is to be construed
most strongly against the party using it.1 If the language
used is to be equally imputed to both parties, in case of doubt
the construction is in favor of the promisor.2? In any case,
the language is to be construed as one party knew the other
understood it.?

§ 258. General and Particular Words. — Where particular
words are in conflict with the general intention of the parties
as shown by the language of the entire contract, the general
intention to be gathered from the whole contract will control
the construction of the particular words.! Thus general words

4 Asin Hunt v. Livermore, 5 Pick. 395; L. 757; K. IT. 1885.

§ 257. } Garrison v. United States, 7 Wall. 688; Noonan v. Bradley,
9 Wall. 394.

2 Butler v. Wigge, 1 Wms. Saund. 66.

8 Cowles Electric Co. v. Lowrey, 47 U. S. App. 531; 79 F. 331.

§ 258. 1 Ford v. Beech, 11 Q. B. 866; W. 328; K. II. 1550; Boardman
». Reed, 6 Pet. 328.
144 THE CONSTRUCTION OF CONTRACTS.

in an instrument may be limited by other parts of the instru-
ment which show that the general words have really a partic-
ular application,? where the particular words precede, but not
where they follow, the general words.’

§ 259. Construction by the Parties. — Where the language of
a contract is of doubtful effect, the construction placed thereon
by the parties is entitled to great weight, if it is not control-
ling; but such construction cannot control the clear meaning
of the contract.2. The construction placed upon such contract
by the successors of those who made it, or by public officers,
is entitled to much less weight. And the understanding of
one party to the contract cannot affect its construction unless
such understanding was induced by the conduct of the other
party.*

§ 260. Construction upholding the Transaction. — That con-
struction of a contract is to be preferred which will render the
contract enforceable. Verba sunt intelligenda ut res magis
valeat quam pereat. If, therefore, a contract provides for
alternative methods of performance, one of which is legal and
the other illegal, the courts will enforce performance in the
legal manner and disregard the alternative method. Thus
where a note was given payable in Confederate money or in
Tennessee money, it was held that payment in Tennessee money
might be enforced, although the promise to pay in Confederate
money was unlawful! So where the contract refers to a class

2 Rock v. Perkins, 189 U. 8S. 628; 11S. Ct. 677; Richmond Ice Co. ».
Crystal Ice Co., — Va. — ; 37 S. E. 851; Jeffreys v. Southern R., —
N.C. — ; 8758. E. 515.

3 Crum v. Sawyer, 132 Ill. 443; 24 N. E. 956.

§ 259. 1 Topliff v. Topliff, 122 U. S. 121; 7S. Ct. 1057; District of
Columbia v. Gallagher, 124 U.S. 505; 8S. Ct. 585; Chicago v. Sheldon,
9 Wall. 50; Lowber v. Bangs, 2 Wall. 728; Consolidated Coal Co. v.
Schneider, 163 Ill. 393; 45 N. E. 126; Childers v. First N. B., 147 Ind.
430; 46 N. E. 825; Hale v. Sheehan, 52 Neb. 184; 71 N. W. 1019; Cin-
cinnati v. Cincinnati Gaslight Co., 53 Ohio St. 278; 41 N. E. 239.

2 Railroad Co. v. Trimble, 10 Wall. 367. But see Ramsay v. Brown, 77
Miss. 124; 25S, 151.

3 Cincinnati v. Cincinnati Gaslight Co., supra.

* Bank v. Kennedy, 17 Wall. 19.

§ 260. 1 Hanauer v. Gray, 25 Ark. 350.
GENERAL RULES OF CONSTRUCTION. 145

of objects in general terms, and some of the objects in the
class are lawful and others unlawful, the agreement will be
construed as applying only to those objects in regard to which
the parties might legally contract.2. So when a contract is
valid by the law of one place and invalid by that of another,
and there is doubt where the contract is to be performed, the
contract will be construed as calling for performance in the
place where it is valid? Anda clause in a contract provid-
ing for a forfeiture will in case of doubt be constr ued as allow-
ing the avoidance of the executory part of the contract only,
rather than the destruction of rights already vested by the
execution of the contract.*

§ 261, Punctuation, Writing, and Printing. — Punctuation
may be considered in determining the meaning of a contract ;?
but only as a last resort.?

If there is an inconsistency between written and printed
words in an instrument, the written words are entitled to
greater weight.?

§ 262. alternative and Optional Contracts. —In the case of
alternative and optional contracts, the person who is to per-
form has the right of election,’ unless some act is necessary
on the part of the promisee as a condition precedent to the
obligation of the contract.2, Thus an agreement to accept
from two to six hundred tons of a commodity gives the seller
the option, because he must tender the goods before the buyer
is bound to accept.? If the promisee has the election, he must

2 Gaskell v. King, 11 East, 165; K. II. 1632; Harrington v. Kloprogge,
2 Brod. & B. 678.

8 Pritchard v. Norton, 106 U. 8. 124; 1S. Ct. 102.

: # Philadelphia, W. & B. R. R. Co. v. Howard, 13 How. 807.

§ 261. 1 Joy v. St. Louis, 138 U. 8.1; 11S. Ct. 248.

2 Ewing v. Burnet, 11 Pet. 41.

3 Robertson v. French, 4 East, 180; American Express Co. v. Pinck-
ney, 29 Tll. 392; Chicago v. Weir, 165 id. 582 ; 46 N. E.725; O'Rourke v.
Burke, 44 Neb. 821; 63 N. W. 17.

§ 262. 1 Layton v. Pearce. 1 Doug. 15; K. IT. 1004.

2 Thorn v. City Rice Mills, 40 C. D. 857; K. II. 1010 ; Honck v.
Muller, 7 Q. B. D. 92; W. 578; K. IT. 1315.

8 Wheeler v. New Brunswick, etc. R. R. Co, 115 U.S. 29; 5S. Ct.

1061, 1160.
: 10
146 THE CONSTRUCTION OF CONTRACTS.

notify the promisor.t If the promisor has the election, and
performance on his part requires action by the promisee, he
must notify the promisor of his election.’

“Where one person agrees to support another without desig-
nating the place of support, the person to receive the support
may elect the place where he chooses to receive it, if he does
not thereby occasion unnecessary expense. Where an act is
to be done at one of two dates, at the election of the promisor,
his failure to perform the act at the earlier date is an election
to perform it at the later.’ ‘ When one contracts in the alter-
native to do one of two things by a given day, he has until the
day is past the right to elect which of them he will perform ;
but if he suffer the day to elapse without performing either, his
contract is broken and his right of election is lost.”° Where
the promisor has the election to perform one of two acts, and
performance of one of them is impossible at the time the con-
tract is made, the obligation to perform the other is absolute.®
Where performance of one of the acts subsequently becomes
impossible, it seems that the nue is nevertheless bound
to perform the other act.10

§ 268. Construction of Particular Contracts. —Contracts of
guaranty are to be construed liberally... Contracts of insur-
ance are to be construed in favor of the insured.? Contracts
affecting public interests are to be construed in favor of the
public. Contracts in restraint of trade are to be construed

4 Vyse v. Wakefield, 6 M. & W. 442; L. 969; K. IL. 1088; Honck v.
Muller, supra.

5 Plowman vu. Riddle, 7 Ala. 775; K. II. 1005.

& Norton v. Webb, 36 Me. 270 ; K. II. 1008.

7 Price v. Nixon, 5 Taunton, 338; K. II. 1012.

8 Choice v. Moseley, 1 Bailey, 186; K. II. 1013; McNitt v. Clark,
7 Johns. 465; K. II. 1014; Brown v. Dobson, — Pa. — ; 48 A. 415;
Amanda, etc. Co. v. People, etc. Co., — Col. — ; 64 P. 218.

9 Stevens v. Webb, 7 C. & P. 60; K. II. 1016.

10 Jacquinet v. Bontron, 19 La. Ann. 30; Browne. Hoye Ins. Co., 1 E.
& E. 853; K. IT. 1699; but see Laughter’s Case, 5 Rep. 22; K. I. 1679.

§ 263: 1 Davis v. Wells, 104 U. S. 159.

2 American Surety Co. v. Pauly, 170 U. S. 133.

8 Joy v. St. Louis, 188 U. $. 1; 11S. Ct. 243.
GENERAL RULES OF CONSTRUCTION. 147

like ordinary contracts. Hence if the contract is entire, and
the restraint exceeds the extent allowed by law, the court can-
not divide the contract and enforce it only to a reasonable
extent.6 If, however, the unreasonable part of the restriction
can be separated from that which is reasonable, the agreement
will be enforced within such reasonable limits.

* Mills v. Dunham, 1891, 1 Ch. 576.

§ Davies v. Davies, 35 C. D. 359; W. 77; contra, Saddlery Hardware
Co. v. Hillsboro Mills, — N. H. — ; 44 A. 300.

6 Ante, § 249. ;
148 THE CONSTRUCTION OF CONTRACTS.

CHAPTER IX.

IMPOSSIBILITY.

§ 264. Inherent Impossibility. —A promise to do a thing in
its nature impossible cannot, as we have seen, give rise to a
contract... A man, however, may promise to do a thing which
is in its nature possible, but which is actually impossible at
the time of the making of the contract, or which may subse-
quently become impossible. If the impossibility exists at the
time the contract is made, the effect of such impossibility de-
pends upon the character of the contract. If the impossibility
is due to the fact that two inconsistent descriptions are ap-
plied to the subject-matter, and both those descriptions are
essential, then, as will be seen hereafter, the contract is void,
in the absence of any warranty that the descriptions are both
correct.2, If one party, however, warrants the correctness of
the descriptions, the contract is binding on him, but voidable
by the other party.®

§ 265. Legal Impossibility —Its Relation to the Contract. —
Strictly speaking, of course, the performance of a contract can
never be legally impossible. If a thing cannot be done, there
can clearly be no obligation to do it. There may, however,
be an obligation to compensate the other party for the non-
performance of a promise which cannot be performed.1_ The

§ 264. 1 Ante, § 76; Duvergier v. Fellows, 5 Bing. 248; K. II. 1652.

2 Couturier v. Hastie, 5 H. L. C. 673; post, § 335.

8 Behn v. Burness, 1 B. & S. 877; 3 B. & S. 751; L. 556; Davison v.
Von Lingen, 113 U. S. 40; 5S. Ct. 346; H. & W. 265; post, § 335.

§ 265. 1 Jacksonville R. v. Hooper, 160 U.S. 514; K. 700. ‘There
cau be no question that a party may by an absolute contract bind him-
self or itself to perform things which subsequently become impossible, or
pay damages for the non-performance, and such construction is to be put
upon an unqualified undertaking where the event which causes the im-
IMPOSSIBILITY. 149

real question therefore is, is there any duty to pay damages
for non-performance of a contract, where the performance
proves impossible? This is purely a question of construction?
Impossibility has in itself no effect on the contract; but if the
contract is construed as imposing an obligation to do X., then,
clearly, failure to perform Y. cannot constitute a breach of
contract. We have then to consider the cases in which the
language of the contract is construed as not applying to some
situation which renders its literal performance impossible.

§ 266. When Legal Impossibility is not within the Contract. —
A condition is ordinarily implied in a contract that if the law
subsequently renders the performance of the contract accord-
ing to its terms unlawful or impossible, the promisor shall be
discharged from his obligation. The act of the law discharg-
ing the contract may be legislative, executive, or judicial.

§ 267. Discharge of Contract by Legislative Act. — An act of
any legislative body within the jurisdiction is not a contingency
against which the contract is intended to provide. Thus where
a paddock was taken by a railway company under an act of
Parliament authorizing the compulsory purchase of land for

X

possibility might have been anticipated and guarded against in the con-
tract; or where the impossibility arises from the act or default of the
promisor.” Jackson, J., in Chicago, M. & St. P. Ry. v. Hoyt, 149 U. S.
1, 14,15; 18 S. Ct. 779; W. 22, note. “I think it is not competent to
a defendant to say that there is no binding contract merely because he has
engaged to do something which is physically impossible.’’ Brett, J., in
Clifford v. Watts, L. R. 5 C. P. 577; W. 19.

2 «The words of a contract are to be construed to include all circum-
stances which the parties actually contemplated at the time the contract
was made, or which if they had thought properly about the matter they
ought to have contemplated. If something has happened which it is ob-
vious that no person of intelligence could have contemplated, the con-
tract is construed as not applying to the circumstances thus produced.”
Lord Esher, in Harrison v. Muncaster, 1891, 2 Q. B. 680, 686; W. 28,
note. ‘* Where the event is of such a character that it cannot be reason-

‘ ably supposed to have been in the contemplation of the contracting par-
ties when the contract was made, they will not be held bound by general
words, which, though large enough to include, were not used with refer-
ence to the possibility of the particular contingency which afterwards
happens.” Jackson, J., in Chicago, M. & St. P. Ry. v. Hoyt, supra.
150 THE CONSTRUCTION OF CONTRACTS.

the railway, it was held that the erection of a building by the
railway company did not constitute a breach of a covenant by
a previous lessee of the land with his lessor that neither the
lessee nor his assigns would permit the erection of a building
on the paddock. The covenant was held not to apply to the
case in question.1 So where the lessee of a wooden building
agreed to rebuild the same in a suitable time in case of de-
struction by fire, and the building was burned, it was held
that the subsequent passage of a city ordinance forbidding the
erection of a wooden building in that locality discharged the
lessor from his obligation to rebuild.”

§ 268. Discharge of Contract by Judicial Act. — An act of the
courts is not a contingency against which the contract. is ordi-
narily intended to provide. Thus, where A. was under a con-
tract of employment by a corporation, and the corporation was
enjoined from carrying on business at the instance of the State,
the contract was held to be discharged.! In general, the ap-
pointment of a receiver or the issuance of an injunction will
discharge, or at least suspend, the contract.2. This doctrine,
however, appears in some cases to have been carried too far
in its application to particular contracts.

A contract of life insurance does not and cannot include the
risk of death by legal process. The execution of the insured
by order of the court is not an event within the contemplation
of the parties; and if it were, insurance against the proceed-
ings of the court would be against public policy.*

Where A. agreed that if he left B.’s service without giving
two weeks’ notice he should receive nothing for wages due, it

§ 267. 1 Baily v. De Crespigny, L. R. 4 Q. B. 180; W. 15; K. II. 1712.

2 Cordes v. Miller, 89 Mich. 581; H. & W. 645.

§ 268. 1 People v. Globe Mut. Life Ins. Co,s 91 N. Y. 174; W. 49;
K. If. 1719.

2 Malcolmson v. Wappoo Mills, 88 F. 680. See, however, State v. Chi-
cago, Rh. I. & P. R., — Neb. — ; 85 N. W. 556. It may well be said
that an injunction is really the act of the party who procures it, and not
the act of the law at all.

8’ Burkhardt v. Georgia School Tp., 9 S. D. 817; 69 N. W. 16.

4 Burt v. Union Central L. I. Co, — U. 8. App. — ; 105 F. 419; So-
ciety v Bolland, 4 Bligh (N. R.), 194, 211
IMPOSSIBILITY. 151

was held that the arrest and imprisonment of A. dispensed
with the requirement of notice.6

§ 269. Discharge of Contract by Executive Act. —An act of
the executive is not a contingency against: which the contract
is intended to provide. Thus a declaration of war discharges
all contracts which require trading with the enemy for their
performance.!

So also of any act by an administrative officer of the govern-
ment. Thus, where work was begun on a building, under an
agreement that no extras should be paid for unless agreed to
in writing, and the-eity building inspector ordered changes in
the work, the defendant was held bound to pay for extra work
caused by such orders, although there was no agreement in
writing in regard to them?

§ 269 a. The Effect of Foreign Law upon the Discharge of Con-
tracts. — The fact that a foreign law renders the performance
of a contract impossible is held to be of no consequence, ex-
cept in the case of a charter-party of a foreign ship, where
impossibility caused by the law of the State to which the ship
belongs is an implied condition discharging the contract.?

§ 270. Existence of Subject-matter as a Condition of the Con-
tract. — As will be seen,’ the existence of the subject-matter
of a contract is ordinarily construed as a condition precedent
to the existence of the contract, unless it appears that the in-
tention of the parties was to make a contract regardless of
the existence of the subject-matter. And where the subject-
matter is in existence at the time the contract is made, the
continual existence of the subject-matter may be an implied
condition of the contract.

5 Hughes v. Wamsutta Mills, 11 Allen, 201; H. & W. 647.

§ 269. 1 Esposito v. Bowden, 7 E. & B. 763; Hanger v. Abbott, 6 Wall.
532, 536.

2 Cunningham v. Fourth Baptist Church, 159 Pa. St. 620; 28 A. 490.

§ 269a. 1 Barker v. Hodgson, 3 M. &S. 267; K. II. 1690; Taylor v. Tain-
tor, 16 Wall. 366; K. II. 1667. As to the application of this rule to the
relation of the different States to each other, see Taylor v. Taintor, supra ;
as to the relation of the States to the United States, see Com. v. Overby
80 Ky. 208; K. II. 1676.

2 Leake, Contracts, 615; The Teutonia, L. R. 4 P. C. 171.

§ 270. 1 Post, § 288.
152 THE CONSTRUCTION OF CONTRACTS.

§ 270 a. Termination of Contract by Destruction of Subject-
matter. — Where there is an agreement for the use of a hall, the
destruction of the hall by fire discharges the contract. The
same rule is applied in any case when the subject-matter of
the contract is part of a building.2— At common law, however,
the destruction of a building does not release from his cove-
nants the lessee of the land upon which the building stands.’
The common law regarded the land as the essential subject-
matter of the lease, and the rent was looked upon as issuing
from the land. This view was due to the fact that in early
times most leases were of farm-lands, the rent being part of
the crop of such lands, and the buildings of the tenants being
of slight value. This ancient rule of the common law has
been altered in some jurisdictions by statute; and in others,
with more questionable propriety, by the courts.*

§ 271. Destruction of Subject-matter of Leases. — In accord-
ance with the foregoing principles it has been held that where
A. leased a mine to B., and B. agreed to work the mine and
pay so much a ton for the clay removed, and to remove a cer-
tain quantity yearly, the exhaustion of the clay discharged
B. from his contract... But where the lessee of a coal mine
covenanted absolutely to raise a given quantity of coal
in each year, or to pay a minimum rent which should
represent the minimum amount of coal agreed to be worked,
the lessee was held bound to pay the minimum rent at all
events.”

§ 270 a. ! Taylor v. Caldwell, 3 B. & S. 826; K. If. 1703.

2 Stockwell v. Hunter, 11 Metc. 448; Graves v. Berdan, 26 N. Y. 498;
Lieberthal v. Montgomery, 121 Mich. 369; 80 N. W. 115.

8 Phillips v. Stevens, 16 Mass. 238; Ely v. Ely, 80 Ill. 532; Beach »v.
Crain, 2 N. Y. 87; Polack v. Pioche, 35 Cal. 416.

* Wattles v. Sonth Omaha Ice Co., 50 Neb. 251; 69 N. W. 785. And
see Richmond Ice Co. v. Crystal Ice Co., -— Va. — ; 87S. E. 851. For
a curious and interesting case where the land itself was washed away by
the Mississippi River, and the lessee, under the special terms of the lease
held discharged, see Waite v. O’Neil, 76 F. 408.

§ 271. 1 Clifford v. Watts, L. R.5 C. P. 577; W. 19; K. II. 1751;
Walker v. Tucker, 70 Ill. 527.

2 Bute v. Thompson, 13 M. & W. 487; K. II. 1691.
IMPOSSIBILITY. 153

§ 272, Existence of Property as a Condition in Contracts of
Sale. — Where there is an agreement for the sale of specific
property, the existence of the property at the time perform-
ance is due is an implied condition of the contract. Thus in
a contract for the sale of specific goods, the destruction o1 the
goods before delivery discharges the contract! So where
goods are to be sent in a certain ship, and the ship is unable
to take them, the contract of sale is discharged.? So where
there is a contract for the sale of a crop to be grown on speci-
fied land, and the crop fails, the contract is discharged. But
this rule does not apply where the contract is for a certain
quantity of the article without specifying the land on which it
‘is to be raised. Nor does it apply where one who has con-
tracted to sell goods is unable to manufacture them on account
of an accident to his machinery.6 But if the goods are to be
made only at a particular factory, the destruction of that fac-
tory discharges the contract, provided ordinary diligence is
used by the manufacturer.’ In a recent Pennsylvania case, a
contract by the defendant to furnish the plaintiff with an ade-
quate supply of water from the springs on a certain tract of
land was held absolute, though the springs were incapable of
furnishing an adequate supply.®

§ 278. Impossibility in Building Contracts. — When one con-
tracts to furnish labor and materials, and to construct a chat-
tel or to build a house on the land of another, the destruction
of the chattel or building before the time fixed for its com-
pletion will not excuse him.t Nor will the severity of the

§ 272. 1 Dexter v. Norton, 47 N. Y. 62; H. & W. 649; McMillan v.
Fox, 90 Wis. 173; 62 N. W. 1052.

2 Nickoll v. Ashton, 1900, 2 Q. B. 298.

3 Howell v. Coupland, 1 Q. B. D. 258; W. 25; K. II. 1759.

* Anderson v. May, 50 Minn. 280; 52 N. W. 580; W. 40; H. & W.
639; K. IL. 1764.

5 Summers v. Hibbard, 153 Ill. 102; 38 N. E. 899; K. IT. 1767.
6 Stewart v. Stone, 127 N. Y. 500; 28 N. E. 595; K. II. 1762.

7 Richmond Ice Co. v. Crystal Ice Co.. — Va. — ; 388. E, 141.
8 Du Bois v. Du Bois Waterworks Co., 176 Pa. 430; 85 A. 248.
Sed qu.

§ 273, 1 Adams v. Nichols, 19 Pick. 275; School District ». Dauchy,
25 Conn. 530.
154 THE CONSTRUCTION OF CONTRACTS.

weather,? nor a latent defect in the soil,? nor the necessity of
draining the land,‘ be a sufficient excuse. So where one con-
tracts to build a well according to certain specifications, and
the specifications call for a curb which is inadequate for the
purpose, the inadequacy of the curb does not affect the obli-
gation to build the well.6 In such cases the impossibility in
question has no effect on the contract because the contract is
construed as absolute.

§ 274. Impossibility in Contracts for Work to be done upon
Building or Chattel of another. —If the contract is not for the
entire construction of the building or chattel, different rules
prevail. Thus, where A. contracts to make repairs on B.’s
house, or to furnish a part of the work and materials used in
the erection of B.’s house, and the destruction of the house
renders performance of the contract impossible, A. may re-
cover pro rata for the work done under his contract... The
courts of England and Illinois allow no recovery in such cases.?
Recovery is usually allowed in such cases in this country on
the ground of an implied agreement by the owner of the build-
ing that he will pay pro rata for the actual performance of the
work in case the building is destroyed. In somé of the
decisions, however, the ground on which recovery is allowed
seems to be regarded as quasi-contractual, resulting from the
benefit conferred upon the owner of the building by the work

2 Reichenbach v. Sage, 138 Wash. 364; 43 P. 354. But see Asplund
v. Mattson, 15 Wash. 328; 46 P. 341.

3 Dermott v. Jones, 2 Wall. 1; H. & W. 641; School Trustees v. Ben-
nett, 27 N. J. L. 513; K. IL. 1741.

4 Stees v. Leonard, 20 Minn. 494; W. 33.

5 Leavitt v. Dover, 62 N. H. 94; 32 A. 156; contra, Murphy v. Liberty
N. B., 184 Pa. 208; 39 A. 1438.

§ 274. 1 Cleary v. Sohier, 120 Mass. 210; Keener, Cas. Q.-C. II. 229;
Butterfield v. Byron, 153 Mass. 517; 27 N. E. 667; W. 41; Hollis v.
Chapman, 86 Tex. 1; Clark v. Franklin, 7 Leigh, 1; Schwartz v. Saun-
ders, 46 Ill. 18; Rawson v. Clark, 70 Ill. 656; Clark v. Busse, 82 II]. 515.

2 Appleby v. Myers, L. R. 2 C. P. 651; Keener, Cas. Q.-C. II. 192;
Anglo-Egyptian Nay. Co. v. Rennie, L. R. 10 C. P. 271; Keener, Cas.
Q.-C. I. 582; Siegel v. Eaton, ete. Co., 165 Tl. 550; 46 N. E. 449;
Huyett Mfg. Co. v. Chicago Edison Co., 167 Ill. 238; 47 N. E. 384; and
see Brumby v. Smith, 3 Ala. 123; Keener, Cas. Q.-C. II. 213.
IMPOSSIBILITY. 155

actually done.’ If the latter view is taken, the measure of the
contractor’s recovery is the actual value of the work per-
formed, not exceeding the contract price. The Illinois doc-
trine is that where the contract is entire, both parties are
discharged ;* but that where the contract is severable, recovery
may be had for the amount already earned under the contract.

§ 278. Discharge of Bailment Contracts by Impossibility of Per-
formance. — The obligation arising from a bailment is not
necessarily contractual, but springs from the undertaking of the
bailee. Where, however, there is a contract of bailment, the
obligation of the contract will not, it seems, be construed as
differing from the obligation imposed by the undertaking,
unless it affirmatively appears that the contract is intended to
increase or to diminish the obligation which would otherwise
exist.2. Thus the obligation of a common carrier to receive
and carry goods is not contractual, but is imposed by law.
That obligation is to receive goods offered to him and to carry
them safely to their destination unless prevented by the act of
God, or of a public enemy. This obligation may be modified
by contract so as to increase or to diminish the carrier’s lia-
bility ; but it must appear that the contract was intended to
alter the common-law obligation.

§ 276. Distinction between Bailment Contracts and Securities
for their Performance. — In accordance with the foregoing prin-
ciple it has been held that the charterer of a ship is not liable
where the ship is destroyed by the act of God;! but that if a
bond is given conditioned for the return of the vessel, the
obligors are liable on the bond notwithstanding such destruc-

3 Cook v. McCabe, 53 Wis. 250; 10 N. W. 507; Hysell v. Sterling
Coal Co., 46 W. Va. 158; 33 S. E. 95; see Keener, Quasi-Contracts, 254.

4 Huyett Mfg. Co. v. Chicago Edison Co., supra.

5 Siegel v. Eaton, etc. Co., supra. The court held the contract in that
case severable, but without apparent reason. ;

§ 275. ! Field v. Brackett, 56 Me. 121; Seevers v. Gabel, 94 Ia. 75;
62 N. W. 669; contra, Harvey v. Murray, 136 Mass. 377; and see Barrere
v. Somps, 113 Cal. 97; 45 P. 177.

2 As in Wilmington Transportation Co. v. O’Neil, 98 Cal. 1; 32 P.
705; H. & W. 654.

§ 276. 1 Ames v. Belden, 17 Barb. 518.
156 THE CONSTRUCTION OF CONTRACTS.

tion of the vessel So where money was déposited by the
bailee as security “for the return of all property hired by him
in good order and condition,” the contract to return the prop-
erty was held absolute.? This distinction between the contract
of bailment, or charter-party, and the security given for the
~ performance of the contract, seems at least of doubtful validity.
The United States Supreme Court has held that sureties on a
collector’s bond conditioned for the payment of the money re-
ceived were not liable where the money was captured by a
public enemy, on the ground that the collector was a bailee,
and that the bond was really conditioned only for the perform-
ance of his duties as bailee, so that there had been no breach
of condition.4

§ 277. Discharge of Personal Contracts by Death or Disability.
— Contracts involving personal performance by either of the
parties, or by a third person, which can only be executed by
the particular individual, are subject to the implied condition
that the person shall be able to perform the contract; and his
death or disability discharges or suspends the contract,' pro-
vided the death or disability is not brought about with the in-
tention of violating the contract.2— The death of the employer
terminates a contract of employment, as well as the death of
the employee.? The dissolution of a corporation terminates

2 Steele v. Buck, 61 Ill. 348.

8 Barrere v. Somps, 113 Cal. 97; 45 P. 177.

4 United States v. Thomas, 15 Wall. 337.

§ 277. 1 Laughter’s Case, 5 Rep. 22; K. TI. 1679 ; Spalding v. Rosa,
71 N. Y. 40; W.47; H. & W. 655; Scully v. Kirkpatrick, 79 Pa. 324;
K. II. 1681; Boast v. Firth, L. R. 4 C. P. 1; Robinson v. Davison, L. R.
6 Ex. 269; Smith v. Preston, 170 Ill. 179; 48 N. E. 688; Blakely v. Sousa,
— Pa. — ; 47 A. 286. As to the right of recovery for services rendered,
see ante, § 41. As to what will excuse the performance of a promise to
marry, see Hall v. Wright, E. B. & E. 765; K. If. 1725; Trammell ».
Vaughan, — Mo. —; 59S. W. 79.

2 See Ritter v. N. Y. Life Ins. Co., 169 U. S. 189.

8 Lacy v. Getman, 119 N. Y. 109; 23 N. E. 452; W. 54; Yerrington
v. Greene, 7 R. I. 589; K. II. 1747; Whincup v. Hughes, L. R. 6 C. P.
78; Keener, Cas. Q.-C. 527; Farrow v. Wilson, L. R. 4 C. P. 744; Har-
ris v. Johnson, 98 Ga. 434; 25 8. E. 525.
IMPOSSIBILITY. 157

its contracts with its employees;* unless the dissolution of
the corporation is voluntary.® The death of one of two joint
contractors puts an end to the contract where the contract
contemplates personal performance by both,® but not other-
wise.’ Where there are dependent covenants in a contract,
and one party dies, the other party cannot sue on the contract
until an administrator is appointed and demand is made upon
the administrator, thus putting him in default2

§ 278. Personal Danger as an Excuse for Non-Performance of
Contract. — The prevalence of cholera in a certain place has
been held to justify a laborer in refusing to work in that place.
But the prevalence of small-pox in a school district was held
not to discharge the school district from liability to a teacher
hired for a given period where the district had closed the
schools during that period on account of the small-pox in the
vicinity ?

+ People v. Globe Mut. Life Ins. Co., 91 N. Y¥. 174; W. 49; K. II.
1719; contra, Rosenbaum v. United States, etc. Co., — N. J. L. —; 40
A. 591.

5 Kalkhoff v. Nelson, 60 Minn, 284; 62 N. W. 332.

6 Landa v. Shook, 87 Tex. 608; 30S. W. 586; Griggs v. Swift, 82 Ga.
292; Baxter v. Billings, 49 U. S. App. 767; 83 F. 790.

7 Hughes v. Gross, 166 Mass. 61; 43 N. E. 1031; Phillips v. Alhambra
Palace Co., 1901, 1 Q. B. 59.

8 Pead v. Trull, 173 Mass. 450; 53 N. E. 901.

§ 278. 1 Lakeman v. Pollard, 43 Me. 463; W. 58.

2 Dewey v. Alpena School District, 48 Mich. 480; 5 N. W. 646;
W. 60.
158 THE CONSTRUCTION OF CONTRACTS.

CHAPTER X.
REASONABLENESS.

§ 279. The General Implication of Reasonableness in Contracts.
— Where a contract calls for the performance of a certain act
and the contract is silent as to the time or manner of perform-
ance, the contract is construed as imposing an obligation to
act reasonably. Thus, where no time is specified in a contract
for its performance, the contract is construed as calling for
performance within a reasonable time. So where some thing
is to be done “after six months,” it must be done within a
reasonable time after six months.”

§ 280. What is a Reasonable Time.—A reasonable time
means a reasonable time under the particular circumstances
of the case! Thus, where a bill of lading specified no time
for the discharge of the cargo of a ship, it was held that the
consignees were bound to discharge the cargo within a reason-
able time, and that the consignees were not liable for a delay
in unloading caused by a strike of dock laborers, over which
the consignees had no control.2, Whether a strike by the ser-
vants of the consignees would be a sufficient excuse for the
delay is perhaps uncertain. On principle, it would seem that
such a strike ought to be a sufficient excuse, if the consignees
were unable to obtain a sufficient number of laborers on rea-
sonable terms. It has been held in New York, however, that

§ 279. 1 Minneapolis Gaslight Co. v. Kerr-Murray Mfg. Co., 122 U.S.
800; 7 S. Ct. 1187; Eppens, etc. Co. v. Littlejohn, — N. Y. — ; 58
N. E. 19.

2 New Haven Trust Co. v. Gaffney, — Conn. — ; 47 A. 760.

§ 280. 1 Carlton Stp. Co. v. Castle Mail Packets Co., 1898, A. C. 486;
Hick v. Raymond, 1893, A. C. 23; Eppens, ete. Co. v. Littlejohn, —
N. Y. — ; 58N. E.19; McFadden v. Henderson, — Ala. — ; 298. 640.

2 Wick v. Raymond, supra.
REASONABLENESS. 159

‘

a common carrier is not excused for delay in the delivery of
goods, although no time was set for their delivery, where the
delay is caused by a strike of the laborers employed by such
carrier. Possibly a distinction may be drawn between the
case of a common carrier and that of an ordinary contractor,
on the ground that, as a matter of public policy, the risk of a
strike should be borne by the carrier, and not by the shipper.
It is established that, if the delay is caused by the active inter-
ference of the strikers, it is excused ;® and there seems to be
no valid reason for distinguishing between an impossibility
caused by the violence of the strikers, and an impossibility
caused by their refusal to work on reasonable terms, unless
the reason of public policy just mentioned be sufficient.®

§ 281. Particular Instances of Reasonable Time. — When a
contract provides for the payment of money as soon as cer-
tain property of the debtor is sold, the debtor is bound to
pay within a reasonable time, unless it is clear that the obliga-
tion is purely ¢ontingent.}

Failure to ship goods within a reasonable time is not ex-
cused. where the delay is due not to the lack of shipping
. facilities, but to the shipper’s personal inability to avail him-
self of those facilities.”

The words “ with all despatch as customary” in a charter-
party mean that the charterer is not responsible for delay due
to impediments arising from the custom of the port,’ such as

3 Blackstock v. N. Y. & E. R. RB. Co., 20 N. Y. 48.

*4 1 Northwestern Law Rey. 131.

5 Geismer v. Lake Shore & M. S. R. Co., 102 N. Y. 563; 7 N. E. 828;
Haas v. Kansas City, ete. R. Co., 81 Ga. 792; 7S. E. 629; Pittsburg, Ft.
W. & C. RB. R. Co. v. Hazen, 84 Tl. 36.

6 1 Northwestern Law Rev. 131.

§ 281. 1 Nunez v. Dautel, 19 Wall. 560; Noland v. Bull, 24 Or. 479;
33 P. 983;-Fisher v. Chadwick, 4 Wy. 379; 84 P. 899; Rioux v. Rye-

gate Brick Co., — Vt. — ; 47 A. 406; Hood v. Hampton Plains Co., 106
F. 408. See also Johnston v. Schenck, 15 Utah, 490; 50 P. 921; Camp-
bell v. Heney, — Cal. — ; 60 P. 582.

2 Eppens, etc. Co. v. Littlejohn, — N. Y. —; 58 N. E. 19.
8 Postlethwaite v. Freeland, 5 A. C. 599. As to what constitutes the
custom of the port, see Hagerman v. Norton, — U.S. App. — ; 105 F.

996.
160 THE CONSTRUCTION OF CONTRACTS.

the lack of facilities for discharge,‘ or for delay caused by a
strike.6

§ 282. Whether what is a Reasonable Time is a Question
of Law or of Fact. — This question is one in regard to which
the authorities are not agreed. It has been urged on the one
hand that the question is one of law, to which the answer has
been made, how much law must a man know to know what
is a reasonable time for the performance of a particular con-
tract ?4 The case is one where if the matter is clear, that is,
if the court thinks that there is no doubt that the actual per-
formance has or has not taken place within a reasonable time,
the court should so decide as matter of law; but if the mat-
ter is doubtful, it should be left to the jury as a mixed ques-
tion of law and fact. i

§ 288. Contracts calling for Personal Satisfaction. — Where
the promisor’s obligation is conditional upon his satisfaction
with the performance of the promise, the condition will some-
times be construed as meaning that the promisor shall act
reasonably. If the contract in question does not involve the
personal equation of the promisor, the tendency of the courts
is to construe the contract as meaning that the promisor shall
act reasonably.! If the personal taste of the promisor is
concerned, the contract will be construed literally, and the
promisor’s obligation will be construed as conditional on
his actual satisfaction.2 Thus in a contract for household
furniture? or for a suit of clothes,t or for a work of

4 Lyle Shipping Co. v. Cardiff, 1900, 2 Q. B. 688. .

© Castlegate Stp. Co. v. Dempsey, 1892, 1 Q. B. 854, reversing, 1892,

1Q. B. 54, W. 31.
§ 282. ! See Keener, Quasi-Contracts, 104-106; Wright v. Bank, 110

N. Y. 237; 18 N. E. 79; Campbell ». Heney, — Cal. — ; 60 P. 582;
Brainard v. Van Dyke, — Vt. — ; 45 A. 758; Nunez». Dautel, 19 Wall.
560. .

§ 283. } Hawkins v. Graham, 149 Mass. 284; 21 N. E. 312; W. 6;
Duplex Safety Boiler Co. v. Garden, 101 N. Y. 887; 4 N. E. 749; H. &
W. 546; K. IT. 1108.

2 Duplex Safety Boiler Co. v. Garden, supra; Hawkins v. Graham,
supra; Walter A. Wood, etc. Co. v. Smith, 50 Mich. 565; 15 N. W. 906.

8 McCarren v. McNulty, 7 Gray. 139.

4 Brown v. Foster, 113 Mass. 136; K. II. 1105.
REASONABLENESS. 161

art,® or for a dwelling-house heater,® to be paid for if satis-
factory to the promisor, actual satisfaction has been held
necessary. The parties, however, may agree in any case
that the promisor shall have an unqualified option.’ The
promisor must always act in good faith ;® and in some States
it is held, contrary to the general rule, that he must act
reasonably.®

5 Zaleski v. Clark, 44 Conn. 218; Pennington v. Howland, — R.I.
— ; 41 A. 891,

6 Adams Radiator Works v. Schrader, 155 Pa. St. 394; 26 A. 745;
H. & W. 549.

7 Walter A. Wood, etc. Co. ». Smith, supra; Hawkins v. Graham,
supra; Singerly v. Thayer, 108 Pa. St. 291; 2 A. 230; W.11; Blaine
v. Knapp, 140 Mo. 241; 41 8. W. 787; Electric Lighting Co. v. Elder,
115 Ala. 188; 21S. 988; Magee v. Scott Lumber Co., 78 Minn. 11; .80
N. W. 781.

8 Singerly v. Thayer, supra; Adams Radiator Works v. Schrader,
supra; Electric Lighting Co. v. Elder, supra; Magee v. Scott Lumber
Co., supra.

9 Doll v. Noble, 116 N. Y. 230; 22 N. E. 406; W.9; Keeler v. Clif.
ford, 165 Ill. 544; — N. E. —; Richison v. Mead, — S. D. —; 80 N. W.
131.

11
162 THE CONSTRUCTION OF CONTRACTS.

CHAPTER XI.
THE ESSENCE OF THE CONTRACT.

§ 284. What is meant by the Essence of the Contract. —
Many contracts contain more than one promise, even though
there is apparently only a single promise involved. Thus a
promise to do something at a particular time or place, or in
a particular manner, may often be resolved into two com-
ponent promises: a promise to do the thing, and a promise
to do it at a certain time or place, or in a particular manner.
So a contract may provide for the sale of a particular article,
and two descriptions may be given to the article ; in which case
there may or may not be a promise that the article shall answer
both descriptions. In every case the question arises, What is
the essence of the contract, and what promises or descriptions
are merely subsidiary to the main object of the contract?
This question is one of great importance, for the effect of a
breach of contract going to the essence is very different from
that of a breach which does not go to the essence. The ques-
tion is one of construction in every case, and the courts are
not always agreed ; but there are certain general principles of
construction which are usually adhered to.

§ 285. When Time is of the Essence. — Time will not be
regarded as of the essence of the contract, unless it affirma-
tively appears that the parties so regarded it. Time is of
the essence of the contract wherever the parties so stipulate ;?

§ 285. 1 Secombe v. Steele, 20 How. 94; Brown v. Guarantee Trust
Co., 128 U. 8. 403; 9S. Ct. 127; McFadden v. Henderson, — Ala. — ;
29 S. 640.

2 Cheney v. Libby, 134 U. S. 68; 10 S. Ct. 498; Frazier v. Boggs,
387 Fla. 807 ; 20 8. 245; Jewett v. Black, — Neb. — ; 82 N. W. 3875.
THE ESSENCE OF THE CONTRACT. 1638

and the nature of the contract may make the time of per-
formance essential. Thus, in life insurance policies the time
fixed for the payment of premiums is of the essence of the
contract.4| So in the case of a contract for the sale of prop-
erty subject to rapid fluctuations in value, such as mineral
property,® or shares of stock.® In mercantile contracts the
time of shipment or delivery of goods is part of the essential
description of the goods,’ but if the shipment is not to be
made from a specified place, the time of delivery only is
material. The avowed object of the purchaser may render
time of the essence of the contract when it would not be
otherwise.® In charter-parties, the specification of a fixed
time for the ship to be in a certain place, or to sail for a cer-
tain port, or to be in a certain condition, will ordinarily make
time of the essence of the contract. If, however, the time
is not definitely fixed, but is described in general terms, it is
not ordinarily treated as essential, either in charter-parties,”
or in contracts of sale.”

3 Savannah Ice Delivery Co. v. American, etc. Co.. — Ga. — ; 35S. E.
280; Miller v. Rice, 133 Il. 315; 24 N. E. 543.

4 New York Life Ins. Co. v. Statham, 93 U.S. 24; K. IT. 1249 ; Klein
v. Ins. Co., 104 U. S. 88.

5 Waterman v. Banks, 144 U. S. 394; 12 S. Ct. 646.

6 Cabot v. Kent, 20 R. I. 197; 37 A. 945.

7 Bowes v. Shand, 2 A. C. 455; Norrington v. Wright, 115 U. S. 188;
6S. Ct. 12; W. 593; H. & W. 584; K. II. 1190; Hoare v. Rennie, 5 H. .,
&N. 19; i 549; K. IL. 1175; Cleveland Rolling Mill v. Rhodes, 121
U.S. 255; 78. Ct. 882; Honck v. Muller, 7 Q. B. D. 92; W. 578; K. II.
1315; Cresswell Ranch Co. v. Martindale, 27 U. S. App. 277; 63 B. 84;
11 C. C. A. 83; Lefferts v. Weld, 167 Mass. 531; 46 N. E, 107; Provi-
dence Coal Co. v. Coxe, — R. I. — ; 35 A. 210; contra, Gerli v. Poide-
bard Mfg. Co., 81 A. 401; 57 N. J. L. 432; K. IL. 1201; Hubbard ».
Haley, 96 Wis. 578; 71 N. W. 1036.

8 Coyne v. Avery, — Ill. — ; 59 N. E. 788.

9 Tilley v. Thomas, L. R. 3 Ch. 61.

10 Glaholm v. Hays, 2 M. & G. 257; L. 492 ; K. IL. 1071; Behn v.
Burness, 1 B. & S. 877; 3 B. & S. 751; L. 556; K. IL. 1057; Ollive v.
Booker, 1 Ex. 416; L. 501.

a Tarrabochia v, Hickie, 1H. & N. 183; L. 681; “Freeman v. Taylor,
8 Bing. 124; L. 483; contra, Lowber v. Tange, 2 Wall. 728.

42 McFadden v. Henderson, — Ala. — ; 29 S. 640.
164 THE CONSTRUCTION OF CONTRACTS.

§ 286. When Time for the Payment of Money is of the Es-
sence.— Fixing a time for the payment of money does not
ordinarily have the same effect as fixing a time for the de-
livery of goods. ‘“ December wheat” is an entirely distinct
thing from “January wheat” in the eyes of merchants; but
December dollars do not differ essentially from January dol-
lars! The nature of the contract, however, may make even
the payment of money on a fixed day of the essence of the
contract. This is the case with life insurance policies, unless
otherwise agreed, because the policies are based upon cal-
culations involving the prompt payment of premiums.?
So where a contract provided for the delivery of all the ice
required for icing refrigerator cars at a certain place for the
period of one year, deliveries to be paid for monthly, the
time of payment was held to be of the essence of the con-
tract. So where the payment of the money is essential in
order to enable the other party to proceed with his part of
the contract, and the one who is to pay the money knows this,
the payment of the money may go to the essence of the
contract.

§ 287. Inconsistent Descriptions. — The effect of incon-
sistent descriptions of the subject-matter of a contract will
be hereafter explained in the chapter on Conditions. We
have here to consider in what cases an inconsistency has
been regarded as material. This is a question of construc-
tion, for the parties may make whatever they choose mate-
rial; the province of the court is simply to determine the
meaning of their contract. Many cases of mistake, where

§ 286. 1 Mersey Co. v. Naylor, 9 A.C. 484; W. 586; K. II. 1825; Frank-
lin v. Miller, 4 A. & E. 599; L. 872; K. II. 1211; Freeth v. Burr, L. R.
9C. P. 208; L. 157; K. II. 1810; Beatty v. Howe Lumber Co., 77 Minn.
272; 79 N. W. 1013; Cornwall v. Henson, 1900, 2 Ch. 298; Monarch
Cycle Co. v. Royce Wheel Co., — U. S. App. — ; 105 F. 824; West v.
Bechtel, — Mich. — ; 84N. W. 69.

2 New York L. I. Co. v. Statham, 93 U. S. 24; K. II. 1249; Klein ».
Ins. Co., 104 U. S. 88.

8 Savannah Ice Delivery Co. v. American, etc. Co., — Ga. — ; 85 S. E.
280; and see preceding section.

4 Rioux v, Ryegate Brick Co., — Vt. — ; 47 A. 506.
THE ESSENCE OF THE CONTRACT. 165

the mistake has been in attributing to the subject-matter of
the contract some quality which it does not possess, involve
simply the question whether the parties have regarded that
quality as part of the essential description of the subject-
matter or not.

§ 288. Existence of the Subject-matter as a Condition of the
Contract.— The existence of the subject-matter of the con-
tract is construed as a condition of the contract, unless one
party warrants the existence of the subject-matter, when it
becomes a condition only of the other party’s obligation? If
a particular quality is attributed to the subject-matter by the
parties, and that particular quality goes to the essence of the
contract, the result is the same. In the following instances
the failure of. the subject-matter to possess some given attri-
bute has been held to go to the essence of the contract.

§ 289. Quantity, Quality, and Title as affecting the Essence
of the Contract. — A substantial variance between the quan-
tity of land in a given tract, and the quantity specified in the
contract, has been held to go to the essence.! A substantial
difference in the title to property has been held to go to the
essence in many cases? In other cases a substantial differ-
ence in title has been held immaterial where the difference
between the supposed and the actual title arose from a mis-
take of law,?—a doctrine which seems erroneous. It has
been held in New York that the description of an incum-
brance on land as a mortgage of a certain amount is suf-

§ 288. 1 Couturier v. Hastie, 5 H. L. C. 673; Strickland v. Turner,
7 Ex. 208; Keener, Cas. Q.-C. 356; Allen v. Hammond, 11 Pet. 63.

2 Davison v. Von Lingen, 113 U.S. 40; 5S. Ct. 346; H. & W. 265.

§ 289. 1 Lawrence v. Stagg, 8 R. I. 256; Newton v. Tolles, 19 A.
1092; 66 N. H. 136. As to what is such a variance, see Rogers v. Pattie,
96 Va. 498; 31S. E. 897.

2 Varnum v. Highgate, 65 Vt. 416; 26 A. 628; Bingham v. Bingham,
1 Ves. Sr. 126; Keener, Cas. Q.-C. 73; Cooper v. Phibbs, L. R. 2 H. L.
149; Keener, Cas. Q.-C. 96; Martin ». McCormick, 8 N. Y. 331; Ankeny
v. Clark, 148 U. S. 845; 13S. Ct. 617; Bigham v. Madison, 103 Tenn.
858; 52 8. W. 1074.

3 Clapp v. Hoffmann, 159 Pa. St. 531; 28 A. 362; Hamblin v. Bishop,
41 F. 74; Leal v. Terbush, 52 Mich. 100; 17 N. W. 713.
166 THE CONSTRUCTION OF CONTRACTS.

ficiently accurate although the mortgage is payable in gold,
instead of in legal tender;* but in Massachusetts, that where
a broker is employed to procure a loan on mortgage, he can-
not recover a commission for finding a lender who insists that
the loan shall be made payable in gold. The quality of
land was held an essential part of the description where the
land was supposed to contain coal, but did not;® but the op-
posite rule was laid down in a case where a supposed onyx
mine proved to contain only limestone.’ The capacity of a
machine to do the kind of work for which it was purchased
has been held to be of the essence of the contract.6 Whether
in the sale of a chattel a mere supposition that the chattel
possesses a particular quality is to be regarded as an essential
part of the contract or not, is rendered somewhat doubtful by
the authorities.

§ 290. Mistake as to Quality of Subject-matter. — On prin-
ciple, if the parties contract for the sale of a specific thing, the
mere supposition that that thing possesses a particular quality
is immaterial unless that quality is expressed in the descrip-
tion of the thing sold.’ Thus, where a diamond was sold for a
dollar, in ignorance of the real character of the stone, the
mistake as to the quality of the stone was held immaterial.?
‘So where a note was sold, secured by a deed of trust, and the
parties erroneously supposed that the deed gave a first lien on
some stock, their mistake was held immaterial. On the other
hand, where a cow which was supposed to be barren was sold,
and proved to be a breeding cow, of much greater value, the
Supreme Court of Michigan held that the mistake went to
the essence of the contract, although it did not appear that

Blanck v. Sadlier, 153 N. Y. 551; 47 N. E. 920.
Caston v. Quimby, — Mass. — ; 59 N. E. 653.
Fritzler v. Robinson, 70 Ia. 500; 31 N. W. 61.
Hood v. Todd (Ky.), 58 S. W. 783.
8 Watson v. Brown, — Ia. —; 85 N. W. 28.
§ 290. 1 Valley City Nutting Co. v. Prange, — Mich. — ; 81 N. W.
1074; and see § 289.
2 Wood v. Boynton, 64 Wis. 265; H. & W. 257.
3 Sample v. Bridgforth, 72 Miss. 293; 16 S. 876.

ar rn eB
THE ESSENCE OF THE CONTRACT. 167

the contract specifically called for a barren cow. The con-
fusion that has arisen in the cases is due to a misunderstand-
ing of the effect of mistake upon a contract. Mistake, in
itself, as will be shown in the chapter on Rescission of Contracts,
has no legal effect on contracts. There are many cases where
mistake appears to produce legal, results, but as far as con-
tracts are concerned these results may all be shown to be due
to some other cause. What the parties to a contract thought
is of consequence only in so far as it concerns what they did.
The province of the court is only to interpret the acts of the
parties. When the court goes beyond the interpretation of
legal acts, it is no longer concerned with the construction of
contracts, but is in reality enforcing obligations independent
of contract.

4 Sherwood v. Walker, 66 Mich. 568; 33 N. W. 919; H. & W, 249.
168 THE CONSTRUCTION OF CONTRACTS.

CHAPTER XII.
PENALTIES AND, LIQUIDATED DAMAGES.

§ 291. The Question is one of Construction. —A contract
may provide that upon a breach by one party he shall pay the
other a fixed sum. This sum may be either a penalty, imposed
to secure the performance of the contract; or it may be in-
tended as an assessment in advance of the amount of damage
that may be caused by the breach of contract. Whether the
fixed sum is a penalty or liquidated damages is a question of
construction.

§ 292. Penalties in Bonds. — In the case of an ordinary bond
with condition subsequent, the bond in form acknowledges the
existence of a debt from the obligor to the obligee, and pro-
vides that the obligation shall be discharged by performance
of the condition. The common-law courts used to enforce
such bonds strictly in accordance with their terms; and an
action of debt would lie for the amount of the bond upon the
non-performance of the condition. In equity, however, the
bond was regarded simply as security for the performance of
the condition, and the obligee was not allowed to recover more
than the actual damage he had sustained by the breach of
condition. The equitable view now prevails in the common-
law courts, although the procedure in such cases varies con-
siderably in different jurisdictions.

§ 293. The Intention, not the Language, of the Contract is con-
clusive.—In the case of other contracts the use of the term
“penalty” or “liquidated damages” is of little consequence.!

§ 293. 1 Kemble v. Farren, 6 Bing. 141; K. II. 1447; Law v. Red-
ditch, 1892, 1 Q. B. 127; K. II. 1460; Bignall v. Gould, 119 U. 8S. 495;
7S. Ct. 294; K. II. 1457; Hennessy v. Metzger, 152 Il). 505; 38 N. E.
1058; Sanford v. First Nat. Bank, 94 Ia. 680; 63 N. W. 459.
PENALTIES AND LIQUIDATED DAMAGES. 169

The question is one of the intention of the parties in every
case, and the following principles are applied in the construc-
tion of such contracts.

§ 294. Rules governing the Construction of Provisions for
Liquidated Damages. — The fact that the damages are difficult
of assessment tends to make the courts regard the fixed sum
as liquidated damages! This rule applies where there are
various stipulations of uncertain value.2 But where there are
several stipulations in an agreement, the damages for the non-
performance of some of which are easily ascertainable by a
jury, and the damages for the non-performance of the others
cannot easily be measured, a sum named as damages for
breach of any stipulation is treated as a penalty.2 The fact
that the damages fixed appear to be excessive does not in it-
self make the sum a penalty.t If the sum fixed is to be paid
as damages on non-payment of a smaller sum, it is presump-
tively a penalty ;* but a provision that a debt payable in instal-
ments shall become due on non-payment of any instalment is
not a penalty, for it merely affects the time of performance
of the contract.

§ 294. 1 Gobbie v. Linder, 76 Ill. 157; Kemble v. Farren, 6 Bing. 141;
K. IT. 1447.

2 Reynolds v. Bridge, 6 HE. & B. 528; K. II. 1450.

3 Kemble v. Farren, supra ; Higginson v. Weld, 14 Gray, 165; Lamp-
man v. Cochran, 16 N. Y. 275; Trower v. Elder, 77 Ill. 452.

4 Van Buren v. Digges, 11 How. 461.

5 Kemble v. Farren, supra; Poppers v. Meagher, 148 Il]. 192; 35 .
N. E. 805.

6 Wallingford v, Mutual Society, 5 A. C. 685.
170 THE CONSTRUCTION OF CONTRACTS.

CHAPTER XIII.

DEMAND AND NOTICE,

§ 295, When Notice to perform is unnecessary. — Where a
party stipulates to do a certain thing in a certain specific event
which may become known to him, or with which he can make
himself acquainted, his obligation is not conditional upon
notice unless so stipulated. Thus where A. made a lease to
B., and covenanted to keep the buildings on the demised prem-
ises in repair, having the right to enter to view the premises,
A. was held bound to repair the buildings without notice.
So, where A. promises to pay B. a certain sum when B. marries
C.;? or to pay B. a certain sum when C. does a certain act ;?
or to save B. harmless from certain suits.4

§ 296. When Notice to perform is necessary. — If, however,
one promises to do a thing under circumstances or conditions
which are within the peculiar knowledge of the opposite party,
his promise is construed as conditional upon his receiving
notice to perform. Thus, where a lessor covenants to repair,
his covenant is conditional upon notice by the lessee, because
the lessor has no means of knowing what repairs are neces-
sary, not having the right to enter the premises.1 So where
A. agrees to pay B. a certain sum when B, shall return from
London, B. must give notice of his return.2 So where A. sells

§ 295. 1 Hayden v. Bradley, 6 Gray, 425; W. 4; K. II. 1093.

2 Beresford v. Goodrouse, 1 Rolle’s Abr. 462, pl. 3,4; L. 965.

3 Haverleigh v. Leighton, Jenkins, 311; L. 963; Fowle v. Haggar,
Cro. Jac. 492; L. 966.

4 King v. Atkins, 1 Siderf. 442; L. 968.

§ 296. 1} Makin v. Watkinson, L. R. 6 Ex. 25; L. 978; K. II. 1095;
Hugall ». McLean, 53 L. T. 94; W. 3.

2 Gable v. Morse, 1 Bulstrode, 44; L. 963.
DEMAND AND NOTICE. 171

goods to B., and agrees to replace them if they prove unsatis-
factory, B. must notify A. if he is dissatisfied with the goods3
So a covenant by A. that he will not do any act to prejudice
an insurance policy which B. may take out on A.’s life in any
insurance company in London is conditional upon notice that
such insurance has been effected.*

§ 297. Notice to Joint Promisors to perform. —If the con-
tract is joint, and notice to perform is necessary, notice to all
the joint promisors is essential,’ except where one is the agent
of the others, as in cases of partnership.

§ 298. When Demand for Performance is necessary, — A
debt is not necessarily a contractual obligation. It is a fixed
sum belonging to the creditor, but in the debtor’s hands, as
the result of some transaction which may or may not be con-
tractual in its character. The obligation to pay the debt rests
at common law on the theory that the debtor has possession
of the creditor’s property. It is therefore what is termed in
Roman law a real, as distinguished from a contractual or con-
sensual, obligation. A debt payable upon request could be
sued for without any request; and the enforcement of debts
by the action of indeditatus assumpsit did not change this
rule, although the cause of action in that action was alleged
to be a promise to pay the debt. So a bill of exchange or a
promissory note payable on demand requires no demand to
charge the acceptor or maker.?- The indorsee’s contract rests
on a different footing. If the promise is to do any other act
than the payment of a debt, and it is a promise to perform on
demand, demand is necessary, even though the promise be to
pay money.2 When money is deposited in a bank, custom
ordinarily requires that a demand must be made on the bank

3 Becket v. Gridley, 67 Minn. 37; 69 N. W. 622.

4 Vyse v. Wakefield, 6 M. & W. 442; L. 969; K. II. 1088.

§ 297. 1 Rogers v. Burr, 105 Ga. 482; 31 S. E. 438.

§ 298. 1 Langdell, Summary, 181; Wallis v. Scott, 1 Strange, 88;
L. 956; K. IT. 1108.

2 Bigelow, Bills, Notes, and Cheques (2d ed.), 52.

3 Langdell, Summary, 132; Birks v. Trippet, 1 Wms. Saund. 32;
L. 955; K. II. 1101.
172 THE CONSTRUCTION OF CONTRACTS.

before an action can be brought to recover the deposit,* and
demand is always necessary before an action can be maintained
on a certificate of deposit payable “to the depositor’s order
hereon.” 5

4 Sickles v. Herold, 149 N. Y. 332, 43 N. E. 852; Brahm v. Adkins,

77 Il. 268.
5 Cottle v. Marine Bank, — N. ¥. — ; 59 N. E. 736.
BOOK IV.

THE OPERATION OF CONTRACTS.

CHAPTER XIV.

THE OPERATION OF CONTRACTS AS TO THE SUBJECT-MATTER, —
ABSOLUTE AND CONDITIONAL CONTRACTS.

§ 299. Nature of Conditions. — A condition is a fact or event
which must precede some change in the legal relations of two
parties. To constitute a condition, however, the fact in ques-
tion must be uncertain. Thus in the case of a promise to pay
$100 on the 1st of January next, the arrival of the 1st of
January is not a condition, for the reason that the day is sure
to arrive. Nor is a promise to pay within a certain time after
a man’s death conditional, because the death is certain to
occur. It was held in one English case that a promise to
pay at a certain time after a government ship was paid off
was not a conditional promise, because the government is
sure to pay ;2 but this decision seems questionable. The un-
certainty in regard to a fact which makes that fact a condi-
tion need not be objective uncertainty ; it is sufficient if that
uncertainty exists in the mind of the party who seeks to treat
that fact as a condition. Thus where a charter-party was
made of a ship “now in the port of Amsterdam,” although
the ship was not in the port of Amsterdam at the time, the
uncertainty of the charterer in regard to the location of the
ship rendered that location a condition.? Similar principles

§ 299. 1 Roffey v. Greenwell, 10 A. & E. 2292: Conn v. Thornton, 46
Ala. 587. :

2 Andrews v. Franklin, 1 Strange, 24.

3 Behn v. Burness, 1 B. & S. 877; 3 B. & S. 751; L. 556; K. II. 1057;
Davison v. Von Lingen, 113 U. 8. 40; 5 S. Ct. 846; H. & W. 265.
174 THE OPERATION OF CONTRACTS.

as to what constitutes legal uncertainty we have already seen
applied with reference to the subject of consideration

§ 800. Classification of Conditions. — Conditions may be
divided in three ways: first, with reference to their giving
rise to some right, or putting an end to some right already
existing; secondly, with reference to their affecting the forma-
tion of contract or the obligation of contract; thirdly, accord-
ing as they are facts which the parties have fixed upon as
conditions, or facts which the law treats as conditions without
regard to the intention of the parties. The former may be
called internal, the latter external conditions.1

§ 301. Conditions Precedent and Subsequent.— A fact or
event which gives rise to a right is called a condition prece-
dent. A fact or event which gives some one the right to put
an end to some existing right of another is called a condition
subsequent... Upon the happening of the event constituting
the condition, the party to whose obligation the condition is
attached is bound absolutely, if the condition is a condition
precedent, or is entitled to be discharged from that obligation,
if it is a condition subsequent.

§ 802. Conditions and Limitations. — It is important to dis-
tinguish between a condition subsequent and a limitation. A
limitation defines the extent or duration of a right, while a
condition subsequent simply gives some one the right to put
an end to that right. Thus if A. promises to pay B. an annu-
ity so long as B. shall refrain from the use of tobacco, the
extent of A.’s obligation is limited with reference to B.’s
abstinence from tobacco, and the use of tobacco by B. in itself
puts an end to A.’s obligation. But if A. gives B. an estate
on condition that B. shall not use tobacco, the use of tobacco
by B. gives A. a right to put an end to the estate, but does
not of itself bring the estate to an end.

§ 303. Concurrent Conditions. — There is a class of condi-
tions which are called concurrent. “A concurrent condition
must consist of some act to be done by the covenantee or

4 Ante, § 110.
§ 300. 1 Rioux v. Ryegate Brick Co., — Vt. — ; 47 A. 406.
§ 801. 1 See Root v. Childs, 68 Minn. 142; 70 N. W. 1087.
CONDITIONS. 175

promisee, which can be done at the same moment that the
covenant or promise is performed.” It seems, however, that
such conditions may properly be reduced to conditions prece-
dent, by treating an offer to perform the act called a condition
concurrent as a condition precedent. Thus in the case of
mutual promises to marry, performance on each side is said
to be a condition concurrent of the promise on the other side.
So also in the case of contracts for the sale or exchange of
property. The contract may be looked upon, however, as con-
taining a condition precedent to the obligation of either party
that the other party shall offer to perform the contract.1

§ 304. Internal and External Conditions — Conditions in Fact
and Conditions in Law.—JInternal and external conditions
alike may be precedent or subsequent, and may affect the forma-
tion of contract or its obligation. Under the head of Formation
of Contracts we have already seen what external conditions
precedent the law regards as essential to the formation of
contract. External conditions subsequent affecting the con-
tract itself will be treated under the head of Rescission of
Contracts. External conditions subsequent affecting the obli-
gation of contract concern the Discharge of Contracts ;} ex-
ternal conditions precedent to the obligation of a contract
seem not to exist. Internal conditions alone are usually
treated under the head of Conditions; and when the word
“condition ” is used it is ordinarily to be understood as mean-
ing an internal condition, that is, a condition inserted by the
parties, expressly or by implication, in the contract itself, as
distinguished from a condition imposed by law. It is a con-
dition precedent to the formation of a simple contract that
the consideration shall be furnished. The distinction between
the consideration, which completes the contract, and a condi-
tion contained in the contract is sometimes overlooked.?

§ 305. Conditions affecting Formation and Obligation of Con-
tract. — Conditions in this narrow sense are of two kinds,
those which affect the formation of contract, and those affect-

§ 303. 1 Dunham v. Pettee, 8 N. Y. 508; K. IT. 1044.
§ 304. 1 Rioux v. Ryegate Brick Co., — Vt. — ; 47 A. 406.
2 Rolt v. Cozens, 25 L. J. C. P. 254; L. 548; K. II. 1165.
176 THE OPERATION OF CONTRACTS.

ing its obligation. If A. covenants to pay B. $100 in one
year, provided B. goes to Rome, B.’s going to Rome is a con-
dition precedent to A.’s obligation. If A. covenants to pay
B. $100 per annum for ten years, provided B. does not use
tobacco during that time, B.’s use of tobacco is a condition
subsequent, entitling A. to. be discharged from his obligation
to pay the annuity. If A. insures B.’s life on condition that
the facts stated in B.’s application for insurance are true, the
truth of B.’s statements is a condition precedent to the forma-
tion of the contract of insurance. If A. sells a cow to B.as a
Jersey cow for $100, and agrees that B. may return the cow
if she is not a Jersey, the fact that the cow is not a Jersey is
a condition subsequent, entitling B. to rescind the contract.
No fact can be a condition affecting the formation of a con-
tract unless such fact exist at the time the contract is entered
into. It is said by Professor Langdell! that “a covenant or
promise cannot be conditional unless it first exist; it is only
the performance of it that the condition renders uncertain.
An event, therefore, which must happen before a covenant
or promise is made, does not make the covenant or promise
conditional. If the event happens, the covenant or prom-
ise is absolute; if it does not happen, no covenant or promise
is made.” This statement must be taken with some qualifica-
tion and explanation.

§ 306. Existence of Subject-matter as a Condition. — When
a unilateral contract is conditional upon the existence of a
certain fact, if the fact does not exist, the contract is void;
or to speak more accurately, the apparent contract is not a
contract at all.

In the case of a bilateral contract, if all the promises of
both parties are conditional upon the existence of a certain
fact, and that fact does not exist, the agreement is void.)
For example, A. agrees to sell and B. to buy a certain cargo
of corn which is supposed to be on board a certain ship
destined for England. As a matter of fact, the cargo has

§ 305. 1 Summary of Contracts, §§ 27, 28.
§ 806. 1 United States v. Charles, 36 U. S. App. 766; 74 F. 142; Nor-
dyke v. Kehlor, 155 Mo. 643; 56 8. W. 287.
CONDITIONS. 177

already been unloaded and sold. If the existence of the cargo
is a condition upon which the parties make their agreement,
the apparent contract is void.2— So where there is a contract
for the manufacture of an article under a supposed patent
which does not exist.2 The negligence of either party in not
ascertaining whether the supposed fact exists is immaterial in
such cases. If, however, one party’s promise is absolute, and
the promise of the other party is conditional upon the exist-
ence of a certain fact, the non-existence of that fact renders
the contract not void, but voidable at the option of the party
whose promise is conditional. Whenever one of the parties
to a contract warrants the existence of a certain fact, the non-
existence of that fact may be a condition subsequent, entitling
the other party to avoid the contract, but cannot affect the
obligation of the party giving the warranty. If, however,
as in Couturier v. Hastie,® the existence of a fact is not war-
ranted, it may be a condition precedent to the formation of
the contract.

§ 807. Conditions in Charter-parties. — In the leading case
of Behn v. Burness,! it was agreed by acharter-party between
the plaintiff and the defendant that the plaintiff's ship, “now
in the port of Amsterdam,” should proceed to another port
for a cargo. The ship was not in the port of Amsterdam at
the time the charter-party was executed. The court there-
fore gave judgment for the defendant. What the effect of the
charter-party was has been much discussed, One view is that
the statement as to the position of the ship being untrue, the
defendant had made no promise.2- Another view is that the
charter-party was void, but that the plaintiff would have been
estopped from showing that his own statement that the ship
was in the port of Amsterdam was untrue.? It seems clear,

2 Couturier v. Hastie, 5 H. L. C. 673.
8 Hamilton v. Park, etc. Co., — Mich. — ; 83 N. W. 1018.
4 Nordyke v. Kehlor, supra.
5 Griggs v. Moors, 168 Mass. 354; 47 N. E. 128.
§ Supra.
§ 307.1 3B. & S. 751; L. 556; K. II. 1057.
2 Langdell, Summary, § 28.
3 Pollock, Contracts, p. 489, note (8).
12
 

178 THE OPERATION OF CONTRACTS.

however, from the opinion of the court, that the charter-party
was regarded as voidable by the charterer, and not as void.
In a similar case in the United States Supreme Court there
were cross-actions on a similar charter-party. The ship-
owner sued to recover for an alleged breach by the charterer,
and was defeated because his stipulation in regard to the ship
had not been fulfilled, and was regarded as a condition prece-
dent to the charterer’s obligation under the contract. The
charterer sued for breach of the stipulation in regard to the
ship, and recovered judgment on the ground that such stipu-
lation was a warranty by the owner.* In both these cases the
stipulation in regard to the ship was looked upon as a condi-
tion precedent affecting the charterer’s obligation under the
contract, and as a condition subsequent, entitling the char-
terer to rescind the contract itself. Thus the same fact may
be a condition precedent as regards a party’s obligation under
a contract, and a condition subsequent as regards the validity
of the contract itself.®

§ 308. Conditions in Contracts of Sale. — Again, a certain
fact may be a condition precedent affecting the obligation of a
party under one contract, and a condition subsequent giving
him the right to avoid another contract. Whenever a sale
occurs and the purchase-money is unpaid there are always in
reality two contracts, one bilateral, the other unilateral. The
bilateral contract is this: A. promises to sell B. certain goods
in consideration of A.’s promise to take those goods and pay
for them. This bilateral contract is a contract to sell, on the
one hand, and to buy, on the other, and it has in view the
making of a subsequent contract of sale. The contract of sale,
on the other hand, is unilateral. In consideration of the
transfer by A. to B. of the title to the goods, B. agrees to pay
A. the purchase price, which thereupon becomes a debt due
from B. to A. The bilateral and the unilateral contract may
be actually simultaneous, but theoretically the bilateral con-
tract may always be regarded as preceding the unilateral. The
distinction between these two contracts is of great importance,

* Davison v. Von Lingen, 113 U. S. 40; 5 S. Ct. 346; H. & W. 265.
5 Griggs v. Moors, 168 Mass. 354; 49 N. E. 128.
CONDITIONS. 179

though it is sometimes lost sight of. Thus if B. refuses to
receive the goods tendered by A. in accordance with the
bilateral contract, B. is liable in assumpsit for damages, the
measure of damages being the injury sustained by A. through
B.’s refusal to accept the goods.!_ If, however, the goods are
accepted by B., B. thereupon becomes liable to A. in debt or
indebitatus assumpsit for the price agreed upon. This dis-
tinction has been ignored by some courts, which allow A. to
recover the price, although the title to the goods has not
passed to B32 Now a given fact may be a condition precedent
to the obligation of the vendee to accept the goods under the
bilateral contract, and a condition subsequent affecting the
validity of the unilateral contract to pay the price. Thus it
is a condition precedent to the obligation of the buyer to ac-
cept the goods that the vendor should tender goods of the
description called for by the contract. If the title tothe
goods tendered once passes to the vendee, the passage of title
gives rise to a unilateral contract on the part of the vendee to
pay the price. If the vendee subsequently discovers the goods
to be different from those called for by the bilateral contract,
and the defect amounts to a breach of the condition upon
which he accepted the goods, he may avoid the contract by
restoring or offering to restore the goods.6 Thus the failure
of the goods tendered to correspond with the goods described
in the executory contract will prevent the seller from insist-
ing that the buyer is bound to take them, because it is a con-
dition precedent to the buyer’s obligation under the bilateral
contract that the goods shall correspond with the description ;
while after the goods have been accepted, such defect, if suffi-
ciently important, will amount to a condition subsequent affect-
ing the validity of the unilateral contract to pay the price.®

§ 308. ! Benjamin on Sales, § 762; Laird v. Pim, 7 M. & W. 474; L.
914.

2 Benjamin on Sales, § 765.

8 Lincoln Shoe Mfg. Co. v. Sheldon, 44 Neb. 279; 62 N. W. 480.

4 Benjamin on Sales, § 600; Vigers v. Sanderson, 1901, 1 Q. B. 608.

5 Benjamin on Sales, § 600; Alden v. Hart, 161 Mass. 576 ; 37 N. E. 742.

6 See California Civil Code, § 1786 ; First N. B. v. Hughes, — Cal. —;
46 P. 272; Vigers v. Sanderson, supra.
180 THE OPERATION OF CONTRACTS.

§ 309. Conditions in Insurance Policies. — Similar principles
apply to the case of insurance policies. An insurance policy
is a unilateral contract, which is preceded theoretically by a
bilateral contract. The bilateral contract consists of mutual
promises, the insurer’s promise to issue the policy, and the
promise of the insurer to accept it. The issue and acceptance
of the policy constitute a performance of the bilateral contract,
and give rise to one or two unilateral contracts ; one, if the
premium is paid, two, if it is not, as the premium becomes a
debt on the acceptance of the policy.

§ 310. Conditions in Leases and Charter-parties. — So in
the case of a lease, an agreement to lease is a bilateral
contract, while the lease itself is only partly bilateral. An
event, then, which is to happen before the beginning of the
tenancy, such as the repair of the premises by the lessor, is a
condition precedent affecting the lessee’s obligation to become
a tenant ;! but if the lessee does become, a tenant, the lessor’s
failure to repair does not affect the lessee’s obligation to pay
the rent.2 So in a charter-party, the seaworthiness of the
vessel at the time of sailing may be a condition precedent to
the obligation of the charterer to take the vessel, but on prin-
ciple it cannot be a condition precedent to his obligation to
pay the freight after he has once accepted the vessel If,
however, the condition of the vessel is such that the vessel is
lost and the freighter is thereby deprived of any benefit under
the contract, the freighter has the right to treat the loss of the
vessel as a condition subsequent, entitling him to rescind the
contract.

§ 811. Conditions distinguished from Representations and
Warranties. — It is important to distinguish between repre-
sentations, warranties, and conditions. A representation is a
statement made by one party to the other before or at the

§ 309. 1 Langdell, Summary, § 119.

§ 310. 1 Tidey v. Mollett, 33 L. J. C. P. 235; L. 567.

2 Langdell, Summary, § 119.

® Tbid. The opinion to the contrary in Thompson »v. Gillespy, 5 E. &
B. 209 ; L. 537, is shown by Professor Langdell to be unsound in its
reasoning.
CONDITIONS. 181

time of making the contract in regard to some matter or
circumstance relating to the subject-matter of the contract.
If the party making the representation assumes legal respon-
sibility for its truth, the representation thereupon becomes a
warranty. If the representation amounts to a description of
the subject-matter of the contract, it becomes a condition. If
the party entitled to insist upon this condition has received sub-
stantially what he bargained for, though the condition has not
been fulfilled, the condition then becomes what has been termed
a warranty ex post facto. This term is inappropriate, because
if a represeutation amounts to a warranty it is a warranty at
the time the contract is made. The fact that the representa-
tion is a condition as well, and that it subsequently ceases to
be a condition, dves not in any way affect its character as a
warranty. The terms “warranty” and “condition” are often
confused and used interchangeably. The distinction, however,
is clear. In speaking of a representation by A. to B. as a
warranty, we are looking at that representation with reference
to A.’s obligation. When we speak of the same represen-
tation as a condition, we are dealing with the effect of that
representation on B.’s obligation.

§ 812. Suspension and Discharge of Obligation by Condi-
tions. — A condition subsequent may operate as a partial or
as an entire discharge of the contract. If a state of facts
occurs which releases the promisor from his obligation to
perform his contract so long as that state of facts continues
to exist, and the state of facts in question lasts so long, or is
of such a character that the failure of performance caused
thereby goes to the root of the contract, the contract is dis-
charged entirely ;! otherwise the contract is only suspended
during the continuance of such state of facts.”

§ 3813. Conditions subsequent in Form, precedent in Fact. —
There are contracts in which conditions are expressed as
conditions subsequent, when in reality the conditions are

§ 312. 1 Geipel v. Smith, L. R. 7 Q. B. 404; Jackson v. Union Ins. Co.,
L. R. 10C. P. 125; New York Life Ins. Co. v. Statham, 93 U.S. 24; K. IT.
1249. :

2 Hadley v. Clarke, 8 T. R. 259.
182 THE OPERATION OF CONTRACTS.

conditions precedent. Thus in the case of an ordinary penal
bond the obligor acknowledges that he is bound to the obligee
in a certain sum, provided that the obligation shall be void if
a certain event shall happen. At common law the bond was
construed literally. It was debitwm in presenti, soluendum in
futuro, a present debt for the penalty to be paid at a future
day, subject to defeasance by the performance of the condition
subsequent. KEquity, however, restricted the right of recovery
on the bond to the amount of damage actually sustained by
the obligee through the breach of the condition of the bond,
looking upon the penalty simply as a security for the perform-
ance of the condition. In order to recover anything more than
nominal damages, therefore, the obligee had to prove that he
had been actually injured by the breach of condition. What
is apparently a breach of a condition subsequent, therefore, is
in reality the fulfilment of a condition precedent,! so far as the
actual recovery on the bond is concerned; for the equitable
rule under different forms of procedure now controls the ac-
tion of the common-law courts.2?, Yet by reason of the form
of the bond the defendant, at common law, is compelled to
show performance of the condition.$

§ 314. Conditions affecting Right of Action. — A condition
may be annexed as well to the right of action for breach of
contract as to the contract itself. Thus it is a common pro-
vision that disputes in regard to breaches of contract shall be
referred to arbitration, and such reference may be made a
condition precedent to a right of action upon the contract.?
So it may be made a condition precedent to the right of action
that the assured shall produce his account books ;? or shall
give notice of the loss within a certain time.? Or it may be

§ 313. 1 Langdell, Summary, § 44; Cage v. Acton, 1 Ld. Raym. 515;
L. 772; K. IT. 1281.

2 See MecNitt v. Clark, '7 Johnson, 465; K. IT. 1014.

3 Gray v. Gardner, 17 Mass. 188; L. 785; K. II. 1244.

§ 314. 1 Scott v. Avery, 5 H. L. C. 811; W.195; Viney v. Bignold, 20
Q. B. D. 172; W. 201; Caledonian Ins.’Co. v. Gilmour, 1893, A. C. 85;
Hamilton v. Liverpool Ins. Co., 186 U. S. 242; 10 S. Ct. 945; H. & W.
351; Hood ov. Hartshorn, 100 Mass. 117; ante, § 191.

2 Niagara F. J. Co. v. Forehand, 169 Ill. 626; 48 N. E. 830.
8 Roper v. Lendon, 1 E. & E. 825 ; L. 546; K, II. 1129.

‘
CONDITIONS. 183

agreed that an action for breach of contract shall be barred if
not brought within one year, and the failure to bring an ac-
tion within that period will operate as a condition subsequent
discharging the right of action.*

§ 315. Express and Implied Conditions. — Conditions are
divided by Professor Langdell’ into express conditions, which
are expressed in terms; conditions implied in fact, which are
implied from something contained in the covenant or promise ;?
and conditions implied by law, which are not based upon the
interpretation of the covenant or promise, but upon its con-
struction. Whatever may have been the former importance
of this distinction,® it seems to be of no practical consequence
at the present day. It has been urged by Professor Keener 4
that the conditions implied by law are not true conditions,
because they are only found when the party to a contract has
failed to protect himself by the insertion of express conditions.
With regard to a certain class of conditions, which are really
external to the contract, this criticism is sound; but with
reference to internal conditions it is not well taken. Internal
conditions are always gathered from the contract itself, and
_ when they are implied by the law they are always implied
because the law supposes that the intention of the parties is
to treat a given fact as a condition, even though they have
not manifested that intention in express words. The fact
that the court always tries to discover the intention of the
parties by looking at the entire contract, and that such inten-
tion is the sole rule for determining whether a given fact is
or is not a condition, shows clearly that an internal condition

4 Riddlesbarger v. Hartford Ins. Co., 7 Wall. 386. As to whether a
condition annexed to a right of action is precedent or subsequent, see
Hotham v. East India Co., 1 T. R. 688; L. 779; K. II. 1241; Langdell,
Summary, § 43.

§ 315. } Summary, § 32.

2 See Raynay v. Alexander, Yelverton, 76; L. 443; K. II. 1020;
Thomas v. Cadwallader, Willes, 496 ; L. 458; K. II. 1033; Cadwell v. Blake,
6 Gray, 402; L. 609 ; K. IT. 1049; Rae v. Hackett, 12 M. & W. 723; L. 499;
K. II. 1069; Armitage v. Insole, 14 Q. B. 728; L. 508; K. IT. 1086.

3 See Thorp v. Thorp, 12 Mod. 455; L. 446; K. II. 1022.

4 Quasi-Contracts, p. 225.
184 THE OPERATION OF CONTRACTS.

implied by law is just as much a part of the real contract of
the parties as if the condition had been set forth in express
words.6 When the court goes beyond the contract itself,
however, as it sometimes does, and attempts to introduce con-
ditions which cannot possibly be based upon any construction
of the contract, then it is not enforcing the contract obligation,
but is modifying that obligation by taking other things than
the contract into consideration.

§ 316. Dependent and Independent Promises. — When the
obligation to perform one of two covenants or promises is
conditional upon the performance of the other, the former is
said to be dependent on the latter. When the obligation of
each of two promises is conditional upon an offer to perform
the other, the two covenants or promises are said to be mutu-
ally dependent. If the condition is express, the dependency
is CXDTCES 5 if the condition is implied, the dependency is
implied. / The doctrine of implied dependency was introduced
by Lord Mansfield in 17731 Before Lord Mansfield’s time, if
there was no express dependency of one promise on another,
the breach of his promise by one party gave the other only a
right to a cross-action, and was no defence to an action by the
party who had thus broken the contract.2 At the present
day the distinction between express and implied dependency,
like that between express and implied conditions, seems
immaterial.

§ 817. Dependency a Question of Intention. — Whether cov-
enants or promises are dependent or independent is a question
of the intention of the parties, to be determined from the whole
contract. - Arbitrary rules, therefore, are useless; but the
following general principles govern the courts in their con-
struction of contracts.

° Rioux v. Ryegate Brick Co., — Vt. — ; 47 A. 406, citing text.

§ 316. 1 Kingston v. Preston, cited in Jones v. Barkley, Doug. 684; L.
901; K. II. 1142; Langdell, Summary, § 143.

2 Thorp v. Thorp, 12 Mod. 455; L. 446; K. II. 1022

§ 317. 1 Loud v. Pomona Land Co., 153 U. S. 564; K. II. 1062; Stavers
v. Curling, 8 Bing. N. C. 855; L. 876; Seeger v. Duthie, 29 L, J. C. P.
253; 30 L. J. C. P. 65; L. 691; Philadelphia, W. & B. R. R. v. Howard,
13 How. 307; Griggs v. Moors, 168 Mass. 354; 47 N. E. 128.
CONDITIONS. 185

§ 318. Dependency a Question of Relative Time for Perform-
ance. — The real test of dependency is whether the parties
have fixed the time for performance of the promise of A., which
is claimed to be dependent, with reference to the time for per-
formance of the promise of B, on which A.’s promise is alleged
to depend. If the time for the performance of an act is fixed
solely by reference to some other event, and is to happen after
such event, that event is a condition precedent to the obliga-
tion to perform such act;* but if the time for such perform-
ance is to be determined without reference to such event, that
event is not a condition precedent: to such obligation.?

Hence if one of two promises is to be performed at a given
time after the performance of another, the first promise is de-
pendent on the second.? But if the time for the performance
of one promise is not fixed with reference to the performance
of the other, the promises are independent. Thus where there
is a promise on one side to finish the performance of work by
acertain day, and on the other to pay fur the work in monthly
instalments, the two promises are independent.®

§ 319. Dependency and Fixed Dates for Performance. —When
the time for the performance of each act is fixed, as when A.’s
promise is to be performed on November 1, and B.’s promise
on December 1, it seems that B.’s promise is not dependent on
A.’s performance, but that a failure by A. to perform his prom-
ise, if going to the essence of the contract, will amount to a
condition subsequent entitling B. to a discharge from his lia-
bility. Professor Langdell maintains! that B.’s promise is
dependent on A.’s promise; but the case of Grant v. John-

§ 318. 1 Loud v. Pomona Land Co., 153 U. S. 564; K. II. 1022;
Holdipp v. Otway, 2 Wms. Saunders, 106; L. 445; Northrup v. Northrup,
6 Cowen, 296; H. & W. 576; L. 721; K. II. 1352.

2. Mattock v. Kinglake, 10 A. & E. 50; L. 662; K. II. 1873; Wilks v.
Smith, 10M. & W. 355; L. 666; K. IT. 1360; Dicker v. Jackson, 6 C. B.
103; L. 676.

8 Loud v. Pomona Land Co., supra; Northrup v. Northrup, supra.

4 Tronson v. Colby University, — N. D. — ; 84.N. W. 474.

5 Philadelphia, W. & B. R. R. v. Howard, 13 How. 307.

§ 319. } Summary, § 122.
186 THE OPERATION OF CONTRACTS.

son,? relied on by him, seems limited in its true application to
cases involving an exchange of rights. In fact, the New York
courts have developed a peculiar and unsatisfactory doctrine
with regard to instalment contracts, which is set forth in
§ 821.

§ 820. Nature of the Contract as affecting Dependency. —
The foregoing rules are qualified in the case of contracts in-
volving a sale or an exchange of property by the presumption
of mutual dependency which exists in the case of such con-
tracts. If A. agrees to part with his property in exchange for
B.’s money or property, the natural inference is that neither
party intends to perform his promise until he receives the per-
formance of the other party. In such a case, A.’s performance
and B.’s performance are concurrent conditions, and A.’s
promise and B.’s promise are mutually dependent, unless a
contrary intention clearly appears.!

8 321. New York Doctrine as to Dependency in Instalment
Contracts. — It is held in New York that where the purchase-
money for land is to be paid in instalments, and some of such
instalments are to be paid before the delivery of the deed, if
the vendor sues before the time fixed for the delivery of the
deed, and before the instalments are all due, he may recover
for such instalments as are then due.! If the vendor sues
after all the instalments are due, however, he must prove an
offer to convey the land before bringing suit. When the last
instalment falls due the payment of the whole of the purchase-
money and the conveyance of the land become mutual con-
current conditions, The same rule applies when an action is
brought for any instalment payable at or after the time fixed
for the delivery of the deed.2 The New York doctrine is fol-

2 1 Seld. 247; L. 603; K. IT. 1158.

§ 820. 1 Tronson v. Colby University, supra; post, § 330.

§ 321. 1 Paine v. Brown, 87 N. Y. 228; Harrington v. Higgins, 17
Wend. 376.

2 Beecher v. Conradt, 138 N. Y. 108; L. 767; K. II. 1861; Hill »v.
Grigsby, 35 Cal. 656; H. & W. 580; Shelly v. Mikkelson, 5 N. D. 22; 68
N. W. 210.

8 Grant v. Johnson, 1 Seld. 247; L. 603; K. TI. 1158; Eddy v. Davis,
116 N. Y. 247; 22 N. E. 362; W. 613; K. II. 1867.
CONDITIONS. 187

lowed in California * and South Dakota.5 These decisions are
based upon the idea that two promises not originally depend-
ent may become so by reason of some subsequent event, an
idea which is inconsistent with the general theory of depend-
ency. If A. promises to convey land to B. on February 1, and
B. promises to pay €200 for the land, #100 January 1 and
$100 March 1, the promise to pay $100 January 1 is neces-
sarily independent, and when January 1 arrives the obligation
to pay arises. To hold that this obligation to pay $100, which
is absolute January 1, becomes, February 1, conditional on the
delivery of the deed by A., is to take a position which involves
a confusion of thought as to the nature of dependency. The
defence set up in such cases, that the plaintiff has broken his
contract, is not really a legal defence that conditions prece-
dent to the defendant’s promise have not been performed, but
an equitable defence, analogous to that of “failure of consid-
eration,” so called.6 In jurisdictions where the distinctions be-
tween law and equity are confused or obliterated, asin New York,
there may be some ground for the adoption of such a doctrine,
which may tend to avoid circuity of action; but even this expla-
nation of the doctrine does not render it entirely satisfactory.

§ 322. The Better Rule as to Dependency in Instalment Con-
tracts. — The better rule in regard to such instalment contracts
is this: that the promises to.pay those instalments which be-
come due before the date set for the delivery of the deed are
absolute and independent, and are in no way affected by a fail-
ure to deliver the deed at the time specified! But where the
deed is to be delivered simultaneously with the payment of the
last instalment, then on payment of the previous instalments
the tender of the deed and the tender of the last instalment
becomes mutual concurrent conditions.?

4 McCroskey v. Ladd, 96 Cal. 455; 81 P. 558; Russ Lumber Co. ».
Muscupiabe, etc. Co., 120 Cal. 521; 52 P. 995.

5 First N. B. v. Spear, 12 S. D. 108; 80 N. W. 166.

6 First N. B. v. Spear, 12 S. D. 108; 80 N. W. 166.

§ 822. 1 Kane v. Hood, 13 Pick. 281; L. 760; K. II. 1037; Sheeren v,
Moses, 84 Ill. 448; K. II. 1169; Duncan v. Charles, 5 Tl. 561.

2 Kane v. Hood, supra ; Sheeren v. Moses, supra ; Duncan v. Charles,
supra ; Headley v. Shaw, 39 Ill. 354.
188 THE OPERATION OF CONTRACTS.

§ 823, Continued Performance as affecting Dependency. —
If A.’s promise is to be performed at a fixed time, and B.’s
promise requires continued performance before and after that
time, A.’s promise is independent of B.’s, and performance by
B. is not a condition precedent tu A.’s obligation. Entire per-
formance by B. cannot in the nature of the case be a condition
precedent; and there is no reason to suppose that the parties
intended A.’s promise to be conditional upon partial perform-
ance by B.! In such a case, however, B.’s failure to perform
may be a condition subsequent, entitling A. to put an end to
the contract, if such failure amounts to a repudiation of the
entire contract.?

§ 324. Contingent Liability and Dependency. — If the obliga-
tion of A.’s promise is contingent upon some future event,
performance by A. will not be an implied condition precedent
to the obligation of B.’s promise. Thus, when B. promises A.
to pay A. a sum of money in consideration of A.’s guaran-
teeing that C. will perform some act, the performance of such
act by C. will not be a condition precedent to B.’s obligation to
pay the money.!

_§ 825. Dependency in Contracts for Sale of Goods. — Where
a contract is made for the sale of goods, and the goods are to
be delivered in instalments and paid for upon or after deliv-
ery, tender of each instalment in accordance with the terms
of the contract is a condition precedent to the vendee’s obli-
gation to accept such instalment.! So also readiness and

a

§ 823. 1 Judson v. Bowden, 1 Ex. 162; L. 678; K. IT. 1875; Campbell
v. Jones, 6 T. R. 570; L. 839; K. IT. 1357; Carpenter v. Cresswell, 4 Bing.
409; L. 870; Goldsborough v. Orr, 8 Wheat. 217. Professor Langdell
regards performance by B. up to the time fixed for performance by A. as
a condition precedent to his obligation. Summary, § 129.

2 See cases supra.

§ 324. 1 Christie v. Borelly, 29 L. J. C. P. 158; L. 688; K. II. 1881;
contra, Griggs v. Moors, 168 Mass. 354; 47 N. E. 128. -

§ 325. 1 Norrington v. Wright, 115 U.S. 188; 6S. Ct. 12; W. 593;- H.
& W. 584; K. II. 1190; Hoare v. Rennie, 5H. & N. 19; L. 549; K. II.
1175; Cleveland Rolling Mill v. Rhodes, 121 U. S. 255; 7S. Ct. 882;
contra, Gerli v. Poidébard Mfg. Co, 47 N. J. L. 482; 81 A. 401; K. IL.
1202.
CONDITIONS. 189

willingness to accept the goods on the part of the buyer is
a condition precedent to the vendor’s obligation to deliver.?
The payment for an instalment by the vendee, however, is not
a condition precedent to the vendor’s obligation to deliver
other instalments.?

§ 326. Dependency and Promissory Warranties.— It is im-
plied that payment for work is to be made upon its com-
pletion; hence payment is not dependent upon the fulfilment
of a warranty of the future goodness of the work.!

§ 827. Dependency in Optional Contracts. — A promise which
can only be performed on the happening of a certain event is
conditional upon the happening of that event... Hence if any
option is to be exercised by one party to the contract, the ex-
ercise of such option is a condition precedent to the other’s
obligation.?

§ 328. Mutual Dependency — The Test of Equivalency. — In
order that two promises may be mutually dependent they must
be capable of performance at the same time and place, and
they must involve an exchange of rights between the parties
Professor Langdell maintains that in order that two promises
may be mutually dependent the performance of the one must
be regarded as full payment for the performance of the other?
This theory of equivalence, however, although most ingeni-

2 Honck v. Muller, 7 Q. B. D. 92; W.578; K. II. 1315; Creswell Ranch
Co. v. Martindale, 63 F. 84; 11 C. C. A. 33; 27 U. S. App. 277; Provi-
dence Coal Co. v. Coxe, 19 R. I. 380; 85 A. 210; contra, Gerli v. Poidebard
Mfg. Co., supra.

3 Mersey Co. v. Naylor, 9 A. C. 434; W. 586; K. II. 1825; Franklin
v. Miller, 4 A. & E. 599; L. 872; K. II. 1211; Withers v. Reynolds,
2 B. & Ad. 882; L. 740; K. II. 1309; Freeth v. Burr, L. R. 9 C. P. 208;
L. 712; K. II. 1810; Monarch Cycle Co. v. Royer Wheel Co., — U.S.
App. — ; 105 F. 324; and see Cornwall v. Henson, 1900, 2 Ch. 298; ef
Rioux v. Ryegate Brick Co., — Vt. —; 47 A. 406, where the breach
by non-payment went to the essence of the contract.

§ 326. 1 Gilliam v. Brown, 116 Cal. 454; 48 P. 486.

§ 327. 1 Langdell, Summary, § 41.

2 Raynay v. Alexander, Yelv. 76; L. 448; K. II. 1020; Coombe v.
Greene, 11 M. & W. 480; L. 497.

§ 328. 1 Langdell, Summary, § 133.

2 Ibid. § 136.
190 THE OPERATION OF CONTRACTS.

ously developed by Professor Langdell,does not seem to be
based on satisfactory authority?

§ 329, Mutual Dependency — The Test of Simultaneous Per-
formance. —— It seems that the true test of mutual dependency
is not whether or not the promises in question are legally
equivalent to each other, but whether the parties intend that
the two promises shall be simultaneously performed.?| When-
ever the contract contemplates an exchange of rights between
the parties, and no time is fixed for such exchange, or the
‘contract provides that the promises shall be performed at the
same time and place, then the promises are mutually depend-
ent. Thus in every contract for the sale of goods where no
time is specified for performance of the contract, tender of the
goods and tender of the price are mutual conditions concurrent.3

§ 330. The Presumption of Mutual Dependency in the Case of
an Exchange. — So where the contract calls for an exchange of
rights, and the time is fixed for the performance of one party’s
promise, but not for the performance of the other’s, the two
promises are mutually dependent! The character of the
transaction in such cases raises a presumption that the prom-
ises of both parties are mutually dependent.2. This presump-
tion is overcome if the parties expressly or by implication fix
different times for the performance of the mutual promises.3

8 «The cireumstance that one of the conditions of a contract only
affects part of the consideration is not per se sufficient to make it col-
lateral to the main contract.” Bank of China v. American Trading Co.,
1894, A. C, 266, 271.

§ 329. 1 Kane v. Hood, 13 Pick. 281; L. 760; K. IL 1037; Sheeren v.
Moses, 84 Ill. 448; K. IT. 1169; Headley v. Shaw, 39 Ill. 354; Duncan v.
Charles, 5 id. 561; Glazebrook v. Woodrow, 8 T. R. 866; L. 732; K. IL.
1147.

2 Casey v. Leslie, — N. J. L.— ; 85 A. 6; Gray v. Smith, 76 F. 525.

8 Rawson v. Johnson, 1 East, 203; L. 805; K. I. 1153.

§ 330. } Morton v. Lamb, 7 T. R. 125; L. 727; K. II. 1144; Marsden
v. Moore, 4 H. & N. 500; L. 750; K. II. 1156; Langdell, Summary,
§ 133.

2 Goodisson v. Nunn, 4 T. R. 761; L. 723; and cases supra, note 1;
Manistee Lumber Co. v. Union N. B., 148 Tll. 490; 82 N. E. 449; Bank-
art v Bowers, L. R. 1 C. P. 484; L. 753; K. If. 1166.

8 Mattock v. Kinglake, 10 A. & E. 50; L. 662; Wilks v. Smith, 10
CONDITIONS. 191

§ 881. Continued Performance requiring Co-operation, —
Where the contract calls for continued performance on both
sides, and such performance requires the co-operation of both
parties, it seems that each party is bound to perform only
while the other party is willing to co-operate. The question
has arisen more than once in contracts of apprenticeship as to
the effect of a refusal by one party to learn or by the other
party to teach. It is clear that the master is not bound to
teach an apprentice who will not learn,! and that an appren-
tice is not bound to learn from a master who will not teach?
The explanation of the legal situation given by the authorities,
however, is not very clear. The best explanation is that
finally reached by Professor Langdell ;3 viz. that if either
party refuses to co-operate in the performance of the contract,
there can be no breach by the other party so long as such
refusal continues.

§ 332. Performance within the same Period distinguished from
Performance at the same Instant. — The mere fact that mutual
promises are to be performed within the same period does not
make them mutually dependent unless the contract contem-
plates their performance at the same instant. Thus where a
contract contained various stipulations on each side, and pro-
vided that each party should give security to the other for the
performance of the contract within ten days, the promises to
give security were held not to be mutually dependent ; but giv-
ing security by each party was treated as a condition precedent
to the other’s obligation to perform!

§ 833. Dependent Promises must be Part of the same Con-
tract. — One promise can be dependent on another only where
they both constitute parts of the same contract. There may
be two or more contracts contained in the same instrument.

M. & W. 355; L. 666; Dicker v. Jackson, 6 C. B. 103; L. 676; and see
McRaven v. Crisler, 52 Miss. 242; H. & W. 577; Foley v. Dwyer, —
Mich. — ; 81 N. W. 569.
§ 331. ! Raymond v. Minton, L. R. 1 Ex. 244; L, 587; K. II. 1077.
> 2 Ellen v. Topp, 6 Ex. 424; L. 520.
3 Summary, § 177, note.
§ 332. | Roberts v. Brett, 11 H. L. C. 837; L. 575; K. II. 1078.
192 THE OPERATION OF CONTRACTS.

If A. agrees to sell B. a horse for $100, and B. agrees to sell
A.acow for $100, these are two distinct contracts, though
both agreements are contained in the same instrument But
if A. agrees to sell B. a horse for $100, and to take B.’s cow
in payment for the horse, there is only one contract.?

§ 384, Dependency and Unilateral Contracts. — Properly
speaking, promises contained in two unilateral contracts can-
not be dependent, even though they are given in consideration
for each other! This is especially true in the case of bills
and notes, which by definition must be absolute obligations.
To treat a promissory note as dependent on another promise
is to make the note conditional,? in defiance of its definition.
The American courts, however, have generally held that two
unilateral contracts are to be construed as one contract if each
of the two contracts is the consideration for the other.2 This
is really allowing the introduction of the equitable defence of
failure of consideration, or breach of an external condition
subsequent, under the name of dependency, and should be dis-
tinguished from true dependency, which is merely a matter
of the construction of the contract with reference to conditions
contained in the contract itself.

§ 335. Inconsistent Descriptions. — Contracts often occur in
which two inconsistent descriptions are applied to the subject-
matter. If both these descriptions are regarded by the parties
as essential, there is no contract, because there is no subject-
matter. Thus if A. agrees to sell to B. “this bar of gold,”
and the bar is not gold, there are two inconsistent descriptions
of the subject-matter. “This” describes the bar specifically,

§ 833. 1 Langdell, Summary, § 115.

2 Atkinson v. Smith, 14 M. & W. 695; L. 748.

§ 334. 1 Langdell, Summary, § 117.

2 Moggridge v. Jones, 14 East, 486; L. 638; Spiller v. Westlake,
2B. & Ad. 155; L. 654.

3 Duncan v. Charles, 5 Tl. 561; Bailey v. Cromwell, 4 Ill. 72; Hunt v.
Livermore, 5 Pick. 395; L. 757; K. IJ. 1385; Hall v. Perkins, 5 Ill. 548;
Ft. Payne Coal & Iron Co. v. Webster, 163 Mass. 134; 89 N. E. 786; Hill
v. Grigsby, 35 Cal. 656; H. & W. 580; Shelly v. Mikkelson, 5 N. D. 22;
63 N. W. 210; Sayre v. Mohney, — Or. — ; 56 P. 526; Talbott v. Heinze,
— Mont. — ; 63 P. 624.
CONDITIONS. 198

while “of gold” describes its nature. If the parties contract
only on the supposition that the bar is gold, and there is no
intention to deal with the bar in question if it is not gold,
then there is no contract, because there is nothing in existence
represented by the words “ this bar of gold,” and these words
are therefore meaningless.! If, however, A.’s promise to sell
is absolute, and not conditional on the bar’s being gold, while
B.’s promise to buy is conditional, A.’s promise may be inter-
preted thus: “I will sell you this bar, and I warrant that it is
gold.” In such a case the agreement is not meaningless. A.
is bound by his promise to deliver the bar, and is responsible
in damages for the fact that the bar is not gold.2 B., on the
other hand, is not bound to accept the bar, because his promise
is conditional on the bar’s being gold.2 The bar not being
gold, A. cannot compel B. to accept it, because the condition
precedent of B.’s promise has not been performed. If, how-
ever, B. does accept the bar, the bilateral contract becomes a
unilateral contract, and B. is bound to pay for the bar. This
unilateral obligation of B., however, is subject to a condition
subsequent, by virtue of which B. may avoid his obligation to
pay for the bar by offering to return it; * and even the return
is unnecessary if the bar has no value.®

§ 336. Inconsistency of Non-Hssential Descriptions. — The
rules just stated apply where the two inconsistent descriptions
of the subject-matter of the contract are both essential. If
two inconsistent descriptions are applied to the subject-matter
of a contract, and one is essential while the other is not, the
non-essential description has no effect unless it be construed
as a warranty on the part of one of the parties that such de-
scription is correct. If the contract is executory, as in the
case of a bilateral contract to sell, A. must tender perform-

§ 335. 1 See Couturier v. Hastie, 5 H. L. C. 673; Holmes, Common
Law, 311; Hamilton v. Park, ete. Co., — Mich. —; 83 N. W. 1018.

2 Davison v. Von Lingen, 113 U. S. 40; 5S. Ct. 846; H. & W. 265.

8 Davison v. Von Lingen, supra; Behn v. Burness, 1 B. & 8. 877;
3B. &S. 751; L. 556; K. II. 1087.

4 Benjamin on Sales, § 887.

5 Poulton v. Lattimore, 9 B. & C. 259.

13
194 THE OPERATION OF CONTRACTS.

ance in accordance with his warranty as a condition precedent
to B.’s obligation.’ If the contract becomes unilateral, as in-
the case of a contract of sale where the property has passed
to the buyer, the buyer’s promise becomes absolute, and he
cannot avoid his obligation to pay for the goods by reason of
the breach of warranty. This principle is logically sound, and
is followed in England and in many American courts.2 In
some States, however, to avoid circuity of action, a warranty
may be treated as a condition subsequent; and the vendce
may avoid his obligation to pay by offering to return the
goods, as in the case of conditions proper.®

§ 337. Performance of Conditions. — Contractual obligation
is the result of a voluntary act which determines the extent
of that obligation. If, then, the promisor attaches any condi-
tions precedent to his promise, he cannot be bound unless
those conditions are performed, even though there has been a
part performance beneficial to. the defendant! This rule is
fundamental, and is subject only to the rule de minimis non
curat lex. ‘There may, however, be a quasi-contractual obli-
gation imposed by the law on a party who has received a
benefit at the hands of another to pay for the benefit reccived,
although there is no contractual obligation to pay therefor?

§ 338. Tender, and Readiness and Willingness to perform. —
The distinction between readiness and willingness to perform
a promise, and an actual tender or offer to perform, is obvious

§ 836. 1 Pope v. Allis, 115 U. 8. 863; 6S. Ct. 69; H. & W. 595;
Davison v. Von Lingen, 113 U.S. 40; 5S. Ct. 346; H. & W. 265; Behn
v. Burness, 1 B. & S. 877; 3 B. & S. 751; L. 556; K. IT. 1057.

? Freyman v. Knecht, 78 Pa. St. 141; H. & W. 607; Benjamin on
Sales, § 888; and pp. 958, 959 (Bennett’s 7th ed.).

8 Bryant v. Isburgh, 13 Gray, 607; H. & W. 609; Benjamin on Sales,
ubi supra.

§ 337. 1 Cutter v. Powell, 6 T. R. 320; Taylor v. Renn, 79 Ill. 181;

overruled by Palmer v. Meriden Britannia Co., — Ill. — ; 59N. E. 247;
Easton v. Jones, 193 Pa. 147 ; 44 A. 264; Michaelis ». Wolf, 136 Ill. 68;
Coughran v. Bigelow, 164 U. S. 301; Forman v. The Ship Liddesdale,
1900, A. C. 190. :

2 Taylor v. Renn, supra; Gillis v. Cobe, — Mass. — ; 59 N. E.
455.
CONDITIONS. 195

and important, but is sometimes overlooked! If A’s prom-
ise is dependent on B.’s, performance by B. is ordinarily
necessary to give B. a right of action against A.2 If perform-
ance by B, requires that A. should do some other act at or
before the time fixed for B.’s performance, A.’s failure to
perform that act is a waiver of performance by B., but is not
in itself a waiver of tender of performance.’ If, however,
A. renders tender of performance impossible, by positive
or negative conduct, it is then only necessary that B. should
be ready and willing to perform up to the time that tender
becomes impossible; but such readiness and willingness is
essential, and an averment that B. notified A. that he was ready
and willing to perform, without an averment that he was
actually ready and willing, is insufficient to entitle B. to
recover.5

Where A. agrees to assign certain claims against OC. to B.
.and B, agrees to pay therefor an amount to be determined
in a certain manner, not involving B.’s co-operation, a refusal
by B. to proceed with the contract may excuse A. from ten-
dering an assignment of the claims, but not from having the
amount fixed which B. is to pay therefor.$

Where A. agrees to manufacture goods for B., to be fur-
nished from time to time at B.’s request, and B. agrees to pay
for a certain amount of such goods ina given time whether
he takes them or not, in so far as A. fails to furnish goods at
B.’s request he cannot recover pay therefor.?

§ 839. The Doctrine of Substantial Performance. — In
some States a peculiar doctrine exists, under which, if A.

§ 338. 1 As in Rawson v. Johnson, 1 East, 203; L. 805.

2 Callonell v. Briggs, 1 Salk. 112; L. 722.

% Anon., 2 Rolle’s Rep. 238; L. 791; Lancashire v. Killingworth, 1 Ld.
Raymond, 686; 12 Mod. 529; L. 796; Dunham v. Pettee, 8 N. Y. 508;
K. II. 1044; L. 762.

# Lancashire v. Killingworth, supra; Waterhouse v. Skinner, 2 B. & P.
447; L. 810; Ferry v. Williams, 8 Taunt. 62; L. 818; Poole v. Hill,
6 M. & W. 835; I. 825; Guilford v. Mason, — R. I. — ; 48 A. 386.

5 McCabe v. Cruikshank, 106 F. 648.

6 Stillman v. Dresser, — R. IT. — ; 48 A. 1.

7 Richmond Ice Co. v. Crystal Ice Co., — Va. — ; 388. E. 141.
196 THE OPERATION OF CONTRACTS.

has substantially performed his contract with B., and has
attempted to perform in good faith, A. may recover the con-
tract price of B., less the amount necessary to compensate B.
for the damages caused by A.’s failure to perform the contract
exactly." Good faith is essential; and a wilful refusal to per-
form will prevent A.’s recovery,? unless the breach of condi-
tion comes within the rule de minimis non curat lex2 The
burden of proof is upon the plaintiff to show how little it
will cost to supply his omissions, and he cannot recover with-
out such proof. This doctrine cannot be supported either
on contractual or quasi-contractual theories. A. has no right
to demand the contract price, because he has not performed
the conditions of the contract; while if B.’s obligation is
quasi-contractual, it must be measured by the actual value of
A.’s performance, not by the contract price less the damages
caused by non-performance. The better rule is that the obli-
gation in such cases, if any exists, is quasi-contractual and
limited to the value of the benefit received,® and the value
of that benefit is to be estimated in the light of the defend-
ant’s right to have the contract performed.6 This value

§ 339. 1 Nolan v. Whitney, 88 N. Y. 648; W. 575; H. & W. 542;
Hayward v. Leonard, 7 Pick. 181 (but see Gillis ». Cobe, — Mass. — ;
59 N. E. 455); Keeler v. Herr, 157 Ill. 57; 41 N. E.750; Shepard v. Mills,
178 Ill. 223; 50 N. E. 709; Palmer v. Meriden Britannia Co., — Ill. — ;
59 N. E. 247; Spence v. Ham, — N. Y. — ; 57 N. E, 412.

2 Van Clief v. Van Vechten, 130 N. Y. 571; 29 N. E. 1017; Elliott».
Caldwell, 43 Minn. 357; 45 N. W. 845; Gillespie Tool Co. v. Wilson, 123
Pa. 19; 16 A. 36; Hartman v. Meighan, 171 Pa. 46; 33 A. 123; Desmond-
Dunne Co. v. Friedman-Doscher Co., 162 N. Y. 486; 56 N. E. 995; An-
derson v. Todd, — Minn. — ; 77 N. W. 599. In Palmer v. Meriden
Britannia Co., supra, the question of wilful refusal was raised by counsel,
but the court refused to pass upon it, so that the doctrine stated in the
text appears not to be the law of Illinois, in spite of previous dicta of the
court. ;

3 Van Clief v. Van Vechten, sunra.

4 Spence v. Ham, supra; contra, Palmer v. Meriden Britannia Co.,
supra.

5 Blood v. Wilson, 141 Mass. 25; 6 N. E. 362; Atkins v. Barnstable,
97 Mass. 428; Keener, Quasi-Contracts, p. 313, note 2; Taylor v. Renn,
79 Ill. 181 (overruled by Palmer v. Meriden Britannia Co., supra).

® Gillis v. Cobe, supra.

/
CONDITIONS. 197

may in many cases be ascertained by deducting from the con-
tract price what the plaintiff’s performance was worth less to
the defendant by reason of the deviation from the contract.’
Curiously enough, in some courts recovery on the contract is
denied in such cases, but the amount of damages which the
plaintiff recovers is the same as that allowed by the courts
upholding the doctrine of substantial performance.®

§ 3840. Origin of the Doctrine of Substantial Performance, —
The doctrine of substantial performance has its origin in the
equitable rule that where a contract is broken, and the breach
does not go to the essence of the contract, a court of equity,
if it takes jurisdiction of the case, may decree specific per-
formance, with compensation for the breach. This rule is
often applied when there is some minor defect in the title
to land agreed to be conveyed. The doctrine of substantial
performance in an action at Jaw, allowing a plaintiff to re-
cover who has not performed the conditions precedent annexed
to the defendant’s promise, is an extension of the equitable
doctrine to cases of which a court of equity would never have
had jurisdiction, and to which, therefore, the doctrine of equity
could never have been applied. This common-law doctrine of
substantial performance has been most often applied in those
States where the distinctions between law and equity have
been ‘largely obliterated ; and in cases of building contracts,
where the builder has not complied with the specifications in
regard to the building. It is an unfortunate substitute for
the quasi-contractual rule giving the plaintiff the right to
recover only the value of the benefit conferred on the defend-
ant when the conditions of the contract have not been
performed.

§ 341. Waiver of Conditions. — Conditions precedent and
subsequent may both be waived by the act of the party for
whom they are imposed; and such waiver may be either ex-
press or implied.

7 Norwood v. Lathrop, — Mass. — ; 59 N. F. 650.

8 Smith v. Packard, 94 Va. 730; 27 S. E. 586; Hayward v. Leonard,
7 Pick. 181 (but see Gillis v. Cobe, supra) ; Keener, Quasi-Contracts, ubi
supra.
198 THE OPERATION OF CONTRACTS.

§ 342, ‘Waiver by Acceptance of Imperfect Performance. —
Waiver may take place by an acceptance of performance that
does not fulfil the conditions of the contract. When a con-
tract has been performed in a substantial part, and the other
party has voluntarily accepted and received the benefit of the
part performance, knowing that the contract is not being
fully performed, such acceptance will amount to a waiver of
his right to require complete performance as a condition of
his liability, and render him liable to pay for what he has
received.!

In like manner, such acceptance of performance will oper-
ate as a waiver of the condition subsequent, in case the failure
to perform in accordance with the contract would be a breach
entitling the injured party to be discharged from the contract.?

§ 348. Waiver by Acceptance requires Opportunity for
Choice.— The appropriation by the defendant of the benefit
part performance of the conditions may confer upon him does
not amount to a waiver of conditions precedent, unless the
defendant has an opportunity to reject the benefit thus con-
ferred.t This rule is often applied in the case of building
contracts, where the owner of the land has no opportunity of
rejécting a building which does not conform to the specifica-
tions of the contract. It has also been held that the defend-
ant must have knowledge of “his rights under the contract.”

§ 842. 1 Sykes v. St. Cloud, 60 Minn. 442; 62 N. W. 613; Wiley v.
Athol, 150 Mass. 426; 23 N. E. 311; Harber Bros. Co. v. Moffat Cycle Co.,
151 Ml. 84; 387 N. E. 676; K. II. 1341; Tompson v. Noel, 1 Levinz, 16;
K. TI. 1254; Phillips Construction Co. v. Seymour, 91 U. S. 646; K. IL
1255; McGowan v. Griffin, 69 Vt. 168; 37 A. 298 ; Barnard v. McLeod,
114 Mich. 73; 72 N. W. 24; Young Bros. Co. v. Young, 111 Mich. 118;
69 N. W. 152.

2 Cahen v. Platt. 69 N. Y. 848; W. 608; Harber Bros. Co. v. Moffat
Cycle Co., supra; Havelock v. Geddes, 10 East, 555; LL. 857.

§ 343. 1 Smith v. Brady, 17 N. Y. 173; Munro v. Butt, 8 E. & B.
738; Sumpter v. Hedges. 1898, 1 Q. B. 673 ; Hartupee v. Pittsburgh, 97
Pa. 107; Yeats v. Ballentine, 56 Mo. 530; Ellis v. Hamlen, 3 Taunt. 52;
Mantel v. Campbell, 3 Ark. 324; Escott ». White, 73 Ky. 169; Presby-
terian Church v. Hoopes Stone Co., 66 Md. 598; 8 A. 752; Gillis v. Cobe,
— Mass. — ; 59 N. EF. 455; contra, Palmer v. Meriden Britannia Co.,
— Il. — ; 59 N. E. 247.
CONDITIONS. 199

That he must have knowledge of the facts is undoubted ; but
knowledge of “rights” involves knowledge of the law as
well as of the facts, and it is inconsistent with general prin-
ciples to treat knowledge of the law as material in cases of
contract.2

§ 843 a. Waiver of Conditions Subsequent. — A condition
subsequent may be waived by conduct inducing the promisee
to believe that it will be waived! But the acceptance after
forfeiture of a contract of money due before the forfeiture is
no waiver?

§ 344. Waiver by Prevention of Performance. — A condi-
tion precedent is waived when the party for whose benefit
the condition is imposed prevents its performance! This rule
applies to two classes of cases: first, where the condition
precedent cannot be performed without some positive act first
being done by the party who sets up the condition; and,
second, where such party by an affirmative act prevents the
performance of the condition.

Where A. agrees to make brick for B. under a five-year con-
tract, and B., knowing that A. had no other means of perform-
ing the contract, agrees to furnish A. with money and supplies,
B’s continued failure to furnish money or supplies entitles
A., when thereby disabled from proceeding under the con-
tract, to recover for work done thereunder.?

§ 345. Waiver by Defendant’s Failure to perform Necessary
Act. —In England a vendor of land is bound to tender a deed
to the purchaser, but the purchaser is bound to prepare the
deed for execution; and therefore failure of the purchaser to
prepare the deed will excuse the tender of the deed by the
vendor.! In this country, on the other hand, custom places
the burden of preparing and executing the deed on the vendor.

2 Yorston v. Brown, — Mass. — ; 59 N. E. 654.

§ 343.4. } Hartford L. I. Co. v. Unsell, 144 U. 8. 439.

2 Rouse v. Western Wheel Works, 169 Il], 536; 48 N. E. 495.

§ 344. 1 St. Louis & P. R. R. Co. v. Kerr, 153 Ill. 182; 38 N. E. 688;
Mackay v. Dick, 6 A. C. 251.

2 Rioux v. Ryegate Brick Co. — Vt. — ; 47 A. 406.

§ 345. 1 Poole v. Hill, 6 M. & W. 835; L. 825; and see Giles v. Giles,
9 Q. B. 164; L. 744; K. IT. 1039.
200 THE OPERATION OF CONTRACTS.

In America it is common to require the vendor to furnish
an abstract of title for the inspection of the purchaser. Fail-
ure of the vendor to furnish this abstract may operate as a
waiver of the condition that the purchaser must tender the
price before bringing an action for breach of contract; but
such failure will not excuse the purchaser from tendering the
purchase-money before bringing an action for specific per-
formance of the contract.?

§ 846. Waiver by Defendant's Act preventing Perform-
ance. — Positive acts which will excuse the performance of
conditions may be of various kinds. Thus the defendant
may direct the plaintiff not to perform the condition.’ Or he
may render its performance impossible or useless in various
ways? Thus if A. and B. are engaged to marry each other,
the promises to marry are mutually dependent, and either
party must ordinarily show a request to marry and a refusal
by the other in order to sustain an action for breach of
promise. But if one of the parties marries a third person
and is thereby disabled from marrying the other party, the
latter may sue without making any request for the perform-
ance of the contract. So where arbitration is a condition
precedent and is prevented by the defendant. So where the
certificate of an architect in the defendant’s employ is a condi-
tion precedent to the plaintiff's recovery, the discharge of the
architect by the defendant has been held a waiver.6 It has

2 Kelsey v. Crowther, 162 U. S. 404.

§ 3146. 1 Hinckley v. Pittsburgh Steel Co., 121 U.S. 264; 7S. Ct. 873.

? Batterbury v. Vyse, 2 H. & C. 42; L. 885; K. II. 1111; Hinckley
v. Pittsburgh Steel Co., supra; Wolf v. Marsh, 54 Cal. 228; H. & W.
560; Delamater v. Miller, 1 Cowen, 75; H. & W. 561; Woodberry v.
Warner, 53 Ark. 488; 14 S. W. 67; H.& W. 574; Hale v. Trout, 35 Cal.
229; H. & W. 561; St. Louis & P. R. R. Co. v. Kerr, 153 Ill. 182; 38
N. E. 638; James v. Burchell, 82 N. Y. 108; W. 609; K. II. 1227; Hood
v. Hampton Plains Co., 106 F. 408.

3 Short v. Stone, 8 Q. B. 358; L. 921; K. II. 1961; Caines v. Smith,
15M. & W. 189; L. 926.

4 United States Sugar Ref. Co. v. Edward P. Allis Co., — U.S. App.
— ; 105 F. 881.

5 C, T. Fitts Co. v. Reinhart, 102 Ta. 811; 17 N. W. 297.
CONDITIONS. 201

sometimes been held that the defendant’s act in refusing to
allow the plaintiff to continue the performance of an entire
contract will entitle the plaintiff to recover for services actually
rendered under that contract, even though the defendant’s act
is justified by the plaintiff’s own conduct, as where a servant
is discharged for cause, subject, however, to the defendant’s
right to recoup for the plaintiff’s breach. This doctrine is a
departure from the common-law rule that seems difficult of
justification.

§ 3817. Waiver by Repudiation.— A refusal by one party
to perform his part of the contract, or to accept performance
by the other party, will operate as a waiver of conditions pre-
cedent in favor of the latter. The refusal, however, will
operate as a waiver only in case it is an absolute renunciation
of the contract, and is so treated by the other party.2 Much
confusion has arisen with regard to the effect of one party’s
refusal to perform upon the obligation of the’other party. In
a contract between A. and B., if B.’s promise is dependent on
A.’s, performance by A. is a condition precedent to B.’s obli-
gation. If, however, B.’s promise is not dependent on A.’s,
B.’s obligation is not subject to such a condition precedent,
but is subject to a condition subsequent, viz., a renunciation
of the contract by A., which entitles B. at his option to refuse
to go on with the contract. In the first case, B.’s obligation

6 Hildebrand v. American Fine Art Co., — Wis. — ; 85 N. W.
268.

§ 347. 1 Hinckley v. Pittsburgh Steel Co., 121 U. S. 264; 7S. Ct. 875;
Greenup v. Stoker, 3 Gilm. 202; Jones v. Barkley, Doug. 684; L. 901;
K. II. 1254; Laird v. Pim, 7 M. & W. 474; L. 914; Cort v. Ambergate
Ry. Co., 17 Q. B. 127; L. 937; K. II. 1263; Windmuller v. Pope, 107
N. Y..674; 14 N. E. 486; H. & W. 555; Frost v. Knight, L. R. 7 Ex.
111; W. 386; K. II. 1287; Adams v. Turner, — Conn. — ; 46 A. 247;
Daniels v. Newton, 114 Mass. 580; W. 406; K.II. 1293; Burtisv. Thomp-
son, 42 N. Y. 246; W. 419; Stokes v Mackay, 147 N. Y. 223; 41 N. E.
496; K. II. 1300; Anisdes o, Atwood, 68 Vt. 822; 35 A. 311; Barnes v.
Morrison, 97 Va. 372; 34 8. E. 93; Phillips Construction Co. v. Seymour,
91U. 8. 646; K. II. 1254.

2 Ripley ». M’Clure, 4 Ex. 345; L. 927; K. II. 1263; Johnstone v.
Milling, 16 Q. B. D. 460; W. 391; K. IL. 1331. As to saith constitutes
a tenunciation, see post, § 521.
202 THE OPERATION OF CONTRACTS.

does not arise until A. has performed; in the second case
B.’s obligation continues until he acts upon A.’s renunciation.

§ 348. Confusion between Waiver ‘by Breach or Repudiation
and Dependency. — The distinction between waiver by repu-
diation and dependency is clear, but it has often been ignored.
Thus in New Jersey it is held that where goods are to be
delivered and paid for in instalments, default by either buyer
or seller with reference to one instalment will not discharge
the other party from his obligation to proceed with the con-
tract, unless the conduct of the party in default be such as to
evidence an intention to abandon the contract, or a design
to be no longer bound by its terms.1_ This view is opposed to
the weight of authority, and the error arises from ignoring
the distinction just mentioned. The tender of each instal-
ment of goods in accordance with the terms of the contract
is a condition precedent to the buyer’s obligation to accept the
goods; and the buyer is not bound to perform the contract
unless such condition precedent is fulfilled? On the other
hand, payment for one instalment is not a condition precedent
to the seller’s obligation to deliver the next instalment; and
failure to make such payment will discharge the seller from
further obligation under the contract only when such failure
amounts to a renunciation of the contract,’ or goes to the
essence of the contract.4 The distinction between the tender
of each instalment of the goods as a condition precedent to
the buyer’s obligation, and the refusal to pay for the goods as
a condition subsequent affecting the seller’s obligation is not
recognized by the New Jersey courts.

§ 348. 1 Gerli v. Poidebard Mfg. Co., 31 A. 401; 57 N. J. L. 482; K.
II. 1202.

2 Norrington v. Wright, 115 U. 8.188; 6S. Ct. 12; W. 593; H. & W.
584; K. IT. 1190.

8 Mersey Co. v. Naylor, 9 A. C. 434; W. 586; K. IT. 1825; Beatty
v. Howe Lumber Co., 77 Minn. 272; 79 N. W. 10138; Cornwall v.
Henson, 1900, 2 Ch. 298; Monarch Cycle Co. v. Royer Wheel Co., —

U.S. App. — ; 105 F. 324; West v. Bechtel, — Mich. — ; 84 N. W.
69. As to what constitutes renunciation or repudiation, see post, § 521.
4 Savannah Ice-Delivery Co. v, American, etc. Co., — Ga. — ; 35

S. E. 280; Rioux v. Ryegate Brick Co, — Vt. — ; 47 A. 406.
CONDITIONS. 208

§ 849. Excuses for Non-performance of a Condition Prece-
dent. — Nothing can excuse the non-performance of a condi-
tion precedent but the act of the party for whose benefit it is
imposed! (This is the common-law doctrine, but is modified
in some States by the doctrine of substantial performance,
already explained.2) Thus if a certificate of a third party is
made a condition precedent to the promisor’s obligation, a
mistake by such third party, or lack of substantial reason for
refusing to give the certificate, will not excuse its non-produc-
tion.2 Such acondition, however, is construed as meaning that
the third party shall act in good faith. Some courts construe
such a condition as meaning that the third party shall act
reasonably,® but this seems unsound. The object of the
parties in inserting such conditions is to provide a mode of
settling their disputes; and if the court is to inquire into the
reasonableness of the conduct of the party who is to give the
certificate, the whole question is thrown open once more, to be
determined only by the lawsuit which the parties sought to
avoid. If, however, the defendant has received a benefit from
the plaintiff under the contract, there may be a recovery in

§ 349. 1 Coughran v. Bigelow, 164 U. 8. 301.

2 Ante, § 339.

3 King v. Duluth, — Minn. — ; 80 N. W. 874; Bradner v. Roffsell,
57 N. J. L. 412; 31 A. 387; Bowman »v. Stewart, 165 Pa. St. 394; 30 A.
988; Worsley v. Wood, 6 T. R. 710; L. 472; Thurnell v. Balbirnie, 2M.
& W. 786; L. 489; K. II. 1126; Clarke v. Watson, 18 C. B. Nn. s. 278;
L. 572; K. II. 1114; Chicago & S. F. R. R. Co. v. Price, 188 U.S. 185;
11 S. Ct. 290; K. IT. 1118; Martinsburg & P. R. R. Co. v. March, 114
U.S. 549; 5S. Ct. 1035; Sweeney v. United States, 109 U. S. 618; 3S.
Ct. 344; Kihlberg v. United States, 97 U. S. 398; Gilmore v. Courtney,
158 Ill. 432; 41 N. E. 1023; Audette v. L’Union St. Joseph, — Mass.
— ; 59 N. E. 668.

4 Kihlberg v. United States, supra ; Sweeney v. United States, supra ;
Martinsburg & P. R. R. Co. v. March, supra ; Chicago & S. F. R. R. Co.
v. Price, supra; King v. Duluth, supra; Michaelis v. Wolf, 136 Ill. 68;
26 N. E. 384; Pittsburg, etc. Co. v. Sharp, 190 Pa. 256; 42 A. 685;
United States Sugar Ref. Co. v. Edward P. Allis Co., — U.S. App. — ;
105 F. 881; Chism v. Shipper, 51 N. J. L. 1; K. IT. 1118.

5 Vought v. Williams, 120 N. Y. 253; 24 N. E. 195; Nolan v. Whit-
ney, 88 N. Y. 648; W. 575; H. & W. 542; K. II. 1116; Crouch v. Gut-
man, 184 N. Y. 45; 31 N. E. 271.
204 THE OPERATION OF CONTRACTS.

such cases on quasi-contractual grounds in some jurisdictions,
and on the theory of substantial performance in others.®

§ 350. Bquitable View of Conditions. — Courts of equity take
a different view of conditions from courts of law. Thus, in
the case of a contract to convey land, tender of a conveyance
to the land and to the estate therein described in the contract
is a condition precedent to the obligation of the purchaser to
pay the purchase-money.’ In equity, however, if the difference
between the property contracted for and that tendered does
not go to the essence of the contract, specific performance will
be granted with compensation to the vendee for such differ-
ence. This equitable rule applies only where equity has juris-
diction of the subject-matter of the contract. In New York,
and perhaps in other States where the distinctions between
common law and equity are abolished, there is a marked ten-
dency to extend this equitable doctrine to cases where it
could never have been applied by a court of equity for the
simple reason that a court of equity would not have had juris-
diction of the subject-matter.2. This tendency, however, has
called forth a well-deserved protest from one of the judges of
the New York Court of Appeals.®

5 Ante, § 339.

§ 350. 1 St. Albans v. Shore, 1 H. Bl. 270; L. 464; K. II. 1171; Wells
v. Calnan, 107 Mass. 514; L. 615; K. II. 1182.

2 Ante, § 340.

3 «« The tendency, called equitable, of courts to relieve persons from
the performance of engagements deliberately entered into, and in legal
effect, to make for litigants new contracts which they never entered into,
and which it cannot be supposed they ever would have entered into, has
been and is being carried to a length which cannot be justified in reason.”
Follett, C. J., in Crouch v. Gutmann, 134 N. Y. 45; 31 N. E. 271; H. &
W. 5438, note.
JOINT AND SEVERAL CONTRACTS. 205

CHAPTER XV.

THE OPERATION OF CONTRACTS AS TO THE PARTIES THERETO —
JOINT AND SEVERAL CONTRACTS,

§ 351. General Rules. — A right may belong to two or more
individuals jointly ; it cannot belong to each severally. An
obligation, however, may be imposed upon two or more jointly,
and upon each severally, at the same time. When two or
more parties unite in making a promise they become joint
promisors. When a promise is made to two or more jointly,
they become joint promisees. When the promise is made by
two or more jointly, and at the same time each makes the
same promise severally, they become joint and several prom-
isors. Promisees cannot be both joint and several.!

A contract can be joint only when each promisor is bound
by the same obligation as every other. Hence any agreement
whereby several parties promise to pay “ the sums set opposite

-» our respective names,” as in a subscription paper, is neces-
sarily not a joint contract, but a series of several contracts.?

§ 852. Rules of Pleading. — A contract is an entire thing,
and therefore all who are parties to it must join as plaintiffs
or be joined as defendants. A difference exists, however, in
the manner of taking advantage of such non-joinder. If the
declaration shows a non-joinder of the proper parties, advan-
tage of such non-joinder may be taken by demurrer, or by
‘motion in arrest of judgment; for the declaration shows that
it is fatally defective.’ If the declaration sets forth a promise

§ 351. 1 Slingsby’s Case, 5 Co. 19a; K. II. 961; Anderson v. Martin-

dale, 1 East, 497; K. II. 977.

2 Chicago Building Co. v. Graham, 41 U. 8. App. 680; 78 F. 83; Cor.
nish v. West, — Minn. — ; 84 N. W. 750.

§ 352. } Bragg v. Wetzell, 5 Blackf. 95; H. & W. 486; Gilman v.
206 THE OPERATION OF CONTRACTS.

by the defendant B. to the plaintiff A., and the evidence shows
a promise by B. to A. and C. jointly, there is a fatal variance,
for A. has no separate right in the contract and cannot sue
alone.2 If the declaration sets out a promise by the defendant
B. to the plaintiff A., and the contract sued on contains a
joint promise by B. and C., B. cannot say that he has not
promised, and must therefore plead in abatement the non-
joinder of C. as defendant.?

§ 353. Survivorship. — The common-law rule is that on the
death of one joint promisor the surviving promisors alone re-
main liable ;! and that on the death of one joint promisee the
right of action accrues to the survivors? This rule has been
changed by statute in many States.

§ 354. Discharge of Joint Contracts. — Any cause operating
to discharge the right of action of one promisee will destroy
the right of action of allt But a discharge of the debtor in
insolvency which is binding on.only two of three joint credit-
ors does not discharge the debt.2 In like manner, any cause
operating to destroy the right of action against one of several
joint promisors will discharge all of them ;* except where one

Rives, 10 Pet. 298; Sweigart v. Berk, 8 S. & R. 308; H. & W. 490; Farni
v. Tesson, 1 Black, 309; State v. Chandler, 79 Me. 172; 8 A. 553; K.
II. 973; Sinsheimer v. Skinner Mfg. Co., 165 Ill. 116; 46 N. E. 262;
Sandusky v. Sidwell, 173 Ill. 498; 50 N. E. 1008.

2 Jell v. Douglas, 4 B. & Ald. 374; W. 273; K. II.976; Hallett v. Gor-
don, — Mich. — ; 81 N. W. 556.

8 Whelpdale’s Case, 5 Co. 241; W. 270; Richards v. Heather, 1 B. &
Ald. 29; W. 270; K. IL. 993.

§ 353. 1 Richards v. Heather, supra.

2 Jell v. Douglas, supra; Knights of Honor v. Portingall, 167 Til. 291;
47 N. E. 203.

§ 354. 1 Myrick v. Dame, 9 Cush. 248; Austin v. Hall, 13 Johns. 286;
Decker v. Livingston, 15 Johns. 479; Dyer v. Sutherland, 75 Ill. 583;
Osborn v. Martha’s Vineyard R. R. Co , 140 Mass. 549; 5 N. E. 486; W.
293; K. IL. 971; Rawstorne v. Gandell, 15 M. & W. 304; K. II. 979.

2 Chase v. Henry, 166 Mass. 577; 44 N. E. 988.

3 Mason v. Eldred, 6 Wall. 231; overruling Sheehy v. Mandeville,
6 Cranch, 254; King v. Hoare, 13 M. & W. 494; W. 273; K IT. 982; Ken-
dall v. Hamilton, 4 A. C. 504; W. 287; Jansen v. Grimshaw, 125 III.
468; 17 N. E. 850; Moore v. Bevier, 60 Minn, 240; 62 N. W. 281; Hale
JOINT AND SEVERAL CONTRACTS. 207

receives a purely personal discharge, as in bankruptcy, or by a
covenant not tosue. Under a statute, however, barring any
future action against the debtor by a creditor who presents
his claim to the assignee in insolvency, the presentation of a
claim to the assignee of one of two joint promisors has been
held to bar any future action against both* The release of a
lien on the property of one joint debtor does not discharge
the other, in the absence of equitable considerations.®

§ 855. Merger of Joint Contracts by Judgment. —Where the
contract is joint and several a judgment against the promisors
jointly is a bar to an action against any of them severally ;*
and a judgment against one of them severally is a bar to an
action against them jointly.2 But where one of two joint
promisors gives a check for the debt, a judgment recovered on
this check dees not discharge the other, since the original
claim is not merged in such a judgment.?

§ 856. Joint Contractsin Equity. — It is sometimes said that
joint contracts will be treated as joint and several in equity.
‘Such a statement, however, is inaccurate. A joint contract
will be treated as joint and several in equity only when there
is some equitable reason for so treating itt Thus if money is
lent to two persons who give a joint obligation for its repay-
ment, a court of equity will enforce the obligation against the
representatives of the deceased obligor, “on the ground that
the lending to both creates a moral obligation in both to pay,
and that the reasonable presumption is the parties intended
v. Spaulding, 145 Mass. 482; 14 N. E. 534; K. 17.981; Clark v. Mallory,
185 Ill. 227; 56 N. E. 1099; contra, Blewett v. Bash, — Wash. — ; 61 P.
770.

# Munyan v. French, 60 N. J. L. 12; 36 A. 771.

5 Council Bluffs S. B. v. Griswold, 50 Neb. 753; 70 N. W. 376.

§ 355. 1 United States v. Price, 9 How. 83; contra, Moore v. Rogers,
19 Ill. 847; People v. Harrison, 82 Ill. 84; K. II. 988; Davis v. Sander-
lin, — N. C.— ; 258. E. 815.

2 Clifford, J., in Sessions v. Johnson, 95 U. 8S. 347, 348. See also
Travelers’ Ins, Co. v. Mayo, 170 Ill. 498; 48 N. EB. 917.

3 Drake v. Mitchell, 8 East, 251; Wegg Prosser v. Evans, 1895, 1 Q. B.
108; K. II. 990, overruling Cambefort v. Chapman, 19 Q. B. D. 229.

§ 356. 1 This equitable rule is adopted by the California Civil Code.
Farmers’ Exchange Bank v. Morse, — Cal. — ; 61 P. 1088.
208 THE OPERATION OF CONTRACTS.

their contract to be joint and several, but through fraud, igno-
rance, mistake, or want of skill, failed to accomplish their
object.” Where no such equity exists, however, as in the
case of a joint obligation by principal and surety, equity fol-
lows the law and recognizes only the legal obligation of the
surety, which is discharged by his death?

§ 857. Rules of Construction. — A few rules of construction
for determining whether a contract is joint or several may here
be given.

An obligation entered into by two or more parties is con-
strued as a joint obligation unless it appears that the parties
intended otherwise.

A contract will be construed to be joint or several, accord-
ing to the interests of the parties appearing on the face of the
contract, if the words are capable of such construction ; but
the express language of the promise must govern

The presumption that a contract is joint is not defeated by
the fact that each promisor is to contribute separately to the
entire result for which they bargain, and is entitled to a dis-
tinct interest under the contract for which he would have a
separate remedy.®

A note signed by two or more, and running, “ We promise
to pay,” is joint ;* but if it runs, “TI promise to pay,” it is joint
and several.5

Where two persons join in the rendition of services for

2 Davis, J., in Pickersgill v. Lahens, 15 Wall. 140, 144.

3 United States v. Price, 9 How. 83.

§ 357. 1 Elliott v. Bell, 37 W. Va. 8384; 17 S. E. 899; White v. Tyn-
dall, 13 A. C. 263; Eller v. Lacy, 137 Ind. 436; 36 N. E. 1088. As to
what is sufficient to show a contrary intention, see National Society v.
Gibbs, 1900, 2 Ch. 280; Streichen v. Fehleisen, — Ja. — ; 84 N. W.715.

2 Farni v. Tesson, 1 Black, 309; Keightley v. Watson, 3 Ex. 716; W.
281; Duncan v. Willis, 51 Ohio St. 433; 38 N. E. 13; Sorsbie v. Park, 12
M. & W. 146; K. II. 963; White v. Tyndall, 13 A. C. 263; K. IT. 995;
Montana Mining Co. v. St. Louis Mining Co , 19 Mont. 313; 48 P. 305.

3 Alpaugh v. Wood, 53 N. J. L. 638; 23 A. 261. But see Curry v.
Kansas, etc. R., 58 Kans. 6; 48 P. 579.

4 Barnett v. Juday, 38 Ind. 86.

5 Hemmenway v. Stone, 7 Mass. 58; Maiden v. Webster, 30 Ind. 317;
Dill v. White, 52 Wis. 456; 9 N. W. 404.
JOINT AND SEVERAL CONTRACTS. 209

which a reward is offered, they become joint promisees, and
must sue jointly ;® but if different persons act separately,
only the one who succeeds is entitled to the reward.’

§ 858. Partnership Contracts. — Partnership contracts are
joint.1 In equity they are sometimes said to be joint and
several. This is incorrect; the only foundation for the state-
ment is that partnership creditors are allowed to come into
equity to obtain payment from the estate of a deceased part-
ner, which is not liable at law.?

In equity, where two persons lend money to a third, there
is a presumption of fact that they are tenants in common both
of the debt and of any security given for it.

6 Janvrin v. Exeter, 48 N. H. 83.

7 Elkhorn Valley Lodge v. Hudson, — Neb. — ; 81 N. W. 889.

§ 358. ! Streichen v. Fehleisen, — Ia. — ; 84 N. W. 715.

2 Lord Cairns, C., in Kendall v. Hamilton, 4 A. C. 504,516; W. 287.
8 Steeds v. Steeds, 22 Q. B. D. 537; W. 352; K. II. 1564.

14
210 THE OPERATION OF CONTRACTS.

CHAPTER XVI.
THE OPERATION OF CONTRACTS AS TO THIRD PARTIES.

§ 359. Introductory. In the preceding chapters we have
had occasion to consider the operation of contractual obli-
gation first, with reference to the subject-matter of the con-
tract, whether the obligation is absolute or conditional; and,
secondly, with reference to the parties to the contract, whether
their rights and obligations are joint, several, or joint and sev-
eral. We have now to consider what may be the operation
of contracts, first, with reference to third parties, whether
strangers to the contract have rights or obligations there-
under; and, secondly, with reference to parties claiming by
assignment from the original parties to the contract, whether
such assignees have any rights or obligations thereunder.
The question as to strangers to the contract must be con-
sidered, first, with reference to the parties who are bound by
the contract; and, secondly, with reference to the parties
who may enforce the contract. ,

§ 360. The Operation of Contract as to Obligations. — Inas-
much as contractual obligation is the result of a voluntary
act, no one can be bound by such obligation unless his own
act has given rise to the obligation. In other words, no one
can be bound by a contract who is not a party to it.

The existence of a contract between two parties may impose
an obligation on other parties not to interfere with the con-
tract. Indeed it is now generally recognized that malicious
interference with a contract by a third party is actionable?

§ 360. 1 Schmaling vy. Thomlinson, 6 Taunt. 147. The act of an agent
is regarded as the act of his principal, so that agency furnishes no real
exception.

2 Lumley v. Gye, 2 E. & B. 216; Bowen v. Hall, 6 Q. B. D. 333;

Walker v. Cronin, 107 Mass. 555; H. & W. 416; Angle wv. Chicago, ete.
Ry. Co., 151 U. S.1; Jones v. Stanley, 76 N. C. 355; H. & W. 418;
AS TO. THIRD PARTIES. 211

Such interference, however, constitutes a tort, and is a breach,
not of the contractual obligation, but of an obligation imposed
by law. :

§ 861. The Operation of Contract as to Rights. —The com-
mon-law rule is that no one can enforce a contract who is not
a party thereto! In the case of formal contracts this rule
rests on the fact that the deed itself determines the person to
whom the obligor binds himself, and that the obligation can
therefore extend only to the obligee named. In the case of
simple contracts, the promise determines the consideration,
and extends only to the person who furnishes that considera-
tion. An exception has recently been made in England where
the consideration is furnished by the plaintiff’s agent without
the plaintiff’s authority. This exception does not rest on rat-
ification by the plaintiff, but seems purely arbitrary.2 The
equitable rule is the same as that at common law,’ except in
the case of marriage settlements, which may be enforced by
any person within the scope of the settlement. Hence when
A. mortgages two adjoining lots, and then conveys one lot to
B., who assumes the mortgage, and then conveys the other lot
to C., subject to the mortgage, C. cannot enforce B.’s contract
to pay the mortgage, even in equity.?

contra, Chambers v. Baldwin, 91 Ky. 121; 15 S. W. 57; Boyson v. Thorn
98 Cal. 578; 33 P. 492. See Bigelow on Torts, ch. iv.

§ 361. 1 Price v. Easton, 4B. & Ad. 333; L.172; K. 771; Tweddle v.
Atkinson, 1 B. & 8. 893; L. 174; Exchange Bank v. Rice, 107 Mass. 37 ;
W. 520; Borden v. Boardman, 157 Mass. 410; 32 N. E. 469; W. 524; H.
& W. 435; K. 849; Halsted v. Francis, 31 Mich. 113; Wheeler v. Stewart,
94 Mich. 445; 54 N. W.172; Linneman v. Moross, 98 Mich. 178; 51 N.
W. 103; Woodcock »v. Bostic, 118 N. C. 822; 24 S. E. 362; Vought v.
Columbus, ete. Co., 58 Ohio, 123; 50 N. E. 442; Campbell v. Lacock, 40
Pa. St. 448; K. 790; Morgan». Randolph-Clowes Co., — Conn. — ; 47
A. 658; Adams v. Kuehn, 119 Pa. St. 76; 18 A. 184; K. 827. The case
of agency need not be here considered.

2 Fleming v. Bank of New Zealand, 1900, A. C. 577 (P. C.).

8 Re Rotherham Alum Co., 25 C. D. 104, 111; Re Empress Engineer-
ing Co., 16 C. D. 125, 129.

4 Pollock, Contracts, 188, 199; Achilles v. Achilles, 187 Tll. 589; 28
N. E. 45.

5 Pearson v. Bailey, — Mass. — ; 58 N. E. 1028,
212 THE OPERATION OF CONTRACTS.

§ 862. Exceptions to the Common-law Rule. — Such being
the common-law rule, we have to consider what exceptions

there are. The only exception now recognized in Massachu-
y Pp d

setts is “ where the defendant has in his hands money which
in equity and good conscience belongs to the plaintiff, as where
one person receives from another money or property as a fund
from which certain creditors of the depositor are to be paid,
and promises, either expressly or by implication from his ac-
ceptance of the money or property without objection to the
terms on which it is delivered to him, to pay such creditors,”
This exception is really no exception at all, since the cases
it includes are those where the obligation which the plaintiff
seeks to enforce is not contractual in its nature.

Another exception was recognized in early cases both in
England and Massachusetts, where the beneficiary was nearly
related to the promisee.2 It was held accordingly that a child
might sue on a promise made to the father for the child’s ben-
efit. This exception is no longer recognized in England,‘ or
in Massachusetts,5 and it has no foundation in principle ; but
in a recent New York decision the majority of the court up-
held the exception on the ground of relationship, and allowed
a wife to sue on a promise made to her husband ;® and a
recent Illinois case? also lends some support to this doctrine.

Another exception where the consideration is furnished
without authority by the plaintiff’s agent has been mentioned
in the preceding section.

§ 363. Right of the “Beneficiary” to sue. a: most of the
States there is a broad exception to the common-law rule,
This exception is really rather a modification of the general
rule by judicial legislation. The leading case in support of

§ 362. 1 Exchange Bank v. Rice, 107 Mass. 37; W. 520.

2 Bourne v. Mason, 1 Ventr. 6; L. 170.

8 Dalton v. Poole, 2 Lev. 210; L. 170; K. 769; Felton v. Dickinson,
10 Mass. 287; Mellen v. Whipple, 1 Gray, 317; K. 772.
* 4 Tweddle v. Atkinson, 1 B. & 8. 393; L. 174; K. 787.

5 Marston v. Bigelow, 150 Mass. 45, 53; 22 N. E. 71; K. 838; Saun-
ders v. Saunders, 154 Mass. 337; 28 N. E. 270; K. 843.

® Buchanan v. Tilden, 158 N. Y. 109; 52 N. E. 724.

7 Lawrence v. Oglesby, 178 Ill. 122; 52 N. E. 945.
AS TO THIRD PARTIES. 2138

this modification of the common law is Lawrence v. Fox,}
in which the New York court laid down the principle “ that
where one person makes a promise to another for the benefit
of a third person, that third person may maintain an action
upon it.” This rule has no foundation in principle, and is a
pure case of judicial legislation; but the rule has been widely
adopted throughout the United States, and has led to great
confusion in the law. Where the New York rule prevails
there are two things to be considered: first, to what con-
tracts the rule applies; and, secondly, what is the nature of
the third party’s right to sue.

§ 864, Cases in which the Right of the Third Party is recognized.
— The cases in which a third party is allowed to sue ona
contract scem confined to two classes. In the first class of
contracts, the object of the contract is the benefit of the third
party.1 In the second class, the performance of the contract
must go to discharge some legal obligation of the promisee to
the party suing. In some cases, however, not falling within
‘ either of these two classes, the third party has been allowed
to sue ; but upon what principle the writer has been unable to
discover.?

§ 3865. Contracts for the Benefit of the Third Party. — In the
following cases it has been held that the object of the contract
was to benefit the party suing, and the rule in Lawrence »v. Fox
has been applied.

Where a city covenanted with the State to pay damages
resulting from the making of certain improvements, it was
held that a person damaged by the improvements could sue
the city on its covenant.!

So where contractors with the State assume to do certain
things, it has been held that the contractors are liable to the

§ 363. 120 N. Y. 268; W. 596; H. & W. 422; K. 777.

§ 364. 1 In some States this rule is statutory. Newberry Land Co. v.
Newberry, 95 Va. 119; 27S. EH. 899; Rogers v. Gosnell, 51 Mo. 466.

2 Merriman v. Moore, 90 Pa. St. 78; Brewer v. Maurer, 38 Ohio St.
543; Dean v. Walker, 107 Tl]. 540; Marble S. B. v.. Mesarvey, 101 Ia.
283; 70 N. W. 198; Enos v. Sanger, 96 Wis. 150; 70 N. W. 1069; White-

head v Burgess, 61 N. J. L. 75; 38 A. 802.
§ 365. 1 Coster v. Mayor of Albany, 43 N.Y. 399.
214 THE OPERATION OF CONTRACTS.

person injured by their non-performance ; but this rule rests
on public policy as well as on- the decision in Lawrence »v.
Fox.?

Where the father of an illegitimate child made a contract
with the mother for the support of the child, an action on the
contract by the child against the father was allowed.?

§ 365 a. Right of the Beneficiary to enforce a Life Insurance
Policy. — “The well-established right of a beneficiary to sue
upon a life insurance policy does not seem to have been
judicially discussed in relation to the larger question as to
the right of a third person to sue upon a contract made for
his benefit. In most American jurisdictions such third person
can sue. In Massachusetts, on the contrary, he cannot; nev-
ertheless, in that jurisdiction the beneficiary of a life insurance
contract can sue ; the taking out of such policy being deemed
a declaration of trust, though the beneficiary is allowed to
proceed at law.1 The effect of most of the decisions seems
to be that the insured through the operation of the contract
with the insurers creates a res in the nature of property which
thenceforward belongs to the beneficiary.” 2

§ 866. The Present New York Doctrine as to the Rights of
the Beneficiary. — At the time the first edition of this book
was published the latest cases in New York seemed to have
abandoned the idea that a stranger to a contract can sue upon
it simply because it is for his benefit. Thus it had been held
that the trustees of a church cannot sue upon a subscription
paper for the benefit of the church, where they are not parties
to the contract... Again, where the owner of land conveyed
it to her grandsons, taking a mortgage securing an annuity
to herself, and also providing that the grantees should pay
a certain sum to her two granddaughters after her death, it
had been held that the granddaughters could not enforce the

2 Little v. Banks, 85 N. Y. 258; K. 812.

3 Benge v. Hiatt, 82 Ky. 666; Todd v. Weber, 95 N. Y. 181; K. 814.

§ 365 a. 1 Pingrey v. Ins. Co., 144 Mass. 374.

* Woodruff, Cases on Insurance, 380.

§ 366. 1! Presbyterian Church v. Cooper, 112 N. Y. 517; 20 N. E. 352;
W. 544; Lawrence v. Fox was entirely ignored in this case.
AS TO THIRD PARTIES. 215

mortgage.2 The court in the latter case said, “To maintain
the action by the third person, there must be (some) liability
to him on the part of the promisee.” Recently, however, by
a vote of four judges to three, the New York Court of Appeals
has held that a wife may sue on a promise made to her hus-
band to pay money to her for services rendered by the husband
to the promisor.2 The court seems to treat the obligation of
the husband to support the wife as sufficient to entitle her to
sue on the promise made to him. In another recent case a
contract by A. with B. to take B.’s child and maintain him, and
at her death to give him her property, was held enforceable
by the child in equity, though not at law.4 These later de-
cisions leave the New York law on this question in a state of
great uncertainty. The law of Illinois appears to be equally
uncertain.®

§ 367. Contracts in Discharge of the Promisee’s Obligation to
the Plaintiff.—In the second class of cases where a stranger
to a contract can sue, the performance of the contract must
go in discharge of a legal obligation of the promisee to a
party suing. The following cases show where the action is
allowed.

Where a railroad company agreed with a city to pay part of
a policeman’s salary, the policeman was allowed to sue on the
contract.?

Where one insurance company made a contract with an-
other by which the first company agreed to pay the losses of
policy-holders in the second, the policy-holders were allowed
to sue the first company on the contract.?

Where the promisee and his wife had separated, a contract
by the promisor to support the wife was held enforceable by
the wife. The performance of the contract went in discharge
of the promisee’s obligation to support his wife.

2 Townsend v. Rackham, 143 N. Y. 516; 38 N. E. 731.

8 Buchanan v. Tilden, 158 N. Y. 109; 52 N. E. 724.

4 Winne v. Winne, — N. Y. —; 59 N. E. 832.

5 Post, § 373.

§ 367. 1 Porter v. Richmond, etc. R. R. Co., 97 N.C. 46; 2 8. E. 374.
2 Barnes v. Hekla Ins. Co., 56 Minn. 38; 57 N. W. 314; K. 851.

3 Coleman v. Whitney, 62 Vt. 123; 20 A. 322,
216 THE OPERATION OF CONTRACTS..

§ 3868. Mortgagee’s Right to sue Purchaser assuming Mort-
gage. — The most common instance where the third party is
allowed to sue is where a mortgagor sells land, and his
grantee assumes and agrees to pay the mortgage. In such
cases the mortgagee is generally allowed to sue the purchaser
ou his contract to pay the mortgage.!. The same rule applies
when there is a contract by the promisor to discharge any
other obligation of the promisee.?

§ 369. Contracts unenforceable by Third Party.—If a case
does not fall within one of the two classes already described,
a stranger to the contract cannot sue upon it, even though
he might be benefited by the performance of the contract.
This principle is illustrated in the following cases.

Where A.’s husband conveys land to B., and B. covenants
to pay all incumbrances on the premises, A. cannot sue B.
for breach of his covenant resulting in the loss of her inchoate
right of dower by sale of the land in a foreclosure suit2 The
husband owes no duty to his wife to protect her right of
dower, so that the covenant docs not go in discharge of any
obligation of the promisee to the party suing.

Where all A.’s creditors agree not to sue him without the
concurrence of a majority of the creditors, this contract does
not inure to the benefit of the debtor, and he cannot take
advantage of it.?

§ 368. 1 Burr v. Beers, 24 N. Y. 178; Campbell ». Smith, 71 N. Y. 26;
Schley v. Fryer, 100 N. Y.71; 2 N. E. 280; Flint v. Cadenasso, 64
Cai. 83; 28 P. 62; Ellis v. Johnson, 96 Ind. 877; State v. Davis, 96 Ind.
539; Wright, v. Briggs, 99 Ind. 563; Daub v. Haglobach, 109 Ill. 267;
Witzgerald n “Barker, 85 Mo. 13; Giftord v, Corrigan, 117 N. Y. 257; 29
N. E. 756; W. 585; K. 839; Stevenson v. Elliott, 53 Kans. 550; 86
P. 980; Thompson v. Checuman, 15 Utah, 43; 48 P. 477; Starbire v.
Cranston, 24 Col. 20; 48 P. 652; Morgan v. South Milwaukee Co.,
97 Wis. 275; 72 N. W. 872. i

2 Emmitt v. Brophy, 42 Ohio St. 82; Arnold v. Nichols, 64 N. Y. 117;
Bassett v. Hughes, 43 Wis. 319; W. 41; H. & W. 428; Porter v. Woods,
138 Mo. 539; 398. W. 794; Feldman v. McGuire, — Or. —; 55 P. 872.

§ 869. 1 Carter ». Holahan, 92 N. Y. 498; Lorillard v. Clyde, 122
N. Y. 498; 25 N. E. 917.

2 Durnherr v. Rau, 135 N. Y. 219; 382 N. E. 49; W. 540; K. 847.

8 Johnson v. Bamberger, 19 8, W. 920 (Ark.).
AS TO THIRD PARTIES. Q17

Where B., C., and D. are joint indorsers of A.’s notes, and
make an agreement among themselves that, if A. fails to pay,
each will pay his share, and if any one pays more than his
share he shall recover from the others, and a mortgage is
given to secure the performance of this agreement, the mort-
gage cannot be enforced by the holders of A.’s notes. The
contract is for the protection of the indorsers, not of A., and
each indorser’s promise is in effect a promise to perform his
own obligation, and not to perform A.’s obligation.

A contract between a city and a water company, by which
the company agrees to supply the city with water, gives no
right of action to a citizen who is injured by the failure of the
water supply.®

Where the grantce of land subject to a mortgage does not
assume it, a stipulation in a conveyance by him that his
grantee shall assume the mortgage does not make the latter
liable to the mortgagee.6 The promise does not go in dis-
charge of any obligation of the promisee.

§ 870. Contracts unenforceable by Third Party, continued. —
Where B. agrees to furnish C. such sums of money as may be
necessary to pay C.’s current expenses, a person who furnishes
C. with goods cannot sue B.1. So where an employer contracts
to furnish an employee with medical attendance, the attending
physician cannot sue the employer for his fees.?

A contract between A. and B. to subscribe for stock in a

4 Seward »v. Huntington, 94 N. Y. 104.

5 Davis v. Clinton Water Works Co., 54 Ia. 59; 6 N. W. 126; K.
809; Boston S. D. Co. ». Salem Water Co., 94 F. 238; contra, Gorrell v.
Greensboro, ete. Co., 124 N. C. 828 ; 32S. E. 720.

6 Nelson v. Rogers, 47 Minn. 103; 49 N. W. 526; Brown v. Still-
man, 43 Minn. 126; 45 N. W. 2; Vrooman v. Turner, 69 N. Y. 280; K. 803;
Carter v. Holahan, 92 N. Y. 498; Young Men’s Christian Association v.
Croft, 34 Or. 106; 55 P. 489; Eakin v. Shultz, —N. J. Eq. — 47 A. 274;
contra, Merriman v. Moore, 90 Pa. St. 78; Brewer v. Maurer, 88 Ohio St.
543 (dictum); Dean v,' Walker, 107 Ill. 540 (dictum); Marble S. B. ».
Mesarvey, 101 Ia. 285; 70 N. W. 198; Enos v. Sanger, 96 Wis. 150; 70
N. W. 1069.

§ 870. ! Burton v. Larkin, 36 Kans. 246; 13 P. 398.

2 Thomas Mfg. Co. v. Prather, 65 Ark. 27; 44S. W. 218,
218 THE OPERATION OF CONTRACTS.

corporation,’ or for the sale of land to a corporation to be
formed thereafter,’ or a contract by A. on selling stock to B.
to pay the corporation’s debts,® cannot be enforced by the
corporation.

Where corporation A. leases a railroad to corporation B.,
and corporation B, guarantees to pay to corporation A. an
annual amount equal to a 10 per cent dividend on the capital
‘stock of corporation A., a stockholder in corporation A. cannot
enforce this contract, because he has no right to dividends as
against corporation A., there being no legal obligation on the
part of a corporation to pay dividends.®

Where A. agrees to pay a certain proportion of B.’s indebt-
edness, C., a creditor of B., cannot sue A. on this contract,
because there is no agreement to pay any special amount. in
proportion of the claim of any individual creditor; and while
the performance of the contract may go in discharge of B.’s
obligation to C. it will not necessarily do so. It is essential
that the performance of the contract must go in discharge of
such obligation.’ It has been held in Minnesota, however,
that where the defendant agrees to pay all the debts of A.,
not to exceed $130,000, and to pay all the creditors pro rata
if the debts exceed that amount, an action for the benefit of
all the creditors may be brought on the agreement, and that
a decree pro rata will be entered in favor of each creditor.®

Where A. promises to pay B.’s debts and to make certain
advances, the total amount to be paid by A. to be limited to
a certain sum, B.’s creditors cannot sue A. on this contract.
The contract is in effect simply to advance a certain sum of
money, and not to pay any specific debt of B.’s.9

8 Morawetz, Corporations, § 49 ; Lake Ontario R. R. Co. v. Curtis, 80
N. Y. 220.

4 Newberry Land Co. v. Newberry, 95 Va. 119; 27 S. E. 899.

5 German State Bank v. Northwestern, etc. Co., 104 Ia. 717; 74 N. W.
685.

6 Beveridge v. N. Y. El. R. Co., 112 N. ¥.1; 16 N. E. 489; Flagg v.
Manhattan Ry. Co., 20 Blatchf. 142.

7 Wheat v. Rice, 97 N. Y. 296; K. 821; Serviss v. McDonnell, 107
N. Y. 260; 14 N. E. 314.

8 Bell v. Mendenhall, 71 Minn. 331; 73 N. W. 1086.
® Washburn v. Interstate Investment Co., 26 Or. 486; 38 P. 620.
AS TO THIRD PARTIES. 219

§ 3871. Contracts unenforceable by Third Party, continued.
— Where A. agrees with B. to erect buildings and apply the
money received for materials and labor, “to the end” that
there shall be no liens, and C. guarantees to B. the perform-
ance of A.’s contract, D., who furnishes material for the
buildings, cannot sue C. The contract does not provide for
the payment of D.’s claim, but simply that the money received
by B. shall be applied in payment of similar claims.!_ So where
an employer agrees to retain part of the money to be paid to
a contractor as security for the payment of sub-contractors, a
sub-contractor cannot hold the employer to such agreement?

Where A. simply promises B. to indemnify him against a
claim of C., C. cannot sue A.? Thus where A. gave a bond
to B., conditioned for the payment of B.’s note to C., the court
held that C. gould not sue A. on the bond for the reason that
there was no promise by A. to pay the note to 0.4 A fortiori,
where D. guarantees such a bond, C. cannot sue D. on his
guaranty.5 But if A. promises B. to pay B.’s note to C., and
D. guarantees the performance of A.’s promise, C. can sue D.
on the guaranty.®

Jt has been held in Nebraska and Missouri that where a bond
is given to a city by contractors, conditioned that they will pay
for all labor and material furnished, persons furnishing labor
and material can sue on the bond;7 but the Minnesota courts
take the opposite view.8 In Iowa, C. may sue on the bond by
virtue of a statute to that effect.

§ 371. ! Weller v. Goble, 66 Ta. 113; 23 N. W. 290.

2 School Dist. v. Thomas, 51 Neb. 740; 71 N. W. 781. .

3 Berry v. Brown, 107 N. Y. 659; 14 N. E. 289; Merrill v. Green, 55
N. Y. 270; Simson v. Brown, 68 N. Y. 855; Walsh v. Featherstone, 67
Minn. 103; 69 N. W. 811.

4 Turk v. Ridge, 41 N. Y. 201; Merril] v. Green, supra.

5 Simson v. Brown, supra.

6 Claflin v. Olstrom, 54 N. Y. 581.

7 Lyman v. Lincoln, 38 Neb. 794; 57 N. W. 531; Rohman v. Gaiser,
53 Neb. 474; 73 N. W. 923; St. Louis v. Von Phul, 133 Mo. 561; 34
S. W. 843.

8 Jefferson v. Asch, 53 Minn. 446; 55 N. W. 604; Union Ry. Storage
Co. v. McDermott, 53 Minn. 407; 55 N. W. 606. ;

9 Jordan v. Kavanaugh, 63 Ia. 152; 18 N. W. 851; Baker v. Bryan,
64 Ia. 561; 21 N. W. 83.
\

220 THE OPERATION OF CONTRACTS.

Where a contract for the sale of land by A. to B. recites
that part of the price “is going to C.,” C. cannot sue B.!0

§ 3872, Nature of Beneficiary’s Right to sue.— Having seen
on what contracts a stranger is and is not allowed to sue in
many American courts, we have to consider the theory upon
which such actions are allowed.

§ 373. The Trust Theory.—In the cases where the third
party is in reality one for whose benefit the contract is made,
there seems to be an extension of the idea of trust by the com-
mon-law courts. In many of the States statutes provide that
“the real party in interest must sue;” and it is generally held
that the beneficiary is the real party in interest. Indeed, in
Missouri the promisee is declared a trustee for the beneficiary.
In Indiana the court says there is an “executed gift of the
promise to the beneficiary,” 2 which may be revoked when ‘it
appears that the donor did not intend to make it irrevocable.
In J]linois the court has said that “such a promise invests the
person for whose use it is made with an immediate interest
and right, as though the promise had been made to him.” *
In another case, however, the same court held that the promise
creates no privity of contract between the promisor and the
beneficiary until the latter assents thereto ;° but this view, in
turn, is contradicted by still another decision,’ which treats
the beneficiary’s rights as springing from the contract itself,
and allows the beneficiary to proceed against the original
debtor as well as against the new promisor; so that the IIli-
nois doctrine on this point must be regarded as still unsettled.

§ 874. The Novation Theory. — The New Hampshire doc-
trine is that a third party can sue on a contract only where
there has been a novation. If A. promises B. to pay B.’s debt

10 Crandall v. Payne, 154 Ill. 627; 39 N. E. 601.

§ 373. ! Rogers v. Gosnell, 51 Mo. 466 (by statute).

2 Pruitt v. Pruitt, 91 Ind. 595; Ransdell v. Moore, 153 Ind. 393 ; 58
N. E. 767; Ferris v, American Brewing Co., — Ind. — ; 58 N. E. 701.

3 Richards v. Reeves, 149 Ind. 427; 49 N. E. 348.

4 Bay v. Williams, 112 Ill. 91, 97; K. 818; Ingram v. Ingram, 172 Tl.
287; 50 N. E. 198.

5 Commercial N. B. vc. Kirkwood, 172 Ill. 563; 50 N. E. 219.

6 Hazle v. Bondy, 173 Ill. 302; 50 N. E. 671.
AS TO THIRD PARTIES. 221

to C., and C. assents to this arrangement, B. is thereby dis-
charged, and A. is substituted as C.’s debtor. C.’s assent, it is
held, may be given after the agreement between A. and B.,
but must be given before suit is begun.1 It seems very ques-
tionable whether this theory of novation can be supported.

In Maine, on the other hand, in a case like that just put, A.’s
promise to B. imposes on A. an obligation to C., and C. has
his election to sue either B. or A., but cannot sue both.2 The
beneficiary must be specifically designated ;3 and the implied
contract between him and the promisor “results from equi-
table considerations.” 4

In Rhode Island the court hesitates between the Maine and
the New Hampshire doctrine, but holds that C. can sue only
one of the parties; and that in order to obtain the benefit of
the new contract he must show a release of the old, whether
the view of the Maine or of the New Hampshire courts be
adopted.6

§ 375. The Subrogation Theory.— Where the contract be-
tween A. and B. involves a promise by A. to perform B.’s
obligation to C., the right of C. to sue A. seems largely influ-
enced by the doctrine of subrogation. Even in those jurisdic-
tions where the common-law rule prevails, and a stranger to
the contract cannot sue upon it, C. is allowed to avail himself
in equity of B.’s rights against A. wherever a case of subro-
gation arises. The ground upon which equity gives C. a right
against A., however, is not that C. is regarded as having any
right by virtue of the contract between A. and B., but that in
equity a creditor has a right to the benefit of any obligation or
security given by the principal to the surety for the payment
of the debt.1 In equity, the assumption of a mortgage by a
vendee is regarded, as between vendor and vendee, as making

§ 374. 1 Warren v. Batchelder, 16 N. H. 580; Butterfield v. Hartshorn,
7 N. H. 345; Clough ». Giles, 64 N. H. 73; 5 A. 835.

2 Bohanan v. Pope, 42 Me. 93.

3 Harvey v. Maine Condensed Milk Co., 92 Me. 115; 42 A. 342.

4 Cumberland N. B. v. St. Clair, 93 Me. 35; 44 A. 123.

5 Wood v. Moriarty, 15 R. I. 518; 9 A. 427; H. & W. 430; K. 830.

§ 875. 1 Beacon Lamp Co. v. Travellers’ Ins. Co., — N. J. Eq. —;
47 A. 579.
222 THE OPERATION OF CONTRACTS.

the vendee primarily liable for the debt, and placing the mort-
gagor in the position of surety for the vendee, so that the
mortgagee is subrogated to the rights of the mortgagor, and
may compel the vendee to pay the mortgage.? Subrogation,
where the common-law doctrine prevails, is the only right
which the mortgagee can acquire by the vendee’s assumption
of the mortgage.2 In other jurisdictions, subrogation is the
only remedy of a stranger to a sealed contract,’ although he
is sometimes allowed to sue at law in the name of the cove-
nantee,® but an action at law is allowed on a simple contract.®
In other jurisdictions a stranger may sue on any contract,
whether under seal or not, if such contract is one which the
courts recognize as enforceable by a stranger.? Where an
action at law is allowed, the equitable right of subrogation is
said to be “swallowed up in the greater equity of the legal
right founded on the theory of a promise made for the benefit
of the creditor.”® It is sometimes held that in such cases the
legal remedy is the exclusive one.®

§ 316. Differences between Equitable and Legal Subrogation.
— There are important differences to be noticed between the
right of subrogation, and the right of a third party to sue on a
contract... The former is equitable, the latter legal. Where
the right of subrogation exists, the mortgagee stands strictly
in the shoes of the mortgagor,! and hence, if the mortgagor re-

2 Keller v. Ashford, 133 U. 8. 610; 10S. Ct. 494; Tatum v. Ballard,
94 Va. 370; 26S. E. 871; Biddle v. Pugh, — N. J. Eq. — ; 45 A. 626.

3 Keller v. Ashford, supra; Willard v. Wood, 135 U. S. 309; 10S. Ct.
831; Woodcock v. Bostic, 118 N. C. 822; 248. E. 362; Ellett v. McGhee,
94 Va. 877; 26 S. E. 874.

4 Joslin v. New Jersey Car Spring Co., 86 N. J. L. 141; Harms »v.
McCormick, 132 Tl. 104; 22 N. E. 511; Baldwin v. Emery, 89 Me. 496;
36 A. 994; contra, Webster v. Fleming, 178 Ill. 140; 52 N. E. 975.

5 Brann v. Maine, etc. Ass’n, 92 Me. 341; 42 A. 500.

6 Elmer v. Loper, — N. J. L. — ; 48 A. 550.

7 Bassett v. Hughes, 43 Wis. 319; W. 541; H. & W. 428; Carter v.
Mayor of Albany, 43 N. Y. 899; Garvin v. Mobley, 1 Bush, 48 ; Marble
S. B. v. Mesarvey, 101 Ta. 285; 70 N. W. 198.

8 Gifford v. Corrigan, 117 N. Y. 257; 22 N. E. 756; W. 535; K. 839.

® Cotes v. Bennett, 183 Ill. 82; 55 N. E. 661.

§ 376. ! Green v. Turner, 80 F. 41; Ellett v. McGhee, 94 Va. 377;
26S. E. 874.
AS TO THIRD PARTIES. 223

leases his vendee from his assumption of the mortgage, the
mortgagee’s rights against the vendee are destroyed,? unless
the release is fraudulent. Where the legal right of the
stranger to the contract is recognized, it is held in some cases
that this right springs from the contract itself, and cannot be
destroyed by any act of the promisee.t In Indiana the third
party is regarded as having an interest by virtue of the con-
tract only when the contract is intended for the sole benefit
of such third party. In such cases, a release by the promisee
cannot affect the rights of the beneficiary ;° while if the prom-
isee has an interest in the performance of the contract he may
release the promisor at any time before the third party has
assented to the contract.®

In New York and many other States a release by the prom-
isee will destroy the rights of the third party if such release
is made before the third party has assented to the contract.’
After he has assented, his rights cannot be affected by any act
of the promisee.®

The outcome of Lawrence v. Fox in New York seems to be
that a legal right of a stranger to a contract to sue is recog-
nized ; that the courts have been chiefly influenced in their
decisions as to the extent of this right by the equitable rules
governing subrogation ; and that the tendency of the decisions

2 Youngs v. Trustees, 831 N. J. Eq. 290; O'Neill v. Clark, 33 N. J.
Eq. 444.

3 Trustees v. Anderson, 30 N. J. Eq. 366.

4 Bay v. Williams, 112 Ill. 91; K. 818; Bohanan v. Pope, 42 Me. 93 ;
Starbird v. Cranston, 24 Col. 20; 48 P. 652.

5 Pruitt v. Pruitt, 91 Ind. 595.

6 Berkshire Life Ins. Co, v. Hutchings, 100 Ind. 496.

7 Brewer v. Maurer, 38 Ohio St. 543; Kelly v. Roberts, 40 N. Y. 432;
K. 794; Comley v. Dazian, 114 N. Y. 161; 21 N. E. 185; Berkshire Life
Ins. Co. v. Hutchings, supra ; Commercial N. B. v. Kirkwood, 172 IIL
563; 50 N. E. 219.

8 Dodge v. Moss, 82 Ky. 441; Gifford v. Corrigan, 117 N. Y. 257; 22
N. E. 756; W. 535; K. 889; N. Y. Life Ins. Co. v. Aitkin, 125 N. Y.
660; 26 N. E. 732; Basset v. Hughes, 43 Wis. 319; W. 541; H. & W.
428; Vinet v. Bres, 48 La. Ann. 1254; 20 8. 693. “A contract made
expressly for the benefit of a third person may be enforced by him at any
time before the parties thereto rescind it.” N. D. Rev. Code, § 3840.
224 THE OPERATION OF CONTRACTS.

is to minimize the differences between this legal right and the
generally recognized right of subrogation.

§ 877. Doctrine of the Federal Courts as to Stranger’s Right to
enforce Contracts. — The law of the Federal courts as to the
right of a third party to sue on a contract does not seem clearly
settled. In Hendrick v. Lindsay,’ the United States Supreme
Court says that while no one can sue on a promise under seal
who is not named in the deed, “the right of a party to main-
tain assumpsit on a promise not under seal, made to another
for his benefit, although much controverted, is now the pre-
yailing rule in this country.” In National Bank v. Grand
Lodge,? the court says that while the general rule is that a
stranger to the contract cannot sue upon it,? “there are con-
fessedly many exceptions” to the rule. The two exceptions
mentioned by the court are, first, the so-called exception when
the defendant has assets to which the plaintiff is really enti-
tled ; and, second, “ where the plaintiff is the beneficiary solely
interested in the promise, as where one person contracts with
another to pay money or deliver some valuable thing to a
third.” The court goes on to say, “ But where a debt already
exists from one person to another, a promise by a third person
to pay such debt being primarily for the benefit of the original
debtor, and to relieve him from liability to pay it (there being
no novation), he has a right of action against the promisor for
his own indemnity; and if the original creditor can also sue,
the promisor would be liable to two separate actions, and there-
fore the rule is that the original creditor cannot sue.” This
language is quoted with approval in Keller v. Ashford,* where
the court held that the sole right of a mortgagee against the
grantor of the mortgagor who assumes the mortgage, is in
equity, and rests on the equitable doctrine of subrogation.
The general rules laid down by the Supreme Court thus coin-
cide with the common-law rules; but it seems uncertain

§ 377. 1 93 U. S. 143.

298 U. S. 123; W. 518; K. 807.

3? American Exchange Bank v. Northern Pac. R., 76 F. 130.

4 133 U. S. 610; 10S. Ct. 494: Willard v. Wood, 135 U. S. 309; 10
S. Ct. 881; Green v. Turner, 80 F 41.
AS TO THIRD PARTIES. 225

whether the second exception in National Bank v. Grand
Lodge would really be treated as an exception if the case
should actually come before the court.

§ 878. Unsettled Questions as to Stranger’s Right to enforce
Contract.— There are certain important questions on which
the decisions of the Supreme Court throw little light. In
Willard v. Wood! the court holds that the remedy of a third
party on a contract is determined by the lex fort; and that in
the District of Columbia the sole remedy of the mortgagee
against the purchaser who assumes the mortgage is in equity.
But the contract in that case was made in New York; and in
New York the right of the third party is a legal right to sue
on the contract, and he is not compelled to resort to the doc-
trine of subrogation in order to recover. It is clear that a
third party may be able to sue on a contract in New York,
and yet not be able to sue in equity in the District of Colum-
bia, because in the District of Columbia he would have to show
himself entitled to subrogation ; while in New York he is not
bound to establish a right to subrogation in order to enforce
the contract. It would seem, therefore, that the decision in
Willard v. Wood has the effect to deprive a man in the Dis-
trict of Columbia of substantive rights which he has acquired
in New York.

On the other hand, in Union Life Insurance Co. v. Hanford,?
the court holds that in an action brought in the Federal court
sitting in Illinois, an extension of time given by a mortgagee
to his mortgagor’s grantee who has assumed the mortgage,
discharges the mortgagor, because such assumption of the
mortgage places the grantee in the position of principal and
the mortgagee in the position of surety with regard to the
mortgage debt. This case proceeds on the theory that the
law of Illinois is to govern the substantive rights of the par-
ties in the Federal court sitting in that State. It seems
impossible to reconcile this case with Willard v. Wood.

§ 878. 1 185 U. S. 309; 10S. Ct. 831.

2143 U. S. 187; 12S. Ct. 487. The law of Illinois on this point
seems to have been misunderstood. See Fish v. Glover, 154 Ill. 86; 39
N. E. 1081; Webster v. Fleming, 178 Ill. 140; 52 N. E. 975.

15
226 THE OPERATION OF CONTRACTS.

In a recent case in the Circuit Court of Appeals,? it is held
that in a State where a stranger to the contract may bring an
action at law in his own name in the State courts, he may also
do so in the Federal court. This decision seems to be in con-
flict with the rule laid down by the Supreme Court in Keller
v. Ashford ;4 and also with the well-established doctrine that
in matters of general jurisprudence the Federal courts will
not follow State rules, or entertain a suit at law upon an obli-
gation essentially equitable.

The latest decision of the Supreme Court ® reaffirms the
doctrine that the lex fort determines whether the remedy of
the mortgagee against the grantee of the mortgagor who as-
sumes the mortgage is at law or in equity, following Willard
v. Wood ; and also applies the doctrine that the grantee be-
comes primarily liable to the mortgagor as soon as the latter
knows of the arrangement, not as a matter of local law simply,
but apparently as a principle of general jurisprudence.

3 Adams v. Shirk, — U.S. App. — ; 105 F. 659.
#133 U. S. 610; 10 S. Ct. 494.
*§ Johns v. Wilson, — U.S. — ; 215. Ct. 445.
AS TO ASSIGNEES. 227

CHAPTER XVII.

THE OPERATION OF CONTRACTS AS TO ASSIGNEES.

§ 879. Assignments at Common Law. — The right to enforce
a, contract is a chose in action, Choses in action at common
law were in general not assignable by the act of the owner.
At common law, therefore, the attempt of a party to a con-
tract to transfer his rights thereunder to a third party had no
effect.1 An exception to this rule was recognized by the law
merchant in the case of bills of exchange. Bills of exchange
are negotiable; that is, the bill is regarded as the thing to
which the legal title may be transferred in some cases by
delivery, and in any case by indorsement. Whether promis-
sory notes were also negotiable was a disputed question, but
the statute of 3 & 4 Anne, c. 9, settled their negotiability.
Checks are negotiable; and in this country corporate bonds
payable to bearer are negotiable by custom.? ,

§ 380. Assignments in Equity.—JIn equity different rules
prevail. While an assignment of an ordinary contract in
equity does not give the assignee the title to that contract,
the assignment imposes certain duties on the assignor and on
the other party to the contract. These duties, though origi-
nally ignored by the common-law courts, were enforced in
equity. When a party to a contract has assigned his rights
thereunder, a court of equity will compel him to respect such
assignment. The assignee may therefore compel the assignor
to permit him to sue at law in the assignor’s name, upon
giving the assignor indemnity against the costs of the action.

§ 379. 1 Glenn v. Marbury, 145 U. 8. 499; 12'S. Ct. 914; K. 856.

2 White v. Vermont & Mass. R. R. Co., 21 How. 575.

§ 380. 1 Crouch v. Credit Foncier, L. R. 8 Q. B. 380; Henderson v.
Welch, 3 Gilm. 340.
228 THE OPERATION OF CONTRACTS.

The other party to the contract will also be compelled to
respect the rights of the assignee in so far as he has notice
thereof.

§ 881. Personal Contracts unassignable. — Even in equity
not all contracts are assignable. Whenever the personal per-
formance of the contract by the assignor is of the essence of
the contract, an assignment of the contract while the assignor
is still under any obligation to perform the contract personally
is ineffectual! Thus where A. hired a carriage of B., a
coachmaker, for five years at a yearly rent, payable in advance
each year, the carriage to be kept in repair and painted once
a year by the maker, it was held that B. could not assign the
contract, since it involved personal performance on his part.?

- But where certain railway wagons were let with an agreement
that the owner would keep them in repair, and “ cause them
to be repaired” upon notice, it was held that the contract
was not personal in its nature and could be assigned. A
contract for street-cleaning is not personal, and is therefore
assignable. The following contracts have been held personal
and non-assignable: A contract for the planting and care of
an orchard ;° a contract by an advertising company to display
advertisers’ cards in street cars ;® a contract for the publica-
tion of a book.’ A personal contract is none the less personal
and non-assignable because one of the contracting parties is a
corporation.®

§ 882. Assignments of Contracts involving both Rights and
Liabilities. — When the contract involves the performance
by one party of his part of the contract on the strength of
the other party’s credit, the one to whom credit is given
cannot assign the contract so that the other party can be
compelled to accept the credit of the assignee, for the giving

§ 381. 1 Sloan v. Williams, 138 Ill. 43; 27 N. E. 531.

2 Robson v. Drummond, 2 B. & Ad. 303.

8 British Waggon Co. v. Lea, 5 Q. B. D. 149; W. 449; K. 879.
4 Devlin v. New York, 63 N. Y. 8; K. 868.

5 Edison v. Babka, 111 Mich. 235; 69 N. W. 499.

® Eastern Advertising Co. v. McGaw, 89 Md. 72; 42 A. 923.

7 Griffith v. Tower Pub. Co., 1897, 1 Ch. 21.
8 Ibid.
AS TO ASSIGNEES. 999

of credit rests on the personal confidence of the creditor
in the debtor.1 But when goods are to be paid for on de-
livery, the vendee can assign his rights under the contract,
though not his liabilities.2 In short, a party cannot be com-
pelled to accept any other performance of a contract than that
for which he has bargained; and in so far as the assignor’s
rights under the contract are necessarily bound up with his
liabilities thereunder, since the liabilities cannot be assigned,
the rights cannot be assigned.?

§ 383. What constitutes an Assignment. — To constitute an
equitable assignment there must be some significant act ex-
pressing the intention of the assignor that the assignee shall
have the debt or right in question If the assignment is
voluntary, that is, without consideration, enough must have
been done by the assignor to make a complete gift of the
chose in action; for if the transfer is incomplete, equity will ”
not aid a volunteer by compelling its completion.2 The as-
signment need not be by deed,’ or even in writing, in the
absence of statute.

§ 384. Partial Assignments. — The assignment of part of a
fund is generally recognized in equity as valid.1 Whether
such assignment is good without the consent of the debtor
is a disputed point.2 A distinction is drawn in some States

§ 382. 1 Arkansas Valley Smelting Co. v. Belden Mining Co., 127
U.S. 879; 8S. Ct. 1808; W. 453; H. & W. 438; K. 883.

2 Rochester Lantern Co. v. Stiles & Parker Press Co., 185 N. Y. 209;
81 N. E. 1018; H. & W. 447.

3 Burck v. Taylor, 152 U.S. 634.

§ 883. ! Palmer v. Merrill, 6 Cush. 282; K. 890.

2 Hart v. Strong, 183 Jll. 349; 55 N. E. 629; Williams v. Chamber-
lain, 165 Tl. 210; 46 N. E. 250; Harding v. Harding, 17 Q. B. D. 442;
Tallman v. Hoey, 89 N. Y. 5387; K. 930. Edward Jenks, 16 Law Quar-
terly Rev. 241, shows the mistake in the frequent assertion that an assign-
ment requires consideration as between the parties.

3 Howell v. Maclvers, 4 T. R. 690; K. 924.

4 Risley v. Phenix Bank, 83 N. Y. 318; K. 925.

§ 384. 1 James v. Newton, 142. Mass. 366; 8 N. E. 122; W. 461;
Field v. Mayor, 2 Seld. 179; H. & W. 453; Ex parte Moss, 14 Q. B. D.
310; Warren v. First Nat. Bk., 149 Tl. 9; 38 N. E. 122.

2 James v. Newton, supra. That the debtor’s consent is necessary,
2380 THE OPERATION OF CONTRACTS.

between assignments of claims against individuals and against
public corporations, and partial assignments of claims against
the latter are held to be against public policy, as tending to
embarrass the administration of publice affairs.?

§ 885. Checks as Assignments. — “A check of itself does
not operate as an assignment of any part of the funds to the
credit of the drawer with the bank, and the bank is not liable
to the holder unless and until it accepts or certifies the
check.”? This is the rule of the law merchant, enacted in
the Uniform Act concerning Negotiable Instruments. Some
courts, however, have treated a check as an assignment pro
tanto of the drawer’s funds in the bank; and have even per-
mitted the holder of the check to sue the bank in an action
at law2

§ 386. Assignment of Inchoate Rights. — An assignment may
be made before a right has accrued, and if made upon a valu-
able consideration it will be given effect by a court of equity
when the right does come into existence An assignment
of money to become due under an existing contract will be
generally recognized to-day by a court of law;? but not an
assignment of a mere possibility of gaining money under a
future contract.

§ 887. Necessity of Notice to the Debtor. — In order that an
assignment. may impose any duty to the assignee upon the

see Mandeville v. Welch, 5 Wheat. 277; Palmer v. Merrill, 6 Cush. 282;
K. 890; Carter v. Nichols, 58 Vt. 553; 5 A. 197; K. 900; contra, Field
v. Mayor, supra; Warren v. First Nat. Bk., supra; Brill v. Tuttle, 81
N. Y. 454; K. 895; Risley v. Phenix Bank, 83 N. Y. 318; K. 928;
Chambers v. Lancaster, 160 N. Y. 842; 54 N. E. 707; Todd v. Meding,
56 N. J. Eq. 83; 38 A. 349.

3 Delaware County v. Diebold Safe Co., 133 U. S. 473; 10 S. Ct. 399.

§ 385, 1 Negotiable Instruments Law, § 196; Risley v. Phenix Bank,
83 N. Y. 318; K. 925,

2 Niblack v. Park N. B., 169 Ill. 517; 48 N. E. 488.

§ 386. 1 Field v. Mayor, 2 Seld. 179; H. & W. 453; Peugh v. Porter,
112 U.S. 787; 5S. Ct. 361.

2 Carter v. Nichols, 58 Vt. 553; K. 900; Brill v. Tuttle, 81 N. Y. 454;
K. 895; Parsons v. Woodward, 2 Zabr. 196; K. 906 ; Brice v. Bannister,
3 Q. B. D. 569; K. 909; Walton v. Horkan, — Ga. — ; 88S. E. 105.

3 O'Keefe v. Allen, 20 R. I. 414; 39 A. 752; K. 888.
AS TO ASSIGNEES. 231

party liable under the contract, it is necessary that such party
should have notice of the assignment; but as between as-
signor and assignee the assignment is good without notice

§ 3888. Equitable Modification of Common-law Rules. — The
growth of equitable ideas in the common-law courts has
modified the doctrines of such courts with reference to as-
signments. Courts of law will now protect the interest of the
assignee of the whole of a fund, so that the debtor cannot deal
with the assignor after notice of assignment, to the detriment
of the assignee! In Hngland and in many jurisdictions in
this country statutes authorize an assignee to sue in his own
name atlaw.2 Even in the States where the common-law rule
prevails and the assignee can sue at law only in the name of
the assignor, the assignee’s rights are so well protected by the
common-law courts that it is only in exceptional instances
that the assignee of the whole of a fund can bring suit in
equity to enforce his claim;* but the assignee of part of a
claim must always sue in equity.*

§ 389. What passes by the Assignment.— The assignment
of a contract transfers to the assignee only such rights as
his assignor possesses against the other party at the time the
latter receives notice of the assignment,! unless the contract

§ 387. | Spain v. Hamilton, 1 Wall. 604; Heermans v. Ellsworth, 64
N. Y. 159; K. 916.

2 Gorringe v. Irwell Works, 34 C. D. 128.

§ 388. 1 Welch v. Mandeville, 1 Wheat. 233; K. 903; Legh v. Legh,
1B. & P. 447; K. 901; Littlefield ». Storey, 3 Johns. 425; K, 903; Par-
sons v. Woodward, 2 Zabr. 196; K. 906.

2 Brice v. Bannister, 3 Q. B. D. 569; K. 909; Walker v. Bradford
Old Bank, 12 Q. B. D. 511; K. 932.

3 New York Guaranty Co. v. Memphis Water Co., 107 U.S. 205;
28. Ct. 279; Hayward v. Andrews, 106 U. S. 672; 1S. Ct. 544; Carter
v. United Ins. Co., 1 Johns. Ch. 463; H. & W. 452.

4 Field v. Mayor, 2 Seld. 179; H. & W. 453; Smith v. Bates Machine
Co., 182 Il. 166; 55 N. E. 69.

§ 389. 1-Mangles v. Dixon, 3 H. L. C. 702; United States v. Buford,
3 Pet. 12; Scott v. Shreeve, 12 Wheat. 605 ; Miller v. Kreiter, 76 Pa. 78 ;
K. 918; Goshen N. B. o. Bingham, 118 N. Y. 349; 23 N. E. 180; K. 921.
See, however, as regards the effect of a set-off held by the debtor against
the assignor, Niblack v. Park N. B., 169 Ill. 517; 48 N. E. 438.
232 THE OPERATION OF CONTRACTS.

itself provides that the assignee shall have greater rights than
his assignor.2 Equities or defences in favor of the debtor
arising after notice to him of the assignment are not available
against the assignee.®

§ 390. Priorities between Successive Assignments. — As be-
tween successive assignments of the same fund there are two
theories as to the priority of the different assignees. Accord-
ing to the highest authority in England and America a pur-
chaser for value and without notice of a prior assignment who
gives notice to the debtor or trustee is entitled to priority over
a prior assignee who has failed to give such notice.! Various
State courts, however, hold that successive assignments have
priority according to the order in which they are actually
made? A creditor garnishing the assignor is generally post-
poned to a prior assignee, though the latter has not given
notice to the debtor.®

§ 391. Negotiability.— Some contracts are negotiable as
well as assignable. Bills of exchange, promissory notes, and
checks are negotiable instruments; other instruments may
be negotiable by custom or statute. An instrument which is
negotiable is looked upon for many purposes as a thing. The
instrument is ordinarily regarded as the contract, and the
transfer of the legal title to the instrument transfers the right
to sue at law on the contract. The transfer of the legal title
takes place by indorsement, if the instrument is payable to
order; by delivery, if the instrument is payable to bearer. If
the legal title is not transferred, as where a note payable to
order is transferred by delivery, the transferee’s rights are
simply those of an assignee of any chose in action! He must

2 Re Blakely Ordnance Co., L. R. 3 Ch. 158; Ex parte Asiatic Bank-
ing Ass’n, L. R. 2 Ch. 397.

3 Merchants’ Bank v. Weill, 163 N. Y. 486; 57 N. E. 749.

§ 390. 1 Dearle v. Hall, 3 Russ. 1; Foster v. Cockerell, 8 Cl. & F. 456;
Judson v. Corcoran, 17 How. 612, 615; Spring v. Hamilton, 1 Wall. 604,
623; Methven v. Staten Island Light Co., — U.S. App. — 66 F. 113.

2 Thayer v. Daniels, 113 Mass. 129; Muir v. Schenck, 3 Hill, 228;
Sutherland v. Reeve, 151 Ill. 384; 88 N. E. 180.

3 Walton v. Horkan, — Ga. —; 38S. EK. 105.

§ 391. 1 Goshen N. B. v. Bingham, 118 N. Y. 349; 23 N. E. 180; K.
921; Bigelow, Bills, Notes, and Cheques (2d ed.), 85.
AS TO ASSIGNEES. 233

sue at law in the name of his assignor, and he stands in his
assignor’s shoes. The transfer of the legal title to the instru-
ment, however, places the transferee on an entirely different
footing. He becomes the owner of the instrument, and may
enforce the contract in his own name. Moreover, if he is a
purchaser of the instrument for value before maturity, and
without notice of any defences, he becomes entitled to demand
of the party liable on the instrument the sum of money called
for by the contract, and may therefore stand in a better posi-
tion than his assignor. The special rules governing negoti-
able instruments belong not to the general law of contracts,
but to the law merchant.”

§ 892. Assignment by Operation of Law. — A chose in action
may be transferred from one person to another by operation
of law. The ordinary ways in which such transfer takes
place are by death, by marriage, by bankruptcy or insolvency,
and by the conveyance of land. ,

§ 893. Assignment by Death.— The executor or adminis-
trator of a deceased’ person succeeds to the personal estate of
the deceased, and becomes liable in his representative capacity
for all claims against such estate! Ifa contract involves the
personal performance of any essential act by the deceased the
contract is construed as conditional on his life, and is termi-
nated by his death;? but the right of action for money due
under the contract survives.2 The heir, at common law, is
liable to an action of debt on the bond of his ancestor, if
specially named ;* but the heir can plead riens per descent, that
is to say, that he has received no assets by descent from his
ancestor; and his liability is limited to the value of the assets

2 The subject of Negotiable Instruments is ably treated in Bigelow on
Bills, Notes, and Cheques.

§ 393. 1 Devon v. Powlett, 2 Viner’s Abr. 132; K. 936.

2 Baxter v. Burfield, 2 Strange, 1266; K. 937; Dickinson v. Calahan,
19 Pa. St. 227; H. & W. 479; K. 947; Farrow v. Wilson, L. R. 4 C. P.
744; K. 955; Lacy v. Getman, 119 N. Y. 109; 23. N. E. 452; W. 54; K.
956.

3 Stubbs v. Holywell R., L. R. 2 Ex. 311; K. 944.

4 Pyatt v. Waldo, 85 F. 399; Greenleaf on Evidence (16th ed.), II.
§ 856.
234 THE OPERATION OF CONTRACTS.

so received.® The liability of the heir is now commonly regu-
lated by statute.

Rights of action for breaches of contract occurring in the
lifetime of a deceased person pass to his executor or adminis-
trator; but the personal representative cannot recover any
damages for strictly personal injuries. Thus in a suit for
breach of promise of marriage, the executor of the injured
party can recover only the pecuniary damages sustained by his
testator.§

§ 394. Assignment by Marriage. — At common law, upon a
woman’s marriage, the right to collect her choses in action
passed to her husband. If, however, he failed to reduce them
into possession during coverture, her rights remained un-

‘changed by the coverture.1 The marriage also made the hus-
band jointly liable with his wife for all liabilities she had
incurred before marriage,? even in the case of an infant ;? but
this liability existed only during coverturet The rights of
married women are now almost universally altered by statute.

§ 895. Assignment by Bankruptcy and Insolvency. — Statutes
in some jurisdictions provide for the involuntary transfer of
the property of an insolvent debtor to a trustee. The present
National Bankrupt Act vests the title to rights of action aris-
ing upon contracts in the bankrupt’s trustee.t In the case of
such involuntary transfers the rights of prior assignees are
usually protected,? except in the case of an unlawful prefer-
ence given to a particular creditor.3

5 Greenleaf on Evidence (16th ed.), II. § 359.

6 Chamberlain v. Williamson, 2 M. & S. 408; K. 942.

§ 394. } Fleet v. Perrins, L. R.4 Q. B. 500; Boozer v. Addison, 2 Rich.
Eq. 273; Woodr. 95.

2 Platner v. Patchin, 19 Wis. 333; H. & W. 478; Gray v. Thacker,
4 Ala. 1386; Woodr. 66.

8 Roach v. Quick, 9 Wend. 237; Woodr. 441.

* Bell v. Stocker, 10 Q. B. D. 129; Lamb v. Belden, 16 Ark. 539 ;
Woodr. 65.

§ 395 1 Act of 1898, § 70. As to the application of bankrupt acts to
personal contracts, see Beckham v. Drake, 8 M. & W. 846; K. 987.

2 Howell v. MacIvers, 4 T. R. 690; K. 924.

8 Act of 1898, § 67.
AS TO ASSIGNEES. 235

§ 396. Assignment by the Transfer of Land.— The transfer
of land has the effect of transferring the benefit of certain
contracts, and the obligation of certain contracts in re-
gard to that land. The subject of covenants running with
the land, however, is more properly treated in a work on Real
Property.
BOOK V.

THE RESCISSION AND REFORMATION OF
CONTRACTS.

CHAPTER XVIII.

THE NATURE OF RESCISSION,

§ 897. Rescission defined. —A contract may exist and yet
be subject to some condition subsequent which entitles one of
the parties to the contract to rescind the contract. Such a con-
tract is called voidable. The term “ rescission ” is loosely used.
Strictly speaking, rescission of a contract signifies the restora-
tion of the parties to the position which they occupied before
the contract was made. A contract can be rescinded only by
reason of some fact existing at the time of its formation.
Thus if A. sells B. a cow with the privilege of returning the
cow if she is not a Jersey, and the cow is not a Jersey, B. may
rescind his contract to pay for the cow by returning her to A.
If, however, A. sells the cow to B. with the privilege of return-
ing her if she does not give ten quarts of milk a day, B. may
discharge himself from his obligation to pay for the cow by
returning her to A. if she does not give the specified amount
of milk. In the first case the contract is rescinded ; in the
second, it is discharged. In the first case, a condition subse-
quent attaches to B.’s promise; in the second case, only to the
obligation of B.’s promise. The term “rescission” is often
applied to both these cases,! but for the sake of clearness it
seems advisable to apply the term only to the former class of

§ 397. 1} As in Blake v. Pine Mountain Iron Co., 43 U. 8. App. 490;
76 F. 624.
THE NATURE OF RESCISSION. 237

cases, If the contract has been executed by the conveyance of
property, rescission of the conveyance involves the restoration
of the property so conveyed. As this book deals only with obli-
gations, however, we are here concerned only with the rescis-
sion of contractual obligations, not with the rescission of
conveyances,

§ 398. Rescission and Conditions Subsequent, — We have al-
ready examined conditions subsequent which are attached to
the contract by the parties themselves, and which we have
termed internal conditions. We now come to conditions sub-.
sequent which the law attaches to the contract without regard
to the intention of the parties, which may be called external
conditions subsequent.! In others words, we have to consider,
first, what facts, not treated by the parties themselves as con-
ditions, will entitle one of the parties to rescind his contract;
secondly, how such rescission may be effected; and, thirdly,
how the right to rescind may be lost.

§ 399. Causes for Rescission. — All external conditions sub-
sequent affecting the contractual nexus, that is, all causes for
rescission recognized by the law without regard to the inten-
tion of the parties, have this in common, — they are all facts
tending to prevent the party who seeks to rescind from acting
with a due regard to his own interest in making the contract,
in other words, facts tending to produce what has been termed
“improperly created motive.”! Yet though all such causes
for rescission are facts which tend to cause such disregard of
his own interests by the party seeking to rescind, it is not
always necessary that the particular fact which is set up as.
the ground for rescinding a particular contract should actu-
ally have operated to the injury of such party. If the fact in
question is one which in legal contemplation is sufficient to
induce a party to enter into a contract which he would not
enter into but for the existence of that fact, that contract is
voidable in two classes of cases. In the first class the con-
tract is voidable by reason of an arbitrary and positive rule of

§ 398. 1 Rioux v. Ryegate Brick Co., — Vt. — 47 A. 406.

§ 399. 1 Holmes, C. J., in Hoseason v. Keegen, — Mass. — ; 59 N. E.
627.
238 RESCISSION AND REFORMATION.

law; in the second class the contract is voidable because one
party knows of the existence of the fact which improperly
affects the motives of the other party, and seeks to gain an
unfair advantage thereby.

§ 400. Legal Rescission — Facts rendering the Contract void-
able absolutely, — Certain facts affecting the state of mind of
one of the parties to a contract may tend to induce him to act
without due regard to his own interests. In general, the right
of rescission is equitable in its character, and is due to the un-
fair conduct of the other party in taking advantage of the state
of mind of the party seeking rescission. In one or two cases,
however, the right of rescission is not equitable, but legal, in
its character ; and rests not on the misconduct of the other
party, but on the ground that the party seeking rescission is
entitled thereto because the fact set up to justify rescission is
held as matter of law to tend to cause a disregard by such
party of his own interests.

The class of voidable contracts in which the ground for
rescission is legal in its character, and the conduct of the other
party is immaterial, includes most contracts of infants, and in
some jurisdictions the contracts of insane persons.
CAUSES FOR RESCISSION — INFANCY. 239

CHAPTER XIX.
CAUSES FOR RESCISSION — INFANCY.

§ 401. Who are Infants. — Persons under twenty-one years
of age are called infants at common law. A person becomes
of age on the day preceding his twenty-first birthday. Stat-
utes in many States regulate the duration of infancy. In some
States women become of age at eighteen ; and in some States
there are statutory proceedings whereby an infant may acquire
the rights of majority.

§ 402. Void and Voidable Infants’ Contracts. — Some con-
tracts of an infant are said to be void, some voidable, and
some binding. An opinion formerly prevailed that contracts
which were for an infant’s benefit were binding, contracts ap-
parently to his prejudice void, and contracts where the question
of benefit or prejudice was uncertain, voidable. It is important
here to distinguish between motive and capacity with refer-
ence to infants’ contracts. If an infant’s contract is void it is
because he lacks contractual capacity; but if it is voidable,
it is because the law regards his youth as an insuperable
obstacle to rational action in making a contract, and for the
infant’s protection permits him to escape the consequences of
his acts.

Tt seems doubtful if any contracts of an infant are void at
the present day except by virtue of some statute.’ It is set-
tled, however, that an infant cannot execute a power of attor-
ney to confess judgment or to execute a deed?

§ 401. ! Herbert v. Turball, 1 Keble, 589; Ewell’s L. C. 1; State v.
Clarke, 8 Harring, 557; Ewell’s L. C. 2; Woodruff, 308.

§ 402. ! Pollock, Contracts, 52-59; Weaver v. Jones, 24 Ala. 420;
Woodruff, 310; Union Central L. I. Co. v. Hilliard, — Ohio, —; 59 N. E.

231.
2-Saunderson v. Marr, 1H. Bl. 75; Ewell’s L. C. 35; Trueblood v.
240 RESCISSION AND REFORMATION.

§ 403. Binding Contracts of Infants. — All contracts which
the law expressly authorizes an infant to make,’ and all con-
tracts made by the infant in discharge of a legal obligation,
are binding. Thus the contract of a minor with the mother
of his bastard child to support the child is valid where the
law imposes an obligation on the father to support such
child?

As to whether any other contracts of an infant are binding,
there is a difference between the English and the American
authorities.

§ 404. Quasi-contractual Liability of Infants. —It is fre-
quently said that an infant’s contracts for necessaries are
binding. It is now generally recognized in this country, how-
ever, that while an infant is liable for necessaries actually
received by him, his liability is only quasi-contractual.1

Thus it is generally held that an infant is liable only for
the actual value of the necessaries he has received; and this
even in jurisdictions where the other party is allowed, by an
anomalous procedure, to sue upon the infant’s express con-
tract... The quasi-contractual nature of the infant’s liability
is clearly recognized in a recent case in Connecticut.

§ 405. Contracts for the Infant’s Benefit. —In England and
Rhode Island contracts for an infant’s benefit are binding.
. This doctrine seems anomalous. The American doctrine that
an infant’s contracts are voidable regardless of the question
of benefit or injury to the infant, or the fairness of the con-

Trueblood, 8 Ind. 195; H. & W. 218; Ewell’s L. C. 36; Woodruff, 313;
Lawrence v. McArter, 10 Ohio, 37.

§ 403. 1 Re Morrissey, 137 U. S. 157.

2 Stowers v. Hollis, 83 Ky. 544; People v. Moores, 4 Denio, 518; Wood-
ruff, 389.

§ 404. 1 Keener, Quasi-Contracts, 20.

2 Trainer v. Trumbull, 141 Mass. 527; 6 N. E. 761; H. & W. 220;
Woodruff, 397.

8 Gregory v. Lee, 64 Conn. 407; 30 A. 53; Woodruff, 402.

§ 405. 1 Fellows v. Wood, 59 L. T. n. s. 513; Evans v. Ware, 1892,
3 Ch. 502; Clements v. London & N. W. Ry. Co., 1894, 2 Q. B. 482 (but
see De Francesco v. Barnum, 43 C. D. 165, 174); Pardey v. American Ship
Windlass Co., 20 R. I. 414; 37 A. 706.
CAUSES FOR RESCISSION — INFANCY. 241

duct of the other party, is arbitrary, and has proved so unjust
that it has been modified by statute in several States. Such a
doctrine, however, is at least simple and easy of application.
A more rational rule would be to place contracts between
infants and adults on the same basis as those between a
trustee and his cestu que trust, and simply require the adult
to show that the contract is fair to the infant. The question
of fairness is a question of fact, which can be tried in every
case. But the question whether a contract is or is not for an
infant’s benefit is a question of law to be determined by the
court from an inspection of the contract; and yet benefit is in
reality a question of fact, which is not to be determined by
the application of legal principles. The practical justification
of the English doctrine is that it accomplishes the desired re-
sult of protecting the infant from his improvident contracts
without allowing him to avoid all his contracts in the arbitrary
manner permitted by the American courts.

§ 406. Effect of Infant’s False Representations as to Age.—
The privilege of avoiding a contract on the ground of infancy
is an absolute one, and is therefore not affected by the fact
that the infant has falsely represented himself to be of full
age.t

§ 406. 1 Merriam v. Cunningham, 11 Cush. 40; Sims v. Everhardt, 102
U. S. 300; Burdett v. Williams, 30 F. 697; Carpenter v. Carpenter, 45 Ind.
142; Wieland v. Kobick, 110 Ill. 16; Wilson v. Wilson, 20 Ky. L. R. 1971;
50 S. W. 260; Conrad v. Lane, 26 Minn. 889; Alt v. Groff, 65 Minn. 191;
68 N. W. 9; Ridgeway v. Herbert, 150 Mo. 606; 51S. W. 1040; Studwell
v. Shapter, 54 N.Y. 249. This rule is changed by statute in some States.
And see contra, Pemberton Bldg. & Loan Ass’n v. Adams, 53 N. J. Eq.
258 ; 81 A. 280.

16
242, RESCISSION AND REFORMATION.

CHAPTER XX.
CAUSES FOR RESCISSION — MENTAL INCAPACITY.

§ 407. Equitable Grounds for Rescission — Facts prejudicially
affecting Motives to the Knowledge of the other Party. — In this
second class of voidable contracts the contract is voidable
because of the existence of some fact tending improperly to
influence the motives of one party, of which fact the other
party has knowledge, and seeks to take advantage. Under
this head come contracts voidable on account of mental
incapacity, misunderstanding (including mistake and fraud),
duress, and undue influence.

§ 408. Mental Incapacity —The Massachusetts Doctrine. — Tn
some States an insane person’s contracts, like an infant’s, are
voidable regardless of the fairness of the other party’s con-
duct, or of such party’s ignorance of the former’s insanity.
“ The fairness of the defendant’s conduct,” says the Supreme
Court of Massachusetts, ‘cannot supply the plaintiff’s want
of capacity.”1 There is a fallacy here in the use of the word
“ capacity.” A lunatic may lack natural capacity to make a con-
tract, but he does not lack legal capacity. A married woman,
on the other hand, has natural capacity to make a contract,
but at common law lacks legal capacity. Consequently a
married woman's contracts are void, while a lunatic’s con-
tracts are only voidable. The effect of the Massachusetts
doctrine is to place lunatics’ contracts on the same basis as
those of infants, and to make both infants’ and lunatics’ con-
tracts voidable absolutely by virtue of an arbitrary rule of law.

§ 408. 1 Seaver v. Phelps, 11 Pick. 304; Ewell’s L. C. 610; Woodruff,
451; and see Wager v. Wagoner, 53 Neb. 511; 73 N. W. 937; Orr v. Equi-

table Mtg. Co., 107 Ga. 499; 33S. E. 708; Eldredge v. Palmer, 185 III. 618;
57 N. E. 770; Morris v. Great Northern R., 67 Minn. 74; 69 N. W. 628.
CAUSES FOR RESCISSION—MENTAL INCAPACITY. 243

The Massachusetts doctrine seems unsound in principle, and
is opposed to the weight of authority. By the better rule the
voidable contracts of insane persons belong, not in the first
class of voidable contracts, but in the second.

§ 409, Mental Incapacity — The General Doctrine. — The dif-
ference between mental and legal incapacity has already been
pointed out. Mental incapacity has various forms, of which
the extreme is insanity. There are cases holding that the
contract of a lunatic is void, but the weight of modern au-
thority is overwhelmingly in favor of the proposition that
such contracts are at most only voidable.? A power of
attorney given by an insane person, however, is held to be
absolutely void.?

Logically, and on the most recent English authority, a luna-
tic’s contract is voidable only when the other contracting party
knows of the insanity. An insane person’s contracts, there-
fore, properly belong in the second class of voidable contracts.
As we have already seen, however, in some States such con-
tracts are voidable absolutely without regard to the state of
mind of the sane contracting party.®

§ 410. Mental Incapacity — Unsettled Condition of American
Law.— In many American courts an anomalous doctrine pre-
vails. This doctrine is that if the sane party is ignorant of the
other’s insanity, and the contract is fair and cannot be re-
scinded so as to place the parties in statu quo, it is binding.

§ 409. 1 Burke vr, Allen, 29 N. H. 106; Ewell’s L. C. 576.

2 Carrier v. Sears, 4 Allen, 336; Ewell’s L. C. 574; Matthews v. Bax-
ter, L. R. 8 Ex. 182; Louisville, N. A. & C. Ry. Co. v. Herr, 185 Ind. 591;
35 N. E. 556; Ashmead v. Reynolds, 127 Ind. 441; 26 N. E. 441; Allen v.
Berryhill, 27 Ia. 5384; Woodruff, 456; Bunn v. Postell, 107 Ga. 490; 33
S. E. 707; tna L. I. Co. v. Sellers, 154 Ind. 370; 56 N. E 97; French
Lumbering Co. v. Theirault, — Wis. — ; 83 N. W.-927.

8 Dexter v. Hall, 15 Wall. 9; Ewell’s L. C. 570.

4 Imperial Loan Co. v. Stone, 1892, 1 Q. B. 599 (C. A.); K. 311;
Woodruff, 453; Leake, Contracts, 501; Lancaster County Bank v. Moore,
78 Pa. St. 407; Pattee’s Cases on Contracts, 109; and see Creekmore v.
Baxter, 121 N. C. 31; 27S. E. 994.

5 Seaver v. Phelps, 11 Pick. 804; Ewell’s L. C. 610; Woodruff, 451;
ante, § 408.

§ 410. 1 Young v. Stevens, 48 N. H. 183; Riggs v. Amer. Tract Society,
244 RESCISSION AND REFORMATION.

This doctrine rests on some loose statements in an English
case? decided half a century ago. The present English doc-
trine is perfectly clear and logical; so is the Massachusetts
doctrine, although the latter seems arbitrary ; but the attempt
to make the validity of the contract depend upon its perform-
ance does not and cannot lead to satisfactory or intelligible
rezults. Reasonable ground to know of the insanity is equiv-
aient to actual knowledge.

§ 411. Lunatic’s Contracts for Necessaries. — A lunatic’s
contracts for necessaries are said to be binding ;} but if the
party furnishing the necessaries is aware of the insanity, the
insane person’s liability is really quasi-contractual in its nature.?
In some cases the lunatic has been held liable not only for
necessaries, but also for other things reasonable and proper
for the lunatic’s comfort?

§ 412. What constitutes Mental incapacity.— The contracts
of an insane person are voidable because his lack of mental
capacity prevents his forming a rational estimate of the legal
consequences of his acts, and because the other party, know-
ing of the insanity, has no right to attempt to bind the insane
person by contract. Mere weakness of mind falling short of
insanity is not sufficient to invalidate the contract.!_ Nor does
the fact that a party is a monomaniac entitle him to rescind
his contract,? unless the monomania affects his understanding
in regard to a particular contract. If, however, the mono-

84 N. Y. 330; Matthiessen Co. ». McMahon, 38 N. J. L. 5386; Alexander
v. Haskins, 68 Ia. 73; 25 N. W. 935; Northwestern Ins. Co. v. Blanken-
ship, 94 Ind. 535.

2 Moulton v. Camroux, 2 Ex. 487; 4 Ex. 17; Ewell’s L. C. 614.

3 Lincoln v. Buckmaster, 32 Vt. 652.

§ 411. 1 Bagster v. Earl of Portsmouth, 5 B. & C. 170; Ewell’s L. C.
632.

2 Sceva v. True, 53 N. H. 627; Sawyer v. Lufkin, 56 Me. 3808; Re
Rhodes, 44 C. D. 94, 105; Keener, Quasi-Contracts, 20.

3 Kendall v. May, 10 Allen, 59.

§ 412. 1 Stone v. Wilbern, 83 Ill. 105; Pattee’s Cases on Contracts,
144; Kimball v. Cuddy, 117 Ill. 213; 7 N. E. 589; Miller v. Craig, 36 Ill.
109; Dennett v. Dennett, 44 N. H. 531; Ewell’s L. C. 547; Miller v. Rut-
ledge, 82 Va. 863; 1S. E. 201.

2 Boyce v. Smith, 9 Gratt. 704.
CAUSES FOR RESCISSION— MENTAL INCAPACITY. 245

mania affects the contract in question, the contract is void-
able’ Thus where a man of seventy-two was a monomaniac
on the subject of spiritualism, an ante-nuptial agreement to
deliver property to a female medium was held voidable.*

§ 413. Drunkards and Spendthrifts. — If a man does not un-
derstand what he is doing when he makes a contract it is of
no consequence whether his lack of understanding is due to
idiocy or insanity, or whether it is brought about by drunken-
ness, or by the use of opiates;? and conversely, if he does
know what he is doing, his intoxication is no defence to an
action on the contract.2 It has been held, however, that if the
party’s mind is “in an abnormal state superinduced by drunk-
enness,” he may avoid a contract made by him when in such
state Whatever the cause of the mental derangement,
such derangement must, of course, exist at the time the con-
tract is made, in order to render the contract voidable.6 In
many jurisdictions by statute spendthrifts are placed on the.
same footing as habitual drunkards.

§ 414, Judicial Declaration of Insanity. — A judicial decla-
ration of a person’s insanity deprives him of legal contractual
capacity, and all contracts made thereafter are not voidable,
but void ;? unless sanity has actually been restored, which
may be shown by other evidence than an adjudication of
restoration.?, A judgment of insanity, however, has no retro-
active effect.?

€

8 Dimmick v. Randolph, — Ala. —; 27 S. 481.

# Connor v. Stanley, 72 Cal. 556; 14 P. 306.

§ 413. 1 Gore v. Gibson, 13 M. & W. 623; Ewell’s L. C. 734; Barrett
v. Buxton, 2 Aikens, 167; Ewell’s L. C. 728; H. & W. 228; Bush v.
Breinig, 113 Pa. St. 310; 6 A. 86.

2 Chicago, etc. Ry. Co. v. Lewis, 109 Ill. 120.

3 Bates v. Ball, 72 Ill. 108; Watson v. Doyle, 130 Ill. 415; 22 N. E.
613; Wright v. Waller, — Ala. — ; 29 8S. 57.

4 Franks v. Jones, 39 Kans. 236; 17 P. 663.

5 Conley v. Nailor, 118 U. S. 127; 6 S. Ct. 1001; Watson vr. Doyle,
supra ; Lilly v. Waggoner, 27 Iil. 395.

§ 414. 1 Wadsworth v. Sharpsteen, 8 N. Y. 388.

2 Lower v. Schumacher, 61 Kans. 625, 860; 60 P. 588.

3 Knox v, Knox, 30 S. C. 877; 9S. E. 353.
246 RESCISSION AND REFORMATION.

CHAPTER XXI.

CAUSES FOR RESCISSION — MISTAKE.

§ 415. Misunderstanding. — There is often in contracts
some misunderstanding on the part of one or both parties.
This misunderstanding may be in regard: to the promise or
promises actually made, or it may be with reference to the
subject-matter of the contract ; it may or may not be common
to both parties ; and the misunderstanding of one party may
or may not be induced by the conduct of the other.

§ 416. Misunderstanding common to both Parties — Mistake.
— And first, with regard to cases where the misunderstanding
in question is common to both parties. This misunderstand-
ing may be with reference to the terms of the contract or to
the subject-matter of the contract. Where the mistake is as
to the terms of the contract, the question involved is one of
reformation, to be hereafter considered.

§ 417. Mistake as to the Subject-matter — Inconsistent De-
scriptions. +- When there is a common mistake as to the
subject-matter, such mistake has, in itself, no legal effect.
There are various cases in which such mistake seems to have
legal consequences, but those consequences are in reality due
to other causes.

A common case of mistake occurs when two inconsistent
descriptions are applied to the subject-matter of the contract ;
as where there is a contract for the sale of “ this bar of gold,”
and “this bar” is not “of gold.” The rights of the parties
in such case are not in any way affected by reason of. the
mistake in itself, but are determined by the rules heretofore
given under the head of Conditions} and Construction.2 If

§ 417. 1 Ante, § 335. 2 Ante, § 287.
CAUSES FOR RESCISSION — MISTAKE. 247

the two inconsistent descriptions are both essential, and there
is no warranty that both descriptions are correct, the contract
is void. This is not because there is a mutual mistake, but
because there is nothing in existence corresponding to the
terms used in the contract, so that the contract is meaning-
less. If, however, one of the parties warrants that both de-
scriptions are correct, the contract is not void, but voidable at
the option of the other party. This is because the correctness
of both descriptions is a condition subsequent affecting the
promise of the latter party, while the promise of the party
warranting such correctness is absolute. Finally, if the two
descriptions, though inconsistent, are not both essential, a
mistake as to the non-essential description does not affect the
validity of the contract.

§ 418. Common Mistake as to Subject-matter, — That a
common mistake as to the subject-matter does not affect the
validity of the contract unless there is some condition, express
or implied, in the contract itself, is clear.1 Thus where A.
sold to B. for $1 a stone of the nature of which both parties
were ignorant, and the stone subsequently proved to be a
diamond, the contract was held binding.2? So where a sup-
posed onyx mine turned out to be only limestone. So where
one partner bought out another’s interest, and there was a
mistake as to the value of the assets. So where A. sold a
note to B., and the makers of the note were insolvent, the
fact that the parties both supposed the makers solvent was
held immaterial.6 So where the plaintiff was injured in an
accident,.and afterwards had a miscarriage as the result of
the accident, a settlement made previously, when both parties
were ignorant of the plaintiff's pregnancy, was held valid.
And, in general, a release of damages for all injuries received

§ 418. 1 Valley City Milling Co. ». Prange, — Mich. — ; 81N. W.
1074; Hood v. Todd (Ky.), 58 S. W. 783.

2 Wood v. Boynton, 64 Wis. 265; 25 N. W. 42; H. & W. 257.

3 Hood v. Todd, supra.

# Taylor v. Ford, — Cal. — ; 63 P. 770.

5 Hecht v. Batcheller, 147 Mass. 335 ; 17 N. E. 651; H. & W. 255.

6 Kowalke v. Milwaukee, etc. R., 103 Wis. 472; 79 N. W. 762.
248 RESCISSION AND REFORMATION.

in an accident is binding, though there is a mistake as to the
extent of those injuries.’ In some cases, however, a common
mistake as to the subject-matter has been held sufficient
ground for the rescission ® or reformation ® of the contract,
upon reasoning that seems unsatisfactory.

§ 419. Common Mistake as Existence of Subject-matter. —
Mistake as to the existence of the subject-matter is really a
special case of inconsistent descriptions, and the same rules
apply as in the case of such inconsistent descriptions.

§ 420. Mistake as to Identity of Subject-matter. — Mistake
as to the identity of the subject-matter is said to render the
contract void. Where there is a mistake as to the identity
of the subject-matter the contract is usually void. In the case
of simple contracts, however, the contract is void because
there is no consideration for the promise, as has already been
shown. In the case of formal contracts it is not clear that the
mistake as to identity of the subject-matter can have any
effect unless some condition can be imported into the contract
itself. If A. covenants to give Blackacre to B., and there
are two estates called Blackacre, the fact that A. means one
of those estates, and B. thinks A. means another, can hardly
be regarded as rendering A.’s covenant void. If, however, A.
and B, execute a charter-party of the ship “ Peerless,” and
there are two ships named “ Peerless,” it seems proper to
regard A. as chartering ship No. 1 to B. on condition that B.
agrees to take that ship, and B. as agreeing to take ship No. 2
on condition that A. charters that ship; so that such a
charter-party is void.

§ 421. Mistake as to Identity of Promisee. — Mistake as to
the identity of the promisee is said to render the contract
void. This rule rests in reality on two simple principles.

7 Houston, ete. R. v. McCarty, — Tex. — ; 60S. W. 429.

® Sherwood v. Walker, 66 Mich. 568; 33 N. W. 919; H. & W. 249;
ante, §§ 289, 290.

® Zorn Brewing Co. v. Malott, — Ind. — ; 46 N. E. 23; Hull »v.
Watts, 95 Va. 10; 27 S. E. 829; post, § 496.

§ 419. 1 Gibson v. Pelkie, 37 Mich. 380; H. & W. 247; Couturier v.

Hastie, 5 H. L. C. 673; Strickland v. Turner, 7 Ex. 208; Keener, Cas.
Q.-C. 356; ante, §§ 287, 335.
CAUSES FOR RESCISSION — MISTAKE. 249

The first is that if A. makes a promise to B., C. cannot en-
force that promise by palming himself off as B. The second
is that if A. accepts a benefit from B., not knowing or having
reason to know that B. expects to be paid for it, A.’s accept-
ance of the benefit does not constitute a promise to pay B.
for it.! ;

§ 422. Mistake of one Party not known to the other. — It
has been stated that voidable contracts of the second class are
rendered voidable by reason of the existence of some fact
which tends to prevent one of the parties from acting with a
due regard to his own interest, of the existence of which the
other party is aware and seeks to take advantage. Any mis-
understanding or mistake, therefore, of one party, of which
the other party does not know or has not good reason to know
does not affect the validity of the contract." Thus where the
general agent of a railroad company quotes a certain freight
rate to a local agent, and the local agent by mistake quotes a
lower rate to the shipper, the railroad company is bound if the
shipper does not know of the mistake.?

In the application of the foregoing rule it must always be
remembered that there are two questions to be answered :
first, is there a contract? and, second, is the contract void-
able? A mistake of one party of which the other party is
ignorant may prevent the formation of a contract, as we have
already seen ;® but if a contract is actually made, such a mis-
take does not render it voidable.

§ 423. Mistake of one Party known to the other. — A misun-
derstanding of one party of which the other party is aware has
three distinct phases: first, where such misunderstanding is
not due to the conduct of the other party ; second, where the

§ 421. 1 See ante, § 48.

§ 422. 1 Scott v. Littledale, 8 E. & B. 815; Lyon v. Robertson, 127
Cal. xviii; 59 P. 990; Comer v. Grannis, 75 Ga. 277; Griffin v. O’Neil, 48
Kans. 117; 29 P. 143; Strong v. Lane, 66 Minn. 94; 68 N. W. 765; Mis-
souri Pac. R. v. Crowell Grain Co., 51 Neb. 293; 70 N. W. 964; Seeley
v. Citizens’ Traction Co., 179 Pa. 334; 36 A. 229; Conant v. Kimball, 95
Wis. 550; 70 N. W. 74.

2 Borden v. Richmond, etc. R. R. Co, 113 N. C. 670; 1858. E. 392.

3 Ante, §§ 151, 152.
250 RESCISSION AND REFORMATION.

misunderstanding is caused by the innocent conduct of the
other party ; and, third, where the misunderstanding is caused
by the fraudulent conduct of the other party. The first phase
is commonly treated under the head of Mistake; the second
under the head of Misrepresentation ; and the third under the
head of Fraud. In all three cases the contract may be void-
able, but there are certain important distinctions between
Mistake, Misrepresentation, and Fraud, which require exami-
nation.

§ 424, Misunderstanding not caused by the other Party —
Mistake. — And first as to Mistake, that is, misunderstanding
of one party not caused by the other. Mistake as to the:
nature of a promise by one party, if known to the other,
renders the contract voidable.1 Thus where A. leases land to
B. and by mistake fixes the rent at £180 instead of £280, and
B. knows of the mistake, A. is not bound.2 So where by a
mistake in a rate-sheet a railroad rate is given as $15 less than
it should be, a person who buys a ticket at that rate knowing
of the mistake cannot hold the railway company.? It is suffi-
cient to invalidate the contract if knowledge of the mistake
of the offerer is acquired by the offeree at any time before the
contract is completed by the acceptance of the offer.t

§ 425. Cases of Mistake rendering Contract voidable. — The
foregoing principle was applied by thé United States Supreme
Court in Hume v. United States! The plaintiff sued for the
price of shucks furnished the defendant. The plaintiff had
submitted bids for furnishing various articles on blank sched-
ules provided by the government. It was customary to buy
shucks by the hundredweight, but in the schedule the printed
word “ pounds” had not been changed, so that the plaintiff

§ 424, 1 Everson v. International Granite Co., 65 Vt. 658; 27 A. 320;
Thayer v. Knote, 59 Kans. 181; 52 P. 433; Beland v. Anheuser-Busch
Brewing Ass’n, 157 Mo. 598; 58S. W. 1.

2 Garrard v. Frankel, 30 Beav. 445; Keener, Cas. Eq. III. 261. See,
however, May v. Platt, 1900, 1 Ch. 616, where Garrard v. Frankel is said
to rest upon the ground of fraud.

8 Shelton v. Ellis, 70 Ga. 297; H. & W. 262.

* Moffett, etc. Co. v. Rochester, 178 U. 8. 373.
§ 425. 1 152 U.S. 406; 10S. Ct. 134.
CAUSES FOR RESCISSION— MISTAKE. 251

submitted a bid for furnishing shucks at sixty cents a pound,
which was accepted. The shucks were worth less than two
cents a pound. The court held that the plaintiff knew or
ought to have known that there was a clerical error in the
contract, and that the government agents could not have in-
tended to accept a bid for shucks at thirty times their real
value. The contract was therefore held not binding on the
government.

The same principle was applied in the leading English case
of Smith v. Hughes? In that case A. agreed to buy some
oats of B. The court held that if A. thought B. was agreeing
to sell old oats and B. knew that A. thought so, B. could not
compel A. to accept new oats.

2. BR. 6 Q. B. 597.
252 RESCISSION AND REFORMATION.

CHAPTER XXII.
CAUSES FOR RESCISSION — MISREPRESENTATION AND FRAUD.

§ 426. Misunderstanding caused by the other Party — Mis-
representation and Fraud. — Where the misunderstanding in
question is caused by the conduct of the other party to the
contract, such conduct constitutes Misrepresentation. If the
misrepresentation is fraudulent, it is called Fraud. A false
representation by one party in regard to a material fact made
for the purpose of inducing the other party to enter into a con-
tract, and actually inducing the latter to enter into the con-
tract, renders the contract voidable.

§ 427. What constitutes a False Representation. — A false
representation may consist either in an act or in an omission.
An omission to communicate facts which one person is bound
to communicate to another amounts to a representation that
those facts do not exist. A person cannot, of course, be bound
to communicate knowledge which he does not possess.

§ 428. Wo General Duty of Disclosure of Material Facts.—
There is no general duty resting on any one to disclose to
another all material facts with reference to a contract between
the parties. Parties dealing with each other at arm’s length,
like vendor and vendee,! or debtor and creditor? are not in
general bound to disclose facts affecting the value of the
subject-matter of the contract. Even if the vendor is aware
that the purchaser thinks that the thing sold possesses a cer-
tain quality, and would not enter into the contract if he knew
the truth, the vendor’s failure to correct the purchaser’s mis-

§ 428. 1 Laidlaw v. Organ, 2 Wheat. 178; H. & W. 282; Bigelow,
Fraud, I. 591; Benjamin, Sales, § 430.
2 Chicora Fertilizer Co. v. Dunan, 91 Md. 144; 46 A. 347.
CAUSES FOR RESCISSION— MISREPRESENTATION. 258

take does not render the contract voidable2 The common-
law maxim is caveat emptor; but there are American cases
which treat the vendor as under obligation to disclose latent
defects in the thing sold.4

§ 429. Duty of Disclosure by Fiduciaries. — The existence of
a fiduciary relation between the parties to a contract imposes
onthe fiduciary the duty of acting with the utmost fairness ;
and if he fails to disclose all facts within his knowledge affect-
ing the transaction the contract is voidable.!

§ 430. Duty of Disclosure in Contracts of Insurance. — There
are certain contracts in which the promise of one party is
conditional upon the disclosure of all material facts by the
other party. Such contracts are termed uberrime fidet. In
contracts of marine insurance the policy is conditional upon
the disclosure of all material facts by the insured. Non-dis-
closure in such a case prevents the formation of a contract.
And in any contract of insurance the policy insures only the
risk therein described ; hence if the risk is not properly de-
scribed there is no contract. There may, however, be a con-
tract of insurance in which the risk is described with essential
accuracy, and yet there may be a failure to disclose all the
facts material to forming a judgment of the risk. In such a
case it'seems that there is a contract which is voidable on the
ground of misrepresentation.! That the duty of disclos-
ure applies to all contracts of insurance has been doubted, but
seems to be the law.2, The question whether a particular fact
is material is for the jury.?

§ 431. Duty of Disclosure in Contracts of Suretyship. — A
contract of suretyship is not wberrime fidei. It is not neces-

3 Smith v. Hughes, L. RB. 6 Q. B. 597; Law v. Grant, 37 Wis. 548;
Williams v. Spurr, 24 Mich. 335; contra, Cecil v. Spurger, 32 Mo. 462;
Lunn v. Shermer, 93 N. C. 164.

4 Grigsby v. Stapleton, 94 Mo. 423; 7S. W. 421; H. & W. 285; Ben-
jamin, Sales (Bennetit’s 7th ed.), 482.

§ 429. 1 Bigelow, Fraud, I. 315.

§ 430. 1 Bigelow, Fraud, I. 623.

2 Seaton v. Heath, 1899, 1Q. B. 782. Cf. s.c. sub nom. Seaton v. Bur-
nand, infra.

3 Seaton v. Burnand, 1900, A. C. 185. Cf. 8.0. sub nom. Seaton v.
Heath, supra.
254 RESCISSION AND REFORMATION.

sary, therefore, that the creditor should disclose all facts in
regard to the transaction. The silence of the creditor must
amount to a positive misrepresentation in order to render the
contract voidable.!

§ 432. Partial Disclosure — Suppressio Veri Suggestio Falsi.
— Although silence does not ordinarily amount to a represen-
tation, a partial disclosure of the truth may give a false im-
pression because the whole truth is not told. In such a case
the concealment of part of the truth coupled with a confession
of the rest may amount to a misrepresentation. Thus where
A. promised to marry B., and B. told A. she had obtained a
divorce from a former husband, the concealment by B. of the
fact that her former husband had also obtained a divorce from
her was held to amount to a positive misrepresentation.1 And
in contracts of suretyship it is held in England that the cred-
itor impliedly represents to the surety that he knows of noth-
ing in the transaction that would be regarded as unnatural
with reference to the transaction in question.”

§ 483. Expressions of Opinion. — The representation must,
in general, be a representation of fact. An expression of
Opinion is not a representation of fact, nor is a prediction of a
future event! <A positive expression of opinion, however, in
regard to facts susceptible of knowledge, or the positive pre-
diction of a future event, may amount to a representation
that the party expressing the opinion or making the predic-
tion is acting in good faith, and knows nothing contrary to
what he has said. So a statement of opinion in regard to

§ 431. 1 Bigelow, Fraud, I. 601; Pollock, Contracts, 493; Leake, Con-
tracts, 347; Anson, Contracts (8th ed.), 161. But see Seaton v. Heath,
1899, 1 Q. B. 782; s. c. sub nom. Seaton v. Burnand, 1900, A. C. 135.

§ 482. 1 Van Houten v. Morse, 162 Mags. 414; 38 N. E. 705.

2 Bigelow, Fraud, I. 601. :

§ 433. 1 Bigelow, Fraud, I. 473; Southern Development Co. v. Silva,
125 U.S. 247; 8 S. Ct. 881; Sheldon v. Davidson, 85 Wis. 138; 55 N. W.
161; H. & W. 295; Dawe v. Morris, 149 Mass. 188; 21 N. E. 313; H. &
W. 292; Gardner v. Knight, 124 Ala. 273; 27 S. 298; Esterly, etc. Co. v.
Berg, 52 Neb. 147; 71 N. W. 952; Moore v. Barksdale, — Va. — ; 25
8. E. 529; Anderson v. Creston Land Co., 96 Va. 257; 381 S. E. 82.

2 Bigelow, Fraud, I. 474, 475.
CAUSES FOR RESCISSION—MISREPRESENTATION. 255

facts peculiarly within the knowledge of the party making
the statement may amount to a representation that the party
making the statement knows facts which justify his opinion?
§ 484. Expressions of Intention. — A representation of in-
tention ordinarily either gives rise to a contract or has no
effect! Nevertheless, intention is a matter of fact, and if a
man represents that he has a certain intention when he has
not, he clearly makes a false representation of fact.2 Thus it
is generally held that the purchase of goods amounts to a rep-
resentation that the buyer intends to pay for them, and if he
intends not to pay for them he is guilty of frand.2 Mere in-
solvency of the buyer,* or lack of reasonable expectation to
pay,® are insufficient to constitute fraud. “There must have
been in the mind of the vendee at the time, an actual inten-
tion to cheat, or to de an act the necessary result of which will
be to defraud the seller.”® In some cases a representation of
intention has been held not to amount to fraud under any cir-
cumstances ;? while some decisions draw a distinction between
an intention not to pay for goods and an intention not to per-
form some other promise, holding that the former constitutes

2 French v. Ryan, 104 Mich. 625; 62 N. W. 1016.

§ 434. } Dawe v. Morris, 149 Mass. 188; 21 N. E. 8138; H. & W. 292;
Long v. Woodman, 58 Me. 49; Bigelow, Fraud, I. 483; Anderson v. Cres-
ton Land Co., 96 Va. 257; 31S. E. 82; Gaither v. Slack, 89 Md. 727; 43
A. 915; Krouskop v. Krouskop, 95 Wis. 296; 70 N. W. 475.

2 Bigelow, Fraud, I. 484; contra, Gardner v. Knight, — Ala. — ; 27
S. 298. i

8 Bigelow, Fraud, J. 486; Donaldson v. Farwell, 93 U. S. 631; Watson
v. Silsby, 166 Mass. 57; 43 N. E. 1117; Syracuse Knitting Co. v. Blanch-
ard, 69 N. H. 447; 48 A. 637; Miller v. White, 46 W. Va. 67; 33S. E.
332.

4 Kirschbaum v. Jasspon, — Mich. — ; 82 N. W. 69.

5 Kitson v. Farwell, 132 Ill. 327; 23 N. E. 1024; Syracuse Knitting
Co. v. Blanchard, 69 N. H. 447; 43 A. 637; contra, McKenzie v. Roths-
child, 119 Ala. 419 ; 24 S. 716. .

6 Johnson v. Stockham, 89 Md. 358; 48 A. 920; Syracuse Knitting Co.
v. Blanchard, supra; Watson v. Silsby, 166 Mass. 57; 43 N. E. 1117;
Miller v. White, 46 W. Va. 67; 33 S. E. 332.

7 Smith v. Smith, 21 Pa. St. 367; Farris v. Strong, 24 Col. 107; 48
P. 963.
256 RESCISSION AND REFORMATION.

fraud,’ but not the latter.2 Even though a representation of
intention unfulfilled does not affect the validity of the con-
tract, it may induce the court to refuse the equitable remedy
of specific performance.”

§ 435, Representations of Law.— A representation of law
does not ordinarily affect the validity of a contract.1 “ A rep-
resentation of law,” says Sir George Jessel, “is this, — when
you state the facts and state a conclusion of law so as to dis-
tinguish between facts and law.”2 A statement of fact which
involves a conclusion of law is nevertheless a statement of
fact.3 And even a misrepresentation of the law will stand
on the same ground if the party to whom it is made is justi-
fied in relying upon it. In New York the following rule has
been laid down, “ Where there is a mistake of law on one
side, and either positive fraud on the other, or inequitable,
unfair, and deceptive conduct which tends to confirm the mis-
take and conceal the truth, it is the duty of equity to give
relief.”’* This rule, however, seems somewhat broadly stated.
Ordinarily, one man is not justified in relying upon another’s
representations in regard to the law ; but if the party making
the representation of law occupies a fiduciary position toward
the other or if from his superior means of information the
other party is reasonably entitled to accept his statements in
regard to- the law,® or if the representation is as to the law
of another jurisdiction,’ a statement of law has the same

8 Allen v. Hartfield, 76 Ill. 358; Farwell v. Hanchett, 120 id. 573; 11
N. E. 875.
9 Gage v. Lewis, 68 Ill. 604; Murphy v. Murphy, — id. — ; 59 N.E.
796.
10 Jasper County Electric R. v. Curtis, 154 Mo. 10; 55S. W. 222.
§ 435. 1 Upton v. Tribilcock, 91 U. 8.45; Fish v. Cleland, 83 Ill. 237;
H. & W. 288; Georgia Home Ins. Co. v. Warten, 113 Ala. 479; 22 8. 289.
2 In Eaglesfield v. Londonderry, 4 C. D. 693.
38 Motherway v. Wall, 168 Mass. 333; 47 N. E. 135.
4 Haviland v. Willets, 141 N. Y. 35, 50; 35 N. E. 958; Keener, Cas.
Eq. III. 144.
5 Sims v. Ferrill, 45 Ga. 585.
6 Ross v. Drinkard, 35 Ala. 434; H.& W. 291; Bigelow, Fraud, I. 489;
Titus v. Rochester German Ins. Co., — Ky. ; 31S. W. 127.
7 Wood v. Roeder, 50 Neb. 476; 70 N. W. 21.

 
‘

CAUSES FOR RESCISSION—MISREPRESENTATION. 257

effect as a statement of fact. Indeed, in all cases of misrep-
resentation, the fundamental question is as to the right of the
party to whom the representation is made to act upon it.6
The character of the representation is an important thing to
be considered in determining whether or not action upon the
representation is justified, but all the other circumstances of
the case are also to be taken into consideration.

§ 486. Seller’s and Buyer’s Statements — Simplex commendatio.
— Even a false representation of fact is not sufficient to justify
the other party in acting upon it if it comes under the head of
what are termed “seller’s statements,” simplex commendatio,}
or “buyer’s statements.”? Under this head come state-
ments by the vendor of property in regard to its value.? Rep-
resentations in regard to the productiveness of land have been
placed on the same footing. In some States representations
by the vendor as to the cost of an article or as to offers made
for it are also treated as seller’s statements. In Colorado a
distinction is drawn between statements as to the cost of the
property, and statements as to offers made for it, the former
being held material,® and the latter immaterial.’ All such rep-
resentations, however, may be made under circumstances enti-
tling the other party to rely upon them, as where a fiduciary
relation exists between the parties, or where one party has or
assumes to have spe@jal knowledge of the value of the prop-

8 Griel v. Lomax, 94 Ala. 641; 10S. 232.

§ 436. ! Lehigh Zinc Co. v. Bamford, 150 U. S. 665; Southern De-
velopment Co. v. Silva, 125 U.S. 247; 8 S. Ct. 881; Gordon v. Butler,
105 U. 8. 553; Bigelow, Fraud, I. 490.

2 Byrd v. Rautman, 85 Md. 414; 36 A. 1099.

3 Bigelow, Fraud, I. 491 ; Conly v. Coffin, 115 N. C. 563; 20 S. E. 207;
Lynch v. Murphy, 171 Mass. 307; 50 N. E. 623; Blanks v. Clark, — Ark.
— ; 56S. W. 10638.

* Gordon v. Parmelee, 2 Allen, 212.

5 Bigelow, Fraud, I. 492; Medbury v. Watson, 6 Met. 246; Long ».
Woodman, 58 Me. 52; Sowers v. Parker, 59 Kans. 12; 51 P. 888; contra,
Page v. Parker, 43 N. H. 363; Jackson v. Armstrong, 50 Mich. 65; 14
N. W. 702; Stoney Creek Woolen Co. v. Smalley, 111 Mich. 321; 69
N. W. 722.

6 Zang v. Adams, 23 Col. 408 ; 48 P. 509.

7 Cole v. Smith, 26 Col, 506; 58 P. 1086.

17
258 RESCISSION AND REFORMATION.

erty upon which he knows the other relies.§ The buyer’s
statements as to his reasons for wishing to purchase are as
immaterial as the seller’s statements as to his reasons for
wishing to sell.9

§ 487. The Representation must induce the making of the
Contract. — The party to whom the representation is made
must be induced thereby to enter into the contract. That is,
he must be ignorant of the truth, must believe the represen-
tation, and must enter into the contract as a result of that
belief. A man who acts upon the strength of his own infor-
mation? or upon a representation by a third party,3 cannot
avoid his contract on the ground of misrepresentation, because
the misrepresentation has not been the cause of his entering
into the contract. But it is not necessary that the false rep-
resentation should have been the sole inducement to the con-
tract ; it is sufficient if it was a material inducement, though
there may have been other material inducements. The burden
is upon the party making the false representations to show
that they did not induce the other party to enter into the
contract.5

§ 438. The Representation must justify Action upon it by the
Injured Party. — The party acting on the misrepresentation
must have been justified in so acting. The representation
must therefore be made either to him p@sonally, or to a third

8 Bigelow, Fraud, I. 496; Wilson v. Nichols, — Conn. — ; 48 A.
1052; Chrysler v. Canaday, 90 N. Y. 272; Stover v. Wood, 26 N. J. Eq.
417 ; Keener, Cas. Eq. III. 607 ; Edelman v. Latshaw, 180 Pa. 419; 86 A.
926; Horton v. Lee, 106 Wis. 439; 82 N. W. 360. e

7 Byrd v. Rautman, supra.

§ 437. 1 Bigelow, Fraud, I. 521; Ming v. Woolfolk, 116 U. S. 599;
6S. Ct. 489; Missouri Pac. R. v. Goodholm, — Kans. — ; 60 P. 1066;
Duffy v. Metropolitan L. I. Co., — Me.— ; 47 A. 905.

2 Dickinson v. Lee, 106 Mass. 557; Farnsworth v. Duffner, 142 U.S. _
43; Chicago B'ld’g Ass’n v. Higginbotham, — Miss. — ; 29 S. 79.

8 Wachsmuth v. Martini, 154 Ill. 515; 39 N. E. 129.

4 Ruff v. Jarrett, 94 Tl. 475; Sioux Nat. Bank v. Norfolk State Bank,
56 F. 189; 5C. C. A. 448; 12 U.S. App. 347; Braley v. Powers, 92 Me.
203; 42 A. 362.

_ § Garrison v. Technic Electrical Works, — N. J. Eq. — ; 45 A.
612.
CAUSES FOR RESCISSION—MISREPRESENTATION, 259

person to be communicated tohim. Thus a report of the state
of the affairs of a corporation filed with a public officer as
required by law is not a representation on which any one is
justified in acting,' because it is not made to any one except
the State, and because it is made by compulsion. Even a rep-
resentation made to the injured party is insufficient to invali-
date the contract if it was not intended to induce his action.?
But a representation to a commercial agency is intended to be
acted on by the public?

§ 489, When the Representation must be acted upon. — The
representation must be acted on within a reasonable time after
it is made.!

§ 440. Effect of Negligence by the Party acting on the Represen-
tation. — According to some courts a person must use rea-
sonable diligence to discover for himself facts obvious to an
ordinary observer, of which the means of knowledge are
equally available to both, parties, and if he fails to do this he
cannot set up that he has been misled by the other party.!
Thus it has been held that one who can read, and signs a con-
tract without reading it, cannot have it set aside for misrep-
resentation by the other party as to its contents.2 In the
application of this rule, says the Supreme Court of Massachu-
setts, “the circumstances of each case should be considered
to determine whether the plaintiff has been guilty of such
inexcusable negligence as should preclude him, under a gen-
eral rule of public policy, from having a remedy against one
who has fraudulently abused his confidence.” What rule of
public policy requires the courts to uphold a fraud is not

§ 438. 1 Hunnewell v. Duxbury, 154 Mass. 286; 28 N. E. 267; H. &
W. 303; Utley v. Hill, — Mo. — ; 55S. W. 1091.

2 Butterfield v. Barber, 20 R. I. 99; 387 A. 582.

8 Soper Lumber Co. v. Halsted, ete. Co., — Conn. — ; 48 A, 425.

§ 439. 1 Sharpless v. Gummey, 166 Pa. St. 199; 30 A. 1127.

§ 440. 1 Slaughter v. Gerson, 13 Wall. 879; Washington Cent. Imp.
Co. v. Newlands, 11 Wash. 212; 39 P. 366; Brady v. Finn, 162 Mass.
260; 58 N. E. 506; Holst v. Stewart, 161 Mass. 516; 37 N. E. 755.

2 Kimmeel v. Skelly, — Cal. — ; 62 P. 1067; Dowagiac Mfg. Co. ».
Schroeder, — Wis. — ; 84N. W. 14.

8 Holst v. Stewart, supra.
260 RESCISSION AND REFORMATION.

clear. The more rational rule is that a man who has de-
ceived another has no right to say “ You ought not to have
trusted me” in any case, if the other party has actually relied
on his misrepresentations.4* The negligence of one party doubt-
less aids the other in perpetrating a fraud, but there is no good
reason why the shrewd rascal should therefore be allowed to
take advantage of the careless innocent.

§ 441. Misrepresentation and Fraud. — It has already been
stated that misrepresentation may be innocent or fraudulent.
In either case the contract is voidable, but the methods of
obtaining rescission are different. The differences in regard
to the manner of rescission will be explained later; but it is
here necessary to point out the difference between innocent
and fraudulent misrepresentation, or, to use other terms,
between misrepresentation and fraud.

§ 442. The Scienter— Knowledge of the Palsity of the Repre-
sentation. — If a misrepresentation is made with knowledge of
its falsity it is always fraudulent. It is not essential that there
should be any intent to cheat.' A misrepresentation made
without belief in its truth is fraudulent. And a misrepresen-
tation made recklessly without caring whether it be true or
false is fraudulent.2. So far the authorities are in harmony.
On the question whether a false statement made with an
honest belief in its truth but without reasonable grounds for
such belief is fraudulent there is a difference of opinion.
It is held by the House of Lords that want of reasonable
ground to believe that a statement is true does not make such
statement fraudulent ;° and this is the doctrine of some Ameri-
can courts. On the other hand, other courts hold that a pos-

4 Bigelow, Fraud, I. 524-528; Speed v. Hollingsworth, 54 Kan. 436;
38 P. 496; Wilson v. Carpenter, 91 Va. 183; 21 S. E. 243: Redgrave v.
Hurd, 20 C. D. 1; Rohrof v. Schulte, — Ind. — ;\55 N. E. 427; Alex-
ander v. Brogley, — N. J. L. — ; 48 A. 888; Lovejoy v. Isbell, —
Conn. — ; 47 A. 682.

§ 442. 1 Morris v. Power, — Ia. — ; 82 N. W. 755.

2 Lord Herschell in Derry v. Peek, 14 A. C. 387; Krause v. Busacker,
105 Wis. 350; 81 N. W. 406.

3 Derry v. Peek, supra.

4 McKown v. Furgason, 47 Ia. 686; H. & W. 301 ; Lamberton v. Dun-
CAUSES FOR RESCISSION—MISREPRESENTATION, 261

itive statement of a fact within one’s means of knowledge
implies that one has knowledge of the truth of his statement;
and that such a statement is therefore fraudulent.®

§ 443. The Scienter in the United States Courts. — The doc-
trine of the United States Supreme Court in regard to what
makes a misrepresentation fraudulent is not clear. That
court has held erroneous an instruction that lack of rea-
sonable ground for belief in a statement constitutes fraud ;}
but it has also said “ that a person who makes representations
of material facts, assuming or intending to convey the impres-
sion that he has actual knowledge of the existence of such
facts, when he is conscious that he has no such knowledge, is
as much responsible for the injurious consequences of such
representations, to one who believes and acts upon them, as if
he had actual knowledge of their falsity.” ?

ham, 165 Pa. St. 129; 30 A. 716; Clement v. Swanson, — Ia. — ; 81
N. W. 233.

5 Chatham Furnace Co. v. Moffatt, 147 Mass. 403; 18 N. E. 168; H. &
W. 298; Cole v. Cassidy, 188 Mass. 437; Glaspie v. Keator, 12 U. S. App.
281; 56 F. 203; 5 C. C. A. 474; Cabot v. Christie, 42 Vt. 121; Walters
v. Eaves, 105 Ga. 584; 32S. E. 609; Newman v. H. B. Claflin Co., 107
Ga. 89; 32 S. E. 943; Braley v. Powers, 92 Me. 203; 42 A. 362; Olcott
v. Bolton, 50 Neb. 779; 70 N. W. 366; Hadcock v. Osmer, 153 N. Y. 604;
47 N. E. 923.

§ 443. 1 Lord v. Goddard, 13 How. 198.

2 Lehigh Zine Co. v. Bamford, 150 U. S. 665; Simon v. Goodyear, ete.
Co., — U.S. App. — ; 105 F, 578.
262 RESCISSION AND REFORMATION.

CHAPTER XXIII.
CAUSES FOR RESCISSION — DURESS AND UNDUE INFLUENCE.

§ 444. Duress renders Contracts voidable, not void.— A
person who is induced by duress to enter into a contract may
avoid the contract on the ground of such duress. The duress
operates as a condition subsequent affecting the validity of the
contract. The contract is voidable, not void,! because the act
of the party in executing the contract is a voluntary act in the
legal sense. His will acts, although the duress constitutes
the motive for his action.

§ 445. Development of the Law of Duress. — The older cases
limited duress to cases involving great bodily harm or impris-
onment, or threats of such violence or imprisonment.! The
tendency of the modern cases, however, is to enlarge the defi-
nition of duress, so as to make it include all cases of unlawful
interference with the person or property of another for the
purpose of compelling him to make a contract. According to
the modern view, duress consists in the actual or threatened
unlawful exercise of power possessed, or believed to be pos-
sessed by one party, over the person or property of another,
from which the latter has no other means of immediate relief
than by performing the required act.2, It must be shown that

§ 444, 1 Skeate v. Beale, 11 A. & E. 983; K. 11.1774 ; Miller v. Minor
Lumber Co., 98 Mich. 163; 57 N. W. 101; Ormes v. Beadel, 2 De G. F.
& J. 333; Lewis v. Bannister, 16 Gray, 500; Sornborger v. Sanford, 34
Neb. 498; 52 N. W. 368; Eberstein v. Willets, 134 Ill. 101; 24 N. E.
967; Oregon Pac. R. Co. v. Forrest, 128 N. Y. 83; 28 N. E. 187; K. IL.
1810.

§ 445. 1} Bacon’s Abridgment, “Duress,” A; Comyn’s Digest,
“ Pleader” (2 W. 20); 2 Inst. 483.

2 Radich v. Hutchins, 95 U. S. 210, 213; Lonergan v. Buford, 148
U.S. 581; 13 S. Ct. 684; Stenton v. Jerome, 54 N. Y. 480; Oliphant v.
CAUSES FOR RESCISSION —DURESS. 2638

the party charged with duress used such means to induce the
other to act as would overcome the mind and will of an ordi-
nary person.®

§ 446. Duress by Threats. — Refusal to perform a contract
does not constitute duress, though such refusal is made for the
purpose of compelling the performance of an act by the other
party.) Threats of a civil action do not constitute duress.?
Nor threats to take possession of property by means of a judi-
cial writ, unless there is an attempt to abuse the process of
the court. Detention of goods under a claim of right is not
duress. An attachment of a third person’s goods on a writ
against the debtor does not constitute duress where no unlaw-
ful threats are used.6 It has been held in Oregon that threats
constitute duress in any case where they operate to overcome
the will of the person to whom they are addressed ;° but this
rule should be limited to cases where the threats would be
sufficient to overcome the will of an ordinary man.’

Markham, 79 Tex. 548. The old rule seems to prevail in England.
Leake, Contracts, 351; Skeate v. Beale, 11 A. & E. 983; K. IT. 1774.

3 Morse v. Woodworth, 155 Mass. 233; 27 N. E. 1010; 29 N. E. 523;
H. & W. 808; K. II. 1790; Keener, Cas. Eq. III. 791; contra, Galusha v.
Sherman, 105 Wis. 263; 81 N. W. 496.

§ 446. 1 Doyle v. Trinity Church, 133 N. Y. 372; 31 N. E. 221; Hack-
ley v. Headley, 45 Mich. 569; Keener, Cas. Eq. III. 764; Mason v.
United States, 17 Wall. 67; Silliman v. United States, 101 U. 8. 465; K.
JJ. 1780; Keener, Cas. Eq. III. 759; Secor v. Clark, 117 N. Y. 350; 22
N. E. 754; Keener, Cas. Eq. III. 768; contra, Adams v. Schiffer, 11 Col.
15; 17 P. 21.

2 York v. Hinkle, 80 Wis. 624; 50 N. W. 895; Keener, Cas. Eq. TII.
770 ; McClair v. Wilson, 18 Col. 82; 31 P. 502; Dunham ». Griswold, 100
N. Y. 224; 3 N. E. 76; K. IT. 1788; Keener, Cas. Eq. IIT. 790; Whitta-
ker v. Southwest Va. Improvement Co., 34 W. Va. 217; 12S. E. 507;
Wilson S. M. Co. v. Curry, 126 Ind. 161; 25 N. E. 896 ; Jones v. Hough-
ton, 61 N. H. 51; Burke v. Gould, 105 Cal. 277 ; 38 P. 783; Savannah
S. B. v. Logan, 99 Ga. 291; 25 S. E. 693; Hart v. Strong, 183 Il. 349;
55 N. E. 629; Bestor v. Hickey, 71 Conn. 181; 41 A. 555.

3 Davis v. Rice, 88 Ala. 388; 6 S. 751; Wilcox v. Howland, 23 Pick.
167; Vick v. Shinn, 49 Ark. 70; 4S. W. 60.

4 Hall Lumber Co. v. Gastin, 54 Mich. 624.

5 Kingsbury v. Sargent, 83 Me. 230; 22 A. 105; K. IT. 785.

6 Parmentier v. Pater, 13 Or. 121; 9 P. 59.

7 Morse v. Woodworth, 155 Mass, 233; 27 N. E. 1010; 29 id. 525;
264. RESCISSION AND REFORMATION.

§ 447. Confusion of Duress and Undue Influence. — Threats
of criminal prosecution made for the purpose of compelling
another to enter into a contract constitute duress.1_ It seems,
however, that the offence for which arrest is threatened should
be specified ;? and that the party making the threat should
have some present means of execnting it,? by immediate im-
prisonment,* but the authorities are not agreed.6 In fact, the
growth of equitable doctrines in the common-law courts, and
the confusion of legal and equitable procedure in many States,
have left the line between duress and undue influence too
shadowy to be easily perceived.6

§ 448, Duress by Lawful Imprisonment.—TIt is often said
that the imprisonment must be unlawful, or that threats
made must be of an unlawful imprisonment, or that there
must be an abuse of process.! To take advantage of a lawful
imprisonment or of threats of such imprisonment for the pur-
pose of furthering one’s private ends is generally regarded,
however, as constituting duress.”

§ 449. Duress to Third Parties. — Duress to a third party

II. & W. 308; K. If. 1790; Keener, Cas. Eq. III. 791; Hartford F. I. Co.
v. Kirkpatrick, 111 Ala. 456 ; 20 8. 651.

§ 447. 1 Thompson v. Niggley, 53 Kan. 664; 35 P. 290; K. IL. 1798;
Weiser v. Welch, 112 Mich. 1384; 70 N. W. 438.

2 Kruschke v. Stefan, 83 Wis. 373; 53 N. W. 679.

3 Horton v. Bloedon, 57 Neb. 666; 56 N. W. 3821; Higgins v. Brown,
78 Me. 473; 5 A. 269; Barrett v. Mahnken, — Wy. — ; 48 P. 202;
Duffy v. Metropolitan L. I. Co., — Me. — ; 47 A. 905.

4 Beath v. Chapoton, 115 Mich. 506; 73 N. W. 806.

5 See Morse v. Woodworth, 155 Mass. 233; 27 N. E. 1010; 29 id. 525;
H. & W. 308; K. Il. 1790; Thompson v. Niggley, supra; Galusha v.
Sherman, 105 Wis. 263; 81 N. W.495. “It is not the threat of criminal
prosecution in any case that constitutes duress, but the condition of mind
produced thereby.” Wolff v. Bluhm, 95 Wis. 257; 70 N. W. 73.

® This confusion is well illustrated by Galusha v. Sherman, supra.

§ 448. 1 McCormick, etc. Co. v. Miller, 54 Neb. 644; 74 N. W. 1061.

2 Morse v. Woodworth, 155 Mass. 233; 27 N. E.1010; 29 N. E. 525;
H. & W. 308; K. II. 1790; Keener, Cas. Eq. III. 791; Hartford F. I. Co.
v. Kirkpatrick, 111 Ala. 456; 20 S. 651; Bentley v. Robson, 117 Mich.
691; 76 N. W. 146; Hensinger v. Dyer, 147 Mo. 219; 48 S. W. 912;
Behl v. Schuett, 104 Wis. 76; 80 N. W. 73; Gorringe v. Read, — Utah
— ; 63 P. 902.
CAUSES EOR RESCISSION—DURESS. 265

exercised for the purpose of compelling another to execute a
contract will in some cases entitle the party making the con-
tract to avoid it. A husband may avoid for duress to his
wife, and a wife for duress to her husband.? A parent may
avoid for duress to his child,? and a child for duress to his
parent. A sister may avoid for duress to her brother It
has been held that a surety may avoid a contract for duress to
his principal ;® but this is not the law.’

§ 450. The other Party must seek to take Advantage of the
Duress. — Contracts voidable for duress come under the second
head of voidable contracts, where rescission is granted because
of the unfair conduct of one of the parties. It is therefore
necessary that the duress should be the act of the other party
to the contract, or that he should seek to take advantage of
duress practised by another.1

§ 451. Unfair Dealing and Undue Influence. — There are cer-
tain cases where a contract is voidable because one party has
taken an unfair advantage of another. The contract in such
cases is said to be voidable on the ground of undue influence.
Unfair dealing, however, seems a more accurate expression
than undue influence.

§ 452. Abuse of Fiduciary Relations. —It is a general prin-

§ 449. 1 1 Rolle Abr. 687.

2 City Nat. Bank v. Kusworm, 88 Wis. 188; 59 N. W. 564; K. II.
1797; Keener, Cas. Eq. III. 795; Hensinger »v. Dyan 147 Mo. 219; 48
S. W. 912; Giddings v. Iowa S. B., 104 Ia. 676; 74 N. W. 21; Bentlys.
Robson, 117 Mich. 691; 76 N. W. 146; Gorringe v. Read, — Utah —;
63 P. 902.

3 Bryant v. Peck & Whipple Co., 154 Mass. 460; 28 N. E. 678; Me-
Cormick, etc. Co. v. Hamilton, 73 Wis. 486; 41 N. W. 727; Weiser v.
Welch, 112 Mich. 134; 70 N. W. 438.

4 1 Rolle Abr. 687.

5 Schultz v. Catlin, 78 Wis. 611; 47 N. W. 946.

6 Evans v. Huey, 1 Bay, 13.

7 Bowman v. Hiller, 180 Mass. 153; Huscombe v. Standing, Cro. Jac.
187; Robinson v. Gould, 11 Cush. 55; Plummer v. People, 16 Ill. 358 ;
Graham v. Marks, — Ga. — ; 25S. E. 931.

§ 450. 1 Leake, Contracts, 353; Compton v. Bunker Hill Bank, 96 Ili.
301; Morse v. Woodworth, 155 Mass. 233; 27 N. E. 1010; 29 N. E. 525;
H. & W. 308; K. II. 1790; Keener, Cas. Eq. III. 791.
266 RESCISSION AND REFORMATION.

ciple of equity that a person in whom confidence is placed by
another shall not be permitted to abuse that confidence. Cer-
tain relations are essentially confidential; for example, the
relation of trustee and cestut que trust, principal and agent,
attorney and client,! parent and child,? or of betrothed persons.?
In other cases special confidence may be shown by one person
in another in a particular case. There are various rules as to
the burden of proof in different cases,‘ but the general princi-
ple is always the same, that equity will not tolerate an abuse
of confidence, and will set aside contracts obtained by such
abuse.

§ 453. Actual Undue Influence. — Unfair dealing for which
a court of equity will set aside a contract may consist in actual
undue influence. If a person’s mind is so weak as to be
easily influenced by others, a contract entered into by him will
be set aside if there is any unfairness in it, if he acts without
independent advice.!

§ 454. Unfair Dealing with Bxpectant Heirs. Unfair deal-
ing with an expectant heir in regard to his expectancy affords
an equitable ground for the rescission of a contract; and inad-
equacy of compensation for such expectancy constitutes unfair-
ness. This rule is altered in England by statute, but still
prevails in this country.?

§ 452. 1 Elmore v. Johnson, 143 Tll. 513; 32 N. E. 413.
2 This includes step-parent and child; Woods v. Roberts, 185 Ill. 489;
57 N. HE. 426; Powell v. Powell, 1900, 1 Ch. 243; but not parent and

adult child ; Coleman’s Estate, 193 Pa. 605; 44 A. 1085.

8 Hessick v. Hessick, 169 Ill. 486; 48 N. E. 712; Russell v. Russell,
-— N.J. Eq. — ; 47 A. 87.

4 See Pollock, Contracts, 557-575.

§ 453. 1 Allore v. Jewell, 94 U.S. 506; Plant v. Plant, 76 Miss. 560 ;
25S. 151; Holland v. John, — N. J. Eq. — ; 46 A. 172.

§ 454. 1 Bigelow, Fraud, I. 370, 372.
HOW RESCISSION IS EFFECTED. 267

CHAPTER XXIV.

HOW RESCISSION IS EFFECTED.

§ 455. Modes of Rescission.— There are three ways in
which rescission may be effected. These three modes of re-
scission are rescission in pais, rescission by plea, and judicial
rescission.!

§ 456. Rescission in Pais. — Rescission in pais takes place
when the party entitled to rescind does an act in pais, that is,
out of court, which puts an end to the contract. Thus if an
infant refuses to perform his contract, or if the buyer of an
article who has been deceived by the seller tenders back the
article, this constitutes rescission in pais.

§ 457. Rescission by Plea. — Rescission by plea occurs
when the party entitled to rescind sets up the fact justifying
the rescission in repudiation of the contract in his plea. Here
the plea not only constitutes a defence to the action, but is in
itself the act which rescinds the contract.! On principle such
rescission must be by plea or answer, and not by reply.

§ 458. Rescission by Reply. —If the plaintiff states a
cause of action and the defendant pleads a voidable contract
in defence, the plaintiff should not be allowed to rescind by
replying that the contract set up was voidable. By hypoth-
esis, the plaintiff’s right of action has been destroyed by the
making of the voidable contract, and can be revived only
by the rescission of that contract. To allow the plaintiff to
rescind the contract by reply, therefore, is to allow him to
acquire a cause of action after bringing suit, which is of

§ 455. ! Bigelow, Fraud, I. 75.
§ 457. 1 Chicago B’ld’g Ass’n v. Higginbotham, — Miss. — ; 29
S. 79.
268 RESCISSION AND REFORMATION.

course unsound.! The authorities, however, are in conflict.
It has been held on the one hand that where rescission is at- '
tempted by reply, the reply will be allowed if the rights of
the parties can be adjusted in one suit;? and on the other,
that such reply is insufficient to rescind the contract,? and
that there cannot be a rescission of a compromise by mere
pleading in a declaration.4

§ 459. Judicial Rescission. — Judicial rescission is brought
about by the decree of a court of equity, which has exclusive
jurisdiction over actions for the rescission of contracts.

§ 460. When Judicial Rescission is necessary. — We have
now to consider when each of these different modes of rescis-
sion may be used; and, first, as to judicial rescission. The
fundamental ground of equity jurisdiction is that the com-
plainant has no adequate remedy at law. Judicial rescission,
therefore, is granted on the ground that rescission in pais or
by plea is not adequate to protect the rights of the party in-
jured. Nowa court of law can never grant rescission of a
contract ; it can only recognize the fact that the contract has
been rescinded cither by act in pais or by plea. This is true
even under modern statutes authorizing equitable defences in
actions at law. Such statutes permit rescission in pais or by
plea on equitable grounds, and authorize courts of law to rec-
ognize such rescission, but they do not authorize a court of
law to assume the functions of a court of equity and to grant
judicial rescission. Thus under such statutes a purchaser of

§ 458. 1 Bigelow, Fraud, I. 83.

2 Brewster v. Brewster, 38 N. J. Eq 119; Hoboken Ferry Co. v. Bald-
win, — N. J. Eq. — ; 43 A. 417; Missouri Pac. R. v. Goodholm, 61
Kan. 758; 60 P. 1066; Whitehill v. Dacus, 49 8S. C. 273; 27 S. E. 200;
Malmstrom v. Northern Pac. R., — Wash. — ; 55 P.38; Home Benefit
Society v. Muehl, (Ky.), 59 S. W. 520; 60S. W. 371.

3 Brown v. Hartford Fire Ins. Co., 117 Mass. 479; Potter v. Mon-
mouth Fire Ins. Co., 63 Me. 440; Gould v. Cayuga Bank, 86 N. Y. 75,
Western, etc. R. v. Burke, 97 Ga. 560; 25S. E. 498; Jessup v. Chicago,
etc. R., 99 Ia. 189; 68 N. W. 673; Hancock v. Blackwell, 139 Mo. 440;
41.8. W. 205; Levister v. Southern R., 56 S. C. 508; 35 S. E. 207; Brain-
ard v. Van Dyke, — Vt. — ; 45 A. 758.

* Westerfeld v. New York L. I. Co., — Cal. — ; 58 P. 92; tna L.
I. Co. v. Sellers, — Ind. — ; 56 N. E. 97.
HOW RESCISSION IS EFFECTED. 269

land cannot set up the fraud of his vendor as a defence to an
action on the contract of purchase where he has received a
deed to the land, because a judicial decree for rescission is
necessary in order to restore the parties to their original posi-
tion, and such a decree cannot be rendered by a court of law.
Whenever, therefore, the cancellation of a written document
is necessary to the protection of a party’s rights he must go
into equity to procure such cancellation.

§ 461. Equitable and Legal Causes for Rescission. — An
additional reason for resorting to a court of equity to procure
rescission in many cases is that there are certain facts which
equity recognizes as grounds for rescinding a contract which
are not recognized at law. Undue influence and innocent mis-
representation! will entitle a party to rescission in equity,
but not at law. Again, the form of the contract determines
whether or not judicial rescission is necessary. A deed can
be avoided at law only on the ground of infancy, of mental
incapacity,’ or of duress. Fraud,* mistake, misrepresentation,
undue influence, affect the deed only in equity. This rule,
which is very ancient, rests on the importance attached by the
common law to the deed as evidence.’ It still prevails in the
United States courts,° and in some of the State courts,’ though
it has been generally modified by statute or by the practice
of allowing equitable defences in an action at law.

§ 462. When Rescission by Plea or in Pais is proper. —
Rescission by plea is proper when the ground for rescission
is one which the court can recognize, and the contract has

§ 460. 1 Tyson v. Williamson, 96 Va. 636; 32S. E. 42.

§ 461. ! In the cases where innocent misrepresentation is recognized
at law as a defence, such recognition is given because the truth of the rep-
resentations is made an implied condition of the contract.

2 Re Glubb, 1900, 1 Ch. 354.

3 Hoboken Ferry Co. v. Baldwin, — N. J. Eq. — ; 48 A. 417.

4 Connor v. Chemical Works, 50 N. J. L. 257; 12 A. 713.

5 “The obligor . . . was helpless against an obligee who had the spe-
cialty.” Ames, 9 Harv. Law Rev. 40.

® George v. Tate, 102 U. S. 564; Hartshorn v. Day, 19 How. 211;
Lumley v. Wabash R., — U. 8. App. — ; 76 F. 66.

7 Hancock v. Blackwell, — Mo. — ; 418. W. 205.
270 RESCISSION AND REFORMATION.

not already been rescinded. If the contract has already been
rescinded in pais the plea merely states a defence to the
action.

Rescission in pais is proper whenever judicial rescission is
unnecessary.

In many jurisdictions there is now by statute only one form
of action, and the court is authorized to administer legal and
equitable remedies in the same suit, and to recognize equitable
defences.
REQUISITES OF RESCISSION. 271

CHAPTER XXV.

REQUISITES OF RESCISSION.

§ 463. Rescission of Executory and Executed Contracts, —
The object of rescission is the restoration of the parties to
their original position. If the contract is wholly executory
on both sides, and does not require judicial rescission, a sim-
ple refusal to perform will constitute a sufficient rescission in
pais, and a plea of the facts constituting the ground for re-
scission is a sufficient rescission by plea. If, however, one
party has received something from the other, can he rescind
the contract by a simple refusal to perform? The answer to
this question depends upon the ground on which rescission
is sought.

§ 464. Requisites of Rescission by Infants. — An infant
may avoid his contract by a simple refusal to perform.’ It is
not necessary that the other party should be placed in statu
quo by the infant as a condition precedent to rescission? So
the sale of property by the infant after he comes of age oper-
ates as a rescission of a previous sale by him of the same prop-
erty.2 We are not here concerned with the question whether
the infant can recover property with which he has parted or
not, but only with the infant’s obligations.

§ 465. Rescission by Infants acquiring Property with Obli-
gations attached. — An exception to the foregoing rule pre-

§ 464. } Craighead v. Wells, 21 Mo. 404, 409 ; Morse v. Ely, 154 Mass.

458; 28 N. E. 577; Woodruff, 349.

2 MacGreal v. Taylor, 167 U. 8. 688; Sanger y. Hibbard, — U.S.
App. — ; 104 F. 455; White v. New Bedford, etc. Corp., — Mass. — ;
59 N. E. 642.

2 Ridgeway v. Herbert, 150 Mo. 606; 51S. W. 1040; Combs v. Hall,

(Ky.), 60 S. W. 647.
272 RESCISSION AND REFORMATION.

vails in cases where the infant has acquired an interest in
permanent property to the possession of which interest cer-
tain obligations are attached. In such cases the infant can
avoid his obligations only by a disclaimer of his interest in
the property. Thusan infant lessee who retains possession of
leased premises after he becomes of age renders himself liable
for arrears of rent accruing during his minority! So an in-
fant who becomes a stockholder in a corporation is liable
on his stock like any other stockholder, unless he disaffirms
the purchase within a reasonable time after coming of age.”
Whether an infant who becomes a member of a firm must
disclaim his interest in the partnership when he comes of age
in order to avoid liability to the creditors of the firm is
not clearly settled.2 A marriage settlement must be repu-
diated by an infant when he comes of age or he will be
bound by it.4

§ 466. Requisites of Rescission by Insane Persons. — The
authorities are at variance as to the right of a person to re-
scind a contract on the ground of mental incapacity without
restoring what he has received. In some States the same rule
is applied to insane persons as to infants. The courts in those
States hold that the law “intends that he who deals with in-
fants or insane persons shall do so at his peril.” The insane
person, therefore, may avoid his contract without first restor-
ing what he has received.1. Other courts hold that the restora-
tion of what he has received under the contract is a condition
precedent tothe right to rescind on the ground of mental
incapacity.2— A distinction of doubtful validity has been

§ 465. 1 Rolle’s Abr. 731.

2 London & N. W. Ry. v. M’Michael, 5 Ex. 114; Woodruff, 331; Dub-
lin & Wicklow Ry. v. Black, § Ex. 181.

% See Bates, Partnership, § 145.

4 Carter v. Silber, 1892, 2 Ch. 278; affirmed sub nom. Edwards »v.
Carter, 1893, A. C. 360.

§ 466. 1 Gibson v. Soper, 6 Gray, 279; Wager v. Wagoner, 53 Neb.
511; 73 N. W. 937; Bates vu. Hyman, — Miss. — ; 28 S. 567.

2 Joest v. Williams, 42 Ind. 565; Pattee’s Cases on Contracts, 155;
McKenzie v. Donnell, 151 Mo. 461; 52 S. W. 222; Eldredge v. Palmer,
185 Ill. 618; 57 N. E. 770; Morris v. Great Northern R., 67 Minn. 74; 69
N. W. 628.
REQUISITES OF RESCISSION. 273

drawn between cases where the party dealing with the insane
person has acted innocently, and those where he has acted
fraudulently. The dictum in Molton v. Camroux,* that where
one dealing with the insane person acts in good faith and
without notice of the insanity, and the contract is fair and
cannot be rescinded so as to place the parties in statu quo,
the contract will not be set aside, has been often repeated, but
does not furnish a satisfactory solution of the question, for
reasons already given.

$ 467. Restitutio in Integrum generally necessary. — With the
exception of the cases of infancy and mental incapacity, it
is a general principle that rescission is granted only where
there can be a restitutio in integrum, and that the party
seeking rescission shall do everything in his power to bring
about such restitution.!

Tender of what one has received is essential if the thing
received is of any value whatever to either party.2 It is
unnecessary, however, to restore anything received from a
third party.2 It has sometimes heen held that a bill for re-
scission is sufficient if it alleges willingness to restore prop-
erty received under the contract by the complainant, and that
actual tender is not a necessary prerequisite to the filing of
such a bill. It is also held in some States that tender may
be made by reply.®

3 Ronan v. Bluhm, 173 Ill. 277; 50 N. E. 694.

42 Ex. 487; 4 Ex. 17; Ewell’s L. C. 614.

5 Ante, § 410.

§ 467. ! Bigelow, Fraud, I.420; Savery v. King, 5 H. L. C. 627; Urqu-
hart v. McPherson, 3 A. C. 831; Neblett v. Macfarland, 92 U. S. 101;
Keener, Cas. Eq. III. 693; Doane v. Lockwood, 115 Ill. 490; Carlson »v.
Segog, 60 Minn. 498; 62 N. W. 1132; The Ernest M. Munn, — U. S.
App. — ; 66 F. 356; Harkness v. Cleaves, — Ia. — ; 84 N. W. 1033.

2 Bigelow, Fraud, I. 426; Bassett v. Brown, 105 Mass. 551; Feweil v.
Deane, 43 S. C, 257; 218. E. 1; Wilcox v. San José, etc. Co., 118 Ala.
519; 21 S. 376; Crossen v. Murphy, 31 Or. 114; 49 P. 858. But see City
N. B. v. Kusworm, 88 Wis. 188; 59 N. W. 564; K. II. 1797; Keener,
Cas. Eq. IIT. 795.

3 Wyss v. Grunert, — Wis. — ; 83 N. W. 1095.

4 Perry v. Boyd, — Ala. — ; 28S. 711.

5 Home Benefit Society v. Muehl, (Ky.), 59 S. W. 520; ante, § 458.

18
274. RESCISSION AND REFORMATION.

If the party seeking rescission has by his own act rendered a
restitutio in integrum impossible, he is not entitled to rescission,®
although he may have acted in ignorance of the facts render-
ing the contract voidable.’? His financial inability to return
money which he has received is no excuse for his failure to
tender the money.®

§ 468. Restitution unnecessary when Innocent Party has re-
ceived no Benefit. — The rule requiring restitution as a con-
dition precedent to rescission is not absolute, but rests on
general principles of equity. Accordingly the party seeking
to rescind is not required to restore that which in any event
he would be entitled to retain, either under the contract or
under the original liability... So if he has received no benefit
from the contract, he may obtain rescission even where there
can be no restitutio in integrum.2 Thus where A. was indueed
by B.’s misrepresentation to form a partnership with B., it
was held that A. was entitled to rescission of the contract of
partnership, and to the recovery of the capital he had put in,
although the partnership business had failed.? Again, if re-
scission is prevented by the wrongful act of the party against
whom it is claimed, restitution is unnecessary .4

§ 469. Restitution unnecessary where impossible without
Fault of the Injured Party. — Where the thing received has been
destroyed, rescission will nevertheless be granted,! although
restitution has thus become impossible. Thus, where A. sold

® Bollnow v. Novacek, 184 Ill. 463; 56 N. E. 801.

7 Bigelow, Fraud, I. 423; McCrillis v. Carlton, 37 Vt. 189; Handforth
v. Jackson, 150 Mass. 149; 22 N. E. 634; Rigdon v. Walcott, 141 Ill. 649;
81 N. E. 158; Keener, Cas. Eq. III. 714.

8 Rigdon v. Walcott, supra.

§ 468. } Kley v. Healy, 127 N. Y. 555; 28 N. E. 593; Winter v. Kan-
sas City Cable R., — Mo. — ; 61S. W. 606.

” Wyss v. Grunert, — Wis. — ; 83 N. W. 1095; City N. B. v. Kus-
worm, 88 Wis. 188; 59 N. W. 564; K. Il. 1797; Keener, Cas. Eq. III.
795. The application of this rule to the facts in the latter case, however,
seems justly open to the criticism of the judges who dissented.

3 Adam v. Newbigging, 13 A. C. 308.

4 Gates v. Raymond, — Wis. — ; 82 N. W. 530.

§ 469. 1 Neblett v. Macfarland, 92 U. 8. 101; Keener, Cas. Eq. III.
693; Scott v. Perrin, 4 Bibb, 360.
REQUISITES OF RESCISSION. 275

property to B., and the contract was voidable on account of
A.’s misrepresentations, B. was allowed, to rescind the con-
tract, although the property had been taken from B. by a sale
under a prior lien.2- So where a subscription to shares of stock
was obtained by the fraud of the corporation, to which the
shares were afterwards forfeited, restitution was held unneces-
sary to entitle the purchaser of the stock to recover his money
from the corporation?

And in any case where without fault of his own the party
seeking rescission is unable to restore what he has received,
rescission will nevertheless be granted if the court can so
mould its decree as to restore the parties to their original
position. But where a bill is filed to recover property, tender
of the price received is not excused by an offer to set off the
price,® or to set off any other claim,® although the vendor is
no longer able to return the consideration.’

§ 470. Partial Rescission.— Rescission need not go to the
whole contract if the contract is divisible, and the cause for
rescission affects only part of the contract! If, however, either
the promise or the consideration be indivisible, there can be
no partial rescission.?

2 Henninger v. Heald, 51 N. J. Eq. 74; 26 A. 449.

8 Aaron’s Reefs v. Twiss, 1896, A. C. 273.

* Thackrah v. Haas, 119 U. S. 499; Keener, Cas. Eq. IIT. 697; 7S. Ct.
311; Savery v. King, 5 H. L. C. 627; United States v. Beebe, — U. S.
= 5 BLS. Ci. a7.

5 Rigdon v. Walcott, 141 Ill. 649; 31 N. E. 158; Keener, Cas. Eq.
Ill. 714.

® Loxley v. Douglass, 121 Ala. 575; 25 S. 998.

7 Rigdon v. Walcott, supra.

§ 470. 1 Rubin v. Sturtevant, — U.S. App. — ; 80 F. 980; Bank of
Antigo v. Union Trust Co., 149 Ill. 343; 86 N. E. 1029.

* Bigelow, Fraud, I. 422; Barrie v. Earle, 143 Mass.1; 8 N. E. 639;
Merrill v. Wilson, 66 Mich. 232; 33 N. W. 716; Yeomans v. Bell, 151
N. Y. 230; 45 N. E. 552; Bollnow v. Novacek, 184 Ill. 463; 56 N. E.
801; Alfree Mfg. Co. v. Grape, — Neb. — ; 82 N. W. 181.
276 RESCISSION AND REFORMATION.

CHAPTER XXVI.

HOW THE RIGHT OF RESCISSION MAY BE LOST.

§ 471. What will bar the Right of Rescission.—The right
of rescission may be barred by ratification, by laches, by the
statute of limitations, and by estoppel.

§ 471 a. Ratification by Infants. — Certain peculiar rules
governing infants’ contracts render it necessary to examine
the question of ratification of such contracts separately. In
England the subject is now governed by the Infants’ Relief
Act of 1874.1 Statutes sometimes require written ratification?

§ 472. When an Infant can ratify.— An infant can ratify
avoidable contract only after attaining majority. In order
that the ratification may be set up in a given action, it must
take place before that action is brought.?

§ 478. What will constitute Ratification of an Infant’s Con-
tract. — What will constitute a ratification depends upon the
nature of the transaction. Where an infant purchases prop-
erty, any act after he attains majority consistent only with an
intention on his part to assert his ownership of the property
will amount to a ratification4 Thus the sale of the property,?

§ 471 a. ! Anson, Contracts (8th ed.), 111.

2 Ward v. Scherer, 96 Va. 318; 81S. E. 518.

§ 472. 1 White v. New Bedford, etc. Corp., — Mass. — ; 59 N. E.
642.

2 Thornton v. Illingworth, 2 B. & C. 824; Ford v. Phillips, 1 Pick.
202; Hale v. Gerrish, 8 N. H. 374; Ewell’s L. C. 171; Sanger v. Hib-

bard, — U.S. App. — ; 104 F. 455; contra, Buchanan v. Hubbard, 119
Ind. 187; 21 N. E. 538.

§ 473. 1 Lawson v. Lovejoy, 8 Me. 405; Ewell’s L. C. 166; Henry v.
Root, 83 N. Y. 526; Pattee’s Cases on Contracts, 20.

2 Lawson v. Lovejoy, supra; Henry v. Root, supra ; Boody v. McKen-
ney, 23 Me. 517; Woodruff, 320.
WHAT WILL BAR RESCISSION. Q7T

or the retention of it for an unreasonable length of time? will
amount to a ratification of the purchase. The retention of
the property, however, may be so explained as not to consti-
tute a ratification. Thus where lumber was furnished to an
infant for building a house, it was held that retention of the
property after the infant came of age did not amount to a
ratification, the lumber having lost its original form.

§ 474. Instances of Ratification by Infants. — Any act show-
ing that a person intends to be bound by a contract which
he made before coming of age will constitute a ratification.
Bringing suit on the contract is of course a ratification!

Where there is a contract by an infant to serve for a given
time, which extends beyond his minority, if the infant remains
in his employer’s service after coming of age, he ratifies the
contract.?

Where an infant buys land and gives a purchase-money
mortgage, by asserting his title to the land after coming of
age he ratifies the mortgage.?

§ 475, Ratification by Infant’s Failure to disaffirm the Contract.
—Only acts which show an intention on the part of the infant
to affirm the contract can constitute a ratification.1 A mere
failure to disaffirm the contract does not amount to a ratifica-
tion.2 There is an exception to this rule, as we have seen,
where an infant acquires property to which certain obligations
are attached. In such cases, failure to disaffirm the purchase

8 Delano v. Blake, 11 Wend. 85; Boyden v. Boyden, 9 Pick. 519;
Pattee’s Cases on Contracts, 94.

4 Bloomer v. Nolan, 36 Neb. 51; 53 N. W. 1039; and see McCarty v.
Carter, 49 Ill. 58; Woodruff, 379.

§ 474. 1 Middleton v. Hoge, 5 Bush, 478.

2 Forsyth v. Hastings, 27 Vt. 646; State v. Dimick, 12 N. H. 194,

8 Uecker v. Koehn, 21 Neb. 559; 82 N. W. 583; Kennedy v. Baker,
159 Pa. St. 146; 28 A. 252; Robbins v. Eaton, 10 N. H. 561.

§ 475. 1 Toby v. Wood, 123 Mass. 88 ; Woodruff, 377.

2 Smith v. Kelley, 18 Met. 809; Ford v. Phillips, 1 Pick. 202; Good-
sell v. Myers, 8 Wend. 479; Pattee’s Cases on Contracts, 19; Carrell v.
Potter, 28 Mich. 377; Nichols v. Snyder, — Minn. — ; 81 N. W. 516;
Gilkinson v. Miller, 74 F. 181. A different rule is sometimes laid down’
by statute in regard to the ratification of conveyances. Sayles v. Christie,
187 Ill. 420; 58 N. E. 480.
278 RESCISSION AND REFORMATION.

within a reasonable time after arriving at majority constitutes
a ratification of the purchase?

§ 476. Acknowledgment and Part Payment by Infant not
Ratification. — A mere acknowledgment that a debt is due is
insufficient, even though accompanied by a statement that
the creditor will get his pay.2. Part payment of a debt will not
amount to a ratification ;? nor will an offer to compromise ; +
nor declarations to third parties.®

The making of a will directing that the testator’s just debts
should be paid has been held not to amount to a ratification
of debts contracted during minority.®

§ 477. Ratification must be voluntary. — Ratification must
be voluntary, and not brought about by fear of arrest,’ or
through undue influence.”

§ 478. Ignorance of Law does not affect Ratification. — A
ratification is valid though made in ignorance of the law
giving the party the right to avoid his contract on the ground
of infancy.

8 Ante, § 465.

§ 476. 1 Ford v. Phillips, 1 Pick. 202; Kendrick v. Neisz, 17 Col. 506;
30 P. 245; Goodsell v. Myers, 3 Wend. 479; Pattee’s Cases on Contracts,
19; Breese v. Stanly, 119 N. C. 278; 25 8S. E. 870; Thompson v. Lay,
4 Pick. 48; Woodruff, 376.

2 Hale v. Gerrish, 8 N. H. 3874; Ewell’s L. C. 171.

8 Kendrick v. Neisz, 17 Col. 506; 30 P. 245; Catlin v. Haddex, 49
Conn. 492; Hinely v. Margaritz, 3 Pa. St. 428; contra, American Mtg.
Co. v. Wright, 101 Ala, 658; 148. 399.

4 Bennett v. Collins, 52 Conn. 1.

5 Sayles v. Christie, 187 Il. 420; 58 N. EB. 480; Chandler v. Glover,
32 Pa. St. 509.

6 Smith v. Mayo, 9 Mass. 62; but see Merchants’ Fire Ins. Co. »v.
Grant, 2 Edw. Ch. 544.

§ 477. 1 Harmer v. Killing, 5 Esp. 102.

2 Sayles v. Christie, 187 Ill. 420 ; 58 N. BE. 480.

§ 478. 1 Morse v. Wheeler, 4 Allen, 570; Woodruff, 384 ; Anderson v.
Soward, 40 Ohio St. 325; American Mtg. Co. v. Wright, 101 Ala. 658;
14 8. 399; Clark v. Van Court, 100 Ind. 113, overruling Fetrow v. Wise,
man, 40 Ind. 148; Bestor v. Hickey, 71 Conn. 181; 41 A. 555; contra,
Hinely v. Margaritz, 3 Pa. St. 428. And see Sayles v. Christie, 187 Ill.
420; — N. E. —, where the court says, ‘‘ The act relied upon as a ratifi-
cation must be performed with a full knowledge of its consequences, and
with an express intent to ratify what is known to be voidable.”
WHAT WILL BAR RESCISSION. 279

§ 479. Conditional Ratification by Infants. — Ratification
may be conditional, in which case the condition must be per-
formed in order that the ratification may be set up to overcome
the defence of infancy.*

§ 480. Ratification of Insane Persons’ Contracts. — Con-
tracts made by parties lacking in mental capacity may be
ratified by them when the disability ceases,! or by their rep-
resentatives after their decease,? or by order of court upon
the appointment of a committee, guardian, or conservator.
Knowledge of the law rendering such contracts voidable is
not essential to the validity of such ratification. It seems
that the acts set up as constituting a ratification must, as in
the case of an infant’s contracts, show an intention to affirm
the contract.

§ 481. Requisites of Ratification in general.—In the case
of contracts voidable for mistake, misrepresentation, fraud,
duress, or unfair dealing, ratification consists in some act
or course of conduct showing, first, a knowledge of the facts
rendering the contract voidable ; and, secondly, a willingness
to abide by the contract." An act done in ignorance of the
facts rendering the contract voidable cannot be a ratification
of the contract.2. Knowledge of all the incidents of a fraud,
however, is not essential;? nor is knowledge of the law.4
Knowledge of the falsity of the representation, however, is
sufficient to put the injured party to his election, though he

§ 479. 1 Everson v. Carpenter, 17 Wend. 419; Proctor v. Sears, 4 Al-
len, 95; Kendrick v. Neisz, 17 Col. 506; 30 P. 245; State v. Binder, —

N. J. L. — ; 31 A. 215; Thompson v. Lay, 4 Pick. 48 ; Woodruff, 376.
§ 480. 1 Carpenter v. Rodgers, 61 Mich. 384; 28 N. W. 156.
2 Bunn v. Postell, — Ga. — ; 33 S. E. 707.

3 Baldwyn v. Smith, 1900, 1 Ch. 588.

4 Arnold v. Richmond Iron Works, 1 Gray, 434.

§ 481. 1 Sutter v. Rose, 169 Ill. 66; 48 N. E. 411.

2 Brophy v. Lawler, 107 Ill. 284; Baker v. Maxwell, 99 Ala. 558; 14
8. 468 ; Kraus v. Thompson, 30 Minn. 64; Pratt v. Philbrook, 41 Me. 132;
Hays v. Midas, 104 N. Y. 602; 11 N. E. 141; Equitable Co-op. Foundry
v, Hersee, 103 N. Y. 25; 9 N. E. 487; Alabama Foundry Works v. Dal-
las, — Ala. — ; 29S. 459.

® Wilson v. Hundley, 96 Va. 96; 30S. E. 492.

* Ante, §§ 478, 480.
280 RESCISSION AND REFORMATION.

does not know of all the evidence tending to prove the fraud.5
But if the defrauded party acts on false information given him
by his own agent, who has been bribed by the other party,
there can be no election until the corruption of the agent
becomes known to the principal.®

§ 482. The Effect of Blection. — In every case of a voidable
contract the injured party has his election to affirm or dis-
affirm the contract. The two remedies are inconsistent and
cannot be combined. ‘Any decisive act by a party, with
knowledge of his rights and of the facts, determines his elec-
tion in the case of inconsistent remedies.””"2 The commence-
ment of an action on the contract is therefore a ratification.?
Merely advertising land for sale under a mortgage after filing
a bill to rescind the mortgage for fraud is not a ratification of
the mortgage, where no attempt to sell 1s made.t Where the
plaintiff tenders back property received under a voidable con-
tract, and the property is refused, rescission takes place, and
a subsequent sale of the property by the plaintiff is not a
ratification of the contract.

§ 483. Deliberation necessary to constitute Election. — In
order to constitute an election there must be a deliberate
assertion of one of two alternative rights... An action brought
hastily upon the contract, and afterwards dismissed, is not,
therefore, a bar to a subsequent rescission of the contract2
Deliberation, however, is presumed in such cases, but the

5 Simon v. Goodyear, etc. Co., — U.S. App. — ; 105 F. 578.
® Alger v. Keith, — U.S. App. — ; 105 F. 105.
§ 482. 1 Alfree Mfg. Co. v. Grape, — Neb. — ; 82 N. W. 181.

2 Robb v. Vos, 155 U. 8. 18, 43; Wright, etc. Co. v. Robinson, —
Minn. — ; 82 N. W. 632.

8 Thompson v. Howard, 31 Mich. 309; Thomas v. Watt, 104 Mich. 201;
62 N. W. 345; Evans v. Rothschild, 54 Kans. 747; 39 P. 701; Connihan
v. Thompson, 111 Mass. 270; Conrow »v. Little, 115 N. Y. 387; 22 N. E.
346.

* Watts v. British & Am. Mtg. Co., 60 F. 453; 9C. C. A. 98.

5 Barnett v. Speir, 93 Ga. 762; 21S. HE. 168.

§ 483. 1 Standard Oil Co. v. Hawkins, 46 U. S. App. 115; 74 F. 395.

2 Johnson-Brinkman Co. v. Missouri Pac. Ry. Co., 126 Mo. 344; 28
S. W. 870.
WHAT WILL BAR RESCISSION. 281

presumption is rebuttable.? Election is sometimes confounded
with estoppel,* though the distinction is very clear. The de-
liberate act of one party with knowledge of the facts consti-
tutes an election,® while an estoppel can arise only when the
other party’s position has been changed.®

§ 484. Laches. — Laches consists in the neglect to assert
aright. ‘The length of time during which the party neglects
the assertion of his rights, which must pass in order to show
laches, varies with the peculiar circumstances of each case,
and is not, like the matter of limitations, subject to an arbi-
trary rule. It is an equitable defence, controlled by equitable
considerations, and the lapse of time must be so great, and
the relations of the defendant to the rights such, that it would
be inequitable to permit the plaintiff to now assert them.’’?
Laches cannot be imputed to one who is ignorant of his
rights?

§ 485. The Statute of Limitations. — The statute of limita-
tions may prevent the bringing of an action for rescission,
after the lapse of the prescribed time, and it may operate also
to bar rescission by plea.

§ 485 a. Loss of Right of Rescission by Estoppel.— Where
an action is brought for the rescission of a contract upon one
ground, judgment for the defendant in that action is a bar to
any subsequent action for rescission based upon any ground
of a similar nature, or, in other words, upon any matter ‘of
improperly created motive” which the plaintiff might urge as
a reason for asking the court to set aside the transaction.
The judgment in such a case operates as an estoppel against

= Bigelow, Fraud, I. 487.

4 As in Johnson-Brinkman Co. v. Missouri Pac. Ry. Co., supra.

5 Campbell v. Kauffman Milling Co., — Fla. — ; 29 S. 435, citing
Bigelow on Estoppel.

8 3 Northwestern Law Review, 157.

§ 484. 1 Halstead v. Grinnan, 152 U. S. 412, 416; Alsopv. Riker, 155
U.S. 448,

? Halstead v. Grinnan, supra; Lasher v. M’Creery, 66 F. 834.

§ 485 a. 1 Hoseason v. Keegen, — Mass. — ; 59 N. E. 627, and cases
cited.
282 RESCISSION AND REFORMATION.

the plaintiff in a subsequent action, because “he was bound
to bring forward in the former case all grounds of a similar
nature, or, in other words, all matters of improperly created
motive which he might have for setting aside the trans-
action.” 2

2 Holmes, C. J., in Hoseason v. Keegen, supra.
THE REFORMATION OF CONTRACTS, 283

CHAPTER XXVII.

THE REFORMATION OF CONTRACTS.

§ 486. Nature and Effect of Reformation. —If there is a
common mistake in regard to the terms of the contract, it is
because the parties have intended to bring about a certain
change in their legal relations by means of the contract, and
have failed to express themselves so as to produce that change,
either on account of a mistake in the use of language, or
on account of a mistake as to the legal effect of the lan-
guage used. We have already seen that when the parties
have once agreed that a written document shall be regarded
as expressing the terms of their contract, oral evidence is in-
admissible to vary the terms of such written contract. If this
rule were an absolute one it would clearly work great injus-
tice; and to prevent such injustice a court’ of equity will,
under proper circumstances, interfere to reform or rectify the
writing in question to conform to the intention of the parties.
This reformation, or rectification, may be looked upon as a
rescission of the contract actually made, and a substitution
therefor of the contract which the parties intended to make.
The subject of reformation of instruments, therefore, may
properly be treated in connection with the rescission of
contracts.

§ 487. When Reformation will be granted. — The funda-
mental rule of equity with reference to the reformation of
written instruments may be stated as follows. Where the
parties to a given transaction have intended to bring about a
certain change in their legal relations by means of a written
instrument, and that instrument fails to produce the intended
legal result, a court of equity will reform the instrument in
284. RESCISSION AND REFORMATION.

question so as to make it conform to the intention of the par-
ties, provided such reformation will not impair some superior
equity of the party resisting reformation.

§ 488. The Mistake must be common to both Parties. — It
is apparent from the foregoing rule that a mistake as to the
nature of the promise will not be ground for the reformation
of the instrument unless such mistake is common to both par-
ties.1 “It must appear that both have done what neither in-
tended ;” 2 and it must also appear that both intended to do
the same thing. Hence there may be a mistake on each side,
and yet such double mistake will not be ground for reforming
an instrument, Thus in Page v. Higgins,’ A. executed a deed
to B. under an agreement to sell all his land ina certain town.
B. supposed that A. owned two tracts, X. and Y., and drew
the deed so as to include both. A. owned only X., and sup-
posed that the deed conveyed only X. The court refused to
reform the deed, because, though each party had made a mis-
take, the mistake on one side was different from that on the
other.

§ 489. Mistake of one Party as Ground for Reformation. —
Mistake on one side, however, is recognized as ground for
reforming an instrument where such mistake is caused by the
fraud of the other party.1 This doctrine seems unsound in
principle. In so far as a party is injured by fraud his rights
are to be restored to the position which he would have occu-
pied had not the fraud been committed. Now if a written
contract is executed by A. and B, and B. executes the con-
tract because A.’s fraud has misled B. as to its terms, the

§ 487. 2 As to the application of this proviso between mortgagor and
mortgagee, see Ocean Beach Ass’n v. Trenton Trust Co., — N.J. Eq. — ;
48 A. 559.

§ 488. 1 Fowler v. Fowler, 4 De G. & J. 250; King v. Holbrook, —
Or. — ; 63 P. 671; Ocean Beach Ass’n v. Trenton Trust Co., — N. J.
Eq. — ; 48 A. 559.

2 Hearne v. Marine Ins. Co., 20 Wall. 488, 491.

3 150 Mass. 27; 22 N. E. 63.

§ 489. 1 Simmons Creek Coal Co. v. Doran, 142 U. S. 417, 485; 12S.
Ct. 239; Bergen v. Ebey, 88 Ill. 269; Conns v. Hagan, 93 Tex. 384; 55
S. W, 323,
THE REFORMATION OF CONTRACTS. 285

effect of the fraud has been to induce B. to execute a con-
tract which he would not otherwise have executed, and B. is
therefore entitled to a rescission of such contract. A., how-
ever, has executed the exact contract which he intended to
execute, and to reform the contract is for the court to impose
an obligation upon him which is not really contractual, since
itis not the obligation created by his act in executing the
written contract. By virtue of this doctrine B. has the right
to enforce the contract as executed, or to enforce an obliga-
tion which A. never incurred by virtue of any contract, but
simply through the decree of the court “reforming” the
contract in question.

§ 490. Mistake of one Party not caused by the other. — Some
courts carry this doctrine even farther, and decree a reforma-
tion of the contract whenever one party has made a mistake
with regard to its terms of which the other party was cogniz-
ant.t. This case differs from fraud in that the mistake is not
caused by the conduct of the other party. The true rule, in
such cases, however, is this: If A. and B. enter into a con-
tract, and A. makes a mistake with reference to its terms, of
which B. is aware, a court of equity will rescind the contract
at A.’s request unless B. consents to its reformation in accord-
ance with A.’s understanding of its terms.2 In a recent Eng-
lish case? it is said that the English cases cited in support of
this doctrine rest on fraud, and that unilateral mistake is not
ground for rescission or alternative reformation; a statement
which is open to doubt.

§ 491. Reformation of Voluntary Deed. — If a deed is purely
voluntary, it is sometimes held that the mistake of the grantor
will justify a reformation of the deed at the instance of the

§ 490. 1 Wyche v. Greene, 26 Ga. 415; Roszell v. Roszell, 109 Ind. 354;
10 N. E. 114; Essex v. Day, 52 Conn. 483; Trenton Terra Cotta Co. v.
Clay Shingle Co., 80 F. 46.

2 Paget v. Marshall, 28 C. D. 255; Keener, Cas. Eq. III. 295; Garrard
v, Frankel, 30 Beav. 445; Keener, Cas. Eq. III. 261; Fehlberg v. Cosine,
16 R. I. 162; 18 A. 110; Keener, Cas. Eq. ITI. 312; Moffett, etc. Co. v.
Rochester, 178 U. 8S. 373; McCusker v. Speir, 72 Conn. 628; 45 A.1011.

8 May »v. Platt, 1900, 1 Ch. 616.
286 RESCISSION AND REFORMATION.

grantee! Other cases hold that the deed may be set aside
entirely for such mistake.”

§ 492. Mistake of Fact and Mistake of Law. — It is often said
that equity will correct a mistake of fact but not a mistake of
law; that if the parties to a contract say X. when they mean
Y., the contract will be reformed, and Y. substituted for X.;
but that if the parties make a mistake only as to the legal
effect of the word X., the court will not interfere. The true
rule, however, is this: When there is an intention on the
part of both parties that a certain contract shall be executed,
and the written instrument which they execute does not have
the effect which they intend, it makes no difference whether
the mistake of the parties is in regard to the terms of the con-
tract or as to the legal effect of those terms.! ‘“‘ Whether the
mistake can be clearly defined as one of fact or law is not so
important.”? In either case the court will correct the instru-
ment by making it conform to the intention of the parties. If,
however, in addition to the general intention of executing a
certain contract, the parties have the specific intention of exe-
cuting the particular instrument in question, then the specific
intention controls, and the court cannot reform the instru-
ment to make it conform to the general intention of the parties.
This specific intention must, it seems, be something more than
the intention of doing an act which is inferred from the volun-
tary doing of that act. The specific intention must be the re-
sult of deliberation and choice.®

§ 493. Instances of Reformation for Mistake of Law.— The
foregoing principles are illustrated by the following cases.

A. sells a piece of land to B. By mistake the habendum in

§ 491. 1 Lynn v. Lynn, 135 Tl. 18; 25 N. E. 634; contra, Willey v.
Hodge, 104 Wis. 81; 80 N. W. 75.

2 Foth v. Ellenberger, — N. J. Eq. — ; 47 A. 216; Mulock v. Mu-
lock, 31 N. J. Eq. 594.

§ 492. 1 Kyner v. Boll, 182 Ill. 171; 54 N. E. 925; Whitehill v. Dacus,
49 S. C. 273; 27 S. E. 200; Wisconsin, ete. Bank v. Mann, 100 Wis.
596; 76 N. W. 777.

2 Pinkham v. Pinkham, — Neb. — ; 83 N. W. 837.

8 See Bigelow’s note to Story’s Equity Jurisprudence (13th ed.),.§ 111.
But see Morehead Bkg. Co. v. Morehead, 124 N. C. 622; 32 S. E. 967.
THE REFORMATION OF CONTRACTS. 287

the deed runs “to B. and his bodily heirs,” instead of “to B.
and his heirs;” thereby conveying an estate-tail instead of a
fee-simple. The mistake is a mistake of law as to the effect
of the words “ bodily heirs,” but the deed will be reformed.

A. grants land to B., intending to reserve a life-estate, but
uses inapt words making the instrument testamentary in its
character through the mistake of the notary in drafting the
instrument. The deed will be reformed.”

A., B., and C. form a partnership. A. takes out an insur-
ance policy on cotton belonging to the firm. A. communicates
the facts in regard to the ownership of the cotton to the insur-
ance agent, who tells him that a policy in A.’s name will pro-
tect the interest of the firm. The policy is issued in A.’s
name, but by reason of a mistake as to the law does not pro-
tect the firm. The policy will be reformed.®

A. signs a bond conditioned that B. shall “abide by and
perform the orders and decrees” of the court in a certain
action. The bond is intended simply as security for B.’s ap-
pearance in court so as to be amenable to such “orders and
decrees.” There is no mistake as to the words of the bond,
but there is a mistake as to the legal effect of the words used.
The bond will be reformed.*

§ 494. Conflict of Opinion in Regard to Reformation for Mis-
take of Law. — Some courts still cling to the idea that there is
a distinction between mistake of law and mistake of fact.1
Thus the Supreme Court of Illinois in a recent case states the
law of that State as follows: “If the words are written as
the parties intended they should be written or supposed they
were written, no matter how much they may be mistaken
in the meaning of those words, no relief can be granted either

§ 493. 1 Dinwiddle v. Self, 145 Ill. 290; 33 N. E. 892; Keener, Cas.
Eq. III. 187; Kyner v. Boll, 182 Ill. 171; 54 N. E. 925.

2 Pinkham v. Pinkham, — Neb. — ; 83 N. W. 837.

8 Snell v. Ins. Co., 98 U. S. 85; Keener, Cas. Eq. III. 80.

4 Griswold v. Hazard, 141 U. S. 260; 1158. Ct. 972, 999; Keener,
Cas. Eq. III. 107. :

§ 494. 1 See Morehead Bkg. Co. v. Morehead, 124 N. C. 622; 328. E.
967.
288 RESCISSION AND REFORMATION.

at law or in equity.”2 In that case some grantors intended
to convey land to A. with remainder to his children, and gave
instructions to a conveyancer accordingly. The conveyancer
,used the word “heirs” instead of “children” in the deed,
thereby altering its legal effect. The grantors executed the
deed, supposing it would give effect to their intention, and the
court refused to reform the deed. So in a recent case in Utah
a guardian signed a note which was not intended by the parties
to bind him personally, and the court held that the note could
not be reformed.2 Sometimes there appears to be a confusion
of the rule excluding parol evidence to alter the meaning of a
written instrument and the rule permitting such evidence in
equity when offered for the purpose of reforming the instru-
ment.*

§ 495. When Mistake of Law is no Ground for Reformation,
— While a mistake of law will not prevent the court from re-
forming a contract so as to give effect to the intention of the
parties, the principle that the specific intention controls the
general intention is illustrated by the leading case of Hunt v.
Rousmaniere.! In that case the defendant’s intestate had bor-
rowed money of the plaintiff, and had given as security a power
of attorney to sell certain vessels. The general intention of
the parties was to give the plaintiff a lien on the vessels. The
plaintiff was advised by counsel, however, that a power of at-
torney would be preferable to a mortgage, and such power of
attorney was accordingly given. The borrower died insolvent,
and the plaintiff sought to enforce his supposed lien on the
vessels. The power of attorney, however, was revoked by the
debtor’s death, and the court refused to treat it as a mortgage.
The general intention of the parties that a lien on the vessels
should be given was controlled by their specific intention that

2 Fowler v. Blake, 136 Ill. 363; 26 N. E. 596; Keener, Cas. Eq. III.
100; contra, Brock v. O'Dell, 21 S. E. 976 (S. C.), which supports the
principles stated in the text. In Kyner v. Boll, 182 Ill. 171; 54 N. EB.
925, the court attempts to distinguish Fowler v. Blake, but evidently is
seeking to break away from the rule laid down in that case.

8% Andrus v. Blazzard, — Utah, — ; 63 P. 888.

4 Tbid.

§ 495. 1 1 Pet. 1; Keener, Cas. Eq. III. 6.
THE REFORMATION OF CONTRACTS. 289

the power of attorney should be executed instead of a mort-
gage; and as their specific intention had been carried out, there
was no ground on which the court could interfere. So where
A. purchased land and took the conveyance in his wife’s name
under the impression that the land would descend to him at
her death, reformation of the conveyance was refused.?

§ 496. Reformation of Contracts for Mistake as to the Subject-
matter. — In some cases the courts have reformed contracts
on account of a common mistake as the subject-matter of the
contract.t The objection to reformation in such cases is that
the court cannot make contracts for the parties. If A. and
B. contract for a certain thing, X., and by mistake call it Y.,
the court in reforming the contract is simply giving effect to
the intention of the parties, which by accident has been mis-
takenly expressed. Thus where the parties agree upon a cer-
tain boundary line, but misdescribe it by reference to a certain
supposed boundary, the court can properly reform the deed to
make the description agree with that of the line actually
agreed upon by the parties.? If, however, the parties contract
for a certain thing, X., mistakenly believing that X. is Y.,
there is no ground for reforming the contract. If Y¥. and X.
are essentially different, there is no contract, the mistake
going to the essence.’ If, on the other hand, X. and Y. are not
essentially different, the mistake does not go to the essence,
and there is a valid contract for X. In neither case is there
any contract for Y.; and the court in-“ reforming” the con-
tract, by substituting Y. for X. therein, is really imposing
upon the parties a contract which they never intended to
make.! This reasoning, however, is not invariably appreciated.
Thus where the parties had agreed upon a certain boundary
line, under a mutual mistake with reference to its location,
the court “reformed” the contract by substituting for the
boundary line which the parties actually agreed upon, the line

2 Dever v. Dever, — Ky. — ; 448. W. 986.
§ 496. 1 Zorn Brg. Co. v. Malott, — Ind. — ; 46 N. E. 23.
2 Henderson v. Beasley, 137 Mo. 199; 38S. W. 950.
® Ante, §§ 287-290, 335.
4 Leake, Contracts, 272.
19
290 RESCISSION AND REFORMATION.

which they might have agreed upon had it not been for the
mistake. By a process of reasoning somewhat similar, it has
been held that where a tract of land is sold, and is described
in the deed by metes and bounds, containing so many acres,
if there is a mistake as to the number of acres the court will
give relief by a decree in favor of the party injured for the
value of the excess or the deficiency ; although the description
by metes and bounds is controlling.

5 Zorn Brg. Co. v. Malott, — Ind. — ; 46 N. E. 28.
6 Hull v. Watts, 95 Va. 10; 278. E. 829.
BOOK VI.

THE DISCHARGE OF CONTRACTS.

CHAPTER XXVIII.

THE DISCHARGE OF CONTRACTS IN ACCORDANCE WITH THEIR
TERMS.

§ 497. How Contractual Obligation may be discharged. —
Contractual obligation may be discharged by performance ;
by the happening of an event which the contract itself pro-
vides shall effect a discharge of the obligation, and which is,
therefore, an internal condition subsequent; by the happen-
ing of an event which by operation of law effects a discharge
of the obligation, and which is, therefore, an external condi-
tion subsequent; and by the discharge of the right of action
arising from breach of contract. The term “discharge” is
here used to denote any event which puts an end to the obli-
gation of the contract, including performance of the contract.
It is sometimes necessary, however, to distinguish between
performance and discharge by the happening of some event
which is a condition subsequent, for while performance is a
mode of discharge, discharge is not performance. This dis-
tinction between performance and discharge is of special im-
portance in connection with the interpretation of that clause
of the Statute of Frauds which refers to contracts not to be
performed within one year.’

§ 498. Performance.— The performance of an obligation
necessarily discharges that obligation. The performance must

§ 497. 1 Post, §§ 588, 589.
292 THE DISCHARGE OF CONTRACTS.

be in strict accordance with the terms of the contract, sub-
ject only to the rule de minimis non curat lex. It is held in
some States that substantial performance in good faith of a
condition precedent may be sufficient ;! but this rule applies
only to the performance of conditions, not to the performance
of obligations.

§ 499. Substituted Performance. — Performance in a dif-
ferent manner from that called for by the contract will dis-
charge the obligation if such performance is accepted by the
promisee ;! and if the promisee requests a change in the man-
ner of performance, the promisor is discharged if the promisee
prevents him from performing in the substituted manner? It
makes no difference in this respect whether the original con-
tract is within the Statute of Frauds or not.?

§ 500. Conditional Performance. — Performance may be
conditional ; that is to say; an act maybe accepted as per-
formance, subject to some condition subsequent. If the con-
dition subsequent happens, the performance no longer operates
as a discharge of the obligation, and the promisee has a right
of action on the original contract. A common instance of
conditional performance is ‘where a negotiable instrument
is given in discharge of an obligation. Such an instrument
may operate either as an absolute or as a conditional dis-
charge. If the discharge is absolute, the original obligation
is forever gone; if the discharge is conditional, the obligation
is discharged by the negotiable instrument; but if the nego-
tiable instrument is dishonored at maturity, the original obli-
gation is revived. Whether a negotiable instrument is to
operate as a conditional or as an absolute discharge of the
original obligation is a question of intention. There is a con-
flict of authority as to the presumption in such a case, but the
weight of authority supports the view that a negotiable instru-

§ 498. 1 Nolan v. Whitney, 88 N. Y¥. 648; W. 575; H. & W. 542;
K. IL. 1116; ante, § 339. —

§ 499. } Leather Cloth Co. v. Hieronimus, L. R. 10 Q. B. 140; Swain
v. Seamens, 9 Wall. 254; Rogers v. Rogers, 189 Mass. 440; 1 N. E. 122.

2 Cummings v. Arnold, 8 Met. 486; Stearns v. Hall, 9 Cush. 31.

3 Browne, Statute of Frauds, $§ 423, 424.
PERFORMANCE. 293

ment is presumed, in the absence of evidence, to operate only
as a conditional discharge.}

§ 501. Substantial Performance. — Substantial performance
of a condition precedent is in some jurisdictions held suffi-
cient! Substantial performance of a contract, however, even
in those jurisdictions, does not relieve the party performing
from liability for damages for his failure to perform the con-
tract entirely, and such damages may be recouped or set off
against the plaintiff's claim to recover the contract price.?

§ 502. Tender.— Tender is not strictly equivalent to per-
formance, although sometimes so declared by statute. Tender
consists in attempted performance. If the promise is to pay
money, tender of the money, if the tender is kept good, will
stop the running of interest, and will prevent the promisee
from recovering costs. If the contract to pay the money is
unilateral, the obligation to pay is not discharged by the
tender. If the contract is bilateral, a refusal by the promisee
to accept performance may amount to a renunciation of the
contract, and may be treated by the promisor as a discharge
of the contract.2. If the contract is unilateral, and is not for
the payment of money, a refusal to accept performance will
discharge the promisor.? Tender must, of course, correspond
in all respects to the terms of the contract.4

§ 503. Internal Conditions Subsequent — Conditions in
Fact. — The happening of an event which is an internal con-
dition subsequent, that is to say, which is a condition subse-
quent according to the construction of the contract itself,
will discharge the contract,! or at least will entitle the party

§ 500. 1 The cases are collected in Benjamin on Sales (Bennett’s 7th
ed.), pp. 772-776. In some cases the question is held to be a question
of fact for the jury, with no presumption either way. See Wheelock’ v.
Berkley, 138 Ill. 153; 27 N. E. 942.

§ 501. } Ante, § 339.

2 Thid.

§ 502. 1 Anson, Contracts (8th ed.), 284.

2 Post, §§ 518 et seq.

8 Lamb v. Lathrop, 13 Wend. 95.

* Patch v. Collins, 158 Mass. 468; 33 N. E. 567; Dixon »v. Clarke,
5 C. B. 879. : :

§ 503. 1 Belleville v. Citizens’ Horse R., 152 Ill. 171; 38 N. E. 584.
294 THE DISCHARGE OF CONTRACTS.

for whose benefit the condition is imposed to put an end to the
contract. Thus in a contract of sale with a provision that the
thing sold may be returned if not satisfactory to the vendee,
the return of the thing sold will discharge the vendee’s obli-
gation to pay for it There are other internal conditions
which are not expressed in terms, but which are, nevertheless,
according to a true construction of the contract, part of the
contract. Among such internal conditions may be mentioned
legal impossibility; the death of a party to a contract for
personal services; and the destruction of the subject-matter
of the contract. The circumstances under which such events
will be construed as internal conditions subsequent have been
already explained in discussing the Construction of Contracts.
Again, the failure of a thing sold to answer the description
in the contract of sale may, if the article is actually received,
amount to a condition subsequent entitling the vendee to
return the article and thereby be discharged from his obliga-
tion to pay for it. In England the right of return is limited
to cases where the thing received is essentially different from
the thing bargained for. Some of the American courts allow
a mere breach of warranty to be treated as a condition subse-
quent, but the English rule is more commonly followed.é

2 Buckstaff v. Russell, 151 U. S. 626; and see Head v. Tattersall, L. R.
7 Ex. 7.

3 Ante, Ch. IX.

4 Bryant v. Isburgh, 13 Gray, 607; H. & W. 609; Milliken v. Skil-
lings, 89 Me. 180; 36 A. 77.

° Freyman rv. Knecht, 78 Pa. St. 141; H. & W. 607; Benjamin on
Sales (Bennett’s 7th ed.), 958.
WAIVER AND GIFT. 295

CHAPTER XXIX.
THE DISCHARGE OF CONTRACTS BY VOLUNTARY ACT.

§ 504. What Voluntary Acts will dischargé Contractual Obli-
gation. — A contract may be discharged either by the voluntary
act of the party in whose favor the obligation is imposed, or
by some event which operates as a discharge by operation of
law. The voluntary acts by which the obligation may be dis-
charged include waiver, gift, release, and novation.

§ 505. Waiver.— Waiver is not sufficient to discharge a
contract in this country, nor generally in England. In the
case of a bill of exchange or promissory note the English
courts have held that waiver by the holder of his rights will
discharge the parties to the instrument.? Such waiver is now
required by the Bills of Exchange Act, 45 & 46 Vict. c. 16,
§ 62, to be in writing.

§ 506. Gift. — The promisee may make a gift of the obliga-
tion to the promisor. A gift must be executed; that is, there
must be an act done sufficient in law to amount to a transfer
of the property given! A chose in action is, of course, the
subject of gift. If the chose in action is evidenced by a
written instrument, delivery of the instrument is ordinarily
necessary? and completes the gift. If delivery of the proper
evidence of the obligation is impossible, a receipt in full is

§ 505. 1 See King v. Gillett, 7 M. & W. 55; K. II. 1470.

2 Foster v. Dawber, 6 Ex. 839.

§ 506. 1 Hart v. Strong, 183 Ill. 349; 55 N. E. 629.

2 Young v. Power, 41 Miss. 197; Buswell v. Fuller, 156 Mass. 309;
31 N. E. 294; Slade v. Mutrie, 156 Mass. 19; 30 N. E. 168; Young v.
Young, 80 N. Y. 422; Hart v. Strong, supra.

8 Stewart v. Hidden, 13 Minn. 48.
296 : THE DISCHARGE OF CONTRACTS.

sufficient, if executed with the intention of making a gift,* but
not otherwise.®

§ 507. Release. — A release at common law is a deed dis-
charging an obligation. The term “release” ex vt termini
imports a sealed instrument, when used in a technical sense ;!
although the term is used popularly in a wider sense. A
release may be conditional, subject either to a condition pre-
cedent or to a condition subsequent. Thus in Gibbons 2,
Vouillon? a deed provided that the defendant should carry
on business under the inspection of trustees; that his cred-
itors, who were parties to the deed, should not sue him for
five years; and that if any creditor should interfere with the
defendant the defendant’s obligation to such creditor should
be discharged. It was held that the deed operated as a re-
lease, subject to the condition precedent of the plaintiff's
interference with the defendant. On the other hand, where a
deed of composition contained a release of their claims by the
creditors, with a condition that the release should be void if
the composition was not paid, the non-payment of the com-
position was held to restore the creditors to their original
rights.3

§ 508. Releases and Covenants not to sue. — A release must
be distinguished from a covenant not to sue. A release dis-
charges the obligation,! while a covenant not to sue is an
independent contract, and does not affect the right of action
on the original claim. A covenant never to sue, however,
may be pleaded in bar of the action by the covenantee, in
order to prevent circuity of action. A covenant not to sue is
purely a personal defence, available only between the parties

# Green v. Langdon, 28 Mich. 221; Lewis’s Estate, 189 Pa. St. 640;
22 A. 635; McKenzie v. Harrison, 120 N. Y. 260; 24 N. E. 458.

5 Ante, §§ 106 et seq.

§ 507. 1 Tllinois Central R. v. Read, 37 Ill. 485.

28 C. B. 483; W. 311; K. IT. 1580.

3 Newington v. Levy, L. R. 6 C. P. 180.

§ 508. 1 Clark v. Mallory, 185 Ill. 227; 56 N. E. 1099.

2 Ford v. Beech, 11 Q. B. 852 ; W. 323; K. II. 1550; Guard v. White-
side, 13 Ill. 7.

3 Ford v. Beech, supra; Chicago v. Babcock, 148 Ill. 858; 32 N. E. 271.
RELEASE AND NOVATION. 297

to the covenant.4. While between the parties oral evidence is
not admissible to show that a release is merely a covenant not
to sue, it has recently been held that in an action against one
of two joint tort-feasors it may be shown that a release of the
other was intended merely as a covenant not to sue.® This
rule is of doubtful soundness, and certainly should not be
extended to the case of joint debtors.

§ 509. Consideration in Releases. A release, being under
seal, requires no consideration at common law. In some
States, however, statutes have been passed declaring that “a
seal is only presumptive evidence of consideration.” The
effect of such statutes is to make a release invalid without
consideration.1. In New Jersey, however, a different interpre-
tation is placed on such a statute; and a sealed instrument
without consideration is held binding if the parties intended.
there should be no consideration.

§ 510. Novation.1— Novation is a term borrowed from the
Roman law, signifying the substitution of a new contract for
an old one. The new contract may involve either a change in
the parties or a change in the subject-matter of the contract.

§ 511. Novation by Change of Parties.!— Novation by change
of parties is said to be a doctrine of modern origin. If the
obligation is a debt, the novation may involve either a change
of creditors or a change of debtors, or a change of both
parties. Where there is a change of creditors, novation must
be distinguished from assignment. If the debt is assigned,
the assignee acquires only an equitable interest in the debt.
He stands in the shoes of his assignor, and at common law
must sue in his name. If, however, a novation takes place,
the new creditor has a direct contract with the debtor.

4 Dean v. Newhall, 8 T. R. 168; Walmesley v. Cooper, 11 A. & E. 216;
K. II. 1576; Chicago v. Babcock, supra.

5 O’Shea v. New York, etc. R., — U. S. App. — ; 105 F. 559.
§ 509. 1 Wabash Western Ry. v. Brow, — U.S. App. — ; 65 F.941;
Winter v. Kansas City Cable R., — Mo. — ; 61S. W. 606.

2 Aller v. Aller, 40 N. J. L. 446; H. & W. 82; K. 754.

§ 510. } On the subject of novation, see 16 Am. & Eng. Encyel. of
Law, 862 ; Ames, 6 Harv. Law Rev. 184.

§ 511. 1 See foregoing references.
298 THE DISCHARGE OF CONTRACTS.

Whether there is an assignment or a novation in any case is
a question of fact, dependent upon the actual agreement of
the parties as evidenced by their conduct.

§ 512. Novation by Change in the Subject-matter of the
Contract. — A contract may be discharged by another contract,
changing the terms or subject-matter of the existing contract.
A contract to discharge an existing contract may be inferred
from the making of another contract inconsistent with the
first.1 In case the first contract is bilateral, an agreement by
each party to release the other is a new contract which con-
sists of the mutual promises of the parties.2— In case the first
contract is unilateral a mere agreement to discharge the con-
tract is, of course, not binding on the promisee unless there
is some distinct consideration for his promise to discharge.’
On principle, where A. and B. make a bilateral contract, such
contract can be discharged by a new contract only where that
new contract varies the obligations on both sides. If A.’s
obligation alone is increased, while B. remains under the same
obligation as before, there is no consideration for A.’s promise
to incur the additional obligation; while if A.’s obligation re-
mains the same, and the new agreement simply diminishes
B.’s obligation, there is no consideration for A.’s promise to
release B. from his pre-existing obligation. The courts are
not agreed on this point, however.

§ 518. When the New Contract will discharge the Old —
Effect of the Statute of Frauds. — Any valid alteration of the
terms of the original contract will amount to the substitution
of a new contract, and the discharge of the original contract.!
The new contract will be identical with the old, except so far
as the terms have been altered. A written contract may be
rescinded by a subsequent oral contract; and this though the

§ 512. 1 Thornhill v. Neats, 8 C. B. n. s. 831; K. II. 1471.

2 Collyer v. Moulton, 9R. 1.90; H. & W. 522; K. IT. 1478; McCreery
v. Day, 119 N. Y. 1; 23 N. E. 198; W. 360; K. I. 1480; Andre v.
Graebner, — Mich. — ; 85 N. W. 464. .

8 Bragg v. Danielson, 141 Mass. 195; 4 N. E. 622.

4 Ante, §§ 117 et seq.

§ 513. 1 Taylor v. Hilary, 1 C. M. & R. 741; W. 297; K. II. 1467.
RELEASE AND NOVATION. 299

original contract is within the Statute of Frauds. But if
the new contract is itself within the Statute of Frauds, it
must expressly rescind the old.2 If the second contract is
within the Statute of Frauds as well as the first, and is not
in substitution for the first, the first contract remains in force.*
The distinction between the substitution of a new contract for
the old, by which the old is entirely discharged, and the sub-
stitution of a new mode of performance must be kept care-
fully in mind. Although the second contract may. not be in
substitution for the first, the performance of the second con-
tract may be accepted as a substituted performance of the
first, and so discharge the first contract. In that case, how-
ever, it is not the second contract, but the performance of it,
which discharges the original contract.®

§ 514. Formal Requisites for the Discharge of Contracts. —
The rule of the common law is unumquodque ligamen dis-
solvitur eodem ligamine quo ligatur,—every obligation must
be dissolved in the same manner in which it is created. This
rule rested on the rules of procedure by which evidence was
classified, and records, deeds, and parol contracts ranked in
the order named. In no case at common law could a contract
under seal be modified or discharged before breach by a con-
tract not under seal! In equity different rules prevailed, and
a contract under seal could be modified or discharged by a
subsequent parol agreement.?- And even at common law, a
new contract not under seal was binding, though it did not
discharge the original contract.2 The equitable rule now

2 Goss v. Lord Nugent, 5 B. & Ad. 65 ; Cummings v. Arnold, 3 Met.
486.

8 Noble v. Ward, L. R. 2 Ex. 185; K. II. 1476; Moore v. Campbell,
10 Ex. 323.

* Moore v. Campbell, supra ; Whittier v. Dana, 10 Allen, 326 ; Augusta
Southern R. v. Smith Co., — Ga. — ; 33 S. E. 28; Warren v, A. B.
Mayer Mfg. Co., — Mo. — ; 618. W. 644.

5 Rogers v. Rogers, 189 Mass. 440; 1 N. E. 122; Hickman v. Haynes,
L. R. 10 C. P. 598; Leather Cloth Co. v. Hieronimus, L. R. 10 Q. B.140;
Thomson v. Poor, 147 N. Y. 402; 42 N. E. 13; K. II. 1486.

§ 514. 1 Spence v. Healey, 8 Ex, 668; K. IT. 1469.

2 Very v. Levy, 13 How. 345, 857; Canal Co. v. Ray, 101 U. 8. 522.

3 Nash v. Armstrong, 10 C. B. nN. 8. 259.
300 THE DISCHARGE OF CONTRACTS.

prevails in England,t and in many of the United States by
statute ;® while in other jurisdictions the common-law courts
have adopted it of their own accord.’ In Illinois it has been
said that a parol contract may operate as a discharge of a
sealed contract, but not “to introduce any new element into
the sealed contract, so that thereby a new executory contract
would be executed, which would depend partly upon the con-
ditions under seal, and partly upon the conditions by parol
for its enforcement ;”* but the latter part of the rule seems to
be no longer law.2 In Rhode Island, if the contract is in writ-
ing, no action can be brought upon an oral variation of such
contract.2 In some States “a contract in writing may be
altered by a contract in writing, or by an executed oral agree-
ment, but not otherwise.” The code of civil procedure
adopted in many of the States is responsible for the introduc-
tion of many equitable rules into the common law.

4 Steeds v. Steeds, 22 Q. B. D. 537; W. 352; K. II. 1564.

5 McCreery v. Day, 119 N. Y. 1; 28 N. E.198; W. 360; K. II. 1480;
Thomson v. Poor, 147 N. Y. 402; 42 N. E. 18; R. ID. 1486.

6 Hastings v. Lovejoy, 140 Mass. 261; 2 N. E. 776; K. IT. 1491.

7 Starin v. Kraft, 174 Tl. 120; 50 N. E. 1059.

8 Palmer v. Meriden Britannia Co., 188 Ill. 508; 59 N. E. 247.

9 Herreshoff v. Misch, 21 R. I. 524; 45 A. 145.

10 California Civil Code, § 1698; Henehan v. Hart, 127 Cal. 656; 60 P.
426; Comp. Laws, S. D., § 83593; Mettel v. Gales, 12 S. D. 632; 82 N. W.
181.
BREACH GOING TO THE ESSENCE. 801

CHAPTER XXX.
THE DISCHARGE OF CONTRACTS BY OPERATION OF LAW.

§ 515. Events discharging Contractual Obligation by Opera-
tion of Law. — The obligation of contracts may be discharged
by breach of contract going to the essence; by repudiation;
by “failure of consideration ;” by the alteration or loss of a
written instrument; by merger; by estoppel; by marriage;
and by discharge of the right of action for breach of contract,

§ 516. Discharge of Contract by Breach going to the
Essence. — In a bilateral contract the obligation of one party
may be discharged by a breach of contract by the other party.
In order that the mere breach of contract should operate as a
discharge, the breach must go to the essence of the contract ;?
although a different rule prevails if the breach amounts to a
repudiation of the contract.2 What is or is not of the essence

§ 516. 1 Norrington v. Wright, 115 U. 8. 188; 6 S. Ct.12; W. 598;
H. & W. 584; K. II. 1190; Providence Coal Co. v. Coxe, 19 R. I. 880,
582; 85 A. 210; Bradford v. Williams, L. R. 7 Ex. 259; L. 588; K. IL.
1215; Poussard v. Spiers, 1 Q. B. D, 410; L. 591; K. II. 1222; Freeman
v. Taylor, 8 Bing. 124; L. 483.

2 Mersey Co. v. Naylor, 9 A. C. 484; W. 586; K. II. 1325; Stone v.
West Jersey Ice Co., — N. J. L. — ; 46 A. 696; Franklin v. Miller,
4A.& EH. 599; L. 872; K. II. 1211; Bettini v. Gye, 1 Q. B. D. 183; L.
717; K. II. 1218; Clipsham »v. Vertue, 5 Q. B. 265; L. 670; Tarrabochia
v. Hickie, 1 H. & N. 183; L. 681 ; Seeger v. Duthie, 29 L. J. C. P. 253; 30
id. 65; L. 691; Jonassohn v. Young, 4 B. & S. 296; L. 703; K. 11.1179;
MacAndrew v. Chapple, L. R. 1 C. P. 643; L. 706; Freeth v. Burr, L. R.
9 C. P. 208; L. 712; Cornwall v. Henson, 1900, 2 Ch. 298 ; Monarch

Cycle Co. v. Royer Wheel Co., — U. S. App. — ; 105 F. 324; Rioux v.
Ryegate Brick Co., — Vt. — ; 47 A. 406; West v. Bechtel, — Mich.
— ; 84.N. W. 69 ; McFadden v. Henderson, — Ala. — ; 29 S. 640.

3 See post, §§ 518, 519.
802 THE DISCHARGE OF CONTRACTS.

of the contract is a matter of construction which has been
already discussed. The breach of contract going to the essence
operates as an external condition subsequent,’ that is to say,
the law treats such breach as a condition subsequent, entitling
the other party to be discharged from his obligation. The
breach does not, however, operate to discharge the contract
unless the injured party elects to treat it as a discharge; and
therefore until he treats the contract as discharged it remains
in force. The right to treat the breach as a discharge may,
of course, be waived.®

§ 517. Discharge by Breach of Contract distinguished from
Dependency. — There is a great deal of confusion in the cases
as to the nature of conditions, as already pointed out in the
chapter on Conditions. In every bilateral contract, if there
are two promises, X. and Y., and promise Y. is dependent on
promise X., performance of X. is an internal condition prece-
dent to the obligation of Y. But where X. and Y. are inde-
pendent, performance of X. cannot be a condition precedent
to the obligation of Y. In such case, however, if X. goes to
the essence of the contract, breach of X. is an external con-
dition subsequent, entitling the injured party to a discharge
from promise Y. This distinction between the internal condi-
tion precedent and the external condition subsequent is funda-
mental, and the failure to appreciate it has been the cause
of much confusion in the decisions of courts and the opinions
of text-writers."

§ 518. Discharge by Repudiation.— The absolute and un-
qualified refusal of one of the parties to a bilateral contract
to perform the contract entitles the other party to treat such
a refusal as a discharge.’ Such renunciation or repudiation
is, like a breach of contract going to the essence, an external

* Ante, Ch. XI.

5 Rioux v. Ryegate Brick Co., supra.

® Cahen v. Platt, 69 N. Y. 348; W. 608; Langdell, Summary, § 177.

§ 517. 1 See ante, § 348.

§ 518. 1 Eastern Arkansas, etc. Co. v. Tanner, 67 Ark. 156; 53 S. W.
886; Elgin v. Joslyn, 136 Ill. 525; 26 N. E. 1090; Manistee Lumber Co.
v. Union N. B., 143 Til. 490; 82'N. E. 449; Chapman v. Beltz Co., — W.
Va. — ; 85S. E. 1018; and cases infra, § 519.
REPUDIATION. 303

condition subsequent; that is to say, a fact which by operation
of law gives the injured party the right to put an end to the
contract. Whether repudiation by the plaintiff operates as a
discharge of the defendant from liability for past as well as
for future violations of the contract is unsettled.?

§ 519. Discharge by Breach and Discharge by Repudiation
distinguished. — A mere breach of contract, as we have seen,
will operate as a discharge only when it goes to the essence
of the contract ;' but if the contract is repudiated, the repu-
diation will operate as a discharge though it does not go to
the essence of the contract.”

§ 520. Repudiation of Contracts incidental to the Tenure
of Property.—If the contract in question is incidental to
the tenure of property, repudiation of the contract will not
operate as a discharge unless an actual breach of the contract
would authorize the injured party to rescind the entire rela-
tion between himself and the other party with reference to
that property. Thus where A. leases land to B., and the
lease contains various stipulations, a refusal by A. to perform
a particular stipulation will entitle B. to a discharge from his
obligations only in the case where an actual breach would
entitle him to such discharge. Now an actual breach of a
stipulation by A. can discharge B. only where B.’s promise is
dependent on A.’s, or where B. is entitled to throw up his lease
on account of such breach. If, therefore, there is no de-
pendency between the two promises, and the actual breach by

2 That it does, see Harber Bros. Co. v. Moffat Cycle Co., 151 Ill. 84;
37 N. E. 676; K. II. 1341; contra, Crane v. Crane, — U. 8. App. — ;
105 F. 869. é

§ 519. 1 Ante, § 347; Mersey Co. v. Naylor, 9 A. C. 434; W. 586; K.
II. 1325; Elgin v. Joslyn, 186 Ill. 525; 26 N. E. 1090; contra, Wharton
v. Winch, 140 N. Y. 287; 35 N. E. 589.

2 Mersey Co. v. Naylor, supra; Elgin v. Joslyn, supra; Cornwall v.
Henson, 1899, 2 Ch. 710; Rugg v. Moore, 110 Pa. St. 236; 1 A. 320; W.
603; Withers v. Reynolds, 2 B. & Ad. 882; L. 740; K. II. 1809 ; Nichols.
vy. Scranton Steel Co., 187 N. Y. 471; 33 N. E. 561; Harber Bros. Co. v.
Moffat’ Cycle Co., 151 Ill. 84; 37 N. E. 676; K. II. 1841; Bradley v.
King, 44 Ill. 839; contra, Beatty v. Howe Lumber Co., 77 Minn. 272; 79

N. W. 1018.
304 THE DISCHARGE OF CONTRACTS.

A. of a given promise would not entitle B. to throw up the
lease, A.’s refusal to perform cannot operate to discharge B.
from his obligations under the lease."

§ 521. What constitutes Repudiation. —To constitute re-
pudiation there must be either an act rendering performance
impossible,! or an absolute refusal to perform.? An announce-
ment of future intention not to perform, made while the prom-
isor is actively engaged in good faith in the performance of
the contract, is insufficient. An announcement of “ entire in-
ability ” to perform has been held sufficient.*

Whether in the case of instalment contracts a refusal to
pay for an instalment of goods already received, without a
refusal to pay for goods to be thereafter delivered, will amount
to a repudiation, is a question which has been much discussed.
It is settled that the mere non-payment is not a repudiation,§
and this well-settled rule has sometimes given rise to the idea
that there is no distinction between failure to pay and re-
fusal to pay. The better rule, however, is that an absolute
refusal to pay for an instalment received,’ or a refusal to
pay therefor until the vendor shall deliver another instal-

§ 520. 1 Johnstone v. Milling, 16 Q. B. D. 460; Ww. 391; K. IT. 1881.

§ 521. 1 Short v. Stone, 8 Q. B. 358; L. 921; K. IT. 1361; Caines v.
Smith, 15 M. & W. 189; L. 926; ord ts Tiley, 6 B. & C. 325; Wood-
berry v. Warner, 53 es 488; 14 S. W. 67; H. & W. 574; Taaes v.
Burchell, 82 N. Y¥. 108; W. 609; K. II. 1227; Delamater v. Miller,
1 Cow. 75; H. & W. 561.

2 Mersey Co. v. Naylor, 9 A. C. 434; W. 586; K. II. 13825; Hochster
v. De la Tour, 2 BE. & B. 678; W. 377; K. II. 1281; Harber Bros. Co. v.
Moffat Cycle Co., 151 Ill. 84; 87 N. E. 676; K. IL. 1841; Bradley v.
King, 44 Il]. 339; Dingley v. Olen 117 U.S. 490; 6S. Ct. 850; W. 399;
H. & W. 556; Johnstone 'v. Milling, 16 Q. B.D. 460; W. 391; K. II.
1331; Burtis v. Thompson, 42 N. Y. 246; W. 419; Frost v. Knight, L. R.
7 Ex. 111; W. 386; K. IL 1287 ; Freeth v. Burr, L. R. 9 C. P. 208; L.
712, K. IL. 1310.

8 Kilgore v. Northwest, etc. Soc., 90 Tex. 139 ; 37 S. W. 598.

4 Chamber of Commerce v. Sollitt, 43 Ill. 519.

5 Ante, §§ 286, 348.

6 Winchester v. Allen, 2 Allen, 492; West v. Bechtel, — Mich. — ; 84
N. W. 69; Freeth v. Burr, L. R. 9 C. P. 208; L. 712; K. II. 1310; ef
Withers v. Reynolds, 2 B. & Ad. 882; L. 740; K. IT. 1801.

7 Bradley v. King, supra.
REPUDIATION. 305

ment, or do some other act, is a repudiation of the con-
tract and entitles the vendor to rescind the contract, or at
least to discharge from his obligation to proceed further there-
under ;® unless the conduct of the vendee is reasonable under
the particular circumstances, as where legal proceedings
against the vendor render the vendee reasonably uncertain as
to who is entitled to receive the payment in question; or
where the damage to the vendee caused by a preceding breach
on the part of the vendor equals or exceeds the amount due
from the vendee, and the latter offers to set off his damages.

In a recent case * Chief Justice Holmes says: “ A mere re-
fusal to pay money when due, especially a refusal based upon
the terms of the contract, and in good faith though mis-
takenly believed to be justified by it, is not a repudiation of
the contract, and does not warrant a rescission.” This state-
ment seems to represent the law of Massachusetts,® but goes
beyond the doctrine laid down by the House of Lords in
Mersey Co. v. Naylor.“ It is undoubtedly true, as established
by that case, that a refusal to perform, made upon reasonable
grounds, is not a repudiation; but the statement just quoted
seems to substitute a subjective for an objective test, the good
faith of the debtor for the reasonableness of his conduct.

If an act is done rendering performance impossible, this is
a repudiation of the contract, although the promisor might be
able by some subsequent act to undo the consequences of the
first act. Thus if a man promises to marry a woman at a
certain time, and marries another before that time, this is a
repudiation of the contract, although the death of his wife
might enable him to perform his promise at the specified
date.* So if one promises to sell property, and before the

8 Harber Bros. Co. v. Moffat Cycle Co., supra.

9 See Crane v. Crane, — U.S. App. — ; 105 F. 869.

10 Mersey Co. v. Naylor, supra.

11 Harber Bros. Co. v. Moffat Cycle Co., supra.

12 Daly v. People’s B’ld’g Ass’n, 178 Mass. 13; 59 N. E. 452.

13 Winchester v. Newton, 2 Allen, 492.

14 Supra.

16 Short v. Stone, supra, Caines v. Smith, supra; Brown v. Odill, 104
Tenn. 250; 568. W. 840.

20
3806 THE DISCHARGE OF CONTRACTS.

time appointed for its conveyance sells it to another, this is a
repudiation of the contract.1®

§ 522. Repudiation must be accepted before the Contract is
discharged. — Repudiation, like breach of contract, does not put
an end to the contract, but only entitles the injured party to
put an end to the contract... The renunciation may therefore
be withdrawn at any time before it is accepted by the other
party ;2 and the party repudiating may take advantage of any
event which happens before such acceptance which would en-
title him to a discharge from the contract.3 Notice that the
repudiation is accepted as a discharge must be given the party
repudiating, unless the contract itself dispenses with such
notice, or unless notice becomes unnecessary by reason of the
conduct of the parties.t If the party repudiating becomes in-
sane before the repudiation is accepted as a discharge, and
there is no breach going to the essence, it seems that a for-
feiture of the contract cannot be declared by the other party,
but that a judicial decree is necessary for that purpose.®

§ 528. Discharge by “Failure of Consideration.”— A contract
may be discharged in certain cases by the breach of another

16 Delamater v. Miller, supra ; James v. Burchell, supra; Ford v. Tiley,
supra ; Woodberry v. Warner, supra; Synge v. Synge, 1894, 1 Q. B. 466;
Easton v. Jones, 193 Pa. 147; 44 A. 264; contra, on the ground that the
vendor may repurchase before the time set for the conveyance, Webb v.
Stephenson, 11 Wash. 342; 39 P. 952 ; Garberino v. Roberts, 109 Cal. 125;
41 P. 857.

§ 522. 1 Avery v. Bowden, 5 E. & B. 714; Dingley v. Oler, 117 U. S.
490; 6S. Ct. 850; W. 439; H. & W. 556; Johnstone v. Milling, 16 Q. B.
D. 460; W. 391; K. IT. 1831; Zuck v. McClure, 95 Pa. St. 541; W.
422; Kadish v. Young, 108 Ill. 170; W. 431; Roebling’s Sons v. Lock
Stitch Fence Co., 130 Ill. 660; 22 N. E. 518; Ripley v. M’Clure, 4 Ex.
345; L. 927; K. IT. 1263; Brown v. Muller, L. R. 7 Ex. 319.

2 Rayburn v. Comstock, 80 Mich. 448; 45 N. W. 878; W. 426; Frost
v. Knight, L. R. 7 Ex. 111; W. 386; K. Il. 1287; Lundahl v. Hansen,
147 Tl. 504; 35 N. E. 741. As to what constitutes acceptance of repu-
diation, see Mutual Reserve Fund L. I. Ass’n v. Taylor, — Va. — ; 37
S. E. 854; post, § 553.

3 Frost v. Knight, supra ; Avery v. Bowden, supra.

4 Hennessy v. Bacon, 137 U. 8. 78; Cornwall v. Henson, 1900, 2 Ch.
298; McFadden v. Henderson, — Ala. — ; 29S. 640.

5 Helbreg v. Schumann, 150 Ill. 12; 387 N. E. 99.
NATURE OF CONSIDERATION. 307

contract. In the case of a bilateral contract, as we have seen,
there are two ways in which a breach of contract by one party
may affect the obligation of the other. B.’s promise Y. may
be dependent on A.’s promise X., in which case unless X, is
performed, B. is not bound to perform Y.; or X. and Y. may
be independent, in which case a breach of X. will discharge Y.
if X. goes to the essence of the contract.

§ 524, Failure of Consideration and Dependency, — Strictly
speaking dependency can exist only in a bilateral contract,
although the courts, by a process which is often miscalled
construction, but which is really the exercise of an equitable
jurisdiction, often attempt to make one bilateral contract out
of two unilateral contracts! Moreover, the rule that a breach
of contract by one party may discharge the other, applies, as
we have seen, only to bilateral contracts. Nevertheless, a
doctrine has sprung up in this country, and is very generally
approved, to the effect that “failure of consideration” will
discharge the contract.2— The doctrine is equitable in its char-
acter, and its recognition by the common-law courts illustrates
the tendency toward the merging of legal in equitable rules.
Strictly speaking, there can be no such thing as a “ failure of
consideration.” Either the promisor receives the considera-
tion he has bargained for, or he does not. If he does not
receive the consideration, there is no contract; if he does
receive the consideration, there can be no “ failure” of con-
sideration thereafter. The term “failure of consideration” is
used, however, to express the situation that arises first, where
there is a unilateral contract with an internal condition subse-
quent which is broken ;? and, second, where the consideration
for one promise is another promise, and the second promise is
broken.

§ 525, Failure of Consideration and Conditions Subsequent, —
If, for example, in a contract of sale, the thing sold fails to
correspond with the description in the contract of sale under
such circumstances that the vendee has a right to return the

524. 1 Ante, §§ 256, 334.
§

2 See California Civ. Code, § 1689, subd. 4.
3 Whitehill v. Dacus, 49 S. C. 273; 278. E. 200.
3808 THE DISCHARGE OF CONTRACTS.

property received, the sale gives rise to a unilateral contract
by the vendee to pay the price, which contract is subject to an
internal condition subsequent whereby the-vendee may return
the property and be discharged from his obligation. This
right of rescission is often said to rest on failure of con-
sideration.

§ 526. Failure of Property to answer Description. — The
term “ failure of consideration” is often applied to the failure
of the property sold to answer the description. The important
question in such cases is, what was the contract of sale?! For
example, A. agrees to sell B. a certain chose in action; is
the agreement a contract for the sale of a valid right or claim,
or is it simply a contract that A. shall assign whatever right
he may have? This is a question of fact in each case.2 If
the agreement is to assign a valid claim, and the claim proves
invalid, the assignee is entitled, by virtue of an internal con-
dition subsequent, to be discharged from his obligation to pay
the price; but if the contract simply calls for the assignment
by A. of whatever right he possesses, it is clear there is no
ground on which B. can escape payment. So in the case of
the sale of land, the question is, does the purchaser agree to
pay for a deed from his vendor, or for a good title to the land?
While the contract is executory it is bilateral, and the pur-
chaser is not bound to accept a defective title ; but if he does
accept a conveyance with covenants by the vendor, does a fail-
ure of title enable him to escape payment of the purchase-
money? It is held in England and by some courts in this
country that such failure of title does not affect the purchas-
er’s obligation to pay the purchase-money ;? but other Ameri-
can courts take a different view. It is sometimes held that

§ 526. 1 Valley City Milling Co. v. Prange, — Mich. — ; 81 N. W.
1074; Owen v. Pomona Land Co., — Cal. — ; 64 P. 253.

2 Lambert v. Heath, 15 M. & W. 486; Otis v. Cullum, 92 U.S. 447;
Meyer v. Richards, 163 U. S. 885; Herzog v. Heyman, 151 N. Y. 587;

45 N. E. 1127.
3 Soper v. Arnold, 14 A. C. 429; Lloyd v. Jewell, 1 Greenl. 352;

Black v. Walker, 98 Ga. 31; 26 S. E. 477; Mallard v. Allred, 106 Ga.
503; 32S. E. 588.

4 Rice v. Goddard, 14 Pick. 293; Redding v. Lamb, 81 Mich. 318;
45 N. W. 997.
FAILURE OF CONSIDERATION. 3809

the defence will be allowed only where the warranty is not
effective by reason of the insolvency or incapacity of the war-
rantor;® and sometimes that it is admissible only where the
purchaser has actually been evicted.®

§ 527. Breach of Independent Contract as Failure of Consid-
eration. — The term “ failure of consideration” is also used in
cases where one unilateral contract is made in consideration
of another unilateral contract, and the second contract is
broken.! Such failure of consideration is no defence at com-
mon law, the two unilateral contracts being entirely independ-
ent.2. The common-law rule still prevails in the Federal
courts;® but in many of the State courts a breach of one
unilateral contract may operate to discharge the obligation
of a second contract for which the first is the consideration.
The courts often attempt to justify this result by saying that
the two unilateral contracts are to be construed as one bilateral
contract, and that the doctrines governing dependency there-
fore apply. Dependency, in the proper sense, however, is
purely a matter of construction; while to make one bilateral
contract out of two unilateral contracts is not construction at
all. Where promise X. and promise Y. are contained in one
bilateral contract, the dependency of promise Y. on promise
X. is caused by the fact that the performance of X. is con-
strued as an internal condition precedent to the obligation of
Y.; but where X. and Y. are contained respectively in two
separate unilateral contracts, a breach of X. can only operate
as an external condition subsequent affecting Y.

§ 528. Failure of Consideration in Specialties and Negotiable
Instruments. — In the case of a specialty, inasmuch as consid-
eration is not an essential element of the contract, failure of

5 Mallard v. Allred, supra; Bennett v. Pierce, 45 W. Va. 654; 31
S. E. 972.

6 Nathans v. Steinmeyer, 57 S. C. 386; 35 S. E, 733; McLeod ».
Barnum, — Cal. — ; 63 P. 924.

§ 527. 1 Manistee Lumber Co. v. Union N. B., 143 Ill. 490; 82 N. E.
449.

2 Kramer v. Messner, 101 Ia. 88; 69 N. W. 1142; Ames, 9 Harv.
Law Rev. 52; and see Anderson v. Gaines, — Mo. — ; 57S. W. 727.

8 Hartshorn v. Day, 19 How. 211, 222.
310 THE DISCHARGE OF CONTRACTS.

consideration is no defence at common law.! In the case of a
negotiable instrument, however, consideration is essential to
the validity of the instrument. If, then, there has been what
is sometimes called a “ total failure of consideration,” that is,
if the maker of the instrument has actually received nothing
of value, the instrument is not binding because there is no
consideration for it. If, however, the consideration for the
instrument is a promise, the breach of such promise cannot,
at common law, affect the validity of the instrument; for the
consideration is not the performance, but the promise.2 These
principles, as just stated, are not generally followed in our
State courts. Partial failure of consideration, such as arises,
for example, from a breach of warranty in a contract of sale,
is no defence at common law ;4 but the modern practice is
generally to admit such failure of consideration as a defence
in order to avoid circuity of action.®

§ 529. Discharge by Alteration of a Written Instrument. —
The intentional alteration of a written contract by one of the
parties to the contract in a material particular without the
consent of the other party discharges the obligation of
the other party. ‘The alteration must be intentional ; if made
by accident or mistake it is of no consequence.’ But though
a mistake in making the alteration renders the alteration im-
material, if the mistake is as to the legal consequences of the
alteration, the alteration is treated as intentional, and dis-

§ 528. ! Ibid.; Tyson v. Williamson, — Ga. — ; 32 S. E. 42.

2 Mogeridge v. Jones, 14 East, 486; L. 638; Spiller v. Westlake,
2B. & Ad. 155; L. 654; K. II. 1883; Trickey v. Lane, 6 M. & W. 278.
See also Anderson v. Gaines, — Mo. — ; 57 S. W. 727.

3 Duncan v. Charles, 5 Ill. 561; Hunt v. Livermore, 5 Pick. 895;
L. 757; K. II. 1385; Ft. Payne Coal Co. v. Webster, 163 Mass. 184 ;
39 N. E. 786; Edwards v. Pyle, 28 Jll. 354; Sayre v. Mohney, 30 Or.
238; 47 P. 197.

4 Thornton v. Wynn, 12 Wheat. 183.

5 Withers v. Greene, 9 How. 213; Welch v. Hoyt, 24 Jl. 118;
Wheelock v. Berkley, 188 id. 153; 27 N. E. 942; Bay View Brewing
Co. v. Tecklenburg, 19 Wash. 469; 53 P. 724.

§ 529. 1 Wilkinson v. Johnson, 3 B. & C. 428; Neff v. Horner, 63 Pa.
St. 327.
ALTERATION AND LOSS OF INSTRUMENTS. 311

charges the contract.2 The alteration must be material;
that is, it must alter the legal effect of the instrument upon
the rights or remedies of the parties? If the alteration is
with the consent of the other party, the contract is not dis-
charged ;* and consent to the alteration may be given after,
as well as before the alteration has been made.’ It is the
alteration of the instrument that discharges the contract;
whether the alteration injures or benefits the other party is
immaterial.6 The alteration which destroys the instrument
does not discharge a debt which exists independent of the
instrument,’ unless such alteration is made fraudulently. In
England the alteration of an instrument by a stranger while
in the possession of one of the parties, though without his
knowledge, destroys the obligation of'the other party ;® but
in this country such alteration has no effect.

§ 580. Loss or Destruction of a Negotiable Instrument. —
The loss of a negotiable instrument at common law destroyed
the rights of the owner;! but equity would compel the pay-
ment of the note if the owner offered proper indemnity,? and
the equitable doctrine has often been applied in this country
by courts of law’

2 Bank of Hindostan v. Smith, 86 L. J. C. P. 241; Kelly v. Trumble,
74 Til. 428; contra, Wallace v. Tice, 32 Or. 288; 51 P. 738.

8 Gordon v. Third Nat. Bank, 144 U.S. 97; 12,8. Ct. 657; Ryan v.
Springfield Bank, 148 Tll. 349; 85 N. E. 1120.

4 Speake v. United States, 9 Cranch, 28.

5 Stiles v. Probst, 69 Ill. 382; Payne v. Long, 121 Ala. 385; 25 S.
780.

6 Martin v. Thomas, 24 How. 315; Reese v. United States, 9
Wall. 18.

7 Clough v. Seay, 49 Ia. 111; H. & W. 665; Savage v. Savage, —
Or. — ; 59 P. 461.

8 Smith v. Mace, 44 N. H. 558; H. & W. 660; Maguire v. Eichmeier,
109 Ja. 301; 80 N. W. 895.

9 Davidson v. Cooper, 13 M. & W. 348.

10 Church v. Fowle, 142 Mass. 12; 6 N. E. 764; Martin v. Tradesmen’s
Ins. Co., 101 N. Y. 498; 5 N. E. 338; Condict v. Flower, 106 Ill. 105.

§ 5380. 1 Hansard v. Robinson, 7 B. & C. 90.

2 Tbid.

3 Daniel, Negotiable Instruments, II. § 1478; First N. B. »v. es
= U.S. App. — ; 104 F. 187.
812 THE DISCHARGE OF CONTRACTS.

§ 531. Loss or Destruction of a Specialty. — A specialty at
common law was treated as the contract itself, and the plain-
tiff could recover only by producing the-deed in court.1 The
loss or destruction of the deed, however, was one of the acci-
dents which gave the Court of Chancery jurisdiction; and
equity would enforce the obligation when the obligee had no
remedy at law by reason of his inability to prove his case.?
The common-law courts, however, finally gave relief to the
obligee by allowing him, if the production of the deed was
impossible, to give secondary evidence of its contents.

§ 532. Merger. — When a given obligation exists, and by
act of the parties or of the law that obligation becomes es-
tablished by a higher form of evidence, the original obligation
is merged in the obligation of higher order. The three classes
of evidence, it will be remembered, are parol evidence, deeds,
and records. If, then, a simple contract exists, and a new
contract is made identical with the old as to parties,’ and
subject-matter,” but under seal, the simple contract is merged
in the specialty, and thereby discharged. The simple ac-
knowledgment of a simple contract debt by a deed merges the
simple contract in the specialty ;* but if the purpose of. the
deed is to provide for settling a dispute as to the amount of
the debt, there isno merger.4 Nor does merger take place if
the new contract is conditional, so long as the condition is
unperformed.®’ Nor is there any merger where the new con-
tract is taken as a collateral security for the old.

§ 583. Merger and Novation. — There can be no merger
of an oral in a written contract, because oral and written
contracts are of equal rank. The written contract, however,

§ 531. 1 Bigelow, History of Procedure, 317; Ames, 9 Harv. Law
Rev. 49.

2 Ames, ubi supra.

3 Ibid.; Read v. Brookman, 3 T. R. 151.

§ 582. 1 White v. Cuyler, 6 T. R. 176; Banorgee v. Hovey, 5 Mass. 11.

2 Walton v. United States, 9 Wheat. 651.

8 Isaacson v. Harwood, L. R. 8 Ch. 225.

4 Bank of Columbia v. Patterson, 7 Cranch, 299.

5 Baits v. Peters, 9 Wheat. 556.

8 Day v. Leal, 14 Johns. 404.
MERGER — ESTOPPEL — MARRIAGE. 318

may be a substitute for a preceding oral contract. The dif-
ference between novation and merger is this: that the ques-
tion whether a new contract is substituted for an old one is
a question of fact, depending upon the intention of the parties ;
while the question of merger is one of law, since merger takes
place without regard to the intention of the parties. The
term “merger” is often used, however, to denote the fact that
an oral agreement has been reanad to writing.

§ 534. Merger and Estoppel. — The judgment of a court oi
competent jurisdiction discharges the obligation which the
action is brought to enforce The judgment may operate
either to merge the original obligation, in so far as judg-
ment is rendered for the plaintiff; or to estop the plaintiff
from subsequently setting up his original claim, in so far as
judgment is rendered for the defendant. The effect of a
record, as we have seen, is to furnish conclusive evidence of
the matters therein contained as between the parties to the
record.

§ 585. Marriage. — At common law the marriage of two
people discharges any obligation of either to the other;* un-
less the performance of the contract is to take place after
coverture, as where a man promises to pay his wife a sum of
money after her death. This rule is more or less generally
altered by statute.

§ 534. 1 Hart v. Seymour, 147 Ill. 598; 35 N. E. 246.

§ 535. 1 Butler v. Butler, 14 Q. B. D. 831; Farley v. Farley, 91 Ky.
497; 16 S. W. 129; Woodruff, 84; Schilling v. Darmody, 102 Tenn. 439;
52S. W. 291.

2 Cage v. Acton, 1 Ld. Raym. 515; L. 772; K. I. 1231.
314 THE DISCHARGE OF CONTRACTS.

CHAPTER XXXI.
DISCHARGE OF RIGHT OF ACTION FOR BREACH OF CONTRACT.

§ 586. Modes of discharging Right of Action. — The right
of action arising from breach of contract may be discharged
by the terms of the contract, by voluntary act, or by operation
of law.

§ 5387. Discharge of Right of Action by the Terms of the
Contract, or by Internal Conditions Subsequent. — The right of
action is discharged by an internal condition subsequent when-
ever an event happens which the contract provides shall bar
the action. Thus in insurance policies there is often a pro-
vision that the right of action shall be barred if a claim is not
filed within a certain time after a loss occurs.

Although the judgment is conclusive as to the legality of
the plaintiff's claim, if the contract on which the judgment is
rendered is illegal in another State, the courts of that State
will not afford equitable relief to the judgment creditor.!

§ 538. Discharge of Right of Action by Voluntary Act. —
The right of action for breach of contract may be discharged
by voluntary act or by operation of law. The voluntary acts
which may discharge the right of action are waiver, gift, re-
lease, accord and satisfaction, and submission to an award of
arbitrators. The subjects of waiver, gift,? and release? have
already been discussed.

§ 589. Accord and Satisfaction. —A breach of contract
gives the injured party a right to sue and obtain a judgment
for damages. An agreement to accept something in lieu of
the damages to be awarded by the judgment of the court is

§ 537. 1 Minzesheimer v. Doolittle, — N. J. Eq. — 3 45 A. 611.
§ 538. 1 Ante, § 505. 2 Ante, § 506. 3 Ante, § 507.
ACCORD AND SATISFACTION. 815

called an accord; the actual acceptance of the thing agreed
upon constitutes satisfaction. There can be no satisfaction
without a valid contract, for which consideration is necessary.
What consideration will support such an agreement has al--
ready been discussed.1. An accord without satisfaction does
not discharge the right of action. Nor is partial performance
of the accord with tender of what remains to be done a satis-
faction.2 But though an accord will not discharge a right of
action, the acceptance of a new contract in satisfaction of the
right arising from breach of the original contract will operate
as a discharge. Whatever is given must be received in satis-
faction of the right of action in order to discharge it. It is
a question of fact in every case whether what is given by the
defendant is accepted as satisfaction by the plaintiff.

§ 540. Part Payment and Compositions with Creditors. —
Whether the plaintiff has a right to apply money or a check
sent in full satisfaction of the debt in part payment thereof
is a question on which the authorities are not agreed. It is
held in England?! and in some cases in this country? that he
has that right, while in the majority of the American cases

§ 539. 1 Ante, §§ 106 et seg.

2 Allen v. Harris, 1 Ld. Raym. 122; W. 320; K. IL. 1547 ; Memphis
v. Brown, 20 Wall. 289; Kromer v. Heim, 75 N. Y. 574; W. 357 ; H. &
W. 627; K. II. 1558 ; Plealer v. Hursh, 151 Pa. St. 415; 25 A. 52; W.
359, note 1; Omaha F. I. Co. v. Thompson, 50 Neb. 580; 70 N. W. 30;
Welch v. Miller, 70 Vt. 108; 89 A. 749 ; Fouché v. Morris, — Ga. — ;
37 S. E. 182.

8 Long v. Scanlan, 105 Ga. 424; 31 S. E. 436; Kromer v. Heim,
supra.

4 Babcock v. Hawkins, 23 Vt. 561; W. 365; Evans v. Powis, 1 Ex.
601; Morehouse v. Second Nat. Bank, 98 N.*Y. 503; K. II. 1561;
Flegal v. Hoover, 156 Pa. St. 276; 27 A. 162; Farrar v. Wheeler, 88 II].
408.

5 Chicago v. Babcock, 148 Tll. 858; 82 N. E. 271.

§ 540. ! Day v. McLea, 22 Q. B. D. 610; W. 355; K. IT. 1568.

2 Tompkins v. Hill, 145 Mass. 379; 14 N. E. 177; Wellington v.
Monroe, etc. Co., 90 Me. 495 ; 38 A. 543.

3 Fuller v. Kemp, 138 N. Y. 2381; 33 N. E. 1034; Keck v. Hotel
Owners’ Ins. Co., 89 Ia. 200; 56 N. W. 438; Nassoiy v. Tomlinson,
148 N. Y. 826; 42 N. E. 714; K. II. 1571; Ostrander v. Scott, 161 Ill.
339; 43 N. E. 1089; Lapp v. Smith, 183 Ill. 179; 55 N. E. 717; Ander-
316 THE DISCHARGE OF CONTRACTS.

the acceptance of the money or the check is held to operate as
a satisfaction. The reasoning of Lord Bowen* in support of
the former view, however, seems unanswerable. Even when the
latter view prevails it must be perfectly clear that the creditor
“ accepted less with the full knowledge that it was offered him
only upon the condition that its acceptance should be in dis-
charge of the whole claim.”® In the case of a composition with
creditors, they may agree to accept the composition agreement
itself as a satisfaction,® or they may agree to accept only the
actual payment of the composition.’ The satisfaction must be
furnished in every case by the party a or by some one in
his behalf.

§ 541. Satisfaction of Specialties. — The ae of the common
law previously mentioned, wnwmquodque ligamen dissolvitur
eodem ligamine quo ligatur, required that where the cause of
action was established by a deed, as in the case of a single
bond, or of a covenant to pay an existing debt, no release or
satisfaction of that cause of action could be proved except by
means of a deed.!. But where the deed did not show that an
obligation existed at the time of its execution, an accord and
satisfaction in discharge of the obligation sued on could be
shown by parol.2_ Thus in the case of a covenant to do a cer-
tain act, as to repair a house, though the obligation to repair
is created by the deed, the cause of action arises from the
failure of the defendant to repair, and not from the deed it-
self; so that in an action on such a covenant accord and sat-
isfaction was a good defence. Equity, however, recognized

son v. Standard Granite Co., 92 Me. 429; 43 A. 21; Rosema v. Porter,
112 Mich. 13; 70 N. W. 316; Hull v. Johnson, — R. I. — ; 46 A. 682;
Talbott v. English, — Ind. — ; 59 N. E. 887.

4 In Day v. McLea, supra.

5 Talbott v. English, supra.

6 Good v. Cheesman, 2 B. & Ad. 828; W. 320.

7 Re Hatton, L. R.7 C. A. 723; W. 333; Clarke v. White, 12 Pet. 178.

8 James v. Isaacs, 12 C. B. 791; W. 330.

§ 541. 1 Blake’s Case, 6 Co. 486; W. 317; State Bank v. Littlejohn,
18 N. C. 563.

2 Blake’s Case, supra; Herzog v. Sawyer, 61 Md. 344.

8 Blake’s Case, supra.
ARBITRATION AND AWARD. 317

accord and satisfaction as a defence, though the cause of ac-
tion sprang from the deed itself, and the rules of equity have
in many jurisdictions superseded those of the common law.

§ 542. Arbitration and Award. — If the parties to a contract
submit a dispute to arbitration, the award of the arbitrators is
binding upon them. The award must be certain,’ and must
conform to the terms of the submission.2~ When an award
determines simply the amount of an existing debt, the original
cause of action is not discharged, but the amount of the debt
is conclusively determined by the award; but where the award
creates a new duty,as where a claim for unliquidated damages
is submitted to arbitration and a fixed sum awarded, the orig-
inal cause of action is discharged.2 A submission to arbitra-
tion is a power which may be revoked at any time before the
publication of the award.* Equity has jurisdiction to set aside
an award for mistake so gross as to imply bad faith or fail-
ure to exercise an honest judgment; but not for mistake in
general.®

§ 548. Discharge of Right of Action by Operation of Law. —
The right of action for breach of contract may be discharged
by the alteration or loss of a written instrument ;1! by merger ;2
by estoppel ;3 and by marriage ;* all of which have been already
discussed. The right of action may also be discharged by
statute, as by statutes of limitations and bankrupt acts.

§ 544. The Statute of Limitations. — Lapse of time does not
discharge a right of action, though laches may deprive a party

§ 542. ! Lyle v. Rodgers, 5 Wheat. 394.

2 McCormick v. Gray, 138 How. 26; De Groot v. United States, 5 Wall.
419; Boston & Lowell R. R. v. Nashua, etc. R. R., 139 Mass. 463; 31
N. E. 751; W. 372.

3 Freeman v. Bernard, 1 Ld. Raym. 247; W. 367; Commings c.
Heard, L. R. 4 Q. B. 669; W. 369. This rule holds in Pennsylvania
only when the submission is without consideration. McCune ». Lytle,
— Pa. — ; 47 A. 190.

4 Boston & Lowell R. R. v. Nashua, etc. R. R., supra.

5 Burchell v. Marsh, 17 How. 344; Bispham v. Price, 15 How. 162.

§ 543. 1 Ante, §§ 529-531.

2 Ante, §§ 532, 533.

8 Ante, § 534.

4 Ante, § 535.
318 THE DISCHARGE OF CONTRACTS.

of the assistance of a court of equity to enforce his rights. In
all jurisdictions, however, there are statutes limiting the time
within which actions may be brought. The effect of such
statutes is ordinarily merely to bar the remedy on the contract,
and not to extinguish the obligation of the contract.

§ 545. Bankrupt Acts.— A discharge in bankruptcy is a
common statutory form of discharge, which is personal to the
debtor. The interference of the States with the obligation of
contracts is prohibited by the United States Constitution,
Congress, however, has power to pass bankrupt acts, and this
power has been occasionally exercised. The present National
Bankrupt Act was passed in 1898, but is not regarded as per-
manent legislation.
BOOK VII.

THE ENFORCEMENT OF CONTRACTS.

CHAPTER XXXII.
SANCTIONS.

§ 546. Sanctions and Remedies. — Legal obligations are en-
forced by means of sanctions and remedies. The sanction is
imposed for the purpose of compelling the fulfilment of the
obligation ; while the remedy is given for the purpose of re-
dressing the wrong done by the violation of the obligation.

§ 547. Intermediate and Ultimate Sanctions. — Sanctions are
of two kinds, intermediate and ultimate. Sanctions which
consist merely in liability to a duty are called intermediate
sanctions; sanctions which consist not in liability to a duty,
but in liability to some other evil, are called ultimate sanctions.!
Ultimate sanctions comprise bodily pain, including death,
imprisonment, and forfeiture.2_ Only the last two sanctions
apply to contractual obligation. :

§ 548. Intermediate and Ultimate Sanctions of Contractual
Obligation. —In the enforcement of contracts there may be
one or more intermediate sanctions. Thus if A. promises to
convey land to B., and breaks his contract, the breach of the
primary obligation to convey the land gives rise to a secondary
or sanctioning obligation to pay damages.?' If an action is
brought for the damages, and judgment obtained against B.,
the judgment gives rise to another intermediate sanction ; to wit,

§ 547. 1 Markby, Elements of Law, § 8140.

2 Ibid., § 841.
§ 548. 1 Ibid., §$ 183, 184.
320 THE ENFORCEMENT OF CONTRACTS.

the duty to pay the judgment. If the judgment is not paid,
it is enforced by one of two ultimate sanctions, imprisonment
or forfeiture. Imprisonment as an ultimate sanction for the
non-payment of a debt has become very rare, though it was
formerly very common. Forfeiture, or the seizure and sale of
the debtor’s property in execution, is the ordinary ultimate
sanction in such cases. If, in the case put, instead of an ac-
tion for damages, a suit is brought for specific performance,
the decree of the court awarding specific performance gives
rise to an intermediate sanction, and if the decree is violated
it may be enforced by the ultimate sanctions of imprisonment
for contempt, and of forfeiture, in accordance with the prac-
tice of courts of equity.

In looking at the sanctions of contractual obligation we
are looking at the matter from the standpoint of the promisor ;
but the more common and more important question is the
question of remedies, which must be looked at from the stand-
point of the promisee.
REMEDIES. 821

CHAPTER XXXIII.

REMEDIES.

§ 549. Remedies for Prevention and for Redress. — Reme-
dies are of two kinds: those which are intended to prevent,
and those which are intended to redress, a breach of obliga-
tion! A threatened breach of contract may be prevented in
certain cases by injunction. Injunction is an equitable
remedy, and will therefore only be granted when adequate
redress for the threatened injury could not be obtained by the
ordinary remedy at law. Thus it has been held that a singer
who contracts to sing at a particular theatre exclusively may
be prevented by injunction from singing elsewhere during the
term of her engagement.?

§ 550. Remedies for Redress — Damages and Specific Per-
formance. — The remedies for the redress of a breach of con-
tract are of two kinds: an action for damages and an action
for specific performance. The former remedy is legal; the
latter, equitable in character. Before considering the character
of these remedies we must first examine once more the nature
of contractual obligation.

§ 561. Primary and Secondary Obligation in Contracts, —
A man may incur contractural obligation with reference to a
past, present, or future event. If he contracts that something
is, or has been, what is the nature of his obligation? Clearly,
in such a case, he simply assumes a risk and binds himself to
pay to the other party a sum of money sufficient to compen-
sate the latter for the non-fulfilment of the assurance. In

§ 549. 1 Holland, Jurisprudence, 281.

2 Lumley v. Wagner, 1 D. M. & G. 604; Keener, Cas. Eq. II. 223;
contra, Rice v. D’Arville, 162 Mass. 559 ; 39 N. E. 180; Keener, Cas. Eq.
II. 1071 (semble) ; post, § 564.

21
‘

822 THE ENFORCEMENT OF CONTRACTS.

such a case the contract is broken, if at all, as soon as it is
made, and the primary obligation necessarily coincides with
the secondary or sanctioning obligation to pay damages. If
the contract provides that something shall happen in the
future, the promised event may or may not be within the
control of the promisor. If the event is not within his con-
trol, his promise can amount only to the assumption of a risk
as in the preceding case. In this case, also, the primary
obligation to compensate the other party for the non-occur-
rence of the promised event is necessarily coincident with the
secondary or sanctioning obligation to pay damages for breach
of contract. If, however, the promised event is one which in
its nature is within the control of the promisor, a different
situation arises. Here the primary obligation of the promisor
is to perform his promise ; and his failure to perform gives
rise to a secondary obligation to pay damages. In every con-
tract, therefore, there is the assumption of a risk; and every
breach of contract gives rise to a secondary obligation to pay
damages ; but in contracts where the thing promised is within
the control of the promisor, there is, in addition, a distinct
primary obligation to perform the contract; while in other
contracts the primary obligation is necessarily coincident with
~ the secondary obligation.

§ 552. The Existence of Primary Contractual Obligation dis-
puted. — Chief Justice Holmes maintains! that the true view
of contract is that a man who makes a contract incurs an ob-
ligation to respond in damages for the non-fulfilment of the
contract, which obligation is defeasible by performance. That
this is true in all cases where the thing promised is not within
the control of the promisor is clear. That there is no primary
obligation to perform a contract when performance is within
the control of the promisor is a doctrine open to the following
objections. First, the doctrine seems to rest only on the
limitations of procedure in the king’s courts, and not on any
true historical theory of contract.2 Second, the doctrine is

§ 552. 1 Common Law, 298-303.
2 «« The oldest actions of the common law aim for the most part not
at ‘damages,’ but at what we call ‘specific relief.” . . . Even when the
REMEDIES. 323

entirely opposed to all equitable ideas; and the whole ten-
dency of our modern law is in the direction of equitable theo-
ries? Third, the doctrine involves an unreasonable departure
by the law from fundamental ethical principles.

cause of action is in our eyes a contractual obligation, the law tries its
best to give specific relief. .. . The common law has excellent inten-
tions; what impedes it is an old-fashioned dislike to extreme measures.”’
Pollock & Maitland, History of English Law, II. 593, 594.

8 Lingenfelder v. Wainwright Brewing Co., 103 Mo. 578; 15 S. W.
844; H. & W. 181; King v. Duluth, M. & N. Ry. Co., 61 Minn. 482;
63 N. W. 1105.
324 THE ENFORCEMENT OF CONTRACTS.

CHAPTER XXXIV.
ANTICIPATORY BREACH OF CONTRACT.

§ 553. The Nature of Anticipatory Breach. — In addition to
the secondary obligation to pay damages for breach of con-
tract, which exists in all cases, and the primary obligation to
perform the contract when it is within the promisor’s power
to do so, there is another obligation resulting from certain
contracts which is generally recognized. This is the obliga-
tion which exists before the time for performance has arrived,
not to violate the right of the promisee to have the contract
kept open as a subsisting and effective contract.1 A violation
of this right of the promisee constitutes what is known as an
“anticipatory breach” of contract. An anticipatory breach
of contract may occur in one of two ways. The promisor may
absolutely repudiate the contract ;? or he may do some act
putting it out of his power to fulfil the contract.2 In general,
the rules governing the right of action for an anticipatory
breach of contract are similar to those governing the right of
one party to treat the repudiation of the other party as a dis-
charge. That is to say, the act relied upon as constituting an
anticipatory breach must be of such a character as to justify
the injured party in putting an end to the contract, and must be

§ 553. 1 Roehm »v. Horst, 178 U.S. 1.

2 Hochster v. De la Tour, 2 E. & B. 678; W. 377; Frost v. Knight,
L. R. 7 Ex. 111; W. 386; K. II. 1287; Roehm »v. Horst, 178 U.S. 1;
Davis v. Grand Rapids, etc. Co., 41 W. Va. 717; 24 S. E. 6830; Chapman
v. Beltz Co., — W. Va. —; 358. E. 1018; Trammell». Vaughn, — Mo.
— ; 59S. W. 79.

8 Short v. Stone, 8 Q. B. 858; L. 921; K. II. 1261; Caines v. Smith,
15 M. & W. 189; L. 926; Delamater v. Miller, 1 Cow. 75; H. & W. 561;
Brown v. Odill, 104 Tenn. 250; 56S. W. 840. As to what amounts to
repudiation, see ante, §§ 521, 522.
ANTICIPATORY BREACH. 325

treated by him as discharging the contract except so far as his
own right of action for damages is concerned. An allegation
in the plaintiff’s declaration that he was willing and ready to
perform, without any demand on the defendant, or without
doing anything tending to prejudice the defendant, will not
prevent a recovery by the plaintiff for an anticipatory breach.
Most of the cases sustaining the right of the injured party to
treat the other party’s repudiation of the contract as a dis-
charge also support the doctrine of anticipatory -breach.®

§ 554, Limitations of the Doctrine of Anticipatory Breach. —
The limitations of the right of the promisee to have the
contract kept open as a subsisting and effective contract until
the time for performance arrives are not absolutely defined.
It seems clear, however, that a refusal to pay a debt cannot
give a right of action before the maturity of the debt;! nor
can refusal to pay one instalment of a debt make the other
instalments fall due, in the absence of express contract to
that effect.2. In a recent English case’ the plaintiff, who held
a life-insurance policy, brought an action against the insurance
company to obtain a declaration of the validity of this policy
and an injunction against its repudiation. The policy was
not due, but the company had refused to receive the premiums
on the ground that the policy was obtained by fraud. The
court said the action was unheard of, and dismissed it, upon
the defendant’s undertaking not to rely on the non-payment
of premiums as a bar to a subsequent action on the policy;
but said that the repudiation of the policy gave the plaintiff
the right to recover nominal damages for such repudiation.
In a recent Kentucky case* the defendant agreed with the
plaintiff, an infant, that if the plaintiff would work for him

4 Mutual Reserve Fund L. I. Ass’n v. Taylor, — Va. — ; 87 S. E.
854.

5 Ante, §§ 518-522.

§ 554. 1 See Nichols v. Scranton Steel Co., 187 N. Y. 471, 487; 33
N. E. 561, as to the distinction between the recovery of a debt and the
recovery of damages for breach of the contract.

2 Flinn v. Mowry, — Cal. — ; 63 P. 724.

8 Honour v. Equitable L. I. Soc., 1900, 1 Ch. 852.

4 Pittman v. Pittman, — Ky. — ; 618. W. 461.
826 THE ENFORCEMENT OF CONTRACTS.

until he was twenty-one, he would adopt him and make him
his heir. The plaintiff rendered services under the agreement
until he reached the age of twenty-one, when the defendant
said that he should never have any share of his estate. The
court held that the action would not lie until the death of
the defendant, who might carry out the contract by leaving
the plaintiff a share of his estate by will. The defendant’s
contract had become unilateral, the plaintiff having per-
formed his part. It is doubtful, therefore, if the doctrine of
anticipatory breach has any application whatever to unilateral
contracts, or to contracts which have become unilateral by
performance on one side.

§ 555. Cases rejecting the Doctrine of Anticipatory Breach. —
In a few States the gencral doctrine of anticipatory breach is
repudiated,! although the court does not deny the possibility
that in certain contracts present obligations may arise, though
the time for performance is in the future; as, for example, in
the case of an engagement to marry, in regard to which there
seems to be no dispute.2. The Massachusetts courts, however,
are not consistent; for although they refuse to allow a man
to recover damages for a refusal to perform a contract before
the time for performance has arrived, they permit him, after
the time for part performancé has arrived, to treat a refusal
to perform as a breach of the entire contract, and to recover
damages for not performing the contract in the future.2 This
distinction “ between cases of renunciation before the arrival
of the time of performance and those of renunciation of the
unmatured obligations of a contract while it is in course of
performance” has recently been rejected as unsound by the
Supreme Court of the United States.4

§ 556. Damages in Case of Anticipatory Breach, — Where

§ 555. 1 Daniels v. Newton, 114 Mass. 580; W. 406; Stanford »v.
McGill, 6 N. D. 586; 72 N. W. 938. And see Williston, 14 Harv. Law.
Rev. 433.

2 Lewis v. Tapman, 90 Md. 294; 45 A. 459.

3 Parker v. Russell, 183 Mass. 74; W. 414.

4 Roehm »v, Horst, 178 U. S. 1,19. See, however, Williston, 14 Harv.
Law Rev. 434.
ANTICIPATORY BREACH. 3827

there is an actual breach of contract the injured party is
bound to use reasonable efforts to prevent unnecessary loss ;?
but where there is an anticipatory breach no such duty arises,
unless the repudiation is accepted by the plaintiff as an actual
breach,? for such anticipatory breach can only be regarded as
a breach in case the injured party wishes so to treat it.2 In
equity, however, this rule is not necessarily followed.4 Where
there is an anticipatory breach the injured party may have
his damages assessed immediately,? or may wait till the time
for performance has arrived.

§ 556. 1 Leake, Contracts, 906; Clark v. Marsiglia, 1 Denio, 317;
W. 417; H. & W. 572; Derby v. Johnson, 21 Vt. 17; H. & W. 568;
Mather v. Butler County, 28 Ia. 253; H. & W. 612; Gibbons v. Bente,
51 Minn. 499; 53 N. W. 756; K. II. 1417. As to contracts of employ-
ment, see Huffcut, Agency, 74; Stearns v. Lake Shore R., 112 Mich. 651;
71 N. W. 148.

2 Roth v. Taysen, 73 L. T. 628.

3 Kadish v. Young, 108 Ill. 170 ; W. 481; Roebling’s Sons Co. v.
Lock Stitch Fence Co., 130 Ill. 660; 22 N. E. 518; Phillpotts v. Evans,
5M. & W. 475. This doctrine is criticised by Professor Williston (14
Harv. Law Rev. 422, 441) on the ground that the plaintiff has no right by
performing labor that is of no benefit to the defendant to require the
latter to pay therefor. If the contract is for the sale of property, this
criticism has clearly no application. If, on the other hand, the contract
is for services, and the defendant notifies the plaintiff that the services
‘will not be required, while there is no duty on the part of the plaintiff to
mitigate his damages, he naturally can recover as damages only the
difference between what he can obtain for the same services from some
one else, and the amount which the defendant agreed to pay therefor.

4 Truax v. Estes, 92 F. 529.

5 Roehm v. Horst, 178 U. S. 1.

6 Kadish v. Young, supra.
828 THE ENFORCEMENT OF CONTRACTS.

CHAPTER XXXV.

DAMAGES.

§ 557. The Object of Damages. — In computing damages the
following general principles are to be observed. The object
of damages for breach of contract is to compensate the injured
party for the loss actually sustained; except in the case of
breach of promise of marriage, where in an action for breach
of contract damages are awarded as if for a tort.1

§ 558. The Measure of Damages — The General Principle. —
The extent of contractual obligation is fixed by the act giving
rise to the obligation; hence only such damages for breach of
contract will be allowed as a reasonable man would suppose
the contract was intended to provide for.

§ 559. Loss of Profits as an Element of Damages. — In the case
of a bilateral contract, there are two elements to be estimated
in computing the damages: first, the actual expense incurred
by the injured party, and the actual yalue of his services ; ; and,
second, the loss of anticipated profits.t

§ 560. Interest as Damages. — Interest is not recoverable at
common law as damages for the detention of money due unless
the contract so provides, or unless there is an implied contract
to pay such interest by reason of the usage of trade, as in the
case of mercantile instruments.1 In this country, however,

§ 557. 1 Anson, Contracts (8th ed.), 253.

§ 558. 1 Hadley v. Baxendale, 9 Ex. 341; K. II. 1407; Rochester
Lantern Co. v. Stiles, ete. Co., 185 N. Y. 209; 31 N. E. 1018; K. II.
1412. c

§ 559. 1 United States v. Behan, 110 U. S. 338; 4 S. Ct. 81; K. IL.
1420; Hinckley v. Pittsburgh Steel Co., 121 U. S. 264; K. IT. 1890.

§ 560. 1 Page v. Newman, 9 B. & C. 878; K. IJ. 14385; London,
Chatham, & Dover Ry. Co. v. South-Eastern Ry. Co., 1898, A. C. 429 ;
K. II. 1489; Madison County v. Bartlett, 1 Scam. 67.
DAMAGES. 329

interest is generally recoverable on liquidated claims, that is,
where the amount of the claim is fixed.2_ In some cases in-
terest has been allowed on unliquidated claims. Compound
interest is generally not allowed.*

§ 561. Liquidated Damages. — The parties to a ,contract
may agree upon the damages to be paid in case of a breach.
Whether the specification in the contract of a fixed sum to
be paid for a breach makes that sum liquidated damages or
a penalty is a question of construction which has been already
discussed.1

2 Young v. Godbe, 15 Wall. 562; Curtis v. Innerarity, 6 How. 146;
Cooper v. Coates, 21 Wall. 105.

8 McMahon v. New York & Erie R., 20 N. Y. 463 ; K. II. 1487.

* Lewin v. Folsom, 171 Mass. 188; 50 N. E. 528.

§ 561. 1 Ante, Ch. XII.
8380 THE ENFORCEMENT OF CONTRACTS,

CHAPTER XXXVI.
SPECIFIC PERFORMANCE.

§ 562. The Equitable View of Contractual Obligation. — When
the performance of his contract is within the control of the
promisor, his primary obligation is to perform his contract.
This is the equitable view of contractual obligation. This
also was the view of contractual obligation taken in the com-
mon-law courts in early times! The common-law courts,
however, in administering justice, came to award damages
only for breach of contract; and this limitation on their
power of enforcing obligations seems to have given rise to the
idea that because a common-law court could give only dam-
ages for breach of contract, the contract amounted only to
the assumption of a risk; and the promisor had the right to
break the contract if he chose. This view of contract has
been adopted in many cases,” and has received the support of
at least one distinguished jurist.2 The constant progress of
equitable doctrines and equitable ideas, however, seems to
render it impossible that a conception of contractual obliga-
tion so far below that of ordinary business morality should
long continue to receive the sanction of the law. The exercise
of the jurisdiction of courts of equity to decree specific per-
formance, says Chief Justice Fuller in a recent case, “prevents
the intolerable travesty of justice involved in permitting par-
ties to refuse performance of their contracts at pleasure by
electing to pay damages for the breach.” Even in Massachu-
setts the doctrine advocated by the learned Chief Justice of

§ 562. 1 Ante, §§ 551, 552.
2 Ante, § 117.
8 Holmes, Common Law, 298-3803.
SPECIFIC PERFORMANCE. 38381

that State does not appear to be carried to its logical con-
clusion, for it has recently been held there that it is no defence
to an action for specific performance that the defendant can
save money by abandoning the contract and paying damages.

§ 563. Inadequacy of Legal Remedy the Ground of Equitable
Jurisdiction to enforce Contracts. The equitable theory of
contractual obligation is that a man is bound to perform his
contracts if he can. This is the primary obligation which
equity will enforce, in a proper case, by its peculiar remedies
of injunction and specific performance. This primary obliga-
tion may exist side by side with a secondary obligation to pay
damages. But though this is the equitable theory of con-
tractual obligation, it does not follow that equity will in every
case interfere to enforce such primary obligation. On the
contrary, the interference of equity must be sought on equitable
grounds, namely, that the complainant has not an adequate
remedy at law.

§ 564. Specific Performance of Positive and Negative Stipu-
lations. —If the contract contains only negative stipulations,
it can be specifically enforced by injunction. If the contract
contains only positive stipulations, a decree for specific per-
formance is necessary. If the contract contains both positive
and negative stipulations, the jurisdiction of equity to enforce
the negative stipulations by injunction when it cannot enforce
the positive stipulations by a decree for specific performance
is disputed! The doctrine of Lumley v. Wagner, the leading
case in support of the enforcement of negative stipulations
when the positive stipulations cannot be enforced, ought not
to be extended according to the present views of the English
courts.8

§ 565. Damages must be an Inadequate Remedy. — Whether

* Roberts v. Cambridge, 170 Mass. 199; 49 N. E. 84,

§ 564. 1 See Lumley v. Wagner, 1 D. M. & G. 604; Keener, Cas. Eq.
II. 223; Rice v. D’Arville, 162 Mass. 559; 89 N. E. 180; Keener, Cas.
Eq. IL. 1071; Cort v. Lassard, 18 Or. 221; 22 P. 1054; H. & W. 619;
Welty v. Jacobs, 171 Ill. 624; 49 N. E. 723.

2 Supra.

8 Ehrman v. Bartholomew, 1898, 1 Ch. 671.
832 THE ENFORCEMENT OF CONTRACTS.

the contract be negative or positive in its character, equity will
only interfere where the damages which the plaintiff could
recover at law would be an inadequate remedy. Negative
contracts are more readily enforced than positive ones, be-
cause a decree for specific performance will only be granted
when the court can supervise the performance of the contract.
The jurisdiction of equity in the case of positive contracts is
chiefly confined to contracts affecting land and certain special
kinds of personal property. In decreeing specific performance
the court is governed by many principles of equity which can-
not be discussed here.2, The most important thing to notice
in a work on Contracts is that consideration is always essen-
tial to every contract which equity will enforce; while at law,
as we have seen, consideration has nothing to do with the
obligation of formal contracts.

§ 565. 1 See South African Territories v. Wallington, 1898, A. C. 309.

2 The student is referred to Sir Edward Fry’s treatise on Specific
Performance for further information on this difficult branch of equity
jurisdiction.
BOOK VIII.

THE STATUTE OF FRAUDS.

CHAPTER XXXVII.
THE NATURE AND HISTORY OF THE STATUTE.

§ 566. Oral Contracts at Common Law. — The purely formal
part played by the court in the trial of cases was one of the
peculiarities of primitive judicial procedure which had a marked
effect on the development of English law.1 One party or the
other was ordered to prove his case, and if certain forms were
‘satisfied, the judgment of the court was given in favor of the
party complying with such formal requirements. Originally,
the only eccntracts which the courts recognized were “real”
contracts, where the defendant had received a guid pro quo, and
formal contracts, where the defendant’s obligation was estab-
lished by his own deed. At first the writing, and afterwards
the defendant’s seal, was regarded as the only means of prov-
ing the defendant’s promise. The requirement of the seal as
an essential part of a deed had the effect, of course, to make
a mere written promise of no greater force than an oral prom-
ise ;2 and both oral and written promises alike came to be en--
forced only by the new and constantly developing action of
assumpsit. As this action originally sounded in tort, and as
consideration came to be its essential feature, the form of the
promise was of no consequence. Promises could be made by
writing, by word of mouth, or by conduct without words, and

§ 566. 1 See post, Appendix IT.
2 Rann v. Hughes, 7 T. R. 350, note a; L. 187; K. 336.
3834 THE STATUTE OF FRAUDS.

were of equal effect in sustaining the action of assumpsit.
Negotiable instruments alone were required to be in writing,
and this only by the custom of merchants, which had little
influence on the general development of contract law.

§ 567. The Statute of Frauds.— The utter absence of any
formal requirements for contracts enforceable by the action of
assumpsit seems to have made it very difficult for the courts
to determine the truth in cases where one party set up an oral
contract, and the other denied its existence. Accordingly, in
1676, an act was passed for the prevention of frauds and per-
juries. This act was the celebrated Statute of Frauds, 29
Car. II. c. 3, which has been most productive of litigation. In
whole or in part this statute is generally in force to-day
throughout the United States. Two sections of the act affect
contracts, the fourth and the seventeenth.

§ 568. The Fourth Section. — The fourth section of the orig-
inal Statute of Frauds is as follows :—

“No action shall be brought whereby to charge any execu-
tor or administrator upon any special promise to answer
damages out of his own estate; or whereby to charge the de--
fendant upon any special promise to answer for the debt, de-
fault, or miscarriages of another person; or to charge any
person upon any agreement made upon consideration of mar-
riage; or upon any contract or sale of lands, tenements, or
hereditaments, or any interest in or concerning them; or upon
any agreement that is not to be performed within the space of
one year from the making thereof; unless the agreement
upon which such action shall be brought, or some memorandum
or note thereof, shall be in writing, and signed by the party to
be charged therewith, or some other person thereunto by him
lawfully authorized.”

§ 569. The Seventeenth Section.— The seventeenth section
of the original Statute of Frauds is as follows: —

“ No contract for the sale of any goods, wares, or merchan-
dises for the price of £10 sterling, or upwards, shall be al-
lowed to be good, except the buyer shall accept part of the
goods so sold, and actually receive the same, or give something
in earnest to bind the bargain, or in part of payment, or that
THE STATUTE OF FRAUDS. 3385

some note or memorandum in writing of the said bargain be
made and signed by the parties to be charged by such contract,
or their agents thereunto lawfully authorized.”

We have then to consider, first, to what contracts these
sections apply ; second, what is required by the statute in the
case of such contracts; and, third, the effect of the statute
upon contracts which do not conform to its requirements.
336 THE STATUTE OF FRAUDS.

CHAPTER XXXVIII.

CONTRACTS WITHIN THE STATUTE.

§ 570. Contracts within the Fourth Section. — And first as to
‘the contracts included in the fourth section. These include
personal contracts by executors and administrators ; guaran-
ties; contracts in consideration of marriage; contracts for the
sale of real estate; and contracts not to be performed within
one year.

§ 571. Contracts of Bxecutors and Administrators. — The
first class of contracts is described as follows: “ Any special
promise by any executor or administrator to answer damages
out of his own estate.” Executors and administrators are
liable for claims against the estates of their decedents only in
their representative capacity. Judgment against an executor
as such is de bonis testatoris. Executors and administrators,
however, may bind themselves personally to pay such claims,
and the statute requires such contracts to be in writing. To
be within the statute the promise must be to answer for some
liability of the estate ; hence a promise by an executor to pay
an heir for forbearing to contest the will of the testator need
not be in writing!

§ 572. Guaranties. —“ Any special promise to answer for
the debt, default, or miscarriage of another.” This includes
all contracts by which any person agrees to be responsible for
any civil liability incurred by another. In every case within
the statute there must be three parties involved: C., the cred-
itor; B., the principal debtor; and A., the guarantor. A
promise, to fall within the statute, must be a promise by A.
to C. to answer to C. for B.’s liability to C. A promise by -

§ 571. 1 Bellows v. Sowles, 57 Vt. 164; H. & W. 110.
CONTRACTS WITHIN THE STATUTE. 337

A. to pay his own debt, or the debt of a firm of which he is
a member, and for which he is therefore responsible, is not
within the statute.t

8 573. There must be a Guaranty of a Real Liability. —
There must be a real liability of B. to C. Hence a promise
to answer for the “debt” of a married woman at common
law is not on principle within the statute; though it has been
held otherwise.’ [If credit is given to a married woman on
the strength of her separate estate, however, the statute ap-
plies? The guaranty of an infant’s contract is within the
statute, because an infant’s contracts are not void, but only
voidable?

§ 574. The Promise must not be for the Performance of a
Collateral Act.— The promise must be a promise to pay the
debt, and not to pay a certain sum for a collateral act. Thus,
a promise to pay the plaintiff in a suit £50 to withdraw his
suit need not be in writing.

§ 575. Contracts of Indemnity.— There is a conflict of
authority as to whether a promise of indemnity is within the
statute. If A. induces B. to go surety for C. on an obliga-
tion to D., it is held by some courts that A.’s promise to in-
demnify B. is within the statute’ The better rule, however,
is that such contracts are not within the statute, because A.’s
promise is really a promise to B. to pay any claim that D. may
have against B.; so that the promise is to the debtor, B., and
not to the creditor, D2 It is in reality not the contingent

§ 572. 1 Reid v. Wilson, 109 Ga. 424; 84S. E. 608.

§ 573. 1 Maggs v. Ames, 4 Bing. 470; 1M. & P. 294; Miller v. Long,
45 Pa. St. 350.

2 Connerat v. Goldsmith, 6 Ga. 14.

8 Dexter v. Blanchard, 11 Allen, 365; Scott v. Bryan, 73 N. C. 582;
Brown v. Farmers’, etc. Bank, — Tex. — ; 31S. W. 285; contra, King v.
Summitt, 73 Ind. 312.

§ 574. 1 Read v. Nash, 1 Wils. 305.

§ 575. 1 May v. Williams, 61 Miss. 125; H. & W.1138; First Nat. Bank
v. Bennett, 83 Mich. 520; Draugham v. Bunting, 9 Ired. 10; Hurt v. Ford,
142 Mo. 283; 44 S. W. 228.

2 Thomas v. Cook, 8 B. & C. 728; Guild v. Conrad, 1894, 2 Q. B.
885, where the promise was to indemnify the plaintiff from liability if
he would accept certain bills of exchange; Aldrich v. Ames, 9 Gray, 76;

22
838 THE STATUTE OF FRAUDS.

liability of C. to B., but the liability of B. to D. for which A.
agrees to be answerable to B.

§ 576. Contracts of Novation not within the Statute. — If
the effect of the promise is to discharge the debtor’s lia-
bility, it is not within the statute, which contemplates that
the primary liability of the debtor shall be supplemented by
the secondary liability of the guarantor. Hence if a novation
takes place by which A. agrees to pay B.’s debt to C. in con-
sideration that ©. will discharge B. and accept A. as his
debtor instead, and B. and C. assent to the transaction, A.’s
promise is not within the statute.t

§ 577. Promises to the Debtor not within the Statute. — If
the promise is made to the debtor, it is not within the statute.
The promise in such a case imposes a direct and original obli-
gation on the promisor to pay the amount of the debt, and
the fact that the debtor designates that that amount shall be
paid to the creditor has no different effect from a direction
that the promisor shall deposit the money in a bank. The
promise in such a case is not to answer for the liability of
another, but to perform a certain act which has been designated
by the debtor as the consideration for some promise or act on
his own part. Thus, if A. sells property to B., and B. promises,
in consideration of the sale, to pay A.’s debt to C., the statute
does not apply to B.’s promise.}

§ 578. The “New Consideration” Rule. — It is often said
that if the moving consideration for a promise to pay money
Anderson v. Spence, 72 Ind. 815; Jones v. Bacon, 145 N. Y. 446; 40
N. E. 216 ; George v. Hoskins, — Ky. — ; 30 S. W. 406; Fidelity, etc.
Co. v. Lawlor, 64 Minn. 144; 66 N. W. 143; Esch v. White, 76 Minn.
220; 78 N. W. 1114; Warren v. Abbett, — N. J. L. — ; 46 A. 575;
Faulkner v. Thomas, — W. Va. — ; 30S. E. 914.

§ 576. 1 Eden v. Chaffee, 160 Mass. 225; 35 N. E. 675; Langdon v.
Hughes, 107 Mass. 272; Hamlin v. Drummond, 91 Me. 175 ; 39 A. 581;
Ferst v. Bank of Waycross, — Ga. — ; 36 8S. E. 773; Hanson »v.
Nelson, — Minn. — ; 84.N. W. 742.

§ 577. 1 Wilson v. Bevans, 58 JIl. 232; Gold v. Phillips, 10 Johns. 412;
Townsend v. Long, 77 Pa. St. 143; First Nat. Bank v. Chalmers, 144
N. Y. 432; 89 N. E. 831; Neagle v. Kelly, 146 Ill. 460; 34 N. E. 947;
Feldman v. McGuire, — Or. — ; 55 P. 872; Coffin v. Bradbury, 89 Me.
476; 36 A. 988.
CONTRACTS WITHIN THE STATUTE. 339

be the liability of a third person, the promise must be in
writing; but if there be a new consideration moving from the
promisee to the promisor, that makes it a new agreement,
which is not within the statute. This doctrine is frequently
laid down by the courts, but has been justly criticised.1 The
statute applies to any special promise to answer for the debt,
default, or miscarriage of another. Neither the motive in-
ducing the promise, nor the consideration therefor, can deter-
mine whether the promise is in reality to answer for the
liability of another. The real test should be, Is the promise to
“answer for” the debt of another, that is, does it impose on
the promisor a liability contingent on the failure of the prin-
cipal debtor to make payment? If there is an absolute
promise to pay money the statute does not apply, even though
it be agreed that such payment shall discharge the debt of
another. Thus an oral promise to a surety to pay the debt of
the principal, in consideration of the surety’s abandoning his
right to have the debt made by execution against the prin-
cipal, is binding. So a promise by A. to pay B.’s debt to C.
in consideration that C. does not levy execution on property
belonging to the firm of A. and B. is not within the statute.®
There are three classes of cases, however, which are said to
come under the new consideration rule, which can easily be
explained.

§ 579. The “ New Consideration”? Rule — Promises to pay
one’s own Debt.— Where A. owes B. and B. owes C., an
agreement that A. shall pay to C. the debt due from A. to B. is
clearly not within the statute; A.’s promise is to pay his own
debt, not the debt of another.1 Again, where A. contracts a
debt to B., which he agrees to pay by paying C.’s debt to B.,
the contract is not within the statute, for the same reason.?
Thus where B. surrenders to A. an insurance policy held by

§ 578. 1 Browne, Statute of Frauds, Ch. X.

2 Bunting v. Darbyshire, 75 Ill. 408. ,

3 Swayne v. Hill, — Neb. — ; 81 N. W. 855.

§ 579. 1 Clymer v. De Young, 54 Pa. St. 118; Sanders v. Classon,
13 Minn, 379.

2 Stillman v. Dresser, — R. I. — ; 48 A. 1.
340 THE STATUTE OF FRAUDS.

B. as security for a debt due from C. to B., in order that A.
may collect the money on the policy, A.’s promise to B. to pay
'C.’s debt creates a debt of A.’s own, and is therefore not within
the statute. In such a case there is really a purchase by A.
from B. of the insurance policy for the amount of C.’s debt.
If, however, the transaction between A. and B. does not create
a debt on A.’s part, A.’s promise has been held within the
statute. Now a simple contract debt can be created only by
the receipt of a quid pro quo; so that if A. does not receive
a quid pro quo from B. his promise to pay C.’s debt to B. is,
according to some authorities, within the statute.4

§ 580. The “ New Consideration” Rule — Promises to apply
Assets.— The third class of cases in which the “new con-
sideration” rule is said to take the promise out of the statute
is where property of the debtor is surrendered to the promisor
for the purpose of having the promisor pay the amount of the
debt to the creditor out of the proceeds. In such a case, the
defendant is in effect, if not technically, a trustee.!

§°581. The “Main Purpose” Rule. — If the promisor has
a personal, immediate, and pecuniary interest in a transaction
in which a third party is the original obligor, the statute does
not apply. ‘“ Whenever the main purpose and object of the
promisor is not to answer for another, but to subserve some
pecuniary or business purpose of his own, involving either a
benefit to himself, or damage to the other contracting party,
his promise is not within the statute, although it may be in
form a promise to pay the debt of another, and although the
performance of it may incidentally have the effect of extin-
guishing that liability.” Thus where A. was a creditor of a

3 Borchsenius v. Canutson, 100 Tl. 82.

4 Curtis v. Brown, 5 Cush. 488; Nelson v. Boynton, 8 Met. 396; Noyes
v. Humphreys, 11 Gratt. 636; Maule v. Bucknell, 50 Pa. St. 39; Kelsey
v. Hibbs, 13 Ohio St. 340; Browne, Statute of Frauds, §§ 212, 214e.
See, however, Bunting v. Darbyshire, 75 Ill. 408; Swayne v. Hill, — Neb.
— ; 81 N. W. 855.

§ 580. 1 Williams v. Leper, 3 Burr. 1886; Browne, Statute of Frauds,
§ 206.

§ 581. 1 Clifford, J., in Emerson v. Slater, 22 How. 43; Ferst v. Bank
of Waycross, — Ga. — ; 36S. E. 773.
CONTRACTS WITHIN THE STATUTE. 341

mining company, and chiefly interested in the working of a
mine, his promise to B. to pay B. for services rendered by
the latter in transporting ore for the company was held not
to come within the statute. So where the defendant had
employed a party to build a house, and on his failure the
plaintiff, who was a sub-contractor, agreed to go on with the
work if the defendant would pay him, the defendant’s oral
promise to pay was sustained.? It is more logical, however,
to hold the promise to be within the statute unless the prin-
cipal contractor is released. A mere incidental benefit to the
promisor is insufficient to take the promise out of the statute.®
The true test in such cases is whether the defendant is inter-
ested in the transaction in regard to which the promise is
given, or whether he is totally unconnected with it except by
means of his promise to pay the loss. In the former case the
contract is one of indemnity, and is not within the statute ;
in the latter case the contract is one of guaranty, and comes
within the statute.6 This principle is illustrated in a modern
English case.’ The plaintiffs, who were stockbrokers, made
an oral agreement with the defendant that he should intro-
duce clients to them, and that the plaintiffs should transact
business on the Stock Exchange for the clients thus in-
troduced. It was agreed between plaintiffs and defendant
that defendant should’receive half the commissions earned
by plaintiffs on transactions for such clients, and should pay
to plaintiffs half the loss which plaintiffs might suffer in con-
sequence of such transactions. The contract was held not to
be within the statute, partly on the ground that it was a con-
tract of indemnity, and partly because it was to regulate the
terms of the plaintiffs’ employment.

2 Davis v. Patrick, 141 U. S. 479; 12 S. Ct. 58; Ferst v. Bank of
Waycross, supra. ,

8 Clifford v. Luhring, 69 Il. 401; Craft v. Kendrick, 39 Fla. 90; 21
S. 803; Hall v. Alford, — Ky. — ; 49S. W. 444.

4 Wilhelm v. Voss, 118 Mich. 106; 76 N. W. 308; Gilles v. Mahony,
— Minn. — ; 82 N. W. 583.

5 Commercial N. B. v. Goodrick, — Wis. — ; 83 N. W. 766.

6 Sutton v. Grey, 1894, 1 Q. B. 285.

7 Ibid.
342 THE STATUTE OF FRAUDS.

§ 582. To whom Credit must be given. — If goods are sold or
services rendered upon the sole credit of the defendant, the
fact that the goods are delivered or the services rendered to a
third person does not bring the defendant’s promise to pay for
them within the statute, for there is no liability on the part of
the recipient of the goods or services to which the defendant’s
promise can be collateral.t But if any credit be given to the
third party, the defendant’s promise must be in writing.?

§ 583, Marriage Contracts. —“ To charge any person upon
any agreement made upon consideration of marriage.” This
includes all promises made in consideration of actual) marriage,
or of promise of marriage, with the exception of mutual
promises to marry. Mutual promises to marry were origi-
nally held to be within the statute,! but the modern doctrine
excludes them. If, however, the promise to marry is part of
an ante-nuptial agreement, and dependent on it, it is within the
statute. A contract by which a man agrees to settle on his
wife more than the law would give her is within the statute.*

§ 584. Contracts concerning Lands. — “ Upon any contract or
sale of lands, tenements, or hereditaments, or any interest in
or concerning them.” This clause is sweeping in its language,
and applies to all contracts affecting in any way the title to
any kind of interest in any kind of real property, except
leases, which are governed by sections one and two of the
original statute.1 The distinctions between realty and per-
sonalty need not be here discussed. Some illustrations of the
application of the statute are here given, however. The statute

§ 582. 1 Hartley v. Varner, 88 JI. 561; King v. Edmiston, 88 II]. 257;
White v. Tripp, 125 N. C. 523; 34 S. E. 686; Lusk v. Thorp, — II.
—; 59 N. E. 529; Herendeen Mfg. Co. v. Moore, — N. J. L. — ;
48 A. 525.

2 Anderson v. Hayman, 1 H. Bl. 120; Welch v. Marvin, 36 Mich. 59;
Browne, Statute of Frauds, §197; Pake v. Wilson, — Ala. — ; 28 S.
665.

§ 583. 1 Philpott v. Wallet, 3 Lev. 65.

2 Clark v. Pendleton, 20 Conn. 495; Lewis v. Tapman, 90 Md. 294;
45 A. 459; Browne, Statute of Frauds, § 215 a.

8 Chase v. Fitz, 132 Mass. 359.

4 Richardson v. Richardson, 148 Ill. 563; 36 N. E. 608.

§ 584, 1 Browne, Statute of Frauds, Ch. ITI.
CONTRACTS WITHIN THE STATUTE. 843

applies to a contract for the transfer of a pre-emption right ;?
of an equitable interest ; and of a right of possession ; 4 but not
to a right to claim a mechanic’s lien. It applies to a contract
by A. to procure a conveyance from B. to C., or to pay C.a
certain sum;® to a contract for the sale of debentures which
constitute a floating charge on the property of a company, such
property comprising certain leaseholds.’ An agreement to
refrain from a certain use of land is not within the statute if
the agreement does not create an easement. <A contract by
A. with B., by which A. agrees to sell land to a purchaser
whom B. shall find, and to pay B. all the money received over
and above a fixed price, is not within the statute.?

§ 585, Joint and Partnership Contracts concerning Land. — A
contract for a partnership to trade in lands is not within the
statute ;1 nor is a contract for the purchase of lands by the
parties jointly, or for their joint benefit ;2 nor a contract for
the division of the proceeds of partnership real estate? In
none of these cases does the contract itself affect the title to
the land in any way. The interest of the parties in the land
actually bought is determined not by the contract, but by the
resulting trust in favor of the partnership caused by the use
of the partnership funds in purchasing the land. If, however,
the contract itself makes any change in the title to the land,
it is within the statute. Thus where the parties agree to hold
as firm property land previously held in severalty, the con-

2 Lester v. White, 44 Ill. 464. _

3 Dougherty v. Catlett, 129 Il. 481; 21 N. E. 932.

4 Howard v. Easton, 7 Johns. 205; Boyd v. Paul, 125 Mo. 9; 28 S. W.
171.

5 Hughes v. Lansing, — Or. — ; 55 P. 95.

6 Mather v. Scoles, 35 Ind. 1.

7 Driver v. Broad, 1893, 1 Q. B. 744.

8 Hall v. Solomon, 61 Conn. 476; 23 A. 876.

9 Hayes v. Philips, 37 Cal. 529; H. & W. 118.

§ 585. 1 Dale v. Hamilton, 5 Hare, 369; Holmes v. McCray, 51 Ind.
358; Speyer v. Desjardins, 144 Ill. 641; 32 N. E. 283; Jones v. Davies,
— Kan. — ; 56 P. 484; contra, Smith v. Burnham, 8 Sumner, 435.

2 Simon v. Gulick, — Ky. — ; 50 S. W. 992; Re De Nicols, 1900,
2 Ch. 410; contra, Schultz v. Waldons, — N. J. Eq. — ; 47 A. 187.

8 Van Housen v. Copeland, 180 Ill. 74; 54 N. E. 169.
844 THE STATUTE OF FRAUDS.

tract operates to transfer the equitable interest in the prop-
erty from the individual partners to the firm, and is therefore
within the statute For the same reason an agreement for the
dissolution of a partnership which provides that one of the
parties shall assign to the others a certain interest in land
must be in writing.6

§ 586. Entire, Divisible, and Alternative Contracts concerning
Land. — If the contract is entire, covering both realty and per-
sonalty, it is within the statute;! and so if the contract ‘s in
the alternative, and one alternative is within the statute?

§ 586 a. Contracts for Mutual Wills.— A contract whereby
the parties agree to make mutual wills in each other’s favor is
not within the statute where the party dying first has no real
estate at the time of his death.

§ 587. Agreements not to be performed within One Year. —
“Upon any agreement that is not to be performed within one
year from the making thereof.” This clause applies only to
contracts which by their terms cannot be performed within
one year. Hence, if no time for performance is fixed, the
statute does not apply. Nor is a contract within the statute
if the time for performance depends upon a contingency that
may happen within one year, as in the case of a promise by a
man to marry when he recovers his health.? Nor does the
statute apply to a contract to do something until the hap-
pening of a certain event, which may happen within the ‘
year. Nor to a contract to do something “within” five

4 Goldstein v. Nathan, 158 Il]. 641; 42 N. E. 72.

5 Gray v. Smith, 438 C. D. 208, per Kekewich, J.

§ 586. 1 Meyers v. Schemp, 67 Il. 469; Thayer v. Rock, 13 Wend. 53;
Dicken v. McKinley, 163 Ill. 318; 45 N. E. 134; Martin v. Martin, —
Wis. — ; 84 N. W. 4389.

2 Mather v. Scoles, 35 Ind. 1.

§ 586 a. 1 Turnipseed v. Serrine, — 8. C. — ; 358. E. 757.

§ 587. 1 McPherson v. Cox, 96 U. 8. 404; Haussman v. Burnham,
59 Conn. 117; 22 A. 1065; MacElree v. Wolfersberger, — Kan. — ;
52 P. 69; Richmond Union R.-v. Richmond, etc. R.. — Va. — ; 32
S. E. 787 ; Warner v. Texas, etc. R., 164 U.S. 418.

2 McConahey v. Griffey, 82 Ia. 564; 48 N. W. 988.

_ 8 Hutchinson v. Hutchinson, 46 Me, 154; Peters v. Westborough,
19 Pick. 364; H. & W. 120.
CONTRACTS WITHIN THE STATUTE. 845

years A contract extending the time for the payment of
a debt more than one year is within the statute.®

§ 588, Effect of Conditions and Limitations distinguished. — A
distinction should be drawn between the case of a contract to
do something until the happening of a certain event, which
may happen within the year, and that of a contract to con-
tinue for more than one year, but with a proviso that on the
happening of a given event the contract shall be discharged.
In the former case there is a limitation, in the latter a condi-
tion subsequent. Hence if the contract is by its terms not to
be performed within one year, the fact that either party is
given an option to terminate the contract within the year does
not prevent the application of the statute Thus where a
mortgagee agreed with his mortgagor that the mortgage
might run ninety-nine years, or so long as the interest was
paid, it was held that the statute applied to the agreement, al-
though the mortgage might be paid at any time at the mort-
gagor’s option.2, So where a contract provided for the use of
a patent cut-off on a steamboat, and provided that the user
should pay a certain sum for the use of the patent during its
continuance (which was to be twelve years), if the steamboat
should last so long, the contract was held to be within the
statute.®

§ 589, Personal Contracts.— The application of the fore-
going principles has resulted in a conflict of authority. Where
the contract is to do something for more than one year, but is
of a personal character, so that it does not bind the repre-
sentatives of the promisor, the question arises whether such

4 Walker v. Johnson, 96 U.S. 424.

5 Barry v. Wixon, — R. J. — ; 46 A. 42; Morgan v. Wickliffe, —
Ky. — ; 618. W. 138.

§ 588. ! Dobson v. Collis, 1 H. & N. 81; Birch v. Earl of Liverpool,
9 B. & C. 392; Buhl v. Stephens, 84 F. 922; contra, Blake v. Voigt, 134
N. Y. 69; 81 N.E. 256; Johnston v. Bowersock, — Kan. —; 61 P. 740.

2 Barry v. Wixon, — R, I. — ; 46 A. 42.

2 Packet Co. v. Sickles, 5 Wall. 580. This decision has been criticised
in Warner v. Texas, etc. R., 164 U.S. 418, and in Johnston v. Bowersock,
supra. The decision, however, appears perfectly sound, and the criticism
to be based on a misapprehension of its reasoning.
346 THE STATUTE OF FRAUDS.

contract is within the statute. On principle, it seems that the
question is really one of construction ; that if the life of the
person is to be regarded as marking the limitation of the con-
tract, the statute does not apply; but that if death is to be
regarded as a condition subsequent putting an end to the con-
tract, the statute should apply; and that whether death is to
be treated as a limitation or as a condition should depend on
the terms of the contract, and not upon any arbitrary rule. If
A. promises to do something as long as he lives, A.’s life
marks the natural duration of the obligation; and so, if A.
promises to do something as long as B. lives,! or so long as
B. needs,? or to give B. “permanent employment,” ? or to
employ B. so long as A. is engaged in a certain ‘business,*
or so long as B.’s services are satisfactory,6 B.’s life
marks the limit of the possible duration of the obligation.
The period of life is uncertain, and may be less than one
year; on principle, therefore, the statute should not apply to
the cases just put.6 If, however, A. promises to do something
for a period of five years, the contract is not performed until
the five years have elapsed, and A.’s death, or B.’s death, if
the contract is personal in its character, operates simply as a
condition discharging the contract; unless the contract is of
such a character that it may properly be construed as extend-
ing only during the life of A. or B. Thus an agreement by A.
to work for B. for five years is within the statute,’ although
death will discharge it; but an agreement by A. to support B.
for five years,’ or to keep a horse for two years,’ or to refrain

§ 589. 1 Hiserman v. Schneider, 60 N. J. L. 291; 387 A. 623.

2 Warner v. Texas, etc. R., 164 U. S. 418.

8 Carnig v. Carr, 167 Mass. 544; 46 N. E. 117.

4 Yellow Poplar Lumber Co. v. Rule, — Ky. — ; 50S. W. 685.

5 Sax v. Detroit, etc. R.. — Mich. — ; 84 N. W. 314.

® See Carter White-Lead Co. v. Kinlin, 47 Neb. 409; 66 N. W. 536,
and cases supra.

7 Shute v. Dorr, 5 Wend. 204; Hill v. Hooper, 1 Gray, 181; Miller v.
Wisener, 45 W. Va. 59; 30 S. E. 237.

8 Peters v. Westborough, 19 Pick. 364; H. & W. 120; Macgregor ».
Maceregor, 21 Q. B. D. 424; White v. Murtland, 71 Ill. 250.

9 Martin v. Batchelder, 69 N. H. 360; 41 A. 88.
CONTRACTS WITHIN THE STATUTE. B47

from doing something for five years, is not within the statute,!
although on the subject of negative agreements there is a con-
flict of authority.

§ 590. Performance on One Side within One Year. — If all
that is to be done on one side may be performed within one
year, the statute does not apply, although performance on the
other side will require more than one year. This is the Eng-
lish doctrine, but the American courts are divided, some fol-
lowing the leading English case of Donellan v. Read,! while
others hold that the statute does apply.2 The better rule
would seem to be that if the promise of the defendant is not
capable of performance within one year, a writing should be
required ; but that if the defendant’s promise is to be per-
formed within one year, the fact that the plaintiff’s promise is
not to be performed within that time is immaterial.2 A dis-
tinction is sometimes drawn between cases where the only
thing not to be performed within one year is the payment of
money, and cases where some other act is to be performed
more than one year from the date of the contract, some courts
holding that the statute applies to the latter, but not to the
former.

§ 591. “Year” defined.— “One year” means one calendar
year from the day on which the contract is made, excluding
that day.t

§ 591 a, Contracts within the Seventeenth Section. — The
seventeenth section of the statute applies to contracts “ for the

10 Doyle v. Dixon, 97 Mass. 208; Dickey v. Dickinson, — Ky. — ;
49 S. W. 760; contra, Davey v. Shannon, 4 Ex. D. 81; Browne, Statute
of Frauds, § 2826 ; Higgins v. Gager, 65 Ark. 604; 47 S. W. 848.

§ 590. 1 3 B. & Ad. 899; Curtis v. Sage, 35 Ill. 22; Grace v. Lynch,
80 Wis. 166; 49 N. W. 751; Langan v. Iverson, — Minn. — ; 80N.W.
1051.

2 Whipple v. Parker, 29 Mich. 369; Pierce v. Paine, 28 Vt. 34;
Marcy v. Marcy, 9 Allen, 8; Jackson Iron Co. v. Negaunee Concentrating
Co., — U.S. App. — ; 65 F. 298; Bain v. McDonald, 111 Ala. 269;
20 S. 77; Tiernan v. Granger, 65 Ill. 351.

3 Browne, Statute of Frauds, §§ 290, 290 a; Sheehy v. Adarene, 41 Vt.
541.

4 Curtis v. Sage, supra.

§ 591. 1 Dickson v. Frisbee, 52 Ala. 165.
848 THE STATUTE OF FRAUDS.

sale of any goods, wares, and merchandises for the price of
£10 sterling or upwards.”

§ 592. “Contract for the Sale of.” —It was at one time
thought that the statute did not apply to contracts for the
future delivery of goods,! but the cases were conflicting, and
the law was settled to the contrary, in England, by Lord Ten-
terden’s Act, 9 Geo. IV. c. 14, § 7, and by the Sales of Goods
Act, 56 & 57 Vict. c. 71,§ 4 (2). This section does not apply
to a case where A. agrees to work for B., and B. agrees to pay
A. in goods.?

Whether a contract is for the sale of goods or for the per-
formance of services is a difficult question. The English rule
is that if the subject-matter of the contract is a chattel to be
afterwards delivered, the contract is within the statute.2 The
Massachusetts rule is that a contract for the sale of articles
now existing, or such as the vendor in the ordinary course of
his business manufactures or procures for the general market,
whether on hand at the time or not, is a contract for the sale
of goods, and within the statute. But if the goods are to be
manufactured especially for the purchaser, and upon his spe-
cial order, and not for the general market, the case is not
within the statute.6 The New York rule is that an agreement
for the sale of any commodity not in existence at the time,
which the vendor is to manufacture or put in a condition to
be delivered, is not within the statute ;® unless the acts to be
done by the vendor do not alter the essential nature of the
thing contracted for.’

§ 592. 1 Clayton v. Andrews, 4 Burr. 2101; W. C. S. 716; contra,
Rondeau v. Wyatt, 2 H. Bl. 63; W. C. S. 717; Garbutt v. Watson,
5B. & Ald. 618; W. C. S.718. That contracts of barter or exchange

are within this section, see Raymond v. Colton, — U. S. App. — ; 104
F. 219.
2 Spinney v. Hill, — Miun. — ; 84 N. W. 116.

3 Lee v. Griffin, 1 B. & 8. 272; W. C. S. 722.

4 Mixer v. Howarth, 21 Pick. 205; W. C. 8. 725; Goddard »v. Bin-
ney, 115 Mass. 450; W.C. 8. 727; H. & W. 127.

5 Spencer v. Cone, 1 Met. 283.

6 Parsons v. Loucks, 48 N. Y. 17; W.C.S. 731.

7 Cooke v. Millard, 65 N. Y. 352.
CONTRACTS WITHIN THE STATUTE. 849

§ 593. “Goods, Wares, and Merchandises.” — This includes
all tangible personal property. The statute in England is
held not to apply to incorporeal property, such as shares of
stock.’ In this country shares of stock are generally regarded
as within the statute.2 Some courts hold all choses in action
to be within the statute,’ but the better American rule limits
the application of the statute to choses in action which have a
visible and palpable form, like shares of stock.!

§ 594. “For the Price of £10 Sterling and upwards.” — Lord
Tenterden’s Act substituted the words “of the value” for
‘¢for the price,” and the Sales of Goods Act follows Lord Ten-
terden’s Act in this respect. Where several articles are sold
at the same time and as part of the same transaction, if the
total value exceeds the amount fixed by the statute, the stat-
ute applies,’ but the question whether there is one contract or
several is a question of fact.2 In England a distinction is
drawn in the case of auction sales of successive lots,’ the sale
of each lot being held a separate contract ; but this distinction
is not universally recognized in this country.

§ 593. 1 Humble v. Mitchell, 11 A. & E. 205; W. C. 8. 758.

2 Tisdale v. Harris, 20 Pick. 9; contra, Rogers v. Burr, 105 Ga. 482 ;
81S. E. 438.

3 Greenwood v. Law, 55 N. J. L. 168; 26 A. 134; H. & W. 131.

* Baldwin v. Williams, 3 Met. 365; Somerby v. Buntin, 118 Mass. 279 ;
Dalzell v. Dueber Mfg. Co., 149 U. 8. 815; 13 8. Ct. 886.

§ 594. 1 Baldey v. Parker, 2 B. & C. 87; W.C. S. 759; Weeks ». Crie,
— Me. — ; 48 A. 107.

2 Weeks v. Crie, supra.

8 Emerson v, Heelis, 2 Taunt. 38. :

4 Jenness v. Wendell, 51 N. H. 63; Benjamin on Sales (Bennett’s 7th
ed.), 187.
350 THE STATUTE OF FRAUDS.

CHAPTER XXXIX.
THE REQUIREMENTS OF THE STATUTE.

§ 595. Difference in the Requirements of the Two Sections. —
The requirements of the two sections of the statute are differ-
ent. They resemble each other, however, in this, that a memo-
randum or note in writing of the agreement or bargain signed
by the party to be charged or his lawfully authorized agent
will take a contract out of the statute, whether such contract
comes under the fourth or the seventeenth section. The re-
quirements of the memorandum are practically the same in
both sections, and the subject of the memorandum may be
treated with reference to both sections.

§ 596. The Memorandum. — No particular form of words is
required, nor any particular kind of document. Any writing
containing the terms of the contract and the parties to it is
sufficient. Thus the memorandum of a contract contained in
a will is sufficient to charge the testator.’ If an offer is in
writing it is a sufficient memorandum to bind the party mak-
ing it, though the offer is accepted by parol If the memo-
randum is in the form of a deed, the deed must be delivered.®
Bought and sold notes constitute a sufficient memorandum
where they correspond and contain all the terms of the con-
tract.4 A city ordinance,® or the recorded vote of a corpora-

§ 596. 1 Re Hoyle, 1893, 1 Ch. 84; Maddox v. Rowe, 23 Ga. 431.

2 Western Union Tel. Co. v. Chicago & P. R. R. Co., 86 Ill. 246; con-
tra, Kroll v. Diamond Match Co., 113 Mich. 196; 71 N. W. 630.

8 Callanan v. Chapin, 158 Mass. 118; 32 N. E. 941.

4 Bibb v. Allen, 149 U. 8. 481; 13 S. Ct. 950.

5 Greenville v. Greenville Waterworks Co., — Ala. — ; 27 S. 764.
REQUIREMENTS OF THE STATUTE. 351

tion, or of a committee acting upon a subject over which the
committee has power,’ is a sufficient memorandum.

§ 597. Connected Documents and Oral Modifications.— The
memorandum may consist of several different letters or
papers, provided they are connected, consistent, and complete,
so that the contract can be clearly established without any
resort to oral testimony. If, however, one document refers
to another in ambiguous terms, parol evidence is admissible
to identify the latter, and so to connect the two documents.?
And it has been held that parol evidence, if clear and satis-
factory, may be received to connect two documents which do
not directly refer to each other; but this seems questionable.
A memorandum containing the terms of an offer which is
afterward modified by parol is insufficient.

§ 598. Description of Parties. —The memorandum must show
who are the parties to the contract.! It is sufficient if the
obligee is described with reasonable certainty in the memo-
randum.2 The agency of the party to whom the memorandum
is addressed may be shown by parol. Parol evidence is
also admissible to show which party is buyer, and which is
seller.*

6 Lamkin v. Baldwin, ete. Co., 72 Conn. 57; 43 A. 593; Chase »v.
Lowell, 7 Gray, 33.

7 McManus v. Boston, 171 Mass. 152; 50 N. E. 607.

§ 597. 1 Boydell v. Drummond, 11 East, 142; Brown v. Whipple, 58
N. H. 229; W. C. 8. 973; Ryan v. United States, 186 U. S. 68; 10 S. Ct.
913; Bayne v. Wiggins, 139 U. S. 210.

2 Ridgway v. Wharton, 6 H. L. C. 238; Beckwith v. Talbot, 95 U. S.
989; W.C. S. 970; Lee v. Butler, 46 N. E. 52.

3 Oliver v. Hunting, 44 C. D. 205; W. C. S. 955; Brewer v. Horst-
Lachmund Co., — Cal. — ; 60 P. 418.

§ 598. 1 Champion v. Plummer, 1 B. & P. N. R..252; W.C. 8. 871;
Vandenbergh v. Spooner, L. R. 1 Ex. 316 ; W. C. 8. 936.

2 Gowen v. Klous, 101 Mass. 449.

3 Bateman v. Phillips, 15 East, 272; Filby v. Hounsell, 1896, 2 Ch.

737.

4 Salmon Falls Mfg. Co. v. Goddard, 14 How. 446; W. C. S. 961;
Newell v. Radford, L. R. 3 C. P. 52; W. C. 8. 936; contra, Frank v. El-
tringham, 65 Miss. 281; Mentzv. Newwitter, 122 N. Y. 491, 497; W.C.
S. 970, note. :
852 THE STATUTE OF FRAUDS.

§ 599. The Terms of the Contract must be stated. — The terms
of the contract must appear in the memorandum, such as the
time of performance,! and the conditions of the bargain,? and
a description of the property sufficient to identify it.

§ 600. Must the Consideration be stated?-—- Whether the
consideration must be expressed or not is a question which
has given rise to a vast amount of litigation. It was held in
Wain v. Warlters! that the provisions of the fourth section
required that the memorandum should express the considera-
tion. The decisions in this country are conflicting, and the
matter is governed in many cases by express statutory enact-
ment. It is hard to speak of principles where the authorities
are so at variance, but the following propositions seem reason-
able, if the statute does not settle the matter affirmatively.
If there is no definite consideration agreed upon, none need
be stated, for the law infers that a reasonable compensation
is to be paid for the performance of the promise.” If the
memorandum provides for the ascertainment of the compen-
sation, it is sufficient? If the memorandum acknowledges
the receipt of the consideration, it is sufficient. If the con-
sideration is obvious from the character of the contract, the
memorandum is sufficient. Thus in a jurisdiction where the
consideration must be expressed, if a guaranty of a note is
written on the note before delivery, the consideration for the
guaranty is sufficiently obvious, viz., the discounting of the
note;® but if the guaranty is written after delivery, the con-
sideration does not appear from the character of the transac-
tion, and must therefore be expressed.6 If the consideration
has not been received, and does not clearly appear from the

§ 599. 1 O’Donnell v. Leeman, 48 Me. 158; H. & W. 100.

2 Morton v. Dean, 138 Met. 385.

8 Alabama Land Co. v. Jackson, 121 Ala. 172; 25 S. 709.

§ 600. 1 5 East, 10; conira, Brown v. Fowler, — N.H. ; — 47 A. 412.

2 Hoadley v. M’Laine, 10 Bing. 482; W. C. S. 885.

8 Atwood v. Cobb, 16 Pick. 227.

4 Fugate v. Hansford, 3 Litt. (Ky.) 262.

5 Carter v. Odom, 121 Ala. 162; 25 S. 774: contra, Commercial N. B.
v. Goodrick, — Wis. — ; 83 N. W. 766.

6 Moses v. Lawrence County Bank, 149 U. S. 298; 13S. Ct. 900,
REQUIREMENTS OF THE STATUTE. 853

character of the transaction, it seems that the nature of the
consideration ought to be stated. This is clearly established
in the case of contracts for the sale of goods, where it is held
that the price must be stated in the memorandum.’

§ 601. Distinction between setting forth the Consideration
and expressing its Nature.— There is a distinction between
expressing the nature of the consideration and setting forth
the consideration itself. Thus in an executory contract of
sale the consideration for the vendor’s promise to sell at a
certain price is the vendee’s promise to buy at that price.
Now the vendee’s promise to buy need not be set forth in the
memorandum ;! but the price must be stated, because the
promise of the vendor is not simply a promise to sell, but a
promise to sell at a certain price.* This distinction, however,
is sometimes ignored.3

§ 602. The Signature to the Memorandum. — The signature to
the memorandum may be by initials ;} may be in lead pencil ;?
and may be by a printed signature, if the adoption of such
signature is shown.? The signature may be in any place.*
The other party need not sign, for the statute requires only

7 Blagden v. Bradbear, 12 Ves. 466; Farwell v. Lowther, 18 Ill. 252 ;
Peirce v. Corf, L. R. 9 Q. B. 210; W. C. S. 942; Hanson v. Marsh, 40
Minn. 1; 40 N. W. 841; W. C. S. 997.

§ 601. 1 Egerton v. Mathews, 6 East, 807; W. C. S. 870.

2 Browne, Statute of Frauds, § 38l1a; Kelley v. Thuey, 148 Mo. 422;
45 S. W. 300; Stockwell v. Williams, 68 N. H. 75; 41 A. 973; Arnold v.
Garth, 106 F. 18; and see dissenting opinion of Field, C. J., in Hayes v.
Jackson, 159 Mass. 451; 34 N. E. 683; W.C. S. 999, note.

8 Hayes v. Jackson, supra.

§ 602. 1 Salmon Falls Mfg. Co. v. Goddard, 14 How. 446; W. C. S.
961.

2 Merritt v. Clason, 12 Johns. 102; W. C. 8S. 959 ; Clason v. Bailey, 14
Johns. 484; H. & W. 102.

8 Schneider v. Norris, 2 M. & S. 286; W. C. S. 875. The word ‘ sub-
scribed ” requires a written signature. Davis v. Shields, 26 Wend. 341.

4 Penniman v. Hartshorn, 13 Mass. 87; Clason v. Bailey, supra ; John-
son v. Dodgson, 2 M. & W. 653; W. C. S. 890.

5 Justice v. Lang, 42 N. Y. 493; Old Colony R. R. Co. v. Evans,
6 Gray, 25; Clason v. Bailey, supra ; Perkins v. Hadsell, 50 Il. 217; Mon-
ongah Coal Co. v. Fleming, 42 W. Va. 538; 26 S. E. 201; Western Land
Ass'n v. Banks, — Minn. — ; 83 N. W. 192.

23
854 THE STATUTE OF FRAUDS.

the signature of the party to be charged. The signature may
be made by an agent, and the agent may be appointed by
parol, for the statute only requires him to be “lawfully author-
ized.”® It is not even essential that the agent should be -
authorized to sign the document as a record of the contract ;7
or that the memorandum should disclose the agency of the
signer.8 The agent may be any one but the opposite party ; °
and the same person may act as agent for both parties, as in
the case of an auctioneer or broker, whose memorandum will
bind both parties. “The vote of the directors of a corpora-
tion, duly recorded, is a sufficient memorandum in writing,
and the signature of the recording officer in attestation of the
minutes a sufficient signature by the party to be charged.” ™

§ 603. When the Memorandum must be made.— The memo-
randum may be made at any time before suit is begun, but not
afterwards. This follows from the language of the statute,
“no action shall be brought.” If the memorandum is made
after the action is begun, and the statute is relied upon as a de-
fence, the plaintiff must dismiss his action and bring a new one.

§ 6034. Requirements of the Seventeenth Section. — Con-
tracts within the seventeenth section of the statute may be
rendered enforceable not merely by a memorandum, but also
by the acceptance and receipt of part of the goods by the
purchaser, by the giving of earnest, and by part payment.

§ 604. Acceptance and Receipt.— “ Acceptance” is not used
in the statute in its common acceptation ; hence there may be
an acceptance within the statute which will not operate as an
acceptance so as to prevent the purchaser from repudiating

6 Hawkins v. Chace, 19 Pick. 502.

7 Griffiths Cycle Co. v. Hunter, 1899, 2 Q. B. 414.

8 Phillips v. Cornelius, — Miss. — ; 28S. 871.

® Wright v. Dannah, 2 Camp. 203; W. C. S. 872; Bent v. Cobb,
9 Gray, 397. In Chase v. Lowell, 7 Gray, 33, the plaintiff, as clerk of a
committee of the city council, signed a report employing him as city en-
gineer, and this was held a sufficient memorandum.

10 O’Donnell v. Leeman, 43 Me. 158; H. & W. 100; Morton v. Dean,
13 Met. 385; M’Comb v. Wright, 4 Johns. Ch. 659.

11 Lamkin v. Baldwin, etc. Co., 72 Conn. 57; 48 A. 598.

§ 603. 1 Bill v. Bament, 9 M. & W. 36; Bird v. Munroe, 66 Me. 337;
H. & W. 92; W.C.S. 999.
REQUIREMENTS OF THE STATUTE. 855

the goods on the ground that they are not according to the
contract.!. The test seems to be whether there has been such
a dealing with the goods as amounts to a recognition of the
contract.2. The precise meaning of the word “ acceptance ”
has never been determined by the English courts ;3 and the
decisions in this country, though numerous, do not afford any
clearer definition.* “Receipt” denotes a change of posses-
sion, either actual or constructive. Both acceptance and
receipt are required by the statute. Where there is one con-
tract for several articles, acceptance of one is sufficient; but
if there are distinct contracts, acceptance of goods under one
contract does not validate the other.®

§ 605. Earnest and Part Payment. — Earnest is some token
given by the buyer to the seller and accepted by the latter to
mark the final conclusive assent of both sides to the bargain.}
Part payment goes in discharge of the buyer’s obligation to
pay for the goods; earnest is simply the token that the con-
tract has been made. Part payment may be made by the
buyer’s discharging the seller from some existing liability to
himself; but not by a mere promise to discharge, at some
future date, or on some contingency.? So a promise by the
buyer to pay a debt of the seller to a third person is sufficient,
where such promise is accepted by the seller in satisfaction of
the price of the goods. In New York part payment must be
made at the time of the sale. If made subsequently it must
be made and received for the express purpose of complying
with the statute, or else the parties must reaffirm or restate the
terms of the contract.*

§ 604. 1 Page v. Morgan, 15 Q. B. D. 228; W.C.S. 813; Remick ».
Sandford, 120 Mass. 309, 316.

2 Page vy. Morgan, supra; Taylor v. Smith, 1893, 2 Q. B. 65; W. C.S.
819. This is the test established by the Sale of Goods Act, 56 & 57 Vict.
c. 71, § 4 (8).

3 Lord Herschell, in Taylor v. Smith, supra.

4 See Benjamin on Sales (Bennett’s 7th ed.), pp. 169-173.

5 Weeks v. Crie, — Me. — ; 48 A. 107.

§ 605. 1 Benjamin on Sales, § 189.

2 Walker on Nussey, 16 M. & W. 302; W.C. S. 858.

8 Cotterill ». Stevens, 10 Wis. 422.

4 Raymond v. Colton, — U.S. App. — ; 104 F. 219.
856 THE STATUTE OF FRAUDS.

CHAPTER XL.

THE EFFECT OF THE STATUTE.

§ 606. The Statute establishes a Rule of Evidence only. —
The statute does not require that the contracts to which it
refers shall be in writing, but simply that there shall be some
written evidence of certain kinds of oral contracts, Hence
oral contracts within the statute are not void, but simply in-
capable of proof except by some written memorandum.’ In
other words, the statute is part of the law of evidence, and its
effect is to be determined by the lez fori.2 The benefit of the
statute is purely personal, therefore, to the contracting party,
who alone can set up the lack of written evidence to over-
throw the contract.2 There seems to be no difference in
effect between the fourth and seventeenth sections of the
statute. Verbal contracts within the statute cannot be
made available in any way as a cause of action or ground of
defence.’ ~

§ 606. ! Leroux v. Brown, 12 C. B. 801; Bird v. Munroe, 66 Me. 337;
H. & W. 92; W.C. S. 999; Wheeler v. Frankenthal, 78 Ill. 124; Obear
v. First N. B., 97 Ga. 587; 25 S. E. 335; Heaton v. Eldridge, 56 Ohio,
87; 46 N. E. 638; Buhl o. Stephens, 84 F. 922. But see Miller v. Wil-
son, 146 Ill. 523; 384 N. E. 1111.

2 Leroux v. Brown, supra; Buhl v. Stephens, supra ; contra, Miller v.
Wilson, supra.

8 Amsinck v. American Insurance Co., 129 Mass. 185; W. C. S. 763;
Browne, Statute of Frauds, § 128.

4 Ibid. § 115.

5 Ibid. § 181; King ». Welcome, 5 Gray, 41; McGinnis v. Fernandes,
126 Ill. 228; 19 N. E. 44; Chicago Attachment Co. v. Davis S. M. Co.,
142 Ill. 171; 31 N. E. 488; Lemon v. Randall, — Mich. — ; 83 N. W.
994; contra, Mack v. Bragg, 80 Vt. 571; Abbott v. Inskip, 29 Ohio
St. 59.
THE EFFECT OF THE STATUTE. 857

§ 607. The Effect of Part Performance at Law. — If part ofa
contract consists of promises within the statute, and the rest
of promises to which the statute does not apply, when the
promises within the statute have been performed, the remain-
ing stipulations become enforceable.t| Thus where the cause
of action is really a debt arising from the acceptance of goods
or services, the fact that the promise to pay for such goods or
services was within the statute will not prevent a recovery of
the stipulated price.? If, however, the transaction does not
create a debt, there seems to be no good reason for allowing a
recovery on the contract simply because the consideration is
executed. Performance of part of the contract does not, of
course, render another part, which is within the statute, en-
forceable at law.2 The remedy of the party who has performed
in such a case is in quasi-contract,4 and exists only where the
defendant himself has received a benefit, not where the plain-
tiff has conferred a benefit on another at the defendant’s
request.5

§ 608. The Effect of Part Performance in Equity. — Although
performance of part of the contract does not make it enforce-
able, a party may, by his own conduct, be estopped from set-
ting up the defence of the statute. If the defendant by his
conduct induces the plaintiff to change his situation in re-
liance upon the supposition that the defendant regards his
contract as binding, a court of equity will not allow the de-
fendant to set up the statute as a defence. What change
of position on the part of the plaintiff will raise such an equi-

§ 607. ! Worden vo. Sharp, 56 Ill. 104; Remington v. Palmer, 62 N.Y.
31; Browne, Statute of Frauds, § 117.

2 Leake, Contracts, 255; Souch v. Strawbridge, 2 C. B. 808.

3 Marcy v. Marcy, 9 Allen, 8; Emery v. Smith, 46 N. H. 151; William
Butcher Steel Works v. Atkinson, 68 Ill. 421; Klein v. Liverpool, etc.
Ins. Co.’ (Ky.), 57 S. W. 250; Hallett v. Gordon, — Mich. — ; 81
N. W. 556.

4 King v. Welcome, 5 Gray, 41.

5 Bristol v. Sutton, 115 Mich. 865; 73 N. W. 424.

§ 608. 1 Glass v. Hulbert, 102 Mass. 24; Keener, Cas. Eq. II. 327;
Gross v. Milligan, 176 Mass. 566; 58 N. E. 471; Burris v. Landers, 114
Cal. 810 ; 46 P. 162.
858 THE STATUTE OF FRAUDS. ’

table estoppel in his favor is a difficult question. The acts
‘done in reliance on the contract need not be in -performance
thereof.2. But there must be some act, apparently, which
changes the plaintiff's situation in some way so that he cannot
be restored thereto by the mere payment of money. In the
case of a sale of land, taking possession of the land and mak-
ing lasting and valuable improvements thereon will take the
contract out of the statute. The transfer of possession in it-
self will give a court of equity jurisdiction, not to enforce the
contract,‘ but to make the possession conform to the agree-
ment of the parties. A promise by A. to devise an estate in
land to B. is rendered valid by B.’s conveyance of the land to
A.§ Mere payment of the consideration will not render a con-
tract within the statute enforceable,’ though payment of an
increased rent for the same premises has been held sufficient.8
Nor will the rendition of services render binding a promise
within the statute made in consideration of such services ;° at
least if compensation for the services can be made in money,!°
Where no pecuniary value can be placed upon the services,
the hardship to the plaintiff, who in such case can recover
nothing on a quantum meruit, has induced some American
courts to enforce the contract specifically. In Minnesota, the
rendition of services under an oral contract within the statute

2 Swain v. Seamens, 9 Wall. 254.

8 Ahl v. Johnson, 20 How. 511; Smith v». West, 103 Ill. 332; Towns-
end v. Vanderwecker, 160 U. S. 171; Bell v. Sappington, — Ga. — ;
36 S. E. 780; Burris v. Landers, supra; Fouts v. Roof, 171 IIL. 568;
50 N. E. 653; contra, Pass v. Brooks, 125 N. C. 129; 34 S. E, 228.

4 Lavery v. Pursell, 89 C. D. 508.

5 Ungley v. Ungley, 5 C. D. 887; Keener, Cas. Eq. II. 661.

6 Bird v. Jacobus, — Ja. — ; 84 N. W. 1062.

7 Glass v. Hulbert, supra; Temple v. Johnson, 71 Ill. 13; Jourdain v.
Fox, 90 Wis. 99; 62 N. W. 936.

8 Miller v, Sharp, 1899, 1 Ch. 622.

9 Maddison v. Alderson, 8 A. C. 467; Keener, Cas. Eq. II. 675; Martin
v. Martin, — Wis. — ; 84N. W. 439; Russell v. Briggs, 165 N. Y. 500;
59 N. E. 303; Spinney v. Hill, — Minn. — ; 84 N. W. 116; and see
Warren v. Warren, 105 Ill. 568; contra, Svanburg v. Forseen, 75 Minn.
350; 78 N. W. 4; Lothrop v. Marble, 12 S. D. 511; 81 N. W. 885.

10 Weeks v. Lund, 69 N. H. 78; 45 A. 249.
THE EFFECT OF THE STATUTE. 359 :

does not make the contract binding, but fixes the value of the
services rendered under it. “ We are compelled to admit,”
says the Supreme Court of that State, “that the reasoning on
which the doctrine is based is not satisfactory.” 4 Marriage
has been held insufficient to make an oral promise to make
a settlement enforceable,” on the ground that marriage is a
change of position contemplated by the statute itself.

§ 609, Requisites of Part Performance. — (1) “ The acts of
part performance must be such as not only to be referable to
a contract such as that alleged, but to be referable to no other
title ;+

“ (2) They must be such as to render it a fraud in the de-
fendant to take advantage of the contract not being in writing ;

“ (8) The contract to which they refer must be such as in
its own nature is enforceable by the court; and ©

“ (4) There must be proper parol evidence of the contract
which is let in by the acts of part performance.” ?

11 Spinney »v. Hill, supra.

2 Finch v. Finch, 10 Ohio St. 501; Browne, Statute of Frauds, § 459 ;
Richardson v. Richardson, 148 Ill. 563; 36 N. E. 608; Russell v. Russell,
— N. J. Eq. — ; 47 A. 87.

§ 609. 1 Miller v. Sharp, 1899, 1 Ch. 622.

2 Fry, Specific Performance, § 580.
APPENDIX I.

THE NATURE OF CONTRACTUAL OBLIGATION.

§ 610. Different Meanings of the Term “Contract.” — The
word “contract” might well be supposed to have attained by
this time a definite legal meaning. An examination of the
various ways in which the term is used, however, shows clearly
that the different meanings given to the term in different con-
nections render any one definition entirely inadequate. For
example, contracts are often divided into contracts of record,
such as judgments and recognizances ; specialties, or contracts
under seal ; and simple or parol contracts. The only feature
in common possessed by these three classes of “ contracts” is
that an action ex contractu would lie at common law to enforce
any of them.

So, too, the terms “express and implied contracts” and
“executed and executory contracts” have often been applied
to obligations or to transactions which cannot properly be
grouped together in one classification.!

§ 611. Contract and Agreement. —It has often been said
that ‘“* Contract results from a combination of the two ideas
of agreement and obligation. . . . Contract is that form of
agreement which directly contemplates and creates an obliga-
tion.”* But when we inquire whether it is the agreement that
constitutes the contract, or the obligation resulting from the
contract, we find the word “contract” variously used. Some-
times it is used to denote the fact of agreement, sometimes
the nature of the agreement, sometimes, in the case of a

§ 610. } Ante, §§ 10, 11.
§ 611. } Anson on Contracts (8th ed.), 1, 2.
DEFINITIONS OF CONTRACT. 861 .

written undertaking, the written instrument containing the
agreement, and sometimes the obligation resulting from the
agreement. Then, too,,we hear constantly of “void con-
tracts” and “ illegal contracts,’ which create no obligation
whatever. Moreover, the objections to Sir William Anson’s
definition of contract are clearly stated by himself. “ This
statement,” he adds, ‘‘ must be limited in its application to a
scientific system of jurisprudence in which rights have been
analyzed and classified. The conception of obligation, as we
understand it, was probably not clearly present to the minds
of the judges who first enforced promises to do and forbear;
and we may be quite sure that they did not rest their deci-
sions, as to the validity of such promises, upon agreement or
the union of wills.” The statement that “the analysis is
none the less accurate because it has not always been made
or understood” may justly be questioned. A “scientific sys-
tem of jurisprudence” seems to demand rather an analysis
and classification of our own legal ideas and institutions than
the attempt to superimpose upon our own law the analysis,
however scientific, of another and alien system. Whatever
may be the relation of agreement to the Roman law of con-
tract, nothing is clearer than that agreement is not the funda-
mental idea underlying contractual obligation in the common
law. The contractual obligations which the common law recog-
nized were enforced, and are still enforced, not because those
obligations are the result of agreement, but because certain
forms of procedure afforded remedies for certain wrongs. It is
therefore only by the study of the history of English procedure
that we can understand the principles of the English law of
contract. The historical development of our modern theory
of contract will be explained in Appendix II.

§ 612. “ Contract” in Legislative Enactments. — The mean-
ing of the word “ contract,” as used in legislative enactments,
varies with the connection in which it is used. For example,
the United States Constitution prohibits any State from pass-
ing any law “impairing the obligation of contracts.” The
Supreme Court has held that the term “ contracts,” as used
in this clause of the Constitution, includes the charter of a
3862 THE NATURE OF CONTRACTUAL OBLIGATION.

corporation,! which would not be regarded as a contract at
common law, but does not include a judgment obtained against
a municipality for damages caused by a mob,? although such
judgment is called a “ contract of record.”

§ 613. Difficulty in defining Contract. — If, then, we seek to
build up a definition of the term “contract,” which shall in-
clude all things that have been called contracts, and shall
exclude all things which have been held not to be contracts,
the task is evidently impossible. Nor is the reason for this
impossibility far to seek. Terms which are used chiefly or
exclusively by men of a given trade or profession soon acquire
a definite technical meaning. Such terms, for example, as
“ seisin”” and “conversion” can be clearly defined. Terms,
however, which are in common use, and which by reason of
their common use are also of frequent occurrence in the tech-
nical terminology of the law, or of any other science, are very
apt to be used in the loose way in which the word “ contract”
has been used.

Any definition of contract, therefore, must be either arbi-
trary or inexact. But there are certain well-marked obliga-
tions which may be called contractual, which are capable of
definition, and seem properly to call for distinct treatment.
With such obligations this book has dealt. In order to define
these obligations we must first look for a moment at the
general field of jurisprudence.

§ 614. Classification of Obligations. — The rights which
courts of justice protect, and the obligations which they
enforce, are of many kinds. For scientific purposes these
rights and obligations must be properly classified, just as
flowers must be classified by the botanist, and rocks by the
geologist. This classification is rendered especially difficult
in our law by the fact that the law has crystallized around
forms of procedure. The history of English law shows a slow
development from the superstitions of the dark ages, through
the technicalities of later times, of those principles of justice
which alone can give to law the approval of reason. In former

§ 612. 1 Dartmouth College v. Woodward, 4 Wheat. 517.
2 Louisiana v. New Orleans, 109 U.S. 285; 3S, Ct. 211.
CLASSIFICATION OF OBLIGATIONS. 363

days the procedure by which rights were enforced was re-
garded by the courts as of greater importance than the rights
themselves. Consequently the classification of rights and
obligations was determined by the remedies given for their
enforcement ; which is about as satisfactory a method of clas-
sification to the student of jurisprudence as the classification
of flowers or rocks by their color would be to the botanist or
geologist. Obligations enforced in the same manner were
given the same name. Every obligation enforceable by an
action ex contractu was termed a contract, regardless of the
real character of that obligation ; and as actions ex contractu
came to be used in a great variety of cases, there came to be
so many kinds of “contracts,” that to define a contract has
become, as we have seen, an impossibility. Nevertheless, in
the case of many “contracts,” using the word in its broadest
sense, we find existing an obligation with certain definite
characteristics which can easily be recognized. This obli-
gation we shall venture to call “contractual.” Of the forma-
tion of this contractual obligation, of its construction, its
assignment, its extinction, and its enforcement, this book has
treated ; its nature now requires further analysis.

§ 615. Paramount or Irrecusable, and Consensual or Recusable,
Obligations, — How, then, are we to distinguish contractual
obligation from other legal obligations? In the first place,
looking at the endless variety of obligations which the courts
enforce, we notice that some obligations are imposed upon
a person without his consent, and without regard to any
act of his own, while other obligations are the result of a
voluntary act on the part of the person on whom they are
imposed. The former may be termed paramount, or irrecus-
able, the latter consensual, or recusable} obligations. A clear
example of paramount or irrecusable obligation is the obliga-
tion imposed on every man not to strike another without some

§ 615. 1 The terms ‘‘ recusable” and “irrecusable” have been sug-
gested by Professor Wigmore, 8 Harv. Law Rev. 200; while “ para-
mount”’ and ‘consensual ’’ are used by Professor Bigelow to express the
same distinction. Torts, 6th ed., p. vi. It is unfortunate that in regard
to so important a distinction there should be no agreement as to terms.
364 THE NATURE OF CONTRACTUAL OBLIGATION.

lawful excuse. Here the obligation is entirely independent of
any act on the part of the person bound by it. In the case of
consensual or recusable obligations, on the other hand, some
act on the part of the person bound is a condition precedent
to the genesis of the obligation.

§ 616. Definite and Indefinite Obligations. — Consensual or
recusable obligations are either definite or indefinite in their
character, according as the extent of the obligation is or is
not determined by the act of the party on whom the obligation
is imposed. Indefinite consensual or recusable obligations may
result from the fact that the party bound has undertaken to
do something. The undertaking may be general, as where
one engages in a public vocation, or it may be particular,
being simply the undertaking of a specific act or trust. Thus
the obligation of an innkeeper to receive guests, and the obli-
gation of a common carrier to receive goods for transporta-
tion, are general indefinite consensual or recusable obligations.
Such obligations are consensual or recusable, for no one is
bound to be an innkeeper or common carrier ; they are indefi-
nite, because they are not determined by the act of the party on
whom they are imposed ; and they are general, because they
extend to the public. The undertaking of a gratuitous bailee,
on the other hand, imposes on him a particular indefinite con-
sensual or recusable obligation. This obligation is consensual
or recusable, because it is voluntarily assumed ; it is indefinite,
because its extent is not determined by the act of the party on
whom the obligation is imposed, but by certain rules of law in
regard to “due care;” and it is particular, because it extends
only to the owner of the property bailed.! The obligation of

§ 616. 1 Professor Beale shows clearly the distinction between contracts
and gratuitous undertakings, in 5 Harv. Law Rev. 222. He maintains,
nevertheless, that the obligation of a carrier or innkeeper to the public is
such that a breach of it sounds-only in tort.

The question is really whether the assumption of the position of trustee
or bailee is to be treated as an act involving the voluntary assumption of
obligations, and therefore analogous to contract; or whether it be re-
garded as the assumption of a particular status, to which the law attaches
certain duties, the violation of which should be treated as a tort. Profes-
sor Bigelow takes the latter view. Torts, 6th ed., vil.
CLASSIFICATION OF OBLIGATIONS. 3865

a trustee is also a particular indefinite consensual or recusable
obligation. The obligation arises from a voluntary act, the
acceptance of a trust; it is determined by the general princi-
ples of equity; and it extends only to the cestui que trust2

§ 617. Unifactoral and Bifactoral Obligations. — In the case
of definite consensual or recusable obligations, the extent of
the obligation is fixed by the act giving rise to the obligation.
Definite consensual or recusable obligations are of two kinds,
which may be termed unifactoral and bifactoral. A unifac-
toral obligation is created by the act of the party bound. A
bifactoral obligation requires two acts, one by the party on
whom the obligation is imposed, the other by the party to
whom the obligation extends. The existence of unifactoral
obligations in the common law cannot be denied, although
some of the jurists, it seems, would rather be rid of
such obligations than modify their theories to meet the deci-
sions of the courts. Thus, if a deed contains an acknowl-
edgment of obligation by the maker, its delivery gives rise to
a unifactoral obligation.2 In some States the common-law
rule has been altered, however, and acceptance of the deed
has been held essential to its validity, the courts in those
States treating the obligation created by a deed as necessarily
bifactoral.2 A unifactoral definite recusable obligation may
be termed contractual, and is so treated by the courts, if not
by the jurists, most of whom maintain that contractual obliga-
tion must be bifactoral.

§ 618. Contract, Estoppel, and Deceit. — Bifactoral definite
consensual or recusable obligations are of two kinds. The
nature and characteristics of the act of the obligor, which may

2 The obligation of a trustee is not contractual. Arnold v. Alden,
173 Ill. 229; 50 N. E. 704.

§ 617. 1 Xenos v. Wickham, L. R. 2 H. L. 296. Professor Holland
(Jurisprudence, p. 244) hopes “ that this case may some day be explained
away;” and quotes the German jurists as stigmatizing the case as ‘“ ein
juristisches Monstrum.” Sir William Anson characterizes the existence of
the unifactoral obligation as an anomaly. Contracts (8th ed.), p. 32.

2 Xenos v. Wickham, supra ; Roberts v. Security Co,, 1897, 1 Q. B.
111.

3 Ante, § 82.
366 THE NATURE OF CONTRACTUAL OBLIGATION.

be called the primary act, resemble each other in both cases ;
but the character of the secondary act, or the act of the obli-
gee, differs in these two kinds of obligations. In one case, the
secondary act may be of an indefinite character; in the other
case, the secondary act is fixed by the primary act. The first
kind of obligation has a well-known example in equity under
the name of equitable estoppel, and seems to have obtained
general recognition in the commou-law courts. To constitute
an obligation of the first class, all that is essential is that the
secondary act should be done in reasonable reliance on the
primary act. How far such obligations are actually enforced
by the courts is hard to state. In equity, the doctrine has long
obtained that a man who makes a representation, in reliance
upon which he induces another to act, will be estopped to deny
the truth of that representation to the prejudice of the party
who has so acted. The representation which will work an
estoppel, however, must be a representation of existing fact.
In the common-law courts the action on the case for deceit at
the time when that action would lie for breach of a parol
promise shows a recognition of a bifactoral obligation of simi-
lar character. Indeed, the present action for deceit is based
on a bifactoral obligation, which, though consensual or recus-
able, is indefinite in character. For in deceit the extent of the
obligation is not determined by the primary act, namely, the
false representation by the defendant, but is indefinite in char-
acter, extending to all the damage which is the natural conse-
quence of the plaintiff's acting in reliance on such false
representation. The action for deceit for breach of a parol
promise, however, has long since passed away. Whether there
is a broad common-law principle that a false representation
will give rise to an obligation if acted upon seems very doubt-
ful, although there are specific cases which can best be sup-
ported by reference to such a principle.! Certain it is, that
both at law and in equity a bifactoral definite recusable obli-
gation can be created only in two cases: first, where the
primary act definitely fixes the character of the secondary act;

§ 618. } See an article by Professor Jeremiah Smith, 14 Harv. Law
Rev. 184.
CLASSIFICATION OF OBLIGATIONS. 367

secondly, where the primary act is a representation of existing
fact, in which case the secondary act may be indefinite in
character, provided it is done in reasonable reliance on the
primary act. Where the primary act definitely fixes the char-
acter of the secondary act we have a bifactoral obligation
which may be termed, as it is termed by the courts, contract-
ual. In some jurisdictions it is held that even where the
primary act is a promise, the secondary act need not be defined
by the promise. The obligation thus created is called con-
tractual by the courts which recognize its existence.2 The
primary act, as will be seen later, is the promise, the second-
ary act, the consideration.

§ 619. Contractual Obligation. — We have chosen, then, to
apply the adjective “contractual” to two kinds of obligation,
one unifactoral, the other bifactoral. What are the common
features of these two kinds of contractual obligation? The
answer is simple. In both the obligation is consensual or re-
cusable, resulting from the voluntary act of the party bound;
and in both the obligation is determined by the act of the
party on whom it is imposed. In the unifactoral contract the
act of the obligor creates and defines the obligation. In
the bifactoral contract the act of the obligor does not of itself
create the obligation, but it fixes the terms on which the other
party may, by performing the specified act, to wit, the consid-
eration, impose such obligation on the obligor. The two es-
sential features of contractual obligation, therefore, are, first,
that it is the result of a voluntary act on the part of the ob-
ligor; and, second, that this voluntary act determines the
extent of the obligation and all conditions necessary to its
existence.

§ 620. Resemblances and Differences between Contractual
and other Obligations. — We may here sum up the various re-
semblances and differences between contractual and other
obligations. Contract differs from tort and quasi-contract in
that contractual obligation is consensual or recusable, while
tort obligation and quasi-contractual obligation are paramount
or irrecusable. Contractual obligation resembles the obliga-

2 Ante, §§ 129, 150.
*
368 THE NATURE OF CONTRACTUAL OBLIGATION.

tion of a bailee or trustee in being both corisensual or recus-
able and particular; the difference is that the former is definite,
the latter indefinite. The obligation of a simple contract re-
sembles the obligation to answer for damages caused by de-
ceit, in this, that both obligations are consensual or recusable
and bifactoral, and that in both the secondary act must be done
in reliance on the primary act; simple contract obligation
differs from deceit obligation in this, that the former is definite,
the latter indefinite; that in the former the primary act deter-
mines the secondary act, while in the latter the secondary act
is indeterminate ; and also, though this distinction is perhaps
less universally accepted, that in the former the intention of
the party is immaterial, while in the latter, intention to de-
ceive is an essential element. Finally, simple contract obli-
gation resembles equitable estoppel in this, that both are
bifactoral definite recusable obligations ; it differs from estop-
pel in this, that in contract the primary act determines the
secondary act, while in estoppel the secondary act is indeter-
minate. Even this distinction is not universally accepted.t

§ 621. What is a “ Contract”? — Such being the nature of
contractual obligation, what shall we fix upon as a “ contract” ?
In the case of a unifactoral contract the answer is easy. The
contract is the act which creates the obligation. In the case
of bifactoral contracts it is more difficult to determine what
constitutes the contract. The answer seems to depend upon
whether the bifactoral contract is unilateral or bilateral. A
contract is called bilateral if it imposes obligation on both
parties ; unilateral, if only one is bound. A unifactoral con-
tract is necessarily unilateral, but a bifactoral contract may be
either unilateral or bilateral. If A. promises B. to pay him
$1 for a day’s work, and B. performs the work, A.’s promise
to pay B. becomes a unilateral contract. But if A. promises to
pay B. $1,000 if B. will agree to work for A. for a year, and
B. accepts A.’s offer, we have a bilateral contract by which A.
is bound to pay B. $1,000, and B. is bound to work for A. for
a year. It is only where two parties incur mutual obliga-
tions at the same time, and by acts of the same legal char-

§ 620. 1 Post, § 649.
WHAT IS A “CONTRACT”? 369

acter, that a contract is bilateral. Two promises made in
different forms, legally speaking, cannot, therefore, constitute
part of the same contract, although such promises are mutual,
and are given in consideration of each other. Thus, a promise
under seal cannot form part of the same contract with a prom-
ise not under seal; nor can a promissory note form part of
any other contract. These propositions, although simple
enough, and clear enough in principle,! have often been over-
looked by the courts.? An entire transaction has often been
treated as one contract, without regard to the inherent impos-
sibility of a parol promise forming part of the same contract
with a specialty.

§ 622. Is the Consideration Part of the Contract ?— A
promise not under seal requires a consideration to make it
binding. Is the consideration part of the contract or not?
If the contract is unilateral, the consideration is clearly not
part of the contract, but simply a condition precedent to its
existence. If the contract is bilateral, it is composed of the
mutual promises only, even though there be other considera-
tions on each side, for such considerations are only conditions
precedent to the existence of the contract, and cannot form
part of it. In short, if the contract is unilateral, the “ con-
tract” is the primary act which gives rise to the obligation,
and the secondary act (if there is one) is not part of the con-
tract; if the contract is bilateral, the contract is. composed
only of the primary acts giving rise to the obligation on
each side.

§ 628. Contract, Promise, and Agreement.— It has been
customary to treat all contracts as if the idea of a promise or
agreement were common to all. As a matter of fact, how-
ever, contracts are of two distinct kinds, formal and simple.
The nature of these two kinds of contracts is essentially dif-
ferent. The formal contract is a contract because the party
executing it has done some formal act which establishes his
legal obligation to the other party.. The simple contract, on
the other hand, is composed of a promise or promises. The

§ 621. 1 Langdell, Summary, § 117.
2 Asin Hunt v. Livermore, 5 Pick. 395; L. 757; K. II. 1885.
24 :
370 THE NATURE OF CONTRACTUAL OBLIGATION.

attempt has becn made to treat formal contracts as if they
were necessarily promises or agreements ; but this is histori-
cally incorrect. Formal contracts were originally regarded
as grants, rather than promises, and the early ideas of such
contracts still have an important influence on the law. If A.
gives B. a deed acknowledging that he is indebted to B. in
the sum of $100, A. has made a contract whereby he has
bound himself to pay B. $100. It may be said that such a
deed implies a promise on A.’s part to pay B. $100. Histori-
cally, however, as just stated, such a deed has been regarded
rather as a grant than as a promise. Moreover, it is clear
that implying a promise from such a deed is a very different
thing from implying a promise from a man’s conduct in ac-
cepting the services of another. The truth is, that while such
a deed is a contract, and gives rise to contractual obligation,
that obligation is the result, not of a promise on A.’s part,
but of a solemn formal act by which A. has created such obli-
gation, and has furnished evidence of that obligation which
he is not permitted, at common law, to contradict. So little
weight, in fact, did the idea of promise have in such cases,
that a promise under seal to pay a definite sum of money was
enforceable originally only by the action of debt, which was
in its nature a real action, brought to recover property; and
it was not until the seventeenth century that the action of cov-
enant, which had come to be founded on the idea of promise,
was allowed.!

§ 624. Contract, Promise, and Assurance.— In every simple
contract there may be said to bea promise, “ Assurance,” how-
ever, is a more accurate term than “promise”; for promise
looks only to the future, while assurance is independent of
tenses. A warranty, for example, that a horse is sound, or
that a ship has sailed from port, is a contract; but it would
require a stretch of the word “ promise” to make it apply to
such warranties. In all simple contracts, however, there is
always an assurance which may be in regard to the past, pres-
ent, or future, and may be made with reference to some act

§ 623. 1 Pollock and Maitland, Hist. Eng. Law, II. 217; Ames,
2 Harv. Law Rev. 56.
WHETHER CONTRACTUAL OBLIGATION IS SPECIFIC. 871

within or not within the control of the party giving the assur-
ance. When the assurance is that an event within the
control of the party giving the assurance will happen, the
assurance is properly a promise. The word “ promise,” how-
ever, has practically become a technical term, and is gener-
ally used as equivalent to the more comprehensive term
“ assurance.”

§ 625. Whether Contractual Obligation is specific— Whether
a person who makes a contract is bound to perform it, or
whether he simply assumes the risk of having to pay damages,
is an important question, which has already been discussed in
connection with the subject of remedies for breach of con-
tract. The generally accepted view is that the obligation of
a contract is specific if performance is within the power of
the promisor, whether there is an actual remedy to compel
specific performance or not.

§ 625. 1 Ante, §§117, 121, 551, 552.
APPENDIX II.

THE HISTORY OF CONTRACTUAL ACTIONS.

§ 626. Necessity of the Historical Treatment of Contract. —
The law of contracts has sometimes been treated as if the
conception of contractual obligation had always existed. It
seems clear, however, that the general idea of contractual
obligation was unknown to our Anglo-Saxon ancestors, and
that only in very recent times has that idea become fully de-
veloped. To understand the manifold inconsistencies and
apparently arbitrary rules with which the student of contract
law is constantly confronted, it is absolutely necessary to
understand the development through long ages of our modern
ideas of contract: Only in the last few years has historical
research given us a satisfactory account of this development.
Although there are still unsettled points in our legal history.
it is now possible to understand in a general way the history
of contract in English law.

§ 627. Older Modes of Trial at Common Law. — The history
of English law is very largely the history of English proced-
ure. In the early English law, as in the primitive law of
other countries, the trial of a lawsuit did not involve a judi-
cial determination of the merits of the case by a judge or jury
upon the evidence offered by the parties. ‘The conception
of the trial,” says a Jearned writer, “was that of a proceed-
ing between the parties, carried on publicly under forms which
the community oversaw.”? The old forms of trial were by a
record, by charters or documents, by witnesses, by the party’s
oath with or without fellow swearers, by the ordeal, and by

§ 627. 1 J. B. Thayer, 5 Harv. Law Rev. 46.
OLDER MODES OF TRIAL. 373

battle. The last two methods need only be mentioned, but
the others are important on account of their effect on the law
of contracts. And first as to trial by witnesses. These did
not resemble our modern witnesses ; in fact, they were really
triers, not witnesses at all in the modern sense. Their testi-
mony was not subject to any consideration by judge or jury;
their oaths given in proper form were conclusive.”

§ 628. Trial by Oath — Compurgation, or Wager of Law, —
In the trial by oath, the defendant was compelled to clear
himself of the charge brought against him by the plaintiff by
swearing to his innocence. Sometimes his own oath was suf-
ficient, but more commonly he had to produce a certain num-
ber of fellow swearers, called compurgators. The number of
compurgators varied with the rank of the parties and of the
compurgators, with the value of the property if property were
involved, and with the nature of the suit.1 The most usual
number of compurgators seems to have been eleven. These
compurgators swore, not to the facts in the case, but to the
truthfulness of the defendant’s oath, or to their belief in its
truth. This mode of trial was also called wager of law. At
first very common, it came to be used chiefly in detinue and
in debt on simple contract. Wager of law never secured more
than a precarious foothold in the United States, and was abol-
ished in England in 1833.2

§ 629. Trial by Record. — Trial by record was aed to de-
termine the existence of facts alleged to have happened in
court. The records of the superior courts, whether proved
orally or by inspection, were indisputable ; those of the in-
ferior courts could be impeached.*

§ 630. Trial by Charter.—In the case of trial by charter,
the charter was produced at the trial. If it appeared to be
genuine, the party who executed it was held to be bound by
his solemn act or deed, and all statements and promises
therein contained were binding on him in favor of the other

2 Bigelow, History of Procedure, p. 308.

§ 628. 1 Bigelow, History of Procedure, p. 301.
2 Thayer, 5 Harv. Law Rev. 63.

§ 629. 1 Bigelow, History of Procedure, p. 319.
3874 THE HISTORY OF CONTRACTUAL ACTIONS.

party to the deed. The Saxon method of executing a deed
was for the party to subscribe his name if he could, and in
any case to affix the sign of the cross... Seals were sometimes
used, but were not essential to the validity of the deed. The
Normans were more accustomed to the use of seals, and after
the Norman conquest the seal came to be essential to the
validity of the deed; but so late as the reign of Henry II. we
have strong evidence that the use of seals was common only
among great men.? Centuries later, in Pillans v. Van Mie-
rop,? one of the greatest of English judges held a promise in
writing to be binding without a seal; but his decision proved
of little consequence, as it was soon overruled by the House of
Lords.*

When the charter was produced in court, the judge deter-
mined its genuineness by comparison of the seal with other
seals of the same party, if possible; otherwise, the party pro-
ducing the charter might prove the seal by means of the duel.
When it was once established that the seal was the defend-
ant’s, he was held bound by the deed, although the seal had
been affixed without his consent; but if he had lost his seal he
was not responsible for its use ; provided, at least, that he had
.given public notice of its loss. The evidence afforded by the
deed could only be contradicted or overcome by other evidence
of an equally satisfactory character. Oral testimony was in-
admissible to impeach or to modify the effect of a deed when
the genuineness of that deed was once established, —a rule
which still prevails in common-law courts.

§ 631. Actions ex Contractu at Common Law. — Justice in
the king’s courts was administered by means of the royal writ,
directing the sheriff to summon the defendant to appear be-
fore the court unless before a certain day he should grant the
plaintiff’s demand. In modern times the idea prevails that,
if a man has a legal right, he must have a legal remedy to

§ 630. 1 Blackstone’s Com., II. 305.

2 Abbot Walter v. Baillol, Bigelow, Placita Ang.-Norm. 175.
8 3 Burrow, 1663; L. 177; K. 324.

4 Rann v. Hughes, 7 T. R. 350, note a; L. 187; K. 336.

5 Pollock, Contracts, p. 139.
THE ACTION OF DEBT. 3875

enforce that right. In early days, however, a man’s rights in
the king’s courts were limited by the writs which he could
get from the chancery, whence the writs were issued. These
writs were few in number. Those'that we must consider are
the writs of debt, covenant, and account. The most striking
thing about these writs is this, that though debt, covenant,
and account are all called actions ex contractu, the writs in
these actions show that they did not proceed upon the ground
of enforcing any contractual obligation. The writs were all
drowttural writs; that is to say, they all proceeded upon the
theory that the defendant had certain property in ‘his posses-
sion which belonged to the plaintiff, and commanded the de-
fendant, “juste et sine dilatione,” justly and without delay, to
restore that property to the plaintiff.

§ 632. The Action of Debt.—The writ of debt had two
forms. It was brought either in the debet and detinet, or in
the detinet only, according to circumstances. When brought
in the dedet and detinet, the writ stated that the defendant
owed and unjustly detained the debt. This form was used in
cases where the suit was brought by the original creditor
against the original debtor, or against his heirs, if the latter
were liable for the debt. When brought in the detinet only,
the writ simply stated that the defendant unjustly detained
the debt. This form of the writ was used when the action
was by or against an executor for a debt due to or from his
testator. Debt in the detinet was also the proper action for
the recovery of a specific amount of unascertained chattels.
In this form the action closely resembled that of detinue,
which was for the recovery of a specific chattel.

$ 633. What Contracts were enforceable by Action of Debt. —
A debt at common law is a specific sum of money or a fixed
amount of chattels due from the debtor to the creditor.
To-day the term is applied only where money is due. The
ways in which a debt could be created at common law were
strictly limited. The action of debt, in so far as it would lie

§ 632. 1 Blackstone’s Com., ITI. 155; Ames, 8 Harv. Law Rev. 260,
note 1.
376 THE HISTORY OF CONTRACTUAL ACTIONS.

to enforce a contract, was confined to those cases where the
contract was either real or formal. Contracts arising from
the receipt of a thing are termed real contracts, in analogy to
the contracts re of the Roman law; contracts which derive
_ their binding force from the weight attached by the law to the
formal character of the act creating the obligation are termed
formal contracts. The formal contracts enforced by the ac-
tion of debt were evidenced by a record or by a charter. As
to informal contracts, debt was used chiefly, if not exclusively,
in four cases. The action would lie for money lent, for the
price of goods sold, for arrears of rent due upon a lease for
years, and possibly for money due from a surety, though legal
historians are not agreed as to whether a surety could be
bound except by deed. At any rate, if an action would
ever lie against a surety except on a deed, such action had
disappeared by the time of Edward III Laying aside the
question of a surety’s obligation, it will be noticed that the
cause of action in debt is always either the receipt of a thing
by the debtor from the creditor, or the execution of a deed
which affords conclusive evidence of the existence of the obli-
gation set forth in the deed. In the Year Books the term
“contract” was applied to the former class of transactions
exclusively, while the contract under seal was described as a
grant, an obligation, or a covenant.

§ 634. Quid pro quo. — The thing from the receipt of which
a debt arose came to be termed guid pro quo. It seems prob-
able that services rendered by the plaintiff to the defendant
would have been regarded, as they are to-day regarded, as on
the same footing with goods sold and delivered.’ A quid pro
quo, then, was always some benefit rendered by the creditor to
the debtor. A benefit rendered to a third person, however,
was not a sufficient guid pro quo to support an action of debt,
though the defendant had expressly promised to pay therefor.

§ 633. 1 In favor of the surety’s liability, see Pollock and Maitland,
Hist. Eng. Law, II. 208; Holmes, Common Law, 264; cuntra, Ames,
8 Harv. Law Rev. 252.

2 Ames, 8 Harv. Law Rev. 253, note 3.

§ 634. 1 Pollock and Maitland, Hist. Eng. Law, II. 209.
COVENANT AND ACCOUNT. 3817

This rule was finally modified so that the action of debt was
allowed wherever the benefit was conferred on a third person
at the defendant’s request, provided such third person incurred
no liability for the benefit received.?

§ 635. The Action of Covenant.— The writ of covenant was
used to enforce a covenant or promise. It was originally
confined to covenants concerning land,’ and the judgment
might be, in certain cases, for the recovery of the land which
the defendant had agreed to convey; thus showing the droit-
ural character of the writ, in which the breach of the defend-
ant’s covenant was looked upon as constituting a detention
of the plaintiffs property.?

Though the practice seems to have varied at first, by the
end of the fourteenth century the rule became firmly -estab-
lished that the covenant must be under seal, and the term
“covenant” to-day means a promise under seal.? This rule
requiring a seal to every covenant prevented the writ of cove-
nant from becoming a general remedy for the enforcement of
contracts.

§ 636. The Action of Account.— The writ of account was
used to compel a bailiff or factor to account for moneys re-
ceived by him on behalf of his employers. It was used chiefly
in the fourteenth and fifteenth centuries, and practically dis-
appeared with the progress of equitable jurisdiction in such
cases.1 The action of account still lingers in some jurisdic-
tions, where it is more or less modified by statute. The juris-
diction of equity in matters of account is concurrent with that
of the common-law courts in many cases. The superiority
of the equitable procedure in adjusting complicated accounts
has made litigants resort so exclusively to courts of equity
in such cases, that the right to an account is sometimes
thought to be purely an equitable right. In reality, the
right is in many cases a common-law right, for the enforce-

2 Ames, 8 Harv. Law Rev. 262, 263.

§ 635.1 Ames, 8 Harv. Law Rev. 253.

2 Pollock, 6 Harv. Law Rey. 400.

8 Ibid. 399-401. ,

§ 636. 1 Pollock, 6 Harv. Law Rey. 401, 402.
378 THE HISTORY OF CONTRACTUAL ACTIONS.

ment of which courts of equity have provided a more adequate
remedy 2

§ 637. The Lack of General Principles of Contract at Common
Law. —It is clear, then, that the king’s courts recognized no
general theory of contractual obligation. There were certain
special obligations which might be enforced by the appropriate
writs, but the technicalities of the rules of procedure prevented
any development of a theory of contracts. The manorial
courts, however, and doubtless other inferior courts, were not
so strict in their rules of evidence, and seem to have enforced
agreements more liberally. The ecclesiastical courts, more-
over, regarded the lesto fidet, or breach of plighted faith, as a
sin demanding ecclesiastical penalties. Their jurisdiction was
restricted, however, and seems to have had little or no influence
on the development of the law of contracts in the king’s
courts. Itis to the celebrated Statute of Westminster II., 13
Edw. I. c.. 24, that the modern law of contracts owes its most
important features.

§ 688. The Action of Trespass on the Case. — On account of
the limited number and narrow scope of the king’s writs
many wrongs were committed for which there was no remedy
in the king’s courts. This unfortunate condition of affairs
led to the passage of the statute just mentioned, which pro-
vided that where there was a wrong, which, though analogous,
was not within the scope of the writs in common use, the
chancery clerks might issue a like writ in consimili casu,
adapted to the circumstances of the particular case. This
statute led to the introduction of writs of trespass on the case.
The writ of trespass proper could be used only where the
wrong complained of had been committed by the use of force
by the defendant. The force might be very slight, and yet
trespass would lie; but for negligence and fraud there was
no remedy. It was the unauthorized contact with the person
or property of the plaintiff that was originally regarded as

. constituting a tort.

2 Knox v. Gye, L. R. 5 H. L. 656.
§ 637. 1 4 Selden Soc, 115.
THE ACTION OF ASSUMPSIT. 3879

§ 639. Trespass on the Case and Assumpsit. — The introduc-
tion of writs of trespass on the case gave a remedy where
damages had resulted from the defendant’s conduct with ref-
erence to the plaintiff’s person or property, even though there
was no forcible contact. Even in such cases, however, the
defendant was not liable for negligence, unless he had ex-
pressly undertaken some task which he performed improperly,
or unless the nature of his occupation required him to act with
reasonable skill. Accordingly, a common carrier or common
innkeeper was held liable for the loss of the plaintiffs goods
intrusted to his care; but in the case of other bailees, the
plaintiff had to allege and prove an undertaking on the part
of the defendant to take charge of the goods.! So, in the case
of a surgeon who was sued for negligence causing the death
of the plaintiff’s horse, it was held that the plaintiff must show
either that the surgeon was a common surgeon to cure such
horses, or that he had expressly undertaken to cure defend-
ant’s horse.?- From the necessity of alleging an undertaking,
or assumpsit, in such cases, these writs were known as writs
of trespass on the case in asswmpsit. In the course of time,
however, it came to be held that the defendant’s negligence, and
not his undertaking, was the gist of the action, so that the as-
sumpsit was finally omitted.’

§ 640. Deceit and Assumpsit.— Another class of actions on
the case included actions of deceit against the vendor of a
chattel upon a false warranty. Here too an express warranty
was necessary to charge the defendant, except in the case of
one who, like a taverner or vintner, was bound by the nature
of his occupation to sell articles of a certain quality.*

For the class of actions that most nearly resembled the
modern action of special assumpsit, however, we must turn to
actions on the case for deceit for the simple breach of a parol
promise. It was generally held that the action would not lie,
because the plaintiff counted on a promise and showed no
specialty. In the fifteenth century, however, the courts al-
lowed the action whenever the plaintiff had been induced to

§ 639. 1 Ames, 2 Harv. Law Rev. 6. 2 Thid. 4. 8 Ibid. 7.
§ 640. 1 Ames, 2 Harv. Law Rev. 9.
380 THE HISTORY OF CONTRACTUAL ACTIONS.

part with money or property on the strength of the defendant’s
promise, and the doctrine was soon extended so that the action
might be brought whenever the plaintiff had incurred any
detriment by acting on the defendant’s promise. Although the
allegation of deceit lingered till the present century, the action
for breach of a parol promise had come to be regarded as an
action ex contractu, and had developed into the action of special
assumpsit.?

§ 641. Indebitatus Assumpsit.-— The action of indebitatus
assumpsit originated in the sixteenth century. The foundation
of the action was a debt due from the defendant to the plain-
tiff, and a promise by the defendant to pay that debt. By the
decision in Slade’s Case,! in 1603, the promise was rendered
unnecessary, the court holding that proof of a simple contract
debt was sufficient to support the action without proof of any
promise to pay. The allegation of the undertaking, however,
still remained necessary, the asswmpsit becoming a fiction,
though a necessary one.2 Indebitatus assumpsit finally became
a concurrent remedy with debt in all cases except where the
debt was due by record, specialty, or for rent. It was also
extended to most cases of quasi-contracts, as, for example,
where the defendant had received money which in equity and
good conscience belonged to the plaintiff.4

§ 642. Quantum Meruit and Quantum Valebat. — The action
of assumpsit in the seventeenth century was extended to cases
of contracts implied in fact; and the party who furnished
goods or rendered services to another was allowed to recover
on a quantum meruit or quantum valebat, by alleging a promise
to pay what the goods or services were reasonably worth. A
promise implied in fact was thus recognized by the courts;
previously only an express promise had been considered
binding.

2 Ames, 2 Harv. Law Rev. 10-16.

§ 641. 1 4 Rep. 92a.

2 2 Harv. Law Rev. 16, 17.

3 In Illinois, by statute, indebitatus assumpsit may be brought on a
specialty. Mt. Hope Cemetery Ass’n v. Weidenmann, 139 III. 67.

4 2 Harv. Law Rev. 63-69.
§ 642. 1 2 Harv. Law Rey, 58.
THE ACTION OF ASSUMPSIT. 381

§ 648. Contracts in Equity. —The ingenuity displayed by
the common-law courts, and the fictions they devised in ex-
tending the action of assumpsit, may have been due in some
degree to the jealousy of the Court of Chancery, entertained
by the common lawyers. It is not possible here to trace the
origin and growth of equity jurisdiction ; suffice it to say, that
persons who could get no redress in the common-law courts
applied to the Lord Chancellor, as “ keeper of the king’s con-
science,” for relief; and that the relief afforded by the courts
of equity tended constantly to make suitors turn thither
rather than to the common-law courts, where there was so
often either no adequate remedy or no remedy at all. A
court of equity had no general jurisdiction to enforce con-
tracts ;* but its jurisdiction over cases of fraud and trust gave
suitors so much relief that the common-law judges devised
the various fictions by which the action of assumpsit was ex-
tended, partly to promote justice, but partly, no doubt, to re-
tain their jurisdiction over cases which otherwise would have
gone into the equity courts. The extension of the action of
assumpsit was accompanied by a restriction of the jurisdiction
of the courts of equity.

§ 644. Growth of the Action of Assumpsit.-— The action of
assumpsit became the ordinary mode of enforcing all simple
contracts. Indebitatus assumpsit had two great advantages
over the action of debt. First, the former action rendered
pleading less difficult. In debt the cause of action had to be
stated very carefully and particularly. In indebitatus asswmp-
sit, the debt was only the inducement to the asswmpsit, and the
plaintiff had only to state the general nature of his cause of
action.1 Secondly, in debt on simple contract the defendant
could wage his law, while in assumpsit the plaintiff could sub-
mit his case to a jury.

§ 645. The Common Law of Contracts based on Procedure, not
on Principle. — It is clear, therefore, that there is no general
theory of contracts to be found in the common law; which ex-

§ 643. 1 Stickney v. Goudy, 132 TI. 218.

§ 644. 1 Waidner v. Pauly, 141 Ill, 442.
2 2 Harv. Law Rev. 57.
382 THE HISTORY OF CONTRACTUAL ACTIONS.

plains the zeal with which more than one writer has turned to
the Roman law for a scientific and rational analysis of con-
tract. The reason that there is no common-law theory of con-
tracts is simple enough, however. Our ancestors were familiar
with debt and covenant and account and assumpsit, but in
their legal reasoning their inquiry always was, “ Will debt lie?
or covenant? or account? or assumpsit ?”? We have, there-
fore, a theory of debt, a theory of covenant, of account, of as-
sumpsit; but we have no theory of contracts except what has
been developed in very recent times from a combination of the
different theories already existing. To attempt to establish
any theory of contract which does not rest on the rules and
ideas governing the courts in their actual decisions is a grave
mistake. To construct a scientific theory upon those rules and
ideas is possible only by the exelusion of the notion that the
same principles must always govern classes of contracts which
have a widely different history.

§ 646. The Modern Theory of Simple Contracts. — While
no one theory of contract will apply alike to formal and to
simple contracts, the courts have worked out a theory of sim-
ple contracts which is reasonably consistent and intelligible
This theory is that a promise creates obligation when it calls
for certain action by the promisee, and when the promisee
takes such action in reliance upon the promise. This may be
called the consideration theory of contract, and has its origin
in the development of the action of assumpsit from the action
of deceit for breach of a parol promise. Another theory, hav-
ing the same origin, is that the promise becomes binding
though it calls for no specific action, if the promisee acts rea-
sonably in reliance upon it. This may be called the estoppel
theory. It differs from the consideration theory in this, that
under the former theory the action which the promisee must
take to turn the promise into a contract is marked out by the
promise itself, while under the latter, any reasonable action
by the promisee in reliance upon the promise will turn the
promise into a contract. The close connection between the
different forms of legal obligation called simple contract,
equitable estoppel, and deceit is clearly apparent. All these
MODERN THEORIES OF CONTRACT. 383

rest upon this broad ethical principle, that every man is
responsible for the natural consequences of his legal acts. If,
then, the natural consequence of A.’s act is to produce a par-
ticular impression on B.’s mind, in consequence of which B.
naturally does a certain act, A.’s act renders him responsible,
to some extent and with some limitations, for B.’s act. The
extent and nature of such responsibility will be illustrated by
the following examples.

§ 647. Simple Contract—-The Consideration Theory. — A.
says to B. “I will give you $100 for your horse.” This state-
ment of A.’s induces B. to believe that A. will pay him $100 for
the horse. Influenced by this belief, and relying on A.’s prom-
ise, B. gives his horseto A. A. becomes bound to pay B. $100,
having induced B. to do the act which A.’s promise called for,
and thereby becoming legally responsible for the promise.

§ 648. Equitable Estoppel. — A. and B. own adjoining lots.
A. says to B., “These two trees mark the boundary line be-
tween our lots.” The trees are in fact on A.’s land. A. in-
duces B. to believe that the trees mark the true boundary line,
and in reliance on A.’s statement, B. builds a house which is
partly on A.’s land. A. is estopped to deny that the true
boundary line is the one he pointed out, having induced B. to
act in reliance on his statement. To create an estoppel of
this character, there must be a representation of existing fact.

§ 649. Simple Contract — The Estoppel Theory. — A. prom-
ises to give $100 to the First Methodist Church. In reliance
upon this promise the church buys a new organ. According
to some courts, this action of the church makes A.’s promise
binding! Such courts call the action of the church the con-
sideration for A.’s promise, but the strict definition of con-
sideration requires that it should be specifically indicated by
the promise itself. The reason for calling this theory the
estoppel theory of contract is that this case differs from estop-
pel only in one particular, viz., that here A.’s act is a promise
instead of a representation of fact.

§ 650. Deceit. — A. represents to B. that the horse which
he wishes to sell B. is sound. B. is induced by his represen-

§ 649, 1 Ante, §§ 129, 150.
384 THE HISTORY OF CONTRACTUAL ACTIONS.

tation to buy the horse. A. is liable to B. in damages for the
injury which he has sustained, at least if A. knew that his
representation was false.

§ 651, The Consensual Theory of Contracts, —— While the
theory of simple contract in our law is essentially a theory
of responsibility for an act which has influenced the conduct
of the promisee, another theory has found some place in
judicial opinion, and has been advanced by more than one
text-writer as the only rational explanation of contractual
obligation. That is the consensual theory, which treats con-
tractual obligation as due simply to the agreement of the
parties to the contract. It is obvious, of course, that in al-
most every contract there is an agreement and a meeting of
minds. The real question, however, is not whether there is
an agreement, but whether the fact of agreement creates or
is essential to the obligation. Now an examination of the
authorities shows that a formal contract is enforced because
of the weight which the law attaches to the act of sealing and
delivering ; while a simple promise is enforced only when the
promisee has acted in reliance upon it. On the other hand,
some essential element of agreement may be lacking, and yet
there may be a contract. Fraud and duress, for example, are
inconsistent with the idea of agreement. Yet a contract ob-
tained by fraud or duress is not void, but valid until rescinded.

§ 652. Summary of the Principles governing Contractual
Obligation at the Present Day.— A proper understanding of
the modern law of contracts therefore requires a recognition
of the following principles : —

First, there is no general theory of contracts to be induced
’ from the English and American decisions.

Second, there is a theory of formal contracts in the com-
mon law, resting on the rule that what a man does under his
hand and seal he cannot dispute in a court of law.

Third, there is a theory of simple contracts, developed by
the slow process of judicial decision through the action of
assumpsit. The history of this action shows the growth
of the idea of contractual obligation from the original idea of
tort or deceit, The modern idea of simple contract recognizes
MODERN THEORIES OF CONTRACTS. 385

contractual obligation as due to the responsibility which the
law imposes on one who by his conduct influences the action
of another. The idea of simple contract, therefore, appears
to be closely connected with the ideas of equitable estoppel and
of deceit. The general theory of simple contract is differ-
ently applied by different courts, according to their definition
of consideration. In one of its branches it appears as the con-
sideration theory; in the other, as the estoppel theory.

Fourth, the idea that contractual obligation has its origin
and foundation in the agreement of the parties, has some sup-
port in judicial opinion, and the support of some of the lead-
ing English and American text-writers. This consensual
theory is insufficient to explain our law of contracts, as has
been pointed out. It derives its chief force from the vigor
with which two leading English writers have indorsed the
theories of Continental jurists.!. The existence of this theory
must be recognized, even though its inadequacy as an explana-
tion of our judicial decisions be apparent.

Fifth, there is a strong tendency toward the unification of
the theories of formal and of simple contracts. This tendency
is due to the constant gain which equitable principles have
made and are making over merely technical rules. Its effect
is to bring the rules governing formal contracts more and
more into harmony with the broad principles governing sim-
ple. contracts, and, in general, to substitute equitable for
legal rules.

The rules of positive law governing contracts in our system

-of jurisprudence have been set forth in the main body of the
text. With the foregoing explanation of the historical de-
velopment of our law, those rules may appear more reason-
able, and their relation to each other more intelligible, in
spite of the lack of that complete symmetry of legal theory
for which the student naturally seeks, and for the absence of
which the jurist must solace himself as best he can.

§ 652. 1 Anson, Contracts (8th ed.), 2; Pollock, Contracts, Dedi-
cation.
INDEX.

The figures refer to sections.

ACCEPTANCE,

OP WOES ce se. ar oS ce ep SS Re aE ew er OA

of documents Be J eS oe ae ond fee Tee ee edd bed Ses 55-59
ofdeed . .. . ee foe tae, a! Ga ea i, oe geo 82-83
when it is a valid canaidacatien soe ee ew ww ew «6100-105
relation of, to consideration . ye 144
communication of. . . . ee 8 8 em oa ee 4 44149
in unilateral and bilateral contr: ants 153
and counter-offer 154
conditional 155
manner of 156
time of ae ae 157
communication of . . . . 2. we ee ee 158-163
by POSt a woe a Aloe % » oe oe ee we . 159, 161, 162
by telegraph 5 ew 1 we we wee we ww e160
failure to receive . . 2 ee ew we ew ee we ew ew we GL
attempted ; 163
after rejection of offer . 164
ACCEPTANCE AND RECEIPT,
as used in satute of frands . . . . 2. . 1. ee 604
ACCORD AND SATISFACTION,

acceptance of insurance in lien of damages - 2264

539

discharge of right of action by

22
26

ACCOUNT,

actionof . ......., se 8 ee & « «© « 16, 686
ACT,

necessity of .

voluntary’ “s. Goa-ecvene ee i ys er BI ee

silence as an act ae
determines extent of dhlicaBion ‘ oe
must be capable of affecting legal velations be a er

24
28
888 INDEX.
The figures refer to sections.
ACTIONS £X CONTRACTU .... ‘

(See ContRacTUAL ‘Acrrows.)

ADDITIONAL COMPENSATION

promise to pay 3 z

for performance of contract with third fers .
ADMINISTRATION OF JUSTICE,

contracts interfering with . .
ADVERTISMENTS,

as promises .
AGREEMENT,

contract, promise, and . :
ALTERNATIVE CONTRACTS

construction of . . . . . 6 e

AMBIGUITIES .
ANTICIPATORY BREACH OF CONTRACT . .

ARBITRATION,

contracts to submit to. . . . . 6 © © © @
ARBITRATION AND AWARD,

discharge of right of action by . . . . . -
ASSIGNMENT OF CONTRACTS .....

at common law . Se. sat ae We

in equity .

personal contracts . Sa

assignment of liabilities . . . wok eS

“what constitutes an assignment
partial assignment
assignment by check .
assignment of inchoate rights
notice to the debtor. .
what passes by assignment F
priorities between successive assignments .
negotiability . . . . . 2. ew. we
assignment by operation of law. . aD ee
pe eee Saree Se
by marriage . .
by bankruptcy and Ruoeney

by the transfer of land .
ASSOCIATIONS,
exhaustion of remedies within .
ASSUMPSIT,
adtion of « « «= . % 6 # « «& sole
and deceit . « « ¥ * » + 4 w * 8 ® @
ASSURANCE,

contract, promise, and - . » « « «© « «© «

eo 8 8

+ . . 892-896

oe « « + 896

- 13-20, 631-637
117-122

oe LEE
- 122, 125

- . 190
+ 49-50
623

262
- - 257
. 558-555

- 1914-199

oe @ « » Bdd

- 879-396
379
380
381
- 3882

- 3883
- 384
385

. + 886
387, 389
389

390
391

oe

« . « 893
394
395
192

- 17, 640
640

624
INDEX.
The figures refer to sections.
ATTORNEYS,
contracts with . ih) Nigel ae! ost ice. Sia
(See also CoaMPERTY.)
AUCTIONS .

BAILMENT CONTRACTS,
impossibility in 3
BANKRUPT ACTS,
discharge of right of action by . ‘
BANKRUPTCY AND INSOLVENCY,
assignment by . .
BENEFICIARY,
right of, to enforce contracts
BILLS OF LADING,
as contracts
BLANK DEEDS,
delivery of .
BLINDNESS,
affecting execution of contract .
BOHEMIAN OATS CONTRACTS .
BONDS,

penalties in .
penal .

BREACH OF CONTRACT,
going to the essence . . .
distinguished from dependency «
anticipatory

nature of .

doctrine of i

damages in case of .
BUYER’S STATEMENTS. .«

CAPACITY,

of parties
CAUSA :
CERTAINTY AND UNCERTAINTY .
CHAMPERTY.......+ 4. »
CHARTER,

trial by 4) 6) cs Set ae ate

. 553-555

- 554-555

389

227

52-53

- 275-276

544

395

. 361-378

55-59
38

77
211

292
313

516
517

553

556
436

68-73
90
28-31

- 183-188

629
390 INDEX.

The figures refer to sections.

CHARTER-PARTIES,
conditions in
CHECKS,
as assignments .
CIRCULARS,
as promises . Seg cesprs Ser Seppe) S, <3
COMBINATIONS. (See Restraint or TRADE.)
COMPOSITIONS WITH CREDITORS .
when fraudulent ‘ :
discharge of right of atten by

COMPOUNDING FELONY ........

COMPROMISE,
when a valid consideration .
CONDITIONS,
subsequent in form, precedent in fact .
nature of ‘
classification of
precedent and subsequent
and limitations
concurrent . :
internal and etterial — —in a Goat ae in law
affecting formation and obligation of contract
existence of subject-matter .
in charter-parties .
in contracts of sale
in insurance policies
in leases .
distinguished fini repeesendations anil Saraulies
suspending and discharging contracts
affecting right of action .
express and implied . ‘
dependent and independent promises
mutual dependency .
inconsistent descriptions
performance of
waiver of oh
equitable view of . bag
excuses for non-performance .
and discharge of contracts
internal conditions subsequent
in fact

internal conditions subsequent and discharge of right of action : ; 537
CONDITIONS PRECEDENT. (See also ee

distinguished from consideration .

. 807-310
385

49-50

- . 196
207, 208
540

189
- . 112-116

- « 292
299

300

- - 801
- 802, 588
- « « 803
304

305

- . 806
307, 310
398

309

310

311

312

314

. 315
316-334"
328-330
335-336
337-340
341-349
350

349

503

503

503

97

CONDITIONS SUBSEQUENT. (See Canermrensr sisgion)
INDEX, 391
The figures refer to sections,
CONNECTED WRITINGS ...........++4.. 68
and statute of frauds . , eae oe de Ge ako he DOF
CONSENSUAL OBLIGATIONS oR VS Sip ak a ae ae BD,
CONSENSUAL ‘THEORY,

of contracts. . bo He, Ge PS we ew ae BBL
CONSIDERATION, ;
origin of the doctrine . . . «© . 1. © ew we +) (85-86
Indebi: 4: = se 8 2 8 Awe Wa eR Se eye ew ee BF
inassumpsit 2... e . . w ee eee ee we ee 8B
inequity .. 4 Bi Ailey a ah ee ee eee a S82.
good and veluable iS se ay, SEO ae OO ee eek ee Ce ee a “BD
GRO CAUSE 6. oi a eet Oe a SG Bide, £90
MOGESSILY OF 5 Eig. cast a. ak SP GR ae, St ee ae a OO
quid proquo . . 1.» « - ga gg. WIG? Riaiie apes. BF
definitions Of io % ees ee we we Ok we ee ewe we OL
instances of . a a Uy ete ats ah Mad dive en @ onda 9293
mutual promises . . i Wife ae we ee OS

promise must impose liability to be valid go vee Re ee a we OB:
is act so treated by the parties . . . . . 1... ew 6 e » 96

distinguished from condition precedent. . . . . .....
adequacy of «2. 1 6 6 6 ee ee ww we we ee ww 8B
Teality- OF) oe ao gas der Ba UG ee OS a 99
COMMUGEHE 9g wy ee wR he ke awe we 100-105 a
mutuality . . eee ew ww ww « 100-105

performance of legal obligation soe ee ee ew wee 106-125
part payment of debt be RO ge ae ye we eae “LO7=109

in wagers ae Gare Shuai dca gly ee a ed Oe AL
compromise and forbearance soe ee ee we wwe) 112-116
in compositions with creditors . . . . 1... + «© - « «© 196

in subscription papers. . . . - « «© - » . . . « 195-182
must be furnished in reliance on the promise . . . . . 183-141
mutual promises... 6 ee ee ew ee ew we 185
past consideration. . . - «1 ee we we ee.) 186-140
moral obligation . . . S Ape ea eae ee Beas, ue ae ee
indeeds . . . . beh OY Hake teak) etael oot get eld
in negotiable instruments ey de ih Gh Be ane 8, Boas de Be) BI 148
relation of offer and acceptance to. - - « - + +» « « ~ 144
is determined by the promise . . . - - » + + - - 150-163
illegal . . good a i op Se we oe we ee we ADD DAE
partial iflegality ot BOWS a GDR 8 Sy es Bw we OEE
failure of and discharge . . . . « - - © «© « «© «© 528-528
“new consideration rule” . . - . +-,- «+ « + « « 578-580
a part of the contract . oats Wi ei ei Gs Ta a BQ
consideration theory of simple eouteants 8h he a ze eee 6
CONSTRUCTION OF CONTRACTS... .. . + . 259-298
generalrules . . eon ee ew we ww we 252-263
3892 INDEX.

The figures refer to sections,

CONSTRUCTION OF CONTRACTS, — continued.
natureof . . . .
meaning of words .
surrounding circumstances .
custom and usage . .
documents parts of same frarieaation a
ambiguous language .
general and particular words
construction by the parties .
upholding the transaction . . .
punctuation, writing and printing .
alternative and optional contracts .
guaranties e.%
insurance contracts . . oo.
contracts affecting public interest s
contracts in restraint of trade .

impossibility
reasonableness . . . . . + e+ 6 « »
essence of contract . . ik eel leer Oy

penalties and liquidated dase Ptods cash tare Gs
demand and notice . . . . » + ws ee
of joint and several contracts . . . .
CONTRACT,
definition of . . . ae
lack of general pranciples of, at common law e%
different meanings of the term. . . . .
and agreement. . . . . - + « «
in legislative enactments. . - - - « «© «
difficulty in defining . . . . - »- ee.

Whatis a 6 «© 4 & oe 4 wow * w «
CONTRACTS,

formal, simple, and real. . . . . + « ©

formal

of record

simple or parol j
executed and executory .
express and implied
unilateral and bilateral

written atte, eee: a nas eat?
illegal . Sola. tae Ue
against public poliey hh ge

immoral. . Oe er

to defraud others : -

to violate fiduciary relations ‘

affecting freedom of marriage . . . . .
affecting freedom of testamentary disposition .

«+ « 252
- + 253
254

255

256

. 257
258

259

260

261

: 262
263

- 263
263

263

" 964-978
279-283
284-290
291-294
295-298
- 3857

3 3

- + 637
- . 610
- . 611
» . 612
» + 613
» + 621
7. 4
5

: 6

. 8
10

7 11
12, 334

- 60-67
171-251
175-227
149-205
206-211
210

- + 218
» - Q14
INDEX. 893
The figures refer to sections,
CONTRACTS, — continued.
inrestraint of trade 2. 1 1 1 we ew ew www) Q1K-994
to surrender inalienable rights . . . . 2. 2... « « © 995-907

void and illegal distinguished . . . 2. 1. 1 1 ew us 286
construction of. . soe ee ww we ww) 959-998
alternative and optional 6 Se Soh > a ew we oe we B62

entire and divisible . . 2. 2. 2. 1. ee. ee ww ew ee 963
essenceof . 1 1 ww ee we ew ew we wee) 984-290
Operation of . . see ee we we we 999-896
absolute and conditional « 1! [! 1,20)
joint andseveral . . . . 1 1. 1 1. ee ee 8514858
partnership. 2 2 2 6 6 6 ee ee ew ew ew we 858
assignmentof . . . . . . . ee ee we es) 879-896
enforcement of . . .. ... 2. ee ss 6 © 546-565

oral,atcommonlaw . . . . 1. 1 1 ww ee ee 566
personal, and statute of frauds . . ....... . 4. 589
modern theory of simple . . .......... . 646
consideration theory of . . . - 2 6 ee 1 ew ew ee CAT
estoppel theory of 2. 2. 1. 1 1 we we ew we ew we 649
consensual theory of . . ae i es a ew we we, SBT

CONTRACTUAL ACTIONS,
actions ex contractu atcommonlaw . . .. . . . . 631-637
debits eo a ea ee a ae! el woe ele 632-634

covenant 2k eke ee ee we ee ee Oe ee 685
account. .. . eee ee we ee «686
lack of general principles at ¢ common mn law Ce WW wm ays 1687
trespass on the case sone ee ee gw ew we 688-640
deceit and assumpsit. . . . 2. 2... ee ee ee 640
indebitatus assumpsit . . eo me we ee we we we 64]

quantum meruit and quantum valebad . se ew ew ew we 648

contracts inequity . . . 2. 1... we ee ee ee B43
assumpsit, growthof. . . . . oo ere 6 644
common law of contracts based on procedure, nob on prinniile - » 645
modern theory of simple contracts . . . ..... =. . 646
the consideration theory. . . 2. 1 1 7 ee ee ee OAT
equitable estoppel . . . . . 2. ee ee ee ew ee 648
the estoppel theory . . . 2... . 1 eee we ee 649
the consensual theory . - . 2. 1. 2 we De ee 651

historyof . . 2... . Ge eh “GOW en WE CR Ge 626-659
necessity of historical treatment net aS ae Ae Soe ee GG.
older modes of trialat commonlaw . . . . . . . . 627-630

by oath, wager oflaw. . 2. 2. 1. 1. 1. we ee 628
byreond ee ee + 688

by charter. . Cee eRe ce a oe oe @ 630
CONTRACTUAL OBLIGATION,
primary and secondary . . . - . «2. se ee « © BSL

equitable view of . . . . - 2 2. 5 2. 2 4 we we se 562
894 INDEX.

The figures refer to sections,

CONTRACTUAL OBLIGATION, — continued.

natureof . . eee we ew we ~~ 6610-625
different meanings of the jen x “ contract 2 mf eee G10
contract and agreement . . «© 2 es + + ee we e 6611
contract in legislative enactments . . - - . « - « + + + 612
difficulty in defining “contract” . - fe 6 ee os e 618
summary of principles oe at present day eset eee ae er 65D
essentials of . . . . s 6 a eee da a ce DI
CORPORATIONS,

vote of, as promise. - . 2. + e+ + ee ew we ew we) 6D

capacity of » 6 w# 4% @ & | © & ee we ew ee ee 78
COVENANT,

Géfinition of 6 6 8 ee a ee we ws ee

action of. 2 6 6 6 ee ee ew ww ew ww «B85
COVENANTS,

running with the land . . . 1 1 1 6 we ew ew ee ee (896
CUSTOM AND USAGE . .... . 2 © @ © © 6 o + 255

D.
DAMAGES,
liquidated . . . oe we ww ew ws 991-294, 561

for anticipatory breach of contract ie ee Be a ce ew, DG
for breach of contract . . . . se ee ee ee 557-561

measureof. . . - - «© 2 © © © © © eo ww ow «B58

loss of profits as . . 2 6 7 6 ee we we ww ww «55D

interestas . . . BE A Be Sik ee Ea oR 4 BO

and specific performance Oe ae OR al Pa eR - 565
DEATH,

assignment by. . - ee 6 ee ew ee ee 393

discharge by . «© - es 6 2 ee et ew ew te "977, 278
DEBT,

definition of. 2 2 2 6 ew ew ew ee ee we we el UC

actionof ... . eee ew ew we + 632-634

what contracts enforceable by action of wo Oe ce we Kes ey ote ee 9688
DEBTOR,

promises to, not within statute of frauds. . . . . - + + + 577
DECEIT,
and contractual obligation . . . 2 2 6 ee + + ee © 618

and assumpsit . . 2. - 6 + + ee ee ew ew ew ew 6640
DEEDS,

requisitesiof 6 kw aS 33

acceptance of © 6. 1 ee we ee ee "89-83

consideration in . . Ecib tir A So 4D

DEFINITE AND INDEFINITE OBLIGATIONS. soe es ss 616
INDEX. 895

by foreignlaw. . . » « 2 ee

The figures refer to sections.
DELIVERY OF DEEDS ........ 4... 4. 386
in blank . ‘ Sic tee gi Gath ort Rev oa! Saxe Slats 38°
in escrow 37
DEMAND AND NOTICE. ‘ - 295-298
‘DEPENDENCY. (See also Conprrions.) - 316-334
a question of intention ; . 317
a question of relative time for performunnes ; 318
fixed dates for performance . 319
affected by nature of contract - + 820
in instalment contracts, and contauad, patinnauan ‘321, 322, 325,
323, 331
and contingent liabilities . 324
and promissory warranties 326
in optional contracts . - - 826
mutual . “ - 328-332
of one contract on anollier - 333-334
distinguished from waiver . . 3 - » 348
distinguished from discharge by Vireaeh : 317
DESCRIPTION,
failure of property to answer». 1 ee eo we we we 596
DESCRIPTIONS,
inconsistent ow =. 6S «4 = ww Rg 6 8 ee a we ww 997
DETRIMENT... . geek ee a! Gee ae BB LIOn
DISCHARGE OF CONTRACT,
by happeuing of conditions . » 503
by voluntary act - 504-514
by waiver 505
by gift to the promisor - «= 506
by release. - 507-509
by novation - 510-513
formal requisites for . - . 514
by operation of law es - 515-535
by breach going to the essence . - « 516
by breach distinguished from dependency - . 517
by repudiation . - 518-522
by failure of countlermtion - 523-528
by alteration or loss of written ihateninent » 529-531
by merger 532
by estoppel . 534
by marriage ois) Gat Js) GBB
by death % 277, 278.
by impossibility - 264-278
by legislative act 267
by judicial act . -+ 268
by executiveact . . . » » « « - . 269
« + 2694
396 INDEX.
The figures refer to sections,

DISCHARGE OF CONTRACT, — continued.
by destruction of subject matter Pewee Re Bae eee BIO

of joint contracts . . . . en sia gees cep, Gate se. teal 354
by performance . 2... ww ee ee ee ‘498-501
by tender . . ee bate se we «. B09
DISCHARGE OF RIGHT. OF ACTION,
for breach of contracts . . . ee ee eww «586-545
by terms of contract. . 2 1. 1 ww ee ee en 537
by internal conditions subsequent . . . . . . . + ee + 587
by voluntary act. 6 ewe we ee ee ww BBB
accord and satisfaction . . . Roe @ @ ee « 589

part payment and composition with aredibora soe ew ew wee 540
satisfaction of specialties. . . . . . - ee we ws ws BAL
arbitration and award «1 ww we ew ew ee ew wee BAD
by operation oflaw 2. 1 1 1 1 we ee ee ee BB
statute of limitations . . . . . 1 1 ee we ew ee Bb
bankrupt acts... Bo eh! Sey ey cutie Abr SS) av ia oy 545
DIVISIBLE CONTRACTS. Be im Ma Fee a, | 949-951
and divisible promises, distinguished . . . . . . « « « 949-250
DRUNKARDS,

Capacity Of 2 ke hae we we AS a ee we ee 9
contracts of. . 6 1 ee ee ew ew kw ww ww 418
DURESS,

ground for rescission. «© 2 6 1 1 ee ww ww we 4b 450
and undue influence . - . 2. 2. 1 1. 1 ee ee ew ee 447

E.

EARNEST AND PART PAYMENT,
as used in statute of frauds. . . 2. - 2 ee ww we es 605

ELECTION,

and ratification. . . . oe ww © 489-483
ENTIRE AND DIVISIBLE CONTRACTS, ee ee we) 949-951

in restraint of trade . . . .. . Bicwe wep oe ae a ss 968
ESCROW ... ee ee owe ee oe a 87
ESSENCE OF THE CONTRACT, |

whatisthe. . . Sore © we ow © = ) 0 284-986

inconsistent dosorintions .. Be tay pected: 8) Se ow ae ee a ~ BYE990!
breach going tothe . . . 1 1. 2. 1 ee ee we 5G
ESTOPPEL,
rescission barred by . . 2. 2. 1 ew ee ew ww ee 485
and merger. . eR BE tee WR WO aR soe tae, LS A
and contractual obligation Some BER ees a ee ce, ap sala “a G18
equitable . . . . SoS ay ae SE Tat ae ap el ees dee a 1648.
estoppel theory of contracts . Be eS a ep ae at te we 649)
INDEX.
The figures refer to sections.

ESTOPPEL-CONTRACT,

and subscription papers . . . . . . © .
EVIDENCE,

contracts to procure or suppress
EXECUTORS AND ADMINISTRATORS,

contracts of, and statute of frauds. . . . .

F.

FAILURE OF CONSIDERATION,
and discharge . . . . ne tee aes Ge
and dependency
and conditions subsequent
breach of independent contract as .
in specialties and negotiable instruments .
FAMILY RELATION,
and implied promises .
FIDUCIARIES,
agreement to violate duties of .
duty of disclosure by .
FORBEARANCE TO SUE,
when a valid consideration .
FORMAL CONTRACTS

(See also Sprcrattigs.)
FRAUD,

in execution of written contracts

contracts to defraud others .

reason for rescission .

(See also Misnepresenrartow.)

FRAUDS, STATUTE OF .
FREEDOM,

contracts to limit individual .
FUTURE CONTRACT,

agreement for .

GIFT,

discharge of obligation by . . . . ... -
GUARANTIES,

communication of acceptance in

construction of

dependency of . ahdte oa

under statute of frauds . .

397

129
190

571

- 528-528
524
525
527
528

47

210
429

- 112-116
4, 5, 6, 7

- 77-80
- 206-211
« 441-443
- 566-609
ee + 212

67

506

. 146-149

.” 268
. . 894
. 572-582
398 INDEX.

The figures refer to sections.

H.
HISTORY OF CONTRACTUAL ACTIONS. .... « . 626-652

I.
ILLEGAL CONTRACTS... .... . eee @ © 2171, 251
and void contracts, distinguished. . . . » » » » « » . . 286
ILLEGALITY,
general rulesasto 2 2 1 ee ew ew ew we ww. 6 298-251

partial 203 sow Se ew ew Rw we ce 3 @ we 249-951
ILLITERACY,

affecting execution of contract . . og ek ee Ps AE
IMMORAL CONTRACTS. (See also Wacwxs) oe ee © © 194-205
IMPLIED PROMISES. ... . ee ee ee 89-48
IMPOSSIBILITY,

inherent . Be TA Re “ag TR eh B RO gt, Gah Ae Be uae (Sorby 264

Legals ce i ee wh ok we ae ee . oe ee + + 265-269 a

as to subject-matter... 1. 1 6 1 ee ee ee + 270-276

in building contracts. 2. 2 2 1 ee we ww eg 278-274

in bailment contracts. . 6. 6. 6 6 ee ee ww we 0 275-276

in personal contracts. + ee ew ew ew tw «© 877-278
INALIENABLE RIGHTS,

contracts to surrender . . hip RRL Oa es Hetrin ty eh Se D5
INCONSISTENT DESCRIPTIONS ah sikey Swe” MB ies’ ao Wale Bee ite em tee DO
effect of . . . : eo. 8 ew» & w « , 885-386

and mistake as to the siibjeat-anatter BR ee ae a we
INDEBITATUS ASSUMPSIT,

action of . . Mo ee EP a ew ce ws 18 OAT
INDEMNITY,

for illegal acts. . . . gl ot EE a Ben Gabes Sen be Te 988

contracts of, and statute of ‘frauds ia By echo. tes Side ace Let BTS

INDEPENDENT CONTRACT,
breach of, as failure of consideration . . . 2 1. ew ee « 597

INFANCY,
ground for rescission. 2 2 1 1 we ew ew ee ee 2 401-406
INFANTS,
Gapacity of ge se a ae ae a a ee
contracts of . 6 1 1 ee ee ee ee ww ee 6 401-404
contracts for benefit of . 2 6 1 6 ee ee ee ee ee 405
requisites of rescission by . «1. 1. + 1 we we ew ew AOE

ratification by . . 6. 1 ee ee ee ew ww 47 lL 479
INDEX. 399
The figures refer to sections.
INFORMAL AGREEMENT,
for future contract . 1. 2 1 ww we ee ee eww CBF
IN PARI DELICTO. . . 1. 1 ww ww ew ww we 888 a-241

INSANE PERSONS,
capacity of... we et ee ee 7B
contractsof 2. 1 1 ee ee ee ee ee tw 407-414
ratification by... OG. we wee we a Us ow iw @ 8E
INSTALMENT CONTRACTS,
dependencyin. . . . see ew ew ww ww © 821-393, 325

INSURANCE,
acceptance of, in lieu of damages as satisfaction. . . . . . . 2264
INSURANCE CONTRACTS,
and wagers. . . . fo Ip, nay. Ret el Pe ae “200
construction of . 6. 6 6 1 ew ee ee eee we. 268

duty of disclosurein. . . - 1. 1 ee ew ee we ee 480

conditionsin . . . 6 . 6 ee ee ww ww es 809, 314
INTENTION,

innocently illegal . . 2. 1. 1 1 6 we ee ee ww we 280

of one party illegal 2 2 1 1 ew we ee ee ww we 888

vendee’s, illegal . 2. 2. 1 1 te we ee ww ww we B84

borrower’s, legal 2. 2 ee eee ee ee we ew O85

representations of 2. 1 1 ee ee ew ew ee we 484
INTEREST,

asdamages . 6 1 + 1 1 ee ew we ee we we ele ee «560

J.
JEST,
promises made in. . . oy a a wow ee 75
JOINT AND SEVERAL CONTRACTS soe ee we . 351-358
survivorshipin . . + I. ae Cn oP ie OE ae. tay 353
discharge of . . + 1 7 ee ee ee ww ee we, BBS
merger of. 6 og Gk oe aw ye ie Ge oe we we ae BED
in equity. 4 ws A wR Eo ee wee eS we BOE
construction of 2... 1. 6 1 we ee ew ee ew ee 857
partnership contracts . . . . . 1 ee ee ww ee. 858
JUDGMENTS,
as contracts . . Sy Beco W A Is! Rae Bh a 6
discharge of contracts by ge Re wR ee Bw Oe ce Gg BOPSHBS
JURISDICTION,

contracts ousting . » . + 6 6 1 ew ew oe ew ww © 66 19-192
400 INDEX.

The figures refer to sections.

L.
LACHES,
bar to rescission . - . «1. 1 ew ee ew ew eh ww ww 484
LANDS,

contracts concerning, within statute of frauds . .. . . . 584-586

joint and partnership contracts concerning . . . + + « . + 585

indivisible and alternative contracts concerning . . . ..- . . 586
LAW,

representations of. . . - . 1 ee ew ew ew ew wo 488
LEASES,

Conditions: 2. ss eas aS) a ee e810
LIABILITY,

promise mustimpose . . . 1. 1 1 ew we ee ee ee OS
LIMITATIONS,

and conditions . . . a ee ww ew «6 802, 831, 588
LIMITATIONS, STATUTE OF,

rescission barred by. 2 2 2 6 ew ew eee ee we 485
LIQUIDATED DAMAGES . . . .. 1... 1 1 o «291-294

LOCUS P@NITENTIZ «2. 1 6 ww ww ww ew wwe BBY
LOTTERIES. (See Waczrs.)
LUNATICS,

capacity Of sao -a i ac a Se ee Ga ae a a a
contractsof . 2 1. 1 ew ew eee we ew ew ew we 0 AOF—414

“MAIN PURPOSE RULE,”
under statute of frauds. . 2. . 1 1 1 1 ew ew we we ee BBL

MAINTENANCE. . . . 2... 1 1. ww ee es «188-188
MARRIAGE,
contracts interfering with . . br Wt aor Ay EE Blow Se FeO
contracts affecting the freedom of AMC, Sag Aino aka a “OD
assignment by . Be Re a ee ge a ODE
discharge of contracts by Bepckinh, Ne Gr" wh lable) wate alah ah, ae DDO
contracts of, and statute of frauds. . 2... 1. ww ee e588

MARRIED WOMEN,
capacity of . 6 6 1 4 ee ee ee ee ww st 69-70
separate estateof . . 2. 2 1 1 1 ee ww we ee ww «CO
MEMORANDUM,
for future contract . . 1. 1 1 ee ww we ee we CBF
under statute of frauds . . . . . . «ee «© « « 596-603
INDEX. 401

The figures refer to sections,

MENTAL INCAPACITY,
ground for rescission. . 2 6 6 ee ew ew ew ew we) 407-414

MERGER,
ofjoiubcontmaets «ke ee wk ee ww BBE
discharge by . 2 2 1 1 6 ee ew we ew ee ww ew 589
and novation . 2 1. 1. 1 ee ew ew wee ew wwe BBB
andestoppl . . . . 1 1 6 ee ew ee we ww ee B84

MISREPRESENTATION,

ground for rescission - . 2 2 1 eee we wee) 496-443
what constitutes ©. 2. 1. 1 ee ee ee ew ee) 497-436

OF OPINION? def Ge oss se a ke a a ae Sg te 888
Oba $c te, ae se es ae a ee Ss we ee gs ae Gee! el all a uk
of intention . . bh ster: Sot ae Geel Paley Sh st ee lo A

must induce making of contract gi as Sh a a Oe Oe RT
must justify action upon it . . 2. 2. 2... we ee) 488-440

MISTAKE,
as to subject-matter. 2. 6 6 1 ew ew ew ee ee ee Cd
astoterms ofoffer . . . . 2... ee we we ee ew, 159

as to subject-matter. 2. - 1 1 ee ew we ee) 987-290
when ground for rescission. . . . 2. 6. 1 ee we) 415-495
as to subject-matter . . . Bom ae Sioa y oe ATI HH8
as to existence of subject-matter OD. Jats ochre abe. vet, Sd: Teg ae GD ce ge TG
as to identity of subject-matter . . . . . 1... . . 420
as to identity of promisee . . . . . 1 we ew ow ew ee AQT

of one party. ‘ se ee we ew ee 499-495
when ground for reformation coe eee ee ewe 486-496
of law and of fact. . . . , oe Wk we ot OD

MONOPOLIES. (See nena OF Thane

MORAL OBLIGATION,
asconsideration . . . . 2. « «© «© «© «© «© sw we ee 141

MORTGAGEE,
right of, to sue mortgagor’s vendee . . . . . . . 868, 375-378

MOTIVE AND CONSIDERATION ......... . 183
MUTUAL DEPENDENCY ......... . . 398-839
MUTUAL PROMISES... . ee ee
MUTUALITY AND CONSIDERATION. ....... . 103

N.

NEGOTIABLE INSTRUMENTS ......... . 6,391
consideration in . . BE Re we
failure of consideration in . . . . - ew © os ew we B98
loss or destruction of. . - . - 2 - 2 ee ew we ew ee) 830

26
402 INDEX.
The figures refer to sections.
“NEW CONSIDERATION RULE,”
under statute of frauds . . . se ee eo ew oe ~~ «578-580
NOTICE,
when necessary - - - se + ee ee we ew + = 295-298
ofassignment . . ..- 2. - 6 2 se ee ee + + © 887-889
NOVATION,
right of stranger to enforce contract . . - . + + - « + «+ 874
and discharge . . - 6 ee ee ee © ee © ~~ 510-513
by change of parties . . - 2 ee 6 we we ee es SLT
by change in the subject-matter . . 2. . - - - « + « ~ 512
and statute of frauds » - . - . e © © «© © © « © ~~) 518,576
and merger. ee ee ee ee ew ew ee tw «588

O.

OATH,
rial Oye 3 Ae ee EO ae Se ae SS

OBLIGATION,
pre-existing, as consideration . . - - - - + + + « © + 186

OBLIGATION OF CONTRACT,

natureof . ..... de We BO ae oe we we | ZED OT
OBLIGATIONS,
classification of . . .~ » 2s « 614617

paramount or irrecusable, and consensual or “recusable eo a we O15
definite and indefinite . . . .... +. + «© «ws. 616
unifactoral and bifactoral . . . . . 2 e © «© © © © 617

OFFER,
distinguished from solicitation of order . . . . .- - - + + 50
and option . . . ee ww oe ee Oe

acceptance of . . Soe 8 Bw) ee ewe oe we et CSB 164
mistake as to terms of swe ee ae Says pe ae Se ee ee BD
counter-offer . . 2... 1 6 8 ee ew we ee ww 154
expiration of . 6. 6. 6 2 6 6 6 © ew wt ew ww ow 167

revocation of . . to. 4 4 @ & & « » « 65-170
OFFER AND ACCEPTANCE,

relation of, to consideration. . . . . «© «= « « « « « « 144
OPERATION OF CONTRACTS ... . . 299-396

as to subject-matter, absolute and conditional contracts + + 999-350

as to parties thereto, joint and several contracts . . . . 351-358

astothird parties. . 2... 1. 2. 1. es ee + +) 859-896

astoassignees. . . . 2. 2 ee 1 ew ew ee ee) 879-396
OPINION,

representationsof. . 2. 2. 6 6 6 1 ew we we ew ew 483
OPTION,

and “offers. 46. se es Gp ee OS ee a Se 08 @
INDEX.
The figures refer to sections.

OPTIONAL CONTRACTS,

construction of 7

dependency in
OPTIONS AND WAGERS
ORAL CONTRACTS,

at common law

ORAL EVIDENCE. (See ‘Pato fivinaice)

P.

PARAMOUNT OBLIGATIONS .
PAROL CONTRACTS .
PAROL EVIDENCE,

to affect written contracts
PARTNERSHIP CONTRACTS .
PART PAYMENT,

as used in statute of frauds .
PART PERFORMANCE,

and statute of frauds .
PAST CONSIDERATION .

and ratification i
PAYMENT,

part of debt, as consideration

part, under statute of frauds é

part, and discharge of right of action .
PENALTIES AND LIQUIDATED- DAMAGES
PERFORMANCE,

of conditions

substantial . :

and discharge of aantraata ‘

substituted .

conditional .

substantial .

specific . .

part, and siatate af founds
PERSONAL CONTRACTS,

impossibility in .

when assignable

and statute of frauds .
PRE-EXISTING OBLIGATION,

as consideration 3
PRINTED CONTRACTS,

construction of 3
PRIZES AND WAGERS .

562-565

277-278

403

262
527
201-203

566

615
8

60-67
358

605

607-609
188-140
140

107-109
605
540

291-294

337-340
339-340
498-535
499
500
501

607-609

381
589

136

262
204
404 INDEX.

The figures refer to sections.

PROCEDURE,

common law of contracts based on
PROFITS,

loss of, as damagés . . «1 ee
PROMISE,

when implied ous

implied from acceptance of reuetls,

when silence is a
PROMISEE’S CONDUCT,

roust be reasonable
PROSECUTION,

contracts stifling .
PUBLIC OFFICERS,

contracts to interfere with
PUBLIC POLICY,

contracts against .

PUNCTUATION

QUANTUM MERVIT,

and guantum valebat .
QUASI-CONTRACTS ein
QUIDPROQUO........

RATIFICATION,
and past consideration . . . ». . = -
by infants
by insane persons
in general
READINESS AND WILLINGNESS ~
REASONABLENESS,
of promisee’s conduct
implied in contracts . . . . «
astotime: 2 3 6 6 6 & @ # 8%
as to satisfaction
RECEIPTS,
ascontracts . . . - « + » «
recognizances

RECORD,

trial. DY?) cn Se SP cas et ARI ee

- 87, 91, 634

» » 645
559

eae ae BO
o . 40-48
+ + 22-25

- + 74-80
- . « 189
- 178-180

175-227
» + 261

19, 642
20

» » « 140
471 a-479
- . 480
481-483

a) gj ve B88

74-75
279-283
280-282

2 6 . 283

+ . 55-59
en 6

- . » 629
INDEX.

The figures refer to sections.

RECUSABLE AND IRRECUSABLE OBLIGATIONS .

REFORMATION,

of contracts . is

nature and effect of

for mistake of both parties

for mistake of one party . ion

for mistake of fact and mistake of law

for mistake as to subject-matter
RELEASE,

and discharge :

and covenant not to sue
RELIANCE ON PROMISE,

and consideration - . . . . . + es « we ey
REMEDIES,

and sanctions distinguished .

for prevention and redress

damages and specific performance i sles oh

primary and secondary contractual obligation
REPRESENTATIONS,

distinguished from conditions . .- . .. .
REPUDIATION,

waiver by . .

and discharge . ;

of contracts incidental to tenure of property .

what constitutes :

must be accepted before aonteach is dliseharged
RESCISSION,

mature Of gcse a ek a Re

causes for ge Ge RE rsa

and conditions gubaeguent oh ® & dow, Rae A

modesof .

how effected

CEDOIS eR ee CA le We as

by plea .

by reply

judicial . soa

requisites of, in executory and executed contracts

of infants’ contracts . . .

of illegal contracts. ;

of insane persons’ contracts . .

when restitution is necessary .

partial rescission = 6 ww ee we te .
how barred . .- jl Be at
barred by ratification

barred by laches . «1 ee 2 1 we

barred by statute of limitations
barred by estoppel . . .

405

615

486-496

486

. 488
489-491
492-495

496

507-509

508

133

546, 549-552
549

. . 550
551-552

311

bgt oe

. 518-592
520

Assis nee
i ee eal
. + 897-400
. . 899-462
398

. 455
455-462

456, 462

457, 462

. «458
459-462

. . 468
464-465

. 240

lat ee a
. . 467-469
. . 470

. 471-485

. 471-483
14 484
we 485
485 a
406 INDEX.

The figures refer to sections,

RESTITUTION,

when necessary for rescission. . . . - 8 + 4

RESTRAINT OF TRADE,
contracts in

construction of séntmictet AM! og, wn est ea) Be
REVOCATION OF OFFER. .......-.

notice of wo § 7

by expiration . . . ae Se te» Bi Mayra et Oe

by operation of law . AE IR sas ik Re ae, ta a Se

REWARDS AND WAGERS ......4.4.-.
REWARDS FOR INFORMATION .......

SALES,
of property for or USGL eer cae ee ce
conditions in . . Dmx BS Seti se
dependency in 3 eR! IRL ae. ase
SANCTIONS .... ogee Sb Sae Seat
and remedies distinenished oor we A
intermediate and ultimate
SATISFACTION,
when required incontracts  . . 1. ee we ew
SCIENTER,
meaning of. « . 1 ee ee we
SEAL,
defined . wee fae apogee a as
SELLER’S STATEMENTS eg cae ieee
SET-OFF,
of unliquidated against liquidated claim .
SIGNING,
of deeds .
SILENCE,
when a promise
when a representation
SIMPLE CONTRACTS .
modern theory of . Space is elle Sy aoe
SIMPLEX COMMENDATIO. .....4. 4. .
SOCIAL ENGAGEMENTS,
not contracts . . . *
SPECIALTIES (See also Roan Gums
failure of considerationin . + . 2. + 2 © ew
loss or destruction of . . - . «+ «
satisfaction of, and discharge of right of action .

467-469

215-224
- « 263
165-170

166, 168, 169

- 167
- . 170
- 204
- 138

«+ 234
- « 308
325

"546-548
- . 546
547-548

« » 283
442-443

» . 385
- 436
116

- 34

+ 22-95
428-439
8

646

436

« «75
oe 7
- + 528
. « 581
- «+ 541
INDEX. 407

The figures refer to sections.

SPECIFIC PERFORMANCE ....... . . . 669-565
and equitable view of contractual obligation . . . . . . . 562
ground of equitable jurisdiction . . 2. 2. 1. 1. 1 ee ee 568
of positive aud negative stipulations . . . .... =... 564
damages must be an inadequateremedy . . . . . . . « « 565

SPENDTHRIFTS,
capacityof . « «6 # «© © 8 ee de ee ww we we ew 9D
contracts of . ee ee ee

STATUTE OF FRAUDS,
and novation . . . Ke eh ee OR OR Ae ae el ee ar ae BS
oral contracts at common law hovel a ER OR A ae Se te 2B
fourth section of . . 2. 1. 1 1 ee ew we ww ew wy 568

seventeenth section of . . . 2. . 2. 2 2 ew ew ee 569
contracts within . . oo te Shady cers "57 0-594
contracts of executors and admlaistratets ae 2es Ge, oe aise fe Been OL
guaranties . - 572-582

contracts of indemnity ee Go, 3 GR. Sos Wo cle Sheer oak og aa OD
contracts of novation not within . . . . . . . « + « « 576
promises to the debtor not within. . . . . . . 2... - 577
new consideration rule . . eee ee ee he) CZ8-580

promises to pay one’s own debt acy) ee es ey ie a 579)

promises to apply assets... «+ e+ + ew oe se we 6580
the main purpose rule . . - «© ee 6 se ew ew ew 5B]
to whom credit must be given . «. . - 2 - - «© «ew « 58Q
marriage contracts. 1 ee + ee ee ee ew ww 588
contracts concerning ands . . . . + + - + + + « 584-586
contracts for mutual wills . . : oe oe ee) «65868
agreements not to be performed within one 16 year eee «587-591
effect of conditions and limitations distinguished . . . .- - . 588
personal contracts . - . + s+ + + © © © «© «© » 589-590
“contracts for the sale of”. 2. 1 ee ee ee ew ww 59D
* goods, wares, and intprdhinndises 2) Se in Sen Tae Ge an Gh “Se Se ee HOS

“forthe price of” . - 2 6 1 6 6 ee ee ee we 59M
requirements of Hack 595-605
596-605

memorandum . . «
connected domiuments ard oral ‘migdifestions bee em A e897,
description of parties . . - foe ak Sp ee we 508
terms of contract must be tated oe Bw ws) ew a 598
must consideration be stated? . . - . © «. «© «. 600-601
signature to the ew Re ee 602
when memorandum must be pire fe Se sas a Be ee BOB

acceptance and receipt - - + + + + + « © # eo 604
earnest and part payment - - - + + + se + se ee 6 + 605
606-609

effect of. . . ir tie <li Colo tee sca
establishes a role i: eridbaee only we Sears: go Go ere) erg G06
408 INDEX.
The figures refer to sections.

STATUTE OF FRAUDS, — continued.

part performance . . . a ee eae Ss 607-609
effect of, atplaw . . 2. - + 6 © oe - . 607
effect of, nequity . . . 2. . 2. © ‘ 608
requisites of . . . ae ee . 609
STATUTE OF LIMITATIONS,
and discharge of right of action . . - « + + » » 54d
STIFLING PROSECUTION ...... » «= 189
STRANGER,
right of, to enforce contract. . . 361-378
SUBJECT-MATTER,
existence of . . . « . «2 © «© «© © © + 270, 272, 288, 306
destructionof . . . 2. 2 1 ee ee ee 270 a-271
SUBROGATION,
as affecting right of stranger to enforce contract . . . 375-378
SUBSCRIPTION PAPERS .. . . 127-132
SUBSTANTIAL PERFORMANCE OF CONDITIONS 339-340
SUICIDE, :
contracts tending to cause 196
SUPPLEMENTAL AGREEMENTS gohan - 244,
SUPPRESSIO VERI . . «1 6 e+ ew we ew « 432
SURETYSHIP,
duty ofdisclosurein . «© - 2 6 2 we we we ee ew ee 4]
SURVIVORSHIP,
of joint contracts. . 2. 2 6 6 ee ee ew we we ew «85S
T.
TENDER,
and readiness and willingness - . . «© 2 «© «© «© + « «© « 838
and discharge . . - - + + © © © © «© ew we e+ 508
TICKETS,
ascontracts . 2. 2 6 6 1 8 ew ew eh ew 55-59
TIME,
reasonable . . . a ae Se ae ee 280-282
when of the essence of the contract . . . . + 285-286
TIME-TABLES ....... 54
TORT,
contract not to sueforafuture . . oe & w « = 296
TRADE-UNIONS. (See Restraint oF Taxon.)
TRESPASS ON THE CASE, :
action of =. 1 6 ee we we ww ww ew es 688-640
and assumpsit . . 1 + 6 6 2 1 © © © wo - .« 639
INDEX.
The figures refer to sections,
TRIAL,
older modes of, at common law

TRUSTS. (See also Restraint oF aries)
right of stranger to enforce contract .

U.
UNCERTAINTY,
as affecting question of consideration. . . . «
UNDUE INFLUENCE,
and duress .

UNIFACTORAL AND BIFACTORAL OBLIGATIONS

UNILATERAL AND BILATERAL CONTRACTS,
distinguished ak 5
consideration in
acceptance in
dependencyin . . ee riser ee SG Se i beer

UNLIQUIDATED CLAIM,
set-off of, against liquidated .

USURIOUS CONTRACTS,
previous, as consideration

V.

VOID AND ILLEGAL CONTRACTS,
distinguished . . . i
VOLUNTARY ACT,
defined F
discharge of coutendt ier ‘
discharge of right of action by .
VOTE OF CORPORATION,
as a promise F

WAGER OF LAW,
trial by . ‘

WAGERS
consideration in

WAIVER,
of conditions : ee ee ee
discharge of obligation by ee we Be eee

409

627-630

373

109, 110

444-454
617

123
123
153
334

116

137

236

« 26, 27
504-514
538

628
198-205
lll

341-349
505
 

410 —"TNDEX.

The figures refer to sections.
WARRANTIES,
distinguished from conditions
WILLS,

contracts affecting the making-of . ‘

mutual contracts for, and statute of frauds .
WRITTEN CONTRACTS .

fraud in execution of

rules governing execution of

discharge by alteration of

YEAR,
and statute of fraud: cle oe Gel
defined . - . «© 2 we we we eo wwe

311

» . 914
- 586a
60-67.

- 77-80
« 78-80
529

587-591
591
 

KF 801 H29 1901 ¢.1

 

Vol,

 

 

 

Author
Harriamn, Edward Avery
Title Copy
The law of contracts
Date Borrower’s Name

 

 

 

 

 

 
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