7 — ^^^ma 1, UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW LIBRARY ? l^^\/\/ o f (U) nirj PRINCIPLES OF THE LAW OF ATTORNEY AND CLIENT A MONOGRAPH BY \V. B. HALE, LL B. Author of "Bailments and Carriers"; "Damages" St. Paul, Minn. WEST PUBLISHING CO. 1896 CoPYKicnT, 1S96, WEST PUBLISHING COMPANY. ATTORNEY AND CLIENT. 1. In General— Definition. 2. Establishment of Relation. 3-4. General Powers of an Attorney. 5. Rights and Liabilities— Good Faith and Fairness. 6. Duty to Account— Liability for Money Received. 7. Liability for Negligence. 8. Liability for Breach of Contract— Exceeding Authority. 9. Liability to Third Persons. 10. Reimbursement and Indemnity. 11. Compensation. 12. Attorneys' Liens. 13. Retaining Lien. 14. Charging Lien. 15. Confidential Communications. 16. Termination. IN GENERAL— DEFINITION. 1. An attorney at law is an ofB.cer of a court of record le- gally qualilied . to prosecute and defend actions in courts of IsL-w on the retainer of clients.' The relation existing between an attorney and his client is that of principal and agent. The client is the principal; the attorney is the agent. In its broadest sense, "an attorney is one that is set in the turn, stead, or place of another" ; ^ the term being synonymous with "agent." Attorneys, in the modern use of the term, are of two sorts: attorneys at law, and attorneys in fact. An attorney in fact is a private attorney authorized by another to act in his place and stead, either for some particular purpose, as to do a particular act, or for the transaction of business in general, not of a legal char- acter."^ An attorney at law is a public attorney employed by a party in a cause to manage the same for him in the courts. Attorneys 1 Weeks, Attys. at Law, p. 14G. 2 Co. Litt. 51o. 3 Black, Law Diet, ATTY. & CL. — 1 2 ATTOHNKY AND CI.IKNT. (§ 1 at law an- ..iViccis of llir courts in whidi tlu'V inacliic/ and must jMissi'ss rdiain Ii-^al «|ualiliiat i(»ns. No out- not possossiii^ these i|iialillralioiis is cMlillfil to coudui t au09; Robinson's Case, l.n Mass. 3T(). 8 Col.t) v. .IiKlKi* of Supcrif*!- Court, 43 Mich. 281), 5 X. W. 3U9. « In re .Mo.sHfS.s, :'.:» Wis. .">(H). • Wiijiit. Aii. -,7,1; U.)l)l) V. Smith, 3 Scam. (111.) 4G; State v. Garesche. '^^ Mn. ii.-.c,; .McKojin v. iH'vrics, 3 Barb. (N. Y.) 190. Circuit jutlj^o not entitleil i<> practicf. IIul)by v. Smilli. 1 (Nnv. (X. Y.) .^88; Scyiiioiir v. Ellison, 2 c.w. (X. V.I i:'.. - iti It- O'Nril. 9(1 .\. Y. .'S4: In re Mosncs^, 3!) Wis. ."HH). ^ In n- (5o(h1.-I1. 4S Wis. ti93; In ro Hall. .">() Conn. 131; In re Leonard. 12 Or. 9.'',. (i I'ac. 42<;; Kol)inson's Cas(>, 1.31 Mass. 370. And see note to In re I.«'<.nurd. ->:\ Aui. Rep. :',2.'., a Vnc. 420. § 2) * ESTABLISHMENT OF RELATION. 3 character, iii>ward of 21 years of age, and learned in tlie law. In other respects, the general principles of agency apply. ESTABLISHMENT OF RELATION. 2. The relation of attorney and client may be established in any of the -ways in -which any other relation of agency may be established. The act of a client by •which he engages an attorney to manage his cause is called "retainer." "It is said that two things are necessary to establish the relation between attorney and client: (1) The agreement of the attorney to be attorney for the party, and (2) the agreement of the party to have the other for an attorney." ^'^ In civil cases, an attorney cannot be compelled to act for a party against his will. An attorney has no power to appear and act by ^irtne of his license alone. He must be employed by the party for whom he appears, or by some one au- thorized to represent such party.^^ The act of employing an at- torney is called -'retainer." Formerly attorneys were required to be appointed by warrant, and to file their powers in court; ^- but that practice has long since been disused, and a mere parol retainer is sufficient.^ ^ The appearance of the party by attorney instead of personally must appear on the record.^* An allegation in the plead- ings that the party "comes by his attorney" is sufficient.^ ^ Tlie re- 10 Weeks, Attys. at Law, p. 388. 11 McAlexander v. Wright, 3 T. B. Mon. (Ky.) 189. An attorney prose- cuting a suit on a chanipertous contract cannot surrender the contract and proceed with the suit in the client's absence, though he he also her attor- ney in fact under a power. Kelly v. Kelly, 86 Wis. 170, 50 N. W. G37. 12 Manchester Bank v. Fellows, 28 N. H. 302; McAlexander v. Wright, 3 T. B. Mon. (Ky.) 189. 13 Manchester Bank v. Fellows, 28 N. H. 302; Weeks, Attys. at I^iw, § 185; Owen v. Ord, 3 Car. & P. 349; Hirshfield v. Landman, 3 E. D. Smith (N. Y.) 208; Hardin v. Ho-Yo-Po-Nubby's Lessee, 27 Miss. 567; Leslie v. Fischer, 62 111. 118. 1* Weeks. Attys. at Law, p. 401; Hunter v. Neck, 3 Man. & G. 181; Fisher V. Anderson, 101 Mo. 460, 14 S. W. 629. 15 Weeks, Attys. at Law, p. 401; Parsons v. Gill, 1 Salk. 88. The veritica- 4 ATTnlJM V AND ll IKNT. (§ 2 Uiiiirr <»f an atloiin-v may In- iiiiplicd, as wlii-ic the ^'ciu'ral altoi-ncy «>f a paity aitprars for him in a |iaiiic csloiiiird in deny llio aullioiiiy. Where a dnly iieensed allorney assnnies to a|i|Mai- tof a parly, his anihorily to (h* .so is prima facie presiimeil.' '' Sncli an- ihoiity. lio\ve\ci\ may he tpieslioned eiilier liy lie' aHc^^i-d clitui or the opposite pai'ly. and ihe ]ii ••snm|)l ion lehiillecL (Jii stmnliK/ AttonU'lfK AuthiJi'ifiJ — llij Ojijioslf, J\irfi/. When tlte opposite jtai'ty qnestions the anlhoi-ity of tlic atlorin'y he ninst slate facts tending to show. <»i' the ;iionnds ami reasons whicii induced him lo helie\(\ thai ilie alloiney had no aullioriiy to appeal'.''' Wiien tiie want of aniiioriiy to hrin;^ a sail is shown, the action slionld he dismissed, on motion of (h'feiidant.-" "An at- torney is not jieiiiiiited to commence a suit in the name df another wiihont liist receiving authority foi- tlie purpose, liis position gives liim the right to appear for a suitor when emph>yed, l)nt none to interfere in a case in whicli he is not retaiued. * * * He must be actually emphiyed for the j»urpose before he can re])resent the tion of a coniiihiint by i)laiutifT i.s sufticicnl written recognition. (Jrali.ini v. Aiulrews (Super. N. Y.) 32 N. Y. Supp. 795. i« Cooper V. Ila nilton. 52 111. 119; Tabraui v. Horu, 1 Man. & U. 22.S; Hall V. Lavcr. 1 Hare, 571; Lee V. Joues, 2 Camp. 49U; Reynolds v. Howell, L. R. S Q. B. ."^KS. 17 rayuu'iit to the attorney for services remlcred is a ratiliciUion. Ryan V. Doyle, 31 Iowa, 5:5. See Oluistead v. Firtii, t;o Minn. iL'tj, (ji N. w. loiT. 1" Ilaniillon v. Wright, 37 N. Y. 502; Dentou v. Noyes, (J .Johns. (N. Y.) L".is; Anioiil V. Nye. 2:^ Mich. 29(i; Norberg v. Heineinau, 59 Mich. 210, 20 N. W. 4S1; Lcsli.' v. Fischer, 02 111. 118; Ferriss v. Hank. 55 111. App. 2tS; S.liiii/, V. Mi-yi-r, (U Wis. 418, 21 N. W. 243; IMggntt v. Addicks, 3 (1. (Jreene (low.i) 427; Harshey v. Blackmarr, 20 Iowa. Itll; I)(irs(>y v. Kyle, ."50 Md. 512; Osborn v. Hank, !> Wiieat. 7:iS; Nuycs v. Helding. 5 S. I). Co.!. .".a N. w. i(x;9. "> Pef»ple V. M.iriiiDs.M Co., .''/.» (':il. tiS3; Norlierg v. Ilciiiciiian. .">!> Midi. "Jlo. 2i; .V. W. 4S1; H:iiiii]t..n v. Wrigiit, Wi N. Y. .'.o-j; L.-sii.- v. Fis.'lirr, Cj 111. 11^; Kiiili V. Wilson, •! .Mo. 4:;.".; Mc.Mrx.iiiil.-r v. Wriu'lil, .'. I". 1'.. M<>ii. iKv.i ls:t; 'rhoiiias v. Steele. 22 Wis. 207; Schlilz v. Meyer, (!1 Wis. 4tS. ■Jl .V. W. 24.5. Oltjcction siiould be m.-ide by iiiotidU ix-fore tri.il. l*eoi»le V. Lamb. s.". iiuii, 171. .".2 .\. V. Siipi). .'.M. 2" Frye"s Adm'rs v. ('ailnnni Cd., 11 111. I.'.-'. § 2) EST A H 1, 18 1 1. MK NT OF lUM-ATION. 5 I);ii(y ill coiii't. 'I'lir rclalioii of clicnl and adoiiicy iinisl sii}).siHt botwoen thcni. Tliat idalioii caniiol he ci-calcd \>y Hm- attorney alone. The suitor lias a ri^lil to select liis own atloiney. If an altoniey brinj^s a suit in the name of another, tlie lej^al presumplion is that lie lias been iclained for- the iiui'posc. It is only u Ihmi liis I'i^lit to rejiresent the plaint ifl" is (jueslioned, and tin? ijresuniplion that he has been en;>a^ed by him is rejK'lled, that he can be called upon to make proof of his anthority. But in such a cas<', if he fails to show any authority to institute the suit, the same slutuld be summarily dismissed by the court. * * * A defendant is not bound to answer to the merits of a suit commenced witliout author- ity from the plaintiff. Otherwise, he might be twice compelled to litigate the same cause of action. A judgment in his favor in a suit l»rosecuted without authority would be no bar to a second action brought by direction of the i»lainti(r." ^i The question should be raised at the earliest oi)portunity. It cannot be entertained after a default.-^ The ahidavit of the attorney himself, or his mere state- ment, is evidence of his authority.-^ Letters received in due course purporting to come from plaintiff may be sufficient, though he might be unable to prove the handwriting. "All that is required to be sliown in such cases, in tlie first instance, is that the attorney has acted in good faith and under an authority appearing to be genuine, though informal. It then devolves upon the party Impeaching the authority to show by positive proof that it is invalid or insufficient in substance." ^* 21 Id. -•^ Ketd V. Curry. 3." 111. r>3G. See Mor;,'an v. Thorne. 7 Mees. & W. 4r)0. Caunot be raised for the first time on appeal. State v. Carothers, 1 G. Greene (Iowa) 4CA. 2 3 Eiokman v. Troll, 20 Minn. 124, 12 N. W. ;}47; Penobscot Boom Co. v. Lamson, 16 Me. 224; Manchester Bank v. Fellows, 28 N. H. 302. An affi- davit of plaintiff's afrent that he was directed to cause suit to be brought, and tliat lie had employed the attorney, is sufficient. Hughes v. Osborn. 42 Ind. 430. 24 Hardin v. Ho-Yo-Po-Xnbby's Lessee, 27 Miss. 507; Savery v. Savery, S Iowa, 217; Bush v. Miller, 13 Barb. (\. Y.) 481; Grignon v. Schmitz, 18 Wis. G20. ATTORNEY AND CLIK.NT. (§ 2 S(n)7(^Bi/ Alleged CHent. Not only may tho opjajsilo i)arty (nicstion an attorney's anllioiity, hut his alle^'i'd client may do so. Wlinc an action is broii.ulit with- out authoi-ily. on i)i'om}>t applicaliiui liy ihc iilaiuiilV llic juocoed- m^s will bo stayed.-^ I.aclu's or acqniosroncc will estop the jiarty to dony tho attornoy's authority.-" It has been held that a judg- ment cannot bo collaterally attacked on the j^round that the attor- ney's ai)itearani-e on which it was entered was unautlioi-ized.'-' A distinction in this rejrard has been often made between foreijjn and domestic judirments. The rule is well settled in actions on forei<;n jndjinients that, if the record recites that the defendant ai>i)eared by attorney, this may well be conclusive ])i-oof that the attorney did appear for liim;-^ but it is only prima facie evidence that the at- torney was authorized to appear for him, and the defendant is at full liberty to prove that such ai)pt'arance was unauthorized or fraudulent, and consequently that there was no jurisilicliou of his jterson.-^ A contrary rule has been ai»i»lied in some stales to ac- 2 5 Harshey v. Blackmarr. 20 Iowa, IGl; De Louis v. :MiM^k. 2 G. Groono (Iowa) 5o; Hefferman v. Burt. 7 Iowa. 321; Sherranl v. Xcvius. 2 Ind. 24t. It has. however, been held that a party is bound by an un.iuthoi-izod ap- pearauce. Abbott v. Dutton. 44 Vt. 54(); Denton v. Noyes. (! .lohus. (N. Y.) 2'.tS; En.ch\nd v. Garner. 90 X. C. 197; Dorsey v. Kyle. 30 Md. 512; Buu- ton v. Lyford, 37 X. H. ol2; Latucli v. Tasherante, 1 Salk. 86. 2 6 Dorsey v. Kyle. 30 Md. r»12. 2T Brown v. Xichols. 42 X. Y. 20; Haiiiilton v. Wri.i^lit. :>7 X. Y. r)(>2; Iloff- niire v. Hoffiuire, 3 Edw. Ch. (X. Y.) 174; Aniericau Ins. Co. v. Oakley, Paige (X. Y.) 49G; Finneran v. Leonard, 7 AUen (Mass.) .")4: Ix)we v. String- bam, 14 Wis. 222; Baker v. Stonebraker. 34 Mo. 17"); (".irpentier v. City of Oakland. 30 Cal. 439; Field v. Gibbs. Tet. C. C. l.V). Fed. Cas. Xo. 4,7('.t>. Contra. Wiley v. Tratt, 23 Ind. 028; Hess v. Cole. 23 X. J. Law, 12.".; Shum- way v. Stillniau, Wend. (X. Y.) 4.')3; Sheltou v. Titlin. How. lO.".. See Wri^rlit v. Andrews, 130 Ma.ss. 149. ■•'- In Ferguson v. Crawford, 70 X. Y. 2.".7. it w:\s licld tliat a (l.-frndant in an action on a domestic judgment migbt sliow collaterally that what pur- Iiort.s to be an appearance on his behalf, sigm-d by an attorney, attached to tin- jugment roll, is a forgery. •-■•' Aldricii v. Kinney. 4 ("onn. 380; Hall v. Williaii.s. (i Tick. (M.iss.) 2.".2; Shumway v. Stilluian. C, Wend. (X. Y.) 447; Price v. Ward, 2." \. ^. Law. 22.",; Kooncc v. I'.iilliT. S4 X. C. 221; Sherrard v. Xevius, 2 Ind. 241; Boy- l:in V. Wliitiiey, :; Ind. 140; Welch v. Sykcs. 3 (Jilm. (111.) 197: Thoiiii>son v. Knuii.Tt, 1.". 111. 410; Lawrence v. Jurvis, 32 111. 3o4; B.-illz.-ll v. .Nuslcr, § 2) ESTABLISIIMKNT OF RELATION. 7 tions on domestic judgments.'" P.iit the better opinion is that no valid distinction can be drawn, and tliat want of jurisdiction be- cause of want of authority on llic i»ai-t of the attorney to appear 1 Iowa. ,188; Ilarslipy v. Blackinarr, 20 Iowa. 172; M:ir.\- v. Fovo, .">! Mo. r,0; Eager v. Stover, 59 Mo. 87. In the case of Budurtha v. Gooflrich, 'A (iray (Mass.) 508, Chief Justice Shaw remarked: "It would certainly be veiy strange if an inhabitant of another state could thus be liouiid liy a court having no jurisdiction, without any act or default of such party. * * ♦ We think that where it appears that, as in the present case, the defendant was an inhabitant of another state, that no property of his was attached by trustee process or otherwise, and that he was not served with process, and the only ground to sustain the judgment is that he appeared by attorney, it is competent for the plaintiff in error to aver and prove that such attor- ney was never authorized to appear for him and thereby give the court juris- diction; and, even had the record gone further, and stated that such attor- ney was duly authorized and did appear, still it would be open to the plaintiff in error to aver and prove facts tending to show that the court had no jurisdiction of the cau.se. and therefore that they could make no rec- ord binding upon him, being a stranger, and such record would not be con- clusive. It would be reasoning in a circle, and inconclusive, to say that the court had jurisdiction because it was shown by their record that the defendant appeared by attorney, and that they had authority to make such record binding upon him, because they had jurisdiction." Some of the earlier cases are contra. Field v. Gibbs, Pet. C. C. 15r>, Fed. Cas. No. 4,700; Roberts v. Caldwell, 5 Dana (Ky.) 512; Edmonds v. Montgomery, 1 Iowa, 143. This was also the doctrine in Missouri (see Warren v. Lusk, IG Mo. 102; Baker v. Stonebraker, 34 Mo. 172) until the decision in the case of Thompson V. Whitman, IS Wall. 457, after which the courts felt obliged to conform to the principles therein established. See Eager v. Stover, .59 Mo. 87. 30 Everett v. Bank, 58 N. H. 340; Field v. Gibbs, Pet. C. C. 155, Fed. Cas. No. 4.76G; Pillsbury's Lessee v. Dugan's Adm'r, 9 Ohio, 117; Campbell v. Bristol, 19 Wend. (N. Y.) 101. In Denton v. Noyes, b Johns (N. Y.) 297. it was held that a domestic judgment rendered by a court of genei-al juris- diction against a party who had not been served with process, but for whom an attorney of the court had appeared, though without authority, was neither void nor irregular. This is now the settled rule in New York. Graz^- brook V. McCreedie, 9 Wend. (N. Y.) 437; Hamilton v. Wright, 37 N. Y. 502; Brown v. Nichols, 42 N. Y. 31. "The courts in this state, while holding that strictly domestic judgments rendercMl against a party not served, but for whom an attorney appeared without autliority, cannot be as.sailed on this ground when coming in question collaterally, nevertheless grant relief on motion, either by setting aside the judgment absolutely, or by staying pro- ceedings and permitting the party to come in and defend the action. Where 8 ATToliNKY AND lI.IKNT. (§§ 3-4 may always lie st-l iiji a^iainsl llu' jwdj^nu'iit, whether foreign or (Idiiicslic. and ih-onciI l>y c.Mriiisic' cvidciict'.''^ GENERAL POWERS OF AN ATTORNEY. 3. An attorney at law has authority, by virtue of his em- ployment as such, to do in behalf of his client all acts, in or out of court, necessary or incidental to the prosecution and management of the suit, and which affect the remedy only, and not the cause of action.^- 4. More specifically, by reason of his general authority, an attorney has the following powers, inter alia: (a) He has general control over conduct of suit; but, (b) He cannot compromise his client's claim. (c) He may receive payment, even after judgment. (d) He may enforce judgment by the usual means. (e) He may employ subordinates, but not substitutes. (f) He may bind his client by bonds and undertakings in cases of strict necessity. An attorney, like any other agent, may bind his principal by acts w ithin the course of his employment. He is employed to conduct and manage a cause; that is, to secure the remedy, not to discharge till' attorney is iusolvent, the jiulj,nnont will be absolutely vacated and set aside. Campbell v. Bristol, 1., supra; Nordliuger v. I)e Mier, ."4 llun, 27t;, 7 N. Y. Sui)p. 4i;;;. See reiison suggested for distinction by Dillon, J., in llarsliey v. Hlaekiuarr, 20 Iowa. KJl. ••!i Reynolds v. Kleniing, .'^0 Kan. 100, 1 Pac. 01; Ferguson v. Ciawfonl, Tit N. Y. 2.">:!; Raker v. O'RiordMU, 0.") Cal. 30S, 4 Tac. 232. ■■■■i .M..uli..n V. Rc.wker. 11.". .Mass. 30. §§ 3-4) GKNERAL POVVKRS OV AN ATTORNEY. 9 the cause of action. This is the fundamental principle by which to determine what acts of an attorney are bindinj^ ui)on liis client.^^ Acts in or out of court, incidental or necessary to the due i)rosecu- tion of the remedy, are pi'ima facie within the attorney's authority/* and are binding upon the client as against innocent third persons."" I'rivale instructions limiting an attorney's actual authority are of no avail, as against third persons having no knowledge or notice of such liuiitatious.^^ Control of Suit — Implied Powers. An attorney has full control of a case in court. ^^ In the absence of collusion, a client is bound by whatever his attorney does affect- ing tlie remedy only. If it be done without actual authority, the only remedy is against the attorney.^" "It is indispensable to the de- <'orum of the court, and the due and orderly conduct of a cause, that such attorney shall have the management and control of the action, and his acts go unquestioned by any one except the party whom he represents. So long as he remains attorney of record, the court can- not recognize any other as having the management of the cause." ^® An attorney's general control over the conduct of a suit has been 33 Attorney cannot bind client by sale of land sued for. Corbin v. Mulli- ■gan, 1 Bush (Ky.) 297. Nor by purchase of land for client at sale under client's execution. Beardsley v. Root, 11 Johns. (N. Y.) 464. 3 4 The attorney and not the client has exclusive management of the cause in court. Board of Com'rs, etc.. of City of San Jos6 v. Younger, 29 Cal. 147. 35 Foster v. Wiley, 27 Mich. 244; Clark v. Randall, 9 Wis. 1.35; Moulton v. Bowker, 115 Mass. 30; Wieland v. White, 109 Mass. 392; De Louis v. Meek, 2 G. Greene (Iowa) 55. 3 Payment to an attorney of record discharges the debt in spite of private instructions limiting attorney's authority. State v. Hawkins, 28 Mo. 3G0; Pickett V. Bates, 3 La. Ann. G27. 37 Whart. Ag. § 585; Nightingale v. Railway Co., 2 Sawy. 339, Fed. Cas. No. 10.2(54; AVard v. Hollins, 14 Md. 158; Clark v. Randall, 9 Wis. 135; Pierce v. Strickland, 2 Story, 292, Fed. Cas. No. 11,147; Simpson v. I>ombas, 14 La. Ann. 103. 38 Moulton V. Bowker, 115 Mass. 36; Gaillard v. Smart, G Cow. (N. Y.) 385; Kellogg v. Gilbert, 10 Johns. (N. Y.) 220; Anon., 1 Wend. (N. Y.) 108. 39 Foster v. Wiley, 27 Mich. 244; Sampson v. Obleyer. 22 Cal. 200; Bethel Church V. Carmack, 2 Md. Ch. 143; Greenlee v. McDowell, 4 Ired. Eq. (N. C.) 481; Chambers v. Hodges, 23 Tex. 104. 10 ATTORXEV AND CLIENT. (§§ 3-4 luld to iiicliidc till' jiowcr to make st iimlaiioiis iH'^arilin^^ the con- tliui of the tfial;^" to waivf objritioiis to ovidciicc; ''^ to admit facls:^- to waive tiH-hnical advaiitaj;i's; *^ to waive iiotici's; ^' to open defaidts and vaeate the jiul^Mneut; *° to verify papers by affi- da\it/" Of waivt' vei-ification; ^ ' to stipulate for continuances;*** to extend the time fof lilin^ pajtcrs and jtleadin^s; "' to cliai'j::*' client witli cost of printinj; briefs; "^^ to remit damages; ^^ to afi;ree to a leference; ■^- to submit the cause to arbitration;'^^ to dismiss the cause; '■' to ay:ree that execution shall be suspended after judg- *» Board of Com'rs, etc., of City of San Jos6 v. Yonnpror, 29 Cal. 147. ; Barrett v. Railmnd Co., 45 .\. Y. c.i'S; .McLcran v. .Mc.X.imani, .55 Cal. .5(i.S; Davis v. Hall, 90 :\1(). ♦;.5',>, 3 S. W. 3.S2; Rogers v. Greenwood, 14 Minn. 333 (Gil. 250). §§ 3-4) GKNERAL POWKKS OF AN ATTOUNKY. 11 iiieiit; '■•'' aud the like*."'" It lias been held that an attorney has no implied power to assign the suit; ^'^ to release indorsers; °^ to release the interest of witnesses; °'' to bind his client by erroneous admis- sions of law; "" to enter a retraxit, when it is a final bar; "^ to aj,^ree not to appeal or move for a new trial. "- 55 Wieland v. "White, 109 Mass. 302; Union Bank of Georgetown v. Geary, 5 ret. 99. !io Attorney has power to accept service, Ileffernian v. Burt, 7 Iowa, 320; to appeal from the decision, Adams v. Robinson, 1 Pick. (Mass.) 402; to re- lease an attachment, Moulton v. Bowker, 115 Mass. 30; to confess judg- ment, Denton v. Noyes, G Johns. (N. Y.) 29G. See Thompson v. Pershinj?, 80 Ind. 303; Talbot v. McGee, 4 T. B. Mon. (Ky.) 377. But see People v. Lam- born, 1 Scam. (111.) 123. It is within the scope of an attorney's authority to agree that, if a foreclosure sale is effected pending an appeal from the foreclosure decree, the proceeds shall be held in court, subject to be dis- po.sed of pursuant to the decision and mandate of the appellate court. Hal- liday v. Stuart, 151 U. S. 229, 14 Sup. Ct. 302. As to power to issue writs outside of county, where admitted, see Hooven Mercantile Co. v. Morgan, 15 Pa. Co. Ct. R. 567; Id., 4 Pa. Dist. R. 48. As to power to levy on prop- erty, and liability of client therefor, see Graham v. Reno, 5 Colo. App. 330. 38 Pac. 835; Wiegmann v. Morimura, 12 Misc. Rep. 37, 33 N. Y. Supp. 39; Fischer v. Hetherington, 11 Misc. Rep. 575, 32 N. Y. Supp. 795. As to power to make stipulation, see Beardsley v. Poke, 11 Misc. Rep. 117, 32 X. Y. Supp. 920; Smith v. Barnes, 9 Misc. Rep. 308. 29 N. Y. Supp. 092; Ives V. Ives, 80 Hun, 130, 29 N. Y. Supp. 1053. Admission of service, Sullivan v. Susong (S. C.) 18 S. E. 208. 57 Weathers v. Ray, 4 Dana (Ky.) 474; Head v. Gervais, Walk. (Miss.) 431; Mayer v. Blease, 4 S. C. 10. An attorney to whom a note is sent for collec- tion has no authority to indorse the same in the name of his client. Sher- rill V. Clothing Co.. 114 N. C. 4.30, 19 S. E. 305 58 Varnum v. Bellamy, 4 McLean, 87, Fed. Cas. No. 16,886; Kellogg v. Gilbert, 10 Johns. (N. Y.) 220; East River Bank v. Kennedy, 9 Bosw. (N. Y.) 543; York Bank v. Appleton, 17 Me. 55; Mitchell v. Cotton. 3 Fla. 134. Or release a surety. Union Bank of Tennessee v. Govan, 10 Smedes <& M. (Miss.) 3;}3; Savings Institution of Harrodsburg v. Chinn's Adm'r, 7 Bush (Ky.) 5.39; Givens v. Briscoe, 3 J. J. Marsh. (Ky.) 529. 59 East River Bank v. Kennedy, 9 Bosw. (N. Y.) 543; Murray v. House, 11 Johns. (N. Y.) 404; Browne v. Hyde, Barb. (N. Y.) 392; Ball v. Bank, 8 Ala. 590; Shores v. Caswell, 13 Me^^c. (Mi^ss.) 413; Marsluill v. Xagel, 1 Bailey (S. C.) 308. 60 Mitchell V. Cotton, 3 Fla. 134. 61 Lambert v. Sandford, 2 Blackf. (Ind.) 137. 62 People v. Mayor, etc., 11 Abb. I'rac. (N. Y.) 66. Contra, Pike v. Emerson, 5 U ArroKNKY AM) CI.II.M. (§§ 3-4 Poicfr to Compnnnisf' Chiim. Ill l\n;;l:iiul it srciiis lo ]»<> sclflt-tl tli;it ;;rin'r;il aiif liofit} to con dint a causr i;ivcs tin- attoiin-y pnwci- to coiiiin'oiiiisr.' • 'I'lii- ((iiiiino- niisc is Itiiidiiii,' t»n tlic rliciii, ili«»ii;:li a;;aiiisl liis t'X|ircss iustnic- liniis, |ii(i\ iilcil ihis liiuilai ion mi ihc ;ii Ioiihv's aiiilioiiiy was un- known to tin- «»|i]iosit»' party.'* This iiilc is followed in somo Ann rican decisions, "•■ but Ity the wcij,du of aiilliority in America at- torneys lia\e no implied power lo compromise their flieiit*8 claims."* A coiiipi oiuise may lie ralilied liy acijiijescence."' Jhirr-r to Jitveh'ii l\ii/nu'nf. An attorin'v has implied jiower to receive payment on hejialf of his client, either before or after jiid^^meut.""* lUit, in the absence N. II. '.VX\. Attornoy cannot rolcas*' larnislioo from attnclinuMit. Qnarh'S v. Porter. Ill .Mo. 70; nor agree that dismissal of an action sliall har a subse- Hurl. \- N. S!H>; Prestwlch v. Poley, 18 C. B. (N. S.) 800; Strauss v. Francis, VI Jnr. (N. S.) 4S0. «♦ Potter V. Parsons. 14 Inwa, 'JSi;. 01 Mallory v. .Marin<'r. 1.'. Wis. 17li; Widand v. Wliitc. lo-.i M.ass. \\\y1; Peru St(H'l A: Iron Co. v. Whipple File A: Steel .Manufj,' Co.. Id. 404; Potter v. Par- s .Mo. l.'>0; llolker V. Parkf-r, 7 ('ranch. 4,".0; (e.nlon v. Coolid;^e. 1 Sunin. .">.">7, Fed. Cas. No. r>.t^M;. «o Mandeville v. Kc-yiiohls. ('►S N. Y. .V_'S; Wetiicrbcc v. Fit.li. 117 ill. 07: 7 N. E. ni.'l; Wadhams v. (Jay. 7:{ 111 41.",; Kelly v. WriKht. (k"» Wis. 2.50. ■JO N. W. 010; Frltchey v. Bosley. .'>0 Md. '.m;; Whipple v. Whitman, i:{ K. I. r.lj; (;ranjrer v. Batclndder, 7A Vt. LMs; Spears v. hedtrircrlitr. ."ii! .Mo. 4«;.".; Is.-iacs v. Zu^smiths. KC. Pa. St. 77; I'iilty v. .Miller. •_'.'. Pa. St. L't'^l; Township of North Whitehall v. Keller. 1(m» Pa. St. lo.'.. S.-e llolker v. Parker, 7 Craiich, 4.'{<». (Jenerally. as t<» the release and compromise of clalniH, we Senn v. Joseph (.\la.) 17 Sotitli. .".4:i; B.arton v. lliiiiicr. .V.» .Mo. App. 010; Maxwell v. Pate (.Miss) 10 Soiiiji. .".J'.i; .My^'ait v. r:irl)i'll, S,") Wis. 4.".7. .V. N. W. loril; Armslr(iuK. 02.'?: Diicctt v. Cumiin^'hiiin. .",!l Mo. ;{S(;: r>iin;,'il<>ii v. rotter, i:'. M.iss. .•'.•_'o; .Miller v. Scutl. '_M .\rlv. :;'.»(;: Sniytii v. II;irvic. ;!1 III. (i2: W.vckdtr V. K(i-;:cii. 1 .\. .1. I.:i\v, 214: White v. Johnsnn. CT Me. L'ST. The fact tliiit ;ni atlonicy has b.-cii employed by an executor in connection Willi the wiiidiiifr up of the testator's estate does not authorize him to re<-cive payment of a mortjrajre which had been assijrnr'd to the executors, he havin.u' drawn the papers at the time, where he has not pos.se.sslon of the iiiort^'ajre. liryant v. Hamlin's Ex'rs (Pa. Com. n.) .'i Pa. Di.st. R. SSo. 0" Walker v. Scott, l.'i Ark. 044; (Jullett v. Lewis. 3 Stew. (Ala.) 2:i; Cost V. Genette. 1 Port. (Ala.) 212; Huston v. Mitchell. 14 Ser;:. \- R. (Pa.) 307; Ixirtl V. Burbank. 18 Me. 178; Treasurer v. McDowell. 1 Hill (.S. C.) 184; (Jarvin v. Lowry. 7 Smedes & M. (Miss.) 24; .Jeter v. Haviland. 24 Ga. 2."j2. lUit see Tavinpston v. HadclifT. Rarb. (N. Y.) 201. -"Trumbull v. Nichol.'^on, 27 111. 14!>; Davis v. Lee. 20 La. Ann. 24S: West V. Hall. 12 Ala. 340; Chapman v. Cowles. 41 Ala. lo:;; Harper v. Harvey. 4 W. Va. .•i39; Kirk's Appeal, S7 Pa. St. 243; Stackhouse v. Ollara. 14 Pa. St. SS; Herrimau v. Sliomon. 24 Kan. 387; Fassitt v. Middletou, 47 Pa. St. 214; Miller v. Lane. 13 111. App. 048; Smock v. Dade. .-. Rand. (Va.i (•>,'i!»; .Tcter v. Haviland, 24 Ga. 2.^)2; Langdou v. Potter. 13 Mass. 31!»; Move V. Cofjdell. CO X. C. 1)3. TiDucett v. Cunningham. 3,0 Me. liSO; Brackett v. Norton. 4 Conn. 'Al; Miller v. Scott, 21 Ark. 300; Pickett v. Bates, 3 La. Ann. 027; Rogers v. McKeuzie. 81 N. C. 1(*4. ■2 Mecheni, Ag. § 817. ■fs Herrimau v. Shomon. 24 Kan. ;iS7; Miller v. Lane. 13 111. App. 048; Mechem. Ag. § 810. '* Weist V. Lee. 3 Yeatcs (Pa.) 47. TO Smith v. Kidd. CkS .\. V. i;{o; Doubh-day v. Kress. ."lO .\. Y. 41(i; Wil- liams V. Walker, 2 Sandf. Ch. (\. Y.j 32.->; Ihiin v. Couisby. 1 Ch. Cas. 'M. 11 ATTOKNKY AND CLIENT. (§§ 3-4 Pmrrv to Enforce Judijment. An atloiiicy lias iini)li('(l antliority to emi)loy the usual uunms to iralizc on tho judj^niont. Ilo may sue out and manage the execni- lion.''' delay its issue, or stay i)roeeedin Beers v. Heudrickson, 45 N. Y. 065; Kirk's Appeal, 87 Pa. St. 24.1; Banks v. Evans, 10 Smedes & M. Xi; Trumbull v. Nicholson, 27 111. 149; McCarver v. Nealy. 1 G. Greene (Iowa) 300; Suioek v. Dade, 5 Rand. (Va.) o;;!!; Lewis v. (Janiage, 1 Pick. (Mass.) 347; Lewis v. Woodruff, 15 How. Prac. (N. Y.) .539; Benedict v. Smith, 10 Paige (N. Y.) 128; Jackson v. Bart- lett. 8 Johns. (N. Y.) 1^61; Chapman v. Cowles, 41 Ala. 103. -•i Wyckolf v. Bergen, 1 N. J. Law, 214; Wi>.'ks. Attys. at Law, § 242; Wliart. Ag. § .-.S.S. 6s Weeks, Attys. at I/nv, § 2:1s. S3 McDnnald v. Todd, 1 (irant (Pa.) 17; Bullir v. Knight, L. H. 2 Exch. 109. «♦ Id.; Weeks, Attys. at Law, § 238. §§ 3-4) GENERAL POWERS OF AN ATTORNEY. 15 Employment of Subordinates and Siihstitutes. The relation of attorney and client is peculiarly a relation of trust and confidence. Because of the attorney's lai-jjje discretion- ary powers, he is presumably chosen for personal i-easous, and there- fore he cannot delegate his authority to a substitute without the client's consent.*'' Sui-li consent, however, may be either express or implied, or such delegation may be ratified, in either of wliich cases the substitute becomes authorized to act for the client. Ratification may be presumed from acquiescence.*" The retainer of one member of a firm is a retainer of all, and, unless otherwise stipulated, the cause may be argued and conducted by any one of tliem.*^ Matters not involving discretion, however, may be delegat- ed to subordinates, to be performed under the direction and control of the attorney.** Pmver to Bind Client l)y Bond. Where the execution of a bond or other undertaking becomes necessary in the due prosecution of a cause, and it is impossible to communicate with the client in time to accomplish the object, an attorney has implied power to execute the bond or undertaking in his client's name, provided it is not required to be under seal;*-* or he may do so in his own name, and look to his client for in- demnity."** The power exists only in case of necessity,''^ Where 85 In re Bleakley, 5 Paige (N. Y.) 311; Hitclioock v. McGehee, 7 Port. (Ala.) 55G; Kellogg v. Norris, 10 Ark. 18; Ratcliff y. Baird, 14 Tex. 43; An- trobus V. Sherman, 6.5 Iowa, 230, 21 N. W. 579; Smalley v. Greene, 52 Iowa, 241, 3 N. W. 78; Dickson v. Wright, 52 Miss. 585. 8 6 Eggleston v. Boardnian, 37 Mich. 14; Briggs v. Georgia, 10 Vt. 68. Cli- ent is not bound by acts of unauthorized substitute. Kellogg v. Norris, 10 Ark. 18. See, also, Dickson v. Wright, 52 Miss. .585. A client is not liable to an attorney for services rendered without his knowledge at the request of the attorney employed by him. Moore v. Orr, 10 Ind. App. 89. 37 N. E. 5.54. Cf. Hyde v. Nerve-Food Co., 160 Mass. 5.59, 30 N. E. .585. 8^ Eggleston v. Boardman, 37 Midi. 14; Ganzer v. Schiffbauer, 40 Neb. 63.3, 59 N. W. 98. 88 Eggleston v. Boardman. supra; McEwen v. Mazyck, 3 Rich. Law (S. C.) 210. 89 Clark V. Courser, 29 N. H. 170. 90 Clark v. Randall, 9 Wis. 1^5. 91 Clark V. Randall, supra; Schoregge v. Gordon, 29 Minn. 367, 13 N. W. 1&4; Fulton v. Brown, 10 La. Ann. 350; Mechem, Ag. § 816. 1(5 ATTORNEY AND CUENT. (§ ^ ,lu' .•liont is pirscnt. or within reach, and can act for himself, the attorney has no such implied power. It has been held he has no power to execute an appeal - or replevin bond.- The attorney's un- authorized act is ratified by the acceptance of benefits."* RIGHTS AND LIABILITIES - GOOD FAITH AND FAIRNESS. 5. An attorney must exercise perfect good faith and fair- ness in all liis dealings with his client. An attorney is bound to the highest honor and integrity and the utmost good^faith in all his transactions with his client."^ The relation is a fiduciary one of the closest intimacy, and is jealously guarded by the courts. Transactions between attorney and client by which the former obtains a benefit are closely scrutinized, and all the rules and presumptions which apply in the case of other riduciary relations apply with special force to this.«« "Where a solicitor purchases or obtains a benefit from a client, a court of equity expects him to be able to show that he has taken no ad- vantage of his professional position, that the client was so dealing with him as to be free from the influence which a solicitor must necessarily possess, and that the solicitor has done as much to pro- tect his client's interest as he would have done in the case of a client dealing with a stranger." " If, while acting as attorney, one 9 2 Clark y. Courser. 29 N. H. 170; Ex parte Holbrook, 5 Cow. 35. Though an attorney, by virtue of his employment, may execute in the name of client bonds on appeal (Comp. St. Neb. c. 7, § 7), he is not authorized to thus exe- cute an indemnity bond to the sheriff (Luce v. Foster, 42 Neb. 818, 60 N. W. 1027). •J3 Narraguagus Land Proprietors v. Wentworth, 36 Me. 339. 4 Bank of Augusta v. Conrey, 28 Miss. 667. 05 Cox V. Sullivan, 7 Ga. 144. OG Mechem, Ag. § 82L As to purchase ot client's property and of claims against client, see Mitchell v. Colby (Iowa) 63 N. W. 769; Sutheriaud v. ifeeve, 151 111. 384; 38 N. E. 130; Owers v. Olathe Silver Min. Co. (Colo. App.) 39 Pac. 980; Kreitzer v. Crovatt, 94 Ga. 694, 21 S. E. 585. 07 Sayery v. King, 5 H. L. Cas. 655. See, also, Merryman y. Euler. 59 Md. 588; Whipple v. Barton, 63 N. H. 613, 3 Atl. 922; Yeamans v. James, 27 Kan. 195; Gray v. Emmons, 7 Mich. .533; Laclede Bank y. Keeler, 109 ID. 385; Kisling y. Shaw, .33 Cal. 425; Starr v. Vanderheyden, 9 Johns. 2.53. Zeigler v. Hughes, 55 111. 288. § 5) GOOD FAITH AND FAIRNESS. 17 buys property sold in the course of litigation, he holds as trustee for the client.^* "An attorne3^ can in no case, without the client's con- sent, buy and hold, otherwise than in trust, any adverse title or in- terest touching the thing to which his emplo^Tuent relates." ®^ The fact that one of the parties to a contract is an attorney, and that he offers to and does draw the necessary writings without charge, does: not establish the relationship of attorney and client between them, or impose upon the attorney the duties and obligations of that re- lationship, or raise a presumption of fraud against him. Nor do these facts, or the inference (which may be drawn from the nature of his business) that by reason of superior experience, sagacity, and shrewdness he may have exercised some control over the other party, and so have obtained an advantage in the contract, establish or justify a finding of undue influence. There must be evidence show- ing some confidential relationship or intimacy between the parties.^*"* It is an attorney's duty to disclose any adverse interest that he may have, personally or as attorney for others, and, having accepted a retainer, he cannot thereafter accept conflicting inter- ests.^^'^ An attorney cannot act as such to both parties.^"- These obligations of an attorney- will be enforced summarily by the court, by virtue of its control over its own ofiflcers, or they may be enforced by private action.^ '^•'* 9f Taylor v. Young, 56 Mich. 28.5, 22 N. W. 799; Pearce v. Gamble, 72 Ala. 341; Bylngton v. Moore, 62 Iowa, 470, 17 N. AV. 644. 99 Henry v. Raimad, 25 Pa. St. 3.54. See, also. Smith v. Brotherline, 62 Pa. St. 461; Hockenbiiry v. Carlisle, 5 Watts & S. 348; Case v. Carroll, 35 N. Y. 385; Giddings v. Eastman, 5 Paige (N. Y.) 561; Moore v. Bracken, 27 111. 23. See Cameron v. Lewis, 56 Miss. 601, as to attorney's right to purchase of tax title of client's land. Cf. Bowers v. Virden, 56 Miss. 595. See, also. Harper v. Perry, 28 Iowa, 58; Baker v. Humphrey, 101 U. S. 494. 100 Stout V. Smith, 98 N. Y. 25. 101 Williams v. Reed, 3 Mason, 405, Fed. Cas. No. 17,733; Mechem, Ag. § 822. 102 Mechem, Ag. § 823. 103 Cooley, Torts, p. 618. ATTY. & CL.— 2 IS ATTORNEY AND CLIENT. (§ 6 SAME— DUTY TO ACCOUNT— LIABILITY FOR MONEY RECEIVED. 6. An attorney must account for property of the client coming into his possession, and promptly pay over money collected for the client's account. An iittoriu'V niiisl account to his client for money or property of the latter coinino- into his hands. An action cannot ordinarily be maintained ajiainst an attorney for money collected by him as such until after a demand and refusal to pay over.^"* But it is the at- torney's duty to notify his client of the receipt of money within a reasonable time, and, if he fails to do so, an action may be main- tained without a demand.^°= The statute of limitations does not run against such an action until the client has notice of the col- lection.^"* Where the attorney retains the money an unreasonably lon^' time, or converts it to his own use, he is liable for iuterest.^"^ Min for a mistake in rcfci-riirr to a iiiatli'i- as lo nliitli iiH-mlifi's of ilic pfofrssioii |iosscssim] (»f n-asoiiahli' skill and know I»d;:r may dilVrr as t(» the law iiiilil il has lic.-n si-iilrd in tlif coiiris. nor if In- is mistaktii in a |M»ini of law on wliidi irasonahlo doulit may lir fntfiiaincd liy wdl infoiiiifd la wyrrs.' ' ■' Tlif stand- '•2 Altltntt. (". J., ill Montriou v. .Irfforys. 2 (":ir. \ I". 11.!. I.onl Manstlrids sjiyiii;; ill ritt V. Yaltloii. 4 Huirows, 'J(M>n, 'J(h;1. Is famous: "'riiat i)art of tlio prnffssioii wliU-h is carritHl on by att<»ru»'ys is librral ami rcpuialtlc as w«'ll as useful to the puhlic. wlit'U tlioy coiuiuct tluMusflves with Ikhiop and IntoKfity: ami they ou;:lit to W i)rot»'<-t»'(l when they act to the best of their skill and knowledjie. Hut every in.in is liable to error, ami 1 slioulil be very sorry that It should be taken for ^'ranted that an attorney is answer- able for every error or mistake. • ♦ • A counsel may mistake, as well as an attorney. Yet no one will .say that a counsel who has been mistaken shall be charncil. ♦ * ♦ .\,,t only n counsel, but judges, may differ or doubt, or take time to consi .•^outh. Cilt. (Jenerally, as to liability of ;ittorneys for erri>neous .advice, see 4 Vale Law .1. r>r,, by William H. liosley. (;.'ner;illy. as to liability for ne;;- lli;ence, see Ke|der V. ,Iessup, 11 Ind. .\|»p. 211. .''.7 .\. I'. <">."<.".; Wain v. He.iver. H;i I'a. St. tyi.",. 21t All. 114, 4:t:{; Ahlh.auser v. Hutler. .".7 Fed. 121; I'iiikston V. ArriiiKlon, !ts .\i.i. 4Mi, 11'. Soiitli. :,i\]\ Colin v. Hensnei-. <.i Mis.. K.-p. 4.S2, '.Vt N. Y. Su|ip. 241; Kin;: v, Fourchy, 47 La. Ann. ."..".4, \t\ South. .S14. US citizens' I.,<.an Fund \- Sav. Ass'n v. Fiiedley. 1'2:{ Ind. 14.'?, 2.'? N. K. lo7.',. Cf. Coclir.iiie v. Little, 71 .Md. :i2.'!. IS .Ml. C.is. Aii aitornev ciinioi § 7) 1 lAHlI.ITY Idll MHil.KiKNCK. 21 jird of skill r.(iiiii<(l ol' l;i\v,\frs is siilisliiiil i;ill v the saim- as that of j)hvsi('ijiiis."'' It is (Iciciinincil I'V llic particular prariic- of tin- part iciilai- bar. "A iiicl luiM.lilaii slaiMJaid is not to ap|ilii«l to a rural bar.""' A law.vn' is not cxiicii.d to ;,Miaraiil.v siiicohs.' '" This standard would not sccni consist, nt witii tin- carl.v thtM.i.v that an attorncv at law is lud liable if he acts hoin-stly and to the best of his ability."' Of course, he must exercise reasonable dili;;ence •generally in the conduct of his client's business.'-" Thus, in ex- l)c cli:irirc(l Willi iii'jrliL'-i'MiM' wlicii lie accepts, ns a cori-fct exposition of tlie law. a .jccisioii of tile supieiiie coiii-t of liis State ill aiiollior case upon tlie question of the lialtilMy of stockliolders of corporations of the state, in ad- vance of any decision thereon in his own case. Marsli v. Wliitniore, 'Jl Wall. 17.^. Nor is lie lial»le for an iiisiilticieni atlidavit in atta<'linient. .Vlil- hauser v. Hutler, ~>~ Feil. 121. 110 Watson V. Muirhead, .".7 Pa. St. ICl. "The law is not a mere art. but a science." Sliarswood, J., in Citizens' Loan, Fund & Sav. Ass'n v. Friedley, 12.3 lud. 14.'i. 2.3 N. E. 107."), reviewing many cases. Approved in Nickless v. rearson. 12(1 Ind. 490, 2() N. E. 47S. iiTWe»'ks. Attys. at Law, § 280; I'ennington's Ex'rs v. Yell, 11 Ark. 212; Whart. Nep. § 7.".(). 118 Weeks, Attys. at Law, § 200. 110 Lynch v. Com., IG Serg. & R. (Pa.) 30)8; Croshie v. Murphy, 8 Ir. C. L. 301; Kemp v. Burt, 4 Barn. & Adol. 424; Gilbert v. Williams, 8 Mass. 57. He has. however, been held liable for gross negligence. Turves v. Landell. 12 Clark A: F. 91; Baikie v. Chandless, 3 Camp. 17; Elkingtou v. Holland. I) Mees. & W. r,c,i. 120 Failing to commence an actiou against a debtor in failing circum- stances, Khines' Adinis v. Evans, UO Pa. St. 192; or in time to avoid bar by the statute of limitations. Fox v. Jones (Tex. Ai>p.) 14 S. W. 1007; Hett V. Pun Pong, IS Can. Sup. Ct. 2!X); failing to be present when his case is reached. City of Lincoln v. Staley, 32 Neb. 63. 48 X. W. 887; or to advise client as to expenses on appeal. Jamison v. Weaver, 81 Iowa, 212. 40 N. W. 9W; making negligent investments, Blyth v. Fhulgate [1891] 1 Ch. 337 (et vide Mellish. L. J., in Sawyer v. Goodwin, 1 Ch. Div. 351); loaning money. Whitney v. Martine. 88 N. Y. 535; for not notifying his client of imi)ending tax sales. ANaln v. Beaver, IGl Pa. St. 005, 20 Atl. 114, 493; for negligence in preparing mechanic's lien, Joy v. Morgan, 35 Minn. 184. 28 N. W. 237; generally, for misdescription, Taylor v. (Joiinan, 4 Ir. Eq. 550; for loss of bond. Walpole v. Carlisle, 32 Ind. 415. Not liable for failure to transfer in- surance policy to vendee, Herbert v. Lukens. 153 Pa. St. 180, 25 Atl. 1110. When not liable for failure to plead statutory limitations, Thompson v. Dick- inson. 1.59 Mass. 210. 34 \. E. 202. 22 .vrroKNKV and ri.iKST. (s 'i' ainiiiatioii of litlt-s. In- imisi sci-iilini/.f vi.uil;mil.\ . and is lialilr. for txamplr. for failnic l«» iiolc ilio exist. 'iicc of an intMinihranrc.'-' r.iil. as to (lonlitfnl jtoints of law. it is snllirimt if he conforms to the standaid of ;:oo(l profrssional im-n of iii»' |ilair.' -- An ailorncv, as hailfi- of |iai»t'is (»r oiIkt |iio|>riM_v of liis client, is lialtle for failure to exercise ordinarv care and diliueiice. X' !(•(• of As.stn'idfr.f, J'di'durs, (ind Si//»)/-s. An attorney is not liable for the n('},di^rence of an associate, as (list in.unislied from a paitner oi- subordinate, where such associato is employetl by the client. (U- emjjloyed by tiie attorney with the ( bent's consent, express or imi>lied, as where it is necessary to eni- jtloy an associate to take dei)ositions in a distant city. An attor- m y, however, is liable for nej^liiicnce in selecting; an associate. ^-^ Attorneys are also liable for the ne^ii;^ence of their ]>artners,'-* clerk.s, or subordinates.'-^ This liability rests on familiar principles of a;,'eney. 1:1 rciinoycr v. \N'illis (Or.) 32 Pac. ."jT. Put. oven undn- siicli circum- stancos. the question of ue^ilijrence has been left to tlie jury. Tinlvston v. Arrinsrton. its Ala. 480, 13 South. 5G1. And see Hinckley v. Krug (Cal.) 34 I'ac. lis. 1 = 2 Watson V. Muirhead, 57 Pa. St. KU; Whart. Ag. § .".07; Potts v. Dut- ton. S Beav. 403; Taylor v. Gorman. 4 Ir. Eq. .").")0; Wilson v. Tucker, 3 Starkie. 1.".4. I) )wi. N. P. 30; Knifjhts v. Qu.nies. 4 Moore. .k^'J; Allen v. Clark, 7 Law T. (N. S.» 7S1. 1 X. K. 3.">S; Diax v. StriHjpe. 2 Barn. & Adol. .■.SI; Stannard v. rilithorae. 10 Ring. 4J)1; Ires<,n v. Pearniau. ."> Dowl. v^: K. *\s-: Howell V. Young. ." H.nn. & ('. 2.".0; Whitehead v. (Jreethaiu. 2 King. 4<"rt. lit Moore, is:?; Dartnali v. lIow;ird. 4 Barn. iS: C. 34.">; Bruuibridge v. Masscy. 2S Law J. Exch. .V.t; ("o<)i)cr v. Stephensnii. •_'! L;iw .1. Q. B. 202; Ilayne v. Khode.s, 8 Q. B. 342. 10 .lur. 71. 1.". Law .T. Q. B. IM. 1S3 Whart. Ag. § 001; (JtHlefnty v. It.ili.m. (! Bing. 4(58. 12* Wilkinson v. (Jriswold, 12 Suiedes & ^L (Miss.) (iCO; Poole v. Hist. 4 McConl (S. ('.) 2.V,l; Smyth v. Harvic. .31 111. ('.2; Livingston v. f:<>x, i! Pa. St. ."'.Co; McEarland v. Crary, S Cow. (\. Y.) 2.'..!; W.irner v. (Jriswold. 8 Wrnd. (N. Y.) <;(>'». >2' W:dker v. Stevtiis. 7!i 111. lO.".; IMoyd v. .Nanglc. 3 Alk. ."iiVS; Birkheck V. StafTnr.l. 14 AM.. Pnir. (.\. Y.i 2S.-,. § 9) LIAnil.ITY TO THIRD TERSdNS. 23 SAME— LIABILITY FOR BREACH OF CONTRACT — EXCEED- ING AUTHORITY. 8. An attorney is liable for breach of the contract of em- ployment. An attornoy is, of courso, linblo for damasos rosnltin^^ from his breacli of the contract of (Miiployinent. He impliedly contracts to obey instructions/-*^ and not to exceed his authority.^ -^ lie is lia- ble for default in either respect. SAME— LIABILITY TO THIRD PERSONS. 9. An attorney is not liable to third, persons for breach of duty o"wing to his client alone; but, -where his conduct violates a duty o-wed to third persons, gro-wing out of his personal contract or imposed by law, he is so liable. Liability in Contract. For breach of duty imposed upon him merely by virtue of his retainer, an attorney is liable to his client alone, for to him alone the duty is owing.^-** But for breach of a duty imposed upon him by law, as a responsible individual, in common with all other mem- bers of society, he is liable to any one harmed by the breach.^-* Thus, for nejjligence in the examination of title, an attorney is liable only to the person by whom he was employed, and not to a third person who relied on the attorney's certificate to his injury.^^" An attorney, however, like other ajjents, may assume a duty towards 126 Where he fails to bring an action immediately as directed, he is liable for consequent damage to his client. People v. Cole, Si 111. 327; Gilbert v. Williams, 8 Mass. 51; Cox v. Livingston, 2 Watts & S. (Pa.) 10.3. 127 Attorney is liable for iinauthorizod appearance whereby assiuned client is damaged. O'Hara v. Bropliy. 24 How. Prac. (X. Y.) 37'.>. 128 National Sav. Bank of District of Columbia v. Ward, 100 U. S. 195; Dundee Mortg. & Trust Inv. Co. v. Iluglies. 20 Fed. 39. 129 Mechem, Ag. § 572. 130 See cases cited in note 128, supra. 24 ATTORNKY AND CI.IKNT. (§ 9 lliiril persons, ;is wlicic lie ((uiti-icts jJiTsonnlly with them, niiil in such cases is liable accordingly.'" An attorney is usually held pt rsonally liable for clcik's and sherilT's fees for issuing, tiling, and stTvinu' writs and otlu-i' jiaiiris.' •- This Is on ihc liround "Ihat an altorncy jtlacini; a writ in an olhcei-'s hands for service is to be re- garded as personally request inarties." ^■■■' In this view of the case, the ruh* is no dei»arture from the general law of agency, and is sup- jiorted by the additional argument of convenience. The rule, how- «ver, has not been universally followed. In Michigan it has been held that an attorney is liable for such fees only upon proof of his express promise to pay them, or of some practice or course of deal- ing between him and the clerk from which such personal promise can be implied.^''* The rule is the same in Vermont.^''^ Attorneys are liable for torts on the same principles that other ]»ersons are.^"° Thus, attorneys may be liable for malicious prose- cution, where llic malice is their own, and they have no probable cause. Hut it may be that evidence which wotdd show a want of probable cause for the client would not establish the same thing as to the attorney.^ ^^ Where an attorney acts in good faith, he is not liable, though the action on his client's part was malicious and without ]nobable cause.' ^'^ An attorn(\v may rely on the facts stat- 131 He is liable for clerk'.s and sherifT's fees when he promises to pay them. Wires v. Brijrgs. ~i Vt. 101; Trestou v. Prestou, 1 Doug. (Mich.) 2!)2. 132 ranip))ell V. Cothran, iJO N. Y. 279; Adams v. Iloplcins. 5 .lohus. (N. Y.) 2.7J; Ousterhout v. Day, 9 .Tohus. (N. Y.) 114; Watcrtowu v. Coweu, 5 Paigf (X. Y.) .jlo; Heath v. Bates, 4!) Conu. 342; Tiltou v. Wright, 74 Me. 214. i-t3 Hcatli v. Bates. 4!) 0)nn. :{42. I'i* Preston v. Preston, 1 Doug. (Mich.) 21)2. 13.-. Wires v. Briggs, ."> Vt. KU. 1-0 Attorneys are lialilc for rraud or cdilusion, and cannot inj\ii-e a tliird jHTson without liability. Such conduct violates a ritilit in rem. .National Sav. I'.ank of District of Toliunhia v. Ward, KM) V. S. 19."). 1 ^ I'.urnai) v. Marsii. i:; III. :..;.'.; l.ynch v. Com., 1(1 Scrg. ^v;: U. (Pa.) :5(J8; i'.-<-k V. choin.;!!!, '.ti .Mo. i:!'.), :; s. w. .")77. ■ I'lH StockJi-y V. liornidge, H C.ir. A: P. 11; Hunt v. Priiitup, 2S Ca. 297. .\i)il see cas«'S cited suiira, note i;;7. § 11) COMPENSATION. 25 t'(l ))y liis client.'''" As in trespass liability is wholly independent of motive, an alloniey, even tlionj^^h actin<^ in f^ood faith, is liable if he participates in a trespass. Thus, an attorney who directs the execution of a void writ is liable in trespass to the person injuicd.''" The client and ollicer are also liable.^*^ They are joint tresi>assers. The attorney and client are not liable, however, even thouf^h the writ is void, where the officer exceeds the command of the writ,'*- unless they individually i):irti(i])ate in, direct, or ratify the act which constitutes the trespass.^^-' Where an attorney assunu's to act wholly without authority, he is liable to any one damaged by his unauthorized act.^** SAME— REIMBURSEMENT AND INDEMNITY. 10. An attorney is entitled to reimbursement and indem- nity from his client. A client must reimburse his attorney for all reasonable expenses advanced in the course of litigation, and indemnify him against lia- bilities incurred. ' ' ^ SAME— COMPENSATION. 11. An attorney is entitled to compensation for his serv- ices. This is determined either — (a) By contract, or (b) By quantum meruit. 120 Burnap v. Marsh, 13 111. 5.3."); Peck v. Chouteau 91 Mo. 1.39, 3 S. W. 577. Ko Burnap v. Marsh, 13 111. 535; Cook v. Hopper, 23 Mich. 511. But see Koss v. Griffin, 53 Mich. 5, IS N. W. 534 (judicial privilege). 141 Newberry v. Lee. 3 Hill (N. Y.) 525; Foster v. Wiley, 27 Mich. 244; Bates V. Pilling. G Barn. & C. 38. 14 2 Averill v. Williams, 1 Denio (N. Y.) 501; Adams v. Freeman, 9 .Johns. (N. Y.) 118; Ford v. Williams, 13 N. Y. 577, 24 N. Y. 359. 143 Cook V. Hopper, 23 Mich. 511; Hardy v. Keeler. 56 III. 1.52; Welsh v. €ochran, 63 N. Y. 181; Averill v. Williams, 4 Denio (N. Y.) 295. See, also, Yanderbilt v. Turnpike Co., 2 N. Y. 479. 144 Burnap v. Marsh, 13 111. 535. 145 Clark V. Randall, 9 Wis. 135; Campion v. King, 6 Jur. 35. ATTORN KY AND CMKNT. C§ 11 Ailoriirvs ;ir(' itriiMM f;i«i<' ciiiitl.'d lo .•oiii|M'iis;iti<>n for llicir scrv- irrs. and iiiav iiiaintain an anion iliorrfor.'"' unless (lu-y have spicially aun-rd lo st-rvc «:iat nitoiisly, and llio Imrdrn of showini; sn( h si.c<-ial a-romirnl is on iln- .li.iil."" 'I'lw riulii to <'oniiM-nsa- linn ami iis oxlfiil is dott-i mined \>\ the contiacl when tiiere is one.'*- Wh.re there is no contract on tiie sultject, tiie attoiney may recover on a r('y. !>:', V . S. ."IS; Bracki'tt V. Scars. 1.1 Mich. L'44; K^'glcston v. Hoardman, ;}7 Mich. 14; Sinitii v. Davis. 4.". N. II. ."»<;(;; Nichols v. Scott, 12 Vt. 47; "Webb v. Rrowniiii:. 14 Mo. or.4 ; Ilarlaii.l v. Lillcnthal. .":? N. Y. 438; Halsbauj:li v. Fra/.cr. 1!) I'a. St. S>r>. Cf. S.H'lcy v. Craue, 15 N. J. Law. 3.j; Law v. Kwcll. l* Cnincli, ('. C. 144. Fed. (■a.<. No. 8.127; Mowat v. Brown. 19 Fed. 87. And see Hasscll v. V.m Ilouten. V,'J N. J. Kq. 105; Bnulcenrid>,'e v. McFarland, Add. 40. 14T Brady v. Mayor, 1 Saudf. nc/J; Webb v. Brownin;:, 14 Mo. ;5.".4. 14*. Moses v. Bagley, 55 Ga. 283; Badjier v. (Jallaher, 113 111. tiC/J; Ilitoh- in^rs v. Van Brunt. 38 N. Y. .T'..".; Tai>ley v. Cottiii. 12 <;ray. 42o: Stanton v. Enibrey, !t3 1". S. 54S. MO Kjrirleston v. Bo.'inlni.in. :\1 Mi 111. 527. «! N. K. 43.".; ('anijiltell v. Cod.lanl. 17 111. .Vpli. ."'.N-".; I'eople v. Bond Street Sav. Baidv. lo Abb. N. (". 1.".; Stanton v. Ilnibrey. I».3 W S. ."..".7; Siiiitii V. Kailroad Co.. Co Iowa. 51.".. 15 N. W. 2ttl; Mnndy v. Stroii;: (N. .1. Kir. A: App.i 31 .\tl. t;il. In New York C(»sts belonj; to attorn. -y. tluiiano v. Wliiie- nack (Com. PI.) 30 N. Y. Suitp. 415. 1 •••> Wri;:lit v. Tebbits. ;il t . S. 2."2: 'I'Mylor v. Bfiiiiss, llo 1. S. 12. :v Suii. Cl. 441; I'.oardnian v. Thi'mpson. 2.". In\v:i. is'.i. i-i Duke V. Hari.er, (iC .Mo. 51; .Mlard v. Laiiiiniii.b'. 2'.i Wis. .".nj; Kusicrcr V. City of Beaver Dam. 5(; Wis. 471. 14 N. W. f.l7; Sianton v. Hmbrey. !»3 U. S. MH; Taylor v. Bend.ss. 110 V. S. 42. 3 Snp. Ct. 4tl: Wylle v. C.txe. 15 How. 415; I'.riT v. DicUen. 105 Fa. St. S3; Dale v. Ki. Ii.nds. I'l D. C. 312. Jf-iDuke V. ll:iriM'r. CC Mo. .",1; (%/|enian v. Billings. S'.i 111. is.;; Martin v. Clarke, 8 It. I. I'.s'j; Alhird v. I.aniiriiiid.'. 2".i Wis. .".nj: Ma.kns v. Myron. 4 § 11) COMPENSATION. 27 tin!, to constitute C'liiinipcrty, iIkiI Hktc he :iii jij^m-i-ciikiiI for a por- li(»ii of the very thiiij^ recovered. Jf there is no such a^nccMicnl, but the attorney's compensation is to be a personal liability of the client, though i»roi)ortion<'(l to the amount of recovery, the a^i'ee- ment is not champertous. It is iiiiiiiatciial tliat the avails of the suit were tlie means or tlie security on which the attorney lelied for payment, if it was to be payment of a debt (bn; from the client.'"'^ Unless the stipulation for a eontinf,a'nt fee amounts to an assi;;n men t, and the opposite party has notice of it, the client may make a bind- inj? settlement of the suit in disrejj;ard of the attorney's claims.' '•* Notice will not alter the rule unless the claim was le},'ally assign- ahle.^'^^ A cause of action for a personal tort is not assignable.' =*' r.ut, althou<;h the settlement of the case may be binding, the client will be liable for breach of contract to the attorney.'^' The attorney may recover at least the reasonable value of his services.' ^^ Where there is no special contract respecting compensation, an attorney may recover the reasonable value of his services.'^* It is, of course, necessary to show a retainer.""' Where the attorney w'as retained by another party, the mere fact that his services were beneficial to defendant is iusuflicient to show liability."'' In lixiiig ilie value Mich. 53"); Ware's Adin'r v. Russoll, 70 Ala. 174; Ihurston v. rcrcival, 1 rick. (Mass.) 415; Lathroi) v. Amherst Baulv. t) Meto. (Mass.) 4S9; Smith v. Davis, 45 N. H. 5GG; Davis v. Sharron, 15 B. Mou. (Ky.) CA; Boardman v. Thompson, 25 Iowa, 489. In Massachusetts an agreement to look solely to the fund for compensation without any personal liability on the part of the client is held to be champertous. Blaisdell v. Ahern. 144 Mass. 393, 11 X. E. f»l. 153 Blaisdell v. Ahern, 144 Mass. 393. 11 X. E. G81. 184 Coghlin V. Railroad Co., 71 N. Y. 442; Pulver v. Harris, i\2 Barb. 500. 52 N. Y. 73; Quiucey v. Francis, 5 Abb. N. C. 2S(>; Lamont v. Wasliiu;i,nou, etc., R. Co., 2 Mackey, 502; Miller v. Newell, 20 S. C. 122. 155 Kusterer v. City of Beaver Dam, 50 Wis. 471, 14 .\. W. t;i7. 156 Id. 157 Kersey v. Gartou, 77 Mo. G45; Polsley v. Anderson, 7 W. Va. 2o2. 158 Quint V. Mining Co., 4 Xev. 305. 159 See cases cited in note 149, ante; In re Sherwood, 3 Beav. 338. 160 Weeks, Attj's. at Law, §§ 338, 339; Cochran v. Newton, 5 Denio (N. Y.) 482; Chicago, St. C. & M. R. Co. v. Lamed. 20 111. 218; Turner v. Myers, 23 Iowa. 391. 101 Chicago, St. C. cV M. R. Co. v. La rued, 2tJ 111. 218; Turner v. Myers, 28 ATTORNEY AND Cl.IKNT. (§11 of an attorney's sorvicos, liis professional skill and standing;, his ( xperieuce. the nature aiul eliaraeter of the (piestions raised in tlu' rase, the amonnts involved, and the result must all be considered. '"- \\ant of snecess. however, is no defense, in the absence of a special contract making compensation conlinj^M-nt on success.'"'' The client may recoup damaji«'S for ne}ili<;ence or bad faith on the part of the attorney.'"* Where an attorney refus<'s to ])ay over money collect- ed for his client, and the client is compelled to brinji an action airainst him for the amount collected, the attorney forfeits any fees that may have been a<;reed npon for his services.'"^ An attorney, retained «ienerally to conduct a' le^al proceeding, enters into an entire contract to conduct the proceeding to its termination. If an attorney without just cause abandons his client before the procei'd- inj; for which he was retained has been conducted to its termination, he forfeits all right to payment for any services which he has ren- dered. The contract being entire, he must i)erform it entirely, in order to earn his comjtensation, and he is in the same position as any }ierson who is enj^aged in rendering an entire service, who must show full performance before he can recover the stipulated comi)ensation.'°*' The rule is the same where the attorney is dis- 2,3 Iowa, 391; Ex parte Lynch, 25 S. C. 193; Saving's Rank v. Benton, 2 Mete. (Ky.> 240. 162 EjrjJTleston v. Bonrdmau, 37 Mich. 14; riielps v. Hunt, 40 Conn. 97; Kohbins v. Harvey, 5 Conn. 335; Harland v. Lilienthal, 53 N. Y. 438; Selover v. Bryant. .54 Minn. 4,34, 56 N. W. 58; Friuk v. MoCoinl). 00 Fetl. 480. The wcaltli of a client cannot be considered. Stevens v. Ellswortli (Iowa) (53 N. W. ON.-!. i'^a Brackett v. Sears, 15 Mich. 244; Rush v. ("aveuauKh, 2 Pa. St. 187; Bills v. Polk, 4 Lea (Tenn.) 494. Disregard of instructions is a defense, o'llalloran v. Marshall. 8 Ind. App. .394. .35 N. E. 920 i<;4 Cliatlicld v. Sinionson. 92 N. Y. 209; Iloppin.ir v. Quin. 12 Wend. (\. Y.) 517; Caverly v. McOwen, 123 Mass. .574; Nixon v. Phelps. 29 Vt. 19S; Pearson v. l)arrin;,'ton. 32 Ala. 227. AViicrc an attorney adviseil liis client in an action against a nf)nresident tiiat service by publication was ltooi], and a valifl judgment could l)e olttaineil, su"li attorney «innot recover for -Tvices rendered therein. Hinckley v. Krug (Cal.) ;{4 Pai-. IIS. 1 us Large v. Coyle (Pa. Sup.t 12 .\tl. 34:5; (Jray v. Conyers. 70 (Ja. .349; Wills V. Kane, 2 Crant, Cas. 00. "•"TerMicy v. lierger, 93 N. Y. 524. 529: JOiini v. I.autnn. 7 .Mim, 274; Davis V. Snnth, 48 VI. .54. Bui see Brilton v. Turner, \. II. 481. §11) COMPENSATION. 29 charged by liis client for cans-e/" AMiere, however, the attorney has sufficient cause for abandduing- the (Mni)b)ynient, he may always recover on a quantum meruit; ^"^ and it has been held, that when the services were rendered under a contract fixing the amount of compensation, he could recover the stipulated sum.^'''" What shall be a sufficient cause to justify an attorney in abandoning a case in which he has been retained has not been laid down in any general rule, and cannot be. If the client refuses to advance money to pay the expenses of the litigation, or if he unreasonably refuses to advance money during the progress of a long litigation, to his attorney, to apply upon his compensation, sufficient cause may thus be furnished to justify the attorney in withdrawing from the serv- ice of his client. So any conduct on the part of the client, during the progress of the litigation, which would tend to degrade or humiliate the attorney, such as attempting to sustain his case by the subornation of witnesses or other unjustifiable means, would fur- nish sufficient cause.' ^'^ The employment by the client, without consent of or consultation with the attorney, of counsel with whom the attorney has personal and professional objections to being as- sociated is suflficient cause.^" The client, unless he has bound liimself to employ the attorney for a stated period, may disclmrge him at any time, with or without cause.^^^ If It is without cause, the attorney may recover the reasonable value of his services.'"^ If tlie discharge is a breach of a contract to employ the attorney 167 Walsh V. Shumway, 05 111. 471. 168 Tenney v. Berger. 93 N. Y. 524; Eliot v. Lawton, 7 Allen. 274. And see Whitner v. Sullivan (S. C.) 2 S. E. 391. 169 Polsley V. Anderson, 7 W. Ya. 202; Baldwin v. Bennett, 4 Cal. 392; Kersey v. Garton, 77 Mo. (545. ivo Tenney v. Berger, 93 N. Y. 530. iTi Id. 172 Tenney v. Berger. 93 N. Y. 524; Trust v. Repoor, 15 How. Prae. 570; In re Prospect Ave. (Sup.) 32 N. Y. Supp. 1013. But the court will not per- mit a. substitution until the attorney's fees and charges are first secured. Ogden V. Devlin, 45 N. Y. Super. Ct. G31; Board of Sup'rs of Ulster Co. t. Brodhead, 44 How. Prac. 411. 173 Tenney v. Berger, 93 N. Y. 524; Ogden v. Devlin, 45 X. Y. Super Ct. 631. oO ATTOKXKY AND CLIENT. (§i^ 12-13 foe ;i (Idinilc tiinc, lie may i-ccoNcr daniajics for such breach/'* If the (liscliarjic is for cause, as has been seen, the attoi'ney forfeits all rij::ht to conipiMisation. Unfaithfulness, want of diligence and ykill, and the like w ill justify a disehai'ge. SAME— ATTORNEYS' LIENS. 12. An attorney has a lien to secure his charges. At- torneys' liens are of two kinds: (a) The general, or retaining, lien; and (b) The special, or charging, lien. 13. RETAINING LIEN— An attorney's general or retain- ing lien is a right on the part of an attorney to re- tain all property of his client that conies into his possession in the course of his professional employ- ment until all his costs and charges against his client are paid.'" An attorney's general lien is a common-law lien,^'*' and, like other coniniou-law liens, it is founded on possession. It is a mere right to retain i)Ossession,^'" It cannot be enforced by sale, or by any j)roceediny; in law or equity.^'® It is a mere ri<;ht to embarrass the (lient by withholding possession.^ ^" IJut the lien continues until I'^Polslej' V. Anderson, 7 \y. Va. iJOli; Baldwin v. Bennett, 4 Gal. 302; -Myers v. Crr " ?tt, 14 Tex. 257; McElhiuney v. Kline, G Mo. App. 94. i'5 Jones, i is, § 113. 1T6 In some states this lien Is declared by statute. Gen. Laws Colo. 1877, § 32; Gen. St. Colo. 1883, § 85; McClain's Oode Iowa 1888, § 293; Rev. Codes Dak. 1877, §§ 9, 10; Code Ga. 1882, § 1989; Comp. Laws Kan. 1879, p. 114. §§ 4^^)8, 4G9; Gen. St. Ky. 1883, p. 149, § 15; Gen. St. Minn. 1894, § G194; Hill's Ann. Laws Or. 1. 414, c. 3, § 54; Comp. St. Neb. 1881, c. 7, § 8; Rev. St. Wyo. 1887, § 138. 177 In re Wilson. 12 Fed. 237; IIcslop v. Metcalfe. 3 Mylne & C. 183: BoYAin V. BoUand, 4 Mylne & C. 354; Colc^rave v. Manley, Turn. & R. 400. 1 78 Jones, Liens, § 132; In re Wilson, 12 Fed. 235; Brown v. Bifjley, 3 Tcnu. Ch. G18; Thames Iron Works Co. v. Patent Derrick Co., 1 Johns. «& II. tC!; Ileslot v. Metcalfe, 3 Mylne & C. 183; Bozon v. Bolland, 4 Mylne & c. :'..")4. 178 West of EnKliiiul Bank v. Bjitciiclor, 7>\ Law J. Cli. 190. See, also, •loiifs. Lit-ns, g lf)2. In l)i' of ;it Inni('\ s,' ' ■ lliniiL;li nilicr persons iiinv li;i\c a special lien for scr\icos ii'iidori'd on tlu' spi'iilic projirrtv on which Ihc lien is clainicil.'""' Whcic tlic iiropoi'ly is received hy the atloiney, not in his professional (ajiacily, Imi, f(tr example, as I inslee.' ■•' oi- inort- ;;;ij;e(.'. '■'■'' ihe lien does not al lach.'""'' 'Die lien extends to papers/'"* money."" and [iroperty '■'- of all kinds, lielonj^in;^ to ihe client ;ind leceived by the attorney in his jivofessional capacii\. Where the attorney claims a li.ulit to letain money, it is a dispnted (pn-slion wheiluT his claim resets upon the law of lien or the law of sel-olT.'""' The liuht to retain money has been sais'o lien arises when it is obvions that >">•'• A rcal-cslMte lirola i- li;is no licii on p:iiicis in liis li:inils. Arlinn' v. Sylvfslcr. luri Pa. St. 'SV.i. Xor an anclioiiccr. San.lcrson v. I'.i'll, 2 ('romp. .V M. .•:o4. 1""^ IlolHs V. Claridjio. 4 Taunt. NiT; Santlcrson v. Hell. 2 Cronip. A: M. :]04. 18T Kex V. Sankey, (I Nev. iS: M. 831); Ex parte Ncwland. 4 Cli. Div. ol."). 188 Telly V. Wathen, 7 Hare, 351, 18 Law J. Cli. 281. is» Worrall v. .lohnson, 2 .lac. & W. 214, 21S; San(l(>rs v. Seclye, 12S 111. r^l, 21 N. E. GUI; Stevenson v. Blakeloek, 1 Maule & S. "(35. i«o.st. .Tolin V. Diefenilorf, 12 Wend. (\. Y.) 201; Hooper v. Wdcli, 4:'. Vt. If,!); In re Knapp, 85 N. Y. 284; Bowiin^-Green Sav. Bank of City of New York V. Todd, 52 N. Y. 489; In re \Vilson, 12 Fed. 235; ^Veed Sewiu}? Maeh. r'o. V. Boutelle. 5(5 Vt. 570; Kedferu v. Sowerby. 1 Swanst. 84. An attorney has no lien on his client's will. Balch v. Synies, 1 Turn. & R. 87. Nor to public records or court tiles. Clifford v. Turrill. 2 De Gex & S. 1. i-'i DowlinK V. Eggemanu, 47 Mich. 171, 10 N. W. 187; Bowling-Green Sav. Hank of City of New York v. Todd, 52 N. Y. 480- In re Knapp, 85 N. Y. 2S4; Ward v. Craig, 87 N. Y. 550; In re Tasclial, 10 Wall. 4.S5; Lewis v. Kincaly. 2 Mo. App. 'X',; Dielil v. Friester, 37 Ohio St. 473; Cooke v. Thresh- .T, 51 Conn. I(t5; Ca.sey v. March, 30 Tex. 180; llnrll)urt v. Brighain, 5(i Vt. 3(W; Head v. Bostick, (5 Humph. (Tenn.) 321; Wells v. Hatch, 43 N. II. 2t(); ( ninerod v. Tate, 1 East, 404. Cf. Lucas v. Canipbeh. 88 111. 447. The lien exists for a stipulated fee, or to the extent of quantum meruit. In re Kna]ip, 85 N. Y. 284. Tln' lien does not atiadi unlil ilie money is receivetl, and nnist not l>e confounded with tiie allorney's cliarging lien. See i>ost, p. :{.3; Casey v. March, 30 Tex. 180; St. John v. Diefendorf. 12 Wend. (N. V.I 2i;i. I'ccs of associate aitorneys may 1k' retained, as wed as liis own. l',alsl.au;,'ii v. I'raxer, III I'a. St. tt5; .Tackson v. Clopton. 00 Al.i. 20. ''••-. \s uipon .•ii-tirics (Iclivficd to bt used as evidence in tlie case. l''ris- well V. King. 15 Sim. lOt. 11'^ Weils V. Hatcli. 4.'. .\. 11. 24(i. i»« I>u r.ois" .\|ipc;il, ;:8 I'a. St. 2.".1. See, also. Baisl):iugli v. Frnzer, 10 Pa. § 14) ATTOK.NKYS' CllAUCJlN*; i.ii;.\. 33 the pjii-tics intended lluit (Ik re should l»c ii<» lien, and, of conrsr-, the attorney may waive il. W'licic the contract of enipioynient is inconsistent with the existence of a lien, as where a tej-in of credit is pr<»\ided for.'''"' theic is im» lien. So tlie deliNciy of |tro|)erty to an attorney for a special pnrpose is inconsistent with the existence of a lien.'"'' Continued possession is essential to the continued existence of the lien. "NA'here tlie attorney voluntaiil.\ jiarts witii possession, the lien is gone.^^^ Taking other security operates as a waiver.^"" I'aynient discharges the lien. Taking the client's note does not,^"" unless it is received as payment.^"" The attor- ney's lien takes priority over all claims hy or under the client.-"* « 14. CHARGING LIEN— An attorney has an equitable lien upon a judgment or fund in court realized from his exertions. This lien is called a charging lien, and is a special, not a general, lien. An attorney's cluuging lien must not be confounded with the general or retaining lien just explained. The retaining lien is strict- St. Of): McKclvcy's Appeal, 108 Ta. St. G15. Id Wells v. Hatch, 4:5 X. II. 246,, it was called a right of set-off. 193 See Stoddard Woolen Manufactory' Co. v. Huntley, 8 X. II. 441. 196 In re Larner. 20 Wkly. Dig. 73; Anderson v. Bosworth. l.j K. I. 443. 8 Atl. 339; Batch v. Synies, 1 Turn. & It. 92; Lawsou v. Dickenson, 8 Mod. 300; Ex parte Sterling, Ki Ves. 258. But, if the property is left with him after the special purpose is accomplished, the lien attaches. Ex parte remberton, 18 Ves. 282. 197 In re Wilson, 12 Fed. 235; Nichols v. Pool, S!.' 111. 491; Du Bois' Ap- l>eal. 38 Ta. St. 231; Oakes v. Moore, 24 Me. 214. But not where the pos- session is obtained from him by force or fraud. Dicas v. Stockley, 7 Car. & P. 587. A lien is lost by a transfer. In re Wilson, 12 Fed. 235; Lovett v. Brown, 40 N. II. 511. 19S Balch V. Symes. 1 Turn. & K. 87; Cowell v. Simpson, 16 Ves. 275; Wat- son V. Lyon. 7 De Gex. M. & G. 288. 199 Bennett v. Cutis, 11 N. H. 163. 200 Cowell V. Simpson, 16 Ves. 275. 201 Schwartz v. .Teuney, 21 Hun, 33; Ward v. Craig. 87 N. Y. ,5.50; Ex parte Stei-liug. It; Ves. 258; Weed Sewing Mach. Co. v. Boutelle. 5(i \t. 570; Randolph v. Randolph, 34 Tex. 181. The attorney's possession is notice of his claim. Hutchinson v. Howard, 15 Vt. 544; Weed Sewing Mach. Co. v. Boutelle, 56 Vt. 570; In re Wilson, 12 Fed. 235. ATTY. & CL.— 3 ;n ATTt)UNKV AM> llIKNT. (§ 14 Iv a cuiniiioii law li<■ n.» piiss.-ssi..n of a jiid-iii. iil. •Tin' li.ii uhi.li an aiiorn.-y is sai.l lo lia\.- on a Jiid-iiniil -wlii.h is. pi-iliaps. an inriirn-. t .-xjno.ssion— is ni.-i. ly a claim to tin* .-.piiiahlc ini.-r ft i.-n»-t- of tin- fonrt to liav.- thai jndjini.-nt held as a secnrity for his «l.hi."-'' -Alllnin-h \v»- talk of an all.»ini-y haxin^' a li.-n npon a jnd-inicnt. it is. in fa.l. only a .laini or ri^dil t(.^ uhU for ili.- ini.-r N.-ntion .»f thf conn for his prol.-.iion. wh.-n, havin;; oliiain.-.l jml-,' ni.-nt f.ir his clit-nt. 1m- linds th.-r.- is a prohability of tin- rli.-nrs .1.- privin;.' him of his costs. "' -"^ In many slabs iliis lien has h.-.-n d.-.lar.-d and rc;;nlatt':«. •J Kdw. Ch. (N. Y.) lOS; ^V^i^J:ht v. ("..l)l.'i^'li. 'Jl N. H. XV.). :M1: M. -Williauis V .I.-ukins. 72 .\la. 4sn; r.>rlnisli v. Lc.iiianl. S .Miiui. :'.ii:{ ((Jil. li'lTt; M'>s.'ly V. Norman. 74 .Ma. 4*Jli: In rt' ^Vllson, Ili Fcl. 'S\r>: Hall v. I.avcr. 1 liar.'. .-.71; Lucas v. r.-atock. '.» H.-av. 177; Stcplicus v. Wcsmu. ;{ Hani. vV: C. o.\'t. au3 Barki-r v. St. guiutiu, 12 .M.-.-s. A: W. 441. 2«M M,.r.-.T V. <;iavcs. L. K. 7 g. 1'.. 4!i'.». - -Lifu,' pn.iMTly s|M-:iklu;,'. Is a word which applies only to a chattel; ilea upon a ju.l^'iii. -uf is a va;;uc ami iiia«-cunit.' e.xpresHlou; au»' the words 'e.iuitabic li.-n" ar.' iut.-iis.-ly undi'- lin.'.l." Itnnis.loii v. .Mlar.l, L' Kl. ^ Kl. 1'.'. •_'7. Th.- li.-u nf an atturu.'y up.)n a jml^'iiient is an e.iuitahle li.-u. .I..ues. l.i.-lis. S l-V-. It is iiui ivc.^rniz.il by (-omiiK.n law, but only in t-.iulty, unl*-ss dc.-lan-.l by statute. Forsythe v. HeviTldKc. r.2 111. li«>S; SlnnuouB v. Almy, lo:{ Muss. X\; Hak.-r v. Took. 11 .Mass. Sir,: ( Jet. -hell v. Clark. .". .Mass. ;{on; I'ott.-r v. May... :: .M.-. .'.t: Stone V. Hyde, '2'2 .Me. .'US; Ilobson v. Watson, .'14 M.-. 'Jn; I'atri.k v. l..-a.li. '2 Me- Crary. mp f.irm In the f..ll.iwliiu' stales: Alab.-ima: War- li.ld V. ( ampt»ell. :iM Ala. .V-'?; .la.kson v. Cloptou. r,i; Ala. -".•; Cnitial Kailr..ad \ llanklni; Co. v. IVttus. lilt F. S. Iin. .'. Sup. Ct. :W7; F.\ i.art." l,.-liiuau. Durr .^: I-,,.. .Vt .Ma. <;.{1. Arkansas: .Mansf. IHu. 1XS4, SK :M>:ir.. .'V.i.t'.i; I.aii.- v. llallum. :'.s Ark. :'.sr>: tJlst v. llanly. :;:•. Ark. -SV.',. C..1..i:m1..: Mills' Am. St is-.H. « § M) ATTOHNKYs' in \u<;i.\(; I.IKN. 3-5 As licl'drc slalfd, ;iii ;i I loiiirv "s lii-n ii|i(in tin- fiiiils <»f :i siiil in liinilcd (o (he scr\iccs rrmlcird tlicr<-iii; jiikI, ;illli(»ii;;li a ihiiiiIhm- of scpaialc suils iii\(ilvc llic saiiir t|iH'sl i(tri. and arc ai<,Mir'd ami dc- t en Milled t n;4c I 111 r. I lie I'lllils n\ (iln- air IKiI Sllltjrcl In a lii'H for scrv- •JIL'; . I. .1ms,, II V. M.Mill.iii, l.'! <"..I,i. VIW. L'J l':i.\ 7<;'.i: I'illiiK.rc v. WclN, 10 Colo. 21iS. ir» I'nc. ."U:?. ('(iiiiiccliciii: Ainlnus v. Mdisc, TJ ( 'oiiii. •H4; Cooke V. Thri'shcr. ",1 Comi. Ki.".; I'.ciiJ.imiii \. i'.ciij:iiiiin, 17 Coiiii. lln; (Jii^^'cr v. AViitsoii. 11 Ccniii. li;s. llDiid.i: <',u-ici- v. l',7; llawkius v. Loyh'ss. .••.•» Ca. 5; (Jrecu v. Express Co., :;'.» Cu. lio, TwifrK!* V. Chauihcrs. r.C (Ja l'7!>: I.itiU' v. Sexton. S!> (Jn. 411. 1.". S. i;. lim. Iiidinna: Rev. St. issi, § .-L'7(;; Jlamui v. Island Coal Co., (! Ind. A|)ii. V,:\, .'51 N. !■:. M<;. luwa: .McClains .\iiii. Cndc ISSS. SS l.'J>;i. 2tt4; Wiiislow v. H:iilroad Co., 71 Iowa. r.i7. :;•_' .\. W. ;;:;, § 7710; Kinney v. Tabor, Oli Mieh. .'".17. li'.t .\. \V. sc. .".12; Wells v. Kls.nii, Hi .Mi( li. IMS. M.ijnc: Hob- sou V. W:its(.n. ;;4 .Me. I'd; Ncwhert v. Cunuiii;;liaiii. .".(i .Me. L'.'.l. .Maryland: See Marsliall v. Cooper. 4:5 Md. 4i;; Strikes' Case. 1 Hland .".7. .Ma.s.sa<-liu- setts: Oeean Ins. Co. v. Rider, 22 IMek. 210; Thayer v. Daniels, 113 Mass. 120: Siininons v. Alniy. 103 Mass. .3:5. See Baker v. C^ok. 11 Mass. 230. Minnesota: Gen. St. 18!)4, § GllU; Dodd v. I5rott. 1 .Minn. 270 (Cil. 20.-,); For- biish V. Leonard, S Minn. 3o;{ (Gil. 2C.7): Ciowl.y v. Le l)u<-. 21 .Minn. 412; Henry v. Trayuor, 42 .Minn. 234, 44 .\. W. 11. ni-,-.,n: 2 Hill's Ann. Laws 1802. § 1044; In re Seo^';;in. 5 Sawy. .-.40. Fed. Cas.. .N'o. 12,.")11. .Mississippi: Stewart v. Flowers. 44 Miss. .->i:5; Fuyh v. Royd. 3P Miss. 320. .Montana: Comp. St. 1887. p. 023. Nebraska: Comp. St. 1887, § i:W; Patrick v. Leach, 2 McCrary, 035, 12 Fed. G(il; Abbott v. Abbott. 18 Nob. oo:!, 20 .\. W. :50l. New Hampshire: Youuj; v. Dearborn. 27 .\ II. :!24: Wliiteouib v. Straw, 02 N. H. 0.-(t: Currier v. Railroad Co., 37 N. II. 22::. .Vew .Jersey: Heister v. Mount, 17 N. .T. Law, 438; Braden v. Ward. 42 N. J. Law, TAS; Barnes v. Taylor. 30 N. .1. Va\. 407. New York: The lien is upon the cause of action, (ioodrich v. McDonald. 2 .\. Y. St. Rep. 144; Whitaker v. Railroad Co., 3 N. Y'. St. Rep. r.:57; McCabo v. Fopp:, 00 How. Frac. (X. Y.) 48.S: Lausiuff v. Ensif,'!!. 02 How. I'r.i.-. (\. V.i ;;(;;;; in re n.-iiley. 00 11. .w. i'i;i.'. iX. V.i f.l; Tidlis V. Bushnell. 0.3 How. Prac. (.X. Y.) 40.",; Oliwcll v. Verdenlialveu. 17 Civ. Froe. R. 302, 7 N. Y. Supp. Oi); Roonoy v. Railroad Co., 18 N. Y. :30S; Wrijrhi v. Wrif^bt. 70 N. Y. loO; .Marshall v. .Meech. .".l X. Y. 14(i: Cou-ldin V. Railroad Co.. 71 N. Y. 443. South Carolina: Sharlock v. (dand. 1 Rich. Law (S. C.) 207; Miller v. New ell. 20 S. C. 123. Tennessee: Hunt v. .MeClau- ATTi'JtNKV AM) tllKNT. G 14 i( rs r«-lulcT« lli)wiii;; states: <';ilir<>inla: ll. .VJ III I'CiS; M.iiols v. rl. S<> III. 4!»1: .niilh v. Vonn^'. <1L! 111. iM't. Missonri: I.owis V. Kiin-aly, 'J Mo. Api». ;{;*.; Fiisst'll v. Ilaih'. is .Mn. is; Kolx-its v. .\4 Isnii. !'■_'. .Mil. Ajip. I'S. (liiiii: Dirlil v. Friosici. ;i(' Ohio Si. 47."'.. Ti-xas: Casey V. Maivh, 30 Tex. iSO; Whiilaker v. Clarke, 33 Tex. r)47. Wisconsin: Conrtin-y v. MeGavock. 'S.i Wis. till). ••'•o .Massailinsetts & S. Const. Co. v. (Jill's Creek Tp.. 4S rd. II.".. 20T Nfwliert V. Cnnninj,'liani. ."lO Me. '2iU; Hooper v. Hrninla^'e. 2'2 Me. 4t!0; O.-.-an Ins. Co. v. Kider, JJ Pick. (.Mass.) L'lO; Wells v. llaicii. 4:; N. II. iMti; Whitcoiub V. Straw, tili .\. 11. U'.U; Weed Sewinj; Midi. Co. v. Hontelle. ."><] \ t. .".7n; Kx parte Kyle, 1 Cal. 331; Manslield \. Doiland. 2 Cal. .'ii»7; Massa- c imsctts A: S. Const. Co. v. Cili's Creek Tp.. 4S !• ed. 14.">; Con;.'lilin v. Uaiii-oad Co., 71 .v. V. 44:{. ^"" IlfiK-liey V. City of ('liic.i;;o. 41 111. M\t'>: Ilnniphrey v. Brownin;;, 4ti 111. 47<;; Kinney v. Talii.r, t;L' .Midi. .■•.17. -".• .N. W. St;, r^■\•2•. Wells v. Klsaiu, 40 Midi. lilS; Warlield V. Canipliell, .38 Ala. :.J7; MiDoiiald v. Napier, 14 Ga. 8J»; Carter v. Heniiett. ti I'la. lil I; Cart»'r v. Davis, 8 I'la. is;;; Pop.- v. .\riii- stron;:, .3 Sniedes A: .M. (.Miss.i L'M; .\iidre\vs v. Morse. 12 Conn. 444; Ilill v. I'.rlnkley, Iti Ind. Hi:.': Ccinnil RailnMii \ U.iiiluii- Co. v. rctins. li:; V. S. in;, ."i Suji. Ct. :;.S7; llersliy v. IMi \al. 47 Mk. s>\. n S. W. jr.'.i: In re Mailey. f)»; How. I'ra<-. (.X. V.i t;4; Tnllis v. Hnsliiiell. t;.*. 11, .w. I'l.ic (N. V.i 4i;.'; Oil- well V. Nerdeiilijilveii, 17 Civ. Pioc. IJ. ;!(;•_', 7 .N. V. Snpp. P'.'; .McC.ilie v. loy;;, i;ii How. Pr:ie. (.\. V.i Iss; l.jinslii^ v. I'aisiu'ii, t;:.' How. Prae. i.N. V.I :ifc'.. .\n attorney lias :i lieu on lii< dieiiis eaiise of .•ictioii for eompiMisation that may l»e dne him for services in th.at or any otlier proceediiu'. Can.ary v. l:u->*e|l. I'l .Mi^e. l:ep .V.t7. .".1 .\. V. Sllpp. IPl tft MnssurLuHetts \ S. Const. Co. V. Cills Creek Tp., 4s I'ed. 14.'.. § 14; AT'JCUNKVS' ( IIAIC<.I.\(. I.IKN. 37 ll7/rn Aftilrh.s. 'I'lic cli.ii-^iiii;,' litii (Ifics iHtl iillMcli iiiilil jinl;:iin-ii( is ciilcrcd. ill tin- iibscncc <)(■ siiiiiiitny i»';:iil;iti(»ii.-"' ll ddcs not iillmli iiitoii iciidi- tioii of \('i(Ii'6 How. I'ra?. (N. Y.) 42*;; Totter V. Mayo, 3 Me. 34; Hobsoii v. Watsou, 34 ^lo. 20; Hanua v. Coal Co., 5 lud. App. It;:?. 31 N. K. 84(1; ^Vl'lls V. Hatcli. 43 N. II. 24!.; Hooper v. ^Vek■ll. 43 Vt. 1G9; Weed Sewiug Mach. Co. v. Boutelle, 5G Vt. 570; Henchey v. City of Chicaf,'o. 41 111. 13<;; Ci'tclit'll v. Clark. .") Ma.ss. .3n:»; Brown v. KiKl<-y. 3 Teun. Ch. 1518; Kusterer v. City of Beaver Dam, 50 \Vis. 471, 14 N. W. G17; Courtney v. MetJavock. 23 Wis. r.22: Newbert v. Cuniungliani. .">o .Me. 231; Lamout v. Uailroad Co., 2 Mackey (D. C.) 502 211 Code Civ. I'roc. X. Y. 1879, § GO. 212 See cases eited iu note 210, supra. It lias been held that a settleiueut before judgment will not defeat the attorney's lien for cost.s and charges which are legally ta.xal.Ie. Swain v. Senate. 2 Bos. & P. (N. li.) 99; Cole v. Bennett, G Price. l.">; Morse v. Cooke. 13 Price, 473; Ka.siiuiu v. Stage Co., 12 Abb. Prac. (N. Y.) 324; Dietz v. McCallum, 44 How. Prac. (N. Y.) 493; Talcott V. Brousou, 4 Paige (X. Y.» ."01. See, also, Lamont v. Kailroad Co.. 2 Mackey (D. C.) 502; Parker v. Bligiiton. 32 Mich. 2i;\.r ;i srt otT ;i«-(iiiir»Ml ;iffi-n»'\ may rrcovt-r fnmi tlio olipositr party thr amount of his rjaim.-*- H.lsk. (T.-nn.^ It.'.; Skn^'K's v. Hill (!<>• M S. W :•.••..•. .niid.-r stMtuin; Fill- more V. Wt'lls. 10 Colo. L':'.1. ir. I'Mc. ;{4:{ ouult r sliituHM. 2i«\V;irnHd v. (':>iiiph«'ll. :w Ahi. .VJ7; lloylr v. Hoylr. lof. N. V. f.r.l. I-' .\. K. 7n<»: <"a\idl.' v. Kir.>. 7S Ca. SI. ."? S. K. 7; PliTco v. La wrfiicf. Hi I.ca (Tt-nn.) :>T2, 1 S. W. 20 J. -IT Hosworth V. Tallnian. or, Wis. J'J. 27 N. W. KH; 1. 1.. OC, Wis. n.'W. 29 .\. W. .'.42: Moli.iwk Itnnk v. Kurrows. Jolms. Cli. N. V.) :517: Porter v. I-.-in.'. S .Tohns. (N. Y.) X>1; Nicoll v. Nicoll, 10 Wend. (N. Y.) 440; National Hank ..f Winterset v. Kyre. .s Fid. 7:;.i; Kx parte Lehman. .V.t Ala. *>:U; Ihirst V. Sheets. 21 Iowa, ."(d; (;aK«'r v. Watson. 11 Conn. HiS. Ci-nerally. as to effect of set-ofT of jndjjmcnts, see Delauey v. Miller. S4 Hun. 2tt. :;2 N. Y. Supp. .'o.-,; Kolterts v. .Mitchell. 114 Tenn. 277 2!> S W. .": Kevins v. Albro. .^; Hun, '>'M, 3,3 X. Y. Snpp. 107V»; Field v. Maxwell. 44 Neb. IKK), U'{ N. W. 02. -I'-Dodtl V. I'.n.tt, 1 .Minn. 27o ((iil. 2o.-.i; ilurst v. Sheds. 21 low.i. .'.nl ; .Marshall v. Meecli. 51 N. Y. 140. -ladammon v. Chandler. 30 Me. 1.".2; Ilobson v. Watson. :\\ M.'. 2i»: Ncw- Pi-rt V. Cunnin^diam. ."O .Mc. 2:'.l; Weeks v. W.iyne Circuit .Iu. = 20 Albert rainier Co. v. Van Orden, Gi How. Trac. (N. Y.) 7!); Coster v. (;neii Point Ferry Cii.. .". N. Y. Civ. Proc. K. 140; (Joo«lricli v. Monalil. 41 Hun. 2.30. An attorney's lien for conipensalion att.iches to the judgment in the haiuls of an assignee for value witiioui n->ticc. Cvdi.-ino v. \\liilen:ick, :< MIm-. U»-|>. •"t;2, :5, H: I1«.\v. Pi:i<-. (N. Y.i 17;'.; Slr.ilinn v. llu n. All al l(tiii<'\ s rliai^iii;^ lii-n may !»•• waiMiI or lle asslj^nec of the judgment to (lie extent of liis lien.--" He may en- force his lien liy an action on Ihe jnd^nient in the name of his client,--' lull iioi in his own nanie.-'-" Wheie a fund is in cour'f, on motion, the coni'l will order |iaymenl to the attorney out of the fund.--" The lien continues and may he enforced. 1hou;^di the ilienfs debt secured by it is barred by the statute of limitations.--" SAME— CONFIDENTIAL COMMUNICATIONS. 15. An attorney cannot be compelled and -will not be per- mitted to disclose confidential communications made to him by his client, except — EXCEPTIONS (a) Where the communications relate to the proposed commission of a crime. (b) Where the disclosure is necessary to the attorney's protection. Co., 84 Hull, 4;!7. '.V2 X. Y. Su[)i). 3S7; Voig^t Brcwe'-y Co. v. Donovan, in."? Mich. 190, Gt X. W. :U;5; Crouch v. Iloyt, 24 Civ. Proc. It. »!0, :{U X. Y. Supp. 40G; Cauaiy v. Russell, 10 Misc. Rep. 597, 31 X. Y. Supp. Ii91; Mosely v. .lanii- sou, 71 Miss. 450. 14 So. 529; Foster v. Dauforth. 5'J Fed. 750. 228 See ante, p. 33. 225 Citizens' Xat. Bank v. Culver, 54 X. II. 327; note on enforcing' attor- ney's lien, 10 Abb. X. C. 391. 220 Jones, Liens, § 232; Xewbert v. Cunningham, 50 Me. 231; Mosely v. Xornian. 74 Ala. 422: Kx parte Lehman, Durr & Co., 59 Ala. t>31; Wottds v. Verry, 4 Gray, 357; Marshall v. Meceh, 51 X. Y. 140. -•-•■ St. ne V. Hyde, 22 Me. 318. But iiot without authority from his client. Horton v. Champlin, 12 R. I. 550. •--> Adams v. Fo.\. 40 Barb. 442. -••-'» \Valker v. Floyd. 30 Ga. 237; Smith v. Goode, 29 Ga. 1S5. 230 Higgins V. Scott, 2 Barn. & Adol. 413. -10 ATTOKNKY AND Cl.lKNT. (§ li> < '(iiiiiiimii«;itiniis iiiailf to :iii ;iiioiiic,\ !•> his iliciil for iln- imriMisi- • if olii.iiiiiiii: his .i»l\ i . ihf alluiiH'V will tiol lu- ((iiiiiuih-d (tr pfniiit led l»» disrhis.- liiciii. This |tii\ih;:(' i-«sts cm rrasdiis (»f piildii- policv, ^Mowiii;; «iiil of ihr ri»iili«h iilial tliafatlt r of tin- ichil iuii. and ihc mii-ssil \ thr clii'iit is undci- (»f iiiaiiiii;; full disclosuir 1<» ciiahh- iIk- attoimv in succrss- fidlv condnrt his »aus«'.-''' Tin- rxislfiicc i»f lln- irlalioii of allor- iirv and tliciii is essential to the cxisicinr (if Ihc |irivii(';;«'.-^- A formal rriaiiitr or tin- |ia\iiiiiii of a frr is not ntM-cssafV, '-''•'' liowi'VtT, and loninnmitaiions in ani icipaiion of fiu|th».vinrnt arr privilc;;- rd.-'* r»nt coininunitMt i(»ns niadr lo an aitoincv. noi in his jiro- ftssional tapacit.x . l»ut as a fiicnd, aif iioi [iiix ilf;,M'; Kuchfstfr City Maiik v. Suydaiu, .") How. I'rac. (.N. Y.I i:r.4; Eark- v. (Jrout, 4i'>: ( Jraiij,'('r v. Warrington, ;? (Jiim. (111.1 •_".>;•: ICockford v. Falvtr. L'T HI. App. »>n4; Rog.-rt v. l?ogt'rt, J i:d\v. Ch. (.\. Y.I ::'.•;•: I'.irkcr v. Cartti. l .Miiiit. (Va.i 2i:\. -'»•■' Haonn V. Frisliic. so N. Y'. .">'.M: .Mar Saiidf. Ch. (N. Y.I .'..'>: fust.r V. Hall. Ill IMfk. ^.Mas.s.) SU; lU'ltzhoovt-r v. HhiLkstock. :i Willi- il'a.i liii; Cross v. Ki;,'giiis. ."•(» Mo. 33"). Cl. Th, js \t. ToU; Cuts V. I'ic-kt'ring, 1 Vent. 1"J7. -■'« liacoii V. I'risltii', .so N. Y. :ili4; Thorp v. (ioov. i\v. .s."> 111. Cll; (MIon v. .MH'ord, :{:J Wis. I'Oo; Crus.s v. Uiggins, 50 Mo. .*i.'{5; Young v. State. (15 «;a. -•_'5; I'., ail V. (^iiiiiil)y. 5 .N. H. '.U. -li 1 (Jrct-nl. Kv. 8 LM4; Coltra v. Wulcott. 14 111. .Vt; Cady v. W.ilk.i-. CJ Mi 1.J4; Clark v. Uichards, , i;. H. Siullh (.N. Y.I v.). § I'l) COM-IDKNTIAI, ((iMMfNICATIONH. 11 iicv. llii' rrlnlidii of ;i i luincv iiikI .lirnt cniiiKit fxisl. iiiid ili<- r|. ."iC,;;; Iloliiuin v. Kiiiii..ill. SI \t. fi."."; S;iiii|>lf \. I'rosl. lo Iowa. lUIti; I'.anics v llaiii;.. 7 ("nsli. (.Mass.i ."iT"!. The nilf aiiplics only to llccnstMl attorneys, llolnian v. Kimball, '12 Vt. .">.". Cf. Hcncdict V. State. 44 Ohio St. f.Ttt. 11 N. K. V1T\. wlicrc it was hcM coiniiiniiicatioiis to a persou rejjularly iiracticinj; in a jnstice court, lint who was nut an atlnrncy. were privilcj^cd. 237 Foster v. Hall, IL' Tick. (Mass.) 81). 2-»s MobiK", ttc.. K. Co. v. Ycatcs, (iT Ala. 107: .tackson v. French. ?, Wend. (N. Y.l WM; House v. Hou.se. (il Mich. r>J». L'7 N. W. S.-,S: (J.allaKlier v. Wil- liamson, 2.*? Cal. ;{:n; Hartford Fire Ins. Co. v. KcynoUls, 'M\ .Mich, .'oi'; Hu;.dies V. Hoone. KiL* .\". C 1.''.7. !• S. E. liS(i. •-::i!. Henderson v. Terry. CJ Tcx. I'M; Hipon \. Daviis. l' .Xcv. ^ .M. :;Hi; Hu^rhcs V. Boone, 102 N. C. l.'^7, S. E. 2.S<;; Cady v. Walker. t;2 Mich. ir,7, 2,s N". W. .so.".; Bartlott v. Bunn, .jU Huu, .j07, 10 N. Y. Supp. 2ln; White v. State. S(i Ala. (i9, 5 South. 074. :i4u McLellau v. Lon^'fellow. 32 Me. 404; Wheeler v. Hill. 10 M»'. 320. -MI White V. State. SO Ala. (ill. H South. 074; Mobile etc.. U. Co. v. Yeates, G7 Ala. HU; Leiudecker v. Waldron, .j2 111. 283; Gower v. Emery, IS Me. 79; Chirac v. Keinicker, 11 Wheat. 2S0: Forshaw v. Lewis. 1 .Tur. (N. S.i 2(i3. 2*2 Fulton V. Maccrackeu, IS Md. .j28; Levy v. Pope, 1 MiMxly A: ^L 4lo. 2<3 Wheatley v. Williams, 1 Mees. A: W. 530; Brown v. Fayson. N. H. 443; In re Austin. 42 Hun, ."»l(i; Burnside v. Terry. ."1 Ca. ISO; Hebbard V. Hauuhian. 7i> N. Y. ."4: House v. House. 01 Midi. (i!». 27 N. W. 858; Cady V. Walker. 02 Mich. ir»7. 28 N. W. So.". An attoiiu-y may be asked whether he has in his possession a ceitain paper, in order to lay .-i foundation for the admission of secondary evidence as to its contents. Coveney v. Tanna- hill. 1 Hill (X. Y.l 33; .lackstin v. M"Vey. IS .Tcdins. (N. Y.) 33(X But he cannot be compelled to produce it or state its contents. Id. •J'J ATTOUNKY AM> } till- ;iltni!if\, *' or wlicif lie tlrii\ts i II ft >iiii:i I ioii l»y «ilisi'r\;i tittii ■'*■• or frniii iliird |M-isims.-*" it is mil |>ii\ ilr^'cd. 'I'lir i»ii\ ilr^c is for ilu' Itrinlit of the nn'_\ . Il (•<»iitiiiin's until wjiivfd Itv till' tliriil ^)\• his |irrs(iii;il !i'|irrsiiii;il i\t'.-'' ' Il is nut \\;ii\f(i iiH irlv l>\ MiaUiii;; tin- ;iltiirii«v :i uilnsln'rc the disclosure is ncccs 2«« Hon.-ic V. House, c.l Midi. (;!». 27 N. W. S.V.I. •J4.1 Croslty V. Bcr;:cr. 11 Vii'iav (N. Y.) IJTT; Hnmdt v. Kit-in, 17 Johns. (N. Y.I :v.\:t: ("hllllcotlR' Terry Vo. v. .Taiiicson. 4s 111. :j.si; stt)iicy v. M'Ncil. Ilnr- jMT (S. ('.) .".."7. .:««('r(why V. Hcr;.'fr. 11 I';ii;:f (N. Y.) .".77; lluiitt-r v. NNatsmi. li; Cal. .".f.."!; < lallaulHT V. Williiinison, '2'.\ Cal. :{;n. -*■ .M.'clH'Mi, Ak- 8 >; Ilatttm v. Rt.ldnsoii, 14 rick. (Ma.ss.l 41i;. The cli- ent may waive. Chase's ("a.He, 1 Hhuitl, Ch. (Md.) '2iH\; I'arker v. Carter, 4 Miiiif. (Va.) l.'7:{; Whitin;: v. Harney, ."{o N. Y. .U'So; Heiijaiiilii v. Cttveiitry. lit Weiiil. (.\. Y.I :U't; liank of I'tica v. .Mer.sti-eiiii. :: Ilarh. Cli. (.\. Y.i r,-2'i; It.ssler V. Schriher. .'W 111. 172; rassiiitni- v rassinnr.'. .".o .Mi.li. Cji;. if, .\. W. 17o; Ilaiiiiltoii v. People. I".* Mich. 17.'.; Pt.sler v. Hail, IJ I'itk. (.Mass.i s:i. •-«" \aillaiit V. I»o(leiiieail. 'J Atk .".U4; \\aitlrt.ii v. Wanl. .^lyle, 44'.i. 2««» People V. \'aii .Vlliiif. .")7 .Micji. •;:•, ll.'l N. \V. .'.'.U. See, alsti, Coveiiey v. Taiinahili, 1 Hill, .'..t; Hank of Ciica v. Mersereau. .! IJarh. Cli. (N. Y.) .VJS; Stale V. .Mewlierter. n; I.iwa, .ss; iMulley v. Meek. .*. Wis. •_'74; (Jniluini v. reopl«.. iui Harh. (N. Y.| iW; ci.iy v. Willi.Miiis, L* .Miiiif. (\:i i lo.-,; 'I'v ler v. I yier. rj<; III. .-.'_•.-., lii .\. i:. r.ic,. - ' 1 <; refill. i:v. 8 i:»o. -I P..iiik of I ilf.'i V. .Meisere.'iu, I". I'.arh Ch. (.\. Y.i .".-S; M.i \li:iiii v. I'l.ice. 4f; VI. 4:; I. § 1(5) TKUMIN \TI()N. 43 K.irv |(» llii- |ii ttlcci i<»ii (if llic :il I idiicv's own ii;,'Iils, ;is wln-i-c In- sih-h III' is sili'd liv his ciifiil. iiinl il Imtoiius lii;ilri'i;il Id slinw liir liallJIc •)\' liis ciiiiildniiciil III ihc insl riKl idiis of tlir clioiit.-'** 10. TERMINATION. Tlic rrl.ilidii o( niinriMv iiiid di'iil iii;iv !»<• Ifi'niiii;il ol in ;iiiv of till- \\;ivs in wiiicli any oilier a;,' N. K. T Him. L'.'iT, :'.J .\. V. Sujiii. ini:;. 254 Krekeler v. Thaiile, 4!> How. I'rac. l.'JS; Ginders v. Moore, 1 liarn. & C. s, 11 Wkly. Kep. T.'.l. S Law T. (N. S.) -425. 2. ''5 r. s. V. Curry, (J How. lUG; Boj'd v. Stone, 5 Wis. 1'40. WKST l>UULltiaiN(i CO., PK1.NTER.1 A.^D STERKOTYrKlW, 8T. PAUL, MI.N.f. PRINCIPLI' S OK 'DIE LAW OF FACTORS A MONOGRAPH liV EARL P. HOPKINS, A. B., LL M. Author of "Real Property." Etc St. Paul, Minn. WEST PUBLISHING CO. 1896 CoPYUuinT, 18'Jti, in WEST PUBLISHING COMPANY. FACTORS. I. F.'iclor Dcliiicd. L*. i;st:iliIisliiiM'iit of Krlatlon. I? 4. Implied I'owtTs of Fnctors. r>. Rights and Liabilities of Factors. (t. Duty to Exercise (Jood Failli. 7. Duty to Keep lMiii(i|i;il I'dsicd. S. Liability for NejiliKcnco. II. Duty to Follow InstrucUous. 1<>. Duty to Account. 11. 1 Miiy iu Reniirtinp. 11*. Del Credere Agents. 1.".. Kiglit to CoMunissions. 11. Right to Reimburs^einent. l.'>. Riglit to Indemnity. H",. Lien. 17. Rights against Third Persons. IS. Liabilities to Third I'ersons. 10. Rights and Liabilities of Principals and Third Per.sons. 20. Termination of Relation. FACTOR DEFINED. 1. A factor or commission merchant is an agent -who makes a business of receiving and selling consign- ments of goods, usually in his own name. The following- ai'i' souk* dcliniiioiis of a factor wliich are found in the books: "A factor is a specialist oiiii)lo_vod to receive and .sell floods for a comniission.'' ^ A factor is "an agent employed to sell goods or nieicliandise consigned or delivered to him by or for his principal for a compensation, commonly called 'factorage' or 'com- mission.* " - "A factor is an agent wlio. in the pursuit of an iiide- 1 Whart. .\g. S 7."..".. .\ factor may receive a salary instead of a commission. State V. Thompson. Il2u Mo. 11.'. L'5 S. W. 340. 2 Stoiy. Ag. § -.VS. KAt-TOKS— 1 2 FACTOItS. (§ 1 iHiidcjit calliiiu. is ciiiiiloN rd l»y niuitlicr lo sell jirniicrty lor liim, :iii»l is \csl((l |i_v ilif liillcr willi liir |Hisscssi(iii nr rtnilrdl of llic jirojicriy, or iuilliorizcd to rcrt'i\r p.iyiiK-nt ilicicfoi' fi-nm the ])ni'- rliiisrr." •'' The Icnii "tniumissioii iiicrcliMiit. " ;is nscd in (•oiniiion parliiiuc. iiHMiis ilic s.-iiut' ;is llic Ic^al It'iiii "fartni'." ' Tosscssion of the uonds with wliicli llir facloi' deals, and aullmiily In sell llu'in. arc essential lo llie (diaracter of a factor. A factor is dislin •mislied from a lu-oUer cliielly by tlie fact that lie lias |M>ssession of tile i^oods. while the lnoker docs not: and that the factor nsiially sells in his own name, while the luoker usually deals in the name of his iirincipal.' To constitute one a factor, he must make the sell iu^ of ^M»ods on commission a re.milai business. The icceipt and sale of a sinirle c(»nsiiiiiment would Ik insutlicient. Thus, under a statute riMiuirinj; factors to take out licenses, it is only the jwrson who iuteuds to euj^age iu the business of a factor as a source of profit — to pursue that as a vocation, either alone or in connection with some otlier business — who is required to obtain a license. Su( li a statute does not make it necessary for one who may gratu- itously assume the duties of a factor, or who may in one or two instances discharge such duties, to lake out a license." In some cases the term "factor" has been applied to agents to purchase goods;' liut this use of the word seems improper. A factor really means nothing except an agent to sell goods, though the factor may per- loini other duties for his principal in addition to those he performs as factor.^ One who puichases goods for a principal is really a broker. 8 Civ. Code Cal. § 20L'(J; Civ. Code Dak. § 11G8. * Brickell, J., in l'erkiu.s v. State, 50 Ala. 154, 15G. 6 Hiiriug V. Corrie, 2 Barii. & Aid. 137; IJarberl v. Ni'ill. I'.t Tex. 143; Snladiu V. MitcliclJ, 45 111. 7;i; lli;:;riiis v. Muoie, 34 N. Y. 417; Slack v. Tucker, li.5 Wall. :iJ\. Terkius v. State, 50 Ala. 154. 7 lirycL' V. Brooks, 2tj Wend. ;{(;7; Stevens v. Robins, 12 Mass, Iso, « See Patterson v. Lt-aki'. 5 La. Ann. 547; Emerson v. Manuliutiiriiig Co.. 12 .Mass. 2.''.7. < Hie who takes milk from I'annurs, manufactnrcs it into huttir and cIhm'sc, .-iimI sells the iirddiict, dedn<'linK a certain compen.sation pi-r ponnd, is a factor. First .\al. Hank of K\n\u v, Sciiwec ii. 127 111. 57.'J. 20 N. E. CkSI. Wlieir several al and faflor, the samo rules are ai)plic'able as in ordinai-y eascH of aj^ency. It may arise by an express contract of the parties; it may be implied from their acts; or the principal may ratify the acts of an unau- thorized factor, d IMPLIED POWERS OP FACTORS. 3. A factor has the folio-wing implied powers: (a) To sell in his own name (p. 4). (b) To fix the price (p. 5). (c) To sell on credit (p. o). (d) To warrant (p. G). (e) To receive payment (p. 7). (f) To insure (p. 7). 4. A factor has no implied pow^er: (a) To barter (j). 8). (b) To pledge, unless authorized by statute (p. 8). (c) To delegate his authority (p. 10). (d) To settle except for payment in full (p. 11). Bradford v. Kimborlfv, o Joluis. Cb. (N. Y.) 431. The captaiu of a steamboat, selliug tlour on fn'ij;ht, will not be considered a factor without express au- thority, or such as is implied by the usages of trade. Taylor v. Wells, 3 Watts (Pa.) U.5; Rapp v. I'almer, 3 Watts (Pa.) 178. \\'here a person emploj-s an- other to sell goods and wares at a distant place, agrees that the employe shall receive a certain sum yearly and a stipulated portion of the profits for his services, and the employe is to select and rent a business house, and employ clerks, and conduct the business, and all rents and expenses are to be paid out of the proceeds, if sufficient, but, if not, then by the employer, the pei'son con- ducting the business is a factor. AViuue v. Hammond, 37 111. OS); Blood v. Palmer, 11 Me. 414. A common carrier may occupy the position of a factor by selling the goods he has transported for the shipper, at the place of destination. Kemp V. Coughtry, 11 Johns. (N. Y.) 107; Wilhams v. Nichols, 13 Wend. (X. Y.) ."38; Harrington v. McShaue, 2 Watts (I'a.) 4J3; Taylor v. Wells, 3 Watts (Pa.) 05. 4 FACTO us. §§ 3-4 A factor is bouiul to conform to llic inslriiciioiis of liis coiisi,t;noi' as to the pficc of tlir ariiclo to be sold, the terms, tlic mode of pay- ment, etc.*" l?iit, in (lie altseiice of any iiistriiction.s, the consignor is in-esiinied by law to be accjiiainted with and to assent to the conrse of dealinjx which is nsually practised at tlie same market by othifs in the same line of business." A person who deals in a par- ticular market must be taken to deal accordin<; to the known, ^^eii- eral. .md uniform custom or usaj;e of that market; and he who ein- ]>loys another to act foi* him at a jtarliciihir jilace or market must be taken as intending' that the business to be done will be done according; to the usaj^e and custom of that place or market, whether the i>nncij)al in fact knew of the usage or custom or uot.*^ To Sell in His (hen Kame, Among the implied powers of a factor is the power to sell gooda consigned to him in his own name, without disclosing his princi- Iial.^^ This, as ah-eady stated, is one of the chief tests in distin- guishing a factor from a broker.^* 10 Van Alen v. Vanderpool, G Johns. (N. Y.) 70; Lelaud v. Douglass, 1 Wend. (X. Y.) 4W; Goodcuow v. Tyler, 7 Mass. 30; Day v. Holmes, 103 Mass. 30G; Cotton V. Hiller, 52 Miss. 7; Hall v. Storrs, 7 Wis. 258; Osborne, D. M. & Co. V. Kider, 02 Wis. 235, 22 N. W. 394. The factor must sell within a reasonable time after the goods are received. Atkinson v. Burton, 4 Bush (Ky.) 21)0. As to the place of sale, see Phillips v. Scott, 43 Mo. 80; Kauft'man v. Beaslcy, 54 Tex. 503; Wallace v. Bradshaw, G Dana (Ky.) 382; Grieff v. Cowguill, 2 Disn. (Ohio) 58. Where a consignment is made to a commission merchant for sale without instruction, in the absence of an establislied usage to the contrarj', of wliicli the consignor has or nuist be presumed to liavo knowledge, the con- .signee's authority to sell is limited to the place to wliirh tlie consignment wa.s^ originally made. Burke v. Frj'e, 44 Neb. 223, 02 N. ^\'. 470. 11 Dwight V. Whitney, 15 Pick. (Mass.) 179; Randall v. Kclili.r, 0(t Me. 37; Ka\i(Tiii;in v. Beasley, .54 Tex. .503. 12 Bailey v. Bensley, S7 111. 5.5(j; Stoiy, Ag. S§ <"'<•, '.m's VX)\ 1 Ciiit. ("oiU. dllh Am. Ed.) 83; Sutton v. Tatham, 10 Adol. & E. 27; Bayliffe v. Butterw.nth, 1 Welsh. H. & (}. 42S; Lyon v. CuIlMTt.son, S3 111. :V.\\ T'nltcd Stales Life \\\s. Co. \. Advance Co., SO 111. .5 to. >3 (Jraham v. Diickwall, S I'.ush (Ky.l 12; .Johnston v. I'sltoiiic, II .Vdol. ^S: E. 540. 1* Baring v. Corrle, 2 P.arn. i: Aid. l.!7; ante, \). 2. §§ 3-4) IMPLIED TOWERS OF FACTORS. 5 To Fix the Price. The <(»nsi^nni('iit of j^oods to u factor foi- sale, williout Hpccial insti'iH'tioii.s as to the i)rice for wliicli lio shall sell, confers \\\v)\\ him the rifiht to use his own judj;nieut as to what olTers lo accej^t, and the probable chanj^es in the market/'^ A sudden fallinj^ olf of the market after the goods are received does not alter the case, and the factor may sell without waiting: for instrufttions.*" lie may even sell for less than tlie amount he has advanced to the prin- cipal on the goods, and recover the ditference from the principal.'^ The i)rincii)al may, of course, fix the price, and then the factor must follow his instructions.^^ To Sell 0)1 Credit. A factor has implied power to sell goods on a reasonable term ot credit.^" He must, however, exercise the care that a reasonably prudent business man would use, and not extend credit to irre- sponsible persons.^*^ A factor, however, has no authority to give credit against the express instructions of his principal,'-^ ^ or wlien the usage of the trade is to sell for cash only.-- When a factor 15 Adams v. Capron, 21 Md. ISC; Conway v. Lewis, 12U Pa. St. 215, 13 Atl. 821}; Given v. Lemoine, 35 Mo. 110. i« Adams v. Capron, supra. IT Given v. Lemoine, supra. 18 See post, p. 15. Letters of instruction from a mercliaut to his factor, ac- compiinying a consisnment of goods, not expressly fixing the minimum price of tlie goods, but merely expressing an expectation that the goods, on account of their superior quality, would readily command a certain price named, will not be construed as fixing the minimum price; and if the factor sell for a less price than the one named, in good faith and without negligence, he Avill not be liable in damages. Yianna v. Barclay, 3 Cow. (N. Y.) 281. 19 Van Alen v. Yanderpool. G Johns. (N. Y.) 09; Robertson v. Livingston, 5 Cow. (X. Y.) 473; (Joodenow v. Tyler, 7 Mass. 3lJ; Hapgood v. Batcheller. 4 Mete. (Mass.) .570; M'Coiinico v. ("urzcu. 2 Call (Va.) 35S; Pinkham v. Crocker, 77 Me. 503, 1 Atl. 827. 20 Pinkham v. Crocker, 77 Me. .503. 1 Atl. 827; .Tames v. M'Credie. 1 Bay (S. C.) 204. 21 Hall V. Storrs, 7 AVis. 253; Bliss v. Arnold. 8 Vt. 252; .Tohnson v. Totten, 3 Cal. .343. 22 Kauffman v. Beasley, 54 Tex. 503; Harbert v. Neill, 49 Tex. 143; Xeill v. Billiugsley, Id. 101. G KACTOHS. (§§ 3-4 srlls on credit, lie iiia.v take iici^ntiaMc ]K\\n'V pa.vaMc to liimsclf.-* If tin* iiiakt'i- of tlio pajxT hfcomcs ins(>lvciit, the fadoi- is not liable for tho loss if he has exorcised due care.'-* I5nt, if the factor dis- counis such iiaitei' for liis own aecomuiodal i(Ui. he l>fC(»nii'S liable for any loss which occurs^"' thou^ih he lias iiui)lied jMiwer to discount paper friiH'iiials in one sale, and take a note for the whole sum from ihe purchaser payable to himself.-' 7(> Wiirrant. Tlu* nsaj^e of trade jienerally gives a factor power to warrant the (pmlity of the goods he sells.-** IJut the warranty must be a rea- sonable one. Thus, it has been held that there is no imitlieil au- thority to warrani ihat Hour will keep sweet during a long sea voy- 23 lUit wliere there was a sale on credit, and. at the expiration of the term of credit, the factor took a uote payable to himself, he was held personally liable. Hosmer v. Keel)C, 2 Mart. (N. S.) ^(IS. 24 Goodenow v. Tyler, 7 Mass. 30; Gorman v. "Wheeler, 10 Gray (Mass.) 'MVl; Leech v. Beardslee, 22 Conn. 404; Greely v. Bartlett, 1 Greeul. (Me.) 172. As to the dili},'euce he must use iu collecting notes, see Folsom v. Mussey, 8 Greenl. (Me.) 400. All such notes belon:; to the principal, and do not pass to the factor's assipnee in bankruptcy. Kip v. Bank, 10 Johns. (N. Y.) 03; Messier v. Amery, 1 Yeates (Pa.) 533; Thompson v. Perkins, 3 INIason, 232, Fed. Gas. No. 13,972. 25 Morris v. Wallace, 3 Pa. St. 319; Myers v. Entriken, Watts & S. (Pa.> 44; Johnson v. ollara, 5 Leigh (Va.) 450. 26 Greely v. Bartlett, 1 Greenl. (Me.) 172. 27 Roosevelt v. Doherty, 129 ^lass. 301; Chesterfield ^lanufg Co. v. Pehon. r> Pick. (>Lass.) 7; West Boylston Manufg Co. v. Searle. 15 Pick. (Mass.) 225; Ilapgood V. Batcheller, 4 Mete. (>Lass.) 573; ILamilton v. Cunningham. 2 Brock. ;!.".0, Fed. Cas. No. 5,978; Codies v. Cunnning, Cow. (X. Y.) ISl. But see SOtry. Ag. §§ 179n, 204a. Where a commission merchant takes a bond for a simple contract debt due to him for goods sold on commission, and includes in the same instrument a debt due to himself, he makes himself answerable to his princii)al for the amount of the goods, as he has deprived him of the means of pursuing his claim against his debtor, by extinguishing the debt due by simjtle contract. Jackson v. Baker. 1 Wash. C. C. 3'.M. Fed. Cas. No. 7,120. .\nd cf. Johnson v. O'llara. 5 I>eigh (^'a.) 450. ■-•»' Schuchardt v. Alh-iis, 1 Wall. ;',50; Woodford v. Mc( l.n.ilian. 111. S.->; lptf llic owner. '"* Aiilion<:li a factor or l>rolSU, alHruicd, ^'J N. E. 1»S12, l.")4 111. 30. A promise by a factor that he would write to his principal to get insurance done does not bind the principal to insure. It is a personal enjiafe'e- mcnt of tlie factor, for whicli tlie principals are not liable. Randolph v. Ware, 3 Crauch, r>o3. 3t. Wlieeler & MauufacturiuK Co. v. C.ivan, <"..". .Mo. S'.t; Win^' v. Ncal (Me.) *J .\tl. S81; Guerreiro v. Peile, 3 Barn. & Aid. (iU;; Victor Sewinj; Mach. Co. v. llcller. 44 Wis. li^. (N. \^ ll'T; Itoiliigucz v. IlcO'erman, "> .lohus. Ch. (N. Y.) 417; .Ncwl.ol,! v. Wright, 4 llnwlc tl'a.) 1".>.'.; Ivindcr v. Siiaw, li Mass. 3"J7; dray v. Agncw, 'J.'> 111. ;'.l.".; Kelly v. Sniitii, 1 Hlatchf. IJ'.M). r..l; Wright v. Solomon, li) i'mI. r,4; .MtTchanl.s" N:il. I^iiiil; of .Mfinphis v. Tnniiolni, VI llcislc. (Tciiii.t .V_»0; M<-Crcary v. (laincs. :..". Tcx. 4s.'i; Falcrson v. Tasli. -J Siiangc. 117S; Dan- tdgny V. Duval, ."> Term U. 004; Ncwsom v. 'fiiornloii, C lO.-ist. 17; Craliam v. Dystcr. '1 Starkh', lil; Martini v. Coles. 1 .Manic vV S. t pe, Shipley v. Kynicr. Id. 4M; Solly V. Kathbonc. '1 Manic \- S. LMIS; Cockian v. Irlain, Id. ."'.ot. not.-; I'.oyson v. Cohs. <; Mnule \- S. It; Fichling v. Kymer. '1 I'.rod. \- H. <;.".',e. i^ueiroz V. Tnicman. :'. Harn. iV C. .WJ; llouito v. Mos(picra. 1! Hosw. (N. Y.) tot. Hut cf. Hutchinson v. Hours. <", C:il. .•'.SI; Led v. Wa.lsworth. .'. Cal. KM; Wright v. Soh.mon. 1J> Cal. CI; Mill.r v. Srhneidcr. in 1.,m. Ami. .".oo: M.Cnary V. <;aineH. .V. 'fcx. 4S.'i: l-'lrsl Nat. Hank v. .Nelson. :{S <;m. :101. <"]iclTn»au v. Nolde, G Melc. (.Ma.ss.) lib. The factor, however, ciiimot ttls- §§ 3-4) IMII.IKD POWKUH OF KAcTOItS. 9 The I'i^^-^Iils of (lie priiicijcil and f;u"fnr (Icjicnd on flu- I;i\v iikt- olianl, wliich has bt'cn adoplcd l»y the coiiiiiion law. IJy I his law a factor' is hut tlic alloriicy of his jn'iiuijcil, ;iii(l In- must pursue (he powers (l<'h';,s-|Irh'(l^»', and ad\aiiciM^' iiis nioin-y, acipiiics no title, as aj^ainst the jdinci- ])al. \or is it material in such a case wliether the pled^^n-e knew that lie was dealin;; witli a factof or not. If he knew the fact, lie was hound to know that by law the factor hail no autli0. c. 54; Pub. St. 1882. c. 71. Pennsylvania. Bright. & Purd. Dig. 1873, p. tiC.4. Wisconsin, Rev. St. 1878, pp. 854, 855, §§ 3345-3.347. 10 FACTORS. (§§ •'^-4 make it imssiMc foi- jxTstnis led;;ed, by [>aying ilu- amount which the pledgee has advanced. Ti' Ui-h/jafe Aiithority. The mere existence of the relation of principiil and factor ], liUli, li'J4, §§ 3, 5, G, 14. Khode Island, (Jeu. St. 1872, p. 2G1, e. VIW; Pub. St. ISNli, c. 13G. I>ouisiaua, Act tS74, No. Iki. *'" St. Louis .Nat. I'.aiiU v. Ross, '.) Mo. .\pp. 31)1); lOvans v. TriU'iiiau, 1 Muody A: K. lU. *o Stollcnwcrik v. 'riiadicr, lir> .Mass. 'I'lA. ^T.icnuings v. Merrill, JU ^^■l■ud. (N. Y.) I); Stevens v. Wilson, n Hill (N. Y.> T)VJ.; id., :i Denio (N. Y.) 4Tli; Cartwrij;lit v. Wiliiu idinj,', 124 N. Y. yiV, First .Vat. Hank of Toledo v. Sliaw. Gl X. Y. l.'s:5; Kiiisey v. Le^Kclt, 71 N. Y. 387; llowlaiid v. WoodnitT, Go N. Y. 7li; ( "liica^'o Taylor Print in;; Press Co. v. I...\\<11, c,(i C;!]. i.-,i; .Mckcrson v. l>.nrnw. .". Allni (Mass.) ll'.t; Siollniwcrck v. Thaclier, It.". .Mass. Iili4; Cole v. .North wtstern Rank. L. U. lo C. P. :io4; Fuciitcs v. .Montis. L. K. 3 C. P. ."IGS; Id.. L. U. 4 C. P. !>3; .lohiis.iii v. Credit LyonnalH, 1' ('. P. Div. li'J I ; I'icUrriiiu' v. HiisU. l."> I'last. '.\S\ PdysKii v. Cole.s, G .Maulc & S. 14; h.ver v. I'larsi.n, ;'. l'.nrn. iS; C. :;s. <•' Warner v. .Martin. 11 How. liU'J; Mereliant.s" .Nai. P.aiik of .Miiiipliis v. TrfnlKdiii, VI llcisk. (Tenii.; :>'H). §§ 3-4) iMi>i.ii;i) rowKKs of kactors. 11 iiujilicd iKiwcr lo (|clt'-;al('.'"* So, a principal iiiav confer (he iHiwcr of dolt'j^ation or substitution, either expressly or impliedly,'" or may, after (Iclej^^ation by the ap^ent, ratify or cftnfinii the same, iu suoli manner as to make the subajient responsible dii-eetly to the l>rinci|tal; but (he fad llial llic principal knows that a siiba;;eMt or factor will be empbtyed does not relie\e the liability of the aj^fut to the principal. '^^ To Settle except for Payment in Full. As already seen, a factor may sell on credit, and receive payment according- to the terms of the credit, but that is tlie limit of liis power. A factor lias no liower, unless authorized by his prinayment of his own debts,°* even when there is a balance due him from the principal. ^^ lie has no power to compromise the claim of the prin- cipal. ^° A factor cannot bind his principal by submitting to arbi- tration a controversy arising out of a sale made by the factor; for in- stance, a claim for damages arising out of an alleged breach, of an im- plied warranty of the quality of the thing sold.^" When a factor has sold goods on credit, he has no implied power to extend the time of payment. ^^ 49 Harralson v. Stein, ~)0 Ala. o47; Johnson v. Cunningham, 1 Ala. 249; Planters' & Farnieis' Nat. Bank v. First Nat. Bank, 75 X. C. 534. A factor cannot deluge the selling of goods intrusted to him to his clerk. Warner v. Martin, 11 How. 224; Loomis v. Simpson, 13 Iowa, 532; Combes' Case, 'J Coke, 75, 70a. 50 Campbell v. Reeves, 3 Head (Teun.) 22G; Loomis v. Simpson, 13 Iowa, 532; Combes' Case, 9 Coke, 75. 51 Loomis V. Simpson, 13 Iowa, 532. 52 Sangston v. Maitland, 11 Gill & .1. (Md.) 28(5; Underwood v. Nicholls, 17 C. B. 239. But see Greenleaf v. Moody, 13 Allen, 3ti3. 53 Ante, p. 8. 54 Warner v. Martin, 11 How. 2U9; Benny v. Rhodes, 18 :Mo. 147; Holtnu v. Smith, 7 N. H. 440. 5 5 Benny v. Pegram, 18 Mo. 191. 56 Russ. Merc. Ag. 48. But see West Boylston Manufg Co. v. Searle, 1.5- Pick. (Mass.) 225. 5 7 Carnochan v. Gould, 1 Bailey (S. C.) 179. 5s Douglass v. Bernard, Auth. N. P. 278. 12 FACTOKS. (§ 6 RIGHTS AND LIABILITIES OF FACTORS. 6. The rif^hts and liabilities of factors will be considered under the following heads: (at Tuty to exercise good faith (j). 12). (b) Duty to keep principal posted ([). 13). (c ) Liability for negligence (p. 11). (d> Duty to follow instructions ( ji 1.')). (6 1 Duty to keep and render accounts ([). 19). (f i Duty in remitting (p. 22). (g) Del credere agents (j). 23). (h) Right to commissions (p. 27). (i) Right to reimbursement (p. 28). (j) Right to indemnity (p. 29). (k) Right to a lien (p. 30). (1 ) Rights against third persons (p. 37). (m) Liability to third persons (p. 39). SAME— DUTY TO EXERCISE GOOD FAITH. 6. A factor must exercise the utmost good faith in all his dealings w^ith his principal. <"iiM)(l fjiiili is tlu' i»;u;nu()uiit and vital ]>rinci])le of tho law j;(>\- t^rninj; tlu' relation of }»rinci]>al and factor, (lood faith must Ik' exoirisod by the factor. in all his dcalinj^s with the principal's floods. The factor is not permitted to make any profit ont of his a;,'en(v hcynnd liis Ic^iiiniale commissions."" lie caiiiiot jnirchase for himself the ; l{;ilti(jck v. (Uiiisoii, L'.'t liul. T.'i; Slmw v. Simu', 1 Cusii (Ma.ss.) li^S; Clnrku v. 'I'ippinu, 1) Hcuv. L'S-l. Tlie niaiiiii^' of advances l»y the fa:lilt'r V. Manufacturlii;; Co., 12 .Md. 'AS'A. So, lie caiuint ad as a^'ciil for thu purcLa.ser. Bcuslcy v. Moon, 7 111. Aiip. ll."»; Tahutl v. Cliew. L'T I'nl. § 7) FACTOU'S DUTY TO KKKP PUIXCirAI, TOSTED. 13 sinli coiisciit, tlic i»riii(i|i;il, on l(';iiiiiii4. 14 FACTORS. (§ 8 SAME— LIABILITY FOR NEGLIGENCE. 8. A factor is liable for all losses caused by his negligence in conducting his principal's business. A factor must exercise a sound and lionesl jnduiuoul in tlioso matters which are left to his discretion. lie will not be n'spon- sil)le if lie ai»pear to liave acted to the best of his altilitics, and not to have l»(vn guilty of breach of orders, ^n-oss negligence, or fraud."" It is not sulhcient, however, that he has not been guilty of fraud, or such gross negligence as would carry with it the badges of fraud. He is required to act with reasonable care and prudence in his em- jiloynient, and exercise liis judgment after proper inquiry and pre- cautions."^ If, through carelessness or want of proper examination and in- .v. S Creenl. (.Me.) {(Hi; ItMinI.ill V. K'clilni', CO Me. 37; (Jorm.in \. Wlircici", Kt <;iay (.Mass.) ;;(;l'; Thil- lips V. M(.ir, (ilJ 111. 1.j5; Chandler v. llogle, :>s 111. Hi. o Greely v. Bartlctt, 1 Mc. ir>7. "» Fosler v. Waller, ir> III. ici. § 9) FACTOU'S DUTY TO FOLLOW INSTRUCTIONS. 15 tlio ])i-iiicipal «;ivcs iiisl i-iid ions as lo (lie place of storinj;- liis <^(Hh\h until sale, those insdiiclioiis iimsl Ix' followed by the factor, or he will be held liable for any loss which occurs."^" A factor is not, however, to be held liable for not anticipatinj,^ a danj,^er altoilitit's iiiciii'ird nii nccnunt tlii'i-i'of ; ;nul llic f:itM«>i' is 1m. 1111(1 to olu'V his »»i-«ifis. 'I'liis arises from I In- nidinMiy i-flalion "f i'liiirijKiI and a;;«'nt. If. liowt-vci-, the factor inaki-s an himself annsi;;nnn'nt and advances or lialtiliiies. there are orders ;;i\fn 1>\" the consi^iiior, which ar<' assented to ]>y the factor, that the jl:ooo. "■• I'arkcr v, UnuKkcr, 22 Pick. (.Mas.s.) 40; .MarlU-Kl v. (JotKllmr. ;{ N. Y. «;j; lliiiMii V. \ainl2. When a ih>nianil winiltl lie useless or iiu- |inM-il(al)le, iiN where tlie |irln<-i|iMl is insolvent m in a distant cuuniry. mt dc- nintid Im Ufct sHary. lln»w n v. .MttJr.in, 11 I'ei. IT'J. § 10) KAClOU's 1)1 TV 'lo A((i)INT. 1'' ai" lialiilil it s iiKUi-rcd liv llu' fa<-1<»i', lo siispriid or ((tiilidl this liijil of s;tl«', cxtt-pl sJ, r>'J Iowa, o'M; Howard v. Smith, 5(j Mo. 314; Davis v. Kol)e, 3(J Miuu. 214, .30 N. W. (;<".2. s" Nflsou V. Kailroad Co., 2 lU. App. ISU; Weed v. Adams, 37 Comi. .'oS; Howard V. Smith, 50 Mo. 314. **'■ Brown v. Mtdran, 14 I'et. 479. Where goods are consijxned to a factor, without instructions, and witliout advances made or lial)ililies incurred l»y the factor, the principal may at any time control and direct him as to the terms, time, and manner of selling. Marlield v. Douglass, 1 Sandf. (N. Y.) 3G0. A fac- tor who does not accept the terms on which a consignment to bim is made cannot resist such other disposal of the goods as the consignor may make. Winter v. Coit, 7 N. Y. 288. 811 Terwilliger v. Beats, G Lans. (X. Y.) 403; Keighler v. Manufacturing Co., 12 Md. 383; Dodge v. Perkins. 'J Pick. (Mass.) 308; Clark v. Mdody. 17 Mas.s. 20 KAt^dKS. (§ ^^ Ii. M.cnniit. il is llir (liH.v <»f :i f;ictor l(. kiH-p b(><.lcs. in which sh:\ll I..' «-.in<'«il.v ciitcn'*! the lr:ms:i»li\\\ uhnc a fador has rriiilcn-d his acctuint of sales rc-,Milarly, aiul tin- s;uiic wcic sctlh-d wilh full knowl('dj;o of all tln-ii- iinus. and Iho naiiios of pmchascrs wciv not then ii-iiuiro*!. il is unrcasnuahh'. al any considci al.h- dis- lancr of time thrrcafiiT. lo siilijcal. after having ajiproved ;iiul recognized the Ilrst account, is not bound to ni>tice or object to the second, at the peril of Its being taken as a stated account, and held binding ui»on him. Cartwrlght v. (.Greene, 47 IJarb. . The owner of goods has a right to waive a tort, as against factors, and to bring an action to conijiel them to accoimt. Lulu-rt v. ihauvl- teau. 3 Cal. 458. Since be waives the tort, and sues the defendants as factors, he can recover oidy the net proceeds, deducting charges, etc., and not the abso- hite value of the goo., I'J .MM. .''XJ. «»> Id. »2 Lenke v. Sutlierhind, '27> Ark. lilU; Cooley v. Helts. LM Wend. fX. Y.) 'JOri. § 10) KACTOU's UUTV TO ACCOl'NT. 21 liis i>riiici|>;il, lie Itrromcs Mm' |iiiii(iiiiirs ddiloi- in tli.-il jiukmiiiI, :iii(i is iKil i-r(|iiir('(l lo keep Ihc t'llIl(|^. of Ihc |iriiiciii;il si'|tiir;i If fntiii liis (iwii. If he is jicliii;^'- lor scNcr.il pi'iiici|);ils, lie may iiiiii;^^*' all the IiiikIs ill a coniiiion mass.'" In iliis (cspcct, factors dilT*'!- fi-oni otlicr a;;('iils.'" Tlir jtayiiiciif of a balance of accoiiiil by a fact(H" or coimiiission iiicicliaiit lo liis jiriiicipal, after the sales made, and for llie ]nir|>ose of closing,' llie aciMMiiits between the paiMies, is an assiiinj)! ion of the oiitstandinjj; debts; and couseinienliy the pi-inci]ial is no lon;rer accountable or bound to refund advances, thonj^h the debtors finally fail to pay for j^'oods sold on credit, the proceeds of which Avere looked to for I'eimlmrsemeiil."'' I>iil a note ^iNcn for the lial- ance of an account, tliou<;h i>riiiia facie evidence of j)ayment of the account, may be explained and rebutted by proof as to the natui-e of the transaction between the original parties.*"^ It is the duty of factors who receive goods to sell to account for the proceeds iu a reasonable time, without previous demand, wliere a demand is impracti- cal)le or liighly inconvenient. Eaton v. Welton, 32 X. II. 3.J2; Lyle v. Murray, 4 S:iiidf. (N. Y.) .-'10. >•;' Vail V. Duranr, 7 Alhii (Mass.) 408. »■» Mechem, Ag. § r.liU. 5 Oakley v. Grensliaw. 4 Cow. (X. Y.) 250. But, to llirow this upon the factor, a clear intention to assume it should in all cases be shown. Robertson v. Livingston, 5 Cow. (N. Y.) 473. Accepting the final account of a factor, without objection, discharges him from all further liability to account for sales made by him on a credit, tlie proceeds of whicli lie lias not collected. Rion v. Gilly. G Mart. (La.) 417. »" Hapgood V. Batcheller, 4 Mete. (Mass.) ".73. Where a commission mer- chant sold goods on a credit, and then settled with his principal, giving liim a note for the balance, which he stated was to acconuuodate him, and, for tliat reason, lie made it payaltle a few days after the note of the vendee fell due. held, that this was not an assumption of the vendee's debt, but that, to throw tills upon the commission iiicrchaiii, a clear intention to assume it should have been sliown. Robertson v. Livingston, o Cow. (N. Y.) 473. In absence of any contract, or usage which may be evidence of contract, a factor is not liable for interest until he is in some default. Elleiy v. Cunningham. 1 Mete. (Mass.) 112. A del credere factor who, by the default of purchasers, has become liable to pay the price to his iirincipal. is chargeable with interest, without demand. Blakely v. Jacobson, 9 Bosw. (N. Y.) 140. KACTOK8. (§11 SAME— DUTY IN REMITTING. 11. A factor is not bound to remit until ordered to do so. If lie remits without orders, the remittance is at his own risk. A f;n-tor is uiidci" no ohli-jfnlion to rnnit to liis pi-iinipal :iny l»al- ;iinc (Ino tlu' laltci- uiilil lie is insinidrd in do sn.'"' A usap' or roiirsi' of dfalinj; ltd urcii the jiarlirs, liv wliicli tin- factor was to ifiiiii wiilioiil iiisiriicii<»iis. wdiild, of conrsr, alter tln' case."* Un- til tli(M-i> has liccii a dciiiaiid hy the ]irin(-ipal, he caiiiMit niaintain an action against the factor for any balance due. since the fnctor is j^Jiilty of no In-each of duly in felainiii;: the funds. '^ If the fac- tor undertakes to leiuil when no direction or authority luiH l>«'en ^iven, the remittance is at his own risk.'"" If a factor remit in some otlu'r manner than that ordeicd liv liis lu-iiicipal, or justified l>y the course <»f dealinj;" lietucen them, he assumes the risk him- self, and must Iwarany loss that occurs.'"' I'.ut where a factor is directed to remit in liiijs. if he procure such as are drawn hy jmtsous (»f undoulited credit at the time, it is a compliance with the duty lie has to iHM-form. The person on whom the bill is drawn rests in the dis<-retion of the drawer. The law jiresumes he has elTects f)f tlie drawer in his hands. If the fa«'tor has no cause to doulii tlie fact, he may take the bill consist- ently with the ' Il.'ilMtii V. Crjifls, 4 E. D. Smiili (.\. V.i l".>o; icnis v. I'miIs. to .Tulms. (N. Y.» i:.s.".; CfMilcy V. Itctts. 1:4 Wciid (N. Y.) 2o.!. K" Hrliik V. Dolscn, s H:irli. (.\. Y.) :;.;7. «"» IIuldfD V. Crafts. 4 K. I >. Smitli (N. Y.) I'.mi; Mriiik v. Dulscii. s Harlt. (.N. Y.) '.'^ll; CofiU-y v. R«*tts, 'J4 W.nd. (.\. Y.) 'Jo;?; (l.iiU v. M. .,..!>. 17 .MasH. 14rj. • "•• HaldMi V. Crafts, 4 i:. I>. ."^iiiltli (.N. Y.) I'.io; Clark v. .Muddy. 17 Mass. 1 J.V 101 Kerr V. Oittuii, 'J.'J 'lt\. 111. §12) UEL CUKDKUK AGK.NT.S. '23 sotialily r\|ici'lc< Morris v. Cleasby, 4 Maule & S. uOO; Thompson v. Perkins, 3 Mason, ■S.V2. Fed. Cas. Xo. 13.072. 105 See Lewis v. P.rcluue, :W Md. 412. •J 4 FACTORS. (§ 12 ill til.' (If. isiuiis thriMs.'lvfS ;ii>;irt frniii the diila foiiml in llir tii>in- ioMS. All tin- cMsi'S coiicfdi- il li> In- ihr iMLilil of lln' juiiK i|i;il In tdiliitl ]i;i\iin'iil l«> llic ;i.i:"'iil. mill !<• niaiiilaiii ;in ;iclitni liiiiisflt' a^niiisl ihc Imvfi- lo nM-(tV(>i- llir priic of tin- i:tio(is. oi' lo |iiiisiit' liis ^^kxIs or ilir Holes tiikrii for ilii'iii iiilo ihc lijiiuls of iliird |>;irlii's, i»r«'- ( isoly ;is if no del firdtio conirnti existed. '"" And. llM»H}j:h such iij:lit in llie |irin(ii»:d wonld seem to bo consistent onlv with a col- latenil nndeilakinj; liy the a^u'iit, yot the coiitntct del ci-cdcre. lie- ini: sni ^M-neris. is hfld in no wise to chanjjc Ihc (»fi;^inal and indi'- jieiideiit ( hararter of Ihc a^'-ciit's niKhM-takin;; to his piinciital.'"' A factor, nndef a i-inci])al. he then, in etfect. becomes the imi-iliaser. or is snh- stitnted for the iMirdiaser. and is honnd lo ]iay. no! conditionally, hut alisolulcly, iu the lii-st instance. Hence, after the factor has sold tin' <:o. .V la.iur wh.i ^ii.irMiit ics sales Ilia. If tiy him on coiiiniisslou is I'lilitlod to m-clit lor k»><"1s which lie had sold, ami cliaiK'-d to liliii.stlf in his account of sales, lint :iriei\vards reccive.l bai-k from the buyers, pursuant to autlDilty jrlveii by his priiii-ii»al ti> settle ;i dis- pute a.s to the (luality. and f.ir ^'.xuls recovered from tlie buyers for fiau.l in pr.euriHK the Kale. Tai.-ott v. .Mills Co. (Cl. .\rl).> .-{o N. V. Supp. fJl. .\ la.t'.f imiy, by c.jiitract, uuaraiiiy tli.- .•.»ll.'ttl«iii .»f lii.- price of v'oo.ls to !•.' s.ii.i, and also that their sale shall lealiz.- certain sums, lirst .Nat. Hank of i:i;;iii v. .Sehw.en, r>'7 111. .'.7.?. lio N. K. USl. Jo» Cartwrlght v. (Jreeii.', 17 r.aib. (X. V.i !•. § 12) i)i:i, ( iu:ni;i!K agicnts. 2') tlic S(»I\ciic\- (if the Ihivcis of llic i^riMids, (>!• i-;illiay i(. when it heroines due; and his nmleitakini;' is not collatei-al wiihin the statute of frauds. Imt is an oiijiinal and ahsoInt<' ajii-ccincnl, thai tiw prices f(»r which tin* },^(K)(ls arc sold, or the debts created by tlie sales of the j^oods, shall 1)0 paid to the principal when the credit -i\en on the sales shall ha\'e expired." ' '" The only nrchaser himself, for, as we have seen, the principal, not wit h- standinj,' this liability, may exercise a control not allowable be- tween creditor and debtor. AVhen the pnnci})al api)ears, the ri},rht of the factor to receive payment ceases. This shows that the efifect of the commission is not to extinjTuish the relation between prin- cipal and factor, but applies solely to a guaranty that the pur- chaser shall pay. It is not a contingent liability, so as to recinire legal measures to be exhausted against the j)ui-cliaser before th(» factor is bound, but an engagement to i)ay on the day the purchase money becomes due. Although the factor is absolutely liable, he is not bound to pay until the money becomes due from the j.ur- chaser."- Statute of Fravds. Htit it seems nowhere to be retpiirod that a guaranty of this na- ture should be in writing, for the liability is admitted to be origi- nal; and although the vendor may in such case forbid payment to the agent if he is insolvent, and maintain an action for himself, which in other cases is held to be the distinctive mark of a collat- 110 Bnullcy v. HicliardsoJi, 1?, Vt. TL'O. 111 Morris v. Cleusby, 4 Maule iV: S. .'>(;i». The del credere agent mu.st follow instructions like other factors. Ex parte White. 6 Ch. App. 897. He cannot receive payment except in the usual way. Catterall v. Hindle. L. It. 1 C. p. 180. 11- Leverick v. Meig.s, 1 Cow. (N. Y.l (145. L't) FACTORS. C§ 12 rial niiilfrtakiiii:. yt'l in lliis |»:irt itiilar »Miiiti"nl such a |tri\ ilt';j:c lo tlir \fii«l(»r is 1m'I(I iiol to allti' lln- ualnrr of liis claim ii|>t of aiioilicr. Tin- luiiicipal Iraiisfci-s ji riulil. alllniii;:li iiol llic i'\cliisi\r ri^lil, Ik the fai'lnr. to sue for and iHM'oxcr tin- money in liis own iiamc. ami lo cnjlcci llir dchl aiul Imld llio moin-y. acconiit iii:,^ only foi- ilic nd lialancc of ai-counl lictwd'H ihf parlies. Thus, ilic ddii cif ilic iMircliasci- is to some rxit-ni mado iln* |ii-ojKTiy of iIk- faciei-, and he lo that oMcnt 1m'- ronics lilt' iiurcliasor of ii. and so far suhsliluU's his liabiliiy in jtlaci' of ihat of llic imrchascr. The cfTocl of this ecial iiist iiid ion from the j»rincipal, then it will be at the risk of the latter, provided the instructions ar«' observed with projK'r caution and diligence on the part of the a;_Miit. r.ut if. by the enj^iiiil, 12 L)viuo (.N. Y.) 11* .siicrw<)ouer (N. V.» l."-7. Tlie ^'laranty of a del credere eoiimiission does not C'Xteu«l to tlie n'mitlaiire of funds in liie iiands of tiie factor; Imt if. liy a^ree- § i;j) FACTuu's liumv to commissions. 27 SAME RIGHT TO COMMISSIONS. 13. A factor is entitled to a commission on the sales made by him, unless some other compensation has been agreed upon. A factor usually receives liis compensation in a commission on the amount of sales made. The rate is fixf-d by the contr.ict of the parties, by IIm- usa-v of tradr, or iij.on a (piantum moniit.^*" The relation of i.iiiicipal and factor may exist liion^'li the factor receive» his compensation in the form of a salary."' A del credere agent usually receives an additional commission for <,niai-antyin;; the solvency of the purcluusers."^ Ordinarily, a factor who takes com- missions from his principal, who employs him to sell, would violate his conti-act should he also take commissions from the person to whom lie sells;"" but, when it is clearly understood by all the niont of parties, the factor is authorized to charge a commission for the guar- anty of bills of exchange remitted, his omission to charge such commission does not absolve him from his liability as guarantor of the exchange. Heubaek v. Uother, 2 Uuer (N. Y.) 227. 118 Story, Ag. § ii20. Whether a factor is entitled to commission on a .sale on credit where the purchaser fails depends on usage. Clark v. Moody, 17 Alass. 145. Factors in gold dust have no right to talce their pay or compensa- tion out of the gold dust. The gold dust is to be treated as property, and their compensation must be estimated in money. McCune v. Erfort, 43 Mo. 134. The suggestion in 1 Pars. Cent. *90, that a factor may be entitled to commissions when he is prevented without his fault, by some irresistible obstacle, from completing a sale, does not seem to be supported by the authorities cited. A factor cannot be deprived of his commissions by the willful act of his prin- cipal. The execution of a contract of agency, whose obligations are mutual, cannot be placed entirely at the principal's option. Thompson v. Packwood, 2 La. Ann. G24. 11" State v. Thompson, 12o Mo. 12. 2o S. W. .'540. lis Lewis V. Brehme, 33 Md. 412. A del credere c-ommission is not demand- able when the sale is made on credit, but is, nevertheless, paid for in cash, in consideration of a deduction of a certain percentage. Kingston v. Wilson, 4 Wash. C. C. 310, Fed. Cas. No. 7,823. iioTalcott V. Chew. 27 Fed. 273; Raisin v. Clark. 41 Md. loS; Lynch v. Fallon, 11 R. I. 311; Scribuer v. Collar, 40 Mich. 37o. 28 FACTOI19. (§ 14 parlirs lliat our \\ln» is \k\'h\ niniinissioiis !<» sill is :ils(i to rliai'^^t* commissions fi-diii iIh- linv< t. tlir trniismt imi is mn illi ^nl.' " A fiiclnr \\lii> is ^Miiliv of fi;uitl oi- iituli.Li'iirr in ilir tuntluff of Ills i»rinfii»;irs bnsincss foifcits nil cinini to tonimissions or olliiT tH)miH-ns;ilion f«)r his services.'-' SAME — RIGHT TO REIMBURSEMENT. 14 A factor is entitled to be reimbursed for advances made to the principal, and for expenses properly- incurred in conducting the business. A ]>riniii>al is Imund to n-inihurst' liis I'attor for all advances inado on ;:oo(ls consign* d to tho lattfi-, and for all sums i»rt»iMMly «-.\lM-udorin«i|iars acconnl.'-- Where a faitor niaki's ad- vances, indejteiident of an atiual aui-eenienl to that elVect. the lef^al inference is that they were math- n]M»n the joint creerson, and look alone to his lien for icimhursement.^-^ It is then a rigiit >-•'> Tnlcott V. Clu'W. Ii7 Ked. L'T.'J. 121 Fonlyc,. V. INpcr, If, Fed. .")1C.; Norninii v. rcpcr. 24 I'imI. -JO.?; Taltott V. Cluw. L'T Icl. L'T.J; Dodge v. Tih'sloii. IJ Tick. (.Ma.«ninn. 1 SlarkU', li:*,; llaiiKiiid V. Holiday, 1 «':ir. A: V. .'^^I, I><'favour, 11 .Mcic (Mas.s.) 171; Cnrli.s v. Cmuiniii;;. C Cow. (N. Y.) IMI: Siri>n« v. .Stewart, It Ildsk. (Tcmi.i l.;7. 123 Hurrlll V. IMiiliips, 1 (Jail. :V4), IVd. Cas. N... 2.-J«io; rdscli v. l»i.ksou hl8 making Ih.- .-idvanc.'H § lo) factor's kumit to indemnity. 20 of wliicli (lie f;i bushels of wheat, to be delivered at any time during the current year, at the seller's option, and after an advance in tlie price the principal refused to stand to the contnict, and the factor settled with the buyer by payin;: iiiui the difference between the contract price and the market value, the principal being unknown to the purchaser; held, that the principal was liable to his agent for the sum so paid by him, and also for his commissions. Searing v. Butler, CO 111. 575. 30 KACTOIJS. (§ IG t luTcfdi- frtiiii tlir iiiiii(ijt;il ; Imt icchmial inn niiist Ix- iiiadc acitud iiiLT t(» llic iMistoiu of tin* Inisiin'ss, williiii siuli rcasoiialtlt' time as would oiialilc llio (Ifft'iidaiits to i-oclaiin from the pailifs fiom whom liny jiiiiiliasrd. What uoidd lio a n-asoiialth' liiiic woiihl he for 1 III- jury lo dfcidt'.*-" SAME— LIEN. 16 A factor has a general lien on all the property of his principal in his hands, to secure his demands against the principal. The lien is subject to the following- conditions: (a) It does not attach to the goods of the principal until they come into the factor's possession. (b) It is extinguished by payment or -waiver. (c) It may be foreclosed or enforced by a sale of the property by the factor. A fatt<»r has a Vwu, not only for his connnissions. but for his expenses in c (inducting tlu* business, for advances nuule to the \n-\u- <-il>al. and for lialiilitios incuiii-d by the factor lor tin- principal. '■' i2« Heach v. Branch, 57 (Ja. .'iC'J. 1^' Kalon V. Tnicsdail. r>-2 111. ."iOT; Matthews v. ^I(•nc(l^'cI•, 2 McLean, 14.". Fed. Cas. No. U.'JSU; ^•:lil v. Dmant. 7 Allen (Mass.) 4US; llaebler v. Lutt^'i-n (Minn.) ♦« N. W. 7L'o; ("olley v. Merrill. <; (ireenl. (Me.) 'A; State v. Tlumiii- son, V2U Mo. 12, 2."> S. W. 34G; IIod;,'son v. Paysou, ;{ liar. & .1. 'MV.); Nesniith V. CaleU'hMin;; Co.. 1 Curt. C. C. VM\, Fed. Cas. No. lo.TJl; .Inrtlan v. .lanus. :• Ohio, 8S. The lien does not cover delits liavin^jr no connection with the a;;ency. Stevens v. Robins, 12 .Mass. 1.S2; Iloujiliton v. .Nt.illlu ws. o Itos. \- ]'. 4.s.">; Drinkwater v. (Joodwin, Cowj). 2.'>1. And sih' I'.iory v. Honiiij;er, 4(5 M«l. r.O. The riu'lit of «'lee ext«'nded to create a lien for the money which Would lie<'onie due thereby upon u;<»< (is hcjij in pursuance of an ordinary i-onuncn-ial nlation. '"JMie doctrine of a factors lit n for a itinera 1 balance of ac( iituit never went so far as to cinbr:i<'e even tlie jtriee of j.'oods sold by a factor to his pritx-iital not <-onne<-ted with tlic uciici:il jmrposcs of their rela- tion as principal and a^eid." Thacher v. Hannahs. I Ktjb. (.\. Y.i 4o7. A factor's lien dersons.'-^ The doctiiiie of <:eneial lien in favor of a factor is not confined to a fxencral ;ij,^ency, but ni>|iiies ;is well to a limited nnmber f)f dis- tinct ti-ansaetions ns to a coniinnons dealing. Wliene\ La. Auu. 447. Where a factor indorsi's bills for his principal, such liability ^ives him, as a factor, a lien on a bill Iheu in his hands belouj,'iug to the prin- cipal, and indorsed to him for collection, to meet the event of his indorse- ments; and the fact that the factor receives a commission on his indorsements does not in any way alTect the general question as to his lien as factor. Hodg- son V. Payson, 3 Har. & .7. (Md.) lilVJ. A factor's lien for a general balance ac- crued in tlie lifetime of his i)rincipal does not attach to the property coming in- to the factor's possession after the principal's . 12^ Where a purchasing factor had transmitted two distinct orders for goods, and, on the arrival of the fii'st parcel, delivered an invoice of the same to his principal, and accepted his draft for the amount thereof, payable at a future day, it was held tliat, by so doing, he had waived his lien, which otherwise would have existed on the first parcel, for the price paid or responsibility as- sumed on account of the second parcel; and. upon his refusal to deliver up the tirst parcel, an action of trover was held to lie against him. Bryct.' v. HriKiks, 2(i Wend. .".Cm. 130 lloUingworth v. Tooke, 2 H. Bl. 50:;. The factor has only a special prop- 32 FACTOICS. (§ lt> (iwiiff iiKiy, ;il ;iiiy linif In f(irr adual sale, liy |»ayiiiLr tlic lialaiico ami tliscluir^'^ini; tlu' i-csjunisiliililics of ilir tartdi-, willidraw his ctTt'cis; aiwl. if (lie factor hcctuiu' iiisoh nil. ilic ^(mkIs remain the |irii|iril\ (if ihf iiiimi|)al, siilijfct lo ihc lien i>\' ihi- fad m'.''" Thfsr liens arc all the nature of the factor's emphjvment, and to encoaraj;e ad- \ances upon ijoods in his possession, or to be c(»nsi;_nied to liim, and are favored.''- The factoi-'s i-i;:hi to his lien is an a^M-eement wliich the hiw implies. '•''■' If llie factor lias sold the ^oods, and parted wiih the possession, he has a lien on the piice in the hands his ri,i,dit to the money, excej^t where the f.-iclor has nolliin;^ due to him.'-'* .\nd. where the owner aliens the property, the juir- cliaser takes it subject to the lien of the factor. ^^^ A oommissiou meirhant who has sold a i)art of the {joods left with him for sale is entitled to a lieu upon the residue.^^" The lien of a factor covers also money recovered on an insurance policy, taken out in favor of the i)rincipal.^^' Uut a factor has no lien lui troods of a stranji'er consijunied to liim by oiu* haviui,^ no rij^ht to do so.^^** In some states, however, it has been provided by statute that every person in whose name nu'rchamlise is shipped for sale shall be deemed the true owner so far as to entitle the consij^nee to a lien thereon for money advanced or securities given to the shippei- on account of the consignment, unless the consijiuee city. U. t>. v. Villaloujxa, 211 AVall. :;."■; Willianis v. Tilt. :M\ \. Y. olU; Heard v. Brew-or, 4 Daly (N. Y.) l.'JC; Hall v. Hinks, 121 Md. 4U0. 131 Ziuck v. Walker, 2 W. lil. lir>4, ll.lO. 131: Houubton V. Matthews, 3 Bos. it P. 4S.j, 4SS, 4l)S. 133 Walker v. Birch, G Term li. Ii(i2. 134 Brander v. Phillip.s, 10 Pet. 121; Brown v. Mclirann, 14 Pet. 470; Brown v. Combs, G3 X. Y. 5'JS; Drinkwater v. Uoodwiu, Cowp. 2.">(j; Houyhlou v. Matthews, 3 Bos. & P. 4S;». 13.'. Godiu v. Assurance Co., 1 i'.uiritws, 4S'J; Jordan v. James, 5 Ohio, 88; Katon v. True.sdail, .".2 111. 307. 130 Sewall V. .\i. J3H Bank of Koclu'Ster v. Jones, 4 X. V. I'.i7; 'I'liaclier v. II;niii;ilis, 1 U.ih. (.v. Y.I 407; Oliver v. .Moore, 12 Ileisk. ('I'enn.t -IS2; Kyiier',' v. Siiell. 2 Wash. C. (". 40.3, I"m1. ("as. No. 12.1!io; Bell v. Priwell. 2.3 I.a. .\nn. 7iM;; Suc- cession of .N'nrtoii, 21 l.a. .\iiii. 21S; llullaiid v. lliiiiilile, 1 Starkie, 113. § 10) FAfTOU's 1,1 KN. 33 had notice, by tlic 1>ill of hiding <»r- ollxM-wiso, llial Iho 8liipy)or waH not llic actual uwimm-.'"' These HlatntcK do not aj)iily, of coui-He, unless tlie real ownei" coiiseiilcd to the shipment. The acts op- erate as ail esloppri on liiiii for I he prolecl ion of I he factor. \\ ln-n the consij^nnieiil was made in \ioi;iii(»n of his ri^lits, Ik- is not esttipped,^**^ W/i^^ Lfssession, and do<'s not at- tach until the proi>erty on which it is obtained is in the poss(;ssion ot the factor.^*^ A great deal of difficulty luus been encounterel. 1** Marine P.auk v. Wright. 4.S N. Y. 1; First Nat. Bank of Chicaf^o v. Bay- l.'y. .llo Mass. 228; Davenport Nat. Bank v. Ilomeyer, 4.") Mo. 14.'.; First Nat. Bank of Batavia v. Kfxe, 109 N. Y. 120. Ki N. E. :n7. 1*5 Winter v. Coit, 7 N. Y. 288; Bank of Roclicst<-r v. .loiics. 4 X. Y. 4;t7; Marine Bank of Chicafio v. Wrij^ht, 4S N. Y. 1; Davenport Nat. Hank v. II(»- nu-yer, 4."> .Mo. 14."); Bruce v. Wait. :i Mees. & W. ir>. n'i .Mien V. Williaiiis. 12 I'ick. (Mass.) l.'!»7; Bank of Koi-hcster v. Jones, 4 N. Y. 4'.t7; Winter v. Coit, 7 .\. Y. "Jsn. n- Bailey v. Bailnad Co.. \U \. V. 70; Hoibrook v. Wi-lil. 21 Wciid. e\. Y.i ICil; .I Ohio, SS; Ilardcninn v. De Vauirlin, 4il (Ja. .V.Hi; El- liott V. Cox. 48 (la. :'.!»; Hcslia v. I'ope. f. .\la. <;:)0. .\nd sc*' \'allf v. Cerre's .\.o <;a. l.".o: D;ivis V. I'.r.'idlev, 2S Vt. US. .Vii.l see Brown v. Wij:i:iii. Hi .\. H. .'!12. § IG) factou'h lien. .i.> llic lien anaclics in llicsc cmsch, llicrc aic some coiilra dtM-isioiis."^ As lon}4' ixa the jjjoods rcniaiii in the posseasiou ol' lii<* i)iinai, I in* factor ac(inii'('s no licn.'^" J/c/w Lien. Lout. A factor's lion conliinics only wliilr (lie factor liiinsclf lias the possession, and llicrerorc if he pledges llic <:,(M)ds for his own di-bt^ or suffers them to be attached, or otherwise parts with them vol- untarily, the lieu is lost, and the owner may trace and recover theui, or he may sue in trespass if they are forcibly taken; for he has constructive possession notwithstanding the lien.^°^ None but the factor himself can set up this pHvilej-e against the owner. It is a personal privilege of the factor, and cannot be transferred, nor can the question upon it arise between any but the principal and factor.^ '^■- But, unless the factor does some act which amounts to a ixdinquishment of his lien, he cannot be deprived of it by tue creditors of the princii>al.^'^^ The death of the principal while the 149 Saunders v. Bartlctt, 12 Heisk. (Toun.) 310; Kinloch v. Craig, 3 Term K. 119. 150 Oliver V. Moore, VI Heisk. (Teun.) 4S2. And see Baker v. Fuller, 21 Pick. (Ma.ss.) 318. Wliere jioods were shipped to tlie consignor's agent, to be by him delivered to tlie factor, liis lien was lield not to liave attached. Brown v. Wig- gin, 16 N. H. 312. 151 Holly v. Huggeford, 8 Pick. (Ma.ss.) 73; Jarvis v. Kogei-s. lo Mass. 380; Jones V. Sinclair, 2 N. H. 31'.); Uaubigny v. Duval, 5 Term R. 600. A commis- sion niercliant advanced money to his principal on his indorsenu-nt, and cliar- ged tlie note upon whicli the advance was made in liis general account. Hcld^ that the mere cliarging of the note to the principal did not entitle the latter to its possession. The agent had a right to retain it as his principal's property until he was paid the balance of his general account arising in the course of tlieir dealings. Myer v. .Jacobs, 1 Daly (X. Y.) 32. Taking a note from the princi])al is not a waiver of the lien. Stoiy v. Flournoy, T>7i Ga. 56. But see Darlington v. Chamberlain. 20 111. App. 443, where taking a judgment note was held a waiver. That neglect to enforce the lieu will operate as a waiver, see (Jrieff v. Cowgull, 2 Disn. (Ohio) ,">8. 152 Holly V. Huggeford, 8 Pick. (IMass.) 73; Barnes Safe & Lock Co. v. Bloch Bros. Tobacco Co., 38 W. Ya. 1.58, 18 S. E. 482; .Tones v. Sinclair. 2 \. H. 321; Ames v. Palmer, 42 Me. 107; Daubigny v. Duval. ."» Term li. 0(M1. The personal representatives of a deceased factor may enforce his lien. Gage V. Allison, 1 Brev. (S. C.) 40.3. 153 Eaton V. Truesdail. 52 111. 307; White Mountain Bank v. West. 4(; Me. oO • FACTORS. (§ in ;;ikk1s ari* in transit will not di-fcat n fattui-'s lim wliirli had at taclu-d.''* If ilic |>i-oj>cil,v hi' volunlaiil.v drlis fir rrasscilcd.''-' l?ut if ll\<' d»'Iivii-\ he sjM-cial. SI) tliat ilir farioi- siill i-ciains Ilir cnnlrol of tin- ino|MTty, the lim is not n'lin«inislird.''"' A fartor cannot slo]» j»i-o|»('iMy in ti-ansiin. wlu-i-o In- lias \(diin- lafilv drli\('rcd u\> the jMisscssion of it. on any jn-flmsc that he has a lien n].on it fof ad\antis inadf on acronnt of ihi- piinciital. lla\ inu parted with the possession of the j»i'o|»erIy. he has relimpiislied his lien, and cannot reass^-rt it. The owner may, in some cases. I'tLTain the posses.si<)ii of jti'ojierty sold and delivei'ed liy him, and liidd it until the i)ayinent of the considoration shall 1m' rei-ei\cd. r>i:t this cannot be done by a factor whose interest is sptH:-ial and connecte; Winue v. llaiiiiiKind, .'37 III. U'J; Jordan v. James, 5 Ohio, SS; Davis v. Bradley. 2S Vi. 118. A factor, having a lien on goods consigned to liim Ity viriric of an agret^ luent with LLs principal, do»'s not preclude himself from insisting on his lien liy holding ont his principal as the owner of the goods. Seymour v. Iloadley. U Conn. 418. The conveyance by a princii)al cannot destroy or impair juiy lieu which the factor had previously aciiuired. Bard v. Stewart, 3 T. B. Mou. (Ky.) 72. I'-- .Matthews v. Menedger. 2 .Mcl.ran. 1 15. I'ed. (as. .No. '.»,2S'J. lit Winter v. Colt, 7 .\. Y. 2S,S. X60 Schlffer v. Feagln. 51 Aln. .'{.'{5. 10" Beehe v. Mend. :'.:'. N. Y. .587; (lage v. Allison, 1 Brev. (S. C.) I'.i5: Join s V. Tarleton, 'J Mces. A: W. (;75. § 17) KACTOK's IUGHTS against 'lUiUD I'KUaONS. o7 JIow Lien Enforced. ^^'(' lia\«' already seen'"' that a fact(»i' iiiav sell ciKtiijjli (if llic j,^<>(»(ls in his hands to satisfy Iiis lien, and tlial In- may so stdl aj^ainst \\w onh'i-s of the inincipai as lo time and jti-icc, if lie first jjives notice to tlic pi-incii»al t(> redeem."-' If, aftei- the salo, ii bahinco remains due the factor, he may proceed aj^ainst tlie piin- cipal ixTsonally.^"^ The factor is not, however, confined to tiiis remedy. lie may liave his lien foreclosed in equity, and will be entitled to ;i decree for any deficiency thai may icmain.^*'* SAME -RIGHTS AGAINST THIRD PERSONS. 17. A factor may maintain actions against third persons on contracts of sale made by him, and for injuries to the goods of his principal. A factor, in selling the goods of his principal, acquires contract rights against the vendee, and may sue him for the price of the goods sold,^'^'^ or for breach of the contract of sale,^*^** being ac- 161 Ante, p. 19. A factor, while indebted to his principal, cannot sell the property of the principal to pay obligations on account of the factoragi'. Alex- ander V. Mon-is, 3 Call (Va.) S'J. 162 Miller v. Price (Cal.) 89 Pac. 781; AVeed v. Adams, 37 Conn. 37S; Mar- field V. Donglass, 1 Sandf. (N. Y.) 30(). 163 Whitman v. Morton, 46 N. Y. 8nper. Ct. 5.31; Giliou v. Stanton, 9 \. Y. 476; Corlies v. Camming, G Cow. (N. Y.) 184; ^lottram v. Mills, 2 Sandf. (N. Y.) 1S9. 104 AVhitman v. Ilorton, 46 X. Y. Super. Ct. 531; Gihon v. Stanton, 9 X. Y. 476; Denuey v. Wlieelwriglit. Go Miss. 733; Strong v. Stewart, 9 Heisk. (Tenn.> 137. i65Toland v. Murray, 18 Johns. (X. Y.) 24; White v. Chouteau. 10 Barb. (X.. Y.) 202; Ilsley v. Merriam, 7 Cush. (Mass.) 242; Gii-ard v. Taggart, 5 Serg. & R. (Pa.) 19; Graham v. Duckwall, 8 Bush (Ky.) 12; Miller v. I^a, 35 Md.. 396; Sadler v. Leigh, 4 Camp. 195. The factor may collect, in his own name^ notes ft)r his principal's goods, which arc payable to himself. Van Staphorst \. Pearce, 4 Mass. 258. The factor may maintain an action against a ware- houseman for a breach of his contract to store the goods. Allen v. Steers, 39 La. Ann. .5S(;, 2 South. 199. But a factor cannot maintain an action against a carrier for delay in transportation when his lien lias not attached. Cobb v. Railroad Co., 88 111. 394. ie« Groover v. Warfield, 50 Ga. 644, 3S FACTOHS. (§17 foiiiilalilt' tt» his |iiiii«i|);il for ilic aiiHuml rc'covci*'^!. As will lie Sfal rann-it cm otV lln- facloi-'s i-ii:lils ihrrrin."'" if lln- fador txi\cs the jiiircliasiM- iiolicc of his litn. jiavan-nt \>\ the latter to the prin- cijKil will not i-cliovo him of lialiilitv to the factoi-.''" Wln-n a factor sncs a pnichasn- on tin- contract of sale the latter may avail himself of anv defensi'S which he has a;;ainst tiie iirincipal '"' or aj;ainst the factor;'"'- l)nt the purchaser is not allowed to avail himself of set olTs against tiie princi[»al to an extent that would defeat the faclol-"s lien.' " •' It has Iwen seen that a factor has a s)MM-iaJ propei-ty in tlie {joods of his jirincipal, so far as they come 1o his hands. This is by vir- tue of his lien. This s]>ecial ]>roiK'rly j^ives him the riLilit t(» sue for and recover- it if illeij;ally dis]>ossessed.' "^ or 1o maintain tres- ]>ass for injury it may sustaiu by a wron;;doer, precisely as if he was the -general owuer.*'^ Nor can a tort feasor question his 10' Tost. p. 41. 108 Ki'lh'v v. .Miinson. 7 .Mass. 'AV.); (loldcn v. r»'vy. 1 Car. Law Ucpos. aL'T. i«9 Hudson V. (Iran;;!'!-, .". P>arn. iV Aid. '27. I'o St(»ry, Ag. § 4L'4; Drinkwatcr v. (loodwln, Conip. '27>\. 171 Gric-e v. Konrick, h. K. '> g. H. 344. »*2 (;iJ)son v. WinttT, ."> Barn. «.Sc Adul. 1K>. 173 DrinkwattT v. fJoodwin, ("owp. L'.")l. Sec ante, p. — . i^MVinnc v. llanuiiond. I'.l 111. '.I'.i; ]lnil)niuk v. Wight. 24 Wend. (X. Y.) Hi'.t; Ladd v. Ark»-ll. ;{7 N. Y. Supir. Ct. ;;.">; (luruni v. Carey, 1 Abl). Vviu-. (S. Y.) 285; Fitzhu^'li v. ^\■ima^. U X. Y. n.lO. He may maintain replevin for the gofxls. even against an <>lti<-t'r who has attached them on i)recept against the general owner. His consent to l)e(-ome keeper of the goods for the attach- ing ofM(-er does not defeat his right Xo maintain sudi aition of replevin. ?7.'. C. s. v. N'illalonga. L'.'. Wall. :'.."; I'if/.lmgli v. Wiin.-ui. !» N. V. ."..'.'.i; Connn V. Carey, 1 Alih. Prae. (.\. Y.) '2s:>; Kobinson v. \Vel)h, 11 Hiisli (Ky.) 4(V4: I'.eyer V. I'.ush, .%() Ala. IK. ^^■here bnildlngs are destroyed to arrest a con- tlagnitlon. ji factor may claim damages for goods desti-oyed. to the amotnu of his lien for i-liaiges, etc., lint he camiot claim the value of the goods for the lienetit of the owner. .Mayc sues a sli-aii^ci- for a ronvcrsiuii (if lln- jtriiiciiKirs ^^nods, Ihc iiicasiirc ol (laiiia|j sues the principal ov some one standiii^^ in I lie pi-iii- (•ipal's place, as an atlacliin;i cit'diloi-, llie i-ecovcrv is liiniicd (o the value of llie factor's special proiiei-ty; that is, to the ainonnL (iC his lien,''^ SAME— LIABILITIES TO THIRD PERSONS. 18. A factor may be liable in contract to purchasers frora. liim, or for conversion to the real o'wners of goods ■wrongfully consigned to him. The liability of factors to third persons with whom they contract in relation to the business of their agency is the same as that of other agents making contracts on behalf of principals who are disclosed or undisclosed.^'^ Foreign Facfoi's. It was formerly considered that factors, acting for merchants resident in a foreign country were personally liable for contracts upon the fact of possession; it grows out of the I'ight to the possession. Gorum v. Carey, 1 Abb. Prac. (N. Y.) 285. 176 Wiuue V. Hammond, 37 111. 99. 177 Heard v. Brewer, 4 Daly (N. Y.) 136. 17S McCullough V. Thompson, 4-5 N. Y. Super. Ct. 449; .Tohnson v. Mcf'anip- bell, Baxt. (Tenn.) 294. When the proceeds of a sale made by the factor are appropriated bj- the principal, with the consent of the factor, to the use of a crcdittir of the principal, the factor is bound to hold the proceeds for that purpose. Lowery v. Steward, 25 N. Y. 239. Where a consignor directs the proceeds of certain bales of cotton to be applied by his factor in payment of a specific debt of his son, he is warranted in countermanding the direction at any time before the factor has thus appropriated the money, or entered into an agreement Avith the creditor who is the object of the remittance to hold it for his use. AValton v. Tims, 7 Al:i. 47o. A factor has the right to pay the proceeds of property sold by him to the owner, although he may know that the owner has promised them to his creditors. Pearce v. Roberts, 27 Mo. 179. A factor who sells oil, with a warranty of quality, without designating himself as "agent," is personallj- liable on the warranty, altlumgh he has settled with his principal before notice of the breach, and altliongli the vendee was in- formed before action brought that the factor was not acting for himself. Hastings v. Levering, 2 I'ick. (Mass.) 214. 40 FACTO us. (§18 iiKidc bv tlit'in for tlu'ir rin|>lov('is, iio( willislnndini; tlu'V fiillv dis- closcil at llio limo tlio cliaraclcr in wliicli tlu-v wnc adinj;. "lu such cases iho ordinary itrrsuiiiption is thai civdil is j^ivcn to the ajient or factor. Tliis ])r('sniiiitlioii, liowcvcr, is lialdc to be i-ebul- ted eiilier l>y j>n»ofs that (he credit was uixni lo hoili iii'iii(i]ial and aiieiit. or to tli(» })rincij)al only, or that the usiijj^e of trath' (h)es not «'Xtend to the particuhir case." ^^° lint the rnh> above stated has bt>al on the laltor repayinj^ tlir advances.^*' RIGHTS AND LIABILITIES OF PRINCIPALS AND THIRD PERSONS. 19. Principals may maintain actions on the contracts made by their factors, and for injuries to their property in the hands of their factors. They are liable on the contracts made for them with third persons. A piineipal may, of coiH'se, sue on contracts made by the fac- tor/®** whether the purchaser knew at the time of the sale tliat he was dealing with a factor or not.^" The principal's right to re- cover the purchase price is, however, limited in two ways: Firsf, as already seen, his right of action is subject to the factor's lien on the proceeds of the sale; ^^^ and, second, when the principal was not disclosed, the purchaser can set off against him any claims he may have acquired against the factor, up to the time he received lieu on them, he is liable for conversion if he sells the crop, and pays the proceeds to his principal. Merchants' t^c Planters' Bank v. Meyer, 50 Ark. i'M, 20 S. W. 40G. 1^5 Newcomb-Buchanan Co. v. Baskett, 14 Bush (Ky.) O.-jS. And see Rol- lins V. Fowler, L. R. 7 H. L. 757. 186 Ilsley V. Merriam, 7 Cush. 242; Leverick v. Meigs, 1 Cow. (N. Y.) 045; Kelley v. Muuson, 7 Mass. 319; Merrick's Estate, 5 Watts & S. D. 187 Locke V. Lewis, 124 Mass. 1; Roosevelt v. Doherty, 129 Mass. 301; Guard v. Taggart, 5 Serg. & R. 19; Miller v. Lea, 35 Md. 390. 188 Ante, p. 38. A factor may make an entire contract for the sale of his own goods and those of a principal, or for the sale of goods of two or more prin- cipals. In such case no action can be maintained for part of the goods unless the contract made by the factors has been performed. Roosevelt v. Doherty. 129 Mass. 301. So, where the factor takes one note for such a sale, it operates "to suspend the right of action of any of the principals until the expiration of the credit given by the factor in taking the note. Hapgood v. Batcheller, 4 Mete. (Mass.) 573. 42 VACTons. (§ 10 iioiifc tif iIh' riirlils df llic itriiici|i;il. '""'•' If llic iMirrlinscr knew at tlir tiiiic (if (lie sail' that lie was dealiuj; with a lartor as siicli, he caiiMoi set up any olaims on Ihi- fador airaiiist tlu- inincipal/''** The spciial pi-oiu-rty which a factor aciiuircs bv icastii of his lien (hx's not th'i»r'i\»' Ilir ]»i'iiicijial. as uciici-aj o\\ nee, of his rii:;iit to maintain actions for the injui'v or conversion of his !ix<><'9 Locke V. Lewis. IL'4 Mass. 1; l',;nry v. Vi\ixv. lo Cra.v (.Mass.) ;{'.)S; Iliint- iujjton V. Kuox. 7 Cush. (Mass.) -JTl; lluj^au v. Short), 24 Wcud. (N. Y.) 458; Merrick's Estate. 5 Watts & S. (I'a.) J>; Parker v. Donaldson, 2 Watts & S. d'a.) al fioin tlie ])nr- €haser, tlion^^h the factoi- lias violated his instructions.'"'' The im- jdied powers of a factor cannot be limited, as against purchasers, by secix't insl ructions.' '"* count asainst a purchaser, boforo its maturity, and without a dcniand on tlic principal to n-imburse liini for advances, tlio assignee ac(iuires no ri^'ht to tli<' iiccount aj,'ainst tlie principal. Coujniercial Nat. Bank v. Ileilbronner, lOS N. Y. 131), 15 N. E. 701. AN'hcre a factor delivers j::oods of his ininriiial in jiay- ment of his own debt, the prin(ii)al may recover them, uotwithstandin;,' he is indebted to the factor to an amount as si'CJit as the value of the goods. Benny V. Pegram, 18 Mo. 191. If a factor to whom goods are consigned pledges them as owner, the owner of the goods has an immediate right of action against the pledgee for the goods or their value, though the pledgee is innocent; and the pledgee cannot reduce the amount of judgment against him by exhibiting the iiccounts between the owner and tlie factor. Bonito v. Mosquera, 2 Bo»w. (N. Y.) 401. A party receiving of a factor goods of his principal, in payment of or ns security for a previous debt due him from the factor, is liable to account to the principal for the goods, although he did not know that they belonged to the principal. Warner v. Martin, 11 How. 201). In an action by a shijiper against a carrier for damage to goods consigned to a factor, evidence that drafts drawn by the plaintilf for more than the value of the goods had been accepted and paid by the consignee was properly excluded. Hill v. Railroad Co., 43 S. C. 4G1, 21 S. E. 337. 104 Ante, p. 3. 195 Iliggins V. McCrea, IIG U. S. 071, G Sup. Ct. 5.j7. The autliority of factors and brokers acting in the line of their employment cannot be limited by private instructions not known to tlie iiarty dealing with them. Lobdell v. Baker, 1 Mete. (Ma.ss.) 103. 190 Schuchardt v. Allans, 1 Wall. 3.j9; Andrews v. Kneeland, G Cow. (N. Y.) :\rA; Randall v. Kehlor, GO Me. 37. loT See ante, p. G. 19S Dias V. Chickering. G4 Md. 34S, 1 Atl. 700. 109 Lobdell v. Baker, 1 Mete. (.Mass.) 193. 4i FACTORS. (§ 20 TERMINATION OF THE RELATION. 20. The relation of principal and factor is terminated (a) By the expiration of the time for -which the agency ■was created. (h) By the sale of all the goods consigned. ( c ) By notice by either party. (d By the death of either party. EXCEPTION — The principal cannot terminate the rela- tion, so as to deprive the factor of his special prop- erty in the goods. Tlu' relation of priucipal and factor continues until the ji^oods consijjned to the factor are sold, and the accounts settled, unless t he agency is sooner terminated by expiration of the time for which it was created, or in some other manner in which agencies are ter- minated. In the absence of a contrary agrtnnnent, a factor may put an end to the relation at any time; but he should give reason- able notice to the pi-incipal, and afford him an opportunity to take ( harge of any goods remaining in the factor's hands. The prin- cipal may also terminate the agency at any time, by reimbureing the factor for advances made and liabilities incurred; otherwise, the factor may retain the priuci]>ars goods under his lien, and, as has been seen, sell enough to satisfy his charges.-''" The death of either the factor or the principal tei*minates the relation except as lo the special property of the factor. This is not affected, and a factor may, after the i)rincipars death, sell to satisfy his lien.^"^ 200 Ante, p. .37. 201 llaiiuiionds v. Barclay, 2 East, 227. And sec .Jackson Ins. Co. v. Parteo, llei.sk. (Teuu.j 2!X;. WEHT I'UBLIHUINU CO., PKINTEUtI A.NU HTKUi^UTYlMCUH, HT. I'AUL,, MINN. 3 PKJXCIPLES OK THE LAW OF BROKERS A MONOGRAPH St. Paul, Minn. WEST PUBLISHING CO. 1899 CorYRIGHT, 1899. BY WEST PUBLISHING COMPANY. BKOKERS. Section. 1. Broker Defined. 2. Bstablislimcnt of Kolntion. 3. Legnlity of Object. 4. Inii)li('(l Powers of Brokers. 5. IJife'lits and Liabilities of Brokers. G. Good Faith— Acting for Both Parties. 7. Negligence. 8. Following Instructions. 9. Duty to Account. 10. Kiglit to Commissions. 11. Bight to Reinibur.sement and Indemnity. 12-14. Right to a Lien. 15. Rights against and Liabilities to Third Tersons. 11). Rights and Liabilities of Principals and Third Persons. 17. Termination of Relation. 18. ■Merchandise Brokers. 19. Real-Estate Brokers. 20. Bill and Note Brokers. 21. Loan Brokers. 22. Stock Brokers. 28. Ship Brokers. 24. Insurance Brokers. 25. Custom-House Brokers. BROKER DEFINED. 1. A broker is an agent who, for a commission and usually in the name of a principal, negotiates commercial contracts, including the purchase and sale of real and personal property. Brokers do not have pos- session of the property sold by them, except — EXCEPTION'S— Stock and bill brokers may have posses- sion of the property. It is diffionlt to find a delinilion of a broker which is accurate and yet specific enough to be of any value as a definition,^ The term 1 See Black, Law Diet. tit. "Broker." A person engaged in selling on com- mission, in a city, merchandise by sample for his several principals, having an BROKERS 1 2 UKOKKItS. '•lutikci"" is MpplitMl ill commtrcial tr:nis;i(li(»iis lo siidi a varidy of (livt'isc occupations that it is (lillicull to foiumlato nik's wliicli will pivcru the ri^'lils and lialiililics of brokers as a class. Cortaiii t^lasscs of brokci-s. such as bill biokci-s and stock brokers, are, more accu- ratt'l.v speakinjr. factors; ])ut lluir desijination as brokers has become unalieiably fixed in coinniercial iisa}j:e. The possession of tlie floods is what disiin^Miishes the factor from tlie sellinji; broker. Dn the otlier hand, the so called "purchasinii factor" is in reality a bioker.- Tawnbrokers \\lio loan llieir own money on the security of personal pioperly are not brokers at all, but are i)rinci])als in the busi- ness.'' A broker is, in general, one who buys or sells property for another. Keal-estate brokers are agents for the sale and purchase of real proi)erty. Merchandise brokers are those who deal in per- sonal jirojierty of a corjioreal nature. The ])rincipal classes of bro- kers dealing in incorjioreal }X'rsonalty are stock brokers, bill and note brcdiers, and exchange brokers. The business of brokers is not, how- ever, confined to the purchase and sale of property. There are insnr ance brokers who negotiate the making of contracts of insurance as the agents of the insured.* Ship brokers, in addition to the buying and selling of shijis. are agents for the making of charter parties. While it is probable that a broker might receive his conijiensjition otherwise than in the form of commissions, and still retain his char- acter as a broker, yet a salaried agent buying bills of exchange with the money of his principal cannot be re(iuired to take out a broker's licease.'^ office wb»M(' his s:iniiil«'S are pxliil)ito(l. is a l.tiai odiiHiitMcial broker, though he makes special arraiiuenieiits in advance with tliose liy whom he is employetl, and is their sole representative in his city. Stratford v. City Council, 110 Ahi. GIO, 20 South. 127. - See nionof;rapli on Factors, p. 2. 3 City of Little Kock v. Ilarloii. :V.\ Ark. 4.".t!. 4.">0. * Insurance brokers are the ajieiUs of the insured; insurance agents are tlie agents of the insurer. Hartford Fire Ins. Co. v. Reynolds, 'M Mich. ii(i2; Miller V. Insurance Co., 27 Iowa, 24; Sibbald v. Iron Co., S3 N. Y. 578; Lyons v. Wait, 51 N. .T. Eq. GO, 26 Atl. 334. 8 Pierce v. Thomas, 4 E. D. Smith (X. Y.) 354. And see post, p. 21. 9 Dickerman v. Ashtou. 21 .Minn. .538; Brown v. P:aton, Id. 409; Worrall v. Munn, 5 X. Y. 229. 10 Fiero v. Fiero, 52 Barb. (X. Y.) 288; Fischer v. Bell, 91 Ind. 243. 11 Civ. Code Cal. § HJ-2A; Revision X. J. p. 44G, § 10. •1 BROKERS. ;iiitlioi-ity cMiiiiot ircnv(>r coininissiuus. ihou^li llu- jiiiiK ijiiil h;is cum |ili It'll ilic salr iHjidi inird [)\ till' ltink( r. ciilici- nil tlic (^'Xpii'ss oral roulrart or on a anil contract to sell land he Is entitled to his compensation thereunder, \aiigliaii v. McCarthy, 5'J -Minn. lOJJ. 00 N. W. 107.^. la Clark, Cout. 470. 1* Tenant v. Elliott, 1 Bos. & P. 3; McBIair v. Cilihcs. 17 IIuw. 2;!2; \\\\\- strong V. Toler. 11 Wheat. 258; Com. v. Cooper, l.'{0 .M.-iss. 2.S.".. 15 White V. Benellt Union, 70 Ala. 251; Crawford v. Ku.ssi'li. wi it.irb. iN. V.) 112; John.son v. Hunt, 81 Ky. .'{21; Hall v. Potter, :'> \.v\. 112: I>niry v. Ilooke, 1 Vern. 412; Cole v. Gibson, 1 Ves. .Sr. .50;{; Deheiilmiii v. Ox, Id. 270; \Wx V. Thorp, 5 Mod. 221; Smitli v. Hniiiliig. 2 Vern. ;{Ii2. \\\i\ .f. Hoynlnii v. Hubbard, 7 Mas.x. 112. 118. »« Crawford v. KuBseh, 02 Barb. (\. Y.) l>2; Johnson v. Hunt, 81 Ky. ;{21. LKOALITY OF OIUECT. 5 Dealing in Fnlnrrs. The class of contraHs made by brokers in wliicli llif fineH IIKOKKHS. ir. ill ;i roniial cdMUiiri for ilic |iiinli;is»' ami sale (if iiiri cliaiKlisr \if 1m' (lfli\ »'i«'(i in the future at a lixcd inirc, ii is adiially iIk- ai^rct'iucnt nf ilic paitics thai tlic nn'nliaM(lisc shall not he (h'liscicd and the price paiih Imii iliat. when the slipuialrd time f- tiou is iimnaterial, exce]»t so far as it is made a part of tlu' contract, al- thoiiiih it need not be made expressly a part of the contract. To con stitute a waj^erinj; coulract. it is suflicient, whatever may be the form of tlie contract, that both parlies iiuderstand and inteml tliat one party shall not be bound to deliver the merchandise, ami the other to receive it and to pay the price, but that a settlement shall be made by the payment of the ditTereiice in i)rices.-^ The il|e«;ality of wagers on tiie lluctualions of the market dejiends on statutory provisions in the several states.^^ In some states the provisions are broader, and every contract for the sale or transfer of stock or lionds of a state or corp(tration is void, unless the \'endor is, at the lime of inakinji the contract, the owner or assij;inM' of the stock or bonds, or an ajicnt authori/,ed to sell.-'' The Illinois sialiite forbids broker lor another is (■.•illc(l for l)y tlic jailer. .iihI an .iiiiial lender lliercof matte, he is not exempted from li.aliilily for ilie price by llie fact tlial llie .stock was, In the tirst place, liouKlit for him l>y liie brolier on a maij,'in. Anthony v. TnauKst, 174 I'a. St. 10. :{4 All. l'S4. -1 Harvey v. Merrill, ir.0 .Mass. 1, I'li X. E. 4!>; Itarnes v. Smilii. l.'.O Mass. .'.It. :!4 .\. K. 40:',; Iteadles v. .MeKIialh. .S.-> Ky. L'.'50. .*! S. W. ^:>•2. -■- full. A. |). L'.")4; Laws Te.x. IHST, e. l.":; .Mansf. Iti-. Ark. § 1S48; Lawft .Mi.ss. 1.S.SL'. e. 117; Acts Tenn. l.SS.'{, e. li.'.l. - •• I'lil.. SI. .Mas.s. c. 78, S (i; Acts S. C. ISKl. No. :\iM\, p. 4.71, S I (unh'ss there ,- a lioiia ll(I»' hitentioD to make a delivery). .V siniil.ar |»rovision In .New York was repealed by Laws 1858, c. l.!l. 'Jliese siaiules have been construed lu the IMl'l.lKD rOWKItS TO HKOKKRS. / contracts for options (o Itiiv or sril a( n fiiliiic "iiiiv '^\:\\\\ or ollior com- modity, stock of any railroad or oilier coiiiiiaiis , oi- ^^oid';-^ that is, the sale of "puts" and "calls" is uiado illegal.-'' IMPLIED POWERS OF BROKERS. 4. A broker has such implied po-wers as are necessary, ac- cording to the usage of the business, to accomplish the object of the agency. These powers will be dis- cussed under the following heads: (a) To act in his own name. (b) To fix price. (c) To sell on credit. (d) To warrant. (e) To sign contract for both parties. (f) To delegate authority. (g) To receive payment. (h) To rescind or submit to arbitration. Pmcer to Act In llix Oini JVanw. According to the usage of business, brokers, as a general rule, make their contracts in the names of their principals.-® But stockbrokers usually act in their own names in buying and selling, and in many instances never disclose the names of their principals at all.^^ following cases: Stebblns v. Leowolf. 3 Cush. (Mass.) 137; Barrett v. Hyde, 7 Gray (Mass.) 1(J0; Barrett v. Mead. 10 Allen (Mass.j :j;{7; Brown v. Phelps, 103 Mass. 313; Price v. Minot. 107 Mass. 49; BuUard v. Smith, 139 Mass. 492, 2 N. E. 86; Gram v. Stebbins, G Paige (N. Y.) 124; Frost v. Clark.-^on, 7 Cow. (N. Y.) 24. 24 Rev. St. 1893. c. 38. § 130. And see Pickering v. Cease. 79 111. 3l.'8; Pixley V. Boynton, Id. 351; Sanborn v. Benedict, 78 111. 309; Wolcott v. Heath. Id. 433. -T. A "put" is a contract which gives an option to sell or not at a certain price. A "call" gives an option to bny or not. Black. Law I>ict. tit. "Tnts and Calls." 2 6 Saladin v. Mitchell, 45 111. 79; McKiudly v. Dunham. 55 Wis. 515. 13 N. W. 485; Evans v. Wain, 71 Pa. St. 69; Graham v. Duckwall, 8 Bush (Ky.) 12; Brown v. Morris, 83 N. C. 254. When a broker, not intrusted with pos- session, contracts in his own name, payment to him will not relieve the pur- chaser from liability to the principal. Crosby v. Hill. ."9 Ohio St. 100. '^ !Markham v. Jaudou, 41 >*. Y. 235; Hoitou v. Morgan, 19 N. Y. 170. b BROKERS. /',,t/\rs .^Tv•, .S.SV7/V/ to Accmnj)Ji(pe of liis eni|)lnyuieiil, he has power to bind his princi])al by whatever contract the carrying out of the laltei-'s commission may require.** The implied powers of brokers are fixed almost entirely by custom or usage. This is especially true when the broker is dealing in ^i regular market as a member of a board like a stoik e.xchangt or a board of trade. The rules of such body enter into all the contracts made by the broker, and are binding on his principal. A i)erson who deals in a particular market must be taken to deal according to the known, general, and uniform custom or usage of that market; and he \sliu employs another to act for him at a particular place or market must be taken as intending that his business shall be done according to the usage of that market, whether he in fact knew of the usage or not.-® There are, however, certain reasonable limits to the powers which may be conferred by usage. No usage is admissible to control rules of law''" or the provisions of an express contract.'" A usage which causes the bi-oker to assume the rehition of a princij)al to those 28 Le Ro.v V. Beard. 8 IIow. A7A\ Star Line v. Van Vliet. 4.'? Mich. .•5»i4. o N. W. 418: Sala.lin v. Mitchell, 45 111. 79; Craijihcad v. Pet.'rs,)ii. 72 X. Y. 270: .McBeau v. I'ox. 1 111. App. 177; Beuniughoff v. Iiisurauce (\^.. !•;; .\. V. 41K>: Lawrence v. (iallagher, 42 N. Y. Super. Ct. 309: Benjamin v. Benjamin, 15 Conn. .*i47; Ilnntley v. Matliias. KG N. C. 101; llanlee v. Hall. 12 Bush (Ky.) 327; Shackiuau v. Little, S7 Iiul. 181: M(Ali)in v. C'assidy. 17 I'cx. UK; Boyd V. Satteiwhite. 10 S. C. 45. -x Lyon V. Cnlbertsou, 83 111. :v.\: United States Lifi- Ins. Co. v. Advance Co.. SO 111. 540; Bailey v. Bensley, 87 111. 550; Hoiton v. Moijjan. 19 N. Y. 170; Lawrence v. Maxwell. 53 N. Y. 19; Nourse v. Trinie. 4 .lelins. Cli. (N. Y.) 490; Itosenstoek v. Tornicy. ;'.2 .Mil. 1<;9; l»ui;nil v. I'.iiii. '.»s .M.iss. KM; Siunnrr v. Stewart. 09 I'a. St. .•521; Sutton v. Tatliani. lo Adol. iV: K. 27. ^•0 Wheeler v. Newl)Ouhl. 10 N. Y. :\\\2; Hi«:>:ins v. Moore. ;;i N. V. n7; r.owen V. Newell. 8 N. Y. I'.MJ. •> Clark V. Baker, 11 Mete. (Mass.; 180; Blacken v. Assuranic Co., 2 Tyrw. 200. IMI'I.IKU I'OWKU.S TO BUOKKUS. •' eniployiii;^ him is iiixaiid.'-' So, a prin(i|)iil is not bound by a iisaj:*' of brokers when dealing;- witli hiokns in aiiollicf ?/•//• to Sign Contract for l]>>t}i l\irti,s. AI<'r(lian(lis<' *" and stock luokeis/' when they inako contracts for their principals, an*, so far as the statute of frauds is coiiccrnc*!. a;i«*nts for lioib [larties. When so acting', they have anthorify to do all that is ueirssiiry to bind the liar;:ain. and hence may si;,Mi the requisite memorandum. *- In this country it is customary for the broker to make an entry of the siile in a book kept for that purpose, and such an ♦ntry. if it contains the terms of the bai«,'ain, is a siilVuient memo randiim.*^ n(»i- need it In- si^'iie; Boardnian v. Spooner. 13 Allen, 353. 3* Andrf'ws v. Knecland. ♦! Cow. (N. Y.> 3M; Boorman v. Jenkins, 12 Wend. (N. Y.) 5. «« Sn.vdain v. Clark. 2 Sandf. (N. Y.) l.'W; Peltier v. Collins. 3 Wend. (.N. Y.> ■ir.I»; I»:ivis v. .^iJiields. 2t> Wend. (N. Y.) 341. «i Colvin v. Williams. 3 liar. A: J. (Md.) 3S. *2 Coddin^ton v. (ioddard. 10 CJray (Mass.) 43(i. Hut where, upon the mak- ing of a contract of sale and purchase, a broker acts merely to bring the parties together, after which they negotiate with each other dirivtly, the broker lias no jMjwer to bind them by meniorand;i signe«l by him. Aguirre v. .Mien. 10 Harb. iN. Y.) 74. The actual signing of the memorandum, being merely a ministerial act, may b*- by the broker's clerk. Williams v. Woods, PJ .Md. 22o. *» Coddlngton v. (Joddard, Ki (Iray i.Mii><.i l.u;; (Mason's K.x'rs v. Pailey. 14 Johns. (N. Y.j 4S4; Merritt v. Clason. 12 Jolms. (N. Y.) 102; Sale v. Uarragh. 2 mil. iN. \.) IM; Williams v. W(»o(Is. IC Md. 22i»: Haeon v. Kecles, 43 Wis. 22 1 . «« Coddlngton v. Coildard. k; «.'ray »Ma>.s.i 4;!t',: .Merritt v. Clason, 12 Johns. (N. v.; 102; Cla»ou*» i:.\rb v. IJalley, 14 Johns. u\. Y.) 48-1. JMI'I.IKU roVVKKS TO HUOKKRH. 11 Hiillii ictit/' IlKnijili. if lie delivers to biivcr .'ind solNr notes which ma It rially 133; Bacon v. Eedes. 43 Wis. 227; Bibb v. Allen. 14'» U. S. 481, 13 Sup. Ct. 050. per .Jackson. .7. •»" Benj. Sales, § 27t). *>- Heyman v. Xeale. 2 Camp. 337, per Lord Ellenborough; Thornton v, Charles, 9 Mees. & W. 802, per Parke, B.; Sievewright v. Archibald, 17 Q. B. 115, 20 Law .L Q. B. 520, per Lord Campbell. C. J., and Patterson, J.; Thomp- son v. Gardiner, 1 C. P. Div. 777; Thornton v. Meu.x, Moody & M. 43, per Abbott. C. J.; Townend v. Drakeford, 1 Car. & K. 20, per Denman, C. J.; Thornton v. Charles, supra, per Lord Abinger. But these authorities are over- ruled by Sievewright v. Ai-chibald, supra. Benj. Sales, § 2t>4. See Langd. Cas. Sales, 1035. The view was lu'ld by some judges tliat the entry not only did not constitute the contract, but was not even admissible in evidence, at least not without proof that it was seen by the parties when they contracted or was assented to by them. Cumming v. Roebuck. Holt N. P. 172. per Gihbs, C. J. ■•9 The statement is taken from Kerr, Dig. Sales, g 20. Cf. Benj. Sales, § 202. BO Cases cited in note 48, ante. 12 ORUKKUS. |i;»rti('R.*' I'lit if Miili mill's corrfsiuiiKl with one aiHitlicr. :iinl ditTiT fumi fhr »'iiir\. it Imcoiius ;i (lucsiinii of f;i< i foi tin* jury wlii'tlicr tln-ir ;irc(>pia!U(' liy llic itarlits ((iiistilults a m-w ((tiilrart, as <'\ idniccd by llu' notos.'- {-) If tlicic Ik* IK) signed cmry. the iiolfs. if llicy cor- rrspoiKl Willi one an«»flnr and state all the tfiins of llir bargain. top'thor constitute a nuMiioiaiidum of tlio contract.'^ Iliil if (lny do not rorr(\«:itond. or aro insiinicictu. no nionioiandnni at all exists. "' (3) Kither note by itself const iliitrs a inenioranduiii. in tlie absence of evidence that the sijjm'd entry or ilic other note dilVers ilieiefroin.''" Healestate brokers, however, have no power to si^n niemoranda which will bind both parties;^' their i)ower to si<:jn au aj^reenient wliich shall bind even the principal is denied in some cases,"^ though it is recognized, and. it seems, with U'tter reason, in otliers.''* Power to Delegate Authnritfj. A broker employed to make a contract for his principal nnist give the business his personal attention, because the principal is presumed to rely on his exjieiieiice and discretion. The broker must not dele- gate his authority.^" JJul mcMi* ministerial acts may be i)erformed by a subagent or clerk, .such as signing a memorandum of siile,°° or -■•» The notes do not constitute the contract. Thonitou v. Cliarlfs. '.• .Mees. & W. 802. per Parke, B.; Heyman v. Nealc, 2 Camp. ;i37, per Ix)id Ellenborough; Slevewrigbt v. Archibald, 20 Law J. Q. B. 529. 17 Q. B. 116. 62 Thornton v. Cliarle.s, 9 Mees. & W. S02; SievewriKht v. Ar<-liil>ald, supra. Bs Gooni V. Aflalo, U IJaru. & C. 117; Slevewri^lht v. .Xrclilltalil. supra. 1* Thornton v. Kempster, "» Taunt. 78. .^niith (.\. Y.) 17.'i; Shepherd v. Iledden. 29 .\. .1. Law, XW: .Monis v. Kuddy. 20 N. J. K<| ZJ*'.; O'Uellly v. Keiin (N. J. Krr. iV;.- App.) \'A Atl. ti)7:?; Chapman v. Jewett rVa.) 24 S. K. 201; Halsey v. M.)nt.'lro. !>2 Va. .".si. 21 S. K. 2r.s. ao Kono v. Dutcher, 18 -N. J. Kq. 401; Rutenberg v. .Main. 47 Cal. 21,*.: I'riii gl«' V. SjiauldlnR. 53 Barb. (N. Y.) 17; Ilaydock v. Stnw. 4o N. Y. :w>:\. i.verrul- liig ("oleiiian V. C'arrlguoH. IX Barb. (N. Y.) 00. fif Wllll.oiiH \. Woods, 1»; -Md. 220; Sims v. .M.iy, 19 Ihiii. c.(i7. 1 N. Y. SuiH). «;71; Allen v. McConlhe. 121 .N. V. .'.12. 2t; N. L. S12; Elwell v. Chamberlain, 2 IU»KW. (N. Y.) 2:10. : <;raliam v. Duckwall, s Busli (Ky.) 12; Crosby v. IJill, 39 Oliio St. lUU. And see Bassett v. Lederer, 1 Hun (N. Y.) 274; Gallup v. Letlerer, Id. 2S2. «5 Higgins V. Moore, 34 N. Y. 417. 80 See ante, p. 2, and monograph on Factors, 2. 7 Bid. Stock Brok. 91; Young v. Cole, 4 Scott. 489; Cropper v. Cook, L. 11. 3 C. P. 194; Mollett v. Kol)inson. L. R. ."> C. P. tHtJ. 08 I'eck V. Harriott, U Serg. &; R. (Pa.) 145. 1 1 nitOKKUS. /'otreT to /i,S('it)>7 or S)i?niiif f<> Arhitmtiim. A ItmUi'i- li;is no iiii|ilirti pnwcr to s.Mlc disimtcs f^rowinn out <»f coiitriuls iiiJidr li.v liiiii for his priueip.il Ity snlunilliii;; tlio dilTt -nines to ;irl>iiiation; '" nnd. luiviii^' \wm\v a coiiiratl. tliu brokiT has nu iiu- plitnl power to ressciiid it.'" RIGHTS AND LIABILITIES OF BROKERS. 5. Tlie rights and liabilities of brokers will be considered under the followinj^ heads: (a) Duty to observe good faith — Acting for both parties. (\i) Liability for negligence. (c) Duty to follow instructions. (d) Dutj' to account. (e) Right to commissions. (f ) Right to reimbursement and indemnity. (g) Right to a lien. (h; Rights against and liabilities to third persons. SAME— GOOD FAITH— ACTING FOR BOTH PARTIES. 6. A broker is required to observe perfect good faith in his dealing with his principal. He cannot act as agent for both parties, except — EXCEPTION— By the weight of authority, a broker may act for both parties (aj When he introduces a named person or sells at a fixed price, or (b) When both parties consent. A broker, hein;: trusted with the confideiico of liis priiuipal. is in a fiduciarv rehilion to liim. and is lioiiiid to exercise tlie iilinost ;,'ood faith. He iiiiist not |iiit liiniself in any [)osiiion which makes his in terest adverse to that of his principal. lie cannot ad as a^^ent for .several principals whose interestH are in conllict.'' Nor lan a hroker • • iDKriilunii V. WliitiuDn'. 7r» 111. Ii4. T> Snladiii V. Mllcli.ll. ir. 111. TJ»: Kelly v. Milling (^o.. WZ V.a. HT,. IS S. K. M):\. T» Murruy v. lieard, 101! N. V. OOo, 7 N. E. 006. UKilirs AM) I lAI'.M.iriKS OK mtoKKIC^. l-') iiisliii(lt' pririciicil Immoimc tlic scll«i <»r jnif fhjiHer/" niilrss il is willi lln- Iviiow Icd;^!' ;iinl coiisciil of iIk- priiiri I»mI/' Tn siicli ciisf it is no jiuswcr ilmt liis iiilfuiion \\;is lioiifsl. :iii cannot be coniiicllcd ty the other to inirchasc. and is vested with any disciclion or jndjinient in the ncjiotiation. his duties are in contlict, and he caniMJt fairly serve both parties. The duty of Ta Bain V. Browu, .■"»<» N. Y. liS.j; Tewksbury v. Spniance, 75 111. 187; Hugbos V. Washinjiton. 72 III. 84; Ilolberg v. Nichol. 14!> 111. 249. 37 N. E. &3: Stewart V. .MatluT. ;J2 Wis. 344; Sbaruian v. Brandt. L. H. C Q. B. 720; Mollctt v. Kol>- insnii, L. II. o C. I'. (K»'r>. A broker cannot soil to a linn of which he is ;i lucm- ber. Francis v. Kcrkcr, S.j III. 190. When a broker is authorized to sell at a certain price, and is to receive as compensation all above that price, it would seem that he niiijht become the pnnliasei- himself at the price fixed. But see Tower v. O'Ncil. GG Pa. St. X\1. "3 When a broker, autliorized to sell, by a subsequent agreement with his principal becomes the purchaser himself, he is entitled to hig commissions as though he had sold to a third person. Stewart v. Mather, .32 Wis. 344; Grant V. Hardy, a.'J Wis. G68. This is true even if he has been guilty of a fraud on one who became a co-purchaser. Hardy v. Stonebraker, 31 Wis. G40. •* Taussig V. Hart, 58 N. Y. 425. A custom for a broker to buy of or sell to himself, unknown to the employer, is against public policy, and illegal. Farns- worth V. Ilemmer, 1 Allen (Mass.) 494; Com. v. Cooper. 1.3o Mass. 285. -5 Bobbins v. Sears. 23 Fed. 874; Rice v. Wood, 113 .Mass. 133; Raisin v. Clark, 41 Md. 1.58: Meyer v. Ilanchett, 43 Wis. 24G. And see Empire State Ins. Co. V. American Cent. Ins. Co.. l.'iS N. Y. 446, '^A N. E. 200. A real-estate agent who sells the lands, for more than the price fixed by the terms of tiis contract, to another, for whom he is also agent for the investment of money, and secretly retains the excess, Is liable to a double recovery therefor by the aeller and purcha.««er. Lewis v. Denisou, 2 App. D. C. .387. •8 Taussig V. Hart, 58 N. Y. 425. For the right of a broker, acting for both parties, to commissions, see i)ost, p. 24. IG BROKERS. all aj;t'iit for a vendor is to sell ilic iuojmiIv al iln- hi^^licst juice: of thea^enl of (he purchaser, to Itiiv it foi- (he lowest. 'I'hese duties aro so utterly irrecoucihilde and contlidin;^' lliat they caiiutit lie |ieiff /(/>!■'< MiiltllriiUin. In some of the cases it is slated, as a hioad excejition to tlie rule tliai a broker cannot act for both parlies, that he may do so when lie is a mere middleman, and has no other duties to perform than to bring the parties to«;etlier to eonlrait for themselves.^* l»ut a broker does not act in «;ood faith to his lirst employer if he turn aside all proposals that are not accompanied with an a«lditional retainer or commission. Vet such is the temjitation upon him if he may levy a fee from both I'arties. When he has secured the retainer of the other party, he is interested, in order to win his double commissiou, to bring together these two, to the exclusion of all others. The interests of his principal are in danger of prejudice from this counter interest in the agent. And, besides, the broker is ordinarily and almost inevitably intrusted, to a greater or less extent, with the confidence of his principal.'" The jiroper limits for the exception to the general rule seem to be that the broker may act for both jiarties when the one lirst employ- ing him merely engages him to establish negotiations between the Itiiixipal and a named person; and in such case there is no reason why the broker cannot lawfully receive a commission from the latter.*" So, when a broker is employed to buy or sell at a tixed price, the 11 I?:irry v. .Scliniltlt. r>7 Wis. 17'J, 15 N. W. 'J J; F.inisworth v. Ik'iunicr. I .Mloii (.Mjisb.) 4;»4. Th Kuauiss V. HrewlnK Co.. 1-tU N. Y. 70. :tc. N. E. 807; Slcpel v. (lould. 7 I.aus. (N. Y.) 177; IImvIImiuI v. rricc. C, M1.k<'." Ucp. .•172, '2W N. Y. Sin>p. 757; I'.onwcll V. Aiild. 1> .Misc. Kcp. <>.'». lt> .N". Y. Supp. l.">: Rnpp v. Snmpsoii. 1(1 Gray (.Mass.) ;'.5»H; Orton v. ScoHcJd. CI ^Vis. :iSL'. '1\ .\ \\ . 'JCl : Il.riiian v. M.irllueau, 1 Wis. 151. '9 Walker V. OsKood. !»s .Mass. .'US; .SnituitT v. ('nllar. JO .Mirh. ^^~:^. "0 Sim- Knausfl v. Unwlng Co., Mli -N. Y. 70, 3G N. K. >*'>~; S< iliiinr v. Collar, 40 Mich. 375. KKilirs AM) IIAl'.IMTIKH <»K UltuKKIlS. 17 l>roI\v. a piic*- as [tossiltlc, and (his inlncsl is in idiilliil wilh tiial of the second iiiimiijai."- Sitnii l\if/i>s ( 'misfitti IK/. Whon liolli i»ailit's know of th<' (h)uldo apency of a broker, and con- sent lo il, he \i(dalcs no duly to eilhor luinciiial, and liis miployment by each is lepal."* ' Some cases, however, bave dec hired sndi double a<:encies to be ilb'^ial. as against public jtolicy."* The weight of au- ihcuity and the better reason suppmt the le<;ality of sm-li contracts, Tims, it was said in an Ohio case:^^' "We admit that all such trans- actions slKUild be re^Mrded with suspicion; lint, where full knowledge and consent of all parti<'s interested ar<' clearly shown, we know of no public policy or principle of sound morality whiili can be said to bo violated. It seems to ns, rather, that public poliey recinires that con- tracts fairly entered into by jtarties comijetent to contract should be enforced where no public law has been violated, and ikj corrupt purpose or end is sou-;ht to be accomplished. True, such agent may not be able to serve each of his principals with all his skill and ener^^y. He may not be able to obtain for his vendor principal the hij^hest price which could be obtained, or for the purchaser the lowest i»rice for which it could be purchased. But he can render to each a service entirely free from falsehood and fraud, — a fair and valuable service, in which his best judji;ment and his soundest discretion are fully and freely exercised. And in such case such service is all that either of his principals contracted for. Undoubtedly, if two persons «lesire to negotiate an exchange or a bargain and sale of property, they may 81 Bany v. Schmidt, 57 Wis. ITli. 15 N. W. 24; Montross v. E(M.v. IM Mi. li 100, 53 N. W. DIG; Alexander v. University, 57 Ind. AW. 8 2 Evrrliait V. Searle. 71 Pa. St. 25ij. 83 Kowe V. Stevens. 53 N. Y. 621; Alexander v. University, 57 Ind. 4t;«;; .I.is- lin V. Cowee, 50 N. Y. G26; Adams Min. Co. v. Senter, 2i«ioii of a viiilaliil piiblir polity wtniltl aiisc. It may hv sail! that sufli third jhtsom is an arbitrator cliost'ii t«) sfllK' dilTt'ivint's he- twi't'ii his «'iiiph>vfis. an a«:«iMV or oIVkc ;,M«'ally favon'd in the law. Ami Si. it i>. r.iit wliat is thf dist imlioii lM-t\v<'<'ii tlial employment and tlir one in the pieseiit ease, which >iioidd laiisc ilu- hiw lu fav.ir the former aiul aldior tlu' hitter?" "" SAME -NEGLIGENCE. 7. A broker is bound to possess and exercise reasonable skill and diligence. He is liable to his principal for losses due to his negligence. A broker holds himself out as possessed of ordinary skill in the bnsi iiess in which he is en;j;a«,MHl: and. when he undertakes ii ne;:otiation, he is bound to conduct it with reasonable dilijicnce."^ If be does this, he is not liable to his principal for negligence.'"* A money broker, to whom money is intrusted to loan, is liable if. by his want of care in estimatinj; the value of the land on which a mortgage is taken as se curity, his principal sutTers a loss.**" S(. if he fiuls to record the mort- gage, when that is jtai t of his duty.'^ A broker who, without suf- ticient information, advises his jirim i|.al to make a sale, will be held re.sponsible if the sale causes a h»ss.'^ IJut an insurance broker who «• Bell V. McCotinell, ."tT Ohio St. :;Im;, 401. »i SbipbiTd V. Field. 70 111. 4;J8: McFarlnud v. .M»("l.'os (Pa. Sup.) 5 .\tl. r^>: I'.aruard v. Coffin, 138 Mas.^. 37; Stewart v. Muse. 02 Ind. 385. »><• (JlHH'U V. Jobnson. SX» Pa. St. 38; Gettius v. Scudder, 71 111. SO; .Matilu-ws V. ruller. rSi Mass. 441;. Wlifu property I.'* placed wlUi a broker for sale, be is uol iKjuud to eouHunuiiate a sale, or prwure a purcliaser upon tb.- au're.Ml terms. \Val«b V. Hastings. 'JO Colo. •J43. 38 Pae. 3_'4. ^w .McFarland v. MeCleeH (Pa. Sup.) r> Atl. .'"m); Sliiplierd v. Field. 70 111. 43S. Wiiere defendant, a stock broker, took eertlUcates of stock as collateral security f ,r a loan be was autiiori/.ed to n»al;e for a client, witbout lnquirin« as to their validity at the office of the coriM.ration, which was aece.^^siltb- to him. or taking ..ilier precautious, and the certillcates proved to be forgeries, defendaut was Kullty of 8U< h nek'liKence as lo render him liable for the loss. Isliuui v. Post. 71 II un, IHl. 'S: N. Y. Sn|»|'. 211. lUW; Post v. I sham, Id. • » Stewart v. .Muse. 02 Ind. .'W-'i. • I Barnard v. 22. Authority to a real-estate agent to contract for a sale will not authorize him to make a contract for the sale of an option to purchase. Jones v. HoUaday, 2 App. D. C. 27'.». After preliminary corri'spoiHleiice. a real-estate broker wrote to defendant, stating that he could seU defendant's land (800 acres) for i^t.fKX), one-half cash, balance in one and two years at 8 per cent. Interest. Defendant telegraphed, "Accept the $4,CK»0 proposition." Held not to authorize the broker to contract to sell for cash. Kverman v. Herndon, 71 Miss. 823, 15 South. l.'5r». A usage of brokers will iidt justify a breach of instructions. Parsons v. Martin. 11 (Jray iMass.) Ill; Day v. Holmes, 103 Mass. 306. »« Morris v. Ruddy, 20 N. J. Eq. 236. A sale on terms more advantageous tli;in tlidse ordered by the principal will not bind him, unless he ratifies the sale. Ne.sbitt V. Helser, 49 Mo. 38:3. »" Laverty v. Snethen. OS N. Y. 522; Gray v. Murray, 3 Johns. Ch. (N. Y.) 107; Schmertz v. Dwyer. 53 Pa. St. 335. Where grain brokers employed by a dealer to buy and sell wheat for future delivery write the dealer that a contract which he has for May can be changed to June delivery, to which letter the dealer makes no reply, thougli he is in a position to do so. and the brokers then change the contract, the fact tliat the dealer receives and retains a statement sent him '20 BROKERS. »'r'« option."' :i brnkrr cMiuiot Inn llic simk liiiiiM-If. ;iii»l Iml.l ii mi his priiK-ijmrs jirciumi for f.O days."" Ih disolirv in;; inslrudions, a bmUiT may lose his lirn un nmncy or propiTty in liis hands."* SAME— DUTY TO ACCOUNT. 9. A broker is bound to render his principal an account of all business transacted on his behalf, and pay over any balance due the principal. Tlio duly of a broker in kccpin;; and rcndcrinpj acmunts to hi.s print ipal is practically tho sanic as thai of a factor.^"" He must keep accurate record of all his Iransutions. and render statements thereof on the demand of the principal. The bioker must i»ay over to the principal any balance remaining due him.^°^ SAME— RIGHT TO COMMISSIONS. 10. A broker is entitled to commissions for the service he performs. This right will be considered under the following heads: (a) Employment necessary. (b) Amount of commission. ( c) Acting for both parties, (d) Illegal contracts. (6) What is performance by broker. (f ) Performance within time given. (g) Sale completed by principal — Broker procuring cause, (h) Sale prevented by principal. ( i ) Exclusive agency— More than one broker employed. ( j ; Effect of requiring a license. tiy tin- liroktT. Kliowlng such «h:iiiK<'. (loos not sliow a nillflcnflim nf the liroker's act In making the changi-. Hjuiscm v. Hoyd, 101 U. S. .'mT. ic, .Snp. ("t. ."".Tl. • <« rickcrlng V. I»«'nH'rritt. 1(K> .Mjiss. 41(5. .\iid see Dny v. lloUni-s, 103 .Mass. »• Jones V. MnrkH. 40 III. .ll.'l. 100 Hc«' inonogruph on KactorH. p. 1!>. «o» IliiiiM V. Imiiion, [) luwji, r».s'J; Nuulsc v. rrlnif, 7 .1 dins. ("li. iN. Y.) 09. nil. Ills AM> I.IAIill.lTIK.S OF IJHoKKUS. 21 Einploijin mf Xrct ssi 1 1 'ij . A broker is ml it led lo coiiipciisiif ion in some form for tlie sfrviccK pcifoiMicd Cor his |tiiiiri|i;il. Hiil. Im-Ioic a broker can recover any form of comjiensalioii. in- miisi sln»\\ empIoviiieMl ; that is. lie must eslablish the exisleiiee of llie rehilioii ni' |irim-i|i,il iiiid liroker.'"- I'- ''^, 20 N. Y. Siipji. 67; Cook V. Welch, 9 AHcu (.Mass.) '.iTti); ('uinniings v. Town of Lake Realty Co., 80 Wis. :'.Sli, 57 N. W. VA; Hinds v. Henry. 30 N. J. Law, 328; Atwater V. Lockwodd. :\U ('(inii. 4.".; .Mesttui v. Da vies (Tax. Civ. App.) 3G S. W. SOTf. Waltou V. ("lark, .".4 Mian. 341, no .\. W. 40. Kut see, for facts held to show ^'aipliiynieut. Iloldeu v. Starks, 150 M.-iss. o; lias.sett v. Uo«ers, 102 .Mass. 47. .'57 X. K. 77L'. The one contracting to pay the commission need not bo the lieiit liiial owner of llie property to be sold. Jones v. Adler. 34 Md. 440. And see LaiKlsl.eryer v. Murray. 6 .Misc. Rep. 00r>, 2."> N. Y. Supp. UK)7; Bowles V. Allen (Va.) L'l S. E. (iO.">. To recover commissions from a corporation. a broker must i)rove einploynu iil by some one having power to bind the cor- poration. Tw(>lfth St. Market Co. v. Jackson, 102 Pa. St. 209. A wife has no power to bind her husband to pay a broker commissions. Harper v. Goodall, 62 How. Trac. (N. \'.) 288. Where a broker employed to sell defendant's farm on commission produces a purchaser, who takes the property at a price lixed by ■defendant, the latter cannot withhold the commission on the ground that when the contract of employment was made the broker had. unknown to defendant, already found the customer, and was employed by him to buy a farm, but from whom he was to receive no commission. Donohue v. I'adden, 9.''. Wis. 2<>, 00 N. W. 804. Whore a broker asks and obtains from the owner of land the price at which he is willing to sell it, this, of itself, does not establish the relation of principal and agent between the owner and the broker. Castner v. Richard- son, IS Colo. 490. :v.\ rac. 103. Mere consent by a person to tlie renderin;; by a real-estate agent of the unsolicited services, which enable him to sell his land, does not entitle tlie agent to recover compensation therefor under an implied promise of remuneration. Viley v, Pettit. 90 Ky. 576, 29 S. W. 438. Defendant, in a conversation with plaintilT, whom he knew to be a real-estate broker, but whose services in selling the proixrty in question he had previously dtnlined. told plaintiff that he would take .>f;:W.fKtO for the property. Plaintiff asked him If he was in earnest, and defendant .said that he meant business, and that, if plaintiff did not think so.'' let him bring a purchaser. Held, that the language did not constitute an offer to pay plaintiff a commission for procuring a pur- chaser at the price stated. Dunn v. Price. 87 Te.x. 318. 28 S. W. (;81. A real- estate broker employed to sell land, who agrees to pay another broker a com- mission if he procures a purchaser therefor, is liable for the commission if the purchaser is procured, thougli he afterwards discovers that the land is not the property of his primipal. Rarthell v. I'oter, 88 Wis. 310, 00 N. W. 42".t. Where '22 UHDKICIIS. formin*; services ns n inon> voliiiif»'< r. fmiii \\ lii. li tin' princlpnl derives ;i ln'iu'lil. tines iKtl eiiiillf the liKiktr to t (»m|nMs;it inn ; as. where a lirnker, \\itliniu a previous emplnx meiit. semis to the nwiur of pi-np«'ity a person to \\ lioni he sells it. the broker acqiiiies no ri;:lil lo a conimis- sion from tlu' veiulor.'" In some eases it is saiil. howevei-. that a Itroker is entitled lo i-oniniissions if the prinripal adopts iml laiities his acts.'*** .[iiiniiiit iif Coiumisshm. A ludker's ronii>onsation is nearly always jtaid in the form of a com- mission.''** Tliis is usually a percentage t»n the amount involved in the lrans;ietion in which the broker is employed;'*"' but it may bo u .1 liroktT fUU'Io.viHl to sell wiiisky iiiinnluci-il a pimliMser, to whom the principal gave an option on goods made antl to Ito nindo the next .vcnr. tin- hrokcr was held not entitled to commissions on whisky sold under the option, hiit of the next seasons manufacture. IMock v. Walker. It) ('. C. A. Or». 72 Fed. (U'.u. 103 Cook V. Welch. S> Allen (Mas.s.) ."{.".O: Castner v. Hichanlson. 18 Colo. VM\, .13 Pac. UW: Atwater v. Lockwood, 3J> Conn. 45. And s.e i:ilis v. Dunsworth. 40 HI. App. 1S7. 104 Low V. Uailroad Co.. 40 X. H. 2S4; Twelfth St. Market Co. v. .lack Pac. U02. A departure of a real-estate agent from the terms of his authority in etTecting a sale becomes, on ratification by the principal, a jiart of tlie original contract of employment, and the compensation fixed therein controls. Celatt V. Kidge. 117 Mo. .'..>{. 2^? S. W. S.S2. The fad that in the sale of land the vindor and vendee agree that the latter shall pay tlie commissions agreed upon between the vendor and plaintiff for the services of the latter in negotiat- ing the sale does not relieve the vendor of liability to plalntllT. In the absence of an agreement on plaintitTs i)art to release tlie veutlor. Burnett v. Casteel (Tex. Clv. App.) :'.0 S. W. 7S2. 108 Whether one who Is paif ilic jiiirc iccciv cd liy lln' Nciidor, or the l>r(»k(i- for llic sah' of proiniiv iiiav lie ^jivcn all lie icrcivcs ov«'r ;i fixid pi'icf*.'"^ 'I'lic aiiioiiiit of a luokcr's commission \h (lf*fcrmiru*{0; Erben v. Lorillard. •41 X. Y. 567; Thomas v. Brandt (Md.) 2l> Ail. 7t2A. lu an action on a quantum meruit to re- cover compensation for elTecting a sale of real estate, plaintiff not being a regu- lar real-estate agent, proof of the customary charges of such agents for similar services is not conclusive. Kennerly v. Sommerville, 2 Mo. App. Rep'r, 918. 110 Ante. p. 16. An agreement by real-estate agents to divide their commia- sions with the purchaser of land, made without the knowledge of their principal, does not affect their right to recover the commissions which such principal agreed to j)ay. Scott v. Lloyd. 19 Colo. 401, 35 Pac 733. The mere fact that an agent employed to tiud a purchaser for land advanced to the purchaser money to make a part payment does not prevent a recovery of his commission from the vendor. Lawson v. Thompson, 10 Utah, 462. 37 Pac. 732. Where a broker's contract to procure a purchaser at a specified price simply requires him to bring his principal and the purchaser together, so that they them.selves can make their own contract, he may recover commissions from both parties on separate con- tracts with each. Childs v. Ptomey, 17 Mont. 502, 43 Pac. 714. A real-estate agent, eniitloycd tci buy certain property at a certain price, does not forfeit the commission which the purchaser agreed to pay him because he secured another commission from the vendor after the vendor had accepted the terms offered. Jones V. Henry, IQ Misc. Rep. IHl, 36 N. Y. Supp. 483. \Miere a broker is employed to sell at a specified price, he does not, by accepting a commission from the purchaser, lose his right to commissions from the vendor. Alex.-mder V. University, 57 lud. 466; Barry v. Schmidt, 57 Wis. 172, 15 N. W. 24. It has L>1 BROKKKS. plnvimut is Ic^al. llif lirokcr u\a\ n'lovcr ((HninisslonR from Itoth |.;irii«'s; "• (.tlu'rwi.M'. lie may U.hc liis ri};lit to a commission from filluT."-' WIh'Ii a broker has Imm'M cmiilovcd to perform cerlain du ties under promise of a miiimissioii. ami he attempts to aet as aj^ent for the other jiarlv also, for an addilioiKil commission, h.v eii;:a;j:in;; Willi the siMoiid he fttifeits his ri;.'hl to rompeiisatioii Iroiii the one who tii-st employed him."' Uy the second en;:aj,'emenl . tin- ;i^enl, if In- does not in fact dis.ihle hinisell' fium rend, i in;: to tin- lirsl employer the full (pianimn of service conlra:t N. \V. 10.->S; llorman v. .Martlut'aii. 1 Wis. ir.l; Howe v. Sicvcii-. .".:'. N. V. f.'-M : Sicp'l v. Could. 7 b.in.s. (.\. V.) 177; Lansing v. Bliss. .SU lliiii. L'o.".. .'.:: N. V. Sii])].. .'•.lo: Siiiiiii v. Tripi.s. li Tex. Civ. Apii. liiM. 21 S. W. 7li'J: Siicrwiii v. o'Coinmr. L't NCli. Co.",. :',<> N. W. »;20: Campbell v. Haxicr. 41 Neb. 7-_'^t. uo N. W. 5M>. iizUice v. Wo«h1, lU .Mass. Ka; Y<.uiiy v. 'rraiiutr. 1.">M 111. A2S. 41.' N. K. VHi; Fuller Watchman's Kle«trical Detector Co. v. Louis. 50 III. Ai)p. 4*28; Perkin.s v. (^ujirry Co.. 11 Misc. Uep. 328, 'A2 N. V. Snpp. '.•.to: StrawhrldKe v. Swan, 4;{ .Neb. 7.S1. lil' .N. W. r.t'.». Ueal-est:itc M^enls represi-nting the dIfTcrent owners In an i-xchanp- of lands lose the rl^Mil to cDnimi.ssions by their entering Into an agreement, without the ettnsent of their prineip.ils, lo piol or divide their r<»mmIssions. Norman v. HoHeniiin. .".'.» .Mo. .\pp. t..s*J. M3 Walker v. Osgood, IIS .Mas.s. :i|S: Pell v. .McCounell, ;!7 Oliio St. :«M5; ■linsley v. reiuiim.in. 1'J Tex. Civ. App. .'".•1. .'.l S. W. ."ttl.-.. Hi Meyer v. lijinchett, .'«> Wis. 4P.t; Hell v. .McCoiuiell. ;t7 Ohio St. ."/.h;. A UHage of brokerK to charge a commission to botli pjirlies to an exch.inge of i)rip- erty will not be enforced. Haisin v. Cl.irk. 41 .Md. \:>S: Farnsworth v. Ilemmer, 1 Allen (.Ma.^s.j 4l>4. But see Mullen v. Keeizleb, 7 Bush tKy.> 2:>.i. UKillTS AM) I.IAIUI.ITIKH OK UltOKERS. 25 jiiid <^(hh\ moi-ils, and, liotli |Milii's IIkmtIo Ixiii;.' in pari ' on Hk- lnoker's ri^jht to compen- sation. A broker ini}j:ht nej^oliate such a contract without l)eiim privy to the illejj:al intent of the piincipal parties to it, which renders it void, and in such a case, beiu^^ inuoceiii of any violation of law, and not .suinj; to enforce an uidawful contract, has a meritorious ground for the recovery of conijx'nsiition for services and advances.^'' Hut when the broker is privy to the unlawful design of the parties, and brings them together for the very purpose of entering into an illegal agree- ment, he is particeps crimiuis, and cannot recover for services rendered or losses incurred by himself on behalf of either in forwarding the transaction.'** 115 Faruswortb v. Ilouuner. 1 Allen (Mass.) 494; Walker v. Osgood, 98 Mass. ^8; Smith v. Towiisond, 109 Mass. 500; Rice v. Wood, 113 Mass. 133; Boll- iiiau V. Loomis, 41 Coqu. 581; Eveibart v. Searle, 71 Pa. St. 256; Morlson v. Tbomp.sou. L. R. 9 Q. B. 480; Bell v. McConnell, 37 Ohio St. 390; Lynch v. Fallon, 11 R. I. 311. 118 Ante, p. 4. iiT Irwin v. Williar, 110 U. S. 499. 4 Sup. Ct. IGO; Crawford v. Spencer, 92 Mo. 498, 4 S. W. 713; Bartlett v. Smith, 13 Fed. 263; Kirkpatrick v. Adams, 20 Fed. 287; First Nat. Bank v. Oskaloosa Packing Co., 66 Iowa, 41, 23 N. W. 255. The fact tliat an agreement for the sale of land to a purchaser procured by plaintiff was made on Sunday does not affect plaintiff's rijxlit of action on a prior agreement to pay him for securing a purchaser. Bolaud v. Kistle, 92 Iowa, 309, 60 N. W. 632. It has been held that a broker who merely brings parties together, and they make and carry out an illegal contract, can recover the agreed commission, even though he knew of his principal's illegal object. Ormes v. Dauchy, 45 N. Y. Super. Ct. 85. For a more strinjrcnt rule, see In re Green. 7 Biss. 338, Fed. Cas. No. 5,751; Barnard v. Backliaus, 52 Wis. 593. 6 N. W. 252. In some cases, notably In Pennsylvania and New Jersey, the illegality of the transaction Is held to make the broker a principal, and to prevent his re- covery of commissions or advances. Dickson's Ex'r v. Tliomas. 97 Pa. St. 278; Rnchizky v. De Haven, hi. 202; Flagg v. Baldwin. 38 N. .1. E: Crawford v. Spencer. 02 Mo. 498, 4 S. W. 713: Cobb v. ProU, 15 Fed. 774; Bangs v. Horuiek, 30 Fed. 97. '26 BUOKKKS. \\'li:it constitutos jHTforinnnco In n brnkcr. so that hv Is ciilitlcd to his ((iiinnissions. is a qiicslion (hiMiHliiif; on tin- fiicis df i-ach case, and tlM' t'DiistriU'tion of the contract between tlic IhkUci and liis i»rinci]»al. The nsa;;cs <»f trade in many cascw determine when a broker has cai'ncr willful misconduct, the bonelit of the transiction is lost to his principal;'-'^ nor when he violates his duty to exercise ;jood faith.'"' .\ lir<»ker who becomes the ]iurcha8er of prop<'rty placed in his liands for sale has no rii:ht to commissions.'" ii» Wbero tlio t)n)kt'r's cDUtinrt witli his jjiiiuiiiiil is that ho shall n-ct'lvc all obtalucd froui the purchaser above n fixed price, the broker is entltlt'd to no compensation when a sale Is made at or below that price. Hops v. Sprnance, 45 111. 308; Beatty v. Ku.ssell, 41 Neb. .'{21. ".0 N. W. 91!>. Hut where there was a contract to pay the broker a comiuissiou if he effec-ird a sale at $H5.(X)0, if the owner subsecinenily sells to a purchaser prod\iced by the Imtker at $14,<^KK), the broker is entitled to a proportional conmiissien. without an e.xiinss ;i;;ree- ment to pay. Jones v. Adler, 34 Md. 440; Byrd v. Frost (Tex. Civ. Ai)p.» Ltt S. W. 4'2 Ind. 348; Ilaniond v. Holiday. 1 r.ir. & P. 3H4; Hurst V. Holdinp, 3 Taunt 32. 121 A real-estate agent Is not entitled to commissions from the vend»'e, as agreed on between them, where the agent asks the vendee a price greatly In excess of that fixed on the land by the vendor, and conceals from the vendee the fact that the vendor had instructed him to sell to tlie former at the reduced price. I'Linney v. Hall, 101 Miih. 4r)l, ol> N. W. S14. Where brokers, who are authorized to sell for a certain price, by colorable sales to an employC'. and actual sales of part of the prendses. soil for a much larger price without their principal's knowhslge. the l)rokers cannot retain the conunlssion charged on the colorable sale to the empl«iy6, nor charge conunissions on the actual sales made. Powers V. Black. IW) Pa. St. ir^i. 28 Atl. 1:53. The fact that the broker reported to his principal that an olTer of ?H!.0(m» for the land had Ihmmi made. Instead of $15,fMir), dors n«»t afTect his right to a conunisslon, where, as a result of his negotiation, a sab- for the smaller sum was made. Peckham v. .Ashhurst. 18 U. I. Mi\, 2S Atl. .3.'!7. 'Hie fact that the purchaser proctued by the .-igent was acting In behalf of anoUier does not affj'ct the agent's right to commissions. fJehilt v. Hldge, 117 Mo. TtXi, 2.3 S. W. HS'2. 122 The fact that, unknown to the principal, Ji iiicinlicr of a llrm employed to sell land Itclongs to the syndicate to whieli the land is sold, bars the llrm fron> recovering a Cumuiiiiiilou for the sab-. tlinti;:li ihe pri\ the business in whidi he is engaj^ed. Thus, a broker who is employed to l»ro2 N. Y. *_'<»:?; SiM'iiliI V. Iron Co.. S;5 N. Y. .'^78: Monlft'O v. IIIk'JJIh.s, Tu 111. ."►<): LaiiK v. l!;ni(l. 57 III. Apu. KM: Hash v. Hill. (Ill 111. 210; Wllliani.x v. .McKlraw. .-.2 Mi.h. 4.S0. IS N. W. 227; Stewart v. Mather, :{2 ^Vis. :UI; Hratlford v. Mnianl. 35 Minn. I',i7. 2S N. W. 24S; llainllu v. S.lmlto. 'M Miiiii. 4SU. IS N. W. 41.".; .McfJavock V. ^V.m»lIl.'f. 20 How. 221; MattiiiKl.v v. TiMinle. 105 Cal. ."11. .'.'.► Pac 2iM): Hrnwn V. AVIlson. f>S Iowa. .'lH;. (57 N. W. 251; .Tones v. Ilollailay, 2 A]^]^. P. C. 27r>. Uefusal of the priiKlpal to ••oiiii)lele the s:>le does lint relieve hlin of his liability to the broker. KocU v. Knuiierliiii;. 22 I low. i>;»: <;ieiu\v(irih v. Luther. 21 Barb. (N. Y.) 145; Van Lien v. Hyriies, 1 Hilt. (N. Y.» 134. It has been held that a broker was uot entitled to connnlssions when the purchaser produetHl by him refu.>^ed to accept a quitclaim deed, and demande2Ti{ii,b v. Allen, 14'.) r. S. 4S1. 13 Sup. Ct. l>.".(i; Ward v. Lawrence, 79 111. 2t>5; Levy v. Huff. 4 .Misc. Kep. ISO, 23 N. Y. Sui)p. lonj; Vaughan v. McCarthy, 5^S Minn. 1IM», tMJ N. W. 1075. So, where a loan broker is emi)loyed to Kecure a loan for his principal, It Is not esst-ntlal to his right to coiunds- slons that he have a binding contraci with the yroyosed Icniler. Midiilciou V. Thomimou, 105 I'a. St. 112, 2l> Atl. 7V>0. HKJIITS AMI I.IAlUI.ITlKa OF UROKEHS. 29 Snine — Ratponsihle Piirchresented by the broker, the commission is earn<(l.'-" \\\\\ if the principal rejects the purchaser, and the broker claims his coniniission, he must show, not only that the person fur- nish«-d was wilUnj,' to ac."(;; I^ovy v. KufT, 4 Misc. Hop. ISO, 23 N. Y. Snpp. KKJ-J; Cook v. Krofiuokf. 4 DjjI.v (N. Y.l l-'tW; r.oss V. Broom, 31 Minn. 4S4, IS N. W. lilXi. Solv»>nry Is presuraod In the absouce of evidence to the contrary. Hart v. IlolTinaii. 41 How. Prac. (N. Y.) 1(8. Contra, Iselin v. Grittitli. r,2 Iowa. G(38. 18 N. W. .ioj. Where the purchaser furnished by a broker is accepted by the seller, without any niis- represeutalion on the part of the broker as to such purchaser's financial stand- iiiji, the burden of proof Is on the seller to show that the purchaser is not able to pay for the goods according to the contract. Fairly v. Wappoo Mills. 44 S. C. 227. 22 S. E. 108. Where the proix>sed purchaser admits that he had not the ability to pay the price fixed, his testimony that he was actin;: in behalf of a syndicate, and that he would have l)een prepared, when the time arrived to complete the purchase, to find the money reqtiired. does not .satisfactorily show his ability to buy. Mattingly v. Pennie, lOo CjU. 514. .'?•.> Pac. 2<»0. In an action to recover commis.sions for the sale of land allej;e»2 McCarthy v. Cavers. OG Iowa. 342, 2;'. N. W. 7.'i7; W:iis..n v. Hrooks. 11 f)r. 271. 3 Pac. 07;t; Ilalperiii v. Callemh-r. 17 .Misc. IJep. ;u;2. 30 N. Y. Supp. lOiA; Beauchamp v. Iliggins, 20 Mo. Ap|». .'>14: Zeiiuer v. .Vntisell. 7.'t Gal. 509, 17 Pac. S 111. 42.S. 42 N. K. 130. afhrniing r»7 111. App. •»;52. Where the minds of vendor and purcliaser have met on a contract to sell real ••Htate, the broker who procured the execution of sudi contract is entitled to recover his promised commission, whether or not the contract is llnally con- Mummated, and notwithstanding any vagueness in its terms. Folinsbee v. Sawyer, 15 .Mlsc-. Uej*. 20.'!, 'M\ N. Y. Supp. 40r». Where an application for a loan Id made to a broker, who secures a party willing to make the loan, but diM-8 not so notify tin- a[ipli<'ant, and, after the time has elapsol within wliii ii RIGIITH AM) I.I AlUI.I riKS OK MIM (KKUS. 31 ever, altoi^cllicr siilisr.icNuv ;is (o \vli;il cuiisl itiil'-s such pcintrm- ance. ^\'ll('Il a sjilc within llu* lime liniitcrl is iiK-Ncntcd hy llie ne^Ii- pMicc, fault, or fi-nid of (ho itriiicipiil. tlic Ijiokcr can recover his coiuinissions.'''' In some cmscs. i( li.is hccn hchi lh;il the siih* must be comph'tcd wilhiii llic (iinc Kitecificd.''" In others, the hrol.fr has been held enlitled to compensation when he produced a purchaser within the time, to wliom a Hale is niaih* Jiftcr (he time h:is expired.'^* Sale Comph'tt'd hij Pr'nu-ijuil — Broktr Prixuiiixj Cans,. A broker earns his commission whenever the sale oi- lace it, the broker is not entitle Pac. 772. 136 Martin v. Sllliman. 53 X. Y. 615; I.udlow v. Carman. 2 Hilt. (X. Y.) 107; Timberman t. Craddock, 70 Mo. 038; Bass v. Jacobs, 03 Mo. App. 303; Loud V. Ilall, 101> Mass. 404; Bornsteiu v. Lans, 104 Mass. 214; Dowling v. Morrill, 1(>5 Mass. 491, 43 N. E. 295; Howe v. Werner, 7 Colo. App. 530, 44 Pac. 511. The broker need not be present during the negotiations or at the completion of the bargain. Dreisback v. Kollins. 39 Kan. 268, 18 Pac. 187: Sibbald v. Iron Co., 83 X. Y. 378; Baker v. Thomas, 11 Misc. Hep. 112, 31 N. Y. Supp. 9U3. 32 imoKKRs. If (he brisker was the prticiiriii};; cause of the sale, lie can i»'C(»vcr ; '*^ otIuTwise. ho cannot.'"' TIk' principal netni mil kimu. ai llw lime tho sjilo was coinjilctcil. that tlic purchaser was (»l»iaiiit'(l iliruii;;h the brttkcr's clTorts.''" Nor need tlie ludker hiwr intKxliKtd tlie pur >'■ Vi>\H> V. IlriUs. liis Mass. :<*<]: Kitysti-r v. MnKcveiic.v, '.i l.ca i Iciiii.) 1 t>; Earp V. rumiiiliis, M I'a. St. :VM: Lloyd v. Mutthows. .'>! N. Y. IJt; Uodlleld V. IVpp. ."{S N. Y. 'JIJ. The completed Iraiisacflon need imt result In a bcncflt to tlu' principal. Schwarizo v. Yearly. .".1 Md. 270. An owner of real estate, after her efforts to sell to W. liad failed and been abandoned, put It In the b:uids of a real-estate a>;ent to sell at a certain i)rlce. He then eoinmenced negotiations with \V.. and. while it still remained in his hands, without no- tice to him. the owner sold It to ^V., for a l«ss price than that at which the agent had Ihh'u authorized to sell. Held, that he was entitled to commissions on the amount for which it was sold. Schlegal v. Allerton. (>r> Conn. 2<>o, 32 Atl. .'W13. Where a real-estate agent, with whom land has been i)laced for sale, places it with another, reserving the right to sell the land himself, he cannot sell the l.ind to a customer of the latter, and thereby defeat the lat- ter's right to his commissions. Leonard v. Roberts, 20 Colo. .88, 34) Pac. 880. Whert? an agent's authority to sell lands uinin certain terui.s is revoked, and the owner. In good faith, thereafter sells upon less favorable terms to one who had declined to purchase from the agent, such agent is not entitled to commissions. Bailey v. Smith, 103 Ala. i'Al, 15 South. Ixki. a real-estate broker is not entitled to commissions on a sale of land where the purcha.ser bought solely uikiu his own information, after uegotintlng with the owners, and was not intluenced by the broker, though the broker made otTorts to sell the land to such purchaser. Brown v. Shelton (Tex. Civ. App.) 23 S. W. 483. Where a real-estate agent brings the parties together, and negotiations are thus opened between them, which continue witliout withdrawal of either party therefrom, and culminate In a sale, though on dilTercut terms than orig- inally arranged, the broker is entitled to his commissions. Jones v. Henry, 15 Misc. Rep. 151. .'JO N. Y. Supp. 4S3. ist Stewart v. Mather, 32 Wis. .Ml; Wyckoff v. Bliss. 12 Daly (N. Y.) .'?24; Sussdorfr V. Schmidt, r>5 N. Y. :{l!i; McClave v. Paine. 40 N. Y. .'i«l; Tyler v. Parr, 52 Mo. 241); Carter v. Wel>ster, 70 111. i'.Ct. Where a broker empi iye3» Lloyd V. .Matthews, 51 .N. Y. 124; Ilanford v. Shapter, 4 Daly (N. Y.) 243; Kelly v. Stone, 04 Iowa. 31(;. 112 .\. W. .S-12; Bryan v. Abert, 3 App. D. O. IbO. But see Soulo v. Deering, 87 Me. 305, 32 Atl. 008. UK.in-^ AMI I.IAIlll.niKS <(!•■ IllfdKKKS. 33 clinscr \*> till' |.i iiifi|.;il,"" m i\i\\ Know ili«- |iiiicli;is.'r himself.'*' Thus, wht'ir ilir oiH- \vli(t |»m(li;isrs the priiiciiKil's propcily first hiiiiis thill il is for .silc frciiii llic advci I isrim ills (if ihc ImoU.t.' *- or from SI third pt rsoii lo whom lh<' hrokt-r \\:u\ commiiirKMi'tl lh<' fact.'*' \\li(ii a l.roivcr, ha\iii<,^ Imcii unsiiccrsKfiil in liiidiiiK a pnrrhastT. ahai>- Lea fTcnu.) 148; Wylie v. Bank, Gl N. Y. 415; Anderson v. Cox, IG Neb. 10, 20 N. W. 10. But see Getzler v. Bnehm, 16 Misc. Rep. 390, 38 N. Y. Supp. oJ. Ki Derriclison v. Quinliy. 43 N. .1. baw, 373; Lincoln v. McClatcbiL'. 36 Conn. 130; Wylie v. Bank. t;i N. V. 415. And see Newhall v. Pierce, 115 Mass. 457. I*- Earp V. ("uiinniiis, 54 Pa. Si. '.VM. 143 Anderson v. Cox, 10 Neb. 10, 20 N. W. 10; Lincoln v. McClatchle. 36 Conn. 13n. Where a broker talks about laud which he has for sale Uhe owner rctaininj.' a ri^'ht to sell iti to one who, not acting for the broker, men- tions it to a third person, who purchases from the owner, he is not entitled to a commission. (Ileason v. Nelson, 102 Mass. 245. 38 N. E. 407. 144 Sibbald v. Iron Co., 83 N. Y. 378; Wylie v. Bank, c.l N. Y. 415; Holley V. Townsend. 2 Hilt. (N. Y.) 34; Bouscher v. Larkins. M llmi. 2S.8, 32 N. Y. Supp. 305; Earp v. Cummins. 54 Pa. St. 304. Cf. Ware v. Dos Pas.sos, 4 App. Div. 32, 38 N. Y. Supp. CwS. A real-estate In-oker is not entitletl to commissions for procuring a purchaser for lands where the sale is .-iliandMiicd with his own consent. Sawyer v. Bowman. 91 Iowa, 717, 59 N. W. 27. 1 4 r. Parker v. Walker. 80 Teun. ."I'.O. S S. W. 391; Love v. Miller. .">3 Ind. 2(M. But where the contract entered into contains a stipulation that, in case either party should fail to comply with the contract, a forfeiture of .Sl.fKK) should Ik? paid by the party in default, the broker is not entitled lo his com- liKOKEIib — '6 o4 IU{( (KICKS. wuiilil l»i' no defense to say thnl ;i bill lo enforce spocilii- pn fniinaiue would Itr of no avail on acconnl of ilu- iturcliascr's insohcncv. The jiiincipal was not bound (o acf('[i( (In* iiroposcd i»iii(liaser, uidess he WIS altic to jK'i'forni.'^*' \\"h('n iH'ifoi'niancc 1»,\ a brolcci- is |)r«\('nl(Ml by liis principal, tlio brokci" is. nevertheless, entitled to conipensai ion. The inineipal can not. by i-efnsinj; to complete the contrail when ;i |iii)pei cnstoniei- is piodiiced by the broker, escajie iiabiJiiN lo ilie laller.''" Nor does a iiiis>i(iii il' the ijurcba.scr docs \w\ iicironii. r.fiiiifii v. lO^iiu, 3 Misi-. licit. 4-Jl. S.', N. Y. Siipp. 154: KimluTly v. 1 Icii.lnsnii. J'l .M.l. :A'2; Aiglcr v. I.nii.l Co.. r.l Kau. 718, 33 Pac. '>'X\. liut .o. In (Jilder v. I>avis, 137 N. Y. r>(i4. :!.", N. K. r»'.Kt, the brolccr was iu a similar case ;:ivi'u a commission on tlic roilCit money. 140 See ante, p. 2t). i-i" Midiiletou v. ThoiHii>^oii. H;:; I'.-i. Si. IfJ. ■_".» .\tl. 7!Mi; .McCJiiire v. Carl- sou, til 111. App. UO.J: Cook V. Fiske. 12 (Jia.v (Mass.i 4!)1; Felts v. Buicher. 93 Iowa. 414. V.\: Kit'iiici- v. Kice, 88 Wis. 10, 5{> N. \V. 4.".0: Kock v. Kmmeiliiij:. 21' How. c.'.i; \\aisoii v. Hrooks. 8 Sawy. 31(>. l."> Fed. .">40. Where the pfincipal sold Ihe properly himself, luit permitted the broker to make further eft'orts to secure a i)ur- chaser wiilmut informiug him of the sale, he was held liable for commissions. Lane v. .MbrijihI. 49 Ind. 27."t. So. where :\ purchaser is procured by the broker, and the itriiicipal f:ives an option for .-i limiU'd time to the proposed Iturehaser. but sells to another within that time, the broker may recover com- missions. Heed's Kx'rs v. Keed. SJ I'a. St. 4:J(i. A real-estate ajjeut, wlm l»rocures a purchaser able, ready, and williiifx to l;ike the property, and pay for it at the price aj^reed, and who is jirevented from doiiis so by his prin cipal's refusal to carry out the coiiiiaci. Is ciiiiilcd to coinpeiisalion, ihoiijjh the j)urchaser C(Hild not have been coniiirllcd to rjiny out his contract if he hail chosen to set np tlic sininte of frauds, lloidcn v. Slarks. l.">'.» .Mass. .">o.",. :'.4 N. K. HMi9. Defendant emidoyed plaint ilT as a biokci' lo sell il^ooiIs at a certain cfunmission. IMaintifT itrocined a purchaser, lo whom defeiidani shii>|(ed the piods. bill they were icjcclcd by iiiin as iiol of the qu.iliiy siwc ifit'd. Held, that iilainiilT. havin;j performed l:is pari of ilie coiilr;ici. was ciiiiilcd lo his connnission. Strong v. lirownsli.nc Co.. C .Mis.-. Kep. ."i7. 3'> S. Y. Snpp. .sr». Where a laiido\vn<'r refuses to execule a deed pursuaiu to the iirms of sale made by his authorized a^cnt. neilher Ihe :ip:enl nor the piirciiaser need tender the imiciiMse nioiiey before liic .Mireiil cin sue for his services. Vau;:ban v. .McC.iilhy. .V.t .NFiim. I'.Ht. c,o N. W. bi7.".. .\ broker wlio a;rn'<'S to procure a lo;in |»erforins his contr.ici wlien lie siM-ures ;i com- pany able, williii;,'. and rendy lu make the loan, and need not lender or cause IfKllirs AM) I.IAIilMTll-.M OK ItKdKKUS. oO (l,.r,.(l ill llic piiiicipiirs (illc. wliiili cniiscs Hk- |tiiirli;i>ci- lu fc|ci-t i(, iclicxc llic |iriiMi|i;il.' ''' unless llir lii«»U<'i- kin\\ of lln' \'li(ic the |niii(i|»jil sees tliiil llu' broUci- is iihoiil In <'lli-(i a sal<\ lie caiiiKtl cul (ilV (lie lallcf's ri^lil (o conimissioiis. I»y aiiv IraiKliilcnt f(. lie iriidcivd tlK' auKiiiiit of tlic Idiiii before he is eiilifled to his eoinpensa- tiiiii. i'hisli r V. Cove. -4S Mo. App. -»•"">; Felford v. Hriiikeilioff, 45 III. App. 5S(;. One iiKiy recover in ;iii ;i:j. (17 X. W. 1108; Koberts v. Kimmons. 05 Miss. ;'>.'i2. 3 South. 730; Sullivan v. Hampton (Tex. Civ. App.) 32 S. W. 2:35; (Joodridge v. Holladay. IS 111. App. 303; Davis V. Morgan, 96 Ga. 518, 23 S. E. 417; Davis v. Lawrence, 52 Kan. :'.S3. 34 Pa<-. 1(K">1; Topping V. Healey, 3 Fost. &: I'\ 325. But see Tombs v. Alexander. 101 Mass. 2.55; Rockwell v. NCwioii. 44 Conn. 333: Blankenshiiis .Kdmf v. Kyerson. .50 Ala. 420. Kefus.il of the principal's wife to release her dower does not relieve him of lialiiliiy to the broker. Clai)p v. Hughes. 1 riiil.i. (Ba.i 3S2; Hamlin v. Schulle. ;;4 Minn. .5.34. 27 X. W. .3(11. But see Hill v. Jones. 152 Pa. St. 43.3. 25 Atl. 8.34. A broker employed to obtain a loan is. in the absence of a condition to the contrary, entitled to commissions on ob- taining a i>erson al»le and willing to make the loan, though it is not consum- m.ited because the title to the premises on which the loan was to be made is defective, in that the building thereon encroaches on adjoining property. Kgan v. Kieferdorf. 10 Misc. Kep. ;iS5. 38 X. Y. Supp. 81. But contra under a contract making cDinpensation depend on the payment of the purchase price. Cremer v. .Miller, .5r, Minn. 52, 57 X. W. 318. In Condict v. Cowdrey. i:'.;> X. Y. 273. 34 X. 10. 7M. it was held that a broker was not entitled to conunissions where the contract of purchase was conditional on the title being foimd as represent eerl y. this will not deprive the broker of his commissions.^''^ Exclusive Agency — More tJian One Broher EmpJoijcd. When an owner of pi'operty lists it with a broker for sale, he does not. without an express aj2;reement, {2,ive the broker the exclusive rijj;ht to Ml. The owner may, of course, agree not to sell himself or throu^di any other ajrent.^''- In the absence of such an agreement, the principal may effect a sale independently of the broker's efforts; and, if he do so, he will not be liable to the broker for the payment of com- missions.^ ^^ It has, however, been intimated in souie cases that the 150 Stewart v. Mather, 32 Wis. 344: Fox v. Byrues. .VJ X. Y. Suinn-. Ct. 150; Briggs V. Boyd. 56 N. Y. 289; Keys v. .Tohnson, 68 Pa. St. 42; Reed v. Reed, 82 Pa. St. 4*iO; Lane v. Albright. 40 Ind. 275; Doonan v. Ives. 73 Ga. 295. And see Bash v. Hill, 62 111. 216; Nesbitt v. Helser. 49 Mo. .383. A vendor cannot escape liability for commissions to the agent employed to negotiate a sale of the land, on completing himself a sale to a purchaser with whom the agent had been negotiating, by including in the sale otlier lands in addi- tion to those the agent was employed to sell. Ivanson v. Weston. 110 Mich. 240. 68 N. W. 152. 151 Glentworth v. Luther, 21 Barb. (N. Y.) 145. 152 Ward v. Fletcher, 124 Mass. 224; Stringfellow v. Powers, 4 Tex. Civ.. App. 199, 23 S. W. 313; Levy v. Rothe, 17 Misc. Rep. 402, 39 N. Y. Supp. 1057. An exclusive agency may be given by contract, and the principal may agree to pay a commission if he sells himself within the time given the broiler. Levy V. Rothe. 17 Misc. Rep. 402, 39 N. Y. Supp. 1057: Rucker v. Hall. 105 Cal. 425, 38 Pac. 962; Holland v. Howard, 105 Ala. 538, 17 South. 35. One who agrees to allow a real-estate broker commissions on sales of land made by himself is not liable for commissions upon making a conveyance, absolute on its face, but which in fact is a mortgage. Terry v. Wilson's Estate, 50 Minn. 570, 52 N. W. 973. i53McClave v. Paine, 49 N. Y. 561; Hay v. Piatt. 66 Hun. 488. 21 N. Y. Supp. 3C.2; Carlson v. Nathan, 43 111. App- •><"'^; Metzen v. Wyatt, 41 111. App. 487; Vandyke v. Walker, 49 »to. App. 381; Lawrence v. W(Mr. W Colo. App. 401, 33 Pac. 646. The broker did not have the exclusive riglit to sell. After he had found a purchaser ready and willing to buy on the owner's terms, but before he had notilicd the owner tliereof. the owner found anotlier pur- ciiaser, and closed a sale with him. Ilehl, the owner was not liable to tlie broker for a commission. Baars v. Hyland. (U". Minn. 1.50, 07 N. W. 1148. But see CarroU v. PetUt, 67 Ilun, 418, 22 X. Y. Supi). -'50. RIGHTS AND 1,1 AIUI.ITIKS OF BHOKKKS. 37 broker is (Militlcd to a reasonable time within which to make a sale.^"'* Not only may I he principal sell himself, but he may employ other bro- kers to sell the property, and he will be bound to pay commissions only to the one who secures a purchaser.^ ^'^^ A sale by one broker is a revocation of the authority of the others without any notice to them; ^'"'^ and a broker will not, by subsequently producing a purchaser, have any claim on tlie ])rincipal for commissions.^^'' If a broker who hrst procures a purchaser reports his offers to his principal without identifying the i)erson from whom they come, he cannot reco\er commissions in case of a subsequent sale through an- other broker at the same price, to the same purchaser, unless it ap- pears in evidence that the seller knew this fact, or that notice was given him by the })laintiff before the completion of the contract and 15* Charlton v. Wood, 11 Heisk. (Tenu.) 19. 155 Ward V. Fletcher, 124 Mass. 224; Dreyer v. Ranch, 42 How. Prac. ut a broker brinjiinajied in business as a broker regularly, but merely negotiating a single transaction.' •*•' 1.-.8 Tinges v. Moale, 'l:^ Md. -180; Ejrglt^stou v. Austin. 27 Kan. 245: Clif- ford V. Meyer, Ind. A pp. ('>:«. 34 N. E. 2;{. 150 Vreeland v. Vetterlein, 33 N. J. Law. 247; Tinsios v. Moalo, 25 Md. 480. loochadwick v. Collins, 2(5 Pa. St. i;W; Johnson v. Hulings. 103 Pa. St. 40S: Holt V. (ireen, 73 Pa. St. IDS; Ilustis v. Pickands. 27 111. App. 2T0; ^^'llitlit'ld V. Iluling:. 50 111. App. 170; Stevenson v. Ewing, 87 Teun. 4(5, 9 S. W. 2:;o; lUchardson v. Hrix, !t4 Iowa. cc'c.. (■>:! N. ^^'. 325; Yount v. Den- \m\'A. 52 Kan. G29. 35 Par. 207. "1 Holt V. Green, 73 Pa. St. IDS: Vouiil v. 1 tciiuinj;. 52 Kan. c,j<», 35 Pac, 207. Contra, Fairly v. Wai>poo Mills, 44 S. C. 227, 22 S. E. los. "••- Shepler v. Scott. 85 Pa. St. :'.2t). I'l'! Johnson v. Hulings, 103 Pa. SI. 4'.lS: Holt v. (iiccn. 7:'. P.i. St. 198. I'n Portland v. O'Neill, 1 Or. 218. And see Spear v. Hull. 40 111. App. 348. ler, O'Neill v. Sinclair, 153 111. 525. :!9 X. E. 124; Jackson v. Hough. .'{S W. Va. 2:'.<;. 18 S. E. 575; Chadwi< k v. Collins, 2(J Pa. St. i:!.S; .loliiisou v. Wil- liams, 8 Ind. Ai)p. G77, 3G 2s'. E. 107. KIGHTS AND LIABILITIES OF BROKERS. 39 SAME— RIGHT TO REIMBURSEMENT AND INDEMNITY. 11. A broker is entitled to reimbursement for money ex- pended on his principal's account, and to indemnity for liabilities incurred in the execution of his agency. A j)riii(i|tal is not j^ciKMally liable lor his broker's exp('ns<*s.^"" It is pirsunu'd that the coiiimissioiis paid ^^ hen the broker is successful cover all expenses incurred by him; and, when not successful, the loss is on the broker, he having taken that risk by making his compensation and reimbursement dependent on success.*"" It has, however, been held that a broker would be entitled to recover for expenses incurred by him when the principal does not give him a reasonable time to per- form.*"* In such cases the expenditures are in reality on the broker's own account, not that of his j)rincipal. When, however, a broker lays out money in carrying out the orders of his principal, as when he buys property or pajs insurance premiums, he is entitled to be reimbursed for such sums.*"'' Ho. when a broker incurs liabilities in his principal's business, the latter must indemnify him against loss therefrom.*'" 160 An iusiuauce broker may recover of the assured the expense of the telegrams relating to the iusurance sent at the hitter's request, without proof that they were i-eceivert by the parties to whom they were sent. Ward v. Tucker, 7 Wash. .399, 3.'> Pac. 1086. Where one employed to sell mining land, he to receive all over a certain amount, devotes a large amount of time there- to, and performs labor and inciu's large expenses to effect it, and is permitted to do so for a period of years, he is entitled to recover on a quantum meruit for his time, labor, and expenses if his authority is revoked. .Jaekel v. Cald- well, 1.^.0 ra. St. 260, 26 Atl. 1063. i«- Charlton v. Wood, 11 Heisk. (Tenn.) 19. !«'< Hill V. Jones. 152 Ta. St. 433, 25 Atl. 834. And see Mcl-'arlaud, J., in Charlton v. Wood, 11 Heisk. (Tenn.) 19, 26. I'-f Knapp V. Simon. 9(5 X. Y. 284; Searing v. Butler, 69 111. .575. 1-" Maitland v. Martin, 86 Pa. St. 120; D'Arcy v. Lyle, 5 Bin. (Pa.) 441; Stocking V. Sage. 1 Conn. 519; Bennett v. Covington. 22 Fed. 816. But see Carpenter v. Momsen. 92 Wis. 449, 65 N. W. 1027. A broker employed to negotiate the sale of tlour at a certain price, who, without express authority, makes a contract for the sale thereof at such price in his own name, cannot, on his principal's refusal to deliver at the price named, recover from the principal damages paid by him to the purchaser for his failure to perform the contract of sale, Haas v. Euston, 14 Ind. Api). 8, 42 N. E. 298. 40 BRO KICKS. SAME— RIGHT TO A LIEN. 12. Insurance brokers, stock brokers, and purchasing agents have general liens. 13. A loan broker has a lien which is probably particular. 14. Ship brokers and real-estate brokers have no liens. Insurance Brol'ers. Insuiauce brokers have a general lien for their coniuiissions and for premiums paid by them, on the policies in their hands,^'' and on the moneys received under such policies in the event of a loss.^'^ If the broker delivers the policy to his principal, his lien is gone.''^ But, if it should come into his hands again, the lien would revive,'"* unless the manner of his parting with the policy manifests an intention to abandon the lien.'^' A subagent of the broker has a particular lien on a policy in his hands for his expenditures and services in procur- ing that policy, but not as against the insured, for a general balance due him from his principal, the broker.' ^^ Stock Brokers. Stock brokers generally stand in the relation of pledgees"^ to the principals, rather than holding a lien. When a broker buys stock or bonds for his principal, and advances most of the money to make the purchase, he holds the stock or bonds as collateral security,'" and has 171 McKonzie v. Nevins, 22 Me. 138; Cranston v. Tupuiaiuv Co.. 5 Bin. (Pa.) 538; Moody v. Webster, 3 Pick. (Mass.) 424. iT2Spiinj,' V. Insurance Co., 8 Wheat. 2()8; McKouzie v. Novius, 22 Me. 138. 173 Crauston v. Insurance Co., 5 Bin. (Pa.) 538. 174 Moody V. Webster, 3 Pick. (Mass.) 424. 175 Spriuf,' V. Insurance Co., 8 Wheat. 2<;S; Sharp v. Whiinih-. 1 P.osw. (N. Y.) 557. 170 McKenzie v. Nevins, 22 Me. 138; Foster v. Iloyt, 2 .Ti.lins. Cas. (N. Y.) :'.27; Maanss v. Henderson, 1 East, 335; Suook v. Davidsdu. 2 Camp. 218. The rule is the same where the subagent did not know that tlie broker wlio employed him was himself acting as an agent. Bank of Melrt)polis v. Now England Bank, 1 How. 2:}-l; Mann v. Forri'ster. 4 Camp. GO; Bal)one v. Wil- liams, 7 Term R. 3(;0. liT s.'f post. p. 52; Hale, Bailm. & Car. 12(1, note 137. 17K linker v. Drake, OU N. Y. 518; Steuton v. Jerome, 54 N. Y. 480; Van- RIGHTS AND LIABILITIES OF BROKERS. 41 power to sell nUev pioiier notice.^^* Slock brokers may, liowovor, hold a lien, strictly speaking, ou the property of their principals in their hands. Since, as ali-eady seen,^^'' stock brokers are in reality factors, they have the same power to sell to reimburse themselves that factors have.^^^ JPurc/uislufj Af/ents. Brokers Mhose business is to make purchases for their principals have a general lien on the goods in their hands for advances and com- missions.^82 g^-.j^ brokers are often called "purchasing factors." ^^'^ A broker who is intrusted with the possession of goods which he is to sell becomes, by reason of such possession, a factor/ «* and so has a general lien.^^^ Loan Brokei's. A loan broker has been held to have a lien on the money borrowed while it remains in his hands, for his commissions. ^s*' The courts, how- ever, have not given the question careful consideration, and it has not been determined what the exact nature of this lien is, or whether it is a general lien or a particular lien. It would seem, however, that the lien is a particular one, since general liens are not favored by the common law.^^^ A usage of business in the market where the parties were dealing would be sufficient to establish a general lien.^ss pell V. Woodward, 2 Sandf. Ch. (N. Y.) 143; Thompson v. Tolaud, 48 Cal. 9l»: Worthiugton v. Tormey, 34 Md. 182; Hatch v. Douglas, 48 Conn. 116. 1-9 Hale, Bailm. & Car. 16.5; Browu v. Ward, 3 Duer (N. Y.) 6G0; Wallace V. Berdell, 24 Hun (N. Y.) 379; Canlield v. Association, 14 Fed. 801.' 180 See ante, p. 2. 181 1 Jones, Liens (2d Ed.) § 421; Monograph on Factors, p. 37. is2BiTee v. Broks, 26 Wend. (N. Y.) 367; Stevens v. Robins, 12 Mass. 180 183 See ante, p. 2. 184 See ante, p. 2. 185 Monograph on Factors, p. 30. Circumstances may make the lien of such a broker a particular one. Barry v. Boninger, 46 Md. 59. 186 Vinton v. Baldwin, 95 Ind. 433. Cf. James' Appeal, 89 Pa. St. 51. A broker is entitled to a lien for commissions on a note and mortgage left in his possession for sale on commission. Peterson v. Hall, 61 Minn '^68 63 N. W. 733. ' . - , '87 1 Jones, Liens (2d Ed.) § 19;' Rushforth v. Hadfield, 7 East, 221. 18S Green v. Farmer, 4 Burrows, 2214, 2221. 12 HlfOKKKS. Ship lii-okcrs liavc no lien on llic slii]) ooncprninj; wliidi ilicy n('jj:o- tiatc."''' Thus, a broker has uo lien for liis services in jtrocnrin}; a t harter party. ^'**' Nor has an aj^enl who solicits frei<;ht.^®^ Tlie tpiestiou of a ship broker's lien on ])ai)ers in liis hands has not been raised in any case which has come to the Avriter's notice. Rail- Est a tr Brohr^. It is probable that a real-estate broker has no lien on deeds, plats, etc., in his hands for his commissions and expenses.^ "^ In Richards V, Gaskill '^^^ it was held that such a lien existed for "work thereon, and for their connnissions and advances." The case, however, is not well considered. Scriveners and conveyancers have a particular lien on papers in their hands for work done on such papers,^®* but such services are not performed as real-estate brokers. A lien, in Rich- ards V. Gaskill, was properly given for work in drawing the deed. ISO The Thames, 10 Fed. 848; The Crystal Stream. 25 Fed. 575: The .T. C. Williams, 15 Ped. .558. Aud see The Faola R., 32 Fed. 174; Ferris v. The E. D. Jewett, 2 Fed. 111. 190 The Thames, 10 Fed. 848. lei The Crystal Stream, 25 Fed. 575. Aud see The .T. C. Williams. 15 Fed. 558. i»2 Arthur v. Sylvester, 105 Pa. St. 2X5. In Gresham v. Galvestou Co. (Tex. Civ. App.) 36 S. W. 796, it was held that a broker had a lien for his commission upon the notes given for deferred payments, entitling him to the possession of the notes for the purpose of collection. A real-estate broker has no lien for services on a certificate of deposit placed in his hands by his principal, to be used, conditionally, in purchasing land. Robinson v. Stewart, 97 Mich. 4,54. 5enter v. Momsen, 92 Wis. 449. 65 N. W. 1027. IIIGHI.S AND LlAIUMTllCS OF HUOKERS. 43 SAME— RIGHTS AGAINST AND LIABILITIES TO THIRD PER- SONS. 15. Against third persons, a broker has the usual rights of any agent. RighU against Third Persons. Brokers usually make their contracts in the name of their princi- ]>als. But a broker may contract in his own name as apparent prin- cipal, or for a princi})al who is not disclosed. In any case the broker's rights against the person with Avhom the contract is made present no points calling for particular attention. The rules are the same as for agents in general. ^''^ So, in those cases where a broker has j)Ossession of his principal's goods, he has the usual rights of action against third persons who interfere with his possession.^*® Liabilities to Third Persons. Brokers who make contracts for principals whom they disclose are not liable thereon peisonally.^®' They are liable when they do not disclose Iheir principals.^'-*^ A broker selling property in his pos- session, with a warranty, is liable for a breach of the warranty when he does not disclose the existence of his agency,^*" but not when he does.2«o The liability of a broker for conversion by dealing with the goods of a third person in ignorance of the true owner's rights is unsettled. las See Meohein, Ag. c. 15. In Farrow v. Insurance Ck)., 18 Pick. (Mass.) 53. it was held that either the principal or the broker could sue on a policy of insurance made payable to the broker. 10 6 See Monograph on Factors, p. 38. 197 Wright V. Cabot, 89 N. Y. 570; Cabot Bank v. Morton, 4 Gray (Mass.) 1.".8; McGraw v. Godfrey, 14 Abb. Prac. X. S. (N. Y.) 397; Knapp v. Simon, !K; N. Y. 284. iitf^ Wright V. Cabot. S!) N. Y. 570: Knapp v. Simon, 96 N. Y. 284; Beebe V. Robert. 12 Wend. (N. Y.) 418; C()l)b v. Knapp, 71 N. Y. 348. A broker purchasing in his own name is liable to the carrier transporting the goods for demurrage. Falkenburg v. Clark, 11 R. I. 278. 199 Merriam v. Wolcott, 3 Allen (Mass.) 2.58; Wilder v. Cowles, 100 Mass. 487; Thompson v, McCullough, 31 Mo. 224; Aldrich v. Jackson. 5 R. I. 218; Dumont v. Williamson, 18 Ohio St. 515; Sere v. Faures, 15 La. Ann. 189. 200 Morrison v. Currie, 4 Dner (N. Y.) 79. He may bind himself person- ally by a contract to do so. Wilder v. Cowles, 100 :Mass. 487. 14 BROKERS. It seems to be conceded that a brokei' wlio has no possession of (lie goods, but merely sells or buys them for his principal, is not liable for conversion.-"^ But, when the broker has possession of the property at any time, the cases are unsatisfactory and scarce.-"- EIGHTS AND LIABILITIES OF PRINCIPALS AND THIRD PERSONS. 16. Principals, ■whether disclosed or not, may maintain ac- tions on the contracts made for them by their bro- kers. They are liable to third persons on contracts made by their brokers -within their authority. PrincipaVs Rights against Third Persons. The principal may sue third persons with whom his broker makes contracts for him. He may do this whether the broker, at the time of making the contracts, disclosed the name of the principal or not.^*^^ When the broker selling property does not have possession, the pur- chaser, when sued by the principal, cannot set off claims against the broker.-"* For injuries to his property in the hands of his broker, a principal has the usual rights of a general owner. ^"^ Liahiliti^ of Principal to Third Pei'sons. Third persons contracting through a broker can sue his principal on such contracts.-"" When the broker exceeds his authority, the principal is not bound. ^"'^ A broker not having possession of his principal's goods cannot bind the latter by contracts made according to the usages of trade and of the market in which he is dealing.-"* 201 Fowler v. Hollins, L. R. 7 Q. B. Glt>. 202 Williams v. Merle, 11 Wend. (N. Y.) 80; Fowler v. Hollins, L. K. 7 Q. B. GIG. And see Monograph on Factors, p. 40. 203 Graham v. Duckwall, 8 Bush (Ky.) 12; Mechem, Ag. § 7GS at seq. 204 Bradon v. Insurance Co., 1 La. 220. 205 Mechem, Ag. § 792. 206 Mechem, Ag. §§ G95, 703. 207 Clark V. Gumming, 77 Ga. 64; Clark v. Smith. SS 111. 298; Saladin v. Mitcliell, 4~j 111. 83; Brown v. Morris, 83 N. C. 254; Kornemanu v. Monaghan, 24 .Mich. :W. But see Wliildeu v. Bank, t>l Ala. 1. -"»* Seiple V. Irwin, 30 Pa. St. 514; Crosby v. Hill, .39 Ohio St. 100; Higgins V. ^foore, 34 N. Y. 417; Roseustock v. Tormey, 32 Md. 1G9; Borries v. Bank, L. K. 9 C. P. 38. TKHMINATION OK KKLATION, 45 lu tliis respect there is a ditlereiice between brokers and factors.^"* When the broker has possession, his contracts within the scope of his implied powers -^^ are binding on the principal.^^^ TERMINATION OF RELATION. 17. The relation of principal and broker may be terminat- ed (a) By expiration of the time for which the agency was created. (b) By agreement of the parties. (c; By notice by either party after a reasonable time, un- less created for a definite time. (d) By death of either party. If a principal and broker, at the time the relation is established, agree that the relation shall continue for a definite time, when that time has expired the broker's authority will be at an end, and the relation terminated.^ ^^ The parties may terminate the relation at any time by mutual agreement, whether created for a definite or an indefinite time. If the agency was established for a definite time, neither party could put an end to the agency without the consent of the other."^ But, when no time for the continuance of the contract is fixed by its terms, either party is at liberty to terminate it at will, subject only to the ordinary requirements of good faith.^^* The contract of the par- 2 09 Monograph on Factors, p. 43; Barings v. Corrie, 2 Barn. & Aid. 138. 210 Ante, p. 7. 211 Tborne v. Bank, 37 Ohio St. 254; Lobdell v. Baker, 1 Mete. (Mass.) 193; Borries v. Bank, L. R. 9 C. P. 38. 212 A broker's aiithority may be terminated by performance of his under- taking. Walker v. Derby, 5 Biss. 134, Fed. Cas. No. 17,068. The destruction of a house by fire is a revocation of a broker's authority to sell, and a sub- sequent sale of the lot by the owner to a purchaser to whom the broker had attempted to sell before the fire does not entitle the broker to commissions. Cox V. Bowling, 54 Mo. App. 289. 213 Brown v. Pforr, 38 Cal. 550. An agreement to pay a broker a com- mission if he sells land within a month is not necessarily an agreement not to revoke the agency during the month. Brown v. Pforr, Id. 214 Sibbald v. Iron Co., S3 N. Y. 378; Satterthwaite v. Vreeland, 3 Hun (N. Y.) 1.52; Brown v. Pforr, 38 Cal. 550; Doonan v. Ives, 73 Ga. 295; Wilson V. Dyer, 12 Ind. App. 320, 39 N. E. 103; Neal v. Lehman, 11 Tex. Civ. App. \ B BROKERS. tics may, liowovcr, willionl an oxpicss siipnlation, ro(|uit'(> the con- tinuance of the relation for a reaisonablc linic. ^Vlicrc I lie ]K'ifoiiii- ance of the broker'!? nndertakinji necessarily involves expendilnres. the broker is entitled to a fair and reasonable ojiportnnity to [K-rforni liis oblijiation, snbject, of course, to Ihe ri^ht of the seller to sell inde[K'ndently. But, that liavin}>- been j^ranted him, the right of the principal to terminate his authority is absolute and unrestricted, ex- cept only that he may not do it in bad faith, and as a mere devic(> to escape the payment of the broker's commissions. Thus, if, in the midst of negotialions instituted by the broker, and which were plainly and evidently approaching success, the seller should revoke the author- ity of the broker, with the view of concluding the bargain without his aid, and avoiding the payment of commissions about to be earned, it might well be said that the due performance of his obligation by the broker was purposely prevented by the piincipal. But if the latter acts in good faith, not seeking to escape the payment of com- missions, but moved fairly by a view of his own interest, he has the absolute right before a bargain is made, while negotiations remain un- successful, before commissions are earned, to revoke the broker's au- thority; and the latter cannot thereafter claim compensation for a sale made by the principal, even though it be to a custonuu' with whom Ihe broker unsuccessfully negotiated, and even though, to some extent, the seller might justly be said to have availed himself of the fruits of the broker's labor.^^" 4<;l, 34 S. W. 153; Farmer v. Kobiusou, 2 Oaiiip. ;K9, uote. Where a roal- estate broker for several months talios no steps to find a purchaser, the owner is justitied in treating his conduct as an abandonment of all effort to sell the property. Singer & Taleott Stone Co. v. Hutchinson, 01 111. App. 30S. ("f. Vincent v. Oil Co., 1<>5 Pa. St. 40-J. :'.o Atl. <.«»l. The broker must be given notice of the revocation of his autiioiity. Lnmson v. Sims. 48 N. Y. Super. Ct. 281; Hash v. Hill, (52 111. 21(). One who has given a broker authority, until further notice, to sell land. h;is the burden to show that he revoked tin- authority before the broker found a purchaser. Bourke v. Van Keureu, 20 Colo. !J.".. 3« Pac. 882. 2ioSii»l)ald V. Iron Co., S:\ X. Y. 378; Kelly v. Marsliali. 172 Pa. St. :'.'.•(;. 33 Atl. 090. A contract of agency to sell lots, stipulating for additional pay to the agent should he sell them all in one year, gives him one year to sell them; and, though not engaging his whole time, it cannot be revoked by tlie principal so long as the agent is diligent in his business, (jlover v. ileiider- sou, 120 Mo. 307, 25 S. \V. 175. MERCHANDISE BROKERS. 47 So. wiieii a stock broker undertakes a transaction for a client which involves a carrying of stock by the broker, there is an implied agree- ment to continue the relation a reasonal)le time, provided tlie ])rin- cipal complies with his part of the contract.-^" If the principal does not keep up the margins agreed upon, the broker may, after proper notice, sell the stoclc.^^^ The deatli of either the principal or the broker [luts an end to the hitter's authoritv.-^* MERCHANDISE BROKERS. 18. Merchandise brokers negotiate the purchase and sale of goods without having possession. Merchandise brokers are most nearly allied to factors. They differ from them as selling agents principally in not having the possession of the goods sold. When a broker for the sale of goods is intrusted with possession, he becomes a factor. ^^^ The differences in the im- plied powers of a merchandise broker ^^" and a factor arise from the possession of the goods. The powers of a broker employed to pur- chase goods depend on the authority given him. If he departs from his instructions, his principal is not bound. Such a broker has im- 216 White V. Smith. 54 N. Y. .522; Rogers v. Wiley. 131 N. Y. 527. 3U N. E. 582; Hess v. Kau. 95 N. Y. 339. -17 Stentoii V. Jerome, 54 X. Y. 4S0; Allen v. Mcronilie. 124 N. Y. 342. 2t; N. E. 812; Roseustock v. Toniiey, 32 :Md. I(i9. 218 Boone v. Clarke, 3 Cranch, C. C. 389, Fed. Cas. No. 1,G41; Hunt v. Rousmanier's Adm'r, 8 Wheat. 174; Lincoln v. Emerson, 108 Mass. 87; Adri- auoe V. Rutherford, 57 Mich. 170, 23 N. W. 718; Merrick's Estate, 8 Watts & S. (Pa.) 402; Hartford Fire Ins. Co. v. Wilcox, 57 111. 180. But the death of the principal does not revoke the broker's authority where it is coupled with an interest, as where a stock broker is carrying stock on margins. Hunt v. Rousmanier's Adm'r. supra; Hess v. Rau. 95 N. Y. 359. 219 Ante, p. 41. Cf. Bragg v. Meyer. 1 McAU. 408. Fed. Cas. No. 1.801. 220 The implied powers of merchandise brokers selling goods were con- sidered in treating of the implied powers of brokers generally. Ante, p.* 7. Such a broker has no implied power to rescind a sale which he has made. Saladin v. Mitchell. 45 111. 79; nor to receive payment, Higgins v. Moore. 34 N. Y. 417; Western R. Co. v. Roberts. 4 Phila. (Pa.) 110. For their right to commissions, see Moses v. Bierliug, 31 N. Y. 402. 48 BROKERS. jtlied j)(>AV(>r. in the nbsciico of iiisii iiciioiis on tlic point, lo fix the ])nio at which the i)iirchas(' sliall bo niade.'--'^ The power of mer- chandise brokers to bind both parties to the contract by the execu- tion of bong:ht and sokl notes has ah'eady been considered.-'-- Tliere are varions special kinds of merchandise brokers, who take their names from the articles in wliich tliey deal. Thus, we have jjjrain brokers, produce brokers, sugar brokers, etc. Their rights and powers differ only as the customs and usages in their several kinds of business differ. REAL-ESTATE BROKERS. 19. Real-estate brokers negotiate the purchase, sale, and leasing of real property. Most of the cases touching real-estate brokers are on the question of their right to compensation. This has already been considered.^-* ^fost cases hold that a real-estate broker who is given authority to sell on terms definitely fixed by the principal may bind the latter by sign- ing a written contract to sell,^-* though, of course, the broker cannot convey without a power of attorney; ^-^ and a few cases have held that he has no authority to bind the principal by a contract to convey.^ ^" Real-estate brokers in many instances combine, with the business of selling real property, the care, management, and renting of such 2 21 Ante, p. 9. 22 2 Ante, p. 10. 2 23 Ante, p. 20. 224 Smith V. Armstrong. 24 Wis. 44€; Pringlc v. Spanlding. ."la Barb. (N. Y.) 17; Glentwortli v. Lutlier, 21 Barb. (N. Y.) 145; Force v. Dutcher. IS N. .f. Kq. 401; Smith v. Allen, SO Mo. 178. But see Ilaydock v. Stow, 40 N. Y. ;{G3; Roach v. Coe, 1 E. D. Smith (N. Y.) 17."). 225 Glentworth v. Luther, 21 Barb. (N. Y.) 145; Force v. Dutcher, 18 N. J. Eq. 401. Cf. Blood v. Goodrich, 12 Wend. (N. Y.) 525. 2::') Duffy V. Hobson, 40 Gal. 240; Rutenberg v. Main, 47 Cal. 213; Mor- ris V. Ruddy, 20 N. J. Eq. 236; Keim v. Lindley (N. .T. Eq.) 30 Atl. 10G3; Cole- man V. Garrigues, 18 Barb. (N. Y.) 60 (oven-uled Haydock v. Stow, 40 N. Y. .■!i;:{); Mannix v. Ilildreth, 2 App. D. C. 2r)0. Where the terms of the sale are to be submitted to the principal, the broker has no authority to bind him by contract. Furst v. Tweed, 1)3 Iowa, 300, 61 N. W. S57; Berry v. Tweed, l>.". Iowa, 206, 01 N. W. 858. But see Smith v. Kcelor, 101 UI. 518, 38 N. B. 2.J0. HILL AND NOTK BROKERS. 49 properly. Uu\ siicli ;iii ;ij;<'ii(, lli()iij;li lie lias power to iiial^e ordinary repairs, has no implied power to rebuild in case the buildings are de- stroyed by fire."^ An ajjent for the care of property has been held to have no authority to l»iiii<; suit in his own name, for the recovery of possession of the property from one claiming under a tax title.--* BILL AND NOTE BROKERS. 20. Bill and note brokers negotiate the purchase and sale of commercial paper. Brokers who negotiate the purchase and sale of foreign bills of exchange are called "exchange brokers'';--** and so sometimes when they negotiate bills drawn on other places in this country,-^" When a bill or note broker acts in his own name, he is liable if the paper he sells proves not to be genuine.- ^^ The same is true when he does not disclose the name of his principal, though the purchaser knows he is dealing with an agent.^^- It has been held, however, that, when he has sold such pajjer, he will not be liable if he has paid over the proceeds to his principal.^^^ Tlie broker is not liable when he discloses the name of his principal, though the signatures of some of the parties are forged. ^^* There is no implied warranty of the solvency of any of the parties to paper sold by a broker, whether his principal is disclosed or not.-^"' A principal selling a note through a broker can reclaim the proceeds in the hands of the broker as long as they can be identified.-^*' A principal has been held bound by rep- 227 Becknian v. Wilson. 01 Cal. .33.j. 228 McIIenry v. Painter. 58 Iowa. ;;(;.">. 12 N. AV. 338. 229 Black, Law Diet. tit. -Broker." 2 30 Bouv. Law Diet. tit. "Brokers." 231 Merriam v. Wolcott. 3 Allen (Mass.) 258; Worthington v. Cowles. 112 Mass. 30: Thompson v. McCnllougli. 31 Mo. 224; Lyons v. Miller. 6 Grat. (Va.) 427: Aldrith v. .Tackson. 5 R. I. 218: Bell v. Calferty, 21 lud. 411. 232 Morrison v. Currie. 4 Duer (N. Y.) 79. 233 Morrison v. Currie. 4 Duer (N. Y.) 79. 234 Worthington v. Cowles. 112 Mass. 30: Lyons v. Miller. 6 Grat. (Va.) 427; Merriam v. Wolcott, 3 Allen (Mass.) 258; Thompson v. McCullough, 31 Mo. 224. 235 Aldrich v. Jackson. .". R. I. 218. 236 Clark V. Bank, 1 Sandf. (N. Y.) 498. BROKERS 4 50 BROKliRS. iH'sciifntions inndf l),v liis ln'olvi r llmi I lie iiolc ho \v;i>; soUlnj; was not usurious,-' '• and thai the inhitiiial was bound llicrcon as jiuaranlor.-'"' A lull broker haviiijj: possession of [lapci- whii-h he sells has implied power lo receive pavuieut.-^* LOAN BROKERS. 21. Loan brokers negotiate the lending of money. "VNTiat coustitutes performance of the undertaking; of a loan broker has already been considered.^*" A broker empowered to borrow money has implied authority to give to the lender the ordinary securi- ties therefor.'""^ An agent employed to loan money for the principal has. by implication, no power to loan it at an illegal rale. If the agent takes more than the legal late. the principal will not be af- fected.^*'- In some states the amount of commission which a broker may charge for procuring a loan is limited by statute.^" It has already been stated that pawnbrokers loaning their own money are not brokers at all, but are principals.^** STOCK BROKERS. 22. Stock brokers negotiate the purchase and sale of cor- porate stocks and bonds and government securities. As already stated,-*^ stock brokers, when selling stocks or bonds, are very much like factors, since thej^ usuallj' have possession of the property in which they deal. The business of stock brokers is very 237 Ahern v. Goodspeed, 72 N. Y. 108. 238 Fivvall V. Fitcli, 5 Whart. (Pa.) 32."). 239 Lentilhoii v. Vorwerck, Hill & 1). (N. Y.) 443. 2*0 Aute, p. 27. 2*1 Hatch V. Coddlngtou, 05 U. S. 48. ^^'il(M•(> a loan broker is applied to for a loan, he ha.s implied authority to asi'ee with liie propo.^H'd louder that 'full ])rlef of title and searches, with opinion of counsel, will be required." Middleton v. Thompson, im I'a. St. 112, 29 All. 7!m;. 2*2 f Jokey V. Knapp, 44 Iowa, 32. 2*3 Revision N. J. p. 519, § 5; Broad v. Hoftmau, G Barb. ^N. Y.) 177. 2*« Ante, p. 2. 2*5 Ante, p. 13. STOCK BROKKRS. f)! huiio]y ^ov(Mned bj the rules and usages of the slock exchange. The jiarties may, of conise, govern (lioir rights by any special contracts they see fit to make.2^« If no such agreement is made, the relation of the parlies, when a customer orders his broker to buy stock in the expectation of a rise in the market, has been well stated by Hunt, C. J., in .Markham v. Jaudon,-^" as follows: "The customer, Mr. M., employs the broker, Mr. J., to buy certain railroad stocks for his account, and to pay for them, and to hold them sui)ject to his order as to the time of sale. The customer advances ten per cent, of their market value, and agre(^s to keep good such proportionate advance according to the fluctuations of the market. Waiving for the moment all dis- puted questions, I state the following as the result of this agree- ment: The broker undertakes and agrees (1) at once to buy for the customer the stocks indicated; (2) to advance all the money required for the purchase, beyond the ten per cent, furnished by the customer; (3) to carry or hold such stocks for the benefit of the customer so long as the margin of ten per cent, is kept good, or until notice is given by either party that the transaction must be closed; an appre- ciation in the value of the stocks is the gain of tlie customer, and not of the broker; (4) at all times to have in his name or under his control, ready for delivery, the shares purchased, or an equal amount of other shares of the same stock; (5) to deliver such shares to the customer when required by him, upon the receipt of the advances and commis- sions accruing to the broker; or (6) to sell such shares upon the order of the customer, upon payment of the like sums to him, and account to the customer for the proceeds of such sale. Under this contract, the customer undertakes (1) to pay a margin of ten per cent, on the current market value of the sluires; (2) to keep good such margin, according to the fluctuations of the market; ^^^ (3) to take the shares so purchased on his order, whenever required by the broker, and to pay the difference between the percentage advanced by him and the 2*c Robinson v. Norris, 6 Hun (N. Y.) 233; Baker v. Drake, 0(5 \ Y 518- Hyatt V. Argeuti. 3 Cal. 151. 2*T 41 X, Y. 235, 239. 2^8 If he fails to do so, the broker may, after proper notice, sell the stock to protect himself. Baker v. Drake, (56 X. Y. 518; Gruman v. Smith SI X Y. 25; (Jillett v. Whiting, 120 X. Y. 402, 24 x\. E. 790; Esser v. Linderman 71 Pa. St. 76. 52 BROKERS. niuount ]);ii(l tliciefoi' by tli«^ brolcci.-'^ Tlic jjosilioii of jlic bi'okcr is twofold. T'[»oii the Older of the customei', he piirchascs thi' shares of stocks desired by him. This is a clear act of agency. To complete the purchase, he advances from his own funds, for the benefit of the customer, ninety per cent, of the ])ui'chase money.'' In uiakin*»' these advances, the broker assumes a new relation to the client; he becomes a creditor of the client, and holds the stock as a pledgee.-^*' When the customer desires to speculate on his judgment that the market will fall, he orders his broker to sell stocks or bonds vihi(;h the principal does not own. Tlie broker executes the order by borrowing the stock of some other broker for delivery to the piu-chaser. When the transaction is to be closed, the broker buys in stock on the market to replace that borrowed. An operation of this kind is called "sell- ing short." ^^^ The broker is. of course, bound to follow the instruc- tions of his principal in the execution of all orders for buying or sell- ing. If he fails to do so. he is liable to his principal for the resulting 249 A broker who advanced margins for the purchase of stocks for his chent could not recover the amount thereof before calling upon his client to take up the stock. MuUer v. Legendre, 47 La. Ann. 1017. 17 South. 500. A broker is not entitled to recover from his principal differences on stock which he purports to carry over on his behalf, when there is no existing contract between such broker and any third party available for the principal at the time when such differences arise. Skelton v. Wood, 15 Reports, 130. Stock ordered of a broker on margin contracts belongs, not to tlie broker, but to customers, and may be redeemed by them from an assignee of the broker for the benefit of creditors. Skiff v. Stoddard. Go Conn. li)8, 26 Atl. 874. 250 Markham v. Jaudon. 41 N. Y. 235; Baker v. Drake, 53 N. Y. 211, 6G N. Y. 518; Stenton v. Jerome, 54 N. Y. 480; Gruman v. Smith, 81 N. Y. 25; Taussig V. Hart, 58 N. Y. 425; Gilpin v. Howell, 5 Pa. St. 41; Child v. Hugg, 41 Cal. 511); Thompson v. Toland, 48 Cal. 90; Maryland Firo Ins. Co. v. Dalrymple, 25 Md. 243. For a discussion of the riglits and liabilities of a stock broker so far as he is a pledgee, see Ilale, Bailm. & Carr. c. 4. A broker is not bound to retain the identical certiticatc^s of stock, since one share is the exact equivalent of any other. It is sufficient if he always has on hand stock enough to fill his contract. Caswell v. Putnam. 120 N. Y. 153, 24 N. E. 287; Taussig v. Hart, supra; Levy v. Loeb, 85 X. Y. 305; Atkins v. Gamble, 42 Cal. 8G; Hale, Bailm. & Carr. 15!). 251 Knowlton v. Fitch, 52 N. Y. 288; White v. Smith, 54 N. Y. 522; Rogers V. Wiley, 131 N. Y. 527, 30 N. E. 582; Hess v. Rau, 95 N. Y. 359; Maxton v. Gheeu, 75 Pa. St. 1G6; Smith v. Bouvier, 70 Pa. St. 325. SHIP BROKERS. 63 loss.-^- Wliere the broker is given a "stop order," — that is, an in- struction to buy or sell wiien the nuirlvet reaches a certain figure, — he must wait for some other broker to make that price, and not make it himself bv offering to buy or sell at that priee."^ Ordinarily, in stock transactions the brokers do not disclose their clients, but deal only with each other. The usual rules of liability apply, however, and a broker who discloses the name of his principal will not be liable on the contract he makes; -^* otherwise, he will.^^^ One who has deposited margins with a broker, and ordered the purchase of stock, may withdraw the margins at any time before the order is executed, and revoke the broker's authority. ^^"^ SHIP BROKERS. 23. Ship brokers negotiate the purchase and sale of ships and the business of freighting vessels.^*^ Ship brokers engaged in the business of selling ships resemble in many respects real-estate brokers.^ ^^ A contract to pay a broker a 252 Smith V. Bouvier, 70 Pa. St. 325; Davis v. Gwynne, 57 X. Y. 67<>; Allen V. McConihe, 124 N. Y. 342, 2G N. E. S12; Galigher v. Jones. 129 U. S. 193, 9 Sup. Ct. 335. Where a brolier who had purchased securities for a customer on margins is directed, after the margin is exhausted, to sell, it is his duty to sell within a reasonable time thereafter, and, if he fails to do so, he is liable for the resulting loss. Zimmermaun v. Heil, 86 Hun, 114, 33 X. Y. Supp. 391. 2 53 Porter v. Worniser, 94 N. Y. 431; Wicks v. Hatch, 62 N. Y. 535; Wronkow v. Clews, 52 X. Y. Super. Ct. 176; Hope v. Lawrence, 50 Barb. (X. Y.) 258. 254 Coles V. Bristowe, 4 Ch. App. 3. 255 Nickalls v. Merry, L. R. 7 H. L. 530; Royal Exch. Ins. Co. v. Moore, 11 Wkly. Rep. 592; Stray v. Russell, 1 El. & El. 8S8. 2 56 Fletcher v. Marshall, 15 Mees. & W. 761. 2 57 Bouv. Law Diet. tit. "Brokers." 25S For a ship broker's right to commissions, see Stillman v. Mitchell, 2 Rob. (N. Y.) 523; Rowland v. Coffin, 47 Barb. (X. Y.) 653; Brown v. Post. 6 Rob. (X. Y.) Ill; Cook v. Fiske, 12 Gray (Mass.) 491; Cook v. Welch, Allen (Mass.) 350; Rennell v. Kimball, 5 Allen (Mass.) 356. For the effect of the words "by telegraphic authority," used by a ship broker in signing a charter party, on his implied warranty of authority, see Lilly v. Smales [1892J 1 Q. B. 456. 54 BROKICRS. siiciilicd fdiMmission for ol»(;iiiiiiii;- ;i iliMiIci' (»f :i m-sscI fiimi llic I'nitrd States ^(ivcrniiicnt is im»i void on iIk- i^idiiiid iliai il coiilra- vciu's public policy.-'''" The busiix-ss of a sliip broker includes the puichase and sale of ships, and the neuoilalion of contracts ft)r build- iiii: thcni.-''^ as well as the soli3. 2«'« White V. Insurance Co., 120 Mass. ;'i30; Train v. Insurance Co., 5; Rothschild v. lusuiance Co., 5 Mo. App. 596; Latoix V, Insurance Co., 27 La. Ann. 113. But see Goodson v. Brooke, 4 Camp. 1(>3. 2fiT "V^'hite V. lusuiance Co., 120 Mass. 330; Hermann v. Insurance Co.. 100 N. Y. 411. .'5 N. E. 341; Grace v. Insurance Co.. 109 U. S. 278. 3 Sup. Ct. 207. 268 Standard Oil Co. v. Triumph Ins. Co., (14 N. Y. 85. 269 Ante, p. 40. And see the following cases: Spring v. Insurance Co.. 8 Wheat. 2(>8: Cranston v. Insurance Co., 5 Bin. (Pa.) 538; Moody v. Webster. 3 Pick. (Mass.l 424; Sharp v. ^^'hipple, 1 Bosw. (N. Y.) 557; Foster v. Iloyt, 2 Johns. Cas. (N. Y.) 327. 2T0 Gettins v. Scudder. 71 111. 8(3. 271 Park V. Hammond, Taunt. 495; Moore v. Mourgue. 2 Cowp. 479; Mallough V. Barber. 4 Camp. 1.50; Maydew v. Forrester, 5 Taunt. i\l~j. 27 2 Grove v. Dubois, 1 Term II. 112. 273 14 Stat. 117. «74 Black. Law Diet. tit. "Custom-House Broker.** WBHT rUBLISIllNO CO., PRINTKK8 A.-tU 8TKBKUTY PKHS, 8T. I-AWL, MIWN. PKINCIPLI^:S OK IHK LAW OF CONDITIONAL SALES AND CHATTEL MORTGAGES A MONOGRAPH St. Paul, Minn. WEST PUBLISHING CO. 1899 Copyright, 1899, BY WEST PUBLISHING COMPANY. CONDITIONAL SALES AND CllATTLL iMOKTGAGLS. CONDITIONAL SALES. 1. GENERAL CHARACTERISTICS. An agreement to sell personal property upon condition is executory, and DO title passes from the seller to the purchaser until the condition is performed. The nature of the condition varies in different cases. Thus the following rules have been laid down : "(1) That where, by the agreement, the vendor is to do anything to the goods before delivery, it is a condition precedent to the vesting of the property. (2) That where anything remains to be done to the goods for ascertaining the price, such as weighing, testing, etc., this is a condition precedent to the transfer of the property." (3) That ''the parties may indicate an intention, by their agreement, to make any condition precedent to the vesting of the property, and, if they do so, their intention is fulfilled." (4) "Where the buyer is, by the contract, bound to do anything as a condition, either precedent or concurrent, on which the passing of the property depends, the property will not pass until the condition be fulfilled, even though the goods may have been actually delivered into the possession of the buyer." ^ In the first two classes above mentioned the sale is, in a sense, con- ditional, because the performance of some further act contemplated on the part of the seller must be performed before title can pass ; but the third and fourth classes, relating more particularly to cases where 1 Blackb. Sales, 152, and Benj. Sales, §§ 318, 320, quoted in Harkness v. Kussell, 118 U. S. GG7, 7 Sup. Ct. 51; Bishop v. Shillito, 2 Barn. & Aid. 329, note; Brandt v. Bowlby, 2 Barn. & Add. 932. COND.S.— 1 L CONDITIONAI. SAI.KS. tho ijodds nio alrciulv coinplclcd and n.^ccrtained. but wliore it is aj;rt'0(l thai no title shall pass until some act is done by the purchaser, — as. for example, payment. — or to cases where some particuhir event must liappoiKor some jiarticular condition be ix'rfornicd by either party, before title shall pass, cover what are usii.-illy described as conditional sales, 'i'lnis, in Mires v. Solebay ^ one Allsiou look sIkm^j) to ])astur" for a certain time, with an aj»reement that if, at the end of that time, he should pay a certain sum, he should have the sheep, and before the time exi>ired the owner sold them to another person, and it was held that the sale was valid, and that the agreement to sell the sheejt to Allston, if he would pay for them at a certain date, did not amount to a sale, but only to an agreement. So, also, where goods are sold to be paid for in cash or securities upon delivery, it is held that the sales are conditional only, and that the vendors are entitled to retake the goods, even after delivery, if the condition is not ])erformed, the delivery being considered as conditional. This often haj)pens in case of sales by auction, when certain terms of payment are prescribed with a condition that, if they are not complied with, the goods may be resold for ac- rount of the buyer, who is to account for any damage between the second sale and the first. Such was the case of l^iniond v. Davall."' In Crawcour v. Robertson* certain furniture dealers let Robertson have a lot of furniture upon his paying £10 in cash, and signing an agreement to pay £5 per mgnth (for whi<'li notes were given) nntil the whole price of the furniture should be jjuid. and when all the install ments were paid, and not before, the furniture was to be the property of Robertson; but, if he failed to jjay any of the inslallments, the own- ers were authorized to take possession of the property, and all prior payments actually made were to be forfeited. The court of ai>peal held that the property did not pass by this agreement, and could noi be taken as Robeitson's ]»roperty, by his trustee, under a liquidation [irocceding. The same conclusion was reaclx'd in the subsequent cas(» of Crawcour v. Salter. "^ In these cases, it is true, support of the transac tions was sought from the custom, whi(;h prevailed in the places where the transactions took place, of hotel keeix-rs holding their furniture on hire. Jiut they show that the intent of the pai'ties will be recognized and sanctioned where it is not contrai-y to the j»olicv of the law. This 2 2 Mud. ■_•«:;. ay Iowa, IGG. .JC. N. W. 4L'4; Knowles Loom Works V. Vaeher, .j7 N. J. Law, 400, IM Atl. '.\m. 18 Warren v. Liddell, 110 Ala. 232, 244, 20 South. SO; Went worth v. Ma- chine Co., 1G3 Mass. 28. 39 N. E. 414; Thomas, Chat. Mortg. § 58. See Ix'atlu'rl)erry v. Connor, ~A N. .T. Law. 172, 23 Atl. «]S4. Conti'a. Rylo v. Loom Works, 31 C. C. A. 340, 87 Fed. !)7i;; I'liion Bank of Wilton v. Creamery Tack- ape Mffc. Co. (Iowa) 74 N. W. 021. If Call v. Seymour. 40 Ohio St. 070; Kylo v. Loom Works, 31 C. C. A. 340. 87 Fed. UlC; Marquette Mfg. Co. v. .Teffrey. 40 Mich. 2S3, 13 N. W. r)02; Ilark- ness v. Russell, 118 U. S. GG3, G7r», 7 Sup. Ct. .■>! : Ccorge v. Slubbs, 2C> Me. 243; Sargent v. Glle, 8 N. IT. 32."i: Ileiilin v. Hdl. .'.(t VI. i:M: Tliorpe v. Fow- ler, r>7 Iowa, 541, 11 X. W. .3; Cole v. Herry, 42 N. .1. L:iw. .30S. See. also. Mr. Freeman's note to K.-inaga v. Taylor, 7 Oino Si. l.l I. in 70 Am. Dec. (52; and romiKire Ilaak v. Linderman, 04 I'a. St. 40t>; \'an i»u/.or v. Allen, 90 111. 4Jrt); Ilervey v. Locomotive Works, 93 U. S. G04. 071. •■^^(Jreen v. Van Hnskirk, 5 Wall. .'>U7, 7 A\all. l.'V.i; Ilervey v. Locomotive Works, 03 U. S. 004. SAI.K HY HAILKK, FOU IIIKK. I in th<' vondf'C.^^ If, in iifliiiiiiinrr' of the ((nilriicl. (lie vendor seizes the chattels for flic avowed i)iiri)ose of selliuK llieiii, and colleeting the amount due upon the contract, he has no right to seize and sell or seize and retain more than is sufTicient to satisfy his demand and cx|t<'iis('S.-* TIm- faroperty until the purchase money is fully paid.*^ 5. SALE BY BAILEE FOR HIRE. Where the owner of personal property delivers it to a bailee for hire, under an agreement that the latter may purchase it, the latter, prior to the performance of the coiKlition, cannot give title to a purchaser in good faith, for value, and without notice.^* '1 Detroit Ileatiug & Lighting Co. v. Stevens. 16 Utah, 177, 52 Pac. 379; Hervey v. l>iniou(l (N. H.) 3U Atl. 331. 2:: O'Kouike v. Hadfock, 114 X. Y. 541. .j4S), 22 N. E. 33. See, also, section lie of the New York Lien Law (Laws 18U7, c. 418), providing that, in case of a retaking by the vendor or a successor in interest, the goods shall be re- tained for a period of 30 days, during which the vendee or his successor in interest may comiily with tlio terms of the contract, and thereupon receive the property, and that after the expiration of that period, if the terms are not complied witli. the articles may be sold at public auction on notice, in which case the vendor or his successor in interest may retain from the pro- ceeds the amount due on his contract and the expenses of storage and of sale; the balance to be held subject to the demand of the vendee or his suc- cessor in interest for 30 days, and then deposited with tlie treasurer, cham- berlnin. or supervisor, who shall hold it for the vendee or his successor in interest for five years, and, if unclaimed, shall transfer it to the funds of the town, village, or city. Similar provisions exist in many states. Orner v. Manufacturing Co., IS Ind. App. 122. 47 N. E. 644; Richardson Drug Co. v. Teasdall. 52 Neb. 608, 72 N. W. 1028; Milburn Mfg. Co. v. Wayland (Tenn. Ch. App.) 43 S. W. 129. 23 National Cash-Kegister Co. v. Coleman. 85 Hun, 125, 32 N. Y. Supp. 593: Campbell Printing Press & Mfg. Co. v. Rockaway Pub. Co., 50 N. J. Law, 676, 29 Atl. 681; Clark v. Richards (Minn.) 75 N. W. 605. 24 Austin V. Dye, 46 N. Y. 500; Ryle v. Loom Works, 31 C. C. A. 340, 87 Fed. 976. CONDITIoNAI, SAI.KS. 0. SALE BY BORROWER HAVING RIGHT TO PURCHASE. W'liere an owner dolivors goods to another, who signs a writing re- citing that he has "borrowed and received" the goods, to be returned to the U'nder on demand, and tliat the borrower may purcliase the goods for a certain sum, payable in instalbmnts. wliii h he agrees ^o |i;i\. and that until payment the liglit to jtosscssion shall it-main in the lender, no lilh' jKisses to the boi-rower, but the title rcniains in the lender, who, until payment of the stipulated sum, is entitled to posses- sion."-'^ 7. FRAUD. The common law recognizes the validity of verbal contracts of sales of chattels for any amount, and however proven; but a great modification was introduced by the statute of 20 Tar. TI. c. 3, known as the ''Statute of Frauds," which exists, with some slight variations, in almost every state of the Union. The seventeenth section of the English statute provided that no contract for the sale of any goods, wares, or merchandise for the price (value) of £10 sterling or upwards shall be allowed to be good except the purchaser 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 payment, or that some note or memorandum in writing of the said bargain be made aiMl signed by the parties to be charged by such contract, or their agents thereunto lawfully authorized. In New York it is provided by se^'tion iM of the Personal Property I^w -' that: ''Every agreement, i)romise or undertaking is void un- less it, or some note or memorandum thereof, Im^ in writing and sub- scribed by the party to be charged therefor, or by his lawful agent, if such agreement, promise or undertaking * * * is a contract for the sale of any goods, chattels or things in action for the j)rice of !?.")l) or more, and the buyer does not accept and receive part of snch goods, or the r'\i(|ences, or some (tf them, of such things in action, nor at the time pay any jtart of the purchase juice." And by section 1*4 of the same act it is jirovided that: "Every transfer of any interest in per- sonal property or the income thereof, and evt-ry charge on such prop- erty 7, c. 117. KKAUI). 9 Cfcdilois (»f oIIht |m'i.s()iis of (lirir lawrul suits, dwiiiii^^cs, foifcil iircs, (IcMs or (lriii;iii(is. ;iii(l every bond or other evidence of debt given, suit (•omiiK'nrrd. or decree or jnd^Mueiit stifTei-ed, vvilli such intent, is void as u;;ainsl every person so liiiidered, delayed, or defrauded." And by section 25 it is provided that: "Every sale of goods and chattels in the possession or under the control of the vendor, and every assignment of goods and chattels l)y way of security or on any condition, but not constituting a mortgage nor intended to operate as a mortgage, unless accompanied by an inuuediate delivery, followed by actual and contin- ued change of j)ossession, is presumed to be fraudulent and void as against all persons who are creditors of the vendor or person making the sale or assignment, including all persons who are his creditors at any tiuw^ while such goods or chattels remain in his possession or under his control, or subsequent purchasers of such goods and chatt<'ls in good faith; and is conclusive evidence of such fraud unless it appear on the part of the person claiming, under the sale or assignment, that it was nuide in good faith, and without intent to defraud such creditor or purchaser. But this section does not ajjply to a contract of bot- tonii-y or respondentia, or to an assignment of a vessel of goods at sea or in a foreign port;" and by section 26 that "the question of the ex- istence of fraudulent intent in cases arising under this article is a question of fact, and not of law." The fact that the conditional vendee of goods not delivered is permitted by the agreement to sell the articles embraced therein upon condition that the proceeds of sales shall be accounted for and paid to the vendee to apply upon the purchase price, does not impair the lights of the vendor, or render it void as to the creditors of the vendee,^^ The same principle applies where there is a delivery under an agreement for conditional sale, with a right in the purchaser to sell, and remit the proceeds.^^ But if the conditioml vendee is given absolute power to sell for his own benefit or to con- sume the property, the result is to vest title in the purchaser as against his creditors.-* = - Prentiss Tool & Supply Co. v. Sehirmer, 136 N. Y. 305, 32 N. E. 849; Mausur & Tebbotts Implement Co. v. Reeman-St. Clair Co. (Tex. Civ. App.) 45 S. W. 729. 28 Cole v. Mann. G2 N. Y. 1; Ufford v. Winchester, G9 Vt. 542, 38 Atl. 230. 2!» Devlin v. O'NeiU, 6 Daly (N. Y.) 305; Frank v. Batten, 49 Uun, 91, 1 N. Y. Supp. 705. 10 CONDITIONAL SALKS. 8. FORM OF CONDITIONAL SALE. Tho TiKM'O iiomiiinl form (tf a Iraiisaction is iiol toiiclusivo in »le- Icriuininj; whether it is or is not a conditional sale The law looks at its real nature. Thus, a transaction in form a lease, or bailment, or absolute Siile may be in fact a conditional sjile if the intent is to make an agreement of sale conditional upon the happening of a con- tingency or the performance of a condition.^" 9. SPECIAL STATUTORY PROVISIONS. In addition to the provisions already referred to, the New York statute, which may be taken as typifying in general the statutes of other states, although the latter vary from it and among themselves in many respects, contains the following provisions: Defi}iitio?7S. "The terra 'conditional vendor,' when used in this article, means the person contracting to sell goods and chattels upon condition that the owiK*rship thereof is to remain in such person until such goods and rhattels are fully paid for or until the occurrence of any future event or contingenc}'; the term 'conditional vendee,' w'hen so used, means the person to whom such goods and chattels are so sold." '* The same statute, after providing that conditions and reservations in a contract for conditional sale accompanied by immediate delivery and continued possession of the thing contracted to be sold, to tho effect that the ownership of such goods and chattels is to remain in the vendor until payment, or some future event, shall be void as against subso(pi('nt purchasers, pledgees, or mortgagees in good faith, and as to them the sale shall be deemed absolute, unless such contract of sale, or a true copy thereof, shall be filed, as there provided. ^^ The lien law goes on to provide in section 114 that the provisions of the preced- 30 Wright V. Harnard, SO Iowa, IGd, r.O N. W. 42^; Singer Scwiiig-Mach. Co. V. Ilolcorab, 40 Iowa, X\; Fjirnuhar v. Mc.Movy. 142 Ta. St. 2Si, 21 Atl. 811; Kyle v. Loom Works, 'M C. C. A. :{40, i>7 1\»1. 1)70. ni Li«'i) Law (Laws 1S!I7, c. 418, § 110). «i Id. S§ Uli, 113. SAl.K WITH (II'IION TO KKTIIiN. 11 ing article, relating? to chattel mortgaRes, apply to the indorsement, entry, refiling, and diHchargo of contracts for the conditional sale of goods and clinKcls. Upon tliis siibjcd, llicivforo, reference is here made to the subject of tiling of cliatlel mortgages, which is discussed hereafter.*" Exceptions. The New York stat\ite does not apply to a number of articles enumerated therein, including household goods, pianos, threshing ma- chines, coaches, carriages, bicycles, and other devices for locomotion by human power, if the contract for the sale thereof is executed in duplicate, and one duplicate delivered to the purchaser. 10. SALE WITH OPTION TO RETURN. Where an ownei- of property sells it subject to the condition that the purchaser may, at his option, return it, the seller is thereby devested of all title and control over the goods, unless the seller elects to return them; for until the exercise of this option the goods are his; he has the jus dis])onendi, and is at lil)erty to sell upon his own terms, and to whom he pleases, the only consequence being that he is to pay the seller the agreed price, and to this extent becomes the seller's debtor.^* In this respect such a sale differs radically from a conditional sale, prop- erly so called, for here the title passes subject to a condition subse- quent, while in a proper conditional sale the title does not pass until the performance of a condition precedent thereto. ^^ 33 See, also, Wriiilit v. Barnard, 89 Iowa, 16C, 56 N. W. 424; Knowles Loom Works v. Vacher. 57 N, J. Law, 400, 31 Atl. 306; In re Wilcox & Howe Co., 70 Conn. 220, 39 Atl. 163; Cohen v. Manufacturing Co. (Conn.) 40 Atl. 455; Holland v. A.lams (Ga.) .30 S. E. 432; .Johnston v. AVood (Wash.) 53 Pac. 707; Woolley v. Wagon Co., 59 N. J. Lo-w, 278, 35 Atl. 789. 8 4 Costello V. Herbst, 18 Misc. Rep. 176. 41 N. Y. Supp. 574. so Fish V. Benedict, 74 N. Y. 613; Carter v. Wallace, 32 Hun (N. Y.) 384; Ex parte White, 6 Ch. App. 397. 12 CHATTEL MORTQAUES. CHATTEL MORTaAGES. 11. CHATTEL MORTGAGE DEFINED. A chattel mortgage is a present transfer of the tit If to poisonal property, snbject to defeat by })aynu'nt of the sum or instrument it is given to secure; and, in default of performance by tlie mortgagor of the condition, the title of the mortgagee becomes absolute.*' "A chat- tel mortgage is a transfer of personal property as security for a debt or obligation, in such form that, upon failure by the mortgagor to comj»ly with the terms of the contract, the title of the property will be in the mortgagee." "^ 12. CHATTEL MORTGAGE AND CONDITIONAL SALE DISTIN- GUISHED. The owner of personal property may sell the same outright, subject to DO condition. Tliis is an absolute sale. Instead of this, he may agree to sell it upon a condition to be performed by the purchaser. This is a conditional sale. Or, again, he may make an absolute sale, and take back from the purchaser a chattel mortgage upon it, by virtue of which, upon the failure of the purchaser to perform something which he agrees to do, the title to the property will again become vested in the original owner. Or, still again, he may keep the property, and himself give a mortgage upon it, in which case, upon liis failure to per- form some agreement on his part, the title shall vest in the mortgagee. The second and third of these cases present some points of similarity, but in other resj>ects are dilferent. In the case of a conditional sale, the title continues in the original owner, and is devested only upon the hapi)ening of the specified condition. In the case of a sale, the seller jiiirts with the title, and, if he takes back a mortgage, he thereby 30 Parshall v. K^'Rcrt, 54 N. Y. 18; Blake v. Ck^rbolt, Jliu N. Y. :'.L'7, i:i N. E. 477. •7 Thomas, Cbut. .Murlg. i 2. MoimiAcii;, [■i.i:n(;K, amj salk oistinquisiied. 1'> rc;i.(|iiirf's ;i iiMTO lrclini<;il title, iiiid doos not reacquire absolute title, exLH'pt in casi? of iionpcrforiiiance by llic purciiaser. But in both cases tlu' n'sult of the transaction is to give to the purchaser certain rights in n-spcct to the property, and to leave certain other rights in respect to it in llie seller. If one who owns property wishes, for example, to dispose of it, but the proposed purchaser is not at {)r('sent in a posi- tion to jtay the price, and the seller is willing to deliver tlie pioperty and wait for payment, if only he can assure himself of ultimately hav- ing either the property or the price, without relying merely upon the purchaser's promise to |»ay, he may either deliver it to the purchaser under an agreement that the title should not pass until the price is paid, or he may sell and deliver it, and take back a chattel mortgage upon it, containing the condition that, if the stipulated sura should be paid by a specified date, the mortgage shall be void; otherwise to re- main in full force and effect In the former case, if payment was not made, a seller would be in the same position as if he had not agreed to sell; while in the latter, if the amount named in the mortgage was not i»aid. he would again own the property. As between these two forms of the transaction, a distinction sometimes exists under the statutes relating to the necessity of filing either chattel mortgages, or comlitional bills of sale, or both.^* 13. MORTGAGE, PLEDGE, AND SALE DISTINGUISHED. In the case of an absolute sale, the title passes to the purchaser, sub- ject to no condition. A conditional sale may, as already seen, be conditioned upon the doing of some act to the property by the vendor before the transaction is completed, as weighing or separating it from other property; or it may be conditional, even though ready for de- livery, and even though delivered, if the agreement is that title is not to pass until the performance of some condition by the vendee or the liappcning of some subsequent contingency. In all these cases, title docs not pass until the condition is complied with, or the contingency happens. In the case of a chattel mortgage, the title passes, theo- reticiilly; but no delivery is necessary to consummate the transaction, and usually i lie mortgaged goods are not in fact delivered. As already 88 IlarkiKba V. Huss^ell, His U. S. 003, 7 i?iip. Ci. 51. 14 CHAITKI. MDKTGACiKS. SCHMI, tlic nitii't.::;i.uor rt'tnins some of llic rights iiuMdml lo ow in'rslii|i; such as the rijiht to sell, or to pliirc a sccuiid moi Ij^ajic on the proju'ilv subject to tlie first inortfxa^c, until (l»'faull. al wliich lime the ahsolutc lej^al title passt-s to the inorlf^ajree, suhjecl itt an iMjuitabh' iij;ht in the mortgajior to rcdccni. In i In- < asc of a plnl^c, (lie delivei'V of the piop erty to the pledgee is esseniial.^" 14. MORTGAGE, CONDITIONAL SALE, AND BAILMENT DIS- TINGUISHED. ''When the identical thinjj: delivered, altlKiuuli in an altered form, is to be restored, the contract is one of bailnifiu. ami (he title to the projK'rty is not chanj^ed; but when there is no oblij;ation to restore the specific article, and the receiver is at liberty to return another thing of equal value, he becomes a debtor to make the return, and the title to the property is changed; it is a sale," absoluic or conditional, according to the circumstances."'*' 15. FORM OF CHATTEL MORTGAGE. A cliattel mortgage is usually in the form of a transfer of the propiM-ty to the mortgagee, his executois, administrators, and assigns, specify- ing the goods mortgaged, upon condiiion, nevertheless, that if the mortgagor, his heirs, executors, administrators, and assigns, shall and do well and truly pay, or cause to be paid, to the nu)rtgagee, his exec- utors, administrators, and assigns, a specified sum of money, or the amoimt of specified obligations, then and in that event the mortgage to be void, otherwise to remain in full Utvcv and elTect. It commonly provides, also, that the mortgagor shall insure the goods and chattels mortgaged, and keep them insured, against loss and dauutge by fire, in a company to be approved by the mortgagee, with the loss, if any. »» Sledcnbach v. Riley, 111 N. Y. .'.(;<», ll> N. E. -JT.".; People v. KlrkpalriiU. 00 III. App. 207; Ward v. Lord. KH) (Ja. 407. L'S S. E. 44(;; CauQeld v. W. J. iUnih] & Co. (Mich.) 73 N. W. 550; Aiiglin v. Harlow (Tox. Civ. App.) 45 S. W. 827. 40 \\ riKlit V. r.ariiard, 8ft Iowa, KKJ. .'ii; N. W. 4124; Fostor v. I'ettiboiu'. 7 N. V. 4.T); Chickeiiii^' v. Hastress. I.*?)) III. L'OC.. ITJ N. K. .".»•_'; .Mowbray v. Cady. 40 Iowa, G04; 15iidloiig v. Cottrell, Gl luwa. -Sio, 20 N. \V. If^;. KOUM Ol- CIIATTKI, MOUTGAGK. 1 "> ]i;i\;ililr l<> III'' iiinrl^M;;c<', ;is his iiilncsl nuiv ;i|i|M';ir; mid tlic iiiorl- j,'i»P' also usually coiilains special provisions a},'ainst the rcuKival of the properly by the niort},'aj,'or without the nioitKiiK^'t^'s couHcnt, and for the retentiou by the moitga};or of the property mortgaged, until (hfaiiU. and for the taking of the property by the mortgagee in case tilt- iuoi'i;^a;;or soils or assigns the same, and for a sale thereof, and the n-lention oui of the proceeds of the amount then uni»aid, with the costs and t iiarges of removing and selling tlie property, liut no particular foiin is «'ssen(ial.*' It need not, for example, state the s>im of money for whirh it is given as security, nor that the mortgagee shall have the right to take possession of the goods. Thus, the following instru- ment has been held lo be a chattel mortgage: "For value received, T, TsMlM'Ila Corbet t. do hereby sell and assign the above mentioned and described books to Henry A. Blake, his heirs and assigns, I to hold and retain possession of said books for eight months from this sale; and if, during that period, the sum of indebtedness to said Blake now owing to him by Richard (.'rowley is paid or satisfied, for the payment of which this assignment is made as security, then this conveyance shall be null and void." *- So. where an instrument which was in form an absolute bill of sale contained a provision that ''it is further understood and agreed by the l)artie8 hereto that, if the said party of the first part pay unto the party of the second part the sum of ^400, within from the date hereof, the party of the second part agrees and will resell the property men- tioned herein, back to the said jtarty of the first part, and it is further understood and agreed by the parties hereto that the property men- tioned herein and specified in the schedule shall remain in the posses- sion of the party of the first part, he agreeing to pay the party of the second part 12.50 per week for the use of said mentioned prcrperty in his business"; and it appeared that the owner of the propcnty liad applied for a loan of money, offering to secure its repayment hy giving a chattel mortgage; that the lender had refused to accept a chattel ni(ulga;;e. but had accepted the instrument in question instead; and that he had acknowledged that the instrument was to be given back «>nill.(.rt V. ItepistiT Co., G7 111. App. f,OG; Smlth-McCord Dry-(;o7, 24 N. K. 477. 1(1 CHATTKI, MDUTCACKS. when the money should l)(M'<'ii;ii«l toliiin. il wjisluld that tlu'S(» fncts^ tak«Mi in connei'tion witli tlie provisions of the instriniiont, conlcniphit- rd a h)an of money and a sale of the property, upon the condilion that the property should be returned upon the payment of the money so loaned, and that this was, in ellect, a chattel mortgage.*^ 16. EFFECT ON THE TITLE BEFORE DEFAULT. While, strictly sjjeaking, upon the execution of a chattel mortgage, a conditional legal title to the jtroperty is vested in the mortgagee, which title is subject to defeasance by the performance of the condi- tions contained in the mortgage, and title vests at law in the mort- gagee, u]»on default in the payment of the mortgage, and thereafter there is left in the mortgagor only an equity of redemption, this view is more technical and theoretical than practical. Practically, the sub- stantial title remains in the mortgagor, with all the incidents of the legal title. He retains the use, control, and benefit of the property, subject to the mortgage. If the property is taken from his posses- sion wrongfully during the time when, by the terms of the mortgage, he is entitled to retain possession thereof, he may maintain an action for conversion against any wrongdoer, even against the mortgagee. He can sell it, and convey a good title, subject to the mortgage, to any purchaser; and it may be seized and sold by virtue of an execution against him.** The mortgagor can sell the property, or mortgage itj and a subsequent mortgage of personal property is not an uncommon form of securit}'.*^ 43 Susman v. Whyard, 149 N. Y. 127. 43 N. E. 413. As to what is a suffl- cient description for the niortjiage to contain of the chattels mortgaged, see Williamson v. Wylie, GO Mo. A pp. 3G8; Wilson v. Uustad (N. D.) 75 N. W. 200; Desany v. Thorp (Vt.) 39 Atl. 309; Cragin v. Dickey, 113 Ala. 310, 21 South. 55. ** Leadbetter v. Leadbetter, 125 N. Y. 290. 26 N. E. 2Gr>; Casscrly v. With- erbee, 119 N. Y. 522. 23 N. E. 1000. 46 Moore v. Supply Co., 133 N. Y. 144, 149, 30 N. E. 730. EKFKCT ON TITLK AKTKIl DEFAULT, 17 17. EFFECT ON TITLE AFTER DEFAULT. After (Ir lijid is vested Jibsolnfely. subject to the i-i^'ht of redemption in e<|iii(y. in the mortgagee;''*' and llieieafter tlie mortgagee, even though his mortgage is a second mortgage, iias the same right to sue for a conversion of the projjerty, or an injury to it, as the mortgagor wouUl liave possessed if there had been no default in the payment. This is the result where the first mortgage is not yet overdue; but, when the title of the first mortgage has become absolute at law, the secoixl moi'tgagee cannot thereafter sue for conversion."'^ When default is made in the payment of the debt secured by a mort- gage on personal i)roperty, the legal title to the property becomes vested in the mortgagee; and thereafter the mortgagor or any one holding his title has but an e(iuitable right of redemption, and he can accordingly tiansfer no greater light to his assignee.*® Where default has been made in the payment of a first mortgage before the second is executed, and in the second before the third is executed, the last two mortgages transfer nothing but the equity of redemption, bet;ause the legal title has become vested in the first mortgagee, who could at any time assert that title by taking the prop- erty into his possession. But while the holder of a first mortgage, after default in payment of his debt, becomes vested with the legal title, yet, so long as he does not take possession, he does not acquire all the rights nor subject himself to all the duties and responsibilities of owner. So long as the possession of the mortgagor is not dis- turbed, the mortgagor is entitled to receive the earnings of the prop- erty, if any, and is liable for repairs, and for the discharge of the duties and obligations incident to ownership; and the mortgagee, tliough having the legal title after default, is not charged wath any such obligations, in the absence of express contract, until he assumes *o .Martiu v. .Iciikins. 51 .S. C. 42, 27 .S. K. 1)47; Trustees of Ashland Lodjjre V. Williams (Wis.) 7.". N. W. 054. *■! Mooro V. Supply Co., l:^•.^ N. Y. 144. 30 N. E. 730; lYeat v. Gilmore, 40 Me. 34; Kint,' v. Neale, 114 Mass. 111. <8 Kimball v. Bauk, 138 N. Y. 500, 5U4, 34 N, E. 337 COND.S.— 2 1 "^ CHATTKl. MOItTIJAlJKS. thi'in l\v t;il;injj: jiossession, and Ihcn he bccoinos onlided to receive the oarniuns of the property, if any.** If a luort^ap'e holding a inorliia^ic upon sevci-al chatlels continut's to sell after he has reali/ed enough to satisfy the debt and costs, he iK'foiiics a ircspasser.'**' 18. CHATTEL MORTGAGE ON NONEXISTENT PROPERTY. A nioi't^a^c cannot be •;ivtn clVcct at law as a lien upon personal property wliicli. at th<» time of its (h'liverv. was not in existence, eitiier actually or potentially, when the riulits of creditors intervene. At law. such a mortj^age must be conceded to be void. The mortgage c(»uld have no positive opeiation to transfer in pra^st^iti property not in esse. But it may operate l>y way of a personal contract between the jiarties that the crey his debior, which ('(juity will enforce as against the latter.^^ Even where a chattel moitgage ojierates as an executory agreement to give a lien when the property comes into existence, some further act is necessary in order to make it actual and effectual as against credit- ors. If no further act is done by the ]>arties to the instrument, to create such an actual lien, the levy of an execution upon the property by a creditor of the mortgagor operates to transfer the ])osse8sion from the owner to that of the sheritf. As against his possession, the equities of the nn)rtgagee ;ire unavailing for any purpose.^- <» Kiiiihnll V. liaiik, l.".S N. V. .")00. .">o.".. .;» X. Iv .••.:'.T; Wilson v. Wilson, !>. R. 14 p:q. 4U; Brown v. 'raiiiuT. :; (Mi. A\>\>. .V.iT; Liverpool Marine Credit Co. V. Wil.son. 7 Cli. App. .'(OT. ooo'Kourke v. Iladcock. 114 N. Y. r.41. .".4!t. liJ N. K. .T.. 61 RoclR'ster Distilling Co. v. Uasey, 14U N. Y. 570, :{7 N. E. CuV2: Hank of Lunslugburgh v, Crary. 1 Bar!). (N. Y.) 542; Electric I-lglitiug Co. of Mobilf v. Ilust (Ala.) *J:'. Sontli. 751; Standard Brewery v. Nudehnan. 70 111. App. .^5<;; Otis V. Sill. S Barh. (N. Y.) 102; (Jardncr v. MeEwen, l!l N. Y. 12.'{; Kribbs V. Alford. 120 N. Y. 510. 24 N. E. 811. Compare Allen v. .Mannfac- tiirlng Co.. 87 Fed. 7Sfi; Alnswortli v. Trading Co. (Ca.) 2;> S. E. 142; Snow V. rimer. !H> Me. .".24. ."iO Atl. '.W,; Midland Slate Bank v. Kili>atrlek-Koeh I)ry-<;oodK Co. (Neb.) 74 N. W. S.!7; Kane v. Lodor i.N. .1. Cli.l .'{H .\tl. 5M'>0. f'-' Hoclicsfei- Distilling Co. v. Bascy. 142 N. Y. 570. ;',7 .\. lO. (►.•.2. Compare Holroyd v. .Marsball. 10 H. T-. ('as. 201); McCalTrey v. Woodlu, 05 N. Y. 450; MiH)i\y V. Wriglit, l.'. Mete. (.Mass.j 17. THK IIKJIIT OF POSSESSION. 19 Where a moi l;;jif;e covers chattolp in exist cue*'. :iikrt}^agee. possession shall H'Miain in ihr inuri;^a^()r."^'' 20. FRAUDULENT CHATTEL MORTGAGES. Xiinu'Ktiis aulhorifies deal with the snhjrct of niiirl;,Mj^('S which, either upon their faee or in connection with a contcnijioraneous oral agreement between the parties, are intended to authorize the mort- gagor to continue to sell or otherwise to deal with the projuM'ty as his own. It is ohviotis that such an arrangement is strongly indiiative of an intention to give a false credit to the mortgagor. Chattel mortgages were formerly in most of the states treated as invalid, unless actual possession was surrendered to the mortgagee; but it is not so now, for modern legislation has as a general thing (the cases to the contrary being exceptional) conceded the right to the mortgagor to retain pos- session if the transaction is for a good consideration, and bona tide. This concession is in ol)eplication to mort- gages. The cases cannot be reconciled l»y any piocess of reasoning, or on any i»iinci|tles of law. It is not ditlicult to sec that the mere retenlioi» of use of personal property until default is altogether a ditTer0 N. V. :^74. KllAUOI'I.KNT CHATTKL MORTGAGES. 21 foniirr is fiv.|iirn(l\ jin mil led by statiilr. is coiisistriil willi (li<- ii' not only to continue in possession, but to dispose of the property, sell it at retail, and use the money obtained to replenish his stock, and there is no covenant to account with the mortgagee, nor any recognition that the projjorty is sold for the latter's benefit, the manifest object of it is to entitle the mortgagor to continue his busi- ness, and appear to the world as the absolute owner of the goods, and enjoy all the advantages resulting therefrom. Where the instrument on its face shows that the legal effect of it is to delay creditors, the Livv imputes to it a fiaudulent purpose.'^ In order to invalidate a mortgage because of its authorizing the mortgagor to dispose of the property generally for his own benefit, it is not necessary that such an authorization should be contained in terms in the mortgage. The arrangement may be shown by an oral agreement between the parties, and this, in turn, may be established by evidence of a course of dealing between the parties in accordance with which the mortgagor would be entitled thus to deal with the mortgaged chattels.'^^ So, also, if the mortgage contains merely an inhibition upon the mortgagor's s«'lling "on credit." he is, by a necessary implication, an thorized to sell for cash; and this fact, together with other circumstan- ces showii^ the intention that he may continue to retail the mortgaged property and receive the proceeds to his own use, may suffice to render the mortgage void as against creditors; and where such is the effect of the written instrument, and there is no doubt what the lan- guage means, the mortgage is void, as matter of law; and, as the court would be obliged to set aside a verdict confirming its validity as often as one should be rendered, the question of fraud need not be submitted to the jury." And if, for the reasons now under consideration, a mort- gage is void ajs to a portion of the property, it is fraudulent as to all 6T Robinson v. Elliott, 22 Wall. 51^: Freeman v. Kawson, 5 Ohio SL 1; Barnet v. Fergus, 51 111. 352. •" Gardner v. McEwen, 19 N. Y. IJri. " Edgell V. Hart. 9 N. Y. 2111. 22 CHATTEL MORTGAGKS. ilir prtijit'ily covered by the inort.mi^^'c; for \ho inoit;j:aj;o is ono slnj^lc instiunient. j^iven to sccnro on(> d(»ht, and, to render it valid, it must havo b(^on jjivon in irood faith, and for the lionost purpose of socnring lliodeltt, and wiiliout any intent to liinder or defiaiid creditors. This eannot he true when the object in pari or as to part of tlie property is to defraud cieditors. Tlie unhiwfiil desi;;ii sitiales tlie entire instru- ment.*'" Rut, notwithstanding the foregoing propositions, it is still true that a cliattel mortgage is not per se void because of a provision contained in it allowing the mortgagor to sell the mortgaged property; for if the agre<'nient is that, as ho sells it himself, he is to account to the mortgagee for the proceeds, and apply them on the mortgage debt, it is unobjectionable. Such a sale and application of proceeds is the normal and proper purpose of a chattel mortgage, and within the pre- cise boundaries of its operation and elTect. It does no more than to substitute the mortgagor as the agent of the mortgagee, to do exactly what the latter had the right to do, and what it was his privilege and duty to accomplish. It devotes the mortgaged property to the pay- ment of the mortgage debt. If the mortgagor sells, and actually pays over the whole proceeds, nobody is harmed; for that only has hap- jK'ned which is the proper and lawful operation of the mortgage. If, on the other hand, under such an arrangement, such proceeds have not been paid over, the adverse lien is still unharmed; for, as against it, such proceeds are deemed paid over and applied in reduction of the mortgage debt, although, as between the mortgagor and mortgagee, the debt remains and is still unpaid.®^ 21. FILING AND REFILING. It is frequently provided by statute that, where the mortgagor re- tains possession'^ of mortgaged chattels, the mortgage shall be void •0 Russell V. Winiic. .'57 N. Y. 51>1. «i Brackett v. Ilarvpy, 01 N. Y. 214; Rohiiison v. Elliott. 22 Wall. 524; Mansur & T. Imp. Co. v. lieonian-St. Clair ("o. (Tox. Civ. App.) 45 S. W. 721); Ufford v. Winchester, i\U Vt. TA'J, 38 All. 2;}1). «2 Drury v. Moors (Mass.) r>0 N. K. (51S; Hurchinell v. Schoyer (Colo. App.) .'iO rac. 217; MarUn v. Sexton, 72 111. App. 3D0; Sclineitler v. Kraby, 97 Wis. 510, 73 N. W. 01. FILING AND np:FILING. -> as a;;jnnsf liis cicdilors, and as against siibsoquont pinchasors and Uiort^'agcrs in tjood faidi, unless flic niorl^'ago is lih'd; and it is coni- nionl}- provided, furtlier, that it innsl l)e refded from time to time in order to continue it in foice. An iliiislration of sncli Klatnl<\s is found in the New York lien law,"'' by wliich it is provided (seel ion 00) that "every mortgage or conveyance intended to operate as a mortgage of goods and chattels, or of any canal boat, steam tug, scow or other craft, or the appurtenances thereto, navigating the canals of the state, which is not accompanied by an immediate delivery, and foll<>wed by an actual and continued change of possession of the things mortgaged, is absolutely void as against the creditors of the mortgagor, and as against subsequent purchasers and mortgagees "* in good faith, unless the mortgage, or a true coj)y thereof, is filed as directed in this article." "Mortgages creating a lien upon real and personal property, executed by a corporation as security for the payment of bonds issued by such cori)oration or by any telegraph, telephone, or electric light corporation, and recorded as a mortgage of real property in each county where such property is located or through which the line of such telegraph, tele- phone, or electric light corporation runs, need not be filed or refiled as chattel moitgages." "' "An instrument, or a true copy thereof, if intended to operate as a mortgage of a canal boat, steam tug, scow or other craft, or of the appurtenances thereof, navigating the canals of this state, must be tiled in the office of the comptroller, and need not be filed elsewhere. Every other chattel mortgage or an instrument intended to operate as such, or a true copy thereof, must be filed in the town or city where the mortgagor, if a resident of the state, resides at the time of the execution thereof, and if not a resident, in the town or city where the property mortgaged is, at the time of the execution of the mort- gage. If there is more than one mortgagor, the mortgage, or a cer- tified copy thereof, must be filed in each city or town within the state where each mortgagor resides at the time of the execution thereof. In the city of New York, such instruments must be filed in the office of the register of the city and county of New York; in the city of Brooklyn, in the office of the register of the county of Kings, and «•■« Laws 18J)T, c. 41S, §§ 1)0-IH>. •* Wolf V. Rnusch. 22 Misc. Rep. 108, 48 N. Y. Sui)i). TIG. •5 Laws 189T, c. 418. § 01. 24 CHATTKL MORTGAGES. in t'vcry otlior city or town of th(> state, in the ofVico of the city or town clerk, unless there is a county clerk's oflice in such city or town, in wliich case it must be filed therein.""' A ft IT further jjrovidin^, in section Oli, for the nielluxl of lilinji and indexiuii chat lei niort^a^es, and, in section 1)4, for the olBcial fees, llie act proceeds to provide, in section 1)5, that "a chattel niortjxage, except as otherwise provided in this article, shall he invalid as against creditors of the niort}2;agor, and aj^jainst subsequent purchasers or creditors in good faith, after the expiration of the first or any existing term of one year, reckoning from the time of tlie first fding, unless (1) within 30 days next preceding the expiration of each such term, a statement containing a description of such mortgage, the names of the parties, the time when and place where filed, the interest of the mortgagee or of any person who has succeeded to his interest in the property claimed by virtue thereof, or (2) a copy of such mortgage and its endorsements, together with a statement attached thereto or en- dorsed thereon, showing the interest of the mortgagee or of any person who has succeeded to his interest in the mortgage, is tiled in the proper office in the city or town where the mortgagor then re- sides, if he is then a resident of the town or city where the mortgage or a copy thereof or such statement was last filed; if not such resident, but a resident of the state, a true copy of such mortgage, together with such statement, shall be filed in the proper office of the town or city where he then resides; and if not a resident of the state, then in the proper office of the city or town where the property so mort- gaged was at the time of the execution of the mortgage." It will be noticed that, while the statute prescribes how and where chattel mortgages shall be filed, it does not in terms prescribe^ the time within which this is to be done. While the act does not in terms require an immediate filing, its purpose can only be satisfied by prompt and diligent action on the part of the mortgagee in filing his mortgage. Some time, of course, will necessarily elapse between the execution and tiling of tiie mortgage. Where it appears tliat due diligence was exercised in filing tiie mortgage, and there has been no unnecessary delay, and no actual intervening lien has been ac- quired, there would seem to be no grouinl ui)on which subsequent lienholders could question the validity of the mortgage. But a delay «« 111. i 'J2. FORECLOSURE. -'^ of six wr.ks in liliii;: liiis boon liold not to be a compliance witli the foiiiHT sliiHitc on this siibjoct, wlioro tlioro were no circumstancGS ivndci inj; so h.iijj; a dchiy nticossiuy, oven though it is filed before the creditor's rights have attached." 22. THE RIGHT TO REDEEM. Although, upon the mortgagor's default, the absolute legal title to the propoity vests in tlie mortgagee, yet the mortgagor has, as already s(at<(l. an equitable right to redeem until the mortgagee has foreclosed it. Tliis right lie may enforce by suit, after first paying or tendering the full amount due.*^* The relief sought may be either the return of the property,^^ or, if the property has in the meantime been illegally sold by the mort- gagee, a recovery of the value, less the amount of the mortgage debt ; ""* while, if the sale has been lawful, the mortgagor may recover the sur- plus.'^ llie right to redeem may be exercised by the mortgagor, or by any one who has a title to or lien on the property under or through the mortgagor. '- 23. FORECLOSURE. Inasmuch as. after default, and after the mortgagee has taken ])OSsessiou, the mortgagor retains the equitable right of redemp- lion, the mortgagee is on his part afforded means of extinguishing ihis right, and having the respective rights of the parties finally 87 Karst V. Gane, 13G N. Y. 31G, 32 N. E. 1073; Ledoux v. Silk Co., 19 Misc. Rep. 440, 44 X. Y. Supp. 489; Stephens v. Meriden Britannia Co., 13 App. Div. 268, 43 N. Y. Supp. 226. And, as to refiling, in general, see Stevenson Brewing Co. v. Eastern Brewing Co., 22 App. Div. 523, 48 N. Y. Supp. 89; William Deering & Co. v. Hanson (N. D.) 75 N. W. 249; Beskin v. Feigenspan (Sup.) 52 N. Y. Supp. 7.50. 6 8 Porter v. rarmley. 52 N. Y. 185; Lambert v. Miller, 38 N. J. Eq. 117; Stoddard v. Deuison, 2 Sweeny (N. Y.) 54; Noyes v. WyckoCf, 30 Hun (N. Y.) 466; Brush v. Evans, 53 N. Y. Super. Ct. 523; Ooe v. Cassidy, 72 N. Y. 133. «» Porter v. Parmley, 58 N. Y. 1S5. TO St; Pettibone v. Drakeford, 37 Hun (N. Y.) 628. 26 CHATTEL MORTGAGES. adjusted. This suhjoct is froquently rejj:nlatod by statute. Tn most oases, however, the nioit^M^^ce may foreclose either by action, or, in some cases, by sale. An action lies in ((juity to foreclose a chattel mortgage; but the remedy by sale, under the power contained in the mortgage, is, in most cases, a more speedy and effectual means of extinguishing the equity of redemption. But the right to foreclose by action has not been taken away.''* The New York Code of Civil Procedure, by sections 1737 to 1740, provides for actions "to foreclose a lien upon a chattel"; but by sec- tion 1741 it is provided that these sections do not ailcct any existing right or remedy to foreclose or satisfy a lien upon a chattel without action; and it does not apply to a case^* where another mode of en- forcing a lien upon a chattel is specially prescribed by law.""* Taking possession of mortgaged chattels, and selling them, prior to the contingencies mentioned in the mortgage upon which the mort- gagee may proceed to foreclose, amounts to a conversion J* 24. DISCHARGE OF MORTGAGE. Where statutory provisions are made for the filing of chattel mort- gages, the statutes also provide the method of discharging such mort- gages of record. Thus, by the New York statute ' ^ it is provided that, "upon the payment or satisfaction of a chattel mortgage, the mort- gagee, his assignee or legal representative, upon the request of the mortgagor or of any person interested in the mortgaged property, must sign and acknowledge a certificate setting forth such payment or satisfaction. The officer with whom the mortgage, or a copy thereof, is filed, must, on receipt of such certificate, file the same in his office, and write the word 'Discharged' in the book where the mortgage is entered, opposite the entry thereof; and the mortgage is thereby discharged." T8 Rriggs V. Oliver, C8 N. Y. Snc, :;:«). 1* As, for example, a mechanic's lieu, or lions on vessols. Code Civ. Phk'. 51 3398-3441. 75. See, also. McCarthy v. Hetzner, 70 lU. App. 4S0; Brook v. Bayless (Okl.) 52 Pac. 738; Desany v. Thorp (Vt.) 39 Atl. 309; Le.xiuglou Bank v. Wirges, 52 Neb. 049, 72 N. W. 1049. T« .Tohiiston v. Itobuck, 104 Iowa. .VJ3, 73 ^. W. 1002. 7 7 Llfu Law, Laws 1897, c. 418. § US. BALES TO AKUIVE. 27 SALES TO ARRIVE. 25. IN GENERAL. Sales "to arrive" are frequently made, and "it is not always easy to determine in given instances whether the language used implies a condition or not, or what the real condition is." ''* 26. NATURE AND CHARACTERISTICS. But in a proper case of a sale "to arrive," apart from any additional and peculiar provisions, the contract is both conditional and execu- tory. Certainly until arrival, the title to the goods does not pass to the vendee, and it may be that it does not pass until the goods are delivered.^® The contract is conditional as to both parties, and if the vessel does not arrive, or if, though it arrives, the goods are not on board, the <:on tract is at an end. So, if a part only of the goods arrive, the seller would not be bound to deliver nor the purchaser to accept it. The same result follows if goods of the same general description, but not of the stipulated quality, arrive.^" These propositions rest, of course, upon the assumption that there is no warranty by the seller that they shall arrive, or that, arriving, they shall be of a particular quality; for, if such a warranty is made, he is liable thereon.*^ And the same principle applies where, in a 7 8 Beuj. Sales, § 578. 7 8 Benedict v. Field, IG N. Y. 595, 597. 80 O'Douohue V. Leggett, 134 N. Y. 40, 31 N. E. 269; Clark v. Fey, 123 N. T. 470. 24 N. E. 703. 81 Shields v. Pettie, 4 N. Y. 122; Boyd v. SifiEkin, 2 Camp. 326; Alewyn v. Pryor, 1 Kyan ^Vc M. 406; Ix)vatt v. Hamilton, 5 Mees. & W. 639; Johnson v. Maedouahl. 9 Mees. & W. 600; Russell v. KicoU, 3 Wend. (N. Y.) 112. '-'8 SALES TO AFtRIVE. coutract for sale of goods to arrive, it is stipulated that they shall be equal to sample.*- Other conditions besides the "arrival" of the goods may be. and frequently are, introduced into the coutract; as, for example, lliat Ihcy shall be shipped by a particular vessel, or a ])artit ular route, or that they shall arrive in a particular vessel, or that thi* goods sold "to arrive" shall be of a particular quality. But a provision that the sale is of goods "to be shipped by" a specified vessel, "no arrival, no sale," refers to the arrival of the goods, and not to the arrival of the vessel named; and it is not to be inferred that the goods must arrive in that vessel; ^^ and in this respect such a contract differs from a sale of goods "to arrive by" or "on arrival of" a sliip named, as in Lovatt v. Hamilton,®^ Johnson v, ]\racdonald,^'^ and Hale v. Raw- son.^® 82 Dike V. Reitlinger, 23 Hun (N. Y.) 241; Siiuond v, Braddon. 2 C. B. (N. S.) 324; Jones v. Just, L. R. 3 Q. B. 197; Cleu v. McPlierson, 1 Bosw. (N. Y.) 480. 8 3 Harrison v. Fortlage. 101 U. S. oT, IG Sup. Ct. 488; lasigi v. Koseustein, 141 N. Y. 414, 36 N. E. 509. 8 4 5 Mees. & W. 639. 85 9 Mees. & W. 600. 86 4 C. B. (N. S.) 85. WEST PL'BLIBBINO CO., PKINTERB AND 8TEREOTYPER8, ST. PAUL, MI.NN. PRINCIPLES OK iMK LAW OF SURETYSHIP AND GUARANTY A MONOGRAPH St. Paul, Minx. WEST PUBLISHING CO. icSyy COPYRIfiUT, 1899, 1!Y WEST PUBLISHING COMPANY. SURETYSHIP AND GUARANTY. 1. DEFINITIONS. (a) A gvaranfy is an imdertakino; by one person that in case an- otlier, wlio is piiin:iril\ liable to pay or perform some debt or ob- lij^ation, fails to do so, he will be answerable for the nonpayment (.r nonpi'i'fnrniance. (b) kSnrctijshIp is the obligation assumed by one who binds him- self with a i)rinc'ipal, as an orij;inal promisor, for the payment or performance of a debt or obligation of the principal. McMillan v. )lank,;{2Tnd. 14. (c) A f/u((mntor is one who makes a guaranty. (d) A guarantee is one for whose benefit a guaranty is given. (e) A i^xrcfy is one who l^inds himself with a principal as an origi- nal promisiir for the payment or performance of some debt or ob- lifjcation of the principal. (f) A principal,, or principal debtor, is one who is ultimately liable for the payment or performance of some debt or obligation in re- sjK'Ct of which another acts as guarantor or surety. ' (g) A creditor is one who is entitled to enforce a de])tor obliga- tion against a principal debtor or surety, or to hold a guarantor an- sw( inblc in case of nonpayment or nonperformance. In the latter case he is also termed a "guarantee." (h) Suretyship and, guaranty compared. The terms "siu-etyship'' and "guaranty" are often used inaccurately, as if having the same meaning. But, while they have certain points of resemblance, there are important differences between them. Thus, both involve the liability of one person for a debt or obligation for which another is, as between themselves, ultimately liable. But, the surety being bound with his i)riucipal as an original promisor, he is himself a srK.& G.— 1 2 SURETYSHIP AND GUARANTY. debtor from the beginning, and must see tluit the debt is paid, and is held, ordinarily, to know every default of his principal, and can- not protect himself by the mere indulgence of the creditor, nor by want of notice of the default of the principal, however such indul- gence or want of notice may, in fact, injure him. On the other hand, the contract of a guarantor is his own separate contract that the thing guarantied to be done by the principal shall be done, — not a mere joint agreement to do it. A guarantor, therefore, is not bound to do what the principal has contracted to do, but only to answer for the consequences of the default of the principal. He is not invariably bound to take notice of nonperformance by the principal; and if, when entitled to notice, he suffers damage through the creditor's failure to notify him, he is pro tanto dis- charged. It is not so with a surety. McMillan v. Bank. 32 Ind. 13; Wright V. Simpson, G Yes. 714; Saint v. Manufacturing Co., 05 Ala. 371, 10 South. 530; Campbell v. Sherman, 151 Pa. St. 70, 25 Atl. 35; Deobold v. Oppermann, 111 N. Y. 531, 10 N. E. 04. Usually, a surety is bound by the same terms of the same con- tract as his principal. Powell v. Allen, 11 111. App. 134. (i) Suretyship^ guaranty^ and indorsement compared. An in- dorsement is the writing of the name of a holder upon an instru- ment with the intent either to transfer the title to the same, or to strengthen the security of the holder by assuming a contingent liability for its future payment, or both. It strictly applies only to negotiable instruments. An indorsement is classed by itself as a distinct body of contract rights and liabilities. It has its origin in, and is contined to, ne- gotiability. Orrick v. Colston, 7 Grat. (Va.) 105. It is a contract, and one to which the law merchant and the common law have ap- ])ended very peculiar conditions. It is a contract something in the nature of a guaranty (Oakley v. Boonnan, 21 Wend. [N. Y.] 588; Kingsland v. Koeppe, 137 111. 344, 28 N. E. 48); something in the nature of a warranty, and to the liability under which the laws have attached the very unusual conditions of presentment, demand, and notice of dishonor (Osgood's Adm'rs v. Artt, 17 Fed. 575; Johns. Cas. Bills & N. 107). An indorser is liable only when the note has been duly presented for payment on the exact date, and when due notice has been given DEFINITIONS. 3 to him of its nonpayment, in exact compliance with the law as to time and method of service of notice. If these conditions are ful- filled, he is liable; if not, he is absolutely discharged. A guarantor is liable upon receiving notice of nonpayment within a reasonable time; and, even though the notice is unreasonably delayed, this only discharges him to the extent of damage to him thereby occa- sioned.^ Story, Prom. Notes, § 400; Hunter v. Moul, 98 Pa. St. 16, 17; Gibbs v. Cannon, 9 Serg. & R. (Pa.) 198; Overton v. Tracey, 14 Serg. & R (Pa.) 311. (j) Chuaranty and warranty distinguished. Warranty differs from a guaranty in that it relates, not to some debt or obligation of any third party, but to some feature of an agreement made by the very person who also makes the warranty as a part thereof. Wiley v. Inhabitants of Athol 150 ]\rass. 4.34, 23 N. E. 311; De Col. Guar. & Sur. 1, 2. (k) Guaranties of payment and of collection. The fundamental distinction between a guaranty of payment and one of collection is that in the first case the guarantor undertakes unconditionally that the debtor will pay, and the creditor may, upon default, proceed directly against the guarantor, without taking any steps to collect of the principal debtor, and the omission or neglect to proceed against him is not (except under special circumstances) any defense to the guarantor; while in the second case the undertaking is that, if the demand cannot be collected by legal proceedings, the guar- antor will pay, and consequently legal proceedings against the prin- cipal debtor, and a failure to collect of him by those means, are conditions precedent to the liability of the guarantor; and to these the law, as established by numerous decisions, attaches the further condition that due diligence be exercised by the creditor in enfor- cing his legal remedies against the debtor. McMurray v. Noyes. 72 N. Y. 525; Cass v. Shewman, 61 Hun, 472, 16 N. Y. Supp. 236. Com- pare Campbell v. Sherman, 151 Pa. St. 70, 25 Atl. 35. The general rule in regard to one who becomes the guarantor of the collection of a demand is that, in so doing, he undertakes that the claim is collectible by due course of law, and the guarantor only promises to pay when it is ascertained that it cannot be collected by suit prosecuted to judgment and execution against the prin- cipal; and the endeavor to so collect is a condition precedent to -1 SlinCTVSIII!' AM) (ir.MtANTY. n rijilit of Mclioii n.^aiiist tlic uiKiraiilnr. Aiul llir fad 7, 33G), — prop- ositions which ajtply with e(|iial force to both suieties and guar- antors. "A guarantor has all the rights of a surety in equity." De ("ol. ( luai'. «.V: Sui'. 1 . note. So the terms "guaranty" and "guarantor" are often used in a ge- neric sense, so as to include both guaianty and suretyship, as where DKFIMTIONS, O De Colyar bojjins the sixlh clinptci- of his work (page 211) by say- ing that, in proceeding to ascertain tlio extent and nature of a tsu rt't ;/" s lial)ility, lie ])roposes to call attention to the rules lor the construction oi guaranties' an;iriirs, is luit rssciil i;il to llu' foiiiiMiioii of a foiiliart. as a ;,^iMi(Mal iito|i N. Y. Suiip. 1093. KOKMATION OK THK CONTItACT. 1 1 4. CONSIDERATION. Like oilici- conli'iU'ls, (hut of a siirct.v or f^iiaraiilor rcqtiiros a consideration. (a) If llic principal contract has already been execntcd, and the <,niaranl V is ^iven siil)sc(piriit l_v, tlu*re must be a new consideration, (lislinct from that supporting the principal contract. If, in sucli a case, the contract of guaranty is for the benefit of the guarantor, that fact constitutes a sullicient consideration. Davis v. Wells, 104 I'. S. 1G5, 1G6; Overton v. Trucey, 14 Serg. & K. (I'a.) ?>U. And the obligation of a surety to pay a note, though barred by the statute of limitations, is suflicient consideration for his subse- (pient guaranty thereof. Miles v. Linnell, 1)7 Mass. 298. And if the owner of a note indorses and transfers it for a con- sideration, and guaranties collection, no further consideration to hira is requisite. Gillighan v. Boardman, 29 Me. 79; Osborne v. Lawson, 2(J Mo. App. 554. (b) If a subseipient guaranty of an existing obligation is not given for the benefit of the guarantor, then an advantage accorded by the guarantee to the principal, involving forbearance, detriment, loss, or responsibility on the part of the guarantee, upon the faith of the guaranty, is a suflicient consideration. Traders' Nat. Bank v. Par- ker, 130 N. Y. 420, 29 N. E. 1094; Strong v. Shellield, 144 N. Y. 392, 39 N. E. 330; Ware v. Adams, 24 Me. 177. And if a debtor transfers property to a third person in consider- ation of the latters promise to the debtor to pay the debt to the creditor, the latter may accept and adopt the promise when it becomes known to him, and may maintain an action upon it. When the promise in such cases is the consideration or condition upon which the third party has received the debtor's property, he thei-e by makes the debt his own, and assumes an independent duty of payment, irrespective of the liability of the princijxil or original debtor. Clark v. Howard, 150 X. Y. 238, 44 N. E. 095. Even where the obligation has been created, but is not yet du<- and payable, a new consideration must appear, in order to bind one who then guaranties it. Tenney v. Prince, 4 Pick. I'^Iass.) 385. An agreement by a creditor to forbear the collection of a debt presently due is a good consideration for an absolute or conditional 12 grKKrYSIllP \M» t.lAKAMV. |tioiiiisr iif a third [n rsoii («i |ia\ ilif tlilii. or for any oltli^at ion ho iiiav assiniir in rcs|M(| (In-ri-lti. Noi' is il cssriilial ihat tin- ci'cdilor .vhnnhl liiiitl liiinsclf at tin- liiiif In fnilicai- (»r In ;:ivr linn-. If hf is roiursh'd l»v Ills tlflMnr to cxlrnd llir linn-, and a ihird pci'son nndcrtakt'S. in considt'iat inn u|); Wilhy v. K!«;cc, L. K. Id ('. W VM : Kin;: v. I'ptnn. I ('ircnnl. i.Mc.i :{ST; l.cakf. ('niit. p. ."> I ; I-'mlh v. Stanton. 1 Saund. L'lO, note (b). Cnmiiaiv Caiy v. While. ."'J \. V. i;:s. In the absence of a spccilicd lime, a leasnnable time is in-ld tn be iniendi-d. Siim.ii;: v. ShelVKld. Ill N. ^■. ::!•.".. :::► X. !•:. ••{•■:<>: Older shaw V. Kin;;. L' llml. vV: N. 517; ('alkins v. Chandlci', .'.li .Mich. .•'/JO. In soi.ie jnrisdictinns. liowever, the rule is that ineie fni-beai-ance bv the creditnr. in tiie absence of any a;:reement that lit will for bear, is no cmsiderai inn. Ibss" llsiali'. ir.ii Pa. Si. illC. L' I All. tlTti; Mauler V. Chnrchill, IL'7 .Mass. ;{I. And the fact thai the cnllaleral may iinl be enfnrceable nniil a delinite time in the fiilnre dnes linl operate In e.Mend the lime nf jiaynient of llm principal dibt nr snspend Ihe ri;;hl !<► sue npnii the oii;,'inal security, l'. S. v. ilnd^'e. C. Ilnw. •2~U[ Fallkill Xat. Kank of I'nn^'hkeepsie V. Sh-i;,dil. I Apjr. hiv. I'.II. ::7 X. ^ . Snj.p. I .■).".. (<•> If the cnnirail nf ;,'iiaranty nr siiielysliip is made al the s;inie liinewilh the principal conlracl.anil Ihe latter is based njinn the fnr mer. ilien no distinct cnnsideralion is retpiisitc (Simnns \. Steele, .'Wi \. 11. 7;i; Eric Co. Sa\. ISaidv v. Coil, lUl X. Y. oM, 1 I X. i:. ol); for KOllM A'l'H'N UK IIIK (()NTHA(T. i:i tlir ^Mi;iraiil\ or Min-I \ slii|), on llit- oiif liiiiid, ;iml ili'- o.\<'ciil ion of the |irin(i|iiil conliacl Itv the ^,Miaranlrf, on lln- otliri'. ar<- conoid eratioiiH oiio for llii- other (Davis v. Wrlls, 101 C. S. Iti.-jj; or, from anotlicr point of view, tlic (;onHi«l('ral ion jiassin^' from llic ci-cdilor supportH both the princijial contract and Ilial of tin- snrct.v or ^nar alitor (Eric Co. Sav. l'»aid< v. Coit, 104 N. V. 'y'M, II N. K. •"•l; Mc 7!); Hopkins v. Kichardson, ".) (Irat. |\'a.] 4!»1; Leonard v. \'redenlnirj;li, 8 .Johiiw. [N. Y.] l!0; Darby v. ISanU, !I7 Ala. {\i:>. 1 1 Sonlh. 881). In order that I lie jdincipal contract and tlie j^naranty slionld be conteniporaneons within tlie meaning of the foregoing proposition, it is not necessary that they should be strictly siraultaneons. 'i'lms. if A. procures a credit from B. upon the assurance that he will |»ro cure a gnaianty from C., and within a short time he does so, the transactions are regarded as simultaneous, and no separate and dis- tinct consideration to (\ is requisite. Opiwuheim v. Waterbury. 8fi Ilun, 122, :?:{ X. Y. Supp. 183; McXaught v. Mcrianghry, 42 X. Y. 22; Moies v. r.ird. 11 Mass. 4:}<;; Leonard v. ^Yildes. :',() Me. 2<;.~): Ilawkes v. lMiillii)s, 7 (Jray (Mass.) 286; Smitli v. Molleson, 148 X. Y. 241, 42 N. E. OGO. (d) When the contract of guaranty or suretyship is tendered be fore the i>rin(ipa] contract is made, as in Ihe case of a letter of credit, and thus const it uics an outstanding otfer, it becomes a bind- ing contract, when accejjted and acted ui)on, eithei- with or with- out notice, according to the varying laws of ditTei-ent jurisdictions. Evansville Xat. Uank v. Kaufmann, 93 N. Y. 270; Union Bank of Louisiana v. Coster's Ex'rs, 3 X. Y. 211; Davis v. Wells, 104 V. P. 16G; Kennaway v. Treleavan, 5 Mees. & W. 498. (e) When the consideration relied on is one passing directly from the guarantee to the guarantor, a nominal consideration of one dol- lar is sufficient. Davis v. Wells, 104 U. S. 107, 108. (f) A written guaranty given by a third party to a creditor, that his debtor will thereafter pay to him a pre-existing debt, must, not- withstanding the amendment of the statute of frauds in Xew York, by Laws 1803, c. 404, expressly or by fair ini|»lication disclose that the i>romise rests on a legal consideration. Barney v. Forbes, 118 X. Y. 585, 23 N. E. 890; Church v. Brown, 21 X. Y. 331; Drake v. Seaman, 97 X. Y'. 230. 11 SlKKTYMlll' A.NU L.LAUAMY. fi. COMPETENCY TO CONTRACT. Tilt" usual iiilfs a|>|>li<:ilili' |o (illur coiitriKis iti I'csiM'ct t(i tlu» <:ip:i(i(v of coiiKiraliiiiis iKix'hh'r «& Co. v. KfiiilH'iiiicr. 2<> Apii. Div. 1, 1!» N. V. Supp. 7r»r»; Louisiana Siato Hank v. Orlt-ans Nav. Co.. .■> La. Amu. i'.dli. infants (Naplrs v. Wi;;iilnian. \ < "oini. 'AU'r. Kline v. Ui'clx'. C Conn. .")(»:{; Heed v. Lane, f.j \i. IM.*, 17 .\ll. T'.Mi; Pat.hin \. Ci-oniack. i;'. \'\. :'.;{ n, inlo.xitatcd jMisons (l'a;i;<" v. Krckcv. 1:57 X. V. :ni, :\:\ X. i:. 311; Ifarly V. Smith, 74 111. App. l!»h. lunali<-s \an I'alion v. r.eals. 40 Iowa, (i2; Seaver v. riH-l|.s. 11 IMnietimes been construed not to eover the right to make contracts of suretyshij*. and that in New Jersey and some other states maiTJ ed wom en are jirohibited from bindiu}; themselves as sureties. Todd v. Baih'y. 58 X. JrTaw. 10, ^'2 Atl. COC; Tha(^er v. Thacker, 125 Ind. 4S!). 2") X. K. 51)5 ; Taylor v. Aconi (fud. T.) 45 S. W. l.M); Wolf v. Zinimer man. lL'7 Ind. 1st;. l'C, X\ K. 17.!: I'^reenian v. Coleman, 80 Ga. 5!)0. 12 S. i;. loCrl; Walker v. Crucible Co.. 47 X. J. K(|. ^42. 20 Atl. SS5: At hoi Mach. Co. v. Fuller. 107 Mass. 4.^7: Will bank v. Tobler, 181 I'a. Si. 108, :\7 Atl. iss; Willard v. Kastliaui. l.~. Cray (Mass.) 328; ( losnian v. Cruder, 01) X. V. S7. As to the liability of attorneys, where a statute or couit rule re (piii'cs that they shall not act as sureties on bonds i-e. Sep AimIicws v. C'nii}iar, L't; Lawv. Md. i»0; Wiim v. llillyrr, li! Mo. .\i»|». 139. Duress. A bond e.\t'cuU'(l imdcr the (iiirt'ss of IIk; principal is void UH to llio siiiciv als(», if llic siiii-ly adcd willioiil i0 Mass. 153; riummer v. People, KJ III. 358. Jus- tice Paxson, in Gritlith v. Sitgreaves, 00 Pa. St. 101, after review- ing many cases of the latter class, states that in all of them the duress was either upon the party seeking to avoid tin- contract sued on or it was known to him. See Fairbanks v. Snow, 145 Mass. 154, 13 N. E. 5'.m;, for a general discussion of duress, its nature and ef- fect. Both principal and sun-iy may be relieved by proof of duress as against both. V . S. v. Tingey, 5 Pet. 115. Ilhgalit)/. If the principal contract is contrary to pii}>iic polic}', the sureties or guarantors are not liable, and the same principle applies where the contract of suretyshii) or guaranty is itself con- trary to public policy. Thus, if A., having embezzled funds of B., gives his note for the amount in settlement, and C. guaranties the note on condition that A, shall not be prosecuted, or if a public board illegally loans pub- 10 SL'UKTYSIIir AM) (ilAKANTY. lif inoiii'vs 1»> niic for his |iii\;ilf use. iind t;ik<'S Imtl, his nolo f(ir iIh' same, w hich a ihiid \>:w\\ si^Mis as suici v. ihr guarantor or sure- ty is not lialih'. .Mc.Mahon v. Smith, 17 ('oiin. L'-Jl; Howard v. Smith (Ti'X. Slip.) :{S S. W. ir>; lionsc v. Mt.hr. •_".• 111. .\\>\k '.V2\ ; (lor- liam V. Kc.vt's. \'M .Mass. T^S'A; Boaid of lldmal ion of llaiiford 'Pp. \. TliompsoM. .■>.■*> ()hiii St. ;iL'l. A promise h_v a pa\<'e to have the makt r appoinii-tl to a jjiiblie oHice. thon^^li made to induce a surely to siuii. is, as a^^ainst ])ul)lie policy, void, and could not (h'ceive or defraud llir surely, ("iraliam V. Marks, 1»8 Ga. CT, 12.". S. K. ii:;i. lUit if an administrator, in (U(h'r to induce one to i^o upon his ollicial bond. de])osits with liim the funds of the estate as security, this does not release the surety in case of a default on tlie part of the administrator; for the surety, by executing the bond, secured the appoinlmeut of the administrator upon the stren<;th thereof. The givinjj: of the bond is lej>al. and the only iUegality consists in the attemjil to illegally protect the surely from the legal liability he assumes. — an illegality in \vhi(di the persons for whose benefit the bond is given have no part. Deobold v, Ui»permanij, 111 N. Y. oM, 11> N. E. !)4. 6. STATUTE OF FRAUDS. The English statute of frauds (L'H ("ar. II. c. U). which is substan- tially followed by the statutes of most (d" <»ur states, juovides. in section 4, par. L'. "that no action shall be brought whereby to charge • * * the defendant upon any special juomise to answer for the debt, default or miscarriage of another i»ersou • ♦ * nnless the agreement ujion which such action shall be brought, or some m<'m- oiaiidum or note tliereof. shall be in writing, and signed by the par- ty to be charged iherewith, or some other person thereunto by him law fully autluuized." (ai 'I'lie term "special prnmise" is designed to a\(»id only such promises as are (-specially and jiart icularly to answer f(U' the debts of olheis. and not tlutse whicli. while incidentally assuming the re- sponsibility for such debts, are wludly or |uinci|ia lly for the jmr- pc.se of pei-f«M-ming scune disliiid obli^Mtion of the promisor. Dui'haiii v. .Manrow. '2 S. V. :.:'.:'.; .Mallory v. Cilleti, ijl X. Y. 412; Suilon v. drey [ls:J4J 1 Q. B. 285; Little v. Edwards, Gl) Md. 4'J!>, FoltMATION OK TlIK ( O.NTItACT. 17 ]»;AI1.1;M; hnvis v. I'anirk, I ll 1. S. ITIt, IL' Sii|.. Ct. r.S; Miirlnll V. H<'(U, ss -Midi. ;!l-, no N. W. ::o.'); I''iisl .\;il. I'.iinU v. ( 'IimIiimth, lUU N. \. •■>.")S, li4 N. E. 84.S. A con Mad of iciiisiiraiK-c lias Ix'cn, held not wiiliin the statute, liaiilcll v. Insurance Co., 77 Iowa, 15."), 41 X. W. ayuieut. made for the jMirpoHe of iudu- cin;; aiiolli<'r lo purchase II. .Milks v. Kich, SO N. Y. 2G1); Car."'), 18 Atl. 152. Hut see Dows v. Swett, 134 Mass. 142. And tlie promise by a del credere agent to his i)rincipal to guaranly the solvency of the persons to whoni he sells goods is not within the" statute. Couturier v. Hastie, 8 Exch. 40, 5 H. L. Cas. 073; Sher- wood V. Stone, 14 N. Y. 207; Wolff v. Koppel, 5 Hill (N. Y.) 458, 2 Denio (X. Y.) 308; Swan v. Nesmith, 7 Pick. (Mass.) 220. Again, if a creditor has, or is about to file, a lien on property ta secure his claim, and a third ])erson, whose interests are or may be prejudiced thereby, guaranties the debt in consideration of a release of the lien or forbearance to file it, his object is to remove or pre- vent the lien, and the guaranty is merely incidental, and some courts hold that it need not be in writing (Fitzgerald v. Dressier, 7 C. B. [X. S.] 374: Sniilh v. Bank, 110 Pa. St. 508, 1 Atl. 700; Will> V. Brown, 118 Mass. 138; Prime v. Koehler, 77 N. Y. 01); though the weight of authority is probably to the contrary, where the lia- bility of the debter continues (X^elson v. Boynton, 3 Mete. [Mass.] 30(5; Mallory v. Gillett, 21 N. Y. 412; Bunneman v. Wagner, 10 Or. 433, 18 Pac. 841; Clark v. Jones, 85 Ala. 127, 4 South. 771). And it has even been held that where the owner of a building, on which the contractu' has abandoned work, promises to ]>ay I he con- ti-actor's workmen what is due them from the contractor if Ihey will go on with ihe work, the undertaking is original; or to ]iay a ma- terial man if lie will continue to supply materials to tlie contractor if the contractor fails to ])ay as agreed. Kaabe v. Squier, 148 X. Y. 81, 42 N. E. 510; Andre v. Bodman, 13 Md. 241. In this latter SUR.& G.-2 18 SURETYSIIII' AND (ilAKANTY. • ase llir claiiii a^xaiiist tlir coiil lador. it serins, was <,^ivcn up. so that their MO l(»ii^^fr cxislfd aiiv priiuai.v lialtilily (if a ihiid prison. Crawford v. Kilisoii. 1.") Ohio Si. L*:?!!, i:'. X. 11. SO; ( lirninii^^h v. Kirhholtz (Ta. Snp.i l.~) All. TTJ; Vruiiiaii v. .Miirlhr, :*.:' Mo. App. :\[:\: r.urhanaii v. .Moraii. ('>- Conn. S."!, L'r> .\ll. ;'.!»<;. P.nl Ihr (((ii- naiv has hrrii lirhl. Srr l^inihani v. Davis. T'.> Me. li-Sli, *.» Atl. Tl'.'.; Cirrnc V. Latchani, '2 Coht .\pp. 4H;. .'51 I'ac '2:\P^. Wlin-.- a widow, roiitinninj; hor (Ircrasrd hnshand's business, ]»roinisr(i hrr lius- Itand's (Tcdilor to pay liis (h'lH if hr woiihi sril hrr ^iOdds on ( ivdil, (hi- iiromisr was hrld lo lir wiihiii ihr sialuir. Kupi>r v. Tetcrson, • iT .Mirh. j::7, ;{.■■) N. W. S-. And ser I )iriin<;(i' v. Moynihaii (Com. I'l.i 1(1 N. V. Sui>i». .~)40. (10 ''Drhf, t'aiilt, «>r iniscaniage," soriu, as said by Dr <'(»!. Cuar. ^: Sur. p. r.l, to ••point t(» three distinct kinds of jiuaranty. namely: ill (luai^anties lor the payment of a 'debt" already eonti-acted by another ])ei-son; (L'l -iiiaianties against the 'default' of anotber pei-.son, i. e. for the j.a.Mneiit of debts to be con traded by another jierscm. or against loss I hat may occur from another's future breach of duty; and i:^l guar- anties against the 'miscarriage' of another i)erson, i. e. against loss that may occur from another's jtasi or future breaches of duty." The exact sense intended by the framers of the act to be attributed lo each of these words, respectively, has been a subject of freipuMit speculation and some doubt. Throoi), Verb. Agreem. 192. However, it is settled that, taken togelhri'. thry include^ all lia- bilities (»f a third person, however they may arise, and therefore iiK lude liabilities arising out of a wrong act or tort as wtdl as Ih; se arising out of contract. Kirkham v. Marter, L* r.arn. ^: Aid. til:'.. .\nd ^i-i- Tnriirr v. llubbell. 2 Day (Conn.) 4.17; Mountsteithen v. Lakeman. L. K. 7 (2- l». -"•_. They also include pros]>ective as w<'ll as existing liabililies. "If the fnlnrr ])rimary liability of a princi pal is c()nteni|ilated as the basis of ih. i.roniise of a gnaiaiilor. such promise is within I he slatute of frauds. i»recisely as it would be if tlie liability existed when the pidinise was made." Mead v. Wat- son. ri7 \t. I'Jt;. .\nd see .Matson v. Whaiani. L' 'reini Iv. SO; .Mai thews V. .Milton. I ^ •!■;;. I'i'eiin.i ."»7(;. .\ |ir(»mis<' b\ one person 1<> indemnify another for bee ing a guarantor for a lliird is not with- in the statute. Jones v. iiacon, 14u N. Y. 44(i, lo N. !■:. L'iG. FORMATION OK THK CONTKACT. 19 (c) ''''Of another perxony Tlic promise coiitcmjdatcMl hy the stat- ute is a j)r(Hiiis(' lo answer fur ilic (icl)l, dcfanli . (tr iiiisciiiiiaj^c of "anotlH'i- person"; or, in other \voroi-t was held a ])romis(^ to pay her husband's debt. Perkins v. Westcoat, 3 Colo. App. 338, 33 Fac. 139. If. for instance, two persons come into a store, and one buys, and the oth- er, to gain him credit, promises the seller, "If he does not pay you, I will," this is a collateral undertaking, and must be in writing; but if he says, "Let him have the goods, and I will pay," or "I will see you paid,'' and credit is given to him alone, he is himself the buyer, and the undertaking is original. Birkmye v. Darnell, 1 Salk. Ii7; Hartley v. Varner, 88 111. 561; Nelson v. Boyntou, 3 Mete. (Mass.* .396; Greene v. Burton, 59 Vt 423, 10 Atl. 575; Geelan v. Reid, 22 111. App. 165; Higgins v. Hallock, 60 Hun, 125, 14 N. Y. Supp. 550; Boston V. Farr, 148 Pa. J^t. 220, 23 Atl. 901; Crowder v. Keys. 91 Ga. 180, 16 S. E. 986; Mountstephen v. Lakeman, L. R. 7 H. L. 17. And see cases cited above and in the following notes. In other words, whether the jiromise in such a case is within the statute de- pends on how the credit was given. If it was given exclusively to '20 SUUKTYSIIir AND GUAUAMY. tlir jtroiiiisdi'. liis niKlcrlakinu is oiiuiiial (Chase v. l)av. 17 Julius. [X. v.] Ill; Morris v. Oslcihoiii. .".r. Midi. l!(iL*. lil N. W. ;',:!II; Lar- son V. Jensen, 53 Mich. 427, 1!» N. \V. lliO; Hartley v. ^'arIl(■r, 88 111. nci: MuT V. GratUiii, :U Md. ar>(»; Grant v. Wolf. ::4 .Minn. 32, 21 N. W . 2s:>; Kllis V. Murray, 77 Ua. 542; Hake v. Solomon. (>2 Mich. ;:77. 2S X. W. !)()S; lla/eltine v. Wilson, 55 X. J. Law. 250, 2i'. At). 7!it; ItiK it is colhitcral if any credit was given to the other l.arry (Welch v. Marvin, ;!(; Mich. 51); Cahill v. T.igelow, 18 Pick. [Mass.] :i(;!l; Xorris v. (Jrahani, 33 Md. 5<;; Matthews v. Milton, 4 Yerg. [Tenn.] 57C»; llaldwin v. Hiers, 73 Ga. 739; Langdon v. Rich- ardson, 58 Iowa, 010, 12 X. W. 622; Bugbee v. Kendricken, 130 ^[ass. 437; .Alead v. Watson, 57 Vt. 42G; Stndley v. Bartb, 54 Mich. 0, 1!) X. W. 5(i8; Robertson v. Hnnter, 20 S. C. 9, 6 S. E. 850). (e) Even though there is an existing liability of a third person for which the promisor undertakes to answer, still the promise is not with- in the statute, if the terms are such that it effects an extinguishment of such liability; in other words, the liability of the original debtor must continue. A promise to i)ay another's debt in consideration of the creditor's doing something wliich will extingiiisli his claim against the debtor, and release him absolutely, need not be in writing. Mallory V. Gillett, 21 N. Y. 412; Goodman v. Chase, 1 Barn. & Aid. 207; Teeters v. Lamborn, 43 Ohio St. 144, 1 X. E. 513; Andre v. Bodman, 1.". Md. 241; Meriden Britannia Co. v. Zingsen, 48 N. Y. 247; Curtis \. Brown, 5 Cush. (Mass.) 488; ]Mulcrone v. Lmnber Co., 55 ^lich. 022, 22 X. W. 07; liunde v. Runde, 50 111. 08; AMiit lemon,' v. Wenlworth, 70 Me. 20; Green v. Solomon, 80 Mich. 234, 45 X. W. 87; Carlisle v. ( 'amplK'll, 70 Ala. 247. To take the promise out of the statute, the oiiginal debtor's release must be absolute. If the creditor may still hold him liable at his option, the jirondse nuist be in writing. Nel- son V. r.oynton, 3 M«'tc. (Mass.) ;;00; Welch v. Marvin, 30 Mich. 50; Waggoner v. Gray, 2 H.'n. .^' M. (Va.) 012; Willard v. Bosshard, 08 Wis. 454, .32 N. W. 538; Hill v. Frost, 50 Tex. 25; IMalf v. Cummings, 07 .Mi.h. 14.3, 34 N. W. 281. The fad that a lien against the original (lel)tor is released has been held immaterial, if the debtor himself re- main liable, X'^elsou v. l?oynton, snjira; Alallory v. Gillett, 21 N. y. 412. A promise to jiay another's debt merely, if tlie |iioniisee will forbear to sue the debtor, which he does, is within the statute. Gump v. ilalberstadt, 15 Or. :'.5(;, 15 I'ac. 407, containing a collection of thc^ FORMATION OK TIIK CONTRACT. 21 cases on this point; Watson v. Randall, 20 Wend. (N. Y.) 201; While V. Rintoul, 108 N. Y. L'22, 1.5 N. E. ;{18. Novalioiis fall williin this class of a<;r('«'iii('nts. (f) The |)i(nnis(' must ('oiitciupliilc iciyiiiciit Ii.v (lie pi-oiiiis(ir out of his own projKM'ty, or, at least, not out of the property of the debtoi', from which, or from the proceeds of which, the promisor is under a duty to pay or is authorized to pay; for in such a case the payment is, in effect, by (he dclilor. The statulc lias no ap])lication to ''cases where the original debtor [ilaces projjerty of any kind in the hands of a third person, and that person promises to pay the claims of a particu- lar creditor of the debtor. The promise, in such case, is an ori^^inal promise, and the jjroperty placed in his hands is its consideration. In this class of cases it is immaterial whether the liability of the orij^inal debtor continues or not." Mallory v. Gillett, 21 N. Y. 412; Wait v. Wait, 28 Vt. 350; Belknap v. Bender, 75 N. Y. 446; First Nat. Bank of Sing Sino; v. Chalmers, 144 N. Y. 432, 39 N. E. 331; Fehlinger v. Wood, 134 Pa. St. 517, 19 Atl. 746 ; Sext v. Geise. 80 Ga. 098, 6 S. E. 174. But see Gower v. Stuart, 40 Mich. 747; Frame v. August, 88 111. 424. (g) A promise to pay another's debt, to come within the statute, must be made to the creditor, and not to the debtor. A promise to the debtor himself to pay his d(4it for him does not require writing. Eastwood V. Kenyon, 11 Adol. & E. 438; Windell v. Hudson. 102 Ind. 521, 2 N. E. 303; Alger v. Sqoville, 1 Gray (Mass.) 391, 395. Illustra- tions of this are where a person buys land or goods, and agrees to pay the purchase money to a creditor of the seller, or, as part of the con- sideration, assumes a mortgage or other indebtedness of the seller. This is no more than a promise to pay the promisor's own debt in a particular way. Wilson v. Bevans, 58 111. 232; Clinton Xat. Bank v. Studemann, 74 Iowa, 104, 37 X. W. 112; Delp v. Brewing Co., 123 Pa. St. 42, 15 Atl. 871; Bateman v. Butler, 124 Ind. 223, 24 N. E. 989; Price v. Reed, 38 Mo. App. 489; Hooper v. Hooper, 32 W. Va. 526, 9 S. E, 937. Nor is a promise to indemnify or save another harm- less from any liability which he may incur as the result of a transac- tion into which he enters at the instance of the promisor, as in the case of a promise to indemnify the promisee against loss from going bail for another, within the statute. Anderson v. Spence, 72 Ind. 315; Aldricli v. Ames, 9 Gray (Mass.) 70; Thomas v. Cook, 8 Barn. 22 SUUKTYsniP AND GUARANTY. \- C. 728: Hoainaii v. Hnssdl. L'O Vt. 2(1.-); liarry v. Ransom, 12 N. Y. 4«>2. So, also, a iiroinisc made to a debtor to iiuloiniiifv him ajiainst any claim aiisinu from liis debt is not within the statntc, whiTi' the |ii(imisoi' (hits iidi bfctinic liabh- to the creditor. Conkey v. Hopkins, 17 Johns. (X. V.) iVA; Weld v. Nichols. 17 Pick. (Mass.) 538. It is nolliinjj more than a promise to pay a prospective debt of the promisee. It has been souj;ht in some, if not most, of the books to distinguish betwet'n contracts within the slatnle and conlracts of indemnity by saying, witliont qualification, that a promise of indenuuty is not with- in the statute; but this may mislead. Such a promise to indemnify the promisee against any liability wliich he may incur, as we have mentioned, is not witliin the statute; but it is otherwise where the j)romise is to indemnify the promisee against any loss he may sustain by reason of the default or miscarriage of a person under liability to him. Nugent v. Wolfe, 111 Pa. St. 471, 4 Atl. 15; Mallory v. Gillett, 21 N. Y. 412; Cheesman v. Wiggins. 122 Ind. 352, 23 N. E. 945. In jurisdictions where acceptances of bills of exchange are not required to be in writing, or the statutes do not otherwise modify the common law, parol acceptances, if assented to by the holder, are permitted. Scudder v. Bank, 91 U. S. 406; Stock well v. Bramble, 3 Ind. 428; Ex- change Bank v. Rice, 98 Mass. 288. PRINCIPLES OF CONSTRUCTION. 7. (a) The liability of a surety or guarantor is strictissimi juris, and he is not to be held liable beyond the precise stipulations of his contract. Douglass v. Reynolds, 7 Pet. 125; Hopewell v. Mc- Crew, 50 Neb. 789, 70 N. W. 397; Markland Min. & Mfg. Co. v. Kimmel, 87 Ind. 5G0. This does not mean that a different rule must be applied in the construction of such contracts from that which is to be applied in the construction of contracts in general. Like all other contracts, they must be construed fairly and reasonably, and according to the i.rtention of the parties. But when the meaning of the language used has been thus ascertained, the responsibility of the guarantor or surety is not to be extended or enlarged by implication or con- struction, and is strictissimi juris. People v. Hackns, 117 N. Y. 19(5, 22 N. E. 759; Northern Light Lodge No. 1, L O. O. F., v. Kennedy LIARII.ITY OF sl'rp:ty ou guauantor. 23 (N. D.) 73 N. W. 524; Locke v. McVcan, 'Xi Mich. 473; Weiler v. Henarie, 15 Or. 2S, Vi Pac (111. (l») If the pliraseohj^ry of a coiiliacl of giiaraiily or siirciyship is so ambiguous as not to furnish conchisive evidence of its meaning, light may be sought from the extrinsic circumstances. Evansville Nat. Bank v. Kanfniann. 03 N. Y. 2S1. (>•) If, as tlins inlcrjueted, the contract is still fairly open to ditfer- «iit conshnciious. il is to be interpreted most strongly against the surety or guarantor, because it was he who adopted the phraseology. Lawrence v. McCalmont, 2 How. 426; Hargreave v. Smee, Bing. 244; Belloni v. Freeborn, 03 N. Y. 388; Smith v. Mollesun, 148 N. Y. 241, 42 N. E. 669. LIABILITY OF SURETY OR GUARANTOR. 8. WHEN DOES THE LIABILITY ARISE. The surety, being a debtor from the beginning, must see that the debt is paid, and his liability to pay the debt himself arises as soon as it is due. The guarantor is not liable until after the principal has failed to perform, and even then his obligation, at least theo- retically, is not to pay the debt, but to answer for the conse- (piences of the default. In a guaranty of collection, he is only liable after the appropriate means of collecting from the principal have been exhausted; while in a guaranty of payment his liability arises immediately upon default, subject, in certain cases elsewhere con- sidered, to his right to have demand made upon the principal and notice of default given to himself. Saint v. Manufacturing Co., 9.5 Ala. 371, 10 South. 530; McMurray v. Noyes, 72 N. Y. 525; Mc^Millan v. Bank, 32 Ind. 13. Compare Campbell v. Sherman, 151 Pa. St. 70, 25 Atl. 35; and, as to the Pennsylvania cases, see Walton v. Mascall, 13 Mees. & W. (Hare & W. Am. Ed.) p. 72, note. The prospective obligation, however, both of surety and guarantor, exists as soon as their contract is complete. Davis Sewing Mach. Co. V. Richards, 115 U. S. 527, 6 Sup. Ct. 173; City Nat. Bank of Poughkeepsie v. Phelps, 86 N. Y. 493; Mussey v. Bayner, 22 Pick. 223; Keunaway v. Treleavan, 5 Mees. & W. 498. By the general rule of law, a covenant to indemnify against a 24 SUKKTYSllU^ AM) GUARANTY. fii(ur(» jndunu'iit, clinr^t', or liability is broken by tlio rocovory of a judiiuuMit, or tlic lixiii^j; of a charj^c oi- liability in tlic mailer to which the covenant relates. When the covenant is cnc of indemnity ai^ainsi the recovery of a jndgment, the cause of action on the eove- iiani is coniph'te the moment the judjiinent is recovered, and an action for danui}2;es may bo immediately nniintained thereon, meas- nred by the amount of the jnd;^nient ; and this, altlionjih the judji- nicnt lias not been jtaid by the covenanlee, and allli(iui;li the cove- nantor was not a party, or liad no notice of the former action. Tlie covenantor, in an action on a covenant of general indemnity against judgments, is concluded, by the judgment recovered against the cov- enantee, from questioning the existence or extent of the covenantee's liability in the action in which it was rendered. The recovery of a judgment is the event against which lie covenanted, and it would contravene the manifest intention and ])nrpose of the indemnity to make the right of the covenantee to maintain an action on the cove- nant depend upon the result of the retrial of an issue which, as against the covenantee, had been conclusively determined in the former action; always, however, saving the right, as the law must in every case where the suit is between third })ersons, to contest the proceeding, on the ground of fraudulent collusion, for the purjiose of charging the surety. A judgment by default or on consent is also covered by the covenant, but in such cases is only presumptive evi- dence against the sureties. Conner v. Reeves, W,i X. Y. 527, 9 N. E. 4:51). The cases relating to bonds conditioned on the faithful perform- ance of duty by officials present certain peculiarities because of the fact that the statutes under which they are usually given vary in their terms. Accordingly, the bond may go into effect from its date, or upon delivery, or upon acceptance by the government, or otherwise, as afl'ected by sjiecial circumstances, or as specified or im- jdied in the statutes govei'iiing a given case, liroome v. T''^. S., 15 How. 143; U. S. v. Le liaion, 1!> How. 73; .T<:tna Life Ins. Co. v. American Surety Co., 'M Vrd. 2!)!); Dawes v. Kdes, K! Mass. 177; lleiljy V. Dodge, 42 Hun, tUt;. And after the bond goes into cITect, il may relate back to cover a pciiod ((mtcmplatcd by ils terms. J-^lna Life Ins. Co. v. ,\nierican Surely Co.. 'M Fed. 2!l!); Dawes v. Kdes, i:'. .Mass. 177; Clioate v. Arrin;rlon, 1 Hi Mass. 557. LIAnil.ITY OF Sl'KKTY OK Cl'AUANTOR. 25 NegoUahillty and axx)hts arisinif (heicfroni, it is inijKn'tant to dislin^uisli hclwecii negotiability and nu'ic assi N. C. 351; Hobson v. Stexcnson, 1 Tenn. Ch. 203; Richards v. Griggs, 10 Mo. 410. The ruh's in regard to negotiability are in sharp contrast to the prin- liplcs governing assignments. ^Vith instruments made payable in l)lank oi- to bearer, the debtor is prima facie protected in payments u|ioii negotiable bills and notes made to the person who has the in stiunient in his possession. Pettee v. Prout, 3 Gray (Mass.) 502; Way V. Hichardson, Id. 412; Garvin v. Wiswell, 83 111. 215; Jevvett v. Cook, 81 111. 2(;(»; Collins v. Gilbert, !) t C. S. 753; Rubey v. Culbert- son, 35 Iowa, 2()4; Kcton v. Harlan. 2(1 Kan. I."'i2; Wells v. Schoonover, !» Ileisk. (Tenn.j 800. The last, and perhaps most important, distinction made between the I.IAIULITY OK yUKKTY OK CUAKANTOU. 27 transfers of nonnegotiable coMtracts and those of n^otiablc l)illH and notes is that in case of the former the a8si}:;nee takes subject to tin* equities or defenses existing between the prior parties, while the bona tide holder of a negotiable instrument may disregard these e(piities. and recover, upon suit, the full amount called for by the instrument he buys. According to Dwight, C. (Trustees of Union College v. Wheeler, 61 K Y. 101), the assignee of a non-negotiable contract take» subject, not only to the equities existing between the original parties, but also must always abide the case of the person from whom he buys. The holder of a chose in action cannot alienate anything but the bene- ficial interest he possesses. Warner v. Whittaker, G Mich. i:>;{; Selig- man v. Ten Eyck's Estate, 49 Mich. 104, 13 N. W. 377; Shotwell v. Webb, 23 Miss. 375; Howell v. Medler. 41 Mich. G41, 2 N. W. 911; Ayres v. Campbell, 9 Iowa, 213; Tinnus v. .Shannon, 19 Md. 296; State Mut. Fire Ins. Co. v. Roberts, 31 Pa. St. 438; Cary v. Bancroft, 14 Pick. (Mass.) 315; Harwood v. Jones, 10 Gill & J. (Md.) 404; Scott V. Shreeve, 12 \Mieat. 605. It is a question of power or capacity to transfer to another, and that capacity is to be exactly measured by his own rights. This is un- doubtedly the law in England and in New York, though in many of the states of the Union the great authority of Chief Justice Kent has prevailed to limit the equities to those existing between the original I)arties, and does not extend them to those existing in favor of third parties. The technical or theoretical reason of the rule is that given by Judge Story (Eq. Jur. § 1040): "Every assignment of a chose in action is considered in equity as in its nature amounting to a dec- laration of trust, and to an agreement to permit the assignee to make use of the name of the assignor in order to recover the debt, or to re- duce the property into possession." This theory leads to the conclu- sion that the action by the assignee must be precisely commensurate with that of the assignor, as it must be in his name, and on the sup- position that, for the purposes of the action, he is still the owner. As to the negotiability of guaranties indorsed on or referring to- negotiable paper, the authorities are in some respects contiicting. Daniel, Xeg. Inst. §§ 1774-1784. (1) A guaranty of a negotiable promissory note, in general terms, if upon a separate paper, is not itself negotiable. McLaren v. Wat- son, 26 Wend. (N. Y.) 430, 446, affirming 19 Wend. (N. Y.) 557. 2S SURKTYSIIIP AND GUARANTY. C2) This nilt> npjilics hoili wlicrt' (lu> jj;n;ir;inty is tundr lo a <,MV(>n iiHlividiijil hy imiuc. iiiul wlicrc no j;iiarantoo is luiincd, for in the latici- case ii is liniiicd lo the lirsl {ii'rson >vh<> thci-caftcr lakes the insiiuiuciii ^uaiaiilird, in reliance upon the ^uaraiiiv. Id.; Story, Tioni. Notes. J; 4.S4. i'A) Where, before delivery, a fjenernl fjnaranty is indorsed upon ue^dliaMe jtaper by one not a |»arty thereto, and naniin;j; no j^uaran- tee. it is held in some styles that it docs not jiaitake of the nej;o- tiability of the paper }2;uarantied. Tinker v. McCanley, 'A Mich. ISS; True V. Fuller, 21 Pick. (Mass.) 140; Sandford v. Norton, 14 Vt. I'JS. Such a jiuaranty becomes fixed whenever any one lakes it n|)on the guarantor's credit. Nevius v. Bank, 10 Mich. 'Al. r.ni. A\her(> a note is <:;uarantied in general terms, there is a pre- siini|iiion that the ]ihiintitT suinj^: thereon, appearing to be the first and only holder for value, was the person to whom the guaranty was <,Mven or duly transferred. Northumberland Co. Bank v. Eyer, 58 Pa. St. 103; Cooper v. Dedrick, 22 Barb. (N. Y.) olG; Nevius v. IJank. 10 :Mi(h. 547. See Taylor v. Binney, 7 Mass. 481; True v. Fuller. 21 IMck. (Mass.) 142. If the guaranty, though on a separate paper, is attached to the in- strument guarantied, the effect is the same as though it were in- dorsed thereon. Everson v. Gere, 122 N. Y. 292, 25 N. E. 402. In other states it is held that a general guaranty upon the back of a negotiable instrument, specifying no person to whom the guar- antor undertakes to l)e liable, runs with the instrument on which it is written and to which it refers, ])artakes of its character of ncgoti;iliility, and any jjerson having the legal interest in the prin- ci|»al instrument takes in like manner the incident and may sue upon the guaranty. Commercial Bank v. Cheshire l*rovident Inst. (Kan. Sup.) 53 Pac. 131; Webster v. Cobb. 17 Til. 4(;0; Partridge v. Davis. 1^0 Vt. 400. See Watson v. McLjuvn, 10 Wend. (X. Y.) 557. i'ais. Notes & B. ji. 13l', says that though strong opinions, resting on strong aigunients, have Ixmmi expressed in favor of tlie doctrine ilial the neg(»t iabilily of paper guaianticd alta<-hrs (o the contract of guaranty which is indoisri! upon it, Ihc wci^^hl of aulhoiity is op posed to this view. (h Where the holder of a negotiable note, in Iransfeiring it to another, indorses and signs a guaranty thereon, but does not other IJAHILITY OF SlIRKTY OH (iUA KAN'KJK. 2'.> wise iiidoisc the note, i( lias Imm-ii licid llial llic ;;iiaiaiity docs not iimic to t 1k' 1m lie 111 of an_\ luildcr snl»s('(|ii<'iil to t he one laUiii^i IK mi (he ^uaraidoi', so as to oiiablc him (o sxw Die laltcr tlicr<'<»ii. in tin' absence of })i'oof of any subse(]nent ]>rivity. Taylor v. r.inney. 7 -Mass. 481. See Trust Co. v. National Bank, 101 U. S. 70. ('(intia, riulps V. Clmi-di, Cm :Micli. 'S.\'2, :V2 N. W. :',(); Cooper v. Dediick, 2'2 Jiarb. (X. Y.) 51(>; I'artridjic v. Davis. IM) Vt. 4!M); 15enton v. Fletcher, SI Vt. 418; Jndson v. (Jookwin. 'M 111. 28(>. But the imnu'- diate liansferee for whose benelit the ^naianty is given may sue npon it. Brown v. Curtiss, 2 N. Y. 225. And see Upham v. Prince, 12 Mass. 14; Barrett v. May, 2 Bailey (S. C.) 1. (5) Pa.ssing from the question of negotiability to that of assign- ability, the ])rinciple in equity is that, in any case of a guaranty upon or aceonqianying negotiable pa])er, the holder of the paper may assign his right with the pai)er guarantied, so that the assignee may sue in the name of the original guarantee. 2 Daniel, Neg. Inst. 1775; Story, Bills, 457. In New Y'ork it is settled that a special guaranty, limited to the person to whom it is addressed, and contemplating a trust or re])os- ing a confidence in such person, is not assignable until a cause of action has arisen thereon. Evansville Nat. Bank v. Kaufmann, 03 X. Y. 273; Bennett v. Draper, 1:5!) N. Y^ 2GC, 34 N. E. 791. There- after, by virtue of the statute relating to actions by the real party in interest, the assignee of the cause of action may now sue thereon in his own name. Evansville Nat. Bank v. Kaufmann, 93 N. Y. 277. But where, as in the case of a guaranty of a promissory note pre- viously executed and delivered, the amount and time of payment of which are fixed, the guarantor undertakes to i)ay it if the maker does not, it makes no diffen'once to the guaiantor whether he pays it to the payee, or to some one else to whom the latter transfers his claim, and the latter may sue in his own name. P^verson v. Gere. 122 N. Y. 290, 25 N. E. 492. Compare Lamourieux v. Hewit, 5 Wend. (N. Y.) 307. The fact that a guaranty is in terms negotiable makes the guaranty i)ass with the instrument, and vests whomsoever may hold the note with right to sue upon it, but this does not change its character of a guaianty (Allen v. Rightmere, 20 Johns. [N. Y.] 365; Ketchell v. P,urns, 24 Wend. [N. Y.] 450. Compare Story, Prom. Notes, § 484; Palmer v. Grant, 4 Conn. 389); and accordingly, being 30 SURETYSHIP AM) (il'AKANTY. ;i j,Mi;ii-;iiit V. llir debtor iiiiisi srt-I; llic cnMlitor, iiiid tlie <,ni;ir;ml()r is mlillt'd t(» IK. Holier of tlie failure of the iiiakei' or aeee]>t(ir to l>av the iiistninieiit (Allen v. Ki^htiiicrc. lit) Johns. [X. Y.] lidH; \\ alion \. Maseall. IM Mees. ^: W. T'Ji; th(Mij;li tliis niav he varied by the pari ieuhii' terms of jiivcn {guaranties (Arents v. Com., IS (Jrat. |\'a.) 7701. I'nder tlu' statutes d(M'larin<2; only bills and notes jo be n('}:;otiable. a <;narantoi' of coiipons on railroad bonds. Ihon^li the jxnaranty is available as such to a transferee of the prineipal instruments, may make any defense that he could have made if sued by the original jtayee in the bonds. Eastern Townships T.ank v. St. Johnsbury & L. C. R. To., 40 Fed. 423. W'oi'ds of assignment on the back of inst laiments. unless cleaT'ly showinfj an intention to exempt the transferror from an indorser's lia- l)ility, are treated as an indorsement. Sears v. Lantz, 47 Iowa, G58; \ anzant v. Arnold, 31 Ga. 210; Fassin v. Hubbard, 55 N. Y. 405; Kiihards v. Frankum, 9 Car. & P. 221; Shelby v. Judd, 24 Kan. IGG; Hall V. Tobv, 110 Ta. St. 318, 1 Atl. 3(;0. 9. EXTENT OF LIABILITY. The liability of a surety or f^uarantor is not to be extended beyond the terms of his contract, properly construed. To the extent, and in the mannei', and undei' the circumstances prescribed iu his oblipition, lie is bound, but no further. Tie has a rijiht to stand upon tln^ precise terms of his contiact. And if there be a default, or breach of condition, his liability must be de- temiined by the tenns of the contrac t. which cannot be extended by construction or implication to cover a case not within its j)rovisions. Cushin^r V. Cable, 48 Minn. 3, 50 N. W. S!)l ; Tern Plow & Wheel Co. V. Ward, 1 Kan. App. 0, 41 Pac. <;4; Miller v. Stewart, Wheat. 081 ; Flynn v. Mudd, 27 111. :'.2:'.; Chase v. .Mcl>(.nald. 7 liar. .V: .1. i.Md.) 100; Noyes V. Granj^cr. 51 Iowa, 227, 1 N. W. 519; Ludlow v. Simond, 2 < aines, ("as. (X. Y.) 1 ; F. S. v. IJoecker, 21 Wall. 052. If a surety is sued u|>on the ohl agreement, to which alone his under- takinj^ was ao'cssory. he has only to show that that has ceased to <'\ist, and no lon^^ei' binds his jirincijial ; ami, if he is sued upon the .substituted agreement, he is entitled, both in law and <', 41 Tac. G4; Paiue v. Jones, 7(> N. V. 274; Colnirn v. Wchh, .^0 Ind. A surety for an official lioldinfj; ofllice for a jx-riod lixcc] l)y statute is j;enerally oidy liable foi' that pei'iod. IJoaid of Adin'rs v. McKowen, 48 La. Ann. 2."il, ID Soutli. :J28; Uassell v. Lonj;, 2 Maule & S. 'M'/.i; •Mayor, etc., of Wilmington v. Horn, 2 Har. (Del.) 190. But see, further, as to the question of liability while the official holds over pending the appointment of a successor, Baker City v. Murphy, :\0 Or. 4()r), 42 Pac. 13.']; Eddy v. Kincaid, 28 Oi-. H.'iT, 41 Pac. 150. Where a bond given by a surety for himself and his administrators, to secure the due discharge of his trust by a bank cashier, was condi- tional upon such performance during his entire emplo^-ment, whether under his present or any subsequent election, and whether under the bank's present charter or any renewals or extensions thereof, tin- surety was held liable, though the breach of duty by the cashier oc- iiri;Ui(tn of fiiiuls duiiim llic Icriii cdMicd 1»\ tlic ImmhI. tlioii^Tr tllVclt'd for tlu' purposr of coverinu :i (Icfalciilion ((umiiillcil diiriiiji- the jirior tonn (IVoplo v. llaiimioiul, lOI* Cal. :5S4, 4li Pac. 'Mi); and \hv snivtifs on the new liond of an olTu-ial who succeeds liiniself are lialil*' for his iiiisa|iiir(i|ii iaiioii or faihire to accoiiiit. (hnin.u tliat lenii. for funds remaining- in his liands when the prior term eiid d (Trustee!* of Schools V, ArnoUl, HS llh App. 10:M. If a rej;ister of deeds. (hnin<;- the term for wliicli a bond has been given to secure tlie faithful performance of all the duties of his ollice, is l)_v statute subjected to liability for dama<;»'S to individuals injured by his failure to index instruments, the sureties are also liable (State V. (Jrizzard, 117 N. C. 105, 23 S. E. 93); and sureties on an ollicial bond may be liable for various torts of the principal, in so far 'as they constitute a breach of his otiicial duty (Kischer v, Meehan, 11 Ohio Cir. Ct. II. 103; Stephenson v. Sinclair, 11 Tex. Civ. App. 133, 36 S. W. 137. Compare Marquis v. Willard, 12 Wash. 528, 11 Tac. 880). The terms of an official bond may be such as not to render the sure- ii» s liable for disbursements erroneously made by the official, if actually made in good faith and for the benefit of the government. U. S. v. .McClane, 74 Fed. 153. The terms of a given contract of suretyship or guaranty may be such as to cover a wider field than the usual one. Thus, where a bond was given to a bank, conditioned upon the faithful and honest performance by the cashier of all his duties during his term of office, and he converted funds of the bank to his own use, and ♦■•ngaged in a conspiracy to defraud the bank, by which the latter lost funds belonging to it, it was held that the fact that the bank had failed to pr(»vide an "exchange committee," as required by its by-laws, and that in the absence of such a conuniltw the cashier had exclusive authority to transact the business of Ihe bank, would not relieve the sureties, nor would the fact lliat his salary had been increased in considerat i(ui of his peirormiiig other duties n(tt af- fecting the continuance of his full duties as cashier, if the losses in (pU'Slion occurred because of his ])reach of duty as cashier. Wallace V. IJank, 120 Ind. 2«;5. 2(; X. )•:. 175; Sha( Uamaxou ItanU v. Vaid. 150 I'a. St. 351, 1^1 All. a ("nnli.i. Ii'i; X. V. 'J:*:',. I'T X. i:. iMli: thouj^h it is otherwise where the ^MiaiMiiIor docs not kiiuw th:U il is a lirm that i)ro|)()s«'s to icl.v on tlic <::iiaiaiit_v, and ho ])roi>osos to iinaraiit.v only tlio iiidixidnal to wlioiu the ;:;uai'an(_v runs (llanis \. I'.anow. lil X. V. :!:i; Lord Arliui^loii v. .Mnrickr. L' Saiiiid. Ill; Wri-ht V. Kussel, 2 W. Bl. JCU; Myers v. Edge, 7 Toini K. i:r.4; lUdiiies V. Small. 157 >[ass. 223, 32 N. E. 3). In the abs«'n(»' of lanj;ua{;e. in a f^naranty j^'ncii !<» a liiin. slKiwin;^ that the parties intondcd Iliat il slioiild survive changes in tlio iiarlncr- ship. and inui-e to llio benotii of a now linn, as well as tJie old. it torniinates with tlie existence of the linn to wliidi it was given. Bennett v. Draper, 139 N. Y. 270. 34 N. E. 791; Strange v. Lee, :: East, 489; Add. Cent. C*r^r>. But loans on advances made by the old firm on the faith of the guaranty could be assigned to the new tirm, and such assignmeni would carry with it a right of action on llie gnaianty. Bennett v. Drai.ei-. 139 X. Y. 270. 34 N. E. 791. And the fact that a guaranty addressed to a firm is a contiiming one does not operate to continue it after the membershii» of the firm changes. B.urch v. De Kivera, 53 Hun. 3(;7. (I N. Y. Supp. 20(;. RIGHTS OF THE SURETY OR GUARANTOR. 10. (a) An ago !)).■<( tJy principal. After the debt is due, and llie surety or guai-antoi- lias paid the same, his right of action arises against the principal without demand for what he has thus paid, with inter- est and costs. Collins v. Boyd. 14 Ala. 505; Harper v. ^IcVeigb, S2 ^'a. 7.51; Tillotson v. Bose, 11 Mete. (Mass.) 299; Eaton v. Lambert. 1 Neb. 339; Ward v. Henry, 5 Conn. .595; Coggesliall v. Buggies, 02 III. 101; I{usliong V. Taylor. 82 Mo. 070; Craumer v. ^bSwords. 2<; W. \a. tl7. The surety or guarantor may also, hy special agreement, have other means of indennufying himself, as by enforcing securities given to s*'- cure him against loss (West v. Hayes. 117 Ind. 290. 20 X. E. 1.55); and is not dchmi'ed from becoming a piiicliaser at slierilT's sah' of (lie property of the jirincipal (.Malliis v. Stulllebeaiii. 91 111. •1S7). lie may also seek the aid of e<|uily for reimbursement. liisjt. Ecp i; .''.'{l. And becau.se the surety has uo interest iu the contract of his i)riu KIGHTS OK THK SUKKTY OK GUAItANTOK. 35 cipiil, he may, in a pi-oi)or case, i)i"oci'e(J in a courl of efinity against the [)rincipal to comf)el him to pay the debt. 1 Story, Eq. Jur. § 327; Bishop V. Day, 13 Vt. 81; Harris v. Xcwcll, 42 Wis. <;!>!; Hays v. Ward, 4 Jolins. Ch. (N. Y.) 12:5. If a suit'ty or guarantor, after the debt has become due. lias any apprehension of loss oi' injury fr(»ni tlie delay of the creditor to en- force the debt against the principal ilebtor, he may {iroeeeil in equity to compel the debtor to discharge the debt or other obligation for which the surety is responsible. Story, Eq. Jur, § 849 ; Norton v. Reid, 11 S. C. 593; Watson v. Barr, 37 S. C. 463, IG S. E. 188; Philadelphia & R. R. Co. V. Little, 41 N. J. Eq. 519, 7 Atl. 35G; Gibbs v. Mennard, 6 Paige (N. Y.) 258; Hannay v. Pell, 3 E. D. Smith (X. Y.) 432. (b) As against the creditor. A surety, if compelled to pay the prin- cipal's debt, is entitled to stand in the creditor's place, and to enforce the same remedies and avail himself of all securities held by the cred- itor. Hays V. Ward, 4 Johns. Ch. (N. Y.) 130; Kidd v. Hurley, 54 N. J. Eq. 179, 33 Atl. 1057; Schroeppell v. Shaw, 3 N. Y. 457. At law the surety is liable to pay the debt, though the creditor holds securities; but in equity, if no injury would result to the creditor and otherwise might result to the surety, the latter may require the cred- itor to first resort to his securities before coming to the surety. Kidd V. Hurley, 54 N. J. Eq. 180, 33 Atl. 1057; Irick v. Black, 17 N. J. Eq. 195. But subrogation is a matter of grace, not of right, and is a creature of pure equity. It will never be decreed where it works injustice. Budd V. Olver, 148 Pa. St. 194, 23 Atl. 1105; Prairie State Nat. Bank V. U. S., 1G4 U. S. 231, 17 Sup. Ct. 142 ; Gadsden v. Brown, Speer, Eq. (S. C.) 41. As a general proposition, it is no defense to an action against a sure- ty or guarantor that the creditor has other securities, and the defendant has no right to ask an assignment thereof to himself prior to his pay- ment of the creditor's demand. Lumbennen's Ins. Co. v. Sprague, 59 Minn. 208, 60 N. W. 1101. A guarantor or suret}', when sued by the creditor, cannot avail him- self, in exoneration of his liability, of a cause of action for damages for a breach of the contract existing in favor of the principal. Newton V. Lee, 139 N. Y. 332, 336, 34 N. E. 905. Conversely, securities belonging to the principal debtor, and pledged 36 SI'UKTVSIIII' AM) (.I'AltANTY. l>_v liiin t»i indcinnifv liis siiifiy, iimrf lo ilic Iti nclU of tin' crcdidn-. ^lt•V(•l•s V. (';iiii|ili( II. .">:» N. .1. L:i\v. :'.7s. :',:> Ail. 7SS; Kastmaii v. Foster, s .Mete. (Mass.i l!i; \{'hv v. Dewey, i:{ (Jray (Mass.) 47; Hussell v. I'larke, 7 Ciaiicli. C.'.i: Hvcrlson v. l?oolIi. 1!) Johns. (N. Y.) 4S(;; Keller v. Ashfnii]. i:::: r. s. <;iiL\ lo suj). ct. i!n. ( iia\r (l(»iiliis were I'oi' a time entertiuiicil as to (he ri^:ht of a surety, hy suit in al, is entitled to notify the creditor to proceed ajiainst the principal, at the peril of otherwise releasing the surety or .miarantor to the extent of any injury resnltinu from The failure to comjily. This is the view ariii(i|ial (Snow v. lJor;;an, 18 R. I. 289, 27 Atl. :{:J8). Ddimiid t oilicrw isr br lalltd for, notice of drfanll may be s|M'cially rc- ipiind as a condiliim |irccc(b'nl to the liability »»f a surety or ^;nar- ant(.r. Waldlieini v. Sonnenst raid. S Misc. Kip. '_M!», 28 N. Y. Suj>i>. r.SL'; Davis v. W.lls. KM I'. S. 170; I'.ailiydt v. Kllis. b" N. Y. 11<». .\nd if notice ef default would result in no beiielit wliatever to llie guarantor, as where the principal was insolvent when the guaranty w as ^iiven, and so remained, failure to ^^[ive notice is no defense to the ^'uarantor. Taussijjj v. Reid, 145 111. 4!)5, 82 N. E. Ob^; (Jibbs v. Can non, Serg. & R. (Pa.) 198. And the same principle has been applied where the principal is insolvent at the maturity of the debt (Sulli- van v. Field. 118 X. C. 358, 24 S. E, 73")); and to eases where, fn.m the circumstances, the guarantor must know all that a notice would tell him (Cooper v. Page, 24 Me. 75; Williams v. Granger, 4 Day [Conn.] 444; Milroy v. Quinn, GO Ind. 411V Under this head fall many cases of absolute and unconditional giiai antics of j)aymenl. McDonald v. Fernald (X. U.) 38 Atl. 720. And. in general, even where a notice is requisite under a continu- ing guaranty, notice of the amounts due, given within a reasonable time after all transactions with the principal are closed, is suf!i cient. and, if no injury results, an entire omission of notice is im- material. Ferst V. P.lackwell, 39 Fla. 021, 22 South. 802; Stevens v. Gibson, f)9 Vt. 142. 87 Atl. 244. Notice of default may be waived. Page v. ^rachine Co., 12 Tex. Civ. Ai>p. 327. 34 S. W. 08S. And the relation of the sureti<'s or giiaiaiiltus may be such in regard to a transaction as to make the principal their agent in re- spect t(> Ihe default, and so dis]»ense with notice, -lungk v. Keed, 12 rtah, 10<;, 42 Pac. 202. (c) Ax a(fainJif co-surt'th'fi mid eo-fin(ii'i's. ( )ne of several sure- ties (W guarantors wli(» is (»lili;_'e(l t tlic fact that the oiu' who pays (iid not llicii know that there weri' co siirelies (Waiiicr V. Morrison, .'{ Allen [Mass.) ."(iO). And, as between two or more sureties, one who pa.vs is enlitlcd to (he benefit of seciiritieH held by another. Silvey v. Dowrll. :,;: 111. iMiO; A;,micw v. I:.II. I Watts (Pa.) 31; Currier v. Fellows, 27 N. II. ;}(iG. But contribution dc»es not rest upon contract, but on the broad, equitable princii)le that equality is ecjuity. .lust ice and fair dealing demand that where two or more parties sign tlie same obligation, and become obligated in precisely the same degree thereby, and stand ujioii the same footing as to their liabilities thereunder, on(; of the number shall not be conipelled to assume the whole burden for his associates, but may compel them to share equally with him any loss that may occur as the result of their common liability, IJulkeley v. House, G2 Conn. 459, 20 Atl. 352. Parol evidence is therefore admissible to show that apparent prin- cipals are sureties, or vice versa. Kobison v. Lyle, 10 Barb. (S. y.) 512; Barry v. Ransom, 12 N. Y. 402; Apgar's Adm'rs v. Ililer, 24 X. J. Law, 815; Mansfield v. Edwards, 130 Mass. 15. "If the sureties are not bound for the same thing, or do not oc- cupy towards each other the same relative position, then one of these results may follow: (1) The surety paying the debt may have no right to contribution; (2) a surety first in point of time may have no remedy against one who is subsequent; (3) or a subsequent surety may have no remedy against the first." Bulkeley v. House, 02 Conn. 459, 20 Atl. 352; Bisp. Eq. 308; Harris v. \Yarner, 13 Wend. (N. Y.) 402; Paul v. Berry, 78 111. 158; Sayles v. Sims, 73 N. Y. 552; Oldham v. Broom, 28 Ohio St. 53; Sherman v. Black, 49 Vt. 198. Thus, if one signs as surety for one who is himself a surety, he is not liable for contribution to the latter. Robertson v. Deatherage, 82111.511. And if a note signed by a jyrincipal and two sureties is discharged by the execution and delivery of a new note executed by the prin- cipal and one of those sureties, and the latter is forced to pay the last note, he is not entitled to contribution from his co-suret}' on the first note. Chn]»man v. Garber, 40 Neb. 10, 04 X. W. 302; Bell v. Boyd, 70 Tex. 133, 13 S. W. 232. 40 SUHKTYSHII' AM) C.rAPvANTY. ^^'llil(" a mere volmilaiy i.avniciil l>,v a snrctv oi- guarantor, wliicli could not have Ihh'U coniiK'llcd, gives liini no right to reimburse- ment from the jirincipal nor to eonli il»ution from co-sureties or co- guarantors (Sui>i)iger v. (larrels. '_*(» 111. Ap|i. Cl".*: Hough v. In- surance (\>.. ')7 HI. :ns; Bradley v. liurwell, :'. Denio [N. Y.] C.iH, yet it is not necessary for him, in oi-der to recover, to show that he was comjK'lled to pay by execution. >\lien the principal ((Uitiad has hrvu broken, lie nuiy pay without suit, and recover tiie anuiunt of his principal (Mauri v. llcll'ernan, L'i .Johns. [X. Y.] HS); and by analogy is entitled to contribution (Bradley v. Burwell. :{ Denio [X. Y.] «;i)). I)(>if/( of co-suretr/. AVhile. as above stated, the rifrht to contri- bution originated in equitable principles, yet it has been grafted upon the law, with the aid of an implied promise to secure the legal remedy. It follows, therefore, that the death of one of two or more sureties or guarantors does not relieve his estate from the liability to contribute under their implied contiact to that effect, originating when they executed the original undertaking (Johnson V. Harvey, 84 N. Y^ 365); even though the default by the principal was subsequent to the death of the co-surety (Bradley v. r.urwell, 3 Denio [X. Y.] Gl). In this respect the mutual obligation to contribute is like any other contract made by one in his lifetime to jiay money at a future time, either absolutely or contingently, who dies before the occur- rence of any breach of the contract. Bradley v. Burwell. 3 Denio (X. Y.) GO; Toussaint v. :Nbwtinnant, 2 Terra R. 104; Cowell v. Ed- wards, 2 Bos. & P. 2G8; Wood v. Leland, 1 Mete. (Mass.) 387; Bach- elder v. Fiske, 17 :Mass. 4G4. The theoiT that the liability of the sureties or gnaiantors, as l)etween tlieinselves, rests on an implied contract, is not univ<'rsally recognized, and, accordingly, in some jurisdi( lions, the death of one relieves his estate from the duty of contribution. Waters v. Biley. 2 liar. & G. (Md.) 305. Even under the Xew York rule, the death of one of two or more co-sureties or co-guaiant(M's, who are jointly bound, relieves his estate from direct liability to the creditor. Kisley v. Brown, G7 X. Y. IGO; W\)od v. Fisk, G:{ X. Y. 245; Getty v. P.insse, 41) X. Y. 385; IMckersgill v. Dihens, 15 W all. 1 tO. DISCHAKUIC OF SURETY OK GUARANTOR. 41 DISCHARGE OF SURETY OR GUARANTOR. 11. The surety or guarantor uiay be able, in given cases, to set up any one of Humorous dcfcusos to an a<-ti(>n against him by the creditor on the ground that liis original conlract was not binding ab initio, or that by some subsequent alteration in it, or in the principal contract, or some subsequent acts of the creditor injurious to his rights, or some change in circumstances, he is discharged. Thus: (a) Fraud. If the creditor knows that the surety or guarantor was induced to become such by fraudulent representations, he can- not hold him to his contract. lieath v. Chapoton (Mich.) 73 N. W. SOG. But he is not responsible for any deception practiced by the prin- cipal upon the guarantor, without the creditor's knowledge. Pow- €rs V. Clarke, 127 N. Y. 422, 28 N. E. 402; Western New York Life Ins. Co. V. Clinton, 66 N. Y. 326. (b) Concealment. If the creditor misleads the surety or guarantor at the time of the latter's executing his contract, or suppresses facts he should have disclosed, or refuses to answer proper inquiries, which would have revealed facts the surety or guarantor had a right to know, he cannot hold the latter liable. Benton Co. Sav. Bank v. Boddicker (Iowa) 75 N. W. 632; Bellevue Building & Loan Ass'n v. Jeckel (Ky.) 46 S. W. 482; Denton v. Butler, 99 Ga. 264, 25 S. E. 624; Fassnacht v. Gagin Co., 18 Ind. App. 80, 46 N. E. 45, 47 N. E. 480; Traders' Ins. Co. v. Berber, 67 Minn. 106, 69 N. W. 701; Powers Dry-Goods Co. v. Harlin, 68 Minn. 193, 71 X. W. 16; Jungk v. Hol- brook, 15 Utah, 198, 49 Pae. 305. But, if no inquiry be made, mere silence does not necessarily re- lease the surety. Lake v. Thomas, 84 Md. 608, 36 Atl. 437. The creditor is not required to make any disclosure or explana- tion the withholding of which would not amount to fraud. Powers V. Clarke, 127 N. Y. 423, 28 N. E. 402. (c) Invalidity of principal debt. Usually, if the principal debt is not bound by the principal contract, the surety is not bound by his contract of suretyship. But this principle does not apply where the nonliability of the principal is occasioned by a purely personal •12 SUKETYSlIir AM) urAKANTY. »lff» iis(\ in the nature \'a. r)l(), IG S. E. ('>'2~. AN'lien the name of the i)rincij>al or a surety lias been forced, a ((» surety, though he signed in the belief that the forged name was genuine, is nevertheless bound if the cre.-), 50.1; Polak v. Everett, 1 Q. B. Div. VM); Ellesniere Brewery Co. v. Cooper [180G] 1 Q. B. 75; KeeKe v. U. S., 9 Wall. 21 ; I'iiiney v. Condon, 8G Dl. 78; Paine v. Jones, 70 N. Y. 278, 279; Pajj;e v. Krekey, 137 N. Y. 313, 33 N. E. 311; Bennett v. Draper, 139 N. Y. 2GG, 34 K. E. 791 ; VillajiC of Chester v. Leonard, G8 Conn. 509, 37 Atl. 397; Board of Com'rs of Morgan Co. v. Branham, 57 Fed. 179; United States Glass Co. v. ^^'est Virginia Flint Bottle Co., 81 Fed. 993. Compare :Mersman v. Werges, 112 U. S. 139, 5 Sup. Ct. 65. Thus, if, after a promissory note payable to a named payee or bearer is signed by one as surety, the principal so alters it as to increase the rate of interest, the note is thereby rendered void as to the surety, even in the hands of a bona fide holder for value without notice. Hill v. O'Neill, 101 Ga. 832, 28 S. E. 996; Derr v. Keaough, 96 Iowa, 397, 65 N. W. 339; Farmers' & Merchants' Nat. Bank v. Novich, 89 Tex. 381, 34 S. W. 914; Windle v. Williams, 18 Ind. App. 158, 47 N. E. 680. Compare Keene's Adm'r v. Miller (Ky.) 45 S. W. 1041. But it is usually held that there may be changes so immaterial as not to effect a discharge. Etz v. Place, 81 Hun, 206, 30 N. Y. Supp. 765; Troy City Bank v. Lauman, 19 N. Y. 477. And, if the agreement for a change is void, it does not effect a discharge. Slaughter v. Moore \T€X. Civ. App.) 42 S. W. 372. And a change of part of a guarantied account into the form of notes does not discharge the guarantor (Len- nox V. Murphy [Mass.] 50 N. E. 644), nor does a change in the nature or extend of the acts guarantied, as compared with those performed in the same line of business, employment, or credit before the contract of suretyship or guaranty was executed, if the new class of acts is in fact covered by the terms of the latter contract (People v. Backus, 117 N. Y. 196, 22 N. E. 759). And the same result follows where, after a bond has been executed by sureties or guarantors to secure the agree- ment of a national bank as a depository of state funds, the charter ex- pires, but is extended under a federal statute declaring that in case of such extension the bank shall continue to be in all respects the identical association it was before the extension. People v. Backus, 117 N. Y. 196, 22 N. E. 759; Exeter Bank v. Rogers, 7 N. H. 21. Compare Thompson v. Young, 2 Ohio, 334; Union Bank v. Kidgely, 1 Har, & n SlliKTYSllir AND ClAKANTY. (J. .".i!!; I'.;ink v. Uaiiiii^toii, - I'cii. ^: \V. 127; r.rown v. T/inimoic 17 A lidiul fof fiiitliful MM'vice may bo so woi-dcd as to survive various clianut'S tliat would otliorwise discharge. Singer Mfg. Co. v. Reynolds. ICS Mass. nss, 47 X. K. 438. Illustrations of eases where a change in the I'elation. situation, status, etc., of the i)arties, or in the eircuinstanees, does operate to re- lease the surety or guarantor, or to throw given defaults outside the range of his liahility, are stated undei' the head of "Extent of Lia- bility." (e) And where the pirty secured does some act which changes the ]»osition of the surety to his injury or prejudice, the latter is discharged absolutely or pro tanto, according to the circumstances. Smith v. MoUeson, 148 X. Y. 247, 42 N. E. mi); General Steam Nav. Co. v. Kolt. G C. B. (N. S.) 550; Calvert v. Dock Co., 2 Keen, G.S8; Warre v. Calvert, 7 Adol. & El. 143; Plunkett v. Machine Co., 84 Md. 520, 3(; Atl. 115. ^lere delay by the creditor in suing the principal, or in proceeding against a fund pledged by him, does not release the sui-ety or guarantor, even though loss may have thereby resulted. Purdy v. Forstall, 4.") La. Ann. 814, 13 South. 95; Schroeppell v. Shaw, :\ X. Y. 440; Evans v. Evans, IG Ala. 465; Darby v. Bank, 97 Ala. (545, 11 South. 881; A\'atson v. Barr (S. C.) 10 S. E. 188. And mere postponement of one of the ordinary proceedings in a iw ^: E.]. Kcji. 2S5; Cunmiings v. .\niold, :; Mete. [.Mass.J ISO; Adams v. Way, :'.2 ("oiin. lOdj; and. win re laches of the creditor is siicli as to discharge the surety or guarantor, it thus operates only to the extt-iit that the latter has sulTered loss ((iillighan v. Boardman, 29 Me. 79j. DISUIAHUK OF SUUKTY OK CiUAUANTOK. 45 One who guaranties a boIc liadcr lor IIk- tniiliriil i.ciroriiianco of duty by a cloik is no longer responsible if the trader takes a i)artner (Wright V. Kussell, :{ Wils. 5:U); Holmes v. Small, 157 Mass. 223, 32 N. E. 3; Lloyd v. Blackburn, 1) Mees. & W. 3G3), unless the contract otherwise provides (Garret 1 v. Ilandley, 4 Barn. & C. G66). But the mere fact that a government, having a judgment against a principal debtor, releases him by a statute from imprisonment thereunder, does not discharge the surety. Hunter v. U. S., 5 Pet. 1 73. The duty of the creditor, in respect of securities held by him, towards the surely, is not active, but negative, and he is simply bound not to cancel, waste, or impair them. If securities are re- leased by the creditor, they must possess more than a supposititious or imaginary value, in order to discharge the surety, and so with a bona fide exchange of securities. State Bank of Lock Haven v. Smith, 155 N. Y. 200, 49 N. E. 680; Xeff's Appeal, 9 Watts & S. (Pa.) 36; Coates v. Coates. 33 Beav. 249; Thomas v. Cleveland, 33 Mo. 126; Moss v. Pettingill, 3 Minn. 217 (Gil. 145). But, if security held by a creditor is lost through his negligence, or voluntarily released, without the surety's consent, the surety is pro tanto discharged. Mingus v. Daugherty, 87 Iowa, 56, 54 N. W. 66; Sherraden v. Parker, 24 Iowa, 28; Burr v. Boyer, 2 Neb. 265. (f) A binding extension of the time of paAinent of the principal debt, without consent of the guarantor, discharges him, unless he subsequently assents to the extension and ratifies it. Bishop v. Eaton, 161 Mass. 501. 37 N. E. 665; Chace v. Brooks, 5 Gush. (Mass.) 43; Calvo v. Davies, 73 N. Y. 211. (g) The full payment or performance of the debt, act, or obligation of suretyship or guaranty operates to discharge the surety or guar- antor. Thus, such liability ipso facto terminates when the debt secured is paid or payment is tendered (Petefish v. Watkins. 124 111. 384, 16 X. E. 248; Woodman v. Mooring, 14 N. C. 237; Felch v. Lee, 15 Wis. 265; Sharp v. Miller, 57 Cal. 415; Joslyn v. Eastman, 46 Vt. 258; Sears v. Van Dusen, 25 Mich. 351; Johnson v. Mills. 10 Gush. [Mass.] 503); but contra as to tender (Glark v. Sickler, 64 X. Y. 231). A contract of suretyship, entered into on behalf of a partnershi]» as principal, continues no longer than the partnership itself. Lon- don & L. Fire Ins. Co. v. Holt (S. D.) 72 X. W. 403. -iG 8URKTV>llir AMI lilAKANTY. r»ut a lliiu may l»y iis roiiduci. after a cliaii^ir in its iiu'iiib" rsliip. rat ify. and ilins liind itself l»y. a let in- of ci-rdit {,'ivi'n by tlie old lirni. Sniiih V. L<'dyard. 1!) Ala. I'TH. ilii Tlio siiri'ly or guarantor may. of course, be disthar;,'ed by any act wiiicli, by tlio terms of theii- a;;r«»<'inont, is accordcil that elTect, as liy levocation in accoi'dance ^vitll an express reserved ripht to re\»die. So. also, by a bindin;: nnitnal substitution of a new a^jrcM*- ment in jilace of the old. Tayloi- v. Hilary, 1 fYomp., M. ^: K. 711. (i) DfOth of tiuiyftj or (jnavnntnr. The general ])re>umpti()n, i'> the ab.^ence of express \\t)ids. that the parties to a c(Mitratt intend to bind not only tliemsehcs. but their personal representatives, apjdies to contracts of suretyship or <;uaranty. The parties may. if they choose, contract otherwise. And tlu» nature of the contract may be conclusive in determining tin- intent. In the case of a con tinuinjr jruaranty of successive credits, the death of the j^tiarantor. ami notice thereof, terminates the <;uaranty as to subsequent cred its. unless the contran provides otherwise. Coulthart v. Clement S(Ui, n Q. B. Div. 42; llarriss v. Tawcett. L. K. 1." Kq. Cas. .Ml; TJoyds V. llariK'r, It; Ch. Div. 1".M). r.ut. if the «;tiaranty creates a continuinjr i)ecuiiiary oblij;ation. the consideration for which is entire and j.Mven ome for all. tln' • leath of the j,Miaiantor dues not terminate the ;^uaranty, unless so provided. Kernochan v. Murray, 111 N. Y. ?M\. IS N. E. StiS; Holt liausen V. Kells. IS Ajip. Div. 80, 45 N. V. Sujip. 171. al1irme or Lniaranty are irrevoca- ble or revocable accordinj^ as the considei-.ition is entire, or is sup- plied from time to time, and therefore divisible. An instance of the first class is where a person enters into a ^Miaranty that, in consideiat ion of the lessor granting; a lease to a thiid pers(>n, he will be answerable foi- the perfoiniance of the cove- nants. The moment the lease is granted there is nothing more for DISCHAIKiK OF SIUKIY OK Of A U A NT< 'K. 47 (tie lessor to 1!»; Calvert v. Gordon, 3 Man. & R. 124; Coulthart v. Clementson, 5 Q. li. Div. 42; Snow v. Horgan, IS K, I. 28!>. 27 Atl. 338; National Eagle Bank v. Hunt. Ifi R. I. l.jl, 13 Atl. ll.'j; Green v. Young, 8 :Me. 10; Moore v. Wallis. 18 Ala. 403; Royal Ins. Co. v. Davies. 40 Iowa, 471; Rapp v. Insurance Co., 113 III. 304; OlTord v. Davies. 12 C. P.. (N. S.) 750, 7."'j7; Jordan v. Dobbins. 122 Mass. 170. 171; Menard v. Scudder. 7 La. Ann. 301. 302. But a surety bound for the fidelity and honesty of his principal, and so for an indefinite and contingent liability, and not for a sum lixed, and certain to become due, may revoke and end his future lia- I'ility in either of two cases, viz.: Where the guarantied contract has no definite time to run; and where it has such definite time, but the principal has so violated it and is so in default that the creditor may safely and lawfully terminate it on account of the breach, Emery v. Baltz, 94 N. Y. 414; Burgess v. Eve, L. R. 13 Eq. 450; rhillips v. Foxall, L. R. 7 Q. B. 000; Sanderson v. Aston. L. R. 8 Exch. 73; Singer Mfg. Co. v. Draughan (X. C.) 28 S. E. 130. 48 SURETYSHIP AM) GUARANTY. SURETYSHIP IN RESPECT TO PARTNERSHIPS AND SALES OF REALTY. 12. (a) Where a partner withdraws from a tirm, or it is dissolved, aud it is agreed that the otlK?r shall take the property and pay the tirm debts, the latter becomes a princii)al, and the other a surety^ ;ind the usual iiriiiciples of suretyshii* apply, both as between them- selves and as to creditors with notice. Porter v. P»axter (Minn.) 1^ N. W. SU; Williams v. Boyd, 75 Ind. 28(); Colgrove v. Tallman, 07 X. Y. 95; Bizer v. Ray, 87 N. Y. 220; Chandler v. Higgins, 101) 111. 602; Barber v. Gillson, 18 Nev. 89, 1 Pae. 452; Oakeley v. Pashe- leer, 10 Bligh. 548. Thus, if the retiring partner is obliged to i)ay a firm debt, he may recover the amount from the one who remains (Shanburg v. Abbott, 112 Pa. St. 12, 4 Atl. 518); while, if the remaining partner pays the debt, he is not entitled to contribution from the one retiring (Hanna V. Hyatt, 67 Mo. App. 308). The same result follows where one partner transfers his interest in the firm property and assets to an outsider, who is thereupon admitted to the new firm, consisting of the other members of the old. Morss V. Gleason, 64 N. Y. 204. But, to atfect a creditor who extends time of payment or does other acts which would discharge a surety, he must have notice of the new arrangement and its binding effect. Palmer v. Purdy, Ki X. Y. 144. And in some juiisdictions it is held that he is not bound, even by notice, unless he has assented to the new relationship. Ridgiey V. Robertson, 67 Mo. Apj). 45. (b) Where the owner of real property, incumbered by a mortgage which he is liable to ])ay, sells the ecpiity to a purchaser, who as- sumes and agrees to pay the mortgage, the grantee becomes the jtrincipal in respect thereto, while the grantor becomes his surety. Curry v. Hale, 15 W. Va. 807; 2 White & T. Lead. Cas. Eq. pt. 1, p. 282; Wager v. Link, VU N. Y. 122, 31 N. E. 213. It follows that if, when the debt becomes due, the guaiantor pays it. he bccoiiH s entitled to be substituted to the mortgage security as it originally existed, with the right to i)roceed immediately against the land for his indemnity. Calvo v. Davies, 73 N. Y. 211. PAHTNERSIIIPS AND SALKS OF RKAI.TY. 4y And if, winidul tho consent of the grantor, the mortgagee and the grantee effect a release or satisfaction of the mortgage, or a binding extension of the time for i)aynicnt (Calvo v. Da vies, 73 N. Y. 211; Union Mut. Life Ins. Co. v. llanford, 143 U. S. 101, 12 Sup. Ct. 437), or a change in its terms (Paine v. Jones, 76 N. Y. 274), the grantor is thereby discharged either absolutely or to the extent of his result- ing injury, in accordance with ]>rinciples already stated. In order to establish the relation of principal and surety as to Ihe grantor and the grantee, it is essential that the grantor be him- self personally obligated to pay the debt, though it is not necessary that such obligation should have been created by the deed under which he acquired title. Wager v. Link, 134 N. Y. 122, 31 N. E. 213; Id., 150 N. Y. 555, 44 N. E. 1103. It is also essential that the grantee should assume the payment of the mortgage. It is not enough that he take title subject to the mortgage. Chilton v. Brooks, 72 Md. 557, 20 Atl. 125; Wager v. Link, 150 K Y. 554, 44 N. E. 1103; Crowell v. Hospital, 27 N. J. Eq. 650. While it is the generally accepted doctrine that where land incumbered by a mortgage, which the owner is obligated to pay, is conveyed by him to a grantee, who assumes payment thereof, the mortgagee is entitled in some form to enforce the agreement against the grantee, there is a conflict upon the question whether his remedy should be at law or in equity. Burr v. Beers, 24 N. Y. 178; Thorp v. Coal Co., 48 N. Y. 253; Dean v. Walker, 107 111. 540, 545, 5.50. The question whether the remedy is at law or in equity is to be determined by the lex fori. Union Mut. Life Ins. Co. v. Hanford, 143 U. S. 190, 12 Sup. Ct. 437. In New York the right of the mortgagee has been supported upon the theory that, if one who is indebted transfers property to a third party upon the latter's promise to pay the debt, the creditor may sue the third party upon the contract thus made for the creditor's benefit, under the authority of the line of cases beginning with I^iwrence v. Fox, 20 N. Y. 268; Wager v. Link, 134 N. Y. 127, 31 N. E. 213; Hand v. Kennedy, 83 N. Y. 154. Accordingly, in that state, the mortgagee is entitled to maintain his suit against the grantee, either in equity or at law. Halsey v. Reed, 9 Paige (N. Y.) 446; King v. Whitely, 10 Paige (N. Y.) 465; SUR.& G.— 4 oO SURETYSHIP AM) Cil'ARA.Nl A'. IMyor V. :\r()nli()ll;ui(l, 2 Saiulf. Ch. 4TS; Trottci' v. Ilu^lu^s, 12 X. Y. 74; Burr v. lioeis, 24 N. Y. ITS; Campbell v. Smith, 71 N. Y. 20; Paidt'O V. Tivat, 82 N. Y. 385; Hand v. KimithmIv, 83 N. Y. 150; Bow- on V. Iteck, 04 N. Y. 8(51. Ami the ^i an tor's liabilily to tlic mortgagee is released by a binding extension of time given by the latter to the grantee, with knowledge of the mntual relations of the grantor and grantee, and without the grantor's consent, even though the mortgagee did not know of that relation at the time of the original contract, or even if that relation has been created since that time. Union ^fut. Life Ins. Co. V. llanford, 143 I^. S. l!ll. 12 Sup. Ct. 437; Ewin v. Lan raster, Best & S. 571; Oriental F. Corp. v. Overend, 7 Ch. App. 142, and L. R. 7 H. L. 348; Smith v. Shclden, 35 Mich. 42. As to the form of remedy, however, the United States sujireme court has approved thQ doctrine that w^liile the purchaser of lands subject to mortgage, who assumes and agrees to pay the mortgage debt, becomes, as between himself and his vendor, the principal debtor, and the liability of the vendor, as between the ])arties, is that of surety, and if the vendor pays the mortgage debt he may sue the vendee at law for the moneys so paid, yet in equity, as at law, the contract of the purchaser to pay the mortgage, being made with the mortgagor and for his beni^tit only, creates no direct obli- gation of the purchaser to the mortgagee. And it has a])proved the doctrine that it is in application of the equitable ]»rinciple that a creditor may have the benefit of all collateral obligations for the payment of the debt, which a person standing in the situation of a surety for others holds for his indemnity, that decrees for deficiency in foreclosure suits have been made against subsecpient ]»ur('hasers, who have assumed the paynuMit of the mortgage debt. The mort- gagee, upon this theory, is allowed, by a mere rule of ])rocedure, to go directly, as a creditor, against the person ultimately liable, in order to avoid circuity of action, and save the mortgagor, as the intermediate party, from being harassed for the payment of the debt, and then driven to seek relief over against the ])erson wlio has indemnified him. and upon whom the liability will ultimately fall. Tlie mortgagee's only remedy against the grantee is in ecpiity. In such a case, therefore, a mortgagee, who has in no way acted (in the failh of, or otherwise made himself a party to, the agreement of I>AKTM;U-IIirS AND SALKS OF REALTY. 51 the mortgnj^'or's <,n;iiit By Contract. Interest on a [jrinciiial snni may be stipulated for in the contract itself, either to run from the date of the contract until it nuitines or until payment is made.'^ The agreement for interest may be either express or implied, and an agreement to that effect will be implied where there was a custom to charge interest, which was known to the defendant.^- But ''intei-est does not run u])on a contract, unless es- pecially provided for therein, until the time fixed for payment." '^ In an action for breach of contract, whether interest is recoverable does not rest in the discretion of the jury, but it is a question of law for the court.^* Whether, in a given case, interest is recoverable as mat- ter of law, depends in part upon statutes and in part upon principles to be hereafter stated,^ ^ will stup the accruing of interest, even in actions of tort. Thompson v. Rail- road Co., 58 N. n. r)J4. Where the debtor is forbidden by law to pay the debt, he is not liable for interest during the delay. Thus, trustee process or injunction will interrupt the running of interest. Le Grange v. Hamilton, 4 Term R. 613; Hamilton v. Le Grange, 2 H. Bl. 144; Osborn v. Bank, 9 Wheat. 738; Norris v. Hall, 18 Me. 332; Bickford v. Rich, 105 Mass. 340; Le Branth- wait V. Halsey, 9 N. J. Law. 3; Kellogg v. Hickok. 1 Wend. (N. Y.) 521: Stevens v. Barringer, 13 Wend. (N. Y.) 039. In some states a garnishee of person enjoined must bring the money into court, or he will be chargeable with interest. Kirkman v. Vanlier, 7 Ala. 217; Smith v. Bank, 60 Miss. 69. Inter- est as damages does not accrue in time of war, where the debtor is in one hostile country and the creditor in the other. Interest accruing by contract is not affected. Hoare v. Allen, 2 Dall. 102; Foxcraft v. Nagle, Id. 132; Bigler V. Waller, Chase, 316, Fed. Cas. No. 1,404; Mayer v. Reed, 37 Ga. 482; Selden V. Frestou, 11 Bush (Ky.) 191; Bordley v. Eden, 3 Har. & McH. (Md.) 167; Brewer v. Ilastie. 3 Call (Va.) 22; Lash v. Lambert, 15 Minn. 416 (Gil. 336j; Brown v. Hiatts, 15 W.hII. 177; Ward v. Smith, 7 Wall. 447. Generally, as to what will relieve a debtor from interest, see Miller v. Bank, 5 Whart. (Pa.) 503; Redlield v. Iron Co., 110 U. S. 174, 3 Sup. Ct. 570; Bartells v. Redfield, 27 Fed. 286; Stewart v. Schell, 31 Fed. 65; Jane v. Hagcu, 10 Humph. (Tenn.) 332. 11 Morley v. Railway Co., 346 U. S. 168, 13 Sup. Ct. .54. 12 Ayers v. Metcalf, 39 III. 307; Veiths v. Hagge, 8 Iowa, 163; McAllister v. Reab, 4 Wend. (N. Y.) 483, 8 AYend. (N. Y.) 109; Meech v. Smith, 7 Wend. (N. Y.) 315; Dickson v. Surginer. 3 Brev. (S. C.) 417; Fisher v. Sargent, 10 Cush. (Mass.) 250; Knox v. Jones. 2 Dall. 193; Bispham v. Pollock. 1 McLean, 411, Fed. Cas. No. 1,442; Koous v. Miller, 3 Watts & S. (Pa.) 271; Watt v. Hoch, 25 Pa. St. 411; Adams v. Palmer, 30 Pa. St. 346. 13 In re Clever's Estate. 154 Pa. St. 482, 25 Atl. 814. 1* Mansfield v. Railroad Co., 114 N. Y. 336, 21 N. E. 735, 1037. 15 Lewis v. Rountree, 79 N. C. 122, 128; Dana v. Fiedler, 12 N. Y. 40-50; 4 INTEREST. Tnterrst on Promi'^ftoi'ij N^ofes. "The words 'with interest,' in a contract, — as, for example, in a promissory note, — imply a promise to pay interest from date. With- out them, the note would carry interest from maturity, as matter of law." ^' A promissory note payable on demand, and making no pro- vision for interest, carries interest, not from its date, but from de- mand.^'^ If no time of payment is specified, interest begins to accrue at once, though not provided for.^" Interest on Insurance Policies. Interest is recoverable on the amount due on an insurance policy.^** Interest on Coupons. Coupons attached to bonds, and representing the interest payable upon the principal, may or may not themselves carry interest, according to circumstances. While they are in the hands of the holder of the bond, though detached and overdue, they remain mere incidents of the bond, and have no greater force and effect than the stipulation for the payment of interest contained in the bond. But they may become separate and independent instruments. Tliis does not occur until they are utilized as such.^" In some states, however, coupons, though still attached to the bonds, carry interest from the time when payable."^ And if the law of a state, as it exists when bonds with coupons are issued, allows interest on coupons from the time when they fall due, the legislature has no Brougbton v. :Mitcb('ll, 04 Ala. 210; Hamer v. Hathaway, 33 Cal. 117; An- drews V. Durant, 18 N. Y. 4D(>; De Lavallette v. Wendt. 7") X. Y. ,57i); Kobinsou V. Insurance Co., 1 Abb. Prae. N. S. (N. Y.) ISO; AVeble v. Butler, 43 How. Prac. (N. Y.) 5; Rhemke v. Clinton, 2 Utah, 230. 16 Smith V. Goodlett, 92 Tenn. 230, 21 S. W. 106; Gibbs v. Fremont, 9 Exch. 25; Kitchen v. Bank, 14 Ala. 233; Swett v. Hooper, 02 Me. 54. 17 Bishop V. Snitren, 1 Daly (N. Y.) 155; 2 Pars. Notes & B. 393; Herrick V. Woolverton, 41 N. Y, 581, 596; Hunter v. Wood, 54 Ala. 71; Dodge v. Perkins, 9 Pick. (Mass.) 369. 18 Purdy V. Philips, 11 N. Y. 400; Sheldon v. Heaton, 88 Hun. 535, 34 N. Y. Supp. 850. 19 Swamscot Mach. Co. v. Partridge, 25 N. H. 369, 380. 20 Williamsburgh Sav. Bank v. Town of Solon, 130 N. Y. 405, 481. 32 N. E. 1058; Bowman v. Neely, 137 111. 443, 447, 27 N. E. 758; Id., 151 111. 37, 37 N. E. 840; Kvertson v. Bank, 06 N. Y. 14. 21 Mills V. Town of Jefferson, 20 Wis. 50; Celpcke v. City of Dubuque, 1 Wall. 175, 200; Aurora City v. West, 7 Wall. 82, 104. VVUKN INTEREST IS ALLOWED. O power, even in the form of a retroactive declaration as to' what the former law was, to change this principle as to such coupons, and cut off the right to interest thereon.-^ By Statute. Interest is frequently provided for by statute; as, for example, from the maturity of certain debts until judgment,^^ or upon judgments,^* in both which cases the interest is in the nature of damages. And sometimes the right to interest as compensation, and not as damages, also rests upon statute; as, for example, in statutes relating to con- demnation proceedings, and providing that title shall vest in the city upon confirmation of the commissioners' report, and that the comp- troller shall pay the compensation awarded, "with lawful interest from the date of confirmation." ^^ In some states there are statutes providing that interest shall be al- lowed "on money withheld by an unreasonable and vexatious delay of payment." In such a case interest is not to be computed merely from the time when the delay began to be unreasonable and vexatious, but is to be computed from the time when the debt became due.-® As Damages. Interest is given on money demands as damages for delay in pay- ment, being just compensation to the plaintiff for a default on the part of the debtor. (a) Where it is expressly reserved in the contract, or is implied by the nature of the promise, it becomes part of the debt, and is recover- able as of right; but when it is given as damages it is often matter of discretion.-^ 2 2 Kosbkouong v. Burton, 104 U. S. 668, 676. 23 Morley v. Railway Co., 146 U. S. 168, 13 Sup. Ct. 54. 24 Code Civ. Proc. N. Y. § 1211; O'Brien v. Young, 95 N. Y. 428. 2 5 Devlin v. City of New York. 131 N. Y. 123, 30 N. E. 45. 2 City of Chicago v. Tebbetts, 104 U. S. 120, 125. 2T Redfield v. Iron Co., 110 U. S. 176, 3 Sup. Ct. 570; Jourolmon v. Ih\ing, 26 C. C. A. 23, 80 Fed. 604. See Mansfield v. Railroad Co., 114 N. Y. 336, 21 N. E. 735, 1037. Interest may therefore be demanded in a declaration or complaint in an action to recover the principal, and is computed to the time of verdict or judgment. "The interest is an accessory to the principal, and the plaintiff cannot bring a new action for any interest grown due between the commencement of his action and the judgment in it. * * • I don't know of any court in any () INI'KKKST. lb) If tlic cunlriicl (l(»('s not jtioxidc foi- iiilcifsl .iftcr iiiiihiiitv and failiiic 1o jtav. llic (pu'sl ion wliclhcr iiiU'ifsi shall accnic depends wholly on tlie hiw of tlie slate. If the stale declares that, in ease of breaeli, interest shall accrue, such interesl is in the nature of damaji;es, and, as botweon the jiarlies to the contract, such interest will continue to mil until i>a\nieMt. oi- until the owner of the cause of action elects to nierjit' it into judgment.-'" ic) At conmion law, neitlier verdicts nor jud.i;nien<.s bore interest,'^® but no^^ , after the cause of action, whether a tort or a broken contract, not itself prescribing interest till payment, shall have been merged into a judgment, whether interest shall accrue upon the judgment is a mat- ter not of contract between the i)arties, but of legislative discretion, which is free, so far as the federal constitution is concerned, to provide for interest as a peiKilty. or licpiidated damages for the noni)ayment of the judgment, or not to do so. When such provision is made by statute, the owner of the judgment is entitled to the interest so pre- scribed until payment is received, oi' until the state shall, in the exer- cise of its discretion, change the rate or declare that such interest shall, from then on, cease to accrue. For such purposes the judgment is not a contract, and conse(|nently such a statutory declaration is not within the prohibition of the federal constitution against impairing contracts, or depriving one of i)roperty without due process of law.^" country (and I have looked into the matter) which don't carry interest down to tlie last act by which the sum is liquidated." Lord Mansfield, in Robinson v. Bland, 2 Burrows, 1087. 2 8 Morley v. Railway Co., 146 U. S. 108, 13 Sup. Ct. 54. 2!' Massachusetts Ben. Ass'n v. Miles, i;!7 IJ. S. 091, 11 Sup. Ct. 234. 3 Morley v. Railway Co., 140 U. S. lOii. i:'. Sup. Ct. .")4; O'Biieu v. Young, 9.J N. Y. 42S. It is usually held that inleivst is recovcfaldc in an action of di-bt on a .iudg- uient. regardless of whether llie original demand carried interest or not. Klock V. Rol)inson, 22 Wend. (X. Y.) l.">7. It is held in sonic states to be recoverable by common law. Perkins v. I'oiuniiiucl. 14 How. .".28. .".31; Crawford v. Sinionton's E.x'rs, 7 Port. (Ala.) 110; (Jwinn v. Wliilaker's Adm'x, 1 Har. & .1. Qld.) 7."4; llodgdon v. Ilodgdon, 2 X. II. 1(J'.>; .Mahufin v. Bickford, X. H. .■'.o, in some states, it is provided by statute lliiil interest may be recovered upon the amount awarded by a verdict, to be computed from the date thereof, Ihe jud^nnent to be entered for the amount of the verdict with such interest.'*^ So, under the national banking act, the claim of a dejxjsitor, in a bank which has suspended, is, after being proved to the satisfaction of the conijitroller, of tlie same efficacy as a judgment, and bears interest as a judgment would do.^- Rate leticeen Default and Judgment. By the law of many states, contracts drawing a specified rate of interest before maturity draw the same rate of interest afterwards.^^ While in others the contract rate in such a case continues only until maturity, and from then on the statutory rate prevails.^* And even in states where the statutory rate prevails after maturity, in the ab- sence of any contrary provision in the contract, a provision for a speci- fied rate of interest "until payment" continues the contract rate in force after maturity;-'"' and so where the stipulation is for interest "annually." ^® But this latter rule does not apply where the agree- ment is to pay a principal sum in installments, at specified dates, with interest at a specified rate "on all sums remaining unpaid." Such a provision refers only to the sums not due at any given time. After 57 Tex. 511. It was held not recoverable, without statute, in Reece v. Knott, 3 Utah, 451, 24 Pac. 757. See, also, Guthrie v. Wickliffs. 4 Bibb (Ky.) 541; Cogwell's Heirs v. Lyon, 3 J. J. Marsh. (Ky.) 38. 31 Code Civ. Proc. N. Y. § 1235; Massachusetts Ben. Ass'n v. Miles, 137 U. S. 691, 11 Sup. Ct. 234; Munsell v. Flood, 46 N. Y. Super. Ct. 134. 32 National Banlc of Commonwealth v. Mechanics' Nat. Bank, iM U. S. 439. 33 Hand v. Armstrong, IS Iowa, 324; Brannon v. Hursell, 112 Mass. 63; Marietta Iron Works v. Lottimer, 25 Ohio St. 621; Phinney v. Baldwin, 16 111. 108; Kohler v. Smith, 2 Cal. 597; Ohio v. Frank, 103 U. S. 697. 3 4 O'Brien v. Young, 95 N. Y. 430; Holden v. Trust Co., 100 U. S. 72; Brewster v. Wakefield, 22 How. 118; Burnhisel v. Firman, 22 Wall. 170; Cook V. Fowler, L. R. 7 H. L. 27; Kohler v. Smith, 2 Cal. 597; First Ecclesiastical Society of Sufheld v. Loomis, 42 Conn. 570; Jefferson Co. v. Lewis, 20 Fla. 980; Brown v. Hardcastle, 63 Md. 484; Asluielot R. Co. v. Elliot, 57 N. H. 397; Pearce v. Heunessy, 10 R. I. 223; Kitchen v. Bank, 14 Ala. 233. See Crom- well V. Sac Co., 96 U. S. 51. 3 5 O'Brien v. Young. 95 N. Y. 430. 36 Westfield v. Westlield, 19 S. C. 85. I.NTKKKST. they become due. and then remain unpaid, the statutory rate prevails." AN'htMo a note is i)ayable on demand,^'^ or one day after date/'* the intent to make a continuing obligation is obvious, and therefore inter- est >vill be allowed at the stipulated rate. Interest as damages is given at the statutory rate.*" Where no rate is fixed by statute, it is given at the customary rate.*' Where the statutory rate is changed after interest begins to accrue, interest, as damages, accrues thereafter at the new rate.*- But otherwise where it is not allowed as damages.*^ In an action to recover possession of bonds, the fact tliat they only bore 4 per cent, interest is immaterial on the rate to which plaintiffs are entitled to recover, from the date of demand, in addition to the amount found to represent the value of the bonds. Upon demand, the plaintiff is entitled to either the bonds or to their value, and from that time on, if the bonds cannot be restored, to their value, with interest thereon at the legal rate.** In an action on a contract,* ^^ interest should be given at the rate of the place of performance, or of the place where the contract was made.*^ The parties may legally agree upon interest at the rate either 3 7 Ferris v. Hard, 135 N. Y. 365, 32 N. E. 12i). Comparo Miller v. Hall, 18 S. C. 141. 3 8 Paine v. Caswell, 68 Me. 80. 3 9 Casteel v. Walker, 40 Ark. 117; Gray v. Briscoe, 6 Bush (Ky.) 687; Sharpe v. Lee, 14 S. C. 341. 4 ^^'t"gner v. Bank, 76 Wis. 242, 44 N. W. 1096. *i Davis v. Greely, 1 Cal. 422; Perry v. Taylor, 1 Utah. 63. 4 2 Wilson v. Cobb, 31 N. J. Eq. 91; White v. Lyons, 42 Cal. 279; Wood- ward V. Woodward, 28 N. J. Eq. 119; In re Doremus' Estate. 33 N. J. Eq. 2:U; Mayor, etc., of .Jersey City v. O'Callaghan. 41 N. .7. Law. 349; Reese v. Ruther- furd, 90 N. Y. 644; Sanders v. Railway Co., 94 N. Y. 641; O'Brien v. Young, 95 N. Y. 428; Stark v. Olney, 3 Or. 88. 4 3 Wyckoff v. Wyckoff, 44 N. J. Eq. 56, 13 Atl. 602. Compare Searle v. Adams, 3 Kan. 515. 4 4 Govin v. De Miranda, 140 N. Y. 479, 35 N. E. 026. 4 5 Pana v. Bowler, 107 U. S- 529, 2 Sup. Ct. 704; Sulro Tunnel Co. v. Segre- gated Belcher Min. Co., 19 Nev. 121, 7 Pac. 271. 46 Gibbs V. Fremont, 9 Exch. 25; Courtois v. Carpentier, 1 Wash. C. C. 376, Fed. Cas. No. 3,285; French v. French, 126 Mass. 360; Pauska v. Daus, 31 Tex. 67; Porter v. Munger, 22 Vt. 191. WJIKN INTERKST IS ALLOWED. 9 of the state where the contract is executed or where payment is to be made."^ Wlicre no rate is stipulated, the law of the state where the contract was to be performed is usually controlling."* But it has been lield (hat interest on overdue coupons should be given at the rate of the place where the action was brought."'* The question of the rate of interest is a local one, and the federal courts fol- low the local law in a given case,''" even as applied to interest on judgments in actions removed from a state court.*** Rate after Judgment. The parties may, by their contract, stipulate that a specified rate of interest shall be paid after judgment. Such is sometimes held to be the effect of a provision in the contract that interest shall be at a speci- fied rate "until payment." ^" While sometimes that clause is under- stood to refer to payment of the principal sum as such, as distinguished from the payment of a judgment therefor; and under that construction the contract provision ceases to be operative when the creditor, after maturity of the debt, elects to merge it in a judgment. ^^ Apart from the effect of a special contract provision, the rate of in- terest upon a judgment depends upon the terms of the statute of the state, so far as concerns the enforcement thereof in that state; but, if an action is brought in another state upon the judgment, the rate of interest recoverable is that allowed by the latter,^* and, if the original action is brought in a federal court, interest is allowed on the judgment in all cases where, by the law of the state in which such court is held, interest may be levied under process of execution on judgments recov- ered in the courts of such state, to be calculated at the rate so allowed from the date of the judgment; and interest may also be computed 4 7 Pecks V. Mayo, 14 Vt. 33; Kilgore v. Dempsey, 25 Ohio St. 41.3. 48 Hunt's Ex'r v. Hall, 37 Ala. 702; Vou Hemert v. Porter, 11 Mete. (Mass.) 210; Cartwriglit v. Greene, 47 Barb. (N. Y.) 9. 4 9 Fauntleroy v. Hannibal, 5 Dill. 219, Fed. Cas. No. 4,692. 50 Massachusetts Ben. Ass'n v. Miles, 137 U. S. 691, 11 Sup. Ct. 234. ci id. 5 2 Morley v. Railway Co., 146 U. S. 168, 13 Sup. Ct. 54. 53 O'Brien v. Young, 95 N. Y. 430. r.4 Morley v. Railway Co., 146 U. S. 171, 13 Sup. Ct. 54; Parlier v. Thompson, 3 Pick. (Mass.) 429; Hopkins v. Shepard, 129 Mass. 600; Nelson v. Felder, 7 Rich. Eq. (S. C.) 395. See Crone v. Dawson, 19 Mo. App. 214; Porter v. Munger, 22 Vt. 191. 10 INTKKKST. fidin the dat«^ of the verdict, and iiuludcd in \\u' jiid^iiifiil, if allowed liy tlic statulcs of lliat statt'.^^ Li luidated and Unl i 1^1 1 dated Damag^ft. "The jroneral ndo is that, whenever the deblor knows wliat ho is to pay and when he is to pay it, he shall be charj-vd with interest if he ne«;leets to pay." °° /// actiomfoi' hirach of a contra'i<. \Vhere the amount involved is liquidated, interest begins to run as soon as it is payable, either from a time stipulated for payment, or from demand, or from the time of suit, brought, according to the terms of the contract and the circumstances of the given case.=^ JJamagi'M ( Vipahle of Liquidation . The same principle is applicable where the damages, though not actually liquidated, are, at the time of breach, and from facts then known, easily ascertainable.^** 86 Massachusetts Ben. Ass'n v. Miles. 137 U. S. 891, 11 Sup. Ct. 284. 06 reople V. New York Co., 5 Cow. (N. Y.) 331; Curtis v. Inuerarity, How. 146; Whitworth v. Hart, 22 Ala. 343; Peoria Marine & Fire Ins. Co. v. Lewis. IS 111. rM3; Clark v. Button, 69 111. o21; Stern v. People, 102 111. 540; Hall v. Iluckins, 41 Me. 574; Newson's Adm'r v. Douglass, 7 Har. & ,T. (Md.) 417; Judd V. Dike, 30 Minn. 380, 15 N. W. 672; Buzzell v. Snoll, 25 N. H. 474; Stuart V. Binsse, 10 Bosw. (X. Y.) 430; Gutta Percha & Kubber Mfg. Co. v. Benedict, 37 N. Y. Super. Ct. 430; Spencer v. Pierce. 5 R. I. 03; Hauxhurst v. Hovey. 26 Vt. 544; Footo v. Blancliard. 6 Alien (Mass.) 221. Interest is recoverable on legacies from the time when they should have been paid. Custis v. Adkins, 1 Houst. (Del.) 382; Hennion's Ex'rs v. Jacobus, 27 X. J. Kq. 28; Vermont State Baptist Convention v. Ladd, 58 Vt. 95, 4 Atl. 634. s- fJray v. Railroad Co. (X. Y. App.) 52 N. E. .5.55; Sloan v. Baird. 12 App. Div. 486, 42 X. Y. Supp. 38; Mansfield v. Railroad Co.. 114 X. Y. .'..'.l. 21 \. E. 7:55. 10.37; McMaster v. State, 108 X. Y. 542. 15 X. E. 417. •'.8 Lawrence v. Church, 128 N. Y. 324. .332, 28 X. H 4iKt: M.n.l v. Wh.M'ler. 13 X. H. 351. But see Yellow Pine Liunber Co. v. Carroll. 70 Tex. 135, 13 S. W. 201. sf .McM.ilioii V. Kailroad Co.. 20 X. Y. 40;?; Mansfield v. Railroad Co., 114 N. Y. 3:n, 21 .\. E. 7;t5, l(i.".7: Siitpcrly v. Stewart. .50 Barb. (X. Y.) 62; Smith V. Velie, 00 X. Y. 106. lu an action for breach of a contract to deliver property WHK.N INTKKKST IS A I,I,()\Vi;j). 1 1 Tims, in Van Renssclaor v. Jc\v3 U. S. 462, 14 Sup. Ct. 849; also, Pacific R. Co. v. U. S., 158 U. S. 118, 15 Sup. Ct. 766; Moore v. Fuller, 47 N. C. 205; Tillotson v. Preston, 3 Johns. (N. Y.) 229; Dixon v. Parkes, 1 Esp. 110; Churcher v. Stringer, 2 Barn. & Adol. 777; Cutter v. Mayor, etc., 92 N. Y. 166; Hamilton v. Van Rensselaer, 43 N. Y. 244; Hayes v. Railway Co., 64 Iowa, 753, 19 N. W. 245; Southern Cent R. Co. v. Town of Moravia. 61 Barb. (N. Y.) 181; Couseqiia v. Fanning, 3 Johns. Ch. (N. Y.) ;i64; Gillespie v. Mayor, etc., 3 Edw. Ch. (N. Y.) 512; .Taeot v. Emmett, 11 Paige (N. Y.) 142; Succession of Mann, 4 La. Ann. 28; Succession of Anderson, 12 La. Ann. 95; American Bible Soe. v. Wells, 68 Me. 572; Tenth Nat. Bank v. ALiyor, etc., 4 Hun (N. Y.) 429. ♦ Robbins v. Cheek, 32 Ind. 328; Stone v. Bennett, 8 Mo. 41; Fake v. Eddy's Ex'r, 15 Wend. (N. Y.) 76; King v. Phillips. 95 N. C. 245; Devlin v. City of New York, 131 N. Y. 123, 30 N. E. 45; Smitli v. City of Buffalo (Sup.) 39 N. Y. Supp. 881. i"& People v. New York Co., 5 Cow. (N. Y.) 331. LIABILITY Ob' TKUSTEIO FOR INTEREST. 19 are made generally on account, interest is first extinguished thereby, and accordingly the unsatisfied balance, even though exactly equaling the interest, may be sued for as principal.^"® 7. LIABILITY OF TRUSTEE FOR INTEREST. If a trustee holds funds which can and should be invested, and through fraud, or mismanagement, or other breach of trust he does not invest them, or invests them in his own business, or that of others, or in commercial or manufacturing enterprises, or speculative ventures, he will be charged with interest, as a general rule; ^°^ or, at the option of the beneficiary, with the profits earned.^ "^ But the beneficiary cannot have rests at selected periods, so as to claim profits when they exceeded interest, and interest when it exceeded profits. If profits have first exceeded interest, and then there has been actual loss, if the benefi- ciary claims profits he can only recover net profits for the entire period.^*^" And where the trustee has made separate unauthorized in- vestments of separate parts of the fund, the beneficiary's right to elect applies to each investment by itself, so that, according as his interest may appear, he may approve some and accept the profits, and reject others and insist on legal interest.^ ^^ And he may so elect even during the pendency of the trust,^^^ And a beneficiary is not re- quired to keep watch of all the trustee's acts, so as to be prepared at once to protest in case of improper investments. It is the duty of the trustee, and not of the beneficiary, to attend to the investment of the estate.^ ^^ But it may be the beneficiary's duty, if he proposes to 106 Id. See, also, National Bank of Commonwealth v. Mechanics' Nat. Bank, M U. S. 440. 107 Price V. Holman, 135 N. Y. 124, 32 N. E. 124; In re Barnes, 140 N. Y. 468, 471, 35 N. E. 653; Cook v. Lowry, 95 N. Y. 108, 113; Reynolds v. Sisson, 78 Hun, 595, 29 N. Y. Supp. 492. 108 utica Ins. Co. v. Lynch, 11 Paige (N. Y.) 520; In re Myers, 131 N. Y. 409, 30 N. E. 135; Deobold v. Oppermann, 111 N. Y. 531, 538, 19 N. E. 94; King V. Talbot, 40 N. Y. 76, 86; Wilmerding v. McKesson, 103 N. Y. 329, 8 N. E. 665. 109 Baker v. Disbrow, 18 Hun (N. Y.) 29, affirmed in 79 N. Y. 631. 110 King V. Talbot, 40 N. Y. 76, 91. Compare In re Porter's Estate, 5 Misc. Rep. 274, 25 N. Y. Supp. 822. 111 Gillespie v. Brooks, 2 Redf. Sur, (N. Y.) 340, 360. 112 In re Foster, 15 Hun (N. Y.) 387, 393. 20 INTKRKST. object to the trustee's fn^lnre to invest small snnis, to find nnd call to his attention suitable opportunities for investing the sanie.^' ' And the mere fact that the trustvV deposits trust moneys with his own, or uses them in his own business, does not necessarily nMuler him liable for interest; as, for instance, where the funds are too small to make it practicable to invest them, or where the trustee may be called on at any moment to j^ay over the fund to the beneticiary. In order to make him liable for interest, there must be superadded a breach of trust, a nejilect or refusal to invest the funds at the time or in the mode which the trust instrument or the law itself has pointed out.^^* In a case where a trustee has made use of the funds, l)ut no breach of trust is involved, he will be charj^ed with interest, if it be proved that he has earned interest.""* If, when rents and income are due and payable, the lieneficiary volun- tarily leaves them in the trustee's hands, they do not draw interest."® If a penalty is incurred, owing to the negligent failure of the trustee to pay taxes when due, and is paid by him, he cannot be credited there- with on his accounting.^" If commissions are prematurely withdrawn by the trustee, he is chargeable with interest thereon."' But not solely on that ground, 15 3 Rapalje v. Norswortliy's P^x'rs. 1 Sandf. Cli. (X. Y.) :m). 405. 11* Rapalje v. Noiswortby's Ex'rs, 1 Saudf. Ch. (X. Y.) 899, 404; .Jaoot v. Emmett, 11 Paige (X. Y.) 142, 145; Price v. Holman. lo5 X. Y". 124. 133, 32 N. E. 12ri; lu re Barnes, 140 N. Y. 468, 35 X. E. (i53; In re Xesmith, 140 N. Y. 609, 615-617, 35 N. E. 942; Shuttleworth v. Winter. 55 N. Y. U24. <331; In re Clark's Estate, IG Misc. Rep. 405, 39 X. Y. Hnpp. 722. As to whether, in deciding whether a trustee had in his hands a fund large enough to call for in- vestment thereof, it is permissible to take into account the fact that he held several entirely distinct trust funds, which, if combined, would have atforded such a gross sum, see Rapalje v. Norsworthy's E.x'rs, 1 Sandf. Cli. (X. Y.) 399. 115 Rapalje v. Xorsworthy's Ex'rs. 1 Sandf. Ch. (X. Y.) 399. 4(>4. As to liability for interest, see, also, note to Kellett v. Rathbun, 4 Paige iN. Y.; Banks' Ann. Ed.) 102, 109. lie Holley v. S. G., 4 Edw. Ch. (X. Y.) 284. 286. 117 Stubbs V. Stubbs, 4 Redf. Sur. (N. Y.) 170. 118 In re Peyser, 5 Dem. Sur. (N. Y.) 244. 247; Wheelwright v. Wheelwright, 2 Redf. Sur. (N. Y.) 501; In re Freeman's Estate, 4 Redf. Sur. (X. Y.) 211, 215; United States Ti-ust Co. v. Bixby, 2 Dem. Sur. (N. Y.) 494. But see Wyckoff V. \an Siclen, 3 Dem. Sur. (X. Y.) 75. LIAi;iI,ITY OK TRUSTEK FOR INTKREST. 21 if they had then been actually earned."^ If commissions which have been earned, but not allowed, are in good faith withdrawn by the trustee, under an assnni])tion that he is entitled so to do, this mere fact, in the absence^ of any resulting loss to the estate, is not ground for charging him with interest thereon. ^^"^ It is only in extraordinary cases that the trustee is charged with compound interest.^ -^ In King v. Talbot ^^- it was held that in case of bad faith or willful failure of duty, the highest rate of interest should be imposed; but where, as in that case, a mistake occurs in investing funds, but the trustee acted honestl}' and in good faith, the rate of interest to be charged rests in a discretion which permits the consideration of all the circumstances, which show that substantial justice can be done to the cestui que trust, by allowing a less rate. Accordingly, following the English rule in such cases of charging 4 per cent, where the legal rate was 5, the court charged the trustee (> per cent., the legal rate in New York being then 7 per cent.^-^ In Clarkson v. De Feyster ^'* it was said that the English rule of ''equi- table interest ' at 1 per cent, less than the legal rate has never been adopted in this state. But the court in King v. Talbot, supra, say that there is nothing in Clarkson v. De Peyster, supra, that affects the soundness of their adoption of the English rule.^^^ In cases where there has been an active breach of trust, resulting in loss, but the circumstances are not sufficiently aggravated to call for compound interest, legal interest is commonly charged, but each case must depend to a considerable degree on its own circumstances, as 119 Beard v. Board, 140 N. Y. 260, 265, 266, 35 N. E. 488; Price v. Holman, 135 N. Y. 124, 32 N. E. 124; Wliitney v. Phoenix. 4 Redf. Sur. (N. Y.) 180, 195. 120 Beard v. Beard, 140 N. Y. 260, 266, 35 N. E. 488. 121 Price v. Holmaii, 135 N. Y. 124, 133, i:34, 32 N. E. 124. For instances of such charges, see Hannahs v. Hannahs, 68 N. Y. 610; Brown v. Knapp, 79 N. Y. 136, 145; Tucker v. McDermott, 2 Redf. Sur. (N. Y.) 312; Morgan v. Mor- gan, 4 Dem. Sur. (N. Y.) 353, 356; Smith v. Rockefeller, 3 Hun (N. Y.) 295; Reynolds v. Sissou, 78 Hun, 595, 598, 29 N. Y. Supp. 492; Utica Ins. Co. v. Lynch. 11 Paige, 520. 122 40 N. Y. 76. 12 3 See, also, Shuttleworth v. Winter, 55 N. Y. 624; Haskin v. Teller, 3 Redf. Sur. (N. Y.) 310, 323. 124 Hopk. Ch. 424, 426, 125 To the same effect appear to be Wilmerding v. McKesson, 103 N. Y. 329, 341, 8 N. E. 605; Bruen v. Gillet, 115 N. Y. 10, 21, 21 N. E. 676. 22 INTEREST. affected by the dej^ree of wronj^doing:, the ])iobable actual loss, the j,)ei'Sonal profits, if any, realized by the trustee, etc.^^^ Soniowliat similar principles ai)ply where it is found that one person has been holding funds belonging to another, even though he only knew tliat the latter claimed them, witliout knowing I he particulars of The claim. For if, instead of setting the fund apart to await the set- tlement of the dispute, he mingles it with his own funds, and enjoys the benefit of it, he is chaigeable \\ ith legal interest.^^^ 8. FEDERAL JURISDICTION— AMOUNT IN CONTROVERSY. In determining whether the amount of a judgment in an action in a federal court is suflicient to w arrant a review thereof in the supreme court in cases where the right to a review still depends on the amount in controversy, interest accruing before and included in the judgment appealed from is deemed to form part of the amount in controversy.^-^ But interest on the judgment appealed from is not included in de- termining the jurisdictional amount.^ -° In all judgments brought to the supreme court for review, the value of the "matter in dispute," where that is still involved, under present statutes, is determined by the amount due at the time of the judgment brought there to be reviewed, namely, the judgment of the intermedi- ate appellate court, and not at the time of the judgment of the trial court; and thus the total amount due included interest on the original judgment, if it bore interest, until the date of that of the intermediate appellate court. ^^° And where in an action brought in a state court, and removed to the federal court, a judgment is entered which, in ac- cordance with the statutes of the state, includes interest upon the amount of the verdict, from its date, until the entry of judgment, the 12C Cook V. Lowry, 9."> N. Y. lOo, 114, and cases there cited; Morgan t. Mor- gan, 4 Dem. Sur. (N. Y.) .'353, SuG, and cases there cited. 127 Moors v. Washburn, 159 Mass. 172, 34 N. E. 182. 128 New York El. R. R. v. Fifth Nat. Bank, 118 U. S. 608, 7 Sup. Ct. 2S; District of Columbia v. Gannon, 130 U. S. 227, 9 Sup. Ct. 508; The Patapsco, 12 Wall. 451; The Rio Grande, 19 Wall. 78. 120 Kuapp V. Banks, 2 How. 73; W. U. Tel. Co. v. Ro.m>rs. 03 U. S. 565, 5G6. 130 zeckendorf v. .Tohnson, 123 U. S. G17, 8 Sup. Ct. 2(n ; Keller v. Ashford, 1.33 TJ. S. 610, 10 Sup. Ct. 494; Benson Mining' & Siiulting Co. v. Alia Mining & Smelting Co., 145 U. S. 428, 12 Sup. Ct. 877. REMISSION OF INTEREST AWARDED. 23 total amount of the judgment thus composed determines the question whether the amount involved is sufficient to give the federal supreme court jurisdiction to review it.^^^ 9. BEMISSION OF INTEREST AWARDED. If interest is erroneously awarded or allowed, and is included in a judgment, the appellate court may allow the api)ellee, if he wishes, to remit the interest, and may, where that is the only reversible error, affirm the judgment appealed from, upon condition that such remission be made."^ 131 Massachusetts Ben. Assn v. Miles, 137 U. S. 689, 11 Sup. Ct. 234. See, also, U. S. Sup. Ct. Rule 23 (137 TJ. S. 691, 692, 3 Sup. Ct. xiii.); Baltimore & O. R. Co. V. Griffith, 159 U. S. 605, 16 Sup. Ct. 105. 132 Washington & G. R. Co. v. Harmon's Adm'r, 147 U. S. 571, 13 Sup. Ct. 557; Upham v. Dickinson, 50 111. 97; AVhitehead v. Kennedy, 69 N. Y. 462; Town of Union v. Durkes, 38 N. J. Law, 21. Compare dissenting opinions in Burdict v. Railway Co., 123 Mo. 221, 27 S. W. 453; and see Suth. Dam. § 460; Carlisle v. Callahan, 78 Ga. 320, 2 S. E. 751. 24 usuRif. USURY. 10. USURY DEFINED. Wliere money or property is exacted or reserved l>y ajxreeraent for the loan or forbearance of money in excess of the h'Ral rate of interest fixed by statute, the agreement is usurious, and tlie money or property thus exacted or reserved in excess is termed usury. The latter term is also applied to the act of loaning money at a usurious rate. 11. USURIOUS INTENT ESSENTIAL. Usury consists in the corrupt agreement of the parties by which more than lawful interest is to be paid. To constitute usury, there must be a usurious or corrupt intent. When, at the time of an agreement for a loan, nothing is said as to the rate of interest, the law implies it to be that limited by statute. To increase or alter it, a special agreement is necessary. ^^^ Thus the accidental inclusion of an extra sum, neither principal nor interest, in the amount for which a note is given, and where it is the intention of the parties to provide for the payment of principal and of legal interest only, does not render the note usurious. As to the sur- plus item, it is without consideration, but it is not usury.^^** The same principle applies to mistakes in attempting to eliminate usury by recomputing and giving a new security.* 12. LOAN OR FORBEARANCE ESSENTIAL. Usury must be founded on a loan or forbearance of money. If neither of these elements exists, there can be no usury, however uncon- scionable the contract may be."'^ Thus, a change of securities for an iss Rosonstein v. Fox, 350 N. Y. 3.j4, 3(53, 44 N. E. 3027. 134 Brown v. Baulv, 80 Iowa, 527, 53 N. W. 410, 412; lUisliing v. Willingliam (da.) 31 S. E. 154. * Jarvis v. Grocery Co., 03 Ark. 225, 229, 38 S. W. 148. 135 Mt-aker v. Eit-ro, 145 N. Y. 1G5, 31) N. E. 714; Elk'Ubogen v. Griffey, 55 Ark. 2G8, 18 S. W. 120. KOliM OF CONTRACT IMMATKUIAL. 25 existing debt, and payment of a sum of money to the creditor for hiH consent to Uw change, is not a loan, and, if there is no forbearance, there is no nsiiry.^^^ 13. FORM OF CONTRACT IMMATERIAL. In determining whether a contract is usurious, the law looks not at the mere form, but at the substance. If there be in fact a usurious loan, no shift or device will protect it.^^^ Thus, if one mortgage his real estate, and at the same time agree that, in addition to the legal rate of interest, the mortgagee shall have the manure from the place, there is usury.^^^ So, if an applicant for a loan from an insurance company is required, as a condition of pro- curing it, to take out a policy.^ ^* A sale of stock, coupled with an agreement by the seller to buy it back at the price paid for it, with 1 per cent, a month added, if the purchaser should wish to sell, may be usurious, but the mere agree- ment does not in itself, as matter of law, stamp the transaction as a scheme or device to cover up a usurious loan.^**^ A seller of land or chattels may stipulate for a larger price on a credit sale than he would be willing to accept in cash, and the transac- tion is not rendered usurious by the fact that the credit price is in ex- cess of the cash price and legal interest to the date of payment.^* ^ But when the sale is in fact at an agreed cash price, and the form of a sale on credit is resorted to for the purpose of evading the statute against usury, the transaction will be declared usurious.^ *2 13 G Moaker v. Fiero, 145 N. Y. 165, 171, 39 N. E. 714. 137 Scott V. Lloyd, 9 Pet. 446; Phelps v. Bellows, 53 Vt. 539; Meaker v. Fiero, 145 N. Y. 165, 169, 39 N. B. 714; Krumsieg v. Trust Co., 71 Fed. 350, 352; Brower v. Insurance Co., 86 Fed. 748; Braiue v. Rosswog, 13 App. Div. 249, 42 N. Y. Supp. 1098; Id.. 153 N. Y. 647, 47 N. E. 1105. 138 Vilas V. McBride, 62 Huu, 324, 17 N. Y. Supp. 171, affirmed in 136 N. Y. €34. 32 N. E. 635. 139 Carter v. Insiu-ance Co. (N. C.) 30 S. E. 341; Union Cent. Life Ins. Co. V. Morrow, 7 Ohio Dec. 118; Hilliard v. Sanford, Id. 449. 1*0 Phillips V. Mason, 66 Hun, 580, 21 N. Y. Supp. 842. 141 Bass V. Patterson, 68 Miss. 310, 313, 8 South. 849; Hogg v. Ruffner. 1 Black, 115; Brooks v. Avery, 4 N. Y. 225; Rushing v. Worsham (Ga.) 30 S. E. 541; Beete v. Bidgood, 7 Barn. & C. 453: Floyer v. Edwards, 1 Cowp. 112. i-t2 Bass v. Patterson, 68 Miss. 310, 313, 8 South. 849; Quackenbos v. Sayer, 'JG USURY. So, antodatini; a note for a loan is usurious, if with corrupt intent, but not otherwise. ^*^ 14. HISTORICAL. The takinj; of any interest whatever was, by the ancient com- mon law. absolutely luohibited.'*^ The statute 37 Hen. VIII. c. 9, limited the rate to 10 per cent., and thus nej,^ativcly authorized interest. The statute 12 Anne, St. 2, c. IG, reduced the author- ized rate to 5 per cent., and provided that all bonds, contracts, and assurances whatsoever for payment of any principal, or money to be lent, or covenanted to be performed upon or for any usury, whereupon or whereby there should be reserved or taken above the rate of five pounds in the hundred, should be utterly void, and that any person who should take more than that rate should forfeit and lose for every such offense the treble value of the moneys, wares, merchandises, and other things so lent. Various English statutes establishing different rates had been passed between the dates of these two statutes.^* ^ By 17 & 18 Vict. c. 00, all the laws against usury were repealed, leaving parties at liberty to contract for any rate of interest. In the United States the statutes of usury have been based on the statute of Anne^ but contain many variations from its provisions, differing among them- selves in the rates of interest authorized and in other respects. 15. THE FEDERAL STATUTE. By the national currency act of June 3, 1864,^*" it is provided that national banks may loan money at the rate in force, in the states where they are respectively organized, in respect to state banks, and that this interest may be taken in advance. The knowingly taking, receiving, reserving, or charging a greater rate of interest effects a for- feiture of the entire interest, but does not prevent a recovery of the principal. If a greater rate of interest has actually been paid, the per- 62 N. Y. .'{44; 'niompson v. Nesbit. 2 Kicb. Law (S. C.) 73; Tuni-y v. (Jiant, !• Smcdes & M. (Miss.) 89. 143 Anslcy v. liank, 113 Ala. 407, 47"J, 21 South. .VJ. i** Hawk. r. C. bk. 1, c. 82; Sutli. Daiu. g ;;(>1. 14 5 Rcf 2 rnrs. Notes & P.. 301. 140 i;; Stat. 00; Uev. St. U. S. § 5107. NEW YORK STATUTES. 27 son paying it, or his legal representatives, may recover back twice the amount of interest thus paid, by »n action to be brought within two years from the consummation of the transaction. Tliis statute thus embodies two provisions: First, that in case of an action by the bank upon a usurious agreement, only the principal of the loan may be recovered, and the defendant may set up the defense of usury to defeat a recovery of any interest; and, secondly, that in such an action, where interest in excess of the legal rate has already been paid, the defendant cannot, by way of counterclaim or offset, re- cover under the clause entitling him to double the amount thus paid, but must enforce that right by a separate action against the bank.^*^ And this federal statute applies to actions by or against national banks, even though brought in a state court.^*^ The general scheme of the federal statute is found embodied in some state statutes, and will be further discussed in the following sections. 16. NEW YORK STATUTES. In New York there are two principal statutes (with some minor ones) relating to usury. The first deals with the general subject, and the second deals with loans by state banks and "individual bankers." (a) Under the statute first mentioned, the rate of interest upon the loan or forbearance of any money, goods, or things in action is 6 per cent., and the statute prohibits every person or corporation from di- rectly or indirectly taking or receiving in monej^ goods, or things in action, or otherwise, any greater rate of interest If anv higher rate is paid, the person paying it may recover the excess by action, and all bonds, bills, notes, assurances, conveyances, and all other contracts or securities (except bottomry and respondentia bonds and contracts), and all deposits of goods or other things, whereupon or whereby there shall be reserved or taken, or secured or agreed to be reserved or taken, any greater sum, or greater value, for a loan or forbearance, than is 14 7 Baruet v. Bank, 98 U. S. 5.55, lis Natioual Bank of Auburn v. Lewis, 81 N. Y. 15; Marion Nat. Bank v. Thompson (Ky.) 40 S. W. 903; Peterborougli Nat. Bank v. Cliilds, 133 Mass. 248, 251; First Nat. Bank of Clarion v. Gruber, 91 Pa. St. 377. As to the meaning of "twice the amount of interest paid," which may be recovered, see Hill v. Bank, 15 Fed. 432; Hintermister v. Bank, 04 N. Y. 212. 28 USUKY. prescribed by the statute, are void;^*® and a person who directly or indirectly receives any interest, discount, or consideration upon the loan or forbearance of money, goods, or things in action greater than is allowed by statute, is guilty of a misdemeanor.^^" It will thus be noticed that under this statute usury invalidates the contract for re- payment, and no action will lie by the lender 1o recover even the prin- cipal; while the borrower, if he has paid excessive interest, may re- cover such excess. (b) Another statute (Laws 1892, c. GS9, § 55) follows in practically identical language the federal statute relating to national banks, but applies its provisions to state banks and individual bankers, fixes the legal rate at 6 per cent., and adds: "The true intent and meaning of this section is to place and continue banks and individual bankers on an equality in the particulars herein referred to with the national banks organized under the act of congress." ^^^ The result of these provisions is that under this statute the construc- tion given to the federal act restricting the right of the borrower who has actually paid excessive interest to recover twice the amount thereof to a direct action, applies also to the state statute, so that such a claim cannot be set up by way of counterclaim or offset in an action by the lender to recover the principal.^ '^^ The New York law, prior to the revision of 1892, above cited, re- ferred in terms not only to banks and "individual bankers," but also to "private bankers." The term "individual banker" denotes a person who, having complied with the statutory requirements, has received authority from the banking department to engage in the business of banking, subject to its inspection and supervision. "Private bankers" are persons or firms engaged in banking without having any special privileges or authority from the state. The statute, as it stood prior to 1892, protected not only banking corporations, and individual bank- ers, but also private bankers, from the consequences imposed by the general statutes on citizens not engaged in banking who receive more than the legal rate of interest.^ ^* 148 2 Rev. St. (0th Ed.) pp. 1854-1857. 150 Pen. Code, § 378. 151 Act June 3, 18G4 (13 Stat. 09). 152 Caponigri v. Altieri, 20 App. Div. 304, 51 N. Y. Supp. 418. 1" rerkins v. Smith, 116 N. Y. 441, 449, 23 N. E. 21; Carley v. Tod, 83 Hun, STATUTES OF OTHER STATES, 29 17. STATUTES OF OTHER STATES. As already stated, the statutes of nsiiiy in the several states, while similar in many respects, differ in some particulars among themselves. Thus, in New York, if interest is paid at a usurious rate, the excess may be recovered back by an action; ^^* while in Nebraska and other states the borrower cannot recover any part of the interest paid, but is coufineH:! to the defense of usury in an action against him on the con- tract. ^^ Under such statutes the payment of the usurious interest, together with the whole of the principal, constitutes a settlement ; while, if the contract or note be only partially settled, then the defense of usury can still be made.^'^'^ And by Rev. St. U. S. § 5198, if usurious interest has been paid to a national bank, twice that amount may be recovered by action.^ °' So, by the general New York statute, usury renders void the con- tracts or securities reserving or securing it, while in other states the contract is not avoided, but in an action thereon the plaintiff may still recover the principal without any interest, diminished by any interest that shall have been already paid.^^^ And under the federal statute,^ ^^ and also the New York statute relating to banks and individual bank- ers, usury forfeits the interest, but the principal may be recovered without offset, the borrower being left to his action for debt to recover twice the interest paid.^*^'' r)3, 73, 31 N. Y. Supp. 635. But as to the effect of Laws 1892, c. 689, above summarized, which omitted the term "private banker," see Hawley v. Kouutze, 16 Misc. Rep. 249. 250, 38 N. Y. Supp. 327 (reversed, but not on this point, in 6 App. Div. 217, 39 N. Y. Supp. 897). 154 2 Rev. St. (9th Ed.) p. 1854. 155 Blain v. Willson, 32 Neb. 302, 49 N. W. 224; Latham v. Association, 77 N. C. 145; Haddeu v. Innes, 24 111. 381; Quinn v. Boynton, 40 Iowa, 304; Spurlin v. Millikin, 10 La. Ann. 217. 156 New England Mortg. Sec. Co. v. Aughe, 12 Neb. 504, 11 N. W. 753; Hadden v. Innes, 24 111. 381. 157 So, in actions in New York against state banks and individual bankers. Laws 1892, c. 689, § 55. 158 Blain v. Willson, 32 Neb. .302. 49 N. W. 224. is»Rev. St. U. S. § 5198. 160 Barnet v. Bank, 98 U. S. 555, 558. 30 USURY. In still other states the parties may a.mce in any conliacl in w riling' for the })aymeut of any rale of interest, and it must ihtii he allowfd. both at law ami in eiinity. ainl (here can be no relief on (he mereyronnd of excessive interest in the absence of fraud or imposition. ^"^ Fur- ther variations also exist in different jurisdictions, under the terms of local statutes,^"* 18. EXCEPTIONS. Demand Loans. In New York, where advances of money, repayable on demand, to an amount not less than )?5,000, are made upon warehouse receipts, bills of ladinf?. certificates of stock, certificates of deposit, bills of ex- change, bonds or other negotiable instruments pledged as collateral security for such repayment, it is lawful to receive, or contract to re- ceive, and collect, as comi)ensation, any sum, to be agreed upon in writ- ing by the parties to such transaction. ^*^^ And where one borrows a sum not less than |5,000 upon his note, secured by shares of stock, the fact that he gives to the lender, at the same time, an agreement to sell him such stock at the latter's option, at a specified price, even though the price fixed is less than its actual value, does not take the case out of the protection of the statute relating to call loans upon security. The effect of the statute is to remove such loans from the oj)eration of the usury laws, and it seems that the only importance of an agreement in writing as to the sum to be received by the lender is to enable the latter to collect more than G per cent, as his compensa- tion.^ «* Loans to Corporations. It is also provided by statute in New York that no corporation shall interpose the defense of usury. The term "corporation," as used in the New York statute, includes all associations and joint-stock com- panies having any of the powers or privileges of corporations not pos- sessed by individuals or partnerships.^®" 101 Boyce v. Fisk, 110 Cal. 107, 42 Pac. 473; Pub. St. Mass. p. 42(). 162 See, also, In general, 3 Gen. St. N. J. pp. 3703, 3704; Brightly, Punl. Dig. Pa. (l'_'th Ed.) pp. 10(;2-10(>4; Pub. St. Mass. p. 420; 1 Supp. Pub. St. Mass. p. 7.^7; 2 Supp. I'ub. St. Mass. p. GGl. i«3 2 Kev. St. (0th Ed.) p. lOGO, § 50. i«* Ilawley v. Kountze, App. Div. 217, 30 N. Y. Supp. Sl»7. 185 2 Kev. St. (Dth Ed.) p. 1855. EXCEPTIONS. 3 1 The result of this statute is that "the condition of this class of boinjrs bc'coiiics the same as if the usury laws never existed," so far as con- cerns contracts governed by the laws of New York. Imf the act has no application to contracts controlled by the laws of another state or coun- try/«« LodiiK hi/ Pawnbrokers. I'awnbrokers are generally required by statute to procure licenses, and the interest they may charge is usually fixed by law at a rate in excess of that allowed in other cases. In New York ^^^ the rate is fixed at 3 per cent, per month for the first six months, and 2 per cent, per month thereafter, on loans not exceeding $100, and at a lower rate for larger loans. Loans hy Pawnhrohing Corporations. By Laws N. Y. 1895, c. 326, amended by Laws N. Y. 1896, c. 206. provision is made for the incorporation, in certain counties, of corpo- rations for the loan of money not exceeding .$200 to any one person, upon pledge or mortgage of personal property; and by section 3 it is provided that such corporations may charge upon each loan made without the actual delivery to it of the property pledged interest at the rate of 3 per cent, per month for a period of two months or less, and not exceeding 2 per cent, per month for any further period. Section 5 provides that in any such county no person or corporation other than corporations organized under the act shall charge or receive any inter- est, discount, or consideration greater than at the rate of 6 per cent, per annum upon the loan, use, or forbearance of money, goods, or things in action less than |200 in amount or value, or upon the loan, use, or sale of personal credit in any wise, where there is taken for such loan, use, or sale of personal credit any security upon any household furni- ture, etc. A violation of this prohibition is a misdemeanor, and upon proof of the fact the debt shall be discharged, and the security void. But the section does not apply to licensed pawnbrokers making loan upon the actual and permanent deposit of personal property as se- curity. 166 Curtis V. Loavitt 15 N. Y. 9, 85. 167 2 Eev. St. (9th Ed.) p. 2573, § 7. 82 USURY. 19. COMPENSATION FOR SERVICES. \Miether the paymeut of a sum described as commissions, in addition to the le.ual rate of interest, renders a loan usurious, depends on the question of fact whether or not the person to whom it is paid is in reality tlie agent of the borrower to procure the loan, and is thus paid for his services in procuring it. If so, this is no ground for charging the lender with usury.^"^ But if the alleged agent of the borrowtM- i<'ally received the so- called commission as an additional payment for the loan, on behalf of th(^ lender, the transjiction is usurious.^"" The mere fact that the person to whom a commission is paid, and by whom it is exacted, is in fact also an agent of the lender in reference to effecting the loan, does not, in itself, result in usury. To have that effect, it must be shown that he took it with the knowledge and assent of the lender, so that the latter, at least by acquiescence, became a ])arty to the usurious exaction. It is not even sufficient to show that the lender knew of the usurious exaction after he had made the loan and the transaction was completed. He nmst have known of it at the time. Nor is it sufficient to show that he supposed that his agent was to receive some compensation for services which he rendered to the bor- rower.^ ^" But where an agent authorized to lend, though not to take usury, lends the money of his principal at a usurious rate, and both the sura lent and the usury exacted are secured by the same instrument, which the principal, knowing that it is for a larger amount than the sum i«8 Telford v. Garrets. 1.32 111. 550, 5.54, 24 N. E. 573; Moore v. Bogart. 19 Ilnn (X. Y.) 227; Goodwin v. Bishop, 145 111. 421, 34 N. E. 47; Ginn v. Se- rurity Co., 92 Ala. 135, 138, 8 South. 388; Couover v. Van Mater, 18 N. .7. Eq. 481; Grant v. Insurance Co., 121 U. S. 105, 7 Sup. Ct. 841; Smith v. Wolf, 55 Iowa. ."..->. 8 N. W. 42{>. leoBraine v. Kosswog, 13 App. Div. 249, 42 N. Y. Supp. l(n)8; Id.. 153 N. Y. 047, 47 N. K. 1105; Hare v. Hooper (Neb.) 76 N. W. 10.55; Hughson v. Loan Co. (N. J. Ch.) 41 Atl. 492. i7«stillman v. Northrup, 109 N. Y. 473, 17 N. K. 379; Call v. Palmer, 116 U. S. 98, Sup. Ct. 301; Muir v. Institution, 10 N. J. Kq. 537; Chicago Fire- Prootiig Co. V. Park Nat. Bank, 145 111. 481, 32 N. E. 534. SALES OF PROPERTY OR CREDIT. 33 loaned, without explanation, accepts, and has the benefit, he adopts the act of his agent the same as if it had been done by himself.^^^ As the borrower may pay a third party for services in connection with x>rocuring the loan, without rendering the loan itself usurious, so he may pay to the lender, out of the money borrowed, or the lender may, by his direction, retain, a sum in excess of interest, if it is in reality a bona fide payment for services rendered to the borrower by the lender in other connections, and is not a cloak for usury.^'^ So a payment by a borrower to the lender's agent, under the lender's requirement, of the expenses of examining the title of the property mortgaged as security and of preparing the necessary papers, or a clause providing for payment of attorney's fees in foreclosure, if nec- essary, has been held unobjectionable.^ ^^ And the borrower may even validly agree to pay the lender, in addition to legal interest, for the latter's services and disbursements in collecting in other loans from others, in order to lend to him, and for that purpose going to another town, borrowing funds to make up the required loan, etc. For such payment is not, if bona fide, for the loan, but for work, labor, services, and expenses. ^^* 20. SALES OF PROPERTY OR CREDIT. Usury laws apply only to a loan or forbearance of money, and not to a sale. The purchase, for example, of an existing security for money at a discount, is a common and legitimate transaction, and the pur- chaser may enforce it for its full amount. Such a transaction may, of course, however, be a cloak for a usurious loan, and in that case it will not avail.^^^ iTiBliven v. Lyclecker, 130 N. Y. 107, 28 N. E. 625; McNeely v. Ford, 103 Iowa, 508, 72 N. W. G72. 172 Swanstrom v. Balstad, 51 Minn. 276, 53 N. W. 648. i73Ammondson v. Ryan, 111 111. 506; Giun v. Security Co., 92 Ala. 135, 138, 8 South. 3S8; Glover v. Mortgage Co., 31 C. C. A. 105, 87 Fed. 518. See Ellenbogen v. Griffey. 55 Ark. 268, 272, 18 S. W. 126. 174 Thurston v. Cornell, 38 N. Y. 281; Harger v. McCullough, 2 Denio (N. Y.) 119; Eaton v. Alger, *41 N. Y. 41; Palmer v. Baker, 1 Maule & S. 56. 17 5 Siewert v. Hamel, 91 N. Y. 199, 202; Standen v. Brown, 152 N. Y. 128, 46 N. E. 167; Ellenbogen v. Griffey, 55 Ark. 268, 18 S. W. 126; Struthers v. Drexel, 122 U. S. 487, 7 Sup. Ct. 1293. INT.&U.— 3 34 USURY. Thus, nianv statutes relating to iisurv, as, for pxaniplo. Kov. St. r. i>. § r)l!>7, and I^iws N. Y. 1802, c. (189, § T)."). provide, in sul)stanct\ that the purchase, discount, or sale of a bona fide bill of exchange, note, or other evidence of debt payable at another place than the place of such purchase, discount, or sale, at not more than the current rate of exchange foi* sight drafts, or a reasonable charge for the collection of the same in addition to the interest , shall not be considered as taking or receiving a greater rate of interest than 6 per cent. But, to come within the field of a sale, there must be an existing valid security to be sold. Thus, where one makes a note, and gives it to a note broker for sale at a rate not exceeding G per cent, per annum, and he sells it at a discount of 10 per cent., the real nature of the transaction is a loan by the so-called purchaser to the maker through the broker, and accordingly the loan is usurious, and the note void.^' '' This rule, which renders void a note in the hands of a third party who has purchased it at a discount greater than the legal interest, finds its application in the case of instruments that have no legal inception between the parties, or which are not intended to be avail- able until discounted.^'" So, a sale of a legacy, if bona fide, and not a cloak for usury, is valid, though the price paid is less than the face of the legacy.^'^^ So, a sale of one's credit can never be void for usury, at whatever price it may be made, unless it can be seen that it is in- tended as a cover for a usurious loan of money.^^® Any person is at liberty to sell his credit at whatever price he can get for it, precisely as he is at liberty to sell any other property which he may have,^**^ except where it is specifically prohibited by statute under given circum- stances.^®*^ 17 6 Claflin V. Booriim, 122 N. Y. 385, 25 N. E. 3G0; Freeport Bank v. Hage- meyer, 91 Hun, 194, 3C N. Y. Supp. 214. 177 .Toy v. Diefendorf, 130 N. Y. G, 10, 28 N. E. 602. See National Revere Bank v. Morse, 163 Mass. .383, 385, 40 N. E. 180. 17 8 Hintze v. Taylor, 57 N. J. Law, 2.39, 30 Atl. 551. 179 Forgotston v. McKeon, 14 App. Div. 342. .344, 43 N. Y. Supp. 9.39; El well V. Chamberlin. 31 N. Y. 611. 617; More v. Howland, 4 Donio (N. Y.) 264. 180 Forgotston v. McKcon, 14 App. Div. 342, 344, 43 N. Y. Supp. 939. 181 Pen. Code N. Y. § 378; 3 Rev. St. N. Y. (9lh Ed.) p. 2573, § 7. BOTTOMRY AND RESPONDENTIA. dO 21. INTEREST IN ADVANCE. If, upon the making of a loan, interest at the legal rnlo is paid in ad- vance, the necessary result is, of course, to give the lender more than legal interest, for he thus has, in addition, the use of that interest be- fore his loan has earned it. This is a matter which has been variously treated in different jurisdictions. Thus, in Illinois, it is not usurious to exact the payment of interest in advance.^ ^^ Thus, by the federal law relating to national banks, and the New York law relating to state banks and individual bankers, it is provided that interest at the legal rate may be taken in advance, reckoning the days for which the note, bill, or evidence of debt has to run. "Upon the discounting of com- mercial paper not havings longer time to run to maturity than the notes and bills which are usually discounted by bankers, interest on the whole amount of principal agreed to be paid at maturity, not exceed- ing the legal rate, may be taken in advance." ^^^ But, in order to render this principle applicable, the paper discounted must be a ne- gotiable instrument, and payable at no very distant day.^^^ So, in- terest may be validly made payable monthly, quarterly, or semi- annually on paper having a longer time to run.^^^ 22. BOTTOMRY AND RESPONDENTIA. The fundamental element of usury consisting in the corrupt reser- vation or exaction of a payment, for a loan or forbearance, in addition to a repayment of the principal, in excess of the legal rate of interest, it is obvious that there must be cases where, the repayment of both 182 Telford V. Garrets, 132 111. ooO, 554, 24 X. E. 573. issMarvine v. Hymers, 12 N. Y. 223, 227; Manhattan Co. v. Osgood, 15 Johns. (N. y.) 162; New York Firemen's Ins. Co. v. Sturges, 2 Cow. (N. Y.) (>64; Bank of Utica v. Wager, Id. 712, 8 Cow. (N. Y.) 398; Bank of Utica v. Phillips, 3 Wend. (X. Y.) 408; Utica Ins. Co. v. Bloodgood, 4 Wend. (X. Y.) 652; Thornton v. Bank, 3 Pet. 36; International Bank v. Bradley, 19 N. Y. 245. 254; Lloyd v. Williams, 2 W. Bl. 792. 184 Mai-vine v. Hymers, 12 N. Y. 223, 229; Marsh v. Martindale, 3 Bos. & P. 158. i«5 Mowry v. Bishop. 5 Paige (N. Y.) 98, 101; Peirce v. Rowe, 1 X. H. 179: Greenleaf v. Kellogg, 2 Mass. 568; Gladwyn v. Hitchman, 2 Vern. 135; Sessions V. Richmond, 1 R. I. 305. 36 USURY. principal and interest being contingent, tlie reservation of a reasonable paynunit in exccs!;; of tlie legal rate lo cmer that risk would not fall witliin the purpose of the prohibition. Such instances ar(» found in the case of loans upon bottomry or respondentia, \vli< re money is loaned, respectively, on a ship or its cargo, and it is agreed that, if the property thus pledged to secure the loan should be lost, the borrower shall repay nothing to the lender.''"' The same principle applies to the case of a jnirchasc of an annuity involving similar uncertainty, and to the so-called post obit con- tracts.^^ ^ 23. USURY AND PENALTY DISTINGUISHED. As already noticed, statutes of usury frequently contained two dis- tinct provisions, namely, that the agreement for a usurious rate of pay- ment for a loan or forbearance shall result in a forfeiture of either prin- cipal or interest or both, and that, in addition, a borrower who has in fact paid interest in excess of the legal rate may recover back by action not merely w^hat he has paid, but an additional sum, by way of penalty. This represents one use of the term ''penalty." ^^^ A second sense in which the term is employed is found in cases where one agrees that, in case of breach Iw him of his agreement to jiay the principal when due, he will jiay an extra sum as a penalty for the breach. This is unobjectionable, for, if the payment of the extra sum is purely conditional, and that condition it is within the power of the debtor to perform, so that the creditor may, by the debtor's act, be deprived of any extra payment, it is not usurious. ^'^^ isoThorudike v. Stone, 11 Tick. (Mass.) 183; Bmy v. Bates, 9 Mete. (Mass.) 237, 250; 1 Pars. Mar. Ins. 208. 187 3 Tars. Cotft. 140; Lloyd v. Scott, 4 Tot. 20.j; Id., Tet. 418; Delano v. Wild, G Allen (Mass.) 1, 8; Earl of Cbesterlield v. Jausseu, 1 Atk. 301, 2 Ves. Sr. 125; Batty v. Lloyd, 1 A'eru. 141. i88 0sborn v. Bank, 154 Pa. St. 134, 2G Atl. 2S9. ISO Sumner v. People, 29 X. Y. 337; Poiueroy v. Aiusworth. 22 Barb. (N. Y.) 124; Green v. Brown, 22 Misc. Rep. 279, 49 N. Y. Supp. 103; Floger v. Ed- wards, Cowp. 112, 115; Garret v. Foot, Comb. 133; Roberts v. Trenayne, Cro. Jac. 507; Burton's Case, 5 Coke, G9a; Cutler v. How, 8 Mass. 259. But, if it Is a mere cover for usury, it will not avail. Sunnier v. People, 29 N. Y. 337, 342. CONTINGENT BKNKFITS AS U.SL'UY. 37 24. NEGOTIABLE INSTRUMENTS— BONA FIDE HOLDER. In some states, Avhere iisuiy renders void the instrument affected thereby, it is held that: "A note void in its inception for usury con- tinues void forever, whatever its subsequent history may be. It is as void in the liauds of an innocent holder for value as it was in the hands of those who made the usurious contract. No vitality can be given it by sale or exchange, because that which the statute has de- clared void cannot be made valid by passing through the channels of trade." ^°° While in other states, where a usurious note is not void, but void or voidable as to the usury only, at the instance of the debtor, it is held that, if a purchaser of a note knows nothing of the usury be- tween the original parties, he will not be affected thereby.^^^ While in still others, where the statute renders the note void as to interest while valid as to principal, the innocent purchaser for value, before maturity, may enforce it as to principal, but not as to interest, for it gathers no validity by circulation.^'*- After a lender has parted with the note given for the loan to a bona fide holder, the latter cannot be prejudiced by any subsequent acts of the original parties.^®' 25. CONTINGENT BENEFITS AS USURY. When a lender stipulates for a contingent benefit beyond the legal rate of interest, and has the right to demand the repayment of the prin- cipal sum, with the legal interest thereon, in any event, the contract is in violation of the statute for prohibiting usury; as, for example, where, in addition to stipulating for legal interest in any event, a bor- rower agreed that the lender should have a contingent interest in the profits of a certain business.^^* 190 Claflin v. Booriim, 122 N. Y. 385, 25 N. E. 360; Union Bank of Rochester V. Gilbert, 83 Hun, 417, 420, 31 N. Y. Supp. 945. 191 Bi-adsliaw v. Van Yalkenburg, 97 Teun. 31G, 320, 37 S. W. 88. 192 Miles V. Kelley (Tex. Civ. App.) 40 S. W. 599, GOl; Andrews v. Hoxle, 5 Tex. 172; Ward v. Sugg, 113 N. C. 489, 18 S. E. 717. 193 Seymour Opera-House Co. v. Thurston (Tex. Civ. App.) 45 S. W. 815. 194 Browne v. Vredenburgh, 43 N. Y. 195; Gilbert v. Wai'ren, 19 App. Div. 403, 4G N. Y. Supp. 489. 38 USURY. 26. SUBSTITUTED SECURITIES. V^lien a sermilv tainted with usury is jiivcii up, ;um1 n new security substituted, in renewal or continuance, the new security is also tainted with usury.^"" 27. SUBSEQUENT USURIOUS AGREEMENT. If, when a loan is made, there is no agreement for usurious interest, the fact that subsequently it is agreed that a usurious rate shall be paid, and notes for the loan are given, which are invalidated by this illegal feature, the invalidity of the notes does not react upon the original loan, so as to invalidate it also. The only effect of avoiding the notes is to leave the original loan standing.^^" So the mere fact that excessive interest has been paid does not show that it was origi- nally agreed on or exacted for the loan or forbearance.^ °" And so a promissory note, not originally usurious, cannot be made so by an agreement for an extension, subsequently entered into, in consideration of a payment of, or a promise to pay, usurious interest.^ ^^ 28. RECOVERING BACK USURIOUS PAYMENTS. The rule that, when a plaintiff is in pari delicto with the defendant, money i)aid by the former to the latter cannot be recovered back, ap- plies only where the act done is in itself immoral, or a violation of the general law'S of public policy, but does not bar a recovery where the law violated is intended for the protection of the citizen against op- lasTreadwell v. Archer, 76 N. Y. ldC>; Walker v. Bank, 3 How. 67, 71; Feldman v. McGraw, 1 App. Div. 574, 37 N. Y. Siipp. 434; Id., 14 App. Div. 631, 43 N. Y. Supp. S85; Sheldon v. Haxtun, 91 N. Y. 124, 131; Marion Nat. Bank v. Thompson (K3\) 40 S. VY. 003-905; BroAvu v. Bank, 169 U. S. 416, 18 Sup. Ct. 300; Bank of Russellville v. Coke (Ky.) 45 S. W. 867; Fanners' Bank of Kearney v. Oliver (Neb.) 7G N. W. 449; Tardoe v. Bank (Iowa) 76 N. W. 800. See First Nat. Bank of Garden City v. Segal. 121 Pa. Co. Ct. R. 113; McFarland v. Bank (Kan. App.) 52 Pac. 110. 106 In re Consalus, 05 N. Y. 340, 344; Humphrey v. McCauley, 55 Ark. 143, 146, 17 S. W. 713; Nichols v. Pearson, 7 Pet. 104. 10- Willard v. Pinard, 05 Yt. 100, KM'), 26 Atl. 67. 108 Morse v. AVellconie, OS Minn. 210, 70 N. W. 978. RECOVKRING BACK USURIOUS PAYMKNTS. 39 pression. extortion, or deceit. Within the latter class falls the case of usurious pavnicnts.^"® This principle is subject, of course, to that elsewhere discussed, and adopted under the statutes of some states, — that, if all the principal and usurious interest have been paid, no action will lie to recover back the interest. Statutes authorizing actions to recover back usurious interest that has been paid provide that they must be brought within some specified time "from the time when the usurious transaction occurred." Under such a clause, the "usurious transaction" occurs only when a greater amount than the principal, with legal interest, has been paid, or judg- ment has been taken for such greater amount. In other words, the time of the limitation does not begin to run until the creditor has received, in the way of payment of principal and usurious inter- est, a sum in excess of the principal and legal interest, or has taken judgment for such excessive sum. The theory is that the creditor, when entitled . in any event to his principal, and only liable to a forfeiture of interest, or to a recovery thereof by the borrower, or of some larger sum by way of penalty, in case he has actually re- ceived an excess, has an election to repent him of his usurious exac- tion, which may be made or evidenced by crediting all payments re- ceived, whether intended at the time they are made to be of usury or not, on the principal or legal interest ; and his failure to avail himself of this option, and his receipt of illegal interest, cannot, while he still has this locus pcenitentise, be affirmed; so that until the payment of an actual excess above principal and legal interest, or judgment there- for, the "usurious transaction" has not "occurred." ^°° After the time limited by the statute, no further right of action ex- ists.=«^ i99Hiiitze V. Taylor, 57 N. J. Law, 239, 241, 30 Atl. 551; Jones v. Barkley, Doug. 684; Wheaton v. Hibbard, 20 Johns. (N. Y.) 290; Thomas v. Shoemaker, 6 Watts & S. (Pa.) 183. 200 First Nat. Bank of Gadsden v. Denson, 115 Ala. 050, 22 South. 518, 522; Duncan v. Bank, Fed. Cas. No. 4,135; McBroom v. Investment Co., 153 r. S. 318, 328, 14 Sup. Ct. 852, 85(3; Stevens v. Lincoln, 7 Mete. (Mass.) 525; Harvey v. Insurance Co., 60 Yt. 209, 14 Atl. 7. 201 Palen v. Johnson, 46 Barb. (N. Y.) 23, affirmed in 50 N. Y. 49; Matthews V. Paine, 47 Ark. 54, 14 S. W. 403. Compare Wheaton v. Hibbard, 20 Johns. (N. Y.) 290; Brown v. Mcintosh, 39 N. J. Law, 22; Baum v. Thoms (Ind. Sup.) 50 N. E. 357. 4U USURY. Statutes antlioiizinj]; the borrower or his "personal representatives" to recover, for example, twice the excess over legal iulcrcsl, do uot allow such an action by his assij^uee.-"- 29. CREDITING USURIOUS PAYMENTS. As long as anv sum is due upon a lawful debt, out of or in connec- tion with which a usurious contract has once arisen, all payments made on either should be credited on the valid claim.-**^ Where a debtor does in fact pay the lender sums in excess of legal interest, but only from motives of gratitude or generosity, and not in pursuance of an agreement or exaction for the loan or forbearance of money, he cannot recover such payments back, or have them credited as payments upon the principal.-''^ 30. WHO MAY SET UP USURY. The right to set up the defense of usury is personal to the borrower, and, under some circumstances, those in privity with him; as, for ex- ample, his heirs, devisees, mortgagees subsequent to a usurious mort- gage, purchasers, and trustees.-"^ 31. PLEADING USURY. Usury, as a defense, must be pleaded. It is like every other defense, and cannot be proved unless it is set up in the answer. If it is not pleaded, it will be considered as waived. And the rule is so strict with reference to pleading it that it has been held that it nnist be set forth "with such precision and certainty as to make out on the face of the 202 Pardee v. Bank (Towa) 70 N. W. 800; Osboni v. liank. 175 Pa. St. -I'.H. 490, 34 Atl. 8.'jS. 203 iluini)lu-ey v. :McCauley, 55 Ark. 143, 147, 17 S. W. 713; Payne v. Nfw- comb, 100 111. Gil; Rogers v. Buckintiham. .33 Conn. 81; Fretz v. Murray (Mich.) 70 N. W. 405; Hasklns v. Bank, 100 Ga. 210, 127 S. E. 985. 2 04 White V. Benjamin, 138 N. Y. 023, 020, 33 N. K. 1037. 2 0.'-, Berilan v. Sfdgwick, 44 N. Y. 020; Williams v. Tilt. .'lO X. Y. 310, 3-J5; Post V. Dart, 8 Pai-^o (X. Y.) 030; De Wolf v. Johusuu, 10 \\lK;it. 307, 303; Ureen v. KL-nip, 13 Mass. 515; 3 I'ars. Cunl. 122. CRIMINAL PROSECUTION FOR USURY. 41 pleading that a corrupt and usurious contract has been entered into." 2o« It is not necessary to use the word "corrupt," nor even the word "usury," if the facts establishing those incidents of the transaction are set forth; ^"^ but merely applying epithets, or pleading a definition of usury, does not constitute that "plain statement of facts" necessary to a sufficient pleading.-"' 32. BURDEN OF PROOF. Where the defense of usury is interposed, the burden of showing that the special agreement for an illegal rate, which must exist in every case of usury, was in fact made, rests upon the defendant.^"^ He enters upon the defense with the presumption against the violation of the law and in favor of the innocence of the party charged with the usury. It is a just requirement that all the facts constituting the usury should be proved with reasonable certainty, and that they should not be established by mere surmise and conjecture, or by in- ferences entirely uncertain.^ ^* 33. CRIMINAL PROSECUTION FOR USURY. TVTiere a statute simply provides, as in New York (Pen. Code, § 378), that a person receiving usurious interest shall be guilty of a misde- meanor, the allegations of an indictment thereunder, in order to consti- tute a good plea, must not merely allege the unlawful exacting and receiving of a specified sum in excess of the legal rate for the loan and forbearance of another specified sum for a specified period, but must charge the usurious agreement, specifying its terms, and the par- ticular facts relied upon to bring it within the prohibitive clause of the 20 6 Laux V. Gildersleeve, 23 App. Div. 352, 355. 48 N. Y. Supp. 301; Chapuis V. Mathot, 91 Hiin, 565, 36 N. Y. Supp. 835; Stanley v. Bank, 165 111. 205, 46 N. E. 273; Mosier v. Norton, 83 III. 519. See HoUis v. Association (Ga.) 31 S. E. 215; Ansley v. Bank, 113 Ala. 467, 479, 21 South. 59. 207 Miller v. Schuyler, 20 N. Y. 522. 20 8 Chapuis v. Mathot, 91 Hun, 565, 568, 36 N. Y. Supp. 835. 209 Rosenstein v. Fox, 150 N. Y. 354, 363, 44 N. E. 1027; Guggenheimer v. Geiszler, 81 N. Y. 293; Telford v. Gerrels, 132 111. 550, 554, 24 N. E. 573. 210 White V. Benjamin, 138 N. Y. 623, 33 N. E. 1037. 42 USURY. section. The reason is that the receiving or exacting of a greater rate of interest than is authorized by statute may or may not consti- tute usury, according to the circumstances; for, in order to constitute usury, it must appear that the exaction and reception of the additional interest was in pursuance of a mutual agreement between the parties, and this agreement must be alleged and proved.^^^ And where the statute (Pen. Code N. Y. § 37S), requires the receipt of usurious interest in order to render the lender guilty of a crime, the mere corrupt agreement to exact or receive it, which would suffice as a defense in a civil action on the contract, will not suffice to secure a conviction. And therefore, in a civil action, where the defendant seeks an examination of the plaintiff in order to learn the details of the original transaction of which he is ignorant, in order that he may plead them in connection with the defense of usury, the plaintiff cannot object that the examination would compel the disclosure of facts con- stituting a criminal offense, if, for all that appears, it would only dis- close an agreement for, and not a receipt of, usurious interest.^^' 34. EQUITABLE BELIEF AGAINST IMPROVIDENT BARGAINS. ^Trom an early period equity has relieved against usurious con- tracts by requiring payment of the principal debt and legal interest. * * * It would not, as is supposed, follow the repeal of all usury laws, that even then courts of equity would refuse to afford relief. 'No usury laws now exist in England, having been repealed by stat- ute. It has nevertheless been decided that the repeal of these laws did not alter the doctrine by which the court of chancery affords relief against improvident and extravagant bargains.' " -^^ Thus an agreement, made in advance, to pay compound interest, save in certain excepted cases, elsewhere considered, although not usurious, is not enforceable.^^* 211 People V. Hubbard, 10 Misc. Eep. lOi, 31 N. Y. Snpp. 114. 212 Fox V. Miller, 20 App. Div. 333, 46 N. Y. Supp. 837. 213 Bisp. Eq. § 222. Higgins v. Lanslngh, 154 111. 301, 370, 40 N. E. 3G2. 214 Van Benschooten v. Lawson, 6 Johns. Ch. (N. Y.) 313; Young v. Hill, 67 N. Y. 1G2; Higgins v. Lansingh, 154 111. 301. '^0, 40 N. E. 302; Bowman V. Neely. 137 III. 443, 27 N. E. 758. But see Boyce v. Fisk, 110 Cal. 107, 42 Pac. 473. WAIVER OF USURY. 43 35. EQUITABLE RELIEF AGAINST USURIOUS TRANSACTION, When a borrower on usurious interest "comes into a court of equity to ask for relief by having the transaction set aside, equity will not afford him redress, except upon the terms of his returning the amount actually borrowed, with lawful interest." ^^"^ This rule has been chan- ged, so far as concerns suits by borrowers, in New York, by statute.^^' But the term "borrower," in the New York statute last cited, is used in its literal sense. It does not apply to his sureties, his grantees, or his devisees, or his assignee in bankruptcy. The act was intended to confer a special and peculiar privilege upon the actual borrower, and is purely personal. The devisee, for example, cannot secure equitable relief against a usurious mortgage placed on the land devised by his devisor, without offering to pay the principal, with legal interest.^ ^^ 36. WAIVER OF USURY. Even where a statute declares usurious agreements void, they are void only in a limited sense. They are not so absolutely void that the borrower is prevented from making payment if he desires; and, if he voluntarily does this, he cannot reclaim the money thus paid. Nor are they so far void that the borrower is not at liberty to deduct the payment of the debt. Thus the maker of a general assignment for the benefit of creditors may lawfully include in it, and direct the pay- ment of, a usurious debt; so the borrower of money upon a usurious contract, which is secured by a mortgage upon land, upon making sale of the land may lawfully contract w ith his vendee for the payment of the usurious mortgage, and the vendee will not then be at liberty to set up the objection of usury.^^* aisBisp. Eq. § 43; Hubbard v. Tod, 19 Sup. Ct. 14. 216 2 Eev. St. (9th Ed.) p. IS.-.G, § 8. See, also, Scott v. Austin. 36 Minn. 460, 32 N. W. 89, 864; Krumsieg v. Trust Co., 71 Fed. 350; Mathews v. Trust Co. (Minn.) 72 N. W. 121. 217 Buckingham v. Corning, 91 N. Y. 525; Hubbard v. Tod, 19 Sup. Ct. 14, 2i8Berdan v. Sedgwick, 44 N, Y. 626, 630; Chapuis v. Mathot, 91 Hun, 565, 36 N. Y. Supp. 835; Cole v. Savage, 10 Paige (N. Y.) 583; Hartley v. Harrison, 24 N. Y. 171; Murray v. Judson, 9 N. Y. 73; Chapin v. Thompson, 89 N. Y. 270. 44 USURY. But subsequent grantees of the mortgaged premises, with no agree- ment to either assume or take subject to the prior and usurious mort- gage, ma}-, upon foreclosure, set up the defense of usury, even though judgment has been rendered against the mortgagor, establishing the validity of the mortgage, if such judgment was subsequent to the purchase of the land; for after that date the mortgagor cannot do any act to affect his gran tee.- ^^ 37. ESTOPPEL. The doctrine of estoppel extends to the case of usury, and in appro- priate cases prevents the borrower from setting up that defense. But it is subject to the qualification that the person by whom it is in- voked must not be a stranger to the transaction, or one whose conduct the declaration was not designed to influence. Thus, where an as- signee for value takes a chose in action — for example, a bond and mortgage — by assignment, in reliance upon the debtor's explicit written declaration that he has no defense or set-off to the debt assigned, and that it will be good and valid in the hands of an assignee, the debtor cannot set up in defense, on foreclosure, that the bond and mortgage are void for usury; and this is true although the plaintiff in foreclo- sure is a second assignee, so that the debtor did not have him specif- ically in mind in executing the declaration, for the circumstances are such as to entitle the second assignee to rely on the declaration.--"* 38. PUKGING FROM USURY. A usurious contract can be purged of the taint of usury, and money loaned upon a usurious contract can furnish a valid consideration for a promise to pay the money actually loaned. If the usurious contract 219 Berdan v. Sedgwick, 44 N. Y. 626. See Natioual Loan & Investment Co. of Detroit v. Stone (Tex. Civ. App.) 46 S. AV. 67; Building & Loan Ass'n of Dakota v. Price, Id. 92; People's Building, Loan & Savings Ass'n v. Sellars, Id. 370. 220 Weyh v. Boylan, 85 N. Y. 394; Mechanics' Bank of Brooklyn v. Town- send, 29 Barb. (N. Y.) 569; Stoll v. Reel, 11 Misc. Rep. 461. 32 N. Y. Supp. 737; Horn v. Cole, 51 N. H. 287; Holbrook v. Zinc Co., 57 N. Y. 616; Ashton's Appeal, 73 Pa. St. 153; Ryall v. Rowles, 2 White & T. Lead. Cas. Eq. pt. 2, p. 1G73. PURGING FROM USURY. 45 be mutually abandoned bj the parties, and the securities be canceled or destroyed so that they can never be made the foundation of an action, and the borrower subsequently makes a contract to pay the amount actually received by him, this last contract will not be tainted with the original usury, and can be enforced. "i 221 Sheldon V. Haxtun, 91 N. Y. 124, 132; McConkey v. Petterson, 15 App Diy. 77, 44 N. Y. Supp. 286; Kilbourn v. Bradley, 3 Day (Conn.) 35G; Houser V. Bank, 57 Ga. 95. WEST PUBLISHING CO.. PBINTERS AND STEEEOTVPERS, ST. PALL, MINN: ^^ ^.o rC'-A^ L^-.4^^ ^f.4''^-W /tcA-^VtrO UCff^^ ^ ' " , <5^ K^lot cW^^A^ .^/jU^" v:^ *^^ - ^"'' '^ / ' f Ui ^^%i£^ t^Vj ^^^ wLc^w^ / . ' W ic. ' ly^AP^' Sr PRINCIPLKS OF THE LAW OF ARBITRATION AND AWARD A MONOGRAPH RY R. W. FISHER St. Paul, Minn. WEST PUBLISHING CO. 1896 COPYKIGHT, 1S96, BV WEST PUBLISHING COMPANY. + ARBITRATION AND AWARD. 1. Ill (rcnernl. 2_ I'artu's. 3. Subject-Matter. 4. 1"he Arbitrators. 5. The Submission. (i. Kevocatiou. 7. I'roceedings. 8. Award. 9. Impeacliiuent. 10. Effect. 11. Enforcement. IN GENERAL. 1. Arbitration is the investigation and determination of dis- puted matters by one or more unofiB.cial persons, called "arbitrators" or "referees," chosen by the parties to the controversy. The term "arbitration" is often broadly used to include all the various steps in the settlement of a controversy by reference to third persons, and in this sense to embrace the award; but a more strict use confines its meaning to the submission and the hearinj», the decision being separately spoken of as the "award." ^ The dis- tinguishing feature of an arbitration is that it amounts to a sub- stitution, by the parties, of judges of their own selection for the usual remedies offered by the courts, under an agreement, expres.'^ed or implied, that the unprejudiced decision of these persons, after a full and fair hearing, shall be binding and final.- But while a submission to arbitration is thus, to an extent, a taking of the controvers}' out of the hands of the courts, its scope, procedure, and effect are limited and controlled by certain well-defined rules whi( li make up what is technically called the "law of arbitration and award." Most of these rules have for their object the protection of 1 Black, Law Diet. 2 Abb. Law Diet. ARB. & AWARD — 1 •J AIJHITKATION AND A\VA1U>. <'a(li i»;uly from tlii' fraud or uufainu'ss of the other or of the ailiitialor, and to scrni-c an nuprcjiRlicod decision upon the merits of tlic I'onlroversy as ]nvs<'nted by the parties. If these results aif reached. Ilie settlement will }2;enerally be upheld, regardless of any lack of formality in tlie i)i()ceediugs.' PARTIES. 2. Generally, the power of a party to a controversy to submit it to arbitration is co-extensive with his ca- pacity and authority to contract relative to the sub- ject-matter. But to this rule may be made the fol- lowing exceptions: (a) Agents, from a general authority to contract, have no implied power to arbitrate. (b) Partners have no general pow^er to bind their co- partners by a submission to arbitration. (c) Of&cers of the United States have no power, as such, to refer matters arising out of the public business under their control. Ill General. As to the contractual capacity of the parties, an ag^reement to suimiit a disputi^d matter to arbitration is governed by the general law (jf conti-acts."* But, in addition to being legally competent to c(»nti-aet, the parties to a submission must have such control over ilie subject-matter as will enable them to perform any legal award that may be made.° The power to submit to arbitration generally grows out of the j)ower or authority to compromise" or to prosecute 3 Si'j', ;,'('ncrally. cases cited under note 12o. * .Morse. Arb. :'.; Caldw. Aib. l.j; Kuss. Arb. l,j; Shelf v. Baily, 1 Comyn, 18.".; I'.iady V. Mayor, etc.. 1 Harb. (N. Y.) 584; Burrell v. Joues, 8 Barn. & Aid. 17: Blair v. Wallace, 21 Cal. 317; Cox v. Taj;ger, 2 Cow. (N. Y.) U38; W-.-d V. i;ilis. 3 Cables (N. Y.) 2.j4. •'■ Morse, Arb. 3. Thus, a religious corporation, which has no power, with- oiM coiisciil of the supreme court, to sell its real estate, cannot submit to Mrl)ilration (he rincstion whether it shall be bold. Wyalt v. Beusou, 23 B.'ub. (N. V.I :;27. c S.liofT V. Bloonilield. 8 Vt. 472. PARTIES. 3 or defend a suit relative to the subject matter; ^ and it mi^'ht !».• laid down as a s^'ueral rule that any person conijictcnt to conlraet in an individual or a representative cai)acity may submit to aibi- tration any eivil controversy for the determination of wliidi he has the right or authority to prosecute a suit. From thcs.- prin ciples it follows that the submission of an infant in his own right is voidable at his election; ** since he has neither capacity to con- tract nor power to sue. Corporations, both municipal '•' and pri vate/° may be parties to a submission, and are bound by an award legally rendered. Administrators ^^ and executors ^^ may submit 7 Buckland v. Conway, IG Mass. 39(5; Alexandria Canal Co. v. Swnnn. 5 How. 83; Somers v. Balabrcga, 1 Uall. 1G4- Brady v. Mayor, etc., 1 Barb. 93; Bingliam's Trustees v. Guth- rl.', Ill Pa. St. 41S, 1" "It is lielicved to be the i)ractice tlu-ougliout the Union for suits to be rcfi-rriMl l)y consent of counsel without special autliority. and this universal jiractice nnist l»e founded on a general conviction tiiat tlie power of an at- toniev at law over the <-ause of his client extends to sucli a rule." Marsliall, ('. .]., in Holker v. Parker, 7 Cranch, 43»>. See, also, I'ilmer v. Dell)er, 3 Tamit. 4S*;. '".Morse, .\rh. 2<;: liac Al)r. "Ar])itration," ('; Fnvt v. Battle. 13 Smedes A: M. (.Miss.) i;;:{; McComb v. Turner. 14 Smedes A: .M. (.Miss) 119; I.uuiley I'A1>TIK.S. ) sary implication from the powers conferred;^'-' fur otherwise the submission would be, in elTect, an unwarranted delej^ation of iIk? agent's power to bind his principal.-" No power to submit lo ar- bitration is imijlied from a general authority to contract,-^ or to collect-- or "settle''-" claims or accounts. But it seems tliat any authority to an agent to secure or enforce any kind of a judi- cial determination of the matter, or which gives him absolute con- trol over it, will imply power to arbitrate. Thus, authority to pios- ecute or defend a suit gives by implication power to submit it to arbitration.-^ Authority to "compromise'' a claim has been held to warrant a reference by the agent; ^"' and the t-ame effect has been given to a general authority to act for a partner in the dis- solution of the firm and settlement of its business.-'* Partners. A submission by one partner without special authority is not binding on his co-partners.-' This is unquestioned so far as con- V. Huttou, Cro. Jac. 447; iMempliis & C. R. Co. v. Scruggs, 50 Miss. 2M. See, also, Spuvck v. Crook, 19 111. 415. 10 Bacon v. Dubarry, 1 Ld. Eayin. 24G; Cox v. Fay, 54 Vt. 446; Trout v. Emmons, 29 111. 433; Gibbs v. Holcomb, 1 Wis. 33; Scarborough v. Reynolds, 12 Ala. 252; Ingraham y. Whitmore, 75 111. 24; Michigan tjent. R. Co. v. Gougar, 55 111. 503; Lowoustein v. Mcintosh, 37 Barb. (N. Y.) 251. Authority to an agent to make the submission does not empower him to ratify the award, when made. Bullitt y. Musgrave, 3 Gill (Md.) 31. 20 But the unauthorized submission by an agent may be ratified by the principal, and thus rendered binding. Diedrick v. Richley, 2 Hill (N. Y.) 271; Perry v. Mulligan. 58 Ga. 479; Furber v. Chamberlain, 9 Fost. (N. H.) 405; Memphis & C. R. Co. v. Scruggs. 50 Miss. 284; Isaacs v. Society, 1 Hilt. (N. Y.) 4G9. 21 Story. Ag. § 98; Bacon v. Dubariy, 1 Ld. Raym. 246; Trout v. Emmons, 29 111. 433; Scarborough v. Reynolds, 12 Ala. 252. 2 2 See Pars. Cont. 689; Morse, Arb. 11, and cases there cited. 23 Mechem, Ag. § 405; Huber v. Zimmerman, 21 Ala. 488; Michigan Cent. R. Co. V. (4ougar. 55 111. 503; Scarborougli v. Reynolds, 12 Ala. 252. 24 Buckland v. Conway, 16 Mass. 396; Wilson v. Young, 9 Pa. St. 101; Somers v. Balabrega, 1 Dall. 164. 2 3 Schoff V. Bloomfield. 8 Vt. 472. 2 6 Henley v. Soper, 8 Barn. & C. 16. 27 Morse, Arb. 7; Russ. Arb. 20; 1 Pars. Cont. 191; 1 Lindl. Partn. 129; Karthaus v. Ferrer, 1 Pet. 222; St. Martin y. Thrasher, 40 Vt. 400; Antram V. Chace, 15 East, 209; Stead v. Salt, 10 Moore, 389; Fancher v. Furnace 6 AKHITUATIOX AND AWAKD. i-crns submissions by an instrument requirinj;- ;i seal.-^ And while tluTc are cases upboldinii llii' power of one partner to bind the firm b.v a parol submission not specially authorized,-^ the weight of authority clearly sustains the rule that such submissions are not binding on co-partners not consenting thereto before the award is rendered.^" In such cases the partner making the unauthorized submission is alone bound.^^ United States Officers. It is not within the general powers of an officer of the United States to submit to arbitration any matter involving the rights of the government.^- The denial of this power is put upon the ground that, as the constitution has vested the judicial power in the supreme and inferior courts, no officer of the government can vest it elsewhere. Such a submission, it is said, must be based on special authority given by an act of congress. Co., SO Ala, 481, 2 South. 2GS; Wood v. Shepherd, 2 Tat. & H. (Va.) 442 Walker v. Beau, 34 Miun. 427, 2G N. W. 232; Buchoz v. Grandjeau, 1 Mich 3t;T; Joues v. Bailey, 5 Cal. 345; Harriugtou v. Higliam, 13 Barb. (N. Y.) 600 -'' Backus v. Coyue, 35 Mich. 5; Savercool \ Farwell, 17 ISIich. 321; Bu- chauau v. Curry, 19 Johus. (N. Y.) 137; Karthaiis v. Ferrer, 1 Pet. 222 Davis v. Berger, 54 Mich. (i52, 20 N. W. 629' McBride v, Hageu, 1 Wend (X. Y.) 32G; St. Martin v. Thrasher, 40 Vt. 460; Abbott v. Dexter, 6 Cush (Mass.) 108; and cases cited in preceding note. 2 9 Such is the law in Illinois, Ohio, Kentucky, and Pennsylvania. See Hal- lack v. March, 25 111. 33; AVilcox v. Singletary. Wright (Ohio) 420; Southard V. Steele, 3 T. B. Mon. (Ky.) 435; Taylor v. Coryell, 12 Serg. & R. (Pa.) 243; Gay v. Waltnian, 89 Pa. St. 453. 3 See, generally, cases cited in notes 27, 28 and 31. Also. Eastman v. Burleigh, 2 N. H. 484; Horton v. Wilde. 8 Gray (Mass.) 425; Mackay v. Bloodgood, 9 Johns. (N. Y.) 285; Tillinghast v. (Jilniore, 17 II. I. 413, 22 Atl. 942. But the assent of the partner may be presumed where he is pres- ent at the hearing, and fails to object. See Hallack v. March, 25 111. 33. 31 1 Lindl. Partn. 129; Buchanan v. Curry, 19 Johns. (N. Y.) 137; Strang- ford V. Green. 2 Mod. 228; Harrington v. Higham, 13 Barb. (N. Y.) G(!0; .McBride v. Ilagen, 1 Wend. (N. Y.) 326; Smith v. Van Nostrand, 5 Hill (.\. Y.) 419; Karthaus v. Ferrer, 1 Pet. 222. An unauthorized submission by a partner may operate as a release of the partnership claim where he ac- f<-Itts the amount awarded in favor of the firm, and indorses a receipt on thf award. Buchanan v. C(u-it, 19 Johns. (N. Y.) 137. 3 2 U. S. V. Auu'S, 1 Woodb. & M. 76, Fed. Cas. No. 14,441. S U BJ ECT-M ATTER . SUBJECT-MATTER. 3. Any actual doubt or dispute which the parties might legally settle by contract may be submitted by them to arbitration. A doubtful or disputed matter, to eonie withiu the nieanin<^ of tbis rule, must be of such a character that its determination will require an exercise of judicial discretion on the part of the arbi- trator, and not merely' the performance of a ministerial act.^^ A doubt or uncertainty which an application of the ordinary rules of calculation or measurement would remove will not serve as the basis of an arbitration. Thus, a surveyor chosen to establish a boundary line,^'* an accountant to examine the accounts of the parties and report a balance,^ ^ a clerk to calculate the interest on a note and determine the amount due,^® persons chosen to de- termine the difference to be paid in an exchange of slaves,^' are generally not regarded as arbitrators, nor are their reports given the conclusiveness of awards.^® The same may be said generally of persons chosen to appraise property according to their own judgment of its value; ^'^ although in some cases appraisers have been regarded as arbitrators.*** The reference of a matter con- cerning which no dispute exists, for the purpose of preventing future 33 Morse. Arb. 36; Leeds v. Burrows, 12 East. 1; Hale v. Handy, 2G X. H. 206; Norton v. Gale, 95 111. 533; McKinney v. Page, 32 Me. 513; Terry v. Chandler, 16 N. Y. 354; Elmendorf v. Harris. 5 Wend. (N. Y.) 521; Lee v. Hemingway, 3 Nev. & M. SGO. 34 Thayer v. Bacon, 3 Allen (Mass.) 163. 3 5 Stage V. Gorich, 107 111. 361; Kelly \. Crawford, 5 Wall. 785. 3 6 Grimes v. Blake, 16 Ind. 160. 37 Curry v. Lackey, 35 Mo. 389. 3 8 But see Board of Trustees, etc., y. Lynch, 5 Gilman (III.) 521; McAvoy V. Long, 13 111. 147; Bobbins v. Clark, 129 Mass. 145; Oakes v. Moore, 24 Me. 214. 39 See cases cited in note 33 supra. Also, Garred v. Macey, 10 Mo. 161; Curiy V. Lackey, 35 Mo. 389; Van Cortlandt v. Underbill, 17 Johns. (N. Y.) 405. 40 See Smith v. Railroad Co.. 36 N. H. 458; (Jnderhill v. Van Cortlandt. 2 Johns. Ch. (N. Y.) 339; Leonard v. House, 15 Ga. 473; Efuer v. Shaw, 2 Wend. (N. Y.) 567; Oakes v. Moore, 24 Me. 214. AICMIIKATION AND AWAIiD. •litTrn'Ucrs from nrisiiii:. is iml i(';j;;ir(l('d as a submission to arbi- Iiatioii." Hut tlir mailer iir.d not be iuvolvt'd in a jK'ntliii.u sni(-/- it is siini.it'nt iliai it br ;uHi;ill\ (iispiiicd. (ir even mncly doubit'd.'-' It u.r.l lint <(nisist sdlrly (»!' (picslions of tact; for a imic .Tones (N. C) 12.j; Mayo V. (Janlner. 4 .Foiies (N. C.) SoO; Iliggins v. Kinuoaay. 20 Iowa. 474. ** Ching V. Vhiu'A, Yes. 2S'2; (Ireen v. Ford. 17 Ark. 5S(5; Strawbridge v. Fuustoue. 1 Walts & S. (I'a.) 517; .loncs v. Mill Corp., tj Pick. (Mass.) 14S: Smith V. Thorndike. S (Jrecnl. (Me.) IIU; Klcinc v. Catara, '_• Gall. Cil, Fed. Cas. No. 7.8inat(>r, and i;ive to them the \)0\\Qr to select a third in case of disaiiret-mmt. T'ais third person is called an "umpire." Generally, uncU'r such a submission, the arbitrators need not wait until they have actually disagreed, but may appoint an umpire even before ( (.mmi-ncing the hearing.^** The appointment may be by parol, unk'ss the statute, the terms of the submission, or the nature of ihi' subject-matter require it to be in writing;^" and where the parties appear before the umpire without objection as to the mode of his appointment they cannot afterwards raise the objection that he should have been appointed by written instrumeut.'^^ But an uniiiire cannot be appointed by parol where it is agreed that the Miliuiission shall be made a rule of court.**^ Upon the disagree- iiR-nt of the arbitrators, it is the duty of the umpire to decide, not merely the points upon which the arbitrators have failed to agree,, but the whole controversy, exactly as though he had been appointed sole arbitrator in the firs-t instance.®- He should hear the oral of interest from acting as arbitrators in a case in which the railroad company is a party. Inhabitants of Leominster v. Fitchburg & W. K. Co., 7 Allen (Mass.) 38. "0 Brown v. Lcavitt. 2(> Me. 251; Davis v. Forshee, o4 Ala. 107; Fox v. Hazeltou, 10 rick. (Mass.) 275; Dougherty v. Mc^^ norter, 7 Yerg. (Tenn.) ::.",!»: strong v. strong. D Cush. 500. s" Robb v. Brachman, 38 Ohio St. 42^i; Monongahela Xav. Co. v. Fenlou, 4 Watts & S. (Pa.) 205; Fox v. Hazelton. 10 Ticlc. (Mass.) 275; Anderson v. r.urchett. 48 Kan. 1.53. 29 I'ac. 315; Brown v. I.eavUt, 2t! Me. 251. &t> Ale.xandria Canal Co. v. Swann. 5 IIow. 83; Bigelow v. Mayuard, 4 Cu.sh. 317; Dudley v. Thomas. 23 Cal. 3(!5; Newton v. West. 3 Mete. (Ky.l 24; McKinstry v. Solomons. 2 .Johns. (N. Y.) 57; Van Cortlandt v. Underliill, 17 .Fr.hns. <.\. Y.) 405; Butler v. Mayor, etc, of New Y(irl<, 1 Hill (N. Y.) 480; I'eck V. Wakely. 2 McCord (S. C.) 27!»; Woodrow v. O'Connci'. 28 Vt. 77(!;. Stevens V. Brown. .S2 N. C. 400. 60 Morse. Aili. 215; Bryan v. .Teffreys. 104 N. C. 242, 10 S. E. 107. «» Knowlton V. Iloniir, ;'>0 Me. 552. ei Klmendiirf v. Harris. 2.''. Wind. (.\. Y.) 028. 62 Bates V. Cooke. I'.arn. i^ C loT: Ml)le v. Peebles, 13 Serg. & R. (Pa.) 319; King v. Jemison. 33 Ala. 499; Valentine v. Valentine, 2 Barb. Ch. 430; Ilopson v. iMxlittk', 13 Conn. 23G. The stipulation should fix the number of arbitrators and the mode of their selection. Greiss v. Insurance Co., 98 Cal. 241, 33 I'ac. 19.5. "^ See Russ. Arb. .53; Walters v. Morgan, 2 Coj^, Ch. 3G9; Ballauce v. Un- derhill. 3 Scan). (111.) 453; Stone v. Atwf>od, 28 III. 30. From the fact of sub- mission, the law always implies an agreement to abide by the award. Valen- tine v. Valentine, 2 Barb. Ch. 430. «» Morse, Arb. 51. And see, gencr.illy, 'I'lioiuasson v. Risk, 11 Busli (Ivy.) i\\U: Smith V. Douglass, Ki 111. :M: Mm tin v. Ciiapm;in, 1 .\la. 278; I'hil- l.rick V. Pn-hl". IS Me. 2.55; Si.nks Heirs v. Caiuiady, 3 Litt. (Ky.) ;J99; I'li<-i]is V. Duliiii, 75 HI. 9ii; I.();:s(l()n v. Uulterts' K.\''-s, 3 'i. B. Mon. (Ky.) 2.55; Byrd v. odem, 9 .Ma. 7.55; Dilks v. Ilaiiunorid, SG Ind. 5G3; Donnell V. Lee. .58 .Mo. App. 288; Mc.Mulli'ii v. May(- 8 Sin.-dcs & M. (Miss.) 29S. 'I'lie siilMnlssion of a ix'iidiiig suit iii;iy he hy ]);ir<>l. Wells v. L;ine, 15 W.n«l. 99. •••MorKO. ,\rl». 55; Mill.r v. ( ;r;iliiiiii, 1 I'.ii'\. (.s. (\i 4IS: Stark's Heirs V. Cnimady. 3 Lilt. (Ky.i :t99; Hodges v. S.iiiiidi is. 17 Pick. 470. -I PciiJx.dy V. Rice. li:', M.-iss, :;i. "- I»:ivy V. I'nw, 7 riMinIi, 172; \\i'st. & L. Printing Co. v. Recaimer Maxiuf'g Co., 14 Daly. 475. ]| AKUrrUATION AM) AWAIU). tirs iiuiv -m.-nillv s.lc.-t. :il ili.-ir i>\^\um, cilli.T tli.> stalutory or tho vi.umn.n law ukmIc; and if tlu- suhiuissicu, protccdin^'s. and award ;uv .^un'uirut wlu'U l.sl.'d hv the nil.-s ..f the conunon law, althou-ih not in (•(.nfonnily with Ww sialulc. ihc award will !..■ -ivcn clTcct ;is a »oniin..M law award/" \U\{ wh.'ic it dearly ai.itcars that a statutory ailiilration was intended, the submission and i)roceedinjj;s \\ill -.■net-ally he jnd^'ed hy the statute; and any siihstantial i\e- jiarture ffoin its iH)sitivc' f.iiuirenienis will be fatal to the validity ttf the awanl/^ REVOCATION. 6. Either party may revoke the submission at any time before the award is made. The revocation may be— (^a) Express, either oral or written, as corresponds to the submission; or (b) Implied from circumstances, or the acts or condition of the parties. Exprcj"< W.'iiiz V. Diipler, 17 ill. HI; Cc<'ilic form of words is ro(|uii('d. Any words wliich, when lilicfally cou- siinrd. «lis(los«' an inimiion to icxoki- the jiowii- of ilio arbitratois, u ill 111- lu'ld sullitii-nt.''- Iinplicd Jxccocdtioii. A rt'vocation icsidls liy iinjilitaiioii or opi-ration of law from any ai-t or fii-c-unislau(.-f wliith n-udt'rs llic conliiiuanee of llie proceed- ings le^^ally or aelually impossible. Tims, unless The submission provides aj,'ainst sueli a eontin^icmy, the death of au arbitrator/^ or of a party.'' tir tlio rol'iisal of an arbiiiator to proceed/'^ or the iuarriaj,'e ; Carey v. Coininissiouers, I'J Oiiio. 1'4.">; Slu-.i.vcr V. Ha.sli, .".7 Iu. i-a Sutton V. Tyrrell, 10 Vt. 'Jl; I'otter v Stern it. i:4 I'a. St. 411. ■-•* liailey V. Stewart, :; Watis tV S. (I'a.i .".(in; I'ower v. Power, 7 W.ilts I I'a.) 20.".; (;n';.'ory v. Trust Co., 'M FeU. 40S; TyK-r \. .Jones, 3 Karii. A: C. 144; Ty.sou v. IJoitinsoii, :! Ired. ; Crawshay v. ('olliiis. ;'. Swaiist. :mi; Ciiap- nian v. Seecomb, 3i! .Me. KrJ. i"5<'oiii. I)i;j. "Arbitrament." 1 », .'.; Ch;nnh-y v. Wiiisi.inley, ') Fast, 'JtHi; Siiiiuii V. Tyrrell, lo \l. '.»1 ; .\biiolt v. K<-itli. It \\. .'.•J.".. KM'etiTs' Adm'r v. rinlir, <; I>aii!i (Ky.i ;;(i7; I'liulsi-n v. M.-iiiske, 21 III. App. 'Jo; Klmlmll v, Cilm.in, (JO N. U. :.l. IJul sec Sutton v. Tyrndl, lo Vt. •Jl. IMIOCKEDINGS. 17 have tliat cffccf.'"^ nor doc-^ Ihc d.-nili of a [Kiily wli.-if llic siih- mission has been made a rule (if ((nirM/'" PROCEEDINGS. 7. The mode of conducting the reference is left lar(?ely to the discretion of the arbitrators, subject to the re- quirement that all proceedings shall be fair and just to both parties. The following are essential features : (a) Notice of the meetings of the arbitrators for the hearing of evidence must be given to each party, unless waived. (b) Each party must be given an opportunity to present evidence and argument in support of his own case, and to be present w^hen his opponent is heard. (c) All competent and material evidence offered by either party should be heard; but it is for the arbitrators to determine its competency or materiality, (d.) The arbitrators must act jointly and in person at every stage of the proceedings, unless otherwise provided by the submission. (e) All proceedings must end with the making of the aw^ard. As to the proceedings generally in a common-law arbitration the law prescribes no formality. If the investigation is conducted fully, fairly, and without prejudice, the arbitrator may select his own method. The essential features of the proceedings as above out- lined need but little explanation. A hearing is indispensable un- less waived, and an award made from the arbitratm-s' personal knowledge or ex parte investigation of the case is void.""' Each 88 Andrews v. ralmcr, 4 Barn. & Aid. 250; Snook v. Hollyor. 2 Chit. 4.'}. 00 Bacon v. Crandon, 15 Pick. (.Mass.) 79; Freeborn v. Dennian. S X. J. Law, 116; Moore v. Webb, 6 Heisk. (Tonn.) 301. See, also, Bash v. Christian^ 77 Ind. 290. 100 Billings v. Billings. 110 Mass. 225; Wiberly v. Matthews. 91 N. Y. (WS; Hartford Fire Ins. Co. v. Bonner Meic.iutile Co.. 44 Fed. l.'.l. Waiver of ARB. & AWARD— 2 > MUirrU V I 1<»N AM) AWAHD. i»;mM\ iv ••iitiil<"l i<» iiiiii.f (if ilu' tiiiK' Mini itlmc (if the hearing'; i\\n\ (iiiiih-stoii III ;;i\f ii. if imt \v;ii\ cd.'" is f;it;il iti I lie award.""' lint uotitM" nri'd iiol !«• ;;ivrii cif iiicfliii;,'s df the ai liii i aims (itlwr than tluisr for iIm- licarin;; of cvidciuM'.'"'' Tlir luarinu mnsi lie in tin- iufscncr (if Imili paiiics nnlcss lliis ii;.'ln is \\ai\<(l."" 'I'lu' t'Xaniinalitin of a uinnss in ilu- absence of a pail.v, and willioiit hS kno\vIed;,'e an«l conseni. or I lie receiilion of informal ion fi-oni one of the paities in ilie aliseiice of the oilier,'"' is >-n(li an in-e^- ciiariiv as \\ill invaii A: S. U. r.i. v Alfrt-d. 3 111. Apii. .'ill; Stiockcy's Adiirr v. Glas- fonl. t; I>ana (Ky.) It; Madisini lius. Co. v. Crittin, 'd lud. L'TT; Kane v. City of r.iiul du Lac. 4n Wis. 41»r.; Tike v. Stallin;,'s, 71 (Ja. SCO. And a waiver of ii.itlcc will not be readily prcsuincd from the conduct of the parties, especial- ly when there Is evidence which prevents the court frouj iiidulu'lnj; pre- siniiptions wliolly In favor of the award.. Warren v. 'J insley. ;; ('. ('. A. tii:'., M Fed. tiS'X loa Khneiidorf v. Harris, li."! Wend. f.JN; Crimes v. Brown. 11.'. N. C. l.">4. is S. K. ST: Snmll v. Courtney, 1 Hrev. (S. C.» U05; Thornton v. Chapman. 2 Cninch. C. C. *J44. Fed. Ca.s. No. VS.'Ml; Walker v. Walker, 28 (hi. 14m: Fal- coner v. .Mont^,'onle^y, 4 I>all. 232; luyraham \. Whitmore. To 111. 21: Ki;,'den V. .Martin. ,'iv.M. even thouu'h the sub- mlssli n Ik Kllent as to notice. Slilvely v. Knoblock. M Ind. App. A'X\. 'ATt N. i:. 1U2X. Hut where a party, kimwiim that the referee. witho\it ;:iviii;,' notice t<» lilni. has made an e.x parte investiuatiou of the case, allows the hearing to j.r"'■ In n- CreKKon. !'• Coke. 408. «"« hiKnihiim v. Whitmore. 7r» III. 21; KImetido.-f v. II:irris. 2.'? Wi-iid. (.\. Y.J C2H: Lutx V. Mnlhlcum. S Tel. 17S; Ilairner v. .Mus;:nive. 1 D.ill. s:\: ' Itaplla T. Klrwan. 1 Pall. 20i: MuIIIim v. .Xiiiuid, j .si 1 (Temi.i 2t!2: Mc Klnney v. FaKe. .'12 .Me. .'!.'{. Hut It Ih ii" iibjictini, ihril the :irbiir!itiirs took ndvlee relative to the ({UeHtlonH before them If they decided on their OWU ;udtrnHMit. Klmoim v. MIIIm. HO Cal. lis. 22 l'a( 2V PKOCKKOINGS, 19 111" cN idciicc, tlif ;iil»ilr:il(ir is iioi IhiiiihI \,y the sliiii rules of law. lie iiiiiv cxMiiiiiH' wiliirssH-s ill I cifsi «m| ill (lie fvi'iit of ihi' hiiii. ami \\\\(t would be inc. and casj's hi preced- ing note. Where parties are selected as arbitrators Iteeause of tlu-ir special knowledge of the matter in controver-sy, and it is apparent that the parties intended to rely on that knowledge, the arbitrators may be jnstifled in refus- ing to hear evidence. Hall v. Norwalk Fire Ins. Co.. 57 Conn. 105. 17 Atl. 35(5. 110 Hall v. Lawrence, 4 Term R. aSlt; Maynard v. Frederi<'k. 7 Cusli. (Mass.) 247; Fox v. Hazelton, 10 Pick. (Mass.) 27."); I'atten v. Iliumewell, 8 tJreenl. (Me.) 19; Woodrow v. O'Conner, 28 Vt. 770; Greer v. Cantield, 38 Neb. 1«S). 56 N,W. 88.3; Terry v. Moore (Com. PI.) 22 N. Y. Siipp. 7S.": Cochran v. Bartle. 91 Mo. 030, 3 S. W. 8.>4. HI Kankakee & S. W. R. Co. v. Alfred, :\ 111. App. .")11; Katt v. Insumucc Co., 20 Hun (N. Y.) 429; Payne v. Crawford (Ala.) 10 Snutli. Oil. 112 Taylor v. Towing Co., 25 III. App. .'lOa; Id.. 120 111. 2ro. is N. K. tun; Thompson v. Mitcliell, 3."i Me. 2S1; Carpenter v. WoikI. 1 Mete (.Mass.) 409; Smith V. Smith. 2S 111. 50; Maynard v. Frederick, 7 Cush. 247; Uurriii v. Norton, 7 Wend. .")34. 20 AKHITUATlnN AND AUAUD. :illliou;:h it !'<• si iiiiil;il««i lli;il a iniijorily iii:iv innlvc llir iiwiird."^ Hut il is hrhl Jhat in lUr laMfi- lasc. if oiif nf the arliitiatoi-s rc- fiisr to act. tln' Dtlit'i's have imwcr tn tnak<' a \alitl award."* l-lach arliitrator must ad in jicison. lie laiiimi dilruair liis aiiilioiitv without foiisciil of all till- parties to llic suliinissioii."" As the aiutlioiity of the arbilraiois nids with the iiiakiu;; and imliiical ion of tin- award, aii.v pi-»M«cdiiius tlinraflor ai-c a tiullilv. Tlioy have tin 11 II o |i(»wt'i' to hraf flirt licr r\ idriHc. fccoiisidi'f any drridi d poiiil. or rvon to chanjn' ilu- award fof llu- purpose of ((Uicetini; a uiati*- rial eiror."* AWARD. 8. Tlie award is the expressed decision of the arbitrators on the questions submitted. To be valid, it must be— (a) Co-extensive with the submission. (bj Certain to a common intent. (c) Possible and reasonable. (d) Final and conclusive. Tlie teiiii "award" is used to desi<:iiate the decision of tlu' ai'bi- trators without regard lo the foim in whieh it is expressed; it is >>»K<'nt V. rrcncli. 7t; I<>\v:i. isT, 40 N. W. 71.".; Ddlu-rty v. DolnTty, 148 .M.ifw. :nn. 19 N. K. :i'>2. i«« Kile V. Chnpin. In«l. ino. JiaMcirsc. Arlt. 1<;<;; Unss. Arh. I'.is; Wii;,'lit v. Miver I'l'cx. Civ. Aitlt.i -."> .<. W. H'JJ. >>•> H.'iyiu' V. Morris. 1 Wall. HT: I>u; Thf'iiipsnii v. Mltcln-ll. ;5.". .Mi>. L'SI ; Wdodluuy v. Nnrlliy. ."{ tJnMMil. (.Ml'.) ST.; I>; Ilo;c«TH V. CorrotlitTH. L'«; W. Va. 'J.'JS; Ilcrltst v. Ha;:(iia»Ts, 1.'17 .\. V. IHHi. Xi N. K. mr,; Kljiiuifry v. Sahnyian. l.'.l N. V. s.'., .'.l N. K. :nu. Mm a niiTf ili-rh-nl iTr«»r of oiiiIshIom. not afTi'-. (t(MM|c|l V. Uuyiiioiiii. '_'7 Vt. I'll. An awanl made .Kconlln;; to thf> trrtnM of tlH> HuliiiilKKJori Ik not rciulcn-d Invalid by a sn|)|iii'iii<'iii:il .iward whifh In not witliln tin- terms of the Hnbinlsslon. IJldy's V.x'v v. .Ncnilmp iKy.i ISJ 8. \\. 3o3. A\VAIU». 21 also used ill ;i iiKiic spicilic Nciisc ;i.s rcfcnin;,' In the iiislniiiii'Mt cimlaiiiin^ tli:it (icrisimi wlnn pui into wriliii;,'." • ( H-nrty Trlut- ing Co. V. Recamier Mauuf'g Co., 15 N. Y. St. Rep. 3r>4; rhill)rick v. Preble, 18 Me. 2'>o\ Slielton v. Aleox, 11 Conn. 239; Smith v. Dou^'la.ss, lU 111. 34; Gay V. Waltiuau. 8!) Pa. St. 453; Joue.s v. Dewey, 17 N. H. .j'JG. A parol award is not vitiated by a subsequent ineffectual attempt to reduce It to writing. Dounell v. Lee, 58 Mo. App. 288. 110 Morse, Arb. 2."iG; White v. Fox, 29 Conn. 57(1; (Joodcil v. Kayuiond, 27 Vt. 241; Marsli v. Packer, 20 Vt. 198; Crabtree v. Grceu, 8 Ga. s. 120 I'hilbrick v. IMclile, 18 Me. 2.55; Evans v. McKinsey. Litt. Sel. Cas. (Ky.i 2G2; McManus v. McCulloch, G Watts (Pa.) 357; Darby's Lessee v. Russell, 5 Hayw. (Touu.) 139. 121 Morse, Arb. 257: Pratt v. Ilackott, G Johns. (N. Y.) 14; Stanton v. Henry, 11 Johns. (N. Y.) 133; Kloomer v. Sherman, 5 Paige (N. Y.) 575; Cald'^ well V. Dickinson, 13 Gray (Mass.) .•'.G5; Allen v. Galpin, 9 Harb. (N. Y.) 24(!: Nowiiian v. Laboaume. 9 Mo. 30. Rut such stipulations may bo waived. Tu- dor v. Scovell. 20 N. IL 174. An award valid in other respects is not invalid because not made under seal, though recpiired by the submission to be so made. Matlicws v. Miller. 25 W. \:\. S17. 122 Kinford v. Xy(\ 2(i Vt. 132; Coxe v. Lundy, 1 N. J. Law. 2.55; (Jrier v. Grier, 1 Dall. 171: Innes v. Miller, Id. 18S; Gonsales v. Deavens, 2 Yeatcs (Pa.) 5;!9: Joy V. Simpson, 2 X. IL 179. 123 Morse, Arb. 252: Adams v. Adams. 2 Mr.d. ir.ii; Mir)onald v. Anmut. 14 111. .58; Lewis y. Rurj;oss, 5 Gill uMd.) 129; Kmss v. W.itl, IG 111. 99; Dibblce V. Best, 11 Johns. 103. 22 AunnuATi<»N and award. fnun ilifir |»rotuis«' tn ili;it s.-Iv or liv nrccssiirv iniiilication. :ili llif iiiattorH suhiiiittfd ami actuallv picsoiitrd at tin- lu-ariiij;.'-' il is void;'-" and if it intluinitt»'d it will at It-ast Iw void as to tlii-ni; and, nnlcss the nnantlnM-i/rd i>art can Im- s<'|ia!ai«d from iId- rt'st. the wholf ninsl fall.'-' r.nl in sniiimit of lii.- award il will Itf itrrsanu'd. until the contraiy is shown, that the terms of lli«' submission have Uwu follows*!, and that all matlci-s ariually prt'- sont.-d wiTo dftfrniim'd.'^* That ihr awaid is co = iTli;it till* iirliltrattirs are IkiuikI to pass upon only tlio niattfrs actually pn*.M'iile«I at the liwirlnK. see Jones v. Wi-hvood, 71 N. V. Uos; Hostou & L. U. Con>. V. Nashua & L. U. Coq).. l.Ut Mass. 4U5, .Il N. K. 7."il; Ta^e v. Foster, 7 .N. II. •i'S2: liallauce v. Indeihill, 3 Scam. (111.) 4.')3; Whetstone v. Thomas, 'J-'i 111. .''.•".l ; Ott v. Scliroeiipel. ."> N. Y. 4s_': Warlh-ld v. 1 l.illti'ook, 20 rick. .'..n. i2« Hradford v. Hrvaii. Willes, •Jf.S; Wii::lii v. \Vii;:lit. .". Cow. (N. Y.) 107; Sherfy v. (Jniluim. 7l' 111. ir.s; Hewitt v. I'uiinaii. U; Sei;:. A: K. (Ta.) i;^."); CanuKhan v. Christie. 11 Wheat. 4n;: Marker v. Ihmu'li. T N. .1. Law. 428; Sci' Ilamlltou V. Hart, 12.-. Pa. St. 142. 17 -Ml. 2-Ji;. 17;;: Waters v. Hrld«e, Cro. Jac. «k{«»; Lee v. Klkius, 12 .Mod. .-,s7: Hill v. Tiioni, 2 M.mI. :!0'.t; Peters V. Pelrce, S .Mass. ;V.t!»; Culver v. .\shley, 17 Pick. (Mas.s.) 'JS; Lorey v. I^orey, 1 .Mo. App. Kep'r. 1S'.»; Thrasher v. Haynes. 2 .\. H. 4211; Leslie v. Leslie, !")2 N. J. Kq. ;i:52. :n Atl. 724;Sawtells v. Ho\var:>: Wiiite v. Arthur, .V.» Cal. :W; .Melirlde V. Hak'cii, 1 Wend. (.\. Y.i :t2i;; Cl« iiieiit v. Dur^'iu. 1 Creenl. (.Me.) :WHJ; Cox V. Jak'Uer, 2 Cow. (.\. Y.» t'^js; Conner v. James, 2 Swan (Tetut.) 21.3; Lynch v. Nuu-ent, S<) Iowa, 422, 4<; .\. W. (51; Phllbrlek v. Preble. IS Me. 2.'.1: Walker V. Merrill. 13 .Me. 17:;; Hill v. Tliorn. 2 .M..d. :io'.t. «J»SiM'rry v. Uh-ker, 4 Alien iMass.i 17; Call v. Hall;ird. (».") Wis. 1S7, 2i! .\. W. .VIT; Ji.neM V. Welw I, 71 N. Y. 2i>S; Darsf v. Collli-r. si; III. '.id: K.-irfh- nuN V. Ferrer. 1 Pet. 222: Harris v. Wilson. 1 W.iid. (N. Y.i .■.11: <»tt v. SehnM'piM'l. r> N. Y. 4S'J; Tallman v. Tallman, 7> Cush. t.Ma.s.s.) ;{:.',->: Yo\m« v. Kliiiu'V. 4.S VI. 22; I-'imphlre v. Cowan. :tn VI. I2(»; Solomons v. .M«Klnstry. 1.', .1. liiiK. (N. Y.> 27; Joy v. Simpson. 2 N. H. 17'.i; Clement v. Comstock. 2 Ml'li. .''..'>'.»; iladawny v. Kelly. 7S III. 2.S«5. One who h.-is lU-cepted the lnMiellts of the award Im putnpped to nlijeci to Us validity on the Ki-onnd ili.it it did not • uihrace nil niatlern nulimlttcMl. (Jriinmett v. Sndtli, 42 111. .\pii. .■>77. .\ party AW. MM). J., Ilic siilmiission iiiny iippcjir \>\ iiii|ili<;itiiiii.''"'' Tlif rule in<-aHiir- in^' llic scope (if tlic ii\v;ii(l hy III.- siihiiiissiiiii applifs lo Ihthoum as well as tS; Adams v. Stratham. 2 Lev. li:;.'.; Tliirsl.y v. Ilclliont, .'{ .Mod. 1172; Martin v. Williams, i;? .loliiis. i.\. V.i lir,4: <"liapiiian v. Champion. 2 Day (Conn.) lol; Wyatt v. Heiistiu. •_'.•> Uarh. t.X. Y.i :',-~; Ctilliiis v. I-n-.-is, 77 Ta. St. 411:]. 131 Caltlw. Arl). L'L'S: Snonk v. Ilcilycr, L' Cliit. 41!; Hinl v. Bird. 1 Salk. 74. 132 Beckett v. Taylor, 1 Mod. i»; Bird v. Bird, 1 S.ilk. 74: Boston v. Brazcr. 11 Mass. 447; Lainjihire v. Cowan. .'V.t Vt. 4liti. 133 BiatUty v. Clyston, Cro. Car. ."41. 134 Buss. Arb. I'.sc; Infrraliam v. Whit more, 7."> 111. I'l; Hawkins v. Col- clouph. 1 Burrows. 27.j; Purtly v. Dclavan. 1 Caines (N. Y.) 304; McDonald V. Baeon, 3 Seam. (111.) 4;;l; Waite v. Barry. 12 Wend. iN. Y.i 377; Akfly v. Akely, K! Vt. 4."0; Woodward v. At water. 3 Iowa. ; White v. Jones, S ■J 1 ARHITIIATION .\M> AWAliH. jiwartl ils«'lf."' 'I'rcliniral int'cisiuii is not n'i|iiirt'il. Tin' f:i(l tliiit llif :i\v;ir«l is coiMlilioiKil.' " «ti- in (he allmial i\ r,' ' does iiui ikm-cs- snrily niidcr it v»»i»l for umrrtiiiniy. Tin- lliiiiLT ;i\\ ;ii dill to lie lioiii- iiiiisl also In- |M»ssili|i'.' '" IJiil if it is ill its iiatniT ju»ssili|r. a suliscinu'iit iiii|utssiliilit v cn-aii'd by ilic jKirly liiuisrlf will not atTrct its validity.'*' Tlu' award slundd hi' r«'as Alien (Mass.) .">(;(!; Macon v. Ounip. 1 Call (Va.) .".7.".: Heiison V. Wliite. lol Mass. -IS; Waite v. Barry. V2 Weiid. iN. Y.t 377, An award which is sntlicieiilly detinite to lu' oblijratory as a coiuract is sutfl- cteiitly c«'rtaln as an awanl. Hush v. Davis. :\4 Midi. I'.Mi; Punly v. Delavan, 1 t'alnes (X. Y.) .'i(>4: ("lenient v. ("onisiock. '2 .Mifiir. is void for uncertainty as to the kind of security reipiired. .Tackson v. De Lon«, fi .loluiH. (\. Y.) 4.'{. An award that a ci'rtain sum "was due on the ."id of -M.irch IjiKt. with Interest on the same." the date nanu'd l)ein>r several months In-fore the nieetiti;; of the refi-rees. is l>;id fur unecrta inty. Youii;,' v. Kciihen, 1 I •.ill. ll'.l. ' Steph. .\. 1". IIS; I'ursi-r v. I'n.wd, ( ro. .I:ic. VS.',; Linlirl.l v. I'eriic. .'] L. V. l**. n» I^-e v. Klkins. Il' .Mi«l. .'s.-,; Wiiarli.n v. Kiim. L' Mani. A: .\d.il. .M.'S; Thorn- ton V. CiirMuii, 7 CniiK-h. .'iIh;; .Mcl)i>nald v. Arnoiii. 11 111. ."iS. •• • ? I'nn«. r'ont. <2M: Lee v. KIklns, 12 Mod. r.s.".. ' Ml. DIu, "Arltltranieiit." i;. pj; 2 Pars. ('out. d'.tl. " Holle. Aril. F. 1; Caldw Arb. •_'."«; 1 .^tei>li. N. I*. IJ.".; 'J P.irs. font. •',;>.". •> WiMid V. (Jrlltllh. 1 .SwniiHt. A'A; Ilrown v. Hn.wii. 1 \"«rn. I.'i7: Walli-r v. Klnjf. II Moil. rtl: IVrkluij v. Glle8, n.'l llarb. (.\. Y.j ;UJ; .'ind authorities cited In pnvfHilni; uolc. AWAItli. iKil liccoiiic the sill)j('c| (if l'iiMi|-i- lit i;,';il iuii.' ** All ;i\v;ir(| is tili:il when iiotliiii;,^ more Iliaii iinTc iiiiiiisiciiul ;i('ls icnijiiii tn !»<• done to lix llir fi^lits and (ihli;,r;,ii,j„H ,,f i),,. j,;ii'li»'s as to tin- inallciH in <-liiany. I'J Wend. (X. Y.i .'377; Inj:r.iliain v. Whitmoro. 7.') 111. tlA; ruiily V. Dclavau. 1 Caiiu's (X. Y.) 304; Carnndiaii v. Christie, 11 Wheat. 44G. KsColcord V. Fletcher, aO Me. 398; Liiicdlii v. Whitteiunn Mills. IJ Mete. ".•.">. H' Munro v. Alaire, 2 Caines (X. Y.) 320; Kuiitkle v. Kunckle, 1 Dall. 304. And au award that oue party shall pay to the other a spec-ilh- sum is final without a release. Byers v. Van Deusen, ."> ^Vend. (N. Y.) 2; Eokersley v. B Reports. 827. [ISIM] 2 2G AKniTUATIii.N ANI> AWAItP. SAME IMPEACHMENT. 9. Tlie award may be impeached for — [jBL) Insufficiency. (b) IrroR-alarity in the proceedings. (C) Mistake of law or fact apparent on its face. (d) Misconduct of the arbitrators. (e) Fraud of the parties in procuring it. ll lias Imtii st><'ii ill tlif pircriliii^^ scclidii ilial if the a\v:ir»l is insutllcifnt — thai is. larlxinu in any of the i (•(•«. uiii/rd cssmiials ; iniil;:iii!iii v. Hriiluiiuin, L'.l .Mo. '_'7_': Henick v. lUnlr. 1 JoluiH. Ch. iS. Y.) lol; PeikliiH v. Clh's, :..'{ Harh. (N. Y.) MJ; Peiidiy V. IlUchlo, 4 Col. 2(*5; McCnlmont v. WJiltaker, :{ Uawle d'a.) St. One Hcek- Ujk to wt nni«!e un awnni on the uround of nil.stake must show that if the iiii«tak«' lin«l not (uenrred ihi- award would have been dllTereiil. tjnrliion v. .Millard. .V» Iowa. .'..'.»; Tank v. Itidiwcdt-r (lowai f,7 N W. Km;. AW AIM) IMl'KArllMKNT. 'J7 (loos nol ('.\i»rcss tlir Inn' Jiid-mriit (,f the ;iiliii riilctrw. TIiim K;iiiHf l)rincij>lc ;i|)|iliis to iiiislakcs nl l.iw in cikck wlinc the whole mat- lor ol" law and I'acl is siiliinii hd. An f-r-i-oncuns asNiiinpiiiin <»f what tho law is, if ajipaii ni nn I \\r I'arr d iIm- awaid. may !».• j,'iMiin-l foi- sfllin;;- il aside; l.nl. il tiic aihii i alur lias cxiM-cisiMJ iiis jn i nicnl as to tin- law, it is concinsiN «•, ilion;^li it he cnoncoiis.' ■ 'j'lic award may also lie im|H'a(licd fm- miscondint on the |»arl of ilw arbili-aloi-s wliicii is ]»i<'sninalily prcjudiiial ton a prior submission «if the same mat- ter,' "' is «,M-oiind for sottin*,' asido hin award. I-^aiid l.y the par ties in obtainin«jf tho award may also romh-r it invalid.' " I'.iii in all thoso casos tho ground of impoachmont must he sultstantial. prejudicial to tho pjirty urging it, and not tho rosult of his own mis 152 Smith V. Thoriulilvf, 8 Grconl. (Mc.) 119; Boston Watcr-rowi-r Co. v. (Jray. G Mote. (Mass.) 131; Ilalstead v. Seaman. 51' How. I'rac. (N. Y.) 41.".; Ilall V. Insiirauce Co., 57 Coun. K)."). 17 Atl. S.KJ; Goddard v. Kin;;. 40 .Minn. KM, 41 \. W. (mO; Swasej- v. Laycock, 1 Handy (Oliio) :{;{4; .Toix's v. U«»ston Mill Coip.. (1 ri( k. (Mass.) 14S; Bell v. Price. L'2 N. .J. I^w, r.7s; May v. Miller. 59 Vt. 577, 7 Atl. SIS. 163 stion;; v. Strong'. 1> Cusli. (.Mass.i .".(11; Hand v. HediiiKtou, i:5 N. H. 72; Bash V. Christian, 77 Ind. L".k). The fact that one of the arbitrators, dnrinj; the lieariii};. remained at the liouse of the successful parly sevonil nights, partakiiis of his hospitality, and that auother of them dined at an hotel at his expense, is suttieieut evidence of misconduct to warraut settiug aside the award. Robinson v. Siianks, 118 Ind. 125, 20 N. E. 713. 1S4 Smith V. Smith. 2s ill. r,G. See. also. White v. Uobinson. r^) m. 4'.>'.i. iBoBoattie v. Hilliard, .").". \. H. 42s. iSnt see Murville v. American Tra<'t Soc, 12.S Mass. 129. 150 Moshier v. Shear, lo2 III. 1G9. But the fact that one selected as an arbitrator had. five years iK'fure. expressed an opinion on the subject of dis- pute unfavorable to one of the parties, did not render him ineompetent. Brush V. Fisher, 70 Mich. 409. 38 N. W. 44(1. 167 2 Pars. Cont. 707; Morse. Art). 54(t; Stockinn C.imtdned Harv. >:cr j^ A;,M icultural Wurks v. Insurance Co., 9S Cal. 557, l\^\ Pae. G33. 2*^ AUIUTKATION AM) AWAUH. I'oiulurt."^" Tho |trtsiiiiii»iieaclied, suit can be niainiained only for its enforcement, and not on the original cause t»f action. Unless the award expressly i-rovidcs that it shall have a temiK)rary elTect only,"" it binds the rights of the jiarties for all time, without the right of appeal.'"- It may be used iu evi- dtnce,*®' or as a defense or bar to a subsequent suit,"^* or it may be »-sHoKt*i-s V. ConotluMs. L'C W. Va. L'.'is; Tlujiiiiisou v. IJluDchard, 2 Iowa. 44; Davy v. Faw. 7 Craiuli, 171; roinroy v. Kibbee. 2 Root (Conn.) 92; Tmii- linsou V. Hauunoud, 8 Iowa, 40; Daniels v. Willis, 7 Minn. 374 (Gil. 205); Mc- Kiiniey v. Newcdiiib, 5 Cow. (N. Y.) 42.j; Kimball v. Walker, 30 111. 4S2; riuminer v. Sanders. ."..- X. II. 23; Steams v. Cope, 109 111. 340; Steere v. BrowucU, 113 111. 415; Kartliaus v. Ferrer, 1 Pet. 222; Beam v, Macomber, 33 MIeh. 127. .Mere irre;;ularity without fraud will nut invalidate the award. Golder v. .Mueller. 22 111. Ajip. .".27. 150 Kartliaus v. Ferrer. 1 Tet. 222; Ott v. Sclinieppel. 5 N. Y. 482; Merritt v. Merritt. 11 111. ."»(>5; Strong; v. Strouj:, 9 Gush. (Mass.) 500; Y'oun:; v. Kinney, 48 Vt. 22: Hush v. Davis, .U Mich. 190; Clement v. Comstoclc, 2 Mich. 359; McDonald v. Arnout, 14 111. .58; Liverpool & Loudon & Globe lus. Co. v. Goehrlujr. !«> Va. St. 1.3. 10" Varney v. Brewster, 1 J N. 11. I'.i; Tevis' Ex'r v. Tevis' Ex'r, 4 T. B. Mou. «i See Kuss. Aril. 51 1. >«2 Whltelie.-id V. 'I'attei-sall. 1 Ado!. A: K. I'.H : .Mcni|iliis & C. K. Co. v. Senm«H. 50 .Miss. 2.S1; Ulcliard.sou v. Lauiiiiif,'. 2i; X. .1. Law. i:50; Ko-ers v. Ilolden, 13 III. 29.3; Stevenson v. Beeeher. 1 .lolnis. (X. Y.) 4'.t2; .\l»lu)tt v. KeJtIi, 11 Vt. .525; .Miller v. \'au«lian, 1 .lolms. (X. V.i .■;15; Morse v. I'.islinp, .55 Vt. irn. >•■•» UusH. Arb. .5.55; Sylway v. Wliitc, 1 Meos. iK: W. 4;'.5; Wliileliead v. Tat- lerwill, 1 Adol. & K. 491; Moore v. Helms, 74 Ala. ."{(IS. »«♦ Bnizill V. iHlinni, 12 N. Y. 9: Jessimau v. Iron Co., 1 X. H. r.s; (.)wcu3 A \v.\ lU) — knk()I{(;i:mknt. 20 enforced by an action at law or in (•(piji \ ; '"■• Imt in •iili.-r ciisc it operates onl}' between llic iiaitics, and, as a general iiilc. it can neither be used by nor aj^ainst a slrant^cr.""' As to (pn's tions alTectinjj^ real estate, it o[)('rates by way of csIoiiimI only; ii cannot pass title/"'' 11' olTci-cd in cn idein'c, or on mot ion for jud;^- nient upon it, the adverse paity may usually present evidenee to impeach its validity;^"* but until this has been successfully done it remains in all respects conclusive as between the parties. SAME— ENFORCEMENT. 11. The award may be enforced by — (a) Suit for specific performance. (b) Suit at law on the award. (c) Suit on the arbitration bond; or, where provided by statute, by (d) Entry of judgment on the award, enforceable as other judgments, by execution or attachment. The award, itself, and not the submission, is the proper founda- tion of an action for the enforcement of its provisions.^ "^^ If the terms of the submission require that the award shall be published, the action Avill not lie until after publication.^^" Generally, e(]uity will enforce specific performance of the award where the thing it ordei-s V. Boerum, 23 Barb. (N. Y.) 187; Preston v. Whitcoinl), 11 Vt. 47; Halt.-s v. Machine Works, 120 lud. 185, 28 N. E. 31'J; Kiloy v. Hicks, 81 Ga. 2t;.".. 7 S. E. 173. lee See "Enforcement," p. 29. 1G6 Morse, Arb. 519; Russ. Arb. 521; Thompson v. Noel. 1 Atk. (V). 1C7 Henry v. Kirwan, 9 Ir. C. L. 459; Smalley v. Ilaih-oad Co.. 2 Hurl. A: N. 158; Slu'lton v. Alcox, 11 Conn. 240; Cox v. Ja^'ger, 2 Cow. (N. Y.) (W8; Whit- ney V. Holmes, 15 Mass. 152; Shepard v. Kyers, 15 .Johns. (N. Y.) 497. 168 Ingram v. Milnes, 8 East, 445; Robertson v. Wells, 28 Miss. 9it; R.lyca v. Ramsay, 2 Wend. (X. Y.) G02; Hinklo v. Hanis. ;'.4 Mo. App. 22:;; 'IVnnant V. Devine, 24 W. Ya. 387. iGoRank V. Hill. 2 Watts cV: S. (Pa.) 5(>: West v. Stanley. 1 Hill (N. Y.i ••.'... See, also, Hodsden v. Harridge, 2 Sanud. (Ub. i"o Varney v. Brewster, 14 N. H. 49; Kingsley v. Bill, 9 Mass. 198; Parsons V. Aldrich, G N. H. 204 •30 AKIIIIK \TI(»N AM) AWAIiH. lo In- »lIlowin^ tlu' ;;«'iu'ral luinciiiics (»f ((iiiilv. tlMMcforc, an action for sjK'ciflc iMTfimnancc will not lie ulicic (luic is an adc- (|iiatt' rmictlv at law,'"- or wIkic the paiMv scckiii;^ llio aid of tin? court has not |icrforin»'d on liis part, oi' Ity his laches or othciwisc has pfcjudicid the li^dits of the olhei- parly.'"' The award may also he enforretl hy a suit at law appropriate to the iialiii'e of the snlmiission or the thin;; awarded; as by an ad ion of ( mciiaiit where the snlttnissiitn is hy deed,'"* or an action of the ddii where the award directs the payment of a snm of money/"'' or an action on llie ca.«<<- where the default in perf(Uiuance has resulted in an injury to the propj-rty of tin.- other parly,'"" or an action of assumpsit };en- erally, where the siihmissi(ui is not under seal.'" l>efanlt in i>er- fornianee also j;ives a ri^ht of aciiiui on the arhitratiou bond, >•> Kuss. Aril. i\i'>:\; Wiihcrs v. Morgan. L' (<>x. ("Ii. .'jr.'.t; Jouos v. Mill €on».. 4 IMik. (Mass.) r^i7: Wddd v. SlM'phcnl. li Tut. \ II. (Va.) 442; liurke V. rjirkc. .-. W. Vn. ll-'J; McNear v. Bailey, is Me. li.'il: Halhuue v. Inder- liill. .{ .Scaiu. (111.) 4:):i: McNeil v. Matreo. .". .Mason. 1^4 1. Fed. Cas. No. S,'J15; i'erkins V. (Jlles, Ki Barb. (N. Y.) .'U:.'; Caldwell v. Dickiiismi, 13 (Jray, 305; Smith V. .'"Jinitli, 4 Iljiud. (Va.) U.'.. i"2 Huss. Arl). r»(h5; Wallers v. .Mi»r;.';iii, •_' Cox. Cli. .■•.•;;•; Smith v. Smith, 4 Itaiid. (Va.) 'Xi; Caniiady v. Roberts, f. Ind. Ij). iN. C.i IJJ; .Memi)his & <". IC. Cn. V. SeruKHS, .")() Miss. 'JM; .Tones v. .Mill C..ri)., 4 \'Uk. (M:iss.) r>(>7; .McN.ar v. Bailey, IS Mo. 2."il; .McNeil v. .Mm;.-.-.-, .". .Mason, :i44. Fed. Cas. No. 8.l>lo. >•» Morse, Arb. ('i04: .McNeil v. .Ma-ee. .'i .Mason. Jtl, Vv^. Cas. .No. S.; Blackett V. Bates, 3.". Ijiw J. Cli. 3J4; lOads v. Williams, 21 Law .1. Cli. 'uU. >7«ciiarnley v. Wlnstanley, .". i;ast, •_'»»(•,; M.iisli v. Hultts-l, .". I'.arn. A: .\ld. '•••WliiliT V. White, ;i Moore. «;71; Feirer v. Oven. 7 Barn. & C. 4L>7; itainiiloii V. Boyer. Cro. ICliz. .".'i7; .McKinstry v. Solomons. 'J .lolins. (.\. Y.) r.7; Uiddell V. Sutton. .". Biritf. 1!00; .MrNear v. Balhy. is Me. j.M ; Willi.ims V. raHchnll. 4 Dnll. 2X1; B««aii v. Farnam. (i Tick. L't;s; Webl. v. /ijiei-, 70 Ind. lOS; «:rim.'H v. Seeley, S Ind. L'tU. >'«HluiriK' V. II.'UK'ock. 7 .Man. A: <;. ;!.">l. «Ti KiiHH. Arb. .Vll; Ilodsden v. Ilarridue, '2 Sanml. r,2: IHedri.U v. Ulili- ley, L' Hill (N. y.) 1'71; I>oww» V. Co.\e. ;: Bin;;. L'o; Swicjird v. Wilson. 2 .Mill. CoiiMt. (S. C.) 21N; Taylor v, Ballmad Co.. .'.7 Vt. Kh;; B.ites v. Curtis. •-'1 IMck. 1'47; Taylor v. Coryell. 12 .S(i«. iVc U. (I'a.) 213; Bierly v. Willianus, \a-\kU (Vn.) 7W. AWAIMi KNKdIUI.NrKNT. .'; I where one has l»f.'ii cxcciii.d.' AimI -.•ii.r;ill\ . in ih.- Initi-il StateH, in case of Ntaliiloiy siil)iiiissioii. ih.- awani is niadi- iitiniia blc into conrl, wlinc jikI^^iik-ih is ciiicr-cd ii|inii it, wliirli in «mi f<)iT(al)lr ill llic same maimer as aiiv olhci- jikI^^iih-iiI.' '" ISiit lli<- fad liial Ilic slatiilf has 1m-cii imisiicd in irs|»(Ti lu iht- fuirii of iIh- submission docs not malcc (liis step imperat i\ e. ( mhi-i ;ill\ i he pari v in whose fa\()r the awai-d is maa\v (N. C.) 4:5."); rhuimicr v. .Moniil. IS Me. l.vt; (;f>()r;,'(' v. Farr. 4HlNC. ( O. 1899 CorvnionT. 1899, BY WEST PUBLISHING COMPANY. THE STATUTE OF LIMITATIONS. HISTORICAL. laches may bar llio rijiht to relief in ('<|iiity.' aiul n< law n nroariies to a contract. The rights arising from a contract are of a y>ermanent and indestructible character, unless either from the nature of the c(m- tract or from ils terms it is limited in point of duration.' But, though the rights arising from contract are of this yx-rmaneni character, yet as long ago as the time of James I.* a limitation of the right to sue thereon in certain cases was effected by a provision that all actions of account and on the case, other than accounts concerning the trade of merchandise between merchant and merchant, their factoi-s or servants, all actions of debt grounded upon any lending, or con tract without specialty, and all actions of debt for arrearages of rent, should be commenced and sued within six years next after the cause of such action or suit, and not after. In consequence of uncertainty as to whether the lapse of the prescribed period merely raised a rebut table presum})tion of payment, allowing evidence of stibsequent ac- knowledgment of the debt by the debtor, or actually closed the door to enforcement aiRl precluded evidence of nonpayment.— in otJH-r words, to use the technical terms, whether the statute was on*- of 1 Eads V. Williains, 4 De Gex. M. & G. 674; Soutlicomb v. Bishop of Excti • 6 Ilare, 213; Hogan v. Kjie. 7 Wash. r.O.'), 35 Pac. 30t>; Rogers v. Saunders, li. Me. 92. 2 Williams v. Mitchell. 112 Mo. 3u0. 20 S. W. 647; Knight v. McKinney, 84 Me. 107, 24 Atl. 744; Wanniaker v. Van Buskiik. 1 N. J. Kq. 68."); Stover v. DiireD, 3 Strob. (S, C.) 448. 3 Auson, Cont. 316; Llanelly Uailway A: Duck Co. v. London &. N. N\'. Ity. Co., L. R. 7 H. L. 550, 567. * 21 .Tac. I. c. KJ. ST.LIM.— 1 '1 THK STATITK oT I 1 M I lA TH ).\S. p/YMurripftofi or of reponr^ — a hilci- stiitiilt',' known as "lionl Tonter- • It'ii's Act," disposed of (lio (nicstioii Itv jnovidinfr. in I'lTcct. that the liar of the slatnlo niij^hl bo removed li.v a new pKnnise or acknowh'd}^ Mjt'nl in wrilinj;. and sij,Mied l»y llir paiiv lo 1m- i<'d (li('i('l»y ; lun iM»t otherwise. It did noi deal wiili iIm- ctVcci of a jiaii pavnit'iit, n(»i- ilcfine h\ wlioin it ini;;h( be made, nor who should Im- iiuund lln'irbv. It left that subject to be rejiulated by the courts.' Statutory provisions, generally in terms similar to those of T/ird Tcuterden's act, have been adopted in all our states, providing tliat a< lions must be brought within a certain number of years, or be barred. Snrh statutes are known as the "Statutes of Limitations." The time limited varies in llie dilVereul states. 2. LACHES IN EQUITY. Irrespective of the oiM'iation of statutes of limitation, a court of equity will not aid a party whose application is destitute of conscience, good faith, and reasonal)le diligeiue, but will discourage stale de- mands, for the jieace of society, by refusing to interfere where there has been gross ladies in i>i'osetuling rights, or where long acipiies- cence in the assertion of adverse liglits has occurred. The rule is jK-culiarly apjdicable where the dill'K idiy of doing entire justice ai'ises ilirough the death of the princi]»al |)articipants in the transactions complained of. or of lh«* witness or witn<'sses, or by reason of the original transactions having l»ecome so obscured by time as to render the ascertainment of the exact facts impossible. Kach case must tx'cessarily be governed by its own circumstances, since, though the lajise of a few years may be siiflicient to defeat the action in one can-, a longer jh i iod may Ite held reciuisile in aiiotlu'r, dependent upon the siiuaiion of the jiaities. ilie extent of their knowledge or informa tion. gieat changes in values, the want of pi'obable grounds for the imputation of intentional fiaiid. the destruction of specific testimony, the abwnce of any reasonable impedinienl or hintham *• to the assertion of the alleg.il ri^ihis. and tlie like.^ • 9 Geo. IV. c. 1 t. • .Mtinl.*. Clilfty. .T.. In !{.• H..liinKhli.-,-i(I. ;'.7 rh. IHv. <^'.1. T Ilumuiuud V. n<.iikliiH, U.". L. S. -••Jl. IJ.'.o, 111 Sup. (Ji. lib; Marsli v. Wliil I,A( lli;s IN Kyl'ITV. .; Tims, niidcr llic \;ir.viii^' I'mis nl' ;ii\tii ciiso. ilir ilm nine df I.hIio has been aj)I)lie(l lo dchiii' the ('(iiii|i|;iiii;iiil <.! n li. r ;ifi.i lli<- l;i|.f-.- of seven, ^ five," four,'" and even (wo years." The jiarly wlio appeals (o llie conscience of tin- (•li;iiinn MuL Life Ins. Co. v. f'lty of Austin, 168 U. S. 685. 607, 18 Sup. Ct. 22:*.. Compare Macaulay v. Palmer. 125 N. Y. 742, 26 N. E. 912; Jackson v. Sackett, 7 Wend. (\. Y.) 04; Bean v. Ton- uele, 94 N. Y. 381. t Mason v. Henry, 102 N. y. 529, 539, 46 N. E. S:}7; Baldwin v. Martin. 14 Abb. rrac. N. S. (X. Y.) 9. 12 Badger v. Badger, 2 Wall. 87, 94; Builer v. JoUusou, 111 N. Y. 204. 213. 4 THK STATl'TK OF LIMITATIONS. Upon i\w ;m;il(.-y of (he like limilaliou at law; '^ wliilc in soiiio juris- dictions the statute of limitations inaki's spciial provision for actions in (Mjuity. but in such cases the statute merely fixes tlie time beyond whicli the claim slinll not be prosecuted, but does not dejirive courts of (Hpiiiy of thrir power of refusins relief on the ground of laches, even thouixh tlie time fixed by tlie statute has not yet expired.^* Thus, in New York, the period of limitation in equitable actions is fixed, by Code Civ. Proc. § 388, at 10 years after the cause of action accrues.^* 8. STALE CLAIMS AT LAW. As already stated, delay in asserting a claim mijiht, at common law, raise a rebuttable presumption of payment. And. notwithstanding the adoption of statutes of limitation, such delay is still evidence of payment. The distinction between the operation of the statute and of tliis presumption, however, is that the former is pleaded as a bar, wliile the other raises a question of fact for the jury. The former is conclusive, and excludes discussion of the question whether the debt has in fact been paid or not; while the other turns on the question whether, from the delay, together with other circumstances, payment may be presumed. If the jury are satisfied by such evidence that the defense of itayment is made out, it is, of course, immaterial that the period fixed by the statute of limitations has not yet expired.' 10 18 N. E. G4;j; In re Ncilloy, 95 N. Y. 382, 390; RoIktIs v. Ely. 11:5 N. Y. 128, 133, 20 N. E. C,()G. i« Badger v. Badger, 2 WM. 87. ^; Murdock v. Watorniaii. 14."j N. Y. 5."). 01. .39 N. E. 829; Giles v. Barciiiore, 5 Jolins. Ch. (N. Y.) 54.5. i« C'alliouii V. Millard. 121 N. Y. 09, 82. 24 N. B. 27; People v. Donohue. 70 Hun, 317, .322, 24 N. Y. Supp. 437. 16 .Mason V. Henry, ir>2 N. Y. .">2!>, 1(J N. K. S.!7; Ciiiiiniv v. II;mi. 112 N. Y. 1. 6, W N. E. 82«;; Exkorn v. E.xkorn, 1 App. Kiv. 121. :\1 S. V. Sn|.ii. (;8. )« H:dl V. I{nl)ertR. «n3 Hun. 47.3, 479, 18 N. Y. .Siipp. 480; Macanlcy v. Palmer. rSiip.) N. Y. Supp. 404: Id.. 12.". N. Y. 744, 2(] X. E. 912; 2 Phil. Ev. 171; Jackson v. Saekett, 7 Wend. (N. Y.) 94; Bean v. Tonnele. 94 X. Y. .381; Anon., .Mod. 22; Oswald v. Ix'gb. 1 Term R. 270; Dullield v. Creed, 5 Esp. .''.2; Perkins v. Kent, 1 Root (Conn.) 312; Daggett v. Tnllman, 8 Conn. 108; Wells V. WashiJigton's Adm'r, Munf. (Va.» :,:V2: Has.s v. Bass, 8 lM THK STATUTK «)(-' LIMITATIONS. stiituto strictly as one of ifiiosc " And if (lio dooisions in a .N. K. rm. • * UHI V. .Morrison. 1 I'.-t. :\r,\ :;c,(t. S2 B«ll V. .Morrison, I IVl. ."..'.1 :!<;o; }U\uk< v. H.-ill. L' I'l<-k. (Mass.) .'{OS; In WHAT IS A SUKlIt IKNT ACKNOWI.KIXJM KNT. / A (lochinr (inilr ;is coiniu n of tin- |ir«)iniw* to pa}', it will iKil lie ('\ idcncr of a ]»ii>inise, sunicicnl lo r«'viv<' the debt, and take il out of (he sla(n(e""; and in accoid wi(h (his piinriplc the sjinie court hehl tliat, "if (he acknowlt'djinient be acronijianitMl bv a declaration tlial ilie pariy intends (o rely on the statute as a deferis< . such an a(knowled;^inent is wholly insu(1i4 Cal. 354, 30 Tac. 609; Heauy v. Schwartz, 155 Pa. St. 154, 25 All. 1078; Boynton V. Moultun. l.j'J Mass. 248, 34 X. E. 361. 23 Bangs V. Gelston, 15 Johns. 511. 24 Si'o. also, Brown v. Campbell, 1 Serg. & R. (Pa.) 176; Clenu-ntson v. WU- liains. 8 Crauch, 72; Phelan v. Fitzpairick, S4 Wis. 240, ."4 N. W. 614; Perry V. C'luslcy. 77 Me. .".93; Hussey v. Kirknian. 0." N. C. 6;'.: Stiiffunl v. Rl(>hard- sou, 15 Wend. (N. Y.) 302; Shoemaker v. Benedict. 11 N. Y. 176, 1S3. 25 Bell V. Moriison. 1 Pet. 351; Russell v. Davis, 51 Miun. 482, .">3 N. W. 766. ("dinpare Gay's Estate v. Hassam. G4 Vt. 495. 24 Atl. 715. 2G Keener v. Zartman, 144 Pa. St. 179. 22 Atl. 889: Rus-sell v. K.Tvis. .".I Minn. 482. 53 N. W. 766; Chapmans Appeal, 122 Pa. St. 3:31, 15 Atl. 4by.'" Hut oral evidence may bo icsoiicd to, as in other rases of written instruments, in aid of tiie intei'jtretation. Con- sistently with l]\\> rule, it has been held tliat oral evidence is admis- sible to identify the debt, and its amount, or to lix the date of the writing relied upon as an ackm^wled^ment, when the cirenmslanees are omitted, or expressed ambijiuously.^" Althou;;!!. as above shown, it is sonieiimeH said that the promise must be untonditional, this term does not exclude as insutVieient an absolute pioniise to pay upon the happening; of some eontinji;eney or the fuUilhnent of some condition, for when this happens, or is fulfilled, the promise then becomes absolute. In such a cas«'. in order to take advantarre of the promise, it must be shown that it has thus become o|H'rative.'' 6. WAIVER. The t]ief»ry on which an acknow le(l;;nient or new piomise takes the debt out of the statute of limitations is sometimes stated to be that it waives the bar of the statute, thoujj^h it is admitted that this \iew, paiticularly when the so-called waiver is made before the period of limitation has exjdred. and when, accordin<;ly, there is nothing; to waive, and tlie liability is undeniable, is not free fi-om ditliculties.''- And it is said that probably the doctrine is a relic of the time when th«' statute was rej^arded with disfavor, and evaded as far as pos- sible." ITie term "waiver'' is, however, sometimes used in another. sense, as ref«rrin;; to a c(uitract by the debtor with the creditor not to avail himself of the henelit of the statute, in return for an extension of time to pay, or oilier beinlit jiassin;; fmm the crediii>r; ''* while »• S«i' I'liinrsou V. Ni'iii-r. !«;."» l'n. .Si. W. 7.;, 'M All Tts. >« .MniKliihter v. Urmdner. 107 X. Y. .'ilt* ,'A'J, 11 .\. K. -Hh',; Kin«!ii<1 v. Ardil- I'ald. 73 N. Y. IW); Li'chiinTf v. netcht'r. 3 Tyrw. •l.">0; HIrd v. (;:iiuiiinii. 3 Hlng. (N, C.) 883; 1 Smith. Ix?ad. Ciis. '.HVt, and .uses cited. »> Wnkitiinii V. .Slicniiaii. .\. Y. 8.'); Hoyutoii v. .Moiiiton. l.iK .M;iss. L'ls. 34 N. i:. ;5<;i; I'jirk«T v. iJuttcrwortli. 40 N. .1. Ijiw. LM I. "»\Vnld V. Arnold. IIW Mann. 13^1. 4«; .\. i:. ll'.t; ilslcy y. Jcw.Hl. 3 .M.lo. Walil V. Arnold, ItW .MaH». i;jl, »0 N, E. ll'j. • • WetzvU T. Hu«Hard, 11 Wheat. 3(J0. WHAT IS PAItT I'AYMKNT. sometimos 5. 3T Murdock v. Waterman, 145 N. Y. 53. G2. TO N. E. SID. «s Shoemakur v. Beuedict, 11 N. Y. 17G, 1S5. m THK STATUTK OK 1,1 M ITA I H i.NS. llni»l(\ tJlKni (lilt (if the sl;iliit(^ of liliiit;il iolis ll|i In lli;i( liliif. 'IMh' I'lviin'iil is ;iii ;nkii(»\\ lt<|;;iiHlil of iiii rxistiii;; ilidclttcdin'ss, ;iim1 i;ii>ts Mil itniiliid |iromisc at tliiii liiiio to |i;iy the liiilanco.^" In tinier to Iiii\t' that ••iVfil. it imisi not oiilv apiirar fliat a pavmriif \va-« maalaneo.*° If it l»e doulitfnl uhttlirr a payment was a pari payment of an existinfi del»t. mole licin;: admitted to be due, or whether the pay- mi'nt was intended by the party to satisfy the wliole of the demand a^'ainst him. the payment tannot operate ns an admission of a debt, so as to extend the period of limitation. If there be a mere nak(Hl payment of money, without anything to show on what account or for what reason the money was paid, the payment will be of no avail under the statute.*^ The provisions of the New Yorlc Code chanfje neither tlio nature nor the elTect of payment of interest or principal, nor introduce any rule of evidence in re«;ard to the establishment of the same, different from that existing; before the adojition of the Code, and tlie payment need not be evidenced by writinj;.'*' /'///i'/if on ^Vdf'.s or Bills. To make an indorsement of princii)al or interest upon a note ad- missible in eviden<<' at all. it must Im' pi'oved to have been made before the pr«sumption of payment attached by la|>se of time; in other wolds, the indorsement, which is only evidence of the pay- ment, must appear to have been made by a creditor at a time wiieii he had n«» moti\e to ;;ive a fals^.- credit, and at least befoie the statute • •Day V. Mayo. ITA Mass. 471:, 13> N. K. X»n; I.mii;,' v. c;:ij,'.-. GT. N. II. 173, 18 AU. 7lXi. «o Crow V. GleaHon, Ml N. V. !S;», 49;j, 3G N. K. •I!t7. <> 1 Woi.rl. LIm. L'71; Alil.. Tr. Kv. S2I: Ilarpir v. Tairl.'y. M N. Y. -142; All>r<» V. 1Iku< ra. \'*) N. Y. «i:;o; .^mlth v. Uyaii. »',(; N. V. .I.VJ; Aegun before the <- In 10 lleaiinans Estate iSur.) lit N. V. Supp. .>!"J; Hos.'luKim v. HlUinjjion. 17 Johns. (N. Y.) 182. <■* Roseboom v. Billiuirtun. IT .Tnhns. (N. Y.) 181,'; In re lU-aniiau's Ej.tate, (Sur.) 19 N. Y. Supp. 'kW. 46Bouton T. Hill. 4 .\pp. Div. 2r.l, i;i> N. Y. Supp. 498. 12 TIIK STATITK OK I I M 1 1 ATIONS. statiitorv jK-riod. willi icfcit iico to such new promiso, h:is oxpire^. Tims, if the jH'riod of liinilation is six vears. and a new promise is not made until the end of the seventh year, an action may be main- laintKl thereon within six years from the time of the makin«^ of the new promise.** 0. PAYMENT NEED NOT BE MADE IN MONEY. A. payment. sHfliciont to take a ease out of the statute of limita- imus, n»'«'d not be made in the form of money. Thus, for exanijde, \N here a claim arose in 1878, and .in 18^!^{-84 work was performed by the debtor for the creditor under an agreement that the amount thereof should be credited ujion the account, and credits were given accordingly, such credits were held to take the case out of the oi)era- tion of the statute.*' So, delivery by a debtor to a creditor, of the note of a third person as collateral to the j»ayment of liis debt, is equally significant as an acknowledgment by the debtor of his liability for the whole demand an would be a cash payment of a like amount.*' So, the delivery to the creditor of a policy of life insurance, or of the renewal certificate of such policy, as collateral security for the payment of the debt, is sullicient to constitute a renewal of the debt, and the statute will begin to run fiom the lime of such delivery. The theory ui>on which the delivery of the policy .saves the ojieration of the statute is that the debtor, by such act, acknowledges the debt, and evinces a willingness to pay.*' So, also, if one gives his note for an aniount conipulcd by the cred- itor to be due. but which the dchior claims to be incorrect, and it is then agreed that, if a recoinputation shall show the amount to be loo large, the error may be corrected, a subsequent indorsement, dated back to tlx* date of the note, of an amount in which it was sub- B4'inent, not being luiide by the debtor or by his authority, canitot, therefore, arrest the running of the statute. But in the application of the doctrine that a part payment, 00 Bouton V. Hill, 4 App. Div. 2r.l. 38 N. Y. Supp. 498; Amos v. Smith. 1 Hurl. & C. 238. 61 McMulIcu V. Raffeity, Si) N. Y. 4oG, 400. 1 J THK STATUTF. OK LIMITATIONS. witliin tli«> sImIuIo. must l»r iiuidt' by llic dclilor or by liis ;inlliority, (hero has been iimcli diversKy of judicial opinion. '- I'rior to iho d('nt and promise to pay, made by one partner after the dissolution of the firm, would not revive a debt against the tirm, which was barred by the statute of limitations, on the theory that the dissolution of the part- nership terminated the agency of each partner to bind the others. Til Shoemaker v. Benedict ^^ the (piestion was presented whether the joint contract creates an agency in one of several joint debtors to continue a debt or renew a debt already barred against all, and ])re- vejit the statute of limilatimis from attaching by a new promise, ex- I»iess or implied; or, in other words, whether such joint debtor is authorized, by virtue of his relation to the parties, to make snch new l.'i. »» 2 N. Y. '>'S',. s« Whltcoiiili V. Whiliiit,'. ii IxxiK'. ';•'►-: I'all.isoii v. ("lin.-ite, 7 Wciid. (X. V.) 441; Ilummon v. lluiUley. 4 Cow. (N. Y.) 41K',. ii Moore V. CJoodwIn, KKJ N. ('. '-MS. i:; S. K. TT'J: Sipmnicy v. I miry. U ri(k. (.MM.K.S.) liHl; IVrhHiii v. It.iviial. '2 Uiii;;. 'Mx;-, I'ikc v. W.irnn. 1.". .Mr. 3U'{; .loslyn v. Smith, l.'i Vt. .'Cm;; Sli.-itnii v. ("ockc, ;{ .M\mf. (Va.) t!»l; JJcii/. v. Fuller. 1 .McConI iS. C; .".41; .simpsou v. Geddrs, li Hay (S. C) 533. i« 11 N. Y. lT X. E. .'Hd: M.rritt V. Day, 38 N. J. Law. :!2. ci Bloodgood V. Bnien. S X. Y. 362. 370: Mooors v. White. 6 .Tolnis. t h. (N. V.) 373. ir. TUF. STATITK OK MMITATIONS. />' // Iffirs of ^lortcjnged Prrm ixrs. WIhtc one wlio owns real cslalo. niton wliirh lie lia^ jilaccd a niort- ;.'a;:«', convoys a iimiion tlicroof. and dios intostalo. a payincnl tliore- aflt-r by his heirs, in whdiii liic ifiiiaininu' pari <>f liif ni(>rti:a;. J/j N. E. SLIi. I!Y WHOM A< KNOWI.KDti.MKNT MUST UK MAOK, 17 conliiiuc his lialiilitv iiiHlcr iIk' >t;ilulc i<\ llic cxtciil (if tin- r<-;il aswlH in his hands, but Mould li;i\c no illVcl ;i;^:iiiisl ihi' owihis of the equity of i-odi'inplion in .suspending llio niiinin;,^ of the slntiilc''^ Effect on Surth/. At common hiw, a ]>iiyment made upon Ihc note by ilic prinripal debtor, before I he coniph'lion of tlie bai- of (he slat ale. seived to keep the debt alive, both as to the debtor and the siirrfiy."* The same rule prevails in many states of the Union,* and, unless the com- mon-law rule has been changed by statute in a state whose hiws control in a given case, this principle will be apjilied l)y the Tnited Slates courts."' Nor does the death of a surety befoi-e (he demand tuatmes make any difference in ]>iin(i]tle, where the Iiabili(y is no( (»f a personal nature, but is an incumbrance upon the suie(y's property; for while there is authority holding that payment of interest by the princijuil debtor after the death of the surety, but before the statute of limita- tion has run against the debt, will not prevent the surety's executors from pleading the statute,®® this rule does not extend to the repre- sentative of the deceased surety, whose liability was not jiersonal, but upon property mortgaged.®^ Bn( as (o the elTect of a iiai( pay- ment, by a principal, upon a surety in New York, see LiKh-tield v. Littlefield/^ where it was held that one joint maker of a note, even though in fact a surety, does not lose his right to set up the statute of limitations on account of a part payment made by another joint maker, who was in fact the principal. So, part payment by a surety does not relieve the demand against the princiiial, unless mad(> at the express request of the principal;®" and the mere fact that a surety, when applied to for payment, requests the creditor to seek payment 63 Muiclock V. Watuiman, 145 N. Y. 55, 66, 61) N. E. SL'O. 04 Whitcumb v. Wliitiug, 2 Doug. (552; Burleigh v. Stott. S Barn. & C. 36; Wyatt V. Hodson, 8 Bing. 309; Mainzinger v. Mohr, 41 Mich. 685, 3 N. W. 183. * Bank v. Cottou. 5:) Wis. 31, 9 N. W. 920: Quimliy v. Putuaui. 2S Me. 419. er. Cross v. Allen, 141 U. S. 528. 536. 12 Sup. Ct. 67. 06 Lane v. Doty, 4 Barb. (N. Y.) 530: Smith v. Townsend, 9 Uich. Law iS. C.) 44. 7 Cross V. Allen, 141 U. S. 528. 536, 12 Sup. Ct. 67. See, also, Mhjer y. Graham. 24 Ta. St. 491; Bank of Albion v. Burns, 46 N. Y. 170. 05 91 N. Y. 203. 6 8 Harper v. Fairley, 53 X. Y. 442. ST.LIM.— 2 I*; THK STATITK t)K I IMIIA IIONS. fnmi iln- iiiiii(i|t;il. i tlir snniv.'" 11. TO WHOM ACKNOWLEDGMENT MUST BE MADE. In oidt-r t«> take a case oiii of ilic oin'ialioii of ilio statut«'. an a«-kiioul((l;:niciit must lie made to llic cicdiloi-, oi- liis ajit-nt, or soim- otu' actiii;; in liis Ix-lialf. or at Irast niiisl Ik- intt'iuh'd to he (•(•iniiinni i-atixl to liini. or 1o inlhiciifc his r(»ndntt. Thus, ajiait fioM\ oilier obj(H'tions. tho fact that an admission or atknowlcdmiicnt of an in (h'litMhu'ss is madr by tin' debtor in an answer interposed by him in an action to which the creditor is not a jiaity would not sullice to rebnt the prosiumptiou of iiaymeiil, or to ri'vive a «hbl barred by the statuie.^^ 12. APPLICATION OF PAYMENTS. \\'liere one jutsou holds several distinct chiims ajjainst another, and the latter makes a i»ayment to the former, the (piestion as to the claim on which the ].aynient is to be applied is, of course, important in deterniinin;^ which (»f them is ilieieby taken out of the statute of limitations. If the debtor owes all the delits in his individual capacity, no .serious ditViculty is presented. The debtor, in making' a payment under such cinumstances, has the ii;iiil t(» dt'sijjiiate the i»arlicular claim upon \\liicli ihe iiaymeiii shall be a|i|ilied; and, if he does not do .so. the creu Haiikiiiu Co. V. siiiiiii jisscji 1 g. i{. :<;.".. '» Fl«'l«l V. Il 6(> Jis to SMslaiii M\ ;ii I ion lor the Imhunf. lint if ;i cicilitoi Ih»I(|m one chiiiii against an in li\ idiial di-liior. ami anmlK-r riaini iipiinttt tbc same drblor jointiv uiih olltt-r di-ltlois. and iIh' individual driitor niukcs a payiiK'iit fruiu his uwn funds, and no a|>{irK'aiton is iit (at-t made liv ('iilu'i- party, tlir wri^iil >l)s(Mic(' of (|iialif\in^ cIk iinistamcs. tlie |ia\nH-ni slioidd lli-Ml be applied by (he cunii upon (Ik- deliloi's individual ol»li;,'ai ion.' * 13. WHEN THE PERIOD BEGINS TO RUN. Tnasniucli as llu' stahile of liinilalie;^ins to tun a;^ainst bis action to recover the ley,acy.''' This principle is also illustrated in the case wheic lands are atleited by an assessment aj)])earin}j to bo valid on its face, and an apparent lien upcui the lands, but in fad illegal and void, by reason of farts ( utsimeiit had been s«-t aside. '^ -■■i Hliike v. Sawyer, s:; .Me. llitl. I'l All. .s;'.4. 74 Camp V. iSmith. l.'.O N. Y. IST-liOl. :\2 N. K. tWO: R-ikor v. Stackpoole. 9 Cow. (N. Y.) 420; Livermore v. riaridKi". 'X\ Mr. 4L'S: .ToIimhoii v. K"*« Adni'rs. 2 Har. (Dol.) 172; .MuiiRpr. raym. p. IT.".. 75 Gilbert v. Taylor, 14S N. Y. 2!tS. :{or.. 42 N. K. Ti::: .M;iisnn v. A>>t»..y. 141 N. Y. 17!>. IS;^, 3G N. E. 11: (Jilmore v. Ham. 142 N. Y. 1. .-.«; N. K. 82»;. 7fi Tiiinnicr v. City of Ho.litster. i;{4 N. Y. 7(;. ;:i N. K. 2'k}. Compare NYeaver v. Havilaud, 142 N. Y. r.:U, 37 N. K. 'Wl. 'JO THK STATUTK OF MM HATIONS. Tills primipli' is ontlpodicd in s(;ilii(oiv f«niii in ilir N'lu V«tik Todo of Civil Prorodtire (section 41")). So, in ;in action in Illinois, for work (lone nndor nn oxprossod rontmrt, A\lii(h was not fnlly iicrfonncd, in which «'ach |»art.v accnsod Ihc tdhcr of oansinfj: Ihc work to he stojijicd, ai>d most of \ho work had boon done more than livo yoars dhat lu'ing tho local period of limitation) hcforo an action was Ix'^un, it was In'ld erroncons to charge that, oven if plaint ifl' was entitled to recover, undrr an implied contract, for the work done, he conld only recover for that part of tlic work done wiiliin live years of the commencement of the action: since, as the work was an entirety, the statntc* of limita- tion did not be<;;in to run against any of it nntil plaint ill' ceased work- ing." H7//>r<' Demand is ]\WcM/tari/. Nunierons instances are <'lsewhere refeired to. where a demand is nr'cessary in order to set the statute of limitations running. These rest upon the proposition that where, by the exjtr^'ss or implied agree- ment of the jiarties. money is only to come due when payment is sought by the party entitled thei-eto. there is no reason why the peison <»ltliged to pay should be able ultimately to refuse payment mei-ely be- cause the other i)arty had exercised his right not to call for it. In a jiroper sense, there is in such a case no cause of action in e.xistence until the contemplated recpiest has been made and refused.^*' In- stances of such cases are found in dei)Osits. as distinguished from loans, while notes j»;iyable on demand, on grounds already stated, constitute an a]iparent exception. So, where one receives numi'y for the use of another, under such circumstances that it is the duty of the formei- to pay it over, an action for money had ami reielM-d m.iy Im- brought to recover it, without a demand, and tlie slatule of limitati(»ns iM-gins to run fiom the date of the receipt of ilie money."'* Thus, if one jM-rson re<-eives from an insurance coniiiaiiy moneys that belong to anotlu-r. it is the ordinary case of ihe i«lrl(h. 1C, HI. ;!M. '• I'nttiTBon V. Hlniiclinnl. OS <;n. IMS. S.', S. E. .'>72. t» 21111a V. MHIh. 115 N. Y. W. IM .\. i:. 71 1. WIIKN TIIK rKKIDI) »K i-JKht to rctniii it, nor any trust dul.v to (Iis(liiii«j(' in i<'s|»(m( Io it, lie iH lia!)l«' in an lu-tion to rcHovcr I lie same, and willioiit aii.v dcniaiMl l)cf(tr<' siiil."* So. an obligation liiiuliii;; one to pay a Hprcilied Kuin, but Hpocifyinj; no linio for payment, is due at once, and the stalute of limitationB begiuH lo run ininiedialcly."^ Further illusti-ations of the application of the foregoing principles are given below: (a) Afjainxt a JJijxislt. The time fixed by statute begins to run. against the riglit of a dejiosilor with a bank or a private jterson to recover liis dcjtusii. only from the time when payment thereof is refused. If the period of lim- itation, for example, is six years, the mere lapse of six years from the time when the deposit was made is no bur Lo au atiion.*' (b) Agahist a Certified Check. A certification does not make the chec k due without demand. It simply binds the drawcH' bank to have and hold suflicient funds to pay the check to one lawfully demanding payim-iit. In other respects it still remains a depository liable lo pay only upon dcmaml. And the mere drawing of a check is not a demand. Thus, if a dejiositor draws a check, which is duly certified by the drawee bank, and is sub- sequently paid to some one other than the payee, upon a forged in- dorsement of the hitter's name, these facts constitute no demand. The only person authorized by the depositor to make a demand did not do so, and therefore, whenever the depositor discovers the mis- take, although more than six years subsequent to the luiyment, he may repudiate the charge made against him, return the check, and claim payment of the simi really unpaid to him, or upon his order." 80 Wodd v. Young, 111 N. Y. 211, JIT, 'M N. E. 193. 81 Erviu v. Brooks (N. C.) 16 S. E. 240. The distinction betwoon these dif- ferent classes of cases is discussed :iud illustrated in Dorman v. Gannon. 4 App. Div. 458, 38 N. Y. Supp. G59; Bak.r v. Moore, 4 App. Div. 234. 38 N. Y. Supp. 559; Watson v. Wallier, 23 N. II. 471: Iving v. Mackellar. 109 X. Y. 215. 10 N. E. 201. • 2 Thomson v. Bank. Jn2 N. Y. 1. 8; Payne v. Gardiner. 29 N. T. 146. 16S. 171. S3 Bank of British North America v. Merchants" Nat Bank of New York. 91 N. Y. 100. ■Jj TIIK STATITK oK 1,1 M ITA IK •NS. (o) Agaiuat a Crrtijicat^ of I)tjnnsii for wliidi iH» ceitili«ate is issned/* The c(Mtilicale j;iven for a deposit sonieiinies closely rcseniMes a jironiissorv iioto. — as. foi example, in Howell \. Adani^."' where ilu* certificate provided ihai. if the money remained on deposit six months, intei-est wonld be jiaid at ." pei- cent, jiei annum. Init contained no promise to pay either primijial or interest : while in Uaker \. Leland "" the certificate was to the elTect that the dejiosiior had de]MtsiIed a specified sum, paifuhlt to Jiif< onlrr thi't'i' months tiftrr ihift\ with interest at 7 per <<'nt. if left beyond a specified date. The fornu'r certificate was held io lie a certiticate of deposit, a<;ainst which llio statute wonlil he^'in to inn only fi(tm demand, while the latter was hehl to lie a jiromissory note. a;iainst which the statute w<»uld hej^in to run from three inoutlis after its date." (di A'/'"'/i.sf P< iiia)i .N. V. 1 >•;. KW. "i«;H .\. Y. .".14. ••J> App. DIv. MuK 41 N. Y. Siipi.. AW. »•• S^i'. hIho. Hunt V. IMvliic. :{7 til. l.'.T: Mill, r v. .Vu^^t.n. 1?. How. 21S: R;nik -.f Orl.-nUH V. .Merrill, 1' lllll (.\. Y.i 2V>. *• WJhh'Iit v. Wjmikt. IT N. Y. .".IK; In iv Kind's ICslatc '.M Midi. Ill, VS), :,\ ,\. ^V. ITH; N«'wiiiiui V. Kctlrllf. l.', j'j.k. i.Mid-s.i 4 IS; I'cinin v. C.-.iy, 14fi .M.'iHH. IIS, 1.' N. K. ST; I.aniH(in v. I.!niii>crt, 11' .\. .F. I.iiw, IMT; l\ln>j-st)ur.v v. I'.iillS; NVeiiiiijiii v. iiiHiirurice Co., 1.'. Wcml. i.\. Y.i l.'i;T; .\ N. Y. I.v;, I.VJ. WHK.V Tin; IKIUOI) IlKfilNS To RUX. of colli sc, lie so )iii|>ln\ )'(] :is to rfiiuirr a (liiiiiiiiil as ii condition preeedciil ; ;is, ulnn- a iKtt*- was piivalili- 1^4 iiioiiiIih afl»*r (U'lnarii! and it wiis lidil iluit ilio statute (lid i>ot l)<-;;iii to nm until a dmiaiMl was niado. and tlir tinio niontioncd liad cxitiicd. '" 'J'iic itriiiciplf li\ wliicli the statute of liiiiilatioiis l»e;^inH to run upon a demand iM>te. as lietwet n the iiol(]er and tlie maker, from ii^^ in('e])tion. a])|)lies also in an action against a ;^uarantor. wIiom' ohii «i:ation is co-extcnsiM' uitii that of the maker; for, the moment tin- maker fails in law to jHifoini his contract, a cause of action accrues against the j;uaiantor upon which he 1»\ In New York it is the settled law that, a note payalth- on demand, with interest, beinjr a <(intinuiug security, no cause of action arises aj;ainst an indorser until after actual demand. The plain import of the indorser's contract is that the maker of the note will jiay th' same at a certain lime and i»la 14!1: Miles v. Hdiiirli. \\ Adol. vV- E. (N. S.) H4."i: Koss v. H.niIroa(l Co 6 Ind. 2i>l>. »i McMuUen v. UnlTerty. s!» N. V. 4 ■'.<;. 82 Nelson v. Bostwiok. a Hill iN. V.i :\~. 93 Tarkcr v. Stroud, 98 N. Y. .'{Tit: .Mcrrilt v. Ttxld. 'i:\ N. V. '>; Pardrr v Fish, m N. Y. 12(;.".. 04 Shutts V. Fiucar. 100 N. Y. r.;Ut. W N. E. 588. - > THK STATl'TK OK MM ITATlo.NS. (f I In Canr of an Erprttw Trust. Tin* stnluto of liniifations does not brfjin iu\<. \ i. J77; .Miles v. Tborn*'. \'>> (al. ;Uio; Ih-uPHt v, riijol, 4 J Cal. ITIO; CJranl v. Hurr. ;">» Cal. 208; Hf-nry v. .MInlnjc Co., 1 NVv. CUM n.-i.on v. Klv.s. KM! r. s. 'Ut. 1 .Sup. Ct. 3; Ki->inmir v. Kn-er, 8 Wall. SJOli; I.aiiiiiiiT v. Stodtinnl. 1o:5 N. Y. (172. D N. E. .'{1»; Zoblcy v. Trunt Co.. YM N. Y. •ic.l. .'A .\. V.. 1(m;7: Van C.iinii v. .Srarle, 117 N. Y. I.VJ. nil. 41 N. K. 4'J7. »• IJiMiiiier V. .Sl(MMaril. la'J N. Y. «i7i:. N. K. Wis, n, re I,.iiii;iii. W.! .M<1. SlTt. " Kx parti' HoKH. U (;!yn & J. 40. XV); .Mliiot v. TIimcIi.t. 7 Mete. (Ma.ns.) .•{48; rnrk«T V. SantMjrn. 7 (;ray (.Mawj.) IJil ; Voii Saclw v. Krctz, '2 N. Y. 54S, 556. »• Klrkpntrlck v. McKlroy, 41 N. J, l-^j. 555. 7 AU. W7. ••Kant' V. IJ1oo3] 1 Ch. 590; In re Bowdcn. 4.' Ch. Dlv. 444: Swai; V. liiiugeiuan [IS'JIJ 3 Ch. 233; In re Tage. Jones v. Morgan [IMVJl 1 Cli. ;UH Somerset v. Earl rouK-tt [ISDIJ 1 Ch. irU; How v. Karl Wintorton 1180G] 2 Cb 62G. 101 Kane v. Bloodgood, 7 .lobiis. Cb. (N. Y.) 0<.). 122: Hickam v. Ulckam, 4' Mo. App. 40C; Lincoln v. Judd, 4lt N. .1. E.i. :;.S7. 21 Atl. 318. 102 Code Civ. Proc. § 3S2. subd. 5; Carr v. Tlmmpson, S7 N. Y. 100. 103 Higgins v. Crouse, 14,7 N. Y. 411. 42 N. E. G. •JCi TIIK STATUTK OF LIMITATIONS. ;:i't Aside Frauduhnt Convryance. The last precedino; subdivision relates to cases where the right of action arose as soon as the fraud was committed, but where the person who had that riji;ht did not know of the fraud, and so did not know of his rij^ht to sue until subsecpiently. A dilferent case is pre- sented where a debtor makes a cimveyam-e of his property which is fraudulent as to creditors. Here a creditor, even though he knows of the fraud, has no ri^dit to maintain an action to set the conveyance aside until la- has tirst recovered judj^'meut a«,'ainst the debtor upon the indebtedness, and execution thereon has been returned unsatisfied. rntil then, theiefnre, the statute of limitations docs not begin to run.*"* io< Kxkorn v. E.xkorn. 1 App. Dlv. VIA. 'M N. Y. Siipp. 68; Onkcs v. Howoll. L'T How. I'rac. 151; Uo.vt v. rutuatu. ;\\) Iliiii. 401.', 40i;; Mnsou v. lltiir.v. ITiL' N. V. :>-J\K lU N. K. 8;{7. Coiiipart' De Fon-st v. Walters. irsJ N. Y. L**-M>. 47 N. K. 21H. i«>-. Kirsl Massjiilmsctls Tunipil8iJ. >M l>e Fon-Ht V. Waltcr.s. l.-.;i N. Y. '1'1\\ '1\\. 17 N. Iv 2!)1: li.irtl.'tt v. .Imld, •1\ N. Y. 2rX>; SprnKUc v. Ctx-liran, 144 N. Y. lOl. :W N. K. KHMJ. n6(Hrott V. Itallroad Co., 20 N. Y. 210. See, also, Clark v. Hailroad Co., 94 N. Y. 217. MUTUAL, OPKN, AND CUItKKNT ACCOUNTS. 29 commencemont of tlio ad ion, for (he time s|i Code Civ. Proc. N. Y. § 365 et seq.; Miller v. Railroad Co., 71 N. Y. 380; Hull V. I'owel, 4 Serg. cV: H. U'a.) 405. 30 THK STATl'Tl': OV I. IMITATIONS. to nil ncfion on Jho ciisc lor iiol afcdunlinu. and. alter ronsiilcrahlc varillalidii in the dctisions, thai acccMints wiiliin llic exception were noi Itaricd. even if there were no items on the otiiei' sich' of the ac- «uunt, williiii six years.*-" It was also hehl that the exce|(tion in the statute extended only to accounts concernin2o Hol.iiisoij V. Al.x.iiKl.r, s l',li;;b (N. Sj lio2; iw^Ua v. llaigli, S Mecs. A: W. TTo. '-> CatliiiK V. Siioiijdiii;.'. r> 'f.-iiii U. IK!). 121- (Jn-fii V. Di.slinnv. 7!t .\. V. 1. C; Day v. Mayo. l.".l .Mass. 472, IW N. E. >S!»S. »23 UjinicliiiiKlcr V. Haiiiiiiiiri(i. 2 .Inlms. (.\. V.i ijiMt. >2< (irccu V. Dl.sl»iu\v, T!» .\. V. 1. N. E. 45; c;uli)immI it. An account of items upon one side and payments ujion iIk* other is not a mutual account. The payments do not, in smli case, enter into the account. They aic at once a|)i)lied. and icdiicc i li<- acmunl .' -" ^^'llere there are mutual accounts between two peis(uis. it is always the understanding- that the accounts upon one side shall olVset that upon the other, and in law the debt due from one to the other is only the balance left after the application in reduction of the ac( <.nni on the opposite side. Tlie very theory on which the provision of ih.- statute of limitations relatinj; to accounts is based is that the d.-diis are mutual, and that the account is permitted to run with tin- view of ultimate adjustment by a settlement and payment of the balaine.'-' "In ordinary cases of mutual dealings, no obligation is created in re- gard to each particular item, but only for the balance; and it is the constantly varying balance which is the debt." '^^ Thus, where a party, wlio has items charged against him u])on an account, delivers goods to the other party on the mutual undei standing thai iii<'.\ are to enter into the account between the parlies, to be adjusted when the account should be settled, the delivery does not constitute a pay- ment on account of existing items, but they would be credited on the opposite side of the account, so that in any future settlement between the parties he could have the benefit of them. Tlie legal eU'ect i>f such a transaction is that the party delivering the goods sells them to the other party, the price to be credited on the account.^ -•' 120 (Jieen v. Disbrow, 79 N. Y. 1, 9. Compare Warreu v. Swi'i'iu-y. 4 Nev. 101. 127 Grot'U V. Disbrow. 7!> N. Y. 1. 10. 128 Abbott v. Keith, 11 Vt. r)2."i; Truenian v. Fcnton. 1 Sniitli. Load. Cas. (Hare & W. Notes) 966. 120 Green v. Disbrow. 79 N. Y. 1, 10: Clianiliors v. Martis. 2.". I'a. St. 'JiMi; Nortou V. Larco, 30 Cal. 12G. TflE STATUTK OK I.IM ITA IIONS. 16. LIMITATIONS AS AGAINST THE GOVERNMENT. ApiMl fi-om (lie ((jtcralion of stntiitts of limiiarKni. iIh' ilrfriiscs of stale claims and ladies cannot hv set up aj,Minst the •xoverninent.*^*' This (htctiine was enibndied in the jihrase, "Niilluin tenipus occnrrit le^'i." This maxim is fenndeil. iwit on tlie j^Monnd of extraordinai'y preroj^ative, but upon a {^leat i)iiblic policy. The {government can transact its business only tliroufih its agents, and its fiscal operations are so various, and its agencies so numerous and scattered, that the utmost vigilance woidd not save the public from the most serious loss, if the doctrine of laches couM be aj>plied to its transactions.^^^ But the principle is conlincd to cases where the government has a direct pecuniary interest in the subject-matter of the litigation. ^^^ Thus, for example, if a suit is brought in the name of the United States, to set aside public land yiatents issued by one of its departments, if the government has in fact no interest in the result, the suit being brought for the interest of individuals, the statute of limitation, if a bar against the latter, may be set uj) against the United States as the nominal jilaintilT.'^^ But the fact that a government is not bound by statutes of limitation, does not involve the conclusion that a citizen is not bound by them, as between himself and the government; ^^* and agents of the government, when treated as principals, may i-ely upon the j)rotection of the statute.^ ^^ Although the principles above stated had become established in connection with the equitable doctrine of laches and the common-law lule respecting stale claims, irresjtective of tlie operation of statutes of limitation, the sjune piinciples apply under such statutes, but the ajiplicatioii of the princi|tles is generally coiitidlled by statutes tixing some period within which the government, allhoiigh an actual party in interest, must bring actions, if at all. Thus, by Code Civ. I'roc. N. Y. >»o U. S. V. Dalh's .Military Hruul CS8; U. S. V. Klrkpatrlck, U Wheat. 71iO. >a> r, S. V. Klrkpatrkk, « Wheat. 71i<>. »»2 San rc-rKy). 12 Sup. Ct. 'MS. i»a Ciirtnor v. T'nltfd States. 14U C. S. r,i\'2. CTli. VA Sup. Ct. !>S5. '»♦ Slanley v. S«-h\van)y. 1 17 1'. S. TidS. .".17. l."; Snp. Ct. 41S. ia» Ware v. City Co., Ill C. S. 170, 4 Siii). Ct. ;i.{7. KX|M-ily, or llic iswufH or {u-olUfl tluM-cof, b.v iciisoii of tlic rijj;lit oi- title of the pcoph' to the naiiio. uiiUiw ritlu'i- (1) tlu' cause of action accrued within 10 years In-fon- tin* aclion is conuuenced; or (2) the |>eo]ile, or lliosc from whom ihev chiim. havp received the rents and profits of liu' re;il property, or of some part thereof, within the same period of time." And liy section ''.S!» it Ih ]>rovided, with reference to actions other tluni for the recovery of real juoperty.that the limitations prescril»ed''a]>ply alike to actions lu-ounht in the name of the jieople of the slate, oi' for their lienelit. and to ac- tions by private persons." AimI, even apart from the operation of such statutes, the maxim, "I-ipse of time is no bar to the ri;;hts of the soverei^ni,"' applies only to a sovereign state, and not to nuinicipal corporations deriving their powers from the state; and .so tin- statute runs against cities, towns, counties, and school districts, except as otherwise provided by statute.^ ^* 17. EXCEPTIONS AND DISABILITIES. It is very evident that theie are classes of cases where it woiild be most unjust to allow the mere lai)se of time to bar the enforcement of a cause of action. Such, for example, would be cases of infants; for an infant, being under general legal disabilities in many respects, ought not, during his minority, to have time counted against him under the statute. But, as the absolute bar created by the lap.se of a specified time rests upon a statutory basis, so any exceptions to the application of the statutes of limitation must be sought in the statutes, and accordingly the details of the law ui)OU this subject vary in different jurisdictions. Statutory Provisions in Neio York. (a) Thus the New York Code of Civil Procedure, after regtilating th<- subject of alterations in actions for the recovery of real property (sec- tions 8<)2, 374), provides in section 375 that if a pcison who might maintain an action to recover real property, or the possession thereof. 136 st.ite v. School Dist. No. 9, 30 Neb. 520, 4G N. W. Ol.'i. and 27 \m. St. Rep. 420; Pimental v. City of San Francisco, 21 Cal. 3ol: Clark v. Iowa City. 20 Wall. 583; Evans v. Erie Co., 00 Pa. St. 225; Inhabitants of Kfnn.-l.nnkiM.rt V. Smith. 22 Me. 445. ST.LIM.-3 l\\ THK STATUTK. OK I I M 1 lATIONS. or iii;il;c nil onliy. or iiilcrijosc llic ilcfnisc oi- comilnt l;iim foimdtMl (HI ilic liilc lo rciil jtroix-rly, or rciils or services out of llic s;ime. is. u'/cn /u'.'i iiilt'fird dtmcfx/s, or his cause oi aelion or rijjlil of entry ^rirsf rtrr/'v/'.s, either (1) within the age of 21; or (2) insane; or 0?) iniiirisoned on a criminal char;;e, or in execnlion upon conviction of a criminal offense, for a term less than for life. — the lime of such dis- ability is not a part of the time limited for connnencin^ the action, or makin^^ the entry, or interposing the defense or counterclaim, except that the time so limited cannot be extended more tiian 10 years after the disability ceases, or after the death of the person so disabled. (b) So. aijain, after regulating the period of limitation in actions other than for the recovery of real property (sections 37G, 395), the Code provides, in section :VM\, that in all these cases, with two or tliree specitied exceittions, the time of disability caused by infancy, insanity, or imprisonment under the circumstances above mentioned, is not a part of the time limited for commencing the action, except that the time so limited cannot be exttmded more than live years by any such disability except infancy; or, in any case, more than one year after the disability ceases. (c) So, again, by Code Civ. Proc. § 401, it is provided that: "If, when the cause of action accrues against a person, he is without the state, the action may be commenced within the time limited therefor, after iiis retiu-n into the state. If, aftrv a cause of action has accrued against a jierson. he departs from the slate, and remains continmmsly absent therefrom for the sj)ace of one year or more, or if. without the knowledge of the person entitled to maintain the action, he resides within the state under a false name, the time of his absence or of such residence within the state, under such false name, is not a part of the time limited for the commencement of the action." This section d(»es not ajiply whih* the designation of another resident of the state as a j)erHoii upon whom to serve suiumoiis or other piocess or jiapers, executed and tiled in accordance witli the pi()\isions of section V.\K), or subdivision 2 of section V-Vl, remains in force. Tlie operation of tliis section is illustrated by the case of an action njion a written in- Ktiumeiit in the nature of a promissory note for •'^l.OOO, dated January L'.'!. ISSL', made by the defeiMlant's testatrix to the jjlaintitT, payable on or before one year after tiie death of tlie maker, with interest. 'I'lie maivei died in ,l;iiiii;iiy, 1S1M>, ie;i\ing a will, in which the de- ExciirnoN.s anj; oisAi;ii,rni>. rir» fendaiit, llicn and cvor siiico a i-csidciil of < "liiciij^ij, \\;i> nmrM-il nn execulrix. Tlic drfcndaiil duly (inalilicd. and iirocccdcd to a dralli of a iicistm who sliall liavc dird wiiliiii GO days after the aUcinpl shall have bocn made to institute an action ajxainst liini imi'suant to the provisions of section olt!), is dealt with l>y section 40.*? of the Code, and other special provisions arr found in the following sections. The operation of section 40:') is illustrated in a case wlicre. at the time of the death of the maker of a note, tlie six years had not inn out l»y 10 days. He died Anj,Mist 12. 1SS7, and letters testamentary were issued Manli l'."., ISS!), and an action npon the note was conmienced ^Mardi 21, 1800. — two years and a half after the expiration of six years from the time when the note came due. It was held that the event of his death operated, under section lOo. to sustain tlie rnnninj: of the statute of liniitaiions upon the liability, for under that section it is provided that the term of 18 mouths after the death is not a part of the time limited for the com- mencement of an action against the executor or administrator. The 18 months mentioned, being computed as calendar months, expired on Felirnary 13. 1880. Thus, when the suspension cansod by the in- tervention of the statutory' provision was at an end. on Feluuary i:{th, the running of the six years was resumed. Of tliat year there had re- mained just 40 days when the testatrix died, and, if that period be computed from February 13, 1880, it brings the time down to March 2.">, isso. P.ut, as already stated, letters testamentary were issued on March 23. and under section 403 the plaintill had one year thereafter to commence tlie actioa*'* 18. SEVERAL CONCURRENT DISABILITIES. It sometimes happens that several distin<'t disabilities are recognized by statute to co-exist, each of them being sunicient for tlie time being to suspend the operation of the statute. Thns. a person owning a caus(? of action, miglit at the same time be a minor and also impris- oned ou a ci'iminal chai-ge. or a minor and insane. In MidelJ. 153 N. Y. 596-003. 47 N. E. 78;]. 1*2 Code Civ. Proc. §§ 39S. .^.!>!>: Riloy v. Pub y, 141 N. Y. 409, 30 N. E. 308; Clare v. Loikanl, 122 N. Y. 203, 25 N. E. 391. .38 TllK STATUTK OK MM 1 lATloNS. 21. THE STATUTE AFFECTS THE REMEDY ONLY. The stiilnlf uf limilJii idiis diics iml. nflci- llic prrsciilicil iiniod. dis- tliai^c «ir |»;iv the dclil. luU it simply l»;irs a iriiMMiy lliciron. The dclil, and llie obligation to |»a.v tlw same I'l-main, and tho aibitrai-.v liai' of ilio statute alone stand;* in llic \\a\ ol" tin- cicditor sceliinj; to coinjtel jiayinent. The lojiislalure could i( |m a! ihc statute of limita- tions, and then the payment of a de])t upon \viii( li the lij^^lit of action was barred at the time of the reiH-al coidd be enforced by action, and tile statutory ri;rhts of the ddtior are not invaded by such le}j:isla- tion.^** The statute of limitations acts only upon the remedy; does not imj)air the obli;xaliou of a contract nor pay a debt, nor produce a presumption of jjayment, but is merely a statutory bar to a recov- ery.'** Tlius, if notes are given, secured by a mortgage under seal, the fact that the statute has run against the notes does not prevent a foreclosure of the mortgage, as to which the longer period of limita- ti(»n applical)le thereto has not exjiired; for the notes are not paid, and, until lliey are paid, the mortgage is a subsisting security.'*'* 22. ABSENCE FROM THE STATE. It would obviously be unjust to provide that a claim should be barred unless prosecuted within a specified period, without also nmk- ing some special provision for the case of absence from the jurisdic- tion of the person against whom the action should be brought; for otherwise lie might, by absenting himself, render it impracticable to institute a suit a;.'ainst him. and tiwu return after the statutory period »<3 Cnniplx-ll V. lli.lt, lir. V. S. c.i'o. c Siip. Ct. L'ni). i4« lluilMTt V. Clark. V2S N. V. ITJD, liS N. K. JWiS; Quantock v. Enpland, 5 r.iirrows. llUli-S; .Toll!)'-''!! V i;,iili. '<- Ilullurt V. Clark. li:s .\. Y. i;:*.'.. L's .\. i;. (;;!S; J.cwis v. Hawkins, 'j;! W all. 11!»; HaKliii V. Hoyd. ll.'i U. S. T.'ii;, .' Sni». Ct. 771; Culdilcn;;]! v. .Inluisnn, M Ark. ?A2: 'I'linycr v. M.mmii. V.) I'ltk. f.Mass.i .':i."; H.-iiicock v. Iiisiiiaiifc Co., 114 MaHH. l."!.'.; .Ii.y v. A-laiiis, L'U Me. .'WO; llclknnp v. CJIcason, 11 Conn. KIO; T^mI- lou V. 'rnyliir, It H. I. 1.'77; Spears v. Hartly, 3 KHp. 81; Ili^jrlns v. .Stdii. 2 r.arn. A: As not run.'*' 23. FEDERAL CONSTRUCTION OF STATE STATUTES. "The courts of the United States, in the absence of legislation ui>on the subject by concurrence, recognize the statutes of limitation of the several states, and give tluMu the same construction ami etT«'ct wliich are given by the local tribmials. * * * If the highest judi- cial tribunal of a state adopts new views as to the proi>er construc- tion of such a statute, and reverses its former decisions, this court will follow the latest settled adjudications."^** The apjilication of this principle is not alTected by the fact that some other state, other than the one whose laws govern the case in hand, has adopted a different 146 Bennett v. Cook. 41', N. Y. .^'57; Riker v. Curtis. 17 Misc. Rep. 1.14-130. 39 X. Y, Suiip. ;i40; Watorniau v. Mauufacturiug Co., oo Conn. rM4. 57i'.. 12 .\tl. 240. 147 Burrows v. Fiencli. 34 S. C. H».". 13 S. E. .3."); Alexantler r. Bumrt, 5 Rich. Law (S. C.) 189; Ruggles v. Keeler, 3 Johns. (N. Y.) 2<;-{: Fowler v. Htrnt, 10 .Tolins. (X. Y.) 4<}4. See Langdon v. Doud. Si Am. Dec. «U."», note: Moore ▼. Ariiisfronsr. 36 Am. Dec. 7G: Muslims Re.v v. Gadban [\Si\\] 2 Q. B. 3.'.2. i*s Bausermau v. Blunt, 147 U. S. G47-<]04, 13 Sup. Ct. 4G(j. 10 Tlir. STATrTF, OK I. IMITATIONS. consfnirtion of a similar statulo.'*^ Nor l»y the fart ilial Iho case ill hand has boon docidod hy tho circuit court of tlie ITniled States prior to any construction by the state court, if. subsoquonf to such (locision. and before tho arfjunicnt of tin- appeal, the slahite is con- strued by the state court.''"' These principles have been applied in numerous cases."^ Thus, the state construction has be7, K5 .Siip. Ct. 4GG. 160 HauBtrinan v. Hlunt, 147 U. S. W7-W37, 13 Sup. Ct. 4(JC. 161 HlfTKliiKon v. Mfiu, 4 Cniiicli, 4ir>-^19; Sohn v. Watcrson. 17 Wall. .''.0<>- t.oo; I»avi.' V. I{ri««s. 1)7 U. S. V,2S (i37; Buvuvy v. Oclrlchs, 138 U. S. Olit), 11 Sup. Ct. 414. »'2 (;rccn v. Ni'al'.s Lcssoo, G Pet. LtM. >6«TloKa H. H. V. ItloHHhurB & C. K. U.. 1*0 Wall. i::7 143. 16* Kll)l)c V. I)itto, !»3 U. S. (J74. 166 .Mc.firi'H V. Itaiik. 104 U. S. (JIM). 160 (;nat WcHtorn Tel. Co. v. nmiiliam. ir.2 V. S. 339, 10 Sup. Ct. 8.10; Mot- .alf V. WaUTtown. IM U. 8. G71, r,i:,, 14 Sup. Ct. 1M7: Code Civ. Proc. N. Y. . .';;K); Wutcrrnan v. .ManufacturitiK Co., 50 Cuuu. 554, 570, 12 AU. lilO; Sisuoa V. NIW'H. f'A Vt. 4Ut, 24 Atl. W2. 167 MJiltT V. lircubaoi, US N. Y. 83. 'iiii: I AW Ml' Tin: koutm oovkmnb. 41 l)t'in;; ;i sinfnic of liiiiii;il ions in jiiiv Hi-nso known to fhf law, in. in legal etTccl. onl.v iin ;iltrnipl to give operation to the statute* of liniita lions of thai slate in all the other stales of the Union by donying the etlicacy of a judgment recovered in another state, for any cauw of action which was barred in her tribunals. Hmh a statute Is in deroga tion of section 1 of article 4 of the federal constitution, providing that full faith and credit shall be given in each state to Iho public actp, ro<^ ords, and judicial proceedings of every other state, and of the legisla- tion enacted in pursuance of that provision.*'* IBS Christmas v. Russoll, 5 Wall. li!K). VEST PUBLieaiNO CO., PRINTERS AND ■TEJ:EOTYPEH«, IT. PAUL. MUrK. CONFLlCr OF LAWS A MONOGRAPH St. Paul, Minn. WKST PUBIT-^HINC CO. Copyright. 1899, BY WEST PUBLISHING COMPANY. CONFLICT OF LAWS. 1. INTRODUCTORY. Laws have no foico of llicmselves. bevoud ilu- juiisdiclion uf tlio na tion or state which enacts them, and can have extraterriioiial » ff. cases will be more fully considered hereafter. But the geneml ml.- 1 Huntington v. Attrill. 14G U. S. 657. W9. 13 Sup. Ct. 'J24: !Iili..u t. (Jiiy.t. 159 U. S. 113, 163, 16 Sup. Ct 139; Marshall v. Sherman, 14S N. Y. 9. 25, 42 N. E. 419. CONF.L.— 1 'J CONKLICT OF LAWS. is that, ill cases of othor than penal aelions. il\e f(»it'i;^n law, if not eontrarv to the pultlic pnrh v of the slate where tlie actiou is broiij^hl, or to absiraet jiisliec or pure morals, or calriilated to injure the hitter state or its citizens, will be recoj;ni7,ed and enfoi-ced there, if the court has jurisdiction of all necessary parties, and can see that, consistcDtly w itli the local forms of procedure and law of trials, it can do substantial justiie between the parties. But if the foreign law is a penal stat- ute, or ofl'ends the policy of the state, or is repugnant to justice or to good morals, or is calculated to injure the state or its citizens, or if tlie court has not jurisdiction of parties who must be brought in to en- able it to give a satisfactory remedy, or if under the local forms of pro- cedure an action in the state where it is brought cannot give a substan- 1 ial remedy, the court is at liberty to decline jurisdiction.^ "International law, in its widest and most comprehensive sense,— including not only questions of right between nations, governed by what has been appropriately called the law of nations, but also ques- tions arising under what is usually called private international law, or the conflict of laws, and concerning the rights of persons within the territory and dominion of one nation, by reason of acts, private or pub- lic, done within the dominions of another nation, — is part of our law. and must be ascertained and administered by the courts of justice as often as such (piestions are presented in litigation between man and man, duly submitted to their determination. The most certain guide, no doubt, for the decision of such questions, is a treaty or statute of this country; but when * * • there is no written law ui)on the subject, the duty still rests upon the judicial tribunals of ascertaining and declaring what the law is, whenever it becomes necessary to do so, in order to determine the rights of parties to suits regularly brought befoie them. In doing this the courts must obtain such aid as they can from judicial decisions, from the works of jurists and commenta- tors, and fr(un the ads and usages of (•i\ili/,<'d nations."' The foregoing quotation relates to the rights of i)ersons within the lerritorv and dominion of one tmtian. by reason of acts, private or pub- lic, (lone w*itliin the dominions of another luitlon. The same principles would be aititlical)le if for the word "nation" we substituted the word « HigBins V. Railroad Co., 150 Mass. 17<;. L'i) N. E. r):54; Mldlaud Co. v. Broat, 50 Minn. .-C,2, 52 N. W. ^1!. » Hilton V, Guyot, 15U U. S. 113, 103, 10 Sup. Ct. 1.30. COMITY. •> ^'state," in the senso of one of Ihn United StalcH, fxccpf iliat. unil ujwn each stale to j;ive ctlVct to certain s|MMiiifd actb done io o\\ui states, — a subject to be discussed hei-eafler. 2. DEFINITIONS. 'Xex loci rei sitae" is the term desifjnating tlie law of llu- jdac- where given property is situated. "Lex loci contractus" in the law of the place where a given contract is made. "Lex loci actus" is "the law of a place where a legal transaction takes place."* "Lex loci solu tionls" is the law of the place where a given contract is to be jm r formed. "Lex loci domicilii" is the law of the place where a given pti son has his domicile. "Lex fori" is the law of the place where a given action or proceeding is pending. 3. COMITY. As already stated, no law has any etfect, of its own force, beyond the limits of the sovereign i)ower from which its authority is deriv»'d. The extent to which the law of one nation, as put in force within iis territory, whether by executive order, by legislative act, or by judicial decree, shall be allowed to operate within the dominion of another n.i tion, depends upon what has been called the "comity of nations. "Comity,'' in the legal sense, is neither a matter of absolute obliga tion, on the one hand, nor of mere courtesy and good will, u[»ou tic other. But it is the recognition which one nation allows within its territory to the legislative, executive, or judicial acts of another nation, having due regard both to international duty and convenience, ami to the rights of its own citizens or of other persons who are under fli protection of its laws.^ 4 Dicey, Confl. Laws, 74. 5 Hilton V. Guyot, 159 U. S. 113, 163, 16 Sup. Ct. 139: Marshall v. Sherman 148 N. Y. 9, 25, 42 N. E. 419; Story, Confl. Laws. §§ 23. 24, 28, 33. 38; Saul v. His Creditors, 5 Mart. N. S. (La.) 569, 5915; Bank of Augusta v. Earle. 13 Per 519, 589; Wheat. Int. Law (8th Ed.) §§ 78, 79, 147. 4 CONFLICT OF LAWS. JForrigji Amgnees. "NMiile the statutes of one state can in no cnso Imvo any force anil effect in another state ex proprio vigore, and hence the statutory title of foreii;n assijjnecs in bankruptcy can have no recop;nition solely by virtue of the forei{j;n statute, yet the comity of nations allows a cer- tain effect to titles derived under, and powers created by, the laws of other countries, and from such comity the titles of foreifin statutory assi«;nees are recognized and enforced when that may be done without injustice to the citizens of the state where such recognition is sought, and without prejudice to the rights of creditors pursuing their remedies there under its statutes, and provided such titles are not in contiict with the laws or public policy of the latter state. Subject to these conditions, foreign assignees may appear and maintain suits against debtors of the bankrupt whom they represent, or against others wha have interfered with or withhold the property of the bankrupt.^ Foreign Tmi.^tces. A trustee holding title under an instrument executed in one state or country, by a resident thereof, may sue in another state or country to recover trust property, or damages for conversion, for he has the legal title.^ Foreign Executor or Administrator. An executor or administrator appointed in one state cannot bring an action in another to enforce claims in favor of the estate, without first taking out letters in the latter. But a voluntary payment to such an administrator is valid.' 4. LOCAL AND TRANSITORY ACTIONS. Actions are designated as local or transitory, according as they must, on the one hand, be brought in the jurisdiction where the subject-mat- ter is located, or where the transactions involved occurred, or, on the « In re Waitf. i)9 N. Y. \\\\\, 2 N. E. 440. T Toronto fJeneral Trust Co. v. Chicago, B. & Q. K. Co., VIW X. V. Wi, 25 N. E. 108; Bromlpy v. MltcheU, 1&5 Mass. 00!), 30 N. K. 8;{. Sec I'.in.nh.iin v. Bank, 112 N. Y. GGl, 19 N. E. 416. « Scliluter V. Bank, 117 N. Y. ]2r>, 12;». 22 N. E. r)72; rarsons v. Lyman, 20 N. Y. lo:;; Wilkln.s v. Ellett, 9 Wall. 740; Stevens v. Gaylord, 11 Mass. 256; I'almer v. Insurance Co., 84 N. Y. 03, 07. I'KNAL PU0CP:EDIN08 ARE LOCAL. other hand, iiiiiy bo hi'(Hie. 10 Wheat. 66, 123. 12 u. S. V. Reisiuger, 128 U. S. 398, 402. 9 Sup. Ct. 09: U. S. v. Chouteau. 102 r. S. 603, Gil. 13 Huntington v. AttriU, 146 U. S. G57, 6G7, 13 Sup. Ct. 224. b CONFLICT OF LAWS. iitcs. for the protection of its rc\(HMc. or oIIut iiiiiiii(ii>;il liiws, ami to all judfjinents for such iH'iialtics." '* Thus, in the case hist cited, it was lield tliat the Inited States su- preme court liad no ori<;inal jurisdiction of an action by a state upon a judj^inent recovered by it in one of its own courts aj;ainst a citizen of anoihci- state, for a i)ecuuiary penalty for a \iohi(ion of its municipal law. So. the courts of a state cannot be compcUed to take jurisdic- tion of a suit to recover a like i)enalty for a viohition of a law of the I inited States.^ ^ So (except in cases removed from a state court in obedience to an express act of congress, in order to protect rights un- der the constitution and laws of the Tnited States), a circuit court of the I'niled States cannot entertain jurisdiction of a suit in behalf of the state, to recover a i)enalty imposed by way of punishment for a violation of a statute of the state.^" So. again, for the purposes of extraterritorial jurisdiction it has been held that actions by a com- mon informer to recover a penalty imposed by statute for an offense against the law . and which may be barred by a pardon granted before action brought, may stand on the same ground as suits brought for such a jM-nalty in the name of the state or its officers.*" And personal disabilities imjwsed by the law of a state as an incident or consequence of a judicial sentence or decree, by way of iMinishnient of an offender, and not for the benefit of any othei- ju'rson. — such as attainder, or infamy, or incompetency of a convict to testify, or disqualitication of the guilty party to a cause of divorce to marry again. — are strictly penal, and therefore have no extraterritorial operation.^* On the other hand, if the statute of oiw state makes a j)erson or cor- poration, whose wi-ongful act.n«'glect. or defaidt should cause the death of any jierson. liable to iin ariiou by his iidniiuisnator. for the benefit n Wisroiisiu V. Insurance Co.. IL'T I'. S. UC,.".. lMhi. s Sii]). ("I. l.".T0. 15. Martin v. Uunler's Lessee, 1 Wheat. ;'.0l. .■!.:o. .■;:;T; f. S. v. Latlirop, 17 .((.lins. (X. Y.) 4; Ely v. Peck, 7 Couu. 2:59; Slate v. Tike, 1.1 X. II. 8:5. 85; Wanl V. .leiiklns, 10 Mete. (Ma.ss.) 'jKi, r»87. in(;wiii V. I?reeT Adams v. Woods, 2 Craiieli. ."..'.i;: l'. S. \. Coiiiior, l.'.s r. S. Ul. CC. 11 Sup. Cf. 221>; Hr.vaiit v. Ela. Siuilli (X. II. t :',1m;. !•> Folliott v. OKdeii, 1 H. lil. VSl. .'{ Term H. 7Jt;: Ln-.in v. T. S.. Ml 1'. S. 2«W, :J0.'!, 12 Sup. Ct. tU7; Dickson v. Dickson's Heirs. 1 Verf,'. (Tenn.) 110; Corn. v. Laut, 113 Mas.s. 458, 471; Vau Vooiijis v. Brim nail, 8ti X. Y. 18, 28, 20, PENAL FR0CKEDING8 ARK I>k:AI,. of his widow and next of kin, to recover daiii;i;;<-s fui ilir* [lOfiiniary injury icsulliii^' (o thcni from IiIh death, su, 12 Slip. Ct. 905. soHorrick v. Railway Co., 31 Minn. 11. KJ N. W. ll.'.; Chicago. St. I.. vV N O. R. Co. v. Doyle, 60 Miss. 977: KnijLrlu v. Railroad Co.. los I'a. St. ITjO; Morris v. Railway Co., G5 Iowa. 727. 2^5 N. W. 143: Higgius v. Railroad Co.. 155 Mass. 176, 29 N. E. 534. 21 Huntington v. Attrill, 146 U. S. 657. 13 Sup. Ct. 224. 22 Burgess v. Soligniau. 107 U. S. 2: fariM liter v. .StraiiKc. 1 Jl T.'. S. 87, lo.'t. 11 Sup. <"t. '.".o. »ft HiiiitlnRton V. AttriU. HO IJ. S. (k". <\K\, 13 Sup. Ct. lil'l; liiiiiliinftoii v. 'rlll IIS!..;| App. Cas. 1-|<». -• llmiiiiiKt.iij V. Attrlli, Mt; i:. S. ii.".7. ('.f.Ji. i:! Siii». CI. '1-1\. «T Wi.»tl. prlv. Int. Law, p. i:5. »• IIuiitliiKtun V, Altrlll. 14«J V. S. (>:.T. OCD. UJ Siij). (.'t. -'I'l. 2» ElU-nwood V. Chnlr Co., 158 U. 8. lOG. 15 Sup. Ct. 771; Ain.TJr.qn TTiilon Tfl. Co. V. Mlrldlctoti. Mr» N, y. 4nls.tn v. Mat tin ws. I {•.•mi 1{. :m\\; .Ml-- K.'niui V. rirtk. 1 How. 241. 24S. *• LlvlngittuD V. JflTfrson, 1 linnk. llo;!, Ted. (as. No. >s,411. LOCALITY IN KQUITY SUITS. 9 ti'ospnss to 1,111(1 in Illinuis. wImtc tlic nile of tlic coiniuon law pn vaik'd, was maintained in Ix)uisi:nia.'* 8. INJURIES TO PERSONS OR TO MOVAHLF, PROPKRTY. Tn order to iiiaiiilain an action for an injury to the jkthoii or to movable {jrojierty. some courts have held lh;il the wrong niuht \n- on.- Avliich would be actionable by the law of tlic place where the redre88 i sou^dU, as well as by the law of the place where the wrong wa done;^- while in others, including the federal courts, a private action may be maintained in one state, if not contrary to its own fiolicy, for ' such a wrong done in another, aiKJ actionable there, although a iik' wrong would not be actionable in the state where the suit is brought.*' 9. ACTIONS ON CONTRACT. As a general proposition, an action to recover damages for tic breach of a contract, or specific performance of its terms, is trau.*-: tory,^* 10. LOCALITY IN EQUITY SUITS. In suits in equity the situation [uesented is somewhat different from that in actions at law; for '"where the subject-matter is situated with- in another country or state, but the jiarties are within the juriwliction of the court, any suit may be maintained and remedy granted wiiicli directly aft'ect and operate upon the peison of the defeiMlant. and not upon the subject-matter, although the subject-matter is refei r. d to in 31 Holmes v. Barclay, 4 La. Ann. 63. See, also. Compnnhia de M.., .nr.,.]. V. British Soutli Africa Co. 11.^021 2 Q. B. 358; Crapin v. I.ovell. H8 N. Y. Z>^ AUin V. Limiber Co., 150 Mas.s. 5()0. 23 N. E. r»Sl. 32 The Halloy, L. R. 2 P. C. 1»3, 2M; Phillips v. Eyre. L. K. G Q. B. 1. 2S. 29; The M. Moxhaui, 1 Piob. Dlv, 107, 111; Wo N. E. 584. Compare Anderson v. Railway Co.. 37 Wis. 321: Leonard ▼. Nav: gation Co.. 84 N. Y. 48. 3* Midland Co. v. Broat. 50 Minn. 562, 52 N. W. l>72; Ulggins v. Railroad Cc.. 155 Mass. ITG, 2'J N. E. 504. 10 CONHUT OK LAWS, thi' (Imt'c. and iln' (Irfnulant is ordficd to do or icfiain from ctilain arfK towards it. and it is llius nil iniattlv. Imt indirrrlly. alTrrtcd h\ the rrlii'f prant»Ml." '* r«)ni»'r«iy mentions, as rxamplcs of this rnl*-, suits for spctitlc |M-r- formantc. roliof on tlw ^momikI of fraud, linal acrowntinfj:, wttlomcnt of parincrshiiis. and tho like. So. where an action is liron;:ht, for ex- ample, in Coiniecticnt. iipt»n a New York j\ul;:ment, altln»n;;li the jndjz- nieiit sued on eanintt he atiaiked in that anion, on the ground that it was procurod by fraud, yet the defendant may file a bill in e«piity a^iainst the plaint itT. alle^^in^' that the jnd;;nient was procured by fraud, and. upon establisliin;: his allegations, jii'ocnre a decree enjoin- in;: the i)laintifr from proseeutinj; the action upon it. And in sncli a case, if an action is subsecjuently brou^^ht upon the ori;^inal jndp:- ment, in New York, where it was ori;;inally rendered, the decision of the Connecticut court that it had been obtained by fraud would be conclusive in New York ajfainst its validity.'"' So. the courts of a state have power, in a suit in e(|nity. to set aside a jml;,'ment or decree obtained by fraud. althon;:h it was obtained in a Tniied States court." Althou;,di in cases of trust, of contract, and of framl. the jurisdiction of a court of chancery may be sustaine<1 over (he person, notwithstand- ing; lands not within the jurisdiction may be alTected by the decree," ye! it d(»es not follow that such decree is in itself nece.ssarily bindinjj upon the c(Mirts of the stale wliere the land is situated. 'Phus. if the court of a state in whicli land is not situated, instead of direct in;: Ji conveyance or in some way exertin;: c(mtrol over the party, in (uder thereby to effectuate its decision, merely adjudii ates tipon the title, the courts of the state where the land lies are not obli;:ed thereby to surrender jurisdiction to the court renderin;: the decree, by accedin;; to its diMiHion.'" »S3 I'oin. ]:«i. Jur. | I.'JIS: Duvl.s v. Curiiw. ir.l N V. 17J. ITS. \:, N. K. 449; DobsoD V. rearcc', 12 N. Y. ir.«»: Sli'vcns v. l'.;iiiU. I II N. V. .".o. .J'.i N. K. CtS. • « DotiHoii V. iNjirec, 12 N. Y. l.'.ii. »' Htcv«-iiH V. Hank, 141 N. Y. r»o. :;•( .\. K. r,s. Sec. .-ilsn, Hiinlniry v. Mnii- l>ury, 1 IJcav. .'U«; lliTkfi>r• CnriMiitcr v. StranKc 141 I'. S, ST. KM!. 11 Sup. f'f. OCO; Davis v. TToadloy, JJ .\. J. 1>|. 11.': .MilltT V. MInlHJinu. 7 Ilaxt. 0«in"-; •'»-'5>; Ci>.»l«y v. Scarlett, 38 III. .".p;; <;iir"linr v. Ot:* (oNlUAtTS. 11 11. WHAT LAW GOVERNS CONTRACTS. (a) 0^nfrni-ts Rilatiiif/ tn ^'' Monifilis.'''' It is a general and iinivtisal iiih- tlial |M'rsonal jirnp. riv hat* no locality. It is subjftt to tin- law of tiic owihi-'h doiiiicil"-. a* vvi-ll in r«'S|»t oiM-rate in another state to pass title to the property in coutraveuliou of the laws of that state."- So. while the validity of a disposition of personal property at tie domicile of the owner is ^^-nerally the test of its validity in other juri- dictions, the rule only requires compliance with forms and with prin ci]>les of law, jieneial or nniversal. reeo^jni/.ed as essential to the trans fer or transmission of pro{)erty. If p«'rsoi»jd property is dispc»H*r or transmit the pr«>i»orty but rejiulations apjilicable to the holdinj: of |»roi>«rty in a parti, nlar community, founded upon political or soi-ial considenitions. Thus, 40 Cross v. Trust Co., 131 N. Y. .'«0. X\'d. .10 N. K. I^-V 41 Warner v. Jaffray, 96 N. Y. 248, 25o; CJreeu v. Van l?u-u rk. T Wall. IX' Hervey v. Locomotive Works. 93 V. S. 664. 4^ Warner v. Jaffray. i't". N. Y. 248. 12 CONFLICT OF LAWS. a disposition of ]•< rsoiial proixMi v iiKidr in N'<\v York by a coiniM^tcnt t«'st;»l(»r. in a valid tcslaniontary insdunH-nt, to trustees in a foreif^n <-ountry. for the i)iiriioso of a cliarity to be estaidished in tliat eountiy, is valid, altlioujih not in eonipliaiu'e with the New York statute or thr rules of law in force there in regard to trusts, providing it is valid l.y the law of the place where the gift is to take effect, and which governs the trustee and the property when transinittcd there.*'' n>i Om/litional Sahs. Where a chattel is sold under a contract executc.l in another state, whereby the vendor retains the legal title until the price is ]>aid. the law of the state where the contract was made will govern tlie rights of the i)arties.** (c) ContrnctA Relating to ^'' Immovahlesy "It is a principle firmly established that to the law of the state in which the land is situated we must look for the rules which govern its possession, alienation, and transfer, and for the elTect and construction of wills." *' Thus, for example, where an action in the federal courts involves the application of the rule in Shelley \s Case, the court is re- lieved from the consideration of the innumerable cases in which the courts in England and in the several states of the Union have dealt with its origin and application, and has only to do with the rule as ex- pcjunded and applied by the courts of the state in which the land lies.*" The rule which subjects a contract made in one state concerning land in aiK)ther state to the law of the place where the land is situated is not contined in its operation to the formal execution of the deed, but extends to and includes all ipn-slions as to its construction and «> Hope v. IJrewer, \'M N. V. V^'i. l-«'.». ."5- N- K- •'•"••'^; '-^o**^ v. Trust Co.. 131 N. Y. ;'-'.o. .50 N. K. ll!."i; Hurliank v. Whitney, '2A Pl.k. (.Mass.) 154; Fordyce V. Hrl(l«th, 2 riill. Ch. W)1\ Vansant v. Uolu-rts, 3 .Md. 11!>. Soo. also, in Kcn- eral. as to contracts valid where made, and also where the movable pntperly is Bitunttd. and the recoj;nition of their validity elsewhere, Cleveland Mach. Works V. I.aiij; (.N. II.) 31 Atl. 'JO; OfTutt v. Fla^k'. K' N H "'. Wdiisltin v. Freyer, W, Ala. 'i:~i, t> South, lis.'*. «« Barrett v. Kelley. 06 Vt. 510, LM> Atl. 801); Cobb v. Husweli. 37 Vt. 337; Holt v. Knowllon. m<1 Me. 4.'>0, 1» AU. 1113; Cleveland Maeh. Works v. Laug (N. n.) 31 Atl. IHJ; Marvin Safe Co. v. Norton. 4S N. J. Law. 11<». 7 Atl. 4 IS. ♦ » De VauKhn v. Iluchlnson. Km r. S. .'.c,(;, 17 ."^up. Cl. 4<;i : f. S. v. Cio.sby, 7 Cranch, ll-'). «• De Vaugha v. IJuchlnsou, It;.*! U. S. 50«i, 07", 17 Sui". Ct. 4tll. \VII\r LAW f;()VKI{NH CONTItAcmi, 18 intcrpretalio!!.*^ Not only imiHt n-sort he h.u] lo th«' Inw of th«» iilt« to (Ictcnuinc the ((Uisl ruction and lc;jal clT^'ct of a (IimhI. Itnt alno f (Iclcrniinc whctlici' llic siiltjcct niallt-r of tlif inslrninf-nt jh real or \*> sonal.*" The (jiK'siion. Itcin;; one of fun i;.'ii law, riniKt In? detemilni* invest the proceeds, as they mij^ht deem advisable. The trusti^cH were directed to i)ay over to the beneficiaries the rents and profits, "and all net proceeds of sales, made pursuant to the authority so piven them, which they shall deem inadvisable to reinvest." Testator then "piave, devised, and bequeathed" all the property of which the trusteeu had received the rents and protits, and all the residue of his pr(»|MTty. "in such manner that the parties, theretofore receiving the inconi only, shall receive and become vested with the estate and proin-rty out of which such income arose." And it was held that, thou^'h the trustees sold the land under the power, and brought the proceeds into New York w ithout reinvesting them, such proceeds retained the char- acter of realty, and the testamentary disposition thereof was governe«- V. Douglass. 5 N. Y. 447: Kline v. Baker, i>9 Mass. 2&4; Concha r. Murrk-t 40 Cb. Div. 543. 60 Elniendorf v. Taylor. 10 Wheat. 152. 1.59. 61 Butler V. Green (Sup.) 19 N. Y. Supp. 890. 14 CONFI.UT OK LAWS. conic within tlu' Ic^al (Iclinilitin of "Iwrnl." ;is snlijcct lo tli<' 1<'.\ loii it'i sitae.^^ 12. LEX LOCI REI SITAE. In Mildilion to the itiinciplcs clscwlicit' stated as to tlio rontrolliim elTtrt of the law of the site in respect to contracts, deeds, assij^nnienls, and other transactions atTectinj; inunovalih' j)roperty, that law ex- clnsively "governs the descent and heii-shiit of real i)roperty. No p«'r- sons can take by descent unless iccofini/.ed as iesitiniate heirs by the law of the country or stale where the land lics.'^' The same principle ap]»lies to devises of real property."* Other illustrations, and further discussion, of the law of the site, both witli rc-iard to movable and immovable property, will be found uihler other heads, where for convenience it is treated by way of com- parison or contrast with the law of the forum, of the place of the contract, etc. 13. LEX LOCI CONTRACTUS. An instrument, as to its form and the formalities attending its exe- cution, must be tested by the law of the place where it is made."° Such is the usual statement of the "general rule, and yet upon the <]ues- ti(m by what law the execution, interpretation, and validity of a con- tract is to be determined there are dilTeient theories when a contract is made in one place and to be j)eif<»riiie(l in another. Tluis, in Scud- N. V. Siipi.. S'.Mi. S'.M: Levy v. I>cv.v. .!.■; \. ^ . !»7. ■•'•• WilllaniH V. KlinliJiil, :;:. Il.i. TS."!. H", Suutii. 7s.".: lU>yro v. City nl' St. Louis. J'.t Uarli. (N. Y.) <».">0; Umwcs v. Hoylsloii, li Mus.s. :{;;7; I'oitcr v. 'I'it. dinlt, 'JJ Mt'. .",o<»; Duncan v. L.MWson. 41 Ch. DIv. .'MM. I* (;uarante<' Trust A: Safc-ncpdHit Co. v. .Mji.wvi'i! iN. .1.; M All. .{;«). 6ft Millrr V. Wll.M)n, 140 HI. o'S6, 34 N. E. 1111. 6«'J1 U. a. 40G, 4L2. I.I.X I-(t(I (MMKAtTUH. 1 ' thai llu' Milidity of an airc|ilaiirc in ( "liir;i;^(i. l.y n iikiiiImt of au Illinois tiiin, of a liill of ('X(lian;;<'. drawn in ('ITKii^'o niMiii III"* firm, was to 1)(> (lelciminrd hy (lit* law of lllinoiH." In the LivtTpool & CI. W. Steam Co. Ca^*'. it in said that a n-vicw of tlie principal cases demonstrates tiial. according: to ih<- ;.'nat pn*- l)ondei'ance, if not the uniform concurrence, of anthorit.v. tin- jii-iierul rule that the nature, the obli^'ation, and the int<'r|ii: Oliphant v. V:uiiitst. ."..S N. .7. Law. ItrJ. X\ All. .".82. 08 Hamlyu v. Tali.-^ker Distillery IISIMJ App. Ca.-^. l^oii. 6 8 Taylor v. Sharp, 108 N. C. 377. 13 S. E. 138. 80 See, as to promissory notes. Mc(;arry v. Nicklin. 110 Ala. .V.;t. 17 South. 72G; Case v. Dodjio. 18 R. I. GOl. 20 All. 7S.-. 61 lu re Missouri S. S. Co.. 42 Cli. Div. :{21: Davis v. Insuraiue Co. .N. H » 34 Atl. 4(J4; Hart v. Machine Oo.. 72 Miss. .^Ut, .^28. 17 South. 7n». 6 2 Andrews v. Poud. 13 Pet. (>): Loudou Assurance v. Compauhia de Moagon*. 167 V. S. 149. 161. 17 Sup. Ct. 7S."». 6 3 Dickinson v, Edwards, 77 N. Y. 573. 10 CONFI.ICT OF LAWS. otluT. where the drawee resides, the law of the lattor state, in respect to pivsentation and demand for payment, is oon(rollin<,'/" In New York it is held that the lex loci solutionis and the lex loci contractus must both be taken into consideration, neither, of itself, boin^' conclusive, but the two must be considered in connection with the whole contract, and the circumstances under which the parties acted, in determining the question of their intent.'' ' In some states it is held that, in the absence of a contrary intention, when a contract is made in one place or country, to be performed in another, its validity and effect are to be determined by the law of the place of per- foniiance.®^ If a stipulation in a contract with a common carrier, relieving the carrier from liability for injuries resulting from the negligence of its servants, is valid where made, it will be enforced, and, if void there, will not be enforced, on principles of comity, in another jurisdiction, although contrary to its own local policy.''^ 14. DEFENSES AND DISCHARGES. The general rule, as stated by Story, is that a defense or discharge, good by the law of the place whore the contract is made or is to be f>erformed, is to be of equal validity in every other place where the (|ucsiion may come to be litigated.*^® Thus, infancy, if a valid de- 0* Sylvester v. Crohan. 138 N. Y. 4m. .3-4 N. E. 273. See Douglas v. Bank, 1«7 Teiin. 133, 3G S. W. 874; Abt v. Hank. 150 111. 4(!7, 42 N. E. 85G. 8 6 Wilson V. Mill Co., 150 N. Y. 314, 323, 44 N. E. 909. «« Burnett v. Kallroad Co., 17G Pa. St. 45, 34 Atl. 972; Abt v. Bank, 159 111. 4(;7, 42 N. K. 850. «7 O'licgan V. Steamship Co., 160 Mass. 306, 361, 35 N. E. 1070; Davis v. Hallway Co., 93 Wis. 470, 480, 67 N. W. 16, 1132; Fonseca v. Steamslilp Co., ir..', Mass. r>r/.i, 27 N. E. 6G5; Brockway v. E.xpress Co., IGS Mass. 257, 47 N. B. 87. So, as to telegrams, Keetl v. Telegraph Co., 135 Mo. 601, 37 S. W. 904. otherwise, in the federal courts, The Iowa, 50 Fed. 501; even thouRli the par- tji H stli)u!ate to be governed by the fonlKU law. The Knergia, 50 Fed. 124; Ty<\vis(ilin V. Steamship Co., 56 Fed. 602. Upon the question of when it is that n rori tract, as. for example, an insurance policy, becomes complete, so as to de- ftrniinc the "place of the contract," see Curnow v. Insurance Co., 37 S. E. 406, K; S. E. 132; iMpiltable Life Assur. Soc. v. Cleiiiciils, 140 U. S. 220, 11 Sup. Ct. S'J'J '"• Story, Confl. Laws, 8 331. THK LAW OF THK PLACIO OF I'KKKOKM ANCE. IT fense by the lex loci contractus, will lie a valiil o r('S|>f'«ly ne;,'(tii;il»le bills or notes is by the lex loci contractus held to be a conditional payment only, it will be so hold, even in states where such payment tinder the domestic law would be held absolute. So, if, by the law of iln- jdace of the contract, equitable defenses are alhtwed in fa\nr <»! ilie niakiT of a nejjotiable note, any subsequent indorsement will not change his rights in regard to the holder. The latter must take it cum ODere.^* 15. THE LAW OF THE PLACE OF PERFORMANCE. In every forum, a contract is governed by the law with a view to which it was made.'^ The law of the place where a contract is maile can never be the rule where the transaction is entered into with an express view of adopting the law of another country as the rule by which it is to be governed.'* It is upon this ground that the presump ^ tion rests that the contract is to be performed at the place where it is made, and to be governed by its laws, where there is nothing in its terms, or in the explanatory circumstances of its execution, inconsist- ent with that i9*ftition. It is the w ill of the contracting parties, and not the law, which fixes the place of fulfillment.^" But if no place is designated, the place of sale is the point at which goods ordered or purchased are set apart and delivered to the 69 Thompson v. Ketchum, 8 Johus. (N. Y.) IS'.): Male v. Koberis. :> Ksp. i-. 7 Warder v. Arcll, 2 Wasb. (Va.) 2S2. 71 Searight v. Calbraith, 4 Dall. Sl^o. 72Evaus V. Gray, 12 Mart. O. S. (La.) 475; Story, Confl. L.nw- s ;:.:j. 7 3 Pritcbard v. Norton. 106 U. S. 124, 136. 1 Sup. Ct. 102. 7 4 Robiuson v. Bland, 2 Burrows. 1077, 107S; Le Breton v. Miles. S I'aige (N. Y.) 261. 75 4 Phillim. Int Law, 469, 47U. See, iilso, Meyer v. Richards, 163 U. S. »5. 16 Sup. Ct. 1148. CONF.L.— 2 18 CONKMCT OF LAWS. jiuit lijisrr."" ''blatters connected with tlu- performance of a contract are rcjiulMlcd by the law prevaillnj; at the phice of the performance." '^ The nUe that the oblijiation of sliippers of a carj!:o is 1o be determined by the hiw of the phue where Ihe contract of affreightment was iii;i(h' ■" disjioscs of any tlieoiy thai f he (jiicst ion can be affected by the "hiw of the llag." Tlie fact tliat tlie vessel, for instance, was Italian, docs not subject the contract of shipment to the operation of tlic Italian rommercial Code.^* Jni.rr.st. The general proposition is that where a ])romissory note or other obligation for the ]»ayincnt or forbearance of money is made in one stale, and i)ayable in another, tiie parlies may voluntarily agree ujjon a rate of interest allowed by the laws either of the state where the obligation is made, or by the laws of the state where it is made pay- able. If a party goes into another state, and there makes an agree- ment with a citi/.en of that state for the loan or forbearance of money, lawful by the laws of that state, he does not render his obligation void by making it payable in another state, under whose laws the contract would be usurious. ]S'either can it be claimed that, because the obligation, instead of being signed in the state where the contract was made, is signed in another state, and sent by mail to the place of the contract, it must be governed by the local laws of the i>lace where it was signed. **" Where a contract of loan is made between a citizen of Illinois and a 76 ivrlniiiu V. Sarluiius. UVl I'm. St. :'.2U, 21) All. 852. -^ AVaverly Nat. Bank v. ll.ill. ir>0 Pa. St. 40G, 473. 24 Atl. CC": Scuddor v. Bank, 01 U. S. 4(M;; Prit.li.inl v. Xnrton, Km; U. S. 124, 1 Sup. Ct. 102. 7« Liverpool & G. \V. Steam Co. v. IMicnix Ins. Co., 121) U. S. 31)7, D Sup. Ct. 4(rj. -" China Mut. Ins. Co. v. Force, 142 N. Y. DO. 100, 3(; N. E. 874. to Wayne Co. Sav. Bank v. Low. SI N. Y. .'.CJU: Jackson v. MoitsaRc Co., 8.S C.ii. 7r.r,. 1.", S. E. H12; .Mott v. Uowland. S.'. Mi.ii. ."C.l, 4S .\. W. iV-W, New EtiKiand Mortj;. Si-e. Co. v. McLauKlilin. S7 Ca. 1. 1.'! S. \\. SI; Staiilcs v. Nott. 12.S .\. Y. lo:;. 2S N. E. r»l.'»: Andrews v. I'mid. l". I'd. f,.".; Loudon Assurance V. Coni|>anlii.i d<' Moajicns Do Baircini. HIT I'. S. II!). ir,l. 17 Sup. CI. 7.S.'".: Nickels V. .\s.sS Ky. • ;!».".. :'.4 S. W. 2:'..": Ainorlcau Eieeliold I^and & Moilyage Co. v. Jefferson, Gi) .\li-s. 770, 12 Soulli. 4G4. LEX DOMKII II. <:oi'i(()i()se of the statute or rule. Thus, it has been held that, within the mean- ing of statutes regulating attachments against the property of debt- ors, and arrest on civil process for debts, it was actual residence of the defendant, and not his domicile, that determined the rights of the parties;" and a siinilai- construction has bi'en given to the clause, sometimes found in statutes of limitations, providing that if, after the cause of action shall have accrued, the defendant shall "depart from, and reside otit of, the stale," the time of his absence shall not be in- cluded in the period of limitation."^ In general, inhabitancy and i-esidence d«» not mean luccisely the Kirne thing as domicile, when the lattei- term is apiilied to succession •♦Trice V. Price. l.'C Pa. .St. r,l7. 21 .Ml, Lttl; Anders.. n v. W.ilt. i:;.S U. S. eJM. 70<5. 11 .Sup. Ct. W'X • 6 People V. Cudy, M.". .\. Y. 1(K», ;{7 .\. K. CT.'!. As to dnnilcili' of orJKln and (lonilcilc of cholc*'. m-v, also, lu re CrnlKnlsh |ls;rj| ,3 di. ISO; Mdinlcllf (if a lunatic. .Sharpe v. CrlBpln. L. R. 1 Prnb. & Dlv. Ull, (US; Ininliiirl v. liutter- fleld. :rr Cb. I>lv. :r.7; .Mowry v, Lnihani, 17 U. I. 480. 23 Atl. la. «"> IVntield V. Kailroad Co., 134 I^ .S. :{.'»1, 10 .Snp. (M. ."ViO. •- Itarney ?. Uelrlclis, 138 U. 8. 52U, 533, 11 Suy. Ct. Hi. LEGAL KFKKCTH OK DuMIflM'. -1 to |M'rs()ii,il csl.ilc, bill I hey iiiciiii ;i fix*M] and [(oriiianont nlxKlf or d\\«'llin^^ ]ila(<' for the lime bciii;,', :is dislin^^'iiislicd from a inj. The question as to what law governs the validity of contracts, so far as concerns the personal capacity to contract, has received dilTerent answers, and in some particulars is involved in doubt. T'nis Dicey •'* states it to be the general rule, subject to specified exceptions, that a pei-son's capacity to enter into a contract is governed by the law of his domicile at the time of making the contract; while Gray. C. J., in Milliken v. Pratt." ^ treats the law of the place of contract as usually controlling, save in exceptional case?.'*' Thus, the cajiacity of an in- fant to contract is frequently held to be determined by the lex loci contractus.®^ In Cooper v. Cooper."* however, it is said that whether the capacity of a minor to bind himself by personal contract ought t«» be determined by the law of his domicile or by the lex loci contractus has been a fertile subject of controversy, but ilial perhaps, in Eng- 8 8 Wrigley's Case. 4 Weml. (N. X^ f'O^. S Wend. (N. Y.) l.'?4; so Frost V. Brisbiii. H( Woud. (N. Y.j 11. See Tells v. Suell, 130 111. 379, 2.-] N. E. 117. 90 Conflict of haws, 543. 81 12i5 Mass. 374. »2 Also, Taylor v. Sharp, 108 N. C. 377. ?,S\. 13 S. E. 138. »^ :Male V. Roberts, 3 Esp. 103; Thonipsou v. Ketchuui. S .Tohns. (N. T.> ISO: Baldwin v. Gray, 4 Mart. N. S. (La.) mz, 193; Saul v. His Creditors, 5 Mart N. S. (La.) 569, 597. 4 13 App. Cas. SS, 108. Is CONFLICT OF LAWS. l;ni(]. flio qucslion is not tiiuilly scltlcd. llion^ili (ho propondoraiico of opinion lluMc. as well as in Aniciica. sconis lo be in favor of llu' law of llu' (loniicilc.''' So, accordiu«j: to most authorities, the capacity of a luaiiicd woman lo contract is deteruiined by the law, not of the domicile, but of the contract.®® Thus, if a married woman domiciled in .Massachusetts si;;ns a nolo there, written and dated at a place in Maine, as surety for her husband (w liich by tlie laws of her domicile sIk^ cannot do), and mails it to the payee in Maine, where it is accepted and acted on, its validity and binding efifect upon her is to be determined by the law of Maine." \Miere a married woman, a resident of one state, enters into a contract in another state, to take etfect in that state, which, thoujijh valid there, is invalid in her own state, and the latter state afterwards empowers her to make such a contract, the contract may be there sued upon.'-** Where one domiciled in one state subscribes for stock of a national bank of another state, and then transfers it to his wife, so that, by the law (tf the stat<' of their domicile, she becomes owner tluMeof, she is sultject to a stockholder's liability, under Rev. St. U. S. § .jir)2, without rej,'ard lo the laws of the state where the bank is relative to contracts by married women."® The capacity of a husband to contract with his wife, and her competency to receive his covenant, are determim'd l»y llie law of their domieile. even in resjtect to a contract by him to surrender his ri<,dits in laiuls owned in another state, and the contract will be there recojj;nized and enforced.'"" »5 Cooper V. Cooper, Ki A pp. Cas. 88, lOS. un Pearl v. HansborouKh. 1> Ilnmpli. (Tcim.) ll'ti; Millikcn v. Pratt, 125 Mass. ."'.Tl. (,'ontra, Armstrong v. liost, 11*2 N. C. ")!), ITS. E. 14; Freeman's Api)pal, 1J8 Conn. TiS-i, 37 Atl. lliO. «•' Hell V. Packard, GO Me. 1<>.'.; .■Nlillik.ii v. riaii. VS^ .Mass. .''.Tl; Howies v. Field. 78 Fed. 742; Evans v. Hc.iver. ."lO oliio Si. I'.mi. :;;; N. E. MW. See, also, Baiini V. Hirchall, 1.".0 I'a. St. KM. 24 .Vti. (;2o; Kuliinson v. Queen, 87 Tenn. 44.', 11 S. \V. ."'.8. Contra. Freeman's Appeal, C.S Conn. .'.;?;•.. :{7 Atl. 420. :•" Case V. I)«)dj,'e, 18 U. 1. CCl, 21) .Ml. TS.'i; .Millikcn v. I'r.ilt, VIT) .Mass. 374, 37f;. "" Kerr V. Urle, Sd .Md. 72. 37 All. 7S1». ""• Pol.«on V. Stewail. 107 .Mass. 211. 4." N. E. 7.''.7. Hnt the rule Is other- wise as lo a couvi'^uuce of laud. Koss v. Koss, 12U Mas.s. 243, 24G. And LEGAL EFFECTS OF DOM KILE. Z'J (b) Domicile of Student. The qiiostion of the bearinji^ of a residence acciiiiiefl hv a student, in connection Avitli llie jinrsuit of his studies at an institution of learn ill};, ujion Iiis d<»uiicile, is sometimes regulated by statute. It may sonietinu'S hajjpen, wlien a student leaves his |»revi(uis place of abode, in order to puisne studies at such an institution, he does, in fact, take up a pernuuient residence at the place where the institution is located, with the intention of abandoning his previous domicile and establish ing a new one. On the otlu-r hand, it may be that th(» change is one of residence merely, and not of domicile. Tiiis distinction is recog- nized by the New York constitution,^"^ to the effect that, for the pur- l)ose of voting, a residence cannot be gained or lost by reason of jiresence or absence while a student of any seminary of learning. Un- der that provision a student who has previously been domiciled else- where does not acquire a new residence at the place where he goes to study, unless his intent to change his domicile is manifested by acts other than his mere presence as a student in his new place of resi- dence.^**^ (c) Domicile of Coi'poration. A corporation always has a domicile in the state or country in which it is incorporated. As to whether it may also have a domicile elsewhere, the authorities differ.^*^^ (d ) Ihin (die of Infa n t. An infant has, during his minority, the same domicile as his father.^"* An illegitimate cliild has the domicile of his mother; ^°^ but if an illegitiuuite child is afterwards legitimated, according to the law of the parents' domicile, by their subsequent marriag^e, while he cannot in consequence inherit land, by intestacy, in a country where such an ovi'ii :is to cou tracts to oouvej'. See Cocliiau v. Bciitou, 12H liiil. ."»,s. 25 N. E. 87U: J)()yle v. McCiuiie. 38 Iowa, 410; Sell v. Miller, 11 Ohio St. ool. 1 1 Article 2, § 3. 102 lu i-e Garvey, 147 N. Y. 117, 41 X. E. 439. lof lu the affirmative, National Fire Ins. Co. v. Chanihers, .")3 X. .7. Eq. 4GS. 494. 32 Atl. tUj3. In the negative. Douglass v. Insurance Co., 13S N. Y. 20'.». 33 N. E. 038. 104 In re Macreight. 30 Ch. I>iv. Km. lor. In re Beaumont [1893J 3 Ch. 490; Kjall v. Kennedy, 40 N. Y. Sui)er. Ct. 347, 3(il. 24 CONFLICT OF LAWS. effect is not given to a subsequent marriage, ho may nevertheless be entitled to take it as a "child" of the parent, under a devise to his "children.'' ^"'^ But in New York the subsequent remarriage of the parents, which according to the law of their domicile would legitimate the child, renders him legitimate in New York for all purposes, in- cluding the right to inherit. ^"'^ (e) Domicile of a Married Woman. A married woman is domiciled where the husband has his domicile, even though she may be in fact residing in another place, and even though she is living apart from her husband, if without sufficient cause.^°® This rule is founded upon the theoretical identity of per- son and of interest between husband and wife, as established by law, and the presumption that, from the nature of that relation the home of the one is that of the other; and is intended to promote, strengthen, and secure their interests in this relation, as it ordinarily exists, where unity and harmony prevail. But the law will recognize a wife as hav- ing a separate existence, and separate interests and separate rights, in those cases where the express object of legal proceedings is to show that the relation itself ought to be dissolved for the husband's fault, or so modified as to establish separate interests.^*" (f) Change of Domicile. The act which, if coupled with a due intent, may suffice to constitute a change of domicile, may be any act whatever which in its nature may, in a given case, bear out the claim of a change; but it must, in effect, be an actual change of residence.^^" (g) Situs of a Debt. • The general rule is settled that the situs of debts and obligations is at the domicile of the creditor. But the attachment laws of New 100 Biilwhi.stle v. Vardill, 2 Clark & F. .j71, 7 Clark & F. SDr,; In re Groy's Trusts [1802] 3 Ch. 88. 107 Miller V. Miller. 91 N. Y. 31o. See Laws N. Y. 18!)(J. c. 272. § 18. 108 Cheely v. Clayton, 110 U. S, 701, 705, 4 Sup. Ct. o28; Auderson v. Watt, 138 U. S. (;')4, 700, 11 Sup. Ct. 449. 108 Ilarteau v. Ilarteau, 14 Tick. (Mass.) 181. 1.S5; Burtis v. Burtis, 101 Mass. 508, 37 X. E. 740; Anderson v. Watt, 138 U. S. 604, 706, 11 Sup. Ct. 449. 110 Mitchell V. U. S.. 21 Wall. 350; Brown v. Butler. 87 Va. 621, 13 S. E. 71; Dicey, Coufl. Laws. 105-119; Chaml)ers v. Prince, 75 Fed. 170; McMullen v. Wadswortb, 14 App. Cas. 031, 030. LEGAL EFFECTS OF DOMICILE. 20 York and of other states recognize the right of a creditor of a non- resident to attach tlic debt or credit, owin^- or due to him, from a person within the jurisdiction where the attachment issues, and to this extent the principle has been sanctioned that the laws of the state, for the purposes of attachment proceedings, may fix the situs of a debt at the domicile of the debtor. It is at least doubtful whether this qualification of the general rule applies to negotiable instruments, or other written obligations of a resident debtor, held by and in the possession of his nonresident creditor.^ ^^ (h) As to Marriage. The domicile of parties to a marriage contract, entered into in an- other jurisdiction, does not control its validity, which depends in gen- eral on the law of the place where it was contracted.^ ^^ (i) As to Divorce. The bearing of the question of domicile upon the validity of a divorce has been elsewhere discussed. But a general discussion of the sub- ject may be found also in Thompson v. Waters,^ ^^ Knowlton v. Knowl- ton,^^* Flower v. Flower,^^^ and Anthony v. Rice,^^® which should be read in connection with those cited under "Foreign Divorce." ^^'^ (j) As to ^Yills. The law of a testator's domicile controls as to the formal requisites of the validity of a will of personal property, the capacity of the testator, and the construction of the instrument. But a will of real property must be executed in compliance with the law of the place where the land lies. And if a will contains a particular bequest of funds, to be transmitted to and administered for particular purposes in another state, the validity of the bequest must be tested by the law of the latter state.^^* Ill Douglass V. Insurance Co., 138 N. Y. 209, 219, 33 N. E. 938. See National Fire Ins. Co. v. Chambers, 53 N. J. Bq. 468, 32 Atl. 663. iisMilliken v. Pratt, 125 Mass. 374, 380. See post, p. 42, "Foreign Mar- riages." 113 25 Mich. 247. 114 155 111. 158, 39 N. E. 595. 115 42 N. J. Eq. 152, 7 Atl. 669. lie 110 Mo. 223, 19 S. W. 423. iiT Post, p. 43. lis Sickles v. City of New Orleans, 26 C. C. A. 204, 80 Fed. SG8; Chamber- 2G CONFLICT OF LAWS. The validity of the execution of a testamentary power of disposi- tioD of personal property depends on the law of the domicile, not of the donee, but of the testator,— the donor of the itower.^^** The distribu- tion of a decedent's personal estate is y,overn('d by the law of the testator's domicile.^ ^" (k) As to Ge7ieral Assignments for Creditors. The general rule that the validity of a transfer of personal property is governed by the law of the domicile of the owner is in most juris- dictions held to apply to a transfer by Aoluntary assignment by a debtor of all his property for the benefit of his creditors, as well as to a specific transfer by way of ordinary sale or contract, and the title of such assignee, valid by the law of the domicile, will prevail against the lien of an attachment issued and levied in another state or country subsequent to the assignment, in favor of a creditor there, whether a citizen or a nonresident, upon a debt or chattel belonging to the assignor, embraced in the assignment, provided the recognition of the title under the assignment would not contravene the statutory law of the state or be repugnant to its public policy. This is the general, though not the universal, rule, supported by the preponder- ating weight of authority, and is the settled law of New York.^-^ But this general rule is subject to a qualification, established in the jurisprudence of the American states, that a title to personal prop- erty acquired in invitum under foreign insolvent or bankrupt laws, though good according to the law of the state where the proceedings laiu V. Chamberlain, 43 N. Y. 431; Jones v. Halier.sliam, 107 U. S. 179, 2 Sup. Ct. 33U; Dammert v. Osl)()in. 140 N. Y. :!0. 85 N. E. 407; Id., 141 N. Y. otxi. 35 N. E. 1088. ii» Cottinp V. De Sartiues. 17 11. I. tifhS. 24 Atl. 530. 120 Jenkins v. Safe-Deposit Co., 53 N. J. Eq. 194, 32 Atl. 208; Bruce v. Bruce, 6 Brown, Pari. Cas. 50f>; Doglioni v. Crispin, L. R. 1 H. L. 301. As to the rule in testamentarj- provisions creating perpetuities, or effecting a suspension of the power of alienation, see Whitney v. Dodge, 105 Cal. 192. .38 Pac. («G; Cross V. Trust Co., 131 N. Y. 330, ;i(l N. E. 125. iziBartli V. Backus, 140 N. Y. 2.3o. 2:'.l. ;;5 \. K. 125; Ockerman v. Cros.s, .54 N. Y. 21>; Speed v. May, 17 Pa. St. 91; Forbes v. Scannell. 13 Cal. 242. See Train v. Kendall, 137 Mass. 3f}G; Pierce v. O'Brien, 129 Mass. 314; Van Winkle V. Armstrong. 41 N. .1. Eq. 402, 5 Atl. 449; Beutley v. Whittemore, 19 N. J. Eq. 4G2: Consniidatcd Tank-Line Co. v. Collier. 148 111. 2.59. .".5 X. E. 756. See Dearing v. llardware Co., 33 App. Div. 31, 53 N. Y. Supp- 313. LKX FORI. 27 were takeu, will uot be ret'Oj,aii/.('1. LEX FORI. 2 'J der V. Bank, "'' l)ccause the fo)'m of the contract is rcj^ulatcd 1»> llio law of the place of its cehltiation, and the evidence of it by Ihat of the forum. This principle does not apply to a parol contract for the sale of land in another state, executed in that state, where an action is brought to enforce it in another state; for, in the absence of any proof that the laws of the state where it was executed require such contracts to be in writing, it is enforced, even though it would be in- valid if orally executed in the state in which suit is brought.^ ^® But the question of consideration, whether arising upon the admis- sibility of evidence or presented as a point in pleading, is not one of procedure and remedy. It goes to the substance of the right itself, and applies to the constitution of the contract."^ Where a mort- gagee has acquired, by the law of the state where the mortgaged land is situated, a right to enforce, against a grantee of the mortgagor, his agreement to assume and pay the mortgage debt, yet the form of his remedy, whether it must be in covenant or in assumpsit, at law or in equity, is governed by the law of the place where the action is brought.^ ^^ The statutes of another state have of course no extraterritorial force, but rights acquired under them will always in comity be en- forced, if not against the public policy of the laws of the state where the action is brought. In such cases the law of the place where the right was acquired or the liability was incurred will govern as to the right of action, while all that pertains merely to the remedy will be controlled by the law of the state where the action is brought. And the principle is the same whether the right of action be ex contractu or ex delicto. Thus, in an action to recover damages for deatli caused by the defendant's negligence, where the death occurred in Montana and the action was brought in Minnesota, it appeared that, when the death occurred, the limit of recovery under the laws of Minnesota was $5,000, but at the time of the trial of the case the limit had been increased to |10,000, while, under the laws of Montana, 135 91 U. S. 406. 13 6 Miller v. Wilson, 146 111. 523, 34 N. E. 1111. See Bearing v. Hardware Co., 33 App. Div. 31, 53 N. Y. Supp. 513; Poison v. Stowait, IGT Mass. 211, 45 N. E. 737; Cochran v. Benton, 126 Ind. 58, 25 N. E. 870. 13 7 Pritchard v. Norton, 106 U. S, 1^4, 135, 1 Sup. Ct 102. 138 Willard v. Wood, 135 U. S. 309, 10 Sup. Ct. S31. 30 CONFI.KT OK LAWS. the n'Cdvorv \v;is liiuilcd to sm li ;ni ;imi»iiiil ;is (lie jiiiv mi;:lil tliiiik jiiojuT iimltT Jill llu' <-inniustaiU('s. Tlun- \\;is;i vcrdirl for f IO.(H»0. It was held thai tlir ri;rlit to ircoxcrv. ami llu- liinif of icntxci'v, wire L'i>\rnnMl \)\ llif lex loci. aiHJ M(»t liv iln- li\ fori.'"' It is a |)iinri|i!f of iinivtisal ajipliral ion. rcco;xi»i'/«e<-t as forei^ni to each oilier, and that the courts of one stale are not presimied to know, and therefore not lioiiiid to take judicial notice of. the laws of another state. '*- The of the I'nited States take notice, withoiil |»roof. of the laws of each of the Inited States, when exercisin.ij; an ori;:inal jnris- dicti»»n. When tin* federal siipi-eine court exercises an ajipellate juris- diction from a lower court of i he I niied States, it lakes jmlicial notice of the laws of every slate of the Inion. Itecjiiise those law s aic know n to the conrt Itelow as laws needing: no a\einilale. while ilii- l;iw of that state, hein;.; known to its courts as law. is of course wilhiii (lie judicial notice of the supreme court at the hejiriiiL: tui error. ,\ei. as in the >»»NorlluTn Vm-. U. Co. v. ItnlxixU. l.M \'. S. I'.mi. It Snji Ci. iiTS. ("em- pan- \V*' Monrw V. DoiikIjihh, ■''i N. V. i'C: I.nili.iin v. I>i' l.disrllf. .". .Xpji. Div. .'I'J.'i. :\H N. Y. Siipp. L'7o: iMivlHon v. <:iimoii. .'. c c A. .".1.!. .'.<; I'r.j. h;;. »«2 lliinlc.v V. I>()iiok1iii«', 110 L", S. 1, «, r, S\\\> Ci. IT.'. LKX lOUI. '51 sl;ilc (Mdiii tli<- laws of Miiutlicr slair arc Init finis ri)iin^'liuc. lit; I'. S. 1, <;. (i Slip. Ci. 'IVl. n< Kollcy V. Kelley, IGl Mass. 111. 'MS N. E. s;;7: Wain v. Walii. -.•', N. .T. Law, 42J». Tl Atl. 2<>:5. 145 Wooden V. Kaihoail Co., Ilm; N. Y. 10. l'c, N. K. liC.O; CIkim- v. Insiiran Co.. 01 Mass. ;;n : National Hank of Michigan v. N. W. Stl'J. 1*6 Davison v. Gibson, 5 C. C. A. ."^4.;. ."kJ Fed. 44.'.. 1*" Davison v. Gib.son. supra. 1*8 Great Western Tel. Co. v. riir.ly. lt;j I'. S. .-^29. 339, 16 Sup. Ct 810; Munos V. Southern Pac. Co.. 2 C. C A. Hk!. o\ Fed. 188. 1*9 Christmas v. Kussell, 5 Wall. 1.1)0. 0-: CONKI.ICT OF LAWS. 20. LEX LOCI ACTUS. "Anotlior law offi'ii invoked is llic ir.\ loci ;i«ins. ili;it of tlio I'lac*' when' tlu' iii.'^tnimcnt was oxcvntcd or where jndiiial pioceed- in<:s have been had." '"" The h'X hxi actus ^'oxciiis the forms of in- struments, and the validity of foici^Mi jiKlicial jiroceediugs.'*^ 21. ACTIONS ON JUDGMENTS. \Miere a judi^nient is procured bv one litigant against another, it is, of course, enforceable as such, by process, only within the nation or stat<' in which it was rendered. If, for exaini)le. a jndgtnent is ren- dered in New Jersey, execution cannot be levied under it in Pennsyl- vania; if it is rendered in the federal circuit court for the Southern district of New York, execution cannot be levied in the federal dis- trict of Khode Island; if it is rendered in England. executi(>n cannot be levie Sup. Ct. 13"J; Cottington's Cast'. 2 Swanst. 32(;; Roach v. Garvan, 1 Ves. Sr. 157; Harvey v. Farnle. 8 App. Ca.-. 43; Cheely v. Clayton. 110 U. S. 701, 4 Sup. Ct. 328. if-« Hilton v. (Ju.vot, 150 U. S. 113, 108. 1(5 Sup. Ct. 139: e lield honnd liy a jiidiinu'iit in favor of either. Ami if a ciii/.en sues a foreij^nei-. and jud-mcnl is rendered in fa\(ir of ihc latter, hoth may be held e(|ually bound.''" The elfect to which a jud^Muent. |»ui('ly executory, rendered in favor of a citizen or resident of the country, in a suit there broujjht by him a^xaiust a forei^nt-r. may be entitled, in an action thereon a<;ainst the latter in his own country, juesents a autre ditticnlt (|uestion, njion which there has been sonu* diversit\ ul opinion."^" The cases last cited establish that by the law of lai-laiid. prior to the heclaratiou of InilejM'iidence, a judi^ment recovered in a foreiun country for a sum of money, when sued ujton in Kni:lan. >•'••' Hilton V. (Juynt. iriJ» r. S. li;i. 170. ic .s:ii|i. CI. l.'V.c KUanlo v. (JjuTla.s. I'J Chirk A: I". ."'.tiS: 'I'lif ( Jriffswjild. S\\:i\>. I.'.u. i::.",: Iljirlicr v. I.auili. S C. H. l.N. S.I '.1.'.; l..'!i V. l».iUili. II r,i--. S.:. led. C:is. .Nn. S.l.'.l. >•'«». S«M« Diiplei.x V. !)(' Uoveii. '_' Vviu. .VKJ; Slmlair v. I'r.is.r. "J I'at. .Vpii. (,'a«. 'S>:\. Mvr. Diet. 4r.41i, 1 !>i>n;:. .".. note; Cniwfunl v. \\liiit;il. 1 l>.nm. 4. Hole; l'liillp>i V. HiuUcr. ■_' II. r.l. Itij. mil. im: I'.iicli.iii.iii V. Kiirji.i-. 1 Cmiiiji. Hlssr|| V. Urit'Ks. U Mass. 4(il.'; .Miilillrscx I'..iiiU v. I'.iuiiian. !.".• Mr. 1!». i;i: Hryaiit v. Kla. Smlfli cN. II.) :i\H\, 4oi: Itatlih.Mi.' v. 'W'viy, 1 K. 1. 7;;, 7tJ: IimiK.Mk V. Alckeu, 1 Caiiich (N. Y.j 4W; iU'Ulou v, Burgot, 10 Sery. & K. lI'U.) Jlo .'Jlj. A li;i\c Itftii liTjilf'il ;is (■(iiirliisi\c liv llir lii;;licH( ((mils nf N<'\v ^'^lI•k. 31jiiiic, iiinl Illinois."'' In lllc I'llilcd Sliilrs Sll|il( MM' loilll, ill Mm- !< ;i(|iii;: cjisc of Hilton V. (Iiivol."'-' Ironi liic opinion in wliiiji nninv of ilio foic^ioin;; Kiah- nicnls liavr Ikm'U lak«*ii. it is said on jiatic liOL'. l.".M l". S.. and j.aj;c MS, Hi Sup. Ct., dial, "in view of all tlic autlwnitios upon liio sulij<-cl, and of the licnd of jndiiial oi)inioii in tins t-onnliy and in Kn;iland. followin'; the Itad of Kent and Story, we are satiHtied that, wluM-t- tlurc has been opiiorlnnily for a full and fair trial abroad, before a t oui't of c'om])el9 U. S. 'Sir>. 10 Sup. Ct. 171. i«4 Hilton V. C.uyot. l.".!) U. S. 113, 201!. 10 Sup. Ct. 130; Vadala v. Lawos. 2."> Q. B. Div. 310: Duchess of Kingston's Case. 20 How. St. Tr. 543. iiotf. 2 Smith. Lead. Cas. Eq. I'M: Ochsenbein v. Papelier, 8 Ch. App. (.0.1; Messina v. retrocochino. L. R. 4 P. C. 144. ir.7; Abouloff v. Opiienheimcr. 10 Q. B. Div. 295, 305-308; Crozat v. Brojidcu [1804] 2 Q. B. 30. :?4. 3.-.. ♦Holker v. Parker, Merlin. Questions de Droit. Judsrnieut. « 14. No. 2: Moreau, No. 106; Clunet. 1882, p. 166, and IS^. p. 913: Sirey. 1892. 1, 201. quoted in Hilton v. C.uyot. l."0 U. S., at page 217. 10 Sup. Ct. 139. 36 CONFLICT OF I,AWS. tli(' pliiiiilifTs claim. Tii lutldin^ kucIi a jud^Tiicnl. for want of rcci- procitv, not to be conclusive evidence of llic merits of tin- ( laim, the court xaminable in Eng- land; and, in order to remove iliat inconvenience, statutes were in some cases passed by which judgments rendered by a court of compe- i«» Hilton V. Guyot, 150 U. 8. 113, 210, 22S. It', Sup. (1. l.J'.t. >«« Lazier v. WoHtcott. 2« N. Y. MC,, Lll; Duiislaii v. IIIk^'Ius, 1:W N. Y. 70, 33 N. K. 725>. >•' \:A\ U. 8. 113, 210. 22K. 1« Sup. Ct. \\V^. »•• See Nouvlou T. Freeuiau, 15 Ai>p. Cua. 1, 13. ACTIONS ON JUDUMKNTS. 37 tent jurisdiction in Ji iici^hltorinj,' cnldiiv ( mild imt Itf inipoachHl.'*" It was bcrausc of tlial roiMlition of ilu- l;i\v. as bi'twrt-n the Aineii can colonics anil stales, (hat tlie I'nitcd Stales, at the l)e;,MnninK '><" their existence as a nation, ordained that full faith and credit shonld be s'ven to the judgments of one of the states of tl»e Union in the courts of another of those states.^'" "Full faith and credit shall be given, in each of these states, to the records, acts and judiiial i»io ceedin<;s of every other state; and the cou^^ress may by general laws prescribe llie maiiner in which such acts, records and proceedinr7: Grover & Baker Sewiug-Mach. Co. v. Kaddiftc, 1^7 U. S. 287, 294, 11 Sui-. Ct. l>2. 38 CONFLICT OF l.AUS. ilic rourt dill have in :iii :ii rmn, iIi(iiil;1i iIiiIv Itioiiulii ln'forc it for ccr- t.iiii purposes."" .liiris»Ii<(ioii is ilic ri;:iii lo atljiuliralc «(»iiro ])roiiirht within the .oiilrnl of the c(»urt. or the actidii must in some form be oiv to i-eacli <»r disjiose of specitic prnperty within the slate, as in an action to foreclose a nnutf^a^'e or for partititm. In such cases, the jud^Muent is valitl to the extent of the property thus alVectcd. but no further.''" A jnd;;ment rendeivd in oiw state, under its hical laws upon the subject, may be valid there, and yet. under the principles just stated, be invalid in other states.'"'' A law which substitutes constructive fni aitual sci\ice is bindini: upon iieisims (hnnicih-d wilhin tlie stat(\ wiieie such law jirevails. and as respects the |)roperiy of others situ- ateT« V;iii Clnif V. Iluriis. l.L-. N. V. ."|(i. I'.o N. i:. C.Cl. I'- KcyrmJilH v. Stoctitoii. 1 Jo t . .»<. 'J.M. JCkS. 11 Sup. Ct. TT:'.; limit v. Iliiiit. ::: .\. v. iii7. irjs. I*" Uccd V. CliilHin. Hi: .\. V. l.'iL'. .!•; N. Iv KS|; .Inlmson v. IV.wcrs. l.'.It U. S. l.'M!. l."i!». 11 Sup. Ct. .'2r»; CrDVcr &: It.ikci- Scwiu;; Madi. Cd. v. ll.'ullilTc, l.'iT r. S. 2S7. 11 Still. ''•• '•*-: rtiUKiyiT v. .\«IT. IK". I'. S. 714: (Jiiliirli' v. I,k'K«. ••H .M«l. 2.'.:.. Ituf. ns to MitMihni.iil of I hoH«-!« ill action, hcc Nntlonal Khv lus. Co. v. ('Ii.iiiiIkts. .'.:'. N. .1. Ki|. tc^s, 481, ',',2 All. iM'k'.. ITS Steel V. Smith. 7 Wafts & S. (Pa.) 117; Hill v. r.nwuMii, 11 L;i. II.'.. !•<» Weaver v. liuggx, l!t> Md. 1J05. ACTIONS ON JlMKiMKNTS. 39 Tlic ;i|i|ii jiiJIIIcr of ;i (lrf(iiI ••a|t|M-ar s|m« iail> ." for tli<' piii'pose of raising ilic y executi<»n: but they leave the manner in which ihey tnay be enforced to tlie law of the state in whicli they may be sued on, pleaded, or (dTered in eviden.-e."" i;ut when duly ]»leaded and proved* in a court of that state, they have the eft'ect of being not merely jiiiiiia facie evidence, but conclu- sive proof, of the rights llieieby adjudicated: and a refusal to give them the force and effect in this resiK'ct which they had in the state in which they were rendered denies to the party a right secunMl to him by the constitution and laws of the Vnited States, and by a writ isi Kocd v. Chilson. l-ll.* N. V. i:.J. .'.<; N. K. {vM. 182 Huntington v. AltriJl. UC. V. S. ir.T. («.".. l.T Sup. Ct. 224. 1S3 McElmoyle v. Coheu. 1.5 IVt. :!1U'. .".i:.": Wiscmsiu v, IVlicau Ins. Co., 1-7 IT. S. '2/Ho. li'J2. 8 Sup. Ct. IMTO. * Ensign v. Kindred, K>'^ I'a. St. (>;i!>. 30 .Vti. 2~i. 40 ooNKi.irr of laws. of « rini- from a judirnuMit aroturin<; a jud;;meiit in one slate may be a j^round for the refusal of the courts of another state to reeo;;- nize it, the cases just cited may be compared with Hunt v. Hunt *" and White v. Reid.^'^ The seeming discrepancy is apjiarently ex- plainable on the ground that where any question of fraud is involved in the original action, and has bcHMi, or mii;ht have been, passed on and decided by the court, the same (pnslion cannot be reopened for examination in a subsequent a«tion upon the judgment in another state, while if the original judgment was ])rocured by fraud, con- sisting in preventing the unsuccessful party from fully exhibiting his ease, by fraud or deception practiced upon liiiu by his op]>onent. the facts establishing sudi fraud may be shoun in an action upon the judgment in another state.'*' »«* IIunthiptoD T. Attrlll. 140 U. S. <;57. USr>, 13 Sup. Ct. 2*Jt; Christmas v. Uu-ssell. r, Wall. 'JiHi; Greeu v. Van Itiiskirk. '» Wall. liOl, 7 Wall. 131); Car- p.riUT V. Stranp'. HI V. S. 87. 11 Sup. Ct. JH'.O. >«» Haiik-y v. Douoghue, IIU V. S. 1, 4. Sup. Ct. 2411; Chrislnias v. Uussell, n Wall. 2U0. :{; Wlsfonsln v. rdlcan lus. Co., Ilt7 V. S. 20r., 2;>2. 8 Sup. Ct. i:;70; Hilton v. niiyot. ir.'J U. S. li:;. 1S4. l.S,-.. lO Sup. ct. i:!!i; Mooucy V. lIimlH. H;o .Mass. Uit. lUi N. E. 484. >««7'J N. Y. i;i7. 2'S>. »«T 70 Ilun. VM. 1^4 N. Y. Siipp. •J'.^\. »«»Whltp V. U«'i(l. 70 Ilnn. 1J»7. LM \. V. Supj), 'Jlto; M.M.ncy v. ITIn.ts. lOi .Maw. 4t;'.t. .'.i; .\. K. 4.S.I; National liauk of City of Hruokiyn v. Wjillis r.<> .\. .1. Law, 4«;, :t4 Atl. 1»h;'.. And for cotnitiirl.s »n of the ruN- iii caso of Judguiuuls of ■ furclKU couutry, see N'adula v. Lawts, 1^.'. y. 15. Dlv. ;jlo, ;ut). INTUATKRIIITOIUAL OrEKATION OF LAWS. 4 1 22. JUDGMENTS IN REM AND IN PERSONAM. A jiidp^inent in rein binds only tho property within the control of the court which reiKierod it, and a judn^niont !ji prrxoufim hitidH only the parties to that judgment and those in privity with them."' Thui*, a judgment recovered against the administrator of a decesiHod imthoii in one state is no evidence of a debt, in a subsequent suit by the same plainlilT in another state, either against an administrator (wh<'fh- er the same or a dilTerent person) appointed there, or against any other person having assets of the deceased; for the original defendant's representation of his intestate is a qualified one, and extends not be- yond the assets of which the ordinary, or other oflicer or court, from whom he receives his authority, had jurisdiction.*"* 23. EFFECT OF STATE LAWS ON ABSENT CITIZEN. A citizen of a state is so far bound by its laws, in consequence of the allegiance which he owes to it, that, even though he is absent, he is bound upon a judgment rendered against him, without jtersonal service, but by some form of advertisement or other substituted serv- ice, which is recognized as valid by the laws of his state."* 24. INTBATERRITORIAL OPERATION OF LAWS. "All laws duly made and published by a state bind all i)ersons and things within that state." ^^^ A citizen of a state, going into another state, owes a temporary allegiance to the latter state, and is bound by its laws, and is amenable to its courts. If in such a case he is not 189 John.soa v. Powers, loD U. S. ir.«i. 151). 11 Sup. Ct. '.25; Hilton v. Giiyot, 159 U. S. 113, 1G7, 16 Sup. Ct, 139; Chiua Mut. Ins. Co. v. Force. 142 N. Y. 90. 95. 36 N. E. 874; Reed v. Chilson. 142 N. Y. 152. 36 N. E. 8S4. 190 John-son v. Powers. 130 U. S. 156, 159. 11 Sup. Ct. 525; Stacy v. Tlirasht-r. 6 How. 44; Low v. Bartlctt, 8 Allen (Mass.) 259. 181 Douglas V. Forrest, 4 Bing. <5S6: Bocquet v. MacCarthy, 2 Barn. &. Add. 951; Martin v. Nlcolls, 3 Sim. 458; Schibsky v. Westenholz. L. R. G Q. B. 155. See Hunt v. Hunt, 72 N. Y. 217, 238. 192 Story. Confl. Laws, § 395; Comp.anhia de Mooambique v. British Sidcccdiii^. — -as, for instance, a |tidvision that snch steps shall ho deemed ('(jnivalent to an appoaranee in the action, and shall disponso with the seiviie of citation, lie conid not, under such ciicnmstaiK os, invoke the gen«'ral rule that an answer on the merits does not waive an objection to jurisdiction, be cause the statute in such a case intervenes."** 25. FOREIGN MARRIAGES. Tlie Enirlish rule seems to be that it is indispensable to the valid- ity of a niairia;,'e that the lex loci actus be satistied, ^1) so far as re;:ardH the forms or ceremonies; (2) so far as regar«ls the consent of jiaionts or ;^uardians: (.'?) so far as regards the capacity of iho pai-ties to contract it, — whether in resjiect of the prohihite; I'mIIit v. Mmwn. ."» Kjisf. L".0; \\;iricn(l4-. ihc defendant was neither so served noi' aiipeaied in the action, but was served by jiublication or by oth«'r substituted service suflioth jtarties were domiciled, the decree is still entitled to full credit every where.^"^ 105 Wightman v. Wighlni.iii. 4 .Tohiis. Cli. (N. Y.) lUll; Hutchins v. Klmm.-Il. 31 Mich. i:^!3. lOG Vau Voorbis v. Brininall. 81! N. Y. IS; Tliorp v. Tliori). 9U N. Y. tXt'J: Com. v. Laue, 11". Mass. -t.'.M rutiiam v. Putnam. 8 Pick. (Mass.) 433: Com. v. Huut. 4 Cush. (Mass. I 4!»: Smitm v. Warron. 10 Meto. (Mass.) 4r>3. If- Hum V. Ilnni. 72 N. V. JIT. 1.M1: Campboll v. Campbell. OO Hnn. 233. 35 N. Y. Supp. JSo, O'Jo; lu ic Di'uick, 'Jj. iiuu, liJl, 'M N. Y. Supp. olS; Bissell U CONFLICT OF LAWS. (b) In the case of a divorce granted in a state where only the phiin- titT is domiciled, and the defendant appeared in the action, or was served with process within the territorial jurisdiction, the decree is still accorded extraterritorial effect.^"* But if, in such a case, the nonresident defendant does not appear in the action, and is not served with process within the territorial jurisdiction, the question of wheth- er a decree of divorce is of binding effect without the state where it is rendered is the subject of a sharp difference of opinion, and the decisions in different courts are diametrically opposed. The New York doctrine is that such a decree, rendered in another state, is abso- lutely invalid in New York.^®^ The opposite doctrine is adopted in many states, where it is held that the courts of a state where the plaintiff resides, although the defendant resides elsewhere, are empowered to determine the status of its citizen, and hence to establish such statns, by a decree of divorce, as that of an unmarried person; and that, as one party to the mar- riage cannot be a single person while the other continues to be a married person, the status of both is thereby determined; and that, as the court rendering the decree has jurisdiction to determine the cause, its decree is binding upon the other states, under the United States constitution, 2°° requiring each state to give full faith and credit to the records and judicial proceedings of every other state, and the legislation, elsewhere considered, prescribing the manner in which such records and proceedings shall be proved, and the effect thereof.*"^ V. BrJggs, 9 Mass. 464; Ditson v. Dltson, 4 R. I. 107; Hood v. ITood, 11 Allou (Ma.ss.) rJG; Cooper v. Reynolds, 10 Wall. 308. ifs Jones V. Jones, 108 N. Y. 415; 15 N. K. 707; Rich v. Rk'b, 88 Hun, 500, 34 N. Y. Supp. 854, Blssell v. Briggs, 9 Mass. 4G4. 100 People V. Baker, 76 N. Y. 78; O'Dea v. O'Dea, 101 N. Y. 23, 4 N. E. 110; Rl^ney v. Rigney, 127 N. Y. 408, 28 N. E. 405 (reversed, on another point, 160 U. S. .531, K; Sup. Ct. liVAi); Williams v. Williams, l.^.O N. Y. 193, 29 N. E. 98; In re Kimball, 155 N. Y. 02, 49 N. E. 331; Athertou v. Atherton, 155 N. Y. 129, 49 N. E. 03."{; People v. Karlsioe, 1 App. Div. 571, 37 N. Y. Supp. 481. Also. Cook V, Cook, 56 Wis. 1SK5, 14 N. W. 33, 443. Compare the dicta in Maynard v. IIIll, 125 U. S. 190, 8 Sup. Ct. 72;{; Cheely v. Clayton, 110 U. S. 701. 4 Sup. Ct. 328; Cheever v. Wilson, 9 Wall. 108; Pennoyer v. NeCf, 95 U. S. 714, 7.34, 735. 200 Article 4, $ 1. 201 Anthony v. Rice, 110 Mo. 223. 19 S. W. 423; Iclt v. Kelt (xN. .1. Ch.J 40 FOREIGN DIVOUCES. 45 Effect on Dower. The effect which a divorce granted by the ronrts of a state haa upon lands of the husl)and in that state must be dclernjincd by its laws; but the effect whicli it has upon his lands in anothor state must be determined by the laws of the latter state. Thus, if a divorce be procured in Illinois, on the j;;round of abandonment, and the result, by the laws of that state, is to deprive the wife of dower, she is not thereby deprived of her dower in lands in New York, where such a result follows only from an absolute divorce, founded on the one ground recognized therefor in the latter state.^°* Antenuptial Contracts. A discussion of the effect of antenuptial contracts executed in one country, upon the property rights of the parties in other countries, will be found in the cases cited below.^"^ Atl. 43G; State v. Scblachter, 61 N. C. r.20; Ditson v. DItson, 4 R. I. 87; Harrison v. Harrison, 19 Ala. 40"J; Beard v. Beard, 21 Ind. 321. 202 Van Cleaf v. Burns, 133 N. Y. 540, 30 N. E. 661. See. also. Doerr v. Forsythe, 50 Ohio St. 726, 35 N. E. 1055. 20.-? Long V. Hess, 154 III. 482, 40 N. E. 335; Fuss v. Fuss, 24 Wis. 256; Castro v. lilies, 22 Tex. 470; Decouche v. Savetier, 3 Johns. Ch. (N. Y.> IIK). WK.ST I'UBLISUINU CO., PU1.STKB8 AND STKKKOTYl'Ell.S, 8T. PACL, UI.NX. PRINCIPLES OK THE LAW OF DAMAGES A MONOGRAPH St. Paul, Minn. WEST PUBLISHING CO. 1899 Coi-Yinfun-. 1899, II V WEST rU15MSIIl.N(i COMPANY, DAlMAGi:S. DEFINITION AND NATURE. 1. Damag-es are the pecuniary reparation -whicli tlio law compels a -wrongdoer to make to the person injured by his w^rong. \Vlu'i'('V('r tlic (■(•iiiiiion law I'ccn^xni/.cs a i'ii:ht. it also ;_'i\«'s a nMiKnly for its violation.^ "Ubi jiis. ill! iciiicdiiini." 'T^i^'lit" and "irimdy" arc i(\ciii llirealeiied \\roii;_'s liy injunction. <»r afford specilic relief; l»nt at common law almost the sole power of the court is to make and enfone a money jud;;nicnt. THE THEORY OF DAMAGES. 2. The theory upon -which damages are awarded in civil actioi\s is that they are an indemnity to the person injured, not a punishment to the wrongdoer. EXCEPTION — Where a tort is accompanied by circum- stances of fraud, gross negligence, malice, or oppres- sion, exemplary damages are sometimes awarded as a punishment to the offender. 18 Bl. Conuu. p. li::?. c. ^; Asliby v. White. 1 Salk. 1!>. 21. Y.Tt.- v. .(..yr.-. 11 .Tohus. (N. Y.) 130. 140. - Keplevin, ilotiuue. ejectment, proceedinps to recovi-r dower, nbntenient of uuisance. quo warranto, mandamus, pro)iil)ition, liaU-as e.rpus. estn-jM*- CHAP.DAM.— 1 l).\MA(ii:8. Compfuaatinii f1u Ri(h\ ("oinponsation is tlic fniKlnni('iit:il niid :ill jx^rvnsivc ]»riii(iiili' <:()voni- ini; the award of dainajxcs.' (■(Hii|ifiisa(i(>n. not i'«'sliliiii»»ii. vuliic. not cohI, is tlic iiicasnic of i.'li.f/ \\'iR'tluT the action be ex contiactn or ox delicto, the end in view is the same, — that phiintitV be made whole. "In civil actions, the law awards to the party injmed a just indemnity for the wrong which has been done him. and no more, whetlier the action be in contract or tort. Except in those si)ecial cases where punitory damajjes are al- lowed, the impiiry must always be, what is an adeipiate indemnity to the i)arty injured? And the answer to that (piestion cannot be affected by the form of action in which he seeks his remedy." In an action for liivach of contract of carriage, 'Svhat the ]>assengcr is entitled to rec«)ver is the difference between what he ought to have had and what he did have." "> Damages for breach of conliact are not limited by the consideration paid." Mewsure of Damages. (a) The measure of damages in actions for conversion is ordinarily the market price of the property converted, at the time and pluce of conversion, with interest. '^ ment, and the obsolete Idcvia iuitiiii>:intia. Soo 1 Co. T.itt. KMta; Story, Eq. Jur. {IS T.'JO, SL>.^). 3 Fllliter v. I'liippunl. T- Im-. -01.', '_'(M, 11 Adol. & E. (N. S.) 347, 350; Siiiilh V. SherwfKxl. '1 Tc.x. 4<;o; (Jriffln v. Colvcr, K! N. Y. 480; Mechcni. Cas. Dam. 74; H()l)liison v. Ilaniiaii. 1 Exch. S.'>0. * Pol. Torts, c. 5, citing Wliltiiani v. Kerslwiw, IC Q. U. l>iv. (ii:?. See, also, SiiHl V. Insurance Co., 4 Dall. (U. S.) 430; Quimi v. Van IVlt. m N. Y. 417. 48, 20 S. E. 71.S. In an action in tort for wroiiKfnl coiivcrKlon i»n>l'i"iation. lie cauMrit resort to the contract Ibus abaiidoned to eslablisli the measure of d.im.iu'es. llynes v. I'atterHon, ;>5 N. V. 1. <». 6 HobliH V. Kalirnad Co.. L. IC. lo (^ I',. Ill, IIIO. « Qulnn V. Van Telt, .5); N. V. 117; Hennelt v. Buchan, 01 N. Y. 'I'l'l. 7 Si)icer v. Waters, (n5 Harb. (X. V.) L"J7; Allen v. Dykers. .'{ Hill (N. Y.) hm\ rhlllli)H V. Speyers, 41) \. V. ^'^y-',: 'J'yng v. Warehouse Co., 58 N. Y. 308; I'arm.-nter v. Eitz|.atrick, i:'..". N. V. l!»o, .'U N. E, lo:{2; Ilawyer v. Bell. 141 N. Y. 140. 30 N. E. 0; Oruisby v. Mining Co., 50 N. Y. Gli3; Fowler v. Merrill, THK TIIi:(»riY OF I)AMA<;i:s. .J Tn an .Mfjioii for rfnivrisioii of blocks. Ilic incasiiic of (];niia;:i's in sonic jui'isdiclions is the lii;;li<'st value iiilcriiu'dijilc the convcrHion and flic end of (lie li-ial; wliiif in oIIhts tlic measure is the lii;:ln-st price readied williin a ie;(soii;ililc titni' afler liir |ilaiiitilV liail learm-d of the conversion. The hilter view is adopted in New ^'ori^;" and in tlie United States supreme court ; ' and in I'eiinsyivania if there \\as a trust relation between tlie parties, and justice 4; VMk v. I-lct.luT. IS (;. B. (N. S.) 403; Lyou v. (Jormley, .">:{ Pa. St. 2(Jl; Jenkins v. .MeCi.nieo. 2r, .Ma. 213. 8 Baker v. Drake. 53 N. Y. 211; Wright v. Bank, llo N. Y. •j:;7. is N. E. 79. Compare Barnes v. Brown, 130 N. Y. .'^2. 2U N. K. 7f^). Ami see .Smith V. Savin, 141 N. Y. 315. 3(i X. E. 338. 9 Galigher v. .Tones. 120 U. S. 103, 9 Sup. Ct. 3.".5, wliere tlie various authori- ties are reviewed. 10 Huntingdon & B. T. K. cV- C. Co. v. I-:n-lish. SO Ta. St. 247. .\nd »c€ In re Jamison & Co.'s Estate, 103 Ta. St. 143, 29 Ad. lOol; c;ali;:lu'r v. Jones. 129 U. S. 193, 9 Sup. Ct. 335. 11 Griggs V. Day, 136 N. Y. 160. 32 N. E. 612; Stevens v. Wiley. H>o Mass. 402, 43 N. E. 177; Latham v. Brown, IG Iowa. 118; 3 Piirs. Notes A: iJ. 1\*>k Cf. Booth V. Powers, 56 N. Y. 22. 12 3 Sandf. (N. Y.) 614. 13 Ditmars v. Saclcett, 81 Hun, 319, 30 N. Y. Supp. 721; 3 Pars. Cout p. 202. 4 DA MACKS. dor (if ]»('rsoiiMl properly, for liiiadi of the contract, is stated and dis- cussed in TilT. Sales, § 127 et scii.'* (dl The measure of daniajies for Itreach of warranty is tlie dilTerence between the actual value of the article and its value if it had conformed wiih the warranty, and not the difference between its pnichase piice and the actual \alue.''' (e) The measure of damaj^es in actions by a vendor of personal prop- erty against a vendee is stated and discussed in Tiff. Sales, § 123 et seq.'" (f) Where a breach of contract by one party prevents performance by the other, the latter is entitled to recover the amount of exi)ense9 which he has properly iucuired in ])rei)arin^- and providiu};- for per- formance, and which were naturally to be anticipated.^^ If. under a contract for specified work at a specified price, the de- fendant prevents the plaintilf from completing the work, the plaintiff may recover foi- the work done in ]>roportion to the ratable cost of that ]»ortion. and. for the work picvented. the piolits he has lost thereon.^" (g) In some states, in an action of ejei-tmenl to recover the posses- sion of land wrongfully held by another, no damage for tlie wrongful detention can be recovered.*" To recover his substantial damages, the ]ilainlitr must resort to a subsequent action of ti<'spass for mesne piolits.-" i« See, also, Theiss v. Weiss, IGG Pa. St. 9. Ml Ail. •;:>,. 1' r.irk V. Furnace Co.. M Wis. ISO. (i4 \. W. s.V.»: Slmrpo v. Bottis (Ky.) :',-2 S. W. .^!»."); Iliiiu'S v. Kiclii. l."il I'm. SI. I'.in. -j:, All. f,:;j: o^dcn v. Hoalty, l.'!7 I'a. St. 1!»T. l'i> Atl. C.l'O; Carntil-rorlcr Hoiler &; Tank ("<>. v. Coliiinlms .Macli. Co., 'j C. C. A. I'.K), ."» Fel ; liacli V. Levy, lol N. V. r>11. ."• .N. K. 345; Beeuian v. Haiit;i. US N. Y. 5;{S. i'? .\. K. SS7; Swain v. S N. K. 41."). But sec (Jordoii v. Norris, );» .\. H. .37(1. IT Bernstein v. Meech, 1.30 .\. Y. .3.":>, 29 N. E. 2.".."; Friedl.niil v. Myers, 1.39 N. Y. 4.38, 34 N. E. IO.m. I'lKehoe v. Borouph of Kutlifrfonl. .".<; X. .1. bnw. 2.3. 27 All. '.tl2. 19 (Joodtitie V. Tombs. 3 Wlls. 118; Ilurvey v. Snow, 1 Yealcs (Pa.) l.'iC). 20 MltcbeU V. Mitchell, 1 Md. 55. TIIK TIIKdKY OF DAMACKS. .•) But in other states the possession and dainaRes for Iho (Iclciilioii are recovered in one action, — either ejectment,-' or trfspaHM td trv title,'-- or in a similar statutory action. In both cliisscs of states the mcasui'r of (i;iiii;i;,'*'s is tlic «;iiiie. It is the annual value <»f the ])reuiises; - ' not wliat the o(iii|i;iiii aciuiilly received, but what should have been i-eceived.-' The defendant may deduct, from the miuoumi reciivt-d ;is tin- income of the land, necessary expenses paid Ity him. such as taxes,-'' and re- pairs.-" When the occupant has made \ahialth' improxcmeiits on the land, which will be a benefit, their value may be set ofif against the hitter's claim for damages. ^^ The improvements must have been made, however, by one wIkj acted in good faith, believing that he had title to the land, oi- no allowance will be nuide.-^ The j)laintiff, in an action for mesne profits, may recover damages from the time his right to possession accrued,^" up to the time the defendant gives up the possession.*" 21 Couipton V. The Chelsea, 139 N. Y. 538, 34 N. E. 1090. in which the New York statutes (Code Civ. Proc. §§ 1490, 1497. 1531), and other provisions. In- cluding those relating to treble damages in certain cases, are discussi'd. 2 2 Boyd's Lessee v. Cowan, 4 Dall. 138; Battln v. Bigelow. Tot. C. C. 4.7J. Fed. Cas. No. 1,108. 23 New Orleans v. Gaines, 15 Wall. 624; Larwell v. Ptevens. 12 Fed. 559; Woodhull v. Rosenthal. CI N. Y. 382; Taylor v. Taylor. 43 N. Y. 57S: Ege v. Kille. 84 Pa. St. 333. 2 4 Woodhull V. Rosenthal, 61 N. Y. 382; Campbell v. Brown. 2 Woo9; Ringhouse v. Keener. 63 111. 230: Semple v. Banlc. ."> Sawy. 394. Fed. Cas. No. 12.660. 26 Semple v. Bank. 5 Sawy. 394. Fed. Cas. No. 12.r>e.0. And see Ewalt v. Gray. 6 AVatts (Pa.) 427. 2T Green v. Biddle. 8 Wheat. 1; Woodliull v. Rosenthal, f.l N. Y. 39«V. Bedell v. Shaw. .")9 N. Y. 46; Jackson v. Loomis. 4 Cow. iN. Y.) l""^^; Ilodg- kiiis V. Price. 141 Mass. 162, 5 N. E. 502. 2s Campbell v. Brown, 2 Woods, 349, Fed. Cas. No. 2.355; Dothage v. Stuart, 35 Mo. 251; Code Civ. Proc. N. Y. § 1531. 2»Danziger v. Boyd, 120 N. Y. 628. 24 N. E. 482; Clark v. Boyreau. 14 Cal. 634. -io Danziger v. Boyd. 120 N. Y. 628. 24 N. E. 482; Gilnian v. Oilman, 111 N. Y. 265, 18 N. E. 849; Mitchell v. Freedley, 10 Pa. St. 198. G DAMAiiKS. This is the rule in liic Mbscuce of soiuo staliilc of limitations applica- ble to such actious.^^ But in most states the right of recovery is limited to a few years before the action is bepm; ^^ jjenerally, six years.^' Wht'ic, owinfj to the technical form of the action of ejectment, no costs were recovered, they may be made a part of the damages in a subsequent action for mesne profits.^* In England, reasonable counsel fees in the ejectment action may be recovered. *'' The same has been held in this country in some cases,^^ and denied in others.^^ (h) Damages for detention of dowser w^ere first made recoverable by the statute of Merton;^^ and the subject is largely regulated by- statute in the United States.'^ The amount of damages is computed on the same basis as for the detention of real property in other cases; that is, the net value of the land. But. in the case of a widow suing for detention of dower, only one third of the husband's whole estate is recoverable, that being the .share of her husband's land to which she is entitled by the com- ni(m law.*" 31 New Orleans v. Caincs. 15 Wall. G24. 82 Gatton V. ToUey, 2li Kan. 678; Ringhouse v. Keener. 63 111. J.'.o. Rut see Budd v. Walker, 9 Barb. (N. Y.) 493; Gaslight Co. v. Rome. W. & o. K. Co., 51 Ilun. 119, 5 N. Y. Supp. 450. 33. Jackson v. Wood, 1^4 Wend. (\. Y.) 443; Hill v. .Myers. 4(; I'.i. Si. 1.".. 3* Baron v. Abell, 3 Johns. (N. Y.) 481; Pearse v. Coaktr. L. K. 4 Kxch. [)2. But .see Hunt v. OWiill, U N. .T. I.iiw, 564; Doe v. Killiter, 13 Mees. & W. 47. 86 1)06 V. Htldd.-iil, 4 I»o\vl. i:;7. 86 Doe V. Perkins, s 1',. Mcii. iKy.) 1!tS; Dm v. Chubb, 1 N. .T. Law, 466. .\iid see Gll)son, C. .7.. in .Mi-xuiidci- v. lien's lOx'rs. 11 Pa. St. .■»;{7. .".39. 37 Ilerreshoff v. Tripp, 15 U. I. 92, 23 All. 104; White v. Clack. 2 Swan "Tenn.) 2."M); Alexandt-r v. Ilerr's Kx'rs, 11 I'm. Si. ,5.37. -"20 Hen. III. c. 1. 30 See 1 Stlm. Am. St. Law, § .327S; 2 Sciii). Dower (2il Kd.) 700; :{ Pars. Cont. 222; Co32. /sBidlard v. Stone, G7 Cal. 477, 8 Pac 17: Furlong v. PoUeys. 30 Me. 491: Rice V. Manley, GO X. Y. 82; AVemple v. Stewart. 22 P.arl). (N. Y.) 154; Graip! Tower Co. v. Phillips. 23 Wall. 471. 46 Emmons v. Bank, 97 Mass. 2^30. 47 For a discussion of this subject, and a reference to the atuhorities. see the monograph on "Interest and Usury." o DAMAIIKS. WRONG AND DAMAGE. 3. Wheuever a legal rig-ht is violated, and only then, damages may be recovered. ^''Dxinnuiii Ahsqiu? Injuria — hiJKi'id f II. L. Tas. .503; Salvin v. Coal Co., 9 Ch. App. 70.5; Uogers v. Dutt. i:i M(M»i-e. P. C. 'JOJ>: Kieh v. Haiiroad Co.. S7 N. Y. 3S2: Tall.ot V. Kailroad Co.. ir>l N. V. 1(;2. I.'. .\. I). .■•.S2; Lord Kenyon. C. J., in Pasley V. Fn'cman. .''> Teini K. 51. C.;. •'-1 \Vel»b V. Manuf.-icturing Co., 3 Snnin. IS'.t, I'eil. Cas. No. 17.322; and Mechem, Cas. Dam. 3. DirtKCT AM) CONSKCiUKNTIAL I.OSSKS. v' 5. Compensation may be recovered only for proximate losses resulting from ■wrong'ful conduct, and never for any losses "which are remote. Thouj^h compensation is tlic tlioory and aim (if \\\r l;i\\ in awarilin;: daninf^os. every eons(H]u<'nce of a wroii*:; is not an rlcmcni in lin- raliii- lation of wliat is Ic^^al coin jicnsat ion. A pei-son wron^jcil can iccdvcr compensation only for tlie direct of proximate conseipn-nc i s of tin' wronj;. To hold one liable for all the consccpiences of a wron^'fiil aK.St',S. A iirect (•onse(|iieiices are necessarily ]tro\iniat('. One is conelusively jiitsiinied to intend the direct consiMiiience of one's acts. Tluis, it was held in a civil action for assault, where defendant had intentionally kicked plaintiff on the lej; dnring school lionrs, though he did not intend to injure him. that, the act beiiit: unlawful, defendant was liable for the injury wliidi in fact resulnd. lli(»u,i;h it could not have been foreseen.'''^ So. also, a sleepinj;-car conijiany is liabk' for a miscarriajic caused by the wronjjful expulsion of a married woman from a berth, tliouuli its servants were ignorant of her delicate condition." In actions of contract the rule in respect to direct losses is the same.^* 6 8 Cogdell V. Yett, 1 Cold. (Temi.) l.*30; T:illy v. Ayres, 3 Sneed (Teiiii.i ('.77; Bowas V. Tow Lino, 2 Sawy. 21, Fed. Ca.s. No. 1.713; Perley v. Railroad Co.. 98 Mass. 414; Brown v. Railway Co., 54 Wis. 342, 11 N. W. 3.-><;. JHl; Sloan V. Edwards. CI Md. 89; Eten v. Luyster, GO N. Y. 252. Cf. Allcu v. Mc- Conihc. 124 N. Y. 347, 20 N. K. 812. •''•» Voslmrij V. IMitiicy. Stt U'is. 5i':',. .'.0 N. "\V. 4i>.".. ••■ .M.imi lioudolr-Car Co. v. Duimv. 4 C. C. A. .540. 54 Fed. G40. Contra, rnlliii:m I'alace-Car Co. v. lijirkcr. 4 Colo. ;{44, a case much criticised, and opposed to .'ill the other authorities. See. also. Campbell v. Car Co., 42 Fed. 484; Brown v. Railway Co.. .54 Wis. .342, 11 N. W. .35<;, . H. 127: Cr.ine Elevator Co. v. Lipp«-rt. 11 C. C. A. 521. tUJ Fed. 042. "Where a disease c.iused by the Injury siipervenes. as well as where the disease exists at the time, and is :i^j;ra- vate«l by It, the itlalntilT Is enlilled to liill <• iin|>cnsatory (l;iiii;ii,'cs." I/oiiisville, N, A. & C. Ry. Co. V. Snyder. 117 In.l. i:'.5. 'jo N. K. 2SJ. '" Iladley v. Baxendale. J> i:\.ii. :;n. I'.iirr.il v. SmIi Co.. 11 .Midi. 34; J'.rown v. Ftister. 51 Ta. St. I Co. V. Sumner. lOG Ind. 55, 5 N. E. 404; Houser v. Peareo. 13 Kan. 1(>4. S. . I'lDsser V. Jones, 41 Iowa, 674; McHose v. Fulmer, 73 Pa. St. 3(55: \Vilkins««;i V. Da vies, 146 N. Y. 25. 40 N. E. 501; Collins v. Stephens. 58 Ala. 543; Colin V. Norton. 57 Conn. 480, 4tr2, IS Atl. 5it5; Kenrig v. Eggleston (lii4S| Ale.vn. JC; Little V. Kailroad Co.. 60 Me. 239. See, also, Mather v. Express Co., 138 Mass. 55; Starbird v. Barrows, 62 N. Y. 615. 68 Sedg. Dam. J HI- I- I) \ MA (IKS. I'roxiiii.ilt' cnnsctpiciircs. Ilicn foic. air siiiiplv (liosc (lial arc natural and |ir<»lial»lr."" W'lirilici- (ir not a <^\vi'n result is naluial and probable is Inr I Ik* juiy.* Thr rulr s. no branch of the law u]»on which there is a jrreaier conllict of judicial decisions, and none in which so many nieicly arbitrary rules have been atlojtted."- ^^■here jdaintilf was induced by false representations to put money in a siteculatiou. and afterwards put in more money, the loss of the latter iiKiney was held a juoximate consequence of the fraud.**' Injury to jdaintilT's mill and machineiy. caused by a boiler ex]ilosi(ui. is a jiroximate conse(]uence of defects in the boiler."* Where defendant abducted plaint ill's slaves, leavin;^ no one to care for the plantation, it was held that compensation coidd be recovered for <'orn destroyed by cattle of the nei^dibors. and for wood swept away by a Hood."' A loss throujih (h'|pri\ ation of means of protection is pi-oxiniate.'"'*' oPdvcrt V. Cninfonl. HI .\. Y. .V_M. :;•; N. K. :>'M. • ll.ivfiiy V. IJailniad Co., 135 Pa. St. .^)(». !'.> Ail. lot.".. In an anion of (oiitract, Hlackhurn. .1., .sai<> reiuote." lloliits v. IahhIoii Uailroad Co., L, H. to c^. i;. 111. «» Pol. Torts, i». .•'..'.. 02 Alllw)!! V. Chaiuller. 11 .Mich. .".IL'; Mechein. Cas. l>aiii. 09. o" Crater v. I'.iiininu'iT, ;',:', N. .1. Law, .'>1.'{. «« I'aKc V. Ford, 11! Iiid. H;; i:ii<' t'ltv Iron Works v. HailMP. UM', Pa. St. 12.". o-' .McAfee v. CrotToid. 1.'. Ilow. IIT. ooiK.rry v. Klitner, UH M.-i.-s. i:',l: The Ceorire :ind Ui Exch. 311. 347. DIUKCr AM) CONSKQl KNTIAl, I,ls. ]''i A (IcfccI in a fnicr is a inoxiiiiatc caiiM .Johns. (N. Y.i 241: Doniidl v. .Tones. i:{ Ala. 490; Cochrane v. Quackenbnsh. 2ti Minn. :'.7i;. 13 N. W. l.">4: Larins v. <;iirety. L. R. 5 P. C. 34r); Travis v. l»ulT;iu. 2o Tex. 4;i: Siuiili v. (CDonnell. S Lea (Tenn.) 4(18. 7 2 Wheeler v. Randall. 48 111. 182; Slierrod v. Lanplon. Jl Iowa. .".is. 73 Waters v. Towers. 8 Exeh. 401; New York & C. Min. Syndicate & Co. V. Fraser, 130 U. S. Gil, 9 Sup. Ct. G<;.".. But see Vedder v. llildreili. "J Wis. 427, and Ruthven Woolen Mfg. Co. v. Great Western R. Co.. 18 I'. C. C. P. .Mc,. 74 Denny v. Railroad Co.. 13 C.ray (Mass.) 481; Morrison v. Davis. 2o P.-i. St. 171; Railroad Co. v. Reeves. 10 ^Vall. 176. But see, contra. MichaeLs v. Railroad Co.. 30 N. Y. 5(>4; Read v. Spauldinir. Id. «W). 75Ehrg:ott V. Mayor, etc.. W N. Y. 2f,4. 76 Royston V. Railroad Co., G7 Miss. 37G, 7 South. 320; Ellis v. Cleveland, 55 Yt. 358. IJ DAMAGES. Tlitrc niiist he .111 immcdialc Jiiid iwiliii'nl rclalion IicIwccmi tlic act oomitlaiiu'd df and tin iiijiir.v. williniil tlic iiilci'vciitioii tif other iiido- pt'iitlrnt caiisrs. or llic daiiiajits will lie ton rniHtti'.' ' ^\'llt'I•(' a liuniaii a^M'iicv oi' the volniitaiv ad of a |icrs(»ii over wIkuii defendant has no contrid intervenes after defendant's widiii^fiil act, the iiallv remote.''* I^iss of n situation is not a i»foxiniate conseciuencc of an assault and batteiy.'-' I'.ut. where the act of the third party is a natural and probable re- sult of defendant's acts, the loss is not too nMiiote.^" Loss of credit or custom involves the intervention of the N\ill of strangers, and is therefore usually loo remote.**^ I hit. where the wronjiful conduct directly atl'ects the credit or tra injury caused by a crowd which he draws after him. if his act was of a natui-e to attract a destructive crowi]."^ 12. CONSEQUENTIAL. DAMAGES FOR TORTS— Com- pensation may be recovered for all the consequen- tial losses resulting from a tort w^hich -were natu- ral and probable at the time the tort was commit- ted. 13. CONSEQUENTIAL DAMAGES FOR BREACH OF CONTRACT — Compensation may be recovered only for such consequential losses resulting from a TT Kuekcr V. MamifMclmiiiK Co., .'4 Gn. S4. T*- Hurloii V. I'liikcrtdii, L. 1{. 2 Kxch. :'.I0; Stone v. Codmaii. !."» I'ick. (MasK.) 2\i~: Schmidt v. Mlfctirll. s^ I III. I'.i.-.. T» Brown v. C'uiiiriilnj;^. "i Ali'ii i.M.iss.i ."ioT. »» GrlKKS V. Klcckeustciii, It Miim. M Hlil. tIJi. "> Ixjwcnstchi V. Monroe, ."i Iowa, M'J, 7 .\. ^^'. ^OO; Wcoks v. Prcscolt. .'•S Vt. .''(7. S»'c Alexander v. Jacoliy, 2'.^ (Hiio St. .Ti8. Contra, MacVeaj^h v. I'.:illey, L'«» III. .\],]k C,(h;. " a Swain V. SiliKfTrlii), l.'it N. Y. 471. .".1 .\. K. lo_'.'.; r.nyd v. I'itl. 14 Ir. C. L. 4.'.. «3 Fairbanks v. Kerr, 7U I'u. St. iHi; Guille v. Swan, VJ .Johns. uN. V.) 3S1. DIUKCT AM) (ONSKiirKNTIAl. I.OSSK.S. 1 •'> breach of contract as were natural and probable under the circumstances contemplated by the par- ties at the time the contract -was made. Til determinin}; wliat coiis^njuciilijil Iossch sliall Im* comiMMisiitKl. llifn- is ail important . 86Suth. Dam. § 45; Anson, Cont. 310; Hadley v. Baxeiidalp. 9 Exch. 341; Candee v. Telegraph Co., 34 Wis. 479; Paeiflc Exp. Co. v. Darnell. O'J Tex. 6.39; Thomas, H. & W. Mfg. Co. v. Wabash. St. L. & P. Ry. Co.. 02 Wis. (M2. 22 N. W. 827; Smith v. Osboru. 143 >Lass. 185. 9 N. E. T^TvS: Packard v. Slack. 32 Vt. 9; Smith v. Green, 1 C. P. Div. 92; Hiech v. Belch. (W Iowa, 52«i. 27 N. W. 507; Jones v. Gilmore, 91 Pa. St. 310. ST Sutb. Dam. § 28; Bowas v. Tow Line, 2 Sawy. 21, Fed. Cas. No. 1.713; Whart. Xeg. §§ 77. 78: Higgins v. Dewey, 107 >Lnss. 4M: Stevens v. Dudley. 56 Vt. 108; Evans v. Railroad Co.. 11 Mo. .Vpp. 403; Ehrg..tt v. Mayor, etc.. 96 N. Y. 281; Baltimore City Pass. Ry. Co. v. Kemp. 01 Md. 74. See Brown V. Railroad Co., 54 Wis. 342, 11 N. W. 350. 911. 10 DAMAiiKS. CimAfiqxiential Damacfefi for lirnirJi nf ( 'nnfrarf. I^ir iiiiyiliin^^ aiiKnintiii^ to a (iirccl bicadi of coulract, wliother foi('S('( n or iinforcscf'ii. the paity rosjioiisihk' tlieri'for is liabk'. hecaiisf lu' lias coiitractod that the other party sliall receive that very thiiij;; Init lie is not liable for iiKiireet or consequential losses resiiltin Wis. :!1,S; Booth v. .Mill Co., Co \. Y. 487; Cory v. Iron-Works Co., L. R. :: <2. B. 188. ""(ice V. Railroad Co., Ihnl. A: .\. 211; Howard v. Manufacturing Co., 130 U. S. 1!«>, 11 Slip. Ct. 500; Ca.se v. Stevens, 137 Ma.ss. 551; Mather v. Express Co., 138 Ma.s.s. .".5; Fox v. Railroad Co., 148 Mass. 220, 19 N. E. 222: }{.-n7,iger v. Miller, 50 Ala. 20ni» wlio lircaks llic conlriict. jiiid wIktc Ilic (l;iiii;i;:(' cuiiiiilaiiifil ul IIuwh uatmally fioiii the biiadi of contiact iUHlcr lliost* H|)('cial ciiriinislari ces, then such special damage must be supposed to have been conleui phited by the parties to the contract, and is recoverable."^ A further rule is implied, viz. that damage which cannot be consid- ered as fairly and naturally arising from breach of contract under any given circumstances is not recoverable, whether those circumslances were or were not known to the person who is being charged."^ THE REQUIRED CERTAINTY OF DAMAGES. 14. Losses must be certain in amount, and certain in re- spect to the cause from -which they proceed, or damages therefor cannot be recovered. The bur- den of proving both these facts is on the plaintiff. In an action for damages, the plaintiff must juove. as a jiai t of his case, both the amount and the cause of his loss. Absolute ((rtaiiity is not recpiired, but both the cause and the probable amount (jf ihi- loss must be shown with reasonable certainty."^ Reasonable certainty means reasonable probability.®* Thomas. B. & W. Mfg. Co. v. Wabasb, St. L. cS: V. U\. Co.. c,l> Wis. <. K. HM; Deming v. Kailroad Co., 48 N. H. 4.55; liocht'Ster Lantern Co. v. StiK's iV I'arkcr Press Co.. 135 X. Y. 217, 31 N. E. 1018. See Hexter v. Knox. (13 X. Y. 7n\\. 3 East Tennessee, V. & G. R. Co. v. Staub, 7 Lea (Tenn.) 397: Wohott v. Mount. ;?(> X. .T. Law, 262, 271; Allison v. Chandler, 11 Mich. 542. ."..V.; Satchwell v. ^yilliams, 40 Conn. 371; Suth. Dam. S 53: Rochester Lantern Co. V. Stiles & Parker Press Co., 1.35 X. Y. 217. 31 X. E. 1018; Griffin v. Col- ver, 16 X. Y. 494; Leeds v. Gaslight Co.. 90 X. Y. 2t;: Dnko v. Railway Co., 09 Mo. 347. 351, 12 S. W. 636. 04 Griswold V. Railroad Co., 115 X. Y. 61. 21 X. E. 72«J: United States Trust Co. V. O'Brien, 143 X. Y. 284, 38 X. E. 266. CHAP.DAM.— 2 18 dama(;ks. SAME— PROFITS OR GAINS PREVENTED. 15. Compensation may be recovered for profits lost -when the loss is a proximate and certain result of the tort or breach of contract. ''Tho broad {^'ciu'ral iiilc in siicli cases is llial Ihc i>aity iiijurcil is entitled to recover all his damages, including jiains prevented as well as losses sustained; and this rule is subject to but two conditions: The damajjes must be such as may fairly be supposed to have entered into the contemplation of the parties when the}' made the contract. — that is. must be such as might naturally be expected to follow its viola- tion; and they must be certain, both in their nature and in respect to the cause from which they proceed."®^ Where the losses claimed are contin<>ent, speculative, oi' mei'ely possible, they cannot be compensated."" Anticipated ])rofits from a competition or speculation are too uncer- tain to be compensated.®" Where j)laintift" is engajied in a mercantile business, conijtensation for a personal injury is limited to the value of his loss of time. Loss of ]>rofits of the business through the injury to the good will is not a natural conseciuence."^ 85 WitluM-hci' V. .McviM-. ir»r. N. Y. 4 4<;. .")(> N. E. HS; (Jiitliii v. Colvcr, Ki N. V. 480. 401; Booth v. Mill Co.. (JO N. Y^4S7; Wakcinan v. Maiuiractnrinj; Co.. 101 N. Y. '20'}. 4 N. K. 204; licriistcin v. Mfcch. VM) N. Y. 3:>4, 2U N. E. 255; Thomson-IIoustou Eh'ctric Co. v. luiiaiit Land Imit. Co., 144 N. Y. 47, 39 N. E. 7; Uanfortli v. Itallroad Co., sn> Ala. IVM, Ui South. .">(5; Peunypacker v. .Tones. 1(J; Mi/.iicr v. Frazier. 40 Mich. .-, I'a. St. :'>(»n. »» Marks v. Kailro.i.l Cu., It D.ily (\. Y.) 01; I'.icili.irii v. Kiil»i)er Co., 54 TIIK KKCillUKI) CKIITAINTY. 1'.' The iisiiii] and oi'diiiarv jnotits of an cslaldislnMl hiisiiicHS or j)ic)f. •sioii arc nasonalilv cci'laiii. and iiiav he recovered in an action f«>r in teri'ui)ti<)n of the business, in tin- ahsciMc of anything sliowin;: lliat they would not liavc been ivali/.cd. '' Some businesses are of so uncertain a naiurc that thtir pKitiis never become established, such as fisliiii};.""* I'laintitT cannot recover anticipated jtrolits of a new bnsiiicHH, in which he was wronjifull.v incvented from enlbal•kin;^^"" Damages for the loss of use of hind or business jireinises arc liic rental value, and the same measure is to be ap|)n<'il in art ions ban-il on breach of contract to deliver niaehiner\. or furnish water power for mills, etc., where no special circumstances exist rendering loss of ex pected profits a more appropriate measure.' "- Compensation may be recovered for loss of earnings or income caused by personal injuries.* Loss of profits by the destruction of an unnuitured crop is usuall.v regarded as too uncertain to be compensated; '''■'' but compeu.sation based on the average croj) of that year has been allowed.*"* Wis. 208, 11 N. W. 514; Masterton v. Villajjp of Mt. Vernon, ."is N. Y. :'.'•' But see Ehrgott v. Mayor, etc., 96 N. Y. 27."». 09 Dickinson v. Hart. 142 X. Y. ISi. IW N. E. 801: Snow v. rulltzer, 142 N. Y. 2(J3. 3(i N. E. lo.j!>; AllLsou v. Chandler. 11 Mich. 542: Peltz v. Eier Co.. H-". Mass. 261. 14 N. E. 113. 100 Wright V. Mulvaney, 78 Wis. Sit. 46 N. W. ln4.".. 101 Red V. City Council, 25 Ga. 38<»: Greeuo v. Williams. 15 III. 2tM;: Mon-y V. Gaslight Co., .'» N. Y. Super. Ct. 185. 102 Witherhee v. Meyer. 155 N. Y. 44<;, 50 N. E. 5S: Grlltln v. CtUver, M N. Y. 489; City of Chicago v. Hueuerl)ein, 85 111. 5'.M: Ile.xter v. Knox. 03 N. Y. 561; Townsend v. Wharf Co., 117 Mass. .501: Dodds v. Hakes. 114 N. Y. '^¥K 21 N. E. 396. But see Cargill v. Thomp.sou. 57 Minu. 54S. 5;t N. W. 6.38. * Moore's Adui'r v. Minerva. 17 Tex. 20; Wade v. Leroy. 2o How. 34; Plerci; V. Millay, 44 111. 189; Masterton v. Village of Mt. Veruon. 58 N. Y. 391; Shee- han V. Edgar, 58 N. Y. 631; Pennsylvania & U. Canal Co. v. (;rnliam. aT Pa. St. 290; Houston & T. C. Ry. Co. v. Boehni. 57 Te.x. 152. 103 Gresham v. Taylor, 51 Ala. 505; Richardson v. Northnip. <^; I'.arh. iN. Y.i So; Texas & St. L. R. Co. v. Young. 60 Tex. 2ttl. 104 Payne v. Steamship Co.. :« La. Ann. 164: lJi< .• v. Whitniore. 74 Cal. 611». 16 Pac. 501. See. also. Wokotl v. Mount, 3<; N. J. l.aw, 262; Passiuger v. Thorhurn, 34 N. Y. 634. 20 I)AMa<;ks. I\»r liirjicli nf a cuiifrnrt of ]i:irliicrslii]i. jdaiiililT ina.v r<'cov(>r siirli jMoliis as lie rail |iio\c with irasoiialilr ici laiiily. I-lx idriitt- <»f past |ii(tlils is adinissililt'. but ii i:ts. JO'i SkiiiiuT V. Tinker, :; 1 IJarh. (N. \ .) :!."..'.; I'.all v. I'.iiltDii. r»s 'Vv\. .'.7. 1"' I'ox V. llanliii;:. 7 ("nsli. (Mass.i .">1C.: Mace v. Itainscy. 74 N. C. 11; Mitrlicll V. ("iMiii'll, 44 .\. V. SuiKT. Ct. 4ol: .Shaw v. IIolTniaii. 11.". Midi. ICJ. 1"" .MasttTtou V. Mayor, etc., 7 Hill (N. Y.) Ul ; Lentz v. Choteau, 412 I'a. .Si. 4::.'.. ""'IJciitiiii V. Fay. (•,! 111. 117: Slirlhyvillr 1,. H. K. (.. v. I.cwark. 4 liid. 471; .N.luiHoii V. Inliahitants of Ifolynkc. lo.". .Mass. so; I.iue v. n(>isiiii,'tnti. .".U Vt. y.Ui; \Vhltsnn v. (Jray, .'{ Heat! ('ri'iui.i 441. >'"Yiimijr V. Cun-toii. HI Ala. 7l.'7. «> South. :'..'>!:; AVchlc v. Ilavilaiid. f,U N. Y. 44M. Hut sf«' Alaliauin Iron \Voiks v. Hurley. S<; Ala. i:i7. r» .South. 41.S. m reruisylvanl.i H. Co. v. Kale. 7<> Ta. St. 47; New .Jersey Hxp. Co. V. .NUhfdK. Xi N. J. Law, 4:'.t; Nash V. Sharpe. 1!» Hun (N. Y.) .'{(JT); ^Valkl•^ V. l::iilway Co., tU liarli. (N. Y.) l-'tat; Itaker v. Hallway Co.. .".4 N. Y. Super. Ct. ',','M: rhlillpH V. Hallrond Co.. T. C. I'. I>lv. IXO; Melcalf v. Haker. ."7 N. Y. .\. \V. .". C. V. I>iv. ILHO; Holmes v. Hal.le. 74 .Me. liS. ii> .lafij'i''** ^'- Itallruad Co., 41 Conn. i'A; KaiilTniau v. Halxock, G7 Tex. -•41, 2 S. ^V. 878. KI.KMKN'rs OK ( oMl'KN.HAllii.S. 21 A\'lM'it' oiM' is iiol cii^;!;,'!'*! in Itiisimss ;it tin- liiiif rofits or {jjains from the us*' of properly which has been totally destroyed by defendant's widn- do noi fall within the rub-, and cannot be recovered. In such cases compensation is ;;ivon for tli< whole value of the property destroyed, and thereupon, in le;;al con templation, all plaintitT's title and interest in the pr.iperty ceases."' ELEMENTS OF COMPENSATION. 16. Damage in respect to anything in the enjoyment of which one is protected by law may be a subject for compensation. 17. Damage for which the law affords compensation may be divided into three classes: (a) Pecuniary losses, direct and indirect; (b) Physical pain and inconvenience; (c) Mental suffering. The law awai'ds damages only for injuries fo person, property, or reputation. An injuiy in any one of tlusc respects may alb ct «»ne in one or more of three ways. It may cause tl) pecuniary loss, direct or 114 Fishor v. .Tanscii, 128 111. 54;>. 2\ N. K. 598. 116 Dr. Ilarter Medicine Co. v. Hopkins. Si Wis. .312. 5.3 N. W. .V»l. 116 Wharton & Co. v. Winch. 14o N. Y. 2sT. :i.*. N. E. 581». iiv Sedg. Moas. l>ain. § ITS. McKuighl v. llatcliff. 44 Ta. St. l.-Ki; Edwards V. Hoebe, 4S Barb. ^N. V.) 100. •_"J UAMACiKS. iiidiriMt; iJi pliysical jmiii ;iii(l inconvenience; and {'.\\ mental snlTerin;;. All liner are projier eK'nients of conipensiitiou to be considered iu es- timating' damajj:es. SAME -PECUNIARY LOSSES. 18. Compensation for all pecuniary losses which are the proximate and certain result of the cause of action may be recovered, except — EXCEPTION — Counsel fees incurred in litigation caused by the "wrong are usually not recoverable. Oenerally sJ)eakin^^ jiocnniai y losses are always an element in esti- mating the damages cansed by a wrong. h.rpenxi'tt of Litigation. The expenses of litigation to obtain comjtensation for a wrong, though the natural and ])robable conseiiuence of an injury, cannot usually be i-e((»\-ered as damages.'"* In general, tlie law considers the taxed costs as the only damage which a paity sustains by the «: HlHhop V. Il.'iulrick. HU Hun. '.VS.',. '.\\ N. Y. Supi.. .".oj. no Young V. Courtney. V.\ Ln. Ann. l'J3. laopit-rce v. Millay. W ill. 1S1»; McKlnlcy v. Hailruad (Vi., 44 Iowa. '.\\\; Ross V. Leyt'ctt, 01 .Midi. 413, 1:8 N. ^V. <\'Xi\ Stcplic'U.s v. Kailroatl Co., '.JO .Mo. KI-KMKNTH (iK Ci )M IKNSATIi )N. Tlic MUHMiiil (if (l;iiii;i.i:\ wliirh tli«- ••<|iii\ alcnt of such iujuiii-s in money can Ix- csliniafc(l. I)ain:i;^»-s cannot he rt'covcn-d for inconveni('n<(' or annoyance,'" nnlcKH it aniouniH to physical x of a Came of Arfion. It has been doubt . <:im.i1 ("o. v. Crahaiii. li-'i I'a. St. aw; Goodno V. City of Oshkosli. U8 Wis. Mo'i. 121 Hamlin v. Railway Co., 1 Hurl. \- .V. 4..s: Hunt v. ]. nival. Diul. .«,-ll. UO Mass. 197: Ross v. Lojrgett, 61 Mich. 44.".. 28 N. W. .KC But spc Walsh v. Railway Co.. 42 Wis. 23. 123 Wostcott V. Middleton. 43 N. J. Eq. 478. 4n;. U All. 4l«»: M.. 44 .N. .1. Eq. 297. IS Atl. 80. And see Baltimore & O. R..Co. v. Carr. 71 Md. 135. 17 Atl. 1052. ^ . 124 See Scd.ir. Mc-as. Lam. § 44; 1 Suth. Dam. 7s; Wadswortb v. Telegraph Co., 86 Teun. 721. S S. W. ')74. 24 DAM.\r;Ks. hi Msion in Iho mind of (lie iMlicr. hiii no ii(ln:il liarni icsnlts. (here is no cjinsr of action.'-"' WIhtc, howevci". tlio fiii:Iit or shock canscs illness, ncivons ]tros- lialion. or any other physical injuiy. the orij^inal rault is the pioximale (anse of tlio itijnry; and c(tnijH'nsati(»n may lie i-e( i»\ cied. not toi- the fri^dit. but for the resnlis of it.'-" ^^'luM•e the fear or anxiety, instead of caiisinu the physical injury, accoinjianies it, as a concomitant or incident, (he injury beinjj: proved, compt nsation may he had for the menial snlTerinii. The jihysical in- jiny sujiporls the action.'-' And it is often dithcnll to tix the (hunaji^e.'^. even wlu're injury in a le^sd sense results.'** lUit. where the law recounizos a riptht to comiiensation for an injury, such ditlicnlty is never a ground for withlnddinu all damages; '-" and the ditlicnlty is solved by leaving the matter to the sound discretion of a jury.'-'^o M> iifitl Siijfii'inri In Acfiotis of Tort. <"omp('nsation for mental sidlerinj; which is the natural, proximate, and certain result of a tort may be recovered.'^' 1-' o'l'lalicrty v. Kaihdad Co.. .■{4 \\\\s. Div. 74. .".4 X. Y. Stipp. ;>*i; Cainiiiii: V. Iiili:il.it:iiits of Wiiliaiiistown. 1 Cash. (Mass.) l.'.l ; .\tcliisou. T. & S. F. It. C^'i. V. McGiunis. 4f; Kaii. Hi'.i. HU I'ac. 4."):!; Ft. \^(prlh & D. C. \\\. Co. v. I'.urtnn iTex. App.) ]."> S. ^\■. i;i7; Wyiii.ui v. Lcavill. 71 Me. 227; lOwinj; v. ICailway Co.. 147 Ta. St. 4o, 2.'i All. .".to. Cdiitra, Vealviuii v. Krot'^iiT ('I'c.K. Civ. App.t 27 s. w. !ir.:;. I ••:'•• Smith V. Railway Co., :{0 .Minn. t<;9, 14 .\. W. 7'.i7: WW v. It.iilway Co., L. R. 20 Jr. 428, disapproving Victorian Hailwnys Cuiii'is v. ('oulins. V.\ .\pp. Cas. 222. Contra, MitclicII v. Railway Co., l.'.l N. V. I07, 4.'. .\. V.. .'..". I: Wliite V. S.iiulcr, ir,S Mass. 2'.m;, 47 N. K. 90. See, also. Fitzi)atrick v. Railway Co., 12 I'. ('. Q. R. (^45: Oliver v. Town of La Vallc, ;{(; Wis. .'.1)2; Wanvn v. Rail- n.a.l C... n;;; .Ma.ss. 4K4, 40 N. K. SiK"). >-'• (»'ll.'ilM'rly v. Railroad Co.. \\\ .\pi.. Div. 71. :a \. V. Su|ip. '.'i" Waiiswrntii V. 'r.l.-i:i|.li C..., SO Teuu. 721, 8 .^. W. .".74. '■■•" M. »•■"> Wadswuiiii V. 'J'ele;,'i;ipii Co.. S(» Toiui. 7 1 : r.nllon v. FaiiMUii, 11 .Mlt'ii (Mass. I 77, 7S. '•■>> I'ersonal Injury. \;ni l»i' N'ciittT v. R.iiiway Co., 2i; leii. .■•.2: l»riiili watpf V. Dinsiiiore. in linn. 2.".o: R.-insum v. Raiiroail Co.. 1.") .\. V. n.">; Curtis V. Railroad Co.. 18 N. V. r,::i; Waili.-r v. Itailway Co., (;;J I'.aili. (.\. \.) KI.KMKNTS OK tOMTHNHATlON. Proxpective Mii)p. irjC; WabiiHh & W. Ry. Co. V. Morjran. V.Vl Ind. 4:?0. .31 N. K. tiCl. and :'.•-• N. K. V,; I-M.-iuIiip V. Town of Shenandoali. 71 Iowa. 4.".r,. .-{2 N. W. \T^i\\ Sidcknin v. H:iihv:iy Co.. 93 Mo. 400, 4 S. W. 701. Assavdt and Hattcry. nnlthor v. Hlnw. 11 Md. n-SO: jMorpaii v. Ciuley. 142 Mass. lo7. 7 N. K. 72(5: Mclntyn- v. Giblin, 131 U. S. 174, Append. Indecent Assault. Wi.lf v. Trinkle. ln;5 Ind. 355. 3 N. E. 110; Fay v. Swan, 44 Mich. 544, 7 N. W. 21.1; Ford v. J..ii49. 5 N. E. 41. Mall.-lous Prosecution. Parkhurst v. Mastcllcr. .")7 Iowa. 474. lo N. W. *«V»; Fngnnu V. Knox. 40 N. Y. Suiicr. Ct. 41; Whccl.-r v. Hanson, ic.l Mass. .37n. .37 N. B. 382. Libel; Slander. Sliattuc v. McArthur. 2tt Fed. K'^".; Tcrwillijier v. Wands. 17 N. Y. 54; Wilson v. Coir. Id. 442; Sanuiels v. Asswiation. «5 Hun i\. Y.» 5: Hamilton y. Eno. 16 Ilun (X. Y.) 599: Lombard v. Lennox. 155 Mas.-*. 70. 28 N. E. 1125; Warner y. Publishinfr Co.. 132 X. Y. isl. .3o X. E. :VX\. S.Hluctlou and Criminal Conversation. Irwin v. I>.nrnian. 11 East. 23; BarlH»ur v. Stephenson. 32 Fed. 66; .Johnston y. I>isbn.w. 47 Mich. .''i9. in N. W. 73; Emery v. Goweu. 4 Me. 33; Hatch v. Fuller. 131 .Mass. .574; Lli>«» v. El»en- lerd, 32 N. Y. 229. Abduction of Children. Magce v. Hollnnd. 27 X. J. Law. 86; Stowe y. Heywood. 7 Allen (Mass.i 118. 132 Matteson v. Railroad Co.. 62 Barb. tX. Y.> 3«'.4; Memphis A: C. R. Co. V. Whitfield, 44 Miss. 466; South & X. A. R. Co. v. M1. •J() DA MACKS. ill icsiH'cl to ii ri^lil indlcclcd Ity l;i\\. ;is in ic^.inl t(t liis jtci'son, ]ir(»iM'it \ . or ir]nii;ilioii. ilir liiw, ill icdicssinu such in jury, will also award to ]ilainlilV a suilaldr ((iniiimsat ion Cor his nicntal sufft'rinfjj, considrrcd as an insi]iaraltl(' [laii of tin' jiciicral risnll of tlie tort airainst liini.^^^ MintaJ Sulferi))(/ in Act inns of (nufrdcf. Ijion ihc quest i: resulting; from a breach of contract, the authorities are in conllict. It has been held that such daniaj;es as are recoverable are subject to the jj^eneral limitation that damages for the breach of a con- tract must be jiroximate, certain, and contemplated at the time the con- tract was made.^^® The breach of a promise of marriaj^e has always been regarded as an exception. aiKl damages for mental suffering allowed.^ ^^ Actions against telegraph companies for delay or failure to deliNcr messages const itnt(^ by fai- the most numerous class of cases in which this (piestion has been raised. In the case of So Relle v. Telegraph ro.,^='» it was held that the ad- dressee of a telegraphic message could recover, as compensator^' dam- ages, for the failure to deliver ])ronii)tly a message announcing the death of his niothei'. by reason of which delay he was ]>revented from attending hei- funeial. And it is now well established in Texas that, where the ualuie of the message is su( li as to ajipiise tin- conijiany that mental stilVering will i-esult from delay or failui-e to tiansniit it, 138 Lynch V. Kni^Mil. :» H. I.. (":is. r.TT: O'KlMlicny v. It.-iilniMd Vi,.. :U App. I»iv. 74. r>4 .N. V. Suiip. !ir,: Tri^'- v. i:.iil\v;iy Ci... 74 Mo. 147; linructl v. ■|'cl.';.'r:ipli ("(I.. :;'.» Mn. Aiip. .V.i!i: W. f. irl. Co. V. i;(i>:crs. ('►.S Miss. 74S. «> Siiuili. S"J.",: SiiinimTlit'ld v. Telt';;rii|>li Cd., ,S7 Wis. 1, .",7 .\. W. •»7;{; ('li:ii>iii;in V. 'J"clc;:nii)li Co.. JM» Ky. LMm. 1;{ S. "W. SNO. 11' W.iilsworlli V. 'Jclc-i:ipli Co.. H\ Tciiii. tlUft. 7ii;{. S S. ^^■. .".71. Contra, l-niiicis V. 'I'elc^riMpli Cd.. .".s .Miiiii. LTil', .")!) X. \V. 1(»7N. In tlic lollowiii;: cases iiH'iilal siilTiriiiK lias liccii held too rcniutc or uiKXpcricd to lie c(iiiip('iisatetl: I'.caslt-y V. 'rclc;:ra|ili Cd., :'.'.» I'cil. ls|; WClls. I'ai-^ro \- Co.'s E.xpross V. Iiilii r. » 'I'.'X. Civ. Apj). •1V.\, li.'. S. W. ML': .Mrjiols v. Jlild.v ('{'ex. Civ. App.) _■» S. W. :;i(J; Tliiimpsdii V. 'rcle;:ra|.li C... In7 .\. C. I l!». VI S. i:. 427. '•■'■CdlJiiiK V. .Mack. :'.! Arl<. list; Clidlis v. Cliapmaii. 12.". .\. V. 222. 2(". .N. E. .'{OS; SluTiiiaii V. i)a\vsoii. lirj .Mass. M'.i."., 'M\); Jobusou V. Jculiius, 24 N. Y. 2r.2: Tlioni v. JN nK DAMA'.FS. i. i (•(iiii|i( nsation for such siillVi iii^^ i;iii Im- riMuvt-ri-d. ili(iii;.'li ii<>t ion ncclcd witli ;in.\ plivsical iiijiny or |HMUiiiaiv loss.'^" The ''Texas Doctiine" has liccii followed in soiin- oiIkt jiiiisdi< tions/*" but roimdiated in others, iiu-ludiu^' the fed. Mai roiiits.'*' Damages for Mtnital Suffering Compenmton/, imf f'.'.n iii/>llary damages. These terms are sometimes loosely used to mean eviden«'e i30Loper v. Telegraph Co.. TO Tex. (380. 8 S. W. »•.<•<.; W. U. Tel. Co. v. Broesche, 72 Tex. 054, 10 S. W. TM- W. U. Tel. Co. v. K..s,.ntreter. SO Tex. 400, IG S. W. 25. 140 W. U. Tel. Co. V. Henderson. 89 -\la. 510, 7 i^o\\\\\. 4T.t: ('hai)inaii Telegraph Co., 90 Ky. 205, 13 S. W. SSO. 141 Curtin V. Telegraph Co., 13 App. Div. 2.5;i. 42 N. Y. Supp- H<«: Francia V. Telegraph Co., 58 Miuu. 252, 50 N. W. KtTS: W. U. Tel. Co. v. Hnpers. «;s Miss 748, 9 South. 823; SuimnertieUl v. Tele^-raph Co.. 87 Wis. 1. .'.7 N. ^^■. 973; Chapman v. Telegraph Co., 88 .Ja. T.;:;. I.". S. K. 901; International Ocean Tel Co. v. Saunders. 32 Fla. 4X4. 14 Snu.h. 14S: Chase v. Telegraph Co 44 Fed. 5M; Craxvson v. Telegraph Co.. 47 Fed. 544. And see note by Wm L Clark. Jr., in W. U. Tel. Co. v. Coggiu. 15 C. C. .\. 2:r.. "naniages in Actions against Telegraph Companies." See. also. Lynch v. Knight. 9 IT L Cas. 577. per Lord Wensleydale. 142 Smith V. Overby, 30 Ga. 241; Bixby v. Duulap. 50 N. U. 4.-^); Th..i..,. Elect. § 382. 28 DAM AUKS. of jmytliiiiu: that tends io iiicicasc or dccrcaso llio damages, Itiil the juopcr sense is that indicated above. It is for the jnry to say wliether the matters given in evidence aggravate or mitigate the damages. It is not a qnestion of hiw for 1 he court.'''' "Nevertlieless, certain rules as to the effect of some common circum- stances (such as i)rovo(ation, good faith, tlie position of the parties, etc.) in aggravating or mitigating the damages liave been laid down, and are followed in ordinary- cases, though, as has been said, they should not be regarded as conclusive. These rules are api)lied in actions of breach of promise of marriage and of tort for personal in- jury, and in all actions where exemplary damages are allowed." ^** Ordinarily, evidence in aggravation or mitigation of damages, in the strict sense, is inadmissible in actions of contract. And in such actions the defendant's motive or intention in breaking the contract is not an element in the case, unless it belongs directly to the issue.^*^ If the person injured thereafter negligently suffeis his loss to be enhanced, the incr<'ase so occasioned cannot be recovered from the I)erson who first violated his contract or duty; and in some cases it is incumbent on the person damnified to take such active measures as he reasonably may to minimize the damages naturally tlowing from the bi-each.^*° Apart from the principles of aggravation and mitigation, in their strict sense, the special circumstances of given cases, or special i)ro- visions of given contracts, may, of course, modify the general rules which would be applicable under ordinary circumstances, and operate, according to their nature, to either increase or lessen the damages recoverable. Thus, where rooms were let, with table board, for a fixed pciind ;iii(l s})ecified weekly |);iynient, ''with no dednclion in case of alisciicc,"" and the Ixtarder left pending the term, it was held that he '* ■ Osimui V. W'iiiti'i's, 27, Or. L'liU. ;>,'> I'ac. 2.')0. ' '< Scdg. Dam. § r>li. Sec. j,'ciicrally, as to ajJCf-'ravation and iniliuatioii of dainaKi'S, Grable v. Margrave. .•', Scam. (111.) 37*J; Storey v. Karl.v. sc, 111. ici; Sayro v. Sayre. 2'> N. J. Law. SW,; Duval v. Davey, 32 Ohio St. Ciil. M.ilu.iicy V. Bclfonl. r.'.2 Mass. liU:',; Siiilivaii v. Kailway Co., 1G2 Mass. oMi, 3;» .N. E. 185. It" 3 I'ar.s. Cont. 1G7; Anson, Cout. 311. i*« Allcu v. McCuuihe, 124 N. Y. 317, 20 X. E. 812; 1 Siilh. Dam. 118. AGGUAVATION AND MITICATION OK DAMAGES. 20 was liablo to llic otlici- pailv, nol nuTcly fuf |»i(»s|m( ii\c |iiutils. Init for tlic full contract i>ricc.' '' !r^o. wliilc, in an action for convcision of inoiicrl \ (if llinliialiii;: v;ili)f, the market valnc for a rcasonalth- linn\ in wliidi to iciiImcc tli<- piop erty, furnishes the guide to the proper measure of damagt's.'*" vet. if there is no market, and no market vahie, and in the mIisiihi of special circumstances, the vahie at the time of conversion, wiiii iiii-. Xelson v. Wallace, 48 Mo. App. 103. 158 Ward v. Dean, 57 Hun, 585, 10 X. Y. Supp. 421; Earl of Leicester v. 30 DAMAGKS. 24. An injured party cannot be compelled to accept spe- cific reparation in lieu of damages; but, if he does so voluntarily, it will operate as a reduction of damages. ''•' EXEMPLARY DAMAGES. 25. Exemplary, punitive, or vindictive damages are dam- ages awarded in addition to compensation as a pun- ishment to the defendant, and as a warning to other w^rongdoers. 26. The authorities are in great conflict as to whether ex- emplary damages can ever be allowed. (a) In some jurisdictions, exemplary damages cannot be recovered."^ (b) In a few jurisdictions, exemplary damages, so called, may be recovered, but they are, in fact, compen- satory.'^' (c) In most jurisdictions, exemplary damages may be re- covered in cases of aggravated torts. "^- The doctrine of exemplary damages is anomalous and illogical. '"It has been suffered to lean upon and sui)port itself by the sup])0sed weight of authority, rather than to stand upon principle and inherent strength." i«3 Walter, 2 Canu). 25t; Hallam v. Publishing Co., 55 Fed. 450; Post Pub. Co. V. Hallam. 8 C. C. A. 201, .59 Fod. 530. i''»Xoniian v. Uo^'ers. 20 Ark. ."^05; Livermore v. Xortlirup. 44 N. Y. 107; McConnick v. IJailroad Co.. 80 N. Y. 3.5:?; Porham v. Coney, 117 Mass. 102. laoStilsou V. Gibbs, 63 Mich. 280. 18 N. \\'. sl5; Murphy v. Ilobb.s. 7 Colo. 541. 5 Pac. 119; Fay v. Parker, 53 N. H. 342. 101 Pegram v. Stortz, 31 W. Va. 220, G S. E. 485, now overruled. Mayer v. Probe, 40 W. Va. 240, 22 S. E. 58; Quigley v. Railroad Co.. 11 Xev. 350; .Stuyvesant v. Wilcox, 92 Mich. 233, 52 N. W. 4^)7. 162 Day V. Woodworth, 13 How. 363, 371; Voltz v. Blaekniar, 04 N. Y. 444; Eml)len v, Myers, 6 Hurl. & N. 54; Milwaukee & St. P. Uy. Co. v. Arms, 91 V. S. 489; Missouri Pac. Ry. Co. v. Humes, 115 V. 8. 512. (5 Sup. Ct. 110; I'.uiKly V. .Maginess. 70 Gal. 532, IS Pac. 008; Daltou v. Beers. 38 Conn. 529. iiJ- Field, Dam. p. 79. KXKMrLAKV iJAMAliKS. 31 The fact remains, liowcver, thai, in a vast IkmIv of (Iicisioiis. (la;iia;,'cs have been allowed strictly in pdMiam. The doctrine of these cases is to be sustained, if at all, mainly on the groimd of antliority.'"* 27. WHEN RECOVERABLE— In jurisdictions where ex- emplary damages are allowed, they can be recov- ered only in actions of tort," ' and when the tort is accompanied by violence, oppression, gross negli- gence, malice, or fraud. EXCEPTIONS — (a) Exemplary damages may be recov- ered for breach of promise of marriage."' (b) In a few states exemplary damages may be recov- ered in an action on a statutory bond, where the breach of condition w^as a tort."" (c) In some jurisdictions, exemplary damages cannot be recovered where the tort is also a crime "■* Exemplary damages, being designed to jmnisli tlu^ wiongdoer. can he justified only where the wrong was willful or wanton; and their allow- ance is Hmited to that class of cases.^*^** Good faith,^^*^ and provo- cation,^ ^^ may be shown in mitigation. It is the province of the court to determine whether there is any evidence to support an award of exemplary damages,^" and of the 164 Sedg. Dam. § .354. lesSedg. Dam. § 370; Anson, Cont. .311: Gniklfoi-a v. Stoamsliii) Co.. 9 Can. Sup. Ct. 303; Murdoclv v. Railroad Co., 133 Mass. 15. 166 Johnson v. .Jenkins, 24 X. Y. 252; Chellis v. Chapman. 125 N. Y. 214. 2i; N. E. 308. 167 Floyd v. Hamilton, 33 Ala. 2.35. Contra. Cobb v. IVopK'. M 111. 511. 168 Murphy v. Hobbs, 7 Colo. 541, 5 Pac. 11!). Contra. Cook v. Ellis. <> Hill (N. Y.) 466. But see People v. Meakini, 133 N. Y. 225. 30 N. E. 828. 169 Huling V. Henderson. 161 Pa. St. 5.53, 29 Atl. 276; Con.solidated Coal Co. V. Haenni, 146 111. 628, 35 N. E. 162; Reeder v. Purdy. 48 111. 261; Moore v. Crose, 43 Ind. 30: Brown v. Allen, .35 Iowa. .306; U. S. v. Taylor. 35 Fed. 484; Ames v. Hilton. 70 Me. 36; Sapp v. Railway Co.. 51 Md. 115; Railway Co. v. Lee, 90 Tenn. 570. 18 S. W. 2(>S; Hamilton v. Railroad Co.. 53 X. Y. 25; Yates V. Railroad Co., 67 X. Y. 100: Caldwell v. Steamboat Co., 47 X. Y. 282. 17 Millard v. Brown. 35 X. Y. 297. 1-1 Kiff V. Youmans. 86 X. Y. .331. 1T2 Chicago, St. L. & X. O. R. Co. v. Scurr, 59 Miss. 456. 32 DAMAGES. jniv to (Icifi iiiinc wliclhci- oi- not such (l:iiiiii«i(>s slinnld bo awarded.''-^ In suits in e»|uity, exemplary da^na^cs arc never jj;iven.^^* When tlie ciirunistances justify it, exemplary damajjes may be re- covered in actions for assault and battery,^^'^ false imprisonment/^* malicious proseiut ion,' " " defauuilion.^'^ The falsity of the defamation is evidence of malice,^"" willful inju- ries to person^*'' or property, ^'^^ and in actions of trover ^^- and re- plevin. ^^^ In actions founded on loss of service, as for enticement,^^* seduc- tion.'''^ ciiminal conversation,'-" and for haiboiinj;' plaintiff's wife/^^ exemplary danuiges may be recoA'ercd. In case of physical injury to a child or servant, exeni}tlary damages can be recovered only in an action by the child or servant. They cannot be recovered in an action by the master or parent for loss of services.* AATiere a wrongdoer dies before tiial, only compensatory damages can be recovered against his estate. The liability to exemplary dam- ages does not survive.' ^^ I'-i Pratt V. rond, 42 Conn. .318. 1'* Kinl V. Ilaih-oad Co.. 8 Rich. Kq. (S. C.l M>. I'SConners v. AVulish. 1.31 N. Y. .V.)(», .30 X. E. 50; Buiuly v. Maginess, 76 Cal. .o32, 18 Tac. (iCiS; Cook v. Ellis, Hill (N. Y.) 40(5. 1T6 Huckle V. Money, 2 Wils. 205. 1T7 Donnell v. .Jouos. 1.3 Ala. 490. i-s Philadt'lphia, W. & B. K. Co. v. Qiiijilcy. 21 How. 202. 179 Kergnianii v. .Toiii's. 04 N. Y. 'A. .Sec Holmes v. Jones, 147 N. Y. (u, 41 X. E. 400; Swain v. Scliieffelin. 1.34 X. Y. 474. :',\ X. E. 1025. isoDalton v. Beers, 38 Conn. 529. 1" U. S. V. Taylor, 35 Fed. 484; Allaback v. Utt. 51 X. Y. (m1. i»2 Dennis v. Barber, (J Serg. & K. (Pa.) 420. Contra, Berry v. Vantries, 12 Scrg. &. K. (Pa.) s;i. !><:'• Cable V. D.-ikin, 20 Wend. (X. Y.) 172. 1*-+ Sniiili V. (Joodnian, 75 (ia. 108. i*-'- Kol)inson v. Burton, 5 Har. (Del.) 3.35. I''" .Tohiiston V. Disbrow. 47 Mich. 50. 10 X. W. 79. 1H7 .loliiison V. Allen. 100 X. C. 131, 5 S. E. UG1>. ♦Whitney v. Hitchcock, 4 Denio (X. Y.) 4(jl. ISO Edwards v. Kicks, 30 La. Ann. 920; Kipin-y v. Miller, 33 X. C. 247. LIABILITY Of riUNCll'AL KOK A< T OK AGKNT. LIABILITY OF PRINCIPAL FOR ACT OF AGENT. 28. A prncioal is not liable to exemplary damages for the tort o^ his agent or servant, unless he authorized or ratified the act as it was performed, or was liimself guilty of negligence.'" EXCEPTION — In some jurisdictions, if the principal is liable for compensatory damages, he is liable also for exemplary damages, if the agent or servant would be.'"" LiahUlty of Corporations. It is usually held that corporations are liable to exeraphuv (l:nnaj;es for the acts of their agents or servants in cases where the agent or servant would be liable to such damages.^" In many jurisdictions, however, the same rule is appli<'d to corpura tions as is applied to individuals, and tlie corporation is not li;il.I<' unless it authorized or ratified the act, or is otlicrwise responsil.li' f..r 189 The Amiable Nancy. 3 Wheat. 54G; rollock v. Gantt. r,0 Ala. .37.3; Lieii- kaiif V. Morris, 6(5 Ala. 406; Burns v. Camphell, 71 Ala. 271; Freese v. Tripp.. 70 111. 496. 190 Southern Exp. Co. v. Brown. 67 Mi.>;s. l.r.0, 7 South. 318. and S Smith. 42.5. Cf. Cleghorn v. Eailroarl Co.. '^i\ N. Y. 44. 191 Citizens" St. Ry. Co. v. Steen. 42 Ark. 321; Illinois Cent. Ry. Co. v. Ham- mer, 72 111. 3.53; Southern Kansas R. Co. v. Rice, 3S Kan. 308. 16 Tac. 817; Goddard V. Railway Co., .57 Me. 202; Perkins v. Railroad Co.. 55 Mo. 201: Belknap v. Railroad Co., 49 N. H. 358; Quinn v. Railway Co.. 29 S. C. 381. 7 S. E. 614. 192 Cleshorn v. Railroad Co.. .56 N. Y. 44; City Nat. Bank v. .Teflfries. T.\ Ala. 183; Murphy v. Railroad Co., 48 N. Y. Super. Ct. 96; Keil v. Gas Co.. 131 Pa. St. 466, 19 Atl. 78; Hagan v. Railroad Co., 3 R. I. 88; Lake Shore & >L S. Ry. Co. v. Prentice. 147 U. S. 101, 13 Sup. Ct. 261. CHAP.DAM.— 3 34 i)A.M.\(ii:s. AVOIDABLE CONSEQUENCES. 29. Compensation cannot be recovered for injuries which the injured party, by due and reasonable diligence, after notice of the ^vrong, could have avoided. Such consequences are regarded as remote, the in- jured party's will having intervened as an inde- pendent cause. "^ Tile rule applies in an ad ion aj^ainsl a carrier for ndmldi very, wliei'c Uw consijinee can protect himself ajiainst loss by a ]>nr(liase in llic niark.'t.^^* \\ liL-re an employ^ is \vr(»njifnliy discliarjied liefore the expiration of the term of service, he must seek other employment; and the meas- ure of daniajres is the difference between what he might have earned ami what he should have I'cccived under his contract.^"'' Reasonable dilijjeuce in scckinu otlici' cniployuK'nt docs not requiie one to accept employment of an entirely dilTerent or inferior sort, or to abandon one's home and place of residence.^ "^ liule of Contrlhutonj Neglujence Dhtin N. W. 4, 20 Pac. 717. ii'« Scott V. Steaniship Co.. Km; Mass. jc.s. >"•• Walwortli V. Tool. Ark. :!!)4; .M.Daniel v. raii; C..stiy:an v. Railroad Co.. 2 Denio (N. Y.) COf); Howard v. Daly, 01 N. Y. 302; Fiiclis v. Koeruor, 107 N. Y. 529, 14 N. i:. 415. Nominal i)AMAnF:.s. a** whafcvcr. On tlic oOh r li;iiii]. iIh- iiilf df jnuid.ililf (•»iiis»r|iifiicr». pp supposes Ji valid ( misc nf ariioii. Il has no a|i]ilir;itiitii mitil a rii^lit to rt't'ovci- some daiiia^cs at all events lias arisen, and then it y law. Tlii.«« occurs whenever the conduct comjilained of is absolutely forbidden. In this class of cases a wron*,^ can be shown without |»roof of dama^:e. If no damages in fact are or can be proved, the le;:al presumption nevertheless remains.^ "^ 187 Armfield v. Nash. 31 Miss. 301; Parker v. Meadows. S»; Teiin. IM. <; S. W. 49. i»s Barnes v. Brown. 130 X. Y. 372. 29 N. K. 7W; Dayton v. Parko. 142 Y. 403, 37 N. E. G42; Webb v. Manufacturing Co.. 3 Sumn. ISO. Ft>«l. Ca». N 17,322; New Jersey School & Church Furniture Co. v. Board of Education Somerville, 58 N. .1. Law. (i-ic. 3.". Atl. ."{OS; Noble v. Hand. 1»*.3 Mass. 2s9. .;;.. N. E. 1020; LaMin v. Willard. 10 Pick. (Mass.) 04. See. also. Whittemoro v. Cutter. 1 Gall. 429, 433. Fed. Cas. No. 17.e,mi; I»avis v. Kendall. 2 K. I. '>y v. Wbite. 1 Ld. Raym. 938, 9")S; Pig. Torts, 10; Suth. Dam. IS. 3(i DAMACiKS. A liiiaiinn owner may rt'rovcr iioiuiiial daiiiaucs for a liaic iiifiiiigo- iiifiit of his rights.'"'* N(miinal en- i('0X,.\v Vnik Kul.l.cr Co. V. Itdtlicry, i:::.' N. V. •l'X\. :!l» X. K. S41; ni>riclit V. \\':it .Miss. -ITC,; Ccnisli v. Mauulacluiing Co., 30 X. II. 47H; .Amoskcag Mff?. Co. v. Goodalc IC X. II. 53. -'»> Ix-yo V. Vau Valk<'iiltnrjrli. r> Hill (X. Y.) 'IVl. ■■i"'^ Wriixl, Mayne. I>aiii. 11: Wylir v. Itirdi. 4 Q. H. ^cn. -"■■ I.jilliii V. Willanl. IC, I'i. I^'cd. Cms. Xo. 17,311:; llalliorno V. Stiiison. 12 Me. IS."'.. See, also, ScidfiisparKer v. Spear, 17 Me. 123; Cliap- iiiaii V. .MaiuifaclmiiiK Co.. K! Conn. 2C,;»; Devciidorf v. \Vert, 42 Harli. (X. Y.) 227; Thomas v. Brackney. 17 Harl). (N. Y.) <;r>4; Carhart v. (JaslJKiit Co., 22 Marl). (X. Y.) 297; Tunl)ridKe Wells Dipper's Case, 2 Wlls. 414. ■i"-. Potter V. .Melleii, I'X, .Miuu. 122, 30 N. \V. 43«; Ely V. Parsons, 55 Couu. 83, 10 .\tl. AU\). 2"« See 3 HI. Coinui. 434. LICillDATKI) I)AM.\<;i:s AM) I'KNAITIKH. o < satioii. This iitaclirr \\;is nlliinatclv fullnw cd liv coiiitM of \:i\\ , ami was filially sjincliom d Wy slatiilc.-'" LIQUIDATED DAMAGES AND PENALTIES. 34. Liquidated damages are damages agreed upon by the parties as and for compensation for, and in lieu of, the actual damages arising from a breach of con- tract. * 35. A penalty is a sum agreed to be paid or forfeited ab- solutely upon nonperformance of the contract, re- gardless of the actual damages suffered, and intend- ed rather to secure performance than as compen- sation for a breach. 36. "Where the parties to a contract agree upon liquidated damages, the sum fixed is the measure of damages for a breach, whether it exceeds or falls short of the actual damages; but, where the sum fixed is a penalty, the actual damages suffered, whether more or less, may be recovered. Intent of the Partief<. In makinj; contracts, the parties aro at iM-rfrct lil»» rty to stipulate for li(]uidated damages to be paid by one ]iariy td tii.- other as com- pensation for a breach.-"^ To have this effect, it is, of course, piiiii;irily rs>.iiii;il that the jur ties so intended.'-'^''' 207 Betts V. Burch. 4 Hurl. & N. 506. See 2 Wliite & T. Lend. Ois. Va\. V*'^ * Dwinel v. Brown. 54 Me. 4(i8. 474. per Appleti.u. C. .!.. (llsseuHnjf. 208 In an action to recover a sum stipulated in a contract as lii|uidnt«>«l dam- ages, no proof of actual damages is reiiuired. Sanford v. Hank. 5M Inwa. (80. 63 N. W. 459. Contract of employment; damages for discharge .stipulated at two weel^s' wages. "Watson v. IJussell. 140 N. Y. .S88. 44 X. E. U»l. ^00 Koiup V. Ice Co.. 69 X. Y. 4.'»: Crisdee v. Boltou. 3 Car. & P. 240. s also. Dwinel v. Brown, 54 Me. 468: Xoyes v. rhillips. tVi X. Y. 4«»Si; nenieiii V. Cash. 21 X. Y. 253: Lampmau v. Codunu. 16 X. Y. 275; Coudou v. K«miiikt. 47 Kan. 126, 27 Bac. 829. oS DAMAGES. SAME— RULES OF CONSTRUCTION. 37. In seeking to ascertain the real intent, the courts lean strongly to"wards a construction that the sum fixed is a penalty, rather than liquidated damages. The language of the parties is not conclusive, and ■will be strictly construed.-'" There are four forms of contracts in which the question under dis- cussion is usually presented : First. The contract may be to do or refrain from doing a particular thing, or, in the alternative, to pay a stipulated sum of money. Prima facie, it is an alternative contract, but may be a mere cloak to cover a penalty.- ^^ Second. The contract may be in the form of a common-law bond. Prima facie, the sum stipulated in a bond is a penalty; but, neverthe- less, it has sometimes been held to be liquidated damages.^^* Tliird. The contract may bind the parties to do or refrain from doing a ceiiain thing, and provide that, in case of default, a certain sum shall be paid as a penalty. Prima facie, the sum named in this class of contracts is a penalty; but the presumption is not so strong as in the case of bonds.- ^^ Fourth. Till' agrecuicnt may be in the same form as the last, except that the stipulated sum is called "liquidated damages" or a "forfei- ture." This language will be given its literal effect only where the sum named is, in fact, reasonable compensation for a breach.^ ^* 2ioDoane v. Kaihvay Co., 51 111. Apj). :^o3: Condon v. Kcinpcr. 47 Kan. 126, 27 Pac. 820; Tode v. Gross, 127 N. Y. 487, 28 N. E. MiW. 211 Standard Button FastenniK Co. v. Breed, 103 Mass. 10. 39 N. E. 346. See post, "Alternative Contracts." 212 Studabakcr v. Wiiitc, 31 Ind. 212; Fisk v. Fowler, 10 Cal. 512; Duffy V. Shoe-key, 11 Ind. 70; Clark v. Barliard, lOS U. S. 4:^(1. 4."):?, 2 Sup. Ct. 878. 213 Suth. Dam. § 2,S4. Cf. Law v. Local Board [18'.>2] 1 Q. B. 130. 21 < Grand Tower Co. v. Phillips, 23 Wall. 471; Hamilton v. Moore, 3:5 U. C. Q. B. 520. LIQUIDATKI) DAMAdKS AM) PKN A I.'I I KH, 39 38. Where the stipulated sum is wholly collateral to the object of the contract, and is evidently inserted in terrorem as security for performance, it "will be construed to be a penalty. '' 39. Where the stipulated sum is to be paid on the non- payment of a less amount, or on failure to do some- thing of less value, it will generally be construed to be a penalty.-"^ 40. Where the actual damages arising from a breach may be either greatly more or greatly less than the stipulated sum, according to the time of the breach, such sum will usually be regarded as a penalty. ■'• And, generally, wliere a contract provides for payniont in install- ments, and stipulates that a certain proportion shall Im- r<*tainfd fnmi each installment, the whole to be forfeited upon a breach, the sum retained is considered a penalty."^ 41. Where the damages resulting from a breach of contract cannot be measured by any definite pecuniary standard, as by market value or the like, but are wholly uncertain, the law favors a liquidation of the damages by the parties themselves ; and, where they stipulate for a reasonable amount, it will be enforced, unless glaringly disproportionate.' 210 Henry v. Davis, 123 Mass. 345; Spear v. Smith. 1 lunio (N. Y.) 4i;i: Henderson V. Cansler. Cj X. C. 542; Brown v. Bellows. 4 Pick. CNIass.l 179: Robeson V. Whitesides, IG Serg. & K. (ra.) 320; Burr v. Todd. 41 I'a. St. 2iNi; Merrill v. Merrill, 15 Mass. 488; Burrage v. Crump. 4.S N. C. :^Vk 210 Suth. Dam. §288; Mayne, Dam. 1G6; Thompson v. Hudson. L. K. 4 H. L. 1, L. R. 2 Eq. 012; Ashtown's Lessoe v. Wliitf. 11 Ir. Law U. 4: MrNItt v. Clark. 7 Johns. (N. Y.) 405. 217 Davis V. Freeman. 10 Mich. ISS; Richardson v. Woehler. 20 Mich. 0<>. 218 Savannah & C. R. Co. v. Callahan, 50 Ga. 331. But, where the sum was not excessive, it has been allowed as liquidated damages. See Elizabethtown & P. R. Co. V. Geoghegan. 9 Bush (Ky.) 50. 210 Kelso V. lU'id, 145 Pa. St. 000. 23 Atl. 323. •10 nAM\f;Ks. Tims, si i|iiil;i( ions fdi Ii(|ni V. Peers. 4 Burrows. L*2*_'r). -21 (Jnininon v. Howe, 14 Me. 27,0. In New York if is held that tlic (Inmasi's lor )ire;ich of an ordinary contract for thi' sale or exchange of lands are not uncertain, aud a stipulation for li(inidated daniajres cannot be sustained upon this f.'ronnd. Noyes v. Phillips. (!0 X. Y. 40S; Richards v. Kdick, 17 Harb. 'JtV); Laurea v. Bernauer. .3.3 Ilun. :{l»7. But if the sum tixed is reasonable in nniouut, and clearly luteuded'as compensation, it is recoverable as liipiidated damages. Slosson v. Beadle, 7 Johns. 72: llasltronck v. Tappen, 1.') .Johns. 200; Knapp v. Maltby. 1.", Wend. .")S7; otherwise not. Dennis v. Cumniins, 3 •Johns, ("as. 21>7. 22-' .Ta(juith V. Hudson, ."> Mich. 12.3; Tode v. Gross, 127 N. Y. 480, 28 N. I']. 4(^0. Delay In the perfornnxnce of contracts. Fletcher v. Dyche. 2 Term U. .32; Curtis v. Brewer, 17 I'ick. (.M.i-^s.i .-.1.3; liridges v. IlvMtt. _' Abb. I'lac. (.\. Y.) 44J); O'Dr.nnell v. Jtosenberg, 14 Abb. I'rac. \. S. (\. Y.» .")!»; I'aniliam v. l{o.sH. 2 Hall (N. Y.) 1<;7; Weeks v. Utile. 17 .\. Y. Super. Ct. 1; .Monmouth Park Ass'n v. ^^■allis Iron ^\■orks. 7,:, S. J. L.iw, i;'.2. Ji; All. 1 in. Ct. W'ilcus v. Klin-K', ^7 III. 107; \Yard v. BnildiuK Co., 12.'. N. Y. 2.!(i. 2:!:.. 20 .\. l',. 2r)(;. -■-••S;ilh. D.ain. » 2.s;t; Fisher v. liidwell, 27 Conn. .3<;3; Stc\v:nt v. <;rier. 7 IIoUKl. .378. .32 Atl. :{2S. 2-'i.Ia(|ua V. Headinj,'ton, 111 Iml. :;(i!>, IC. .\. i;. .".JT: Maiiicc v. I'.iady, l."> Abb. I'lac. (N. Y.) 173: Colhcal v. 'I'.Mlrii.igc. li .\. Y. ."..".1; KnaiM' v. .Maltb.v. 13 ^Velld. (.\. Y.) Wl; Powell v. Buirini-hs, 7y\ Pa. .^t. :',2!». But if I lie sum tixed varies materially from a .iiist coniiM-nsation, or if the intention is doubtful, the Hum will be In-hl a iM-nalty. Dennis v. Cummins, .3 .bdiiis. Cas. (N. Y.) 2'.t7: K.smond v. Yan Beiisilioten, 12 Barb. (N. Y.) 'AW. \ provision in a lease for ?5,000 damages, to cover iuterniption of earnings and other losses iu addition LlQl'lDATKl) IiAMA<.KS AND I•^:NAI.TI^y^ w 43. Where a sum is deposited, and the contract declares that it shall be forfeited for nonperformance, if reasonable in amount, it will be enforced as liqui- dated damages. - 44. Where the stipulated sum is to be paid on any breach of a contract containing several stipulations of widely different degrees of importance, it is usually held to be a penalty.-'" 45. A sum stipulated to be paid upon a breach of contract cannot be recovered as liquidated damages for a partial breach, for one sum cannot consistently be compensation alike for either a total or a partial breach;--' and, if it appears from the language used that the stipulation was meant to be applicable only to a total breach, it will be disregarded in an action for a partial breach.-^ So. also, a i)arlial brcadi may jiistifv tlif oIIkm- jiarty in trt-atiii^' lh.- contract as at an end. So, the sum named may Im- nrnvcu-d: but. if he accepts part performance, it cannot.=^=*® to unpaiil reut. in case of breacli by the lessee, when, on an actual breach, no substantial damase has been suffered, must be held to he a penalty, flay Mfjc. Co. V. Camp, 25 U. S. App. 134, V.i C. C. A. VM. and C.'. Ked. 704. 22r. luilly V. Jones. 1 Bins. .''.(Hi: Hinton v. Sparkes. L. U. 3 C. V. Id; Swift V. Powell, 44 Ga. 123; Terzell v. Shook, Z^ N. Y. Super. Ct. (N. Y.t .".ol: WaIU» V. Smith, 21 Ch. Div. 24:?; Chaiide v. Shepnrd. 122 N. Y. :«»T. 2.'. N. K. '•^'>x. See In re Dagenham (Thames) Dock Co., 8 Ch. App. loi:-J. 226 Watts V. Camors, ll.-j U. S. 3r,o. (i Sup. Ct. ttl; Wilh.-lm v. Kav, s. -Jl ur. 194, 27 Pac. 10.13; Bignall v. Gould. 11t» V. S. VX,. 7 Sup. Ct. ."M; Lyman v. Babcock, 40 Wis. 503, 517; Kemhle v. Farr.-n. •; Hinp. 141: KiK-k v. Bh'l»er. 148 Pa. St. 045. 24 Atl. 170; Hathaway v. Lynn. 75 Wis. ISi;. 43 N. W. «j«l: Trustees of First Orthodo.K Congregational Chun-h v. Walrath. 27 Mich. 232; Trower v. Elder, 77 111. 453; Clement v. Cash. 21 N. Y. 2.53; Nlver v. Uossman. 18 Barb. (N. Y.) .50; Staples v. Parker. 41 Barb. (N. Y.i c.-lii; UinslnR v. Da.1.1. 45 N. J. I-aw, 525; Chase v. Allen. 13 (Jray (Mass.) 42. 227 Sedg. Dam. § 4.15. 228 Cook V. Finch. W Minn. 4(i7 (<;il. •'.51 n. 220 Wibaux V. Live-stock Co.. 9 M.mt. 1.54. 1(..5. 22 Pnc. 492: Ho.ngLin.l v.- Se-ur 38 \ .3 Law. 230; Lampmau v. Cochran. 10 N. Y. 27.5. i»er Shankland. J -^Inell V. McNitt, 9 Paige (N. Y'-) l^'U ^^""^Ij" ^- <^">^'-^'^- ^^ ""•*• ^-'''- ^'* 1- DAMAOKS. 46. Where the sum stipulated to be paid on the breach of a contract would constitute an evasion of the usury laws, it will be treated as a penalty,-**^ if, in- deed, it is not absolutely void.^' ALTERNATIVE CONTRACTS. 47. The measure of damages for the breach of an alterna- tive contract is compensation for the least benefi- cial alternative. An alternative contract is one which may be executed by doinj]: either of several acts, at the election of the part}' from whom perform- ance is due.-^* 'llw contract is completely jterforincd when any one of the alterna- tives is jK'rformed. and so, of course, no (lucstion of damages for a breach arises. An alternative contract is not a contract for li(iuidated damages.^^^ To constitute an alternative contract, there must have been an in- tention to really give the party an option. When this is the case, the damages for a breach are limited to compensation for the least iMiieficial alternative.'^* \\li( re. however, tlieie is an absolute en- gagement to do a thing, and, if not, to pay a sum of money, the damages for not doing the thing aic the sum of money.'^"^ In such a case the jiarty has no oiJtion,-^" and tlie agreement is one for liquidated dam- y,:\r,; Town of Wlioatland v. Taylor. L'l> Hun (N. Y.) 70; Chase v. Allen, i;j Gray (.Mass.) 42. -•:"• Clark V. Kay, 2G Ga. 4();i; Kurtz v. Sponalik', G Kau. 305; Davis v. Free- man, to .Mich. 188; State v. Taylor, 10 Ohio. 378; Gray v. Crosby, 18 Johns. (N. Y.) 21!t. 220. But see Lawn-nee v. Cowlcs. 13 111. .".77. Withfu the Iwumls of the Ie>:al nite of interest, ii;u-ties may li(|ui(1ate damages for nonpayment of money when due. IlackinlMM ly v. Shaw, It Ind. :!!t2; Dagget v. I'ratt, 15 .Mjiss. 177. -3» 'J'his would (h'jH'nd on llii- l;in;ruaL'c (jf the statute. 2.1: Snth. I)am. S 282. 233 Smith V. Bergengren, 153 Mass. 2;'.(;, 2. Trnr. ^N. S.) 20G; Long v. Bowiing, 33 Boav. 58.1; Gray v. Crosby. IS .Johns. rN. Y.» 210: Chilliner y. Chilliner, 2 Ves. Sr. 528; Ingeledew v. Crlpps. 2 Ld. Knym. M»: Lampman y. Cochran. IG N. Y. 275; AVard v. .Tewett. 4 Rob. (N. Y.) 714; I{.»Im'- son y. Whitesides, 10 Sorg. & R. (Pa.) 320; National Provincial Bank v. .Mar- shall, 40 Ch. Div. 112. 237 Pearson y. Williams' Adm'rs, 24 Wend. )N. Y.) 214. 2f, \V»-n«l. (X. Y.) 630; Hodges y. King, 7 Mete. (Mass.) 583; Slosson y. Beadle. 7 Johns. (X. Y.) 72. See, also. Morrell v. Insnrance Co.. 33 N. Y. 42C(. This nile is dlfflcult to reconcile with that of the least beneticial alternative. Its practical effect is to make an alternative contract one for liipiidated damages, with this dif- ference: that specific performance of a contract can be enforced, though It stipulate for liquidated damages, while, in alternative contracts, only the al- ternative chosen can be enforced. See Crane v. Peer. 43 N. J. Kq. .V»3. .Ws. 4 Atl. 72, and Suth. Dam. § 282. In Smith v. Bergengn-n. \r- vision that defendant might resume practice provided he would pay plaintiff a certain sum, did not provide for eitlier a penalty or liquidated dau)ag(>s. The sum named was a price fixed for what the contract permitti-d him to do if he paid. 238 Ritchie V. Atkinson, 10 East. 29.": Simpson v. Crippin. L. R. 8 Q. B. 14: Honck V. :Muller, 7 Q. B. Div. 92; Hoare v. Rennie. 5 Hurl. & N. 19; Norrls v. Harris, 15 Cal. 22G; McGrath v. Cannon. 5.". Minn. 457, 57 N. W. l.">0; Fullmer v. Poust, 155 Pa. St. 275. 20 Atl. .543; note 134. infra. 239 Hartupee y. Crawford, 5G Fed. 61; Simpson v. Crippin. L. R. 8 Q. B. 14. tt l)AMA(iKS. Il;i\ iiii; (iiicc (IcIciiiiiiKMl tli;ii a iirdiiiisc is (li\ isililc, it is :i (■(jmpnia- li\("ly siiii|ti»' inallcr in :i]>iilv llir law ; Iml llic (iiicsliiui of (li\isiliilily is (iitliciill. ami ihis (lilliciilty has nsultcd in a diivct c oiillid in liic di-- : Simpson v. ("i-ipiiin. I.. It. 8 Q. 15. 14: -Mersey Steel Co. v. Xaylor, U Q. V,. I>iv. (;4,s. «> App. Cas. 434; ('alien v. Plait. "•.;» N. Y. :}48; Trotter v. Ilecksclicr, lo X. J. E. IHrt'cily oiipr)se(l to Situpsou v. Ciippin. snpra, is another case, decided I'ar- liiT. Iloare V. Rennie, 5 Hurl. I'v: .\. lit. Sec. also, Norrington v. Wright, ll.") f. S. ISS. (; Snp. Ct. 12; Barrie v. Karlc 14:5 .Mass. 1, S X. K. (iMO; Kinir riiillip .Mills V. Slater, 12 R. I. S2; Catlin v. Tobias. 2(; N. Y. 217; Hill v. Blake. !>7 .\. V. -Mc,; ]'„]„" V. Torlei-, Krj .\. V. ;'.(;(;, 7 \. L. ;{04; I'.iadli y v. King, 44 HI. .■;.!'.•. -■" WillieiK V. Reynolds. 'J liani. A: Adol. ,SS2; Callin v. Toliias. 2C, N. V. •_M7; Stephenson v. <'ady, 117 .Mass. i\; lilackburn v. Reilly, 47 X. .1. Law. 2;io. 1 .\tl. 27; <;erli v. Mannfactnring Co.. .".7 .\. .1. Law. 4:U. :U Atl. 401; Rugg v. Moore. I 111 I'a. SI. 2:tC,. 1 Atl. .•;20; Wliarton v. Wiiieli. 1 10 .\. Y. 2S7, .T) N. E. 58J>. So, alsii. it noniiaynient of one installment o\' goods he acconipaiued hy smli cir cninsfances .-is to give the seller reasonahle grounds foi- Ihiidcing Hint the hnyer will not he ahle to pay for the rest, he may take adv.inla.uc of ihis one ouii--i'.ii to repudiate the contract. Bloomer v. Bernstein, L. R. \) C. i\ r)SS. TIMK TO WIIKIl t OMI'KNSA TION MAY ItK |{K< oVKUKIi. I •'> JiillticS to il^^lCC tllMl the cilliic jicit'orilKllHc (if ;i (-(i||sii lia\e Imih jmi funned.-** ENTIRETY OF DEMAND. 49. All the damage resulting from a single cause of ac- tion must be recovered in a single action. The de- mand cannot be split, and separate actions main- tained for the separate items of damage. A sinjil(^ cause of action j^ives rise to but a sin;:lc licmand for- dam- aj;es. l*laintiff must demand the full aiiHuini . IS Viu: .-.o*_': Hill v. .Toy. 14W Pa. St. 243, 24 Atl. 293; Howell v. Goodrich. «!9 111. .>")<>; I'iern» v. Railway Co., 39 Minn. 451, 40 N. W. 520; Winslow v. Stokes, 48 N. C. 285; Fetter v. Real. 1 Ld. Rayui. 339. «>92, 1 Salk. 11. Compare, for illustrations of .separati- causes of action. Secor v. Sturgis. IG N. Y. 54S: Nathaus v. Hoper. 77 N. Y. 42o. As to contracts for sale and delivery of poods in inst.-illnicnts. see Nirlmls v. Steel Co., 137 N. Y. 471, 33 N. E. 5G1; Wharton v. Winch, 140 N. Y. 2S7, 3.". N. E. 589. 4G DAMAGES. ■which have arisen subsequently, and for prospective losses, if such losses are the certain and proximate results of the cause of action, and do not themselves constitute a new cause of action. If, pending a fixed term of (Mni)loyniont, the employ to the time of the trial. -^^ If, at the time of the discharge, his wages are then paid in full, only one action will lie to recover damages, based on future wages, even though they were by the contract made paj^able in installments.^*® Tlie eniployd discharged dining the term of employment may either (1) sue during the term, for damages; or (2) treat the contract as rescinded, and sue on the <]uantum meruit for the work actually i)er- formed; or (3) wait until the expiration of the term, and claim as dam- ages the wages agreed on, less what he has or could have earned after his discharge, and pending the term.^*^ "Damage to goods and injury to the person, although they have been occasioned by one and liie same wrongful act, are infringements of different rights, and give rise to distinct causes of action; and there- fore the recovery, in an action, of compensation for the damage to the goods, is no bar to an action subsequently commenced for the injury to the person." -*^ -•'^ C'uttor V. CJilk'tte. It;:; Mass. 9."3, :J0 N. E. 1010; Remelco v. Hall, 31 Vt. .>S2; Sutherland v. Wyer. G7 Me. 64; King v. Steiren, 44 Pa. St. 99. s*'. IJassctt V. French, 10 Mise. Rep. 07."), ^M N. Y. Supp. 007; Zender v. Seli- ger-Toothill Co., 17 Misc. Kep. 120, 39 N. Y. Supp. 340; .lordau v. Patterson, 07 • Dim. 480, 35 Atl. 521; Fowler v. Armour. 24 Ala. 194; Litcheustein v. I'.rooks, 75 Tex. 190, 12 S. W. 975; Gordon v. Brewster, 7 Wis. 355. And see the dictum in Everson v. Powers. 89 N. Y. .527. 2*" .Fames v. Allen Co., 44 Ohio St. 220. (; X. E. 240. Cf. Mount Hope Ceme- tery Ass'n V. Weidenmann. i:'.9 111. (57. 2S \. E. S.34. 247 Colburn v, Woodworth, 31 Barl). (N. Y.) 381, 383. 248 lirunsden v, Humphrey, 14 Q. B. Div. 141. In the recent case of Reilly V. Paving Co., 31 App. Div. .302, 52 N. Y. Supp. 817. the contrary rule was adopted; but, as pointed out in 28 Civ. Pioe. R. ()3. note, the English rule had previously been adopted and followed in the case of Mulligan v. Ice Co., re- TIMK TO WIIK II lOMPENSATION MAY ItK UKCOVKKKD. 47 Repetition of Wrou(/. Where an action has been brought for ;i wrong, and \\v wrong is subsequently repeated, a new action must In* hronglit to rccuvrr tin; damages caused thereby. Sucli repelitiun coiistiliites a m-w cause of action, and compensation for tlie loss as caused by one wron;,' cannot be recovered in an action lu'ought to recover the damages caused l>y another and a distinct wrong.-*" Continuing Torts and Breacliea of Contract. A single wrongful act, however, may be of sndi a nature as lo give rise to a continuous succession of torts or breaches of contracts. "In the case of a personal injury, the act complained of is c»)niplete and ended before the date of the writ. It is the damage (uily that con- tinues and is recoverable, because it is traced baik to the act : wliilc in the case of a nuisance it is the a<'t wliicli continues, or. ratlni'. i.-^ ix-- newed day by day." -^° A continuing tort or breach of contract is, in <'tfect. simply tln' repe- tition of the same wrong an infinite number of times.- '^ As a general rule, where a continuous duty is imposed by contract, each moment its performance is neglected constitutes a separate breach, for which an action will lie. This has been held in actions for the breach of contracts for support;-" contracts not to engage in Imsi- ness; -^^ and contracts to convey land.-''* Where permanent structures liave been erected which result in injury to land, there is much confusion and conllict in the authcuitits as to whether all the damages, past and prosi)ective, may be recovered in a single suit, or whether successive actions must be brought to ported in the note referred to, which was attiniifd un ai'pcal in lo'.i N. Y. ''..".T. 16 N. E. GS4. 249 In an action for slander, evidence of words sp.iktn after conuuenoeniont of suit are inadmissible. Root v. Ixjwudes. c, IIIU iN. Y.) OlS; Keeubolts v. Becker, 3 Deuio fX. Y.) 34G. 2 50 Kockland Water Co. v. Tillsou, Ul) Me. 235, 2(JS. 2 51 Beach v. Grain, 2 N. Y. S(>. 252 Fay V. Gujnon, 131 Mass. 31. 2 53 Hunt V. Tibbetts, 70 Me. 221. 254 Warner v. Bacon. 8 Gray (ilass.'* .307. As to nuisances, see, also, I>.h- ver City Irrigation & Water Co. v. Middaugh, 12 Colo. 434. 21 Pac. 5C5: Mark- ley V. Duncan, 1 Hai-p. (S. C.) 276; Cobb v. Smith, 3S Wis. 21; Sta.ller v. Grieben, 61 Wis. 500, 21 N. W. 629. See. also, Fearsou v. Carr. "J7 N. C. IIM. 1 S. E. 916; Dailey v. Canal Co., 24 N. C. 222. 4S i>AMA(;i-:s. i-('('()vcr (■(iiii]Mns;ili(Mi for llic il;mi;i.i:(' ;is ii arises. 'Plic licilci' view is thai, if the slnutiiiv is oxprcssly aiitliorizcd, llicii' is no liability fensation be made for ihe resuiliiiu damage (a condition commonly inii)Osed by the auihoiizinii' act or the conslitiitioni. and it is iiennanent in its nature, its continuance may reasonably be pre- sumed, and full compensation for both past and prospective losses may be recovered in one action. -^^ Where the erection of the structure was a forbidden act, — that is, where it was a trespass, and the act of trespass is com])leted once for all, — the entire damage, past and prospective, must be recovered in one suit.-'^" CARRIERS OF GOODS -DAMAGES FOR REFUSAL TO TRANSPORT. 51. The measure of damages for refusal to receive and transport goods is the difference bet-ween the value of the goods at the time and place of refusal, and what would have been their value at the time and place w^here they should have been delivered, w^ith an allow^ance for w^hat the freight charges would have been.-' 52. If other reasonable mode of conveyance can be pro- cured, the measure of damages is the increased cost of transportation.^ 2s5Chica)xo *: K. 1. K. Co. v. Locb, lis 111. 2iK\. s N. E. 4G0; .Teffersonvllle, M. & I. K. Co. V. Estcrlc. Hi Bush iKy.t CCT. But see Uline v. Railroad Co.. 101 N. Y. m, 4 N. E. 5:i(j; Stowcrs v. Cilbcit. 15(i N. Y. (K)0, 'A N. E. -JS^; I'niiil V. Railway Co., 112 N. Y. ISC. 1J» N. E. 4S7. Cf. Cadle v. Railroad Co., W Iowa. 11; Aldwortli v. City of Lynn. l.">:', Mass. ,-..'^, 2« N. E. 220; City of I'.iiCaiila V. Siiniiioiis. SC Ala. r)l.">, C. South. 17; Uccd v. Slate. tOS \. Y. 407. 1.". N. i-;. 7:5.1; Duryca v. .Mayor, etc., 2(; IIuii (.\. V.) 120. See, also, City of .North VeriKUi v. VocKler. Id.''. Ind. :U4, 2 \. K. S21. !!•''•' See Adams v. Railroad Co., IS Minn. 2(;o ((Jil. 2.".()). -•" I'eimsylvania R. Co. v. Titusvillc & V. Plank R. Co.. 71 Ta. St. :r)0; <;:ilrri;i \- C. V. R. Co. v. n:\r. IS 111. 4S.S; Il.irvry v. Railroad Co., 124 Mass. 421; llridKinan v. The Kiiiily. IS Iowa, .".o'.t; W aid's Cent. A: Pac. Lake Co. V. Elkins. ;'.4 .Mich. l.'iO; O'Conner v. I'"(irslei-. lo Watis (Pa.) 41S; Bracket v. .McNair. 14 .Tohns. (N. Y.) 17o. 20»>o'Coiiner v. Forster, 10 Watts (Pa.j 418; Ogden v. Marshall, S N. Y. CAICICIKKS Of (iOOlJH. 4'.' SAME— DAMAGES FOR LOSS OR NONDELIVERY. 53. The measure of damages for total loss or nondelivery is the value of the goods at the time and place they should have been delivered.- ' Obviously, the natural ami luohahlc conscMnicno'H of a failnif to doliver tho jioods at their dcsliiiatioti is a loss lo the owner, anioiiniin;: to the vahie of the ^oods at dial point, and smh valnt- is ilit-refore the measure of damages. SAME— DAMAGES FOR INJURY IN TRANSIT. 54. The measure of damages for injury to goods in transit is the difference between the value of the goods at the time and place of delivery in their damaged condition, and what their value would have been had they been delivered in good order. "*" 340; Grnnd v. Foudeigast. 5S Barb. (N. Y.) -JKr. IIi};trinsou v. W.-ld. 14 P.rny (Mass.) 1U5; Crouch v. Railway Co., 11 Exch. 142. See. also. Ni-lson v. Elevating Co., 55 N. Y. 480. Cf. Bohn v. Cleaver. 25 La. Ann. 415». Plain- tiff cannot recover for damages caused by his failure to properly c-are for the goods while they were in store, awaiting transportation, and before they had been accepted by the carrier. Hamilton v. McPIkmsoii. i'.s N. Y. 7li. ()ni4 with whom a carrier has made a contract for transporting his prxMls may. in case of breach, elect to sue for damages for failure to perform the public duties of a carrier, or he may waive the tort, and sue for breach of the siH-iinl contract. Hutch. Carr. §§ 737-74S: Denman v. Railroad Co., 52 Neb. 140. 71 N. w. mi. 2 59 Rodocanachi v. ^lilburn. IS Q. B. I>i\. 07. Cf. .Mau'iiin v. IMnsmore. .Vi N. Y. 168, 62 N. Y. .35, and 7o X. Y. 410. See. also. Faulkner v. Hart. S2 N. Y. 413; Spring v. Haskell. 4 Allen (.Mass.) 112; Sturgess v. Bissell. 4<\ S. Y. 4()2. But see The Telegraph, 14 Wall. 258; Krohu v. ( (eclis. 48 Barb. (N. Y.) 127. 260 Notara v. Henderson, L. R. 7 Q. B. 225; Chicago. H. \- Q. R. Co. v. Hale. 83 111. 3G0; Brown v. Steamship Co., 147 Mass. .58. l«i N. K. 717; Ix)ul8ville & N. R. Co. V. Mason. 11 Lea (Tenn.) 116; Magdeburg (;eiiiTal Ins. Co. v. Paulson, 29 Fed. 530; The Mangalore. 23 Fed. 4(K{. See Morrison v. Steamship Ck)., 36 Fed. 569, 571; The Compta, 5 Sawy. 137. Fed. Cas. No. 3.O70: Bow- man V. Teall. 23 Wend. (N. Y.) .3(K): Hackett v. Railroad Co., 35 .N. H. .'.ixt: Western Mfg. Co. v. The Guiding Star, 37 Fed. 641. CHAP.DAM.— 4 50 DAMAGES. SAME— DAMAGES FOR DELAY. 55. The measure of damages for delay is the difference between the value of the goods at the time and place fixed for delivery, and their value at the time and place of actual delivery.-" 56. Where the value of the goods is not diminished by the delay, the measure of damages is the value of their use during the period of delay. ^^ SAME— CONSEQUENTIAL DAMAGES. 57. Consequential damages arising from a carrier's default may be recovered provided they are natural and probable consequences of the breach of duty.-*^ 203 DAMAGES FOR INJURIES TO PASSENGER. 68. "The obligation or responsibilities of public carriers do not arise altogether or mainly out of contracts; they are principally imposed by law. The refusal to undertake the conveyance of a passenger w^ithout excuse, or w^hen actionable, is merely a violation of a carrier's duty." 261 Hudson V. Railway Co., 02 Iowa. 2.31. 60 N. W. 608; Wilson v. Railway Co., 9 C. B. (N. S.) 032; Cutting v. Railroad Co., 13 Allen (Mass.) 381; The Caledonia, 157 U. S. 124, 139, 15 Sup. Ct. 537; Weston v. Railway Co., 54 Me. 376; Sherman v. Railroad Co., 64 N. Y. 254; Ward v. Railroad Co., 47 N. Y. 29; Scott V. Steamship Co., 106 Mass. 468. 262 United States Exp. Co. v. Haines. 67 111. 137. Priestly v. Railroad Co., 26 111. 206. 263 Vick-sbui-;,' & M. R. Co. v. Ragsdale, Hi Miss. 458; Hadlcy v. Baxendale. 9 Exoh. 341; Gee v. Railway Co., 6 Hurl. & N. 211. As to sufiiciency of no- tice of special circumstances, see Home v. Railway Co., L. R. 8 C. P. 131, af- lirming L. R. 7 C. P. 583. See, also, Cobb v. Railroad Co., 38 loAva, 601, 630; Harvey v. Railroad Co., 124 Mass. 421 ; Pennsylvania R. Co. v. Titusville & P. Plank R. Co.. 71 Pa. St. 3.">0; Hales v. Railway Co., 4 Best & S. 66; Far- well V. Davis, r>r, Barb. (N. Y.) 73; Matlier v. Exi)ress Co.. 138 Mass. 55; P.lack V. Baxeudale, 1 Exch. 410; Favor v. Philbrick, 5 N. H. 358. INJURIES TO PASSKNGKU. 51 Contracts, however, are usuallv made lixiii;; ilir ( xtciit (»f tln' iiiiit<-. the mode of conveyance, the kind of accdiminMliiiioiis. tin* lime, cir.; and therefore actions founded u\h)U sndi contiarts may he mainlaim-d. ^^llether the action be upon the breach of duty or for violation of contract, to the extent that they involve the same acts and omission^, the damages as measured by law are substantially the same.-"* The consequences in this class of cases fall directly njioii tin- pfrsfni. and in most cases are not distinguishable from tluisc uf a t34. 265 Cf. Hobbs V. Railway Co.. 10 Q. P>. Ill, with McMnlion v. Fi.-M. 7 Q. B. Div. 591; AVilliams v. Vanclerbilt. 28 N. Y. 217; Alabama (J. S. K. Co. v. Heddleston, 82 Ala. 218, 3 South. 53; Baltimore C. P. K.v. Co. v. Kemp. 01 Md. 74, 619; Murdock v. Railroad Co., 133 Mass. ir,; Cincinnati. H. & I. K. Co. V. Eaton, M Ind. 474; 2 Sedg. Dam. § 8G8; Brown v. Railway Co.. .",4 \\> 342, 11 N. W. 356. 911. 266 New Orleans, J. & G. N. R. Co. v. Ilnrsr. 3.: Miss, ci;..; Hamlin v. Rail way Co., 1 Hurl. & N. 4.08, 411. 207 Heirn v. McCaughan, 32 Miss. 17; Thomp. Carr. p. 54c.. § .'; hi p. :..::. §27. 208 Sedg. Dam. § 860. 52 DAMAGES. SAME— FAILURE TO CARRY PASSENGER— DELAY. 61. Damages for failure to transport a passenger include compensation for the increase of cost of carriage by another conveyance, the loss of time, and other or- dinary expenses of delay.^^^ SAME— FAILURE TO CARRY TO DESTINATION— WRONGFUL EJECTION. 62. Where a carrier fails to carry a passenger to his des- tination, and sets him down at some intermediate point, compensation may be recovered for all the expenses of delay,-"'' including loss of time,^^ and cost of a reasonable conveyance to his destination.^^^ He ma}' also recover compensation for tlie indignit}- of the expulsion from a train, and, if tliere are aggravating circumstances, be may re- cover exemplary damages. ^'^^ Where, by the fault of the carrier's agents, and without the passen- ger's fault, the ticket of the passenger is not such a one as he should have to entitle him to passage, the carrier will be liable in damages for expelling him.^^^ 269 Baltimore & O. R. Co. v. Carr, 71 Md. 135, 17 Atl. 1052; Eddy v. Harris, 78 Tex. ()C)1, 15 S. W. 107; Porter v. The New England, 17 Mo. 290; The Zenobia, 1 Abb. Adm. 80, Fed. Cas. No. 18,209; Williams v. Vauderbilt, 28 N. Y. 217. -'70 Chicago & A. R. Co. v. Flagg, 43 111. 3G4; Pennsylvania R. Co. v. Con- 11(^11, 127 111. 419, 20 N. E. 89; carrying beyond, Trigg v. Railway Co., 74 Mo. 147. 271 Hamilton v. Railroad Co., 53 N. Y. 25. 272 Indianapolis, B. & W. Ry. Co. v. Birney, 71 111. 391; Pennsylvania R. Co. V. Connell, 127 111. 419, 20 N. E. 89; Francis v. Transfer Co., 5 Mo. App. 7; Hamilton v. Railroad Co., 53 N. Y. 25. Cf. Miller v. King, 88 Hun, 181, 34 N. Y. Supp. 425. ■^-■■i Ilauson V. Railway Co., (52 Me. 84; Yates v. Railroad Co., 67 N. Y. 100. But not in an action for breach of the contract of carriage. Miller v. King, 88 Hun, 181, 34 N. Y. Supp. 425. 27 4 Lal^e Erie & W. R. Co. v. Fix, 88 Ind. 381; Murdock v. Railroad Co., 137 Mass. 293; Yorton v. Railway Co., 54 Wis. 234, 11 N. W. 482; Id., (>2 Wis. 31)7, 21 N. W. 51(>, and 23 N. W. 401; Bradshaw v. Railroad Co., 135 Mass. 407. CONTRACTS TO SELL REAL PROPERTY. .'/^ 63. BREACH OF CONTRACT FOR SALE OF GOODS. ''ft 64. BREACH OF WARRANTY.^^s CONTRACTS TO SELL REAL PROPERTY— BREACH BY VENDOR. 65. The proper measure of damages for the breach by a vendor of his contract to sell real property is the difference between the contract price and the market value of the land at the time of the breach, plus any part of the purchase price which has been paid, w^ith interest. EXCEPTION — In some states the vendee can recover, in addition to purchase money advanced, with in- terest, only nominal damages for a breach of the contract, due to failure of the vendor's title, pro- vided the vendor acted in good faith. In Pennsyl- vania the good faith of the vendor is immaterial. The Better Rule. In most American states a vendee can recover substanticol damages for his vendor's breach of contract to convey real property;-" that is, the vendee is given the benefit of his bargain. This is of particular importance when the property has risen in value after th(' contract of sale was entered into.-^** The value of the land in estimating the damages is takt-ii at the time it should have been conveyed under the contract.-^® 27 5 See Tiff. Sales, §§ 12.5-128. 27 6 See Tiff. Sales, §§ 131-133. 277 Hopkins v. Lee, 6 Wheat. 109; Plummer v. Rigdon, 78 111. 222; Loomis V. Wadhams, 8 Gray (Mass.) 557; Skaaraas v. Fiunegan, 31 Minn. 48, 16 N. W. 45(); Case v. Wolcott, 33 Ind. 5; Robinson v. Hoard. 15 Me. 20<;; Irwin v. Askew, 74 Ga. 581; Barbour v. Nichols, 3 R. I. 187; Russ v. Telfener, ."7 Fed. 973. 27 8 Hopkins v. Lee, 6 Wheat. 109. 279 Allen V. Atkinson, 21 Mich. 351; Combs v. Scott. 76 Wis. mi. 4.") N. W. 532; Plnmmer v. Rigdon, 78 111. 222; Whiteside v. .Jennings. 19 Ala. 784. For breach of a contract to give a lease, the measure of damages is the value of 54 DAMAGES. Nominal Damages Only — The Engliah Rule. In England an anomalous mle of damages has been adopted in ac- tions against vendors for bieacli of contracts to sell, to the effect that the vendee cannot recover for the loss of his bargain, whether the vendor has been guilty of fraud or not. If there has been fraud, the vendee can only recover nominal damages in an action for breach of contract; and, to recover substantial damages, he must bring an action for deceit.-^'* The uncertainty of English titles is assigned as the reason for the rule, but such considerations have no place under our registry laws. The English rule has been followed, however, in some states. In Pennsylvania this is carried so far that only nominal damages are re- coverable, even in cases where the vendor knew that his title was not good.-^^ But in the other states which follow the English rule it is necessary that the vendor act in good faith, or he is held liable for substantial damages.-*^ The Xew York rule is that "the vendee in a contract for the sale of land, in the absence of fraud or bad faith, is not entitled to recover, aside from the purchase money paid, and expenses of examination of the title, other than nominal damages as for breach on the part of the vendor arising from his inability to convey a good or marketable title." =83 the lease; that is. the difference between the value of the premises for the term and the rent which was to be paid. Loyd v. Capps (Tex. Civ. App.) 29 S. W. 505; Poposlvey v. Munkwitz, 68 Wis. 322, 32 N. W. 35; Trull v. Granger, 8 N. Y. 11.5. Expenses necessarily caused by the lessor's breach may be added. Yeager v. Weaver, 64. Pa. St. 425. But see, for expenses not recoverable, Eddy v. Coffin, 149 Mass. 463, 21 N. E. 870. 2 so The leading cases establishing the rule in that country are Flurcau v. Tliornhill, 2 W. Bl. 1078, and Bain v. Fothfrgill, L. R. 7 H. L. 158; Robinson v. Harman, 1 Exch. 850. 2^1 Rurk V. Serrill, 80 Pa. St. 413; McCafferty v. Griswold, 99 Pa. St. 276; McXiiii- V. Compton, 35 Pa. St. 23; Gerbert v. Trustees, 59 N. J. Law, 160, 35 Atl. 1121. Rut see Hennorshotz x. Gallagher. 124 Pa. St. 1, 16 Atl. 518. 2 82 Pumpelly v. Phelps, 40 N. Y. 59; Conger v. Weaver, 20 N. Y. 140; Mar- graf V. Muir. 57 N. Y. 155; Walton v. Meeks, 120 N. Y. 79, 23 N. E. 1115. See Rineer v. Collins, 156 Pa. St. 342, 27 Atl. 28; Heimburg v. Ismay, 35 N. Y. Super. Ct. 35. -■s:! Walton V. Meeks, 120 N. Y. 79. 23 N. E. 1115; Northridge v. Moore, 118 N. Y. 419, 23 N. E. 517. See Pumpelly v, Phelps, 40 N. Y. 66. IJKKACH OK COVKNANTS. 55 Many states stato the rule in siidi cMsrs In !.»• tliaf. if iIh- vf-mlor fails to convey because lie has not a ^^ooil title, lu- is always liable to the vendee in substantial damages for the loss of the barjiain. TIuh rule is not to be varied because the vendor a. \.) l-b. 56 DAMAGKS. If ihoxv has been uo eviction, only nominal damages can be lecov- ered.-"''° SAME— WARRANTY AND QUIET ENJOYMENT. 68. In nearly all the states the damages -wrhich are given on covenants of -warranty and quiet enjoyment are based on the old feudal doctrine of -warranty, and the value of the land at the time of the cove- nant is made the measure. But the value of the land is taken at the price -which -was paid for it. Though this may be contrary to all the fundamen- tal principles of damages, it is certainly the rule in the great majority of states.-"'^ According to some authorities, the rule is that, "if the eviction has been from all the lands conveyed, the recovery has been limited to the purchase price i)aid and interest for the time of dispossession ; if from a definite part capable of definite ascertainment and boundary, then to such part of the original price as bears the same ratio to the whole consideration that the value of the land to which the title has failed bears to the value of the whole premises''; -^^ and that, "with- out the aid of fraud or bad faith, nothing can be recovered for im- provements made or for the increased value of the premises produced by them," -^^ though the value of such improvements is deducted from the mesne profits which are recovered by the real owner.^"* Mollis V. I'heliis, ."» .Toliiis. (X. Y.) 49; Cornell v. Jackson, 3 Cusli. (Mtis.s.) .jOU; ll.iitfonl & Salisl)iiry Ore Co. v. Miller, 41 Conn. 112. -'»o Smith V. IIuslR's. 50 Wis. G20, 7 N. W. 053; Cocla-ell v. Proctor, O.') Mo. 41. 2»i Staats V. Ten Eyck's Ex'rs. 3 Caines (N. Y.) Ill: Harding v. Larkiu. 41 111. 413; Devine v. Lewis, 38 Minn. 24, 35 N. W. 711; Brandt v. Foster, 5 Iowa, 287. But see Brooks v. Black. 08 Miss. 101. 8 South. 332. 202 See Hymes v. Esty, 133 N. Y. 342, 347, 31 N. E. 105. 2i'-i See Walton v. Meeks, 120 X. Y. 83, 23 N. E. 1115; Pitcher v. Livinsston. 4 Johns. (X. Y.) 1; Hunt v. Kaplee, 44 Hun (X. Y.) 141); Ela v. Card. 2 X. H. 175; Sedg. Dam. § 051; Taylor v. Wallace, 20 Colo. 211. 37 Pac. !)(i3; Wflzfl v. Kichcreck, .53 Ohio St. 02. 40 X. E. 1007; Copeland v. McAdory, lOU Ala. .5.-.:;. .500, 13 Soutli. .545; Furnas v. Durgin, 119 Mass. 500. 2W4 Green v. Biddle. 8 Wheat. 1; Woodhull v. Rosenthal, 01 X. Y. 390; Hodg- kius V. Price, 141 Mass. 102, 5 X. E. 502; Stark v. Starr, Fed. Cas. No. 13,307. HKKACH OF COVKNANTS. •) , EXCEPTION — In a few states the measure of damages for breach of these covenants is the value of the land at the time of evic^^ion,-"' including inii)rove- ments.-^'^ SAME— AGAINST INCUMBRANCES. 69. The measure of damages for breach of a covenant against incumbrances is : (a) For a permanent incumbrance, the diminution in the value of the premises due to the incumbrance, — not exceeding, in most states, the consideration paid; in others, not exceeding the value of the land."'^ (b) For an incumbrance which causes a total eviction, the consideration, with interest and costs, in most states;-'" or the amount necessarily paid to avoid eviction, not exceeding the consideration; -" or the value of the land, with interest in others; " and, for a partial eviction, a proportionate amount.*" Removable Incwnhrances. Where ineninbrances exist, such as mortjiajxes. wliidi can Ix- re- moved by the payiucnt of money, the grantee, if no fi-aiid intervenes. 295 Norton v. Babcock, 2 Moto. (Mass.) rilO; Hanly v. X.'lsou. T, M<'. ■'-•"•: Keeler v. Woofl. 30 Yt. 242; Sterling v. Peet, 14 Coun. 24.^). 296Colemau v. Ballard's Heirs, 13 La. Ann. 512; Bunny v. Iljpkins.in. 27 Beav. 5(55. 297 Bronson v. Coffin. 108 Mass. 175; Harlow v. Thomas. 15 Ti.-k. (Mass.l CT,; Grant v. Tallman. 20 N. Y. 191; Mackey v. Harmon. :?4 Minn. ic^s. i»4 N. W. 702; Kellogg v. Malin, 62 Mo. 429; Mitchell v. Stanley. 44 Conn. .{12; Clark V. Ziegler. 79 Ala. 340; Koestenbader v. Pierce, 41 Iowa. 2tV4. 29sDimmick v. Lockwood. 10 ^Yend. (N. Y.) 142; (irant v. Tallman. 2n N. Y. 191; Howell v. :^Ioores. 127 111. c.7. 19 N. E. SC.-^; Stewart v. I»rak.-. 9 N. J. Law, 139. 209 Dillahunty v. Kailway Co.. .59 Ark. r.2t). 27 S. W. I.H.2. and 2S S. W. iV.7. 300 Barrett v. Porter, 14 Mass. 143; Horsford v. \Viipht. Kirby (Conn.i 3: Rickert V. Snyder. 9 Wend. (N. Y.) 410; Terry's Kx'r v. Drabenstadt. US Pa. St. 400. But see Harrington v. Mnrnhy. 100 Mass. 2'.i9. 301 Harlow v. Thomas, 15 Pick. (Mass.) 00; Ale.xauder v. Bridgford, 59 Ark. 195, 27 S. W. 09. oa DAMAGES, ami no nttcnipt has been made to enforce the iiicuiubianco, can recover ndniinal damages only, unless he shall \\i\vv paid the amount; ^'^^ but this must not ext-eod the prite or value of the land, as the 1; McrJuckin v. Milhank, HI', IIuii, 47.'{. .31 N. Y. Supp. 1040. affiiinod ir)2 X. Y. 2!J7, 4<; X. E. 41)0; Trescott v. Tnicniaii. 4 Mass. (127; Wiuslow v. Mc- Call, .32 Bar).. (X. Y.i 211; Hall v. Dean. 13 .Johns. (N. Y.) 10.".. ^"•■' .Tohn.son v. Collins, IIG Mass. 392; Grant v. Tallman, 20 N. Y. 1!)1; I'.ailry V. Scott. 13 Wis. 618. ■■<'* liradshaw v. Crosby, 151 Mass. 237, 24 X. E. 47; Cobnrn v. Litchfiokl. 132 Mass. 449. For broach of covenants to remove incumbrances, see Somers V. Wright. 115 Mass. 292. 3 5 Dobbins v. Duqnid, Cu 111. 4G4; Sheets v. .Toyner, 11 Ind. App. 20.'j, 38 X. E. 8.30; Claris v. IMslier, 54 Kan. 403, 38 Pac. 493; Wetzell v. llichcreek, r,:i in Colorado, Connecticut, Illinois, :Maine, :Massiistrict of Columbia. Indiana. 307 See Beach v. Crahi. 2 N. Y. SG: Thonisoii-Hnustoti Elt'ctric Co. v. I>u- rant Land Imp. Co.. 144 N. Y. 34. 39 N. E. 7; rnite<;. W Atl. 852; Trinity Churcli v. Higgins. 48 X. Y. 532: Penley v. Watts. 7 M.e-. & W. GOl. See, also, Dickinson v. Hnrt. 142 N. Y. is;'.. 3f. N. E. 801: Snow v. Pulitzer, 142 N. Y. 2(;:*>. 3<', N. E. lo.V.e, Kasiiuan v. City of Nrw York. l.VJ X. Y. 4G8, 46 N. E. 841. sosHiggins v. Butcher. 1 Yel. SO: Bak.r v. Hoifuii. 1 Cimp. 403; Osbom V. Gillett, L. R. 8 Exch. 88. 309 Connecticut Mut Life Ins. Co. v. N.w York & N. II. R. Co.. 25 Conn. 2(;o; Green v. Railroad Co., 28 Barb. iN. Y.) '.>; Insurance Co. r. Brame. U.> U. S. 754. sioOsborn v. C.illett. L. R. 8 Exch. 88: Hyatt v. Adams. IG Mich. 180: Green v. Railroad Co., 41 N. Y. 294; Pol. Torts. 53. 311 Tiff. Death Wrong. Act. p. xvii.: Seward v. The Vera Cruz. 10 App. Cas. 59; Whitford v. Railroad Co.. 23 N. Y. 4t;5: Littlewoud v. Mayor, etc., 89 N. Y. 24; Hulbert v. City of Topeka, 34 Fed. 510. 60 DAMAGES. Kansas, Ohio, Oklahoma, Utah, Virginia, and West Virginia; and to 120,000 in Montana. With these exceptions, the statutes impose no limit, and in New York the constitution forbids the creation of any limit.^^- The New York act provides that the amount recovered shall draw interest from the death, which interest shall be added to the verdict, and inserted in the entry of judgment. This provision is not uncon- stitutional.^^^ Tlie rate of interest is governed by the statute regulating interest in force at the time of the verdict.'^* The interest is to be added and inserted by the clerk.^^' Remission of Damages. ^Vhere the verdict is excessive, the plaintiff may frequently cure the error by remitting the excess. Where an item of damage has been erroneously included in the estimate by the jury, the error may be cured by remitting the amount allowed for such item, provided it can be definitely ascertained; ^^® otherwise, not.^^^ In the case of nonpecuuiary injuries, where the verdict of the jury is final, unless it shows that the jury were influenced by partiality, prejudice, or passion, the plaintiff has been permitted to remit enough to prevent the verdict from being excessive. It is a common practice for both trial and appellate courts to indicate the amount by which 312 Code Civ. Proc. § 1904. 313 Cornwall v. Mills. 44 N. Y. Super. Ct. 4.5. 314 Salter v. Railroad Co., 86 N. Y. 401: Id., 23 Hun (N. Y.) 53.3. overruling Erwin v. Steamboat Co., 23 Hun (N. Y.) 578. 315 See Manning v. Iron Co., 91 N. Y. 665, reversing 27 Hun (N. Y.) 219. As to the measure of damages, see. also. Blake v. Railway Co., 18 Q. B. 93; Illinois Cent. R. Co. v. Barron, 5 Wall. 95; Oldfield v. Railroad Co., 14 N. Y. 310; Murphy v. Railroad Co., 88 N. Y. 445; Tilley v. Railroad Co., 24 N. Y. 471, 29 N. Y. 252; Houghkirk v. Canal Co., 92 N. Y. 219; Pennsylvania Co. V. Lilly, 73 Ind. 252; Illinois Cent. R. Co. v. Weldon. 52 111. 290; Chicago & X. W. R. Co. v. Whitton's Adm'r, 13 Wall. 270; Birkett v. Ice Co., 110 N. Y. .504, 18 N. E. 108; Terry v. Jewett, 78 N. Y. 338; Ihl v. Railway Co., 47 N. Y. 317. 316 Toledo, W. & W. Ry. Co. v. Beals, 50 111. 150; Evertsen v. Sawyer. 2 Wend. (N. Y.) 507; Lambert v. Craig, 12 Pick. (Mass.) 199; King v. Howard, 1 Cush. (Mass.) 137; Kennon v. Gilmer, 131 U. S. 22, 9 Sup. Ct. 090. 31T Pavey v. Insurance Co., 56 Wis. 221, 13 N. W. 925. DEATH BY WRONGFUL ACT. 61 they deem the verdict excessive, and require the plaintiff to remit it as a condition of refusing a new trial. "« ' It is a grave question whether this practice does not deprive the parties of the right to trial by jury, and it would seem to be an in- vasion of the province of the jury; 3x. but the practice is supported by the weight of authority.^^o ^^« Upham V. Dickinson. 50 111. 97; Hegeman y. Railroad Corp.. 13 N Y L l^r ^' ''"''''''^' ^ ^^"'"- ^^- ^-^ ^^' Whitehead v. Kennedy, 69 n: Y.' ~iy>Z, 470. 319 See dissenting opinions in Burdict v. Railway Co., 123 Mo. 221, 27 S. W. 453 320 Baker v. City of Madison. 62 Wis. 137. 22 N. W. 141, 583; Town of Union V. Durkes, 38 N. J. Law, 21; Hopkins v. Orr, 124 U. S. 510.- 8 Sup Ct 590- Arkansas Val. Land & Cattle Co. v. Mann. 130 U. S. 69. 9 Sup Ct 458 WEST PUBL18H.no CO., PKINTEB8 AND STEREOTYPEES, ST. PAUL. MINN. / /, m UNIVERSITY OF CALIFORNIA LIBRARY Los Angeles This book is DUE on the last date stamped below. niN2 41980 FEB 1 1983 r^^ ,3IS55cS!>?<}!«i55ES2»:; -.-^^timiS