IfiliPPPilipiPiiiBpmJR;;; fACILITY ^^■: i ■ THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW COMMENTARIES ON THE LAW OF CONTRACTS BEING A CONSIDERATION OF THE NATURE AND GENERAL PRINCIPLES OF THE LAW OF CONTRACTS AND THEIR APPLICATION IN VARIOUS SPECIAL RELATIONS BY WILLIAM F. ELLIOTT CO-AUTHOR OF "ROADS AND STREETS," "RAILROADS," "EVIDENCE," ASSISTED BY THE PUBLISHERS' EDITORIAL STAFF IN SIX VOLUMES Volume II INDIANAPOLIS THE BOBBS-MERRILL COMPANY PUBLISHERS Copyright 1913 By The Bobbs-Merrill Company T TABLE OF CONTENTS VOLUME TWO. OPERATION AND INTERPRETATION CHAPTER XXI. LEGALITY OF OBJECT. SECTION. PAGE. 645. Generally 3 646. Means by which contract rendered illegal immaterial 5 647. Agreements in violation of positive law 6 648. Contracts prohibited by statute generally void 7 649. Agreements contrary to public policy — Generally 8 650. Broad statement of the rule concerning public policy criticized.... 9 651. Public policy — What determined by 11 652. Contracts against public policy void 12 653. Agreements contrary to express rules of common law — Generally 12 654. Agreements involving commission of crime 13 655. Agreements involving commission of a civil wrong 14 656. Agreements involving fraud 15 657. Contracts which cannot be performed without defrauding third persons 16 658. Conspiracy to defraud third persons 17 659. Rule further illustrated 18 660. Agreements to defraud creditors 18 661. Conveyance of property to defraud creditors 19 662. Who may avoid such conveyance 20 663. Agreements contemplating publication of libel 22 664. Agreements mala in se and agreements mala prohibita 22 665. Basis of the rule • 23 666. Penalties generally import or imply prohibition 24 667. When penalty does not imply prohibition 26 668. Different tests applied by different courts to determine legislative intent 26 669. Revenue measures — Statutes for protection of public 27 670. Omission of penalty does not render express prohibition ineffective Z? 671. Agreements may be forbidden yet not void where statutes so provide 28 650072 LAW IV TAELK OF COXTEXTS. SECTION. PAGE. 672. Illustrations of the rule 29 673. Rule where conditions prescribed for conducting business are not complied with 29 674. Illustrations of the rule 30 675. Attempting to do indirectly what cannot be done directly 31 676. Contracts growing out of or connected with illegal contracts.... 22 677. Modified rule stated 2)2 678. Rule where aid is required for illegal contract to establish case.. 23 679. Illustrations of the rule 35 680. Rule where illegal contract is abandoned or merely collateral 35 681. Collateral contracts of insurance, surety and loans 36 682. Contracts containing several distinct undertakings 37 683. Repeal of statutes — Contract valid under existing law 37 684. Repeal of statutes — Contract void under existing law 39 685. Repeal of statutes — Impairing obligation of contract 39 686. Ratification 41 687. Violation of federal statutes 41 688. Violation of liquor laws 43 689. Violation of liquor laws — Knowledge of vendee's unlawful intent 43 690. Violation of liquor laws — Further illustrations 45 691. Sunday contracts 47 692. Violation of statute as to gaming or wagering 48 693. Wagering contracts at common law 48 694. Wagering contracts — Present status 49 695. Violation of statute as to lotteries 50 695*. Elements essential to existence of a lottery 50 696. Guessing contests as lotteries 51 697. Tailor suit clubs — Accumulated funds distributed by chance, and the like 52 698. Solution of a problem not a lottery 53 699. Bailee's refusal to deliver up property won at a raffle 54 700. No lottery when element of chance is wanting 54 701. Giving of trading stamps not a lottery 54 702. No lottery when element of consideration wanting 55 703. Collateral contracts — Rights of vendor and vendee, inter se 55 704. Violation of the statute as to usury 56 705. Agreements contrary to public policy — Classification 56 706. Agreements tending to official corruption or injury of the public 56 707. Tending to official corruption — Interest of public official 57 708. Tending to official corruption — Contracts for materials 58 709. Tending to official corruption — Location of public buildings 59 710. Tending to official corruption — Indemnity bond 59 711. Tending to official corruption — Influencing appointments to office 60 712. Tending to official corruption — Payment of campaign expenses and the like 61 713. Tending to official corruption — Contract to take more or less than statutory fee 62 TABLE OF CONTENTS. SECTION. PAGE. 714. Agreements tending to corrupt citizens as to public duties 63 715. Agreements tending to obstruct or pervert justice— Compounding crimes and the like. CS 716. Obstructing justice— Compounding crimes— Misdemeanors 67 717. Obstructing justice— Compounding offenses— Object must be to stifle prosecution ""^ 718. Miscellaneous illustrations ^° 719. Agreements tending to obstruct or pervert justice— Civil proceed- 69 mgs ^-^ 720. Civil actions— Fraud on the court 71 721. Obstructing justice— Securing evidence 71 722. Obstructing justice — Paying witnesses 73 723. Obstructing justice— Hiring witnesses to leave state and the like. . 74 724. Obstructing justice— Indemnity to sureties 75 725. Ousting jurisdiction or limiting powers 76 726. Ousting jurisdiction— Submission to private individual 77 727. Ousting jurisdiction— Condition precedent /8 728. Ousting jurisdiction— Certificate of architect and the like SO 729. Ousting jurisdiction— Notice of claim 81 730. Ousting jurisdiction— Further illustrations 82 731. Agreements tending to encourage litigation 83 732. Encouraging litigation— Champerty and maintenance 82 733. Encouraging litigation— Champerty— Modifications of rule con- cernmg *^^ 734. Encouraging litigation— Champerty— Attorney and client 85 735. Encouraging litigation— Champerty— Right to compromise 86 736. Encouraging litigation— Champerty— Recovery of quantum meruit 87 737. Encouraging litigation— Champerty— Defense of— when available 87 738. Agreements tending to corrupt morals 88 739. Corrupting morals— Letting house for brothel— Prostitute's board 90 740. Corrupting morals— Leasing house for brothel 90 741. Immoral consideration— Illicit intercourse 90 742. Immoral consideration— Existing contract to marry 91 743. Immoral consideration— Promise by putative father 91 744. Immoral consideration— Contracts to act as housekeeper 91 745. Immoral consideration— Executed contract 92 746. Immoral consideration— Past immoral acts 92 747. Agreements tending to corrupt morals— Miscellaneous 94 748. Agreements tending to induce fraud or breach of trust 94 749. Inducing breach of trust— Officers of corporation 95 750. Inducing breach of trust— Public service corporation 97 751. Inducing breach of trust— Other applications of rule 97 752. Agreements of a gambling or wagering nature 98 753. Agreements in derogation of marriage— Restraint of marriage 98 754. Derogation of marriage— IMarriage brokage contracts 99 755 Derogation of marriage— Agreements made in view of future ^ ,. 101 separation Vlll TABLE OF CONTENTS. SECTION. PAGE. 843. Contracts in restraint of trade — Presumptions as to validity 169 844. Modern doctrine 170 845. Rules of construction illustrated by particular cases 170 846. Recognition taken of modern conditions 171 847. Divisibility or severability of contract 171 848. Divisibility as to territorial extent — When valid 172 849. Divisibility as to time 173 850. Breach of contract 174 851. Breach of contract — Partners and employes 175 852. Breach of contract — Entering another's employment — When is... 175 853. Acts which amount to a breach by vendor 176 854. Rights and remedies — Injunction 177 855. Remedies — Injunction — When may issue 177 856. Remedies — Action for damages or penalty ' 179 857. Breach of contract — Parties in pari delicto 179 858. Laches, burden of proof, assignability 180 CHAPTER XXIII. COMBINATIONS. MONOPOLIES AND TRUSTS. 865. Generally 182 866. Legislative grant of monopoly 182 867. Definitions of terms as here used 183 868. Judicial attitude tovirard 185 869. Monopoly need not be complete 185 870. Contracts and combinations among manufacturers or dealers to control and enhance price 185 871. Rule further illustrated 187 872. Combination or monopoly must be merely ancillary 187 873. Rule against monopolies as applied to dealers 188 874. Rule further illustrated 188 875. Contracts restricting sale of intoxicating liquors 189 876. Combinations to decrease production or withhold from market 190 877. "Corners" and combinations to prevent competition in other re- spects 191 878. "Corners" — Forestalling, regrading and engrossing 192 879. Combinations relating to publication of news 193 880. Combinations relating to insurance 195 881. When statute does not apply to insurance 196 882. Combinations of laborers and other workmen 197 883. Right to organize confers no special privilege 198 884. Contracts between union and employes 199 885. Binding force of constitution and by-laws of union 200 886. Strike in breach of contract 201 887. Monopolies at common law 201 888. Modern doctrine 202 TABLE OF CONTENTS. IX SECTION. PAGE. 889. Monopolies as affected by state constitution 202 890. Monopolies under state statutes 203 891. Grants of exclusive rights by government authority 204 892. Exclusive grant by private person 204 893. Exclusive grant by carriers 204 894. Exclusive grant by carriers to hackmen — Right to dock vessel.... 205 895. Discrimination — Exclusive service contract with patron 208 896. What are illegal trusts 208 897. Form not controlling 209 898. Rights and disabilities of members of trusts as between them- selves 210 899. Rules further illustrated 212 900. Rights and disabilities of members of trust as against third persons 213 901. The rule illustrated 213 902. Rule further illustrated — Destruction of property and the like.. 214 903. Rights of third persons 215 904. Rights of third persons under statutes 216 905. Rights of stockholder 217 906. Antitrust statutes — Constitutionality 217 907. State antitrust acts — Limitations on power to enact 218 908. State antitrust acts — Constitutionality 219 909. Antitrust acts of Congress 221 910. Federal antitrust act — Construction and effect 221 911. Federal antitrust act gives a reasonable construction 223 912. Federal antitrust act — Application of 224 913. Federal antitrust act — When inapplicable 225 914. Federal antitrust act — Power to pass 225 915. State antitrust acts 228 916. State antitrust acts — General scope 228 917. State antitrust acts — Application to labor unions 230 918. State antitrust acts — Application to insurance 231 919. State antitrust acts — Exercise of police power 231 CHAPTER XXIV. VIOLATION OF SUNDAY LAWS. 925. Generally 233 926. The English statute 234 927. Sunday laws in the United States 235 928. Effect of the omission of the words "ordinary calling" 236 929. Statutes prohibiting business on Sunday 237 930. Illegal business transactions 237 931. Statutes prohibiting labor but not business 238 932. Performance of contract for labor on Sunday 240 933. The exceptions of necessity and charity 240 X TABLE OF CONTENTS. SECTION. PAGE. 934. Suits to enforce contracts made on Sunday 242 935. Paj-ments for Sunday labor 242 936. Sunday laws — How construed 243 937. Sales made on Sunday 244 938. Delivery of goods without payment 244 939. Sunday contract fully executed 245 940. Telegrams on Sunday 246 941. Contracts of common carriers 247 942. Duty of carrier independent of contract 247 943. Loaning money on Sunday 248 944. Deeds, mortgages and sealed instruments made on Sunday 249 945. Rule as to deeds and mortgages illustrated 249 946. Notes and bills 250 947. Bona fide holder of a note made on Sunday 252 948. Ratification of contracts made on Sunday — General rule 253 949. Minority rule — Distinction drawn 254 950. Completion of contract on secular day 256 951. Delivery on secular day 257 952. Executed and executory Sunday contracts 258 953. Executed by one party 259 954. Conflict of laws as to Sunday contracts 259 955. Void when made void everywhere and vice versa 260 956. Law of place of performance 260 957. Not void on ground of public policy 261 CHAPTER XXV. USURY. 960. Violation of statute as to usury — Generally 262 96L Usury a personal defense 263 962. Rule further illustrated 264 963. Usurious note secured by mortgage 265 964. Largely a matter of statutory regulation 266 965. Bona fide holders — Usurious contract between original parties 267 966. Usury as a matter of intent 269 967. Substance and not form controls 269 968. Usually applies to contracts of borrowing- and lending 271 969. Application to contracts of purchase and sale 271 970. Resale to vendor 272 97L Deferred payments for work and labor 273 972. Grantee of real estate assuming mortgage 273 973. Discounting commercial paper 274 974. Restricting commissions — Exempting building and loan associa- tions 275 975. Incidental expenses incurred in making or collecting loan not usury 27 J TABLE OF CONTENTS. XI SECTION. PAGE. 976. Incidental expenses — Hiring agent to negotiate loan 277 977. Liability of principal for acts of agent — Rule further considered 278 978. Time of pajment 278 979. Interest becoming principal — Weight of authority 280 980. Renewal bill or note — Extensions 281 981. Corporations 283 982. Remedies under national banking act 284 983. Rule as to the application of payments of usury interest 284 984. Recovery of usurious interest 237 985. Recovery of usurious interest — Rights as affected by federal statute 288 986. Set-off under state laws 291 987. Who may recover usurious interest 292 CHAPTER XXVI. GAMING AND WAGERING. 990. Generally 294 991. Change of attitude toward 295 992. Early statutes against 296 993. Modern statutes against 297 994. Gambling contracts generally invalid thereunder 297 995. Futures 298 996. Must intend and agree to deliver goods 299 997. Kentucky statute — Contracts for future delivery — Various forms of 300 998. Intention not to deliver must be mutual • • 301 999. Rule as to mutual intention further considered 302 1000. When intention of one party may defeat contract 303 1001. Subsequent agreement as to delivery 303 1002. Futures — Margin transactions 304 1003. Test by which to determine validity of 305 1004. Presumption as to margin transactions — Illustrations 305 1005. Legislative enactment concerning 307 1006. Futures — Options 307 1007. Rule further illustrated 308 1008. Puts and calls, assignments, resale, ringing out 309 1009. Other forms of wagering contracts — Election debts 310 1010. Other forms of wagering — Horse racing 311 1011. Gaming as defined by statute — Generally 312 1012. Games on behalf of charity 314 1013. Bohemian oats speculation 314 1014. Rights of parties — Validity of bills, notes or other obligations given in payment of gambling debts 314 1015. As between the immediate parties and those with notice 315 1016. Special statutory enactments concerning recovery thereon 316 1017. Note given in an option or "future" deal 317 *"A *. Xll ■• . TABLE OF CONTENTS. * ♦• • SECTION. PAGE. 1018. Presumptions concerning and validity of note given for gambling debt 317 1019. Recovery of money lost at gaming, wagering or dealing in futures 318 1020. Illustration of rule concerning recovery 320 1021. Rights and liabilities of third persons 321 1022. Prize contests 322 1023. Further examples of valid and invalid prize contests 2)22 1024. Collateral agreements 323 1025. Collateral contracts — Lender must be a confederate 'i2l 1026. Examples of invalid collateral contracts 324 1027. Examples of valid collateral contracts 325 1028. Securities given for gambling debt 325 1029. New contract — Ratification — Executed margin transaction 325 CHAPTER XXVII. LOBBYING CONTRACTS. 1035. General rule 327 1036. Lobby contracts void 328 1037. When illegal 328 1038. Character of legislation immaterial 329 1039. Lobbying contract may be general in its nature 329 1040. Invalid if personal solicitation is contemplated 329 1041. Illustrations of unenforcible contracts 330 1042. Further illustrations 331 1043. Use of money as a test 331 1044. Contract by executive officer— Qualifying a valid legislative en- actment 332 1045. Lobbying contract entered into by public officials 'iZ2 1046. When contract for services before legislative body not unlawful 2)i2 1047. Examples of valid contracts ^^^ 1048. Must appear openly in true character '^H 1049. Rule applied '^'^^ 1050. Contracts distinguished from lobbying 334 1051. Effect of making fee contingent on success 335 1052. Contract entered into under legislative authority 2)li(i 1053. Rule where contract provides for services partly illegal 336 1054. Recovery of compensation ^^i CHAPTER XXVIII. EFFECT OF ILLEGALITY OF CONTRACTS. 1060. Illegal contracts are void and cannot be enforced 339 1061. Void contract incapable of supporting a remedy 339 1062. Rule as affected by public policy 340 |VT5!f ^„T tin-'- TABLE-OJr^GOXTENTS. - nr X^J Xlll SECTION. PACE 1063. Exception to the rule 340 1064. Effect of performance or execution of contract 341 1065. Contract presumed valid 341 1066. Parties left in position in which they place themselves 342 1067. Illustration of illegal contracts 344 1068. A party in pari delicto may object to the legality of the contract 345 1069. Effect of illegality of contract 345 1070. Effect of subsequent illegal contracts on prior contracts 346 1071. Necessity of making a prima facie case without disclosing illegal- ity of contract 346 1072. Rule criticized and restated 347 1073. Rule further considered 347 1074. Partial illegality when contract is divisible 348 1075. Rule illustrated and applied 348 1076. Indivisible illegal contracts 349 1077. Illegal when consideration cannot be apportioned — Renunciation, effect of 350 1078. Contracts growing out of or connected with illegal contracts 352 1079. Illegal combination — Right to maintain alien or independent con- tract 352 1080. Rule illustrated 353 1081. Illegal combination — Insurance contract 353 1082. Effect of state statutes 353 1083. Promise by third party to pay claim arising out of illegal contract 354 1084. Third party acting as depositary 355 1085. Recovery of that parted with under executed agreement 355 1086. Duty of agents and partners to turn over proceeds of illegal transaction 356 1087. Abandonment of illegal contracts 357 1088. Rule where aid of illegal contract is required to establish case.. 358 1089. Ratification of illegal contract 358 1090. General rule as to ratification 358 1091. Rule illustrated 359 1092. Rule as applied to Sunday contracts 359 1093. Effect of subsequent payment of license fee 359 1094. Enforcing or obtaining relief from illegal contracts 360 1095. Exceptions — Recovery provided for by statute 360 1096. Statutes permitting recovery strictly construed 361 1097. Other statutes considered 361 1098. Recovery permitted when parties not in pari delicto 362 1099. Rule illustrated 363 1100. Penalty on both parties — No undue advantage given 364 1101. When parties not equally at fault 365 1102. Rule illustrated 365 1103. The principle of "par delicto" as affected by public policy 366 1104. When one in pari delicto may be granted relief 367 Xiv TABLE OF CONTENTS. SECTION'. PAGE. 1105. Locus poenitentiae 368 1106. Rule illustrated 368 1107. Money or property given to one of the parties to the illegal agree- ment 369 CHAPTER XXIX. CONFLICT OF LAWS. 1 1 10. General rule — Lex loci contractus 2>12 1111. Lex loci contractus governs as to the nature, obligation and in- terpretation of the contract THZ 1112. The general rule given further consideration 374 1113. Law of the place a part of the contract 375 1114. Reasons underlying the rule 375 1 1 15. Where is the place of the contract 376 1116. Place of acceptance 376 1117. Place of delivery Ill 1118. Place of performance 378 1119. When law of the place of performance governs 379 1120. The rule illustrated 380 1121. Part performance in one jurisdiction and part in another 381 1122. Agreement by parties as to law which shall control 382 1123. Agreements as to the law which shall control considered further 382 1124. Formal validity 383 1125. Formal validity— Statute of frauds 383 1126. Essential validity— Legality 384 1127. Capacity of parties 385 1128. Capacity to contract — Corporations — Agents 385 1129. Distinction between capacity to contract and capacity to perform the contract 386 1130. Capacity to contract — Married women 386 1131. Capacity to contract — Transients in a foreign country 387 1132. Capacity to contract — Law of domicil 387 1133. Rule in Louisiana 388 1134. When law of domicil imposes a total incapacity 388 1135. Capacity to contract — Law of forum 389 1 136. Capacity to contract — Infants 389 1137. Discharge of contracts — Statutes of limitation 390 1138. Lex fori — When action may be maintained thereunder 391 1139. Statutes as to maintenance of actions in lex fori 392 1 140. Other statutory enactments 392 1141. Rule when the law of the place extinguishes the contract 393 1142. Particular contracts — Contracts relating to realty 393 1143. Rule applied 394 1144. Lex situs controls as to covenants which run with the land and the like 395 TABLE OF CONTENTS. XV SECTION. PAGE. 1145. Distinction between covenants which run with the land and per- sonal covenants 396 1146. Transfer of personalty 397 1147. Legislative power extends to all personal property within bound- aries of the state 398 1148. When the law of domicil yields to the law of the situs 398 1149. Sale or attachment of goods — When lex sitae controls 399 1 150. The trend of authority 399 1151. The law of the domicil as compared with the law of the place.. 400 1 152. Transfer of personalty — Sales 400 1153. Sale governed by the law of the place where it becomes com- plete and binding 401 1154. The law of the situs as affecting the rights of creditors 402 1155. Removal of goods without vendor's knowledge or consent 403 1156. Contract of sale providing for delivery and use in another juris- diction 404 1157. Validity of chattel mortgages and bills of sale 404 1158. Removal of mortgaged goods to another jurisdiction 405 1159. Mortgagors consenting to the removal — Comity 406 1160. Necessity to refile mortgage on property moved into another jurisdiction 407 1 161. Sales of intoxicating liquors 407 1 162. Sales of intoxicating liquors — Rule applied 408 1163. Voluntary assignments for the benefit of creditors 409 1164. Assignment valid where made generally valid everywhere 409 1165. Foreign voluntary assignment — Resident creditors 410 1166. When law of place of assignment prevails over the law of the domicil 411 1167. Involuntary assignment under bankrupt and insolvency laws 412 1168. Involuntary assignment — When recognized in foreign jurisdic- tions 413 1169. When assignment is involuntary 413 1170. Sale or mortgage — As affected by fraud 414 1171. Bills and notes 414 1172. Presumption as to place of delivery 415 1173. Bill or note payable generally 416 1174. Naming of place for payment does not necessarily fix governing law 417 1175. Laws of more than one state may apply to same bill 417 1176. Negotiability 418 1177. Rule in federal and a few state courts 419 1178. Law governing liability of parties to bills and notes 420 1179. Necessity of demand and protest as a condition precedent 422 1180. Necessity for notice of dishonor 423 1181. Time of payment — Days of grace 424 1182. Interest 424 1183. Different rates — Parties may stipulate either 425 XVI TABLE OF CONTENTS. SECTION. PAGE. 1184. In selecting rate must act in good faith 426 1185. Insurance contracts — Generally 426 1186. Authority of agent limited to taking applications — Exceptions.. 427 1187. Policy mailed to agent of insurer 428 1188. Delivery and payment of first premium 429 1189. Parties designating the state whose laws are to govern 429 1190. Validity — Policy usually governed by the law of the place 430 1191. Construction and rights of the parties 430 1192. Contracts of carriers 432 1193. Connecting lines of carriers — The English rule 433 1 194. The American rule 435 1195. "Contract tickets" 437 1196. Maritime contracts 437 1 197. Contracts of affreightment 438 1198. Contracts of telegraph company 440 1199. Remedies — Lex fori — Generally 441 1200. Lex fori governs as to remedy 442 1201. Rule appHed 443 1202. When forum will refuse to enforce the contract 443 1203. Foreign laws not judicially noticed 444 CHAPTER XXX. STATUTE OF FRAUDS. 1210. Form of contract — Classes of simple contracts in writing 447 1211. Statute of frauds — Origin and purpose 449 1212. Statute of frauds substantially adopted in this country 450 1213. Construction of the act 451 1214. Operation and effect of statutes generally — Executed contracts.. 452 1215. Its effect on verbal contracts 453 1216. Operation and effect of statutes generally — Quasi and implied contracts 454 1217. Statutes generally held to affect remedies 455 1218. Defense of statute personal 456 1219. When statute must be invoked by third person 457 1220. Waiver of statute 458 1221. Conflict of law — Law of forum 458 1222. Conflict of law — Cases applying lex loci contractus 459 1223. Conflict of law — Cases applying law of place of performance 460 1224. How statute must be invoked 460 1225. Fourth section of the original act — Affect form of simple contracts 461 1226. Fourth section — Promise by executors and administrators 462 1227. Fourth section — Promise to answer for debt of another — Scope of clause 463 1228. Fourth section — Promise to answer for the debts of another — General matters 464 TABLE OF CONTENTS. XVll SECTION. PAGE. 1229. Necessity for a subsisting, binding obligation 466 1230. To whom the promise must be made 467 1231. Original and collateral promises 468 1232. General rules further considered 469 1233. Original promises — Paj-mcnt out of property of debtor 470 1234. Original promises — New consideration moving to promisor 471 1235. Original promises — Promise to pay own debt 472 1236. Question determined by person to whom credit is given 474 1237. Person to whom credit is given — Services rendered, and the like 476 1238. Language indicative of collateral promise 477 1239. Miscellaneous promises 478 1240. Question one of intention 478 1241. When a question for the jury 479 1242. Relinquishment of lien 480 1243. Independent promise releasing another 480 1244. Del credere commission 481 1245. As to contracts of indemnity 482 1246. Oral promise to indemnity guarantor not within the statute 483 1247. Illustrations of collateral promises 484 1248. Agreements in consideration of marriage 485 1249. Promise to do some act other than marry in consideration of mar- riage 486 1250. Antenuptial contracts 486 1251. Antenuptial parol agreements reduced to writing after marriage 487 1252. Antenuptial agreement — Execution 488 1253. Contracts relating to lands 488 1254. Necessity for and sufficiency of writing 489 1255. Scope of the clause 490 1256. Cases not within the statute — Constructive trusts 492 1257. Cases not within the statute — Party fences and location of boundary line 493 1258. Cases not within the statute — Licenses to enter on lands 494 1259. Fixtures 496 1260. Fructus industriales 497 1261. Other collateral contracts not within the fourth clause — Illustra- tions 500 1262. Cases not within fourth clause — Partnership to deal in lands 500 1263. Cases distinguished — How contract may be taken out of statute. . 502 1264. Appointment of agent to buy land 503 1265. Cases not within the fourth clause — Judicial sales 504 1266. Contracts within statute — Parol contract to arbitrate 505 1267. Cases within clause four — Easements 505 1268. Contracts within the fourth clause — Contracts for the sale of growing trees 507 1269. Sale of standing timber to be immediately removed 509 1270. Cases within the fourth clause — Leases 510 1271. How contract concerning land may be taken out of the statute 511 xviii TABLE OF CONTENTS. SECTION. PAGE. 1272. Insufficient performance — Possession 513 1273. Taking possession— English doctrine 514 1274. Insufficient performance— Payment of purchase-price — Exchange of lands 515 1275. Additional illustrations of the rule 516 1276. Performance of services 518 1277 A.greements not to be performed within a year — Scope of the 1 519 clause ^"-^ 1278. Contracts within the fifth clause— Contracts to last a year from a date in f uturo — Leases 521 1279. Contracts to last a year from a date in f uturo— Services 522 1280. Method of computing time 524 1281. Contracts which cannot be performed within a year 525 1282. Cases not within the fifth clause— Contracts which may be per- formed within a year 5-6 1283. Performance within a year possible— Rule illustrated and con- sidered further '^-' 1284. Performance depending upon a contingency 528 1285. Contracts not within the fifth clause— Contracts to continue dur- ing hfe • • • ^^^ 1286 Contracts to be performed on death of one of the parties of third S31 person -^^^ 1287. Statute of frauds applies to contracts which cannot possibly or reasonably be performed within a year 532 1288. Agreement not to be performed within a year— Option to termmate ^ ^ 1289. Performance on one side within the year 534 1290. Performance by one party within a year— Sufficiency of question of construction ' 536 1291. Seventeenth section of the statute 536 1292. Scope of the statute ^^"^ 1293. Transactions construed as contracts for sale 539 1294. Work and labor contracts distinguished from contracts of sale.. 540 1295. Massachusetts rule ^"^^ 1296. The rule in New York ^"^^ ■ 1297. The English rule ^^'^ 1298. Sale of timber products ^^5 1299. Realty improvement contracts •545 1300. Work in raising crops and the like 545 1301. Sufficiency of the memorandum acquired by the fourth and sev- enteenth sections 545 1302. Form of memorandum 546 1303. Correspondence as evidence of the contract 548 1304. Bought and sold notes— "Slip contracts" 549 1305. The contents of the memorandum 549 1306. Xames of parties must be shown 550 1307. Description of subject-matter— Personal property 551 TABLE OF CONTENTS. XIX SECTION. PAGE. 1308. Contents of memorandum — Admission of evidence aliunde 552 1309. Contents of memorandum — Descriptions of real estate 552 1310. Further illustrations of the rule 554 1311. Contract to convey one of several tracts 555 1312. Contents of memorandum — Descriptions of real estate held in- sufficient 556 1313. Whether the memorandum must show the consideration 557 1314. Weight of authority 558 1315. Statement of consideration — Executory contracts — Price and terms 558 1316. Memorandum — Time of payment 559 1317. Form of signature 560 1318. Place of signature 562 1319. Who must sign 563 1320. Who is the party to be charged 564 1321. Vendor as party to be charged 565 1322. Trustee as party to be charged 566 1323. Special statutes relating to the signature of the parties 566 1324. Time when memorandum must be made 567 1325. Must memorandum be prepared before action is brought? 568 1326. Necessity for delivery of memorandum 569 1327. Taking contract out of operation of seventeenth section — Part performance 571 1328. Taking contract out of operation of seventeenth section — Receipt and acceptance — Necessity for 572 1329. Kind of acceptance — Must be unconditional 574 1330. Mere words insufficient 576 1331. Acts construing an acceptance 576 1332. Further illustrations 577 1333. Acceptance of part of the goods 578 1334. Goods sold by sample 580 1335. Constructive delivery and acceptance 581 1336. Acceptance by agent, bailee or joint purchasers 583 1337. Delivery at a place or to a person designated by the buyer 584 1338. Delivery to a carrier 584 1339. Delivery which takes contract out of the statute 587 1340. Question for the jury 588 1341. Earnest or part payment 589 1342. Auctioneer's sale 590 1343. Judicial sales 590 CHAPTER XXXI. IMPLIED CONTRACTS. 1355. Implied and quasi contracts — Introductory 592 1356. Judgments 593 1357. Duties imposed by statute 594 XX TABLE OF CONTENTS. SECTION. PAGE. 1358. Acts of parties 594 1359. Contracts not implied by law where express contracts 597 1360. Limits of rule that express contract excludes implied contract... 598 1361. Right to recover where minds of parties did not meet on at- tempted express contract 600 1362. Accounts stated 602 1363. Work and services 603 1364. Contracts for services where skill is required 606 1365. Same subject continued — When silence imports assent 607 1366. Where law will not imply a promise owing to relationship of parties 610 1367. Parent and child — Rule as to services rendered 612 1368. Persons standing in loco parentis 616 1369. Same subject continued — Further illustrations 617 1370. Same subject continued — During illicit cohabitation 618 1371. Same subject continued — In expectation of marriage 618 1372. Money had and received 619 1373. Rule illustrated 621 1374. Nature of the action 622 1375. When action may be maintained 623 1376. Jvloney lent • • 626 1377. Money lent to a municipal corporation 626 1378. Money received and used by borrower 627 1379. Money paid — Receiving without consent of owner 628 1380. One to whom an obligation is due may proceed against one hold- ing the money 630 1381. Money voluntarily paid to another with owner's consent 631 1382. Rule as to voluntary and involuntary payments further illustrated 633 1383. Effect of protest 634 1384. Recovery of money paid under duress or compulsion 635 1385. The rule illustrated 636 1386. Voluntary payment of taxes 638 1387. Recovery of illegal taxes paid under compulsion 640 1388. Money paid by or under mistake 641 1389. Payments by banks — Insurance companies — General matters 642 1390. Effect of negligence upon the right of recovery 643 1391. Recovery of money paid under mistake of law 645 1392. Ignorantia juris neminem excusat — Exception in the case of igno- rance of a foreign law 646 1393. Contribution 646 1394. When contribution may be enforced 648 1395. Goods sold and delivered 650 1396. Board and lodging 650 1397. Use and occupation 651 1398. Waiver of torts and suing on implied contracts 652 1399. Rule further considered 653 1400. Other instances in which the tort may be waived and suit brought on the implied contract 654 TABLE OF CONTEXTS. XXI CHAPTER XXXII. LIMITS OF OBLIGATION CONTRACTS AFFECTING THIRD PERSONS. SECTION. PAGE. 1405. Obligation of contract as between the parties 658 1406. Privity of contracts 659 1407. Further exceptions to the English rule 660 1408. Obligation of contract as to third person 661 1409. Obligation as to liability of third person 662 1410. Obligation as to duty of third person — Interference by third per- sons 663 1411. Obligation as to rights of third persons 666 1412. When third persons may enforce contracts for their benefit 667 1413. Must be a clear intent to benefit the third party 670 1414. Acceptance necessary for and sufficiency of 672 1415. Delivery — Rights of parties in general 673 1416. Particular cases — Insurance 675 1417. Particular cases — Telegraph company cases 676 1418. Particular cases — Building contract cases 678 1419. Particular cases — Contracts with carriers 681 1420. Miscellaneous cases 682 1421. When third persons may not enforce contract 684 1422. Question of construction — Contracts with water company and the like 687 1423. Rule further illustrated 689 1424. Rule further illustrated — Right to enforce sealed instrument 690 CHAPTER XXXIII. ASSIGNMENTS. 1430. Definition — Different rule at common law and in equity under modern law 691 1431. Chose in action unassignable at common law 692 1432. The rule in equity 694 1433. What may be assigned — Generally 695 1434. Assignment of public contracts — Wages and the like 697 1435. Assignment of contracts involving personal liability 700 1436. Examples of unassignable contracts 701 1437. Parties may stipulate against assignment 704 1438. Assignment may be forbidden by statute 705 1439. Assignment of liabilities by act of parties 706 1440. Assignment of rights by acts of parties 707 1441. Form and elements of assignments 707 1442. Informal assignments 709 1443. Partial assignments 711 1444. Partial assignments in equity 712 XXH TABLE OF CONTENTS. SECTION. PAGE. 1445. Notice of assignment as between the assignor and assignee and the party liable 714 1446. Effect of notice to debtor or person liable — Rights of parties gen- erally 715 1447. Assignments by operation of law — Generally 717 1448. Assignments by operation of law — Effect of transfer of interest in land 717 1449. Nature and purpose of covenant controls — Restrictions as to use of real property 719 1450. Valid covenants running with the land 720 1451. Effect of marriage 721 1452. Effect of death of one of the parties — Actions that survive 722 1453. Actions that do not survive 722 1454. Effect of assignment 122> 1455. Rights of assignee — Qualified assignments 724 1456. Implied warranties in assignments — Rights and liabilities of as- signor and assignee 725 L457. Title of assignee 726 1458. Equities of third persons 729 1459. Rights of assignees as between themselves — priority of notice.... 731 1460. Priority in point of time — Rule criticized 12)Z 1461. Successive assignees — Existing equities 734 1462. Evidence of assignment and of assignee's rights — Right of as- signee to sue — Burden of proof 735 1463. Evidence of assignee's right 736 1464. Proof of the assignment 738 1465. Assignee of corporation 739 1466. Delivery and acceptance 741 CHAPTER XXXIV. JOINT AND SEVERAL CONTRACTS. 1470. What is joint and what are several 742 1471. General rule stated — Rights of parties 743 1472. Illustrative cases — Joint contracts 744 1473. Joint contracts — Further illustrated 745 1474. Illustrative cases — Several contracts 745 1475. Illustrative cases — Joint and several contracts 747 1476. Intention of parties generally governs 748 1477. Form of promise as test 749 1478. Interest of parties as test 750 1479. Liability of joint obligors 750 1480. Contracts of subscription 751 1481. Subscription contracts further illustrated — May be joint 752 1482. Effect of release of one joint debtor 753 1483. As affected by the intention of the parties 754 TABLE OF CONTENTS. XXIU SECTION. PACE. 1484. Settlement with one joint debtor 755 1485. Covenant not to sue 757 1486. Effect of death of joint contractor at law 757 1487. The rule in equity 758 1488. Where the deceased joint debtor is surety 759 1489. When a surety's estate is held liable 760 1490. Contribution among joint debtors 760 1491. Contribution among sureties 762 1492. Actions on joint contracts 764 1493. Judgments on joint contracts 765 1494. Judgments on joint contracts further considered 767 1495. Actions on joint and several contracts 768 1496. Statutory modifications ^^^ 1497. Other statutory modifications 771 1498. Effect of statute of limitation 771 CHAPTER XXXV. INTERPRETATION AND CONSTRUCTION. 1505. Meaning of terms — Purpose 774 1506. No room for construction when contract is unambiguous 7"S 1507. Rules of construction generally 776 1508. Rules of construction generally — Intention of parties 778 1509. Rules of construction generally — Words understood in their or- dinary meaning 780 1510. Rules of construction generally — Language used evidences the intent "82 1511. Rules of construction generally — Technical terms 784 1512. Rules of construction — Commercial terms — Words used in legal sense 784 1513. General rules — Technical words governed by the intent 785 1514. Rules of construction generally — Whole instruments looked to 787 1515. Rules of construction generally — Construing particular clauses 789 1516. Rules of construction generally — Xoscitur a sociis 791 1517. Rules of construction generally — Surrounding circumstances 791 1518. Rule illustrated 793 1519. Rule concerning surrounding circumstances further considered.. 794 1520. Subsidiary rules of construction — Construction upholding con- tract preferred 796 1521. Subsidiary rules of construction — A reasonable construction will be adopted 798 1522. Subsidiary rules of construction — Construing several instruments together 800 1523. Contracts contained in more than one instrument further illus- trated 802 1524. The rule further illustrated 803 XXIV TABLE OF CONTENTS. SECTION. PAGE. 1525. Subsidiary rules of construction — Instruments partly written and partly printed 804 1526. Repugnant provisions must be irreconcilable 806 1527. Must not be construed to defeat intention of parties — Construc- tion of words and figures 806 1528. Subsidiary rules of construction — Doubtful words construed against the party using them 807 1529. Construction of grants by government 809 1530. Application of the rule 810 1531. Subsidiary rules of construction — Language to be understood in sense in which promisor knew or had reason to believe the other party understood it 811 1532. Subsidiary rules of construction — General and particular words^ Ejusdem generis 813 1533. Subsidiary rules of construction — Expressio unius est exclusio alterius 815 1534. Subsidiary rules of construction — Punctuation and grammar 816 1535. Subsidiary rules of construction — Rejecting and interpolating words 817 1536. Rejecting and interpolating words — Limits of rule 820 1537. Practical construction 821 1538. Contemporaneous and subsequent acts considered 823 1539. The rule illustrated 824 1540. Additional illustrations 825 1541. Must be the act of both parties 826 1542. Contract must be ambiguous 827 1543. Entire and severable contracts 828 1544. Contract consisting of several distinct items 829 1545. Illustrations of entire contracts 830 1546. Example of severable contracts 831 1547. Dependent and independent promises 832 1548. Alternative stipulations and options 833 1549. Rules as to time — Performance 833 1550. Computation of time from a particular day or a particular event. 834 1551. Time — Time at law generally of the essence of a contract 837 1552. Time — Relative to the sale of goods 838 1553. Conditions precedent 839 1554. When time is not of the essence of a contract 841 1555. Time not generally regarded in equity as of the essence of the contract 842 1556. Illustrations 843 1557. Where the property is subject to fluctuations in value 843 1558. Stipulations in regard to real estate 844 1559. Rules as to penalties and liquidated damages 845 1560. Illustrations 851 1561. Stipulations in building contracts 852 1562. Further illustrations of penalties 853 TABLE OF CONTENTS. XXV SECTION. PACE. 1563. The intention of the parties and nature of the agreement— Con- trolling guides 8o4 1564. Province of courts and jury in construing contract 855 1565. Province of court and jury further considered 858 1566. Oral contracts 859 CHAPTER XXXVL COVENANTS AND CONDITIONS. 1575. Generally — When words construed as covenant and when as con- dition 861 1576. Kinds of covenants — Dependent and independent — Mutual 863 1577. Time of performance 864 1578. Covenants construed as dependent 865 1579. Examples of covenants construed as independent 868 1580. Mutual promises — Reliance on remedy or condition 869 1581. Conditions in insurance policies 869 1582. Conditions in insurance policies — Suicide 872 1583. Examples of conditions precedent — Vendor and purchaser 874 1584. Examples of provisions held not conditions precedent in cases of vendor and purchaser 876 1585. Vendor and purchaser — Miscellaneous 877 1586. Conditions as to arbitration — Waiver 879 1587. Conditions and acts to be performed in sales of goods 880 1588. Sales of goods — Conditions to passing the title 881 1589. Sale of goods to arrive 882 1590. Sales of goods — Delivery by instalments 883 1591. Sales — Instalments — Review of cases 886 1592. Insolvency of buyer 887 1593. Conditional sales 888 1594. Form and construction of contract of conditional sales 890 1595. Transfer of rights under conditional sale 891 1596. Conditional sales— Rights of the parties on default 892 1597. Waiver of forfeiture and title 893 1598. Risk of loss — Destruction of the property 894 1599. Recording 895 1600. Miscellaneous matters concerning conditional sales 896 1601. Architect's or engineer's certificate of approval 897 1602. Architect's certificate — Illustrations 899 1603. Promise conditional upon approval of promisor 902 1604. Cases holding that right of approval must be exercised reasonably 903 1605. Cases holding right of approval absolute and unqualified — Good faith 905 1606. Failure to fully perform— Substantial performance 907 1607. Building contracts— Substantial performance 909 1608. Personal services 914 XXVI TABLE OF CONTENTS. SECTION. PAGE. 1609. Conditions in subscriptions generally 916 1610. Conditions in subscriptions to stock 918 1611. Conditions subsequent in deed — Subsequent defeasance 921 1612. Surety's bond signed under condition 922 1613. Time of performance — Reasonable time 923 1614. Waiver — Miscellaneous 924 CHAPTER XXXVII. PAROL EVIDENCE. 1620. Merger of negotiations in written contracts 926 1621. Extrinsic evidence not admissible to contradict or vary written contracts — General rule 929 1622. The rule illustrated — Transfers of real property 931 1623. The rule illustrated — Insurance contracts 931 1624. Bills and notes, promise to pay out of particular fund 932 1625. Contemporaneous contracts — To defeat validity or legal effect of note 933 1626. Contemporaneous agreement to pay note in property or work. . . . 935 1627. Miscellaneous illustrations 935 1628. Rule applies to what is implied by law as part of contract 937 1629. Limitations and qualifications of general rule 940 1630. Rule does not ordinarily apply to strangers 942 1631. Incomplete writings 942 1632. Existence and validity of contract 944 1633. Collateral and independent agreement 945 1634. Collateral agreements — Evidence held admissible 947 1635. Collateral agreements — Evidence held inadmissible 949 1636. Conditions precedent 951 1637. Conditions precedent — Bills and notes 952 1638. Conditions precedent — Sureties 954 1639. Conditions precedent — Rule further illustrated 954 1640. Subsequent agreements 955 1641. Object— Purpose— Intent 956 1642. Consideration 958 1643. One contract as consideration for another 960 1644. Bills of lading : 962 1645. Evidence to connect different writings 963 1646. Resulting trust 964 1647. Showing deed to be a mortgage 965 1648. Dates 966 1649. Illegality 967 1650. Fraud and duress 968 1651. Fraud — Illustrative cases 970 1652. Mistake 971 1653. ^Mistake — Illustrative cases 97i TABLE OF CONTENTS. XXVU SECTION. PAGE. 1654. Discharge — Performance — Waiver 974 1655. Parol evidence to aid interpretation 976 1656. Patent ambiguity 977 1657. Latent and patent ambiguity 978 1658. Another statement as to patent and latent ambiguity 981 1659. Identification of subject-matter 982 1660. Identification of subject-matter — Illustrative cases 985 1661. Meaning of words — Generally 986 1662. Translations and illegible writings 988 1663. Usage and custom 989 1664. Identification of parties 991 1665. Abbreviations, technical trade, and local terms 992 CHAPTER XXXVIII. Customs and usages. 1670. Introductory 997 1671. Usages defined 998 1672. Customs defined 999 1673. Local customs having the force of laws 1001 1674. Caution in the use of usages 1001 1675. Terms "laws" in treaties includes customs and usages 1002 1676. Legislative abolition of customs or usage 1002 1677. Requisites of a valid custom or usage 1003 1678. Custom or usage must be uniform and certain 1005 1679. Reasonableness of customs or usages 1007 1680. Reasonableness of custom or usage — Examples of customs in- valid for unreasonableness 1009 1681. Reasonableness of customs or usages — Examples of customs held not unreasonable 1010 1682. Necessity that custom should be general 1012 1683. Effect of occasional deviations from general custom 1014 1684. Necessity that custom or usage should be general — Illustrations of principle 1014 1685. Individual usages or practices 1015 1686. Antiquity as element of custom or usage 1016 1687. Antiquity — Illustration of principle 1018 1688. Legality of custom or usage 1019 1689. Legality of customs or usages — Customs which contravene public pohcy 1021 1690. Legality of customs or usages — Contravention of established legal principles 1022 1691. Legality of customs or usages — Contraventions of legal princi- ples — Illustrations 1023 1692. Legality of customs or usages — Contravention of statutes 1025 1693. Legality of railway and banking customs 1027 XXVlll TABLE OF CONTENTS. SECTIOX. PAGE. 1694. Effect of partial illegality of custom 1030 1695. Effect of adoption of usage by courts 1030 1696. Knowledge of custom or usage — Essential 1030 1697. Presumption of knowledge of usage 1033 1698. Presumption of knowledge continued — As to railroads and banks 1036 1699. Knowledge of established custom 1036 1700. Particular usages without binding force for want of knowledge. .. 1037 1701. Necessity of knowledge of usage giving arbitrary meaning to words 1038 1702. Mississippi doctrine of presumption of knowledge 1041 1703. Usage in violation of rules 1042 1704. Agent's knowledge imputed to principal — Bill of lading — Charter party 1042 1705. Custom or usage to explain contract 1043 1706. Custom or usage to show intention of parties 1045 1707. Construction of words in contract 1046 1708. Construction of words of contract — Unusual and technical words. . 1049 1709. Contract not created by custom or usage 1050 1710. Incorporation of custom or usage in contract 1051 1711. Incorporation of custom in contract — Custom as to pro rata de- livery of manufactured articles 1054 1712. Custom construed — Charter party — Demurrage 1054 1713. Express contract may not be varied or contradicted by custom or usage 1055 1714. Test of variance 1059 1715. Customs and usages may not vary express contracts — Illustra- tions 1059 1716. Exclusion of custom or usage by express contract 1051 1717. Implied exclusion of custom by terms of contract 1062 1718. Cases illustrating the rule of implied exclusion of customs 1063 1719. Implied exclusion of custom or usage where controversy relates solely to terms of contract 1064 1720. Presumption of intent to include usage in contract 1065 1721. Custom or usage to explain matters on which contract is silent — Adding to terms of contract 1066 1722. Illustrative cases of added terms 1067 1723. Usage to explain meaning of unambiguous terms having a pecu- liar meaning 1069 1724. Test to determine whether instrument to be interpreted by cus- tom or usage 1071 1725. Warranty may not be added 1071 1726. Strict construction of usage 1072 ^ 1727. Usages relating to bills of lading and shipping contracts 1072 1728. Custom making bills of lading negotiable 1073 1729. Effect of custom on liability of connecting carriers 1074 1730. Custom as to delivery of goods to carrier 1075 1731. Usage as to capacity of cars 1076 1732. Custom and usage as to delivery of goods by carrier 1076 TABLE OF CONTEXTS. XXIX SECTION. P''^^^- 1733. Custom as to delivery of goods by carrier by water 1077 1734. Custom as to notice to consignee of arrival of goods 1079 1735. Customs as to delivery of baggage to carrier 1079 1736. Usages allowing passengers to carry packages on trains 1080 1737. Usage as to furnishing refrigerator cars 1081 1738. Guaranty of freight bills 1081 1739. Effect of usage on transaction of business at stockholders' meet- ing — Usage as by-law 1081 1740. Corporate lien on stock by usage or custom 1082 1741. Creation and amendment of corporate by-laws by custom or usage 10>^2 1742. Powers of president of corporation inferred from usage, custom or habit of acting 1083 1743. Duties of treasurer as affected by custom or usage 1084 1744. Effect of usage or custom on right of corporate officer to com- pensation 1085 1745. Usages as to ownership of dividends 108& 1746. Insurance customs and usages generally 1086 1747. Usage as to authority of insurance agents 1087 1748. Custom to notify insured of maturity of premium 1088 1749. Notice of cancelation of policy 1089 1750. Customs as to re-insurance 1090 1751. Custom of paying losses not covered by policy 1090 1752. Origin of banking customs 1091 1753. Essentials of good bank usage 1092 1754. Customs and usages must not be unreasonable 1093 1755. Bank usages as to powers and duties of officers 1093 1756. Cashier's powers and duties affected by usage 1094 1757. Certification of checks 1095 1758. Custom of bank to pay notes out of depositor's funds 1095 1759. Interest on overdrafts 1095 1760. Local custom of banks as to substituted check 1096 1761. Custom as to days of grace 1096 1762. Presumption of knowledge of bank custom where note payable at bank 1096 1763. Bank usage as to demand and notice 1097 1764. Mailing notice of protest 1099 1765. Collection customs of banks 1099 1766. Collection customs of banks — Customs will not excuse negligence 1101 1767. Custom of sending collection to drawee condemned 1102 1768. Collection customs — Remittance of proceeds 1103 1769. Value of foreign money 1104 1770. Customs and usages in master and servant relation 1104 1771. Customs and usages in principal and agent relation 1106 1772. Principal and agent — Authority of agent 1108 1773. Brokers and factors IHO 1774. Usage of brokers to treat stock certificates as negotiable paper.. 1111 1775. Use of stock of customer by broker 1112 XXX TABLE OF CONTENTS. SECTION. PAGE. 1776. Sale of collateral securities to enforce pledge 1112 1777. Landlord and tenant 1113 1778. Measurements and weights 1114 1779. Partnership customs and usages 1116 1780. Sales of goods 1117 1781. Charges for professional services 1118 1782. Interest on contracts 1119 1783. Theatrical and amusement contracts 1119 1784. Custom of sending telegraph message by telephone 1120 1785. General custom need not be specially pleaded 1120 1786. Local customs and usages must be pleaded 1120 1787. Customs and usages as evidence need not be pleaded 1122 1788. Technical meaning of words need not be pleaded 1122 1789. Pleading local usage in action for compensation 1122 1790. Judicial notice of customs and usages 1123 1791. Judicial notice — Examples 1123 1792. Proof preliminary to admission of evidence of usage or custom. . 1126 1793. Burden of proof of custom or usage 1127 1794. Presumption of knowledge of usage 1127 1795. Character of evidence to establish custom or usage 1129 1796. Opinion evidence as to customs or usages 1130 1797. Competency of experts on question of custom or usage 1131 1798. Number of witnesses required to establish custom 1133 1799. Parol proof of usage or custom 1134 1800. Custom or usage not established by proof of isolated instances.. 1137 1801. Evidence of knowledge of custom or usage 1138 1802. Evidence of custom of prompt payment or collection 1139 1803. The South Carolina rule as to evidence of custom to vary contract 1139 1804. Custom or usage as question of law or fact 1141 1805. Knowledge of question for jury 1142 CHAPTER XXXIX. TRADE CONTRACTS, 1810. Introductory 1 145 1811. Construction of particular terms in contracts of sale, barter or exchange generally 1146 1812. Abbreviations generally 1148 1813. "Sales on credit" — "Time sales." 1148 1814. "Cash sale" — "Terms cash" 1148 1815. "Cost"— "Actual cost"— "Wholesale cost" 1148 1816. "More or less" in sales of personalty 1149 1817. "More or less" in descriptions of land 1151 1818. "About"— "Almost" 1153 1819. "Say" and "say about" 1 154 TABLE OF CONTENTS. XXXI SECTION. PAGE. 1820. Terms relating to time, "year," "month," "week," "day," "Sun- day" 1 155 1821. "From and after" — "On" — "Or before" — "On or about" — "Since". 1156 1822. "Until"— "By" — "Forthwith" — "Immediate" — "Presently"— "At once" 1158 1823. Sale on trial 1160 1824. Interest with respect to transfer of property right — "Interest in land" — ".As interest may appear" 1160 1825. "C. O. D." and "F. O. B." 1161 1826. "Carloads" 1162 1827. "On sale and return" 1 163 1828. "Satisfactory" 1163 1829. "For collections" 1164 1830. "Dollar"— "Greenbacks" 1164 1831. "Supplies" 1164 1832. "Rcgrating" and "Forestalling" 1165 1833. "Stock in trade" 1165 1834. Terms used in grain and lumber contracts 1165 1835. "Strike" clauses 1165 1836. "Extra" in building contract 1166 1837. "Agency," "agent," "sub-agent," "attorney in fact" 1166 1838. Construction of conditions and warranties 1 166 1839. Terms relating to position, "near," "abutting," "adjacent," "con- tiguous," "on," "meander line" 1 167 1840. "Guaranty," "unlimited guaranty," "primarily liable," "secondarily liable," "surety" 1168 1841. Terms used in dealing with real estate 1169 1842. "Real estate," "vested estate," "perpetuity," "appurtenant" 1170 1843. "Conditional estates," "conditions" in deeds, "defeasances," "ven- dor's lien." 11' 1 1844. "Lease" or "license," "sub-tenant" 1172 1845. "All crops grown and to be grown" 1172 1846. Miscellaneous terms 1 17- ELLIOTT ON CONTRACTS CHAPTER XXI. LEGALITY OF OBJECT. 1645. Generally. 646. Means by which contract ren- dered illegal immaterial. 647. Agreements in violation of positive law. 648. Contracts prohibited by statute generally void. 649. Agreements contrary to public policy — Generally. 650. Broad statement of the rule concerning public policy crit- icised. 651. Public policy— What deter- mined by. 652. Contracts against public policy void. 653. Agreements contrary to ex- press rules of common \zw — Generally. 654. Agreements involving commis- sion of crime. 655. Agreements involving commis- sion of a civil wrong. 656. Agreements involving fraud. €57. Contracts which cannot be per- formed without defrauding third persons. 658. Conspiracy to defraud third persons. 659. Rule further illustrated. 660. Agreements to defraud cred- itors. 661. Conveyance of property to de- fraud creditors. 662. Who may avoid such convey- ance. 663. Agreements contemplating pub- lication of libel. 664. Agreements mala in se and agreements mala prohibita. I 665. Basis of the rule. 666. Penalties generally import or imply prohibition. 667. When penalty does not imply prohibition. 668. Different tests applied by dif- ferent courts to determine legislative intent. 669. Revenue measures — Statutes for protection of public. 670. Omission of penalty does not render express prohibition ineffective. 671. Agreements may be forbidden yet not void where statutes so provide. 672. Illustrations of the rule. 673. Rule where conditions pre- scribed for conducting busi- ness are not complied with. 674. Illustrations of the rule. 675. Attempting to do indirectly what cannot be done directly. 676. Contracts growing out of or connected with illegal con- tracts. 677. Modified rule stated. 678. Rule where aid is required for illegal contract to establish case. 679. Illustrations of the rule. 680. Rule where illegal contract is abandoned or merely collat- eral. 681. Collateral contracts of insur- ance, surety and loans. 682. Contracts containing several distinct undertakings. 683. Repeal of statutes— Contract valid under existing law. 1 — CoNTR.^cTS, Vol. 2 CONTRACTS. 684. Repeal of statutes — Contract § 713. void under existing law. 685. Repeal of statutes — Impairing obligation of contract. 714. 686. Ratification. 687. Violation of federal statutes. 715. 688. Violation of liquor laws. 689. Violation of liquor laws — Knowledge of vendee's un- lawful intent. 716. 690. Violation of liquor laws — Fur- ther illustrations. 691. Sunday contracts. 717. 692. Violation of statute as to gam- ing or wagering. 693. Wagering contracts at common 718. law. 719. 694. Wagering contracts — Present status. 695. Violation of statute as to lot- 720. teries. 695a. Elements essential to exist- 721. ence of a lottery. 696. Guessing contests as lotteries. 722. 697. Tailor suit clubs — Accumulated funds distributed by chance, 723. and the like. 698. Solution of a problem not a lottery. _ 724. 699. Bailee's refusal to deliver up property won at a raffle. 725. 700. No lottery when element of chance is wanting. 726. 701. Giving of trading stamps not a lottery. 727. 702. No lottery when element of consideration wanting. 728. 703. Collateral contracts — Rights of vendor and vendee, inter se. 729. 704. Violation of the statute as to usury. 730. 705. Agreements contrary to public policy — Classification. 731. 706. Agreements tending to official corruption or injury of the 1Z2. public. 707. Tending to official corruption TiZ. — Interest of public official. 708. Tending to official corruption — Contracts for materials. 734. 709. Tending to official corruption — Location of public build- 735. ings. 710. Tending to official corruption 736. — Indemnity bond. 711. Tending to official corruption — Influencing appointments IZl . to office. 712. Tending to official corruption — Payment of campaign ex- penses and the like. Tending to official corruption — Contract to take more or less than statutory fee. Agreements tending to corrupt citizens as to public duties. Agreements tending to ob- struct or pervert justice — ■ Compounding crimes and the like. Obstructing j u sti c e — Com- pounding crimes — Misde- meanors. Obstructing justice — Com- pounding offences — Object must be to stifle prosecution. Miscellaneous illustrations. Agreements tending to obstruct or pervert justice — Civil pro- ceedings. Civil actions — Fraud on the court. justice — Securing justice — Paying justice — Hiring to leave state and Obstructing evidence. Obstructing witnesses. Obstructing witnesses the like. Obstructing justice — Indemnity to sureties. Ousting jurisdiction or limit- ing powers. Ousting jurisdiction — Submis- sion to private individual. Ousting jurisdiction — Condi- tion precedent. Ousting jurisdiction — Certifi- cate of architect and the like. Ousting jurisdiction — Notice of claim. Ousting jurisdiction — Further illustrations. Agreements tending to encour- age litigation. Encouraging litigation — Cham- perty and maintenance. Encouraging litigation — Cham- perty — Modifications of rule concerning. Encouraging litigation — Cham- perty — Attorney and client. Encouraging litigation — Cham- perty — Right to compromise. Encouraging litigation — Cham- perty — Recovery of quantum meruit. Encouraging litigation — Cham- perty — Defense of — When available. LEGALITY OF OBJECT. § 645 (738. Agreements tending to cor- §761. rupt morals. 762. 739. Corrupting morals — L e 1 1 i n g house for brothel — Prosti- 763. tute's board. 764. 740. Corrupting morals — Leasing 765. house for brothel. 741. Immoral consideration — Illicit intercourse. 766. 742. Immoral consideration — Exist- ing contract to marry. 743. Immoral consideration — Prom- 767. ise by putative father. 744. Immoral consideration — Con- tracts to act as housekeeper. 745. Immoral consideration — Ex- 768. ecuted contract. 746. Immoral consideration — Past immoral acts. 769. 747. Agreements tending to corrupt morals — Miscellaneous. 770. 748. Agreements tending to induce fraud or breach of trust. 749. Inducing breach of trust — Ofifi- cers of corporation. 771. 750. Inducing breach of trust — Pub- 112. lie service corporation. 75L Inducing breach of trust — Other applications of rule. IIZ. 152. Agreements of a gambling or wagering nature. 774. 753. Agreements in derogation of marriage — Restraint of mar- 775. riage. 776. 754. Derogation of marriage — Mar- 171. riage brokage contracts. 755. Derogation of m a r r i a g e — Agreements made in view of 778. future separation. 756. Derogation of marriage — 779. Duties imposed by law. 757. Derogation of marriage — Fa- 780. cilitating divorce. 758. Agreements in restraint of 781. trade. 759. Agreements suppressing com- petition or sales or public 782. lettings. 760. Bidders may combine re- sources. One may bid for benefit of all. Bids or proposals for govern- ment work and the like. Rule further illustrated. Honest co-operation permitted. Agreements exempting from liability for negligence — Con- tracts with carrier. Agreements exempting from liability for negligence — Rea- son for the rule. Agreements exempting from liability for negligence — Eva- sion by stipulation that goods are shipped at owner's risk. Exempting from liability — Eva- sion by stipulation against presumption of negligence. Exempting from liability — Rule in New York. Limitation of liability to dam- ages resulting from gross negligence allowed in some states. Limiting common-law liability. Validity of stipulation exempt- ing carrier from liability to passenger for negligence. Persons riding on passes — Basis of decisions. Rule given further considera- tion. Degrees of negligence. Who is a passenger. Agreements exempting em- ployer from liability for neg- ligence. Valid contracts limiting liabil- ity of employes. Valid contracts — Negligence of fellow servant. Valid contracts — Criminal neg- ligence. Contracts against liability for negligence — Miscellaneous instances. Unclassified illegal agreements — Miscellaneous cases. § 645. Generally. — The object or subject-matter of a con- tract has been defined as "that concerning which something is done."^ All authorities agree that the object of a contract must be legal. No court will lend its assistance in any way towards 'Miller v. Miller, 104 Iowa 186, 13 N. W. 484. § 64: CONTRACTS, carrying out the terms of an illegal contract." The law will not lend its support to a claim founded upon its violation.^ Those contracts are illegal which have for their object anything which is repugnant to the general policy of the common law or contrary to the provisions of any statute or against morality, or against the principle of sound public policy/ But the principle that no court will lend assistance to one who founds his cause of action upon an illegal act applies in general only when it appears that the very party who is seeking aid from the court participated in the unlawful purpose. It has been said that the test of its applica- tion is whether the plaintiff can establish his case otherwise than through the medium of an illegal transaction to which he himself is a party.^ The term "illegal" is in many cases loosely applied, and is made to include all void contracts, and also contracts that are only voidable. Thus the ultra vires contracts of a corporation have been termed illegal or unlawful.'^ " Claflin V. United States Credit Svstem Co., 155 Mass. 501, 43 N. E. 293; Citizens' Nat. Bank of Chick- asha V. Mitchell, 24 Okla. 488, 103 Pac. 720; ^IcMullen v. Hoffman, 174 U. S. 639, 654, 43 L. ed. 1117, 19 Sup. Ct. 839. ' Shenk V. Phelps, 6 111. App. 612 ; Crichfield v. Bermudez Asphalt Pav- ing Co., 174 111. 466, 51 N. E. 552; Emerv v. Kempton, 2 Gray (Mass.) 257; Edelmuth v. McGarren, 4 Daly (N. Y.) 467; Holt v. Green, IZ Pa. St. 198; Coppell v. Hall, 7 Wall. (U. S.) 542, 19 L. ed. 244. "Courts are instituted to carry into effect the laws of a country; how can they then become auxiliary to the consumma- tion of violations of law?" Bank of United States v. Owens, 2 Pet. (U. S.) 527, 7 L. ed. 508. To the same effect, Berka v. Woodward, 125 Cal. 119, 57 Pac. m, 45 L. R. A. 420, IZ Am. St. 31 ; Dolson v. Hope, 7 Kans. 161 ; Sprague v. Roonev, 104 Mo. 349, 16 S. W. 505; Fowler v. Scully, 72 Pa. St. 456, 13 Am. Rep. 699. No legal right can arise out of a con- tract which promotes or is intended to promote a violation of law. Pipes V. Boston & M. R. Co., 75 N. H. 435, 75 Atl. 1041. An illegal contract creates no obligation. Greenwald v. Weir, 59 Misc. (N. Y.) 431, 111 N. Y. S. 235. ■•Lingle v. Snyder, 160 Fed. 627, 87 C. C. A. 529; Goodrich v. Tenney, 144 111. 422; Reynolds v. Nichols, 12 Iowa 398; Haggerty v. St. Louis Ice Mfg. & Storage Co., 143 Mo. 238, 44 S. W. 1114; Hunt v. Knickbacker, 5 Johns. (N. Y.) 327; Thalimer v. Brinkerhoff, 20 Johns. (N. Y.) 386; Heart v. East Tennessee Brewing Co., 121 Tenn. 69, 113 S. W. 364, 19 L. R. A. (N. S.) 964n, 130 Am. St. 753 ; Lemon v. Grosskopf , 22 Wis. 447, 2 Kent's Comm. 466. See also, Lambert Hoisting Engine Co. v. Paschall, 151 N. Car. 27, 65 S. E. 523. 'State v. Bevers, 86 N. Car. 588; Electrova Co. v. Spring Garden Ins. Co., 156 N. Car. 232, 72 S. E. 306. See also, ante, § 556 et seq. ^ Buckeye Marble &c. Co. v. Har- vey, 92 Tenn. 115, 20 S. W. 427, 18 L. R.A. 252, 36 Am. St. 71. But as is pointed out in the chapter on Private Corporations, such contracts cannot properly be termed illegal. They may be illegal but are not necessarily so. See ante, § 556 et seq. See also, Gor- rcll V. Home Life Ins. Co., 63 Fed. 371. The term has also been applied to contracts entered into by agents in LEGALITY OF OBJECT. § 646 ^ 646. Means by which contract rendered illegal immate- rial. — If the object of the contract is in fact illegal, it is imma- terial whether such agreement is forbidden by the Constitution of the United States/ or of a state,® by statutory enactment, state" or federal/" by a United States treaty," by the ordinance of a city,^" by the common law/^ or whether the thing forbidden is malum in se or malum prohibitum.^* excess of their authority. This is clearly a misuse of the term. See, ante, § 556 et seq. Although all con- tracts to do an illegal act are invalid, it is not true that all illegal contracts call for the doing of an act that is illegal. Lovell v. Boston &c. R. Co., 75 N. H. 568, 78 Atl. 621, 34 L. R. A. (N. S.) 67n. ' Patton V. Gilmer, 42 Ala. 548, 94 Am. Dec. 665 ; Gandolfo v. Hartman, 49 Fed. 181; Craig v. Missouri, 4 Pet. (U. S.) 410, 7 L. ed. 903; Litch- field V. Ballou, 114 U. S. 190, 29 L. ed. 132, 5 Sup. Ct. 820. *Garms v. Jensen, 103 Cal. 374, 2,7 Pac. 2i7; Oakland Pav. Co. v. Hil- ton, 69 Cal. 479, 11 Pac. 3; Edwards County V. Jennings, 89 Tex. 618, 35 S. W. 1053; San Antonio Irr. Co. v. Deutschmann, 102 Tex. 201, 114 S. W. 1174. ° Persons v. Jones, 12 Ga. 371, 58 Am. Dec. 476; Penn v. Bornman, 102 111. 523; McNulta v. Bank, 164 111. 427, 45 N. E. 954, 56 Am. St. 203; Naglebaugh v. Harding &c. Mining Co., 21 Ind. App. 551, 51 N. E. 427; Moorehouse v. Kukalman (Ind.), 96 N. E. 600; Mcintosh v. Wilson, 81 Iowa 339. 46 N. W. 1003; Wheeler V. Russell, 17 Alass. 258; Cobbs v. Hixson, 75 Mich. 260, 42 N. W. 818, 4 L. R. A. 682; Handy v. Publishing Co.. 41 Minn. 188, 42 N. W. 872, 4 L. R. A. 466. 16 Am. St. 695 ; Wilson V. Parrish, 52 Nebr. 6, 71 N. W. 1010; Brooks V. Cooper, 50 N. J. Eq. 761, 26 Atl. 978, 21 L. R. A. 617, 35 Am. St. 793; Ft. Edward v. Fish. 156 N. Y. Z62>, 50 N. E. 973 ; Columbia Bank & Bridge Co. v. Haldeman, 7 Watts. &- S. (Pa.) 233, 42 Am. Dec. 229; Fowler v. Scully, 72 Pa. St. 456. 13 Am. Rep. 699; Olson v. Sawvcr- Goodman Co., 110 Wis. 149, 85 N. W. 640, 53 L. R. A. 648. A contract by which one gives away all her property without retaining an amount sufficient to support herself, subject to a provision that the donee shall thereafter maintain her, has been held void as against a statute which pro- vides that a donor can not divest himself of all his property. Acker- man V. Larner, 116 La. 101, 40 So. 581. '"Hawley v. Coal Co., 48 Kans. 593, 30 Pac. 14; Jones v. Blacklidge, 9 Kans. 562, 12 Am. Rep. 503 (viola- tion of both state and federal law) ; Cherokee Strip Live &c. Assn. v. Cass Land & Cattle Co., 138 Mo. 394, 40 S. W. 107. See also. Gulf Pipe Line Co. v. Vanderberg, 219 U. S. 467, 55 L. ed. 297, 31 Sup. Ct. 265, 34 L. R. A. (N. S.) 671. "Gandolfo v. Hartman, 49 Fed. 181, 16 L. R. A. 277n. ^"Denning v. Yount, 62 Kans. 217, 61 Pac. 803, 50 L. R. A. 103; ^lilne v. Davidson, 5 Martin (La.) (N. S.) 409, 16 Am. Dec. 189; Miller v. Am- mon, 145 U. S. 421, 36 L. ed. 759, 12 Sup. Ct. 884. "Thomas v. First Nat. Bank. 116 111. App. 20, affd. 213 111. 261, 72 N. E. 801; Indianapolis &c. R. Co. v. Ervin, 118 111. 250, 8 N. E. 862, 59 Am. Rep. 369; Bishop v. Palmer, 146 Mass. 469, 16 N. E. 299, 4 Am. St. 339; Messenger v. R. Co., 36 N. J. L. 407, 13 Am. Rep. 457; Wvckoff v. Weaver, 66 N. J. L. 648, 52 Atl. 356 ; Nellis V. Clark, 20 Wend. (N. Y.) 24. 27, affd. 4 Hill (N. Y.) 424. "Gardner v. Tatum, 81 Cal. 370, 22 Pac. 880; Union Nat. Bank v. Louisville N. A. & C. R. Co., 145 111. 208. 34 N. E. 135; Penn v. Bornman, 102 111. 523; Pike v. King, 16 Iowa 40; White v. Buss, 3 Cush. (Mass.) 448; Haggertv v. Storage Co., 143 ^lo. 238. 44 S. W. 1114, 65 Am. St. 647; Pennington & Kean v. Town- send, 7 Wend. (N. Y.) 276; Cansler v. Pcnland. 125 N. Car. 578, 34 S. E. 683, 48 L. R. A. 441; Holt v. Green, 647 CONTRACTS. § 647. Agreement in violation of positive law. — A con- tract which is prohibited by the positive provisions of a consti- tutional statute is void. This is well settled. ^^ So it has been held not only that parties cannot agree so as to bind themselves by parol covenants which the law requires to be in writing, but also that they cannot bind themselves by an agreement that contracts which the law permits to be made orally shall not be valid unless 72, Pa. St. 198; Gibbs v. Consolidated Gas Co., 130 U. S. 396, 32 L. ed. 979, 9 Sup. Ct. 553; Bank of United States V. Owens, 2 Pet. (U. S.) 527, 539, 7 L. ed. 508; Melchoir v. AIc- Carty, 31 Wis. 252, 11 Am. Rep. 605. See post, § 664. Compare, however, Hughes V. Snell (Okla.), 115 Pac. 1105, 34 L. R. A. (N. S.) 1133. "Jackson v. Davison, 4 B. & Aid. 691 ; Rogers v. Kingston, 10 Moore 97, 2 Bing. 441 ; Murray v. Reeves, 8 B. & C. 421 ; Hall v. Dyson, 16 Jur. 270, 21 L. J. C. B. 224, 17 Q. B. 785 ; Hills V. Mitson, 8 Exch. 751 ; Cope V. Rowlands, 2 M. & W. 149; Watts V. Brooks, 3 Ves. Jr. 612; Victorian Davlesford Syndicate v. Dott. 74 L. J. Ch. (N. S.) 673 (1905), 2 Ch. 624, 93 L. T. 627, 21 Times L. R. 742; Cun- dell V. Dawson, 4 C. B. Z76; Brown V. Moore, 32 Can. S. C. 93 ; Arkan- sas Stave Co. v. State, 94 Ark. 27, 125 S. W. 1001, 27 L. R. A. (N. S.) 255n, 140 Am. St. 103 ; Compagionette V. McArmick, 91 Ark. 69, 120 S. W. 400; Berka v. Woodward, 125 Cal. 119, 57 Pac. 777, 45 L. R. A. 420. 75 Am. St. 31 ; Skelton v. Bliss, 7 Ind. 77; Western U. Teleg. Co. v. Yopst, 118 Ind. 248, 20 N. E. 222, 3 L. R. A. 224n ; Naglebaugh v. Harder &c. Min- ing Co., 21 Ind. App. 551, 51 N. E. 427; Hill v. Smith, Morris flowa) 70; Watrous v. Blair, 32 Iowa 58; Pangborn v. Westlake, 36 Iowa 546; Vanmeter v. Spurrier, 94 Ky. 22, 21 S. W. 337; Collins v. Lewiston, 107 IMaine 220, 77 Atl. 834; Robinson v. Barrows, 48 Maine 186; Durgin v. Dyer, 68 Maine 143; Bowditch v. New England Mut. Life Ins. Co., 141 Mass. 292, 4 N. E. 798, 55 Am. Rep. 474; Deans v. McLendon, 30 Miss. 343; Williams v. Tappan, 23 N. H. 385 ; Cannon v. Cannon, 26 N. J. Eq. 316; Kreiss v. Seligman, 8 Barb. (N. Y.) 439, 5 How. Pr. (N. Y.) 425; Pratt v. Short, 79 N. Y. 437, 35 Am. Rep. 531; Burger v. Koelsch. 77 Hun (N. Y.) 44, 59 N. Y. St. 69, 28 N. Y. S. 460; Peck v. Burr, 10 N. Y. 294; Pease v. Walsh, 7 Jones & S. (N. Y.) 514; Sharp v. Farmer, 4 Dev. & B. L. (N. Car.) 122; Spurgeon v. McElwain, 6 Ohio 442, 27 Am. Dec. 266; Rossman v. McFarland, 9 Ohio St. 369; Seiden- bender v. Charles, 4 Serg. & R. (Pa.) 151, 8 Am. Dec. 682; Atherton v. Wilkes-Barre, 3 Kulp (Pa.) 402; Fowler v. Scully, 72 Pa. St. 456, 13 Am. Rep. 699; Holt v. Green, 72, Pa. St. 198, 13 Am. Rep. 737; Birkett v. Chatterton, 13 R. I. 299, 43 Am. Rep. 30; Gilliland v. Phillips, 1 S. Car. 152; Perkins v. Watson, 2 Baxt. (Tenn.) 173; Stevenson v. Ewing, 87 Tenn. 46, 9 S. W. 230; Keith v. Foun- tain, 3 Tex. Civ. App. 391, 22 S. W. 191; In re Pittock, 2 Sawy. (U. S.) 416, Fed. Cas. No. 11189; Hayden v. Davis, 3 McLean (U. S.) 276, Fed. Cas. No. 6259; Deaton v. Lawson, 40 Wash. 486, 82 Pac. 879, 2 L. R. A. (N. S.) 392, 111 Am. St. 922; Mel- choir V. McCarty, 31 Wis. 252, 11 Am. Rep. 605. No one has a right to enter into a contract where the obligation imposed by it cannot be performed by the other party without violation of law. Edgar Lumber Co. v. Cornie Stave Co., 95 Ark. 449, 130 S. W. 452. No en forcible prom- ise or obligation grows out of a con- tract prohibited by statute. Security Life & Annuity Co. v. Costner, 149 N. Car. 293, 63 S. E. 304. There can be no recovery for acts or services rendered or property sold in direct contravention of a statute. Harding V. Hagar, 60 Maine 340. Where a contract shows on its face that it is in contravention of a statute the stat- ute need not be pleaded to raise the question of illegality. Shohoney v. LEGALITY OF OBJECT. § 648 in writing.^" A contract may be illegal even though it does not contravene the specific directions of a statute if it be opposed to the general policy and intent of the statutory law." The statu- tory prohibition may be either express or implied/^ § 648. Contract prohibited by statute generally void. — Contracts prohibited by statute are, as a general rule, void not- withstanding the statute does not expressly declare them to be so, especially where a penalty is attached for its violation." Thus, under a statute which provided that oats and meal should be sold "by the bushel'' it has been held that selling by the bag amounted to disobeying a prohibition and that no action could be Quincy &c. Co., 231 Mo. 131, 132 S. W. 1059, Ann. Cas. 1912A. 1143. Un- less of course the statute provides the consequences that shall attach to its violation. See post, § 671. As to the duty of the court sua sponta to refuse to entertain an action on an illegal contract, see O'Brien v. Shea, 208 Mass. 528. 95 N. E. 99. Ann. Cas. 1912A. 1030 and note. No right can be founded on a violation of the law. Moorehouse v. Kukalman (Ind.), 96 N. E. 600. " Northwestern Nat. Ins. Co. of IMilwaukee v. Avant, 132 Ky. 106, 116 S. W. 274. See post, chap. 30. " Staines v. Wainwright, 6 Bing. N. C. 174; Phillpott v. St. George's Hospital, 6 H. L. Cas. 338; De Beg- nis V. Armistead, IG Bing. 107; Guen- ther V. Dewien. 11 Iowa 133; Van- meter V. Spurrier, 94 Ky. 22, 21 S. W. 337 ; Roby v. West, 4 N. H. 285, 17 Am. Dec. 423; Hunt v. Knicker- backer, 5 Johns. (N. Y.) 327; Wet- more V. Brien, 3 Head (Tenn.) 723; Mcintosh V. Renton, 2 Wash. Ter. 121, 3 Pac. 830. "Cope V. Rowlands. 2 Mees. & W. 149; Victorian Daylesford Syndicate V. Dott, 74 L. J. Ch. (N. S.) 673 (1905), 2 Ch. 624, 93 L. T. 627, 21 Times L. R. 742; Cundell v. Dawson, 4 C. B. 376; Macdonald v. Riordan, Rap. Jud. Quebec. 8 B. R. 555 ; Cook V. Pierce, 2 Ploust. (Del.) 499; Siter V. Sheets. 7 Ind. 132; Barton v. Port Jackson &c. Road Co., 17 Barb. (N. Y.) 397; Gilliland v. Phillips, 1 S. Car. 152; Perkins v. Watson. 2 Baxt. (Tenn.) 173; Ohio Life Ins. &c. Co. V. Merchants' Ins. &c. Co., 11 Humph. (Tenn.) 1, 53 Am. Dec. 742 ; Stevenson v. Ewing, 87 Tenn. 46, 9 S. W. 230; Harris v. Runnels, 12 How. (U. S.) 79, 13 L. ed. 901; Elkins V. Parkhurst, 17 Vt. 105. "Youngblood v. Birmingham Trust & Sav. Co., 95 Ala. 521, 12 So. 579, 20 L. R. A. 58, 36 Am. St. 245; O'Donnell v. Sweeney, 5 Ala. 467, 39 Am. Dec. 336; Woods v. Armstrong, 54 Ala. 150, 25 Am. Rep. 671 ; Tucker V. West, 29 Ark. 386; Swanger v. Mavberrv, 59 Cal. 91; People v. Whitesides, 122 111. App. 40; Watkins Med. Co. V. Paul, 87 111. App. 278; Skelton v. Bliss, 7 Ind. 77; Cashin v. Pliter, 168 Mich. 386. 134 N. W. 482; Columbia Bank & Bridge Co. v. Haldeman, 7 Watts & S. (Pa.) 233, 42 Am. Dec. 229; Lutz v. Weidner, 1 Woodw. Dec. (Pa.) 428; Seiden- bender v. Charles, 4 Serg. & R. (Pa.) 151. 8 Am. Dec. 682; Harrison v. Berkley, 1 Strob. L. (S. Car.) 525, 47 Am. Dec. 578; Territt v. Bartlett, 21 Vt. 184; Wilson v. Spencer, 1 Rand. (Va.) 76, 10 Am. Dec. 491; Middle- ton V. Arnolds, 13 Grat. (Va.) 489. A contract prohibited by law is void regardless of whether the act pro- hibiting it expressly so declares it or not. Swing v. Sligo Furnace Co.. 133 111. App. 217. To same effect. Swing v. Dayton, 124 App. Div. (N. Y.) 58, 108 N. Y. S. 155. But see, as to rev- enue statutes, Hughes v. Snell. 28 Okla. 828. 115 Pac. 1105. 34 L. R. A. (N. S.) 1133, and cases cited; also post, § 669. § 649 CONTRACTS. 8 maintained for the price.=° The same has been held true under a statute which required goods to be branded, tagged, or labeled, where such goods were sold in contravention of this statutory provision-^ and so where untested weights and measures are used when the statute requires them to be tested and sealed by the proper officer." In short, any attempt to contravene the policy of a public statute is illegal notwithstanding the absence of any express prohibition in the statute condemning the means adopted.-^ Agreements in violation of positive law will be sub- divided and treated more at length in the subsequent sections of this chapter. § 649. Agreements contrary to public policy — Generally. — Under this head might be included all illegal contracts, for con- tracts that are illegal are certainly in contravention of public policy. By public policy is meant that principle of law which holds that no citizen can lawfully do that which has a tendency to injure the public or which is against the public good.-* And in =" Eaton V. Kegan, 114 Mass. 433. =^ Campbell v. Segars, 81 Ala. 259, 1 So. 714; Pacific Guano Co. v. Mul- len, 66 Ala. 582; Johnston Bros. & Co. V. McConnell, 65 Ga. 129; Con- ley V. Sims, 71 Ga. 161; Van Meter V. Spurrier, 94 Ky. 22, 21 S. W. 2,i7 ; Abbott V. Goodwin, 2)7 Maine 203; Buxton V. Hamblen, 32 Maine 448; Richmond v. Foss, 77 Maine 590, 1 Atl. 830; Prescott v. Battersby, 119 Mass. 285 ; Braunn v. Keally, 146 Pa. 519, 23 Atl. 389, 28 Am. St. 811; Mc- Connell V. Kitchens, 20 S. Car. 430, 47 Am. Rep. 845; Niemeyer v. Wright, 75 Va. 239, 40 Am. Rep. 720. ^ Finch V. Barclay, 87 Ga. 393, 13 S. E. 566; Smith v. Arnold, 106 Mass. 269; Sawyer v. Smith, 109 Mass. 220; Bisbee v. McAllen, 39 Minn. 143, 39 N. W. 299. ^ Sharp V. Teese, 9 N. J. L. 352. ^ Everton v. Brownlow, 4 H. L. Cas. 1 ; Russell v. Courier &c. Co., 43 Colo. 321, 95 Pac. 936; Holland v. Sheehan, 108 Minn. 362, 122 N. W. 1, 23 L. R. A. (N. S.) 510; Superior V. Douglas County Tel. Co., 141 Wis. 363, 122 N. W. 1023. A contract which conflicts with the morals of the time and contravenes an established interest of society is void as against public policy. Montgomery v. Mont- gomery, 142 Mo. App. 481, 127 S. W. 118. Agreements are against public policy when they tend to injure the state or public. Lawson v. Cobban, 38 Mont. 138, 99 Pac. 128. Public policy does not forbid competent par- ties from entering into an agreement to form a corporation and providing for its future management and con- trol, if the corporation is created ac- cording to statutory requirements, and the objects contemplated are law- ful and proper. Borland v. Prindle &c. Co., 144 Fed. 713. One may make a valid enforcible contract bind- ing himself not to dispose of his property by will but to perrnit his possessions to descend according to the laws of intestacy. Jones v. Ab- bott, 228 111. 34, 81 N. E. 791, 119 Am. St. 412. See also. Mills v. Smith, 193 Mass. 11, 78 N. E. 765, 6 L. R. A. (N. S.) 865 (contract giving the second party entire charge of the lands of the first party and vesting in him the sole right to sell the same providing that the agreement should be binding on the executors of the first party, upheld). A provision^ in an award for damages for the taking of one's land for a public purpose, LEGALITY OF OBJECT. § 650 determining whether or not a contract is contrary to piibhc poHcy it has been stated that "the contract must be measured by its tendency, and not merely by what was done to carry it out."-'* § 650. Broad statement of the rule concerning public pol- icy criticised. — The law's broad general statements of this character, it is believed, are of little value when applied to the concrete case. It must be borne in mind that the public interest is not well served by indulging baseless suspicions of wrong- doing. Public policy forbids the enforcement of any illegal or immoral contract, but it is equally insistent that those which are lawful and contravene none of its rules be duly enforced and not set aside or held invalid on a bare suspicion of illegality."" Courts will not declare a contract void on the ground of public policy unless it clearly appears that the contract is in violation of which reserves any and all claims for interest on the award, is not void as against public policy. Grote v. New York, 190 N. Y. 235, 82 N. E. 1088. A contract by a private com- pany to pay a part of the expense of a bridge to be erected by a town if it would erect a strong and substan- tial bridge is not unenforcible as against public policy. Charlotte Township v. Piedmont Realty Co., 134 N. Car. 41, 46 S. E. 12}. Con- tracts which have for their direct ob- ject the acquisition of public lands in a lawful manner are not against pub- lic policy. Williams v. Finley, 99 Tex. 468, 90 S. W. 1087. But it is obvious that if the contract is violative of the school land law it will not be enforced. Brown v. Brown (Tex. Civ. App.), 132 S. W. 887. A provision in the constitution of a benefit organization to the effect that "no will shall be permitted to control the appointment or distribu- tion of, or rights of any person to any benefit payable to this order," has been held not at variance with law or public policy. Thomas v. Covert (subnominec Supreme Lodge Knights of Honor). 126 Wis. 593. l05 N. W. 922. 3 L. R. A. (N. S.) 904n. Under the laws of Georgia contracts which tend to corrupt legislation or the judiciary, contracts in general re- straint of trade, contracts to evade or oppose the revenue laws of an- other country, wagering contracts and contracts of maintenance and champerty are a'gainst the policy of the law. Bailey & Graham v. Phil- lips, 159 Fed. 535. '* Sherman v. Burton (Mich.), Zl L. R. A. (N. S.) 87, 130 N. W. 667; Conklin v. Conklin, 165 IMich. 571, 131 N. W. 154. A contract, the terms or operation of which is unlawful, whether so intended or not, will not be enforced. Stewart v. Stearns & Culver Lumber Co., 56 Fla. 570, 48 So. 19, 24 L. R. A. (X. S.) 649n. See also, Russell v. Courier &c. Co., 43 Colo. 321, 95 Pac. 936; Delbridge v. Beach, 66 Wash. 416, 119 Pac. 856. ■■^ Stroemer v. Van Orsdel, 74 Xebr. 132, 103 N. W. 1053, 107 N. W. 125, 121 Am. St. 7l3n. The principles of sound public policy do not run counter to principles of honesty and fair dealing; for this reason it cannot be invoked to defeat recovery on an honest claim for services. Darknell v. Coeur D'Alene & St. &c. Co., Vt Idaho 61, 108 Pac. 536. See also, Printing &c. Registering Co. v. Sampson. L. R. 19 Eq. 462; Hall v. O'Xeil Turpentine Co., 56 Fla. 324, 47 So. 609: Mutual Life Ins. Co. v. nurden, 9 Ga. App. 797. 72 S. E. 295 : D. H. Baldwin & Co. v. Mosei (Iowa), 123 X. W. 989. § 650 CONTRACTS. 10 the public policy of the state.-' A doubtful matter of public policy is not sufficient to invalidate a contract. An agreement is not void on this ground unless its contravention of public policy is clear and is manifestly injurious to the interest of the state."® Freedom of contract is as essential to unrestricted commerce as freedom of competition, and one who asks the court to put restrictions upon ^Goodhart v. Mission Pub. Co. (Cal. App.), 123 Pac. 210; Oregon R. & Nav. Co. V. Dumas, 181 Fed. 781, 104 C. C. A. 641; Virginia Bridge & Iron Co. V. Crafts, 2 Ga. App. 126, 58 S. E. Z22; Superior Coal Co. v. Darl- ington Lumber Co., 236 111. 83, 86 N. E. 180, 127 Am. St. 275; Leeds v. Townsend, 228 111. 451. 81 N. E. 1069, 13 L. R. A. (N. S.) 191n; Livingston V. Chicago &c. R. Co., 142 Iowa 404, 120 N. W. 1040; D. H. Baldwin & Co. V. Moser (Iowa), 123 N. W. 989; Barrett v. Garden, 65 Vt. 431, 26 Atl. 530, 36 Am. St. 876, per Start, J. : "In Richmond v. Dubuque R. Co., 26 Iowa 191, it is said, 'that the power of courts to declare a contract void for being in contra- vention of sound public poHcy is a very delicate and undefined power, and, like the power to declare a statute unconstitutional, should be exercised only in cases free from doubt.' In Kellogg v. Larkin, 3 Pin. (Wis.) 123, 56 Am. Dec. 164, Howe, J., said : 'He is the safest magistrate who is more watchful over the rights of the individual than over the con- venience of the public, as that is the best government which guards more vigilantly the freedom of the subject than the rights of the state.' In Richardson v. MelHsh, 2 Bing. 229, 9 Eng. Com. L. 557, Sir James Burrough, said : 'I protest, as my lord has done, against urging too strongly upon public policy ; it is a very unruly horse, and when once you get astride it you never know where it will carry you. It may lead you from the sound law. It is never urged at all but when other points fail.' In Walsh v. Fussell, 6 Bing. 169, 19 Eng. Com. L. 83, Lord Chief Justice Tindale, in pronounc- ing judgment, said : 'It is not con- tended that the covenant was ille- gal on the ground of the breach of any direct rule of law, or the direct violation of any statute, and we think to hold it to be void on the ground of its impolicy or inconvenience, we ought to be clearly satisfied that the performance of it would be necessar- ily attended with injury or inconve- nience to the public' " "It is not against public policy for a public service corporation to enter into a contract to give an employe perma- nent employment." Louisville & N. R. Co. V. Cox, 145 Ky. 667, 141 S. W. 389. '•^*Cox V. Hughes, 10 Cal. App. 553, 102 Pac. 956; McCowen v. Pew, 147 Cal. 299, 96 Pac. 893, first appeal, 147 Cal. 299, 81 Pac. 958; Equitable Loan & Security Co. v. Waring, 117 Ga. 599, 62 L. R. A. 93, 44 S. E. 320, 97 Am. St. 177; McCandless v. Alle- gheny Bessemer Steel Co., 152 Pa. St. 139, 25 Atl. 579. See also, Kan- sas City Paper House v. Foley R. Printing Co., 85 Kans. 678. 118 Pac. 1056; Dallas v. Douglas (Mont.), 122 Pac. 275. A contract will not be declared against public policy unless it requires the doing of some thing against the public good or the con- sideration of which is immoral or hurtful or is forbidden by statute. Callicott V. Allen, 31 Ind. App. 561, 67 N. E. 196. See also. Printing &c. Co. V. Sampson, L. R. 19 Eq. 462. An agreement by which an inventor engages to work for a term of years at a salary, and assign an interest_ in any invention he may make during that time to his employer, is not against policy. Wright v. Vocalion Organ Co., 148 Fed. 209, 79 C. C. A. 183. An agreement by the lessor of premises to obtain a liquor license for his lessee has been held not con- trary to public policy. Cavanagh v. Iowa Beer Co., 136 Iowa 236, 113 N. W. 856. II LEGALITY OF OBJECT. § 65] the right to contract ought to make it clearly appear that the con- tract is against public policy.-^ § 651. Public policy — What determined by. — In determin- ing whether a contract is or is not contrary to public policy, ref- erence must be made to the constitution, federal and state, to the statutes, and to the decisions of the courts, federal and state."" The public policy of the nation must be determined so far as it can be from its constitution, laws, and judicial decisions. The act of congress 1887, entitled "An Act to regulate commerce," ^ Couch V. Hutchinson, 2 Ala. 444, 57 So. 75; United States v. Trans- Missouri Freight Assn., 58 Fed. 58. See also. Printing &c. Registering Co. V. Sampson, L. R. 19 Eq. 462 ; Zeigler v. Illinois Trust &c. Bank, 245 111. 180. 91 N. E. 1041. See, how- ever, Escambia Land & Mfg. Co. v. Ferrv Pass &c. Assn., 59 Fla. 239, 52 So. 715, 138 Am. St. 121, which lays down the rule that "Courts will take notice of their own motion, too, of illegal contracts which come be- fore them for adjudication, and will leave the parties where they have placed themselves." Parties do not have the right to make any and all contracts they may choose. The state has the power to place many re- strictions on the right to contract. Karnes v. .Xmerican Fire Ins. Co., 144 Mo. 413. 46 S. W. 166. '"Hartford Fire Ins. Co. v. Chi- cago &c. R. Co.. 62 Fed. 904, atTd. 70 Fed. 201, 17 C. C. A. 62, 30 L. R. A. 193, per Shiras, J. : "The real question for consideration is, how shall it be determined whether the contract is or is not contrary to public policy? The subject-matter of the contract may be such that it af- fects the country at large, or it may be local in its nature. The nature of the subject-matter determines the source from which light must be sought upon the question of fact whether the provisions of a given contract are or are not contrary to public policy. In other words, there is a public policy of the nation, ap- plicable to all matters wherein the people at large are interested, in- cluding those committed to the con- trol of the national government, and co-extensive with the boundaries of the union, and also a state public policy adapted to the circumstances of the locality embraced within the boundaries of the state, and applic- able to all matters within state con- trol. Thus, in Greenhood on Public Policy, it is said that any contract made by a competent party, upon valuable consideration, is valid, un- less it binds the maker to do some- thing opposed to the public policy of the state or nation. Greenhood on Public Policy, p. 1, rules 1 and 2. In seeking to ascertain the requirements of the public policy of the nation, the principal sources of information are the Constitution of the United States, the statutes enacted by the congress, and the decisions of the courts, federal and state : and in case there should be a divergence in the views of the federal and state courts upon a question of national public policy, the conclusion reached in the federal courts must be ac- cepted as the best evidence of what the requirements of the national pub- lic policy are. On the other hand, when seeking to determine the public policy of the state toward a sub- ject within state control, the prin- cipal sources of information are the state constitution and statutes and the decisions of the courts, state and federal ; and, in case of divergence between them, the decisions of the state court must be accepted as the best evidence of the public policy of the state. Swann v. Swann. 21 Fed. 299; .\tlantic Coast Line R. Co. v. Beazley, 54 Fla. 311, 45 So. 761; Mu- ,^ 6;2 CONTRACTS. 12 and known as the Interstate Commerce Law, it has been said, demonstrates the fact that from the date of the passage of that act it has been the pnbHc pohcy of this nation to regulate that part of interstate commerce which consists of transportation, and to so far restrict competition in freight and passenger rates be- tween railroad companies engaged therein as shall be necessary to make such rates open, public, reasonable, uniform and steady, and to prevent discriminations and undue preferences.^^ § 652. Contracts against public policy void. — When a con- tract belongs to a class which is reprobated by public policy it will, as a general rule, be declared void and unen forcible, although in the particular instance no injury to the public may have re- sulted.^- Agreements contrary to public policy will be classified and treated at length in the subsequent sections of this chapter.^^ § 653. Agreements contrary to express rules of common law — Generally. — At common law contracts which were con- tual Life Ins. Co. v. Burden, 9 Ga. App. 797, 72 S. E. 295; Moon v. School City of Soutli Bend (Ind. App.), 98 N. E. 153; Orrell v. Bay ^Ifg. Co., 83 Miss. 800, 36 So. 561, 70 L. R. A. 881 ; Langdon v. Conlin, 67 Nebr. 243, 93 N. W. 389, 60 L. R. A. 429, 108 Am. St. 643; Vidal V. Philadelphia, 2 How. (U. S.), 127, 11 L. ed. 205. To same effect adding that the public policy of a state does not depend upon the private conviction or notions of the individ- ual judge. Picket Pub. Co. v. Car- bon County, 36 Mont. 188, 92 Pac. 524, 13 L. R. A. (N. S.) 1115, 122 Am. St. 355. "The public policy of the state or of the nation is to be found in its Constitution and its statutes, and, when cases arise con- cerning matters upon which they are silent, then in its judicial decisions and the constant practice of the gov- ernment officials." Zeigler v. Illinois Trust & Sav. Bank, 245 111. 180, 91 X. E, 1041, 1045, 28 L. R. A. (N. S.) 1112n. See, however, the case of Craig V. United States, Health &c. Ins. Co., 80 S. Car. 151, 61 S. E. 423, 128 Am. St. 877, which states that "the judicial department of the government may refuse to enforce contracts recognized by the people at large as vicious in themselves, and therefore opposed to public policy." ^^ United States v. Trans-Missouri Freight Assn., 58 Fed. 58. See also. Standard Oil Co. v. United States, 221 U. S. 1, 55 L. ed. 619, 31 Sup. Ct. 502, 34 L. R. A. (N. S.) 834. The public policy of a government is found in the statutes, or, in the ab- sence of statutes, in the court de- cisions. When a constitutional stat- ute is enacted, the public policy is what the statute enacts. Logan v. Postal Tel. &c. Co., 157 Fed. 570. See also. General Electric Co. v. Ft. Deposit (Ala.), 56 So. 802. In the absence of a statute the courts may declare void, as against public policy, contracts that are closely injurious to the interests of the public. Buck V. Walker, 115 Minn. 239, 132 N. W. 205. ^^ Fireman's Assn. v. Berghaus, 13 La. Ann. 209; Hurley v. Allman Gas &-c. Co,. 144 App. Div. (N. Y.) 300, 129 N. Y. S. 14; City of Pittsburgh v. Goshorn, 230 Pa. 212, 79 Atl. 505. ■^ See post, § 705 et seq. 13 LEGALITY OF OBJECT. 654 trary to the interest of the 3late and to the prejudice of the puhHc generally were forbidden and held illegal.^* The principles of the common law apply in all jurisdictions whose jurisprudence is based upon it, except where there has been a change by statu- tory enactment. § 654. Agreements involving commission of crime. — Un- less otherwise provided by statute, when a plaintiff seeks to en- force an executory contract or to recover damages for its breach, he will be denied recovery if in the development of the case it appears that the consideration of the contract involved the viola- tion of a penal law and the courts will declare the contract void and refuse to aid in its enforcement whether its illegality be pleaded or not.^'^ This is true, as a general rule, regardless of whether the contract calls for the performance of an act which is a breach of a rule of common law, when the crime is a common- law offense, or is for the performance of an act declared criminal by statute.^^ This is true whether the act is a felony^" or a mis- '* Indianapolis &c. R. Co. v. Er- win, 118 111. 250, 8 N. E. 862, 59 Am. Rep. 369; Bishop v. Palmer, 146 Mass. 469, 16 N. E. 299, 4 Am. St. 339; Nellis v. Clark, 20 Wend. (N. Y.), 24, aflfd. 4 Hill (N. Y.) 424. See also, Remolds v. Nichols, 12 Iowa 398; Wvkoff v. Weaver, 66 N. J. L. 648, 52 Atl. 356; Hunt v. Knickcrbacker, 5 Johns. (N. Y.) Zll ; Thalimer v. Brinkerhoff, 20 Johns. (N. Y.) 386; Lemon v. Grosskopf, 22 Wis. 447, 99 Am. Dec. 58. The gener- al principle enforced by the common law ris that no one can lawfully do that which has a tendency to be in- jurious to the public or against pub- lic good. See People v. Chicago Gas Trust Co., 130 111. 268, 22 N. E. 798, 8 L. R. A. 497n, 17 Am. St. 319: Aged Women's &c. Homes v. Pierce, 100 Md. 520, 60 Atl. 277. 70 L. R. A. 485n, 108 Am. St. 450; McNamara v. Gar- gett, 68 I\Iich. 454, 36 N. W. 218, 13 Am. St. 355; Robson v. Hamilton, 41 Ore. 239, 69 Pac. 651. '=* Evans v. Richardson. 3 Mer. 469; Parken v. Whitby, Turn. & Rus. Eng. Ch. 366; Russell v. Burton. 66 Barb. (N. Y.) 539; Keith v. Fountain, 3 Tex. Civ. App. 391, 22 S. W. 191; Oscanyan v. Arms Co., 103 U. S. 261, 26 L. ed. 539. =° Collins v. Blantern, 2 Wils. 341; James v. Hendree's Admr., 34 Ala. 488; Evans v. Collier, 79 Ga. 315, 4 S. E. 264; Henderson v. Palmer, 71 111. 579, 22 Am. Rep. 117; ^IcWil- liams V. Phillips, 51 IMiss. 196; Hinds V. Chamberlin, 6 N. H. 225; Griffiths V. Hardenbergh. 41 X. Y. 464; Cump- ston V. Lambert, 18 Ohio 81, 51 Am. Dec. 442; Hunter v. Agee, 5 Humph. (Tenn.) 57; Arnold v. Clifford, 2 Sumn. (U. S.) 238. "A promise to pay for services in criminal trans- actions will not be enforced." Crig- ler V. Shcpler (Kans.), 101 Pac. 619. "Robinson's Exrs. v. Robards, 15 Mo. 459. "There can be no doubt that a contract to commit murder or any other crime, or a contract to give a reward to one for the commission of a crime, is void as against public policy." The contract must, however, contemplate the commission of a crime. Zeigler v. Illinois Trust &c. Bank, 245 111. 180, 91 X. E. 1041, 28 L. R. A. (X. S.) 1112n. § 655 CONTRACTS. 1 4 demeanor.^® Thus, agreements by one of the parties to commit an assault on a third person.^" to indemnify one for the commis- sion of such assault and battery/" to abduct another," for the commission of a nuisance/- to compensate another for the com- mission of a wilful and malicious trespass/^ or mutual promises to marry when the parties, to the knowledge of each other, are already married,"** have been held illegal since their execution requires the commission of a crime. Contracts made in violation of federal statutes, the liquor laws or Sunday laws, and laws of a similar character, will be treated in subsequent sections of this chapter.*^ § 655. Agreements involving commission of a civil wrong. — A civil injury has been defined as "a violation of the pre-exist- ing right for which the law gives a right of private action or pro- cedure."*^ An agreement which has for its object the invasion of the civil right of a third person is illegal, although the wrong may not be a crime either at common law or by statute.*^ Thus, it has been held that a printer who prints a book after the copy- right has been secured, and with actual notice of the fact, cannot recover the value of his services.*^ A contract which has for its object the commission of a trespass upon the person*^ or prop- ^' Youngblood v. Birmingham Trust down the rule that a stipulation &c. Co., 95 Ala. 521, 12 So. 579, 20 L. by a father to restore his daughter R. A. 58, 36 Am. St. 245; Gardner v. nolens volens to the custody of her Tatum, 81 Cal. 370, 22 Pac. 880; mother, when she should be eighteen Nichols V. Ruggles, 3 Day (Conn.) years old, was as much a contract to 145, 3 Am. Dec. 262; Dillon v. Allen, infringe her personal liberty as if the 46 Iowa 299, 26 Am. Rep. 145 ; age fixed had been thirty-six or fifty- State V. Wilson, 1Z Kans. 334, 80 Pac. four, and was unlawful. 639, 84 Pac. Ill ; Smith v. Robertson, " Friend v. Porter, 50 Mo. App. 106 Ky. 472, 20 Ky. L. 1959, 50 S. W. 89. 852, 45 L. R. A. 510; Haggerty v. '' Ives v. Jones, 3 Ired. (N. Car.) St. Louis Ice &c. Co., 143 Mo. 238, 538, 40 Am. Dec. 421. 44 S. W. 1114, 40 L. R. A. 151, 65 Am. " Paddock v. Robinson, 63 111. 99, St. 647; Snoddy v. American Nat. 14 Am. Rep. 412. See also, Prevost Bank, 88 Tenn. 573, 13 S. W. 127, 7 L. v. Wood, 21 Times L. R. 684. R. A. 705n, 17 Am. St. 918; See also, ''See post, § 687 et seq. Poplett V. Stockdale. 1 Ryan & M. '"Benjamin on Contracts, p. 5 of ZZl; Gale v. Leckie, 2 Stark. 107. the Introduction. =* Allen V. Rescous, 2 Lev. 174. " Randall v. Howard, 2 Black (U. '^Babcock v. Terrv, 97 Mass. 482; S.) 585, 17 L. ed. 269. Hatch V. Mann, 15 Wend. (N. Y.) 44, '"Nichols v. Ruggles, 3 Day revg. 9 Wend. (N. Y.) 262. (Conn.) 145, 3 Am. Dec. 262. " Baker v. Parker, 23 Ark. 390 ; *" Babcock v. Terry, 97 Mass. 482 ; See also, Dittrich v. Gobey, 119 Cal. Cumpston v. Lambert, 18 Ohio St. 81, 599, 51 Pac. 962, which lays 51 Am. Dec. 442. 15 LEGALITY OF OBJECT. § 656 erty^° of a third person is illegal. Nor can one who commits a civil trespass on the property or person of another hold one liable on his contract for the commission of such trespass and to indemnify him against liability for the injury inllicted.^^ The same principle has been held to apply to a contract to publish a libel and slander upon a third person when such publication was not punishable by indictment, but was only actionable.^^ § 656. Agreements involving fraud. — Fraud is a civil wrong, and consequently an agreement the object of which is to defraud a particular individual or individuals or the public generally, is illegal.^^ Thus contracts which have for their object the perpe- tration of a fraud and deceit upon the general public are illegal,^* such as contracts which tend to deceive the public as to the quality and kind of goods sold.^^ Likewise, a contract by which a trade- ""Marcy v. Crawford, 16 Conn. 549, 41 Am. Dec. 158; Avery v. Hal- sey, 14 Pick. (Mass.) 174; Favor v. Philbrick, 7 N. H. 326; Coventry v. Barton. 17 Johns. (N. Y.) 142, 8 Am. Dec. 376; Ives v. Jones, 3 Ired. (N. Car.) 538, 40 Am. Dec. 421; Mc- Grcal V. Wilson, 9 Tex. 426. A con- tract to clear an unnavigable stream and to run logs through it cannot be assumed to be void as against public policy on the ground that it involves trespassing on the lands of third per- sons, unless it also appears that the riparian owners object or that an in- vasion of their rights is intended. Fuller V. Rice, 52 Mich. 435, 18 N. W. 204. " Evans v. Collier, 79 Ga. 315, 4 S. E. 264: Stanton v. McMullen, 7 111. App. 326 ; Fuller v. Rice, 52 Mich. 435, 8 N. W. 204. See also, cases cited in preceding notes. "Shackell v. Rorier, 2 Bing. N. C. 634; Clay v. Yates, 1 Hurl. & N. 73; Hayes v. Hayes, 8 La. Ann. 468. See also, post, § 663. " Begbie v. Phosphate Sewage Co., L. R. 10 Q. B. 491; Church v. Proctor, 56 Fed. 240, 13 C. C. A. 426 ; Grav V. McRevnolds, 65 Iowa 461, 21 N. W. W, 54 'Am. Rep. 16; Davis v. Tones* Admr., 94 Kv. 320. 15 Ky. L. 89, 22 S. W. 331, 42 Am. St. 360: Thomas v. Caulkett, 57 Mich. 392, 24 N. W. 154, 58 Am. Rep. 369; Ellicott V. Chamberlin, 38 N. J. Eq. 604, 48 Am. Rep. 2,11; Kelly v. Scott, 49 N. Y. 595; Blakely v. Sousa, 197 Pa. 305, 47 Atl. 286, 80 Am. St. 821; Simon v. Garlitz (Tex. Civ. App.), 133 S. W. 461. Any contract which involves a fraud on the rights of others is against public policy. Coch- ran V. Zachery, 137 Iowa 585, 115 N. W. 486, 16 L. R. A. (X. S.) 235n, 126 Am. St. 307. " Church V. Proctor, 66 Fed. 240, 13 C. C. A. 426; Jerome v. Bigelow, 66 111. 452, 16 Am. Rep. 597 ; McDonnell V. Rigney, 108 Mich. 276, 66 N. W. 52 ; I^IcXamara v. Gargett, 68 Mich. 454, 36 N. W. 218, 13 Am. St. 355; Ma- terne v. Horwitz, 101 X. Y. 469, 5 N. E. 331 ; Blakely v. Sousa, 197 Pa. St. 305, 47 Atl. 286, 80 Am. St. 821. "Church V. Proctor, 66 Fed. 240, 13 C. C A. 426. Thus, it has been held that there could be no recovery in action brought for damages on defendant's failure to accept and re- ceive four hundred cases of domestic sardines with fancy labels. By fan- cy labels it was meant that the sar- dines were to be marked so as to indicate that thej' were imported goods. It was held that these labels were intended to deceive the consum- ers and was a fraud of which both parties were cognizant, and that con- sequently the courts would not aid either party in carrying out its fraud- § ^57 CONTRACTS. i6 mark was assigned, which indicated that a certain person was the manufacturer of a product sold, has been held illegal.^^ The name of an artist, an author, a musician or lawyer has never been regarded as a trade name, and as such salable. Consequently an agreement by which it is sought to assign the right to use such name is unenforcible, for the reason that its enforcement would enable the assignee to impose upon and deceive the public." § 657. Contracts which cannot be performed without de- frauding third persons. — In some jurisdictions contracts are held illegal that cannot be performed without defrauding a third person. ^^ Thus, where coupons are sold under such terms that the performance thereof must necessarily work a fraud on the last vendee of such coupon, the agreement has been held against public policy.^^ The familiar "Bohemian Oats" contract belongs to this class of agreements.^" Contracts whereby two persons ulent purpose. Materne v. Horwitz, 101 N. Y. 469, 5 N. E. 331. Also, Harshow v. El wood (Conn.), 76 Atl. 531. Plaintifif and defendants agreed to buy inferior goods, mark them with the label of well known manu- facturers, and resell them as high grade stock at a "bankrupt sale." Action was brought for an account- ing, the appointment of a receiver and other relief. It w^as held that the action was properly dis- missed. '"^ Alaver v. Flanagan, 12 Tex. Civ. App. 405, 34 S. W. 785. See also, Joseph V. Macowsky, 96 Cal. 518, 31 Pac. 914, 19 L. R. A. 53; Hoxie v. Chaney, 143 Mass. 592, 10 N. E. 713, 58 Am. Rep. 149. "Messer v. The Fadettes, 168 Mass. 140, 46 N. E. 407, 37 L. R. A. 721, 60 Am. St. 371; Skinner v. Oakes, 10 Mo. App. 45; Hegeman v. Hegeman, 8 Daly (N. Y.) 1; Blake- ly V. Sousa, 197 Pa. 305, 47 Atl. 286, 80 Am. St. 821. ''Knight V. Linzey, 80 Mich. 396, 45 N. W. 337, 8 L. R. A. 476; Mc- Namara v. Gargett, 68 Mich 454, 36 N. W. 218, 13 Am. St. 355; Shirey V. Ulsh, 2 Ohio C. C. 401, 1 Ohio C. D. 554; Cowell v. Harris, 2 Ohio C. C. 404, 1 Ohio C D. 556; Carter v. Lillie, 3 Ohio C. C. 364, 2 Ohio C. D. 204. In Jacobs v. Mitchell, 46 Ohio St. 601, 22 N. E. 768, such contract was held probably not invalid, though the decision was not based on such ground. Twentieth Century Co. v. Quilling, 130 Wis. 318, 110 N. W. 174. °'' Hubbard v. Freiberger, 133 Mich. 139, 94 N. W. 727. See also. Bank of Ozark V. Hanks, 142 Mo. App. 110, 125 S. W. 221. •""Bonisteel v. Saylor, 17 Ont. App. 505; Shipley v. Reasoner, 80 Iowa 548, 45 N. W. 1077; Merrill v. Packer, 80 Iowa 542. 45 N. W. 1076 ; Hanks v. Brown, 79 Iowa 560, 44 N. W. 811; Davis v. Seeley, 71 Mich. 209, 38 N. W. 901; McNamara v. Gargett, 68 Mich. 454, 36 N. E. 218, 13 Am. St. 355; Knight v. Linzey, 80 Mich. 396, 45 N. W. 337, 8 L. R. A. 476 ; Carter V. Lillie, 3 Ohio C. C. 364, 2 Ohio C D. 204; Cowell v. Harris, 2 Ohio C. C. 404, 1 Ohio C. D. 556; Shirey v. Ulsh, 2 Ohio C. C. 401, 1 Ohio C. D. 554. See, however, Matson v. Blos- som, 50 Hun (N. Y.) 600, 18 N. Y. St. 726, 4 N. Y. S. 489. It has been held that such a contract was not illegal as a gambling contract. Eber- sole v. First Nat. Bank, 36 111. App. 267; Merrill v. Packer, 80 Iowa 542, 45 N W. 1076; Shipley v. Reasoner, 80 Iowa 548, 45 N. W. 1077; Hanks 17 LEGALITY OF OBJECT. § 658 conspire to defraud a third are to be distinguished from agree- ments for tiie accomphshment of some lawful purpose, but by the terms of which one party is induced to accept through the other party's fraud. "^ § 658. Conspiracy to defraud third persons. — An agree- ment entered into between two persons, whereby they conspire to wrong or defraud a third, is illegal and unenforcible."^ In con- formity with this principle it has been held that if two parties enter into a fraudulent conspiracy to cheat a life insurance com- pany, and one of them obtains the proceeds of the policy, the other can under no circumstances recover of him.*^^ Likew^ise, an agreement, whereby commissions are to be paid one who effects the sale of certain lots, cannot be enforced where the one to whom the commissions were to be paid w^as to subscribe for certain lots at a meeting held by prospective purchasers and per- suade them to buy, at the same time concealing the fact that the owner had agreed to release him from such subscriptions as he did not w^ish to retain.*^* So, where a creamery partnership firm fixes a unifonn price for butter, making the contract wdth the various dairymen who were to furnish it cream, and one of the firm entered into a secret agreement with plaintiff, allowing him a rebate to induce him to come in so that others would be induced, by his action, to enter into the agreement, the court treated such secret agreement as illegal and left the parties with reference to it where they have placed themselves.^^ V. Brown, 79 Iowa 560, 44 N. W. 811 ; ]\Iary's Benevolent Assn. v. Lvnch, Matson v. Blossom. 50 Hun (N. Y.) 64 N. H. 213. 9 Atl. 98; Wittkowsky 600, 18 N. Y. St. 726, 4 N. Y. S. 489. v. Barucli, 127 N. Car. 313, 27 S. E. Compare, Schmueckle v. Waters, 125 449; Crawford v. Wick, 18 Ohio St. Ind. 265, 25 N. E. 281; McNamara 190. 98 Am. Dec. 103; State v. Cin- V. Gargett, 68 Mich. 454, 36 N. W. cinnati &c. Coke Co., 18 Ohio St. 262; 218, 13 Am. St. 355. See post. § 692. Simon v. Garlitz (Tex. Civ. App.), " In the latter case A's acceptance 133 S. W. 461 ; Leach v. Devereaux of B's offer is procured through (Tex. Civ. App.), 32 S. W. 837; fraud on the part of B. In the first Barnett v. Barnett, 83 Va. 504, 2 S. E. instance the subject-matter of the 7Z2>. agreement itself is illegal. See ante, *" Howe's Exr. v. Griffin's Admr., Chap. 4. 126 Ky. 372, 103 S. W. 714, 128 Am. °=Buchtclla V. Stepanek, 53 Kans. St. 296n. 272, 36 Pac. 749; Bennett v. Tiernay, "'McDonnell v. Rigney, 108 Mich. 78 Ky. 580, 1 Kv. L. (abstract) 312; 276. 66 N. W. 52. Selbv v. Case, 87 Md. 459. 39 Atl. "'- McEwen v. Shannon, 64 Vt. 583. 1041'- Lawton v. Estes, 167 Mass. 25 .'\tl. 661. The court said: "The 181, 45 N. E. 90, 57 Am. St. 450; St. court treats all such secret agree- 2 — CoNTR.\CTS, Vol. 2 § 659 CONTRACTS. l8 § 659. Rule further illustrated. — On the same principle one who advances money to a stockholder in a corporation, to enable him to carry on an action and to recover in his own name and for his own use a judgment which properly belonged to the corporation, and with knowledge that the corporation was thereby being deprived of its property, cannot have such claim allowed in the distribution of the fund."" A partnership, whereby the parties thereto arrange for a horse race with one whom they in- duced to enter his horse by making him think he had a "sure thing," and by leading the latter to think that their horse was untrained and undeveloped, has been held a conspiracy to defraud so that a court would not aid either of the partners by compelling the one who had possession of all the profits to make an account- ing." It has also been held that where several cotenants join in a contract by which the property of the cotenancy is sold at a tax sale to one of the conspirators, for the purpose of defrauding one of the cotenants, the conspirator who purchases to subsequently deed the property to the conspirators, free from the claim of the defrauded cotenant, none of the parties to the fraudulent scheme will be granted relief in equity as against the one who, pursuant to the scheme, acquired the tax title to the land and claims it as his own.°® § 660. Agreements to defraud creditors. — An agreement to defraud creditors, such as a private stipulation with the debtor whereby one creditor, who assumes to act with other creditors in a composition of their debts, is to receive some advantage to merits which work a fraud upon the represented to X that he would in- rights of others as illegal, and re- duce B to believe that his mine was fuses to enforce them."' salted, and thus enable X to buy •^ Davis V. Gemmell, 7i Md. 530, 21 below value, it was held that A was Atl. 712. entitled to no relief in equity where " Morrison v. Bennett, 20 Mont, the scheme was really one between 560, 52 Pac. 553, 40 L. R. A. 158. See A and B to induce X to buy, the mine also, Dakin v. Rumsey, 104 Mich, being in reality worthless. Bearden 636, 62 N. W. 990. Compare, how- v. Jones (Tenn.), 48 S. W. 88. ever, with the case of Hobbs V. Boat- "^Lawton v. Estes, 167 Mass. 181, right, 195 .Mo. 693, 93 S. W. 934, 5 45 N. E. 90, 57 Am. St. 450. See L. R. A. (N. S.) 906, 113 Am. St. also, Tappan v. Brewing Co., 88 Cal. 709. In this latter case the party 570, 22 Pac. 257, 5 L. R. A. 428, 13 who was induced to bet was the one .Am. St. 174; Smith v. Humphreys, that brought the suit. See also, ante, 88 Maine 345, 34 Atl. 166. § 92. In pari delicto. So, where A 19 LEGALITY OF OBJECT. § 66l himself over such other creditors, is also iinen forcible."'' Such fraudulent advantage vitiates the composition as to innocent cred- itors and they are not bound by it.'" On the other hand it has been held that the creditor who perpetrated the fraud could not sue even to enforce his original claim," or recover his share or divi- dend under the composition agreement." § 661. Conveyance of property to defraud creditors. — Likewise a debtor who transfers his property to another in order to defraud his creditors cannot compel the performance of a promise, given in consideration of such conveyance by the one to °*Benicia Agricultural Works v. Estes, 98 Cal. 17, 32 Pac. 938; Smith V. Owens, 21 Cal. 11; In re Clement's Appeal, 52 Conn. 464; McFarland v. Garber, 10 Ind. 151; Morrison v. Schlesinger, 10 Ind. App. 665, 38 N. E. 493; Goodwin v. Blake, 3 T. B. Mon. cKy.) 106, 16 Am. Dec. 87; John T. Hardie's Sons Co. v. Scheen, 110 La. 612, 34 So. 707; Ramsdell v. Edgarton, 8 Mete. (Mass.) 227; Sternberg v. Bowman, 103 Mass. 325 ; Brown v. Nealley, 161 Alass. 1, 36 N. E. 464; Vreeland v. Turner, 117 Mich. 366, 75 N. W. 937, 72 Am. St. 562; Newell v. Higgins, 55 Minn. 82, 56 N. W. 577; O'Shea v. Collier White Lead &c. Co., 42 Mo. 397, 97 Am. Dec. 332; Bank of Commerce v. Hoeber. 88 Mo. 27 ; Winn v. Thomas, 55 N. H. 294 ; Adams v. Outhouse, 45 N. Y. 318; Bliss v. Matteson, 45 N. Y. 22; Breck v. Cole, 4 Sandf. (N. Y.) 79; Wheeler v. Pettyjohn, 14 Okla. 71, 76 Pac. 117; Patterson v. Boehm. 4 Pa. St. 507; Lee v. Sellers, 8P2 Pa. 473; Willis v. Morris, 63 Tex. 458, 51 Am. Rep. 655; Dansby V. Frieberg, 76 Tex. 463, 13 S. W. 331 ; Clarke v. White, 12 Pet. (U. S.) 178, 9 L. ed. 1046. Thus, a guaranty of a debt at a bank by a third person, whereby the bank was induced to sign a compromise agreement for its claim against an insolvent firm, without knowledge of the other cred- itors of the firm, is void as against public policy, even though the com- position failed because of the refusal of some of the other creditors to sign the agreement. Glens Falls Nat. Bank v. Van Nostrand, 41 Misc. (N. Y.) 526, 85 N. Y. S. 50, affd. 103 App. Div. (N. Y.) 598, 92 N. Y. S. 1125. A solvent debtor conveyed property to a trustee with authority to convert the same into cash and pay creditors. Under the trust agreement the trustee was to settle with the creditors as cheaply as possible and give the debtor the benefit of any dis- count he might obtain. The agree- ment was held contrary to public policj', because of its tendency to lead the trustee to deal unjustly with the creditors. Haswell v. Blake (Tex. Civ. App.), 90 S. W. 1125. See also, Fried v. Danziger, 120 App. Div. (N. Y.) 604, 121 App. Div. (N. Y.) 903, 105 N. Y. S. 44. ™Daughlish v. Tennent, L. R. 2 Q. B. 49; Ex parte Milner, 15 Q. B. D. 605; Kullman v. Greenebaum, 92 Cal. 403, 28 Pac. 674, 27 Am. St. 150 ; Ilefter v. Cahn, 73 111. 296; Kahn v. Gumberts, 9 Ind. 430; Partridge v. Messer, 14 Gray (Mass.) 180; Cobb V. Tirrell, 137 Mass. 143; Powers Drv Goods Co. v. Harlin, 68 Minn. 193, 71 N. W. 16. 64 Am. St. 460; Stuart V. Blum, 28 Pa. 225. ^Mallalieu v. Hodgson, 16 Q. B. 689; O'Brien v. Greenebaum, 92 Cal. 104, 28 Pac. 214; Baldwin v. Rosen- man, 49 Conn. 105 ; Huckins v. Hunt. 138 Mass. 366; White v. Kuntz. 107 N. Y. 518, 14 N. E. 423, 1 Am. St. 886. "Howden v. Haigh, 11 Ad. & E. 1033; Doughty v. Savage, 28 Conn. 146; Huntington v. Clark, 39 Conn. 540; Frost v. Gage. 3 Allen (Mass.) 560. Contra, Hanover Xat. Bank v. Blake. 142 N. Y. 404. 37 N. E. 519, 27 L. R. A. 33, 40 Am. St. 607. § 662 CONTRACTS. 20 whom the property is conveyed, should the latter refuse to per- form." Thus, in case the agreement calls for a subsequent re- conveyance the reconveyance cannot be compelled.'* One who convevs property to another in order to avoid paying alimony cannot compel a reconveyance.'^ Nor can the heirs of a grantor who conveyed property to his son in order to defraud his cred- itors show this fact in order to rebut the presumption that the conveyance was an advancement and to establish a resulting trust in themselves.'® § 662. Who may avoid such conveyance. — But while such conveyance cannot be avoided by the debtor it may be avoided by the creditor or creditors injured thereby." It has been held that the debtor cannot recover the purchase-price which the grantee agreed to pay" although perhaps the weight of authority is to the contrary.'® A mortgage given by the debtor and taken to defraud '^ Kirkpatrick v. Clark. 132 111. 342, 24 N. E. 71, 8 L. R. A. 511, 22 Am. St. 531; Kitts v. Willson, 130 Ind. 492, 29 N. E. 401; Gentry v. Field, 143 Mo. 399, 45 S. W. 286; Pass v. Pass, 109 N. Car. 484, 13 S. E. 908; Brinkerhoff v. Tracy, 55 Ohio St. 558, 45 N. E. 1100. '*Castellow v. Brown, 119 Ga. 461, 46 S. E. 632; Moore v. Horsley, 156 111. 36, 40 N. E. 323; Brady v. Huber, 197 111. 291, 64 N. E. 264, 90 Am. St. 161; Kitts V. Willson, 130 Ind. 492, 29 N. E. 401; Briggs v. Coffin, 91 Iowa 329, 59 N. W. 259; Canton v. Dorchester, 8 Cush. (Mass.) 525; Hassam v. Barrett, 115 Mass. 256; Poppe V. Poppe, 114 Mich. 649, 72 N. W. 612, 68 Am. St. 503; Sell v. West, 125 Mo. 621, 28 S. W. 969; Whitaker v. Whitaker, 157 Mo. 342, 58 S. W. 5; Eyre v. Eyre, 19 N. J. Eq. 42; Mc^Manus v. Tarleton, 126 N. Car. 790, 36 S. E. 338 ; Lockren v. Rustan, 9 N. Dak. 43, 81 N. W. 60 ; Pride v. Andrew, 51 Ohio St. 405, 38 N. E. 84; Walton v. Blackman (Tenn. Ch. App.), 36 S. W. 195; Herndon v. Reed, 82 Tex. 647, 18 S. W. 665; Randall v. Howard, 2 Black (U. S.) 585, 17 L. ed. 269; Shoemake V. Finlayson, 22 Wash. 12, 60 Pac. 50 ; McClintock v. Loisseau, 31 W. Va. 865, 8 S. E. 612, 2 L. R. A. 816. "Fiske V. Fiske, 173 Mass. 413, 53 N. E. 916. It has been held other- wise, however, where the wife was not awarded any alimony for the rea- son that no creditor was defrauded. Rivera v. White, 94 Tex. 538, 63 S. W. 125. '* McClintock v. Loisseau, 31 W. Va. 865, 8 S. E. 612, 2 L. R. A. 816. " Stillings V. Turner, 153 Mass. 534, 27 N. E. 671; Plarvey v. Varney, 98 Mass. 118; Dyer v. Homer, 22 Pick. (Mass.) 253. Creditors of a de- ceased husband's estate may agree to withdraw their objections to the al- lowance of the year's support in con- sideration of a note made to them by the widow and such agreement is not a fraud on the other creditors and against public policy. Golding v. McCall, 5 Ga. App. 545, 63 S. E. 706. ^*Norris v. Norris' Admr., 9 Dana (Ky.) 317, 35 Am. Dec. 138; Church v. Muir, 33 N. J. L. 318; Powell v. Inman, 8 Jones L. (N. Car.) 436, 82 Am. Dec. 426n; Bradford v. Beyer, 17 Ohio St. 389; Goudy v. Gebhart, 1 Ohio St. 262. '" Harcrow v. Harcrow, 69 Ark. 6, 58 S. W. 553, 64 S. W. 881 ; Springer V. Drosch, 32 Ind. 486, 2 Am. Rep. 356, overruling Welby v. Armstrong. 21 Ind. 489; Butler v. Moore, 73 Maine 151, 40 Am. Rep. 348; Still- 21 LEGALITY OF OBJECT. § 662 his creditors^" or accepted by him in order to estabhsh a false de- fense to an action for damages'' cannot be enforced. The same is true of a fraudulent note executed without consideration," as where a note is given to a bank merely to increase its apparent assets.*^ There is some conflict in the application of the doctrine of in pari delicto in cases of this character. Some cases hold that if the fraudulent grantor remains in possession an action in ejectment may be maintained by the grantee/* Other jurisdic- tions hold that the grantee cannot maintain an action in ejectment for the reason that the courts will aid neither party.^^ A judg- ment confessed in fraud of creditors has also been held good as between the parties.®" But should the grantee or his heirs reconvey they cannot avoid such reconveyance." Moreover it is the unlawfulness of the agreement and not the underlying intent which renders the transaction unenforcible, and where the mort- gage is given to secure a bona fide indebtedness the mortgagor may redeem notwithstanding the intention to give an unlawful preference.^* Nor can a conveyance in trust for creditors be avoided merely because of a secret fraudulent intent.^^ ings V. Turner, 153 Mass. 534, 27 N. Admr., 17 B. Mon. (Ky.) 292; Boyle E. 671; Sauter v. Leveridge, 103 AIo. v. Rankin, 22 Pa. St. 168; Epperson 615, 15 S. W. 981. V. Young, 8 Tex. 135. *" O'Kane v. Terrill, 144 Ind. 599, ^ Harrison v. Hatcher. 44 Ga. 638 ; 43 N. E. 869; Miller v. Marckle, 21 Kirkpatrick v. Clark, 132 111. 342, 24 111. 152; Williams v. Clink. 90 Alich. N. E. 71, 8 L. R. A. 511, 22 Am. St. 297, 51 N. W. 453, 30 Am. St. 443; 531. So where grantee is grantor's Schroeder v. Pratt, 21 Utah 176, 60 surety, and grantor acted in good Pac. 512. Contra. Pierce v. Le faith, replevin was held not to lie. Monier, 172 Mass. 508, 53 N. E. 125 ; Havs v. Windsor, 130 Cal. 230, 62 Barwick v. Movse, 74 Miss. 415, 21 Pac. 395. So. 238, 60 Am'. St. 512; Bradtfeldt ^Pitkin v. Burnham, 62 Nebr. 385, V. Cooke, 21 Ore. 194, 40 Pac. 1, 50 87 N. W. 160, 55 L. R. A. 280. Am. St. 701. "Detwiler v. Detwiler, 30 Nebr. " Bates V. Cain, 70 Vt. 144, 40 Atl. 338, 46 N. W. 624. Nor can the 36. creditors of the grantee avoid such ^-McTighe v. McKee, 70 Ark. 293, convevance. Biccochi v. Casev- 67 S. W. 754; Sternberg v. Bowman, Swasev Co., 91 Tex. 259, 42 S. W. 103 Mass. 325. 963, 66 Am. St. 875. See also. Kihl- ^ Chicago Title & Trust Co. v. ken v. Kihlken, 59 Ohio St. 106, 51 Bradv. 165 Mo. 197, 65 S. W. 303; N. E. 969. Clav' County Bank v. Keith, 85 :Mo. ^ Halloran v. Halloran. 137 III. 100, App. 409. ' 27 N. E. 82. *^ Elmore v. Elmore (Kv.), 22 Ky. *» Neresheimer v. Smvth, 167 N. Y. L. 856, 58 S. W. 980; Jones' Admr. v. 202, 60 N. E. 449. Jenkins, 83 Ky. 391 ; Bibb v. Baker's § 663 CONTRACTS. 22 § 663. Agreements contemplating publication of libel. — A contract which contemplates the publication of a libel against a third person has been held illegal because it has for its object the commission of a civil injury against such third person.''*' Thus a contract to indemnify a publisher against loss or damages re- sulting from the publication of a libel is void. The law will not interfere to aid either; it will not inquire which of the two is the more in the wn'ong with a view of adjusting the equities between them, but regarding both as having been understandingly engaged in a violation of the law it will leave them as it finds them to adjust their differences between themselves as best they may.^^ The liberty of the press is not involved in such cases. "The liberty of the press does not include the right to publish libel much less does it include the right to be indemnified against the just legal consequences of such publication."^^ However, it has been held that a publisher might contract for indemnity against possible liability for unintentional libel.®^ § 664. Agreements mala in se and agreements mala pro- hibita. — Some of the earlier cases made a distinction between contracts mala prohibita and mala in se. This distinction rested on no solid foundation, however, so far at least as it was supposed to affect the subject here under consideration,''* and has been re- ''" Fores v. Johnes, 4 Esp. 97 ; Pop- prietor's knowledge or consent. Col- lett V. Stockdale, 2 C. & P. 198; burn v. Patmore, 1 Cromp. M. & Shackell v. Rosier, 2 Bing. N. Cas. R. 73. 634; Hayes v. Hayes, 8 La. Ann. 468; "'Arnold v. Clifford, 2 Sumn. (U. Ives V. Jones, 25 N. Car. 538, 40 Am. S.) 238. Fed. Cas. No. 555. To same Dec. 421 ; Lea v. Collins, 4 Sneed. effect, Adkins v. Johnson, 43 Vt. 78, (Tenn.) 393; Arnold v. Clifford, 2 5 Am. Rep. 260. Sumn. (U. S.) 238, Fed. Cas. No. "''The court said: "In order, we 555 ; Atkins v. Johnson, 43 Vt. 78, 5 think, to render the contract unlaw- Am. Rep. 260. See also, Colburn v. ful, it should appear that there was Patmore, 1 Cromp. M. & R. 73. an intention on the part of the author ""Adkins v. Johnson, 43 Vt. 78, 5 and publisher to write and publish Am. Rep'. 260. To same effect, Ar- libelous matter, or that the author nold V. Clifford, 2 Sumn. 238, Fed. proposed, with the knowledge and ac- Cas. No. 555; Shackell v. Rosier, 2 quiescence of the publisher, to write Bing. N. C. 634. For the same libelous matter, or that the contract reason it has been held that the pro- on its face provided for or promoted prietor of a newspaper could not re- an illegal act." C. F. Jewett Pub. Co. cover of his editor damages he had v. Butler, 159 Mass. 517, 34 N. E. sustained as a result of an action 1087, 22 L. R. A. 253. brought against him for a libel in- '" Sharp v. Farmer, 4 Dev. & B. L. serted by the editor without the pro- (N. Car.) 122. 23 LEGALITY OF OBJECT. § 665 pudiated.®^ The same general rule applies whether the contract is malum in se or malum prohibitum ; in either case the maxim ex turpi causa non oritur actio applies."" § 665. Basis of the rule. — It should be borne in mind, how- ever, that public pcjlicy lies at the basis of the law in regard to illegal contracts, and the rule is adopted not strictly for the bene- fit of the parties but rather for the benefit of the public. It is obvious that cases may arise even under contracts of this char- acter in which the public interest will be better served by granting than by denying relief and in such the general rule should yield to this policy. The principle of in pari delicto will not defeat Again it recovery in such cases if public policy demands it. " Bensley v. Bignold, 5 Barn. & Aid. 335; Penn v. Bornman, 102 111. 523. "A contract may be invalid when the act to be done is legal, both where the contract is made and where it is to be performed (Davis v. Osgood, 69 N. H. 427, 44 Atl. 432), for, not only is a contract to do an illegal act invalid, but one to do a legal act is also invalid if it is made at a time or in a way the lex loci contractus forbids the parties to make it. The test therefore to deter- mine the validity of a contract is to inquire whether the lex loci contractus, forbids the parties to make it — not whether it forbids them to do the act or acts it contemplates, nor whether the parties are forbidden to do them by the law of the place where they are to be done." Lovell V. Boston & M. R. Co. (N. H.), 78 Atl. 621. "^ Melchoir v. ^kCarty, 31 Wis. 252, 11 Am. Rep. 605. To same effect, Aubert v. Maze, 2 Bos. & P. 371; Jackson v. Shawl, 29 Cal. 267; Pike v. King, 16 Iowa 49 ; Hathaway v. Moran, 44 Maine 67; White v. Buss, 3 Cush. (]\Iass.) 448; Haggerty v. St. Louis Ice &c. Co., 143 Mo. 238, 44 S. W. 1114, 40 L. R. A. 151, 65 Am. St. 647; Downing v. Ringer, 7 Mo. 585; Lewis v. Welch. 14 N. H. 294; Evans v. Trenton, 24 N. J. L. 764 ; Pennington v. Townsend, 7 Wend. (N. Y.) 276; Securitv Life & Annu- ity Co. V. Costner. 149 N. Car. 293. 63 S. E. 304; Puckett v. Alexander, 102 N. Car. 95, 8 S. E. 767, 3 L. R. A. 43; Cansler v. Penland, 125 N. Car. 578, 34 S. E. 683, 48 L. R. A. 441; Rossman v. McFarland, 9 Ohio St. 369; Columbia Bank & Bridge Co. V. Haldeman, 7 Watts & S. (Pa.) 233. 42 Am. Dec. 229; Eberman v. Reitzel, 1 WaUs & S. (Pa.) 181 ; Holt V. Green, 11 Pa. 198, 13 Am. Rep. IZT \ Young V. Robertson, 6 Phila. (Pa.) 184; Ohio Life Ins. &c. Co. v. IMerchants' &c. Ins. Co., 11 Humph. (Tenn.) 1, 53 Am. Dec. 742; Hunt v. Robinson, 1 Tex. 748; Bank of United States v. Owens. 2 Pet. (U. S.) 527, 7 L. ed. 508; Gibbs v. Con- solidated Gas Co., 130 U. S. 396, Zl L. ed. 979, 9 Sup. Ct. 553. An act which is prohibited by statute or the com- mon law whether malum in se or merely malum prohibitum, whether indictable or subject only to a penalty of forfeiture, cannot form the con- sideration of a valid contract. Lind- sev v. Rottaken, 32 Ark. 619. " See Bcrka v. Woodward, 125 Cal. 119, 57 Pac. m. 45 L. R. A. 420, ll Am. St. 31 ; Hobbs v. Boatright, 195 ^lo. 693. 93 S. W. 934, 5 L. R. A. (N. S.) 906, 113 Am. St. 709. "In re- gard to contracts not immoral or criminal in themselves, but prohibited by statutory law, the same general rule may be said to apply, not, how- ever, universal in its application, but subject to certain exceptions as bind- ing in authoritv as the rule itself." Lester v. Howard Bank, Zl :\Id. 558, 3 Am. Rep. 211. § 666 CONTRACTS. 24 has been said: *'It is no doubt the general rule of law, that no right of action can spring out of an illegal contract. And the rule that an illegal contract cannot be enforced, applies as well to contracts malum prohibitum, as to contracts malum in se. But it does not necessarily follow that all the consequences attending a contract, which is contrary to public morals, or founded on an immoral consideration, attend and affect a contract malum pro- hibitum merely. The law in the former case will not undertake to relieve parties from the position in which they have placed themselves, or to adjust the equities between them. But in the latter case, while the law will not enforce the prohibited con- tract, it will take notice of the circumstances, and if justice and equity require a restoration of money or property, received by either party thereunder, it will give, and in many cases has given relief."^« § 666. Penalties generally import or imply prohibition. — A statute which imposes a penalty upon an act by implication ordinarily prohibits such act. A penalty usually implies a pro- hibition although there are no prohibitory words in the statute.^^ ""Pratt V. Short, 79 N. Y. 437, 35 Am. Rep. 671; Harrison v. Jones, Am. Rep. 531. See also, In re T. H. 80 Ala. 412; Dudley v. Collier, 87 Bunch Co., 180 Fed. 519, which says, Ala. 431, 6 So. 304, 13 Am. St. 55; "A distinction is made between acts Aloog v. Hannon, 93 Ala. 503, 9 So. which are mala in se, which are gen- 596; Youngblood v. Birmingham erally regarded as absolutely void in Trust &c. Co., 95 Ala. 521, 12 So. the sense that no right or claim can 579, 20 L. R. A. 58, 36 Am. St. 245; be derived from them, and acts which Tucker v. West, 29 Ark. 386; Martin are mala prohil)itum, which are void v. Hodge, 47 Ark. 378, 1 S. W. 694, or voidable according to the nature 58 Am. Rep. 763 ; Jackson v. Shawl, of the thing prohibited," quoting 29 Cal. 267 ; Berka v. Woodward, 125 from Ewell v. Daggs, 108 U. S. 143, Cal. 119, 57 Pac. 111. 45 L. R. A. 420, 27 L. ed. 682, 2 Sup. Ct. 408; Doney n Am. St. 31; Funk v. Gallivan, 49 v. Langheim (Ind. App.), 94 N. E. Conn. 124, 44 Am. Rep. 210; Cook v. 1027. See also, post, § 676. Also chap. Pierce, 2 Houst. (Del.) 499; Watkins 28, Effect of Performance of Illegal Medical Co. v. Paul, 87 111. App. Contract. 278; People v. Whiteside County, 122 '''Bensley v. Bignold, 5 B. & Aid. 111. App. 40; Skelton v. Bliss, 7 Ind. 335; D'Allax v. Jones, 2 Jur. (N. S.) 11; Siter v. Sheets, 7 Ind. 132; 979; Tyson v. Thomas, McCl. & Y. Beecher v. Peru Trust Co. (Ind. 119; MacDonald v. Riordan, Rap. App.), 97 N. E. 23; Pike v. King, 16 Jud. Quebec, 8 B. R. 555, Appeal dis- Iowa 49; Watrous v. Blair, 32 Iowa missed in 30 Can. Sup. Ct. 619; 58; Pangborn v. Westlake, 36 Iowa Brown v. Moore, 32 Can. S. C. 93; 546; Dillon v. Allen, 46 Iowa 299, 26 Shippey v. Eastwood, 9 Ala. 198; Am. Rep. 145; Tootle v. Taylor, 64 Sahmarsh v. Tuthill, 13 Ala. 390; Iowa 629, 21 N. W. 115; Richardson Stanley v. Nelson, 28 Ala. 514; v. Brix, 94 Iowa 626, 63 N. W. 325; Woods V. Armstrong, 54 Ala. 150, 25 Pinney v. First Nat. Bank, 68 Kans. 25 LEGALITY Or OBJECT. 666 Thus, it has been held that the law would not aid a plaintiff to recover the value of a lottery ticket from one who had obtained possession of it.' Likewise, a statute which lays a penalty on any one who brings lumber into the state for sale without its being surveyed, marked and numbered according to the require- ments of the statute, by implication prohibits its sale unless so surveyed, marked and numbered." And a sale of pressed hay unbranded in violation of the statute has been declared void although not prohibited in express terms.^ And one who sells wood before it is measured by the proper official has been denied the right to recover the price of the wood.* The same rule has been applied where shingles were sold which were not of the size prescribed by statute.^ 223, 75 Pac. 119; Rust v. Larue, 4 Litt. (Ky.) 411, 14 Am. Dec. 172; Murphy v. Simpson, 14 B. Mon. (Ky.) 419; Vanmctcr v. Spurrier, 94 Kv. 22, 21 S. W. ZZ7; Buxton v. Hamblen, 32 Maine 448; Durgin v. Dver, 68 Maine 143 ; Allen v. Hawks, 13' Pick. (Mass.) 79; Miller v. Post, 1 Allen (Mass.) 434; Prescott v. Battersbv, 119 Mass. 285; Shattuck V. WatsSn, 164 Mich. 167, 129 N. W. 196; Solomon v. Dreschler, 4 Minn. 278. 4 Gil. 197; Ingersoll v. Randall, 14 Gil. (Minn.) 304; Bisbee v. Mc- Allen, 39 Minn. 143, 39 N. W. 299; Demers v. Daniels, 39 Minn. 158. 39 N. W. 98; Robv v. West, 4 N. H. 285, 17 Am. Dec. 423; Pray v. Burbank, 10 N. H. 2>77; Lewis v. Welch, 14 N. H. 294; Williams v. Tappan, 23 N. H. 385; Brackett v. Hovt. 29 N. H. 264; Coburn v. Odell, 30 'N. H. 540; Hal- lett V. Novion, 14 Johns. (N. Y.) 273, revd. 16 Johns. (N. Y.) Z27 ; Griffith V. Wells, 3 Denio (N. Y.) 226; Barton V. Port Jackson &c. Road Co., 17 Barb. (N. Y.) 397; Best v. Bauder, 29 How. Pr. (N. Y.) 489; Vininp; v. Bricker. 14 Ohio St. 331 ; Mitchell v. Smith. 1 Binn. (Pa.) 110. 2 Am. Dec. 417; Seidenbender v. Charles, 4 Serg. & R. (Pa.^ 151. 8 Am. Dec. 682; Columbia Bank & Bridge Co. v. Haldeman, 7 Watts. & S. (Pa.) 233, 42 Am. Dec. 229; Lutz v. Weidncr, 1 Woodw. Dec. (Pa.) 428; Harrison V. Berkley, 1 Strob. (S. Car.) 525, 47 Am. Dec. 578; Ohio Life Tns. & T. Co. V. Merchants' Ins. & T. Co., 11 Humph. (Tenn.) 1, 53 Am. Dec. 742; Perkins v. Watson, 2 Baxt. (Tenn.) 173; Harris v. Runnels, 12 How. (U. S.) 79, 13 L. ed. 901; Elkins v. Park- hurst, 17 Vt. 105; TerriU v. Bartlett, 21 Vt. 184; Bancroft v. Dumas, 21 Vt. 456; Boutwell v. Foster, 24 Vt. 485; Aiken v. Blaisdell, 41 Vt. 665; Wilson V. Spencer, 1 Rand. (Va.) 76, 10 Am. Dec. 491 ; Middleton v. Ar- nold, 13 Grat. (Va.) 489; Niemeyer V. Wright, 75 Va. 239, 40 Am. Rep. 720. This rule was announced thus in the early case of Bartlett v. Vinor, Carth. 251, where it is said: "Every contract made for or about any mat- ter or thing which is prohibited and made unlawful by any statute is a void contract, tho' the statute itself doth not mention that it shall be so, but only inflicts a penalty on the of- fender, because the penalty implies a prohibition, tho' there are no pro- hibitory words in the statute." ^ Funk V. Gallivan, 49 Conn. 124, 44 Am. Rep. 210. 'Prescott V. Battersby, 119 Mass. 285 ' Buxton V. Hamblen. 32 Maine 448. * Prav V. Burbank. 10 N. H. m. MVheeler v. Russell, 17 Mass. 258. See also, Beecher v. Penn Trust Co. (Ind. App.), 97 N. E. 23 (sale of stock food). See further succeeding sections. § 667 CONTRACTS. 26 § 667. When penalty does not imply prohibition. — How- ever, the imposition of a penalty does not necessarily and invar- iably render every contract in contravention of the statute void and unenforcible in the courts.® The question of whether all contracts in derogation of the statute are void is one of legislative intent. The purpose and intention of the legislature will control.'' If, from the subject-matter of the statute, the language used and the purpose sought to be accomplished by its enactment, it appears that the statute was not intended to imply a prohibition, courts will construe the statute accordingly.^ § 668. Different tests applied by different courts to deter- mine legislative intent. — It seems, however, that different cases apply different rules of construction by which to determine the legislative intent. It has been said that "when a statute is silent and contains nothing from which the contrary can be prop- erly inferred, a contract in contravention of it is void."'' Other cases lay down the rule that if the statute does not declare a con- tract made in violation of it to be void and if it is not necessary to hold the contract void in order to accomplish the purposes of the statute, the inference is that it was intended to be directory and not prohibitory of the contract.^^ ' Demers v. Daniels, 39 Minn. 158, such intention, the contracts should 39 N. W. 98; Niemeyer v. Wright, be sustained and enforced." Dunlop 75 Va. 239, 40 Am. Rep. 720. v. Mercer, 156 Fed. 545, 86 C. C. A. ' Toodle V. Taylor, 64 Iowa 629, 21 435. N. W. 115; Pinney v. First Nat. * Pangborn v. Westlake, 36 Iowa Bank, 68 Kans. 223, 75 Pac. 119; 546. See also, Lestor v. Bank, 33 Md. Vanmeter v. Spurrier, 94 Ky. 22, 21 558, 3 Am. Rep. 211; Burck v. Taylor, S. W. 337; Burck v. Taylor, 152 U. 152 U. S. 634, 38 L. ed. 578, 14 Sup. S. 634, 38 L. ed. 578, 14 Sup. Ct. Ct. 696. 696; Harris v. Runnels, 12 How. (U. "Harris v. Runnels, 12 How. (U. S.) 79, 13 L. ed. 901; Niemeyer v. S.) 79, 13 L. ed. 901. See also. In re Wright, 75 Va. 239, 40 Am. Rep. Pittock, 2 Sawy. (U. S.) 416, Fed. 720. "The true rule is that the court Cas. No. 11189. should carefully consider in each case ""When a statute imposes specific the terms of the statute which pro- penalties for its violation, where the hibits an act under a penalty, its act is not malum in se, and the pur- object, the evil it was enacted to rem- pose of the statute can be accom- edy, and the effect of holding con- plished without declaring contracts tracts in violation of it void, for the in violation thereof illegal, the infer- purpose of ascertaining whether or ence is that it was not the intention not the lawmaking power intended of the lawmakers to render such con- to make such contracts void, and, if tracts illegal and unenforcible." In from all these considerations it is re T. H. Bunch Co., 180 Fed. 519; manifest that the legislature had no Bowditch v. New England Mutual &c. 27 LEGALITY OF OBJFXT. 669 § 669. Revenue measures — Statutes for protection of pub- lic. — The effect of a penal statute upon a contract in (leroj^a- tion thereof also depends on llic j^urposes for which the penalty is attached. In case the penalty is attached for the protection of the public, a contract which violates the statutory provision is almost universally declared void." On the other hand, if the law is strictly a revenue law, the sole object being to get money into the treasury, a contract will not be held invalid merely because the stipulated license fee has not been paid.^" Some jurisdic- tions, however, seem to hold all contracts void regardless of whether the statute was passed to raise revenue or to protect the public.^" >j 670. Omission of penalty does not render express pro- hibition ineffective. — The omission of a penalty, however, does not necessarily render the express prohibitum ineffective. Contracts in violation of a statute have been held unlawful not- withstanding the statute violated merely prohibited the doing of the act and imposed no penalty for its violation.^* Such decisions Ins. Co., 141 Mass. 292, 4 N. E. 798. 55 Am. Rep. 474. To same effect, Bemis V. Becker, 1 Kans. 226. '' Cope V. Rowland. 2 M. & W. 149; Taylor v. Crowland Gas & Coke Co., 10 Exch. 293; Victorian Davlesford Syndicate v. Dott, 74 Law J. Ch. (N. S.) 673 (1905). 2 Ch. 624, 93 L. T. 627, 21 Times L. R. 742; Cundell v. Dawson, 4 C. B. 376; Ellis v. Batson (Ala.), 58 So. 193; Levison v. Boas, 150 Cal. 185, 88 Pac. 825, 12 L. R. A. (N. S.) 575n; Taliaferro v. Moffett. 54 Ga. 150; Randall v. Tuell, 89 Maine 443, 36 Atl. 910, 38 L. R. A. 143; Shattuck v. Watson, 164 Mich. 167. 129 N. W. 196; Cashin v. Pliter, 168 Mich. 386, 134 N. W. 482 ; Tandy V. Elmore Cooper Live Stock Co.. 113 Mo. App. 409, 87 S. W. 614; Hall v. Bishop, 3 Daly (N. Y.) 109. "Smith V. Mawhood. 14 M. & W. 452; Swan v. Bank of -Scotland. 1 Deacon Bankruptcy 752; Sunflower Lumber Co. v. Turner Supplv Co., 158 Ala. 191, 48 So. 510, 132 Am. St. 20; Vermont Loan & T. Co. v. Hoff- man, 5 Idaho 376. 49 Pac. 314. 37 L. R. A. 509. 95 Am. St. 186; Straus v. Mmzesheimer, 78 111. 492; Coates v. Locust Point Co., 102 Md. 291, 62 Atl. 625, 5 Am. & Eng. Ann. Cas. 895; Favor v. Philbrick, 7 N. H. 326; Lewis v. Welch, 14 X. H. 294; Hughes V. Snell, 28 Okla. 828, 115 Pac. 1105, 34 L. R. A. (N. S.) 1133; Amato V. Dreyfuss (Tex. Civ. App.), 34 S. W. 450; Dowell v. Applegate, 7 Fed. 881, 7 Sawv. (U. S.) 232. "Holt v. Green, '73 Pa. 198, 13 Am. Rep. 737; Johnson v. Hulings, 103 Pa. 498, 49 Am. Rep. 131. Compare, Rahter v. First Xat. Bank. 92 Pa. 393. See also. Smith v. ^lawhood, 14 Mces. & W. 452; Cope v. Row- lands. 2 M. & W. 149; Denning v. Yount, 62 Kans. 217. 61 Pac. 803, 50 L. R. A. 103; Manker v. Tough. 79 Kans. 46. 98 Pac. 792, 19 L. R. A. (X. S.) 675, 17 Am. & Eng. Ann. Cas. 208; Van Meter v. Spurrier, 94 Kv. 22, 21 S. W. 337 ;Territt v. Bartlett. 21 Vt. 184. "Robertson v. Hayes. 83 Ala. 290. 3 So. 674; Woods v. Armstrong. 54 Ala. 150. 25 Am. Rep. 671n ; Black v. Oliver, 1 Ala. 449, 35 Am. Dec. 38; Walker v. Gregorv, 36 Ala. 180 ; Peo- ple V. Whiteside County, 122 111. App. 40; Buchanan v. Tilden, IS App. § 671 CONTRACTS. 28 are based largely upon the ground that there is a moral obligation on the part of all people to obey the law regardless of any penalty imposed for its violation, nor will courts sanction the violation of a law which they are bound to respect, and enforce and give effect to a contract forbidden by it.^^ § 671. Agreements may be forbidden yet not void where statutes so provide. — In case the statute points out the con- sequences of its violation it has been stated broadly no other con- sequence than that provided for in the statute can be imposed.^" When it appears to have been the legislative intent to exclude every other penalty or forfeiture than such as is declared in the statute no other will be enforced, and it is held that an action may be maintained upon the transaction of which the prohibited act was a part, if such action can be maintained without sanction- ing the illegality.^^ Consequently when statutes prohibit a specific kind of contract but in addition provide that contracts entered into in violation of such statute are not to be deemed void, courts are obliged to enforce such contracts in accordance with the pro- visions of the statute.^^ Div. (N. Y.) 123, 45 N. Y. S. 417; Waugh V. Beck, 114 Pa. St. 422, 6 Atl. 923, 60 Am. Rep. 354; Hunt v. Robinson, 1 Tex. 748; Pierce v. United States, 1 Ct. CI. (U. S.) 270. "It is not necessary that a statute impose a penalty for doing or omit- ting to do something, in order to make a contract void which is op- posed to its operation." McGeehee v. Lindsay, 6 Ala. 16. "Hunt V. Robinson, 1 Tex. 748. See also, Sussex Peerage Case, 11 Clark & F. 85, 148. See ante, § 647. ^' Philadelphia Loan Co. v. Tow- ner 13 Conn. 249; Lazear v. Nat. Union Bank, 52 Md. 78, 36 Am. Rep. 355; Peterborough Xat. Bank v. Childs, 133 Mass. 248, 43 Am. Rep. 509; Faneuil Hall Bank v. Brighton, Bank, 16 Gray TMass.) 534; Ossipee Hosiery &c. Mfg. Co. v. Canney, 54 N. H. 295 ; Connecticut River Sav. Bank V. Fiske, 60 N. H. 363; Taylor v. Empire State Sav. Bank, 66 Hun fX. Y.) 538; Pratt v. Short, 79 N. Y. 437, 35 Am. Rep. 531; Utica Ins. Co. V. Scott, 19 Johns. (N. Y.) 1; Utica Ins. Co. v. Kip, 8 Cow. (N. Y.) 20; Utica Ins. Co. v. Cadwell, 3 Wend. (N. Y.) 296; Utica Ins. Co. v. Bloodgood, 4 Wend. (N. Y.) 652; Smith V. Exchange Bank, 26 Ohio St. 141; First Nat. Bank of Colum- bus V. Garlinghouse, 22 Ohio St. 492, 10 Am. Rep. 751; Rossman v. Mc- Farland, 9 Ohio St. 369; Turner v. Calvert, 12 S. & R. (Pa.) 46; Lucas V. Government Nat. Bank, 78 Pa. St. 228, 21 Am. Rep. 17; Harris v. Run- nels, 12 How. (U. S.) 79, 13 L. ed. 901; Oates v. National Bank, 100 U. S. 250, 25 L. ed. 580 ; Bank of United States v. Waggener, 9 Pet. (U. S.) 378, 9 L. ed. 163; Fleckner v. Bank of U. S., 8 Wheat. (U. S.) 338, 5 L. ed. 631. "Pratt V. Short, 79 N. Y. 437, 35 Am. Rep. 531. See also, Lewis v. Bright, 4 El. & Bl. 917. "Lewis v. Bright, 4 El. & Bl. 917; McMahon v. Boden, 89 Conn. 316; Connecticut River Mutual &c. Ins. Co. v. Whipple, 61 N. H. 61; York County v. Small, 1 W. & S. (Pa.) 315. 29 LEGALITY OF OBJECT. § 6/2 § 672. Illustrations of the rule. — Thus it has Ijccn held that where the statute in regard to usury provides for a forfeit of all interest where the contract is usurious but provides for no for- feiture of any portion of the principal, and the criminal statute makes the taking of usury a misdemeanor punishable by fine and imprisonment, an action on a note, a part of the consideration of which was usurious, is not defeated by the criminal statute since the usury statute provided for the status of usurious contracts when the subject of an action in a civil court. ^^ And a statute which forbids an insurance company to grant a rebate under pen- alty of forfeiting its license to do business does not render the policy void on the premium of which a rebate is given nor does it entitle the insured to recover the premium paid by him.-*' It has also been held that a statute which made it a misdemeanor to transact business under an assumed name without filing in the office of the clerk of the county or counties a certificate showing the parties' true full name, was intended to protect the creditors and not the debtors of persons conducting a business under a fictitious name and did not prevent the latter from recovering on an executed contract."^ § 673. Rule where conditions prescribed for conducting business are not complied with. — Violations of a law which requires a license to conduct a certain business or occupation have already been treated and nothing further will be added at this point."" The present topic does not have to do with the necessity to obtain a license to conduct a business at all, but rather with the placing of restrictions upon the method by which " Waite V. Bartlett, 53 Mo. App. a firm." This construction being, in 378, (Construing Dakota Statutes.) our opinion, justified by the very ^ Laun V. Pacific Mutual Life Ins. words of the act, supports the pre- Cc, 131 Wis. 555, 111 N. W. 660, 9 sumption that it was the legislative L. R. A. (X. S.) 1204. intent to make the statute effective "^ "In construing the New York act as thus interpreted, and that where, the Court of Appeals of that state in as in this case, goods contracted for Gay v. Seibold, 97 X. Y. 472, 49 Am. have been accepted, and the contract Rep. 533, said : "The purpose of the executed by the vendor, the debtor statute was obviously to protect per- cannot escape payment because the sons giving credit to the fictitious creditor has rendered himself liable firm on the faith of fictitious desig- to indictment. Rutkovvsky v. Bozza, nation. It could have no other pur- 73 .Atl. 502. pose. It was not needed to protect " See ante, § 666. See also, ante, those who obtained credit from such § 669. § 674 CONTRACTS. 3O a given business may be conducted. So long as statutes which prescribe conditions for conducting a business do not invade any constitutional right of the individual they are upheld and are en forcible. Thus, a statute which provided for the bi-weekly payment of employes has been upheld, the courts saying that "Any contract that might be voluntarily entered into between the corporation and its employes for the payment of the wages at a longer period than semi-monthly would be void, and could not deprive the employe of his right to request or demand the payment of his wages semi-monthly.""^ But a statute which prohibits both employer and employe in all lines of labor from contracting for employment except upon the condition that wages earned by the employe shall be paid weekly has been declared unconstitutional for the reason that it deprived citizens of their liberty to contract and of property without due process of law.^* § 674. Illustrations of the rule. — A contract for the em- ployment of minors in a factory in violation of a statute prohibit- ing their employment is void."^ An agreement whereby an em- ploye has agreed to work more than eight hours a day in violation of a law prohibiting more than eight hours of work a day in mines and filters has been declared void.'" Building contracts such as agreements to erect a building in a manner prohibited by law have been held unenforcible.^^ Should the statute impose a "Arkansas Stave Co. v. State, 94 68 ; Johnson v. Goodyear Min. Co., 127 Ark. 27, 125 S. W. 1001, 27 L. R. A. Cal. 4, 59 Pac. 304, 47 L. R. A. 338, (N. S.) 255n, 140 Am. St. 103. For 78 Am. St. 17. cases upholding similar statutes ^ Republic Iron & Steel Co. v. which are held not to infringe the State, 160 Ind. 379, 66 N. E. 1005, rights of either employe or the em- 62 L. R. A. 136. See also, Common- ployer to contract, see, Seelyville wealth v. Isenberg, 4 Pa. Dist. 579; &c. Min. Co. V. McGlosson, 166 Ind. Sally v. Berwind-White Coal Min. 561, n N. E. 1044, 117 Am. Co., 5 Pa. Dist. 316. St. Rep. 396; New York &c. "'P.irkett v. Chatterton, 13 R. I. 299, R^. Co. V. Williams, 64 Misc. (N. Y.) 43 Am. Rep. 30. The above case 15, 118 N. Y. S. 785; Lawrence v. holds that the wages earned cannot Rutland R. Co., 80 Vt. 370, 67 Atl. be recovered. See also, Emery v. 1091, 15 L. R. A. (N. S.) 350n. Sim- Kempton, 2 Gray (Mass.) 257. ilar statutes have, however, been de- ^ Short v. Bullion Beck &c. Min. clared unconstitutional where they Co., 20 Utah 20, 57 Pac. 720, 45 L. R. impose a penalty on artificial persons .\. 603. which was not imposed upon natural -^Stevens v. Gourley, 7 C. R. CN. persons. Smith v. Ohio Oil Co., 43 S.) 99; Eastern Expanded Metal Co. Ind. App. 735, 86 X. E. 1027. See also, v. Webb Granite &c. Co., 195 Mass. Slocum V. Rear Valley Irrigation Co., 356. 81 N. E. 251 ; Beman v. Tugnot, 122 Cal. 555, 55 Pac. 403, 68 Am. St. 5 Sands. (N. Y.) 153; Burger v. LEGALITY OF OBJECT. § 67 /D penalty for selling or disposing of goods, wares, or merchandise by scales or measures which have not been sealed and tested it has been held that no recovery can l^e had for the price thereof, since such sales are in violation of law.^* The rule has thus been expressed : 'The weighing or measuring is not a collateral matter, but is directly involved in the act of selling and the contract of sale. It regulates the quantity to be delivered and the amount to be paid. And where the statute has in view the prevention of fraud by the seller, then, though there be nothing but a penalty, a contract which infringes the statute cannot be upheld."-" The same general principle applies in those cases in which the statute requires goods to be inspected, labeled or their weight to be set forth.^** Thus, it has been held that the vendor of wood sold could not recover its price when before being sold it was not measured by officers appointed for that purpose as required by statute.^^ And a similar rule has been applied where shingles were of a size other than that prescribed by statute. ^- § 675. Attempting to do indirectly what cannot be done directly. — It is well settled that one cannot do by indirection that which cannot lawfully be done directly. A contract entered into in fraud or evasion of the statute is equivalent to an open violation of the act.^^ Thus, an agreement entered into on Sun- Koelsch, n Hun (N. Y.) 44, 28 N. McConnell, 65 Ga. 129; Conley v. Y. S. 460, 59 N. Y. St. 69. See also, Sims, 71 Ga. 161 ; Van Meter v. Hart V. City Theaters Co., 71 Misc. Spurrier, 94 Ky. 22, 21 S. W. ZZl \ (N. Y.) 427, 128 N. Y. S. 678, in Abbott v. Goodwin, 11 Maine 203; which a suit was brought to recover Prescott v. Battersby, 119 Mass. 385; agreed payments to be made in con- McConnell v. Kitchens, 20 S. Car. sideration'of the plaintiff's permitting 430, 47 Am. Rep. 845; Niemeyer v. defendant to cut a hole through Wright, 75 Va. 239. 40 Am. Rep. 720. plaintiff's wall and use the latter's '^ Pray v. Burbank, 10 N. H. 111. stairway as an exit for defendant's °- Wheeler v. Russell, 17 Mass. 258. theater. The building department ^ Ex parte McKay, L. R. 8 Ch. refused a permit. Held: that plain- App. 643; Working Men's Bankmg tiff could not recover, as the agree- Co. v. Rautenberg, 103 111. 460, 42 ment if carried out would involve a Am. Rep. 26; Wells v. People, 71 111. violation of the buildine: code. 532; Bank of United States v. Ow- =* Finch V. Barclav, 87 Ga. 393, 13 ens. 2 Pet. (U. S.) 527. 7 L. ed. 508. S. E. 566; Eaton v. Kegan, 114 Mass. "Whatever is prohibited by law to be 433. done directly, cannot legally be ef- -'Bisbee v. McAllen, 39 Minn. 143, fectcd by an indirect and circuitous 39 N W. 299. contrivance." Booth v. Bank of Eng- '" Pacific" Guano Co. v. jMullen. 66 land. 7 CI. & Fin. 509. A fraud upon Ala 582- Campbell v. Segars, 81 Ala. a statute is a violation of the statute. 259, 1 So. 714; Johnston Bros. v. "It cannot be permitted by law to § 676 CONTRACTS. Z^ day in violation of the statute is illegal, notwithstanding the parties date the instrument which sets forth the agreement on a week day.^* § 676. Contracts growing out of or connected with illegal contracts. — Where a contract grows immediately out of and is connected with a prior illegal or immoral contract the illegality of the latter will enter into the new contract and render it illegal and a court of justice will not lend its aid to enforce it.^^ The rule has been given the following broad statement: "If the con- nection between the original illegal transaction and the new promise can be traced, if the latter is connected with and grows out of the former, no matter how many times and in how many different forms it may be renewed, it cannot form the basis of a recovery, for repeating a void promise cannot give it validity.""^ § 677. Modified rule stated. — It is believed, however, that a more conservative statement is to the effect that if the new con- tract "grows out of or is dependent upon the original contract, which was an indivisible one, it cannot be enforced." And stipulate for the reservation of that which it is not permitted to receive. In those instances in which courts are called upon to inflict a penalty * * * it is necessarily otherwise ; for then the actual receipt is generally necessary to consummate the offense. But when the restrictive policy of a law alone is in con- templation, we hold it to be an universal rule that it is unlawful to contract to do that which it is un- lawful to do. * * * There can be no civil right where there can be no le- gal remedy, and there can be no legal remedy for that which is itself ille- gal. * * * There is no distinction, as to vitiating the contract, between malum in se and malum prohibitum." Bank of United States v. Owens, 2 Pet. (U. S.) 527, 7 L. ed. 508. "Heller v. Crawford, Z7 Ind. 279; Moseley v. Hatch, 108 Mass. 517: Ni- bert v. Baghurst, 47 N. J. Eq. 201, 20 Atl. 255. See post, § 691. " De Begnis v. Armistead, 10 Bing. 107; Aubert v. Maze. 2 B. & P. 371; Sturges V. Bush, 5 Day (Conn.) 452; Webster v. Sturges, 7 111. App. 560; Henderson v. Palmer, 71 111. 579, 22 Am. Rep. 117; Nash v. Monheimer, 20 111. 215; Cox v. Grubb, 47 Kans. 435, 28 Pac. 157, 27 Am. St. 303 ; Da- vis v. Holbrook, 1 La. Ann. 176; Cummings v. Saux, 30 La. Ann. 207; Wheeler v. Russell, 17 Mass. 258; Comstock V. Draper, 1 Mich. 481, 53 Am. Dec. 78; Buckingham v. Fitch, 18 Mo. App. 91 ; Electrova Co. v. Spring Garden Ins. Co., 156 N. Car. 232, 12 S. E. 306; Jones v. Surprise, 64 N. H. 243, 9 Atl. 384; Barton v. Port Jackson &c. Road Co., 17 Barb. (N. Y.) 397; Woodworth v. Bennett, 43 N. Y. 273, 3 Am. Rep. 706; Rose v. Truax, 21 Barb. (N. Y.) 361 ; John- son v. Hulings, 103 Pa. St. 498, 49 Am. Rep. 131; Shelton v. Marshall, 16 Tex. 344; Armstrong v. Toler, 11 Wheat. (U. S.) 258, 6 L. ed. 468. See also, Muller v. Wm. F. Stoacker Ci- gar Co., 89 Nebr. 438, 131 N. W. 923, 34 L. R. A. (N. S.) 573n. '"Comstock V. Draper, 1 Mich. 481 53 Am. Dec. 78. "^ Brechlin v. Night Hawk Min. Co., 33 LEGALITY OF OBJECT. § 678 if the new agreement does not grow out of or is not connected with the illegal contract or transaction but is based on a new con- sideration, it is valid so far as this question is concerned, not- withstanding the prior illegal contract or transaction may have indirectly given rise to the new agreement. ^^ As stated at the beginning of the chapter, the generally accepted test is whether the plaintiff can establish his case otherwise than through the medium of an illegal transaction to which he himself was a party.^** § 678. Rule where aid is required for illegal contract to establish case. — On the other hand if the plaintiff cannot establish his case otherwise than through the medium of an illegal transaction to which he himself was a party the new con- tract will be held illegal.'''' Thus a subsequent agreement which 49 Wash. 198, 94 Pac. 928, 126 Am. St. 863. So long as the void contract is the basis of the right of action, courts will leave the parties where it finds them. Cascade Pub. Serv. Corp. V. Railsback, 59 Wash. 376, 109 Pac. 1062. ^* Branch Bank v. Crocheron, 5 Ala. 250; Whetstone v. iNIontgomery Bank, 9 Ala. 875; Scheible v. Bacho, 41 Ala. 423; Barker v. Parker, 23 Ark. 390 : Fearnley v. De Mainville, 5 Colo. App. 441, 39 Pac. 73; Phalen V. Clark. 19 Conn. 421, 50 Am. Dec. 253; Jackson v. Dwight, 78 Fed. 896, 24 C. C. A. 380 ; Hoffman v. AIcMul- len, 83 Fed. 372, 28 C. C. A. 178, 45 L. R. A. 410, affd. 174 U. S. 639, 43 L. ed. 1117, 19 Sup. Ct. 839; Gullatt V. Thrasher, 42 Ga. 429; Guilfoil v. Arthur, 158 111. 600. 41 X. E. 1009; Tvlcr V. Tvler, 126 111. 525, 21 N. E. 616, 9 Am. St. 642 ; Daniels v. Barney, 22 Ind. 207; Green v. Schoenhofen Brewing Co., 103 Iowa 252. 72 X. W. 655: }kiartin v. Richardson, 94 Ky. 183, 14 Kv. L. 847, 21 S. W. 1039, 19 L. R. A. 692, 42 Am. St. 353 ; Stanley v. Nye, 51 Mich. 232; Smith v. Barstow, 2 Doug. (Mich.) 155; Gunnaldson v. Nyhus, 27 :^Iinn. 440, 8 X. W. 147; Hutchinson v. Dornin, 23 j\Io. App. 575; Scott v. Scott. 68 X. H. 7, 38 Atl. 567; Thalimer v. Brinkerhoff, 20 Johns. (X. Y.) 386; Bly v. Second Nat. Bank, 79 Pa. St. 453; Johnson v. 3 — Contracts, Vol. 2 Hullings, 103 Pa. St. 498, 49 Am. Rep. 131; Sawyer v. Macaulay, 18 S. Car. 543; Torbett v. Worthy, 1 Heisk. (Tenn.) 107; De Leon v. Trevino, 49 Tex. 88, 30 Am. Rep. 101 ; Flovd V. Patterson (Tex.), 18 S. W. 654, affg. 72 Tex. 202, 10 S. W. 526, 13 Am. St. 787; Dent v. Ferguson, 132 U. S. 50, 33 L. ed. 242, 10 Sup. Ct. 13; Ocean Ins. Co. v. Polleys, 13 Pet. (U. S.) 157, 10 L. ed. 105; Armstrong v. Toler, 11 Wheat. (U. S.) 258, 6 L. ed. 468; Armstrong v. American Exch. Xat. Bank, 133 U. S. 433, 33 L. ed. 747, 10 Sup. Ct. 450 : Buck v. Al- bee, 26 Vt. 184. 62 Am. Dec. 564: Bier v. Dozier, 24 Grat. (Va.) 1. If a contract is void, as made in viola- tion of law, the fact that a second promise is made into which a new consideration, lawful in its charac- ter, enters and is mingled with the unlawful consideration does not ren- der such second contract valid. Gwinn V. Simes, 61 Mo. 335 ; Bick v. Seal, 45 Mo. App. 475; Gray v. Hook, 4 X. Y. 449. =*In re T. H. Bunch Co., 180 Fed. 519; Electrova Co. v. Spring Garden Ins. Co., 156 N. Car. 232, 72 S. E. 306; Oliphant v. Markham, 79 Tex. 543, 15 S. W. 59, 23 Am. St. 363. See also, ante, § 226. '"Smith V. Mawhood. 14 M. & W. 452: Simpson v. Bloss, 2 Marsh. 542, 7 Taunt. 246; Fivaz v. Xicholls, 2 § 6/8 CONTRACTS. 34 has for its purpose the execution of the unexecuted portion of an illegal contract is illegal." For the same reason a new promise to pay money which is due on an illegal contract is unenforcible.^^ C. B. 501; Farmer v. Russel, 1 Bos. & P. 296; Tavlor v. Bowers, 1 Q. B. D. 291; Booth v. Hodgson, 6 T. R. 405; Gunter v. Lackev, 30 Ala. 591; McGehee v. Lindsav, 6 Ala. 16 ; Walk- er V. Gregory. 36 Ala. 180; Martin v. Hod?e. 47 .\rk. 378, 1 S. W. 694, 58 Am.^Rep. 763; Phalen v. Clark, 19 Conn. 421. 50 Am. Dec. 253 ; Hoffman V. McMullen, 83 Fed. 372, 28 C. C. A. 178, 45 L. R. A. 410, affd. 174 U. S. 639, 43 L. ed. 1117, 19 Sup. Ct. 839; Clark V. Brown, 17 Ga. 606; Ingram V. Mitchell. 30 Ga. 547: Welch v. Messon, 6 Gray (Mass.) 505; Gilliam V. Brown, 43 Miss. 641 ; Parsons v. Randolph, 21 Mo. App. 353; Harrison V. McCluney, 32 Mo. App. 481; Ty- ler V. Larimore, 19 Mo. App. 445 Suits V. Taylor, 20 Mo. App. 166 Kitchen v. Greenabaum, 61 Mo. 110 Roby V. West, 4 N. H. 285, 17 Am. Dec. 423; Woodman v. Hubbard, 25 X. H. 67, 57 Am. Dec. 310; Thalimer V. Binkerhoff, 20 Johns. (N. Y.) 386; Woodworth v. Bennett, 43 N. Y. 273, 3 Am. Rep. 706; Swan v. Scott, 11 Serg. & R. (Pa.) 155; Holt v. Green, 11 Pa. St. 198, 13 Am. Rep. IZl ; Eber- man v. Reitzel, 1 Watts & S. (Pa.) 181; Thomas v. Brady, 10 Pa. St. 164; Hippie v. Rice, 28 Pa. St. 406; Oliphant v. Markham, 79 Tex. 543. 15 S. W. 569, 23 Am. St. 363 ; Floyd v. Patterson, 72 Tex. 202, 10 S. W. 526, 13 Am. St. 787; Catts v. Phalen, 2 How. (U. S.) Zl(), 11 L. ed. 306; Har- ris V. Runnels, 12 How. (U. S.) 79; Buck V. Albee, 26 Vt. 184, 62 Am. Dec. 564; Hardy v. Stonebraker, 31 Wis. 640. "Webster v. Sturges, 7 111. App. 560; Barton v. Port Jackson &c. Plank Road Co., 17 Barb (N. Y.) 397; Gray v. Hook, 4 N. Y. 449; Rob- inson V. Kalbfleisch, 5 Thompson & C. (N. Y.) 212; McBlair v. Gibbes, 17 How. (U. S.) 232, 15 L. ed. 132. « Crawley v. White, 78 L. T. (N. S.) 167; Young v. Timmins, 1 Tyr. 226; Clay v. Ray, 17 C. B. (N. S.) 188; Geere v. Mare, 2 H. & C. 339; Bibb V. Hitchcock, 49 Ala. 468, 20 Am. Rep. 288; Chancely v. Bailey, Zl Ga. 532, 95 Am. Dec. 350 ; Hall v. Gavitt, 18 Ind. 390; Firemen's Charitable Assn. V. Berghaus, 13 La. Ann. 209; Howe V. Litchfield, 3 Allen (Mass.) 443 ; Coulter v. Robertson, 14 Smedes & M. (Miss.) 18; Claflin v. Torlina, 56 Mo. 369; Bick v. Seal, 45 Mo. App. 475; Crossley v. Moore, 40 N. J. L. 27; Stanton v. Allen, 5 Denio (N. Y.) 434, 49 Am. Dec. 282 ; Payne v. Eden, 3 Caines (N. Y.) 213; Bly v. Second Nat. Bank, 79 Pa. St. 453 ; Morris Run Coal Co. V. Barclay Coal Co., 68 Pa. St. 173, 8 Am. Rep. 159; Brown v. Tarkington, 3 Wall. (U. S.) Zll , 18 L. ed. 255. Compare York County v. Small, 1 W. & S. (Pa.) 315; Mechan- ics' Sav. Bank &c. Co. v. Duncan (Tenn. Ch. 1896), 36 S. W. 887; Bog- gess V. Lilly, 18 Tex. 200; Shelton v. Marshall, 16 Tex. 344; Robertson v. Marsh, 42 Tex. 149; Seeligson v. Lewis, 65 Tex. 215, 57 Am. Rep. 593; Reed v. Brewer (Tex. Civ. App.), 36 S. W. 99, affd. 90 Tex. 144, 2>1 S. W. 418; Wegner Bros. v. Biering, 65 Tex. 506; Pierce v. Kibbee, 51 Vt. 559; Fivas v. Nicholls, 2 C. B. 501. "No court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act." Hol- man v. Johnson, Cowp. 341. Con- tracts in violation of law are with- out binding force, the parties there- to, being in delicto, can claim no rights under them. Johns v. Bailey, 45 Iowa 241. "No principle of law * * * is better settled, than that no action will lie upon a contract made in violation of a statute." Wheeler V. Russell, 17 Mass. 258. In Holt v. Green, IZ Pa. St. 198, 13 Am. Rep. IZl , it is said : "The test whether a demand connected with an illegal transaction is capable of being en- forced by law is, whether the plain- tiff requires the aid of the illegal transaction to establish his case. * * * If a plaintiff cannot open his case without showing that he has broken the law, a court will not as- sist him. * * * The principle to be extracted from all the cases is, that the law will not lend its support to 35 LEGALITY OF OBJECT. § 679 § 679. Illustrations of the rule. — Thus, as between the par- ties, a promissory nute'^ or a note and mortgage given in place of other notes and mortgages/^ or a draft*^ cannot be recovered on when made in execution of an illegal contract, and this is held true even though a new consideration enter into the new contract when the two are indivisible/" The same principle has been held to apply notwithstanding the new contract is under seal, and for that reason imports a consideration.*^ It is obvious that a con- tract illegal as against public policy cannot be rendered vaHd by a subsequent ratification.'*® § 680. Rule where illegal contract is abandoned or merely collateral. — However, where the contract between the par- ties is not directly connected with the illegal transaction and is a claim founded on its own viola- tion." " Seeligson v. Lewis, 65 Tex. 215, 57 Am. Rep. 593. Compare also, Em- hrey v. Jemison, 131 U. S. 336, 23 L. ed. 172, 9 Sup. Ct. 776. " Pierce v. Kibbee, 51 Vt. 559. *"* Morris Run Coal Co. v. Barclay Coal Co., 68 Pa. St. 173, 8 Am. Rep. 159. "Clay V. Ray, 17 C B. (N. S.) 188. See also, Santa Clara Valley &c. Co. V. Hayes, 76 Cal. 387, 18 Pac. 391, 9 Am. St. 211; Nicholson v. Ellis, 110 Md. 322, 73 Atl. 17. 24 L. R. A. (N. S.) 942n, 132 Am. St. 445. See also, ante, § 226. "Fisher v. Bridges, 3 El. & Bl. 642; Lyon v. Waldo, 36 Mich. 345, 353 *«Swann v. IMiller, 82 Ala. 530, 1 So. 65 ; Moog v. Hannon, 93 Ala. 503, 9 So. 596; Rainev v. Capps, 22 Ala. 288; Butler v. Lee, 11 Ala. 885, 46 Am. Dec. 230; Shippey v. East- wood, 9 Ala. 198; Pettit's Admr. v. Pettit's Distributees, 32 Ala. 288; Tucker v. West. 29 Ark. 386: Hoff- man V. McAIullen. 83 Fed. 372, 28 C. C. A. 178, 45 L. R. A. 410, affd. 174 U. S. 639. 19 Sup. Ct. 839. 43 L. ed. 1117; Meriwether v. Smith, 44 Ga. 541; Calhoun v. Phillips, 87 Ga. 482, 13 S. E. 593 ; Thompson v. War- ren, 8 B. Mon. (Ky.) 488: Pope V. Linn, 50 Maine 83; Plaisted v. Palmer, 63 Maine 576; Ladd v. Rogers, 11 Allen (Mass.) 209; Day V. McAllister, 15 Gray (Mass.) 433; Tucker v. Mowrey, 12 Mich. 378; Winfield v. Dodge, 45 Mich. 355, 7 X. W. 906, 40 Am. Rep. 476; Handy v. St. Paul Globe Pub. Co., 41 Minn. 188, 42 X. W. 872, 4 L. R. A. 466, 16 Am. St. 695; Kountz v. Price, 40 Miss. 341 ; Gwinn v. Simes, 61 Mo. 335; Bick v. Seal, 45 Mo. App. 475; -VlcCormick Harvesting Mach. Co. v. tinier, 54 Xebr. 644, 74 X. W. 1061; Allen V. Deming, 14 N. H. 133, 40 Am. Dec. 179; Boutelle v. Melendv, 19 X. H. 196, 49 Am. Dec. 152: Reeves v. Butcher, 31 N. J. L. 224; Nibert v. Baghurst (N. J. Eq.). 25 Atl. 474; Steffens v. Earl, 11 Vroom (X. J. L.) 128, 29 Am. Rep. 214; Ryno v. Darby, 20 N. J. Eq. 231 ; Robinson v. Kalb- fleisch, 5 Thomp. & C. (X. Y.) 212; McKee v. Cheney, 52 How. Pr. (X. Y.) 144; Gray v. Hook, 4 X. Y. 449; Wheeler v. Wheeler, 5 Lans, (X. Y.) 355; Henry Christian Bldg. &c. Assn. v. Walton, 181 Pa. St. 201, 37 Atl. 261. 59 Am. St. 636; Shisler v. Vandike, 92 Pa. St. 447, 37 Am. Rep. 702; Hunter v. Xolf, 71 Pa. St. 282; Pearsoll v. Chapin, 44 Pa. St. 9 : Xeg- ley V. Lindsay, 67 Pa. St. 217, 5 Am. Rep. 427; Rue v. Missouri Pac. R. Co., 74 Tex. 474, 8 S. W. 533. 15 Am. St. 852; Vinz v. Beatty, 61 Wis. 645. 68 1 CONTRACTS. 36 itself legal and entirely collateral to any illegal agreement it will be upheld.*" Thus it has been held that an action could be main- tained on a note given for the rent of land leased for the purpose of raising food for laborers in the employ of the confederate government.^*^ Likewise, in the absence of any express statutory provision to the contrary, an action may be maintained to recover the price of goods sold and delivered by one who is a member of an illegal trust or combination, when the sale of such goods is merely collateral to the illegal combination or agreement.^^ § 681. Collateral contracts of insurance, surety and loans. — It has also been held that insurance could be recovered on a piano which had been placed in a house of ill fame to enable the proprietor to try, and induce her to purchase the same, since the illegal nature of the house was too remote to make the insurance *' Midland Valley R. Co. v. Hofif- man Coal Co., 91 Ark. 180, 120 S. W. 380 ; Chicago Well Paper Mill v. Gen- eral Paper Co., 147 Fed. 491, 78 C. C. A. 607, 8 Am. & Eng. Ann. Cas. 889; International Harvester Co. v. Smith, 163 Mich. 55, 127 N. W. 695, 30 L. R. A. (N. S.) 580; Electrova Co. v. Spring Garden Ins. Co., 156 N. Car. 232, 72 S. E. 306. ""McKesson v. Jones, 66 N. Car. 258, 264. In the course of the opin- ion the court said : "In the present case the aid given the rebellion was much more indirect ; it was at best two steps further off. It was not a sale of military material, nor even a sale of provisions to laborers engaged in making such material, but a lease of land upon which provisions might be raised, which might be applied to feed laborers engaged in an unlaw- ful occupation." Again, it is said in the same case: "It is possible to foresee and calculate • the direct consequences of an act. If we at- tempt to follow it out into its indirect and more remote consequences, our reasoning becomes soon uncertain, and after a few steps altogether un- satisfactory. When we confine our- selves to direct consequences, we feel that we are treading on tolerably firm ground; but if we go farther, there is no telling into what calculations of remote and merely possible conse- quences we may not be compelled to plunge." " Midland Valley R. Co. v. Hoffman Coal Co., 91 Ark. 180, 120 S. W. 380 ; Buckhorn Plaster Co. v. Consolidated Plaster Co., 47 Colo. 516, 108 Pac. 27; Chicago Wall Paper Mills v. General Paper Co., 147 Fed. 491, 78 C. C. A. 607, 8 Am. & Eng. Ann. Cas. 889; Boatmen's Bank v. Fritzlen, 175 Fed. 183; Johns-Pratt Co. v. Sachs Co., 176 Fed. 738; Motion Picture Patents Co. v. Laemmle, 178 Fed. 104; Virtue V. Creamery Package Mfg. Co., 179 Fed. 115, 102 C. C. A. 413; Bessire & Co. V. Corn Products Mfg. Co., 47 Ind. App. 298, 94 N. E. 353; Inter- national Harvester Co. v. Smith, 163 Mich. 55, 127 N. W. 695, 30 L. R. A. (N. S.) 580; Freed v. American Fire Ins. Co., 90 Miss. 72, 43 So. 947, 11 L. R. A. (N. S.) 368; Brooklyn Dis- tilling Co. V. Standard Distilling and Distributing Co., 120 App. Div. (N. Y.) 237, 105 N. Y. S. 264, affd. on other grounds in 193 N. Y. 551, 86 N. E. 564; Connollv v. Union Sewer Pipe Co., 184 U. S. 540, 46 L. ed. 679, 22 Sup. Ct. 431 ; Continental Wall Paper Co. V. Louis Voight & Sons Co., 212 U. S. 227, 53 L. ed. 486, 29 Sup. Ct. 280, affg. 148 Fed. 939, 78 C. C. A. 567, 19 L. R. A. (N. S.) 143. 37 LEGALITY OF OBJECT. § 682 policy void as against public policy.'^" So, it has been held that where a principal and surety gave a note for a consideration against public policy and the surety paid the same at the request of the principal, the principal giving a new note to the surety, the latter note could be collected.''^ On the same principle a loan of money by one in no way connected with a gambling transac- tion, to another, in order that he may pay a gambling debt already made, may be recovered in the absence of a special statute.^* § 682. Contracts containing several distinct undertakings. — Closely allied to contracts of this character are those w^hich contain distinct undertakings, some of which are legal and some illegal. As a general rule, where a deed or other contract con- tains distinct undertakings some of which are legal and valid and some illegal or void, the former will, when separable from the latter, be upheld, though the latter are void.^^ § 683. Repeal of statutes — Contract valid under existing law. — As a general rule, the validity of a contract is deter- mined by the law in force at the time the contract was made."^ This is true regardless of whether the law in force at the time "Electrova Co. v. Spring Garden mere subterfuge resorted to in order Ins. Co., 156 N. Car. 232, 72 S. E. 306. to avoid the statute against gaming. " Powell V. Smith, 66 N. Car. 401. St. Croix v. Morris. 1 Cab. & El. 485 ; "Eaiknev v. Revnous. 4 Bur. 2069; Hill v. Fox, 4 H. & N. 359; Roberts Ex parte Pvke, L. R. 8 Ch. Div. 754, v. Blair, 11 Colo. 64; Sampson v. 38 L. T. (X. S.) 923, 26 W. R. 806; Whitnev, 27 La. .Ann. 294. See also. Fox V. Hill, 4 H. & N. 359, 7 W. R. IMcKinnell v. Robinson. 3 M. & W. 263; English v. Young. 10 B. Mon. 435; White v. Wilson, 100 Ky. 367, 38 (Ky.) 141; White v. Wilson (Ky), S. W. 495, Z1 L. R. A. 197. 37 S. W. 677; Wyman v. Fiske, 3 "Pittsburgh &c. R. Co. v. Brown Allen (Mass.) 238. 80 Am. Dec. 66; (Ind.), 97 N. E. 145; Nicholson v. Mooring v. Stanton, 1 Mart. (1 N. Ellis. 110 Md. 322, 12> Atl. 17, 24 L. R. Car.) 52; Ballard v. Green, 118 N. A. (N. S.) 942n, 132 Am. St. 445; Car. 390. 24 S. E. Ill : Fnlwell v. Leavitt v. Palmer, 3 N. Y. 19. 51 Am. Stuart, 4 Pa. Co. Ct. 80; Owen v. Dec. ZZl\ Central New York Tel. &c. Davis. 1 Bail. (S. Car.) 315; Arm- Co. v. Averill, 199 X. Y. 128,92 N. E. strong V. American Exch. Nat. Bank, 211, 139 Am. St. 878; Tate v. Gaines 133 U. S. 433, 2,2> L. ed. 747, 10 Sup. (Okla.), 105 Pac. 193. 26 L. R. A. Ct. 450. Under the provision of spe- (N. S.) 106. and note; Winsor v. cial statutes recovery has been held Commonwealth Coal Co. (Wash.), to be forbidden. Tatam v. Reeve. 5 114 Pac. 908, 12, L. R. A. (N. S.) 63. Reports ^l (1893), 1 Q. B. 44, 62 L. See also, ante, § 226. J. Q. B. 30, 67 L. T. (N. S.) 683. 41 "Woods v. Armstrong, 54 Ala. W R 174, 57 J. P. 118; White v. 150, 25 .\m. Rep. 671: Pacific Guano Wilson's Admr. (Kv.). 2,1 S. W. 677. Co. v. Dawkins, 57 Ala. 115; Schaun The loan must not, however, be a v. Brandt, 116 Md. 560, 82 Atl. 551. § 683 CONTRACTS. 38 the contract is entered into declares it valid or void. Thus, it has been held that a contract legal and valid at the time it is entered into is not rendered illegal by a subsequent statute de- claring such contract to be unlawful.^' In accordance with this principle recovery has been permitted upon a contract for the sale of beer in Indian Territor}' made before the passage of an act declaring such sales unlawful.^^ Xor can a property right ac- quired under a state statute be divested by repealing the statute.^® Where, therefore, under an act directing a city to audit and adjust the amount of damage done to certain private property by the opening of a street, providing for an appraisal thereof by commissioners, and requiring the city to raise the amount by assessment, and pay it over to the owner of the property, after the commissioners have made the appraisal, and their report has been affirmed by the court, the owner's claim against the city is fixed, and cannot be affected by a subsequent repeal of the act.^" "Bennett v. Woolfolk, 15 Ga. 213. " Anheuser-Busch Brewing Assn. V. Bond, 66 Fed. 653, 13 C. C. A. 665. *» People V. O'Brien, HI X. Y. 1, 18 X. E. 692, 2 L. R. A. 255, 7 Am. St. 684. **"We have seen that the report of the commissioners under the statute, awarding damages to the relator in the sum of $5,500, confirmed by an order of the court, had all the force and effect of a judgment creating an obligation on the part of the city to pay. Woodhull v. Little, 102 X. Y. 165, 6 X. E. 266; People v. Common Council of Syracuse, 78 X. Y. 56. It vested in the relator, when the or- der of confirmation was enforced, an absolute right to receive the amount. It created an obligation on the part of the city to pay, and in this sense was a contract of the highest nature. Cornell v. Donovan, 14 Daly 295. All contract obligations are protected from impairment by state legislation by the provisions of the federal con- stitution. The obligation of a con- tract is impaired in the constitutional sense by any law which prevents its enforcement, or which materially abridges the remedy for enforcing it, which existed when it was con- tracted, and does not supply an al- ternative remedy equally adequate and efficacious. McGahey v. Virgmia, 135 U. S. 662, 685, 10 Sup. Ct. 972. * * * The remedy subsisting in es- tate when and where an obligation is made or created and is to be per- formed is a part of the obligation, and any subsequent law of the state which so affects that remedy as sub- stantially to impair and lessen the value of the contract is forbidden by the constitution, and is, therefore, void. Edwards v. Kearzey, 96 U. S. 595. This provision of the constitu- tion cannot be evaded by indirect methods. The obligation of a mu- nicipal corporation cannot be im- paired by restraining its powers of taxation to the point of disabling it from performance, or by repeal of the law under which the obligation was to be enforced, or by enacting statutes of limitation that do not al- low a reasonable time for bringing the action any more than by open and avowed assaults upon the con- tract itself. In this case the repeal- ing act could have no other purpose than to prevent the audit and pay- ment of the relator's claim ; but whatever the motive which prompted the legislation, it is clearly inoper- ative and void as to the award made 39 LEGALITY OF OBJECT. § 684 ^ 684. Repeal of statutes — Contract void under existing law. — On the other hand, a contract which is invalid under the law in force at the time it was made is not validated by the enactment of subsequent legislation under which it might be en- tered into legally."^ It follows that the repeal of a law which declares a specified contract unlawful and which was in force at the time the minds of the parties met does not render such con- tract valid and binding.*^" Thus, the subsequent repeal of a stat- ute by which a particular transaction is rendered void and illegal does not validate an agreement made in contravention of its terms while the statute was in force.*^^ It has also been held that a physician cannot recover for services rendered while practicing in violation of a statute after such statute has been repealed.''* The general principle underlying cases of this character is that the law in existence at the time the contract is entered into be- comes a part of the agreement."^ § 685. Repeal of statutes — Impairing obligation of con- tract. — That section of the federal constitution which inhibits legislation impairing the obligation of a contract also applies in a proper case of this kind.°° It would seem, however, that a dis- by the commissioners and confirmed Gilliland v. Phillips, 1 S. Car. 152; by the court." People v. Common Hunt v. Robinson, 1 Tex. 748. Council, 140 N. Y. 300, 35 N. E. 485. '* Nichols v. Poulson, 6 Ohio St. " Lanning v. Osborne, 82 Fed. 575 ; 305. See, however, the case of Wash- Schaun v. Brandt, 116 Md. 560, 82 burn v. Franklin, 13 .'\bb. Pr. (X. Y.) Atl. 551. 140, which seems to hold contrary to '■ Woods V. Armstroncf. 54 Ala. 150, the foregoing cases. 25 Am. Rep. 671; Pacific Guano Co. "Aycock v. Martin, 37 Ga. 124, 92 V. Dawkins, 57 Ala. 115; Pacific Gu- Am. Dec. 56; Phinnev v. Phinney, 81 ano Co. V. Mullen, 66 Ala. 582; White ]\Iaine 450, 17 Atl. 405. 4 L. R. A. 348, V. Noland, 3 Mart. (La.) (N. S.) 636; 10 Am. St. 266; People v. Common Quarles v. Evans, 7 La. Ann. 543; Council of Buffalo. 140 N. Y. 300, 35 Hathaway v. Moran, 44 IMaine 67; N. E. 485, 27 Am. St. 563; Walker v. Banchor v. Mansel, 47 Maine 58; Whitehead. 16 Wall. (U. S.) 314, 21 Robinson v. Barrows, 48 Maine 186; L. ed. 357; Swinburne v. Mills, 17 Springfield Bank v. Merrick, 14 Wash. 611, 50 Pac. 489, 61 Am. St. Mass. 322: Roby v. West, 4 N. H. 932; People v. Superior Court of 2 5, 17 Am. Dec. 423; Puckett v. Al- King County, 21 Wash. 186, 57 Pac. exander, 102 X. Car. 95, 8 S. E. 767, 3 337. L. R. A. 43. "^ Superior v. Douglas County Tel. •"Woods V. Armstrong, 54 Ala. Co.. 141 Wis. 363. 122 X. W. 1023. 150, 25 Am. Rep. 671 ; Pacific Guano For a review of the subject see .\v- Co. V. Dawkins, 57 Ala. 115: Willcox cock v. Martin. 37 Ga. 124, 92 .\m. V. Edwards (Cat), 123 Pac. 276; Dec. 56. See further on this subject Quarrels v. Evans, 7 La. Ann. 543; note in 120 Am. St. 468. An errone- § 685 CONTRACTS. 40 tinction must be drawn between executed and executory contracts for "It is a general principle of law, that when a contract is lawful when made, and a law afterward renders performance of it un- lawful, neither party to the contract shall be prejudiced, but the contract is to be considered at an end."" This does not mean, however, that a contract legal at its inception becomes illegal by subsequent statutory prohibition as to acts done before the enact- ment of the statute, but that the statute puts an end to the con- tract and there can be no legal recovery by the plaintiff even if he should perform the unlawful act, as it is against public policy to permit a party to recover for the performance of his own illegal act or benefit by his own wrong.*** Thus, where property was leased to be used as a saloon and subsequent to the execution of the lease the sale of intoxicating liquors was rendered unlaw- ful, it was held that by operation of law the lease became void and unenforcible.*'^ There are also cases in which an agreement or instrument lacking in some formality may be validated or made effective by subsequent statute. '^° And it has been held by the Supreme Court of the United States, in a very recent case, that, although a contract, such as to issue an annual pass for life, was valid when made, it could not be enforced after the passage of an act of congress prohibiting such agreements, and that such act is not unconstitutional as so applied.''^ ous decision gives a person no vested * * * The rule is the same virhen right, however. Crigler v. Shepler, the purpose of the contract, although 79 Kans. 834, 101 Pac. 619, 23 L. R. A. lavirful when made, becomes unlawful (N. S.) 500n. by statutes enacted before the full " Odlin v. Insurance Co. of Penn- performance of its term." If the sylvania, 2 Wash. C. C. 312, Fed. Cas. contract is executory and cannot be No. 10433. performed without a violation of the ** American Mercantile Exchange existing law, it will be discharged on v. Blunt, 102 Maine 128, 66 Atl. 212, the ground of impossibility of per- 120 Am. St. 463n, 10 L. R. A. (N. S.) formance. Odlin v. Insurance Co., 414n. See also, Mississippi &c. R. Co. 2 Wash. (U. S. 312), 18 Fed. Cas. v. Green, 9 Heisk. (Tenn.) 588; Gray No. 10433. V. Sims, 3 Wash. C. C. 276, Fed Cas. ™ Downs v. Blount, 170 Fed. 15, No. 5729. 95 C. C. A. 289, 31 L. R. A. (N. S.) ""Heart v. East Tennessee Brew- 1076, and many other cases cited and ing Co., 121 Tenn. 69, 113 S. W. 364, reviewed in the note. See Eckles v. 19 L. R. A. (N. S.) 964n, 130 Am. Wood, 143 Ky. 451, 136 S. W. 907, St. 753. The court said: "It is a 34 L. R. A. (N. S.) 832. principle of general application that "Louisville &c. R. Co. v. Mottley, all contracts are void which provide 219 U. S. 467, 55 L. ed. 297, 31 Sup. for doing a thing which is contrary Ct. 265, 34 L. R. A. (N. S.) 671. In to law, morality, and public policy, the course of the opinion the court 41 LEGALITY OF OBJECT. § 68: § 686. Ratification. — In strictness, a contract which is ille- gal under existing laws cannot be ratified so as to give it validity after the repeal of such statute," and this is true notwithstanding the party who attempts to ratify has received a benefit under the illegal contract.^^ It is competent, however, for the same parties after the repeal of the statute which made their former contract illegal, to enter into a new agreement supported by a valid con- sideration to the same effect as the old contract.''* It has also been held that a contract which violates an existing law, but which is made in contemplation of a change of such law, is not void and may be enforced when the law is changed so as to render its performance legal. ^° § 687. Violations of federal statutes. — The Constitution of the United States is the supreme law of the land and a contract violative of its provisions is illegal.^" Contracts in contravention of treaties entered into by the United States have also been held void." The same is true of contracts violative of a federal says : "After the commerce act came into effect, no contract that was in- consistent with the regulations estab- hshed by the act of Congress could be enforced in any court." And the court quotes from Fitzgerald v. Grand Trunk R. Co., 63 Vt. 169, 173, 22 Atl. 76, 13 L. R. A. 70, to the ef- fect that parties must be held to have contracted on the basis that the law might be changed, and from Atkin- son V. Ritchie, 10 East 530, 5.34, to the effect that no contract can be en- forced which was either contrary to the provisions of the law when made or has become illegal by virtue of some subsequent law. "Handv V. St Paul Globe Pub. Co., 41 Minn. 188, 42 N. W. 872, 4 L. R. A. 466, 16 Am. St. 695. Com- pare, however, Lovell v. Boston &c. R. Co.. 75 N. H. 568, 78 Atl. 621, 34 L. R. A. (N. S.) 67n. "Dever v. Corcoran, 8 N. B. 338; Ludlow v. Hardy, 38 Mich. 690. The above case holds that a sale of liq- uors in violation of law would not support a new promise to pay there- for after the law's repeal. Puckett v. Alexander, 102 N. Car. 95, 8 S. E, \ 767, 3 L. R. A. 43. Thus an action will not lie to recover the purchase- price, nor can validity be imparted to the contract by a subsequent ratifi- cation, where liquor is sold by a wholesale dealer who has not taken out a revenue license as required by law, such sale being void under the statute then in force. Moog v. Han- non, 93 Ala. 503, 9 So. 565. For a further discussion of subsequent statutory prohibition, see post, chap- ter on Impossible Contracts, vol. 3. " Carr v. Louisiana Xat. Bank, 29 la. Ann. 258; Handv v. St. Paul Globe Pub. Co., 41 Minn. 188, 42 X. W. 872, 4 L. R. A. 466, 16 Am. St. 695. "Tavlor v. Chichester & Midhurst R. Co.' L. R. 4 H. L. 628; Norwich V. Norfolk &c. R. Co., 4 El. & Bl. 397. '" Gandolfo v. Hartman, 49 Fed. 181, 16 L. R. A. 277; Craig v. Mis- souri, 4 Pet. (U. S.) 410, 7 L. ed. 903; Litchfield V. Ballou. 114 U. S. 190, 29 L. ed. 132, 5 Sup. Ct. 820. " Pettit's Admr. v. Pettit's Dis- tributees, 32 Ala. 288; Lewis v. Love & Lane. 1 Ala. 335 ; Gandolfo v. Hart- man, 49 Fed. 181, 16 L. R. A. 277; § 68/ CONTRACTS. 42 Statute."® A state court gives the statute of the United States the same recognition, force and effect accorded to acts passed by the state legislative body. Thus, where cattle were pastured on an inclosed portion of the pubHc domain, in violation of a federal law, declaring it to be a misdemeanor to erect or maintain any fence inclosing more than i6o acres of the public domain, it was held that a note given in payment for such pasturage was based on an illegal consideration, and was therefore unenforcible, though the note purported to have been for expenses incurred for the serv- ice of cowboys in connection therewith. ^^ A contract to ship goods in foreign vessels from one port of the United States to another, being in violation of the federal statute, does not, as between the parties, becom.e legal, because the United States has remitted the forfeiture.*" An action cannot be maintained on a transfer of a govermnent contract prohibited by the federal statute.*^ A contract for the sale and transfer of soldiers' additional home- stead scrip, that is, such scrip as purports to carry a soldier's personal right to enter public land, is against the plain intent and policy of the statute, and cannot be made the basis of an action." The same is true of an agreement to obtain qualified citizens to enter public lands under the general homestead law and to grant the entire use of such lands to another until final proof is made or the holdings are disposed of.*^ Where one agrees with another to acquire public land for the benefit of the latter, con- trary to the California statute, the latter cannot have relief from Howell V. Fountain, 3 Ga. 176, 46 Am. general rule is laid down by Holt, C. Dec. 415. See also, Kennett v. Cham- J. : "Every contract made for or bers, 14 How. (U. S.) 38, 14 L. ed. about any matter or thing which is 316. prohibited and made unlawful by "Cornelius v. Murray (Okla.), 120 statute is a void contract, though the Pac. 653. statute does not mention that it shall "Tandy v. Elmore-Cooper Live be so, but only inflicts a penalty on Stock Commission Co., 113 Mo. App. the offender, because the penalty im- 409, 87 S. W. 614. See also, Cox v. plies a prohibition.") Bartlett v. Vi- Cameron Lumber Co., 39 Wash. 562, nor, Carth. 251. 82 Pack 116. ^'•Turnbull v. Farnsworth, 1 Wash. ** Smith V. Mawhood, 14 M. & W. Ter. 444. 452 ; Petrel Guano Co. v. Jarnette, 25 *"" Macintosh v. Renton, 2 Wash. Fed. 675. (In this case it is held that Ter. 121, 3 Pac. 830. it is the fact that the statute forbids *^ Ware v. United States, 84 C. C. such act, and not the penalty imposed, A. 503, 12 L. R. A. (N. S.) 1053n, 154 which makes the contract illegal. The Fed. 577. 43 LEGALITY OF OBJECT. § 688 the courts to enforce his rights under the agreement. The par- ties are in pari dehcto.®* § 688. Violation of liquor laws. — As a general rule liquor laws are not enacted for the purposes of revenue only, but for the safety and protection of the puhlic morals as well. It follows that contracts made in violation of such laws are illegal.'*'^ Thus courts have frequently held that a promissory note given as pay- ment for intoxicating liquors illegally sold on Sunday is invalid, notwithstanding the sum included in the note was also for other articles legally sold.^'^ It has also been held that one who sells liquors and so marks the cask that their contents cannot be ascer- tained by the revenue officers, and thus aids in their being sold in violation of law, cannot recover on the contract of sale.*^ But it has been held that knowledge that the vendee of liquors is selling them in violation of law is no defense to an action by the vendor for their price, when the vendor does no act with the pur- pose of aiding in the evasion of the law.®^ § 689. Violation of liquor laws — Knowledge of vendee's unlawful intent. — While the better authorities hold that mere knowledge by a vendor of the vendee's unlawful intent will not bar a recovery upon a contract of sale, yet, if in any way the former aids the latter in his unlawful design to violate a law, such participation will prevent him from maintaining an ** McGregor v. Donelly, 67 Cal. consideration of the receiver in a 149. 7 Pac. 422. Plaintiff agreed to bankruptcy proceeding being given point out timber lands belonging to the use of defendant's liquor license). the United States and defendant *" Wadsworth v. Dunnam, 117 Ala. agreed to procure title to reservation 661, 23 So. 699; Braitch v. Guelick, 37 lands and exchange the same for the Iowa 212; Gerlach v. Skinner, 34 lands pointed out which were sub- Kans. 86, 8 Pac. 257, 55 Am. Rep. 240 ject to exchange. This agreement Ladd v. Dillingham. 34 Maine 316 was held not void as against public Gotten v. McKenzie, 57 Miss. 418 policy because the right of exchange Brick v. Seal. 45 Mo. App. 475 ; San was not assignable, no assignments derson v. Goodrich, 46 Barb. (N. Y.) being contemplated. Western Lum- 616; Widoe v. Webb, 20 Ohio St. ber Co. v. Willis, 160 Fed. 27, 87 C. C. 431. 5 Am. Rep. 664. A. 183. ''Gaylord v. Soragen, 32 Vt. 110, "Loranger v. Jardine, 56 Mich. 76 .Aim. Dec. 154; Aiken v. Blaisdell, 518 23 X. W. 203. See also. Brown 41 Vt. 655. V. Detroit Trust Co.. 193 Fed. 622 ''^ Gambs v. Sutherland's Estate. 101 (agreement by which defendant was Mich. 355. 59 N. W. 652: Gaylord v. to be permitted to remain in posses- Soragen, 32 Vt. 110, 76 Am. Dec. 154. sion of a suite of rooms in a hotel in 689 CONTRACTS. 44 action to recover. The participation must be active to some extent. The vendor must do something in furtherance of the purchaser's design to transgress, but positive acts in aid of the unlawful purpose are sufficient, although slight.*'' Thus the plaintiff, a corporation, by its agent, sold and furnished bottled beer to the defendant, the keeper of a house of prostitution, as the agent well knew. While he had no knowledge of just what was to be done with the beer, the agent supposed at the time it was furnished that it was to be used or sold in the brothel. No other facts appearing, it was held that plaintiff could recover a balance claimed to be due from defendant for and on account of said sale.^" And where it appeared that the promisee of a note given by an inhabitant of Maine for spiritous liquors sold and deliv- ered in another state, where the sale was not illegal, knew of the purchaser's intent to sell the same in violation of law, and did acts, beyond the mere sale, which aided the purchaser in his un- "Hill V. Spear, 50 N. H. 253, 9 Am. Rep. 205; Tracy v. Talmage, 14 N. Y. 162, 67 Am. Dec. 132n. ^ Anheuser-Busch Brewing Assn. V. Mason, 44 Minn. 318, 46 N. W. 558, per Colhns, J. : "While it is cer- tain that a contract is void when it is illegal or immoral, it is equally as certain that it is not void simply be- cause there is something immoral or illegal in its surroundings or con- nections. It cannot be declared void merely because it tends to promote illegal or immoral purposes. The American text-writers generally ad- mit this to be the prevailing rule of law in the states upon this point. 1 Wharton on Contracts, § 343; Hill on Sales, 490. 492; 1 Parson on Con- tracts 456; Story on Contracts (5th ed.), § 671; Story on Conflict of Laws, § 253 ; Greenhood on Doctrine of Public Policy in the Law of Con- tracts 589. However, it has been sug- gested that this statement is subject to the modification that the unlawful use, of which the vendor is advised, must not be a felony or crime involv- ing great moral turpitude. See Han- auer v. Doane, 12 Wall. (U. S.) 342; Tatum v. Kelley, 25 Ark. 209; Milner v. Patton, 49 Ala. 423; Lewis v. Latham, 74 N. Car. 283; Bickel v. Sheets, 24 Ind. 1; Steele v. Curie, 4 Dana (Ky.) 381. Without expressly indorsing the re- sult in some of the cases, or all that has been said by the courts in their opinions when making an application to the facts then in hand, of the rule so exhaustively examined and ap- proved in Tracy v. Talmage, and Hill V. Spear, we cite, in support of the propositions therein contended for, and upon which we rest a reversal of the order of dismissal made by the court below, Armstrong v. Toler, 11 Wheat. (U. S.) 258; Green v. Col- lins, 3 Cliff. (U. S.) 494; Dater v. Earl, 3 Gray (Mass.) 482; Armfield V. Tate, 7 Ired. L. (N. Car.) 258; Read v. Taft, 3 R. I. 175; Cheney v. Duke, 10 Gill. & J. (Md.) 11; Kreiss v. Seligman, 8 Barb. (N. Y.) 439; Michael v. Bacon, 49 Mo. 474 ; Bruns- wick V. Valleau, 50 Iowa 120; Web- ber V. Donnelly, 33 Mich. 469; Bishop V. Honey, 34 Tex. 245; Wright v. Hughes, 119 Ind. 324, 21 N. E. 907; Feineman v. Sachs, 33 Kans. 621 (7 Pac. 222) ; Rose v. Mitchell. 6 Colo. 102; Banchor v. Mansel, 47 Maine 58; Henderson v. Waggoner, 2 Lea (Tenn.) 133; Gaylord v. Soragen, 32 Vt. 110; Mahood v. Tealza. 26 La. Ann. 108; Delavina v. Hill (N. H.), 19 Atl. 1000." 45 LEGALITY OF ODJECT. § 690 lawful design, the court held that he could not legally enforce the payment of such note. The original contract being in viola- tion of the statute was void ; and the subsequent repeal of the stat- ute did not render the contract valid.'^^ In New Hampshire it has been held that if goods are sold and delivered in the state where the contract is made, and the sale is there legal, and noth- ing remains then to be done by the vendor to complete the trans- action, and his connection therewith ceases, the vendor may maintain an action for the price in a state where, by its law% the sale would be prohibited. But if it enters at all as an ingredient into the contract between the parties that the goods shall be ille- gally sold, or that the seller shall do some act to assist or facilitate the illegal sale, the contract will not be enforced. Or, if the goods are sold to be delivered in the place where the sale is pro- hibited, the purchaser w^ill not be held liable."" § 690. Violation of liquor laws — Further illustrations. — A retail liquor dealer, who has failed to pay his state license tax, "Banchor v. IMansel, 47 Maine 58, per Appleton, J. : "In the present case, it appears from the letters of the plaintiff, that the liquors were to be kept by the master of the vessel carrying them, till called for by the defendant, and that he was cautioned •against the dangers of, and advised how to avoid their seizure. The plaintiff then not merely knew that the liquors sold were purchased by the defendant to be sold by him in viola- tion of law, but he co-operated with and aided the defendant in his efforts to evade the law and to elude the AMgilance of its officers. Having done this, he asks this Court to enforce a contract made under such circum- stances and for such purposes. * * * The original contract being in violation and fraud of the law as it then existed, was void. The subse- quent repeal of the prohibitory laws of the State cannot restore validity to a contract void in its inception. Hathawav v. IMoran. 44 Maine 67; Milne v.'Huber, 3 McLean (U. S.) 212; West v. Roby, 4 N. H. 285." To same effect, Corbin v. Houlehan, 100 Maine 246, 61 Atl. 131, 70 L. R. A. 568. •'Banchor v. Mansel, 47 Maine 58, per Appleton, J. : "In Kreiss v. Selig- man, 8 Barb. (N. Y.) 439, the Su- preme Court of New York says 'that, where a party, who sells goods or advances money to another, with knowledge of a design on the part of the latter to put the money or goods to an unlawful use, does any act whatever beyond the bare sale or loan, in aid or furtherance of the un- lawful object, he cannot recover.' This view of the law is recognized as sound by the Supreme Court of Mas- sachusetts, in Datre v. Earl, 3 Gray (Mass.) 482. The authorities bear- ing upon this question were fully ex- amined by Selden, J., in Tracy v. Talmage. 4 Kernan 162, and it was there held, that if the vendor, with knowledge of the intent of the pur- chaser to use the property purchased for an unlawful purpose, does any thing beyond making the sale, in aid or furtherance of the unlawful de- sign, he cannot recover. The same question came before the Court of Appeal of New York in Curtis v. Leavitt. 15 N. Y. (I Smith) 10, and the doctrine of Tracy v. Talmage was unanimously affirmed."' To same ef- fect, Corbin v. Houlehan, 100 Maine 246, 61 Atl. 131, 70 L. R. A. 568. 690 CONTRACTS. 46 and is actually engaged in an illegal traffic, cannot recover from a brewing company for its breach of contract to sell its beer exclu- sively to him in a designated town.^^ An action, as provided by statute, to recover money paid by plaintiff to a liquor dealer for beer sold in violation of the liquor law to plaintiff, a retail liquor dealer, survives on the death of the seller. Where the statute provides that such payment may be recovered as money received and held to the plaintiff's use, the rule that plaintiff, having pur- chased the beer for illegal sale, cannot have the aid of the law in matters growing out of the transaction, does not apply.°* It has also been held that one who hired to a dealer in liquors to serve as clerk or general employe, and also to act as barkeeper, cannot recover any compensation for the services rendered where "* Niagara Falls Brewing Co. v. Wall, 98 Mich. 158, 57 N. W. 99, per Grant, J. : "It has been held by this court that a saloon keeper cannot recover for sales made b}^ him before he has paid his tax and filed his bond. Loranger v. Jardine, 56 Mich. 518, 23 N. W. 203. It was there held that the liquor law was not enacted for the purpose of revenue only, but for the safety and protection of pub- lic morals as well ; and that a con- tract or sale made in violation of it was void. The same was held in Deering v. Chapman, 22 Maine 488. It is insisted, however, by the defend- ant that he might legally buy, though he could not legally sell. The case is not one where a party has bought intending to make legal sales, and to store and keep the liquor until he has obtained the legal right to sell. De- fendant was actually engaged in the illegal business and sold most of the liquor while he was thus engaged. While thus violating the law, public policy will not permit him to defend against a legal purchase while he was engaged in illegal sales. He was not legally in condition to perform his contract with the plaintiff until he had paid his tax and filed his bond. This he did not do before the alleged violation of the contract by plaintiff, and he had treated it as rescinded in consequence of the violation. The plaintiff might legally have rescinded the contract upon ascertaining that the defendant had not complied with the law, and therefore had no right to make sales of the goods pur- chased from it. The court was cor- rect in directing a verdict for the plaintiff." "* Yearteau v. Bacon's Estate, 65 Vt. 516, 27 Atl. 198, per Munson, J.: "The defendant submits that if the action is one that will survive, as not penal in its nature, it cannot be maintained because based upon an illegal transaction, in which the plain- tiff and the deceased were equally in fault. The liquor was sold by the deceased in violation of law, and was bought by the plaintiff for the pur- pose of unlawful sale; and neither party could, ordinarily, have the aid of the court in any matter growing out of the transaction. But it is within the province of the legislature to relieve either party to an illegal transaction from the operation of this rule. The statute provides that one who makes a payment for liquor sold in violation of law may recover it back, as money received and held to his use. If the plaintiff is within the purview of the statute, the doctrine that one in pari delicto shall not maintain a suit cannot be invoked against him, for the legislature has given him the right to sue notwith- standing the character of the transac- tion. But the defendant insists that a statute should not be so construed as to contravene a well-recognized and wholesome rule of law, when there is room for its application else- 47 LEGALITY OF OBJECT. § 69I the sale of intoxicciting liquors is prohibited."' So it has been held that one who leased premises to be used for the keeping and sale of liquors, and who in addition agreed to supply ice with which to keep the premises cool, was not liable for damage done to liquor caused by the failure of the landlord to keep the prem- ises cool, when the sale of intoxicating liquors was illegal.''^ A surviving partner has also been denied the right to an accounting against the deceased partner's executrix, where the partnership was formed to manufacture and sell distilled liquors, when the business was conducted and the licenses, state and federal, held in the deceased's name ; and the state law required that the applicant for a distiller's license must state that he is the only person pecuniarily interested in the business, and the federal laws re- quired every distiller to give the collector of the district written notice as to the parties interested in the business.®^ § 691. Sunday contracts. — A subsequent chapter wdl be devoted to a discussion of Sunday contracts. The general rules are much the same as to such contracts, but they constitute a dis- where. It is urged that this statute employment, the contract being an should be held to give the right of entirety. If the plaintiff contracted recovery only to those who purchase with the defendants for his personal for their personal use, and not to one services in their employment, a part dealer as against another. The ar- of which employment was to be in gument is that when applied to a case selling liquors unlawfully, he can like this the statute cannot punish recover nothing upon such a contract one violator of the law without re- or for services rendered in pursuance warding another to the same extent, of it. But if his contract was to and that the legislature cannot have render services only in a legal em- intended an application of the pro- ployment, and he seeks to recover for vision where it would produce such no other, he is not to be debarred a result. But we think the purpose therefrom merely because, during the of the legislature is to be determined season of his employment, he occa- from a broader survey of the law. Tf sionally assisted in the sale of liquors the vendor of intoxicating liquor sells as a gratuitous service to his em- on credit he cannot enforce collection ployers, and not as a part of his con- of the price, and if he sells for cash tracted services for which he seeks he cannot defend his receipts against compensation." a demand for their return." ""Kellv v. Courter, 1 Okla. 277, 30 "'Bixbv V. Moor, 51 N. H. 402: Pac. 372. Sullivan v. Horgan, 17 R. T. 109, 20 "Vandegrift v. Vandegrift, 226 Pa. Atl. 232, 9 L. R. A. 110. See, how- 254. 75 Atl. 365. "It is lawful for ever, in connection with the two fore- parties to contract to abstain from going cases, the case of Goodwin v. the performance of acts proper and Clark, 65 ATaine 280, which holds legal in themselves, when others with that "A person cannot recover for whom they contract may have an in- his personal services, portions of terest in their doing so * * * and such which are rendered in an unlawful agreement may assume the form of 692 CONTRACTS. 48 tinct class, and there is some difference of opinion on a few of the questions relating to such contracts. § 692. Violation of statute as to gaming or wagering. — A gambling or wagering contract has been defined as "Anything which induces men to risk their property without any other hope of return than to get for nothing any given amount from the other,"®^ Gaming and wagering contracts will be treated at length in a subsequent chapter; for this reason they will be given only brief consideration at this time. § 693. Wagering contracts at common law. — At common law wagering contracts upon indifferent matters were valid. ''^ But those which tended to a breach of the peace or to injure the feelings, character or interest of third persons, or to militate against the principles of morality of sound public policy, were void.^ Moreover, the courts were not disposed to entertain actions upon idle wagers, and were vigilant for reasons upon a condition," annexed to the sale of real estate that intoxicating liquors shall not be sold thereon. Whealkate Min. Co. V. Mulan, 152 Mich. 607, 116 N. W. 360. **In re Brua's Appeal, 55 Pa. St. 294, quoted in Creston First Nat. Bank V. Carroll, 80 Iowa 11, 14, 45 N. W. 304, 8 L. R. A. 275. "A bet or wager is ordinarily an agreement be- tween two or more that a sum of money, or some valuable thing, con- tributing to which all agreeing take part, shall become the property of one or some of them on the happen- ing in the future of an event at the present uncertain ; and the stake is the money or thing thus put upon the chance." Harris v. White, 81 N. Y. 5.32, quoted in Hankins v. Ottinger, 115 Cal. 454, 47 Pac. 254, 40 L. R. A. 76. See also, Fareira v. Gabell, 89 Pa. St. 89. _ "There is no mutuality in 3. gambling contract; no oppor- tunity for both sides to make gains ; no consideration to be paid bv one and received bv the other" (other than the mutual promises of each to the other). "One must gain and the other must lose." Rehberg v. Ton- tine Surety Co. (Mich.), 91 N. W. 132. ^'^ Jones V. Randall, 1 Cowp. 37; Good V. Elliott, 3 T. R. 693; De Costa V. Jones, 2 Cowp. 729 ; Bunn V. Riker, 4 Johns. (N. Y.) 426, 4 Am. Dec. 292 ; Bernard v. Taylor, 23 Ore. 416, 31 Pac. 968, 18 L. R. A. 859, 37 Am. St. 693. Mn Irwin v. Williar, 110 U. S. 499, 28 L. ed. 225, 4 Sup. Ct. 160, the Su- preme Court of the United States says of wagering contracts : "In Eng- land, it is held that the contracts, although wagers, were not void at common law, and that the statute has not made them illegal, but only non- enf orcible ; Thacker v. Hardy, ubi supra ; while generally, in this coun- try, all wagering contracts are held to be illegal and void as against pub- lic policy. Dickson's Executor v. Thomas, 97 Pa. St. 278; Gregorv v. Wendell, 40 Mich. 432; Lyon v. Cul- bertson, 83 111. 33; Melchert v. Ameri- can Union Telegraph Co.. 3 McCrarv (U. S.) 521, 11 Fed. 193. and note Barnard v. Backhaus. 52 Wis. .593 Kingsburv v. Kirwan. 77 N. Y. 612 Story v. Salomon. 71 N. Y. 420: Love V. Harvev, 114 Mass. 80." 4 Kent's Commentaries 466; Greenhood on Public Policy 226. 49 LEGALITY OF OBJECT. § 694 which to base a refusal to enforce them witliout violating the rule of stare decisis." Some of the American courts have fol- lowed the common-law rule. Where this is true, in the absence of any statutory enactment, unless it contravenes sound public policy, a wager contract will be upheld.^ A stock illustration of wagering contracts that are against public policy within the mean- ing of the common-law rule is election bets. Such wagers are held to be illegal and void because they tend to destroy the surety of the ballot.'' § 694. Wagering contracts — Present status. — The pres- ent day disposition of the courts is to increase the number of exceptions to the common-law rule which permits a recovery upon gaming or wager contracts. Many jurisdictions declare all wagering contracts to be illegal and void without regard to sub- ject-matter for the reason that they are against public policy.'' 'Gilbert v. Sykes, 16 East 150; Atherfold v. Beard, 2 T. R. 610; Elt- ham V. Kingsman, 1 B. & Aid. 683; Fisher v. Waltham, 4 Q. B. 889. * Boughner v. Me.ver, 5 Colo. 71. 40 Am. Rep. 139; Dewees v. Miller, 5 Har. (Del.) 347; Flagg v. Baldwin, 38 N. J. Eq. 219, 48 Am. Rep. 308; Campbell v. Richardson, 10 Johns. (N. Y.) 406; Smith v. Brown, 3 Tex. 360. 49 Am. Dec. 748. See Appleton V. Maxwell, 10 N. Mex. 748, 65 Pac. 158, 55 L. R. A. 93, for a review of the subject. A bet on a horse race is not invalid because against public policy. Gridlev v. Dorn, 57 Cal. 78, 40 Am. Rep. 110; Ross v. Green. 4 Har. (Del.) 308; Harris v. White, 81 N. Y. 532; McElroy v. Carmichael, 6 Tex. 454. A wager as to the time a railroad will be completed is valid. Johnson v. Fall, 6 Cal. 359, 65 Am. Dec. 518; Beadles v. Bless. 27 111. 320, 81 Am. Dec. 231. Idle wagers and all gaming contracts have been de- clared void. Kuhl V. M. Gallv Uni- versal Press Co., 123 Ala. 452, '26 So. 535. 82 Am. St. 135; IMonroe v. Smellv. 25 Tex. 586. 78 Am. Dec. 541. *Hill V. Kidd, 43 Cal. 615; John- ston v. Russell, ?>7 Cal. 670; Wheeler V. Spencer, 15 Conn. 28; Merchants' Sav. &c. Co. V. Goodrich. 75 111. 554; Wroth V. Johnson, 4 Har. & McH. 4 — CoNTR.\CTS, Vol. 2 (Md.) 284; Ball v. Gilbert, 12 Mete. (Mass.) 397; Cooper v. Brewster, 1 Gil. (Minn.) 72, ; Bates v. Clifford, 22 Minn. 52; Specht v. Beindorf, 56 Nebr. 553. 76 N. W. 1059, 42 L. R. A. 429; Vischer v. Yates, 11 Johns. (N. Y.) 23; Thomas v. Cronise, 16 Ohio 54; Stoddard v. Martin, 1 R. I. 1 ; Quarles v. State, 5 Humph. (Tenn.) 561; Tarleton v. Baker, 18 Vt. 9, 44 Am. Dec. 358; Shumate v. Common- wealth, 15 Grat. (Va.) 653. Election bets are illegal even when made after the poll is closed, if before the can- vass is complete. Rust v. Gott. 9 Cow. (N. Y.) 169, 18 Am. Dec. 497. A bet on the outcome of an election to be held in a district other than that in which the parties reside has been upheld. Smith v. Smith, 21 111. 244, 74 Am. Dec. 100; Wroth v. Johnson, 4 Har. & McH. (Md.) 284. 'Eldred v. Malloy, 2 Colo. 320, 20 Am. Rep. 752; Stacy v. Foss, 19 Maine 335. Z6 Am. Dec. 755; Lewis V. Littlefield. 15 Maine 233; Harvev v. Merrill. 150 Mass. 1, 22 N. E. 49. 5 L. R. A. 200. 15 Am. St. 159; Love V. Harvev, 114 Mass. 80; Wilkinson v. Tousley. 16 Minn. 299. 10 Am. Rep. Iv39; Winchester v. Nutter. 52 K. H. 507. 13 Am. Rep. 93; Williston Cas. on Contracts 157; Pekkins v. Eaton, 3 N. H. 152; Dickson's Exr. v. § 695 CONTRACTS. 50 The common-law rule relative to gambling and wager contracts is at present comparatively unimportant since modern statutes de- clare practically all gambling and wager contracts invalid.® § 695. Violation of statute as to lotteries. — Lotteries are closely allied to gaming and wagering. Indeed a lottery has been defined as a species of gaming, which may be defined as a scheme for the distribution of prizes by chance among persons who have paid, or agreed to pay, a valuable consideration for the chance to obtain a prize. ^ For this reason the subject of lotteries might be properly included with gaming and wagering contracts but brief mention will be given the former subject in this section. Concisely stated a lottery is a scheme for the distribution of a prize or prizes by chance.^ § 695a. Elements essential to existence of a lottery. — Three elements are declared essential to its existence, which are : a prize, a chance on the prize, and the payment of a consideration for the chance." The question of what actually constitutes a lot- Thomas, 97 Pa. 278; Edgell v. Mc- 234, 48 L. R. A. 775, 84 Am. St. 818. Laughlin, 6 Whart. (Pa.) 176, 36 "Burks v. Harris, 91 Ark. 205, 120 Am. Dec. 214; Rice v. Gist, 1 Strob. S. W. 979, 23 L. R. A. (N. S.) 626n, (S. Car.) 82; Irwin v. Williar, 110 134 Am. St. 67; Brooklyn Daily Eagle U. S. 499, 28 L. ed. 225, 4 Sup. Ct. v. Voorhies, 181 Fed. 579; Equitable 160; West v. Holmes. 26 Vt. 530; Loan &c. Co. v. Warring, 117 Ga. Collamer v. Day, 2 Vt. 144. And 599, 44 S. E. 320. 62 L. R. A. 93, 97 see Pabst Brewing Co. v. Liston, 80 Am. St. 177 ; State v. Nebraska Home Minn. 473, 83 N. W. 448, 81 Am. St. Co., 66 Nebr. 349, 92 N. W. 763, 60 275. _ "Of late years, by legislation L. R. A. 448, 103 Am. St. 706. See and judicial decision, the hostility to also, Loiseau v. State, 114 Ala. 34, wagers of every nature has been 22 So. 138, 62 Am. St. 84; Grant v. marked." Bernard v. Taylor, 23 Ore. State, 54 Tex. Cr. 403, 112 S. W. 416, 31 Pac. 968, 18 L. R. A. 859. 1068, 21 L. R. A. (N. S.) 876. 130 ® See post, § 692. Am. St. 897. As to what constitutes ^ Burks V. Harris, 91 Ark. 205, 120 a prize, see Fitzsimmons v. United S. W. 979, 23 L. R. A. (N. S.) 626n, States, 156 Fed. 477, 84 C. C. A. 287, 134 Am. St. 67, 25 Cyc. 1633. 13 L. R. A. (N. S.) 1095; United * State V. Sedgwick (Del.), 81 Atl. States v. Purvis, 195 Fed. 618. For 472; State v. Kansas Mercantile other definitions of what constitutes Assn., 45 Kans. 351, 25 Pac. 984, 11 a lottery, see People v. Elliott, 74 L. R. A. 430, 23 Am. St. 727; State Mich. 264, 41 N. W. 916, 3 L. R. A. V. Boneil, 42 La. Ann. 1110, 8 So. 298, 403, 16 Am. St. 640; Hull v. Ruggles, 21 Am. St. 413. See, too, Ballock v. 56 N. Y. 424. For a case drawing State, 73 Md. 1. 20 A. 184. 8 L. R. A. the distinction between lotteries, 671, 25 Am. St. 559; People v. Elliott, wagers, and bets, see. Stevens v. 74 Mich. 264, 41 N. W. 916, 3 L. R. Cincinnati Times-Star Co.. 72 Ohio A. 403, 16 Am. St. 640; Quatsoe v. St. 112. 73 N. E. 1058, 106 Am. St. Eggleston, 42 Ore. 315, 71 Pac. 66; 586. For a case drawing the dis- State V. Dalton, 22 R. L 77, 46 Atl. tinction between games of chance 51 LEGALITY OF OBJECT, C96 tcry depends largely on the statute declaring lotteries to be unlaw- ful. The following is an instance in which a given scheme was declared a lottery : The distribution of parcels of land of unequal value by chance among holders of tickets of purchasers, ^uch per- sons not being tenants in common, has been held a lottery, not- withstanding each pays a uniform price. ^^ § 696. Guessing contests as lotteries. — "Guessing con- tests" such as a scheme by which the subscriber for a certain peri- odical who shall guess nearest the popular vote for a certain official at a coming election," or the person who guesses nearest and those of skill, see People v. Lavin, 179 N. Y. 164, 71 N. E. 753. It is immaterial whether the methods used make the value of the prize de- pend upon chance or its possession (it having a fixed value) depend upon chance. In cither case a lottery exists. United States v. One Box of Tobacco, 190 Fed. 731, 111 C. C. A. 459. "Power V. Canniff, 18 U. C. Q. B. 403; Loyd v. Clark, 11 U. C. C. P. 248; Cronyn v. Widder, 16 U. C. Q. B. 356; Marshall v. Piatt, 8 U. C. C. P. 189; Paulk v. Jasper Land Co., 116 Ala. 178, 22 So. 495; Burks v. Harris, 91 Ark. 205, 120 S.. W. 979, 23 L. R. A. (N. S.) 626n, 134 Am. St. 61; Branham v. Stallings, 21 Colo. 211, 40 Pac. 396, 52 Am. St. 213; Whitley v. McConnell, 133 Ga. 738, 66 S. E. 933, 27 L. R. A. (N. S.) 287. 134 Am. St. 223. (Lots to be sold at auction. After the sale a drawing was to be had in which all purchasers might participate, the lucky person to receive a lot which was not to be put on sale.) Glcnn- ville Inv. Co. v. Grace, 134 Ga. 572, 68 S. E. 301 ; Elder v. Chapman, 176 111. 142, 52 N. E. 10, revg. 70 111. App. 288; Swain v. Bussell, 10 Ind. 438; Lvnch v. Rosenthal. 144 Ind. 86, 42 N. E. 1103, 31 L. R. A. 835, 55 Am. St. 168: Emshwiler v. Tyner, 21 Ind. App. 347, 52 N. E. 459, 69 Am. St. 360; Guenther v. Dewien, 11 Iowa 133; Wooden v. Shotwell, 24 N. J. L. 789, affg. 23 N. J. L. 465 ; Jackson Steel Nail Co. v. Marks. 2 Ohio C. D. 584. 4 Ohio C. C. 343; Hooker v. DePalos, 28 Ohio St. 251 ; Seidenbender v. Charles, 4 Serg. & R. (Pa.) 151, 8 Am. Dec. 682n; Allebach v. Godshalk, 116 Pa. St. 329, 9 Atl. 444; Allebach v. Hun- sicker, 132 Pa. St. 349, 19 Atl. 139; Ridgeway v. Underwood, 4 Wash. C. C. 129, Fed. Cas. No. 11815. See, however, Lauder v. Peoria Agri. & Trotting Soc, 71 111. App. 475, which liolds that if the parcels of land are of equal value and are apportioned to the purchasers by a designated com- mittee, no lottery exists. See also, Harlow v. Snow, 147 111. App. 369. And where the subscribers to lots de- cided in a meeting held by them that the lots subscribed for should be ap- portioned by drawing, it did not con- stitute a lotterv. Chancv Park Land Co. V. Hart, 104 Iowa 592, 12> X. W. 1059. The subscribers may meet and determine upon a method of distribu- tion (Ginther v. Rochester Imp. Co. (Ind. App.), 92 N. E. 698; Wash- ington C^lass Co. V. !\Iosbaugh. 19 Ind. App. 105, 49 N. E. 178; McCleary V. Chipman, 32 Ind. App. 489, 68 N. E. 320). but they must not adopt a plan which constitutes a lottery. Emshwiler v. Tvner. 21 Ind. App. 347. 52 N. E. 459. 69 Am. St. 360. The owners may distribute by lot when thev are tenants in common. Wooden V. Shotwell, 24 N. J. L. 789. See also. Elder v. Chapman, 176 111. 142, 52 N. E. 10. " Waite V. Press Pub. Co.. 155 Fed. 58. 11 L. R. A. 609n. 85 C. C. A. 576. Stevens v. Cincinnati Times-Star Co., 72 Ohio St. 112. 73 N.E. 1058. 106 Am. St. 586; Hobing v. Enquirer Co., 2 Ohio N. P. (N. S.) 205; 25 Ops. Atty. § 697 CONTRACTS. 52 the number of beans in a jar/" or the number of seeds in a water- melon or pumpkin/^ or a "guessing contest" as to the total number of paid admissions to the World's Fair at St. Louis, ^* or a chance drawing of certain numbers representing given ball clubs, the prize going to the one who held numbers representing clubs that made the greatest number of scores in a week's time,^^ have been held games of chance or lotteries. A scheme for the distribution of money among the purchasers of certain brands of cigars who should estimate most closely the number of cigars of all brands upon which the government would collect taxes during a named month has been held a lottery." § 697. Tailor suit clubs — Accumulated funds distributed by chance, and the like. — A "tailor suit club" the members of which contributed a specified amount per week and had weekly drawings has been held a lottery.^^ The courts also condemn as a lottery any scheme whereby a fund is accumulated by the pay- ment of designated sums of money at specified intervals by the holders of certificates, which certificates are to mature and be paid in a manner dependent upon chance, the holder to be paid a greater sum than he has contributed.^^ Likewise a plan whereby Gen. (Moody) 286. Contra, 19 Ops. Q. B. 474 (prize for person correctly Atty. Gen. (Miller) 679; 23 Ops. guessing the names of winning Atty. Gen. (Griggs.) 207. horses in a race to be run) ; Camin- "Hudelson v. State, 94 Ind. 426, 48 ada v. Hulton, 60 L. J. Mag. Cas. (N. Am. Rep. 171. Contra, Reg. v. S.) 116, 17 Cox. C. C. 307 (guessing Dodds, 4 Ont. 390; Reg. v. Jamieson, winner of horse race) ; Dunham v. 7 Ont. 149 (buttons in the jar in- St. Croix Soap Mfg. Co., 34 N. B. 243 stead of beans). (weight of a block of soap). See, "Thomas, Nonmailable Matter however, Barclay v. Pearson (1893), § 137a. 2 Ch. 154. Guessing contest as to "25 Ops. Atty. Gen. (Moody) 286. missing word in a sentence. Word Contra, 23 Ops. Atty. Gen. (Knox) not chosen until after the close of the 492. contest. Held lottery. To same ef- " State V. Sedwick (Del.), 81 Atl. feet. Hall v. MacWilliams, 65 J. P. 472. 742. "Ellison V. Lavin, 179 N. Y. 164, "De Florin v. State, 121 Ga. 593, 71 N. E. 753, 66 L. R. A. 601. Contra, 49 S. E. 699, 104 Am. St. 177; People United States v. Rosenblum, 121 Fed. v. McPhee, 139 Mich. 687, 103 N. W. 180. The English and Canadian 174, 69 L. R. A. 505, 5 Am. & Eng. authorities generally hold such con- Ann. Cas. 835 ; State v. Moren, 48 tests valid. In addition to those al- Minn. 555, 51 N. W. 618: State v. ready cited, see; Hall v. Cox (1899), Perry, 154 N. Car. 616, 70 S. E. 387: 1 Q. B. 198 (prize for a correct pre- Grant v. State, 54 Tex. Crim. 403, 112 diction of the number of births and S. W. 1068, 21 L. R. A. (N. S.) 876n, deaths in London during a certain 130 Am. St. 897. week); Stoddart v. Sagar (1895), 2 ^'Fitzsimmons v. United States, 53 LEGALITY OF OBJECT. 698 one buys n lead pencil of triflin L. R. A. (X. S.) 305 and note. The above case can readily be distinguished from the preceding ones in that it required skill while in the others chance pre- dominated. But where an element of chance enters in, the scheme becomes a lottery and illegal. Thus where a prize is given to those persons who solve a puzzle by obtaining seven complete animal pictures therefrom, ability to solve the puzzle depending on the chance that the purchaser will buy a box containing an animal nee- § 699 CONTRACTS. 54 of a prize contest involving skill in making the largest number of words out of the letters composing the words "Hamilton Pianos" has also been upheld.-^ § 699. Bailee's refusal to deliver up property won at a raffle. — The bailee of an automobile disposed of at a raffle has no right to refuse to deliver it to the winner because of the illegality of the transaction by which title to the machine was transferred, especially after having recognized an order for the machine given the winner and consenting to hold the machine for the new owner.-"* § 700. No lottery when element of chance is wanting. — When the element of chance is wanting'^ as where one is to pay for a ring by weekly instalments, forfeiting all interest in money paid by him on the agreement should he let his payments lapse,^*^ or where all the chances on the prize are bought by one person" or where the prize is awarded "to the society, church, school, lodge or person having secured the greatest number of votes at the close of each contest"^^ the transaction is not a lottery or gaming contract. § 701. Giving of trading stamps not a lottery. — To give a purchaser, without additional price, a ticket or trading stamp cessary to complete the required hundred five cent cuts of plug to- number of animal pictures (United bacco. United States v. One Box of States V. McKenna, 149 Fed. 252), Tobacco, 190 Fed. 731, 111 C. C. A. or the obtaining of the premium is 459. made to turn upon purchasing boxes '"Barney v. Tontine Surety Co., of a given commodity and finding 131 Mich. 192, 91 N. W. 140. See therein coupons on which are printed also, Watkins v. Curry (Ark.), 147 S. letters that can be combined into the W. 43 (conditional sale of automo- word "Mother's", (United States v. bile, vendor held entitled to assert Jefferson, 134 Fed. 299), the scheme his Hen even though the sale might is a lottery. To same effect, Sheedy v. have been indirectly connected with District of Columbia, 19 App. D. C a lottery scheme). Younkman v. Hill- 280. man, 53 Wash. 661, 102 Pac. IIZ ^D. H. Baldwin & Co. v. Moser (purchase of real estate. Ten dol- (lowa), 123 N. W. 989. lars down and ten dollars per "^Dee'v. Sears-Nahinger Auto Co., month). 141 Iowa 610, 118 N. W. 529, 133 Am. "Thornhill v. O'Rear, 108 Ala. 299, St. 182. 19 So. 382, 31 L. R. A. 792. *' United Jewelers Mfg. Co. v. ''^Quatsoe v. Eggleston, 42 Ore. Keckley, 11 Kans. 797, 90 Pac. 781. 315, 71 Pac. 66. Such a contest may The element of chance has been held however be vitiated by fraud. Good- present where a prize of a fixed value hart v. Mission Pub. Co. (Cal.), 123 was concealed in one out of each Pac. 210. 55 LEGALITY OF OBJECT. § 702 which entitles him to a certain sum of money or to goods of a certain value, is not, in the absence of any element of chance or hazard, contrary to the law against gambling and lotteries and legislation which forbids their use is, as a general rule, held un- constitutional.-" Legislation prohibiting their use has, however, been upheld.^'' § 702. No lottery when element of consideration wanting. — Likewise if the element of consideration is wanting as where the chances on the prize are distributed gratuitously no lottery exists.^^ The same holding has been made where gifts of sub- stantially equal value were made with each sale.^- It has also been held that a subscriber for stock in a corporation cannot defeat an action thereon by a trustee in bankruptcy because of the proposed distribution of lots by a drawing to be conducted by the company. ^^ § 703. Collateral contracts — Rights of vendor and vendee, inter se. — A contract indirectly connected with a lottery may be valid when not otherwise illegal.^* But the lotter\^ contract itself is void and cannot be enforced. "° However, when the law does not declare both the vendor and vendee of a lottery ticket equally guilty but is instead enacted for the purchaser's protection such purchaser may recover money paid for lottery tickets.^° '" Ex parte, Drexel, 147 Cal. 763, Long v. State. 74 Md. 565, 22 Atl. 4, 82 Pac. 429. 2 L. R. A. (N. S.) 588 12 L. R. A. 425, 28 Am. St. Rep. 268; and note ; Citv and County of Den- State v. Dalton, 22 R. I. 77, 46 Atl. ver V. Frueanff, 39 Colo. 20, 88 Pac. 234. 48 L. R. A. 775. 84 Am. St. 818. 389, 7 L. R. A. (N. S.) 1131 and ''Reed v. Gold. 102 Va. 37, 45 S. note; State v. Sperry & Hulchrison E. 868. See also, Roney v. Craw- Co., 110 Minn. 378, 126 N. W. 120, ford, 135 Ga. 1, 68 S. E. 701. 30 L. R. A. (N. S.) 966. See also, '* Watkins v. Curry (Ark.), 147 S. State V. Caspere, 115 .Md. 7, 80 Atl. W. 43. 606. '° American Copying Co. v. Thomp- '" District of Columbia v. Kraft, 35 son (Tex. Civ. App.), 110 S. W. 777. App. D. C. 253, 30 L. R. A. (N. S.) '"Becker v. Wilcox, 81 Xebr. 476, 957 and note. 116 X. W. 160, 16 L. R. A. (X. S.) "Yellowstone Kit y. State. 88 Ala. 571n. 129 Am. St. 690. See. ante, 196, 7 So. 338, 16 Am. St. 38n, 7 L. § 645. See also. post, chapt. 28. Ef- R. A. 599n. feet of Performance of Illegal Con- ^ United Jewelers Mfg. Co. v. tracts. Keckley, 77 Kans. 797, 90 Pac. 781; 704 CONTRACTS. 5^ § 704. Violation of the statute as to usury. — This subject will be given consideration in a separate chapter." A great deal depends in such cases on the provisions of the particular statute. § 705. Agreements contrary to public policy — Classifica- tion. — As was stated in one of the preceding sections to this chapter/' the title, Agreements Contrary to Public Policy, is broad enough to include illegal contracts of every character and, as is there pointed out, the term "public policy" is one more or less indetinite in its application. Owing to the vague outlines of the subject, it is not only convenient but imperative that some classification be given the decided cases. This will be done in the succeeding sections of this chapter. § 706. Agreements tending to official corruption or injury of the public. — Agreements which tend to official corruption or injury of the public service may be entered into either directly with the official or with a third person who is to bring improper influences to bear upon such official. The courts will unhesitat- ingly pronounce illegal and void, as being contrary to public policy, those contracts entered into by an officer or agent of the public which naturally tend to induce such officer or agent to be- come remiss in his duty to the public.'" Nor is it necessary for the officer or agent to bind himself to violate his duty to the "See post, § 704. ceedings and cannot recover the "^See ante, § 649. agreed price. Coffey v. Burke, 132 '•Cheney v. Unroe, 166 Ind. 550, App. Div. (N. Y.) 128, 116 N. Y. S. n N. E. 1041, 117 Am. St. 391. An 514. An attorney made a contract agreement by a county official to de- with a sheriff by which he was to posit public funds in a certain bank act as counsel for the sheriff during in consideration of an officer of such his term of office at $300.00. This bank going his bond is unlawful, amount was to be applied in satis- Ramsay's Estate v. Whitbeck, 183 faction of the attorney's taxes. The 111. 550, 56 N. E. 322, revg. 81 111. contract was held contrary to public App. 210. A contract to pay an ex- policy as tending to divert from the cessive price for labor "upon the public treasury its money to pay the understanding that the government sheriff's private debt. Miller v. Wise- would be soaked," has been held ner, 45 W. Va. 59, 30 S. E. 237. "Any against public policy and void. Fish- agreement whereby the officer en- er Electric Co. v. Bath Iron Works, trusts custody of his prisoner to an- 116 Mich. 293, 74 N. W. 493. An other who has no authority under employe of a city while acting as em- protection of the writ to restrain ploye is precluded from selling in- him, accomplishes a legal escape * * * formation, no matter how gained, to and is absolutely void." Gebhardt v. be used against the city in legal pro- Holmes, 149 Wis. 428, 135 N. W. 860. 57 LEGALITY OF OBJECT. § 707 public in order to bring such an agreement within the operation of the rule. Any agreement by which Ire places himself or is placed in a position which is inconsistent with his duty to the public and has a tendency to induce him to violate such duties, is clearly illegal and void.*" § 707. Tending to official corruption — Interest of public official. — Under this principle, contracts for services or mate- 'rial in which public officers have an individual interest, are pro- hibited. "Independently of any statute or precedent, upon the general principles of law and morality, a member of an official board cannot contract with the body of which he is a member."" Thus, a contract entered into by a municipal board with one of its « Cheney v. Unroe, 166 Tnd. 550, 11 X. E. 1041, 117 Am. St. 391; Consoli- dated Coal Co. V. Board of Trustees, 164 Mich. 235, 129 N. W. 193. A contract which tends to draw public officials away from the honest dis- charge of their duties is against pub- lic policy. Lucas v. Allen, 80 Ky. 681, 4 Ky. L. 687. A contract for public printing with a corporation in which the then Secretary of State was a stockholder and of which he was treasurer has been declared void, notwithstanding the corporation was the lowest bidder for the work and the Secretary of State had nothing to do with the awarding of the con- tract. In re Opinion of the Justices (Maine), 82 kx\. 90 (reviewing a number of decisions on the subject). "Any contract by one acting in a public capacity, which restricts the free exercise of discretion vested in him for the public good, is void." Brown v. First Nat. Bank, 137 Ind. 655, n N. E. 158, 24 L. R. A. 206, quoting from Greenhood on Public Policy, 337. To same effect, Schnei- der V. Local Union Xo. 60, 116 La. 270, 40 So. 700. 5 L. R. A. (N. S.) 891n, 114 Am. St. 549; Robinson v. Patterson, 71 Mich. 141, 39 X. W. 21 ; Edwards v. Goldsboro, 141 X. Car. 60, 53 S. E. 652, 4 L. R. A. (X. S.) 589. .\ contract to sell postoffice fixtures and to use influence to ob- tain the appointment of the purchaser as postmaster has been held illegal. Edwards v. Randle, 63 Ark. 318, 38 S. W. 343, 58 Am. St. 108, 36 L. R. A. 174. To same effect, Haas V. Fenlon, 8 Kans. 601 (army post sutler). And the same is true of a contract by a third-class postmaster to obtain the removal of a post-office to a certain building and maintain it there during such post- master's term of office in considera- tion of receiving fixtures for the office. The postmaster is required to exercise his official judgment in locating the office. Benson v. Baw- den. 149 Mich. 584, 113 X. W. 20, 13 L. R. A. (X. S.) 721. The giving of money to the governor of a prov- ince to defray his expenses on a trip to confer with the president con- cerning the grant of mineral con- cessions to the one who advanced the money has been held not the use of money for an unlawful or immoral purpose. Allen v. O'Brvan, 118 .A.pp. Div. (X. Y.) 213, 103 X. Y. S. 125. " Davidson v. Guilford Countv, 152 X. Car. 436, 67 S. E. 918. See also. State v. Windle, 156 Ind. 648, 59 N. E. 276 (County commissioners authorized the county treasurer to loan the county all moneys for the payment of orders, bonds and the like and agreed to pay him not more than 6 per cent, interest thereon). Pipe Creek School Tp. v. Hawkins (Ind.), 97 X. E. 936 (contract be- tween a member of a township ad- visory board and the board). § 70S CONTRACTS. S8 members or with a firm to which he belongs to perform legal serv- ices for such body or the municipality has been declared void as against public policy.*" The same rule applies to the employment of a physician by a board of which he is a member*^ or the em- ployment of the wife of one of the members of a board of school trustees to teach in a school over which such board had super- vision.''* Nor does it have the right to employ one of its mem- bers to act as "street boss,"*'^ or to make settlements with a tax collector,*^ or to furnish carriages at the expense of the city for a Fourth of July celebration.*" § 708. Tending to official corruption — Contracts for mate- rials. — As a general rule, contracts for materials and supplies from an officer or member of a board whose duty it is to purchase such supplies are held invalid, although in some cases where the contract has been executed a recovery of the quantum meruit is allowed.*^ The rule that an agent cannot bind his principal in a *= Young V. Mankato, 97 Minn. 4, 105 X. W. 969, 3 L. R. A. (N. S.) 849n. In the above case the board was appointed to draft a charter for the municipahty. The board em- ployed one of its members to fur- nish advice to it and prepare a char- ter for it. Beebe v. SuUivan County, 64 Hun (N. Y.) Ill, 199 N. Y. S. 629; Burkett v. Athens (Tenn.), 59 S. W. 667. See contra, Niles v. Muzzy, ZZ Mich. 61, 20 Am. Rep. 670. In this case it was held that one who had been elected mayor and a mem- ber of the council might be legally employed to defend a suit against the city and could collect for the services rendered, there being noth- ing to show the contract was fraudu- lent and the services rendered being highly beneficial to the city. "^ Fort Wayne v. Rosenthal, 75 Ind. 156, 39 Am. Rep. 127; Goodrich v. Waterville, 88 Maine 39, 2>Z Atl. 659. "Nuckols V. Lyle, 8 Idaho 589, 70 Pac. 401 (decided under a statute). "Snipes v. Winston, 126 N, Car. 374, 35 S. E. 610, 78 Am. St. 666. " Winchester v. Frazer, 19 Ky. L. 1366, 43 S. W. 453. "Smith V. Albany, 61 N. Y. 444. Compare with the foregoing cases that of Concordia v. Hageman, 1 Kans. App. 35, 31 Pac. 133, in which case the board made a contract for public printing with a firm a mem- ber of which was also a member of the board. It was held that since the printing company had dealt fairly and honestly with the city it was en- titled to recover the quantum meruit of its services. *'McGehee v. Lindsay, 6 Ala. 16; Edwards v. Estell, 48 Cal. 194 ; Skeels v. Phillips, 54 111. 309; Noble v. Davison (Ind.), 96 N. E. 325 (suit to enjoin the performance of a con- tract for the instalation of a heat- ing system in a public school build- ing, one of the school trustees being president of the corporation which was to install the system). Root v. Stevenson's Admr., 24 Ind. 115; Con- cordia v. Hagaman, 1 Kans. App. 35, 41 Pac. 133; Smith v. Albany, 61 N. Y. 444; Commonwealth v. Press Co., 156 Pa. St. 516, 26 Atl. 1035; Wills V. Abbey, 27 Tex. 202 ; Baldwin v. Co- < burn, 39 Vt. 441 ; Pickett v. Wiota School District, 25 Wis. 551, 3 Am. Rep. 105. An agreement to purchase certain county orders for $2,500.00, the legality of which was in question, the purchaser agreeing to take his chances on the litigation, is against good morals and void. The pur- 59 LEGALITY OF OBJECT. § 709 contract which the agent makes with himself extends to pubhc officials/** ^ 709. Tending to official corruption — Location of public buildings. — Likewise a contract made in order to secure the location of a public building or office or to prevent its removal when public convenience requires its removal, for private advan- tage, tends to injure the public service and is void.^" However, private subscriptions which do not in any way influence the selec- tion of a particular site, save the judgment of the person selecting the site as to its suitableness, are not against public policy.^^ § 710. Tending to official corruption — Indemnity bond. — A bond which indemnities a public official from loss for breach of duty is void as against public policy and no recovery can be chaser thereby places himself in an attitude of hostility to the suit brought in behalf of the county by its taxpayers. Giblin v. North Wis- consin Lumber Co., 131 Wis. 261, 111 N. W. 499, 120 Am. St. 1040. It has been held that a corporation may re- cover the quantum meruit for work done for a city, notwithstanding a member of the city council was a stockholder in such corporation, where the councilman did not con- trol or direct the expenditures for the work. Call Pub. Co. v. Lincoln, 29 Xebr. 149. 45 X. W. 245. See also, and compare 1 Elliott Rds. & Sts. (3rd ed.), § 630. See ante, chapt. 20. "Baars v. Laketon Tp.. 163 Mich. 665, 129 N. W. 7, Ann. Cas. 1912A. 866 and note. "•Edwards v. Goldsboro. 141 N. Car. 60. 53 S. E. 652. 4 L. R. A. (N. S.) 589. reviewing many authori- ties. In the above case it is said: "All agreements, for pecuniary con- siderations, to control the business operations of the government, or the regular administration of justice, or the appointment to public offices, or the ordinary course of legislation, are void as against public policy, without reference to the question whether improper means are contem- plated or used in their execution. The law looks to the general ten- dency of such agreements, and it closes the door to temptation by re- fusing them recognition in any of the courts of the country'. Provi- dence Tool Co. V. X'orris, 2 Wall. (U. S.) 45. 17 L. ed. 868." For cases of similar import not cited in the above opinion, see Spence v. Harvev, 22 Cal. 336, 83 Am. Dec. 69; Colburn v. El Paso County, 15 Colo. App. 90, 61 Pac. 241 ; Randolph County v. Jones, P.rcesc ail.) 237: Hare v. Phaup. 21 Okla. 575, 101 Pac. 1050. 138 Am. St. 852; Filson v. Himes, 5 Pa. St. 452, 47 Am. Dec. 422. " In this case $15,000 had been ap- propriated with which to buy a post- office site. By means of subscrip- tions it was made possible to select a site worth $32,000. Currier v. United States. 184 Fed. 700. 106 C. C. A. 654. For other cases holding that a contract for the location of a public building is not necessarily invalid, see Carpenter v. Mather. 3 Scam. (Til.) 374: State v. Johnson. 52 Ind. 197: Brown v. Anderson, 1 T. B. Mon. (Kv.) 198; Beal v. Polhemus, 61 Mich. 130. 34 N. W. 532: State Treasurer v. Cross. 9 Vt. 289, 31 Am. Dec. 626. See also. Electric Plaster Co. V. Blue Rapids Citv Tp., 11 Kans. 580, 96 Pac. 68 (agreement by mill- owners to pay a part of the cost of a public improvement upheld). § 711 CONTRACTS. 6o had thereon.^" A public official cannot barter away his power to discharge his official duty.^^ § 711. Tending to official corruption — Influencing appoint- ments to office. — It is also well settled that contracts which have for their object the influencing of appointment to public office and the restricting of the discretion vested in a public officer in the selection of appointees are invalid.^* An officer who has the power of appointment should make the best appointment pos- sible and it is contrary to public policy that such officer be de- prived of this discretionary power by a contract previously made or an obligation previously assumed. ^^ Consequently an agreement by the terms of which the defendant was to obtain the resignation of the sheriff for a money consideration and then secure the plaintiff's appointment who would in turn make the defendant his deputy is void.^® A contract involving one's resig- nation as postmaster and the appointment of a designated person as his successor has been held contrary to public policy.^^ Public '' Harrington v. Crawford, 136 Mo. Atl. 965, 59 L. R. A. 336, 93 Am. St. 467, 38 S. W. 80, 58 Am. St. 653, 35 901 ; Stephenson v. Salisbury, 53 W. L. R. A. 477. Compare Smith v. Rob- Va. 366, 44 S. E. 217. A public inson, 3 Ohio C. C. 257, 2 Ohio C. officer is prohibited from contribut- D. 146. ing money or other valuable things '^ James v. Pepper (Ga. App.), 73 to secure his appointment. In this S. E. 407. case contract was made with mayor " Meguire v. Corwine, 3 MacArth. bv an applicant for the position of tax (10 D. C.) 81, affd. 101 U. S. 108, 25 collector. Pittsburg v. Goshorn, 230 L. ed. 899; Schneider v. Local Union Pa. 212, 79 Atl. 505. No. 60, 116 La. 270, 40 So. 700, 114 "''Schneider v. Local Union No. Am. St. 549, 5 L. R. A. (N. S.) 891n; 60, 116 La. 270, 40 So. 700, 5 L. R. A. Faurie v. Morin's Syndics, 4 Mart. (N. S.) 891n, 114 Am. St. 549. See (O. S.) (La.) 39, 6 Am. Dec. 701; Har- also, Conner v. Canter, 15 Ind. App. ris V. Chamberlain, 126 Mich. 280, 85 690, 44 N. E. 656 (promise of a N. W. 728 ; Keating v. Hyde, 23 Mo. candidate in case of election to ap- App. 555; Gray v. Hook, 4 N. Y. point another as his deputy held 449; Basket v. Moss, 115 N. Car. 448, void). Compare with Stout v. Ennis, 20 S. E. 733. 48 L. R. A. 842, 44 Am. 28 Kans. 706, which holds that such a St. Rep. 463; Wishek v. Hammond, promise made before election does 10 N. Dak. 72, 84 N. W. 587; Fil- not render invalid a contract of em- son v. Himes, 5 Pa. 452, 47 Am. Dec. plovment made after election. 422; Sallade v. Schuvlkill County, 19 '«Eversole v. HolHday, 131 Ky. Pa. Sup. Ct. 191; Burch v. Abbott. 22 202, 114 S. W. 1195. Tex. Civ. App. 216, 54 S. W. 314; "' McCall v. Whaley, 52 Tex. Civ. Willis V. Weatherford Compress Co. App. 646, 115 S. W. 658. See also, (Tex. Civ. App.), 66 S. W. 472; Harris v. Chamberlain, 126 Mich. Livingston v. Page, 74 Vt. 356, 52 280, 85 N. W. 728. 6i LEGALITY OF OBJECT. 712 policy forbids that a public office be made the subject of con- tracts.'^* §712. Tending to official corruption — Payment of cam- paign expenses and the like. — An agreement by one largely interested in the erection of public buildings and works to pay the campaign expenses of a candidate for the presidency of the city council has been declared against public policy.^^ The same is true of contracts for procuring public or government contracts where the compensation to be received is contingent upon the success of the promisee's efforts. The law considers the tend- ency of such contracts as evil.''° This is also true of a contract for services in obtaining contracts from state officers through social and political relations with such officers,®^ or which tends to introduce personal solicitation or personal influence as elements in the procurement of contracts.®^ And a transaction where- "^Aughev V. Windrem, 137 Iowa 315, 114 N. W. 1047; New Bruns- wick V. Cramer, 61 N. J. L. 270. 39 Atl. 671, 68 Am. St. 705; White v. Cook, 51 W. Va. 201, 41 S. E. 410, 57 L. R. A. 417. 90 Am. St. 775; McGraw v. Traders' Nat. Bank, 64 W. Va. 509, 63 S. E. 398 (contract to pay a specified sum of money to se- cure one's election or appointment as special receiver in a pending cause). The sale of offices is against public policy. Hall v. Gavitt, 18 Ind. 390. To same effect, White v. Cook, 51 W. Va. 201, 41 S. E. 410, 57 L. R. A. 417, 90 Am. St. 775. A contract by one who anticipates that he will be appointed county treasurer to ap- ply all his fees and emoluments in excess of a certain stipulated amount toward the discharge of certain obli- gations on which he and the plain- tiffs were jointly liable in considera- tion of the latter becoming sureties on his bond is contrary to public policy and void. Serrill v. Wilder, 77 Ohio St. 343, 83 N. E. 486. 14 L. R. A. (N. S.) 982. A contract by one public official to perform the duties of another officer is against public policy and unenforcible. IMoore v. Cassilv, 16 Ohio Cir. Ct. R. 708. 9 Ohio C. D. 305 ; Walker v. Jackson, 7 Hill (N. Y.) 3S7 (con- tract to keep a log cabin open in City of New York to further candi- dacy of certain parties). '"Ward V. Hartley, 178 ^lo. 135, 77 S. W. 302. A contract providing for the payment for services and ex- penses incurred in procuring the es- tablishment of a post-office in a city in and on a certain block therein, the payment to continue so long as said post-office shall be there maintained not to exceed ten years, is contrary to public policy and void. Hare v. Thaup, 23 Oklk. 575. 101 Pac. 1050, 138 Am. St. Rep. 852. *" Russell V. (Courier Printing & Publishing Co., 43 Colo. 321, 95 Pac. 936. •"Drake v. Lauer. 93 App. Div. (N. Y.) 86. 86 N. Y. S. 986. affd.. 182 N. Y. 533. 75 N. E. 1129. To same effect, IMcCallum v. Corn Products Co., 131 App. Div. (N. Y.) 617, 116 N. Y. S. 118. "^Dunlap V. Lebus, 112 Ky. 237, 23 Ky. L. 1481, 65 S. W. 441 : Flynn V. Bank of Mineral Wells, 53 Tex. Civ. App. 481, 118 S. W. 848. See also. Bovd V. Cochrane, 18 Wash. 281. 51 Pac. 3S3 (agreement by bank to extend time for payment of a note if payor would get the county treasurer to deposit with the bank a part of the public funds held illegal). § 713 CONTRACTS. 62 by a note is executed by an official of one bank in consideration of the latter bank crediting the bank represented by the maker of the note in order to enable it to appear solvent when it made its report to the State Auditor is illegal and neither party can enforce any rights thereunder."^ The mere possibility, however, of resorting to corrupt practices does not necessarily render the con- tract void.^* §713. Tending to official corruption — Contract to take more or less than statutory fee. — Agreements whereby a public officer contracts to accept less than the fees or salaries pre- scribed by law are also contrary to public policy and void.^^ The same has been held true of a contract with a school teacher by which she agrees to accept as compensation less than the amount provided for by statute.'^'' So an agreement by a justice of ® Kentucky & Indiana Bank v. Globe Bank & Trust Co. (Ky.), 116 S. W. 792. "Bergen v. Frisbie, 125 Cal. 168, 57 Pac. 784; Cole v. Brown-Hurley Hardware Co., 139 Iowa 487, 117 N. W. 746, 18 L. R. A. (N. S.) 1161n; Kerr v. American Pneumatic Ser. Co., 188 Mass. 27, IZ N. E. 857; Knut V. Nutt, 83 Aliss. 365. 35 So. 686, 102 Am. St. 452, afifd. 200 U. S. 13, 26 Sup. Ct. 216, 50 L. ed. 350. Thus the employment of an attorney to draft a resolution to be acted on by the board of aldermen is not illegal in the absence of any evidence show- ing improper conduct on the part of the lawyer in securing the adoption of the resolution. Eisenstein v. Maiden Lane Safe Deposit Co., 113 N. Y. S. 967. See also, Bigham v. Wabash-Pittsburgh Terminal R. Co., 223 Pa. 106, 72 Atl. 318. See, how- ever, Flvnn V. Bank of Mineral Wells, 53 Texas Civ. App. 481, 118 S. W. 848. •^Ohio Nat. Bank. v. Hopkins, 8 App. D. C. 146 (agreement by notary to accept less than prescribed fees). Compare the foregoing case with that of Settle v. Sterling, 1 Idaho 259; Bodenhofer v. Hngan, 142 Iowa 321, 120 N. W. 659, 134 Am. St. 418 (holding that a contract to accept less does not defeat a deputy sheriff's right to recover the compensation fixed by law when he claims no rights under the unlawful contract). Hawk- eye Ins. Co. V. Brainard, 12 Iowa 130, ZZ N. W. 603; Second Nat. Bank v. Ferguson. 114 Ky. 516, 71 S. W. 429; In re Callaway, 123 Mo. App. 508, 100 S. W. 565 (public administrator agreeing to accept less than compen- sation allowed by law). Abbott v. Hayes Countv, 78 Nebr. 729, 111 N. W. 780; Gallaher v. Lincoln, 63 Nebr. 339, 88 N. W. 505 (officer appointed by city council agreeing to take less than sum prescribed by law). People V. Board of Police, 75 N. Y. 38; Tappan v. Brown, 9 Wend. (N. Y.) 175: Pittsburg v. Goshorn, 230 Pa. 212, 79 Atl. 505 (mayor appoint- ing one collector of delinquent taxes upon his agreeing to accept as com- pensation less than the amount pro- vided for by statute). See also, Peters v. Davenport, 104 Iowa 625, 74 N. W. 6. See, however. Bloom v. Hazzard, 104 Cal. 310, Zl Pac. 1037. "" City School Corp. of Evansville V. Hickman, 47 Ind. App. 500, 94 N. E. 828. In the above case the teacher taught under the contract until the close of the school year, when she sued for the difference between the contract price and the compensation provided for by statute. It was held she might recover. See, however. Brown v. Board of Education, 70 Misc. (N. Y.) 399, 128 N. Y. S. 16. 63 LEGALITY OF OBJECT. § 714 the peace not to charge a litigant any fees unless his judgment is collected has been declared void."^ The same principle applies to agreements to pay a public official more than tlie statutory fee or salary.^* This has been held to apply to a court stenographer even though appointed to act for only one case."" Nor can a landlord who contracts to pay and does pay a marshal extra for executing a dispossess warrant, recover from the dispossessed tenant the sum paid the marshal.^" Lobbying contracts might properly be included under this head. A separate section has, however, been devoted to this subject.'^ § 714. Agreements tending to corrupt citizens as to public duties. — Agreements which tend to the corruption of citizens as to public duties or with reference to matters in which the public has a direct interest are also contrary to public policy and void."- "Willemin v. Bateson, 63 Mich. 309, 29 N. W. 734. See also, Watson V. Fales, 97 Maine 366, 54 Atl. 853, 94 Am. St. 504 (disclosure commissioner to have no pay unless the party is successful or until he collects of his adversary) ; Edgerly v. Hale, 71 N. H. 138,' 51 Atl. 679 (sheriff to receive no fees unless action resulted successfully). A contract with reference to the emoluments of a public office is against public policy and void. It has been said that tliis would be true of a contract by a postmaster to give another the emoluments of his office, also that he does not lose his right thereto by not claiming them. Bailey V. Sibley &c. Co. (Mich.), 129 N. W. 17. ■"Downs V. McGlvnn, 2 Hilt. (N. Y.) 14, 6 Abb. Prac. (N. Y.) 241; Dull V. Mammoth Min. Co., 28 Utah 467, 79 Pac. 1050. An agreement to pay a delegate from a territory to congress for services rendered in securing payment of a claim for which congressional action is neces- sarv is void. Weed v. Black. 2 Mc- Arthur (U. S.) 368. 29 Am. Rep. 618. '"Dull V. Mammoth Min. Co.. 28 Utah 467, 79 Pac. 1050 ; Wadsworth V. Livingston County, 115 N. Y. S. 8 (also to a countv clerk). " Gravrock Land' Co. v. Wolff. 67 Misc. (N. Y.) 153, 121 N. Y. S. 953. But two game protectors each en- titled to receive as part of his com- pensation half the fines and penal- ties paid in actions brought on in- formation furnished by him, and each having obtained evidence of vio- lations of the game law by the same person, those of which defendant had evidence, they agreed that plaintiff should surrender his right to prose- cute an action for fines and penalties and should merge his evidence with that of defendant and join with de- fendant in the prosecution of the larger claim ; they to divide the money which might be recovered. Such agreement was held not against public policv. Overton v. Williams, 139 App. D'iv. (N. Y.) 177, 123 N. Y S 758 " See. post, ch. XXVII. "Jacobs V. Tobiason, 65 Iowa 245, 21 N. W. 590, 54 Am. Rep. 9; Usher V. McBratney. 3 Dill. (U. S.) 385, Fed. Cases No. 16805: Pingry v. Washburn. 1 Aiken (Vt.) 264. 15 Am. Dec. 676. An agreement to withdraw opposition to a pardon and to endeavor to induce the pardoning authority to grant a pardon is against public policy. William Deering & Co. V. Cunningham, 63 Kans. 174. 65 Pac. 263, 54 L. R. A. 410. A promissory note given under an agreement by the payee to obtain for the maker a substitute in case he should be § 714 CONTRACTS. 64 For this reason it has been held that a promise to pay money to one if he will withdraw his opposition to the laying out of a high- way over his real estate is illegal.'^^ The same has been held true of an agreement' not to protest against one's application for a patent to public land,'* or of an agreement to give one an inter- est in property sold at judicial sale if he will not object to the confirmation of such sale." It is also unlawful to purchase the consent of property owners who represent more than one-half of a certain street frontage when the consent of property owners representing that much of the frontage is a necessary condition to the grant by municipal authorities of permission to lay a street railroad in such street.''*' The same has been held true of purchasing consent to the open- ing or Improvement of street or highway/' or to the issuance of a certificate authorizing the sale of intoxicating liquors.'^ The foregoing principles seem to apply to artificial as well as natural "drafted so as to do duty in the army" or otherwise to clear him from draft is unenforcible for the rea- son that so to do would be against pubhc pohcy. O'Hara v. Carpenter, 23 Mich. 410, 9 Am. Rep. 89. "^ Smith V. Applegate, 23 N. J. L. 352. See also, Mcguire v. Smock, 42 Ind. 1, 13 Am. Rep. 353; Rider V. Parker-Washington Co., 144 Mo. App. 67, 128 S. W. 226 (citing Elliott Rds. and Sts. (2d ed.), § 587). Contra, Weeks v. Lippencott, 42 Pa. St. 474. Compare, also, Barr v. IMayor &c. of New Brunswick, 67 Fed. 402; North Baptist Church v. Orange, 54 N. J. L. Ill, 22 Atl. 1004, 14 L. R. A. 62n ; State v. Geneva, 107 Wis. 1, 82 N. W. 550. ''Roy V. Harney &c. Mfg. Co., 21 S. Dak. 140, 110 N. W. 106, 9 L. R. A. (N. S.) 529n, 130 Am. St. 706 (may agree not to contest but can- not agree not to protest). "Davezae v. Seiler, 12 Ky. L. 599. '' Doane v. Chicago City R. Co., 160 111. 22, 45 N. E. 507, 35 L. R. A. 588. See also, Sussman v. Porter, 137 Fed. 161, in which contract to pro- cure the consent of property owners to the construction of a trolley line in front of their properties, the pay received to be contingent upon suc- cess, has been held contrary to pub- lic policy. See, however, Montclair Military Academy v. Northern Jer- sev Street R. Co., 65 N. J. L. 328, 47 Atl. 890. " MaGuire v. Smock, 42 Ind. 1, 13 Am. Rep. 353 ; Howard v. First In- dependent Church, 18 Md. 451; Rider v. Parker Washington Co. (Mo. App.), 128 S. W. 226, 227 (citing 2 Elliott Rds. & Sts. (3d ed.), § 729 (587) ; State v. Stout, 33 N. J. L. 42. It has been held, however, that the party whose consent is purchased must be really opposed to the con- templated highway, and that there must be a buying of conscientious opposition. Makemsen v. Kauffman, 35 Ohio St. 444. Compare also, Lowne v. Newton, 167 Mass. 311, 45 N. E. 745 ; Stratford v. Greensboro, 124 N. Car. 127, 32 S. E. 394; 2 El- hott Rds. & Sts. (3d ed.), § 729. See also, Sussman v. Porter, 137 Fed. 161, in which a contract to obtain the consent of property owners to the construction of a trolley line in front of their properties, the amount to be paid for such services being con- tingent on success, was held contrary to public policy. ''Riggs V. Rvan, 121 App. Div. (N. Y.) 301, 106 N. Y. S. 39. 65 LEGALITY OF OBJECT. § 715 persons. Thus the editor of a paper who sought to recover for the sale of his editorial influence as expressed in editorials in his paper and for other alleged services in carrying an election was not entitled to compensation since the agreement to sell the editorial columns of his paper was against public policy and for that reason not cnforcible.''* § 715. Agreements tending to obstruct or pervert justice — Compounding crimes and the like. — Agreements which tend to obstruct or pervert justice, such as contracts which have for their purpose the compounding of a crime or the stifling of a criminal prosecution, are against public policy.*** This has been '"King V. Raleigh &c. R. Co., 147 N. Car. 263, 60 S. E. 1133. 125 Am. St. 546. To same effect, Livingston V. Page, 74 Vt. 356, 52 Atl. 965, 59 L. R. A. 336, 93 Am. St. 901. A check given in order that voters may be influenced to authorize the is- suance of township bonds at a sub- sequent election is void. Burden Bank v. Plielps, 5 Kans. App. 685, 48 Pac. 938. '"Folman v. Siler, 132 Ala. 297, 31 So. 719 (promise to conceal crime) ; United States Fidelitv &c. Co. v. Charles, 131 Ala. 658, 31 So. 558, 57 L. R. A. 212. ( In the above case the surety company made good an em- bezzlement of one Caldwell. Cald- well and the defendants as sureties then gave a note to the surety com- pany to reimburse it on condition that the surety company would not prosecute Caldwell for embezzlement. It was held illegal.) Kirkland v. Benjamin, 67 Ark. 480, 55 S. W. 840 (dismissal of criminal prosecution) ; Keating v. Morrissev, 6 Cal. App. 163, 91 Pac. 677 ; :\Ic^Iahon v. Smith, 47 Conn. 221. 36 Am. Rep. 67; Giles V. De Cow. 30 Colo. 412. 70 Pac. 681 (promise by brother-in-law to repay loss) ; P.ierbauer v. Wirth, 5 Fed. 336, 10 Biss. (U. S.) 60; In re Law- rence. 166 Fed. 239. 92 C C. A. 251 ; Henderson v. Palmer, 71 111. 579; Wolf v. Flctcmeyer, 83 111. 418; Halt- haus v. Kuntz, 17 111. App. 434; Sellers v. Catron. 5 Ind. T. 263. 82 S. W. 742 ; Crowder v. Reed. 80 Ind. 1; Ricketts v. Harvey, 106 Ind. 564. 6 X. E. 325; Peed v. McKee, 42 5 — CoNTR.\CTS. Vol. 2 Iowa 689, 20 Am. Rep. 631; Rosen- baum v. Levitt, 109 Iowa 292. 80 N. W. 393; Friend v. Miller, 52 Kans. 139, 34 Pac. 397, 39 Am. St. 340; First Nat. Bank v. Payne, 19 Ky. L. 839, 42 S. W. 736; Averbeck v. Hall, 14 Bush (Ky.) 505 ("To use every legal and proper endeavor to have dismissed" certain criminal prose- cutions). Owens v. Green, 103 Ky. 342, 20 Ky. L. 44, 45 S. W. 84; American Nat. Bank v. Madison, 144 Kv. 152, 137 S. W. 1076; Part- ridge V. Hood, 120 :\Iass. 403, 21 Am. Rep. 524; Gorham v. Keves, 137 Mass. 583 ; Snyder v. Willey, 33 Mich. 483; Case v. Smith, 107 Mich. 416. 65 N. W. 279, 31 L. R. A. 282, 61 Am. St. 341 ; Buck v. First Nat. Bank, 27 ^lich. 293, 15 Am. Rep. 189 (note given in consideration of the officers of a bank agreeing to sign petition asking clemency or otherwise exert influence to obtain clemency) ; Mc- Coy v. Green. 83 Mo. 626; Metro- politan Land Co. v. Manning. 98 Mo. App. 248, 71 S. W. 696; McCormick &c. Co. v. Miller. 54 Nebr. 644. 74 N. W. 1061; Graham v. Hiesel, 73 Nebr. 433. 102 N. W. 1010 (defend- ant not to prosecute plaintiff's hus- band for burglarv) ; Jourdan v. Bur- stow, 76 N. J. Eq. 55. 74 Atl. 124, 139 Am. St. 741; Havncs v. Rudd. 102 N. Y. 372, 7 N. E. 287. 55 Am. Rep. 815: Buffalo Press Club v. Greene. 86 Hun (N. Y.) 20, 67 N. Y. St. 105. 33 N. Y. S. 286; Roll v. Raguet, 4 Ohio 400. 7 Ohio 76, 22 Am. Dec. 759; Springfield Fire & Marine Ins. Co. v. Hull, 51 Ohio St. 270, 25 L. § 715 CONTRACTS. 66 held again and again, and the ilhistrative cases are very numer- ous, akhough there is some difference of opinion as to some phases of the general subject.^''^ Thus a note and mortgage, the sole consideration for which was a promise by the obligee not to prosecute the obligor's son for a felony, have been held unen forcible.**^ The agreement not to prosecute may be either express or implied.**- But while this is true, there is no compounding of a felony unless there is an agreement not to prosecute.*^ The foregoing rule does not militate against the R. A. Z7, Z7 N. E. 1116, 46 Am. St. 571 ; Weber v. Shay & Cogan, 56 Ohio St. 116, 46 N. E. 2,77, 2>7 L. R. A. 230, 60 Am. St. 743 (contract by which attorneys were to prevent the finding of indictments) ; Calloway v. West- ern States Lumber Co. (Okla.), 123 Pac. 151 ; In re Bredin's Appeal, 92 Pa. St. 241, 2 Ky. L. 20, 2,7 Am. Rep. 677; Pearce v. Wilson, 111 Pa. St. 14, 2 Atl. 99, 56 Am. Rep. 243; Biddle v. Hall. 99 Pa. St. 116; Bankhead v. Shed, 80 S. Car. 253, 61 S. E. 425, 16 L. R. A. (N. S.) 971n; Medearis v. Cranberry, 38 Tex. Civ. App. 187, 84 S. W. 1070, 86 S. W. 790 (holding that the court would not aid a grantee to recover posses- sion of land under a deed given in consideration of compounding a fel- ony, where the grantor remained in possession) ; Barron v. Tucker, 53 Vt. 338, 38 Am. Rep. 684; Fernekes V. Bergenthal, 69 Wis. 464, 34 N. W. 238. ^'a In addition to the cases cited in the last preceding note, see also the following: Abandonment of criminal proceeding by prosecution for a con- sideration. Deen v. Williams, 128 Ga. 265, 57 S. E. 427. Money or property parted with in considera- tion of the compounding of a felony, both parties being equally guilty, can- not be recovered. Pierce v. Kibbee, 51 Vt. 559. (In the above case a note and mortgage given in lieu of notes and mortgages given to compound a felony held invalid.) But it is a question whether a promise to pay what he justly owes made by one under threat of criminal prosecution can be avoided by the promisor, as where A embezzles money and under threat of prosecution promises to re- pay the same. Some authorities hold him liable on the promise since he agrees to do nothing more than dis- charge a legal liabilitv. Hilborn v. Bucknam, 78 Maine 482, 7 Atl. 272, 57 Am. Rep. 816; Thorn v. Pinkham, 84 Maine 101, 24 Atl. 718, 30 Am. St. 335n ; Wolf v. Troxell. 94 Mich. 573, 54 N. W. 383; Beath v. Chapoton, 115 Mich. 506, 72, N. W. 806. 69 Am. St. 589. See, however, Morrill v. Nightingale, 93 Cal. 452, 28 Pac. 1064. 27 Am. St. 207. See ante, chapt. 7. "Jones V. Dannenberg, 112 Ga. 426, 2,7 S. E. 729, 52 L. R. A. 271 (notes and mortgage executed by wife) ; Koons v. Vanconsant, 129 Mich. 260, 88 N. W. 630, 95 Am. St. 438; Corbett v. Clute, 137 N. Car. 546, 50 S. E. 216; Racine-Sattlev Mfg. Co. v. Pavlicek, 21 N. Dak. 222, 130 N. W. 228. (In the above case judg- ment by default had been taken on notes given to compound a felony. On its being made to appear that the notes on which judgment had been taken were given to compound a fel- ony the judgment was vacated. The party giving the notes was an illit- erate foreign woman.) " In re Lawrence, 166 Fed. 239, 92 C C. A. 251; Clark v. Pomeroy, 4 Allen (Mass.) 534; Sumner v. Sum- mers, 54 Mo. 340; Conderman v. Hicks, 3 Lans. (N. Y.) 108; Ball v. Ward, 76 N. J. Eq. 8, 74 Atl. 158; Riddle v. Hall, 99 Pa. St. 116. ^' Miller v. Minor Lumber Co., 98 Mich. 163, 57 N. W. 101, 39 Am. St. 524. (In above case two deeds were given by wife for same property; first one held invalid, second one valid.) Moyer v. Dodson, 212 Pa. 344, 61 Atl. 937. Conveyance of 67 LEGALITY OF OBJECT. § 716 compromise or settlement of a claim for civil injuries or liabilities o-rowinjr out of a criminal act when there is no express or implied agreement to suppress the criminal prosecution made in connec- tion therewith."** ^716. Obstructing justice— Compounding crimes — Misde- meanors. — It would also seem that misdemeanors which are personal in their nature between the parties, and in the prosecu- tion of which the public has no interest, may be settled by an agreement between the parties.*^ Bastardy cases afford an illus- tration of such compromises.**" Some jurisdictions permit, with the court's approval, an agreement not to prosecute certain minor misdemeanors to be included in a contract by which the private injuries resulting therefrom are settled. ^^ propert\', without any promise not to institute criminal proceedings, though with the expectation that, if restora- tion were made, no prosecution would be instituted. Bishop v. Howe, 117 N. Y. S. 996; Pierson v. Green, 69 S. Car. 559, 48 S. E. 624. (Mortgage executed by wife to raise money to pay husband's debts and compromise a criminal prosecution against him. The mortgagee assisted in such com- promise. ^Iortgage held valid in so far as it was executed to raise money to pay husband's debts, but invalid as to the amount used to compromise the criminal prosecution.) See also, Thom V. Stewart (Cal.), 122 Pac. 1069; Horn v. Gibson, 24 Okla. 481, 103 Pac. 563. -* Goodrum v. Merchants' & Plant- ers' Bank (Ark.), 144 S. W. 198; Keating v. Morrissey, 6 Cal. App. 163, 91 Pac. 677; Lomax v. Colorado Xat. Bank. 46 Colo. 229, 104 Pac. 85 : Paige V. Hieronvmus, 192 111. 546, 61 N. E. 832; Sloan v. Davis. 105 Iowa 97, 74 N. W. 922 (agreement for the settlement of civil action for adulterv) ; Powell v. Flanarv. 109 Kv. 342. 22" Kv. L. 908, 59 S. W.' 5: Ward V. Allen. '2 Mete. (Mass.) 53. 35 Am. Dec. 3S7; Atwood v. Fisk. 101 Mass. 363. 100 Am. Dec. 124; Heath v. Chapolon. 115 Mich. 506. 73 X. W. 806. 69 Am. St. 589; Wolf v. Trox- cll. 94 Mich, 573. 54 N. W. 383 ; Bar- rett V. Weher (see Weber v. Bar- rett), 125 N. Y. 18, 25 N. E. 1068; Cohen v. Grimes, 18 Tex. Civ. App. 327. 45 S. W. 210. '" Moog V. Strang, 69 Ala. 98 ; Breathwit v. Rogers, 32 Ark. 758; McMahon v. Smith. 47 Conn. 221, 36 .\m. Rep. 67; Soule v. Bonney, 37 Maine 128; Mathison v. Hanks, 2 Hill (N. Car.) 625; Geier v. Shade, 109 Pa. St. 180; Holcomb v. Stimp- son, 8 Vt. 141. "" Hinman v. Taylor. 2 Conn. 357 ; Davis V. Moodv, 15 Ga. 175; Jones v. Peterson, 117 Ga. 58, 43 S. E. 417; Coleman v. Frum, 3 Scam. (111.) 378; Allyn V. Allyn. 108 Ind. 327, 9 N. E. 279; Griffin v. Chriswisser. 84 Nebr. 196, 120 N. W. 909. In the above case a settlement of bastardy pro- ceedings was upheld, notwithstanding such settlement contained a provision against prosecution for statutory rape, on the ground that the legal was severable from the Mlcgal part, and it appearing that the infant feme did not knowingly participate in the unlawful agreement. Hoit v. Cooper. 41 N. H 111: Burton v. Belvin, 142 N. Car. 151. 55 S. E. 71; Maxwell v. Campbell. 8 Ohio St. 265: Wyant v. Lesher. 23 Pa. St. 338; Jangraw v. Perkins. 77 Vt. 375. 60 Atl. 385. See also, Bea v. People. 101 111. App. 132 (agreement to pay an abandoned wife and child fixed amount, which agree- ment contained a provision against indictment for abandonment). "Deen v. Williams. 128 Ga. 265. 57 S. E. 427; Partridge v. Hood, 120 §717 CONTRACTS. 68 §717. Obstructing justice — Compounding offenses — Ob- ject must be to stifle prosecution. — It seems that an agree- ment will not be avoided on the ground that it has for its object the compounding of a crime or the stifling of a criminal prosecu- tion, unless it appears that the alleged crime was committed or that a criminal prosecution had actually been commenced or was pending, ^^ or that the contract was, in fact, given for the stifling of a criminal prosecution. Thus, where one agreed to pay three hundred dollars for the return of a watch which he believed had been stolen, it was held that there was no attempt to com- pound a felony, and the contract was not void for that rea- son.®^ Voluntary subscriptions by some of the stockholders of a loan association, sufficient in amount to cover the defalcation of the secretary made without knowledge of or any partici- pation therein by the officers and directors of such associations, are not invalid on the ground that the transaction was an ar- rangement to compound a felony.^** § 718. Miscellaneous illustrations. — One may also enter into an agreement which has for its purpose the suppression of a Mass. 403, 21 Am. Rep. 524; Lyon party to be under arrest and actually V. Waldo, 36 Mich. 345; People v. in the course of being prosecuted, in Bishop, 5 Wend. (N. Y.) Ill; Roth- order to enable a party who secures ermal v. Hughes, 134 Pa. St. 510, 19 the dismissal or termination of the Ati. 677; Brown v. McCreight, 187 prosecution, for a money considera- Pa. St. 181, 41 Atl. 45. tion, to plead the illegality of such **Woodham v. Allen, 130 Cal. 194, consideration in bar of its collection. 62 Pac. 398; Eberstein v. Willets, 134 Beal-Doyle Dry Goods Co. v. Barton, 111. 101, 24 N. E. 967; Baker v. Far- 80 Ark. 326, 97 S. W. 58. See also, ris, 61 Mo. 389.; Manning v. Colum- Smith Premier Typewriter Co. v. bian Lodge, 57 N. J. Eq. 338, 38 Atl. Mayhew, 65 Nebr. 65, 90 N. W. 939, 444, 45 Atl. 1092; Steuben County which lays down the rule that a Bank v. Mathewson, 5 Hill (N. Y.) promise not to institute criminal pro- 249; Swope v. Jefferson Fire Ins. Co., ceedings is as illegal as the dismissal 93 Pa. St. 251 ; Catlin v. Henton, 9 of a prosecution already instituted. Wis. 476; Schultz v. Catlin, 78 Wis. ''Schirm v. Wieman, 103 Md. 541, 611, 47 N. W. 496. It is not neces- 63 Atl. 1056, 7 L. R. A. (N. _S.) 175n, sary, however, to show, in order to 115 Am. St. 373. See also. Live Stock defeat an action on a note alleged Nat. Bank v. Collins, 147 Iowa 107. to have been given to compound a 124 N. W. 172, which holds that a felony, that the crime had actually contract whereby commission men been committed, it appearing that an agree to pay a certain amount in set- information had been filed charging tlement of a fraud perpetrated by one of the co-makers of the note with them is not void, for the reason that a crime. W. T. Joyce Co. v. Rohan, it compounds a felony. 134 Iowa 12, 111 N. W. 319, 120 Am. »" Richter v. Phoenix Bldg. &c. Co., St. 410. It is not necessary for a 27 Ohio C. C. 793. 69 LEGALITY OF OBJECT. § JK) public scandal or the institution of an unwarranted and ground- less prosecution. But such an one may avoid the agreement so induced on the ground of fraud, duress or want of consideration, depending on the circumstances of each particular case." And in a very recent case it w^as held to be against public policy for a husband to contract to settle with one for criminal conversation with such husband's wife, and to do nothing to give the matter publicity, and that the breach of such agreement by suing the wife for divorce and introducing the agreement in evidence gave no right of action."" A contract to pay an attorney a given fee, in case he succeeded in ''suspending the enforcement or opera- tion" of a designated act for a certain period of time, has been held illegal and unenforcible.'^ There can be no recovery on a note given solely to establish a false defense to a criminal prose- cution,"* § 719. Agreements tending to obstruct or pervert justice — Civil proceedings. — Agreements relating to civil proceed- ings and involving and providing for anything inconsistent with the full and impartial course of justice therein, or those that tend to pervert the course of justice or its pure administration by the courts, are also illegal."^ In case public interests are involved in *^Woodham v. Allen, 130 Cal. 194, sent." Ball v. Ward, 76 N. J. Eq. 62 Pac. 398; Keith v. Buck, 16 111. 8, 74 Atl. 158. App. 121; Smith v. Steely, 80 Iowa °=]McKenzie v. Lynch, 167 Mich. 738, 45 N. W. 912; Koons v. Vau- 583, 133 N. W. 490, citing Case v. consant, 129 Mich. 260, 88 N. W. Smith, 107 Mich. 416, 65 N. W. 279, 630 95 Am. St. 438; James v. Rob- 31 L. R. A. 282, 61 Am. St. 341; erts, 18 Ohio 548; Smith v. Blachley, Clark v. Ricker, 14 N. H. 44; Treat 188 Pa. St. 550, 41 Atl. 619, 68 Am. v. Jones, 28 Conn. 334. St. 887; Heckman V. Swartz, 50 Wis. "'Arlington Hotel Co. v. Ewmg 267, 6 N. W. 891. "It is against equity (Tenn.), 138 S. W. 954. and good conscience for a creditor °"' Bates v. Cain's Estate, 70 Vt. to extort from a parent payment on 144, 40 Atl. 36. or security for the debt of a son, for '^Davvkins v. Gill, 10 Ala. 206; Pat- which the parent is not responsible, terson v. Donner. 48 Cal. 369; Gil- by tlireats of criminal prosecution of lette v. Logan County Supervisors, the son, even if the imprisonment be 67 111. 256. When the contract was lawful, or supposed to be lawful, and made proceedings were pending to that contracts of the parent for such have a guardian appointed for the payment or security executed under plaintiff. The dismissal of this pro- circumstances created by the creditor, cceding was the consideration for the which deprive the parent of the free- contract sought to be canceled. Held, dom and power of deliberation neces- that if the suit was brought merely sary to validate transactions of this to extort the contract its dismissal af- description, may be avoided in a forded no consideration ; on the other court of equity, as made without con- hand, if the proceeding was well- § 719 CONTRACTS. a civil suit it cannot be compromised in derogation of the inter- ests of the public.^'' An agreement to withdraw a plea of usury has been held against public policy and unenforcible." It has also been held that the probate of a will is a proceeding in rem to W'hich all the world are in some sense parties, and that for this reason a probate court cannot refuse to probate a will merely because all parties directly interested in it have entered into an agreement to the effect that the testator was of unsound mind.^- Nor will an agreement be enforced whereby one of the owners of land to be sold at judicial sale agrees not to oppose the con- firmation of such sale.''^ The same has been held true of an grounded public policy required that it be pushed to a conclusion. In neither event could the one instituting the proceeding make its abandonment a source of profit to herself. Sim- mons V. Kelsey. 76 Nebr. 124, 107 N. W. 122. An agreement among sev- eral parties to prevent personal serv- ice of summons in mortgage fore- closure suits has been held void. Peo- ple V. Spiro, 71 Misc. (N. Y.) 362, 129 N. Y. S. 183. ■^Amestoy v. Electric Rapid Tran- sit Co., 95 Cal. 311, 30 Pac. 550. (The above case had to do with the ob- struction of a public thoroughfare.) "'Clark V. Spencer, 14 Kans. 398, 19 Am. Rep. 96; In re Melon's Ap- peal (Pa.), 7 Atl. 201. •*In re Will of Dardis, 135 Wis. 457, 115 N. W. 332. 23 L. R. A. (N. S.) 783n, 128 Am. St. 1033. Compare with this case the case of Cochran v. Zachery, 137 Iowa 585, 115 N. W. 486, 16 L. R. A. (N. S.) 235n, 126 Am. St. 307. See also, Carter v. Owens, 41 Ala. 217; Crow v. Blakey's Exr., 31 Ala. 728; In re McNamara. 154 Mich. 671; In re Leonard's Will (N. J.), 47 Atl. 222; In re Lasak, 131 N. Y. 624, 30 N. E. 112; Cuthbert v. Chauvet, 48 N. Y. St. 346, 20 N. Y. S. 336; Heermans v. Hill, 2 Hun (N. Y.) 409. In the absence of collusion or fraud as to other parties interested in the estate, one interested in de- feating the probate of a will may enter into a valid agreement not to interpose any objection to its probate. Grochowski v. Grochowski, 11 Nebr. 510, 112 N. W. 335. The conveyance of a prospective interest in the estate of an ancestor, and an agreement not to contest any disposition thereof, is not, in California, against public pol- icy. In re Wickersham's Estate, 153 Cal. 603, 96 Pac. 311. An agreement entered into by the two proponents of two different wills, one proponent being the guardian and trustee for an infant beneficiary, whereby the costs of all the parties should be paid out of the estate irrespective of which will was probated, has been held not void as tending to affect the administration of justice, and while the plaintiff's costs could not be paid out of the estate, for the reason that the will of which the infant was the beneficiary was probated, and such infant was not bound by such agree- ment, the defendant, executor and trustee was not thereby freed from his agreement, and consequently he was liable to the plaintiff. Prince v. Haworth, 75 L. J. K. B. 92 (1905), 2 K. B. 768. But where the agreement not to contest is of such a nature as to tend toward the sup- pression of truth and to exaggerate and color facts tending to support the will, it will not be allowed to stand. Conklin v. Conklin, 165 Mich. 571. 131 N. W. 154. "'Tappan v. Albanv Brewing Co., 80 Cal. 570, 22 Pac. 257, 5 L. R. A. 428n, 13 Am. St. 174. The court said : "It is contended by the re- spondent that this was nothing more than the payment of a sum of rnoney by way of a compromise of litiga- tion, and that such contracts have been upheld. We do not so construe the agreement. It was the promise to yi LEGALITY OF OBJECT. § 72O agreement to aid in obtaining land at an administrator's sale at less than its real value/ § 720. Civil actions — Fraud on the court. — Courts will not give effect to a fraud practiced on them. Thus where a woman, in order to procure a divorce, conceals her relations with a second man she cannot maintain an action for breach of promise against this second man on a promise to marry made prior to obtaining her divorce." An agreement whereby a patient who has sus- tained a personal injury agrees to pay his physician one-third of any sum which he might receive from the parties tiirough whose negligence he was injured, has been held uncn forcible because it furnished a powerful motive for exaggeration, suppres- sion or misrepresentation, — a temptation to swell the damages so likely to color the doctor's testimony as to be inimical to pure administration of justice.^ § 721. Obstructing justice — Securing evidence. — Likewise an agreement to pay a witness a sum contingent upon the success of the promisor in the contemplated suit has been held against public policy.'' Contracts to secure evidence of a given state of facts which \\'\\\ enable or tend to enable a party to win a suit or force a favorable settlement have also often been held void as against public policy.'^ The rule is otherwise, however, w'here the pay a consideration for the conceal- N. W. 154, 58 Am. Rep. 369; Laffin ment of a fact from the court and v. Billington, 86 N. Y. S. 267, 14 N. the parties, material to the rights of Y. Ann. Cases 360. said parties, and which it was her ^ Dawkins v. Gill, 10 Ala. 206; duty to make known. Such a con- Pollak v. Gregory. 9 Bosw. (N. Y.) tract was against public policy, and 116. See also, Henderson v. Hall, neither party should receive the aid 87 Ark. 1, 112 S. W. 171, 25 L. R. A. of the courts to enforce it." (N. S.) 70n ; Hughes v. Mullins, 36 ' Smith V. Humphreys, 88 Maine Mont. 267, 92 Pac. 758. 345. 34 Atl. 166. " Hutlev v. Hutlev, L. R. 8 Q. B. = Prevost V. Wood, 21 Times L. R. 112; Recs v. De Bernardv (1896), 2 684. Ch. 437; Neece v. Joseph, 95 Ark. 'Sherman v. Burton. 165 Alich. 552, 129 S. \V. 797, 30 L. R. A. (X. 293. ZZ L. R. A. (\. S.) 87n. 130 N. S.) 278: Goodrich v. Kennev. 144 W. <667. The same has been held true 111. 422, ZZ N. E. 44. 19 L. R. A. 371 of a contract by which an attorney and note. 2i6 Am. St. 459; Phelps v. agreed to pay the physician who at- Manecke, 119 Mo. App. 139, 96 S. W. tended the person injured a specified 221 ; Hughes v. 'Mullins, 26 Mont, sum for his services as a witness if 267, 92 Pac. 758, 13 .A.. S: 'E. .Ann Cas. the suit was won. In re Schapiro. 128 209: Quirk v. Mullcr. 14 l\Iont. 467. N. Y. S. 852. To same effect. 36 Pac. 1077, 25 L. R. A. 87. 43 Am. Thomas v. Caulkett, 57 Mich. 392, 24 St. 647; Lyon v. Hussey, 82 Hun (N. § 721 CONTRACTS. 72 contract merely provides for the payment of services rendered in securing for use such testimony as actually exists and does not contemplate the procurement of evidence which tends to estab- lish a given state of facts regardless of any other considera- tion, and compensation does not depend upon the outcome of the suit in which the evidence is to be given." Y.) 15. 63 N. Y. St. 531, 31 N. Y. S. 281; Getchell v. Welday, 4 Ohio S. & C. P. Dec. 65; Bowling v. Blum (Tex.), 52 S. W. 97. An agreement whereby a deputy sheriff is to be paid a certain sum in consideration of his furnishing evidence sufficient to con- vict the murderers of a relative of the other party to the contract has been held void as an agreement to pay a public officer for doing a duty which the law requires him to do without such pavment. Kennedy v. Hodges, 97 Ga. 753, 25 S. E. 493. " Wood v. Casserleigh, 30 Colo. 287, 71 Pac. 360, 97 Am. St. 138 and note, affg. Casserleigh v. Wood, 14 Colo. App. 265, 59 Pac. 1024._ The contract in the above case required the plain- tiff to furnish evidence which was then in his possession and which he had secured prior to the execution of the contract. The plaintiff had collected this testimony under a con- tract with a party by whom he had been employed which in no manner rendered his compensation contin- gent upon the character of the testi- mony which he had been employed to procure or the result of any action in which it might be used. On the contrary, for the services thus per- formed he was paid or promised a specific compensation in no manner contingent upon his success. Com- pare, however, with the foregoing case that of Casserleigh v. Wood, 119 Fed. 308, 56 C. C. A. 212, where an opposite conclusion was reached on exactly similar facts but on the ground of champerty and mainte- nance. Lucas V. Pico, 55 Cal. 126 fin- formation concerning outstanding title). Contract to pay defendants to procure evidence of another's breach of contract without reference to the outcome of a suit in which the evi- dence was to be used. J. I. Case Threshing Mach. Co. v. Fisher riowa), 122 N. W. 575. See also. Singer Mfg. Co. v. City Nat. Bank, 145 N. Car. 319, 59 S. E. 72. The above case holds that merely because one received a certain sum for se- curing witnesses in a pending divorce suit, it does not follow that the re- cipient of the money was to obtain false or suborned testimony. Chand- ler V. Mason, 2 Vt. 193; Cobb v. Cowdery, 40 Vt. 25, 94 Am. Dec. 370 ; Plating Co. v. Farquharson, L. R. 17 Ch. Div. 49. In the above case an advertisement was inserted in the newspaper which offered a hundred- pound reward to any one who could pioduce documentary evidence of a certain fact. An action was brought to commit parties inserting this ad- vertisement for contempt of court. The court said : "Advertisements of a similar nature are very common. You advertise for a lost deed or a lost will, or you advertise for a cer- tificate of marriage or of baptism, to prove heirship or kinship. That is done as a matter of course. * * * And I have never heard it suggested that those advertisements were il- legal, or were not a proper mode of obtaining evidence." The above case criticizes that of Pool v. Sacheverel, 1 P. Wms. 675. In this latter case a party who had been defeated in a suit offered a hundred pound reward for the discovery and legal proof that a certain registry entry which had been introduced at a trial evidenced the marriage of the parties whose names were correctly stated therein. He was held guilty of contempt of court. Contracts for the investigation of evidence are looked upon with suspi- cion, since they may easily become the instrument of corruption, and the law does not tolerate the offering to any one, no matter how virtuous, of such temptation to crime. See cases cited ante, this note. It is ap- parent that a contract for the 71 LEGALITY OF OBJECT. § 722 § 722. Obstructing justice — Paying witnesses. — As a gen- eral rule agreements to give a witness compensation in addition to his statutory fee are held invalid where the witness is merely to testify as to facts within his knowledge which the law and his duty as a citizen require him to make known/ The foregoing principle does not necessarily apply to expert witnesses. Con- tracts with expert witnesses for extra compensation are as a general rule upheld where the employment is such as to require from the place of the court, more than twenty miles, so that his deposi- tion could be taken, agrees that he will attend in person. In these and the like cases the promise is one for indemnity, and is founded on a new and meritorious consideration, and is good. * * * If a witness agrees with a party, that he will attend and testify without being summoned, and he is not summoned and so not brought under the order or censure of the court, we suppose any reason- able promise for compensation is good and may be enforced; for the proceeding or service is not under nor in pursuance of the statute." Dodge V. Stiles, 26 Conn. _ 463. "Where a witness who is not inter- ested in the result of the controversy resides within the state and is amenable to process therein, an agreement to compensate him in an amount in excess of the legal fees for attending as a witness and testifying only as to facts within his knowl- edge, is contrary to public policy and void." Clifford v. Hughes, 139 App. Div. (N. Y.) 730, 124 X. Y. S. 478. An agreement to pay a mem- ber of a fraudulent conspiracy a val- uable consideration in return for such conspirator's testimony and per- mission to use the evidence showing such conspiracy in his possession has also been held void, and no recovery permitted on such agreement by the conspirator, since he is not permitted to profit by the information pos- sessed by reason of his unlawful con- spiracv. Hagan v. Wellington, 7 Kans.'.\pp. 74. 52 Pac. 90O. See also, Wright V. Somers. 125 111. App. 256; Boehmer v. Foval, 55 111. App. 71 ; Haines v. Lewis, 54 Iowa 301. 6 N. W. 495. Zl Am. Rep. 202n ; Cowles V. Rochester Folding Box Co., 81 purchase of evidence coupled with an agreement to suppress testi- mony is void. Young v. Thom- son, 14 Colo. App. 294, 59 Pac. 1030. An agreement by a public offi- cer or other fiduciary to reveal facts coming within his knowledge on ac- count of his office or fiduciary rela- tion is unenforcible. Lucas v. Allen, 80 Ky. 681, 4 Ky. L. 687. Compare with this case that of Harris v. More, 70 Cal. 502, 11 Pac. 780, which holds an officer entitled to recover on a contract to furnish evidence where it related to a crime committed out- side his jurisdiction. ^ "Were it otherwise, and witnesses might be allowed to make terms for testifying, there would be room for oppressive conduct, and for corrup- tion. Witnesses, knowing that their testimony was indispensable, would under one pretense or another, make terms for their testimony, and such as might be induced to represent their testimony as important, would be tempted to barter their oaths at the expense of truth and justice. Now, a promise to pay more than the stat- ute fees for just this statute service, without further service or loss _ by the witness, may be said to be with- out consideration. It cannot be im- portant, in our view, whether the promise be made after the service of the subpoena, co-temporaneously with it, or before, provided the promise refers to this duty and is founded on no other consideration. "There may be a further consideration, in which case an executory promise for extra compensation will be upheld; as if the witness was about going abroad at the time he may be wanted to at- tend court, and agrees that he will remain and give up his journey and is summoned; or living at a distance 7^ CONTRACTS. 74 special work in preparation for the trial." Thus, if a physician renders extra services as an expert an agreement whereby he is to receive extra payment for such services is proper and legal." However, if the agreement is one by which the expert is to receive for his services a percentage of the amount that may be recovered or realized from the suit the contract is illegal.^'' Nor is he en- titled to extra compensation where he is a witness merely as to matters concerning which the law and his duty as a citizen would compel him to testify.^^ § 723. Obstructing justice — Hiring witnesses to leave state and the like. — It goes without saying that a contract by which a witness is hired to leave the state and not to appear at the trial of a pending suit is an unlawful agreement to stifle public justice.^" An agreement to abstain from giving or to suppress App. Div. (N. Y.) 414. 80 N. Y. S. 811; In re Ramschasel's Estate, 24 Pa. Sup. Ct. 262. An agreement for extra compensation does not render invalid an agreement otlierwise valid and enforcible if such illegal pro- vision is separable from that part vi'hich is legal. Smith v. Hartsell, 150 N. Car. 71, 63 S. E. 172, 22 L. R. A. (X. S.) 203. A contract which contains a provision to the ef- fect that the plaintiff will give all true evidence does not render illegal a contract otherwise valid. Smith v. Hartsell. 150 N. Car. 71, 63 S. E. 172, 22 L. R. A. (N. S.) 203. _ * Lincoln Mountain Gold Min. Co. V. Williams, 11 Colo. 193, 85 Pac. 844 (expert testimony as to the value of mining property) ; Johnson v. Pietsch, 94 111. .A.pp. 459; Barrus v. Phaneuf, 166 Mass. 123, 44 N. E. 141, 32 L. R. A. 619; People v. Mont- gomery, 13 Abb. Pr. (N. S.) (N. Y.) 207; People v. Cayuga County, 22 Misc. rX. Y.) 616, 50 N. Y. S. 16; People V. Cortland County, 39 N. Y. St. 313, 15 X. Y. S. 748; People v. Jefferson Countv, 35 App. Div. (N. Y.) 239, 54 X. Y. S. 782; Hough v. State, 68 Misc. CX. Y.) 26. 124 X. Y. S. 878; Philler v. Waukesha County, 139 Wis. 211. 120 N. W. 829, 25 L. R. A. ex. S.) 1040n, 131 Am. St. Rep. 1055, 17 Am. & Eng. Ann. Cas. 712. 'Lewis v. Blye, 79 111. App. 256. "Laffin v. Billington, 86 X. Y. S. 267, 14 X. Y. Ann. Cas. 360. See also. Hough v. State, 145 App. Div. (X. Y.) 718, 130 X. Y. S. 407, hold- ing an agreement by an expert wit- ness employed to appraise property to appraise it at a substantially less figure than an expert employed by the adverse party against public pol- icy. " Burnett v. Freeman, 125 Mo. App. 683, 103 S. W. 121, same case on second appeal 134 Mo. App. 709, 115 S. W. 488. The above case lays down the rule "that a witness called to testify as an expert, whether as a physician or in any other branch of knowledge, may be compelled to state his opinion upon hypothetical or other questions involving his pro- fessional knowledge, without com- pensation other than the witness fee taxed to the ordinary witness. He cannot, however, be required to make special preparation without extra compensation." See also, Walker v. Cook, ZZ 111. App. 561. "Feltner v. Feltner, 132 Ky. 705, 116 S.^ W. 1196. an the above case the witness executed his part of the agreement and then attempted to re- cover on the contract.) To same ef- fect, Lazenby v. Lazenby, 132 Ga. 836, < 65 S. E. 120, in which a witness who knew facts favorable to the adverse /J LEGALITY OF OBJECT. 7^4 evidence is void/^ In short any contract which relates to court proceedings and which may involve anything inconsistent with the impartial course of justice is void regardless of actual corruption, the good faith of the parties, or the fact that no evil resulted therefrom.^* § 724. Obstructing justice — Indemnity to sureties. — There is a condict of authority on the (iue.sti(jn as to whether a bond of indemnity to sureties on a bail bond is void as contrary to pub- lic policy. By one line of cases a prisoner may indemnify his bail.'^ Other authorities hold that such contracts tend to ob- struct or interfere with the administration of public justice and are for that reason against public policy and void. The reason- ing in such cases briefly stated is : The effect of a bail bond is to transfer the legal custody of the prisoner from the state to the bailor; if the bailor is indemnified against loss there is no longer party agreed not to volunteer any information to such adverse party Imt to assist the other party to the litigation, this latter party agreeing to convey certain property to the witness on a favorable issue of the suit: '= Valentine v. Stewart, 15 Cal. 387; Haines v. Lewis. 54 Iowa 301. 6 N. W. 495, 2,7 Am. Rep. 202n ; Friend v. Miller. 52 Kans. 139. 34 Pac. 397. 39 Am. St. 340; Crisup v. Grosslight, 79 Mich. 380, 44 N. W. 621. "Treat v. Jones. 28 Conn. 334; Paton v. Stewart, I?' 111. 481 ; Brown v. Bank. 137 Ind. 655. 2>7 N. E. 158, 24 L. R. A. 206n; Gray v. Mc- Revnolds, 65 Iowa 461, 21 N. W. "777, 54 .\m. Rep. 16; Bowman v. Phillips. 41 Kans. 364, 21 Pac. 230, 3 L. R. A. 631. 13 Am. St. Rep. 292; Averbeck v. Hall, 14 Bush (Ky.) 505; Thomas v. Caulkett, 57 Mich. 392, 24 N. W. 154, 58 Am. Rep. 369; Will- emin v. Bateson, 63 Mich. 309, 29 N. W. 734; Ridenbaugh v. Young, 154 Mo. 274, 46 S. W. 959; Weber v. Shav, 56 Ohio St. 116, 46 N. E. Z77. 27 L. R. A. 230. 60 Am. St. 743j Ormerod v. Dearman. 100 Pa. 561. 45 Am. Rep. 391 ; Bierhauer v. Wirth, 10 Biss. (U. S.) 60, 5 Fed. 336; Bar- ron v. Tucker, 53 Vt. 338, 38 Am. Rep. 684. "Learv v. United States (U. S.), 32 Sup. Ct. 599 ; Molonev v. Nelson, 158 N. Y. 351. 53 N. E. 31 (statutory law permitted a prisoner to furnish cash bail). Essig v. Turner, 60 Wash. 175, 110 Pac. 998. (Based on statutory grounds. Law permitted prisoner to give cash bail. Court could see no difference between go- ing cash bond directly to state and agreement to indemnifv surety.) Carr v. Davis, 64 W. Va. 522, 63 S. E. 326. 20 L. R. A. (N. S.) 58n. See also. Ellis V. :^orman. 19 Kv. L. 1798. 44 S. W. 429. The indemnity to the bailor may be given by a third per- son. Stevens v. Hay, 61 111. 399; Harp V. Osgood, 2 Hill (N. Y.) 216. See also, Anderson v. Spence, 72 Ind. 315. 27 Am. Rep. 162; Aldrich v. Ames, 9 Gray (Mass.) 76; Holmes v. Knights, 10 X. H. 175; Harrison v. Sawte!, 10 Johns. (N. Y.) 242, 6 Am. Dec. 2)27. Contra, Dunkin v. Hodge, 46 Ala. 523. Pennsylvania is perhaps contra. Mavne v. Fidel- ity &c. Co., 198 Pa. 490. 48 Atl. 469. revg. 8 Pa. Dist. 711. When the bail pays a recognizance the law does not imply a promise by the accused to rcimlnirse the bail. United States v. Greene, 163 Fed. 442, and cases cited ; Ignited States v. Rvder. 110 U. S. 729. 28 L. ed. 308, 4 Sup. Ct. 196; Carr v. § 7^5 CONTRACTS. 76 any inducement for him to exercise vigilance, and, as a result, the state receives the surety of only one person instead of two." § 725. Ousting jurisdiction or limiting powers. — Contracts by which the parties thereto seek to oust the jurisdiction of the courts and to deny the right of one or both to resort to any court of competent jurisdiction to settle questions of law that may arise thereunder, are declared void as against public policy." Courts guard with jealous eye any contract innovations upon their jurisdiction.^* Agreements to the effect that suit shall be brought only in a certain court^^ or in a certain county^" or state^^ Davis, 64 W. Va. 522, 63 S. E. 326, 20 L. R. A. (N. S.) S8n. See how- ever, J. G. Hutchinson & Co. v. Mor- ris Bros., 86 Mo. App. 40; Reynolds v. Harral. 2 Strob. (S. Car.) 87. '° United States v. Greene, 163 Fed. 442; United States v. Simmons, 47 Fed. 575, 14 L. R. A. 78. Compare the foregoing federal cases with Leary v. United States (U. S.), 32 Sup. Ct. 599. See also, Dunkin v. Hodge, 46 Ala. 523; Mayne v. Fidel- ity &c. Co., 198 Pa. 490, 48 Atl. 469, revg. 8 Pa. Dist. 711. Where part of the consideration was the agree- ment to procure "straw bail" this was said to taint the entire transac- tion and render it unenforcible. Way v. Greer, 196 Mass. 237, 81 N. E. 1002. " See, generally, Ross v. Conwell, 7 Ind. App. 375, 24 N. E. 752; Hager V. Shuck, 120 Ky. 574, 47 Ky. L. 957, 87 S. W. 300; Ison v. Wright, 21 Ky. L. 1368, 55 S. W. 202; Bauer v. In- ternational Waste Co., 201 Mass. 197, 87 N. E. 637; Watson v. Boswell, 25 Tex. Civ. App. 379, 61 S. W. 407 (lease providing against liability on part of landlord for damages aris- ing from any future distraint). Flor- ida Athletic Club v. Hope Lumber Co.. 18 Tex. Civ. App. 161. 44 S. W. 10. See also, Webber v. Cambridge- port Sav. Bank, 186 Mass. 314, 71 N. E. 567. "A prior agreement, by which the interested parties mutually agree upon terms of settlement on condition that the patent in contro- versy is sustained by the court, can- not upon principle and authority de- prive a court of its inherent power and jurisdiction." Victor Talking Machine Co. v. American Grapho- phone Co., 140 Fed. 860, affd. 145 Fed. 350. And where the facts are the same in several cases the parties may agree to try only one case and that the result in that case shall de- termine all. Peyton v. Stuart, 88 Va. 50, 13 S. E. 408, 16 S. E. 160. "First Nat. Bank of Kansas City V. White, 220 Mo. 717, 120 S. W. 2,6, 132 Am. St. 612. ^^ Mutual Reserve Fund Life Assn. V. Cleveland Woolen Mills, 82 Fed. 508, 27 C. C. A. 212 (suit to be brought only in the United States circuit court), Blair v. National Shirt and Overalls Co., 137 111. App. 413 (suit to be brought only in the highest court of original jurisdic- tion). Darling v. Protective Assur. Society of Buffalo, 71 Misc. (N. Y.) 113, 127 N. Y. S. 486 (provision in insurance policy that suit thereon to be brought in Buffalo courts). ^^ Benson v. Eastern Building & Loan Assn., 174 N. Y. 83, 66 N. E. 627; McLean v. Tobin, 109 N. Y. S. 926, 58 Misc. (N. Y.) 528 (suit on fire insurance policy to be brought in supreme court of specified coun- ty). Healy v. Eastern Building &c. Assn., 17 Pa. Super. Ct. 385; Savage V. People's &c. Sav. Assn., 45 W. Va. 275 31 S. E. 991. -"'Buel V. Baltimore &c. O. S. W. R. Co., 24 Misc. (N. Y.) 646, 53 N. Y. S. 749. See, however, Mittenthal v. Mascagni, 183 Mass. 19, 66 N. E. 425, 60 L. R. A. 812, 97 Am. St. 404, which upholds a clause in a contract which was to be performed in sev- 17 LEGALITY OF OBJECT. 726 or that suit shall not bo brought in a certain court" are not bind- ing. § 726. Ousting jurisdiction — Submission to private indi- vidual. — An agreement in advance whereby a question of law is to be submitted to a private party for decision has been held invalid.-^ A party does not have the right to contract beforehand under penalty of forfeiture that he will not litigate a claim that may thereafter arise. The policy of the law is to furnish ever\^ citizen with speedy redress for any injury which he may receive in person or property and a contract which essentially imposes a penalty upon seeking such redress is contrary to that policy."" These principles also find application in those instances in which there is an agreement to arbitrate. One is not bound by an agreement entered into in advance to submit finally the entire subject-matter of dispute under a specified contract of arbitra- tion." Thus a provision in the by-laws of a corporation which eral countries, that suits upon it should be brought in the country where the contracting parties are domiciled. See also, Gitler v. Rus- sian Co., 124 App. Div. (N. Y.) 273, 108 X. Y. S. 793. - Home Ins. Co. v. Morse, 20 Wall. (U. S.) 445. 22 L. ed. 365 (action not to be brought in or removed to United States court). Barron v. Burnside, 121 U. S. 186, 30 L. ed. 915, 7 Sup. Ct. 931. ° Sanitary District v. McMahon &c. Co.. 110 111! App. 510. " Chicago B. & Q. R. Co. v. Healy, 76 Nebr. 783, 107 N. W. 1005. Ill N. W. 598, revd. 10 L. R. A. (N. S.) 198. In the above case the deceased was a member of the railroad company's re- lief department. His contract of membership provided that if suit was brought for any injuries sustained by him he forfeited any benefits that he might be entitled to or if he accepted benefits, the right to sue for damages was forfeited. His widow accepted benefits and it was then held that she might sue as administratrix for the benefit of the deceased's minor chil- dren. =' Mitchell V. Dougherty, 90 Fed. 639, II C. C. A. 205; Supreme Coun- cil V. Garrigus, 104 Ind. 133, 3 N. E. 818, 54 Am. Rep. 298n; Hartford Fire Ins. Co. v. Bourbon County Court, 115 Ky. 109, 24 Ky. L. 1850. 72 S. W. 739; Ison v. Wright, 21 Ky. L. 368, 55 S. W. 202; Jones v. Brown, 171 Mass. 318, 50 N. E. 648; Miles v. Schmidt, 168 Mass. 339, 47 N. E. 115; White V. ]\Iiddlesex R. Co., 135 INIass. 216; Vass v. Wales, 129 Mass 38; Pearl v. Harris, 121 Mass. 390; Phoe- nix Ins. Co. V. Zlotky, 66 Nebr. 584, 92 N. W. 1l(i\ Hartford Fire Ins. Co. V. Hon, 66 Nebr. 555. 92 N. W. 746, 60 L. R. A. 436, 103 Am. St. 725; Home Fire Ins. Co. v. Kennedy, 47 Nebr. 138, 66 N. W. 278. 53 Am. St. 521 : March v. Eastern R. Co., 40 N. H. 548, n Am. Dec. 1Z2\ Seward v. Rochester, 109 N. Y. 164. 16 N. E. 348 : Haggart v. Morgan, 5 N. Y. 422, 55 Am. Dec. 350; Pittsburgh &c. R. Co. V. Garrett, 50 Ohio St. 405. 34 N. E. 493: Tilden v. Bernhard, 31 Ohio C. C. 255 ; Needy v. German-Ameri- can Ins. Co., 197 Pa. St. 460. 47 Atl. 739; Mentz v. Lancaster Fire Ins. Co., 79 Pa. St. 478. 21 Am. Rep. 80; Grav v. Wilson. 4 Watts (Pa.) 39: In re The Excelsior. 123 U. S. 40. 31 L. ed. 75. 8 Sup. Ct. ZZ. In Miles v. Schmidt. 168 Mass. 339, 47 N. E. 115, the court § 7-V CONTRACTS. 78 requires all stockholders to submit disputes with it to arbitration and attempts to oust the jurisdiction of the courts is void.'' And the provision in an insurance policy to the effect that a deci- sion of a tribunal of the insurer or arbitrators shall be final as to all disputes arising under the policy, is invalid and does not pre- vent a resort to the court on the contract of insurance."'^ §727. Ousting jurisdiction — Condition precedent. — Some fact or condition precedent to litigation may, however, be settled by arbitration.'^ Thus provisions in an insurance policy that the said: "Perhaps if the question were a new one, no objection would be found to permitting the parties to se- lect their own tribunals for the set- tlement of civil controversies, even though the result might be to oust the courts of jurisdiction in such cases. But the law is settled other- wise in this state." To same effect, Condon v. South Side R. Co., 14 Grat. (Va.) 302, where the rule was held settled but not to be extended. There is some authority to the effect that an action will lie on the covenant to arbitrate, for at least nominal damages. Nute v. Hamilton Mut. Ins. Co., 6 Gray (Mass.) 174; Hag- gart v. Morgan, 5 X. Y. 422, 55 Am. Dec. 350; Munson v. Straits of Do- ver S. S. Co., 99 Fed. 787, affd. 100 Fed. 1005, 41 C. C. A. 156. ^ State v. North American &c. Timber Co., 106 La. 621, 31 So. 172, 87 Am. St. 309; National League &c. of United States v. Hornung, 72 Misc. (N. Y.) 181, 129 N. Y. S. 437; Pepin V. Societe of St. Jean Baptiste, 23 R. T. 81, 49 Atl. 387, 91 Am. St. 620; Daniher v. Grand Lodge, 10 Utah 110, Zl Pac. 245. "The parties waived right of ap- peal to a court of law or equity from the decision of the arbitrators. Jef- ferson Fire Ins. Co. v. Bierce, 183 Fed. 588; Supreme Council &c. v. Forsinger, 125 Ind. 52, 25 N. E. 129, 9 L. R. A. 501, 21 Am. St. 196; Bauer V. Sampson Lodge No. 32, K. of P., 102 Ind. 262, 1 N. E. 571; Stephen- son V. Piscataque &c. Ins. Co., 54 Maine 55; Reed v. Washington Fire & Marine Ins. Co., 138 Mass. 572; Whitney v. National Masonic Acci- dent Assn., 52 Minn. 378, 54 N. W. 184; Randall v. American Fire Ins. Co., 10 Mont. 340. 25 Pac. 953, 24 Am. St. 50; Hartford Fire Ins. Co. v. Hon, 66 Nebr. 555, 92 N. W. 746, 60 L. R. A. 436, 103 Am. St. 725; Ger- man-American Ins. Co. V. Etherton, 25 Nebr. 505, 41 N. W. 406; Williams V. Branning Mfg. Co.. 154 N. Car. 205, 70 S. E. 290; Mvers v. Jenkins, 63 Ohio St. 101, 57 "X. E. 1089, 81 Am. St. 613; BaUimore &c. R. Co. V. Stankard, 56 Ohio St. 224, 46 N. E. 577, 49 L. R. A. 381, 60 Am. St. 745; Mentz v. Lancaster Fire Ins. Co., 79 Pa. St. 478, 21 Am. Rep. 80; Fox V. Masons' Fraternal Ace. Assn., 96 Wis. 390, 71 N. W. 363. See also, Utter V. Travelers' Ins Co., 65 Mich. 545, 32 N. W. 812, 8 Am. St. 913n (cannot contract as to the right of recovery itself). ^^ Scott V. Avery, 5 H. L. Cas. 811 ; Hall V. Norwalk Fire Ins. Co., 57 Conn. 105, 17 Atl. 356; Mundy v. Louisville &c. R. Co., 67 Fed. 633, 14 C C. A. 583; Lewis v. Brotherhood Ace. Co., 194 Mass. 1, 79 N. E. 802, 17 L. R A. (N. S.) 714; Hutchinson v. Liverpool &c. Ins. Co., 153 Mass. 143, 26 N. E. 439, 10 L. R. A. 558; Wood V. Humphrey, 114 Mass. 185; Easter V. Brotherhood of Am. Yeomen, 154 Mo. App. 456. 135 S. W. 964; Wolff V. Liverpool &c. Ins. Co., 50 N. J. L. 453, 14 Atl. 561 ; Delaware & Hudson Canal Co. v. Pennsylvania Coal Co., 50 N. Y. 250 ; Kane v. Ohio Stone Co., 39 Ohio St. 1; Mansfield &c. Co. v. Veeder, 17 Ohio 385; Easton v. Canal Co., 13 Ohio 79; North Lebanon R. V. McGrann, Zl Pa. St. 530, 75 Am. Dec. 624; Faunce v. Burke & Goner, 16 Pa. St. 469, 55 Am. Dec. 519; Hamilton v. Liverpool &c. Ins. Co., 79 LEGALITY OF OBJECT. § -] l"^ loss sustained shall be ascertained by arbitration*® or that in the case of mutual benefit insurance companies the question under dispute must be presented to a tribunal of the insurer before the suit is brought/" or that all means of settlement provided for in the contract must be exhausted,^ ^ have been upheld even though a question of law as to the liability of such mutual benefit organi- zation is thereby determined.^- It is believed, however, that as 136 U. S. 242, 34 L. ed. 419, 10 Sup. Commercial Mut. Fire Ins. Co., 115 N. Ct. 945. Contra, to the effect that Dak. 360, 107 X. W. 59; Phoenix Ins. such contracts are unen forcible, even Co. v. Carnahan, 63 Ohio St. 258, 58 when to arbitrate the amount of loss. N. E. 805; Scottish &c. National Ins. Schrandt v. Young, 62 Xebr. 254, 86 Co. v. Clancy, 71 Tex. 5, 8 S. W. 630; X. W. 1085. Such provision may be Hamilton v. Home Ins. Co., 137 U. S, revoked even after loss, and suit is 370, 34 L. ed. 708. 11 Sup. Ct. 133; a revocation. Xeedy v. German- Montgomery v. Am. Cent. Life Ins. American Ins. Co., 197 Pa. St. 460, 47 Co., 108 Wis. 146. 84 X. W. 175; At). 739. Chapman v. Rockford Ins. Co., 89 =" Carroll v. Girard Fire Ins. Co., Wis. 572, 62 X. W. 422, 28 L. R. A. 12 Cal. 297, 13 Pac. 863; Adams v. 405; Hobkirk v. Phoenix Ins. Co., South British &c. Ins. Co., 70 Cal. 102 Wis. 13, 78 X. W. 160; Straker 198, 11 Pac. 627; Old Saucelito &c. v. Phoenix Ins. Co., 101 Wis. 413, Co. V. Commercial &c. Assur. Co., 66 11 X. W. 752. Contra. Xational &c. Cal. 253, 5 Pac. 232; Southern Mu- Accident Assn. v. Burr, 44 Xebr. 256; tual Ins. Co. v. Turnley, 100 Ga. 296, Schrandt v. Young, 62 Xebr. 254, 86 27 S. E. 975 ; George Dee & Sons Co. X. W. 1085 ; Phoenix Ins. Co. v. Zlot- v. Key City Fire Ins. Co., 104 Iowa kv, 66 Xebr. 584. 92 X. W. 736; Hart- 167, IZ X. W. 594; Zalesky v. Home ford Fire Ins. Co. v. Hon, 66 Xebr. Ins. Co., 102 Iowa 613, 71 N. W. 566; 555, 92 X. W. 746, 60 L. R. A. 436. Fisher v. Merchants' Ins. Co., 95 103 Am. St. 725. Maine 486, 50 Atl. 282, 85 Am. St. =" Harrington v. Workingmen's Be- 428; Perrv v. Cobb, 88 Maine 435, 34 nevolent Association, 70 Ga. 340; Su- Atl. 278, 49 L. R. .V. 389; Dunton v. preme Council &c. v. Forsinger, 125 Westchester Fire Ins. Co., 104 Maine Ind. 52, 25 X. E. 129, 9 L. R. A. 501, Zll. 71 Atl. 1037, 20 L. R. A. (X. S.) 21 Am. St. 196; Bauer v. Samson 1058; Lamson &c. Co. v. Pru- Lodge, 102 Ind. 262, 1 X. E. 571; (lential Fire Ins. Co., 171 ^lass. Jeane v. Grand Lodge &c., 86 Maine 433, 50 N. E. 943; Hutchinson v. 434. 30 Atl. 70: Cotter v. Grand Liverpool &c. Ins. Co.. 153 Mass. Lodge A. O. U. W., 23 Mont. 82. 57 143, 26 X. E. 439, 10 L. R. A. 558; Pac. 650: Levy v. Iron Hall, 67 X. H. Reed v. Washington Fire & Marine 593, 38 Atl. 18: Mvers v. Jenkins, 63 Ins. Co., 138 Mass. 572; Chippewa Ohio St. 101, 57 X. E. 1089, 81 Am. Lumber Co. v. Phenix Ins. Co., 80 St. Rep. 613 . Mich. 116, 44 X. W. 1055: Hamberg ''^ Lew v. Magnolia Lodge, 110 V. St. Paul &c. Ins. Co.. 68 Minn. 335, Cal. 297. 42 Pac. 887: Mvers v. Jen- 71 X. W. 388; :Mosness v. German- kins, 63 Ohio St. 101, 57 'X. E. 1089, -American Ins. Co., 50 Minn. 341. 52 81 .\m. St. 613. See also, note on X. W. 932; Gasser v. Sun Fire Of- this in 59 .\m. St. Rep. 203. fice, 42 Minn. 315, 44 X. W. 252; '= Levy v. Magnolia Lodge. 110 Stevens v. Xorwich Union Fire Ins. Cal. 297. 42 Pac. 887; Ravmond v. Co.. 120 Mo. App. 88. 96 S. W. 684: Farmers' Mut. Fire &c. Ins'. Co.. 114 Wolff V. Liverpool &c. Ins. Co., 50 Mich. 386, 72 N. W. 254: Patrons' X. J. L. 453. 14 .\\\. 561 ; Pioneer Mut. Fire Ins. Co. v. .Attornev-Gen- Mfg. Co. v. Phoenix Assur. Co., 106 eral (Mich), 131 N. W. 1119. ' X. Car. 28, 10 S. E. 1057; Leu v. § 7^8 CONTRACTS. 8o a general rule an agreement to arbitrate can refer only to ques- tions of fact and that any condition precedent by which inquiry is required into the liability of the company and made final is an attempt to oust the jurisdiction of the courts and for that reason invalid. Nor can the writer discern any valid reason why this salutar}^ rule should not be applied to mutual benefit societies. ^^ Arbitration does not finally determine the liability of the company.'* § 728. Ousting jurisdiction — Certificate of architect and the like. — And in building contracts which provide that a cer- tificate shall be obtained from an architect to the effect that the work is done in accordance with the drawings and specifications and that he considers the payment properly due, it has been held, where a provision of this sort exists that the obtaining of a cer- tificate is a condition precedent to the maintenance of a suit by the builder against the owner for compensation, provided, of course, the architect acts in good faith. ^^ Closely analogous to cases of this character and which reach a similar conclusion are those in which the common council of a city in contracting for a public improvement provides that upon the sworn statement of any unpaid claim for labor or material being filed with the common council a sum of money sufficient to cover such claims shall be retained from any money due the contractor, the council to pay such claim out of the money so held when fully substan- " Lewis V. Brotherhood Accident Mass. 99, 74 N. E. 305. In the above Ins. Co., 194 Mass. 1, 79 N. E. 802, case it was provided that if the con- 17 L. R. A. (N. S.) 714; Easter v. tractor failed to go ahead and corn- Brotherhood of American Yeomen, plete the building and the builder 154 'Mo. App. 456, 135 S. W. 964. See was compelled to finish the work also, Dunton v. Westchester Fire Ins. the architect should determine the Co., 104 Maine 372, 71 Atl. 1037, 20 amount expended by the owner in L. R. A. (N. S.) 1058; Porter v. completing the contract and that his Traders' Ins. Co., 164 N. Y. 504, 58 finding should be conclusive on the N. E. 641, 52 L. R. A. 424; Williams parties. It also contained a provision v. Branning Mfg. Co., 154 N. Car. to the efifect that the increased or di- 205, 70 S. E. 290; Myers v. Jenkins, minished compensation of the con- 63 Ohio St. 101, 57 N. E. 1089, 81 Am. tractor caused by changes in the plan St. 613. should be fixed Jjy competent persons " Smith V. Herd, 110 Ky. 56, 22 Ky. or a designated tribunal whose deci- L. 1596, 60 S. W. 841. sion was to be binding. These pro- ^Bannon v. Jackson, 121 Tenn". visions were upheld. Conners v. 381, 117 S. W. 504, 130 Am. St. 778. United States, 130 Fed. 609. To same efifect, White v. Abbott, 188 LEGALITY OF OBJECT. 729 tiated to the satisfaction of the council.'"' A construction contract may also provide that in case additional time is desired a claim therefor must be filed with the owner's superintendent, who should certify the additional time. The contract also pro- vided for an appeal from such award to arbitrators." The estimate of designated engineers of the amount of work done, unless unreasonably refused may be made a necessary pre- requisite for a recovery for work done."^ Matters of similar character may be left to an architect, engineer or imipire, and his decision is final unless fraud, gross mistake or a failure to exercise an honest judgment exists.^'' But such architect, engi- neer or umpire cannot determine the legal rights of the parties under the contract.'"' § 729. Ousting jurisdiction — Notice of claim. — A contract may also provide that notice of a claim for damages must be '""We do not read this provision as excluding wholly the jurisdiction of the courts, and see no valid ob- jection to the provision which au- thorizes the city to withhold so much of the contract price as shall pro- tect the materialmen." Carlisle v. Spain. 147 Mich. 158, 110 N. W. 532. " The court said the contract would have been valid even if the superin- tendent had been made the final judge, it appearing that his award had not been made through fraud, mistake or arbitrarilv. Thompson v. St. Charles County, 227 Mo. 220, 126 S. W. 1044. See also, Huber v. St. Joseph's Hospital, 11 Idaho 631, 83 Pac. 768 (in the writing application for time was held to have been waived). '* National Contracting Co. v. Hud- son River &c. Co., 192 N. Y. 209, 84 N. E. 965. =' Shriner v. Craft, 166 Ala. 146. 51 So. 884, 28 L. R. A. (N. S.) 450n, 139 Am. St. 19: Conners v. United States, 130 Fed. 609. affd. 141 Fed. 16, 12 C. C. A. 272; Korblv v. Loomis. 172 Tnd. 352. 88 N. E. 698. 139 Am. St. 379; Edwards v. Hartshorn, 72 Kans. 19. 82 Pac. 520. 1 L. R. A. (X. S.) 1050; Chapman v. Kansas Citv &c. R. Co.. 114 Mo. 542. 21 S. \\J . 858 (to judge quantity and quality of 6 — CoNTR.\CTS, Vol. 2 work) ; Wortman v. IMontana Cent. R. Co., 22 Mont. 266, 56 Pac. 316 (to judge whether work properlv done or not) ; Ruch v. York City, S'l Atl. 891 (power to determine right to liqui- dated damage under the terms of the contract) ; Seim v. Krause, 13 S. Dak. 530, 83 X. W. 583 (to determine amount to be added or deducted from contract price on account of altera- tions). Bannon v. Jackson, 121 Tenn. 381, 117 S. W. 504, 130 Am. St. 778 (certificate of architect required for extra work) ; Barlow v. United States, 35 Ct. CI. (U. S.) 514. affd. 184 U. S. 123, 46 L. ed. 463, 22 Sup. Ct. 468, 2>1 Ct. CI. 547 (quantity or fitness of material) ; Halsey v. Wau- kesha Springs &c. Sanitarium Co., 125 Wis. 311, 104 X. W. 94, 110 Am. St. 838. See also. National Contract- ing Co. V. Hudson River &c. Co.. 170 X. Y. 439. CiZ X. E. 450: Bell v. Campbell (Tex. Civ. App.), 143 S. W. 953 (holding that an executed con- tract of arbitration is binding). "Mitchell v. Doughertv. 90 Fed. 639. ZZ C. C. A. 205.^ See also. :Mait- land v. Reed. Zl Tnd. App. 469. 77 N. E. 290. A contract by which a com- pany's engineer is to determine whether a contract with it has been breached and assess the damages would be invalid, since such matters § 730 CONTRACTS. 82 given within a reasonable time, and the reasonableness of the time specified is usually a question of fact to be determined by the evidence in the particular case.*^ So, reasonable stipulations as to the manner or time within which claims for loss or damage to freight, shall be submitted to a common carrier and the like, have often been upheld. *- § 730. Ousting jurisdiction — Further illustration. — A by- law of a board of trade which provided that in case of a failure between the contracting parties to adjust a dispute in regard to the right to a margin deposit "after the maturity of all contracts upon which the deposit is applicable, the matter in dispute shall, upon the application of either party to such contracts, be sub- mitted to a select committee of three disinterested persons, mem- bers of the association, to be appointed by the president, which committee shall, without unnecessary delay, summon the parties before them, and hear such evidence, under oath, as either may wish to submit touching their claims to the deposit, and shall by a majority vote decide, and report to the president of the board, in writing, in what manner and to whom the deposit is payable, either wholly or in part," has been upheld.*^ It has been held proper for one to contract to refrain from pursuing a particular remedy to enforce an existing claim, since public policy is in no way concerned with the option which every man has to sue or forbear to sue.^* could only be determined by a court ed. 556. See also, Case v. Cleveland of competent jurisdiction. El Paso &c. R. Co., 11 Ind. App. 517, 39 N. E. &c. R. Co. V. Eichel (Tex. Civ. App.), 426; Grieve v. Illinois Cent. R. Co., 130 S. W. 922. To same effect, Miles 104 Iowa 659, 74 N. W. 192; Selby v. V. Schmidt, 168 Mass. 339, 47 N. E. Wilmington &c. R. Co., 113 N. Car. 115. 588, 18 S. E. 88, Z7 Am. St. 635 ; Penn- *^ Western Union Tel. Co. v. Smith sylvania Co. v. Shearer, 75 Ohio St. Ox. Civ. App.), 130 S. W. 622; 249, 79 N. E. 431, 116 Am. St. 730; Chicago &c. R. Co. v. Thompson, 100 Bennett v. Northern Pac. R. Co., 12 Tex. 185, 97 S. W. 459, 7 L. R. A. Ore. 49, 6 Pac. 160. (N. S.) 191n, 123 Am. St. 798. Con- ^' Pacaud v. Waite, 218 111. 138, 75 tracts which provide that actions are N. E. 779, 2 L. R. A. (N. S.) 672. to be brought within a reasonable ** Gitler v. Russian &c. Ins. Co., time have also been upheld. Baker v. 124 App. Div. (N. Y.) 273, 108 N. Y. Baker. 139 111. .^pp. 217. S. 793. One may agree to let the *^Inman v. Seaboard Air Line R. decision of the circuit court be final Co., 159 Fed. 960, citing 4 Elliott R. CHoste v. Dalton, 137 Mich. 522, 100 R., § 1512, where many other cases N. W. 750), or may waive jury and are cited ; Southern Express Co. v. summons and provide that the judge's Caldwell, 21 Wall. (U. S.) 264, 22 L. decision shall be final. Pendleton v. 83 LEGALITY OF OBJECT. § 73 1 § 731. Agreements tending to encourage litigation. — The quieting of disputes and tlie adjustment and settlement of litiga- tions has always been and always should be favored by the acts of legislatures and the decisions of courts."^ Agreements which amount to maintenance or champerty oppose this legislative and judicial policy, and for that reason are declared void. Main- tenance, as generally defined, is an officious intermeddling in a suit by one that has no connection with it, by maintaining or assisting either party with money or otherwise to prosecute or defend if*" Maintenance contracts are unlawful. ^^ But, as will hereinafter a])i)ear in considering champertous contracts, there may be contracts to assist in litigation that are not contracts of maintenance within the definition or rule, and it is not every one who can complain ; but as champerty may well he regarded as a species of maintenance, and the most common one, and the rules are in general the same, it seems sufficient to take up that particu- lar phase of the subject without further amplifying or illus- trating the general statement upon the subject of maintenance. § 732. Encouraging litigation — Champerty and mainte- nance. — "Champerty as recognized in most of the states is Electric Light Co., 121 N. Car. 20, 22 Utah 366, 62 Pac. 913, 53 L. R. A. 27 S. E. 1003. 952, 83 Am. St. 794 ; 4 Bl. Comm. 134, *=* In re Snvder, 190 N. Y. 66. 82 N. 135. See also. Brush v. Carbondale, E. 742. 14 L.'R. a. (X. S.) 1101, 123 229 III. 144. 82 N. E. 252 (contract Am. St. 533.. by the plaintiff to paj' the expense of *"Mud Vallev Oil &c. Co. v. Hitch- an appeal bv the city, where, after cock, 40 Ind. App. 105, 81 N. E. Ill; he had expended more than $1,000 Ingersoll v. Coal Creek Coal Co., 117 under his agreement, but before the Tenn. 263, 98 S. W. 178, 9 L. R. A. case was finally adjudicated, the city (X. S.) 282n, 119 Am. St. 1003n ; 4 dismissed, and the plaintiff then Bl. Com. 149. brought this suit to recover the ■"Phelps V. Manicko, 119 Mo. App. money expended by him, and it 139, 96 S. W. 221 (agreement by lay- was held he might recover), man to hire lawyers, look up evi- Wlien the plaintiff simply asserts dence, and the like). One is not a legal right, consequential upon guilty of maintenance, however, who, the possession of property which out of charity, maintains the suit of has been legally assigned to him, his kinsmen, servant or any poor per- any action he may maintain there- son. Harris v. Brisco, 17 Q. B. D. on is not open to the objection 504 ; Quiglcy v. Thompson, 53 Ind. of maintenance, nor will the court, 317; Brown v. Beauchamp, 5 T. B. upon the grounds of public policy, ^lon. (Kv.) 413, 17 .Am. Dec. 81; refuse its assistance. Fitzroy v. Thallhimer v. Brinckerhoff, 3 Cow. Cave (1905). 2 K. B. 364. In the (N. Y.) 623, 15 .A.m. Dec. 308n ; above case plaintiff had taken assign- Reece v. Kyle. 49 Ohio St. 475. 31 N. ments of claims against a creditor E. 747. 16 L. R. A. 723; In re Evans, under an agreement that, after pay- § 7Z^ CONTRACTS. 84 where a person agrees to prosecute another's suit wholly or in part at his own expense for a share of the proceeds of the suit."*' Thus, an agreement to pay an attorney a percentage of the amount obtained as alimony in a divorce proceeding has been held invalid on the ground of champerty.*^ The principles of champerty or maintenance do not apply exclusively to attorneys. Thus, it has been held that a contract, by which the executor and trustee in a will agree for a consideration to contest the probate thereof, has been held void as a species of champerty and main- tenance.^° So, a contract and bond, by which an expert account- ant, having no interest in the subject of the litigation, contracted to audit the books of a township trustee for a percentage of all moneys recovered, and to hold the township free from all costs and expenses of the litigation, were held inseparably connected and void for champerty in a recent case in Indiana.^ ^ Nor is it necessary that the contract be entered into between an attorney and his client. Contracts between an attorney and a layman, ment of costs of collection, he would paj' over the amounts represented by the claims, or so much thereof as he was able to recover. The assignee desired to throw the creditor into bankruptcy. And see Hotmire v. O'Brien, 44 Ind. App. 694, 90 N. E. ZZ; Smith v. Flack, 95 Ind. 116. See also, the case of Bernard v. Fromme, 132 App. Div. (N. Y.) 922, 116 N. Y. S. 807, in which an agreement by an attorney to pay a creditor's claim if he would join with others in a petition to have the debtor adjudged a bankrupt was upheld. ''Benj. Cont. 265, citing: 4 Bl. Com. 135; Gilbert v. Holmes, 64 111. 548; Geer v. Frank, 179 111. 570, 53 N. E. 965, 45 L. R. A. 110; State v. Sims, 76 Ind. 28; Wallace v. Chicago &c. R. Co., 112 Iowa 565, 84 N. W. 662; Boardman v. Thompson, 25 Iowa 487; Barngrover v. Pettigrew, 128 Iowa 533, 104 N. W. 904, 2 L. R. A. (N. S.) 260, 111 Am. St. 206; Atchison &c. R. Co. v. Johnson, 29 Kans. 218; Aultman v. Waddle, 40 Kans. 195, 19 Pac. 730; Belding v. Smythe, 138 Mass. 530: Lancey v. Havender, 146 Mass. 615, 16 N. E. 464. See Hadlock v. Brooks, 178 Mass. 425, 59 N. E. 1009; Huber v. Johnson, 68 Minn. 74, 70 N. W. 806, 66 Am. St. 456; Gammons v. John- son, 76 Minn. 76, 78 N. W. 1035; Duke v. Harper, 66 Mo. 51, 27 Am. Rep. 314; Omaha &c. Ry. Co. v Brady, 39 Nebr. 27, 57 N. W. 767; Key v. Vather, 1 Ohio 132; Brown v. Ginn, 66 Ohio St. 316, 64 N. E. 123; Martin v. Clarke, 8 R. I. 389, 5 Am. Rep. 586 ; Peck v. Heurich, 167 U. S. 624, 42 L. ed. 302, 17 Sup. Ct. 927; Nelson v. Evans, 21 Utah 202, 60 Pac. 557; Hamilton v. Grav, 67 Vt. 233, 31 Atl. 315, 48 Am. St. 811; Stearns v. Felker, 28 Wis. 594; Dockery v. Mc- Lellan, 93 Wis. 381, 67 N. W. 72>2,. Compare also, the definition in the recent case of Mud Valley Oil Co. v. Hitchcock, 40 Ind. App. 105, 81 N. E. 111. An attorney has been de- nied the right to recover the quantum meruit of services rendered under a champertous contract. Roller v. Murrav, 112 Va. 780, 72 S. E. 665. '"Brindley v. Brindlev, 121 Ala. 429, 25 So. 751. ■^■^ Cochran v. Zacherv, 137 Iowa 585, 115 N. W. 486, 16 L. R. A. (N. S.) 235n, 126 Am. St. 307. "Lancaster Tp. v. Graves (Ind. App.), 96 N. E. 172. 85 LEGALITY OF OBJECT. § 733 by which the latter contracts to bring to the former persons hav- ing causes of action, are as a general rule condemned." § 733. Encouraging litigation — Champerty — Modifications of rule concerning. — In a number of states, however, the rules relative to maintenance and champerty are either unsettled or limited," have been entirely abandoned," or ^o not prevail, except as preserved by statute.^' § 734. Encouraging litigation — Champerty — Attorney and client. — As between attorney and client the courts are not in complete harmony as to what contracts are champertous. The weight of authority seems to be that contracts between attorney and client, by which the attorney agrees, in consideration of hav- ing a part of the thing recovered, to support the litigation at his own expense, are champertous; but where the attorney does not undertake to support the litigation at his own expense, but simply agrees to render the ordinary services of an attorney in consid- eration of receiving a sum equal to a certain per cent, or a part of the thing recovered, then the agreement is not champertous.^'^ And it has been held that in order to constitute champerty the contract between the attorney and his client must not only pro- vide that the attorney shall have a part of the money or thing recovered in the action, but it must also provide that the at- torney shall, at his own expense, support the suit, be respon- "See Holland v. Sheehan. 108 W. 327; Smedlev v. Dregge, 101 Minn. 362, 122 N. W. 1. 23 L. R. A. Mich. 200. 59 N. W. 411; Schomp v. (N. S.) 510, reviewing the author- Schenck, 40 N. J. L. 195. 29 Am. ities. Langdon v. Conlin, 67 Nebr. Rep. 219; Hassell v. Van Houten, 39 243. 93 N. W. 389, 60 L. R. A. 429, N. J. Eq. 105. 108 Am. St. 643. "Ledgwick v. Stanton, 14 N. Y. "Richardson v. Rowland, 40 Conn. 289; Coughlin v. New York &c. R. 565; Metropolitan Life Ins. Co. v. Co., 71 N. Y. 443, 27 Am. Rep. 75; Fuller, 61 Conn. 252, 23 Atl. 193, 29 Fowler v. Callan, 102 N. Y. 395, 7 Am. St. 196; Dahms v. Sears, 13 N. E. 169; Browne v. West. 9 App. Ore. 47, 11 Pac. 891; Brown v. Bigne, Div. (N. Y.) 135. 41 N. Y. S. 146. 21 Ore. 260, 28 Pac. 11. 14 L. R. A. Compare Roller v. Murray, 107 Va. 745, 28 Am. St. 752: Perry v. Dicken, 527, 59 S. E. 421, second appeal, 72 105 Pa. St. 83, 51 Am. Rep. 181; S. E. 665 (agreement by attorney to Chester County v. Barber, 97 Pa. St. carry on litigation at his own expense 455. in consideration of a percentage of " Mathewson v. Fitch, 22 Cal. 86; the net amount recovered V Hofifman v. Vallejo. 45 Cal. 564; ""Blaisdoll v. Ahern. 144 Mass. 393, Wildey V. Crane, 63 .Mich. 720, 30 N. 11 N. E. 681, 59 Am. Rep. 99. § yT,=) CONTRACTS. 86 sible for the costs, and take all the risks of litigation.^' And the New York Court of Appeals, in a comparatively recent case, has said: "It has been decided so often and so fully that attorneys may undertake litigation for a compensation contin- gent upon their successful efforts that it is unnecessary to refer to the decisions upon that point. "^^ § 735. Encouraging litigation — Champerty — Right to com- promise. — But even those courts that have adopted a rule similar to that just stated do not generally go so far as to hold that an attorney, in furtherance of his contract for a contingent compensation, may reserve a veto power upon the right of his client to make, in good faith, an honest settlement of his claim, in other words, to entirely block a settlement of the suit without the attorney's consent. Contracts for a contingent fee which provide against settlement without the attorney's consent are, as a general rule, held invalid. This has been held true in actions to recover for personal injuries,'^^ to recover damages sustained by a fire,*^" to remove a cloud on the title to real estate,^^ to set aside the admission of a will to probate,*'- to recover on an official bond,**^ or to recover possession of real estate.*'* ^ '"'Omaha &c. R. Co. v. Brady, 39 "Jackson v. Stearns, 48 Ore. 25, Nebr. 27, 57 N. W. 767. 84 Pac. 798. 5 L. R. A. (N. S.) 390. "In re Snyder, 190 N. Y. 66, 82 "= Williams v. Miles, 63 Nebr. 859, N. E. 742, 14 L. R. A. (N. S.) 1101, 89 N. W. 451. 123 Am. St. 533. See also, to this *' Davis v. Webber, 66 Ark. 190, 49 effect, Whinery v. Brown, 36 Ind. S. W. 822, 45 L. R. A. 196, 74 Am. App. 276, 75 N. E. 605, where many St. 81. authorities are cited; Tron v. Lewis, ** Davis v. Chase, 159 Ind. 242, 64 31 Ind. App. 178, 66 N. E. 490. N. E. 88, 95 Am. St. 294; Key v. ='■' North Chicago St. R. Co. v. Vattier, 1 Ohio 132. See also. Gam- Ackley, 171 111. 100, 49 N. E. 222, mons v. Johnson. 69 Minn. 488. 72 44 L. R. A. 177; Boardman v. N. W. 563 (damages resulting from Thompson, 25 Iowa 487 ; Kansas City failure of railroad company to fence Elev. R. Co. V. Service, 77 Kans. 316. right of way) ; Mosley v. Jamison, 71 94 Pac. 262. 14 L. R. A. (N. S.) 1105; Miss. 456, 14 So. 529 (damages for Burho v. Carmichael (Minn.), 135 N. assault). A contract for a contingent W. 386; Weller v. Jersey City &c. R. fee, by which the client is restricted Co. (N. J.), 61 Atl. 459; Lee v. from setthng or compromising his Vacuum Oil Co., 126 N. Y. 579, 27 claim without the consent of his at- N. E. 1018 (in efifect) ; Emslie v. torney, is void as against public pol- Ford Plate Glass Co., 25 Ohio C C. icy. Papineau v. White, 117 111. App. 548. Compare, however, Granat v. 51. See, however, Lipscomb v. Kruse. 114 111. App. 488, writ of error Adams, 193 Mo. 530, 91 S. W. 1046. dismissed, 213 111, 328. 72 N. E. 744. 112 Am. St. 500, which holds that the '"Anderson v. Itasca Lumber Co., validity of such a contract depends 86 Minn. 480, 91 N. W. 12. upon the circumstances of each case. 8/ LEGALITY OF OBJECT. § 736 § 736. Encouraging litigation — Champerty — Recovery of quantum meruit. — An attorney has been denied tlie riglit to recover from a coal company the agreed per cent, of his fee, when such company effected a settlement with the attorney's client witliont the consent of the attorney."^ However, if the compromise is not a good faith settlement, but is made collusively and for the purpose of defeating the attorney's lien or claim to compensation, the court may set it aside and refuse to enforce the settlement. ^^"^ Some cases hold that where such a settlement is made tlie attorney may prosecute the suit to final judgment in the client's name in order to fix his fee.°^ § 737. Encouraging litigation — Champerty — Defense of — When available. — Notwithstanding a champertous agree- ment may exist between a plaintiff and his attorney for the prose- cution of a certain suit which is against public policy and void, it does not affect the right of the plaintiff to prosecute his action against the defendant in the suit for the prosecution of which such champertous agreement was made.**^ The defense of main- tenance or champerty cannot be raised by one not a party to the obnoxious agreement,^'' unless the right to sue was acquired by In this instance they upheld a con- Abb. Pr. (N. Y.) 324; Fisher-Hansen tract by which the attorneys were to v. Brooklyn Heights R. Co., 63 App. have half the land recovered, and Div. (N. Y.) 356, 71 N. Y. S. 513; which contained a provision against Wilber v. Baker, 24 Hun (N. Y.) 24. compromise without the consent of See also, Falconio v. Larsen, 31 Ore. defendant's attornevs. 137, 48 Pac. 703, Zl L. R. A. 254; "Ingersoll v. Coal Creek Coal Co., Potter v. Ajax Min. Co., 19 Utah 421, 117 Tenn. 263, 98 S. W. 178. 9 L. R. 57 Pac. 270. A. (X. S.) 282n, 119 Am. St. 1003n. *" McDonald v. Napier, 14 Ga. 89; In the above case the facts showed Jones v. Morgan, 39 Ga. 310, 99 Am. that the attorney visited the scene of Dec. 458; Talcott v. Bronson, 4 Paige the disaster and solicited employment ( N. Y.) 502; Wilber v. Baker. 24 for bringing action against the one Hun (N. Y.) 24; Pottery. Ajax Min. responsible for the injury. The con- Co., 19 Utah 421, 57 Pac. 270. See, tract in question called for a percent- however, Morehouse v. Brooklyn age of the amount recovered, and Heights R. Co., 43 Misc. (N. Y.) 414. contained a clause against settlement 89 N. Y. S. ZZl; Oliwell v. Verden- without the attorney's consent. See holvcn, 17 N. Y. Civ. Pr. Zdl, 7 X. Y. also, De Graffenrcid v. St. Louis &c. S. 99; In re Evans, 34 Misc. (X. Y.) R. Co., 66 Ark. 260, 50 S. W. 272. As 37. 69 X. Y. S. 487; Stearns v. Wol- to the right of an attorney to solicit Icnberg, 51 Ore. 88. 92 Pac. 1079, 14 business, see note in 9 L.'R. A. (N. L. R. A. (X. S.) 1095. S.) 282. ""Pennsylvania Co. v. Lambardo, "• Young v. Dearborn. 27 N. H. 49 Ohio St. 1, 29 N. E. 573, 14 L. R. 324; Rasquin v. Knickerbocker Stage A. 785n. Co., 21 How. Pr. (X. Y.) 293, 12 "Bullock v. Dunbar, 114 Ga. 754, § 738 CONTRACTS. 88 and rests upon such unlawful agreement. In other words, the defense of champerty or maintenance can only be set up when such agreement itself is sought to be enforced.'" Nor do the principles of maintenance and champerty apply to one who has an independent interest recognized by the law" in the subject- matter or ultimate outcome of the litigation.'^ § 738. Agreements tending to corrupt morals. — Where a contract grows immediately out of and is connected with an illegal or immoral act a court of justice will not lend its aid to the enforcement of it; and if the contract is connected in part only with the illegal transaction and grows immediately out of it, although it be in fact a new contract, it is equally tainted by it.'^ 40 S. E. 783; Torrence v. Shedd, 112 111. 466; Burton v. Perrv, 146 111. 71, 34 N. E. 60; Zeigler v. Mize, 132 Ind. 403, 31 N. E. 945; Cleveland &c. R. Co. V. Davis, 10 Ind. App. 342, 36 N. E. 778, Zl N. E. 1069; Small v. Chi- cago &c. R. Co., 55 Iowa 582, 8 N. v/. 437 ; Wehmhoff v. Rutherford, 98 Ky. 91, Z2 S. W. 288; Euneau v. Rieger, 105 Mo. 659, 16 S. W. 854; Chamberlain v. Grimes, 42 Nebr. 701, 60 N. W. 948; Pennsylvania Co. v. Lombardo, 49 Ohio St. 1, 29 N. E. 573, 14 L. R. A. 785n ; Croco v. Ore- gon Short Line R. Co., 18 Utah 311, 54 Pac. 985, 44 L. R. A. 285 ; Burnes v. Scott, 117 U. S. 582, 29 L. ed. 991, 6 Sup. Ct. 865. Contra, Kelly v. Kelly. 86 Wis. 170, 56 N. W. (iZI . But the rule does not apply when the champertous nature of the transac- tion appears on the plaintiff's own showing. Roller v. Murray, 107 Va. 527, 59 S. E. 421, second appeal, 12 S. E. 665. '"Keiper v. Miller, 68 Fed. 627; In re The Clara A. Mclntyre, 94 Fed. 552; Johnson v. Hilton, 96 Ga. 577, 23 S. E. 841; Caldwell v. Boone County, 41 Ind. App. 40, 83 N. E. 355; Stewart v. Welch, 41 Ohio St. 483; Miles v. Mutual Life Assn., 108 Wis. 421, 84 N. E. 159. See also. Brush V. Carbondale, 229 111. 144, 82 N. E. 252; Baltimore &c. R. Co. v. Trennepohl, 44 Ind. App. 105, 87 N. E. 1059; Allen v. Frazee, 85 Ind. 283; Hart V. State, 120 Ind. 83, 21 N. E. 654. "Alabaster v. Harness, 1895, 1 Q. B. 339. In Hotmire v. O'Brien, 44 Ind. App. 694, 90 N. E. Z2>, it is said : "Where a party has an interest, direct or remote, immediate or con- tingent, existing at the time the suit is commenced the right of such party to assist in maintaining such a suit exists, and may be exercised." "Gilman v. Jones, 87 Ala. 691, 5 So. 785, 7 So. 48, 4 L. R. A. 113; Chicago City R. Co. v. General Elec- tric Co., 74 111. App. 465; Bartholo- mew County V. Jameson, 86 Ind. 154; Tron V. Lewis, 31 Ind. App. 178, 66 N. E. 490; Call v. Calef, 13 Mete. (Mass.) 362; Williams v. Fowle, 132 Mass. 385 ; Thallhimer v. Brincker- hoff, 3 Cow. (N. Y.) 623, 15 Am. Dec. 308n ; Reece v. Kyle, 49 Ohio St. 475, 31 N. E. 747, 16 L. R. A. 723; Pittsburg &c. R. Co. v. Volkert, 58 Ohio St. 362, 50 N. E. 924; Dorwin v. Smith, 35 Vt. 69; Davies v. Sto- well, 78 Wis. 334, 47 N. W. 370, 10 L. R. A. 190; Gilbert-Arnold Land Co. v. O'Hare, 93 Wis. 194, 67 N. W. 38. "Dumont v. Dufore, 27 Ind. 263; Merrick v. Bank of Metropolis, 8 Gill. (Md.) 59; Forsythe v. State, 6- Ohio 19; Brua's Appeal, 55 Pa. St. 294; Toler v. Armstrong, 4 Wash. C. C. (U. S.) 297; Armstrong v. Toler. 11 Wheat. (U. S.) 258, 6 L. ed. 468. The mere fact that con- demnable acts are done under a con- tract does not necessarily invalidate it when it appears that the perform- 89 LEGALITY OF OBJECT. 738 In accordance with this principle a conditional sale, title to rest in the vendor until payment, of furniture and household goods for use in a house of ill fame, with knowledge on the part of the vendor of the manner in which the goods are to be used, is a contract against public policy and void/* But while it is certain that a contract is void when it is illegal or immoral, it is equally as certain that it is not void simply because there is something immoral or illegal in its surroundings or connections. It can not be declared void merely because it may indirectly tend to promote illegal or immoral purposes." ance of such acts was not contem- plated by the agreement. Drake v. Lauer, 93 App. Div. (N. Y.) 86, 86 N. Y. S. 986, 182 N. Y. 533, 75 N. E. 1129. "Reed v. Brewer (Tex. Civ. App.), 36 S. W. 99, affd. 90 Tex. 144, Z7 S. W. 418; Standard Furniture Co. V. Vanalstine, 22 Wash. 670, 62 Pac. 145, 51 L. R. A. 889, 79 Am. St. 960. The case last cited draws the distinction between an actual sale and delivery of the goods and a condi- tional sale under which the property is merely leased until paid for. In the former the relation of debtor and creditor merely exists while in the latter they are merely leased and in the above case they were leased with knowledge to be used for an unlaw- ful purpose. The court said : "It is true that it is held in many well-con- sidered cases, and it is perhaps the weight of authority, that mere knowl- edge on the part of the vendor of goods that the vendee designs to and will put them to an immoral or ille- gal use is not of itself sufficient to bar an action brought to recover the purchase-price of the goods sold. But in all of the cases announcing this rule which have been brought to our attention tlie transaction was one in which the owner of the goods at the time of their delivery to the vendee parted with his title and right of pos- session, so that thereafter the rela- tion between the vendor and vendee was that of debtor and creditor merely, or that of debtor and cred- itor with a m.ortgage over to secure the deferred payments of the pur- chase price. The sale and delivery of the property was complete, and no element of participation or aid in the immoral or illegal design of the vendee could be imputed to the vendor. On the other hand, it is held by all the cases— even those which announce the rule contended for by the appellant— that if the vendor has knowledge of the im- moral or illegal design of the ven- dee, and in any way aids or par- ticipates in that design, or if the con- tract of sale is so connected with the illegal or immoral purpose or trans- action of the vendee as to be insep- arable from it, the vendor cannot recover." " .-Vnheuser-Busch Brewing Assn. v. :\Iason, 44 Minn. 318. 46 N. W. 558, 9 L. R. A. 506, 20 Am. St. 580. In the above case the brewing asso- ciation was allowed to recover for goods sold to the keeper of a house of prostitution. It appeared that the vendor did not know just what was to be done with the goods, but sup- posed that the vendee would sell them or use them in her brothel. To same effect, Washington Liquor Co. V. Shaw. 38 Wash. 398. 80 Pac. 536 (unconditional sale of liquor to keeper of house of ill fame). See, however, .\nderson v. Freeman (Tex. Civ. App.), 100 S. W. 350, in which one was not permitted to recover on notes and a chattel mortgage on furniture given by the defendant to enable her to carry on and conduct a hoiLS'^ of public prostitution. i§ 739 CONTRACTS. QO § 739. Corrupting morals — Letting house for brothel — Prostitute's board. — A brothel is a nuisance at common law, and to keep or contract to rent a house to be used as a brothel is illegal and indictable, irrespective of the statute.'*^ So, also, the price of the board and lodging of prostitutes is not recover- able when furnished to enable them to lead a life of prostitution.^^ In order, however, to avoid a mortgage given in part payment for a house on the ground that it was bought by one whom the grantor knew to be a prostitute, for immoral purposes, it must appear not merely that the house was capable of use for such pur- poses, but that in view of the grantee's means and conditions in life, she could not intend to use it for a lawful purpose. ^^ § 740. Corrupting morals — Leasing house for brothel. — A lease made with the knowledge of the lessor that the premises are rented for the express purpose of being used as a house of prostitution is contrary to public policy, and no rent can be recov- ered thereon. ^^ Nor can one member of a partnership which has for its purpose the renting of apartments for purposes of prosti- tution maintain an action against the other for an accounting.^" Nor can a cotenant recover compensation for his services in let- ting apartments for such purposes.®^ § 741. Immoral consideration — Illicit intercourse. — Con- tracts entered into in consideration of future illicit intercourse, *- •*Ashbrook v. Dale, 27 Mo. App. S. E. 109; Macbee v. Griffith, 2 649 per Rombauer, J.: "The answer Cranch (U. S.) 336, Fed. Cas. No. simply claims the illegality of the 8660. transaction. A bawdy house is a '* Clark v. Hagar, 22 Can. Sup. Ct. common nuisance, per se, and to con- 510. duct such a place or lease property "Dougherty v. Seymour, 16 Colo, for such a purpose is a public wrong. 289, 26 Pac. 823; Ralston v. Boady, Givensv. Studdiford,86Mo. 156. The 20 Ga. 449; Kathman v. Walters, 22 fact that the statute above referred La. Ann. 54; Ashbrook v. Dale, 27 to has no application to the city of Mo. App. 649; Ernst v. Crosby, 140 St. Louis, cannot render that lawful N. Y. 364, 35 N. E. 603; Hunstock which is unlawful irrespective of the v. Palmer, 4 Tex. Civ. App. 459, 23 statute. If the plaintiffs claim that, S. W. 294. owing to some authorized local regu- *" Chateau v. Singla, 114 Cal. 91, 45 lation, it was unlawful to keep such Pac. 1015, 33 L. R. A. 750, 55 Am. a house in the city of St. Louis, it St. 63. was incumbent upon them to show '*' Ballerino v. Ballerino, 147 Cal. it." Standard Furniture Co. v. Van 544, 82 Pac. 199. Alstine, 22 Wash. 670, 62 Pac. 145. 51 "'Boigneres v. Boulon, 54 Cal. 146; L. R. A. 889, 79 Am. St. 960. Drennan v. Douglas, 102 111. 341, 40 "Pitts V. Rivers, 112 Ga. 850, 38 Am. Rep. 595; Winebrinner v. Weis- 91 LEGALITY OF OBJECT. § 742 such as a promise of marriage in the future on condition of inter- course before marriage, are illegal and an action will not be for their breach/^ A contract made in consideration of future illicit sexual intercourse is void, and the woman cannot recover under such contract, although it has been performed on her part.'* § 742. Immoral consideration — Existing contract to marry. — However, if the parties have already entered into a valid con- tract to marry, such contract is not rendered invalid by subse- quent illicit intercourse under a promise to marry at once should pregnancy result therefrom. -^ The latter is not the consideration for the original promise to marry. § 743. Immoral consideration — Promise by putative father. — A promise by tlie putative father to pay for the board of a woman and her bastard child, the purpose of both parties, express or tacit, being to facilitate a continued state of cohabitation be- tween the promiser and woman, is void ; but the purpose must be clearly proved, and is not to be inferred merely from the previous cohabitation, although that was known to the promisee and she is the mother of the woman.^*' S 744. Immoral consideration — Contracts to act as house- keeper. — As a general rule, there can be no recovery on a iger, 3 T. B. Mon. (Ky.) 32; Simp- her with money to start in the mil- son V. Normand, 51 La. Ann. 1355, linery and dressmaking business) ; 26 So. 266; Brown v. Tuttle. 80 Winebrinner v. Weisiger, 3 T. B. Maine 162. 13 Atl. 583; Massev v. Mon. (Kv.) 32; Randolph v. Stokes. Wallace. 32 S. Car. 149. 10 S. E. 937; 125 App. Div. (N. Y.) 679. 110 N. Y. Cusack V. White. 2 Mill Const. (S. S. 20; Sherman v. Barrett, 1 McMul. Car.) 279. 12 Am. Dec. 669; Bivins v. (S. Car.) 147; Singleton v. Bremar. Jarnigan, 3 Baxt. (Tenn.) 282. Harp. L. (S. Car.) 201. "Boigneres v. Boulon, 54 Cal. 146; "Kurtz v. Frank, 76 Ind. 594, 40 Saxon V. Wood. 4 Ind. App. 242, 30 Am. Rep. 275. In such case the con- N. E. 797; Edmonds v. Hughes, 115 sideration for the promise to marrv Ky. 561, 24 Ky. L. 2467, 74 S. W. 2831; is not that of present or future sex- Baldy v. Stratton, 11 Pa. St. 316; ual intercourse. Henderson v Sprat- Goodall V. Thurman, 1 Head (Tenn.) len, 44 Colo. 278, 98 Pac. 14 19 L R 209; Burke v. Shaver, 92 Va. 345, 23 A. (N. S.) 655n. See also,' Lauer v. S E. 740. Bauming, 152 Iowa 99, 131 N. W. ** Walker v. Gregory. 36 Ala. 180; 783, 140 Iowa 319, 118 N. W. 446. Wilson V. Ensworth, 85 Ind. 399 ^''Trovinger v. M'Burney, 5 Cow. (agreement to discharge mortgage (N. Y.) 253. on plaintiff's real estate and supply § 745 CONTRACTS. 92 contract to render services as a housekeeper or servant when such agreement is entered into in contemplation of an illicit relation- ship. This is true either under an express" or implied^^ agree- ment. But if a contract for the rendition of services as a housekeeper is entered into without reference to any unlawful relation existing between the parties, recovery may be had thereon even though the parties thereto may live together in a state of concubinage.®^ It has also been held that a woman sus- taining such relations to a man may recover money loaned by her to him.'*' § 745. Immoral consideration — Executed contract. — Im- moral or illegal contracts will not be enforced; but if executed, courts will not disturb them, but will leave the parties as they find them.'*^ Under this principle a deed executed and delivered in consideration of illicit intercourse, the grantees being in posses- sion, vests title and ejectment will not lie to dispossess them." § 746. Immoral consideration — Past immoral acts. — While it seems true on principle that past illegal intercourse can- not be the sole consideration of a promise, the fact that it is given for past illegal intercourse does not, of necessity, render it in- valid. A contract to make compensation for the injury done in ''Walker v. Gregory, 36 Ala. 180; following cases recovery was per- Sackstaeder v. Kast, 31 Ky. L. 1304, mitted under an implied contract. 105 S. W. 435; McLane's Admr. v. Viens v. Brickie, 8 Mart. (La.) 11; Dixon, 30 Ky. L. 683, 99 S. W. 601 ; In re Pereuilhet's Succession, 23 La. Winebrinner v. Weisiger, 3 T. B. Ann. 294, 8 Am. Rep. 595. Mon. (Ky.) 32. ""McDonald v. Fleming, 12 B. Hon. ^Walraven v. Jones, 1 Houst. (Ky.) 285. (Del.) 355; McDonald v. Fleming, "Howell v. Fountain, 3 Ga. 176, 46 12 B. Mon. (Ky.) 285; Stringer v. Am. Dec. 415; Denton v. Erwin, 6 Mathis, 41 La. Ann. 985, 7 So. 229; La. Ann. 317; Hertz v. Wilder, 10 Simpson v. Normand, 51 La. Ann. La. Ann. 199; Summerlin v. Livings- 1355^ 26 So. 266; Brown v. Tuttle, ton, 15 La. Ann. 519; Worcester v. 80 Maine 162, 13 Atl. 583; Vincent Eaton, 11 Mass. 368; White v. V. Moriarty, 31 App. Div. (N.- Y.) Hunter, 23 N. H. (3 Fost.) 128; 484, 52 N. Y. S. 519; Swires v. Par- Denton v. English, 2 Nott. & McC. sons, 5 Watts & S. (Pa.) 357. (S. Car.) 581, 10 Am. Dec. 638. Such ''•' Lytle V. Newell, 24 Ky. L. 188, 68 executed illegal contract may, how- S. W. 118; Rhodes v. Stone, 63 Hun ever, in a proper case, be set aside (N. Y.) 624, 44 N. Y. St. 17, 17 N. Y. at the instance of a third person. S. 561 ; Emmerson v. Botkin, 26 Okla. Leupert v. Shields, 14 Colo. App. 404, 218, 109 Pac. 531, 29 L. R. A. (N. S.) 60 Pac. 193. 786, 138 Am. St. 953. See also, Goff "' Hill v. Freeman, 73 Ala. 200, 49 V. Supreme Lodge Royal Achates, 90 Am. Rep. 48. See also, Marksbury Nebr. 578, 134 N. W. 239. In the v. Taylor, 10 Bush. (Ky.) 519. 93 LEGALITY OF OBJECT. § 74^ consequence of past illegal cohabitation, which contains no stipu- lation for future intercourse, is valid."" An agreement made as an indemnity against the consequences of an illegal or immoral act to be done at a future period is void; but a person may in- demnify himself against the consequences of an unlawful act already done,°* as where a woman married a man, by whom she became the mother of two children. She subsequently discovered that he had a wife living, from whom he had not been divorced. He then made to her an assignment of a mortgage. It was held that the assignment was a meritorious act and not impeachable for immorality of consideration."^ An executed contract for sale of land, based upon illicit sexual commerce, cannot be set aside at the instance of the grantor or his heirs at law."'' Once exe- cuted it cannot be recalled."' It has also been held that a vendee of a residence cannot defeat an action for the purchase-price on the ground that the vendor knew that the premises were to be used for a mistress of the purchaser."^ Public policy does not forbid a contract made to restrain one from the continuance of disgraceful relations, such as a contract of employment which requires the employe to break off relations with certain women of bad repute."" Neither is it contrary to public policy to agree "' Smith V. Dubose, 78 Ga. 413, 3 v. Banning, 152 Iowa 99, 131 N. W. S. E. 309. 6 Am. St. 260; Burton v. 783, 140 Iowa 319, 118 N. W. 446. Belvin, 142 X. Car. 151. 55 S. E. 71; "^Gay v. Parpart, 106 U. S. 679, per Cusack V. White, 2 Mill. Const. (S. Miller, J.: "It was not the case of a Car.) 279, 12 .A.m. Dec. 669. See also, contract for future illicit intercourse In re Isaacson. 21 Times L.- R. 89 of the class which the authorities (contract upheld even though it also hold to be against public policy, but contemplated future cohabitation an appropriate means of providing when given for past cohabitation) ; for the support of a woman whom he Winebrinner v. Weisiger, 3 T. B. had married while he had a wife Mon. (Kv.) 32; Dotv Admr. v. Doty's living, and of the children resulting Gdn. 118 Kv. 204, 26 Ky. L. 63, from that marriage." 80 S. W. 803. 2 L. R. A. (N. S.) ^]\Iarksbury v. Taylor, 10 Bush 713 (contract to give property to the (Ky.) 519. illegitimate child of the parties in "Gisaf v. Neval, 31 Smith (Pa.) consideration of the mother permit- 354; Bivins v. Jarnigan, 3 Baxt. ting it to remain with the father); (Tenn.) 282; Carter v. Montgomery, Brown v. Kinsey, 81 N. Car. 245; 2 Tenn. Ch. 216. Under certain cir- Wyant v. Lesher, 23 Pa. St. 338; cumstances the gift or conveyance Massev v. Wallace, 32 S. Car. 149, 10 mav be avoided bv creditors. Jack- S. E. 937. son v. Miner. 101 'ill. 550. '^Kneeland v. Rogers, 2 Hall (N. "'Armfield v. Tate. 29 N. Car. 258. Y.) 579; Given v. Driggs, 1 Cai. Cas. »» Gould v. Magnolia Metal Co., 207 (N. Y.) 450; Doty v. Wilson. 14 111. 172, 69 N. E. 896. Johns. (N. Y.) 378. See also, Lauer § 747 CONTRACTS. 94 to influence a person by lawful methods to cease disgraceful rela- tions with women or others. But an agreement by two or more to make such efforts and compensate each other out of the legacy given to one or more by such person so operated upon, — the larger the legacy the larger the compensation — has been declared against public policy on the ground that it tended to encourage the use of all sorts of influence not only as to conduct, but in procuring the execution of a will favorable to the one or the other of the parties to the agreement or to both.^ § 747. Agreements tending to corrupt morals — Miscel- laneous. — The mere fact that a contract involves moral tur- pitude will not, as a general rule, necessarily render it invalid.^ Contracts of a different character but yet which involve wrong and immoral acts are declared against public policy. Thus, as a general rule, any contract which contemplates or necessarily in- volves the defrauding of third persons as its ultimate result is contra bonos mores and against public policy.^ Contracts which are regarded as contra bonos mores in one state will not be en- forced or given any recognition there, notwithstanding such con- tract was made in another state and was valid by the laws of that state.* § 748. Agreements tending to induce fraud or breach of trust. — Agreements which tend to induce fraud or breach of trust on the part of persons standing in a fiduciary or confiden- tial relation are void.^ Consequently contracts the object or 'Sheppey v. Stevens, 185 Fed. 147. "De Sobry v. De Laistre, 2 Har. & See also, Sheppey v. Stevens, 177 J. (Md.) 191, 3 Am. Dec. 535 ; Green- Fed. 484. wood V. Curtis, 6 Mass. 358. 4 Am. ==Nevins v. Chapman, 15 La. Ann. Dec. 145; Flagg v. Baldwin, 38 N. J. 353; Moore v. Remington, 34 Barb. Eq. 219. 48 Am. Rep. 308; Hinds v. (N. Y.) 427; Gay v. Parpart, 106 U. Brazealle, 2 How. (Miss.) 837, 32 S. 697, 27 L. ed. 256, 1 Sup. Ct. 456. Am. Dec. 307; Commonwealth v. See also, Baumeister v. Markham, Bassford, 6 Hill (X. Y.) 526; Gist v. 101 Ky. 122 19 Ky. L. 308, 39 S. W. Western Union Tel. Co., 45 S. Car. 844, 41 S. W. 816, 72 Am. St. 397, 344, 23 S. E. 143, 55 Am. St. 763n. in which an actress who hired to per- See post, chapt. 29. form as a burlesque opera artist in ^ Smith v. David B. Crockett Co. tights was held entitled to recover (Conn.), 82 Atl. 569 (contract con- damages for an injury which pre- templating the bribing of purchasing vented her from earning money in agents) ; Byrd v. Hughes. 84 111. such employment. 174, 25 Am. Rep. 422; Lucas v. Allen, 'Twentieth Century Co. v. Quill- 80 Ky. 681, 4 Kv. L. 687; Helee v. ing, 130 Wis. 318, 110 N. W. 174. Fink, 75 Mo. 100. 43 Am. Rep. 385; 95 LEGALITY OF OBJECT. § 749 necessary tendency of wliich places a party wlio owes a duty or obligation to third persons in a position inconsistent with such duties are void, even though no breach of trust results.' § 749. Inducing breach of trust — Officers of corpora- tion. — Chief among contracts of this character are those which tend to control the discretion of officers of corporations. Generally speaking, a contract between an officer or director of a corporation and another which places such officer or director in a position where he is under obligations inconsistent with the duty imposed upon him by reason of his official connection with the corporation is voidable.^ A contract whereby a bidder on con- Halloway v. Stevens, 48 How. Pr. (X. Y.) 129; Everhart v. Searle, 71 Pa. 256; Woodstock Iron Co. v. Richmond Gas Co.. 129 U. S. 643, 32 L. ed. 819, 9 Sup. Ct. 402. ' Yale Gas Stove Co. v. Wilcox, 64 Conn. 101. 29 .'\tl. 303. 25 L. R. A. 90, 42 Am. St. 159 (In the above case a promoter arranged to make a secret profit). McClure v. Ullman. 102 Mo. App. 697, n S. W. 325 (The above case was one of agency, the agent acting for both aprties) ; Bolton v. Amsler, 95 N. Y. S. 481. Plaintiff was engaged in the business of writ- ing circular letters giving advice and information to his clients as to the value of securities dealt in on the Stock K.xchange. His agreement with defendant stockbrokers to influence l)y his letters the purchase by his clients of certain stock in which de- fendants were interested, was ille- gal. Ridglev V. Keene, 134 App. Div. (N. Y.) 647, 119 X. Y. S. 451. To same eflfect. Ridgelv v. Keene, 134 App. Div. (X. Y.) 647. 119 X. Y. S. 451 : Williams v. Kcndrick, 105 Va. 791, 54 S. E. 865 (sale of coal lands). A secret agreement with an employe of a rival company whereby he was to abandon his contract of employ- ment, in order to embarrass the rival company as a competitor, was held illegal and fraudulent, and did not furnish a good consideration for a promise to pay the employe a salary. Rhoades v. Malta Vita Pure Food Co., 149 Mich. 235. 112 X. W. 940. One who furnished supplies and work in repairing defendant's auto- mobile' pursuant to a contract on de- fendant's behalf with his chauffeur, paid to the chauffeur a discount in violation of Penal Code, sec. 384r. It was held that the one making re- pairs could not recover, the contract being void as against public policy. General Tire Repair Co. v. Price, 115 X. Y. S. 171. To same effect. Sir- kin V. Fourteenth St. Store, 108 X. Y. S. 830: Jablon v. Traynor, 135 N. Y. S. 545. But it is not against public policy for an architect to agree to pay a third party a certain per cent, of his fee if such third party will pro- cure a loan for his employer. The architect was by such contract not only advancing his own interests but also the interests of his employer. McCrarv v. Thompson, 123 Mo. App. 596. 100 S. W. 535; Livermore v. Bushnell, 5 Hun (X. Y.) 285. See also, Selz v. Unna, 6 Wall. (U. S.) 2>11, 18 L. ed. 799. ' Davis V. Gemmell, 70 Md. 356, 17 Atl. 259; Woodruff v. Wentworth, 133 Mass. 309; Attawav v. Third Xat. Bank. 93 Mo. 485. 5 S. W. 16: Bliss V. Mattcson, 45 X. Y. 22: Wardell v. Union Pacific R. Co.. 103 U. S. 651, 26 L. ed. 509; Woodstock Iron Co. v. Richmond & D. Extension Co., 129 U. S. 643. 32 L. ed. 819, 9 Sup. Ct. 402. A stockholder in a corporation has been denied the right to recover on a contract the consideration for which was the sale of his vote at a stockholders* meeting. Dieckmann v. Robyn (Mo). 141 S. W. 717. § 749 CONTRACTS. 96 stmction work for a corporation agrees to pay the president of the corporation a large bonus in addition to the amount of his bid renders the entire contract illegal and precludes the mainte- nance of any action on the contract either to recover the contract price or the amount originally bid.® A contract whereby one, on purchasing a controlling interest in a corporation, engages that he will endeavor to retain a certain person as an officer, in the corporation at a fixed salary, has been held void as against public policy for the reason that it might require him to act contrary to the interest of stockholders other than himself." An agreement ® Standard Lumber Co. v. Butler Ice Co., 146 Fed. 359, 1(> C. C. A. 639, 7 L. R. A. (N. S.) 467n. To same effect, Landes v. Hart, 131 App. Div. (N. Y.) 6, 115 N. Y. S. Zll. See also, Stanton v. Sturgis, 140 Fed. 789. In the above case there was an agreement to pay part of the directors a certain per cent, of the profits. The court regarded the con- tract as one. An agreement be- tween the engineer of a corporation and one who has the contract to con- struct certain works for it that the latter will divide the profits of his contract with the former is against public policy and void. Smythe's Es- tate V. Evans, 209 111. App. 2>16, 70 N. E. 906. " West v. Camden, 135 U. S. 507, 34 L. ed. 254, 10 Sup. Ct. 838. To same effect. Noel v. Drake, 28 Kans. 265, 42 Am. Rep. 162; Guernsey v. Cook, 120 Mass. 501 ; Woodruff v. Wentworth, 133 Mass. 309. See also, Glass v. Basin and Bay State Min. Co., 31 Mont. 21, n Pac. 302, in which juris- diction the rule is statutory. See, however, Kantzler v. Benzinger, 214 111. 589, 1Z N. E. 874, in which it is said : "It is next contended that the provision in the con- tract that the plaintiffs should hold the ofBces of president, secre- tary, and treasurer of the Garden City Billiard Table Company for five years from the date of the con- tract, at a salary of $2,000 per annum each, is contrary to public policy and void. The contract was entered into by all the stockholders of the cor- poration, and, while it might not have bound the board of directors after- ward elected, we think there is no reason, in law, why it should, not be held to be binding upon the defend- ants, and enforceable against them. The entire stock of the corporation was held by the plaintiffs, and, in making a contract with the defend- ants whereby the latter were to ob- tain at once six-tenths of said stock, it was open to the parties to make any arrangements with regard to the management of the company mu- tually agreeable to them. The price to be paid for the stock was a mat- ter to be determined by them, and by them only. They owned all the property represented by the stock and the mere fact that it was repre- sented by corporate stock could make no difference. No other person had any interest in it, and no one else could complain. Instead of paying a different price than that agreed on for the stock not then to be transferred, it was mutually agreed that the plain- tiffs should continue in their old official positions for five years, with an increase of salary." A sale by a majority stockholder of all of the property of the corporation without the knowledge or consent of the other stockholders, is against public policy. Bias v. Atkinson, 64 W. Va. 486, 63 S. E. 395. See also, Scripps v. Sweeney, 160 Mich. 148, 125 N. W. 72, where a minority number of the stockholders in four different cor- porations entered into an agreement, without the consent of the other stockholders, which had for its ob- ject the personal aggrandizement of the minority stockholders. The con- tract was held against public policy, 97 LEGALITY OF ODJECT. § 750 by which a trustee of a savings bank for a consideration moving to himself for his private benefit, agrees to secure the election of certain persons as trustees of the institution, is illegal as against public policy. ^° § 750. Inducing breach of trust — Public service corpora- tions. — Directors of corporations aficcted with a public in- terest, such as railway companies, are held not only to owe a duty to the stockholders of such corporations but to the public generally. Consequently contracts with the corporation by which the directors obtain some private advantage are unen forci- ble because against public policy.^ ^ § 751. Inducing breach of trust — Other applications of rule. — Public policy forljids that a person occupying a fidu- ciary relation place himself or be placed in a position which may tempt him to betray his trust/" An agreement whereby one is notwithstanding good faith on the part of one of the parties thereto. Compare with, San Remo Copper Min. Co. V. Alonensc, 133 X. Y. S. 509. A voting trust agreement is not per se void. Carnegie Trust Co. v. Security Life Ins. Co., Ill Va. 1, 68 S. E. 412, 31 L. R. A. (N. S.) 1186, and note ; Winsor v. Commonwealth Coal Co., 63 Wash. 62, 114 Pac. 908, 33 L. R. A. (X. S.) 63. Compare with Morel v. Hoge, 130 Ga. 625, 61 S. E. 487, 16 L. R. A. (X. S.) 1136 and note. For full discussion of the subject of the relation sustained by officers of a corporation toward such corporation, see Thomp. Corp. (2d. ed.). '" Dickson v. Kittson. 75 Minn. 168, 77 X. W. 820, 74 Am. St. 447. "St. Louis &c. R. Co. v. Mathers, 71 111. 592, 22 Am. Rep. 122: Fuller v. Dame, 18 Pick. (Mass.) 472; Ilolla- day v. Patterson. 5 Ore. 177; Wood- stock Iron Co. V. Richmond S:c. Co., 129 U. S. 643, 32 L. ed. 819, 9 Sup. Ct. 402. In Western Union Tel. Co. v. Union Pac. R. Co., 3 Fed. 1, 1 Mc- Crary (U. S.) 418. it is said: "The officers of a railway company are quasi public officers. Their duties are of a fiduciary character. They are, in an important sense, trustees. 7 — CoNTR.vcTS, Vol. 2 To pay them individually anj-^thing of value for executing a corporate con- tract is grossly unlawful, and taints such contract with moral turpitude. Vast interests, in which the public, as well as the immediate parties, are deeply concerned, are intrusted to the control and management of such officials ; and in my judgment, there are important considerations of pub- lic policy which demand that courts of justice shall hold them to a strict account, and shall never for a mo- ment recognize as valid a contract obtained by paying directly or in- directly to such officials any consider- ation, whether large or small." See also, Peckham v. Lane, 81 Kans. 489, 106 Pac. 464, 25 L. R. A. (X. S.) 935. "Sims v. Petaluma Gas Light Co., 131 Cal.' 656, 63 Pac. 1011. An ex- ecutor may renounce his trust, but he cannot lawfully sell his right to act as administrator and any agree- ment by which he attempts to do so for a consideration moving to him- self is against public policy and un- enforcible. Oakeshott v. Smith. 104 App. Div. (X. Y.) 384. 93 X. Y. S. 659. 185 X. Y. 583_. 78 _X. E. 1108. The office of a guardian is not a matter of commerce and an agreement to re- sign is against public policy. Aughcy § ys^ CONTRACTS. 98 to pay another for his trouble in recommending him as a builder to one who may inquire as to his capacity and liability in that line has been declared illegal." A contract which virtually en- courages one of the parties thereto to future violations of the law is also illegal.^* § 752. Agreements of a gambling or wagering nature. — A separate chapter will be devoted to the subject of agreements of a gambling or wagering nature, and for that reason contracts of this character will not be discussed in this connection.^'^ § 753. Agreements in derogation of marriage — Restraint of marriage. — A contract in unreasonable restraint of mar- riage is against public policy and invalid.^® However, agree- V. Windrem, 137 Iowa 315, 114 N. W. 1047. A guardian and his surety agreed that the ward's funds should be deposited in a bank, and not with- drawn except on the joint check of the guardian and the surety. This contract was held contrary to pub- lic policy as having the effect to take from the guardian, in part, the cus- tody and control of the ward's funds, and surrender the same to the surety ; and for that reason did not bind the bank so as to render it liable to the surety for having paid over funds of the ward in violation of the agree- ment. Fidelity & Deposit Co. v. But- ler, 130 Ga. 225, 60 S. E. 851, 16 L. R. A. (N. S.) 994n. The duty resting; upon the majority owners of a ves- sel to manage it to the advantage of all the owners and all persons whose lives and property may be involved is a trust which they cannot agree to surrender permanently or indefinite- ly. Smith-Green Co. v. Bird, 96 Alaine 425, 52 Atl. 910, 90 Am. St. 352. An agent in charge of his principal's estate induced the prin- cipal to exchange his property for other property which belonged to the agent. The agent did not disclose the fact of his ownership. Tt was held that the contract of exchange could be avoided by the principal, whether beneficial or not, on the ground that the contract was con- trary to public policy. McClain v. Parker, 229 Mo. 68, 129 S. W. 500; J. I. Case Threshing Machine Co. v. Fisher, 144 Iowa 45, 122 N. W. 575 (holding that a mere selling agent may divulge that he is able to obtain goods at better rates from one man- ufacturing company than from an- other). Plaintiff was a subagent for defendants in selling lands for a cer- tain company. Defendants were dis- charged as agents and plaintiff ap- pointed in their stead. Defendants then entered into an agreement with plaintiff to divide the commissions to be derived from certain unfinished sales. Held, that such agreement was not illegal, though defendants, im- mediately on termination of their agency, became agents for a rival company. Duensing v. Paine, 150 Iowa 417, 130 N. W. 385. See also, Keady v. United R. Co., 57 Ore. 325, 108 Pac. 197 (all parties to the agree- ment had knowledge of its terms). " Holcomb V. Weaver, 136 Mass. 265. See, however, the case of Hoyt V Holly, 39 Conn. 326, 12 Am. Rep. 390, in which an agreement whereby one physician contracts to pay an- other five hundred dollars to recom- mend him to the latter's patients was upheld. " Bowman v. Phillips. 41 Kans. 364, 21 Pac. 230, 3 L. R. A. 631, 13 Am. St. 292 ^'See post, § 692. "Hartley v. Rice, 10 East 22; 99 LEGALITY OF OBJECT. S 754 ments against marriage under the age of twenty-one or other reasonable age or with a specified person, or a member of a desig- nated family and the like have been upheld.'' A condition by husband or wife in restraint of second marriage has been upheld." Thus a contract whereby a man agrees to pay his divorced wife a specified simi per month so long as she remains unmarried, no obligation being imposed upon her not to marry, is not a contract in restraint of marriage, and, not involving ques- tions of morals or public policy, it cannot be avoided on any of these grounds.^'' ;^ 754. Derogation of marriage — Marriage brokage con- tracts. — A contract to procure or bring about a marriage for White V. Benefit Union, 76 Ala. 251, 52 Am. Rep. 325; James v. Jellison, 94 Ind. 292, 48 Am. Rep. 151; Chal- fant V. Payton, 91 Ind. 202, 46 Am. Rep. 586; Williams v. Cowden, 13 Mo. 211, 53 Am. Dec. 143; Knost v. Knost, 229 iMo. 170, 129 S. W. 665 (.daughter, under will, to receive less than the other children in case she married) ; Sterling v. Sinnickson, 5 X. J. 756; Conrad v. Williams, 6 Hill (N. Y.) 444; Maddox v. Mad^ dox, Admr., 11 Grat. (Va.) 804. While a contract between a man and a woman each to marry the other re- strains each of them from marryirig any one else, the contract is not void for that reason. If it were other- wise there could be no valid mar- riage contract. Brown v. Odill, 104 Tenn. 250, 56 S. W. 840, 52 L. R. A. 660, 78 .Am. St. 914. A contract by which the father of the prospective groom agrees to pay the wife a speci- fied sum should his son mistreat her or abandon her and her child is not in restraint of marriage. Wright v. Wright. 114 Iowa 748, 87 X. W. 709, 55 L. R. A. 261. Defendant desired to marry one of plaintiff's employes and promised to pay $30.00 for her release from her contract of em- ployment in consideration of which promise she was released. It was held that the contract was not in restraint of marriage. Holtz v. Han- son. 115 Wis. 236. 91 X. W. 663. "Shackelford v. Hall. 19 111. 212; Hogan V. Curtain, 88 X. Y. 162, 42 Am. Rep. 244; Phillips v. Ferguson, 85 Va. 509, 8 S. E. 241. 1 L. R. A. i<37, 17 Am. St. 78; Reuff v. Coleman, 30 W. Va. 171, 3 S. E. 597. However, it would seem that contracts of this character must be entered into by the one who contemplates marriage. Thus, A may contract that he will not marry under a certain reasonable age or that he will not marry a cer- tain person, but the law will not recognize and enforce contracts be- tween outside parties, relatives or friends to break up and prevent con- templated marriages. Sheppey v. Stevens, 177 Fed. 484. '* Allen v. Tackson, 1 Ch. Div. 399; Phillips v. ^ledbury. 7 Conn. 568; Bennett v. Packer, 70 Conn. 357, 39 Atl. 739, 66 Am. St. 112; Shackelford V. Hall, 19 111. 212; Siddons v. Cock- rell, 131 III. 653, 23 X. E. 586; Bos- tick V. Blades, 59 Md. 231, 43 Am. Rep. 548; Knight v. ^Mahoney. 152 Mass. 523, 25 N. E. 971 : 9 L. R. A. 573; Dumev v. Schoeftler, 24 Mo. 170, 69 Am." Dec. 422; Herd v. Cat- ron. 97 Tenn. 662. 37 S. W^ 551. 37 L. R. A. 731 ; Giles v. Little. 104 U. S. 291. 26 L. ed. 745. See Stilwell v. Knapper. 69 Ind. 558. 35 .Am. Rep. 240. See also. Knost v. Knost, 229 Mo. 170, 129 S. W. 665; Trust Co. &c. V. Xash, 50 Misc. (X. Y.) 295, 98 X. Y. S. 734 (separation agree- ment). ""Jones V. Jones, 1 Colo. App. 28, 27 Pac. 85. See also, Appleby v. Appleby, 100 Minn. 408, 111 N. W. § 754 CONTRACTS. 100 a consideration, usually termed a marriage brokage agreement, is invalid, both at law and in equity, as being opposed to public pol- icy."'^ This applies not only to contracts to bring about a marriage between strangers but also to an agreement to hasten an intended marriage for a consideration. A contract to hasten an intended marriage is as obnoxious as a contract to bring about a marriage between strangers."^ The same is true of a contract by which one undertakes to prevent a person from breaking his contract to marry.-" Marriage brokage contracts cannot be enforced either at law or in equity."^ On the other hand, if the considera- tion has been paid to the marriage broker it is held by the better rule that the payment is induced by fraud or is made under a species of duress or undue influence, and that a court will award 305, 10 L. R. A. (N. S.) 590, 117 Am. St. 709, where a contract which provided that the husband should have an annuity of $10,000 so long as he remained unmarried after the death of the wife, provided they were living together as husband and wife at the time of her death, was upheld. ^Roberts v. Roberts, 3 P. Wms. 66; Hall v. Potter, 3 Lev. 411; Keat ■V. Allen, 2 Vern. 588; Morrison v. Rogers, 115 Cal. 252, 46 Pac. 1072, 56 Am. St. 95; Leupert v. Shields, 14 Colo. App. 404, 60 Pac. 193; Hellen V. Anderson, 83 111. App. 506; Chal- fant V. Payton, 91 Ind. 202, 46 Am. Rep. 586; James v. Jellison, 94 Ind. 292, 48 Am. Rep. 151 ; Grobe's Estate, 127 Iowa 121, 102 N. W. 804; John- son's Admr. v. Hunt, 81 Ky. 321, (Agreement by grandfather that he would surrender to grandson a note held against the latter if he would aid in inducing a young lady to marry the former.) Fuller v. Dame, 18 Pick. (Mass.) 472; Craw- ford V. Russell, 62 Barb. (N. Y.) 92; Duvall v. Wellman, 124 N. Y. 156, 26 N. E. 343 ; Place v. Conklin, 34 App. Div. (N. Y.) 191, 54 N. Y. S. 532; Overman v. Clemmons, 19 N. Car. 185. See Jangraw v. Perkins, 76 Vt. 127, 56 Atl. 532, 104 Am. St., which holds that a contract to hasten an intended marriage for a considera- tion is a marriage brokerage contract. A marriage-brokage contract is an agreement for the payment of money or any other consideration or com- pensation for the procurement of a marriage. "Although they may not be a fraud on either party, such con- tracts are held to be void and a pub- lic mischief, forasmuch as they are calculated to bring to pass mistaken and unhappy marriages, to counter- vail parental influence in the training and education of children, and to tempt the exercise of an vindue and pernicious influence for selfish gain in respect to the most sacred of human relations. An essential ele- ment in such contracts is the procure- ment of a marriage, oftentimes with- out regard to the wishes of friends or parents, or to the happiness of the parties most deeply interested.'' White V. Equitable Nuptial Benefit Union, 76 Ala. 251, 52 Am. Rep. 325. ^Jangraw v. Perkins, 76 Vt. 127, 56 Atl. 532, 104 Am. St. 917. "■Morrison v. Rogers, 115 Cal. 252, 46 Pac. 1072, 56 Am. St. 95. ^Hlorrison v. Rogers, 115 Cal. 252, 46 Pac. 1072, 56 Am. St. 95; Hellen V. Anderson, 83 111. App. 506; In re Grobe's Estate, 127 Iowa 121, 102 N. W. 804; Crawford v. Russell, 62 Barb. (N. Y.) 92. But a contract by which a father promised to a man $2,000 if he would marry the for- mer's daughter has been upheld on the ground that marriage is a valua- ble consideration. Lieb v. Dobriner, 60 Misc. (N. Y.) 66, 111 N. Y. S. 650. lOI LEGALITY OF OBJECT. ? 755 restitution of the money or other property parted with."* There are cases, however, which hold that the property so parted with cannot be recovered." § 755. Derogation of marriage — Agreements made in view of future separation. — A contract l^etween a husband and wife which contemplates a future separation is invalid be- cause it tends to facilitate a separation."'"' But where the separa- tion is an accomplished fact"^ or where it takes place at a time contemporaneous with the actual separation, ^^ the courts will as a general rule uphold a contract, entered into between the parties concerning their property rights, which is not tainted by fraud, duress or undue influence."" "'Hermann v. Cliarlesworth (1905), 2 K. B. 123; Wcnniyer v. Mitchell, 139 .Mo. App. 420, 122 S. W. 1130 (also on the ground that pubhc pol- icy requires repayment) ; Duvall v. Wellman, 124 N. Y. 156, 26 N. E. 343; Place v. Conklin, 34 App. Div. (N. Y.) 191, 54 N. Y. S. 532, affg. 23 Misc. (N. Y.) 40, 51 N. Y. S. 407. In the above case suit was brought by the husband, the wife having turned over to the broker property given her bv the husband. "Chalfant v. Payton, 91 Ind. 202, 46 Am. Rep. 586. The contract in this case was more in the nature of a wagering agreement. -' Pcrcira v. Percira, 156 Cal. 1, 103 Pac. 488, 23 L. R. A. (N. S.) 880n. 134 Am. St. 107; Watson v. Watson. ?>7 Ind. App. 584. 77 N. E. 355 (ante- nuptial contract) ; Donohue v. Dono- hue (Mo. App.). 141 S. W. 465 (antenuptial agreement for di- vorce) ; Brun v. Brun, 64 Nebr. 782, 90 N. W. 860. See ante, chapt. 13. "^ McConnell v. McConnell. 98 Ark. 103, 136 S. W. 931 ; Prvor v. Prvor, 88 Ark. 302, 114 S. W. 700 (contract contemporaneous with the decree of divorce) ; Storcv v. Storev, 125 111. 608, 18 N. E. 329, 1 L. R. A. 320n, 8 Am.- St. 417; Hilbish v. Hattle, 145 Ind. 59, 44 N. E. 20, ?,?, L. R. A. 7^2> ; Loud v. Loud, 4 Bush (Kv.^ 453; Grime v. Borden, 166 Mass. 198. 44 N. E. 216; Roll v. Roll. 51 Minn. 353, 53 N. W. 716: Galusha v. Galusha, 116 N. Y. 635, 22 N. E. 1114; Durvea v. Bliven, 122 N. Y. 567, 25 N. E. 908; Effrav v. Effray, 110 App. Div. (N. Y.) 545, 97 N. Y. S. 286; Bettle v. Wilson, 14 Ohio 257; Rains v. Wheeler, 76 Tex. 390, 13 S. W. 324; Squires v. Squires, 53 Vt. 208, 38 Am. Rep. 668; Rolette v. Rolette, 1 Pin. (Wis.) 370, 40 Am. Dec. 782. See also, Trust Co. of America v. Nash, 50 Misc. (N. Y.) 295, 98 N. Y. S. 734. '^Nichols V. Palmer, 5 Day (Conn.) 47; Boland v. O'Xeil, 72 Conn. 217, 44 Atl. 15; King v. Mollo- han, 61 Kans. 683, 60 Pac. 731, affd. 61 Kans. 692. 61 Pac. 685; Carev v. Mackey, 82 Maine 516, 20 Atl. 84, 9 L. R. A. 113, 17 Am. St. 500; Steb- bins V. jMorris, 19 Mont. 115, 47 Pac. 642; Brun v. Brun, 64 Nebr. 782, 90 N. W. 860 ; Poillon v. Poillon, 49 App. Div. (N. Y.) 341, 63 N. Y. S. 301; Dower v. Dower, 36 Misc. (N. Y.) 559, 73 N. Y. S. 1080; Henderson v. Henderson, 37 Ore. 141. 60 Pac. 597, 61 Pac. 136. 48 L. R. A. 766. 82 Am. St. 741; \\'alker v. Walker's Exr., 9 Wall. (U. S.) 743, 19 L. ed. 814; Baum V. Baum, 109 Wis. 47, 85 N. W. 122, S3 L. R. A. 650, 83 Am. St. 854. ^Bowers v. Hutchinson, 67 .'\rk. 15, 53 S. W. 399; Wells v. Stout. 9 Cal. 479. See Luttrell v. Boggs. 168 111. 361, 48 N. E. 171 : Dutton v. Dut- ton, 30 Ind. 452: Robertson v. Rob- ertson, 25 Iowa 350: McKce v. Reyn- olds. 26 Iowa S79^\ Fox v. Davis. 113 Mass. 255, 18 Am. Rep. 476; Randall § 756 CONTRACTS. 102 § 756. Derogation of marriage — Duties imposed by law. — x\n agreement, however, by the husband to pay his wife for services rendered as a housekeeper, or for the per- formance of other duties imposed upon her by the marital rela- tion,"" is void for the reason that it is without consideration and against public policy. But it has been held by many cases that a promise whereby the husband agrees to pay his wife a specified sum of money, if she will dismiss a divorce proceeding and renew the marital relation, will be enforced."^ § 757. Derogation of marriage — Facilitating divorce. — But it is well settled that any agreement between husband and V. Randall, Zl Mich. 563; Nelson v. (providing for resumption of mar- Vassenden, 115 Alinn. 1, 131 N. W. ital relation where wife had been 794; Garbut V. Bowling, 81 Mo. 214; guilty of adultery); Sommer v. Foote V. Xickerson, 70 N. H. 496, Sommer, 87 App. Div. (N. Y.) 434, 48 Atl. 1088, 54 L. R. A. 554; Aspin- 84 N. Y. S. 444; In re Burkholder's wall V. Aspinwall, 49 N. J. Eq. 302, Appeal, 105 Pa. St. 31. A promise by 24 Atl. 926; Carson v. Murray, 3 a third person made to induce the Paige (N, Y^) 483; Clark v. Fosdick, wife, who lives apart from her hus- 118 N. Y^ 7, 22 X. E. 1111, 6 L. R. band for cause sufficient to entitle A. 132, 16 Am. St. IZZ; Miller v. Mil- her to a divorce, to resume her duties ler. 16 Ohio St. 527; Commonwealth as a wife is valid. Mack v. Mack, 87 v. Richards, 131 Pa. St. 209, 18 Atl. Nebr. 819, 128 N. W. 527, 31 L. R. 1007; In re Scott's Estate, 147 Pa. A. (N. S.) 441n. A husband and St. 102, 23 Atl. 214. See ante, chapt. wife, while they were living apart 13, _ and a divorce suit instituted by the '"Grant v. Green, 41 Iowa 88; wife was pending, made a contract Miller v. INIiller, 78 Iowa 177, 35 N. whereby, in consideration of the set- W. 464, 42 N. W. 641, 16 Am. St. tlement of the divorce suit and for 431- Al'ichigan Trust Co. v. Chapin, the purpose of a reconsideration, the 106 'Mich. 384, 64 N. W. 334, 58 Am. husband agreed that if the wife St 490. But an agreement which should at any time thereafter leave bound the husband to treat his wife him, or be unable to live with him as a husband should has been upheld, for any good cause, she should re- It tended to uphold instead of de- ceive a sum of money each month, stroy the marriage. The contract such sum being no greater than the was also conditional on the wife's court would have allowed her had own good behavior. It was also held no contract been made. The con- that there was a sufficient considera- tract was held not contrary to pub- tion to support the contract. Mont- lie policy, but as valid, as under the gomery v. Alontgomery, 142 Mo. App. code the wife may maintain an action 481, 127 S. W. 118. for alimony without suing for a di- "' Phillips v ]\Teyers 82 111. (^1 \ vorce. Woodruff v. Woodruff, 28 Poison V. Stewart, 167 Mass. 211, 45 Ky. L. 757, 90 S. W. 266, judgment N E. 737, 36 L. R. A. 771, 57 Am. modified, 91 S. W. 265. Compare St. 452 (agreement to forbear suit with Pereira v. Pereira, 156 Cal 1. for divorce); Reithmaier v. Beck- 103 Pac. 488, 23 L. R A. (N. S.) with 35 Mich. 110; Barbour v. Bar- 880n, 134 Am. St. 107. See ante, hour 49 X. T. Eq. 429, 24 Atl. 227: chapt. 13. But see Merrill v. Peas- Adams v. Adams. 91 N. Y. 381, 43 lee, 146 Mass. 460, 16 N. E. 271, 4 Am. Rep. 675. See also, Duffy v. Am. St. 334. White, 115 Mich. 264 73 N. W. 363 10' LEGALITY OF OBTFXT. § 717 wife, the purpose of which is to induce or facihtate the procure- ment of a divorce at the suit of either party, is against public poHcy and unen forcible.^" The foregoing principles apply not only to contracts between husband and wife, but to contracts between one of the married parties with a third person which tend to break up the marriage relation. Thus, an agreement by a wife to pay her attorney in a suit for divorce and alimony against her husband a certain per '"Newman v. Freitas, 129 Cal. 283, 61 Pac. 907, 50 L. R. A. 548; Beard V. Beard. 65 Cal. 354, 4 Pac. 229 (notes secured by mortgage given b\' husband to induce wife not to re- sist divorce proceedings) ; Smutzer v. Stimson, 9 Colo. App. 326, 48 Pac. 314; Goodwin v. Goodwin, 4 Day (Conn.) 343; Appeal of Seeley, 56 Conn. 202, 14 Atl. 291; Paddock v. Robinson, 63 III. 99, 14 Am. St. 112; Hamilton v. Hamilton. 89 111. 349; Stokes V. Anderson, 118 Ind. 533, 21 N. E. 331. 4 L. R. A. 313n; Fredrick V. Sault. 19 Ind. App. 604, 49 X. E. 909; Comstock v. Adams, 23 Kans. 513, ZZ Am. Rep. 191 ; Johnson v. Johnson's Committee, 122 Ky. 13, 90 S. VV. 964, 121 Am. St. 449; Hardy v. Smith, 136 Mass. 328; Adams v. Adams, 25 Minn. 12; McAUen v. Hodge, 94 Minn. 237, 102 N. W. 707 (contract to withdraw one action for divorce and interpose another for cruel and inhuman treatment by the husband would make no defense) ; Blank v. Xohl, 112 Mo. 159, 20 S. W. 477, 18 L. R. A. 350; Donohue v. Donohue, 159 Mo. App. 610, 141 S. t\^ 465: Wilde v. Wilde, ^7 Xebr. 891. 56 X. W. 724; Davis v. Hinman, IZ Xeb. 850, 103 N. W. 668 ; Sayles v. Savles, 21 N. H. 312. 53 Am. Dec. 208n; Cross v. Cross, 58 N. H. yi2>\ Noice V. Brown, 38 N. J. L. 228. 20 Am. Rep. 388 ; Lake v. Lake, 136 App. Div. (N. Y.) 47, 119 N. Y. S. 686; Train v. Davidson, 20 App. Div. (N. Y.) 577, 47 X. Y. S. 289 (husband to furnish evidence against self and pay wife an annuitv) ; Stoutenburg v. Lv- brand, 13 Ohio St. 228; Phillips v. Thorp, 10 Ore. 494; Kilborn v. Field, 78 Pa. St. 194: Irvin v. Irvin. 169 Pa. St. 529, 12 Atl. 445. 29 L. R. A. 292; Palmer v. Palmer, 26 Utah 31, 12 Pac. 3, 61 L. R. A. 641, 99 Am. St. 820; Kistler v. Kistler, 141 Wis. 491. 124 X. W. 1028. A contract relating to alimony made during the pendency of a suit for divorce executed before the rendition of the decree, performance of which was conditioned on the granting of a divorce, has been held against public policv. Wilson v. Fahneslock, 44 Ind. App. 35. 86 N. E. 1037. An instrument whereby a wife released her one-third interest in her husband's real estate for a sum of money on an understanding that the husl)and should apply for a divorce, and that the wife should make no de- fense thereto, was declared void as against public policv. In re Bell's Es- tate, 29 Utah 1, 80 Pac. 615. See also, Barngrover v. Pettigrew, 128 Iowa 533, 104 X. W. 904, 2 L. R. A. (X. S.) 260, 111 Am. St. 206; McCurdv V. Dillon, 135 Mich. 678, 98 N. W. 746; Lcvine v. Klein, 65 Misc. (N. Y.) 498, 120 X. Y. S. 196. But an agreement which does not suspend, modify or abridge the rights of either of the parties to a divorce, or affect the proceedings in court, may be up- held. Ward V. Goodrich, 34 Colo. 369. 82 Pac. 701, 2 L. R. A. (X. S.) 201n, 114 Am. St. 167. See also. Gib- bons V. Gibbons, 21 Ky. L. 1214, 54 S. W. 710 (no question as to the right of the husband to a divorce) ; Dono- hue V. Donohue, 159 Mo. App. 610. 141 S. W. 465 (antenuptial agreement to secure a divorce) ; Delhridge v. Beach, 66 Wash. 416. 119 Pac. 856. However, a contract whereby a hus- band agreed to pay his wife certain sums of money in consideration of her withdrawing an appeal from a di- vorce decree has been upheld. Bloom V. Bloom, 134 X. Y. S. 581. CONTRACTS. 104 cent, of whatever property, real or personal, that should be awarded her out of her husband's estate for alimony, is void as against public policy.^^ Such an agreement tends to facilitate divorce and prevents reconciliation between the parties.^* A con- tract entered into by the husband with an attorney, conditioned on the obtainment of a divorce, or intended or calculated to facili- tate its procurement, is also void as against public policy.^^ An agreement whereby the husband is to pay his attorney in a divorce proceeding a lump sum as his fee, out of which such attorney is to pay the defendant's witness fees,^® or alimony awarded the wife," has been held void on the ground of champerty.^^ So an agree- ^Brindley v. Brindlev, 121 Ala. 429, 25 So. 751; McConnell v. AIc- Connell, 98 Ark. 193, 136 S. W. 931, 33 L. R. A. (N. S.) 1074; Newman V. Freitas, 129 Cal. 283, 61 Pac. 907, 50 L. R. A. 548 (suit for specific per- formance by assignee of attorney) ; Jordan v. Westerman, 62 Mich. 170, 28 N. W. 826, 4 Am. St. 836; Mc- Curdy v. Dillon, 135 ^lich. 678, 98 X. W. 746 ; Lynde v. Lynde, 64 N. J. Eq. 736, 52 Atl. 694, 58 L. R. A. 471, 97 Am. St. 692; Van Vleck v. Van Vleck, 21 App. Div. (N. Y.) 272, 47 N. Y. S.470; In re Brackett, 114 App. Div. (N. Y.) 257, 99 N. Y. S. 802. The plaintiff, in an action for breach of promise, alleged that during the pendency of a hearing on a suit for divorce filed by her the defendant promised to marry her, should she ob- tain her divorce. Thereupon illicit relations were established between them. She concealed this fact from the court and obtained her divorce. This suit was brought on the breach of promise to marry. Held, assuming the promise to have been made, that since the divorce was necessary for the performance of the promise to marry, and as it was founded on de- ceit and immorality, it was against public policy to permit her to main- tain the action for breach of prom- ise. Prevost V. Wood, 21 Times L. R. 684. A contract, by which a married man, about a month prior to obtain- ing a divorce, promised to give a ■woman not his wife $3,500 if she would marry him as soon as he ob- tained a divorce, has been declared Contrary to public policy, repugnant to good morals and utterly void. Leu- pert V. Shields, 14 Colo. App. 404, 60 Pac. 193. "" Newman v. Freitas, 129 Cal. 283, 61 Pac. 907, 50 L. R. A. 548; Jordan V. Westerman, 62 Mich. 170, 28 N. W. 826, 4 Am. St. 836; McCurdy v. Dil- lon, 135 Mich. 678, 98 N. W. 746; Lynde v. Lynde, 64 N. J. Eq. 736, 52 Atl. 694, 58 L. R. A. 471, 97 Am. St. 692. Such agreements have also been declared void because champer- tous. Newman v. Freitas, 129 Cal. 283, 61 Pac. 907, 50 L. R. A. 548. See also, Delbridge v. Beach, 66 Wash. 416, 119 Pac. 856. ^^Barngrover v. Pettigrew, 128 Iowa 533, 104 N. W. 904, 2 L. R. A. (N. S.) 260, 111 Am. St. 206; Don- aldson V. Eaton, 136 Iowa 650, 114 N. W. 19, 14 L. R. A. (N. S.) 1168, 125 Am. St. 275. ^^ Barngrover v. Pettigrew, 128 Iowa 533, 104 N. W. 904, 2 L. R. A. (N. S.) 260, 111 Am. St. 206. "Donaldson v. Eaton, 136 Iowa 650, 114 N. W. 19, 14 L. R. A. (N. S.) 1168, 125 Am. St. 275. ^*An attorney has been permitted to recover the quantum meruit of his services in a divorce proceeding, not- withstanding his contract with the w^ife called for percentage of the ali- mony recovered. McCurdy v. Dillon, 135 Mich. 678, 98 N. W. 746. See, however, Brindlev v. Brindlev, 121 Ala. 429, 25 So. 751; Sharon v. Sha- ron, 75 Cal. 1, 16 Pac. 345; White v. White, 86 Cal. 212, 24 Pac. 1030. And in Barngrover v. Pettigrew. 128 Iowa 533, 104 N. W. 904, 2 L. R. A. (N. S.) 260, 111 Am. St. 206, an attorney lO: LEGALITY OF OBJECT. § 758 ment whereby a wife confirms the gift of a note to her husband if he will not defend an action for divorce brought by her is void and does not defeat her right to maintain an action against her former husband to obtain possession of it or to recover judgment for the amount of the notc.^° § 758. Agreements in restraint of trade. — It is a general rule in all the states of this country as well as in England that contracts in general restraint of trade are void as against public policy.*" Universality as to space or time does not, however, necessarily render a particular contract void because in re- straint of trade. The invalidity of such contracts is to be deter- mined by the conditions of each case and the reasonableness of the restraint under the circumstances is a test of the contract's validity." If the restraint which the contract places on trade is only partial, is founded on a valid consideration, and affords only reasonable protection to the party in whose favor the restraint is imposed, it will be held valid.*" It is not intended to give any was not permitted to recover the quantum meruit of his services where the agreement entered into with the husband was in derogation of the marriage relation, and champertous. Roller V. Murray, 112 Va. 780, 12 So. 665 (denying quantum meruit recov- ery for services rendered under a champertous contract). ^"Johnson v. Johnson's Committee, 122 Ky. 13, 90 S. W. 964. 121 Am. St. 449. In the above case the court held that the principle of in pari delicto did not apply. The court said : "It was simply a void contract. If, at the time the contract was made, the ap- pellee was entitled to recover the note or the amount of it, her cause of ac- tion was not destroyed by reason of that agreement. It being void, it left the parties with rights as fixed by ' *'' Harris v. Theus, 149 Ala. 133. 43 So. 131, 10 L. R. K. (N. S.) 204n. 123 .\m. St. 17; More v. Bonnet. 40 Cal. 251, 6 Am. Rep. 621; Goodman V. Henderson, 58 Ga. 567; Wiley v. Baumsrardner, 97 Ind. 66, 49 Am. Rep. 427; Sutton v. Head, "^d Kv. 156. 5 S. W. 410. 9 Am. St. Rep. 274; ^lerchants' Ice &c. Co. v. Rohrman, 138 Ky. 530, 128 S. W. 599, 137 Am. St. 390; Warfield v. Booth, ZZ Md. 63; Bishop v. Palmer, 146 Mass. 469, 16 X. E. 299, 4 Am. St. 339 ; Peltz v. Eichele, 62 Mo. 171 ; Mandeville v. Harman, 42 N. J. Eq. 185, 7 Atl. Zl \ Curtis V. Gokev, 68 X. Y. 300 ; Gras- seilli V. Lowden, 11 Ohio St. 349; In re Smith's Appeal, 113 Pa. 579, 6 Atl. 251; Herreshoff v. Boutineau, 17 R. I. 3. 19 Atl. 712, 8 L. R. A. 469, ZZ Am. St. 850; Berlin .Mach. Works v. Perrv, 71 Wis. 495, 38 X. W. ^1, 5 Am. St. 236. " Trenton Potteries Co. v. Oliphant, 58 X. J. Eq. 507, 43 Atl. IIZ, 46 L. R. A. 255. 78 Am. St. 612; Cowan v. Fairbrother. 118 X. Car. 406, 24 S. E. 212. Z2 L. R. A. 829, 54 Am. St. IZZ; Oakdale Mfg. Co. v. Garsh, 18 R. I. 484, 28 Atl. 9'IZ, 23 L. R. A. 639, 49 Am St. 784. "Tuscaloosa Ice Mfg. Co. v. Will- iams, 127 Ala. 110. 28 So. 669, 50 L. R. A. 175, 85 .\m. St. 125 ; Getz Bros. 6 Co. v. Federal Salt Co., 147 Cal. 115, 81 Pac. 416. 109 Am. St. 114; Lanzit v. Sefton Mfg. Co., 184 111. 326, 56 X. E. 393. 75 Am. St. 171; Plarding v. .\merican Glucose Co., 182 111. 551, 55 X. E. 577, 64 L. R. A. IZ'^, 74 .\m. St. 189. and note ; Union Strawboard Co. v. Bonfield, 193 111. § 759 CONTRACTS. 1 06 more at this point than a statement of the general rules covering the subject of contracts in restraint of trade. Contracts of this character will be treated more in detail in a subsecjuent chapter. § 759. Agreements suppressing competition or sales or public lettings. — The law condemns all unlawful combina- tions to prevent biddings at auction sales/^ or public lettings** when made for the purpose of stifling competition. Agreements not to bid against each other at a public auction as well as agree- ments for the employment of underbidders and puffers are held to l3e a fraud on the bidders at a sale, and void as against public policy. So contracts of brokers or agents upon a consideration founded on violations of duties to the principal are void.*^ Thus 420, 61 N. E. 1038, 86 Am. St. 346; Swigert v. Tilden. 121 Iowa 650, 97 N. \y. 82, 63 L. R. A. 608, 100 Am. St. 374 ; Pohlman v. Dawson, 63 Kans. 471. 88 Am. St. Rep. 249, 65 Pac. 689, 54 L. R. A. 913. *' Packard v. Bird, 40 Cal. 378; Loyd V. -Malone, 23 111. 43, 76 Am. Dec. 179; Devine v. Harkness, 117 111. 145, 7 N. E. 52; Ingalls v. Rowell, 149 111. 163, 36 N. E. 1016; Goldman V. ^Oppenheim, 118 Ind. 95, 20 N. E. 635; Fleming's Heirs v. Hutchinson, 36 Iowa 519; Gardiner v. INIorse, 25 Maine 140; Fisher v. Hampton Transp. Co., 136 Mich. 218, 98 N. W. 1012, 112 Am. St. 358 (bankrupt sale) ; Wooton v. Hinkle, 29 Mo. 290; Durfee v. Moran, 57 Mo. 374; Mc- Clelland V. Citizens' Bank, 60 Nebr. 90, 82 N. W. 319 (note given to pre- vent bidding at chattel mortgage sale imen forcible) ; IMorris v. Woodward, 25 \. J. Eq. 32 ; Jones v. Caswell, 3 Johns. Cas. (X. Y.) 29, 2 Am. Dec. 134; Brisbane v. Adams, 3 N. Y. 129; Dudlev V. Little, 2 Ohio 504; Kine v. Turner, 27 Ore. 356, 41 Pac. 664; Slingluff V. Eckel, 24 Pa. St. 472; Barton v. Benson, 126 Pa. St. 431, 17 Atl. 642, 12 Am. St. 883 ; Camp v. Bruce, 96 Va. 521, 31 S. E. 901, 43 L. R. A. 146. 70 Am. St. 873 ; Ralph- snyder v. Shaw, 45 W. Va. 680, 31 S. E. 953 (trustee's sale). « Woodruff V. Berry, 40 Ark. 251; Swan V. Chorpenning, 20 Cal. 182; Ray V. Mackin, 100 111. 246; Conway V. Garden City Pav. &c. Co., 190 111. 89, 60 N. E. 82; Hunter v. Pfeiffer, 108 Ind. 197, 9 N. E. 124; Weld v. Lancaster, 56 Maine 453 ; Gibbs v. Smith, 115 Mass. 592; Hannah v. Fife, 27 Mich. 172; Boyle v. Adams, 50 Minn. 255, 52 N. W. 860, 17 L. R. A. 96; Gulick v. Ward, 10 N. J. L. 87, 18 Am. Dec. 389; Brooks v. Cooper, SO N. J. Eq. 761, 26 Atl. 978, 21 L. R. A. 617; Atcheson v. Mallon. 43 N. Y. 147, 3 Am. Rep. 678; Baird V. Sheehan, 38 App. Div. (N. Y.) 7, 166 N. Y. 631, 60 N. E. 1107, 56 N. Y. S. 228; Hardison v. Reel, 154 N. Car. 273, 70 S. E. 463, 34 L. R. A. (N. S.) 1098; McMullen v. Hoffman, 174 U. S. 639, 19 Sup. Ct. 839. "See Waldo v. Martin, 4 B. & C. 319; Elliott V. Richardson, L. R. 5 C. P. 744; Marshall v, Baltimore & Ohio R. Co., 16 How. (U. S.) 314. 14 L. ed. 953 ; Guernsey v. Cook, 120 Mass. 501 ; Smith v. Jownsend, 109 Mass. 500 ; Phippen v. Stickney, 3 Mete. (Mass.) 384; Gibbs v. Smith, 115 Mass. 592; Curtis v. Aspinwall, 114 Mass. 187, 19 Am. Rep. 332. An auctioneer at a fair and open sale struck off property to the highest bid- der. One who was interested in the sale of the property thought other- wise and wished the auctioneer to recry the property. The purchaser agreed to indemnify the auctioneer against all claims that might be brought against him if he would con- firm the sale. The sale was con- loy LEGALITV OF OBJECT. 760 a note given or other agreement entered into in consideration of forbearance of bidding at a sheriff's sale of real estate has been held to be without consideration on the ground that it is the policy of the law to encourage bidding at sales on execution."*" § 760. Bidders may combine resources. — But. on the other hand, an agreement between two or more persons that one shall bid on behalf of all the parties to the agreement, where the object of the agreement is not to stifle competition but to combine their resources so as to raise the purchase-money, or to enable them to make a division of the property, or to protect existing interests, or has for its object the accomplishment of any other equitable object, will be upheld."*^ § 761. One may bid for benefit of all. — Parties may agree that one shall bid for the benefit of all upon property about to be firmed. Agreement held valid. Carr V. Gooch. 1 Wash. (Va.) 260. See also, Auction Sales. "Jones V. Caswell. 3 Johns. Cas. (N. Y.) 29. 2 Am. Dec. 134. To same effect, Hallam v. Hoffman, 5 Kans. App. 303, 48 Pac. 602; Hamilton v. Hamilton, 2 Rich. Eq. (S. Car.) 379; Boiling V. Mullins, 111 Va. 250, 68 S. E. 982; Xitrophosphate Syndicate &c. V. Johnson, 100 Va. 774, 42 S. E. 995; Camp v. Bruce, 96 Va. 521, 31 S. E 901. 43 L. R. A. 146, 70 Am. St. 873 (purchaser bought rights of bid- der giving the latter advance on bid). See also. Ruis v. Branch (Ga.), 74 S. E. 1081. The policy of the law encourages free competition, and contracts in avoidance of that policy are void. Tones v. Caswell. 3 Johns. Cas. (N. Y.) 29. 2 Am. Dec. 134; Doolin v. Ward, 6 Johns. (N. Y.) 194; Thompson v. Davies, 13 Johns. (N. Y.) 112; National Bank v. Sprague, 20 N. J. Eq. 159; Morris V. Woodward. 25 N. J. Eq. 32. A contract for the sale of a decree for the foreclo.sure of certain mechanics' liens provided that the purchaser should give his notes for the consid- eration and should purchase the prop- erty on the sale under the decree, in case it did not bring more than called for by the decree, in which latter event the notes should be returned to the purchaser of the decree. The agreement was held not void as tend- ing to stifle competition at the sale under the decree. Spitzlev v. Rivard, 152 Mich. 670, 116 N. W.'547. 15 De- troit Leg. N. 391. One may contract to buy land at a foreclosure sale for an amount sufficient to cover the in- debtedness. Satterfield v. Kindlev, 144 N. Car. 455. 57 S. E. 145. *' Jenkins v. Frink, 30 Cal. 586, 89 Am. Dec. 134; Garrett v. Moss. 20 111. 549; Switzer v. Skiles, 3 Gilm. (111.) 529; Hunt v. Elliott, 80 Ind. 245, 41 Am. Rep. 794; Mallon v. Buster. 121 Kv. 379, 89 S. W. 257; Smith V. Ullman. 58 Md. 183; Phip- pen V. Sticknev, 3 Mete. (Mass.) 384; Gulick V. Webb, 41 Nebr. 706. 60 N. W. 13, 43 Am. St. 720; Olson v. Lamb. 56 Nebr. 104, 76 N. W. 433, 71 Am. St. 670; National Bank v. Sprague, 20 N. J. Eq. 150; De Baun V. Brand. 61 N. J. L. 624, 41 Atl. 958; Marie v. Garrison. 83 N. Y. 14; Hopkins v. Ensign. 122 N. Y. 144. 25 N. E. 306. 9 L. R. A. 731 ; Breslin V. Brown. 24 Ohio St. 565. 15 Am. Rep. 627; Smull v. Jones. 1 Watts. S: S. (Pa.) 128, 6 Watts. & S. (Pa.) 122; Kearnev v. Tavlor 15 How. (U. S.) 404. 14' L. ed.' 787: Wicker v. Hopnock. 6 Wall. (U. S.) 94. 18 L. ed. 752: Missisquoi Bank v. Sabin, 48 Vt. 239; Henderson v. Henrie, 61 § y62 CONTRACTS. . I08 sold at public auction which they desire to purchase together, either because they propose to hold it together or afterward to divide it into such parts as they wish individually to hold, neither desiring the whole, or for any similar honest or reasonable pur- pose ; but such agreement, if made for the purpose of preventing competition and reducing the price of the property to be sold be- low its fair value, is against public policy and illegal.** There is nothing in law or morals to prevent parties from uniting together in good faith to purchase property whether it be offered up at public auction or advertised for sale and bids from purchasers are invited.*^ And the mere fact that an agreement, entered into by parties having an interest in property about to be sold at public or judicial sale, with honest motives for the purpose of preserv- ing their interests, may incidentally restrict competition upon such sale, does not render the agreement illegal.^'' § 762. Bids on proposals for government work and the like. — The rule condemning as unlawful combinations which prevent bidding at auction sales is also applicable to proposals for government work in response to a call therefor or other public lettings, with a view to contract with the lowest bidder. And a combination of contractors under and by which the privilege of bidding for the work is secured by one without competition is against public policy and illegal, and if the combination results in W. Va. 183, 56 S. E. 369. In order Compare Fletcher v. Johnson, 139 to protect an existing interest in Mich. 51, 102 N. W. 278, 111 Am. property to be sold at public auction St. 401. one may lawfully agree not to bid at ^'' Marie v. Garrison, 83 N. Y. 14; such sale. De Baun v. Brand, 61 N. Delisi v. Ficarrotta, 135 N. Y. S. J. L. 624, 41 Atl. 958. 653; Barnes v. Morrison, 97 Va. 372, "Gibbs V. Smith, 115 Mass. 592; 34 S. E. 92,. See also, Hughes v. Phippen v. Stickney, 3 Mete. (Mass.) FoUz, 142 Mo. App. 513, 127 S. W. 384. See also, matter on this subject 112, in which it had been agreed that in the chapter on Offer and Accept- public property would be sold at ance Under Sale and Auction Sale. $20,000.00. Plaintiff was told that the An agreement by a prospective bid- board would rather sell to him. than der on property at a foreclosure sale to an out-of-town party with whom to sell the property to a third per- the board was thinking of contract- son, in case the former became an ing. Plaintiff then went to the other actual purchaser, was not illegal, un- party and offered to give $1000 for less it had for its object the preven- the withdrawal of the latter or to tion, competition, and the sacrifice of take $1,000 for his own withdrawal, the property to be sold. Venner v. The other party decided to give. Denver Union Water Co.. 40 Colo. Plaintiff brought suit on the prom- 212. 90 Pac. 623. 122 Am. St. 1036. ise. It was held that he might re- *» Smith v. Ullman, 58 Md. 183. cover. 109 LEGALITY OF OBJECT. § 763 a letting at an iinrcasonal)lc price it authorizes a rejection of the proposal or a repudiation of the contract. Where, however, a contracting hoard having sole power to act for the state and to re- ject proposals in case it deems them disadvantageous to the state, with full knowledge of all the facts, adjudges a proposal not ex- cessive in price or disadvantageous to the state, accepts it and enters into a contract in pursuance of it, the state is bound and cannot maintain an action to recover damages for the illegal com- bination, in the absence of any evidence that the board acted cor- ruptly or malum fide.^^ A secret partnership agreement to stifle or diminish competitive bidding on public work or letting is void.°" An agreement not to bid or influence any one else to bid for the service or labor of the inmates of a house of correction is against public policy and void, and no action will lie upon it even if the party letting the services has sustained no injuries by rea- son of making the agreement.^^ § 763. Rule further illustrated. — A combination among the principal banks of a county, by which a specified bank is to make a designated bid for public funds, the other banks agreeing to bid under the bid of the favored bank, the latter, on becoming the depositary, to parcel out the deposits among all the banks in the combination in given proportion, is a fraud on the county and invalid.^* The supreme court of North Carolina has decided a " People V. Stephens. 71 N. Y. 527. N. Y. S. 228, affd., 166 N. Y. 631, 60 "McMullan v. Hoffman, 69 Fed. N. E. 1107; Coverly v. Terminal Ware- 509 (fictitious bid made to give ap- house Co., 85 App. Div. (N. Y.) 488, pearance of competition) ; Hoffman 83 N. Y. S. 369, affd. 178 N. Y. 602, V. ^Ic.Mullen. 83 Fed. 372, 28 C C A. 70 N. E. 1097 (lease of dock belong- 178, 45 L. R. A. 410; affd., 174 U. S. ing to city of New York) ; Daily v. 639, 43 L. ed. 1117. 19 Sup. Ct. 839 Hollis. 27 Tex. Civ. App. 570, 66 S. (fictitious bid) ; Brady v. Yost, 6 W. 586 (contractors agreed as to Idaho 273, 55 Pac. 542; Hunter v. amount tliat eacli should hid; success- Pfeiffer, 108 Ind. 197, 9 N. E. 124; ful bidder to share profits). A con- Fdelen v. Newman. 5 Ky. L. 120 tract entered into by an administra- (combination among livery men to trix, which would induce her to dis- prevent competition between them- courage purchasers from attending selves in bidding for contract to carry her sale as administratrix, is against mail to and from terminal office of public policy. Beatrice Creamery Co. a railroad companv) ; Hannah v. v. Fitzgerald, 70 Nebr. 308 97 N. W. Fife, 27 Mich. 172; Pendleton v. As- 301. bury, 104 :\Io. App. 723, 78 S. W. 651 " Gibbs v. Smith, 115 :\Iass. 592. (combination between newspapers of "In re Salmon, 145 Fed. 649. To countv) ; Whalen v. Harrison. 26 same effect, In re Blake 150 Fed Mont. 316. 67 Pac. 934; Baird v. 279; Henrv Countv v. Citizens' Bank Sheehan, 38 App. Div. (N. Y.) 7, 56 of Windsor, 208 Mo. 209, 106 S. W. § 764 CONTRACTS. IIO unique case under this subject." Briefly the facts were: Plaintiff submitted a bid for a contract to carry the mail. He requested the notary who swore him to the bid not to divulge the amount thereof. The bidder claimed that the notary divulged the amount of his bid to another, who underbid him, because of which he lost the contract. He sued the notary for damages. Recovery was denied. The court said: "The authorities clearly recognize the principle that where an agreement, without regard to its form, is made for the purpose of preventing free and fair competition, or of stifling or chilling biddings at public sales, or in the letting of contracts by the government, or for the purpose of giving undue advantage to either of the parties thus engaged in dealing with reference to the biddings, it is contrary to public policy and void." A contract for paving a street, providing that the brick shall be of a particular kind, manufactured by only one person, there being bricks of the same kind manufactured by other per- sons in the vicinity, is contrary to public policy as creating a monopoly and restricting free competition.^^^ § 764. Honest co-operation permitted. — However, an agreement between two parties, one of whom has already filed his bid on a contract for a public improvement, to do the work in partnership in case the contract shall be awarded to either, the same to enure to the benefit firm, is not void as against public policy when there was no intention to influence the bid of either party or to stifle fair competition.^*' Two or more contractors may openly and honestly co-operate for the purpose of bidding on and securing a contract for the construction of a public 622, 14 L. R. A. (N. S.) 1052n; Kans. 196, 84 Pac. 1034; Atkin v. Wy- Henry County v. Farmers' Bank of andotte Coal &c. Co., IZ Kans. 768,84 Windsor, 208 Mo. 238, 106 S. W. 630, Pac. 1040 ; Shoenberg v. Field, 95 14 L. R. A. (N. S.) 1052n. See also. Mo. App. 241, 68 S. W. 945; Smith Pittsburgh &c. Const. Co. v. Monon- v. Syracuse Imp. Co., 161 N. Y. 485, gahela &c. Dredging Co., 139 Fed. 56 N. E. 1077. See also. Swift v. 78(J. The court said further: "In ad- St. Louis, 180 ^lo. 80. 79 S. W. 172; ministering the law, courts have noth- Curtice v. Schmidt, 202 Mo. 703, 101 jng to do with the moral quality of S. W. 61 ; Dickey v. Holmes, 208 Mo. an act where no legal right is in- 664, 106 S. W. 511; 2 Elliott Rds. & vaded." Sts. ('3d ed.), § 712. " Hardison v. Reel, 154 N. Car. "" Pittsburgh Dredg. &c. Co. v. Mo- 273, 70 S. E. 463. nongahela &c. Dredg. Co.. 139 Fed. "a National Surety Co. v. Kansas 780; Rreslin v. Brown, 24 Ohio St. City Hydraulic Press Brick Co., 11 565, 15 Am. Rep. 627. Ill LEGALITY OF OBJECT. § 765 work." A contractor also has the right to abandon negotiations and permit another to obtain the contract when there is no cor- rupt agreement between the parties.^* But it is against pubhc policy for a contractor to hire another to withdraw his bid."'" Contracts to stifle competition among applicants for a public franchise are also unen forcible.'^'' § 765. Agreements . exempting from liability for negli- gence — Contracts with carrier. — Cases on this subject may be classified under two heads, namely, contracts whereby a car- rier seeks to contract against his own negligence, and agreements whereby an employer seeks to contract against liability resulting from the negligent injury of his employe. Contracts of the first class may be further subdivided into those whereby the carrier attempts to contract against its negligence with reference to per- sonal property entrusted to its care for transportation, and con- tracts whereby it seeks to limit its liability to passengers. It has been repeatedly held that carriers of goods cannot contract for exemption from liability from losses and damages happening from the negligence of themselves or their servants — that it is against public policy to permit them to do so.^^ 171, 52 Atl. 610. 56 L. R. A. 884. 96 Am. St. 192; Liverpool &c. Ins. Co. V. McNeill, 89 Fed. 131. 7>2 C C. A. 173; Berry v. Cooper. 28 Ga. 543; Georgia R. Co. v. Gann. 68 Ga. 350 ; Baltimore &c. R. Co. v. Ragsdale, 14 Ind. App. 406. 42 N. E. 1106; Cleve- land &c. R. Co. V. Heath, 22 Ind. App. 47, 53 N. E. 198; Indianapolis &c. R. Co. V. Allen, 31 Ind. 394; Michigan &c. R. Co. v. Heaton, 37 Ind. 448, note; Missouri Vallev R. Co. V. Caldwell, 8 Kans. 244; St. Louis &:c. R. Co. V. Trihbev, 6 Kans. .■\pp. 467, 50 Pac. 458; Louisville &c. R. Co. V. Brownlee. 14 Bush. (Kv.) 590; Louisville &-c. R. Co. v. Hedger. 9 Bush (Kv.) 645. 15 Am. Rep. 740; Simon v. The Fung Shuey 21 La. Ann. 363: Fillebrown v. Grand Trunk R. Co.. 55 Maine 462, 92 Am. Dec. 606 (if such notice is expressly or impliedly assented to by the owner^l : ^forse v. Canadian Pac. R. Co.. 97 :Maine 11. 53 Atl. 874; Cox v. Ver- mont Cent. R. Co.. 170 Mass. 129. 49 N. E. 97, 9 Am. & Eng. R. Cas. (N. " See also. Virginia Bridge &c. Co. V. Crafts, 2 Ga. App. 126, 58 S. E. 2)12 ; State v. FoUmer, 4 Nebr. (unof.) 376, 94 N. \V. 103 (bids at leasing of public lands). One on sell- ing out his business may agree not to bid on public work for a desig- nated county for a period of five vears. Trentman v. Wahrenburg, 30 Ind. App. 304, 65 N. E. 1057. "Moore v. First Xat. Bank, 139 Ala. 595. 36 So. IV. " Conwav v. Garden Citv Pav. &c. Co.. 190 Hi. 89. 60 N. E. 82. ** Hver v. Richmond Traction Co., 80 Fed. 839, 26 C C. A. 175. "^ Cobban v. Canadian &c. R. Co., 23 Ont. App. 115; South &c. R. Co. v. Henlein. 52 Ala. 606; Louisville Src. R. Co. V. Oden. SO Ala. 38; St. Louis R. Co. V. Jones, 93 Ark. 537. 125 S. \y. 1025. 137 Am. St. 99; Kansas Citv Southern R Co. v. Carl. 91 Ark. 97: 121 S. \V. 932. 134 Am. St. 56; Milton v. Denver &c. R. Co.. 1 Colo. App. 307. 2^ Pac. 22; Mears V. New York &c. R. Co., 75 Conn. § y66 CONTRACTS. 112 §766. Agreements exempting from liability for negli- gence — Reason for the rule. — This liabihty on the part of the carrier rests on the old common-law doctrine that a bailee for hire became an insurer, on the articles committed to his care, against loss or damage from any cause other than an act of God, the law, the public enemy or an act of the shipper, or some in- herent vice in the article itself,"'^ and, also, on a recognition of the inequality of the parties to the contract of shipment at the time of its execution. At this time it is obvious that a shipper is in no position to stand out for another contract and be redressed in S.) 591; Sanford v. Housatonic R. press Co., 93 U. S. 174, 23 L. ed. 872; Co 11 Cush. (Alass.) 155; Christen- Southern Express Co. v. Caldwell, 21 son V. American Express Co., 15 Gil. Wall. (U. S.) 264, 22 L. ed. 556 (car- (Minn.) 208. 2 Am. Rep. 122; Hull rier shipped by more dangerous V. Chicago &c. R. Co., 41 Alinn 510, route, contrary to shipper's instruc- 43 N W 391 5 L. R. A. 587, 16 Am. tions, and goods were lost) ; Rintoul St 722, 40 Am. & Eng. R. Cas. 104; v. New York &c. R. Co., 21 Blatchf. George v. Chicago &c. R. Co., 57 Mo. (U. S.) 439, 17 Fed. 905; Maslin v. App. 358; Ketchum v. American &c. Baltimore &c. R. Co., 14 W. Va. 180, Exp. Co., 52 AIo. 390; Johnson v. overruling Baltimore &c. R. Co. v. Alabama &c. R. Co.. 69 Miss. 191, Rathbone, 1 W. Va. 87, 35 Am. Rep. 11 So 104, 30 Am. St. 534; Nelson 748; Berry v. West Virginia &c. R. V. Great Northern R. Co., 28 Mont. Co., 44 W. Va. 538, 30 S. E. 143, 67 297, 72 Pac. 642; Omaha &c. R. Co. Am. St. 781, 11 Am. & Eng. R. Cas. V. Crow, 54 Nebr. 747, 74 N. W. (N. S.) 103; Black v. Goodrich 1066, 69 Am. St. 741 ; Union Pac. R. Transp. Co., 55 Wis. 319, 13 N. W. Co. V. Langan, 52 Nebr. 105, 71 N. 224, 42 Am. Rep. 713; Densmore W. 979; Paul v. Pennsylvania R. Co., Commission Co. v. Duluth &c. R. Co., 70 N. J. L. 442, 57 Atl. 139; Gardner 101 Wis. 563, 77 N. W. 904. This V. Southern R. Co., 127 N. Car. 293, principle applies to all persons and 27 S. E. 328; Parker v. Atlantic &c. corporations, such as carriers and R. Co. 133 N. Car. 335, 45 S. E. 658, warehousemen, engaged in receiving 63 L. R. A. 827 ; Cincinnati &c. R. and caring for the property of others. Co. V. Berdan, 22 Ohio C. C 326, 12 Gulf Transit Co. v. United States, Ohio C. D. 481 ; Davidson v. Graham, 43 Ct. CI. (U. S.) 183. See also, 2 Ohio St. 131 : Normile v. Oregon 5 Thomp. Neg., § 6507, et seq. &:c. R. Co., 41 Ore. 177, 69 Pac. 928; "'"This is a politick establishment, Aliam V. Pennsvlvania R. Co., 3 Pa. contrived by the policy of the law. Super. Ct. 335; Farnham v. Camden for the safety of all persons, the &c. R. Co., 55 Pa. St. 53; Ballou v. necessity of whose affairs oblige them Earle, 17 R. I. 441, 22 Atl. 1113, 14 to trust these sorts of persons, that L. R.' A. 443, 33 Am. St. 881 ; John- they may be safe in their way of stone V. Richmond &c. R. Co., 39 S. dealing; or else these carriers might Car. 55. 17 S. E. 512; Springs v. have an opportunity of undoing all South Bound R. Co.. 46 S. Car. 104, persons that had any dealings with 24 S. E. 166; Bird v. Southern them, by contriving with thieves, etc., R. Co., 99 Tenn. 719. 42 S. W. and yet doing it in such clandestine 451, 63 Am. St. 8.S6; Houston manner as would not be possible to &c. R. Co. V. Williams (Tex. be discovered. And this is the rea- Civ. App.), 31 S. W. 556: In- son the law is founded upon in that ternational &c. R. Co. v. Foltz. 3 point." Coggs v. Bernard, 2 Lord Tex. Civ. App. 644, 22 S. W. 541 ; Raym. 909. Bank of Kentucky v. Adam's Ex- 113 LEGALITY OF OBJECT. 1(^7 the court. His business, if he is a business man, will not allow such a course of conduct."^ It is held that the liability of a car- rier for negligence is not lessened by the fact that the goods de- stroyed through its negligence were insured by the shipper.*'* § 767. Agreements exempting from liability for negli- gence — Evasion by stipulation that goods are shipped at owner's risk. — A common carrier is not released from liabil- ity for damage occurring through his own negligence, by stipu- lating that the goods are shipped at the "owner's risk." At most this would only protect him against loss occurring from the ordinary and known risks of transportation."^ § 768. Exempting from liability — Evasion by stipulation against presumption of negligence. — It has also been held that the carrier will not be permitted to contract that no presump- tion of negligence shall arise from non-delivery of goods received for shipment ; since such a stipulation would result in the abro- gation by contract of the well-settled rules of evidence.**" "°"If the customer had any real freedom of choice, if he had a rea- sonable and practicable alternative, and if the employment of the carrier were not a public one, charging him with the duty of accommodating the public in the line of his employment, then, if the customer chose to assume the risk of negligence, it could with more reason be said to be his private affair, and no concern of the public. But the condition of things is en- tirely different, and especially so un- der the modified arrangements which the carrying trade has assumed. The business is mostly concentrated in a few powerful corporations, whose position in the body politic enables them to control it. They do. in fact, control it, and impose such condi- tions upon travel and transportation as they see fit, which the public is compelled to accept. These circum- stances furnish an additional argu- ment, if any were needed, to show that the conditions imposed by com- mon carriers ought not to be adverse (to say the least') to the dictates of public policy and morality. The status and relative position of the 8 — CoNTR.\CTS, Vol. 2 parties render any such conditions void. Contracts of common carriers, like those of persons occupying a fiduciary character, giving them a position in which they can take un- due advantage of the persons with whom they contract, must rest upon their fairness and reasonableness." N. Y. Cent. R. Co. v. Lockwood, 17 Wall. (U. S.) 357, 21 L. ed. 627. "•^.lerrick v. Branard, 3 Barb. (N. Y.) 547; Burnside v. Union Steam Boat Co., 10 Rich. (S. Car.) 113. "' Pigeon V. Dominion Express Co., Rap. Jud. Que.. 11 Super. Ct. 276; Aaronson v. Pennsvlvania R. Co., 23 Misc. CN. Y.) 666, 52 N. Y. S. 95; Nashville &c. R. Co. v. Jackson, 6 Heisk. (Tenn.) 271. Compare, how- ever, with the case of Ellison v. Adams Exp. Co.. 245 111. 410, 92 N. E. 277, in which the consignor re- fused to divulge the value of the goods consigned to an express com- pany for shipment. The more val- uable the goods the higher the rate. The court refused to aid the shipper to recover the true value of the goods. "*■ Southern Pac. Co. v. Phillipson § 769 CONTRACTS. II4 §769. Exempting from liability — Rule in New York. — The courts of New York seem to stand alone in opposition to the sound and wholesome doctrine in regard to contracting against neslisence. In that state a carrier may stipulate for exemption from liability for losses resulting from his own negligence. There the position is taken that men must be permitted to make their own agreements, and that it is no concern of the public upon what terms the individual chooses to have his goods carried. "To say the parties have not a right to make their own contract and to limit the precise extent of their respective risks and liabilities, in a matter in no way affecting the public morals or conflicting with the pubHc interests, would, in my judgment, be an unwar- rantable restriction upon trade and commerce and a most palpable invasion of personal right."" But the courts require that this exemption should be expressly stated in the contract"* and the intent to claim exemption so plainly and distinctly expressed that it cannot be misunderstood by the shipper.*''* § 770. Limitation of liability to damages resulting from gross negligence allowed in some states. — In Illinois the (Tex. Civ. App.), 39 S. W. 958, 2 43 N. Y. St. 65, 60 N. Y. Super. Ct. Am. Neg. 652. A stipulation in the 117; Jennings v. Grand Trunk R. contract for the shipment of cattle, Co., 127 N. Y. 438, 28 N. E. 394, 10 that a failure of the shipper to fur- Rail. & Corp. L. J. 409, 49 Am. & nish to each conductor in whose Eng. R. Cas. 98; Knell v. United charge the cattle are placed, a state- States & Brazil S. S. Co., 33 N. Y. ment of their condition, shall be con- Super. Ct. 423; Magnin v. Dinsmore. elusive evidence that they are in good 56 N. Y. 168; Prentice v. Decker, 49 condition, is unreasonable and void. Barb. (N. Y.) 21; Zimmer v. New Missouri &c. R. Co. v. Carter, 9 Tex. York &c. R. Co., 42 N. Y. St. 63, Civ. App. 677, 29 S. W. 565. 16 N. Y. S. 631. *' Parker, J., in Dorr v. New Jer- «' Holsapple v. Rome, W. & O. R. sey Steam Nav. Co., 1 Kernan (N. Co., 86 N. Y. 275; Nicholas v. New Y.) 485. See also, Campe v. Weir, York &c. R. Co., 89 N. Y. 370. See 28 Misc (N Y.) 243, 58 N. Y. S. also. Hooper v. Wells Fargo & Co., 1082 ; Condict v. Grand Trunk R. Co., 27 Cal. 11,85 Am. Dec. 211. A 54 N. Y. 500; Fasev v. International stipulation in a receipt that the car- Nav. Co., 77 App. f)iv. (N. Y.) 469, rier acted as forwarder only, and 79 N. Y.'S. 1103; Falkenau v. Fargo, should not be liable for any loss or 44 How. Pr. CN. Y.) 325, 35 N. Y. damage except from fraud or gross Super. Ct. 332; Mvnard v. Syracuse negligence, will not exempt such car- &-C. R. Co., 7 Hun (N. Y.) 399, revd. rier from liability or failure to re- 71 N. Y. 180, 27 Am. Rep. 28; Sher- turn the goods when ordered to do man v. Inman Steamship Co., 26 so by the shipper, during their trans- Hun (N. Y.) 107; Wilson v. New portation. Rosenthal v. Weir, 54 York &c. R. Co., 27 Hun (N. Y.) App. Div. fN. Y.) 275, 66 N. Y. S. • 149 841, afifd. 170 N. Y. 148, 63 N. E. 65, ''Giles V. Fargo, 17 N. Y. S. 476, 57 L. R. A. 527. 115 LEGALITY OF OBJECT. § 77I cases indicate a leaning in favor of allowing the exemption from liability for ordinary negligence of sei'vants; but they deny the right to an exemption from liability for damage resulting from gross negligence of the carrier or his employes.'" This is also the view of the courts in Georgia^^ and South Dakota; in the latter state it is claimed tliat the statute allowing the carrier to limit his liability by express contract permits stipulations against liability for ordinary negligence." This doctrine is not un- qualifiedly accepted by other courts of the United States. The rule supported by reason and authority denies the carrier the right to contract for an exemption where the loss has been occa- sioned by negligence on his part, or on the part of his servants; and the courts recognize no distinction in the degrees of the neg- ligence, but hold that the carrier can no more stipulate for a slight degree of negligence than he can for a gross degree." §^71. Limiting common-law liability. — A distinction must be drawn, how^ever, between contracts entered into by a carrier against its own negligence and tliose contracts by which it limits its common-law liability. In the absence of a statute to the contrary, while a carrier cannot contract against liability for its own negligence it may by special contract limit its common- law liability. Thus it may contract against liability from loss by fire not caused by the carrier's negligence.'* It may limit its '"Arnold v. Illinois Cent. R. Co., stock may be rejected. United States 83 111. 273. 25 Am. Rep. 386; Chicago Express Co. v. Burke, 94 111. App. & N. W. R. Co. V. Calumet Stock 29. Farm. 194 111. 9, 61 N. E. 1095. 8S "Cooper v. Raleigh &c. R. Co., Am. St. 68n. affg. 96 111. App. 337; 110 Ga. 659, 36 S. E. 240. Chicago B. & Q. R. Co. v. Miller, 79 " :\Ieucr v. Chicago &c. R. Co., 5 111. App. 473 ; Chicago B. & N. R. Co. S. Dak. 568, 59 N. W. 945, 25 L. R. V. Hawk. 42 111. App. 322, affd. 147 A. 81. 49 Am. St. 898. 111. 399, 35 N. E. 139. See also, "'Michigan Southern & Northern Cleveland. C. C. & St. L. R. Co. v. &c. R. Co. v. Heaton. 37 Ind. 448; Ncwlin. 74 111. .A.pp. 638; Chicago & Steamboat New World v. King. 16 A. R. Co. V. Grimes. 71 111. App. 397 j How. (U. S.) 469. 14 L. ed. 1019. Baltimore &c. R. Co. v. Ross, 105 '* Ellison v. Adams Exp. Co.. 245 111. App. 54. In accepting live stock 111. 410. 92 N. E. 277 (holding that at for transportation, tlie carrier un- common law a carrier might by spe- dertakes to use ordinary care for its cial contract stipulate against liabil- safcty. commensurate with its nature ity for any loss not the result of its and condition ; and all contracts in own negligence or that of its serv- which the carrier undertakes to limit ants) ; Johnson v. West Jersey & its duty to less than the use of or- Seashore R. Co., 78 N. J. L. 529, 74 dinary care for the safety of such Atl. 496, 138 Am. St. 625. § 7/2 CONTRACTS. ii6 common-law liability in the transportation of live stock."^^ Con- tracts of this character are, however, foreign to the subject under discussion and for that reason will not be given further consider- ation. Mention was made of ihem merely to point out the dis- tinction. § 772. Validity of stipulation exempting carrier from lia- bility to passenger for negligence. — It is settled beyond dispute that where a carrier is under a duty to carry a passenger and it undertakes for a reward to perform that duty it cannot by contract legally exempt or relieve itself from liability arising out of the negligence of itself or servants. '° There is a conflict of "'Louisville & N. R. Co. v. Smitha, 145 Ala. 686, 40 So. 117; Cooper v. Raleigh &c. R. Co., 110 Ga. 659, 36 S. E. 240; Central of Georgia R. Co. V. Hall, 124 Ga. 322, 52 S. E. 679, 4 L. R. A. (N. S.) 898, 110 Am. St. 170; Chicago & N. W. R. Co. v. Cal- umet Stock Farm, 194 111. 9, 61 N. E. 1095, 88 Am. St. 68n ; Terre Haute & L. R. Co. V. Sherwood, 132 Ind. 129, 31 N. E. 781, 17 L. R. A. 339n, 32 Am. St. 239; Hudson V. Northern Pac. R. Co., 92 Iowa 231, 60 N. W. 608, 54 Am. St. 550 ; Kansas Pac. R. Co. v. Reynolds, 8 Kans. 623; ]\IcFadden v. Missouri Pac. R. Co., 92 ^lo. 343, 4 S. W. 689, 1 Am. St. Rep. 721; Smith v. Chicago &c. R. Co., 112 Uo. App. 610, 87 S. W. 9; Chicago R. I. & P. R. Co. V. Witty, 32 Nebr. 275, 49 N. W. 183, 29 Am. St. 436; Normile V. Oregon Nav. Co., 41 Ore. 177, 69 Pac. 928; Louisville & N. R. Co. v. Dies, 91 Tenn. 177, 18 S. W. 266, 30 Am. St. 871 ; Gulf C. & S. F. R. Co. V. Trawick, 68 Tex. 314, 4 S. W. 567, 2 Am. St. 494; Gulf C. & S. F. R. Co. V. Dunman (Tex. Civ. App.), 31 S. W. 1070; Norfolk &c. R. Co. V. Harman, 91 Va. 601, 22 S. E. 490, 44 L. R. A. 289, 50 Am. St. 855; Abrams v. Milwaukee &c. R. Co., 87 Wis. 485, 58 N. W. 780, 41 Am. St. 55; Notes to Clarke v. Rochester &c. R. Co., 67 Am. Dec. 213; Missouri Pac. R. Co, v. Pagan, 72 Tex. 127, 9 S. W. 749, 2 L. R. A. 75. 13 Am. St. 776; Heller v. Chicago & G. T. R. Co., 109 ^lich. 53, 66 N. W. 667, 63 Am. St. 541; Chicago & N. W. R. Co. v. Calumet Stock Farm, 194 111. 9, 61 N. E. 1095, 88 Am. St. 68n. ■"In re Brantford City (N. Y.), 29 Fed. 373; Pittsburgh &c. R. Co. v. Higgs, 165 Ind. 694, 76 N. E. 299, 4 L. R. A. (N. S.) 1081; Hart v. Chicago & N. W. R. Co., 69 Iowa 485, 29 N. W. 597; Coppock v. Long Island R. Co., 89 Hun (N. Y.) 186, 69 N. Y. St. 11, 34 N. Y. S. 1039; Railroad Co. v. Lockwood, 17 Wall. (U. S.) 357, 21 L. ed. 627; Railroad Co. V. Stevens, 95 U. S. 655, 24 L. ed. 535 ; Phoenix Ins. Co. v. Erie & W. &c. Co., 117 U.S. 312, 29 L. ed. 873, 6 Sup. Ct. 750 ; Inman v. South Caro- lina R. Co., 129 U. S. 128, 32 L. ed. 612, 9 Sup. Ct. 249; Davis v. Chi- cago &c. R. Co., 93 Wis. 470, 67 N. W. 16, 33 L. R. A. 654, 57 Am. St. 935; Annas v. Milwaukee N. R. Co., 67 Wis. 46, 30 N. W. 282, 58 Am. Rep. 848. In New York a contract exempting from liability for negli- gence of employes is held effective. Nicholas v. New York &c. Co., 89 N. Y. 370. The English rule is dif- ferent from the American. M'Cance v. London &c. R. Co., 7 Hurl. & N. 477; Hall v. North Eastern &c. Co., L. R. 10 Q. B. 437; Glenister v. Great Western R. Co., 29 L. T. (N. S.) 423 ; McCawley v. Furness R. Co., L. R. 8 Q. B. 57; Slim v. Great North- ern &c. Co., 14 C. B. 647; Taubman V. Pacific &c. Navigation Co., 26 L. T. (N. S.) 704; Austin v. Manchester &c. R. Co., 10 C. B. 454. 117 LEGALITY OF OBJECT. § 111 authority, however, on the question as to whether or not a carrier may exempt itself from liabihty for neghgence when it carries such passengers gratuitously. In many jurisdictions the courts hold that such a stipulation is void and not binding on the person using the pass," and that the carrier is liable for injuries negli- gently inllictcd upon a person using a pass containing such a stipulation. But in the states of New York,'* and Washington,'* and in a number of other states, such stipulations are held valid, at least where the pass is gratuitous, and the carrier exempted from liability from acts of negligence resulting in injury to the person using the pass. The rule in England is also to the effect that the carrier may make a valid contract exempting itself from liability for injuries negligently inflicted upon a person rid- ing on a free pass.^° § 773. Persons riding on passes — Basis of decisions. — The authorities which hold that such stipulations are invalid rest upon the doctrine that it is against public policy for one to con- tract exempting himself from liability for his future negligence.®\ "Railroad Co. v. Lockwood, 17 Wall. (U. S.) 357, 21 L. ed. 627; Railway Co. v. Stevens, 95 U. S. 655, 24 L. ed. 535; Mobile &c. R. Co. v. Hopkins. 41 Ala. 486, 94 Am. Dec. 607; Solan v. Chicago &c. R. Co., 95 Iowa 260. 63 X. W. 692, 28 L. R. A. 718. 58 Am. St. 430; Dovle v. Fitchburg R. Co., 162 Mass. 66, 11 N. E. 770. 25 L. R. A. 157, 44 Am. St. 335 ; Starr v. Great Northern R. Co., 67 Minn. 18, 69 N. \V. 632; Car- roll V. Missouri Pac. R. Co., 88 Mo. 239. 57 Am. Rep. 382; Cleveland P. P. A. R. Co. V. Curran. 19 Ohio St. 1, 2 Am. Rep. 362 ; Pennsylvania R. Co. V. Henderson, 51 Pa. St. 315; Buffalo &c. R. Co. v. O'Hara (Pa.), 9 Am. & Eng. R. Cas. 317; Ft. Worth &c. R. Co. v. Rogers, 21 Tex. Civ. App. 605, 53 S. \^^ 366; Gulf C. & S. F. R. Co. V. McGowan, 65 Tex. 640. 26 Am. & Eng. R. Cas. 274. But several of these cases are based, at least in part, upon a statute. See also, Yazoo & M. V. R. Co. v. Grant, 86 Miss. 565. Z"^ So. 502. 109 Am. St. nZ; Norfolk &c. R. Co. v. Tanner. 100 Va. 379, 41 S. E. 721. A child who rides and of whom no fare is demanded because of his age is a passenger. Southern R. Co. v. Lee, 30 Ky. L. 1360, 101 S. W. 307, 10 L. R. A. (N. S.) 837. To same effect, Ball v. Mobile &c. Co., 146 Ala. 309, 39 So. 584, 119 Am. St. 11. " Wells V. New York &c. R. Co., 24 N. Y. 181 ; Poucher v. New York &c R. Co.. 49 N. Y. 263, 10 Am. Rep 364; Perkins v. New York &c. R Co., 24 N. Y. 196, 82 Am. Dec. 281 Kenney v. New York &c. R R. Co., 125 N. Y. 422. 26 N. E. 626; Ulrich V. New York &c. R. Co., 108 N. Y. 80. 15 N. E. 60. 2 Am. St. 369. ^'Muldoon v. Seattle &c. R. Co., 7 Wash. 528, 35 Pac. 422. 22 L. R. .'\. 794. 38 Am. St. 901, 9 Lewis Am. R. & Corp. 715 and note. See also, Payne v. Terre Haute &c. R. Co., 157 Ind. 616, 56 L. R. A. 472, and cases cited. *°IMcCaroley v. Furness R. Co.. L. R. 8 Q. B. 57; Gallin v. London &c. R. Co., L. R. 10 Q. B. 212; Hall v. North Eastern R. Co.. L. R. 10 Q. B. 437. "Mobile &c. R. Co. v. Hopkins, 41 Ala. 486. 94 Am. Dec. 607; Finn v. Philadelphia &c. R. Co.. 1 Houst. (Del.) 469; Ohio &c. R. Co. v. Nick- § 774 CONTRACTS. Il8 The authorities which hold the stipulations valid and binding upon the person using the pass rest upon the theory that the car- rier, when it issues a mere gratuitous pass, and does a thing which the law does not require it to do, has a right to stipulate against liability, and that by so doing no principle of public policy is con- travened.^" § 774. Rule given further consideration. — In such a case since the person who receives the pass gets something which he is not entitled to demand it seems but just that the carrier may rightfully limit its liability, and that the person who receives the gratuity should assume the risk accompanying it. In some of the cases usually cited as opposed to this doctrine the pass was not in fact gratuitous, but for it some consideration, although in- direct, was yielded, and it is evident that such cases are essentially different from cases in which a pass is issued as a mere gift, or donation. In most of the states it is held that if the pass is not a pure gratuity, but is one for which some consideration has been paid, then a stipulation against liability is void. Such is the rule where passes have been issued to drovers or persons accompan}^- ing shipments to care for the same during transit. In such cases the pass is not a mere gratuity but one for which some considera- tion has been paid and hence the person using the pass may be justly regarded as a passenger for hire.^^ less, 71 Ind. 271 ; Carroll v. Missouri '' Little Rock & Ft. S. R. Co. v. Pac. R. Co., 88 Mo. 239, 57 Am. Miles, 40 Ark. 298, 48 Am. Rep. 10: Rep 382; Graham v. Pacific R. Delaware &c. R. Co. v. Ashley, 67 Co., 66 Mo. 536; Pennsylvania R. Fed. 209, 14 C. C. A. 368; Water- Co. V. Henderson, 51 Pa. St. 315; bury v. New York &c. R. Co., 17 Gulf C. & S. F. R. Co. V. McGowan, Fed. 671 ; Chicago M. & St. P. R. 65 Tex. 640; Missouri &c. R. Co. v. Co. v. Carpenter, 56 Fed. 451, 5 C. Ivy 71 Tex 409 9 S. W. 346, 1 L. C. A. 551 ; Cleveland P. & A. R. Co. R. A. 500, 10 Am. St. 758, Z1 Am. & v. Curran, 19 Ohio St. 1, 2 Am. Rep. Enff R Cas. 46; Saunders v. Sou- 362; New York Cent. R. Co. v. Lock- thern Pac. R. Co., 13 Utah 275, 44 wood, 17 Wall. (U. S.) 357, 21 L. Pac. 932. ed- 627; Saunders v. Southern Pac. *= Rogers v. Kennebec Steamboat R. Co., 13 Utah 275, 44 Pac. 932; Co., 86 Maine 261, 29 Atl. 1069, 25 Sprigg's Admr. v. Rutland R. Co., V L R A 491- Quimby v. Boston &c. Vt. 347, 60 Atl. 143; Maslm v. Bal- R. Co.. 150 Mass. 365. 23 N. E. 205, timore &c. R. Co.. 14 W. Va. 180, 5 L. R. A. 846; Muldoon v. Seattle 35 Am. Rep. 748; Lawson v. Chicago &c R. Co., 7 Wash. 528, 35 Pac. 422, &c. R. Co., 64 Wis. 447, 24 N. W. 22 L. R. A. 794, 38 Am. St. 901. See 618, 54 Am. Rep. 634. It has been also. Duncan v. Maine Cent. R. Co.. held otherwise in New York. Pou- 113 Fed. 508; Marshall v. Nashville cher v. New York &c. R. Co.. 49 N. R & Light Co., 118 Tenn. 254, 101 Y. 263, 10 Am. Rep. 364. See Gard- S. W. 419, 9 L. R. A. (N. S.) 1246. 119 LEGALITY OF OBJECT. § 77. §775. Degrees of negligence. — In some of the courts a distinction is made between the different degrees of negligence, the stipulation creating the exemption being held valid as to ordi- nary negligence but not as to gross negligence.®* As already inti- mated, however, such distinctions seem untenable, at least as a general rule. § 776. Who is a passenger. — It has been held that an ex- press messenger carried by tlie railroad under a contract with the express company is a passenger for hire and that consequently the railroad company cannot contract releasing itself from lia- bility to such express messenger.^^ Mail agents and postal clerks are also passengers.*" It is held, however, that railroads are under no obligation to haul the cars of a sleeping-car company and that it may require the latter to indemnify it against lia- bility for personal injuries received by the sleeping-car company's employes and that such contract of indemnity is valid and is not a contract against the negligence of the railroad company.*^ On ner v. New Haven & Northampton Co., 51 Conn. 143. 50 Am. Rep. 12. "Illinois Cent. R. Co. v. Read, Z7 111. 484, 87 Am. Dec. 260; Arnold v. Illinois Cent. R. Co., 83 111. 272>, 25 Am. Rep. 383. (But see Illinois Cent. R. Co. V. Beebe. 174 111. 13. 50 N. E. 1019, 43 L. R. A. 210, 66 Am. St. 253). Pennsylvania R. Co. v. Mc- Closkey, 23 Pa. St. 526. See also. Annas v. Milwaukee &c. R. Co.. 67 Wis. 46. 30 X. W. 282, 58 Am. Rep. 848, 27 Am. & Eng. R. Cas. 102. Or- dinarily, it is the carrier's duty to carry the baggage of its passengers subject, of course, to the reasonable rules of the company as to quantity and character. See French v. Mer- chants &c. Co.. 199 Mass. 433, 85 N. E. 424. 19 L. R. A. (N. S.) 1006 and note. 127 Am. St. 506. "Davis V. Chesapeake &c. R. Co., 122 Kv. 528, 29 Kv. L. 53. 92 S. W. 339, 5 L. R. A. (N. S.) 458. 121 Am. St. 481. But sec Louisville &c. R. Co. V. Keefer, 146 Ind. 21. 44 N. E. 796. 38 L. R. A. 93, 58 Am. St. 348; Pittsburgh &c. R. Co. v. Mahonev, 148 Ind. 196, 46 N. E. 917, 47 N. E. 464. Compare with the case of Piper V. Boston & M. R. Co., 75 N. H. 435, 75 Atl. 1041, in which a con- tract by an employe of an express company to release the defendant railroad company for liability for in- juries caused by its negligence or the negligence of its servants, was held severable, the invalidity of the former provision not affecting the validity of the latter. See, however, Peter- son V. Chicago &c. R. Co.. 119 Wis. 197, 96 N. W. 532, 100 Am. St. 879. Railway company may by contract with the express company indemnify against liability for injuries inflicted on expressmen. See also, post. § 776. A caretaker in charge of a shipment of cattle has been held a passenger and a contract exempting the railroad company from damages for his negligent injury invalid. Sprigg's Admr. v. Rutland &c. R. Co., 77 Vt. 347. 60 Atl. 143. "4 Elliou R. R. (2d ed.). § 1578a. *' Chicago &c. R. Co. v. Hamler, 215 111. 525. 74 N. E. 705. 106 Am. St. 187: Russell v. Pittsburgh &c. R. Co.. 157 Ind. 305. 61 N. E. 678. 55 L. R. A. 253. 87 Am. St. 214; San Antonio &c. R. Co. v. Tracy (Tex. Civ. App.), 130 S. W. 639. § jyj CONTRACTS. 120 the same principle it has been held that one who was given per- mission to erect a coal shed on the defendant's right of way, in consideration of a small rental and a contract to indemnify the defendant from loss or damages to himself, his property or servants, occasioned by the negligence of defendant's servants, was bound by such indemnity contract in so far as it worked no injury to the public.^^ § 777. Agreements exempting employer from liability for negligence. — By the weight of authority, a contract between employer and employe, whereby the latter releases, in advance, the former from liability for negligent injuries inflicted on the employe, is held against public policy and unenforcible.®^ The master cannot shield himself directly or indirectly from the con- sequences of his own negligence by any form of contract. Thus agreements whereby the employe contracts to use that degree of care in the inspection of tools and premises that should be exer- cised by the master have been held against public policy.^'* § 778. Valid contracts limiting liability of employe. — But a contract whereby the employe agrees to assume liability from injury resulting from a disobedience of the company's rules is valid and binding when such rules are reasonable and do not con- ** Osgood V. Central Vermont R. western R. Co. v. Arnold, 32 Tex. Co., n Vt. 334, 60 Atl. 137, 70 L. R. Civ. App. 272, 74 S. W. 819; Gal- A. 930. veston H. & S. A. R. Co. v. Pigott ^Hissong V. Richmond & D. R. (Tex, Civ. App.), 116 S. W. 841; Co. 91 Ala. 514, 8 So. 776; Richmond Texas &c. R. Co. v. Putman (Tex. & D. R. Co. v. Jones, 92 Ala. 218, Civ. App.), dZ S. W. 910 (in the 9 So. 276; Louisville & N. R. Co. v. above the father of a minor executed Orr, 91 Ala. 548, 8 So. 360; Chicago the release); Roesner v. Hermann, W. & V. Coal Co. v. Peterson, 39 111. 10 Biss. (U. S.) 486. 8 Fed. 782; App. 114; Maney v. Chicago B. & Q. Tarbell v. Rutland R. Co., 12> Vt. 347, R. Co., 49 111. App. 105 ; Kansas P. R. 51 Atl. 6, 56 L. R. A. 656, 87 Am. St. Co. v Peavey, 29 Kans. 169, 44 Am. 734; Johnson's Admx. v. Richmond Rep. 630; Atchison T. & S. F. R. Co. & D. R. Co., 86 Va. 975, 11 S. E. 829. V. Fronk, 74 Kans. 519, 87 Pac. 698; See also, note in Ann, Cas. 1912A. Newport News & M. Valley Co. v. 1152. Eifort, 15 Ky. L. 575, 15 Ky. L. 600; '"Consolidated Coal Co. v. Lun- Blanton v. Dold, 109 Mo. 64, 18 S, bak, 196 111. 594, 6Z N, E. 1079; Him- W. 1149; Johnson v, Fargo, 184 N rod Coal Co. v. Clark, 197 111. 514. Y. 379. n N E. 388, 7 L. R. A. (N. 64 N. E. 282; Bonner v. Bean, 80 S.) 537. (In the above case the em- Tex. 152, 15 S. W. 798; Missouri K. ploye agreed to execute a release.) & T. R. Co. v. Wood (Tex. Civ. Lake Shore & M. S. R. Co. v. Spang- App.), 35 S. W. 879; Gulf C. & S. R ler, 44 Ohio St. 471, 8 N. E. 467, R. Co. v. Darby, 28 Tex. Civ. App. 58 Am. Rep. 833 ; St. Louis South- 413, 67 S. W. 446. 121 LEGALITY OF OBJECT. ^ 779 travene public policy.''^ Indeed, disobedience of reasonable rules properly promulgated would often defeat a recovery in any event. § 779. Valid contracts — Negligence of fellovir servant. — A distinction has also been suggested between those cases in which the employer seeks to contract against liability for the non- performance of a personal duty he owes his employe, such as the duty to exercise ordinary care in the selection of proper tools or a safe place in which to work, and those cases in which the pri- mary duty rests upon the employe not to injure a fellow servant negligently, but whose negligence is nevertheless imputed to the employer. The negligence of a fellow servant is not in fact and in morals the negligence of the master, although by virtue of the statute it may be imputed to the master. Hence, it has been said that a stipulation not to be answerable for the negligence of his employe beyond the selection of competent servants in the first instance and the discharge of such as proved to be reckless or incompetent might be upheld as reasonable notwithstanding a statute might abolish the old rule of nonliability for the acts and omissions of a coservant."" § 780. Valid contracts — Criminal negligence. — In Georgia it is held that the master may exonerate himself except when the injuries sustained are due to criminal negligence.^^ Just what this means may not always be easy to determine, and other courts make no such distinction or exception. "Russell V. Richmond &c. R. Co., Ga. 461; Western &c. R. Co. v. 47 Fed. 204. See also, Sedgwick v. Bishop, 50 Ga. 465 ; Fulton Bag &c. Illinois &c. R. Co., 11 low, 158. 34 Mills v. Wilson, 89 Ga. 318, 15 S. E. N. W. 790; Quinn v. New V'ork & 2,22; New v. Southern R. Co., 116 N. H. & H. R. Co., 175 Mass. 150, Ga. 147, 42 S. E. 391, 59 L. R. A. 115. 55 N. E. 891. See, however. Cook v. Western &c. "Little Rock & Ft. S. R. Co. v. R. Co., 12 Ga. 48. See also. Pitts- Eubanks, 48 Ark. 460. 3 S. W. 808. burgh &c. R. Co. v. Mahonev, 148 3 Am. St. 245. See also, Griffiths v. Ind. 196. 46 N. E. 917, 47 N. E. 464, Dudley, L. R. 9 Q. B. Div. 357. The 40 L. R. A. 101. 62 Am. St. 503; In- decision in the above case is grounded ternational & G. N. R. Co. v. Hinzie, upon freedom of contract. Piper v. 82 Tex. 623, 18 S. W. 681. See, how- Boston & M. R. Co., 75 N. H. 435, ever, in connection with this case, 75 Atl. 1041. Contra. Shohonev v. Galveston &-c. R. Co. v. Pigott (Tex. Quincy S:c. R. Co.. 231 Mo. 131,' 132 Civ. App.).*116 S. W. 841: Texas &c. S. W. 1059. Ann. Cas. 1912A. 1143. R. Co. v. Putnam (Tex. Civ. App.), decided under a statute forbidding (^2i S. W. 910: Peterson v. Seattle such contracts. Traction Co., 23 Wash. 615, 63 Pac •=■ Western &c. R. Co. v. Strong, 52 539, 65 Pac. 543, 53 L. R. A. 586. § 781 CONTRACTS. 122 § 781. Contracts against liability for negligence— Miscel- laneous instances. — It has been held that a bailee may con- tract to relieve himself from liability for negligence. Thus the contract by which exhibitors at the Chicago World's Fair relieved the World's Columbian Exposition Company from liability for losses "resulting from any cause" was upheld at least to the ex- tent that the company was not liable for negligence not directly chargeable to the directors or managing officers of the company and not of a distinctly gross, wanton, or wilful character.^* A warehouseman may also contract to relieve himself against lia- bility for loss by fire even though it results from his own negli- o-ence.''^ x-\n agreement by which an independent contractor agreed to exempt the railroad from any liability for injuries he might sustain in the removal of an embankment was held void in so far as it released the railroad company from liability for its own negligence.®'^ A commercial agency may be liable for dam- age resulting- to a subscriber from its own negligence, even though it has contracted against such liability." A contract be- tween a municipal corporation and one who desires sewer connec- tions by which the latter covenants to hold the city harmless against any damages resuking from such connection has been held invalid as against a subsequent purchaser."^ A clause in the contract of an electric light company made with one of its con- sumers that it would not "be liable in any event for damage to person or property arising, accruing or resulting from the use of the light" does not relieve the company from liability for failure to perform its duty.®^ §782. Unclassified illegal agreements— Miscellaneous cases. — A contract whereby a mother with the consent of the father gives the custody of their children to relatives of the "World's Columbian Ex. Co. v. St. 161, 19 Atl. 500, 7 L. R. A. 661, Republic of France, 96 Fed. 687, 38 19 Am. St. 681. ,^„ r j CCA 483 *' Murphy v. Indianapolis, 158 ind. '•'Welis V. Porter, 169 Mo. 252, 69 238, 63 N. E. 469 (city permitted S. W. 282, 92 Am. St. 6^7. sewer to remain in defective condi- " Johnson's Admx. v. Richmond & tion). , „ ^ t D. R. Co., 86 Va. 975, 11 S. E. 829. "» Denver Consol. &c Co. v. Law- "" Crew V. Bradstreet Co., 134 Pa. rence, 31 Colo. 30-1, 72> Pac. 39. 123 LEGALITY OF OBJECT.'' § 782 mother has been held null and void as against public policy.' However, an agreement entered into between husband and wife pending a settlement of divorce suit, by which they arrange for the custody and support of their children, which contract did not abridge, modify, or suspend any rights which the parties had in the action for a divorce, has been upheld.- A contract by which one entering a home for aged men agreed that should he, by de- vise, legacy, or otherwise, become the owner of any property what- ever, the home should have the same, has been declared against public policy.^ A power of attorney to appoint other managing agents on the same terms and furnish them with similar contracts to appoint yet other managing agents in an endless chain has been held void as contrar)^ to public policy.* A contract whereby one party leases to another the shore or space between high and low water mark, a part of the bed of a navigable stream, the title to which is in the state in trust for the public, and the riparian rights which are concurrent with the rights of other inhabitants of the state and must be exercised subject to the rights of others, is void as contrary to public policy.^ The right to acquire title to land by limitation is given by our statutes and an agreement between two parties to acquire property in this manner is not wrongful or inequitable.^ ^ Hibbette v. Baines, 78 Miss. 695, having been awarded the custody of 29 So. 80, 51 L. R. A. 839. In the the children. Wilkinson v. Denning, above case the mother was on her 80 111. 342, 22 Am. Rep. 192. death-bed at the time the contract 'Ward v. Goodrich. 34 Colo. 369. was entered into. The same rule 82 Pac. 701, 2 L. R. A. (N. S.) 201n, applies to testamentary dispositions 114 Am. St. 167. made bv a mother of her child, not- ' Baltimore Humane &c. Homes v. withstanding she was divorced at the Pierce, 100 Md. 520, 60 Atl. 211, 70 time the instrument was executed. L. R. A. 485n. The court suggested Hernandez v. Thomas, 50 Fla. 522. it would be proper for the home to 39 So. 641, 2 L. R. A. (N. S.) 203n, require the inmate to pay a fixed 111 Am. St. 137; Tavlor v. Jetter. ZZ and definite sum in case he became Ga. 195, 81 Am. Dec! 202; McKinney able to make such payment. V. Noble, n Tex. 731, 38 Tex. 195; *Bank of Ozark v. Hanks, 142 Mo. In re Neff, 20 Wash. 652, 56 Pac. App. 110. 126 S. W. 221. 383. Some states would seem to rec- "Escambia Land & Mfg. Co. v. ognize the right of a mother to make Ferry Pass Inspectors' & Shippers' a testamentary disposition of her Assn.. 59 Fla. 239, 52 So. 715, 138 children where the father is dead Am. St. 126. (In re Reynolds, 11 Hun (N. Y.) 'Hammons v. Clwer (Tex. Civ. 41), or divorced from his wife, she App.), 127 S. W. 889. CHAPTER XXII. CONTRACTS IN RESTRAINT OF TRADE. §790. Confusion on subject— Distinc- §813. tions. 791. Early doctrine as to contracts in restraint of trade. 814. 792. Distinction between general re- strictions as to place and as 815. to time. 793. Reason for holding such con- 816. tracts void. 794. Unreasonable restraint of 817. trade. 795. Unreasonable restraint — Injury 818. to the public. 796. Restraint such as is reasonably 819. necessary. 820. 797. Gradual relaxation of rule — Reason for. 821. 798. Broad statement of the rule criticized. 799. Reasonable and partial re- straint allowed. 822. 800. The rule illustrated. 801. Application of rule to various callings. 823. 802. Agreements by parties and em- ployes not to compete. 824. 803. Agreement by the vendor or 825. vendee of property not to conduct a designated busi- 826. ness. 804. Exclusive agencies. 827. 805. Sales by stockholders. 806. Where restraint is unlimited 828. as to space. 807. Abandonment of arbitrary geo- 829. graphical limits as test. 808. Illustration of modern rule. 830. 809. Limited and unlimited re- straints as to time — ^Limited 831. as to time. 810. Limited as to time — Contracts 832. between employer and em- ploye. 833. Sn. Limitations as to time — Effect 834. and importance of. 812. Contracts unlimited as to time. 124 Contracts between employer and employe — Attitude of courts toward. Must be incidental or ancillary to be valid. May be invalid although for sale of property or business. Illustrations of invalid con- tracts. Invalid contracts — Contracts of common carriers. Subsequent contracts in re- straint of trade. "System" of contracts. As affected by nature of busi- ness. Nature of business — Distinc- tion between sale of business and contracts between em- ployer and employe. Nature of business — Corpora- tions affected with public in- terest. Nature of business — Rule fur- ther illustrated. Good will — Defined. Sale of good will in absence of restrictive covenant. Sale of good will — Soliciting old customers. When old customers may be solicited. Sale of good will at involun- tary sale. Holding out to public that vendor is successor. Right to carry on competing business. Nature of business as affect- ing sale of good will. Express provision against com- peting in business. Patents and secret processes. Contracts protecting ownership in. 125 CONTRACTS IX RESTRAINT OF TRADE. § 79O 835. Restricting resale of article 847. Divisibility or severability of produced thereby. contract. 836. Trade secret — \\ hen partner- 848. Divisibility as to territorial ex- ship property. tent — When valid. 837. Trade secret and patent — Dis- 849. Divisibility as to time. tinction between. 850. Breach of contract. 838. Rights of owner of patent. 851. Breach of contract — Partners 839. Transfer by owner of rights and employer. under patent. 852. Breach of contract — Entering 840. Contracts which owner of another's employment — When patent is prohibited from is. making. 853. Acts which amount to a breach 841. Construction. by vendor. 842. The rule illustrated. 854. Rights and remedies — Injunc- 843. Contracts in restraint of trade tion. — Presumptions as to valid- 855. Remedies — Injunction — When ity. may issue. 844. Modern doctrine. 856. Remedies — Action for damages 845. Rules of construction illus- or penalty. trated by particular cases. 857. Breach of contract — Parties in 846. Recognition taken of modern pari delicto. conditions. § 790. Confusion on subject — Distinctions. — The subject of contracts in restraint of trade is broad in its scope. It is a sub- ject about which confused ideas are held, largely because con- tracts of this character have not been properly classified or per- haps more accurately because of a failure to observ'e that the subject has two different phases. One class of contracts in re- straint of trade consists of such as tend or are designed to destroy or stifle competition, eft'ect a monopoly, artificially maintain prices, or by other means hamper or obstruct the course of trade as it would be carried on if left to the control of the natural law governing trade or commerce.^ Contracts of the other class do not have for their object the creation of a monopoly but merely prevent a person, natural or artificial, from employing his talents, industry or capital in a designated occupation or undertaking within general or specified limits for a general or specified time." It is to this latter class of contracts that the present chapter will be devoted. Those of the fonner will be treated in the succeed- ing chapters on Combinations, jNIonopolies and Trusts. ^ 791. Early doctrine as to contracts in restraint of trade. — It seems that originally all contracts whereby a per- son bound himself to abstain from the exercise of a particular 'See Black's L. Diet. (2d ed.). 'See Black's L. Diet. (2d ed.). § 79^ CONTRACTS. 126 lawful trade, business, or vocation were void regardless of whether the restraint was general or special. Thus as early as 1414 such agreements were termed *'the immortal immorality." The case that provoked this statement was one in which suit was brought on a sealed obligation which contained a provision that it should be void, if the other party did not carry on his trade of dyer within the town where he had formerly carried on such business for a period of six months.^ The early doctrine still obtains, as a general rule, when applied to contracts in re- straint of trade unlimited as to both time and place. Such agreements are usually declared void as against public policy.^ § 792. Distinction between general restrictions as to place and as to time. — There is, however, a distinction between a ' Y. B. 2 Hen. 5, pi. 26. The court said : "The condition is against the common law, and, per Dieu, if the plaintifif were here he should go to prison until he paid a fine to the king." See also, Colgate v. Bacheler, Cro. Eliz. 872; Alerriman v. Cover, 104 Va. 428, 51 S. E. 817. "It is cer- tain that at a very remote period the words 'contract in restraint of trade' in England came to refer to some voluntary restraint put by contract by an individual on his right to carry on his trade or calling. Originally all such contracts were considered to be illegal, because it was deemed they were injurious to the public as well as to the individuals who made them. In the interest of the freedom of the individuals to contract, this doctrine was modified so that it was only when a restraint by contract was so general as to be coterminous with the kingdom that it was treated as void. That is to say, if the re- straint was partial in its operation, and was otherwise reasonable, the contract was held to be valid." Standard Oil Co. v. United States, 221 U. S. 1, 55 L. ed. 619, 31 Sup. Ct. 502, 34 L. R. A. (N. S.) 834. The holdings in these early cases are per- haps the result of conditions that existed in primitive England. As seen in the chapter on Public Corpo- rations, practically every person who carried on a business public in its nature, such as blacksmiths, bakers, etc., was affected with a public inter- est and for that reason subject to public control. Owing to existing con- ditions such persons had practically a monopoly, and any contract which tended to strengthen this natural monopoly was unhesitatingly de- clared void. * Davies v. Davies, L. R. 36 Ch. Div. 359; Harris v. Theus, 149 Ala. 133, 43 So. 131, 10 L. R. A. (N. S.) 204n, 123 Am. St. 17; Wright v. Ryder, 36 Cal. 342, 95 Am. Dec. 186; Callahan v. Donnolly, 45 Cal. 152, 13 Am. Rep. 172; Cook v. Johnson, 47 Conn. 175, 36 Am. Rep. 64; Seay v. Spratling, 133 Ga. 27, 65 S. E. 137; Hursen v. Gavin, 59 111. App. 66, affd. 162 111. Zn, 44 N. E. 735 ; Union Strawboard Co. V. Bonfield, 193 111. 420. 61 N. E. 1038, 86 Am. St. 346; Ryan v. Ham- ilton, 205 111. 191, 68 N. E. 781 ; Wiley v. Baumgardner, 97 Ind. 66, 49 Am. Rep. 427; Linneman v. Allison, 142 Ky. 309, 134 S. W. 134; Gamewell Fire Alarm Tel. Co. v. Crane, 160 Mass. 50, 35 N. E. 98, 22 L. R. A. 673, 39 Am. St. 458; Long v. Towl, 42 AIo. 545, 97 Am. Dec. 355; Rob- erts V. Lcmont, 1Z Nebr. 365, 102 N. W. 770; Lange v. Werk, 2 Ohio St. 519; Lufkin Rule Co. v. Fringeli, 57 Ohio St. 596, 41 L. R. A. 185, 49 N. E. 1030, 63 Am. St. 736; Taylor v. Saurman, 110 Pa. St. 3, 1 Atl. 40; Richards v. American Desk & Seat- ing Co., 87 Wis. 503. 58 N. W. 787; Cottington v. Swan, 128 Wis. 321, 107 12/ CONTRACTS IX RESTRAINT OF TRADE. § 793 general restriction as to place and a general restriction as to time. The mere fact that the duration of the restriction as to time is indefinite or perpetual will not of itself avoid the contract if it is limited as to place and is reasonable and proper in all other re- spects.^ On the other hand, a contract limited in duration to five years but unlimited as to space, where the business or subject was of a local character, has been held void." The same has been held true of contracts limited as to time for twenty-five years but unlimited as to place.^ The importance of the limitation as to time must not be underestimated, however. A limitation as to time may make a contract which might otherwise be in unreason- able restraint of trade as to territory, reasonable.® Thus a con- tract which was unlimited as to space but was limited in time to five years has been upheld as not unreasonable.** § 793. Reason for holding such contracts void. — Two rea- sons are given for declaring contracts in restraint of trade void. One is the injury to the public which results from its being de- prived of the restricted party's industry. The other is the injury to the party himself caused by his being precluded from pursuing his occupation, and thus being prevented from supporting himself and his family. Both these evils occur when the contract is gen- eral, not to pursue one's trade at all, or not to pursue it in the entire realm or country. The country suffers the loss in both cases and the party is either deprived of his occupation or is N. W. 336; Kradwell v. Thiesen, 131 "Oakdale Mfg. Co. v. Garst, 18 R. Wis. 97. Ill N. \V. 233; Tecktonius T. 484, 28 Atl. 973. 23 L. R. A. 639. V. Scott, 110 Wis.441,86N.W. 672. 49 Am. St. 784 (where the court dis- See also, Hoff v. Leneerman, 143 111. tinguishcd Wiley v. Banmgardner, 97 App. 170. Ind. 66. cited in a previous note, "Cook V. Johnson, 47 Conn. 175, as involving a purely local subject. 36 .Am. Rep. 64. whereas in the case in hand the busi- " Wiley V. Bomgartner. 97 Ind. 66, ness was extensive and widespread 49 Am. Rep. 427. See also, Seay v. and the five-year period was a rea- Spratling, 133 Ga. 27, 65 S. E. 137. sonable time to ascertain what could ^ Union Strawboard Co. v. Bon- be done and to seek a field of opera- field, 193 111. 420, 61 N. E. 1038, 86 tion.) To same eflFect, Artistic Porce- Am. St. 346. lain Co. v. Boch. 76 X. J. Eq., 245 'Proctor V. Sargent. 2 Man. & G. 74 Atl. 680, 139 Am. St. 758. See 20; Ward v. Bvrne, 5 M. & W. 548; also, Nordenfelt v. Maxim Norden- Munford v. Gething. 7 C. B. (N. S.) felt Gun &c. Co. (1894), A. C. 535, 305; Whittaker v. Howe, 3 Beav. 6 Eng. Rul. Cas. 413. 383 ; Jones v. Lees, 1 H. & N. 189. § 794 coxTRACTS. 128 obliged to expatriate himself in order to fulfil the contract con- ditions.'" § 794. Unreasonable restraint of trade. — There is a tend- ency on the part of the modern authorities to abandon, to some extent at least, the test of space and time. Instead, reasonable- ness is made the test by which to determine the validity of con- tracts in restraint of trade. This test is applied according to the circumstances of the agreement and the contract is not to be arbitrarily limited by boundaries of time and space. The law has advanced with social progress, and it is now true at least in some jurisdictions that contracts in restraint of trade are not necessarily void by reason of universality of time nor of space, but they depend upon the reasonableness of the restriction under the conditions of each case.^^ Under this rule the generality of time or space is an important factor in determining whether or not the contract is reasonable, although not in itself necessarily a decisive test.'- § 795. Unreasonable restraint — Injury to the public. — *The application of the rule does not depend upon the number of those who may be implicated, nor the extent of space included, in the combination, but upon the existence of injury to the pub- lic."^^ If the natural tendency of the contract is to injuriously ^^Linneman v. Allison, 142 Ky. 309, Co. v. Garst, 18 R. I. 484, 28 Atl. 973, 134 S. W. 134; Moorman v. Parker- 23 L. R. A. 639, 49 Am. St. 784. See son, 127 La. 835, 54 So. 47; Oregon also, Hubbard v. Miller, 27 Mich. 15, Steam Nav. Co. v. Windsor, 20 Wall. 15 Am. Rep. 153 ; Merriman v. Cover, (U. S.) 64. See also, cases above 104 Va. 428, 51 S. E. 817. cited "Artistic Porcelain Co. v. Boch, " Maxim Nordenf elt Gun & Am- 76 N. J. Eq. 245, 74 Atl. 680, 139 Am. munition Co. v. Nordenf elt (1893), St. 758. See also, Dowden v. Pook 1 Ch. 630, affd. (1894) A. C. 535, (1904), 1 K. B. 45. Restraint ex- 6 Eng. Rul. Cas. 413; John D. tended to every part of the world Park &c. Co. v. Hartman, 153 and was wider than necessary for the Fed 24, 82 C. C. A. 158, 12 protection of the company. L. R. A. (N. S.) 135n; Stewart v. ''' Nestcr v. Continental Brewing Stearns & Culver -Lumber Co., 56 Co., 161 Pa. St. 473, 29 Atl 102, 24 Fla. 570, 48 So. 19, 24 L. R. A. (N. L. R. A. 247, 41 Am. St. 894. Con- S.) 649n; Swigert v. Tilden, 121 tinning the discussion the court said: Iowa 650 '97 N. W. 82. 63 L. R. A. "One combination, consisting of but 608, 100 Am. St. 374; Trenton Pot- part of those engaged in a given teries Co. v. Oliphant, 58 N. J. Eq. branch of trade, may amount to a 507, 43 Atl. 723, 46 L. R. A. 255, 78 practical monopoly; while another, Am. St. 612; Cowan v. Fairbrother, less extensive in its scope, may as 118 N Car. 406, 24 S. E. 212. 32 L. R. well bring disaster in its train. The A. 829, 54 Am. St. 733; Oakdale Mfg. difference lies only in degree, but 129 COXTRACTS IX RESTRAINT OF TRADK. 795 affect public interests, the form and declared purpose are of no moment ; the agreement will be void and it matters not whether the restraint be complete or partial/* Thus an agreement by one to close and keep closed his hotel in a certain town for a period of three years, unaccompanied by a sale of the business, has been held contrary to public policy and void.^° And a contract by which a business and its good will were sold, the vendor agreeing not to engage directly or indirectly in the same business again in the same state for a period of twenty-five years, has been held void/*^ The same has been held true of a contract by which the vendor of a business agreed not to conduct the same for a period of five years outside the limits of a certain city in the state." The apprehension of danger to public interest, however, should rest on evident grounds, and courts should refrain from interference with the affairs of citizens unless their conduct in some tangible form threatens the welfare of the public/^ It does equally forbids the aid of courts. * * * So no one can for a moment doubt that more serious injury would result to densely settled than to a much larger district with scattered population. Thus a combination to raise the price of breadstuffs would cause serious loss in a city, while it would be comparatively harmless in an agricultural state." See also, Homer v. Ashford, 3 Bing. 322; Dr. Miles Med. Co. v. John D. Park & Sons Co., 220 U. S. 272, 55 L. ed. 502, 31 Sup. Ct. 376; Stewart v. Stearns Lumber Co., 56 Fla. 570, 48 So. 19, 24 L. R. A. (N. S.) 649n; Union Strawboard Co. v. Bonfield, 193 111. 420, 61 N. E. 1038, 86 Am. St. 346; Lanzit V. J. W. Sefton Mfg. Co., 184 111. 2>26, 56 N. E. 393, 75 Am. St. 175; Knight &c. Co. v. Miller, 172 Ind. 27, 87 N. E. 823. " Stewart v. Stearns &c. Lumber Co.. 56 Fla. 570. 48 So. 19, 24 L. R. A. (N. S.) 649n (agreement by lessors not to establish a store and to issue to employes merchandise checks against their wages directed exclu- sively to lessees). Nester v. Con- tinental Brewing Co., 161 Pa. St. 473, 29 Atl. 102. 24 L. R. A. 247. 41 Am. St. 894; Charleston Nat. Gas Co. V. Kanawha Nat. Gas Light & 9— CoNTR.'KCTS, Vol. 2 Fuel Co.. 58 W. Va. 22, 50 S. E. 876. 112 Am. St. 936. "Clcmmons v. Meadows, 123 Ky. 178. 29 Ky. L. 619, 94 S. W. 13, 6 L. R. A. (N. S.) 847, 124 Am. St. 339. (In this case it is obvious that the main purpose of the contract was the creation of a monopoly.) See in connection with this case, Mar- shalitown Stone Co. v. Des Moines Brick Mfg. Co., 114 Iowa 574, 87 N. W. 496. '■^Lufkin Rule Co. v. Fringeli, 57 Ohio St. 596. 49 X. E. 1030, 41 L. R. A, 185, 63 Am. St. 736. " Consumers' Oil Co. v. Nunnea- ker, 142 Ind. 560, 41 N. E. 1048, 51 Am. St. 193. The courts said : "It is not the interests of the parties alone, which in the eye of the law are to be considered the true test, but in each particular case, under the facts, the judicial inquiry is : Will it be in- imical to the public interest? If so, then, and in that event, the agree- ment must be held as hostile to pub- lic policv. and therefore void." "Leslie v. Lorillard, 110 N. Y. 519 18 N. E. 363. 1 L. R. A. 456; Wood v. Whitehead Bros. Co., 165 N Y. 545. 59 N. E. 357; Harbison-Walker Refractories Co. v. Stanton. 227 Pa. 55, 75 Atl. 988. See also. My Laun- •^ / 796 CONTRACTS. 130 not follow from the authorities to which reference has been made that every restriction of competition imposed by contracts be- tween competing dealers is illegal. The modern rule is more limited in its application.^^ § 796. Restraint such as is reasonably necessary. — Some courts lay down the further rule that a contract in restraint of trade will be enforced when the restraint is no more extensive than is reasonably necessary to protect the interests of the party in whose favor it is given, and it does not interfere with the interests of the public.^" Thus a contract which bound the de- fendant not to engage in a business of the character conducted by the plaintiff either in the city of Jersey or within five hundred miles of that city was held unreasonable so far as it embraced territory outside of Jersey City and the contract was to that ex- tent invalid. The court said, however, that in respect to Jersey City it was clearly necessary for the protection of the business as it existed at the time of the sale, and to that extent not in opposi- dry Co. v. Schmeling, 129 Wis. 597, 109 N. W. 540. "United States v. Trans-Missouri Assn., 19 U. S. App. 36, 58 Fed. 58, 7 C. C. A. 15, 24 L. R. A. IZ. ^Taylor Iron & Steel Co. v. Nich- ols, IZ N. J. Eq. 684, 69 Atl. 186, 24 L. R. A. (N. S.) 933n, 133 Am. St. 753n ; Diamond Match Co. v. Roe- btr, 106 X. Y. 473, 13 N. E. 419, 60 Am. Rep. 464; Threlkeld v. Stewart, 24 Okla. 403, 103 Pac. 630, 138 Am. St. 888; Harbison-Walker Refrac- tories Co. V. Stanton, 227 Pa. 55, 75 Atl. 988. See also, Merriman v. Co- ver, 104 Va. 428, 51 S. E. 817. In giving application to the present-day doctrine the true test is whether the restraint is such only as to afford a fair protection to the interest of the party in favor of whom it is given, and not so large as to interfere with the interest of the pubHc. And the restriction must be reasonable, not oppressive, nor out of proportion to the benefits which the vendee may, in reason, expect to flow from the re- strictive features of the contract. Swigert v. Tilden, 121 Iowa 650, 97 N. W. 82, 63 L. R. A. 608, 100 Am. St. 374. "The vendor will be bound by any covenant which is reasonably necessary for the preservation and protection of the property which he sells." Anchor Electric Co. v. Hawkes, 171 Mass. 101, 50 N. E. 509, 41 L. R. A. 189, 68 Am. St. 403. "It is now settled that a covenant, even if it be unlimited both in time and space * * *, not to engage in a par- ticular business is valid if it is coup- led with the sale of a business and is necessary to give to the purchaser what he has bought." Marshall En- gine Co. V. New Marshall Engine Co., 203 Mass. 410, 89 N. E. 548. See also, in connection with the forego- ing Massachusetts cases that of Uni- ted Shoe Machinery Co. v. Kimball, 193 Mass. 351, 79 N. E. 790. "The test usually laid down by which to determine whether a contract in par- tial restraint of trade is reasonable is. whether it affords only a fair pro- tection to the interests of the party in whose favor it is made, without being so large In its operation as to interfere with the interests of the public." Walter A. Woods &c. Co. V. Greenwood Hardware Co., 75 S. Car. 1%, 55 S. E. 973, 9 L. R. A. (N. S.) 501. See also, post, § 799 et seq. 131 CONTRACTS IX RESTRAINT OF TRADE. § /Q/ tion to public policy and to that extent might be enforced.-^ A contract may also be invalid in so far as it attempts to embrace territory outside of a particular state but remain en forcible within the territory of the state if when so enforced it conflicts with no federal or state law." § 797. Gradual relaxation of rule — Reason for. — This gradual relaxation of the severity with which ai,n"eements in re- straint of trade were treated has been brought alx)ut by the growth of industrial activities and the enlargement of commer- cial facilities which tend to render monopolies less easy of accom- plishment."^ "The changes in the methods of doing business and the increased freedom of communication which have come in recent years have very materially modified the view to be taken of particular contracts in reference to trade. The comparative ease with which one engaged in business can turn his energies to a new occupation, if he contracts to give up his old one, makes the hardship of such a contract much less for the individual than formerly, and the commercial opportunities which open the mar- kets of the world to the merchants of every country leave little danger to the community from an agreement of an individual to cease to work in a particular field."'* § 798. Broad statement of the rule criticized. — This doc- trine had its origin during the period of great industrial develop- ment experienced by the English speaking people during the latter part of the nineteenth century. Those cases which seem to consider the question as one wholly between the parties and which lay down the rule that if the restraint is no more than the pur- chaser requires as a protection to the enjoyment of what he pur- chased or for what the vendor received a fair consideration, there is no objection to the contract because the limits of trade and '^ Fleckenstein Bros. Co. v. Fleck- 43 Atl. 723, 46 L. R. A. 255, 78 Am. enstein, 76 N. J. L. 613. 71 Atl. 265, St. 612. See, post. § 847. 24 L. R. A. (X. S.) 913. =' Leslie v. Lorillard, 110 X. Y. 519, - Monongahela River Consol. &c. 18 X. E. 363, 1 L. R. A. 456. Co. V. Jute, 210 Pa. 288. 59 Atl. 188, '-* Anchor Electric Co. v. Hawkes, 105 Am. St. 812, 2 Am. & Eng. Ann. 171 Mass. 101, 50 X. E. 509, 41 L. R. Cas. 951. See also. Trenton Potteries A. 189, 68 Am. St. 403. &c. Co. V. Oliphant, 58 X. J. Eq. 507, § 799 CONTRACTS. 1 32 commerce are now so great, under modern conditions, that a gen- eral restraint is not more than is reasonable to afford protection to the purchaser in his business, have been criticized and termed fallacious for the reason that they ignore the interest of the pub- lic in the question."^ It is believed that the justness of this criticism will become more and more apparent, and that in this period of combination and monopoly the interest of the public is perhaps the only general rule that can safely be applied. The conflict between the cases which seem to consider the question as one wholly between the parties and those in which injury to the public is made the test is, however, more apparent than real. The courts will perhaps, when forced to choose between protect- ing the vendee in his purchase and the welfare of the public, unhesitatingly decide in favor of the latter. § 799. Reasonable and partial restraint allowed. — As is apparent from the preceding sections of this chapter, the severity of the original rule regarding contracts in restraint of trade has been more and more relaxed by exceptions and qualifications and a gradual change has taken place. The centuries have worked a transformation in the modern field of business society and the original rule has been gradually modified to meet these changed conditions and now the doctrine in regard to contracts in restraint of trade is that whether the covenant be general or particular its validity must be determined by the question whether it is reason- able and is based upon a valid consideration.^*' The rule of rea- ^Lufkin Rule Co. v. Fringeli, 57 trade are void, as being against pub- Ohio St. 596, 49 N. E. 1030, 41 L. R. lie policy. But contracts only in par- A. 185, 63 Am. St. 736. tial restraint of trade are valid and "^ See, Nordenfelt v. Maxim Nor- enforcible, if reasonable and support- denfelt Gun Co. (1894), App. Cas. ed by a consideration good in law." 535; Mitchel v. Reynolds, 1 P. Wms. Lauzit v. J. W. Sefton Mfg. Co., 184 181, 1 Smith's Leading Cas. (11th ed.) 111. 326, 56 N. E. 393, 75 Am. St. 171. 406; Rousillon v. Rousillon, L. R. 14 A restraint is not general when it Ch. Div. 351 ; Knapp v. S. Jarvis Ad- applies only to a particular person ams Co., 135 Fed. 1008, 70 C. C. A. within prescribed and reasonable lim- 536; Anchor Electric Co. v. Hawkes, its. Duffy v. Shockey, 11 Ind. 70, 71 171 Mass. 101, 50 N. E. 509, 41 L. R. Am. Dec. 348. The contract must of A. 189, 68 Am. St. 403 ; Leslie v. Lor- course be supported by a considera- illard, IIQ N. Y. 519, 18 N. E. 363, 1 tion. Cleaver v. Lenhart, 182 Pa. St. L. R. A. 456n; Cottington v. Swan, 285, Zl Atl. 811. But a contract of 128 Wis. 321, l07 N. W. 336. "It is this kind requires no greater pecuni- too well settled to require discussion ary or valuable consideration to sup- that contracts in general restraint of port it than any other contract. Hub- ^33 CONTRACTS IN RESTRAINT OF TRADE. § 799 son now obtains." An agreement in restraint of trade will be upheld when it imposes only suck restrictions as are reasonably necessary to protect the interest of the favored parties, regard being had to the nature of the business, and is not so large as to interfere with the interests of the public.-* bard v. Miller, 27 Mich. 15, 15 Am. Rep. 153. '' Standard Oil Co. v. United States, 221 U. S. 1, 55 L. ed. 619. 31 Sup. Ct. 502; United States v. American To- bacco Co., 221 U. S. 106, 55 L. ed. 663, 31 Sup. Ct. 632. This is not true in Michigan, however. Sec- tion 1 of Act No. 329 of the Public Acts of 1905, page 507, provides: "All agreements and contracts by which any person, copartnership or corporation promises or agrees not to engage in any avocation, employ- ment, pursuit, trade, profession or business, whether reasonable or un- reasonable, partial or general, lim- ited or unlimited, are hereby declared to be against public policy and illegal and void." The act does not apply, however, where the only object of the contract is to protect the vendor in the purchase of the good will. -* Horner v. Graves, 7 Bing. 735; Nordenfelt v. ^klaxim Nordenfelt Gun &c. Co., L. R. (1894) App. Cas. 535; Harris v. Theus, 149 Ala. 133, 43 So. 131, 10 L. R. A. (N. S.) 204n, 123 Am. St. 17 ; Edgar Lumber Co. V .Cornie Stave Co., 95 Ark. 449, 130 S. W. 452 ; Trentman v. Wahrenburg, 30 Ind. App. 304, 65 N. E. 1057; Morse &c. Mach. Co. v. Morse, 103 Mass. 73, 4 Am. Rep. 513; Mever v. Estes, 164 Mass. 457, 41 N. E. 683, 32 L. R. A. 283 ; Anchor Electric Co. v. Hawkes, 171 Mass. 101, 50 N. E. 509, 41 L. R. A. 189, 68 Am. St. 403 ; Mar- shall Engine Co. v. New Marshall Engine Co.. 203 Mass. 410, 89 X. E. 548; Hubbard v. Miller, 27 Mich. 15, 15 Am. Rep. 153 ; Bcal v. Chase, 31 Mich. 490; Buck v. Coward, 122 Mich. 530, 81 N. W. 328; National Benefit Co. v. Union Hospital Co., 45 Minn. 272, 47 N. W. 806, 11 L. R. A. 437; Finck v. Schneider Granite Co., 187 Mo. 244, 86 S. W. 213, 106 Am. St. 452 ;, Roberts v. Lemont, 73 Nebr. 365, 102 N. W. 770; Bancroft v. Un- ion Embossing Co., 73 N. H. 402, 57 Atl. 97, 64 L. R. A. 298; EUerman v. Chicago Junction &c. Stock Yards Co., 49 N. J. Eq. 217, 23 Atl. 287; Trenton Potteries Co. v. Oliphant, 58 N. J. Eq. 507, 43 Atl. 723, 46 L. R. A. 255, 78 Am. St. 612; Taylor Iron & Steel Co. v. Nichols, 73 N. J. Eq. 684, 69 Atl. 186. 24 L. R. A. (N. S.) 933n, 133 Am. St. 753n; Diamond Match Co. v. Roeber, 106 N. Y. 473, 13 N. E. 419, 60 Am. Rep. 464; Tode v. Gross, 127 N. Y. 480, 28 N. E. 469, 13 L. R. A. 652n, 24 Am. St. 475; Wood v. Whitehead Bros. Co., 165 N. Y. 545, 59 N. E. 357; Cowan v. Fairbrother, 118 N. Car. 406, 24 S. E. 212, 32 L. R. A. 829n, 54 Am. St. 733; Herreshoff V. Boutineau, 17 R. I. 3, 19 Atl. 712, 8 L. R. A. 469, 33 Am. St. 850 ; Til- linghast v. Boothby, 20 R. I. 59, 37 Atl. 344; Oregon Nav. Co. v. Win- sor, 20 Wall. (U. S.) 64, 22 L. ed. 315; Fowle v. Park, 131 U. S. 88, 33 L. ed. 67, 9 Sup. Ct. 658; Dr. Miles Med. Co. V. John D. Park & Sons Co., 220 U. S. 373, 55 L. ed. 502, 31 Sup. Ct. 376; Kradwell v. Thiesen, 131 Wis. 97, 111 N. W. 233; WaUer A. Wood Mowing & Reaping Co. v. Greenwood Hardw. Co., 75 S. Car. 378, 55 S. E. 973, 9 L. R. A. (N. S.) .^Oln. See also, Louisville Board of Fire Underwriters v. Johnson, 133 Kv. 797, 119 S. W. 153, 24 L. R. A. (N. S.) 153n. § 8oo CONTRACTS. 134 § 800. The rule illustrated. — Thus one engaged in a pro- fession-''' or any legitimate business^" may, on selling his property and good will therein, bind himself not to resume practice or business within a reasonable time in a designated place or coun- try, regard being had to the nature of the business. A contract whereby a physician agrees not to practice medicine or surgery within a certain town or in a particular locality within a reason- able area is not void as against public policy but valid.^^ And ^ McCurry v. Gibson, 108 Ala. 451, 18 So. 808, 54 Am. St. 177; Webster V. Williams, 62 Ark. 101, 34 S. W. 537; Cook v. Johnson, 47 Conn. 175, 36 Am. Rep. 64; Ryan v. Hamilton, 205 111. 191, 68 X. E. 781; Linn v. Sigsbee, 67 111. 75 ; Martin v. Murphy, 129 Ind. 464, 28 N. E. 1118; Beattv V. Coble, 142 Ind. 329, 41 N. E. 590; Smallev v. Green, 52 Iowa 241, 3 N. W^ 78, '35 Am. Rep. 267n; Cole v. Ed- wards, 93 Iowa 477, 61 N. W. 940; Warfield v. Booth, 33 Md. 63; Gill- man V. Dwight, 13 Gray (Mass.) 356, 74 Am. Dec. 634; Dwight v. Hamil- ton, 113 Mass. 175; Doty v. Martin, 32 Mich. 462; Timmerman v. Dever, 52 Mich. 34. 17 N. W. 230, 50 Am. Rep. 240; Gordon v. Mansfield, 84 Mo. App. 367; Greenfield v. Gilman, 140 X. Y. 168, 35 X. E. 435; In re McClurg's Appeal, 58 Pa. St. 51; French v. Parker, 16 R. I. 219, 14 Atl. 870, 27 Am. St. 733. =*" Moore &c. Hardw. Co. v. Tow- ers Hardware Co., 87 Ala. 206, 6 So. 41, 13 Am. St. 23; Hurscn v. Gavin, 59 111. App. 66, affd. 162 111. 377, 44 N. E. 735; Eisel v. Hayes, 141 Ind. 41, 40 N. E. 119; W. S. Wolverton v. Bruce (Ind. T.), 89 S. W. 1018 (sale of insurance agency) ; Arnold v. Kreutzer, 67 Iowa 214, 25 X. W. 138: Sauser v. Kearney, 147 Iowa 335, 126 X. W. 322 (sale of lumber business) ; Jayne &c. Lumber Co. v. Turner, 132 Iowa 7, 109 X. W. 307; Wilson v. De- laney, 137 Iowa 636, 113 X. W. 842; Roller V. Ott (see W. W. Roller & Co. V. Ott), 14 Kans. 609; Western Dist. Warehouse Co. v. Hobson, 96 Ky. 550, 29 S. W. 308; Guerand v. Bandelet, 32 Md. 561, 3 Am. Rep. 164; Boutelle v. Smith, 116 Mass. Ill; Smith V. Brown, 164 Mass. 584, 42 X. E. 101 ; Up River Ice Co. v. Denier, 114 Mich. 296, 72 X. W. 157, 68 Am. St. 480; Kronschnabel-Smith Co. v. Kronschnabel, 87 Minn. 230, 91 X. W. 892; Espenson v. Koepke, 93 Minn. 278, 101 X. W. 168 (agreement not to engage in purchase of hogs or cat- tle within ten miles of village on sale of an interest in butchering busi- ness) ; Gill V. Ferris, 82 Mo. 156: Angelica Jacket Co. v. Angelica, 121 Mo. App. 226, 98 S. W._ 805 (con- tract relating to sale of jackets and aprons) ; Downing v. Lewis, 59 X^ebr. 38, 80 X. W. 261 ; Engles v. Morgen- stern, 85 Xebr. 51, 122 X. W. 688 (sale of lumber yard) ; Finger v. Hahn, 42 X. J. Eq. 606, 8 Atl. 654, 44 X. J. Eq. 604, 17 Atl. 1104; Fran- cisco V. Smith, 143 X. Y. 488, 38 X. E. 980; Kramer v. Old, 119 X. Car. 1, 25 S. E. 813, 34 L. R. A. 389, 56 Am. St. 650 ; King v. Fountain, 126 X. Car. 196, 35 S. E. 427 (sale of livery busi- ness) : Morgan v. Perhamus, 36 Ohio St. 517, 38 Am. Rep. 607; Smith's Ap- peal, 113 Pa. St. 579, 6 Atl. 251 ; Pat- terson V. Glassmire, 166 Pa. St. 230, 31 Atl. 40; Palmer v. Toms, 96 Wis. 367, 71 X. W. 654: Cottington v. Swan, 128 Wis. 321, 107 X. W. 336 (sale of liverv stable) ; Palmer v. Toms, 96 Wis. 367, 71 X. W. 654 (sale of livery business). An agreement limiting the number of shares which should be issued to each stockholder in a contemplated corporation would not be binding on the corporation but would be binding on the parties to the agreement. Hladovec v. Paul, 222 111. 254, 78 X. E. 619, affg. 124 111. App. 589. "' Davis V. Mason, 5 T. R. 118;_At- kyns V. Kinnier, 4 Exch. 776; Sainter v. Ferguson. 7 C. B. 716; Mcll v. Moony, 30 Ga. 413; Goodman v. Hen- derson, 58 Ga. 567; Linn v, Sigsbee, OD CONTRACTS IX RESTRAINT OF TRADE. § Soi when contracts of this character further provide that a sum named as Hquidated damages shall be paid if the one restrained breaks the agreement, the penalty is recoverable in an action based upon the breach of the agreement.^- Or a physician may be compelled by injunction to comply with his agreement not to practice his profession in a designated place.^^ An agreement whereby an inexperienced physician was not to practice his pro- fession in a certain county for a period of five years is binding when based on an agreement by an experienced doctor located in such county to employ the former as an assistant at a monthly salary during the mutual pleasure of the parties.^* §801. Application of rule to various callings. — The same is true of other callings.^^ The courts have upheld contracts not 67 111. 75; Miller v. Elliott, 1 Ind. 484, 50 Am. Dec. 475; Halde- man v. Simonton, 55 Iowa 144, 7 N. W. 493; Cole v. Edwards, 93 Iowa 477, 61 N. W. 940; Warfield v. Booth, 33 Md. 63; Dwight v. ?Iamil- ton, 113 Mass. 175; Doty v. Martin, 32 Mich. 462; Timmerman v. Dever, 52 Mich. 34. 17 N. W. 230, 50 Am. Rep. 240; Thompson v. !\Ieans, 11 Sm. & M. (Miss.) 604; Smith v. Smith, 4 Wend. (X. Y). 468; Mott V. Mott, 11 Barb. (X. Y.) 127; Hol- brook V. Waters, 9 How. Pr. (X. Y.) 335; Amedon v. Gannon, 6 Hun (N. Y.) 384; Xiver v. Rossman, 18 Barb. (X. Y.) 50: Threlkeld v. Steward, 24 Okla. 403, 103 Pac. 630, 138 Am. St. 888. In re McClurg's Appeal, 58 Pa. St. 51; Bigony v. Tyson, 75 Pa. St. 157; Carroll v. Hickes, 10 Phila. (Pa.) 308; In re Bett's Appeal, 10 Week. N. Cas. (Pa.) 431; McXutt v. McEwen. 1 Week. N. Cas. (Pa.) 552, 10 Phila. (Pa.) 112; Wolff v. Hirschfeld, 23 Te.x. Civ. App. 670, 57 S. W. 572. "Martin v. Murphy, 129 Ind. 464, 28 N. E. 1118. "McCurrv v. Gibson, 108 Ala. 451, 18 So. 808. 54 Am. St. 177 : Freuden- thal V. Espy, 45 Colo. 488, 102 Pac. 280, 26 L. R. A. (X. S.) 961; Rvan v. Hamihon. 205 111. 191, 68 N. E. 781 ; Threlkeld v. Steward, 24 Okla. 403, 103 Pac. 630, 138 Am. St. 888. In the absence of anything to show ir- remedial damages or that an adequate remedy cannot be obtained at law, the injunction mav be denied. Osius V. Hinchman, 150 Mich. 603, 114 N. W. 402, 16 L. R. A. (X. S.) 393. ^Freudenthal v. Espy, 45 Colo. 488, 102 Pac. 280, 26 L, R. A. (X. S.) 961. ^^Welstead v. Hadley, 21 Times L. R. 165 (agreement not to publish magazine for ten years within twenty miles of London) ; Edmundson v. Render, 90 L. T. (X. S.) 814 (solic- itor's clerk not to practice within a radius of fifteen miles of a town) ; Hooper v. Willis, 93 L. T. 236. 21 Times L. R. 691 (fourteen years or at any place within thirty miles of the towns of B. or S.) ; Dendy v. Henderson, 11 Exch. 194 (not to practice for twenty-one years within twenty-one miles of a town) ; Mav V. O'Xeill. 44 L. J. Ch. (X. S.) 660 (not to practice within counties of Middlesex or Esse.x, nor within city of London) ; Howard v. Woodward, 34 L. J. Ch. (X. S.) 47 (not to prac- tice within tiftv miles of town) ; Giles V. Hart, 5 JuV. (X. S.) 1381 (sur- geon's assistant not to practice with- in a radius of five miles) ; Carnes v. Xesbitt, 7 H. & X. 778 (ten miles) ; Sainter v. Ferguson, 7 C. B. 716 (seven miles) ; Hastings v. Whitley, 2 Exch. 611 (ten miles) ; Fo.x v. Scard, 33 Beav. 327 (not to practice within twelve miles of town during § Soi CONTRACTS, 136 to practice law in a certain city,^*' not to do blacksmithing in a certain locality,^' or not to engage in a specified line of business at a certain city,^^ such as conducting a newspaper in a desig- nated county,^' or a livery stable in a given town/" or engaging in the laundry business ''either by conducting a laundry establish- ment on his own behalf or in conjunction or jointly with other persons or by entering the employment of any person, firm or corporation engaged in such business in the capacity of an officer, manager, solicitor, or in any other capacity whatsoever,"*^ or refraining from the sale of intoxicating liquors in the county where the contract is made or in adjoining counties for a period of six years," or soliciting insurance in the district in which an agent acts for his employer after he leaves his employment." employer's life or ten years after his death) ; Hampton v. Caldwell (Ark.), 129 S. W. 816 (barber) ; Bullock v. Johnson, 110 Ga. 486, 35 S. E. 703 (produce dealer) : Hursen v. Gavin, 59 111. App. 66, affd. 162 111. 2,11, 44 X. E. 735 (agreement not to engage in undertaking business in city of Chicago for five years) ; Linneman v. Allison, 142 Ky. 309, 134 S. W. 134 (agreement by undertaker not to carry on such business within fifty miles of a given town) ; Skaggs v. Simpson, ZZ Ky. L. 410, 110 S. W. 251 (marble and tombstone busi- ness) ; Thomas v. Gavin (N. Mex.), 110 Pac. 841 (agreement not to buy or sell lumber in a certain town or its vicinity for two years) ; Broad- brooks V. Tolles, 114 App. Div. (N. Y.) 646, 99 N. Y. S. 996 (radius of twenty-five miles for a period of twentv-five years) ; Turner v. Abbott, 116 Tenn. 718, 94 S. W. 64, 6 L. R. A. (N. S.) 892n, 8 Am. & Eng. Ann. Cas. 150 (young dentist agreeing not to compete with his employer in a certain town). See, however, Man- deville v. Harmon, 42 N. J. Eq. 185, 7 Atl. Zl. But an agreement by which a cutter for a tailor agreed "not to enter into any business ar- rangement in competition with ox that would in any way interfere with the business carried on" by his em- ployer, "at his establishment in Wey- bridge or the city of London, or at any of his addresses of the future" has been held unreasonable as too wide. Beetham v. Eraser, 21 Times L. R. 8. ^' Smalley v. Greene, 52 Iowa 241, 3 N. W. 78, 35 Am. Rep. 267n. ^'Stafford v. Shortreed, 62 Iowa 524, 17 N. W. 756. ''Rugg V. Rohrback, 110 111. App. 532; Beard v. Dennis, 6 Ind. 200, 63 Am. Dec. 380; Grow v. Seligman, 47 Mich. 607, 11 N. W. 404; Bradford & Carson v. Montgomerv Furniture Co. 115 Tenn. 610. 92 S. W. 1104, 9 L. R. A. (N. S.) 979. ^McAuliffe v. Vaughan, 135 Ga. 852, 70 S. E. 322, ZZ L. R. A. (N. S.) 255. To same effect, Andrews v. Kingsbury, 112 111. App. 518, affd. 212 111. 97, 72 N. E. 11; Vandiver v. Robertson, 125 Mo. App. 307, 102 S. W. 659; Mapes v. Metcalf, 10 N. Dak. 601, 88 N. W. 713. (The vendor was to receive a certain share of the proceeds realized from publication of legal notices.) ^» Breeding v. Tandy, 148 Ky. 345, 146 S. W. 742. "My Laundry Co. v. Schmeling-, 129 Wis. 597, 109 N. W. 540. To same effect, Downing v. Lewis, 59 Nebr. 38, 80 N. W. 261. See also, Barrone v. Moseley Bros., 144 Ky. 698, 139 S. W. 869 (agreement to abandon shirt, collar and cuff laundry business). *^ Walker v. Lawrence, 177 Fed. 363, 101 C. C. A. 417. To same ef- fect, Mitchell v. Branham, 104 Mo. App. 480, 79 S. W. 739. *"Barr v. Craven, 89 L. T. 574, 20 Times L. R. 51. To same eft'ect, Eu- ^}>7 CONTRACTS IX RESTRAINT OF TRADE. § 802 § 802. Agreements by partners and employes not to com- pete. — A partner who sells his interest in the firm l)usiness may contract not to start a competitive business nor to work for a competitor/* So also may an employe make a similar agree- ment.*" § 803. Agreement by the vendor or vendee of property not to conduct a designated business. — The vendor of prop- erty may also agree with the vendee that he will not use the property purchased in competition with a business retained by reka Laundry Co. v. Long, 146 Wis. 205, 131 N. W. 412, 35 L. R. A. (N. S.) 119, except that it has to do with an agreement by the driver of a laundry wagon not to solicit busi- ness from the customers on that route for one's self or a rival of the employer during the term of his em- ployment or two years thereafter. "Hursen v. Gavin, 59 111. App. 66, affd. 162 111. Zn, 44 N. E. 735; O'Neal V. Hines, 145 Ind. Z2, 43 N. E. 946; "Western Dist. Warehouse Co. v. Hobson, 96 Ky. 550, 29 S. W. 308 (all members of the firm agreeing not to re-engage in business for ten years) ; Moorman v. Parkerson, 127 La. 835, 54 So. 47 (sale of interest in insurance business) ; Angier v. Web- ber, 14 Allen (Mass.) 211, 92 Am. Dec. 748; Boutelle v. Smith, 116 Mass. Ill (binding on both members of the firm) ; Ropes v. Upton, 125 Mass. 258; Curtis v. Gokev. 68 N. Y. 300: Wooten v. Harris, 153 N. Car. 43, 68 S. E. 898: Siegel v. Marcus, 18 N. Dak. 214. 119 N. W. 358, 20 L. R. A. (N. S.) 769n; Lange v. Werk, 2 Ohio St. 519; Thomas v. :\Iiles. 3 Ohio St. 274. A contract by a retir- ing partner not to engage in the same business, although containing no spe- cific limitation as to territory or tirne, has, taking into consideration the cir- cumstances of the case, the nature and extent of the business, and the situation, objects and interests of the parties, been construed as applying to the entire United States, hut not to other parts of the world, and has been upheld to that extent. Prame v. Ferrell, 166 Fed. 702, 92 C. C. A. 374. "Knapp V. S. Tarvis Adams Co., 135 Fed. 1008, 70 C. C. A. 536. Eure- ka Laundry Co. v. Long, 146 Wis. 205, 131 N. W. 412, 35 L. R. A. (N. S) 119 and note, drawing a distinction between an injunction sought as a means of indirectly securing the spe- cific performance of an agreement for services and an injunction sought as a means of preventing an injury to business. Compare with. Jewel Tea Co. v. Novak, 146 Wis. 224, 131 N. W. 415, where the contract was sim- ilar to those in the foregoing cases except that the restraint imposed was limited to the life of the contract. See also, Tivoli, Manchester v. Col- ley, 52 Week. Rep. 632, 20 Times L. R. 437, holding that an actress may be enjoined from appearing in a the- ater other than that in which she was under contract to appear. A com- pany controlling a number of thea- ters may engage owners of attrac- tions and bind them not to appear in competing houses, notwithstanding it thereby induces owners to violate their contracts with such competing houses. Roseneau v. Empire Circuit Co., 131 App. Div. (N. Y.) 429, 115 N. Y. S. 511. See, however. Grand Union Tea Co. v. Lewitsky, 153 lsV\z\\. 244. 116 N. W. 1090, to the contrary, decided under a statute pro- viding, ".Ml agreements and con- tracts by which any person, copart- nership or corporation promises or agrees not to engage in any avoca- tion, employment, pursuit, trade, profession or business, whether rea- sonable or unreasonable, partial or general, limited or unlimited, are hereby declared to be against ^public policv and illccal and void." See also,' infra, § 809 et seq. So4 CONTRACTS. 138 the vendor/^ such as a stipulation on the part of the vendee that he will not sell sand off of land purchased from the vendor when the sole business of the vendor is that of selling sand.*^ A stipu- lation in a deed or conveyance that intoxicating liquors shall not be sold on the property conveyed has been held valid/** A con- tract by which the manufacturers of a certain kind of printing press agree with the purchaser not to sell to others similar presses to be used in the same way has been held valid.*^ § 804. Exclusive agencies. — Agreements whereby one party for a valuable consideration contracts to act as exclusive agent, and is given the exclusive agency for a certain kind of goods, for some local business, are, in the absence of a statutory enactment to the contrary, upheld,^" such as an agreement by a *" Moris V. Tuscaloosa Mfg. Co., 83 Ala. 565, 3 So. 689; Hitchcock v. Anthony, 83 Fed. 779, 28 C. C. A. 80; Wittenberg v. Mollvneaux, 60 Nebr. 583, 83 N. W. 842; Herpol- sheimer v. Funke, 1 Nebr. (unof.) 304, 95 N. \\'. 687; Dunlop v. Greg- ory, 10 X. Y. 241, 61 Am. Dec. 746; Stines v. Dorman, 25 Ohio St. 580; Oregon Steam Nav. Co. v. Winsor, 20 Wall. (U. S.) 64, 22 L. ed. 315. " Hodge V. Sloan, 107 N. Y. 244, 17 N. E. 335. A deed, granting and con- veying certain land for quarry pur- poses, provided "that the rock and material taken therefrom by the party of the second part or by its lessees or assigns is for railroad pur- poses, and the party of the second part or its lessees or assigns is not to carry on the business of furnish- ing rock for any other purpose than that of railroad purposes, or for such purposes and in such business as the party of the second part may be engaged." Held, that the deed was not to be construed as giving the grantee the right to quarry or remove rock and then forbidding cer- tain uses of it after removal, and was not, therefore, in restraint of trade. Pavkovich v. Southern Pac. R. Co., 150 Cal. 39, 87 Pac. 1097. *^Star Brewerv Co. v. Primas. 163 111. 652, 45 N. 'K. 145; Sullivan v. Kohlenberg, 31 Tnd. App. 215. 61 N. E. 541 ; Sutton v. Head, 86 Ky. 156, 5 S. W. 410, 9 Am. St. 274 (not to be sold in less quantities than five gallons) ; Whealkate Min. Co. v. Mulare, 152 Mich. 607, 116 N. W. 360; Anderson v. Rowland, 18 Tex. Civ. App. 460, 44 S. W. 911. '" New York Bank Note Co. v. Kid- der Press Mfg. Co., 192 Mass. 391, 78 N. E. 463. To same effect, New York Bank Note Co. v. Hamilton Bank &c. Co., 180 N. Y. 280, IZ N. E. 48. ^^ Keith V. Hershberg Optical Co., 48 Ark. 138, 2 S. W. Ill ; Twomey v. People's Ice Co., 66 Cal. 233, 5 Pac. 158; Weiboldt v. Standard Fashion Co., 80 111. App. 67; Garden City Sand Co. v. Southern Fire &c. Co., 124 111. App. 599, affd. Lanyon v. Garden Citv Sand Co., 223 111. 616, 79 N. E. 313, 9 L. R. A. (N. S.) 446n (contract to manufacture and sell a given product exclusively to another who agreed to take such product) ; Superior Coal Co. v. E. R. Darlington Lumber Co.. 236 Til. 83, 86 N. E. 180, 127 Am. St. 275 (sale of coal) ; Brown v. Rounsavell, 78 Til. 589; Ferris v. American Brew- ing Co., 155 Tnd. 539, 58 N. E. 701, 52 L. R. A. 305; Roller v. Ott (see W. W. Roller & Co. v. Ott), 14 Kans. 609; Peck- Williamson Heating S:c. Co. v. Miller (Ky.), 118 S. W. 376; Woods v. Hart, 50 Nebr. 497, 70 N. W. 53; New York Trap-Rock Co. v. Brown, 61 N. J. L. 536, 43 Atl. 100 139 COXTRACT.S IX RESTRAINT OF TRADE. § 805 dry goods house to act as the exclusive aqent for patterns issued by a certain company.^^ The same has Ijeen held as to an agree- ment by a manufacturer of teeth to sell only to a certain dentist." This rule may, ho\ve\'er, be changed by statutor}' enactment." § 805. Sales by stockholders. — Stockholders in a corpora- tion may, on selling their stock or on disposing of the corporation assets, bind themselves by a reasonable contract not to enter into a competing business with the corporation, or the business con- ducted by the purchaser.'^' § 806. Where restraint is unlimited as to space. — As has already been mentioned all contracts in restraint of trade were, during medieval times, considered void. This rule was gradually modified, but conditions remained such that it seemed necessary to maintain a limit as to space; consequently the old cases and some modern ones hold that a restriction which embraces the whole country or an entire state is against public policy and void, for the reason that the citizen would either be compelled to give up his chosen profession or expatriate himself, and for the fur- ther reason that the contract itself tended to create a monopoly and to drive men of skill in business from the state.^^ (contract to act as sole agent to sell 1139; S. S. White Dental Mfg. Co. output of a factory). A contract by v. Hertzberg (Tex. Civ. App.), 51 which one is employed to buy all the S. W. 355. Compare with Forrest molasses a corporation shall need in Photographic Co. v. Hutchinson Gro- its business, the compensation to be eery Co. (Tex. Civ. App.), 108 S. ten cents per barrel for each bar- W. 768. rel purchased by the corporation, "Davis v. Booth. 131 Fed. 31, 65 whether the purchase should be made C. C. A. 269; Robinson v. Suburban through the one so employed or not, Brick Co.. 127 Fed. 804, 62 C. C. A. has been held valid. Healy v. South- 484; Up River Ice Co. v. Denier, 114 em &c. .Mfg. Co., 125 La. 1038, 52 Mich. 296, 72 N. W. 157, 68 Am. St. So. 150. Compare with Banker v. 480; Buckhout v. Wiltwer, 157 Mich. Willard, 46 App. Div. (N. Y.) Z7i, 406, 122 N. W. 184, 23 L. R. A. (N. 61 N. Y. S. 447. S.) 507; Kronschnabcl-Smith Co. v. "Butterick Pub. Co. v. Fisher, 203 Kronschnabel, 87 Minn. 230, 91 N. Mass. 122, 89 N. E. 189, 133 Am. St. W. 892; Anders v. Gardner, 151 N. 283. Car. 604, 66 S. E. 665; Kradwell v. °= Clark V. Crosby, 2,7 Vt. 188. Thiesen, 131 Wis. 97, 111^ N. W. 233. *" Pope-Turnbo v. Bedford (Mo. See, however. Merchant's Ad Sign App.), 127 S. W. 426, holding that Co. v. Sterling. 124 Cal. 429, 57 Pac. under the Missouri antitrust law a 468, 46 L. R. A. 142, 71 Am. St. 94. contract to use only a specified hair "See Prugnell v. Gosse. Alyen 67, restorer in treating patients for bald- which contains a statement to the ness or dandruff was void. To same effect that the promise cannot be effect. Gust Feist Co. v. Albertvpe good if the restraint be general Co. (Tex. Civ. App.), 109 S. 'W. throughout England. Mitchcl v. 8o7 CONTRACTS. 140 § 807. Abandonment of arbitrary geographical limits as test. — With the changing of business conditions and the practical annihilation of space the courts gradually abandoned arbitrary geographical limits as a test.^*' The rule as now stated is that generally the contract will be upheld if the restriction is reasonable, that is, reasonable with reference to the interest of the parties concerned, and reasonable in reference to the interest of the public, so drawn and guarded as to afford ample protec- tion to the party in wdiose favor it is imposed, while at the same time it is in no way injurious to the public.^^ Reynolds, 1 Sm. L. C (lUh ed.) 406; Lanzit v. J. W. Sefton Mfg. Co., 184 111. 326, 56 N. E. 393, 75 Am. St. 171 ; Harding v. American Glucose Co., 182 111. 551, 55 N. E. 577, 64 L. R. A. 738, 74 Am. St. 189; Taylor v. Blanchard, 13 Allen (Mass.) 370, 90 Am. Dec. 203; Bishop v. Palmer, 146 Mass. 469, 16 N. E. 299, 4 Am. St. 339. Compare the foregoing Massa- chusetts cases, however, with Anchor Electric Co. v. Hawkes, 171 ^lass. 101, 50 N. E. 509, 41 L. R. A. 189, 68 Am. St. 403. "No case is to be found where such a contract has been up- held which covered the whole of England or a state of this union." Lang V. Werk, 2 Ohio St. 519. "We do not think the extent of the terri- tory embraced in a state affects the principle. Whatever may be the ex- tent of the state, the monopoly re- stricts the citizen from pursuing his business, unless he transfers his resi- dence and his allegiance to some other state or country. Its tendency is to drive business and citizens who are skilled in business from this to other states. If one is not at liberty to carry on his business here, but is at liberty to do so elsewhere, he will be likely to go elsewhere, and employ others to go with him." Lufkin Rule Co. v. Fringeli, 57 Ohio St. 596, 49 N. E. 1030, 41 L. R. A. 185, 63 Am. St. 736, quoting from Taylor v. Blanchard, 13 Allen (Mass.) 370, 90 Am. Dec. 203. "It is against the pol- icy of the state that its citizens should not have the privilege of pur- suing their lawful occupations at some place within its borders, and that a citizen should be compelled to leave the state to engage in his busi- ness and to support himself and fam- ily. It is true that a contract may be valid which embraces portions of more than one state. Trade and busi- ness are not affected by state lines, and a contract might be good in re- straint of trade which embraced, within reasonable limits, parts of dif- ferent states, but an agreement which applies to the whole state is void, and cannot be enforced." Union Straw- board Co. V. Bonfield, 193 111. 420, 61 N. E. 1038, 86 Am. St. 346. '"See Oakdale Mfg. Co. v. Garst, 18 R. I. 484, 28 Atl. 973. 23 L. R. A. 639, 49 Am. St. 784. This is not true in all jurisdictions, however. See Seay v. Spratling, 133 Ga. 27, 65 S. E. 137; Floding v. Floding, 137 Ga. 531, 73 S. E. 729; Kinney v. Scar- brough Co. (Ga.), 74 S. E. 772 " Nordenfelt v. IMaxim Norden- felt &c. Co. (1894), A. C. 535; Greg- ory V. Spieker, 110 Cal. 150, 42 Pac. 576, 52 Am. St. 70; Fisheries Co. v. Lennen, 116 Fed. 217, affd. 130 Fed. 533, 65 C. C. A. 79; Harrison v. Glu- cose Refining Co., 116 Fed. 304, 53 C. C. A. 484, 58 L. R. A. 915; National Enameling &c. Co. v. Haberman, 120 Fed. 415; S. Jarvis Adams Co. v. Knapp, 121 Fed. 34, 58 C. C. A. 1 ; Thibodeau v. Hildreth, 124 Fed. 892, 60 C. C. A. 78, 63 L. R. A. 480; Ryan v. Hamilton, 205 111. 191, 68 N. E. 781; Eisel v. Hayes, 141 Ind. 41, 40 N. E. 119; Swigert v. Tilden, 121 Iowa 650, 97 N. W. 82, 63 L. R. A. 608, 100 Am. St. 374; Davis v. Brown, 98 Ky. 475, 32 S. W. 614, 36 S. W. 534; Anchor Electric Co. v. Hawkes, 171 Mass. 101, 50 N. E. 509, 141 CONTRACTS IN RESTRAINT OF TRADE. § 808. Illustrations of modern rule. — In those jurisdic- tions where this rule obtains a contract coextensive with the ter- ritory of Great Britain,'^'* the District of Columbia,^'* one state,"" or over several states of the union/'^ as *'not to solicit freights nor do any business with Port au Prince in or from any place or places in the United States east of the Mississippi river,""- or over the whole United States,"^ within fifteen hundred miles of Chicago,"* or without limitation as to space at all," have been upheld where it appeared that the restraint placed on trade was 41 L. R. A. 189, 68 Am. St. 403 (modifying earlier Massachusetts de- cisions) ; Marshall Engine Co. v. New Marshall Engine Co., 203 Mass. 410, 89 N. E. 548; Buck v. Coward, 122 Mich. 530, 81 N. E. 328; Kron- schnabel-Smith Co. v. Kronschnabel, 87 Minn. 230, 91 N. W. 892; Bancroft V. Union Embossing Co., 72 N. H. 402, 57 Atl. 97, 64 L. R. A. 298; Althen v. Vreeland (N. J. Eq.), 36 Atl. 479; Diamond Match Co. v. Roeber, 106 N. Y. 473, 13 N. E. 419, 60 Am. Rep. 464; Tode v. Gross, 127 N. Y. 480, 28 N. E. 469, 13 L. R. A. 652n, 24 Am. St. 475 ; Magnolia Metal Co. V. Price, 65 App. Div. (N. Y.) 276, n N. Y. S. 792; Cowan v. Fair- brother. 118 N. Car. 406, 24 S. E. 212, 32 L. R. A. 829, 54 Am. St. Ill; Shute V. Heath, 131 N. Car. 281, 42 S. E. 704; Hulen v. Earel, 13 Okla. 246. IZ Pac. 927; Nester v. Conti- nental Brewing Co., 161 Pa. St. 473, 29 Atl. 102, 24 L. R. A. 247. 41 Am. St. 894; Herreshoff v. Boutineau, 17 R. I. 3, 19 Atl. 712, 8 L. R. A. 469, ZZ Am. St. 850; Tillinghast v. Booth- bv, 20 R. I. 59, Zl Atl. 344. See also, ante. § 790. Tnderwood v. Barker (1899), 1 Ch. 300; Nordenfelt v. Maxim Nord- enfelt &c. Ammunition Co. (1894), A. C. 535. "'Godfrey v. Roessle, 5 App. D. C. 299. "^Oregon Steam Nav. Co. v. Win- sor, 20 Wall. (U. S.) 64. 22 L. ed. 315. See, however, Union Straw- board Co. V. Bonfield. 96 111. App. 413, affd., 193 111. 420, 61 N. E. 1038, 86 Am. St. 346. •* Swigert v. Tilden, 121 Iowa 650, 97 X. W. 82, 63 L. R. A. 608, 100 Am. St. 374; Trenton Potteries Co. v. Oli- phant, 58 X. J. Eq. 507, 43 Atl. 12Z, 46 L. R. A. 255, 78 Am. St. 612; Dia- mond Match Co. V. Roeber, 106 X. Y. 473, 13 X. E. 419, 60 Am. Rep. 464. See, however, Lanzit v. J. W. Sefton Mfg. Co.. 83 111. App. 168, revd. 184 111. 326, 56 N. E. 393, 75 Am. St. 171. *- Brett V. Ebel, 29 App. Div. (X. Y.) 256, 51 X. Y. S. 573. *" Xational Enameling &c. Co. v. Haberman, 120 Fed. 415 (no limita- tion as to time) ; Frame v. Ferrell, 166 Fed. 702, 92 C. C. A. 374. See, however, Seav v. Spratling, 133 Ga. 27, 65 S. E. 137; Mallinckrodt Chemi- cal Works V. X^emnick, 83 Mo. App 6, affd. 169 Mo. 388, 69 S. W. 355. ** Harrison v. Glucose Refining Co., 116 Fed. 304, 53 C C. A. 484, 58 L. R. A. 915. See, however, Harding _v. American Glucose Co., 182 111. 551, 55 X. E. 577, 64 L. R. A. 738, 74 Am. St. 189. See also, Althen v. Vree- land (X. J.). 36 Atl. 479. holding radius of 1000 miles too great when business did not extend more than 100 miles. •^Goddard v. Crefield Mills, 75 Fed. 818, 21 C C. A. 530; Anchor Electric Co. v. Hawkes, 171 Mass. 101, 50 N. E. 509. 41 L. R. A. 189, 68 Am. St. 403; Marshall Engine Co. V. Xevv Marshall Engine Co., 203 ISIass. 410. 89 X. E. 548; Bancroft v. Union Embossing Co., 72 X. H. 402, 57 Atl. 97, 64 L. R. A. 298; Tode v. Gross, 127 N. Y. 480. 28 X. E. 469. 13 L. R. A. 652n, 24 Am. St. 475; Oakdale Mfg. Co. v. Garst, 18 R. I. 484, 28 Atl. 973, 23 L. R. A. 639, 49 Am. St. 784. 809 CONTRACTS. 1 42 reasonable under the circimistances.*'*' It will be found, however, upon examination of those cases which lay down the rule, that a contract may be valid notwithstanding it is unlimited as to space. They are nearly all cases in which there was a limitation as to space or a limitation as to time, and, as has already been pointed out, a contract in restraint of trade may be rendered valid by a provision limiting the time for which it is to endure, which would otherwise be invalid. § 809. Limited and unlimited restraints as to time — Lim- ited as to time. — The preceding cases have dealt largely with the reasonableness of contracts in restraint of trade as to space, although in many of them the questions of reasonableness as to space and time overlap each other. The following cases will have reference more particularly to the reasonableness of con- tracts in restraint of trade as to the time covered by them. Two companies were engaged in the business of issuing benefit certifi- cates entitling the holders, in case of sickness or injury, to care and treatment in any hospital provided by the company. The plaintiff company had formed a lucrative business in several states and acquired valuable contracts with hospitals therein. The two companies entered into a contract, by the terms of which the plaintiff agreed to refrain for the term of three years from selling certificates in the territory named, to turn over to the de- fendant its hospital contracts, in consideration of which the defendant agreed to pay plaintiff a certain sum of money, and also to refrain for a like period of three years from selling certifi- cates to railroad employes within the territory named. It was held that the contract was not void as being in restraint of trade.*^ § 810. Limited as to time — Contracts between employer and employe. — As a general rule it is held that an employer has the right to contract with an employe not to go into the em- ployment of a competitor, for a reasonable time after his employ- ment terminates, within the territory where the employer seeks "United Shoe Machinery Co. v. "National Benefit Co. v. Union Kimball, 193 Mass. 351, 79 N. E. 790 ; Hospital Co., 45 Minn. 272, 47 N. W. Underwood v. Smith, 135 N. Y. 661, 806, 11 L. R. A. 437. Z2 N. E. 648. 143 CONTRACTS IN RESTRAINT OF TRADE. .II his market, and whether such covenant is reasonable and binding is a judicial question which must depend in each case upon the peculiar facts and circumstances.*'^ Thus, contracts entered into by traveling salesmen or solicitors with their employers that they will not act as agents for a competitor of their employers, nor engage in the business on their own account, for a period of six months, "^^ one year,'° two years,'^ three years,'- and five years," have been held valid/* Even a restraint which was to endure for ninety-nine years has been upheld." The statutes of some jurisdictions, however, provide that the restriction can last only so long as the one in whose favor it runs continues in such busi- ness.^® § 811. Limitations as to time — Effect and importance of. — There is a well-recognized distinction between a general restric- tion as to place and one as to time. An agreement, reasonable in other respects, will not, as a general rule, be declared invalid because indefinite or unlimited as to duration." However, re- •« Carter v. Ailing, 43 Fed. 208. ""Hackett v. A. L. & J. J. Reyn- olds Co., 30 Misc. (N. Y.) 72,2,, 62 X. Y. S. 1076. '"Underwood v. Barker, 80 L. T. (X. S.) 306; American Ice Co. v. Lynch, 74 X. J. Eq. 298, 70 Atl. 138, (ice wagon driver) ; Davies v. Racer, 72 Hun (X. Y.) 43. 55 X. Y. St. 191, 25 X. Y. S. 293; Erie County Milk Assn. V. Ripley, 18 Pa. Sup. Ct. 28. "Benwell v. Inns. 24 Beav. 307; Rousillon V. Rousillon, L. R. 14 Ch. Div. 351 ; Rogers v. Aladdocks (1892), 3 Ch. 346; Hopp's Tea Co. V. JDorsey. 99 111. App. 181. '^ Badische Anilin &c. Fabrik v. Schott (1892), 3 Ch. 447 (contract as to space covered the whole world) ; Harrison v. Glucose Sugar Ref. Co., 116 Fed. 304, 53 C. C. A. 484, 58 L. R. A. 915; Carter v. Ai- ling. 43 Fed. 208. " Magnolia Metal Co. v. Price. 65 App. Div. (X. Y.) 276, 72 X. Y. S. 792 (agent had obtained confidential information by reason of his em- ployment). For a case holding five years unreasonable, see Leetham v. White, 22, Times L. R. 254. '* See also, Hinde v. Gray, 1 Mann. & G. 195 (agreement not to enter into competing business for ten years upheld) ; Hooper v. Willis, 93 L. T. 236, 21 Times L. R. 691 (fourteen years) ; Lyddon v. Thomas, 17 Times L. R. 450 (agreement by brokers not to carry on similar business for twenty years upheld). " Diamond Match Co., v. Roeber, 106 X. Y. 473, 13 X. E. 419, 60 Am. Rep. 464. '°Citv Carpet &c. Works v. Jones, 102 Cai. 506. 36 Pac. 841 ; Ragsdale v. Xagle, 106 Cal. 2,22. 39 Pac. 628; Hulen V. Earel, 13 Okla. 246, 72 Pac. 927. See further, post, § 812. " Davies v. Davies, 36 Ch. Div. 359; Archer v. Marsh, 6 Ad. & El. 959; Hitchcock v. Coker, 6 Ad. & El. 438; McCurrv v. Gibson, 108 Ala. 451, 18 So. 808. 54 Am. St. 177; Brown v. Kling. 101 Cal. 295, 35 Pac. 995 ; Cook v. Johnson, 47 Conn. 175. 36 .\m. Rep. 64; Goodman v. Hender- son. 58 Ga. 567 : Swanson v. Kirbv, 98 Ga. 586, 26 S. E. 71 : Rvan v. Ham- ilton. 205 111. 191, 68 X. E. 781; Bowser v. Bliss, 7 Blackf. (Ind.) 344, 43 Am. Dec. 93; Eisel v. Haves, 141 Ind. 41, 40 X. E. 119; O'Xeal v. Mines, 145 Ind. 22, 43 X. E. 946; § 8ii CONTRACTS. 144 straints which cover an unreasonably long period of time are not favored^* and a contract reasonably restrained as to time may render valid a contract which would otherwise be unreasonable.'^^ Cases of contracts which placed the duration of restraint at one year/" two years/^ three years/" five years/^ ten years/* four- Moorman V. Parkerson, 127 La. 835, 54 So. 47; Doty v. Martin, Zl Mich. 462; Up River Ice Co. v. Denier, 114 Mich. 296, 12 N. W. 157, 68 Am. St. 480; Southworth v. Davison, 106 Minn. 119, 118 N. W. 363, 19 L. R. A. (N. S.) 769n; Gordon v. Mansfield, 84 Mo. App. 367; Dunlop v. Gregory, 10 N. Y. 241, 61 Am. Dec. 746; Law- rence V. Kidder, 10 Barb. (X. Y.) 641 ; Holbrook v. Waters, 9 How. Pr. (N. Y.) 335; Diamond Match Co. v. Roeber, 106 N. Y. 473, 13 N. E. 419, 60 Am. Rep. 464; In re McClurg's Appeal, 58 Pa. 51 ; French v. Parker, 16 R. I. 219, 14 Atl. 870. 27 Am. St. 1ZZ; Tillinghast v. Boothby, 20 R. I. 59, Zl Atl. 344; Butler v. Burleson, 16 Vt. 176. But see, Alger v. Thach- er, 19 Pick. (Mass.) 51, 31 Am. Dec. 119. " Long V. Towl, 42 Mo. 545, 97 Am. Dec. 355. " Proctor V. Sargent, 2 Mann. & G. 20; Ward v. Byrne, 5 Mees. & W. 548; Munford v. Gething, 7 C. B. (N. S.) 305; Whitaker v. Howe, 3 Beav. 383; Jones v. Lees, 1 Hurlst. & N. 189. See also, Oakdale Mfg. Co. v. Garst, 18 R. I. 484, 28 Atl. 973, 23 L. R. A. 639, 49 Am. St. 784; Artis- tic Porcelain Co. v. Boch, 1() N. J. Eq. 245, 74 Atl. 680, 139 Am. St. 758, in which the court said : "Tested alone by the question of extent of territory, the agreement appears plainly to be general and unlimited, and, consequently, inoperative and void. It remains to be seen whether the time limit of the extension agree- ment, being a period of approximate- ly five years, makes the contract one of partial restraint to such an extent as to take it out from under the opera- tion of the general rule." The court held that this limitation as to time made the contract valid. Teckton- ius v. Scott, 110 Wis. 441, 86 N. W. 672. ""McAlister v. Plowell, 42 Ind. 15; Davies v. Racer, 72 Hun (X. Y.) 43, 55 N. Y. St. 191, 25 N. Y. S. 293; Gates V. Hooper, 39 S. W. 186, revd. 90 Tex. 563, 39 S. W. 1079. "Wintz V. Vogt, 3 La. Ann. 16; Thomas v. Gavin (N. Mex.), 110 Pac. 841 (agree not to engage in buy- ing and selling of lumber) ; MoUy- neaux v. Wittenberg, 39 Nebr. 547, 58 N. W. 205. *- Brown v. Kling, 101 Cal. 295, 35 Pac. 995 ; Skaggs v. Simpson, ZZ Ky. L. 410, 110 S. W. 251; Bradford v. Montgomery Furniture Co., 115 Tenn. 610, 92 S. W. 1104, 9 L. R. A. (N. S.) 979. For a case holding three years under the circumstances as too long, Oppenheimer v. Hirsch, 5 App. Div. (N. Y.) 232, 38 N. Y. S. 31L ^'Mitchel V. Reynolds, 1 P. Wms. 181 ; Love v. Stidham, 18 App. Cas. (D. C.) 306, 53 L. R. A. 397; Bullock V. Johnson, 110 Ga. 486, 35 S. E. 703; Boutelle v. Smith, 116 Mass. Ill; Bishop v. Palmer, 146 Mass. 469, 16 N. E. 299, 4 Am. St. 339; Buckhout v. Witwer, 157 Mich. 406, 122 N. W. 184, 23 L. R. A. (N. S.) 507; Greite v. Henricks, 71 Hun (N. Y.) 7, 24 N. Y. S. 545, 53 N. Y. St. 851; Sander v. Hoffman, 39 N. Y. Super. Ct. 307, revd. 64 N. Y. 248; Paragon Oil Co. v. Hall, 4 Ohio Cir. Dec. 576, 7 Ohio Cir. Ct. 240; Gompers v. Rochester, 56 Pa. St. 194; Oakdale Mfg. Co. v. Garst, 18 R. I. 484, 28 Atl. 973, 23 L. R. A. 639, 49 Am. St. 784. Five year re- straint too extensive ; Western Woodenware Assn. v. Starkey, 84 Mich. 76, 47 N. W. 604, 11 L. R. A. 503n, 22 Am. St. 686; Mott v. Mott, 11 Barb. (N. Y.) 127. ^Whitney v. Slayton, 40 Maine 224 ; Watertown Thermometer Co. v. Pool, 51 Hun (N. Y.) 157, 4 N. Y. S. 861 ; Muller v. Vettel, 25 How. Pr. (N. Y.) 350; Wolff v. Hirschfeld, 23 Tex. Civ. App. 670, 57 S. W. 572. Ten year restraint too extensive. Urmston v. Whitelegg, 55 J. P. 453; 145 CONTRACTS IX RESTRAINT OF TRADE. § 8l2 teen years,'' fifteen years,*"' twenty years," twenty-five years,^' and ninety-nine years'"''' have been upheld. § 812. Contracts unlimited as to time. — Contracts in par- ticular instances unlimited as to lime may also be upheld."" Con- tracts of this character have been interpreted as running for life- time of either of the parties or for so long as the one in whose favor they are made is engaged in the designated business.'*^ § 813. Contracts between employer and employe — Atti- tude of courts toward. — In many cases courts of equity look with great disfavor on contracts in restraint of trade ancillary to a contract of employment, and contracts of this character are more apt to be declared unreasonable than those ancillary to the sale of the good will of a business for the reason that the cov- enantor's means for procuring a livelihood for himself and family are thereby diminished. By such agreements the citizen is de- Wright V. Ryder, 36 Cal. 342, 95 Am. Dec. 186; Oregon Steam Nav. Co. v. Winsor, 20 Wall. (U. S.) 64, 22 L. ed. 315. "Davis V. Mason, 5 T. R. 118; Hooper v. Willis, 93 L. T. 236, 21 T. L. R. 691. ^United Shoe Mfg. Co. v. Kim- ball. 193 Mass. 351, 79 N. E. 790; Un- derwood V. Smith, 19 N. Y. S. 380. " Bryson v. Whitehead, 1 Sim. & St. 74; Whittaker v. Howe, 3 Beav. 383; Fisheries Co. v. Lennen, 116 Fed. 217, affd. 130 Fed. 533, 65 C. C. A. 79; Fleckenstein Bros. Co. v. Fleckenstein. 76 N. J. L. 613. 71 Atl. 265, 24 L. R. A. (X. S.) 913. *^ Union Strawboard Co. v. Bon- feld, 193 111. 420, 61 N. E. 1038, 86 Am. St. 346; Broadbooks v. Tooles, 114 App. Div. (N. Y.) 646, 99 N. Y. S. 996. * Diamond Match Co. v. Roeber, 106 X. Y. 473, 13 X. E. 419, 60 Am. Rep. 464. "Foss V. Robv, 195 Mass. 292. 81 N. E. 199. 10 L. R. A. (X. S.) 1200n; United Shoe Machinery Co. v. Kimball. 193 Mass. 351. 79 X. E. 790. "Formerly it was generally re- garded as essential to the validity of such contracts that they be limited both as to time and place. * * * The settled modern law, however, is, both in England and this country, that limitation as to both time and place is unnecessary, if the agreement in other respects be reasonable, and not in conflict with public policy or gen- eral welfare. * * * Though there are authorities which hold that no limi- tation of time renders the contract invalid * * * the great prepon- derance of authority sustains the converse of the proposition where there is a proper limitation as to place." Southworth v. Davidson, 106 Minn. 119, 118 N. W. 363. "Wooten V. Harris. 153 N. Car. 43, 68 S. E. 898; Hauser v. Harding. 126 X. Car. 295, 35 S. E. 586. 'Tt can- not be supposed the parties intended the restraint to last after the neces- sity for it ceased to exist." Saddlery &c" Co. v. Hillsborough Mills. 68 N. H. 216. 44 Atl. 300, 73 Am. St. 569. When no limit is fixed they may be construed as limited for a reasonable time. Rackeman v. Riverbank. 167 Mass. 1. 44 X. E. 990. 57 Am. St. 427. See also, statutes of California and Oklahoma. 10 — CoxTR.\CTS. Vol. 2 § 8i4 CONTRACTS. 146 prived of much of his nsefuhiess to himself and the pubHc loses the benefit it might derive from his services. °^ § 814. Must be incidental or ancillary to be valid. — The general rule to the effect that a contract in restraint of trade will be enforced where the restraint is no more extensive than is rea- sonably required to protect the interests of the party in whose favor it is given and not so large as to interfere with the interest *" See Ward v. Byrne, 5 Mees. & W. 548; Hinde v. Grav, 1 Mann. & G. 195; Leng v. Andrews (1909), 1 Ch. 763 ; Keeler v. Tavlor, 53 Pa. St. 467, 91 Am. Dec. 221; Carroll v. Giles, 30 S. Car. 412, 9 S. E. 422, 4 L. R. A. 154. In the case of Norden- felt V. Maxim-Nordenfelt Guns &c. Co., 1894, A. C 552, 6 Eng. Rul. Cases 413, while it states the rule for the validity of contracts in restraint of trade in broader terms than it had ever before been stated in Eng- land and is usually cited to the point that contracts universal as to time and space may nevertheless be up- held, Lord Watson said : "The gen- eral policy of the law is opposed to all restraints upon liberty of individ- ual actions which are injurious to the interests of the state or com- munity. Nor is it doubtful that Courts will rightly refuse to enforce any contract by which an individual binds himself not to use his time and talents in prosecuting a particular pro- fession or trade, when its enforce- ment w'ould obviously or probably be attended with these injurious con- sequences. " See also, the dissenting opinion of Williams, L. J., in the case of Underwood v. Barker, 80 L. T. (X. S.) 306, in which he said: "This difference * * * seems to me important, because in the decision of questions of this sort one alwaj^s has to balance two considerations against each other, the one being the interest of the public in maintaining the rules of fair dealing between man and man, the other being the consideration of the interest of the public in main- taining liberty of individual action, and it seems to me that in the case of the sale of a business, while the public have the deepest in- terest that the contract by the sel- ler not to compete with the buyer shall be fairly carried out, the re- straint imposed by the contract upon liberty of individual action is so slight as to be of no public interest whatever, whereas, in the case of master and servant the servant does not enter into the contract with the same freedom of choice as that with which a persons buys a business, and the restraint on the servant from earning his livelihood in the manner best suited to his capacity seems to me to be a restriction of individual liberty in which the public have a deep interest." And Manderville v. Harman, 42 N. J. Eq. 185, 7 Atl. Zl. \xi this case there was an application for an injunction to restrain the de- fendant, a physician, from violating his covenant not to engage in the practice of medicine or surgery in a certain town at any time thereafter. It lays down the rule that contracts in restraint of trade are prima facie void, and points out the distinction between a mere sale of good will and a covenant to abstain from practicing one's profession in the future. The court in disposing of the case said : "The conspicuous defect of the com- plainant's case is that the legal right on which he founds his claim to an injunction is not clear. No court of this state has ever declared that a covenant like that on which the com- plainant rests his claim is valid. On the contrary, it appears that the gen- eral legal presumption is against the validity of such covenant. * * * No rule of equity is better settled than the doctrine that a complainant is not in a position to ask for a pre- liminary injunction when the right on which he found his claim is, as a mat- ter of law, unsettled." 147 CONTRACTS IN RESTRAINT OF TRADE. 814 of the public has already been stated." This rule implies that the contract must be one in which the main purpose is to secure to the covenantee that measure of protection needed by him, the covenant in restraint of trade being merely ancillary or incident to this main purpose.''^ The agreement restraining trade must be incidental to and in support of the contract or sale by which the one in whose favor it runs acquired some interest in the busi- ness he seeks to protect. One cannot make a valid contract in restraint of trade no matter how limited as to space or time where he does not purchase the good will or any interest in the matter and the main object of which is to stifle competition."^ " See ante, § 794 et seq. ** United States v. Addyston Pipe & Steel Co., 85 Fed. 271, 29 C. C. A. 141, 54 U. S. App. 723, 46 L. R. A. 122, affd. 175 U. S. 211, 44 Law ed. 136, 20 Sup. Ct. 96; Park v. Hartman, 153 Fed. 24, 82 C. C. A. 158, 12 L. R. A. (N. S.) 135n ; Darius Cole Transp. Co. V. White Star Line, 186 Fed. 63, 108 C. C. A. 165. See also, McCon- nell V. Camors-McConnell Co., 140 Fed. 987. 71 C. C. A. 681, revd. on appeal. 152 Fed. 321, 81 C. C. A. 429; Starkweather v. Jenner, 27 App. D. C. 348; Home Teleph. Co. v. North Manchester Teleph. Co,. 47 Ind. App. 411, 92 N. E. 558, 93 X. E. 234. See, however, United Shoe jNIachinerv Co. V. Kimball, 93 Mass. 351, 79 X. E. 790, laying down the rule "If it ap- peared that such a contract was made with the purpose to obtain a monopo- ly, and would have a direct tendency to that result, it would be looked upon with less favor. On the evi- dence in the present case this does not appear. But one legitimately may try to diminish competition in his own field, and may make rea- sonable efforts to enhance his profits by energy and enterprise as a pioneer where others onlv tardilv follow." "Harris v. Thues, 149 Ala. 133, 43 So. 131, lOL. R. A. (X. S.)204n, 123 Am. St. 17; Fox Solid Pressed Steel Co. V. Schoen, 11 Fed. 29, affd. 84 Fed. 544. 28 C. C. A. 492; United States V. Addyston Pipe &c. Co., 85 Fed. 271, 29 C. C. A. 141, 46 L. R. A. 122 ; Xational Enameling &c. Co. v. Haberman, 120 Fed. 415; Wiley v. Baumgardner, 97 Ind. 66, 49 Am Rep. 427; Chapin v. Brown, 83 Iowa 156, 48 N. W. 1047, 12 L. R. A. 428, 32 Am. St. 297 ; Barrone v. Mosely Bros., 144 Ky. 698, 139 S. W. 869; Watrous v. Allen. 57 Mich. 362, 24 X. W. 104. 58 Am. Rep. 363; Clark v. Xeedham. 125 Mich. 8, 83 X. W. 1057, 51 L. R. A. 785, 84 Am. St. 559; Euston v. Edgar, 207 Mo. 287, 105 S. W. 11Z\ Chappel v. Brockway, 21 Wend. (X. Y.) 157; Ru Ton v. Everitt, 35 App. Div. (X. Y.) 412, 54 X. Y. S. 896; Oppenheimer v. Hirsch, 5 App. Div. (X. Y.) 232, 38 X. Y. S. 311; Wood v. Whitehead Bros. Co., 165 X. Y. 545, 59 X. E. 357; Brett v. Ebel, 29 App. Div. (X. Y.) 256, 51 N. Y. S. 573; Mapcs v. Metcalf, 10 N. Dak. 601, 88 X. W. 713; Block v. Standard Distilling &c. Co., 11 Ohio Dec. 145, 8 Ohio (N. P.) 313; Huebner-Toledo Breweries Co. v. Singlar, 28 Ohio C. C. 329; Lufkin Rule Co. v. Fringeli, 57 Ohio St. 596, 49 X. E. 1030, 41 L. R. A. 185, 6Z Am. St. 736: Field Cordage Co. V. X'ational Cordage Co., 6 (Ohio) C. C. 615, 3 Ohio Cir. Dec. 613; Lange v. Werk, 2 Ohio St. 519; Paragon Oil Co. v. Hall. 7 Ohio C. C. 240, 4 Ohio C. D. 576; Gompers v. Rochester, 56 Pa. St. 194; Harbinson-Walker Refractories Co. V. Stanton, 227 Pa. 55, 75 Atl. 988; Palmer v. Toms, 96 Wis. Ztl , 71 X. W. 654. § 8i.s CONTRACTS. 148 § 815. May be invalid although for sale of property or business. — And under the more modern rule even the fact that the contract is for the sale of property or of business and good will or for the formation of a partnership or a corporation, will not save it from invalidity when it appears that it was only part of a plan to place all the property used in a business under one management with a view of establishing a monopoly. In such cases the restraint of competition ceases to be ancillary and becomes the main purpose of the contract and the transfer of property and good will or the partnership agreement is merely ancillary and subordinate to that purpose, in which case the con- tract is void and unenforcible.'^'' Covenants in restraint of trade are sustained when made in connection with a sale or purchase of a business and its good will or some analagous subject-matter when the public is not injured thereby and the restraint is no more extensive than necessary to protect the covenantee. When there is no sale or purchase of any business or the like an agree- ment in restraint of trade will not ordinarily be upheld.''^ § 816. Illustrations of invalid contracts. — Consequently it has been held that the owner of a hotel who in consideration of a stipulated monthly payment agreed to close up his hotel in a certain town for three years and thus attempt to give the other *° United States v. Addyston Pipe & Steel Co., 85 Fed. 271, 29 C. C. A. 141-, 54 U. S. App. 723, 46 L. R. A. 122, affd. 175 U. S. 211, 44 Law ed. 136, 20 Sup. Ct. 96. In the above case it is said : "Covenants in partial restraint of trade are generally up- held as valid when they are agree- ments (1) by the seller of property or business not to compete with the buyer in such a way as to derogate from the value of the property or business sold; (2) by a retiring part- ner not to compete with the firm ; (3) by a partner pending the partner- ship not to do anything to interfere, by competition or otherwise, with the business of the firm; (4) by the buyer of property not to use the same in_ competition with the business re- tained by the seller; and (5) by an assistant, servant, or agent not to compete with his master or employer after the expiration of his time of service. Before such agreements are upheld, however, the court must find that the restraints attempted thereby are reasonably necessary (1, 2, and 3) to the enjoyment by the buyer of the property, good will, or interest in the partnership bought; or (4) to the legitimate ends of the existing partnership, or (5) to the preven- tion of possible injury to the business of the seller from use by the buyer of the thing sold ; or (6) to protection from the danger of loss to the employ- er's business caused by the unjust use on the part of the employe of the confidential knowledge acquired in such business." *'Fox Solid Pressed Steel Co. v. Schoen, 77 Fed. 29, afifd., 84 Fed. 544, 28 C. C. A. 492. 149 CONTRACTS IX RESTRAINT OF TRADE. §817 party to the contract a monopoly on the hotel business of that town cannot recover the monthly payment/^'* The same has been held true of a contract whereby the owner of an ice machine agreed to close down his plant for five years in order to give the owner of a second plant a monopoly ,°^ or an agreement by grocers not to buy butter from producers for two years if a firm would open a butter store in the place/ and an agreement by a manufac- turer of chaplets and anchors to close that part of its business for the benefit of a rival is void for the reason that it tends to create a monopoly although limited as to time and subject-matter.- It has also been held that the holder of a promissory note cannot recover on the same where it was given to prevent the holder from erecting, operating, or to be interested in the construction, or operation of a cotton press at a point anywhere within a radius of a hundred miles of the post-office at Oklahoma City.^ § 817. Invalid contracts — Contracts of common carriers. — Contracts by common carriers whereby one railroad agreed not to run tracks to and through or from a stone quarry or quarries which were connected with the other party's road,* or where the owners of rival steamboats agreed to divide profits in a certain proportion without in anywise creating a partnership and in case one of the parties sold liis boat not to engage in business for a year' have been held void as in restraint of trade and as attempts to prevent competition in business.^ **"The contract was not for the Am. St. 390; Artie Ice Co. v. Frank- purpose of protecting the appellants lin etc. Ice Co., 145 Ky. 32, 139 S. W. in the legitimate use of something 1080. which they acquired by it, for noth- ^Chapin v. Brown, 83 Iowa 156, 48 ing was conveyed to them. The pur- N. \V. 1074, 12 L. R. A. 428, 32 Am. pose and effect of the contract was St. 297. to enable the appellants to enjoy an = Clark v. Xeedham, 125 Mich. 84, illegitimate use of something which 83 X, W. 1027, 51 L. R. A. 785, 84 they already had." Clemons v. Am. St. 559. Meadows (Ky.). 94 S. W. 13, 6 L. nVebb Press Co. v. Bierce, 116 La. R. A. (X. S.) 847. See in connec- 905, 41 So. 203. tion with this case Marshalltown * Chicago I. & L. R. Co. v. South- Stone Co. V. Des Moines Brick Mfg. ern Indiana R. Co. (Ind. App.) 70 Co.. 114 Iowa 574, 87 N. W. 496. X. E. 843. "Tuscaloosa Ice Mfg. Co. v. Wil- "Anderson v. Jett, 89 Kv. 375, 11 Hams, 127 Ala. 110, 28 So. 669, 50 L. Kv. L. 570, 12 S. W. 670, 6 L. R. A. R. A. 175. 85 Am. St. 125. To same 390. effect. Merchants' Ice &:c. Co. v. " See also, .Arnold Sz Co. v. Jones' Rohrman, 138 Kv. 530, 128 S. W. Cotton Co., 152 Ala. 501. 44 So. 662, 599. 30 L. R. A. (X. S.) 973, 137 12 L. R. A. (N. S.) 150n, declaring CONTRACTS. i=;o § 818. Subsequent contracts in restraint of trade. — A sale of the business and property is insufficient to support a subse- quent independent contract in restraint of trade where the sale is complete in all respects and the duty of the parties on both sides is clearly defined and the obligation to perform it comprehended within its express provisions, which contain no stipulation which is in restraint of trade; the subsequent contract not to engage in the same business is void and unenforcible, the first contract having been executed before the second was entered into," as where one partner purchases the interest of the other partner in- cluding good will, and a subsequent contract is thereafter entered into whereby for a fixed sum the retiring partner agrees not to engage in the same business.* an agreement between purchasers of cotton in a given district void as in restraint of trade. See, however. Steam Xav. Co. v. Wright, 6 Cal. 259, 65 Am. Dec. 511 (agreement en- tered into by owners of steamboats whereby one agreed not to permit his vessel to run on certain waters upheld). Pierce v. Fuller, 8 Mass. 223, 5 Am. Dec. 102 (agreement not to use a stage competing with plain- tiflF's stage upheld). See also, ante, chapter XIX. ' Cleaver v. Lenhart, 182 Pa. 285, Zl Atl. 811. » Prescott v. Bidwell, 18 S. Dak. 64, 99 N. W. 93. The distinction be- tween contracts in restraint of trade which are ancillary and those in which the main purpose of the agree- ment is to secure a monopoly or re- strain trade is illustrated by the two cases of demons v. Meadows (Ky.), 94 S. W. 13, 6 L. R. A. (N. S.) 847, which is reviewed infra, and that of Wittenberg v. Mollvneaux, 60 Nebr. 583. 83 N. W. 842. In the former case restraint of trade was the object of the contract; in the latter case the parties agreed to exchange their properties and the agreement was carried into execution. The convey- ance made by Mollyneaux to the de- fendant provided that the premises therein described should not be used for hotel purposes for a period of two years. This provision was up- held. The court said : "Contracts which impose unreasonable restraints upon the exercise of any business, trade, or profession are said to con- travene sound public policy ; but par- tial restraints are not deemed to be unreasonable when they are ancillary to an actual purchase of property, made in good faith, and are appar- ently necessary to afford fair protec- tion to the purchaser. Although such agreements tend to suppress competi- tion, and bring about conditions fa- vorable to the creation of monopolies, they are in harmony with the policy of the state, which is to promote commerce by facilitating the sale and transfer of property. Of course, if it be shown that the main purpose of the agreement is to secure a monop- oly, and that the purchase of the property was a mere incident or means to that end, it is within the rule applicable to ordinary combina- tions in restraint of trade, and will not be enforced." See, however, Moore v. First Nat. Bank of Flor- ence, 139 Ala. 595, Z^ So. Ill, which upholds a contract whereby a con- tractor agreed to let the defendant take the contract for the building of a mill without competition, on the ground that the public had no con- cern in the letting of the contract for the mill building and therefore no business in maintaining competition and said : "The withholding by agree- ment of competition for business though the business involved but a single transaction is when not op- posed to public policy a valuable con- 151 CONTRACTS IN' RESTRAINT OF TRADE. § SlQ §819. "System" of contracts. — It must also be borne in mind that a ''system" of contracts may present a very different question from those which arise when a single contract only is involved. A single contract might in no way affect the public interest while a large number might do so and might also deter- mine whether the restraint imposed on trade was ancillary or the principal object of the agreement.'* § 820. As affected by nature of business. — The nature of the business in its bearing on the validity of a contract in restraint of trade is of scarcely less importance than the element of space or time.^'* Thus contracts concerning patents and secret proc- esses which contain restrictions that would render invalid an ordinary contract are upheld." § 821. Nature of business — Distinction between sale of business and contracts between employer and employe. — It has already been pointed out that there is a distinction between the case of the sale of a business and the case of a master binding his servant by an agreement not to follow his trade, profession, or calling. In the latter case the restraint on the servant or other party from earning his livelihood in the manner best suited to his capacity is said to be a restriction of individual liberty in which sideration on which to rest the agree- 923, IZ C C A. 157; Vickery v. ment." Welch, 19 Pick. (Mass.) 523; Garst '"A common purpose unites each v. Harris, 177 Mass. 12, 58 N. E. 174; covenantee to every other, and the Thum v. Tloczynski, 114 Mich. 149. 'system' is to be construed as 'one 12 N. W. 140, 38 L. R. A. 200, 68 piece', in which the complainant and Am. St. 469 ; Hard v. Secley, 47 Barb, every assenting dealer, whether (N. Y.) 428; Jarvis v. Peck, 10 wholesaler or retailer, is a party; Paige (N. Y.) 118; Alcock v. Gib- and the agreement of such cov- erton, 5 Deur (N. Y.) 76; John D. «nantee to sell only at the prices die- Park &c. Co. v. National Wholesale tated by the manufacturer constitutes Druggists' Assn. (Sup. Ct. Spec. T.), one general scheme. The question 30 Misc. (N. Y.) 675, 64 N. Y. S. here is therefore one of a totally 276, 54 App. Div. (N. Y.) 223; Tode different character from that which v. Gross, 127 N. Y. 480, 28 N. E. 469, would arise if the question was the 13 L. R. A. 652n, 24 Am. St. 475; more simple one presented by a Fowle v. Park, 131 U. S. 88, ZZ L. breach by a single covenantee." Park ed. 67, 9 Sup. Ct. 658. V. Hartman, 153 Fed. 24, 12 L. R. A. " Harrison v. Glucose Refining Co., (X. S.) 135: W. H. Hill Co. v. Grav 116 Fed. 304, 53 C. C. A. 484. 58 L. (Mich.). 127 N. W. 803. R. A. 915; Brewer v. Lamar, 69 Ga. " C. F. Simmons Medicine Co. v. 656, 47 Am. Rep. 766. See further on Simmons, 81 Fed. 163 ; American this subject, post, § 833. Brake Beam Co. v. Pungs, 141 Fed. § 822 CONTRACTS. 1 52 the public has a deep interest, and which will render void con- tracts which might otherwise be valid/" In the case of an em- ploye or one following a learned profession there should be a rea- sonable limit as to time so as to prevent the contract from operat- ing with unnecessary harshness against the person who is to abstain from following his calling or practicing his profession at a time when his so doing could in no wise benefit the other con- tracting party, whereas in the case of the sale of a mercantile or other business, such limit is not essential to the validity of con- tracts but the restraint may often be indefinite.^* § 822. Nature of business — Corporations affected with public interest. — It is also well recognized that corporations affected with a public interest such as railroads, telegraph com- panies, and the like, cannot ordinarily be placed under any re- straint whatever in this way without such restraint acting to the prejudice of the public, and that any contract whereby a restraint is sought to be imposed upon such corporation, however impartial such restraint may be, will be void as against public policy.^* Corporations cannot contract to escape public duty. Contracts ""A clear distinction must be chapter XIX. But the contract taken between the class of cases will be upheld when the re- binding one who has sold out a mer- straint benefits the public. Wayne- cantile of other kind of business, and Monroe Tel. Co. v. Ontario Tel. Co., the good will therewith connected, 60 Misc. (N. Y.) 435, 112 N. Y. S. not to again engage in that business 424. See also, Home Tel. Co. v. within a given territory, and that North Manchester Tel. Co., 47 Ind. class of cases binding one to desist App. 411, 92 N. E. 558, rehearing de- from the practice of a learned pro- nied. 93 N. E. 234; Reed v. Saslaff, fession." Rakestraw v. Lanier, 104 78 N. J. L. 158, 7Z Atl. 1044 (agree- Ga. 188, 30 S. E. 735, 69 Am. St. 154. ment between two rolling-chair pro- See also, McAuliffe v. Vaughan, 135 prietors to maintain price at maxi- Ga. 852, 70 S. E. 322, ZZ L. R. A. mum charge provided by ordinance) ; (N. S.) 255. Whitaker v. Kilby, 55 Misc. (N. Y.) "Freudenthal v. Espy, 45 Colo. 488, 2,i7, 106 N. Y. S. 511, order ai=fd. 122 102 Pac. 280, 26 L. R. A. (N. S.) App. Div. (N. Y.) 895, 106 N. Y. S. 961. See further, ante. § 812. 1149. See Merriman v. Cover, 104 "Dunbar v. American Tel. & T. Va. 428, 51 S. E. 817, holding that a Co., 238 111. 456, 87 N. E. 521, revg. provision in a contract between a decree (1908), 142 111. App. 6; Chi- firm obtaining a right of way for a cago Gaslight &c. Co. v. People's Gas- railroad and the owner, that no chest- light &c. Co., 121 111. 530, 13 N. E. 169, nut oak bark shall be shipped over 2 Am. St. 124 ; Keene Syndicate v. the road when constructed except to Wichita Gas &c. Co., 69 Kans. 284, "the owner, unless he refuses to take 76 Pac. 834, 67 L. R. A. 61, 105 Am. it at the market price," is not on its St. 164; West Virginia Transp. Co. face void, because unreasonable as V. Ohio River Pipe Line Co., 22 W. between the parties or injurious to Va. 600, 46 Am. Rep. 527. See ante, the public. 153 CONTRACTS IN RESTRAINT OF TRADE. § ,:>2T^ which affect only a portion of a person's business and merely place a reasonable restraint upon the field in which one may ex- ercise his talents, such as a contract by one who sells the good will of his business not to again carry on business with his old cus- tomers, have been upheld. Such covenant, however, will not be extended beyond its express temis, and if it should be drawn so as to restrain the covenantor beyond the limit intended it will be pronounced invalid. ^° § 823. Nature of business — Rule further illustrated. — In case the contract is not otherwise unreasonable, one may con- tract not to manufacture a particular article,^" or not to engage in a business similar to that sold.'^ A restraint may also be placed on the use to which a particular piece of property is to be put if such restraint is not unreasonable and not larger than necessary.^* It has also already been seen that one may bind himself to sell a particular article or articles only to the cov- enantee.^'' And, on the other hand, one may agree to act as ex- clusive agent for a certain line of goods."" It is of course obvi- ous under the general principles which have been enunciated that should one bind himself not to engage in any business whatsoever within a given space and time, the contract will be void."^ One may, however, give up his own business and enter into a contract for pennanent employment with another." " riunlocke V. r.lacklove, 2 Saund. Dowden v. Pook, 73 Law J. K. B. 38 156; Ward v. Byrne, 5 M. & W. 548; (1904), 1 K. B. 45, 89 Law T. 688, 52 Dubowski V. Goldstein (1896), 1 Q. Week. Rep. 97, 20 Times L. R. 39. B. 478; Baines v. Gearv, 35 Ch. Div. "Hitchcock v. Anthony, 83 Fed. 154; Rannie v. Irvine, 8 Scott N. R. 779, 28 C. C. A. 80: Wittenberg v. 674; Mills v. Dunham (1891), 1 Ch. Mollyneaux, 60 Nebr. 583, 83 N. W. 576; Nicholls v. Strctton, 10 Q. B. 842. 346, 59 E. C. L. 344 ; Warren v. " Blauncr v. Williams Co., 36 Misc. Jones, 51 Maine 146; Dethlefs v. (N. Y.) 173, 73 N. Y. S. 165. See, Tamsen, 7 Dalv (N. Y.) 354. however, Pope-Turnbo v. Bedford '"Gilhs V. Hall, 2 Brewst. (Pa.) (Mo.). 127 S. W. 426. 342, 7 Phila (Pa) 422. =^Wieboldt v. Standard Fashion "Cussen v. O'Connor, 32 L. R. Ir. Co., 80 111. App. 67. See ante. §799. 330; Magnolia Metal Co. v. Price, 65 ^ Baker v. Hedgecock. 39 Ch. Diy. App. Div. (N. Y.) 276; Erwin v. 520; Perls v. Saalfeld (1892), 2 Ch. Hayden (Tex.), 43 S. W. 610. Such 149. contract may, however, be rendered "Carnig v. Carr, 167 Mass. 544, 46 void because the agreement is un- N. E. 117, 35 L. R. A. 512, 57 Am. reasonably extensive. Davies v. St. 488. Davies, 36 Ch. Div. 359. See also, § 824 CONTRACTS. 1 54 ' § 824. Good will — Defined. — Good will has l)een variously defined. Some of the definitions are narrow; others are broad. The narrowest definition is that perhaps which defines good will as "the probability that the old customers will resort to the old place."'^ This definition is too narrow in that it limits good will to a place. It has been broadly defined as "All that good disposi- tion which customers entertain toward the house of business, identified by the particular name or firm and which may induce them to continue giving their custom to it." And further it "must mean every advantage * * * that has been acquired by the old firm in carrying on its business, whether connected with the premises in which the business was previously carried on, or with the name of the late firm, or with any other matter carrying with it the benefit of the business.""* § 825. Sale of good will in absence of restrictive covenant. — The law recognizes in good will a thing of value which may be sold, regardless, however, of whatever definition of good will may be adopted. It is held, as a general rule, that in the case of a transfer thereof the assignor, in the absence of any express agree- ment to the contrary, may carry on a similar business in the same locality. A mere sale of good will, in the absence of any express restrictive covenant, does not import an agreement by the vendor not again to engage in a competing business.^^ But while there ° Cruttwell V. Lye, 17 Ves. Jr. 335, E. 720, 60 L. R. A. 291 ; Beard v. 11 Rev. Rep. 98; Lufkin Rule Co. v. Dennis, 6 Ind. 200, 63 Am. Dec. 380; Fringeli, 57 Ohio St. 596. 49 N. E. Findlay v. Carson, 97 Iowa 537, 66 N. 1030, 41 L. R, A. 185, 63 Am. St. W. 759 ; Drake v. Dodsworth, 4 Kans. 736. 159; Berjamini v. Bastian, 35 La. ''Churton v. Douglas, John. 174, Ann. 60, 48 Am. Rep. 216; Bassett v. 19 Eng. Rul. Cas. 666; Von Breman Percival, 5 Allen (Mass.) 345; Hoxie V. MacMonnies, 200 N. Y. 41, 93 N. v. Chaney, 143 Mass. 592, 10 N. E. E. 186, 32 L. R. A. (N. S.) 293. For 713, 58 Am. Rep. 149; Smith v. Gibbs, a review of the various definitions of 44 N. H. 335; Von Breman v. Mac- good will see People v. Roberts, 159 Monnies, 200 N. Y. 41, 93 N. E. 186, N. Y. 70, 53 N. E. 685, 45 L. R. A. 32 L. R. A. (N. S.) 293; Close v. 126. Flesher 8 Misc. (N. Y.) 299, 59 N. ^Churton v. Douglas, Johns. 174; Y. St. 283, 28 N. Y. S. 737; Moody Trego V. Hunt (1896), A. C. 7; La- v. Thomas. 1 Disney (Ohio) 294, 12 bouchere v. Dawson, L. R. 13 Eq. Ohio Dec. 630; Rupp v. Over, 3 322; Jennings v. Jennings (1898), 1 Brewst. (Pa.) 133; Tn re Hall's Ap- Ch. 378; Gillingham v. Beddow peal, 60 Pa. St. 458, 100 Am. Dec. (1900), 2 Ch. 242; Cottrell v. Bab- 584; White v. Trowbridge, 216 Pa. cock &c. Mfg. Co.. 54 Conn. 122.6 Atl. 11. 64 Atl. 862; Palmer v. Graham, 791; Porter v. Gorman. 65 Ga. 11; 1 Pars. Eq. Cas. (Pa.) 476; Zantur- Ranft V. Reimers, 200 111. 386, 65 N. jian v. Boornazian, 25 R. I. 151, 55 DD CONTRACTS IX RESTRAINT OF TRADE. 826 is no implied covenant not to engage in a competing business in the absence of a restrictive covenant to that effect, some courts do, nevertheless, afford the vendee a measure of protection and hold that by a voluntary sale of such good will the vendor pre- cludes himself from setting up a competing business which will derogate from the good will which he has sold."** § 826. Sale of good v/ill — Soliciting old customers. — Con- sequently it is held as a general rule that the former owner, by his voluntary act of sale, has prohibited himself from competing with the purchaser of the good will to the extent of having impliedly agreed that he will not solicit trade from the customers of the old business and he will be enjoined from so doing." Thus, a copartner who sells his interest in the firm business, together with the good will, may not solicit trade from the customers of the old firm,-^ as where two dentists dissolve partnership, one purchasing the business and good will from the other. The vendor may not solicit the customers of the old firm or act so as Atl. 199; ]Moreau v. Edwards, 2 Tenn. Ch. 347; Bradford v. Mont- gomery Furniture Co., 115 Tenn. 610, 92 S. W. 1104, 9 L. R. A. (N. S.) 979; Snowden v. Noah, Hopk. Ch. (N. Y.) 347, 14 Am. Dec. 547; White V. Jones, 1 Robt. (N. Y.) 321; Fish Bros. Wagon Co. v. La Belle Wagon Works, 82 Wis. 546, 52 N. W. 595, 16 L. R. A. 453, 33 Am. St. 72. ""Old Corner Book Store v. Up- ham, 194 Mass. 101, 80 N. E. 228, 120 Am. St. 532. "Trego V. Hunt (1896), A. C 7; Labouchere v. Dawson, L. R. 13 Eq. 322; Jennings v. Jennings (1898), 1 Ch. 378; Ranft v. Reimers, 200 111. 386, 65 N. E. 720. 60 L. R. A. 291; Mvers v. Kalamazoo Buggv Co., 54 Mich. 215, 19 N. W. 961, 20 N. W. 545. 52 Am. Rep. 811. And see Wentzel v. Barbin. 189 Pa. St. 502, 42 Atl. 44: Zanturiian v. Boornazian, 25 R. I. 151. 55 Atl. 199. ';A man may not derogate from his own grant; the vendor is not at liberty to destroy or depreciate the thing which he has sold; there is an implied cove- nant on the sale of good will that the vendor does not solicit the custom which he has parted with: it would be a fraud on the contract to do so. These, as it seems to me, are only different turns and glimpses of a proposition which I take to be ele- mentary. It is not right to profess and purport to sell that which you do not mean the purchaser to have; it is not honest to pocket the price, and then to recapture the subject of sale, to decoy it away or call it back before the purchaser has had time to attach it to himself and make it his verv own." Von Bremen v. Mac- Monnies, 200 N. Y. 41, 93 N. E. 186. 32 L. R. A. (N. S.) 293, quoting from Trego v. Hunt (1896), A. C 7, 65 L. J. Ch. (N. S.) 1, 12 Eng. Rul. Cas. 442. ^''Leggott V. Barrett, L. R. 15 Ch. Div. 306; Ginesi v. Cooper. L. R. 14 Ch. Div. 596; Mogford v. Courtenav, 45 L. T. (N. S.) 303; Althen v. Vree- land (N. J.), 36 .A,tl. 479; Von Bre- man v. MacMonnies, 200 N. Y. 41, 93 N. E. 186, 32 L. R. A. (N. S.') 293. refusing to follow Marcus Ward & Co. v. Ward, 40 N. Y. St. 793, 15 N. Y. S. 913. 827 CONTRACTS. 156 to destroy the business he has sold.'® And one who sells a grocery and cigar business, together with the good will thereof, will be enjoined from soliciting customers of the old firm, who were such at the time of the sale, to trade with the competing firm subsequently organized by him.^** Even though the retiring partner reserves the right to engage in a competing business, it has been held that he cannot personally or otherwise apply to cus- tomers of the old business and request them to deal with him in preference to the old firm.^ § 827. When old customers may be solicited. — However, it has been held that such retiring partner may solicit the patrons of the old firm when he does not hold himself out as the successor of the business sold.^" And it has been held that a copartner who transfers his interest in the old business to the other partners, whether the good will be included in the transfer or not, has the right, not only to advertise his new business, but also to solicit the customers of the old firm, unless he has bound himself not to do so by contract, upon subsequently resuming the same kind of business.^^ It has also been held that a retiring partner en- gaged in a competing business is not prohibited from dealing with those customers of the old firm who voluntarily and without solicitation choose to deal with liim.^* ^''Foss V. Roby, 195 Mass. 292, 81 N. E. 199, 10 L. R. A. (N. S.) 1200. '"Acker, Merrall &c. Co. v. ]\Ic- Gaw, 144 Fed. 864. The court said: "It would be a reproach to the law if no adequate remedy could be af- forded for the protection of a prop- erty so valuable as such a good will against the attack of the vendor who had sold it, and who afterward at- tempts to regain it to the damage of his vendee." "Burkhardt v. Burkhardt, 5 Ohio Dec. 185. To same effect Gillingham V. Beddow (1900), 2 Ch. 242. "Cottrell V. Babcock Printing Press Mfg. Co., 54 Conn. 122, 6 Atl. 791. To same effect, Fish Bros. Wagon Co. v. Labelle Wagon Works, 82 Wis. 546, 52 N. W. 595, 16 L. R. A. 453, 33 Am. St. 72. ''Williams v. Farrand, 88 Mich. 473, 50 N. W. 446, 14 L. R. A. 161. In this case the contract included good will. The court took as its princi- pal authority the case of Pearson v. Pearson, L. R. 27 Ch. Div. 145, which overruled Labouchere v. Dawson, L. R. 13 Eq. 322, which was in turn dis- approved by the case of Crego v. Hunt, 1896, A. C. 7, 12 Eng. Rul. Cas. 442, and which restored the doc- trine of Labouchere v. Dawson. The Michigan court rendered its decision subsequent to the Pearson case but prior to the Crego case, '*Leggott v. Barrett, L. R. 15 Ch. Div. 306. Compare, however, with Curl Bros. v. Webster (1904), 1 Ch. 685, which holds that the customers of the old firm cannot be solicited who had voluntarily and before so- licitation become customers of the new firm. See also, Foss v. Roby, 195 Mass. 292. 81 N. E. 199, 10 L. R. A. (N. S.) 1200. 1^7 COXTRACTS IX KE5TRAIXT O!' TRADE. § 828 § 828. Sale of good will at involuntary sale. — The fore- going principles apply only in the case of vcjluntary sales. The good will which the owners thereof part with under a species of compulsion, as in bankruptcy proceedings or by oj)eration of law, as in the liquidation of a partnership by the lapse of time or its termination by the death of one of the parties or pursuant to the articles of the corporation, is a lesser property than the good will which is subject to the voluntary sale and transfer by the owner for a valuable consideration. In sales of the first class, the for- mer owner remains under no legal obligation restricting competi- tion on his part in the slightest degree.^^ Thus a bankrupt after discharge may set up a rival business^*^ and may solicit patronage from the customers of the old business.^' A sale of good will forced upon the sui'viving partner by the death of the other mem- ber of the firm does not prevent such surviving partner from set- ting up a competing business and soliciting customers of the old f^rm.=^^ § 829. Holding out to public that vendor is successor. — A vendor of good will who does not expressly bind himself not to set up a competing business cannot hold out to the public that he is a successor to the business sold.^^ But a vendor of good will who has the right to establish a competing business may conduct such business under his own name, notwithstanding it may corre- " Von Breman v. MacMonnies, 200 printing plant under foreclosure pro- N. Y. 41, 93 N. E. 186, 32 L. R. A. ceedings may enjoin the mortgagor (N. S.) 293. from publishing a newspaper as the " \\'alker v. ^Mottran, L. R. 19, successor of one sold under the mort- Ch. Div. 335 ; Hudson v. Osborne, 21 gage. L. T. (N. S.) 386; Cruttwell v. Lye, ** Hutchison v. Xay, 187 Mass. 262, 17 Ves. Jr. 335. See also, Vinall v. 72 N. E. 974, 68 L. R. A. 186, 105 Am. Hendricks, 33 Ind. App. 413, 71 N. E. St. 390. 682. ** Myers v. Kalamazoo Buggy Co.. "Walker v. ^lottran, L. R. 19. 54 Mich. 215, 19 N. W. 961. 20 N. Ch. Div. 355; Cruttwell v. Lye, 17 W. 545, 52 Am. Rep. 811. To same Ves. Jr. 335. He cannot so conduct effect, Kucdler v. Glaenzer, 14 U. S. a business, however, as to lead the App. 336, 55 Fed. 895, 5 C C. .\. 305, public to believe that the business 20 L. R. A. 733; Fish Bros. Wagon set up by him is the same or is a Co. v. LaBelle Wagon Works. 82 continuation of that which was for- Wis. 546. 52 N. W. 595, 16 L. R. A. merly carried on bv him. Hudson 453, 33 Am. St. 72. See also, Mog- V. Osborne, 21 L. T. CN. S.) 386. ford v. Courtenay, 45 L. T. (N. S.) See also. Lawrence v. Times Print- 303; White v. Jones, 1 Rob. (La.) ing Co., 90 Fed. 24, which holds that 321 ; Hall's Appeal, 60 Pa. St. 458 one who has acquired a paper and 100 Am. Dec. 584. § 830 CONTRACTS. 1 58 spond to the name under which the old business was conducted/** The only restraint placed upon him is to prevent him from subse- quently employing his own name so as to deceive or mislead the public.*^ He cannot, however, adopt a name other than his own and such as was used to designate the business and good will sold." § 830. Right to carry on competing business. — The fore- going would naturally lead to the conclusion that in case of a transfer of good will, the assignor, in the absence of an express agreement to the contrary, may enter into and carry on a com- peting business in the same locality and this is true as a general rule." The rule is otherwise, however, in Massachusetts. In that jurisdiction one who has voluntarily sold the good will of his business cannot set up a competing business in derogation of his grant.** The courts of that jurisdiction hold that where the good will of a business is sold and the vendor sets up a competing business it is a question of fact whether, having regard to the character of the business sold and that set up, the new business does or does not derogate from the grant made by the sale.*^ § 831. Nature of business as affecting sale of good will. — The nature of the business has much to do with the determination of this question. In a mercantile business the sale of the good will conveys an interest in a commercial business, the trade of which may be largely if not wholly dependent upon locality and the right which the vendee acquires under the purchase is the chance of being able to retain the trade connection with the busi- ness where it has been conducted, while in the practice of a pro- ''Ranft V. Reimers, 200 111. 386, 65 ''Von Breman v. MacMonnies, 200 X. E. 720, 60 L. R. A. 291 ; Newark N. Y. 41, 93 N. E. 186, 32 L. R. A. Coal Co. V. Spangler, 54 N. J. Eq. (N. S.) 293. 354, 34 Atl. 932; White v. Trow- "Hutchinson v. Nay, 187 Mass. bridge, 216 Pa. 11, 64 Atl. 862. 262, 72 N. E. 974, 68 L. R. A. 186, "Vonderbank v. Schmitt, 44 La. 105 Am. St. 390; Gordon v. Knott, Ann. 264, 10 So. 616, 15 L. R. A. 199 Mass. 173, 85 N. E. 184, 19 L. 462n. 32 Am. St. 336. R. A. (N. S.) 762n ; Foss v. Roby, "Drake v. Dodsworth, 4 Kans. 195 Mass. 292, 81 N. E. 199, 10 L. R. 159; Myers v. Kalamazoo Buggv Co., A. (X. S.) 1200. 54 Mich. 215, 20 N. W. 545, 19 N. W. "' Old Corner Book Store v. Up- 961, 52 Am. Rep. 811. See also, ham, 194 Mass. 101, 80 N. E. 228, 120 Churton v. Douglas, 5 Jur. (N. S.) Am. St. 532. 887, John. 174, 19 Eng. Rul. Cas. 666. 159 CONTRACTS IX RESTRAINT OF TRADE. § 832 fession the personal qualities of integrity, professional skill, and ability attach to and follow the person, not the place.'** § 832. Express provision against competing in business. — The preceding matter on the subject of good will has had to do with contracts for the sale of good will which did not expressly prohibit the vendor from engaging in a competing business. It is well settled that a contract which places a reasonable restraint on the vendor of good will from re-entering into a competing business to the derogation of the good will sold will be en- forced." This is true even though no tangible property passes ; if the business sold has a good will and custom,'* such as an agency for the sale of land,'" or, in a proper case, an agreement whereby one gives up his own business and enters into the em- ployment of another agreeing not to re-engage in such business,^" ^•Foss V. Roby, 195 Mass. 292, 81 202 (not to re-establish business N. E. 199, 10 L. R. A. (N. S.) 1200. within four blocks of old stand); *' Mitchell V. Reynolds, 1 P. Wms. Jackson v. Bvrnes, 103 Tenn. 698, 54 181; Rousillon v. Rousillon, L. R. 14 S. W. 984; Tobler v. Austin, 22 Tex. Ch. Div. 351; Leather Cloth Co. v. Civ. App. 99, 53 S. W. 706; Fowle v. Lorsont, L. R. 9 Eq. 345; Maxim Park, 131 U. S. 88, 33 L. ed. 67, 9 &c. Ammunition Co. v. Nordenfelt Sup. Ct. 658; Washburn v. Dosch, 68 (1893), 1 Ch. 630; Moore &c. Hard- Wis. 436, 32 N. W. 551, 60 Am. Rep. ware Co. v. Towers Hardware Co., 873. Under Civil Code, § 1673, a con- 87 Ala. 206, 6 So. 41, 13 Am. St. 23; tract by a vendor of stock in a cor- Hovt V. Hollv, 39 Conn. 326, 12 Am. poration not to engage in the busi- Rep. 390; Hitchcock v. Anthony, 83 ness of bill posting as long as vendee Fed. 779, 28 C. C. A. 80; Bullock v. should engage therein is invalid, for Johnson, 110 Ga. 486. 35 S. E. 703; the reason that the vendor cannot Ryan v. Hamilton, 205 111. 191, 68 sell the good will of the corporation, N. E. 781, revg. 103 111. App. 212; and without a valid sale of good will Johnson v. Gwinn, 100 Ind. 466; a contract in restraint of trade is Pohlman v. Dawson. 63 Kans, 471, 65 invalid. Merchant's Ad. Sign Co. v. Pac. 689, 54 L. R. A. 913. 88 Am. St. Sterling, 124 Cal. 429, 57 Pac. 468, 249; Grow v. Scligman. 47 Mich. 607, 46 L. R. A. 142. 71 Am. St. 94. Con- 11 N. W. 404, 41 Am. Rep. 737; Beal tracts of this character have been up- V. Chase. 31 Alich. 490; Hubbard v. held. Up River Ice Co. v. Denier, Miller, 27 Mich. 15, 15 Am. Rep. 153; 114 Mich. 296. 72 N. W. 157, 68 Am. National Benefit Co. v. Union Hospi- St. 480; Buckhout v. Witwer. 157 tal Co.. 45 Minn. 272, 47 N. W. 806, jNIich. 406. 122 X. W. 184, 23 L. R. A. 11 L. R. A. 437; Presbury v. Fisher, (N. S.) 507; Anders v. Gardner, 151 18 Mo. 50; Downing v. Lewis. 59 N. Car. 604. 66 S. E. 665; Kradwell Nebr. 38. 80 N. W. 261; Trenton Pot- v. Thiesen, 131 Wis. 97, 111 N. W. teries Co. v. Oliphant, 58 N. J. Eq. 233. 507, 43 Atl. 723, 46 L. R. A. 255, 78 ** Bloom v. Home Ins. Asrency, 91 Am. St. 612. partlv affirming and Ark. 367, 121 S. W. 293; Wood v. partlv reversing 56 N. J. Eq. 680, 39 Whitehead Bros. Co., 165 X. Y. 545, Atl. "923 : King v. Fountain. 126 N. 59 X. E. 357. Car. 196. 35 S. E. 427; Paragon Oil *»Wood v. Whitehead Bros. Co., Co. v. Hall, 7 Ohio C. Ct. ^240, 40 165 X. Y. 545. 50 X. E. 357. Ohio C. D. 576; Peterson v. Schmidt, ""Anchor Electric Co. v. Hawkes, 13 Ohio Cir. Ct. 205, 7 Ohio C. D. 171 Mass. 101, 50 X. E. 509. 41 L. 833 CONTRACTS. 1 60 or an agreement whereby an employe or agent covenants not to engage in a competing business with his employer after the term of his employment ends.^^ Copartners who sell their interest in the partnership business at the same time agreeing not to again engage in that line of business are bound by such contract, if, tmder all the circumstances, it is reasonable/''" § 833. Patents and secret processes. — One wdio invents or discovers, or procures another to invent or discover for him, and keep secret, a secret process or trade secret has a qualified right in it to the extent that he has a right to maintain its secrecy and prevent its disclosure by one who has obtained knowledge thereof through fraud, breach of confidence, or a violation of a contract with him.^^ The right to use such secret process is regarded as R. A. 189, 68 Am. St. 403 ; Carnig v. Carr, 167 ^lass. 544, 46 N. E. 117, 35 L. R. A. 512, 57 Am. St. 488; Kevil V. Standard Oil Co., 8 Ohio N. P. 311. See also, ante, § 799. "Haynes v. Doman (1899), 68 L. J. Ch. 419, 80 L. T. (N. S.) 569; Underwood v. Barker (1899), 1 Ch. 300, 80 L. T. (N. S.) 306; Dubow- ski V. Goldstein (1896), 1 Q. B. 478; S. Jarvis Adams Co. v. Knapp, 121 Fed. 34, 58 C C. A. 1; Harrison v. Glucose Sugar Refining Co., 116 Fed. 304, 53 C. C. A. 484, 58 L. R. A. 915 ; Carnig v. Carr, 167 Mass. 544, 46 N. E. 117, 35 L. R. A. 512, 57 Am. St. 488 (contract for permanent employ- ment with a provision not to engage in business so long as employment was furnished). The rule has been held applicable to the following em- ployments: salesmen (]\Iills v. Dun- ham (1891), 1 Ch. 576; Carter v. Ailing, 43 Fed. 208; Sternberg v. O'Brien, 48 N. J. Eq. 370, 22 Atl. 348) ; teachers (Herreshoff v. Bouti- neau, 17 R. I. 3, 19 Atl. 712, 8 L. R. A. 469, 2,2> Am. St. 850 [covenant held void, however, on other grounds] ; Patterson v. Crabb (Tex.), 51 S. W. 870) ; dentists (Til- linghast v. Boothby, 20 R. I. 59, Zl Atl. 344). A contract by which em- ploye covenanted to give the employer the exclusive right to a machine in- vented by the employe, with all im- provements thereon. Bonsack Ma- chine Co. V. Hulse, 57 Fed. 519; :\Iorse Twist Drill &c. Co. v. Morse, 103 Alass. IZ, 4 Am. Rep. 513 "Hursen v. Gavin, 59 111. App. d^, affd., 162 111. Zn, 44 N. E. 735 ; Hub- bard v. Aliller, 27 I\Iich. 15, 15 Am. Rep. 153; American Ice Co. v. IMeck- el, 109 App. Div. (N. Y.) 93, 95 N. Y. S. 1060; Curtis v. Gokey, 68 N. Y. 300; Thomas v. Miles, 3 Ohio St. 274; Lange v. Werk, 2 Ohio St. 519. "It is thoroughly settled that the good will of business concerns is, though intangible, a species of prop- erty transferable from hand to hand as other property." Southworth v. Davidson, 106 Minn. 119, 118 N. W. 363, 19 L. R. A. (N. S.) 769n. "John D. Park & Sons Co. v. Hartman, 153 Fed. 24, 12 L. R. A. (N. S.) 135n, 82 C. C. A. 158; Stew- art V. Hook, 118 Ga. 445, 45 S. E. 369, 63 L. R. A. 255; Westervelt v. National Paper &c. Co., 154 Ind. 673, 57 N. E. 552; Peabody v. Norfolk, 98 Mass. 452, 96 Am. Dec. 664 ; Chad- wick V. Covcll, 151 Mass. 190, 23 N. E. 1068, 6 L. R. A. 839, 21 Am. St. 442; Thum v. Tloczvnski, 114 Mich. 149, 72 N. W. 140, 38 L. R. A. 200, 68 Am. St. 469; Watkins v. Landon, 52 Minn. 389, 54 N. W. 193, 19 L. R. A. 236, 38 Am. St. 560; Vulcan De- tinning Co. V. American Can Co., 67 N. J. Eq. 243, 58 Atl. 290; Taber v. Hofifman, 118 N. Y. 30, 23 N. E. 12, 16 Am. St. 740; O'Bear-Nester Glass Co. V. Antiexplo Co., 101 Tex. 431, 108 S. W. 967, 109 S. W. 931, 16 L. i6i COXTRACTS IX RESTRAIXT OF TRADE. § 834 analagous to the right to use a trade mark, copyright, or patent and entitles one to the same protective remedy.^* Consequent!}' the owner of a secret process will be protected against an employe who in violation of a contract express or implied undertakes to apply it to his own use or disclose it to a third person/^ § 834. Contracts protecting ownership in. — Contracts which merely protect one in the ownership of a secret process or R. A. (N. S.) 520, 130 Am. St. 865. The owner is entitled to be protected against invasion of his rights in the process by fraud or by breach of trust or contract. Dr. Miles Med. Co. V. John D. Park & Sons Co., 220 U. S. 37i. 55 L. ed. 502, 31 Sup. Ct. Z76. It must be borne in mind, however, that he has not an exclusive right against the pul)lic, or those who in good faith acquire a knowledge of it. This point is brought out in the cases cited above. "Vulcan Detinning Co. v. Amer- ican Can Co., 75 N. J. Eq. 542, 69 Atl. 1103. "Yovatt V. Winyard, 1 Jac. & W. 394, Z7 Eng. Reprint 425; MerrA^- weather V. Moore (1892), 2 Ch. 518; C. F. Simmons Medicine Co. v. Sim- mons, 81 Fed. 163 ; Harrison v. Glu- cose Sugar Refining Co., 116 Fed. 304, 53 C. C. A. 484, 58 L. R. A. 915; H. B. Wiggins' Sons Co. v. Cott-A- Lap Co., 169 Fed. 150; Peabodv v. Norfolk. 98 Mass. 452, 96 Am. Dec. 664; Thum v. Tloczvnski, 114 Mich. 149, 72 X. W. 140, 38 L. R. A. 200, 68 Am. St. 469: Sanitus Nut Food Co. V. Cemer. 134 Mich. 370, 96 N. W. 454; Elaterite Paint &c. Co. v. S. E. Frost Co., 105 Minn. 239, 117 N. W. 388; Salomon v. Hertz, 40 N. J. Eq. 400. 2 Atl. 379; Stone v. GrasselH Chemical Co., 65 N. J. Eq. 756. 55 Atl. 736. 103 Am. St. 794, 6Z L. R. A. 344; Tavlor Iron &c. Co. v. Nichols, 73 N. J..Eq. 684. 69 Atl. 186, 133 Am. St. 753n ; Little v. Callus, 4 App. Div. (N. Y.) 569. 38 N. Y. S. 487. 72> N. Y. St. 643: Baldwin v. Von Micher- oux. 5 Misc. (N. Y.) 386, 25 N. Y. S. 857. afTd. in 83 Hun (N. Y.) 43, 31 N. Y. S. 696; Eastman Ko- dak Co. V. Reichenbach. 20 N. Y. S. 110, 47 N. Y. St. 435. aflfd. in 79 Hun (N. Y.) 183, 29 N. Y. S. 1143, 62 N. Y. St. 97; G. F. Harvey Co. V. Nat. Drug Co., 75 App. Div. (N. Y.) 103, 77 N. Y. S. 674; Mc- Call Co. v. Wright, 133 App. Div. (N. Y.) 62, 117 N. Y. S. 775, aflfd.. 198 N. Y. 143, 91 N. E. 516, 31 L. R. A. (N. S.) 249n; Magnolia Metal Co. v. Price, 65 App. Div. (N. Y.) 276, 72 N. Y. S. 792; Fralich v. Despar, 165 Pa. 24, 30 Atl. 521 ; Sterling Varnish Co. v. Macon, 217 Pa. 7, 66 Atl. 78: Chain Belt Co. v. Von Spreckelsen. 117 Wis. 106, 94 N. W. 78. The courts have gone a long way in upholding contracts of this character. Wester- velt V. Nat. Paper &c. Co., 154 Ind. 673, 57 N. E. 552. Thus a contract by which T was to keep secret for- ever all the inventions which he made while in H's employment, has been upheld. "As to these inventions, Thi- bodeau's agreement was perpetual, and it continues to bind him, notwith- standing his employment has been ended. This contract is neither un- conscionable nor against public pol- icy. Such an agreement is not un- commonly made by an employe with his employer, and it may be necessary for the reasonable protection of the emplover's business." Thibodeau v. Hildreth. 124 Fed. 892. 60 C. C. A. 78, 63 L. R. A. 480. A contract against disclosure may be implied arising from the confidential relation resulting from the employment of one to perform a duty which will of necessity place him in possession of such secret or process. Tavlor Iron & Steel Co. V. Nichols. 7Z N. J. Eq 684, 69 Atl. 186. 24 L. R. A. (N. S. 933n. 133 Am. St. 753n. See alsf. Vulcan Detinning Co. v. Americai Can Co.. 70 N. J. Eq. 588. 62 Al 881 ; Baldwin v. Von Micheroux. 5 11 — CoxTR.^cTS, Vol. 2 § 834 CONTRACTS. 162 trade secret are not in restraint of trade/'^ It is otherwise, how- ever, when the terms of the contract binding an employe not to disclose a trade secret are unreasonable in their provisions as when unlimited as to time and place and the contract as a whole savors of servitude. ^^ The law recognizes a trade secret or secret fonnula as a thing of value which may be made the subject of confidential communication and of sale or license to use with restrictions as to territory and prices.^^ And when the owner of such secret sells it under an agreement on his part not to use such secret himself or disclose it to others the contract is neither in restraint of trade or against public policy and will be enforced when not otherwise objectionable- When the restraint is no greater than that necessary to protect the vendee in his purchase he is entitled to be protected by the court against the use or dis- closure of the secret by the vendor.^^ Ordinarily the vendor may Misc. (N. Y.) 386, 25 N. Y, S. 857; Silver Spring &c. Co. v. Woolworth, 16 R. I. 729, 19 Atl. 528. '^Thibodeau v. Hildreth, 124 Fed. 892, 60 C. C. A. 78, 63 L. R. A. 480; Dr. Miles Med. Co. v. Jaynes Drug Co., 149 Fed. 838; Magnolia Metal Co. V. Price, 65 App. Div. (N. Y.) 276, 72 N. Y. S. 792; Chicago Board of Trade v. Christie Grain &c. Co., 198 U. S. 236, 49 L. ed. 1031, 25 Sup. Ct. dZl . The names of customers of a business whose trade and patron- age have been secured by years of business effort and advertising and the expenditure of time and money stand on the same footing as a secret of compounding some article. Witkop & Holmes Co. v. Boyce, 61 Misc. (N. Y.) 126, 112 N. Y. S. 874. See also, Kinney v. Scarbrough (Ga.), 74 S. E. 112. "Tavlor Iron & Steel Co. v. Nich- lols. 73' N. J. Eq. 684, 69 Atl. 186, 24 ;_ R. A. (N. S.) 933n, 133 Am. St. '"53n. To same effect, Mallinckrodt Chemical Works v. Nemnich, 83 Mo. .pp. 6, affd., 169 Mo. 388, 69 S. W. 5. "•Dr. Miles Med. Co. v. John D. rk & Sons Co., 220 U. S. ZIZ, 55 ed. 502, 31 Sup. Ct. 376; Fowle v. rk, 131 U. S. 88, Z2, L. ed. 67, 9 Sip. Ct. 658; Chicago Board of Tiade v. Christie Grain & Stock Co., m U. S. 236, 49 L. ed. 1031, 25 Sup. Ct. 637 (sale of quotations of prices on sales of grain and provisions for future delivery) ; Simmons Medicine Co. v. Simmons, 81 Fed. 163 ; Thum V. Tloczynski, 114 Mich. 149, 72 N. W. 140, 38 L. R. A. 200. 68 Am. St. 469; Grand Rapids Wood Furnishing Co. V. Hatt, 152 ^lich. 132, 115 N. W. 714, 15 Detroit Leg. N. 89 (sale of furniture polish formula) ; Vulcan Detinning Co. v. American Can Co., €1 N. J. Eq. 243, 58 Atl. 290: Tode v. Gross, 127 N. Y. 480, 28 N. E. 469, 13 L. R. A. 652n, 24 Am. St. 475. To same effect. Grand Rapids Wood Fin- ishing Co. V. Holt, 152 Mich. 132, 115 N. W. 714. "" Harrison v. Glucose Sugar Refin- ing Co., 116 Fed. 304, 53 C. C. A. 484, 58 L. R. A. 915; Brewer v. Lamar, 69 Ga. 656, 47 Am. Rep. 766 ; Vickerv v. Welch, 19 Pick. CMass.) 523; Fowle v. Park, 131 U. S. 88, 2>Z L. ed. 67, 9 Sup. Ct. 658; iMorse Twist Drill &c. Co. V. Morse, 103 Mass. IZ. 4 Am. Rep. 513; Thum v. Tloczynski, 114 Mich. 149, 72 N. W. 140, 38 L. R. A. 200, 68 Am. St. 469; Grand Rapids Wood Finishing Co. v. Hatt. 152 Mich. 132, 115 N. W. 714; Jarvis v. Peck, 10 Paige (N. Y.) 118; Hard V. Seeley, 47 Barb. (N. Y.) 428: Tode v. Gross, 127 N. Y. 480, 28 N. E. 469, 13 L. R. A. 652n, 24 Am. St. 475; National Gum & Mica Co. v. Braend- ly, 27 App. Div. (N. Y.) 219, 51 N. 1 63 CONTRACTS IX RESTRAINT OF TRADE. § S35 also provide in the terms of sale that the secret process is to be used or sold only within a given territory.''" § 835. Restricting resale of article produced thereby. — The manufacturer of an article produced by a secret process, not protected by a patent or copyright, cannot, however, sell the same and impose conditions as to the terms of its sale which follow it into the hands of subsequent purchasers. A contract whereby he attempts to restrict its resale by such subsequent vendee who has made no restrictive covenant is contrary to the common-law rule against monopoly and restraint of trade and the provisions of the federal antitrust law.'^^ The same principle applies to the sale of Y. S. 93. "There can be no question that no court of equity would permit a person, after he had sold the abso- lute and exclusive property in a pat- ent medicine for a valuable considera- tion, to impart the formula and secret recipe, which are the most valuable parts of the purchase, to others, that they may be used in competition with his vendee. Whatever knowledge Mrs. Simmons possessed, she acquired as wife of Dr. M. A. Simmons; and she could not do what her husband would be restained from doing, and especially if, as in this case, nearly the entire consideration was paid to her as voluntary alimony. To permit this would enable every owner of a patent medicine to sell the secret thereof to one person, and have his wife, or some other member of the family to whom it had theretofore been confided, either use it, or sell it to others to be used, in competition with the purchaser. 'Equity prevails against the party who gets the secret of another delivered to him in breach of contract or of trust.' " C. F. Sim- mons Medicine Co. v. Simmons, 81 Fed. 163. "Upon the sale of a secret process, a covenant, express or im- plied, that the seller will not use the process himself or communicate it to any other person is lawful, because the process must be kept secret in or- der to be of any value, and the pub- lic has no interest in the question by whom it is used." Central Transp. Co. V. Pullman's Palace Car Co., 139 U. S. 24, 53. 35 L. ed. 55, 11 Sup. Ct. 478. One who sells to another the exclusive right to use his secret proc- ess impliedly agrees that he will not use it himself or disclose it to others. Vickery v. Welch, 19 Pick. (Mass.; 523. ^"Fowle V. Park, 131 U. S. 88, 33 L. ed. 67, 9 Sup. Ct. 658. "The prod- ucts being made under trade secrets of which complainants are the exclu- sive owners, and no other person hav- ing any interest in or right to the se- cret formulas under which the arti- cles are made, or to the articles them- selves, the manufacturers may with- hold them entirely from sale, may sell them on such terms as thej' please, may withhold them from one per- son while selling to others, and may fix any price in their sole and exclusive discretion. This rule is abundantly settled." Dr. Miles Med. Co. v. Piatt, 142 Fed. 606. "John D. Park & Sons Co. v. Hartman, 153 Fed. 24. 82 C. C. A. 158, 12 L. R. A. (N. S.) 135n. The above decision was written by Judge Lurton and is an exhaustive one reviewing many authorities. W. H. Hill & Co. v. Gray & Worcester, 163 Mich. 12, 127 N. W. 803, 30 L. R. A. (N. S.) 327; Dr. Miles Med. Co. v. John D. Park & Sons Co., 220 U. S. 373, 55 L. ed. 502, 31 Sup. Ct. 376. See also, Lovejov V. Michels, 88 Mich. 15, 49 N. W. 901, 13 L. R. A. 770. In the John D. Park & Sons case it must be borne in mind that the purchaser of the goods refused to enter into any contract not to sell them below a certain figure. The vendee obtained the goods by lawful means without 836 CONTRACTS. 164 copyrighted books and the sole right to vend does not include the rioht to so restrict resales. ^^ § 836. Trade secret — When partnership property. — The mere existence of a partnership which deals in a product manu- factured by a secret process does not of itself determine the ownership of such trade secret.*'" But should such trade secret actually belong to the partnership either partner may, upon the making any restrictive covenant as to his right to resell. It was the policy of the company to sell only to those who agreed to resell at a certain fig- ure. The action was brought to en- join defendant from in any manner inducing or persuading, or attempt- ing to procure, induce, or persuade, directly or indirectly, any breach of any such sales agreement as stated, and from procuring or attempting to procure in any way plaintiff's rem- edies and medicines directly or indi- rectly from any wholesaler or retailer wlio had executed such wholesale or retail agency contract with plaintiff in violation of the same and from ad- vertising, selling, or offering plain- tiff's medicines and remedies. The foregoing case may be distinguished from that of Garst v. Harris, 177 IMass. n, 58 N. E. 174, and Clark V. Frank, 17 Mo. App. 602, in which cases the vendee actually entered into a contract not to resell the goods be- low a stipulated figure. The agree- ment was upheld. See also, Authors & Newspapers Assn. v. O'Gorman Co., 147 Fed. 616. Nor is the John D. Park & Sons case in conflict with those decisions which merely hold that an agreement whereby a manu- facturer binds the vendee not to re- sell goods at less than a specified price is not prohibited by a particular statute of the state. Commonwealth v. Grinstead, 111 Kv. 203, 63 S. W. 427, 23 Ky. L. 590. '56 L. R. A. 709. In re Greene, 52 Fed. 104. Compare also, with Dr. Miles Medical Co. v. Piatt, 142 Fed. 606, holding that de- fendant may be enjoined from in any way procuring wholesalers and retail- ers to violate their contracts. To same effect, Grogan v. Chafifee, 156 Cal. 611, 105 Pac. 745, 27 L. R. A. (N. S.) 395n, holding that a manu- facturer of olive oil may enjoin one who has contract not to sell such oil for less than a certain amount from selling it for less than the amount specified. Dr. Miles Med. Co. v. Jaynes Drug Co., 149 Fed. 838; Park & Sons Co. V. National Wholesale Druggists Assn., 175 N. Y. 1, 67 N. E. 136, 62 L. R. A. 632, 96 Am. St. 578. Disapproved, however, in Dr. Miles Med. Co. v. John D. Park & Sons Co., 164 Fed. 803, 90 C. C. A. 579, 220 U. S. ZIX 55 L. ed. 502. This latter case was followed in Dr. Miles Med. Co. V. John D. Park & Sons Co., 220 U. S. il2>, 55 L. ed. 502, 31 Sup. Ct. 2)1^. Both these latter cases draw a distinction between the for- mula itself, the process of manufac- ture, and the manufactured product, — an article of commerce. °""The precise question, therefore, in this case is, does the sole right to vend (named in § 4952) secure to the owner of the copyright the right, after a sale of the book to a pur- chaser, to restrict future sales of the book at retail, to the right to sell it at a certain price per copy, because of a notice in the book that a sale at a different price will be treated as an infringement, which notice has been brought home to one undertaking to sell for less than the named sum? We do not think the statute can be given such a construction * * * and this is purely a question of a statutory construction. There is no claim in this case of contract limitation, nor license agreement controlling the sub- sequent sales of the book." Bobbs- Merrill Co. v. Straus, 28 Sup. Ct. 722. See also, Scribner v. Straus, 210 U. S. 352, 210 L. ed. 1094, 28 Sup. Ct. 735. •" Morison v. ^loat, 9 Hare 241, 68 Eng. Reprint 492. 165 COXTRACTS IX RESTRAINT OF TRADE. § 837 dissolution of the firm and in the absence of any agreement to the contrary, use the same.^* § 837. Trade secret and patent — Distinction between. — The principal distinction between a trade secret and a patent is that in the case of the former, while the owner is protected against any one obtaining and using the secret process through breach of trust or contract, on the other hand, one is free not only to use the process or formula if discovered by skill and investigation with- out breach of trust but also to make or sell the thing or prep- aration as made by the process or formula of the original discov- erer without his permission or against his will. In the case of a patent, however, the monopoly endures for the whole term of the patent. It gives the patentee the right to control the use of his invention during the entire period and he may rightfully protect by contract the power to regulate all manufacture, sale or use of the things embodying his invention. It is this continuity of the right granted to the patentee which distinguishes it from the right to manufacture, sell, or use unpatented articles.®^ Nor does the owner "possess his patent upon the condition that he shall make or vend the article patented, or allow others to do so for a fair and reasonable compensation. When he has once secured his pat- ent, he may, if he choose, remain absolutely quiet, and not only neglect and refuse to make the patented article, but he may like- wise refuse to permit any one else to do so on any terms. * * * He may keep such right to himself, or make the machinery or manufacture the patented article alone, or he may permit others to share such right with him, or he may allow them an exclusive right, and retain none himself.""** § 838. Rights of owner of patent. — These rights and pow- ers necessarily confer upon the holder of the patent the right to sell it to another, or agree with him that he will permit none "Baldwin v. VonMicheroux, 5 ton-Fastener Case. 11 Fed. 288, 25 Misc. (N. Y.) 386. 25 N. Y. S. 857. C. C. A. 267, 47 U. S. App. 146, 35 ■^John D. Park & Sons Co. v. L. R. A. 728; E. Bement & Sons v. Hartman. 153 Fed. 24. 82 C. C. A. 158, National Harrow Co.. 186 U. S. 70. 12 L. R. A. (N. S.) 135n. 46 L. ed. 1058, 22 Sup. Ct. 747; Paper " Good V. Tucker &c. Co.. 121 N. Y. Bap Case. 210 U. S. 405, 52 L. ed. 1, 24 N. E. 15. To same effect, But- 1122, 28 Sup. Ct. 748. 839 CONTRACTS. 1 66 other than such person to use it."' The rules governing contracts in restraint of trade do not apply to agreements concerning the sale, assignment or licensing of a patent. A patent is a true and absolute monopoly, is granted in derogation of the common right, and is a substantial property right which the public is under obli- gation to respect and protect.*'^ The holder of the patent may give another the exclusive right to use, vend or lease the patented article within a designated territory.*'^ § 839. Transfer by owner of rights under patent. — It is not necessary that all rights under the patent be conferred in one and the same contract. The right to manufacture, the right to sell, and the right to use are each substantive rights and may be granted separately or conferred together by the patentee.'" The owner of the patent may grant to another the right to use the patented article and, as one of the terms of the grant, bind the licensee to buy from the patentee those materials necessary to the construction or operation of the patented article."^ The patentee "■ Good V. Tucker &c. Co., 121 X. Y. 1. 24 N. E. 15. "And, of course, as a patent is a sort of monopoly, the owner may manufacture under it or not, as he pleases; and may make either a partial or entire assignment of it; and may protect his assignee, not only by an agreement not to use the patent (which would be unneces- sary, because such use would be an infringement), but by a covenant not to interfere in any way with the profits to be derived from the as- signed patent." Vulcan Powder Co. V. Hercules Powder Co., 96 Cal. 510, 31 Pac. 581, 31 Am. St. 242, Benj. Cont. 640, 641. ''^ Button-Fastener Case, 11 Fed. 288, 25 C. C. A. 267, 35 L. R. A. 728. To same effect, American Brake Beam Co. v. Pungs, 141 Fed. 923, 12, C. C. A. 157; Victor Talking Mach. Co. V. The Fair, 123 Fed. 424, 61 C. C. A. 58; Rubber Tire Wheel Co. v. Milwaukee Rubber W. Co.. 154 Fed. 358, 83 C. C. A. 336; United States &c. Co. V. Griffin &c. Co., 126 Fed. 364, 61 C. C. A. 334; Morse Twist Drill &c. Co. V. Morse, 103 Mass. 13, 4 Am. Rep. 513; Standard Fireproof- ing Co. V. St. Louis Expanded &c. Co., 177 Mo. 559, 76 S. W. 1008. "' Whitson V. Columbia Phono- graph Co., 18 App. (D. C.) 565; Standard Fireproofing Co. v. St. Louis Expanded Metal &c. Co., 177 Mo. 559, 76 S. W. 1008; Bancroft & Rich v. Union Embossing Co.. 12 N. H. 402, 57 Atl. 97, 64 L. R. A. 298; Sommers v. Myers, 69 N. J. L. 24, 54 Atl. 812; Consolidated R. Electric &c. Co. V. United States &c. Co., 11 N. J. Eq. 285, 78 Atl. 684 (patentees may not only sell their various patents but may also contract to assign any pat- ents secured on improvements on the patents assigned). See also, in con- nection with the case last cited, Squires v. Wason Mfg. Co., 182 Mass- 137, 65 N. E. 32. '^Button-Fastener Case, 11 Fed. 288, 25 C. C. A. 267, 35 L. R. A. 728 ; Henry v. A. B. Dick Co., 224 U. S. 1, 32 Sup. Ct. 364; Adams v. Burke, 17 Wall. (U. S.) 453, 21 L. ed. 700; Dorsey Revolving &c. Rake Co. v. Bradley Mfg. Co., 12 Blatchf. (U. S.) 202, Fed. Cas. No. 4015. " Clark v. Cyclone Woven-Wire Fence Co., 22 Tex. Civ. App. 41, 54 S. W. 392 ; Henry v. A. B. Dick Co., 224 U. S. 1, 22 Sup. Ct. 364. 167 CONTRACTS IN RESTRAINT OF TRADE. § 84O may fix the price at which the patented article or product shall be marketed." ^ 840. Contracts which owner of patent is prohibited from making. — But while the owner of the patent is given an absolute monopoly and while he may sell or otherwise dispose of such right and the transfer be valid, a contract made in connec- tion therewith wdiich prohibits the vendor from manufacturing or selling any article similar to, but not covered by the patent- right sold the vendee, will be declared void when such restraint is unreasonable." Neither can the owners of two or more distinct patents enter into a contract or system of contracts which has for its object the suppression of competition and the restraint of trade."^ Nor can the owner of a patent or patents who uses them in a business affected with a public interest or permits them to be so used discriminate against or provide for discrimination against patrons or classes of patrons similarly circumstanced; all are en- titled to use it on the same terms as other persons in the same class." §841. Construction. — It is. as a general rule, the duty of the court to interpret the written agreement and ascertain the "Indiana Mfg. Co. V. J. I. Case &c. tides under them) is not accepted Machine Co., 148 Fed. 21. and a price not agreed on. the same " Gamewell Fire- Alarm &c. Co. v. shall be withdrawn, and that he will Crane, 160 Mass. 50, 35 N. E. 98, 22 not dispose of, transfer, or assign to L. R. A. 673, 39 Am. St. 458. To same any other person any such patent. eflFect, United States v. Standard device, or thing (meaning a new pat- Sanitary Mfg. Co., 191 Fed. 172. ent or article under it)." Compare with United States v. Wins- '* Vulcan Powder Co. v. Hercules low, 195 Fed. 578. He may, however, Powder Co.. 96 Cal. 510, 31 Pac. 581, agree to assign future improvements 31 Am. St. 242, Benj. Cont. 640; In- on the patent sold. Consolidated R. diana Mfg. Co. v. J. I. Case &c. Mach. Elec. &:c. Co. v. United States &c. Co., Co., 148 Fed. 21 ; National Harrow 77 N. J. Eq. 285. 78 Atl. 684. Com- Co. v. Hench, 83 Fed. 36. 27 C C. A pare, however, with the case of Jones 349, 39 L. R. A. 299; National Har- Cold Store Door Co. v. Jones, 108 row Co. v. Bement, 21 App. Div. (N. Md. 439, 70 Atl. 88, 129 Am. St. 446, Y.) 290, 47 N. Y. S. 462 (reversed declaring against public policy a con- on another point, 163 N. Y. 505, 57 tract by which a patentee agreed that N. E. 764). in the" event of a change, "of any ^"Delaware &c. Tel. Co. v. State, patents or devices in use (meaning SO Fed. 677; Chesapeake & P. Tel. a change conceived of or invented by Co. v. Baltimore & O. Tel. Co.. 66 a new patent), then he agrees to sub- Md. 399, 7 .Atl. 809, 59 Am. Rep. 167; mit the same (that is. the clianged State v. Telephone Co., 36 Ohio St. patent, or device), and, if the same 296; Bell Telephone Co. v. Common- (meaning the new patents and ar- wealth (Pa.), 3 .Atl. 825; Commercial § 842 CONTRACTS. 1 68 meaning of the parties/® and the question as to whether or not it is in restraint of trade is one of law for the conrt.'^ ]\Iany cases lay down the rule that all contracts in restraint of trade are prima facie void, and that their provisions will not be extended by construction or implication in favor of the party seeking their enforcement beyond what the terms would clearly require.'^^ § 842. The rule illustrated. — Thus, a contract binding the defendants not to manufacture truck frames "or any part of such frames, when made of pressed metal," has been construed as only prohibiting them from manufacturing in whole or part plain- &c. Co. V. New England &c. Co., 61 Vt. 241, 17 Atl. 1071, 15 Am. St. 893. See ante, chap. XIX. ''Mills V. Dunham (1891), 1 Ch. 576. "Dowden v. Pook, IZ L. J. (K. B.) 38 (1904), 1 K. B. 45, 89 Law T. 688, 52 Wkly. 97, 20 T. L. R. 39 ; Haynes V. Doman (1899), 2 Ch. 13; Mallan V. May, 1 M. & W. 653; Linn v. Sigsbee, 67 111. 75; Knight &c. Co. v. Miller, 172 Ind. 27, 87 N. E. 823; Wiley V. Baumgardner, 97 Ind. 66, -+9 Am. Rep. 427; Warren v. Jones. 51 Maine 146; Geiger v. Cawley, 146 Mich. 550, 109 N. W. 1064; Erie County Milk Assn. v. Ripley, 18 Pa. Super. Ct. 28; Palmer v. Toms, 96 Wis. 367, 71 N. W. 654. It is believed that the construction of the contracts continues to be a question of law, notwithstanding there may exist some latent ambiguity or other factor which requires determination by a jury. It is sometimes necessary as aids to the court, to have the situation of the parties at the time of the execution of the contract, and all the facts and circumstances surrounding it, in or- der to enable the court to determine the intent of the parties; however, because the situation is such that it becomes necessary to prove these facts and circumstances, the question of construction is not transferred from the court to the jury, but, in- stead, the question of the construc- tion of the contract continues to be one of law for the court, the facts and circumstances proved being avail- able for the purpose of ascertaining the real intent of the parties. Cohen V. Berlin &c. Envelope Co., 166 N. Y. 292, 59 N. E. 906. See also, Dow- den V. Pook (1904), 1 K. B. 45; Can- field Lumber Co. v. Kint Lumber Co., 148 Iowa 207, 127 N. W. 70. ■'Underwood v. Barker (1899), 1 Ch. 300; Mystery of Gunmakers Soc. v. Fell, Willes 388; Mitchel v. Rey- nolds, 1 P. Wms. 181, 1 Smith. Lead. Cas. (11th ed.) 406; Wiggins Ferry Co. v. Ohio &c. R. Co., 72 111. 360; Talcott v. Brackett, 5 111. App. 60; M. M. Mitchell Co. V. Mitchell, 134 111. App. 214; Roller v. Ou. 14 Kans. 609 (sub- nomine W. W. Roller & Co.) ; An- chor Electric Co. v. Hawkes, 171 Mass. 101, 50 N. E. 509, 41 L. R. A. 189, 68 Am. St. 403 ; Saddlery &c. Co. v. Hillsborough ^Ulls, 68 N. H. 216, 44 Atl. 300, 1Z Am. St. 569; Mande- ville v. Harmon, 42 N. J. Eq. 185, 7 Atl. 2>1; Weller v. Hersee. 10 Hun (N. Y.) 431; Chappel v. Brockway, 21 Wend. (N. Y.) 157; Ross v. Sadg- beer, 21 Wend. (N. Y.) 166; Ste- phens V. Aulls, 3 Thomp. h Q. (N. Y.) 781; Greenfield v. Gilman, 140 N. Y. 168, 35 N. E. 435; Bingham V. Maigne, 52 N. Y. Super. Ct. 90; Seward v. Shields, 9 Pa. Dist. 583. ]Many authorities declare, in sub- stance, that all restraints are pre- sumed to be bad, but if the circum- stances are set forth the presumption may be excluded, and the court judge of these circumstances whether the contract be valid or not. Mallan v. Mav, 11 M. & W. 653; Callahan v. Donnolly, 45 Cal. 152, 13 Am. Rep. 172, and note; Tavlor v. Blanchard, \Z Allen (Alass.) 370, 90 Am. Dec. 169 CONTRACTS IN RESTRAINT OF TRADE. § 843 tifif's truck, and not from making pressed metal parts of other kinds of truck frames.^" So the lease of a store for five years, coupled with a covenant on the part of the lessor not to engage in a competing business, prevents him from so doing only during the five years period.*" An agreement not to engage in the general grocery business within two squares of the store sold will not pre- vent the covenantor from manufacturing brushes and mops and selling them, together with brooms, buckets and woodenwares, at wholesale and retail.*^ One who agrees to act as the exclusive agent, and is given the exclusive agency for a certain furnace in a given town, does not violate his contract to act as exclusive agent by selling airtight stoves.*' A contract wdiich bound one not to "engage directly or indirectly in the business of buying cot- ton waste from any cotton mills in any part of the United States or Canada" has been held not to prohibit the covenantor from buying cotton waste in the general market, or from other sources not mentioned in the contract, and selling it in the United States.*^ § 843. Contracts in restraint of trade — Presumptions as to validity. — The Sherman Antitrust Law would seem to ren- der all contracts in restraint of trade prima facie void.** Other cases adopt a more liberal construction, and deny the existence of any presumption against the validity of such contracts, but in- stead interpret them in such a way as to render them effectual instead of defeating them. An illegal restraint is not implied from doubtful words, and within the last two or three decades there has been a strong tendency to set aside the narrow and ar- 203; Lange v. Werk, 2 Ohio St. 519; Compare with Geiger v. Cawlev. 146 Kellogg V. Larkin. 3 Pin. (_Wis.) 123, .Mich. 550, 109 N. W. 1064. holding 3 Chand. 133, 56 Am. Dec. 164; Ber- that a contract not to sell hardware, lin Machine Works v. Perry, 71 Wis. furniture, implements "and" wagons 495, 38 N. W. 82, 5 Am. St. 236; was broken by engaging in selling Kradwell v. Thiesen, 131 Wis. 97, 111 hardware and agricultural imple- N. W. 233. mcnts, "and"' being construed as "or". " Fox Solid Pressed Steel Co. v. " Peck-Williamson Heating &c. Co. Schoen Mfg. Co., 84 Fed. 544, 28 C. v. Miller (Ky.), 118 S. W. :^76. C. A. 492. " Bauer v. International Waste Co., «■ Long V. O'Bryan. 28 Ky. L. 1062, 201 Mass. 197. 87 N. E. 637. 91 S. W. 659. See also, Broadbrooks " See article bv Senator Edmonds V. Tolles, 114 App. Div. (N. Y.) 646, in the December. 1911, issue of the 9*^ X. Y. S. 996. North American Review. *^ Goose V. Leonard, 14 Ky. L. 174. § 844 CONTRACTS. I/O bitrary rules of construction based on place and time in favor of a more reasonable vie\v.^° § 844. Modern doctrine. — The modern decisions as a gen- eral rule take into consideration the situation of the parties, the nature of the business, the rights of the one in whose favor the restriction runs, and also the effect of such restriction upon the public.*" Thus, when the contract is in fact beneficial to the pub- lic, it will not be declared unenforcible because in restraint of trade." § 845. Rules of construction illustrated by particular cases. — A contract to sell or rent certain property only to persons who would agree to buy and handle the beer of a certain company has been held not to prevent the occupant from handling other beers, since the adverb "only" modifies "sell or rent," and not the words "buy or handle," and for that reason does not re- strain trade-^* The word "deal" in a contract not to "deal" in 'Hlumford v. Gething, 7 C. B. (N. S.) 305, 97 E. C. L. 303; Merchants' Ad. Sign Co. v. Sterling, 124 Cal. 429, 57 Pac. 468, 46 L. R. A. 142, 71 Am. St. 94; Anthony v. Hitchcock, 71 Fed. 659; Hubbard v. Miller, 27 Mich. 15. 15 Am. Rep. 153; Caswell v. Gibbs, 33 Mich. 331; Trenton Potteries Co. v. Oliphant, 58 N. J. Eq. 507, 43 Atl. 723, 46 L. R. A. 255, 78 Am. St. 612; Diamond Match Co. v. Roeber, 106 N. Y. 473, 13 N. E. 419, 60 Am. Rep. 464; Wood v. Whitehead, 165 N. Y. 545. 59 N. E. 357. See ante, § 794 et seq. *' Smith V. Hancock (1894), 2 Ch. 377; More v. Bonnet, 40 Cal 251. 6 Am. Rep. 621 ; Long v. Towl, 42 Mo. 545, 97 Am. Dec. 355; Trenton Pot- teries Co. V. Oliphant, 56 N. J. Eq. 680, 39 Atl. 923, 46 L. R. A. 255 ; Oak- dale Mfg. Co. V. Garst, 18 R. I. 484, 28 Atl. 973, 23 L. R. A. 639, 49 Am. St. 784; Oregon Steam Nav. Co. v. Winsor, 20 Wall. (U. S.) 64, 22 L. ed. 315. ""The contract is not one in re- straint of trade. It does not restrain appellees from suppb'ing natural gas to the city of Ft. Smith under the or- dinance No. 634, so long as they are willing to meet a 'downward revision' of the prices of natural gas. The law prohibiting contracts in restraint of trade does not prevent one from mak- ing a contract by which he agrees to compete with others in the price of the commodity which he produces for the use of the public. One purpose of the law in prohibiting contracts in restraint of trade is to encourage competition, and thereby lower the prices of services and commodities to the public." Ft. Smith Light &c. Co. V. Kelley, 94 Ark. 461, 127 S. W. 975 ; Wayne-Monroe Tel. Co. v. Ontario Tel. Co., 60 Misc. (N. Y.) 435, 112 N. Y. S. 424. See also, Forrest Pho- tographic Co. V. Hutchinson Grocery Co. (Tex. Civ. App.), 108 S. W. 768. *^ Fleming v. Mulloy, 143 Mo. App. 309, 127 S. W. 105. Compare with Ferris v. American Brewing Co., 155 Ind. 539, 58 N. E. 701, 52 L. R. A. 305 (agreement not to sell any beer on leased premises except that of a named company). Compare with Christ Diehl Brewing Co. v. Konst, 30 Ohio C. C. 782 (holding that les- see may agree to sell only lessor's beer on the premises) ; Huebner-To- ledo Breweries Co. v. Singlar, 28 Ohio C. C. 329 (holding invalid a con- tract by which a lessee bound himself 171 COXTRACTS IX RESTRAIXT OF TRADE. § 846 Stock, cattle or horses for speculative purposes in a certain vicin- ity, has been construed to mean "to engage in the business of buying and selling such property with the object of gain.""^ The word "at" has been construed as synonymous with "near,'""" and the word "and" as "or."'*^ So a contract which limits the communication of what the plaintiff might have refrained from communicating to any one is not in restraint of trade."" A butcher, on selling his business, agreed not to "enter into the butcher business nor kill any animals for the purpose of peddling or sale of any nature only for his own private use." It was held that this contract prohibited the vendor from competing with the vendee either himself personally or in any other manner, directly or indirectly, as by becoming the employe of another butcher.'''' § 846. Recognition taken of modern conditions. — Recog- nition is taken of the great change that has taken place by reason of modern inventions and means of communication which have removed the barrier of space, so far as the majority of trades and businesses are concerned. This has resulted in the modification of the old principle to suit present day conditions.''* § 847. Divisibility or severability of contract. — Where an agreement in restraint of trade contains a stipulation unlimited to sell only lessor's beer, but by which ter of the village of L— , and that the lessor was not bound to furnish the contract was not void for failing the same to the lessee). But a contract to state a period within which the of this character has been upheld, defendant was not to practice den- even though it did not specifically tistry within those limits. Cook v. bind the plaintiff to furnish the de- Johnson, 47 Conn. 175, 36 Am. Rep. fendant beer at anv time when the 64. plaintiff tendered its'elf ready to fur- "Geiger v. Cawley, 146 Mich. 550, nish a good qualitv of beer at proper 109 N. W. 1064. prices. Feigenspan v. Nizolek, 71 N. "Chicago Board of Trade v. Chris- J. Eq. 382. 65 Atl. 703, affd., 72 N. J. tie Grain &c. Co.. 198 U. S. 236, 49 Eq. 949, 68 Atl. 1116. L. ed. 1031, 25 Sup. Ct. 637. *" Wilson v. Delaney, 137 Iowa 636, "' Canady v. Knox, 48 Wash. 685, 113 N W 842 94 Pac. 652. •"Harris v. Theus. 149 Ala. 133, 43 "See Maxim Nordenfeld Guns &c. So. 131, 10 L. R. A. (N. S.) 204n. Co. v. Nordenfeld (1893), 3 Ch. 122, 123 Am. St. 17. The plaintiff bought 62 L. J. Ch. 749; United States _v. the defendant's business as a dentist, Addyston Pike &c. Co.. 85 Fed. 271, and the latter executed the contract 29 C. C A. 141, 46 L. R. .\. 122; not to practice dentistrv within a Trenton Potteries Co. v. Oliphant. radius of ten miles of the town of 58 N. J. Eq. 507, 43 Atl. Ill, 46 L. R. L— . It was held that the above ex- A. 255, 78 Am. St. 612; Diamond pression meant ten miles of the cen- I\Iatch Co. v. Roeber, 106 N. Y. 473, § 848 CONTRACTS. 1 72 and in restraint of trade and another provision which is capable of being construed divisibly and which is valid, the court will give effect to the latter and will not hold the agreement void in toto.^^ The bad is rejected ; the good retained. Thus a telephone com- pany which put a switch board and telephone system in defend- ant's hotel under a contract that it should have the exclusive priv- ilege of furnishing such hotel with telephone facilities might en- join the removal of its switchboard and telephone system but could not restrain defendant from permitting the instalation of any other telephone system in his hotel."° § 848. Divisibility as to territorial extent — When valid. — Contracts in restraint of trade are frequently declared divisible in respect either to territorial extent or time. ''Where the re- straint imposed by the contract applies to a limited and reasonable space, and is also extended to an unlimited or unreasonable space, the contract may be held to be divisible and the restriction as to the reasonable limit expressed may be enforced."^' Consequently where a contract prohibited one from resuming a particular busi- ness any place within the United States, this stipulation was held divisible from the rest of the contract and since the remaining part of the contract was based on a sufficient consideration it was en forced. ''^ Likewise a contract which bound one not to engage in business of the character formerly conducted either in the city of Jersey City or within five hundred miles of that city, has been held divisible and so far as it embraces territory outside of Jersey City declared unreasonable and to that extent invalid, but that in respect to Jersey City itself it was clearly necessary for the protection of the business at the time of the sale and to that ex- tent might be enforced."* And a covenant in a contract for the 13 N. E 419, 60 Am. Rep. 464; Les- Averill, 199 N. Y. 128, 92 N. E. 206, lie V. Lorillard, 110 N. Y. 519, 18 139 Am. St. 878. N. E. 363, 1 L. R. A. 456. " Wiley v. Baumgardner, 97 Ind. *" Ft. Smith &c. Co. v. Kelley, 94 66, 49 Am. Rep. 427. Ark 461, 127 S. W. 975; Central «' Nicholson v. Ellis, 110 Md. 322, New York &c. Co. v. Averill, 199 N. 1?> Atl. 17, 24 L. R. A. (N. S.) 942, Y. 128, 92 N. E. 206, 139 Am. St. 132 Am. St. 445. 878; Oregon Steam Nav. Co. v. "" Fleckenstein Bros. Co. v. Fleck- Winsor, 20 Wall. (U. S.) 64, 22 L. enstein. 76 N. J. L. 613, 71 Atl. 265, ed. 315. 24 L. R. A. (N. S.) 913. To same •* Central New York &c. Co. v. effect. Price v. Green, 16 M. & W. 173 CONTRACTS IX RESTRAINT OF TRADE. § 849 sale of a pottery manufacturing business which prohibited sellers from engaging in such business "within any state in the United States of America or within the District of Columbia except in the state of Nevada and the territory of Arizona" was severable and might be enforced in the state of New Jersey, that being the place of the business, the place of the contract and the place where it was being violated.^ Agreements not to re-enter busi- ness in a certain city," or county.'" or any other place, usually in the United States, have been declared divisible and enforcible as to the city or county. An agreement whereby one was not to carry on a particular trade within one-half mile of the residence of the one who had taught him such trade, or within one-half mile of the place where such instructor or her executors or ad- ministrators might thereafter move has also been declared divis- ible and enforcible as to the first restriction.* But where the contract contains no residuum which is not open to objection the entire agreement is void.'^ § 849. Divisibility as to time. — Should the time limit be unreasonable the contract may be enforced in a proper case for such time as under the circiimstances is reasonable.*^ In case there is no limited time some courts construe such contract as covenants not to engage in the business sold so long as the buyer remains in business.'^ It has also been held that to the extent that 346, 6 Eng. Rul. Cas. 406 (business Ind. 560. 41 X. E. 1048. 51 Am. St. not to be conducted within 600 miles 193; Roberts v. Lemont. IZ Nebr. of London or Westminster. Held 365, 102 N. W. 770; Althen v. Vree- enforcible as to cities of London and land (N. J.). 36 Atl. 479. Westminster although the balance of "Oregon Steam Nav. Co. v. Win- the restriction was held void). sor, 20 Wall. (U. S.) 64, 22 L. ed. 'Trenton Potteries Co. v. Oliphant, 315. 58 N. J. Eq. 507. 43 Atl. 723, 46 L. "'Harris v. Theus. 149 Ala. 133. 43 R. A. 255, 78 Am. St. 612. So. 131. 10 L. R. A. (X. S.) 204n. ^'Citv Carpet Beating Works Co. v. 123 .\m. St. 17; Gregory v. Spieker, Jones,' 102 Cal. 506. 36 Pac. 841; 110 Cal. 150, 42 Pac. 576, 52 Am. St. Peltz V. Eichele, 62 Mo. 171. 70. In case the contract contained a 'Dean v. Emerson. 102 Mass. 480; reasonable time limit the contract will In re Smith's Appeal. 113 Pa. 579, 6 be enforced so long as the buyer r«- Atl. 251. mains in business not e.xceeding the *Chesman v. Xainbv. 2 Strange entire limit. Meyers v. Merrillion. 739. ' 118 Cal. 352. 50 Pac. 662 (this rule * See Beetham v. Frazer, 21 Times is statutory in California). See al.'io, L. R. 8: Hooper v. Willis, 93 "Law Hauser v. Harding. 126 N. Car. 295. T. 236, 21 Times L. R. 691; Con- 35 S. E. 586 (lifetime of covenantor), sumers Oil Co. v. Xunnemaker, 142 § 850 CONTRACTS. 1 74 a contract restrains the defendant from engaging to work for any individual, firm, or corporation engaged in a similar line of busi- ness within a certain territory for a specified time it may be as to that feature void and unen forcible, but such employe may, never- theless, be restrained from interfering with the trade custom or good will of his employer and from making use of the knowl- edge or information gained from his employment.® § 850. Breach of contract. — Whether or not the breach of a contract in restraint of trade is actionable or can be prevented is altogether a question as to the validity of the contract itself ; if the restraint is reasonable and otherwise valid the contract can be enforced. This has been demonstrated by the discussion of the preceding sections of this chapter. The present section is more concerned with what amounts to a breach than the liability which may result from a breach of the contract. Where a physician has entered Into an agreement not to practice medicine within a given district, the word practice has been construed to mean the exercise of his profession, and that a single incursion within the prohibited territory was a violation of the agreement.^ Agree- ments of this character may also be broken by the promisor be- coming the member of a firm engaged in a competing business witliin the designated district.^'' And there is no question but that the agreement is broken by such promisor opening an office within the prescribed district and entering into active competition with the one in whose favor the restraint runs." A physician's contract to refrain from practicing medicine within a certain limit is also broken by practicing medicine within the limits of the prescribed district notwithstanding he resides outside such dis- trict. ^^ But one who establishes his office outside the limit pre- scribed is not prohibited from treating patients who voluntarily * Witkop &c. Co. V. Boyce, 61 Misc. 573, 19 Atl. 704 (physician opened an (N. Y.) 126, 112 N. Y. S. 874, affg. office in close proximity to the place without opinion 115 N. Y. S. 1150. where his former office was main- " Gaul V. Hoffman, 5 Pa. County tained). See also, Freudenthal v. Court 355. Espey, 45 Colo. 488, 102 Pac. 280, 26 "Greenfield v. Gilman, 140 N. Y. L. R. A. (N. S.) 961. 168, 35 N. E. 435. ^' Smith v. Smith, 4 Wend. (N. Y.) "Raub V. Van Horn, 133 Pa. St. 468. 175 CONTRACTS IN RESTRAINT OF TRADE. § 85 1 come to him even though they Hve within the territory within which he is not to practice medicine.'^ §851. Breach of contract— Partners and employer.— It has already been mentioned that a retiring partner who sells his interest in a given business together with good will and without any restriction on his right to engage in a competing business may as a general rule establish a new and competing business; but that he cannot represent himself as a successor of the old firm or solicit its customers but that he may deal with them if they come to him voluntarily/* One who enters the employment of another may thereby breach a covenant not to engage in a rival business, as where on the dissolution of a partnership the retir- ing partner engages not to conduct the same business heretofore conducted by them in the same city, or with any partner, partner's firm, company, or corporation for a period of two years, it was held that such retiring partner violated his agreement by entering into the employment of another who has engaged in a compet- ing business and practically acting as agent and manager in the conduct thereof/^ § 852. Breach of contract — Entering another's employ- ment — When is. — The following has been stated as the rule whereby to determine whether entering another's employment is a breach of a covenant not to engage in rival business. When the "Dwight V. Hamilton, 133 Mass. of a rival shop); Meyer v. Labau, 175. 51 La. Ann. 1726, 26 So. 463 (agree- "See ante. § 824 et seq. ment not to engage in mercantile " Siegel V. Marcus, 18 N. Dak. 214, business violated by taking part in 119 N. W. 358, 20 L. R. A. (N. S.) conducting a rival business although 769n. For other cases to the same he had no interest as owner) ; Em- effect, see Jefferson v. Markert. 112 ery v. Bradley, 88 Maine 357, 34 Atl. Ga. 498, n S. E. 758 (employment 167 (the promisor carrying on or but a pretext to cover violation of the acting as clerk or agent). See also, agreement) ; Merica v. Burget, 36 Anderson v. Ross, 14 Ont. L. Rep. Ind. App. 453, 75 N. E. 1083 (held 683; Boutelle v. Smith. 116 Mass. that vendor violated his agreement by 111; Geiger v. Cawley, 146 Mich. 550, taking stock in and becoming assist- 109 N. W. 1064; Finger v. Hahn. 42 ant cashier of a new bank); Tohl- N. J. Eq. 606. 8 Atl. 654; Corwin v. man v. Dawson, 63 Kans. 471, 65 Pac. Hawkins, 42 App. Div. (N. Y.) 571, 689, 54 L. R. A. 913, 88 Am. St. 249 59 N. Y. S. 603; American Ice Co. (barber who had sold out under a v. Meckel, 109 App. Div. (N. Y.) contract not to engage in the barber 93, 95 N. Y. S. 1060; Petejson y. business in any way violating his Schmidt, 13 Ohio C C. 205, 70 Ohio agreement by becoming an employe C. D. 202. § 853 CONTRACTS. 1 76 scope and character of employment is such as to result in all like- lihood in substantial interference with the business which was the subject of the contract it amounts to a breach of the covenant not to engage in a rival business/" Whether or not accepting employment with another is a breach of a covenant not to en- gage in a rival business also depends largely upon the wording of the contract.^" § 853. Acts which amount to a breach by vendor. — It is not always easy to determine whether the acts of the vendor amount to a breach of his contract not to engage in a specified business. Many cases lay down the rule that a similar business is one so like the other as to compete with it.^^ The vendor is also required to exercise good faith. ^^ If he violates the letter and spirit of his agreement,"" or does that which it is evident the agreement intended that he should not do,"^ it may be ground for granting an injunction. He cannot set himself up without the limits of the prescribed territory and solicit patronage within the same,^" nor create the impression that he has merely moved from one place of business to another, in which latter location he will continue his former business."^ Nor can he engage in such busi- '" Wilson V. Delaney, 137 Iowa 636, Stuart v. Diplock, 43 Ch. D. 343; 113 N. \V. 842. See also, Nelson v. Rousillon v. Rousillon, L. R. 14 Ch. Johnson, 38 xAIinn. 255, 36 N. W. 868. D. 351 ; Caswell v. Johnson, 58 Maine Several of the cases above cited in 164; Davis v. Barney, 2 Gill & J. effect state the same rule, (Md.) 382; Richardson v. Peacock, " See Battershell v. Bauer, 91 111. 33 N. J. Eq. 597 ; Kelso v. Reid, 145 App. 181. For other cases in which Pa. St. 606, 23 Atl. 323, 27 Am. St. it is held that a contract not to en- 716. But see Clark v. Durland, 47 gage in a rival business is not Hun (N. Y.) 633, 13 N. Y. St. 427; breached by the acceptance of em- Breck v. Ringler (Ct. App.), 42 N. ployment, see Grimm v. Warner, 45 Y. St. 356. Secretly manufacturing Iowa 106. Compare with Wilson v. and selling the same compound by a Delaney, 137 Iowa 636, 113 N. W. different name and through a third 842; Tabor v. Blake, 61 N. H. 83; person is a breach of an agreement Eastern Express Co. v. Meserve, 60 not to manufacture or sell such com- N. H. 198; Haley Grocery Co. v. pound. Gregory v. Spieker, 110 Cal. Haley, 8 Wash. 75, 35 Pac. 595. 150, 42 Pac. 576, 52 Am. St. 70. " See, generally, Vernon v. Hal- ^* Heichew v. Hamilton, 3 Green lam, 34 Ch. D. 748; Pearson v. Pear- (Iowa) 596. son, 27 Ch. D. 145; Labouchere v. ""Richardson v. Peacock, 33 N. J. Dawson, L. R. 13 Eq. 322; Harms Eq. 597. V. Parsons, 32 Beav. 328; Cruttwell ^ Watts v. Smith, 62 L. T. (N. S.) V. Lye, 17 Ves. Jr. 335 ; Drew v. Guy 453. (1894), 3 Ch. 25; Fitz v. lies (1893), "Duffy v. Shockey, 11 Ind. 70, 71 1 Ch. 77, following Buckle v. Fred- Am. Dec. 348. ericks, 44 Ch. D. 244, distinguishing " Wolmershausen v. O'Connor, 36 / 177 CONTRACTS IN RESTRAINT OF TRADE. § 854 ness under cover of his son's name,-^ or the name of his wife,-"^ or attempt to evade his contract by becoming a principal stock- holder in a rival corporation.-" It has been held, however, that a covenant not to engage in a similar or competing business does not prevent the covenantor from loaning money to a person who is engaged in such trade or occupation, or who desires to embark therein.-' § 854. Rights and remedies — Injunction. — It has already been seen that where the restraint is reasonable and is supported by a valuable consideration the contract is valid and en forcible. -** In case the contract is a valid and en forcible one the remedy fre- quently granted is that of injunction. This relief is usually granted on the ground that adequate damages cannot be estimated or recovered for a breach of the contract.-*^ §855. Remedies — Injunction — When may issue. — The courts have frequently enjoined one from the practice of his pro- fession in violation of a valid agreement not to practice for a spe- L. T. (N. S.)921; In re Hall's Appeal 60 Pa. St. 458. 100 Am. Dec. 584. =^Guerancl v. Bandelet, 32 Md. 561, 3 Am. Rep. 164. "Harris v. Theus, 149 Ala. 133. 43 So. 131, 10 L. R. A. (N. S.) 204n, 123 Am. St. 17. See also, Flecken- stein Bros. Co. v. Fleckenstein, 66 N. J. Eq. 252, 57 Atl. 1025 ; My Laundry Co. V. Schmeling, 129 Wis. 597, 109 N. W. 540. See, however, the case of Loe V. Lardener, 4 W. R. 597, which holds that where the cov- enantor married and assisted her husband in his business within the prescribed area she had not violated the agreement not to take, keep or be interested in anv licensed house. =' Kramer v. Old, '119 N. Car. 1, 56 Am. St. 650, 25 S. E. 813, 34 L. R. A. 389. "Bird v. Lake. 1 Hem. & M. 338; Gallup Electric Light Co. v. Pacific Imp. Co., 16 N. ^lex. 86, 113 Pac. 848; In re Harkinson's Appeal, 78 Pa. St. 196. 21 Am. Rep. 9. " See. generallv, preceding section. "Nicoll v. Beere, 53 L. T. (N. S.) 659; Ragsdale v. Nagle, 106 Cal. 332, 39 Pac. 628; Brewer v. Lamar, 69 12— CoNTR.\cTS, Vol. 2 Ga. 656, 47 Am. Rep. 766; Spier v. Lambdin, 45 Ga. 319; Cobbs v. Niblo, 6 111. App. 60; O'Neal v. Hines, 145 Ind. 32, 43 N. E. 946; Guerand v. Bandelet, 32 Aid. 561, 3 Am. Rep. 164; Hubbard v. Aliller, 27 Mich. 15, 15 Am. Rep. 153; Richardson v. Pea- cock, 33 N. J. Eq. 597; Dethlefs v. Tamsen, 7 Dalv (N. Y.) 354; Davies V. Racer, 72 Hun (N. Y.) 43, 55 N. Y. St. 191, 25 N. Y. S. 293; Muller v. Vettel, 25 How. Pr. (N. Y.) 350; Diamond Match Co. v. Roeber, 106 N. Y. 473, 13 N. E. 419, 60 Am. Rep. 464; Francisco v. Smith, 143 N. Y. 488, 38 N. E. 980; Baumgarten v. Broadaway, 77 N. Car. 8 ; Kramer v. Old. 119 N. Car. 1, 25 S. E. 813. 34 L. R. A. 389, 56 Am. St. 650; Wilkin- son V. Collev, 164 Pa. St. 35. 30 Atl. 286, 26 L. R. A. 114; Gaul v. Hoff- man, 5 Pa. Co. Ct. 355. But see Car- roll V. Giles, 30 S. Car. 412, 9 S. E. 422, 4 L. R. A. 154; Patterson v. Crabb (Tex. Civ. App.), 51 S. W. 870. Injunctive relief has also been granted on the ground that a mul- tiplicity of action was thereby avoided. Sutton v. Head, 86 Ky. 156, 5 S. W. 410, 9 Am. St. 274. \ v-^ § 855 CONTRACTS. 1 78 cified time within a i^iven district after the expiration of the term of employment by obHgee.^" In case tlie contract embraces, not one whole area, but two areas disjunctively described, one area be- ing unreasonable in extent and the other not, the court may issue an injunction covering the district within which the restraint is legal. ^^ In a case where the contract placed no limit as to its duration it was held that the injunction would be made perma- nent during the lifetime of the covenantor.^- The fact that the covenantor is insolvent is ground for granting an injunction pro- hibiting the breach of a reasonable contract in restraint of trade.^^ An injunction has even been issued where an employe lias deposited money with his employers, to be retained by the latter as liquidated damages should the employe violate his con- tract.^* It is not necessary that the services rendered by the employe should be "unique," "peculiar," "individual" or "extraordinary" when the employer alleges no damages to his business by reason of the fact that the employe has left his employment, but merely seeks to restrain the latter from committing certain acts after he has left the employment which will directly injure his former em- ployer's business, and which in his contract of employment he specifically agreed that he would not do.^'^ '"Howard v. Woodward, 34 L. J. '^'Hauser v. Harding, 126 N. Car. Eq. (N. S.) 47; May v. O'Neill, 44 295, 35 S. E. 586. L. J. Ch. (N. S.) 660; Giles v. Hart, '^ Paragon Oil Co. v. Hall, 7 Ohio 5 Jur. (N. S.) 1381; Gravely v. Bar- C. C. 240, 40 Ohio C. D. 576. nard, L. R. 18 Eq. 518; Palmer v. '"A. L. & J. J. Reynolds Co. v. Mallet, L. R. 36 Ch. Div. 411; Frue- Dreyer, 12 Misc. (N. Y.) 368, 33 N. denthal v. Espey, 45 Colo. 488, 102 Y. S. 649. Pac. 280, 26 L. R. A. (N. S.) 961; '''Reasonable restrictive covenants Foss V. Roby, 195 Mass. 292, 81 N. in a contract of employment, designed E. 199, 10 L. R. A. (N. S.) 1200; to prevent the employe from injuring Turner v. Abbott, 116 Tenn. 718, 94 the employer in his business by so- S. W. 64, 6 L. R. A. (N. S.) 892n, liciting the latter's patrons, will be 8 Am. & Eng. Ann Cas. 150. enforced in equity for the reason '^Althen v. Vreeland (N. J.), 36 that an action at law for their breach Atl. 479; Monongahela River &c. Co. would no more furnish an adequate v. Jutte, 210 Pa. 288, 59 Atl. 1088, remedy than would an action at law 105 Am. St. 812, 2 Am. & Eng. Ann. for the breach of similar covenants Cas. 951. When the contract is prop- in a contract for the sale of a busi- erly restricted as to place an injunc- ness. That equity alone can furnish tion which restrains the covenantor an adequate remedy in such cases is from engaging in business anywhere well settled. Eureka Laundry Co. is too broad. Talcott v. Brackett, 5 v. Lour, 146 Wis. 205, 131 N. W. 111. App. 60. 412, 35 L. R. A. (N. S.) 119 and note. 179 COXTRACTS IN RESTRAINT OF TRADE. § 856 But where tlie law Is unsettled and the validity of the contract uncertain an injunction will be denied.^" §856. Remedies — Action for damages or penalty. — In- junction is not the exclusive remedy. It has been held that one may maintain an action to recover damages for alleged breach of a reasonable contract in restraint of trade, and also to enjoin fur- ther breach thereof.^^ The action may have for its object merely a recovery of the penalty of a bond given for the performance of the agreement.^* Or an action may be maintained to recover damages for a breach of such an agreement.^" On the other hand, the one against whom the restraint runs may maintain an action to recover the sale price of the business transferred, or to enforce any other provisions of a valid contract made in restraint of trade.*" § 857. Breach of contract — Parties in pari delicto. — It is of course apparent that no relief will ordinarily be granted to either party when both are in pari delicto, and the contract is in unreasonable restraint of trade. *^ But even when the parties are '"Mandeville v. Harman, 42 N. J. Eq. 185, 7 Atl. Z7. ''Buckhout V. Witwer, 157 Mich. 406, 122 N. W. 184, 23 L. R. A. (N. S.) 507. The above case holds that a stockholder in a corporation, who sells his stock, agrees not to engage in a business in competition with such corporation and stipulates for a pen- alty on a violation of his contract, is liable thereon when the only object of the restraint is to protect the vendee in his purchase. See also. Up River Ice Co. V. Denier. 114 Mich. 296, 72 N. W. 157. 68 Am. St. 480; Kronschnabel-Smith Co. v. Kronschnabel, 87 Minn. 230, 91 N. W. 892; Flcckenstein Bros. Co. v. Fleckenstein. 76 N. J. L. 613. 71 Atl. 265. 24 L. R. A. (N. S.) 913; Krad- vvell V. Thiesen, 131 Wis.. 97, 111 N. W. 233. See, however. Merchants Ad. Sign Co. v. Sterling. 124 Cal. 429. 57 Pac. 468. 46 L. R. A. 142, 71 Am. St. 94. ''Mallan v. Mav. 11 M. & W. 653. 6 Eng. Rul. Cas. 393 : Hastings v. Whit- ley. 2 Exch. 611; Carnes v. Nesbitt, 7 H. & N. 778. ™Edmundson v. Render, 90 L. T. (N. S.) 814; Davis v. Mason, 5 T. R. 118. '"Nicholson v. Ellis. 110 ^Id. 322, 72, Atl. 17, 24 L. R. A. (N. S.) 942, 132 Am. St. 445. "Flowers & Peagler v. W. T. Smith Lumber Co., 157 Ala. 505, 47 So. 1022 (breach of contract in un- reasonable restraint not actionable) ; Farrington v. Stuckj', 165 Fed. 325, 91 C. C. A. 311 (In the above case the plaintiff sought to recover a sub- scription made in furtherance of an enforcible contract. The court said : "It must be borne in mind that the plamtiff is here asking affirmative re- lief and he pleads his own wrong- doing as the ground for invoking the aid of the court.") ; Camors-McCon- nell Co. v. McConnell. 140 Fed. 412, 987. revg. 152 Fed. 321. 81 C C. A. 429; Berger v. Armstrong. 41 Iowa 447 (unreasonable injunction re- fused) ; Openheimer v. Hirsh, 5 App. Div. (N. Y.) 232. 38 N. Y. S. 311 (unreasonable provi- sion, injunction refused) : Culp v. Love, 127 X. Car. 457, 2,7 S. § 8^8 CONTRACTS. l8o in pari delicto the courts may interfere and grant relief to one of the parties from motives of public policy."' § 858. Laches, burden of proof, assignability. — The plain- tiff's right of action may also be barred by laches." The general rule is that a party who seeks to enforce a contract in restraint of trade must show that it is reasonable. But if the contract upon its face shows that it is reasonable and the defendant seeks to avoid it by some extrinsic matter which renders it illegal, the burden is upon him to establish such illegality as in other cases where the illegality of a contract is set up as a defense to a con- tract valid upon its face, by clear and satisfactory evidence." Valid contracts in restraint of trade are assignable.*^ E. 476 (action in damages for breach *^ Smith v. Brown, 164 Mass. 584, of contract) ; Gust Feist Co. v. Al- 42 N. E. 101. The plaintiff may, how- bertype Co. (Tex. Civ. App.), 109 S. ever, be entitled to injunctive relief W. 1139; Pocahontas Coke Co. v. even though he is able to prove only Powhatan Coal &c. Co., 60 W. Va. nominal damages. Brown v. Kling, 508, 56 S. E. 264, 10 L. R. A. (N. S.) 101 Cal. 295, 35 Pac. 995. 268n, 116 Am. St. 901. (In the "^ Merriman v. Cover Drayton & above case suit was brought to Leonard, 104 Va. 428, 51 S. E. 817. enjoin a breach of contract in See also, Knapp v. Jarvis Adams restraint of trade.) It is gen- Co., 135 Fed. 1008, 70 C. C. A. 536; erally true that the law does not Harbison-Walker Refractories Co. v. prohibit the making of contracts in Stanton, 227 Pa. 55, 75 Atl. 988. restraint of trade, but merely declines ^'Anders v. Gardner, 151 N. Car. to enforce them. Heim v. New York 604, 66 S. E. 665. To same effect, Stock Exchange, 64 Misc. (N. Y.) Welstead v. Hadley, 21 Times L. R. 529, 118 N. Y. S. 591. See also, post, 165 (sale by receiver). Compare § 865. See chapter XXI. with New York Bank Note Co. v. "Dunbar v. American Tel. &c. Co., Hamilton Bank Note &c. Co., 180 238 111. 456, 87 N. E. 521. N. Y. 280, 73 N. E. 48. CHAPTER XXIII. COMBINATIONS, MONOPOLIES AND TRUSTS. 865. Generally. 866. Legislative grant of a monop- oly. 867. Definitions of terms as here used. 868. Judicial attitude toward. 869. Monopoly need not be com- plete. 870. Contracts and combinations among manufacturers or dealers to control and en- hance price. 871. Rule further illustrated. 872. Combination or monopoly must be merely ancillary. 873. Rule against monopolies as ap- plied to dealers. 874. Rule further illustrated. 875. Contracts restricting sale of in- toxicating liquors. 876. Combinations to decrease pro- duction or withhold from market. 877. "Corners" and combinations to prevent competition in other respects. 878. "Corners" — Forestalling, re- grading and engrossing. 879. Combinations relating to pub- lication of news. 880. Combinations relating to insur- ance. 881. When statute does not apply to insurance. 882. Combinations of laborers and other workmen. 883. Right to organize confers no special privilege. 884. Contracts between union and employer. 885. Binding force of constitution and by-laws of union. 886. Strike in breach of contract. 887. Monopolies at common law. 888. Modern doctrine. 889. Monopolies as affected by state constitution. ; 890. Monopolies under state stat- utes. 891. Grants of exclusive rights by government authority. 892. Exclusive grant by private per- son. 893. Exclusive grant by carriers. 894. Exclusive grant by carriers to hackmen — Right to dock ves- sel. 895. Discrimination — Exclusive service contract with patron. 896. What are illegal trusts. 897. Form not controlling. 898. Rights and disabilities of mem- bers of trusts as between themselves. 899. Rule further illustrated. 900. Rights and disabilities of mem- bers of trusts as against third persons. 901. The rule illustrated. 902. Rule further illustrated— De- struction of property and the like. 903. Rights of thirds persons. 904. Rights of third persons under statutes. 905. Rights of stockholder. 906. Antitrust statutes — Constitu- tionality. 907. State antitrust acts — Limita- tions on power to enact. 908. State antitrust acts — Consti- tutionality. 909. Antitrust acts of Congress. 910. Federal antitrust act — Con- struction and effect. 911. Federal antitrust act given a reasonable construction. 912. Federal antitrust act — Applica- tion of. 913. Federal antitrust act — When inapplicable. 914. Federal antitrust act — Power to pass. 915. State antitrust acts. I6l § 865 coxTRACTS, 182 916. State antitrust acts — General 918. State antitrust acts — Applica- scope. tion to insurance. 917» State antitrust acts — Applica- 919. State antitrust acts — Exercise tion to labor unions. of police power. § 865. Generally. — At the present time the words *'com- binations," ''monopoly" and "trust" are commonly, or often, used interchangeably. This has not always been so. The word "mo- nopoly," in its original sense, was an exclusive right, granted by the state to one or a few, of something which was before a com- mon right. ^ Thus, Lord Coke defined a monopoly as "an insti- tution or allowance by the king by his grant to any person of or for the sole buying, selling, making, working, or using of any- thing."^ § 866. Legislative grant of a monopoly. — The power to grant monopolies originally rested with the crown but owing to the abuse of this prerogative it was by statute vested solely in parliament.^ In this country the right to grant monopolies rests in congress and the various state legislatures, subject to such con- stitutional restrictions as exist. Patents and copyrights are ex- amples of monopolies given by the federal government.* Legis- ^ Pocahontas Coke Co. v. Powha- der the present patent laws, see tan Coal &c. Co.. 60 W. Va. 508, 6 Henry v. A. B. Dick Co. (U. S.), S. E. 264, 10 L. R. A. (N. S.) 268n, 32 Sup. Ct. 364, holding that a sale 116 Am. St. 901. of ink to a purchaser of a rotary *3 Cokes Inst. 181. To same ef- mimeograph, with license restricting feet, 4 Bl. Com. 159. See also, dis- its use only with ink made by the senting opinion of Story, J., in patentee, with the expectation that it Charles River Bridge v. Warren, 11 would be used in connection with Pet. (U. S.) 420, 9 L. ed. ITZ, 938. such mimeograph, constitutes con- The case of State v. Duluth Board of tributory infringement of a pat- Trade, 107 Minn. 506, 121 N. W. cnt. See also. United States v. 395, 23 L. R. A. (N. S.) 673n, also Standard Sanitary Mfg. Co., 191 draws the common-law distinction Fed. 172. As pointing out the dis- between a monopoly and engrossing, tinction between the patent and copy- *21 Jas. 1, Ch. 3. See, however, right laws, see Button-Fastener Case, Case of Monopolies (Darcy v. Allein, 11 Fed. 288, 25 C. C. A. 267, 47 U. 11 Coke 84), where a grant, by the S. App. 146, 35 L. R. A. 728; John crown, of the sole making of cards D. Park &c. Co. v. Hartman, 153 within the realm was held utterly Fed. 24, 82 C. C. A. 158, 12 L. R. A. void for two reasons: first, that it CN. S.) 135n. The establishment of was a monopoly and against the com- a uniform text book system in the mon law; second, that it was against public schools (Leeper v. State, 103 the divers acts of parliament. This Tenn. 500, 53 S. W. 962. 48 L. R. A. case was decided prior to the acts 167; Rand v. Hartranft, 29 Wash. above cited. 591, 70 Pac. 11^, and letting contracts *As showing how complete a for such books (Dickinson v. Cun- monopoly is granted a patentee un- ningham, 140 Ala. 527, Z1 So. 345 ; iS- COMBIN'ATIOXS, MONOPOLIES AXD TRCSTS. § 867 lative grants which create a monopoly are given a strict construc- tion.^ § 867. Definitions of terms as here used. — This chapter is not primarily concerned, however, with monoix>lies which result from a grant by the state. A monopoly, more or less complete, may also be created by a mere individual or corporation, and it is with this latter class of monopolies that we are concerned. In its modern sense a monopoly "is created when, as a result of ef- forts to that end, previously competing businesses are so concen- trated in the hands of a single person or corporation, or a few persons or corporations acting together, that they have power to practically control the prices of commodities and thus to practi- cally suppress competition.'''^ B. F. Johnson Pub. Co. v. Mills, 79 Miss. 543. 31 So. 101), have been up- held. See also, Dreyfus v. Boone, 88 Ark. 353, 114 S. W. 718 (municipal grant for removal of offal) ; City of Denver v. Hubbard, 17 Colo. App. 346 (contract for street lights for ten vears) ; State v. Orr. 68 Conn. 101. '35 Atl. 770, 34 L. R. A. 279 (contract for collection and disposal of garbage ) ; Vincennes v. Citizens Gas Light Co.. 132 Ind. 114. 31 N. E. 573. 16 L. R. A. 485 (contract for street lights) ; Davenport Gas &c. Co. V. Davenport, 124 Iowa 22, 98 N. W, 892 (contract for lights for certain period) ; State v. Robb, 100 :\[aine 180. 60 Atl. 874 (removal of offal) ; Grand Rapids v. De Vries, 123 Mich. 570, 82 N. W. 269 (re- moval of garbage) ; Ludington Water Supply Co. v. Ludington, 119 Mich. 480, 78 X. W. 558 (contract with water companv) ; Reid v. Trow- bridge, 78 Miss'. 542, 29 So. 167 (con- tract to light streets for ten years). See, however. Her v. Ross, 64 Nebr. 710, 90 N. \y. 869, 57 L. R. A. 895, 97 Am. St. 676, denying right of city to give one individual the sole right to collect garbage. A grant of the exclusive privilege to construct a water-works system has been held to violate the provision of the state con- stitution against perpetuities and monopolies. Thrift v. Elizabeth City, 122 N. Car. 31, 30 S. E. 349, 44 L. R. A. 427. The law does not look with favor upon monopolies, and the power to create them will not be im- plied to a municipal corporation. Kirkwood v. Meramee Highlands Co., 94 Mo. App. 637, 68 S. W. 761. See, ante, § 833. '^ Wilmington City R. Co. v. Wil- mington &c. R. Co., 8 Del. Ch. 468, 511, 46 Atl. 12. 22. See Saginaw Gas- light Co. V. Saginaw, 28 Fed. 529; Omaha Horse R. Co. v. Cable Tram- way Co., 30 Fed. 324; Interstate Stock- Yards Co. v. Indianapolis Union R. Co., 99 Fed. 472; Capital City Light &c. Co. v. Tallahassee. 42 Fla. 462. 28 So. 810; State v. Cin- cinnati Gas &c. Co., 18 Ohio St. 262; Appeal of Scranton Electric &c. Co., 122 Pa. St. 154, 15 Atl. 446. 1 L. R. A. 285, 9 Am. St. 79; Brummit v. Ogden Water-works Co., 33 Utah 289, 93 Pac. 828. In the absence of any express provision creating a monop- oly a grant will not be construed as granting an exclusive right, except by unavoidable implication. See also. National Fireproofing Co. v. Mason Builders' Assn., 169 Fed. 259, 94 C C. A. 535. 26 L. R. A. (N. S.) 148n, affg. 145 Fed. 260. ° L^nited States v. American To- bacco Co.. 164 Fed. 700. "As now used and understood, monopoly em- braces any combination the tendency of which is to prevent competition in its broad and general sense, and to control^ prices to the detriment of the public." Pocahontas Coke Co. v. § 86/ CONTRACTS. 1 84 The word "trust" also has a double meaning; originally it signified that one person held property for the benefit of another, called a beneficiary. This meaning is by no means obsolete, and is still used in that sense in the law governing trustees." As the term "trust" is here used, however, it means an entity which re- sults from a contract whereby a combination or federation is formed, or an understanding, express or implied, is reached be- tween two or more persons to control the price of a commodity or services for the benefit of the parties thereto, and to the injury of the public, and which creates or tends to create a monopoly/ In common usage the word "trust" is applied indiscriminately to any business conducted on a large scale, especially when carried on by a corporation. It also signifies the methods by which a combina- tion in trade is effected, and generally implies the organization of a corporation and the issuance to the several parties in interest of a proportionate amount of stock represented by certificates.^ Considered in connection with the foregoing definitions, it is un- necessary to attempt any definition of the word "combination.** As here used it is a general term which includes monopolies, trusts or any device or conspiracy by which two or more persons seek to destroy competition and control trade in a certain com- modity or commodities, to the detriment of the public. Powhatan Coal &c. Co., 60 W. Va. 75 Pac. 89. "A combination of many 508, 56 S. E. 264, 10 L. R. A. (N. competing concerns under one man- S.) 268n, 116 Am. St. 901. See also, agement, which thereby reduces the Herriman v. Menzies, 115 Cal. 16, 44 cost, regulates the amount of produc- Pac. 660, 46 Pac. 730, 35 L. R. A. tion and increases the price for which 318, 56 Am. St. 81 ; Burrows v. In- the article is sold. It is either a terborough Metropolitan Co., 156 monopoly or an endeavor to estab- Fed. 389; Jones v. Carter, 45 Tex. lish a monopoly. =5= * * -phe term Civ. App. 450, 101 S. W. 514. "trust" is popularly applied to all ^ See ante. § 167, also chap. XVII. methods of effecting a combination in * Pocahontas Coke Co. v. Powha- trade." W. W. Cook on Trusts, p. 4. tan Coal & Coke Co., 60 W. Va. 508, "But "it makes no difference 56 S. E. 264, 10 L. R. A. (N. S.) whether the combination is effected 268n, 116 Am. St. 901. See also, through the instrumentality of trus- .State V. Fireman's Fund Ins. Co., tees and trust certificates, or whether 152 Mo. 1, 43, 52 S. W. 595, 607, 45 it is effected by creating a pew cor- L. R. A. 363, 376. It has also been poration and conveying to it all the defined as "any form of combination property of the competing corpora- between corporations or corporations tions. The test is, whether the nec- and natural persons, for the purpose essary consequence of the combina- of regulating production and repres- tion is the controlling of prices, or sing competition by means of the pow- limiting of production, or suppress- er thus centralized." MacGinniss v. ing of competition, in such a way as Boston &c. Min. Co., 29 Mont. 428, thereby to create a monopoly." Hard- 185 COMBIXATIOXS, MONOPOLIES AND TRUSTS. § 868 § 868. Judicial attitude toward. — The attitude of the courts of this country toward combinations, monopohes and trusts has been expressed as follows : "Monopoly in trade or in any kind of business in this country is odious to the government. It is sometimes permitted to aid the government in carrying on a great public enterprise, or public work under governmental con- trol, in the interest of the public. Its tendency is, however, de- structive of free institutions, and repugnant to the instincts of a free people, and contrary to the whole scope and spirit of the federal constitution, and is not allowed to exist under express provisions in several of our state constitutions. * * * It is al- ways destructive of individual rights, and of that free competi- tion w^hich is the life of business, and it revives and perpetuates one of the great evils which it was the object of the framers ot our form of government to eradicate and prevent. It is alike destructive to both individual enterprise and individual prosper- ity, whether conferred upon corporations or individuals, and therefore public policy is, and ought to be, as well as public senti- ment, against it."^° § 869. Monopoly need not be complete. — It is not essen- tial that the monopoly or combination be complete before it is illegal. If it tends to the injury of the public, through the sup- pression of competition or otherwise, it will be declared illegal although the restraint imposed is only partial.*^ § 870. Contracts and combinations among manufacturers or dealers to control and enhance price. — The foregoing ing V. American Glucose Co., 182 111. right that it may not only be pro- 551, 55 N. E. 577, 64 L. R. A. 738n, tected by the courts, but it is not with- 74 Am. St. 189n. in the power of a legislature to deny '" Merchants' &c. Storage Co. v. it." Denver Jobbers" Assn. v. Peo- Rohrman. 138 Ky. 530, 128 S. W. pie (Colo.), 122 Pac. 404. 599, quoting from Richardson v. " Dunbar v. American Tel. S:c. Co., Buhl, n Mich. 632, 43 N. W. 1102, 224 111. 9. 79 N. E. 423, 115 Am. St. 6 L. R. A. 457. See also, Tousev v. 132; Hunt v. Riverside Co-Operative Indianapolis (Ind), 94 N. E. 225; Club. 140 Mich. 538. 104 X. W. 40. Lufkin Rule Co. v. Fringeli, 57 Ohio 112 Am. St. 420; State v. Eastern St. 596. 49 N. E. 1030. 6Z Am. St. Coal Co.. 29 R. I. 254. 70 Atl. 1. 132 736. In a recent case it is said: Am. St. 817: Pocahontas Coke Co. v. "The right of freedom of trade be- Powhatan Coal Co.. 60 W. Va. 508, longing to every citizen, and the free- 56 S. E. 264, 10 L. R. A. (N. S.) dom from oppression by monopoly, 268n, 116 Am. St. 901. is such an inherent and constitutional § S;o CONTRACTS. 1 86 propositions apply to contracts and combinations among manu- facturers or dealers to control and enhance prices when the pri- mary purpose and necessaiy tendency of the contract is to so restrict competition as to form a monopoly or trust. Thus, a voluntary association of salt manufacturers, wliich had for its object the fixing of the price of salt and the establishment of a monopoly, has been declared illegal.^- The same has been held true of a contract whereby an ice plant concern sought to obtain the plant business and good will of the other ice manufacturers in a certain city, with a view to consolidating them under one management, and thus control the ice trade in such city.^^ This has also been held true of an association which has for its pur- pose an increase in the price and a decrease in the number of candles manufactured within a specified territory.^* Trade agreements, the purpose of which was to fix the price of wire cloth,^^ the price of gas,^** or the manufacture and sale of beer and other distilled products,^' have in each case been declared illegal and void ; as have contracts by which brick manufacturers "^Clancey v. Onodaga Salt Mfg. Co., 62 Barb. (N. Y.) 395; Central Ohio Salt Co. v. Guthrie, 35 Ohio St. 666. " ^Merchants' Ice &c. Co. v. Rohr- man, 138 Ky. 530, 128 S. W. 599, 137 Am. St. 390. In the above case it was sought to refrain the defendant from violating his contract not to engage in the manufacturing of ice in such cit_v for a period of ten years. The injunction was denied. " Emery v. Ohio Candle Co., 47 Ohio St. 320, 24 N. E. 660, 21 Am. St. 819. "DeWitt Wire Cloth Co. v. New Jersev &c. Co., 16 Daly (N. Y.) 529, 14 N. Y. S. 277. '' State v. Portland &c. Oil Co.. 153 Ind. 483, 53 N. E. 1089, 53 L. R. A. 413, 74 Am. St. 314. To same ^effect, Chicago Gas &c. Co. v. People's Gas &c. Co.. 121 111. 530, 13 N. E. 169, 2 Am. St. 124; People v. Chicago Gas Trust Co., 130 111. 268, 22 N. E. 798, 8 L. R. A. 497, 17 Am. St. 319; San Antonio Gas Co. v. State, 22 Tex. Civ. App. 118. 54 S. W. 289. Com- pare, however, with the foregoing cases, that of Rafferty v. Buffalo City Gas Co., Zl App. Div. (N. Y.) 618, 56 N. Y. S. 288, which seems to hold a combination, which has for its ob- ject the prevention of ruinous com- petition, proper and not invalid by creating a monopoly. See also, in connection with this latter case, that of United States Vinegar Co. v. Foehrenbach, 148 N. Y. 68, 42 N. E. 403, which lays down the rule that "not all combinations are condemned, and self-preservation may justify pre- vention of undue and ruinous com- petition, when the prevention is sought by fair and legal methods." This case was an action to recover unpaid subscriptions to the capital stock of the plaintiff corporation. De- fendant set up that the plaintiff was incorporated for the illegal purpose of controlling and limiting the pro- duction , of vinegar throughout the United States. " Distilling &c. Feeding Co. v. Peo- ple, 156 111. 448, 41 N. E. 188, 47 Am. St. 200; State v. Nebraska Distilling Co., 29 Nebr. 700, 46 N. W. 155; An- heuser-Busch Brew. Assn. v. Houck (Tex. Civ. App.), 27 S. W. 692. 187 CO.MBIXATIOXS, MOXOPOI.IKS AND TRUSTS, § 87I seek to control the price of brick/** and also an agreement to secure co-operation in the business of manufacturing preserves, which in effect formed all those engaged in such business in an immense combination/" §871. Rule further illustrated. — A combination among the manufacturers of pipe iron by which the territory was divided up among them, the territory set apart to one to be free from competition from the others, although a semblance of competi- tion was to be maintained by means of pretended bids at prices previously arranged, has been declared illegal both at common law and under the federal antitrust laws.-" Combinations among manufacturers of lumber,-^ druggists,"" manufacturers of pow- der,-^ manufacturers of gelatine capsules-^ and manufacturers of wooden ware'-'' have been declared illegal. § 872. Combination or monopoly must be merely ancil- lary. — Various schemes have been devised by which it has been sought to avoid the prohibition against combinations and monopolies, such as an agreement in the form of a lease wiiereby one manufacturer was paid a certain sum to keep his plant idle,'" or, without any sale, entering into an agreement whereby one is prohibited from manufacturing a certain commodity.-' How- ever, as in the case of contracts in restraint of trade, if the ten- dency of the contract to create a combination, monopoly or trust is merely ancillary, and is necessary to protect the covenantee in the enjoyment of his contract and the public is not injuriously affected thereby it may be upheld.-^ Thus the mere fact that ''Jackson v. Akron Brick Assn., 53 E. 136, 62 L. R. A. 632, 96 Am. St. Ohio St. 303. 41 N. E. 257, 35 L. R. 578. A. 287. 53 Am. St. 637. -^ Vulcan Powder Co. v. Hercules " Bishop V. American Preservers Powder Co., 96 Cal. 510, 31 Pac. 581, Co., 157 III. 284, 41 N. E. 765, 48 Am. 31^ Am. St. 242. St. 317. -* yierz Capsule Co. v. United ^United States v. Addystone Pipe States Capsule Co.. 67 Fed. 414. &c. Co., 85 Fed. 271. affd. 175 U. S. =» Cravens v. Carter-Crum Co., 92 211, 44 L. ed. 136, 20 Sup. Ct. 96, 46 Fed. 479. 34 C. C. A. 479. L. R. A. 122. -" American Strawboard Co. v. ^ Santa Clara &:c. Lumber Co. v. Peoria Strawboard Co., 65 111. App. Hayes, 76 Cal. 387, 18 Pac. 391, 9 Am. 502. St. 211. =^Fox &c. Steel Co. v. Schoen, 77 *=John D. Park &c. Co. v. National Fed. 29. Wholesale Druggists' Assn., 50 N. ^ For a case giving expression to Y. S. 1064, revd. 175 N. Y. 1, 67 N. this distinction, see United States v. § 873 CONTRACTS. 1 88 one enlarges his business by purchasing other plants," or that one sells the entire output of his plant to another,^" or closes up his business and enters the permanent employment of another,^* is not necessarily illegal. § 873. Rule against monopolies as applied to dealers. — The same general principles that govern contracts among manu- facturers are also applicable to dealers in various commodities. Producers and vendors have the right to use all legitimate effort to obtain the best price for the article in which they deal, but agreements to artificially enhance prices and suppress competi- tion are not recognized as legitimate. Thus, contracts among producers or vendors of coal by which they seek to enhance prices by suppressing or keeping out of the market the products of oth- ers, and bind themselves to withhold their supply or to refrain from engaging in competition, have been uniformly held against public policy and unenforcible.^^ Where the defendants, dealers in plumbers' supplies, agreed to keep the selling price — both the wholesale and retail selling price — at a fixed or graduated fig- ure, such agreement was held void because they undertook to create a monopoly of the business of selling plumbers' supplies in the city of Detroit and to secure to themselves the profits of that monopoly.^' § 874. Rule further illustrated.— The same has been held true of similar agreements between ice dealers,^* commercial Addystone Pipe &c. Co., 85 Fed. 271, State v. Eastern Coal Co., 29 R. I. affd. 175 U. S. 211, 44 L. ed. 136, 20 254, 70 Atl. 1, 132 Am. St. 817. The Sup. Ct. 96, 46 L. R. A. 122. above case lays down the rule that ^ Coquard v. National Linseed-Oil if it is unlawful for one person to Co., 171 111. 480, 49 N. E. 563. fix the price at which coal shall be ^ Carter-Crume Co. v. Perrung, sold within the limits of the city, 86 Fed. 439, 30 C. C. A. 174. it is also unlawful for several per- " Carnig v. Carr, 167 Mass. 544, 46 sons to combine for that purpose. N. E. 117, 35 L. R. A. 512, 57 Am. Pocahontas Coke Co. v. Powhatan St. 488. Coal &c. Co., 60 W. Va. 508, 56 S. E. ''Arnot v. Pittston &c. Coal Co., 264, 10 L. R. A. (N. S.) 268n, 116 68 N. Y. 558, 23 Am. Rep. 190; Drake Am. St. 901. V. Siebold, 81 Hun (N. Y.) 178, 30 ^'Hunt v. Riverside Co-Operative N. Y. S. 697; People v. Fisher, 14 Club, 140 Mich. 538, 104 N. W. 40, Wend. (N. Y.) 9, 28 Am. Dec. 501; 112 Am. St. 420. Morris Run Coal Co. v. Barclay Coal "* Griffin v. Piper, 55 111. App. 213 Co., 68 Pa. St. 173, 8 Am. Rep. 159; See also, infra, § 780. 189 COMBINATIONS, MONOPOLIES AND TRUSTS. § 8/5 firms,^' grocers,'" milk dealers," grain dealers,'' and stock raisers and butchers.'" An association of large stock dealers organized ostensibly to promulgate and enforce among the members correct and high moral principles in the transaction of business, but the real purpose of which was to prevent the competition and main- tain uniform prices, has been declared an unlawful combination.*" § 875. Contracts restricting sale of intoxicating liquors. — Some authorities hold that, since it is the policy of the law to dis- courage the sale of intoxicating liquors as a beverage, contracts restricting the sale are not void at common law.*^ Such hold- ings do not, however, meet the approval of all courts. These latter cases, while admitting that it is the policy of the law to re- strict the sale of liquors, nevertheless declare contracts to be ille- gal which restrain trade therein, on the ground that outside the restrictions imposed by state statutes and municipal ordinances the law permits perfect freedom in the sale of intoxicating liq- uors, and that since the law recognizes it as a commodity courts should refuse to aid in any attempt at the imposition upon the public by means of illegal combinations." The state statutes against combinations may, of course, be brought about to include contracts or combinations among liquor dealers." An authority ''India Bagging Assn. v. Kock, 14 46 Pac. 190. To same effect, United La. Ann. 168. States v. Hopkins, 82 Fed. 529, ap- '" Denver Jobbers' Assn. v. People pealed Hopkins v. United States, 171 (Colo. App.), 122 Pac. 404; Chapin U. S. 578, 43 L. ed. 290, 19 Sup. Ct. V. Brown. 83 Iowa 156, 48 N. W. 40. 1074, 12 L. R. A. 428, 32 Am. St. "Sell v. Branen, 70 111. App. 471, 297. in which it is said: "Contracts held "Ford V. Chicago :\Iilk Shippers' void because of being in restraint of Assn., 155 111. 166, 39 N. E. 651, 27 trade are so held upon the ground L. R. A. 298; People v. Milk Ex- of public policy. It is difficult for us change. 145 N. Y. 267. 39 N. E. 1062, to see how a contract restricting the 27 L. R. A. 437, 45 .'Vm. St. 609. retail traffic of intoxicating liquors ^ Pacific Factor Co. v. Adler, 90 in a town can be considered against Cal. 110, 27 Pac. 36, 25 Am. St. 102. public policy." Harrison v. Lockhart, The case above cited had to do with 25 Ind. 112; Anheuser-Busch Brew, a contract for the sale of grain bags Assn. v. Houck (Tex. Civ. App.), 27 entered into as a part of a scheme S. W. 692. to gain a monopolv of grain bags. *^ See State v. Nebraska Distilling Craft V. McConnoughy, 79 111. 346, Co., 29 Nebr. 700. 46 N. W. 155; 22 Am. Rep. 171; Star Mill &c. Co. Nestor v. Continental Brewing Co., V. Ft. Worth &c. Elevator Co. (Tex. 161 Pa. St. 473, 29 Atl. 102. 24 L. R. Civ. App.). 146 S. \V. 604. A. 247. 41 Am. St. 894. "Judd V. Harrington, 139 N. Y. "Anheuser-Busch Brew. Assn. v. 105, 34 N. E. 790. Houck (Tex. Civ. App.), 27 S. W. *° Greer v. Payne, 4 Kans. App. 153, 692, affd. 88 Tex. 184, 30 S. W. 869; § 876 CONTRACTS. IQO which is close to the border line and which illustrates at least one distinction between contracts which are in restraint of trade and those which are not is the case in which two parties, each of w^hom contemplated applying for the franchise to construct a water- works, agreed that but one of them should apply for a franchise that could be granted to but one. The party withdrawing agreed for a consideration to assist the other in procuring the franchise. An action was brought to recover the agreed compensation. It was held that under the circumstances there might be a recov- ery.** § 876. Combinations to decrease production or v^^ithhold from market. — It is true generally that any combination the result or tendency of which is the control of prices, the limitation of production, or the suppression of competition in such a way as to create a monopoly is contrary to public policy and void.*^ Consequently a combination of the manufacturers of red cedar shingles in a given state which was a combination to control the production and to diminish competition in the production of shin- gles as well as to advance their price has been declared illegal.**' The same has been held true of the combination among lumber dealers in the vicinity to limit the supply for that season.*^ However, where the main object among producers who combine is not to limit the output or to secure a monopoly and the public is in no way injured by such agreement it may be upheld.*® And where an agreement was entered into among a number of owners of stone quarries looking toward the securing of "a fair, propor- Texas Brew. Assn. v. Templeman, 90 " Santa Clara Vallev &c. Co. v. Tex. 27, 38 S. W. 27; Fuqua v. Hayes, 16 Cal. 387, 18 Pac. 391, 9 Pabst Brew. Co., 90 Tex. 298, 38 S. Am. St. 211. See also, ante, § 780. W. 750, 35 L. R. A. 241 ; Texas Brew- •" Meredith v. New Jersey Zinc & ing Co. V. Anderson (Tex. Civ. App.), Iron Co., 55 N. J. Eq. 211, Zl Atl. 40 S. W. 111. 539, affd. 56 N. J. Eq. 454, 41 Atl. ** Oakes v. Cottaraugus Water Co., 1116. In the above case the owner- 143 N. Y. 430, 38 N. E. 461, 26 L. R. ship of ores in a certain mine was A. 544. so involved as to practically prevent *'" Harding v. American Glucose the working of the mine. The rival Co., 182 111. 551, 55 N. E. 577, 64 interests were permitted to consoli- L. R. A. 738, 74 Am. St. 189; Charles- date notwithstanding such consolida- ton Gas Co. v. Kanawha Gas Co., 58 tion also involved the purchase of W. Va. 22, 50 S. E. 876. other mines and plants in different *" Gibbs V. McNeeley, 118 Fed. 120, parts of the country. 55 C. C. A. 70, 60 L. R. A. 152. IQI COMBIXATIOXS, MONOPOLIES AND TRUSTS. § S77 tionate sale of the product of all quarries at uniform prices and living rates," and the tenns of the agreement restricted the pro- duction of stone within certain territory, put the sale in the hands of one agent, who should sell for all the parties in interest, pre- scribed a committee of five with power to modify prices and set- tle complaints, and imposed a penalty of one hundred dollars for every sale made in violation of the agreement, and suit was brought to enforce the penalty, the court upheld the agreement and gave judgment accordingly,^" § 877. "Comers" and combinations to prevent competi- tion in other respects. — A "corner" is merely one method out of many by which competition is restricted and a temporary monopoly established. A "corner" is a contract of purchase and sale by which a "short" vendor agrees to deliver the commodity sold at a future date which obligation he is unable to fulfil by reason of the available supply of such commodity being in the hands and under the control of the vendee who thereby creates an artificial demand.^" In such a transaction the object of the " Skrainka v. Scharringhausen, 8 done under it, but by what may be Mo. App. 522. The contract in this done under it ; not by its perform- case was upheld on the theory that ance, but by its powers of perform- it was hmited both as to time and ance when fully exercised.'' Poca- place, a theory which, under the facts hontas Coke Co. v. Powhatan Coal of the case, would seem improper, & Coke Co., 60 W. Va. 508, 56 S. E. Compare with Finck v. Schneider 264, 116 Am. St. 901. Granite Co., 187 Mo. 244, 86 S. W. ""United States v. Patten, 187 Fed. 213, 106 Am. St. 452. See also. On- 664. In the case of Samuels v. Oli- tario Salt Co. v. Merchants' Salt Co., ver, 130 111. 7i, 22 X. E. 4^)9. a wit- 18 Grant Ch. 540; Hearn v. Griffin, ness defined a "corner" as follows: 2 Chitty 407; Hare v. London &c. R. "By 'cornering' the market I mean Co., 2 Johns. & H. 80; Central Trust when parties have contracts on hand Co. V. Ohio Cent. R. Co., 23 Fed. for a greater amount than the sellers 306; United States v. Trans-Mis- have cash grain to deliver."' And in souri Freight .As?n., 58 Fed. 58, the case of Wright v. Cudahv 168 19 U. S. App. 36, 24 L. R. A. 72,, 7 111. 86. 48 N. E. 39, a "corner" was C. C. A. 15, 8 Am. R. & Corp. defined by a witness as "where some- 523 ; Gloucester Isinglass & Glue Co. body succeeds in buying for future v. Russia Cement Co., 154 Mass. 92. deliverv more propertv of a given 27 N. E. 1005. 12 L. R. A. 563. 26 kind, than is possilile 'for the seller Am. St. 214; Manchester & L. R. R. to deliver before the dav of maturity Co. V. Concord R. R. Co., 66 N. H. of the contract." For additional 100, 20 Atl. 383, 9 L. R. A. 689. 49 cases illustrating "corners" see. Bank Am. St. 582, 3 Am. R. & Corp. of Montreal v. Waite. 105 111. App. 22; Queen Ins. Co. v. State. 86 2>72>: Foss v. Gumming*; 14Q HI ^53 Tex. 250, 24 S. W. 397, 8 Am. R. & 36 \. E. 553 (corn) ; Ex parte Young Corp. Rep. 491. "A contract which is 6 Biss. (U. S.) 53. Fed. Cas. No.' charged to be in restraint of trade 18145 (oats). See further as to cor- is not to be tested by what has been ncrs, Wright v. Crabbs, 78 Ind. 487 § 8/8 CONTRACTS. 1 92 vendee is to buy up all or practically all of the available supply of a o-iven commodity and withhold the same from sale until the de- mand becomes so great as to abnormally enhance the price. The same general principles are applicable to "corners" as applied to other instances of combinations, monopolies, or trusts. When the effect of a contract or combination among dealers in a com- modity is to destroy competition between them and others so that the parties to the contract or combination may ol^tain increased prices for themselves, such contract or combination amounts to a restraint of trade in the commodity even though contracts to buy such commodity at the enhanced price are constantly being made.^^ § 878. "Corners" — Forestalling, regrading and engross- ing. — In so far as the law governing monopolies is sought to be applied the question of the legality of agreements for future delivery is immaterial. The common-law term "forestalling" when applied to monopolies meant practically the same as the modern word "corner." "The forestaller intercepted goods on their way to market and bought them up so as to be able to com- mand what price he chose when he got to the market."^^ The common-law term "engrossing" and its synonym "regrading" meant "the buying of corner other dead victual in any market and selling it again in the same market" thus enhancing the price of the provision as every successive seller must have a successive profit.®^ The terms "forestalling," "engrossing" and "regrading" (wheat); Klingel's Pharmacy v. "'Button v. Mayor &c. on Knox- Sharp, 104 Md. 218, 64 Atl. 1029, 7 ville (Tenn), 113 S. W. 381. "What- L. R. A. (N. S.) 976n, 118 Am. St. soever person or persons * * * 399; Sampson v. Shaw, 101 Mass. 145, shall engross^ or get into his or their 3 Am. Rep. 327 (railroad stock); hands by buying, contracting or prom- Raymond V. Leavitt, 46 IMich 447, 9 ise-taking, other than by demise, N. W. 525, 41 Am. Rep. 170; Kirk- grant, or lease of land, or tithe, any Patrick v. Bonsall, 72 Pa. St. 155 ; corn growing in the fields, or any Wells V. McGeoch, 71 Wis. 196, 35 other corn or grain, butter, cheese, N. W. 769. fish, or other dead victuals whatso- " See, Klingel's Pharmacy v. Sharp, ever, within the realm of England, to 104 Md. 218, 64 Atl. 1029, 7 L. R. A. the intent to sell the same again, (N. S.) 976n, 118 Am. St. 399. shall be accepted, reputed, and taken "^3 Stephen's History of Criminal an unlawful engrosser or engrossers." Law of England, chap. 30, page 199. Standard Oil Co. v. United States, 221 See also, 3 Cokes Inst., chap. 89. U. S. 1. 55 L. ed. 619, 31 Sup. Ct. 502, Pettamberdass v. Thackoorseydass, 7 34 L. R. A. (N. S.) 834n, taken from Moore P. C. C 239. Statute 5 & 6 Edw. VI, chap. 14; 3 193 COMBIXATIOXS, MONOPOLIES AND TRUSTS. § 8/9 are not altogether obsolete/* "Cornering" or forestalling the mar- ket or dealing in futures is at the present time perhaps generally termed gambling or wagering contracts and will be treated more fully in the chapter on this latter subject." As indicated at the beginning of this chapter the difference in meaning between the various terms used to designate combinations against public pol- icy is slight. That which differentiates a "corner" from a pool or trust exists only in form. A "corner" has special reference to the raising of prices; a pool refers more particularly to the dis- tribution of profits among its members.'^" § 879. Combinations relating to publication of news. — In order to build up a trade and make those newspapers which are their customers absolutely dependent upon them for news items, a news agency usually binds its customers not to purchase news from any source other than it itself, on pain of being cut off from all service. A provision of this character which sought to ex- clude from publication by any of its members, news procured from any corporation or source which the agency has declared antagonistic, has been declared illegal and void because of the tendency of such provision to create a monopoly in favor of such news agency and to prevent its members from procuring news from others engaged in the same character of work.^^ However, Stevens History of Criminal Law of ancc is not an article of merchandise England, chap. 30, page 199. or manufacture, or one of the 'neces- " See, Button v. Mayor &c. of saries of life,' or of prime necessity, Knoxville (Tenn.), 113 S. W. 281. within the spirit of the laws against The above case passes on the valid- engrossing." Harris v. Common- ity of a city ordinance, passed under wealth (Va.), 12> S. E. 561. a city charter which gave it the right "*' See. post, chap. XXIV. "to restrain and punish forestalling "" Pooling is "an aggregation of and regrading of provisions." See property or capital belonging to dif- also, Klingel's Pharmacy v. Sharp, ferent persons, Vv'ith a view to com- 104 Md. 218. 64 Atl. 1029, 7 L. R. A. mon liabilities and profits." Ameri- (N. S.) 976n, 118 Am. St. 399. The can Biscuit &c. Co. v. Klotz, 44 Fed. offense of engrossing was a part of 721. "Pooling may be as well af- the common law adopted by Colora- fected by a concert in fixing in ad- do Rev. St. 1908, § 6295. Denver vance the rates which in the aggre- Jobbers' Assn. v. People (Colo, gate would accumulate the earnings App.), 122 Pac. 404. (The above of naturally competing lines, as by case contains an exhaustive review depositing all such earnings to a com- of the common law on the subject of mon account and distributing them engrossing.) State v. Eastern Coal afterward." Tift v. Southern R. Co., Co., 29 r: I. 254. 70 Atl. 1, 132 Am. 138 Fed. 753. St. 817 (engrossing a common law "Inter-Ocean Publishing Co. v. offense in Rhode Island). "Insur- Associated Press, 184 111. 438, 56 N. 13 — CoNTR.\cTS, Vol. 2 § 879 CONTRACTS. 194 the New York Court of Appeals, in answering the contention that a by-law by which a newspaper was not to publish news from any other source than a specified agency was unreasonable and oppressive and tended, and was expressly intended, to restrain trade competition and to create a monopoly, while admitting that if the by-law did accomplish these results it would be illegal, held that as construed by that court it did not tend to improperly restrain trade.'*^ The Supreme Court of Missouri has also re- fused to compel the Associated Press to furnish to a certain paper the budget of news collected daily by the former. ''^ A decision E. 822, 48 L. R. A. 568, 75 Am. St. 184. ^' In the above case the court also held that the manner in which the corporation had used its franchise had charged its business with a pub- lic interest, and that it must submit to be controlled by the public for the common good to the extent of the interest it has thus created in the public in its private property. Mat- thews V. Associated Press, 136 N. Y. 333, 32 Am. St. 741. In the above case the court apparently disregard- ed the tendency of such contract to foster a news monopoly and decided the case upon the ground that the re- straint imposed upon the customer was not unreasonable and also ob- served: "The latest decisions of the courts in this country and in England show a strong tendency to very great- ly circumscribe and narrow the doc- trine of avoiding contracts in re- straint of trade." ''The plaintiff set out that it had been ready and willing for a long time to enter into a proper contract with the said Associated Press, etc. The grounds upon which relief was urged so far as material to the sub- ject of monopolies were: "That the gathering of general news for publi- cation in a daily newspaper is a pub- lic employment, which must be exer- cised by those who engage in it for all publishers of dailies who may de- sire it, upon equal terms and without discrimination ; 3. That the Associ- ated Press has by its charter assumed this public employment and so is bound to exercise it on behalf of the relator, upon, tender of compensation equal to that paid by other publishers similarly situated and receiving a similar service; 4. That the Associ- ated Press has broken down all com- petitors and secured a monopoly of the business of news-gathering, in consequence of which it is not prac- ticable to publish a daily newspaper without the aid of its service; 5. That the Associated Press has been granted telegraph and telephone fran- chises by the states of Illinois and Missouri, and also possesses the pow- er of eminent domain ; 6. That the by-law of the Associated Press which makes the consent of existing mem- bers a condition of adrnitting new members in any locality is in viola- tion of the anti-trust laws of Mis- souri, Illinois, and the United States." The court said : "The controlling element which gave origin to the opinion relied on (Munn v. Illinois, 94 U. S. 113) seems to have been that of a monopoly. But, of course, tliat element can have no place in the present instance, because respondent has been granted no special or ex- clusive right or privilege by the state, nor has it received any benefits from that quarter. Nor has the respondent acquired any additional right, by rea- son of its incorporation, to that it possessed before. Every one is at lib- erty to gathen news, and the fact that one has greater facilities or finances for gathering and transmit- ting news, or that the business has grown into one of great magnitude, widespread in its ramifications, or that mere incorporation has been granted a company organized for the purpose of gathering news, does not. 195 COMBINATIONS, MONOPOLIES AND TRUSTS. 880 handed down by the Supreme Court of Illinois seems more in accord with the modem trend of judicial thought on the subject of monopolies."" § 880. Combinations relating to insurance. — The great majority of decisions relative to combinations to secure uniform insurance rates have been handed down subsequent to the passage of antitrust laws. However, the New Jersey Equity Court has taken a broad general view of the subject and held that a con- tract or combination entered into among fire insurance com- panies, foreign and domestic, the necessary effect and the actual results of which are to control such business within a certain area and within such district to fix and regulate prices and to limit or eliminate competition to the injury of the public is contrary to public policy and may be restrained in equity."^ Statutes which in general terms prohibit combinations in restraint of trade are usually held to apply to combinations of agencies or underwriters and cannot, of itself give the state the right to regulate what before in- corporation was but a natural right. * * * And, even if the business of respondent can justly be deemed a monopoly, then relator's efforts should be directed toward the de- struction of that monopoly, and not toward obtaining the mandate of this court compelling relator's admission into that 'real genuine article/ as counsel are pleased to designate it. Conceding respondent's business to be in truth a monopoly would fur- nish an all-sufficient reason and an- swer for denying the relief relator asks, because the addition of one or more monopolist to a monopolistic organization would not lessen its monopolistic features, or abate its vicious tendencies. But there is noth- ing here on which a monopoly can attach. The business is one of mere personal service; an occupation. Un- less there is 'property' to be 'affected with a public interest,' there is no basis laid for the fact or the charge of a monopoly." State v. Associated Press. 159 Mo. 410, 60 S. W. 91, 81 Am. St. 368. ** Compare McCarter v. Firemen's Ins. Co., 74 N. J. Eq. 372, 11 Atl. 80, 29 L. R. A. (N. S.) 1194n, 135 Am. St. 708. *^ McCarter v. Firemen's Ins. Co., 74 N. J. Eq. 372, IZ Atl. 80, 29 L. R. A. (N. S.) 1194n, 135 Am. St. 708. Compare with this case People v. New York Board of Fire Under- writers, 54 How. Pr. (X. Y.) 240, which holds that a corporation formed for the purpose of establishing uni- form insurance rates and requiring its members to follow such rates was held to have the power to accomplish these ends and that a by-law which bound the members to maintain the rates of insurance agreed upon was directly within the powers conferred and could not be attacked as in re- straint of trade or convening public policy. See also, Continental Ins. Co. V. Fire Underwriters. 67 Fed. 310, in which an association of underwriters had rates similar to those of the above corporation. Such an association was held not to be an unlawful combina- tion at common law. Freed v. Amer- ican Fire Ins. Co.. 90 Miss. 12, 43 So. 947, 11 L. R. A. (N. S.) 368. 122 Am. St. 307 (recognizes the unlawfulness of a combination among insurers but holds to the fact that the insurer is a member of an unlawful combina- § 88i CONTRACTS. 196 for the purpose of regulating and controlling rates to be charged for insurance.^^ § 881. When statute does not apply to insurance. — How- ever, a statute which made unlawful combinations to create or carry out restrictions in trade — "trade" being defined as com- merce or traffic in merchandise, produce or commodities — was held not to cover a combination of insurance agents the object of which was to monopolize the business and to control rates and commissions.^^ Such agreements are, of course, in violation of those statutes which specifically prohibit combinations among in- surers to control the rates of premiums."'* Statutes of this char- acter have been held constitutional. '^^ However, combinations relating to insurance, the principal purpose of which is to pro- mote the business, welfare and convenience of the parties thereto, and not to control or enhance prices, are usually upheld both at common law and under statutes which forbid combinations among insurers to control the rates of premiums."" Such organ- tion does not defeat the insurer's rights to sue upon an agreement which is entirely collateral to the contract forming the illegal combina- tion) ; Queen Ins. Co. v. State, 86 Tex. 250, 24 S. W. 397, 22 L. R. A. 483, revg. (Tex. Civ. App.) 22 S. W. 1048 (In its discussion the court places a rather narrow construction on what could be the subject of a monopoly at common law.) ; Harris v. Commonwealth (Va.), IZ S. E. 561 (prosecution for criminal conspir- acy). For a case holding a combina- tion unlawful at common law where its purpose is to regulate and control the rate of premiums charged on in- surance, the effect being to enhance the price, see. People v. Aachen &c. Ins. Co., 126 111. App. 636. •"In re Pfnkney, 47 Kans. 89, 27 Pac. 179; American Fire Ins. Co. v. State, 75 Miss. 24, 22 So. 99 ■ State v. American Surety Co. (Xebr.) 135 N. W. 365. See, however, Aetna Ins. Co. V. Commonwealth, 106 Ky. 864, 51 S. W. 624, 45 L. R. A. 355. •"Queen Ins. Co. v. State, 86 Tex. 250, 24 S. W. 397, 22 L. R. A. 483, revg. (Tex. Civ. App.) 22 S. W. 1048. ** Aetna Fire Ins. Co. v. Kennedy, 161 Ala. 600, 50 So. 12,, 135 Am. St. 160; Continental Ins. Co. v. Parkes, 142 Ala. 650, 39 So. 204; Hartford Fire Ins. Co. v. State, 76 Ark. 303, 89 S. W. 42; Hartford Fire Ins. Co. v. Raymond, 70 Mich. 485, 38 N. W. 474. ^ Carroll v. Greenwich Ins. Co., 199 U. S. 401, 50 L. ed. 246, 26 Sup. Ct. 66. The court said : "If the leg- islature of the state of Iowa deems it desirable artifically to prevent, so far as it can, the substitution of com- bination for competition, this court cannot say that fire insurance may not present so conspicuous an exam- ple of what that legislature thinks an evil as to justify special treat- ment." See also, State v. American Surety Co. (Nebr.), 135 N. W. 365. ®° Workman v. London &c. Fire Ins. Co., 19 Times L. R. 360; Bloom v. Home Ins. Agency, 91 Ark. 367, 121 S. W. 293. See, Louisville Board of Fire Underwriters v. Johnson, 133 Ky. 797, 119 S. W. 153, 24 L. R. A. (N. S.) 153n; Childs v. Firemen's Ins. Co., 66 Minn. 393, 69 N. W. 141, 35 L. R. A. 99. 197 COMBINATIONS, MONOPOLIES AND TRUSTS. § 882 ization or agreement must not, however, be merely a device by which to evade the antitrust laws against combinations to keep up insurance rates. Thus, an organization known as the Under- writers' Social Club has been termed a trust, and dealt with ac- cordingly, where it appeared that the members of the club had an oral agreement to abide by the rates fixed, on penalty of a fine, the violaters of the agreement being tried by the club.°^ § 882. Combinations of laborers and other workmen. — It is well settled that individuals have a perfect legal right to form labor organizations for the protection and promotion of the interests of laboring people.''^ This right to organize is said to be "an exercise of the common-law right of every citizen to pur- sue his calling, whether of labor or business, as he in his judg- ment thinks fit."*^^ As a general rule the legality of unincor- porated labor organizations is recognized under common-law principles.'^'* The incorporation of such organizations is now legaHzed by the statutes of many jurisdictions.'^^ The union may " The proceeding in this case was by a quo warranto to oust seventy- three fire insurance companies of their corporate rights, privileges and franchises, under the law of Missouri relating to pools, trusts and conspira- cies, unlawful combinations. The judgment of the court was that the defendants be ousted of all rights, privileges and franchises conferred by the laws of Missouri, and their certificate to do business at all times under the insurance laws of Mis- souri. State v. Firemen's Fund Ins. Co. (Mo.), 52 S. W. 595. See also. Fire Ins. Co. v. State, 75 Miss. 24, 22 So. 99. See also, post, § 915. *" Allis-Chalmers Co. v. Iron Mold- ers' Union, 150 Fed. 155; Rohlf v. Kasemeier, 140 Iowa 182. 118 X. W. 276. 23 L. R. A. (N. S.) 1284. 132 Am. St. 261 ; Lohse Patent Door Co. V. Fuelle, 215 Mo. 421. 114 S. W. 907, 22 L. R. A. (X. S.) 607, 128 Am. St. 492, and cases cited. "Pickett v. Walsh, 192 Mass. 572, 78 N. E. 753, 6 L. R. A. (N. S.) 1067n. 116 Am. St. 272. See also, United States v. Moore, 129 Fed. 630. '"Allis-Chalmers Co. v. Iron Mold- ers' Union, 150 Fed. 155; Rohlf v. Kasemeier, 140 Iowa 182, 118 N. W. 276, 23 L. R. A. (X. S.) 1284. 132 Am. St. 261. See, Beck v. Railway Teamsters Protective Union, 118 ^lich. 497, 11 X. W. 13, 42 L. R. A. 407, 74 Am. St. 421. " Special provision is made there- for by act of Congress of June 29, 1886 (24 Stat. Laws 86). See act of June 1, 1898 (30 Stat. Laws 427). See, Arthur v. Oakes, 63 Fed. 310. 11 C. C. A. 209, 25 L. R. A. 414, 431 (7th C, 1894). So bv La. Rev. Stat. (1 Wolff's ed., 1904). p. 223; Md. Pub. Gen. Laws (1904), art. 23. § 41. See. Lucke v. Clothing Cutters' &c. Assemblv. 11 Md. 396, 26 Atl. 505, 19 L. R. A. 408, 39 Am. St. 421 ; Mich. Comp. Laws 1897. pp. 2343 ot seq. ; N. J. Gen. Stat. 1895. p. 167; Pa. 2 P. & L. Dig., p. 2915 (see p. 2913). See Flaccus V. Smith. 199 Pa. St. 128, 48 Atl. 894, 54 L. R. A. 640. 85 Am. St. 779; Tex. Laws 1899, ch. 153. See Colo. Rev. Stat 1908, § 3924; Mass. Rev. Laws 1902. ch. 125. §§ 13-16. And while not made so by express provision it is doubtless true that, in many instances, the incorporation of a labor union is authorized by the § 883 CONTRACTS. 198 have for its purpose the procurement of an advance in the wages of its several members.'^ § 883. Right to organize confers no special privilege. — But notwithstanding the foregoing and the fact that there is a great clamor against trusts and combinations on the one hand and for the privilege of combining upon the other the law refuses to create or recognize a privileged class. The right which the law recognizes is nothing more than that conceded to every citi- zen regardless of his position or occupation. While the law rec- ognizes the right of labor to organize and exist as an organiza- tion in order to obtain a lawful benefit to themselves it gives no legal sanction to combinations which have for their immediate purpose the hurt of another.'^ The rights of others must be re- spected.'* The very fact that every citizen has the right to pur- sue his calling whether of labor or business as he in his judgment thinks fit limits that which may be done by a labor organiza- tion." "It is the absolute, unqualified right of every employe, provisions of a general statute. As to English Trade Union Act of 1871, see Chamberlain's Wharf v. Smith, 2 Ch. (1900) 605. As to relief granted to such corporation because of injury to individual members, see Master Horseshoers' &c. Assn. v. Quinlivan, 83 App. Div. (N. Y.) 459, 82 N. Y. S. 288 (1903). ■'^Rohlf V. Kasemeier, 140 Iowa 182, 118 N. W. 276, 23 L. R. A. (N. S.) 1284, 132 Am. St. 261; Beck v. Railway Teamsters Protective Union, 118 Mich. 497, n N. W. 13, 42 L. R. A. 407, 74 Am. St. 421; City Trust, Safe Deposit, &c. Co. v. Waldhauer, 47 Misc. (N. Y.) 7, 95 N. Y. S. 222. "They have labor to sell. If they stand together, they are often able, all of them, to command better prices for their labor than when dealing singly with rich employers, because the necessities of the single employe may compel him to accept any terms offered him. The accumulation of a fund for the support of those who feel that the wages offered are below market prices is one of the legitimate objects of such an organization." Thomas v. Cincinnati &c. R. Co., 62 Fed. 803. Many more adjudications of the same nature exist and might be cited, but, as there is no conflict between th^ modern decisions upon this question, it would be a useless waste of time and labor to cite more. These decisions are based upon the law which permits every one to en- ter into any kind of a contract which has for its object and purpose the protection and promotion of the in- terest of the parties thereto, as well as the betterment of their condition in Hf e ; and that right to so contract is not curtailed or abridged if, per- chance, the contract indirectly or in- cidentally operates in restraint of trade." Lohse Patent Door Co. v. Fu- elle, 215 Mo. 421, 114 S. W. 997, 128 Am. St. 492. "Queen v. Rowlands, 17 Q. B. 671. To same effect, A. R. Barnes & Co. v. Chicago Typographical Union, 232 111. 424, 83 N. E. 940, 14 L. R. A. (N. S.) 1018; W. P. Davis Machine Co. V. Robinson, 41 Misc. (N. Y.) 329, 84 N. Y. Supp. 837 ; Curran v. Galen, 152 N. Y. ZZ, 46 N. E. 297, 37 L. R. A. 802, 57 Am. St. 496; Longshore Printing Co. V. Howell, 26 Ore. 527, 38 Pac. 547, 28 L. R. A. 464n, 46 Am. St. 640. ^* United States v. Cassidy, 67 Fed. 698, 721. "Goldfield Consolidated Mines Co. 199 COMBINATIONS, MONOPOLIES AND TRUSTS. § 884 as well as of every other person, to go about his legal business unmolested and unobstructed, and free from intimidation, force or duress."" § 884. Contracts between union and employer. — Concern- ing contracts between the union and an employer engaged in a private enterprise, by the terms of which the employer binds him- self to employ only union men, the leading case on this subject was understood to hold sucli contracts illegal.''^ In a subsequent case the same court construed the former case so as to make it apply only to those instances in which the contract was between a union and an association of employers carrying on the same line of business in a given community and a contract between a union and a single employer was upheld on the ground that in the lat- ter case the restrictions were not of an oppressive nature operat- ing generally in the community to prevent a laborer from obtain- ing any employment and from earning his livelihood.'* It has V. Goldfield Miners' Union, 159 Fed. 500; Pickett v. Walsh. 192 Mass. 572, 78 N. E. 753, 6 L. R. A. (N. S.) 1067n, 116 Am. St. 272; Marietta Casting Co. v. Thuma, 12 Pa. Dist. 552. ""The right of a labor association to strike is no higher than the right of a non-union workman to take em- ployment in place of the strikers." Pierce v. Stablemen's Union (Cal.), 103 Pac. 324. To same effect, Purvis V. Local No. 500 United Brotherhood of Carpenters, 214 Pa. St. 348. 63 Atl. 585, 12 L. R. A. (N. S.) 642n, 112 Am. St. 757. If the workmen may decline to work the employer may decline to employ. People v. Marcus, 185 N. Y. 257, V N. E. 1073, 7 L. R. A. (N. S.) 282, 113 Am. St. 902; National Protection Assn. v. Cam- ming, 170 N. Y. 315, 63 N. E. 369, 58 L. R. A. 135, 88 Am. St. 648; City Trust, Safe Deposit, &c. Co. v. Wald- hauer. 47 Misc. (X. Y.) 7, 95 N. Y. S. 222. See also, Lohse Patent Door Co. V. Fuelle, 215 Mo. 421. 114 S. W. 997, 22 L. R. A. (X. S.) 607, 128 Am. St. 492. "Curran v. Galen. 152 N. Y. Z7>, 46 N. E. 297, 37 L. R. A. 802, 57 Am. St. 496. '* The case of Curran v. Galen was said to stand unaffected as to au- thority. Jacobs V. Cohen, 183 N. Y. 207, 76 N. E. 5, 2 L. R. A. (N. S.) 292, 111 Am. St. 730. To same ef- fect. Mills V. United States Printing Co., 99 App. Div. (X. Y.) 605, 91 N. Y. S. 185. In the latter case while the result is the same the decision is based on different grounds. The union agreed to give nonunion men the privilege of joining, and the court upheld the contract for the reason that it thus was made to appear that its aim was not the discharge of non- union men as individuals and to secure the employment of union men in their places, but to secure co-operation among all employes. See also, Kis- sam V. United States Printing Co., 199 N. Y. 76, 92 N. E. 214, affg. 128 App. Div. (N. Y.) 889, 112 X. Y. S. 1134. Under the foregoing decisions the present attitude of the courts of New York on this question may be expressed as follows : An agreement between a union and an association of all the employers of laborers en- gaged in a certain line of work in a single community by which the lat- ter agreed to employ union men ex- clusively is invalid, while a contract between an individual employer and a labor union by which the former 88 i CONTRACTS. 200 also been held that where the object of the contract was to bene- fit the parties and not to injure the complainant or other person in a similar situation, it will be upheld/^ A contract which pro- vided that a manufacturer should not keep in his employment an employe who was objectionable to the union from any cause after receiving notice thereof from the union has been held illegal.^" § 885. Binding force of constitution and by-laws of union. — One who joins a union is considered as having declared his submission to its constitution, rules and by-laws.^^ The consti- tution, rules and by-laws of such organizations constitute a con- tract between the union and its members^ ^ and are binding both on the individual members inter se and the union/ ^ This is not true, however, when such rules and regulations are in contraven- tion of law and against public policy.** is to employ only union workmen is upheld. A court may restrain the calling of a strike where it has for its object the obtaining of a complete monopoly of the labor market in a particular business. Folsom v. Lew- is, 208 Mass. 336, 35 L. R. A. (N. S.) 787n, 94 N. E. 316. "National Fire Proofing Co. v. Mason Builders' Assn., 169 Fed. 259, 94 C. C. A. 535, 26 L. R. A. (N. S.) 148n, affg. 145 Fed. 260. See also, Pickett V. Walsh, 192 Mass. 572, 78 N. E. 753, 6 L. R. A. (N. S.) 1067n, 116 Am. St. 272. *""The case of Curran v. Galen, 152 N. Y. 33, 46 N. E. 297, 37 L. R, A. 802, 57 Am. St. 496, in the decision of which the judges of the Court of Appeals were unanimous, fully cov- ers the present case. The principle involved in each of the two cases is the same and the language of the opinion in that case, in its applica- tion to this, is decisive." Berry v. Donovan, 188 Mass. 353, 74 N. E. 603, 5 L. R. A. (N. S.) 899, 108 Am. St. 499. See also, Birmingham Paint & Roofing Co. v. Crampton (Ala), 39 So. 1020; Adams v. Brenan, 177 111. 194, 52 N. E. 314, 42 L. R. A. 718, 69 Am. St. 222 ; Fiske v. People, 188 111. 206, 58 N. E. 985, 52 L. R. A. 291; Holden v. Alton, 179 111. 318, 53 N. E. 556; Fabacher v. Bryant, 46 La. Ann. 820, 15 So. 181,; Brenan v. United Hatters of North America, 73 N. J. L. 729, 65 Atl. 165, 9 L. R. A. (N. S.) 254, 118 Am. St. 727. «^See Harington v. Sendall (1903), 1 Ch. 921, 72 L. J. Ch. 396, 88 Law Times 323. ^Harrington v. Sendall (1903), .1 Ch. 921, 72 L. J. Ch. 396, 88 L. T. 323; Brown v. Stoerkel, 74 Mich. 269, 41 N. W. 921, 3 L. R. A. 430; Council V. Stalker, 21 Misc. (N. Y.) 609, 48 N. Y. S. 77. And see 4 Cyc. Associations 305. Weatherby v. Mont- gomery County Medical &c. Society, 76 Ala. 576; Grand Grove, U. A. O. D. V. Garibaldi Grove No. Seventy- one, 130 Cal. 116. 62 Pac. 486, 80 Am. St. 80; Levy v. Magnolia Lodge No. 29 I. O. O. F., 110 Cal. 297, 42 Pac. 887; Hammerstein v. Parsons, 38 Mo. App. 332. ^ Brenan v. United Hatters of North America. 73 N. J. L. 729, 65 Atl. 165, 9 L. R. A. (N. S.) 254, 118 Am. St. 727. See also, 4 Cyc. Asso- ciations 305. ^ Schneider v. Local Union No. 60, 116 La. 270, 40 So. 70O, 5 L. R. A. (N. S.) 891, 114 Am. St. 549. 201 COMBINATIONS, MONOPOLIES AND TRUSTS. § 886 § 886. Strike in breach of contract. — It is unlawful for employes to go on a strike in breach of their contract of em- ployment.*'^ In case of persons under a contract to work, a strike, or combination not to work, in violation of that contract, to secure something not due them under that contract, would be a combination interfering, without justification, with the employ- er's business.*® § 887. Monopolies at common law. — As stated in the first section of this chapter, a monopoly was originally defined as an institution or allowance by the king by his grant to any person of or for the sole buying, selling, making, working or using of anything.*^ The common law has always considered monopolies against public policy and unlawful. Even though the monopoly was granted by the crown, it might be declared utterly void on the ground that it was against the common law and the divers acts of parliament.** Subsequently parliament, by the statute of 21 James i, ch. 3, declared all existing monopolies, with cer- tain exceptions, abolished and deprived the crown of the power to create new monopolies. Among the exceptions were grants and privileges under acts of parliament such as patents, copy- rights, and manufacturers of certain warlike materials.*^ I ^ State V. Stockford, 11 Conn. 227, of trade unions and trade disputes 58 Atl. 769, 107 Am. St. 28; A. R. enacted December 21, 1906. See also, Barnes & Co. v. Berry, 156 Fed. 72; Mapstrick v. Ramge, 9 Nebr. 390, 2 Wabash R. Co. v. Hannahan, 121 N. W. 739, 31 Am. Rep. 415. Fed. 563; Reynolds v. Davis, 198 ^ See ante, § 865. In Harris v. Mass. 294, S4 N. E. 457, 17 L. R. A. Commonwealth (Va.),73 S. E. 560, it (N. S.) 162n. And see Brauch v. is said that there was no prohibition Roth, 10 Ont. Law (Canada) 284; at common law against the creation United States v. Haggerty, 116 Fed. of a monopoly by individuals, citing 510; Mapstrick v. Ramge, 9 Nebr, Standard Oil Co. v. United States, 390, 2 N. W. 739, 31 Am. Rep. 415. 221 U. S. 1, 55 L. ed. 619, 31 Sup. ^Reynolds v. Davis, 198 Mass. Ct. 502, 34 L. R. A. (N. S.) 834. 294. 84 N. E. 457, 17 L. R. A. (N. S.) There is of course a distinction be- 162n. See also. Commonwealth v. tween a monopoly and a contract in Hunt, 4 Mete. (Mass.) Ill, 38 Am. restraint of trade, but compare with Dec. 346. In England this rule has § 790. been changed by a statute which ^ See Case of Monopolies, Darcv provides "that an act done by a per- v. Allein, 11 Coke 84. See ante, § son in contemplation or furtherance 865. of a trade dispute shall not be action- ** See Norwich Gaslight Co. v. able on the ground only that it in- Norwich City Gas Co., 25 Conn. 19; duces some other person to break a Livingston v. Van Ingen, 9 Johns (N. contract of employment." Section 3 of Y.) 507. the Act to provide tor the regulation ] 888 CONTRACTS. 202 § 888. Modem doctrine. — The modern doctrine as supple- mented by statutes recognizes that the public cannot compel com- petition at all ; but the law in the interest of public policy can and will remove unreasonable restraints by contract upon competi- tion by refusing to enforce the contract and leaving the parties free to compete if they choose.^" Modern statutes have also given the government and third persons who have been injured by such monopoly the right to invoke the courts for aid.®^ The common-law terms of forestalling, engrossing and regrading have already been defined and briefly discussed in the section on ," 'Corners' and combinations to prevent competition in other re- spects" and it is not thought necessary to give them further men- tion.°^^ § 889. Monopolies as affected by state constitution. — The constitutions of a number of the states of the union declare in effect, if not in so many words, that perpetuities and monopolies are contrary to the genius of a free government and shall never '*' Pacific Factor Co. v. Adler, 90 'Cal. 110, 27 Pac. 36, 2 Am. St. 102; Santa Clara &c. Co. v. Hayes, 76 Cal. 387, 18 Pac. 391, 9 Am. St. 211; Fish- burn V. Chicago, 171 111. 338, 49 N. E. 532, 39 L. R. A. 482, 63 Am. St. 236; People V. Chicago Live Stock Ex- change, 170 111. 556. 48 N. E. 1062, 39 L. R. A. 373, 62 Am. St. 404; Peo- ple V. Chicago Gas Trust Co., 130 111. 268, 22 N. E. 798, 8 L. R. A. 497n, 17 Am. St. 319; Chicago Gas &c. Co. V. People's Gas &c. Co., 121 111. 530, 13 N. E. 169, 2 Am. St. 124 ; Craft v. McConoughy, 79 111. 346, 22 Am. Rep. 171; Anderson v. Jett, 89 Ky. 375, •11 Ky. Law 570, 12 S. W. 670. 6 L. R. A. 390 ; Alger v. Thacher, 19 Pick. (Mass.) 51, 31 Am. Dec. 119; People V. Milk Exchange, 145 N. Y. 267, 39 N. E. 1062, 27 L. R. A. 437, 45 Am. St. 609; People v. Sheldon, 139 N. Y. 251, 34 N. E. 785, 23 L. R. A. 221, 36 Am. St. 690 ; Judd v. Har- rington, 139 N. Y. 105, 34 N. E. 790; Leonard v. Poole, 114 N. Y. 371, 21 N. E. 707, 4 L. R. A. 728, 11 Am. St. 667; Arnot v. Pittston &c. Coal Co., 68 N. Y. 558, 23 Am. Rep. 190 ; Heim V. New York Stock Exch., 64 Misc. (N. Y.) 529, 118 N. Y. S. 591; Cen- tral Ohio Salt Co. V. Guthrie, 35 Ohio St. 666; Crawford v. Wick, 18 Ohio St. 190, 98 Am. Dec. 103 ; Nes- ter V. Continental Brewing Co., 161 Pa. St. 473, 29 Atl. 102, 24 L. R. A. 247, 41 Am. St. 894; Morris Run Coal Co. V. Barclay Coal Co., 68 Pa. St. 173, 8 Am. Rep. 159; Texas Stand- ard Cotton-Oil Co. V. Adoue, 83 Tex. 650, 19 S. W. 274, 15 L. R. A. 598, 29 Am. St. 690; West Virginia Transp. Co. v. Ohio River Pipe Line Co., 22 W. Va. 600, 46 Am. Rep. 527 ; Pocahontas Coke Co. v. Powhatan &c. Coal Co., 60 W. Va. 508, 56 S. E. 264, 10 L. R. A. (N. S.) 268n, 116 Am. St. 901. See also, Den- ver Jobbers' Assn. v. People (Colo. App.), 122 Pac. 404, holding that the common-law rule against monop- olies is not one of passive in- action, a court of equity neither en- joining the enforcement of monopo- listic contracts nor aiding in their fulfilment, but instead such court will in a proper case enjoin unlawful combinations. " See post, § 903. See also, Denver Jobbers' Assn. v. People (Colo. App.), 122 Pac. 404. "a See § 877. 203 COMBINATIONS, MONOPOLIES AND TRUSTS. § 890 be allowed."^ Since a monopoly is opposed to public policy, a monopoly created by legislative grant has been held illegal even in the absence of a constitutional restriction prohibiting the crea- tion of a monopoly, a constitutional prohibition being unneces- sary to render it void."^ It would seem, however, that in the ab- sence of a constitutional restriction a monopoly created by public authority would be valid, especially since the fact that it is cre- ated by public authority is generally conclusive upon the question of public policy."* § 890. Monopolies under state statutes.-:— Practically ev- ery state of the union has what is popularly termed an antitrust act. These statutes vary more or less in their wording and the construction that has been placed upon them. It is impractica- ble to set them out in a work of this character; however, addi- tional mention will be given them in a subsequent section of this chapter."^ ** Arkansas Const. 1874 art. 2, § 19; Maryland Declaration of Rights, art. 41 ; North Carolina Declaration of Rights, art. 1, § 31; Oklahoma Const., art. 2, § 32; Tennessee Const., art. 1, § 22; Texas Const., art. 1, § 26; Wyoming Const., art. 1, § 30. Under such a provision the grant of an exclusive privilege by a munici- pality to a water company to furnish water for fire hydrants has been held void. Hartford Fire Ins. Co. v. Houston (Tex. Civ. App.), 110 S. W. 973. " Norwich Gas Light Co. v. Nor- wich City Gas Co., 25 Conn. 19. See also, Saginaw Gas Light Co. v. City of Saginaw, 28 Fed. 529; Citi- zens' Gas &c. Co. V. Elwood, 114 Ind. 332, 16 N. E. 624; Canal &c. R. Co. V. Crescent City R. Co., 41 La. Ann. 561, 6 So. 849; Thrift v. Eliza- beth City, 122 N. Car. 31. 30 S. E. 349, 44 L. R. A. 427; Ft. Worth St. R. Co. V. Rosedale St. R. Co., 68 Tex. 169, 4 S. W. 534. ** Stewart v. Erie &c. Transporta- tion Co., 17 Minn. 372. See also, Slaughter House Cases, 16 Wall. (U. S.) 36, 21 L. cd. 394; New Orleans Gas Co. V. Louisiana Light Co., 115 U. S. 650, 29 L. ed. 516, 6 Sup. Ct. 252; City R. Co. v. Citizens' St. R. Co., 166 U. S. 557, 41 L. ed. 1114, 17 Sup. Ct 653 ; Bancroft v. Thaver, 5 Sawy. (U. S.) 502, 2 Fed. Cas. No. 835; Vermont &c. R. Co. v. Ver- mont Central R. Co., 34 Vt. 249. The establishment of a. state dispensary has been upheld. The court said, quoting from Scott v. Donald, 165 U. S. 104, 17 Sup. Ct. 274: "Granting' that the act gives the state itself a monopoly of all traffic in such liquors, it is not a monopoly in the ordinary or odious sense of the term, where one individual or corporation is giv- en the right to manufacture or trade which is not open to others, but a monopoly for the benefit of the whole people (of the district), the profits of which, if any, are enjoyed by the whole people ; in short, a monopoly in the same sense in which the post- office department and the right to carry the mails is a monopoly of the federal government." Guv v. Cum- berland County, 122 N. Car. 471, 29 S. E. 771. "'See post, § 915 et seq. § 891 CONTRACTS. 204 §891. Grants of exclusive rights by governmental au- thority. — Grants of an exclusive character may emanate from governmental authority or from the acts of private individ- uals. This is not the place to discuss when, how and by what state agency a monopoly may be granted. It is sufficient to say that a valid grant of this character becomes a contract after the party to whom the grant is made has complied with the condi- tions thereof and comes within the protection of that clause of the constitution of the United States which prohibits the impair- ment of the obligations of a contract.''" The grantee will be pro- tected in the enjoyment of his grant.^^ However, regardless of whether the exclusive grant is made by the state^^ or a municipal corporation,^^ it will be strictly construed. §892. Exclusive grant by private person. — The validity of an exclusive grant by a private person or corporation depends upon whether or not the rights of the public are in any way im- paired. If the rights of the public are impaired the grant is in- valid, if not the grant is valid. Contracts of exclusive agency are usually upheld.^ § 893. Exclusive grant by carriers. — The question as to the validity of an exclusive grant by a common carrier frequently arises. So long as the privilege granted in no way interferes with the rights of the public and does not cripple the carrier in the performance of its public duty it would seem, on principle, that the grant should be held valid. The carrier owes a duty to "•Ratcliffe V. Pulaski Turnpike Co., Proprietors v. Hoboken Land &c. 69 Ark. 264, 63 S. W. 70; Citizens Co., 1 Wall. (U. S.) 116, 17 L. ed. Water Co. v. Bridgeport Hydraulic 571. ,r ^ r^ r ^ Co. 55 Conn. 1 ; Long v. Duluth, 49 " Livingston v. Van Ingen, 9 Johns. Minn. 280, 51 N. W. 913, 32 Am. St. (N. Y.) 507. 547; St. Louis Gas Light Co. v. St. "^Capitol City Light &c. Co. v. Louis Gas &c. Co., 16 Mo. App. 52; Tallahasee, 42 Fla. 462, 28 So. 810; In re Binghamton Bridge, 3 Wall. (U. Betts v. Manard, 1 111. 395 ; Tucka- S.) 51, 18 L. ed. 137; St. Tammany hoe Canal Co. v. Tuckahoe &c. K. Co., Water-works v. New Orleans Water- 11 Leigh (Va.) 42, 36 Am. Dec. 374 works, 120 U. S. 64, 30 L. ed. 563, *» Citizens' St. R. Co. v. Jones, 34 7 Sup. Ct. 405; Louisville Gas. Co. Fed. 579; Long v. Duluth, 49 Mmn. V. Citizens' Gas Light Co., 115 U. 280, 51 N. W. 913 32, Am St. 547; S. 683. 29 L. ed. 510. 6 Sup. Ct. 265; St. Louis Gaslight Co v. St Louis New Orleans Gas Light Co. v. Louis- Gas &c. Co., 16 Mo. App. 52. iana Light &c. Co., 115 U. S. 650, 29 'See ante, chap. XXII. L. ed. 516, 6 Sup. Ct. 252; Bridge 205 COMBINATIONS, MONOPOLIES AND TRUSTS. § 894 the public, but it has a right to choose the instrumentahties to be used in the performance of that duty. Thus, it has been held that a railroad company or other carrier may, and that it is to the advantage of the public that it should, grant to a particular person engaged in transferring passengers and baggage the ex- clusive right to keep a representative on its trains or private grounds or property to solicit patronage." It has also been held that a carrier may grant to one individual or corporation the ex- clusive right to handle its express business,^ although there are cases holding to the contrary.* § 894. Exclusive grants by carriers to hackmen — Right to dock vessel. — It is also held by the weight of authority that a carrier may confer upon selected haclvmen or expressmen the exclusive right to solicit patronage within its depot grounds. ° There are many cases, however, which deny the right of the car- * Kates V. Atlanta Baggage &c. Co., 667; Texas v. Missouri &c. R. Co., 107 Ga. 636, 34 S. E. 372, 46 L. R. A. 99 Tex. 516, 91 S. W. 214, 5 L. R. A. 431; Dingman v. Duluth &c. R. Co., (N. S.) 783 (statutory). For cases 164 Mich. 328. 130 N. W. 24, 32 L. R. illustrating similar agreements with A. (N. S.) 1181; Godbout v. St. Paul stockyard companies, see Butchers & Union Depot Co., 79 INIinn. 188, 81 Drover's Stockyards Co. v. Louis- N. W. 835. 47 L. R. A. 532; Barney ville &c. R. Co., 67 Fed. 35, 14 C. C. V. Oyster Bay &c. Co., 67 N. Y.' 301, A. 290; Covington Stockvards Co. v. 23 Am. Rep. 115; Lewis v. Weather- Keith, 139 U. S. 128, 35 L. ed. 73; ford &c. R. Co., 36 Tex. Civ. App. Likewise with sleeping-car companies, 48, 81 S. W. Ill; Barney v. Martin, Chicago &c. R. Co. v. Pullman South- 11 Blatchf. (U. S.) 233, Fed. Cas. No. ern Car Co., 139 U. S. 79, 35 L. ed. 1030; Jencks v. Coleman, 2 Sumn. 97, 11 Sup. Ct. 490; Fort Worth &c. (U. S.) 221. Fed. Cas. No. 7258. R. Co. v. State, 99 Tex. 34, 87 S. W. ^Express Companies' Cases, 117 U. 336, 70 L. R. A. 950. S. 1, 29 L. ed. 791, 6 Sup. Ct. 542, ■* Barker v. Midland R. Co., 18 C. overruling numerous federal cases. B. 46; Beadell v. Eastern Counties See also, Blank v. Illinois &c. R. Co., R. Co., 2 C. B. (N. S.) 509; Painter 182 III. 332. 55 N. E. 332; Louisville v. London. B. & S. C. R. Co.. 2 C. B. &c. R. Co. v. Keefer, 146 Ind. 21, (N. S.) 702; Union Depot & R. Co. 44 N. E. 796, 38 L. R. A. 93, 58 Am. v. Meeking, 42 Colo. 89, 94 Pac. 16, St. 348; Dulaney v. United Railways 126 Am. St. 145; New York N. H. &c. Co., 104 Md. 423. 65 Atl. 45 ; At- & H. R. Co. v. Scovill, 71 Conn, lantic Exp. Co. v. Wilmington &c. R. 136, 41 Atl. 246, 42 L. R. A. 157. 71 Co.. Ill N. Car. 463, 16 S. E. 393, Am. St. 159; Kates v. Atlanta Bag- 18 L. R. A. 393. 32 Am. St. 805. gage & Cab Co., 107 Ga. 636, 34 S. * New England Exp. Co. v. Main E. 372. 46 L. R. A. 431 ; Hart v. At- R. Co., 57 Maine 188, 2 Am. Rep. lanta Terminal Co., 128 Ga. 754, 58 31 (statutory); Kidder v. Fitchburg S. E. 452; Old Colony R. Co. v. R. Co., 165 Mass. 398, 43 N. E. 115 Tripp. 147 Mass. 35, 17 N. E. 89, 9 (statutory) ; McDuffee v. Portland Am. St. 661 : Boston & A. R. Co. v. &c. R. Co.. 52 N. H. 430, 13 Am. Brown. 177 Mass. 65, 58 N. E. 189, Rep. 72; Sanford v. Catawissa &c. 52 L. R. A. 418; Boston & M. R. Co. R. Co.. 24 Pa. St. 378, 64 Am. Dec. v. Sullivan, 177 Mass. 230, 58 N. E. § 894 CONTRACTS. 206 rier to confer upon selected hackmen or expressmen the exclusive right to solicit patronage within its station grounds.*^ A railroad company may also grant the exclusive privilege to a certain per- son or persons to enter upon its grounds and trains for the purpose of selling lunches or to solicit orders from passengers for the sale of lunches/ It has been held that a railroad company 689, 83 Am. St. 275; Godbout v. St. Paul Union Depot Co., 79 Minn. 188, 81 X. W. 835, 47 L. R. A. 532; Red- ding V. Galagher, 72 N. H. Ill, 57 AtL 225, 64 L. R. A. 811, overruling 69 N. H. 650, 45 Atl. 96, 76 Am. St. 204, and 70 N. H. 631, 47 Atl. 614; Barney v. Oyster Bay & H. S. B. Co., 67 N. Y. 301, 23 Am. Rep. 115; Snyder v. Union Depot Co., 19 Ohio C. C. 368, revg. 7 Ohio N. P. 64; State v. Union Depot Co., 71 Ohio St. 379, IZ N. E. 633, 68 L. R. A. 792 ; Donovan v. Pennsylvania Co., 199 U. S. 279, 50 L. ed. 192, 26 Sup. Ct. 91 ; Jencks v. Coleman, 2 Sumn. (U. S.) 221, Fed. Cas. No. 7258; The D. R. Martin, 11 Blachf. (U. S.) 233, Fed. Cas. No. 1030; Oregon Short Line R. Co. v. Davidson, ZZ Utah 370, 94 Pac. 10, 16 L. R. A. (N. S.) 777n. This right of the car- rier to grant an exclusive privilege to certain parties to solicit business on the grounds of the company does not prevent a driver of any vehicle from entering upon such space and ground to fulfill a contract of em- ployment with a passenger or in- tended passenger ; it merely prohibits him from going on the grounds to solicit business. See New York N. H. & H. R. Co. V. ScoviU, 71 Conn. 136, 41 Atl. 246, 42 L. R. A. 157, 41 Am. St. 159; Union Depot &c. Co. v. Meeking, 42 Colo. 89, 94 Pac. 16, 126 Am. St. 145; Boston & A. R. Co. V. Brown, 177 Mass. 65, 58 N. E. 189, 52 L. R. A. 418: Godbout v. St. Paul Union Depot Co., 79 Minn. 188, 81 N. W. 835, 47 L. R. A. 532. S i also, Griswold v. Webb, 16 R. I. 649, 19 Atl. 143, 7 L. R. A. 302 ; New York N. H. & H. R. Co. v. Bork, 23 R. I. 218, 49 Atl. 965. Mn re Palmer, L. R. C. P. 194; Marriott v. London & S. W. R. Co., 1 C. B. (N. S.) 499; Indianapolis Union R. Co. v. Dohn, 153 Ind. 10, 53 N. E. 937, 45 L. R. A. 427, 74 Am. St. 274 ; McConnell v. Pedigo, 92 Ky. 465, 13 Ky. L. 689, 18 S. W. 15; Kalamazoo Hack & Bus Co. v. Soot- sma, 84 Mich. 194, 47 N. W. 667, 10 L. R. A. 819, 22 Am. St. 693; State V. Reed, 76 Miss. 211, 24 So. 308, 43 L. R. A. 134, 71 Am. St. 528; Mon- tana Union R. Co. v. Langlois, 9 Mont. 419, 24 Pac. 209, 8 L. R. A. 753, 18 Am. St. 745. See also, Penn- sylvania Co. V. Chicago, 181 111. 289, 34 N. E. 825, 53 L. R. A. 223 ; Mark- ham V. Brown, 8 N. H. 523, 31 Am. Dec. 209. ' "We cannot believe that there is a sort of right of common lodged in the public at large to enter upon lands on which railroads are located, and over which they have secured the right of way. Such lands the rail- road companies may inclose by fences if they choose to do so, and exclude any and all persons whomso- ever. Their dominion over the same is no less complete or exclusive than that which every owner has over his property. If they do not choose to erect fences and make enclosures, they may, by mere orders, keep off intruders, and they may treat as in- truders all who come to transact their own business with passengers, or with persons other than the com- panies themselves. To do this, how- ever, they must give fair notice; in- asmuch as by a sort of common law or common understanding in this country, an unforbidden entry on un- inclosed lands is not a trespass, un- less the intruder comes for some im- proper purpose, or to remain an un- due or unnecessary length of time. It is manifest that the grant of the privilege to one or more is no right- ful cause of complaint on the part of others to whom a like privilege is denied. The right to make such dis- criminations is incident to the owner- 207 COMBINATIONS, MONOPOLIES AND TRUSTS. 894 which owns a private pier may grant the right to dock and un- dock all vessels at the pier exclusively to tow-boats owned by a designated person when the contract is for the benefit both of the shippers and the railroad.^ If contracts of the character men- tioned in the foregoing part of this section are to be held invalid, it would seem more rational to place the invalidity on the ground that they are ultra vires the corporation instead of on the theory that they tend to create a monopoly. The right of a carrier to exercise a good faith discretion in the selection of the instrumen- talities to be employed in serving the public and the right to ex- clude from its premises those whom it pleases when they come to transact their own private business with passengers or third persons is not to be confused with the duty of the carrier topper- form the public duty imposed upon it without discrimination. As among members of the general public seeking accommodation it must extend the same class of service to all without discrimina- tion and on equal terms.^ ship of all property which is not de- voted to some use that in and of itself involves an invitation to the public to enter and enjoy for the time being." Fluker v. Georgia Rail- road & Banking Co., 81 Ga. 461, 2 L. R. A. 843, 8 S. K 529, 12 Am. St 328 329. 'Baker Whiteley Coal Co. v. Baltimore &c. R. Co., 176 Fed. 632. • See Hays & Co. v. Pennsylvania Co., 12 Fed. 309; Burlington C. R. & N. R. Co. v. Northwestern Fuel Co., 31 Fed. 652; Kinslev v. Buffalo, N. Y. & P. R. R. Co.. Zl Fed. 181; West Coast Naval Stores Co. v. Louisville & N. R. R. Co., 121 Fed. 645. 57 C. C. A. 671 ; Blair v. Sioux Citv & Pac. R. Co.. 109 Iowa 369, 80 N. W. 673; Louisville & N. R. Co. v. Pittsburg & K. Coal Co., Ill Kv. 960. 23 Ky. L. 1318, 64 S. W. 969, 55 L. R. A. 601. 98 Am. St. 447; State V. Southern R. Co., 125 N. Car. 666, 34 S. E. 527 ; Schoficld v. Lake Shore &c. R. C0..43 Ohio St. 571,3 N. E.907, 54 Am. Rep. 846; Baltimore & O. R. Co. V. Diamond Coal Co., 61 Ohio St. 242, 55 N. E. 616; Memphis News Pub. Co. V. Southern R. Co., 110 Tenn. 684, 75 S. W. 941, 63 L. R. A. 150; Hill v. St. Louis South- western R. Co. (Tex. Civ. App.), 75 S. W. 874; Northwestern Warehouse Co. V. Oregon R. &c. Co., 32 Wash. 218, IZ Pac. 388. See also, ante. chap. XIX. It has also been held that a contract or lease whereby a railroad company granted to a telegraph company the exclusive use of railroad right of way for the erec- tion of its poles and the mainten- ance of its wires is void upon ground of public policy as being in restraint of trade and creating a monopoly. Western Union Telegraph Co. v. Burlington &c. R. Co., 11 Fed. 1; Baltimore & O. Tel. Co. v. Western Union Tel. Co., 24 Fed. 319; Western Union Telegraph Co. v. Baltimore &c. Telegraph Co., 23 Fed. 12; Georgia R. & Banking Co. v. At- lantic Postal Tel. Cable Co., 152 Fed. 991 ; Western Union Tel. Co. v. American Union Tel. Co., 65 Ga. 160, 38 Am. Rep. 781 ; St. Louis &c. R. Co. v. Postal Teleg. Co., 173 111. 508, 51 N. E. 382; Mobile & O. R. Co. V. Postal Telegraph Cable Co., 1(i Miss. 731. 26 So. 370, 45 L. R. A. 223. In the absence of any statute giving the telegraph company the power to condemn a right of way it is difficult to see, on principle, why § 89: CONTRACTS. 208 § 895. Discrimination — Exclusive service contract with patron. — One of the reasons advanced for requiring the car- rier to ser\'e the general public without discrimination is that if it were penuitted to discriminate it could thereby build up a monopoly/" The patron of a public service corporation is not as a general rule bound by his contract to give exclusive patron- age to a particular company.^^ § 896. What are illegal trusts. — The test question by which to determine the illegality of a trust is whether or not a combination or conspiracy exists which is injurious or which nat- urally tends to injure the public. Courts will not stop to inquire as to the degree of injury inflicted. It is enough to know that the natural and inevitable tendency of such contract is injuri- ous.^^ In order to determine whether or not the contract will result in injury to the public, its necessary consequences and the railroad company might not grant to a telegraph company the exclu- sive right to construct a telegraph line along its right of way on any grounds other than that of ultra vires. ''' Louisville E. & St. L. &c. R. Co. V. Wilson, 132 Ind. 517, 32 N. E. 311, 18 L. R. A. lOSn; Messenger v. Pennsylvania R. Co., Z1 N. J. L. 531, 18 Am. Rep. 754. See Scoffield v. Lake Shore &c. R. Co., 43 Ohio St. 571, 3 N. E. 907, 54 Am. Rep. 846. See also, ante, chap. XIX. "Central New York &c. Co. v. Averill, 199 N. Y. 128, 92 N. E. 206, 32 L. R. A. (N. S.) 494. See also, ante, chap. XIX. As to the right of local telephone companies operating in different fields for exclusive phys- ical connections for long distance business, see Home Tel. Co. v. Sar- coxie Light &c. Co., 236 Mo. 114, 139 S. W. 108, 36 L. R. A. (N. S.) 124 and note. See also, Cumberland &c. Tel. Co. v. State (Miss.), 54 So. 670, 39 L. R. A. (N. S.) 277. '^ Nester v. Continental Brew. Co., 161 Pa. St. 473, 29 Atl. 102, 24 L. R. A. 247, 41 Am. St. 894. See also, Tuscaloosa Ice Mfg. Co. v. Williams, 127 Ala. 110, 28 So. 669, 50 L. R. A. 175, 85 Am. St. 125; People v. Sacra- mento Butchers' Protective Assn., 12 Cal. App. 471, 107 Pac. 712; Stewart V. Stearns &c. Timber Co., 56 Fla. 570, 48 So. 19, 24 L. R. A. (N. S.) 649n ; Chicago &c. Coal Co. v. People, 114 111. App. 75, affd. 214 111. 421, IZ N. E. 770; Consumers' Oil Co. v. Nunnemaker, 142 Ind. 560, 41 N. E. 1048, 51 Am. St. 193; State v. Cream- erv Package Mfg. Co., 110 Minn. 415, 126 N. W. 126, 136 Am. St. 514; Peo- ple v. Duke, 19 Misc. (N. Y.) 292, 11 N. Y. Cr. 472, 44 N. Y. S. 336; ■Morris Run Coal Co. v. Barclay Coal Co., 68 Pa. St. 173, 8 Am. Rep. 159; State V. Eastern Coal Co., 29 R. I. 254, 70 Atl. 1, 132 Am. St. 798 ; State V. Erickson, 54 Wash. 472, 103 Pac. 796; Milwaukee Masons &c. Assn. v. Niezerowski, 95 Wis. 129, 70 N. W. 166, Z1 L. R. A. 127, 60 Am. St. 97. "In determining the validity at com- mon law of such combinations, and contracts which are essential parts of them, the true test is whether they afford fair and just protection to the parties, or whether they are so broad as to 'interfere with the interests of the public'." Finck v. Schneider, 187 ^lo. 244, 86 S. W. 213, 106 Am. St. 452. A newspaper may refuse to employ as carriers those who refuse to protect its interests by refraining from aiding its competitors. Staroske v. Pulitzer Pub. Co., 235 Mo. 67, 138 S. W. 36. 209 COMBINATIONS, MONOPOLIES AND TRUSTS. 897 tendency to control prices, limit production, or suppress compe- tition and thus restrain trade and create a monopoly in the dis- trict within which it operates, control." In case injury to the public exists the contract is void as against public policy.^* § 897. Form not controlling. — The form which the trust assumes is not controlling in determining its validity.^^ It may "As to tests of illegality, see Tus- caloosa Ice. JNIfg. Co. V. Williams, 127 Ala. 110, 28 So. 669, 50 L. R. A. 175, 85 Am. St. 125; Pacific Factor Co. V. Adler, 90 Cal. 110, 27 Pac. 2>6, 25 Am, St. 102; Western Union Tel. Co. V. American Union Tel. Co., 65 Ga. 160, 38 Am. Rep. 781n ; More v. Ben- nett, 140 111. 69, 29 N. E. 888, 15 L. R. A. 361, 3i Am. St.^216; Bishop v. American Preservers' Co., 157 111. 284, 41 N. E. 765, 48 Am. St. 317; Inter-Ocean Pub. Co. v. Associated Press, 184 111. 438, 56 N. E. 822, 48 L. R. A. 568, 75 Am. St. 184; People V. Chicago Gas Trust Co., 130 111. 268, 22 N. E. 798, 8 L. R. A. 497, 17 Am. St. 319; Chicago^ Gas-Light &c. Co. V. People's Gas-Light &c. Co., 121 111. 530, 13 N. E. 169, 2 Am. St. 124; Harding v. American Glucose Co., 182 111. 551, 53 N. E. 577, 64 L. R. A. 738, 74 Am. St. 189 ; Craft v. AlcCon- oughy, 79 111. 346. 22 Am. Rep. 171; Distilling & Cattle Feeding Co. v. People, 156 111. 448, 41 N. E. 188, 47 Am. St. 200; State v. Portland Nat. Gas &c. Co., 153 Ind. 483, 53 N. E. 1089, 53 L. R. A. 413, 74 Am. St. 314; Chapin v. Brown, 83 Iowa 156, 48 N. W. 1074, 12 L. R. A. 428, Z2 Am. St. 297 ; Anderson v. Jett, 89 Ky. 375, 11 Ky. L. 570, 12 S. W. 670, 6 L. R. A. 390; India Bagging Assn. v. Kock, 14 La. Ann. 168; Richardson V. Buhl, 77 Mich. 632, 43 N. W. 1102, 6 L. R. A. 457; Stewart v. Erie &c. Transp. Co., 17 Minn. 372; Cum- mings V. Union Blue Stone Co., 164 N. Y. 401, 58 N. E. 525, 52 L. R. A. 262; People v. Sheldon, 139 N. Y. 251, 34 N. E. 785, 23 L. R. A. 221, 36 Am. St. 690; .Arnot v. Pittston &c. Coal Co., 68 N. Y. 558, 23 Am. Rep. 190; Stanton v. Allen, 5 Denio (N. Y.) 434, 49 Am. Dec. 282; People v. Milk Exch., 145 N. Y. 267, 39 N. E. 1062, 27 L. R. A. 437, 45 Am. St. 609; Strait v. National Harrow Co., 18 N. Y. S. 224; Central Ohio Salt Co. V. Guthrie, 35 Ohio St. 666; Fisher v. Flickinger Wheel Co., 28 Ohio C. C. 501 ; Anderson v. Shaw- nee Compress Co., 17 Okla. 231, 87 Pac. 315, 15 L. R. A. (N. S.) 846n ; Nester v. Continental Brewing Co., 161 Pa. St. 473, 29 Atl. 102, 24 L. R. A. 247, 41 Am. St. 894; Morris Run Coal Co. V. Barclay Coal Co., 68 Pa. St. 173, 8 Am. Rep. 159; Bailey v. Master Plumbers' Assn., 103 Tenn. 99, 52 S. W. 853, 46 L. R. A. 561; Texas Standard Oil Co. v. Adoue, 83 Tex. 650, 19 S. W. 274, 15 L. R. A. 598, 29 Am. St. 690. It is the consensus of the authorities that a monopoly, within the meaning of the anti-trust laws, is created when, as a result of any contract or combination, previously competing businesses are so concentrated into the hands of a single individual or corporation, or of a few individuals or incorpora- tions acting in concert| that they thereby have the power to practically control the prices of commodities, and thus practically suppress compe- tition. State V. Standard Oil Co., 218 ]\Io. 1, 116 S. W. 902, 1045. " See cases cited ante in the pre- ceding note. " People V. Sacramento Butchers' &c. Assn., 12 Cal. App. 471, 107 Pac. 712; Harding v. American Glucose Co., 182 111. 551. 55 N. E. 577, 64 L. R. A. 738, 74 Am. St. 189; Yazoo &c. R. Co. v. Searles, 85 Miss. 520, Z7 So. 939, 68 L. R. A. 715. A mere social organization among under- takers does not came within the statute against monopolies. Wag- oner Undertaking Co. V. Jones (Mo.), 114 S. W. 1049. 14 — Contracts, Vol. 2 § 898 CONTRACTS. 2IO be in the form of a copartnership/® or a holding company*'^ or an agreement among corporations to pool their earnings/* Or it may be formed by the stockholders in a corporation/" or by the execution of a lease to a rival concern/" Nor does the trust or combination lose its illegal character by reason of a mere altera- tion of the organization, as by a transfer of the properties of the combined companies to a new company organized for that pur- pose/^ The intent of the parties becomes important only when the acts are not sufficient in themselves to produce a monopoly but require further acts in addition to the mere forces of nature in order to bring that result to pass ; an intent to bring it to pass is then necessary in order to produce a dangerous probability that it will happen/^ § 898. Rights and disabilities of members of trusts as be- tween themselves. — In accordance with the principles that courts will not lend their aid to enforce the performance of a contract which is contrary to public policy but will leave the par- ties in the plight in which their own illegal conduct has placed them/^ no proceeding can as a general rule be maintained as "Bishop V. American Preservers' "White Star Line v. Star Line of Co., 157 111. 284, 41 N. E. 765, 48 Am. Steamers, 141 Mich. 604, 105 N. W. St. 317; Harding v. American Glu- 135, 113 Am. St. 551. cose Co., 182 111. 551, 55 N. E. 577, "Ford v. Chicago Milk Shippers' 64 L. R. A. 738, 74 Am. St. 189; Peo- Assn., 155 111. 166, 39 N. E. 651, 27 pie V. North River Sugar Refining L. R. A. 298. See also, National Co., 121 N. Y. 582, 24 N. E. 834, 9 Lead Co. v. S. E. Grote Paint Store L. R. A. 33, 18 Am. St. 843, 32 Am. Co., 80 Mo. App. 247. & Eng. Corp. Cas. 149; State v. ™ American Strawboard Co. v. Standard Oil Co., 49 Ohio St. 137, Peoria Strawboard Co., 65 111. App. 30 N. E. 279, 15 L. R. A. 145, 34 Am. 502; Anderson v. Shawnee Compress St. 541, 36 Am. & Eng. Corp. Cas. 1 ; Co., 17 Okla. 231, 87 Pac. 315, 15 L. ]\Iallory v. Hananer Oil Works, 86 R. A. (N. S.) 846n. See also, Fisher Tenn. 598, 8 S. W. 396, 20 Am. & v. Flickinger Wheel Co., 28 Ohio C. Eng. Corp. Cas. 478. C. 501. " People V. Chicago Gas. Trust Co., ^ Harding v. American Glucose 130 111. 268, 22 N. E. 798, 8 L. R. A. Co., 182 111. 551, 55 N. E. 577, 64 497n, 17 Am. St. 319; State v. Cream- L. R. A. 738, 74 Am. St. 189; Distil- erv Package Mfg. Co., 110 Minn, ling & Cattle Feeding Co. v. People, 415, 126 N. W. 126, 136 Am. St. 514; 156 111. 448, 41 N. E. 188, 47 Am. St. Woodbury v. McClurg. 78 Miss. 831, 200. 29 So. 514; Southern Electric Secur- ^Bigelow v. Calument &c. Min. ities Co. V. State, 91 Miss. 195, 44 Co., 167 Fed. 721, 94 C. C. A. 13; So. 785, 124 Am. St. 638; State v. Swift & Co. v. United States, 196 Standard Oil Co., 218 Mo. 1, 116 S. U. S. 375, 49 L. ed. 518, 25 Sup. Ct. W. 902; Northern Securities Co. v. 276. United States, 193 U. S. 197, 48 L. =" See Chicago &c. R. Co. v. Wabash ed. 679, 24 Sup. Ct. 436. &c. R. Co., 61 Fed. 993, 9 C. C. A. 211 COMBIXATIONS, MONOPOLIES AND TRUSTS. § 898 between the parties to such illegal comlMnation to enforce any provision of the agreement,-* such as an action to enjoin a breach of the agreement," or to compel admission to membership in the trust,^" or to collect the penalty which the contract provides shall be due and payable upon the breach of the agreement," or to re- cover damages for its breach,-'* or a proceeding in equity by which a judgment creditor seeks to enforce the collection of a judg- ment recovered upon an illegal contract,-® or an action to obtain one's share of the profits or earnings claimed to be due under an illegal combination,^'' or enforce contribution toward the pay- 659, 27 U. S. App. 1 ; Phcenix Bridge Co. V. Keystone Bridge Co., 142 N. Y. 425, Zl N. E. 562. "Urmston v. Whitelegg, dZ L. T. R. (N. S.) 455; Bement v. National Harrow Co., 186 U. S. 70, 46 L. ed. 1058, 22 Sup. Ct. 747 (agreement in violation of federal anti-trust act) ; Burlington C. R. & N. R. Co. v. Northwestern Fuel Co., 31 Fed. 652; National Harrow Co. v. Hench, 76 Fed. 667; Cravens v. Carter-Crume Co., 92 Fed. 479, 34 C C. A. 479; Indiana Mfg. Co. v. J. I. Case Threshing Mach. Co., 148 Fed. 21; AlcConnell v. Camors-McConnell Co., 152 Fed. 321, 81 C. C. A. 429; Stew- art V. Stearns & Culver Lumber Co., 56 Fla. 570, 48 So. 19, 24 L. R. A. (N. S.) 649n; More v. Bennett, 140 111. 69, 29 N. E. 888, 15 L. R. A. 361, ZZ Am. St. 216; Keene Syndicate v. Wichita Gas, Electric Light & Power Co., 69 Kans. 284, 76 Pac. 834, 67 L. R. A. 61, 105 Am. St. 164; Chippe- wa Lumber Co. v. Tremper, 75 ^lich. 36, 42 N. W. 532. 4 L. R. A. Z^Z, 13 Am. St. 420; Judd v. Harington, 139 N. Y. 105. 34 N. E. 790; Cohen v. Berlin & Jones Envelope Co., 166 N. Y. 292. 59 N. E. 906; Hartford & New Haven R. Co. v. N. Y. & New Haven R. Co.. 26 N. Y. Super. Ct. 411; National Harrow Co. v. E. Bement & Sons, 21 App. Div. (N. Y.) 290, 47 N. Y. S. 462; Coverly v. Terminal Warehouse Co., 85 App. Div. (N. Y.) 488. 83 N. Y. S. 369. affd. in 178 N. Y. 602. 70 N. E. 1097; Culp V. Love. 127 N. Car. 457. Zl S. E. 476: Central Ohio Salt Co. v. Guthrie, 35 Ohio St. 666; Columbia Carriage Co. v. Hatch, 19 Tex. Civ. App. 120, 47 S. W. 288; Hartford Fire Ins. Co. v. City of Houston (Tex. Civ. App.). 110 S. W. 973; Slaughter v. Thacker Coal & Coke Co., 55 W. Va. 642, 47 S. E. 247, 65 L. R. A. 342, 104 Am. St. 1013; Charleston Gas Co. v. Kanawha Gas Co., 58 W. Va. 22, 50 S. E. 876, 112 Am. St. 936; Pocahontas Coke Co. V. Powhatan Coal & Coke Co., 60 W. Va. 508. 56 S. E. 264, 10 L. R. A. (N. S.) 268, 116 Am. St. 901. See also. Perry v. United States School Furniture Co., 232 111. 101, 83 N. E. 444. *° Pocahontas Coke Co. v. Powha- tan Coal & Coke Co., 60 W. Va. 508, 56 S. E. 264, 10 L. R. A. (N. S.) 268, 116 Am. St. 901. ^ Froelich v. ^lusicians' Mut. Ben. Assn., 93 ^lo. App. 383; O'Brien v. Musical Mut. &c. Union, 64 N. J. Eq. 525, 54 Atl. 150. " Finck V. Schneider Granite Co., 187 Mo. 244, 86 S. W. 213, 106 Am. St. 452. ^Arctic Ice Co. v. Franklin &c. Ice Co.. 145 Kv. 32, 139 S. W. 1080 ; Star Mill & Elevator Co. v. Ft. Worth &c. Elevator Co. (Tex. Civ. App.), 146 S. W. 604. ^ Perry v. United States School Furniture Co., 232 111. 101. 83 N. E. 444. See also, American Handle Co. v. Standard Handle Co. (Tenn.). 59 S. W. 709; Chicago M. & St. P. R. Co. V. Wabash &c. R. Co., 61 Fed. 993. 9 C. C. A. 659. '"Chicago M. & St. P. R. Co. v. Wabash &c. R. Co.. 61 Fed. 993, 9 C. C. .\. 659; .\rnold v. Jones Cotton Co. (Ala.). 44 So. 662. 12 L. R. A. (N. S.) 150; Vulcan Powder Co. v. Her- 899 CONTRACTS. 212 ment of a claim which accrued while the parties were members of an unlawful combination,^^ or to collect instalments of rents upon a steamer leased in order to stifle competition,^^ or to com- pel payment of a subscription for stock in a corporation formed to take over the interests of several corporations and thus form a monopoly,^^ or to enforce any of its provisions when so to do would be to give effect to the illegal combination.^"* § 899. Rule further illustrated. — Where a number of per- sons or firms have conspired together, in violation of a statute or penal code, to do acts injurious to trade, for instance, to unlaw- fully advance the price of an article of food, the courts will not intervene in favor of any one of the parties to give him redress for frauds perpetrated by another to his detriment in carrying out the unlawful enterprise. It does not affect the question that the party complained of as guilty of the fraud was acting as agent for the others. All those who knowingly promote and par- ticipate in carrying out a criminal scheme are principals, and the cules Powder Co., 96 Cal. 510, 31 Par 581, 31 Am. St. 242 ; Meyers v. Meril- lion, 118 Cal. 352, 50 Pac. 662; Craft IMcConoughy, 79 111. 346, 22 Am. Rep. 171 ; Texas & Pacific R. Co. v. South- ern Pacific R. Co., 41 La. Ann. 970, 6 So. 888, 17 Am. St. 445 ; Hooker v. Vandewater, 4 Denio (N. Y.) 349, 47 Am. Dec. 258; Stanton v. Allen, 5 Denio (N. Y.) 434, 49 Am. Dec. 282; Gray v. Oxnard, 59 Hun (N. Y.) 387, 36 N. Y. St. 237, 13 N. Y. S. 86 ; Emery v. Ohio Candle Co., 47 Ohio St. 320, 24 N. E. 660, 21 Am. St. 819; Morris Run Coal Co. v. Barclay Coal Co., 68 Pa. St. 173, 8 Am. Rep. 159; Nester v. Continental Brewing Co., 161 Pa. St. 473, 29 Atl. 102, 24 L. R. A. 247, 41 Am. St. 894 ; Texas Stand- ard Oil Co. V. Adoue, 83 Tex. 650, 19 S. W. 274, 15 L. R. A. 598, 29 Am. St. 690; Wiggins v. Bis.so, 92 Tex. 219, 47 S. W. 637, 71 Am. St. 837; See also, elaborate discussion in Mc- Mullen V. Hoffman, 174 U. S. 639, 43 L. ed. 1117, 19 Sup. Ct. 839. See, however. Central Trust Co. v. Ohio Central R. Co., 23 Fed. 306, in which recovery was permitted of the amount due under a railroad pooling contract. For a criticism of the above case see Chicago &c. R. Co. v. Wabash &c. R. Co., 61 Fed. 993, 9 C. C. A. 659. ^^ White Star Line v. Star Line of Steamers, 141 Mich. 604, 105 N. W. 135, 113 Am. St. 551. ^^ Darius Cole Transp. Co. v. White Star Line, 186 Fed. 63, 108 C. C. A. 165. =''Euston V. Edgar, 207 Mo. 287, 105 S. w. m. ^* See, generally, Greer v. Stoller, 11 Fed. 1 ; American Biscuit &c. Co. v. Klotz, 44 Fed. 721 ; Greer v. Payne, 4 Kans. App. 153, 46 Pac. 190; Uncles V. Colgate, 148 N. Y. 529, 43 N. E. 59; Bailey v. Master Plumbers, 103 Tenn. 99. 52 S. W. 853, 46 L. R. A. 561 ; Milwaukee &c. Builders' Assn. v. Niezerowski, 95 Wis. 129, 70 N. W. 166, Zl L. R. A. 127, 60 Am. St. 97. See also, American Handle Co. v. Stand- ard Handle Co. (Tenn.), 59 S. W. 709. See, however. National Wall Paper Co. v. Hobbs, 90 Hun (N. Y.) 288, 70 N. Y. St. 599, 35 N. Y. S. 932; Noble v. McGurk. 16 Misc. (N. Y.) 461, 39 N. Y. S. 921. 213 COMBINATIONS, MONOPOLIES AND TRUSTS. § 900 fact that one acts, in some respects, in subordination to the others, does not render him any the less a principal.^^ § 900. Rights and disabilities of members of trusts as against third persons. — But where one enters into and is the innocent victim of an unlawful conspiracy in restraint of trade he may have the contract set aside and be restored to his rights."* The rule as to the illegality of the acts of the trust or its members applies only to those acts done in connection with and in further- ance of the trust.^® Since even the parties to an illegal combina- tion may, as between themselves, enforce an agreement unrelated to the illegal restriction," a fortiori is this true as between a third person and a party to the illegal combine.^^ §901. The rule illustrated. — Thus it is as a general rule no defense to an action for goods sold and delivered that plaintiff is a member of an illegal trust or combination to interfere with the freedom of trade commerce since the illegality of the com- bination is collateral to the contract of sale and cannot taint it '° Leonard v. Poole, 114 N. Y. 371, 21 N. E. 707, 4 L. R. A. 728, 11 Am. St. 667. And see Cobb v. Prell. 15 Fed. 774; Bartlett v. Smith, 13 Fed. 263, 4 McCrary (U. S.) 388. See also. Levin v. Chicago Gaslight & Coke Co., 64 111. App. 393, holding that a stockholder who has partici- pated in and accepted the proceeds of an illegal combination cannot sub- sequently invoke the aid of a court of equity to set aside the contract on its proving unprofitable. See also, post, § 903 et seq. ^aDisbrow v. Creamery Package Mfg. Co., 110 Minn. 237, 125 N. W. 115? '"See Wiley v. National Wall Pa- per Co., 70 111. 543; Barton v. Mul- vane, 59 Kans. 913, 52 Pac. 883; In- ternational Harvester Co. v. Eaton Circuit Judge, 163 ^lich. 55. 127 N. W. 695, 30 L. R. A. (N. S.) 580n, Ann. Cas. 1912A. 1022 and note (suit to recover money in hands of agents) ; Springfield &c. Ins. Co. V. Cannon (Tex. Civ. App.) 46 S. W. 375 ; Anheuser-Busch Brew. Assn. v. Houck, affd., 88 Tex. 184,. 27 S. W. 692, 30 S. W. 689. See also, Arnot v. Pitts- ton &c. Coal Co., 68 N. Y. 558, 23 Am. Rep. 190. See also, Steele v. United Fruit Co., 190 Fed. 631. " Hadley Dean Plate Glass Co. v. Highland Glass Co., 143 Fed. 242, 74 C. C. A. 462; I\Ietcalf v. American School Furniture Co., 122 Fed. 115; Buckhorn Plaster Co. v. Consolidated Plaster Co., 47 Colo. 516, 108 Pac. 27 (mill lease). See also, Cincinnati &c. Packet Co. v. Bav, 200 U. S. 179, 50 L. ed. 428, 26 Sup. Ct. 208. =" Western Union Tel. Co. v. Bur- lington & S. W. R. Co., 11 Fed. 1; Harrison v. Glucose Sugar Refining Co., 116 Fed. 304, 53 C. C. A. 484, 58 L. R. A. 915; Matthews Glass Co. v. Eurk, 162 Ind. 608. 70 N. E. 371; State V. New Orleans Warehouse Co., 109 La. 64, 33 So. 81 ; Hartford & New Haven R. Co. v. N. Y. & New Haven R. Co., 26 N. Y. Super. Ct. 411; United States &c. Vinegar Co. V. Schlegel. 143 N. Y. 537, 38 N. E. 729 (suit on subscription to capital stock) ; L^nited States Vinegar Co. V. Foehrenhach. 148 N. Y. 58, 42 N. E. 403; Hoffman v. Brooks, 6 Ohio Dec. 1215. § 902 CONTRACTS. 21 4. with illegality or make it contrary to public policy,^^ although this defense may be made available by statute."** It is no defense to a suit for the infringement of a patent that the complainant and third parties have entered into an unlawful combination."^ Nor can a railroad refuse to furnish cars to a shipper because he is a member. of an illegal combination."^ Membership in such combine does not defeat the right of one to recover for services rendered."^ § 902. Rule further illustrated — Destruction of property and the like. — The property of an unlawful monopoly, trust or combine or of a member thereof cannot be either intentionally or negligently destroyed by another and the owner denied a rem- edy or right of redress on account of membership in the com- bine."" The fact that an insurance company is a member of a combination does not defeat its right of subrogation to the claim against one wrongfully destroying the insured property."^ Nor does the fact that the insured is a member of a trust defeat his right to recover on the policy."" A railroad company has been granted an injunction against the purchasers of tickets from re- '* Chicago Wall Paper Mills V. Gen- Fed. 115, 102 C. C. A. 413; Johns- eral Paper Co., 147 Fed. 491, -78 C. Ullman, 186 Fed. 174; Virtue v. C. A. 607; Bessire & Co. v. Corn Creamery Package Mfg. Co., 179 Products Mfg. Co., 47 Ind. App. 298, Pratt Co. v. Sachs Co., 175 Fed. 70, 94 N. E. 353 ; Moroney Hardware 99 C. C. A. 92 ; Motion Picture Pat- Co. V. Goodwin Pottery Co. (Tex. ents Co. v. Laemmle, 178 Fed. 104; Civ. App.), 120 S. W. 1088; Connolly United States Fire Escape &c. Co. v. V. Union Sewer Pipe Co., 184 U. S. Joseph Halsted Co., 195 Fed. 295. 540, 46 L. ed. 679, 22 Sup. Ct. ".Midland Valley R. Co. v. Hoff- 431; National Distilling Co. v. man Coal Co., 91 Ark. 180, 120 S. Cream City Importing Co., 86 Wis. W. 380. 352, 56 N. W. 864, 39 Am. St. 902. " See Charles E. Wisewall, 74 Fed. But it is otherwise where the sale 802, affd. 86 Fed. 671, 30 C. C. A. and delivery were made to effectuate 339, 42 L. R. A. 5. In the above case a combine. Continental Wall Paper it is held that recovery may be had Co. V. Louis Voight & Sons, 212 U. for services rendered by tugs the S. 227, 53 L. ed. 486, 29 Sup. Ct. 280. owners of which belonged to a com- See ante, § 680. bine. "^See Ferd Heim Brewing Co. v. "^ Louisville &c. R. Co. v. Burley Belinder. 97 Mo. App. 64, 71 S. W. Tobacco Co., 147 Ky. 22, 143 S. W. 691 ; Wagner v. Minnie Harvester 1040. See also, ante, chap. XXI. Co., 25 Okla. 558, 106 Pac. 969. See ^^ Freed v. American Fire Ins. Co., also, Frank A. Menne Factory v. 90 Miss. 72, 43 So. 947, 11 L. R. A. Harback, 85 Ark. 278, 107 S. W. (N. S.) 368, 122 Am. St. 307. 991 ; Columbia Carriage Co. v. Hatch, *" Sprmgfield Fire &c. Ins. Co. v. 19 Tex. Civ. App. 120, 47 S. W. 288. Cannon (Tex. Civ. App.), 46 S. W. See ante, chap. XXI. 375. *^ Motion Picture Patents Co. v. . 215 COMBIXATIONS, MONOPOLIES AXD TRUSTS. § 903 selling them to others, in contravention of the terms under which they were sold, notwithstanding such railroad company may have been a party to an illegal combination.*^ Recovery may be had on a note and mortgage given to a commission company which was a member of an unlawful combination when such note and mortgage did not further, and were not given to further, the pur- poses of an illegal combination.** Nor can a defendant retain possession of property under a lease and avoid liability for rent upon the ground that the defendant company was, to the lessor's knowledge, incorporated for the purpose of creating a monopoly in the manufacture and sale of a commodity.*" On the other hand, each member of an unlawful combination may be held liable not only for his own acts but for those of his coconspira- tors."" § 903. Rights of third persons. — The term "third persons," as here used, excludes all persons who have contracted directly with the trust or monopoly and seek to defend or maintain an ac- tion on such contract. It is held by the weight of authority that at common law a contract wliich created or tended to create a monopoly gave no right of action to third persons for an injury sustained merely by reason of the existence of such combination either by way of injunction^^ or for damages.^" The cases which so hold are decided on the theory that it would be unreasonable to multiply suits by giving every one who was or might be injured by the existence of such monopoly a separate right of action." The common law considered the disadvantages *^Kinner v. Lake Shore Sec. R. Co., 148; Downes v. Bennett, 63 Kans. 69 Ohio St. 339, 69 N. E. 614. 653, 66 Pac. 623. 55 L. R. A. 560. 88 ''Boatmen's Bank v. Fritzlen, 175 Am. St. 256; Russell v. New York Fed. 183. Compare with State v. Produce Exchange. 27 Misc. (N. Y.) Wilson, 73 Kans. 334, 80 Pac. 639, 84 381, 58 N. Y. S. 842. Pac. 737, 117 Am. St. 479, and note. '= Brewster v. C Miller's Sons Co., *» Brooklyn Distilling Co. v. Stand- 101 Kv. 368, 19 Kv. L. 593, 41 S. W. ard Distilling &c. Co.. 120 App. Div. 301, 38 L. R. A. 505; Bohn Mfg. Co. (N. Y.) 237, 105 X. Y. S. 264. v. Northwestern Lumbermen's Assn., "State V. Kansas City Live Stock 54 Minn. 223, 55 N. W. 119. 21 L. R. Exch.. 211 Mo. 181. 109 S. W. 675, A. 337, 40 Am. St. 319; Macaulev v. 124 Am. St. 776. See also, Puring- Tiernev. 19 R. L 255, 33 Atl. 1.' 37 ton V. Hinchliff, 120 111. App. 523, L. R. A. 455. 61 Am. St. 770; West 219 111. 159, 76 N. E 47. Virginia Transp. Co. v. Standard Oil ° National Fireproofing Co. v. Co., 50 W. Va. 611. 40 S. E. 591, 56 Mason Builders' Assn., 169 Fed. 259, L. R. A. 804, 88 Am. St. 895. 94 C. C. A. 535, 26 L. R. A. (N. S.) "See 4 Bl. Com. 167. § 904 CONTRACTS. 2l6 imposed by reason of the unenforcibility of the contract a suf- ficient protection to the pnbHc.°* There are cases, however, which hold that at common law a third person who sustains an injury in his business by reason of the existence of such mon- opoly is entitled to relief by injunction^^ or to maintain an action to recover damages,^^ There seems to be a growing tendency on the part of the courts to adopt this latter view.^' § 904. Rights of third persons under statutes. — The right of a third party to maintain an action under the various statutes depends upon their wording. Thus under the federal antitrust act a third party cannot maintain an action for injunctive relief^* although it expressly provides that a third party injured in his business by an unlawful trust or monopoly may maintain an ac- tion for treble damages.^* Many of the antitrust statutes of the various states permit either an action to restrain the carrying out of the contract® or for damages.®^ An action may also be "See Bohn Mfg. Co. v. Hollis, 54 Minn. 223, 55 N. W. 1119, 21 L. R. A. 22,7, 40 Am. St. 319. "Leonard v. Abner-Drury Brew. Co., 25 App. D. C. 161; Blindell v. Hagen. 54 Fed. 40, affd., 56 Fed. 696, 6 C. C A. 86; Gulf &c. R. Co. v. Miami &c. Co., 86 Fed. 407, 30 C. C. A. 142, 52 U. S. App. 72>2. See also, Denver Jobbers' Assn. v. People (Colo.), 122 Pac. 404. ^ Hawarden v. Youghiogheny &c. Coal Co., Ill Wis. 545, 87 N. W. 472, 55 L. R. A. 828. " See Leonard v. Abner-Drury Brew. Co., 25 App. D. C. 161 ; Kling- el's Pharmacy v. Sharpe, 104 Md. 218, 64 Atl. 1029, 7 L. R. A. (N. S.) 976n, 118 Am. St. 399, 9 Am. & Eng. Ann. Cas. 1184; Kellogg v. Sowerby, 190 N. Y. 370, 83 N. E. 47. ** National Fireproofing Co. v. Mason Builders' Assn., 169 Fed. 259, 94 C. C. A. 535, 26 L. R. A. (N. S.) 148; Blindell v. Hagan, 54 Fed. 40, affd., 56 Fed. 696, 6 C. C. A. 86; Pid- cock V. Harrington, 64 Fed. 821 ; Greer Mills &c. Co. v. Stoller, 77 Fed. 1 ; Southern Indiana Express Co. V. United States Co., 88 Fed. 659, affd., 92 Fed. 1022, 35 C. C. A. 172. "Wheeler-Stenzel Co. v. National Window Glass Jobbers' Assn., 152 Fed. 864, 81 C. C. A. 658, 10 L. R. A. (N. S.) 972; Mines v. Scribner, 147 Fed. 927; Monarch Tobacco Works V. American Tobacco Co., 165 Fed. 774; Thomsen v. Union Castle Mail S. S. Co., 166 Fed. 251, 92 C. C. A. 315; Loewe v. Lawlor, 208 U. S. 274, 52 L. ed. 488, 28 Sup. Ct. 301, 13 Am. & Eng. Ann. Cas. 815 ; American Banana Co. v. United Fruit Co., 213 U. S. 347, 53 L. ed. 826, 29 Sup. Ct. 511. "» Knight &c. Co. V. Miller, 172 Ind. 27, 87 N. E. 823; Walsh v. Associa- tion of Master Plumbers, 97 Mo. App. 280, 71 S. W. 455; Currier v. Concord R. Corp., 48 N. H. 221; Morrill v. Boston & M. R. R. Co., 55 N. H. 531 ; Straus V. American Publishing Assn., 177 N. Y. 473, 69 N. E. 1107, 64 L. R. A. 701, 101 Am. St. 819. Com- pare the foregoing New York case with Locker v. American Tobacco Co., 121 App. Div. (N. Y.) 443, 106 N. Y. S. 115. "Rourke v. Elk Drug Store, 75 App. Div. (N. Y.) 145, 77 N. Y. S. Z7Z. Under the New York statute, however, it is held that the injured party must allege and prove that the combination complained of was in- tended to injure him. Kellogg v. Sowebry, 190 N. Y. 370, 83 N. E. 47. 217 COMBINATIONS, MONOPOLIES AND TRUSTS. § 905 brought by the state on behalf of the public for relief against a restriction upon competition. This action is usually brought by the attorney-general.®'' § 905. Rights of stockholder. — A stockholder in a corpor- ation seems to stand in a position similar to that occupied by a third person. Thus, it has been held that under the Sherman antitrust act a stockholder in a corporation could not bring an action to restrain a rival corporation from buying a controlling interest in the corporation in which he was a stockholder. The corporation and not the stockholder had the right of action."' In several of the state courts a stockholder is permitted to re- strain the carrying out of a scheme, plan, or conspiracy by which the corporation in which he is a stockholder becomes a party to an unlawful combine.®* § 906. Antitrust statutes — Constitutionality. — The con- stitutionality of the federal antitrust act popularly known as the Sherman antitrust law has been affirmed by many decisions. Power is conferred upon congress to enact legislation of this character by that clause of the federal constitution which pro- vides that congress shall have power to "regulate commerce with foreign nations, and among the several states, and with the In- dian tribes."®^ The power thus conferred upon congress to regu- See also, Cleland v. Anderson, 66 Tel. Co.. 224 111. 10, 79 N. E. 423, 115 Nebr. 292, 92 N. W. 306, 96 N. W. Am. St. 132, 8 Am. & Eng. Ann. Cas. 212, 98 N. W. 1075, 5 L. R. A. (N. 57, 238 111. 456, 87 N. E. 521; Hard- S.) 136 ing V. American Glucose Co., 182 111. *=See Denver Jobbers' Assn. v. Peo- 551, 55 N. E. 577. 64 L. R. A. 738, pie (Colo.), 122 Pac. 404; People v. 74 Am. St. 189; MacGmniss v. Bos- Aachen &c. Fire Ins. Co., 126 111. ton & M. Consol. &c. Min. Co., 29 App. 636; Attorney-General v. Fire- IMont. 428, 75 Pac. 89; Anderson v. men's Ins Co., 74 N. J. Eq. 372, 12> Shawnee Compress Co., 17 Okla. 231, Atl. 80. 29 L. R. A. (N. S.) 1194. 135 87 Pac 315, 15 L. R. A. (N. S.) 846n. Am. St. 708. See also. Tibbey Bros. "^"It is therefore well settled that Glass Co. V. Pennsylvania R. Co., 219 it does not apply to restraints or Pa. 430, 68 Atl. 975. monopolies as such, but only to those "Ames V. American Tel. & T. Co., which directly and immediately, or 166 Fed. 820. See, however, the case those which necessarily, affect com- of Bigelow V. Calumet &c. Min. Co., merce among the states or with for- 155 Fed. 869. See also, subsequent eign nations." Bigelow v. Calumet hearings of same case. 167 Fed. 704, &c. I^Iin. Co., 167 Fed. 721, 94 C. C. 167 Fed. 721. 94 C. C. A. 13. A. 13. See also. United States v. "See Continental Securities Co v. Toint Traffic Assn.. 171 U. S. 505, Tntcrborough Rapid Transit Co.. 165 43 L. ed. 250. 19 Sup. Ct. 25: State Fed. 945 ; Dunbar v. American Tel. & v. Duluth Board of Trade, 107 Minn. 907 CONTRACTS. 2l8 late interstate or foreign commerce carries with it the right to legislate upon the subject of private contracts in respect to such commerce.*^® The constitutional guarantee of liberty to contract does not prevent congress from legislating upon the subject of contracts in restraint of interstate or foreign commerce." Nei- ther is it unenforcible on the ground that congress is thereby en- abled to go outside the scope of its authority and deal with mere questions of production of commodities within the state.^® § 907. State antitrust acts — Limitations on power to enact,— The scope of a state law against combinations and monopolies is limited in several ways. Such a statute is, generally speaking, limited as to its effect to the confines of the state which enacts it.*'" The power of a state to enact such legislation is also limited by that provision of the federal constitution which con- fers upon congress the power "to regulate commerce with foreign nations and among the several states and with the Indian tribes."'" The state's power in this respect is further limited by that part of the fourteenth amendment to the constitution of the United States which forbids a state to "deny to any person within its jurisdiction the equal protection of the laws."" 506, 121 N. W. 395, 23 L. R. A. (N. given a reasonable construction. S.) 1260n. As to the constitution- Standard Oil Co. v. United States, ality of the Criminal section see: 221 U. S. 1, 55 L. ed. 619, 31 Sup. United States v. Winslow, 195 Fed. Ct. 502, 519, 34 L. R. A. (N. S.) 834. 578 ^Standard Oil Co. v. United <* See Addyston Pipe &c. Co. v. States, 221 U. S. 1, 55 L. ed. 619, 31 United States, 175 U. S. 211, 44 L. Sup. Ct. 502, 34 L. R. A. (N. S.) ed. 136, 20 Sup. Ct. 96. See also, 834, disapproving United States v. Northern Securities Co. v. United E. C. Knight Co., 156 U. S. 1, 39 L. States, 193 U. S. 197, 48 L. ed. 679, ed. 325, 15 Sup. Ct. 249. 24 Sup. Ct. 436. " 'The power to regu- ""State v. Associated Press, 159 late is the power to prescribe the ]\Io. 410, 60 S. W. 91, 51 L. R. A. rule by which the subject regulated 151. 81 Am. St. 368. See also, State is to be governed.' " In re Charge to v. Lancashire Fire Ins. Co., 66 Ark. Grand Jury, 151 Fed. 834. Wheeler- 466, 51 S. W. 633, 45 L. R. A. 348. Stenzel Co. v. National Window '"Frank A. Menne Factory v. Har- Glass Jobbers Assn., 152 Fed. 864, back, 85 Ark. 278, 107 S. W. 991; 81 C. C. A. 658, 10 L. R. A. (N. S.) Hadley Dean Plate Glass Co. v. 972. Highland Glass Co., 143 Fed. 242, "Addyston Pipe &c. Co. v. 74 C. C. A. 462; Commonwealth v. United States, 175 U. S. 211, 44 L. Strauss, 191 Mass. 545, 78 N. E. 136, ed. 136, 20 Sup. Ct. 96. The argu- 11 L. R. A. (N. S.) 968; State v. ments that the statute impairs the Virginia-Carolina Chemical Co., 71 right of property and destroys the S. Car. 544, 51 S. E. 455. freedom of contract or trade have " In re Giest, 79 Fed. 627 ; Connol- no foundation when the contract is ly v. Union Sewer Pipe Co., 184 U. 219 COMBINATIONS, MONOPOLIES AND TRUSTS. § 908 § 908. State antitrust acts — Constitutionality. — Conse- quently, it has been held that a state statute which contained a provision that it should not apply to agricultural products or livestock in the hands of the producer or raiser was repugnant to the provisions of the fourteenth amendment of the constitu- tion of the United States because it denied the equal protection of the laws of that state to those within its jurisdiction who were not producers of agricultural products or raisers of livestock.'^" A statute which especially excepted labor unions from its opera- tion has also been declared invalid for the same reason^^ but the statute declared invalid by the federal court for this reason has been declared valid in a subsequent decision by the state Supreme Court, on the ground that labor unions did not come within the general provisions of the act and that the proviso excepting them S. 540. 46 Law ed. 679. 22 Sup. Ct. 431 ; Grenada Lumber Co. v. Missis- sippi. 217 U. S. 433. 54 L. ed. 832 (holding the Mississippi statute con- stitutional under this provision of the constitution). See also, State v. Shippers' Compress &c. Co., 95 Tex. 603, 69 S. W. 58. " Brown v. Jacobs Pharmacy Co., 115 Ga. 429. 41 S. E. 553. 57 L. R. A. 547, 90 Am. St. 126; Connolly v. Union Sewer Pipe Co.. 184 U. S. 540, 46 L. ed. 679, 22 Sup. Ct. 431. See also. Kellvville Coal Co. v. Har- rier, 207 111. 624. 69 N. E. 927. 99 Am. St. 240; State v. Cudahy Pack- ing Co., 33 Mont. 179, 82 Pac. 833, 114 Am. St. 804. See, however, Owen Co. Burley Tobacco Soc. v, Brumback. 32 Ky. L. 916, 107 S. W. 710, which upholds a statute which legalizes the pooling of farm products for the purpose of classify- ing, grading, and selling the same, in order that a higher price might be obtained for the products than could be received if they were sold by the individuals owning them, and, fur- ther, to authorize the parties form- ing the pool to select its agents to hold the crops pooled for the pur- pose of classifying, grading, and dis- posing of them. The court said that a contract under this statute by which it was sought to obtain more than the real value of the article would be invalid. See also, Common- wealth V. International Harvester Co., 131 Ky. 551. 115 S. W. 703, 133 Am. St. 256. The above case draws a distinction between the case then before the court and the case of Con- nolly v. Union Sewer Pipe Co., 184 U. S. 540. 46 L. ed. 679, 22 Sup. Ct. 431, saying that in the latter case certain acts, when done by any one other than a farmer, were made criminal, while the Kentucky statute confers a right on farmers not neces- sarily withheld from all others. See also, preceding case. International Harvester Co. v. Commonwealth, 147 Ky. 564, 144 S. W. 1064; Louis- ville &c. R. Co. v. Burlev Tobacco Society, 147 Ky. 22, 143 S. W. 1040 (holding tobacco raisers may pool their crops so long as they do not attempt to raise the price of leaf tobacco above its real value). To same effect, International Harvester Co. V. Commonwealth, 147 Kv. 795, 146 S. W. 12; Stahr v. Hi'ckman Grain Co., 132 Ky. 496, 116 S. W. 784 (as to the necessity of showing that the combine had for its object the depressing of the price at which it bought and the enhancing of the sale price). " Niagara Fire Ins. Co. v. Cor- nell. 110 Fed. 816 (construing Ne- braska statute) ; People v. Butler Street Foundry &c. Co., 201 111. 236, 66 N. E. 349. § 908 CONTRACTS. 220 was mere surplusage.'* This latter statement suggests an im- portant distinction. The legislature may make a reasonable classification, (one not a mere cloak or cover for an arbitrary exemption of certain persons or certain classes of persons, but a natural and proper selection of those who, upon a reasonable view of the mischief to be met, should be subject to the regula- tion prescribed) the law being made to operate generally and uniformly upon all of the classes so constituted.'^ Thus, the antitrust statute may have for its object the suppression of com- binations entered into for the accomplishment of certain purposes and not be made to apply generally to all combinations,'^ such as pools and trusts organized to fix or regulate the price of any article or commodity or to fix or limit the amount or quantity of any article, commodity, or merchandise to be produced or sold within the state." The fact that the federal constitution guarantees liberty of contract does not prohibit the legislature from passing laws which forbid combinations the primary pur- pose of which is to place a restriction upon competition.'® "Hav- ing the power to pass laws of this character, of course the state may provide for proceedings to enforce the same. The state, keeping within constitutional limitations, may provide its own method of procedure and determine the methods and means by which such laws may be made effectual."'^ State antitrust laws may also contravene the constitution of the state which enacts them, but those parts of the various state constitutions which bear upon the subject under discussion do not as a general rule differ ^*Cleland v. Anderson, 66 Nebr. "State v. Standard Oil Co., 218 252, 92 N. W. 306, 5 L. R. A. (N. S.) Mo. 1, 116 S. W. 902; Waters- 136. Pierce Oil Co. v. Texas, 212 U. S. '^Cleland v. Anderson, 66 Nebr. 86, 53 L. ed. 417, 29 Sup. Ct. 220; 252, 92 N. W. 306, 5 L. R. A. (N. S.) Smiley v. Kansas, 196 U. S. 447 25 136. See also. State v. Standard Oil Sup. 289, 49 L. ed. 546, affg. State v. Co., Ill Minn. 85, 126 N. W. 527; Smiley, 65 Kans. 240, 69 Pac. 67 L. State V. Duluth Board of Trade, 107 R. A. 903 ; National Cotton Oil Co. Minn. 506, 121 N. W. 395, 23 L. R. v. State (Tex.), 72 S. W. 615, affd. A. (N. S.) 1260n; State v. Stand- 197 U. S. 115, 49 L. ed. 689, 25 Sup. ard Oil Co., 218 Mo. 1, 116 S. W. Ct. 379; Carroll v. Greenwich Ins. Co. 902. 199 U. S. 401, 50 L. ed. 246, 26 Sup. '" State V. Duluth Board of Trade, Ct. 66, revg. Greenwich Ins. Co. v. 107 Minn. 506, 121 N. W. 395, 32 L. Carroll, 125 Fed. 121. R. A. (N. S.) 1260n. '^ Waters-Pierce Oil Co. v. Texas, "Rohlf V. Casemire, 140 Iowa 182, 212 U. S. 86, 53 L. ed. 417, 29 Sup. 118 N. W. 276, 23 L. R. A. (N. S.) Ct. 220. 1 1284. 132 Am. St. 261. 221 COMBINATIONS, MONOPOLIES AND TRUSTS. § 909 materially from those contained in the federal constitution. It is impracticable to give a detailed review of the various state constitutions and their bearing on antitrust laws which have been enacted.*" § 909. Antitrust acts of congress. — The vital part of the federal antitrust laws provides "that every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is hereby declared to be illegal. * * * Eveiy person who shall monopolize, or attempt to monopolize,. or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several states, or with foreign nations, shall be deemed guilty of a misdemeanor."®^ The statute also provides that one who is injured in his business by reason of the existence of such monopoly may recover treble damages.-- One who violates its provisions is on conviction lia- ble to a fine not exceeding five thousand dollars or imprison- ment not exceeding one year or both of such punishments in the discretion of the court. The constitutionality of this statute has been upheld.®^ § 910. Federal antitrust act — Construction and effect. — The construction to be placed on this statute has been a matter of much controversy. The courts at first seemed inclined to con- strue its words literally and to hold that it, by its terms, embraced *"'The power of the legislature to stricken from the Constitution and prohibit trusts, combinations, con- laws without affecting the validity of tracts and agreements inimical to the the law. It is for the legislature to public welfare, is not derived from or declare what is inimical to public dependent on section 198 of the state welfare, and it is onlj' when it tran- Constitution of 1890, which neither scends the limit of legislative power confers nor limits its power, which that the courts may interpose to shield exists by virtue of the general grant the fundamental law from violation." of legislative power. This section State v. Jackson Cotton Oil Co., 95 imposes on the legislature the duty ^liss. 6, 48 So. 300. See further, post, to pass such laws, and the use of the § 915. expression 'inimical to the public "26 U. S. Statutes at Large 209, welfare' by the legislature has no chap. 647 ; United States Compiled effect, except to show that what it Statutes 1901 page 3200. prohibits is by it regarded as of that *' See ante, § 903 et seq. character. That expression might be ^ See ante, § 906. § 9IO CONTRACTS. 222 all contracts in restraint of trade whether they were reasonable or unreasonable.^* But the Supreme Court finally decided otherwise in view of the common law and the law of this country relative to restraints on trade and the fact that where words are employed in a statute which had at the time a well-known meaning at common law or in the law of this country they are presumed to have been used in that sense unless the context is to the contrary.^"^ "It ap- pears," said the court, "That the context manifests that the stat- ute was drawn in the light of the existing practical conception of the law of restraint of trade, because it groups as within that class, not only contracts which were in restraint of trade in the subjective sense, but all contracts or acts which theoretically were attempts to monopolize, yet which in practice had come to be considered as in restraint of trade in a broad sense. That in view of the many new formfe of contracts and combinations which were being evolved from existing economic conditions, it was deemed essen- tial by an all-embracing enumeration to make sure that no form of contract or combination by which an undue restraint of inter- state or foreign commerce was brought about could save such re- straint from condemnation. The statute under this view evi- denced the intent not to restrain the right to make and enforce contracts, whether resulting from combinations or otherwise, which did not unduly restrain interstate or foreign commerce, but to protect that commerce from being restrained by methods, whether old or new, which would constitute an interference, — ^that is, an undue restraint. And as the contracts or acts embraced in the provision were not expressly defined, since the enumeration addressed itself simply to classes of acts, those classes being broad enough to embrace every conceivable contract or combination which could be made concerning trade or commerce or the subjects of such commerce, and thus caused any act done of the enumer- ** See Trans-Missouri Freight Case, United States v. America Tobacco 166 U. S. 290, 41 L. ed. 1007, 17 Sup. Co. (U. S.), 31 Sup. Ct. 632. Ct. 540 ; United States v. Joint Traf- *° Swearingen v. United States, 161 fie Assn., 171 U. S. 505, 43 L. ed. 259, U. S. 446, 40 L. ed. 765, 16 Sup. Ct. 19 Sup. Ct. 25. See also the dissent- 562 ; United States v. Wong Kim ing opinion of Harlan J., in Stand- Ark, 169 U. S. 649, 42 L. ed. 890, 18 ard Oil Co. v. United States, 221 U. Sup. Ct. 456; Keck v. United States, S 1, 55 L. ed. 619, 31 Sup. Ct. 502, 172 U. S. 434, 43 L. ed. 505, 19 Sup. 34 L. R. A. (N. S.) 834, and also Ct. 254; Kepner v. United States, 195 the dissent by the same judge in U. S. 100, 49 L. ed. 114, 24 Sup. Ct. 797. 223 COMBINATIONS, MONOPOLIES AX-D TRUSTS. §911 ated methods anywhere in the whole field of human activity to be illegal if in restraint of trade, it inevitably follows that the provision necessarily called for the exercise of judgment which required that some standard should be resorted to for the pur- pose of determining whether the prohibition contained in the statute had or had not in any given case been violated. Thus not specifying, but indubitably contemplating and requiring a standard, it follows that it was intended that the standard of reason which had been applied at the common law and in this country in dealing with subjects of the character embraced by the statute was intended to be the measure used for the purpose of determining whether, in a given case, a particular act had or had not brought about the wrong against which the statute pro- vided."«« §911. Federal antitrust act given a reasonable construc- tion. — In other words the court gave the statute a reasonable construction, and attempted to give effect to its spirit and thus make it the agent of that public policy which it was intended to serve. If the welfare of the public is the supreme law, those con- tracts which benefit the public even though they incidentally re- strain trade should not be declared invalid. This would be the case if the statute were interpreted literally, and it would thus defeat the purpose for which it was enacted.^^ Nor does this **The court said further "a con- ably restrict the right to contract and sideration of the text of the 2d sec- unreasonably operate upon the right tion serves to establish that it was to acquire and hold property. Stand- intended to supplement the 1st and ard Oil Co. v. United States, 221 U, to make sure that by no possible S. 1, 55 L. ed. 619, 31 Sup. Ct. guise could the public policy em- 502, 34 L. R. A. (X. S.) 834. To bodied in the 1st section be frus- same effect, United States v. Amer- trated or evaded." Standard Oil Co. ican Tobacco Co., 221 U. S. 106, 5 V. United States, 221 U. S. 1, 55 L. L. ed. 663. 31 Sup. Ct. 632. The fed- ed. 619, 31 Sup. Ct. 502, 34 L. R. A. eral antitrust act does not prohibit a (N. S.) 834. To same effect, United restraint no greater than required States V. American Tobacco Co., for the protection of the legitimate 221 U. S. 106, 35 L. ed. 663, 31 Sup. interests of the vendee. Darius Cole Ct. 632; Phillips v. Tola Portland Transp. Co. v. White Star Line, 186 Cement Co., 125 Fed. 593, 61 C. C. A. Fed. 63. 108 C. C. A. 165. However, 19. See also. United States v. Win- it is not necessary that a direct re- slow, 195 Fed. 578. straint of trade affect an unreason- " It is suggested by Chief Justice ably great amount of commerce in White that a literal interpretation of order to be within the prohibition, the statute might render it unconsti- From the standpoint of reason it is tutional since it then might unreason- not the amount of merchandise or § 912 CONTRACTS. 224 constmction nullify the act. Under a reasonable construction every conceivable act which could possibly come within the spirit or purpose of the prohibition of the law, without regard to the irarb in which such acts were clothed, would be embraced there- o in.®^ § 912. Federal antitrust act — Application of. — The stat- ute applies to restraints of interstate commerce resuking from unlawful combinations of labor.^^ Under the Sherman antitrust law, a combination of publishers and booksellers to fix prices and compel publishers and dealers, by means of rewards and punish- ments, to sell at the prices so fixed, has been declared unenforci- ble.°*' A combination among brewers to control the brewing and sale of beer and the price at which and to whom it shall be traffic affected by the restriction but it is the character and extent of the restriction itself; and if such re- striction reasonably pertains to law- ful results, it is not of itself neces- sarily forbidden. But a direct and absolute restraint which bears no reasonable relation to lawful means of accomplishing lawful ends is not justified merely because the volume of traffic affected is not very great. Steers v. United States, 192 Fed. 1, 112 C. C. A. 423. ** United States v. American To- bacco Co., 221 U. S. 106, 55 L. ed. 663, 31 Sup. Ct. 632, 648. To same effect. Standard Oil Co. v. United States, 221 U. S. 1, 55 L. ed. 619, 31 Sup. Ct. 502, 34 L. R. A. (N. S.) 834. "The recent decisions of the Supreme Court make it equally clear that a combination cannot escape the condemnation of the antitrust act merely by the form it assumes or by the dress it wears. It matters not whether the combination be 'in the form of a trust or otherwise,' whether it be in the form of a trade association or a corporation, if it arbitrarily uses its power to force weaker competitors out of business, or to coerce them into a sale to or union with the combination, it puts a restraint upon interstate commerce, and monopolizes or attempts to mo- nopolize a part of that commerce, in a sense that violates the antitrust act." United States v. E. I. Du Pont De Nemours & Co., 188 Fed. 127, 151. *»Lawlor v. Loewe, 187 Fed. 522, 109 C. C. A. 228. In Loewe v. Law- lor, 208 U. S. 274, 52 L. ed. 488, 28 Sup. Ct. 301, 13 Am. & Eng. Ann. Cas. 815, the statute was held to ap- ply to any unlawful combination re- sulting in restraint of interstate com- merce. In that case the damages sued for were occasioned by acts which, among other things, did in- clude the circulation of advertise- ments. But the principle announced by the court was general. It cov- ered any illegal means by which interstate commerce is restrained, whether by unlawful combinations of capital, or unlawful combination of labor; and we think, also, whether the restraint occasioned by unlawful contracts, trusts, pooling arrange- ments, blacklists, boycotts, coercion, threats, intimidation, and whether these be made effective, in whole or in part, by acts, words, or printed matter." Gompers v. Bucks Stove &c. Co., 221 U. S. 418, 55 L. ed. 797, 31 Sup. Ct. 492. •° Bobbs-Merrill Co. v. Straus, 139 Fed. 155, affd., 147 Fed. 15, 11 C. C. A. 607, 210 U. S. 339, 52 L. ed. 1086, 28 Sup. Ct. 722, 15 L. R. A. (N. S.) 766. Compare the foregoing case with Straus v. American Pub. Assn., 177 N. Y. 473, 69 N. E. 1107, 64 L. 225 COMBINATIONS, MONOPOLIES AND TRUSTS. 913 sold is a trust or conspiracy under the act."^ A contract to strangle a threatened competition by preventing the construction of an immediately projected line of railway, which, if con- structed, would naturally and substantially compete with an ex- isting line for interstate traffic, is in violation of the antitrust law."" The criterion as to whether any given business scheme falls within the prohibition of the statute is its effect upon inter- state commerce, which need not be a total suppression of trade nor a complete monopoly; it is enough if its necessary operation tends to restrain interstate commerce and to deprive the public of the advantages that flow from free competition.^^ , I § 913. Federal antitrust act — When inapplicable. — But the mere acquisition of the material sources of wealth or the en- largement of business and traffic, accomplished without the illegal combination or conspiracy denounced by the act, is not unlaw- ful.''* There must be the meeting of the minds of two or more to accomplish some purpose violative of the act. A person cannot conspire with himself.®^ Neither does it render invalid a con- R. A. 701, 101 Am. St. 819, second appeal, 193 N. Y. 496. 86 X. E. 525. To same effect, Scribner v. Straus, 139 Fed. 193; Mines v. Scribner, 147 Fed. 927; Loder v. Jayne, 142 Fed. 1010, revd., Jayne v. Loder, 149 Fed. 21, 78 C C. A.653,7L.R.A. (N. S.) 984; Ellis v. Inman, Poulsen & Co., 131 Fed. 182, 65 C. C. A. 488; United States V. Jeilico Mountain &c. Coke Co., 46 Fed. 432, 12 L. R. A. 753, 3 Inter Com. 626. Compare Whitwell V. Continental Tobacco Co., 125 Fed. 454, 60 C. C. A. 290, 64 L. R. A. 689. °^ Leonard v. Abner-Drury Brew- ing Co., 25 App. D. C. 161. ""United States v. Union Pac. R. Co., 188 Fed. 102. See also. United States V. Reading Co., 183 Fed. 427. "'United States v. MacAndrews & Forbes Co., 149 Fed. 823. ** United States v. Reading Co., 183 Fed. 427, 457. See also, North- western Consol. Milling Co. v. Wil- liam Callam & Son, 177 Fed. 786; United States v. American Naval Stores Co., 172 Fed. 455 ; Bigelow v. Calumet &c. Min. Co., 94 C. C. A. 13, 167 Fed. 721; United States v. American Tobacco Co., 191 Fed. 371. "^United Pac. Coal Co. v. United States, 173 Fed. Ill, 97 C. C. A. 578; United States v. Reading Co., 183 Fed. 427, 455 ; United States v. Santa Rita Store Co., 16 N. Mex. 3, 113 Pac. 620. As used in the Sherman law, the word "conspiracy" has sub- stantially the same meaning as the word "contract." United States v. Kissel, 173 Fed. 823. There may be a conspiracy under the act with re- ference to a single shipment only. Steers v. United States, 192 Fed. 1, 112 C. C. A. 423. The Sherman law does not prevent a coal company from selecting its customers and fi.x- ing the price at which it will sell to each customer. Union Pac. Coal Co. V. United States. 173 Fed. 737, 97 C. C. A. 578. But it does pro- hibit a number of operators from entering into a contract by which a corporation is to take over their en- tire output and to sell it at no less than a minimum price to be fi.xed by an executive appointed by the oper- 15 — Contracts, Vol. 2 914 CONTRACTS. 226 tract which by a collateral provision may place an ancillary re- straint on trade or competition,^* such as contracts of sole agency.^' A railroad company engaged in interstate commerce may grant to a private individual the exclusive right to develop for it a given trade along its route. ®^ § 914. Federal antitrust act — Power to pass. — ^The au- thority of congress to pass the Sherman law or any other anti- trust act of a general application is found in that clause of the federal constitution which provides that congress shall have power "to regulate commerce with foreign nations, and among the several states, and with the Indian tribes.'"'"^ The power ex- ercised under this clause can be no greater than that conferred. Consequently, the act applies only to interstate commerce.^ In- ators. Chesapeake &c. Fuel Co. v. United States, 115 Fed. 610, 53 C. C. A. 256. ^ Union Pac. Coal Co. v. United States, 173 Fed. 737, 97 C. C. A. 578 ; Bigelow V. Calumet &c. Min. Co., 94 C. C. A.^ 13, 167 Fed. 721; In- graham V. National Salt Co., 130 Fed. 676, 65 C. C. A. 54, certiorari denied, 201 U. S. 641, 50 L. ed. 902, 26 S. Ct. 760; Phillips v. lola Portland Cement Co., 125 Fed. 593, 61 C. C. A. 19; Ar- kansas Brokerage Co. v. Dunn, 173 Fed. 899, 97 C C. A. 454, 35 L. R. A. (N. S.) 464, (organization of jobbers for purchase of sup- plies) ; Gallup Electric Light Co. v. Pacific Imp. Co., 16 X. Mex. 86, 113 Pac. 848; Harbison-Walker Refrac^ tories Co. v. Stanton, 227 Pa. 55, 75 Atl. 988 (agreement by vendor not to engage in same business in same territory during fixed period). See also, Steele v. United Fruit Co., 190 Fed. 631. *^ Virtue v. Creamery Package Mfg. Co., 179 Fed. 115, 102 C. C. A. 413. ** Delaware &c. R. Co. v. Kutter, 147 Fed. 51, 77 C. C. A. 315. *See ante, § 906. *See Texas & P. R. Co. v. Inter- state Commerce Commission, 162 U. S. 197, 40 L. ed. 940. 16 Sup. Ct. 666. "That (the federal antitrust) law deals only with contracts which di- rectly affect interstate or foreign commerce by way of restraint of trade or the creation of a monopoly, and it does not touch contracts which affect interstate commerce only indi- rectly." Commonwealth v. Strauss, 191 Mass. 545. 78 X. E. 136, 11 L. R. A. (X. S.) 968. "'The federal anti- trust act necessarily applied only to contracts, combinations, and conspira- cies in restraint of interstate and in- ternational trade and commerce, and soon after its passage the states be- gan to enact similar statutes for the purpose of reaching agreements and combinations which were beyond the reach of the federal power." State v. Duluth Board of Trade, 107 Minn. 506, 121 X. W. 395, 23 L. R. A. (N. S.) 1260; Locker v. American To- bacco Co., 121 App. Div. (X. Y.) 443, 106 X. Y. S. 115. The federal statute does not apply to a contract made in Missouri for the sale and future de- livery of wheat and to be performed there. C. H. Albers Commission Co. V. Spencer, 205 Mo. 105, 103 S. W. 523, 11 L. R. A. (N. S.) 1003. "There must be some direct and immediate effect upon interstate commerce in or- der to come within the act." Hop- kins V. United States. 171 U. S. 578, 43 L. ed. 290, 19 Sup. Ct. 40. To same effect. United States v. Union Pac. R. Co., 188 Fed. 102; Field v. Bar- ber Asphalt Co., 194 U. S. 618, 48 L. ed. 1142, 24 Sup. Ct. 784; Anderson V. United States, 171 U. S. 604, 43 L. ed. 300, 19 Sup. Ct. 50. An associa- 22/ COMBINATIONS, MONOPOLIES AND TRUSTS. 914 terstate commerce consists essentially in transportation,^ trans- portation between points within a state or transactions carried on wholly within a state being excluded under this clause of the federal constitution.^ tion of meat dealers carrying on an extensive interstate commerce is within the provisions of the federal antitrust law. United States v. Swift & Co., 122 Fed. 529, modified 196 U. S. 375, 49 L. ed. 518, 25 Sup. Ct. 276. But the rules of a live stock exchange have been held not within the provi- sion of the antitrust act. Hopkins v. United States, 171 U. S. 578, 43 L. ed. 290, 19 Sup. Ct. 40. "The con- tract must clearly appear to be with- in the provisions of the act." Poca- hontas Coke Co. V. Powhatan Coal &c. Co., 60 W. Va. 508, 56 S. E. 264, 10 L. R. A. (N. S.) 268, 116 Am. St. 901. However, the Sherman antitrust law applies to a combination in re- straint of trade in a single city of a territory of the United States. Tribo- let V. United States, 11 Ariz. 436, 95 Pac. 85, 16 L. R. A. (N. S.) 223. * Niagara Fire Ins. Co. v. Cornell, 110 Fed. 816, which holds insurance not commerce from one state to an- other. See also. Steers v. United States, 192 Fed. 1, 112 C. C. A. 423. "Gibbs V. McXeelev, 102 Fed. 594; The Charles E. Wiswall, 86 Fed. 671, 30 C. C. A. 339, 42 L. R. A. 85; United States v. American Tobacco Co., 164 Fed. 700; Addvston Pipe & Steel Co. v. United States, 175 U. S. 211, 44 L. ed. 136, 20 Sup. Ct. 96. But as to a territory, see Moore v. United States, 85 Fed. 465, 29 C. C. A. 269. See Federal act, § 189 ; People v. But- ler Street Foundry & Iron Co., 201 111. 236, 66 N. E. 349; State v. Jack, 69 Kans. 387, 76 Pac. 911, 915, 1 L. R. A. (N. S.) 167n. However, inter- state commerce consists of goods transported between two points in the same state where the route over which they are shipped extends through another state or territory. Hanley v. Kansas Citv &c. R. Co., 187 U. S. 617. 47 L. ed. 333, 23 Sup. Ct. 214. Compare, however, with Cincin- nati &c. Packet Co. v. Bav. 200 U. S. 179, 50 L. ed. 428. 26 Sup. Ct. 208 (transportation between two points in state over river forming state boundary). See also, Pennsylvania Sugar Ref. Co. v. American Sugar Ref. Co., 166 Fed. 254, 92 C. C. A. 318. The Federal antitrust statute applies when the contract in question affects commerce among the several states or with foreign nations. It does not affect transactions carried on wholly within the state. Moore V. United States, 85 Fed. 465, 29 C. C. A. 269, 56 U. S. App. 471 ; Robin- son V. Suburban Brick Co., 127 Fed. 804, 62 C. C. A. 484; Slaughter v. Thacker Coal &c. Co., 55 W. Va. 642, 47 S. E. 247. 65 L. R. A 342, 104 Am. St. 1013; National Distilling Co. v. Cream City Importing Co., 86 Wis. 352, 56 N. W. 864, 39 Am. St. 902. For border line cases in which the federal law was held to apply, see W. W. Montague & Co. v. Lowry, 193 U. S. 38, 48 L. ed. 608, 24 Sup. Ct. 307; Swift & Co. v. United States, 196 U. S. 375, 49 L. ed. 518, 25 Sup. Ct. 276. For cases in which it was held not to apply, see Phillips v. lola Portland Cement Co., 125 Fed. 593, 61 C. C. A. 19; Davis v. A. Booth & Co., 131 Fed. 31, 65 C. C. A. 269; Whitwell v. Continental Tobacco Co,. 125 Fed. 454, 60 C. C. A. 290, 64 L. R. A. 689; Dueber Watch Case Mfg. Co. V. E. Howard Watch & Clock Co., 66 Fed. 637, 14 C C. A. 14, 35 U. S. App. 16; Bancroft v. Union Embossing Co., 72 N. H. 402. 57 Atl. 97, 64 L. R. A. 298 ; Brett v. Ebel, 29 App. Div. (N. Y.) 256, 51 N. Y. S. 573; Walsh v. Dwight, 40 App. Div., (N. Y.) 513, 58 N. Y. S. 91; Cincin- nati P. B. S. & P. Packet Co. v. Bay. 200 U. S. 179, 50 L. ed. 428, 26 Sup. Ct. 208; Field v. Barber Asphalt Pav- ing Co., 194 U. S. 618. 48 L. ed. 1142, 24 Sup. Ct. 784 ; Pocahontas Coke Co. V. Powhatan Coal &c. Co., 60 W. Va. 508, 56 S. E. 264, 10 L. R. A. (N. S.) 268, 116 Am. St. 901. The character of interstate commerce attaches when the commodity is delivered to the carrier to be transported by continu- ous voyage or trip beyond the con- fines of the state. Houston &c. Nav. § 915 CONTRACTS. 22S § 915. State antitrust acts. — It is impossible to give any extensive review of state antitrust legislation. As a general rule, it is more or less closely modeled after the Sherman antitrust law.* The constitutional limitations upon state legislation of this character have already been mentioned.^ While the several state antitrust acts are of the same general character, some are broad in their scope and impose heavy penalties while others have a very limited application.^ Thus the act of Florida relates only to restraint in the sale of fresh meats.'^ § 916. State antitrust acts — General scope. — As a general rule, the state antitrust acts do not render void and unenforcible those contracts innocently made that are only in partial restraint of trade and which do not tend to injure the public, the restraint Co. V. Insurance Co. of North Amer- ica, 89 Tex. 1, 32 S. W. 889, 30 L. R. A. 713, 59 Am. St. 17. See also, In re The Daniel Ball, 10 Wall (U. S.) 557, 19 L. ed. 999; Ex parte Koehler, Rec, 30 Fed. 867. It does not lose this character by temporary stoppage in transitu. Delaware & Hudson Co. V. Commonwealth, 2 I. C. R. 222. ;When the commodity reaches the point to which it was consigned it loses its character of interstate com- merce and further shipment by the consignee to a point within the state to which it was consigned is con- trolled by the laws of such state. Gulf &c. R. Co. V. Texas, 204 U. S. 403, 51 L. ed. 540, 27 Sup. Ct. 360. * See State v. Duluth Board of Trade, 107 ^linn. 506, 121 N. W. 395, 23 L. R. A. (N. S.) 1260n (reviewing the federal and also many state stat- utes) ; Smith v. Morgantown Ice Co. 1(N. Car.), 74 S. E. 961. They are usually a codification of the common law on the subject of monopolies. In 're Consolidated Gas Co., 56 Misc. (N. ,Y.) 49, 106 N. Y. S. 407, affd. 124 App. Div. (N. Y.) 401, 108 N. Y. S. 823. ° See ante, § 906. For a discussion of the constitutionality of such legis- lation and the construction to be placed on it, see Knight &c. Co. v. Miller, 172 Ind. 27, 87 N. E. 823. For a review of the statutes of a number of the states see State v. Du- luth Board of Trade, 107 Minn. 506, 121 N. W. 395, 23 L. R. A. (N. S.) 1260n. See also, Niagara Fire Ins. Co. V. Cornell, 110 Fed. 816; Com- monwealth V. International Harvester Co., 131 Ky. 551, 115 S. W. 703, 133 Am. St. 256; Grenada Lumber Co. v. Mississippi, 217 U. S. 433, 54 L. ed. 826, 30 Sup. Ct. 535. ^ Statutes prohibiting monopolies and trusts are not in derogation but they aid the common law and should be construed in accordance with the plain intention of the legislature. State V. Standard Oil Co., 218 Mo. 1, 116 S. W. 902; Gen. Stat. 1906, §§ 3160-3164. ^The laws of Florida also contain provisions relating to coercing em- ployes, criminal conspiracies, and combinations against workmen. Gen. Stat. 1906, §§ 3233, 3514, 3515. Those jurisdictions that have not enacted broad, comprehensive statutes on the subject are not, for that reason, with- out law applicable to combinations and monopolies. In practically all the states of the union, the principles of the common law, when not modified by express enactments or rules or by the requirements of governmental conditions, are in force as a part of the system of laws. Stewart v. Stearns &c. Co., 56 Fla. 570, 48 So. 19, 24 L. R. A. (N. S.) 649n. See also, State v. Armour Packing Co., 173 Mo. 356, 11 S. W. 645, 61 L. R. A. 464, 96 Am. St. 515. 229 COMBINATIONS, MONOPOLIES AND TRUSTS, 916 placed on trade being merely ancillary.* Nor do they, as a gen- eral rule, render invalid a contract whereby one agrees to sell only, and is given the exclusive sale of a certain article or articles in a designated district," although it is otherwise if the object 'Hitchcock V. Anthony, 83 Fed. 119, 28 C. C. A. 80; Lanyon v. Gar- den City Sand Co., 223 111. 616, 79 N. E. 313, 9 L. R. A. (N. S.) 446; Espenson v. Koepke, 93 Minn. 278, 101 N. W. 168; State v. Duluth Board of Trade, 107 Minn. 506, 121 N. W. 395, 23 L. R. A. (N. S.) 1260n (hold- ing that the adoption of a uniform commission for selling grain was not within the Minnesota statute) ; Cum- berland Tel. &c. Co. V. State (Miss.) 54 So. 670 (contract between tele- phone companies. Case holds that validity of the contract depends upon the facts and circumstances of each case.) ; Downing v. Lewis, 56 Nebr. 386, 76 N. W. 900; People v. Amer- ican Ice Co., 135 App. Div. (N. Y.) 180. 120 N. Y. S. 41 (purchase of business of competitors and prohibit- ing them from re-engaging in busi- ness) ; Wooten v. Harris, 153 N. Car. 43. 68 S. E. 898 (sale of good will) ; Kevil V. Standard Oil Co., 8 Ohio N. P. 311; Queen Ins. Co. v. State, 86 Tex. 250, 24 S. W. 397, 22 L. R. A. 483; Gates v. Hooper, 90 Tex. 563, 39 S. W. 1079; Crump v. Ligon, V Tex. Civ. App. 172, 84 S. W. 250; Malakoff Gin Co. v. Riddlesperger (Tex. Civ. App.), 133 S. W. 519 (sale of cotton gin and grist mill, vendor agreeing not to engage in operation of cotton gin or grist mill in same community so long as the purchasers operated a gin and grist mill) ; Wheatlev v. Kallear (Tex. Civ. App.), 133 S. W. 903 (agreement by landlord on leasing certain premises not to lease other property on same street for a similar purpose). See, however. Merchants* Ad-Sign Co. v. Sterling, 124 Cal. 429. 57 Pac. 468, 46 L. R. A. 142. 71 Am. St. 94; Ring- ham V. Brands, 119 Mich. 225, 11 N. W. 940; Comer v. Burton-Lingo Co.. 24 Tex. Civ. App. 251, 58 S. W. 969 (object of the contract was to sup- press competition) ; Texas &c. Coal Co. V. Lawson. 89 Tex. 394. 32 S. W. 871, 34 S. W. 919. Section 1. page 507, Act No. 329, Michigan Pub. Acts 1905 provides: "All agreements and contracts by which any person, co- partnership or corporation promises or agrees not to engage in any avoca- tion, employment, pursuit, trade, pro- fession or business, whether reason- able or unreasonable, partial or gen- eral, limited or unlimited, are hereby declared to be against public policy and illegal and void." * Heimbuecher v. Goff, 119 111. App. ZIZ (contract for sale of entire out- put) ; Lanyon v. Garden City Sand Co., 223 111. 616, 79 N. E. 313, 9 L. R. A. (N. S.) 446n (contract for sale of output) ; Over v. Bvram Foundry Co., n Ind. App. 452, '77 N. E. 302, 117 Am. St. 327 (contract for sale of entire output) ; State v. St. Paul Gaslight Co., 92 :\Iinn. 467, 100 N. W. 216 (sale of entire output of coke) ; Houck v. Wright, 11 Miss. 476, 27 So. 616; Walter A. Wood &c. Co. v. Greenwood Hardware Co., 75 S. Car. 378. 55 S. E. 973, 9 L. R. A. (N. S.) 501n; Butterick Pub. Co. v. Rose, 141 Wis. 533. 124 N. W. 647. See also, Butterick Pub. Co. v. Fisher, 203 Mass. 122, 89 N. E. 189, 133 Am. St. 281 (does not prohibit a sale at a reduced rate in consideration of a contract to sell only the vendor's goods) ; Commonwealth v. Strauss, 191 Mass. 545. 78 N. E. 136, 11 L. R. A. (N. S.) 968; Norton v. W. H. Thomas & Sons Co., 99 Tex. 578, 91 S. W. 780 (pointing out that there is a distinction between the antitrust act of 1889 and 1899) ; Vandeweghe v. Am. Brewing Co. (Tex. Civ. App.), 61 S. W. 526 (decided under the au- thority of Gates v. Hooper (Tex.), 39 S. W. 1079. holding that there can be no combination without a union or association by two or more of their capital, skill or acts). The Texas statute does not prohibit one from undertaking to induce his employes to trade with appellee and from giv- ing appellee the exclusive right to sell poods on his premises. Redland Fruit Co. v. Sargent. 51 Tex. Civ. App. 619, 113 S. W. 330. See also, in connec- 917 CONTRACTS. 230 of the restriction, such as a restriction upon the class of persons to whom a commodity shall be sold or from whom it is to be bought, is to create a monopoly in that particular locality,^" such as contracts fixing the price at which a commodity shall be sold and dividing the territory." § 917. State antitrust acts — Application to labor unions. — The majority of the state antitrust laws prohibit combinations and agreements which tend to restrain trade and limit, restrict or regulate the production, price and distribution of merchandise or any commodity or article intended for sale, barter, use, or con- sumption in the state. These statutes are held not to prohibit labor unions which have for their object the control of the price of labor.^- The words "merchandise," "commodity" and synony- tion with this case, Thousand Island Park Assn. v. Tucker, 173 N. Y. 203, 65 N. E. 975, 60 L. R. A. 786. See, however, Detroit Salt Co. v. Na- tional Salt Co., 134 Mich. 103, 96 N. W. 1 (sale of entire output. Con- tract said not to be void on its face but that since the vendor knew the object of the vendee was to obtain a monopoly, it was, under the Michi- gan statute, void) ; Poue-Turnbo v. Bedford, 147 Mo. App. 692, 127 S. W. 426; State v. Racine Sattley Co. (Tex. Civ. App.), 134 S. W. 400 (decided under Laws 1903, ch. 94) ; Texas Brewing Co. v. Templeman, 90 Tex. 277, 38 S. W. 27; Fuqua v. Pabst Brewing Co., 90 Tex. 298, 38 S. W. 29, 35 L. R. A. 241; Texas Brewing Co. V. Anderson (Tex. Civ. App.), 40 S. W. Til; Texas Brewing Co. v. Durrum (Tex. Civ. App.), 46 S. W. 880; Columbia Carriage Co. v. Hatch, 19 Tex. Civ. App. 120, 47 S. W. 288; S. S. White Dental Mfg. Co. v. Hertzberg (Tex. Civ. App.), 51 S. W. 355 ; Francis T. Simmons & Co. V. Terry (Tex.), 79 S. W. 1103; Pasteur Vaccine Zo. v. Burkey, 22 Tex. Civ. App. 232, 54 S. W. 804. See also, ante, ch. XXII. "Denver Jobbers' Assn. v. People (Colo.), 122 Pac. 404 (association of wholesale and retail grocers in the state of Colorado) ; Knight &c. Co. V. Miller, 172 Tnd. 27, 87 N. E. 823; Hunt V. Riverside Co-operative Club, 140 Mich. 538, 104 N. W. 40, 112 Am. St. 420; Ertz v. Produce Exch. Co., 82 Minn. 173, 84 N. W. 743, 51 L. R. A. 825, 83 Am. St. 419; Walsh v. Master Plumber's Assn., 97 Mo. App. 280, 71 S. W. 455 ; Ferd Heim Brew- ing Co. V. Belinder, 97 Mo. App. 64, 71 S. W. 691 (The above case lays down the rule that if the combina- tion tends to restrict competition it will be declared illegal even though the object which it sought to obtain was a worthy one.) ; Smith v. Mor- gantown Ice Co. (N. Car.), 74 S. E. 961 (action for civil damages). Com- pare with the foregoing case Brews- ter v. C. Miller's Sons Co., 101 Ky. 368, 19 Ky. L. 593, 41 S. W. 301, 38 L. R. A. 505 ; Straus v. American Pub. Assn., 177 N. Y. 473, 69 N. E. 1107, 64 L. R. A. 701n, 101 Am. St. 819; Bailey v. Master Plumbers' Assn., 103 Tenn. 99, 52 S. W. 853, 46 L. R. A. 561. See also, applying fed- eral statute. W. W. Montague & Co. V. Lowry, 115 Fed. 27, 52 C C. A. 621, 63 L. R. A. 58, affd., 193 U. S. 38, 48 L. ed. 608, 24 Sup. Ct. 307 ; Barataria Canning Co. v. Joulian, 80 Miss. 555, 31 So. 961. See, however, the case of Martell v. White, 185 Mass. 255, 69 N. E. 1085, 64 L. R. A. 260, 102 Am. St. 341. This case is not, however, decided under a statute, but is based on common-law principles. " State V. Adams Lumber Co., 81 Nebr. 392, 116 N. W. 302. " Rohlf V. Kasemeier, 140 Iowa 182, 118 N. W. 276, 23 L. R. A. (N. S.) 231 COMBINATIONS, MONOPOLIES AND TRUSTS. § 918 mous terms do not cover combinations to control the price of labor^^ or personal services/* § 918. State antitrust acts — Application to insurance. — Insurance has, however, been held a "commodity" within a stat- ute prohibiting any pool, trust, agreement, combination or feder- ation to regulate or fix the price of any commodity or article whatever.^' And a statute prohibiting trusts and unlawful con- spiracies against trade or business applies to insurance." § 919. State antitrust acts — Exercise of police power. — As a general rule state antitrust legislation is upheld on the ground that it is a valid exercise of its police power. ^^ It has been held that a state under its police power may declare invalid a provision in a sale of goods to be resold that the purchaser shall not sell or deal in the goods, wares or merchandise, of any other 1284, 132 Am. St. 261; State v. Du- luth Board of Trade, 107 Minn. 506, 121 N. W. 395, 23 L. R. A. (N. S.) 1260n. 1281. " Hunt V. Riverside Co-operative Club, 140 Mich. 538, 104 N. W. 40, 112 Am. St. 420; Lohse Patent Door Co. V. Fuelle, 215 Mo. 421, 114 S. W. 997, 22 L. R. A. (N. S.) 607, 128 Am. St. 458n; State v. Standard Oil Co., 218 Mo. 1, 116 S. W. 902; Jacobs v. Cohen, 183 N. Y. 207, l(i N. E. 5, 2 L. R. A. (N. S.) 292, 111 Am. St. 730. See also, Cleland v. Anderson, 66 Nebr. 252, 92 N. W. 306, 96 N. W. 212, 98 N. W. 1075, 5 L. R. A. (N. S.) 136; People v. McFarlin, 43 Misc. (N. Y.) 591, 18 N. Y. Cr. 412, 89 N. Y. S. 527. " Rohlf V. Kasemeier,. 140 Iowa 182, 118 N. W. 276, 23 L. R. A. (N. S.) 1284. 132 Am. St. 261; State v. Du- luth Board of Trade, 107 Minn. 506, 121 N. W. 395, 23 L. R. A. (N. S.) 1260n; State v. Associated Press, 159 Mo. 410, 60 S. W. 91, 51 L. R. A. 151, 81 Am. St. 368. See. however, More V. Bennett. 140 111. 69, 29 N. E. 888. 15 L. R. A. 361, IZ Am. St. 216; State V. Wilson. 11 Kans. 334. 80 Pac. 639, 84 Pac. ITH , 117 Am. St. 479; Froelich v. Musician's Mut. Ben. Assn., 93 Mo. App. 383. Neither does a statute which prohibits combina- tions to fix the price of articles of merchandise, manufacture, mechan- ism, commodity, convenience, repair or the product of mining or any ar- ticle or thing whatsoever include pas- senger and freight rates especially when passenger and freight rates had been the subject of separate and in- dependent legislation. State v. Chi- cago &c. R. Co., 95 Ark. 114, 128 S. W. 555. "Beechley v. Mulville, 102 Iowa 602, 70 N. W. 107, 71 N. W. 428, 63 Am. St. 479. Insurance has been held not commerce. Niagara Fire Ins. Co. v. Cornell, 110 Fed. 816. " State V. American Surety Co. (Nebr.), 135 N. W. 365. " Knight &c. Co. v. Miller. 172 Ind. 27, 87 N. E. 823; In re Opinion of the Justices, 193 Mass. 605. 81 N. E. 142 ; State v. Standard Oil Co., Ill Minn. 85, 126 N. W. 527 ; State v. Standard Oil Co., 218 Mo. 1, 116 S. W. 902; State v. Gage. 12 Ohio St. 210. IZ N. E. 1078; State v. Huegin. 110 Wis. 189, 85 N. W. 1046. 62 L. R. A. 700n. Congress derives its power from the commerce clause of the constitution. See ante, § 914. But see Russell v. l^Iurdock. 79 Iowa 101, 44 N. W. 237, 18 Am. St. 348. § 919 CONTRACTS. 232 person, firm or corporation, or association of persons.^® The question as to whether or not a given contract falls within the prohibition of a state antitrust act depends largely on the circum- stances of each case.^" "The statute does not prohibit the 78 N. E. 136, 11 L. R. A. (N. S.) appointment of agents or sole agents 968. _ for the sale of. nor the making of, "See People v. American Ice Co., contracts for the exclusive sale of 135 App. Div. (N. Y.) 180, 120 N. goods, wares, or merchandise. Com- Y. S. 41. monwealth v. Strauss, 191 Mass. 545, CHAPTER XXIV. VIOLATION OF SUNDAY LAWS. § 925. Generally. § 943. 926. The English statute. 944. 927. Sunday laws in the United States. 945. 928. Effect of the omission of the words "ordinary calling". 946. 929. Statutes prohibiting business 947. on Sunday. 930. Illegal business transactions. 948. 931. Statutes prohibiting labor but not business. 949. 932. Performance of contract for labor on Sunday. 950. 933. The exceptions of necessity and charity. 951. 934. Suits to enforce contracts made 952. on Sunday. 935. Payments for Sunday labor. 953. 936. Sunday laws — How construed. 954. 937. Sales made on Sunday. 938. Delivery of goods without pay- 955. ment. 939. Sunday contract fully executed. 956. 940. Telegrams on Sunday. _ 957. 941. Contracts of common carriers. 942. Duty of carrier independent of contract. Loaning money on Sunday. Deeds, mortgages and sealed instruments made on Sunday. Rule as to deeds and mort- gages illustrated. Notes and bills. Bona fide holder of a note made on Sunday. Ratification of contracts made on Sunday — General rule. ]\Iinority rule — D i s t i n c t i o n drawn. Completion of contract on secular day. Delivery on secular day. Executed and executory Sun- day contracts. Executed by one party. Conflict of laws as to Sunday contracts. Void where made void every- where and vise versa. Law of place of performance. Not void on ground of public policy. § 925. Generally. — A large class of illeg .1 agreements under modern statutes consists of so-called Sunday contracts. The common law, however, made no distinction between con- tracts entered into on Sunday and those made on any other day.^ Contracts entered into on Sunday were as valid as those made on any other day.= The invalidity of Sunday contracts rests entirely ^Heavenridge v. Mondy, 34 Ind. 28; Banks v. Werts, 13 Ind. 203; Wool- dridge v. Wooldridge, 69 W. Va. 554, 72 S. E. 654. ' Comyns v. Boyer, Cro. Eliz. 485; Rex V. Brotherton, 1 Stra. 702; King v. Whitnash. 7 B. & C. 596; Swann V. Swann. 21 Fed. 299; Hooks v. State, 58 Fla. 57, 50 So. 586; Davis V. Barger, 57 Ind. 54 ; Steere v. Treb- ilcock. 108 Mich. 464, 66 N. W. 342; Rodman v. Robinson, 134 N. Car. 503, 47 S. E. 19. 65 L. R. A. 682, 101 Am. St. 877; Amis v. Kvle. 2 Yerg. (Tenn.) 31, 24 Am. Dec. 463. Lord Mansfield, in Drury v. Defontaine, 1 Taunt. 131, said that "it does not ap- pear that the common law ever con- 233 § 926 CONTRACTS. 234 upon statutor}' enactment.^ However, it is not necessary that such statutes contain an express declaration of the invahdity of Sun- day contracts since by prohibiting labor or business and by an- nexing a penalty to a violation of their acts such contracts may be made illegal.* In England and generally in this country laws more or less stringent have been enacted prohibiting all the ordi- nary labor or business on Sunday and imposing fixed penalties.^ § 926. The English statute. — The principal English stat- ute on this subject provides that persons shall not "do or exercise any worldly labor, business or work of their ordinary callings, upon the Lord's day, or any part thereof (works of necessity and charity only excepted)."^ According to the original interpreta- tion of this language, it was confined to work or business done by persons in their ordinary calling. Thus in one case the plaintiff had sent his horse to an auctioneer, who sold him on Sunday to the defendant by private contract. In an action for the price of sidered those contracts as void which were made on a Sunday." See also, Eden v. People, 161 111. 296, 43 N. E. 1108, 32 L. R. A. 659, 52 Am. St. 365. Redfield, J., in Adams v. Gay, 19 Vt. 358, said, in effect, that no case could be found holding a contract to be void at common law because exe- cuted on Sunda3^ But see contra, Morgan v. Richards, 1 Brown's (Pa.) 171. ' Hooks V. State, 58 Fla. 57, 50 So. 586. * Coleman v. Henderson, Litt. Sel. Cas. (Ky.) 171, 12 Am. Dec. 200, note; Allen v. Gardiner, 7 R. I. 22; Lyon V. Strong, 6 Vt. 219. ^1 Waits' Actions and Defenses, 114; 2 Addison on Contracts 8th ed. 754, notes. The constitutionality of such acts has been sustained. Frolick- stein V. Mobile, 40 Ala. 725; Shover V. State, 10 Ark. 259; Scales v. State. 47 Ark. 476, 1 S. W. 769, 58 Am. Rep. 768; Ex parte Andrews, 18 Cal. 678, and cases cited ; Warner v. Smith, 8 Conn. 14; In re King, 46 Fed. 905; Karwisch v. Atlanta, 44 Ga. 204; Langabier v. Fairbury P. & N. W. R. Co., 64 111. 243, 16 Am. Rep. 550; Foltz V. State, ZZ Ind. 215; State v. Judge, 39 La. Ann. 132; Judefind v. State, 78 Md. 510, 28 Atl. 405, 22 L. R. A. 721, and note; O'Brien v. Shea, 208 Mass. 528, 95 N. E. 99 ; Common- wealth V. Has, 122 Mass. 40; Linden- muller v. People, Z7> Barb. (N. Y.) 548; Neuendorff v. Duryea, 69 N. Y. 557, 25 Am. Rep. 235 ; Specht v. Com- monwealth, 8 Pa. St. 312, 49 Am. Dec. 518; Gabel v. Houston, 29 Texas 335. Article on "The Constitutionality of Sunday Laws," by George Stewart Patterson, 32 Am. L. Reg. & Rev. 437 (1893), in answer to article by James T. Ringgold, 31 Am. L. Reg. & Rev. m. *29 Car. 11, ch. 7, familiarly known as the Lord's day act. Every species of labor, business, or work, whether public or private, in the ordinary call- ing of tradesman, artificer, workman, laborer, or other person, is within the prohibition of the statute.. Fenncll v. Ridler, 5 B. & C. 406, 11 Eng. C. L. 517 was an action on the war- ranty of a horse. The court decided that the purchase of a horse, by a horse dealer, was in the exercise of the business of his ordinary calling, that the statute extends to private as well as public sales, and that the plaintiff could not maintain any action upon a contract for the sale and war- ranty of a horse, made by him upon Sunday. 235 VIOLATION OF SUNDAY LAWS. § 927 this horse, the court held that the auctioneer was not in the exer- cise of his ordinary calhng when he sold the horse by private con- tract; and, therefore, as neither the plaintiff nor his agent was in the exercise of their ordinary calling, the sale was not void. The court held that if a man in the exercise of his ordinary calling should make a contract on Sunday, that contract would be void ; that is, void so far as to prevent a party privy to it from suing in a court of law.^ However, in a subsequent case it was said, "The expression 'any worldly labor,' cannot be confined to a man's ordinary calling, but applies to any business he may carry on, whether in his ordinary calling or not."® This point, how- ever, was not raised by the case, and no opinion was expressed upon it by the other judges, and afterward the doctrine of Drury V. De Fontaine was fully sustained.'* § 927. Sunday laws in the United States. — Most of the states of the union, if not all, have what are familiarly known as Sunday laws, and while they differ in their phraseology they are substantially the same in their general scope- Of these laws there has been a great diversity of interpretation, some courts holding to them with great strictness, while others have construed them with some liberality.^" They are mostly modeled upon the English statute, but in many of them the words "ordinary call- ings" are omitted. This circumstance accounts for the discrep- ^ Drury v. Defontaine, 1 Taunt. 131. "Philadelphia, Wilmington & B. R- The same construction was given to Co. v. Lehman, 56 Md. 209, 40 Am. the statute in King v. Whitnash, 7 B. Rep. 415. Statutes for the observance & C. 596. This was a case in which of Sunday are remedial in their char- there was a contract of hiring made acter, and should be liberally con- on Sunday between a farmer and a strued. Smith v. Wilcox, 24 N. Y. laborer for a year. It was objected 353, 82 Am. Dec. 302. The contract that the contract was under the stat- itself is to be construed in a man- ute void, but it was held valid as not ner that will make it lawful, if pos- being in the course of the ordinary sible. The law does not presume that calling of the parties so not within the parties contracted to do an un- the statute. Bloxsome v. Williams, 3 lawful thing or violate a statutory B. & C. 232, 10 Eng. Com. L. 113. prohibition carrying out its terms. ^ Smith v. Sparrow, 4 Bing. 84. Zenatello v. Hammerstein. 231 Pa. 56, • Scarfe v. Morgan, 4 M. & W. 270. 79 Atl. 922. To same effect, Keith v. The doctrine is also recognized in Kellerman, 169 Fed. 196; Lippert v. Wolton V. Gavin. 16 Q. B. 48, hold- Garrick Theater Co., 144 Wis. 413, ing that the enlistment of a recruit 129 N. W. 409. is not within the ordinary calling of a soldier. § 928 CONTRACTS. 236 ancy on this point between the English and many of the American decisions. ^^ § 928. Effect of the omission of the words "ordinary call- ing." — By the omission of the clause confining the prohibi- tions to the exercise of the "ordinary callings" of persons, and extending it so as to include "any manner" of labor, business or work, as in Massachusetts and some other states, the intention seems to have been to comprehend within the prohibition all acts of a secular nature connected with ordinary business or common worldly affairs, although they might not fall within the line of the daily business or occupation in which a person happened to be employed. So a contract entered into on a Sabbath, within the hours designated in the statute, would be tainted with illegal- ity, although it had no connection with the particular calling or business in which either of the parties was usually engaged at the time the transaction took place.'- The execution of a release by a creditor to an assignee by delivery on Sunday is not void under the Rhode Island statute, which prohibits, under a penalty, any person from doing or exercising "any labor, or business, or work of his ordinary calling, on the first day of the week," works of necessity or charity excepted." A contract of marriage, although a civil contract, is not invalid when entered into on Sunday.'* Where a debt was paid on Sunday it was held to be an extinguish- ment of the debt.'^ "Baile/s Conflict of Judicial De- are illegal, and the payment operates cisions 54. to discharge the debt. Jameson v. "Bennett v. Brooks, 9 Allen Carpenter, 68 N. H. 62, 36 Atl. 554. (Mass.) 118; George v. George, 47 A gift completed and executed has N. H. 27 (discussing the effect of the none of the elements of a contract, change in substituting the word and does not come within the prohibi- "secular" for the word "ordinary" in tion of the statute which declares the English act) ; Smith v. Foster, contracts made on Sunday void. 41 N. II. 215 (ordinary and secular Wheeler v. Glasgow, 97 Ala. 700, 11 calling distinguished). So. 758. A promise made on Sunday ^ Allen V. Gardiner, 7 R. I. 22. will not remove the bar of the stat- " Bennett v. Brooks, 9 Allen ute of limitations. Pillen v. Erick- (Mass.) 118. A marriage settlement son, 125 Mich. 68, 83 N. W. 1023. A is not prohibited by a statute which contract void under the statute of prohibits people from following their frauds cannot be taken out of the "ordinary calling" on Sunday. Hay- statute by acts performed on Sun- den V. Mitchell, 103 Ga. 431, 30 S. E. day, when such acts are prohibited 287 hy statute. Ash v. Aldrich, 67 N. H. «' Johnson v. Willis, 7 Gray (Mass.) 581, 39 Atl. 442. 164. Both payment and acceptance 2Z7 VIOLATION OF SUNDAY LAWS. § 929 § 929. Statutes prohibiting business on Sunday. — It seems to be the common expressitjn of the courts that the making of a contract is business, and embraced within prohibitions against all "work, business or lalxDr" on that day.'" In Massachusetts, Maine and Michigan the statutoiy words are: "No person shall do any manner of labor, business or work, except only works of necessity or charity, on the Lord's day." In New Hampshire, Vermont, Connecticut and many other states, the prohibitions are variously expressed, but, when the word "business" is used to indicate a thing forbidden, it is held that contracts made on Sunday are void unless within some statutory exception.^' § 930. Illegal business transactions. — A sale or exchange of horses, attended with the circumstances which usually attend those exchanges, is a secular labor or employment within the meaning of the statute for the observance of the Sabbath.^* In Rhode Island the letting of a horse on Sunday by a liv- ery stable keeper, in the ordinary course of his calling, when uncalled for by necessity or charity, is an illegal contract and cannot be enforced. ^^ The same is true of a note executed ''O'Rourke v. O'Rourke, 43 Mich. 58, 4 N. W. 531 ; Bloom v. Richards, 2 Ohio St. 387 (pointing out the dis- tinction between "labor" and "busi- ness") ; Amis v. Kjle, 2 Yerg. (Tenn.) 31, 24 Am. Dec. 463. As to the validity of Sunday contracts gen- erally, see O'Donnell v. Sweeney, 5 Ala. 467, 39 Am. Dec. 336 ; Mueller v. State, 76 Ind. 310, 40 Am. Rep. 245; Parker v. Pitts, 12> Ind. 597, 38 Am. Rep. 155; Adams v. Hamell, 2 Doug. (Mich.) 12>, 43 Am. Dec. 455 (prom- issory note given on Sunday void) ; Allen v. Deming, 14 N. H. 133, 40 Am. Dec. 179; Kepner v. Keefer, 6 Watts. (Pa.) 231, 31 Am. Dec. 460; Lovejoy v. Whipple. 18 Vt. 379, 46 Am. Dec. 157 ; Deforth v. Wiscon- sin &c. R. Co., 52 Wis. 320, 9 N. W. 17, 38 Am. Rep. Til. "Sunday Con- tracts, When Void and When Bind- ing," article bv J. H. Lind, 17 Am. L. Reg. (N. S.') 281. "In Pattee v. Greelv, 13 ]\Ietc. (Mass.) 284, Shaw, C. J., said: "The statement of fact admits that there is nothing to show that the execution of this bond was a work of necessity or charity. Was its execution 'any manner of labor, business or work", within the meaning of the statute? Certainly it was. The legislature in- tended to prohibit secular business on the Lord's day, and did not confine the prohibition to manual labor, but extended it to the making of bar- gains, and all kinds of trai^cking." Webb v. Kennedy, 20 Minn. 419 (con- tract of hiring) ; Durant v. Rhenier, 26 Minn. 362, 4 N. W. 610 (formation of a partnership) ; Herndon v. Hen- derson, 41 Miss. 584; Chenette v. Tee- han, 63 N. H. 149 (contract for bail- ment) ; Steflfens v. Earl. 40 N. J. L. 128, 29 Am. Rep. 214; Smith v. Chi- cago &c. R. Co., 83 Wis. 271, SO N. W. 497, 53 N. W. 550 (agreement consenting to laying railroad tracks across land void when made on Sun- day). ^' Lvon v. Strong. 6 Vt. 219. "Whelden v. Chappel. 8 R. I. 230; Smith V. Rollins, 11 R. I. 464. 23 Am. Rep. 509 (trover for the conversion of a horse, buggy and harness. §931 CONTRACTS. 238 as part of a transaction connected with the maker's usual or ordinary calling.^" But a statute prohibiting one from fol- lowing his "ordinary calling" on Sunday does not apply to a marriage settlement entered into on that day.^^ Under a statute of this character it would seem that a Sunday contract is not void unless it relates to the ordinary calling or business of the party who assumes the obligation." In Connecticut it was said by the court that the execution of written instruments on Sunday, between sunrise and sunset, has always been held as falling within the description of "secular business", and been adjudged void under the statutes of that state.^^ Under a statute which forbade the keeping open of places of public amusement on Sun- day, such as theaters, etc., a contract providing for the appear- ance and exhibition of certain persons as performers on Sunday in theaters cannot be enforced, in so far as it includes Sunday exhibitions."* § 931. Statutes prohibiting labor but not business. — Where the statute prohibits labor on Sunday, but not business, the courts are not agreed as to whether that embraces business so as to invalidate contracts made on that day.^° In such cases con- tracts generally are upheld ,as not constituting labor within the purview of the statute.^^ Under the rule that contracts to do a thing prohibited by statute are void, it is held that all contracts for Where a plaintiff's cause of action ^* La Crandall v. Ledbetter, 159 arises from a violation of law, the Fed. 702, 86 C C A. 570. Equity has suit cannot be sustained). no jurisdiction to restrain the police '^'^ Smith V. Christian, 6 Ga. App. from arresting a person for violating 259, 64 S. E. 1002 (note given by the Sunday laws. Eden Musee Amer- farmer for purchase of a mule and ican Co. v. Bingham, 110 N. Y. S. buggy). 210. ""Hayden v. Mitchell, 103 Ga. 431, '"Harris on Sunday Laws 93. 30 S. E. 287. ''In California contracts on Sun- " Borough V. Equitable Mortg. Co., day are not prohibited by statute. 118 Ga. 178, 45 S. E. 22; Rodman v. Moore v. Murdock, 26 Cal. 514; Robinson, 134 N. Car. 503, 47 S. E. Hooks v. State, 58 Fla. 57, 50 So. 19, 65 L. R. A. 682, 101 Am. St. 877. 586. Here a sale of watermelons was See, however, Williams v. Allison upheld. The court said : "Our Florida (Ga. App.), 74 S. E. 442, holding a statute on the subject (§ 3565, Gen. contract made by the owner of real St. 1906) provides as follows: 'Who- estate and personal property with a ever follows any pursuit, business or real estate agent, placing the property trade on Sunday, either by manual in the hands of the agent to be sold, labor or with animal or mechanical unenforcible. power, except the same be work of '^ Gould, J., in Fox v. Abel, 2 Conn, necessity, shall be punished by a fine 541. not exceeding fifty dollars.' This be- 239 VIOLATION OF SUNDAY LAWS. § 931 work or labor to be performed on Sunday are void unless such work comes within the exception of necessity or charity,^' as an agreement to carry an advertisement in the Sunday edition of plaintiff's paper."^ ing a penal statute, of course, the same must be strictly construed. What pursuit, business, or trade does it inhiljit the following or perform- ance of on Sunday? Clearly such as requires manual labor or animal or mechanical power to perform it. The execution of a note, mortgage, or other contract requires neither man- ual labor nor any animal or mechan- ical power, and we do not think that their execution on Sunday is pro- hibited by this statute, and that, con- sequently, the validity of any contract made in this state is not affected by the fact that it was executed or de- livered on Sunday. The purpose of our statute, when all of its provisions are considered, seems to be to pro- hibit the performance on Sunday not only of those works or pursuits that from their nature have to be per- formed in public, and that may, there- fore, be offensive to the sensibilities of the Christian community in which they are carried on, if followed on the Lord's Day." In Illinois there is no prohibition of the transaction of business on Sunday, but only of the disturbance of "the peace and good order of society by labor." A Sunday contract is valid. McCurdy v. Alaska &c. Commercial Co., 102 111. App. 120 ; Richmond v. Moore, 107 111. 429, 47 Am. Rep. 445 (an extended review of the law of Sunday as it exists in that state). The same is true in Kansas [Birks v. French, 21 Kans. 238; Holden v. O'Brien, 86 Minn. 297, 99 N. W. 531 (casual execution and delivery of notes or contracts not prohibited)!; Missouri, where the prohibition of the statute is "to labor or perform any work" (Glover V. Cheatham, 19 Mo. App. 656) ; Ne- braska [Fitzgerald v. Andrews, 15 Nebr. 52, 17 N. W. 370; Bloom v. Richards, 2 Ohio St. 3S7 (holding that a sale of land on Sunday, a sin- gle transaction, involving, in the opin- ion of the court, no labor, was not prohibited by statute)] ; nor in Texas. Behem v. (jhio, 75 Texas 87, 12 S. W. 996; Krohn v. Krohn, 5 Tex. Civ. App. 125, 23 S. W. 848. See also, Rodman v. Robinson, 134 N. Car. 503, 47 S. E. 19, 65 L. R. A. 682, 101 Am. St. 877. In Indiana the making of a contract on Sunday is common labor. Link v. Clemmens, 7 Blackf. (Ind.) 479 (bond) ; Reynolds v. Stev- enson, 4 Ind. 619 (making a note). See also, Hill v. Hite, 85 Fed. 268, 29 C. C. A. 549 (decided under Arkansas statute). *' Phillips V. Innes, 4 C & F. 234 (shaving on Sunday) ; Gauthier v. Cole, 17 Fed. 716; Bendross v. State, 5 Ga. App. 175, 62 S. E. 728; Pate V. Wright, 30 Ind. 476, 95 Am. Dec. 705; Johnson v. Brown, 13 Kans. 529; Hazard v. Day, 14 Allen (Mass.) 487, 92 Am. Dec. 790 ; Allen v. Duffy, 43 Mich. 1, 4 N. W. 427, 38 Am. Rep. 159; Handy v. St. Paul Globe Pub. Co., 41 Minn. 188, 42 N. W\ 872, 4 L. R. A. 466, 16 Am. St. 695. De- cisions as to what is and what is not unlawful Sunday labor, see note to Quarles v. State, 55 Ark. 10, 17 S. W. 269, 14 L. R. A. 192. Under a stat- ute which prohibited worldly employ- ment on Sunday it has been held that compensation could not be recovered for services rendered in delivering papers on Sunday. Knight v. Press Co.. 227 Pa. 185, 75 Atl. 1083. ^* Publishers: Geo. Knapp & Co. v. Culbertson, 152 Mo. App. 147, 133 S. W. 55, in which case the advertise- ment was inserted and suit subse- quently brought to recover the con- tract price. It was held there could be no recovery, and that the defense that the contract called for Sunday labor might be set up at any stage of the action. It would seem, however, that it is not the duty of the court to interfere and of its own motion sustain the defense when it is not set up. O'Brien v. Shea, 208 Mass. 528, 95 N. E. 99. § 932 CONTRACTS. 24O § 932. Performance of contract for labor on Sunday. — In a case where there was a contract for services to be rendered on Saturday, Sunday and Monday, it was held that there could be no recovery at all for compensation, if the contract was an entire one. If the contract was not entire the rule might be otherwise and recovery be had as upon quantum meruit.^® It was held in New York, where the statute provided that "all labor on Sunday is prohibited," that a contract entered into on Sunday was not void, and did not violate the statute providing for Sunday ob- servance, unless the work to be done was to be performed on Sunday. ^"^ In the same jurisdiction it has been held that the statute renders void a contract of employment by an actor to perform and render services on Sunday.^ ^ A clerk in an attor- ney's office was not allowed to recover of his principal for extra services performed on Sunday.^^ § 933. The exceptions of necessity and charity. — It has been said of the exceptions in the English statute that they are "vague and indefinite," and "extremely loose."^^ The words "necessity" and "charity" have never received a very strict con- struction. The work of clergymen, physicians, nurses, apothe- caries, and undertakers is by general concession within the excep- tion. The work of those employed in furnishing articles of daily and general need, like gas, water, milk, mails and telegrams, has at least a certain popular sanction as permitted labor.^* The law =«• Williams v. Hastings, 59 N. H. ''Watts v. Van Ness, 1 Hill (N. 373 Y.) 76; Palmer v. New York, 2 Sand. '"Merritt v. Earle, 29 N. Y. 115, (N. Y.) 318. 86 Am. Dec. 292 ; Boynton v. Page, "" Rex v. Younger, 5 T. R. 449. 13 Wend. (N. Y.) 425 (sale of a ** Donovan v. McCarty, 155 Mass. horse) ; Eberle v. Mehrbach, 55 N. Y. 543, 30 N. E. 221 (a controversy in 682; Batsford v. Every, 44 Barb. (N. relation to an instrument of assign- Y.) 618; Hamilton v. Gridley, 54 ment much resembling a will executed Barb. (N. Y.) 542. on Sunday). It is a task of much -'In re Hammerstein, 57 Misc. (N. difficulty, and one that a court ought Y.) 52, 108 N. Y. S. 197; Hallen v. not unnecessarily to attempt, to draw Thompson, 48 Misc. (N. Y.) 642, 96 a line that shall clearly distinguish N. Y. S. 142; Albera v. Sciaretti, 72 works of necessity from those that Misc. (N. Y.) 496, 131 N. Y. S. 889. are not. McGatrick v. Wason, 4 Ohio But a contract of this character has St. 566 (in this case the question was been upheld under a statute provid- whether the danger of a closmg of ing for the punishment of persons navigation by cold weather justified found sporting or at common labor loading a vessel, and it was held that on Sunday. Wirth v. Calhoun, 64 it did). Nebr. 316, 89 N. W. 785. 241 VIOLATION OF SUNDAY LAWS. § 933 regards that as necessary which the common sense of the country, in its ordinary modes of doing its business, regards as necessary.^^ It is sufficient that the act is one morally fit and proi)er to be done on Sunday, under the particular circumstances of the case.^*^ The ordinary domestic duties may be performed, and persons and brutes, as well as proi^erty, rescued from danger." It need not be shown that the property was of great value, but the circum- stances of the owner, and the value of the property to him, are to be considered.^^ In Vermont it was held that it might be necessary in some cases to work in making maple sugar "in order to save a great waste of sap."^** Raising subscriptions on the Lord's day to purchase a church has been held to be a work of charity." The execution and delivery of a promissory note is not prima facie a work of necessity and charity. If any special facts exist to make it so, they should be introduced as evidence." The question of what is to be classed as a "necessity" or "charity" must be decided according to the circumstances, and it is there- fore more a question of fact than of law." The burden has been " Commonwealth v. Nesbit, 34 Pa. St. 398. ^Dovle V. Lynn S:c. R. Co., 118 INIass. '195, 19 Am. Rep. 431; Com- monwealth V. Knox, 6 Alass. 76; Flagg V. Millburv. 4 Cush. (Mass.) 243; :McClary v. Lowell, 44 Vt. 116, 8 Am. Rep. 366. The word "neces- sity" should be given a reasonable construction. State v. Chicago &c. R. Co.. 239 Mo. 196, 143 S. W. 785. ''AIcGatrick v. Wason, 4 Ohio St. 566. ** Johnson v. People, 42 111. App. 594 (reaping a field of oats). =^Whitcomb v. Oilman, 35 Vt. 297: "The individual condition and neces- sities of each man may go far to de- termine whether it is his duty to la- bor on Sunday to save property from destruction.'' *» Allen V. Duffv. 43 Mich. 1. 4 N. W. 427, 38 Am. Rep. 159 and note. In Wilkinson v. State, 59 Ind. 416, 26 Am. Rep. 84. it was held to be a work of necessity to gather melons on Sunday so as to prevent waste. "Burns v. Moore. 76 Ala. 339, 52 Am. Rep. 332 (no emergency shown which excused taking of the note on Sunday) ; Sayre v. Wheeler, 32 Iowa 559. A note given an attorney for services rendered in securing bail for a prisoner has been held collectable, although executed on Sunday, since the services were in the nature of a "work of charity." Few v. Gunter (Ga. App.), 72 S. E. 720. *=^ Mueller v. State, 76 Ind. 310, 40 Am. Rep. 245. What labor would be work is a question of fact for the jury (Edgerton v. State, 67 Ind. 588, 33 Am. Rep. 110) ; such as shaving of a customer by a barber on Sun- day (Ungericht v. State, 119 Ind. 379, 21 N. E. 1082, 12 Am. St. 410). Where the evidence is of such a character that there can be but one conclusion logically deducible from it, the court may, as a matter of law, construe it, but when different con- clusions are deducible from it the court must submit the question to the jurv. Western Union Tel. Co. v. Eskridge. 7 Ind. App. 208. 33 N. E. 238. Of keeping open a shop, etc.. it was said in Commonwealth v. Har- rison, 11 Gray (Mass.) 308: "It is 16 — CoNTR.\CTS, Vol. 2 § 934 CONTRACTS. 242 held to be on a party claiming to be within the exception of a Sunday statute to prove that he is so." § 934. Suits to enforce contracts made on Sunday. — A contract or agreement made on Sunday, in states where such laws exist, will not be enforced in a court of law.^* The ground upon which courts have refused to maintain actions on contracts made in contravention of statutes for the observance of Sunday is the elementary principle that one who has participated in a violation of law cannot be permitted to assert in a court of justice any right founded upon or growing out of the illegal transaction."*^ The plaintiff cannot recover where, in order to sustain his supposed claim, he must set up an illegal agreement to which he himself has been a party.''^ It is upon this principle that a bond, promis- sory note or other executory contract, made and delivered on Sunday, is incapable of being enforced, or as is sometimes said, absolutely void, as between the parties.*^ § 935. Payments for Sunday labor. — Payments fully made for Sunday labor cannot be recovered on the ground that the original contract was invalid. The courts will neither assist in enforcing such contract, nor in recovering what has been paid for them (the jury) to decide on the '"See ante, ch. XXI. whole evidence whether the acts were " Towle v. Larrabee, 26 Maine 464 ; acts of necessity and charity." Pope v. Linn, 50 Maine 83; Pattee *'Troewert v. Decker, 51 Wis. 46, v. Greely, 13 Mete. (Mass.) 284; 8 N. W. 26, 37 Am. Rep. 808. Merriam v. Stearns, 10 Cush. (Mass.) "Cameron v. Peck, 37 Conn. 555; 257; Day v. McAlHster, 15 Gray First Nat. Bank v. Kingsley. 84 (Mass.) 433; Allen v. Deming, 14 Maine 111, 24 Atl. 794; Hill v. Sher- N. H. 133, 40 Am. Dec. 179. This is wood, 3 Wis. 343; Melchoir v. Mc- true although the note is made pay- Carty, 31 Wis. 252, 11 Am. Rep. 605, able in another state. Arbuckle v. is to 'the same effect, and there, too, Reaume, 96 Mich. 243, 55 N. W. 808. was a subsequent promise. As to the The decision in Lea v. Hopkins,_ 7 duty of the court of his own notion Pa. St. 492, indicates that an in- to interfere and rule that an action strument executed on Sunday, on on a Sunday contract cannot be which a suit cannot be maintained, maintained when the defense is not may be admitted in court as evidence pleaded, see O'Brien v. Shea, 208 to establish an indebtedness, in ac- Mass. 528, 95 N. E. 99, Ann. Cas. knowledgment of which such instru- i912A. 1030 and note. rnent was given. An agreement made ^''Collins V. Collins, 139 Iowa 703, on Sunday, void under the statute, 117 N. W. 1089, 18 L. R. A. (N. S.) may be proved as the declarations 1176n; Cranson v. Gross, 107 ]\Tass. or admissions of the plaintiff, which 439, 9' Am. Rep. 45; Publishers: Geo. form a part of the res gestae. Knapp & Co. v. Culbertson, 152 Mo. Rainey v. Capps, 22 Ala. 288. App. 147, 133 S. W. 55. 243 VIOLATION OF SUNDAY LAWS. § 936 under it, but will leave the parties where they have put them- selves, they being in pari delicto.'"^ A distinction is made by the authorities, between a suit to enforce a promise or undertaking entered into on Sunday for work and labor, and for the doing of anything, where the thing to be done is afterward perfomied by the party. It would be a fraud in one who has received the consideration of the contract on a week day to set up the invalid- ity of the contract because made on Sunday. He reaffimis the contracts by receiving the consideration. At any rate, he is bound for the value of the services." § 936. Sunday laws — How construed. — Laws governing the observance of Sunday should l^e construed so as to give them full effect, but not at the expense of all the rules of common honesty. It would be inequitable to allow one who has had the benefit of an illegal contract to plead that illegality, and at the same time to hold on to the benefit he derived therefrom.®" A municipal officer will not be pennitted to shield himself from responsibility arising from his official bond, by alleging that it was executed upon the Sabbath, for the parties to be protected by the bond are ignorant of the violation of law committed in the execution and delivery of it, and they should not be compelled ** Calkins v. Seabury &c. Min. Co., months is not void because the salary 5 S. Dak. 299, 58 N. W. 797. by the terms of the contract was to " Meriwether v. Smith, 44 Ga. 541. commence on Sunday. Lippert v. The courts in the later cases are sel- Garrick Theater Co., 144 Wis. 413, dom at a loss to fall upon some ex- 129 N. W. 409. See also, Rollins v. pedient to reach the ends of sub- Woodman, 117 Cal. 516. 49 Pac. 455, stantial justice, and in doing so show which holds that a recital in a cer- a disposition to recede from the se- tificate for a tax deed which speci- verer rules declared in the earlier fies Sunday as the day on which the cases. Many of them now hold the purchaser shall be entitled to his parties to the performance of a Sun- deed does not affect the validity of day contract whenever it is necessary the deed since the certificate merely to prevent fraud. Harris on Sun- fixed the time when the purchaser's day Laws, 126. note. See post, § 948. right to the deed would be fixed. Nor "Haacke v. Knights of Liberty &c. is the tax lien defeated bv the fact Gub, 76 Md. 42<^. 25 Atl. 422. To that the tax deed is dated on Sunday, same effect, Tenncnt-Stribbing Shoe especially where it appeared that the Co. V. Roper, 94 Fed. 739, 36 C. C. fact that the deed was dated on Sun- A. 455. A contract for the perform- day was not discovered until more ance of services entered into on a than four years after the sale. Schif- secular day and which was acted on fer v. Douglass, 74 Kans. 231, 86 by the parties theroto for several Pac. 132. § 937 CONTRACTS. 244 to suffer from the illegality of an act over which they have no control." § 937. Sales made on Sunday. — Sales made on Sunday are in violation of the statute ; they constitute a transaction of busi- ness, acts of common labor, or work of one's ordinary calling, and make the parties liable to the penalties provided.^^ Thus a statute which prohibited any person from pursuing his business or the work of his ordinaiy calling on Sunday has been held to render invalid a contract whereby the owner of a newspaper sold it to the plaintiff who was connected with another newspaper.^^ Neither party is bound by contracts wholly executory on both sides, jnere contracts to buy and sell. If the sale is wholly exe- cuted on both sides, and the property is delivered, and the money paid, it is generally agreed that both parties are bound. The seller cannot recover his property nor the buyer his money.°* The statement of the principle is that when both parties enter into an illegal contract, without fraud upon the part of either, the courts will leave the contract as they find it, and deny a rem- edy to either party.^^ A delivery of the goods on the following day, in order to make a sale, must be accompanied by circum- stances which in themselves supply the necessary elements of a contract, without depending upon the Sunday transaction for any essential.^'' § 938. Delivery of goods w^ithout payment. — Where the property is sold and delivered on Sunday, but not paid for, the ■" Commonwealth v. Kendig, 2 Pa. men was not buying and selling St. 448. newspapers." "'Cameron v. Peck, 11 Conn. 555; "Moore v. Murdock, 26 Cal. 514; Calhoun v. Phillips, 87 Ga. 482, 13 Horton v. Buffington, 105 Mass. 399; S. E. 593 (A contract of sale made Cranson v. Goss, 107 Mass. 439, 9 on Sunday with no delivery of the Am. Rep. 45 ; Block v. McMurry, 56 property, then or afterwards, is Miss. 217, 31 Am. Rep. 357; Foster void.); Mueller v. State, 1(i Ind. 310, v. Wooten, G] Miss. 540, 7 So. 501; 40 Am. Rep. 245; Thompson v. Will- Chestnut v. Harbaugh 78 Pa. St. iams, 58 N. H. 248. 473. See also, post,§ 948 et seq. "McAuliffe v. Vaughan, 135 Ga. "' See also, Smith v. Bean, 15 N. H. 852, 70 S. E. 322, Z7> L. R. A. (N. 577; Cohn v. Heimbauch, 86 Wis. 176, S.) 255. The court said: "We think 56 N. W. 638. that the contract before us does not "^Aspell v. Hosbein, 98 Mich. 117, escape the test of having been ex- 57 N. W. 27; Curtin v. People's Nat. ecuted on Sunday on the ground that Gas. Co., 233 Pa. 397, 82 Atl. 503 the ordinary business of these two (sale upheld where negotiations be- 245 VIOLATION OF SUNDAY LAWS. § 939 vendor cannot recover the price on the Sunday bargain, whether it be an oral promise or the note of the buyer." There is some con- flict of authorities upon the question whether a vendee will be al- lowed to retain the property without paying the price. The Ver- mont court has held that in all cases of contracts entered into upon Sunday, if either party has done anything in execution of a con- tract, it is competent for him upon another day to demand of the other party a return of the thing delivered, or, where that is impracticable, compensation; and if the other party refuse, the original contract becomes thereby affirmed.'^'* § 939. Sunday contract fully executed. — Possession ac- quired from an illegal transaction, or by a contract fully executed, will often avail the party holding it as a sufficient title. Neither party is allowed to impeach its validity by asserting the illegality of his own act. The court does not give it effect, but simply refuses its aid to undo what the parties have already done.^^ The illegality of the contract can be set up neither as a basis of action nor as a ground of defense.*^" Where parties exchanged horses on Sunday, in violation of the Sunday law, it was held that one of the parties could not tender back the horse received by him and maintain replevin to recover possession of the one parted with.®^ But there are conflicting decisions on this point, and in gan on Saturday, continued through on Sunday, unless the facts or cir- Sunday, and were consummated on cumstances exist which withdraw it Monday). See post, § 948 et seq. from the operation of the statute. " O'Donnell v. Sweeney, 5 Ala. 467, Action to recover on notes for pur- 39 Am. Dec. 336 (assumpsit on a chase-price. Wadsworth v. Dunnam, promissory note given on Sunday in 117 Ala. 661, 23 So. 699. consideration for the purchase-price "Adams v. Gay, 19 Vt. 358. See of a horse) ; Tucker v. West, 29 post, § 948 et seq. Ark. 386 (giving a review of cases); ''"Myers v. Meinrath, 101 Mass. Pike V. King, 16 Iowa 49; Foreman 366. V. Ahl, 55 Pa. St. 325 (action on ""Brazee v. Bryant, 50 Mich. 136, promissory note given for property 15 N. W. 49. sold on Sundav) ; Troewert v. ■" Kelley v. Cosgrove. 83 Iowa 229, Decker, 51 Wis. 46. 8 N. W. 26, V 48 N. W. 979, 17 L. R. A. 779 and Am. Rep. 808 (a well-considered note. Where a horse had been de- case). Under a statute which pro- livered under a contract made on vides that "all contracts made on Sunday, and retaken by force, it was Sunday, unless for the advancement held that the vendee could maintain of religion, or in the execution, or replevin therefor, on the ground that for the performance of some work of the plaintiff will not be allowed to re- charity, or in case of necessity, are cover by force what the law would void." a merchant or shopkeeper can- not have aided him to recover peace- not make a sale or any other contract fully. Kinnev v. McDermott, 55 § 940 CONTRACTS, 246 Michigan replevin was held maintainable for a horse sold by the plaintiff on Sunday, where on a subsequent day he had tendered back the purchase-price and demanded the property.*'^ § 940. Telegrams on Sunday. — The question has fre- quently arisen whether a contract by a telegraph company to transmit a message on Sunday falls within the exception in favor of works of necessity and charity. Telegraph companies are permitted to keep open their offices, for the transmission of mes- sages, on Sunday, because there are emergencies, involving some- times life and sometimes great public and private interests, re- quiring that messages be transmitted on that day. Ordinarily a contract made on Sunday is invalid, but a contract to transmit a message, if a necessity is shown for receiving or transmitting it on Sunday, is valid. *^^ A contract made on Sunday, for the transmission and delivery of a telegram from one brother to another, announcing the death of their father, is within the exception of cases of necessity, if not within the exception in favor of works of charity, in a liberal sense of that term.^* The sending of a telegram is an act of necessity or of charity when it is sent from a husband to his wife, and its purpose is to explain a protracted absence of the former from home, and to announce the time of his return.^^ An emergency requiring immediate action to prevent serious loss or injury may occur in a person's usual vocation, which would make the work of delivering and Iowa 674, 8 N. W. 656, 39 Am. Rep. 23, where a party sent to his brother 191. on Sunday this telegram : "Father "^ Winfield v. Dodge, 45 Mich. 355, died this p. m. Come at once." The 7 N. W. 906, 40 Am. Rep. 476 ; Tucker company having negHgently failed to V. Mowrey, 12 Mich. 378, where a deliver this telegram in time, jury horse was sold and paid for on Sun- gave damages ($275). On appeal, day, and on a subsequent day the judgment affirmed, sellers tendered back the purchase- °° Western Union Tel. Co. v. Full- price, and brought replevin for the ing (Ind. App.), 96 N. E. 967 (tele- horse, held that the sale was illegal, gram by which husband informed null and void, and the sellers could wife that "late trains prevent be- recover the horse if not restored on ing home till morning") ; Burnett v. demand. Western Union Tel. Co., 39 Mo. App. " Western Union Tel. Co. v. Yopst, 599. The telegram sent was as fol- 118 Ind. 248, 20 N. E. 222, 3 L. R. A. lows: "I will be home to-night." 224n, 25 Am. & Eng. Corp. Cas. 519; Action brought for statutory penalty. Gulf &c. R. Co. V. Levy, 59 Texas See opinion by Thompson, J., for a 542, 5 Ky. L. 66, 46 Am. Rep. 269. discussion of definitions of necessity "Western Union Tel. Co. v. Wil- and charity in this connection, son, 93 Ala. 32, 9 So. 414, 30 Am. St. 247 VIOLATION OF SUNDAY LAWS. § 94 1 transmitting a telegraphic message one of necessity.*" A penalty cannot be recovered for the failure to perform an illegal contract. A message reading thus: "Come up in the morning; bring all," is not one which comes within the statute permitting the perform- ance of works of necessity." It has been held, however, that the company might affirm a Sunday contract to send a message by delivering the message on a subsequent week day.°^ § 941. Contracts of common carriers. — A common carrier is not relieved from liability because the contract for carriage was made on Sunday. His liability does not rest in contract alone, but is one imposed by law."" A contract entered into on Sunday, by which the carrier attempts to limit its common-law liability, is invalid in some jurisdictions.'^" A passenger traveling on a Sun- day excursion train, who is wrongfully ejected from the train, may recover the damages he sustains, the fact of traveling on that day not barring his right of recovery.''^ § 942. Duty of carrier independent of contract. — The duty imposed by law upon the carrier of passengers to carry them safely, as far as human skill and foresight can go, exists inde- pendently of contract. For a negligent injury to a passenger an action lies against the carrier, although there be no contract, and the service he is rendering is gratuitous ; and, whether the action is brought upon contract or for failure to perform the duty, the liability is the same." According to the principles of the com- ~ Western Union Tel. Co. v. Yopst, N. H. 568. 78 Atl. 621, 34 L. R. A. 118 Ind. 248, 20 N. E. 222, 3 L. R. A. (N. S.) 67n. 224n. "Chicago &c. R. Co. v. Graham, 3 ""Rogers v. Western Union Tel. Ind. App. 28, 29 N. E. 170, 50 Am. Co., 78 Ind. 169; Thompson v. West- Rep. 256. ern Union &c. Co., 32 Mo. App. 191, "Carrol v. Staten Island R. Co., where the dispatch was on ordinary 58 N. Y. 126, 17 Am. Rep. 221, where business, and the company was pro- the passenger took his passage on hibited from transmitting it unless a Sunday, and was being carried on work of necessity. that day when the accident happened ■"Hoyt V. Western Union &c. Co., by which he was injured, and the 85 Ark. 473, 108 S. W. 1056. See, contract was illegal on his part, be- however, Rogers v. Western Union ing in violation of the law which Tel. Co., 78 Ind. 169, 41 Am. Rep. prohibited traveling on that day, ex- 558. cept in cases of necessity or charity. * Merritt v. Earle, 29 N. Y. 115, Hutchinson on Carriers, § 503. See 86 Am. Dec. 292. also. 4 Elliott R. R. (2d ed.). §§ '" Level! V. Boston &c. R. Co., 75 1693-1696. In Carroll v. Staten Island § 943 CONTRACTS 248 mon law, applicable to common carriers, a railroad company hav- ing accepted the stock to be transported over its road, in the usual course of transit, it at once became its duty to forward the same without unnecessary delay or detention. And if injury be sus- tained by reason of any neglect of this duty, or other wrongful act, in the carrying or delivery of the cattle, the fact of their having been received to be carried, or having been carried on Sunday, can afford no excuse or exoneration of liability." § 943. Loaning money on Sunday. — In states v^^here secu- lar business is forbidden on Sunday, the loaning of money, to be paid on demand, is business within the meaning of the statute, and therefore illegal if done on that day, and it has been held that the mere fact that a person borrowing money on Sunday retains it and converts it to his own use does not raise an implied promise binding in law, upon which an action can be maintained/* Where the defendant borrowed a sum of money of the plaintiff on Sunday, it was held that an action could not be maintained to recover it, whether the promise to repay was evidenced by a written memorandum or by a verbal promise, or rested upon an implied one, as the contract was illegal because made on a day when the making of contracts was forbidden, and the plaintiff could not recover upon an act forbidden by the statute." Where money was deposited on Sunday for safe-keeping, and the party with whom it was deposited kept it until Monday or a later day, R. Co., 65 Barb. (N. Y.) 32, the court company as a common carrier of said : "It would be a great perversion live stock, and not upon any special of right and law, in my opinion, to contract). hold that a common carrier may in- "Finn v. Donahue, 35 Conn. 216; vite and receive into his conveyance Troewert v. Decker, 51 Wis. 46, 8 a passenger for transportation for N. W. 26, Zl Am. Rep. 808. hire on Sunday, and be freed from '" Meader v. White, 66 Maine 90, all such duty and responsibility for 22 Am. Rep. 551. In Maine the stat- his preservation and safety on that ute now provides that the party who day as is clearly due and required by sets up the illegality of a Sunday law on the other six days of the contract by way of defense, before he week." "Rights of a Person Suffer- can invoke that illegality, must re- ing Injury When Violating the Sun- store whatever consideration he has day Law," 21 Cent. L. J. 525. received under such contract. (Laws '^ Philadelphia &c. R. Co. v. Leh- of 1880, Ch. 194.) First Nat. Bank man, 56 Md. 209, 40 Am. Rep. 415 v. Kingsley, 84 Maine 111, 24 Atl. (action for damages for delay in 794; Berry v. Clary, 11 Maine 482, transporting cattle founded upon the 1 Atl. 360; Wentworth v. Woodside> common-law duty and liability of the 79 Maine 156, 8 Atl. 763. 249 VIOLATION OF SUNDAY LAWS. § 944 and then used it, tliis was held to be a conversion, for which an action would lie ; and the depositor may waive the tort and main- tain an action for money had and received, such waiver having the effect of converting the tort into a constructive contract, tak- ing effect as such at the time of the conversion.'" § 944. Deeds, mortgages and sealed instruments made on Sunday. — The effect of the statute upon a sealed instrument is the same as upon all other contracts. A bond actually made and delivered upon that day cannot be the basis of a suit." Deeds and mortgages executed and delivered on Sunday in violation of law are void.'* However, in most states, the courts, as a rule, do not interfere with them, for the reason that a party to such a contract is not in a position to invoke the aid of the court. In a case in Georgia where a trade was made on Sunday whereby a tract of land was sold in 1865 for ninety-two thousand dollars in confederate money, and the deed was made and the money paid on that day, and suit was afterward brought for the land, it was held that while the contract was illegal, the parties being in pari delicto, the courts would not interfere.'^ The signing of an instrument on Sunday which does not take effect until delivery does not in- validate the instrument.*" § 945. Rule as to deeds and mortgages illustrated. — A bond signed on Sunday, but not delivered until a secular day, is held good on the elementar}'- principle of law that a bond is not "Tamplin v. Still's Admr., 11 Ala. deemed void because it is made on 374; Flanagan v. Mever, 41 Ala. 132. the Sabbath dav." "Fox V. Mensch,"3 Watts & S. "Ellis v. Hammond, 57 Ga. 179. (Pa.) 444. See also, Carrick v. i\Ior- See also, Jacobson v. Bentzler, 127 rison, 2 Marv. (Del.) 157, 42 Atl. Wis. 566, 107 N. W. 7, 4 L. R. A. 447. (N. S.) 1151. 115 Am. St. 1052. In "Hill V. Hite. 85 Fed. 268, 29 C. Ohio it has been held that a deed C. A. 549. A deed executed and de- made on Sunday is valid. Swisher livened on Sunday is, under the laws v. Williams. Wright (Ohio) 754. See of Alabama, void, and is not ad- Tracy v. Jenks, 15 Pick. (Mass.) missible in evidence. Williams v. 465. Armstrong. 130 Ala. 389, 30 So. 553. ""Hall v. Parker. 37 Mich. 590. 26 See, however. Wooldridge v. Wool- Am. Rep. 540: In re Beitenman's Ap- dridge (W. Va.\ 12 S.>.. 654, up- peal, 55 Pa. St. 183. See post, § 948 holding a deed where the statute et seq. provided that, "No contract shall be § 946 CONTRACTS. 25O executed until delivered/^ The acceptance of a bond on a sec- ular day which was signed on Sunday is not a violation of law. If some steps are taken toward the execution of a contract on that day, but it is not fully consummated until a secular day, the contract so executed is not in contravention of the statute. ^^ A deed may be drawn up, signed, and even acknowledged on Sun- day, but if not delivered until a subsequent day it is a valid deed, whatever might be the effect of the acknowledgment made on Sunday. ^^ A deed previously signed and acknowledged but de- livered on Sunday, will pass the title to the grantee.'' In South Carolina, where the English statute has been re-enacted, it was held that the execution of a mortgage on Sunday did not fall within the penalty of the act, as it was not an act done within the ordinary calling of the parties.'' A mortgage,'' deed'' or guar- anty" executed on Sunday has been held valid when it appeared that the party to whom it was given had no knowledge that the instrument was executed on Sunday.'® § 946. Notes and bills. — A note made on Sunday is not void at common law, and in a suit on a foreign note any foreign "State V. Young, 23 Minn. 551. *° Hellams v. Abercombie, 15 S. See post, § 948 et seq. Car. 110, 40 Am. Rep. 684. *- Evansville v. Morris, 87 Ind. 269, "' Wilson v. Winter, 6 Fed. 16. 44 Am. Rep. 763, and cases cited. " Duggan v. Champlm, 75 Miss. In Smith v. Sparrow, 4 Bing. 84, 441, 23 So. 179. See also, Schiffer v. Best, C. J., said he would not say Douglass, 74 Kans. 231, 86 Pac. 132. that the mere inception of a con- ** Diamond Glass Co. v. Gould (N. tract on Sunday would avoid it, if J. L.), 61 Atl. 12. Gibbs & S. Mfg. completed the next day, but if most Co. v. Brucker, 111 U. S. 597, 28 L. of the terms were settled on Sun- ed. 534, 4 Sup. Ct. 572. (Contract day, and the mere signature referred signed and delivered on Sunday to to the next day, such a contract could an agent who did not have the power scarcely be supported. to conclude the contract, accepted by ^ Love v. Wells, 25 Ind. 503, 87 agent's principal on week day without Am. Dec. 375. The fact that the knowledge that it had been drawn acknowledgment was taken on Sun- up on Sunday.) It has been held day is immaterial. Schwab v. Rigby, that a convict bond executed on Sun- 38 ATinn. 395, 38 N. W. 101. day is not invalid for that reason "Shuman v. Shuman, 27 Pa. St. Ex prate Millsap, 39 Tex. Cr. 93, 45 90. Delivery of the deed is the con- S. W. 20. summation of the transaction through '"A deed of gift executed on Sun- which the title is transferred, and day has been held valid under a stat- when this has been done the contract ute forbidding the following of an is fully executed and no relief from ordinary calling. Dorough v. Equi- the illegal transaction can be had in table Mortg. Co., 118 Ga. 178, 45 S. the law. Greene v. Godfrey, 44 E. 22. Maine 25. 251 VIOLATION OF SUNDAY LAWS. 946 Statute invalidating it must be proved. °° Unless restrained by statute a party may draw, make, indorse or accept bills and notes on Sunday, and such acts will be as valid as if done on any other day.°^ Wliere, by statute, contracts cannot be entered into on Sunday or secular business legally conducted, bills and notes exe- cuted and delivered on that day fall within the interdiction."^ Notes made on Sunday are generally spoken of as void, but noth- ing more is meant than that such notes are void for the purpose for which they are attempted to be used ; void as the foundation of claims sought to be established by them."^ But it is delivery that completes a contract, and if the bill or note be delivered on another day, it will be valid, although dated and signed on Sun- day.'** The indorsement of a bill or note on Sunday stands on the same footing as drawing a bill or making a note, and the indorsee cannot sue upon such an indorsement, either in his own name or in another's for his benefit.'*^ The indorser of a note, when the indorsement was not made on Sunday, is estopped in "O'Rourke V. O'Rourke, 43 ^lich. 58, 4 N. W. 531. In Missouri a prom- issory note executed and delivered on Sunday is not void. Glover v. Cheatham, 19 Mo. App. 656. Like- wise, in the state of Washington, Main v. Johnson, 7 Wash. 321, 35 Pac. 67. See ante, § 931. " Begbie v. Levi, 1 Cromp. & Jerv. 180, 1 Tyr. 130. "=Fivaz V. Nicholls, 2 C. B. 501; Moseley v. Selma Nat. Bank (Ala.), 57 So. 91; Ball v. Powers, 62 Ga. 757; Pope v. Linn, 50 Maine 83; Ar- buckle V. Reaume, 96 Mich. 243, 55 N. W. 808; Finney v. Callendar. 8 Gil. (Minn.) 2Z; Brimhall v. Van Campen, 8 Minn. 13, 82 Am. Dec. 118. See also, Terry v. Piatt, 1 Pen- new. (Del.) 185,40Atl. 243; Reynolds V. Stevenson, 4 Ind. 619, suit on a note. Plea, that the note was made, executed and delivered on Sunday. Demurrer to the plea ordered, and on error, the court said : "It is ad- mitted that the note in question was made on Sunday. Then the record presents this question : Did the mak- ing of it constitute an act of 'com- mon labor?' Wc think the statute intended to prohibit every descrip- tion of secular business not with the exceptions pointed out by itself. The executing of this note was secular business, and not embraced by the exceptions." In an action on a note dated on Sunday the burden is on the plaintiff to show that it was in fact executed on a day which was not Sundav. Hauerwas v. Goodloe, 101 Ala. 162, 13 So. 567. ^Pope V. Linn, 50 Maine 83. "A note executed on Sunday in violation of the provisions of Code, § 5040, is not absolutely void, but is voidable only." Collins v. Collins (Iowa), 117 N. W. 1176, 18 L. R. A. (N. S.) 1176. "^Terrv v. Piatt. 1 Pennew. (Del.) 185, 40 Atl. 243; King v. Fleming, 12 111. 21, 22 Am. Rep. 131; Conrad v. Kinzie, 105 Ind. 281, 4 N. E. 863; Hofer V. Cowan, McClung & Co., 24 Ky. L. 355, 68 S. W. 438; Hilton v. Houghton, 35 Maine 143; Barger v. Farnham, 130 Mich. 487, 90 N. W. 281 ; Lovejoy v. Whipple, 18 Vt. 379. 46 Am. Dec. 157; O'Day v. Meyers, 147 Wis. 549, 133 N. W. 605. See also, ante, § 942. "'First Nat. Bank v. Kingslev, 84 :\raine 111, 24 Atl. 794; Benson v. Drake, 55 Maine 555. See post, § 947. § 947 CONTRACTS. 252 an action on the note from setting up its invalidity on the ground that it was executed by the maker on that day.^^ § 947. Bona fide holder of a note made on Sunday. — A promissor)- note, given and received on Sunday, and void as be- tween the original parties, might be equally void in the hands of a subsequent holder who took it with notice of the original ille- gality."^ But even if the note bore date on Sunday, that fact would not be conclusive evidence that the holder took it with such notice ; for, although dated on Sunday, it might have been deliv- ered on another day, and so be valid even as between the original parties.^^ Where a party makes and puts in circulation a nego- tiable note, purporting to be made and bearing date on some secular day, he is estopped as against an innocent holder, from showing that it was actually executed and delivered on Sunday."' A negotiable promissory note, made and delivered on Sunday, although illegal and voidable as between the original parties thereto, yet, when indorsed before maturity, to a bona fide and innocent holder, without notice of any defect, cannot be im- peached in the hands of such innocent indorsee.^ Thus in one case it appeared that the contract which was the considera- tion of the note in suit was made on Sunday, and the note was made, signed and fully delivered on Sunday, to the original payee, but bore date of a secular day. The plaintiff was a bona fide *« Prescott Nat. Bank v. Butler, 157 day) ; Greathead v. Walton, 40 Conn. Mass. 548, 32 N. E. 909. See also, 226 (note endorsed on Sunday) ; Do- Moseley v. Selma Nat. Bank (Ala.), honey v. Dohoney, 7 Bush (Ky.) 217; 57 So. 91, reviewing the authorities. Ray v. Catlett, 12 B. Mon. (Ky.) ■"Cranson v. Goss, 107 Mass. 439, 532; Beman v. Wessels, 53 Mich. 9 Am. Rep. 45; Allen v. Deming, 14 549, 19 N. W. 179. Contra, Parker v. N. H. 133, 40 Am. Dec. 179. Pitts, 7Z Ind. 597, 38 Am. Rep. 155 •^Hilton V. Houghton, 35 Maine (note signed by surety on Sunday); 143; Hill V. Dunham, 7 Gray (Mass.) Gilbert v. Vachon, 69 Ind. 372; Davis 543. The administrator of the payee v. Barger, 57 Ind. 54 (overruled by of a note may enforce the same v^rhen Evansville v. Morris, 87 Ind. 269, 44 it appears that the payee did not Am. Rep. 763). know that the note was and did not "* Moseley v. Selma Nat. Bank (Ala. intend that it should be executed on App.), 57 So. 91 (reviewing many Sunday. In order to defeat recovery authorities) ; Johns v. Bailey, 45 it must be shown that the payee was Iowa 241 ; Knox v. Clifford, 38 Wis. a party to the illegal transaction. 651, 20 Am. Rep. 28. Collins V. Collins, 139 Iowa 703, 117 'Gordon v. Levine, 197 Mass. 263, N. W. 1089, 18 L. R. A. (N. S.) 83 N. E. 861, 15 L. R. A. (N. S.) n76n. See also, Heise v. Bumpass, 243n, 125 Am. St. 361; State Capita^ 40 Ark. 545 (note endorsed on Sun- Bank v. Thompson, 42 N. H. 369. 253 VIOLATION OF SUNDAY LAWS. § 948 holder of the note for a vaUiable consideration, and took it before it became due, without notice of any defect, illegality or other in- firmity. It was held that the plaintiff, not having participated in any violation of law and having taken the note before its matur- ity for good consideration, and without notice of any illegality in its inception, might maintain an action thereon against the maker. To hold otherwise would be to allow that party, who alone had been guilty of a breach of the law, to set up his own illegal act as a defense to the suit of an innocent party." § 948. Ratification of contracts made on Sunday — General rule. — It is a general rule that where the consideration of a contract is either wicked in itself or prohibited b\' law the con- tract is absolutely void and incapable of ratification.^ This rule has been applied to contracts made in violation of Sunday laws.* Consequently, many jurisdictions hold that a contract made on Sunday cannot be confirmed or ratified by any act of the parties done on a subsequent week day which does not amount to the formation of a new contract.^ In accordance with this principle -Cranson v. Goss, 107 Mass. 439, 64 Ad. 838; Bradley v. Rea, 103 Mass. 9 Am. Rep. 45. The current Ameri- 188, 4 Am. Rep. 524; Gojdon v. Le- can and English decisions concur in vine, 197 i\Iass. 263, 83 X. E. 861, l3 this view. Begbie v. Levi, 1 Cromp. L. R. A. (N. S.) 243n, 125 Am. St. & Terv. 180- Houliston v. Parsons, 361; International Text Book Co. v. 9 U. Can. (Q. B.) 681; Crombie v. Ohl, 150 Mich. 131, 111 N. W. 768, Overholtzer. 11 U. C Q. B. 55; Salt- 13 L. R. A. (N. S.) 1157, 121 Am. marsh v. Tuthill, 13 Ala. 390; .Mose- St. 612; Acme Electrical &c. Co. ley V. Selma Nat. Bank (Ala. App.), v. Vanderbeck, 127 Mich. 341, 86 N. 57 So. 91; Bank of Cumberland v. W. 786, 89 Am. St. 476; Ryno v. Mayberry, 48 Maine 198. A note Darby, 20 N. J. Eq. 231; Reeves v. actually made on Sunday, but dated Butcher, 31 N. J. L. 224. A Sunday on the following Monday to give it contract cannot be directly enforced credit, is not necessarily void. Though or be interposed as a defense to an made contrary to and in violation of otherwise well-grounded cause of law, the statute has not declared action. Horn v. Dorchester, 199 them void under all circumstances; Mass. 534, 85 N. E. 853. The stat- the invalidity is only implied from ute of West Virginia provides, how- the prohibition of Sunday business, ever, that "no contract shall be and a bona fide holder of such note deemed void because it is made on is protected. Vinton v. Peck, 14 the Sabbath dav." Wooldridge v. Mich. 287. citing Rockwell v. Charles, Wooldridge, 69 W. Va. 554, 72 S. E. 2 Hill (N. Y.) 499; Vallett v. Parker, 654. 6 Wend. (N. Y.) 615. 'Butler v. Lee, 11 Ala. 885. 46 Am. "Armstrong v. Toler, 11 Wheat. Dec. 230: Spahn v. Willman, 1 Pen- (U. S.) 258. 6 L. ed. 468; Coppell new. (Del.) 125, 39 Atl. m \ Plaisted V. Hall. 7 Wall. (U. S.) 542, 19 L. v. Palmer. 62, Maine 576; Day v. Me- ed. 244, 2 Kent's Commentaries. Allistcr, 15 Gray (Mass.) 433; Acme *Finn v. Donahue, 35 Conn. 216; Electrical &c. Co. v. Van Derbeck, Carson v. Calhoun, 101 Elaine 456, 127 Mich. 341, 86 N. W. 786, 89 Am. ^ 949 CONTRACTS. 254 it has been held that a promissory note given on Sunday is void, as between the parties, and a subsequent promise to pay it will not make it valid.** The reason given by the courts why such a contract is incapable of being confirmed or ratified is that, in su- ing upon the original contract after its ratification by the defend- ant, it would still be necessary for the plaintiff in proving his case to show his own illegal act in making the contract at first, ^ and for the further reason that where a contract is illegal because made on Sunday it cannot be validated by the subsequent ratifica- tion, because the parties have no power to give life to an act which from reasons of public policy has been ordained by the legislative authority to be absolutely void.® § 949. Minority rule — Distinction drawn. — Many cases, however, term Sunday contracts void, but nevertheless hold that such contracts may be affirmed, ratified or adopted on a secular day.® Most of the cases that so hold fail to draw a distinction between contracts that have grown out of transactions entered St. 476; Winfield v. Dodge, 45 Mich. 355, 7 N. W. 906, 40 Am. Rep. 476; Kountz V. Price, 40 Miss. 341 ; Gwinn V. Simes, 61 Mo. 335; Riddle v. Kel- ler, 61 N. J. Eq. 513, 48 Atl. 818; Gennert v. Wuestner, 53 N. J. Eq. 302, 31 Atl. 609; Cannon v. Ryan, 49 N. J. L. 314, 8 Atl. 293; Nibert v. Baghurst, 47 N. J. Eq. 201, 20 Atl. 252, 25 Atl. 474; Sherry v. Madler, 123 Wis. 621, 101 N. W. 1095. A contract made on Sunday cannot be validated by proving facts tending to show a ratification, because such a contract is void and not susceptible of ratification. King v. Graef, 136 Wis. 548, 117 N. W. 1058, 20 L. R. A. (N. S.) 86, 128 Am. St. 1101. To same effect. Jacobson v. Benzler, 127 Wis. 566, 107 N. W. 7, 4 L. R. A. CN. S.) 1151, 115 Am. St. 1052. A Sunday contract cannot be ratified, "but the consideration emanating from the tainted contract will be sufficient to form the foundation for a new express promise, on which re- covery may be had." Brewster v. Banta, 66 N. J. L. 367, 49 Atl. 718. 'Pope v. Linn, 50 Maine 83. "If the note was made in violation of law and was therefore illegal, a sub- sequent promise to pay it would not make it any the less illegal. The transaction, illegal at its inception, would not be purged of its illegality by a subsequent promise to perform it. The doctrine of ratification is not applicable to such a case." Whit- mire V. Montgomery, 165 Pa. St. 253, 30 Atl. 1016, to contrary effect. ■'Day V. McAllister, 15 Gray (Mass.) 433; Cranson v. Goss, 107 Mass. 439, 9 Am. Rep. 45. *Burr V. Nivinson, 75 N. J. Eq. 241, 72 Atl. 12, 138 Am. St. 554. Com- pare with the foregoing case, Telfer V. Lambert (N. J.), 75 Atl. 779. 'McKinney v. Demby, 44 Ark. 74; Van Hoven v. Irish, 3 McCrary (U. S.) 443; Hoyt v. Western Union &c. Co., 85 Ark. 473, 108 S. W. 1056; J. B. Bostic Co. v. Eggleston, 7 Ind. Ter. 134, 104 S. W. 566; Kuhns v. Gates, 92 Ind. 66, citing as its au- thority Evansville v. Morris, 87 Ind. 269, 44 Am. Rep. 763, which latter case only holds that the contract may be consummated on a secular day. It was not even averred that the contract was executed on Sun- day. Heavenridge v. Mondy, 34 Ind. 28; Banks v. Werts, 13 Ind. 203; -00 VIOLATION OF SUNDAY LAWS. 949 into upon Sunday, but finally closed upon a secular day, and those cases in which negotiations were entered into on Sunday and finally closed on that day. Contracts partially completed on Sun- Catlett V. M. E. phurch. 62 Ind. 365, 30 Am. Rep. 197 (ratification must be, in effect, a new contract) ; Rus- sell V. iMurdock, 79 Iowa 101, 44 N. W. 237, 18 Am. St. 348; Harrison v. Colton, 31 Iowa 16; Smith v. Case, 2 Ore. 190; Corey v. Boynton, 82 Vt. 257, 11 Atl. 987; Adams v. Gay, 19 Vt. 358; Williams v. Lane, 87 Wis. 152, 58 N. W. n. See also, Helm V. Briley, 17 Okla. 314, 87 Pac. 595; Melchoir v. McCarty, 31 Wis. 252, 11 Am. Rep. 605. "One class of de- cisions holds that, if the contract was void because made on Sunday in connection with the business of one of the parties, it could not become valid by a subsequent ratification. The other class holds that the il- legality which infects such a con- tract is not general in its character; that it does not consist in any wrong or impropriety in the contract itself, but simply in the time of its making; that if it were a contract which would be valid if made on a week day, and both parties recognize it on such a day, after it is made, and proceed to carry it out, they thereby ratify the contract, and purge it of the illegality arising from the time when it was entered into. See Adams v. Gay, 19 Vt. 358 ; Sumner v. Jones, 24 Vt. 317; Jacobson v. Bentzler, 127 Wis. 566, 107 N. W. 7, 4 L. R. A. (N. S.) 1151, 115 Am. St. 1052, 7 A. & E. Ann. Cas. 634 and note. Though there may be some pre- ponderance of authority against rati- fication, this court has taken its stand with those courts which hold in fa- vor of the doctrine, at least where the parties on a subsequent day pro- ceed to carry out a contract made on Sunday. j\ieriwether v. Smith, 44 Ga. 541 ; Bryant v. Booze, 55 Ga. 438, Following these decisions, the uncontradicted evidence showed a ratification, and the parties were bound as if the contract had been signed on a day other than Sundav." McAuliffe v. Vaughan, 135 Ga. 852. 70 S. E. Ill, ZZ L. R. A. (N. S.) 255. The case of Cook v. Forker, 1-93 Pa. St. 461, 74 Am. St. 699, lays down the rule that "con- tracts on Sunday are not void in the sense that they do not admit of rati- fication, though so long as they are executory the law will refuse to en- force them, and acts of ratification will make them new contracts which parties will be bound to perform." Where a note was given on Sunday for the price of a horse sold on that day, and the buyer afterward made payments on account of the note, it was held that these payments, coupled with his retaining the horse in his possession, were a ratification of the contract entitling the vendor to re- cover the sum remaining due on the note. Sumner v. Jones, 24 Vt. 317. Other cases have been held capable of being ratified on the now general- ly repudiated doctrine that contracts of this character are not rendered void as being illegal at common law, but their illegality consists merely in being mala prohibita, not mala in se, and they may be made obligatory by the subsequent act of the parties. Perkins v. Jones, 26 Ind. 499. In a case in Rhode Island, where the plain- tiff sold and delivered to defendant on Sunday a pair of horses, and on Tuesday following paid two hundred dollars and gave a note for one hun- dred forty dollars, which was sued upon, the court held that as the con- tract was invalid only on account of the time, reason and the weight of authority were in favor of allowing a ratification, more especially where the defendant retains the property. And either on the ground of ratifica- tion or of a new promise, for which the retention of the property would be a sufficient consideration, the plaintiff was entitled to recover. Sayles v. Wellman, 10 R. I. 465. See also, Heavenridge v. Mondv, 34 Ind. 28; Banks v. Werts, 13 Ind. 203. A contract illegal because entered into on Sunday cannot be ratified, but it may be adopted subsequently with- out formalitv. Miles v. Tanevrin, 200 Mass. 514, 86 N. E. 785. The term "adopt" as used in this case would seem to signify the actual § 950 CONTRACTS. 256 day, but which are perfected on a week day, are, as a general rule, held valid and not within the operation of the Sunday law." § 950. Completion of contract on secular day. — Bonds or contracts of guaranty signed or agreed upon on Sunday but de- making of a contract of similar im- port to the contract which they had previousl}^ attempted to make. In Lovell V. Boston &c. R. Co., 75 N. H. 568, 78 Atl. 621, 34 L. R. A. (N. S.) 67n, it seems to be conceded that a Sunday contract may be afterward ratified, but it is held that the facts of the case were not sufficient to show a ratification. See also. Covey V. Boynton, 82 Vt. 257, 12 Atl. 987; Flinn V. St. John, 51 Vt. 334. "McKinnis v. Estes, 81 Iowa 749, 46 N. W. 987 (terms of mortgage talked over on Sunday but actually agreed to and consummated on week day) ; Dickinson v. Richmond, 97 ]Mass. 45 (offer made on Sunday, ac- cepted on business day) ; Tuckerman V. Hinkley, 9 Allen (Mass.) 452 (contract for personal services con- summated on secular day) ; Wooliver V. Boylston Ins. Co., 104 Mich. 132, 62 N. W. 149 (a fire insurance policy, the terms of which were not com- pleted until the following ^Monday) ; Duggan v. Champlin, 75 Miss. 441, 23 So. 179 (deed of trust delivered to beneficiary on week day, where he had no knowledge that it had been drawn up on Sunday) ; Provenchee V. Piper, 68 N. H. 31, 36 Atl. 552 (sale of chattel mortgage broached on Sunday, but the actual transaction made wholly on Monday) ; McDon- ald V. Fernald, 68 N. H. 171, 38 Atl. 729 (offer made on Sunday, accept- ance made on day following) ; Stack- pole V. Symonds, 23 N. H. 229 (offer made on Sunday, accepted following day) ; Merrill v. Downs, 41 N. H. 72 (paj^ment made on a secular day could be recovered where an agree- ment was not contemplated, notwith- standing it had been made on Sun- day) ; Burr v. Nivison, 75 N. J. Eq. 241, 72 Atl. 12, 138 Am. St. 554 (ne- gotiations concerning sale of real es- tate entered into on Sunday) ; Curtin V. People's Nat. Gas Co., 233 Pa. 397, 82 Atl. 503 (negotiations begun on Saturday, continued through Sun- day, and were completed Monday) ; Moseley v. Vanhooser, 6 Lea (Tenn.) 286, 40 Am. Rep. Zl (terms of sale agreed upon on Sunday, but sale not actually executed until week day) ; Taylor v. Young, 61 Wis. 314, 21 N. W. 408 (agreement for the payment of damages perfected on a week day). A contract negotiated on Sunday between one party there- to and the agent of the other, such agent not having the power to close or conclude the same, is binding when accepted by the agent's prin- cipal on a week day. Burr v. Niv- ison, 75 N. J. Eq. 241, n Atl. 72, 138 Am. St. 554. To same effect, Gibbs &c. Mfg. Co. v. Brucker, 111 U. S. 597, 28 L. Ed. 534, 4 Sup. Ct. 572. See also, the case of Helm v. Briley, 17 Okla. 314, 87 Pac. 595. From the opinion given in the case it can hardly be determined whether the court deemed the subsequent acts a ratification or a new contract. The court said : "The question here pre- sented is before this court for the first time, and we are now called upon for a rule of law governing Sunday contracts subsequently recog- nized upon a secular day. That the contract when executed was void, and not enforcible under the provisions of our statute, we do not hesitate to declare, and, with reference to a sub- sequent recognition of the agreement on a secular day, we are of the opin- ion, and therefore hold, that a direct subsequent recognition of debt on a week day, which amounts at that time to an acknowledgment of indebted- ness, is a new agreement, and thence- forth binding upon the parties, and in the case now under consideration we hold that the payment of $10 on a secular day, upon a debt of $60, the price of a mule sold on a pre- vious Sunday, was such an acknowl- edgment of existing indebtedness as to amount to a contract and promise 257 VIOLATION OF SUNDAY LAWS. § 9: livett-ed on a secular day have been held valid." The same rule has been applied to notes made on Sunday but not delivered until the following- Monday, or on some other business day.^^ §951. Delivery on secular day. — Many cases hold that when the delivery of a thing bargained for or the delivery of the contract itself takes place on a secular day the transaction will be upheld, notwithstanding such delivery was made pursuant to an agreement made on Sunday. The theory is that the act was formed by the parties upon a secular day, and was sufficient in itself to constitute a complete contract, regardless of what may have taken place upon Sunday,^^ as where potatoes were weighed, delivered, and payment made on Monday, pursuant to an agreement entered into on Sunday, the transaction was up- held on the ground that the actual performance on Monday was not merely incident to the transaction on Sunday, but compre- hended all the elements necessary to make a complete contract in to pay at that time, -and is therefore enforcible in the courts of this ter- ritory." " Tyler v. Waddingham, 58 Conn. 375, 20 Atl. 335, 8 L. R. A. 657; Evansville v. Morris, 87 Ind. 269, 44 Am. Rep. 763, overruHng Davis v. Barger, 57 Ind. 54 (Evansville case frequently cited as upholding ratifica- tion of Sunday contracts) ; Prather V. Harlan, 6 Bush (Ky.) 185; Hall V. Parker, Zl Mich. 590, 26 Am. Rep. 540; State v. Young, 2Z Minn. 551 ; Diamond Glass Co. v. Gould (N. J.), 61 Atl. 12; In re Beitenman's Appeal, 55 Pa. 183 ; Com- monwealth V. Kendig, 2 Pa. St. 448 (bond signed by one surety on Sat- urday, by other on Sunday, but bond not delivered until Mondav) ; Gibbs &c. Mfg. Co. v. Brucker, 'ill U. S. 597. 28 L. ed. 534, 4 Sup. Ct. 572. *=King V. Fleming, 12 111. 21, 22 Am. Rep. 131; Bell v. Mahin, 69 Iowa 408. 29 N. W. 331; Hofer v. McClung. 24 Ky. L. 355, 68 S. W. 438; Dohonev v. Dohonev. 7 Bush (Ky.) 217; Campbell v. 'Young. 9 Bush 240 (note signed by maker and two sureties on Sunday, but signed by third surety and delivered on week day) ; Hilton v. Houghton, 35 Maine 143 ; Barger v. Farnham, 130 Mich. 487, 90 N. W. 281 (note executed on Sunday in consideration of borrowed money. A part of the sum borrowed was paid over to the maker of the note on the day it was made. The remainder was paid by check on a week day.) ; Lovejoy v. Whipple, 18 Vt. 379, 46 Am. Dec. 157; Goss v. Whitney, 24 Vt. 187; O'Day v. Meyers, 147 Wis. 549, 133 N. W. 605. Compare the foregoing cases, however, with Cook v. Forker, 193 Pa. St. 461, 44 Atl. 560, 74 Am. St. 699. "King v. Graef. 136 Wis. 548, 117 N. W. 1058, 20 L. R. A. (N. S.) 86n, 128 Am. St. 1101. To same effect Bloxsome v. Williams, 3 B. & C. 232; Butler v. Lee. 11 Ala. 885, 46 Am. Dec. 230 ; Trier v. Wadingham, 58 Conn. 375, 20 Atl. 335. 8L. R. A. 657 ; P. J. Bowlin Liquor Co. v. Bran- denburg, 130 Iowa 220, 106 X. W. 497; Rosenblatt v. Townsley, IZ Mo. 536; Luebbering v. Oberkoetter, 1 I\ro. App. 393; McDoonald v. Fern- aid, 68 N. H. 171. 38 Atl. 729; Mc- Donald V. Fernald, 68 N. H. 171, 38 Atl. 729; Smith v. Bean, IS N. H. 17 — Contracts, Vol. 2 § 952 CONTRACTS. 258 itself.^* It has been held, however, that a mere delivery of the goods on a secular day would not, in itself, supply a necessary element to the contract and for that reason was insufficient to validate a sale made on Sunday.^* A contract may be complete, notwithstanding certain executory acts remain to be done in the future." § 952. Executed and executory Sunday contracts. — A dis- tinction must also be drawn between the executory and executed Sunday contract. No executory contract or sale made upon Sun- day can be enforced but an executed contract, though made on Sunday, cannot be avoided merely because it was entered into on that day." Thus it has been held that a principal could not repu- diate a contract made and executed on Sunday by his agent in 577; Helm v. Briley, 17 Okla. 314, 87 Pac. 595 ; Everet v. Kleimenhagen, 6 S. Dak. 221, 60 N. W. 851 ; Moseley V. Vanhooser, 6 Lea (Tenn.) 286, 40 Am. Rep. 2,7; Bland v. Brook- shire, 3 Tex. App. Civ. Cas. (Will- son) 539; Hopkins v. Stefan, 77 Wis. 45, 45 N. W. 676; Allen v. Green- wood, 147 Wis. 1094, 133 N. W. 1094. "King V. Graef, 136 Wis. 548, 117 N. W. 1058, 20 L. R. A. (N. S.) 86n, 128 Am. St. 1101. A transaction of this character is sometimes termed a ratification. Orr v. Kenworthy, 143 Iowa 6, 121 N. W. 539, 134 Am. St. 402. "Aspell V. Hosbein, 98 Mich. 117, 57 N. W. 27. See the case of Brad- ley V. Rea, 96 Alass. 20, second ap- peal, 103 Mass. 188, 4 Am. Rep. 524, which holds that where de- livery was made on Monday pur- suant to a contract entered into on Sunday the price agreed upon on Sunday could not be recovered, but that plaintiff could recover only on the implied assumpsit, and since nothing was said about the price on Monday the law would imply a fair price. See also, Kountz v. Price, 40 Miss. 341. (In this case the goods were actually delivered on Sunday, the only thing being done on the sub- sequent day being the execution of a promissory note in payment there- for.) Jacobson v. Bentzler, 127 Wis. 566, 107 N. W. 7, 4 L. R. A. (N. S.) 1151, 115 Am. St. 1052, which holds that the receipt of money on a check made and delivered on Sunday does not relieve the transaction from the operation of the Sunday law. It lays down the rule that acts done on Monday which were mere incidents to the Sunday transaction would not save it from the condemnation of the statute. See also, Williams v. Paul, 6 Bing. 653, 4 M. & P. 532 ; Foreman v. Ahl, 55 Pa. St. 325. ■^^ Hamilton v. Standard Metal Co., 81 N. J. L. 247, 79 Atl. 1031. "Catlett V. M. E. Chuch, 62 Ind. 365, 30 Am. Rep. 197; Rickards v. Rickards, 98 Md. 136, 56 Atl. 397, 63 L. R. A. 724, 103 Am. St. 393 ; Rosen- baum v. Hayes, 10 N. Dak. 311, 86 N. W. 973. "The court will not aid a party to recover on a Sunday trans- action on the one hand ; but on the other hand it will not treat as a nul- lity what was done on Sunday in per- formance of a valid contract; it will on the contrary give to the act done on Sunday its legal effect when set up in defense." Gordon v. Levine, 197 Mass. 263, 83 N. E. 861, 125 Am. St. 361. It will not, however, be given an independent afifirmative ef- fect beyond mere performance. Horn V. Dorchester &c. Ins. Co., 199 Mass. 534, 85 N. E. 853. It would seem that a third party cannot at- tack the validity of an executed Sun- day contract. Tennet-Stribbing Shoe Co. V. Roper, 94 Fed. 739, 36 C. C. A. 455. See also, Corey v. Boynton, 82 Vt. 257, 72 Atl. 987, which terms the execution and acting on the agreement ratification. 259 VIOLATION OF SUNDAY LAWS. § 953 violation of the Sunday laws when the contract itself was within the scope of the agent's authority." § 953. Executed by one party. — However, if the contract has been executed by only one of the parties and is executory as to the other, this fact has been held insufficient to make the agree- ment binding on the latter. Thus it has been held that a contract to render services on Sunday will not support an action to recover for services actually rendered.^® And a contract of release exe- cuted on Sunday is not rendered binding by the fact that wages and medical bills had been paid in pursuance of the agreement.^" A promissory note executed on Sunday is not ratified by the sub- sequent payment of interest thereon.^^ § 954. Conflict of laws as to Sunday contracts. — Generally contracts are governed by the lex loci contractus." This is true of Sunday contracts. They are usually governed as to their le- gality by the law of the place where made.*^ Where this rule is " Rickards v. Rickards, 98 Md. 136, 56 Atl. 397, 63 L. R. A. 724, 103 Am. St. 393. "Carson v. Calhoun, 101 Maine 456, 64 Atl. 838; Stewart v. Thayer, 168 Mass. 519, 47 N. E. 420, 60 Am. St. 407 (quantum meruit cannot be recovered) ; Shepley v. Henrv Siege! Co., 203 Mass. 43, 88 N. E. 1095; Knight V. Press Co., 227 Pa. 185, 75 Atl. 1083. See also, International Text Book Co. v. Ohl, 150 Mich. 131, 111 N. W. 768, 13 L. R. A. (N. S.) 1157. 121 Am. St. 612. Work performed by a servant on Sunday not required by the contract and which was not a work of necessity and the doing of which was a mis- demeanor cannot be recovered for. Barney v. Spangler, 131 Mo. App. 58, 109 S. W. 855. It would seem that the rule is otherwise where the services called for by a contract en- tered into on Sunday are performed on a week dav. Bollin v. Hooper, 127 Mich. 287, 86 N. W. 795. '"Hamilton v. Standard Metal Co., 81 N. J. L. 247. 79 Atl. 1031. ^Reeves v. Butcher, 31 X. J. L. 224. Nor will the retention of the property obtained under the con- tract amount to a ratification of a Sunday agreement. In Simpson v. Nicholls, 3 M. & W. 240. it was held that a replication was bad which set up a promise implied from the re- tention by the defendant of goods which had been sold to him on Sun- day. The courts, in some states, seem inclined to follow this. Butler V. Lee, 11 Ala. 885, 46 Am. Dec. 230; Day V. McAllister, 15 Gray (Mass.) 433. In Tuckerman v. Hinkley, 9 Al- len (Mass.) 452, it is said that "the case of Williams v. Paul, 6 Bing. 653, * * * is not to be relied on." In Boutelle v. Melendy, 19 X. H. 196, Williams v. Paul, 6 Bing. 653, was repudiated, and the case of Simpson v. Phillips, 3 M. & W. 244, followed, and the court held that "an illegal contract is incapable of ratification or of becoming the con- sideration of a subsequent promise." ■^'See post, ch. XXIX. ^ Swann v. Swann, 21 Fed. 299; King V. Fleming. 12 111. 21. 22 Am. Rep. 131 ; Murphy v. Collins, 121 Mass. 6; O'Rourke v. O'Rourke, 43 Mich. 58. 4 X. W. 531; Steere v. Trebilock, 108 Mich. 464. 66 X. W. 342; McKee v. Jones, dl Miss. 405, 955 CONTRACTS. 26o adhered to, a Sunday contract valid by the law of the place where made will usually be enforced/* and a contract invalid by such law will be declared invalid'"' by a foreign jurisdiction. § 955. Void where made void everywhere and vice versa. — However, it has been held that where a contract is drawn up, signed, and delivered to the plaintiff's agent on Sunday in a state under whose laws the doing of all work on Sunday is pro- hibited and made illegal, it will not be enforced in such state even though the contract did not become a binding obligation until accepted by the agent's principal in a foreign state under whose laws it might have been valid and binding. The laws of a foreign jurisdiction cannot make valid an act which is illegal by the laws of the state where it took place.^*' On the other hand, it is held that the courts of a state in which the contract is completed will enforce the agreement if by its laws the contract is valid." § 956. Law of place of performance. — There are cases which hold that the validity of a Sunday contract is, in accord- ance with the presumed intention of the parties, to be determined by the law of the place of performance.^* On the other hand, 7 So. 348; Strouse v. Lanctot (Miss), =^Lovell v. Boston &c. R. Co., 75 27 So. 606; Northrup v. Foot, 14 N. H. 568, 78 Atl. 621, 34 L. R. A. Wend (N. Y.) 248; Lovell v. Bos- (N. S.) 67n; Northrup v. Foot, 14 ton &c. R. Co., 75 N. H. 568, 78 Atl. Wend. (N. Y.) 248. 621 34 L R. A. (N. S.) 67n ; Brown =' International Text Book Co. v. V. Browning, 15 R. I. 422, 7 Atl. 403, Ohl, 150 Mich. 131, 111 N. W. 768, 2 Am. St. 908; Adams v. Gay, 19 13 L. R. A. (N. S.) 1157, 121 Am. Vt. 358. For additional cases which St. 612. assume that a contract is governed as ^ Burr v. Navison, 75 N. J. Eq. to its validity by the law of the 241, 72 Atl. 12, 138 Am. St. 554, 20 place but which in the absence of Am. & Eng. Ann. Cas. 35. proof as to the law of the place as- '" Thayer v. Elliott, 16 N. H. 102; sume that it is the same as the law Brown v. Gates, 120 Wis. 349 97 N. of the forum and hold the contract W. 221, 98 N. W. 205, 1 Am. & Eng. invalid under the law of the latter, Ann. Cas. 85. Compare the .lorego- see Hill v Wilker 41 Ga. 449, 5 ing' New Hampshire case with that Am. Rep. 540; Savre v. Wheeler, 32 of Lovell v. Boston & Maine R. Co., Iowa 599; Brimhall v. Van Campen, 75 N. H. 568, 78 Atl. 621, 34 L. R. 8 Gil. (Minn.) 1, 82 Am. Dec. 118. A. (N. S.) 67n, which sums up the This latter case is overruled, how- situation in that jurisdiction as fol- ever, by Mvers v. Chicago &c. R. Co., lows: "In other words, a contract 69 Minn. 476, 72 N. W. 694, 65 Am. the lex loci contractus forbids the St. 579, the latter case holding that party to make will not be enforced there is no presumption that the in this Jufisdiction (Davis v. Us- statutory law is the same. Rood, 69 H. H. 427 44 Atl. 432), **King V. Fleming, 72 111. 21, 22 but one which is valid where it is Am Rep 131 made will usually be enforced here. 26l VIOLATION OF SUNDAY LAWS. 957 it has been stoutly denied that the law of the place of perform- ance controls.'" But wiiile there may be some question as to whether the validity of an executory Sunday contract is to be de- termined by the law of the place of the contract or the law of the place of performance, it seems to be settled that when the con- tract is to be performed on Sunday in a specified state the validity of the agreement is to be determined by the law of the place of performance.^** § 957. Not void on ground of public policy. — It occasion- ally happens that a suit is brought in a forum other than tliat in which the contract is made or in which it is to be performed. In cases of this character regardless of which law is considered as governing, the courts of the forum will not refuse to enforce a Sunday contract assumed to be valid by its proper law on the ground that it would be contrary to the public policy of the forum to enforce such a contract. ^^ ^"Parties cannot be allowed to de- and that there are wide differences fy our laws and recover upon a con- of opinion and practice in regard to tract void from its inception under the observances of Sunday. Brown v. our statutes, by making the place Browning, 15 R. I. 422, 7 Atl. 403, of payment out of the state." Ar- 2 Am. St. 908; Adams v. Gay, 19 Vt. buckle V. Reaume, 96 Mich. 243, 55 358. In the above case it is said : N. W. 808. See also, cases cited ante, "It is in no just sense a moral senti- note 28. ment at all which impels us to ^^ Said v. Stromberg, 55 Mo. App. the observance of Sunday, for religi- 438 (sale of bar privileges on a Sun- ous purposes, more than any other day excursion to be run to a point in day. It is but education and habit in Illinois). See also. Western Union the main, certainly. Moral feeling Tel. Co. V. Way, 83 Ala. 542, 4 So. might dictate the devotion of a por- 844. tion of our time to religious rites ^ See Swann v. Swann, 21 Fed. 299, and solemnities, but could never in- pointing out that at common law dicate any particular time above all contracts made on Sunday were valid others." CHAPTER XXV. USURY. § 960. Violation of statute as to usury § 975. — Generally. 961. Usury a personal defense. 962. Rule further illustrated. 976. 963. Usurious note secured by mortgage. 977. 964. Largely a matter of statutory regulation. 965. Bona fide holders — Usurious 978. contract between original 979. parties. 966. Usury as a matter of intent. 980. 967. Substance and not form con- trols. 981. 968. Usually applies to contracts of 982. borrowing and lending. 969. Application to contracts of 983. purchase and sale. 970. Resale to vendor. 984. 971. Deferred payments for work 985. and labor. 972. Grantee of real estate assum- ing mortgage. 986. 973. Discounting commercial paper. 987. 974. Restricting commissions — Ex- empting building and loan associations. Incidental expenses incurred in making or collecting loan not usury. Incidental expenses — Hiring agent to negotiate loan. Liability of principal for acts of agent — Rule further con- sidered. Time of payment. Interest becoming principal — Weight of authority. Renewal bill or note — Exten- sions. Corporations. Remedies under national bank- ing act. Rule as to the application of payments of usury interest. Recovery of usurious interest. Recovery of usurious interest — Rights as affected by fed- eral statute. Set-ofif under state laws. Who may recover usurious in- terest. § 960. Violation of statute as to usury — Generally. — It is no longer questioned that the legislature may limit the amount which may be charged as interest upon loans. Statutes on the sub- ject of usury will be held valid in this respect unless the legisla- ture has exceeded its authority by imposing such arbitrary restric- tions upon the individual and his business or occupation as are palpably foreign to the legitimate purposes sought to be accom- plished by the legislature.^ The general rule is that contracts to ■'State V. Gary, 126 Wis. 135, 105 N. W. 792, 11 L. R. A. (N. S.) 174n. See also. State v. Griffith, 83 Conn. 1, 74 Atl. 1068; Edwards v. State (Fla.), 56 So. 401. See also, dis- senting opinion of Cullen, C. J., in Schlesinger v. Gilhooly, 189 N. Y. 1, 81 N. E. 619; Fahringer v. State, 148 Wis. 291, 134 N. W. 406; State v. Sherman, 18 Wyo. 169, 105 Pac. 299, 262 263 USURY. § 961 pay usurious interest are void and unenforcible, or at least void- able at the option of the borrower or those in privity with him, since that which the statute declares unlawful and void can have no validity beyond the extent specified." This rule applies to an action by a payee on a note tainted with usury and such a defense is good as to him.^ § 961. Usury a personal defense. — Usury is a defense per- sonal to the debtor* and his privies in relation.** So where one 27 L. R. A. (N. S.) 898n. Usury is a matter of statute. There is no common-law rule regulating the amount of interest to be recovered for the use of money. Banov v. Bank of Charleston, 79 S. Car. 404, 60 S. E. 942. " Sapp V. Cobb, 60 Ark. 367, 30 S. W. 349; Maxell v. Jacksonville Loan & Imp. Co., 45 Fla. 425, 34 So. 255 ; Lyle v. Winn, 45 Fla. 419, 34 So. 158; Howell v. Pennington, 118 Ga. 494, 45 S. E. 272; Guenther v. Wis- dom, 27 Ky. L. 230, 84 S. W. 771; George N. Fletcher & Sons v. Al- pena Cir. Judge, 136 Mich. 511, 99 N. W. 748; Missouri Real Estate Syndicate v. Sims, 179 Mo. 679, 78 S. W. 1006; Vette v. Geist, 155 Mo. 27, 55 S. W. 871; Osborn v. Payne, 111 Mo. App. 29, 85 S. W. 667; Cowgill V. Jones, 99 Mo. App. 390, 73 S. W. 995 ; Hare v. Hooper, 56 Nebr. 480, 76 N. W. 1055; Clarke v. Day, 72 N. J. L. 75, 60 Atl. 39; Union Credit & Investment Co. v. Union Stockyard & Market Co., 46 Misc. (N. Y.) 431, 92 N. Y. 269; Reich v. Cochran. 41 Misc. (N. Y.) 621, 85 N. Y. S. 247; Erwin v. Morris, 137 N. Car. 48, 49 S. E. 53; Churchill v. Turnage, 122 N. Car. 426. 30 S. E. 122; Metz v. Winne, 15 Okla. 1, 79 Pac. 223; Lorentz v. Pinnell, 55 W. Va. 114, 46 S. E. 796. See also, Matz V. A rick, 76 Conn. 388, 56 Atl. 630. If one is financially embar- rassed and he employs another to as- sist him, and the value of his serv- ices is afterward agreed upon and paid by a promissory note, it is not usury. Noyes v. Landon. 59 Vt. 569, 10 Atl. 342. * Howell V. Pennington, 118 Ga. 494, 45 S. E. 272; McLean v. La- fayette Bank, Fed. Cas. No. 8888, 3 McLean (U. S.) 587; Angier v. Smith, 101 Ga. 844, 28 S. E. 167; Ar- mour v. Moore, 5 111. App. 433; Par- doe v. Iowa State Nat. Bank, 106 Iowa 345, 76 N. W. 800; Johnson v. Joyce, 90 Minn. 377, 97 N. W. 113; Citizens' Nat. Bank v. Donnell, 172 Mo. 384, 72 S. W. 925, affd., 195 U. S. 369, 49 L. ed. 238, 25 Sup. Ct. 49; Allen V. Dunn, 71 Nebr. 831, 99 N. W. 680 ; Strickland v. Henry, 66 App. Div. (N.Y.) 23, 73 N. Y. S. 12; Dun- ham V. Dey, 13 Johns. (N. Y.) 40; Ketchum v. Barber, 4 Hill (N. Y.) 224; Webb v. Galveston & H. Inv. Co., 32 Tex. Civ. App. 515, 75 S. W. 355. See also, Peterson v. Berry, 125 Fed. 902, 60 C. C. A. 610: Scott V. Kennedy, 201 Pa. 462, 51 Atl. 384. * Nance v. Gray, 143 Ala. 234, 38 So. 916, Faison v. Grandy, 128 N. Car. 438, 38 S. E. 897, 83 Am. St. 693; Zeigler v. Maner, 53 S. Car. 115, 30 S. E. 829, 69 Am. St. 842 ; Bird v. Kendall, 62 S. Car. 178, 40 S. E. 142; Barbour v. Tompkins, 31 W. Va. 410, 7 S. E. 1, 3 L. R. A. (N. S.) 715; Smith v. McMillan, 46 W. Va. 577, 33 S. E. 283 ; Chenoweth v. Nat. Bldg. Assn., 59 W. Va. 653. 53 S. E. 559; Harper v. Middle States &c. Const. Co., 55 W. Va. 149, 46 S. E. 817. 'Ford v. Washington Nat Bldg. Src. Assn.. 10 Idaho 30. 76 Pac. 1010. 109 Am. St. 192 ; Lemmon v. Whitman, 75 Ind. 318, 39 Am. Rep. 150: Laux v. Gildersleeve. 23 App. Div. (N. Y.) 352. 48 N. Y. S. 301. See Crawford v. Nimmons. 180 111. 143. 54 N. E. 209. revg. 80 111. App. 543. Examine gcnerallv. Ford v. Washington Nat. Bldg. &c. Assn.. 10 Idaho 30, 76 Pac. 1010, 109 Am. St. 192. 962 CONTRACTS. 264 seeking relief was neither a party nor privy the defense has been refused. ° Such defense, it is declared, is available against per- sonal representatives.'' It is, in general, however, so it is deter- mined, a personal defense limited to immediate parties or the debtor,® and one who purchases mortgaged property subject to the mortgage cannot avail himself of the defense;^ nor as against an indorser can usury between maker and payee be set up ;^° nor, as against the payee, is usury between the payee and acceptor of a bill a defense,^^ although it is held that usury on the part of the maker is available in behalf of an accommodation indorser," or of an acceptor of a bill in an action by the holder. ^^ § 962. Rule further illustrated. — But as against a surety an usurious contract between the principal and holder of a note constitutes no defense,^* although it is held that if collateral has "Vette V. Geist, 155 Mo. 27, 55 S. W. 871. See generally, Missouri Real Estate Syndicate v. Sims, 179 Mo. 679, 78 S. W. 1006; Biedler v. Malcolm, 121 App. Div. (N. Y.) 145, 105 N. Y. S. 642 ; Grubb v. Stew- art, 47 Wash. 103, 91 Pac. 562. 'Fox V. Whitnev, 16 Mass. 118. 'Stickney v. Moore, 108 Ala. 590, 19 So. 76; Cain v. Gimon, 36 Ala. 168; Loomis v. Eaton, 32 Conn. 550; Anderson v. Oregon Mortg. Co., 8 Idaho 418, 69 Pac. 130; Crawford V. Nimmons, 180 111. 143; 54 N. E. 209, revg. 80 111. App. 543; Conger V. Babbet, 67 Iowa 13, 24 N. W. 569; Savage v. Fox, 60 N. H. 17; Bullard v. Raynor, 30 N. Y. 197; Faison v. Grandv, 128 N. Car. 438, 38 S. E. 897, 83 Am. St. 693 ; Zeigler V. Maner, 53 S. Car. 115, 30 S. E. 829, 69 Am. St. 842; Smith v. Mc- Millan, 46 W. Va. 577, 33 S. E. 283. But see Prather v. Smith, 101 Ga. 283, 28 S. E. 857; Akers v. Demond, 103 Mass. 318. Examine generally, Bacon v. Iowa Savings & Loan Assn., 121 Iowa 449, 96 N. W. 977; Peo- ple's Building, Loan &c. Assn. v. Pickard, 2 Nebr. (Unof.) 144. 96 N. W. 337; People's Building, Loan &c. Assn. V. Palmer, 2 Nebr. (Unof.) 460, 89 N. W. 316; Bird v. Kendall, 62 S. Car. 178, 40 S. E. 142; Har- per V. Middle States Loan &c. Co., 55 W. Va. 149, 46 S. E. 817. Receivers may set up defense. Short v. Post, 58 N. J. Eq. 130, 42 Atl. 569. In an action against a co-partner upon a note tainted with usury, usury may be pleaded by such co-partner, he being personally liable as a mem- ber of the firm and as surety for his co-partner. Bolen v. Wright, 89 Nebr. 116, 131 N. W. 185. The crea- tion of a corporation to take over a partnership business does not purge of its illegality a usurious firm con- tract. Chas. S. Riley & Co. v. W. T. Sears & Co., 154 N. Car. 509, 70 S. E. 997. " See post, § 969. '^Challiss V. McCrum, 22 Kans. 157, 31 Am. Rep. 181; McKnight v. Wheeler, 6 Hill (N. Y.) 492; Ely v. Bank, 79 Pa. St. 453. "Woolfolk V. Plant, 46 Ga. 422. "Newport Nat. Bank v. Tweed, 4 Houst. (Del.) 225; Nat. Bank of Auburn v. Lewis, 75 N. Y. 516, 31 Am. Rep. 484, revg. 10 Hun (N. Y.) 468. "Jackson v. Fassit, 33 Barb (N. Y.) 645. 21 Howard Pr. (N. Y.) 279, 12 Abb. Pr. (N. Y.) 281. "Sanner v. Smith, 89 111. 123, 31 Am. Rep. 70; Jenness v. Cutler, 12 Kans. 500; Burks v. Wonterline, 6 Bush (Ky.) 20; Brown v. Prophit, 53 Miss. 649; Cole v. Hills, 44 N. H. 265 USURY. § 963 been pledged by a surety for payment he may set up this de- fense ;^^ and where the principal has obtained an extension by an usurious cont'-act the surety is entitled to the benefit of the pay- ments made/" but an indorser has been denied such a defense/' though it has been held available to a surety against one who purchases the paper after maturity/^ But in construing the lan- guage used the words will not be strained to sustain such a de- fense/^ Again, where an usurious loan has been obtained by a pledge of notes fraudulently obtained the owner may set up the defense of usury under a statute making a pledge based on usury illegal and void.^° An employer when sued for wages due an employe by an assignee of such employe cannot defend that the assignment of wages by the employe was a part of an usurious contract.^^ § 963. Usurious note secured by mortgage. — So, a mort- gage given to secure an usurious note will, so it is decided, be like- wise affected," and so discharge the mortgagor from paying in- terest in certain cases. "^ So, the defense of usury is open to a trustee who has mortgaged the trust estate.^* But the fact that a larger per cent, has been charged than the usual time prices does not make usurious a bond and mortgage given for personalty purchased f^ and in case of a junior mortgage, the debtor being 227; First Nat. Bank v. Garlinghouse, ^Western Union Tel. Co. v. 22 Ohio St. 492, 10 Am. Rep. 751; Rvan, 126 Ga. 191, 55 S. E. 21. Selser v. Brock, 3 Ohio St. 302; La- " Krumsieg v. Missouri K. & T. moile County Xat. Bank v. Bing- Trust Co., 71 Fed. 350; Kleeman v. ham, 50 Vt. 105, 28 Am. Rep. 490; 1-risbie, 63 111. 482; Farmland Secur- Davis V. Converse, 35 Vt. 503; Ward ity Co. v. Nelson, 52 Nebr. 624, 72 V. Whitnev, 32 Vt. 89. N. W. 1048; Beard v. Bingham, 76 N. '' Buquo V. Bank of Erin (Tenn.), Car. 285; Erhardt v. Varn, 51 S. 52 S. W. 775. Car. 550, 29 S. E. 225. See Bouker ""Lemmon v. Whitman, 75 Ind. v. Galligan (N. J. Eq.), 57 Atl. 1010. 318, 39 Am. Rep. 150. Examine Sherwood v. Hanev, 63 "Stewart v. Bramhall, 74 N. Y. Ark. 249, 38 S. W. IS; In re Kellogg, 85. affd. 11 Hun (N. Y.) 139; Union 113 Fed. 120; Elder v. Elder, n9 Nat. Bank v. Wheeler, 60 N. Y. 612. Ga. 174, 45 S. E. 990; Burdette v. "Maher v. Lanfrom, 86 111. 513. Robertson, 97 Ga. 612. 25 S. E. 349. "Hamilton v. La Grange, 2 H. Bl. =" Mav v. Folsom, 113 Ala. 198. 20 144. So. 984. See Wallace v. Goodlett, ^'Keim v. Vette, 167 Mo. 389, 67 104 Tenn. 670, 58 S. W. 343. S. W. 223. Examine Chambers v. "* Wagnon v. Pease, 104 Ga. 417, Gilbert, 68 Minn. 183, 70 N. W. 1077. 30^ S. E. 895. See generally, Osborn v. Payne, 111 "Churchill v. Turnage, 122 N. Mo. App. 29,' 85 S. W. 667. Car. 426, 30 S. E. 122. § 964 CONTRACTS. 266 insolvent, it is held that the former cannoi avail himself of the defense of usury against a prior incumbrancer."" So, an agree- ment to extend the time for payment given in consideration of the payment of usurious interest does not taint with usury the orig- inal note and mortgage which were not so tainted f nor does the receiving, after maturity, usurious interest invalidate a note and mortgage not otherwise tainted with usury ;-^ for receiving such usurious interest on a note after it becomes due does not consti- tute usury, such note not being originally tainted with usury. ^^ So, a note for prior advances and a mortgage for future advances will be valid as to such of the secured debts as are not usurious.'"'* Again, the validity of a note is not destroyed by the taking of a separate note under an usurious contract.^^ A mortgage note may provide for a greater than a legal rate of interest after its maturity.^" § 964. Largely a matter of statutory regulation. — The question of the availability of the defense of usury in actions on bills, notes, or the like, is so largely a matter of statutory regula- tion in different jurisdictions, and is so largely dependent there- upon that recourse must be had to those statutes to determine who is entitled and who not to make such a defense, and the relative and respective rights of the parties.^^ It may be stated, however, ''Stickney v. More, 108 Ala. 590, 1875, p. 105); Anderson v. Oregon 19 So 76 Mortg. Co., 8 Idaho 418 69 Pac. 130; "Morse v. Wellcome, 68 Minn. Carter v. Moses, 39 111. 539 (111. 210, 70 X. W. 978, 64 Am. St. 471. Acts 1845. § 1857) ; Hemenway v. So the refusal to extend the time of Cropsey, Z7 111. 357 (111. Acts 1849) ; a mortgage unless another claim is Tuxbury v. Abbott, 59 Maine 466; paid is not necessarily usurious. North Bridgewater Bank v. Cope- Miller V. Bank of Harvey (N. Dak.), land, 7 Allen (Mass.) 139; Kendall 134 N. W. 745. V. Robertson, 12 Cush. (Mass.) 156; "^McEwin V. Humphrey, 1 Ind. Coatsworth v. Barr, 11 Mich. 198 Ter. 550, 45 S. W. 114. (Mich. Comp. Laws. § 1316) ; Rozelle '"Dell V. Openheimer, 9 Nebr. 454, v. Dickerson, 63 Miss. 538; Claflin 4 N. W. 51; Mahler v. Merchant's v. Boorum, 122 N. Y. 385, 25 N. E. Nat. Bank, 65 Minn. Z7, 67 N. W. 360 (4 Rev. St.. p. 2513, § 5) ; Ward 655. V. Sugg, 113 N. Car. 489, 18 S. E. '^Atkinson v. Burt, 65 Ark. 316, 717, 24 L. R. A. 280 (N. Car. Code, 53 S. W. 404. § 3836) ; Gaillard v. LeSeigneur, 1 "' Cooper V. Tappan, 4 Wis. 362. McMul. (S. Car.) 225; Lynchburg =>' Sloane v. Lucas, Z7 Wash. 348, 79 Nat. Bank v. Scott, 91 Va. 652, 22 Pac. 949. S. E. 487, 29 L. R. A. 827, 50 Am. ^'Matz V. Arick, 76 Conn. 388, 56 St. 860. Upon this subject of the Atl. 630 (Gen. Stat. 1902, § 4599) ; effects of statutory provisions and Lanier v. Cox, 65 Ga. 265 (Ga. Acts the rights of parties w^ith relation to 2.^^ USURY. § 965 that the repeal of a statute which vahdates an usurious note does not make the note invalid and subject to the defense of usury ;^* and where a subsequent statute reduces the rate of interest, con- tinuing to pay the former legal rate does not constitute usury;'" nor does the enactment of a statute with reference to usury make it retroactive as to contracts existing at the time it became a law.^' Under the New York statute, which makes it lawful to receive, to contract to receive and collect, any sum agreed upon in writing by the parties, for the making advances of money repayable on demand to an amount not less than five thousand dollars, upon bills of exchange or other negotiable instruments as collateral security for such repayment, it is held that such excess of the legal rate of interest upon loans so made is not usurious even though orally agreed upon.^^ Again, actions at law and in equity are within the meaning of the term "action" in a usury statute. ^^ § 965. Bona fide holders — Usurious contract between orig- inal parties. — Whether paper based on a usurious contract between the original parties is or is not subject to the defense of usury as against a bona fide holder before maturity, without no- tice, and for value, is a question upon which the decisions are far from being in harmony. The general rule, however, seems to be that such a defense is not available against such holder in the ab- defenses under usurious contracts see Faison v. Grandy. 126 N. Car. 827, generally the following cases: Tur- ZG S. E. 276; Waldner v. Bowden ner v. Merchants' Bank, 126 Ala. State Bank, 13 N. Dak. 604, 102 N. 397, 28 So. 469 (Code 1886, § 4140) W. 169 (Rev. Codes 1899, § 4066); (discount bv banks). In re Samuel Metz v. Winne, 15 Okla. 1, 79 Pac. Wilde's Soils, 133 Fed. 562; First 223; Newton v. Woodlev, 55 S. Car. Nat. Bank v. Glenn, 10 Idaho 224, 132, 32 S. E. 531, 7>Z S. E. 1 ; Ridg- n Pac. 623. 109 Am. St. 204; Finney way v. Davenport, Zl Wash. 134, 79 V. IMoore, 9 Idaho 284, 74 Pac. 866 Pac. 606. (Rev. Stat. 1887, § 1266); Tomlin "* First Ecclesiastical Soc. v. Loom- V. Morris, 26 Kv. L. 681. 82 S. W. is, 42 Conn. 570. yiZ (Kv. Stat. 1903, § 2219) ; Beck- ^ Mastin v. Cochran's Exr., 25 Ky, er V. Headsten, 137 Mich. 478, 100 L. 712, 1^ S. W. 343. N. W. 752 (Comp. Laws, § 4857); '^ North Bridgewater Bank v. Cope- Green V. Grant, 134 Mich. 462, 96 land, 7 Allen (:^Iass.) 139. See Hack- N. W. 583; Lee v. Melby, 93 Minn. 4, ley v. Sprague, 10 Wend. (N. Y.) 100 X. W. 379: Vette v. Geist. 155 113. Mo. 27, 55 S. W. 871 (Laws 1891, p. "In re, Samuel Wilde's Sons, 133 170) ; Davis. McDonald & Davis v. Fed. 562. Tandy, 107 Mo. App. 437. 81 S. W. '" Coatsworth v. Barr, 11 Mich. 457 (Rev. Stat. 18W § 3710) ; Allen 198. construing Mich. Comp. Laws, V. Dunn, 71 Nebr. 831, 99 N. W. 680; § 1316. 96; CONTRACTS. 268 sence of a statutory provision making such paper absolutely void.^'* In several jurisdictions, however, such a defense is good against a bona fide holder*" where such an instrument is expressly declared ^Tilden v. Blair, 21 Wall. (U. S.) 241, 21 L. ed. 632; Palmer v. Call, 2 .McCrary (U. S.) 522. See Orr v. Sparkman, 120 Ala. 9, 23 So. 829; Tucker v. Wilamouicz, 8 Ark. 157; Hemenway v. Cropsey, 27 111. 357; Sherman v. Blackman, 24 111. 346; Conckling v. Underbill, 3 Scam. (111.) 388. See Harbaugh v. Tanner, 163 Ind. 574, 71 N. E. 145; Dicker- man V. Day, 31 Iowa 444, 7 Am. Rep. 156; Brown v. Wilcox, 15 Iowa 414; Gross V. Funk, 20 Kans. 655; Roby V. Sharp, 6 T. B. Mon. (Ky.) 375; Owings V. Grimes, 5 Litt. (Ky.) 331; Gwvnn v. Lee, 9 Gill. (Aid.) 137; Burt V. Gwinn, 4 Har. & J. (Md.) 507; Towne v. Rice, 122 Mass. 67; Ayer v. Tilden, 15 Gray (Mass.) 178, 77 Am. Dec. 355; Robinson v. Smith, 62 Minn. 62, 64 N. W. 90 ; First Nat. Bank v. Bentley, 27 Alinn. 87, 6 N. W. 422; Cheney v. Janssen, 20 Nebr. 128, 29 N. W. 289; Sedgwick v. Dixon, 18 Nebr. 545, 26 N. W. 247; Evans v. De Roe, 15 Nebr. 630, 20 N. W. 99; Cheney v. Cooper, 14 Nebr. 415, 16 N. W. 471 ; State Sav. Bank v. Scott, 10 Nebr. 83, 4 N. W. 314; Wortendyke v. Aleehan, 9 Nebr. 221, 2 N. W. 339. (See Bovier v. Mc- Carthy, 4 Nebr. (unofficial) 490, 94 N. W. 965) ; Young v. Berkley, 2 N. H. 410; Long Island Bank v. Boyn- ton, 105 N. Y. 656, 11 N. E. 837, 1 Silvernail Ct. App. 448; Chatham Bank V. Betts, 2,7 N. Y. 356, affg. 9 Bosw. (N. Y.) 552, 23 How. Pr. (N. Y.) 476; Farmers' & Merchants' Bank of Genesee v. Parker, 37 N. Y. 148; Kitchel v. Schenck, 29 N. Y. 515; Bank v. Flanigan, 39 Leg. Int. (N. Y.) 264; Hackley v. Sprague, 10 Wend. (N. Y.) 113; Munn V. Commission Co., 15 Johns. (N. Y.) 44, 8 Am. Dec. 219; Odell V. Greenly. 11 N. Y. Super. Ct. 358. See McWhirter v. Longstreet, 39 Misc. (N. Y.) 831, 81 N. Y. S. 334; Coor V. Spicer, 65 N. Car. 401 ; Bly V. Second Nat. Bank, 79 Pa. St. 453 ; Creed v. Stevens, 4 Whart. (Pa.) 223; Foltz v. Mey, 1 Bay (S. Car.) 486; Bradshaw v. Van Valkenburg, 97 Tenn. 316, 27 S. W. 88; Lynchburg Nat. Bank v. Scott, 91 Va. 652, 22 S. E. 487, 29 L. R. A. 827, 50 Am. St. 860; Fleckner v. Bank of United States, 8 Wheat. (U. S.) 338, 5 L. ed. 631. See also, Wilson v. Knight, 59 Ala. 172 ; Saylor v. Daniels, 27 111. 331, 87 Am. Dec. 250; Robinson v. Smith, 62 Minn. 62, 64 N. W. 90; Holmes v. State Bank, 53 Minn. 350, 55 N. W. 555; Mason v. Anthony, 42 N. Y. (3 Keyes) 609, 35 How. Pr. 477, 3 Abb. Dec. 207; Holmes v. Wilhams, 10 Paige (N. Y.) 326, 40 Am. Dec. 250; Ramsey v. Clark, 4 Humph. (Tenn.) 244, 40 Am. Dec. 645; Fant v. Miller, 17 Grat. (Va.) 47, 77; Otto v. Durege, 14 Wis. 621. In an action against payee as indorser by bona fide holder the originally usurious contract is not available as a defense. McKnight v. Wheeler, 6 Hill (N. Y.) 492. Usurious contract between intermediate holders of paper transferred before maturity cannot be set up against indorsee without notice. King v. Johnson, 3 McCord (S. Car.) 365. However, the original payee may be required to refund to the maker the usurious interest which the latter has been compelled to pay the bona fide pur- chaser before maturity. Culver v. Osborne, 231 111. 104, 83 N. E. 110, 121 Am. St. 302; Woodworth v. Huntoon, 40 111. 131, 89 Am. Dec. 340. "Young V. Wright, 1 Camp. 139; Orr V. Sparkman. 120 Ala. 9, 23 So. 829; Pearson v. Bailey, 23 Ala. 537; Townsend v. Bush, 1 Conn. 260; Hamilton v. Fowler, 99 Fed. 18, 40 C. C. A. 47; Walton Guano Co. v. Copelan, 112 Ga. 319, 27 S. E. 411, 52 L R. A. 268; Clarke v. Havard, 111 Ga. 242, 36 S. E. 837, 51 L. R. A. 499; Angier v. Smith, 101 Ga. 844, 28 S. E. 167; Laramore v. Bank of America, 69 Ga. 722; Bacon v. Lee, 4 Iowa 490 ; True v. Triplett, 4 Aletc. (61 Ky.) 57; Early v. McCart, 2 Dana (Ky.) 414; Cockey v. Forrest, 269 USURY. 966 void by statute," although the term "unlawful" in a statute is held not to have such an effect/" Again, although there has been a waiver of all defenses as against a bona fide holder, the statutory defense of usurious contract may be sustained, ^^ and knowledge or notice of this statutory infirmity in the paper precludes recov- ery." § 966. Usury as a matter of intent. — Usury is frequently declared to be a mere matter of intention on the part of the par- ties to the agreement. *° Thus a miscalculation innocently com- mitted or the mistake of a scrivener in putting one rate for an- other will not taint the transaction with usur}^'*° § 967. Substance and not form controls. — But the state- ment that usury is mere matter of intention is not to be given too broad an interpretation, nor in all cases a literal one. It is 3 Gill. (Md.) 482; Burt v. Gwinn, 4 Har. & J. (Md.) 507; WhiUen v. Hayden, 7 Allen (Mass.) 407; North Bridgewater Bank v. Copeland, 7 Allen (Mass.) 139; Svlvester v. Swan, 5 Allen (Mass.) 134, 81 Am. Dec. 734n ; Knapp v. Briggs, 2 Allen (Mass.) 551; Union Bank of Roches- ter V. Gilbert. 83 Hun (N. Y.) 417, 31 N. Y. S. 945; Clark v. Loomis, 5 Duer (N. Y.) 468; Clark v. Sisson, 4 Duer (N. Y.) 408; Powell v. Waters, 8 Cow. (N. Y.) 669; Faison V. Grandy, 128 N. Car. 438, 38 S. E. 897, 83 Am. St. 693. See also, Ack- land V. Pearce, 2 Camp. 599; Lowe V. Waller, 2 Doug. 736 ; Lowes v. Mazzaredo. 1 Starkie 385 ; Chapman V. Black, 2 Barn. & Aid. 588; Hen- derson V. Benson, 8 Price 281 ; Ro- decker v. Littauer, 59 Fed. 857, 8 C. C. A. 320; Aeby v. Rapelye, 1 Hill (N. Y.) 9; Lynchburg v. Norvell (Powell), 20 Grat. (Va.) 601. *" Pearson v. Bailey, 23 Ala. 537; Faris v. King, 1 Stew. (Ala.) 255; In re Kellogg, 113 Fed. 120 (under laws of New York) ; Rodecker v. Littauer, 59 Fed. 857. 8 C. C. A. 320; True V. Triplett, 4 Mete. (61 Kv.) 57; Bridge v Hubbard, 15 Mass. 96, 8 Am. Dec. 86; Claflin v. Boorum, 122 N. Y. 385. 25 N. E. 360; Solo- mons V. Jones, 3 Brev. (S. Car.) 54, 5 Am. Dec. 538; Payne v. Trezevant, 2 Bay (S. Car.) 23.' However, it has been held in New York that when a usurious note passes into the hands of a bona fide holder and the maker subsequently makes a payment there- on and gives a new note therefor, the new note is valid. Armstrong v. Middaugh, 74 Misc. (N. Y.) 45, 133 N. Y. S. 647. ■*' Pickaway County Bank v. Pra- ther, 12 Ohio St. 497. See Ewell v. Daggs, 108 U. S. 143, 27 L. ed. 682, 2 Sup. Ct. 408. *^ Union Nat. Bank v. Fraser, 63 Miss. 231. **Torrey v. Grant, 10 Sm. & M. (Miss.) 89; Berry v. Thompson, 17 Johns. (N. Y.) 436. Negotiable paper purchased by a national bank with knowledge that it is based on a usu- rious consideration is subject to the defense of usury the same as if it had remained in the hands of the original payee. Schlesinger v. Leh- maier, 191 N. Y. 69, 83 N. E. 657, 16 L. R. A. (N. S.) 626n, 123 Am. St. 591. " Cooper V. Nock. 27 111. 301 ; Gale v. Grannis, 9 Ind. 140; Von Haus v. Soule. 131 N. Y. S. 512; Covington v. Fisher. 22 Okla. 207, 97 Pac. 615; Daniels v. Mowry. 1 R. I. 151 ; Chil- ders y. Deane, 4 Rand. (Va.) 406. '"Childers v. Deane. 4 Rand. (Va.) 406. See also. Merchants' & Plant- ers' Bank v. Sarratt, 77 S. Car. 141, 57 S. E. 621, 122 Am. St. 562. § 967 CONTRACTS. 27O true, in a general way, that the requisite intent must be present to constitute the defense of usury but such intent is to be deducted from and determined from the acts. The intent which enters into and is essential to constitute usury is simply the intent to take and reserve more than that permitted by statute for the loan and forbearance of money. One cannot avoid the consequences of an act by testifying that he did not intend to take usury. That is, he cannot intend to give the transaction a different name from that which the law gives it and call that a purchase and sale which the law calls a loan of money secured by a mortgage. The vol- untary taking or reservation of a greater interest or compensation for the loan or forbearance of money than that allowed by law is I per se usurious, but if taken by mistake or accident it is not usury. If the party intend to take and receive the amount paid, the law condemns the act if it is within the condemnation of the law against usury.^^ It is the substance and effect of the transaction which controls and not its form.** Every agreement to pay inter- est in excess of the legal rate, however well the unlawful interest may be disguised, is a violation of law and usurious.*® When it is made to appear that the transaction is a mere scheme or device to evade the usury laws it falls within the prohibition of such laws.'" ' "Fiedler v. Darin, 50 N. Y. 437; *' Rosen v. Rosen, 159 Mich. 72, Chas. S. Riley & Co. v. W. T. 123 N. W. 559, 134 Am. St. 712. To Sears & Co., 154 N. Car. 509, 70 S. same effect, In re Fishel, Nessler & E. 997; See also, Plyler v. McGee, 76 Co., 192 Fed. 412. S. Car. 450, 57 S. E. 180, 121 Am. '"Title Guaranty & Surety Co. v. St. 950. Klein, 178 Fed. 689, 102 C. C. A. 189, ' "Falls V. United States Savings 29 L. R. A. (N. S.) 620n ; Ford v. &c. Co., 97 Ala. 417, 13 So. 25, 24 Washington Nat. Bldg. &c. Assn., 10 L. R. A. 174, 38 Am. St. 194; Ford Idaho 30, 76 Pac. 1010, 109 Am. St. V. Washington Nat. Bldg. Assn., 110 192; Cobe v. Guyer, 237 111. 568, 86 Idaho 30, 76 Pac. 1010, 109 Am. St. N. E. 1088; State v. Martin, 76 N. 192; Clemens v. Crane, 234 111. 215, J. L. 292, 69 Atl. 1091; Willson v. 84 N. E. 884; Home Bldg. &c. Assn. Fisher, 75 Misc. (N. Y.) 382, 135 N. V. McCav. 217 111. 551, 75 N. E. 569, Y. S. 532; Missouri, K. & T. Trust 108 Am. St. 263; Meroney v. Atlanta Co. v. Krumseig, 172 U. S. 351, 43 Bldg. & Loan Assn., 116 N. Car. 882, L. ed. 474, 19 Sup. Ct. 179. When the 21 S. E. 924, 47 Am. St. 841. The contract is not usurious on its face, clear legal effect of a contract makes the party alleging it to be usurious unimportant the intent with which it has the burden of proof. In re was made, when it is sought to en- Fishel, Nessler & Co., 192 Fed. 412; force it according to its terms. Stir- Continental Nat. Bank v. Fleming ling V. Gogebic Lumber Co., 165 (Mich.), 134 N. W. 656. Where the Mich. 498, 131 N. W. 109, 35 L. R. written contract is not upon its face A. (N. S.) 1106n. usurious parol evidence is admissible 2/1 USURY. § 968 § 968. Usually applies to contracts of borrowing and lend- ing. — It is true generally that agreements are not held usuri- ous except in cases where the transaction is a loan of money, or the extension of a pre-existing debt." But the statute concern- ing usury may be broad enough to include any and all contracts and assurances. '^" § 969. Application to contracts of purchase and sale. — Since usury statutes as a general rule apply to a contract of bor- rowing and lending exclusively such statutes have no application to good faith contracts of purchase and sale. As a general rule, the vendor has a right to demand any price he may designate for the goods sold, and if the goods are sold on credit he may demand and the vendee agree to pay a higher price, in which case no usury exists because of the absence of any borrowing or lending.^^ to show that the writing is a mere de- vice resorted to for the purpose of conceahng the usurious nature of the transaction. Interstate Sav. & Trust Co. V. Hornsby (Tex. Civ. App.), 146 S. W. 960. To same effect, In re Canfield, 193 Fed. 934. ""It has long been well settled by the decisions of the court of last re- sort in the state of New York, as well as elsewhere, that such usury laws are applicable only to a loan of money, and that the terms 'interest' and 'forbearance' cannot be predi- cated of anything other than a loan of monev." Title Guaranty &c. Co. V. Klein,' 178 Fed. 689, 102 C. C. A. 189, 29 L. R. A. (N. S.) 620. To same effect. Real Estate &c. Co. v. Wilmington &c. Elec. R. Co. (Del.), n Atl. 756; Drv Dock Bank v. Amer- ican Life Ins. &c. Co., 3 N. Y. 344; Smithwick v. Whitley, 152 N. Car. 366. 67 S. E. 914, 28 L. R. A. (N. S.) 113n; Doster v. English. 152 N. Car. 339, 67 S. E. 754. See also. Tate v. Wellings, 3 T. R. 531; Morrison v. McKinnon, 12 Fla. 552; Easterlin v. Rylander. 59 Ga. 292; First Nat. Bank v. Owen, 23 Iowa 185 ; Gilmore V. Ferguson, 28 Iowa 220; Bull v. Rice, 5 N. Y. 315; Hall v. Haggart, 17 Wend. (N. Y.) 280; Curtis v. Leavitt. 17 Barb. (N. Y.) 309; Spen- cer V. Tilden. 5 Cow. (N. Y.) 144; Holmes v. Wetmore, 5 Cow. (N. Y.) 149n ; Cummings v. Williams, 4 Wend. (N. Y.) 679; Marshall v. Rice, 85 Tenn. 502, 3 S. W. 177; Doak v. Snapp's Exrs., 1 Cold. (Tenn.) 180. To the same effect, Hamlin v. Fitch, Kirby (Conn.) 260, 5 Cow. 149n ; Wads worth v. Cham- pion, 1 Root (Conn.) 393; Whipple v. Powers, 7 Vt. 457; Steptoe's Admrs. v. Harvey's Exrs., 7 Leigh (Va.) 501. See also. Continental Nat. Bank v. Fleming (:\Iich.), 134 N. W.. 656, in which case one corporation loaned to another corporation a large amount of money. It was also provided that two officers in the corporation making the loan should be employed bv the borrowing corporation at sal- aries of $2,000 each per year. The contract was held not usurious. The decision is based, however, upon the ground that the burden of proving usury is on the party alleging it and that in this case that burden had not been met. See also, the dissenting opinion. " Rosen v. Rosen. 159 ;Mich. 12, 123 N. W. 559, 134 Am. St. 712. See also, Newkirk v. Burson, 21 Ind. 129; Crawford v. Tohnson, 11 Ind. 258; Torrey v. Grant, 10 Sm. & M. (Miss.) 89; Parchman v. IMcKinney, 12 Sm. & M. (Miss.) 631; Fisher v. Hoover, 3 Tex. Civ. App. 81, 21 S. W. 930. " Beete v. Bidgood, 7 B. & C. 453 ; 9/0 CONTRACTS. 272 And it is immaterial whether the enhanced price is ascertained by the simple addition of a lump sum to the cash price or by naming a particular sum as principal and declaring that it shall draw interest at a rate which would be usurious were the transac- tion one of borrowing and lending.^* § 970. Resale to vendor. — Under this principle it is proper for one person to buy property from another and agree to re- sell it to the vendor at a higher price payable in the future.^^ If such be the actual transaction the law will enforce it. It is frequently difficult, however, in cases of this character to determine whether in a given instance the parties intended a sale or a mortgage and loan on the property. In the latter in- stance the transaction will be treated as a mere device to evade the statute against usury and will be governed by the statutes appli- cable to usury contracts.^" Ellenbogen v. Griffey, 55 Ark. 268, 18 S. W. 126; Brooks v. Avery, 4 N. Y. 225; Hogg v. Ruffner. 1 Black (U. S.) 115; Myers v. Williams, 85 Va. 621, 8 S. E. 483; Thomson v. Koch, 62 Wash. 438, 113 Pac. 1110 (defining commercial paper under Washington statute). Davidson v. Davis, 59 Fla. 476, 52 So. 139, 28 L. R. A. (N. S.) 102, and note. In the above case it is said : "The lavi^ is well settled that usury can only attach to a loan of money, or to the forbearance of a debt, and that on a contract to secure the price or value of work and labor done, or to be done, or of property sold, the contracting parties may agree upon one price if cash be paid, and upon as large an addition to the cash price as may suit themselves if credit be given ; and it is wholly im- material whether the enhanced price be ascertained by the simple addition of a lumping sum to the cash price, or by a percentage thereon. In neither case is the transaction usu- rious. It is neither a loan nor the forbearance of a debt, but simply the contract price of work and labor done and property sold; and the dif- ference between cash and credit in such cases, whether 6, 10, or 20 per cent., must be left exclusively to the contract of the parties, and no amount of difference fairly agreed upon can be considered illegal." "Dykes V. Bottoms, 101 Ala. 390, 13 So. 582; Ellenbogen v. Griffey, 55 Ark. 268. 18 S. W. 126; Davidson v. Davis, 52 Fla. 139, 52 So. 476, 28 L. R. A. (N. S.) 102 and note; Tousey v. Robinson, 1 Met. (Ky.) 663; Cut- ler V. Wright, 22 N. Y. 472; Brown V. Gardner, 4 Lea (Tenn.) 145; Bank V. Mann, 94 Tenn. 17, 27 S. W. 1015, 27 L. R. A. 565n ; Garrity v. Cripp, 4 Baxt. (Tenn.) 86; Hansbrough v. Peck, 5 Wall. (U. S.) 497, 18 L. ed. 520; Graeme v. Adams, 23 Grat. (Va.) 225, 14 Am. Rep. 130; Reger V. O'Neal, 33 W. Va. 159, 10 S. E. 375, 6 L. R. A. 427 ; Swayne v. Rid- dle Z1 W. Va. 291, 16 S. E. 512. *^^ Sherwood v. Burgess, 1 Hayw. & H. (D. C.) 132, Fed. Gas. No. 12775; Barfield v. Jefferson, 78 Ga. 220, 2 S. E. 554; Rogers v. Bluenstein, 124 Ga. 501, 52 S. E. 617, 3 L. R. A. (N. S.) 213; Mills v. Crocker, 9 La. Ann. 334; Phillips v. Mason, 66 Hun (N. Y.) 580, 50 N. Y. St. 104, 21 N. Y. S. 842; Connolv v. Keenan, 42 Misc. (N. Y.) 589, 87 N. Y. S. 630; Yar- borough V. Hughes, 139 N. Car. 199, 51 S. E. 904. '^''Tillar v. Cleveland, 47 Ark. 287, 1 S. W. 516; Sparks v. Robinson, 66 Ark. 460, 51 S. W. 460; Mitchell v. ^7Z USURY. § 971 § 971. Deferred payments for work and labor. — It has been held that an agreement which stipulates that deferred pay- ments for work and labor or the purchase-price of property shall bear interest in excess of that allowed to a lender of money is valid,°^ although there are cases which do not give assent to this view.°^ Many cases which uphold this latter view, however, were decided under a statute which placed all agreements for the payment of interest on the same footing and no discrimination is made in favor of those not founded upon a borrowing or lend- ing of money.^® § 972. Grantee of real estate assuming mortgage. — A grantee of land who expressly agrees to pay a mortgage thereon or who takes it subject to the mortgage, the amount thereof hav- ing been deducted from the purchase-price, cannot interpose the defense of usury in an action on such mortgage."" This rule also Preston, 5 Day (Conn.) 100; Stark- weather V. Prince, 1 MacArth. (D. C.) 144; Morrison v. Markham, 78 Ga. 161, 1 S. E. 425; Wilkinson v. Wooten, 59 Ga. 584 ; Baggett v. Tru- lock, n Ga. 369, 3 S. E. 162 ; Monroe V. Foster, 49 Ga. 514; Ferguson v. Sutphen, 3 Gilm. (111.) 547; Delano V. Rood, 1 Gilm. (111.) 690; Wormley V. Hamburg, 46 Iowa 144; Hevtle v. Logan, 1 A. K. Marsh. (Ky.j 529; Shanks v. Kennedy, 1 A. K. Marsh. 65; Knox v. Black, 1 A. K. Marsh. (Ky.) 298; Barney v. Tontine Sur- ety Co., 131 Mich. 192, 91 N. W. 140; Fielder v. Darrin, 50 N. Y. 437; Brown v. Dewey, 1 Sandf. Ch. (N. Y.) 56, revd. 2 Barb. (N. Y.) 28; Clarkson's Admr. v. Garland, 1 Leigh (Va.) 147; Phelps v. Bellows' Estate, 53 Vt. 539. See also. Johnson v. Grayson, 230 Mo. 380, 130 S. W. 673. Under the Missouri statute a pledge of personal property to secure a usurious debt is void. The property is wrongfully or illegally in the hands of the pledgee and may be taken from him by replevin without a tender of the sum legally due. Holmes v. Schmeltz, 161 Mo. App. 470. 143 S. W. 539. To same effect, Milholem v. Mever 161 Mo. App. 491, 143 S. W. 540. ' " Graeme v. Adams. 23 Grat. (Va.) 225, 14 Am. Rep. 130. 18 — CoNTR.\cTS, Vol. 2 '^Irvin V. Mathews, 75 Ga. 739; Scofield V. ^IcNaught. 52 Ga_. 69; Ozmore v. Coram, 133 Ga. 250, 65 S. E. 448 ; Compton v. Compton, 5 La. Ann. 615; ^litchell v. Griffith, 22 Mo. 515; Hartranft v. Uhlinger, 115 Pa. St. 270, 8 Atl. 244; Evans v. Neg- lev, 13 Serg. & R. (Pa.) 218; Thomp- son v. Nesbit, 2 Rich. (S. Car.) 11. '"Newkirk v. Burson, 21 Ind. 129; Crawford v. Johnson, 11 Ind. 258; Torey v. Grant, 10 Sm. & M. (Miss.) 89; Parchman v. McKinnev, 12 Sm, & M. (Miss.) 631; Fisher v. Hoover, 3 Tex. Civ. App. 81, 21 S. W. 936. ""Hiner v. Whitlow, 66 Ark. 121, 49 S. W. 353, 74 Am. St. 74 ; Spinney V. Miller, 114 Iowa 210. 86 N. W. 317, 89 Am. St. 351; Tidball v. Schmeltz, 11 Kans. 440, 94 Pac. 794, 127 Am. St. 424: Scanlan v. Grim- mer 71 Minn. 351. 74 N. W. 146, 70 Am. St. 326; Terminal Bank v. Du- broff, 66 ^lisc. (N. Y.) 100. 120 N. Y. S. 609; Aggelson v. Middle States Loan &c. Co., 61 W. Va. 139. 56 S. E. 177; Stuckv v. Middle States Loan &c. Co. (W. Va.). 55 S. E. 996. See also, cases cited in note in 78 Am. Dec. 87. A purchaser, subject to the mortgage, of mortgaged premises at a sale of the same in bankruptcy, cannot question such mortgage on the ground of usury. "The reason of the rule is obvious. The statute § 973 CONTRACTS. 2/4 applies to the purchaser of a mere equity of redemption in prem- ises covered by a usurious mortgage/^ and to the vendee of prem- ises at a sale in bankruptcy.^" But when the amount of the mort- gage is not deducted from the purchase-price and when the grantee does not expressly assume the payment thereof he is in privity with the mortgagor and may interpose the defense of usury.®^ § 973. Discounting commercial paper. — Unless the dis- counting of commercial paper at a greater rate of interest than that permitted by law is declared usurious by statute, such paper may be bought and sold on such terms as may be agreed upon by the vendor and purchaser, however small the price paid, if there is a good faith transaction which is not a mere device to disguise a borrowing and lending of money.^* But it would seem that against usury is designed to give pro- tection to the borrower against the greed of the lender, and not to afford any mere adventurer who may hap- pen to sHp into the seat of the bor- rower a right to speculate on a viola- tion of law which has done him no harm and caused him no loss. When the borrower sells his interest in the land he has pledged for the payment of a usurious debt, subject to that debt, he acknowledges the validity of the debt and waives the defense of the statute." Higbee v. .Etna Build- ing &c. Assn., 26 Okla. Zll , 109 Pac. 236, quoting from Lee v. Stiger, 30 N. J. Eq. 610. "It is undoubtedly a sound proposition that, if one buys property and agrees to pay or take up a note afifected with usury as a part of the purchase price, he cannot maintain the defense of usury against the note, and for the very sufficient reason that as to him the obligation is not for the loan of money." Riley v. Sears, 154 N. Car. 509, 70 S. E. 997. "Scull V. Idler (N. J.), 81 Atl. 746. '" Higbee v. ^tna Building & Loan Assn., 26 Okla. 327, 109 Pac. 236. ^ Pearsall v. Kingsland, 3 Edw. Ch. (N. Y.) 195; Ford v. Washington Nat. Bldg. & Loan Invest. Assn., 10 Idaho 30, 76 Pac. 1010, 109 Am. St. 192; Maher v. Lanfrom, 86 111. 513; First Nat. Bank v. Drew, 226 111. 622, 80 N. E. 1082, 117 Am. St. 271; Stev- ens Inst. V. Sheridan, 30 N. J. Eq. 23; Smith v. Cross, 16 Hun (N. Y.) 487; Grove v. Great Northern Loan Co., 17 N. Dak. 352, 116 N. W. 345, 138 Am. St. 707. See also, Banks v. McClellan, 24 Md. 62, 87 Am. Dec. 594; National Mut. Bldg. &c. Assn. V. Retzman, 69 Nebr. 667, 96 N. W. 204; Newman v. Kershaw, 10 Wis. ZZZ; Ludington v. Harris, 21 Wis. 239. ^ Capital City Ins. Co. v. Quinn, 12> Ala. 558; Alabama Gold Life Ins. Co. V. Hall, 58 Ala. 1; Lloyd v. Keach, 2 Conn. 175, 7 Am. Dec. 256; Cole- hour V. State Sav. Inst., 90 111. 152; Shackleford v. Morriss, 1 J. J. ^larsh. (Ky.) 497; Metcalf v. Pil- cher, 6 B. Mon. (Ky.) 529; Newell v. National Bank, 12 Bush (Ky.) 57; Byrne v. Grayson, IS La. Ann. 457; People's Bank &c. Co. v. Fenwick Sanitarium (La.), 58 So. 523; Orch- ard V. School Dist. No. 70, 14 Nebr. 378, 15 N. W. 730; Donnington v. Meeker, 11 N. J. Eq. 362; Cobb v. Titus, 10 N. Y. 198; Holmes v. Wil- liams, 10 Paige (N. Y.) 326, 40 Am. Dec. 250; Cram v. Hendricks, 7 Wend. (N. Y.) 569; Rice v. Mather, 3 Wend. (N. Y.) 62; Utica Ins. Co. V. Bloodgood, 4 Wend. (N. Y.) 652; Siewert v. Hamel_, 91 N. Y. 199; Munn V. Commission Co., 15 Johns. (N. Y.) 44, 8 Am. Dec. 219; Bailey 275 USURY. § 974 such rule would not apply to a bill or note which had its inception only at the time of being discounted upon such usurious con- tract.*" § 974. Restricting commissions — Exempting building and loan associations. — It has also been held that the legislature may restrict the amounts charged for commissions, examinations and renewals in connection with a loan of money.'"' So, on the other hand, it is held as a general rule that the legislature has the right to exempt building and loan associations from the operation of the general usury laws," although there is a conflict of author- V. Smith, 14 Ohio St. 396, 84 Am. Dec. 385 ; Harick v. Jones, 4 McCord (S. Car.) 402; Ramsey v. Clark, 4 Humph. (Tenn.) 244, 40 Am. Dec. 645; Judv v. Gerard, 4 McLean (U. S.) 360, "Fed. Cas. No. 7571; Lafay- ette Bank v. State Bank, 4 McLean (U. S.) 208; Wycoff v. Longhead, 2 Dall. (U. S.) 92, 1 L. ed. 303; Crump V. Nicholas, 5 Leigh (Va.) 251; :Mosely v. Brown, 76 Va. 419. Such a transaction, while not usurious as between the maker and indorsee, may be usurious as between the indorser and indorsee. Scdburv v. Duffy (N. Car.), 74 S. E. 355. It is generally true, however, that when a corpora- tion borrows money and issues its bonds therefor at a discount the transaction will be considered a usu- rious one. Stirling v. Gogebic Lum- ber Co., 165 Mich. 498. 131 N. W. 109, 35 L. R. A. (N. S.) 1106 and note. Compare, however, with Clear- water Countv State Bank v. Bagley- Ogema Tel. Co., 116 Minn. 4, 133 N. W. 91, 36 L. R. A. (N. S.) 1132. °= Simpson v. Hefter, 42 Misc. (N. Y.) 482. 87 N. Y. S. 243. To same effect, Sabine v. Paine, 132 N.Y. S. 813, also holding that the note is pre- sumed to have been given for a good consideration.. ^ State V. Gary. 126 Wis. 135, 105 N. W. 792, 11 L. R. A. (N. S.) 174n. One lending his own money cannot charge a commission. Johnson v. Grayson, 230 Mo. 380, 130 S. W. 673. " Montgomery Mut. Bldg. Assn. v. Robinson. 69 Ala. 413; Bever v. Na- tional Bldg. &c. Assn., 131 .\la. 369. 31 So. 113; Welch v. Wadsworth, 30 Conn. 149, 79 Am. Dec. 236; Union Savings &c. Co. v. Dottenheim. 107 Ga. 606, 34 S. E. 217; Cook v. Equitable Bldg. &c. Assn., 104 Ga. 814, 30 S. E. 911; Winget v. Quincy Bldg. &c. Assn., 128 111. 67, 21 N. E. 12; McLaughlin v. Citizens' Bldg. &c. Assn., (il Ind. 264; International &c. Bldg. Assn. V. Wall, 153 Ind. 554, 55 N. E. 431 ; Racer v. International Bldg. &c. Assn. (Ind. App.), 63 N. E. 772, revd. 159 Ind. 697, 65 N. E. 1124; Iowa Savings &c. Assn. v. Heidt, 107 Iowa 297, 11 N. W. 1050, 43 L. R. A. 689, 70 Am. St. 197; LeMars &c. Bldg. Assn. v. Burgess, 129 Iowa 422, 105 N. W. 641 ; Spith- over V. Jefferson Bldg. &c. Assn., 225 Mo. 660, 125 S. W. 766, 26 L. R. A. (N. S.) 1135n; Zenith Bldg. &c. Assn. V. Heinbach, 11 Minn. 97, 79 N. W. 609; Livingston Loan &c. Assn. V. Drummond, 49 Nebr. 200, 68 N. W. 375; South Omaha Loan &c. Assn. V. Wireck, 63 Nebr. 598, 88 N. W. 694; Preston v. Rockey, 185 N. Y. 186. 11 N. E. 1156, 7 Am. & Eng. Ann. Cas. 315 ; Vermont Loan &c. Qo. V. Whithed. 2 N. Dak. 82. 49 N. W. 318; Cramer v. Southern Ohio Loan &c. Co., 72 Ohio St. 395. 74 N. E. 200, 69 L. R. A. 415, 2 Am. & Eng. Ann. Cas. 990; Spies v. Southern Ohio Loan &c. Co., 24 Ohio C. C. 40; Brooklyn Bldg. & L. Assn. V. Desnoyers, 26 Ohio C. C. 352; Car- michael v. Indemnity Sav. & L. Co., 15 Ohio Dec. 341; Smoot v. People's &c. Bldg. Assn.. 95 Va. 686. 29 S. E. 746. 41 L. R. A. 589; Bryan v. August &c. Loan Assn., 104 Va. 611, 52 S. E. 357; Bosang v. Iron Belt § 975 CONTRACTS. 276 ity upon this question."® § 975. Incidental expenses incurred in making or collect- ing loan not usury. — There are also numerous charges which the lender may require the borrower to pay unless specifically prohibited by law from making such charges, such as requiring the borrower to furnish an abstract of title and pay for having it examined when money is to be loaned on real estate."^ A pro- vision in a note or mortgage to the effect that upon default of payment of the loan the borrower shall bear the expense of col- lection, such as cost of suit, attorney's fees or the like, does not render the instrument usurious.'^" In case there is no usurious intent the lender may be reimbursed for his trouble, time, and expense in collecting or procuring the money for the loan.^^ Bldg. &c. Assn., 96 Va. 119, 30 S. E. 440 ; Archer v. Baltimore Bldg &c. Assn., 45 W. Va. Zl , 30 S. E. 241. ®^ Henderson Bldg. &c. Assn. v. Johnson, 88 Ky. 191, 10 Ky. L. 830, 10 S. \V. 787, 3 L. R. A. 289 ; Hender- son Bldg. &c. Assn. v. Zeller, 11 K3^ L. 702, 12 S. W. 945; Locknane v. United States Sav. &c. Co., 103 Ky. 265, 19 Ky. L. 1984, 44 S. W. 977; James v. James, 21 Ky. L. 1401, 55 S. W. 193; Mack v. Workingmen's Bldg. &c. Assn., 5 Ky. L. 520; Simp- son V. Kentucky Citizens' Bldg. &c. Assn., 101 Ky. 496, 41 S. W. 570, 42 S. W. 834; Safety Bldg. &c. Assn. v. Ecklar, 106 Ky. 115, 50 S. W. 50; Gordon v. Winchester Bldg. &c. Fund Assn., 12 Bush (Ky.) 110, 23 Am. Rep. 713; Citizens' &c. Land Co. v. Uhler, 48 Md. 455. °' See Ellenbogen v. Griffey, 55 Ark. 268, 18 S. W. 126; Humphrey v. Mc- Cauley, 55 Ark. 143, 17 S. W. 713; Goodwin V. Bishop, 145 111. 421, 34 N. E. 47; Cobe v. Guyer, 237 111. 516, 86 N. E. 1071, 139 111. App. 592; Daley V. Minnesota Loan &c. Co., 43 Minn. 517 45 N. W. 1100; White v. Dwyer, 31 N. J. Eq. 40 ; Dayton v. Moore, 30 N. J. Eq. 543. '"Shelton v. Aultman &c. Co., 82 Ala. 315, 8 So. 232; Williams v. Flowers, 90 Ala. 136, 7 So. 439, 24 Am. St. 772 ; Munter v. Linn, 61 Ala. 492; Athens Nat. Bank v. Danforth, 80 Ga. 55; Haldeman v. Massachu- setts &c. Ins. Co., 120 111. 390, 11 N. E. 526; Barton v. Farmer's &c. Bank, 122 111. 352, 13 N. E. 503; Matzen- baugh V. Troup, Zd 111. App. 261 ; Dorsey v. Wolff, 142 111. 589, 32 N. E. 495, 18 L. R. A. 428, 34 Am. St. 99; Farmers' &c. Bank v. Barton, 21 111. App. 403 ; Smith v. Silvers, 32 Ind. 321 ; Churchman v. Martin, 54 Ind. 380; Billingsley v. Dean, 11 Ind. 331; First Nat. Bank v. Canatsey, 34 Ind. 149; Weatherly v. Smith, 30 Iowa 131, 6 Am. Rep. 663;Gaar v. Louis- ville Banking Co., 11 Bush (Ky.) 180, 21 Am. Rep. 209; Duluth Loan &c. Co. V. Klovdahl, 55 Minn. 341, 56 N. W. 1119; Johnston Harvester Co. V. Clark, 30 Minn. 308, 15 N. W. 252; Bank of Commerce v. Fuqua, 11 Mont. 285, 28 Pac. 291, 14 L. R. A. 588, 28 Am. St. 461; National Bank V. Thompson, 90 Nebr. 223, 133 N. W. 199; Miner v. Paris Exchange Bank, 53 Tex. 559. The charging of an at- torney's fee may, however, be a mere device to evade the law. London Realty Co. v. Riordon, 133 N. Y. S. 595. " Bennett v. Ginsberg, 141 App. Div. (N. Y.) 66, 125 N. Y. S. 650. See also. Citizen's Bank v. Murphy, 83 Ark. 31, 102 S. W. 697; In re Fishel, Nessler & Co., 192 Fed. 412. See, however. Bank of Pocahontas v. Browning, 111 Va. 237, 68 S. E. 1000, where in consideration of an exten- sion of time and the dismissal of a 2yy USURY. § 976 § 976. Incidental expenses — Hiring agent to negotiate loan. — The borrower may also hire an agent to negotiate the loan for him and the compensation which he pays this agent can- not impress the transaction as between the borrower and lender with a taint of usury." In case the mediator between borrower and lender is the agent of the lender a different rule may apply. In this case it becomes a question of whether or not the lender is to profit either directly or indirectly by a commission or bonus paid to his agent. In case he has no knowledge of any commis- sion paid to his agent and does not knowingly receive any benefit from such commission he is not subject to the penalties of usury for the reason that he has neither usurious intent nor usurious profit." pending suit defendant executed a re- newal note which included $600 at- torney's fees contracted in prosecut- ing the suit and $87.74 costs. It was held usury. See also, Continental Nat. Bank v. Fleming (Mich.), 134 N. W. 656. "Fisher v. Porter, 23 Fed. 162; Equitable Rlort. Co. v. Craft, 58 Fed. 613; Ginn v. New England Mortg. &c. Co., 92 Ala. 135, 8 So. 388; May V. Flint, 54 Ark. 573, 16 S. W. 575; Baird v. Milliwood, 51 Ark. 548, 11 S. W. 881; Richardson v. Shattuck, 57 Ark. 347, 21 S. W. 478; Vahlberg v. Keaton, 51 Ark. 534, 11 S. W. 878, 4 L. R. A. 462, 14 Am. St. 12> ; Merck V. American F. L. M. Co., 79 Ga. 213. 7 S. E. 265; Telford v. Garrels, 132 111. 550, 24 N. E. 573; Haldeman v. Massachusetts Mut. &c. Ins. Co., 120 111. 390, 11 N. E. 526; Ballenger v. Bourland, 89 111. 513. 29 Am. Rep. 69; Pass v. New England &c. Co., 66 Miss. 365, 6 So. 239; Philo v. Butter- field, 3 Nebr. 256 ; Baldwin v. Dov- ing, 114 N. Y. 452, 21 N. E. 1007; Terminal Bank v. Dulroff, 66 Misc. (N. Y.) 100, 120 N. Y. S. 609. (In the above case the one who negotiated loan for the borrower was not only the agent of the borrower but was also connected with the lender.) Eddy V. Badger, 8 Biss. (U. S.) 238, Fed. Cas. No. 4276; Ottillie v. Waech- ter, ZZ Wis. 252. "Vahlberg v. Keaton, 51 Ark. 534, 11 S. W. 878, 4 L. R. A. 462, 14 Am. St. IZ ; Rogers v. Buckingham, ZZ Conn. 81 ; Dryfus v. Burnes, 53 Fed. 410; Cox V. Massachusetts Mut. Life Ins. Co., 113 111. 382; Massachusetts &c. Ins. Co. V. Boggs, 121 111. 119, 13 N. E. 550; Ballinger v. Bourland, 87 111. 513, 29 Am. Rep. 69; Smith v. Wolf, 55 Iowa 555, 8 N. W. 429; Stein V. Swensen, 44 Minn. 218, 46 N. W. 360; Philo v. Butterfield, 3 Nebr. 256; Manning v. Young, 28 N. J. Eq. 568; Lane v. Washington Life Ins. Co., 46 N. J. Eq. 316, 19 Atl. 618; Muir v. Newark Sav. Inst., 16 N. J. Eq. 537; Condit v. Baldwin. 21 N. Y. 219. 78 Am. Dec. 137; Phillips V. MacKellar, 92 N. Y. 34; Stillman V. Northrup, 109 N. Y. 473, 17 N. E. 379; Lee v. Chadsey, 3 Abb. App. Dec. (N. Y.) 43; Silverman v. Katz, 120 N. Y. S. 790; Williams v. Brvan, 68 Tex. 593, 5 S. W. 401; Call v. Palmer, 116 U. S. 98, 29 L. ed. 559, 6 Sup. Ct. 301 ; Palmer v. Call. 7 Fed. 1Z1, 2 McCrarv (U. S.) 522, aff'd., 116 U. S. 98, 29 L. ed. 559, 6 Sup. Ct. 301. See also. Short v. Pullen, 63 Ark. 385, 38 S. W. 1113; Whaley V. American Freehold Land Mortgage Co., 74 Fed. IZ, 20 C. C. A. 306, 42 U. S. App. 90 ; Knoup v. Carver, 74 N. J. Eq. 449, 70 Atl. 660 (principal had the benefit of the usury") ; P'ranzen v. Hammond, 136 Wis. 239, 116 N. W. 169, 19 L. R. A. (N. S.) 399, 128 Am. St. 1079. '§ 977 CONTRACTS. 278 § 977. Liability of principal for acts of agent — Rule further considered. — In cases of this character the rule has been thus stated : "If *an agent entrusted with money to invest at legal in- terest' exacts 'a bonus for himself as the condition of making a loan, without the knowledge or authority of his principal' such circumstance does 'not constitute usury in the principal nor affect the security in his hands'."^* However, it has been held that if an agent is authorized to make a loan to a person and is entrusted with a certain sum of money for that purpose, and he violates the usury laws, the principal is responsible for such unlawful exac- tions by his agent, and cannot maintain that the contract is not usurious. The rule of respondeat superior applies according to this view.'^ So, a principal may be bound by notice to his agent that a note purchased by the latter is tainted with usury." § 978. Time of payment. — One of the essentials of a usuri- ous contract is that something must be exacted for the use of a loan in excess of what is allowed by law. The mere fact that interest is made payable at frequent recurring intervals, such as semiannually or quarterly or at such times as the parties may agree upon, does not make the contract usurious where the amount charged is not in excess of that allowed by law." Nor '*Franzen v. Hammond, 136 Wis. 88 N. W. 845, 89 Am. St. 541. See 239, 116 N. W. 169, 19 L. R. A. (N. also, Beach v. Lattner, 101 Ga. 357, S.) 399, 128 Am. St. 1079. In the 28 S. E. 110; Ridgway v. Davenport, above case it is said : "The doctrine Zl Wash. 134, 79 Pac. 606. Knowl- above stated seems to be sound. It edge of the agent's acts is imputed is not within the apparent scope of to the lender. American Mortg. Co. a legitimate business agency to vio- v. Woodward, 83 S. Car. 521, 65 S. late the law. So where an agent E. 739. The device frequently em- loans money, exacting a bonus for ployed to effect usury is through the himself, the presumption is rather use of the name of some personal or that it is without the knowledge of family friend for whom the lender the principal than with such knowl- acts as ostensible agent, such agent edge. It logically follows that the exacting all the "commission"^ pos- circumstance of a principal accepting sible. When it appears that this ar- securities from his agent covering rangement is a mere scheme to con- the exact amount of money loaned ceal usury the taint of usury attaches and showing on their face that the to the transaction. France v. Munro, loan was legitimate and insisting 138 Iowa 1, 115 N. W. 577, 19 L. R. upon enforcing the same after obtain- A. (N. S.) 391n. ing knowledge of the excess the agent ^^ Haynes v. Gay, Zl Wash. 230, 79 charged solely for his own benefit, Pac. 794. does not make the transaction as to " Barnes v. Worlich, Cro. Jac. 25 ; the lender usurious." Mowry v. Shumway, 44 Conn. 493; ^"Robinson v. Sims, 85 Minn. 242, Hatch v. Douglas, 48 Conn. 116. 40 279 USURY, § 978 does an agreement to pay interest in advance constitute usury.''* As a general rule it is held not to be usurious to compute interest according to Rovvlett's Tables by which thirty days constitute a month or three hundred and sixty days a year.'" Nor is a trans- action rendered usurious by a provision to the effect that interest if not paid at maturity shall become principal and bear interest at the agreed rate.^ Am. Rep. 154; Quinn v. First Nat. Bank, 8 Ga. App. 235, 68 S. E. 1010 (interest may be made payable monthly) ; Goodrich v. Reynolds, 31 111. 490, 83 Am. Dec. 240; Ragan v. Day, 46 Iowa 239 ; Hawley v. How- ell, 60 Iowa 79, 14 N. W. 199 ; Brown V. Vandyke, 8 N. J. Eq. 795, 55 Am. Dec. 250; ]\Iowrv v. Bishop, 5 Paige (N. Y.) 98; Cook v. Courtright, 40 Ohio St. 248, 48 Am. Rep. 681; Meyer v. Muscatine, 1 Wall. (U. S.) 384, 17 L. ed. 564; Tallman v. Trues- dell, 3 Wis. 393. '* Auriol V. Thomas, 2 T. R. 52 ; ]\Iarsh V. Martindale, 3 Bos. & P. 154; Lloyd V. Williams, 2 W. Bl. 792; Bank of Newport v. Cook, 60 Ark. 288, 30 S. W. 35, 29 L. R. A. 761, 46 Am. St. 171 ; Vahlberg v. Keaton, 51 Ark. 534, 11 S. W. 878, 4 L. R. A. 462, 14 Am. St. Ti ; National Bank v. Smoot, 2 McArth. (D. C) 371; Mac- kenzie V. Flannerv, 90 Ga. 590, 16 S. E. 710; Telford v. Garrels, 31 111. App. 441; Maxwell v. Willett, 49 111. App. 564; Telford v. Garrels, 132 111. 550, 24 N. E. 573 ; McGill v. Ware, 4 Scam. (111.) 21; National Life Ins. Co. V. Donovan. 238 111. 283. 87 N. E. 356; Cobe v. Guver, 237 111. 516. 86 N. E. 1071, 139 111. App. 592; Eng- lish V. Smock, 34 Ind. 115, 7 Am. Rep. 215; Ticonic Bank v. Johnson. 31 Maine 414; Rose v. Mumford. 36 Nebr. 148. 54 N. W. 129; New York &c. Ins. Co. V. Sturges, 2 Cow. (N. Y.) 664; Manhattan Co. v. Osgood, 15 Johns. (N. Y.) 162; Bank of Uti- ca V. Phillips, 3 Wend. (N. Y.) 408; State Bank v. Hunter, 1 Dev. (N. Car.) 100; Thornton v. Bank of Washington, 3 Pet. (U. S.) 40; Fow- ler V. Equitable Trust Co., 141 U. S. 384, 35 L. ed. 786, 12 Sup. Ct. 1; Fleckner v. Bank of United States, 8 Wheat. (U. S.) 338, 5 L. ed. 631; Parker v. Cousins, 2 Grat. (Va.) 372, 44 Am. Dec. 388; Stribbling v. Bank of the Valley, 5 Rand. (Va.) 132. ™ Patton V. Bank of Lafayette, 124 Ga. 965, 53 S. E. 664, 5 L. R. A. (N. S.) 592; Planter's Bank v. Bass, 2 La. Ann. 430; Agricultural Bank v. Bissell, 12 Pick. (Mass.) 586; Plant- ers' Bank v. Snodgrass, 4 How. (Miss.) 573; Merchants' & Planters' Merchants' Bank v. Sarratt, 11 S. Car. 141, 57 S. E. 621, 122 Am. St. 562; Parker v. Cousins, 2 Gratt. (Va.) Z12, 44 Am. Dec. 388. See, however. Bank of Utica v. Wagar, 8 Cow. (N. Y.) 398; Utica Ins. Co. v. Tilman, 1 Wend. (N. Y.) 555. To same effect. Haas V. Flint, 8 Blackf. (Ind.) 67. If the statute provides that a certain per cent, is the legal rate of interest and that if a higher rate is charged there must be a special contract to that ef- fect, it will be usury to discount the principal more than the legal rate of interest unless there is some instru- ment in writing connected with the transaction which authorizes discount at a greater per cent. Merchants' & Planters' Bank v. Sarratt, 11 S. Car. 141. 57 S. E. 621, 122 Am. St. 562. '"Palm v. Fancher, 95 Miss. 785, 48 So. 818, Z2> L. R. A. (N. S.) 295. In the above case it is said: "Under the facts of this case there is no stipulation compelling the borrower to pay compound interest, except in the event of his failure to pay the annual interest at maturity. If the borrower, under the agreement in this case, fulfil his contract, it is impos- sible for the lender to collect more than the legal contractual rate of in- terest. * * * It would never be doubted that the parties might, under a separate agreement, after the inter- est became due and default therein, have executed a second note for the interest and made this second note for the arrearage in interest become 979 CONTRACTS. 280 § 979. Interest becoming principal — Weight of authority. — This doctrine, while the more rational, is not, however, entirely in accord with what is perhaps the weight of authority.*^ But interest-bearing principal. It would not be seriously contended that such an agreement would constitute usury, though interest was thereby com- pounded. * * * Conceding this, we fail to see why parties may not pro- vide in the same instrument for the compounding of interest, when the stipulations of the contract are not such as to require a compounding of interest as a part of the contract, not leaving any option or right in the bor- rower to avoid paying compound in- terest." To same effect, Carney v. Matthewson, 86 Ark. 25, 109 S. W. 1024; Scott V. Saffold, Zl Ga. 384; Merck v. American Freehold Land Mortgage Co., 79 Ga. 213, 7 S. E. 265 ; Ellard v. Scottish-American Mort- gage Co., 97 Ga. 329, 22 S. E. 893; Folly's Admr. v. Hook (Ky.), 113 S. W. 105; Pawling's Exrs. v. Pawling's Admrs., 4 Yates (Pa.) 220; Hale v. Hale, 1 Cold. (Tenn.) 233, 78 Am. Dec. 490; Woods v. Rankin, 2 Heisk. (Tenn.) 46; Lewis v. Paschal's Admr., n Tex. 315; Yaws v. Jones (Tex.), 19 S. W. 443. This rule has been made statutory in some states. Yndart v. Den, 116 Cal. 533, 48 Pac. 618, 58 Am. St. 200; Scottish-Amer- ican Mortg. Co. V. Ogden, 49 La. Ann. 8. 21 So. 116; Stanford v. Co- ram, 26 Alont. 285, 67 Pac. 1005. See also, statutes of Idaho, Missouri and Nevada. A contract which grants an option to pay before maturity and where the interest grows into a usuri- ous rate before such maturity is a usurious contract and does not fall within the rule announced by the courts permitting a higher rate by way of penalty after maturity where the debt is not paid at maturity. Ford v. Washington Nat. Bldg. &c. Assn., 10 Idaho 30, 76 Pac. 1010, 109 Am. St. 192. Compare with Smithwick v. Whitley, 152 N. Car. 366. 67 S. E. 914, 28 L. R. A. (N. S.) 113, and note, in which case the debtor desired to pay the obligation before maturity. The contract contained no provision for payment before maturity, and the creditor required payment of interest in full to maturity before he would discharge the obligation. The debtor paid and then brought suit to recover interest paid which was not due at the time the principal was discharged. Held, not usurious and that there could be no recovery. " Sir Thomas Meers Case, cited in 1 Atk. 304, and Talb. Cas. 40 (a covenant in mortgage that if interest were not paid when due it should be turned into principal and bear inter- est) ; Ossulston v. Yarmouth, 2 Salk. 449 (covenant in mortgage that if in- terest be behind six months, it should become principal and bear interest) ; Eslava v. Lepretre, 21 Ala. 504, 56 Am. Dec. 266 (agreement for con- troverting interest in arrears into principal) ; Hochmark v. Richler, 16 Colo. 263, 26 Pac. 818 (note included interest to maturity and was to bear interest thereafter) ; Drury v. Wolfe, 134 111. 294, 25 N. E. 626; Bowman V. Neely, 137 111. 443, 27 N. E. 758 (interest if not paid annually, to be- come principal, and bear interest) ; Breckenridge v. Brooks, 2 A. K. Marsh. (Ky.) 335, 12 Am. Dec. 401 (interest to be compounded annually if not paid) ; Henry v. Flagg, 13 Met. (Mass.) 64 (guaranty of compound interest) ; Hoyle v. Page, 41 Mich. 533, 2 N. _W. 665 (interest to be- come principal if not paid annually) ; Gay V. Berkey, 137 Mich. 658, 100 N. W. 920 (agreement before inter- est due to compound it) ; Mason v. Callender, 2 Minn. 350, 72 Am. Dec. 102 (after maturity of obligation in- terest to be paid on principal and in- terest) ; Lee v. Melby, 93 Minn. 4, 100 N. W. 379 (interest in arrears to bear interest thereafter) • Perkins v. Coleman, 51 Miss. 298 (interest to be made part of principal and to carry interest) ; Hager v. Blake, 16 Nebr. 12, 19 N. W. 780 (overdue interest to bear interest) ; Cox v. Smith, 1 Nev. 161, 90 Am. Dec. 476 (interest not paid when due to be added to prin- cipal and bear interest) ; Levens v. Briggs, 21 Ore. 7>2>2>, 28 Pac. 15, 14 L. R. A. 188 (interest not paid at the expiration of each year to be added to principal and bear like interest per 28l USURY. 980 while the authorities differ as to whether interest upon interest may be stipulated for at the time of the loan or contract they all agree that if after the interest is due an agreement is made that it shall in the future carry interest such agreement is valid and should be enforced.®" In accordance with this principle it has been held that upon renewing a note for a debt the accrued inter- est may be added to the principal and the combined amount form the principal of the new note without violating the usur}- laws."^ 980. Renewal bill or note — Extensions. — A renewal note is tainted with usury where the original note was so tainted,®* for a note is not purged of the taint of usury by a mere renewal of the annum from the date of expiration of each j'ear, to be paid in same man- ner as the original). See also. Cham- bers V. Goldwin, 9 Ves. Jr. 254; Drury v. Wolfe. 134 111. 294, 25 N. E. 626. Those jurisdictions which ad- here to the rule that interest upon in- terest cannot be stipulated for at the time of the loan or contract usually make interest coupons an exception to this rule treating them as valid written contracts for the payment of a definite sum of money on a given day which bear interest from matu- rity. New England Mortg. Co. v. Vader, 28 Fed. 265 ; Graham v. Fitts (Fla.), 43 So. 512; Drurv v. Wolfe, 134 111. 294. 25 N. E. 626; Bowman V. Neely, 137 111. 443, 27 N. E. 758; Hoyle V. Page. 41 Mich. 533, 2 N. W. 665; Lee v. Melby, 93 Minn. 4, 100 N. W. 379. "'Porter v. Price, 80 Fed. 655, 26 C C A. 70, 49 U. S. App. 295; Es- lava V. Lepretre, 21 Ala. 504, 56 Am. Dec. 266; Hochmark v. Richler, 16 Colo. 263, 26 Pac. 818; Camp v. Bates, 11 Conn. 487; Rose v. Bridgeport, 17 Conn. 243 ; Meeker v. Hill, 23 Conn. 574; Thayer v. Wilmington Star Min. Co.. 105 111. 540; Drury v. Wolfe, 134 111. 294. 25 N. E. 626; Niles V. Sinking Fund Comrs., 8 Blackf. (Tnd.) 158; Grimes v. Blake, 16 Ind. 160; Otis v. Lindsev. 10 Maine 315; Fitzhugh v. McPhersnn, 3 Gill. (Md.) 408; Banks v. McClclhn, 24 Md. 62. S7 Am. Dec. 594; Wilcox v. Rowland. 23 Pick. Mass.) 167; Von Hemert v. Porter, 11 Met. (Mass.) 210; Ferry v. Ferry, 2 Cush. (Mass.) 92; Hoyle v. Page, 41 ^lich. 533, 2 N. W. 665 ; Gay v. Berkey, 137 Mich. 658, 100 N. W. 920; Mason v. Cal- lender, 2 Minn. 350, 72 Am. Dec. 102; Perkins v. Coleman. 51 Miss. 298; Sanford v. Lundquist, 80 Nebr. 414, 118 N. W. 129, 18 L. R. A. (N. S.) 633n ; National Bank v. Thompson, 90 Nebr. 223, 133 N. W. 199 (separate notes given for past due interest) ; Young V. Hill, 67 N. Y. 162, 23 Am. Rep. 99; Van Benschooten v. Law- son, 6 Johns. Ch. (N. Y.) 313, 10 Am. Dec. 333 ; Mowrv v. Bishop, 5 Paige (N. Y.) 98; To'll v. Hiller. 11 Paige (N. Y.) 228; Kellogg v. Hick- ok, 1 Wend. (N. Y.) 521; Townsend v. Corning, 1 Barb. (N. Y.) 627; Forman v. Forman, 17 How. Prac. (N. Y.) 255; Howard v. Farley, 3 Robt. (N. Y.) 308; Hathawav v. Pleads, 11 Ore. 66. 4 Pac. 519; Bura v. Thompson, 2 Clark (Pa.) 143; Stokely V. Thompson, 34 Pa. St. 210; Pindall's Exrx. v. Marietta Bank, 10 Leigh (Va.) 481; Childers v. Deane, 4 Rand. (Va.) 406; Genin v. Inger- soll, 11 W. Va. 549; Craig v. McCul- loch, 20 W. Va. 148; Stansburv's Admr. v. Stansbury, 24 W. Va. 634; Barbour v. Tompkins, 31 W. Va. 410, 7 S. E. 1. 3 L. R. A. (N. S.) 715. "Bramblett v. Deposit Bank of Carlvle. 122 Ky. 324. 25 Ky. L. 1228, 92 S. W. 283, 6 L. R. A. (N. S.) 612, and note. See post. § 980. ** Pardoe v. Iowa State Nat. Bank, 106 Iowa 345. 76 N. W. 800; Clark V. Sisson. 11 N. Y. Super. Ct. 408; Macungie Sav. Bank v. Hottenstein, 89 Pa. St. 328. See Ives v. Bosley, 98o CONTRACTS. 282 note without changing the contract or restoring the overcharge of interest.*^ So, the original transaction is not purged by taking a renewal note, no rights of bona fide holders being involved;^"*' and a transaction may be usurious as to a renewal note, although it bears the legal rate of interest where the note is but an agree- ment to pay an old debt with usurious interest.*^ But an accom- modation note delivered in payment of another and usurious note is not a renewal of the latter so as to permit of the defense of usury ;^^ and if it is a new note, not tainted with usury, it may be valid in a bona fide holder's hands. ^® Nor will the usurious con- tract as to the original note be a defense to a renewal note while in the hands of a bona fide holder, where such holder could other- wise be free from such defense of usury."'* A bonus for extend- ing the time of payment of a note when bearing the full legal rate of interest precludes recovery of the bonus ;^^ and if the time of payment is extended, the test of whether the contract is usurious or not is the rate of interest borne by the debts for which there is 35 Md. 262, 6 Am. Rep. 411; Union Nat. Bank v. Fraser, 63 Miss. 231 ; Wild V. Howe, 74 Mo. 551; Denick V. Hubbard, 27 Hun (N. Y.) 347; Niblack v. Champeny, 10 S. Dak. 165, 72 N. W. 402 ; Fay v. Tower, 58 Wis. 286, 16 N. W. 558. "Nicrosi V. Walker, 139 Ala. 369, Zl So. 97; Johnson v. Grayson (Mo.), 130 S. W. 673. ^Nicrosi V. Walker, 139 Ala. 369, 37 So. 97. It may be otherwise where the renewal note is given to a bona fide purchaser of the old note. Arm- strong V. Middaugh, 74 Misc. (N. Y.) 45, 133 N. Y. S. 647. *^ Citizens' Nat. Bank v. Donnell, 195 U. S. 369, 49 L. ed. 238, 25 Sup. Ct. 49, affg. 172 Mo. 384, 72 S. W. 925. "No matter how many renew- als may have been made, if the bank has charged a greater rate of inter- est than the law allows, it must, if the forfeiture clause of the statute be relied on, and the matter is thus brought to the attention of the court, lose the entire interest which the note carries or which has been agreed to be paid." Brown v. Marion Nat. Bank, 169 U. S. 416, 42 L. ed. 801, 18 Sup. Ct. 390. The original taint at- taches to all consecutive obligations or securities growing out of the orig- inal vicious transaction, and none of the descendant obligations, however remote, can be free from it, if the descent can be traced. Thompson v. Prettyman, 231 Pa. 1, 79 Atl. 874. ^ Palmer v. Carpenter, 53 Nebr. 394, 12, N. W. 690. '* Flight v. Reed, 1 H. & C. 703; Houser v. Planters' Bank, 57 Ga. 95. ""Cuthbert v. Haley, 8 T. R. 390; Masterson v. Grubbs, 1<^ Ala. 406; Mitchell v. McCullough, 59 Ala. 179; Palmer v. Carpenter, 53 Nebr. 394, T2> N. W. 690 ; Kent v. Walton, 7 Wend. (N. Y.) 256; Smalley v. Doughty, 6 Bosw. (N. Y.) 66; Brinckerhofif v. Foote, 1 Hoff. Ch. (N. Y.) 291; Powell V. Waters, 8 Cow. (N. Y.) 669; Smith v. White (Tex. Civ. App.), 25 S. W. 809; Keys v. Cle- burne Bldg. &c. Assn. (Tex. Civ. App.), 25 S. W. 809; Palmer v. Call, 2 McCrary _(U. S.) 522, 7 Fed. IZl . °^ Missouri Real Estate Syndicate v. Sims, 179 Mo. 679, 78 S. W. 1006; Cooper V. Rothman (Fla.), 57 So. 985; Milholen v. Meyer, 161 Mo. App. 491, 143 S. W. 540. See also. Green V. Lake, 2 Mackey (D. C.) 162. 283 USURY. 981 a forbearance.®" But the taking of usury for forbearance in ex- tending the time is held not to make usurious a note and mortgage originally valid. °^ § 981. Corporations. — Corporations are generally subject to the usury laws to the same extent as in the case of individuals,®* although there are exceptions,®' and where this defense is not available to a corporation it will not be sustained when urged by indorsers in actions against them.°° Again, by the national bank- ing act, the local law as to the rates of discount controls banking associations, unless a special rate is allowed to banks of issue organized under the state laws, or unless no rate is specified, in which case the rate is fixed by the state statutes, and if a rate is charged in violation of these provisions it will be a good de- fense to the recovery of interest;®^ but under the federal banking act the principal of the note cannot be avoided by reason of usury ''Kassing v. Ordway, 100 Iowa 611, 69 N. W. 1013. "^ ^lorse V. Wellcome, 68 Minn. 210, 70 N. \y. 978. 64 Am. St. 471. *** National Bank v. Evre, 52 Iowa 114, 2 N. W. 995; Elaine Bank v. Butts, 9 Mass. 49; Farmers' & Trad- ers' Bank v. Harrison, 57 ]\Io. 503; Bank of Utica v. Hillard. 5 Cow. (N. Y.) 153; Niagara County Bank v. Baker, 15 Ohio St. 68; Chafin v. Lin- coln Sav. Bank, 7 Heisk. (Tenn.) 499. '* Ex parte Aynsworth, 4 Ves. 678 ; Freese v. Brownell, 35 N. J. L. 285, 10 Am. Rep. 239. See 2 Cummings & Gilberts Gen. Laws N. Y., p. 1994; Freese v. Brownell, 35 N. J. L. 285, 10 Am. Rep. 239. '"^ifaine Bank v. Butts, 9 Mass. 49; Union Nat. Bank v. Wheeler, 60 N. Y. 612 ; Rosa v. Butterfield, 33 N. Y. 665; Stewart v. Bramhall, 11 Hun (N. Y.) 139; Luddington v. Kirk, 16 Misc. (N. Y.) 301, 74 N. Y. St. 295, 37 N. Y. S. 1141, affd., 17 Misc. (N. Y.) 129, 39 N. Y. S. 419; Chafin v. Lincoln Sav. Bank, 7 Heisk. (Tenn.) 499. But see Hungerford's Bank v. Potsdam &c. R. Co., 10 Abb. Pr. (N. Y.) 24, revg. 9 Abb. Pr. (N. Y.) 124; Hungerford's Bank v. Dodge, 30 Barb. (N. Y.) 626. 19 How. Pr. (N. Y.) 39; Bock v. Lauman, 24 Pa. St. 435. As to sureties, see Freese v. Brownell, 35 N. J. L. 285, 10 Am. Rep. 239. As to accommodation ac- ceptor who is liable as a surety, see First Nat. Bank v. Morris, 1 Hun (N. Y.) 680. ^'Tomblin V. Higgins, 53 Nebr. 92, 73 N. W. 461, 68 Am. St. 596; Nor- folk Nat. Bank v. Schwenk, 46 Nebr. 381, 64 N. W. 1073; Wachovia Nat. Bank v. Ireland, 122 N. Car. 571, 29 S. E. 835; Guthrie v. Reid, 107 Pa. St. 251. See First Nat. Bank v. Mc- Carthy, 18 S. D. 218, 100 N. W. 14; First Nat. Bank v. Ledbetter (Tex.), 34 S. W. 1042; U. S. Rev. St. (1901), §§ 5197, 5198. See Citizens' Nat. Bank v. Donnell, 195 U. S. 369, 49 L. ed. 238. 25 Sup. Ct. 49. aflfg. 172 Mo. 384, 72 S. W. 925; First Nat. Bank v. Lasater, 196 U. S. 115, 49 L. ed. 408, 25 Sup. Ct. 206, revg. (Tex. Civ. App.), 72 S. W. 1054. This act supersedes state usury laws as to na- tional banks. Nat. Bank v. Evre, 52 Iowa 114, 2 N. W. 995; Davis v. Ran- dall, 115 Mass. 547, 15 Am. Rep. 146; Central Nat. Bank v. Pratt, 115 Mass. 539, 15 Am. Rep. 138; Bramhall v. Adantic Nat. Bank, 36 N. J. L. 243; First Nat. Bank v. Garlinghouse, 22 Ohio St. 942, 10 Am. Rep. 751. Com- pare Hintermister v. First Nat. Bank, 3 Hun (N. Y.) 345, 5 Thomp. & C. 98i CONTRACTS. 284 charged by a national bank.°^ Nor can a bank, by offering to remit the excess, evade the statute as to forfeiture on the entire interest.®^ § 982. Remedies under national banking act. — But it is held that an action for the statutory penalty is the only remedy for the recovery of usury/ It has also been held that the na- tional banking act supersedes all state laws on the subject of usury, and the national bank which acquires, in good faith for value, commercial paper void between the parties for usury may recover thereon.^ § 983. Rule as to the application of payments of usury in- terest. — The rule relative to the application of payments of 484 (declaring the contract void for usury) ; Importers' &c. Nat. Bank v. Littell, 46 N. J. L. 506. Compare First Nat. Bank v. Lamb, 50 N. Y. 95, 10 Am. Rep. 438, revg. 57 Barb. (N. Y.) 429. For permitting a mis- demeanor, see Slaughter v. First Nat. Bank, 109 Ala. 157, 19 So. 430. Ac- commodation and business paper are within the intent of the United States statutes. Johnson v. National Bank, 74 N. Y. 329; Barbour v. National Exch. Bank, 45 Ohio St. 133, 12 N. E. 5; Barrett v. National Bank, 85 Tenn. 426, 3 S. W. 117; Hill v. Barre, 56 Vt. 582; Rev. St. U. S., §§ 5197, 5198. ** Stephens v. Monongahela Nat. Bank, 111 U. S. 197, 28 L. ed. 399, 4 Sup. Ct. 336. "(1) Where illegal interest has been knowingly stipu- lated for, but not paid, there only the sum lent without interest can be re- covered. (2) Where such illegal in- terest has been paid, then twice the amount so paid can be recovered in a penal action of debt or suit in the na- ture of such action, brought by the person paying the same, or their le- gal representative." Cox v. Beck, 83 Fed. 269 ; Chase Nat. Bank v. Faurot, 149 N. Y. 532, 44 N. E. 164, 35 L. R. A. 605. See Second Nat. Bank v. Fitzpatrick, 27 Ky. L. 283, 84 S. W. 1150. ** Citizens' Nat. Bank v. Donnell, 195 U. S. 369, 49 L. ed. 238, 25 Sup. Ct. 49, affg. 172 Mo. 384, 72 S. W. 925; Rev. Stat. U. S., § 5198, U. S. Comp. Stat. 1901, p. 3493. 'Cox V. Beck, 83 Fed. 269; Marion Nat. Bank v. Thompson, 101 Ky. 277, 19 Ky. L. 436, 40 S. W. 903; Mont- gomery V. Albion Nat. Bank, 50 Nebr. 652, 70 N. W. 239; Lanham v. Bank, 46 Nebr. 663, 65 N. W. 786 ; Norfolk Nat. Bank v. Schwenk, 46 Nebr. 381, 64 N. W. 1073; Nat. Bank v. Du- shane, 96 Pa. St. 340 ; Comanche Nat. Bank v. Dabney (Tex.), 44 S. W. 413; Driesbach v. National Bank, 104 U. S. 52, 26 L. ed. 658; Barnet v. National Bank, 98 U. S. 555, 25 L. ed. 212. Examine Citizens' Nat. Bank V. Donnell, 195 U. S. 369, 49 L. ed. 238, 25 Sup. Ct. 49, affg. 172 Mo. 384, 72 S. W. 925. Demand is unnecessary to recover penalty. First Nat. Bank V. Turner, 3 Kan. App. 352, 42 Pac. 936. ^ "The right to create and protect national banks, although not named in the constitution, is well established by the decisions of the highest fed- eral court, and any attempt to limit the powers and functions of such banks is an attempt to limit a law which is 'necessary and proper' for carrying into execution powers vested by the constitution in the government of the United States. In view of the dual character of our government, the one state and the other national, when the latter has jurisdiction over a subject, its action, of necessity, is paramount, and, to the extent of any 285 USURY. § 983 usurious interest is determined, in the main, by statutory enact- ment. In many states a payment of usurious interest is applied first to the interest which is lawfully due, and second to the prin- cipal, regardless of any agreement between the parties.^ Conse- conilict between state and national legislation, must render nugatory all state acts repugnant thereto. The argument that a state cannot grant an exceptional privilege to a state bank because it would be class legis- lation is foreclosed by the settled law that the state banks knowingly taking usury forfeit the interest only, the same as national banks; whereas, all other corporations, as well as all per- sons and firms, forfeit both principal and interest. The right to give this exclusive privilege to state banks is thoroughly supported by authority. A classification is justified which frees state banks from injurious competi- tion with national banks by placing the former in the same position as the latter with reference to the subject of usurj-. Without prolonging the discussion, I think that the national banking act was intended to super- sede all state laws on the subject of usury as applied to national banks, and that Congress had power to pass the act as thus construed." Schle- singer v. Gilhooly, 189 N. Y. 1, 81 N. E. 619. See the vigorous dissent- ing opinion of Cullen, C. J., and sub- sequent explanation. To same effect, Schlesinger v. Kelly, 114 App. Div. (N. Y.) 546, 99 N. Y. S. 1083. Com- pare the foregoing cases with that of Schlesinger v. Lehmaier, 191 N. Y. 69, 83 N. E. 657, 16 L. R. A. (N. S.) 626n, 123 Am. St. 591. This case decides that when a national bank knowingly purchases a negotiable in- strument affected with usury, such instrument is subject to the defense of usury to the same extent as if it remained in the hands of the orig- inal payee. The foregoing cases would seem to leave the law in New York in question, although the effect of the Gilhooly case as stated in the text is the interpretation given it by Cullen, C. J., in the subsequent Leh- maier case. However, in the latter case (Schlesincrcr v. Lehmaier, 191 N. Y. 69, 83 N. E. 657, 16 L. R. A. (N. S.) 626, 123 Am. St. 591) Bartlett, J., explains that he concurred with the dissenting opinion of Cullen, C. J., in the prior case (Schlesinger v. Gilhooly, \69 N. Y. 1, 81 N. E. 619;, except as to the effect of the nego- tiable instruments law, and it seems that he concurred "in result, on the ground that under the negotiable in- struments law a bona fide purchaser takes a note free from the defense of usury." Since it does not appear that any judge other than Bartlett accepted the view expressed by him the decision in the Gilhooly case rests on a very insecure basis, for it thus becomes apparent that a majority of the court actually dissented from the reasoning and conclusions expressed in the opinion reported as the prevail- ing one, i. e., that a national bank which became the innocent and good- faith purchaser of a negotiable in- strument aflfected with usury was con- trolled exclusively by the federal laws on usury. For a case holding that one who maintains a place of busi- ness in which the law concerning usury is habitually violated is guilty of keeping a disorderly house, see State V. Martin, 77 N. J. L. 652. 73 Atl. 548, 24 L. R. A. (N. S.) 507n, 134 Am. St. 814. For a vigorous criticism of this case see the note in 134 Am. St. 819. 'Nicrosi v. Walker, 139 Ala. 369, 37 So. 97 (true even though the pay- ments are termed interest) ; Gage v. J. F. Smyth ^lercantile Co., 160 Fed. 425. 87 C. C. A. 377 (construing Missouri statute) ; Atlanta Sav. Rank v. Spen- cer. 107 Ga. 629, 33 S. E. 878 ; Quinn v. First Nat. Bank, 8 Ga. App. 235, 68 S. E. 1010 (suit on renewal notes) ; IMadsen v. Whitman, 8 Idaho 762, 71 Pac. 152 (excessive "premiums" ap- plied to principal) ; Brown v. Lacy, 83 Ind. 436; New Hampshire Bank- ing Co. v. Waller, 5 Kans. App. 881, 47 Pac. 543; Crenshaw v. Crenshaw, 24 Kv. L. 600. 69 S. W. 711; Cren- shaw V. Duff's Exr.. 113 Kv. 912, 24 Ky. L. 718, 69 S. W. 962; Hill v. Cornwall's Assignee, 95 Ky. 512. 16 983 CONTRACTS. 286 quently, where a payment of usurious interest equals the amount of interest lawfully due, a suit to foreclose because of failure to pay interest is premature and cannot be maintained.* And if the payment of usurious interest does not exceed the amount of in- terest lawfully due there is nothing to be applied to the principal.'* The borrower has a right to elect that the excessive interest be applied to the principal, so long as any part of the principal sum re- mains due and unpaid.^ Consequently, usury will not be regarded as having been paid until the legal interest and principal have been satisfied.^ On the other hand, when the principal, with lawful interest thereon, has been repaid the debtor is entitled to have the obligation discharged.^ Nor is any tender of any amount on the part of the debtor necessary.^ The creditor is required to allow all payments of interest in excess of the legal rate as credit upon the principal.^** However, a payment of usurious interest on one Ky. L. 97, 26 S. W. 540; Kendall v. Crouch, 88 Ky. 199. 10 Ky. L. 993, 11 S. W. 587; Ellis v. Brannin's Exrs., 1 Duv. (Ky.) 48; Stone v. Mc- Connell, 1 Duv. (Ky.) 54; New York Security &c. Co. v. Davis, 96 Md. 81, 53 Atl. 669; Kohn v. Kelley, 76 N. J. Eq. 132, 79 Atl. 419, affd. 11 N. J. Eq. 273, 79 Atl. 686 (mortgage foreclosure proceeding) ; Baum v. Daniels, 55 Tex. Civ. App. 273, 118 S. W. 754. Under the Texas stat- ute, however, one may waive the right to have usurious interest cred- ited on the principal, and seek an abatement of further interest. Taylor v. Shelton (Tex. Civ. App.), 134 S. W. 302. When a borrower goes into a court of equity to seek relief from a usurious contract, he should be required to pay the amount of the principal and lawful interest as a condition for such relief. Bolen v. Wright, 89 Nebr. 116, 131 N. W. 185. ^Leipziger v. VanSaun, 64 N. J. Eq. yi, 53 Atl. 1. "Munford v. McVeigh's Admr., 92 Va. 446, 23 S. E. 857. "Devon v. Naunheim's Admr., 7 Ky. L. 222. ^ Paine v. Levy, 142 Kv. 619, 134 S. W. 1160; Hill v. Deposit Bank, 10 Ky. L. 448. See also, Werner v. Lorentzer, 3 Alaska 275; Murphy v. Citizen's Bank, 82 Ark. 131, 100 S. W. 894, 11 L. R. A. (N. S.) 616n. See, however, Taylor v. Shelton (Tex. Civ. App.), 134 S. W. 302. * Hughson V. Newark Mortg. Loan Co., 57 N. J. Eq. 139, 41 Atl. 492. See, however, Shawmut Commercial Paper Co. v. Brigham (Mass.), 97 N. E. 636. "Jordan v. Warner's Estate, 107 Wis. 539, 83 N. W. 946. "Humphrey v. McCauley, 55 Ark. 143, 17 S. W. 713; Madsen v. Whit- man, 8 Idaho 762, 71 Pac. 152 ; Woolley V. Alexander, 99 111. 188; Musselman V. McElhenny. 23 Ind. 4, 85 Am. Dec. 445; Alexander v. First Nat. Bank, 114 Ky. 683, 71 S. W. 883; Equitable Loan &c. Assn. v. Smith, 23 Ky. L. 1567, 65 S. W. 609; New York Se- curity &c. Co. V. Davis, 96 Md. 81, 53 Atl. 669; Spooner v. Roberts, 180 Mass. 191, 62 N. E. 4; Citizens' Nat. Bank v. Donnell, 172 Mo. 384, 72 S. W. 925; Rawles v. Reichenbach, 65 Nebr. 29, 90 N. W. 943; Knox v. Williams, 24 Nebr. 630, 39 N. W. 786, 8 Am. St. 220; Hughson v. Newark Mortg. Loan Co., 57 N. J. Eq. 139, 41 Atl. 492; Arnold v. Mac- donald, 22 Tex. Civ. App. 487, 55 S. W. 529; Fowler v. Equitable Trust Co., 141 U. S. 384, 35 L. ed. 786, 12 Sup. Ct. 1 (under Illinois law). 28/ USURY. 984 note cannot be considered as a part payment on another note." § 984. Recovery of usurious interest. — The common law permitted one who had paid usurious interest to recover the same.^^ This rule obtains in many states, because the common- law principle has either been adopted or exists in the form of a statute.^^ Should the debtor pay the usurious obligation by a transfer of realty it has been held that he may recover the differ- ence between the principal legally due with legal interest thereon and the actual value of the realty conveyed." The statutes of some jurisdictions provide that the debtor may recover double the amount of usurious interest paid." But, under such a statute, there can be no recovery in the absence of actual payment.^® Thus it has been held that the giving of a new note which includes "Carter v. Farthing, 115 Ky. 123, 24 Ky. L. 1927, 72 S. W. 745; In re Maher's Appeal, 91 Pa. St. 516. "Clarke v. Shee, Cowp. 197. The above case refused to follow Tom- kins V. Bernet, 1 Salk. 22. This lat- ter refused to release on the ground that the parties were in pari delicto. First Nat. Bank v. Davis, 135 Ga. 687, 70 S. E. 246, Z6 L. R. A. (N. S.) 134; Wheaton v. Hibbard, 20 Johns. (N. Y.) 290, 11 Am. Dec. 284. "Baum V. Thorns. 150 Ind. 378, 50 N. E. 357. 65 Am. St. 368; Green v. National Building &c. Assn. (Kv.), 64 S. W. 751; Kirkpatrick v. Wherritt, 7 B. Mon. (Ky.) 388; Shannon v. Georgia &c. Loan Assn., 78 IMiss. 955, 30 So. 51, 57 L. R. A. 800, 84 Am. St. 657; Brown v. Mcintosh, 39 N. J. L. 22 ; Cheek v. Iron Belt Bldg. &c. Assn.. 127 N. Car. 121, 2,7 S. E. 150, denying rehearing, 126 N. Car. 242, 35 S. E. 463; Smith v. Old Do- minion Bldg. &'C. Assn., 119 N. Car. 249, 26 S. E. 41; contra, Latham v. Washington &c. Loan Assn., 77 N. Car. 145; Wilson v. Selbie, 7 S. Dak. 494, 64 N. W. 537 ; Rosetti v. Lozano, 96 Tex. 57, 70 S. W. 204; Bexar Bldg. &c. Assn. v. Robinson, 78 Tex. 163, 14 S. W. 227, 9 L. R. A. 292. 22 Am. St. 36; Baum v. Daniels, 55 Tex. Civ. App. 273, 118 S. W. 754 (may recover in absence of statute) ; Nichols v. Bellows, 22 Vt. 581, 54 Am. Dec. 85. " First Nat. Bank v. Davis, 135 Ga. 687, 70 S. E. 246, 36 L. R. A. (N. S.) 134 and note; Paducah Banking Co. v. Ragsdale, 24 Ky. L. 683, 69 S. W. 796. ^"Carter v. Life Insurance Co., 142* N. Car. 338, 30 S. E. 341 ; Rosetti v. Lozano, 96 Tex. 57, 70 S. W. 204; Smith v. Chilton, 90 Tex. 447, 39 S. W. 287. This is also true of the Federal law governing National Banks. The amount recoverable de- pends upon the statutes of the various states to which reference must be had. Melton v. Snow, 24 Okla. 780, 104 Pac. 40. See Turregano v. Bar- nett (La.), 53 So. 884 (whole amount of interest paid recoverable). A stat- ute authorizing a recovery of double the amount of usurious interest paid has been construed as not limiting the right of recovery to double the amount of interest paid in excess of the lawful contractual rate, but dou- ble the whole amount of interest received. Tavlor v. Shelton (Tex. Civ. App.), 134 S. W. 302; Nocona Nat. Bank v. Bolton (Tex. Civ. App.), 143 S. W. 242. "ITnion Alortg. &c. Co. v. Hagood, 97 Fed. 360 (South Carolina con- strued) : Chas. S. Rilev & Co. v. W. T. Seers & Co., 154 N. Car. 509, 70 S. E. 997. § 98; CONTRACTS. 288 usurious interest is not payment." Nor can there, as a general rule, be a recover}' of the usurious interest unless the amount actually paid exceeds the amount lawfully due.^® Statutes which provide for the recovery of usurious interest usually fix a com- paratively short period of limitation within which such action must be brought. ^^ And no action can be maintained after the expiration of the period fixed by statute.-" The statutes of other jurisdictions merely prevent the enforcement of the usurious agreement while it remains executory, and after the payment of the entire debt, usury and all, the usurious interest cannot be recovered.^^ § 985. Recovery of usurious interest — Rights as affected by federal statute. — The federal statutes provide that a per- son paying usurious interest to a national bank may recover twice the amount of the usury thus paid." This is true regardless of "Rushing v. Bivens, 132 N. Car. 273, 43 S. E. 798 (the usury must be paid in money or money's worth). "Kendall v. Davis (sub nomine Josey V. Davis), 55 Ark. 318, 18 S. W. IBS; Alexander v. First Nat. Bank, 114 Ky. 683, 71 S. W. 883; Crenshaw v. Duff's Exr., 113 Ky. 912, 24 Ky. L. 718, 69 S. W. 962; Cambron v. Boldrick, 147 Kv. 524, 144 S. W. 374. Under this rule sums intended for the payment of usurious interesf will be applied to the prin- cipal and lawful interest. See, how- ever, Tavlor v. Shelton (Tex. Civ. App.), 134 S. W. 302; Nocona Nat. Bank v. Bolton (Tex. Civ. App.), 143 S. W. 242; Cotton States Bldg. Co. v. Peightal, 28 Tex. Civ. App. 575, 67 S. W. 524. "In the following jurisdiction the action must be brought within six years : Steere v. Oakley, 5 Pa. Super. Ct. 46. In the following one year: Gunby v. Armstrong, 133 Fed. 417, 66 C. C. A. 627 (under Louisiana statute) ; Gramling v. Pool, 111 Ga. 93, 36 S. E. 430; Burnside v. Mealer, 26 Ky. L. 79, 80 S. W. 785; Parker v. Zwaigart, 22 Ky. 113, 56 S. W. 678; Rvan v. Logan Countv Bank, 21 Ky. 1518, 35 S. W. 714; Chadwick v. Menard, 104 La. 38. 28 So. 933; Palen v. Johnson, 46 Barb. (N. Y.) 21; Washington Nat. &c. Assn. v. Wend- ling, 102 Va. 279, 46 S. E. 296. In the follovv-ing within two years : Rob- erts V. Life Ins. Co., 118 N. Car. 429, 24 S. E. 780. ^Roberts v. Life Ins. Co., 118 N. Car. 429, 24 S. E. 780. ^Hadden v. Innes, 24 111. 381; Tompkins v. Hill, 28 111. 519; Per- kins V. Conant, 29 111. 184, 81 Am. Dec. 305; Manny v. Stockton, 34 111. 306; Pitts V. Cable, 44 111. 103; Lake V. Brown, 116 111. 83, 4 N. E. Ill; Mason v. Pierce, 142 111. 331, 31 N. E. 503; Anderson v. Chicago Trust &c. Bank, 195 111. 341, 63 N. E. 203, affg. 93 III. App. 347; Drake v. Lux, 233 111. 522, 84 N. E. 693; Citizens' State Bank v. Frazee, 9 Kans. App. 889, 58 Pac. 280; Thompson v. Ware, 8 B. Mon. (Ky.) 26; Williamson v. Cole, 26 Ohio St. 207; Hopkins v. West, 83 Pa. St. 109. See also. Fel- lows V. Christensen (S. Dak.), 133 N. W. 814, construing Wisconsin statute. Suit by payee, statute pro- viding that no interest could be re- covered on a usurious contract. Held, "contract either was or was not usurious at its inception, and_ pay- ments or want of payments in no manner changed same." "First Nat. Bank v. Davis, 135 Ga. 687, 70 S. E. 246, 36 L. R. A. (N. 289 USURY. § 98: whether the payment is made by an artificial or a natural person."' Under this statute only interest which has been paid may be re- covered."* Consequentl}', it has been held that the including of usurious interest in the principal of a renewal note,*° the charging of unlawful rate of interest on an open account,-" or the deduc- tion of interest in advance,"^ does not amount to payment as defined by the statute, and that the debtor's remedy lies in his right to resist payment of so much of the unpaid obligation as exceeds the principal advanced. So the deducting of interest at lawful rate by a national bank from the amount credited to one for whom a note is discounted is not a payment of unlawful inter- est which will sustain an action to recover double its amount.^® Even where usurious interest has been retained by a bank there exists from the origin of the loan, from the retaining of the first discount, through all the renewals, up to the principal or up to the time of entering judgment, a locus poenitentiae for the party taking the excessive interest.^" Nor can the statutory penalty be recovered wdien suit is brought and judgment rendered for S.) 134; First Nat. Bank v. Barnett, 51 Nebr. 397, 70 N. W. 937. *^ Albion Nat. Bank v. Montgom- ery, 54 Nebr. 681, 74 N. W. 1102. ^ First Nat. Bank v. Davis, 135 Ga. 687, 70 S. E. 246, 36 L. R. A. (N. S.) 134; Talbot v. First Nat. Bank, 185 U. S. 172, 46 L. ed. 857, 22 Sup. Ct. 612; Brown v. Marion Nat. Bank, 169 U. S. 416, 42 L. ed. 801, 18 Sup. Ct. 390. "* Sydner v. ^It. Sterlins? Nat. Bank, 94 Ky. 231, 21 S. W. 1050; Lanham V. National Bank, 42 Nebr. 757, 60 N. W. 1041; Osborn v. First Nat. Bank, 175 Pa. St. 494, 34 Atl. 858; Daingerfield Nat. Ban!: v. Ragland, 181 U. S. 45, 45 L. ed. 738, 21 Sup. Ct. 536; Brown v. Marion Nat. Bank, 169 U. S. 416, 42 L. ed. 801, 18 Sup. Ct. 390. ""Davey v. National Bank, 8 S. Dak. 214, 66 N. W. 122. "Citizens' Nat. Bank v. Gentry (sub nomine Forman's Assignee), 111 Kv. 206, 63 S. W. 454, 56 L. R. A. 673n. See 63 S. W. 757 for dis- senting opinion. Marion National Bank v. Thompson. 101 Kv. 277. 19 Ky. L. 436. 40 S. W. 903 ; 'Haseltine V. National Bank, 155 Mo. 66, 56 S. 1*^ — Contracts. Yoi.. 2 W. 895; Hade v. McVay, 31 Ohio St. 231. ** Citizens' Nat. Bank v. Gentrv, 111 Ky. 206, 63 S. W. 454, 56 L. R. A. 673; Haseltine v. National Bank, 155 Mo. 66, 56 S. W. 895 (writ of error dismissed, 183 U. S. 130, 46 L. ed. 117, 22 Sup. Ct. 49; Lanham V. National Bank, 42 Nebr. 757, 60 N. W. 1041; Auburn Nat. Bank v. Lewis, 81 N. Y. 15, 75 N. Y. 516, 31 Am. Rep. 484; Higley v. National Bank, 26 Ohio St. 75, 20 Am. Rep. 759. ^Duncan v. First National Bank, Fed. Cas. No. 4135. To same ef- fect, Higlev V. National Bank, 26 Ohio St. 75. 20 Am. St. 759. Com- pare Citizens' Nat. Bank v. Donnell, 195 IT. S. 369, 49 L. ed. 238. 25 Sup. Ct. 49, in which it is said, "We per- ceive no warrant in the statute or the cases for the contention that the bank, when it brings the action and is met by the plea of usury, may avoid the forfeiture imposed bv Rev. Stat.. § 5198, U. S. Comp. Stat. 1901, p. 3493, in absolute terms, by then declaring an election to remit the ex- cessive interest." § 985 CONTRACTS. 290 only the principal and lawful interest.^" The statute provides that an action to recover usurious interest actually paid must be brought within two years after the payment thereof and no action can be maintained after the expiration of this period. ^^ The provisions of the federal statute specifying the remedy where payment for usurious interest has been made to national banks are exclusive and prevent the application of state laws.^'^ Consequently, in an action upon a note held by a national bank there cannot be a set-off of the interest or the penalty provided for therein. ^^ The penalty prescribed cannot be set off against the principal.^* This has been held true even where the note was given by the debtor to the president of the bank as trustee for the bank and as collateral security for the former's note held by the bank, the usurious interest being charged upon the collateral note.^^ However, where a claim for usurious interest has been "" Talbot V. First Nat. Bank, 185 U. S. 172, 46 L. ed. 857, 22 Sup. Ct. 612. ^Talbot V. Sioux Nat. Bank, 111 Iowa 583, 82 N. W. 963. " Slaughter v. First Nat. Bank, 109 Ala. 157, 19 So. 430; First National Bank v. McEntire, 112 Ga. 232, 37 S. E. 381; Winterset Nat. Bank v. Eyre, 52 Iowa 114, 2 N. W. 995; Peterborough National Bank v. Childs, 133 Mass. 248, 43 Am. Rep. 509; Central National Bank v. Hasel- tine, 155 .Mo. 58, 55 S. W. 1015, 85 Am. St. 531 ; Lanham v. Bank, 46 Nebr. 663, 65 N. W. 786; Norfolk National Bank v. Schwenk, 46 Nebr. 381, 64 N. W. 1073; Higlev v. First Nat. Bank. 26 Ohio St. 75, 20 Am. Rep. 759; Haseltine v. National Bank CNo. 2), 183 U. S. 132, 46 L. ed. 118, 22 Sup. Ct. 50. See also, infra, § 981. "Dan forth v. National State Bank, 48 Fed. 271, 1 C. C. A. 62, 17 L. R. A. 622; Lloyd v. First National Bank, 5 Kans. App. 512, 47 Pac. 575; Stephens v. Monongahela Bank, 111 U. S. 197, 28 L. ed. 399; National Bank V. Davis, 8 Biss. CU. S.) 100, Fed. Cas. No. 100.38; Haseltine v. Central Nat. Bank, 183 IT. S. 132, 46 L. ed. 118, 22 Sup. Ct. 50. But see Montgomery v. Albion Nat. Bank, 50 Nebr. 652, 70 N. W. 239; Lanham v. First Nat. Bank, 46 Nebr. 663, 65 N. W. 786; Norfolk Nat. Bank v. Schwenk, 46 Nebr. 381, 64 N. W. 1073; National Bank v. Lewis, 75 N. Y. 516, 31 Am. Rep. 484; National Bank v. Dushane, 96 Pa. St. 340, over- ruling Lucas V. Government Nat. Bank, 28 P. F. Smith (Pa.) 228; Overholt v. National Bank, 1 Norris (Pa.) 490; Comanche Nat. Bank v. Dabney (Tex.), 44 S. W. 413. "It seems to be settled law that a defend- ant cannot offset against principal, usurious interest actually paid by him ; that his only remedy for illegal interest actually paid is the right given by the statute to recover back tv/ice the amount so paid, the penalty prescribed by § 5198, for the unlawful taking of usurious interest." Na- tional Bank v. Lynch (W. Va.), 71 S. E, 389. ^* >iIarion Nat. Bank v. Thompson, 101 Kv. 277, 19 Ky. L. 436, 40 S. W. 903. ^° Schuyler Nat. Bank v. Gadsden, 191 U. S. 451, 48 L. ed. 258. 24 Sup. Ct. 129, revg. Gadsden v. Thrush, 63 Nebr. 881, 89 N. W. 403. Certain state courts have, however, held the state laws applicable to usurious con- tracts entered into by national banks. Farrow v. First National Bank, 20 Kv. L. 1413, 47 S. W. 594; White- hall First Nat. Bank v. Lamb, 50 N. 291 USURY. § 986 reduced to judgment, the provisions of the statute do not apply and one judgment is available as a set-off against the other." § 986. Set-off under state laws. — As a general rule, under the state laws, usury is available as a defense by way of set-off in an action brought on the instrument by the payee or an assignee with notice.^^ And it is also held to be so available in an action upon a renewal note purged of usury.^* The right of a party to set off a payment of usury is held not to be affected by the fact that the amount so paid cannot be recovered in a separate action.*® In some states the rule prevails that usury can only be recouped." The right of a defendant to avail himself of a set-off of this character is not defeated by the statute of limitations." But where a surety pays a debt of the principal upon the request of the latter, who stands by and permits him to make such payment in ignorance of the fact that it is tainted with usury, the principal will not be permitted, in an action against him by the surety on an obligation subsequently given by the former to the latter to secure him for making such payment, to avail himself of a set-off of the usury contained in the original debt. Nor can the principal, in an action by the surety on a note paid by the latter, set of¥ against such note usurious interest which was previously paid by him to the creditor and of which the surety had no notice or knowl- edge.*^ Again, where several acceptances are given by joint makers for portions of the original obligation which contained Y. 95, 10 Am. Rep. 438; State v. Misc. (N. Y.) 97, 117 N. Y. S. 1014 First Nat. Bank, 2 S. Dak. 568, 51 (individual banker) ; Caponigri v. N. W. 587, 3 S. Dak. 52, 51 N. W. Altieri. 165 N. Y. 255. 59 N. E. 87 780. It would seem, however, that (individual banker). Also, Pinch v. the decisions of the Supreme Court Willard. 108 Mich. 204, 66 N. W. 42. of the United States determine the ^^ McGee v. Long, 83 Ga. 156, 9 S. question otherwise and that they are E. 1107; Harris v. Bressler, 119 111. final. 467, 10 N. E. 188; Morrison v. State *'Llovd V. First Nat. Bank, 5 Kans. Bank, 3 Kans. App. 201, 43 Pac. 441 ; App. 5i2, 27 Pac. 575. Knapp v. Briggs. 2 Allen (Mass.) "Wilkinson V. Wooten, 59 Ga. 584; 551. House V. Davis. 60 111. 367; Lemmon ^Mitchell v. Lyman. 11 111. 525. v. Whitman. 75 Ind. 318. 39 Am. Rep. Compare Sims v. Squires. 80 Ind. 42. 150; First National Bank v. Turner, *° Holcraf t v. Mellott. 57 Ind. 549; 3 Kans. App. 352. 42 Pac. 936; Craig Craig v. Butler. 9 Mich. 21. V. Butler, 9 Mich. 21; Thomas v. "Union Nat. Bank v. Eraser, 63 Shoemaker. 6 Watts & S. (Pa.) 179; Miss. 231. Lewis V. Jewett. 51 Vt. 378. See. *= Blakelev v. Adams. 113 Ky. 392, however, Hessberg v. Matter, 64 24 Ky. L. 263, 68 S. W. 393. § 9S7 CONTRACTS. 292 usiir}', it is held that in an action on the acceptances so given there can only be a pro rata set-off of the usury which was paid by them jointly.^^ Usury, to be available as a set-off, must attend the same contract. So where a party indorsed a note for the balance due on a usurious account between the maker and payee, and he subsequently took up such note and gave his own to the payee therefor, it was decided in an action against him on his own note that he could not deduct the original usury.** And an usurious payment made on a note will not be available as a set-off in an action upon another note, though the parties to the action and to the notes are the same.*^ § 987. Who may recover usurious interest. — When recov- ery is permitted the debtor who has paid the usurious interest may recover the same-*" Where the maker of a note bearing usurious interest conveys certain land to his surety in considera- tion of the latter assuming the obligation of such note, it has been held that the maker thereof who was thereby discharged may recover of the payee the usury theretofore paid by him/^ In case the promissory note or other evidence of indebtedness containing the usury has been assigned before maturity to an innocent purchaser and the defense of usury thereby cut off under the statute and the maker has been compelled to pay the note to the assignee the payor may recover from the original payee the usurious interest that the former has been compelled to pay.*^ *^ Deposit Bank v. Robertson, 17 equity of redemption to recover the Ky. L. 1252, 34 S. W. 23. difference between the amount of the ** Craig V. Butler, 9 Mich. 21. debt and the legal interest thereon " Barnet v. National Bank, 98 U. and the amount extorted by the mort- S. 555, 25 L. ed. 212; Ewing v. Gris- gagor from the purchaser of the right wold, 43 Vt. 400. to redeem, see Ellis v. Winlock, 110 ^'Webb V. Wilshire, 19 Maine 406; Ky. ^16, 23 Ky. L. 60, 62 S. W. 495, Davis V. Hoy, 2 Aik. (Vt.) 303. holding that the mortgagee may re- See also, Cable v. Duke, 132 Mo. cover the difference. App. 334, 111 S. W. 909. Each trans- « Culver v. Osborne, 231 111. 104, feree of a usurious note to whom 83 N. E. 110, 121 Am. St. 302; Wood- usurious interest has been paid may worth v. Huntoon, 40 111. 131, 89 Am. be required to refund the same to Dec. 340; Anderson v. Trimble, 18 the maker. Eltonhead v. Found, 153 Ky. L. 507, Zl S. W. 71; Hanson v. III. App. 191. See, however. White- Cummings State Bank, 6 N. Dak. 212, head v. Peck, 1 Ga. 140; Hahn v. 59 N. W. 202. See also, in connec- Walker, 3 Dana (Ky.) 183. tion with this case. Grove v. Great "Mann v. Bank of Ellston, 104 Northern Loan Co., 17 N. Dak. 352, Ky. 852-, 48 S. W. 413. As to the 116 N. W. 345, 138 Am. St. 707. See right of a mortgagee who sells his also, infra, § 969 et seq. 293 USURY. § 987 The assignee may, in a proper case, recover usurious interest exacted from him by the creditor/" The federal statute control- ing national banks permits the assignee to recover twice the amount of interest paid.^** The assignee or receiver of an insol- vent or bankrupt may recover usurious interest.^^ Under the statutes of some jurisdictions the personal representative of a deceased cannot recover usurious interest paid by him." How- ever, if the usurious payment was made after the debtor's death it has been held that it may be recovered by his personal repre- sentative.'^^ The right to recover usury is, as a general rule, held personal to the debtor and his privies in relation. Consequently, it has been held that a surety cannot recover usury paid by his principal, nor have such payment applied on his liability."^* Nor can one creditor recover usurious interest paid by his debtor to a second creditor." One who pays the debt of another, though it be infected with usury, cannot ordinarily recover the usurious in- terest so paid by him.°" *° Turner v. Interstate &c. Loan 165, 40 S. E. 138; Garris v. Thomas, Assn., 47 S. Car. 397, 25 S. E. 278. 66 S. Car. 57, 44 S. E. 374. "" Louisville Trust Co. v. Ken- " Coon v. Swan. 30 Vt. 6. tucky Nat. Bank, 87 Fed. 143. See '^Roberts v. Coffin. 22 Tex. Civ. also, ante. § 985. App. 127, 53 S. W. 597. "Tamplin v. Wentworth, 99 Mass. "Lee v. Fellowes, 10 B. Mon. 63; Chas. S. Rilev & Co. v. W. T. (Ky.) 117. "The right to raise the Seers & Co., 154 N. Car. 509, 70 S. question of usury is personal to the E. 997; Corcoran v. Powers, 6 Ohio borrower, and, if he ratifies the St. 19. See also, Washington-Alaska usurious transactions others cannot Bank v. Stewart. 184 Fed. 673, 108 assume a contrary attitude." Grove C. C. A. 273. Compare with IMurphv v. Great Northern Loan Co., 17 N. V. Citizens' Bank. 82 Ark. 131. 100 Dak. 352, 116 N. W. 345, 138 Am. S. W. 894. 11 L. R. A. (N. S.) 616n, St. 707. See. however. In re Miller, which holds that the receiver cannot 118 Fed. 360; McKinney v. :Memphis recover voluntary payments of prin- Overton Hotel Co., 12 Heisk. (Tenn.) cipal and lawful interest made on a 104. _ usurious contract before the appoint- "" First Nat. Bank v. Davis, 135 Ga. ment of the receiver. 6S7. 70 S. E. 246, 36 L. R. A. (N. "See Butler v. Butler, 62 S. Car. S.) 134. CHAPTER XXVI. GAMING AND WAGERING. 990. Generally. § 1013- 991. Change of attitude toward. 1014. 992. Early statutes against. 993. Modern statutes against. 994. Gambling contracts generally invalid thereunder. 1015. 995. Futures. 996. Must intend and agree to de- liver goods. lOlo. 997. Kentucky statute — Contracts for future delivery — Various forms of. 1017. 998. Intention not to deliver must be mutual. 1018- 999. Rule as to mutual intention further considered. 1000. When intention of one party 1019. may defeat contract. 1001. Subsequent agreement as to delivery. 1020. 1002. Futures — Margin transactions. 1003. Test by which to determine 1021. validity of. 1004. Presumption as to margin 1022. transactions — Illustrations. 1023. 1005. Legislative enactment con- cerning. 1024. 1006. Futures— Options. 1025. 1007. Rule further illustrated. 1008. Puts and calls, assignments, 1026. resale, ringing out. 1009. Other forms of wagering con- 1027. tracts — Election debts. 1010. Other forms of wagering— 1028. Horse racing. 1011. Gaming as defined by statute 1029, — Generally. 1012. Games on behalf of charity. Bohemian oats speculation. Rights of parties — Validity of bills, notes or other obliga- tions given in payment of gambling debts. As between the immediate parties and those with no- tice. Special statutory enactments concerning recovery there- on. Note given in an option or "future" deal. Presumptions concerning and validity of note given for gambling debt. Recovery of money lost at gaming, wagering or deal- ing in futures. Illustration of rule concern- ing recovery. Rights and liabilities of third persons. Prize contests. Further examples of valid and invalid prize contests. Collateral agreements. Collateral contracts — Lender must be a confederate. Examples of invalid collateral contracts. Examples of valid collateral contracts. Securities given for gambling debt — Securities. New contract — Ratification — Executed margin transac- tion. § 990. Generally. — After the mutual promise had become established as a contract, valid and binding on the parties, the wager was recognized as a valid form of contract. It was appar- ent, no other element entering in, that if mutual promises were 294 295 GAMING AXD WAGERING. § 99 1 each a sufficient consideration for the other, wager contracts came within the rule. Consequently a promise to do and perform a certain act upon tlie determination or ascertainment of an uncertain event was upheld/ Lord Mansfield held that an action might be maintained to recover money won on a wager as to the result of a law suit.- There was also a similar holding where two rather dissolute characters placed a wager on the lives of their respective fathers. The one who first lost his father was to pay a certain amount to the other.^ § 991. Change of attitude toward. — Suits on wagering con- tracts soon became a source of vexation and annoyance. This reached a culmination in a suit on a wager as to the sex of a cer- tain person. The judges ultimately threw the case out of court. "^ From that time forward wagering and gambling contracts have carried on a losing fight to hold their position against the policy of the law. The early judges seem to have considered the valid- ity of such contracts too well established to deny them recogni- tion of any sort. They refused recovery, however, on grounds often ingenious but sometimes ridiculous.^ Thus a wager placed on the future amount of hop duty was declared void because it might expose to the world the amount of the public revenue,^ and a bet between two carriage men that a designated person would go to the assembly rooms in the carriage of one rather than the other was declared void on the ground that it exposed one of the public to the inconvenience of being importuned by rival coach- ' See, generally, Walker v. Walker, Moore P. C. 300, 4 Moo. Ind. App. Holt. K. B. 328, 5 Mod., 13, Comb. 339, 12 Jur. 315: "I regret to say, 303; Hard's Case, 1 Salk. 23; Bovey that we are bound to consider the V. Castleman, 1 L. D. Ryam 69; Smith common law of England to be, that V. Airey, 2 L. D. Ryam 1034, Holt, an action may be maintained on a K. B. 329. "Undoubtedly under the wager, although the parties had no common law all wagers or bets were previous interest in the question on not illegal." Thomson v. Hayes, 111 which it is laid, if it be not against N. Y. S. 495. " the interests or feelings of third per- ^ Jones V. Randall. 1 Cowp. 37. sons, and does not lead to indecent * March v. Pigot. 5 Burr. 2802. The evidence, and is not contrary to pub- father of one of the parties was lie policy. I look with concern, and actually dead at the time the wager almost with shame on the subterfuges was made, although this fact was and contrivances and evasions, to unknown to either party. which judges in England long re- *Da Costa v. Jones, 2 Cowp. 729. sorted in struggling against this rule." 'It was said by Lord Campbell in 'Ahterfold v. Beard, 2 T. R. 610. Thackoorseydass v. Dhondmull, 6 § 99- CONTRACTS. 296 men." A bet as to the duration of Napoleon's life was declared void for the reason that it tended to weaken the patriotism of one of the parties for England and encouraged the other to assassinate a f oreigii ruler and in this manner would provoke retaliation upon the English sovereign.® In this country at least legislative action has intervened in almost every state and thus assisted the courts to establish the principle that gambling and wagering contracts are demoralizing and against public policy.^ § 992. Early statutes against. — One of the early English statutes was passed to accomplish what seems to us a curious purpose. It was intended to encourage warlike pastimes and to discourage or prohibit those games which diverted the people from martial exercises.^" Other early English statutes, however, recognized gambling as injurious per se and condemned it as such when indulged in by certain classes of people or carried on fraudulently or to excess, or when engaged in in the form of cer- tain games. ^^ Gambling among the poor or among all below the rank of gentlemen and to excess by the rich was prohibited.^^ These statutes did not, as a rule, attempt to prohibit the king from indulging in sports forbidden his subjects.^^ ^ Eltham v. Kingsman, 1 B. & Aid. taining artillery and the debarring of 683. unlawful games." « Gilbert v. Sykes, 16 East 150. ^ See Act 16, Car. II, C. 7. Of this *As popularly understood, a wager statute it was said: "It both in its relates to contracts of a gambling title and preamble appears to be di- or sporting character. However, rected solely against fraudulent and aleatory agreements in their broad excessive, and to be in no respect sense include insurance contracts pointed at moderate play when there since they require the payment of is no fraud." Applegarth v. Colley, 10 money upon the happening of an un- M. & W. 12Z. See Jenks v. Turpm, 13 certain event, but, notwithstanding Q. B. D. 504, 519. See also. Acts this fact, they are held valid when 9 and ch. 14. This act rendered no the insurer has an insurable interest game unlawful except excessive or in the life or property insured. The fraudulent gaming, which was made essential thing is that the policy shall an indictable offense. Jenks v. Tur- be obtained in good faith and not for pin, 13 Q. B. D. 504, 519. See also, the purpose of speculating upon the statutes, 12 George II, ch. 28, 13 hazard of a life in which the insurer George II, ch. 19, 18 George II, ch. has no interest. McRae v. Warmack, 34, which forbade certain games un- 98 Ark. 52, 135 S. W. 807, ZZ L. R. der penalty and also prohibited bet- A. CN. S.) 949; Rupp v. Western ting more than ten pounds at any Life Indemnity Co., 138 Ky. 18, 127 S. one time or twenty pounds withm W. 490, 29 L. R. A. (N. S.) 675; twenty-four hours. Jenks v. Turpm, Connecticut Mut. Life Ins. Co. v. 13 Q. B. Div. 504, 519. Schaefer, 94 U. S. 457, 24 L. ed. 251. ''See Act ZZ, Henry VIII, ch. 9, 4 "See Act ZZ, Henry the Eighth, Bl. Com. 171. Ch. 9. entitled "The bill for the main- 'M6 Car. II, ch. 7; 9 Anne, ch. 14, 297 GAMING AND WAGERING. § 993 § 993. Modern statutes against. — Modern statutes both in England and the United States recognize gambhng as an evil to be suppressed in the interests of the public welfare and the state at large. These modern statutes either make merely a direct attack on gambling or also prohibit contracts collateral to gambling agreements, or also render unenforcible securities given for a gambling consideration. These various statutory enact- ments cannot be set out, and will not be discussed except incident- ally in connection with decided cases. In so far as the various statutes against gambling declare invalid gambling and wagering contracts they are remedial and not penal and are to be given a liberal construction." § 994. Gambling contracts generally invalid thereunder. — Practically all gambling and wagering contracts are rendered invalid under the modern statutes. In agreements of this char- acter, as in the case of other contracts, the law looks to the sub- stance and not the form. It makes no difference that a bet or wager is made to assume the form of a contract. Gambling is gambling even if it is carried on under the guise of legitimate trade.^^ A gambling contract declared illegal by law is invalid, § 9. See also, Jenks v. Turpin, 13 Q. Turner v. Warren, 2 Stra. 1079; B. Div. 504, 519; Hedgeborrow v. Bones v. Booth, 2 W. Bl. 1226. When Rosenden, 1 Vent. 253 ; Dickson v. penal they are given a strict con- Pawlet, 1 Salk. 345 ; Bentinck v. Con- struction. In re Dorr, 186 Fed. 276. nop. 5 Q. B. 693, 48 E. C. L. 693. 108 C. C. A. 322; Taylor v. Sebas- "Larned v. Tiernan, 110 111. 173; tian (Mo. App.), 138 S. W. 549. Ellis V. Beale. 18 Maine 337, "" Marden v. Phillips, 103 Fed. 196; 36 Am. Dec. 726; Grace v. Mc- Love v. Harvey, 114 Mass. 80; Bur- Elroy, 1 Allen (Mass.) 563; ney v. Blanks (Tex. Civ. App.), 136 Wall v. Metropolitan Stock Exch., S. W. 806. "It makes no diflference 168 Mass. 282, 46 N. E. 1062; Shea v. that a bet or wager is made to assume Metropolitan Stock Exch., 168 Mass. the form of a contract. Gambling is 284, note, 47 N. E. 1113; Meech none the less such because it is car- v. Stoner, 19 N. Y. 26; Arrieta v. ried on in the form or guise of a Morrissey, 1 Abb. Pr. (N. S.) (N. legitimate trade." Wade v. United Y.) 439; McDougall v. Walling, 48 States (App. D. C), 20 L. R. A. (N. Barb. (N. Y.) 364; Collins v. Ragrew, S.) 347, quoting from Irwin v. Wil- 15 Johns. (N. Y.) 5; Zeltner v. Ir- liar, 110 U. S. 499, 28 L. ed. 225, 4 win, 21 Misc. (N. Y.) 13, 46 N. Y. Sup. Ct. 160. It is the law in force S. 852, affg. 20 Misc. (N. Y.) 398, at the time the contract was made 45 N. Y. S. 1036; O'Keefe v. Weber, which determines its validity. A 14 Ore. 55. To the same effect see subsequent statute will not affect the the following English cases: Hedge- substantive rights of the parties; but borrow v. Rosenden, I Vent. 253; 995 CONTRACTS. 298 no matter what form it may assume. The ingenuity of the de- vice does not make it legal.^° The only instances which might be termed exceptions are those in which the state courts hold gam- bling contracts valid at common law and the legislature has de- clared such contracts invalid, not by a general statute, but by an enumeration of certain kinds of gambling contracts. Those kinds of gambling contracts which are omitted from the enumer- ation either deliberately or accidentally are held valid." § 995. Futures. — According to the generally accepted doc- trine, a contract for the sale of goods or property to be delivered at a future day is valid when the parties really intend and agree that the goods are to be delivered by the seller, and the price thereupon paid by the buyer/^ even though the property which is the subject of the executory contract is not then in existence.^' The rule is the same where the vendor or vendee does not have the property on hand at the time the contract is made, but must buy it to perform the contract.^" Nor does the mere fact that the generally statutory alterations in the rules and methods of procedure, in- cluding rules of evidence, are retro- active. Birmingham Trust &c. Sav. Co. V. Currey (Ala), 57 So. 962. '"Creston First Nat. Bank v. Car- roll, 80 Iowa 11. 35 N. W. 304, 8 L. R. A. 275; Richter v. Poe, 109 Md. 20, 71 Atl. 420, 22 L. R. A. (N. S.) 174n; Sharp v. Stalker, 63 N. J. Eq. 596, 52 Atl. 1120; G. G. Edgerton & Son V. J. T. Edgerton & Bro., 153 N. Car. 167, 69 S. E. 53; Durr v. Barclay, 8 Pa. County Court 285. A contract to pay for threshing a field of wheat in consideration of receiving the entire yield less a fixed number of bushels has been held void as a gambling contract. Jacobus v. Haz- lett, 78 111. App. 239. " See Kinney v> Hvnds, 7 Wyo. 22, 49 Pac. 403, 52 Pac. 1081, which holds that money lost in a licensed faro game cannot be recovered. "Goodspeed v. Smith. 162 Mich. 641, 127 N. W. 813; Crawford v. Spencer, 92 Mo. 498, 4 S. W. 713, 1 Am. St. 745. See Fearon v. Little, 227 Pa. 348, 76 Atl. 72, holding that stock transactions are not to be judged wagering merely because the losing party indulged beyond the point of prudence as measured by his financial ability. To same effect, Pelouse V. Slaughter, 241 111. 215, 89 N. E. 259; Western Union Tel. Co. V. Bradford, 52 Tex. Civ. App. 392, 114 S. W. 686. See also, cases cited, post, in this section. "Forsyth Mfg. Co. v. Castlen, 112 Ga. 199, n S. E. 485, 81 Am. St. 28. Products of the soil yet to be grown may be the subject of a valid agree- ment to sell. Gann v. W. R. Long & Sons (Ala.), 56 So. 606. See also, note on sales of property not then in existence, in 81 Am. St. 42. '"Hill V. Levy, 98 Fed. 94; Farm- ers' Oil &c. Co. V. Rosenthal (Ga. App.), 11 S. E. 428; Forsyth Mfg. Co. V. Castlen, 112 Ga. 199, Zl S. E. 485, 81 Am. St. 28; Gardner v. Meek- er, 169 III. 40, 48 N. E. 307, affg. 69 111. App. 422; Richter v. Poe, 109 Md. 20, 71 Atl. 420, 22 L. R. A. (N. S.) 174n; Taylor v. Sebastian 158 Mo. App. 147, 138 S. W. 549; Rogers v. Marriott, 59 Nebr. 759, 82 N. W. 21 ; Kahn v. Walton, 46 Ohio St. 195, 20 N. E. 203; Potts v. Dunlap, 110 Pa. St. 177, 20 Atl. 413 ; Hallet v. Agger- gaard, 21 S. Dak. 554, 114 N. W. 696, \ 299 GAMING AXD WAGERING. § 996 vendee purchases the property merely as a speculation render the contract of purchase invalid.*^ § 996. Must intend and agree to deliver goods. — But such contract is only valid when the parties really intend and agree that the goods are to be delivered by the seller, and the price to be paid by the buyer, and if under guise of such a contract the real intent be merely to speculate in the rise or fall of prices, and the goods are not to be delivered, but instead one party is merely to pay the other the difference between the contract price and the market price of the goods at the date fixed for executing the con- tract, then the whole transaction constitutes nothing more than a wager, and is null and void."- 14 L. R. A. (N. S.) 1251; Clews v. Jamieson, 182 U. S. 461, 45 L. ed. 1183, 21 Sup. Ct. 845, revg. 96 Fed. 648, 38 C. C. A. 473; Bibb v. Allen, 149 U. S. 481, Zl L. ed. 819, 13 Sup. Ct. 950. ^Laughton v. Griffin (1895). A. C. 104; Forget v. Ostigny (1895), A. C. 318: Raymond v. Parker, 84 Conn. 694, 81 Atl. 1030; Gregory v. Wendell. 40 Mich. 432; Goodhart v. Rastert, 7 Ohio N. P. (O. S.) 534: Stewart v. Parnell, 147 Pa. St. 523. 23 Atl. 838; Burr v. Davis (Tex. Civ. App.) 27 S. W. 589. " Universal Stock Exchange v. Strachan (1896) A. C. 166. In re Gieve (1899), 1 Q. B. 794; Peet v. Hatcher, 112 Ala. 514. 21 So. 711, 57 Am. St. 45 : Birmingham Trust Co. V. Curry, 160 Ala. 370, 49 So. 319, 135 Am. St. 102: Metropolitan Nat. Bank v. Jansen, 108 Fed. 572, 47 C. C. A. 497: Waldron v. Johnson, 86 Fed. 757: Morris v. Norton, 75 Fed. 912. 24 C. C. A. 553; Chicago v. L. A. Kinsey Co., 125 Fed. 72; Ware v. Pearsons, 173 Fed. 878. 98 C. C. A. 324; Benton v. Singleton, 114 Ga. 548. 40 S. E. 811. 58 L. R. A. 181; Forsyth Mfg. Co. v. Castlen, 112 Ga. 199. Zl S. E. 485, 81 Am. St. 28: Stewart v. Postal Tel. &c. Co.. 131 Ga. 31, 61 S. E. 1045, 18 L. R. A. (N. S.) 692, 127 Am. St. 212; First Nat. Bank v. Miller, 235 111. 135, 85 N. E. 312; Central Stock &c. Exch. v. Chi- cago, 196 111. 396, 63 N. E. 740, affg. 98 111. App. 212; Jamieson v. Wal- lace, 167 111. 388. 47 N. E. 762, 59 Am. St. 302. afYg. 60 111. App. 618; Miles v. Andrews. 153 111. 262. 38 N. E. 644, affg. 40 111. App. 155; Illinois Trust &c. Bank v. La Touche, 101 111. App. 341; Watte v. Costello, 40 111. App. 307; Wheeler v. McDermid, Z() 111. App. 179; Pratt v. Ashmore, 224 111. 587. 79 N. E. 952 ; Pearce v. Dill, 149 Ind. 136, 48 N. E. 788; Sondheim v. Gilbert, 117 Ind. 71, 18 N. E. 687, 5 L. R. A. 432, 10 Am. St. 23n; Hoff- man V. Farmer's &c. Shipping Assn., 78 Kans. 561, 97 Pac. 440 ; Boyd Com- mission Co. V. Coates, 24 Kv. L. 730, 69 S. W. 1090; Beadles v. McElrath, 85 Kv. 230, 8 Kv. L. 848, 3 S. W. 152; E. 6. Standard Milling Co. v. Flower. 46 La. Ann. 315, 15 So. 16; Morris v. Western Union Tel. Co., 94 ]\laine 423. 47 Atl. 926; Lancaster v. Ames, 103 Maine 87. 68 Atl. 533, 17 L. R. A. (N. S.) 229n. 125 Am. St. 286; Billingslea v. Smith, 17 Md. 504, 26 Atl. 1077; Wilson v. Head, 184 Mass. 515. 69 N. E. 317; Harvev v. Merrill. 150 Mass. 1, 22 N. E. 49, 5 L. R. A. 200. 15 Am. St. 159; Donavan v. Daiber, 124 Mich. 49. 82 N. W. 848; • McCarthy v. Weare Commission Co., 87 Minn. 11. 91 N. W. ZZ; Mohr v. Miesen. 47 Minn. 228, 49 N. W. 862; Campbell v. New Orleans Nat. Bank, 74 Miss. 526, 21 So. 400. 23 So. 25; Connor v. Black. 119 Mo. 126, 24 S. W. 184; Crawford v. Spencer, 92 Mo. 498, 4 S. W. 713, 1 Am. St. 745; § 997 CONTRACTS. 300 § 997. Kentucky statute — Contracts for future delivery — Various forms of. — Under the Kentucky statutes a place where futures are continually dealt in is a disorderly house.^^ Contracts for future delivery may take a variety of fonns such as options, puts, calls and the like. The question as to whether the agreement is illegal on account of being a gaming or wagering contract often depends on the circumstances of each case.^* Fu- Scott V. Brown, 54 Mo. App. 606; Hingston v. Montgomery, 121 Mo. App. 451, 97 S. W. 202; Merrill v. Garver, 4 Nebr. (Unof.) 830, 96 N. W. 619; Ives v. Boyce, 85 Nebr. 324, 123 N. W. 318, 25 L. R. A. (N. S.) 157n; Mendel v. Boyd, 3 Nebr. (Unof.) 473, 91 N. W. 860; Rogers V. Marriott, 59 Nebr. 759, 82 N. W. 21 ; Sprague v. Warren, 26 Nebr. 326, 41 N. W. 1113, 3 L. R. A. 679; Wheeler v. Metropolitan Stock Ex- change, n N. H. 315, 56 Atl. 754; Sharp V. Stalker, dZ N. J. Eq. 596, 52 Atl. 1120; Minzesheimer v. Doo- little, 60 N. J. Eq. 394, 45 Atl. 611; Pratt V. Boodv, 55 N. J. Eq. 175, 35 Atl. 1113; Weld v. Postal Tel. &c. Co., 199 N. Y. 88, 92 N. E. 415, revg. 132 App. Div. (N. Y.) 924, 116 N. Y. S. 1150; Cantwell v. Boykin, 127 N. Car. 64, Z1 S. E. 72; Edgerton v. Edgerton, 153 N. Car. 167, 69 S. E. 53; Dows V. Glaspel, 4 N. Dak. 251, 60 N. W. 60 ; Lester v. Buel, 49 Ohio St. 240, 30 N. E. 821, 34 Am. St. 556; Kahn v. Walton, 46 Ohio St. 195, 20 N. E. 203 ; In re Taylor's Estate, 192 Pa. St. 304, 43 Atl. 973, 12> Am. St. 812; Wagner v. Hildcbrand, 187 Pa. St. 136, 41 Atl. 34; Dauler v. Hartley, 178 Pa. St. 23, 35 Atl. 857; Hop- kins V. O'Kane, 169 Pa. St. 478, 2>2 Atl. 421 ; Gist V. Western Union Tel. Co., 45 S. Car. 344, 23 S. E. 143, 55 Am. St. 763; Waite v. Frank, 14 S. Dak. 626, 86 N. W. 645 ; Allen v. Dunham, 92 Tenn. 257, 21 S. W. 898; Mc- Grew V. City Produce Exch., 85 Tenn. 572, 4 S. W. 38, 4 Am. St. 771 ; Mechanic's Sav. &c. Co. v. Duncan (Tenn.), 36 S. W. 887; Pearce v. Rice, 142 U. S. 28, 35 L. ed. 925, 12 Sup. Ct. 130; Irwin v. Williar, 110 U. S. 499, 28 L. ed. 225, 4 Sup. Ct. 160; Bartlett v. Collins, 109 Wis. 477, 85 N. W. 703, 83 Am. St. 928; Atwater V. ManviUe, 106 Wis. 64, 81 N. W. 985 ; Carson v. Milwaukee Produce Co., 133 Wis. 85, 113 N. W. 393. The character of the transaction is de- termined by its substance and not its form. Fiske v. Doucette, 206 Mass. 275, 92 N. E. 455. "The words 'dealing in options, futures, or mar- gins' are well understood to mean a mere speculative contract, in which the parties speculate in the rise or fall of prices, and imply a con- tract in relation to the price of the article, and not the article itself." Plank V. Jackson, 128 Ind. 424, 26 N. E. 568, 27 N. E. 1117. See also, 14 Am. & Eng. Encyc. of Law 609, note 4. for numerous cases declaring such deals invalid. ^^ Kneffer v. Commonwealth, 94 Ky. 359, 22 S. W. 446; Arenz v. Com- monwealth, 31 Ky. L. 321, 102 S. W. 238. "* See Birmingham Trust & Sav- ings Co. V. Curry, 160 Ala. 370, 49 So. 319, 135 Am. St. 102; Taylor v. Sebastian, 158 Mo. App. 147, 138 S. W. 549; Zeller v. Leiter, 189 N. Y. 361, 82 N. E. 158. Even delivery of the thing sold does not necessar- ily render the entire contract valid. Thus, where the defendant sold and delivered to the plaintiff cotton at the market price of cotton at the time and place of the sale, and as a part of the contract of sale the parties agreed that, if the same grade of cot- ton should advance in price! within a certain time, the defendant should have the right, upon demand, to col- lect from the plaintiff the difference between the price of such cotton at the time the demand was made and the price which the plaintiff had paid defendants for it. On the other hand, if the market went down, plain- itiff was given the right to demand the difference. This optional feature was held uncnforcible. Operations 30I GAMING AND WAGERING. § 998 tures, as above defined, in cotton,-^ grain,-'' and stock transac- tions^^ have been held invalid.-^ § 998. Intention not to deliver must be mutual. — It must be borne in mind, however, that, as a general rule, the intention to make no actual delivery but merely to receive or pay the differ- ence between the contract and the market price must be mutual. Both parties must so understand the transaction. A transaction which on its face is legitimate will not usually be held void as a wagering contract upon a showing that only one party to the agreement understood and meant it to be such. The rights of one party will not be prejudiced by the intentions of the other.^" on the rise and fall of commodities constitute gambling contracts on which an action at law cannot be maintained where they could not have been followed by delivery and could not because of the position of one of the parties entering into them ever end in any real delivery, but were only intended for a settlement of differences. Morris v. Brault, 23 Rap. Jud. Que. (C. S.) 190. See also, cases cited ante this section. ^ Birmingham Trust & Sav. Co. v. Curry. 60 Ala. 370, 49 So. 319, 135 Am. St. 102; Parker v. Moore 111 Fed. 470 ; James v. Haven & Clement, 185 Fed. 692, 107 C. C. A. 640; Min- zesheimer v. Doolittle, 60 N. J. Eq. 394, 45 Atl. 611; Riordan v. Dotv, 50 S. Car. 537, 27 S. E. 939; Embrev v. Jemison. 131 U. S. 336, 33 L. ed. '172, 9 Sup. Ct. 776. * Metropolitan Nat. Bank v. Jan- son, 108 Fed. 572, 47 C. C. A. 497; New York &c. Exchange v. Mellen, 27 111. App. 556. Where a pretended sale of oats, to be delivered in the future, is intended by all concerned to be closed by settling the difference in the price, such a transaction is a mere wager and the courts will not enforce it. Scott v. Brown, 54 iMo. App. 606. No recovery can be had for money advanced and services rendered in purchasing wheat for one who stated to plaintiff's agent, at the time of mak- ing the contract, that he was merely buving options. Dwieht v. Badglcv, 75 Hun (N. Y.) 174, 58 N. Y. St. 585, 27 N. Y. S. 107. "Ubben v. Binnian, 182 111. 508, 55 N. E. 552, revg. 78 111. App. 330: Lancaster v. Ames, 103 Maine 87, 17 L. R. A. (N. S.) 229n, 68 Atl. 533, 125 Am. St. 286; Morris v. Western Union Tel. Co., 94 Maine 423, 47 Atl. 926; Marks v. Metropolitan Stock Exchange, 181 Mass. 251. 63 N. E. 410; McCarthv v. Weare Com- mission Co., 87 Minn. 11, 91 N. W. 33; Flagg v. Gilpin, 17 R. I. 10, 19 Atl. 1084. ^ See also, Edwards v. Hoeffinghoff, 37 Fed. 635 ; Sampson v. Camper- down Cotton Mills, 82 Fed. 833. It is otherwise, however, where the pur- chases were made in good faith by an agent, his principal having con- cealed the fact that he was merely speculating on the rise and fall of the market. Parker v. Moore, 115 Fed. 799, 53 C. C. A. 369. ^Johnston v. IMiller, 67 Ark. 172, 53 S. W. 1052: Ponder v. Cotton Co., 100 Fed. 373, 40 C. C. A. 416; Hill v. Lew, 98 Fed. 94: Edwards V. Hoeffinghoff, 38 Fed. 635; In re A. B. Baxter & Co., 152 Fed. 137, 81 C. C. A. 355: Farmers Oil &c. Co. V. E. W. Rosenthal & Co. (Ga. App.), 73 S. E. 428; Scanlon v. Warren, 169 111. 142, 48 N. E. 410, affg. 68 111. App. 213; Jamieson v. Wallace, 167 111. 388. 47 X. E. 762, 59 Am. St. 302. affg. 60 111. App. 618; Warren v. Scanlon, 59 111. App. 138; Ennis v. Edgar, 154 111. App. 543; Counsel- man v. Reichart, 103 Iowa 430, 72 N. W. 490: Barnes v. Smith, 159 Mass. 344. 34 N. E. 403; Harvey v. Merrill, 150 Mass. 1, 22 N. E. 49, § 999 CONTRACTS. 302 In such case the contract is enforcible at the option of the one who enters into it in good faith.^" § 999. Rule as to mutual intention further considered. — Thus in an action by cotton factors for commission earned and advances made the defense was that the contracts from which tlie claims accrued were wagering contracts. However, it was held that the evidence failed to show an understanding between the parties that the goods were not to be delivered, and it was shown that rules of the cotton exchange at which the purchases were made recognized no contracts except those made for the purchase, sale and delivery of the actual cotton. Under these circumstances the defense was not sustained by the evidence.^^ A contract for future purchase and sale is not a wagering agree- ment as between seller and purchaser unless both parties under- stood that no delivery was to be made and the question as to the purchaser's intention is not to be left to conjecture.^^ Where the 5 L. R. A. 200, 15 Am. St. 159; E. B. Cadwell & Co. v. Lean's Estate (Mich.), 134 N. W. 1110; Donovan V. Daiber, 124 Mich. 49, 82 N. W. 848; IMcCarthy v. Weare Commis- sion Co., 87 Minn. 11, 91 N. W. 33; A. G. Edwards Brokerage Co. v. Stevenson, 160 Mo. 516, 61 S. W. 617; Mulford v. Caesar, 53 Mo. App. 263; Rogers v. Marriott, 59 Nebr. 759, 82 N. W. 21 ; McDonald v. Ges- sler, 208 Pa. 177, 57 Atl. 361; Bibb V. Allen, 149 U. S. 481, 37 L. ed. 819, 13 Sup. Ct. 950; Irwin v. Wil- liar, 110 U. S. 499, 28 L. ed. 225, 4 Sup. Ct. 160; Wagner v. Engel- Millar Co., 144 Wis. 486, 129 N. W. 392. In case the statute makes deal- ing in futures an indictable offence, neither party to a contract of fu- ture sale and delivery of goods can be convicted under such statutes un- less it appears that both parties un- derstood that there was to be no de- livery of the things sold. Scales v. State, 46 Tex. Cr. 296, 81 S. W. 947, 66 L. R. A. 730, 108 Am. St. 1014. See also. Berg v. Flickinger, 38 Pa. Super. Ct. 433. This rule may be changed by statute. See post, § 1005 et seq. When both parties intended that there should be no delivery, dam- ages cannot be recovered for breach of the contract. Alex. Sprunt & Sons v. May, 156 N. Car. 388, 72 S. E. 821. '"Winward v. Lincoln, 23 R. L 476, 51 Atl. 106, 64 L. R. A. 160n. See cases cited ante this section. But the party guilty of the gambling in- terest cannot enforce the contract. Nash-Wright Co. v. Wright, 156 111. App. 243. "Gavlord v. Durvea, 95 Mo. App. 574, 69 S. W. 607 (purchase of stock and grain) ; Springs v. James, 137 App. Div. (N. Y.) 110, 121 N. Y. S. 1054. See, however, Riordan V. Doty, 50 S. Car. 537, 27 S. E. 939 ; Bibb V. Allen, 149 U. S. 481, 37 L. ed. 819, 13 Sup. Ct. 950. The rules of the stock exchange are not, however, conclusive, especially when the rules of the exchange provided for "ring- ing out" without knowledge of the principals. James v. Haven & Clem- ent, 185 Fed. 692, 107 C C. A. 640, revg. 172 Fed. 250. To same effect, WilHamson v. Majors, 169 Fed. 754, 95 C. C. A. 186. ''Barnes v. Smith, 169 Mass. 344, 24 N. E. 403. See also, Fisher v. Fisher, 8 Ind. App. 665, 36 N. E. 296; Fisher v. Fisher, 113 Ind. 474, IS N. E. 832, 131 Ind. 462, 29 N. E. 31. 303 GAMING AND WAGERING. lOOO contract is legal on its face it will be presumed valid and the bur- den is upon the party who seeks to impeach it as a gambling transaction to show its illegality for that reason." § 1000. When intention of one party may defeat contract. ■ — The statutes of some jurisdictions, however, make the inten- tion of one party to settle differences sufficient to invalidate the contract,^* especially when one party knows of or has reasonable cause to believe such to be the intention of the other party." § 1001. Subsequent agreement as to delivery. — In case the original transaction is a bona fide sale for future delivery the mere fact that the party subsequently agreed to discharge the contract by settling differences does not make it a wager.^^ On "Marengo Abstract Co. v. C. W. Hooper & Co. (Ala.), 56 So. 580; Johnston v. Miller, 67 Ark. 172, 53 S. W. 1052 (contract of sale for the future delivery of cotton) ; Cleage v. Laidlev, 149 Fed. 346, 79 C. C. A. 284; Johnson v. Milmine, 150 111. App. 208; Pelouse v. Slaughter, 241 111. 215, 89 N. E. 259; Richter v. Poe, 109 Md. 20, 71 Atl. 420. 22 L. R. A. (N. S.) 174n; E. B. Cadwell & Co. V. Lean's Estate (Mich.), 134 N. W. 1110; Taylor v. Sebastian, 158 Mo. App. 147, 138 S. \V. 549; Treasdale V. McPike, 25 Mo. App. 341 ; Dukers V. Townsend. 24 N. Y. 57; Roundtree V. Smith, 108 U. S. 269, 27 L. ed. 111. 2 Sup. Ct. 630; Irwin v. Williar, 110 U. S. 499, 28 L. ed. 225, 4 Sup. Ct. 160. "The character of such an operation is derived from the inten- tion of the parties, and each party must concur in the vicious intent to bring the transaction under the de- nunciation of the law against gaming. If either contracts in good faith and contemplates a sale to be followed by the constituent of delivery and pay- ment he is entitled to the benefit of the contract, no matter what may have been the future intention or purpose of the other partv." Clav v. Allen, 63 Miss. 426. See also, ISIar- engo Abstract Co. v. Hooper (Ala.), 56^ So. 580. See also, Eure v. Sabis- ton, 195 Fed. 721 (construing North Carolina contract) ; Rodgers, Mc- Cabe & Co. v. Bell, 156 N. Car. 378, 72 S. E. 817. " Taylor v. Sebastian, 158 Mo. App. 147, 138 S. W. 549; Connor v. Black, 119 Mo. 126, 24 S. W. 184; Atwater V. A. G. Edwards &c. Brokerage Co., 147 Mo. App. 436. 126 S. W. 823. In this case the laws of Missouri were held not to apply for the reason that the agreement was not a Mis- souri contract. Schreiner v. Orr, 55 Mo. App. 406 (holding that a broker cannot recover for services rendered in bringing two parties together when it appeared that one of the parties did not intend the delivery of the article sold). Compare the foregoing case with that of Deierling V, Sloop, 67 Mo. App. 446. See. how- ever, Crawford v. Spencer, 92 Mo. 498. 4 S. W. 713, 1 Am. St. 745 (de- cided under a different statute) ; Riordon v. Dotv, 50 S. Car. 537. 27 S. E. 939; Harvev v. Dotv, 54 S. Car. 548, 27 S. E. 943; McGrew v. City Produce Exch.. 85 Tenn. 572, 4 S. W. 38. 4 Am. St. 771. ''Walker v. Johnson. 59 111. App. 448; Fiske v. Doucette. 206 Mass. 275, 92 N. E. 455 ; Marks v. Metropolitan Stock Exch., 181 Mass. 251. (^l N. E. 410; Daw v. Bancs, 174 Mass. 238, 54 N. E. 536; McGrew v. Citv Pro- duce Exch., 85 Tenn. 572. 4 S. W. 38, 4 Am. St. 771. See also. Allen v. Dunham, 92 Tenn. 257, 21 S. W. 808. '^Miles V. Andrews, 153 111. 262, CONTRACTS. 304 the other hand, if the original contract is merely to settle differ- ences the parties may abandon this agreement and make a new and valid contract by which they mutually agree to deliver and receive the commodity contracted for,^^ The rule applies only when the parties contemplated a settlement on the day for deliv- ery on the market value of the goods.^* § 1002. Futures — Margin transactions. — The word "mar- gin" signifies money or other property deposited with a broker by his customer to secure the broker against loss, by reason of fluc- tuations in the market price of the commodity purchased or sold.^" It is held, with few exceptions, that a speculative trans- action for the purchase and sale of stock or other commodity on margins does not constitute gambling.^" 38 N. E. 644; Riebe v. Hellman, 69 111. App. 19; Dillon v. McCrea, 59 111. App. 505; Dillaway v. Alden, 88 Maine 230, 33 Atl. 981. See also, Cleage v. Laidley, 149 Fed. 346, 79 C. C. A. 284. "Young V. Glendinning, 194 Pa. St. 550, 45 Atl. 364; In re Taylor's Estate, 192 Pa. St. 304, 43 Atl. 973, 73 Am. St. 812; In re Taylor's Es- tate 192 Pa. St. 313, 43 Atl. 975 (wa- ger contract made valid after an as- signment for the benefit of cred- itors) ; Anthony v. Unangst, 174 Pa. 10, 34 Atl. 284. Contra, under the South Carolina statute, Riordan v. Dotv. 50 S. Car. 537, 27 S. E. 939. '' Wright V. Vaughn, 137 Ga. 52, 72 S. E. 412; Watson v. Hazelhurst, 127 Ga. 298, 56 S. E. 459. '"See Sheehv v. Shinn, 103 Cal. 325. 37 Pac. 393. "'Margin' is se- curity, nothing more." Hopkins v. O'Kane, 169 Pa. St. 478, 36 Week. N. Cas. (Pa.) 475. *» Skiff V. Stoddard, 63 Conn. 198, 26 Atl. 874, 28 Atl. 104, 21 L. R. A. 111. The above case treats the sub- ject exhaustively. It holds that the customer and broker sustained the relation of pledgor and pledgee, the broker holding the stock or other commodity as security for the re- mainder of the purchase price. Ray- mond v. Parker, 84 Conn. 694, 81 Atl. 1030; Hocker v. Western Union Tel. Co., 45 Fla. 363, 34 So. 901 ; Perin v. Parker, 126 111. 201, 18 N. E. 747, 2 L. R. A. 336, 9 Am. St. 571 ; Curtis V. Wright, 40 111. App. 491 ; Williams Commission Co.'s Assignee v. Shir- ley, 136 Ky. 303, 124 S. W. 327 (hold- ing such a transaction not void under the Kentucky statutes) ; Richter v. Poe, 109 Md. 20, 71 Atl. 420, 22 L. R. A. (N. S.) 174n; In re Taylor's Estate, 192 Pa. St. 304, 43 Atl." 973, 73 Am. St. 812; Wagner v. Hilde- brand, 187 Pa. St. 136. 41 Atl. 34; Hopkins V. O'Kane, 169 Pa. St. 478, 32 Atl. 421; Drouihet v. Pinckard (Tex.), 42 S. W. 135. "The true relations which exist between the broker and the customer in such cases, in the absence of some special agreement, where the stock is pur- chased on margin for speculative ac- count, are these: The broker under- takes and agrees: (1) At once to buy for the customer the stocks indicated. (2) To advance all the money re- quired for the purchase beyond the per cent, furnished by the customer. (3) To carry or hold the stock for the benefit of the customer so long as the margin agreed upon is kept good, or until notice is given by either party that the transaction must be closed. An appreciation in the value of the stock is the gain of the customer, and not of the broker. (4) At all times to have, in his name and 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 305 GAMING AND WAGERING. lOO § 1003. Test by which to determine validity of. — Tlie same test is applied here as in oilier transactions in futures. If the parties mutually understood and intended that the purchaser should pay for and the seller should deliver the commodity at the maturity of the contract it is a legal and valid transaction; and the fact that the purchaser is required to deposit a margin and increase the same at any time the market requires it in order to insure payment of the market price at the maturity of the con- tract, and thus insure the broker against loss, or that the seller shall deposit a margin and increase the same as the market shall require in order to make sure delivery at maturity of the com- modity sold, does not vitiate the contract." § 1004. Presumption as to margin transactions — Illustra- tion. — The mere fact that grain, stocks or other commodities are pu ' ' rchased on a margin does not in itself raise an inference to the customer when required by him, upon the receipt of the ad- vances, commissions, and interest due to the broker; or (6) To sell such shares, upon the order of the cus- tomer upon payment of the like sums to him, and account to the custo- mer for the proceeds of such sale. Under this contract the customer un- dertakes : (1) To pay the margin agreed upon on the current market value of the stock. (2) To keep good such margin according to the fluctua- tions 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 per- centage advanced by him and the amount due the broker. Markham v. Jaudon, 41 N. Y. 235 ; Richardson v. Shaw, 209 U. S. 365. 52 L. ed. 835, 28 Sup. Ct. 512." Richter v. Poe. 109 Md. 20. 71 Atl. 420. 22 L. R. A. (N. S.) 174, also holding that the law presumes the validity of the contract. Contra, Art. iv, § 26, California Con- stitution; Parker v. Otis, 130 Cal. 322, 62 Pac. 927, 92 Am. St. 56, affd., 187 U. S. 606, 47 L. ed. 323, 23 Sup. Ct. 168; Kullman v. Simmens, 104 Cal. 595. 38 Pac. 362. This provision ap- plies when the broker buys from a third person and keeps the title to the stock, though it is agreed that it 20 — Contracts, Vol. 2 is collateral for his customer's debt. Sheehy v. Shinn, 103 CaL 325, Zl Pac. 393. "But if at the time of the contract it is mutually understood and in- tended by all the parties, whether ex- press or not, that the commodity said to be sold was not to be paid for nor to be delivered, but that the con- tract was to be settled and adjusted by the payment of the difference in price, — if the price should decline the purchaser paying the difference, if it should rise, the seller paying the ad- vance, the contract price being the basis upon which to calculate the dif- ferences, — in such case it would be a gambling contract and void. White- sides V. Hunt, 97 Ind. 191, 49 Am. Rep. 441. See also, Hooper v. Nuck- les (Ala.), 39 So. 711; Birmingham Trust &c. Co. v. Currey (Ala.), 57 So. 962; Hatch v. Douglas, 48 Conn. 116, 40 Am. Rep. 154; Ling v. Mal- colm, n Conn. 517, 59 Atl. 698; Fisher v. Fisher, 113 Ind. 474, 15 X. E. 832; Sondheim v. Gilbert, 117 Ind. 71, 18 N. E. 687, 5 L. R. A. 432. 10 Am. St. 23n; Davis v. Davis, 119 Ind. 511, 21 N. E. 1112; Counselman v. Reichart, 103 Iowa 430, 12 N. W. 490; Gibnev v. Olivette, 196 Mass. 294, 82 N. JE. 41, holding that an in- tention not to deliver renders the § 1004 CONTRACTS. 306 that the transaction is a mere wager.*^ But when taken in connection with other facts and circumstances a margin trans- action may show an intention on the part of the parties to engage in a gambling or wagering transaction, as where the correspond- ence shows that the broker was wilhng to buy or sell an unlimited quantity of cotton at his own risk for the defendant, without re- gard to the latter's ability to meet the obligation thus incurred, so long as the defendant put up the margin ;^^ as where the broker knew that the customer could not make payment, and also knew that he was neither a shipper of the com- modities which were the subject of the pretended purchase, nor interested in a business which required their use;** as where the broker makes no inquiry as to the financial ability of customers making large purchases, and merely requires proper margins ;*° as an agreement which requires the customer to put margins as security and provides for the clos- ing out of such customer should he fail to keep the margins good. contract void at common law; Bless- ing V. Smith, 74 N. J. Ch. 593, 70 Atl. 933; Peters v. Grim, 149 Pa. St. 163, 24 Atl. 192, 34 Am. St. 599; In re Taylor's Estate, 192 Pa. St. 304, 43 Atl. 973, 1Z Am. St. 812; Wall v. Schneider, 59 Wis. 352, 18 N. W. 443, 48 Am. Rep. 520. This seems also to be the rule in Massachusetts, although one might infer from the discussion of some of the cases cited supra that the rule was otherwise in that jurisdiction. Rice v. Winslow, 180 Mass. 500, 62 N. E. 1057; Post v. Leland, 184 Mass. 601, 69 N. E. 361 ; Marks v. Metropolitan Stock Exch., 181 Mass. 251, 63 N. E. 410. These Massachusetts cases hold that the broker is the agent of the purchaser to buy the stock or other commodity. An agreement by appellant to pay in- terest on money advanced for him by the appellees to protect sales for fu- ture delivery against the fluctuations of the market was held not to taint the contract with the vice of gam- bling. Gruman v. Smith, 81 N. Y. 25. See Gregory v. Wendell, 39 Mich. Zn, ZZ Am. Rep. 390. One who agrees to pay interest on all money deposited as margins in his behalf is not for that reason a party to a gam- bling contract. Morissey v. Broomal. Z7 Nebr. 766, 56 N. W. 383. ^Johnston v. Miller, 67 Ark. 172, 53 S. W. 1052; Whitehead v. Ballin- ger, 38 Colo. 66, 88 Pac. 169 ; Preston V. Cincinnati &c. R. Co., 36 Fed. 54, 1 L. R. A. 140; Corbett v. Under- wood, 83 111. 324, 25 Am. Rep. 392; Marks v. Metropolitan Stock Exch., 181 Mass. 251, 6Z N. E. 410; Kendall V. Fries, 71 N. J. L. 401, 58 Atl. 1090; Winward v. Lincoln. 23 R. I. 476, 51 Atl. 106, 64 L. R. A. 160n; Hallet v. Aggergaard, 21 S. Dak. 554, 114 N. W. 696, 14 L. R. A. (N. S.) 1251. ^^ Phelps V. Holderness, 56 Ark. 300, 19 S. W. 921. "Waite V. Frank, 14 S. Dak. 626, 86 N. W. 645. However, a purchase of stock on margin will not be con- sidered a wagering contract merely because the purchaser buys beyond the point of prudence as measured by his financial ability. Fearon v. Little, 227 Pa. 348, 76 Atl. 72. *^ Sprague v. Warren, 26 Nebr. 326, 41 N. W. 1113, 3 L. R. A. 679, holds that these facts place the burden on the broker to show that the transac- tion was a bona fide sale for actual delivery. 307 GAMING AND WAGERING. § IOO5 with no provision requiring an offer, ability or willingness to perform on the part of either;^" as where the broker never calls upon the customer for the purchase-money, but only for mar- gins;*^ as where the grain is purchased on a margin and sold by the customer before time for delivery arrived;" as where the customer was to be closed out the moment the fluctuation of the market exhausted his margin;" as where a very small margin is advanced on a very large purchase/" it may lead to the conclusion that the transaction is a mere wager, § 1005. Legislative enactment concerning. — Buying and selling on margins has been by legislative enactment declared gambling. The constitution of California provides that all con- tracts for the sale of shares in the capital stock of any corporation or association, on margins to be delivered on a future day, shall be void, and any money paid on such contracts may be recovered by the party paying it by suit in any court of competent juris- diction."^ The validity of this provision has been upheld by the state courts."^ And under it an agreement that defendant should act as agent for plaintiff in buying stock for her from third par- ties, and pay the whole price therefor, two-thirds of which was advanced by plaintiff, the stock to be held by defendant until the balance was paid, and as collateral security for the balance due on the stock, the title to remain in defendant while so held by him, has been declared a sale on margin of such stock by the defendant to plaintiff.^^ § 1006. Futures — Options. — The mere fact that a contract of purchase and sale is in the end settled by pa3'ment of differ- ences^* does not necessarily establish that the agreement was a ^Lvon V. Culbertson, 83 111. 33, 25 "= Parker v. Otis, 130 Cal. 322, 62 Am. Rep. 349. Pac. 571, 62 Pac. 927. 92 Am. St. 56; "Jameison v. Wallace, 167 111. 388, Kullman v. Simmens, 104 Cal. 595, 38 47 N. E. 762, 59 Am. St. 302. Pac. 362. "Weare Commission Co. v. People, ^ Sheehy v. Shinn. 103 Cal. 325. 37 209 111. 528, 70 N. E. 1076. Pac. 393. Compare with Pollitz v. "Commercial Nat. Bank v. Spaids, Wickersham, 147 Cal. 371, 81 Pac. 8 111. App. 493. See also. Sharp v. 1099. Stalker. 63 N. J. Eq. 596, 52 Atl. 1120. " Sprunt v. Hurst-Streator. 180 '"In re Patterson's Appeal, 13 Fed. 782 (purchaser unable to get Week. No. Cas. (Phila.) 154. actual cotton and accepted payment "Constitution, art 4, § 26. in cas!.); Jamieson v. Wallace, 167 § I007 CONTRACTS. 308 wager at its inception. Good faith contracts of purchase and sale for future deHvery are, as a general rule, upheld, notwith- standing either the purchaser or seller reserves the right to per- form the contract or not at his option.^^ Thus a vendor may be given an option to deliver the thing sold at any time within the next twelve months.^^ § 1007. Rule further illustrated. — And one who has grain in crib and sells it for future delivery may, when that time comes, instead of shipping his own grain, buy grain to fill or offset the sales made and resell the grain on hand for future delivery.^' A contract whereby for a valuable consideration one agrees to purchase gold coin at a certain price and within a specified time deliverable at the seller's option has been held prima facie valid.''' Agreements on the part of the vendor to repurchase stock sold if demand is made within a specified time,'"* or an offer to sell at 111. 388, 47 N. E. 762, 59 Am. St. 302; Scott V. Brown, 54 Mo. App. 606 ; Rogers v. ^Marriott, 59 Nebr. 759, 82 N. W. 21; Flagg v. Baldwin, 38 N. J. Eq. 219, 48 Am. Rep. 308; Waite V. Frank, 14 S. Dak. 626, 86 N. W. 645; Atwater v. Manville, 106 Wis. 64, 81 N. W. 985 ; Lowry v. Dillman, 59 Wis. 197, 18 N. W. 4; W^all V. Schneider, 59 Wis. 352, 18 N. W. 443, 48 Am. Rep. 520. See also, Xash-Wright Co. v. Wright, 156 111. App. 243; Murman v. Rose, 132 Mo. App. IZ, 111 S. W. 527. ==Hanna v. Ingram, 93 Ala. 482, 9 So. 621; Union National Bank v. Carr, 15 Fed. 438, 29 Int. Rev. Rec. 118, 16 Cent. L. J. 320; Wolcott v. Heath, 78 111. 433 ; Logan v. Musick, 81 111. 415; Godman v. Meixsel, 65 Tnd. 32; Mason v. Pavne, 47 Mo. 517; Pieronnet v. Lull, 10 Nebr. 457. 6 N. W. 759 ; Bigelow v. Benedict, 70 N. Y. 202. 26 Am. Rep. 573. affg. 9 Hun (N. Y.) 429; Story v. Salomon, 71 N. Y. 420, 6 Daly (N. Y.) 531; Disljorough v. Neilson, 3 Johns. Cas. (N. Y.) 81: Brown v. Hall, 5 Lans. (N. Y.) 177; Mcllvaine v. Egerton, 2 Robt. (N. Y.) 422; Tyler v. Bar- rows, 6 Robt. (N. Y.) 104; Lester v. Buel, 49 Ohio St. 240, 30 N. E. 821, 34 Am. St. 556; Kirkpatrick v. Bon- sall, 72 Pa. St. 155. So in the case of Harris v. Tumbridge, 83 N. Y. 93, 8 Abb. N. Cas. (N. Y.) 291, 38 Am. Rep. 398 (Brooklyn City Ct. Gen. T.), holding form of option known as a "straddle" valid and of itself in no way obnoxious. "The contract is not, however, to be considered a wager or illegal merely because it is optional on one of the parties and obligatory on the other." Taylor v. Sebastian, 158 Mo. App. 147, 138 S. W. 549. But it is held in some jurisdictions that if the vendee does not obligate himself to take the cot- ton when tendered the contract is unilateral and neither party is bound. Luke v. Livingston, 9 Ga. App. 116, 70 S. E. 596. Mallet & Nutt V. Watkins, 132 Ga. 700, 64 S. E. 999, 131 Am. St. 226. "^ Ferryman v. Wolffe, 93 Ala. 290, 9 So. 148. See also, Johnson v. Mil- mine, 150 111. App. 208. " Morrissey v. Broomal, Zl Nebr. 766, 56 N. W. 383. ^Bigelow V. Benedict, 70 N. Y. 202, 26 Am. Rep. 573. ™ George J. Birkel Co. v. Howze, 12 Cal. App. 645, 108 Pac. 145 (ven- dee given the right to reassign and re- deliver certain stock bought and re- ceive money paid therefor with in- terest) ; Loeb V. Stern, 198 111. 371, 64 N. E. 1043, affg. 99 111. App. 309 GAMING AND WAGERING. lOOS a designated price if acceptance is made within a specified time,"" or to sell one all the coal he shall need during a given season," or to sell all the oranges "my trees may produce in the years 1899 and 1900,"°^ or of the sale of a patent right with an option on the part of the patentee to cancel the contract if the royalties do not amount to a specified sum,"^ have been upheld. § 1008. Puts and calls, assignments, resale, ringing out. — Option contracts in the form of "puts" (the privilege of deliver- ing or not delivering the thing sold) or "calls" (the privilege of calling or not calling for the thing purchased) have been declared illegal by statutory enactment."'* The mere fact, however, that a purchaser in a future deliveiy contract intends to assign his interest therein before delivery"^ or actually resells before the maturity of the contract,"" does not make the contract illegal. Nor does the mere fact that intervening parties drop out and leave a valid subsisting contract existing between one vendor 637; Ubben v. Binnian, 182 111. 508, 55 N. E. 552, revg. 78 111. App. 330; Wolf V. National Bank, 178 111. 85, 52 N. E. 896, revg. 11 111. App. 325. ""Schlee v. Guckenheimer, 179 111. 593, 54 N. E. 302, revg. 76 111. App. 681 ; Minnesota Lumber Co. v. White- breast Coal Co., 160 111. 85, 43 N. E. 774, 31 L. R. A. 529, revg. 56 111. App. 248. " ?^Iinnesota Lumber Co. v. White- breast Coal Co., 160 111. 85, 43 N. E 774, 31 L. R. A. 529; Standard Dis- tilling &c. Co. V. Springfield Coal &c. Co., 146 111. App. 144 (agreement to supply from one to three car loads of coal per day at vendee's option for one year at a designated price). To same effect, Consolidated Coal Co. v. Jones & Adams Co., 232 111. 326. 83 N. E. 851, affg. 120 111. App. 139. ■"Losecco V. Gregory, 108 La. 648, Z2 So. 985. See also, Ganu v. Long (Ala.), 56 So. 606. •" Preston v. Smith, 156 111. 359, 40 N. E. 949. "Pearce v. Foote, 113 111. 228, 55 Am. Rep. 414; Tennev v. Foote, 95 111. 99; Schneider v. turner, 130 111. 28, 22 N. E. 497, 6 L. R. A. 164n ; Preston v. Smith, 156 111. 359. 40 N. E. 949; Nash-Wright Co. v. Wright. 156 111. App. 243 (holding that the statute applies to contracts by which the vendor is bound to deliver on the call of the vendee, it being optional with the vendee to buy or not to buy as he pleases) ; Woods v. Bates, 126 111. App. 180, affd., 80 N. E. 84. See also, Luke v. Livingston, 9 Ga. App. 116, 70 S. E. 596. And when a con- tract contains an optional feature which is illegal, actual delivery of the thing sold does not legalize the op- tional feature. Burnev v. Blanks (Tex. Civ. App.), 136 S. W. 806. '"Ponder v. Cotton Co., 100 Fed. nZ, 40 C. C. A. 416. "" Ex parte Phillips, 2 DeG. F. & J. 634, 30 L. J. Bankr. 1; In re Mor- gan, 6 Jur. (N. S.) 1273, 3 L. T. (N. S.) 516, 9 W. R. 131 : Cleage v. Laid- lev, 149 Fed. 346. 79 C. C. A. 284; Wolf V. National Bank. 178 III. 85, 52 N. E. 896, revg. 11 111. App. 325; Ware v. Jordan, 25 111. App. 534; Rosenstock v. Tormev, 32 Md. 169, 3 Am. Rep. 125; Western Union Tel. Co. v. Littlejohn. 72 Miss. 1025, 18 So. 418; Eggleston v. Rumble, 66 Hun (N. Y.) 627, 20 N. Y. S. 819; Champlin v. Smith, 164 Pa. St. 481, 30 All. 447; In re Taylor (Pa.), 43 Atl. 975 ; Young v. Glendinning, 194 Pa. St. 550. 45 Atl. 364. § I009 CONTRACTS. 3IO and another purchaser invahdate the contract.^^ A transaction of this character is usually termed "ringing out"^^ § 1009. Other forms of wagering contracts — ^Election bets. — Lord Mansfield went farther perhaps than other judges in upholding wager contracts. But he nevertheless held a bet on the result of an election void on the ground that it was calculated to promote corruption in voting.*'^ The various courts have consistently declared election bets void regardless of any statute condemning wagering agreements, either on the ground that they tended to promote corruption in voting^*^ or that the courts by permitting an action to be brought on such wager would be drawn into, 39 So. 971. '* State V. Rorie, 23 Ark. 726; State V. Vaughan, 81 Ark. 117, 98 S. W. 685, 7 L. R. A. (N. S.) 899n, 118 Am. St. 29. In Arkansas the statute prohibited "betting any money on any game of hazard or skill". Horse rac- ing was held not to be a game of hazard or skill under the statute. Harless v. United States, Morris (Iowa) 169 (horse racing not a game of chance) ; Commonwealth v. Shelton, 8 Grat. (Va.) 592 (horse racing not a game of chance) ; Mc- Devit v. Thomas, 130 Kv. 805, 114 S. W. 273 (Kentucky statute 1903. § 1955, provides that "every contract * * * for which the consideration of money, property or other thing lent or advanced for the purpose of gaming * * * shall be void." Bet- ting on a horse race was held not to be prohibited by this provision, but the agreement sued on was held void under another part of the statute which provided that betting, gaming, or wagering contracts were void). " In the following cases the point was decided either in actions on con- tracts entered into in connection with a bet on a horse race, or to recover money lost on the result of a horse race. Blaxton v. Pye. 2 Wils. 309; Goodburn v. Marley, 2 Strange 1159; Corson v. Neathenv, 9 Colo. 212, 11 Pac. 82; Dyer v. Benson, 69 Ga. 609; lOII CONTRACTS. 312 credit."" The Texas Civil Appeals Court, in construing a New York statute suspending for thirty days in the year, within the grounds of certain associations "for improving the breed of horses," the penal section against betting and pool selling, held that this provision did not suspend the civil statute declaring void all gambling contracts, so as to pennit a pool seller to recover his losses from a customer.'^ § 1011. Gaming as defined by statute — Generally. — Most of the cases which will be cited in this section were criminal pro- ceedings, but it is thought best to cite them here in order to show the scope and trend of statutory enactment on this subject. Un- der statutes against gaming, betting on the result, or paying for a thing of value, depending on the outcome of a game of baga- Shaffner v. Pinchback, 133 III. 410, 24 N. E. 867, 23 Am. St. 624 ; Tatman V. Strader, 23 111. 439; Garrison v. ISIcGregor, 51 III. 473; Richardson v. Kelly, 85 111. 491; Mosher v. Griffin, 51 111. 184, 99 Am. Dec. 541 (holding that there can be no recovery for serv- ices rendered in training a horse for purposes of gaming) ; Wade v. Dem- ing, 9 Ind. 35 ; Ellis v. Beale, 18 Maine 337, 36 Am. Dec. 726; Shropshire v. Glascock, 4 Mo. 536, 31 Am. Dec. 189; Boynton v. Curie, 4 Mo. 599; Joseph V. Miller, 1 N. Mex. 621 ; Mc- Questen v. Steinmetz, 73 N. H. 9, 58 Atl. 876, 111 Am. St. 592 (action for rent of premises). See also, Opinion of Justices, 73 N. H. 625, 63 Atl. 505. This question has arisen most fre- quently in prosecutions under crimi- nal statutes. See James v. State (Okla. Cr.), 113 Pac. 226, 33 L. R. A. (N. S.) 827, and note. See also, note in 7 L. R. A. (N. S.) 899. It is believed, however, that in a civil pro- ceeding the court might refuse to en- force a contract directly connected with a bet on a horse race, for the reason that there existed a statute which condemned gaming, and which made it a criminal offense, while at the same time a criminal proceeding could not be maintained under the statute. Statutes of this character, in so far as they invalidate gambling contracts, are remedial and are to be given a liberal construction, while in a criminal proceeding it would be given a strict construction. See State V. Hayden, 31 Mo. 35. '* Barker v. Mosher, 60 N. H. 73. For criminal proceedings brought under statutes concerning book mak- ing and pool selling, see State v. Stripling, 113 Ala. 120, 21 So. 409, 36 L. R. A. 81 ; State v. Vaughan, 81 Ark. 117, 98 S. W. 685, 7 L. R. A. (N. S.) 899n, 118 Am. St. 29; State V. Thompson, 160 Mo. 333, 60 S. W. 1077, 54 L. R. A. 950, 83 Am. St. 468; State v. Oldham, 200 Mo. 538, 98 S. W. 497 ; State v. Nease, 46 Ore. 433, 80 Pac. 897; State v. Ayers, 49 Ore. 61, 88 Pac. 653, 124 Am. St. 1036. " Tuckett V. Herdic, 5 Tex. Civ. App. 690, 24 S. W. 992. See the case of People V. Langan, 196 N. Y. 260, 89 N. E. 921, 25 L. R. A. (N. S.) 479n, which construes § 351 of New York Penal Code, Laws 1908, chap. 506-507, against bookmaking and holds that such statute does not pre- vent oral betting at the race-course. 3^3 GAMING AND WAGERING. § lOII telle/* billiards and pool/" cards/" cock fight/' base ball game/' wrestling match/^ craps/* fan tan/"^ shell game/** a raffle/^ tenpins/* playing for "chips" or "checks"/" or drinks or cigars/'' "People V. Cutler, 28 Hun (N. Y.) 465, 1 N. Y. Cr. 465 (In the above case nothing was actually bet on the game. Losers were merely to play for the use of the apparatus) ; Neal V. Commonwealth, 22 Grat. (Va.) 917. "Murphy v. Rogers, 151 Mass. 118, 24 N. E. 35 (note given in part for price for use of billiard table). An agreement that the loser is to pay for the game constitutes a violation of the statute against gambling. State V. Sanders, 36 Ark. 353. Ill S. W. 454, 19 L. R. A. (N. S.) 913. See also, cases cited in the note on this subject in 19 L. R. A. (N. S.) 913. The contrary is held in some juris- dictions. Harbaugh v. People, 40 111. 294; Wakefield v. Commonwealth, 7 Ky. L. 295; State v. Quaid, 43 La. Ann. 1076, 10 So. 183, 26 Am. St. 207 ; Blewett v. State, 34 Miss. 606; State V. Hall, 32 N. J. L. 158; State v. Belvidere, 44 N. J. L. 350; People V. Sergeant, 8 Cow. (N. Y.) 139; People V. Forbes. 52 Hun (N. Y.) 30, 4 N. Y. S. 757; Steuer v. Royal Cigar Co., 17 Ohio C. C. 82, 9 C. D. 456. "^ Simmons v. State, 106 Ga. 355, 32 S. E. 339; In re Rowland, 8 Idaho 595, 70 Pac. 610; State v. Behan, 113 La. 754, 27 So. 714 (faro) ; Eubanks v. State, 5 IMo. 450; Ford v. State, 86 Miss. 123, 38 So. 229 (poker) ; State V. Burton, 25 Tex. 420 (faro). See, however, Chambers v. State, 25 Tex. 307; Hearn v. State, 25 Tex. 336; Commonwealth v. Terry, 2 Va. Cases 77. ^* Commonwealth v. Tilton, 8 Mete. (Mass.) 232; Bagley v. State, 1 Humph. (Tenn.) 486. ^^'Mace V. State, 58 Ark. 79, 22 S. W. 1108. "Desgain v. Wessner, 161 Ind. 205, 67 N. E. 991. Compare with Wilkin- son V. Stitt, 175 Mass. 581, 56 N. E. 830. ^ Eslava v. State. 44 Ala. 406 ; Mil- ler V. State. 48 Ala. 122; Portis v. State. 27 Ark. 360; Trimble v. State, 27 Ark. 355; Brown v. State. 40 Ga. 689; Bcthune v. State, 48 Ga. 505; New Orleans v. Miller, 7 La. Ann. 651 ; Aguirre v. State, 31 Tex. Cr. 519, 21 S. W. 256; Faucett v. State, 46 Tex. Cr. 113, 79 S. W. 548. Compare, however, with Cummings v. State (Tex. Crim.), 72 S. W. 395; Camp- bell V. State (Tex. Crim.), 72 S. W. 396. "^In re Lee Tong, 9 Saw. (U. S.) 233. 18 Fed. 253. •^ States V. Red, 7 Rich. (S. Car.) 8. '^Mclnnis v. State, 51 Ala. 23; Johnson v. State, 83 Ala. 65, 3 So. 790; State v. De Boy, 117 N. Car. 702, 23 S. E. 167; Stearns v. State, 21 Tex. 692; Long v. State, 22 Tex. App. 194, 2 S. W. 541, 58 Am. Rep. 633. Also, Koster v. Seney, 99 Iowa 584, 68 N. W. 824 (holding that the mere fact that the drawing never took place does not affect the validity of the contract). See, however, Norton V. State, 15 Ark. 71 ; Kirk v. State, 69 Miss. 215, 10 So. 577. ^ State v. Records, 4 Har. (Del.) 554 (price of game risked) ; Hamil- ton V. State, 75 Ind.. 586 (wire of allev). See, however. State v. Hall, 22 N. J. L. 158 (terms of the estab- lishment that loser was to pay for use of alley). To same effect, Bren- inger v. Treasurer of Belvidere, 44 N. J. L. 350. ^Porter v. State, 51 Ga. 300; Rob- inson V. State, 77 Ga. 101 ; Gibbons v. People, 23 111. 442; Ashlock v. Commonwealth, 7 B. Mon. (Ky.) 44; Walton V. State, 14 Tex. 381. *° State V. Wade, 43 Ark. 77, 51 Am. Rep. 560; State v. Maurer. 7 Iowa 406; State v. Leicht, 17 Iowa 28; State v. Bishel, 39 Iowa 42; McDan- iel V. Commonwealth, 6 Bush (Ky.) 326; Stahel v. Commonwealth, 7 Bush (Ky.) 387; Commonwealth v. Tay- lor, 14 Gray (.Mass.) 26; Lord v. State. 16 N. H. 325, 41 Am. Dec. 729; Brown v. State, 49 N. J. L. 61, 7 Atl. 340; Tuttle v. State. 1 Tex. App. 364 ; Stone v. State, 3 Tex. App. 675; Bachellor v. State. 10 Tex. 258; Tuttle v. State. 1 Tex. App. 364; Tlumphrevs v. State, 34 Tex. Cr. 434, 30 S. W. 1066. § IOI2 CONTRACTS. 314 Operating a slot-machine/' have been held gambling.^'^ In New York a bet, by parties ignorant of the truth as to whether or not a third person holds a lease on certain real property, is within the statute against betting and gaming upon an "unknown or contin- gent" event.^^ It has also been held that a bet on a decision of a court of last resort is a wager on an uncertain event.®* § 1012. Games on behalf of charity. — The scheme prac- ticed in aid of fairs and charities of voting with tickets purchased at fixed prices for candidates, of whom one in whose name the most tickets are voted is to receive some article which the whole number of tickets pays for, is not illegal either under the statute or at common law. Strictly this is not gaming.®^ § 1013. Bohemian oats speculation. — Contracts whereby one gives his note for "Bohemian Oats" at a fictitious and extrav- agant price in consideration of the agreement of the payee to sell for him the oats raised from those purchased at a like extravagant price are, in some jurisdictions, declared wager agreements.®^ In other jurisdictions agreements of this character are declared against public poHcy because capable of performance only by the practicing of deception and fraud on others."' In either case the courts will, as a general rule, leave the parties where it finds them.®^ § 1014. Rights of parties — Validity of bills, notes or other obligations given in payment of gambling debt. — In the ab- ^ Muller V. Wm. F. Stoacker Cigar " Shipley v. Reasoner, 80 Iowa 548, Co., 89 Nebr. 438, 131 N. W. 923, 34 45 N. W. 1077; Payne v. Raubinek, L. R. A. (N. S.) 573, and note. 82 Iowa 587, 48 N. W. 995. See also, ^ A bet on a foot race constitutes Merrill v. Packer, 80 Iowa 542, 45 gambling. Jones v. Cavanaugh, 149 N. W. 1076 (sale of "prolific oats" Mass. 124, 29 N. E. 306. * * * as a speculation). Compare '^ Thomson v. Hayes, 111 N. Y. S. with Couch v. Hutchinson, 2 Ala. 495. App. 444, 57 So. 75 (sale of an agency •^ Tripp V. O'Brien, 57 111. App. 407. contract). See also, ante, ch. XXI. '°Dion V. St. John Baptiste So- See, however, contra, Matson v. Blos- ciety, 82 Maine 319, 19 Atl. 825. See som, 50 Hun (N. Y.) 600, 18 N. Y. also, Quatsoe v. Eggleston, 42 Ore. St. 726, 2 N. Y. S. 551 ; Kurz v. Fish, 315, 71 Pac. 66. 58 Hun (N. Y.) 602, 33 N. Y. St. "^Schmueckle v. Waters, 125 Tnd. 674, 11 N. Y. S. 209. 265, 25 N. E. 281 ; McNamara v. Gar- "'* See cases cited, ante, note 97 this gett, 68 Mich. 454, 36 N. W. 218, 13 section. Am. St. 355. 315 GAMING AND WAGERING. § loi, sence of a statutory provision that a bill or note given for a wag- ering contract shall be void, the defense that it was for such a consideration cannot be sustained against a bona fide holder of such a negotiable instrument for value before maturity and with- out notice f° and it has been held that where paper is signed at the maker's request by accommodation indorsers to be discounted at a certain bank, which has no knowledge that the proceeds are to be used for gambling purposes, such use will constitute no de- fense to an action on the paper. ^ § 1015. As between the immediate parties and those with notice. — As a general rule, however, all bills, notes, or other obligations given in payment of a gambling debt are, as between the immediate parties or in the hands of subsequent holders tak- ing after maturity or with notice, subject to a defense showing that the actual consideration was a gambling or wagering trans- action.^ The same rule governs as to the assignee of a note "* Haight V. Joyce, 2 Cal. 64, 56 Am. Dec. 311; Boughner v. Meyer, 5 Colo. 71, 40 Am. Rep. 139; Shirley v. How- ard, S3 111. 455; Adams v. Wool- dridge, 3 Scam. (111.) 255; Biegler V. Merchants' Loan & Trust Co., 62 111. App. 560. afifd., 164 111. 197, 43 N. E. 512; Schmueckle v. Waters, 125 Ind. 265, 25 N. E. 281 ; Wilson v. Na- tional Fowler Bank, 47 Ind. App. 689, 95 N. E. 269; Atwood v. Weeden, 12 R. I. 293 ; Thompson v. Samuels (Tex.), 14 S. W. 143. A defense that notes had been given on Sunday and on account of a stock-gambling trans- action is not available, where the notes are regular upon their face, as against a purchaser in good faith for value, before maturity and without notice. Mvers v. Kessler, 142 Fed. 730, 74 C.'C A. 62. If plaintiff kept a billiard saloon and played with the defendant upon the terms that the defendant should pay for the use of the table by both parties in case he lost, but otherwise he should pay nothing, it is gaming. It is also gam- ing if the parties played together up- on the terms that the defendant, in case he lost, should pay the plaintiff for liquor and cigars to be used by the plaintiff but otherwise not, and the same would apply to the price of the use of table or to the price of the liquors, so that a note given for the amount therefor would be void both as to the original note and the renewal thereof where such acts are contrary to the statute against gam- bling, and so even though the plain- tiff was licensed to sell such goods. Murphy v. Rogers, 151 Mass. 118, 24 N. E. 35; Holden v. Cosgrove, 12 Grav (Mass.) 216. ' Birdsall v. Wheeler, 62 App. Div. (N. Y.) 625, 71 N. Y. S. 67, affd., 173 N. Y. 590, 65 N. E. 1114. See also, Camas Prairie State Bank v. New- man, 15 Idaho 719, 99 Pac. 833, 21 L. R. A. (N. S.) 703n, 128 Am. St. 81n. " Brown v. Turner, 7 T. R. 630, 2 Esp. 631 ; Aubert v. Maze, 2 Bos. & P. 371, 5 R. R. 624; Steers v. Lashley, 6 T. R. 61 ; Amorv v. Merrvweather, 4 Dowl. & Rvl. 86; Sprav'v. Burk, 123 Ind. 565, 24 N. E. 588 ; People's Sav. Bank v. Gifford. 108 Iowa 277, 79 N. W. 63; Scollans v. Flvnn, 120 Mass. 271; Burrus v. Witcover (N. Car.), 74 S. E. 11; Atwood v. Wee- den, 12 R. I. 293. Nevada has adopted the common law upon the subject of wagers as altered by the statute of 9 Anne, ch. 14. making void a trans- fer of a negotiable instrument at the § IOl6 CONTRACTS. 316 given for wagers intentionally lost at cards to enable the obligee to sell it for the joint benefit of the obligor and himself/ and to assignees generally, with notice.* § 1016. Special statutory enactments concerning recovery thereon. — Where a statute provides that all judgments by confession, conveyances, bonds, bills, notes and securities, when the consideration is money or property won at any game or gam- bling device, shall be void and may be set aside and vacated by any court of competent jurisdiction upon suit brought for that purpose by the person so confessing, giving, entering into or executing the same, or by his personal representative, a purchaser or other person interested therein, the main purpose of such an act is to discourage and suppress gaming by preventing retention of the spoils by the gambler, or the successful transfer of them to his colleagues. And where a transfer or indorsement is made of drafts given as security for money loaned and to be loaned for the purpose of gambling with the lender, such indorsement is within the inhibitions of the statute, as it is to be regarded either as a security or as a new bill, nor in such case does the rule as to parties in pari delicto apply ;^ and generally these express statu- tory prohibitions as to notes or paper given for such wagering or gambling considerations, or based upon such gaming transactions, preclude a recovery, even on the part of a bona fide holder.^ time and place of play to the winner. § 3426), considering Williams v. Burke & Co. v. Buck, 31 Nev. 74, 99 Wall, 60 Mo. 318 (which cites 2 Pac. 1078. For numerous cases so Bouv. L. Diet. 493) ; Slacum v. Pom- holding see cases cited, 119 Am. St. erv, 6 Cranch (U. S.) 221, 3 L. ed. 174. See, however, Rudolph v. Win- 205; Coffee v. Planters' Bank, 13 ters, 7 Nebr. 125, overruled by How. (U. S.) 183, 14 L. ed. 105; Sprague v. Warren, 26 Nebr. 326, 41 Van Staphorst v. Pearce, 4 Mass. N. W. 1113, 3 L. R. A. 679n; Russell 258; Chapin v. Dake, 57 111. 295, 11 V. Kidd, 2,7 Tex. Civ. App. 411, 84 S. Am. Rep. 15; and distinguishing Hig- W 273 ginbotham v. McGready, 183 Mo. 96, ' Thompson v. Moore, 4 T. B. Mon. 81 S. W. 883, 105 Am. St. 461. See (Ky ) 79. also, Savings Bank v. National Bank * See Steers v. Lashley, 6 T. R. 61 ; of Commerce, 38 Fed. 800. ; Union Collection Co. v. Buckman, 150 "Manning v. Manning, 8 Ala. 138; Cal. 159, 88 Pac. 708, 119 Am. St. Ivcy v. Nicks, 14 Ala. 564; Birming- 164, and numerous cases cited in note ham Trust &c. Savings Co. v. Curry, on page 175, 9 L. R. A. (N. S.) 568n, 160 Ala. 370, 49 So. 319. 135 Am. St. 119 Am. St. 164n. 102; Aver v. Younker, 10 Colo. App. ''Morton v. Provident Nat. Bank, 27, 50 Pac. 218; Western Nat. Bank 42 Tex. Civ. App. 154, 93 S. W. 189 &c. v. State Bank of Rock Ford, 18 (decided under Rev. Stat. Mo. 1899, Colo. App. 128, 70 Pac. 439; Conklin 317 GAMING AND WAGERING. § IOI7 § 1017. Note given in an option or "future" deal. — How- ever, before a note given in an option or "future" deal shall be subject, in the hands of a bona fide holder, to the defense of an illegal consideration, it is true generally that the inhibition in the statute must be express or by necessary implication sufficiently specific to cover cases of this character to warrant such a defense being sustained,^ although where the statute expressly and in suf- ficiently specific terms makes such notes void it constitutes an available and good defense even against a bona fide holder.^ § 1018. Presumptions concerning and validity of note given for gambling debt. — When it is made to appear that the bill or note sued on was given in satisfaction of a gambling debt the law indulges in no presumption that the holder acquired it without notice before maturity and for value. The burden is V. Roberts, 2i6 Conn. 461; Cunning- 3 Am. Dec. 612; Hurlburt v. Straub, ham V. National I5ank, 71 Ga. 400, 51 54 W. Va. 303, 46 S. E. 163; Swin- Am. Rep. 266 ; Williams v. Judy, 3 ney v. Edwards, 8 Wyo. 54, 55 Pac. Gil. (111.) 282, 44 Am. Dec. 699; 306, 80 Am. St. 916. But see Craw- Pope V. Hanke, 52 111. App. 453, afifd., ford v. Spencer, 92 Mo. 498, 4 S. W. 155 111. 617, 40 N. E. 839, 28 L. R. A. 713, 1 Am. St. 745. The defense must 568; International Bank v. Vankirk, be pleaded. Moore v. Blanck, 71 39 III. App. 23; Tenney v. Foote, 4 Misc. (N. Y.) 257, 129 N. Y. S. 1105. 111. App. 594; Vennum v. Carr, 130 'Pope v. Hanke, 52 111. App. 453, 111. App. 309; Chapin v. Dake, 57 III. affd., 155 111. 617, 40 N. E. 839, 28 295, 11 Am. Rep. 15; Irwin v. Mar- L. R. A. 568; Sondheim v. Gilbert, quett, 26 Ind. App. 383, 59 N. E. 38, 117 Ind. 71, 18 N. E. 687, 5 L. R. A. 84 Am. St. 297; Koster v. Senev, 99 432, 10 Am. St. 23n ; Shaw v. Clark, Iowa 584. 68 N. W. 824; Traders' 49 Mich. 384, 13 N. W. 786, 43 Am. Bank V. Alsop, 64 Iowa 97, 19 N. W. St. 474; Crawford v. Spencer, 92 863; Pace v. Martin. 2 Duv. (Ky.) Mo. 498. 4 S. W. 713, 1 Am. St. 745; 522; Early v. McCart, 2 Dana (Ky.) Third National Bank v. Tinsley, 11 414; Alexander & Co. v. Hazelrig, Mo. App. 498; Higginbotham v. Mc- 29 Ky. 1212. 97 S. W. 353 ; Gough Greadv. 183 Mo. 96. 81 S. W. 883, 105 V. Pratt, 9 Md. 526; Gray v. Robin- Am. St. 461; Provost v. McEncroe, son. 95 Miss. 1, 48 So. 226; Lucas 102 N. Y. 650. 5 N. E. 795; Northern V. Waul, 12 Smedes & M. (Miss.) National Bank v. Arnold, 187 Pa. 356. 157; Lagonda Nat. Bank v. Portner, 40 Atl. 794; Jackson v. Foote. 11 46 Ohio St. 381. 21 N. E. 634; Har- Biss. (U. S.) 223, 12 Fed. 2,7; Hentz per V. Yoimg, 112 Pa. St. 419, 3 Ad. v. Jewell, 4 Woods (U. S.) 656, 20 670; Unger v. Boas, 13 Pa. St. 601; Fed. 592; Third Nat. Bank v. Har- Mordecai v. Dawkins, 9 Rich. Law rison, 3 McCrary (U. S.) 316. 10 (S. Car.) 262; Snoddv v. American Fed. 243; Grav v. Boyle. 55 Wash. Nat. Bank. 88 Tenn. 573. 13 S. W. 578, 104 Pac. 828, 133 Am. St. 1042. 127, 7 L. R. A. 705n. 17 Am. St. 918; But see Hawley v. Bibb, 69 .\la. 52; Allen V. Dunham, 92 Tenn. 257. 21 Cunningham v. National Bank. 71 Ga. S. W. 898; Stewart v. Miller, 3 Will- 400, 51 Am. Rep. 266. son (Tex. Civ. App.), § 292; 'Root v. Merriam. 27 Fed. 909; Pearce v. Rice, 142 U. S. 28, 35 L. Pope v. Hanke. 52 111. App. 453, affd., cd. 925, 12 Sup. Ct. 130; Woodscm 155 111. 617. 40 N. E. 839. 28 L. R. V. Barrett, 2 Hen. & M. (Va.) 80, A. 568; Snoddy v. American Nat. § 1 01 9 CONTRACTS. 318 upon the holder to estabhsh that he is a bona fide purchaser.® However, the note may not be subject to such a defense as that of a gambling consideration where the transaction is valid, in that the intent of one of the parties was an actual sale of stocks, the gambling purpose being only that of the other party. ^"^ Again, a certificate of deposit may be based upon a gambling transaction and be indorsed and assigned in a foreign state, and still the in- dorser or assignor be liable at the suit of a bona fide holder for value, although such negotiable paper be void in such bona fide holder's hands under express declaration of the statute of the state where suit is brought." When a note is given in part for money advanced for legitimate purposes and in part to cover advances as margins in speculating in cotton futures it may, as between the parties, be enforced only as to the money advanced for legitimate purposes.^^ § 1019. Recovery of money lost at gaming, wagering or dealing in futures. — When the loser voluntarily pays to the winner the amount of the wager the former cannot, in the absence of a special statute conferring such right, recover it for the reason that the parties are in pari delicto.^^ Practically all the various Bank, 88 Tenn. 573, 13 S. W. 127, R. 413 ; Windham v. Children, 7 Ala. 7 L. R. A. 705n, 17 Am. St. 918. See 357; Paulk v. Jasper Land Co., 116 also, Alexander & Co. v. Hazelrig, Ala. 178, 22 So. 495 ; Johnson v. Col- 29 Kv 1212, 97 S. W. 353. lier, 161 Ala. 204, 49 So. 761; Nealy * Fuller V. Hutchins, 10 Cal. 523, v. Powell, 20 Ark. 163; Grant v. 70 Am. Dec. 746; Union Collection Owens, 55 Ark. 49, 17 S. W. 338; Co. V. Buckman, 150 Cal. 159, 88 Pac. Frank v. Pennie, 117 Cal. 254, 49 708, 9 L. R. A. (N. S.) 568n, 119 Pac. 208; Branham v. Stallings, 21 Am. St. 164n; Standeford's Admr. v. Colo. 211, 40 Pac. 396, 52 Am. St. Shultz, 5 B. Mon. (Ky.) 581, 46 Ky. 213; Funk v. Gallivan, 49 Conn. 124, 581. Compare with Poorman v. Mills, 44 Am. Rep. 210; Cook v. Barnett, 39 Cal. 345, 2 Am. Rep. 451; Reed v. 25 Ga. 664; Gregory v. King, 58 111. Bond, 96 Mich. 134, 55 N. W. 619; 169, 11 Am. Rep. 56; Holland v. Lee's Admr. v. Ware, 1 Hill (S. Car.) Swain, 94 111. 154; Davis v. Leonard, 313. 69 Ind. 213; Schlosser v. Smith, 93 '"Bangs V. Hornick, 30 Fed. 97; Ind. 83; Thrift v. Redman, 13 Iowa Springs & Co. v. Carpenter, 154 Fed. 25; Graves v. Ford, 3 B. Mon. (Ky.) 487, 83 C. C. A. Zll . See also, Faux 113; Logan v. Anderson, 18 B. Mon. V. Fitter, 232 Pa. Z2,, 81 Atl. 91. (Ky.) 114; O'Brien v. Luques, 81 " Sullivan v. German Nat. Bank, Maine 46, 16 Atl. 304 ; Low v. 18 Colo. App. 99, 70 Pac. 162. Blanchard, 116 Mass. 272; Northrup '^Mixfon V. Walker & Walker v. Buffington, 171 Mass. 468, 51 N. (Ga.), 71 S. E. 1007 See also, Bauer E. 7; Gregory v. Wendell, 40 Mich. V. Fabel, 221 Pa. St. 156, 70 Atl. 558. 432; Nagle v. Randall, 115 Minn. 235, "Hudson v. Davis, 2 Anstr. 504; 132 N. W. 266; Hickerson v. Ben- Vaughan v. Whitcomb, 2 B. & P. N. son, 8 Mo. 8, 40 Am. Dec. 115; Welsh 319 GAMING AND WAGERING. IOI9 States have, however, enacted laws which entitle the loser to re- cover under some, if not all instances, money or other property voluntarily paid to the winner." V. Cutler, 44 N. H. 561; Mount v. Waite, 7 Johns. (N. Y.) 434; Mc- Cullum V. Gourlav, 8 Johns. (N. Y.) 147; Hudspeth v. Wilson, 13 N. Car. 372, 21 Am. Dec. 344; Hodges v. Pit- man, 4 N. Car. 276, 2 Car. Law 394 ; Pratt V. Mcintosh, Wright (Ohio) 356;' Speise v. McCoy, 6 Watts & S. (Pa.) 485, 40 Am. Dec. 579; Allen V. Dodd, 4 Humph. (Tenn.) 131, 40 Am. Dec. 632; Woodson v. Gordon, Peck (Tenn.) 196, 14 Am. Dec. 743; Danforth v. Evans, 16 Vt. 538; West V. Holmes, 26 Vt. 530. However, at common law, if one of the parties to a gambling transaction was made drunk or stupefied by the other drug- ging him with poison or whisky so that he became unconscious, and if while in that condition he was de- prived of his money or property by the other, a recovery of the property could be had, more especially if the further allegation was made that the drugs were administered for that pur- pose. Summers v. Keller, 152 Mo. App. 626, 133 S. W. 1180. Moreover, public policy may, under circum- stances, permit a recovery. Auxer v. Llewellyn, 142 111. App. 265. See also, Williamson v. Majors, 169 Fed. 754, 95 C. C. A. 186. See ante, ch. XXI. "Jaques v. Withy. 1 H. Bl. 65; Jaques v. Golightlv, 2 W. Bl. 1073; Bones v. Booth, 2 W. Bl. 1226; Tap- pendcn v. Randall. 2 B. & P. 467; Lacaussade v. White, 7 T. R. 535, 2 Esp. 629; Aubert v. Walsh, 3 Taunt, 277; Busk v. Walsh, 4 Taunt. 290; Nelson v. Waters, 18 Ark. 570; Cook V. Barnett. 25 Ga. 664; Neal v. Todd, 28 Ga. 334; Dyer v. Benson, 69 Ga. 609; Tatman v. Strader, 23 111. 493; Garrison v. McGregor, 51 111. 473; Richardson v. Kelly, 85 111. 491 ; New York Grain &c. Exch. v. Mellen, 27 111. App. 556; Clingman v. Irvine, 40 111. App. 606; Little v. Brannen- burgh, 4 Ind. 35 ; Wade v. Deming, 9 Ind. 35 ; I'.IcKinney v. Pope's Admr., 3 B. Mon. (Kv.) 93; Standeford's Admr. v. Shultz, 5 B. Mon. (Ky.) 581, 46 Ky. 581 ; Boner v. Montgomery, 9 B. Mon. (Ky.) 123; Gray v. Roberts, 2 A. K. Marsh. (Ky.) 208, 12 Am. Dec. 383; Mayes v. Parish, 11 B. Mon, (Ky.) 38; Lyons v. Hodgen, 90 Ky. 280, 13 S. W. 1076, 12 Ky. L. 211; Triplett v. Scelbach, 91 Ky. 30, 14 S. W. 948; WehmhofT v. Rutherford, 98 Ky. 91, 32 S. W. 288; Ellis v. Beale, 18 Maine 2>?,7, 36 Am. Dec. 726; Peyret v. Coffee, 48 Maine 319; Hook V. Boteter, 3 Har. & McH. (Md.) 348; Grace v. McElroy. 1 Al- len (Mass.) 563; Low v. Blanchard, 116 Mass. 272; Miller v. Le Piere, 136 Mass. 20; Shinn v. Wimberly (Miss.), 12 So. 333; Summers v. Keller, 152 Mo. App. 626, 133 S. W. 1180; Williams v. Wall, 60 Mo. 318; Swaggard v. Hancock, 25 AIo. App. 596; Perry v. Gross, 25 Nebr. 826, 41 N. W. 799; Johnson v. Ferris, 49 N. H. 66; Watts v. Lynch, 64 N. H. 96, 5 Atl. 458; Hutchinson v. Targee, 14 N. J. L. 386; Mann v. Gordon, 15 N. Mex. 652, 110 Pac. 1043 (holding that loser might recover under the statute even though he did not pay the amount of his losses until six months after the loss occurred) ; Grover v. Morris, 72> N. Y. 473 ; Wil- kinson V. Gill, 74 N. Y. 63, 30 Am. Rep. 264; Haywood v. Sheldon, 13 Johns. (N. Y.) 88; Phillips v. Sture, 1 Code (N. Y.) 56; Veach v. Elliott, 1 Ohio St. 139; Hoss v. Lavton, 3 Ohio St. 352; Lear v. McMillen, 17 Ohio St. 464; Lucas v. Harper, 24 Ohio St. 328; Lester v. Buel, 49 Ohio St. 240, 30 N. E. 821, 34 Am. St. 556; App V. Coryell, 3 P. & W. (Pa.) 494 ; Newell v. Wilgus, 35 Pittsb. Leg. J (Pa.) 306; Hockadav v. Willis, 1 Spears' L. (S. Car.) 379, 40 Am. Dec. 606; Williams v. Talliaferro, 1 Coldw. (Tenn.) 2>7 ; McGrew v. City Produce Exch., 85 Tenn. 572, 4 S. W. 38, 4 Am. St. 771 ; Revier v. Hill, 1 Sneed. (Tenn.) 405; Maling v. Crummey, 5 Wash. 222, 31 Pac. 600; Crowley v. Taylor. 49 Wash. 511, 95 Pac. 1016. See, however, Sutterly v. Fleshman, 41 Pa. Super. Ct. 131. One who pays a gambling obligation by check can- not recover from the bank the amount of such check even though tlie bank knows the purpose for which the check was drawn. Gibb v. Dominy, CONTRACTS. 320 § 1020. Illustration of rule concerning recovery. — Thus one has, under the laws of the jurisdiction in which the transac- tion occurred, been held entitled to recover money lost on an elec- tion bet,^^ a bucket shop transaction/" or deal in futures/^ or stock gambling/^ or jewelry given to the keeper of the game in order to obtain poker chips/" or money deposited under a wager agreement upon a rise and fall of the price of stocks, whether the agreement has been fully executed or not,-" or money bet on a foot race,-^ or horse race.^^ 154 111. App. 74. The case of Mc- Ginley v. Cleary, 2 Alaska 269, holds that in a suit in equity a gambler can- not recover losses sustained at his own game. In this case the plaintiff was the proprietor of a saloon in which he gambled with defendant and lost $1800.00, in satisfaction of which debt he conveyed the premises to the winner and then sought to recover them. To the effect that a con- tract void when made is not vali- dated by subsequent repeal of the law which invalidated it, see Willcox V. Edwards (Cal.), 123 Pac. 276, and numerous authorities there cited. '= Watts V. Lvnch, 64 N. H. 96, 5 Atl. 458; Mitchell v. Orr, 107 Tenn. 534, 64 S. W. 476. Compare with Davis V. Leonard, 69 Ind. 213 ; Wood- cock v. McQueen, 11 Ind. 14; Lassen V. Karrer, 117 Mich. 512, 76 N. W. IZ; Liebman v. Miller, 20 Misc. (N. Y.) 705, 46 N. Y. S. 532, in which cases the statute was held not broad enough to cover election bets. See, however, Sutterly v. Fleshman, 41 Pa. Super. Ct. 131, holding that the courts of Pennsylvania will not on account of comity enforce a statu- tory right given by another state to recover losses sustained in a gam- bling transaction which have already been paid. ^* Timmons v. Timmons, 145 Ky. 259, 140 S. W. 164. See, however, Ives V. Boyce, 85 Nebr. 324, 123 N. W. 318, 25 L. R. A. (N. S.) 157n, holding that the Nebraska statute per- mitting recovery of money lost at "games of hazard" does not apply to a "bucket shop" transaction. "Williamson v. Majors, 169 Fed. 754, 95 C. C. A. 186. See also, Ascher v. Edward Moyse & Co. (Miss.), 57 So. 299. 'Hlclntyre v. Smyth, 108 Va. IZd, 62 S. E. 930. '"Johnson V. Clark, 23 Misc. (N. Y.) 346, 51 N. Y. S. 238 (either jew- elry or its value recoverable). To same effect, Zeller v. White, 208 111. 518, 70 N. E. 669, 100 Am. St. 243 (Suit does not have to be brought to recover the money lost on each hand but may be maintained for the lump sum and it might be brought either against the proprie- tor of the house or his employe.). See Cartwright v. McElwain, 132 Ky. 83, 116 S. W. 297, holding that a saloon keeper who receives part of the money lost at gaming in his saloon is liable for the whole amount even though he did not knowingly partici- pate in the profits; Berns v. Shaw, 65 W. Va. 667, 64 S. E. 930, 23 L. R. A. (N. S.) 522n, holding both the keeper of the game and his agent joint tort feasors and liable jointly and sever- ally to the loser, "" Van Pelt v. Schauble, 68 N. J. L. 638, 54 Atl. 437. See also, Pearce v. Foote, 113 111. 228, 55 Am. Rep. 414; Lyons v. Hodgen, 90 Kv. 280, 12 Ky. L. 211, 13 S. W. 1076. Compare with Ives v. Boyce, 85 Nebr. 324, 123 N. W. 318, 25 L. R. A. (N. S.) 157n, in which it was held that the statute was not sufficiently broad to entitle plaintiff to recover money lost in a "bucket shop" transaction. To same effect, Boyce v. O'Dell Commission Co., 109 Fed. 758 (construing Indiana Statute) ; Lancaster v. McKinley, 2)Z Ind. App. 448, 67 N. E. 947; Hirst v. Maag. 13 Pa. Super. Ct. 4. ^ Jones V. Cavanaugh, 149 Mass. 124, 21 N. E. 306. 22 Perry v. Gross, 25 Nebr. 826, 41 N. W. 799. Compare with Ives v. Boyce, 85 Nebr. 324, 123 N. W. 318, 25 L. R. A. (N. S.) 157n. 321 GAMING AND WAGERING. 102 I § 1021. Rights and liabilities of third persons. — Where the winner acts through an agent the principal and agent may under the statute be jointly liable to the loser." The right to recover money lost at gaming may rest in a third person, as where one loses money which rightfully belongs to another, the true owner may maintain an action against the winner for its recovery. Thus, the beneficiary of trust funds which have been lost by the trustee at a faro bank may maintain an action at common law against the proprietor of such gambling bank for their recovery, the beneficiary not being in pari delicto."* A wife, in a proper case, may recover money entrusted to her husband which he has lost at gaming.-^ So, it has been held that a master may recover property owned by him which his servant, without his consent, loses in a gambling game.-'* Under the Tennessee statute, where an officer embezzled funds of his bank, and lost the same in illegal speculations, an assignment to the bank by himself and wife of their right to recover the same is valid. "^ '"Lilenthal v. Carpenter Baggott & Co., 148 Ky. SO, 146 S. W. 2; Cart- wright V. McEKvain, 132 Ky. 83, 116 S. W. 297; Berns v. Shaw, 65 W. Va. 667, 64 S. E. 930, 23 L. R. A. (N. S.) 522n. See, however, Nagle V. Randall. 115 Minn. 235, 132 N. W. 266, holding that under the IMinne- sota statute the keeper of the garne who docs not participate therein is liable to return only the amount of his "rake-off". ** Pierson v. Fuhrmann, 1 Colo. App. 187. 27 Pac. 1015, per Reed. J.: "This was the rule at common law, and has been asserted in the courts of almost every state in the Union. In Jacobs v. Pollard, 10 Cush. (Mass.) 287, it is said: 'In all cases where money is held by a person, whether it came into his hands right- fully or wrongfully, that in fact be- longs to another, tlie true owner may maintain an action against him for its recovery.' " " Murray v. Aull, 47 Colo. 542, 107 Pac. 1068. (In the above case the wife recovered against one who paid the check issued by the husband with the knowledge that it was given in settle- ment of a gambling debt.) See also, Western Nat. Bank of Pueblo v. State Bank of Rocky Ford, 18 Colo. App. 128, 70 Pac. 439; Thompson v. Hynds, 15 Utah 389, 49 Pac. 293. ^Ramirez v. Main, 1 Ariz. 43, 89 Pac. 508. But it has been held that the collateral heirs of a deceased could not recover property conveyed by the decedent in accordance with the terms of an aleatory contract, "in the making of which there appears to have been no unfair dealing and no great disproportion between the value of the property conveyed and the con- sideration received, the property hav- ing been the naked ownership of real estate valued at $3,300, and the con- sideration having been the obligation of the defendant to maintain and care for the grantor during the re- mainder of his life, and to bury him, when dead." Thielman v. Gahlman, 119 La. 350, 44 So. 123. The right to sue may be given the parent, wife, child or children, executor or admin- istrator of or the assignee of the per- son sustaining the loss. Ascher v. Ed- ward Moyse & Co. (Miss.), 57 So. 299. =^ Allen V. Dunham, 92 Tenn. 257, 21 S. VV. 898. As to the right of an 21 — CoNTR.vcTS, Vol. 2 § 1022 CONTRACTS. 322 § 1022. Prize contests. — A purse, prize or premium is usu- ally considered as something of value, offered by a person for the doing of something by others.^^ The mere fact that an entrance fee is charged before one is permitted to contest does not make the transaction gaming when the amount of the prize does not depend upon the number of contestants or the amount of fees paid in by such contestant,^^ and the winner may maintain an action for the purse.^" § 1023. Further examples of valid and invalid prize con- tests. — The transaction is also valid where the prize is made up by voluntary subscriptions on the part of persons who take no part in the contest.^^ A premium or reward offered in good faith and not as a cover for betting, by a third person to the winner of a horse race, may be recovered by the winner even though he paid assignee to sue, see Van Pelt v. Schanble, 68 N. J. L. 638, 54 Atl. 437. ^See Hankins v. Ottinger, 115 Cal. 454, 47 Pac. 254. 40 L. R. A. 76 ; Mor- rison V. Bennett. 20 Mont. 560, 52 Pac. 553, 40 L. R. A. 158; Harris v. White, 81 N. Y. 532. See as to right to recover for deceit of a newspaper publisher who conducted a subscrip- tion contest, Goodhart v. Mission Pub. Co. (Cal. App.), 123 Pac. 210. ^ Gates V. Tinning, 5 U. C. Q. B. 540, 3 U. C. Q. B. 295; Hankins v. Ottinger, 115 Cal. 454, 47 Pac. 254, 40 L. R. A. Id; Wilson v. Conlin, 3 111. App. 517; Alvord v. Smith, 63 Ind. 58; Mullen v. Beech Grove Driv- ing Park, 64 Ind. 202; Molk v. Da- viess County Agricultural &c. Assn., 12 Ind. App. 542, 40 N. E. 927 ; Delier v. Plymouth County Agricultural Soc, 57 Iowa 481, 10 N. W. 872; Farrier v. State Agricultural Soc, 36 Minn. 478, 32 N. W. 554; Harris v. White, 81 N. Y. 532; People v. Van De Carr, 150 N. Y. 439, affg. 7 App. Div. (N. Y.) 608, 39 N. Y. S. 581; People v. Fallon, 152 N. Y. 12, 46 N. E. 296, 57 Am. St. 492, affg. 4 App. Div. (N. Y.) 82, 39 N. Y. S. 1130; In re Dwyer, 14 Misc. (N. Y.) 204, 35 N. Y. S. 884; Misner v. Knapp, 13 Ore. 135, 9 Pac. 65, 57 Am. Rep. 6; Ballard v. Brown, 67 Vt. 586, 32 Atl. 485; Porter v. Day, 71 Wis. 296, 2n N. W. 259. '"Gates V. Tinning, 5 U. C. Q. B. 540, 3 U. C. Q. B. 295; Alvord v. Smith, 63 Ind. 58; Molk v. Daviess County Agricultural &c. Assn., 12 Ind. App. 542, 40 N. E. 927; Delier v. Plvmouth County Agricultural Soc, 57 Iowa 481, 10 N. W. 872; Mis- ner v. Knapp, 13 Ore. 135, 9 Pac. 65, 57 Am. Rep. 6; Porter v. Day, 71 Wis. 296, Zl N. W. 259; Moshier v. La Crosse County Agricultural Soc, 90 Wis. n, 62 N. W. 932. A contract to train horses in consideration in part of a per cent, of the purses won by them does not violate the then New York laws. Brien v. Stone, 82 App. Div. (N. Y.) 450, 81 N. Y. S. 597. See also, Harris v. White, 81 N. Y. 532. Compare with Mosher v. Griffin, 51 111. 184, 99 Am. Dec 541. One who wins an automobile in a raffle may recover the machine from the one who has actual possession thereof when the owner recognizes the right of the winner to the ma- chine and gives him an order for the same. Dee v. Sears-Nattinger Auto Co., 141 Iowa 610, 118 N. W. 529, 133 Am. St. 182. See also, Martin V. Richardson, 94 Kv. 183, 21 S. W. 1039, 14 Ky. L. 847. 19 L. R. A. 692, 42 Am. St. 353. "' Wilkinson v. Stitt, 175 Mass. 581, 56 N. E. 830. 323 GAMING AND WAGERING. § IO24 an entrance fee which contributed toward making up the pre- mium.^- But where the amount of the premium depends entirely upon the number of contestants and the amount of entrance fees paid in, it has been held that the transaction is a gambling con- tract.^' A statute which prohibits pacing or trotting any horse for a purse except when authorized by a fair or agricultural so- ciety does not render invalid an offer by the owner of a stallion of a specified sum of money to the owner of the first get of such stallion that should trot a mile in a designated time.^* § 1024. Collateral agreements. — Contracts made in fur- therance of gambling transactions, though not immediately in- volving a wager, are against public policy.^^ Consequently, one who knowingly and with the purpose of furthering a wagering or gambling transaction lends money to another to enable the latter to engage therein cannot maintain an action for its recov- ery.^" § 1025. Collateral contracts — Lender must be a confed- erate. — It is not enough, however, to defeat recovery by the ^- Porter v. Day, 71 Wis. 296, Zl N. cation, it was not limited entirely to W. 259. An agreement between two the unlawful purpose." St. Louis Fair contestants to pool their winnings in Assn. v. Carmody, 151 Mo. 566, 52 various horse races is not illegal. S. W. 365, 74 Am. St. 571. Hankins v. Ottinger, 115 Cal. 454. 47 ^ Tyler v. Carlisle, 79 Maine 210, Pac. 254, 40 L. R. A. 76. See, how- 9 Atl. 356, 1 Am. St. 301n ; Lancaster ever, Comly v. Hillegass. 94 Pa. St. v. Ames, 103 Maine 87. 68 Atl. 533, 132, 39 Am. Rep. 774, in which the 17 L. R. A. (N. S.) 229n, 125 Am. court refused to permit recovery on St. 286; Gibney v. Olivette, 196 Mass. a check given to cover the entrance 294, 82 N. E. 41 ; Appleton v. Max- fee of a horse in a race. well, 10 N. Mex. 748, 65 Pac. 158, 55 "Gibbons v. Gouverneur, 1 Denio L. R. A. 93; Oliphant v. Markham. (X. Y.) 170; Dudley v. Flushing 79 Tex. 543, 15 S. W. 569, 23 Am. Jockey Club, 69 N. Y. St. 621. 14 St. 363. See also, Thomas v. First Misc. (N. Y.) 58, 35 N. Y. S. 245. Nat. Bank, 116 111. App. 20, affd., 213 "^Whitehead v. Burgess, 61 N. J. 111. 261, 72 N. E. 801 (the indorsee of L. 75, 38 Atl. 802. a certificate of deposit denied the ""Kuhl v. M. Gaily Universal Press right to recover on such certificate Co., 123 Ala. 452. 26 So. 535, 82 Am. when the indorsement was made to St. 135. "A scheme lawful in itself enable the indorsee to engage in pool cannot be made a cover for one that selling on horse races) ; Plank v. is unlawful. The plaintiff's race track Jackson, 128 Tnd. 424, 26 N. E. 568, and grandstand were lawful to be 27 N. E. 1117; Freedlev v. Jacnbv. kept, but when it adds to those the 220 Pa. 609. 69 Atl. 1047 (holding that gambling booth, and runs them to- one who placed a wager for another gether. and then makes a contract and advanced the money for him can- that is appurtenant to either and ap- not recover from the other the money purtenant to both, courts will not en- so advanced) ; Terry v. Peterson, 2>1 tertain it merely because, in its appli- Utah 401, 108 Pac. 1106 (proceeds of § 1026 CONTRACTS. 324 lender, that he knew of the borrower's intention to use it in a wag- ering or gaming transaction. The lender must in some manner be a confederate or participator in the borrower's act, must himself be implicated in it.^^ Thus one not a party to a gambling transac- tion and who does not profit thereby may recover on a note given him by the loser for money loaned the latter with which to dis- charge a gambling debt.^^ § 1026. Examples of invalid collateral contracts. — But it has been held that a vendor of slot-machines who instructs the purchaser and assists him in promotion of their illegal use cannot recover on promissory notes given as payment for such ma- chines.^^ One who was employed as manager of a gambling house and was to receive one-half the net profits in lieu of salary has been denied the right to maintain an action for damages for the breach of such contract.*" A broker who is privy to an illegal contract for the purchase or sale of futures cannot recover either for his services or losses.*^ An executory contract for the pur- chase of a half interest in a store and fixtures among which latter sale of homestead lost by husband in wise, however, where the one seeking gaming). See also, ante, § 1014. to recover was a participant in the ""'Corbin v. Wachhorst, IZ Cal. 411, game. White v. Wilson's Admr., 100 15 Pac. 22; Singleton v. Monticello Ky. 367, 38 S. W. 495, Z1 L. R. A. Bank, 113 Ga. 527, 38 S. E. 947; 197. Plank V. Jackson, 128 Ind. 424, 26 ^ Kuhl v. M. Gaily Universal Press N. E. 568, 27 N. E. 1117; Sondheim Co., 123 Ala. 452, 26 So. 535, 82 Am. V. Gilbert, 117 Ind. 71, 18 N. E. 687, St. 135. 5 L. R. A. 432, 10 Am. St. 23n ; Tyler *°Britt v. Davis Bros., 118 La. 597, v. CarHsle, 79 Maine 210, 9 Atl. 356, 43 So. 248, 118 Am. St. 390. 1 Am. St. 301n; Waugh v. Beck, 114 ^^ Bailey & Graham v. Phillips, 159 Pa. St. 422, 6 Atl. 923, 60 Am. Rep. Fed. 535 ; Anderson v. Holbrook, 128 354; Dowell v. Collin Co. Nat. Bank Ga. 233, 57 S. E. 500, 11 L. R. A. (N. (Tex. Civ. App.), 126 S. W. 29; S.) 575n ; Beers v. Wardwell, 198 Cleveland v. Taylor (Tex. Civ. Mass. 236, 84 N. E. 306; Saunders v. App.), 108 S. W. 1037; Gaylord v. Baker, 122 Mo. App. 294, 99 S. W. Soragen, Z2 Vt. 110, Id Am. Dec. 51 ; Crawford v. Spencer, 92 Mo. 498, 154; Kinney v. Hynds, 7 Wyo. 22, 4 S. W. 713, 1 Am. St. 745. Nor can 49 Pac. 403, 52 Pac. 1081. See also he recover money advanced by him cases cited in preceding note. See, to cover margins. Henry Hentz & Co. however, Scott v. Baker, 143 111. App. v. Booz, 8 Ga. App. 577, 70 S. E. 108. 151. See also, Burns v. Tomlinson, 147 N. "' Oulds V. Harrison, 10 Ex. 572, 3 Car. 645, 61 S. E. 614. But he is en- C. L. R. 353, 24 L. J. Ex. 66, 3 Wk. titled to recover for advances made R. 160; White v. Yarbrough, 16 Ala. on behalf of his principal when not in 109; Brooks v. Brady, 53 111. App. privy of relationship. Allen v. Cald- 155; Wyman v. Fiske, 3 Allen well Ward & Co., 149 Ala. 293, 42 (Mass,) 238, 80 Am. Dec. 66; Bog- So. 855; Bailev & Graham v. Phil- ges3 V. Lily, 18 Tex. 200. It is other- lips, 159 Fed. 535. 325 GAMING AND WAGERING. § 102/ were gaming devices known as slot-machines has been held illegal and recovery of earnest money paid thereon permitted/" § 1027. Examples of valid collateral contracts. — But it is no defense against one not a party to the gambling transaction who seeks to recover for fitting up and furnishing a house that he knew it was to be used for gaming,*^ nor against the vendor or lessor of premises that he knew they were to be used for such purpose.** § 1028. Securities given for gambling debt. — Securities given for a gambling debt are unenforcible." Thus a pledge of stock as collateral security for a note given in settlement of losses at gaming is void.*" The same is true of a bill of sale given," a mortgage executed,*^ or a conveyance of land made,*^ and in some jurisdictions judgments rendered on securities given for a gambling debt are void.^" § 1029. New contract — Ratification — Executed margin transaction. — A new contract, such as a renewal note, which springs out of and is based upon a gambling or wagering agree- ** Muller V. Wm. F. Stoacker Cigar " Hockaday v. Willis, 1 Spear's Co.. 89 Nebr. 438, 131 N. W. 923, 34 Law (S. Car.) 379, 40 Am. Dec. 606. L. R. A. (N. S.) 573n. *' Mackin v. Shannon, 165 Fed. 98 ".Alichael v. Bacon, 49 iMo. 474, 8 (mortgagor and mortgagee partners Am. Rep. 138. To same effect, Green- in conducting a gaming house) ; Kos- land V. Mitchell, 3 Alaska 271 (car- ter v. Seney, 99 Iowa 584, 68 N. W. penters built house to be used by 824 (chattel mortgage), owner as a gaming house). "Trammcll v. Gordon, 11 Ala. 656; " Brunswick &c. Co. v. Valleau, 50 Boatright v. Porter's Heirs, 32 Ga. Iowa 120, 32 Am. Rep. 119; Nagle v. 130; International Bank v. Vankirk, Randall, 115 Minn. 235, 132 N. W. 39 111. App. 23. See, however, as to 266 (action brought against the bona fide purchasers, Fenno v. Sayre, keeper of the game and the owner 3 Ala. 458; Chiles v. Coleman, 1 A. and lessees of the building). The K. Marsh (Ky.) 296, 12 Am. Dec. "owner" or "lessor" may be rendered 396. liable bv statute. Iroquois Co. v. '"Butler v. Nohe, 98 111. App. 624; Meyer, 80 Ohio St. 676, 89 N. E. 90. Gough v. Pratt, 9 Md. 526; Smither '^-Xpplegarth v. Collev, 10 Mees. & v. Keves, 30 Aliss. 179; Campbell v. W. 723, 12 L. J. Ex. 34, 7 Jur. 18; New Orleans Nat. Bank, 74 Miss. International Bank v. Vankirk, 39 111. 526, 21 So. 400, 23 So. 25. See, how- App. 23; Gough v. Pratt, 9 Md. 526; ever, Lane v. Chapman, 11 Ad. & E. Evans V. Cook, 11 Nev. 69; Turner V. 980; Wilkerson v. Whitnev, 7 Mo. Peacock, 13 N. Car. 303 ; Haley v. 295 ; Teague v. Perrv, 64 N. Car. 39 ; Long, 1 Pick. (Tenn.) 93. Holland v. Pirtle, 10 Humph. (Tenn.) "Menardi v. Wacker (Nev.), 105 167; Welford v. Gilham, 2 Cranch Pac. 287. (U. S.) 556, 29 Fed. Cas. No. 17376. 102/ CONTRACTS. 326 merit is unenforcible.^^ Nor can any agreement of ratification or compromise render a gambling or wagering contract valid when its illegality is made to appear.^- However, where an il- legal margin or future transaction has been closed and money belonging to the customer resulting from such transaction is shown to be in the hands of the broker the latter may be required to pay the same to the customer.^* •^Hay V. Ayling, 20 L. J. Q. B. 171, 16 Q. B. 423, 15 Jur. 605; Kuhl V. M. Gaily Universal Press Co., 123 Ala. 452, 26 So. 535, 82 Am. St. 135; Stone V. Mitchell, 7 Ark. 91 ; Union Collection Co. v. Buckman, 150 Cal. 159. 88 Pac. 708, 9 L. R. A. (N. S.) 568n, 119 Am. St. 164n ; International Bank v. Vankirk, 39 111. App. 23; Campbell Co. Bank v. Schmitt, 143 Ky. 421, 136 S. W. 625; Hollings- worth V. Moulton, 53 Hun (N. Y.) 91, 24 N. Y. St. 843. 6 N. Y. S. 362; Haley v. Long, 1 Peck. (Tenn.) 93. To same effect, McKin v. Shannon, 165 Fed. 98. ^ Union Collection Co. v. Buck- man, 150 Cal. 159, 88 Pac. 708, 9 L. R. A. (N. S.) 568n and cases cited, 119 Am. St. 164n; Emery v. Royal, 117 Ind. 299, 20 N. E. 150; Creutz v. Heil, 89 Ky. 429, 12 S. W. 926; Pit- kins V. Noves. 48 N. H. 294, 97 Am. Dec. 615. 2 Am. Rep. 218; Grandin V. Grandin, 49 N. J. L. 508, 9 Atl. 756, 60 Am. Rep. 642 ; Gould v. Arm- strong, 2 Hall (N. Y.) 266; Turner V. Peacock, 13 N. Car. 303; Haley v. Long, 1 Peck. (Tenn.) 93; Reid v. Brewer (Tex. Civ. App.), 36 S. W. 99; Everingham v. Meighan, 55 Wis. 354, 13 N. W. 269. An illegal gaming contract cannot be ratified. Pelouse V. Slaughter, 241 111. 215, 89 N. E. 259. See also, Moore v. Blanck, 71 Misc. (N. Y.) 257, 129 N._ Y. S. 1105 (check given on discontinuance of an action and check given in settle- ment of a gambling transaction). ^'In re Dorr, 186 Fed. 276, 108 C. C. A. 322. Compare with Bauer v. Fabel, 221 Pa. 156, 70 Atl. 558. See however, Norris v. Logan (Tex.). 94 S. W. 123, 97 S. W. 820. CHAPTER XXVII. LOBBYING CONTRACTS. 1035. General rule. 1036. Lobbying contracts void. 1037. When illegal. 1038. Character of legislation im- material. 1039. Lobbying contract may be general in its nature. 1040. Invalid if personal solicita- tion is contemplated. 1041. Illustrations of unenforcible contracts. 1042. Further illustrations. 1043. Use of money as a test. 1044. Contract by executive officer qualifying a valid legislative enactment. 1045. Lobbying contract entered into by public officials. 1046. When contract for services before legislative body not unlawful. 1047. Examples of valid contracts. 1048. Must appear openly in true character. 1049. Rule applied. 1050. Contracts distinguished from lobbying. 1051. Effect of making fee con- tingent on success. 1052. Contract entered into under legislative authority. 1053. Rule where contract provides for services partly illegal. 1054. Recovery of compensation. § 1035. General rule. — The word "lobbying" as generally understood signifies soliciting or addressing members of a legis- lative body, in the lobby or elsewhere, with the purpose of influ- encing their votes. ^ By a legislative body is meant any body of persons authorized to make laws or rules for the community represented by them, such as a city council,^ the legislature of a state,^ or the congress of the United States.^ ' Burke V. Wood, 162 Fed. 533 (the above case quotes a number of defini- tions) ; Le Tourneux v. Gilliss, 1 Cal. App. 546, 82 Pac. 627; Colusa County v. Welch, 122 Cal. 428. 55 Pac. 243; Chippewa Valley & S. R. Co. v. Chi- cago St. R. M. & O. R. Co., 75 Wis. 224, 44 N. W. 17. 6 L. R. A. 601. ° Hayward v. Nordberg Mfg. Co., 85 Fed. 4, 29 C. C. A. 438 (city coun- cil and board of public works) ; Suss- man v. Porter, 137 Fed. 161; Burke V. Wood, 162 Fed. 533; Critchfield v. Bermidez Asphalt Pav. Co., 174 111. 466, 51 N. E. 552, 42 L. R. A. 347. See also, Davison v. Seymour, 1 Bosw. (N. Y.) 88, in which a con- tract for the use of personal in- fluence in controlling the action of a board of directors of a corpora- tion was said to be on the same foot- ing as contracts for influencing the action of legislators. ^ Le Tourneux v. Gilliss, 1 Cal. App. 546, 82 Pac. 627; Marshall v. Balti- more & O. R. R. Co., 16 How. (U. S.) 314. 14 L. ed. 953; Chippewa Valley & S. R. Co. v. Chicago, St. R. M. & O. R. Co.. 75 Wis. 224, 44 N. W. 17, 6 L. R. A. 601. * Owens v. Wilkinson, 20 App. (D. C.) 51; McKee v. Cheney, 52 How. 327 § 1036 CONTRACTS. 328 § 1036. Lobbying contracts void. — A contract which has for its object the influencing of a member or members of a legis- lative body in the discharge of their public duties is void as against public policy.^ In order to render lobbying contracts void it is unnecessary for the agreement to call for the perform- ance of acts which are prohibited by the constitution or legislative enactment.® § 1037. When illegal. — This is true for the reason that legislators should act only from a sense of public duty. Public policy imperatively requires that courts should pronounce void every contract the ultimate or probable tendency of which would be to sully the purity or mislead the judgment of those to whom the high trust of legislation is confided.^ Prac. (N. Y.) 144; Hazelton v. 989, 30 L. R. A. IZI, 51 Am. St. Sheckel, 202 U. S. 71, 50 L. ed. 939, 493; Everson v. Pitney, 40 N. J. Eq. 26 Sup. Ct. 567; Trist v. Child, 21 539, 5 Atl. 95, revd. 42 N. J. Eq. Wall. (U. S.) 441, 22 L. ed. 623. 361, 7 Atl. 860; Milbank v. Jones, ''Burke V. Wood, 162 Fed. 533. 127 N. Y. 370, 28 N. E. 31, 24 Am. *Le Tourneux v. Gilliss. 1 Cal. St. 454; Brown v. Brown, 34 Barb. App. 546. 82 Pac. 627; Milbank v. (N. Y.) 533; Hillyer v. Travers, 1 Jones, 127 N. Y. 370, 28 N. E. 31, Law Rep. (N. Y.) (O. S.) 146; 24 Am. St. 454; Mills v. Mills, 36 McKee v. Cleney, 52 How. Pr. (N. Barb. (N. Y.) 474, affd. 40 N. Y. Y.) 144; Mills v. Mills, 40 N. Y. 543, 100 Am. Dec. 535. 543, 100 Am. Dec. 535, affg. 36 Barb. 'Marshall v. Baltimore & O. R. (N. Y.) 474; Chesebrough v. Con- R. Co., 16 How. (U. S.) 314, 14 L. over, 140 N. Y. 382, 35 N. E. 633; ed. 953. To same effect, Boyd v. Harris v. Simonson, 28 Hun (N. Y.) Barclay, 1 Ala. 34, 34 Am. Dec. 762; 318, revd. 83 N. Y. 156; Cary v. Hunt V. Test, 8 Ala. 719, 42 Am. Dec. Western Union Tel. Co., 47 Hun 659; Martin v. Wade, Zl Cal. 168; (N. Y.) 610, 20 Abb. (N. Cas.) ZZZ, Weed V. Black, 2 MacArth. (D. C.) IS N. Y. St. 204; Gray v. Hook, 4 N. 268, 29 Am. Rep. 618; Hayward v. Y. 539; Russell v. Burton, 66 Barb. Nordberg Mfg. Co., 85 Fed. 4, 29 (N. Y.) 539; Rose v. Truax, 21 C. C. A. 438; Bermudez Asphalt Pav- Barb. (N. Y.) 361; Sedgwick v. ing Co. V. Critchfield, 62 111. App. Stanton. 14 N. Y. 289; Harris v. 221; Goodrich v. Tenney, 144 111. 422, Roof, 10 Barb. (N. Y.) 489; Sweeney 33 N. E. 44, 19 L. R. A. 371, 36 Am. v. McLeod, 15 Ore. 330, 15 Pac. 275 ; St. 459; Cook v. Shipman, 24 111. Plunter v. Nolf, 71 Pa. St. 282; Fil- 614; Judah v. Vincennes University, son's Trustees v. Himes, 5 Pa. St. 23 Ind. 272; McBratney v. Chandler, 452, 47 Am. Dec. 422; Hatzfield v. 22 Kans. 692, 31 Am. Rep. 213; Gulden. 7 Watts (Pa.) 152, 32 Am. Kansas Pacific R. Co. v. McCoy, 8 Dec. 750; Qippinger v. Hepbaugh, Kans. 538; Wood v. McCann, 6 Dana 5 Watts & S. (Pa.) 315, 40 Am. Dec. (Kv.) 366; Gill v. Williams, 12 La. 519; Spalding v. Ewing. 149 Pa. St. Ann. 219, 68 Am. Dec. 767; Burney's 375, 24 Atl. 219, 15 L. R. A. 727, 34 Heirs v. Ludeling, 47 La. Ann. 1Z, Am. St. 608; Usher v. McBratney, 3 16 So. 507; Fuller v. Dame, 18 Pick. Dill. (U. S.) 385; Trist v. Child, 21 (Mass.) 472; Long v. Battle Creek, Wall. (U. S.) 441, 22 L. ed. 623; 39 Mich. 323, Z2> Am. Rep. 384 ; Houl- Providence Tool Co. v. Norris, 2 ton v. Dunn, 60 Minn. 26, 61 N. W. Wall. (U. S.) 4';. 17 L. ed. 868; 329 LOBBYING CONTRACTS. § IO38 § 1038. Character of legislation immaterial. — In determin- ing the vahdity of a lobbying contract the cliaracter of the legisla- tion in consideration of which it is made is immaterial. A con- tract for lobbying services is equally illegal whether the act to be passed is public or private in its nature.** Nor is the contract condemned only when its object is to obtain legislation. An agreement which has for its purpose the prevention of the passage of an act by the legislature is equally invalid." § 1039. Lobbying contract may be general in its nature. — And where the contract contemplates and its main purpose is the securing or influencing of legislative action it may be invalid even though the influence contemplated is not to be exerted for or against any particular bill. Thus one who advances money to another in order to enable the latter to remain at the capital dur- ing a session of the legislature and while there carry on the busi- ness of lobbying has been denied the right to recover the money so advanced.^" § 1040. Invalid if personal solicitation is contemplated. — The validity of a contract for procuring legislation is usually de- Powers V. Skinner, 34 Vt. 274, 80 Atl. 219, 15 L. R. A. 727, 34 Am. St. Am. Dec. 677; Barron v. Tucker, 53 608; Clippinger v. Hepbaugh, 5 Watts Vt. 338, 38 Am. Rep. 684; Common- & S. (Pa.) 315, 40 Am. Dec. 519; wealth V. Callaghan, 2 Va. Cas. 460; Trist v. Child 21 Wall. (U. S.) 441. Houlton V. Nichol, 93 Wis. 393, 67 22 L. ed. 623; Powers v. Skinner, 34 N. W. 715, 33 L. R. A. 166, 37 Am. Vt. 274. 80 Am. Dec. 677. St. 928; Chippewa Valley & S. R. * Sweeney v. McLeod, 15 Oregon Co. V. Chicago. St. R. :\r. & O. R. 330, 15 Pac. 275 (preventing passage Co., 75 Wis. 224, 44 N. W. 17, 6 L. of an act prohibiting the catching of R. A. 601 ; Bryan v. Reynolds, 5 fish in a certain manner) ; Usher v. Wis. 200, 68 Am. Dec. 55. 'See also. McBratney, 3 Dill. (U. S.) 385. See MacGregor v. Dover &c. R. Co., 18 also, Colusa Countv v. Welch, 122 Q. B. 618, 83 E. C. L. 618; East Cal. 428, 55 Pac. 243. Anglian R. Co. v. Eastern Counties "Le Tourneux v. Gilliss, 1 Cal. R. Co., 16 Jur. 249; Cameron v. App. 546. 82 Pac. 627. A man who Reward, 11 Quebec Super. Ct. 392. agrees to furnish testimony for a *Wood V. McCann. 6 Dana (Ky.) legislative investigation, in exchange 366 (contract to secure passage of for a share of the profits which such an act legalizing promisor's divorce investigation will produce to one who from a former wife) ; Frost v. Bel- is favored with inside and advance mont, 6 Allen (Mass.) 152 (lobby- information, cannot recover his share ing services to be rendered in secur- of the profits. Veazey v. Allen. 173 ing the passage of an act for the in- N. Y. 359, 66 N. E. 103. 62 L. R. A. corporation of a municipality; con- 362. See also, Hazelton v. Sheckel, tract therefor held illegal) ; Spald- 202 U. S. 71, 50 L. ed. 939, 26 Sup. ing V. Ewing, 149 Pa. St. 375, 24 Ct. 567. § 1 041 CONTRACTS. 33O termined by the consideration as to whether or not it calls for or contemplates personal solicitation of or pressure brought to bear upon a member or members of a legislative body. If personal influence or personal solicitation is used or is contemplated by the contract, instead of open and fair argument, it is void." § 1041. Illustrations of unenforcible contracts. — A con- tract to pay for professional services in securing additional compensation for the defendant as postmaster, where such ser- vices consisted in securing special legislation to compel the post- office department to pay a claim which had been rejected, has been held contrary to public policy and unenforcible.^^ An agreement between a government claimant and a claim agent, employing the agent to assist in obtaining the passage of a private act of con- gress for payment of a claim, which clearly contemplates paying the agent for personal solicitations of members of congress, and other services such as are known as lobbying, is void because con- trary to public policy. ^^ Where, in a suit for attorney's fees, it appeared that the services rendered consisted in personal solicita- tion of the heads of departments of state, and members of the legislature, in order to procure legislation in the interests of " Hunt V. Test, 8 Ala. 713, 42 Am. the appointments to public offices, or Dec. 659; Le Tourneux v. Gilliss, 1 the ordinary course of legislation, Cal. App. 546, 82 Pac. 627; Owens are void as against public policy, V. Wilkinson, 20 App. (D. C.) 51; without reference to the question Wood V. IMcCann, 6 Dana (Ky.) 366; whether improper means are con- Frost V. Belmont, 6 Allen (Mass.) templated or used in their execution. 152; Sedgwick v. Stanton, 14 N. Y. The law looks to the general tend- 289; McKee v. Cheney, 52 How. ency of such agreements; and it Prac. (N. Y.) 144; Harris v. Roof, closes the door to temptation, by re- 10 Barb. (N. Y.) 489; Trist v. Child, fusing them recognition in any of 21 Wall. (U. S.) 441, 22 L. ed. 623; the courts of the country." Provi- Marshall v. Baltimore & O. R. R. Co., dence Tool Co. v. Norris, 2 Wall. 16 How. (U. S.) 314, 14 L. ed. 953; (U. S.) 45, 17 L. ed. 868. See, how- Globe Works V. United States, 45 Ct. ever, Foltz v. Cogswell, 86 Cal. 542, CI. (\J. S.) 497; Powers v. Skinner, 25 Pac. 60; Miles v. Thome, 38 Cal. 34 Vt. 274, 80 Am. Dec. 677 ; Houlton 335, 99 Am. Dec. 384. V. Nichol, 93 Wis. 393, 67 N. W. 715, " Spalding v. Ewing, 149 Pa. St. 33 L. R. A. 166, 57 Am. St. 928. "It 375, 24 Atl. 219, 15 L. R. A. 727, 34 is sufficient to observe generally, that Am. St. 608. all agreements for pecuniary con- "Trist v. Child, 21 Wall. (U. S.) siderations to control the business 441, 22 L. ed. 623. Compare Penne- operations of the government, or the baker v. Williams, 136 Ky. 120, 120 regular administration of justice, or S. W. 321, 123 S. W. 672. 331 • LOBBYIXG CONTRACTS. § IO42 clients, no recovery can be had, as contracts for such services are against pnbhc pohcy." § 1042. Further illustrations. — Contracts "to give all the aid in his power, spend such reasonable time as may be necessary, and generally to use his utmost influence and exertions to procure the passage into a law" of a specified bill,^° to "use his influence, eff"orts and labor in procuring the passage of a law by the said legislature,"^*' or to procure legislation upon a matter of public interest in regard to which neither of the parties had any claim against the United States," have been declared void. It has been said that "If the terms of the contract be broad enough to cover services of any kind, whether secret or open, honest or dishonest, the law pronounces a ban upon the paper itself. Nor will honest services substantially performed sanctify an unlawful contract."^® § 1043. Use of money as a test. — It has also been stated that all contracts for the procurement of legislation are void wdien they contemplate the use of money to influence legislation, but this broad statement is inaccurate. The use of money is not necessarily wrong. It depends largely upon the manner of its use. "If it iDe used to pay for the publication of circulars or pamphlets, or otherwise, for the collection or distribution of in- formation openly and publicly among the members of the legis- lature, there is nothing objectionable or improper. But if it be used directly in bribing, or indirectly in working up a personal influence upon individual members, conciliating them by suppers, presents, or any of that machinery so well known to lobbyists, "Gary v. Western Union Tel. Co., N. W. 898, 30 L. R. A. Ill, 51 Am. 47 Hun (N. Y.) 610, 20 Abb. (N. St. 493. The above case goes farther Cas.) ZZ2), 15 N. Y. St. 204. than any other in holding lobbying "Mills V. Mills, 40 N. Y. 543, 100 contracts illegal. No personal solici- Am. Dec. 535. Compare Houlton v. tation of the members of congress Nichol, 93 Wis. 393, 67 N. W. 715, was shown. Plaintiff attended con- ZZ L. R. A. 166, 57 Am. St. 928. gress for four years. During that "Rose V. Truax, 21 Barb. (N. Y.) time he appeared before committees 361 (personal solicitation shown). and not being an attorney hired one " Hazelton v. Sheckels, 202 U. S. at his own expense to urge the pass- 71, 50 L. ed. 939, 26 Sup. Ct. 567. age of the bill in which he was in- " Weed V. Black, 2 MacArth. (D. terested. Compare with Houlton v. C.) 268, 29 Am. Rep. 618. See also. Nichol, 93 Wis. 393, 67 N. W. 715, Sussman v. Porter, 137 Fed. 161 ; Z2> L. R. A. 166, 57 Am. St. 928. Houlton V. Dunn, 60 Minn. 26, 61 § I044 CONTRACTS. 332 which aims to secure a member's vote without reference to his judgment, then it is not only illegal but one of the greatest in- fractions of social duty of which an individual can under the circumstances of the present day be guilty."^'* § 1044. Contract by executive officer qualifying a valid legislative enactment. — While, properly speaking, they can- not be designated as "lobbying contracts," it would be well at this point to mention agreements by which a governor or other execu- tive officer seeks to qualify or affect the operation of a valid legis- lative enactment. The governor's approval makes a bill which has been passed by the legislative body a part of the statute law. He cannot qualify or change it by any contemporaneous agree- ment or contract on behalf of the state with persons who are to be benefited by the law whereby they agree to release to the state a part of such benefit.'* § 1045. Lobbying contract entered into by public officials. — The members of an official board have no right to employ an attorney to lobby for or against a bill which will affect their ten- ure of office. ^^ There is even more reason for holding such a contract illegal than there is in cases of private individuals. § 1046. When contract for services before legislative body not unlawful. — The foregoing does not mean that all persons whose interests may in any way be affected by any public or private act of the legislature do not have the right to urge their claims and arguments, either in person or by counsel professing to act for them. It is the right of every citizen who is interested in any proposed legislation to employ an agent for compensation "Kansas Pacific R. Co. v. McCoy, passed by the legislature. Claimant 8 Kans. 538. accepted $22,808.15 under such agree- ^"The legislature passed an act ap- ment and this suit was brought to propriating $45,616.30, in settlement obtain the remainder of the $45,616.30 of a claim against the state. When appropriated. The contract made by presented to the governor for his sig- the governor was held against pub- nature he informed the claimant that lie policy and a recovery was per- the appropriation was excessive and mitted. Lukens v. Nye, 156 Cal. 498, that he would not sign the bill un- 105 Pac. 593. less he would agree to accept $25,000 '' Stark v. Publishers : George in full. This he agreed to do. The Knapp & Co., 160 Mo. 529, 61 S. W. governor then signed the bill as 669. 333 LOBBYIXG CONTRACTS. § IO47 payable to the latter to draft his bill and explain it to any commit- tee, or the legislature, fairly and openly, and ask to have it intro- duced, and contracts which do not provide for more, and services that do not go farther, violate no principle of law or rule of pub- lic policy." § 1047. Examples of valid contracts. — Contracts which provide for compensation in consideration of a particular service to be rendered, such as the collection of evidence, the preparation of papers or the delivery of argmnents orally or in writing in sup- port of a claim, to a committee or other proper authority are legitimate everywhere.-^ Services rendered in obtaining the pas- sage of laws by the legislature may support a claim for compensa- tion when publicly rendered by advocates disclosing their true relation to the subject."* § 1048. Must appear openly in true character. — The per- son performing such services must appear openly in his true char- acter. A hired advocate or agent assuming to act in a different character is practicing deceit on the legislature." § 1049. Rule applied. — These principles apply to proceed- ings before a municipal council"" the same as any other legislative ^ Miles V. Thorne, 38 Cal. 335. 99 ^Trist v. Child, 21 Wall. (U. S.) Am. Dec. 384; Chesebrough v. Con- 441, 22 L. ed. 623; Marshall v. Balti- over, 140 N. Y. 382. 35 N. E. 633; more & O. R. R. Co.. 16 How. (U. Milbank v. Jones, 127 N. Y. 370, 28 S.) 314, 14 L. ed. 953. See also. N. E. 31, 24 Am. St. 454; Marshall Frost v. Belmont, 6 Allen (Mass.) V. Baltimore & O. R. R. Co., 16 How. 152. (U. S.) 314, 14 L. ed. 953; Yates v. =^ Critchfield v. Bermudez Asphalt Robertson, 80 Va. 475. Pav. Co., 174 111. 466, 51 N. E. 552, =^Weed V. Black. 2 :\Iac. (D. C.) 42 L. R. A. 347. "It is not the law 268, 29 Am. Rep. 618; Eisenstein v. that all contracts dependent upon fu- Maiden Lane Safe Deposit Co., 113 ture legislative action are against pub- N. Y. S. 967 (lawyer employed to lie policy, nor is it true that all con- draw up resolution to be acted upon tracts to secure legislative action are by board of aldermen) ; Russell v. unenforcible. It is correct to say Burton. 66 Barb. (N. Y.) 539; Trist that the law guards the processes of V. Child, 21 Wall. (U. S.) 441, 22 L. legislation against improper influences ed. 623. See also, Foltz v. Cogswell, with jealous care, and will not lend 86 Cal. 542. 25 Pac. 60; Baumhoff v. its aid to the enforcement of any Oklahoma Citv Electric &c. Co., 14 contract which expressly or implied- Okla. 127, 17 Pac. 40. ly contemplates the employment of -'Wildey v. Collier. 7 Md. 273; corrupt or otherwise improper meth- Sedgwick v. Stanton, 14 N. Y. 289; ods to influence the official conduct Brown v. Brown. 34 Barb. (N. Y.) of legislators, or others charged with 533; Bryan v. Reynolds, 5 Wis. 200, public duty. But it would be a 68 Am. bee. 55. strange perversion of this wholesome § 1050 CONTRACTS. 334 body. A contract which provided that one "should do all that was necessary and proper to be done to insure its (the bill's) passage,"^ or to render such services in the way of collecting facts and preparing and submitting to the proper authorities arguments upon the merits of the claim, as in his judgment might be neces- sary and proper/^ or which merely makes one the depositary of money to be returned by him in the event that a resolution pend- ing before a board of aldermen and councilmen should fail to pass,'^ or where the only thing necessary to be done under the agreement was to show that the claimant was a loyal citizen dur- ing the civil war^" have been held valid. § 1050. Contracts distinguished from lobbying. — A review of the cases leads to the conclusion that agreements which tend to introduce personal solicitation as an element in procuring and influencing legislative action or action by any department of the government will be condemned as contrary to sound morals and as destructive of ef¥iciency in the public service.^^ But where the contract does not call for the performance of some act illegal per se, nor for the doing of something of itself of a corrupting tendency, nor by its tenns nor by necessary implication contem- rule to say that it forbids all efforts St. R. Co., 82 111. App. 256. See also, of interested persons or classes to Greer v. Severson, 119 Iowa 84, 93 secure the adoption of desired legis- N. W. 12. lative measures. Legislative bodies "Russell v. Burton, 66 Barb. (N. do not occupy such an exalted posi- Y.) 539 (contingent fee). Or to use tion that they may not be approached and make all "reasonable, honest and in a proper manner by those desiring lawful efforts" to secure paving con- action within the legitimate scope of tracts from a city. Dunham v. Has- legislative power, and there is no tings Pav. Co., 57 App. Div. (N. Y.) consideration of public policy which 426, 68 N. Y. S. 221. forbids any individual from under- '* Stroemer v. Van Orsdel, 74 Nebr. taking by petition, by legitimate ar- 132, 103 N. W. 1053, 107 N. W. 125, gument, and by a fair showing of 4 L. R. A. (N. S.) 212n, 121 Am. St. the circumstances to procure the pass- 713n (contingent fee). The _ above age of any law or ordinance within case also limits the case of Richard- the power of the body so addressed son v. Scott's Bluff, 59 Nebr. 400, to enact." Cole v. Brown-Hurley 81 N. W. 309, 48 L. R. A. 294, 80 Hardware Co., 139 Iowa 487, 117 N. Am. St. 682. W. 746, 18 L. R. A. (N. S.) 1161n. ^Milbank v. Jones, 127 N. Y. 370, A contract to compensate property 28 N. E. 31, 24 Am. St. 454. owners for signing a petition ad- ^^ Pennebacker v. Williams, 136 Ky. dressed to a city council cannot be 120, 120 S. W. 321, 123 S. W. 672. enforced. Brieske v. North Chicago "' See infra, § 1037. 335 LOBBYING CONTRACTS. § IO5I plates a resort to improper means, such as personal solicitation or influence, it will be upheld,^- so far as this question is concerned. § 1051. Effect of making fee contingent on success. — The numerical weight of authority supports the doctrine that all con- tracts for procuring legislation are void where the compensation to be received is contingent on the success of the promisee in ob- taining either the passage or defeat of a proposed act, even though the contract did not contemplate the rendition of im- proper services and though no improper services were in fact rendered. A contingent fee is a strong and direct incentive to the exertion of not merely personal but sinister influence upon legislation.^^ This rule is not, however, universal, and many recent cases refuse to condemn contracts concerning the procure- ment of legislation merely because the agreement provides for the payment of a reasonable fee contingent upon success.''* '* The presumption is in favor of innocence rather than guilt. Houlton V. Nichol, 93 Wis. 393, 67 N. W. 715, 33 L. R. A. 166, 57 Am. St. 928, re- fusing to follow Houlton v. Dunn, 60 Minn. 491, 30 L. R. A. 737. "Pub- lic interest is not well served by in- dulging baseless suspicions of wrong- doing." Stroemer v. Van Orsdel, 74 Nebr. 132, 103 N. W. 1053, 107 N. W. 125, 4 L. R. A. (N. S.) 212n, 121 Am. St. 713n. ="Foltz V. Cogswell, 86 Cal. 542, 25 Pac. 60; Weed v. Black, 2 Mac- Arthur (D. C.) 268, 29 Am. Rep. 618; Bermudez Asphalt Pav. Co. v. Critchfield, 62 111. App. 221; Coquil- lard's Admr. v. Bearss, 21 Ind. 479, 83 Am. Dec. 362; Wood v. McCann, 6 Dana (Kv.) 366; Gil v. Williams, 12 La. Ann. 219, 68 Am. Dec. 767; Richardson v. Scott's Bluff, 59 Nebr. 400, 81 N. W. 309, 48 L. R. A. 294, 80 Am. St. 682. See, however, Stroe- mer V. Van Orsdel, 74 Nebr. 132, 103 N. W. 1053, 107 N. W. 125. 4 L. R. A. (N. S.) 212, 121 Am. St. 713n; Rose V. Truax, 21 Barb. (X. Y.) 361; Mills v. Mills, 36 Barb. (N. Y.) 474, affd. 40 N. Y. 543, 100 Am. Dec. 535; :\Iilbank v. Jones. 127 N. Y. 370, 28 N. E. 31, 24 Am. St. 454; Spalding v. Ewing, 149 Pa. St. 375, 24 Atl. 219, 34 Am. St. 608, revg. 9 Pa. County Ct. 471, 15 L. R. A. 727; Clippinger V. Hepbaugh, 5 Watts & S. (Pa.) 315, 40 Am. Dec. 519; Hazelton v. Sheck- els, 202 U. S. 71, 50 L. ed. 939, 26 Sup. Ct. 567; Trist v. Child, 21 Wall. (U. S.) 441, 22 L. ed. 623; Marshall V. Baltimore & O. R. R. Co., 16 How. (U. S.) 314, 14 L. ed. 953; Bryan v. Re>-nolds, 5 ^^'is. 200, 68 Am. Dec. 55; Chippewa Vallev & S. R. Co. v. Chicago St. R. M. & O. R. Co., 75 Wis. 224, 44 N. W. 17, 6 L. R. A. 601. Compare Cameron v. Heward, 11 Que. Super. Ct. 392; Houlton v. Nichol, 93 Wis. 393. 67 N. W. 715, 33 L. R. A. 166, 57 Am. St. 928. In Chippewa Valley &c. R. Co. v. Chi- cago &c. R. Co., 75 \\'is. 224, 6 L. R. A. 601, a contract between two rail- way companies, by which one agreed to render "all reasonable and proper assistance" which it might be able to give in procuring a legislative grant of lands to the other railway com- pany, in which the consideration to be paid to the former was contingent upon securing the grant, was held to be illesial. See also, Sussman v. Por- ter. 137 Fed. 161. ^'Dcnison v. Crawford Co., 48 Iowa 211 : Barber Asphalt Pav. Co. v. Bots- f ord, 56 Kans. 532, 44 Pac. 3 ; Kansas Citv Paper House v. Folev Rv. Print- ing Co., 85 Kans. 678, 118 Pac. 1056; § 1052 CONTRACTS. 336 § 1052, Contract entered into under legislative authority. — A contract entered into under authority of the legislature au- thorizing the employment of an agent to prosecute claims on be- half of the state which require the procurement of legislation, for a fee contingent upon his success, has been upheld on the rather unusual ground that the act of the legislature authorizing the payment of a contingent fee was in that particular case declar- ative of the public policy of the state.^^ § 1053. Rule where contract provides for services partly illegal. — In case of an entire contract which provides for the performance of services before a legislative body part of which services are illegal and part legal, the whole contract is thereby rendered illegal and there can be no recovery for the value of the proper services.'^*' Consequently, when the services contracted for and rendered are partly those of an attorney and partly those of a lobbyist and are blended as part of a single employment, the entire contract is vitiated, and, after performance, no recovery can be had for the work done as an attorney.^^ Ordinarily, how- ever, a contract is not rendered invalid by ancillary or incidental features which may make it necessary to procure action by a leg- islative body or other public officials.^^ Stroemer v. Van Orsdel, 74 Nebr. neither money nor personal attention 132, 103 N. W. 1053, 107 N. W. 125, to securing their rights." See also, 4 L. R. A. (N. S.) 212n, 121 Am. St. Oscanyan v. Arms Co., 103 U. S. 261, 713n. In Taylor v. Bemiss, 110 U. 26 L. ed. 539; Pennebaker v. Wil- S. 42, 28 L. ed. 64, 3 Sup. Ct. 441, liam, 136 Ky. 120, 120 S. W. 321, 123 Mr. Justice Miller said: "It was de- S. W. 672; Chesebrough v. Conover, cided in the case of Stanton v. Em- 140 N. Y. 382, 35 N. E. 633; Houl- brey, 93 U. S. 548, 23 L. ed. 983, that ton v. Nichol, 93 Wis. 393, 67 N. W. contracts by attorneys for compensa- 715, 33 L. R. A. 166, 57 Am. St. 928. tion in prosecuting claims against the ^^ Davis v. Commonwealth, 164 United States were not void because Mass. 241, 41 N. E. 292, 30 L. R. A. the amount of it was made contin- 743. gent upon success, or upon the sum "'^ McBratney v. Chandler, 22 Kans. recovered. And the well-known diffi- 692, 31 Am. Rep. 213; Rose v. Truax, culties and delays in obtaining pay- 21 Barb. (N. Y.) 361; Cary v. West- ment of just claims which are not ern Union Tel. Co., 47 Hun (N. Y.) within the ordinary course of pro- 610, 20 Abb. N. Cas. (N. Y.) 333, 15 cedure of the auditing officers of the N. Y. St. 204; Hazelton v. Sheckels, government, justifies a liberal com- 202 U. S. 71, 50 L. ed. 939, 26 Sup. pensation in successful cases, where Ct. 567; Trist v. Child, 21 Wall. (U. none is. to be received in case of fail- S.) 441, 22 L. ed. 623. ure. Any other rule would work " McBratney v. Chandler, 22 Kans. much hardship in cases of creditors 692, 31 Am. Rep. 213. of small means residing far from the "^ Cole v. Brown-Hurley Hdw. Co., seat of government, who can give 139 Iowa 487, 117 N. W. 746, 18 L. ZZ7 LOBBYING CONTRACTS. § 1054 § 1054. Recovery of compensation. — It is of course well settled that compensation cannot be recovered for services ren- dered in the performance of an illegal lobbying contract.^^ So, a co-partner who expends money for lobbying purposes cannot compel contribution on- the part of the other partner nor will the partner making such expenditures be entitled to a credit for the amount so expended when chargeable with receipts.*" R. A. (N. S.) 1161n (lease not ren- dered invalid by an agreement on part of lessor to obtain the laying of a side track along an alley to the building leased) ; Burbank v. Jef- ferson City &c. Light Co., 35 La. Ann. 444 (corporation stipulated that it would secure passage of an act validating the mortgage securing cer- tain bonds issued bv the company) ; Greene v. Nash, 85 Maine 148, 26 Atl. 1114 (contract concerning the construction of a railroad and to se- cure an extension of time within which it might be built) ; Baumhoff V. Oklahoma City &c. Power Co., 14 Okla. 127, 77 Pac. 40 (contract pro- viding for sale of certain municipal franchises, such sale to be con- summated within ten days after an amendment mutually agreed upon by the parties was passed by the city council). ^ Cary v. Western Union Tel. Co., 47 Hun (N. Y.) 610, 20 Abb. N. Cas. (N. Y.) iiZ. 15 N. Y. St. 204; Globe Works v. United States, 45 Ct. CI. (U. S.) 497. ^McDonald v. Buckstaflf, 56 Nebr. 88, 76 N. W. 476. 22 — Contracts, Vol. 2 CHAPTER XXVIII. EFFECT OF ILLEGALITY OF CONTRACTS. 1060. Illegal contracts are void and cannot be enforced. 1061. Void contract incapable of supporting a remedy. 1062. Rule as affected by public policy. 1063. Exception to the rule. 1064. Effect of performance or execution of contract. 1065. Contract presumed valid. 1066. Parties left in position in which they place themselves. 1067. Illustration of illegal con- tracts. 1068. A party in pari delicto may object to the legality of the contract. 1069. Effect of illegality of con- tract — In equity. 1070. Effect of subsequent illegal contracts on prior contracts. 1071. Necessity of making a prima facie case without disclos- ing illegality of contract. 1072. Rule criticized and restated. 1073. Rule further considered. 1074. Partial illegality when con- tract is devisible. 1075. Rule illustrated and applied. 1076. Indivisible illegal contracts. 1077. Illegal when consideration can not be apportioned — Re- nunciation, effect of. 1078. Contracts growing out of or connected with illegal con- tracts. 1079. Illegal combination— Right to maintain an action on inde- pendent contract. 1080. Rule illustrated. 1081. Illegal combination — Insur- ance contract. 1082. Effect of state statutes. 1083. Promise by third party to pay claim arising out of illegal contract. 1084. Third party acting as de- pository. 1085. Recovery of that parted with under executed agreement. 1086. Duty of agents and partners to turn over proceeds of il- legal transaction. 1087. Abandonment of illegal con- tracts. 1088. Rule where aid of illegal con- tract is required to establish case. 1089. Ratification of illegal con- tract. 1090. General rule as to ratification. 1091. Rule illustrated. 1092. Rule as applied to Sunday contracts. 1093. Effect of subsequent payment of license fee. 1094. Enforcing or obtaining relief from illegal contracts. 1095. Exceptions — Recovery pro- vided for by statute. 1096. Statutes permitting recovery strictly construed. 1097. Other statutes considered. 1098. Recovery permitted when par- ties not in pari delicto. 1099. Rule illustrated. 1100. Penalty on both parties— No undue advantage given. 1101. When parties not equally at fault. 1102. Rule illustrated. 1103. The principle of "pari de- licto" as affected by public policy. 1104. When one in pari delicto may be granted relief. 1105. Locus poenitentiae. 1106. Rule illustrated. 1107. Money or property given to one of the parties to the il- legal agreement. 338 339 EFFECT OF IT-LEGALITY OF CONTRACTS. § 1060 § 1060. Illegal contracts are void and cannot be enforced. • — Illegal contracts are, as a general rule, said to be absolutely void.^ This rule is said to admit of no exception.- But it needs some explanation. § 1061. Void contract incapable of supporting a remedy. — It would seem that the word "void" as thus used merely means that a contract in contravention of a statute or public policy cannot be legally enforced at law or is incapable of supporting a remedy.^ For, as will be seen subsequently, an executed 'Bensley v. Bignold, 5 B. & Aid. 335; Milten v. Haden, Z2 Ala. 30, 70 Am. Dec. 523; Dudley v. Collier, 87 Ala. 431, 6 So. 304, 13 Am. St. 55; Youngblood v. Birmingham Trust & Sav. Co., 95 Ala. 521, 12 So. 579, 20 L. R. \. 58, 36 Am. St. 245 ; Jemison V. Birmingham & A. R. Co., 125 Ala. 378, 28 So. 51 ; Martin v. Hodge, 47 Ark. 378, 1 S. W. 694, 58 Am. Rep. 763; O'Bryan v. Fitzpatrick, 48 Ark. 487, 3 S. W. 527; Berka v. Wood- ward, 125 Cal. 119, 57 Pac. 777, 45 L. R. A. 420, 72, Am. St. 31; Way- man Inv. Co. V. Wessinger, 13 Cal. App. 108, 108 Pac. 1022; Hittson v. Browne, 3 Colo. 304; Funk v. Gal- livan, 49 Conn. 124, 44 Am. Rep. 210; Cook V. Pierce. 2 Houst. (Del.) 499; Gilbert v. Holmes, 64 111. 548; People V. Whiteside Countv, 122 111. App. 40; Missouri K. & t. R. Co. V. Bowles, 1 Ind. Ter. 250. 40 S. W. 899; Western Union Tel. Co. v. Yopst, 118 Ind. 248, 20 N. E. 222, 3 L. R. A. 224n ; Naglebaugh v. Harder & Hofer Coal Min. Co., 21 Ind. App. 551, 51 N. E. 427; Dillon &c. v. Allen, 46 Iowa 299, 26 Am. Rep. 145 ; Richard- son V. Brix, 94 Iowa 626, 6Z N. W. 325; Pinney v. First Nat. Bank, 68 Kans. 223, 75 Pac. 119; Vanmeter v. Spurrier. 94 Kv. 22. 21 S. W. Z2,7 ; Cotton V. Brien, 6 Rob. (La.) 115; Harding v. Hagar, 60 Elaine 340; Durgin v. Dyer, 68 Maine 143; Les- ter V. Howard Bank. ZZ Md. 558, 3 Am. Rep. 211; Prescott v. Battersbv, 119 Mass. 285; Bowditch v. New Eng- land Mut. L. Ins. Co., 141 Mass. 292, 4 N. E. 798, 55 Am. Rep. 474; Sea- mans V. Temple Co., 105 Mich. 400, 63 N. W. 408, 28 L. R. A. 430, 55 Am. St. 457; Buckley v. Humason, 50 Minn. 195, 52 N. W. 385, 16 L. R. A. 423, 36 Am. St. 637 ; Deans v. McLendon, 30 Miss. 343; Brackett v. Hoyt, 29 N. H. 264; Coburn v. Odell, 30 N. H. 540; Hunt v. Knickerbacker, 5 Johns. (N. Y.) 327; Pratt v. Short, 79 N. Y. 437, 35 Am. Rep. 531 ; Sharp V. P'armer, 4 Dev. & B. (N. Car.) 122 ; Tod v. Wick Bros., 36 Ohio St. 370 ; ^lorris Run Coal Co. v. Barclay Coal Co., 68 Pa. St. 173, 8 Am. Rep. 159; Holt V. Green. 7Z Pa. St. 198, 13 Am. Rep. 7Z7 ; Harrison v. Berkley, 1 Strob. (S. C) 525, 47 Am. Dec. 578; Stevenson v. Ewing, 87 Tenn. 46. 9 S. \\'. 230; Hunt v. Robinson, 1 Tex. 748 ; Keith v. Fountain, 3 Te.x. Civ. App. 391, 22 S. W. 191 ; Harris V. Runnels, 12 How. (U. S.) 79, 13 L. ed. 901 ; Miller v. .A.mmon, 145 U. S. 421, 36 L. ed. 759. 12 Sup. Ct. 884; Re Pittock, 2 Sawy. (U. S.) 416, Fed. Cas. No. 11189; Aiken v. Blais- dell. 41 Vt. 655 ; Niemever v. Wright, 75 Va. 239. 40 Am. Rep. 720; Mel- choir V. McCartv. 31 Wis. 252, 11 Am. Rep. 605; Bartlett v. Collins, 109 Wis. 477, 85 N. W. 703, 83 Am. St. 928. Cases without number might be cited on this proposition but it it con- sidered unnecessary. ^ Cox V. Donnelly, 34 Ark. 762. 'Fennell v. Ridlcr, 5 B. C. 406, 11 E. C. L. 517; Hartford Fire Ins. Co. V. Chicago &c. R. Co., 62 Fed. 904; Johns v. Bailey, 45 Iowa 241 ; Giesa- peake & O. R. Co. v. Mavsville Brick Co.. 132 Ky. 643. 116 S. W. 1183 (con- tract by railroad company preferen- tial rate) ; Myers v. Meinrath. 101 Mass. 366, 3 Am. Rep. 368; Smith v. Bean, 15 N. H. 577; jenness v. Simp- son (Vt.), 78 Atl. 886. "It has been held that the words 'void' and *in- CONTRACTS. 340 illegal contract may confer actual and irrevocable rights on the parties; and the word "illegal" in this connection is sometimes used in different senses. It must also be borne in mind that two different rules are applied to contracts entered into with one engaged in a business which the law requires to be licensed. Whether or not a contract entered into with one in the course of such business who has no license will be upheld depends largely on the nature of the business and the wording of the statute. In case the license is required for the protection of the public the contract is void ; in case it is merely a revenue measure the con- tract is valid.* § 1062. Rule as affected by public policy. — The rule which declares illegal contracts void is a necessary and salutary one, but it is not a mere arbitrary rule applicable to all contracts in some sense illegal. It will be disregarded when it becomes necessary to save from injury those for whose protection the violated stat- utes were enacted or whenever public interest demands that such statute be enforced.^ § 1063. Exception to the rule. — As a general rule the prin- ciple that contracts entered into in contravention of a statute are void has no application in the case of marriage contracts. Thus, a marriage has been upheld notwithstanding it was celebrated valid,' when used in regard to con- tracts not immoral or against public policy, usually mean voidable at the option of one of the parties or some one legally interested therein, and that such construction leads to fewer errors than that which ascribes to those words the meaning of absolute nullity for any and all purposes." Doney v. Laughlin (Ind. App.), 94 N. E. 1027. * See ante, § QZ. See Johnson V. Berry (S. Dak.), 104 N. W. 1114. 1 L. R. A. (N. S.) 1159 (which refuses to permit the owner of a steam-thresher to recover his threshing bill when he had failed to comply with the statute requiring steam-threshers to give bond condi- tioned on his paying all damages for fire, &c.) ; Duluth Music Co. v. Clan- cey, 139 Wis. 189, 120 N. W. 854, 131 Am. St. 1051 (action to replevin a piano sold on conditional sale by a foreign corporation not authorized to do business in the state of Wis- consin). ° See generally, Cox v. Donnelly, 34 Ark. 762; City School Corporation of Evansville v. Hickman, 47 Ind. App. 500, 94 N. E. 828; Deming v. State, 23 Ind. 416; Scotten v. State, 51 Ind. 52; Tootle v. Taylor. 64 Iowa 629, 21 N. W. 115; State v. Corning State Sav. Bank, 136 Iowa 79, 113 N. W. 500; Bemis v. Becker, 1 Kans. 226; Mason v. McLeod, 57 Kans. 105, 45 Pac. Id, 41 L. R. A. 548, 57 Am. St. 2>21 ; Lester v. How- ard Bank, ZZ Md. 558, 3 Am. Rep. 211; Bowditch v. New England Mut. &c. Ins. Co.. 141 Mass'. 292, 4 N. E. 798, 55 Am. Rep. 474; Union Trust 341 EFFECT OF ILLEGALITY OF CONTRACTS. § 1064 without the consent of the parents or guardian of the bride and the latter incurred a penahy because of her youthful age.*^ § 1064. Effect of performance or execution of contract. — As a general rule the law will leave all equally guilty of an illegal or immoral transaction where it finds them, and will neither lend its aid to enforce the contract while executory nor to rescind it and recover the consideration parted with when executed.^ "It is a well-settled principle of law that the courts will not aid a party to enforce an agreement made in furtherance of objects for- bidden by the statute, or by common law, or general policy of the law, or to recover damages for its breach, or when the agreement has been executed in whole or in part by payment of money to recover it back."^ § 1065. Contract presumed valid. — The general rule, how^- ever, is "The law does not presume that parties to a contract in- tend by it to accomplish an illegal object, but it rather presumes that they intended to accomplish a legal purpose."^ The legality Co. V. Preston Nat. Bank, 136 Mich. 460, 99 N. W. 399, 112 Am. St. 270; Union Nat. Bank v. Matthews, 98 U. S. 621, 25 L. ed. 188. See, however, Penn v. Bornman. 102 111. 523. 'Hervey v. Moslev, 7 Gray (Mass.) 479, 66 Am. Dec. 515. ^ Cottonwood V. H. M. Austin & Co., 158 Ala. 117, 48 So. 345; Hill v. Freeman, 11 Ala. 200, 49 Am. Rep. 48, and note; O'Byrne v. Henley, 161 Ala. 620, 50 So. 83, 23 L. R. A. (N. S.) 496n (executory contract) ; Holman v. Thomas, 171 Fed. 219; Glass V. Childs (Ga. App.), 71 S. E. 920; Gray v. Roberts, 2 A. K. Marsh 208, 12 Am. Dec. 383 ; Inhabitants of Warrenton v. Eaton, 11 Mass. 368; Tourdan v. Burstow, 76 N. J. Eq. 55, 74 Atl. 124, 139 Am. St. 741 (action to recover property parted with under contract to compound a felonv) ; Klein v. Mechanics' & Trad- ers' Bank, 145 App. Div. (N. Y.) 615, 130 N. Y. S. 436 (holding ignorance of the law no excuse) ; Smathers v. Bankers' Life Ins. Co., 151 N. Car. 98, 65 S. E. 746 (executory con- tract) ; Cantrell v. Ring (Tenn.), 145 S. W. 166; Sauerhering v. Rueping, 137 Wis. 407, 119 N. W. 184 (con- tract to enable plaintiff to control corporation to his own interest). « Howard v. Farrar, 28 Okla. 490, 114 Pac. 695. "A void contract can- not be enforced, no matter what hardship it may work, or how strong the equities may appear." Pipe Creek School Tp. v. Hawkins (Ind. App.), 91 N. E. 936. "The courts will not in general aid either party to enforce an illegal agreement, but will leave the parties where they place themselves with reference to such illegal agreement, e.xcept where the law or public policy requires ac- tion by the courts, or where the par- ties are not in pari delicto, and per- haps in other cases not pertinent here." Stewart v. Stearns &c. Lum- ber Co., 56 Fla. 570, 48 So. 19, 24 L. R. A. (N. S.) 649n. " Page V. Metropolitan Life Ins. Co., 98 Ark. 340, 135 S. W. 911. To same effect, Burne v. Lee, 156 Cal. 221, 104 Pac. 438: Barteldes Seed Co. V. Border Queen Mill & Eleva- tor Co.. 23 Okla. 675, 101 Pac. 1130; Harbison-Walker Refractor- ies Co. v. Stanton, 111 Pa. 55, io66 CONTRACTS. 342 of a contract is to be judged of by its character, and not by what the plaintiff might do or should attempt to do, with the fruits of it/** But when the illegality of the contract is plainly apparent it has been said that the court will or should, sua sponta, deny relief. ^^ § 1066. Parties left in position in which they place them- selves. — However, no other element entering in, the parties are left to abide the consequences of their own act. When the illegality of the contract is made to appear the law will not extend its aid to either of the parties.^- The law does not sit as an ar- biter of differences arising out of an illegal transaction." Money 75 Atl. 988. See also, Brown V. Bishop, 105 Maine 212, 74 Atl. 724; Mires v. St. Louis & S. F. R. Co., 134 Mo. App. 379. 114 S. W. 1052; Artistic Porcelain Co. v. Boch, 76 N.' J. Eq. 533, 74 Atl. 680; Horn V. Gibson (Okla.), 103 Pac. 563. On demurrer the court can look only to the pleadings and when the petition does not disclose the vice of the contract, no other ele- ment entering in the demurrer should be overruled. The defense of ille- gality may be made by answer. Coons V. Green, 55 Tex. Civ. App. 612, 120 S. W. 1108. ^" Luhrig Coal Co. v. Jones &c. Co., 141 Fed. 617. 72 C. C. A. 311. The mere fact that one of the parties entered into the contract for an ille- gal purpose does not render it illegal to the other party when the latter did nothing to further the illegal purpose. Hollenbcrg Music Co. v. Berry, 85 Ark. 9, 106 S. W. 1172. Where a contract, not lawful in it- self, has been executed, and the par- ties have enjoyed the benefits of the contract the mere fact that one of the parties has violated a penal stat- ute in the approach to the contract will not prevent a court from enforc- ing payments. Haynes v. Abramson, 97 N. Y. S. 371 ; Beilin v. Wein, 101 N. Y. S. 38, 51 Misc. (N. Y.) 595. " Dunn v. Stegeman, 10 Cal. App. 38, 101 Pac. 25 ; Union Collection Co. V. Buckman, 150 Cal. 159, 88 Pac. 708, 9 L. R. A. (N. S.) 568n, 119 Am. St. 164n; Howe's Exr. v. Griffin's Admr. (Ky.), 31 Ky. L. 784, 103 S. W. 714; Drake v. Lauer, 93 App. Div. (N. Y.) 86, 86 N. Y. S. 986, affd., 182 N. Y. 533, 75 N. E. 1129; Rogers v. Gladiator Gold Min. & Mill Co., 21 S. Dak. 412, 113 N. W. 86; Ann. Cas. 1912A. 1033, note. See, however, O'Brien v. Shea, 208 Mass. 528, 95 N. E. 99, Ann. Cas. 1912A. 1030. ^" Butler v. Agnew, 9 Cal. App. 327, 99 Pac. 395; Russell v. Courier Printing & Publishing Co. (Colo.), 95 Pac. 936; Thomas v. First Nat. Bank, 213 111. 261, 72 N. E. 801; Rudolf v. Costa, 119 La. 781, 44 So. 477; Benson v. Bawden, 149 Mich. 584, 113 N. W. 20, 13 L. R. A. (N. S.) 721; Perry v. Berger, 85 Nebr. 753, 124 N. W. 133; Heintz v. Saw- yer, 27 Ohio Cir. Ct. 10. When recovery is permitted it is not al- lowed as under the unlawful con- tract but upon a quantum meruit dis- affirming the contract and holding defendant liable for the value of benefit actually received. White Star Line v. Star Line of Steamers, 141 Mich. 604, 105 N. W. 135, 113 Am. St. 551. ^ Bowman v. Phillips, 41 Kans. 364, 21 Pac. 230, 3 L. R. A. 631, 13 Am. St. 292. See Leonard v. Poole, 114 X. Y. 371, 11 Am. St. 667; Wig- gins V. Bisso, 92 Tex. 219, 47 S. W. 637. 71 Am. St. 837; Camp v. Bruce, 9(i Va. 521, 31 S. E. 901, 43 L. R. A. 146, 70 Am. St. 873. "H a cause of action is such as no court would entertain, a court is bound to raise the question in the interest 343 EFFECT OF ILLEGALITY OF CONTRACTS. 1066 paid or personal property transferred in accordance with the terms of an illegal contract cannot as a general rule be recov- ered," notwithstanding the other party refuses to perform his of due administration of justice and not for the benefit or in the interest of either part.v. Whether a claim of illegality is made by the pleadings or not, parties cannot compel a court to adjudicate upon alleged rights growing out of a contract void as against public policy or in violation of public law." Pietsch v. Pietsch, 245 111. 454. 92 N. E. 325, 29 L. R. A. 218n. » Collins V. Blantern, 2 Wits. 341 ; Walker v. Gregory. 36 Ala. 180; Ed- wards V. Randle, 63 Ark. 318. 38 S. W. 343. Z() L. R. A. 174, 58 Am. St. 108; Hartin v. Wade. Zl Cal. 168; Schubart v. Chicago Gas Light &c. Co., 41 111. App. 181; Griffen v. Piper, 55 111. App. 213; State v. Sims. 76 Ind. 328; Nudd v. Burnett. 14 Ind. 25; Davis V. Leonard, 69 Ind. 213 ; Hutchins V. Weldin, 114 Ind. 80; Budd V. Rutherford, 4 Ind. App. 386, 30 N. E. 1111; Kinnev v. AIcDermot, 55 Iowa 674, 39 Am. "Rep. 191; Pike v. King, 16 Iowa 49; TIallan v. Huff- man, 5 Kans. App. 303 ; Davezac v. Seiler, 12 Ky. L. 599; Kimbrough v. Lane, 11 Bush (Kv.) 566; Grav v. Roberts, 2 A. K. Marsh. (Ky.) '208, 12 Am. Dec. 383 ; Copley v. Berrv, 12 Rob. (La.) 79; Waite v. Merrill,'4 Maine 102, 16 Am. Dec. 238; Got- walt v. Xeal, 25 Md. 434; Maryland Trust Co. v. National Mechanics' Bank, 102 Md. 608. 63 Atl. 70 ; Harvev V. Merrill, 150 Mass. 1, 15 Am. St. 159; Richardson v. Buhl, 11 Mich. 632, 43 N. W. 1102. 6 L. R. A. 457; Reed v. Bond, 96 Mich. 134. 55 N. W. 619; Walhier v. Weber, 142 Mich. 322, 105 N. W. 772 (action to recover pay- ments made in order to secure police protection and for the use of an- other's liquor license) ; Benson v. Bawden. 149 Mich. 584. 113 N. W. 20. 13 L. R. A. (X. S.) 721 (post- office fixtures) ; Xelson v. Townsend, 132 :Mo. App. 390, 111 S. W. 894 (action to recover money advanced under a contract to assign wages, the contract to assign wages being unlawful) ; Davis v. Hinman. 73 Xebr. 850, 103 X. W. 668; Welsh v. Cutler. 44 X. H. 561 ; Roby v. West, 4 X. H. 285, 17 Am. Dec. 423; Weeks V. Mill, 38 X. II. 199; White v. Hun- ter, 23 N, H. 128; Johnson v. Ferris, 49 X. H. 66; Hope v. Linden Park Blood Horse Assn., 58 N. J. L. 627, 34 Atl. 1070, 55 Am. St. 614; Brindlev v. Lawton, 53 N. J. Eq. 259, 31 Atl. 394; Ellicott V. Chamberlin. 38 N. J. Eq. 604. 48 Am. Rep. Zll ', People v. Stephens, 71 N. Y. 527; Peck v. Burr, 10 N. Y. 294; Phoenix Bridge Co. v. Key- stone Bridge Co., 142 X. Y. 425, Zl N. E. 562 ; Knowlton v. Congress &c. Spring Co., 57 X. Y. 518; De Witt Wire-Cloth Co. v. New Jersey Wire- Cloth Co., 16 Daly (N. Y.) 529. 14 N. Y. S. 277; Havnes v. Rudd, 83 N. Y. 251 ; Webb v. Fulchire, 3 Ired. 485, 40 Am. Dec. 419; Hoss v. Lav- ton, 3 Ohio St. 352: Kahn v. Wal- ton, 46 Ohio St. 195; Richter v. Phoenix Building & Loan Co., 27 Ohio C. C. 793 (action to recover property parted with under an agree- ment to compound a felonv) ; Atchi- son &c. R. Co. v. Holmes. 18 Okla. 92, 90 Pac. 22 ; Jackson v. Baker Ore.. 85 Pac. 512 (action to recover $1000.00 paid to a homesteader in considera- tion of a promise by the latter to convey his homestead to a third party upon obtaining title) ; Lutz v. Weid- ner, 1 Woodw. Dec. (Pa.) 428; Stew- art V. Parnell, 29 W. X. Cas. (Pa.) 537; Touro v. Cassin, 1 X'ott. & ^IcC. (S. Car.) 173, 9 Am. Dec. 680; Seelig- son v. Lewis, 65 Tex. 215, 57 Am. Rep. 593, overruling Boggess v. Lillv, 18 Tex. 200; Davis v. Sittig, 65 Tex. 497. Compare Ravner Cattle Co. v. Bedford, 91 Tex. 642, 44 S. W. 410. 45 S. W. 554; Huff v. AIcMichael (Tex. Civ. App.), 127 S. W. 574 (action to recover shares of stock transferred to the defendant in fur- therance of a scheme to defraud third parties) ; Harriman v. X'orth- ern Securities Co., 197 U. S. 244. 49 L. ed. 739. 25 Sup. Ct. 493 : White v. Barber. 123 U. S. 392. 8 Sup. Ct. 221 ; Foote & Stone v. Emerson. 10 Vt. 338, Zl Am. Dec. 205 ; McEwen v. Shan- § io67 CONTRACTS. 344 part of the agreement." Where the contract is illegal, because contrary to positive law or against public policy, an action cannot be maintained either to enforce it directly, or to recover the value of services rendered under it, or money paid on it.^^ § 1067. Illustration of illegal contracts. — It has been held that a landlord could not maintain an action for rent due under a lease of a building which the lessor had unlawfully failed to equip with fire escapes." The court has denied the right to recover money paid for a larger sum of counterfeit money, not- withstanding such counterfeit money was not delivered.^ ^ And where property was conveyed in compliance with the terms of an agreement that compounded a felony it was held that no action could be maintained either to compel a performance or to recover the property.'® In case a deed for land has been delivered under such a contract, title passes and the grantor can neither recover non, 64 Vt. 583, 25 Atl. 661 ; Dixon v. Olmstead, 9 Vt. 310, 31 Am. Dec. 629; Barnard v. Crane, 1 Tyler (Vt.) 457; Johnson v. Jennings, 10 Grat. (Va.) 1, 60 Am. Dec. 323 ; McCHntock v. Lois- seau, 31 W. Va. 865, 8 S. E. 612, 2 L. R. A. 816. Appellant was a saloon-keeper whose business had been closed by municipal authorities for his violation of the excise law of the city. He was allowed to re- open upon his deposit with the treasurer of the city of the sum sued for, upon condition that it was to be returned to him if the ex- cise laws of the city were not vio- lated during the year 1906. It was held that the contract was void as against public policy, the money was received by the treasurer as an in- dividual, the parties were in pari delicto, and the law would not in- tervene for the relief of either. Marsicano v. Birmingham (Ala.), 51 So. 608. See also, Hilton v. Hil- ton, 103 Maine 92, 68 Atl. 595 (release by child of all claims against fath- er's estate on latter's death). A contract by which a collection of porcelains is sold contrary to the request of the testator that it be kept intact has been held not con- trary to public policy and was en- forced. Warren v. Bouvier, 68 Misc. (N. Y.) 159, 124 N. Y. S. 641. '=* Edwards v. Randle, 63 Ark. 318, 38 S. W. 343, 36 L. R. A. 174, 58 Am. St. 108; Kinney v. McDermot, 55 Iowa 674, 8 N. W. 656, 39 Am. Rep. 191; Kilbourn City v. Southern Wis. Power Co., 149 Wis. 168, 135 N. W. 499 (involving construction of pub- lic utilities law contract for free light to village). However, when an illegal contract has not been exe- cuted, and is still executory, money paid thereunder may be recovered. Such a suit and recovery do not con- stitute an enforcement of the ille- gal contract. Instead, it constitutes a disaffirmance. McCall v. Whaley, 52 Tex. Civ. App. 646, 115 S. W. 658. See post, § 1105. ^'^ Roller v. Murray, 112 Va. 780, 72 S. E. 665. ^'^Lenthold v. Stickney (Mmn.), 133 N. W. 856. "Chapman v. Haley, 117 Ky. 1004. 25 Ky. L. 2182, 80 S. W. 190. '*Jourdan v. Burstow, 76 N. J. Eq. 55, 74 Atl. 124, 139 Am. St. 741; Johnson v. Douglas, 32 Wash. 293, 1Z Pac. 374. See also, American Nat. Bank v. Madison, 144 Ky. 152, 137 S. W. 1076 (action to recover money paid on a note given to compound a felony). See ante, ch. XXI. 345 EFFECT OF ILLEGALITY OF CONTRACTS. § 1068 the land nor defend against an action in ejectment.^" Xor can property conveyed and delivered in consideration of future illicit intercourse be recovered.'^ § 1068. A party in pari delicto may object to the legality of the contract. — The general rule is that if the parties are in pari delicto the courts will render assistance to neither. More- over, the objection against the legality of a contract may be made by a party in pari delicto. The defense is allowed, not for the sake of the party objecting, but because upon principles of public policy the courts will not aid the party in search of relief." § 1069. Effect of illegality of contract — In equity. — The legal maxim that equity follows the law holds good as a general rule in equitable proceedings on illegal contracts. Where the parties are in pari delicto equity will leave them in the position in which they have placed themselves." The maxim, that he who '"Treadwell v. Torbert, 119 Ala. 279, 24 So. 54, 72 Am. St. 918; Wil- liams V. Englebrecht, Zl Ohio St. 383; Raguet v. Roll, 7 Ohio (part 2) 70. See, however. Southern Ex- press Co. V. Duffey, 48 Ga. 358, which holds that where possession has not been delivered the grantor may be defended against an action in eject- ment. ^Hill V. Freeman, IZ Ala. 200, 49 .•\m. St. 48. To same effect, Otis v. Freeman, 199 Mass. 160, 85 N. E. 168, 127 Am. St. 476; Rrindley v. Lawton, 53 N. J. Eq. 259, 31 Atl. 394. "McKinney v. Big Horn Basin Development Co., 167 Fed. 770, 93 C. C. A. 258; Pittsburgh Const. Co. v. West Side Belt R. Co., 151 Fed. 125; Tompkins v. Compton, 93 Ga. 525, 21 S. E. 79; Goodrich v. Penney, 144 111. 422; Todd v. Ferguson, 161 Mo. App. 624, 144 S. W. 158; Dieckmann V. Robyn (xMo. App.). 141 S. W. 717; Costello V. Portsman's Brewing Co., 69 N. H. 405. 43 Atl. 640; Burck v. Abbott, 22 Te.x. Civ. App. 216, 54 S. W. 314. See also, Edgar v. Fow- ler. 3 East 222; Gubbins v. Bank of Commerce. 70 111. App. 154; Neustadt V. Hall, 58 111. 172; Herring v. Cum- berland Lumber Co. (N. Car.), 74 S. E. 1011. A void or illegal con- tract does not work an estoppel. Lukens v. Nye, 156 Cal. 498, 105 Pac. 593; Wilson v. Fahnestock (Ind. App.), 86 N. E. 1037; Bodenhofer v. Hogan, 142 Iowa 321, 120 N. W. 659, 134 Am. St. 418; International Text Book Co. V. Ohl (Mich.), Ill N. W. 768. As a general rule, where per- sons engage in an unlawful business, such as betting on a horse race, so as to be in pari delicto, the law will not assist either one but leave them where they have placed themselves. Shaffner v. Pinchback, 133 111. 410, 24 N. E. 867, 23 Am. St. 624. To same effect, Morrison v. Bennett, 20 Mont. 560, 52 Pac. 553, 40 L. R. A. 158. ="Benyon v. Nettlefold. 3 Macn. & G. 94; Thomson v. Thomson. 7 Ves. Jr. 470. In re Cork &c. R. Co., 39 L. J. Ch. 277; Ayerst v. Jenkins, L. R. 16 Eq. 275 : Saltmarsh v. Beene, 4 Port. (Ala.) 283. 30 Am. Dec. 525; Roberts v. Taylor. 7 Porter (.Ala.) 251 ; Shattuck v. Watson. 53 .Ark. 147, 13 S. W. 516, 7 L. R. A. 551n; Hedges v. Dixon County, 11 Fed. 304; Gar- rison V. Burns, 98 Ga. 762; Miller v. Marckle, 21 111. 152; Compton v. Bun- ker Hill Bank, 96 111. 301, 36 Am. Rep. § lO/O COXTRACTS. 346 comes in a court of equity must come with clean hands, applies.^'* § 1070. Effect of subsequent illegal contracts on prior con- tracts. — It has already been seen that a lawful promise made for a lawful consideration which grows out of or is immediately connected with an illegal contract and which cannot be severed from the latter may be rendered invalid by reason of its close con- nection with the illegal agreement. ^^ However, where the legal can be separated from the illegal covenants the former may be enforcible, notwithstanding one of the parties may have intended to thereby promote an unlawful object indirectly and collater- allv.-'^ § 1071. Necessity of making a prima facie case without disclosing illegality of contract. — The courts are not in entire accord as to the test to be applied by which to determine whether the lawful agreement is so far removed from the unlawful object Some cases lay down the rule that the as to be itself legal. 147; Mattox v. Hightshue, 39 Tnd. 95 ; Cronise v. Clark. 4 Md. Ch. 403 ; Atwood V. Fisk. 101 Mass. 363, 100 Am. Dec. 124; Ownes v. Ownes, 23 N. J. Eq. 60; Bunn v. Winthrop, 1 Johns. Ch. (X. Y.) 329; Wright v. Miller, 8 N. Y. 9, 59 Am. Dec. 438; McRae v. Atlantic & N. C. R. Co., 58 N. Car. 395 : Thomas v. Cronise, 16 Ohio 54; Stipe v. Stipe, 2 Head (Tenn.) 169; Porter v. Jones, 6 Coldw. (Tenn.) 313; Simmons v. Kincaid, 5 Sneed (Tenn.) 450; Cordova v. Lee (Tex.), 14 S. W. 208 ; Harriman v. Northern Securi- ties Co.. 197 U. S. 244, 49 L. ed. 739, 25 Sup. Ct. 493 ; Thomas v. Rich- mond, 12 Wall. (U. S.) 349, 20 L. ed. 453; Congress & Empire Spring Co. V. Knowlton. 103 U. S. 49, 26 L. ed. 347; St. Louis &c. R. Co. v. Terre Haute &c. R. Co., 145 U. S. 396. 36 L. ed. 749. 12 Sup. Ct. 12; Brown v. Wylie, 2 W. Va. 502, 98 Am, Dec. 781. Thus it has been held that a court of equity will not enjoin the payment of a check given in payment of money lost in illegal speculations on the market. Kahn v. Waldon, 46 Ohio St. 195. Compare Basket v. Moss, 115 N. Car. 448, 20 S. E. 7Z2,, 48 L. R. A. 842n, in which an in- junction was granted against the sale of real estate under a mortgage given as payment for procuring the ap- pointment or resignation of a pub- lic officer. The court said, referring to Pomeroy's Equity Jurisprudence, §§ 939, 942: '"In pari delicto' is often misunderstood, and its applica- tion is, properly and correctly,i that in such cases 'potior est conditio possidentis' that is, that the court will permit nothing to be done which will enable a party to collect from the other the fruits of his wrong. When he sues to recover, the law will not give him judgment. When he has shrewdly attempted to evade this by taking a mortgage with a power of sale, the court will, by injunction, prevent his collecting on a mortgage denounced as void by reasons of public policy." ^ Shattuck V. Watson, 53 Ark. 147. 13 S. W. 516, 7 L. R. A. 551n ; Por- ter V. Jones, 6 Coldw. (Tenn.) 313. As to when, see post, § 1094. ='See ante, § 1078. See also, ante, § 226. ^'Rogers v. Waller, 4 Hayw. (Tenn.) 205, 9 Am. Dec. 758. 347 EFFECT OF ILLEGALITY OF COXTRACTS. § 10/2 collateral agreement cannot be enforced unless a prima facie case can be made without disclosing or relying upon the prior or subsequent illegal contract." If by this rule it is meant that recovery may be had when it is unnecessary to rely on the illegal transaction to establish the plaintiff's right to recovery, it is cor- rect in principle. Thus the illegality of a lease of property will not prevent the lessor from regaining possession after such lease has expired.'^ § 1072. Rule criticized and restated. — The rule as stated in the foregoing cases is misleading, however, for the reason that one might infer that the plaintiff's right to recover depended upon his ability to suppress the illegal contract rather than on his ability to show that it is in no way connected therewith. A bet- ter statement of the rule is to the effect that the test of a viola- tion of rules of public policy is whether the plaintiff requires the aid of the illegal transaction to establish his right."^ § 1073. Rule further considered. — In accordance with these rules it has been held that an unlawful contract entered into for the purpose of modifying or discharging a prior legal contract will not defeat the right to enforce the prior contract.^" Thus "Farmer v. Russell, 1 Bos. & P. which had for its object the suppres- 296; Simpson v. Bloss, 7 Taunt. 246; sion of bidding on public sale of Phalen v. Clark, 19 Conn. 421, 50 lands). Am. Dec. 253; Clarke &c. Co. v. =« Sittle v. Wright, 122 Fed. 434, Brown, 11 Ga. 606, 4 Am. St. 98; 58 C. C. A. 416. Ingram v. Mitchell, 30 Ga. 547; Bar- "'Springfield &c. Ins. Co. v. Hull, wick V. .Movse. 74 Miss. 415, 21 So. 51 Ohio St. 270, Zl N. E. 1116. 25 238,60Am. St. 512: Snider v. Wood- L. R. A. 2,1, 46 Am. St. 571; Robson enware Co., 74 Miss. 353, 20 So. 836; v. Hamilton, 41 Ore. 239, 69 Pac. Gallagher v. Cornelius, 23 Mont. 27, 651; Nester v. Continental Brewing 57 Pac. 447: Green v. Corrigan, 87 Co., 161 Pa. St. 473. 29 Atl. 102, 24 Mo. 359: Woodman v. Hubbard, 25 L. R. A. 247, 41 Am. St. 894. To N. H. 67, 11 Am. Dec. 310; Wood- same eflfect, Wayman Inv. Co. v. worth V. Bennett, 43 N. Y. 273, 3 Am. Wessinger & Wagner, 13 Cal. App. Rep. 706: Oliphant v. Markliam. 79 108. 108 Pac. 1022: Butler v. Agnew, Tex. 543, 15 S. W. 569. 2Z Am. St. 9 Cal. App. Z21 , 99 Pac. 395: Cobb v. 363; Buck v. Albee, 26 Vt. 184, 62 Am. Crittenden, 161 Fed. 510. 88 C. C. A. Dec. 564; Hardv v. Stonebreaker. 31 452; Harwell v. Blake (Tex. Civ. Wis. 640. "A party to an illegal con- App.), 90 S. W. 1125 (action by a tract cannot set up a case in which he debtor against trustee for benefit of must necessarily disclose an illegal creditors for money received by the purpose as the groundwork of his trustee and not accounted for), claim." Southern Mut. Aid Assn. v. '"Foreman v. Hardwick, 10 .-Ma. Bount, 112 Va. 214, 70 S. E. 487 316: Ware v. Currv. 67 Ala. 274: (suit growing out of a contract Tucker v. West, 29 Ark. 386; Haw- § I074 CONTRACTS. 348 the attempted discharge of a vaHd obhgation for an illegal con- sideration has been held not to discharge such valid obligation.^ ^ § 1074. Partial illegality when contract is divisible. — A contract made up of several distinct transactions or parts, some of which are legal and other illegal, will be enforced as to its legal provisions where the legal portions can be separated from those which are illegal,^" as where goods are sold at a separate price for each article, the fact that the sale of some of the articles is illegal does not as a general rule defeat the validity of the entire transaction.^^ § 1075. Rule illustrated and applied. — Thus where fertil- izer was sold and notes given for several shipments thereof, each consisting of several sacks, recovery on the notes given for the shipments properly tagged was not defeated by the fact that one sack in one of the shipments did not have a tag attached thereto as required by law. This defeated recovery only on that con- kins V. Campbell, 6 Ark. 513; Britt V. Aylett, 11 Ark. 475, 52 Am. Dec. 282; Chicago &c. R. Co. v. Lewis, 109 111. 120; Ogden v. Barker, 18 Johns. (N. Y.) 87; Cook v. Barnes, 36 N. Y. 520; Wilcoxon v. Logan, 91 N. Car. 449; Scott v. Atchison, 38 Tex. 384; Nichols v. Mudgett, Z2 Vt. 546. See also, Baird v. Boehner, 11 Iowa 622, 42 N. W. 454; Harvey y. Tama County, 53 Iowa 228; jManion's Admrs. v. Titsworth, 18 B. Mon. (Ky.) 582; Cate v. Blair, 6 Coldw. (Tenn.) 639. ^^ Best V. Higginbotham, 7 B. Mon. (Ky.) 124. See also, Slaughter v. Hamm, 2 Ohio 271. Compare Eu- banks v. Dobbs, 4 Ark. 173 ; Smith v. Davidson, 6 J. J. Marsh. (Ky.) 539; Sickman v. Lapsley, 13 Serg. & R. (Pa.) 224, 15 Am. Dec. 596; Bailey V. Buck, 11 Vt. 252. " Glucose Sugar Refining Co. v. Marshalltown, 153 Fed. 620; Choc- taw P. C. R. Co. V. Bond, 160 Fed. 403, 87 C. C. A. 355; Livingston v. Chicago &c. R. Co. (Iowa), 120 N. W. 1040 (contract concerning main- tenance of farm crossing) ; Fryer v. Marker, 142 Iowa 708, 121 N. W. 526, 23 L. R. A. (N. S.) 477n; Smith V. Corbin, 135 Ky. 121, 123 S. W. 277; Shevalier v. Doyle (Nebr.), 130 N. W. 417; Faist v. Dahl, 86 Nebr. 669, 126 N. W. 84; Piper v. Boston &c. R. Co., 75 N. H. 435, 75 Atl. 1041 ; Osgood v. Central Vermont R. Co., 11 Vt. 334, 60 Atl. 137, 70 L. R. A. 930; Sprigg's Admr. v. Rutland R. Co., n Vt. 347, 60 Atl. 143 (Contract exempting railroad com- pany from liability for damage to cattle over and above an agreed val- uation and exempting it from liabil- ity to the care-taker held divisible. The first provision was valid, the lat- ter invalid.) When several transac- tions, some legal and some illegal, constitute the consideration for a mortgage, they may be upheld for the legal consideration when severable from the illegal. Conradt v. Lepper, 13 Wyo. 473, 81 Pac. 307, rehearing denied, 82 Pac. 2. See ante, § 249. ''Boyd V. Eaton, 44 Maine 51, 69 Am. St. 83; Barrett v. Delano (Maine). 14 Atl. 288; Walker v. Lovell, 28 N. H. 138, 61 Am. Dec. 605; Chase's Exrs. v. Burkholder, 18 Pa. 48; Shaw v. Carpenter, 54 Vt. 155, 41 Am. Rep. 837. 349 EFFECT OF ILLEGALITY OF CONTRACTS. 10/6 signment which contained the sack not properly tagged.^* And the legal portion of the contract, part of which is void because in restraint of trade, will be enforced where the lawful promise can be separated from that part of the contract void because in restraint of trade.^*^ The rule stated in the preceding sections to the effect "that the test whether a demand connected with an illegal act can be enforced is, whether the i)laintiff requires any aid from the illegal transaction to establish his case," applies here.'« § 1076. Indivisible illegal contracts. — A contract which is entire and indivisible and which contains a stipulation that is " Alabama Nat. Bank v. C. C. Par- ker & Co., 146 Ala. 513, 40 So. 987. See, however, the case of Bick v. Seal, 45 Mo. App. 475, which lays down the rule that " 'If the consid- eration of any contract, either in whole or in part, be illegal, this de- feats the entire contract, and it is wholly immaterial, whether the con- tract discloses such illegality, or it be established by evidence aliunde.' " See also, Hanauer v. Doane, 12 Wall. (U. S.) 342, 20 L. ed. 439. In the above case suit was brought upon two notes given as part considera- tion for the purchase of goods sold by the plaintiff to be used to aid those states in rebellion against the United States. The court said : "A portion of their consideration was stores and supplies furnished to the army contractor of the Confederate Government, and another portion was due-bills, issued for the same consideration, and received by Hun- ter and Oakes with full notice of their character. If either of these portions of the consideration on which the notes were given was ille- gal, the notes are void in toto. Such is the elementary rule, for which it is unnecessary to cite authorities." See also, Minnesota Sandstone Co. V. Clark, 35 Wash. 466. 11 Pac. 803. '^ Central New York Teleg. Co. v. Averill. 199 N. Y. 128, 92 N. E. 206, 32 L. R. A. (N. S.) 494n, 139 Am. St. 878. A contract between one who has a franchise to furnish natural gas to the inhabitants of a city, and a gas company owning natural gas wells and a system for distribution in such city, on one side, and a light company which has the right to fur- nish gas and buy and sell the same, on the other, which bound the gas company to furnish gas during the life of the franchise to the lighting company for sale to the inhabitants, etc., the gas company to control the prices of natural gas to the consum- ers for all purposes except illumina- tion, the lighting company to fi.x the rate for illuminating gas, was held divisible and the clause as to the right to fix the price of gas, if in- valid as in restraint of trade, could be disregarded and the legal part of the contract given effect. Ft. Smith Light & Traction Co. v. Kelley, 94 Ark. 461, 127 S. W. 975. See also, Nicholson v. Ellis, 110 Md. Z22, 73 Atl. 17, 24 L. R. A. (N. S.) 942n 132 Am. St. 445. ""Oliphant v. Markham, 79 Tex. 543, 15 S. W. 569, 23 Am. St. 363. See also, Herring v. Cumberland Lum- ber Co. (N. Car.), 74 S. E. 1011. See, ante, § 249. But where the induce- ment to the agreement and the sole object in view was the accomplish- ment of an illegal purpose which cannot be separated from the other parts of the contract the contract cannot be divided and leave any sub- ject-matter capable of enforcement. Santa Clara Vallev &c. Co. v Haves 76 Cal. 387, 18 Pac. 391, 9 Am. 'St! § 1077 CONTRACTS. 350 illegal and cannot be severed from the legal portion of the agree- ment, is corrupted by the stipulation and rendered unenforcible as an entirety.^^ Thus when a condition precedent represents the consideration for a promise and the condition is illegal, the prom- ise supported by it also fails. ^^ § 1077. Illegal when consideration cannot be apportioned — Renunciation, effect of. — Even though it might be possible "Beal & Doyle Dry Goods Co. v. Barton, 80 Ark. 326, 97 S. W. 58 (par- tial illegality consisted of compound- ing a felony) ; Prost v. More, 40 Cal. 347; Santa Clara Valley Mill &c. Co. V. Hayes, 76 Cal. 387, 18 Pac. 391, 9 Am. St. 211; Norris v. Harris, 15 Cal. 226; More v. Bonnet, 40 Cal. 251, 6 Am. Rep. 621; Brown V. Kennedy, 12 Colo. 235, 20 Pac. 696; Pierce v. Shay, 145 111. App. 612; Schmueckle v. Waters, 125 Ind. 265, 25 N. E. 281; Kain v. Bare, 4 Ind. App. 440; Lingle v. Snvder, 160 Fed. 627, 87 C. C. A. 529 (contract em- braced public land part of which was lawfully and part unlawfully in pos- session of the plaintiff) ; Boatmen's Bank v. Frilzlen. 175 Fed. 183; Mount V. Montgomery County, 168 Ind. 661, 80 N. E. 629, 14 L. R. A. (X. S.) 483 (holding that one who purchases another's interest in a re- ward to be paid by the county for information leading to the convic- tion of certain persons guilty of sell- ing their votes cannot recover the reward) ; Osgood v. Bander, 75 Iowa 550, 39 N. W. 887, 1 L. R. A. 655; Dillon &c. V. Allen, 46 Iowa 299, 26 Am. Rep. 145; Baird v. Boehner, 11 Iowa 622, 42 N. W. 454 ; Gipps Brew- ing Co. V. De France, 91 Iowa 108, 51 Am. St. 329; Casady v. Wood- burv, 13 Iowa 113; McLane's Admr. V. Dixon, 30 Ky. L. 683, 99 S. W. 601 (part of consideration living in adultery) ; Goodwin v. Clark, 65 Maine 280 (no recovery allowed for services part of which were ren- dered in the unlawful sale of intox- icating liquors) ; Bishop v. Palmer, 146 Mass. 469, 16 N. E. 299, 4 Am. St. 339; Holt v. O'Brien, 15 Gray (Mass.) 311; McNamara v. Gar- gett, 68 Mich. 454, 36 N. W. 218, 13 Am. St. 355, Handy v. St. Paul Globe Pub. Co., 41 Minn. 188, 16 Am. St. 695; Ford v. Gregson, 7 Mont. 89, 14 Pac. 659; Hughes v. MuUins, 36 Mont. 267, 92 Pac. 758 (contract concerning procurement of evidence) ; Bliss V. Brainard, 41 N. H. 256; Roby V. West, 4 N. H. 285, 17 Am. Dec. 423; Williams v. Hastings, 59 N. H. ZIZ (part of services rendered on Sunday) ; Ridgely v. Keene, 134 App. Div. (N. Y.) 647, 119 N. Y. S. 451; Rose v. Truax, 21 Barb. (N. Y.) 361; Brown v. Treat, 1 Hill (N. Y.) 225; Suydam v. Smith, 7 Hill (N. Y.) 182; Miller v. Scherder. 2 N. Y. 262; Lambert v. Snow, 17 How. Pr. (N. Y.) 517; McGovern v. Payn, 32 Barb. (N. Y.) 83; Brown v. Brown, 34 Barb. (N. Y.) 533; Decker v. Morton, 1 Redf. (N. Y.) 477: Foley V. Speir, 100 N. Y. 552. 3 N. E. 477, affg. 11 Daly (N. Y.) 254; Crawford V. Wick, 18 Ohio St. 190, 98 Am. Dec. 103. Compare Lange v. Werk, 2 Ohio St. 519; Filson's Trustees v. Himes, 5 Pa. St. 452, 47 Am. Dec. 422; Kottwitz v. Alexander, 34 Tex. 689; Arrington v. Sneed, 18 Tex. 135 ; McNeese v. Carver. 40 Tex. Civ. App. 129, 89 S. W. 430 (part of consideration for check was the promise of the payee to procure dis- missal of criminal proceedings against maker's son) ; Kennedy v. Lonabaugh (Wyo.), 117 Pac. 1079. When the entire consideration is ille- gal though not immoral, the con- tract is void. Nicholson v. Ellis, 110 Md. 322, 12> Atl. 17. 24 L. R. A. (N. S.) 942n, 132 Am. St. 445. To same effect. Globe Works v. United States, 45 Ct. CI. (U. S.) 497. See also, ante, § 249. '* Bessire & Co. v. Corn Products Mfg. Co., 47 Ind. App. 298. 94 N. E. 353. 351 EFFECT OF ILLEGALITY OF CONTRACTS. § 1077 to sever the illegal from the legal portion of the contract yet if there are no means by which to ascertain whether the promise was induced by the legal or illegal portion or where the considera- ation is unapportioned and unapportionable the entire contract will be held illegal, if one of the elements thereof is immoral or against public policy.^" Nor can the legal portion of an entire "Walrond v. Walrond, 4 Jur. (N. S.) 1099; Bridge v. Cage, Cro. Jac. 103 ; Willyams v. Bullmorc, 33 Law J. Ch. 461; Card v. Hope, 2 B. & C. 661, 9 E. C. L. 289; Parkin v. Dick, 11 East 502; Hopkins v. Pres- cott, 4 C. B. 577. 56 E. C. L. 577. To same effect, Trist v. Child, 21 Wall. (U. S.) 441, 22 L. ed. 623; Birming- ham Trust & Sav. Co. v. Currey (Ala.), 57 So. 962; Pettit's Admr. v. Pettit's Disbr.. 32 Ala. 288 ; Wynne v. Whisenant, 37 Ala. 46; Dawkins v. Gill, 10 Ala. 206: Valentine v. Stew- art. 15 Cal. 387; Hovt v. Macon, 2 Colo. 502; Pueblo & A. V. R. Co. v. Taylor, 6 Colo. 1, 45 Am. Rep. 512, Cited in Brown v. Kennedv, 12 Colo. 235, 20 Pac. 696; Chandler v. John- son, 39 Ga. 85; Allen v. Pearce, 84 Ga. 606, 10 S. E. 1015; Halthaus v. Kuntz, 17 111. App. 434; Wolf v. Fletemever, 83 111. 418; Tenney v. Foote, 95 111. 99; Henderson v. Pal- mer, 71 111. 579, 22 Am. Rep. 117; People V. Smith, 130 111. App. 407; James v. Jellison, 94 Ind. 292, 48 Am. Rep. 151 ; Ricketts v. Harvev, 106 Ind. 564, 6 N. E. 325; Everhart v. Puc- kett, 73 Ind. 409; Elkhart County Lodge V. Crary, 98 Ind. 238, 49 Am. Rep. 746; Saxon v. Wood, 4 Ind. App. 242, 30 N. E. 797; Madison Ins. Co. V. Forsythe. 2 Ind. 483 ; Koster V. Seney, 99 Iowa 584 : Taylor v, Pickett, 52 Iowa 467. 3 X. W. 514; Baird v. Boehner, 77 Iowa 622, 42 N. W. 454; McBratnev v. Chandler, 22 Kans. 692, 31 Am. Rep. 213: Ger- lach V. Skinner, 34 Kans. 86, 8 Pac. 257. 55 Am. Rep. 240; Flersheim v. Gary, 39 Kans. 178, 17 Pac. 825; Fort Worth First Nat. Bank v. Payne, 19 Ky. L. 839, 42 S. W. 736; Donallen v. Lennox, 6 Dana (Kv.) 81 : Collins v. Merrell. 2 Mete. (Ky.) 163: Swan v. Chandler, 8 B. ]\Ion. (Ky.) 98: Gardner v. Alaxey, 9 B. Men. (Ky,) 90; Burgen v. Straughan, 7 J. J. Marsh. (Ky.) 583; Brown's Admr. v. Langford's Admr., 3 Bibb (Ky.) 497; Kimbrough v. Lane. 11 Bush (Ky.) 556; Ozanne v. Haber, 30 La. Ann. 1384; Coolidge v. Blake, 15 Mass. 429; Perkins v. Cummings, 2 Gray (Mass.) 258; Bishop v. Pal- mer, 146 Mass. 469, 16 X. E. 299, 4 .Xm. St. 339; Robinson v. Green, 3 Mete. (Mass.) 159; Bliss v. Xegus, 8 Mass. 46; McXamara v. Gargett, 68 Mich. 454, 36 X. W. 218, 13 Am. St. 355; Wisner v. Bardwell, 38 Mich. 278; Snyder v. WiUey, 33 Mich. 483; Friend v. Porter, 50 Mo App. 89; Bick v. Seal, 45 Mo. App 475; Pcltz V. Long, 40 ^lo. 532 Sumner v. Summers, 54 Mo. 340 McCormick Harvesting ]Mach. Co. v, Miller, 54 Xebr. 644, 74 X. W. 1061 Hinds V. Chamberlin, 6 X. H. 225; Bixby V. Moor, 51 X. H. 402; Clark V. Ricker, 14 X. H. 44; Steinfeld v. Levy (Brooklyn Citv Ct. Spec. T.), 16 Abb. Pr. (X. S.) (X. Y.) 26; Rose V. Truax, 21 Barb. (X. Y.) 361; Haynes v. Rudd, 102 N. Y. 372, 55 Am. Rep. 815 ; Saratoga County Bank v. King, 44 X. Y. 87; Widoe V. Webb, 20 Ohio St. 431. 5 Am. Rep. 664: Ohio v. Board of Education, 35 Ohio St. 519; Raguet v. Roll, 7 Ohio (pt. 2) 70; ]\IcQuade v. Rosecrans, 36 Ohio St. 442; Filson's Trustees v. Himes, 5 Pa. St. 452, 47 Am. Dec. 422. In re Bredin's Appeal. 92 Pa. St. 241, 2 Ky. L. 20, 37 Am. Rep. 677; Lancaster Countv v. Fulton. 128 Pa. St. 48; Moss v. Jones. 1 Week. No. Cas. (Pa.) 96; Sullivan v. Hor- gan. 17 R. I. 109, 20 Atl. 232. 9 L. R. A. 110; Massev v. Wallace, 32 S. Car. 149, 10 S. E.'937; Potts v. Grav, 3 Coldw. (Tenn.) 468, 91 Am. Dec. 294 ; Wegner Bros. v. Biering, 65 Tex. 506; Seeligson v. Lewis. 65 Tex. 215, 57 Am. Rep. .593 : Reed v. Brewer. 90 Tex. 144. 37 S. W. 418: Edwards County V. Jennings, 89 Tex. 618, 35 § lOjS CONTRACTS. 352 contract ordinarily be rendered valid and binding by a renuncia- tion of the illegal part.*" § 1078. Contracts growing out of or connected with ille- gal contracts. — This subject has already been treated to some extent in the chapter on Legality of Object, under the section, Contracts Growing Out of or Connected with Illegal Contracts, and little will be added here. The general rule is that an obli- gation will be enforced, though indirectly connected with an illegal transaction, if it is supported by an independent consider- ation, so that the plaintiff does not require the aid of the illegal transaction to establish his case.*^ Thus, it is well settled that contracts which relate to and are in furtherance of illegal com- binations are void, but this rule does not generally apply to con- tracts made by members of such combinations which do not relate to the monopoly itself, and which are merely collateral to the agreement by which the illegal combination was formed.*^ § 1079. Illegal combination — Right to maintain an action on independent contract. — There is a conflict of authority as to whether the illegal combination has a right to maintain an ac- tion upon an independent or collateral contract, and the conclu- sion reached by the various courts depends largely upon the con- struction placed upon local statutes forbidding combinations in restraint of trade. At common law such combination or trust S W. 1053, affg. (Tex.), 33 S. W. terial. Kimbrough v. Lane, 11 Bush 585; Kottwitz v. Alexander, 34 Tex. (Ky.) 556. 689; Rayner Cattle Co. v. Bedford, "Arnot v. Pittston &c. Coal Co., 91 Tex. 642, 44 S. W. 410, 45 S. W. 68 N. Y. 558, 23 Am. Rep. 190 (no 554; Powers v. Skinner, 34 Vt. 274, recovery permitted for the price of 80 Am. Dec. 677 ; Badger v. Williams, coal delivered under an illegal con- 1 D. Chip. (Vt.) 137; Cobb v. Cow- tract); Inter Ocean Pub. Co. v. dery, 40 Vt. 25, 94 Am. Dec. 370; Associated Press, Circuit Court Woodruff V. Hinman, 11 Vt. 592, 34 1898, 3 Chicago L. J. (N. S.) 96 Am. Dec. 712; Hinesburgh v.Sumner, "Citizen's Nat. Bank v. Mitchell, 9 Vt. 23. 31 Am. Dec. 599; Bowen v. 24 Okla. 488, 103 Pac. 720 ; Armstrong Buck, 28 Vt. 308; Swartzer v. Gil- v. American Exch. Nat. Bank, 133 lett, 1 Chand. (Wis.) 207. See also, U. S. 433, 33 L. ed. 747, 10 Sup. Ct. Evans v. American Strawboard Co., 450. 114 111. App. 450. Compare Pierce v. "Freed v. American Fire Ins. Co., Pierce, 17 Ind. App. 107, 46 N. E. 90 Miss. 72. 43 So. 947, 11 L. R. A. 480; Wilcox v. Daniels, 15 R. I. 261,3 (N. S.) 368n, 122 Am. St. 307. See, Atl. 204. The smallness of the en- ante, § 249. tire illegal consideration is imma- 353 EFFECT OF ILLEGALITY OF CONTRACTS. § I080 was permitted to mnintain actions which were collateral to and independent of the illegal contract by which the trust was formed, and which are not in furtherance thereof." § 1080. Rule illustrated. — In accordance with this princi- ple it has been held that the agents of a corporation could not defeat an action by the company to compel them to pay over money belonging to it arising from goods sold and collections made on the ground that the corporation was a trust or monop- oly, notwithstanding the existence of a statute which made illegal contracts in restraint of trade or commerce.^* Likewise, the vendor of goods has been permitted to recover the sale price, not- withstanding they were sold under an agreement for an exclusive agency, since the agreement to pay for goods purchased and deliv- ered was severable from the exclusive agency provision.^^ § 1081. Illegal combination — Insurance contract. — And where the plaintiff insured property, which was destroyed by the wrongful act of a third person, it was held that the fact that the insurer was a member of an unlawful combination did not pre- vent it from enforcing a provision subrogating the insurer to the rights of the insured against the one responsible for the destruction of the property, as the subrogation agreement did not relate to the business of the combine." § 1082. Effect of state statutes. — The various state stat- utes do not, as a general rule, defeat the right of a trust or com- bination to recover for goods sold by it,*' unless the statute spe- cifically provides that there can be no recovery. The statutes "Connolly v. Union Sewer Pipe *' Packard v. Bvrd, 73 S. Car. 1, Co., 184 U. S. 540, 46 L. ed. 679, 22 51 S. E. 678, 6 L. R. A. (N. S.) Sup. Ct. 431. Compare with the fore- 547n. going case. Continental Wall Paper *" Freed v. American Fire Ins. Co., Co. V. Lewis Voight Src. Co.. 212 90 Miss. 72, 43 So. 947, 11 L. R. A. U. S. 227, 53 L. ed. 486, 29 Sup. Ct. (N. S.) 368n, 122 Am. St. 307. 280. Also, Hadley Dean Plate Glass *' Wiley v. National Wall Paper Co. V. Highland Glass Co.. 74 C. C. Co., 70 111. App. 543 : Over v. Bvram A. 462, 143 Fed. 242; National Dis- Foundry Co., 37 Ind. App. 452. 77 tilling Co. V. Cream Citv Importing X. E. 302. 117 Am. St. 327; Interna- Co.. 86 Wis. 352. 56 X. W. 864, 39 tional Harvester Co. v. Smith Am. St. 902. (Mich.), 127 N. W. 695, 30 L. R. A. "International Harvester Co. v. (N. S.) 580. Smith (Mich.). 127 X. W. 695, 30 L. R. A. (X. S.) 580. 23 — Contracts, Vol. 2 § 1083 CONTRACTS. 354 of some states so provide/® It is, of course, well settled both at common law and by statute that there can be no recovery where it is necessary to rely on and prove the illegal contract by which the trust or combination was formed.*® § 1083. Promise by third party to pay claim arising out of illegal contract. — Closely allied to the subject under discus- sion is the question of whether or not a third party is liable on his promise, express or implied, to pay a claim arising out ef an illegal contract performed between two other persons, the pro- ceeds of which are in the hands of such third person as a result of his promise. In case the latter's promise is based on a valuable and legal consideration,^" or such third person is a mere depos- itary of money which represents the proceeds of an illegal con- tract to pay the same to one of the parties to such contract, the third party's promise is not affected by the illegality of the orig- inal contract, but may be enforced in behalf of the party for whose benefit the promise is made, since his promise is a new and independent transaction and not tainted by the illegality of the original agreement. ^^ *^Ferd Heim Brewing Co. v. Bel- legally cutting timber from govern- inder, 97 Mo. App. 64, 71 S. W. 691; ment lands). Wagner v. Minnie Harvester Co., 25 "Tenant v. Elliott, 1 Bos. & P. 3; Okla. 558, 106 Pac. 969. Before such Farmer v. Russell, 1 Bos. & P. 296; a statute will apply, however, the Thomson v. Thomson, 7 Ves. Jr. 470; sale must have been made within the Sharp v. Taylor, 2 Phil. Ch. 801 ; state, since the act has no application Barker v. Parker, 23 Ark. 390; Fair- to sales made in another state. Frank banks v. Blackington, 9 Pick. ("Mass.) A. Menne Factory v. Harback, 85 93 ; Woodson v. Hopkins, 85 Miss. Ark. 278, 107 S. W. 991. 171, Z1 So. 1000, 38 So. 298, 70 L. R. '" Continental Wall Paper Co. v. A. 645, 107 Am. St. 275; Hatch v. Lewis Voight &c. Co., 148 Fed. 939. Hansom. 46 Mo. App. 323; Roselle 78 C. C. A. 567, 212 U. S. 227, 53 v. Beckemeir, 134 Mo. 380, 35 S. W. L. ed. 486, 29 Sup. Ct. 280. The above 1132; Owens v. Davenport, 39 Mont, case is an important one on the ques- 555, 104 Pac. 682, 28 L. R. A. CN. tion of what constitutes a collateral S.) 996n : Woodworth v. Bennett, 43 contract, considered in connection N. Y. 273, 3 Am. Rep. 706; Merritt with what constitutes a collateral v. Millard, 4 Keyes (N. Y.) 208. 3 contract within the provisions of en- Abb. Dec. (N. Y.) 291 ; Owen v. Da- actment again.st trusts and monop- vis, 1 Bail. CS. Car.) 315; Jageman v. dies. Necco CTex. Civ. App.). 59 S. W. ""Owens V. Davenport, .39 Mont. 822: McATullen v. Hoffman. 174 U. 555, 104 Pac. 682. 28 L. R. A. CN. S. 639, 43 L. ed. 1117. 19 Sup. Ct. S.) 996n (assignment of claims by 8.39: Lemon v. Grosskopf, 22 Wis. an employer of labor made to one in ^^T. 99 Am. Dec. 58; Kiewert v. consideration of the assignee fur- Rindskopf. 46 Wis. 481. 1 N. W. 163, nishing funds with which to pay la- 32 Am. Rep. 731. "The law will not borers, and labor performance in il- raise an indebtedness in assumpsit 355 EFFECT OF ILLEGALITY OF CONTRACTS. § I084 § 1084. Third party acting as depositary. — However, when such third person is acting merely as a depositary of the proceeds of the illegal contract, it would seem that either of the parties to the contract may withdraw or revoke his instructions as to the payment of the proceeds to the other party to the illegal agree- ment at any time before the payment is actually made.^" The mere fact that the manufacture and sale of whiskey is against the pelicy of the state does not render invalid a contract of insurance by which whiskey stored within the state is insured against loss by fire.^^ § 1085. Recovery of that parted with under executed agreement. — The right of a plaintiff to recover that parted with under an executed agreement is not defeated by the fact that the parties have been engaged in an illegal transaction which was collateral to that on which the suit is brought. When the plaintiff can establish his cause of action without the necessity of relying on an illegal agreement in any way connected with it he cannot be defeated by the plea of illegality because the connec- tion is then too remote for the one to be affected by the vice of the other, as where one loans money with knowledge that it is to be used in gaming, he may recover the money so loaned when it was not loaned for that express purpose but merely to accommo- date the borrower as a man.°* Nor is one's just claim against a against him in favor of the party for " "It is no defense to a contract whose benefit the fund was placed in that has been performed by the prom- his hands." Bendet v. Ellis, 120 isee that the promisor knew that the Tenn. 277, 111 S. W. 795, 18 L. R. agreement or its performance might A. (N. S.) 114, 127 Am. St. 1060 aid the promisee to violate the law (proceeds of an insurance policv). or to defy the public policy of the •* Edgar v. Fowler. 3 East 222. In state when the promisor neither com- the above case the court said: "The bined nor conspired with the prom- monev does not appear to have been isee to accomplish that result, nor actually paid into the defendant's shared in the benefits of such a viola- hands. In case of illegal transactions tion." Mechanics' Ins. Co. v. Hoover it may always be stopped while it is Distilling Co., 182 Fed. 590, 105 C. in transitu to the person who is en- C. A. 128. titled to receive it. If indeed this "Tyler v. Carlisle. 79 Maine 210, had been made a legal transaction, the 9 Atl. 356. 1 Am. St. 301. The mere money might perhaps have been con- fact that pianos are to be sold by sidered as paid. But we will not as- means of a contest does not affect sist an illegal transaction in any re- the validity of their sale to a buyer spect. We leave the matter as we who intends to resell under such con- find it: and then the maxim applies, tract. D. H. Baldwin & Co. v. Moser melior est conditio possidentis." See (Iowa). 123 N. W. 989. Nor does further, ante, ch. XXVI. the fact that money is loaned to a § io86 CONTRACTS. 356 corporation defeated by the fact that he has participated in an improper issuance of stock.^^ And one's right to recover his share of an estate which he has been induced to part with through fraud will not be defeated by the fact that he acquiesced in a proposition made by the purchaser to conceal certain assets of the estate in order to keep them from creditors.^^ § 1086. Duty of agents and partners to turn over proceeds of illegal transaction. — On the principle that their duty to turn over the proceeds of an illegal transaction is collateral to the illegal transaction itself, agents" and partners^® have been re- firm engaged in the liquor business defeat recovery thereof, when it is not shown that the money was loaned to enable the firm to violate the laws but rather to pay its honest debts. Grey v. Callan (Iowa), 110 N. W. 909. The fact that a contract to build a house is collateral to an il- legal scheme does not defeat the right of one of the parties thereto to enforce a lien on the house. Adams V. Curran, 33 Ky. L. 498, 110 S. W. 280. A contract between a shipper and a third person by which the former is to receive a rebate does not, even if in violation of the in- terstate commerce act, render the railroad's contract of shipment in- valid. Southern Kans. R. Co. v. Cox, 43 Tex. Civ. App. 79, 95 S. W. 1124. " Easton Nat. Bank v. American Brick &c. Co., 69 N. J. Eq. 326, 60 Atl. 54, affd. 70 N. J. Eq. 722, 64 Atl. 1095, revd. 70 N. J. Eq. 732, 64 Atl. 917, 8 L. R. A. (N. S.) 271n. =« Wright v. Wright. 51 N. J. Eq. 475, 26 Atl. 166. For a statement of the general rule applicable, see John- ston v. Smith's Admr., 70 Ala. 108. " State V. Baltimore &c. R. Co., 34 Md. 344; Haacke v. Knights of Lib- erty Social Club, 76 Md. 429, 25 Atl. 422; Willson v. Owen, 30 Mich. 474; Gilliam v. Brown, 43 Miss. 641 ; Cheuvront v. Horner, 62 W. Va. 476, 59 S. E. 964; Contra, Clarke &c. Co. V. Brown, 77 Ga. 606, 4 Am. St. 98; Alexander v. Barker, 64 Kans. 396, 67 Pac. 829. See also, Daniels v. Barney, 22 Tnd. 207. This latter case holds that the principal may recover unless the agent engaged in the un- lawful transaction at the orders of the principal. Compare also with Houts V. Scharbaner (Tex. Civ. App.), 103 S. W. 679, where vendor's agent falsely represented to the vendees that he was a joint purchaser with them. It was held the vendor could not recover money paid his agent in furtherance of and in ac- cordance with their scheme to mis- lead and defraud the vendees. But a vendee or purchaser who ap- points an agent to consummate the deal may recover from his agent com- missions paid to the latter by the vendor, notwithstanding the vendee intends to dispose of the property in an illegal manner. Commercial Club of Joplin V. Davis, 136 Mo. App. 583, 118 S. W. 668. In case the party from whom the proceeds are sought to be recovered was not merely an agent or depositary but a cocon- spirator, no recovery can be had. Feltner v. Feltner (Ky.), 116 S. W. 1196. °* Fryer v. Harker, 142 Iowa 708, 121 N. W. 526, 23 L. R. A. (N. S.) 477n; Richardson v. Welch, 47 Mich. 309, 11 N. W. 172; Gilliam v. Brown, 43 Miss. 641 ; Andrews v. New Or- leans Brewing Assn., 74 Miss. 362, 20 So. 837, 60 Am. St. 509. "Although a contract may be illegal, it does not follow that it is illegal or immoral for the parties to it, after its com- pletion, to fairly settle and adjust the profits and losses which have resulted from it. The vice of the contract does not enter into such settlement." Mitchell v. Fish, 97 Ark. 444, 134 S. W. 940, quoting from De Leon v. 357 EFFECT OF ILLEGALITY OF CONTRACTS. § 1087 quired to turn over and account for the proceeds of an unlawful transaction, especially when a division of the profits has been agreed on.'"' The illegality of one contract does not extend to another unless the two are united either in consideration or promise.*" § 1087. Abandonment of illegal contracts. — It is also com- petent for the parties to an illegal contract to mutually rescind the same and to enter into a new and valid agreement based upon a new and valid consideration." The old contract must, how- ever, be abandoned in fact. The parties must not seek by the new contract to enforce rights growing out of or connected with the illegal agreement. Otherwise the subsequent contract will be illegal also. The parties can do nothing less than make a new contract."- A new promise, such as a compromise agreement, based on a contract tainted with illegality, is also illegal."'^ So Trevino, 49 Tex. 88. 30 Am. Rep. 101. See also, Simon v. Garlitz (Tex. Civ. App.), 133 S. W. 461. See, however, Butler V. Agnew, 9 Cal. App. 7)21, 99 Pac. 395; Craft v. McConoughy, 79 III. 346, 22 Am. Rep. 171; Snell v. Dwight, 120 Mass. 9; Morrison v. Bennett, 20 Mont. 560, 52 Pac. 553, 40 L. R. A. 158 ; Coffee v. Burke, 132 App. Div. (N. Y.) 128. 116 N. Y. S. 514; Citizens' Nat. Bank v. Mitchell, 24 Okla. 488, 103 Pac. 720; Vande- grift V. Vandegrift, 226 Pa. 254. 75 Atl. 365 (in which it was held that since recovery could not be had with- out relying on the illegal partnership it would be denied. This was an ac- tion for an accounting brought by a surviving partner against the execu- trix of the deceased partner). "" Mitchell V. Fish, 97 Ark. 444, 134 S. W. 940. See also, McRae v. War- nack, 98 Ark. 52, 135 S. W. 807 (as to the right of an assignee of a life insurance policy to recover the amount of premiums paid by him and the amount which the intestate ac- tually owed him). "" Kansas City &c. Brick Co. v. Na- tional Surety Co., 167 Fed. 496 (ac- tion to recover for brick furnished a contractor with which to make a pub- lic improvement, the contract for the improvement being illegal because let in violation of the statute governing such matters). "Barnes v. Hedley, 2 Taunt. 184; Faikney v. Reynous, 4 Burr. 2069; Mitchell v. Lyman, 11 111. 525; Stout v. Ennis, 28 Kans. 706; Chadbourn v. Watts, 10 Mass. 121, 6 Am. Dec. 100; Clark V. Phelps, 6 Mete. (Mass.) 296. "A new contract, founded on a new consideration, although in relation to property respecting which there had been unlawful transactions between the parties, is not itself unlawful." Armstrong v. Toler, 11 Wheat. (U. S.) 258, 6 L. ed. 468. See also, Curry V. La Fon, 133 Mo. App. 163, 113 S. W. 246. "-Webster v. Sturges, 7 111. App. 560; Handy v. St. Paul Globe Co., 41 Minn. 188, 16 Am. St. 695; Boyd v. Boyd, 130 App. Div. (N. Y.) 161, 114 N. Y. S. 361; Coffey v. Burke, 132 App. Div. (N. Y.) 128, 116 N. Y. S. 514. "'Union Collection Co. v. Buck- man, 150 Cal. 159, 88 Pac. 708, 9 L. R. A. (N. S.) 568n, 119 Am. St. 164n ; Tompkins v. Compton, 93 Ga. 520. 21 S. E. 79 ; Bick v. Seal, 45 Mo. App. 475 ; Kidder v. Blake, 45 N. H. 530; IMelchoir v. McCartv, 31 Wis. 252, 11 Am. Rep. 605. § I088 CONTRACTS. 358 long as the void or illegal contract is the basis of the action courts will leave the parties where it finds them.*'* § 1088. Rule where aid of illegal contract is required to establish case. — This topic has already been touched upon several times in this connection. It was fully treated in the chap- ter on Legality of Object"^ and nothing further will be added at this point. § 1089. Ratification of illegal contract. — It is a general rule of law that a contract made in violation of a statute is void and that when a plaintiff cannot establish his cause of action without relying upon an illegal contract he cannot recover.*"^ Consequently a contract which is in reality illegal cannot, prop- erly speaking, be ratified.^' § 1090. General rule as to ratification. — The general rule has been stated as follows: "Where the transaction is contrary to good faith, and the fraud affects individual interests only, ratification is allowed ; but, when the fraud is of such a character as to amount to crime or other wrong involving the public inter- ests, ratification is not allowed."**^ ** Cascade Public Service Corp. v. Paul Globe Publishing Co., 41 Minn. Railsback, 59 Wash. 376, 109 Pac. 188, 42 N. W. 872, 4 L. R. A. 466, 1062 (contract by entryman for sale 16 Am. St. 695; American Fire Ins. of land before issuance of patent). Co. v. Bank, IZ Miss. 469, 18 So. »° See ante, § 678. 931 ; Bick v. Seal, 45 Mo. App. 475 ; *' See generally matter in preceding McCormick Harvesting Mach. Co. v. section and also Penn v. Bornman, Miller, 54 Nebr. 644, 74 N. W. 1061 ; 102 111. 523 ; Miller v. Ammon, 145 U. Boutelle v. Melendy, 19 N. H. 196, S. 421, 36 L. ed. 759, 12 Sup. Ct. 884; 49 Am. Dec. 152; Sirkin v. 14th Harris v. Runnels, 12 How. (U. S.) Street Store, 124 App. Div. (N. Y.) 79. 13 L. ed. 901 (stating excep- 384, 108 N. Y. S. 830 (action to re- tions) ; Bank of United States v. cover purchase price of goods when Owens, 2 Pet. (U. S.) 527, 7 L. ed. the vendor had given the vendee's 508 (stating exceptions). purchasing agent a commission for "Moog v. Hannon's Admr., 93 Ala. placing the order with him) ; Shisler 503, 9 So. 596 ; Union Collection Co. v. Vandike, 92 Pa. St. 447, Zl Am. v. Buckman, 150 Cal. 159, 88 Pac. 708, Rep. 702; Rue v. Missouri Pac. R. 9 L. R. A. (N. S.) 568n; Pelouze v. Co., 74 Tex. 474, 8 S. W. 533, 15 Slaughter, 241 Til. 215. 89 N. E. 259; Am. St. 852; Central Transportation Lindt V. Uihlein, 109 Towa 591, 79 N. Co. v. Pullman's Palace-Car Co., 139 W. 1Z, opinion modified in 80 N. W. U. S. 24, 35 L. ed. 55. 11 Sup. Ct. 658;Ackerman v. Lamer, 116 La. 101, 478; Buck v. Albce, 26 Vt. 184, 62 40 So. 581 (does not acquire validity Am. Dec. 564; Melchoir v. McCarty, either bv lapse of time or by ratifi- 31 Wis. 252, 11 Am. Rep. 605. cation) ;' Comstock v. Draper. 1 Mich. "'Jennes v. Simpson, 84 Vt. 127, 78 481, 53 Am. Dec. 78; Handy v. St. Atl. 886. 359 EFFECT OF ILLEGALITY OF CONTRACTS, § lOQI § 1091. Rule illustrated. — Thus, a sale of liquor by whole- sale dealers who had not taken out a revenue license, l^eing void under the statutes then in force, will not support an action to re- cover the price; nor can validity be imparted to the contract by a subsequent ratification, express or implied, as by a part payment of the price.'*'' Likewise an agreement to arbitrate losses which arise out of a wagering sale of futures has itself been declared unlawful/" Nor can a contract to compound a felony be ratified or confirmed.'^ § 1092. Rule as applied to Sunday contracts. — There is some conflict of authority, however, when this principle is sought to be applied to Sunday contracts. Some courts hold that such contracts cannot be ratified," others that they may be subse- quently ratified. ^^ It is believed, however, that many of the cases that advance this latter view are guilty merely of a loose use of the word "ratification," or else call acts which in effect amount to the formation of a new contract on a subsequent secular day a ratification.^* § 1093. Effect of subsequent payment of license fee. — In some jurisdictions a contract which is invalid because the parties thereto have failed to pay a license tax imposed by law may be rendered valid and binding by a subsequent payment of such license fee.'^ ••Moog V. Hannon's Admr., 93 Ala. Baghurst, 47 N. J. Eq. 201, 20 Atl. 503, 9 So. 596. 252, 25 Atl. 474. '"Benton v. Singleton, 114 Ga. 548, '^ Evansville v. Morris, 87 Ind. 269, 40 S. E. 811, 58 L. R. A. 181, and 44 Am. Rep. 763; Perkins v. Jones, note 26 Ind. 499; Williamson v. Branden- " Stanard v. Sampson, 23 Okla. 13, berg, 6 Ind. App. 97, 32 N. E. 1022 ; 99 Pac 796 Russell v. jMurdock. 79 Iowa 101. 44 "Butler V. Lee, 11 Ala. 885. 46 Am. N. W. 237, 18 Am. St. 348; Harrison Dec. 230; Day v. McAllister, 15 Gray v. Colton. 31 Iowa 16; Cook v. (Mass.) 433; Acme Electrical Illus- Forker, 193 Pa. St. 461. 44 Atl. 560, trating &c. Co. v. Van Derbeck. 127 74 Am. St. 699. "Acts of ratification Mich. 341, 86 N. W. 786. 89 Am. St. will make them new contracts, which 476- Winfield v. Dodge. 45 IMich 355, the parties are bound to perform." 7 N. W. 906, 40 Am. Rep. 476; "See ante, ch. XXV. Gwinn v. Simes. 61 Mo. 335; Riddle " McMahon v. Savings Assn., /5 V. Keller 61 N. J Eq. 513, 48 Atl. Miss. 965. 23 So. 431 ; American Fire 818; Gennert v. Wuestner. 53 N. J. Ins. Co. v. Bank, 7Z Miss. 469, 18 So. Eq. 302, 31 Atl. 609; Cannon v. Rvan, 931. 49 N. J. L. 314, 8 Atl. 293 ; Nibert v. § I094 CONTRACTS. 360 § 1094. Enforcing or obtaining relief from illegal contracts. — It is well recognized that generally speaking the law will not lend its support to a claim founded upon its own violation. All contracts or agreements which have for their object anything which is repugnant to the general policy of the common law, or contrary to the provisions of any statute, are void and not to be enforced.'* Nor does comity require the enforcement of a contract entered into in another state when it is contrary to the public policy of the forum. A state is not required to recognize or enforce con- tracts which are injurious to the welfare of its people or which are in violation of positive legislation declarative of the public policy of the forum." It is also true as a general rule that if the parties are in pari delicto and are equally at fault and one of them has performed the illegal agreement in whole or in part, he cannot recover from the other party that which he has parted with under the contract. The law will leave the parties where it finds them.'* The rule is the same in equity.'' § 1095. Exceptions — Recovery provided for by statute. — However, there are certain exceptions to the rule which denies the right to recover compensation for services rendered or the possession of property parted with in the performance of an illegal contract. The generally recognized exceptions are : first, those instances in which recovery is provided for by statute; second, when the parties are not equally at fault or are not in pari delicto, and third, contracts where one party recedes from the illegal agreement before its purpose is accomplished, in which case he is allowed to recover that which he has parted with. This last exception is termed the doctrine of locus poenitentiae. '" See ante, § 645. Great Northern R. Co., 18 N. Dak. ''Pope V. Hanke, 155 111. 617, 40 324, 121 N. W. 78; Corstens Packing N. E. 839, 28 L. R. A. 568; Thomas Co. v. Southern Pac. Co. (Wash.), V. First Nat. Bank, 213 111. 261, 72 108 Pac. 613. See also. Western N. E. 801; Corbin v. Houlehan, 100 Union Tel. Co. v. Hill, 163 Ala. 18, Maine 246, 61 Atl. 131, 70 L. R. A. 50 So. 248. 568; Atwater v. A. G. Edwards &c. '* See ante, § 1064. Co. (Mo. App.), 126 S. W. 823; Wil- "Colby v. Title Ins. & Trust Co., liamson v. Postal Tel. Co., 151 N. 160 Cal. 632, 117 Pac. 913. Car. 223, 65 S. E. 974; Hanson v. 361 EFFECT OF ILLEGALITY OF CONTRACTS. § IO96 An instance in which recovery is allowed by statute is found in the case of wager contracts. Many statutes have been passed throughout the English speaking world allowing one who has paid his losses under a wager to recover the same."" § 1096. Statutes permitting recovery strictly construed. — Statutes of this character are usually strictly construed. Thus it has been held that a statute which permits one to recover losses sustained through betting on a game does not apply to other wagers.*^ Some statutes of this character do not permit a com- mon or professional gambler to recover his losses. **- Certain of these statutes are also held to impose a penalty,*'^ while others do not impose a penalty.^'* § 1097. Other statutes considered. — Certain other states permit the recovery of property conveyed in payment of intoxi- cating liquor. ^° Other statutes prevent one who has received a valuable consideration under a contract void because entered into upon Sunday from defending an action brought on such a con- tract upon that ground unless he restores the consideration re- *• Universal Stock Exchange v. Bates, 4 Blackf. (Ind.) 63; Northrup Strachan (1896), A. C. 166; Parker v. Buffington, 171 Mass. 468, 51 N. V. Otis, 130 Cal. 322, 62 Pac. 571, 92 E. 7 (rule changed by the act of Am. St. 56, affd. 187 U. S. 606, 47 1890) ; Bingham v. Scott, 177 Mass. L. ed 323, 23 Sup. Ct. 168; Kruse 208, 58 N. E. 687; Lassen v. Karrer, V. Kennett, 181 111. 199, 54 N. E. 965, 117 .Mich. 512, 76 N. W. 73; Shaw v. revg. 69 111. App. 566; Elder v. Tal- Clark, 49 Mich. 384. 13 N. W. 786, 43 cott, 43 111. App. 439; Wehmhoff v. Am. Rep. 474; Connor v. Black, 132 Rutherford 98 Ky. 91, 32 S. W. 288; Mo. 150, 33 S. W. 783; Dows v. Glas- Triplett V. Seelbach, 91 Ky. 30, 14 pel, 4 N. Dak. 251, 60 N. W. 60. S. W. 948; Lester v. Buel, 49 Ohio " Stapp v. Mason, 114 Ky. 900. 72 St. 240, 30 N. E. 821, 34 Am. St. S. W. 11. (The conclusion here 556; Lucas v. Harper, 24 Ohio St. reached depended on the wording of 328; Rice v. Winslow, 182 Mass. 273, the Kentucky statute.) 65 N. E. 366; Munns v. Donovan "Fitzgerald v. Schloss, 62 N. J. L. Commission Co., 117 Iowa 516. 91 N. 472, 41 Atl. 677; Cooper v. Rowley, W. 789; McGrew v. City Produce 29 Ohio St. 547. E.xch., 85 Tenn. 572, 4 S. W. 38, 4 '* Parker v. Otis. 130 Cal. 322. 62 Am. St. 771. By some statutes the Pac. 571, 92 Am. St. 56, affd. 187 U. loser may recover twice the amount S. 606, 47 L. ed. 323, 23 Sup. Ct. of his loss. Mevers v. Dillon, 39 168 (constitutional) ; Wall v. Stock Ore. 581, 65 Pac' 867. affd. on re- Exchange, 168 :Mass. 282, 46 N. E. hearing. 66 Pac. 814. 1062. See also, further on this sub- "Bovce v. O'Dell Commission Co., ject in the chapter on Gambling and 109 Fed. 758; Sondheim v. Gilbert, Wagering Contracts. 117 Ind. 71, 18 N. E. 687, 5 L. R. A. **Lindt v. Uihlein. 109 Iowa 591, 432, 10 Am. St. 23n; Woodcock v. 79 N. W. 73, 80 N. W. 658. McQueen, 11 Ind. 14; McHatton v. 1098 COXTRACTS. 362 ceived."*' Statutes of this latter character have been held to apply to actions brought by an indorsee against the indorser of a prom- issory note,®' to recover the hire of a team,®® for the roofing of a building/^^ or for the rescission of the sale of a horse. °° Such a statute has been held, however, not to permit the recovery of damages for negligent injuries to a team hired for use on Sun- day.«' § 1098. Recovery permitted when parties not in pari de- licto. — The second exception to the rule that there can be no recovery of the consideration parted with under an executed illegal contract is found in those cases where the parties are not in pari delicto. The parties to an agreement may be in delicto ; this does not of necessity, however, place them in pari delicto. One party may be less guilty than the other ; one may have acted under duress or undue influence ; or the parties may not be on an equal footing because of a disparity in their ages or in mental at- tainment. As a general rule where any of the foregoing circum- stances exist the party less guilty will be permitted to recover from the dominant party that which he has obtained from the for- mer by reason of the unlawful agreement.^^ "Even a wrongdoer '"Wetherell v. Hollister, IZ Conn. Ky. 160, 8 Ky. L. 820, 3 S. W. 5, 7 622. 48 Atl. 826; Bridges v. Bridges, Am. St. 583; Belding v. Smythe, 138 93 Maine 557, 45 Atl. 827 ; Wheeldon Mass. 530 ; Bryant v. Peck & Whipple V. Lyford, 84 Maine 114, 24 Atl. 793; Co., 154 Mass. 460, 28 N. E. 678: Bar Harbor &c. Bank v. Kingsley, 84 Barnes v. Brown, 32 Mich. 146 Maine 111, 24 Atl. 794. Meech v. Lee, 82 Mich. 274, 46 N ''Bar Harbor &c. Bank v. Kings- E. 383; Boston v. Balch, 69 Mo. 115 lev, 84 Alaine 111, 24 Atl. 754. Bell v. Campbell, 123 Mo. 1, 25 S. '*' Wheeldon v. Lyford, 84 Maine W. 359, 45 Am. St. 505 ; Ford v. Har- 114 24 Atl 793. rington, 16 N. Y. 285; Richardson v. ""'Wetherell v. Hollister, 1Z Conn. Crandall, 48 N. Y. 348; Boyd v. De 622, 48 Atl. 826. La Montagnie, IZ N. Y. 498, 29 Am. '"Bridges v. Bridges, 93 Maine 557, Rep. 197; Duval v. Wellman, 124 N. 45 Atl. 827. Y. 156, 26 N. E. 343; Foley v. Greene, "Wheeldon v. Lyford, 84 Maine 14 R. L 618, 51 Am. Rep. 419; James 114. 24 Atl. 793. v. Steere, 16 R. L 367, 16 Atl. 143, '-Woodham v. Allen, 130 Cal. 194, 2 L. R. A. 164; Gorringe v. Read, 62 Pac. 398; Baehr v. Wolf, 59 111. 23 Utah 120, 6Z Pac. 902, 90 Am. St. 470; Herrick v. Lynch, 150 111. 283, Zl 692; Harrington v. Grant, 54 Vt. 236; N. E. 221; Evans v. Funk, 151 111. Rozell v. Vansyckle, 11 Wash. 79, 39 650, .38 N. E. 230; Davidson v. Car- Pac. 270. It has been held that one's ter, 55 Iowa 117, 7 N. W. 466; Wil- cause of action does not grow out of liams V. Collins, dl Iowa 413, 25 N. a violation of law and thus defeat his W. 682; Mason v. McLeod, 57 Kans. right of recovery where he purchased 105, 45 Pac. 76, 41 L. R. A. 548, 57 of a wholesale dealer adulterated Am. St. 327; Harper v. Harper, 85 vinegar under an implied warranty of 363 EFFECT OF ILLEGAIJTY OF CONTRACTS. § lOQQ is not the prey of any spoliator who may outwit him. It is true that the law will enforce no part of a contract the performance of any stipulation of which is forbidden, but the parties do not become outlaws when they make such a contract, and their rights in equity as well as at law are the same as those of others, in so far as they do not require enforcement of any part of the con- tract.""^ § 1099. Rule illustrated. — Thus in case the contract vio- lates a rule of law which has for its object the protection of one class of men from the oppression and imposition of another class of men the really guilty party is never allowed any relief under the statute or permitted to set up the statute as a defense to relief sought by the other party. That which was intended as a shield for one of the parties will not be converted into a sword with which to work his destruction."* As where the legis- lature imposed a penalty on the vendor of lottery tickets, it was held that such statute was intended for the protection of pur- chasers of lottery tickets and for this reason the purchaser by participating in the illegal transaction was not in pari delicto and its purity and retailed it as pure and (Ky.) 208, 12 Am. Dec. 283. "A stat- was fined under the pure food law. ute may declare a contract to be void, Friedgood v. Kline, 67 Misc (N. V.) and still but one of the parties be 428, 123 N. Y. S. 247. The guaranty guilty of its violation. Enactments of a debt due a bank as a secret pref- of this character are often made for erence in a proposed composition the purpose of protecting one class agreement was obtained for such a of men from the oppression and im- bank by the insolvent firm. In a suit positions of another class of men ; by the bank to enforce the guaranty, and in such cases, the really guilty the guarantor in her answer de- party is never allowed any relief un- mandcd the return of the guaranty der the statute, or permitted to set and the stock deposited as security, up the statute as a defense to relief Held, that the relief was an unlawful sought by the other party. Such is preference, and the bank had no right the case with all laws, which declare either to the guaranty or the collat- usurious contracts to be null and eral, the guarantor having no void. The lender is never allowed to knowledge that the consideration take advantage of the statute, be- was illegal when executed. Glens cause he is the guilty party; the bor- Falls Nat. Bank v. Van Nos- rower may do so. because he is not a trand, 103 App. Div. (N. Y.) 598, particeps criminis. He is regarded as 92 N. Y. S. 1125. affd. 41 :\Iisc. (N. the victim of the usurer, and not in Y.) 526. 85 N. Y. S. 50. pari delicto. This principle applies to " Primeau v. Granfield, 180 Fed. every contract declared to be void by 847, 852. the statute, in the making of which " Mobile & O. R. Co. v. Dismukes, but one of the parties is in pari de- 94 Ala. 131. 10 So. 289, 17 L. R. A. licto." Ferguson v. Sutphen, 8 111. 113; Scotten v. State, 51 Ind. 52; 547. Gray v. Roberts, 2 A. K. Marsh. § IIOO CONTRACTS. 364 might recover the price of the ticket."' Likewise a statute which provides that a vendor of a patent must make and file an affidavit of the genuineness of the letters is for the benefit of the vendee, and in case the vendor fails to make and file such affidavit the vendee is not in pari delicto and may maintain an action to set aside the purchase and recover the consideration."*' And the same is true where a druggist sells his entire stock to another in violation of law," or where a client pays his attorney a fee in ex- cess of that prescribed by law.°^ It has also been held that a bank which loans money to one of its directors in violation of law is entitled to resort to security for such loan as against the creditors or the director,°° and one w'ho pays money to a bank on a contract in violation of law may recover the money so paid.^ § 1100. Penalty on both parties — No undue advantage given. — However, if the law imposes the penalty on both par- ties to the transaction, or if there is moral turpitude on both sides the courts will ordinarily take no pains to ascertain the relative guilt of the parties.- Moreover the law will not give the one for whose protection the law is passed an undue advantage. Thus where the purpose of the statute was to protect persons giving credit to a fictitious firm on the face of the fictitious designation, a debtor of such firm could not defeat his liability on the ground "' Gray v. Roberts, 2 A. K. Marsh. 2ai ; Stevens v. Cincinnati Times- (Kv) 208, 12 Am. Dec. 383; Becker Star Co., 72 Ohio St. 112, 73 N. E. V. Wilcox, 81 Nebr. 476, 116 N. W. 1058, 106 Am. St 586 160, 16 L. R. A. (N. S.) 571. See "« Mason v. McLeod, 57 Kans. 105, also, Jaques v. Golightly, 2 W. Bl. 45 Pac. 76, 41 L. R. A. 548, 57 Am. 1073; Browning v. Morris, 2 Cowp. St. 327. 790. The rule is otherwise, however, *' Stansfield v. Kunz, 62 Kans. /W, where the party who seeks to recover 64 Pac. 614. _ -, ,, . ,,-, .« was one of the principals in the '' Smart v. White, 73 Maine 332, 40 lottery scheme. Branham v. Stall- Am. Rep. 356. ,„!•?•? atj ings, 21 Colo. 211. 40 Pac. 396, 52 •'^ Lester v. Howard Bank, 33 Md. Am. St. 213. And the vendee cannot 558, 3 Am. Rep. 211 o-i -o- 1 recover when it appears that the stat- 'White v. Franklin Bank, 22 Pick, ute imposed a penalty upon both the (Mass.) 181. vendor and the vendee and was not 'See ante, § 1096 et seq. bee intended as a protection for the ven- also Pullman Palace - Car Co. v. dee. See cases cited ante this note. Central 'J'ransportation Co., 65 bed. See also. State Mutual Life Ins. Co. 158; White v. Franklm Bank, 22 v. Newton, 89 111. App. 353; Harring- Pick. (Mass.) 181; Kitchen v. Green- ton v. Halliday, 4 Ohio N. P. (N. S.) abaum, 61 Mo. 110. 365 EFFECT OF ILLEGALITY OF CONTRACTS. § I Id that the firm had not filed a certificate in the office of the clerk of the county where the business was transacted.^ § 1101. When parties not equally at fault. — The parties to an illegal contract are not equally at fault and for that reason not in pari delicto when it appears that although the parties concur in the illegal act, some fraud, duress, oppression, imposition or undue influence is practiced by one party upon the other so that the guilt of the latter is subordinate to that of the former.* In such case the wrong rests chiefly on the person by whom it was contrived and his confederate is regarded as a mere instrument for accomplishing an end not his own. If the former were al- lowed immunity under such circumstances he would be permitted to take advantage of his own wrong and reap the benefit from his fraud.^ "A court of equity will interfere, and go to the re- lief of a less guilty party, whose transgression has been brought about by the imposition, undue influence, etc., of the party on whom the burden of the original blameworthiness principally rests. '"^ § 1102. Rule illustrated. — Thus the maxim "in pari de- licto" does not apply to a case where a married woman sues to set aside a deed of her separate property made under express or implied threats of the prosecution of her husband and to save him from prosecution.'^ One who is through duress or undue in- fluence induced to enter into an unlawful transaction is not in pari delicto.* When one induced another to take part in Dr. ' *Rutkowskv V. Bozza, 11 N. J. L. 7 X. W. 466. To same effect, Brady 724, n Atl. 502. V. Central Western R. Co., 88 Nebr. * Burrows v. Rhodes (1899), 1 Q. B. 840, 130 N. W. 575. 816; Mobile &c. Ry. Co. v. Dismukes, "Bell v. Campbell, 123 Mo. 1, 25 S. 94 Ala. 131, 10 So. 289, 17 L. R. A. W. 359. 45 Am. St. 505. 113; McColgan v. Muirhead, 2 Cal. 'Burton v. McMillan, 52 Fla. 469, App.6.82Pac. 1113; Harper v. Har- 42 So. 849, 8 L. R. A. (X. S.) 991, per, 85 Ky. 160, 8 Ky. L. 820, 3 S. W. reviewing many authorities. See 5, 7 Am. St. 583; Morgan City v. also, ante, ch. VII. Dalton, 112 La. 9. 36 So. 208; Roman "Colby v. Title Ins. & Trust Co.. V. Mali, 42 ^Id. 513; Pearl v. Wal- 160 Cal. 632, 117 Pac. 913 (property ter, 80 Mich. 317, 45 X. W. 181; Hess transferred to compound daughter's V. Culver. 11 Mich. 598. 43 X. W. 994, felonv) ; Davidson v. Carter. 55 Iowa 6 L. R. A. 498. 18 Am. St. 421 ; Kitch- 117, 7 X. W. 466; Peck v. Peck. 101 en V. Greenabaum, 61 Mo. 110; Da- Mich. 304. 59 X. W. 604; Bell v. vidsnn v. Hobson. 59 Mo. App. 130. Campbell. 123 Mo. 1. 25 S. \V. 359, . "Davidson v. Carter, 55 Iowa 117, 45 Am. St. 505; Duval v. Wellman, § II03 CONTRACTS. 366 Jameson's raid by representing that the British government had authorized the invasion of South Africa he was held hable to the person so induced for damages sustained by him by reason of his taking part in such raid." One who is induced by his surety on a bail bond to deed certain land to the latter and then abscond, the bailor representing that unless the former did so he would be placed in jail and perhaps sent to the penitentiary, has been held entitled to maintain an action to recover the property so conveyed when the surety was not required to pay over the bail money and the charges were afterward dismissed.'" It has also been said that parties who pay money for the purpose of procuring a hus- band or wife will be regarded as under a species of imposition or undue influence and are entitled to recover the same.^^ § 1103. The principle of "pari delicto" as affected by pub- lic policy. — The relationship which the parties sustain one to another is also important in determining whether they stand in pari delicto. Where a relation of trust and confidence subsists between the parties relief will not be denied to the party least in fault against the one who has led him into the act by a violation of confidence.'^ Thus a husband who conveys property to a sup- posed friend in order to avoid a payment of alimony which he feared his wife might recover in an action for divorce was not in pari delicto when it appeared that the supposed friend knew that the wife did not intend to insist on her demand for alimony but, notwithstanding this knowledge, reported to the husband that the wife would insist on such demand." It has also been held that an attorney cannot interpose the defense of pari delicto in a suit brought against him by a client.'* This same principle has 124 N. Y. 156, 26 N. E. 343 ; Place v. him into this illegal act, and then im- Hayward, 117 N. Y. 487, 23 N. E. 25. posed upon him, such relief will not "Burrows v. Rhodes (1899), 1 Q. be refused." Harper v. Harper, 85 B 816 Ky. 160, 3 S. W. 5, 7 Am. St. 583. "Baehr v. Wolf, 59 111. 470. " Poston v. Balch, 69 Mo. 115. "Wenninger v. Mitchell, 139 Mo. "Ford v. Harrington, 16 N. Y. App. 420, 122 S. W. 1130; Duval v. 285; Freelove v. Cole, 41 Barb. (N. Wellman, 124 N. Y. 156, 26 N. E. Y.) 318, affd. 41 N. Y. 619. See also, 343. See. ante, § 754. Belding v. Smythe, 138 Mass. 530. " Barnes v. Brown, 32 Mich. 146. See, however, Schermerhorn v. De "Even if the party had sufficient ca- Chambrun, 64 Fed. 195, 12 C C. A. pacity to contract, yet if, through 81 ; Roman v. Mali, 42 Md. 513. trusting confidence, the other has led 367 EFFECT OF ILLEGALITY OF CONTRACTS. § II 04 been applied to guardians, trustees, executors and administrat- ors." Likewise when one who employs another to make a con- tract with a third person and pays him a commission for such services, the commission may be recovered when it is subse- quently learned that the one employed to make such contract w^as already in the employment of the third person with whom the agreement was to be made.^" It has been held, however, that one who has knowledge of all the material facts and who is not induced to enter into the contract through mistake may be in pari delicto even though he does not know the contract is illegal because of a mistake of law.^^ § 1104. When one in pari delicto may be granted relief. — Again, one who is in pari delicto may be granted relief on the ground of public policy. Public policy lies at the basis of the law in regard to illegal contracts and the rule is adopted, not for the benefit of the parties, but of the public. Cases may arise of a character in which the public interest will be better promoted by granting than by denying relief and in such cases the general rule must yield to the policy.'^ Thus one who enters into a con- spiracy to defraud but is himself defrauded may recover the amount parted with if public policy demands that he be permitted to do so.'^ It has also been held that the question of the falsity of answers in an application for life insurance cannot be raised in " O'Conner V. Ward, 60 Miss. 1025. of swindlers induced him to join " Campbell v. Baxter, 41 Xebr. 729, them in a supposed scheme to swm- 60 X W 90. die a third person, the plaintiff, how- " ^iissouri, K. & T. R. Co. v. ever, being in fact the victim) ; De- Bowles, 1 Ind. Ter. 250. 40 S. W. 899. pue v. Swift, 1904; Clothes \Vasher "* Lester v. Howard Bank, 33 Md. Co. (Mo. App.), 129 S. W. 230. (In 558 3 Am Rep. 211; Rideout v. the above case recovery was permit- Mars (Miss.), 54 So. 801; Herring ted on the ground that it was pub- V. Cumberland Lumber Co. (N. lie policy to discourage the defend- Car) 74 S E 1011- Johnson v. ant's fraudulent business of selling Cooper, 2 Yerg. (Tenn.) 524, 24 Am. patent rights for a worthless article.) Dec. 502. See' also, Citv School Corp. Compare the foregoing case with of Evansville v. Hickman (Ind. that of Schmitt v. Gibson, 12 Cal. App.).94N. E.828: Jenness v. Simp- App. 407, 107 Pac. 571, in which the son 84 Vt. 127. 78 Atl. 886. facts are much the same except that "Anxer v. Llewellvn, 142 111. App. the betting was on a fake prize hght. 265 (bet on a "fake fight") ; Hobbs The action brought was not one for V. Boatright, 195 Mo. 693. 93 S. W. conspiracv to defraud but in assump- 934. 5 L. R. A. (N. S.) 906, 113 Am. sit. The court denied the right to St. 709. (In the above case the plain- recover. It said: "To our mind the tiff bet on a fake foot-race. A gang public welfare is best promoted by § 1 105 CONTRACTS. 368 a suit over the right to the proceeds which have been paid by the insurer.'" § 1105. Locus poenitentiae. — A third exception to the rule that no rehef will be granted from illegal contracts is found in the rule that either party has a locus poenitentiae*^ before a material part of the illegal purpose has been accomplished.^' The mean- ing of this has already been explained. § 1106. Rule illustrated. — Thus one w^ho deposits money with a stakeholder on a bet may repudiate the wager^^ and de- mand a return of the money deposited with the stakeholder before it is paid over to the winner, and in case the stakeholder pays the stakes over to the winner subsequent to such demand he is liable for the amount so turned over.^* And this is true not- adhering to the rule established in this state half a century ago, at which time the doors of the courts were declared closed against one seeking redress under circumstances identical with those presented in the case at bar." =° Bendet v. Ellis, 120 Tenn. 277, 111 S. W. 795, 18 L. R. A. (N. S.) 114. " Wassermann v. Sloss, 117 Cal. 425, 42 Pac. 566, 38 L. R. A. 176, 59 Am. St. 209 ; Clarke v. Brown, 11 Ga. 606, 4 Am. St. 98 (deposit of money to have been expended in futures) ; Benton v. Singleton, 114 Ga. 548, 40 S. E. 811, 58 L. R. A. 181 (deposit for deal in "futures") ; Lafferty v. Jelley, 22 Ind. 471 ; Sternburg v. Cal- lanan, 14 Iowa 251 (money given to agent to be loaned at usurious rates) ; Stansfield v. Kunz, 62 Kans. 797, 64 Pac. 614; Ware v. Spinney, 76 Kans. 289, 91 Pac. 787. 13 L. R. A. (N. S.) 267n ; Tyler v. Carlisle, 79 Maine 210, 9 Atl. 356, 1 Am. St. 301n; Adams Exp. Co. V. Reno, 48 Mo. 264; Sou- hegan Nat. Bank v. Wallace, 61 N. H. 24 (money furnished to agent to secretly obtain the return of stolen securities) ; Bernard v. Taylor, ZZ Ore. 416, 31 Pac. 968, 18 L. R. A. 859, Z1 Am. St. 693; Peters v. Grim, 149 Pa. St. 163, 24 Atl. 192, 34 Am. St. 599 (action to recover deposit with brokers which was to have been ex- pended in futures) ; Repplier v. Ja- cobs, 149 Pa. St. 167, 24 Atl. 194; Spring Co. v. Knowlton, 103 U. S. 49. 26 L. ed. 347. ^ See Kearlev v. Thompson, 24 Q. B. Div. 742; 'Ullman v. St. Louis Chair Assn., 167 Mo. 273, 66 S. W. 949, 56 L. R. A. 606; Knowland v. Congress & E. Spring Co., 57 N. Y. 518; Hooker v. De Palos, 28 Ohio St. 251 ; Leadbetter v. Hawley, 59 Ore. 422, 117 Pac. 289; Miller v. Lar- son, 19 Wis. 463 ; Douville v. Mer- rick, 25 Wis. 688. (Money deposited by husband with an attorney who was with wife's consent to bring an ac- tion for divorce on the wife's behalf. Suit to recover money before divorce proceedings commenced.) -^Hale v. Sherwood, 40 Conn. 332, 16 Am. Rep. ZT \ Okerson v. Critten- den, 62 Iowa 297, 17 N. W. 528; Pat- terson v. Clark, 126 Mass. 531. =^ Lewis V. Bruton, 74 Ala. 317, 49 Am. Rep. 816; Corson v. Neatheny 9 Colo. 212, 11 Pac. 82; Wheeler v Spencer, 15 Conn. 28; McLennan v Whiddon, 120 Ga. 666, 48 S. E. 201 Petillon V. Hippie, 90 111. 420, 32 Am Rep. 31 ; Doxey v. Miller, 2 111. App 30; Taylor v. Moore, 20 Ind. App 654, 50 N. E. 770; Burroughs v Hunt, 13 Ind. 178; Turner v. Thomp- son, 107 Ky. 647, 55 S. W. 210 ; Stacy v. Foss, 19 Maine 335, 36 Am. Dec. 755 ; Gilmore v. Woodcock, 69 Maine 118; Love v. Harvey, 114 Mass. 80; 369 EFFECT OF ILLEGALITY OF CONTRACTS. § I 107 withstanding the one who placed his money in the hands of the stakeholder believed that he had a "sure thing" and intended to defraud others. ^° The same principle applies where money is paid to a third person for the purpose of bribing officials,^" or to compound a felony,-' or to obtain a pardon for another.-® § 1107. Money or property given to one of the parties to the illegal agreement. — The money so deposited may be re- IMorgan v. Beaumont, 121 Mass. 7; Whitwell V. Carter, 4 Mich. 329; Pabst Brew. Co. v. Liston, 80 Minn. 473, 83 N. W. 448, 81 Am. St. 275; White V. Gilleland, 93 Mo. App. 310 (withdrawal may be made at any- time before payment). Compare the foregoing case with Cutshall v. 'Slc- Gowan, 98 Mo. App. 702, 73 S. W- 933 ; Deaver v. Bennett, 29 Nebr. 812, 46 N. W. 161. 26 Am. St. 415; Ward V. HoUiday, 87 Nebr. 607, 127 N. W. 882 (bet on horse race) ; Thomson V. Haves, 111 N. Y. S. 495, 59 Misc. (N. Y.) 425 (bet as to whether a designated party held a lease on cer- tain property) ; Kohler v. Rosenthal, 135 App. Div. (N. Y.) 438, 120 N. Y. S. 325; Dunn v. Drummond, 4 Okla. 461, 51 Pac. 656; Mc.AUister v. Hoff- man, 16 Serg. & R. (Pa.) 147, 16 Am. Dec. 556; Dauler v. Hartlev, 178 Pa. 23, 35 Atl. 857; Lillard v. Mitch- ell (Tenn.), 37 S. W. 702; Lewy v. Crawford. 5 Tex. Civ. App. 293, 23 S. W. 1041. (Election bet. Stake- holder notified not to turn over money after the result of the elec- tion had become known but before actual payment had been made.) But the stakeholder is not liable where he pays the money over to the win- ner without notice from the loser not to do so. Himmelman v. Pecaut. 133 Iowa 503, 110 N. W. 919. See Maher V. Vanhorn, 15 Colo. App. 14, 60 Pac. 949, on the question as to what con- stitutes a demand. In this case it was held that the demand made was insufficient. Vandolah v. McKee. 99 Mo. App. 342, 73 S. W. 233 (demand held sufficient). See also, Colson v. Meyers, 80 Ga. 499, 5 S. E. 504 (no- tice to a stakeholder not to pay over money for the reason that the elec- 24 — Contracts, Vol. 2 tion would probably be contested not a demand). See also, Cutshall v. McGowan, 98 Mo. App. 702, 73 S. W. 933, where in an action to recover money deposited with defendant as a wager on a horse race, plaintiff's own evidence showed that he did not sig- nify his dissent to the bet until the race was so far run that he realized that his horse was beaten, such dis- sent was inopportune and his right to recover lost. Morgan v. Groff. 4 Barb. (N. Y.) 524 (bet made with unauthorized person). See further in ch. 26. =" Falkenberg v. Allen, 18 Okla. 210, 90 Pac. 415, 10 L. R. A. (X. S.) 494. In the above case plaintiff Allen put up his money on a fake foot-race in the belief that it was fixed his way. Before the race was actually run he found out that the race was merely a scheme to beat him out of his money. He immediately demanded of the stakeholder his money. The stake- holder refused to turn it over, the race was run, and plaintiff lost his money. It was held that he might re- cover from the stakeholder. To same effect, Fisher v. Hildreth, 117 Mass. 558; Bernard v. Taylor, 23 Ore. 416, 31 Pac. 968, 18 L. R. A. 859, 37 Am. St. 693. "Wassermann v. Sloss, 117 Cal. 425, 49 Pac. 566. 38 L. R. A. 176, 59 Am. St. 209. See also. Bone v. Ek- less, 5 Hurlst. & N. 925. " Taylor v. Lendey, 9 East, 49. See also, Davenger v. Everett, 7 Legal Gaz. (Phila.) 202; Kiewert v. Rinds- kopf, 46 Wis. 481. 1 N. W. 163, 32 Am. Rep. 731 (minimum penalty to be procured in case of conviction). =* Adams Exp. Co. v. Reno, 48 Mo. 264. § no/ CONTRACTS. 37O covered if its return is demanded before it is expended for the illegal purpose. There is some question as to whether the prop- erty parted with may be recovered when turned over to one of the parties to the illegal agreement and not to a third party. Cer- tain jurisdictions permit a recovery where the contract is not malum in se and is largely unexecuted and is legal on its face.^^ \Miere this doctrine obtains it is difficult to lay down any general rules which will be applicable to all cases. The rule has been given the following broad general statement : "In minor offenses, the locus poenitentiae continues until the money has been actually converted to the illegal use. The law encourages a repudiation of the illegal contract, even by a guilty participator, as long as it remains an executory contract, or the illegal purpose has not been put in operation."^" Other courts deny the right of one party to recover property paid over to the other party to an illegal agreement where the statute makes no provision for a recovery and both parties are in pari delicto,^^ especially so where the con- tract has been partly performed. 32 ^Simpson v. Lord Howden, 3 defended that it was an unlawful Mylne & C. 97; Congress &c. Spring monopoly and that his right to ern- Co. V. Knowlton, 103 U. S. 49, 26 ployment was so dependent upon his L. ed. 347 ; McCutcheon V. Merz Cap- participation in such unlawful mo- sule Co., 71 Fed. 787, 19 C. C. A. 108, nopoly that a suit for damages 31 L. R. A. 415; White v. Franklin arising out of a disturbance of this Bank, 22 Pick. (Mass.) 181 (money right could not be sustained. The deposited in a bank, contrary to law, court said: "The plaintiff's right of recoverable). action, as we regard it, does not rest ^ Tyler v. Carlisle, 79 Maine 210, upon any assertion of the alleged 9 Atl. 356, 1 Am. St. 301. monopoly, but upon a repudiation of ^' Knowlton v. Congress & E. the very course of procedure that Spring Co., 57 N. Y. 518. was invoked in his case to establish ^'Ullman v. Fair Association, 167 the monopoly. It is settled that, :Mo. 273, 66 S. W. 949, 56 L. R. A. where a party has entered into an 606. See also, the case of Brennan agreement that is void because con- V. United Hatters &c.. Local No. 17, trary to public policy, his right to (N. J.), 65 Atl. 165, 9 L. R. A. recover upon a ground of action that (N. S.) 254. This was a suit brought exists independent of the agree- by a member of a labor union for the ment is not overthrown by the op- alleged wrongful act of such union in eration of the maxim, *In pari de- securing plaintiff's discharge from licto.' his employment. .The labor union J >» CHAPTER XXIX. CONFLICT OF LAWS. I 1110. General rule — Lex loci con- § 1136. tractus. 1137. 1111. Lex loci contractus governs as to the nature, obligation 1138. and interpretation of the contract. 1139. 1112. The general rule given fur- ther consideration. 1140. 1113. Law of the place a part of 1141. the contract. 1114. Reasons underlying the rule. 1115. Where is the place of the con- 1142. tract. 1116. Place of acceptance. 1143. 1117. Place of delivery. 1144. 1118. Place of performance. 1119. When law of the place of per- formance governs. 1145. 1120. The rule illustrated. 1121. Part performance in one ju- risdiction and part in an- 1146. other. 1147. 1122. Agreement by parties as to law which shall control. 1123. Agreements as to the law 1148. whicli shall control consid- ered further. 1124. Formal validity. 1149. 1125. Formal vahdity — Statute of frauds. 1150. 1126. Essential validity — Legality. 1151. 1127. Capacity of parties. 1128. Capacity to contract — Corpo- rations — Agents. 1152. 1129. Distinction between capacity 1153. to contract and capacity to perform the contract. 1130. Capacity to contract — Married 1154. women. 1131. Capacity to contract — Tran- 1155. sients in a foreign country. 1132. Capacity to contract — Law of domicile. 1156. 1133. Rule in Louisiana. 1134. When law of domicile imposes a total incapacity. 1157. 1135. Capacity to contract — Law of forum. 371 Capacity to contract — Infants. Discharge of contracts — Stat- utes of limitation. Le.x fori — When action may be maintained thereunder. Statutes as to maintenance of actions in lex fori. Other statutory enactments. Rule when the law of the place extinguishes the con- tract. Particular contracts — Con- tracts relating to realty. Rule applied. Lex situs controls as to cove- nants which run with the land and the like. Distinction between covenants which run with the land and personal covenants. Transfer of personalty. Legislative power extends to all personal property within boundaries of the state. When the law of domicile yields to the law of the situs. Sale or attachment of goods — When lex sitae controls. The trend of authority. The law of the domicile as compared with the law of the place. Transfer of personalty — Sales. Sale governed by the law of the place where it becomes complete and binding. The law of the situs as aflfect- ing the rights of creditors. Removal of goods without vendor's knowledge or con- sent. Contract of sale providing for delivery and use in another jurisdiction. Validity of chattel mortgages and bills of sale. § iiio CONTRACTS. 372 §1158. Removal of mortgaged goods §1180. to another jurisdiction. 1159. Mortgagors consenting to the 1181. removal — Comity. 1160. Necessity to relile mortgage 1182. on property moved into an- 1183. other jurisdiction. 1161. Sales of intoxicating liquors. 1184. 1162. Sales of intoxicating liquors —Rule applied. 1185. 1163. Voluntary assignments for the benefit of creditors. 1186. 1164. Assignment valid where made generally valid everywhere. 1165. Foreign voluntary assignment 1187. — Resident creditors. 1166. When law of place of assign- 1188. ment prevails over the law of the domicile. 1189. 1167. Involuntary assignment under bankrupt and insolvency 1190. laws. 1168. Involuntary assignmen t — When recognized in foreign 1191. jurisdictions. 1169. When assignment is involun- 1192. tary. 1193. 1170. Sale or mortgage — As affected by fraud. 1194. 1171. Bills and notes. 1195. 1172. Presumption as to place of de- 1196. livery. 1197. 1173. Bill or note payable generally. 1198. 1174. Naming of place for payment does not necessarily fix gov- 1199. erning law. 1175. Laws of more than one state 1200. may apply to same bill. 1176. Negotiability. 1201. 1177. Rule in federal and a few 1202. state courts. 1178. Law governing liability of 1203. parties to bills and notes. 1179. Necessity of demand and pro- test as a condition prece- dent. for notice of dis- payment — Days of Necessity honor. Time of grace. Interest. Different rates — Parties may stipulate either. In selecting rate must act in good faith. Insurance contracts — Gener- ally. _ Authority of agent limited to taking applications — Excep- tions. Policy mailed to agent of in- surer. Delivery and payment of first premium. Parties designating the state whose laws are to govern. Validity — Policy usually gov- erned by the law of the place. Construction and rights of the parties. Contracts of carriers. Connecting lines of carriers — The English rule. The American rule. "Contract tickets." ^Maritime contracts. Contracts of affreightment. Contracts of telegraph com- pany. Remedies — Lex fori — Gener- ally. Lex fori governs as to rem- edy. Rule applied. When forum will refuse to enforce the contract. Foreign laws not judicially noticed. § 1110. General rule — Lex loci contractus. — Personal con- tracts will be construed and their validity determined by the law of the place where they were made, unless the contracting parties clearly appear to have had some other law in view.^ Parties are * Bertonneau v. Southern Pac. Co., 17 Cal. App. 539, 120 Pac. 53; Illus- trated Postal Card & Novelty Co. v. Holt rConn.), 81 Atl. 1061; Croissant v. Empire State Realty Co., 29 App D. C. 538; Provident Sav. Life As- sur. Soc. V. Hadley, 102 Fed. 856, 43 C. C. A. 25 ; Thomson v. Kvle, 39 Fla. 582. 23 So. 12, 63 Am. St. 193; Illi- nois Cent. R. Co. v. Beebe, 174 111. 13, 50 N. E. 1019, 43 L. R. A. 210, 66 Am. St. 253; McCoy v. Griswold, 114 Z72, CONFLICT OF LAWS. II II presumed to contract in reference to the laws of the country in which the contract is made, and it is a maxim that locus con- tractus regit actum, unless the intention of the parties to the con- trary is clearly shown.^ § 1111. Lex loci contractus governs as to the nature, obli- gation and interpretation of the contract. — Lord Justice Turner in a leading case on this subject said : "The general rule is, that the law of the country where a contract is made governs as to the nature, the obligation, and the interpretation of it. The parties to the contract are either the subjects of the Power there ruling, or as temporary residents owe it a temporary allegiance : in either case equally they must be understood to submit to the law there prevailing, and to agree to its action upon their con- Ill. App. 556; Reid, IMurdoch & Co. V. Northern Lumber Co., 146 111. App. 371 ; Weil v. Sturgus, 23 Ky. L. 644, 63 S. W. 602; Farmer v. Etheridge, 24 Ky. L. 649, 69 S. W. 761 ; Emer- son Co. V. Proctor, 97 Maine 360, 54 Atl. 849; Tremain v. Dyott, 161 Mo. App. 217, 142 S. W. 760; Jamieson V. Potts, 55 Ore. 292, 105 Pac. 93; Meuer v. Chicago, M. & St. P. R. Co., 11 S. Dak. 94, 75 N. W. 823. 74 Am. St. 774; International Harvester Co. V. McAdams, 142 Wis. 114. 124 N. W. 1042. See also. First Nat. Bank V. Arthur. 10 Colo. App. 283, 50 Pac 738; Lvnch v. Postlethwaite, 7 Mar- tin (La.) 69; Pittsburgh & E. R. R. Co. V. Bishop. 7 Ohio C. D. 72; Forepaugh v. Delaware L. & W. R. Co., 128 Pa. St. 217, 18 Atl. 503, 5 L. R. A. 508, 15 Am. St. 672 (en- forcing a New York law) ; Scud- der V. Union Nat. Bank, 91 U. S. 406, 23 L. ed. 245; Pritchard v. Norton, 106 U. S. 124, 1 Sup. Ct. 102, 27 L. ed. 104 ; Cox v. United States, 6 Pet. (U. S.) 172. 8 L. ed. 359; Lamar v. Micou, 114 U. S. 218; Watts v. Ca- mors, 115 U. S. 353, 6 Sup. Ct. 91; "Contracts made in Nebraska, with residents of this state, by a foreign building and loan association, if made by agent of such association within this state, are Nebraska contracts, and their construction, validity and enforcement are governed by the laws of th€ state"' National Mutual Bldg. Co. V. Retzman (Nebr.), 96 N. W. 204. And where a contract was made in Indian Territory and was to be performed entirely after the creation of the state of Oklahoma it was held that the rights of the par- ties thereto would in no wise be af- fected or disturbed by the change, even had a change in law followed. Turner v. Trail, 24 Okla. 135, 103 Pac. 575 ; To same effect, Purcell v. Barnett (Okla), 121 Pac. 231 ; Barnes V. American Soda Fountain Co. (Okla.), 121 Pac. 250. See also, Sweetser v. Jordan (Mass.), 97 N. E. 768. Mercantile Trust &c. Co. v. Columbus, 161 Fed. 135 (holding that a contract is not only to be con- strued by the law of the place but by the law as interpreted by the courts at the time the contract was entered into and that its validity is not to be affected by subsequent contrary de- cisions). -Llovd V. Guibert (1865), L. R. 1 Q. B. 115; Gibbs v. Fremont. 9 Ex. 25; Hope v. Hope, 8 Deg. M. & G. 731 ; Alves v. Hodgson, 7 T. R. 241 ; Trimbey v. Vignier, 1 Bing. N. Cas. 151; Lewis v. Headley. 36 111. 433; Emerson Co. v. Proctor, 97 Maine 360, 54 Atl. 849; Milliken v. Pratt, 125 ALiss. 374. 28 Am. Rep. 241 (val- idity of contracts as regards capaci- ty of parties) ; Pearsall v. Dwight, 2 Mass. 84, 3 Am. Dec. 35; Dver v. Hunt, 5 N. H. 401; Douglas v. Old- ^ 1 1 12 CONTRACTS. 374 tract."^ A contract made in London between two English mer- cantile houses, by which one agreed to sell to the other twenty thousand tons of Algerian esparto, to be shipped by a French company at an Algerian port on board vessels furnished by the purchasers at London, and to be paid for by them on arrival, was held to be an English contract governed by English law ; notwith- standing the shipment of the goods in Algiers had been prevented by vis major which, by the law of France, in force there, excused the seller from performing the contract.* § 1112. The general rule given further consideration. — It is true generally that matters bearing upon the execution, inter- pretation and validity of a contract are detennined by the law of the place where it is made ; matters connected with its perform- ance are regulated by the law prevailing at the place of perform- ance ; and matters respecting the remedy depend upon the law of the place where the suit is brought.^ But such contract may not be enforced by the laws of a foreign state where it is contrary to positive statutory enacttnent or the public policy of the state where its enforcement is desired.® ham, 6 N. H. ISO; French v. Hall, *Jacobs v. Credit Lyonnais, 12 L. 9 N. H. 137, 32 Am. Dec. 341 ; Ses- R. Q. B. D. 589. sions V Little, 9 N. H. 271; DaCosta ^n re Swift, 105 Fed. 493; Poison V Davis 24 N. J. L. 319; Roubieck v. v. Stewart, 167 Mass. 211, 45 N. E. Haddad,' 67 N. J. L. 522, 51 Atl. 938; IZI, 36 L. R. A. 771 57 Am. St. 452; Shelby Steel Tube Co. v. Burgess DaCosta v. Davis, 24 N J L. 319 ; Gun Co 8 App. Div. (N. Y.) 444, Latham v. De Loiselle, 158 N. Y. 687, 40 N Y S 871- Bank of United SZ N. E. 1127; Union Nat. Bank v. States V. Donnally, 8 Pet. (U. S.) Chapman, 169 N. Y. 538 62 N. E. 361 8 L. ed. 974; Wilcox v. Hunt, 13 672, revg. 52 App. Div. (NY.) 57; Pet (U. S.) 378, 10 L. ed. 209; Liver- Pickering v. Fisk, 6 Vt. 102; bcud- oool Steam Co. v. Phenix Ins. Co., der v. Union National Bank, 91 U. b. 129 U S 397 406, 23 L. ed. 245. "It was accordingly held that the / Parker y Moore, 115 Fed. 799, 53 law of England, and not the French C. C A. 369; Hamilton v. Chicago law in force at Mauritius, governed &c. R. Co (Iowa), 124 N. W 363 the validity and construction of a con- Carey v. Schmeltz, 12.\ Mo. \6^ liy tract made between an English com- S. W. 946; Carstens Packing Co ^^ pany and an English subject to carry Southern Pac. Co., 58 Wash. 239, 1U8 him hence by way of Alexandria and Pac. 613, holding contract by carrier Suez to Mauritius, and containing a against liability for own negligence stipulation that the company should against policy of Washington. Ihe not be liable for loss of passenger's general doctrine that a contract, valid baggage which the court in Mauri- when it is made is valid also in the tius had held to be valid by the courts of any other country or state, French law. Peninsular &c. Naviga- when it is sought to be_ enforced, tion Co v Shand. 3 Moore P. C. even though, had it been in the lat- (N S ) 272. t^i" country or state, it would be ille- 27 S CONFLICT OF LAWS. § III3 § 1113. Law of the place a part of the contract. — As a rule the law of the place where the contract is made is, without any express assent or agreement of the parties, incorporated into and forms a part of the contract;^ and the rule that con- tracts are to be construed according to the law of the place of their execution, and that the law, including city ordinances, in force upon any subject that is made the subject-matter of any contract enters into the same, has been held to apply just as if the law were actually and expressly made a part of the agreement between the contracting parties."* § 1114. Reasons underlying the rule. — The rule that the validity of a contract depends upon the lex loci contractus may seem at first glance arbitrary and unsupported by any reason. It is, however, supported by sound reason which is as follows: gal and hence unenforcible, is sub- ject to several exceptions: (1) When the contract in question is contrary to good morals;. (2) when the state of the forum, or its citizens, would be injured by the enforcement by its courts of contracts of the kind in question; (3) when the contract vio- lates the positive legislation of the state of the forum — that is, is con- trary to its constitution or statutes; and (4) when the contract violates the public policy of the state of the forum." These exceptions are grounded on the principle that the rule of comity is not a right of any state or country, but is permitted and accepted by all civilized communities from mutual interest and conve- nience, and from a sense of the incon- venience which would otherwise re- sult, and from moral necessity to do justice in order that justice may be done in return. Cannaday v. Atlan- tic Coast Liner Co. (N. Car.), 55 S. E. 836. To same effect, Burrus v. Witcover (N. Car.), 74 S. E. 11 (gaming contract). Comity will not be recognized to overthrow an ex- press statute of the state where the agreement is sought to be enforced. Boyer v. M. D. Knowlton Co. (Ohio), 97 N. E. 137. A contract is not necessarily contrary to the public pol- icy of the state merely because it could not validly have been made there, nor is it one to which comity will not be extended merely because the making of such contracts in the place of the forum is prohibited. A contract valid where made will be up- held in the courts of a foreign ju- risdiction, unless its enforcement would exhibit to the citizens of the state an example pernicious and detestable. International Harvester Co. v. McAdams, 142 Wis. 114, 124 N. W. 1042, 26 L. R. A. (X. S.) 774n. See also, post. §§ 1152, 1171. ' Lamkin v. Lovell (Ala.), 58 So. 258; ]\Iissouri State Life Ins. Co. v. Lovelace, 1 Ga. App. 446, 58 S. E. 93; Baxter National Bank v. Talbot (1891). 154 Mass. 213, 28 N. E. 163. 13 L. R. A. 52. See also, Liverpool & G. W. S. Co. v. Phenix Ins. Co., 129 U. S. 397, Z2 L. ed. 788, 9 Sup. Ct. 469. * Brady v. Northwestern Ins. Co., 11 Mich. 425; Larkin v. Glens Falls Ins. Co., 80 Minn. 527, 83 N. W. 409, 81 Am. St. 286; Gcrncr v. Church, 43 Nebr. 6^0. 62 N, W. 51 ; Jones v. Ne- braska City, I Nebr. 176; Stewart v. Otoe County, 2 Nebr. 177; Sessions v. Irwin, 8 Nebr. 5 ; Dorrington v. ]\Iyers, 11 Nebr. 388, 9 N. W.^555. § 1 1 15 CONTRACTS. 376 Capacity to contract is essential to the formation of a valid agree- ment. Since this is true it follows that capacity to contract should be governed by a fixed rule and should not depend on anything so elusive as the intention of the parties. The rule, out of the necessity created by modern conditions, has determined that as a general proposition capacity of the parties to contract is to be determined by the law of the place where the contract is made. It follows that the validity of the contract should be determined by the law of the place where the contract is made. If this reason were kept in view much of the prevalent confusion would be avoided. § 1115. Where is the place of the contract — Place of cele- bration. — The foregoing rules are well settled. The real dif- ficulty lies in determining what is the place of the contract. This much may be taken as settled, however, that a contract is for the most purposes deemed to have been made at the place or within the state where the final act necessary to make it a binding obli- gation was done.^ This does not settle the matter, however, for it remains to be determined what one act is considered as neces- sary to complete the contract, and where such act was done. In some cases the unconditional acceptance by one of another's offer is the last act essential to the completion of the agreement and the place of the contract is the place where acceptance is made.^" In other instances, however, the contract does not be- come binding until there has been an actual delivery to the obligee in which instance the place of delivery becomes the place of the contract." § 1116. Place of acceptance. — In case the contract is one of such character that delivery of the agreement itself or of the "Gibbs &c. Co. V. De France, 91 Co. v. Tuttle, 40 N. J. L. 476; Mac- Iowa 108, 28 L. R. A. 386, 51 Am. tier's Admrs. v. Frith, 6 Wend. (N. St. 329; Dord v. Bonnaffec, 6 La. Y.) 103, 21 Am. Dec. 262; Wilson v. Ann. 563, 54 Am. Dec. 573; Whit- Lewiston Mill Co., 150 N. Y. 314, 44 son V. Stodder, 8 Mart. (La.) 95, 13 N. E. 959, 55 Am. St. 680; Shelby Am. Dec. 281 ; Emerson Co. v. Proc- Steel Tube Co. v. Burgess Gun Co., tor, 97 Maine 360, 54 Atl. 849; Crom- 8 App. Div. (N. Y.) 444, 40 N. Y. S. well V. Roval Canadian Ins. Co., 49 871. Md. 366, 33 Am. Rep. 258; Milliken "See post, § 1116 et seq. V. Pratt, 125 Mass. 374, 28 Am. Rep. "See post, §§ 1117, 1171, 1185 et 241; Northampton, Mutual &c. Ins. seq. Z77 CONFLICT OF LAWS. § III7 article bargained for is not the final and conclusive act essential to the formation of a binding obligation, the definite and unquali- fied acceptance by one of the other's offer is the last act necessary to conclude the agreement,^- and the lex loci contractus is the place of acceptance/^ Thus where a resident of one state drops in the mail an unqualified and definite acceptance properly ad- dressed to the one making the offer who resides in another state the contract is complete and the lex loci contractus is the place where the acceptance is mailed." The place from where a tele- gram is sent accepting a given proposition is the place of the con- tract in the absence of any other element to take the case out of the general rule.^^ But a proposition made to an agent who has no authority to finally close the deal does not become a binding obligation until accepted by the principal, and the place of the contract is that where the principal accepts. ^^ § 1117. Place of delivery. — There are many contracts, however, that are not complete and binding obligations until the actual delivery of the contract itself or the thing bargained for. Where this is true the place of delivery is the place of the con- tract, irrespective of the place where it was dated or signed.^^ "See ante, ch. 3. N. E. 1004. But if the acceptance is "^ Morgan v. Eaton, 58 Fla. 562, 52 qualified in any material manner it So. 305 ; Emmerson Co. v. Proctor, does not become a binding obligation 97 Maine 360, 54 Atl. 849; Stein- until the proposition as modified is Gray Drug Co. v. H. Michelsen Co., accepted by the other party and the 116 N. Y. S. 789. other place where he accepts is the "Kent V. Dawson Bank, 13 Blachf. place of the contract. Xew York &c. (U. S.) 237, Fed. Cas. No. 7714. In Co. v. Williams. 102 App. Div. (X. the above case an Illinois bank mailed Y.) 1, 92 N. Y. S. 808. See ante, ch. 3. a draft to a North Carolina bank for "Garrettson v. North Atchison collection. Upon the receipt of the Bank, 47 Fed. 867: affd. 51 Fed. 168, draft the North Carolina bank sent 2 C, C. A. 145; Perry v. Mt. Hope through the mail a reply in which re- Ins. Co., 15 R. I. 380, 5 Atl. 632, 2 ceipt of the draft was acknowledged Am. St. 902; Tillinghast v. Boston and assuming to undertake its col- &c. Lumber Co., 39 S. Car. 484, 18 S. lection. The agreement was regard- E. 120, 22 L. R. A. 49. ed as a North Carolina contract. "Dord v. Bonnaffee. 6 La. Ann. Equitable L. Assur. Soc. v. Perkins, 563, 54 Am. Dec. 573 ; Barrett v. Kel- 41 Ind. App. 183, 80 N. E. 682; Dord lev. 66 Vt. 515, 29 Atl. 809, 44 Am. V. Bannaffee & Co., 6 La. Ann. 563, St. 862. See post, § 1186. 54 Am. Dec. 573; Emerson Co. v. " Kellev v. Telle, 66 Ark. 464, 51 Proctor. 97 Maine 360. 54 Atl. 849; S. \V. 633; Connecticut Mut. Life St. Nicholas Bank v. State National Ins. Co. v. Westervelt, SI Conn. 586; Bank, 128 N. Y. 26, 27 N. E. 849, 13 P.uchanan v. Drover's Nat. Bank, 55 L. R. A. 241. See also, Swing v. Ma- ]-\h1. 223. 5 C. C. A. 83, 6 U. S. App. rion Pulp Co. 47 Ind. App. 199, 93 566; Wells, Fargo & Co. v. Van- § iiiS CONTRACTS. 378 A note signed by a member of a partnership in the partnership name, but which is not delivered until after the dissolution of the firm, cannot be received as a partnership obligation/^ The fact that a note is dated at a designated place may be prima facie evi- dence that it was executed at that place. It is proper, however, to show by parol evidence that it was actually executed else- where.^® And if the bill or note is signed in one state or country but is first delivered and becomes a binding obligation in another, the latter is the place of the contract.-** § 1118. Place of performance. — The place at v^hich the contract is to be performed is of great importance in determining the law of the contract. It might perhaps be a more accurate statement of the general rule, in the light of the decided cases, to say that a contract is presumed to be controlled by the law of the place where it is made,"^ especially when it is in fact performed sickle, 64 Fed. 944; Kuhn v. Morri- son, 75 Fed. 81, revd. 78 Fed. 16, 23 C. C. A. 619; Gay v. Rainey, 89 111. 221, 31 Am. Rep. 76; Briggs v. Latham, 36 Kans. 255, 13 Pac. 393, 59 Am. Rep. 546; Roads v. Webb, 91 Maine 406, 40 Atl. 128, 64 Am. St. 246; Milliken V. Pratt. 125 Mass. 374, 28 Am. Rep. 241; John A. Tolman Co. v. Reed, 115 Mich. 71, 72 N. W. 1104; Thomson- Houston Electric Co. v. Palmer, 52 Minn. 174, 53 N. W. 1137, 38 Am. St. 536; Johnston v. Gawtry, 83 Mo. 339; Phoenix Mut. Life Ins. Co. v. Simons, 52 IMo. App. 357 ; Campbell V. Nichols, 33 N. J. L. 81 ; Ball & Hill V. Consolidated Franklinite Co., 32 N. J. L. 102; Freese v. Brownell, 35 N. J. L. 285, 10 Am. Rep. 239 ; Rich- ardson V. Draper, 23 Hun (N. Y.) 188, affd., 87 N. Y. 337; Smith v. Frame, 3 Ohio C. C. 587; In re Con- rad, 8 Phila. (Pa.) 147, Fed. Cas. No. 3126; Winward v. Lincoln, 23 R. I. 476, 51 Atl. 106, 64 L. R. A. 160; Overton v. Bolton, 9 Heisk. (Tenn.) 762. 24 Am. Rep. 367 ; First Nat. Bank V. Shaw, 109 Tenn. 237, 70 S. W. 807, 59 L. R. A. 498, 97 Am. St. 840 ; Til- den V. Blair, 88 U. S. 241. 22 L. ed. 632. See also. Southern Exp. Co. v. Gibbs, 155 Ala. 303. 46 So. 465. 18 L. R. A. (N. S.) 847n, 130 Am. St. 24. "Woodford V. Dorwin, 3 Vt. 82, 21 Am. Dec. 573. "Wells. Fargo & Co. v. Vansickle, 64 Fed. 944; Overton v. Bolton, 9 Heisk. (Tenn.) 762, 24 Am. Rep. 367; First National Bank v. Mann, 94 Tenn. 17, 27 S. W. 1015, 27 L. R. A. 565. Compare with, Thompson v. Ketcham, 8 Johns. (N. Y.) 190, S Am. Dec. 332. "-" Gay V. Rainey, 89 111. 221, 31 Am. Rep. 76n ; Hart v. Wills, 52 Iowa 56, 2 N. W. 619, 35 Am. Rep. 255; Briggs V. Latham, 36 Kans. 255. 13 Pac. 393, 59 Am. Rep. 546; Bell v. Packard, 69 Maine 105. 31 Am. Rep. 251; Fant v. Miller. 17 Grat. (Va.) 47. See further on the subject post, §§ 1171, 1185, 1198 et seq. "* Hale V. New Jersey Steam Nav- igation Co., 15 Conn. 539, 39 Am. Dec. 398. See also, Southern Exp. Co. V. Gibbs, 155 Ala. 303. 46 So. 465, 18 L. R. A. (N. S.) 874n, 130 Am. St. 24; International Harvester Co. of America v. McAdam, 142 Wis. 114, 124 N. W. 1042. 26 L. R. A. (N. S.) 774n. Nothing is expressly stated in the instrument itself as to what should be the governing law. It must therefore be determined under the established principles of private international law. By those 379 CONFLICT OF LAWS. § IIIQ there." But where the real intention of the parties is tliat the contract shall be performed in the place where it is made it will be governed by the laws of such place, notwithstanding another jurisdiction is designated as the place of performance in an at- tempted evasion of a rule of law of the former jurisdiction. The real intention of the parties as to the place of performance gov- erns.^^ If no place of performance is expressly stated or implied from the terms of the contract, the law of the place where it is made will govern.-* Moreover, contracts made in one jurisdic- tion and intended to be performed there, but which cannot be made the basis of an action there, are generally unenforcible else- where." § 1119. When law of the place of performance governs. — However, when it appears upon the face of the contract that there is to be a good faith performance thereof in some jurisdiction other than that of the lex loci contractus, or that it is made with reference to the laws of some other place, then it is to be con- strued according to the law of the place with reference to which it is made.-° When the terms or nature of the contract show the proper law of every contract un- Barb. (N. Y.) 118; Barett v. Dodge, der such circumstances, so far as the 16 R. I. 740, 19 Atl. 530, 27 Am. St. contractual obligations of the parties 111 (note). to each other are concerned, is that "^ See Alexander v. Barker, 64 by which they may justly be pre- Kans. 396, 67 Pac. 829. See also, sumed to have meant to bind them- Lovell v. Boston & R. Co., 75 N. H. selves. New Haven Trust Co. v. 568, 78 Atl. 621, 34 L. R. A. (N. S.) Camp, 81 Conn. 539, 71 Atl. 788, 790. 67. See post, § 1199 et seq. ~ Owen V. Giles, 157 Fed. 825 ; Arn- "" Eastor v. George Wostenholm & ett V. Pinson, ZZ Ky. L. 36, 108 S. Son, 137 Fed. 524, 70 C. C. A. 108; W. 852; Equitable Life Assur. Soc. Southern Ex. Co. v. Gibbs, 155 Ala. V. Clements. 140 U. S. 226, 35 L. ed. 303, 46 So. 465, 18 L. R. A. (N. S.) 497, 11 Sup. Ct. 822. Thus a contract 874n. 130 Am. St. 24; White v. Holly, made and to be exclusively per- 80 Conn. 438, 68 Atl. 997; Douglass formed in Indiana is not subject to v. Paine, 141 Mich. 485, 104 N. W. the provisions of an Ohio statute. 781 ; Curtis v. Delaware, L. & W. R. George A. Shaw & Co. v. Cleveland, Co., 74 N. Y. 116, 30 Am. Rep. 271; C, C & St. L. R. Co., 173 Fed. 746, ^lontana Coal & Coke Co. v. Cin- 97 C. C. A. 520. cinnati Coal &c. Co.. 69 Ohio St. 351, "^ National Alutual Building S: Loan 69 N. E. 613. See. however. Warder Assn. V. Burch, 124 ^lich. 57, 82 N. v. Arell. 2 Wash. 282, 1 Am. Dec. 488. W. 837, 83 Am. St. 311. See also. "It is settled law that the validity of Thomas v. Wentworth Hotel Co.. 158 a contract as to matters affecting its Cal. 275, 110 Pac. 942, 139 .^m. St. performance is to be determined by 120. the laws of the place of performance. "* New York S:c. Co. v. Davis, 96 and not the place of execution." Md. 81, 53 Atl. 669 (note and mort- Zenatello v. Hammerstein, 231 Pa. gage) ; Pomeroy v. Ainesworth, 22 56, 79 Atl. 922. $ II20 CONTRACTS. 380 that it was to be executed in another country or state, then the place of making the contract becomes so far immaterial, and the law of the place where the contract is to be performed governs in determining the rights of the parties."' § 1120. The rule illustrated. — Thus a written contract for the sale of lumber to be cut by the seller in Mississippi, and to be inspected, paid for, delivered and received there, is gov- erned by the laws of that state, both as to its obligation and exe- cution, although made and subscribed in Tennessee.^^ A con- tract subscription to capital stock, made in Maryland, but to be performed in the state where the corporation is chartered and domiciled, has been held governed by the laws of such other state."* "^ Lewis V. Headley, Z6 111. 433, 87 Am. Dec. 227; Burchard v. Dunbar, 82 111. 450; Malpica v. McKown, 1 La. 248, 20 Am. Dec. 279; Douglass V. Paine, 141 Mich. 485, 104 N. W. 781; F. B. Houck Co. v. Sharpe. 83 Mo. App. 385; Campbell v. Nichols, 2)2) N. J. L. 81 ; Fanning v. Consequa, 17 Johns. (N. Y.) 511, 8 Am. Dec. 442; Waverly Nat. Bank v. Hall (1892), 150 Pa. St. 466, 24 Atl. 665 (contract for the loan of money- made in Pennsylvania, the business to be conducted in New York) ; Tobin V. McNab, 53 S. Car. 72, 30 S. E. 827 ; Harrison v. Edwards, 12 Vt. 648, 26 Am. Dec. 364. In Way- man V. Southard. 10 Wheat. (U. S.) 1, 6 L. ed. 253, Chief Justice Marshall referred to the principle as one of universal law that "in every forum a _ contract is governed by the law with a view to which it was made." And in Robinson v. Bland, 2 Burr. 1077, Lord Mansfield said : "The law of the place can never be the rule, where the transaction is entered into with an express view to the law of another country, as the rule by which it is to be governed." In Andrews V. Pond, 13 Pet. (U. S.) 65, 10 L. ed. 61, Chief Justice Taney said: "The general principle in relation to con- tracts made in one place to be executed in another, is well settled. They are to be governed by the law of the place of performance." "Where a contract is made with a purpose by the parties that it shall be performed in a particular place, its validity and interpretation are to be determined by the law of the place where it is to be executed. It is made with a view to that law." Old Dominion Copper &c. Co. v. Bigelow, 203 Mass. 159, 89 N. E. 193. See also. South- ern Exp. Co. V. Gibbs, 155 Ala. 303, 46 So. 465, 18 L. R. A. (N. S.) 874n, 130 Am. St. 24. '* Hart v. Livermore &c. Mach. Co., 72 Miss. 809, 17 So. 769. Cooper, C. J. : "Ordinarily, the validity of a con- tract is determinable by the iex loci contractus,' but where, by the con- tract, a different place of perform- ance is fixed, the presumption is that the parties, as they lawfully may do, contract with reference to the law of such place. Dalton v. Murphv, 30 Miss. 59; Bank of Louisiana v. Will- iams, 46 Miss. 618, 12 Am. Rep. 319; Shacklett v. Polk. 51 Miss. 378; Osgood V. Bauder, 75 Iowa 550, 39 N. W. 887, 1 L. R. A. 655. and note." ^Fear v. Bartlett. 81 Md. 435, 32 Atl. 322, 22 L. R. A. 721n, Robinson, C. J. : "In dealing with the defend- ant's subscription, we have treated it as a Virginia contract. The company was chartered by that state, with its ofiRce and place of business in that state, and although the subscription was made in this state, the contract was to be performed in Virginia, and, 381 CONFLICT OF LAWS. § I 121 §1121. Part performance in one jurisdiction and part in another. — When a part of a contract is tu be perfornicd in one jurisdiction and a part in another, it is held that each part is to be governed by the law of the place where it is performed/" This rule is not universal, however, and it has been held that where the contract is made and to be performed in part in one jurisdiction, the laws of that jurisdiction control, unless it clearly appears that the intention of the parties was otherwise.^^ More- over, if the contract is entire or indivisible, though it is to be partly performed in the state where made and partly in another, then the lex loci contractus or the law of the state where it is this being so, the rights and liabilities ing from it the true intention of the of the parties under it are to be de- parties. '■= * * Stereotyped rules laid termined by the law of that state; and down by judicial writers cannot, what we have said as to the right of therefore, be accepted as infallible the defendant to repudiate his sub- canons of interpretation in these scription on the ground that it was days, when commercial transactions procured through the fraud of the have altered in character and in- companv is strictly in accord with creased in complexity: and there can the decision of the court of appeals be no hard-and-fast rule by which to of that state in Weisiger v. Rich- construe the multiform commercial mond &c. :\Iach. Co., 90 Va. 795, 20 agreements with which in modern S. E. 361." But the validity of a con- times we have to deal," per Bowen. L. tract between citizens of the United J., in Jacobs v. Credit Lyonnais States, valid by the laws of the (1884), L. R. 12 Q. B. Div. 589. See United States and of the state where also, Kavanaugh v. Supreme Council made, has been held to be affected by of Royal League, 158 Mo. App. 234, the customs or laws of the Indians 138 S. W. 359; Adams' Exp. Co. v. in whose territory it is to be carried Green, 111 Va. 527, 72 S. E. 102. out. Anheuser-Busch Brewing Assn. " Bertonneau v. Southern Pac. Co., V. Bond. 66 Fed. 653, 13 C C. A. 665. 17 Cal. App. 539, 120 Pac. 53 (af- '" Southern Exp. Co. v. Gibbs, 155 freightment contract); Southern Ala. 303, 46 So. 465, 18 L. R. A. (N. Exp. Co. v. Hanaw. 134 Ga. 445. 67 S.) 847n, 130 Am. St. 24; Porter v. S. E. 944, 137 Am. St. 227. (Contract Price, 80 Fed. 655, 26 C. C. A. 70 for transportation of goods. Case (holding that in a case of this char- holds that, a contract of carriage, as acter the parties may treat it as a to shipments into Georgia, which is contract of either "jurisdiction in not contrary to the policy of this which it is partlv performed) ; Pom- state, can be enforced here, if valid eroy v. Aine.sworth. 22 Barb. (N. Y.) under the laws of the state where :t 118- Liverpool & G. W. S. Co. v. was made and the carriage was begun, Phe'nix Ins. Co., 129 U. S. 397, 32 although it might not have been a L. ed. 788, 9 Sup. Ct. 469. "It may complete or binding contract if exe- be that the contract is partlv to be cuted in Georgia. The contract was performed in one place and partlv in in this case held against public pol- another. In such a case the onlv cer- icy.) Illinois Cent. R. Co. v. Beebe, tain guide is to be found in applying 174 111. 13. 50 N. E. 1019. 43 L. R_A. sound ideas of business, convenience, 210. 66 Am. St. 253; Bartlett v. Col- and sense fo the language of the con- lins. 109 Wis. 477, 85 N. W. 703, Si tract itself, with a view to discover- Am. St. 9£8. § 1 122 CONTRACTS. 382 r.iade governs as to the validity of such contract and if invalid there it is invalid everywhere.^" § 1122. Agreement by parties as to lavir v^^hich shall con- trol. — The parties may, within certain limits, agree upon the jurisdiction whose law is to control the contract, and when this right is properly exercised no room remains for inference or pre- sumption as to what law was intended to govern.^^ Where the parties to a contract live under different S3^stems of law the ques- tion as to which of those systems must be applied to the construc- tion of the contract or any part of it depends upon the mutual intention of the parties, either as expressed in the contract or as derivable from the fair implications of its terms. ^* Thus, parties residing in different states may agree that the contract shall be governed by the law of either.^^ § 1123. Agreements as to the law which shall control con- sidered further. — In accordance with this principle it has been held that although an arbitration clause in which the arbitra- tors are unnamed is invalid according to the law of Scotland, yet, if the intention of the parties to a contract made in England in "' Illinois Cent. R. Co. v. Beebe, 174 Sup. Ct. 785 ; Liverpool & G. W. S. 111. 13. 50 N. E. 1019, 43 L. R. A. 210, Co. v. Phenix Ins. Co., 129 U. S. 66 Am. St. 253. 397, 32 L. ed. 788, 9 Sup. Ct. 469; ^Spurrier v. La Cloche (1902), Griesemer v. Mutual Life Ins. Co., App. Cas. 446; Royal Exchange 10 Wash. 202, 38 Pac. 1031. "It is Assur. Corp. v. Sjoforsakrings Aktie- no injustice to the company to decide bolaget Vega (1902), 2 K. B. 384; its rights according to the principles Hamlyn v. Talisker Distillery (1894), of the law of the country which it A. C. 202; Mutual Life Ins. Co. v. has agreed to be bound by, so long Hill, 118 Fed. 708. 55 C. C. A. 536 as, in a case like this, the foreign affg. 113 Fed. 44; Mittenthal v. Mas- law is not in any way contrary to the cagni, 183 Mass. 19, 66 N. E. 425, 60 policy of our own." London Assur. L. R. A. 812, 97 Am. St. 404; Russell v. Companhia De Moagens Do Bar- V. Pierce, 121 Mich. 208. 80 N. W. riero, 167 U. S. 149, 4 L. ed. 113, 17 118; Smith v. Parsons, 55 Minn. 520, Sup. Ct. 785. "Under the general 57 N. W. 311; Kavanaugh v. Su- rule defining lex loci contractus, it is preme Council of Royal League, 158 within the power of the parties, by Mo. App. 234, 138 S. W. 359; Hale the terms of their contract, to estab- V. Cairns, 8 N. Dak. 145, 77 N. W. lish the place according to the laws 1010, 44 L. R. A. 261, 73 Am. St. 746; of which the construction of the con- Jones V. Fidelity Loan & Trust Co., tract shall be determined." Green v. 7 S. Dak. 122, 63 N. W. 553; Dugan Security Mut. Life Ins. Co., 159 Mo. V. Lewis, 79 Tex. 246, 14 S. W. 1024, App. 277, 140 S. W. 325. 12 L. R, A. 93, 23 Am. St. 332 ; Lon- "* Caesar v. Capel, 83 Fed. 403. don Assur. v. Companhia De Moag- "United States Savings &c. Co. v. ens, 167 U. S. 149, 42 L. ed. 113, 17 Shain, 8 N. Dak. 136, 77 N. W. 1006. 383 CONFLICT OF LAWS. § II24 which such a clause is contained is that the clause should be inter- preted according to the law of England, there is no reason why a court of Scotland should not give effect to it, as this rule does not appear to rest upon any essential considerations of public policy.^" Express reference to the law of the jurisdiction where the contract is made,^^ or where it is made and to be partly per- formed^* may make the law of such jurisdiction control. More- over, the parties are presumed to know the law of the jurisdiction which they thus adopt. ^® § 1124. Formal validity. — The validity of a contract so far as regards its formation or formal validity is determined by the lex loci contractus when such contract is personal or relates to personal property.^" Thus the formalities with which a policy of insurance must be made have been held governed by the law of the place where it is executed.*^ § 1125. Formal validity — Statute of frauds. — In those ju- risdictions in which the statute of frauds is considered not merely as a rule of evidence but is held to involve the essential validity of the contract and to be declaratory of the form in which the contract must be made the law of the place where the contract is made controls as to the statute of frauds.*- It is otherwise, how- ^ Hamlyn v. Talisker Distillery its validity, as to the form and sol- (1804), A. C. 202. emnities to be observed in its crea- "Dugan V. Lewis, 79 Tex. 246, 14 tion." Roubicek v. Haddad, 67 N. J. S. W. 1024, 12 L. R. A. 93, 23 Am. L. 522, 51 Atl. 938; Pritchard v. Nor- St. 332. ton, 106 U. S. 124, 27 L. ed. 104, 1 ** Alittenthal v. Mascagnie, 183 Sup. Ct. 102. Mass. 19, 66 N. E. 425, 60 L. R. A. "Johnson v. ^lutual Life Ins. Co. 812, 97 Am. St. 404. In the above of New York, 180 Mass. 407. 62 N. case the contract was to be per- E. 733, 63 L. R. A. 833. See also, formed in several countries; it pro- Mutual Life Ins. Co. v. Cohen, 179 vided that suit should be brought in U. S. 262, 45 L. ed. 181, 21 Sup. Ct. Italy. 106. '* Mutual Life Ins. Co. v. Phinney, *^ IMiller v. Wilson, 146 111. 523. 34 178 U. S. 327, 44 L. ed. 1088, 20 Sup. N. E. 1111. 37 Am. St. 186; Kling Ct. 906. V. Fries, 33 Mich. 275; Dacosta v. '"Vrancx v. Ross, 98 Mass. 591; Davis, 24 N. J. L. 319; Wilson v. Lovell V. Boston & M. R. Co., 75 Lewiston Mill Co., 150 N. Y. 314, N. H. 568, 78 Atl. 621, 34 L. R. A. 44 N. E. 959. 55 Am. St. 680; Perry (N. S.) 67n; Williamson v. Postal v. Iron Co.. 15 R. I. 380, 5 Atl. 632, Telegraph-Cable Co., 151 N. Car. 223, 2 Am. St. 902; Scudder v. Union Nat. 65 S. E. 974; Gait v. Dibrell, 10 Yerg. Bank. 91 U. S. 406, 23 L. ed. 245. (Tenn.) 146. "The lex loci con- See also, Wolf v. Burke. 18 Colo. 264, tractus must control in determining 32 Pac. 427, 19 L. R. A. 792n; § 1 126 CONTRACTS. 384 ever, in those jurisdictions where the statute is treated not as operating to destroy the vaHdity of the contract akogether but as concerning merely the procedure or right or the evidence whereby the contract is to be proved. Where this latter view obtains the law of the forum controls as to the statute of frauds.*^ § 1126. Essential validity — Legality. — The general rule is that the validity of the contract, that is, the question of whether it is a legal or illegal one, is judged by the law of the state or country in which it was made, and that a contract good where made is usually good everywhere.'** There are important excep- tions to this rule, however, which will be treated in the subsequent section in this chapter on Remedies.^*^ So, on the other hand, it is held that a contract which is invalid where made because made on Sunday, or the like, will not be enforced in another jurisdiction,*^ even if the contract may be performed in whole or in part at another place under the law of which it would be valid.*^ And in accordance with the general rule first stated, a con- tract which is valid by the law of a place where made will be en- Cochran v. Ward, 5 Ind. App. 89, 29 N. E. 795, 31 N. E. 581, 51 Am. St. 229. *'Leroux v. Brown, 12 C B. 801, 74 E. C. L. 801; Kleeman & Co. v. Collins, 9 Bush (Ky.) 460; Emery v. Burbank, 163 Mass. 326, 39 N. E. 1026, 28 L. R. A. 57, 47 Am. St. 456 ; Heaton v. Eldridge, 56 Ohio St. 87, 46 N. E. 638, 36 L. R. A. 817, 60 Am. St. in. See also, 1 Elliott Ev., § 651 : Buhl V. Stephens. 84 Fed. 922. ■"Evans v. Kittrell, 2>7> Ala. 449; Matthews v. Paine, 47 Ark. 54, 14 S. W. 463; Illustrated Postal Card &c. Co. V. Holt (Conn.), 81 Atl. 1061; Altland v. Atchison, T. & S. F. R. Co., 151 111. App. 291 ; McCoy v. Gris- wold, 114 111. App. 556; Reid, Mur- doch & Co. V. Northern Lumber Co., 146 111. App. 371; Stacv v. Baker, 1 Scam. (111.) 417: Western Life In- demnity Co. V. Rupp, 147 Ky. 489, 144 S. W. 743; Bond v. Cummings, 70 Maine 125; Corbin v. Houlehan, 100 Maine 246, 61 Atl. 131, 70 L. R. A. 568; Tremain v. Dvolt, 161 Mo. App. 217, 142 S. W. 760; Hill v. Spear, 50 N. H. 253, 9 Am. Rep. 205; Will- iamson V. Postal Telegraph-Cable Co., 151 N. Car. 223, 65 S. E. 974; Klinck V. Price, 4 W. Va. 4, 6 Am. Rep. 268; Davis v. Chicago, M. & St. P. Ry. Co., 93 Wis. 470, 67 N. W. 16, 2>2> L. R. A. 654, 57 Am. St. 935. The distinction between the validity of the contract and the validity of the act to be done must be borne in mind in case the contract is made in a juris- diction other than that in which the contract is to be performed. See Lo- vell V. Boston & M. R. R. Co., 75 N. H. 568, 78 Atl. 621, 34 L. R. A. (N. S.) 67n. See also, Wagner v. Minnie Harvester Co., 25 Okla. 558, 106 Pac. 969. "^aSee § 1199 et seq. *=King V. Fleming, 72 111. 21, 22 Am. Rep. 131 ; Strouse v. Lanctot (Miss.), 27 So. 606; Lovell v. Bos- ton & M. R. R. Co., 75 N. H. 568, 78 Atl. 621, 34 L. R. A. (N. S.) 67n ; Northrup v. Foot, 14 Wend. (N. Y.) 248. *" Arbuckle v. Reaume, 96 Mich. 243, 55 N. W. 808; Lovell v. Boston & M. R. R. Co., 75 N. H. 568, 78 Atl. 621, 34 L. R. A. (N. S.) 67n. 385 CONFLICT OF LAWS. § 1 127 forced In another state or country by the law of which the con- tract would be invalid if originally made in the latter jurisdiction when the rule of law forbidding the contract does not rest upon any essential considerations of public policy.*^ § 1127. Capacity of parties. — It is obvious that no contract can be formed unless the parties thereto have capacity to make the agreement. Capacity to contract is a prerequisite to the formation of a binding obligation/^ Since the legality of a contract generally depends upon the place where it is made, ii would seem to follow as a necessity that the capacity of the parties to contract should be governed by the law of the place where the contract is made. Not only does this seem to follow as a necessity but it rests on solid principle. Since there can be no binding contract in the absence of capacity to contract, the law by which to determine capacity should be governed by a fixed rule, and should not depend upon anything so uncertain or elusive as the intention of the parties. Consequently, it is held as a general rule that capacity of the parties to contract is deter- mined by the law of the place where the contract is made.'**' § 1128. Capacity to contract — Corporations — Agents. — It must be borne in mind, however, that in the case of an artificial *" Swann v. Swann, 21 Fed. 299; erecl in Kansas upon Sunday; but Murphy v. Collins, 121 Mass. 6; this was upon the ground that, in the O'Rourke v. O'Rourke, 43 Mich. 58, absence of evidence to the contrary, 4 N. W. 531 ; McKee v. Jones, 67 it would be presumed that the law of Miss. 405, 7 So. 348; Brown v. Kansas was similar to that of Geor- Browning. 15 R. I. 422, 7 Atl. 403, 2 gia, and rendered contracts made on Am. St. 908; Adams v. Gay, 19 Vt. Sunday void. See further as to con- 358. In none of these cases was there Hict of laws relative to Sunday Con- any conflict between the lex loci con- tracts, ante, ch. 25. tractus and lex loci solutionis on this '^^ See ante. Parties, ch. 10; Infants, point. In Alurphy v. Collins, 121 cli. 11; Insane Persons, ch. 12; Mar- Mass. 6, the court said that, the note ried Women, ch. 13; Drunken Per- having been made and delivered in sons, ch. 14. New York, "and not appearing to be " Illinois Cent. R. Co. v. Beebe. payable elsewhere." its validity de- 174 111. 13, 50 N. E. 1019, 43 L. R. A. pended upon the law of New York. 210, 66 Am. St. 253 ; Carev v. Mackev, See also, Thaver v. Elliott, 16 N. H. 82 Maine 516, 20 Atl. 84, 9 L. R. A. 102. See, however, Thaver v. Elliott, 113, 17 Am. St. 500; Campbell v. 16 N. H. 102: Brown v. Gates, 120 Crampton. 18 Blatchf. (U. S.) 150. Wis. 349, 97 N. W. 221. 98 N. W. 2 Fed. 417, 8 Abb. X. Cas. (N. Y.) 205, 1 Am. & Eng. Ann, Cas. 85. In 363; Union Nat. Rank v. Chapman. Hill V. Wilker, 41 Ga. 449, 5 Am. Rep. 169 N. Y. 538, 62 N. E. 672, 57 L. R. 540, the court refused to enforce a A. 513, 88 Am. St. 614; International contract which was made and deliv- Harvester Co. v. McAdam, 142 Wis. 25 — Contracts, Vol. 2 § I 129 CONTRACTS. 386 person capacity to contract is largely determined by the law of its creation as set out in its charter, although its right to contract may be encumbered or restricted by the laws of a foreign juris- diction when it undertakes to contract therein.'^*' The place where one assumes the relation of executor or administrator or agent is also an important factor in determining his rights and powers/^ § 1129. Distinction between capacity to contract and ca- pacity to perform the contract. — A distinction must also be drawn between capacity to make a contract and capacity to per- form it after it is made. The public policy of a foreign jurisdic- tion may prevent the enforcement of a contract which the parties had capacity to make by the law of the place where it was made.^^ § 1130. Capacity to contract — Married women. — Most of the cases concerning capacity to contract relate to agreements entered into by married women. A majority of these cases hold that a married woman's capacity is in this respect governed by the law of the place where the contract is made.^^ Consequently the validity of a contract to marry entered into by a nephew and aunt of the half-blood,^* or of a married woman to become a 114, 124 N. \V. 1042, 26 L. R. A. (N. 1Z Fed. 742; Robinson v. Pease, 28 S.) 774n. Couipare Mayer v. Roche, Ind. App. 610, 63 N. E. 479; Nichols n N. J. L. 681, 75 Atl. 235, 26 L. R. &c. Co. v. Marshall, 108 Iowa 518, A. (N. S.) 763n. 79 N. W. 282 (in the above case the "'In so far as the charter or ar- domicil and forum corresponded); tides of a corporation declare an in- Young's Trustee v. Bullen, 19 Ky. L. tent to do business in another state, 1561, 43 S. W. 687; Bell v. Packard, the law of that state becomes, so 69 Maine 105, 31 Am. Rep. 251 ; Hill far as concerns business there done, v. Chase, 143 Mass. 129, 9 N. E. 30; a part of the contract. Thomas v. Milliken v. Pratt, 125 Mass. 374, 28 Wentworth Hotel Co., 158 Cal. 275, Am. Rep. 241; Smith v. Frame, 3 110 Pac. 942, 139 Am. St. 120. See Ohio C. C. 587; Pearl v. Hansbor- ante, ch. 18. ough, 9 Humph. (Tenn.) 426. " And in case of contracts by an " Campbell v. Crampton, 18 Blatchf . agent see Pope v. Nickerson, 3 Story (U. S.) 150, 2 Fed. 417. In the above (U. S.) 465, Fed. Cas. No. 11274; case it is said: "Upon principle no Chatenay v. Brazilian Submarine Tel. reason can be alleged why a contract Co., 1891, 1 Q. B. 79, dZ L. T. 739, 39 void for want of capacity of the party Week. Rep. 65. at the place where it is made should °' See post, § 1199. be held good because it provides that "Connecticut Mut. Life Ins. Co. v. it shall be performed elsewhere, and Westervelt, 52 Conn. 586. Compare nothing can be found in any adju- First Nat. Bank v. Mitchell, 92 Fed. dication or text-book to support such 565, 34 C C. A. 542, reversed on an- a conclusion. It is a solecism to other point, 180 U. S. 471, 45 L. ed. speak of that transaction as a con- 627, 21 Sup. Ct. 418; Bowles v. Field, tract which cannot be a contract be- 3^7 CONFLICT OF LAWS. § II3I party to an accommodation note for her husband," or to enter into a contract of suretyship,'" or the vahdity of a promissory note given by her"^ is determined by the law of the place where made rather than the law of the place uf performance.'"* §1131. Capacity to contract — Transients in a foreign country. — An exception to the general rule that the capacity or legal competency of the parties to contract is governed by the law of the place has, however, been suggested where the contract is entered into by two citizens of the same community who may be transiently in a foreign country and subsequently it is sought to enforce the contract in their domestic courts/" § 1132. Capacity to contract — Law of domicil. — As be- tween the law of the place where the contract is made and the law of the domicil, the former is, as a general rule, held to determine the capacity of the parties to contract.''** In a Michigan case a cause of the inability of the persons to make it such. When the authori- ties which declare that the obhga- tion, interpretation, nature and vahd- ity of a contract made in one place, which is to be performed in another, are to be determined by the law of the place of performance, are exam- ined, it will be found that the term 'validity' refers to the conditions of the contract, and the extent and na- ture of its obligation, as to which the agreement will be upheld or defeated, according to the sanction or the pro- hibitions of the law of the place where the parties have located the transaction." " Voight V. Brown, 42 Hun (N. Y.) 394; International Harvester Co. v. McAdam, 142 Wis. 114, 124 N. W. 1042, 26 L. R. A. (N. S.) 774n. See also, Thompson v. Taylor, 66 N. J. L. 253, 49 Atl. 544, 54 L. R. A. 585, 88 Am. St. 485 (accommodation in- dorsement). "" Union Nat. Bank v. Chapman, 169 N. Y. 538, 62 N. E. 672, 57 L. R. A. 513. 88 Am. St. 614. "Hager v. National German- American Bank, 105 Ga. 116, 31 S. E. 141; F. B. Hauck Clothing Co. v. Sharp, 83 :Mo. App. 385; Taylor v. Sharpe, 108 X. Car. Ill, 13 S. E. 138/ Wood v. Wheeler, 106 N. Car. 512, 11 S. E. 590, second appeal 111 N. Car. 231, 16 S. E. 418. See also, First Nat. Bank v. Shaw, 109 Tenn. 237, 70 S. W. 807, 59 L. R. A. 498, 97 Am. St. 840, ^ See, however, the case of Maver v. Roche, n N. J. L. 681, 75 Atl. 235, 26 L. R. A. (N. S.) 763n, in which case a married woman signed a note either as an accommodation guar- antor, or surety for the other maker. She signed such note in the state of New Jersey. The court laid down the rule that the proper law of the contract is the law by which the parties thereto intended or may fair- ly be presumed to have intended the contract to be governed and that in the case before the court the parties apparently intended that the contract should be governed by the laws of New York. Compare also, with the case of Garrigue v. Keller. 164 Ind. 676. 74 N. E. 523, 69 L. R. A. 870, 108 Am. St. 324. "■Pickering v. Fisk, 6 Vt. 102. "o Bowles v. Field, 78 Fed. 742; First Nat. Bank v. ^Mitchell. 92 Fed. 565, 34 C. C. A. 542, revd. 180 U. S. 471, 45 L. ed. 627, 21 Sup. Ct. 418; Robinson v. Pease. 28 Ind. App. 610, 63 N. E. 479; Milliken v. Pratt. 125 II33 CONTRACTS. 388 note made by a married woman who resided in Indiana, for the purchase of goods in Michigan and vaHd under the law of the latter state was enforced there under the presumption that it was valid in Indiana, at least until the contrary was shown. ^^ § 1133. Rule in Louisiana. — There is at least one jurisdic- tion in this country, however, which holds that as between the lex loci contractus and the lex domicilii the latter governs with re- spect to the capacity of a married woman to make personal con- tracts. This is true in Louisiana whose jurisprudence is based on the civil rather than on the common law.*'^ § 1134. When law of domicile imposes a total incapacity. — The Supreme Court of Appeals of Virginia has stated the rule as follows : "A contract of a married woman, valid where made and to be performed, is valid everywhere, unless she be domiciled in a state where the law of the domicil imposes a total incapacity to contract on the part of its married women."''^ Alass. 374, 28 Am. Rep. 241 ; Phoenix ]\Iut. Life Ins. Co. v. Simmons, 52 Mo. App. 357; Brigham v. Gilmartin, 58 N. H. 346. In the following cases the lex loci contractus and the lex domicilii corresponded but the de- cision was based on the law of the place. Nixon v. Halley, 78 111. 611; Bond V. Cummings, 70 Maine 125 ; Partee v. Silliman, 44 Miss. 272; F. B. Hauck Clothing Co. v. Sharpe, 83 Mo. App. 385; Hill v. Pine River Bank, 45 N. H. 300 ; Miller v. Camp- bell, 140 N. Y. 457, 35 N. E. 651; Evans v. Clearv, 125 Pa. St. 204, 17 Atl. 440, 11 Am. St. 886; Dulin v. McCaw, 39 W. Va. 721, 20 S. E. 681. •^Wheeler v. Constantine, 39 Mich. 62, 33 Am. Rep. 355. ""Gamier v. Poydras, 13 La. 177; Roberts v. Wilkinson, 5 La. Ann. 369; Baer v. Terry, 105 La. 479, 29 So. 886. "Personal incapacities com- municated by the laws of any par- ticular place, accompany the person wherever he goes. Thus he who is excused the consequences of con- tracts, for want of age, in his coun- try, cannot make binding contracts in another." Le Breton v. Nouchet, 3 Mart. (La.) 60, 5 Am. Dec. 736. See also. Pitch v. Hyatt, 3 McArth. (10 D. C.) 536; First Nat. Bank v. Shaw, 109 Tenn. 237, 70 S. W. 807, 59 L. R. A. 498, 97 Am. St. 840. See ante, ch. 13. "^ This decision would seem really to rest, however, more on public pol- icy than on an application of the lex domicilii in preference to the lex loci contractus. For the court continuing said : "Where the common law pre- vails in full force by which a mar- ried woman is deemed incapable of binding herself by any contract what- ever, it has been held in some cases, and suggested in others, that this utter want of capacity must be con- sidered as so fixed by the settled pol- icy of the state that its courts should not yield to the law of another state in which she might undertake to con- tract." Young V. Hart, 101 Va. 480, 44_ S. E. 703. The English courts originally held that capacity to marry was governed by the law of the place where the marriage was solemnized. Scrimshire v. Scrimshire, 2 Hagg. Con. 395 ; Dalrymple v. Dalrymple, 2 Hagg. Con. 54; Mallac v. Mallac, 2 Sw. & Tr. 67. During the last sev- enty-five years the courts of England have manifested a strong tendency to 389 CONFLICT OF LAWS. § II35 § 1135. Capacity to contract — Law of forum. — As be- tween the law of the place and the law of the forum, there seems to be no question but that the former controls as to capacity to con- tract. Notwithstanding, the court of one of our states has said : "A contract valid by the laws of one State cannot be enforced in another, unless such a contract made between its own citizens could be enforced there, or, in other words, it depends on the lex fori."^* In a subsequent case, however, the court limited the language above quoted and held it applicable only to the remedies sought, and that the lex fori did not go to the validity of the con- tract.*^^ However, when tlie law of the domicil and the forum correspond and are different from that of the place of contract the courts are very apt to hold that a contract, though valid ac- cording to the lex loci contractus, is contrary to the public policy of the forum and therefore will not be enforced, upon the ground that no state or nation will enforce a foreign law which is con- trary to its fixed settled policy.*'^^ § 1136. Capacity to contract — Infants. — The contract of § an infant differs from that of a feme under the disability of determine capacity to marry by the Am. & Eng. Ann. Cas. 1050; Camp- law of the domicil, and in the pres- bell v. Crampton, 18 Blatchf. (U. S.) ent status of their law it may be 150, 2 Fed. 417, 8 Abb. N. Cas. _(N. summarized as follows: Where both Y.) 363), except where the marriage parties are domiciled in the same is polygamous, incestuous, or is posi- country and are incapable under its tively prohibited by the law of the laws to contract marriage, the law domicil. Kinnev v. Commonwealth, of the domicil will control, but when 30 Grat. (Va.) 858, 32 Am. Rep. 690. the marriage is celebrated in Eng- The statutes of some states provide land and one of the parties is there that a marriage consummated outside domiciled and the parties are by the the state with the intent to evade its law of England capable of marrying, laws is void. Rev. Laws ^lass. 1902, their marriage will be upheld, even p. 1346, § 10. Acts of 1905 (Ind.), though the other party, under the p. 216, § 5. As to the law governing law of the domicil, does not have the capacity to marry, see ch. 13. See capacity to marry. See Sottomayor also, ante. ch. 10. See further on this V. De Barros, 3 P. Div. 1, 5 P. Div. subject, § 1199 et seq. infra. 94; Brook v. Brook, 9 H. L. C. 193. °* Hayden v. Stone. 13 R. I. 106. In the United States, capacity to con- ""^ Brown v. Browning, 15 R. I. 422, tract marriage is, as a general rule, 7 Atl. 403, 2 Am. St. 908. determined by the law of the place "a Thompson v. Taylor, 65 N. J. L. (Dannelli v. Dannelli's Admr., 4 107, 46 Atl. 567. Compare the fore- Bush (Kv.) 51; Jackson v. Jackson, going case with that of Thompson 82 Md. 17, 33 Atl. 317. 34 L. R. A. v. Tavlor. 66 N. J. L. 253, 49 Atl. 773; :\redwav v. Needham, 16 Mass. 544. 54 L. R. A. 585, 88 Am. St. 485; 157, 8 Am. Dec. 131 ; Thorp v. Thorp, Maver v. Roche, 77 N. J. L. 681 75 90 N. Y. 602; Tn re Chace, 26 R. I. Atl 235. 26 L. R. A. (N. S ") 763n; 351, 58 Atl. 978, 69 L. R. A. 493, 3 Armstrong v. Best, 112 N. Car. 59, § II37 CONTRACTS. 390 coverture in that in the latter case the contract at common law is void, while in the case of the infant the agreement is merely void- able. The contract of an infant is a valid obligation until dis- affirmed.*^** But since it is true generally that both capacity to contract and the validity of the contract itself are determined by the law of the place it follows naturally that the capacity of in- fants to contract is determined by the law of the place,^^ or in a proper case by the law of the place of performance.^^ § 1137. Discharge of contracts — Statutes of limitation. — Statutes of limitation as a general rule act upon the remedy merely and not upon the debt. A statute of limitation merely bars the remedy and does not extinguish the obligation.*"* Con- sequently the statutes of limitation which exist in the jurisdiction in which suit is brought govern regardless of the local law applic- able to the contract itself.'^*' All suits must be brought wnthin the time prescribed by the lex fori although the laws of the 17 S. E. 14, 25 L. R. A. 188, 34 Am. St. 473; Hanover Nat. Bank v. Howell, 118 N. Car. 271, 23 S. E. 1005; Spearman v. Ward, 114 Pa. 634, 8 Atl. 430. See also, Milliken V. Pratt, 125 Mass. 374, 28 Am. Rep. 241 ; Robinson v. Queen, 87 Tenn. 445, 11 S. W. 38, 3 L. R. A. 214, 10 Am. St. 690; Case v. Dodge, 18 R. I. 661, 29 Atl. 785 ; Holmes v. Reynolds, 55 Vt. 39. ""See ante, ch. 11. •^Male V. Roberts, 3 Esp. 163; Phoenix Mutual Life Ins. Co. v. Sim- mons, 52 Mo. App. 357. ** See Thompson v. Ketcham, 4 Johns. (N. Y.) 285, in which a note executed in Jamaica but payable in New York was held governed by the law of New York with reference to the defense of infancy. Compare, however, with a subsequent appeal of the same case in 8 Johns. (N. Y.) 190, 5 Am. Dec. 332, in which the laws of New York were held inap- plicable for the reason, however, that parol evidence was inadmissible to show that the note was payable in New York. It is not believed, how- ever, that the decision second appeal detracts from the first appeal as au- thority. See also, Andrews v. His Creditors, 11 La. 464; In re Huey's Appeal, 1 Grant. Cas. (Pa.) 51. The foregoing principles do not of course apply to contracts concerning real estate, especially those covenants which run with the land. See Beau- champ V. Bertig, 90 Ark. 351. 119 S. W. 75, 22, L. R. A. (N. S.) 659. See also. post. § 1142 et seq. "" See post, ch. 55. "Williams v. Jones, 13 East. 439; Don V. Lippman, 5 Clark & F. 1; Ruckmabove v. Lulloobhoy Motti- chund, 8 Moore P. C. C. 4, 5 Moore Ind. App. 234 ; De la Vega v. Vianna, 1 Barn. & Ad. 284; British Linen Co. V. Drummond, 10 Barn. & C. 903, 9 L. J. (O. S.) K. B. 213; Fergusson V. Fyfife, 8 Clark & F. 121; Wood- bridge V. Wright, 3 Conn. 523 ; At- water v. Townsend, 4 Conn. 47, 10 Am. Dec. 97; Medbury v. Hopkins, 3 Conn. 472; Bruce v. Luck, 4 G. Greene CTowa) 143; McArthur v. Goddin, 12 Bush (Ky.) 274; Brown V. Stone, 4 La. Ann. 235; Thibodeau V. Levassuer, 26 Maine 362; ]\Iandru V. Ashby, 108 Md. 643, 71 Atl. 312; Pearsall v. Dwight, 2 Mass. 84, 3 Am. Dec. 35 ; Tappan v. Poor, 15 Mass. 419; Fletcher v. Spaulding, 9 Gil. CMinn.) 54; Bigelow v. Ames, 18 Gil. (Minn.) 471; Paine v. Drew, 44 N. H. 306; Nash v. Tupper, 1 391 COXTLICT OF LAWS. § II3S country where the contract was entered into may allow a much longer tune in which to bring an action.^' § 1138. Lex fori — When action may be maintained there- under. — The converse of this is also true and suit may be maintained at the lex fori when the debt is not there outlawed even though the statute of limitation has run against it in the jurisdiction to which the debt is subject."" And this has been held to be so even though the parties have resided in the jurisdic- tion where the obligation was incurred until the statute of limita- tions has run against it in that jurisdiction." The citizens of Caines (N. Y.) 402, 2 Am. Dec. 197; Smith V. Spinolla, 2 Johns. (N. Y.) 198; Ruggles v. Keeler, 3 Johns. (N. Y.) 263. 3 Am. Dec. 482; Peck v. Hozier, 14 Johns. (N. Y.) 346; Whitte- more v. Adams, 2 Cow. (N. Y.) 626; Decouche v. Savetier, 3 Johns. Ch. (N. Y.) 190, 8 Am. Dec. 478; Cans V. Frank, 36 Barb. (N. Y.) 320; Lincoln v. Battelle, 6 Wend. (N. Y.) 475 ; Power v. Hathaway, 43 Barb. (N. Y.) 214; Carpentier v. Minturn, 6 Lans. (N. Y.) 56; Miller v. Bren- ham. 7 Hun (N. Y.) 330, affd. 68 N. Y. 83; Huber v. Steiner, 2 Bing. N. Cas. 202, 2 Scott 304, 1 Hodges 206; Van Reimsdvk v. Kane, 1 Gall. (U. S.) 371. Fed. Cas. No. 16871; Le Roy V. Crowninshield. 2 Mason (U. S.) 151, Fed. Cas. No. 8269; Hinklev v. Marean, 3 Mason (U. S.) 88, Fed. Cas. No. 6523; Titus v. Hobart, 5 Mason (U. S.) 378. Fed. Cas. No. 14063 ; Bank of United States v. Don- nally, 8 Pet. (U. S.) 361, 8 L. ed. 974; M'Elmovle v. Cohen, 13 Pet. (U. S.) 312, 10 L. ed. 177; Townsend V. Jemison, 9 How. (U. S.) 407, 13 L. ed. 194; Carver v. Adams, 38 Vt. 500. See also, note to 48 L. R. A. 625. "Rock Island Plow Co. v. Master- son, 96 Ark. 446. 132 S. W. 216; Hawse v. Burgmire, 4 Colo. 313; Mineral Point R. Co. v. Barron, 83 111. 365; Paine v. Drew. 44 N. H. 306; Bonnifield v. Price, 1 Wvo. 223. "Harris v. Quine, L. R. 4 Q. B. 653. 10 Best & S. 644, 38 L. J. Q. B. (N. S.) 331, 20 L. T. (N. S.) 947. 17 Week. Rep. 967; Finch v. Finch, 45 L. J. Ch. (N. S.) 816. 35 L. T. (N. S.) 235; Jones v. Jones, 18 Ala. 248; Ware v. Curry, 67 Ala. 274; Drake V. Found Treasure Min. Co., 53 Fed. 474; Sloan v. Waugh, 18 Iowa 224: Swickard v. Bailcv, 3 Kans. 507 ; Pearsall v. Dwight, 2 Mass. 84, 3 Am. Dec. 35 ; Wav v. Sperry, 6 Cush. (.Mass.) 238, 52 Am. Dec. 779; Paine V. Drew, 44 N. H. 306; Clarke v. Lake Shore & M. S. R. Co., 94 N. Y. 217; New York Life Ins. Co. v. Ait- kin, 125 N. Y. 660, 26 N. E. 732; Huber v. Steiner. 2 Bing. N. Cas. 202, 2 Scott 304, 1 Hodges 206 ; Saw- yer V. Macaulay. 18 S. Car. 543; Pike V. Greene, 1 Yerg. (Tenn.) 465; Townsend v. Jemison, 9 How. (U. S.) 407, 13 L. ed. 194; Willard v. Wood. 164 U. S. 502, 41 L. ed. 531, 17 Sup. Ct. 176; Le Rov v. Crowin- shield, 2 Mason (N. S.) 151, Fed. Cas. No. 8269; Graves v. Weeks, 19 Vt. 178. In the absence of any provision in the statutes of limitation to the contrary they begin to run at the time of the accrual of the action regardless of the debtor or creditor's presence or absence or residence in the state. Rock Island Plow Co. v. Masterson, 96 Ark. 446, 132 S. W. 216. Compare with Runkle v. Pullin (Ind. App.). 97 N. E. 956; Jamieson v. Potts. 55 Ore. 292, 105 Pac. 93. "Perkins v. Guy. 55 Miss. 153, 30 Am. Rep. 510. See also, Bulger v. Roche. 11 Pick. (Mass.) 36. 22 Am. Dec. 359; Power v. Hathawav, 43 Barb. (N. Y.) 214; Townsend v. Jamieson, 9 How. (U. S.) 407, 13 L. ed. 194. ^ 1 139 CONTRACTS. 392 one state cannot be barred by the statutes of limitation of another state unless they bring themselves within its jurisdiction.^* § 1139. Statutes as to maintenance of actions in lex fori. — The generally recognized rule is that if statutes of limitation be- long to the remedy, and do not affect the validity and obligation of contracts, then the statute of the forum and not of the place of the contract would prevail. The statutes of the forum may provide, however, that an action barred by the laws of any other state or territory will be barred in the forum." The statutory provisions on this subject vaiy. In some cases the statutes pro- vide that no action can be maintained where the statute of limi- tation of another state has created a bar to such action "while the party to be charged was a resident of such state"''* or. "while he resided therein"" or while all the parties resided therein/^ A provision of this character may be made to apply only to causes of action arising outside the state.'** § 1140. Other statutory enactments. — By still other stat- utes no action can be maintained at the forum after the expira- tion of time limited by the laws of the state or country where the obligation of the contract arose, thus excluding the bar of the statute of a third state**" unless the bar of the statute of such third jurisdiction would be available as a defense in the state or country in which the cause of action arose. *^ ^* Field V. Dickinson, 3 Ark. 409, '^Holmes v. Hengen, 41 Misc. (N. 36_Am. Dec. 458. _ Y.) 521. 85 N. Y. S. 35. For other " See Taylor v. Union Pacific R. cases construing statutes of various Co., 123 Fed. 155; Hower v. Aultman jurisdictions, see Strong v. Lewis, &c. Co., 27 Nebr. 251, 42 N. W. 1039. 204 111. 35, 68 N. E. 556; O'Donnell '"Kempe v. Bader, 86 Tenn. 189, 6 v. Lewis, 104 111. App. 198; Van Dorn S. W. 126. V. Bodley, 38 Ind. 402; Harris v. '^McCann v. Randall, 147 Mass. Harri.s, 38 Ind. 423; Mechanics Bldg. 81. 17 N. E. 75, 9 Am. St. 666. Assn. v. Whitacre, 92 Ind. 547; Good- " Frye v. Parker, 84 Maine 251, 24 now v. Stryker, 62 Iowa 221, 14 N. Atl. 844; MacNichols v. Spence, 83 W. 345, 17 N. W. 506, aft'd. 123 U. Maine 87. 21 Atl. 748. S. 527, 31 L. ed. 194, 8 Sup. Ct. 203; "Runkle V. Pullin (Ind. App.), 97 Bradley v. Cole, 67 Iowa 650, 25 N. N. E. 956. See also, Sinclair v. W. 849; Lewis v. Hvams, 26 Nev. Gun^enhauser (Ind.), 98 N. E. Zl . 68, 63 Pac. 126, 64 Pac. 817, 99 Am. *" Sinclair v. Gunzenhauser (Ind.), St. 611; Penfield v. Chesapeake &c. 98 N. E. Z1; Chevrier v. Robert, 6 R. Co., 134 U. S. 351, Zl L. ed. 940, Mont. 319, 12 Pac. 702. 10 Sup. Ct. 566. 393 CONFLICT OF LAWS. § II4I § 1141. Rule when the law of the place extinguishes the contract. — The foregoing principles do not apply, liowevcr, when the statute of the place where the contract was made oper- ates to extinguish the contract or debt itself, in which case when the contract is sued ujxjn in another state the statutes of the lex loci contractus and not the lex fori control.^" And in those juris- dictions where the statute of frauds is considered as a matter merely affecting the remedy, if by the law of the forum no action can be maintained on a particular oral contract, if made in that country, the like rule will obtain as to a contract made abroad, although it was valid by the law of the place where made.®^ § 1142. Particular contracts — Contracts relating to realty. — It appears to be well settled by the laws of every state or coun- try, that the transfer of land or other immovable property, or the creation of any interest in or lien or encumbrance thereon which runs with the land, must be made according to the lex situs or the local law of the place where the property is situated.®* As to such contracts the lex situs governs as to the form of the con- *' Perkins v. Guy, 55 Miss. 153, 30 426; Joy v. Midland State Bank, 26 Am. Rep. 510; McMerty v. Morrison. S. Dak. 244, 128 N. W. 147, 133 N. 62 Mo. 140; Cans v. Frank, 36 Barb. W. 276; White v. Howard, 46 N. Y. (N. Y.) 320; Lincoln v. Battelle, 6 144 (Where a resident of Connecticut ^^'end. (N, Y.) 475. In Baker v. died leaving real estate in New York, .^tonebaker, 36 Mo. 338, it was held it was held that the validity of the that after the twelve years had expired devise and all questions relating to in Maryland after the rendition of the title must be determined by the the judgment no recovery could be laws and courts of New York irre- liad upon it in Missouri because the spective of the domicil of the Maryland statute did not merely af- testator). It has been held that where feet the remedy, but it absolutely a wife died between the date of extinguished the debt. entry by her husband on public lands *^Leroux v. Brown, 12 C B. 801. belonging to the United States and "Beauchamp v. Bertig, 90 Ark. the date that the patent was issued, 351, 119 S. W. 75, 23 L. R. A. the laws of the United States applied (N. S.) 659; Dalton v. Taliaferro, and not the laws of the state relating 101 111. App. 592; Rush v. Landers, to communitv propertj-. Wadkins v. 107 La. 549, 32 So. 95, 57 L. R. A. Producers' Oil Co. (La.), 57 So. 353; Richardson v. DeGiverville, 107 937. Mo. 422, 17 S. W. 974, 28 Am. St. ^ 1 143 CONTRACTS. 394 tract/^ its validity;''® and its interpretation." § 1143. Rule applied. — This is true of assignments for the benefit of creditors conveying real property,*^* mortgages,^" and "New Haven Trust Co. v. Camp, 81 Conn. 539, 71 Atl. 788; Bowdle v. Jencks. 18 S. Dak. 80, 99 N. W. 98. "'McDaniel v. Grace, 15 Ark. 465; Keane v. Chamberlain. 14 App. (D. C.) 84; Post V. Springfield First Nat. Bank, 138 111. 559, 28 N. E. 978; Northwestern Mut. L. Ins. Co. v. Overholt, 4 Dill. (U. S.) 287, Fed. Cas. No. 10338 ; Arndt v. Griggs, 134 U. S. 316, 33 L. ed. 918, 10 Sup. Ct. 557. See also, Bissell v. Terry, 69 111. 184; Doyle v. McGuire, 38 Iowa 410; Loving v. Pairo, 10 Iowa 283, 77 Am. Dec. 108; Moore v. Church, 70 Iowa 208, 30 N. W. 855, 59 Am. Rep. 439; Acker v. Priest, 92 Iowa 610, 61 N. W. 235; Watson v. Holden, 58 Kans. 657, 50 Pac. 883. See Will- iams v. Jones, 14 Bush (Ky.) 418; In re Larendon's Succession, 39 La. Ann. 952, 3 So. 219. See Harper v. Hampton, 1 Har. & J. (Md.) 622; Osborn v. Adams, 18 Pick. (Mass.) 245. See also, Ross v. Ross, 129 ]Mass. 243, 37 Am. Rep. 321; Bentley V. Whittemore, 18 N. J. Eq. 366. See Belanger v. Mann, 11 Que. L. 71; Laviolette v. Martin, 11 Low. Can. 254 ; Commercial Bank v. Jackson, 7 S. Dak. 135, 63 N. W. 548. But in Hubbard v. Sayre, 105 Ala. 440. 17 So. 17, it was held that the validity of a deed given by one domiciled in Alabama, conveying lands situated therein, in payment of commissions earned and advances made by a broker in New York in the purchase and sale of cotton futures, was to be determined by the law of New York. *' Robinson v. Bland, 2 Burr. 1077; Norton v. Florence Land &c. Co., 7 Ch. Div. 332; Western Springs v. Collins, 98 Fed. 933. 40 C. C. A. 33; Wines V. Woods, 109 Ind. 291, 10 N. E. 399; Schee v. La Grange, 78 Iowa 101. 42 N. W. 616; Acker v. Priest, 92 Iowa 610, 61 N. W. 235; Harlan V. Mavington (Iowa), 133 N. W. 367; In re Cassidy's Succession. 40 La. Ann. 827; Bronson v. St. Croix Lum- ber Co., 44 Minn. 348, 46 N. W. 570; Cummings v. Powell, 16 Mo. App. 559; Richardson v. De Givervillc, 107 ^lo. 422, 17 S. W. 974, 28 Am. St. 426; Genet v. Delaware & H. Canal Co., 13 Misc. (N. Y.) 409, 69 N. Y. St. 357, 35 N. Y. S. 147 ; Lewis' Exrs. V. Barry, 72 Pa. St. 18; McGoon v. Scales, 9 Wall. (U. S.) 23, 19 L. ed. 545; Leases: Stanton v. Harvey, 44 La. Ann. 511, 10 So. 778; Graves V. Cameron, 9 Daly (N. Y.) 152. See also, Alexander v. Barker, 64 Kans. 396, 67 Pac. 829. "But what the parties to the instrument, at the time of its execution, understood to be its effect (whenever that may be- come important) is to be determined by the law whatever it was, which they then had in mind as governing its construction and operation." New Haven Trust Co. v. Camp, 81 Conn. 539, 71 Atl. 788. ^'Danner & Co. v. Brewer & Co., 69 Ala. 191; Keane v. Chamberlain, 14 App. D. C. 84; Watson v. Holden, 58 Kans. 657, 50 Pac. 883. *'Purdom v. Pavey, 26 Can. Sup. Ct. 412; Manton v. J. F. Seiberling & Co., 107 Iowa 534, 78 N. W. 194; Goddard v. Sawyer, 9 Allen (Mass.) 78; Fessenden v. Taft, 65 N. H. 39, 17 Atl. 713. Compare Boehme v. Rail, 51 N. J. Eq. £41, 26 Atl. 832; Manhattan & S. Savings & Loan Assn. of N. Y. V. Massarelli (N. J.), 42 Atl. 284; Hosford v. Nichols, 1 Paige (N. Y.) 220; Baum v. Birchall, 150 Pa. St. 164, 24 Atl. 620, 30 Am. St. 797; Oregon & W. Trust &c. Co. V. Rathburn, 5 Sawy. (U. S.) 32, Fed. Cas. 10555. See also, Sinclair V. Gunzenhauser (Ind.), 98 N. E. 37. It has been held that a foreclosure in one state of a mortgage upon land in another has no validity. Farmers* Loan & Trust Co. v. Postal Telegraph Co.. 55 Conn. 334, 11 Atl. 184, 3 Am. St. i3 (where there has been a fore- closure in New York of a mortgage upon lands in Connecticut). See also, Lindlev v. O'Reilley, 50 N. T- L. 636, 15 Atl. 379, 1 L. R. A. 79, 7 Am. St. 802. The effect of a conveyance, in effect a mortgage, made in New York of lands in West Virginia is to 395 CONFLICT OF LAWS. I 144 covenants of warranty.""* It has been decided that the \\\\ of the place where the land is situated must also be resorted to for the purpose of determining what is or is not to be considered as real or heritable property so as to have locality within the intent and meaning of this principle."^ § 1144. Lex situs controls as to covenants which run with the land and the like. — The lex situs is also to be consulted in determining whether a covenant contained in a deed runs with the land.^- It is also true as a general rule that in the case of ex- ecutory contracts which relate to questions of construction, title, covenants ;;real, mode and formality of execution, and all things else which the law of the situs impresses upon the nature of the property, the^character of the tenure and the mode of transmis- sion are to be determined by the law of the place where the land is located. °" Thus the form of validity of a power of attorney executed in England to convey realty situated in Nebraska has be determined by the laws of the lat- ter state; but a contract also made in New York between the citizens of that state for -the loan of money to secure .the "payment of which such conveyance was executed is to be governed as to its nature, construc- tion and validity, by the laws of New York. Klinck v. Price, ^4 W. Va. 4, 6 Am. Rep. 268. Where money was borrowed and the note made payable in New York but dated in Nebraska where a mortgage to secure it was executed on land, the contract being usurious by the New York law, was held void. Sands v. Smith, 1 Nebr. 108, 93 Am. Dec. 331. •"Logan V. Moulder. 1 Ark. 313, 33 Am. Dec. 338; Beauchamp v. Bertig, 90 Ark. 351. 119 S. W. 75, 23 L. R. A. (N. S.) 659. ** Chapman v. Robertson, 6 Paige (N. Y.) 627, 31 Am. Dec. 264. "In all the books it is conceded that real property must be transferred accord- ing to the law of its locality, because it is subject to the exclusive jurisdic- tion of the government of its lo- cality, and because every legal rem- edy in regard to it must be sought there." Per Peckham, J. in Guil- lander v. Howell, 35 N. Y. 657 said : "Real property cannot attend the per- son of the owner as he goes from one jurisdiction to another. It is fixed, immovable, and necessarily under the law of the place where it lies." Baum V. Birchall. 150 Pa. St. 164, 24 Atl. 620, 30 Am. St. 797. "-Fisher v. Parry. 68 Ind. 465; Riley v. Burroughs, 41 Nebr. 296, 59 N. W. 929. Compare Worley v. Hinc- man, 6 Ind. App. 240. 33 N. E. 260. "'Clark v. Harmer, 9 App. Cas. (D. C.) 1 (option for purchase of land) ; Bissell V. Terry. 69 111. 184 (validity of power of attorney) ; Bissell v. Terry. 69 111. 184 (statute of frauds) ; Garden Citv Sand Co. v. Miller, 157 111. 225, 41' N. E. 753; Breckinridge V. Moore, 3 B. Mon. (Ky.) 629 (champertous contract) ; Morris v. Linton, 61 Nebr. 537, 85 N. W. 565 (validity of power of attorney to convev land) ; Latrobe v. Winans, 89 Md. 636. 43 Atl. 829; Giddings v. Eastman, Clarke Ch. (N. Y.) 19 (champertous contract) ; Abell v. Douglass, 4 Denio (N. Y.) 305 (stat- ute of frauds) : Siegel v. Robinson, 56 Pa. St. 19, 93 Am. 775 (statute of frauds). II45 CONTRACTS. 396 been held controlled by the law of tlie place where the realty is situated, i. e., Nebraska, and not by the laws of England.^* §1145. Distinction between covenants which run with the land and personal covenants. — In some jurisdictions, however, a distinction has been drawn between covenants which run with the land and those which are merely personal in their nature, the cases holding that obligations of the latter character such as covenants of seisin, of the right to convey, and against encumbrances, and executory contracts for deeds, or other instru- ments containing covenants that do not run with the land, are governed by the law concerning movables.^^ And the law of the place where the land is situated does not control personal cove- nants, not purporting to be conveyances, between persons outside the jurisdiction although concerning land located within it.*^® Thus it has been held that the measure of damages for the breach of a contract to convey real estate is to be governed by the law of the place where the contract is entered into and not by the law of the place where the land is situated,"^ although other jurisdic- tions hold that the question of damages for the breach of a cove- '^IMorris v. Linton, 61 Nebr. 537, 85 N. W. 565. '' Beauchamp v. Bertig, 90 Ark. 351, 119 S. W. 75, 23 L. R. A. (N. S.) 659. In the above case it is said : "All these contracts in the absence of statutory law or an express intention to the contrary, are usually governed by the law of the place where such contracts are made." For a discus- sion of these covenants which run with the land and those which do not, see Sjoblom v. Mark, 103 Minn. 193, 114 N. W. 746, 15 L. R. A. (N. S.) 1129. Clement v. Willett, 105 Minn. 267, 117 N. W. 491, 17 L. R. A. (N. S.) 1094, 127 Am. St. 562 (holding that a contract to assume and pay a mortgage is not such a covenant). "* Poison V. Stewart, 167 Mass. 211, 45 N. E. in, 36 L. R. A. 771, 57 Am. St. 452. "Where a conveyance is executed in this state, between citi- zens of this state, for lands in an- other state, in so far as it treats of covenants which never attach to the soil, but are essentially personal, the laws of this state control." Cochran V. Ward, 5 Ind. App. 89, 29 N. E. 795, 31 N. E. 581, 51 Am. St. 229. The validity and effect of a note given in Alabama secured by a mort- gage on land situated in Mississippi has been held governed by the laws of Alabama. Lamkin v. Lovell (Ala.), 58 So. 258. *'Atwood V. Walker, 179 Mass. 514, 61 N. E. 58. In the above case the con- tract to convey was entered into in New York. Action for breach thereof was brought in Massachusetts. It was held that the measure of dam- ages was governed by the New York law. See also, Dalton v. Taliaferro, 101 111. App. 592; Fisher v, Parry, 68 Ind. 465. Compare this latter case, however, with Worley v. Hineman, 6 Ind. App. 240, ZZ N. E. 260; Smith v. Ingram, 132 N. Car. 959, 44 S. E. 643. 95 Am. St. 680; Klinck v. Price, 4 W. Va. 4, 6 Am. Rep. 268. It seems that in England the interpreta- tion and effect of contracts relating to land but which do not amount to a- conveyance are to be governed by the laws with reference to which 397 CONFLICT OF LAWS. § I 146 nant which runs with the land is to be determined by the laws of the state where the land is situated. "^ § 1146. Transfer of personalty. — In contradistinction to contracts for the conveyance of an intcest in real estate it has been frequently said that personal property or merchandise has no locus sitae, but follows the person of the owner, and a gen- erally recognized rule is that his alienation of it is governed by the law of the domicil or the place where the sale is made, and that such contracts should have in any other state the same inter- pretation, binding force and validity as would be given them at the domicil or place where the sale is made.°" It is believed, how- ever, that this statement in its broadest sense is inaccurate. There can be no question that tangible personal property has locality, and that this locality is often of great importance in determining the rights of various parties therein. A distinction has been made between debts and movables, the latter being capable of having a situs while the former, it is said, follow the domicil of the owner. ^ they are made (Cood v. Cood, 33 Beav. 314. Campbell v. Dent, 2 IMoo. P. C. 292. Compare Waterhouse v. Stansfield. 9 Hare 234, 10 Hare 254) although it is presumed that the par- ties contracted with reference to the law of the place where the land is located. Lloyd v. Guibert, L. R. 1 Q. B. 115. •*Kling V. Sejour, 4 La. Ann. 128; In re Cassidv's Succession, 40 La. Ann. 827; Ti'llotson v. Prichard, 60 Vt. 94, 14 Atl. 302, 6 Am. St. 95. See also, iMathenv v. Stewart, 108 Mo. IZ, 17 S. W. i014; Hazelett v. Wood- ruff, 150 Mo. 534, 51 S. W. 1048. See, however, Looney v. Reeves, 5 Kans. App. 279, 48 Pac. 606. As to convey- ances by receivers see Joy v. ]Mid- land State Bank. 26 S. Dak. 244, 128 N. W. 147, 133 N. W. 276. •*Da Costa v. Davis, 24 N. J. L. 319. It is a clear proposition not only of the law of England, but of every country in the world where law has the semblance of science, that personal property has no lo- cality. The meaning of that is. not that personal property has no visible locality, but that it is subject to that law which governs the person of the owner. Both with respect to the dis- position of it and with respect to tlie transmission of it, either by suc- cession or l)y the act of the party, it follows the law of the person. Sill v. Worswick, 1 H. Black 665; Thomson v. Advocate General, 12 C. & F. 1. "Our American decisions of inter-confederated law * * * fully sustain this principle." Hoffman v. Carow, 22 Wend. (N. Y.) 285; Born V. Shaw, 29 Pa. St. 288, 12 Am. Dec. 633 (question of a sale of personal property which took place in \'ir- ginia). See Vanbuskirk v. Hartford Fire Ins. Co., 14 Conn. 583. "The law of the domicil of the owner of personal property, as a general rule, determines the validity of every trans- fer made of it bv him." Edgerlv v. Bush. 81 N. Y. 199. "The principle is also well settled that a voluntary conveyance of personal property, good by the law of the place where it was made, passes title wheresoever the propertv mav be situated." Nichols v. Mase, 94 N. Y. 160. ' People V. Commissioner of Taxes, 23 N. Y. 224. See also. Egbert v. Baker. 58 Conn. 319. 20 Atl. 466; Caskie v. Webster, 2 Wall. Jr. (U. s 1 147 CONTRACTS. 398 § 1147. Legislative power extends to all personal property within boundaries of state. — ^Moreover, the situs of personal property is of importance for the reason that the legislative power of every state extends to all personal property within its bound- aries and that the laws of a foreign jurisdiction are applicable thereto only on the principles of comity, and comity between the states will be disregarded when the laws and policy of tlie state where the property is situated have prescribed a different rule of transfer from that of the state where the owner lives. Personal property located in a given state will be affected by the laws of a foreign jurisdiction only so far as comity permits." Every state has the right to regulate the transfer of property within its limits, and whoever sends property into it impliedly submits to the regulations concerning its transfer in force there.^ § 1148. When the law of domicile yields to the law of the situs. — The fiction of law that the domicil of the owner draws to it his personal estate wherever it may happen to be lo- cated, yields whenever it is necessary for the purposes of justice that the actual situs of the thing should be examined. It yields to laws for attaching the estate of nonresidents, because such laws necessarily assume that property has a situs, distinct from the owner's domicil.* S.) 131. See, however, Southern Pac. R. Co. V. A. J. Lj'on & Co. (Miss.), 54 So. 728, 34 L. R. A. (N. S.) 234. "Smead v. Chandler, 71 Ark. 505, 76 S. W. 1066. 65 L. R. A. 353n ; Parker v. Brown, 85 Fed. 595, 29 C. C. A. 357, 56 U. S. App. 341 ; Crowell V. Skipper, 6 Fla. 580; Varnum v. Camp, 13 N. J. L. 326, 25 Am. Dec. 476; State Bank v. First Nat. Bank, 34 N. J. Fxi. 450; Graham v. First Nat. Bank, 84 N. Y. 393, 38 Am. Rep. 528; Hallgarten v. Oldham, 135 Mass. 1, 46 Am. Rep. 433 ; McCollum v. Smith, Meigs (Tenn.) 342, 33 Am. Dec. 147. See Pullman's Palace Car Co. V. Pennsylvania, 141 U. S. 18, 35 L. ed. 613, 11 Sup. Ct. 876; Green v. Van Buskirk, 7 Wall. (U. S.) 139, 19 L. ed. 109, 38 How. Pr. (N. Y.) 52; Hervev v. Rhode Island Loco- motive Works, 93 U. S. 664, 23 L. ed. 1003; Walworth v. Harris. 129 U. S. 355, 32 L. ed. 712, 9 Sup. Ct. 340. 'See Edgerly v. Bush, 81 N. Y. 199; Hervey v. Rhode Island Loco- motive Works, 93 U. S. 664. 23 L. ed. 1003, holding that the liability of property to be sold under legal proc- ess, issuing from the courts of the state where it is situated, must be determined by the law of that state rather than the law of the jurisdic- tion where the owner lives. See also, Studebaker Bros. v. Alan, 14 Wvo. 68, 82 Pac. 2. * Clark V. Tarbell. 58 N. H. 88; Warner v. Jaffray, 96 N. Y. 248. See also, Southern Pac. R. Co. v. A. J. Lyon & Co. (Miss.), 54 So. 728, 34 L. R. A. (N. S.) 234. 399 COXFLICT OF LAWS. § II49 § 1149. Sale or attachment of goods — When lex sitae con- trols. — When a sale, mortgage or pledge of goods within tlie jurisdiction of a certain state is made elsewhere, it is not only competent, but reasonable, for the state which has the goods within its power to require them to be dealt with in the same way as would be necessary in a domestic transaction, in order to pass a title which it will recognize as against domestic creditors of the vendor or pledgor.'^ Where a party residing in the state of New York executed and delivered a chattel mortgage on property in Illinois, and a creditor, before the mortgage was recorded and the property delivered, both record and delivery being necessary under the laws of Illinois, sued out a writ of attachment in Illinois and obtained judgment, and the property was levied upon and sold, it was held that the attachment on the property in Illi- nois took precedent of the unrecorded mortgage executed in Xew York, where record was not necessary, although the owner of the chattels, the attaching creditor and the mortgage creditor were all residents of New York.^ § 1150. The trend of authority. — In recognition of these principles it has been said that "in modern times, since the great increase in the amount and variety of personal property, not immediately connected with the person of the owner, that rule (the principle that the lex domicilii governs) has yielded more and more to the lex situs (the law of the place where the prop- erty is kept and used)."' And again, "Indeed, it may be said 'Hallgarten v. Oldham, 135 :\Iass. signment and the same was subject 1, 46 Am. Rep. 433. to the attachment proceedings. "As '"Green v. Van Buskirk, 7 Wall, to property actually situate in Xew (U. S.) 139, 19 L. ed. 109, 38 How. Jersey, that state has the conceded Pr. (N. Y.) 52. Personal property right to legislate; she may declare situated in New Jersey was held sub- what alone shall transfer the title as ject to the local laws of that state, against her citizens, creditors of the though the owner thereof resided in assignor. The property is within the state of New York. A general as- her exclusivejurisdktion." Guillander signment with preferences for the v. Howell. 35 N. Y. 657. benefit of creditors, which was void ' Pullman's Palace Car Co. v. under the laws of New Jersey, was Pennsylyania, 141 U. S. 18, 35 L. ed. made in New York, of property sit- 613, 11 Sup. Ct. 876, 3 Interstate uated in New Jersey. Subsequently Com. 595. (The question inyolyed such property was taken in New Jer- in the above case was as to the situs sey under a foreign attachment and of personal property for purposes of sold; held, that no title to property taxation.) in New Jersey passed by such as- § II5I CONTRACTS. 4OO that the tendency of modem authorities, under the influence of European Continental jurisprudence, is toward the recognition of the rule of the situs to such an extent that what was an excep- tion is tending to become the rule."^ § 1151. The law of the domicil as compared with the law of the place. — Not only is the foregoing true but it is believed that the statement that personal property or merchandise follows the person of the owner, and that his alienation of it is governed by the law of his domicil misstates the law or is at least too broad. In so far as the personal rights and obligations of the parties are concerned, a contract relating to personal property is much the same as a purely personal contract. For this reason it would seem that the general principle governing personal contracts would apply to contracts concerning personalty, and this is true. The personal rights and obligations of the parties under contracts relating to personal property and also the title to or interest in the property so far as these questions rest upon the validity of such contract depend generally upon the law of the place where the contract is made.^ § 1152. Transfer of personalty — Sales. — The situs of the property is of great importance in determining the law governing sales of personal property. In many instances there is no bind- ing contract until the delivery of the thing sold, in which case the * Farmers' &c. Nat. Bank v. Lof- "The principle is also well settled tus, 133 Pa. St. 97, 19 Atl. 347, 7 L. that a voluntary conveyance of per- R. A. 313. sonal property, good by the law of ' See Aultman &c. Taylor Machin- the place where it was made, passes ery Co. v. Kennedy, 114 Iowa 444, 87 title wheresoever the property may N. W. 435. 89 Am. St. 373 ; Ramsey be situated." This is nothing short V. Glenn, 33 Kans. 271, 6 Pac. 265; of a declaration that the lex loci Townsend v. Allen, 36 N. Y. St. 523, contractus governs. But in another 13 N. Y. S. 73, affd. 126 N. Y. 646, part of the same opinion the court 27 N. E. 853 ; Morrow v. Alexander, quotes with approval a statement 24 N. Car. 388. See further, post, from the case of Edgerly v. Bush, 81 § 1152 et seq. Much of the N. Y. 199, to the effect that "the law confusion which exists on this of the domicil of the owner of per- branch of the subject results from sonal property as a general rule, de- indiscriminating use of language on tcrmines the validity of every transfer the part of the courts. A good illus- made of it by him." In other words, tration of this is found in the case the law of the domicil controls. The of Nichols V. Mase, 94 N. Y. 160. decision seems to have actually In one part of the opinion it is said : turned on the situs of the property. 40I COXrUCT OF LAWS. s 1153 place of delivery becomes the place of the sale/° Thus when a vendee orders goods from a vendor residing in another state and it is agreed that the sale is not complete until the goods are delivered to the purchaser, the law of tlie state to which they are consigned and where the purchaser receives them will govern.'^ § 1153. Sale governed by the law of the place where it be- comes complete and binding. — On the other hand, in tiie ab- sence of anything to show a contrary intent, a sale is ordinarily- considered as complete when a vendee in one state orders goods from a vendor in another state, and such order is accepted by the vendor and the goods delivered to the carrier.^- Consequently, a contract of sale is governed by the laws of the place where the transaction becomes a complete and binding obligation, ^^ notwith- "See Dow v. Gould &c. Min. Co., 31 Cal. 629; Mead v. Dayton, 28 Conn. 33 ; Lewis v. McCabe, 49 Conn. 155, 44 Am. Rep. 217; Weil v. Golden, 141 Mass. 364. 6 X. E. 229. '" Julius Winkelmeyer Brewing Assn. V. Xipp, 6 Kans. App. 730, SO Pac. 956; McLane v. His Creditors, 47 La. Ann. 134, 16 So. 764; Suit v. Woodhall, 113 Mass. 391; Weil v. Golden, 141 Mass. 364, 6 N. E. 229; Wilson v. Lewiston Mill Co., 150 X. Y. 314, 44 X. E. 959, 55 Am. St. 680. See also, Phoenix Packing Co. v. Humphrey-Ball Co., 58 Wash. 396, 108 Pac. 952. " G. A. Gray Co. v. Taylor Bros. Iron Works Co., 14 C. C. A. 56, 66 Fed. 686; Brinker v. Schcunemann, 43 111. App. 659 ; Diether v. Ferguson Lumber Co.. 9 Ind. App. 173, 35 X. E. 843, 36 X. E. 765 ; Engs v. Priest, 65 Iowa 232. 21 X. W. 580; Mc- Carty v. Gordon, 16 Kans. 35 ; Finch V. Mansfield. 97 Mass. 89; Kline v. Baker, 99 Mass. 253 ; Brockway v. Maloney, 102 Mass. 308; Dolan v. Green, 110 Mass. 322; MiUiken v. Pratt, 125 Mass. 374, 28 Am. Rep. 241 ; Portsmouth Brewing Co. v. Smith. 155 Mass. 100, 28 X. E. 1130; Orcutt V. Xelson, 1 Gray (Mass.) 536; Merchant v. Chapman, 4 Allen (Mass.) 362; Kling v. Fries, 33 Mich. 275. See also, Webber v. Howe. 36 Mich. 150, 24 Am. Rep. 590; Sullivan v. Sullivan, 70 Mich. 26 — CoNTR.\cT5, Vol. 2 583; In re Kahn, 55 Minn. 509, 57 N. W. 154; Kerwin v. Doran. 29 Mo. App. 307 : Lauten v. Rowan, 59 X. H. 215; Fuller v. Leet, 59 X. H. 163; Lynch v. Stott, 67 X. H. 589. 30 Atl. 420; Backman v. Jenks, 55 Barb. (X. Y.) 468; Jaffray v. Wolf, 4 Okla. 303, 47 Pac. 496; Braunn v. Keally, 146 Pa. St. 519, 23 Atl. 389, 28 Am. St. 811; Baum v. Birchall, 150 Pa. St. 164, 24 Atl. 620, 30 Am. St. 797; Perlman v. Sartorius, 162 Pa. St. 320, 29 Atl. 852, 42 Am. St. 834; Lowrey v. Ulmer, 1 Pa. Super. Ct. 425; Whiting Mfg. Co. v. Fourth St. Xat. Bank, 16 Pa. Super. Ct. 419 ; Mack v. Lee, 13 R. I. 293. Com- pare Rome Furniture &c. Co. v. Walling (Tenn. Ch.), 58 S. W. 1094. See, however. Phoenix Packing Co. V. Humphrey-Ball Co., 58 Wash. 396, 108 Pac. 952. "Cammell v. Sewell, 5 PI. & X. 728, 27 L. J. Ex. 447; Rhode Island Locomotive Works v. South Eastern R. Co., 31 L. C. Jur. 86; Koster v. Merritt, 32 Conn. 246 ; G. A. Gray Co. V. Taylor Bros. Iron Works Co., 14 C. C. A. 56, 66 Fed. 686; Brinker v. Scheunemann, 43 111. App. 659; Die- ther V. Ferguson Lumber Co., 9 Ind. App. 173. 35 X. E. 843, 36 X. E. 765; Fred Miller Brewing Co. v. De France. 90 Iowa 395. 57 X. W. 959; Finch v. Mansfield. 97 Mass. 89; Kline v. Baker. 99 Mass. 253; Brockway v. Maloney, 102 Mass. 308; § 1 154 CONTRACTS. 402 Standing the seller may be domicilecP* and the goods located'^ elsewhere, subject, of course, to the rule that only so far as the comity of the state where the property is situated allows can such property be affected by the law of any other state.'^ § 1154. The law of the situs as affecting the rights of cred- itors. — A sale which is valid by the lex rei sitae, and which is also the place of the contract, will be upheld as against creditors of the original owner by the law of the state to which such prop- erty is subsequently removed/' Thus, a sale or transfer of prop- erty valid by the law of the place where it is made and where the property is situated will not be held invalid as against an attaching creditor of the vendor after the property has been subsequently removed to another jurisdiction, where if governed by the laws of the latter jurisdiction the sale or transfer would be invalid/^ Bank, 15 Pa. Super. Ct. 419 ; Mack v. Lee, 13 R. I. 293. See also, Bever- wvck Brewing Co. v. Oliver, 69 Vt. 323, Z7 Atl. 1110; State v. O'Neil, 58 Vt. 140, 2 Atl. 586, 56 Am. Rep. 557. "Mead v. Dayton, 28 Conn. 2)Z\ Julius Winkelmeyer Brew. Assn. v. Nipp, 6 Kans. App. 730. 50 Pac. 956; Suit V. Woodhall, 113 Mass. 391; Weil V. Golden, 141 Mass. 364. See also, Wilson v. Lewiston Mill Co., 106 N. Y. 314, 55 Am. St. 680. '^McLane v. Creditors, 47 La. 134, 16 So. 764; Erman v. Lehman, 47 La. Ann. 1651, 18 So. 650; Dougherty V. Curie, 2 Humph. (Tenn.) 453. "See, ante, §§ 1148, 1149 et seq. See also, Olivier v. Townes, 2 Mart. (La.) (N. S.) 93. "Koster v. Merritt, 32 Conn. 246; Wyse V. Dandridge, 35 Miss. 672, 72 Am. Dec. 149 ; French v. Hall, 9 N. H. 137, 32 Am. Dec. 341 ; Born v. Shaw, 29 Pa. St. 288, 72 Am. Dec. 633; Reid V. Gray, Z7 Pa. St. 508. 78 Am. Dec. 444; United States Bank v. Lee, 13 Pet. (U. S.) 107; Kurner v. O'Neil, 39 W. Va. 515, 20 S. E. 589. Compare, also, Adams v. Fellers, 88 S. Car. 212, 70 S. E. 722, 35 L. R. A. (N. S.) 385 and note. "Fally V. Steinficld, 10 Ky. L. 982; Willis v. Memphis Grocery Co. CMiss.), 19 So. 101; Kurner v. O'Neil, 39 W. Va. 515, 20 S. E. 589. See, however, Walp v. Lamkin, 76 Dolan V. Green, 110 Mass. 322; Ames V McCamber, 124 Mass. 85; Milli- ken V. Pratt, 125 Mass. 374, 28 Am. Rep. 241 ; Portsmouth Brewing Co. V. Smith, 155 Mass. 100, 28 N. E. 1130; Tarbox v. Childs, 165 Mass. 408. 43 N. E. 124; Orcutt v. Nelson, 1 Gray (Mass.) 536; Merchant v. Chapman, 4 Allen (Mass.) 362; Kling V. Fries, 2>3 Mich. 275; Sulli- van V. Sullivan, 70 Mich. 583, 38 N. W. 472. See also, Webber v. Howe, 36 ^lich. 150, 24 Am. Rep. 590; In re Kahn. 55 Minn. 509, 57 N. W. 154; Lvnch v. Stott, 67 N. H. 589, 30 Atl. 420; French v. Hall, 9 N. H. 137, 32 Am. Dec. 341 ; Sessions v. Little, 9 N. H. 271; Lauten v. Rowan, 59 N. H. 215; Fuller v. Leet, 59 N. H. 163; Backman v. Jenks, 55 Barb. (N. Y.) 468; D'lvernois v. Leavitt, 23 Barb. (N. Y.) 63; Jaffray v. Wolf, 4 Okla. 303, 47 Pac. 496; Born v. Shaw, 29 Pa. St. 288, 72 Am. Dec. 633; Baltimore &c. R. Co. v. Hoge, 34 Pa. St. 214; Henry v. Philadel- phia Warehouse Co., 81 Pa. St. 76; Braunn v. Keally, 146 Pa. St. 519, 23 Atl. 389, 28 Am. St. 811 ; Baum v. Birchall, 150 Pa. St. 164, 24 Atl. 620, 30 Am. St. 797; Perlman v. Sar- torius, 162 Pa. St. 320, 29 Atl. 852, 42 Am. St. 834; Arnold v. Shade, 15 Leg. Int. (Pa.) 75; Lowrey v. Ulmer, 1 Pa. Super. Ct. 425; Whit- ing Mfg. Co. V. Fourth St. Nat. 403 CONFLICT OF LAWS. g II55 So a sale of property, snch as a ship at sea'® or goods in transitu,-*^ valid by the law of the place where made and where the par- ties reside, will be upheld as against attaching creditors of the vendor in a jurisdiction in which the thing sold subsequently comes, and in which jurisdiction tlie sale would be invalid. Con- ditional sales are, as a general rule, governed by the law of the place where the contract is made, and where its subject-matter is situated, instead of being subject to the laws of the state to which the chattel is subsequently removed.'^ § 1155. Removal of goods without vendor's knowledge or consent. — This is especially true where the conditional sale is valid by the law of the place where the contract is made and the property situated, and the property is subsequently removed to another jurisdiction without J:he conditional vendor's knowl- edge or consent." Thus, one who rents a moving picture ma- chine to another for use in the state where the property is located and the parties reside, by the laws of wliich the contract is not re- quired to be recorded, does not, when he lays claim to the prop- erty as soon as he learns that an interest therein has been sold to a bona fide purchaser, lose his title in favor of such bona fide purchaser in another state, to which the lessee removed the prop- erty without the knowledge or consent of the lessor, although the Conn. 515, 57 Atl. 277. in which the Jersey. Cleveland Alachine Works sale was declared invalid. The goods v. Lang, 67 N. H. 348, 31 Atl. 20, 68 sold were shipped from Connecticut Am. St. 675; Brown Carriage Co. to New York, and the sale there com- v. Dowd, 155 N. Car. 307, 71 S. E. pleted for the express purpose of 721; Barrett v. Kelley, 66 Vt. 515, evading the laws of Connecticut, and 29 Atl. 809, 44 Am. St. 862. See also^ after the sale the goods were im- Mershorn v. Moors, 76 Wis. 502, 45 mediately returned to the state of N. W. 95, in which the place of the Connecticut. contract was held to govern, notwith- "Thuret v. Jenkins, 7 Mart. (La.) standing the property was not there 318, 12 Am. Dec. 508. situated, but was in transitu from -"Fell V. Darden, 17 La. Ann. 236. another jurisdiction to the state of ^ Lane v. J. E. Roach's Banda the forum. Mexicana Co., 78 N. J. Eq. 439, 79 "Sawyer & U. Co. v. Boyce, 1 Atl. 365. In the above case the ar- Sask. L. R. 230; Weinstein v. Freyer, tides sold were temporarily in New 93 Ala. 257, 9 So. 285. 12 L. R. A. Jersey with the vendee's knowledge. 700n; Cooper v. Philadelphia Worsted The court held that under the cir- Co., 68 N. J. Eq. 622, 60 Atl. 352; cumstances the vendor's lien was Fiske v. Peebles, 13 N. Y. St. 743 : paramount to that of a subsequent Studebaker Bros. Co. v. Mau, 14 mortgagor, even though the vendor Wyo. 68, 82 Pac. 2, 13 Wyo. 358, 80 had not recorded his lien in New Pac. 151, 110 Am. St, 1001. § I 156 CONTRACTS. 4O4 laws of such state require such contracts to be recorded to give them vaHdity against bona fide purchasers.-" § 1156. Contract of sale providing for delivery and use in another jurisdiction. — Some jurisdictions hold, however, that where property is sold on conditional sale, and the contract pro- vides for the delivery and use of the property in a jurisdiction other than that in which the contract is entered into, the validity of the transaction is to be governed by the law of the state or country where the property is to be delivered and used, either on the ground that the parties contracted with a view to the laws of the jurisdiction in which the transaction was to be carried out and completed,-* or on the ground that a contrary holding would con- travene the policy of the forum. -^ § 1157. Validity of chattel mortgages and bills of sale. — The validity of a chattel mortgage"*^ or bill of sale" is governed by the lex loci contractus, not only with respect to the substantive rights of the immediate parties,-^ but also, generally, as to the rights of third persons, in so far as their rights depend on the validity and effect of the instrument or contract itself.-^ How- ^ Adams v. Fellers, 88 S. Car. 212, bar Co. v. Lewis, 121 Ala. 94, 25 70 S. E. 722, 35 L. R. A. (N. S.) So. 729. 385. '"Hooper v. Gumm, L. R. 2 Ch. ^Beggs V. Bartels, IZ Conn. 132, 282; Ramsey v. Glenn, 33 Kans. 271, 46 Atl. 874, 84 Am. St. 152. In re 6 Pac. 265; Keenes v. Simpson, 62 Legg, 96 Fed. 326; Bradlev v. King- Minn. Zll, 20 N. W. 364. See also, man Implement Co., 79 Nebr. 144, McCabe v. Blymyre, 9 Phila. (Pa.). 112 N. W. 346. See also, Jones v. 615. Compare with Title Guaranty Molster, 11 Ohio C. C. 432, 5 Ohio &c. Co. v. Witmire, 195 Fed. 43, in C. D. 251 (vendor subsequent to sale which it is held that a chattel mort- consented to the removal of the prop- gage made in Illinois concerning erty to the state of the former). To property to be located in, and which same effect, National Cash Register was in fact transferred to Minnesota, Co. V. Paulson, 16 Okla. 204, 83 where the contract was to be carried Pac. 793. out, must be interpreted with refer- "Weinstein v. Freyer, 93 Ala. 257, ence to the laws of Minnesota. 9 So. 285, 12 L. R. A. 700n ; Public ^ Denny v. Faulkner, 22 Kans. 89. Parks Amusement Co. v. Embree- ''Ramsey v. Glenn, ZZ Kans. 271, McLean Carriage Co., 64 Ark. 29, 6 Pac. 265. See also, cases above 40 S. W. 582; Harper v. People, 2 cited. Colo. App. 177, 29 Pac. 1040 ; Tor- *» Fisher v. Friedman, 47 Iowa 443 ; ranee v. Buffalo Third National Brown v. Koenig, 99 Mo. App. 653, Bank, 70 Hun (N. Y.) 44, 23 N. Y. 74 S. W. 407; Beckham v. Carter, S. 1073 ; Hervey v. Rhode Island Lo- 19 Mo. App. 596 : Roach v. St. Louis comotive Works, 93 U. S. 664, 23 L. Type Foundry, 21 Mo. App. 118; ed. 1003. See, however, Ensley Lum- Hughes v. Abston, 105 Tenn. 70, 58 405 CONFLICT or LAWS. § I 1 52; Shappard where the mortgage was executed, v. Hvnes, 104 Fed. 449, 45 C. C. A. ^^ ChillingAvorth v. Eastern Tin- 271, 52 L. R. A. 675; Blystone v. ware Co., 66 Conn. 306, 2,2, Atl. 1009. Burgett, 10 Ind. 28, 68 Am. Dec. 658; In the above case the mortgage was .\mes Iron Works v. Warren. 76 Ind. executed in New York on proper- 512, 40 Am. Rep. 258; Ord Nat. Bank ty in Connecticut. Compare, how- v. Massey, 48 Kans. 762, 30 Pac. ever, with Gardner v. Lewis, 7 Gil. 124, 17 L. R. A. 127; Lang^vorthy v. (Md.) 2,77. Little, 12 Cush. (Mass.) 109; Keen- ' "Ballard v. Winter, 39 Conn. 179; an v. Stimson, 32 Minn. 277, 20 N. Michigan C R. Co. v. Chicago &c. W. 364; Hundlev v. Mount, 8 Sm. R. Co., 1 111. App. 399; Martin v. & M. (Miss.) 387; Prewett v. Dobbs, Hill, 12 Barb. (N. Y.) 631; Edgerlvv. 13 Sm. & M. (Miss.) 431; Barker v. Bush, 81 N. Y. 199; Jones v. Tavlor, Stacy, 25 :\Iiss. 471; Davis v. Wil- 30 Vt. 42 (overruling Skiff v. Solace. Hams, 72 Miss. 708. 19 So. 352; La- 23 Vt. 279) ; Norris v. Sowles, 57 favette Countv Bank v. Metcalf. 29 Vt. 360; Cobb v. Buswell. 27 Vt. :\Io. App. 384: Smith v. Hutchings, 227 (notwithstanding that the mort- 30 Mo. 380; Feurt v. Rowell. 62 Mo. gagee knew of and consented to such 524: Offutt v. Flagg. 10 N. H. 46; removal). But see contra, McCabe Ferguson v. Clifford, 27 N. H. 86; V. Blymyre, 9 Phila. (Pa.) 615; Cushman v. Luther. 53 N. H. 562; s 1159 CONTRACTS. 406 § 1159. Mortgagor consenting to the removal — Comity. — But where the mortgagor consents to the removal it is held by some cases that the chattel mortgage will not be enforced in the state to which the property was removed as against a bona fide attaching creditor or purchaser.^^ Here as elsewhere it must be remembered, however, that all questions pertaining to the nature and extent of the remedy are governed by the lex fori, and the Parr v. Bradv. Zl N. J. L. 201 ; Nichols V. Mase, 94 N. Y. 160; Hornt Hall v. Burwell, 109 N. Car. 10, 13 S. E. 721, 13 L. R. A. 740, 26 Am. St. 556; Wilson v. Rustad, 7 N. Dak. 330, 75 N. W. 260, 66 Am. St. 649; Greenville Nat. Bank v. Evans-Snyder-Buel Co., 9 Okla. 353, 60 Pac. 249; Craig v. Williams. 90 Va. 500, 18 S. E. 899, 44 Am. St. 934. See also, Handley v. Harris, 48 Kans. 606, 29 Pac. 1145, 17 L. R. A. 703, 30 Am. St. 322; Blvthe v. Crump Bros., 28 Tex. Civ. App. 327, 66 S. W. 885 (in which the property was removed without the mortgagee's consent and sold before he had time to give no- tice of his lien by registration). The foregoing cases do not qualify the rule in any way. In the follow- ing cases the rule is qualified, the court upholding the mortgage if the mortgagee did not know of or con- sent to the removal. Jones v. Two- hey, 8 West. Law (Can.) 295 (chattels removed without consent of mortgagee) ; Bonin v. Robertson, 2 Terr. L. 21 (chattels removed without consent of mortgagee) ; F. E. Crcelman Lumber Co. v. Lesh, 1Z Ark. 16, 83 S. W. 320, 3 Am. & Eng. Ann. Cas. 108 (quaere as to rule if mortgagee did consent to removal) ; Armitage-Herschel Co. v. Potter, 93 III. App. 602; National Bank of Commerce v. Morris, 114 Mo. 255, 21 S. W. 511, 19 L. R. A. 463. 35 Am. St. 754; Anderson v. Doak, 32 N. Car. 295; Kanaga v. Taylor, 7 Ohio St. 134, 70 .^m. Dec. 62; Kerfoot v. State Bank, 14 Okla. 104. n Pac. 46; Newsum v. Hoffman (Tenn.), 137 S. W. 490, limiting Snyder v. Yates, 112 Tenn. 309, 79 S. W. 796, 64 L. R. A. 353. 105 Am. St. 941 ; Scaling v. First Nat. Bank, 39 Texas Civ. App. 154, 87 S. W. 715 (chattels removed without con- sent of mortgagee) ; Studebaker Bros. Co. V. Mau, 14 Wyo. 68, 82 Pac. 2 ; Yund v. First Nat. Bank, 14 Wyo. 81, 82 Pac. 6 (chattels removed without consent of mortgagee). This is true in case of removal of mort- gaged chattels from the United States to the Northwest Territo- ries of Canada (Bonin v. Robert- son, 2 Terr. L. 21), at least where the statutes of the territories make no provision whereby chattel mort- gages made outside the territories can be filed. It is also true in case of the removal of mort- gaged chattels from one province to another. Jones v. Twohey, 8 West. Law (Can.) 295. See, however, cases which deny the rule laid down in the text, Allies v. Oden, 8 Mart. (La.) (N. S.) 211, 19 Am. Dec. 177; Frelson v. Tiner, 6 La. Ann. 18; Verdier v. Leperte, 4 La. 41 ; Zol- likoffer v. Briggs, 19 La. 521; Till- man V. Drake, 4 La. Ann. 16; Delop v. Windsor, 26 La. Ann. 185; Mont- gomery V. Wight, 8 Mich. 143; Bovdson V. Goodrich, 49 Mich. 65, 12 'N. W. 913; Corbett v. Littlefield, 84 Mich. 30, 47 N. W. 581, 11 L. R. A. 95, 22 Am. St. 681 : Vining v. Mil- lar, 109 Mich. 205, 67 N. W. 126, Z2 L. R. A. 442; Buffalo Coal Co. v. Rochester & State Line R. Co., 8 Week. N. Cas. (Pa.) 126; Best v. Farmers' &c. Bank (Texas Civ. App.), 141 S. W. 334 ; Crosby v. Hus- ton, 1 Tex. 203. See also, Rosen- baum V. Dawes, 11 111. App. 295, affd. in 179 111. 112, 53 N. E. 585; Hernandez v, Aaron, IZ Miss. 434, 16 So. 910. *' Pennington Co. Bank v. Bauman, 87 Nebr. 25, 126 N. W. 654 ; Newsum v. Hoffman (Tenn.), 137 S. W. 490; Jones v. North Pac. Fish Co., 42 Wash. 332, 84 Pac. 1122, 6 L. R. A. (N. S.) 940 and note. 407 CONFLICT OF LAWS, § I 160 extent to which it will enforce the law of the lex loci contractus depends on comity.''* § 1160. Necessity to refile mortgage on property moved into another jurisdiction. — ^lorcovcr, each state has the power to regulate the transfer of personal property located within its boundaries and a chattel mortgage made and recorded in some other jurisdiction in conforrEj'.y with the law of the latter will not protect the mortgagee as to creditors or subsequent purchasers without notice in the jurisdiction where the property was situated at the time of the mortgage unless such mortgage is refiled or re- recorded in conformity with the lex situs.^" Nor is this rule changed by the fact that both the mortgagor and mortgagee re- side in the jurisdiction where the mortgage is executed.^'' By the statutes of some states chattel mortgages executed upon prop- erty subsequently brought within the state must be refiled or re-recorded in the latter state.^' § 1161. Sales of intoxicating liquors. — This discussion will have nothing to do with illegal contracts between vendor and vendee of intoxicating liquors whereby they conspire to evade or break the laws of a given juri.^diction, controlling traffic in such liquors. That phase of the subject has been treated in the chap- ter on Legality of Object.^'^ As in the case of other contracts, agreements for the purchase and sale of intoxicating liquors are governed by the law of the "Aultman &c. Tavlor IJachinerv v. Conner, 8 Jones & Spcn. OJ. Y.) Co. V. Kennedy, 114 Iowa 444, 87 X. 339; Green v. Van Buskirk, 7 Wall. W. 435, 89 Am. St. 2>73; Dennv v. (U. S.) 139, 19 L. ed. 109, 38 How. Faulkner, 22 Kans. 89; Studeb?.ker Pr. (N. Y.) 52. In re Soldiers' Busi- Bros. Co. V. ]\Iau, 14 Wvo. 68, 32 nes;^ Messenger & Dispatch Co., 3 Pac. 2. ' Ben. (U S.) 204, Fed. Cas. No. 13163. ^'Hardawav v. Semmes, 38 Ala. To same effect, Smead v. Chandler, 657; In re Brannock. 131 Fed. G19; 71 Ark. 505, 76 S. W. 1066, 65 L. R. Ames Iron Works v. Warren, 76 Ind. A. 353n. 512, 40 Am. Rep. 258; McFadden v. ''Pleasanton v. Johnson, 91 Md. Blocker. 2 Ind. Tcr. 260, 48 S. W. 673, 47 Atl. 1025. 1043. 58 L. R. A. 878; Aultman & "See Johnson v. Hughes, 89 Ala. Taylor Machinery Co. v. Kennedy, 588. So. 147; Peterson y. Kaigler, 114 Iowa 444. 87 'X. W. 435. 89 Ain. 78 Ga. 464, 3 S. E. 655; Hubbard y. St. 2)7Z; Arkansas City Bank y. Cas- Andrews, 76 Ga. 177. See also, sidv, 71 Mo. App. 186: Clark y. Tar- Smead v. Chandler. 71 Ark. 505, 76 bell, 58 X. H. 88; Keller y. Paine, S. W. 1066, 65 L. R. A. 353n. 107 N. Y. 83, 13 X. E. 635; Whitman ^^Ch. 21. § Il62 CONTRACTS. 408 place where the title passes and the sale becomes a complete and binding contract.^^ Consequently, if tlie sale is made and the title passes in a jurisdiction in which the transaction is legal the mere fact that the vendor delivered the liquors to a common car- rier to be transported to a state where the sale would be invalid does not make the laws of this latter state control.^** § 1162. Sales of intoxicating liquors — Rule applied. — Thus a continuing offer by a given vendor to sell to a vendee upon the latter's order is not a completed contract until the goods are or- dered by the vendee and the contract of sale is governed by the laws of the place where the order is accepted. *° So if an order is solicited by an agent who does not have authority to finally close the transaction in territory where the sale would be illegal the sale becomes binding upon acceptance by the agent's principal and is governed by the law of the state where he makes such accept- ance." However, if the sale is not complete and the title does not pass until actual delivery to the vendee the law of the place •where the vendee receives the goods controls.^^ "^ J. &. J. Eager Co. v. Burke, 74 Garner, 111 Iowa 424, 82 N. W. 1007, Conn._ 534, 51 Atl. 544; Fred Miller which holds that the fact that the Brewing Co. v. De France, 90 Iowa vendee may not have known that the 395, 57 N. W. 959 ; Portsmouth sale was not complete until accepted Brewing Co. v. Smith, 155 Mass. 100, by the principal when no inquiry was 28 N. E. 1130; Schoenhofen Brew- made by the defendant concerning ing Co. V. Whipple (Nebr.), 89 N. the agent's power and the salesman W. 751; Bacon v. Hunt, 12 Vt. 98, did nothing calculated to mislead 47 Atl. 394. him into the belief that the sales ^"^ Brown v. Wieland, 116 Iowa 711, were completed when the order was 89 X. W. 17, 61 L. R. A. 417: Engs given to him does not change the V. Priest, 65 Iowa 232, 21 N. W. 580; rule. Bacon v. Hunt, 72 Vt. 98, 47 Sullivan v. Sullivan, 70 Mich. 583, 38 Atl. 394, in which case the court said N. W. 472; Bollinger v. Wilson, 76 it was clearly a question of fact Minn. 262, 79 N. W. 109, 11 Am. St. whether the contract was made in 646. the state of ^lassachusetts or partly ^"Fred Miller Brew. Co. v. De- in Vermont. The jury found that France, 90 Iowa 395. 57 N. W. 959. it was made in Massachusetts, and "J. &. J. Eager Co. v. Burke, 74 their judgment was held conclusive Conn. 534,51 Atl. 544; Brown v. Wie- as to the place of the sale. Corn- land. 116 Iowa711,89N.W. 17,61 E. pare with Phoenix Packing Co. v. R. A. 417; Sachs v. Garner, 111 Humphrev-Ball Co., 58 Wash. 396, Iowa 424, 82 N. W. 1007; Fegler v. 108 Pac. '952. Shipman, ZZ Iowa 194, 11 Am. Rep. "Weil v. Golden, 141 Mass. 364, 118; Bacon v. Hunt, 11 Vt. 98, 47 6 N. E. 229 Atl. 394. To same effect, Sacks v. 409 CONFLICT OF LAWS. § 11^3 § 1163. Voluntary assignments for the benefit of creditors. — It is generally conceded that an owner of property has the right to transfer the same for a good and valuable consideration; and the general disposition of all friendly governments is to give effect to such contracts when not opposed by some great consider- ations of public policy, or which are manifestly injurious to their own citizens." This is especially true of the several states of the American Union, which though foreign in some respects are closely united in many others/* § 1164. Assignment valid where made generally valid everywhere. — It follows that as a general rule voluntary as- signments of property for the benefit of creditors, valid by the laws of the state where made, are held to operate as a conveyance of personal property not already subject to a prior lien in every state where it may be found, when not opposed to the law or public policy of the jurisdiction in which the property is found. *^ Thus *^ See post, § 1164 et seq. " Means v. Hapgood, 19 Pick. (Mass.) 105. See also, Jewell v. Knight, 123 U. S. 426, 31 L. ed. 190, 8 Sup. Ct. 193. ^ Campbell v. Colorado Coal &c. Co., 9 Colo. 60, 10 Pac. 248; First Xat. Bank v. Walker, 61 Conn. 154, 23 Atl. 696; J. M. Atherton Co. v. Ives, 20 Fed. 894; Van Wyck v. Read, 43 Fed. 716; Miller v. Kcrnaghen, 56 Ga. 155; Princeton Mfg. Co. v. White. 68 Ga. 96; Rubel v. Louis- ville Bkg. Co., 10 Ky. L. 1021; Cof- lin V. Kelling, 83 Ky. 649. 7 Ky. L. 724, overruling in effect Johnson v. Parker, 4 Bush. (Ky.) 149; Covey V. Cutler, 55 Minn. 18, 56 X. W. 255 ; Askew V. La Cvgne Exch. Bank, 83 Mo. 366. 53 Am. Rep. 590; Frazier V. Fredericks. 24 N. J. L. 162; Speed V. Mav, 17 Pa. 91, 55 Am. Dec. 540; In re Smith's Appeal, 104 Pa. 381; Carter-Battle Grocer Co. v. Jackson, 18 Tex. Civ. App. 353, 45 S. W. 615; Weider v. Maddox, 66 Tex. 372, 1 S. W. 168. 59 Am. Rep. 617: Black v. Zacharie, 3 How. (IT. S.) 483, 11 L. ed. 690. See also. Walters v. Whit- lock, 9 Fla. 86. 76 Am. Dec. 607; Moore v. Land Title & T. Co., 82 Md. 288, 33 Atl. 641; Zuppann v. Bauer. 17 Mo. App. 678; Roberts v. Xorcross, 69 N. H. 533, 45 Atl. 560; Vandcrpoel v. Gorman, 140 N. Y. 563, 35 N. E. 932, 24 L. R. A. 548, 37 Am. St. 601 ; Thompson v. Fry, 51 Ilun (N. Y.) 296. 4 N. Y. S. 166; Kelstadt v. Reilly, 55 How. Pr. (N. Y.) 373; Wing v. Bradner. 162 Pa. 72, 29 Atl. 291 ; Cook v. Van Horn, 81 Wis. 291, 50 N. W^ 893. See especially the case of Stowe v. Belfast Sav. Bank. 92 Fed. 90. 34 C. C. A. 229, affd., 93 Fed. 100. which was an action at law involving the validity of an at- tachment and sale thereunder of certain lands located in Maine claimed by plaintiff as trustee under a general assignment for the benefit of creditors made in Massachusetts. During the course of the discussion the court said, quoting from the case of Cole V. Cunningham. 133 U. S. 107. 10 Sup. Ct. 269: "In most (states) the distinction between in^ voluntary transfers of property, such as work by operation of law, as for- eign bankrupt and insolvency laws, and a voluntary conveyance, is recognized. The reason for the dis- tinction is that a voluntary transfer, if valid where made, ought general- ly to be valid everywhere, being the § 1 165 CONTRACTS. 4IO in Pennsylvania an assignment made in New York where the assignor and assignee were domiciled which contained prefer- ences in favor of certain creditors, which preferences were valid by the law of New York, but illegal in Pennsylvania, was held to pass the title to personalty in Pennsylvania for all purposes." So an assignment with preferences, made in Utah, of personal property in Idaho, which forbids preferences, was held by the United States Supreme Court valid in Idaho against an attach- ing creditor, a corporation existing under the laws of Minne- sota.*'^ Such assignments have been held, however, ineffectual to pass title to personal property situated in another state, when in contravention of the laws of that state and inconsistent with its policy."'^ § 1165. Foreign voluntary assignment — Resident credit- ors. — The courts of some jurisdictions go so far as to refuse exercise of the personal right of the of the assignor domiciled in Massa- owner to dispose of his own, while chusetts) ; Frank v. Bobbitt, 155 an assignment by operation of law Mass. 112, 29 N. E. 909 (a voluntary has no legal operation outside the assignment made in North Carolma state in which the law was passed." valid as against a subsequent at- In bankruptcy the local laws of the taching creditor in still another state state determine the interpretation and and not a party to the assignment) ; validitv of the contract with the Fav v. Jenks, 78 Mich. 304, 44 N. bankrupt. In re Hartdagen, 189 Fed. W. 378 ; Butler v. Wendell, 57 Mich. 546, and cases cited. 62, 23 N. W. 460, 58 Am. Rep. 329; *«In re Smith's Appeal (1887), 117 In re Paige, 31 Minn. 136, 16 N. W. Pa 30, 11 Atl. 394. See also, Egbert 700; Thurston v. Rosenfield, 42 Mo. v. Baker, 58 Conn. 319, 20 Atl. 466; 474, 97 Am. Dec. 351; Eddy v. Win- Schuler v. Israel, 27 Fed. 851 (a Chester, 60 N. H. 63 ("the rights of voluntary assignment in Texas held our own citizens not being in- valid in Missouri, save as it con- volved") ; Ockerman v. Cross, 54 N. flicts with the rights of resident Y. 29; Vanderpoel v. Gorman, creditors) ; Halsted v. Straus, 32 Fed. 140 N. Y. 563, 35 N. E. 933, 24 L. 279; Baltimore & Ohio R. v. Glenn, R. A. 548, Zl Am. St. 601 (validity 28 Md. 287, 92 Am. Dec. 688 (an as- of assignment made by a New Jer- signment executed by a Virginia cor- sey corporation doing business in poration in the State of Virginia of New York) ; Hanford v. Paine, 32 propertv in Maryland sustained); Vt. 442, 78 Am. Dec. 586; Cook v. Burlock v. Taylor, 16 Pick. (Mass.) Van Horn, 81 Wis. 291, 50 N. W. 335 (an assignment by an insolvent 893. debtor in New York held valid in " Barnett v. Kinney, 147 U. S. IMassachusetts against a subsequent 476, 13 Sup. Ct. 403. attachment by a citizen of New York '''Varnum v. Camp, 13 N. J. L. 2)2^, of property in Massachusetts, al- 25 Am. Dec. 476n ; Warner v. Jaff ray, though such assignment was invalid v30 Hun (N. Y.) 326, 96 N. Y. 248. under the laws of that state) ; Train "The true rule of law and public pol- V. Kendall (1884), 137 Mass. 366 (an icy is this: that a voluntary assign- assignment made in another state up- ment made abroad, inconsistent, in held as against an attaching creditor substantial respects, with our statute, 411 CONFLICT OF LAWS. § II66 any effect to a voluntary assignment made in a forei^m jurisdic- tion and valid by the law of the place where made which will prej- udice the rights of attaching resident creditors.*'^ But even in jurisdictions which so hold, a voluntary assignment is upheld as to all except resident creditors, and in the absence of claims of such creditors the assignee may reduce the property located in such foreign jurisdiction to possession^'' and maintain the validity of the assignment as against nonresident creditors. ^^ § 1166. When law of place of assignment prevails over the law of the domicil. — As between the law of the domicil of the assignor and the law of the place where the assignment is made, the law of the latter usually prevails, especially when tlie business of the assignor is there conducted." This is not true, however, where the assignment is made with special reference to should not be put in execution here to the detriment of our citizens, but that, for all other purposes, if valid by the lex loci, it should be carried fully into effect." Bentley v. Whitte- more, 19 N. J. Eq. 462. See also, Henderson v. Schass, 35 111. App. 155. *' Sheldon v. Wheeler, 32 Fed. 773 (following Illinois rule) ; Heyer v. Alexander, 108 111. 385; Woodward V. Brooks, 128 111. 222, 20 N. E. 685. 3 L. R. A. 702n, 15 Am. St. 104; Smith V. Lamson Bros., 184 111. 71. 56 N. E. 387 ; Fox v. Adams. 5 Greenl. (Maine) 245; Happy v. Prickett, 24 Wash. 290. 64 Pac. 528. '"Woodward v. Brooks, 128 111. 222. 20 X. E. 685, 3 L. R. A. 702n, 15 Am. St. 104. " Woodward v. Brooks, 128 111. 222, 20 N. E. 685, 3 L. R. A. 702n, 15 Am. St. 104; Consolidated Tank Line Co. V. Collier. 148 111. 259. 35 N. E. 756, 39 Am. St. 181; Walton v. Detroit Copper &c. Rolling Mills. 37 111. App. 264 ; Chaffee v. Fourth Nat. Bank, 71 Maine 514, 36 Am. Rep. 345. See also. Lane v. J. E. Roach's Banda Mexicana Co., 78 N. J. Eq. 439, 79 Atl. 365. in which Learning. J., after reviewing the authorities said : "But I have found no adjudicated cases in which a local statute or policy of the forum of the remedy has been upheld to overthrow the comities of states, except where the local statute is in- voked b}' and in behalf of a citizen of the state where the local statute exists. On the contrary, wherever I have found the subject directly considered, the uniform view appears to have been adopted that the law of the contract will be recognized, un- less the enforcement of the pro- visions of the local statute are found necessary for the protection of a citizen of the forum of the remedy." As to the rights of state courts to thus discriminate between domestic and non-resident creditors, see Bel- fast Sav. Bank v. Stowe, 92 Fed. 100, 34 C. C. A. 229, 63 U. S. App. 14, holding that they do not have the right to make any discrimination. "Egbert v. Baker, 58 Conn. 319, 20 Atl. 466; In re Paige & S. Lumber Co., 31 .Minn. 136, 16 N. W. 700; In re Browning Bros.. 66 N. J. Eq. 302. 57 Atl. 869; Smedley v. Smith, 15 Daly (N. Y.) 421, 8 N. Y. S. 100. affd. in 126 N. Y. 637, 27 N. E. 411 ; Grady v. Bowe, 11 Daly (N. Y.) 259. See also, Schroder v. Tompkins, 58 Fed. 672. 1 167 CONTRACTS, 412 the law of domicil" or when executed in another jurisdiction in order to evade the law of the domicil.^* § 1167. Involuntary assignments under bankrupt and in- solvency laws. — There is a distinction between involuntary transfers of property, such as are worked by operation of law un- der foreign bankrupt assignments and insolvency laws, and a vol- untary conveyance. The reason for the distinction is that a vol- untary transfer, valid where made, ought generally to be valid everywhere, since it is but the exercise of the personal right of the owner to dispose of his property, while an assignment by operation of law is not the free and voluntary act of the owner but is made by compulsion and for this reason has no legal opera- tion outside the state in which the law was passed.^^ The pre- vailing doctrine in this country is that a conveyance under foreign bankrupt and insolvent laws cannot affect property outside of the state or country in which the law is enacted, and will not prevail against the rights of attaching creditors where the property is sit- uated.^* ''^ Richardson v. Rogers, 45 Mich. 591, 8 N. W. 526; McKibben v. El- lingson, 58 Minn. 205, 59 N. W. 1003, 49 Am. St. 499. " Kansas City Packing Co. v. Hoover, 1 App. D. C. 268. "Paine v. Lester, 44 Conn. 196, 26 Am. Rep. 442; Stowe v. Belfast Sav. Bank, 92 Fed. 90; Barth v. Backus, 140 N. Y. 230, 35 N. E. 425, 23 L. R. A. 47, Zl Am. St. 545; Cole v. Cun- ningham. 133 U. S. 107, 2,Z L. ed. 538, 10 Sup. Ct. 269; Hanford v. Paine, 32 Vt. 422, 78 Am. Dec. 586. °* Paine v. Lester, 44 Conn. 196, 26 Am. Rep. 442 (a case where the at- tached creditor was not a citizen) ; City Ins. Co. v. Commercial Bank, 68 III. 348 ; Felch v. Bugbee, 48 Maine 9, n Am. Dec. 203; Osborn v. Adams, 18 Pick. (Mass.) 245; Zip- cey V. Thompson, 1 Gray (Mass.) 243; Kelly v. Crapo, 45 N. Y. 86, 6 Am. Rep. 35 (This case, however, was revd.. 16 Wall. (U. S.) 610, 21 L. ed. 430) ; Hovt v. Thompson, 5 N. Y. 320; Willitts v. Waite, 25 N. Y. 577; Hibernia Nat. Bank v. La- combe, 84 N. Y. 367, 38 Am. Rep. 518; Barth v. Backus, 140 N. Y. 230, 35 N. E. 425, 23 L. R. A. 47, Zl Am. St. 545 ; Towne v. Smith, 1 Wood. & M. (U. S.) 115, Fed. Cas. No. 14115; In re The Watchman. 1 Ware (U. S.) 233, Fed. Cas. No. 17251; Booth V. Clark, 17 How. (U. S.) 322, 15 L. ed. 164. "While the authorities are not altogether harmonious, the prevailing American doctrine is that conveyance under a state insolvent law operates only upon property within the territory of that state, and that with respect to property in other slates it is given only such efifect as the laws of such state permit ; and that, in general, it must give way to claims of creditors pursuing their remedies there. It passes no title to real estate situated in another state. Nor, as to personal property, will the title acquired by it prevail against the rights of attaching creditors under the laws of the state where the prop- erty is actually situated." Securitv Trust Co. V. Dodd, 173 U. S. 624, 43 L. ed. 835. 19 Sup. Ct. 545. Chief Justice Marshall in Harrison v. Sterry, 5 Cranch (U. S.) 289, 3 L. 413 CONFLICT OF LAWS. § II68 § 1168. Involuntary assignment — When recognized in for- eign jurisdictions. — Uut w iiilc the statutes of foreign states can have no recognition in other states except hy comity, the stat- utory title of foreign assignees in bankruptcy is recognized and enforced in other states when it can be done without injustice to the citizens thereof and without prejudice to creditors pursu- ing their remedies under the local statute and provided such titles are not in conflict with the laws or public policy of the state." § 1169. When assignment is involuntary. — In determining whether an assignment is voluntarily or involuntarily made it is important to remember that one who voluntarily takes advantage of a bankruptcy act, that is to say, a statute which provides that the assignor may be discharged from his debts as a part of the proceedings under such assignment upon compliance with the pro- visions of the act, is deemed to have done so in invitum and the ed. 104, said, in effect, that foreign bankrupt laws do not operate to transfer the property of bankrupts within the United States. "When upon the insolvency of a debtor, the law of the state in which he resides assumes to take his property out of his control, and to assign it, by ju- dicial proceedings, without his assent, to trustees for distribution among his creditors, such an assignment will not be allowed by the courts of an- other state to prevail against any remedy which the laws of the latter afford to its own citizens against property within its jurisdiction." Tay- lor V. Columbian Ins. Co., 14 Allen (Mass.) 353. In Holmes v. Remsen, 20 Johns. (N. Y.) 229, 11 Am. Dec. 269, it was held that a statutory as- signment of a debtor's property un- der the laws of a foreign country is not equivalent to a voluntary as- signment by the debtor and that such an assignment will not hold good to the prejudice of the rights of do- mestic creditors pursuing their rem- edy by attachment under our laws. "In re Accounting of Waite. 99 N. Y. 433. In Cole v. Cunningham, 133 U. S. 107. 33 L. ed. 538. 10 Sup. Ct. 269, Chief Justice Fuller said : "Great contrariety of state decisions exists upon this general topic, and it may be fairly stated that, as between citi- zens of the state of the forum, and the assignee appointed under the laws of another state, the claim of the former will be held superior to that of the latter by the courts of the former ; while, as between the as- signee and citizens of his own state and the state of the debtor, the laws of such state will ordinarily be ap- plied in the state of the litigation, unless forbidden by, or inconsistent with, the laws or policy of the lat- ter." Upton V. Hubbard, 28 Conn. 274, 73 Am. Dec. 670, a contest be- tween a IMassachusetts assignee and a creditor who was also from that state. The court held that although a foreign assignee may be allowed to sue in our courts as a matter of courtesy, yet the courtesy will be de- nied in all cases where there are claims upon the property adverse to the assignment, whether the claim- ants be citizens of that or of some other state. See article in 7 Harvard Law Rev. 281. entitled "An Assign- ment in Insolvency, and its Effect upon Property and Persons out of the State." § I I/O CONTRACTS, 4I4 assignment is governed by the principles applicable to involuntary assignments."" § 1170. Sale or mortgage — As affected by fraud. — The effect given a sale or mortgage of personal property as influenced by the question of fraud against the creditors of the seller gener- ally depends upon the law of tlie situs of the property and not up- on the law of the place where the contract is made. Consequently a sale or mortgage of personal property, notwithstanding such sale may be valid by the law of the place where the contract is made, will not be upheld in another jurisdiction where the prop- erty is situated at the time of the sale or mortgage as against attaching creditors if by the laws of the latter jurisdiction it would be invalid against such creditors because it tended to hin- der, delay or defraud them.^^ § 1171. Bills and notes. — A promissory note is not com- plete until it has been delivered and as between the immediate parties the place of the contract evidenced by such note does not depend upon where the note is dated or signed but upon the place where it is delivered.^*' Thus a note signed by one maker in '^Townsend v. Coxe, 151 111. 62, 37 57 Fed._133 ("transfer in Illinois held N. E. 689 (The property actually in- invahd in Cahfornia if made with in- volved in that case was real prop- tent to delay, or defraud creditor) ; erty) ; Franzen v. Hutchinson, 94 Levy v. Kentuckv Distilling Co., 9 Iowa 95, 62 N. W. 698; Barth v. Ky. L. (abstract) 103 (fraudulent Backus, 140 N. Y. 230, 35 N. E. 425, transfer of warehouse receipts for 23 L. R. A. 47, Zl Am. St. 545; Se- liquor stored in Kentuckv) ; Schmidt curity Trust Co. v. Dodd, 173 U. S. v. Perkins, 74 N. J. L. '785, 67 Atl. 624, 43 L. ed. 835, 19 Sup. Ct. 545; 11, 11 L. R. A. (N. S.) 1007, Segnitz v. Garden City Bkg. & T. 122 Am. St. 417 (sale in Iowa of Co., 107 Wis. 171, 83 N. W. 327, SO property located in New Jersey); L. R. A. 327, 81 Am. St. 830; Mc- Dearing v. McKinnon Dash & Hard- Clure V. Campbell, 71 Wis. 350, 5 ware Co., 165 N. Y. 78. 58 N. E. 1i2>, Am. St. 220, Zl N. W. 343, 5 Am. St. 80 Am. St. 708 (chattel mortgage ex- 220. See also. Whitman v. Mast &c. ecuted in Michigan unen forcible in Co., 11 Wash. 318, 39 Pac. 649, 48 New York when under the laws of Am. St. 874. This has also been held the latter state it would be invalid true of a deed of assignment exe- because of its tendency to hinder and cuted by a partnership in compliance delay creditors) ; Fowler v. Bell, 90 with a decree of court. Catlin v. Tex. 150, Z1 S. W. 1058, 39 L. R. A. Wilcox Silver Plate Co., 123 Ind. 477, 254, 59 Am. St. 788 (chattel mortgage 24 N. E. 250, 8 L. R. A. 62. 18 Am. executed in Iowa held invalid in St. 338. See also. Ward v. Connecti- Texas on the ground of public pol- cut Pipe Mfg. Co., 71 Conn. 345, 41 icy). See also, Smead v. Chandler, Atl. 1057, 42 L. R. A. 706, 71 Am. St. 71 Ark. 505, 76 S. W. 1066, 65 L. R. 207; Toof v. Miller, IZ Miss. 756, 19 A. 353n ; In re Kahn, 55 Minn. 509, So. 577. 57 N. W. 154. "' Smith v. New York Life Ins. Co., 415 CONFLICT OF LAWS. §1172 one state and by a second maker in another state and by him de- livered is governed by the laws of the latter state.*' In deter- mining the place where an accommodation note is made, the place where it was delivered and negotiated controls, and not the place wliere it was written, signed or dated.''" So wlien the payee of a note indorses the same in one state and sale and deliver}^ thereof is made in another jurisdiction the contract of indorsement is governed by tiie law of the place where the sale and delivery was made instead of where the indorsement was written.*^" § 1172. Presumption as to place of delivery. — However, the note is presumed to have been delivered at the place where it •"Wells-Fargo & Co. v. Vansickle, 64 Fed. 944, holding that parol evi- dence is admissible to show that not- withstanding the printed words "San P>ancisco, California'' upon the face of the note, the note was actually made, executed, and delivered in Car- son Citv, Nev. Kelley v. Telle, 66 Ark. 464, 51 S. W. 633; Loud v. Collins. 12 Cal. App. 786, 108 Pac. 880 (deliverv bv mail) ; Walker v. Lovitt, 250 111. '543, 95 N. E. 631; Hart v. Wills, 52 Iowa 56, 2 N. W. 615, 35 Am. Rep. 255 ; Briggs v. La- tham, 36 Kans. 255, 13 Pac. 293, 59 Am. Rep. 546; Holt v. Knowlton, 86 Maine 456, 29 Atl. 1113; Salley v. Terrill, 95 Maine 553, 50 Atl. 896, 55 L. R. A. 730, 85 Am. St. 433 ; Law- rence V. Bassett, 5 .A.llen (Mass.) 140; Phcenix Mut. L. Ins. Co. v. Simons. 52 Mo. App. 357; Johnston v. Gawtrv, 83 Mo. 339; School Dis- trict V. Stocking. 138 Mo. 672, 40 S. W. 656, Zl L. R. A. 406. 60 Am. St. 576; Bascom v. Zediker, 48 Nebr. 380, 67 N. W. 148; Hyde v. Goodnow, 3 N. Y. 266; Lee v. Selleck, 2>2> N. Y. 615. Compare Staples v. Nott, 128 N. Y. 403, 28 N. E. 515, 26 Am. St. 480; Commercial Nat. Bank v. Simp- son, 90 N. Car. 467; Davis v. Cole- man, 29 N. Car. 424. Compare Mor- ris V. Hockaday, 94 N. Car. 286. 55 Am. Rep. 607n ; Nichols Sheppard Co. V. First Nat. Bank, 6 N. Dak. 404, 71 N. W. 135; Barrett v. Dodge, 16 R. L 740, 19 Atl. 530, Z] Am. St. Ill; Winward v. Lincoln, 23 R. L 476, 51 Atl. 106, 64 L. R. A. 160n ; Johnson Citv First Nat. Bank v. Mann, 94 Tenn. 17, 27 S. W. 1015; Hubble v. Morristown Land Co., 95 Tenn. 585, 32 S. W. 965; Lomax v. First Nat. Bank (Tex.), 39 S. W. 655. Compare Falls v. United States Savings &c. Co., 97 Ala. 417, 13 So. 25, 24 L. R. A. 174, 38 Am. St. 194; Jackson v. .American Mortg. Co., 88 Ga. 756, 15 S. E. 812. Compare with Jennings v. Moore, 189 Mass. 197, 75 N. E. 214. "'Hart v. Wills, 52 Iowa 56, 2 N. W.^ 615, 35 Am. St. 255. "• Gallaudet v. Svkes, 1 McArthur (D. C.) 489; Young v. Harris, 14 B. Mon. (Ky.) 556, 61 Am. Dec. 170; Voigt V. Brown, 42 Hun (N. Y.) 394; Carnegie Steel Co. v. Chatta- nooga Construction Co. (Tenn.), Z% S. W. 102; Connor v. Donnell, 55 Tex. 167; Tilden v. Blair, 21 Wall. (U. S.) 241, 22 L. ed. 632. See also. Chemical Nat. Bank v. Kellogg, 183 N. Y. 92, 75 N. E. 1103, 2 L. R. A. (N. S.) 299 and note. 111 Am. St. 717. See also. Smith v. Dixon, 134 N. Y. S. 1097 (maker sent note to another state to be negotiated). "'Phipps v. Harding, 70 Fed. 468. 17 C. C. A. 203. 30 L. R. A. 513; Briggs V. Latham. 36 Kans. 255, 13 Pac. 293, 59 Am. Rep. 546 ; Dunscomb v. Bunk- er, 2 Mete. (Mass.) 8: New York Life Ins. Co. v. McKellar, 68 N. H. 326, 44 Atl. 516. 11/3 CONTRACTS. 416 was dated and signed"* and in the absence of any notice to the con- trary it would seem that the purchaser has the right to rely on the presumption that the note was made and delivered in the place where it is dated.^" § 1173. Bill or note payable generally. — A promissory note payable generally, that is, where no specified place of pay- ment is mentioned, is treated as a note of the place where it is executed, and the rights, duties and obligations growing out of it are to be determined by the laws of that place.''® When a note was given in Canada, payable on demand, in consideration of an antecedent debt contracted in New York, of which state both parties to the note were inhabitants, but were at the time the note was executed and delivered temporarily in Canada, it was held that the laws of Canada must govern as to the note.''^ If a bill or note is payable in a particular place it is generally to be treated as if made there, without reference to the place where it is writ- ten, or signed or dated.®* "Hall V. Harris, 16 Ind. 180; Strawberry Point Bank v. Lee, 117 Mich. 122,' 75 N. W. 444. "'^ Chemical Nat. Bank v. Kellogg, 183 N. Y. 92, 75 N. E. 1103, 2 L. R. A. (N. S.) 299n, 111 Am. St. 717; Watson V. Boston Woven Cordage Co., 75 Hun (N. Y.) 115, 26 N. Y. S. 1101. *"' Trimbey v. Vignier, 1 Bing. N. C. 151 (note made in Paris, no place of payment being named) ; Walker V. Lovitt, 250 111. 543. 95 N. E. 631; Peck V. Hibbard, 26 Vt. 698, 62 Am. Dec. 605. "Smith V. Mead, 3 Conn. 253. 8 Am. Dec. 183. The note was made payable in New York, but by legal consequence in Canada, and was im- mediately after its execution suable in the courts of that country. The preceding contract was extinguished, and the insolvency laws of New York held not to apply. ^Rouquette v. Overmann, L. R. 10 Q. B. 525; Shoe &c. Nat. Bank v. Wood, 142 Mass. 563, 8 N. E. 753; Houston V. Keith CMiss.), 56 So. 336 Cnote made in IMississippi but by its terms payable in Texas) ; Brown v. Worthington (Mo. App.) 142 S. W. 1082 (note executed in Missouri made payable in Michigan) ; Cutler v. Wright, 22 N. Y. 472 (A note made in New York, but dated in Florida, and payable there, is governed by the laws of that place) ; Everett v. Vendryes, 19 N. Y. 436 (holding that the law of the place where the bill was payable controlled as to the lia- bility of the drawer to the indorsee). See also, the case of Cherry v. Sprague, 187 Mass. 113, 72 N. E. 456, 67 L. R. A. 33, 105 Am. St. 381, in which it is held that as the instru- ment was a promissory note and as it was payable in South Dakota and was sent to the payee by mail and re- ceived by him in that state, it was a South Dakota and not a Massachu- setts contract. Steward v. Common- wealth Nat. Bank, 29 Okla. 754, 119 Pac. 216 (note dated and made pay- able in Texas). A note executed and delivered in Michigan on Sunday in payment of goods sold and deliv- ered, although payable in Ohio, was held governed by the laws of Michi- gan and void. "Parties cannot be allowed to defy our laws, and recover upon a contract void from its incep- tion under our statute, by making the 417 CONFLICT OF LAWS. § I 1 74 § 1174. Naming of place for payment does not necessarily fix governing law. — The naming of a bank in another state as the place for payment of a note does not, however, always characterize the contract as to be governed by the laws of that place. The arrangement may be simply for the convenience of the maker, and have no peculiar effect.'^'* Where a draft was drawn and dated in Illinois, and accepted and made payable in New York by the drawees, residents of New York, and returned by the ac- ceptors to the drawer in Illinois for the purpose of being nego- tiated there by him, the understanding being that the draft was to be discounted by a bank in Illinois, it was held that it was an Illi- nois contract, and the rights and liabilities of the parties were to be determined by the law of that state.'" § 1175. Laws of more than one state may apply to same bill. — The laws of more than one jurisdiction may apply to the same bill of exchange in which event it has been held that it is to be construed according to the law of each place at which the contract contemplated that something was to be done by either place of payment out of the state." signed it and the defendant indorsed Arbuckle v. "Reaume, 96 Mich. 243, 55 it. The note was then mailed to N. W. 808. Artifice is sometimes re- plaintiff in Washington. The in- sorted to in the making of contracts, dorser set up usury as a defense. It with a view of evading the laws was held untenable, and that the con- against usury. To this end a false tract was made in the District of or fictitious place of performance is Columbia, and to be governed by the sometimes inserted in the writing, laws there, and that the engagement Whenever such attempt is made to of the indorser did not affect^ the appear, the courts refuse to lend their local character of the contract. "The sanction to it. Falls v. United States rule deducible from all these cases Savings &c. Co., 97 Ala. 417, 13 So. is that the whole transaction will be 25, 24 L. R. A. 174, 38 Am. St. 194. looked into, to ascertain where the ™ Staples v. Nott, 128 N. Y. 403, 28 real contract, the meeting of the N. E. 515, 26 Am. St. 480, where in minds, simply evidenced by the in- an action upon a promissory note, strument, took place. When that is dated in Washington, D. C.', made ascertained, neither the date of the payable at a bank in New York, instrument, where signed, nor where which bore interest at a legal rate payable, is controlling." Hooley v. where dated but illegal in New York, Talcott, 129 App. Div. (N. Y.) 233, it appeared that the note was given 113 N. Y. S. 820. to take up another note dated in '"Tilden v. Blair. 21 Wall. (U. S.) Washington and payable there, which 241, 22 L. ed. 632. "The place of pay- bore the same rate of interest. The ment was doubtless designated for arrangement for renewal was made the convenience of the acceptors, or in Washington, where the note in to facilitate the negotiation of the suit was drawn and handed to the draft. But it is a controlling fact maker to execute, who took it to that before the acceptance had any his home in New York, where he operation— before the instrument be- 27 — CoNTR.\CTS, Vol. 2 1176 CONTRACTS. 418 of the parties.'^ Each successive indorser is Hable according to the law of the place where he indorses and delivers the note, every in- dorsement being treated as a nev^ substantive contract.'^ § 1176. Negotiability. — The negotiability of a bill or note is, as a general rule, determined by the law of the place of per- formance, although when the place of the contract and the place of performance coincide, it is usually said that the negotiability of a bill or note is to be determined by the law of the place where it is made." But when the bill or note is made payable in a came a bill, the defendants sent it to Illinois for the purpose of having it negotiated in that state — negotiated, it must be presumed, at such a rate of discount as by the law of that state was allowable." A bill drawn in Indiana and accepted in Michigan to be discounted in Indiana, and to be paid in Michigan, held to be an Indiana contract. Farmers' Nat. Bank v. Sutton Mfg. Co., 52 Fed. 191. "Home V. Rouquette, L. R. 3 Q. B. Div. 514; Hibernia &c. Bank v. Lacombe, 84 N. Y. 367, 38 Am. Rep. 518. See also, Arnett v. Pinson, 33 Ky. L. 36, 108 S. W. 852. "Potter V. Brown, 5 East 124; Downer v. Chesebrough, 36 Conn. 39, 4 Am. Rep. 29 (promissory note in- dorsed in blank) ; Powers v. Lynch, 3 Mass. 77 (where Judge Sedgwick held that the indorser contemplates performance as to himself, according to the law of the place where he makes the indorsement) ; Prentiss v. Savage, 13 Mass. 20; Carnegie v. Morrison, 2 Mete. (Mass.) 381; Bax- ter Nat. Bank v. Talbot, 154 Mass. 213, 28 N. E. 163, 13 L. R. A. 52n (promissory note indorsed in another state) ; Freese v. Brownell, 35 N. J. L. 285, 10 Am. Rep. 239; Chemical Nat. Bank v. Kellogg, 183 N. Y. 92, 75 N. E. 1103. 2 L. R. A. (N. S.) 299, 111 Am. St. 717; Artisans' Bank v. Park Bank, 41 Barb. (N. Y.) 599; Hicks v. Brown, 12 Johns. (N. Y.) 142. "Every indorsement, accommo- dation or otherwise, is essentially an original contract, equivalent to a new note or bill, in favor of the holder and the acceptor or obligor." Trabue V. Short, 18 La. Ann. 257. See also, Byers v. Tritch, 12 Colo. App. 377, 55 Pac. 622; Mackintosh v. Gibbs, 81 N. J. L. 577, 80 Atl. 554; Lee v. Selleck, 33 N. Y. 615. In an action upon a bill of exchange payable in New York but drawn in New Gren- ada, it was held that the drawer was liable under the law of the place of performance, and the indorser under the place of contract, that is, where the indorsement was made. Everett V. Vendryes, 19 N. Y. 436. "De La Chaumette v. Bank of England, 2 B. & Ad. 385, 9 L. J. K. B. (O. S.) 239; Robertson v. Burde- kin, 6 Sc. Sess. Cas. (2d series) 17; Vermont Bank v. Porter, 5 Day (Conn.) 320, 5 Am. Dec. 157; Bowne V. Olcott, 2 Root (Conn.) 353; Lock- wood V. Lindsey, 6 App. Cas. (D. C.) 396; Stacy v. Baker, 2 111. 417; Evans V. Anderson, 78 111. 558. Compare Roosa V. Crist, 17 111. 450, 65 Am. Dec. 679; Hakes v. National Bank, 61 111. App. 501, afifd., 164 111. 273, 45 N. E. 444; Yeatman v. Cullen, 5 Blackf. (Ind.) 240; Krieg v. Palmer Nat. Bank (Ind. App.), 95 N. E. 613 (certificate of deposit) ; Tyler v. Trabue, 8 B. Mon. (Ky.) 306; Cope V. Daniel, 9 Dana (Ky.) 415; Stevens V. Gregg, 89 Ky. 461, 12 S. W. 775; Carlyle v. Chambers, 4 Bush (Ky.) 272, 96 Am. Dec. 304 ; Murray v. Gib- son, 2 La. Ann. 311 ; Newton v. Gray, 10 La. Ann. 67; Ory v. Winter, 4 Mart. (La.) (N. S.) 277; Chartres v. Cairnes, 4 Mart. (La.) (N. S.) 1, 5 Cow. 578n ; Warren v. Copelin, 4 Mete. (Mass.) 594; Strawberry Point Bank V. Lee, 117 Mich. 122, 75 N. W. 444; Owen v. Moody, 29 Miss. 79; Stix V. Mathews, 63 Mo. 371, 75 Mo. 96; Clark v. Porter, 90 Mo. App. 143 (instrument made in Indian Terri- 419 CONFLICT OF LAWS. §1177 different jurisdiction from that in which it is executed it is held by the weiL;ht of authority that its negotiability is determined by the lex solutionis. ''■* § 1177. Rule in federal and a few state courts. — The fed- eral courts and a few of the state courts, however, refuse to be bound by the decisions of other jurisdictions upon questions con- cerning the common-law or general commercial principles unless predicated on a statutory enactment defining the elements of a negotiable instrument, which local statute, by its definition, em- braces terms similar to those found in the note in question as affecting its negotiability. Consequently, in the jurisdictions so holding, the courts of the state where the case is tried will be governed by their own precedents even though the courts of the state where the bill or note was payable have interpreted the com- mon law otherwise." This doctrine, however, is contrary to the decision in some of the state courts. The rule adopted in a number of the state courts is that when it becomes nec- essary to determine the common law of another state, the de- tory and payable in Arkansas, the law in Indian Territory and Arkan- sas being the same) ; Bliss v. Hough- ton, 13 N. H. 126; Reddick v. Jones, 28 N. Car. 107, 44 Am. Dec. 68. See Curtiss V. Hutchinson, 4 Ohio Dec. 19. Compare Logue v. Smith. Wright (Ohio) 10; Ludlow v. Bingham, 4 Dall. (Pa.) 47, 1 L. ed. 736; Barrett V. Dodge, 16 R. I. 740, 19 Atl. 530, 27 Am. St. Ill; Harrison v. Edwards, 12 Vt. 648, 36 Am. Dec. 364; Wilson V. Lazier, 11 Grat. (Va.) 477. See, however, Macintosh v. Gibbs, 81 N. J. L. 577, 80 Atl. 554, same case, 74 Atl. 708 (which assumes that the ne- gotiability of a note made and pay- able in California is to be determined by the laws of New Jersey, the place where it was indorsed. The lex fori determines whether a bona fide holder of such bill or note may main- tain an action on it in his own name. Warren v. Copelin, 4 Mete. (Mass.) 594. The lex fori also controls the form of pleas of want of considera- tion. Williams v. HajTies, 27 Iowa 251. 1 Am. Rep. 268. ''Compare Sturdivant v. Memphis Nat. Bank, 60 Fed. 730, 9 C. C. A. 256; Lowry v. Andreas, 20 111. App. 521 ; Sykes v. Citizens' Nat. Bank, 78 Kans. 688, 98 Pac. 206, 19 L. R. A. (N. S.) 665 and note; Shoe &c. Nat. Bank v. Wood, 142 Mass. 563, 8 N. E. 753; Emanuel v. White. 34 Miss. 56,69 Am. Dec. 385; Miller v. :\Iavfield. Zl Miss. 688; Harrison v. Pike. 48 Miss. 46; Howenstein v. Barnes, 5 Dill. (U. S.) 482, Fed. Cas. No. 6786; Brabston V. Gibson, 9 How. (U. S.) 263, 13 L. ed. 131. See also, Houston v. Keith (Miss.), 56 So. 336; Stark v. Olsen, 44 Nebr. 646, 63 N. W. Zl ; Freeman's Bank v. Ruckman, 16 Grat. (Va.) 126. See, however. Woods v. Ridley, 11 Humph. (Tenn.) 194. " State Nat. Bank v. Cudahy Pack- ing Co., 126 Fed. 543; Second Nat. Bank V. Basuier, 65 Fed. 58. 12 C. C. A. 517, 27 U. S. App. 541; Farmers' Nat. Bank v. Sutton Mfg. Co., 52 Fed. 191, 3 C. C. A. 1, 6 U. S. App. 312, 17 L. R. A. 595. In the above case it is said : "Upon such questions (questions as to the general com- mercial law) courts of the United States, in exercising jurisdiction con- current with that of the state courts, have always asserted an independence § 11/8 CONTRACTS. 420 cisions of the courts of final resort of that state will be fol- lowed, ordinarily at least, regardless of precedents to the contrary in the state where the trial is held, and that this rule applies to the law merchant as well as to other branches of the common law."'^ § 1178. Law governing liability of parties to bills and notes. — The following are the general rules usually appli- cable as to the different parties to bills and notes : The liability of a drawer of a bill of exchange is governed by the laws of the of judgment as to the state law, even if they differ with the state Supreme Court. But where the question is a new one with the federal courts it is their rule, as it is their duty, to give weight to the decisions of the courts of the state whose law they are ad- ministering." Guernsey v. Imperial Bank of Canada, 188 Fed. 300, 110 C C. A. 278; Roads v. Webb, 91 Maine 406, 40 Atl. 128, 64 Am. St. 246. To same effect. First Nat. Bank v. Lock-Stitch Fence Co., 24 Fed. 221; Phipps v. Harding, 70 Fed. 468, 17 C. C. A. 203, 30 L. R. A. 513; Van Vleet v. Sledge, 45 Fed. 743; Bank of Edgefield v. Farmers' Co- operative Mfg. Co., 52 Fed. 98, 2 C. C. A. 6Z7, 2 U. S. App. 282, 18 L. R. A. 201; Pattillo v. Alexander, 105 Ga. 482, 30 S. E. 644; Franklin v. Twogood, 25 Iowa 520, 96 Am. Dec. 7Z; Faulkner v. Hart, 82 N. Y. 413, Z7 Am. Rep. 574; St. Nicholas Bank V. State Nat. Bank, 128 N. Y. 26, 27 N. E. 849, 13 L. R. A. 241 ; Third Nat. Bank v. National Bank of Com- merce (Tex. Civ. App.), 139 S. W. 665; Brooklyn City & N. R. Co. v. National Bank, 102 U. S. 14, 26 L. ed. 61 ; Gates v. First Nat. Bank, 100 U. S. 239, 25 L. ed. 580; Swift v. Tyson, 16 Pet. (U. S.) 1, 10 L. ed. 865. See also, note in 6 L. R. A. (N. S.) 212. "'Roe v. Gerome, 18 Conn. 138; Sykes v. Citizens' Nat. Bank, 78 Kans. 688, 98 Pac. 206, 19 L. R. A. (N. S.) 665n. (The question involved was as to the negotiability of a prom- issory note.) "We must presume, in the absence of proof to the contrary, that the common law prevails in Pennsylvania. However, a decision of the highest court of that state upon some branch of the common law may not be in harmony with the decisions in this state. But if the highest judicial tribunal of that state has declared that a note like that in suit may be taken by a good-faith purchaser for value freed from all defenses, that is the law of that state. And this would be true whether the decisions of that state were under a statute or not. A foreign court could question the decisions of the courts of this state upon any branch of the com- mon law only upon the ground that it did not agree with the promises or the reasoning of the court. If the foreign court may question such a decision, it might question a decision of the courts of this state in inter- preting one of its own statutes, but it is conceded that this the foreign court cannot do. The foreign court is the only tribunal competent to de- cide upon the common or the statute law of its own state, and we fail to see any reason for permitting such decisions to be questioned in the one case, and not permitting them to be questioned in the other." Midland Steel Co. v. Citizens' Nat. Bank, 34 Ind. App. 107, 72 N. E. 290; Lim- rick Nat. Bank v. Howard, 71 N. H. 13, 51 Atl. 641, 93 Am. St. 489, pointing out a distinction between decisions of the United States courts and of state courts. The New Hampshire court said: "While it is doubtless competent for the Supreme Court of the United States, in a case before it, to determine the law gov- erning the interpretation of Vermont contracts without regard to the de- cision applicable in that state, it 421 CONFLICT OF LAWS. 1 178 State where the bill is drawn/^ that of the maker of a note by the law of the place where it is made and to be performed/* that of an irregular indorser, in most jurisdictions, by the place where the instrument is delivered/'* that of the acceptor by the law of the place where the bill is payable or where the contract of accept- ance is to be performed/** that of an indorser by the law of the would be little less than usurpation for this court to decide in this case what, in its opinion, ought to be the commercial law of Vermont." See also, note in 6 L. R. A. (N. S.) 212. " Allen V. Kemble, 6 Moo. P. C. 314, 13 Jur. 287; Potter v. Brown, 5 East 124; Story v. McKay, 15 Ont. 169; Crawford v. Branch Bank, 6 Ala. 12, 41 Am. Dec. 33; Sullivan v. Ger- man Nat. Bank, 18 Colo. App. 99, 70 Pac. 162; Thorp v. Craig, 10 Iowa 461 ; Wood v. Gibbs, 35 Miss. 559, dis- tinguishing Fellows V. Harris, 12 Sm. 6 M. (Miss.) 462. Compare Coff- man v. Bank of Kentucky, 41 Miss. 212, 90 Am. Dec. 371 ; Price v. Page, 24 Mo. 65; Bouldin v. Page, 24 Mo. 594; Page v. Page, 24 Mo. 595; Freese v. Brownell. 35 N. J. L. 285, 10 Am. Rep. 239; Lcnnig v. Ralston, 23 Pa. St. 137; Ilazelhurst v. Kean, 4 Yeates (Pa.) 19. In the case of Amsinck v. Rogers, 189 N. Y. 252, 82 N. E. 134, 12 L. R. A. (N. S.) 875, 121 Am. St. 858, the reason for the rule is stated as follows : "The drawer of such a bill does not con- tract to pay the money in the foreign place on which it is drawn, but only guarantees its acceptance and pay- ment in that place by the drawee, and agrees, in default of such payment, upon due notice, to reimburse the holder in principal and damages at the place where he entered the con- tract. His contract is regarded as made at the place where the bill is drawn, and as to its form and nature and the obligation and effect thereof is governed by the law of that place in regard to the payee and any subse- quent holder." "Phipps V. Harding, 17 C. C. A. 203, 70 Fed. 468, 30 L. R. A. 513; Patent Title Co. v. Stratton, 89 Fed. 174; Prvor v. Wright. 14 Ark. 189; Bailev v. Dcvinc, 123 Ga. 653, 51 S. E. 603, 107 Am. St. 153; Crouch v. Hall, 15 111. 263; Hunt v. Standart, 15 Ind. 33, 77 Am. Dec. 79; Goddin V. Shipley, 7 B. Mon. (Ky.) 575; Stickney v. Jordan, 58 Maine 106, 4 Am. Rep. 251; Creston National Bank v. Salmon, 117 Mo. App. 506, 93 S. W. 288; Little v. Riley, 43 N. H. 109; New York L. Ins. Co. v. Mc- Kellar, 68 N. II. 326, 44 Atl. 516; Lee V. Selleck, 33 N. Y. 615; Brab- ston V. Gibson, 9 How. (U. S.) 263, 13 L. ed. 131; Calhoun County v. Galbraith, 99 U. S. 214, 25 L. ed. 410. Compare Ballard v. Webster (Sup. Ct. Spec. T.), 9 Abb. Pr. (N. Y.) 404; Baird v. Vines, 18 S. Dak. 52, 99 N. W. 89; First National Bank v. Doeden, 21 S. Dak. 400, 113 N. W. 81. '" Byers v. Tritch, 12 Colo. App. 377, 55 Pac. 622 ; Smith v. Myers, 107 111. 126, 69 N. E. 858; Nashua Sav. Bank v. Sayles, 184 Mass. 520, 69 N. E. 309, 100 Am. St. 573 ; Lawrence V. Bassett, 5 Allen (Mass.) 140; Cherry v. Sprague, 187 Mass. 113, 72 N. E. 456. 67 L. R. A. 33n, 105 Am. St. 381 ; Hackley Nat. Bank v. Barn-, 139 Wis. 96, 120 N. W. 275. See, however, Montana Coal & Coke Co. V. Cincinnati Coal & Coke Co., 69 Ohio St. 351. 69 N. E. 613, which makes his liability depend upon the place where the note is payable. Co- lumbia Finance & Trust Co. v. Pur- cell, 142 Fed. 984, applying Pennsyl- vania law holds that the place where the regular indorser signed deter- mines the nature of his contract. '"Roe V. Jerome, 18 Conn. 138: Webster v. Howe Mach. Co., 54 Conn. 394. 8 Atl. 482 ; Mason v. Dou- say, 35 111. 424, 85 Am. Dec. 368; Hunt v. Standart, 15 Ind. 33, 77 Am. Dec. 79; Midland Steel Co. v. Citi- zens' National Bank, 34 Ind. App. 107, 72 N. E. 290; Sykes v. Citizens' National Bank, 78 Kans. 688, 98 Pac. s^ 11/9 CONTRACTS. 422 place of the indorsement in the absence of any agreement to the contrary.*^ § 1179. Necessity of demand and protest as a condition precedent. — Likewise the necessity of demand and protest as 206, 19 L. R. A. (N. S.) 665n; Mus- son V. Lake, 4 How. (U. S.) 262, 11 L. ed. 967; Kelly v. Smith, 1 Met. (Ky.) 313: Fiske v. Foster. 10 Mete. (Mass.) 597. See also, Barney v. Xewcomb, 9 Cush. (Mass.) 46; Frazier v. Warfield, 9 Smedes & M. (Miss.) 220; Lienkauf Pkg. Co. v. Hanev (Miss.), 46 So. 626; Freese V. Brownell, 35 N. J. L. 285, 10 Am. Rep. 239; Weller v. Goslin (Sup. Ct. Tr. T.), 32 Misc. (N. Y.) 36, 65 N. Y. S. 232; Frierson v. Galbraith, 12 Lea (Term.) 129; Duerson's Admr. v. Alson, 27 Grat. (Va.) 229; See also, Johnson County Sav. Bank V. Kramer, 42 Ind. App. 548, 86 N. E. 84; Price v. Gatliff's Exrs., 33 Ky. L. 324, 110 S. W. 332; Vennum v. Mertens, 119 Mo. App. 461, 95 S. W. 292. "^^ Allen V. Kemble, 6 Moo. P. C. 314, 13 Jur. 287; Dunn v. Adams, Parmeter & Co., 1 Ala. 527, 35 Am. Dec. 42 ; Givens v. Western Bank, 2 Ala. 397 ; Lowry's Admr. v. Western Bank, 7 Ala. 120; Miller v. Mcln- tyre. 9 Ala. 638; McDougald's Admr. V. Rutherford, 30 Ala. 253; Cullum V. Casey & Co., 9 Port. (Ala.) 131, 33 Am. Dec. 304; Greathead v. Wal- ton, 40 Conn. 226; Levy v. Cohen, 4 Ga. 1; Cox v. Adams, 2 Ga. 158; Humphreys v. Collier, Beecher's Breese (111.) 297; Schuttler v. Piatt, 12 III. 417; Maxwell v. Van Sant, 46 111. 58; Dunnigan v. Stevens, 122 111. 396, 13 N. E. 651, 3 Am. St. 496; Studebaker Bros. Mfg. Co. v. Hinsey, 88 111. App. 234; Belford v. Bangs, 15 111. App. 76; Crouch v. Hall, 15 111. 263; Holbrook v. Vib- bard, 2 Scam. (111.) 465; Bond v. Bragg, 17 111. 69; Krieg v. Palmer Nat. Bank (Ind. App.), 95 N. E. ^13 ; Ycatman v. Cullen, 5 Blackf . Clnd.) 240; Hunt v. Standart, 15 Ind. ?3, 77 Am. Dec. 79; Brown v. Bunn, 16 Ind. 406; Mendenhall v. Gately, 18 Ind. 149; Rose v. Park Bank, 20 Ind. 94, 83 Am. Dec. 306; Patterson v. Carrell, 60 Ind. 128; Bernard v. Barry, 1 Greene (Iowa) 388; National Bank v. Green, 33 Iowa 140; Huse v. Hamblin, 29 Iowa 501, 4 Am. Rep. 244; Chatham Bank V. Allison, 15 Iowa 357; Briggs v. Latham, 36 Kans. 255, 13 Pac. 393, 59 Am. Rep. 546; Carlisle v. Chambers, 4 Bush (Ky.) 268, 96 Am. Dec. 304; Young V. Harris, 14 B. Mon. (Ky.) 556, 61 Am. Dec. 170; Hyatt v. State Bank, 8 Bush (Ky.) 193; Finer v. Clary, 17 B. Mon. (Ky.) 645; Short V. Trabue, 4 Mete. (Ky.) 299; Weil V. Sturgus, 23 Ky. L. 644, 63 S. W. 602; Kuenzi v. Elvers, 14 La. Ann. 391, 74 Am. Dec. 434; Powers v. Lynch, 3 Mass. 77; Glidden v. Cham- berlin, 167 Mass. 486, 46 N. E. 103, 57 Am. St. 479; Williams v. Wade, 1 Mete. (Mass.) 82; Dow v. Po- well, 12 N. H. 49; Chemical Nat. Bank v. Kellogg, 87 App. Div. (N. Y.) 633, 84 N. Y. S. 1121, affd. 183 N. Y. 92, 75 N. E. 1103, 2 L. R. A. (N. S.) 299, 111 Am. St. 717; Aymar v. Sheldon, 12 Wend. (N. Y.) 439, 27 Am. Dec. 137; Cook v. Litchfield, 9 N. Y. 279, Seld. Notes (N. Y.) 195; Lee V. Selleck, 33 N. Y. 615 ; Artisans' Bank V. Park Bank, 41 Barb. (N. Y.) 599; Cowperthwaite v. Sheffield, 1 Sandf. (N. Y.) 416, affd. 3 N. Y. 243 ; Hatcher v. McMorine, 15 N. Car. 122; Case v. Heffner, 10 Ohio 180; Conahan v. Smith, 2 Disney (Ohio) 9, 13 Ohio Dec. 6; Illinois Bank v. Brady, 3 McLean (U. S.) 268; Dun- das V. Bowler, 3 McLean (U. S.) 397, Fed. Cas. No. 4141 ; In re Pulsi- fer, 9 Biss. (U. S.) 487, 14 Fed. 247; Slacum v. Pomery, 6 Cranch (U. S.) 221; Nichols v. Porter, 2 W. Va. 13, 94 Am. Dec. 501. See, however, Mullen v. Morris, 2 Pa. St. 85, which holds that the indorser is liable for interest on a bill according to the law of the place on which it is drawn. To the same effect, see Peck v. Mayo, 14 Vt. 33, 39 Am. Dec. 205. It has also been held, that when an in- dorser goes temporarily into another jurisdiction merely as a matter of con- 423 CONFLICT OF LAWS. II80 a condition precedent to holding the drawer and indorser of a foreign bill liable is governed by the law of the place where the bill is drawn or indorsed.** It would also seem to follow that the time, manner and the sufficiency of demand and protest should be governed by the law of the place where the bill is drawn or in- dorsed, and it has been so held,**^ but it is generally held that such matters are governed by the law of the place where the bill is payable.*'' § 1180. Necessity for notice of dishonor. — The necessity for notice of dishonor is determined by the law of the place where the bill is drawn or indorsed, regardless of where it is payable.®' On the other hand, it is held as a general rule that the law gov- venience in conducting the negotia- tion the state of his residence will be deemed the place of his contract. Vanzant v. Arnold, 31 Ga. 210. See also, Briggs v. Latham, 36 Kans. 255, 13 Pac. 393, 59 Am. Rep. 546; Curtis V. Leavitt, 15 N. Y. 9. "* Crawford v. Branch Bank, 6 Ala. 12, 41 Am. Dec. 33 ; Greathead v. Walton, 40 Conn. 226 ; Bond v. Bragg, 17 111. 69; Belford v. Bangs, 15 111. App. 76; Gay v. Rainey, 89 111. 221, 31 Am. Rep. 76; Hunt v. Standart, 15 Ind. 33, 77 Am. Dec. 79; Thorp v. Craig, 10 Iowa 461 ; Huse v. Ham- blin, 29 Iowa 501, 4 Am. Rep. 244; Young V. Harris, 14 B. Mon. (Ky.) 556, 61 Am. Dec. 170; Finer v. Clary, 17 B. Mon. (Ky.) 645; Powers V. Lvnch, 3 Mass. 77; Glidden v. Chamberlin, 167 Mass. 486, 46 N. E. 103. 57 Am. St. 479; Price v. Page, 24 Mo. 65; Aymar v. Sheldon, 12 Wend. (N. Y.) 439, 27 Am. Dec. 137; Allen v. Merchants' Bank, 22 Wend. (X. Y.) 215, 34 Am. Dec. 289; Carroll v. Upton, 2 Sand. (N. Y.) 171, affd. 3 N. Y. 272; Arti- sans' Bank v. Park Bank, 41 Barb. (N. Y.) 599; Amsinck v. Rogers. 103 App. Div. (N. Y.) 428, 93 N. Y. S. 87, 189 N. Y. 252, 82 N. E. 134, 12 L. R. .'\. (N. S.) 875, 121 Am. St. 858; Warner v. Citizens' Bank, 6 S. Dak. 152. 60 N. W. 746; Green v. Bond, 5 Sneed (Tenn.) 328; Ray- mond V. Holmes. 11 Tex. 54; Mus- son V. Lake, 4 How. (U. S.) 262, 11 L. ed. 967; Nichols v. Porter, 2 W. Va. 13, 94 Am. Dec. 501. "Amsinck v. Rogers, 103 App. Div. (N. Y.) 428, 93 N. Y. S. 87, 189 N. Y. 252, 82 N. E. 134. 12 L. R. A. (N. S.) 875, 121 Am. St. 858, in which the courts suggest that in a case like this there would be no great difficul- ty in forwarding with the bill in- structions for its proper protest. See also, Warner v. Citizens' Bank, 6 S. Dak. 152, 60 X. W. 746 ; Green v. Bond, 5 Sneed (Tenn.) 328. "* Donegan v. Wood, 49 Ala. 242, 20 Am. Rep. 275 ; Guernsey v. Imperial Bank of Canada. 188 Fed. 300, 110 C. C A 278; Wooley v. Lvon. 117 111. 244, 6 N. E. 885, 57 Am. Rep. 867; Allen v. Harrah, 30 Iowa 363; McClane v. Fitch, 4 B. Mon. (Ky.) 599; Finer v. Clary, 17 B. Mon. (Ky.) 645; Commercial Bank v. Barksdale, 36 Mo. 563 ; Sylvester v. Crohran, 138 N. Y. 494, "34 X. E. 273 ; Carter v. Union Bank, 7 Humph. (Tenn.) 548, 46 Am. Dec. 89; Pierce V. Indscth, 106 U. S. 546, 27 L. ed. 254, 1 Sup. Ct. 418. "Belford V. Bangs, 15 111. App. 76; Bonds V. Bragg. 17 111. 69; Gay v. Rainey, 89 III. 221, 31 Am. Rep. 76; Thorp V. Craig, 10 Iowa 461 ; Young V. Harris. 14 B. Mon. (Ky.) 556. 61 Am. Dec. 170; Allen v. Merchants' Bank. 22 Wend. (X. Y.) 215. 34 Am. Dec. 289; Artisans' Bank v. Park Bank. 41 Barb. (X. Y.) 599; Doug- las V. Bank of Commerce, 97 Tenn. 133, 36 S. W. 874. ii8i CONTRACTS. 424 erning the time, manner and the sufficiency of notice of dishonor is controlled by the law of the place where the bill is payable.^^ § 1181. Time of payment — Days of grace. — The time at which a bill or note matures concerns the performance of the obli- gation and is governed by the place where it is made payable and not by the law of the place where it is drawn or indorsed.^^ Thus where a draft drawn and indorsed in New York on a bank in Connecticut was by its terms payable on a specified day and it was presented and protested for nonpayment on that day, it was held in the suit in New York that the law of Connecticut governed, according to which it was payable without grace when due.®^ § 1182. Interest. — It is well settled, as a general rule, that the lex loci contractus must govern the rate of interest where the contract does not provide for its payment in another jurisdiction, or when the contract has nothing on its face, and there is nothing attending the making of it, indicating that it is to be performed in another jurisdiction.^^ This is true notwithstanding prelimi- nary negotiations may have been conducted in another state.®" But if a security made in one country or state is payable in another, the rate of interest, if nothing is said on the subject, is to be regu- lated by the law of the place of payment.®^ Where a promissory ^ See, Rothschild v. Currie, 1 Q. S. 87, 189 N. Y. 252, 82 N. E. 134, 12 B. 43; Hirschfeld v. Smith, L. R. 1 L. R. A. (N. S.) 875, 121 Am. St. 858; C. P. 340 ; Guernsey v. Imperial Bank Pawcatuck Nat. Bank v. Barber, 22 of Canada, 188 Fed. 300, 110 C. C. R. I. 73, 46 Atl. 1095; Bank of A. 278; Wooley v. Lyon, 117 111. Washington v. Triplett, 1 Pet. (U. 244. 6 N. E. 885, 57 Am. Rep. 867; S.) 25, 7 L. ed. 37; Bryant v. Edson, 8 Brown v. Jones, 125 Ind. 375, 25 N. Vt. 325, 30 Am. Dec. 472 ; Blodgett v. E. 452, 21 Am. St. 227. See, however, Durgin, 32 Vt. 361 ; Walsh v. Dart, 12 Aymar v. Sheldon, 12 Wend. (N. Wis. 709; Second Nat. Bank v. Y.) 439, 27 Am. Dec. 137; Amsick v. Smith, 118 Wis. 18, 94 N. W. 664. Rogers. 103 App. Div. (N. Y.) 428, ** Bowen v. Newell, 13 N. Y. 290, 93 N. Y. S. 87. 189 N. Y. 252, 82 N. 64 Am. Dec. 550, Seld. Notes (N. Y.) E. 134, 12 L. R. A. (N. S.) 875, 121 87. See also, Guernsey v. Imperial Am. St. 858. Bank of Canada, 188 Fed. 300, 110 C. *' Kilgore V. Bulkley, 14 Conn. 362 ; C. A. 278. Thorp V. Craig, 10 Iowa 461; Vidal "" Austin v. Imus, 23 Vt. 286. V. Thompson, 11 Mart. (La.) 23; '°Knoup. v. Carver, 74 N. J. Eq. Cribbs V. Adams, 13 Gray (Mass.) 449, 70 Atl. 660. 597 ; Burnham v. Webster, 19 Maine " See Campbell v. Nichols, 33 N._ J. 232; Bank of Orange County v. Col- L. 81 (where the chief justice by, 12 X. H. 520; Bowen v. Newell, [Beasley] declared the rule to be 13 N. Y. 290, 64 Am. Dec. 550, Seld. now entirely indisputable, when the Notes (N. Y.) 87; Amsinck v. Rogers, contract was made in one state, and 103 App. Div. (N. Y.) 428, 93 N. Y. the place of payment, in good faith, 425 CONFLICT OF LAWS. § 1 183 note was drawn in Montreal, payable to parties residing in England, "with interest until paid in England," it was held that the plaintiff, on a judgment obtained in New York, was entitled to the English rate of interest, and not to the rate in Lower Can- ada.''^' § 1183. Different rates — Parties may stipulate either. — When, at the place of contract, the rate of interest differs from that of the place of payment, the parties may stipulate for either rate, and the contract will govern, the parties having the right of election as to the law of which place their contract is to be gov- erned."^ Any rate of interest authorized by the lex loci con- tractus or lex loci solutionis will usually be recognized and en- forced in the courts of other governments even though the laws of the latter would make such rate usurious.*** Where the bor- made in another) ; Cutler v. Wright, 22 N. Y. 472; Fanning v. Consequa, 17 Johns. (N. Y.) 511, 8 Am. Dec. 442 ; Peck v. Mayo, 14 Vt. ZZ, 39 Am. Dec. 205 (where the notes sued on were made at Montreal, Canada, where the makers resided, payable in Albany, New York). In Depau v. Humphreys, 8 Mart. (La.) (N. S.) 1, it was decided that where a con- tract is made in one country, to be performed in another, where the rate of interest is higher than at the place of contract, it may stipulate the high- er rate of interest. Chancellor Kent, 2 Kent's Com. 461, declared that this elementary principle was the re- ceived doctrine at Westminster Hall, citing Thompson v. Powles, 2 Simons 194. See, however, Akers v. Demond, 103 Mass. 318. "Scofield V. Day, 20 Johns. (N. Y.) 102. Compare with Chapman v. Robertson, 6 Paige (N. Y.) 627, 31 Am. Dec. 264, where the debtor bor- rowed money in England upon a bond and mortgage executed in New York, on lands in New York, at the New York rate of interest ; it was held that the usury law of England was no defense. If the contract was made in New York, upon a mortgage there, it was not a violation of the English usury law, though the money was made payable to a creditor in England. A contract is not void for usury which is made in Wisconsin with a New York Bank, for the pay- ment in Wisconsin to said bank of a sum of money, with interest at ten per cent., though the New York law avoids all contracts which pro- vide for payment of more than seven per cent, interest, if the Wisconsin law makes no such provision, the law of the place of performance govern- ing in determining the validity of the contract. Kennedy v. Knight, 21 Wis. 340, 94 Am. Dec. 543. ''Arnold v. Potter, 22 Iowa 194; Goode V. Colorado Inv. Loan Co., 16 N. Mex. 461, 117 Pac. 856; Bul- lard V. Thompson, 35 Tex. 313; Du- gan V. Lewis, 79 Texas 246, 14 S. W. 1024, 12 L. R. A. 93, 23 Am. St. 332 ; Cromwell v. County of Sac, 96 U. S. 51, 24 L. ed. 681; Andrews v. Pond, 13 Pet. (U. S.) 65, 10 L. ed. 61; Miller v. Tiffanv, 1 Wall. (U. S.) 298, 17 L. ed. 540. 'T apprehend that a contract made, bona fide, in one country and to be performed in another, and stipulating the higher rate of interest of the latter, is not usurious with reference to the laws of the former country. A contract, to be usurious, by our law, must not onh' be made here, but to be per- formed here." Peck v. Mayo, 14 Vt. ZZ. 39 Am. Dec. 205. " Walker v. Lovitt, 250 111. 543. 95 N. E. 631 (note made and delivered § I 1 84 CONTRACTS. 426 rower resided in Ohio, the laws of which state, at the time, allowed parties to contract for any rate of interest not exceeding ten per cent., and the lender resided in Pennsylvania, where six per cent, was the legal rate, it was held that the parties, on a loan of money made in Ohio, had a right to stipulate in the note for interest at ten per cent, per annum, and make the note payable in Pennsylvania without thereby rendering the contract usurious.*' § 1 184. In selecting rate must act in good faith. — This rule is subject, however, to the qualification that the parties act in good faith, and that the form of the transaction is not adopted to disguise its real character and in order to evade the penalty of a usurious contract at the other place.®'' Moreover, when the rate of interest is unconscionable and is against public policy and good morals, the forum will refuse to permit the enforcement of the obligation, although the lex loci contractus places no statutory limit on the rate of interest that may be charged.*^ Where a resident of New York made a note there, dated, payable and in- tended to be discounted there, specifying no rate of interest, and the note was first negotiated in another state, at a rate of interest lawful there, but unlawful in New York, it was held invalid for usury.^® § 1185. Insurance contracts — Generally. — So far as the conflict of laws is concerned, insurance contracts are governed by the same general principles that apply to contracts in general.®^ If the parties to an insurance contract are in different jurisdictions, the place where the last act is done which is necessary to complete in Missouri and which was payable Car. 882, 21 S. E. 924, 47 Am. St. generally) ; McAllister v. Smith, 17 841. 111. 328, 65 Am. Dec. 651. In Georgia a " Engert v. Chadwick (Utah), note payable in Massachusetts which 120 Pac. 223. is usurious under the laws of Georgia ""^ Dickinson v. Edwards, 11 N. Y. will not be enforced in Georgia to 573,7 Abb. N. C. (N. Y.) 65, 58 How. the extent of usury. Kilcrease v. Pr. (N. Y.) 24, ZZ Am. Rep. 671; Johnson, 85 Ga. 600, 11 S. E. 870. Jewell v. Wright, 30 N. Y. 259, 9 '^Kilgore V. Dempsey, 25 Ohio St. Abb. Pr. (N. S.) (N. Y.) 399n, 18 413, 18 Am. Rep. 306. Abb. Pr. (N. Y.) 80, 27 How. Pr. ''Hollis V. Covenant &c. Loan (N. Y.) 481, 86 Am. Dec. 372. Assn., 104 Ga. 318, 31 S. E. 215; Mil- '* Missouri State Life Ins. Co. v. ler V. Tiffany, 1 Wall. (U. S.) 298, Lovelace, 1 Ga. App. 446, 58 S. E. 17 L. ed. 540. See also, Akers v. 93; Kavanaugh v. Supreme Court Demond, 103 Mass. 318; Meroney v. of Royal League, 158 Mo. App. 234, Atlanta Building &c. Assn., 116 N. 138 S. W. 359. 427 CONFLICT OF LAWS. II86 or give validity to the contract is the place where the contract is entered into.^ § 1 186. Authority of agent limited to taking applications — Exceptions. — Consequently when the authority of the agent who solicits the insurance is limited to taking and forwarding ap- plications to the home office, there to be accepted or rejected, the contract will be deemed to have been made in the jurisdiction where the home office is situated, when the policy issued substan- tially conforms to the application and is sent directly to the insured or his agent and there is nothing to show that the policy was not to become a binding obligation until actually delivered to the insured.^ However, when the policy of insurance mailed by the insurer to the insured varies materially from the applica- tion,^ or where the contract is not considered as executed until re- * Carrollton Furniture Mfg. Co. v. American Credit Indemnity Co., 115 Fed. n, 52 C. C A. 671, afFd.. 124 Fed. 25, 59 C. C. A. 545; Ford v. Buckeve State Ins. Co., 6 Bush (Ky.)"l33. 99 Am. Dec. 663; Millard V. Bravton, 177 Mass. 553, 59 N. E. 436, 52" L. R. A. 117, 83 Am. St. 294; Haas V. Mutual Life Ins. Co., 90 Nebr. 808, 134 N. W. 937; McElroy V. Metropolitan Life Ins. Co., 84 Nebr. 866, 122 N. W. 27, 23 L. R. A. (N. S.) 968n; Manhattan Life Ins. Co. V. Warwick, 20 Grat. (Va.) 614, 3 Am. Rep. 218; Galloway v. Stand- ard Fire Ins. Co., 45 W. Va. 237, 31 S. E. 969. The assignment of a pol- icy and the parties to whom it may be assigned may be regulated by the laws of the state where the assign- ment was made. Western Life In- demnity Co. V. Rupp, 147 Ky. 489, 144 S. W. 743. ' State Mut. F. Ins. Assn. v. Brink- lev Stave &c. Co.. 61 Ark. 1, 31 S. W. 157, 29 L. R. A. 712, 54 Am. St. 191; Tuttle V. Iowa Traveling Men's Assn., 132 Iowa 652, 104 N. W. 1131, 7 L. R. A. (N. S.) 223n; Com. Mut. F. Ins. Co. V. Knabe &c. Mfg. Co., 171 Mass. 265. 50 X. E. 516; Davis v. Aetna Mut. Fire Ins. Co., 67 N. H. 218. 34 Atl. 464: Orient Ins. Co. v. Rudolph. 69 N. J. Eq. 570, 61 Atl. 26; Northampton Mut. Live Stock Ins. Co. V. Tuttle, 40 N. J. L. 476; Hyde v. Goodnow, 3 N. Y. 266; Huntley v. Merrill, 32 Barb. (X. Y.) 626; Galloway v. Standard Fire Ins. Co., 45 W. Va. 237, 31 S. E. 969. See also. Commonwealth Mut. Fire Ins. Co. v. Fairbank Canning Co., 173 Mass. 161, 53 X. E. 111. See, however, the case of Rose v. Kimber- ly &c. Co., 89 Wis. 545, 62 X. W. 526, 21 L. R. A. 556, 46 Am. St. 855, which admits the general rule but holds that a receiver of the company cannot maintain an action against the insured to recover an assessment when the company was prohibited from transacting business within the state.. ' Born V. Home Ins. Co., 120 Iowa 299, 94 N. W. 849; Supreme Lodge K. of P. v. Mever, 198 I'. S. 508, 49 L. ed. 1146, 25 Sup. Ct. 754. In the above case by the terms of the cer- tificate the agreement of defendant was subject not only to the condi- tions subscribed to by the member in his application, but to the further conditions in agreement hereinafter named. It was held that the con- tract did not become complete until the member had accepted the certifi- cate with these conditions, and since this acceptance took place in Xew York the contract was a New York contract. See also. Provident Sav. Life Assur. Soc. v. Hadlev. 102 Fed. 856, AZ C. C. A. 25. Compare Hart- ii87 CONTRACTS. 428 ceived and inspected by the insured/ the contract is not complete until the receipt and acceptance by the insured of the policy.^ § 1187. Policy mailed to agent of insurer. — The foregoing general rule and its exceptions also apply when the contract of insurance is mailed to the agent of the insurer and by him to be delivered to the insured in another state. When the contract is complete in every respect at the time it is mailed to the agent the state or country from which the contract was mailed will be re- garded as the place of the contract.** But where the agent to whom the policy is mailed is required to countersign the same' and the policy does not take effect until so countersigned, the con- tract has been regarded as made in the state in which the agent countersigned the same.® ford Steam Boiler Inspection Ins. Co. V. Lasher Stocking Co., 66 Vt. 439, 29 Atl. 629 (letter accompany- ing policy suggesting but not requir- ing change held not to change the place of contract). * Swing V. Wellington, 44 Ind. App. 445, 89 N. E. 514. See also, Inger- soll V. Mutual Life Ins. Co., 156 111. App. 568. ' Swing V. Dayton, 124 App. Div. (N. Y.) 58, 108 N. Y. S. 155. The above case holds that a contract of insurance mailed in Ohio to the in- sured in Pennsylvania was to be gov- erned by the laws of the latter state. The contract expressly provided that it should become a mutual agree- ment upon its acceptance by the in- sured. See also, Haas v. Mutual Life Ins. Co., 90 Nebr. 808, 134 N. W. 937. 'French v. People, 6 Colo. App. 311, 40 Pac. 463; Gibson v. Connecti- cut Fire Ins. Co., 11 Fed. 561 ; Com- monwealth Mut. Fire Ins. Co. v. Will- iam Knabe & Co. Mfg. Co., 171 Mass. 265, 50 N. E. 516; Davis v. Aetna Mut. Fire Ins. Co., 67 N. H. 218, 34 Atl. 464; Western v. Genesee Mut. Ins. Co., 12 N. Y. 258; Fidelity Mut. L. Assn. V. Harris, 94 Tex. 25, 57 S. W. 635, 86 Am. St. 813; Baker v. Spaulding Bros., 71 Vt. 169, 42 Atl. 982; Galloway v. Standard Fire Ins. Co., 46 W. Va. 237, 31 S. E. 969. ' DoUan v Supreme Council (Mich.), 113 N. W. 10, 13 L. R. A. (N. S.) 424, overruled on another point on rehearing, 152 Mich. 266, 116 N. W. 383, 16 L. R. A. (N. S.) 555; Orient Ins. Co. v. Rudolph, 69 N. J. Eq. 570, 61 Atl. 26; Hardiman V. Fire Assn. of Philadelphia, 212 Pa. 383, 61 Atl. 990. ® Continental Life Ins. Co. v. Webb, 54 Ala. 688; Curtiss v. ^tna Life Ins. Co., 90 Cal. 245, 27 Pac. 211, 25 Am. St. 114; Pomeroy v. Man- hattan L. Ins. Co., 40 111. 398; Crom- well V. Royal Canadian Ins. Co., 49 Md. 366, ZZ Am. Rep. 258 (The ulti- mate question in this case related to the attachment of the proceeds.) ; Daniels v. Hudson River Fire Ins. Co., 12 Cush. (Mass.) 416, 59 Am. Dec. 192; Heebner v. Eagle Ins. Co., 10 Gray (Mass.) 131, 69 Am. Dec. 308; Antes v. State Ins. Co., 61 Nebr. 55, 84 N. W. 412; Todd v. State Ins. Co., 3 Week. No. Cas. (Pa.) 330; Curnow V. Phoenix Ins. Co., Zl S. Car. 406, 16 S. E. 132, 34 Am. St. 766 (The ultimate question was as to the place where the cause of ac- tion arose.) ; Fidelity Mut. Life Assn. V. Harris, 94 Tex. 25, 57 S. W. 635, 86 Am. St. 813; Manhattan Life Ins. Co. V. Warwick, 20 Grat. (Va.) 614, 3 Am. Rep. 218. (The ultimate ques- tion was as to the place where pre- miums were payable.) See also, Northwestern Mut. L. Ins. Co. v. Elliott, 7 Sawy. (U. S.) 17, 5 Fed. •429 CONFLICT OF LAWS. § I188 § 1188. Delivery and payment of first premium. — The policy may also provide that it is not to take effect until its de- livery, in which case the place of delivery is the place of the contract.* This is also true where the policy provides that it shall not take effect until the payment of the first premium or the payment of the first premium and delivery. When a contract of insurance does not become a binding obligation until the payment of the first premium the place of the payment is the place of the contract.^'' § 1189. Parties designating the state whose laws are to govern. — It must be remembered, however, that the parties to an insurance contract may stipulate therein that it is made with reference to the laws of a designated state, in which event the question of what law governs is no longer open to inquiry, it 225 ; Miller v. Maryland Casualty Co., 193 Fed. 343 (accident policy de- livered and countersigned in Penn- sylvania). 'Meagher v. ^Etna Ins. Co., 20 U. ;C. Q. B. 607; Carrollton Furniture 'Mfg. Co. V. American Credit In- demnity Co., 115 Fed. n, 52 C. C. A. 671 ; In re Pennsvlvania Ins. Co., 22 Fed. 109; Knights' Templar &c. L. Indemnity Co. v. Berry, 50 Fed. 511, 1 C. C. A. 561 ; Thwing v. Great Western Ins. Co., Ill Mass. 93; Re- liance Mut. Ins. Co. v. Sawyer, 160 Mass. 413, 36 N. E. 59; Millard v. Bravton, 177 Mass. 533. 59 N. E. 436, 52 L. R. A. 117, 83 Am. St. 294; Perry v. Dwelling-House Ins. Co., 67 N. H. 291, ZZ Atl. 731, 68 Am. St. 668; Equitable Life Assur. Soc. V. Clements, 140 U. S. 226, 35 L. ed. 497, 11 Sup. Ct. 822; Wood v. Cas- cade F. &c. Ins. Co.. 8 Wash. 427, 40 Am. St. 917; In re Breitung's Es- tate, 78 Wis. Zl, 46 N. W. 891. See also, Prudential Life Ins. Co. v. Fusco's Admr., 145 Ky. 378, 140 S. W. 566 (delivered and to be per- formed in Kentucky) ; Wilde v. Wilde, 209 Mass. 205, 95 N. E. 295. See, however. Perry v. Dwelling- House Ins. Co., 67 N. H. 291, Z2> Atl. 731, 68 Am. St. 668; Equitable Life Assur. Soc. v. Clements, 140 U. S. 226. 35 L. ed. 497, 11 Sup. Ct. 822. "Mut. Ben. Life Ins. Co. v. Rob- inson, 54 Fed. 580, affd. in 58 Fed. 723, 7 C. C. A. 444, 19 U. S. App. 266, 22 L. R. A. 325 ; Albro v. Manhattan Life Ins. Co., 119 Fed. 629, affd., 127 Fed. 281, 62 C. C. A. 213; Knights' Templar & IM. Life Indemnitv Co. v. Berry, 50 Fed. 511, 1 C C. A. 561, 4 U. S. App. 353, affg. 46 Fed. 439; Northwestern Mut. Life Ins. Co. V. Elliott, 5 Fed. 225. 7 Sawy. (U. S.) 17; Rose v. IMutual Life Ins. Co., 240 111. 45, 88 N. E. 204 (hold- ing actual delivery unnecessary where policy provides that it shall not become binding until the first premium has been paid and the policy issued) ; Ford v. Buckeye State Ins. Co., 6 Bush (Ky.) 133, "99 Am. Dec. 663; Grevenig v, Washington Life Ins. Co., 112 La. 879, 36 So. 790, 104 Am. St. 474 (policy merely provided that it should not be binding until the first premium had been paid") ; Millard v. Bravton, 177 Mass. 533, 59 N. E. 436, 52 L. R. A. 117. 83 Am. St. 294; Cravens v. New York Life Ins. Co., 148 Mo. 583, 50 S. W. 519. 53 L. R. A. 305. 71 Am. St. 628, affd. in 178 U. S. 389. 44 L. ed. 1116, 20 Sup. Ct. 962; Horton v. New York Life Ins. Co., 151 :\Io. 604. 52 S. W. 356; LTmberger v. Modern Brotherhood of Am. (Mo. App.), 144 S. W. 898; McElrov v. Metropolitan Life Ins. Co., 84 Nebr. 866. 122 N. W. 27, 2Z L. R. A. (N. S.) 968n; ii89 CONTRACTS. 430 having been settled by the parties themselves. ^^ The liberty of the parties in this respect is, however, limited by the well settled rule that the forum will not give effect to such provision if in any particular case the contract so providing is contrary to the public policy of the forum. The laws of the state may establish a rule of public policy which overrides the freedom of contract of the parties and make waivers of statutory provisions inef- fectual." Pool V. New England Mutual Life Ins. Co., 123 App. Div. (N. Y.) 885, 108 N. Y. S. 431 ; Watt v. Gideon, 8 Pa. Dist. 395, 22 Pa. Co. Ct. 499; Metropolitan Life Ins. Co. v. Brad- ley, 98 Tex. 230, 82 S. W. 1031, 68 L. R. A. 509; Northwestern Mutual Life Ins. Co. v. McCue (U. S.), 32 Sup. Ct. 220; Equitable Life Assur. Soc. V. Clements, 140 U. S. 226, 35 L. ed. 497, 11 Sup. Ct. 822; Mutual Life Ins. Co. v. Cohen, 179 U. S. 262, 45 L. ed. 181, 21 Sup. Ct. 106; Mutual Life Ins. Co. v. Hill, 193 U. S. 551, 48 L. ed. 778, 24 Sup. Ct. 538. "Mutual Life Ins. Co. v. Hill, 118 Fed. 708, 55 C C. A. 536; Mutual Life Ins. Co. v. Cohen, 179 U. S. 262, 45 L. ed. 181, 21 Sup. Ct. 106. Compare the two foregoing cases with Polk V. Mutual Reserve Fund Life Assn., 137 Fed. 273; Russell v. Grigsby, 94 C C A. 61, 168 Fed. 577; Eagle V. New York Life Ins. Co. (Ind. App.), 91 N. E. 814; Green v. Security &c. Ins. Co., 158 Mo. App. 277, 140 S. W. 325 ; Williams v. Mu- tual Reserve Fund Life Assn., 145 N. Car. 128, 58 S. E. 802, 13 Am. & Eng. Ann. Cas. 51 ; Griesemer v. Mut. Life Ins. Co., 10 Wash. 202, 38 Pac. 1031, followed in Griesemer v. Mut. Life Ins. Co., 10 Wash. 211, 38 Pac. 1034. See also. New York Life Ins. Co. V. Smith, 139 Ala. 303, 35 So. 1004; Jones v. New York Life Ins. Co. (Okla.), 122 Pac. 702 (ap- plication provided that contract was to be construed according to law of New York). See, however, Pietri v. Seguenot, 96 Mo. App. 258, 69 S. W. 1055; Umberger v. Modern Brother- hood of America (Mo. App.), 144 S. W. 898. "Albro V. Manhattan Life Ins. Co., 119 Fed. 629, affd., 127 Fed. 281, 62 C. C. A. 213; Mutual Benefit Life Ins. Co. V. Robison, 54 Fed. 580, affd., 58 Fed. 723, 7 C. C. A. 444; 19 U. S. App. 266, 22 L. R. A. 325; New York Life Ins. Co. v. Russell, n Fed. 94, 23 C. C. A. 43, 40 U. S. App. 530; Cravens v. New York Life Ins. Co., 148 Mo. 583, 50 S. W. 519, 53 L. R. A. 305, 71 Am. St. 628, affd., 178 U. S. 389, 44 L. ed. 1116, 20 Sup. Ct. 962; Horton v. New York Life Ins. Co., 151 Mo. 604, 52 S. W. 356. See also. Swing v. Munson, 191 Pa. 582, 43 Atl. 342, 58 L. R. A. 223, 71 Am. St. 112; McDermott v. Pru- dential Ins. Co., 7 Luz. Leg. Reg. (Pa.) 246; Owen v. Bankers' Life Ins. Co., 84 S. Car. 253, 66 S. E. 290, 137 Am. St. 845, holds that a provision in a policy of insurance that it be governed by the laws of a foreign jurisdiction will not be given effect in the face of one statute which provides that contracts made by a foreign corpora- tion within the state of South Car- olina shall be deemed and held to be contracts made within the state and of another which stipulates that all and every such foreign corpora- tion shall be subject to the laws of South Carolina in like manner as corporations chartered under domes- tic laws. See also, cases cited in pre- ceding notes, and Fidelity Mut. L. Ins. Co. V. Miazza, 93 Miss. 18, 46 So. 817, 136 Am. St. 534. In this connection it should be borne in mind that in applying the principles of the common law the federal court while bound by the interpretation which a state court puts on its own statute is not bound by the de- cisions of local courts on questions of general, common or commercial law. In the latter case the federal 431 CONFLICT OF LAWS. § I 190 § 1190. Validity — Policy usually governed by the law of the place. — As in tlie case of contracts generally, the validity of a contract of insurance is usually to be determined by the law of the place where the contract is made/^ and this has been held true even though the property insured was situated in another jurisdiction/^ And where a life insurance policy was made and to be performed in one state, was issued by the company in a second jurisdiction and the insured died and suit was brought on the policy in a third state it was held that the law of the state where the contract of insurance was made and to be performed controlled." § 1191. Construction and rights of the parties. — As to the construction, interpretation, and effect, it has been said that this is controlled largely by the intention of the parties and that they have the power to establish the place of the contract so far as its construction and the rights of the parties thereto are concerned.^^ courts are at liberty to exercise their own judgment. See Washburn &c. Mfg. Co. V. ReHance Marine Ins. Co., 179 U. S. 1, 45 L. ed. 49, 21 Sup. Ct. 1. "Pattison V. ^lills, 2 BHgh (N. S.) 520; Knights' Templar &c. Life In- demnity Co. V. Berrv, 1 C. C. A. 561, 50 Fed. 511; Hicks v. National Life Ins. Co., 60 Fed. 690, 9 C. C. A. 215; National Union v. Marlow, 74 Fed. 775, 21 C. C. A. 89; Equitable Life Assur. Soc. V. Nixon, 81 Fed. 796, 26 C. C. A. 6(20; Equitable Life Assur. Soc. V. Trimble, 83 Fed. 85, 27 C. C. A. 404. See also. State Mut. F. Ins. Assn. v. Brinklev Stave &c. Co., 61 Ark. 1, 31 S. W". 157, 29 L. R. A. 712, 54 Am. St. 191 ; Fletcher V. New York Life Ins. Co., 4 Mc- Crary (U. S.) 440, 13 Fed. 526; Wall V. Equitable Life Assur. Soc, 32 Fed. 273. See Goodwin v. Provident Sav. L. Assur. Assn., 97 Iowa 226, 66 N. W. 157. 32 L. R. A. 473, 59 Am. St. 411; Ford v. Buckeve State Ins. Co.. 6 Bush (Ky.) 133. '99 Am. Dec. 663; Robinson v. Hurst, 78 Md. 59, 26 Atl. 956. 20 L. R. A. 761 44 Am. St. 266; Reliance IMut. Ins. Co. V. Sawyer. 160 Mass. 413, 36 N. E. 59; Voorheis v. People's Mut. Ben. Soc, 91 ]\Iich. 469. 51 N. W. 934; Price V. Connecticut Mut. L. Ins. Co., 48 Mo. App. 281 ; Hyde v. Good- now, 3 N. Y. 266; Ward v. Tucker, 7 Wash. 399, 35 Pac 126; Wood v. Cascade F. &c Ins. Co., 8 Wash. 427, 40 Am. St. 917; Seamans v. Knapp, Stout &c. Co., 89 Wis. 171, 61 N. W. 757, 27 L. R. A. 357, 46 Am. St. 825. However, it has been held that where an insurance contract is to be per- formed in a country different from that in which the contract is made the law of the place of performance governs. London Assurance v. Com- panhia De Moagens, 167 U. S., 149, 17 Sup. Ct. 785, 42 L. ed. 113. The lex fori applies when the contract violates the public policy of the state of the forum as expressed in its stat- utes. Seamans v. Zimmerman, 91 Iowa 363, 59 N. W. 290. " Columbia Fire Ins. Co. v. Kin- yon, 2)7 N. J. L. 2)2) ; Hyde v. Good- now, 3 N. Y. 266; Seamans v. Knapp, Stout Co., 89 Wis. 171, 61 N. W. 757, 27 L. R. A. 357. 46 Am. St. 825. "Clarev v. Union Cent. Life Ins. Co., 143 Kv. 540. 136 S. W. 1014, ZZ L. R. A. (N. S.) 881. " Greer v. Poole, L. R. 5 Q. B. D. 272; Penn Mut. L. Ins. Co. v. Me- § 1 192 CONTRACTS. 432 In the absence of any such agreement on the part of the parties the contract is usually to be construed according to the law of the place of performance/^ The law of the place where the con- tract is made controls as to its construction, interpretation, and effect in the absence of any agreement between the parties by which another jurisdiction is designated as the law governing the construction and when no place of performance is indicated/* § 1192. Contracts of carriers. — The rule that contracts are to be construed according to the laws of the state where made, unless it is presumed from their tenor that they were entered into with a view to the laws of some other state, applies to the con- tract of a carrier to transport goods to a party residing in a dif- ferent state. The rights of the parties will be determined by the law of the place where the contract is made, unless contrary to public policy of the forum.^^ Where a railroad company received chanics' Sav. Bank, 72 Fed. 413, 19 C. C. A. 286, 38 L. R. A. 33n ; Gibson v. Connecticut Fire Ins. Co., 11 Fed. 561 ; Canton Ins. Office v. Woodside, 90 Fed. 301, ZZ C. C. A. 63; Mutual L. Ins. Co. V. Dingley, 100 Fed. 408, 49 L. R. A. 132, 40 C. C. A. 459; Gracie V. Browne, 2 Caines (N. Y.) 30; London Assur. v. Companhia De Moagens, 167 U. S. 149, 42 L. ed. 113, 17 Sup. Ct. 785; Griesemer v. Mutual L. Ins. Co., 10 Wash. 211, 38 Pac. 1034. " Progresso S. S. Co. v. St. Paul &c. Ins. Co., 146 Cal. 279, 79 Pac. 967; Mutual Life Ins. Co. v. Hill, 97 Fed. 263, 49 L. R. A. 127, 38 C. C. A. 159; Mutual Life Ins. Co. v. Ding- ley, 100 Fed. 408, 49 L. R. A. 132, 40 C. C. A. 459; Grangers' Life Ins. Co. V. Brown, 57 Miss. 308, 34 Am. Rep. 446; Milhous v. Johnson (Sup. Ct. Gen. T.), 51 Hun (N. Y.) 639, 21 N. Y. St. 382, 4 N. Y. S. .199; Seiders v. Merchants' Life Assn., 93 Texas 194, 54 S. W. 753; London Assurance Co. v. Companhia De Moagens do Barreio, 167 U. S. 149, 42 L. ed. 113, 17 Sup. Ct. 785. See also, Union Cent. Life Ins. Co. v. Caldwell, 68 Ark. 505, 58 S. W. 355; Marden v. Hotel Owners' Ins. Co., 85 Iowa 584, 52 N. W. 509, 39 Am. St. 316; Seyk v. Millers' Nat. Ins. Co., 74 Wis. €1, 41 N. W. 443, 3 L. R. A. 523n. "Franklin Life Ins. Co. v. Mor- rell, 84 Ark. 511, 106 S. W. 680; Northwestern Steamship Co. v. Mar- itime Ins. Co., 161 Fed. 166; Canton Ins. Office V. Woodside, 90 Fed. 301, 2)2) C. C. A. (i2) ; Supreme Council &c. V. Getz, 112 Fed. 119, 50 C. C. A. 153; Cobb V. Lime Rock Fire & Ma- rine Ins. Co., 58 Maine 326; Horton V. Home Ins. Co., 122 N. Car. 498, 29 S. E. 944, 65 Am. St. 717; Hardi- man v. Fire Assn. of Philadelphia, 212 Pa. 383, 61 Atl 990. See also, Dan- iels V. Hudson River Fire Ins. Co., 12 Cush. (Mass.) 416, 59 Am. Dec. 192; King-Brick Mfg. Co. v. Phoe- nix Ins. Co., 164 Mass. 291, 41 N. E. 277. *" Bertonneau v. Southern Pac. Co. (Cal. App.), 120 Pac. 53; Hale v. New Jersey Steam Navigation Co., 15 Conn. 539, 39 Am. Dec. 398, Southern Express Co. v. Hanaw, 134 Ga. 445, 67 S. E. 944, 137 Am. St. 227; Brockway v. American Exp. Co., 168 Mass. 257, 47 N. E. 87; McKinstry v. Chicago &c. R. Co. (Mo. App.), 134 S. W. 1061 ; Herf &c. Chemical Co. v. Lack- awana Line, 100 Mo. App. 164, 12> S. W. 346; Hurst v. St. Louis & S. F. R. Co., 117 Mo. App. 25, 94 S. W. 433 CONFLICT OF LAWS. § I 1 93 in Indiana goods consigned to Leavenworth, in Kansas, and car- ried them to Chicago, in Illinois, and there delivered them to another railroad company, in whose custody they were destroyed by fire, the Supreme Court of Illinois held that the case must be governed by the law of Indiana, by which the first company was not liable for the loss of goods after they passed into the custody of the next carrier in the line of transit-^" In an action brought in New York to recover for the loss of a trunk and its contents, where the baggage was delivered to the carrier in Pennsylvania to be transported to New York, the question was whether the stat- ute of Pennsylvania, defining the liability of railroad corpora- tions upon contracts entered into by them for the transmission of baggage, formed a part of the contract, and it was held that the rights of the parties were to be determined by the laws of New York where the delivery was to be made.^^ § 1193. Connecting lines of carriers — The English rule. — A common carrier has power to make a contract to carry to a place beyond the terminus of his own route and thereby render himself liable as such for the whole distance." When a carrier 794; Atchison T. & S. F. R. Co. v. tie from a place in Iowa to Chicago). Rodgers, 16 N. Mex. 120, 113 Pac The contract was held to be governed 805 ; Cannaday v. Atlantic Coast Line by the law of Iowa as to its validity R. Co., 143 N. Car. 439, 55 S. E. 836, and interpretation, and the restriction 8 L. R. A. (N. S.) 939, 118 Am. St. as to liability was valid. Hazel v. 821 ; Adams Express Co. v. Green, Chicago &c. R. Co., 82 Iowa 477, 112 Va. 527, 12 S. E. 102. See also, 48 N. W. 926, validity of a contract Gilliland v. Southern R. Co., 85 S. made in another state, but void un- Car. 26, 67 S. E. 20, 137 Am. St. der the laws of Iowa. 861; Shelton v. Canadian Northern ^Curtis v. Delaware, L. & W. R. R. Co., 189 Fed. 153. Co., 74 N. Y. 116, 30 Am. Rep. 271. '^Pennsylvania Co. v. Fairchild, 69 To same eflfect, Southern Express 111. 260 ; Talbott v. Merchants' Des- Co. v. Gibbs, 155 Ala. 303, 46 So. 465, patch Transportation Co., 41 Iowa 18 L. R. A. (N. S.) 489, 130 Am. St. 247, 20 Am. Rep. 589. Goods were 24. See also, Adams Express Co. v. shipped from Connecticut to Iowa and Green, 112 Va. 527, 12 S. E. 102. lost in Illinois, for which the carrier "Swift v. Pacific Mail Steamship was sued in Iowa, where the statute Co., 106 N. Y. 206, 12 N. E. 583; prohibits a common carrier from re- Weed v. Saratoga &c. R. Co., 19 stricting his liability by contract. It Wend. (N. Y.) 534; Pennsylvania was held that as the exceptions lim- R. Co. v. Berry, 68 Pa. St. 272; iting liability were valid in the state Moses v. Union Pac. R. Co. (Tex.), where the contract was made, and 41 S. W. 154; Ogdensburg &c. R. valid in Illinois, where the loss oc- Co. v. Pratt. 22 Wall. (U. S.) 123, curred, the contract was valid, and 22 L. ed. 827. 49 How. Pr. 84; Farm- there could be no recovery for the ers' &c. Bank v. Champlain Transp. loss. McDaniel v. Chicago &c. R. Co.. 23 Vt. 186. 56 Am. Dec. 68; 4 Co., 24 Iowa 412 (shipment of cat- Elliott R. R. (2d ed.), § 1434. The 28 — Contracts, Vol. 2 § 1 195 CONTRACTS. 434 contracts to carry goods to a point beyond the terminus of his own, line, and there deUver them, he may be Hable not only for his own negligence, but also for that of the connecting carriers throughout the route. The connecting carriers are, in such cases, often regarded as his agents, for whose acts he is held respon- sible." In England it has been uniformly held that the receipt of goods marked for a place beyond the line of the carrier who re- ceives them implies a contract on his part to carry them to their final destination, although no connection in business is shown with Supreme Court of Connecticut has held the contrary doctrine. Nauga- tuck R. Co. V. Waterbury Button Co., 24 Conn. 468; Elmore v. Naugatuck R. Co., 23 Conn. 457, 63 Am. Dec. 143. Waite, C. J., in delivering a dissenting opinion, said : "The mail, question involved, is, whether a rail- road corporation has power to make a valid contract for the transporta- tion of goods, to any place beyond the termination of their road. * * * If the present railroad corporations do not possess the power to make such a contract, as incidental to their general powers, in my opinion, the business wants of the community, and especially of mercantile men, must soon demand legislative inter- ference and a grant of the requisite authority. Indeed, I do not see how the great business operations of the country can safely be carried on without it." In Root v. Great West- ern R. Co., 45 N. Y. 524, in speaking of the contract to transport over other lines, the court said: "Such an undertaking may be established by express contract, or by showing that the company held itself out as a carrier for the entire distance, or received freight for the entire dis- tance, or other circumstances indi- cating an understanding that it was to carry through." The way bill showing the destination of the goods furnishes evidence, whether looked upon as a contract or as a declara- tion, or an admission simply. Og- densburg &c. R. Co. v. Pratt, 22 Wall. (U. S.) 123, 22 L. ed. 827, 49 How._ Pr. 84. "As a general rule, the bill of lading given by a carrier to and accepted by the shipper of goods contains the contract for car- riage, and in the absence of fraud, imposition or mistake, the parties are concluded by its terms as there ex- pressed." Per Bradley, J., Jennings V. Grand Trunk Railway of Canada, 127 N. Y. 438. ^Illinois Cent. R. Co. v. Foulks, 191 111. 57, 60 N. E. 890, affg. 92 111. App. 391; Elgin &c. R. Co. v. Bates Mach. Co., 98 111. App. 311, affd., 200 111. 636, 66 N. E. 326, 93 Am. St. 218; Beard v. St. Louis &c. R. Co., 79 Iowa 527, 44 N. W. 803 ; Atchison v. Roach, 35 Kans. 740, 12 Pac. 93, 57 Am. Rep. 199; Bryan v. Memphis &c. R. Co.. 11 Bush (Ky.) 597; Louis- ville &c. R. Co. v. Cooper, 21 Ky. L. 1644, 56 S. W. 144; Popham v. Bar- nard, 77 Mo. App. 619; Missouri Pac. R. Co. V. Crowell Lumber &c. Co., 51 Nebr. 293, 70 N. W. 964; Missouri Pacific R. Co. v. Twiss, 35 Nebr. 267, 53 N. W. 76, 37 Am. St. 437; Chi- cago &c. R. Co. V. Western Hay &c. Co., 2 Nebr. (unoff.) 784, 90 N. W. 205; Nashua Lock Co. v. Worcester &c. R. Co., 48 N. H. 339, 2 Am. Rep. 242; Baltimore &c. R. Co. v. Camp- bell, 36 Ohio St. 647, 38 Am. Rep. 617 (suit to recover the value of baggage lost) ; Post v. Southern R. Co., 103 Tenn. 184, 52 S. W. 301, 55 L. R. A. 481; Gulf &c. R. Co. v. Short (Tex. Civ. App.), 51 S. W. 261 ; Galveston &c. R. Co. v. Allison, 59 Texas 193; Newell v. Smith, 49 Vt. 255. See also, Pennsylvania R. Co. v. Anoka Nat. Bank, 108 Fed. 482, 47 C. C. A. 454; Gwyn Harper Mfg. Co. V. Carolina Cent. R. Co., 128 N. Car. 280, 38 S. E. 894. 435 CONFLICT OF LAWS, § 1 194 Other carriers beyond, and although the price for the through transportation is not paid in advance." § 1194. The American rule. — Some of the states in this country have adopted the Enghsh rule," but the general doctrine '* See Muschamp v. Lancaster &c. R. Co., 8 M. & W. 421 (leading case), where a parcel was delivered at Lan- caster, to the Lancaster and Preston Junction Railway Co., directed to a person in Derbyshire. The person who brought it to the station oflfered to pay the freight charges, but the clerk said that they had better be paid at the other end on receipt of the parcel. The Lancaster and Pres- ton Junction Railway Co. was known to be the proprietor of the line only as far as Preston. The parcel was lost after it was forwarded from Preston. Held, that the Lancaster and Preston company was liable. In the court below the learned judge stated to the jury, in summing up, "that where a common carrier takes into his care a parcel directed to a particular place, and does not by positive agreement limit his responsi- bility to a part only of the distance, that is prima facie evidence of an undertaking on his part to carry the parcel to the place to which it is di- rected : and that the same rule ap- plied, although that place were be- yond the limits within which he in general professed to carry on his trade as a carrier." On a rule nisi for a new trial on the ground of misdirection it was held in the court of exchequer that there was no mis- direction. Lord Abinger, C. B., said: "The carriage-money being in this case one undivided sum, rather sup- ports the inference, that although these carriers carry only a certain distance with their own vehicles, they make subordinate contracts with the other carriers, and are partners inter se as to the carriage-money ; a fact of which the owner of the goods could know nothing, as he only pays the one entire sum at the end of the journey, which they afterward di- vide as they please." Collins v. Bristol &c. R. Co., 11 Exch. 790; Bristol &c. R. Co. v. Collins, 7 H. L. Cas. 194; Mytton v. Midland R. Co., 4 H. & N. 615. The same rule applied to a through contract for the carriage of a passenger and his bag- gage. Watson V. Ambergate &c. R. Co., 3 Eng. L. & Eq. 497; Scothorn V. South Staffordshire R. Co., 8 Exch- 341 ; Coxon v. Great Western R. Co., 5 H. & N. 274; Crouch v. London &c. R. Co., 25 Eng. L. & Eq. 287; Houston R. Co. v. McFadden (Tex. Civ. App.), 40 S. W. 216; Missouri K. &c. R. Co. v. Mazzie, 29 Tex. Civ. App. 295, 68 S. W. 56. "Bird v. Southern R. Co., 99Tenn. 719, 42 S. W. 451. 63 Am. St. 856. The Supreme Court of Illinois would seem to hold that a railroad com- pany which receives goods to carry, marked for a particular destination, although beyond its own line, is prima facie bound to carry them to that place and deliver them there, and that an agreement to that effect is implied by the reception of the goods thus marked. Illinois Cent. R. Co. v. Frankenberg, 54 111. 88. 5 Am. Rep. 92; Illinois Cent. R. Co. v. Johnson, 34 111. 389; Erie R. Co. V. Wilcox, 84 111. 239, 25 Am. Rep. 451. The courts of Alabama, Flor- ida, Georgia, New Hampshire, South Carolina and Tennessee also hold that in the absence of a special con- tract, limiting his liability to his own line, the initial carrier remains liable for the safe carriage to and delivery of the goods at their final destina- tion. Mobile &c. R. Co. v. Cope- land, 63 Ala. 219, 35 Am. Rep. 13; Bennett v. Filyaw, 1 Fla. 403 ; Haw- ley V. Screven, 62 Ga. 347, 35 Am. Rep. 126 (trunk lost) ; Nashua Lock Co. V. Worcester &c. R. Co., 48 N. H. 339, 2 Am. Rep. 242; Bradford v. South Carolina R. Co., 7 Rich. L. (S. Car.) 201, 62 Am. Dec. 411; Louisville &c. R. Co. v. Weaver, 9 Lea (Tenn.) 38. 42 Am. Rep. 654 (loss of baggage). "The mere ac- ceptance of goods by a common car- rier marked to a designation [des- tination] beyond the terminus of its § 1 194 CONTRACTS. 436 as to transportation by connecting lines approved by the United States Supreme Court, and by a majority of the state courts, amounts to this : that each road, confining itself to its common- law liability, is only bound, in the absence of a special contract, to safely carry over its own route and safely deliver to the next suc- ceeding carrier, but that any one of the companies may agree that over the whole route its liability shall extend. In the absence of a special agreement to that effect, such liability will not attach.^^ The owner of goods lost or damaged while in the custody of the carrier may, in this country, seek his remedy against the inter- line, as a matter of law imports no D. 168; Clyde v. Hubbard, 88 Pa. St. absolute undertaking upon the part 358; Harris v. Grand Trunk R. Co., of the carrier beyond the end of its 15 R. I. 371, 5 Atl. 305; St. Louis &c. road, but is a matter of evidence to R. Co. v. Cohen (Tex. Civ. App.), 55 be submitted to the jury, from which, S. W. 1123; Hunter v. Southern Pac. in connection with other evidence R. Co., 76 Tex. 195, 13 S. W. 190 (ex- produced, they are to determine, as press exemption) ; Myrick v. Mich- a question of fact, the real engage- igan Cent. R. Co., 107 U. S. 102, 27 ment entered into." Per Day, J., in L. ed. 325, 1 Sup. Ct. 425; Michigan Mulligan v. Illinois Cent. R. Co., 36 Cent. R. Co. v. Mineral Springs Mfg. Iowa 181. Co., 16 Wall. (U. S.) 318, 21 L. ed. "" Elmore v. Naugatuck R. Co., 23 297 ; Ogdensburg &c. R. Co. v. Pratt, Conn. 457, 63 Am. Dec. 143; Felton 22 Wall. (U. S.) 123, 22 L. ed. 827, 49 v. Central &c. R. Co., 114 Ga. 609, How. Pr. 84 (the contract there was 40 S. E. 746; Pennsylvania Co. v. to carry through the whole route); Dickson, 31 Ind. App. 451, 67 N. McConnell v. Norfolk &c. R. Co., 86 E. 538; Pittsburgh &c. R. Co. v. Va. 248, 9 S. E. 1006 (express ex- Morton, 61 Ind. 539, 28 Am. Rep. emption). "If it be true that an 682; Hill v. Burlington &c. R. Co., 'initial carrier,' by which expression 60 Iowa 196, 14 N. W. 249; Berg v. we understand the carrier first re- Atchison &c. R. Co., 30 Kans. 561, ceiving the goods, is bound for the 2 Pac. 639; Hoffman v. Union Pac. default of connecting carriers, it is R. Co., 8 Kans. App. 379, 56 Pac. because of a contract binding him to 331; Louisville &c. R. Co. v. Tarter, that effect. Such a contract may be 19 ky. L. 229, 39 S. W. 698; Louis- expressed or implied from the facts ville &c. R. Co. v. Cooper, 19 Ky. L. connected with the transaction. If 1152, 42 S. W. 1134; Richmond &c. the 'initial carrier' enters into no R. cio. V. Thomas, 19 Ky. L. 1488, 43 contract to that effect, he is not so S. W. 466; Burroughs v. Norwich bound. If he does so bind himself, &c. R. Co., 100 Mass. 26, 1 Am. Rep. he is liable for the default of the 78- Nutting v. Connecticut &c. R. connecting carrier." Per Beck, J., Co., 1 Gray (Mass.) 502; St. Clair in Beard v. St. Louis &c. R. Co., 79 v. Kansas City &c. R. Co., 77 Miss. Iowa 527. In Missouri the act of 789, 28 So. 957; Illinois Cent. R. issuing a receipt or bill of lading for Co.' v. Kerr, 68 Miss. 14, 8 So. 330; property to be carried beyond its line Grover &c. Baker Co. v. Missouri is evidence of such a contract. Dim- Pacific R. Co., 70 Mo. 672, 35 Am. mitt v. Kansas City &c. R. Co., 103 Rep. 444; Van Santvoord v. St. John, Mo. 433, 15 S. W. 761 (statutory 6 Hill (N. Y.) 157; Root v. Great regulation). "There is really no Western R. Co., 45 N. Y. 524; Knott great difference between the English v. Raleigh &c. R. Co., 98 N. Car. 73, and American doctrine on this sub- 3 S. E. 735, 2 Am. St. 321 ; Stevens ject. The one holds that, to exempt V. Lake Shore &c. R. Co., 11 Ohio C. a carrier from liability beyond its 437 CONFLICT OF LAWS. § II95 mediate carrier in fault, as well as against the carrier with wliom the contract for through carriage was in the first place made." § 1195. "Contract tickets." — Where a passenger on a steamer from Liverpool to Boston purchased a ticket entitled "Passenger Contract Ticket," on which was a stipulation that the owners of the ship did not hold themselves responsible for loss or damage to baggage, it was held in Massachusetts that the contract was a British contract, and, being valid where made, would be enforced in Massachusetts, although, if made in the latter place, it would be void as against public policy.^^ So where a party purchai^ed a ticket which entitled her to passage from a point in California to a point in Kansas it was held that the laws of California governed."" § 1196. Maritime contracts. — A ship in the open sea is re- garded by the law of nations as a part of the territory whose flag such ship carries. Courts have held in many cases that the validity of maritime contracts is to be determined by the law of terminus there must be a special con- 487; Davis v. New York, 0. & W. R. tract to that end. The other, that Co., 70 ^linn. 37. 72 N. W. 823; to make the first carrier responsible Beede v. Wisconsin Cent. R. Co., VU there must be a special contract to Alinn. 36, 95 N. W. 454, 101 Am. that end. Both admit that the car- St. 390; Alabama &c. R. Co. v. Lam- rier is not bound to go beyond the kin, 78 Miss. 502, 30 So. 47; Halliday terminus, but that he may do so; v. St. Louis &c. R. Co., 74 Mo. 159, and if he undertakes to do so he is 41 Am. Rep. 309; Omaha & R. V. R. bound by his undertaking." Per Co. v. Crow, 53 Nebr. 747, 74 N. W. Simpson, C. J., in Piedmont jNIfg. Co. 1066, 69 Am. St. 741 ; Barter v. V. Columbia &c. R. Co., 19 S. Car. 353. Wheeler, 49 N. H. 9, 6 Am. Rep. 434 ; See cases cited in extended note to Taffe v. Oregon R. Co., 41 Ore. 64, Wells V. Thomas, 72 Am. Dec. 232, 67 Pac. 1015, 58 L. R. A. 187; Hous- and Miller v. South Carolina R. Co., ton & T. C. R. Co. v. Nev (Tex.), 2Z S. Car. 539, 9 L. R. A. 833. See 58 S. W. 43. See also, Texas & N. generally, also, 4 Elliott R. R. (2d O. R. Co. v. Brown (Tex. 97), 3,7 ed.), §§ 1435-1441. S. W. 785. "" Southern Express Co. v. Hess, Si =" Potter v. The Majestic, 60 Fed. Ala. 19; Packard v. Taylor, 35 Ark. 624, 9 C C. A. 161, 23 L. R. A. 746. 402, 2>7 Am. Rep. 37; Little Rock &c. =*Justis v. Atchison &c. R. Co., 12 R. Co. V. Odom, 63 Ark. 326, 38 S. Cal. App. 639, 108 Pac. 328. It has W. 339; Anchor Line v. Dater, 68 been held that in actions in tort the 111. 369; Hartley v. St. Louis &c. Co., law of the place where the injury 115 Iowa 612, 89 N. W. 88; United occurs defines the rights of the par- States &c. Co. V. Furniture Co., 19 ties. Smith v. Atchison, 194 Fed. 79. Ky. L. 833, 42 S. W. 342; Hoffman See also. Hasbrouck v. New York V. Cumberland &c. Co., 85 Md. 391, &c. R. Co., 202 N. Y. 363. 95 N. E. 37 Atl. 214; Hope v. Delaware & H. 808, 35 L. R. A. (N. S.) 537. Canal Co., Ill Mich. 209, 69 N. W. 1 197 CONTRACTS. 438 the flag, that is, of the nation to which the ship belongs.'" Thus a French ship, owned by a Frenchman, was chartered by the master, in pursuance of his general authority as such, in a Dan- ish West India island, to a British subject, who knew her to be French, for a voyage from St. Marc, in Hayti, to Havre, London or Liverpool, at the charterer's option, and he shipped a cargo from St. Marc to Liverpool. On the voyage the ship sustained damage from a storm, which compelled her to put into a Portu- guese port. There the master lawfully borrowed money on bot- tomry and repaired the ship, and she carried her cargo safe to Liverpool. The bondholder proceeded in an English court of admiralty against the ship, freight and cargo, which, being in- sufficient to satisfy the bond, he brought an action at law to re- cover the deficiency against the owners of the ship, and they abandoned the ship and freight in such a manner as by the French law absolved them from liability. It was held that the French law governed the case, and therefore the plaintiff could not re- cover.'* § 1197. Contracts of affreightment. — As a general rule the validity and obligations of a contract of affreightment are gov- erned by the law of the place where made and do not vary from time to time as the goods pass from state to state.'^ A contract of affreightment, made in an American port by an American ship- *"Crapo V. Kelly, 16 Wall. (U. S.) which her flag was sufficient notice. 610, 21 L. ed. 430. See, however, That decision was in accordance with Pouppirt V. Elder Dempster Shipping an earlier one of Mr. Justice Story, Co., 122 Fed. 983, revd. 125 Fed. 12>2, in Pope v. Nickerson, 3 Story (U. 6 C. C. A. 500, holding that the ad- S.) 465, ^s well as with later ones miralty courts of the United States in the privy council, on appeal frorn have jurisdiction of an action for the high court of admiralty, in which personal injuries sustained by an the validity of a bottomry bond has American passenger on the high seas been determined by the law prevail- irrespective of the law of the ships ing at the home port of the ship, and flag. not by the law of the port where the "" Lloyd V. Guibert, L. R. 1 Q. B. bond was given. The Karnak, L. R. 115, 6 B. & S. 100. The question of 2 P. C. 505; The Gaetano & Maria, the intent of the parties was compli- L. R. 7 P. Div. 137. See also. The cated with that of the lawful au- Barque Woodland, 7 Benedict (U. thority of the master; and the de- S.) 110, 118; The Woodland, 14 cision in the Queen's Bench was upon Blatchf. (U. S.) 499, and 104 U. S. the ground that the extent of his 180. authority to bind the ship, the freight "' Bertonneau v. Southern Pac. Co. of the owners was limited by the law (Cal. App.). 120 Pac. 53. See, how- of the home port of the ship, of ever, ante, § 1118. 439 CONFLICT OF LAWS. 1197 per with an English steamship company doing business there, for the shipment of goods there and their carriage to and dehvery in England, where the freight is payable in English currency, was held by the United States Supreme Court an American contract, and governed by American law, so far as regards the effect of a stipulation exempting the company from responsibility for the negligence of its servants in the course of the voyage.'" Where a contract was made in Massachussets between an American citi- zen and a British company of ship owners, by which the company undertook to carry certain cattle from Boston to England in a British ship, and the contract contained express stipulations ex- empting the ship owners from liability for loss or damage arising from negligence of the master or crew, which clause of the con- tract was valid by the English law but void by the law of Mass- achusetts as against public policy, and the cattle were lost by the ''Liverpool &c. Steam Co. v. Phe- nix Ins. Co., 129 U. S. 397, 32 L. ed. 788, 9 Sup. Ct. 469, aflfg. Ins. Co. of North America v. Liverpool &c. Steam Co., 22 Blatchf. (U. S.) Ill, 22 Fed. 715 ; adding to Insurance Co. of North America v. Liverpool &c. Steam Co., 17 Fed. Zll. Gray, J., in delivering the opin- ion of the court referring to Penin- sular and Oriental Navigation Co. v. Shand, 3 Moore P. C. (N. S.) 272, said : "In that case effect was given to the law of England, when the contract was made and both par- ties were English, and must be held to have known the laws of their own country. In this case the contract was made in this country, between parties, one residing and the other doing business here, and the law of England is a foreign law, which the American shipper is not presumed to know." He summed up his conclu- sion thus: "Each of the bills of lading is an American and not an English contract, and so far as con- cerns the obligation to carry the goods in safety, is to be governed by the American law, and not by the law, municipal or maritime, of any other country. By our law as de- clared by this court, the stipulation by which the appellant undertook to exempt itself from liability for the negligence of its servant is contrary to public policy and therefore void, and the loss of the ship was a breach of the contract, for which the shipper might maintain a suit against the carrier." In Chartered Mercantile Bank of India v. Netherlands Steam Navigation Co., 9 L. R. Q. B. Div. 118. 10 Q. B. Div. 521, the goods were shipped at Singapore, an English port, to be carried to a port in Java, in a vessel carrying the Dutch flag, and the contract was held to be governed by the law of England. A rule of law founded on public policy cannot be set aside in our own courts by any stipulation to adopt the law of an- other country. The stipulation in a bill of lading that the liability of the carrier shall be governed by the law of England, is a device to secure an unlawful exemption. In re The En- ergia, 56 Fed. 124, affd., 66 Fed. 604, 13 C. C. A. 653 Wlien the British owner of a British ship is proceeded against in an American court by both British and American cargo owners in re- spect to a loss of cargo occurring in British waters, the extent of his liability is determined by the law of the United States and not of Great Britain. In re State Steamship Co., 60 Fed. 1018. § 1 198 CONTRACTS. 44O negligence of the master and crew, it was held in a suit for dam- ages in the English courts that the English law prevailed, and that the stipulations were valid, on the ground that the contracts were governed by the law of the flag, and on the particular ground that from the special provisions of the contracts themselves it ap- peared that the parties were contracting with a view to the law of England.'* However, the courts of the forum may refuse to enforce the provisions in a carrier's contract, valid where made, exempting it from liability for damages sustained whether caused by the negli- gence of the carrier or carriers, or any of its or their employes, when such provisions are contrary to the settled policy of the forum. ^^ § 1198. Contracts of telegraph company. — As regards tel- egraph companies, the generally accepted or prevailing rule is that if a telegraphic message is delivered to the company in one state to be transmitted by it to a place in another state, the validity and interpretation of the contract as well as the rule measuring damages arising upon a breach and the company's liability therefor are to be determined by the laws of the former state where the contract originated.'® Thus it has been held that where a message is delivered to a telegraph company in North ** In re Missouri Steamship Co. N. Car. 603, 45 S. E. 938 ; Hancock v. (1888), L. R. 42 Ch. Div. 321. Western Union Telegraph Co, 137 N. '' Lake Shore &c. M. S. R. Co. v. Car. 497, 49 S. E. 952, 69 L. R. A. Teeters, 166 Ind. 335, 77 N. E. 599, 5 403 ; Johnson v. Western Union Tele- L. R. A. (N. S.) 425. See also, graph Co., 144 N. Car. 410, 57 S. E. Adams Express Co. v. Walker, 26 122, 10 L. R. A. (N. S.) 256, 119 Ky. L. 1025, 83 S. W. 106, 67 L. R. Am. St. 961; Western Union Tel. A. 412; Davis v. Chesapeake &c. R. Co. v. Pratt, 18 Okla. 274, 89 Pac. Co., 122 Ky. 528, 29 Ky. L. 53, 92 237; Western Union Telegraph Co. S. W. 339, 5 L. R. A. (N. S.) 458, v. Waller, 96 Tex. 589, 74 S. W. 751, 121 Am. St. 481. Such a contract 97 Am. St. 936; Western Union may be upheld when the accident Tel. Co. v. Parsley, 57 Tex. Civ. occurs outside the forum. Cleve- App. 8, 121 S. W. 226; Western land &c. R, Co. v. Druien, 26 Ky. L. Union Tel. Co. v. Ashley (Tex. Civ. 103, 80 S. W. 778, 66 L. R. A. 275. App.), 137 S. W. 1165. See also, The measure of damages is deter- Markley v. Western Union Tel. mined by the law of the place where Co. (Iowa), 132 N. W. 37; Brown the loss occurs. Hasbrouck v. New v. Western Union Tel. Co., 85 S. York &c. R. Co., 202 N. Y. 363, 95 Car. 459, 67 S. E. 146, 137 Am. St. N. E. 808, 35 L. R. A. (N. S.) 537. 914. But see. Western Union Tel. "Reed v. Western Union Tel. Co., Co. v. Chilton (Ark.), 140 S. W. 26; 135 Mo. 661, 37 S. W. 904, 34 L. Western Union Telegraph Co. v. Eu- R. A. 492. 58 Am. St. 609; Bryan v. banks. 100 Ky. 591, 38 S. W. 1068. Western Union Telegraph Co., 133 36 L. R. A. 711, 66 Am. St. 361. And 441 CONFLICT OF LAWS. § 1 199 Carolina to be transmitted by it to a party in South Carolina the one in South Carolina to whom the message is directed may maintain an action in North Carolina for breach of contract and recover damages for mental anguish suffered by reason of such breach, even if such damages could not have been recovered in South Carolina. ^^ On the other hand, the same court has held that if a message is given to the company in Virginia to be transmitted to a point in North Carolina suit cannot be maintained in North Carolina for a breach of contract for failure to deliver the message and damages be recovered for mental anguish suffered by reason of such breach, when damages for mental anguish are not recover- able in Virginia.^® § 1199. Remedies — Lex fori — Generally. — One of the leading cases on the subject of the conflict of laws and the case which is perhaps cited by the courts of this country more than any other decision lays down the following rules : "Matters bear- ing upon the execution, the interpretation, and the validity of a contract are determined by the law of the place where the con- tract is made. Matters connected with its performance are regu- lated by the law prevailing in the place of performance. Matters respecting the remedy, such as the bringing of suit, admissibility see generally, Gray v. Western Union latter case the message was sent from Telegraph Co., 108 Tenn. 39, 64 S. a point in Arkansas to a point in W. 1063, 91 Am. St. 706, and note. Texas. It was held that damages " Bryan v. Western Union Tele- for mental anguish could not be re- graph Co., 133 X. Car. 603, 45 S. E. covered in Texas when not recover- 938. Compare also, Brown v. West- able under the laws of Arkansas. See, ern Union Tel. Co., 85 S. Car. 495, however, Western Union Tel. Co. 67 S. E. 146, 137 Am. St. 914. To v. Chilton (Ark.). 140 S. W. 26, same effect, Western Union Tele- holding where a message was sent in graph Co. v. Waller, 96 Tex. 589, IMissouri to the plaintiff in Arkansas 74 S. W. 751, 97 Am. St. 936. In the he might recover damages under the last case a message was given to the Arkansas statute for failure to de- company in Texas to be transmitted liver. And see also, Gray v. Tele- to a point in Indian Territory. graph Co., 108 Tenn. 39, 64 S. W. '^ Johnson v. Western Union Tele- 1063, 91 Am. St. 706n. On the ques- graph Co., 144 N. Car. 410, 57 S. E. tion as to when the sendee stands in 122, 10 L. R. A. (N. S.) 256, 119 Am. such privity of relation as to entitle St. 961 ; Hall v. Western Union Tele- him to sue, see. Anniston Cordage graph Co., 139 N. Car. 369. 52 S. E. Co. v. Western Union Tel. Co., 161 50. To same effect, Western Union Ala. 216. 49 So. 770. 30 L. R. A. (N. Telegraph Co. v. Buchanan. 35 Tex. S.) 1116 and note, 135 Am. St. 124. Civ. App. 437, 80 S. W. 561. In the See also, ante, ch. 2>2. § I200 CONTRACTS. 442 of evidence, statutes of limitation, depend upon the law of the place where the suit is brought. "^^ The first and second rules may be open to some criticism, but the third is universally ad- mitted to be true.'"' § 1200. Lex fori governs as to remedy. — There is no ques- tion but that matters respecting the remedy such as the character of action to be instituted, the admissibihty of evi- dence, and the mode of redress, depend upon the law of the place where the suit is brought, for matters of procedure must be uniform in the courts of the same country. No forum in which a remedy is given to foreigners, or upon foreign contracts, is expected to adopt the forms of trial of the foreign country." The laws of the country where the contract was made can only have reference to the nature of the contract, not the mode of enforcing it. Whoever comes into a country voluntarily subjects himself to all the laws of that country, and therein to all remedies directed by those laws, on his particular engagement.'*- It remains true that as a general rule the validity and legality of a contract made in a foreign country or sister state is to be determined by the lex loci contractus but the remedy or mode of enforcing it is to con- form to the laws of the country or state where the action is insti- tuted." "^Scudder v. Nat. Bank, 91 U. S. Williams, 46 Miss. 618, 12 Am. Rep. 406, 23 L. ed. 245. 319; Bank of United States v. Don- *ht might be well to qualify the nally, 8 Pet. (U. S.) 361, 8L. ed.974; language of the text by saying that Crofoot v. Thatcher, 19 Utah 212, in some jurisdictions the statutes of 57 Pac. 171, 75 Am. St. 725. limitations have been held not mere- ''Walters v. Whitlock, 9 Fla. 86, ly to bar the remedy but to discharge 76 Am. Dec. 607 ; Rosa v. Crist, 17 the debt. Consequently where the 111. 450, 65 Am. Dec. 679; Hefferlm debt is actually discharged by the v. Sinsinderfer, 2 Kans. 401, 85 Am. statute of limitations in force at the Dec. 593; Everett v. Hcrrm, 46 place of the contract the court in Maine 357, 74 Am. Dec. 455; Trash- which suit is brought will not apply er v. Everhart, 3 Gill & J. (Md.) the rule of the forum as expressed in 234; Ivey v. Lalland, 42 Miss. 444, its statute of limitations. 97 Am. Dec. 475, 2 Am. Rep. 606. ^ Scudder v. Union National Bank, The lex fori governs in determming 91 U. S. 406, 23 L. ed. 245; Pritch- the mode of trial, including the form ard V. Norton, 106 U. S. 124, 27 of pleading, the quality and degree L. ed. 104, 1 Sup. Ct. 102; Harrison v. of evidence, and the mode of re- Edwards 12 Vt. 648, 36 Am. Dec. dress. McAllister v. Smith, 17 111. 364. 328, 65 Am. Dec. 651; Union Nat. ^'Melan v. De Fitz James, 1 Bos. Bank v. Chapman, 169 N. Y. 538, & P. 138; De la Vega v. Vianna, 62 N. E. 672, 57 L. R. A. 513n, 88 1 B. & Ad. 284; Bank of Louisiana v. Am. St. 614, affg. 52 App. Div. (N. 443 CONFLICT OF LAWS. § I20I § 1201. Rule applied. — Thus where a contract is made in one country, to be performed in a second, and is enforced in a third, the law of the last alone will govern the case as to the remedy." So it has been held that a statute of Massachusetts, providing that in a suit on a usurious contract recovery must be limited to the original demand, less three times the amount of the usurious reserve, applies to the remedy only, and has no force in Vennont.*'^ And it has likewise been held that where one rents property in Alabama the lessor may proceed in Georgia by a distress warrant for rent due, a distress warrant being in Georgia a mere remedial procedure.*® § 1202. When forum will refuse to enforce the contract. — A contract void by the law of the place where made, even though it is to be perfonned in another state, by the laws of which it would be valid, is void everywhere, as the courts of no state will enforce the void contracts of another state.*^ The forum may Y.) 57. 64 N. Y. S. 1053; Kanaga v. Taylor, 7 Ohio St. 134, 70 Am. Dec. 62 (enforcement of chattel mort- gage in foreign jurisdiction, the property before breach of condition having been removed to Ohio, and beyond the jurisdiction of the state in which the mortgage was given) ; Jamieson v. Polts, 55 Ore. 292. 105 Pac. 93; Murphv v. Allen, 71 Vt. 377, 45 Atl. 752; Harrison v. Edwards, 12 Vt. 648, 36 Am. Dec. 364. "A fourth rule is this : The law of one state having ex proprio vigore, no validity in another state, the enforce- ment of a foreign contract which would not be valid by the law of the forum where its enforcement is ju- dicially attempted, depends upon comity which is extended for that purpose, unless the agreement is contrary to the public policy of the state of the forum, in that it is con- trary to good morals, or the state or its citizens would be injured by the enforcement, or it perniciously vio- lates positive written or unwritten prohibitory law ; the extent to which comity will be extended being very much a matter of judicial policy to be determined within reasonable lim- itations by each state for itself." In- ternational Harvester Co. v. Mc- Adam, 142 Wis. 114, 124 N. W. 1042. State laws do not have extraterrito- rial force but they may prevent the enforcement of a contract which would be invalid by the law of the forum had it been made there. Asch- er v. Edward Moyse Co. (Miss.), 57 So. 299. "Campbell v. Stein, 6 Dow. 116; Davis V. Morton, Gait & Co., 5 Bush (Ky.) 160, 96 Am. Dec. 345. « Suffolk Bank v. Kidder, 12 Vt. 464, 36 Am. Dec. 354. *" Davis v. De Vaughn, 7 Ga. App. 324, 66 S. E. 956. " Western Union Tel. Co. v. Eu- banks, 100 Ky. 591, 38 S. W. 1068, 36 L. R. A. 711. 66 Am. St. 361; Lovell V. Boston & M. R. Co., 75 X. H. 568, 78 Atl. 621, 34 L. R. A. (N. S.) 67n; Hyde v. Goodnow, 3 N. Y. 266; An- drews V. Herriot, 4 Cow. (N. Y.) 508. See also, Akers v. Demond, 103 Mass. 318; John .■\. Tollman Co. v. Reed, 115 Mich. 71, 72 N. W. 1104; Corn Exch. Xat. Bank v. Jansen. 70 Nebr. 579, 97 N. W. 814. See, how- ever, Allegheny Co. v. Allen, 68 X. J. L. 68. 52 Atl. 298, 69 N. J. L. 270, 55 Atl. 724. § 1203 CONTRACTS. 444 also refuse to enforce the contract because the lex fori furnishes no remedy at all or a remedy which is too broad or too restricted to protect the rights of the parties as fixed by the lex loci con- tractus.*^ In case the remedy is too broad, this difficulty may in some instances be overcome by foregoing a part of the remedy afforded and accepting only that part which is coextensive with the remedy of the lex loci contractus.*^ The forum may furnish a remedy for the enforcement of a contract of a married woman, notwithstanding the contract has been made outside the forum and is of a nature such as is prohibited by the lex fori, if made at the forum.^° § 1203. Foreign laws not judicially noticed. — Foreign laws cannot be taken notice of judicially, but must be proved as facts, and with respect to this subject the several states of the union are to be considered in relation to each other as foreign nations." This general doctrine is well settled. ^Bank of Louisiana v. Williams, Bank, 45 Nebr. 850, 64 N. W. 227; 46 Miss. 618, 12 Am. Rep. 319; Ruhe Wood v. Wheeler, 111 N. Car. 231, V. Buck, 124 Mo. 178, 27 S. W. 412, 25 16 S. E. 418. L. R. A. 178, 46 Am. St. 439 (law "Treat v. C. D. Chapman, 1 Ala. of the forum furnished no remedy) ; App. 491, 56 So. 267; Brackett v. Hinkson v. Williams, 41 N. J. L. 35 Norton, 4 Conn. 517, 10 Am. Dec. (remedy too broad) ; Armstrong v. 179 (where the services of an at- Best 112 N. Car. 59, 17 S. E. 14, 25 torney were rendered in the state of L. R. A. 188; Dulin v. McCaw, 39 W. New York and it was held that the Va. 721, 20 S. E. 681 (remedy too laws of New York were the stand- restricted). See also, Hochstadter v. "ard by which the case must be deter- Hays, 11 Colo. 118, 17 Pac. 289; mined); Brown Carriage S°-„o7' Burchard v. Dunbar, 82 111. 450, 25 Dowd, 155 N. Car. 307, 71 S. E. 721; Am Rep. 334; Bradley v. Johnson, Hoshaw v. Lines (Okla.), 118 Pac. 46 N. J. L. 271; Spearman v. Ward, 583. See also, Shelton v. Canadian 114 Pa. St. 634, 8 Atl. 430. Northern R. Co., 189 Fed. 153, hold- "* Hockstadter v. Hays, 11 Colo, ing that the law of Canada must be 118, 17 Pac. 289; Bradley v. Johnson, proved as a fact. See, however, F. 46 N J L. 271. E. Creelman Lumber Co. v. J. A. "Benton v. German-American Nat. Lesh, n Ark. 16, ^Z S. W. 320. CHAPTER XXX. STATUTE OF FRAUDS- i 1210. Form of contract — Classes of § 1232. simple contracts in writing. 1211. Statute of frauds — Origin and 1233. purpose. 1212. Statute of frauds substanti- 1234. ally adopted in this country. 1213. Construction of the act. 1214. Operation and effect of stat- 1235. utes generally — Executed contracts. 1236. 1215. Its effect on verbal contracts. 1216. Operation and effect of stat- 1237. utes generally — Quasi and implied contracts. 1217. Statutes generally held to af- 1238. feet remedies. 1218. Defense of statute personal. 1239. 1219. When statute must be invoked 1240. by third person. 1241. 1220. Waiver of statute. 1242. 1221. Conflict of law— Law of 1243. forum. 1222. Conflict of law — Cases apply- 1244. ing lex loci contractus. 1245. 1223. Conflict of law — Cases apply- 1246. ing law of place of perform- ance. 1224. How statute must be invoked. 1247. 1225. Fourth section of the origin- al act — Affect form of sim- 1248. pie contracts. 1226. Fourth section — Promises by 1249. executors and administra- tors. 1227. Fourth section — Promise to 1250. answer for debt of another 1251. — Scope of clause. 1228. Fourth section — Promise to answer for the debts of an- 1252. other — General matters. 1229. Necessity for a subsisting, 1253. binding obligation. 1254. 1230. To whom the promise must be made. 1255. 1231. Original and collateral prom- 1256. ises. 445 General rules further con- sidered. Original promises — Payment out of property of debtor. Original promises — New con- sideration moving to prom- isor. Original promises — Promise to pay own debt. Question determined by per- son to whom credit is given. Person to whom credit is given — Services rend e r e d, and the like. Language indicative of col- lateral promise. Miscellaneous promises. Question one of intention. When a question for the jury. Relinquishment of lien. Independent promise releas- ing another. Del credere commission. As to contracts of indemnity. Oral promise to indemnity guarantor not within the statute. Illustrations of collateral promises. Agreements in consideration of marriage. Promise to do some act other than marry in consideration of marriage. Antenuptial contracts. Antenuptial parol agreements reduced to writing after marriage. Antenuptial agreement — Exe- cution. Contracts relating to lands. Necessity for and sufficiency of writing. Scope of the clause. Cases not within the statute — Constructive trusts. CONTRACTS. 446 § 1257. Cases not within the statute— § 1282. Party fences and location of boundary line. 1258. Cases not within the statute — Licenses to enter on 1283. lands. 1259. Fixtures. 1260. Fructus industriales. 1284. 1261. Other colhiteral contracts not within the fourth clause — 1285. Illustrations. 1262. Cases not within fourth clause — Partnership to deal 1286. in lands. 1263. Cases disting u i s h e d — How contract may be taken out 1287. of statute. 1264. Appointment of agent to buy land. 1265. Cases not within the fourth 1288. clause — Judicial sales. 1266. Contracts within statute — Pa- rol contract to arbitrate. 1289. 1267. Cases within clause four — Easements. 1290. 1268. Contracts within the fourth clause — Contracts for the sale of growing trees. 1269. Sale of standing timber to be 1291. immediately removed. 1270. Cases within the fourth clause 1292. — Leases. 1293. 1271. How contract concerning land may be taken out of 1294. the statute. 1272. Insufficient performance — Possession. 1295. 1273. Taking possession — English 1296. Doctrine. 1297. 1274. Insufficient performance 1298. — Payment of purchase- 1299. price — Exchange of lands. 1275. Additional illustrations of the 1300. rule. 1276. Performance of services. 1301. 1277. Agreements not to be per- formed within a year — Scope of the clause. 1302. 1278. Contracts within the fifth 1303. clause — Contracts to last a year from a date in futuro 1304. — Leases. 1279. Contracts to last a year from 1305. a date in futuro — Services. 1280. Method of computing time. 1306. 1281. Contracts which cannot be performed within a year. 1307. Cases not within the fifth clause — Contracts which may be performed within a year. Performance within a year possible — R u 1 e illustrated and considered further. Performance depending upon a contingency. Contracts not within the fifth clause — Contracts to con- tinue during life. Contracts to be performed on death of one of the parties or third person. Statute of frauds apphes to contracts which cannot possibly or reasonably be performed within a year. Agreement not to be per- formed within a year — Op- tion to terminate. Performance on one side within the year. Performance by one party within a year — Sufficiency of question of construc- tion. Seventeenth section of statute. Scope of the statute. Transactions construed contracts for sale. Work and labor contracts dis- tinguished from contracts of sale. Massachusetts rule. The rule in New York. The English rule. Sale of timber products. Realty improvement c o n - tracts. Work in raising crops and the like. Sufficiency of the memoran- dum acquired by the fourth and seventeenth sections. Form of memorandum. Correspondence as evidence of the contract. Bought and sold notes — "Slip contracts." The contents of the memo- randum. Names of parties must b e shown. Description of subject-matter — Personal property. the as 447 STATUTE OF FRAUDS. § I2IO ! 1308. Contents of memorandum — § 1325. y\dmission of evidence ali- unde. 1309. Contents of memorandum — 1326. Descriptions of real estate. 1310. Further illustrations of the 1327. rule. 1311. Contract to convey one of several tracts. 1328. 1312. Contents of memorandum — Descriptions of real estate held insufficient. 1313. Whether the memorandum 1329. must show the considera- tion. 1330. 1314. Weight of authority. 1331. 1315. Statement of consideration — Executory contracts — Price 1332. and terms. 1333. 1316. Memorandum — Time of pay- ment. 1334. 1317. Form of the signature. 1335. 1318. Place of signature. 1319. Who must sign. 1336. 1320. Who is the party to be charged. 1337. 1321. Vendor as party to be charged. 1322. Trustee as party to be 1338. charged. 1339. 1323. Special statutes relating t o the signature of the parties. 1340. 1324. Time when memorandum 1341. must be made. 1342. 1343. Must memorandum be pre- pared before action is brought ? Necessity for delivery of memorandum. Taking contract out of oper- ation of seventeenth sec- tion — Part performance. Taking contract out of oper- ation of seventeenth sec- tion — Receipt and accep- tance — Necessity for. Kind of acceptance — Must be unconditional. Mere words insufficient. Acts construing an accep- ance. Further illustrations. Acceptance of part of the goods. Goods sold by sample. Constructive delivery and ac- ceptance. Acceptance by agent, bailee or joint purchaser. Delivery at a place or to a person designated by the buyer. Delivery to a carrier. Delivery which takes contract out of the statute. Question for the jury. Earnest or part payment. Auctioneer's sale. Judicial sales. § 1210. Form of contract — Classes of simple contracts in writing. — As already shown in the earlier part of this work, in the case of sealed contracts, the seal takes the place of the consideration required in simple contracts.^ The deed is the true type of formal contract, and may be said to derive its validity from the form, or, in other words, from the seal and form of exe- cution." Simple or parol contracts, however, do not depend on form in any such sense to make them true contracts ; but a certain form, as a right, may be required as evidence of the contract, 'See, ante. § 196. ' The statute of frauds does not ap- ply to contracts of this character, i. e., agreements under seal, or deeds; it operates only on express simple contracts resulting from the consent of the parties to a promise given for a valuable consideration. See, also, Cooch V. Goodman, 2 Q. B. 580. 42 E. C. L. 817; Aveline v. Whisson. 4 M. & G. 801. 43 E. C. L. 414. In Cherry v. Heming, 4 Exch. 631, Rolfe. B., said : "I am strongly inclined to think that the statute does not extend to deeds, because its requirements would be satisfied by the parties putting § I2I0 CONTRACTS. 448 SO as to make it en forcible at law where proper objection is made or the question properly raised.^ In other words the form re- quired does not in such cases go to the very existence of the con- tract, and while its absence prevents an action being maintained upon it the omission may be made good, and the contract is not void nor incapable of being put in proper form before an action is instituted.* Simple or parol contracts, as elsewhere explained, include contracts in writing as well as those by word of mouth or implied in fact from conduct or the like ; and simple contracts in writing may now be further classified or divided, for con- venience, first, into those which are in writing but are not re- quired to be in writing nor to be proved by writing; second, those which do not need to be in writing but must be proved by writing; and third, contracts which must be in writing. Negotiable instruments, it would seem, must be in writing even in the absence of any statute to that effect and there are their mark to the writing. The ob- ject of the statute was to prevent matters of importance from resting on the frail testimony of memory alone. Before the Norman time, signature rendered the instrument authentic. Sealing was introduced because the people in general could not write. Then there arose a dis- tinction between what was sealed and what was not sealed, and that went on until society became more ad- vanced, when the statute ultimately said that certain instruments must be authenticated by signature. That means, that such instruments are not to rest on parol testimony only, and it was not intended to touch those which were already authenticated by a ceremony of a higher nature than a signature or a mark." ' The statute does not dispense with the common-law requirement of con- sent, promise and consideration; in- stead, its object was to secure proof of these elements. "The statute never meant to enforce any promise which was before invalid, merely because put in writing." Wain v. Warlters, 5 East 10. See also, the case of Rann V. Hughes, 7 T. R. 350n, in which it is said : "All contracts are, by the laws of England, distinguished into agreements by specialty, and agree- ments by parol ; nor is there any such third class as some of the counsel have endeavoured to maintain, as contracts in writing. If they be mere- ly written and not specialties, they are parol, and a consideration must be proved. But it is said that the Statute of Frauds has taken away the necessity of any consideration in this case." After a review of the stat- ute the court said : "That this does not prove that the agreement was still not liable to be tried and judged of as all other agreements merely in writing are by the common law, and does not prove the converse of the proposition, that when in writing the party must be at all events liable." * See, Leroux v. Brown, 12 C. B. 801, 74 E. C. L. 801 ; Britain v. Ros- siter, 11 Q. B. D. 123; Maddison v. Alderson, 8 App. Cas. 467, 488; Bird V. Munroe, 66 Maine ZZ7, 22 Am. Rep. 571 ; Townsend v. Hargraves, 118 Mass. 325. Some cases, however, apparently consider the statute of frauds as affecting the validity of the contract itself. The failure to com- ply therewith makes the contract void. 449 STATUTE OF FRAUDS. § 121 1 Statutes in many states requiring the acceptance of a bill of exchange or the like to be in writing. So the acknowledg- ment of debt barred by the statute of limitations and authority to bind another as surety are usually required by statute to be in writing. And this is true in regard to assignments of copyrights and patents under act of congress. There are also jurisdictions whose statutes require additional contracts to be in writing, or at least to be so proved. But the majority of such statutes, however, relate to contracts under seal for conveyances of land, or the like. The principal statute requiring contracts to be proved by writing is the statute of frauds, and the numerous cases of contracts falling within that statute constitute the main body, if not practically the whole body, of the class of contracts that need not be in writing but must be proved by writing. Deeds, negotiable instruments and other particular written contracts will be specifically considered in another volume. Here we have to do chiefly with simple contracts as affected by the statute of frauds. § 1211. Statute of frauds — Origin and purpose. — The stat- ute of frauds, so called, requiring in many cases written evidence of a contract, was passed in the twenty-ninth year of the reign of Charles II, being A. D, 1677. It is very generally in force in this country, but the statutes of the different states, while agree- ing substantially with the English statute, do not copy its pro- visions exactly.^ The object of the statute was that contracts of an important character, as well as those which were not to be exe- cuted within a prescribed period, should be supported by more satisfactory evidence than could be afforded by verbal testimony only. The risks of mistakes, arising from the defective and im- perfect recollection of witnesses, and the temptation to commit fraud by perjury, were the evils against which the statute was directed." 'The authorship of this celebrated v. Warlters (1804), 5 East 10. "The enactment is mainly ascribed to Sir statute," sa\'s Lord Kenyon in Chap- Matthew Hale, but it was without lin v. Rogers, 1 East 192, "is one doubt the product of several minds, of the wisest laws in our statute Lord Nottingham and others bear- book." For the statutes of the vari- ing a part in framing it. Reed on ous states, see Smith on the Law of Statute of Frauds, § 1 ; Wyndham v. Fraud. Chetwynd (1757), 1 Burr 414; Wain "Saunders v. Wakefield, 4 B. & 29 — Contracts, Vol. 2 § 12 1 2 CONTRACTS, 45O § 1212. Statute of frauds substantially adopted in this country. — The original statute commonly termed the "stat- ute of frauds," in so far as it related to the subject of contracts, in substance provided, ( i ) No action could be brought to charge any executor or administrator upon any special promise to answer in damages out of his personal estate; (2) to charge any defend- ant upon any special promise to answer for the debt, default or miscarriage of another person; (3) to charge any person upon any agreement made upon consideration of marriage; (4) upon any contract for sale of lands, tenements or hereditaments, or any interest in or concerning them ; (5) upon any agreement not to be performed within one year from the making thereof unless the agreement upon which the action was brought, or some memo- randum or note thereof, should be in writing and signed by the party to be charged therewith or his agent duly authorized in writing; (6) all declarations or creations of trusts or confidences in any lands, tenements or hereditaments were to be manifested and proved by some writing, or by the last will in writing of the party who in law was able to declare such trust, or else they should be utterly void and of no effect, except where they arose by operation of law ; (7) all grants and assignments of any trusts and confidences were likewise to be in writing, or by will or de- vise or to be void; (8) no contract for the sale of any goods, wares and merchandise for the price of ten pounds sterling, or upward, should be good except where the buyer should 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 therefor, or that some note or memorandum in writing of the bargain be made and signed by the party to be charged or his agent lawfully authorized.^ The provisions bearing especially on contracts are contained in the fourth and seventeenth sections. They will be given somewhat thorough consideration in the sub- sequent sections of this chapter. The original English statute of frauds has been in substance re-enacted in nearly all the states Aid. 595 ; Norman v. Molett, 8 Ala. ' Smith on the Law of Fraud, § 312, 546; Marcy v. Marcy, 9 Allen (Mass.) pp. 328, 329. 8; Townsend v. Hargraves, 118 Mass. 325. 451 STATUTE OF FRAUDS. § 12 1 3 and territories of this country. Generally, however, our state statutes restrict the term for which oral leases may be made to one year. § 1213. Construction of the statute. — The courts differ as to the construction to be placed on the statute of frauds. This, it is believed, is largely due to the temperament of the various judges who have passed upon it and the attitude which they took toward the statutes, and the supposed exigencies of justice. As is well known, some judges always insist on a literal interpre- tation and application of the statute, regardless of its manifest intent and purpose; others would place a strict construction on the statute so as to make it apply only in those cases which come within the intent of the statute. Regardless of many cases which assert a contrary doctrine a review of the authorities will show that the courts have in the main given the statute a strict con- struction ; moreover, it is believed that this is a growing tendency. Thus it was originally held that an agreement made in considera- tion of marriage was directly within the words and not out of the intent of the statute.® But subsequently it was held that mutual promises to marry were not within the statute.** This latter con- struction is the one which has prevailed.^" The tendency on the part of the court to limit the application of the statute is also strikingly illustrated in the interpretation placed upon that pro- vision which provides that no action can be brought upon any agreement not to be performed within one year from the making thereof unless the agreement upon which the action was brought, or some memorandum or note thereof, shall be in writing and signed by the party to be charged therewith, or his agent duly authorized in writing. This has been held to apply only to con- tracts which by their terms are not to be performed in a year, and inapplicable to those agreements which by any possibility can 'Philpot V. Wallet, 3 Lev. 65. ute, 'Any agreement made upon con- • Harrison v. Cage, 1 L. D. Raym. sideration of marriage.' meant or in- 386. eluded promises to marry. It would '" Clark V. Pendleton, 20 Conn. 495 ; be imputing to the legislature too Blackburn v. Mann, 85 Til. 222; Short great an absurdity to suppose that V. Stotts, 58 Ind. 29; Morgan v. Yar- they had enacted that all our court- borough, 5 La. Ann. 316; Ogden v. ships, to be valid, must be in writ- Ogden. 1 Bland (Md.) 284; Wilbur ing." Withers v. Richardson. 5 T. B. V. Johnson. 58 Mo. 600. "It has never Mon. (Ky.) 94, 17 Am. Dec. 44. been held that the words of that stat- § 1 2 14 CONTRACTS." 452 be fulfilled or completed in one year." Other cases lay down the rule that if the contract may be performed by one of the par- ties within a year it is not within the statute, although the other party is not to perform within a year. That is to say, the courts have inserted the words '*on either side" in the clause not to be performed within a year.^^ Lord Mansfield seems to have given expression to the generally accepted rule applied in the con- struction of the statute of frauds. He said: "The object of the legislature in that statute was a wise one ; and what the legisla- ture meant, is the rule both at law and equity. * * * The key to the construction of the act is the intent of the legislature ; and, therefore many cases, though seemingly within the letter, have been let out of it; more instances have indeed occurred in courts of equity than of law, but the rule is in both the same. For instance, where a man admits the contract to have been made, it is out of the statute; for here there can be no perjury. Again * * * if the contract is executed, it is never set aside."^^ § 1214. Operation and effect of statutes generally — Exe- cuted contracts. — This last proposition is well settled. A verbal contract originally within the statute is removed from the operation of the statute when fully performed.^* So when some of the provisions of a contract are .within the statute and others "See, Anonymous, 1 Salk. 280; 133; James v. Morey, 44 111. 352; Fenton v. Emblers, 3 Burr. 1278; Pearce v. Pearce, 184 111. 289, 56 N. Moore v. Fox, 10 Johns. (N. Y.) E. 311; Anderson School Tp. v. 244, 6 Am. Dec. 338; Blanding v. Lodge, 130 Ind. 108, 29 N. E. 411, 30 Sargent, 33 N. H. 239, 66 Am. Dec. Am. St. 206; Nicholson v. Schmucker, 720; Walker v. Johnson, 96 U. S. 81 Md. 459, 32 Atl. 182; Stone v. 424, 24 L. ed. 834; McPherson v. Dennison, 13 Pick. (Mass.) 1, 23 Am. Cox, 96 U. S. 404, 24 L. ed. 746; Dec. 654; Norton v. Simonds. 124 McGinnis v. Cook, 57 Vt. 36, 52 Am. Mass. 19; Gerber v. Upton, 123 Mich. Rep. 115. See further, post, § 1277 605, 82 N. W. 363; McCue v. Smith, et seq. 9 Gil. (Minn.) 237, 86 Am. Dec. 100; " Donellan v. Read, 3 B. & Ad. 899, Griffith v. Thompson, 50 Nebr. 424, 23 E. C. L. 391; Cherry v. Heming, 69 N. W. 946; Dodge v. Crandall. 4 Exch. 631. See also, Piper v. 30 N. Y. 294; Newman v. Nellis, 97 Fosher, 121 Ind. 407, 23 N. E. 269; N. Y. 285; Brown v. Farmer's Loan Smalley v. Greene, 52 Iowa 241, 3 & T. Co., 117 N. Y. 266, 22 N. E. 952; N. W. 78. Contra, Whipple v. Par- Huntley v. Huntley, 114 U. S. 394, ker, 29 Mich. 369. See, post, § 1290. 5 S. Ct. 884, 29 L. ed. 130 ; Bibb " Simmon v. Motives, 1 W. Bl. v. Allen, 149 U. S. 481, 497, 37 L. ed. 599, 3 Burr. 1921. 819, 13 Sup. Ct. 950; Pireaux v. Si- " Bates V. Babcock, 95 Cal. 479, 30 mon, 79 Wis. 392, 48 N. W. 674. Pac. 605, 16 L. R. A. 745, 29 Am. St. 453 STATUTE OF FRAUDS. § 12 1 5 are not the statute does not apply whenever those within it have been performed. Thus, when an oral contract for the sale of land has been executed and accepted an action may be maintained for the agreed purchase-price.^° § 1215. Its effect on verbal contracts. — The statute does not prohibit the making of an oral agreement, but bars the legal remedies by which it might otherwise have been enforced. A new rule of evidence is introduced and a new defense created by requiring that the agreement shall be proved by a writing.^® A contract within the statute is not illegal when not written, but only not capable of bein^ enforced, an immunity which it is said the defendant on the trial may waive. ^^ If the parties choose to perform it, the contract remains in full force notwithstanding the statute, so far as relates to the legal effect and consequences of what has been done under it.^^ The difference in the phraseology between the fourth and seventeenth sections in this, that the for- mer says "no action shall be brought" upon the contract, and the latter says the contract shall not be "allowed to be good," has been "Worden v. Sharp, 56 111. 104; W. 484; Crane v. Powell, 139 N. Y. Stephenson v. Arnold. 89 Ind. 426; 379. 34 N. E. 911; Magee v. Blank- Brackett v. Evans. 1 Cush. (Mass.) enship, 95 N. Car. 563; Garrett-Will- 79; Preble v. Baldwin, 6 Cush. iams Co. v. Hamill. 131 N. Car. 57, (Mass.) 549; Waldron v. Laird, 65 42 S. E. 448; Child v. Pearl, 43 Vt. Mich. 237, 32 N. W. 29; Galley v. 224. Galley, 14 Nebr. 174, 15 N. W. 318; ''Adams v. Patrick. 30 Vt. 516; Bowen v. Bell, 20 Johns. (N. Y.) ]\Iontgomery v. Edwards, 46 Vt. 151, 338, 11 Am. Dec. 286; Remington v. . 14 Am. Rep. 618. Palmer, 62 N. Y. 31; Randall v. Tur- "Crane v. Gough, 4 Md. 316. It ner, 17 Ohio St. 262; Negley v. Jef- was settled by Leroux v. Brown, 12 fers. 28 Ohio St. 90; Ascutney Bank C. B. 801, that the statute does not V. Ormsby, 28 Vt. 721 ; King v. Smith, affect the validity of the contract, but 33 Vt. 22; Niland v. Murphy, 73 Wis. only makes a particular kind of proof 326. 41 N. W. 335. necessary to enable a party to bring '' Whitney v. Cochran, 1 Scam, an action upon it. "I think it is now (111.) 209; Chicago Dock Co. v. Kin- finally settled that the true construc- zie, 49 111. 289; Lowman v. Sheets, tion of the Statute of Frauds, both 124 Ind. 416, 24 N. E. 351, 7 L. R. the 4th and 17th sections, is not to A. 784; Merchant v. O'Rourke, HI render the contracts within them Iowa 351, 82 N. W. 759; Cahill v. void, still less illegal, but is to ren- Bigelow, 18 Pick. (Mass.) 369; der the kind of evidence required Haynes v. Nice, 100 Mass. 327, 1 Am. indispensable when it is sought to Rep. 109; La Du-King Mfg. Co. v. enforce the contract," per Lord La Du, 36 Minn. 473, 31 N. W. 938; Blackburn in Maddison v. Alderson Kriger v. Leppel, 42 Minn. 6, 43 N. (1883), 8 App. Cas. 467, 488. I2l6 CONTRACTS. 454 commented upon in various cases, but the difference does not change the force and effect of the two sections.^® § 1216. Operation and effect of statute generally — Quasi and implied contracts. — Closely analogous to executed agree- ments are those contracts which are termed quasi or implied con- tracts, and as the statute of frauds does not apply to the former neither does it apply to the latter. As here used the term "quasi contract" applies to all contractual duties which are not enforcible by special assumpsit or by the action of debt. It includes those cases in which one party has conferred a benefit which was not intended as a gratuity upon the other to the conferring of which benefit the latter has assented. Thus where the defendant has had the benefit of the plaintiff's labor and money expended at his request and though he may not be legally liable to carry out his original promise the law upon his refusal so to do implies a prom- ise to compensate the plaintiff.^" Quasi contracts or those im- "Bird V. Munroe, 66 Maine Z2>7, 22 Am. Rep. 571 ; Townsend v. Har- graves, 118 Mass. 325. In some states the statutes expressly provide that certain contracts "shall be void," un- less expressed in writing. A void contract confers no right and cre- ates no obligation between the par- ties. Dung V. Parker, 52 N. Y. 494. ^Gray v. Hill, Ryan & M. 420; Williams v. Bemis. 108 Mass. 91, 11 Am. Rep. 318. Gay v. Mooney, 67 N. J. L. 27. In the above case evidence was admitted to show that as be- tween plaintiff and decedent the lat- ter had agreed to devise a certain dwelling house to the plaintiff's chil- dren in return for what he should receive as a member of the family. While no action could be maintained on this contract evidence thereof was held admissible as tending to show the relation which existed between the parties and the right of the plaintiff to recover the quantum meruit for the value of services ren- dered. Banker v. Henderson, 58 N. J. L. 26, 32 Atl. 700. In the above case the general rule was recognized but in the particular case recovery denied on the ground that the de- fendant had received no benefit. Hawley v. Moody, 24 Vt. 603. To the same effect, Lockwood v. Barnes, 3 Hill (N. Y.) 128, 38 Am. Dec. 620; Albea v. Griffin, 2 Dev. & B. Eq. (N. Car.) 9 (plaintiff permitted to re- cover value of improvements) ; Ben- der's Admr. v. Bender, Z7 Pa. 419 (improvement made on real estate; reliance on a contract within the statute of frauds) ; Rhea v. Allison, 3 Head. (Tenn.) 176 (improvements made on real estate under a parol contract of sale). "The principle seems to be perfectly well settled, and is sustained by very numerous au- thorities, that where a party to an agreement void by the statute of frauds fails to execute it, the price advanced, or the value of the article delivered in part performance of the contract, whether in money, labor, or chattels, may be recovered back." Smith V. Administrators of John F. Smith, 4 Dutch. (N. J.) 208, 78 Am. Dec. 49. "If the plaintiffs, in con- sideration of an agreement which was within the statute of frauds, and which the defendant declined to carry out, expended money in build- ing upon his land, they might main- tain an action to recover the cost of such building." Parker v. Tainter, 455 STATUTE OF FRAUDS. § 121 7 plied or created by law are not within the statute for the obvious reason that the law under certain circumstances imposes a liabil- ity irrespective of the acts of the parties. They are a distinct class and are deemed neither written nor unwritten. ^^ The party liable may be required to respond as if a contract existed even against his express dissent; as when a husband is required to pay for necessities furnished his wife whom he has deserted even though he has given notice that he will not be liable therefor.-' § 1217. Statutes generally held to affect remedies. — Some provisions of some of the statutes may make oral contracts within their scope entirely void or at least voidable. And there are certain provisions of the original statute that have been said in a few cases to have the effect of making such oral contracts void. But the general rule is that the statute affects merely the remedy and does not render the agreement absolutely void but simply prevents its enforcement and refuses damages for its breach."^ Indeed it has been said that the statute does not in any way affect the substance or ingredients of contracts but merely prescribes as a rule of evidence that in all cases where they are sought to be 123 Mass. 185. See, however, O'Rear infants or insane persons being held V. Botts, 3 B. Mon. (Ky.) 360. But liable for necessities furnished them, the plaintiff cannot recover where it See, ante, §§ 260, 261. appears that he himself is the party " See ante, ch. 13. at fault or when he seeks to enforce ^Bracegirdle v. Heald, 1 B. & Aid. a contract within the statute of 722; Souch v. Strawbridge, 2 C. B. frauds. Collier v. Coates, 17 Barb. 808; Britain v. Rossiter, 11 Q. B. Div. (N. Y.) 471; Thomas v. Brown, 1 123; Sweet v. Lee, 4 Scott N. R. 11; Q. B. Div. 714; Abbott v. Draper, 4 Leroux v. Brown, 12 C. B. 801, 14 Denio (N. Y.) 51; Long v. Finger, Eng. L. & Eq. 247; Phillips v. Ocmul- 74 N. Car. 502; Philbrook V. Belknap, gee Mills, 55 Ga. 633; Collins v. 6 Vt. 383. Compare, however, with Thayer, 74 111. 138; Chicago .^ttach- Nelson v. Shelbv Mfg. Co.. 96 Ala. ment Co. v. Davis Sewing-Machine 515, 11 So. 695. 38 Am. St. 116; King Co., 142 111. 171. 31 N. E. 438, 15 L. v. Welcome, 5 Gray. (Mass.) 41; R. A. 754n : Lowman v. Sheets, 124 Masson v. Swan, 6 Heisk. (Tenn.) Ind. 416. 24 N. E. 351, 7 L. R. A. 450. 784; Townsend v. Hargraves, 118 ^ See, 2 Bl. Com. 443; Smith v. Mass. 325; Amsinck v. .American Ins. Bradley. 1 Root (Conn.) 150; Good- Co., 129 Mass. 185; McCue v. Smith, win V. Gilbert. 9 Mass. 510; Thomp- 9 Gil. (Minn.) 237, 86 Am. Dec. son V. Blanchard, 3 Comst. (N. Y.) 100; Pinkham v. Mattox, 53 N. H. 335; Doolittle v. Dininny, 31 N. Y. 600; Magee v. Blankenship, 95 N. 350. The law may in certain in- Car. 563. "The great purpose of the stances impose the liability even enactments, commonly known as the though the party on whom the obli- statute of frauds, is to guard against gation is imposed did not have ca- the commission of perjury in the pacity to contract as in the case of proof of certain contracts. This is I2l8 CONTRACTS. 456 enforced oral proof of them shall not be received.^* This may, however, be too strong a statement of the rule for in some cases the statute of frauds is considered as affecting the validity of a contract in which case the lex loci contractus is declared to gov- ern.'° A distinction is drawn between contracts concerning real estate and personal agreements.^° In still other jurisdictions the law of the place of performance is looked to in order to deter- mine the validity of a contract which would be unenforcible because contrary to the statute of frauds as it exists in the forum."^ § 1218. Defense of statute personal. — The defense of the statute of frauds is a personal one, and, as a general rule, can only be made by parties or privies. ^^ This rule applies to insurance effected by providing that mere parol proof of such contracts shall be in- sufficient to establish them in a court of justice." ]Marsh v. Hyde, 3 Gray (69 Mass.) 331. ^* Browne on Statute of Frauds, § 115. "Ringgold V. Newkirk, 3 Ark. 96; Miller v. Wilson, 146 111. 523, 34 N. E. nil, 37 Am. St. 186 (contract made in another state for the sale of land situated therein) ; Cochran v. Ward, 5 Ind. App. 89, 29 N. E. 795, 31 N. E. 581, 51 Am. St. 229 (lease of real estate. The court held that in such case the statute of frauds of Illinois entered into and became a part of the contract.) See, Low v. Andrews, 1 Story (U. S.) 38, Fed. Cas. No. 8559. =* Stout V. Ennis, 28 Kans. 706; Fox V. Matthews, 33 Miss. 433; Da- Costa V. Davis, 24 N. J. L. 319; Hunt V. Jones, 12 R. I. 65, 34 Am. Rep. 635; Anderson v. May, 10 Heisk. (Tenn.) 84 (contract for lease of land situated in Arkansas). "Allshouse V. Ramsay, 6 Whart. (Pa.) 331, 37 Am. Dec. 417. See also, the following cases in which the forum and the place of performance coincided. The decision being based, however, on the ground that the con- tract was to be performed in the jurisdiction where suit was brought. See, Emery v. Burhank, 163 Mass. 326, 39 N. E. 1026, 28 L. R. A. 57, 47 Am. St. 456; Young v. Pearson, 1 Cal. 448; Turnow v. Hochstadter, 7 Hun (N. Y.) 80. See also, Mason v. Dousey, 35 111. 424, 85 Am. Dec. 368; Denny v. Williams, 5 Allen (Mass.) 1 ; Aldrich v. Carpenter, 160 Mass. 166, 35 N. E. 456. ^' Mewburn's Heirs v. Bass. 82 Ala. 622, 2 So. 520; Daum v. Conley, 27 Colo. 56, 59 Pac. 753; Purdom Na- val Stores Co. v. Western Union Tel. Co., 153 Fed. 327; McCoy v. Will- iams, 1 Gilm. (6 111.) 584; Chicago Dock Co. V. Kinzie, 49 111. 289; Hughes V. Lumbsen, 8 111. App. 185; Hallberg v, Brosseau, 64 111. App. 520; Pasquay v. Pasquav, 235 111. 48, 85 N. E. 316; Mitchell v. King, 77 111. 462; Cool v. Peters Box & Lumber Co., 87 Ind. 531 ; Savage v. Lee, 101 Ind. 514; Bodkin v. Merit, 102 Ind. 293, 1 N. E. 625 :, Burrow v. Terre Haute & L. R. Co., 107 Ind. 432, 8 N. E. 167; Jackson v. Stan- field, 137 Ind. 592, 36 N. E. 345, 37 N. E. 14, 23 L. R. A. 588; Morrison V. Collier, 79 Ind. 417; Dixon v. Duke, 85 Ind. 434; Crawford v. Woods, 6 Bush (Ky.) 200; Bohan- non V. Pace, 6 Dana (Ky.) 194; Ames V. Jackson, 115 Mass. 508; Grisham v. Lutric, 76 Miss. 444, 24 So. 169; St. Louis K. & N. W. R. Co. V. Clark, 121 Mo. 169. 25 S. W. 192, 906, 26 L. R. A. 751n; Rickards V. Cunningham, 10 Nebr. 417, 6 N. W. 475; Eisley v. Malchow, 9 Nebr. 457 STATUTE OF FRAUDS. § I219 companies." An execution creditor cannot question a good faith sale of property by his debtor merely because such contract of sale is not evidenced as tlie statute of frauds requires.^" It is true generally that a creditor cannot take advantage of the statute of frauds and thus avoid a sale of lands made by the debtor, when the latter has elected to waive the statute.'^ When the debtor fails to plead the statute his creditor cannot plead it.^' Neither can the creditor invoke the statute to defeat an estoppel against the debtor,^^ nor to defeat a liability of the creditors which he himself has recognized.^'' Where lands are purchased for the benefit of the plaintiff, and after a resale thereof the proceeds are paid to the defendant, he cannot, in an action for money had and received, successfully defend on the ground that the contract between the plaintiff and third person was in parol and for that reason voidable under the statute. ^^ § 1219. When statute may be invoked by third person. — However, it has been held that when a vendor of chattels by a contract of sale which is voidable by the statute of frauds makes a sale or pledge and delivery of them to a third person, he thereby repudiates and avoids the former contract, and the subsequent purchaser may invoke the statute for his own protection.^* The 174, 2 N. W. Zn\ Tibbets v. Flan- lings, 12 Ind. 505; :\Iorrison v. Col- ders, 18 N. H. 284; Benton v. Pratt, lier, 79 Ind. 417; Dixon v. Duke. 85 2 Wend. (N. Y.) 385, 20 Am. Dec. Ind. 434; Old National Bank v. Find- 623; Bell v. Beazley. 18 Tex. Civ. ley, 131 Ind. 225, 31 N. E. 62; Can- App. 639, 45 S. W. 401 ; Huntley v. non v. Castleman, 164 Ind. 343, IZ Huntley, 114 U. S. 394, 29 L. ed. 130, N. E. 689; Walker v. Walker's As- 5 Sup. Ct. 884. The statute of frauds signee, 19 Ky. L. 626. 41 S. W. 315; as a defense is personal to the party Minnc v. IMorse, 15 Ohio 568, 45 Am. to a contract and is not available to Dec. 590; LefFerson v. Dallas, 20 a stranger to the contract in a col- Ohio St. 68; Roberts v. Francis, 2 lateral proceeding. Grisham v. Lu- Heisk. (49 Tenn.) 127. trie, 1(S Miss. 444. 24 So. 169. '=" Cresswell v. McCaig, 11 Nebr. =" Mutual Mill Ins. Co. v. Gordon, 222, 9 N. W. 52. See also, Cahill v. 20 111. App. 559, affd. 121 111. 366, 12 Bigelow, 18 Pick. (Mass.) 369. N. E. 747; Northwestern Mut. Life ^^ Cross v. Weare Commission Co., Ins. Co. V. Heimann, 93 Ind. 24; Am- 45 111. App. 255, affd.. 153 111. 499, 38 sinch V. American Ins. Co., 129 IMass. N. E. 1038, 46 Am. St. 902. 185. "Kemp v. National Bank &c., 109 *" Dixon V. Duke, 85 Ind. 434. See Fed. 48, 48 C. C. A. 213. also, Wright v. Jones, 105 Ind. 17, "Garrett's Admrs. v. Garrett, 21 4 N. E. 281. Ala. 687. *" Gordon v. Tweedv. 71 Ala. 202 *" First Nat. Bank v. Blair State (parol agreement by husband to con- Bank. 80 Nebr. 400, 114 N. W. 409, vey lands to wife) ; Brown v. Raw- 127 Am. St. 752 and note. See also, § I220 CONTRACTS. 458 foregoing rule is frequently applied to intermediate vendees^^ and lessees of property.^^ The vendee or lessee of one who is alleged to have made a contract voidable within the statute is such a suc- cessor in interest and holds such privity of estate with his vendor or lessor that he may claim the protection of the statute.^* Heirs stand in privity of relationship and may invoke the statute of frauds against a claimant under a parol contract with their an- cestor.*" § 1220. Waiver of statute. — Moreover, the statute of frauds is a shield which a party may use or not for his protection, just as he sees fit. A party, though otherwise entitled to the pro- tection of the statute, may waive it.*^ Thus it has been held that if the complaint alleges a verbal agreement within the statute, and the defendant, by his answer, admits it without pleading the statute as a defense, he is deemed to have waived its benefit/" So it has been held that where in an action for rent due on a con- tract of leasing or renting the defendant neither denies the con- tract nor pleads the statute of frauds, he is in no position to ques- tion its nonconformity to the statute/^ § 1221. Conflict of law — Law of forum. — Since the statute of frauds is usually held to affect merely the remedy it is true Shelton v. Thompson, 96 Mo. App. relation existing between the grantor 327, 70 S. W. 256. and his deceased grantee) ; Phillips "Hunter v. Bales, 24 Ind. 299; v. Kimmons, 94 Tenn. 562, 29 S. W. Hansen v. Berthelson, 19 Nebr. 433, 965 (holding that the administratrix 27 N. W. 423. See also, McSpadden of the vendee could not rescind a V. Starrs &c. Iron Co. (Tenn), 42 parol contract for the sale of land, S. W. 497 ; Masterson v. Little, 75 where the vendor is willing to look Tex. 682, 13 S. W. 154; Sanborn v. to the land alone for payment of Murphy, 86 Tex. 437, 25 S. W. 610. the balance due and the heirs do not ^Best V. Davis, 44 111. App. 624. desire a rescission). See, however, Boyce v. Graham, 91 "■ Cahill v. Bigelow, 18 Pick. Ind. 420. (Mass.) 369; St. Louis &c. R. Co. v. =* Meyer Bros. v. Mitchell, 75 Ala. Clark, 121 Mo. 161, 25 S. W. 192, 26 475 ; Shakespeare v. Alba, 76 Ala. L. R. A. 751, note in 78 Am. St. 648. 351; Bulkley v. Storer, 2 Day '^ Crane v. Powell, 139 N. Y. 379, (Conn.) 531; Grundies v. Kelso, 41 34 N. E. 911; Cozine v. Graham, 2 111. App. 200. Paige Ch. (N. Y.) 177; Vanpell v. ^Vaughn v. Vaughn, 100 Tenn. Woodward, 2 Sandf. Ch. (N. Y.) 282, 45 S. W. 677. See also, Haw- 143; Harris v. Knickerbacker, 5 kins v. Dunmore, 24 Misc. (N. Y.) Wend. (N. Y.) 638; Duffy v. O'Don- 623, 54 N. Y. S. 165 (holding that in avon, 46 N. Y. 223 ; Marston v. this case an executor could not set Sweet, 66 N. Y. 206, 23 Am. Rep. 43. up the statute to compel a reconvey- ** Bless v. Jenkins, 129 Mo. 647, 31 ance on account of the confidential S. W. 938. But see post, § 1224. 459 STATUTE OF FRAUDS. § 1222 generally that the law of the forum governs, at least unless the contract relates to realty, and if a statute of a state in which an action is brought prohibits the enforcement of the contract on which the action is based, that statute will be applied, and if prop- erly invoked, will defeat the action, notwithstanding the fact that the contract may have been good in the state where it was made." There are, however, authorities to the contrary." But cases which so hold, as a general rule, relate to contracts concerning realty. § 1222. Conflict of law — Cases applying lex loci con- tractus. — In those jurisdictions which do not regard the stat- ute of frauds as affecting the remedy merely but where it is con- sidered as affecting the contract itself, a choice must be made between the law of the place where the contract is made and that **Leroux v. Brown, 12 C. B. 801, 14 Eng. L. & Eq. 247, 74 E. C. L. 801; Buhl V. Stephens. 84 Fed. 922; Kleeman v. Collins, 9 Bush (Ky.) 460; Emery v. Burbank, 163 Mass. 326, 39 N. E. 1026, 28 L. R. A. 57, 47 Am. St. 456; Heaton v. Eldridge, 56 Ohio St. 87, 46 N. E. 638, 36 L. R. A. 817, 60 Am. St. 111. "It may be considered as settled that whatever relates to the remedy, and constitutes a part of the procedure, is determined by the law of the forum; but what- ever goes to the substance of the ob- ligation, and affects the rights of the parties growing out of the contract itself, or inhering in it, is governed by the lex loci contractus. The pro- vision of our statute is copied from the fifth clause of the fourth section of the English statute of frauds (29 Car. II. c. 3), and in the case of Leroux v. Brown, 12 C. B. 801, where the precise question now involved arose, it was held, upon great con- sideration, that this clause of the stat- ute affected the remedy only. A re- covery was denied in an action upon an oral contract not to be performed within a year, which was made in France, where it was capable of proof by parol evidence. The doctrine es- tablished by this case has been uni- formly adhered to by the English courts, and has been followed or cited with approbation by many American courts, and it has met with the general approval of text writers. The case of Leroux v. Brown, supra, has been criticized somewhat on the distinction there drawn between the fourth and seventeenth sections of the statute, to the point that the former section related to the remedy and the latter to the obligation or validity of the contract. This dis- tinction has not met with general ap- proval, and it has been held in some of the later cases that both sections relate to the remedy. Leroux v. Brown is cited with approval by the Supreme Court in Pritchard v. Nor- ton, 106 U. S. 124, 134. 1 Sup. Ct. 102." Buhl V. Stephens, 84 Fed. 922. "Gibson v. Holland, L. R. 1 C. P. 1; Miller v. Wilson, 146 111. 523, 34 N. E. 1111, 37 Am. St. 186; Cochran V. Ward, 5 Ind. App. 89, 29 N. E. 795, 31 N. E. 581, 51 Am. St. 229; Kling V. Fries, ZZ Mich. 275 ; Hough- taling V. Ball, 19 Mo. 84, 20 Mo. 563, 59 Am. Dec. 331 ; Anderson v. May, 10 Heisk. (Tenn.) 84; Low v. An- drews &c. Co., 1 Storv (U. S.) 435, Fed. Cas. No. 8559. See also. Wolf V. Burke, 18 Colo. 264, 32 Pac. 427, 19 L. R. A. 792, and note. Wilson v. Lewiston Mill Co., 150 N. Y. 314. 44 N. E. 959. 55 Am. St. 680; Scudder V. Bank, 91 U. S. 406. 23 L. ed. 245. § 1223 CONTRACTS. 460 of the place where it Is to be performed. In those jurisdictions in which the statute is considered as affecting the vaHdity of the contract itself the lex loci contractus is generally declared to gov- ern." In conformity with this principle it has been held that a contract valid by the law of the place where it is made is enforci- ble, though contrary to the statute of frauds in force at the place of performance.'*^ The converse of this is also held true, and a contract which violated the statute of frauds of the place where it was made has been held unenforcible though valid according to the law of the place of performance.*^ § 1223. Conflict of law— Cases applying law of place of performance. — There are a number of cases, however, which hold that the law of the place of performance instead of the law of the place where the contract is made, so far as the statute of frauds is concerned, governs instead of the lex loci contractus.*' And it has been held with reference to the statute of frauds that the intention of the parties to a contract, so far as it is disclosed, must control, and when it is ascertained, it should not be overcome by considerations respecting the place where the contract was ex- ecuted or accepted.^^ § 1224. How statute must be invoked. — There is consider- able conflict among the authorities as to the manner in which the statute should be pleaded or taken advantage of. The better rule *« Kling V. Fries, 33 Mich. 275 ; Co., 33 Mich. 340 ; Da Costa v. Davis, Foster v. Lumbermen's Min. Co., 68 24 N. J. L. 319 ; Goldstein v. Scott, 76 Mich. 188, 36 N. W. 171; Da Costa App. Div. (N. Y.) 78, 78 N. Y. S. V. Davis, 24 N. J. L. 319; Forward v. 736. Harris, 30 Barb. (N. Y.) 338; All- '* Young v. Pearson, 1 Cal. 448 shouse v. Ramsey, 6 Whart. (Pa.) (verbal partnership agreement made 331, 37 Am. Dec. 417; Scudder v. in Louisiana to be performed in Cal- Union Nat. Bank, 91 U. S. 406, 23 ifornia) ; Davenport v. Karnes, 70 111. L. ed. 245; Pritchard v. Norton, 106 465 (parol antenuptial contract made U. S. 124, 27 L. ed. 104, 1 Sup. Ct. in Pennsylvania to be performed in 102. Illinois) ; Mason v. Dousey, 35 III. « Allen V. Schuchardt, Fed. Cas. 424, 85 Am. Dec. 368 (foreign bill of No. 236, 1 Am. L. Reg. (N. S.) 13; exchange drawn in one state and Hunt V. Jones, 12 R. I. 265, 34 Am. made payal)le in another) ; Turnow Rep. 635; Perry v. Mount Hope Iron v. Hochstadter, 7 Hun (N. Y.) 80 Co., 15 R. I. 380, 5 Atl. 632, 2 Am. St. (contract made in Germany to be 902. See also, Houghtaling v. Ball, performed in New York). 19 Mo. 84, 20 Mo. 563, 59 Am. Dec. ^Wilson v. Lewiston Mill Co., 150 331. N. Y. 314, 44 N. E. 959, 55 Am. St. ^'Roethke v. PhilHp Best Brewing 680. 461 STATUTE OF FRAUDS. § 1 225 seems to be that it may be invoked under a general deniaP^ as well as by specially pleading it, but if the fact of the agreement is ad- mitted, while this does not dispense with the writing required by the statute if the statute is at the same time properly relied upon, yet the weight of authority is to the effect that in such case the statute must be pleaded." A number of authorities hold that while the statute may be relied on under the general denial, yet there is a waiver if oral evidence of the alleged contract is permit- ted to be given without objection, and that the proper* way in which to raise the question where there is only general denial, is to object to evidence offered in violation of a statute when it is offered." The authorities on this point are not entirely har- monious and there is good reason for holding that oral evidence, whether objected to when offered or not, is insufficient to support a recovery on a contract required by the statute of frauds to be in writing, at least where the contract is declared on as a written contract.'^* § 1225. Fourth section of the original act — Affect form of simple contracts. — The fourth section of the original act pro- vided " * * * ]\jo action shall be brought whereby to charge " See Buhl v. Stephens, 84 Fed. scope than most other pleas, and un- 922; Billingslea v. Ward, 33 Md. 48; der it defendant may invoke the stat- Riif V. Riibe, 68 Ncbr. 543, 94 N. ute of frauds." Howell v. Harvev, 65 W. 517; Levien v. Dietz, 106 App. W. Va. 310, 64 S. E. 249, 22 L R. Div. (N. Y.) 208, 94 N. Y. S. 419 A. (X. S.) 1077n. (holding the defense of the statute " Battell v. Matot, 58 Vt. 271, 5 of frauds admissible under a general Atl. 479, and note in 78 Am. St. 657. denial where the complainant alleges ^ Miller v. Harper, 63 Mo. App. that the contract sued on is in writ- 293 ; Clement v. Gill, 59 Mo. App. ing) ; Birchell v. Neaster, 36 Ohio St. 482; Crough v. Nurge, 44 App. Div. 331; Rowton v. Rowton, 1 Hen. & (N. Y.) 19, 60 N. Y. S. 395, affd. in Mun. (Va.) 92; Jackson's Assignees 168 N. Y. 657, 61 N. E. 1128; Cosand V. Cutright. 5 Munf. (Va.) 308; v. Bunker, 2 S. Dak. 294. 50 N. W. Eaves v. Vial, 98 Va. 134, 34 S. E. 84; Montgomery v. Edwards, 46 Vt. 978; Robertson v. Smith, 94 Va 250, 151, 14 Am. Rep. 618; Williams-Hay- 26 S. E. 579, 64 Am. St. 723; Will- ward Shoe Co. v. Brooks, 9 Wyo. iams-Havward Shoe Co. v. Brooks, 424, 64 Pac. 342. See also, Nunez v. 9 Wyo. 424, 64 Pac. 342 (citing many Morgan, 77 Cal. 427, 19 Pac. 753, and authorities). See also, note in 78 note in 78 Am. St. 654, 655. Am. St. 648. "The scope of the plea " See Wynn v. Garland, 19 Ark. of the general issue is, as a general 23, 68 Am. Dec. 190; Dixon v. Duke, rule, a denial of every material aver- 85 Ind. 434; Benedict v. Bird, 103 ment of fact in the declaration." Iowa 612, 72 N. W. 768; Thomas v. Sprague v. Hosie, 155 Mich. 30, 118 Churchill, 48 Nebr. 266, 67 N. W. N. W. 497, 130 Am. St. 558. "The 182; Brauer v. Oceanic &c. Co., 178 plea non assumpsit is broader in its N. Y. 339, 70 N. E. 863. § 1226 CONTRACTS. 462 any executor or administrator upon any special promise to answer damages out of his own estate (2) or whereby to charge the de- fendant upon any special promise to answer for the debt, default or miscarriages of another person, (3) or to charge any person upon any agreement made upon consideration of marriage, (4) or upon any contract or sale of lands, tenements, or hereditaments, or any interest in or concerning them, (5) or upon any agreement that is not to be performed within the space of one year from the making thereof (6) unless the agreement upon which such action shall be brought or some memorandum or note thereof shall be in writing and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized."^^ A brief discussion will be given of the various contracts mentioned in the foregoing section in the order in which they are named therein. § 1226. Fourth section — Promises by executors and ad- ministrators. — The clause of the statute providing that "No action shall be brought whereby to charge any executor or admin- istrator upon any special promise to answer damages out of his own estate," made verbally, is closely allied to and is governed by the same principles, as the other provision of the statute re- lating to oral promises by one to pay the debt of another.^® It was enacted to prevent executors or administrators from being fraudulently held for the debts or liabilities of the estate upon which they were called to administer. The special promise re- ferred to is any actual promise made in distinction from promises implied by law, which are held not within the statute." The statute is also usually held not to apply where the promise of the executor or administrator had for its object the purpose to sub- serve some interest of his own.°^ In such a case the contract is founded upon a new and distinct consideration moving between the parties.^* Neither does it include promises on which the "^ Stat. 29 Car. II, Cap. 3, § 4, Bellows v. Sowles, 57 Vt. 164, 52 Am. "'Harrington v. Rich, 6 Vt. 666; Rep. 118. Bellows V. Sowles, 57 Vt. 164, 52 Am. °' Blake v. Robinson, 129 Iowa 196, Rep 118 105 N. W. 401; Emerson v. Slater, "Sage V. Wilcox, 6 Conn. 81; 22 How. (U. S.) 28, 16 L. ed. 360. Eaton V. Graham, 104 111. App. 296; "Bott v. Barr, 95 Ind. 243; Hall 463 STATUTE OF FRAUDS. § 1 22 7 executor or administrator is personally lial)le even though made for the benefit of the estate and though he assumes to contract as executor or administrator."" Where the cause of action exists against the deceased, the executor or administrator may make himself personally liable by a written promise founded upon a sufficient consideration."^ There must be assets in their hands or forbearance for the creditor to constitute a consideration. In case there are no assets a promise by an executor to pay his tes- tator's debts is nudum pactum."- The giving of bond by an administrator to the judge of the probate court to pay the debts and legacies of the testator, has been held to operate as an admis- sion of assets."^ In order to fall within this clause of the statute there must first be a liability against the decedent's estate primar- ily, which the executor or administrator promises to pay out of his own estate."* § 1227. Fourth section — Promise to answer for debt of another — Scope of clause. — The words ''debt, default, or mis- carriage," include any present or future liability whether arising out of contract or tort."'^ The words "another person" as here used mean some person other than the immediate parties to the promise, that is to say, a third person."" Thus a corporation and V. Richardson, 22 Hun (N. ^.) 444, "' Stebbins v. Smith, 4 Pick, affd., 89 N. Y. 636; Bellows v.Sowles, (Mass.) 97. 57 Vt. 164, 52 Am. Rep. 118; Temple- "Taylor v. Mygatt, 26 Conn. 184; tons V. Bascom, 33 Vt. 132; Cross v. Holderbaugh v. Turpin, 75 Ind. 84, Richardson, 30 Vt. 641; Lampson v. 39 Am. Rep. 124; Cochrane v. Mc- Hobart's Estate. 28 Vt. 697. Entee (N. J.), 51 Atl. 279; Wales v. ""See ante, §§ 512, 519. See also, Stout, 115 N. Y. 638, 21 N. E. 1027; Meade v. Bowles, 123 Mich. 696, 82 N. Bellows v. Sowles, 57 Vt. 164, 52 Am. W. 658; Fehlinger v. Wood, 134 Pa. Rep. 118. St. 517, 19 Atl. 746; Jack v. Cassin, 9 "=* Matson v. Wharam, 2 T. R. 80; Tex. Civ. App. 228, 28 S. W. 832. Kirkham v. Marter, 2 B. & Aid. 613; Promises of this character may, how- Mountstephen v. Lakeman, L. R. 7 Q. ever, be affected by other clauses of B. 196; Turner v. Hubbell, 2 Day the local statute. See Perkins v. (Conn.) 457, 2 Am. Dec. 115; Cahill Cooper (Cal.). 24 Pac. 377, reversed v. Bigelow, 18 Pick. (Mass.) 369; on another point in 87 Cal. 241, 25 Cole v. Hutchinson, 34 Minn. 410, Pac. 411. 26 N. W. 319; Mallory v. Gillett. 21 "Davis V. French, 20 Maine 21. 37 N. Y. 412; Matthews v. Milton, 4 Am. Dec. 36. Verg. (Tenn.) 576. 26 Am. Dec. 247; "Pearson v. Henrv, 5 T. R. 6; Mead v. Watson. 57 Vt. 426. Rann v. Hughes, 7 T." R. 350n : Bank ""Windell v. Hudson. 102 Ind. 521. of Troy v. Topping, 9 Wend. (N. Y.) 2 N. E. 303; Colt v. Root. 17 Mass. 273; Ten Evck v. Vandcrpoel, 8 229; Prather v. Vinevard, 4 Gilm. Johns. (N. Y.') 120. (111.) 40; Furbish v. Goodnow, 98 § 1228 CONTRACTS. 464 a Stockholder therein are distinct entities, and a promise by a stockholder to pay a debt of the corporation, no other element entering in, is a promise to pay the debt of another.*'^ § 1228. Fourth section — Promise to answer for the debts of another — General matters. — The clause of the statute which provides that one shall not be liable on a verbal promise to answer for the debts, defaults or miscarriage of another applies to transactions in which one person has incurred or is incurring a liability to a second person which a third party agrees to dis- charge. An immense amount of litigation has arisen over the construction of this clause. It is perhaps impossible to reconcile the decisions that have been made under it.**' It is believed, how- ever, that the conflict among the cases results from the fact that they were decided under different theories and that the conflict is more apparent than real. The courts have applied various rules by which to determine whether a given contract comes with- in the provisions of the act. They may be grouped as follows: If the promise by the third person to answer for the debt of another discharges the latter's obligation, the promise is not with- in the statute but if the one originally liable still remains bound the promise of a third person is within the statute.^'' By other courts it is held that if the new promise does not de- Mass. 296; Barker v. Bucklin, 2 De- Rep. 310; Perkins v. Hershey, 11 nio (N. Y.) 45, 43 Am. Dec. 726; Mich. 504, 43 N. W. 1021; Ackley v. Teeters v. Lamborn, 43 Ohio St. 144, Parmenter, 98 N. Y. 425, 50 Am. Rep. 154 1 N E 513 693; Dougherty v. Bash, 167 Pa. bt. "Temple v. Bush, 79 Conn. 41. 55 429, 31 Atl. 729; Corbett v. Cochran, Atl. 557; Home Nat. Bank v. Water- 3 Hill L. (S. Car.) 41, 30 Am. Dec. man 134 111 461, 29 N. E. 503; Rog- 348; Warren v. Smith, 24 Tex. 484, ers V Waters 2 Gill. & J. (Md.) 64; 76 Am. Dec. 115; Anderson v. Davis, Hanson v. Donkersley, Z1 Mich. 184; 9 Vt. 136, 31 Am. Dec. 612; Mankin Maule V. Bucknell, 50 Pa. 39 ; Sea- v. Jones, 63 W. Va. Z12>, 60 S. E. 248, right V. Pavne, 2 Tenn. Ch. 175. 15 L. R. A. (N. S.) 214n ; Hooker v. «'See Diilaby v. Wilcox, 60 Conn. Russell, dl Wis. 257, 30 N. W. 358; 71, 22 Atl. 491, 13 L. R. A. 643, 25 note in 22 L. R. A. (N. S.) 1084. Am. St. 299; Fullam v. Adams, Zl Vt. This provision has been said to apply 391 ; Gilmore v. Skookum Box Fac- only to "an undertaking by a person torv, 20 Wash. 703, 56 Pac. 934. not before liable, for the purpose of "Mallet V. Bateman, L. R. 1 C P. securing or performing the same 163; Packer v. Benton, 35 Conn. 343, duty for which the party for whom 95 Am. Dec. 246; Spann v. Baltzell. the undertaking is made, continues 1 Fla. 301, 46 Am. Dec. 346; Mitchell liable." Packer v. Benton, 35 Conn. V. Griffin, 58 Ind. 559; Andre v. Bod- 343, 95 Am. Dec. 246, quoted in Oil- man, 13 Md. 241, 71 Am. Dec. 628; laby v. Wilcox, 60 Conn. 71, 22 Atl. Dow V. Swett, 134 Mass. 140, 45 Am. 491, 13 L. R. A. 643, 25 Am. St. 299. 4^5 STATUTE OF FRAUDS. § I22i pend on the payment of the pre-existing indebtedness, it does not fall within the provisions of the act, but that if it does depend on the payment of the pre-existing indebtedness, it is within the statute, even if founded on a consideration and is primarily for the benefit of the promisor.'*' Other cases, however, uphold the promise when it is based on a new consideration which is of pecuniary benefit to the promisor.''^ Where the leading object of the promisor is to subser\^e some interest or purpose of his own, notwithstanding the effect is to pay or discharge the debt of another, his promise is not within the statute." Thus where the assignee of an equity of redemption orally agrees to pay the mort- gage debt in consideration of a forbearance to foreclose, his promise is not invalid under the statute of frauds since the as- signee's promise is supported by a sufficient consideration." Under this rule the benefit accruing to the promisor must be direct '" Merrell v. Witherby. 120 Ala. 418, 23 So. 994, 26 So. 974, 74 Am. St. 39; Gibson County v. Cincin- nati Steam-Heating Co., 128 Ind. 240. 27 N. E. 612, 12 L. R. A. 502n; King v. Lumber Co., 80 Minn. 274, 83 N. W. 170; Giles v. Ma- honey, 79 Minn. 309, 82 N. W. 583; Maurin v. Fogelberg, 37 Minn. 23, 32 N. W. 858, 5 Am. St. 814; Grant V. Wolf, 34 Minn. 32, 24 N. W. 289; Lamkin v. Palmer, 164 N. Y. 201, 58 N. E. 123; White v. Rintoul, 108 N. Y. 222, 15 N. E. 318; Garfield v. Rut- land Ins. Co., 69 Vt. 549, 38 Atl. 235 ; McKenzie v. Puget Sound Nat. Bank, 9 Wash. 442, 37 Pac. 668, 43 Am. St. 844. "Original promises, as distin- guished from collateral promises, un- der the statute of frauds required to be made in writing, are such as are founded on a new consideration, the debt antecedently contracted for still subsisting, moving to the promisor and beneficial to him, and such that the _ promisor thereby comes under an independent duty of payment, ir- respective of the liabilitv of the prin- cipal debtor." White v' Rintoul, 108 N. Y. 222. 15 N. E. 318 (from sylla- bus in 15 N. E. 318. quoted in Greene V. T^atcham, 2 Colo. App. 416, 31 Pac. 233). _ "A consideration to support a promise, not in writing, to pay the debt of another must be of a peculiar 30 — Contracts, Vol. 2 character, and must operate to the advantage of the promisor, and place him under a pecuniary obligation to the promisee, independent of the original debt, which obligation is to be discharged by the payment of that debt." McKenzie v. Bank, 9 Wash. 442, 37 Pac. 668, 43 Am. St. 844. " Chapline v. Atkinson, 45 Ark. 67, 55 Am. Rep. 531 ; Smith v. Delaney, 64 Conn. 264, 29 Atl. 496, 42 Am. St. 181n; Schaafs V. Wentz, 100 Iowa 708, 69 N. W. 1022; Durgin v. Smith. 115 Mich. 239, 73 N. W. 361; Lookout Mountam R. Co. v. Houston, 85 Tenn. 224, 2 S. W. 36; Farnham v. Chapman, 61 Vt. 395, 18 Atl. 152; Mankin v. Jones, 63 W. Va. 373, 60 S. E. 248, 15 L. R. A. (N. S.) 214; Hurst Hardware Co. v. Goodman, 68 W. Va. 462. 69 S. E. 898, 32 L. R. A. (N. S.) 598 (reviewing a number of authorities) ; Kelley v. Schupp, 60 Wis. 76, 18 N. W. 725. "Burns v. Bradford-Kennedy Lum- ber Co. (Wash.), 112 Pac. 359; How- ell v. Harvev, 65 W. Va. 310. 64 S E. 249, 22 L. R. A. (N. S.) 1077 and note. "Manning v. Anthony, 208 Mass. 399, 94 N. E. 466, 32 L. R. A. (N. S.) 1179. See also, Enos v. Anderson, 40 Colo. 305, 93 Pac. 475, 15 L. R. A. (N. S.) 1087n. § 1229 CONTRACTS. 466 and immediate and not be merely an interest of the promisor in the subject-matter of the promise.'* Other courts apply a similar but broader rule to the effect that if the third party's promise rests upon a new and distinct consider- ation, the statute does not apply, irrespective of whether the con- sideration is a benefit to the promisor or a detriment to the prom- isee.'"^ No effort will be made to bring all the cases within the forego- ing rules nor will any attempt be made to reconcile the many con- flicting decisions; instead the essential features of the clause and its application to certain of the more common forms of contracts will be considered. It is obvious that under this provision of the statute there must be ( i ) an existing liability owing by one to another, (2) for which a third person promises to answer, (3) by a promise given to the creditor, and (4) not be merely a prom- ise by the promisor to pay his own obligation. § 1229. Necessity for a subsisting, binding obligation. — The party for whom the promise is made must be liable to the party to whom the promise is made. There must be a valid debt, default or miscarriage, present or prospective, for which the promisor agrees to answer in order to bring the case within the statute.'^ A promise to pay the debt of one not legally com- '*Winne v. Mehrbach, 130 App. W. 855; Leonard v. Vredenburgh, 8 Div. (N. Y.) 329, 114 N. Y. S. 618; Johns. (N. Y.) 29, 5 Am. Rep. 317; Hurst Hardware Co. v. Goodman, 68 (See, however, Mallory v. Gillett, 21 W Va. 462, 69 S. E. 898, 32 L. R. A. N. Y. 412) ; Whitehurst v. Hyman, (X S.) 598. See also. Miles v. Dris- 90 N. Car. 487; Gainesville &c. Hos- coll, 201 Mass. 318, 87 N. E. 579; pital Assn. v. Hobbs, 153 N. Car. Snyder v. Monroe Eckstein Brewing 188, 69 S. E. 79; Cooper v. Cham- Co., 107 App. Div. (N. Y.) 328, 95 bers, 15 N. Car. 261, 25 Am. Dec. N. Y. S. 144, affd. 188 N. Y. 576, 80 710; Tindal v. Touchberry, 3 Strob. N. E. 1120. (S. Car.) 177, 49 Am. Dec. 637; "Chapline v. Atkinson & Co., 45 Templetons v. Bascom, 33 Vt. 132. Ark. 67, 55 Am. Rep. 531; Hughes v. See also, note in 22 L. R. A. (N. S.) Lawson, 31 Ark. 613; Kurtz v. Ad- 1082. A promise to pay the debts of ams, 12 Ark. 174; Craft v. Kendrick, another which has been performed 39 Fla. 90, 21 So. 803; Carraher v. is not within the statute of frauds. Allen, 112 Iowa 168, 83 N. W. 902; Milner v. Harris, Nebr. (unof.) 584, Creel v. Bell & Co., 2 J. J. Marsh. 95 N. W. 682. (Kv.) 309; Dearborn v. Parks, 5 ''" Kilbride v. Moss, 113 Cal. 432, 45 Greenl. (Maine) 81, 17 Am. Dec. Pac. 812, 54 Am. St. 361; Schotte v. 206; Jones v. Hardesty, 10 Gill. & Puscheck, 79 111. App. 31; McKin- J. (Md.) 404, 32 Am. Dec. 180; ney v. Armstrong, 97 111. App. 208; Swayne v. Hill, 59 Nebr. 652, 81 N. Resseter v. Waterman, 151 111. 169, 467 STATUTE OF FRAUDS. § 1230 petent to contract such as a minor need not be in writing." The habihty of a party for whom the guaranty is given must be a legal liability to bring it within the statute" and there must be a clearly defined liability of the third person." § 1230. To whom the promise must be made. — To bring a promise within the statute it must be made to the person entitled to enforce the liability assumed by the promisor."'^ A promise to the debtor to pay his debts and thereby relieve him from the pay- ment of it himself is not within the statute and is a valid and en- forcible contract when based upon a consideration." Thus prom- n N. E. 875; Moorehouse v. Cran- gle, 36 Ohio St. 130, 38 Am. Rep. 564 "Kinc V. Summitt, 1Z Ind. 312, 38 Am. Rep. 145. '^Harris v. Huntbach, 1 Burr. Zll; Royal Exchange Assur. Copr. v. Sjoforsakrings Aktebolaget Vega, 70 L. Jour. ::. B. 874 (1901), 2 K. B. 5v.7; Chapin v. Lapham, 20 Pick, (MaFs.) 467. " Moorbouse V. Crangle, Vy Ohio St. 130, cZ Am. Rep. 634 (promise by l!ie stockholder ^nd president of a corporation that \i the plaintiff would subscribe and pay five hunched dol- lars to the capital stock of such cor- poration he should receive fifteen per cent, of that amount in a year). See also, Beeler v. Finnel, 85 Mo. App. 438. ^Thomas v. Cook, 8 B. & C. 728; Reader v. Kingham, 13 C. B. (N. S.) 344; Birkmyr v. Darnell. 1 Salk. 27; Fitzgerald v. Dressier, 5 C. B. (N. S.) 885; Batson v. King, 4 H. & N. 739; Wildes v. Dudlow (1874), L. R. 19 Eq. 198; Jones v. Shorter, 1 Ga. 294, 44 Am. Dec. 649; Smith v. Say- ward, 5 Maine 504 ; Tighe v. Morri- son (1889), 116 N. Y. 263, 22 N. E. 164; Harrison v. Sawtel, 10 Johns. (N. Y.) 242, 6 Am. Dec. Z2>1 ; Cha- pin V. Merrill, 4 Wend. (N. Y.) 657; Barry v. Ransom, 12 N. Y. 462; San- ders V. Gillespie, 59 N. Y. 250; Mc- Craith v. National &c. Bank, 104 N. Y. 414. 10 N. E. 862. "The statute applies only to promises made to the persons to whom another is already, or is to become, answerable." Har- greaves v. Parsons, 13 M. & W. 560. "I think that to bring a promise within the statute the debt for which the defendant has promised to an- swer must be a debt due to the per- son to whom the promise is made, and that the promise must be made to a person who could bring an ac- tion for the debt." Bowen, L. J., Hoyle V. Hoyle, L. R. (1893), 1 Ch. 84. '^Eastwood V. Kenyon, 11 A. & E. 438; Nelson v. First Nat. Bank, 48 111. 36, 95 Am. Dec. 510; Brown v. Strait, 19 111. 88; Rabbermann v. Wis- kamp, 54 111. 179; Meyer v. Hartman, 12 111. 442; Botkin v. Middlesborough &c. Land Co., 23 Ky. L. 1964, 66 S. W. 747; Alger v. Scoville, 1 Gray (Mass.) 391; Fish v. Thomas. 5 Gray (Mass.) 45, 66 Am. Dec. 348; Per- kins V. Littlefield, 5 Allen (}^Iass.) 370; Aldrich v. Ames. 9 Gray (Mass.) 76; Chapin v. Lapham, 20 Pick. (Mass.) 467; Goetz v. Foos, 14 Gil. (Minn.) 196, 100 Am. Dec. 218; Gill V. Ferrin, 71 N. H. 421, 52 Atl. 558; Barker v. Bucklin, 2 Denio (N. Y.) 45, 60, 43 Am. Dec. 726; Merse- reau v. Lewis, 25 Wend. (N. Y.) 243; Feldman v. McGuire, 34 Ore. 309, 55 Pac. 872; Townsley v. Sum- rail, 2 Pet. (U. S.) 170, 7 L. ed. 386; Beaman v. Russell, 20 Vt. 205, 49 Am. Dec. 775 ; Gilmore v. Skookum Box Factory, 20 Wash. 703, 56 Pac. 934; Shook V. Vanmater, 22 Wis. 532. See also, Esch V. White, 76 Minn. 220, 78 N. W. 1114. A partner in a firm agreed to indemnify the firm against certain debts owing to the firm ; it was held not to be an agreement to answer for the debt of another. § I23I CONTRACTS. 468 ises by an incoming partner to pay the firm debts^^ or by a vendee of land to assume an incumbrance thereon*^ may be declared not within the statute when supported by a sufficient consideration because made to the outgoing partner or vendor. § 1231. Original and collateral promises. — It is pretty gen- erally recognized, that if the real promise is a collateral under- taking to answer for the debt, default or miscarriage of another, it comes within the statute and is unenforcible.^* The difficulty lies in determining what are original and what are collateral agreements. The cases upon this point are much in conflict.®* Hoyle V. Hoyle, L. R. (1893), 1 Ch. 84. "Dickson v. Conde, 148 Ind. 279, 46 N. E. 998. To same effect, Wear- Boogher Dry Goods Co. v. Kelly, 84 Miss. 236, 36 So. 258; Shufeldt v. Smith, 139 Mo. 367, 40 S. W. 887; Bartlett v. Smith, 5 Nebr. (Unof.) Z37, 98 N. W. 687; Lyon v. Cloches- sy, 43 Misc. (N. Y.) 67, 86 N. Y. S. 245; Don Yook v. Washington Mill Co., 16 Wash. 459, 47 Pac. 964. ^'Mudd V. Carico, 104 Ky. 719, 20 Ky. L. 898, 47 S. W. 1080; Flint V. Winter Harbor Land Co., 89 Maine 420, 36 Atl. 634; Provenchee V. Piper, 68 N. H. 31, 36 Atl. 552; Thompson v. Chessman, 15 Utah 43, 48 Pac. 477; Fosha v. O'Donnell, 120 Wis. 336, 97 N. W. 924. See also. Smith V. Caldwell, 6 Idaho 436, 55 Pac. 1065. "Conceding, for argu- ment, that the agreement of defend- ant had for its main object the re- lease of the estate from the indebted- ness to the bank, (the mortgagee), still we encounter an insuperable ob- stacle to the conclusion of defend- ant that it was an agreement to answer for the debt of another within the meaning of the statute. Courts of this state and elsewhere repeatedly have declared that the statute applies only to promises made to the creditor, and not to those made to the debtor or some person stand- ing in his shoes, such as a purchaser of encumbered property. * * * Defendant is driven to say that plain- tiff, under the terms of the contract of sale, assumed the relation of the estate to the debt, and, if this be true, the promise of defendant was made to the debtor, not to the cred- itor." Hedden v. Schneblin, 126 Mo. App. 478, 104 S. W. 887. •** Simpson v. Hall, 47 Conn. 417; Frame v. August, 88 111. 424; Vaugh- an V. Smith, 65 Iowa 579, 22 N. W. 684; Wickersham v. Orr, 9 Iowa 253, 74 Am. Dec. 348; Doyle v. White, 26 Maine 341, 45 Am. Dec. 110; Stratton v. Hill, 134 Mass. 27; Ames V. Foster, 106 Mass. 400, 8 Am. Rep. 343; Studley v. Earth, 54 Mich. 6, 19 N. W. 568; Bates v. Donnelly, 57 Mich. 521, 24 N. W. 788; Belknap V. Bender, 75 N. Y. 446, 31 Am. Rep. 476; Durant v. Allen, 48 Vt. 58. Note to Packer v. Benton, 95 Am. Dec. 257. Whether a promise is original or collateral is to be deter- mined, not by the particular language used, but from all the evidence in the case. Blank v. Dreher, 25 111. 331. It must depend upon the in- tention of the parties, to be ascer- tained from the nature of the prom- ise and the language used. Norris V. Spencer, 18 Maine 324. The con- struction the parties themselves place upon the promise is important. Dix- on v. Frazee, 1 E. D. Smith (N. Y.) Z2. '^Anderson v. Spence, 72 Ind. 315, 2)7 Am. Rep. 162. The terms "original" and "collateral" promises do not occur in the statute and have been introduced by courts to ex- plain its objects and expound its true interpretation. D'Wolf v. Ra- band, 1 Pet. (U. S.) 476, 7 L. ed. 672. 469 STATUTE OF FRAUDS. § 1 232 However, the following indicates the line of cleavage: collateral liability is of two kinds, — that of suretyship and that of guaranty. No matter how they may vary in other respects the guarantor and surety are both bound for a third person. The contract of guaranty varies from the contract of suretyship in that the guar- antor becomes liable by his own separate undertaking, the princi- pal not joining therein. The contract of guaranty is also usually entered into at a different time, either prior or subsequent to the time the principal becomes liable and is frequently founded on a consideration different from that which binds the principal. On the other hand, the surety generally becomes bound at the same time and his agreement is supported by the same consideration as the promise of his principal. In other words, the surety is an original promisor while the promise of the guarantor is collateral. All contracts of guaranty are within the statute and must be in writing, while there are some agreements commonly termed con- tracts of suretyship which may be made orally and yet not fall within the statute. Following out this line of reasoning it will be found that it may be laid down as a general proposition that if the promise sued on is a promise to be collaterally liable for an obligation which has already attached or is to attach to another or which the law makes primarily the obligation of another and has no other consideration to support it, the promise must be in writing. § 1232. General rules further considered. — However, the fact that all the parties enter into the contract at the same time does not necessarily take it out of the statute. Thus the mere subscribing of one's name on a contract, under the word "surety" has been held sufficient as a note or memorandum of the obliga- tion.^" On the other hand, in so far as the statute of frauds is concerned, an indorsement in blank by an accommodation party is sufficient." The distinction between the terms original and '"Dodge V. Lean, 13 Johns. (N. ^ Sloan v. Gibbes, 56 S. Car. 480, Y.) 508; Mead v. Winslow, 53 Wash. 35 S. E. 408, 76 .\m. St. 559. See 638, 102 Pac. 753, 23 L. R. A. (N. also, Weeks v. Parsons, 176 Mass. S.) 1197n. 132 Am. St. 1092. See 570, 58 N. E. 157. also, Gould V. Moring, 28 Barb. (N. Y.) 444. § 1^33 CONTRACTS. 470 collateral promise has been expressed as follows : "Cases are not considered as coming within the statute, when the party promising has for his object a benefit which he did not before enjoy, accru- ing immediately to himself; but where the object of the promise is to obtain the release of the person or property of the debtor, or other forbearance or benefit to him, it is within the statute."^* § 1233. Original promises — Payment out of property of debtor. — In the following cases the promise has been held binding without writing : Where the promisor has or represents that he has in his hands funds or goods belonging to the debtor out of which he has authority^" and where he is in duty bound to pay ** Nelson v. Boynton, 3 Mete. (Mass.) 396, 2,7 Am. Dec. 148. To same effect. Fish v. Hutchinson, 2 Ld. Ken. 537, 2 Wils. 94; Clifford v. Luhring, 69 111. 401; Furbish v. Goodnow, 98 Mass. 296; Ames v. Foster, 106 Mass. 400, 8 Am. Rep. 343; Wills v. Brown, 118 Mass. 137; Nelson v. Boynton, 3 Mete. (Mass.) 396, Z7 Am. Dec. 148; Jackson v. Rayner, 12 Johns. (N. Y.) 291; Nugent V. Wolfe, 111 Pa. St. 471, 4 All. 15, 56 Am. Rep. 291 ; Cross v. Richardson, 30 Vt. 641 ; Watson v. Jacobs, 29 Vt. 169. "If the promise is made by one in his own name to pay for goods or money delivered to, or services done for another, that is original ; it is his own contract on good consideration, and is called original, and is binding on him with- out writing. But if the language is, 'Let him have money or goods, or do service for him, and I will see you paid,' * * * or, 'If he do not pay, I will,' this is collateral, and, though made on good consideration, it is void by the statute of frauds." Stone V. Walker, 79 Mass. 613. *» Adams v. Craig, 24 Ont. L. Rep. 490; Hughes v. Stringfellow, 15 Ala. 324; United Walnut Co. v. Courtney, 96 Ark. 46, 130 S. W. 566; Tevis v. Savage. 130 Cal. 411, 62 Pac. 611; Hughes V. Fisher, 10 Colo. 383, IS Pac. 702; Tuttle v. Armstead, 53 Conn. 175, 22 Atl. 677; Davis v. Banks, 45 Ga. 138; Smith v. Cald- well, 6 Idaho 436, 55 Pac. 1065; Frame v. August, 88 111. 424; Nel- son V. Hardy, 7 Ind. 364; Wood- ward V. Wilcox, 27 Ind. 207; Ben- bow V. Soothsmith, 76 Iowa 151, 40 N. W. 693; Williams Shoe Co. v. Gotzian, 130 Iowa 710, 107 N. W. 807; Harrison v. Simpson, 17 Kans. 508; Apperson v. Exchange Bank (Ky.), 10 Ky. L. 943, 10 S. W. 801; Watson v. Perrigo, 87 Maine 202, 32 Atl. 876; Raymer v. Sim, 3 Har. & Mc. H. (Md.) 451, 1 Am. Dec. 379; Gower v. Stuart, 40 Mich. 747; Mitts V. McMorran, 64 Mich. 664, 31 N. W. 521; Wills v. State Bank, 23 Nev. 59, 42 Pac. 490; Robinson v. Gilman, 43 N. H. 485; Olmstead v. Greenly, 18 Johns. (N. Y.) 12; Griffin V. Cordon, 18 Misc. (N. Y.) 236, 75 N. Y. St. 791, 41 N. Y. S. 380; Birchell v. Neaster, 36 Ohio St. 331; Hiltz V. Scully, 1 Cin. S. C. (Ohio) 555; Hall v. Lincoln Sav. &c. Co., 220 Pa. St. 485, 69 Atl. 994; Peck V. Goff, 18 R. I. 94, 25 Atl. 690; Peele v. Powell (N. Car.), 7i S. E. 234; Smith v. Rogers, 35 Vt. 140. "We apprehend the true prin- ciple why the promise to the credit- or is valid without writing, js * * * [that] the party making the promise, holds the funds of the debtor for the purpose of paying his debt, and as between him and the debtor it is his duty to pay the debt, so that when he promises the creditor to pay it, in substance he promises to pay his own debt, and not that of an- other; and though the debtor still re- mains liable for the debt, his real relation is rather that of a surety 471 STATUTE OF FRAUDS. § 1234 the debtors' obligation, °° the promise is not within the provision of the act, since by accepting the funds or other goods the prom- isor has assumed the position of a trustee for the creditor.®^ § 1234. Original promises — New consideration moving to promisor. — "The promise of one person, though in form to answer for the debt of another, if founded upon a new and suf- ficient consideration, moving from the creditor and promisee to the promisor, and beneficial to the latter, is not within the statute of frauds, and need not be in writing."^^ This rule applies where the promisee has transferred or released to the promisor some in- terest in the property of the debtor,"^ as a lien given by law to the seller for the price of goods sold, but not delivered f* or to a land- lord upon the goods of his tenant for rent;"^ or where the prom- isee has released to the promisor and holder of the property an attachment, or a trustee process f^ or where he has released to the promisor the right to attach property of the debtor,"^ or to bring a for the party whose duty it is, and who has promised to pay his debt, than of a principal for whom the other has become surety or guaran- tor. He holds a fund in trust, under a duty to pay it to the creditor, and he makes an express promise to per- form it. In such case, it is no vio- lation of the spirit of the statute, to hold such promise an original one, and not necessary to be in writing." Fullam V. Adams, 37 Vt. 391. •^ Belknap v. Bender, 75 N. Y. 446, 31 Am. Rep. 476; Ackley v. Parmen- ter, 98 N. Y. 425, 50 Am. Rep. 693; Fullam V. Adams, 37 Vt. 391. Com- pare, however, with Bates v. Don- nelly, 57 Mich. 521, 24 N. \V. 788, and Birchell v. Neaster, 36 Ohio St. 331, in which it is held that the debt- or must assent to such. See also, Dupuis v. Interior Constr. &c. Co., 88 Mich. 103, 50 N. W. 103. "Tevis v. Savage. 130 Cal. 411, 62 Pac. 611; Tuttle v. Armstead, 53 Conn. 175, 22 Atl. 677; Havward v. Gunn. 82 111. 385 ; Walden v. Karr, 88 111. 49; Watson v. Perrigo, 87 Maine 202, 32 Atl. 876; Mitts v. McMorran, 64 Mich. 664, 31 N. W. 521; Grant V. Wolf, 34 Minn. 32, 24 N. W. 289; First Nat. Bank v. Chalmers, 144 X. Y. 432, 39 N. E. 331; Delp v. Bar- tholomay Brewing Co., 123 Pa. St. 42, 15 Atl. 871 ; Fehlinger v. Wood, 134 Pa. St. 517, 19 Atl. 746; Peck v. GofF, 18 R. I. 94, 25 Atl. 690; Wait v. Wait, 28 Vt. 350; Keves v. Allen, 65 Vt. 667, 27 Atl. 319; Lessel v. Zillmer, 105 Wis. 334, 81 N. W. 403. "Dyer v. Gibson, 16 Wis. 557, Quoted in Roy v. Flin, 10 Ariz. 80, 85 Pac. 725. See also, Emmerson v Slater. 22 How. (U. S.) 28. 16 L, cd. 360. See note in 126 Am. St 497. *" Barrel! v. Trussell, 4 Taunt. 117 Tomlinson v. Gill, Ambler 330; Perry v. Erb, 23 Misc. (X. Y.) 105, 50 X. Y. S. 714. " Fitzgerald v. Dressier, 5 C. B. (N. S.) 885. "'Williams v. Leper, 3 Burr. 1886; Thomas v. Williams, 10 B. & C. 664; Edwards v. Kelly, 6 M. & S. 204; Bampton v. Paulin, 4 Bing. 264; Stephens v. Pell, 2 C. & M. 710; Sling- erland v. Morse. 7 Johns. (X. Y.) 463. ■^ Cross V. Richardson, 30 Vt. 641. •^Lampson v. Hobart, 28 Vt. 697. 1235 CONTRACTS. 472 suit to enforce a lien.®® The agreement by a vendee of real estate to assume and discharge an encumbrance on such property as a part of the purchase-price is not within the clause of the statute requiring a promise to answer for the debt, default or miscarriage of another to be in writing, and an action may be maintained on the vendee's promise by either the vendor"'' or the holder of the encumbrance.^ § 1235. Original promises — Promise to pay own debt. — If the debt of another, which a man promises to pay, is also the debt of the promisor the statute has no application.- A promise to the debtor himself to pay his own obligation is not within the statute.^ Thus the assumption of partnership debts by an incoming ""Fish V. Thomas, 5 Gray (Mass.) 45. 66 Am. Dec. 348. ^'Tuttle V. Armstead, 53 Conn. 175, 22 Atl. 677; Ford v. Finney, 35 Ga. 258; Crim v. Fitch, 53 Ind. 214; Neiswanger v. McClellan, 45 Kans. 599, 26 Pac. 18 (assumption clause in a deed) ; Goodwin v. Gilbert, 9 Mass. 510; Pike v. Brown, 7 Gush. (Mass.) 133 (assumption clause con- tained in deed) ; Dobyns v. Rice, 22 Mo. Appw 448; Fiske v. McGregory, 34 N. H. 414; Murray v. Smith, 1 Duer. (N. Y.) 412 (assumption clause contained in deed) ; Miller V. Turnbach, 9 Lane. Bar (Pa.) 129; Bexar Bldg. &c. Asn. v. Newman (Tex. Civ. App.), 25 S. W. 461 ; Mor- ris V. Gaines, 82 Tex. 255, 17 S. W. 538. ^Mulvany v. Gross, 1 Colo. App. 112, 27 Pac. 878; Herrin v. Abbe (Fla.), 46 So. 183; Helms v. Kearns, 40 Ind. 124; McDill v. Gunn, 43 Ind. 315; Bateman v. Butler, 24 Ind. 223, 24 N. E. 989; Lowe v. Hamilton, 132 Ind. 406, 31 N. E. 1117; Lamb v. Tucker, 42 Iowa 118; Senninger v. Rowley, 138 Iowa 617, 116 N. W. 695, 18 L. R. A. (N. S.) 223n; Botkin V. Middlesborough Town &c. Co., 23 Ky. L. 1964, 66 S. W. 747; Hodg- kins V. Jackson, 7 Bush (Ky.) 342; Mudd V. Carico, 104 Kv. 719, 20 Ky. L. 898, 47 S. W. 1080; Daniels v. Gibson, 20 Ky. L. 847, 47 S. W. 621; Flint v. Winter Harbor Land Co., 89 Maine 420, 36 Atl. 634 (assumption of risk in deed) ; Lee V. Newman, 55 Miss. 365 (assump- tion of risk in deed) ; Ruhling v. Hackett, 1 Nev. 360; Society of Friends v, Haines, 47 Ohio St. 423, 25 N. E. 119; Taylor v. Preston, 79 Pa. St. 436; Urquhart v. Brayton, 12 R. I. 169 (assumption clause in deed) ; Moore v. Stovall, 2 Lea (Tenn.) 543 (assumption clause in deed) ; Spann v. Cochran, 63 Tex. 240; Pickett v. Jackson (Tex.), 42 S. W. 568; Thompson v. Chess- man, 15 Utah 43, 48 Pac. 477; Hoile V. Bailey, 58 Wis. 434, 17 N. W. 322; Green v. Hadfield, 89 Wis. 138, 61 N. W. 310. See also, Enos v. An- derson, 40 Colo. 395, 93 Pac. 475, 15 L. R. A. (N. S.) 1087 and note; Emmerson v. Slater, 22 How. (U. S.) 28, 16 L. ed. 360. 'Tevis V. Savage, 130 Cal. 411, 62 Pac. 611; Lester v. Bowman, 39 Iowa 611 ; Chamberlin v. Ingalls, 38 Iowa 300; Harlan v. Harlan, 102 Iowa 701, 72 N. W. 286; Nelson v. Boynton, 3 Mete. (Mass.) 396, 2,7 Am. Dec. 148; Besshears v. Rowe, 46 Mo. 501; Schufeldt V. Smith, 139 Mo. 367, 40 S. W. 887; Robinson v. Gilman, 43 N. H. 485; Goodman v. Cohen, 132 N. Y. 205, 30 N. E. 399; Snell v. Rogers. 70 Hun (N. Y.) 462, 24 N. Y. S. 379; Stoudt v. Hine, 45 Pa. St. 30; Putney v. Farnham, 27 Wis. 187, 9 Am. Rep. 459; Morgan v. South Milw. L. V. Co., 97 Wis. 275, 72 N. W. 872. * Eastwood V. Kenyon, 11 A. & E. 438; Enos v. Anderson, 40 Colo. 473 STATUTE OF FRAUDS. 1235 partner who has purchased the interests of those who retire, and has agreed with the continuing members to form a new partner- ship, is usually held not within the statute for the foregoing reason.* This is especially true when the promise to pay the firm debts is a part of the consideration supporting the transac- tion,° or is given in consideration of receiving assets of the old firm." However, it has been held that where the retiring partner is not discharged by the promise,^ or when the promise to pay the debts of the old firm is made subsequent to the transaction, it must be in writing.^ A promise by the vendee to pay the debt of an- other as part of the consideration paid for the property sold and delivered to such vendee," such as a promise to assume a valid and existing mortgage on land bought,^*^ is not within the statute of frauds. 395, 93 Pac. 475, 15 L. R. A. (N. S.) 1087 and note (purchaser of real es- tate assuming incumbrance there- on) ; Pratt v. Humphrey, 22 Conn. 317; Rabbermann v. Wiskamp, 54 111. 179; Meyer v. Hartman. 72 111. 442; Dickson v. Conde, 148 Ind. 279, 46 N. E. 998; IMerchant v. O'Rourke, 111 Iowa 351, 82 N. W. 759; Center V. McQuesten, -18 Kans. 476; North V. Robinson, 1 Duv. (Ky.) 71; Alger V. Scoville, 1 Gray (Mass.) 391; Per- kins V. Littlefield, 5 Allen (Mass.) 370; Hubon v. Park, 116 Mass. 541; Green v. Brookins, 23 Mich. 48, 9 Am. Rep. 74; Goetz v. Foos, 14 Gil. (Minn.) 196, 100 Am. Dec. 218; Holt V. Dollashide, 61 Mo. 433; Green v. Estes, 82 Mo. 2,^7; Gill v. Ferrin, 71 N. H. 421, 52 Atl. 558; Mersereau v. Lewis, 25 Wend. (N. Y.) 243; Barker v. Bucklin, 2 Denio (N. Y.) 45. 43 Am. Dec. 726; Fosha V. O'Donnell, 120 Wis. 336, 97 N. W. 924. *Lee V. Fontaine, 10 Ala. 755, 44 Am. Dec. 505 ; Haggerty v. John- ston, 48 Ind. 41 ; Poole v. Hintrager, 60 Iowa 180, 14 N. W. 223: Wright V. Carman. 47 X. Y. St. 125, 19 N. Y. S. 696; Reynolds v. Lawton, 62 Hun (N. Y.) 596. 43 N. Y. St. 578, 17 N. Y. S. 432; First Nat. Bank v. Eichelberger. 1 Woodw. Dec. (Pa.) 397; J. & H. Clasgens Co. v. Silber, 93 Wis. 579, 67 N. W. 1122. " Bessemer Sav. Bank v. Rosen- baum Grocery Co., 137 Ala. 530, 34 So. 609. ® McKenzie v. Jackson, 4 Ala. 230; Schindler v. Euell, 45 How. Pr. (N. Y.) 2i. See also, Vanness V. Dubois, 64 Ind. 338; Radel v. Mc- Morran, 30 Hun (N. Y.) 309, 17 N. Y. Week. Dig. 258; Townsend v. Long, 77 Pa. St. 143, 18 Am. Rep. 438; McCreary v. Van Hook's Exrs., 35 Tex. 631; Brazee v. Woods, 35 Tex. 302 ; Wallace v. Freeman, 25 Tex. Supp. 91. ' Sternberg v. Callanan, 14 Iowa 251. See also, Shoemaker v. King, 40 Pa. 107. * Ringo V. Wing, 49 Ark. 457, 5 S. W. 787 ; Freeman v. Badgley, 105 Cal. 272, 38 Pac. 955. "Meyer v. Parsons, 129 Cal. 653, 62 Pac. 216; Daniels v. Gibson, 20 Ky. L. 847, 47 S. W. 621 ; Gilmore^ v. Skookum Box Factory, 20 Wash. 703, 56 Pac. 934. "Herrin v. Abbe (Fla.), 46 So. 183; Senninger v. Rowlcv. 138 Iowa 617, 116 X. W. 695, 18 L. R. A. (N. S.) 223n; Van Meter v. Pool, 130 Mo. App. 433. 110 S. W. 5; Deaver V. Deaver, 137 N. Car. 240, 49 S. E. 113; Pickett v. Jackson (Tex.), 42 S. W. 568; Morgan v. South Mil- waukee Lake View Co., 97 Wis. 275, 72 N. W. 872. 1236 CONTRACTS. 474 The statute contemplates the mere promise of one man to be re- sponsible for another, and cannot be interposed as a cover and shield against the actual obligations of the debtor himself. The common case of the holder of a third person's note, assigning for value with a guaranty, seems to be clearly referable to this prin- ciple. The assignor owes the assignee, and that particular mode of paying him is adopted; he guarantees, in substance, his own debt." § 1236. Question determined by person to whom credit is given. — As a general rule, if the creditor relies upon the per- son to whom the property is delivered to any extent whatever, the promise is collateral and unen forcible if not in writing. ^^ On the " Smith V. Corege. 53 Ark. 295, 14 S. W. 93 ; Darst v. Bates, 95 111. 493 ; King V. Summitt, IZ Ind. 312, 38 Am. Rep. 145; Voris v. Building &c. Assn., 20 Ind. App. 630, 50 N. E. 779; Little v. Edwards, 69 Md. 499, 16 Atl. 134; Huntington v. Welling- ton, 12 Mich. 10; Crane v. Wheeler, 48 Minn. 207, 50 N. W. 1033; Bar- ker V. Scudder, 56 Mo. 272; Cardell V. McXiel, 21 N. Y. 336; Milks v. Rich, 80 N. Y. 269, 36 Am. Rep. 615 ; Kiernan v. Kratz, 42 Ore. 474, 69 Pac. 1027. 70 Pac. 506; Malone v. Keener, 44 Pa. St. 107; Townsend v. Long, n Pa. 143, 18 Am. Rep. 438; Crawford v. Pyle, 190 Pa. 263, 42 Atl. 687; Eagle Mowing &c. Mach. Co. V. Shattuck, 53 Wis. 455, 10 N. W. 690, 40 Am. Rep. 780. "Matson v. Wharam, 2 T. R. 80 (goods charged to buyer) ; Ander- son V. Hayman, 1 H. Bl. 120; Croft V. Smallwood, 1 Esp. 121 ; Birkmyr V. Darnell, 1 Salk. 27 ; Webb v. Haw- kins Lumber Co., 101 Ala. 630, 14 So. 407; Swaboda v. Throgmorton- Bruce Co., 88 Ark. 592, 115 S. W. 380; Harris v. Frank, 81 Cal. 280, 22 Pac. 856; Everett v. Morrison, Breese (111.) 79; Hardman v. Brad- ley, 85 111. 162; Blank v. Dreher, 25 111. 331; Owen v. Stevens, 78 111. 462; Lomax v. McKinney, 61 Ind. 374; Parker v. Dillingham, 129 Ind. 542, 29 N. E. 23; Indiana Trust Co. v. Finitzer, 160 Ind. 647, 67 N. E. 520; Langdon v. Richardson, 58 Iowa 610, 12 N. W. 622 ; Moses v. Norton, 36 Maine 113, 58 Am. Dec. 738; Norris v. Graham, ZZ Md. 56; Swift V. Pierce, 13 Allen (Mass.) 136; Ca- hill V. Bigelow, 18 Pick. (Mass.) 369; Gill v. Herrick, 111 Mass. 501; O'Connell v. College, 174 Mass. 511, 55 N. E. 460; Studley v. Barth, 54 Mich. 6, 19 N. W. 568; Sherman v. Alberts, 153 Mich. 361, 116 N. W. 1090, 126 Am. St. 486n ; Butters &c. Lumber Co. v. Vogel, 130 Mich. Z2>, 89 N. W. 560; Cole v. Hutchinson, 34 Minn. 410, 26 N. W. 319; Will- iams v. Auten, 62 Nebr. 832, 87 N. W. 1061; Vicksburg Mfg. &c. Co. v. Jaffrey Const. Co., 94 Miss. 282, 49 So. 116; Williams v. Auten, 62 Nebr. 832, 87 N. W. 1061 ; Walker v. Rich- ards, 39 N. H. 259; Hetfield v. Dow, 27 N. J. L. 440; Brady v. Sackrider, 3 N. Y. Super. Ct. 514; Allen v. Scarff, 1 Hilt. (N. Y.) 209; Larson V. Wyman, 14 Wend. (N. Y.) 246; Shay V. Cruxton, 116 N. Y. S. 1123; Dougherty v. Bash, 167 Pa. St. 429, 31 Atl. 729; Putnam Mach. Co. v. Cann, 173 Pa. St. 392, 34 Atl. 67; Wood V. Patch, 11 R. I. 445 ; Matte- son V. Moone, 25 R. I. 129, 54 Atl. 1058; Wood v. Dodge, 23 S. Dak. 95, 120 N. W. 774; Ware v. Stephen- son, 10 Leigh (Va.) 155; American Brewing Assn. v. Gossett (Tex. Civ. App.), 107 S. W. 357; Radcliff v. Poundstone, 23 W. Va. 724; John- son V. Bank, 60 W. Va. 320, 55 S. E. 394; Hurst Hardware Co .v. Goodman, 68 W. Va. 462, 69 S. E. 898, 32 L. R. A. (N. S.) 598. 475 STATUTE OF FRAUDS. § 1236 Other hand, if the goods sold to such other are furnished upon the sole credit of the promisor the promise is not within the statute.^' Moreover, if it was the intention of both the promisor and the promisee that the former was to be liable in the first in- stance, the promise is original and not within the statute notwith- standing the benefit inured to a third person/* "Geary v. O'Ncil, IZ 111. 593; Lusk V. Throop, 189 111. 127, 59 N. E. 529; Collins v. Stanficld, 139 Ind. 184. 38 N. E. 1091; Cox v. Peltier, 159 Ind. 355, 65 N. E. 6; Benbow v. Sooysmith, 76 Iowa 151, 40 X. W. 693; Myer v. Grafflin, 31 Md. 350, 100 Am. Dec. 66; Walker v. Hill, 119 Mass. 249; Phelps v. Stone, 172 Mass. 355, 52 N. E. 517; Hagadorn V. Stronach Lumber Co., 81 Mich. 56, 45 N. W. 650; Foster v. Felcher, 119 Mich. 353, 78 N. W. 120; Mau- rin V. Fogelburg, il Minn. 22), 32 N. W. 858, 5 Am. St. 814; Amort v. Christofferson, 57 Minn. 234, 59 N. W. 304 ; McGowan Commercial Co. v. Midland Coal &c. Co.. 41 Mont. 211, 108 Pac. 655 ; Barras v. Pomeroy Coal Co.. 38 Nebr. 311, 56 N. W. 890; Walker v. Richards, 41 N. H. 388; Herendeen Mfg. Co. v. Moore, 66 N. J. L. 74, 48 Atl. 525 ; Ridgeway v. Corporation Liquidating Co., 71 N. J. L. 676, 62 Atl. 116; Chase v. Day. 17 Johns. (N. Y.) 114; Raabe v. Squier, 148 N. Y. 81, 42 N. E. 516; Mackey v. Smith, 21 Ore. 598, 28 Pac. 974; Jefferson County v. Slagle, 66 Pa. St. 202; Booth v. Heist. 94 Pa. St. 177: McCullv v. Porzel, 158 Pa. St. 513. 27 Atl. 866; Green v. Burton, 59 Vt. 423, 10 Atl. 575 ; Hop- kins V. Stefan, 11 Wis. 45, 45 N. W. 676. "Ledlow V. Becton, 36 Ala. 596; Smith V. Miller. 152 Ala. 485, 44 So. 399 (goods sold to third party on credit of promisor) ; Linam v. Jones. 134 Ala. 570. Zl So. 343; Cauthron Lumber Co. v. Hall. 76 Ark. 1, 88 S. W. 594 (goods sold and delivered to employes on the employer's re- quest and charged to him) ; Sears v. Flodstrom, 5 Idaho 314. 49 Pac. 11 (owner of a boarding house told the proprietor of a meat market to let his tenant running the boarding house have what meat she wanted, and charge it to him) ; Hughes v. Atkins, 41 111. 213; Ruggles v. Gat- ton, 50 111. 412; Lusk v. Throop, 189 111. 127, 59 N. E. 529 (contractor promised grocery man to pay for bill of groceries furnished subcon- tractor) ; Clark v. Smith, 87 111. App. 409; Johnson v. Hoover, 11 Ind. 395; Lessenich v. Pettit, 91 Iowa 609, 60 N. W. 192; Porter v. Langhorn, 2 Bibb (Ky.) 63; Stapp v. Anderson, L A. K. Marsh. (Ky.) 535; Leisman V. Otto, 1 Bush (Ky.) 225; Kennon V. Tolle, 9 Kv. L. 811; Myer v. Graf- flin, 31 Md. 350, 100 Am. Dec. 66; Phelps V. Stone, 172 Mass. 355, 52 N. E. 517; Walker v. Hill, 119 Mass. 249; Hake v. Solomon, 62 Mich. 2,11, 28 N. W. 908; Mitchell v. Beck, 88 Mich. 342, 50 N. W. 305; Haga- dorn V. Stronach Lumber Co., 81 Mich. 56, 45 N. W. 650; Wenzel v. Johnston, 112 Mich. 243, 70 N. W. 549; Temple v. Goldsmith, 118 Mich. 172, 76 N. W. 324; Maurin v. Fogel- berg, Zl ]\Iinn. 23, 5 Am. St. 814, Z2 N. W. 358 (promisor instructed ven- dor to give all the goods to H. and R. that they want, and charge di- rectly to them, and every first of the month bring in the bill, and he would pay it) ; Bennett v. Thuet, 98 Minn. 497. 108 N. W. 1; Glenn v.. Lehnen, 54 Mo. 45; Chick v. Frey Coal Co., 78 Mo. App. 234; Beeler V. Finnel, 85 Mo. App. 438; Lind- sey V. Heaton, 27 Nebr. 662, 43 N. W. 420; Palmer v. Wicherly, 15 Nebr. 98. 17 N. W. 364; Price v. Combs, 12 X. J. L. 188 (promise to pay for property sold a third per- son, in goods to be furnished by him to the seller) ; Herendeen Mfg. Co. v. Moore, 66 X. J. L. 74. 48 Atl. 525; Gallagher v. McBride. 66 X. J. L. 360. 49 Atl. 582; Sheppard v. Newton, 13Q N. Car. 533. 52 S. E. 143. See. Oldenburg v. Dorsey. 102 Md. 172, 62 Atl. 576; East Baltimore CONTRACTS. 476 § 1237. Person to whom credit is given — Services ren- dered, and the like. — The same rule appHes where services are rendered to another. A promise by one party to pay for serv- ices rendes-yd another is vi^ithin the statute i£ the credit is given to the on*» for whom the services are performed," but if per- formed on the credit of the promisor it is not within the statute.^* Thus, in case of sudden sickness or serious injury of a person where immediate medical attention is necessary, the question of whether the person who employs a physician under such circum- stances becomes liable in the absence of a writing to that effect depends upon whether the services are performed upon the credit C>f the person who is sick, or of the one employing the physician/^ The promise of one to pay for goods furnished or services per- formed for another is collateral and within the statute if fur- nished on the credit of the beneficiary,^^ who is not a joint con- Lumber Co. V. K'Nessett Israel Aushe S'Phard Congregation, 100 Md. 689, 62 Atl. 575; Mather v. Perry, 2 Dcnio (N. Y.) 162; McCaf- fil V. Radcliff, 3 Robt. (N. Y.) 445; Stilwell V. Otis, 2 Hilt. (N. Y.) 148; Pennell v. Pentz, 4 E. D. Smith (N. Y.) 639; Foster v. Persch, 68 N. Y. 400; White v. Tripp, 125 N. Car. 523, 34 S. E. 686; Grand Forks Lum- ber &c. Co. V. Tourtelot, 7 N. Dak. 587, 75 N. W. 901; Van Leuven v. Holmes, 13 Pa. Super. Ct. 11; Merri- man v. Liggett, 1 W. N. C. (Pa.) 379; Booth v. Heist, 94 Pa. St. 177; Hazen v. Bearden, 4 Smeed (Tenn.) 48; First Nat. Bank v. Greenville Oil &c. Co., 24 Tex. Civ. App. 645, 60 S. W. 828; Sampson v. Swift, 11 Vt. 315; Champion v. Doty, 31 Wis. 190; James v. Carson, 94 Wis. 632, 69 N. W. 1004. "Slone v. Berlin, 88 Iowa 205, 55 N. W. 341 ; Dupuis v. Interior Const. &c. Co., 88 Mich. 103, 50 N. W. 103 ; King V. Lumber Co., 80 Minn. 274, 83 N. W. 170; Brown v. Weber, 38 N. Y. 187; Birchell v. Neaster, 36 Ohio St. 331 ; Lewis v. Lumber Co., 156 Pa. St. 217, 27 Atl. 20; Aldrich v. Jewell, 12 Vt. 125, 36 Am. Dec. 330; Malone v. Knickerbocker Ice Co., 88 Wis. 542, 60 X. W. 999. " Buchanan v. Moran, 62 Conn. 83, 25 Atl. 396; King v. Edmiston, 88 111. 257 ; Hardman v. Bradley, 85 III. 162; Harlan v. Harlan, 102 Iowa 701, 12 N. W. 286; Marr v. Burling- ton &c. R. Co., 121 Iowa 117, 96 N. W. 716; Grant v. Wolf, 34 Minn. 32. 24 N. W. 289; Peyson v. Conniff, 32 Nebr. 269, 49 N. W. 340; Hazeltine V. Wilson, 55 N. J. L 250, 26 Atl. 79; Rounsevel v. Osgood, 68 N. H. 418, 44 Atl. 535; Merriman v. Mc- Manus, 102 Pa. St. 102; Boston v. Farr, 148 Pa. St. 220, 23 Atl. 901; Eddy V. Davidson, 42 Vt. 56; James V. Carson, 94 Wis. 632, 69 N. W. 1004. ^'Geelan v. Reid, 22 111. App. 165; Clark v. Waterman, 7 Vt. 76, 29 Am. Dec. 150. See also, Crowder v. Keys, 91 Ga. 180, 16 S. E. 986; Hentig v. Kernke, 25 Kans. 559; D'Witt v. Root, 18 Nebr. 567, 26 N. W. 360; Peyson v. Conn/ff, 12 Nebr. 269, 49 N. W. 340; Patton's Exr. v. Has- singer, 69 Pa. St. 311. " Pake V. Wilson, 127 Ala. 240, 28 So. 665 ; Harris v. Frank, 81 Cal. 280, 22 Pac. 856; Schoenfeld v. Brown, 78 111. 487; Billingsley v. Dempewolf, 11 Ind. 414; Miller v. State, 35 Ind. App. 379, 74 N. E. 260; Norris v. Graham, ZZ Md. 56; Swift v. Pierce, 13 Allen (Mass.) 136; O'Connell v. College, 174 Mass. 511, 55 N. E. 460; Welch v. Marvin, 36 Mich 59; Wilhelm v. Voss, 118 477 STATUTE OF FRAUDS. § 1238 tractor with the promisor.^" Thus, a promise to pay for beef furnished a jobber working on the promisor's logs has been held within the statute."" § 1238. Language indicative of collateral promise. — No other clement entering in, a promise in language by which the promisor merely promises to see the seller paid,-^ or to pay if the Mich. 106, Id N. W. 308; Cole v. Hutchinson, 34 Minn. 410. 26 N. W. 319; Swirgart v. Gentert, 63 Nebr. 157, 88 N. W. 159; Walker v. Rich- ards, 39 N. II. 259; Matteson v. iMoone, 25 R. I. 129, 54 Atl. 1058. "See Boyce v. Murphy. 91 Ind. 1, 46 Am. Rep, 567; Oldenburgh v. Dorsey, 102 Md. 172, 62 Atl. 576; Swift V. Pierce, 13 Allen (Mass.) 136; Gibbs v. Blanchard, 15 Mich. 292; Dumanoise v. Townsend, 80 Mich. 302, 45 N. W. 179; Hetfield v. Dow, Zl N. J. L. 440; Eddy v. Dav- idson. 42 Vt. 56. "^Sherman v. Alberts, 153 Mich. 361. 116 N. W. 1090, 126 Am. St. 486n. ''Wagner v. Hallack, 3 Colo. 176 (goods charged to debtor) ; Pettit v. Bradcn, 55 Ind. 201 (third person told vendor that, if he would deliver goods to the vendee, he would see that he received his pav) ; Blake V. Parlin, 22 Maine 395 (promise to landlord that the prom- isor would, see that the rent was paid) ; Doyle v. White, 26 Maine 341, 45 Am. Dec. 110 (vendor re- fused to deliver rock to buyer, promisor then said : "You bring the rock and I will see you paid for it") ; Cropper v. Pittman, 13 Md. 190; Cahill v. Bigelow, 18 Pick. (Mass.) 369 (goods first charged to debtor) ; Hill v. Raymond, 3 Allen (Mass.) 540 (exclusive credit not given to promisor) ; Stone v. Walk- er, 13 Gray (Mass.) 613 (attorney given promise to induce him to ren- der services to a third person) ; Hall V. Woodin, 35 Mich. 67 (promise to see the seller of goods paid there- for) ; Butters Salt &c. Co. v. Vogel, 130 Mich. Zl, 89 N. W. 560 (employ- er promised that he would see ven- dor paid for goods sold to em- ployes) ; Bloom v. McGrath, ^Z Miss. 249 (debtor given credit m the first instance) ; Wray v. Cox, 86 Aliss. 638, 38 So. 344 (goods at request of promisor, sold and charged to third person) ; Swigart v. Gentert, 63 Nebr. 157, 88 N. W. 159 (father's promise to a physician to induce him to give his married daughter medical attention) ; Brown v. Bradshaw, 1 Duer (N. Y.) 199 (goods sold and charged to debtor) ; Payne v. Bald- win, 14 Barb. (N. Y.) 570 (officer of corporation gave promise to one furnishing material to a contractor doing work for the corporation; account charged to the corporation) ; Allen V. Scarfif, 1 Hilt. (N. Y.) 209 (vendor was first to try to collect from buyer) ; Garrett-Williams Co. V. Hamil, 131 N. Car. 57, 42 S. E. 448 (charge made to debtor) ; Bir- chell V. Neaster, 36 Ohio St. 331 (promise given by owner to subcon- tractor) ; Rancil v. Krohne, 31 Pa. Super. Ct. 130 (owner of property stated to men laboring thereon " 'I want to see you men to stay with the job and complete it, and if you are afraid that you will not get your money, I will see that you get your pay' ") ; Gable v. Graybill, 1 Pa. Super. Ct. 29 (third party promised laborer that, if the latter continued his work for another, he would see him paid) ; Haverly v. Mercur, 78 Pa. 257; Robertson v. Hunter, 29 S. Car. 9, 6 S. E. 850 (goods sold and charged to a third person at request of promisor) ; Nichols v. Dixon (Tex. Civ. App.), 85 S. W^ 1051. affd.. 99 Tex. 263, 89 S. W. 765 (owner of land upon which a build- ing was being erected promised ma- terialman to see him paid) ; Skinner V. Conant, 2 Vt. 453, 21 Am. Dec. 554; Newell v. Ingraham, 15 Vt 422. § 1239 CONTRACTS. 478 debtor fails to do so," is collateral and within the statute. Thus, a verbal promise on the part of the owner of property to pay materialmen and laborers, if they would go ahead and fulfill their contracts with the contractor, if the contractor failed to pay them, has been held insufficient." However, it has been held that, where the owner was anxious to have the building completed in order that he might use it, and he was enabled to get it completed by promising a subcontractor that he would pay him, the promise was original and the owner liable thereon.^* § 1239. Miscellaneous promises. — In the following in- stances promises have been held collateral and unen forcible under the statute of frauds: a promise to serve as security for, and guarantee the payment of, goods to be sold to a third party f^ an agreement to guarantee the payment of the purchase price of goods or property sold to another;'^ a promise to pay for any goods that a third person might buy of the one to whom the promise was given ;" or of an agreement to hold himself responsi- ble for the payment to an employe by his employer of money to be earned by him during the course of the employment. 28 § 1240. Question one of intention. — The real character of the promise does not depend altogether upon the form of ex- pression, but largely on the situation of the parties ; and the ques- tion always is as to what the parties mutually understood by the language, whether they understood it to be a collateral or a direct promise.^^ In order to arrive at the intention of the parties the ^ Tones v. Cooper, 1 Cowp. 227; N. Y. S. 188; Loftus v. Ivy, 14 Tex. Schotte V. Puscheck, 79 111. App. 31; Civ. App. 701, 11 S. W. 766; Nason Blank v. Dreher, 25 111. 331; New- v. Blaisdell, 12 Vt. 165, 36 Am. Dec. man v. Newman, 7 Kans. App. 77, 52 331. Pac 908 ; Connolly v. Kettlewell, 1 '* Howell v. Harvey, 65 W. Va. 310, Gill (Md.) 260 (purchaser charged 64 S. E. 249, 22 L. R. A. (N. S.) with goods "secured by" promisor) ; 1077, and note. „^ ^ , , ^^ . Dufolt v. Gorman, 1 Gil. (Minn.) '''Wills v. Ross, 11 Ind. 1, 40 Am. 234, 66 Am. Dec. 543; Morrissey v. Rep. 279. Kinsey 16 Nebr. 17, 19 N. W. 454; ^ Dovenmuehle v. Eilenberger 70 Knox v. Nutt, 1 Daly (N. Y.) 213; 111. App. 180; Brown v. Kmloch, 2 Mead v. Watson, 57 Vt. 426. Speers L. (S. Car.) 284 ^Clay V. Walton, 9 Cal. 328; War- "Cutler v. Hmton, 6 Rand. (Va.) ner v. Willoughby, 60 Conn. 468, 22 509. r, r ^ .m Atl. 1014, 25 Am. St. 343; Smith v. ^Miller v. Neihaus, 51 Ind. 401 Burditt 107 App. Div. (N. Y.) 628,95 "Davis v. Patrick, 141 U. S. 479, 479 STATUTE OF FRAUDS. § I24I obvious import of the entire transaction is to be given effect, and this is not controlled by the mere form of the language used.^" In each case the expressions used, the situation of the parties and all the circumstances of the case should be taken into consideration.^^ When the promisee charges the account on his books against the debtor, and not the promisor, this is strong, but not conclusive, evidence that credit was extended to the debtor.^" Thus, it has been held that when the goods are charged to the debtor the usage and method of keeping accounts in such cases are admissible in evidence, in order to enable the jury to arrive at a just conclusion.^^ § 1241. When a question for the jury. — When the words used and the surrounding facts and circumstances leave the ques- tion of whether the parties intended to create an original or col- lateral obligation, the question of their intention is for the jury. It is for the jury to say whether credit was given exclusively to the promisor.^* 35 L. ed. 826, 12 Sup. Ct. 58; John- son V. Bank, 60 W. Va. 320, 55 S. E. 394. "o Forbes v. Temple, 22 N. B. 511; Reed v. Holcomb, 31 Conn. 360; Lusk V. Throop, 189 111. 127, 59 N. E. 529; Miller V. State. 35 Ind. App. 379, 74 N. E. 260; Norris v. Spencer, 18 Maine, 324 ; Rottmann v. Pohlmann, 28 Mo. App. 399; Dixon v. Frazee, 1 E. D. Smith (N. Y.) 32; Allen v. ScarfiF, 1 Hilt. (N. Y.) 209; Brooks Watcrfield Co. v. I. N. Walker Co., 4 Ohio N. P. 147. " Atlas Lumber &c. Co. v. Flint, 20 S. Dak. 118. 104 N. W. 1046. "The question whether the contract was one of original promise, or of guar- anty merely, is one for the jury (or in this case for the trial court) to determine from the surrounding cir- cumstances of the case." Harris v. Frank, 81 Cal. 280. 22 Pac. 856. *= Harris v. Frank, 81 Cal. 280, 22 Pac. 856; Calverley v. Wirth. 59 111. .^pp. 553 ; Lomax v. McKinnev, 61 Ind. 374; Runkle v. Kettering^ 127 Iowa 6, 102 N. W. 142; Langdon v. Richardson, 58 Iowa 610. 12 N. W. 622; Leisman v. Otto, 1 Bush (Ky.) 225; Kennon v. Tolle, 9 Ky. L. 811; Swift V. Pierce, 13 Allen (Mass.) 136; Ridgeway v. Corporation Liqui- dating Co., 71 N. J. L. 676, 62 Atl. 116; Foster v. Persch, 68 N. Y. 400; Nixon V. Jacobs, 22 Tex. Civ. App. 97. 53 S. W. 595. ''White V. Tripp. 125 N. Car. 523, 34 S. E. 686. In this case the prom- isor was held liable, notwithstanding the goods had been charged to the debtor. Proof of custom is not ad- missible, however, to vary the terms of an absolute written contract. Cov- ington V. Kanawha Coal &c. Co. 121 Ky. 681, 28 Kv. L. 636, 89 S. W. 1126. 3 L. R. A. (N. S.) 248n, 123 Am. St. 219. "Boykin v. Dohlonde, 2,7 Ala. 577 (question one of fact for the jury as to whether or not credit was given exclusively to promisor) ; Clark v. Jones, 87 Ala. 474. 6 So. 362; Ellis V. Murray, 77 Ga. 542; Billingsley v. Dempewolf, 11 Ind. 414: Elder V. Warfield. 7 Har. & T. (Md.) 391: Barrett v. McHugh. 128 Mass. 165; Larson v. Jensen, 53 Mich. 427, 19 X. W. 130: Steele v. Ancient Order of Pyramids, 125 Mo. App. 680, 103 § 1242 CONTRACTS. 480 § 1242. Relinquishment of lien. — It is settled that where a creditor has a hen on his debtor's property, and a third person, having a subordinate Hen or other interest in the same property, promises the creditor to pay the debt in consideration of the re- hnquishment of the lien, which thus inures to the promisor's benefit, the statute does not apply. Certain authorities sustain the view that the new promisor must have an interest of some kind in the property to which the hen attached, so that the surrender will inure to his benefit.^^ On the other hand, there are cases which hold, under circumstances of this character, that the prom- isor need not derive a benefit, and that any damage to the prom- isee or benefit to the promisor affords a sufficient consideration to support the promise-^^ The holder of the lien must rely on the promise of such third person to pay the debt.^^ § 1243. Independent promise releasmg another. — An inde- pendent promise absolutely to pay the debt of another, and not on condition of his default, and which in fact releases him, is not a promise to pay the debt of another within the meaning of the statute of frauds.^^ Where one of two creditors of a firm agrees with the other that he will pay the latter's debt if he will S. W. 108; McCaffil v. Radcliflf, 3 Waggener v. The Bells, 4 T. B. Mon. Robt. (N. Y.) 445; Speers v. Knarr, (Ky.) 8; Day v. Cloe, 4 Bush (Ky.) 4 Pa. Super. Ct. 80; Hurst Hard- 563; Myles' Exrs. v. Myles, 6 Bush ware Co. v. Goodman, 68 W. Va. (Ky.) 237; Fain v. Turner's Admrs., 462, 69 S. E. 898, 32 L. R. A. (N. S.) 92 Ky. 634, 16 Ky. L. 719, 29 S. W. 598 628; Griffin v. Cunningham, 183 ^ Clark V. Jones, 85 Ala. 127, 4 So. Mass. 505, 67 N. E. 660. "Where 771 ; Westmoreland v. Porter, 75 a promise is made to pay the debt of Ala. 452; Dexter v. Blanchard, 11 another, the statute has no applica- Allen (Mass.) 365; Nelson v. Boyn- tion if the original debtor is dis- ton, 3 Mete. (Mass.) 396, 2>1 Am. charged. In such case the promise Dec. 148; Mallory v. Gillett, 21 N. Y. is treated as original, and not coUat- 412. See also, Ellis v. Carroll, 68 S. eral. The promisor is substituted as Car. 376, 47 S. E. 679, 102 Am. St. the debtor, and the discharge of the 679; Lee v. Unkefer, 11 S. Car. 460, original debtor is a sufficient consid- 58 S. E. 343. eration. To make the promise col- ^ Cornell v. Central Electric Co., lateral, and bring it within the stat- 61 111. App. 325. See also, Crawford ute, it must be a promise to answer V. King, 54 Ind. 6. to the promisee for the debt, default, *' Fuller &c. Lumber Co. v. House- or miscarriage of a third person, who man, 117 Mich. 553, 76 N. W. 11. is liable therefore to the promisee ^ Abercrombie v. Fourth Nat. Bank and continues so liable." Hyatt v. (Ala.) 39 So. 606; Smith v. Miller, Bonham, 19 Ind. App. 256, 49 N. E. 152 Ala. 485, 44 So. 399; Pylant v. 361. Webb, 2 Ga. App. 171, 58 S. E. 329; 481 STATUTE OF FRAUDS. § 1 244 not sue the firm and garnish funds which the promisee has in his control as treasurer of a company which is indebted to such firm, and the promisee thereupon discharges such firm, the promise is not within the statute of frauds."" Where defendants contracted to build a road for a railway company, but sublet the contract to others, who assigned to defendants all money due the laborers, and defendants agreed to pay to the laborers the amount assigned, and the subcontractors abondoned the work, and gave time- checks to the laborers and plaintiff bought the time-checks, and defendants promised to pay them, whereupon plaintiff, wuth de- fendant's knowledge, released the subcontractors, it was held that defendants were liable upon the promise, and that the agreement was not within the statute of frauds.'*'^ In cases of this character it is usually held that unless the original debtor is discharged the promise is collateral and within the statute.^^ It has also been held that the release of the original debtor and the substitution of the promisor must be the result of an agreement in which the creditor, the debtor and the promisor all concur in order to take the promise out of the statute*" § 1244. Del credere commission. — It was formerly held that the contract of a factor binding him in the terms implied in a del credere commission was a collateral obligation and within the statute,^^ but the later cases do not so hold. The undertaking of the factor is to answer for the solvency of the buyers of the goods. He becomes liable to pay to the principal the amount of the purchase-money, if the buyers fail to pay it when it becomes ^' First Nat. Bank v. Border, 9 Tex. crone v. American Lumber Co., 55 Civ. App. 670, 29 S. W. 659: "As to :\Iich. 622, 22 X. \V. 67: Upham v. the statute of frauds, the petition Clute, 105 Mich. 350, 63 X. W. 317. does not disclose that the promise ^ Abercrombie v. Fourth Xat. Bank sued on was verbal, and not in writ- (Ala.), 39 So. 606; Strauss v. Car- ing. But, if it had done so, it rett, 101 Ca. 307, 28 S. E. 850; Wil- also shows that, by the terms of the helm v. Voss, 118 Mich. 106, 76 X^. agreement, appellant became prima- W. 308; Bicknall v. Bicknall, 27 R. I. rily and unconditionally liable, and 429, 62 Atl. 976; Starr v. Taylor Burns & Dillon, the original debtors, (Tex. Civ. App.), 56 S. W. 543. were discharged. In such a case, the " Palmetto Mfg. Co. v. Parker, 123 statute of frauds does not apply." Ga. 798, 51 S. E. 714; Netterstrom See, however, Hamlin v. Drummond, v. Gallistel, 10 111. App. 352. 91 ]\raine 175, 39 Atl. 551. "Morris v. Cleasbv, 1 M. & S. 576; ""Gleason v. Fitzgerald, 105 Mich. Peele v. Northcote, 7 Taunt. 478. 516, 63 X. W. 512. See also, Mul- 31 — Contracts, Vol. 2 § 1245 CONTRACTS. 482 due, and his engagement is held to be an original and absolute one and not within the statute." Although the factor may sue the purchaser in his own name, the principal has also the right to sue. This, however, does not convert an express original undertaking of the factor with his principal, absolutely to pay the debt at ma- turity, into a collateral and conditional agreement to pay it if the purchaser does not."*^ § 1245. As to contracts of indemnity. — There is an impor- tant difference between a contract of guaranty and one of in- demnity. The former is a collateral undertaking, and presupposes some contract or transaction to which it is collateral.*'^ A contract of indemnity is generally held to be an original one and not within the statute, although there has been much conflict of authority on the question, produced in no inconsiderable degree by the conflict- ing decisions of the English courts.*^ The reasoning of the courts, which hold that the promise of indemnity is not within the statute, is not always the same. The more common one is, that the promise must be made to the creditor, to be within the statute ; that a promise to the debtor to pay his debt to the creditor, or to a "Wickham v. Wickham, 2 K. & Z1 Am. Rep. 162; Jones v. Bacon J. 478; Swan v. Nesmith, 7 Pick. 72 Hun (N. Y.) 506, 54 N. (Mass.) 220, 19 Am. Dec. 282; Os- Y. St. 764, 25 N. Y. S. 212, affd. 145 borne v. Baker, 34 Minn. 307, 57 Am. N. Y. 446, 40 N. E. 216. The old Rep. 55 ; Suman v. Inman, 6 Mo. case of Winckworth v. Mills, 2 Esp. App. 384; Wolff v. Koppel, 2 Denio 484, held that a promise of indemnity (N. Y.) 368, 5 Hill (N. Y.) 458; was within the statute, but in Thomas Bradley v. Richardson, 23 Vt. 720, 2 v. Cook (1828), 8 B. & C. 728, the Blatchf. (U. S.) 343, Fed. Cas. No. contrary doctrine was declared. This 1786. This ruling was followed in case was overruled in Green v. Cress- England, in Couturier v. Hastie, 8 well (1839), 10 A. & E. 453. The Exch. 40, where Parke, J., speaks of doctrine of Green v. Cresswell was the decision as a very able one, and in turn overthrown in Reader v. adopts the reasoning in the case. Kingham (1862), 13 C. B. (N. S.) "Sherwood v. Stone, 14 N. Y. 267. 344, and Wildes v. Dudlow (1874), "Reed v. Holcomb, 31 Conn. 360; L. R. 19 Eq. 198, and the doctrine in Stocking V. Sage, 1 Conn. 519; Heg- England is now that a promise to gie V. Smith, 87 111. App. 141 ; Ander- indemnify the promisee for becom- son V. Spence, 72 Ind. 315, Zl Am. ing surety for another is not within Rep. 162; Taylor v. Taylor, 64 Ind. the statute, and the same doctrine 356; Dole v. Young, 24 Pick. (Mass.) generally prevails in this country. 250; Sanders v. Gillespie, 59 N. Y. See McMillan v. The Bull's Head 250; Dutton v. Pyle, 7 Pa. Super. Ct. Rank, 32 Ind. 11, 2 Am. Rep. 323; 126, 42 Week. No. Cas. 65; Vogel v. Gaff v. Sims, 45 Ind. 262; Dickinson Melms, 31 Wis. 306, 11 Am. Rep. 608; v. Colter, 45 Ind. 445; Taylor v. Tay- Shook V. Vanmater, 22 Wis. 532. lor, 64 Ind. 356; Dole v. Young, 24 "Anderson v. Spence. 72 Ind. 315, Pick. (Mass.) 250. 483 STATUTE OF FRAUDS. § 1246 surety to indemnify him for becoming surety for a third person to a fourth, is an original and not a collateral undertaking when the promisee acts solely on the promise of the promisor.*® § 1246. Oral promise to indemnify guarantor not within the statute. — An oral promise by one person to indemnify another for becoming a guarantor for a third is not within the statute of frauds, and need not be in writing, and the assumption of the responsibility is a sufficient consideration for the promise." So, also, a promise to indemnify one for becoming the surety on the note of another is an original promise, and not within the statute of frauds.^*^ Where an oral promise is made to a sheriff, **Burr V. Cross, 3 Cal. App. 414, 86 Pac. 824; Reed v. Holcomb, 31 Conn. 360; Jones v. Shorter, 1 Ga. 294, 44 Am. Dec. 649; Mills v. Brown, 11 Iowa, 314 (promise to indemnify one if he will be surety for an- other) ; Jones v. Letcher, 13 B. Mon. (Ky.) 363; Hoggatt v. Thomas. 35 La. Ann. 298 (one surety binding himself to hold a cosurety harmless) ; Smith V. Sayward, 5 Greenl. (Maine) 504; Hawes v. Murphy, 191 Mass. 469, 78 N. E. 109; Aldrich v. Ames, 9 Gray (Mass.) 76 (promise to indem- nify another from his liability as bail for a third person ; Chapin v. Lap- ham, 20 Pick. (Mass.) 467: Potter v. Brown, 35 Mich. 274 (promise to pay note) : Comstock v. Norton, 36 Mich. 277; Esch v. White, 76 Minn. 220, 78 N. W. 1114; Patrick v. Barker, 78 Nebr. 823. 112 N. W. 358; Demeritt V. Bickford, 58 N. H. 523, citing au- thorities; Apgar's Admrs. v. Hiler, 24 N. J. L. 808 (promise of surety to cosurety) ; Sanders v. Gillespie, 59 N. Y. 250 (oral agreement to pay note) ; Chapin v. Merrill, 4 Wend. (N. Y.) 657 (promise of defendant to indemnify the plaintiff from the consequences of his agreement to pay a mercantile firm for goods delivered to another who was the purchaser) ; Peterson v. Creason, 47 Ore. 69, 81 Pac. 574; Beaman's Admrs. v. Rus- sell, 20 Vt. 205. 49 Am. Dec. 775: Vogel V. Melms, 31 Wis. 306, 11 Am. Rep. 608. See, also, Wattenbarge v. Hodges, 38 Tex. Civ. App. 329, 85 S. W. 1013; McCord v. Edward Hines Lumber Co., 124 Wis. 509, 102 N. W. 334. Contra, Brand v. Whe- lan, 18 111. App. 186; May v. Will- iams, 61 Miss. 125, 48 Am. Rep. 80 (to indemnify a person for becom- ing surety on another's bail bond, cit- ing cases; Craft v. Lott, 87 Miss. 590, 40 So. 426, 6 Am. & Eng. Ann. Cas. 670; Bissig v. Britton, 59 Mo. 204, 21 Am. Rep. 379; Hurt v. Ford, 142 Mo. 283, 44 S. W. 228, 41 L. R. A. 823, Gansey v. Orr, 173 Mo. 532, 7Z S. W. 477; Hartley v. Sanford, 66 N. J. L. 627, 50 Atl. 454, 55 L. R. A. 206; Ferrell v. Maxwell, 28 Ohio St. 383, 22 Am. Rep. 393 (a promise of indemnity by one not a party to an obligation to induce another to become surety thereon) ; Nugent v. Wolfe, 111 Pa. St. 471, 4 Atl. 15, 56 Am. Rep. 291. In re, Hollowbush's Estate, 36 Leg. Int. (Pa.) 149, 13 Phila. (Pa.) 217; Simpson v. Nance. 1 Spears (S. Car.) 4; Macey v. Chil- dress, 2 Tenn. Ch. 438. Even in cases where Green v. Cresswell, 10 A. & E. 453, is upheld the doctrine that a new consideration inuring to the ben- efit of the promisor will take the case out of the statute is counte- nanced. "Jones V. Bacon, 145 N. Y. 446, 40 N. E. 216. See, however, Craft V. Lott, 87 Miss. 590, 40 So. 426, 6 Am. & Eng. Ann. Cas. 670. ■^George v. Hoskins. 17 Kv. L. 63, 30 S. W. 406; Minick v. Huff, 41 Nebr. 516, 59 N. W. 795 (reviewing § 1247 CONTRACTS. 484 or other officer, to indemnify him against damages growing out of an unlawful seizure of goods upon execution,^^ or where an oral promise is made to indemnify another against costs;" or to in- demnify one for becoming special bail;'^^ or to pay damages and expenses of suit;^* or surety on a recognizance bond;" or surety on an injunction bond;^*^ or to pay damages and expenses of suit f^ or to pay outstanding debts of a firm, it is not within the statute.^® § 1247. Illustrations of collateral promises. — An oral prom- ise to accept a bill of exchange, unsupported by a new considera- tion, is usually considered as a collateral undertaking and within the statute, especially when the acceptor has no funds of the drawer in his hands at the time of the acceptance and does not owe the drawer.^^ It is otherwise, however, if the acceptor owes the drawer f^ or the bill is drawn upon a particular fund in the acceptor's hands ;®^ or if the agreement to accept is part of the original contract.^^ It has also been held that if credit is ex- tended exclusively to the promisors it constitutes an original promise and is not within the statute."^ A promise to make or indorse a promissory note with others for the purpose of raising money to pay the debt of a third party has been held within the statute.^* The general subjects of guarantyship furnished to or many authorities). Contra to text "^ Dent v. Arthur, 156 Mo. App. in Missouri. Hurt v. Ford, 142 Mo. 472, 137 S. W. 285. See. also, Noyes 283 44 S. W. 228, 41 L. R. A. 823. v. Ostrom, 113 Minn. Ill, 129 N. W. "Lerch v. Gallap, 67 Cal. 595, 8 142; Patrick v. Barker, 78 Nebr. 823, Pac. 322; Stark v. Raney, 18 Cal. 112 N. W. 358. 622; Tarr v. Northy, 17 Maine 113, " Marcy v. Crawford, 16 Conn. 35 Am. Dec. 232. But see Nixon v. 549, 41 Am. Dec. 158. Vanhise, 5 N. J. L. 491, 8 Am. Dec. "' Bonebright v. Pease, 3 Mich. 318. 618. '° Chapline v. Atkinson, 45 Ark. 67, ''Windell v. Hudson, 102 Ind. 521, 55 Am. Rep. 531; Emerson v. Slater, 2 N E. 303; Knight v. Sawin, 6 22 How. (U. S.) 28, 16 L. ed. 360. Greenl. (Maine) 361; Goodspeed v. "" Louisville &c. R. Co. v. Caldwell, Fuller, 46 Maine 141, 71 Am. Dec. 98 Ind. 245. 572; Weld v. Nichols, 34 Mass. 538. "^Montague v. Myers, 67 Tenn. But see Nixon v. Vanhise, 5 N. J. L. 539. 491, 8 Am. Dec. 618. "^Espalla v. Wilson, 86 Ala. 487, 5 ''^Harrison v. Sawtel, 10 Johns. So. 867. (N. Y.) 242, 6 Am. Dec. 22>7. "'West v. O'Hara, 55 Wis. 645, 13 "Marcy v. Crawford, 16 Conn. N. W. 894. 549, 41 Am. Dec. 158. °* Willis v. Shinn, 42 N. J. L. 138; "McCormick v. Boylan, 83 Conn. Birkmyr v. Darnell, 1 Smith Lead. 686, 78 Atl. 335, Ann. Cas. 1912A, 882 Cas. (11th ed.) 299; Cowenhoven v. and note. Howell, 7 Vroom (N. J.) Z2Z; Car- 485 STATUTE OF FRAUDS. § 1248 services rendered another have already been given brief men- tion.«=^ § 1248. Agreements in consideration of marriage — What- ever may have been the earhcr decisions upon the question,''" the law is now well settled that a promise to marry is not a promise "in consideration of marriage" so as to require it to be evidenced by writing, under the statute of frauds."^ A distinction has been made between agreements in consideration of marriage and agree- ments in contemplation of marriage. Where parties, contemplat- ing marriage, agreed that certain promissory notes which were held by the woman against the man should not be extinguished by the marriage, but should remain her separate property, collectible out of his estate, if she would forbear to insist on their payment before marriage, it was held that the antenuptial promise was made in consideration of forbearance, and not in consideration of marriage, and was not within the statute.*^^ Indeed, any promise ville V. Crane, 5 Hill (N. Y.) 483, 40 Am. Dec. 364. In Carville v. Crane, 5 Hill (N. Y.) 483, 40 Am. Dec. 364, the statute of frauds was held to apply to a parol promise to indorse a note for the purchaser of goods in consideration that the ven- dor would sell to him and no action will lie on such a promise. It is unlike the case of an acceptor of a bill. The indorser of a note is the collateral debtor, the maker being the principal. "Sec ante, § 1231. ""Philpott V. Wallet, 3 Lev. 66, Skin. 24, overruled by Cork v. Baker, 1 Str. 34, and Harrison v. Cage, 1 Ld. Ravm. 386. " Clark V. Pendleton, 20 Conn. 495 ; Blackburn v. Mann, 85 111. 222 ; Short V. Stotts, 58 Ind. 29; Caylor v. Roe, 99 Ind. 1 ; Nichols v. Weaver, 7 Kans. 373; Morgan v. Yarborough, 5 La. Ann. 316; Ogden v. Ogden, 1 Bland. (Md.) 284; Wilbur v. Johnson, 58 Mo. 600 ; I loitt V. Moulton, 21 N. H. 586; Derby v. Phelps, 2 N. H. 515. "It would be imputing to the legis- lature too great an absurdity to sup- pose that they had enacted that all our courtships, to be valid, must be in writing." Withers v. Richardson, 5 T. B. Mon. (Ky.) 94, 17 Am. Dec. 44. The reason of the provision re- quiring agreements in consideration of marriage to be in writing is to prevent promises thoughtlessly made or artfully procured during court- ship from being perverted into delib- erate and solemn engagements, con- ferring a right) to compel perform- ance. Dunn v. Tharp. 39 N. Car. 7. In New York and many other states mutual promises to marry are in terms excepted from the statute. "' Riley v. Riley, 25 Conn. 154. See also, Rainbolt v. East, 56 Ind. 538; Nowack V. Berger, 133 Mo. 24, 34 S. W. 489, 31 L. R. A. 810. 54 Am. St. 663. Letters or correspondence be- fore marriage may furnish the writ- ten evidence of the agreement re- quired. Logan V. Wienholt, 1 CI. & Fin. 611 ; Hammersley v. De Biel. 12 CI. & Fin. 45; Moorhouse v. Colvin. 15 Beav. 341 ; Kinnard v. Daniel. 13 B. Mon. (Kv.) 496: Peck v. Vande- mark, 99 N.Y. 29, 1 N. E. 41. Mar- riage is not such a part performance as will take the case out of the stat- ute. Redding v. Wilkes, 3 Brown Ch. 400; Montacute v. Ma.xwell, 1 P. Wms. 618; Hammerslev v. De Biel, 12 CI. & Fin. 45; Lassence v. Tier- § 1249 CONTRACTS. 486 which does not have marriage for its sole consideration is not within the statute."^ § 1249. Promise to do some act other than marry in con- sideration of marriage. — But while it has been decided that mutual promises to marry and contracts which have a considera- tion in addition to marriage are not within the operation of the statute, it remains true that promises to marry, given in con- sideration of a promise to do some act other than to marry, are within the statute/*^ All contracts for conveying anything of value upon the sole consideration of marriage are within the operation of the statute,'^^ even though the contract does not con- template the conveyance of real estate/^ § 1250. Antenuptial contracts. — All promises or agree- ments made on the sole consideration of marriage, whether be- tween the parties to the marriage, or with a third person, must be in writing or no action can be maintained upon them, either in the way of enforcing them, or for damages for a breach of them.'^^ Where there has been no fraud and no agreement to re- ney, 1 MacN. & G. 551; Caton v. Ca- 698, 11 Am. St. 255; McAnnulty v. ton, L. R. 1 Ch. App. 137, L. R. 2 H. McAnnulty, 120 111. 26, 11 N. E. 397, L. 127; Bradley v. Saddler, 54 Ga. 60 Am. Rep. 552; Brenner v. Bren- 681; Flenner v. Flenner, 29 Ind. 564; ner, 48 Ind. 262; White v. Bigelow, Crane v. Gough, 4 Md. 316; Brown 154 Mass. 593, 28 N. E. 904; Chase V. Conger, 8 Hun (N. Y.) 625; Hen- v. Fitz, 132 Mass. 359; Manning v. ry V. Henry, 27 Ohio St. 121 ; Finch Riley, 52 N. J. Eq. 39, 27 Atl. 810 ; V. Finch, 10 Ohio St. 501. Henry v. Henry, 27 Ohio St. 121; "Larsen v. Johnson, 78 Wis. 300, Lloyd v. Fulton, 91 U. S. 479, 23 L. 47 N. W. 615, 23 Am. St. 404. See ed. 363. also, cases cited in the preceding note. " Brenner v. Brenner, 48 Ind. 262 ; ™ Montacute v. Maxwell, 1 P. Wms. Flenner v. Flenner, 29 Ind. 564. 618; De Biel v. Thompson, 3 Beav. '"Ayliffe v. Tracy, 2 P. Wms. 65; 469; Coverdale v. Eastwood, L. R. Randall v. Morgan, 12 Ves. Jr. 67 15 Eq. 121 ; Ungley v. Ungley, L. R. (construction of a letter as not 5 Ch. D. 887 ; Flenner v. Flenner, 29 amounting to an absolute agreement Ind. 564; Brenner v. Brenner, 48 Ind. to give a marriage portion) ; Brad- 262; White v. Bigelow, 154 Mass. ley v. Saddler, 54 Ga. 681; Flenner 593, 28 N. E. 904; Brown v. Conger, v. Flenner, 29 Ind. 564 (where the 8 Hun (N. Y.) 625; Matter of Wil- woman promised before marriage to loughby, 11 Paige (N. Y.) 257; Hen- release a judgment recovered against ry V. Henry, 27 Ohio St. 121; Stan- the man); Brenner v. Brenner, 48 ley V. Madison, 11 Okla. 288, 66 Pac. Ind. 262 (to same effect as preced- 280; Adams v. Adams, 17 Ore. 247, ing case); Powell v. Meyers, 23 Kv. 20 Pac. 633. L. 795, 64 S. W. 428; White v. Bige- " Peek v. Peek. 11 Cal. 106, 19 Pac. low, 154 Mass. 593. 28 N. E. 904 (al- 227, 1 L. R. A. 185, 11 Am. St. 244; leged oral agreement not sustained); Moore v. Allen, 26 Colo. 197, 57 Pac. Chase v. Fitz, 132 Mass. 359; Deshon 48/ STATUTE OF FRAUDS. § I25I duce the settlement to writing there can be no departure from the statutory rule. If the wife has placed reliance solely upon the honor or promise of the husband no relief can be afforded.^* It is also settled that an antenuptial agreement by a husband to make a settlement upon his wife, but which settlement is not made until after marriage, is void as to intervening creditors." But the statute is not a defense in an action for the rectification of a marriage settlement where there is satisfactory evidence of a mistake made in drawing the deed." § 1251. Antenuptial parol agreements reduced to writing after marriage. — It has been held in a number of cases that, if there be a written agreement after marriage, in pursuance of a parol agreement before marriage, this takes the case out of tlie statute.''^ However, the weight of authority is perhaps to the contrary." Some authorities even hold that a post-nuptial settle- V. Wood, 148 Mass. 132, 19 N. E. 1, 1 L. R. A. 518 (oral promise; bill in equity by assignee in insolvency to recover certain bonds as transferred in fraud of creditors; Henry v. Hen- ry, 27 Ohio St. 121 (where a woman owning lands promised a man that if he would marry her and make cer- tain improvements on the lands, she would convey the lands to him) ; Dygert v. Remerschnider, 32 N. Y. 629 (agreement to pay debts) ; Cush- man v. Burritt, 14 N. Y. Wkly. Dig. 59 (where a man promised to pay a woman two thousand dollars if she would marry him). In re, Willough- by, 11 Paige Ch. (N. Y.) 257 (where the wife of a lunatic applied for an allowance for support of her daugh- ter by a former marriage on the ground of an alleged antenuptial agreement) ; Ennis v. Ennis, 48 Hun (N. Y.) 11, 15 N. Y. St. 243; Stanley V. Madison, 11 Okla. 288, 66 Pac. 280 (attempt by a wife to recover property levied on by creditor of husband) ; Hackney v. Hackney, 8 Humph. (Tenn.) 452; Llovd v. Fulton. 91 U. S. 479, 21 L. ed. 363. See, however, in re, Krug's Estate, 196 Pa. St. 484, 46 Atl. 484. '* Pierce v. Pierce, 71 N. Y. 154, 27 Am. Rep. 22; Hunt v. Hunt, 171 N. Y. 396, 64 N. E. 159, 59 L. R. A. 306; Hannon v. Hounihan, 85 Va. 429 12 S. E. 157. '"'Oeshon v. Wood, 148 Mass. 132, 19 N. E. 1, 1 L. R. A. 518 (citing a number of cases) ; Wood v. Savage, 2 Doug. (Mich.) 316. See, also, Man- ning V. Riley, 52 N. J. Eq. 39, 27 Atl. 810; Borst v. Corey, 15 N. Y. 505; Stanley v. Madison, 11 Okla. 288, 66 Pac. 280. Compare with Satter- thwaite v. Emley, 4N. J. Eq. 489, 43 Am. Dec. 618. "Johnson v. Bragge, 70 Law J. Ch. 41 (1901) 1 Ch. 28, 83 Law T. 621, 49 Wkly. Rep. 198. "" Surcome v. Pinniger, 3 De G. M. & G. 571 ; Taylor v. Beech, 1 Ves. Sen. 297; Montacute v. Maxwell, 1 P. Wms. 618, 1 Str. 236; Barkworth v. Young, 4 Drew 1 ; Hammerslev v. De Biel, 12 CI. & F. 45; Cooper v. Wormald, 27 Beav. 266 (agreement fully executed) ; Argenbright v. Campbell, 3 Hen. & M. (Va.) 144; Ex parte Whitehead. L. R. 14 Q. B. Div. 419; Buffinerton v. Buffington, 151 Ind. 200. 51 N. E. 328: Moore v. Harrison, 26 Ind. App. 408, 59 N. E. 1077. ™ Frazer v. Andrews, 134 Iowa 621. 112 N. W. 92, 11 L. R. A. (N. S.) 593 and note. (Compare, how- ever, with Kohl V. Frederick, 115 Iowa 517, 88 X. W. 1055) ; Borst v. § 1252 CONTRACTS. 488 ment made pursuant to the terms of an oral antenuptial settle- ment is not binding on the parties thereto."'* Others hold the settlement good as between the parties'"' but invalid against in- tervening creditors or innocent purchasers/^ § 1252. Antenuptial agreement — Execution. — An ante- nuptial contract which has been fully executed is not within the statute. Thus where in consideration of marriage the husband agreed that he would have the wife named one of the beneficiaries of a certificate of insurance held by him and the marriage was solemnized and the change in the beneficiary made, this was a performance which took the agreement out of the statute.®^ § 1253. Contracts relating to lands. — Under the fourth clause in the fourth section of the statute of frauds, a contract Corey, 16 Barb. (N. Y.) 136, affd. 15 N. Y. 505 ; Smith v. Greer, 3 Humph. (Tenn.) 118. It was held in Mc An- nuity V. McAnnulty, 120 111. 26, 11 N. E. 397, 60 Am. Rep. 552, that the reduction to writing after marriage of a verbal antenuptial con- tract did not take it out of the stat- ute. "Doubtless, a verbal antenup- tial agreement might, under special circumstances, be enforced in equity, in order to prevent the party invok- ing the statute from perpetrating a fraud upon the other party." See also, Powell v. Meyers, 23 Ky. L. 795, 64 S. W. 428. '^Carter v. Worthington, 82 Ala. 334, 2 So. 516, 60 Am. Rep. 738; Bradley v. Saddler, 54 Ga. 681; Reade v. Livingston, 3 Johns. Ch. (i\. Y.) 481, 8 Am. Dec. 520; Man- ning v. Riley, 52 N. J. Eq. 39, 27 Atl. 810; Henry v. Henry, 27 Ohio St. 121 ; Hackney v. Hackney, 8 Humph. (Tenn.) 452. '" Satterthwaite v. Emley, 3 Green's Ch. 489 (4 N. J. Eq. 489), 43 Am. Dec. 618. See, also, Argenbright v. Campbell, 3 Hen. & M. (Va.) 144. "Andrews v. Jones, 10 Ala. 400; Jones v. Henry, 3 Litt. (Ky.) 427; Albert v. Winn, 5 Md. 66 (holding that the subsequent written instru- ment does not relate back so as to make the original parol contract the contract) ; Wood v. Savage, 2 Dougl. (Mich.) 316; Borst v. Corey, 16 Barb. (N. Y.) 136, affd. 15 N. Y. 505 ; Izard v. Izard's Admr., Bailey Eq. (S. Car.) 228; Davidson v. Graves, Riley Eq. (S. Car.) 219; Smith V. Greer, 3 Humph, (Tenn.) 118; Caines v. Marley, 2 Yerg. (Tenn.) 582; Patton v. McClure, Mart. & Yerg. (Tenn.) 323; Blow V. Maynard, 2 Leigh (Va.) 29. See Warden v. Jones (1857), 2 De G. & J. 76, disapproving Dundas v. Du- tens, 1 Ves. Jr. 196, 2 Cox Ch. 235, which is cited as holding that a post- nuptial settlement reciting the ante- nuptial agreement was good even against creditors. Warden v. Jones, 2 De G. & J. 76, was an appeal from the decision of the master of the rolls, setting aside a post-nuptial set- tlement as fraudulent against the creditors of the settlor. Lord Chan- cellor Cranworth said : "Lord Thur- low decided in Dundas v. Dutens, 2 Cox 235, that such settlement is good, and on that decision I will only re- mark that if it be a correct view of the law, the whole policy of the stat- ute is defeated. It cannot be enough merely to say in writing that there .vas a previous parol agreement. It must be proved that there was such an agreement, and to let in such proof is precisely what the statute meant to forbid." "^ Supreme Lodge &c. K. of P. v. 489 STATUTE OF FRAUDS. § 1^54 relating to the sale of lands, tenements or hereditaments or any interest in or concerning them must be in writing, and signed by the party to be charged, or by some other person by him there- unto lawfully authorized,**^ and the statute is equally binding on courts of equity as courts of law.** § 1254. Necessity for and sufficiency of writing. — An un- executed verbal agreement for the conveyance of land, without more, is within the statute and unenforcible.*^ Neither is such oral contract of sale available as a defense to an action in eject- ment brought by the vendor.*'^ It is well settled that the form of the writing required by the statute is not material. The contract may be evidenced by one writing or more. It may be shown en- tirely by written correspondence. Whatever form the agreement may assume, if the writing or writings, viewed as a whole, consti- tute in essence or substance, upon their face, a note or memoran- dum in writing, subscribed by the party sought to be charged, or Ferrell, 83 Kans. 491, 112 Pac. 155,33 L. R. A. (N. S.) in. "Lyons v. Bass. 108 Ga. 573. 34 S. E. 721 ; Howton v. Gilpin, 24 Ky. L. 630, 69 S. W. 766 ; Blood v. Hardy, 15 Maine 61 ; Patterson v. Cunning- ham, 12 Maine 506; Hurley v. Don- ovan, 182 Mass. 64, 64 N. E. 685; Glucksman v. Bowers, 68 N. J. L. 146, 52 Atl. 218: Borie v. Satterthwaite, 180 Pa. St. 542. Zl Atl. 102. *• Russell V. Briggs. 165 N. Y. 500; 59 N. E. 303. 53 L. R. A. 556. revg. 12 App. Div. (N. Y.) 624, 44 N. Y. S. 1128; Vick v. Vick, 126 N. Car. 123, 35 S. E. 257; Purccll V. Miner, 4 Wall. (U. S.) 513, 18 L. ed. 435. Courts of equity may decree a specific perform- ance of parol contracts relating to the sale of lands, where there has been a part performance of the contract. But the ground of relief there, in such cases, is fraud. Buckmaster v. Harrop, 7 Ves. Jr. 341 ; Lane v. Shackford, 5 N. H. 130; Phillips v. Thompson, 1 Johns. Ch. (N. Y.) 131. See, also, Zeuske v. Zeuske, 55 Ore. 65, 103 Pac. 648, 105 Pac. 249, Ann. Cas. 1912A. 557. Mere breach of a contract within the statute does not give rise to such an equity as will authorize specific performance. Hen- derson V. Henrie, 68 W. Va. 562, 71 S. E. 172, 34 L. R. A. (N. S.) 628, Ann. Cas. 1912B. 318. " Seymour v. National Bldg. &c. Assn., 116 Ga. 285, 42 S. E. 518, 94 Am. St. 131 (sale of real estate at public outcry bv mortgagee) ; AlcLen- nan v. Boutell, 117 Mich. 544, 76 N. W. 75; Hall v. Fisher. 126 N. Car. 205, 35 S. E. 425; Cleveland v. Ev- ans, 5 S. Dak. 53, 58 N. W. 8. And see also, Fargusson v. Duluth Imp. Co., 56 Minn. 222, 57 N. W. 480. *" Zeuske v. Zeuske, 55 Ore. 65, 103 Pac. 648, 105 Pac. 249, Ann. Cas. 1912A. 557. It may be otherwise, however, when there has been suffi- cient performance to take the case out of the statute. Souci v. Ouillette, n N. B._393: Arguello v. Edinger, 10 Cal. 150; Vanduzer v. Christian, 30 Ga. ZZd; Holcomb v. Dowell, 15 Kans. 378; South-Side Town Min. &c. Co. V. Rhodes, Z2> Kans. 229, 6 Pac. 278; Chandler v. Neil. 46 Kans. 67, 26 Pac. 470 ; Young v. Montgom- erv. 28 Mo. 604; Ford v. Steele, 31 Nebr. 521, 48 N. W. 271; Bigler v. Baker, 40 Nebr. 325, l"^ N. W. 1026, 24 L. R. A. 255. S 1255 CONTRACTS. 49O his agent lawfully authorized in writing, showing who the con- tracting parties are, the subject-matter of the sale, and the con- sideration, the statute is satisfied. ^^ If the several writings, viewed in the light of the situation and circumstances of the parties at the time they were written, clearly relate to, and con- nect themselves with, each other, and when their contents are adjusted to each other there appears to have been clearly made known the names of the contracting parties, the subject-matter of the sale, and the consideration, and if it appears that all this has received the sanction of the subscription of the party sought to be charged, or some person by him thereunto lawfully authorized in writing, the statute requirement in reference to subscription, as well as all other particulars is met.^^ § 1255. Scope of the clause. — A contract of sale of an "in- terest in or concerning" lands, tenements, hereditaments, includes contracts to convey any portion of the legal or equitable title of all realty whatsoever, such as a contract for the transfer of a pre-emption,^" or squatter's rights,"" or a possessory right,®^ or the interest of a vendee under an executory contract,"^ or the beneficial interest of a cestui que trust,"^ or, in fact, any equitable interest in realty."* However, it has been denied that possession " Jenkins v. Harrison, (A Ala. 345 ; of frauds. Pembroke v. Logan, 71 Carter v. Shorter, 57 Ala. 253; Ark. 364, 74 S. W. 297. Thompson v. New South Coal Co. ** Lester v. White's Heirs, 44 111. (Ala.), 34 So. 31; Gray v. Smith, 76 464. Fed. 525, affd. 83 Fed. 824, 28 C. C. A. "^ Hayes v. Skidmore, 27 Ohio St. 168; Allan v. Bemis, 120 Iowa 172, 331. 94 N. W. 560. ''East Omaha Land Co. v. Han- ** Brooks V. Miller, 103 Ga. 712, 30 sen, 117 Iowa 96, 90 N. W. 705; Nor- S. E. 630; Mull v. Smith, 132 Mich, ton v. Webb, 35 Maine 218; Boyd v. 618, 94 N. W. 183 ; Peay v. Seigler, Paul, 125 Mo. 9, 28 S. W. 171 ; How- 48 S. Car. 496, 26 S. E. 885, 59 Am. ard v. Easton, 7 Johns. (N. Y.) 205. St. 731. The consideration must be "'Dougherty v. Catlett, 129 111. 431, expressed. Cooley v. Lobdell, 153 21 N. E. 932; Grunow v. Salter, 118 N. Y. 596, 47 N. E. 783. See, how- Mich. 148, 76 N. W. 325; Hackett v. ever, post, § 1313. The writing must Watts, 138 Mo. 502, 40 S. W. 113. identify the land to be conveyed so See, also, Gilbert v. Bulkley, 5 Conn, that it can be distinguished from 262, 13 Am. Dec. 57 (grantor to re- other land. Lippincott v. Bridge- tain possession until purchase-price water, 55 N. J. Eq. 208, 36 Atl. 672; paid). Cooley V. Lobdell, 153 N. Y. 596, 47 "'Richards v. Richards, 9 Gray N. E. 783. The payment of the pur- (Mass.) 313. chase-price and the making of im- " Ellis v. Hill, 162 111. 557, 44 N. E. provements bv a vendee in a parol 858 ; Cox v. Roberts, 25 Ind. App. contract for the sale of real estate 252, 57 N. E. 937; Hughes v. Moore, takes the contract out of the statute 7 Cranch (U. S.) 176. 491 STATUTE or FRAUDS. .^ l: constitutes an estate or interest in lands which cannot be assigned or granted except by deed or note in writing signed by the proper parties. Thus it has been held that one holding by adverse posses- sion may transfer and pass such possession to another by parol or bargain and sale accompanied by delivery."" An equity in lands is as much within the statute as the legal title, and it is no more com- petent to convey the one by parol than the other."" The assign- ment or transfer of the purchaser's interest in a land contract is generally held a grant of an interest in real property which must comply with the clause of the statute."^ The same is true of an oral agreement by one who negotiates a sale of real estate, to pay back at the purchaser's option the money advanced and assume the contract."^ An oral contract for the exchange of lands is within the statute."" It goes without saying that estates in fee^ or for life," are within the statute. "Crawford v. Viking Refrigerator &c. Co., 84 Kans. 203, 114 Pac. 240, 35 L. R. A. (N. S.) 498 and note. °« Morgart v. Smouse. 103 Md. 463, 63 Atl. 1070, 115 Am. St. 367, 7 Am. & Eng. Ann. Cas. 1140; Scott v. Mc- Farland, 13 Mass. 309; Connor v. Tippett, 57 Miss. 594; Marble v. Mar- ble, 5 N. H. 374 ; Kelley v. Stanbery, 13 Ohio 408. "If there is any case that calls more than another upon the courts to insist upon the salutary provisions of this useful statute be- ing enforced, it is the case of the release of an equity of redemption." Van Keuren v. McLaughlin, 19 N. J. Eq. 187 ; Henderson v. Henrie, 68 W. Va. 562, 71 S. E. 172, 34 L. R. A. (N. S.) 628. " Reams v. Thompson, 5 Ga. App. 226, 62 S. E. 1014 ; Dougherty v. Cat- lett, 129 111. 431, 21 N. E. 932; Con- nor V. Tippett, 57 IMiss. 594; Hackett V. Watts, 138 Mo. 502, 40 S. W. 113; Flinner v. McVay, Vl Mont. 306, 96 Pac. 340, 19 L. R. A. (N. S.) 879n ; Brown v. Jones, 46 Barb. (N. Y.) 400: Love v. Cobb, 63 N. Car. 324; Wilkie V. Womble, 90 N. Car. 254; Smith V. Burnham, 3 Sumn. (U. S.) 345, Fed. Cas. No. 13019; Smith v. Clarke, 7 Wis. 551 : Whitney v. State Bank. 7 Wis. 620. Compare with. Currier v. Howard, 14 Gray (Mass.) 511; Proctor v. Thompson, 13 Abb. N. Cas. (N. Y.) 340. " Esslinger v. Pascoe, 129 Iowa 86, 105 N. W. 362, 3 L. R. A. (N. S.) 147. "' Gordon v. Simmons, 136 Ky. 273, 124 S. W. 306, Am. Cas. 1912A. 305, and note where the authorities are collected. ' McKinnon v. Mixon, 128 Ala. 612, 29 So. 690; Manning v. Pippen, 86 Ala. 357, 5 So. 572, 11 Am. St. 46; Pond V. Sheean, 132 111. 312, 8 L. R. A. 414, 23 N. E. 1018; Austin v. Da- vis, 128 Ind. 472, 26 N. E. 890. 12 L. R. A. 120, 25 Am. St. 456; Jack- son v. Myers, 120 Ind. 504, 22 X. E. 90, 23 N. E. 86; McLennan v. Bou- tell, 117 Mich. 544. l(i N. W. 75; McDonald v. Maltz. 78 Mich. 685, 44 N. W. Zn ; Fargusson v. Duluth Im- provement Co., 56 Minn. 222, 57 X. W. 480 ; Taylor v. Von Schroeder, 107 Mo. 206, 16 S. W. 675: Bloomtield State Bank v. Miller, 55 Xebr. 243. 75 N. W. 569, 44 L. R. A. 387, 70 Am. St. 381 ; Jordan v. Furnace Co., 126 N. Car. 143, 35 S. E. 247, 78 Am. St. 644; Kling v. Bordner, 65 Ohio St. 86, 61 X. E. 148; Cleveland v. Ev- ans, 5 S. Dak. 53. 58 N. W. 8 ; Swash V. Sharpstein, 14 Wash. 426. 44 Pac. 862. 32 L. R. A. 796. "Such as a dower right (Brown v. § 1256 CONTRACTS. 492 A contract for the exchange of lands stands on the same foot- ing as a contract for their sale.^ It seems to be clear that the statute has made it necessary that a partition of lands must be effected by writing* but a parol partition which is followed by possession in accordance therewith and the exercise of acts of exclusive ownership is legal and binding.^ § 1256. Cases not within the statute — Constructive trusts. It is well settled that where property is acquired by fraud or undue influence the person so acquiring it is a trustee ex malificio for the benefit of the person entitled thereto.'' Thus where a party purchases land at a foreclosure sale for the benefit of the owner of the equity at a price below its value, he cannot set up the statute of frauds against the party for whom he purchased, but will be treated as a trustee ex mahficio.'^ Where a person, old and ignorant, under representations by the grantee, in whom he had implicit confidence, that it was the best course to pursue to avoid liability on a false claim, conveys land, receiving an oral assurance from the grantee that he will reconvey on request, the grantee having, however, no intention to reconvey, the agree- ment to reconvey is not within the statute of frauds, since, in such a case, the constructive trust growing out of the grantee's fraud is excepted from the operation of the statute of frauds.^ Rawlings 72 Ind. 505 ; Gordon v. tenants in common are valid at law, Gordon, 54 N. H. 152 ; Keeler v. Tat- at least for some purposes, when fol- nell 23 N J L. 62) even if un- lowed by possession, and m most of assigned. Finch v. Finch, 10 Ohio them by such acts of occupation as 5|. 501 " would be sufficient to secure a de- ^ Stark V. Cannady, 3 Litt. (Ky.) cree for specific performance in 399 14 Am Dec 76; Connor v. equity. Shepard v. Rinks, 7» ill. Tippett, 57 Miss. 594; Beckmann v. 188; Moore v. Kerr 46 Ind. 468; Afenham 97 Mo Ann. 161. 70 S. W. Pipes v. Buckner, 51 Miss. 848; Tay- 1094 Moss V Culven 64 Pa. St. 414, lor v. Millard, 118 N Y. 244, 23 N. 3 Ar^ Rep 601 ; Purcell v. Miner, 4 E. Zl(i, 6 L. R. A. 667. In re Long s Wall'rU. S.) 513, 18 L. ed. 435. Appeal, 11 Pa. St. 151 ; Stuart v. Mohn v Sebattis, 69 Maine 473; Baker, 17 Texas 417; Buzzell v. Porter v. Hill. 9 Mass. 34, 6 Am. Gallagher. 28 Wis. 678. Dec 22; Ballou v. Hale, 47 N. H. "Donnelly v. Rees, 141 Gal. 56, 347 93 Am Dec 438; Lloyd v. Con- 74 Pac. 433. See also, Logan v. over 25 N T L 47 ; Medlin v. Steel, Brown, 20 Okla. 334. 95 Pac. 441, 75 N. Car. ■154 ; Pollard's Code (Va.) 20 L. R. A. (N^ S.) 298n. 1904 § 2413 'Dickson v. Stewart, 71 Nebr. 424, 'Wood v' Fleet (1867), 36 N. Y. 98 N. W. 1085, 115 Am. St. 596. 499, 93 Am. Dec. 528, (citing cases ''Rozell v. Vansyckle, 11 Wash. 19, showing an unbroken current of deci- 39 Pac. 270. sions). Verbal partitions between 493 STATUTE OF FRAUDS. § 1 257 But covenants relating to the management and sale of real estate, contained in a declaration of trust which was signed only by the trustee, cannot, in case of resulting trusts, be considered as cove- nants or limitations of their estates, on the part of the other per- sons for whose benefit the trusts are declared. Nor does their acceptance of the declaration of trust, in such cases, dispense with the necessity of their signatures, under the statute of frauds, when the declaration is claimed to limit, or give an interest in, their equitable estates, which arose independently of the declara- tion of trust.'' § 1257. Cases not within the statute — Party fences and lo- cation of boundary line. — An oral agreement between the owners of adjoining lands with reference to the maintenance of a line fence between them is not within the statute of frauds.^" Thus adjoining occupants may agree to divide the work of keep- ing up a line fence as a temporary arrangement binding until abandoned by mutual consent^ ^ especially when acquiesced in and acted upon by the parties for a long period of time.^^ It has been held that an agreement between adjacent owners that there shall be a lane but no line fence need not be in writing. ^^ Agreements between adjoining owners, establishing the boundary between their lands, when the true boundary is unknown and in dispute, are not within the statute of frauds.-^ Agreements of this char- Adams V. Carey, 53 N. J. Eq. H. 241 (holding such an agreement 334, 31 Atl. 600. obligatory until overruled by the "Guyer v. Stratton, 29 Conn. 421; fence viewers); Tupper v. Clark, 43 Baynes v. Chastain, 68 Ind. 376; Vt. 200 (holding that such an agree- Ivi'ns V. Ackerson, 38 N. J. L. 220 : mcnt must be adhered to until re- Castner v Riegel, 54 N. J. L. 498, 24 pudiated). Atl. 484 : Talmadge v. Rensselaer &c. " Meyer v. Perkins, 89 Nebr. 59, R. Co., 13 Barb. (N. Y.) 493; Fleming 130 N. W. 986, Am. Cas. 1912C. 468 v. Ramsey, 46 Pa. 252. See also, Dod- and note. der V. Snyder, 110 jMich. 69. 67 N. '"Bills v. Belknap, 38 Iowa 225. W. 1101. See. however. Rudisell "Sherman v. King, 71 Ark. 248, V. Cross, 54 Ark. 519. 16 S. W. 575, 72 S. W. 571; Pavne v. McBride, 96 26 Am. St. 57; De Mers v. Rohan, Ark. 168, 131 S. W. 463, Ann. Cas. 126 Iowa 488, 102 N. W. 413 ; Knox 1912B. 661 ; Dierssen v. Nelson. 138 V. Tucker. 48 Maine 373, 77 Am. Cal. 394, 71 Pac. 456; Young v. Dec. 233; Heath v. Ricker, 2 Greenl. Blakeman, 153 Cal. 477, 95 Pac. 888; (:\Iaine) 72; Kellog v. Robinson, 6 Loustalot v. McKeel, 157 Cal. 634, Vt. 276, 27 Am. Dec. 550. 108 Pac. 707; Farr v. Woolfolk, 118 " McAfee v. Walker. 82 Kans. 182, Ga. 277. 45 S. E. 230 ; Clavton v. 107 Pac. 637, 27 L. R. A. (N. S.) Feig. 179 111. 534. 54 X. E. 149; 226n. See also, York v. Davis, 11 N. Kitchen v. Chantland, 130 Iowa 618, § 1258 CONTRACTS. 494 acter are not subject to the objection that they are within the statute of frauds, because they are not considered as extending to the title.'' However, where there has been no dispute about the line,'" or if the adjoining owners with full knowledge of a line which is fixed verbally agree to make another line or consent that a line which has been run elsewhere shall be the true line," or if they establish a division line known by both parties not to be the true line,'^ their agreement is within the statute of frauds. § 1258. Cases not within the statute — Licenses to enter on lands. — A license is defined to be "an authority to do a par- ticular act, or series of acts, upon another's land, without pos- sessing any estate therein. It is founded on personal confidence, and is not assi^rnable nor within the statute of frauds.'"" It has 105 N. W. 367, 8 Am. & Eng. Ann. Cas. 81; Kulas v. McHugh, 114 Iowa 188, 86 N. W. 288 (holding that an agreement to make the line established the true line may be im- plied) ; Warden v. Addington, 131 Ky. 296, lis S. W. 241; Gordon v. Simmons, 136 Ky. 273, 124 S. W. 306; Fields v. Sizemore, 32 Ky. L. 237, 105 S. W. 438; Walker v. Cor- nett (Ky. App.), 122 S. W. 841; Duff V. Cornett. 23 Ky. L. 297, 62 S. W. 895 (holding the above especially true when the contract has been acted on for many years) ; Ferguson V. Crick, 15 Ky. L. 461, 23 S. W. 668; Grigsby v. Combs, 14 Ky. L. 651. 21 S. W. 2>7; Higginson v. Schaneback, 23 Ky. L. 2230, 66 S. W. 1040; Patterson v. Meyer, 28 Okla. 304, 114 Pac. 256; Rozelle v. Lewis, ?>7 Pa. Super. Ct. 563; McKeon V. Roan (Tex.), 106 S. W. 404; Caruthers v. Hadley (Tex.), 134 S. W. 757; Masterson v. Bockel, 20 Tex. Civ. App. 416, 51 S. W. 39; Le- comte V. Toudouze, 82 Tex. 208, 17 S. W. 1047, 27 Am. St. 870. See also, Hall v. Conlee, 23 Ky. L. 177, 62 S. W. 899; Brummell v. Harris, 162 Mo. 397, 63 S. W. 497; Contra Stricklv v. Hill, 22 Utah 257, 62 Pac. 893, 83 Am. St. 786. **Lonstalot v. McKeel, 157 Cal. 634, 108 Pac. 707. See also, McKeon V. Roan (Tex.), 106 S. W. 404. "^Olin V. Henderson, 120 Mich. 149, 79 N. W. 178. See also, Mann V. Mann, 152 Cal. 23, 91 Pac. 994; Fuelling v. Fuesse, 43 Ind. App. 441, 87 N. E. 700; Clarke v. Clarke, 28 Ky. L. 704, 90 S. W. 244; Sweet v. Warner, 14 N. Y. St. 312; Haddock v. Leary, 148 N. Car. 378, 62 S. E. 426. "Gilchrist v. McGee, 9 Yerg. (Tenn.) 455. To same effect. Hoar v. Hennessy, 29 Mont. 253, 74 Pac. 452 ; Nichol v. Lytle's Lessee, 4 Yerg. (Tenn.) 456, 26 Am. Dec. 240; Hous- ton's Heirs v. Matthews, 1 Yerg. (Tenn.) 116; Lewallen v. Overton, 9 Hump. (Tenn.) 76. " Lewis v. Ogram, 149 Cal. 505, 87 Pac. 60, 10 L. R. A. (N. S.) 610n, 117 Am. St. 151. "3 Kent's Com. 452. See also. Smart v. Jones, 15 C. B. (N. S.) 717; Wells v. Kingston-upon-Hull (1S75), L. R. 10 C. P. 402 (use of a lock) ; De Montague v. Bacharach, 181 Mass. 256, 63 N. E. 435; John- son v. Wilkinson, 139 Mass. 3, 29 N. E. 62, 52 Am. Rep. 698; White v. Maynard, 111 Mass. 250, 15 Am. Rep. 28; Turner v. Stanton, 42 Mich. 506, 4 N. W. 204; Johnson v. Skilman, 29 Minn. 95, 12 N. W. 149, 43 Am. Rep. 192; Sampson v. Burnside, 13 N. H. 264 (parol license to enter on land and lay an aqueduct to convey water from a spring) ; Silsby v. Trotter, 495 STATUTE OF FRAUDS, § 1258 accordingly been held that a parol license, while it remains execu- tory, may be revoked at pleasure by the licensor,^" unless it is coupled with an interest in the same realty,^^ or circumstances exist such as will work an estoppel." The erection of improve- ments upon the faith of parol licenses is an important element in determining their revocability in many cases.^^ But licenses which in their nature amount to the granting of an estate for ever so short a time are not good unless in writing.^* 29 N. J. Eq. 228 (to take ore from a mine) ; Olmstead v. Abbott, 61 Vt. 281. 18 Atl. 315. '*WalIis V. Harrison, 4 M. & W. 538 (parol executory license counter- mandable at any time) ; Garner v. Mahony. 115 Iowa 356. 88 N. W. 828; McCrea v. Marsh, 12 Gray (Mass.) 211, 71 Am. Dec. 745n (re- fusal to admit a colored person to a theater, following Wood v. Lead- bitter, 13 M. & W. 838) ; Whittemore V. New York, N. H. & H. R. R. Co., 174 iMass. 363. 54 X. E. 867; Hodg- kins V. Farrington, 150 Mass. 19, 22 N. E. 72,, 5 L. R. A. 209, 15 Am. St. 168; Kitchens v. Shaller, 32 Mich. 496; Ewing v. Rhea, Z7 Ore. 583, 62 Pac. 790. 52 L. R. A. 140, 82 Am. St. 783; Drew v. Peer, 93 Pa. St. 234 (refusal to admit colored persons to theater on tickets held by them). In Taylor v. Waters, 7 Taunt 374, it was held that a beneficial license to be exercised upon land may be granted without deed and without writing. ^ Greenwood v. School District. 126 Mich. 81. 85 N. W. 241; Bolland V. O'Neal, 81 Minn. IS, 83 N. W. 471. 83 Am. St. 362. " Legg V. Horn. 45 Conn. 409; Hiers v. Mill Haven Co., 113 Ga. 1002, 39 S. E. 444; Wilson v. Chal- fant. 15 Ohio 248, 45 Am. Dec. 574; Ainsworth v. Stone, 72, Vt. 101, SO Atl. 805. "Liggins V. Inge. 7 Ring. 682 (dis- tinguishing between licenses which, when countermanded, leave the party in statu quo and licenses for the construction of buildings and works which are not revocable) ; Hazelton V. Putnam, 3 Pinney (Wis.) 107, 3 Chand. 117, 54 Am. Dec. 158, cases collated in notes. ^* Foot V. New Haven & Northamp- ton Co.. 23 Conn. 214 (parol license to overflow land void as the grant of an easement or incorporeal heredita- ment) ; Collins Co. v. Marcy, 25 Conn. 239 (an addition to a building erected upon the land of another) ; Woodward v. Seely. 11 111. 157, 50 Am. Dec. 445n ; Tanner v. Volentine, 75 111. 624 (to flood land) ; Moulton v. Faught, 41 I\Iaine 298 (parol agree- ment that a party may abut and erect a dam upon the land of another for a permanent purpose void) ; Cook v. Stearns, 11 Mass. 533; Hitchens v. Shaller, 2,2 Mich. 496 (to dig ditches) ; Druse v. Wheeler. 22 Mich. 439 (to erect buildings) ; Putnev v. Day. 6 N. H. 430, 25 Am. Dec. 470; Woodbury v. Parshlev, 7 N. H. 237, 26 Am. Dec. 739; Mumford v. Whitney, 15 Wend. (N. Y.) 380, 30 Am. Dec. 60 (which contains an able review of many of the conflicting cases and holds that the conferring of a right to enter upon lands and to erect and main- tain a dam as long as there shall be employment for the water power thus created, is more than a license ; it is a transfer of an interest in land and to be valid must be in writing) ; Pierrepont v. Barnard, 6 N. Y. 279; Phillips V. Thompson, 1 Johns. Ch. (N. Y.) 131; McKellip v. :McIlhenny, 4 Watts (Pa.) 317, 28 Am. Dec. 711; Alien v. Fiske. 42 Vt. 462. A grant of a right to shoot over land and to take away a part of the game killed held to be a profit a prendre and a grant of an interest in land and with- in the statute. Webber v. Lee (1882), 9 Q. B. Div. 315. § 1259 CONTRACTS. 496 § 1259. Fixtures. — The statute had in view the avoidance of only such parol agreements as would create some interest in the land itself. It does not affect such contracts as are collateral and by which no kind of interest is gained in the land.^° Con- sequently contracts for the sale of fixtures which are a part of the realty come with the provisions of the statute,'" but agreements for the sale of such fixtures as are removable or mere improve- ments on lands are not within the statute.^^ Moreover, if a fix- ture, which is generally considered as realty, is to be severed by the seller and delivered by him to the purchaser, the contract for the sale of such fixture need not be in writing, such as a contract for the sale of a dwelling which was to be severed from the realty and delivered on rollers."^ An oral agreement between the land- lord and his tenant by which the tenant is to remove buildings erected by him on the leasehold premises has been held valid. ^'^ The word "house," in its ordinary legal meaning, signifies real property, but the meaning is not a fixed one. The sale of a build- ing with the right of removal is not necessarily the sale of an in- terest in land within the meaning of the statute. The reasonable doctrine is, that where the effect of the contract between the par- ties is to impress upon the structure the character of personalty it takes that character, whether the contract was made before or after its erection, unless the structure is inseparably annexed to the land.'° "Frear v. Hardenbergh, 5 Johns, waukee Lake View Co., 97 Wis. 275, (N Y) 272. 72 N. W. 872; Lower v. Winters, 7 '"Towson V. Smith, 13 App. (D. Cow. (N. Y.) 263; Thouvenin v. C.) 48; Smith v. Price, 39 111. 28, Lea. 26 Texas 612 ; Brown v. Roland, 89 Am. Dec. 284; Aldrich v. Hus- 11 Tex. Civ. App. 648, 33 S. W. 273 band, 131 Mass. 480; Noble v. Bos- ''Long v. White, 42' Ohio St. 59 worth, 19 Pick. (Mass.) 314; Con- To same effect, Rogers v. Cox, 96 Ind, nor V. Coffin, 22 N. H. 538; Bond v. 157, 49 Am. Rep. 152; Keyset v Coke, 71 N. Car. 97. List. No. Eight, 35 N. H. 477. Com- ^Lee V. Gaskell, 1 Q. B. D. 700; pare with Meyers v. Schemp, 67 111 Ronanye v. Sherrard, 11 Irish Rep. 469. (C. L.) 146; Hallen v. Runder, 1 Cr. '^ Powell v. McAshan, 28 Mo. 70. M. & R. 266; Scoggin v. Slater, 22 To same effect, Broaddus v. Smith. Ala. 687; Cassell v. Collins, 23 Ala. 121 Ala. 335, 26 So. 34, 77 Am. St. 61 5 676; Bostwick v. Leach, 3 Day Keyset v. District No. Eight, 35 N (Conn.) 476; Lombard v. Ruggles, 9 H. 477. Greenl. (Maine) 62; Clark v. ShuUz, ** Griffin v. Ransdell, 71 Ind. 440; 4 Mo. 235; Powell v. McAshan, 28 Rogers v. Cox, 96 Ind. 157, 49 Am. Mo. 70; Benedict v. Beebe, 11 John. Rep. 152; Russell v. Richards, 10 (N. Y.) 145; Morgan v. South Mil- Maine 429, 25 Am. Dec. 254 (saw- 497 STATUTE OF FRAUDS. § 1260 § 1260. Fructus industriales. — A contract for the sale of growing crops, produced annually by labor and the cultivation of the earth, and which are included within the meaning of the term "emblements," is not a contract for the sale of land, or any inter- est in it, or concerning it, and it is not material whether they have come to maturity or not at the time of the sale. Emblements are considered distinct from the real estate, and subject to many of the incidents attending personal chattels, and this without regard to the state of maturity to which they have arrived. It follows that the owner is generally held to have the right to make sale of them by parol contract.^^ It has been held that contracts for the sale of an unharvested crop of potatoes,^^ corn,^^ wheat,^* tur- mill); Ham v. Kendall, 111 Mass. 297 (ice-house) ; Shaw v. Carbrey, 13 Allen (Mass.) 462; Keyser v. Dist- rict No. Eight, 35 N. H. 477; Long V. White, 42 Ohio St. 59. Buildings are realty or personalty according to the intention of the parties, and when the parties agree that they may be severed and moved from the realty, buildings are held and treated as per- sonalty. Hartvvell v. Kellv, 117 Mass. 235; Beach v. Allen, 7 Hun (N. Y.) 441 (church building severed from land and placed on rollers) ; Long v. White, 42 Ohio 59. "Buildings, crops, and earth itself, sold to be separated from the land, are not within the statute of frauds; for, by reason of the understanding and agreement of the parties, they have lost their character, as parcel of the realty." Curtiss v. Hoyt, 19 Conn. 154, 48 Am. Dec. 149. "Marshall v. Green (1875), 1 C. P. Div. 35 ; Mayfield v. Wadsley. 3 B. & C. 357; Knowles v. Michel, 13 East 249; Earl of Falmouth v. Thomas, 1 Cromp. & Mees. 89. Note to Duppa V. Mayo, 1 William Saund. 275d; Marshall v. Ferguson, 23 Cal. 65; Bull v. Griswold, 19 111. 631 ; Bricker V. Hughes, 4 Ind. 146 ; Sherry v. Picken, 10 Ind. 375 ; Craddock v. Rid- dlesbarger. 2 Dana (Ky.) 205; Bry- ant v. Crosby, 40 Maine 9 (oats and wheat) ; Day ton v. Dakin's Estate, 103 ^lich. 65, 61 N. W. 349; Garth V. Caldwell. 72 Mo. 622; Holt v. Holt, 57 Mo. App. 272; Smock v. Smock, Zl Mo. App. 56; Cooper v. Kennedy, 86 Nebr. 119, 124 N. W. 1131, 31 L. R. A. (N. S.) 761, 136 Am. St. 701 (reviewing a number of authorities) ; Westbrook v. Eager, 16 N. J. L. 81 ; Austin v. Sawyer, 9 Cow. (N. Y.) 39; Green v. Armstrong, 1 Denio (N. Y.) 550; Brittain v. Mc- Kay, 23 N. Car. 265, 35 Am. Dec. 738; Wisely v. Barclew, 1 Ohio Dec. (Reprint) 216; Carson v. Browder, 2 Lea (Tenn.) 701; Buck v. Pickwell, 27 Vt. 157. ^- Sainsbury v. IMatthews, 4 M. & W. 343; Warwick v. Bruce (1813), 2 M. & S. 205; Parker v. Staniland. 11 East 362 (a sale of an unharvested crop of potatoes was held not within the statute. Land was a mere warehouse for them until they were removed) ; Evans v. Roberts (1826), 5 B. & C. 829. "Northern v. State, 1 Ind. 113, Smith 71 (corn only a few inches high at time of sale) ; Newcomb v. Ramer, 2 Johns. (N. Y.) 421n. "Jones V. Flint (1839), 10 A. & E. 753 (relating to certain crops of wheat, barley and potatoes, and also certain grass) ; Davis v. McFarlane, Z1 Cal. 634, 99 Am. Dec. 340; Whipple v. Foot. 2 Johns. (N. Y.) 418, 3 Am. Dec. 442. In West Virginia a growing crop of wheat has been held realty. Kerr v. Hill, 27 W. Va. 576, following Crews v. Pendleton, 1 Leigh (Va.) 297. 19 Am. Dec. 750. To same effect. Mcllvaine v. Harris, 20 Mo. App. 457, 64 Am. Dec. 196. 32 — Contracts, \'ol. 2 § i26o CONTRACTS. 498 nips," nursery stock,'^ hops," and fruit growing on trees,*^ need not be in writing. Grass which has already been cut may be sold by parol. ^* A parol contract for the sale of a growing perennial crop is taken out of the statute of frauds by the purchaser's entry on the land with the owner's consent and harvesting the crop.*" A number of cases hold that the vendor who has sold real estate may show by parol evidence that growing crops were reserved from the sale of the land when such reservation does not appear on the face of the deed." It is held, however, by what is perhaps the weight of authority that parol evidence of an oral reservation is inadmissible on the theory that the terms of a written instru- ment cannot be varied by parol evidence." It is true, as a gen- eral rule, that the sale of unharvested perennial grasses is con- See, however, in connection with this last case, Garth v. Caldwell, 72 Mo. 622. " Dunne v. Ferguson, Hayes Exch. 540. Contra, Emmerson v. Heelis, 2 Taunt 38. ''Whitmarsh v. Walker, 1 Mete. (Mass.) 313. "Latham v. Atwood, Cro. Car. 515; Frank v. Harrington, 36 Barb. (N. Y.) 415; Webster v. Zielly, 52 Barb. (N. Y.) 482 (sale of hop roots). See, however, Waddington v. Bristow, 2 Bos. & P. 452. ^ Vulicevich v. Skinner, 11 Cal. 239, 19 Pac. 424; Pruner v. Piercy, 40 Md. 212, 17 Am. Rep. 591 ; Smock V. Smock, Zl Mo. App. 56; Brown v. Stanclift, 20 Alb. L. J. (N. Y.) 55. "It would be a perversion of the objects of the statute to hold as in- valid the sale, in other respects legal, of the growing crop of peaches, with no intent of the parties to sell or purchase the soil, but affording a mere license, express or implied, to the purchaser to go upon the land to gather the fruit and remove the same. Substantially, to use the lan- guage of § 271, of 1 Greenleaf's Ev., the transaction takes its character of realty or personalty from the prin- cipal subject-matter of the contract and the interest of the parties, and, therefore, a sale of any growing pro- duce of the earth in actual existence at the time of the contract, whether it be in a state of maturity or not, is not to be considered a sale of an in- terest in or concerning land." Pur- ner v. Pieny, 40 Md. 212, 17 Am. Rep. 591, 23 L. R. A. (N. S.) 1220. Contra, Rodwell v. Phillips, 9 M. & W. 501. *" Cutler V. Pope, 13 Maine Zll. *• Mowrey v. Davis, 12 Ind. App. 681, 40 N. E. 1108. *^ Bourne v. Bourne, 12 Ky. L. (abstract) 467; Cooper v. Kennedy, 86 Nebr. 119, 124 N. W. 1131, 31 L. R. A. (N. S.) 761 (corn crop re- served) ; Walton v. Jordan, 65 N. Car. 170; Baker v. Jordan, 3 Ohio St. 438; Grabow v. McCracken, 23 Okla. 612, 102 Pac. 84, 23 L. R. A. (N. S.) 1218 and note; Backenstoss v. Stab- ler, ZZ Pa. St. 251, 75 Am. Dec. 592. " Gibbons v. Dillingham, 10 Ark. 9, 50 Am. Dec. 233; Fiske v. Soule, 87 Cal. 313, 25 Pac. 430; Gam v. Cor- drey, 4 Pennew. (Del.) 143, 53 Atl. 334; Smith v. Price, 39 111. 28, 89 Am. Dec. 284; Damery v. Ferguson, 48 111. App. 224; Chapman v. Long, 10 Ind. 465; Turner v. Cool, 23 Ind. 56, 85 Am. Dec. 449 ; Brown v. Thurs- ton, 56 Maine 126, 96 Am. Dec. 438; Vanderkarr v. Thompson, 19 Mich. 82; Adams v. Watkins, 103 Mich. 431, 61 N. W. 774; Mcllvaine v. Harris, 20 Mo. 457, 64 Am. Dec. 196 ; Wintermute v. Light, 46 Barb. (N. Y.) 278. J 499 STATUTE OF FRAUDS. § I260 sidered as the sale of an interest in land and must be in writing." A distinction may, however, be drawn between spontaneous grasses and those which require an annual planting.** And while not necessary to the decision of the case, it has been inti- mated that if the grass is to be severed by the vendor himself, an oral contract of sale may be upheld." It has also been held that the verbal contract of sale may be available as a license but not as a sale." The rule adopted in England after considerable hesi- tancy*^ is to the effect that, if it is intended that the things sold, growing on the land at the time, not being fructus industriales, shall remain on the land for the benefit of the purchaser, and that they are to derive benefit from so remaining, then part of the subject-matter of the contract is an interest in the land, and the case comes within the statute. If, on the contrary, the things sold are to derive no benefit from the land, and are to be taken away immediately, the contract is not for an interest in land. Where the process of vegetation is over, or the parties agree that the things sold shall be immediately withdrawn from the land, the contract is for goods. In Maryland it has been held that the question turns on the nature of the contract as shown by the in- tention of the parties, and that, if the products of the earth are sold specifically, and by the terms of the contract to be sepa- rately delivered, as chattels, such a sale is not a sale of any interest in the land. When such is the character of the transaction, it matters not whether the product be trees, grass or grain, vegeta- bles or other crops, or whether the produce is fully grown or in the process of growing.'** "Crosbv V. Wadsworth, 6 East sale of wild grass); Lansingburgh 602; Powers v. Clarkson, 17 Kans. Bank v. Crary, 1 Barb. (X. Y.) 542 218; Smith v. Leighton, 38 Kans. (grass an interest in land). 544, 17 Pac. 52, 5 Am. St. 778; Ross " Craddock v. Riddlesbarger, 2 V. Cook, 71 Kans. 117, 80 Pac. 38; Dana (Ky.) 205. Bank of Lansingburgh v. Crary, 1 " Kirkeby v. Erickson, 90 Minn. Barb. (N. Y.) 542; Hobbs v. Wether- 299, 96 N. W. 705, 101 Am. St. 411; wax, 38 How. Pr. (X. Y.) 385. A See also, post, § 1268. contract for growing grass to be cut *'Carrington v. Roots, 2 M. &. W. by the purchaser was held to be w^ith- 248. in the statute in Crosbv v. Wads- "Marshall v. Green (1875) L. R. worth (1805), 6 East 602; Stearns 1 C. P. Div. 35; Lavery v. Pursell, L. V. Washburn, 7 Gray (Mass.) 187 R. 39 Ch. Div. 508. (grass not personalty until severed); *^ Purner v. Piercy, 40 Md. 212, 17 Kirkebv v. Erickson, 90 Minn. 299, Am. Rep. 591. 96 N. W. 70S, 101 Am. St. 411 (parol I26l CONTRACTS. '500 § 1261. Other collateral contracts not within fourth clause — Illustrations. — It has been held that an agreement to lo- cate*® and work mines is not within the statute,^" nor is a contract to plant crops,^^ or erect a barn,^" or dig a well/^ or drill an oil well,^* or a contract to sell lands for another, for a certain sum, or upon a commission.^^ The same has been held true of agree- ments to pay an assessment,^*^ divert a watercourse,^^ build a dam,^® constiTict an irrigation ditch over the land of another,^^ build and maintain a switch for plaintiff's benefit for shipping purposes "so long as he needed it,""" release certain land from a mortgage, '^^ or to assign dower to a widow.^^ § 1262. Cases not within fourth clause — Partnership to deal in lands. — It has been a mooted question whether a part- nership can be created by parol for the purpose of buying and selling lands for profit. It is now quite generally accepted as the established doctrine that such an agreement is not within the "Shea V. Nilima. 133 Fed. 209, 66 C. C. A. 263. See also, Doyle v. Burns, 123 Iowa 488, 99 N. W. 195. '"'Murley v. Ennis, 2 Colo. 30O; Boone v. Stover, 66 Mo. 430. " State V. Sanders, 52 S. Car. 580, 30 S. E. 616. " Scales V. Wiley, 68 Vt. 39, 33 Atl. 771. "Plunkett V. Meredith, 12 Ark. 3, n S. W. 600. "Haight V. Conners, 149 Pa. St. 297, 24 Atl. 302. ^^ Watson V. Brightwell, 60 Ga. 212 ; Lesley v. Rosson, 39 Miss. 368, 11 Am. Dec. 679; Fiero v. Fiero, 52 Barb. (N. Y.) 288; Lamb v. Baxter, 130 N. Car. 67, 40 S. E. 850; Cot- ton V. Rand (Tex. Civ. App.), 51 S. W. 55, reversed 93 Tex. 7, 51 S. W. 838, and modified on rehearing, 93 Tex. 7, 53 S. W. 343. See also, Friedman v. Suttle, 10 Ariz. 57, 85 Pac. 726, 9 L. R. A. (N. S.) 933n. In some jurisdictions, however, there has been enacted a special statute which provides that all contracts to compensate one for procuring a pur- chaser for real estate must be in writ- ing. The constitutionality of this leg- islation has been upheld. Selvage v. TalboU (Ind.), 95 N. E. 114, Zl L. R. A. (N. S.) 973; Baker v. Gillan, 68 Nebr. 368, 94 N. W. 615 ; Ross v. Kaufman, 48 Wash. 678, 94 Pac. 64L Compare with Fisher Co. v. Woods, 187 N. Y. 90, 79 N. E. 836, 12 L. R. A. (N. S.) 707n. '''Carr v. Dooley, 119 Mass. 294; McCormick v. Cheevers, 124 Mass. 262; Preble v. Baldwin, 6 Cush. (Mass.) 549; Brackett v. Evans, 1 Cush. (Mass.) 79; Remington v. Pal- mer, 62 N. Y. 31. " Hamilton &c. Hydraulic Co. v. Cincinnati &c. R. Co., 29 Ohio St. 341 ; Le Fevre v. Le Fevre, 4 Serg. & Rawle (Pa.) 241, 8 Am. Dec. 696 (holding that, after the execution of a deed conveying a right to lay down pipes to conduct water, the route might be altered by parol). '''Pitman v. Poor, 38 Maine 237; Jackson v. Litch, 62 Pa. St. 451. But see, Mumford v. Whitney, 15 Wend. (N. Y.) 380, 30 Am. Dec. 60. "* Croke v. American National Bank. 18 Colo. App. 3, 70 Pac. 229. *" Warner v. Texas &c. Co., 164 U. S. 418, 41 L. ed. 495, 17 Sup. Ct. 147. " Hemmings v. Doss, 125 N. Car. 400, 34 S. E. 511. «= Pearce v. Pearce, 184 111. 289, 56 N. E. 311. ;oi STATUTE OF FRAUDS. 1262 statute. A partnership of this kind, Hke any other contract of partnership, is an agreement to share in the profit and loss of certain business transactions, and may be formed for the purpose of buying and selHng land generally, or it may be limited to a speculation upon a single venture."^ The rule, as stated in a leading case on this question"* to the effect that the existence of such a partnership can be shown by general evidence, without the necessity of a written agreement, has been generally followed, and, although there are some decisions to the contrary, it may now be said to be the prevailing rule upon that subject. The cases proceed upon the theory that the real estate of a partnership is treated and administered in equity or between partners and for all the purposes of the partnership, as personal property and part- "=» Bates V. Babcock, 95 Cal. 479, 30 Pac. 605. 16 L. R. A. 745n; Jones v. Patrick, 140 Fed. 403 ; Van Housen v. Copeland, 180 111. 74, 54 N. E. 169, affd. 79 111. App. 139; Speyer v. Desjardins, 144 111. 641, 32 N. E. 283, 36 Am. St. 473; Garth v. Davis, 120 Ky. 106, 85 S. W. 692, 117 Am. St. 571; Vaught v. Hogue, 32 Ky. L. 1061, 107 S. W. 757; Mallon v. Bus- ter, 121 Ky. 379, 89 S. W. 257, 123 Am. St. 201 ; Morgart v. Smouse, 103 Md. 463, 63 Atl. 1070, 115 Am. St. 367, 7 Am. & Eng. Ann. Cas. 1140; Stitt V. Rat Portage Lumber Co., 98 Minn. 52, 107 N. W. 824; Rice v. Parrott, Id Nebr. 501, 107 N. W. 840, 111 N. W. 583; Buckley v. Doige, 188 N. Y. 238, 80 N. E. 913, 11 Am. & Eng. Ann. Cas. 263; Ranch v. Dono- van, 126 App. Div. (N. Y.) 52. 110 N. Y. S. 690; Pounds v. Egbert,ll7 App. Div. (N. Y.) 756, 102 N. Y. S. 1079; Miller v. Ferguson, 107 Va. 249, 57 S. E. 649, 122 Am. St. 840, 13 A. & E. Ann. Cas. 138; Floyd v. Duffy, 68 W. Va. 339, 69 S. E. 993, Zl L. R. A. (N. S.) 883n. See also, note in 4 L. R. A. (N. S.) 427. "Dale v. Hamilton (1846). 5 Hare 369. While Dale v. Hamilton, 5 Hare 369, is to some extent shaken by the case of Caddick v. Skidmore (1851), 2 DeG. & J. 51 (an agree- ment to become partners in a mine), it is still recognized as authority. Gray v. Smith (1889), 43 L. R. Ch. Div. 208; Essex v. Essex, 20 Beav. 442; Bunnel v. Taintor. 4 Conn. 568; Kilbourn v. Latta. 5 Mack. (D. C.) 304; Bates v. Babcock. 95 Cal. 479, 30 Pac. 605, 16 L. R. A. 745, 29 Am. St. 133 ; Black v. Black, 15 Ga. 445 ; Holmes v. McCray, 51 Ind. 358, 19 Am. Rep. 735; Richards v. Grin- nell, 63 Iowa 44, 18 N. W. 668, 50 Am. Rep. 727; Pennybacker V. Leary, 65 Iowa 220, 21 N. W. 575; Marsh v. Davis, 11 Kans. 7)26, 6 Pac. 612; Fall River &c. Co. v. Borden. 10 Cush. (Mass.) 458; Fountain v. Menard, 53 Minn. 443, 55 N. W. 601, 39 Am. St. 617; Per- sonette v. Prvme, 34 X. J. Eq. 26; Chester v. Dickerson, 54 N. Y. 1, 13 Am. Rep. 550; Bissell v. Harrington, 18 Hun (N. Y.) 81; Traphagen v. Burt, 67 N. Y. 30; Babcock v. Read. 99 N. Y. 609, 1 N. E. 141 ; Gibbons v. Bell, 45 Tex. 417. See note to McCTormick's Appeal, 98 Am. Dec. 197. See also, cases cited in the pre- ceding note. Contra. Butts v. Cooper, 152 Ala. 375. 44 So. 616. Everhart's Appeal, 106 Pa. St. 349; Smith v. Burnham, 3 Sumn. (U. S.) 435. Fed. Cas. No. 13019; Walker v. Herring. 21 Grat. (Va.) 678, 8 Am. Rep. 616; Bird v. Morrison. 12 Wis. 138; Lang- ley v. Sanborn. 135 Wis. 178. 114 X. W. 787; Scheuer v. Cochem. 126 Wis. 209, 105 X. W. 573. 4 L. R. A. (X. S.) 427n; McMillen v. Pratt. 89 Wis. 612, t2 X. W. 588 (holding ver- § 1263 CONTRACTS. 502 nership assets.®' Although a partnership in land may be proved by parol evidence, yet an agreement by one of the parties to retire and assign his share in the partnership assets is an agreement to assign an interest in land.®® So, also, an oral contract between the members of a copartnership to convey firm realty from one to the other is within the statute." § 1263. Cases distinguished — How contract may be taken out of statute. — While there is apparently much conflict among the authorities as to whether a verbal partnership may be formed to deal in lands, it is believed that very little conflict in fact exists. On account of different ends sought by the litigants, two lines of authorities have been announced neither of which is necessarily inconsistent with the other. In those cases in which an action is brought for an accounting or for a share of the profits of speculation on resale,®^ the oral contract is upheld ; but when the action is brought, not to enforce an interest in the profits of the transaction, but in the land itself, and the real estate has not been bought with partnership funds and there are no other circumstances to take the case out of the statute, the parol bal contract for the promotion of a 39 Am. St. 617; Chester v. Dicker- partnership to purchase standing son, 54 N. Y. 1, 13 Am. Rep. 550; timber within the statute). Babcock v. Read, 99 N. Y. 609, 1 N. E. '"Dale V. Hamilton, 5 Hare 369; 141; King v. Barnes, 109 N. Y. 267, McClintock V. Thweatt, 71 Ark. 323, 16 N. E. 332; Howell v. Kelly, 149 IZ S. W. 1093 ; Flower v. Barnekofif, Pa. St. 473, 24 Atl. 224 ; Bruce v. 20 Ore. 132, 25 Pac. 370, 11 L. R. Hastings, 41 Vt. 380; 98 Am. Dec. A 149; Bates v. Babcock, 95 592. See also, Darrow v. Calkins, Cal 479, 30 Pac. 605, 16 L. 154 N. Y. 503, 49 N. E. 61, 48 L. R. R A. 745, 29 Am. St. 133; Meag- A. 299, 61 Am. St. 637, affg. 6 App. her V. Reed, 14 Colo. 335, 24 Pac. Div. (N. Y.) 28, 39 N. Y. 527. 681, 9 L. R. A. 455; Bunnel v. ''Gray v. Smith (1889), L. R. 43 Taintor, 4 Conn. 568; Morrill v. Ch. Div. 208. Colehour 82 111. 618; Speyer v. Des- '^ Brewer v. Cropp, 10 Wash. 136, jardins, 144 111. 641, 32 N. E. 283, 36 38 Pac. 866, "While the real estate Am. St. 473; Van Housen v. Cope- owned by the partnership is re- land, 180 111. 74, 54 N. E. 169; Holmes garded as personal property for some V. McCray, 51 Ind. 358, 19 Am. Rep. purposes, it is an equitable conver- 735; Richards v. Grinnell, (ii Iowa sion only, and the requirements of 44, 18 N. W. 668, 50 Am. Rep. 727; the law relating to conveyances of Pennybaker v. Leary, 65 Iowa 220, 21 land must be observed in disposing N W. 575 • Garth v. Davis, 120 Ky. of it." See also, Henderson v. Hen- 106 85 S. W. 692, 117 Am. St. 571; rie, 68 W. Va. 562, 71 S. E. 172, 34 Trowbridge v. Wetherbee, 11 Allen L. R. A. (N. S.) 628. (Mass.) 361; Newell v. Cochran, 41 ** Bates v. Babcock, 95 Cal. 479, Minn. 374. 43 N. W. 84 ; Fountain v. 30 Pac. 605, 16 L. R. A. 745n ; Rice v. Menard, 53 Minn. 443, 55 N. W. 601, Parrott (Nebr.), Ill N. W. 583; ^03 STATUTE OF FRAUDS. § 1 264 partnership agreement to deal in lands will be held within the statute.^" But the statute does not apply where real estate is bought in connection with the partnership business and is paid for with firm funds even though title is taken in the najne of one partner only.'^" Part performance of an oral contract of partnership in lands otherwise within the statute may take the agreement out of the statute." The taking possession of the land by the partnership has been held sufficient part performance to take the contract out of the statute." An entry on the books of the partnership may be sufficient to comply with the statute." A partner may also take by operation of law regardless of the statute of frauds. ''* § 1264. Appointment of agent to buy land. — Where the contract is merely one of agency by which the defendant is ap- pointed to purchase land in the plaintiff's name, it is not within the statute and the plaintiff may maintain an action for damages for breach of contract," or where the agent agrees to resell the property as agent and does so and receives the money therefor the principal may maintain an action for the proceeds.'^* But where the agent buys property with his own money and takes title in his own name it has been held that the principal cannot compel a con- veyance by the agent." The foregoing has to do with the rela- Norton v. Brink (Nebr.), HO N. W. "Tillis v. Folmar, 145 Ala. 176, 669, 7 L R. A. (N. S.) 945; Smith 39 So. 913, 117 Am. St. 31, 8 Ann. V. Putnam, 107 Wis. 155, 82 N. W. Cas. 78. 1077 83 N. W. 288. See also, Logan "National Union Bank v. Nation- V. Brown, 20 Okla. 334, 95 Pac. 441, al ?^Iechanics' Bank, 80 Md. 371, 30 20 L. R. A. (X. S.) 298 and note. Atl. 913, 27 L. R. A. 476, 45 Am. St. "Parsons v. Phelan, 134 Mass. 350. 109; Norton v. Brink (Nebr.), 110 " Gorden & Son v. Pankonm, 83 N. W. 669, 7 L. R. A. (N. S.) 945; Nebr. 204, 119 N. \V. 449, 131 Am. Mancuso v. Rosso, 81 Nebr. 786, 116 St. 629. N. W. 679. See also, Nester v. Sulli- " Schmidt v. Beiseker, 14 N. Dak. van, 147 Mich. 493, 111 N. W. 85, 9 587. 105 N. W. 1102, 5 L. R. A. (N. L. R. A. (N. S.) 1106: Dodson v. S. 123n, 116 Am. St. 706. Dodson, 26 Ore. 349. 2>7 Pac. 542. '" Logan v. Brown. 20 Okla. 334, 95 '"Hodgson V. Fowler. 24 Colo. 278, Pac. 441, 20 L. R. A. (N. S.) 298 and 50 Pac. 1034; Lucas v. Cooper, 15 note. Ky. L. 642, 23 S. W. 959; Stitt v. "^ Allen v. Richard, 83 Mo. 55. See Rat Portage Lumber Co., 98 Minn, also. Boos v. Hinkle, 18 Ind. App. 52. 107 N. W 824. 509. 48 N. E. 383; Henderson v. " McKinnon v. McKinnon. 56 Fed. Henrie. 68 W. Va. 562. 71 S. E. 172. 409, 5 C. C. A. 530. 14 U. S. App. 433; Ann. Cas. 1912B. 318 (.\n agree- Chase v. Angell. 148 Mich. 1, 108 N. ment between two persons to bid W. 1105, 118 Am. St. 568. at a judicial sale of land in which 1265 CONTRACTS. 504 tions of the principal and agent inter se. As between the principal and a third party, the general rule is that unless the statute ex- pressly requires the authority to be in writing, an agent may be authorized by parol to make a contract for the sale or purchase of land.'^* Clear and convincing proof may, however, be required to establish the parol authority. ^^ The statute may provide that the authority of the agent shall be in writing, in which case a verbal authorization is insufficient.^" Under a statute of this sort, the authority may be contained in a single writing or several writ- ings.®^ § 1265. Cases not within the fourth clause — Judicial sales. ^ — Judicial sales, made in compliance with a decree or order of a court of competent jurisdiction and under its supervision, are not within the statute.®- This rule is not universal, however.®^ In some jurisdictions the statute provides that it "shall not apply to sales upon execution or by any officer or person pursuant to neither had an interest and that if either was the successful bidder the land should be divided between the two, is a contract for the sale of land within the statute of frauds). To same efifect, Largey v. Leggat, 30 Mont. 148, 75 Pac. 950. "Davis V. Spann, 92 Ark. 213, 122 S. W. 495 ; Jacobson v. Hendricks, 83 Conn. 120, 75 Atl. 85; Kaigler v. Brannon, 137 Ga. 36, 72 S. E. 400; Brandon v. Pritchett, 126 Ga. 286, 55 S. E. 241, 7 Am. & Eng. Ann. Gas. 1093 (action for specific perform- ance) ; Monroe v. Bailey, 145 Ky. 794, 141 S. W. 412; Lawson v. Will- iams (Ky.), 115 S. W. 730; Brown V. Honiss, 74 N. J. L. 501, 68 Atl. 150; Donnell v. Currie (Tex.), 131 S. W. 88; Le Vine v. Whitehouse, 11 Utah 260, 109 Pac. 2; Armstrong v. Maryland Coal Co., 67 W. Va. 589, 69 S. E. 195; Mustard v. Big Creek Development Co., 69 W. Va. 713, 12 S. E. 1021. '* Degginger v. Martin, 48 Wash. 1, 92 Pac. 674. ^Elliott V. Bankston (Ala.), 45 So. 173 ; Lambert v. Gerner, 142 Cal. 399, 76 Pac. 53 ; Stemler v. Bass, 153 Cal. 791. 96 Pac. 809; Seymour v. Oel- richs, 156 Cal. 782, 106 Pac. 88, 134 Am. St. 154n: Goldstein v. Webster, 7 Cal. App. 705, 95 Pac. 677; Vaughn V. Slater, 147 111. App. 441 ; Adams v. Carlton, 11 Kans. 546. 95 Pac. 390; Thomas v. Rogers, 108 Minn. 132, 121 N. W. 630, 133 Am. St. 421 ; Mat- teson V. United States &c. Land Co., 112 Minn. 190, 127 N. W. 629, affd., on rehearing, 112 Minn. 196, 127 N. W. 997; Moots v. Cope, (Mo.), 126 S. W. 184 ; Ross v. Cravens, 84 Nebr. 520, 121 N. W. 451; Finkelstein v. Fabyik, 107 N. Y. S. 67. See also, Chick V. Bridges, 56 Ore. 1, 107 Pac. 478, Ann. Gas. 1912B. 1293. '^ Paris V. Johnson, 155 Ala. 403, 46 So. 642; Purse v. Lambert, 85 Nebr. 739, 124 N. W. 146. '^'Halleck v. Guy, 9 Cal. 181, 70 Am. Dec. 643; Chandler v. Morey, 195 111. 596, 63 N. E. 512; Watson's Admr. v. Violett, 63 Ky. 332; War- field v. Dorsey, 39 Md. 299, 17 Am. Rep. 562; Warehine v. Graf, 83 Md. 98, 34 Atl. 364; Andrews v. O'Ma- honey, 112 N. Y. 567, 20 N. E. 374; Tate V. Greenlee, 15 N. Car. 149; King V. Gunnison, 4 Pa. St. 171 ; Robertson v. Smith, 94 Va. 250, 26 S. E. 579, 64 Am. St. 723. ^Jackson v. Scott, 67 Ala. 99; Cur- rie V. Mann. 6 Ala. .531 ; Gossard v. Ferguson, 54 Tnd. 519; Pepper v. Commonwealth, 6 T. B. Mon. (Ky.) 27; Barney v. Patterson's Lessee, 6 Har. & J. (Md.) 182; Joslin v. Er- :)^D STATUTE OF FRAUDS. § 1266 a decree or order of a court of record."®* A sale of real estate by an administrator has been held within the statute of frauds.®' § 1266. Contracts within statute — Parol contract to arbi- trate. — A parol submission to arbitration may generally be made by parol ; but an exception to the rule prevails where the title to land is involved. A parol agreement to arbitrate the title to real estate is within the statute, and award based thereon is invalid.®" Thus, where the question involved was the title to a certain roadbed, a submission to arbitration by parol rendered the award incapable of specific performance.®^ § 1267. Cases v^ithin clause four — Easements. — At the present day the distinction between an easement and a license is well settled, although it is difficult in some of the cases to discover a substantial difference between them.®® An easement is a lib- erty, privilege or ownership of the soil. It is an interest in an- other's land with a right to enjoy it, while a license carries no such interest. ®° "An easeinent must be an interest in or over the vien, 50 N. J. L. 39. 12 Atl. 136, Will- ets V. Van Alst, 26 How. Fr. (N. Y.) 344; Remington v. Linthicum, 14 Pet. (U. S.) 84, 10 L. ed. 364. " Rev. Stat. 111., chap. 59, § 2. See also, Armstrong v. Vroman, 11 Gil. (Minn.) 42, 88 Am. Dec. 81; Emley V. Drum, 36 Pa. 123. *" Bozza V. Rowe, 30 111. 198, 83 Am. Dec. 184. "* Walters v. Morgan, 2 Cox Ch. Cas. 369; Bvrd v. Odem, 9 Ala. 755; Brown v. Mize. 119 Ala. 10, 24 So. 453; Shaw v. State. 125 Ala. 80, 28 So. 390; Smith v. Douglass, 16 111.34; Wilmington Water Power Co. v. Ev- ans, 166 111. 548, 46 N. E. 1083; Stark V. Cannady, 3 Litt. (Ky.) 399, 14 Am. Dec. 76; Evans v. M'Kinsey, Litt. Sel. Cas. (Kv.) 262: Logsdon v. Roberts' Exrs.. 3T. B. Mon. (Kv.) 255: Rovse V. McCall. 5 Bush (Kv.) 695; Thom- asson V. Risk, 11 Bush (Kv.) 619; Philbrick v. Preble. 18 Maine 255, 36 Am. Dec. 718: Byam v. Rolibins, 6 Allen (Mass.) 63; Copeland v. Wad- ing River Reservoir Co., 105 Mass. 397: Peabody v. Rice, 113 Mass. 31; McMullen v. Mavo, 8 Sm. & M. (Miss.) 298; Gray v. Berry, 9 N. H. 473; Hewitt v. Lehigh &c. R. Co., 57 N. J. Eq. 511, 42 Atl. 325; Jackson v. Gager, 5 Cow. (N. Y.) 383; Mitch- ell v. Bush, 7 Cow. (N. Y.) 185; Val- entine V. Valentine, 2 Barb. Ch. (N. Y.) 430; French v. New, 28 X. Y. 147, 2 Abb. Dec. 209; Crissman v. Crissman. 27 N. Car. 498; Fort v. Allen, 110 N. Car. 183, 14 S. E. 685; Gratz V. Gratz, 4 Rawde (Pa.) 411; Bowen v. Cooper, 7 Watts (Pa.) 311; Miller v. Graham, 1 Brev. (S. Car.) 448; Daw v. Faw, 7 Cranch (U. S.) 171, 3 L. ed. 305 ; Smith v. Bullock, 16 Vt. 592. Compare with Green v. Ford, 17 Ark. 586 (dower interest in per- sonalty belonging to deceased hus- band alone considered). " McKnight V. Parsons, 136 Iowa 390, 113 X. W. 858. 22 L. R. A. (N. S.) 718, 125 Am. St. 265. See also, ante. § 1257. ^Wolf V. Frost. 4 Sandf. Ch. (N. Y.) 72 (distinguishing between ease- ments and licenses) ; Hazelton v. Put- nam, 3 Pinnev (Wis.) 107, 54 Am. Doc. 158n. •^*Pomeroy v. Mills. 3 Vt. 279. 23 Am. Dec. 207, 3 Kent. Comm. 452. In Massachusetts the Supreme Court § 126/ CONTRACTS. 506 soil,"°*^ and it is well settled that it cannot exist in parol. ®^ Con- tracts for the creation of a permanent right of way,"- for the right of overflow"^ or drainage,"* or for any easement or servi- has defined an easement or servitude Hadley, 162 Mass. 579, 29 N. E. 279; to be "a right which one proprietor Minneapolis &c. R. Co. v. Marble, has to some profit, benefit or lawful 112 Mich. 4, 70 N. W. 319; Minne- use, out of or over the estate of an- apolis Western R. Co. v. Minneap- other proprietor." Ritger v. Parker, olis &c. R. Co., 58 Minn. 128, 59 N. 8 Cush. (Mass.) 145, 54 Am. Dec. W. 983; Bonelli v. Blakemore, 66 744; Owen v. Field, 102 Mass. 90. Miss. 136, 5 So. 228, 14 Am. St. 550; •"Rowbotham v. Wilson, 8 El. & Blaisdell v. Portsmouth &c. R. Co., Bl. 123, per Cresswell, J. (distinction 51 N. H. 483; Foster v. Browning, 4 between easements and profits a pren- R. I. 47, 67 Am. Dec. 505. Compare dre) ; Hill v. Lord, 48 Maine 83. with New Iberia &c. Co. v. Romero, ■"Hewlins v. Shippam, 5 B. & C. 105 La. 439, 29 So. 876. 221 ; Cocker v. Cowper, 1 Cromp. "^ Foot v. New Haven &c. R. Co., M. & R. 418; Thomas v. Sorrell, 22> Conn. 214; Woodward v. Seely, Vaughan 330; Snowden v. Wilas, 19 11 111. 157, 50 Am. Dec. 445n; Tan- Ind. 10, 81 Am. Dec. 370; Hays v. ner v. Volentine, 75 111. 624; Wil- Richardson, 1 Gill. & J. (Md.) 366; mington Water Power Co. v. Evans, Fitch V. Seymour, 9 Mete. (Mass.) 66 111. 548, 46 N. E. 1083; Snowden 462; Lawrence v. Springer, 49 N. J. v. Wilas, 19 Ind. 10, 81 Am. Dec. Eq. 289, 24 Atl. 933, 31 Am. St. 702; 370; Buck v. Foster, 147 Ind. 530, 46 Wiseman v. Lucksinger, 84 N. Y. N. E. 920; Stevens v. Stevens, 11 31 (drain through another's land); Mete. (Mass.) 251, 45 Am. Dec. 203; Sweeney v. St. John, 28 Hun (N. Johnson v. Skillman, 29 Minn. 95, 12 Y.) 634; Brown v. Woodworth, 5 N. W. 149, 43 Am. Rep. 192; Batch- Barb. (N. Y.) 550; Babcock v. Ut- elder v. Hibbard, 58 N. H. 269; ter, 1 Keyes (N. Y.) 397, 1 Abb. Dec. Mumford v. Whitney, 15 Wend. (N. 27, 32 How. Pr. 439; Day v. New Y.) 380, 30 Am. Dec. 60; Oimstead York &c. R. Co., 31 Barb. (N. Y.) v. Abbott, 61 Vt. 281, 18 Atl. 315; 548; Thompson v. Gregory, 4 Johns. Clute v. Carr, 20 Wis. 531, 91 Am. (N. Y.) 81; Miller v. Auburn &c. R. Dec. 442. Co., 6 Hill (N. Y.) 61; Pitkin v. "* Hewlins v. Shippam, 5 B. & C. Long Island R. Co., 2 Barb. Ch. (N. 221; Deyo v. Ferris, 22 111. App. 154, Y.) 221, 47 Am. Dec. 320; Doolittlev. 24 111. App. 416; Hunt v. Sain, 181 Eddy, 7 Barb. (N. Y.) 74; Huff v. 111. 372, 54 N. E. 970. See Wessels McCauley, 53 Pa. St. 206, 91 Am. v. Colebank, 174 111. 618, 51 N. E. Dec. 203; Pifer v. Brown, 43 W. Va. 639; Ferguson v. Spencer, 127 Ind. 412, 27 S. E. 399. In Fent^man v. 66, 25 N. E. 1035; Schultz v. Huff- Smith, 4 East 107, Lord Ellenbor- man, 127 Mich. 276, 86 N. W. 823; ough stated that the right to have Wilson v. St. Paul &c. R. Co., 41 water pass over the lands of an- Minn. 56, 42 N. W. 600, 4 L. R. A. other by a tunnel could not be ac- 378; Pitzman v. Boyce, 111 Mo. 387, quired by a parol license. 19 S. W. 1104, 2>2) Am. Rep. 536; "'Forbes v. Balenseifer, 74 111. 183; Great Falls Water Works Co. v. St. Louis Nat. Stock Yards v. Wig- Great Northern R. Co., 21 Mont, gins Ferry Co., 112 111. 384, 54 Am. 487, 54 Pac. 963; Lawrence v. Spring- Rep. 243; Ashelford v. Willis, 194 er, 49 N. J. Eq. 289, 24 Atl. 933, 31 111. 492, 62 N. E. 817; Simons v. Am. St. 702; Van Horn v. Clark, 56 Morehouse. 88 Ind. 391 ; Nowlin v. N. J. Eq. 476, 40 Atl. 203 ; Wiseman Whipple, 120 Ind. 596, 22 N. E. 669, v. Lucksinger, 84 N. Y. 31 ; Wilkins 6 L. R. A. 159; Phoenix Ins. Co. v. v. Irvine, 7)2> Ohio St. 138; Ewing v. Haskett, 64 Kans. 93, (H Pac. 446; Rhea, Zl Ore. 583, 62 Pac. 790, 52 L. Hall V. McLeod. 2 Mete. (Ky.) 98; R. A. 140, 82 Am. St. 783; Hathaway 74 Am. Dec. 400; Baltimore &c. R. v. Yakima Water &c. Co., 14 Wash. Co. v. Algire, 63 Md. 319; Cole v. 469, 44 Pac. 896, 53 Am. St. 874; Pi- 507 STATUTE OF FRAUDS. § 1 268 tude whatsoever,'*'' are within the statute. In case a contract for the execution, maintenance and use of a party wall is considered as creating an easement it is within the statute."" On the other hand, if the verbal agreement concerning a party wall relates to duties imposed by law, and imposes no greater liability than that imposed by law, it is enforcible."^ § 1268. Contracts within the fourth clause — Contracts for the sale of growing trees. — Contracts for the sale of growing trees are generally held to concern an interest in land. The word "'land" in its legal signification embraces much more than th« word literally imports. It is a comprehensive term and includes^ standing trees, buildings, fences, stones and waters, as well as the earth, and all pass under the general description of land in a deed. Standing trees pass to the heir as a part of the inheritance, and not to the executor as emblements or chattels. For this reason it has been usually held that a sale of growing trees with a right at any future time, whether fixed or indefinite, to enter upon the land and remove them, conveys an interest in the land.®^ It is fer V. Brown, 43 W. Va. 412, 27 S. v. Breckenridge, 29 Ohio St. 642; E. 399; Thoemke v. Fiedler, 91 Wis. Huff v. McCauley, 53 Pa. St. 206, 91 386, 64 N. W. 1030. Am. Dec. 203; Pierce v. Cleland. 133 '^Tillis V. Treadwell, 117 Ala. 445, Pa. St. 189, 19 Atl. 352; Clark v. 22 So. 983; Plunkett v. Meredith, 72 Glidden, 60 Vt. 702, 15 Atl. 358. Ark. 3. n S. W. 600; Dorris v. Sulli- '^Tillis v. Treadwell. 117 Ala. 445, van. 90 Cal. 279. 27 Pac. 216: Hayes 22 So. 983; Price v. Lien, 84 Iowa, V. Fine, 91 Cal. 391, 27 Pac. 772; Col- 590. 51 N. W. 52; Rice v. Roberts, lins Co. V. Marcy. 25 Conn. 239; 24 Wis. 461, 1 Am. Rep. 195. Com- Dwight V. Hayes, 150 111. 273, Zl N. pare with Stuht v. Sweesy, 48 Nebr. E. 218, 41 Am. St. 367; Lambe v. 767, 67 X. W. 748. Manning. 171 111. 612, 49 X. W. 509; ""Swift v. Calnan, 102 Iowa 206, Entwhistle v. Henke, 211 111. 273, 71 71 N. W. 233, 11 L. R. A. 462, ^Z Am. N. E. 990. 103 Am. St. 196; Richter St. 443. See also. Price v. Lien, 84 V. Irwin, 28 Ind. 26; Joseph v. Wild, Iowa 590. 51 X. W. 52. 146 Ind. 249, 45 X. E. 467; Cook v. "" Jenkins v. Lykes, 19 Fla. 148, 45 Chicago &c. R. Co., 40 Iowa 451; Am. Rep. 19; Corbin v. Durden. 126 Cook V. Stearns. 11 Mass. 533; Hodg- Ga. 429, 55 S. E. 30; Terrell v. Fra- kins V. Farrington. 150 Mass. 19, 22 zier, 79 Ind. 473; Owens v. Lewis. 46 X. E. IZ, 5 L. R. A. 209, 15 Am. St. Ind. 488, 15 Am. Rep. 295 ; Cool v. 168; Xowlin Lumber Co. v. Wilson. Peters &c. Co., 87 Ind. 531; Arm- 119 Mich. 406, 78 N. W. 338; Peer strong v. Lawson, IZ Ind. 498; Gar- V. Wadsworth. 67 X. J. Eq. 191, 58 ner v. Mahonev. 115 Iowa 356. 88 Atl. 379; Jamieson v. Millemann, 3 X. W. 828; Wiggins v. Jackson, 24 Duer (X. Y.) 255; Cronkhite v. Ky. L. 2189. IZ S. W. 779; Jackson Cronkhite, 94 X. Y. 323; Crosdale v. v. Evans, 44 Mich. 510, 7 X. W. 79; Lanigan, 129 X. Y. 604, 29 X. E. 824, Oconto Co. v. Lundquist, 119 Mich. 26 Am. St. 551; Wilson v. Chalfant, 264, 11 X. W. 950; Macomber v. 15 Ohio 248, 45 Am. Dec. 574; Meek Detroit &c. R. Co., 108 Mich. 491. § 1268 CONTRACTS. 508 frequently held, however, that a contract for the sale of standing wood or timber to be cut and severed from the freehold by the vendee, does not convey any interest in the land, being in contem- plation of the parties a sale of chattels only. Such contracts are considered as executory contracts for the sale of chattels as they shall be thereafter severed from the real estate with a license to enter on the land for the purpose of removal"" In case the 66 N. W. 376, 32 L. R. A. 102, 62 Am. St. 713; Herrick v. Newell, 49 Minn. 198, 51 N. W. 819; Kileen v. Ken- nedy, 90 Minn. 414, 97 N. W. 126; Harrell v. Miller, 35 Miss. 700, 72 Am. Dec. 154; Walton v. Lowrey, 74 IMiss. 484, 21 So. 243 ; Alt v. Gros- close, 61 Mo. App. 409; Lyle v. Shin- nebarger, 17 Mo. App. 66; Mine La Motte Lead &c. Co. v. White, 106 Mo. App. 222, 80 S. W. 356; Howe V. Batchelder, 49 N. H. 204; Kings- ley V. Holbrook, 45 N. H. 313, 86 Am. Dec. 173; Reid v. McQuesten, 61 N. H. 421; Slocum v. Seymour (1873), 36 N. J. L. 138, 13 Am. Rep. 432; Green v. Armstrong, 1 Denio (N. Y.) 550; McGregor v. Brown, 10 N. Y. 114, Seld. Notes 225; Bishop v. Bishop, 11 N. Y. 123, 62 Am. Dec. 68 (hop-poles part of real estate) ; Bank of Lansingburgh v. Crary, 1 Barb. (N. Y.) 542; Silvernail v. Cole, 12 Barb. (N. Y.) 685; Bennett v. Scutt, 18 Barb. (N. Y.) 347; Vore- beck V. Roe, 50 Barb. (N. Y.) 302; ]\Iizell V. Burnett, 4 Jones Law (N. Car.) 249, 69 Am. Dec. 744; Mid- yette v. Grubbs, 145 N. Car. 85, 58 S. E. 795, 13 L. R. A. (N. S.) 278; Green v. North Carolina R. Co., 73 N. Car. 524; Drake v. Howell, 133 N. Car. 162, 45 S. E. 539; Ward v. Gay, 137 N. Car. 397, 49 S. E. 884; Hawkins v. Goldsboro Lumber Co., 139 N. Car. 160, 51 S. E. 852; Ives V. Atlantic &c. R. Co., 142 N. Car. 131, 55 S. E. 74. 115 Am. St. 732; Yeakle v. Jacob, 33 Pa. St. 376 (per- petual right to enter on land and cut timber) ; Bowers v. Bowers, 95 Pa. St. 477; Sterling v. Baldwin, 42 Vt. 306; Buck v. Pickwell, 27 Vt. 157; Ellison V. Brigham, 38 Vt. 64; Flu- harty v. Mills, 49 W. Va. 446, 38 S. E. 521; Bruley v. Garvin, 105 Wis. 625, 81 N. W. 1038, 48 L. R. A. 839; Lillie V. Dunbar, 62 Wis. 198, 22 N. W. 467; Daniels v. Bailey, 43 Wis. 566; Seymour v. Cushway, 100 Wis. 580, 76 N. W. 769, 69 Am. St. 957. See note to Kingsley v. Holbrook, 45 N. H. 313, 86 Am. Dec. 173. In Anonymous, 1 Ld. Ray. 182, growing timber was held to be a chattel inter- est, a dictum which HuUock, B., in Scorell V. Boxall (1827), 1 Y. & J. 396, says he had never heard referred to as authority. In that case (Sco- rell V. Boxall) it was held that the sale of growing underwood to be cut by the purchaser was a contract for an interest in land and must be in writing. In Teal v. Auty (1820), 2 Brod. & Bing. 99, 4 Moore 542, it was held that a sale of growing trees for hop-poles was a contract for an interest in land. In Smith v. Surman (1829), 9 Barn. & Cress. 561, the standing timber was sold for so much a foot. It was held not to be an interest in the land. In Vorebeck v. Roe, 50 Barb. (N. Y.) 302, the court says : "It is well settled, by the authorities in this state, that standing trees form a part of the land, and, as such, are real property. And a contract for the sale of them is a contract for the sale of an in- terest in the land.'' See, however, Leonard v. Medford, 85 Md. 666, 37 Atl. 365 ; 37 L. R. A. 449. *" Bostwick v. Leach, 3 Day (Conn.) 476; Cain v. McGuire, 13 B. Mon. (Ky.) 340; Byassee v. Reese, 4 Mete. (Ky.) 372, 83 Am. Dec. 481 ; Emerson v. Shores, 95 Maine 237, 49 Atl. 1051, 85 Am. St. 404; Erskine v. Plummer, 7 Greenl. (Maine) 447, 22 Am. Dec. 216; Cut- ler V. Pope, 13 Maine 377 (grass grown and ready to be cut) ; Smith v. Bryan, 5 Md. 141, 59 Am. Dec. 104; White V. Foster (1869), 102 Mass. 375; Poor v. Oakman, 104 Mass. 309; Giles v. Simonds, 15 Gray 509 STATUTE OF FRAUDS. § 1 269 parol sale is considered as a license to enter and cut the timber, such hcense may be revoked by the death of the licensor/ or by a subsequent sale of the land to another person.^ It may also be revoked at the will of the licensor.^ § 1269. Sale of standing timber to be immediately removed. — It is held in a number of cases that a sale of standing timber to be immediately removed is not an interest in land and therefore if made by parol, is neither within the statute of frauds, nor is it revocable.* When severed from the freehold it is well settled that trees become chattels. It is also held that when the vendor is, by the contract of sale, required to cut and deliver the trees, they will be considered as personalty and that therefore the agree- ment is not within this clause of the statute.^ When one has under a valid and binding contract acquired the right to cut and remove certain designated timber it has been held that he may give to another a lien on the trees for advances to be made and that such agreement is not within section four of the statute.* It has also been held that where it appeared that the parties to a (Mass.) 441, n Am. Dec. Ill (li- 356, 88 N. W. 828; Walton v. Low- cense to enter on land and cut tim- rey, 74 Miss. 484, 21 So. 243; Ben- ber) ; Douglas v. Shumway, 13 Gray nett v. Scutt, 18 Barb. (N. Y.) 347. (Mass.) 498; Nettlcton v. Sikes, 8 * Marshall v. Green. L. R. 1 C. P. Mete. (Mass.) 34; Drake v. Wells, 35; Dils v. Hatcher. 24 Ky. L. 826, 11 Allen (Mass.) 141; Claflin v. Car- 69 S. W. 1092; Tilford v. Dotson, penter, 4 Mete. (Mass.) 580, 38 Am. 106 Ky. 755. 51 S. W. 583; Byasse Dec. 381: Whitmarsh v. Walker, 1 v. Reese, 4 Mete. (Ky.) Ill, 83 Am. Mete (Mass.) 313; Ellis v. Clark, Dec. 481 ; Robbins v. Farwell, 193 Pa. 110 Mass. 391. 14 Am. Rep. 609; St. Zl , 44 Atl. 260. In re McClin- Green v. North Carolina R. Co., 11 N. tock's Appeal, 71 Pa. St. 365. See Car. 524 (wood standing sold by also, Wiggins v. Jackson (Ky.), 12> the cord); Fluhartv v. Mills, 49 W. S. W. 779; Midyette v. Grubbs. 145 Va. 446, 38 S. E. 521. In several of N. Car. 85, 58 S. E. 795, 13 L. R. A. these cases the reason for holding (N. S.) 278. An agreement for the that a sale of growing trees was a sale of trees growing in a nursery sale of chattels, was that immediate and raised to be sold and transplant- separation from the land was con- ed is not a contract for the sale of templated. an interest in, or concerning lands 'Spacv V. Evans, 152 Ind. 431, 52 within the statute. Whitmarsh v. N. E. 605. Walker, 42 IMass. 313. => Jenkins v. Lykes. 19 Fla. 148, 45 " Dorris v. King (Tenn. Ch.), 54 Am. Rep. 19; Polk v. Carney, 21 S. W. 683; Kleeb v. Bard. 7 Wash. S. Dak. 295, 112 N. W. 147, 130 Am. 41, 34 Pac. 138. St. 719; Brulev v. Garvin, 105 Wis. "Helfreck Lumber &c. Co. v. Ho- 625, 81 N. W. '1038. 48 L. R. A. 839. naker, 25 Ky. L. 717, 76 S. W. 342. 'Garner v. Mahoney, 115 Iowa § 1270 CONTRACTS. 5IO contract for the sale of growing trees did not intend to convey any interest in the land, the agreement is not within the statute.'' § 1270. Cases within the fourth clause — Leases. — An oral lease of realty for a term of years is unenforcible if not specific- ally excepted by the statute from its operation.^ A lease within the statute will not support an action for specific performance,® nor be successfully interposed as a defense in an action by the lessor for possession.^** An oral contract to lease premises for a period of one year, with a privilege of three, at an annual rental, is, when wholly executory, within the statute. ^^ However, a tenancy from year to year as where a tenant holds over after the expiration of his term has been held not within the prohibition of the statute.^^ A contract for a church pew for a period greater than one year has been held within the statute. ^^ The same has been held true of an oral subletting of premises held by a tenant under a written lease ;^* the oral modification over the telephone of a written lease not yet accepted, and orally accepted as modi- fied ;^^ and as to the assignment,^*' extension,^^ or surrender^^ of ^ Banton v. Shorey, 11 Maine 48. statute. Caley v. Thornquist, 89 'Bailey v. Ferguson, 39 111. App. Minn. 348, 94 N. W. 1084. 91 ; Emery v. Terminal Co., 178 " Brown v. Kayser, 60 Wis. 1, 18 Mass. 172, 59 N. E. 763, 86 Am. St. N. W. 523. See also, McClelland v. 473; Smallev v. Mitchell, 110 Mich. Rush, 150 Pa. St. 57, 24 Atl. 354. 650, 68 N. W. 978 ; Smith v. Phillips, " First Baptist Church v. Bigelow, 69 N. H. 470, 43 Atl. 183; Unglish 16 Wend. (N. Y.) 28. V. Marvin, 128 N. Y. 380. 28 N. E. " Fratcher v. Smith, 104 Mich. 537, 634; Browning v. Berry, 107 N. Car. 62 N. W. 832. 231, 12 S. E. 195, 10 L. R. A. 726; "Wiessner v. Ayer, 176 Mass. 425, Jordan v. Furnace Co., 126 N. Car. 57 N. E. 672. 143, 35 S. E. 247, 78 Am. St. 644n; "Chicago Attachment Co. v. Davis Davis V. Pollock, 36 S. Car. 544, 15 Sewing Machine Co., 142 111. 171, 31 S. E. 718; Schulz v. Schirmer (Tex. N. E. 438, 15 L. R. A. 754, affirming App.), 49 S. W. 246; Utah Optical on rehearing 28 N. E. 959, revers- Co. V. Keith, 18 Utah 464, 56 Pac. ing 25 N. E. 669, and distinguishing 155. Webster v. Nichols, 104 111. 160; "Strehl v. D'Evers, 66 111. 11', Kingsley v. Siebrecht, 92 Maine 23, Charlton v. Columbia Real Estate 42 Atl. 249, 69 Am. St. 486; Penney Co., 64 N. J. Eq. 631, 54 Atl. 444. v. Lynn, 58 Minn. 371, 59 N. W. 1043; " Creighton v. Sanders, 89 111. 543. Nally v. Reading, 107 Mo. 350, 17 S. "Hand v. Osgood, 107 Mich. 55, W. 978; Tiefenbrun v. Tiefenbrun, 64 N. W. 867, 30 L. R. A. 379, 61 65 Mo. App. 253. Am. St. 312. See also, Storch v. " Sidebotham v. Holland (1895). Harvey, 45 Kans. 39, 25 Pac. 220; 1 Q. B. 378; Emery v. Terminal Co., Rosen v. Rose, 13 Misc. (N. Y.) 565, 178 Mass. 172, 59 N. E. 763, 86 Am. 2 N. Y. Ann. Cas. 194, 68 N. Y. St. St. 473. 370, 34 N. Y. S. 467. But execution " Rees v. Lowry, 57 Minn. 381, 59 of the agreement takes it out of the N. W. 310. 511 STATUTE OF FRAUDS. § I27I such lease. In a majority of the states an oral lease of realty for a term not exceeding one year is allowed.^" In a number of states an oral lease for a term not exceeding three years is al- lowed.^'* A parol lease which is within the statute does not vest any term whatsoever in the lessee. ^^ Its only effect is to create an estate which has the force and effect of a tenancy at will.** § 1271. How contract concerning land may be taken out of the statute. — If the parol agreement is clearly and satis- factorily proven, and the plaintiff, relying upon such agree- ment and the promise of the defendant to perform his part, has done some act or acts of performance on the faith of the contract and to the knowledge of the defendant, a court of equity may decree specific performance, when it would be a virtual fraud to allow the defendant to interpose the statute as a defense and at the same time secure to himself the benefit of what has been done in performance.^^ The statute by its terms does not affect the "Higgins V. Gager, 65 Ark. 604, 47 S. W. 848; Chicago Attachment Co. V. Davis Sewing Machine Co., 142 111. 171, 31 N. E. 438, 15 L. R. A. 754; Marr v. Rav, 151 111. 340, Z7 N. E. 1029, 26 L. R. A. 799; Whit- ing V. Ohlert, 52 Mich. 462, 18 N. W. 219, 50 Am. Rep. 265; Rev. Stat. 111. Ch. 59 § 2. ="Railsback v. Walke, 81 Ind. 409; Nash V. Berkmeir, 83 Ind. 536 ; Union Banking Co. v. Gittings, 45 Md. 181 ; Birchhead v. Cummins, Zi N. J. L. 44; Wade v. Newbern, 77 N. Car. 460; Dumn v. Rothermel, 112 Pa. St. 272, 3 Atl. 800; Jennings v. McComb, 112 Pa. 518. 4 Atl. 812. "'Borderre v. Den, 106 Cal. 594, 39 Pac. 946 (lease executed by an agent of qwner acting under oral authority. Lease supposed to be for a period of only one year) ; Talamo V. Spitzmiller. 120 N. Y. 37, 23 N. E. 980, 8 L. R. A. 221n, 17 Am. St. 607; Thomas v. Nelson, 69 N. Y. 118. "The following cases were de- cided in jurisdictions in which the statute made no exception as to short leases : Dulev v. Kellev, 74 Maine 556: Elliott V." Stone, 1 Gray (Mass.) 571 ; Whitney v. Swett. 22 N. H. 10, 53 Am. Dec. 228; Currier v. Perley, 24 N. H. 219; Barlow v. Wainright, 22 Vt. 88, 52 Am. Dec. 79; Silsby v. Allen, 43 Vt. 172. See, however, Myers v. Croswell, 45 Ohio St. 543, 15 N. E. 866; Baltimore & Ohio Rail- road Co. V. West, 57 Ohio St. 161, 49 N. E. 344. As to the right of the tenant to surrender the premises and avoid pavment of the agreed rent, see Bless" v. Jenkins, 129 Mo. 647, 31 S. W. 938. See also, Eubank v. May &c. Hardware Co. 105 Ala. 629, 17 So. 109. ="Flickinger v. Shaw, 87 Cal. 126. 25 Pac. 268, 11 L. R. A. 134, 22 Am. St. 234; Legg v. Horn. 45 Conn. 409; Martin v. Martin, 170 111. 639, 48 N. E. 924, 62 Am. St. 411; Ashelford V. Willis, 194 111. 492, 62 N. E. 817; Teague v. Fowler. 56 Ind. 569 ; Fos- ter Lumber Co. v. Harlan County Bank, 71 Kans. 158, 80 Pac. 49. 114 Am. St. 470; Bennett v. Dver, 89 Maine 17, 35 Atl. 1004: Low v. Low, 173 Mass. 580. 54 N. E. 257; Jorgen- sen v. Jorgensen, 81 Minn. 428. 84 N. W. 221: Johnson v. Hurlev, 115 Mo. 513. 22 S. W. 492: Lucas v. Lucas. 64 Nebr. 190. 89 N. W. 769; Miller v. Ball, 64 N. Y. 286: Beards- lev V. Duntlev, 69 N. Y. 577; Sprague V.' Cochran, 144 N. Y. 104, 38 N. E. § I27I CONTRACTS. 512 power which courts of equity have to reheve against fraud by compelHng performance of the contract. In such case the court grants rehef, not on the ground that there is a vahd contract, but that unless the court interposes one party will be enabled to de- fraud the other and that the best way to prevent this is to enforce the contract.'* "In a suit founded on such part performance the defendant is really charged upon the equities resulting from the acts done in the execution of the contract, and not (within the meaning of the contract) upon the contract itself."^^ Thus where possession has been taken in accordance with the provision of a parol contract for the sale of land,^® with the acquiescence of the vendor,^^ and the vendee has paid the agreed purchase- price or otherwise performed the consideration/® or has made 1000 ; Canda v. Totten, 157 N. Y. 281, 51 N. E. 989; Hancock v. Melloy, 187 Pa. St. 371, 41 Atl. 313; Riggles V. Erney, 154 U. S. 244, 38 L. ed. 976, 14 Sup. Ct. 1083. ** Jacobs V. Peterborough & Shir- ley R. Co., 8 Cush. (Mass.) 223; Wheeler v. Reynolds, 66 N. Y. 227. "The ground on which a court of equity proceeds, where, to use the common expression, contracts have been taken out of the statute by part performance, is not that there is a valid contract, but that unless the court interposes one party will be enabled to defraud the other." Drum V. Stevens, 94 Ifid. 181, 183. "Maddison v. Alderson, 8 App. Cas 467. '"Wood V. Thornly, 58 111. 464; Shovers v. Warrick, 152 111. 355, 38 N. E. 792; Wright v. Raftree, 181 111. 464, 54 N. E. 998; Waymire v. Waymire, 141 Ind. 164, 40 N. E. 523 ; Nay V. Mograin, 24 Kans. 75 ; Ben- nett V. Dyer, 89 Maine 17, 35 Atl. 1004; Glass v. Hulbert, 102 Mass. 24, 3 Am. Rep. 418; Burns v. Dag- gett, 141 Mass. 368, 6 N. E. 727; Bresnahan v. Bresnahan, 71 Minn. 1, 73 N. W. 515; Charpiot v. Sigerson, 25 Mo. 63; Phillips v. Thompson, 1 Johns. Ch. 131; Miller v. Ball, 64 N. Y. 292 ; Frye v. Shepler, 7 Pa. St. 91. ''Foster v. Maginnis, 89 Cal. 264, 26 Pac. 828; Pickerell v. Morss, 97 111. 220; Cloud v. Greasley, 125 111. 313, 17 N. E. 826; Barnett v. Wash- ington Glass Co., 12 Ind. App. 631, 40 N. E. 1102; Cockrell v. Mclntyre, 161 Mo. 59, 61 S. W. 648; Poland v. O'Conner, 1 Nebr. 50, 93 Am. Dec. ZZl ; Nibert v. Baghurst, 47 N. J. Eq. 201, 20 Atl. 252; Baxter v. Doane, 208 Pa. 585, 57 Atl. 1062; Williams V. Morris, 95 U. S. 444, 24 L. ed. 360; Purcell v. Miner* (sub nomine Coleman). 4 Wall. (U. S.) 513, 18 L. ed. 435. "^Thornton v. Heirs of Henry, 2 Scam. (111.) 218; Fitzsimmons v. Allen, 39 111. 440; Tibbs v. Barker, 1 Blackf. (Ind.) 58; Denlar v. Hile, 123 Ind. 68, 24 N. E. 170; Mills v. McCaustland, 105 Iowa 187, 74 N. W. 930; Green v. Jones, 76 Maine 563; Bechtel v. Cone, 52 Md. 698; Kent Furniture Mfg. Co. v. Long, HI Mich. 383, 69 S. W. 657 ; Pike v. Pike, 121 Mich. 170, 80 N. W. 5, 80 Am. St. 488; Pawlak v. Granowski, 54 Minn. 130, 55 N. W. 831; Carnev v. Carney, 95 Mo. 353, 8 S. W. 729; Hanlon v. Wilson, 10 Nebr. 138, 4 N. W. 1031; Malins v. Brown, 4 N. Y. 403; Dunckel v. Dunckel, 141 N. Y. 427, 36 N. E. 405; Jamison v. Dimock, 95 Pa. St. 52. But see Brad- ley v. Owsley, 74 Texas 69, 11 S. W. 1052; Brown v. Sutton, 129 U. S. 238, 32 L. ed. 664, 9 Sup. Ct. 273; Townsend v. Vanderwerker, 160 U. S. 171, 40 L. ed. 383, 16 Sup. Ct. 258; Frede v. Pflugradt, 85 Wis. 119, 55 N. W. 159. 5^3 STATUTE OF FRAUDS. § 1272 valuable and permanent improvements'" on the faith of the con- tract,^" a court of equity will decree specific performance of the contract. § 1272. Insufficient performance — Possession. — The mere continuance of a former possession, which is referable to some other origin or authority, is not, however, sufficient to take the case without the operation of the statute,^^ as where the vendee was already in possession as a cotenant,^" or as a tenant^^ or *»Moulton V. Harris, 94 Cal. 420, 29 Pac. 706; Blunt v. Tomlin, 27 111. 93; Morrison v. Herrick, 130 111. 631, 22 N. E. 537; Moreland v. Lemas- ters. 4 Blackf. (Ind.) 383; Starkey V. Starkey, 136 Ind. 349, 36 N. E. 287; Edwards v. Fry, 9 Kans. 417; Burnell v. Bradbury, 69 Kans. 444, 77 Pac. 85 ; Woodbury v. Gardner, 77 Maine 68; Potter v. Jacobs, 111 Mass. 32; Haves v. Railroad Co., 108 Mo. 544. 18 S. W. 1115; Bigler v. Baker, 40 Nebr. 325. 58 N. W. 1026, 24 L. R. A. 255; Stillings v. Still- ings, 67 N. H. 584. 42 Atl. 271 ; Fee V. Sharkey. 59 N. J. Eq. 284, 44 Atl. 673, affd. 60 N. J. Eq. 446, 45 Atl. 109 ; Veeder v. Horstmann, 83 N. Y. S. 99, 85 App. Div. (N. Y.) 154; Schuey v. Schaeflfer, 130 Pa. St. 16, 18 Atl. 544; Townsend v. Vanderwerker, 160 U. S. 171, 40 L. ed. 383. 16 Sup. Ct. 258; Wall v. Minneapolis &c. R. Co.. 86 Wis. 48. 56 N. W. 367. '"Wood V. Thornlv. 58 111. 464; Padfield v. Padfield, 92 111. 198; Pick- erell v. IMorss. 97 111. 220; Shovers V. Warrick, 152 111. 355, 38 N. E. 792; Wright v. Raftree, 181 111. 464, 54 N. E. 998; Mournin v. Trainor, 63 Minn. 230, 65 X. W. 444; Tuni- son V. Bradford. 49 N. J. Eq. 210. 22 Atl. 1073: Cooley v. Lobdell, 153 N. Y. 596, 47 N. E. 783 ; Plunkett v. Bryant, 101 Va. 814, 45 S. E. 742. "Moore v. Gordon, 44 Ark. 334; Lake Erie &c. R. Co. v. Michigan &c. R. Co.. 86 Fed. 840; Padfield v. Pad- field, 92 111. 198; Johns v. Johns. 67 Ind. 440; Felton v. Smith, 84 Ind. 485; Swales v. Jackson. 126 Ind. 282. 26 N. E. 62 ; Green v. Groves, 109 Ind. 519. 10 N. E. 401; Carlisle v. Brennan, 67 Ind. 12; Johns v. Johns, 67 Tnd. 440; Higgs v. Louisa County, 33 — CoNTR.\cTS. Vol. 2 60 Iowa 750, 14 N. W. 205; Harts- horn V. Smart, 67 Kans. 543, 73 Pac. 73; Barnes v. Boston &c. R. Co., 130 Mass. 388; Emmel v. Hayes, 102 Mo. 186, 14 S. W. 209, 11 L. R. A. 323, 22 Am. St. 769; Lamme v. Dodson, 4 Mont. 560, 2 Pac. 298; Peters v. Dick- inson, 67 N. H. 389, 32 Atl. 154; Campbell v. Campbell, 11 N. J. Eq. 268; Cooley V. Lobdell. 153 N. Y. 596, 47 N. E. 783 ; Myers v. Bverly, 45 Pa. St. 368, 84 Am. Dec. 497; Poag v. Sandifer, 5 Rich. Eq. (S. C.) 170; Charles v. Byrd, 29 S. Car. 544. 8 S. E. 1; Ducie v. Ford, 138 U. S. 587,34 L. ed. 1091, 11 Sup. Ct. 417; Winslow V. Baltimore &c. R. Co., 188 U. S. 646, 47 L. ed. 635 ; Pence v. Life, 104 Va. 518, 52 S. E. 257. See also, note in 3 L. R. A. (N. S.) 808. '-Haines v. McGloyne. 44 Ark. 79; Wilmer v. Farris, 40 Iowa 309; Peck- ham V. Balch, 49 Mich. 179, 13 N. W. 506; Roberts v. Templeton (Ore.) 80 Pac. 481, 3 L. R. A. (N. S.) 790; Workman v. Guthrie, 29 Pa. St. 495, 72 Am. Dec. 654 ; Spencer's Appeal, 80 Pa. St. 317; Hill v. Alevers, 43 Pa. St. 170; Munk v. Weidner. 9 Tex. Civ. App. 491, 29 S. W. 409. "In re Brady's Case, 15 Week. Rep. 753; Abbott v. The 76 Land & Wa- ter Co., 101 Cal. 567. 36 Pac. 1 ; Sho- vers V. Warrick. 152 111. 355, 38 X. E. 792; Clark v. Clark. 122 111. 388, 13 X. E. 553 ; Koch v. Xational Union Bldg. Assn., 137 111. 497, 27 X. E. 530; Barrett v. Geisinger, 148 111. 98. 35 X. E. 354; Pickerell v. Morss, 97 III. 220 (possession under a life lease) ; Johnston v. Glancy, 4 Blackf. (Ind.) 94, 28 Am. Dec. 45; Swales v. Jackson, 126 Ind. 282, 26 X. E. 62; Mahana v. Blunt. 20 Iowa 142; Hutton V. Doxsee, 116 Iowa 13, 89 § 1273 CONTRACTS. 514 lessee,^'' This same rule applies to possession taken under a sub- sequent arrangement/'^ But the fact that one who claims under an oral agreement was in possession prior to such alleged con- tract, and continued in possession without interruption, and has made lasting and valuable improvements upon the premises pur- suant to and in part performance of the oral agreement, may be resorted to as evidence showing, or tending to show, that his pos- session after he became entitled thereto under the oral agreement is held under that agreement.^" § 1273. Taking possession — English doctrine. — The mere taking possession in pursuance of the oral contract is held not of itself sufficient to warrant a decree for specific performance.^^ A contrary doctrine obtains in England^^ and Canada, to the effect N. W. 79; Allen v. Bemis, 120 Iowa 172, 94 N. W. 560 ; O'Brien v. Foulke, 69 Kans. 475, 11 Pac. 103; Billings- lea V. Ward, ZZ Md. 48; Messmore V. Cunningham, 78 Mich. 623, 44 N. W. 145; Bigler v. Baker, 40 Nebr. 325, 58 N. W. 1026, 24 L. R. A. 255 ; Lewis V. North, 62 Nebr. 552, 87 N. W. 312; Shields v. Horbach, 49 Nebr. 262, 68 N. W. 524; Cole v. Potts, 10 N. J. Eq. 67 ; Greenlee v. Greenlee, 22 Pa. St. 225; Williams v. Morris, 95 U. S. 444, 24 L. ed. 360. "'Linn V. McLean, 85 Ala. 250, 4 So. Ill; Osborn v. Phelps, 19 Conn. 63, 48 Am. Dec. 133; Koch v. Na- tional Union Bldg. Assn., 137 111. 497, 27 N. E. 530; Rosenthal v. Freebur- ger, 26 Md. 75 ; Spalding v. Conzel- man, 30 Mo. 177; Schneider v. Cur- ran, 19 Ohio C. C. 224; Armstrong V. Kattenhorn, 11 Ohio 265; Craw- ford V. Wick, 18 Ohio St. 190, 98 Am. Dec. 103 ; Jones v. Peterman, 3 Serg. & R. (Pa.) 543, 8 Am. Dec. 672. ^Von Trotha v. Bamberger, 15 Colo. 1, 24 Pac. 883; Willey v. Day, 51 Pa. St. 51, 88 Am. Dec. 562. '"Morrison v. Herrick, 130 111. 631, 22 N. E. 537. See also, Moore v. Gordon, 44 Ark. 334; Tate's Admr. V. Jones' Exr., 16 Fla. 216; Pfiffner V. Stillwater &c. R. Co., 23 Minn. 343; Aurand v. Wilt, 9 Pa. St. 54. ''Carroll v. Powell, 48 Ala. 298; Heflin v. Milton, 69 Ala. 354; Man- ning V. Pippen, 95 Ala. 537, 11 So. 56; Bright v. Bright, 41 111. 97; Geer V. Goudy, 174 111. 514, 51 N. E. 623; Glass V. Hulbert, 102 Mass. 24, 3 Am. Rep. 418; Miller v. Ball, 64 N. Y. 292; Ogsbury v. Ogsbury, 115 N. Y. 290, 22 N. E. 219; Galbreath v. Gal- breath, 5 Watts (Pa.) 146; Douganv. Blocher, 24 Pa. St. 28; Ballard v. Ward, 89 Pa. St. 358. See, however, in connection with the foregoing Pennsylvania cases, Pugh v. Good, 3 Watts & S. (Pa.) 56, Z1 Am. Dec. 534; Reed v. Reed, 12 Pa. St. 117; Ann Berta Lodge v. Leverton, 42 Tex. 18; Alabama Code, 1896, § 2152. See also, Updike v. Armstrong, 4 111. 564; Holmes v. Holmes, 44 111. 168; Ferbrache v. Ferbrache, 110 111. 210; Wright v. Raftree, 181 111. 464, 54 N. E. 998; Cochran v. Ward, 5 Ind. App. 89, 29 N. E. 795, 31 N. E. 581, 51 Am. St. 229; Weed v. Terry, 2 Dougl. (Mich.) 344, 45 Am. Dec. 257; Curtis v. Abbe, 39 Mich. 441; Wis- consin &c. R. Co. V. McKenna, 139 Mich. 43, 102 N. W. 281 ; Allen's Es- tate, 1 Watts & S. (Pa.) 383; Brad- ley v. Owsley, 74 Tex. 69, 11 S. W. 1052; Montgomery v. Carlton, 56 Tex. 361 ; Purcell v. Coleman, 6 D. C. 59, affd. 4 Wall. (U. S.) 513, 18 L. ed. 435. ^' Morphett v. Jones, 1 Swanst. 172 ; Butcher v. Stapely, 1 Vern. Zdi ; Clerk V. Wright, 1 Atk. 12 ; Pain v. Coombs, 1 DeG. & J. 34; Wilson v. West 515 STATUTE OF FRAUDS. § 1274 that taking possession is sufficient part performance to satisfy the statute.^^ And the EngHsh doctrine is favored by a number of decisions in this country/" ^ 1274. Insufficient performance — Payment of purchase- price — Exchange of lands. — The mere payment of the pur- chase-price is not of itself sufficient to warrant a decree for spe- cific performance.^^ "The payment of money is an equivocal act, not (in itself), until the connection is established by parol testi- mony, indicative of a contract concerning land."^- However, a parol contract for the exchange of land which is executed by the Hartlepool R. Co., 2 DeG. J. & S. 475; Ungley v. Ungley, L. R. 4 Ch. Div. 72 \ Mortal v. Lyons, 8 Ir. Ch. Rep. 112. '•Bodwell V. McNiven, 5 Ont. L. Rep. 2>22 ; Cameron v. Spiking, 25 Grant Ch. 116; Crane v. Rapple, 22 Ont. 519, 20 Ont. App. 291. "Keatts V. Rector, 1 Ark. 391; Blakeney v. Ferguson, 8 Ark. 272; McXeili V. Jones, 21 Ark. 277; Ar- guello V. Edinger, 10 Cal. 150; Cal- anchini v. Barnstettcr, 84 Cal. 249, 24 Pac. 149; Eaton v. Whitaker, 18 Conn. 222, 44 Am. Dec. 586; Andrew V. Babcock, 63 Conn. 109, 26 Atl. 715; Arnold v. Stephenson, 79 Ind. 126; FeUon v. Smith, 84 Ind. 485; Robinson v. Thrailkill. 110 Ind. 117, 10 N. E. 647; Mowrey v. Davis, 12 Ind. App. 681, 40 X. E. 1108; Mahana V. Blunt, 20 Iowa 142 ; Anderson v. Simpson, 21 Iowa 399; Edwards v. Fry, 9 Kans. 417; Baldwin v. Bald- win, 72 Kans. 39, 84 Pac. 568, 4 L. R. A. (N. S.) 957; Bresna- han V. Bresnahan, 71 Minn. 1, 72 N. W. 515; Young v. Mont- gomery, 28 Mo. 604 ; Wharton v. Stoutenburgh. 35 N. J. Eq. 266; More V. Beasley. 3 Ohio' 294 ; Flinn V. Manning. 13 Ohio Dec. 446. 1 Cin. Sup. Ct. (Ohio) 110; Anderson v. Chick, Bail. Eq. (S. Car.) 118; Smith V. Smith. 1 Rich. Eq. (S. Car.) 130; Conev v. Timmons, 16 S. Car. 378; Jomsiand v. Wallace. 39 Wash. 487, 81 Pac. 1094. The English rule is statutory in Iowa, except as to leases. Iowa Code, 1897, §§ 4625, 4626. *" Robinson v. Driver, 132 Ala. 169, 31 So. 495 ; Forrester v. Flores, 64 Cal. 24, 28 Pac. 107 ; Temple v. John- son, 71 111. 13; Gorham v. Dodge, 122 111. 528, 14 N. E. 44; Pond v. Sheean, 132 111. 312, 23 N. E. 1018; Dicken v. McKinlay, 163 111. 318, 45 N. E. 134, 54 Am. St. 471; Carlisle v. Brennan, 67 Ind. 12; Green v. Groves, 109 Ind. 519, 10 N. E. 401; Goddard v. Donaha, 42 Kans. 754, 22 Pac. 708; Glass v. Hulbert, 102 Mass. 24, 3 Am. Rep. 418; Blodgett V. Hildreth, 103 Mass. 484; Peck- ham v. Balch, 49 Mich. 181, 13 N. W. 506; Kelly v. Kelly, 54 Mich. 30, 19 N. E. 580; Grindling v. Reyhl, 149 Mich. 641, 113 X. W. 290, 15 L. R. A. (X. S.) 466; Townsend v. Fenton, 30 Minn. 528, 16 X. W. 421 ; Lvdick V. Holland, 83 Mo. 703; B'aker v. Wiswell, 17 Xebr. 52, 22 N. W. Ill; Peters v. Dickinson, 67 N. H. 389, 32 Atl. 154 ; Brown v. Brown, 22 X^. J. Eq. 650 ; Cooper v. Colson, 66 N. J. Eq. 328. 58 Atl. 227. 105 Am. St. 660; Cooley v. Lobdell. 153 N. Y. 596, 47 N. E. 783; Crabill v. Marsh, 38 Ohio St. 331; Kling v. Bordner. 65 Ohio St. 86. 61 X. E. 148; Parker v. Wells. 6 Whart. (Pa.) 153; Gangwer v. Fry. 17 Pa. 491, 55 Am. Dec. 578 ; Purcell v. Coleman, 4 Wall. (U. S.) 513, 18 L. ed. 435; Biern v. Rav, 49 W. Va. 129. 38 S. E. 530; Harney v. Burhans, 91 Wis. 348. 64 N. W. 1031. Contra under Iowa statute. Querv v. Listen. 92 Iowa 288. 60 N. W. 524. *^Maddison v. Alderson, 8 App. Cas. 475. § 12/ /D CONTRACTS. 516 parties putting each other in possession pursuant to the terms of the agreement is thereby taken out of the operation of the statute. The mutual exchange is equivalent to both delivery of possession and payment.*^ This is especially true when to permit a rescission would be inequitable/* § 1275. Additional illustrations of the rule. — A parol gift of land will be upheld, and the agreement to convey enforced, when the donee has taken possession and, on the faith of the gift, has made permanent and valuable improvements thereon,*^ with his own money.*® The doctrine that when there has been such part performance of an oral contract as to take the same out of the operation of the statute of frauds, specific performance there- of may be enforced, applies to parol agreements for a lease of real estate exceeding three years. *^ The mere taking possession, in the absence of the erection of valuable and permanent improve- ments, or the performance of services or some other circum- **McLure v. Tennille, 89 Ala. 572, 8 So. 60; Kimbrough v. Nelms, 104 Ala. 554, 16 So. 619; Savage v. Lee, 101 Ind. 514; Baldwin v. Thompson, 15 Iowa 504; Beebe v. Dowd, 22 Barb. (N. Y.) 255; Brown v. Bailey, 159 Pa. 121, 28 Atl. 245; Wilkinson v. Wilkinson, 1 Des. Eq. (S. Car.) 201. See also, Goodlett V. Hansen, 66 Ala. 151; Moss V. Culver, 64 Pa. St. 414, 3 Am. Rep. 601. Note in Ann. Cas. 1912A. 308. See, however. Connor V. Tippett, 57 Miss. 594; Barnes v. Teague, 54 N. Car. 277, 62 Am. Dec. 200. "Johnston v. Johnston, 6 Watts (Pa.) 370; Jermyn v. McClure, 195 Pa. St. 245, 45 Atl. 938. *^Lobdell v. Lobdell, 36 N. Y. 327, 4 Abb. Prac. (N. S.) (N. Y.) 56, 33 How. Prac. (N. Y.) 347; Freeman V. Freeman, 43 N. Y. 34, 3 Am. Rep. 657; Young v. Overbaugh, 145 N. Y. 158, 39 N. E. 712; Syler v. Eckhart, 1 Binn. (Pa. St.) 378; Young v. Glendenning, 6 Watts (Pa. St.) 509, 31 Am. Dec. 492; Christy v. Barn- hart, 14 Pa. St. 260, 52 Am. Dec. 538; Sower's Admr. v. Weaver, 84 Pa. St. 262. **Burlingame v. Rowland, 77 Cal. 315, 19 Pac. 526, 1 L. R. A. 829; Kurtz v. Hibner, 55 111. 514, 8 Am. Rep. 665; Irwin v. Duke, 114 111. 302, 1 N. E. 913 ; Fonts v. Roof. 171 111. 568, 50 N. E. 653 ; Dunn v. Berk- shire, 175 111. 243, 51 N. E. 770; San- ford V. Davis, 181 111. 570, 54 N. E. 977; Geer v. Goudy, 174 III. 514, 51 N. E. 623 ; Horner v. McConnell, 158 Ind. 280, 63 N. E. 472; Peters v. Jones, 35 Iowa 512; Gilmore v. As- bury, 64 Kans. 383, 67 Pac. 864;Har- desty V. Richardson, 44 Md. 617, 22 Am. Rep. 57; Briggs v. Briggs, 113 Mich. 371, 71 N. W. 632; Hubbard v. Hubbard, 140 Mo. 300, 41 S. W. 749; Storv V. Black, 5 Mont. 26, 1 Pac. 1, 51 Am. Rep. 37; Wylie v. Charlton, 43 Nebr. 840, 62 N. W. 220; Seavey v. Drake, 62 N. H. 393; Young v. Young, 45 N. J. Eq. 27, 16 Atl. 921; Scott v. Lewis, 40 Ore. 37, 66 Pac. 299; Cauble v. Worsham, 96 Tex. 86, 70 S. W. 737, 97 Am. St. 871; Neale v. Neale, 9 Wall. (U. S.) 1, 19 L. ed. 590; Mack- all V. Mackall, 135 U. S. 167, 10 Sup. Ct. 705. " St. Joseph &c. Co. V. Globe Tis- sue-Paper Co., 156 Ind. 665, 59 N. E. 995. 517 STATUTE OF FRAUDS. § 12/5 stance such as will show that a refusal to enforce the contract would work an injustice and fraud on tlie promisee, is not suffi- cient ground for granting specific performance of a parol gift or contract to convey real property.*^ The complete performance of the contract by one contracting party forecloses his adversary from interposing the statute of frauds as a defense." So, equally, a contract for the transfer of an interest in land, in consideration of legal services rendered in settlement of an estate, and the signing of a bond, is taken out of the statute by the performance of the consideration by the attorney; all that remained to be done being the formal order of court approving the settlement.'^" And where the plain- tiff bought land from the purchaser at a sale made under order of court, and paid part of the price, and a later order recited the sale and the transfer to plaintiff, and directed that a deed be made to plaintiff, but no such deed was ever made, and thereafter plaintiff, who had taken possession, orally agreed to transfer the land to defendant, provided defendant would pay plaintiff's debts, including the balance of the price of such land, and defendant thereafter, without plaintiff's knowledge, procured a deed of the land from the court, it was held in a suit to compel a conveyance to plaintiff, that he had an equitable title, and that the sale to such purchaser and the transfer to plaintiff, with the order of court directing a deed to be made to him took the case out of the statute of frauds." Where the owner of land had a contract written out for the sale of certain land to plaintiff, "Price V. Lloyd, 31 Utah 86, 86 gett's Admr. v. Cason's Admr., 26 Pac. 767, 8 L. R. A. (N. S.) 870 and Mo. 221; Self v. Cordcll, 45 Mo. note. For a statement of the reasons 345 ; McConnell v. Brayner, 63 Mo. for the rule see, Poorman v. Kilgore, 461 ; De Hierapolis v. Reilly. 60 N. 26 Pa. St. 365. 67 Am. Dec. 425; Y. S. 417, affd. 168 N. Y. 585. See Miller v. Lorentz, 39 W. Va. 160, 19 also, Moore v. Chicago &c. Co., 7 S. E. 391. See also. Forward v. Kans. .A.pp. 242, 53 Pac. 775; Maupin Armstead, 12 Ala. 124, 46 .A.m. Dec. v. Chicago &c. R. Co.. 171 Mo. 187, 246; Evans v. Battle, 19 Ala. 398; 71 S. W. 334; Alexander v. McDan- Pinckard v. Pinckard. 23 Ala. 649; iel, 56 S. Car. 252. 34 S. E. 405. Conn V. Prewitt, 48 Ala. 636; Thomp- Compare with Sevmour v. Warren, son V. Ray, 92 Ga. 285, 18 S. E. 59; 86 App. Div. (N. Y.) 403, 83 N. Y. Murphv V. Stell, 43 Tex. 123; West S. 871. V. Webster. 39 Tex. Civ. App. 272, '^Mitchell v. Colby, 95 Iowa 202, 87 S. W. 196. 63 N. W. 769. " Blanton v. Knox, 3 Mo. 342 ; "" Howard v. Howard, 96 Ky. 445, Pitcher V. Wilson, 5 Mo. 46; Sug- 29 S. W. 285. § 1276 CONTRACTS. 518 but it was not signed by either, and several months after the owner died, having made a will in which he expressed the desire that the land might be sold to plaintiff "according to the under- standing" between them, in an action by plaintiff for the specific performance of the contract, it was held that the will did not refer to the unexecuted contract with sufficient certainty to entitle them to be read together and so constitute a contract within the statute of frauds." A parol partition of land between coheirs, carried out and followed by actual possession in severalty of the several parcels, has been held valid and enforcible notwithstand- ing the statute of frauds, on the ground of part performance, when the partition is equitable, and the parties acted understand- ingly.^^ Part performance of an oral lease by the parties may take it out of the statute.^* § 1276. Performance of services. — It is true generally that where the consideration for a contract to devise realty is, in whole or part, the performance of work and services, the per- formance of such services will not, of themselves, entitle one to a decree of specific performance when the value of the services so rendered may be estimated and their value liquidated in money so as measurably to make the vendee whole on rescinding the contract.^^ But where the services rendered are of such a pecu- liar character that it is impossible to estimate their value and the vendee cannot be placed in statu quo, a court of equity may interpose its authority and compel specific performance in order to prevent the perpetration of a fraud. ^*' It has also been said in °' Darling v. Gumming, 92 Va. 521, R. A. (N. S.) 466; Conlon v. Mis- 23 S. E. 880. sion of Immaculate Virgin, 39 Misc. ""Welchel V. Thompson, 39 Ga. (N. Y.) 215, 79 N. Y. S. 406; Cooper 559. 99 Am. Dec. 470; Tomlin v. Hil- v. Golson, 66 N. J. Eq. 328, 58 Atl. yard, 43 111. 300, 92 Am. Dec. 118n; Z2,7, 105 Am. St. 660; Ludwig v. McMahan v. McMahan, 13 Pa. St Buengart, 48 App. Div. (N. Y.) 613, 376, 53 Am. Dec. 481 ; Ebert v. Wood, 63 N. Y. S. 91 ; Braun v. Ochs, 77 1 Bin. (Pa.) 216, 2 Am. Dec. 436; App. Div. (N. Y.) 20, 79 N. Y. S. Ay res v. Jack, 7 Utah 249, 26 Pac. 100. 300; Whittemore v. Cope, 11 Utah '^Franklin v. Tuckerman, 68 Iowa 344, 40 Pac. 256. 572, 27 N. W. 759 ; Svanburg v. Fos- " Deeds v. Stephens, 8 Idaho 514, seen, 75 Minn. 350, 78 N. W. 4, 43 69 Pac. 534. L. R. A. 427, 74 Am. St. 490; Teske " Collins V. Collins, 138 Iowa 470, v. Dittberner, 70 Nebr. 544, 98 N. W. 114 N. W. 1069; Grindling v. Reyhl, 57, 113 Am. St. 802; Rhodes 149 Mich. 641, 113 N. W. 290, 15 L. v. Rhodes, 3 Sandf. Ch. (N. 519 STATUTE OF FRAUDS. § 1277 relation to contracts of this character that after a parol contract to sell land has been completely performed on both sides as to everything except conveyance, "the matter has advanced beyond the stage of contract; and the equities which arise out of the stage which it has reached cannot be administered unless the contract is regarded. "^"^ § 1277. Agreements not to be performed within a year — Scope of the clause. — The clause of the statute in regard to agreements "not to be performed within the space of one year from the making thereof" means to include any agreement which, by a fair and reasonable interpretation of the terms used by the parties, and in view of all the circumstances existing at the time, does not admit of its performance, according to its language and intention, within a year from the time of its making.^^ If an agreement is capable of being performed within a year from the making thereof, — in other words, if the obligation of the contract Y.) 279; Hall v. Oilman, 11 App. Div. (N. Y.) 458, 79 N. Y. S. 303, ZZ Civ. Proc. R. 283 ; Lothrop v. Marble, 12 S. Dak. 511, 81 N. W. 885, 76 Am. St. 626; Brinton v. Van Cott, 8 Utah 480, ZZ Pac. 218; Bry- son V. McShane, 48 W. Va. 126, 35 S. E. 848, 49 L. R. A. 527. See also, Loffus V. Maw, 32 L. J. Ch. 49, 8 Jur. N. S. 607. See, however, Rod- man V. Rodman, 112 Wis. 378, 88 N. W. 218; Maddison v. Alderson, L. R. 8 App. Cas. 467. The court said further : "The choice is between un- doing what has been done (which is not always possible, or, if possible, just) and completing what has been left undone. The line may not al- ways be capable of being so clearly drawn as in the case which I have supposed ; but it is not arbitrary or unreasonable to hold that, when the statute says that no action is to be brought to charge any person upon a contract concerning land, it has in view the simple case in which he is charged upon the contract only, and not that in which there are equities resulting from res gestae subsequent to and arising out of the contract. So long as the connection of those res gestae with the alleged contract does not depend upon mere parol testimony, but is reasonably to be inferred from res gestae themselves, justice seems to require some such limitation of the scope of the statute, which might otherwise interpose an obstacle even to the rectification of material errors, however clearly proved, in an executed conveyance, founded upon an unsigned agree- ment." "a Maddison v. Alderson, L. R. 8 App. Cas. 467. See also IS L. R. A. (N. S.) 466 note. ^'Heflin v. Milton, 69 Ala. 354; Warner v. Texas &c. R. Co., 54 Fed. 922, 4 C. C. A. 673; Wooldridge v. Stern, 42 Fed. 311, 9 L. R. A. 129; Haynes v. Mason, 30 111. App. 85; Rardin v. Baldwin, 9 Kans. App. 516, 60 Pac. 1097 (holding a three-year verbal lease void under the Kansas statute) ; Miller v. Goodrich Bros. Banking Co., 53 Mo. App. 430; Schultz V. Tatum, 35 Mo. App. 136; Reynolds v. First Nat. Bank, 62 Nebr. 747, 87 N. W. 912; Lockwood V. Barnes, 3 Hill (X. Y.) 128, 38 Am. Dec. 620 ; Jordan v. Greensboro Fur- nace Co.. 126 N. Car. 143. 35 S. E. 247, 78 Am. St. 644 (holding that the North Carolina statute affects the contract itself) ; Foote v. Emer- son, 10 Vt. 338. ZZ Am. Dec. 205 ; Par- kersburg Mill Co. v. Ohio R. Co., § 1^/7 CONTRACTS. 520 is not, by its very terms or necessary construction, to endure for a longer period than one year, — the statute does not apply al- though the contract is not actually performed until after that period, or is capable of indefinite continuance.^^ The presump- tions are all in favor of the validity of the contract, and oral agreements have been upheld in numerous instances where the parties must have expected that they would not be performed within a year, and performance within the year was not even probable on the ground that consistently with their terms they could be fully performed within that time.^° In order to bring a parol contract within this clause, it must either have been ex- 50 W. Va. 94, 40 S. E. 328. The mischief meant to be prevented was the leaving to memory the terms of a contract for a longer time than a year. The persons might die who were to prove it, or they might lose their faithful recollection of the terms of it. Boydell v. Drummond, 11 East 142; Smith v. Westall, 1 Lord Ray. 316; Bartlett v. Wheeler, 44 Barb. (N. Y.) 162. ^^ Devalinger v. Maxwell, 4 Pen- new. (Del.) 185, 54 Atl. 684; Phoenix Ins. Co. V. Ireland, 9 Kans. App. 644, 58 Pac. 1024; Fain v. Turner, 96 Ky. 634, 16 Ky. L. 719, 29 S. W. 628; Howard v. Burgen, 4 Dana (Ky.) 137; Scribner v. Flagg Mfg. Co., 175 Mass. 536, 56 N. E. 603; Drew v. Billings-Drew Co., 132 Mich. 65, 92 N. W. 774, 9 Det. Leg. News ; Kiene V. Shaeffing, 33 Ncbr. 21, 49 N. W. 773. To same effect, Bank v. Fin- nell, 133 Cal. 475, 65 Pac. 976; Hin- kle V. Fisher, 104 Ind. 84, 3 N. E. 624 ; Saunders v. Kastenbine's Exrs., 6 B. Mon. (Ky.) 17; Farwell v. Tillson, 76 Maine 227; Somerby v. Buntin, 118 Mass. 279, 19 Am. Rep. 459; War- ren &c. Co. V. Holbrook, 118 N. Y. 586, 23 N. E. 908, 16 Am. St. 788; Walker v. Johnson, 96 U. S. 424, 24 L. ed. 834; Kimmins v. Oldham, 27 W. Va. 258. See the leading case of Peter v. Compton, Skinner 353, and notes in 1 Smith's Leading Cases (9 Am. ed.) 586. In that case the defendant made an oral agreement with the plaintiff that, in considera- tion of one guinea, then paid him by the plaintiff, he would pay the plain- tiff a certain greater sum upon the day of his marriage. The marriage did not happen within the year, but it*was held that an action would lie, although the contract was not reduced to writing, as there was nothing in the contract which ren- dered it incapable of being performed within the year. "*Osment v. McElrath, 68 Cal. 466, 9 Pac. 731, 58 Am. Rep. 17; Woodall V. Mfg. Co., 9 Colo. App. 198, 48 Pac. 670 (contract of employment for one year with promise of better pay for following year) ; Russell v. Slade, 12 Conn. 455 ; Wooldridge v. Stern, 42 Fed. 311, 9 L. R. A. 129; Wiggins v. Keizer, 6 Ind. 252; Blair Town Lot & Land Co. v. Walker, 39 Iowa 406; Sutphen v. Sutphen, 30 Kans. 510, 2 Pac. 100; Aiken v. Nogle, 47 Kans. 96, 27 Pac. 825; Standard Oil Co. v. Denton, 24 Ky. L. 906, 70 S. W. 282 (contract to furnish oil for five years, or so long as plaintiff remained in business) ; EUicott v. Turner (sub nomine Peterson), 4 Md. 488; Cole V. Singerly, 60 Md. 348; Sanford v. Orient Ins. Co., 174 Mass. 416, 54 N. E. 883, 75 Am. St. 358 (holding life insurance policy not within the stat- ute) ; Wynn v. Followill, 98 Mo. App. 463, 72 S. W. 140 (contract for the furnishing of "hired help" for the purpose of keeping, supporting and caring for an infant for a period of two years and eight months) ; Kiene V. Shaeffing, 33 Nebr. 21, 49 N. W. 773 (indefinite term of employment) ; Reynolds v. First Nat. Bank, 62 Nebr. 747, 87 N. W. 912; Powder River 521 STATUTE OF FRAUDS. § 1278 pressly stipulated by the parties, or it must appear to have been understood by them that it was not to be performed within a year, and this stipulation or understanding must be absolute and certain, and not depend on any contingency.*" § 1278. Contracts within the fifth clause — Contracts to last a year from a date in future — Leases. — In those juris- dictions in which the statute requires an agreement to be in writ- ing, which "by its terms is not to be performed within a year from the making thereof," the year meant is the time from the making of the agreement to the end of its performance, and if by the terms of the contract it is to last for a year from the time that performance begins, and performance thereof is to commence in futuro, the contract cannot be performed within one year from the date on which it is made and is therefore within the statute.^^ Live Stock Co. v. Lamb, 38 Nebr. 339, 56 N. W. 1019; Gault v. Brown, 48 N. H. 183, 2 Am. Rep. 210; Bland- ing V. Sargent, 33 N. H. 239, 66 Am. Dec. 720; Warren Chemical &c. Co. V. Holbrook, 118 X. Y. 586, 23 N. E. 908, 16 Am. St. 788; Kent v. Kent, 62 N. Y. 560, 20 Am. Rep. 502; Jones V. Pouch, 41 Ohio St. 146 (perform- ance contemplated within the year, but extra time added for emergen- cies) ; Thomas v. Hammond, 47 Tex. 42; Seddon v. Rosenbaum, 85 Va. 928, 9 S. E. 326, 3 L. R. A. 337; Richmond Union Pass. R. Co. v. Richmond &c. R. Co., 96 Va. 670, 32 S. E. 787 (contract between two car- riers to erect gates and keep a watch- man at a crossing of their respective tracks, the expense to be borne equal- ly by the companies). See. English and American Decisions Collected, in notes to Dovle v. Dixon, 97 Mass. 208. 93 Am. Dec. 80. •"Dollar V. Parkington, 84 Law T. 470; Boydell v. Drummond, 11 East 142; Arkansas &c. R. Co. v. Whit- ley, 54 Ark. 199. 15 S. W. 465, 11 L. R. A. 621n; Hall v. Solomon, 61 Conn. 476. 23 Atl. 876, 29 Am. St. 218; Blackburn v. ^lann, 85 111. 222; Hinkle v. Fisher, 104 Ind. 84. 3 N. E. 624; Durham v. Hiatt, 127 Ind. 514, 26 N. E. 401 ; Marlev v. Noblett. 42 Ind. 85; Wilson v. Rav, 13 Ind. 1; Aiken v. Nogle, 47 Kans. 96, 27 Pac. 825; Larimer v. Kelley, 10 Kans. 298; Somerby v. Buntin, 118 Mass. 279, 19 Am. Rep. 459; Green v. Pennsyl- vania Steel Co., 75 Md. 109, 23 Atl. 139; Reynolds v. First Nat. Bank, 62 Nebr. 747, 87 N. W. 912; Roberts V. Summit Park Co., 72 Hun (N. Y.) 458; Warren Chemical &c. Co. V. Holbrook, 118 X. Y. 586, 23 N. E. 908, 16 Am. St. 788; Van Woert v. Albany &c. R. Co., 67 N. Y. 538; Hodges V. Richmond Mfg. Co., 9 R. I. 482; Clark v. Reese, 26 Tex. Civ. App. 619, 64 S. W. 783; Walker v. Johnson, 96 U. S. 424, 24 L. ed. 834. "The statute of frauds plainly means an agreement not to be performed within the space of a year, and ex- pressly and specifically so agreed. * * * It does not extend to cases where the thing only may be performed within the year.' Fenton v. Emblers, 3 Burr. (1762) 1278. Justice Miller, in Mc- Pherson v. Cox, 96 U. S. 404, 24 L. ed. 746, says : "The statute of frauds applies only to contracts which, by the terms, are not to be performed within a year. * * * In other words, to make a parol contract void, it must be apparent that it was the understanding of the parties that it was not to be performed within a year from the time it was made." "Wickson v. Monarch &c. Mfg. § 1^79 CONTRACTS. 522 Thus, a verbal lease for a period of one year, to commence in the future, is generally held within the statute in those jurisdictions in which the statute declares unenforcible an oral lease for a longer period than one year from the making thereof,^^ although there is authority to the contrary."^ However, where the statute contains a special provision which authorizes the making of a verbal lease for a period longer than one year, and which also provides that no action shall be brought whereby to charge any person upon any contract for the sale of land, tenements or hereditaments, or the making of any lease thereof, for a longer term than one year (omitting from the making thereof), a lease for one year to commence in futuro will be upheld.^* § 1279. Contracts to last a year from a date in futuro — Services. — Parol contracts for a year's service, performance Co., 128 Cal. 156, 60 Pac. 764, 49 L. R. A. 141, 79 Am. St. 36; Cooney v. Murray, 45 111. App. 463; Holloway V. Hampton, 4 B. Mon. (Ky.) 415; Frary v. Sterling, 99 Mass. 461 ; Reyn- olds V. First Xat. Bank, 62 Nebr. 747, 87 N. W. 912. •^Bain v. McDonald, 111 Ala. 269, 20 So. 11; Higgins v. Gager, 65 Ark. 604, 47 S. W. 848; Wickson v. Mon- arch Cycle Mfg. Co., 128 Cal. 156, 60 Pac. 764, 79 Am. St. Id. In the above case it appeared that the time was only some three days more than a year after the contract was made, but the court said, "We are not at liberty to extend it three days, nor any time beyond the year." Olt v. Lohnas, 19 111. 576; Wheeler v. Frankenthal, 78 111. 124; Comstock V. Ward, 22 111. 248; Wolf v. Dozer, 22 Kans. 436; Thomas v. McManus (Ky), 64 S. W. 446; Greenwood v. Strother, 91 Ky. 482, 16 S. W. 138; Delano v. Montague, 4 Cush. (Mass.) 42; Whiting v. Ohlert, 52 Mich. 462, 18 N. W. 219, 50 Am. Rep. 265; Jellett v. Rhode, 43 Minn. 166, 45 N. W. 13, 7 L. R. A. 671 ; Brosius V. Evans, 90 Minn. 521, 97 N. W. 373 ; McCroy v. Toney, 66 Miss. 233, 5 So. 392, 2 L. R. A. 847; Hitt v. Greeser, 71 Mo. App. 206; Butts v. Fox, 96 Mo. App. 437, 70 S. W. 515; Cook V. Redman, 45 Mo. App. 397; White V. Holland, 17 Ore. 3, 3 Pac. 573; Whiting v. Pittsburgh Opera House Co., 88 Pa. St. 100; Hawley V. Moody, 24 Vt. 603. '^ Sears v. Smith, 3 Colo. 287; Steininger v. Williams, 63 Ga. 475 ; Jones V. Marcy, 49 Iowa 188; Young V. Dake, 5 N. Y. 463, 55 Am. Dec. 356; Becar v. Flues, 64 N. Y. 518; Ward V. Hasbrouck, 169 N. Y. 407, 62 N. E. 434; Hillhouse v. Jennings, 60 S. Car. 392, 38 S. E. 596; Haves V. Arrington, 108 Tenn. 494, 68 S. W. 44; Bateman v. Maddox, 86 Tex. 546, 26 S. W. 51. As a general rule the cases which hold to the contrary were decided under statutes which required agreements to be in writing if by their terms they are not to be performed within a year, and do not contain the additional clause "from the making thereof." It has been held that the clause, "Providing that no action shall be brought upon any agreement not to be performed with- in one year from the making thereof, unless the same, or some memoran- dum or note thereof, was in writing, has no application to contracts con- veying an interest in land." St. Jo- seph Hydraulic Co. v. Globe Tissue Paper Co., 156 Ind. 665, 59 N. E. 995. ®* Hayes v. Arrington, 108 Tenn. 494, 68 S. W. 44. 523 STATUTE OF FRAUDS. § 1279 to begin at some future time, have been declared within the statute.*'^ Thus a contract entered into the latter part of Octo- ber for a year's services to commence the following Monday, November first, has been held within the statute.®" The same has been held true of a verbal agreement by the lessor of a hotel not to sell cigars in the hotel office during a year from a future time." But if the contract must be performed within a year from the making thereof owing to the nature of the subject-matter, the contract is not within the statute although the date set for performance exceeds a period of one year.'^'' However, a con- »* Britain v. Rossiter, 11 Q. B. D. 123; Strong v. Bent, 31 N. S. 1 ; Scoggin V. Blackwell, 36 Ala. 351 ; lileyer v. Roberts, 46 Ark. 80, 55 Am. Rep. 567 ; Comes v. Lamson, 16 Conn. 264; Fish v. Glass, 54 111. App. 655; Haynes v. Mason, 30 111. App. 85; Caldwell v. Huntington, 132 Ind. 9P., 31 N. E. 566; Shumate v. Farlow, 125 Ind. 359, 25 N. E. 432, 9 L. R. A. 657; Clark County v. Howell, 21 Ind. App. 495, 52 N. E. 769; Cald- well V. Huntington, 132 Ind. 92, 31 N. E. 566; Kleeman v. Collins, 9 Bush (Ky.) 460; Smith v. Theobald, 86 Ky. 141, 5 S. W. 394; Hern v. Hadbourne, 65 Maine 302; King v. Welcome, 5 Gray (Mass.) 41; Davis V. Michigan &c. Ins. Co., 127 Mich. 559, 86 N. \V. 1021 : Lally v. Crook- stron Lumber Co., 85 IMinn. 257, 88 N. \V. 846; Jellett v. Rhode, 43 Minn. 166, 45 N. W. 13, 7 L. R. A. 671; Sharp V. Rhiel, 55 Mo. 97; Biest v. Versteeg Shoe Co., 97 Mo. App. 137, 70 S. \V. 1081; Kansas Citv &c. R. Co. V. Conlee, 43 Xebr. 121, 61 N. W. Ill; McElrov v. Ludlum, 32 N. J. Eq. 828; Oddv v. James. 48 N. Y. 685; Hartwell v. Young. 67 Hun (N. Y.) 472, 51 N. Y. St. 333, 22 N. Y. S. 486; Sutcliffe v. Atlantic Mills, 13 R. I. 480; 43 Am. Rep. 39; Hill- house V. Jennings, 60 S. Car. 373, 38 S. E. 599; Mendelsohn v. Banov, 57 S. Car. 147, 35 S. E. 499; Duckett v. Pool. 33 S. Car. 238, 11 S. E. 689; Moodv V. Jones (Tex. Civ. App.). 37 S. W. 379; Hincklev v. Southgate, 11 Vt. 428; Parkersburg Mill Co. v. Ohio Railroad Co., 50 \V. Va. 94, 40 S. E. 328; Lee v. Hill, 87 Va. 497. 12 S. E. 1052, 24 Am. St. 666; Dra- heim v. Evison, 112 Wis. 27, 87 N. W. 795. «" Chase v. Hinkley, 126 Wis. 75, 105 N. W. 230, 2 L. R. A. (X. S.) 738, 110 Am. St. 896. "Any excess of the year period, however short, is sufficient to satisfy the statute. That was stated very forcibly by Lord Ellenborough in Bracegirdle v. Heald, 1 B. & Aid. 722, the reason therefor being expressed in these words: 'If we were to hold that a case which extended one minute be- yond the time pointed out by the statute, did not fall within its prohi- bition, I do not see where we should stop ; for in point of reason, an ex- cess of twenty years will equally not be within the act. Such difficulties rather turn upon the policy, than upon the construction of the stat- ute.' " Chase v. Hinkley, 126 Wis. 75, 105 X. W. 230, 2 L. R. A. (X. S.) 738n, 110 Am. St. 896. In order that the foregoing cases will not conflict with those holding that contracts w^hich may be discharged by the death of either party are not within the statute it would seem that the parties must expressly contemplate that the contract is to continue in force for one year from the date when the performance begins. Chase v. Hinklev. 126 Wis. 75. 105 X. W. 230. 2 L. R. A. (X. S.) 738n, 110 Am. St. 896. *^Higgins V. Gager, 65 Ark. 604, 47 S. W. 848. "'Brown v. Throop, 59 Conn. 596, 22 Atl. 436, 13 L. R. A. 646. § I28o CONTRACTS. 524 tract for a year's employment to begin in futuro is not taken out of the statute by part performance,*^" or by the fact that the contract may be terminated at the option of either party before the expiration of the year/" or that wages are to be paid by the month. "^ But a contract of hiring made in June, performance to commence in August, "for thirty-five or forty weeks, perhaps a year" has been held not within the statute since no obligation was created to continue the employment for a year.^^ § 1280. Method of computing time. — Contracts to run for one year from the day following their execution are not within the statute for the reason that in the computation of time frac- tions of days are excluded, and for the further reason that the first day is excluded and the last day included.^^ If, however, when judged by this standard, the time from the making of an agreement to the end of its performance exceeds a year ever so little, the statute of frauds applies.^* Thus intervals of two,^^ three,^° seven" and twelve^** days, or of one,^** two^° or three*^ months, between the time when the contract is made and the time that performance begins, have been held to bring the contract within the provisions of the act when it was to run a year from the time that performance began.®^ However, if the parties "» Kleeman & Co. V. Collins, 9 Bush 268; Levison v. Stix, 10 Daly (N. (Ky.) 460; Hillhouse v. Jennings, 60 Y.) 229. S. Car. 2,72,, 38 S. E. 599; Draheim " Wickson v. Monarch Cycle Mfg. V. Evison, 112 Wis. 27, 87 N. W. 795; Co., 128 Cal. 156, 60 Pac. 764, 49 L. Chase v. Hinkley, 126 Wis. 75, 105 N. R. A. 141, 79 Am. St. 36. W. 230, 2 L. R. A. (N. S.) 738, 110 "Reynolds v. First Nat. Bank, 62 Am. St. 896. Nebr. 747, 87 N. W. 912. "Biest V. Versteeg Shoe Co., 97 '* Wickson v. Monarch Cycle Mfg. Mo. App. 137, 70 S. W. 1081. Co., 128 Cal. 156, 60 Pac. 764, 49 L. " Kansas City W. & N. W. &c. R. R. A. 141, 79 Am. St. 36. Co. V. Conlee, 43 Nebr. 121, 61 N. W. " Davis v. Michigan &c. Ins. Co., Ill; Moody v. Jones (Tex. Civ. 127 Mich. 559, 86 N. W. 1021; Sut- App.), 2,7 S. W. 379. cliffe v. Atlantic Mills, 13 R. I. 480, ^"Haines v. Thompson, 2 Misc. (N. 43 Am. Rep. 39. Y.) 385, 21 N. Y. S. 991. ''Kansas City &c. R. Co. v. Con- '^ Britain v. Rossiter, L. R. 11 Q. lee, 43 Nebr. 121, 61 N. W. 111. B. Div. 123; Dickson v. Frisbee, 52 '^Draheim v. Evison, 112 Wis. 27, Ala. 165, 23 Am. Rep. 565, citing and 87 N. W. 795. following Cawthorne v. Cordrey, 13 ** Lee's Admr. v. Hill, 87 Va. 497, C. B. (N. S.) 406. Contra, McElroy 12 S. E. 1052, 24 Am. St. 666. V. Ludlum, 32 N. J. Eq. 828; Billing- ** Mendelsohn v. Banov, 57 S. Car. ton v. Cahill, 51 Hun (N. Y.) 132, 147, 35 S. E. 499. 20 N. Y. St. 615, 4 N. Y. S. 660; «' See also, Aiken v. Nogle, 47 Blanck v. Littell, 9 Daly (N. Y.) Kans. 96, 27 Pac. 825; Sanborn v. 525 STATUTE OF FRAUDS. § I281 contemplate that performance shall begin at once, the contract is not within the statute, although actual performance is postponed until the happening of an uncertain or contingent event.^' A contract for a year's employment which provided that if after a month's trial the parties are mutually satisfied has been held not within the statute since under such a contract performance may begin on the date on which the contract was executed and last for one year.** And where the contract was in the first instance to have been performed within one year, it has been held that its extension for six months longer prior to the expiration of the year first agreed upon did not bring the contract within the statute when, after the extension, time ceased to be of the essence of the contract.*" It has been held, moreover, that the parties may stipulate that the contract shall not become binding on the parties until a time subsequent to that at which perform- ance begins."*' Thus a contract by which the promoters of a corporation hire a person to serve the corporation for a period of one year after its organization is not within the statute of frauds because so far as the corporation is concerned it could not come into existence until after its organization.**^ An oral contract to make a lease is not within the statute since it may be executed within a year.*^ § 1281. Contracts which cannot be performed within a year. — It is of course true that the statute applies when from the language used it must necessarily be understood that the con- tract was not to be performed within a year or it was the dis- tinct intention of the parties that it should not be performed in that time.*^ Thus this clause of the statute is applica- Fireman's Ins. Co., 16 Gray (Mass.) «' Blake v. Voight, 134 N. Y. 69, 448, n Am. Dec. 419. 31 N. E. 256, 30 Am. St. 622. " Baltimore Breweries Co. v. Cal- ^ McArthur v. Times Printing Co., lahan, 82 Md. 106, ZZ Atl. 460. In 48 Minn. 319, 51 N. W. 216, 31 Am. the above case the time at which the St. 653. performance was to commence was '* Shakespeare v. Alba, Id Ala. 351. contingent upon the employe obtain- ** Rogers v. Brightman, 10 Wis. 55. ing a release from his contract of See also. Swift v. Swift, 46 Cal. 266; employment with a former employer. Russell v. Slade, 12 Conn. 455 ; Saun- **A. B. Smith Co. v. Jones, 75 Miss, ders v. Kastenbine's Exrs., 6 B. Mon. 325, 22 So. 802. (Ky.) 17; Hinckley v. Southgate, 11 ^Ward V. Matthews, IZ Cal. 13, Vt. 428. 14 Pac. 604. § 1282 CONTRACTS. 526 ble to promises to marry after the expiration of one year.'*'' The same has been held true of a verbal promise to pay money after the expiration of a year,°^ Agreements to pay a specified sum of money in three annual instalments'*^ and to pay at intervals less than a year, the whole period of payment to ex- tend beyond the year,°^ and an agreement to pay money after the lapse of a year for land to be presently conveyed,"* have been held within the statute. A verbal agreement to sell crops for two suc- cessive years has been held within the statute,"^ and the same has been held true of a contract to clear land within three years, and seed down one acre the first, one acre the second, and one acre the third year.^" A verbal contract by a firm to pay rent, to become due under a prior lease to one of a subsequent firm, has been de- clared within the statute where the rent fell due more than a year after the agreement and when the firm had been dissolved.®^ An oral contract to lease real estate from July i, 1903, to January, 1906, has been declared within the provisions of the Oregon statute.^^ It has also been said that if a contract to maintain a factory was not reduced to writing an action could not be main- tained on the promise, since it was not capable of being performed within a year.®" § 1282. Cases not within the fifth clause — Contracts which may be performed within a year. — An oral agreement which may be fully performed within a year is not within the statute, even though it is doubtful, or expected by the parties that it will not be performed within a year.^ It follows that the statute does not apply to a contract which may be fully performed within '"Ullman v. Meyer, 10 Fed. 241; ** Marcy v. Marcy, 9 Allen (Mass.) Barge v. Haslam, 63 Ncbr. 296, 88 N. 8; Kellogg v. Clark, 23 Hun. (N. W. 516, affirmed on rehearing, 65 Y.) 393. Nebr. 656, 91 N. W. 528: Derby v. ""^ At wood's Admr. v. Fox, 30 Mo. Phelps, 2 N. H. 515; Nichols v. 499. Weaver, 7 Kans. 273. Contra, Lewis "" Herrin v. Butters, 20 Maine 119. V. Tapman, 90 Md. 294, 45 Alt. 459, " Durand v. Curtis, 57 N. Y. 7. 47 L. R. A. 385 ; Brick v. Ganner, 36 "' Dechenbach v. Rima, 45 Ore. 500, Hun (N. Y.) 52. 77 Pac. 391, 78 Pac. 666. '"Wilson V. Ray, 13 Ind. 1. ""Akins v. Hicks, 109 Mo. App. 95, "'Berry v. Grady, 1 Mete. 553; 83 S. W. 75. Parks V. Francis, 50 Vt. 626, 28 Am. ^ Heflin v. Milton, 69 Ala. 354 ; Rep. 517. Fraser v. Gates, 118 111. 99, 1 N. E. **Hill V. Hooper, 1 Gray (Mass.) 817; Blair Town Lot &c. Co. v. 131. Walker, 39 Iowa 406; Scribner v. 52/ STATUTE OF FRAUDS. 1283 the year, where no time for performance is designated," where the agreement is to be performed before a certain date more than a year in the future,^ or where a period of time greater than a year is given "within" which to perform.* If the contract is one which might have been performed within a year, and wliich the plaintiff, at his option, might have required the defendant to per- form within a year, it is not within the statute.'^ § 1283. Performance within a year possible — Rule illus- trated and considered further. — Thus, a promise to marry within a period of more than a year,*" as within three or four years,^ or at the end of a voyage expected to last about eighteen months,* has been held not within the statute." The same is true of a promise to marry generally.'*' Neither does the statute Flagg Mfg. Co., 175 Mass. 536, 56 N. E. 603; Smalley v. Mitchell, 110 Mich 650, 68 N. W. 978; DeLancI v. Hall, 134 Mich. 381, 96 N. W. 449; Martin V. Batchelder, 69 N. H. 360, 41 Atl. 83; Kent v. Kent, 62 N. Y. 560, 20 Am. Rep. 502 ; Warren Chemical Co. V. Holbrook, 118 N. Y. 586, 23 N. E. 908, 16 Am. St. 788; Ward v. Has- brouck, 169 N. Y. 407, 62 N. E. 434; Blakeney v. Goode, 30 Ohio St. 350; Thomas v. Armstrong, 86 Va. 323, 10 S. E. 6, 5 L. R. A. 529; Treat v. Hiles, 68 Wis. 344, 32 N. W. 517, 60 Am. Rep. 858. See also, Johnston V. Bowersock, 62 Kans. 148, 61 Pac. 740; Blake v. Voight, 134 N. Y. 69, 31 N. E. 256, 30 Am. St. 622. -Raynor v. Drew. 72 Cal. 307, 13 Pac. 866 ; Dougherty v. Rosenberg, 62 Cal. 32; Russell v. Slade, 12 Conn. 455 ; Haussman v. Burnham, 59 Conn. 117, 22 Atl. 1065, 21 Am. St. 74; Vocke v. Peters, 58 III. App. 338; Hinkle v. Fisher, 104 Ind. 84, 3 N. E. 624; Durham v. Hiatt. 127 Ind. 514, 26 N. E. 401 ; Sprague v. Benson, 101 Iowa 678. 70 N. W. 731 ; Larimer v. Kellev, 10 Kans. 298; Atchison &c. R. Co. V. English, 38 Kans. 110, 16 Pac. 82; Fain v. Turner, 96 Ky. 634, 16 Kv. L. 719, 29 S. W. 628; Duffy V. Patten, 74 Maine 396; Neal v. Parker, 98 Md. 254, 57 Atl. 213; Som- erbv V. Buntin, 118 Mass. 279, 19 .\m. Rep. 459; Drew v. Wiswall, 183 Mass. 554, 67 N. E. 666; Durgin v. Smith, 115 Mich. 239, 1Z N. W. 361; Thom- as V. South Haven &c. R. Co., 138 .Mich. 50. 100 N. W. 1009; Kiene v. Shaeffing. ZZ Nebr. 21, 49 N. W. HZ; Esty V. Aldrich, 46 N. H. 127; Jack- son V. Pliggins, 70 N. H. 637, 49 Atl. 574 ; VanWoert v. Albany &c. R. Co., 67 N. Y. 538; McGinnis v. Cook, 57 Vt. Z(>, 52 Am. Rep. 115; White v. Hanchett, 21 Wis. 415. ^ Brown v. Throop, 59 Conn. 596, 22 Atl. 436, 13 L. R. A. 646; First Presbyterian Church v. Swanson, 100 111. App. 39; Powder River Live Stock Co. v. Lamb, 38 Nebr. 339, 56 N. W. 1019; Plimpton v. Curtiss, 15 Wend. (N. Y.) 336; Walker v. John- son, 96 U. S. 424. 24 L. ed. 834. *Marlev v. Noblett, 42 Ind. 85; Kent v. Kent, 18 Pick. (Mass.) 569; Jones V. Pouch, 41 Ohio St. 146. "Walker v. Johnson, 96 U. S. 424, 24 L. ed. 834; McPherson v. Cox, 96 U. S. 404, 24 L. ed. 746. 'Paris V. Strong, 51 Ind. 339; Law- rence V. Cooke, 56 Maine 187, 96 Am. Dec. 443 ; Lewis v. Tapman, 90 Md. 294. 45 Atl. 459, 47 L. R. A. 385. 'Paris V. Strong, 51 Ind. 339. * Clark V. Pendleton. 20 Conn. 495. * See also. Brick v. Ganner, 36 Hun (N. Y.) 52. " Clark V. Pendleton. 20 Conn. 495 ; Blackburn v. Mann, 85 111. 222; Mc- Conahev v. Griff ev, %2 Iowa 564, 48 X. W. 983; McElree v. Wolfersber- ger, 59 Kans. 105, 52 Pac. 69. § 1284 CONTRACTS. 528 apply to a contract to refrain from a certain course of action for an indefinite period," as never to practice medicine in a certain town,*- or not to engage in the livery business in a certain town indefinitely.^^ Contracts of employment indefinite as to time are not within the statute.^* This applies to contracts by which an agent is employed to serve for an indefinite time/'* § 1284. Performance depending upon a contingency. — A contract which may or may not be performed within a year, de- pending upon the happening of a contingency, is not within the statute.^" For example, a promise to pay when money is received from a third person,^^ or an agreement to take stock in a company and pay for it when the company is incorporated,^* or to pay money when a certain statute is passed and becomes effective,^* or not to engage in a certain business,-" or a contract of employ- ment to continue so long as the employer should be engaged in a "Worthy v. jcnes, 11 Gray (Mass.) 168, 71 Am. Dec. 696; Fos- ter V. McO'Blenis, 18 Mo. 88; Per- kins V. Clay, 54 N. H. 518. "Blanding v. Sargent, 33 N. H. 239, 66 Am. Dec. 720; Blanchard v. Weeks, 34 Vt. 589. "Lvon V. King, 11 Mete. (Mass.) 411, 45 Am. Dec. 219. See also, Welz V. Rhodius, 87 Ind. 1, 44 Am. Rep. 747 (agreement not to engage in a rival hotel business) ; Richardson v. Pierce, 7 R. I. 330 (contract to re- linquish the trade and business of a butcher in and around the village of K). See also, Doyle v. Dixon, 97 Mass. 208, 93 Am. Dec. 80. "Mathews v. Wallace, 104 Mo. App. 96, 78 S. W. 296; Jagau v. Goetz, 11 Misc. (N. Y.) 380. 65 N. Y. St. 292, 32 N. Y. S. 144; Roches- ter Folding Box Co. v. Browne, 55 App. Div. (N. Y.) 444, 66 N. Y. S. 867, affd. 179 N. Y. 542, 71 N. E. 1139. "Kutz V. Fleisher, 67 Cal. 93, 7 Pac. 195; Niagara &;c. Ins. Co. v. Greene, 77 Ind. 590 (employed for a reasonable time) ; Hill v. Jamieson, 16 Ind; 125, 79 Am. Dec. 414; Scrib- ner v. Flagg Mfg. Co., 175 Mass. 536, 56 X. E. 603; Bartlett v. Mystic River Corp., 151 Mass. 433, 24 N. E. 780; Royal Remedy &c. Co. v. Greg- ory Grocer Co., 90 Mo. App. 53; Jackson v. Higgins, 70 N. H. 637, 49 Atl. 574; Burlingame v. Mandeville, 44 Hun (N. Y.) 623, 7 N. Y. S. 858, affd. 113 N. Y. 633, 20 N. E. 878; Sterling Organ Co. v. House, 25 W. Va. 64. _ ^° Indiana & I. C. R. Co. v. Scearce, 23 Ind. 223; Straughan v. Indianap- olis & St. Louis R. Co., 38 Ind. 185; Bullock v. Falmouth & C. H. Tpk. Co., 85 Ky. 184, 8 Ky. L. 835, 3 S. W. 129 ;_ Cole v. Singerly, 60 Md. 348; Baltimore Breweries Co. v. Callahan, 82 Md. 106, 33 Atl. 460; Blake v. Cole, 22 Pick. (Mass.) 97; Barton v. Gray, 57 Mich. 622, 24 N. W. 638; Weatherford &c. R. Co. v. Wood, 88 Tex. 191, 30 S. W. 859, 28 L. R. A. 526; Walker v. Johnson, 96 U. S. 424, 24 L. ed. 834; Sherman v. Cham- plain Transp. Co., 31 Vt. 162; Seddon V. Rosenbaum, 85 Va. 928, 9 S. E. 326. 3 L. R. A. 337n. "Artcher v. Zeh, 5 Hill (N. Y.) 200 ; Hedges v. Strong, 3 Ore. 18. "Bullock v. Fairmouth & C. H. Tpk. Co., 85 Ky. 184, 8 Ky. L. 835. 3 S. W. 129. "Maxwell v. DeValinger, 2 Pennew. (Del.) 504, 47 Atl. 381. =" Dickey v. Dickinson, 105 Ky. 748, 529 STATUTE OF FRAUDS. § 1284 particular business, ^^ docs not come within this clause of the stat- ute. The same has been held true of a contract of employment which was to continue so long as the employe faithfully and iion- estly worked for his employer,-- or which was to continue as long as satisfactory services were rendered,-^ or as long as the parties were mutually satisfied,-* or as long as the employe might wish to continue in the employment."^ Contracts to pay money upon the sale of certain real estate,^" such as the payment of commissions,"' or the division of profits,^^ upon the closing out of a transaction or business,-'-* or that one is to retain property until he is reim- bursed the cost of an improvement from the profits,^" or until the net profits amount to fifty thousand dollars,^^ have been held not within the statute because they may be performed within a year, dependent upon the happening of a contingent event. A con- tract to marry upon the restoration of health^^ has been held not within the statute. This has also been held true of a contract to labor for five years, or so long as A shall be agent for the com- pany.^* Farming contracts and the like which may be performed 20 Ky. L. 1559; 49 S. W. 761, 88 Am. St. W. "' Yellow Poplar Lumber Co. v. Rule, 106 Ky. 455, 20 Ky. L. 2006, 50 S. W. 685; Carter White Lead Co. V. Kinlin, 47 Nebr. 409, 66 N. W. 536. See also, Glenn v. Rudd, 3 Ont. L. Rep. 422 ; Roberts v. Rockbottom Co., 7 I^Ietc. (Mass.) 46. =" Louisville & N. R. Co. v. Offutt, 99 Kv. 427, 18 Ky. L. 303, 36 S. W. 181, 59 Am. St. 467. "Sax V. Detroit &c. R. Co., 125 Mich. 252, 84 N. W. 314, 84 Am. St. 572; Harrington v. Kansas City Ca- ble R. Co., 60 Mo. App. 223. "Beeston v. Collyer, 4 Bing. 309; Greene v. Harris, 9 R. L 401. See also, Brigham & Co. v. Carlisle, 78 Ala. 243, 56 Am. Rep. 28. ""Carter White Lead Co. v. Kin- lin, 47 Xebr. 409, 66 N. W. 536; East Line &c. R. Co. v. Scott. 72 Tex. 70, 10 S. W. 99, 13 Am. St. 758. "^ Bartlett v. Mystic River Co., 151 Mass. 433. 24 N. E. 780; I^IcPherson V. Cox. 96 U. S. 404, 24 L. ed. 746. " Bartlett v. Mystic River Corp., 151 ]\rass. 433, 24 N. E. 780; Scribner V. Flagg Mfg. Co., 175 Mass. 536, 56 34 — Contracts, Vol. 2 N. E. 603. Citing McGregor v. Mc- Gregor, 21 Q. B. Div. 424; Peters v. Westboro, 19 Pick. (Mass.) 364, 31 Am. Dec. 142; Lyon v. King, 11 Mete. (Mass.) 411, 45 Am. Dec. 219; Doyle V. Dixon, 97 Mass. 208, 93 Am. Dec. 80; Somerby v. Buntin, 118 Mass. 279, 19 Am. Rep. 459; Carnig V. Carr, 167 Mass. 544, 46 N. E. 117, 35 L. R. A. 512, 57 Am. St. 488; Jackson v. Higgins, 70 N. H. 637, 49 Atl. 574. ^Durham v. Hiatt, 127 Ind. 514. 26 N. E. 401; Jordan v. Miller, 75 Va. 442. See also, Treat v. Hiles. 68 Wis. 344, 32 N. W. 517, 60 Am.; Rep. 858 (contract to buy and oper- ate a quarry and to divide resulting profits). '' '"Osment v. McElrath, 68 Cal. 466, 9 Pac. 731, 58 Am. Rep. 17. '"Dailev V. Cain, 11 Ky. L. 936, 13 S. W. 424. *^ Hodges V. Richmond Mfg. Co., 9 R. I. 482. "McConahey v. Griffey, 82 Iowa 564, 48 N. W. 983. "Roberts v. Rockbottom Co., 7 Mete. (Mass.) 46. § 1285 CONTRACTS. 530 within a year, such as the filling of an ice hoiise,^* or to put in and harvest a crop of wheat'° or tobacco,^*' or to pay the reasonable value of simimer fallowing," have been held not within the stat- ute. § 1285. Contracts not vsrithin the fifth clause— Contracts to continue during life. — A contract which is to continue dur- ing the life of either of the parties thereto does not come within the provision of the act as the person whose life is involved may die within a year. Thus a contract by one to support another or others for life need not be in writing since death is a contingency which may happen within a year.^^ Contracts to support one during minority or for a term of years are usually upheld for the same reason.^^ Thus, an agreement to support a child twelve '* Brown v. Throop, 59 Conn. 596, 22 Atl. 436, 13 L. R. A. 646. ^Cuyler v. Crane, 25 Hun (N. Y.) ** Burden v. Lucas, 19 Ky. L. 1581, 44 S. W. 86. "Bank of Orland v. Finnell, 133 Cal. 475, 65 Pac. 976. ^ Murphy v. O'Sullivan, 18 Ir. Jur. (11 N. S.) Ill, 14 Week. Rep. 407 (promise to support and clothe a person during the remainder of his life and to give him pasture for two sheep) ; Harper v. Harper, 57 Ind. 547 (promise by grantee of proper- ty to support grantor during life) ; Bailey v. Cain, 11 Ky. L. 936, 13 S. W. 424 (contract to board a person for life) ; Howard v. Burgen, 4 Dana (Ky.) 137 (promise to clothe and board a person during the life of the promisor) ; Bull v. McCrea, 8 B. Mon. (Ky.) 422 (promise to sup- port a free woman of color) ; Whit- ley V. Whitley's Admr., 26 Ky. L. 134, 80 S. W. 825 (contract to sup- port a widow during her life) ; Stowers v. Hollis, 83 Ky. 544 (agree- ment by putative father to support the child until she was able to sup- port herself or until its death) ; Hutchinson v. Hutchinson, 46 Maine 154; Carr v. McCarthy 70 Mich. 258, 38 N. W. 241 (contract by a son to support his parents during the remainder of their natural lives) ; McCormick v. Drummet, 9 Nebr. 384, 2 N. W. 729 (agreement to sup- port o^yner of land and his wife for their lives) ; Eiseman v. Schneider, 60 N. J. L. 291, 2>1 Atl. 623 (promise to support one for life in consider- ation of personal services) ; McCabe V. Green, 18 App. Div. (N. Y.) 625, 46 N. Y. S. 12Z (agreement to pay board of another during life) ; Dres- ser V. Dresser, 35 Barb. (N. Y.) 573, revd., on another point, 26 How. Pr. (N. Y.) 600 (agreement to sup- port a person during life in considera- tion of a transfer of property) ; Rhodes v. Rhodes, 3 Sandf. Ch. (N. Y.) 279 (contract to support brother in consideration of his property) ; Heath v. Heath, 31 Wis. 223 (con- tract between brothers to support their mother during her life). See also, Chase v. Hinkley, 126 Wis. 75, 105 N. W. 230, 2 L. R. A. (N. S.) 738, 110 Am. St. 896. '"White v. Murtland, 71 111. 250, 22 Am. Rep. 100; Wiggins v. Keizer, 6 Ind. 252. Contra, Goodrich v. Johnson, 66 Ind. 258; Stowers v. Hollis, 83 Ky. 544; ElHcott v. Peter- son (Turner, sub nomine), 4 Md. 476; Peters v. Westborough, 19 Pick. (Mass.) 364, 31 Am. Dec. 142. See, however, Hill v. Hooper, 1 Gray (Mass.) 131. See also, Wynn v. Followill, 98 Mo. App. 463, 72 S. W. 140 (contract to support for two years and eight months) ; McKinney v. McCloskey, 76 N. Y. 594, 8 Daly (N. Y.) 368; Taylor v. Deseve, 81 Tex. 246. 16 S. W. 1008. See also, 531 STATUTE OF FRAUDS. § 1286 years old until she should become eighteen has been held not within the statute, as the death of the child within the year would put an end to the contract/" The same has been held true of a contract to educate and support a child. *^ Contracts of hiring to continue during the life of the employe are not considered as within the statute by the courts of this country." In England, however, it has been held that where the parties contemplated that the contract should continue to be binding, at least as against the employer during the life of the employe, the circumstance that the contract might be determined within the year by the death or retirement or misconduct, or at the will of the employe, would not prevent the operation of the statute.*^ § 1286. Contracts to be performed on death of one of the parties or third person. — A contract to be performed on the death of one of the parties or of a third person is not within the Souch V. Strawbridge. 2 C. B. 808 (contract to support child "so long" as the defendant shall think proper). "Peters v. Westborough, 19 Pick. (Mass.) 364, 31 Am. Dec. 142. To same effect, Wooldridge v. Stern, 42 Fed. 311, 9 L. R. A. 129 (promise to support a child fifteen years old until he became of age) ; McLees v. Hale, 10 Wend. (N. Y.) 426 (agree- ment to support until child should arrive at age of five or six years). See also, White v. Murtland, 71 111. 250, 22 Am. Rep. 100. "Wiggins V. Keizer, 6 Ind. 252; Jones V. Comer, 25 Ky. L. IIZ, 76 S. W. 392; Benge v. Hiatt's Admr.. 82 Ky. 666, 6 Ky. L. 714, 56 Am. Rep. 912 (promise made by putative father) ; Ellicott v. Turner (sub nomine, Peterson), 4 Md. 476. See, however, Farrington v. Donohoe, 1 Ir. R. C. L. 675 (agreement to sup- port a child then five years of age until she could do for herself held within the statute) ; Goodrich v. Johnson, 66 Ind. 258 (contract to support child until majoritv held within the statute) ; Van Schoyck V. Bacus. 9 Hun (N. Y.) 68; Shute V. Dorr, 5 Wend. (N. Y.) 204 (a promise to pay for the services of a youth sixteen years of age when he became of age held to be within the statute) ; Deaton v. Tennessee &c. Coal Co., 12 Heisk. (Tenn.) 650 (a contract for the payment of a speci- fic amount monthly until the young- est child should become of age held within the statute). See also. Baker V. Lauterback, 68 Md. 64, 11 Atl. 703. In the case of Souch v. Straw- bridge, 2 C. B. 808, 10 Jur. 357, a contract to maintain a child as long as the defendant pleased was held not to be within the statute. ^ Revere v. Boston Copper Co.. 15 Pick. (Mass.) 351 (contract of employment to continue during life of the plaintiff or during the exist- ence of the defendant corporation) ; Boggs V. Pacific &c. Laundry Co., 86 Mo. App. 616. See also, Pennsyl- vania Co. V. Dolan, 6 Ind. App. 109, 32 N. E. 802; Updike v. Tenbroeck, 2>2 N. J. L. 105. " Elev v. Positive Government Se- curity '&c. Co.. L. R. 1 Exch. Div. 20 (an agreement to employ a solicit- or for life subject to removal for misconduct). See also. Sweet v. Lee, 3 M. & G. 452 (an agreement to pay an author an annuity for life for his work and manuscript). § 128; CONTRACTS. 532 statute, as the contingency of death may occur within a year/* Thus a contract to pay for work and labor performed or services rendered payable at the death of the promisor has been held not within the statute.*^ Insurance contracts are held not to be within the statute, since the event on which payment is to be made is uncertain and may occur within a year.*" § 1287. Statute of frauds applies to contracts which cannot possibly or reasonably be performed within a year. — A con- sideration of the subject of a contract may, however, show just as clearly that it was not to be performed within a year as if there were an express agreement in the terms of the contract not to be performed within a year. So, also, a consideration of the circum- stances and subject-matter might show that performance of it "Frost V. Tarr, 53 Ind. 390; Rid- dle V. Backus, 38 Iowa 81 ; Sword v. Keith, 31 Mich. 247; Thompson v. Gordon, 3 Strob. L. (S. Car.) 196. " Fenton v. Emblers, 3 Burr. 1278 (promise by employer to provide a servant with an annuity for life on the death of the employer) ; Bell v. Hewitt, 24 Ind. 280 (contract to leave a certain sum to an employe by will in consideration of his con- tinuing to live on the farm) ; Myles V. Myles, 6 Bush (Ky.) 237 (agree- ment to provide for compensation by will); Thomas v. Feese, 21 Ky. L. 206, 51 S. W. 150 (promise by hus- band and wife to devise all their property to the plaintiff in consider- ation of services rendered them) ; Hill V. Chambers, 30 Mich. 422 (promise by son to perform work and labor on the farm and support his father and mother and receive their property at their death) ; Sword v. Keith, 31 Mich. 247 (services to be paid for out of the estate of the promisor at his death) ; Updike v. Tenbroeck, 32 N. J. L. 105 (father at his death to provide for son in payment for services rendered) ; Thorp V. Stewart, 44 Hun (N. Y.) 232 Tson to care for his father and mother in consideration of receiv- ing the farm owned by them) ; Kent v. Kent, 62 N. Y. 560, 20 Am. Rep. 502 (agreement to render services, to be paid for after the employer's death) ; Quackenbush v. Ehle, 5 Barb. (N. Y.) 469 (son to labor on the farm during his father's life, the father to provide for the son by will) ; Kenyon v. Youlen, 53 Hun (N. Y.) 591, 25 N. Y. St. 299, 6 N. Y. S. 784 (contract to convey or de- vise premises in consideration of support of the promisor during life) ; Patterson v. Patterson, 13 Johns. (N. Y.) 379 (holding that an action can not be maintained during the promisor's life on an agreement to provide compensation by will, but that if the will fails to make such a provision then the action could be maintained) ; Thomas v. Armstrong, 86 Va. 323, 10 S. E. 6, 5 L. R. A. 529 (agreement to leave support for housekeeper) ; Jilson v. Gilbert, 26 Wis. 637, 7 Am. Rep. 100 (prom- ise to cancel a note by will). See also, Snyder v. Castor, 4 Yeates (Pa.) 353; Bayliss v. Pricture's Es- tate, 24 Wis. 651. See also, cases cited in the preceding note. ^ Springfield &c. Ins. Co. v. Dejar- nett. 111 Ala. 248, 19 So. 995; How- ard Ins. Co. V. Owens, 94 Ky. 197, 21 S. W. 1037, 14 Ky. L. 881 ; Matting- ly V. Springfield Ins. Co., 120 Ky. 768, 83 S. W. 577; Walker v. Metro- politan Ins. Co., 56 Maine 371 ; San- ford V. Orient Insurance Co., 174 Mass. 416, 54 N. E. 883, 75 Am. St. 358; Wiebeler v. Milwaukee &c. Ins. Co., 30 Minn. 464, 16 N. W. 363; First Baptist Church v. Brooklyn Fire Ins. Co., 19 N. Y. 305, 28 N. Y. 533 STATUTE OF FRAUDS. 1287 within a year would require such extraordinary methods, such ex- traordinary appHances or resources, as could not, by fair construc- tion, be regarded as within the intention of the parties at the time when the contract was made." Thus, contracts for the cutting and sawing of timber, where, when considered in connection with the amount of timber to be cut and the facihties for doing the work, it is apparent that a period longer than one year will elapse before the work can be fully performed, have been held within the stat- ute.*^ Contracts by which a railroad company agrees to do or maintain certain things permanently, such as an agreement to stop cars permanently at a certain place,'" or to use plaintiff's land as a stock yard for unloading all eastbound stock,'" have been held within the statute of frauds.^' Contracts whereby abutting own- ers agree that each would build a certain share of the partition fence between their farms and maintain it always have been held within the statute of frauds.'" The same has been held true of 153; Franklin Fire Ins. Co. v. Colt, 20 Wall. (U. S.) 560, 22 L. ed. 423. "White V. Fitts, 102 Alaine 240, 66 Atl. 533, 15 L. R. A. (N. S.) 313n, 120 Am. St. 483. ''White V. Fitts, 102 Maine 240, 66 Atl. 533, 15 L. R. A. (N. S.) 313, 120 Am. St. 483 ; Jones v. McMichael, 12 Rich. L. (S. Car.) 176. See, however, Nester v. Diamond Match Co., 143 Fed. 72, 74 C. C. A. 266; Barton v. Gray, 48 Mich. 164, 12 N. W. 30, 57 Mich. 622. 24 N. W. 638; Travis v. Myers, 67 N. Y. 542; Van Woert v. Albanv &c. R. Co., 1 Thomp. & C. (N. Y.) 256, affd. 67 N. Y. 538; Long Mfg. Co. v. Gray, 13 Tex. Civ. App. 172, 35 S. W. 32; Rogers v. Brightman, 10 Wis. 55. "Pitkin V. Long Island R. Co., 2 Barb. Ch. (N. Y.) 221, 47 Am. Dec. 320. '"Day V. New York &c. R. Co., 31 Barb. (N. Y.) 548, 53 Rarb. (N. Y.) 255. affd. 51 N. Y. 583, second ap- peal 22 Hun (N. Y.) 412, affd. 89 N. Y. 616. " However, a contract by which a railroad company agrees to do or maintain certain things which depend upon a certain contingency which may happen within a year is not within the statute. Warner v. Texas &c. R. Co., 164 U. S. 418, 41 L. ed. 495, 17 Sup. Ct. 147, revg. 54 Fed. 992, 4 C. C. A. 673, 13 U. S. App. 236 (agreement to maintain a switch as long as one of the parties to the contract needed it) ; Arkansas Mid- land R. Co. V. Whitley, 54 Ark. 199, 15 S. W. 465, 11 L. R. A. 621 (con- tract to construct and maintain cat- tle guards across its road on each side of appellee's land so long as it should maintain and operate its road over appellee's land) ; Sweet v. Desha Lumber Co., 56 Ark. 629, 20 S. W. 514 (agreement by railroad company to furnish plaintiff with cars until such time as his business would justify the building of a switch) ; Straughn v. Indianapolis &c. R. Co., 38 Ind. 185 (contract to construct road and run trains be- tween two given points within two vears) ; Thomas v. South Haven &c. R. Co., 138 Mich. 50. 100 N. W. 1009 (agreement to put in a side track in consideration of the re- moval of a building near the rail- road). For a contract within the statute relating to a railroad, see Wilson V. Ray. 13 Ind. 1. "Osborne v. Kimball, 41 Kans. 187, 21 Pac. 163. § 1288 CONTRACTS. 534 a contract to erect and maintain a cannery, the court saying: "The cannery may have been erected within one year of the date of the contract, but that B (the promisor) should maintain it im- pHes a much greater length of time, (than one year) to say the least."" A bargain entered into in the spring of one year for the potatoes of that year and also for the crop to be raised the succeeding year has been held within the statute of frauds as to the potatoes of the last year at least, for the reason that it could not be performed within one year.^* A contract which in the course of nature cannot be performed within a year from the time it was made is within the statute.^^ § 1288. Agreement not to be performed within a year — Option to terminate. — While it is consistently held that if there is no mention of time, and the time is uncertain, the agree- ment is not within the statute ; yet if the time mentioned is more than one year, though subject to determination on proper notice by either party, it seems that it is within the statute.^^ Thus a contract by one person to render service to another for a period longer than one year has been held within the statute notwith- standing one of the parties may have an option to terminate the contract before the expiration of a year." § 1289. Performance on one side within the year. — There is.a conflict of authority as to whether or not the statute of frauds applies to contracts which are wholly executed on one side or which may be executed on one side within a year, where the execution of the contract on the part of the other party is de- ^'Akins V. Hicks, 109 Mo. App. " Pitkin v. Noyes, 48 N H 294, 95 83 S W 75 However, where 97 Am. Dec. 615; 2 Am. Rep. 21«. the contract provides that a desig- ^"Butler v. Shehan, 61 111 App. nated building or fence is to be 561; Groves v Cook, 88 Ind. 169, erected within a given time and it 45 Am. Rep. 462. is possible for the contract to be per- J» Hanan v. Ehrlich (1912) A C. formed within a year, it is not with- 39, Ann. Cas. 1912B. 730 (might be in the statute First Presby. Church terminated by either party on six V Swanson 100 111. App. 39; Mar- raonth.s' notice); Wagiere v. Dun- ky ^?! Noblett 42 Ind. 85; Duff v. ncll, 29 R. T. 580, n Atl 309^ 17 Am Snider, 54 Miss. 245; Connolly v Giddings, 24 Nebr. 131, Z7 N. W.939 Talmadge v. Rensselaer & S. R. Co. 13 Barb. (N. Y.) 493; Plimpton v Curtiss, 15 Wend. (N. Y.) 336 Jones V. Pouch, 41 Ohio St. 146. & Eng. Ann. Cas. 205. See also Keller v. Mayer Fertilizer Co., 153 Mo. App. 120, 132 S. W. 314. " Biest V. Versteeg Shoe Co., 97 Mo. App. 137, 70 S. W. 1081. 535 STATUTE OF FRAUDS. § 1289 ferred for a longer period than one year. In England it seems to have been definitely determined after a considerable vacilla- tion that the statute does not extend to contracts which are wholly executed on one side, or which may be executed on one side within a year, but applies only to contracts which, as a whole, are not to be performed within that time. In other words, perform- ance by one party within the year takes the case out of the statute, notwithstanding the execution of the contract on the part of the other party is deferred for a longer period than one year.^* In this country the preponderance of authority is in favor of the va- lidity of a contract which has been fully performed upon one side at or near the time of making, although the execution thereof by the other party to the contract is deferred for a longer period than one year.^" The courts of Massachusetts, New York, V^ermont and perhaps some other states hold that contracts in which all that one of the parties is to do in performance of the agreement is to be or has been done within a year, the performance by the other party being postponed for a period longer than one year, are with- in the statute."" "Donellan v. Read, 3 Barn. & Ad. 899 (leading case) ; Cherry v. Hem- ing, 4 Exch. 631 ; Smith v. Neale (1857), 2 C. B. (N. S.) 67; Bevan V. Carr (1885), 1 Cab. & El. 499; Miles V. New Zealand Alford Estate (1886), L. R. 32 Ch. Div, 266, 54 L. J. Eq. 1035. ^Rake v. Pope, 7 Ala. 161; John- son V. Watson, 1 Ga. 348; Curtis v. Sage, 35 111. 22; Eraser v. Gates, 118 111. 99, 1 N. E. 817; Lowman v. Sheets (1890), 124 Ind. 416, 24 N. E. 351, 7 L. R. A. 784;Harper v. Har- per, 57 Ind. 547; Bell v. Hewitt's Exrs., 24 Ind. 280; Riddle v. Backus, 38 Iowa 81 ; Smallev v. Greene, 52 Iowa 241, 3 N. W. 78, 35 Am. Rep. 267n; Atchison T. & S. F. R. Co. v. English. 38 Kans. 110, 16 Pac. 82; Bull V. McCrea, 8 B. Mon. (Ky.) 422; Dant v. Head. 90 Kv. 255, 12 Ky. L. 153, 13 S. W. 1073, 29 Am. St. 369; Holbrook v. Armstrong, 10 Maine_31; Hutchison v. Hutchison, 46 Maine 154; Horner v. Frazier, 65 Md. 1, 4 Atl. 133; Ellicott v. Tur- ner (sub nomine Peterson), 4 Md. 476; Hoyle v. Bush, 14 Mo. App. 408; Self V. Cordell, 45 Mo. 345; McCor- mick V. Drummet, 9 Nebr. 384, 2 N. W. 729; Berry v. Doremus, 30 N. J. L. 399; Durfee v. O'Brien, 16 R. I. 213, 14 Atl. 857; Compton v. Martin, 5 Rich. L. (S. Car.) 14; Seddon v. Rosenbaum, 85 Va. 928; 9 S. E. 326, 3 L. R. A. 337n ; Grace V. Lvnch, 80 Wis. 166, 49 N. W. 751 ; McClellan v. Sanford, 26 Wis. 595; Coyle V. Davis, 20 Wis. 564. ""Frary v. Sterling, 99 Mass. 461; Marcy v. Marcy, 9 Allen (Mass.) 8; Cabot V. Haskins, 3 Pick. (Mass.) 83; Whipple v. Parker, 29 Mich. 369; Emery v. Smith. 46 N. H. 151 ; Kel- logg V. Clark, 23 Hun (N. Y.) 393; Broadwell v. Getman, 2 Denio (N. Y.) 87; Bartlett v. Wheeler, 44 Barb. (N. Y.) 162; Pierce v. Paine, 28 Vt. 34; Parks v. Francis, 50 Vt. 626. 28 Am. Rep. 517. Compare the forego- ing case with Blanding v. Sargent, 33 N. H. 239, 66 Am. Dec. 720; Perkins v. Clav, 54 N. H. 518; Dodge V. Crandall. 30 N. Y. 294; Weir v. Hill. 2 Lans. (N. Y.) 278; Sheehv v. Adarens, 41 Vt 541, 98 Am. Dec 623. § 1290 CONTRACTS. 536 § 1290. Performance by one party within a year — Suf- ficiency of question of construction. — The question turns upon the construction of the words "not to be performed within a year." Those cases which uphold the vahdity of contracts per- formed on one side within a year construe these words as mean- ing not to be performed on either side. The decisions are also based upon the ground that the statute of frauds was designed to prevent frauds and perjuries, and that the court will not enforce the statute when to do so would perpetrate a fraud and injustice and that one who has reaped the benefits of the other party's performance cannot defeat an action on the contract by alleging that he himself was not to perform his part of the agreement within a year. The courts which declare such contracts invalid do so on the ground that performance by one party is not per- formance of the agreement, and that, in any view, the part of the contract sued upon comes within the statute, for which the part performance is only the consideration, and that a valid legislative enactment is binding upon the court and all parties until repealed or modified by the legislature, and that to hold that performance on one side within the year takes the case out of the statute amounts to judicial legislation.*'^ § 1291. Seventeenth section of the statute. — The seven- teenth section of the statute of frauds provided "noe Contract for the Sale of any Goods, Wares or Merchandises for the price of ten pounds Sterling or upwards shall be allowed to be good except the *" See cases cited in preceding ance. But when the contract, on section. In the case of Duff the part of this party, was not to be V. Snider, 54 Miss. 245, the performed within one year from the question was said to be merely one time it was made, the recovery is of pleading, if confined to promises not upon the contract, but upon the to pay money when the considera- quantum meruit or valebat, or upon tion has been received by the de- money counts. It is a recovery back fendant. To the same effect, Dur- of the consideration of a contract fee V. O'Brien, 16 R. I. 213, 14 Atl. upon which no action will lie, and 857. In Pierce v. Paine, 28 Vt. 34, which has been repudiated by the it is said: "If the contract has been other party. * * * ■Q^^^ ^he pay- performed on one side, in such a ment or performance of the consid- manner that the performance goes eration of an agreement or contract, to the benefit of the other party, within any section of the statute of whether this was done within the frauds, never takes it out of the year or not, it undoubtedly lays the statute; if it were so, no contract foundation of a recovery against upon an executed consideration the party benefited by such perform- would ever come within the statute." 537 STATUTE OF FRAUDS. § I2g2 Buyer shall accept part of the Goods soe sold and actually receive the same or give something in earnest to bind the Bargaine or in part of payment, or that some Note or Memorandum in writeing of the said bargaine be made and signed by the party es to be charged by such Contract or their Agents thereunto lawfully au- thorized." This enactment was held not to extend to certain ex- ecutory contracts for the sale of goods and by the statute of 9 George IV, chapter 14, commonly known as Lord Tenter- den's Act, it was provided that the enactment should extend to all contracts for the sale of goods of the value of ten pounds sterling and upward, notwithstanding the goods may be intended to be delivered at some future time, or may not at the time of such contract be actually made, procured, or provided, or fit or ready for delivery, or some act may be requisite for the making of or completing thereof, or rendering the same fit for delivery. This statute has in substance been enacted by the various legislatures of the several states, although the different enactments differ greatly as to the amount or value of the article ordered or pur- chased which may be required to be in writing, some placing the amount at thirty dollars others as high as three hundred doUars.®- § 1292. Scope of the statute. — This section of the statute relates to sales*'^ of goods, wares and merchandise, and in some jurisdictions includes personal property in its broadest significa- tion. Thus promissory notes''* and sales of issued corporate stock^*^ are generally held within the statute. Thus it has been held that a verbal contract to transfer to a lawyer certain shares of ■"The statutes of Florida and Iowa 299; Whittemore v. Gibbs, 24 N. H. fix no minimum limit and as a re- 484. suit all contracts for the sale of "Mayer v. Child, 47 Cal. 142; goods are within the statutes. North v. Forest, 15 Conn. 400 (sale "Stewart v. Cook, 118 Ga. 541, 45 of shares of stock in a jomt stock S. E. 398 (holding a contract of sale company) ; Hightower v. Ansley, partly in writing and partly oral, 126 Ga. 8, 54 S. E. 939, 7 Am. & Eng. within the statute). Ann. Cas. 927 (refusmg to follow ** Hudson V. Weir, 29 Ala. 294; Rogers v. Burr, 105 Ga. 432, 31 S. Gooch V. Holmes, 41 J^Iaine 523 E. 438. 70 Am. St. 50) ; Pray v. (bank bills) ; Baldwin v. Williams, :\Iitchell. 60 Maine 430 (sale of 3 Mete. (Mass.) 365; Riggs v. IMa- shares of stock in a joint stock com- pruder, 2 Cranch C C. 143, Fed. panv) ; Colvin v. Williams. 3 Har. Case No. 11828 (notes of a private & J. (Md.) 38. 5 Am. Dec. 417 (sale bank). See, however, Vawter v. of bank stock); Tisdale v. Hams, Griffin, 40 Ind. 593; Howe v. Jones, 37 Mass. 9 (sale of shares m manu- 57 Iowa 130, 8 N. W. 451, 10 N. W. facturing corporation) ; Boardman § 1292 CONTRACTS. 538 corporate stock in consideration of services to be thereafter ren- dered is within the clause requiring contracts for the sale of goods and chattels to be in writing in the absence of any other circum- stance to take the case out of the statute."" Under the more re- cent English authorities, shares of corporate stock are not consid- ered as "goods, wares and merchandise" within the statute of frauds." Cases prior to these, however, announced a contrary doctrine."^ It has also been held, that an undertaking by com- plainant to transfer to defendant his right of subscription to one hundred shares of new stock in a corporation as soon as books should be opened for subscriptions for the same was not within the statute."® The words of the statute have not been ex- tended beyond securities, which are subjects of common sale and barter, and which have a visible and palpable form; therefore, an agreement for the sale of an interest in an invention before letters patent are obtained was held not to be within the statute.^** V. Cutter, 128 Mass. 388 (sale of shares in manufacturing corpora- tion) ; Sprague v. Hosie, 155 Mich. 30, 118 N. W. 497, 19 L. R. A. (N. S.) 874 and note, 130 Am. St. 558 (sale of bank stock) ; Fine v. Horns- by, 2 Mo. App. 61 (sale of shares of stock in a manufacturing corpora- tion). Compare with Vawter v. Griflfin, 40 Ind. 593. See also, Ray- mond V. Cohon, 104 Fed. 219, 43 C C. A. 501 ; French v. Boston Nat. Bank, 179 Mass. 404, 60 N. E. 793; Green v. Brookins, 23 Mich. 48, 9 Am. Rep. 74; French v. White, 78 Vt. 89, 62 Atl. 35, 2 L. R. A. (N. S.) 804. " Franklin v. Matoa Gold Min. Co., 158 Fed. 941, 86 C. C. A. 145, 16 L. R. A. (N. S.) 381n. Cohtra, Spin- ney V. Hill, 81 Minn. 316, 84 N. W. 116. *' Hibblewrite v. M'Morine, 6 M. & W. 200 ; Knight v. Barber, 2 Carr. & K. 333; Bowlby v. Bell, 3 C. B. 284 (railway shares) ; Watson v. Spratlev, 10 Exch. 222; Humble v. Mitchell, 11 Ad. & El. 205 (banking company) ; Duncuft v. Albrecht, 12 Sim. 189 (railway shares) ; Tempest V. Kilner, 3 C. B. 249 (railway shares) ; Heseltine v. Siggers, 1 Exch. 856. •^ Crull V. Dodson, Sel. Ch. Cas. 41 ; Mussel! V. Cooke, Prec. in Ch. 533 ; Colt V. Neltervill, 2 P. Wm. S. 308; Pickering v. Appleby, 1 Comyns. Rep. 354. ^Gadsden v. Lance, McMuU Eq. (S. C.) 87, 37 Am. Dec. 548. In Meehan v. Sharp, 151 Mass. 564, the plaintiff had a certificate showing that he was the beneficial owner of fifty shares of stock in a corporation. The shares had not been issued, but were held in pool, and were to be issued whenever the board of direct- ors should vote to authorize a de- livery of them. The court said: "It is at least doubtful whether the contract, which was for the sale of stock that had not been regularly issued, can properly be brought with- in the statute." The statute of New York includes "things in action ;" that of Florida and some other states is extended to sales of "personal property." See, however. Fine v. Hornsby, 2 Mo. App. 61 (sale of shares of stock in company not yet organized held not within the statute). '"Somerby v. Buntin, 118 Mass. 279, 19 Am. Rep. 459. Before let- ters patent are obtained, the inven- tion exists only in right, and neither that right nor any evidence of it has any outward form which is ca- C39 STATUTE OF FRAUDS. § 1 293 § 1293. Transactions construed as contracts for sale. — The term "sale" as used in this clause of the statute includes all contracts for the transfer of title to goods, wares and merchan- dise. The statute applies to contracts of barter and exchange of goods, wares and merchandise in return for goods of a similar character, as well as contracts strictly for the sale of goods.'^ An agreement to deliver goods exceeding fifty dollars in value in payment of an antecedent debt is also within the statute." But where the contract is not for the sale and delivery of the property or title to goods the statute does not apply. Thus an agreement between a creditor and a debtor where his creditor had attached property by which the debtor forbore to defend the suit in consid- eration of the creditor's promise to purchase the goods at the sher- iff's sale and give the debtor credit for the cash price of the goods irrespective of the amount bid at the sheriff's sale, has been held not within the statute.''^ Contracts of partnerships* and agency'^ have been held not within the statute, although the title to personal property might be indirectly involved. A contract for the manu- facture of bricks by which the owner of the soil was to remain the owner of the bricks until the clay and wood consumed was paid for has been held not within the statute.^" An agreement to remunerate an agent for the sale of personal property in accord- ance with the amount he obtained therefor has been held not an agreement for the sale of chattels and therefore need not be in writing." A contract for advertising matter, the total cost of pable of being transferred or de- Ind. App. 34, 43 N. E. 575; Gorman livered in specie, or which upon any v. Brossard, 120 Mich. 611, 79 N. W. construction, however liberal, can 903; Brabin v. Hyde, 32 N. Y. 519; be considered as goods, wares, and ]\lilos v. Covacevich, 40 Ore. 239, 66 merchandise. In a contract for the Pac. 914; Norwegian Plow Co. v. sale of gold this article is regarded Hanthorn, 71 Wis. 529, Zl N. W. as a commodity, not as money. Pea- 825. body V. Speyers, 56 N. Y. 230. "Jacobs v. Union Mercantile Co., "Raymond v. Colton, 104 Fed. 17 Mont. 61, 42 Pac. 109. See also, 219. 43 C. C. A. 501 ; Kuhns v. Gates, Mygatt v. Tarbell, 78 Wis. 351, 47 92 Ind. 66; Dowling v. McKenney, N. W. 618. 124 Mass. 478; Gorman v. Brossard, '* Somerbv v. Buntin. 118 Mass. 120 Mich. 611, 79 N. W. 903; Harris 279, 19 Am. Rep. 459. Photographic Supply Co. v. Fisher, "Hatch v. McBrien, 83 Mich. 159, 81 Mich. 136. 45 N.' W. 661; Ash v. 47 N. W. 214. Aldrich, 67 N. H. 581, 39 Atl. 442. ™ Brown v. Morris. 83 N. Car. 251. "Norton v. Davison (1899), 1 Q. "Hamilton v. Frothingham, 59 B. D. 401 ; Galbraith v. Holmes, 15 Mich. 253, 26 N. W. 486. § 1294 CONTRACTS. 54O which was more than fifty dollars, has been declared not one for the sale of goods, chattels or things in action within the meaning of the statute of frauds.'^ Executory contracts for the sale of goods have, in this country, always been held within the statute, and are not taken out of it by the mere circumstance that the goods are not ready for delivery, or are intended to be delivered at some future time.^" § 1294. Work and labor contracts distinguished from con- tracts of sale. — Under this section the courts have met with considerable difficulty in determining whether a given contract is for the sale of goods, wares or merchandise, or where the article is not in existence at the time, whether it is for work and labor. The difficulty arises from "the infinitely various shades of differ- ent contracts."*" It is generally true that where the work or labor is the essential object contracted for, although such work or labor is to be expended on materials of the party who is to furnish the article at a given price, such contract is not for a sale, and consequently is not within the statute.*^ If what is contem- plated by the agreement is the peculiar skill, labor or care of the maker, then the contract is for work and labor and need not be proved by a note in writing.*^ Thus a contract to paint a portrait of a child for its parents was held not to be a sale of chattels, the skill and labor of the artist being the essential consideration.®^ ''Goodland v. LeClair, 78 Wis. 79 Am. Dec. 229; Gardner v. Toy, 176, 47 N. W. 268. 9 Mete. (Mass.) 177. "Atwater v. Hough, 29 Conn. 508, "'Finney v. Apgar, 31 N. J. L. 266. 79 Am. Dec. 229 (an agreement for "^ Hight v. Ripley, 19 Maine 137 the purchase and sale of sewing ma- Abbott v. Gilchrist, 38 Maine 260 chines); Cason v. Cheely, 6 Ga. 554; Crockett v. Scribner, 64 Maine 447 Edwards v. Grand Trunk R. Co., Pitkin v. Noyes, 48 N. H. 294, 97 48 Maine 379; Weeks v. Crie, 94 Am. Dec. 615, 2 Am. Rep. 218; Pres- Maine 458, 48 Atl. 107, 80 Am. St. cott v. Locke, 51 N. H. 94, 12 Am. 410; Burrell v. Highleyman, 33 Mo. Rep. 55; Higgins v. Murray, 4 Hun App. 183; Carman v. Smick, 15 N. (N. Y.) 565, afifd. 73 N. Y. 252; Bird J. L. 252; Prescott v. Locke, 51 N. v. Muhlinbrink, 1 Rich. (S. Car.) H. 94. 12 Am. Rep. 55; Gilman v. 199, 44 Am. Dec. 247; Forsyth v. Hill, 36 N. H. 311; Pitkin v. Noyes, Mann, 68 Vt. 116, 34 Atl. 481, 32 L. 48 N. H. 294, 97 Am. Dec. 615, 2 R. A. 788. Am. Rep. 218; Bennett v. Hull, 10 ''Turner v. Mason, 65 Mich. 662, Johns. (N. Y.) 364; Ide v. Stanton, 32 N. W. 846. See also, Day v. 15 Vt. 685, 40 Am. Dec. 698. Yates, 1 H. & N. 73. But see, *'Atwater v. Hough, 29 Conn. 508, Isaacs v. Hardy, 1 Cab. & El. 287. 541 STATUTE OF FRAUDS. § 1 295 The same has been held true of a contract to manufacture dishes and to place the monogram of the vendee on them.** § 1295. Massachusetts rule. — The mere fact that the goods are not, at the making of the contract, in existence or in the condi- tion in which they are to be when delivered, does not necessarily take the case out of the statute." Thus, an agreement for the manufacture of an article to be made in the course of the general business in which the vendor is engaged, is usually held within the statute.**'^ If, on the other hand, the goods are to be manufac- tured especially for the purchaser, and upon his special order, and not for the general market, the case is not within the statute. This has been termed the Massachusetts rule.®^ Thus it has been held in this jurisdiction that where the agreement was to build a carriage for a party who was to take it when finished and pay for it, this was not a contract of sale within the mean- ing of the statute. The rule was laid down that when the con- tract is a contract of sale, either of an article then existing, or of articles which the vendor usually has for sale in the course of his business, the statute applies whether the contract is to be executed at a future time or to be executed immediately, but where it is "In re Gies, 160 Mich. 502, 125 S. App. 465 (contract to manufac- N. W. 420, 30 L. R. A. (N. S.) ture and furnish stationery of a 318n. special and exclusive nature for the "Pitkin V. Noves, 48 N. H. 294, peculiar use of the vendee); Brown 97 Am. Dec. 615, 2 Am. Rep. 218. &c. Co. v. Wunder, 64 Minn. 450, '"Edwards v. Grand Trunk R. Co., 67 N. W. 357, 32 L. R. A. 593 (ar- 48 Maine 379; Lamb v. Crafts, 12 tides not suitable for general trade Mete. (.Mass.) 353; Mechanical Boil- but to be of a special and peculiar er-Cleaner Co. v. Kellner, 62 N. J. design) ; Pitkin v. Noyes, 48 X. H. L. 544, 43 Atl. 599; Pitkin v. Noyes, 294, 97 Am. Dec. 615, 2 Am. Rep. 48 N. H. 294. 97 Am. Dec. 615, 2 218; Hientz v. Burkhard, 29 Ore. Am. Rep. 218; Smith v. New York 55, 43 Pac. 866, 31 L. R. A. 508, 54 Central R. Co., 4 Key (N. Y.) 180. Am. St. Ill (iron work to be manu- " Spencer v. Cone. 42 Mass. 283 ; factured for a particular building Mixer v. Howarth, 21 Pick. (Mass.) according to special designs and 205. 32 .^m. Dec. 256; Goddard v. measurements); Courtney v. Bridle Binney, 115 Mass. 450, 15 Am. Rep. Veil Box Factory, 55 Ore. 210. 105 112. See also. Moore v. Camden Pac. S96 (special order of boxes to AFarble &c. Works, 80 Ark. 274, 96 be used for special purpose) • Puget S. W. 1063, 117 Am. St. 87, 10 Am. Sound Machinerv Depot v. Ricbv, & Eng. Ann. Cas. 308 (tomb stone 13 Wash. 264, 43 Pac. 39 (contract to be carved according to the order for pumping plant of special value of the party making the selection) ; to the person giving the order) ; Beck & Pauli Lithograph Co. v. Gross v. TTeckert. 120 Wis. 314, 97 Colorado Milling & Elevator Co., N. W. 952 (articles not salable to 52 Fed. 700. 3 C. C. A. 248, 10 U. any other person at any price). § 1295 CONTRACTS. 542 an agreement with a workman to put materials together and construct an article for the employer, whether at an agreed price or not, although in common parlance it may be called a purchase and sale of the article, to be completed in the future, it is not a sale until an actual or constructive delivery and acceptance.®^ In other words, when the contract is to furnish materials and manu- facture the article according to specifications furnished or model selected, and when without the special contract the thing would never have been manufactured in the particular manner, shape or condition in which it was made, the contract is essentially for spe- cial skilled labor or workmanship and is not within the statute.®' Thus, a verbal agreement to manufacture and furnish iron work for a brick building according to special designs and measure- ments, suitable only for use in that particular building, has been held not within the statute of frauds as a sale of personal prop- erty.®" In those cases following this rule the test question is whether the vendor stipulates that he will himself manufacture the article, and the buyer has the right to require him to do it, and cannot be compelled to take one as good or even better if made by another, if so, the contract is not within the statute; while, on the other hand, if the vendor only agrees to sell and de- liver the article, and is under no obligation to make it himself, but may purchase it of another, the contract is one of sale and within the statute.®^ *mixer V. Howarth, 21 Pick. v. Brooks, 9 Wyo. 424, 64 Pac. 342 (Mass.) 205, 32 Am. Dec. 256; Gard- (sale of shoes of the kind usually ner v. Joy, 9 Mete. (Mass.) 177 sold by house). (where the agreement was for the *° Schloss v. Josephs, 98 Minn. 442, delivery of candles which were not 108 N. W. 474 (order for a specified then in existence) ; Goddard v. Bin- number of suits) ; Bird v. Muhlin- ney, 115 Mass. 450, 15 Am. Rep. brink, 1 Rich. L. (S. Car.) 199, 44 112, affg. Mixer v. Howarth, 21 Am. Dec. 247; Wallace v. Dowling, Pick. (Mass.) 205, 32 Am. Dec. 205; 86 S. Car. 307, 68 S. E. 571, 138 Am. Smalley v. Hamblin, 170 Mass. 380, St. 1058; Meincke v. Falk, 55 Wis. 49 N. E. 626 (sale of bottles) ; 427, 13 N. W. 545, 42 Am. Rep. 122. Dowling V. McKenney, 124 Mass. *"Heintz v. Burkhardt, 29 Ore. 55, 478. See also, Yoe v. Newcomb, ZZ 43 Pac. 866, 31 L. R. A. 508, 54 Am. Ind. App. 615, 71 N. E. 256 (sale of St. 111. To same effect, Flynn v. shoes habitually made by vendor) ; Dougherty, 91 Cal. 669, 27 Pac. 1080, Mechanical Boiler Cleaner Co. v. 14 L. R. A. 230. Kellner, 62 N. J. L. 544, 43 Atl. 599 "' Edwards v. Grand Trunk R. Co., (sale of mechanical boiler-cleaning 48 Maine 379. appliance) ; Williams &c. Shoe Co. 543 STATUTE OF FRAUDS. 1296 § 1296. The rule in New York.— It is held in New York, by a long course of decisions, that an agreement for the sale of any commodity not in existence at the time, but which the vendor is to manufacture or put in condition to be delivered, such as flour from wheat not yet ground, or nails to be made from iron belonging to the manufacturer, is not a contract of sale. Stress is laid on the word "sale".®^ •* Cooke V. Millard, 65 N. Y. 352, 22 Am. Rep. 619, in which the au- thorities upon the subject are col- lated and the different views in re- gard thereto of the English, Mass- achusetts and New York courts pointed out, distinguishing the fol- lowing cases : Eichelberger v. Mc- Cauley, 5 Har. & J. (Md.) 213, 9 Am. Dec. 514; Parsons v. Loucks, 48 N. Y. 17, 8 Am. Rep. 517 (a con- tract to manufacture and deliver 20,000 pounds of paper) ; Sewall v. Fitch, 8 Cow. (N. Y.) 215 (to make 300 casks of nails) ; Crofoot v. Ben- nett, 2 N. Y. 258; Kimberly v. Patchin, 19 N. Y. 330, 75 Am. Dec. 334; questioning Mead v. Case, 33 Barb. (N. Y.) 202; Crookshank v. Burrell, 18 Johns. (N. Y.) 58, 9 Am. Dec. 187; Sewall v. Fitch, 8 Cow. (N. Y.) 215; Robertson v. Vaughn, 5 Sandf. (N. Y.) 1; Downs v. Ross, 23 Wend. (N. Y.) 270; Warren Chemical &c. Co. v. Holbrook, 118 N. Y. 586, 23 N. E. 908, 16 Am. St. 788 (contract for the future manu- facture and delivery of a patented roofing material) ; Gerli v. Louis Metzger & Co., 51 Misc. (N. Y.) 46, 99 N. Y. S. 858 (contract to manu- facture silk into an article known as "tussah") ; Ruttv v. Consolidated Fruit Jar Co., 58 Hun (N. Y.) 611, 36 N. Y. St. 121, 13 N. Y. S. 331 (glove clasp to be manufactured by the vendor). In Parsons v. Loucks, 48 N. Y. 17, 8 Am. Rep. 517. it is held that the statute applies to an oral contract for the sale of goods in existence at the time of making the contract, but not to an agree- ment to manufacture and deliver goods. The statute alludes to a sale of goods, assuming that the ar- ticles are already in existence. See also, Roubicek v. Haddad, 67 N. J. L. 522, 51 Atl. 938 (order for a num- ber of articles to be thereafter manu- factured. This New York contract decided in accord with law) ; Sewall v. Fitch, 8 Cow. (N. Y.) 215;, Robertson v. Vaughn, 5 Sandf. (N. Y.) 1; Bronson v. Wiman, 10 Barb. (N. Y.) 406; Donovan v. Willson, 26 Barb. (N. Y.) 138; Parker v. Schenck, 28 Barb. (N. Y.) 38; Mead v. Case, 33 Barb. (N. Y.) 202; Smith V. New York &c. R. Co., 4 Key. (N. Y.) 180. See, however, Juilliard v. Trokie, 139 App. Div. (N. Y.) 530, 124 N. Y. S. 121, in which it was held that a contract by which the vendee agreed to buy, and the vendor, who was not the manufacturer agreed to sell a specified number of yards of a designated article. The contract was held to be a contract of sale within the meaning of the statute notwithstanding it contained a pro- vision to the effect that if the pro- duction of the mills from which the goods were to be procured was cur- tailed by strikes or any unavoidable accident, the amount delivered should be proportioned to the production of the factory. Shrimpton & Sons v. Dworsky, 2 Misc. (N. Y.) 123, 21 N. Y. S. 461 (sale of needles al- ready in existence. The only thing remaining to be done being to print the purchaser's business style thereon. Held a sale of goods) ; Pelletreau v. United States Electric &c. Co., 13 xMisc. (N. Y.) 237, 34 N. Y. S. 125 (letter heads for the exclusive use of the company giving the order) ; Hinds v. Kellogg. 37 N. Y. St. Rep. 356, 13 N. Y. S. 922, affd. 133 N. Y. 536, 30 N. E. 1148 (circulars de- signed to be exclusively used in the business of the person giving the order). J97 CONTRACTS. 544 § 1297. The English rule. — The rule which now prevails in England was laid down in 1861 by a case in which it was held that a contract to make a set of artificial teeth was a contract for the sale of goods, wares and merchandise. As then stated, in order to ascertain whether the action should be brought for goods sold and delivered, or for work and labor done and materials pro- vided, the particular contract entered into between the parties must be looked at. If the subject-matter is such that it will result in the sale of a chattel to be afterward delivered, then the action must be for goods sold and delivered. Reference is had to the time of delivery as contemplated by the parties. If at that time it is a chattel, it is enough according to this rule. If the work and labor be bestowed in such a manner that the result is not anything that can properly be said to be the subject of a sale, the action is for work and labor.^' The net result of the English rule is to treat all contracts for the sale of any commodity not in ex- istence at the time, but which the vendor is to manufacture, or put in a condition to be delivered, as contracts for the sale of chattels.** " Lee V. Griffin, 1 B. & S. 272. "Atkinson v. Bell, 8 B. & C. 277. See Marberley v. Sheppard, 10 Bing. 99; Howe v. Palmer, 3 B. & Aid. 321 ; Baldey v. Parker, 2 B. & C. H . The English rule is followed in Burrell V. Highleyman, 17) Mo. App. 183; Schmidt v. Rozier, 121 Mo. App. 306, 98 S. W. 791 (order for coat and vest of particular and unusual style) ; Tower Grove Planing Co. v. McCormack, 127 Mo. App. 349, 106 S. W. 113 (contract for doors and windows to be manufactured ac- cording to certain plans and specifi- cations). See also, Pratt v. Miller, 109 Mo. 78, 18 S. W. 965, 32 Am. St. 656. In Wolfenden v. Wilson, 2>l U. C. Q. B. 442, the rule is stated as follows: If the contract is intended to result in transferring for a price from B to A, a chattel in which A had no previous property, it is a contract for the sale of a chattel. It is thus made to appear that the New York rule and the English rules are on either extreme and that the Mas- sachusetts rule is a compromise be- tween the two. In the case of Hientz v. Burkhead, 29 Ore. 55, 43 Pac. 866, 31 L. R. A. 508, 54 Am. St. in, it is said: "There appear to be substantially three distinct views upon the statute, which, for conve- nience, are generally designated as the English, the New York, and the Massachusetts rules, as represented by the decisions of their respective courts. In England, after a long series of cases in which various tests have been suggested, the rule seems to have been settled in Lee v. Griffin, 1 Best & S. 272, 23 Eng. Rul. Gas. 191, that 'if the contract be such that, when carried out, it would result in the sale of a chattel, the party can not sue for work and labor; but if the result of the con- tract is that the party has done work and labor which ends in nothing that can become the subject of a sale, the party cannot sue for goods sold and delivered.' * * * In New York the rule prevails that a contract concerning personal property not existing in solido at the time of the contract, but which the vendor is to manufacture or >put in condition 545 STATUTE OF FRAUDS. § 1 298 § 1298. Sale of timber products. — When, under a contract to furnish lumber, it is necessary for the vendor to have the lumber cut and prepared for delivery, the agreement is not one for the sale of goods, wares and merchandise.®^ However, a contract to deliver a specified number of ties of given dimensions and description, at a named price, has been held a contract of sale.®" So a sale of nursery stock is not taken out of the statute by the fact that the trees must be dug up and packed."^ § 1299. Realty improvement contracts. — Contracts for the improvement of realty, notwithstanding they may involve the furnishing of materials of a value in excess of fifty dollars,®^ such as the preparing of materials for and the erection of a build- ing or a portion thereof on real estate,®® or to take down a build- ing and erect it on the land of another,^ or a bridge,^ or a monu- ment^ or to install a steam heating plant in a factory* or automatic stokers under boilers^ or for the removal of earth,*' have been held not to be contracts of sale within the meaning of the statute. ^ § 1300. Work in raising crops and the like. — Contracts by which one party is to perform work and labor in raising a crop for delivery, such as the woodwork sin &c. Fibre Co. v. Jeffris Lumber for a wagon, or wheat not yet Co.. 132 Wis. 1, 111 N. W. 237. threshed, or nails to be made from '"' Ellis v. Denver &c. R. Co., 7 Colo. iron belonging to the manufacturer, App. 350, 43 Pac. 457. and the like, is not within the statute. " Jones v. Pettigrew, 25 S. Dak. * * * By the Massachusetts rule 432, 127 N. W. 538. the test is not the existence or " Campbell & Co. v. ]Mion Bros., nonexistence of the commodity at 6 Ga. App. 134, 64 S. E. 571. the time of the contract, as in New ™ Flvnn v. Dougherty, 91 Cal. 669, York, or whether the contract will 27 Pac. 1080, 14 L. R. A. 230 ; B_rown ultimately result in the transfer of &c. Co. v. Wunder, 64 Minn. 450, 67 title of a chattel from the vendor to N. W. 357, 32 L. R. A. 593. the vendee, as in England, but ^ Scales v. Wiley, 68 Vt. 39, 33 whether the article is such as the Atl. 771. manufacturer ordinarily produces in " McDonald v. Webster's Estate, the course of business and for the 71 Vt. 392, 45 Atl. 895. trade, or as the result of a special 'Forsyth v. Mann, 68 Vt. 116. 34 order and for special purposes. If Atl. 481, 32 L. R. A. 788; Fox v. the former, it is regarded as a con- Utter, 6 Wash. 299, 33 Pac. 354. tract of sale, and within the statute ; * Putnam &c. Mach. Co. v. Canfield, if the latter, it is held to be essen- 25 R. I. 548. 56 Atl. 1033. tially a contract for labor and ma- " Underfeed Stokers Co. v. Salt terial, and therefore not within the Co. (Mich.), 97 N. W. 959. statute." 'Welever v. Detwiler Co., 15 Ohio ''Bagby V. Walker, 78 Md. 239, 27 C. C. 680. Atl. 1033. To same effect, Wiscon- 35 — Contracts, Vol. 2 § 130 1 CONTRACTS. 546 at a specified price are not within the statute.' However, a verbal agreement for the sale of growing grain, to be delivered in a mar- ketable condition, when no part of the purchase-price is paid or any of the crop delivered, is not taken out of the operation of the statute of frauds by virtue of an exception in the statute provid- ing that it shall not apply ''when the article of personal property sold is not, at the time of the contract, owned by the vendor and ready for delivery, but labor, skill or money are necessarily to be expended in producing or procuring the same," notwithstanding money and labor must be expended to make the crop marketable.^ § 1301. Sufficiency of the memorandum required by the fourth and seventeenth sections. — Both the fourth and sev- enteenth sections of the statute of frauds are alike in that they require contracts of the kind enumerated to be evidenced by some memorandum or note thereof in writing and signed by the parties to be charged therewith or some other person thereto by him law- fully authorized. The seventeenth section, besides this provision, has certain other alternative clauses which will be hereinafter con- sidered. § 1302. Form of memorandum. — The form of memoran- dum is not material so long as it is sufficient to comply with the requirements of the statute.^ But the writing must, within itself, or by reference to other writings, state the whole contract so clearly that parol proof is not required to supply an essential element thereof.^" A receipt acknowledging the purchase-money 'Talmadge v. Lane, 17 Misc. (N. sell v. Renfro. 14 Okla. 674, 78 Pac Y.) 731, 41 N. Y. S. 413. 118, affd. 202 U. S. 287, 50 L. ed. 1030, *IVIighell V. Dougherty, 86 Iowa 26 Sup. Ct. 610. 480, 53 N. E. 402, 17 L. R. A. 755, 41 '"Thompson v. New South Coal Am. St. 511. See also, Lewis v. Co., 135 Ala. 635, 34 So. 31 (check Evans, 108 Iowa 296, 79 N. W. 81 ; which did not describe land sold in- Dierson v. Petersmeyer, 109 Iowa sufficient); Craig v. Zelian, 137 Cal. 233, 80 N. W. 389; Johnson v. Hoi- 105, 69 Pac. 853 (sale of land in- land, 124 Iowa 1, 49 N. W. 708. sufficient description) ; Snow v. Nel- * Adams v. McMillan, 7 Port, son, 113 Fed. 353 (time uncertain); (Ala.) IZ; Woodruff v. Butler, 75 Douglass v. Bunn, 110 Ga. 159, 35 S. Conn. 679, 55 Atl. 167; Stewart v. E. 339 (description of property un- Cook, 118 Ga. 541, 45 S. E. 398; First certain) ; North v. Mendel, 12, Ga, Presbyterian Church v. Swanson, 100 400, 54 Am. Rep. 879; Watt v. Wis- 111. App. 39; Ruzicka v. Hotovy, 72 consin Cranberry Co., 63 Iowa 730, 18 Nebr. 589, 101 N. W. 328 ; Clason v. N. W. 898 ; Fry v. Piatt, 32 Kans. 62, Bailey, 14 Johns. (N. Y.) 484; Hal- 3 Pac. 781; Bruckman v. Hargadine- 547 STATUTE OF FRAUDS. § I3OI is sufficient if it contains the requisites to constitute it valid evi- dence of an agreement." A bill of parcels, although not the con- tract itself, may amount to a note or memorandum of the contract within the meaning of the statute.^- An order for goods by the buyer accepted in writing by the seller may be sufficient to satisfy the requirements of the statute." An instrument which pur- ported to be a will leaving land that the testator had orally agreed to give to the beneficiary therein named has been held a sufficient memorandum in writing to satisfy the requirements of the statute of frauds.^* Any document signed by the party to be charged containing the terms of the contract will suffice, as a letter to a third party, a will, or an affidavit in a different matter." An entry in its book of minutes of a resolution passed by the govern- ing or legislative body of a municipal corporation, expressing the terms of a contract signed by the clerk, is held a satisfactory com- pliance with the statute.^" An auctioneer is, as we have seen. McKittrick Dry Goods Co.. 91 Mo. App. 454; Cushman v. Burritt, 14 N. Y. Week. Dig. 59; Wright v. Weeks, 25 N. Y. 153; Bailey v. Ogden, 3 Johns. (N. Y.) 399, 3 Am. Dec. 509; Buck V. Pickwell, 27 Vt. 157. "The meaning of the statute is to reduce contracts to a certainty, in order to avoid perjury on the one hand, and fraud on the other, and therefore both in this court, and in the courts of common law, where an agreement has been reduced to such a certainty, and the substance of the statute has been comphcd with in the material part, the forms have never been in- sisted upon." Lord Hardwicke in Welford v. Beazelv, 3 Atk. 503. " Evans v. Prothero, 1 DeG.. M. & G. 572; Camp v. ]\Ioreman. 84 Ky. 635, 8 Kv. L. 552. 2 S. W. 179; Voor- heis v. Eiting (Ky.). 22 S. W. 80 (in this case the receipt was held insuffi- cient. Sale of land. Property sold not identified) ; Hardt v. Recknagel, 62 App. Div. (N. Y.) 106, 70 N. Y. S. 782. " Saunderson v. Jackson. 2 B. & P. 238. Contra. Slade v. Boutin, 63 App. Div. (N. Y.) 537, 71 N. Y. S. 740. " Austrian & Co. v. Springer, 94 Mich. 343. 54 N. W. 50. 34 Am. St. 350; Lash v. Parlin, 78 Mo. 391; Hawkinson v. Harmon, 69 Wis. 551, 35 N. W. 28. But see Haw v. Amer- ican Wire Nail Co., 89 Iowa 745. 56 N. W. 501. A receipt signed is suffi- cient. Kundv V. Rogers (Idaho), 79 Pac. 195; Hall v. Misenheimer, 137 N. Car. 183, 49 S. E. 104, 107 Am. St. 474; Henry v. Black, 210 Pa. St. 245, 59 Atl. 1070, 105 Am. St. 802. "Shrover v. Smith, 204 Pa. St. 310, 54 Atl. 24. See also. Brown v. Webster, 90 Nebr. 591, 134 N. W. 185, 27 L. R. A. (N. S.) 1196. " First Pres. Church v. Swanson, 100 111. App. 39; In re Hovle (1893), 1 Ch. 84; Cooth v. Jackson. 6 Ves. Jr. 12; Barkworth v. Young. 4 Drew. 1, 26 L. J. Ch. 153 (affidavit) ; Gib- son V. Holland. L. R. 1 C. P. 1, where the subject is fullv considered. Wade v. Curtis, 96 Maine 309, 52 Atl. 762 (nonnegotiable note) ; Peabody v. Speyers, 56 N. Y. 230. "Chase v. Lowell. 7 Gray (Mass.) 2)Z (record of a resolution of city council) ; Tufts v. Plvmouth &c. Mining Co.. 14 Allen (Mass.) 407 (record of votes sufficient to bind corporation) ; .Argus Co. v. .Mbanv, 55 N. Y. 495. 14 Am. Rep. 206. Tn Johnson v. Dodgson. 2 M. & W. 65?), the defendant made the note of the sale in his own book, and got the agent of the plaintiff to sign it and s 1303 CONTRACTS. 548 deemed the agent of both parties, and his memorandum, entered in his own book, is taken to be a memorandum in writing, binding upon both parties, because by them respectively authorized/^ In order to satisfy the statute of frauds it is unnecessary that the terms of the contract be contained in a single instrmnent/^ Thus where the specifications for a public improvement fully describe the work to be done, and a bid in writing is made to do such work and it is accepted and entered of record, sufficient evidence of a contract exists to satisfy the statute of frauds.^® § 1303. Correspondence as evidence of the contract. — The principle is well established that a complete contract binding under the statute may be gathered from letters, writings and telegrams between the parties relating to the subject-matter of the contract, and so connected with each other that they may be fairly said to constitute one paper relating to the contract.^" The correspond- the defendant retained the book; held sufficient memorandum. " Hawkins v. Chace, 19 Pick. (Mass.) 502. So, also, in the case of a broker, Coddington v. Goddard, 16 Gray (Mass.) 436. '"Crystal Palace Flour Mills v. Butterfield, 15 Colo. App. 246, 61 Pac. 479; Schneider v. Anderson, 75 Kans. 11, 88 Pac. 525, 121 Am. St. 356; Bristol v. Mente, 79 App. Div. (N. Y.) Q, 80 N. Y. S. 52, affd. 178 N. Y. 599, 70 N. E. 1096; Flegel v. Dowling, 54 Ore. 40, 102 Pac. 178, 135 Am. St. 812. '"Central Bitulithic Pav. Co. v. Highland Park, 164 Mich. 223, 129 N.^ W. 46, Ann Cas. 1912B. 719. ""Fitzmaurice v. Bayley, 9 H. L. Cas. 78 ; Baumann v. James, L. R. 3 Ch. 508 ; Shardlow v. Cotterell. L. R 18 Ch. Div. 280, L. R. 20 Ch. Div. 90 Studds V. Watson, 28 Ch. Div. 305 Oliver V. Hunting, 44 Ch. Div. 205 Ridgway v. Wharton, 6 H. L. Cas 238 ; Coles v. Trecothick, 9 Ves. 248 Cave v. Hastings, L. R. 7 Q. B. Div 125; Long v. Millar, L. R. 4 C. P Div. 450; Higginson v. Clowes, 15 Ves. 516; Sandilands v. Marsh, 2 B & Aid. 673 ; Gaston v. Frankum, 2 DeG. & S. 561; Byrne v. Marshall. 44 Ala. 355 ; Brewer v. Horst-Lach- mund Co. TCal.), 60 Pac. 418; Es- may v. Gortor, 18 111. 483; Wills V. Ross, n Ind. 1, 40 Am. Rep. 279; O'Donnell v. Leeman, 43 Maine 158, 69 Am. Dec. 54; Drury v. Young, 58 Md. 546, 42 Am. Rep. 343; Freeland V. Ritz (1891), 154 Mass. 257, 28 N. E. 226, 12 L. R. A. 561, 26 Am. St. 244; Lydig v. Braman, 117 Mass. 212, 58 N. E. 696; Atwood v. Cobb, 16 Pick. (Mass.) 227, 26 Am. Dec. 657; Peycke v. Ahrens, 98 Mo. App. 456, 72 S. W. 151; Packard v. Putnam, 57 N. H. 43; Wright v. Weeks, 25 N. Y. 153; Peabody v. Spevers, 56 N. Y. 230 ; Peck v. Vandemark, 99 N. Y. 29, 1 N. E. 41; Louisville Asphalt &c. Co. V. Lorick, 29 S. Car. 533. 8 S. E. 8, 2 L. R. A. 212; Grafton v. Cummings, 99 U. S. 100. 25 L. ed. 366; Williams v. Morris, 95 U. S. 444, 24 L. ed. 360; Ryan v. United States. 136 U. S. 68, 34 L. ed. 447. 10 Sup. Ct. 913; Beckwith v. Talbot, 95 U. S. 289. 24 L. ed. 496. Where parties negotiated for the exchange of certain real estate and defendant was to pay a sum agreed upon as the difference in the value of the land to be exchanged, the receipt and the check held to constitute the contract. Raubitschek v. Blank. 80 N. _Y. 478. A telegram properly identified is equivalent to a letter. McBlain v. Cross, 25 L. T. (N. S.) 804; Mur- phy V. Thompson, 28 U. C. C. P. 233 ; Coupland v. Arrowsmith, 18 L. T. 549 STATUTE OF FRAUDS. § I304 ence must of course be sufficient to establish the contract. ^^ § 1304. Bought and sold notes— "Slip contracts".— The bought and sold notes of a broker, when they correspond and state all the terms of the bargain, are held to be a sufficient mem- orandum.*" "Slip contracts" in the form prescribed by the rules and regulations of the New York Cotton Exchange, showing upon their face that the purchasers named therein bought cotton, stating the quantity sold, the price, the name of purchasers and sellers, the latter designated by fictitious names, were held to sat- isfy the statute. Parol evidence is admissible to show who are the parties represented by the fictitious names for whose account the sales were made."^ § 1305. The contents of the memorandum. — The memo- randum must contain within itself, or by some reference to other written evidence, all the essential terms and conditions of the con- tract, expressed with such reasonable certainty that they may be understood from the memorandum and other written evidence (N. S.) 755; Dilworth v. Bostwick, 1 Sweeny (N. Y.) 581; Kinghorne v. Alontreal Tel. Co., 18 U. C. Q. B. 60. "'Lee V. Vaughan (Ark.), 141 S. W. 496, Zl L. R. A. (N. S.) 352; Jackson v. Stearns, 58 Ore. 57, 113 Pac. 30, VI L. R. A. (N. S.) 639. -Parton v. Crofts (1864), 2>Z L. J. C. P. 189; Grant v. Fletcher, 5 B. & C. 436 ; Gregson v. Ruck, 4 Q. B. Ill ; Suydam v. Clark, 2 Sandf. (N. Y.) 133; Peltier v. Collins, 3 Wend. (N. Y.) 459, 20 Am. Dec. 711; Davis v. Shields, Id Wend. (N. Y.) 341; Greeley Burnham Co. v. Capen (1886), 2Z Mo. App. 301; Sieve- wright V. Archibald, 6 Eng. L. & Eq. 286, where the subject was elabo- rately discussed. There was a dis- crepancy in that case between the bought and sold notes. The diversity was held to avoid the contract. It has been frequently said by English judges that brokers' bought-and-sold notes were in their origin merely copies of the entries in their books (per Lord Ellenborough, in Heyman V. Neale, 2 Camp. ZZT \ per Abbott, C. J., in Grant v. Fletcher, 5 B. & C. 436; per Lord Campbell in Sieve- wright V. Archibald (1851), 6 Eng. L. & Eq. 286), but this view is not adopted by Blackburn (Blackburn on Sales, 86). Bought and sold notes are not peculiar to brokers. They appear to be in familiar use in England be- tween buyer and seller where no broker intervenes, the seller deliver- ing to the buyer a sold note and the buyer delivering to the seller a bought note. Buxton v. Rust, L. R. 7 Ex. 1 ; Wilmhurst v. Bowker, 7 Man. & Gr. 882; Tarling v. Baxter, 6 B. & C. 360. When a broker inter- venes he does for the parties respect- ively what each would otherwise do for himself, that is, he makes out and signs a sold note on behalf of the seller, and a bought note on be- half of the buyer. ]\Ioore v. Camp- bell, 10 Ex. Zll. =*Bibl) V. .Mien. 149 U. S. 481, 11 L. ed. 819, 13 Sup. Ct. 950. The slip contracts were in the following form: "New York. Nov. 10, 1886.— B. 10, ac. .'Mbert; 10 ac. Alexander; 5 ac. Andrew. Seller, — , Buyer, Zerega & White. On contract sub- ject to rules and regulations of New York Cotton Exchange, twenty-five § 1306 CONTRACTS. 55O referred to without aid from parol testimony.^* Under this rule it is essential that the writing or writings show that the parties thereby intended to enter into a binding contract or that they have already entered into an agreement which the writing is to evi- dence."^ Thus a writing submitted by the vendor to the vendee on which the latter had noted "no description of property" on the margin and had replied that he would call with an agreement^* or a writing by which one gives the refusal of certain property to another,"^ or which states that the signer can spare a designated quantity of corn,^* or which merely gives expression to an inten- tion/® or of a desire/" or a letter which asked the party addressed to call by phone and they would talk it over^^ has in each case been declared insufficient evidence of a contract. Where an auc- tioneer entered in his sales book the names of the vendor and purchaser, the subject-matter of the sale and the amount of the purchase money, but omitted any reference to the particulars or conditions subject to which the sale was made, the memorandum was held insufficient.^^ § 1306. Names of parties must be shown. — It is well estab- lished, where the statute requires a contract to be in writing, hundred bales of cotton. Jan. 1 de- 117, 62 N. W. 658; Leatherbee v. livery; price 8.99. Pre Z. & White, Bernier, 182 Mass. 507, 65 N. E. seventy-five." 842; Kling v. Bordner, 65 Ohio St. =' Salomon v. McRae, 9 Colo. App. 86, 61 N. E. 148 ; Davis v. Brigham, 23, 47 Pac. 409; Crystal Palace Flour 56 Ore. 41, 107 Pac. 961, Ann. Cas. Mills v. Butterfield, 15 Colo. App. 1912B. 1340; In re Wright's Estate, 246, 61 Pac. 479; Oglesby Grocery 155 Pa. St. 64, 25 Atl. 877; Master- Co. V. Williams M. Co., 112 Ga. 359, son v. Little, 75 Tex. 682, 13 S. W. n S. E. 372 (holding that writing 154; Munk v. Weidner, 9 Tex. Civ. must show the parties to the con- App. 491, 29 S. W. 409. tract) ; Worthem v. Stith, 23 Ky. L. ^ Andrew v. Babcock, 63 Conn. 1882, 66 S. W. 390 (insufficient de- 109, 26 Atl. 715. scription of land); Bernheimer v. "Williams v. Smith, 161 Mass. Verdon, 63 N. J. Eq. 312, 49 Atl. 732: 248, Zl N. E. 455. Kling V. Bordner, 65 Ohio St. 86, 61 '"Redus v. Holcomb (Miss.), 21 N. E. 148; Cammack v. Prather So. 524. (Tex. Civ. App.). 74 S. W. 354 (in- =* White v. Bigelow, 154 Mass. 593, sufficient description of land) ; Rahm 28 N. E. 904. v. Klerner, 99 Va. 10, 37 S. E. 292 =* In re Wright's Estate, 155 Pa. (contract with agent not identifying St. 64, 25 Atl. 877. Compare, how- territory in which such agent was to ever, with North Platte &c. Co. v. sell). Price, 4 Wyo. 293, Zl Pac. 664. ^ Salomon v. McRae, 9 Colo. App. '' Mathes v. Bell, 121 Iowa 722, 96 23, 47 Pac. 409; Andrew v. Babcock, N. W. 1093. 63 Conn. 109, 26 Atl. 715; American "^Rishton v. Whatmore, L. R. 8 Oak Leather Co. v. Porter, 94 Iowa Ch. D. 467; Kenworthy v. Schofield, 551 STATUTE OF FRAUDS. § I307 that there can be no binding contract unless both parties thereto are named in the writing, or so described therein so that they may be identified. This makes it necessary that the written memoran- dum should show not only who is the party to be charged but also who is the party in whose favor he is charged. ^^ Thus it has been held that if the contract for the sale of property shows that one of the parties subscribing it acted as agent for some undisclosed principal it cannot be enforced against such principal for his rela- tion to it must be established by parol evidence.^* The naming of an auctioneer has been held not to sufficienily designate the seller.^'* A written memorandum which does not identify the vendor^" or vendee'^ is insufficient.^® § 1307. Description of subject-matter — Personal property. • — It must appear from the memorandum what the subject-matter of the contract is, and while it need not be described in a com- plete and detailed manner it must be sufficiently definite to enable the subject-matter to be identified. Thus where a travelling salesman was employed to sell the defendant's goods in the 2 B. & C. 945; Peirce v. Corf, L. R. 308, 26 N. E. 861, 10 L. R. A. 815, 9 Q. B. 210. 25 Am. St. 632; Alentz v. Newwitter, '^Oglesby Grocery Co. v. Williams 122 N. Y. 491, 25 N. E. 1044, 11 L. Mfg. Co., 112 Ga. 359, 37 S. E. THl; R. A. 97. 19 Am. St. 514. To same effect, American Oak Lea- ** Coombs v. Wilkes (1891), 3 Ch. ther Co. v. Porter, 94 Iowa 117, 62 11; Ross v. Allen. 45 Kans. 231, 25 N. W. 658; Mertz v. Hubbard. 75 Pac. 570, 10 L. R. A. 835. In the Kans. 1, 88 Pac. 529, 121 Am. St. 352; above case the contract was sigried Lincoln v. Erie Preserving Co., 132 by one as agent without his principal Mass. 129; Coddington v. Goddard, being in any way indicated. See 16 Gray (Mass.) 436; McKeag v. contra, however, Mantz v. Maguire, Piednoir, 74 Mo. App. 593; Carrick 52 Mo. App. 136. Compare the fore- V. Mincke, 60 Mo. App. 140; Brown going Massachusetts case with the V. Whipple, 58 N. H. 229; Mentz v. case of Tobin v. Larkin, 183 Mass. Newwitter, 122 N. Y. 491, 25 N. E. 389, 67 N. E. 340, in which it was 1044, 11 L. R. A. 97, 19 Am. St. 514; said that if the memorandum gave Grafton v. Cummings, 99 U. S. 100, the name of the agent by whom one 25 L. ed. 366. It is held in Salmon party is represented the principals of Falls Mfg. Co. V. Goddard, 14 How. the agent may be shown by parol (U. S.) 446, 14 L. ed. 493, that the testimony. memorandum need not identify the "Lewis v. Wood, 153 Mass. 321, parties. Grafton v. Cummings, 99 26 N. E. 862, 11 L. R. A. 143; Cat- U. S. 100, 25 L. ed. 366, criticizes this terlin v. Bush, 39 Ore. 496, 58 Pac. case and it was disapproved in Mentz 706, 65 Pac. 1064; Harney v. Bur- V. Newwitter, 122 N. Y. 491, 25 N. E. bans, 91 Wis. 348, 64 N. W. 1031. 1044, 11 L. R. A. 97n, 19 Am. St. So of a sheriff's sale on execution, 514. where the statute of frauds applies. " Mertz V. Hubbard, 75 Kans. 1, 88 Tombs v. Basve, 65 Mo. App. 30. Pac. 529, 121 Am. St. 352. "As to the form of the signature, " McGovern v. Hern, 153 Mass. see post, § 1317, 1308 CONTRACTS. 0:3- "southern states" it was held that the territory in which the salesman had a right to sell was one of the essential terms of the contract and that the term "southern states" was not sufficiently definite and that the defect could not be supplied by a parol proof. ^^ A memorandum of a contract for* the delivery of rail- road ties which merely gave the number of the ties bargained for without designating the number of ties of various descriptions has been held too indefinite to take the contract out of the stat- ute.""* § 1308. Contents of memorandum — Admissibility of evi- dence aliunde. — However, if the subject-matter of the con- tract is capable of being made certain by evidence aliunde which does not add to the terms of the contract the memorandum is sufficient.*^ It has been held that where a third person promised in writing to pay a bill that a debtor owed his creditor it was competent for the creditor to prove by parol the nature and amount of the debt.*^ Nor is the memorandum rendered indefi- nite by the fact that one of the parties is given an option to de- liver either of two or more kinds of property set out in the memo- randum.*^ Abbreviations do not render it defective within the meaning of the act when their meaning may be explained as it was understood between the parties.** § 1309. Contents of memorandum — Descriptions of real estate. — No more particular description is necessary under the statute in a contract for the sale of real estate, than one relat- ^Rahm v. Klerner, 99 Va. 10, 37 held sufficient. The above case also S. E. 292. Compare with Kaufman holds that where there are two de- V. Manufacturing Co., 78 Iowa 679, scriptions, one correct and the other 43 N. W. 612, 16 Am. St. 462, in false, the latter should be rejected as which an agreement to sell goods in surplusage. a designated city "and the territory ^ Haskell v. Tuksberry, 92 Maine tributary thereto" was held to locate 551, 43 Atl. 500, 69 Am. St. 529 (the the territory with sufficient definite- promise was contained in a letter ness. written to the creditor). "Ellis V. Denver &c. R. Co., 7 "American &c. Mfg. Co. v. Mid- Colo. App. 350, 43 Pac. 457. land Steel Co., 101 Fed. 200 ; Burgess "Woods V. Hart, 50 Nebr. 497, 70 Sulphite Fiber Co. v. Broomfield, 180 N. W. 53. In the above case where Mass. 283, 62 N. E. 367. the stock intended to be exchanged " See Brewer v. Horst-Lachmund was described as "being the same cat- Co., 127 Cal. 643, 60 Pac. 418, 50 L. tie picked out by said Woods on Jan- R. A. 240; Sanborn v. Flagler, 9 Al- uary 27, 1893," this description was len (Mass.) 474. 553 STATUTE OF FRAUDS. § I309 ing to personal property. In each, to constitute a bargain and sale, or a contract which will be specifically enforced in equity, the subject-matter thereof must \)c identified.''^ It is not neces- sary that the contract for the sale of realty contain such a de- scription as, without the aid of extrinsic testimony, designates precisely the land agreed to be sold. It should, however, contain a sufficient description to evidence a common intent of the par- ties to deal with respect to a particular piece of property as dis- tinguished from the other property." When the description is sufficiently definite to comprehend the property, it is a compliance with the statute of frauds ; and resort may be had to extrinsic evi- dence to ascertain the boundaries or fix its identity, and apply the description to the very property intended, provided that it does not dispute or add to the agreement." Thus even though the writing does not state in what county or state the land is situated the description may be sufficiently certain provided it contains or provides other means for identifying the land conveyed.*^ No other question entering in, descriptions of real property omitting the town, county or state where the property is situated have been "Shardlow v. Cotterell, L. R. 20 267, 44 N. W. 118; Lippincott v. Ch. Div. 90; Hurley v. Brown. 98 Bridgewater, 55 N. J. Eq. 208, 36 Mass. 545, 96 Am. Dec. 671; Sherer Atl. 672; Kling v. Bordner, 65 Ohio V. Trowbridge, 135 Mass. 500; Whe- St. 86, 61 N. E. 148; Bogard v. Bar- Ian V. Sullivan, 102 Mass. 204; Bishop han, 52 Ore. 121, 96 Pac. 673, 132 V. Fletcher, 48 :^Iich. 555, 12 N. W. Am. St. 676; Ferguson v. Staver, 33 849; Pierson v. Ballard. 32 Minn. Pa. St. 411. 263, 20 N. W. 193; Scarritt v. St. "Bogard v. Barnhan, 52 Ore. 121, John's Church. 7 Mo. App. 174; 96 Pac. 673, 132 Am. St. 676 (in the Webster v. Clark, 60 N. H. 36; Fer- above case it is said, "The rule for guson V. Staver, 33 Pa. St. 411; determining the sufficiency of a de- Johnson v. Granger, 51 Tex. 42; Will- scription in a deed or any other iams V. Morris, 95 U. S. 444, 24 L. writing in relation to real property is, ed. 360. can a survej-or. with a deed or other *'Kopp V. Reiter, 146 111. 437. 34 instrument before him. with or with- N. E. 942. 22 L. R. A. 273, 37 Am. cut the aid of extrinsic evidence, St. 156; Edens v. Miller, 147 Ind. locate the land and establish the 208, 46 N. E. 526; Flegel v. Dowling, boundaries?") See also. Bacon v. 54 Ore 40, 102 Pac. 178, 135 Am. St. Leslie. 50 Kans. 494, 31 Pac. 1066. 44 812. See also, Alabama ^Mineral Am. St. 134; Moavon v. Moavon. 114 Land Co. v. Jackson, 121 Ala. 172, 25 Kv. 855. 24 Kv. L. 1641. 72 S. W. 33, So. 709, 77 Am. St. 46; Ridgway v. 60 L. R. A. 415. 102 Am. St. 303; Ingram, 50 Ind. 145. 19 Am. Rep. Kennedy v. Gramling. 33 S. Car. 367, 706; Fry v. Piatt. 32 Kans. 62. 3 Pac. 11 S. E. 1081. 26 Am. St. 676. 781; Sherer V. Trowbridge, 135 Mass. " Hollev's Exr. v. Currv. 58 W. Va. 500; Burgon v. Cabanne, 42 Minn. 70, 51 S. E. 135, 112 Am. St. 944. 60 § I3IO CONTRACTS. 554 held sufficient where the deed or writing provides other means of identification." § 1310. Further illustrations of the rule. — A memorandum which describes the property sold as the hotel Duquesne property has been held sufficiently definite to support an action for specific performance where the property bargained for was a promi- nent hotel on one of the principal streets of the city and the ident ity of the hotel site was fixed by the city and county records The statute of frauds has been held satisfied for a written agree- ment by which the appellee agrees to convey one-third of his estate of whatever nature acquired under his mother's will, or other- wise borrowed or owned by him, since it was possible to identify the property by parol evidence." A written contract which de- scribed the land exchanged as "^ of sec. 7 — 23 — 7, and all of sec_ 18 — 23 — 7, all being in Sycamore township, in Butler county, Kansas ;" has been held sufficiently definite to support an action for a specific performance when it is alleged and proved at the trial "that at the time of the execution of the agreement the defendant was the owner of section 18, and the south half of sec- tion 7, all in township 23 south of range 7 east, in Butler county, Kansas ; and that the defendant was then the owner of no other real estate in said section 7."" Descriptions of land which give the section^^ or lot numbers,^'' or describe the boundaries so that it may be located/^ and a description which identifies the land as that where the vendor now lives,^** or as his "home-place and ** Hawkins v. Hudson, 45 Ala. 482; " Moayon v. Moayon, 114 Ky. 855, Webb V. Mullins, 78 Ala. Ill; Mc- 24 Ky. L. 1641, 72 S. W. 33, 60 L. R. Cullough V. Olds, 108 Cal. 529, 41 A. 415, 102 Am. St. 303. Pac. 420; Garden City Sand Co. v. "'Bacon v. Leslie, 50 Kans. 494, 31 Miller 157 111. 225, 41 N. E. 753; Pac. 1066, 34 Am. St. 134. Tewks'bury v. Howard, 138 Ind. 103, "^ Mann v. Higgins, 83 Cal. 66, 23 37 N E. 355; Lloyd v. Bunce, 41 Pac. 206; Wilson v. Emig, 44 Kans. Iowa 660 ; Mee v. Benedict, 98 Mich. 125, 24 Pac. 80 ; Ryan v. United 260, 57 N. W. 175, 22 L. R. A. 641, States, 136 U. S. 68, 34 L. ed. 447; 39 Am St. 543; Quinn v. Cham- Combs v. Scott, 76 Wis. 662, 45 N. pagne, 38 Minn. 322, 37 N. W. 451 ; W. 532. Norfleet v. Russell, 64 Mo. 176; "St. Paul Land Co. v. Dayton, 42 Robeson v. Hornbaker, 3 N. J. Eq. Minn. 73, 43 N. W. 782. 60; Flegle v. Dowling, 54 Ore. 40, '"Kyle v. Rhodes, 71 Miss. 487, 15 102 Pac. 478, 135 Am. St. 812 ; Crotty So. 40 ; Sherman v. Simpson, 121 N. V. Effler, 60 W. Va. 258, 54 S. E. Car. 129, 28 S. E. 186. 345, 9 Ann. Cas. 770. '"Falls of Nuese Mfg. Co. v. Hen- '° Henry v. Black, 210 Pa. St. 245, dricks, 106 N. Car. 485, 11 S. E. 586. 59 Atl. 1070, 105 Am. St. 802. 555 STATUTE OF FRAUDS. § I3II Storehouse"" have been held sufficient to comply with the statute. Where the memorandum executed by the defendant described the lot, acknowledged the receipt of money as part of the pur- chase-price, and declared the tmst and taking of the title by defendant, it was held that recovery by plaintiff was not pre- vented by the statute of frauds,"^ and where an agent, who was orally appointed by a married woman with her husband's sanc- tion, purchased land at auction, and the auctioneer made a memo- randum in his book of the purchaser's name and terms of sale, the purchase was held binding on the woman, and not within the statute of fraud.'" § 1311. Contract to convey one of several tracts. — It is true generally that a memorandum agreement to convey any one of several definitely described tracts of land to be selected is suffi- cient to comply with the statute. The contract becomes absolute when the selection is made.*^'' But where the land from which the lots were to be selected had not been platted at the time the memorandum was made it was held that the description was wholly vague and indefinite in the absence of such allotment.^^ There is authority to the effect that a memorandum for the sale of real estate, the specific tract to be conveyed to be selected by " Henderson v. Perkins, 94 Ky. 107 Ind. 432, 8 N. E. 167 (agreement 207, 21 S. W. 1035. giving the grantee the right to se- " Waterbury v. Fisher, 5 Colo. App. lect a certain amount of land for 362 38 Pac 846. a railroad right of way) ; Cape Gira- "- Moore v. Taylor, 81 Aid. 644, 32 deau &c. R. Co. v. Wingerter, 124 Atl. 320, 33 Atl. 886. AIo. App. 426, 101 S. W. 1113 (agree- "" Alabama C. R. Co. v. Long, 158 ment to convey land for a railroad Ala. 301, 48 So. 363 (contract to right of way when located by convev a strip of land out of a speci- grantee) ; Repetto v. Baylor, 61 N. J. fied larger tract to a railroad com- Eq. 501, 48 Atl. 774 (a contract for pany for a right of way) ; Lauder v. the sale of lots as designated on a Peoria Agri. &c. Soc, 71 III. App. certain map, with the proviso that 475 (contract to convev one lot in a if the grantor had already sold any subdivision to be made of a portion of such lots, the grantee might select of certain designated lands, as indi- others) ; Simpson v. Breckenridge, cated by a certain plat thereof, which 32 Pa. St. 287 (an agreement as fol- lot was to be designated by a named lows: "I will give J. S. 100 acres of committee); Carpenter v. Lockhart, land next to either S. or N. for $450; 1 Ind. 434, Smith 326 (an agreement or I will give the 200 acres with a to convey a designated number of clear title, for his house and lot ). acres of land, to be selected by "Chellis v. Grimes. 72 N. H. 337, seller out of a certain larger tract, 56 Atl. 742. See also, Scanlan v. on plaintiff's election to take them Oliver, 42 Minn. 538, 44 N. \\ . 1031 and pay the purchase-money) ; Bur- (land to be conveyed to be mutually row V. Terre Haute & L. R. Co., agreed upon). § 13 12 CONTRACTS. 556 the purchaser, is within the statute until such selection has been actually made in writing.®^ Other courts hold that failure on the part of the one in whom the power of selection rests to make a selection does not destroy the validity of the contract. By enter- ing into the agreement he agrees to make the selection and on failure so to do an action may be brought to compel specific per- formance/^ or for damages for breach of contract.^* § 1312. Contents of memorandum — Descriptions of real estate held insufficient. — While extrinsic evidence may be ad- missible to apply the description given to the very property in- tended, the description or designation of the property in the agree- ment must be such as to render the intention entirely manifest and resort can not be had to extrinsic evidence to determine what property was intended.^^ Thus a memorandum in writing as fol- lows : "I have sold this place," naming the vendee and the price, has been held insufficient to satisfy the statute of frauds.*^** A mortgage, to be effective, must in some way describe and identify the indebtedness it is intended to secure." A promise to convey any one of four tracts of land in consideration of marriage, the tract to be conveyed being in no way identified, has been held within the statute.*'^ A paper acknowledging receipt from the husband of the signor's deceased mother of a specified sum in full payment and satisfaction of the amount due them from their mother's estate is not sufficient as a memorandum, within the statute of frauds, of a contract of sale of their interest in land ''Alabama Mineral Land Co. v. son v. Stearns, 58 Ore. 57, 113 Pac. Jackson, 121 Ala. 172, 25 So. 709, 11 30, Z1 L. R. A. (N. S.) 639. See post, Am. St. 46. See also, Patrick v. § 1326. Sears, 19 Fla. 856; Carr v. Passaic ** The memorandum m question Land Imp. &c. Co., 19 N. J. Eq. 424; contains no reference to any other Ensminger v. Peterson, 53 W. Va. document, and we are clearly of the 324, 44 S. E. 218. opinion that it is not competent to '"Peckham v. Lane, 81 Kans. 489, consider the deed alleged to have 106 Pac. 464, 25 L. R. A. (N. S.) been delivered as a part of the mem- 967, 19 Am. & Eng. Ann. Cas. 369. orandum required by the statute. " Lingeman v. Shirk, 15 Ind. App. Cunha v. Callery, 29 R. L 230, 69 Atl. 432, 43 N. E. 2>Z. See also, Jenkins 1001, 132 Am. St. 811. v. Green, 27 Beav. 437, 5 Jur. (N. "' Bowen v. Ratcliff, 140 Ind. 393, S.) 304; Lingle v. Clemens, 17 Ind. 39 N. E. 860, 49 Am. St. 203. 124 "'Cole V. Cole (Miss.), 54 So. 953, «'Bogard V. Barnhan, 52 Ore. 121, 34 L. R. A. (N. S.) 147 and note. 96 Pac. 673, 132 Am. St. 676; Jack- 557 STATUTE OF FRAUDS. g I3I3 inherited from their mother."" A written agreement to sell a half-acre of land adjoining a certain lot on the east and running due east does not sufficiently describe the land, and the descrip- tion given could not be aided by parol evidence.''" An agreement to convey ten out of forty acres, owned by the vendor, has been held insufficient for indefiniteness.''^ A memorandum of sale de- scribing the land as "The Baldwin Place," where the property was not otherwise identified, has also been held insufficient.''" The fact that a part of the assigned contract is in writing is not sufficient to prevent the operation of the statute of frauds when the written part does not contain all the essentials of the con tract.^^ § 1313. Whether the memorandum must show the consid- eration. — In England it has been declared that the memoran- dum must contain the consideration for the promise. This hold- ing was based mainly upon the assumption that the word "agree- ment" was used in its strict legal, and not in its popular, sense.''* This rule has been followed in England in a long series of cases. ''^ In the courts of this country there has been a contrariety of opin- ion on this point, depending to some extent upon the language of the statute of the different states. In some states the statute ex- pressly provides that the consideration need not appear in the "' Munk V. Weidner, 9 Tex. App. from promise, and that something 491, 29 S. W. 409. besides the mere promise was re- '" Sherer v. Trowbridge, 135 Mass. quired to be stated. And as the con- 500. sideration for the promise is part of ■'■'Omaha Loan & Trust Co. v. the agreement, that ought also to be Goodman, 62 Nebr. 197, 86 N. W. stated in writing." Wain v. Warl- 1082. ters, 5 East 10. "Wood V. Zeigler,99Tenn.515, 42 '"Saunders v. Wakefield, 4 B. & S. W. 447. Aid. 595; Jenkins v. Rej-nolds, 3 "Wright V. Raftree, 181 111. 464, Brod. & Bing. 14; IMorley v. Booth- 54 N. E. 998. by, 3 Bing. 107; Hawes v. Arm- '*"If the question had arisen strong, 1 Bing. N. C. 761; Cole v. merely on the first part of the clause, Dyer, 1 Cro. & Jer. 461 ; James v. I conceive that it would only have Williams, 3 Nev. & Man. 196; Clancy been necessary that the promise v. Piggott, 4 Nev. & Man. 496; should have been stated in writing; Raikes v. Todd, 8 Ad. & El. 846; but it goes on to direct that no per- Sweet v. Lee, 3 ]\Ian. & G. 452. But son shall be charged on such promise, by statutes 19 and 20 Vic, ch. 97 unless the agreement, or some note (1856), a memorandum of a guar- or memorandum thereof, that is, of anty need not state the consideration, the agreement, be in writing; which Holmes v. Durkee, 1 Cababe & E. shews that the word agreement was 23. meant to be used in a sense different § I3I4 CONTRACTS. 55S memorandum,'*' while in others the statute requires the considera- tion to appear." § 1314. Weight of authority. — The weight of American authority would seem to preponderate against the rule, even where the construction depends on the legal meaning of the word "agreement."'^ The words "for value received" sufficiently express the consideration to amount to a compliance with the re- quirements of the law. This seems to be so, both in those states whose statute expressly requires the consideration to be expressed and in those whose courts follow the English doctrine.'^^ § 1315. Statement of consideration — Executory contracts — Price and terms. — Where the parties have actually agreed '"Edgerton v. Edgerton, 8 Colo. 6; Dunlop v. Hopkins, 95 Fed. 234 (construing Illinois statute) ; Hiatt V. Hiatt, 28 Ind. S3; Scott v. Bush, 26 Mich. 418, 12 Am. Rep. 311; Jones V. Palmer, 1 Doug. (Mich.) 379; Hall v. Soule, 11 Mich. 494; Detroit &c. R. Co. v. Forbes, 30 Mich. 165; Palmer v. Marquette &c. Mill Co., 32 Mich. 274; Neibert v. Baghurst (N. J. Eq.), 25 Atl. 474; Hawaii Rev. Laws 1905, § 1997. 2 Starr & Curtis's Illinois Ann. Stat. (2d ed.) 1896, ch. 59, § 9. Burn's Indiana Rev. Stat. 1908, § 7464; Massachusetts Rev. Laws 1902, ch. 74, § 2; Michigan Comp. Laws 1897, (9512) § 9, (9519) § 6. Cobby's Nebr. Ann. Stat. 1911, § 6043; New Jersey Gen. Stat. 1895, § 9. A pro- vision of this character does not of course dispense with the considera- tion. Hite v. Wells, 17 111. 88. "Catterlin v. Bush, 39 Ore. 496, 58 Pac. 706, 65 Pac. 1064; Corbitt v. Salem Gas. Co., 6 Ore. 405, 25 Am. Rep. 541n ; Bellinger & Cotton's Oregon Codes and Stat. 1902, § 797. It was held in Violett v. Patton, 5 Cranch (U. S.) 142, 3 L. ed. 61, that the reasoning of the judge in the cases in which they had decided that the consideration ought to be in writing turned upon the word "agreement," and that this reason- ing did not apply where the word "promise" was introduced. '* Sage v. Wilcox, 6 Conn. 81 ; Sanders v. Barlow (1884), 21 Fed. 836; Davis v. Tift, 70 Ga. 52; White v. Dahlquist, 179 Mass. 427, 60 N. E. 791; Brown v. Fowler, 70 N. H. 634, 47 Atl. 412; Britton v. Angier, 48 N. H. 420; Thornburg v. Masten (1883), 88 N. Car. 293; Reed v. Evans, 17 Ohio 128; Fulton v. Robin- son, 55 Texas 401 ; Patchin v. Swift, 21 Vt. 292; Smith v. Ide, 3 Vt. 290. See also, Harraway v. Harraway, 136 Ala. 499, 34 So. 836. Contra, Hutton V. Padgett, 26 Md. 228; Nichols v. Allen, 23 Minn. 542; Drake v. Seaman (1884), 97 N. Y. 230 (an elaborate discussion of the present New York law). See also, holding that under the Wisconsin act a contract to pay the obligation of a third person must express the consideration, Coxe Bros. & Co. v. Milbrath, 110 Wis. 499, 86 N. W. 174. '"Wain V. Warlters, 5 East 10; Brooks v. Morgan, 1 Harr. (Del.) 123; Whitney v. Stearns, 16 Maine 394; Edelen v. Gough, 5 Gill (Md.) 103; Osborne v. Baker, 34 Minn. 307, 57 Am. Rep. 55; Miller v. Cook, 23 N. Y. 495, and cases cited, 22 How. Pr. (£\ McMorris v. Herndon, 2 Bailey (S. Car.) 56, 21 Am. Dec. 515; Lapham v. Barrett, 1 Vt. 247; Dahlman v. Hammel, 45 Wis. 466; Cheney v. Cook, 7 Wis. 413; Jansen V. Kuenzie, 145 Wis. 473, 130 N. W. 450, Ann. Cas. 1912A. 1241 and note. The text-writers also generally state 559 STATUTE OF FRAUDS. § 131^ as to the price of the goods bargained for, this is considered as an essential element of the contract and must be shown in writing in order to satisfy the statute, and parol evidence is admissible to show that a price was actually agreed on in order to establish the insufficiency of a memorandum which is silent as to price.*'" On the other hand, if there is no actual agreement as to price, the memorandum of the bargain is sufficient even though silent as to the price, for the reason that the law supplies the deficiency by implying a promise on the part of the buyer to pay a reasonable price." Other cases lay down the rule that the memorandum of an executory contract must, in order to be sufficient under the statute of frauds, contain a statement of the price.^- If the memorandum or agreement is insufficient by reason of not stating the price, it becomes valid where, in fact, the price has been paid.*^ § 1316. Memorandum — Time of payment. — Under the rule that a memorandum, to be sufficient under the statute of frauds, must be complete in itself and leave nothing to rest in parol, it the law to be that the words "for value received" sufficiently express the consideration. It has been held that, if the consideration expressed was a fictitious one, it was sufficient. Happe V. Stout, 2 Cal. 460. ™ Elmore v. Kingscote, 5 B. & C 583. 29 Rev. Rep. 341; Acebal v. Levy, 10 Bing. 376, 4 Moore & S. 217 (actual agreement as to price shown by parol) ; Goodman v. Grif- fiths. 1 H. & N. 574, 26 L. J. Exch. (N. S.) 145. In the above case the plaintiff showed defendant an in- voice of his price-list, and then verb- ally agreed to sell him at a deduc- tion of twenty-five per cent, of the price on those prices for cash, where- upon an order was written by de- fendant which read "Please put in hand, to my account, the following : 4 mechanical binders" and signed it. Adams v. McMillan. 7 Porter (Ala.) 7i; Ashcroft v. Butterworth. 136 Mass. 511; Hanson v. Marsh, 40 Minn. 1, 40 N. W. 841; Phelps v. Stilling, 60 N. H. .'^OS ; Soles v. Hick- man, 20 Pa. St. 180; Kinloch v. Sav- age. Speers Eq. (S. Car.) 464; Smith V. Arnold, 5 Mason (U. S.) 414; Ide V. Stanton, 15 Vt. 685, 40 Am. Dec. 698. See, however, Armsby Co. V. Eckerly, 42 Mo. App. 299; O'Neil v. Grain, 67 Mo. 250. See also, Peo- ria Grape Sugar Co. v. Babcock Co., 67 Fed. 892 ; Turner v. Lorillard Co., 100 Ga. 465, 28 S. E. 383, 62 Am. St. 345; Norris v. Blair. 39 Ind. 90, 10 Am. Rep. 135; Rector Provision Co. v. Sauer, 69 Miss. 235, 13 So. 623. " Hoadlv v. M'Laine. 10 Bing. 482, 4 Moore & S. 340; Cristie v. Bur- nett, 10 Ont. Rep. 609; Prenatt v- Runvon. 12 Ind. 174. '= Arnold v. Garth. 106 Fed. 13, modified 115 Fed. 468. 53 C. C A. 200; Reid v. Diamond Plate-Glass Co., 85 Fed. 193. 29 C. C. A. 110 (construing Michigan statute) ; James v. Muir, 2Z Mich. 223. See also. Phillips v. Adams. 70 Ala. 372 ; Bowser & Co. v. Marks, 96 Ark. 113. 131 S. W. 334, 32 L. R. A. (N. S.) 429n; Fry v. Piatt. 32 Kans. 62, 3 Pac. 781; Kay v. Curd, 6 B. Mon. (Kv.) 100; Newbery v. Wall, 65 N. Y. "484. " Sayward v. Gardner, 5 Wash. 247, 31 Pac. 761, ZZ Pac. 289. I3I7 CONTRACTS. 560 is generally held that if the memorandum fails to express the time or times of payment of the purchase-price and there is no known nor recognized custom to fix what is thus left undeter- mined, it is insufficient to meet the requirements of the statute.^* There is, however, authority to the contrary. ^^ A number of cases lay down the rule that if the contract is entirely silent as to the time of payment it will be presumed that a cash sale has been made.®® It is held in other jurisdictions that the court cannot presume that the sale was for cash.®^ A fortiori, if the memo- randum itself shows that the transaction was a sale on credit, the terms on which credit was extended must be stated.^^ § 1317. Form of signature. — Much liberality has been in- dulged in in regard to this requirement of the statute.®'' The sig- nature is held valid and binding, though made with the initials of the party only, and parol evidence is admissible to explain and apply them.^*^ The statute is satisfied by the mark of the person ** Hussey v. Horne-Payne, L. R. 4 App. Cas. 311, 27 Week. Rep. 585; Nelson v. Shelby Mfg. &c. Co., 96 Ala. 515, 11 So. 695, 38 Am. St. 116; O'Donnell v. Leeman, 43 Maine 158, 69 Am. Dec. 54; Elliott v. Barrett, 144 Mass. 256, 10 N. E. 820; Ebert V. Cullen, 165 Mich. 75, 130 N. W. 185, 33 L. R. A. (N. S.) 84n; Gault V. Stormont, 51 Mich. 636, 17 N. W. 214; Harney v. Burhans, 91 Wis. 348, 64 N. W. 1031. See also, St. Louis &c. R. Co. V. Beidler, 45 Ark. 17; Webster v. Brown, 67 Mich. 328, 34 N. W. 676; Conrade v. O'Brien, 1 Pa. Super. Ct. 104; Greenlee v. Greenlee, 22 Pa. St. 225. " Camp V. Moreman, 84 Ky. 635, 8 Ky. L. 552, 2 S. W. 179; Ellis v Bray, 79 Mo. 227 (The above case was declared erroneous in Darnell v Lafferty, 113 Mo. App. 282, 88 S. W 784. See also, Ringer v. Holtzclaw 112 Mo. 519, 20 S. W. 800 and Boyd V. Paul, 125 Mo. 9, 28 S. W. 171) Fulton V. Robinson, 55 Tex. 401. *'Eppich V. Clifford, 6 Colo. 493, Ryan v. Hall, 13 Mete. (Mass.) 520 (cash on demand within a reasonable time) ; Mull v. Smith, 132 Mich. 618, ,94 N. W. 183 (contract held an agreement to pay cash within a rea- sonable time) ; Darnell v. Laffertv, 113 Mo. App. 282, 88 S. W. 784; Smith V. Jones, 7 Leigh (Va.) 165, 30 Am. Dec. 498. 'MVood V. Midgley, 2 Sm. & G. 115, 23 L. J. Ch. 553, 2 Week. Rep. 301 ; Hussey v. Horne-Payne, L. R. 4 App. Cas. 311, 48 L. J. Ch. 846. 41 L. T. (N. S.) 1, 27 Week. Rep. 585 ; Queen's College v. Jayne, 10 Ont. L. 319; Major v. Shepherd, 18 Manitoba L. 505 ; Carroll v. Powell, 48 Ala. 298; Wright v. Weeks, 25 N. Y. 153, affg. 3 Bosw. (N. Y.) 372. See also, Snow v. Nelson, 113 Fed. 353. ^Wood V. Midgley, 2 Sm. & G. 115, 23 L. J. Ch. 553, 2 Week. Rep. 301 ; Hussey v. Horne-Payne, L. R. 4 App. Cas. 311, 48 L. J. Ch. (N. S.) 846, 41 L. T. (N. S.) 1, 27 Week. Rep. 585; Major v. Shepherd, 18 Manitoba L. 505; Eppich v. Clifford, 6 Colo. 493. «» Raphael v. Hartman, 87 111. App. 634; Cabot v. Haskins, 3 Pick. (Mass.) 83. ""Sanborn v. Flagler, 9 Allen (Mass.) 474. The words "your af- fectionate mother" at the end of a letter, were held insufficient as a signature. Selby v. Selby, 3 Mer. 2. 56i STATUTE OF FRAUDS. I317 to be charged, or any figure or designation, if the party affixing intends to be bound thereby."^ It is not even essential that the party to be charged should have affixed either signature, initial or mark of any kind, with his own hand. If his name be even printed with his authority, and the printed signature be intended to bind, it will be sufficient."" A printed letter-head followed by the memorandum of sale has been held sufficient as a signature."^ The signature may be stamped on the memorandum,"* or written thereon by a typewriter."^ However, the writing, stamping or printing of his name by the party to be charged, in person or through a duly authorized agent, must be done with the intention of authenticating and finally adopting the writing as his own."" Thus a petition in an action on a written assurance on the letter-heads of a bank, signed by "Helshaw v. Langley, 11 L. J. Ch. 17; Hubert v. Moreau, 2 Car & P. 528; Weston v. Myers, 33 111. 424; Palmer v. Stephens, 1 Denio (N. Y.) 471; Brown v. Butchers' & Drov- ers' Bank, 6 Hill (N. Y.) 443, 41 Am. Dec. 755. In re McFarson's Appeal, 11 Pa. St. 503. A mere scrawl held sufficient. Baker v. Dening, 8 A. & E. 94. An agreement annexed to conditions of sale by auction, to which D (an illiterate person) had put his mark, held a good memo- randum within the statute. Dyas v. Stafford, 7 L. R. Ir. 590. *' Jones V. Joyner, 82 L. T. (N. S.) 768; Hucklesby v. Hook, 82 L. T. (N. S.) 117; Drury v. Young, 58 Md. 546, 42 Am. Rep. 343 (an in- structive case) ; Schneider v. Norris, 2 M. & S. 286 (where the seller filled the blank in a printed bill of parcels with the name of the pur- chaser, and delivered it to him). But in Boardman v. Spooner, 13 Al- len (Mass.) 353, 90 Am. Dec. 196, where the purchaser stamped his name and date on the bill of par- cels, without delivering it to the sel- ler, in the absence of evidence to show that he had adopted such a stamp as a signature and had affixed it to the instrument with the intent to bind himself, it was held an in- sufficient memorandum. 36 — CoNTR.ACTS, Vol. 2 "Tourret v. Cripps, 48 L. J. Ch. (N. S.) 567, 27 Week. Rep. 706; Drury v. Young, 58 Md. 546, 42 Am. Rep. 343 ; Anderson v. Wallace Lum- ber & Mfg. Co., 30 Wash. 147, 70 Pac. 247. See also, Saunderson v. Jackson, 2 Bos. & P. 238, 3 Esp. 180, 5 Rev. Rep. 382; Delaware Ins. Co. V. Pennsylvania &c. Ins. Co., 126 Ga. 380, 55 S. E. 330, 7 Am. & Eng. Ann. Cas. 1134 (insurance policy com- mencing with the name of the com- pany held sufficient as a signature by the insurer). "Deep River Nat. Bank, 73 Conn. 341, 47 Atl. 675; Laudeker v. Co- operative Bldg. Bank, 71 Misc. (N. Y.) 517, 130 N. Y. S. 780. '^Landecker v. Co-operative Bldg. Bank, 71 Misc. (N. Y.) 517, 130 N. Y. S. 780; Degginger v. Martin, 48 Wash. 1, 92 Pac. 674 (in the above case the firm name appeared fol- lowed l^y the initials of the broker). ^ Lee v. Vaughan Seed Store (Ark.), 141 S.W.496, 37 L.R. A. (N. S.) 352 and note. See also, Hucklesbv V. Hook, 82 L. T. (N. S.) 117; Rich- mond Standard Steel Spike & Iron Co. V. Chesterfield Coal Co., 160 Fed. 832, 87 C. C. A. 636; Boardman v. Spooner, 13 Allen (Mass.) 353, 90 Am. Dec. 196; Ferguson v. Trovaten, 94 Minn. 209, 102 N. W. 373. § 1318 CONTRACTS. 562 an officer thereof, must show the authority of the officer to exe- cute the instniment as a binding obHgation.®^ § 1318. Place of signature. — If the name appears in the memorandum, and is applicable to the whole substance of the writing, and is put there by the party, or by his authority, it is immaterial in what part of the instrument it appears, whether at the top, in the middle, or at the bottom.**® Thus, when one of the parties refuses to sign a contract until a modification is written on the back thereof, the mere fact that the signature of the par- ties is on the preceding page does not prevent that which was written on the back from becoming a part of the contract.®^ A memorandum of a contract for the purchase of goods, written by a broker, employed to make the purchase, with a lead pencil, in his book, in the presence of the vendor, the names of the vendor and vendee and the terms of purchase being in the body of the memorandum, but not subscribed by the parties, has been held to be sufficient/ But the signature must be intended to govern the whole contract, otherwise its position may make a difference.^ It has also been held that when the statute provides that the mem- orandum must be subscribed by the party to be charged, the word "subscribed" meant an actual manual subscription at the end of the instrument.^ «^LiR?ett V. Levy, 233 Mo. 590, sas 475, 94 Pac. 798, 15 L. R. A. (N. 136 S W. 299, Ann. Cas. 1912C. 70. S.) 612n, 127 Am. St. 428n. "'Knight V. Crockford, 1 Esp. 190, ' Dyas v. Stafford, 7 L. R. Ir. 5 R R. 729; Saunderson v. Jack- 590; Clason's Exrs. v. Bailey, 14 son, 2 Bos. & P. 238, 3 Esp. 180, 5 Johns. (N. Y.) 484. When the R. R. 382; Higdon v. Thomas, 1 agreement is required to be sub- Har. & G. (Md.) 139; Evans v. scribed" by the terms of the statute, Hoare (1892), 1 Q. B. 593; Cali- the signature, to be binding, must be fornia Can. Co. v. Scatena, 117 Cal. at the foot. Davis v. Shields, 26 447, 49 Pac. 462 (signature written Wend. (N. Y.) 341; McGivern v across the face of the instrument) ; Fleming, 12 Daly (N. Y.) 289, 66 Bonewell v. Jacobson, 130 Iowa 170, How. Pr. (N. Y.) 300. 106 N W 614, 5 L. R. A. (N. S.) " Caton v. Caton, 36 L. J. Ch. 886, 436 and note ; Drury v. Young, 58 L. R. 2 H. L. 127, 16 W. R. 1. Md 546 42 Am. Rep. 343; Hawkins 'Vielie v. Osgood, 8 Barb. (N. Y.) V Chace, 19 Pick. (Mass.) 502; Don- 130; Zachrisson v. Poppe, 3 Bosw. nell Mfg. Co. v. Repass, 75 Mo. App. (N. Y.) 171. Compare with Equi- 420; Barry V. Coombe, 1 Pet. (U. S.) table Life Assur. Soc. v. Meuth, 145 640. Ky. 160, 140 S. W. 157 (signature of "Bonewell v. Jacobson, 130 Iowa president on the face of the policy 170, 106 N. W. 614, 5 L. R. A. (N. on the back of which his own name S.)' 436 and note. See also, Kurth was printed at the close of the list v. Farmer's &c. State Bank, 11 Kan- of privileges). 563 STATUTE OF FRAUDS. § I319 § 1319. Who must sign. — While there are a few early cases that suggested that a distinction might exist,* it is now uniformly held that there is no difference between the fourth and seventeenth sections of the statute caused by the use of the word "party" in the fourth section and the plural "parties" in the seventeenth sec- tion.° It is not necessary that both parties sign the agreement." In the absence of any special provisions in local statutes, the memorandurn need be signed only by the party "to be charged," that is to say, the party who is to be bound or held chargeable and legally responsible on the contract/ * See Champion v, Plummer, 5 Esp. 240, 1 Bos. & P. (N. R.) 252, 8 R. R. 795. "Cunningham v. Williams, 43 Mo. App. 629; Clason's Exrs. v. Bailey, 14 Johns. (N. Y.) 484; Justice v. Lang, 42 N. Y. 493, 1 Am. Rep. 576. 'Ormond v. Anderson, 2 Ball & B. 370, 12 R. R. 103; Thornton v. Kempster, 5 Taunt. 786, 1 Marsh. 355, 15 R. R. 658; Allen v. Bennett, 3 Taunt. 169, 12 R. R. 633; Seton v. Slade, 7 Ves. 265, 6 R. R. 124; Field V. Boland, 1 Dru. & Wal. Zl ; Smith V. Neale, 2 C. B. (N. S.) 67; Reuss V. Picksley, 4 H. & C. 588; Gaunt v. Hill, 1 Stark. 10; Raphael v. Hart- man, 87 111. App. 634; First Presby- terian Church V. Swanson, 100 111. App. 39; Smith v. Theobold, 86 Ky. 141, 5 S. W. 394; Justice v. Lang, 42 N. Y. 493, 1 Am. Rep. 576; Himrod Furnace Co. v. Cleveland & M. R. Co., 22 Ohio St. 451; Kearhy v. Hopkins, 14 Tex. Civ. App. 166, 36 S. W. 506. In Fenly v. Stewart, 5 Sandf. (N. Y.) 101, it is said: "This construction has proceeded not on the ground that contracts need not be mutual, but that the statute, in certain enumerated cases, has taken away the power of enforcing con- tracts, which would otherwise be mu- lually binding, unless the parties against whom they are sought to be enforced, have subscribed some note or memorandum thereof in writing. If a mutual contract is made, and one of the parties to it gives the other a memorandum, in pursuance of the statute, but neglects to take from that other a corresponding memorandum, he has but himself to blame if he is unable to compel its performance, while he is bound to the other party. The difficulty is not that the contract, as originally entered into, is not mutual, but that one of the parties has not the evi- dence which the statute has made indispensable to its enforcement." Contra, Lawrenson v. Butler, 1 Sch. & Lef. 13; Wilkinson v. Haven- rich, 58 Mich. 574, 26 N. W. 139, 55 Am. St. 708; Co-operative Tel. Co. V. Katus, 140 Mich. 367, 103 N. W. 814, 112 Am. St. 414; Adams v. Har- rington Hotel Co., 154 Mich. 198, 117 N. W. 551, 19 L. R. A. (N. S.) 919; Mcllroy v. Richards, 148 Mich. 694, 112 N. W. 489. See also, Hal- sell V. Renfrow, 202 U. S. 287, 50 L. ed. 1032. 26 Sup. Ct. 610, 6 Am. & Eng. Ann. Cas. 489 (pointing out a distinction between the Oklahoma statute and the statute as usually worded). ' Egerton v. Matthews, 6 East 307 ; Liverpool Borough Bank v. Eccles, 4 H. & N. 139, 28 L. J. Ex. 122; Bank of British America v. Simp- son, 24 U. C. C. P. 354; Kizer v. Lock, 9 Ala. 269; Vassault v. Ed- wards, 43 Cal. 458; Harper v. Gold- schmidt. 156 Cal. 245, 104 Pac. 451, 28 L. R. A. (N. S.) 689, 134 Am. St. 124; Weldin v. Porter, 4 Houst. (Del.) 236; Linton v. Williams, 25 Ga. 391; Perkins v. Hadsell, 50 111. 216; Cook v. Anderson, 20 Ind. 15; Murrav v. Crawford (Ky.), 127 S. W. 494. 28 L. R. A. (N. S.) 680; Williams v. Robinson, Ti Maine 186, 40 Am. Rep. 352; Dresel v. Jordan. 104 Mass. 407; Scott v. Bush, 26 Mich. 418. 12 .\vn. Rep. 311; Mar- queze v. Caldwell, 48 ^Iiss. 23 ; Luc- kett V. Williamson, Zl Mo. 388; Na- § I320 CONTRACTS. 564 § 1320. Who is the party to be charged. — The term "party to be charged" as used in the statute of frauds does not mean the vendor, nor the vendee, but by it is meant the person sought to be charged in court with the performance of the obhgation. "Party defendant" is the party to be charged with the Habihties dependent on and resulting from the evidence, and it is he who is intended to be protected against the danger of false oral testi- mony.^ Thus, in cases which involve contracts for the sale of real property, it has been held that a vendor who did not sign, may enforce the agreement against a vendee who did sign, either by an action for specific performance,^ or by an action at law.^** The same has been held true where the contract was for the sale tional Fire Ins. Co. v. Loomis, 11 Paige (N. Y.) 431; Mizell v. Bur- nett, 4 Jones (N. Car.) 249, 69 Am. Dec. 744; Johnston v. Cowan, 59 Pa. St. 275 ; Sheid v. Stamps, 2 Sneed (Tenn.) 172; Le Vine v. White- house, n Utah 260, 109 Pac. 2, Ann. Cas. 1912C. 407; Brandon Mfg. Co. V. Morse, 48 Vt. 322. *Heflin v. Milton, 69 Ala. 354; Lee V. Vaughan Seed Store (Ark.), 131 S. W. 496, Zl L. R. A. (N. S.) 352; Harper v. Goldschmidt, 156 Cal. 245, 104 Pac. 451, 28 L. R. A. (N. S.) 689, 134 Am. St. 124; Ehren- strom V. Phillips (Del.), 11 Atl. 81; Beckwith V. Clark, 188 Fed. 171, 110 C. C. A. 207; Breen v. Mayne, 141 Iowa 399, 118 N. W. 441 (see also, Schaefer v. Whitman, 146 Iowa 64, 124 N. W. 763) ; Wiley v. Hellen, 83 Kans. 544, 112 Pac. 158; Justice v. Lang, 42 N. Y. 493, 1 Am. Rep. 576 ; Davis V. Martin, 146 N. Car. 281, 59 S. E. 700; Miller v. Carolina Monazite Co., 152 N. Car. 608, 68 S E. 1. (See also. Brown v. Hobbs, 154 N. Car. 544, 70 S. E. 906); Flegel V. Dowling, 54 Ore. 40, 102 Pac. 178; 19 Am. & Eng. Ann. Cas. 1159, 135 Am. St. 812; Jackson v. Stearns, 58 Ore. 57, 113 Pac. 30; Wharton v. Tolbert, 84 S- Car. 197, 65 S. E. 1056; Shillinglaw V. Sims, 86 S. Car. 76, 67 S. E. 906; Cotulla v. Barlow (Texas), 115 S. W. 294; Hazzard v. Morrison (Texas Civ. App.), 130 S. W. 244. (See also, Dockery v. Thorne (Texas), 135 S. W. 593) ; Armstrong v. Maryland Coal Co., (n W. Va. 589, 69 S. E. 195. (See also, Crotty v. Effler, 60 W. Va. 258, 9 Am. & Eng. Ann. Cas. 770, 54 S. E. 345) ; Montana &c. Oil Co. V. Gibson (Wyo.), 113 Pac. 784. See also, note in 3 Am. & Eng. Ann. Cas. 1036, where many additional American and Eng- lish authorities are collected. Com- pare with, UUsperger v. Meyer, 217 111. 262, 75 N. E. 482, 3 Ann. Cas. 1032, 2 L. R. A. (N. S.) 221n; Le Vine V. Whitehouse, Zl Utah 260, 109 Pac. 2, Ann. Cas. 1912C. 407; Bailey v. Heishman, 32 Utah 123, 89 Pac. 78, 13 Am. & Eng. Ann. Cas. 1115. "Hodges V. Kowing, 58 Conn. 12, 18 Atl. 979, 7 L. R. A. 87; Old Col- ony R. Corp. V. Evans, 6 Gray (Mass.) 25, 66 Am. Dec. 394; Dresel V. Jordan, 104 Mass. 407; Ivory v. Murphy, Zd Mo. 534; Marqueze v. Caldwell, 48 Miss. 23 (overruling intimations to contrary in Lee V. Dozier, 40 Miss. 477) ; Hunter v. Seton (sub nomine Seton v. Slade), 7 Ves. Jr. 265; Butcher v. Nash, 61 L. T. (N. S.) 72. "Oliver V. Alabama Gold L. Ins. Co., 82 Ala. 417, 2 So. 445 (suit for rent) ; Byers v. Aiken, 5 Ark. 419 (action to recover purchase- price) ; Drennen v. Boyer, 5 Ark. 497; Booklover Library v. Bogigian, 193 Mass. 444, 79 N. E. 769 (action for failure to take a lease of prem- ises) ; Browning v. Walburn^ 45 Mo. 477 (suit to recover on breach of an agreement to accept premises 565 STATUTE OF FRAUDS. § I32I of chattels, — the seller, who did not sign, being permitted to enforce the contract against the purchaser who did sign.^^ § 1321. Vendor as party to be charged. — Other authorities hold, however, that the purpose of the statute is to protect the holder of the title from alleged verbal agreements for its sale, and that the party to be charged is the vendor, and that the obliga- tion of the contract is unen forcible unless the memorandum is signed by the vendor. They so hold on the theory that the vendor is the party vested with title, and that it is he who can assume a liability which wall compel him to convey the title to the property to the vendee, and that the law intended him to be protected in his right to the property until he voluntarily disposed of it by a writing.^^ Where this rule obtains, a memorandum signed by the vendor alone is sufficient, and he may maintain an action on the contract against a vendee who did not sign." and pay rent) ; Laythoarp v. Bryant, 2 Bing. (N. Car.) 735 (action to re- cover for refusal to pay for lease- hold premises) ; Crutchfield v. Dona- thon, 49 Texas 691, 30 Am. Rep. 112; Anderson v. Tinsley (Tex. Civ. App.), 28 S. W. 121 (suit to recover for damages for breach of contract to purchase land). " Egerton v. Mathews, 6 East 307 ; In re Neff, 157 Fed. 57, 84 C. C. A. 561. 28 L. R. A. (N. S.) 349 (pro- moter of a corporation signed a promise to pay for stock taken by a subscriber upon its surrender within a certain time) ; Schaefer v. White- man, 146 Iowa 64, 124 N. W. 763; Barstow v. Gray, 3 Greenl. (Maine) 409; Penniman v. Hartshorn, 13 Mass. 87; Wemple v. Knopf, 15 Minn. 440, Gil. 355, 2 Am. Rep. 147; Kessler v. Smith. 42 Minn. 494, 44 N. W. 794; Cunningham v. Williams, 43 Mo. App. 629; Clason's Exrs. v. Bailey, 14 Johns. (N. Y.) 484 (obiter) ; Mason v. Decker, 72 N. Y. 595. 28 Am. Rep. 190; Cameron Coal &c. Co. V. Universal Metal Co., 26 Okla. 615, 110 Pac. 720. 31 L. R. A. (N. S.) 619; J. I. Case Thresh- ing Mach. Co. v. Smith. 16 Ore. 381, 18 Pac. 641. See Dvkers v. Townsend, 24 N. Y. 57. Contra. Wilkinson v. Heavenrich, 58 Mich. 574, 26 N. W. 139, 55 Am. Rep. 708; Mcllroy v. Richards, 148 Mich. 694, 112 X. W. 489. See also, Murray v. Crawford (Ky.), 127 S. W. 494. 28 L. R. A. (N. S.) 680, which holds that a vendor of real estate who has not signed a contract for the sale there- of cannot maintain an action to charge the vendee thereon on the ground that the party to be charged is the vendor. ^= Murray v. Crawford (Kv.), 127 S. W. 494. 28 L. R. A. (N. S.) 680; Sears v. Ohler, 144 Ky. 473, 139 S. W. 759; Allen v. Stailey (Ky.). 119 S. W. 755; Frazer v. Ford, 2 Head (Tenn.) 464; Lee v. Cherry, 85 Tenn. 707. 4 S. W- 835, 4 Am. St. 800. See also, Curtis v. Blair, 26 Miss. 309, 59 Am. Dec. 257; Johnson v. Brook, 31 Miss. 17. 66 Am. Dec. 547; Peevey v. Haughton, 72 Miss. 918, 17 So. 378. 18 So. 857. 48 Am. St. 592; Bailev v. Leishman. 32 Utah 123, 89 Pac. 78, 13 Am. & Eng. Ann. Cas. 1116; Le Vine v. White- house, 2>7 Utah 260, 109 Pac. 2. Ann. Cas. 1912C. 407. "Evans v. Stratton, 142 Kv. 615. 134 S. W. 1154. 34 L. R. A. (N. S.) 393. The cases which hold that the vendor is the party to be charged seem to overlook the fact that the vendee is as much entitled to pro- § 1322 CONTRACTS. 566 § 1322. Trustee as party to be charged. — It has been held that when a trust is not created in and by the instrument of con- veyance, it may be sufficiently declared and evidenced by the trustee to whom the land is conveyed. He is the party to be charged and his declaration of the trust takes the transaction out of the statute.'* § 1323. Special statutes relating to the signature of the parties. — The statute of frauds as it exists in certain states does not contain the phrase "party to be charged." Thus, in a number of jurisdictions, the statute requires the contract for the sale or leasing of real property to be signed by the grantor or lessor.'^ The statute in New York as originally passed provided that a contract relating to real estate must be signed by the party to be charged, and under this act it was held that the signature of the defendant was sufficient." Subsequently the law was changed so as to require a memorandum for the sale of real property to be signed by the vendor or his lawfully authorized agent." Under tection as the vendor. The Supreme Court of North Carolina has pointed this out in apt words. It is said "The danger seems as great, that a purchase at an exorbitant price may by perjury be imposed on one, who did not contract for it, as that by similar means a feigned contract of sale should be established against the owner of the land. Hence the act in terms avoids entirely every contract of which the sale of land is the subject, in respect of a party, that is, either party, who does not charge himself by his signature to it after it has been reduced to writ- ing." Simms v. Killian, 34 N. Car. 252. 'f' Holmes v. Holmes, 65 Wash. 572, 118 Pac. 733, 38 L. R. A. (N. S.) 645. See also, Dale v. Hamilton, 2 Phill. Ch. 266, 16 L. J. Ch. (N. S.) 397, 11 Jur. 574; Myers v. Myers, 167 111. 52, 47 N. E. 309. See how- ever, Tierney v. Wood, 19 Beav. 30, 23 L. T. Ch. (N. S.) 895, 2 Week. Rep. 577. '^Mull V. Smith, 132 Mich. 618, 94 N. W. 183 ; Ehrmantraut v. Robin- son, 52 Minn. 333, 54 N. W. 188; Ide V. Leiser, 10 Mont. 5, 24 Pac. 695, 24 Am. St. 17 ; Gartrell v. Staf- ford, 12 Nebr. 545, 11 N. W. 732, 41 Am. Rep. 767; Robinson v. Che- ney, 17 Nebr. 673, 24 N. W. 378; Roberts v. Cheney, 17 Nebr. 681, 24 N. W. 382; Lowry v. Mehaffy, 10 Watts. (Pa.) 387; Tripp v. Bishop, 56 Pa. St. 424; Johnson v. Cowan, 59 Pa. St. 275; Smith's Appeal, 69 Pa. St. 474; Everhart v. Dolph, 133 Pa. St. 628, 19 Atl. 431; Borie v. Satterthwaite, 180 Pa. St. 542, Z7 Atl. 102; Witman v. Reading, 191 Pa. St. 134, 43 Atl. 140; Brodhead v. Reinbold, 200 Pa. St. 618, 50 Atl. 229, 86 Am. St. 735 ; Hodson v. Car- ter, 3 Pin. (Wis.) 212, 3 Chand. (Wis.) 234; Cheney v. Cook, 7 Wis. 413; Lowber v. Connit, 36 Wis. 176. See also. Matter of Eargood, 1 Pear- son (Pa.) 399; Shoof stall v. Adams, 2 Grant Cas. (Pa.) 209. In M'Far- son's Appeal, 11 Pa. St. 503. "Worral v. Munn, 5 N. Y. 229, 55 Am. Dec. 330n; Earl v. Camp- bell. 14 How. Pr. (N. Y.) 330; M'Crea v. Purmort, 16 Wend. (N. Y.) 460, 30 Am. Dec. 103. "Bleecker v. Franklin, 2 E. D. Smith (N. Y.) 93; Cammeyer v. United German Lutheran Churches, 567 STATUTE OF FRAUDS. § 1 324 this Statute it has been held that where property was conveyed to the plaintiff with an agreement to repurchase for the defendant and the plaintiff did not sign defendant's agreement to repur- chase, the defendant could not, under the circumstances, defeat an action on the agreement on the ground that the plaintiff was the vendor/® § 1324. Time when memorandum must be made. — The memorandum is only necessary to evidence the contract, not to constitute it. It is unnecessary that all the terms of the contract be agreed to at one time or written down at one time, or on one piece of paper. If all the papers, taken together, contain the whole bargain, they form such a memorandum as will satisfy the stat- ute.^® The memorandum may be prepared before the contract be- comes a binding obligation on the parties. An offer which is signed by the party to be charged, which contains the essential terms of the contract, and which is subsequently accepted orally by the par- ty to whom the proposal is made, is sufficient as a memorandum.^" The memorandum may, except when made by a mere auction- eer," be prepared subsequently to the time the oral contract is entered into at any time before the action is brought." Thus, 2 Sandf. Ch. (N. Y.) 186; Miller v. same thing. The memorandum is Pelletier, 4 Edw. Ch. (N. Y.) 102; understood to be a note or minute, Champlin v. Parish, 11 Paige (N. informally made of the agreement, Y.) 405; Earl v. Campbell, 14 How. which may have but a verbal exist- Pr. (N. Y.) 330; West v. Newton, 1 ence, expressing briefly the essential Duer (N. Y.) 277; National F. terms, and was never intended to Ins. Co. V. Loomis, 11 Paige (N. Y.) stand as and for the agreement it- 431; Biden v. James, 42 Hun (N. Y.) self." Catterlin v. Bush. 39 Ore. 496, 654, 3 N. Y. St. 734, affd. Ill N. Y. 501, 65 Pac. 1064, 59 Pac. 706. 680, 19 N. E. 284; De Beerski v. =" Brewer v. Horst-Lachmund Co., Paige, 47 Barb. (N. Y.) 172, affd. 127 Cal. 643, 60 Pac. 418, 50 L. R. A. 36 N. Y. 537; Havdock v. Stow, 40 240; Western Union Tel. Co. v. N. Y. 363. See Edwards v. Farm- Chicago &c. R. Co., 86 111. 246, 29 ers' Fire Ins. & Loan Co., 21 Wend. Am. Rep. 28; Austin v. Davis. 128 (N. Y.) 467, affd. 26 Wend. (N. Ind. 472, 26 N. E. 890, 12 L. R. A. Y.) 541. 120, 25 Am. St. 456; Williams v. "Van Name v. Queens Land and Smith, 161 Mass. 248, 37 N. E. 455; Title Co., 130 App. Div. (N. Y.) Sanborn v. Flagler. 9 Allen (Mass.) 857, 15 N. Y. S. 905. 474; Hickey v. Dole. 66 N. H. 336, "Charlton v. Columbia Real Es- 29 Atl. 792, 49 Am. St. 614; Thaver tate Co., 67 N. J. Eq. 629, 60 Atl. 192, v. Luce, 22 Ohio St. 62; Bibb v. Al- 69 L. R. A. 394, 110 Am. St. 495. len, 149 U. S. 481, 37 L. ed. 819. 13 See also, Ingraham v. Strong. 41 Sup. Ct. 950. 111. App. 46. "The memorandum ^Benj. Principles of Sales, p. 300. and the contract or agreement are ^ Dominick v. Randolph, 124 .-Ma. not to be confounded as one and the 557, 27 So. 481 ; Lamkin v. Baldwin § 1325 CONTRACTS. 568 an unauthorized contract of sale made by an agent which is within the statute of frauds may be taken out of the statute by a written ratification of the contract by the principal.'^ Letters written-* after the agreement is entered into, although a consid- erable period of time has elapsed,-^ may be sufficient as a memo- randum. A written memorandum made after a breach of the contract but before any action is brought for the breach, has been held sufficient to satisfy the statute of frauds.-^ When the writ- ing is executed subsequent to the verbal agreement, such memo- randum need not be supported by a new consideration." Such memorandum does not, however, retroact so as to affect third persons.^^ It has been held, moreover, that where the written memorandum of a verbal antenuptial contract was not prepared until after the marriage it did not meet the requirements of the statute for the reason that the statute required the contract itself to be in writing.^® § 1325. Must memorandum be prepared before action is brought? — There are authorities which hold that the memo- randum must be prepared at a time prior to the bringing of the & Lamkin Mfg. Co., 72 Conn. 57, 43 683, 120 Pac. 528, 38 L. R. A. (N. Atl. 593, 1042, 44L. R. A. 786; Whiton S.) 783. V. Whiton, 179 111. 32, 53 N. E. 722, ^* Pitcher v. Lowe, 95 Ga. 423 22 affg. 76 111. App. 553; Miller v. Kan- S. E. 678; Lyons v. Wait (sub nom- sas City &c. R. Co., 58 Kans. 189, 48 ine Lyons v. Pyatt), 51 N. J Eq. Pac. 853; Tyler v. Onzts, 93 Ky. 331, 60, 26 Atl. 334; Townsend v. Ken- 20 S. W. 256; Bird v. Munroe, 66 nedy, 6 S. Dak. 47, 60 N. W. 164; Maine 22,7, 22 Am. Rep. 571 ; Mc- Bayne v. Wiggins, 139 U. S. 210, 35 Manus v. Boston, 171 Mass. 152, 50 L. ed. 144, 11 Sup. Ct. 521; Ide v. N. E. 607; Merson v. Merson, 101 Stanton, 15 Vt. 685, 40 Am. Dec. Mich. 55, 59 N. W. 441; Sheehy 698. V. Fulton, 38 Nebr. 691, 57 N. ^°Lee v. Butler, 167 Mass. 426, 46 W. 395, 41 Am. St. 767; Gar- N. E. 52, 57 Am. St. 466; Newkirk dels V. Kloke, 36 Nebr. 493, 54 v. Place, 47 N. J. Eq. 477, 21 Atl. N. W. 834; Curtis v. Portsmouth, 124. 67 N. H. 506, 39 Atl. 439; Argus Co. '"Bird v. Munroe, 66 Maine ZZ7, 22 V. Albany, 55 N. Y. 495, 14 Am. Rep. Am. Rep. 571. 296; Townsend v. Kennedy, 6 S. "Sheehy v. Fulton, 38 Nebr. 691, Dak. 47, 60 N. W. 164 ; Ide v. Stan- 57 N. W. 395, 41 Am. St. 767. ton, IS Vt. 685, 40 Am. Dec. 698; ==* Felthouse v. Bindley, 11 C. B. Newport News &c. Co. v. Newport (N. S.) 869; Emery v. Terminal &c. R. Co., 97 Va. 19, 32 S. E. 789; Co., 178 Mass. 172, 59 N. E. 763, 86 Prignon v. Daussat, 4 Wash. 199, Am. St. 473. 29 Pac. 1046, 31 Am. St. 914. =* McAnnulty v. McAnnulty, 120 "•McLeod V. Morrison, 66 Wash. 111. 26, 11 N. E. 397, 60 Am. Rep. 552. 569 STATUTE OF FRAUDS. § 1 326 action.^" Other authorities inchnc to the doctrine that the memorandum may be prepared after the action is brought. Thus, where the vendor was sued on his contract to sell land and in answer to the complaint pleaded that he was willing to convey and in writing offered to do so, it was held that the assignee of the vendor had no right to plead the statute of frauds for the vendor who refused to do so, but, on the contrary, offered to convey.^^ It has also been held that where a purchaser at a sheriff's sale brought an action in ejectment against the one in possession, a special return of the sheriff made after the action was brought and the jury empaneled was sufficient as a memorandum.^' The declaration of a trust contained in an answer to a suit for parti- tion showing the terms and conditions of the trust has been held a sufficient memorandum.^^ The filing of a pleading, however, which has for its purpose the avoidance of a parol contract for the sale of land, is not such a written memorandum of the contract and a description of the land as will take it out of the statute of frauds.^* § 1326. Necessity for delivery of memorandum. — A num- ber of authorities lay down the rule that an undelivered memo- randum does not operate to take the contract out of the statute of frauds. ^° In a number of cases this doctrine is given a very broad statement. ^"^ The rule which holds that the memorandum ~BilI V. Bament, 9 M. & W. 36; Cush. (Mass.) 151; Sanborn v. San- Lucas V. Dixon, 22 Q. B. Div. 357. born, 7 Gray (Mass.) 142; Grant v. In re Hoyle (1893), 1 Ch. 84; Gaines Levan, 4 Pa. St. 393; Nichols v. Op- V. McAdam, 79 111. App. 201. See perman, 6 Wash. 618, 34 Pac. 162. also. Bird v. Munroe. 66 Maine 337, '^"To make it operative, it must 22 Am. Rep. 571. In the case last have been executed, and delivered cited, however, it is said: "There has to the plaintiffs, or to some one in been some judicial inclination to their behalf." Parker v. Parker, 1 favor the doctrine to that extent Gray (Mass.) 409, 411. "We have even, and there may be some logic been able to find no case in which a in it." writing signed by a party and kept ^Walker v. Walker (Ky.), 41 S. in his possession, without delivery to W. 315. second appeal 55 S. W. 726. the other party, has been held to be a "Remington v. Linthicum, 14 Pet. compliance with the statute." Johnson (U. S.) 84, 10 L. ed. 364. v. Brook, 31 Miss. 17, 66 Am. Dec. "Mvers v. Myers, 167 111. 52, 47 547. quoted in Steel v. Fife. 48 Iowa N. E.'309. 99. 30 Am. Rep. 388. "We have made "Davis V. Ross (Tenn.), 50 S. a pretty thorough search, but have W. 650. been unable to find any case which •"Day V. Lacasse, 85 Maine 242, 27 sustains the position that an un- Atl. 124; Merriam v. Leonard, 6 delivered deed may be treated as a § 1326 CONTRACTS. 5/0 must be delivered is especially applicable to deeds®^ or some other instrument conveying an interest in real property, such as a mort- gage^* or a lease.^® The same is true of a deed which is placed in escrow but over which the grantor retains control.'*" How- ever, when a deed is placed in escrow but beyond all control of the grantor, it is sufficient as a memorandum.*^ It has also been held that a deed not delivered as such, may, nevertheless, be deliv- ered as an executory contract, or as partial evidence of a contract to sell and convey the land described, and if signed and delivered by the vendor and accepted by the vendee, is sufficient to take the case out of the operation of the statute of frauds.*^ In a suit for specific performance of an oral agreement to make a lease it has been held proper to admit in evidence all the paper writings signed by the parties to the negotiation, even though some of the papers be signed but undelivered instruments, in order to see, when all the papers are taken together, whether they contain the completed terms for a lease as agreed, so that a decree may be made." Other authorities held that a memorandum under the statute of frauds need not be delivered.** It would seem that if the memorandum is merely the evidence of the contract and is not memorandum in writing." Wier v. 43 N. Y. 550; Nichols v. Opperman, Batdorf, 24 Nebr. 83, 38 N. W. 22. 6 Wash. 618, 34 Pac. 162; Popp v. It is essential that the writing re- Swanke, 68 Wis. 364, 31 N. W. 916. quired by the statute be delivered. " Griel v. Lomax, 89 Ala. 420, 6 Nichols V. Opperman, 6 Wash. 618, So. 741; Osborne v. Eslinger, 155 34 Pac. 162. Ind. 351, 58 N. E. 439, 80 Am. St. ^Lodgsdon v. Newton, 54 Iowa 240; Lippold v. Lippold, 112 Iowa 448, 6 N. W. 715; Morrow v. Moore, 134, 83 N. W. 809, 84 Am. St. 331. 98 Maine Z7Z, 57 Atl. 81, 99 Am. St. "Thayer v. Luce, 22 Ohio St. 62 410; Parker v. Parker, 1 Gray (the above case was approved but (Mass.) 409; Comer v. Baldwin, 16 distinguished in Wier v. Batdorf, Gil. (Minn.) 151 ; Schneider v. Vog- 24 Nebr. 83, 38 N. W. 22 and Nichols ler (Nebr.), 97 N. W. 1018; Wier v. Opperman, 6 Wash. 618, 34 Pac. V. Batdorf, 24 Nebr. 83, 38 N. W. 22; 122). As to the effect that an un- Brown v. Brown, ZZ N. J. Eq. 650; delivered deed may have as an ad- Wilson V. Winters, 108 Tenn. 398, mission of some contract to convey 67 S. W. 800. see. Hart v. Carroll, 85 Pa. St. 508; "Merriam v. Leonard, 6 Cush. McGibbeny v. Burmaster, 53 Pa. St. (Mass.) 151. 332. " Chesebrough v. Pingree, 72 Mich. ** Charlton v. Columbia Real Es- 438, 40 N. W. 747, 1 L. R. A. 529. tate Co., 67 N. J. Eq. 629, 60 Atl. "Kopp V. Reiter, 146 111. 437, 34 192, 69 L. R. A. 394, 110 Am. St. N E. 942, 22 L. R. A. 273, Z7 Am. 495. St. 156; Day v. Lacasse, 85 Maine "Johnson v. Dodgson, 2 M. & W. 242, 27 Atl. 124; Cagger v. Lansing, 653; Drury v. Young, 58 Md. 546, 571 STATUTE OF FRAUDS. § 1 327 the contract, and the contract itself is not of such a character as to require delivery, it is immaterial whether the memorandum is delivered or not. All that is necessary is that it be intended to evidence the agreement upon which the minds of the parties met. It would perhaps be more accurate to say that the memorandum need not pass between the parties. Thus a memorandum made by the defendant's bookkeeper at the formers' direction and by the bookkeeper placed in their safe has been held sufficient as a memorandum. ^^ A recital contained in a will which gives ex- pression to the terms of the contract is sufficient as a memo- randum.*" An entr}' in the records of a corporation may be suffi- cient as a memorandum and does not seem to be open to the objection that it has not been delivered.*^ The undelivered memorandum, to be sufficient, must of course contain all the essential elements of the contract the same as any other memo- randum. Thus a resolution adopted on the part of the directory or at a stockholders' meeting of the corporation declaring their willingness to sell the corporate property at a certain figure, and empowering the president to consummate the sale by executing and delivering the necessary deeds, does not constitute a valid contract for the sale of real estate within the statute of frauds.** § 1327. Taking contract out of operation of seventeenth section — Part performance. — The circumstances may be such that mere performance by the vendee of some service or labor in reference to the goods purchased may be considered as such a part performance or part payment or payment of an earnest 42 Am. Rep. 343; Hovekamp v. EI- Conn. 57, 43 Atl. 593, 44 L. R. A. shofif, 3 Ohio N. P. 158, 4 Ohio S. 786; Grimes v. Hamihon Co., Zl & C. P. Dec. 171. Iowa 290; Johnson v. Trinity Church "Drury v. Young, 58 Md. 546, 42 Society. 11 Allen (Mass.) 123; Tufts Am. Rep. 343. v. Plymouth Gold Min. Co., 14 Al- *«In re Hoyle (1893), 1 Ch. 84; len (Mass.) 407; McManus v. Bos- Maddox V. Rovve, 23 Ga. 431. 68 Am. ton, 171 Mass. 152. 50 N. E. 607; Dec. 535; Whiton v. Whiton, 179 Curtis v. Portsmouth. 67 N. H. 506, 111. 32. 53 N. E. 722; Drinker v. 39 Atl. 439; Argus Co. v. Albany, 55 Brinker, 7 Pa. St. 53 Shrover v. N. Y. 495, 14 Am. Rep. 296; Marden Smith, 204 Pa. 310, 54 Atl. 24; Smith v. Champlin. 17 R. I. 423, 22 Atl. V. Tuit, 127 Pa. St. 341, 17 Atl. 995, 938; Central Land Co. v. Johnston, 14 Am. St. 851. 95 Va. 223. 28 S. E. 175. "Greenville v. Water-works Co., "Cumberland & O. V. R. Co v 125 Ala. 625, 27 So. 764; Lamkin v. Shelbyville B. & O. R Co.. 117 Ky Baldwin & Lamkin Mfg. Co., 72 95, 25 Ky. L. 1265, 77 S. \V. 690. § 1328 CONTRACTS 572 as will tcike the case out of the statute. Thus the baling of hay- by the vendee has been held a sufficient part payment of the pur- chase-price to take the contract for the buying of hay, the pur- chaser to do the baling, out of the statute/® However, a parol contract for the purchase of a large amount of corn, the purchaser as a part consideration of the sale to furnish bags in which to put the corn when shelled, has been declared within the statute, not- withstanding the sacks were furnished in accordance with the terms of the contract.'^" § 1328. Taking contract out of operation of seventeenth section — Receipt and acceptance — Necessity for. — If the con- tract is oral, and no part of the price is paid by the vendee, there must not only be a delivery of the goods, or a part of them, by the vendor, but a receipt and acceptance of the same by the vendee to pass the title or to make the vendee liable for the price.^^ When the contract for the sale of chattels is oral and nothing has been given as earnest or by way of payment and neither the goods nor any part thereof have been delivered and accepted and the vendee has performed no acts of ownership, it is within the statute of frauds and unenforcible." Nor is *» Driggs V. Bush, 152 Mich. 53, 327, 70 S. W. 256 ; Shepherd v. Pres- 115 N. W. 985, 15 L. R. A. (N. S.) sey, Z2 N. H. 49; Caulkins v. Hell- 654, 125 Am. St. 389n (In this case man, 47 N. Y. 449, 7 Am. Rep. 461; the action was brought by the pur- Stone v. Browning, 51 N. Y. 211; chaser to recover damages for breach Gibbs v. Benjamin, 45 Vt. 124; Rich- of contract.). See also, Edwards v. ardson v. Squires, Zl Vt. 640; Amson Brown, 98 Maine 165, 56 Atl. 654. v. Dreher, 35 Wis. 615. If the con- ""Hudnut V. Weir, 100 Ind. 501 (In tract be for specified goods, the ac- this case the action was brought by ceptance takes place at the time of the vendor to recover damages for the bargain and the same evidence breach of contract.). that proves the bargain will prove the ''Smith V. Hudson, 6 B. & S. 431, acceptance. Cusack v. Robinson, 1 34 L. J. Q. B. 145; Hinde v. White- B. & S. 299; Phillips v. Bistolh, 2 B. house, 7 East 558, 3 Smith 528, 8 R. & C. 511, 3 D. & R. 391, 2 L. J. R. 676; Wilhams v. Savers (Ala.), (O. S.) K. B. 116. The general rule 29 So. 995; Pusev & Jones v. Dodge, is that as between seller and pur- 3 Pennew. (Del.) 63, 49 Atl. 248; chaser, and as agamst strangers and Brunswick Grocery Co. v. Lamar, 116 trespassers, the title to personal Ga. 1, 42 S. E. 366; Denmead v. property passes by sale without de- Glass, 30 Ga. 637; Greenleaf v. Ham- livery, when no question arises in re- ilton, 94 Maine 118, 46 Atl. 798; Max- lation to the statute of frauds Curn- well V. Brown, 39 Maine 98. (iZ Am. mings v. Gilman, 90 Maine 524, 38 Dec. 605; Corbett v. Wolford. 84 Md. Atl. 538. ,„ ^ , ,-0 426. 35 Atl. 1088; Jones v. Mechanics' "= Jamison v. Simon, 68 Gal 17, 8 Bank, 29 Md. 287, 96 Am. Dec. 533; Pac. 502; Alderton v. Buchoz, 3 Palmer v. Elsberry, 79 Mo. 570; Mich. 322. Shelton v. Thompson, 96 Mo. App. 573 STATUTE OF FRAUDS. § 1 328 delivery alone, in such case, sufficient to satisfy the statute. There must also be a voluntary receipt and acceptance of the goods.''^ Nor is the fact that the goods have been received necessarily sufficient. In a proper case the vendee may have the right to reject the goods within a reasonable time after they have been received." When the seller gives to the buyer the actual control of the goods, and the buyer accepts such control, he has actually received them. Receipt of goods is often evi- dence of acceptance, but it is not the same thing. The receipt by the buyer is often for the purpose of seeing whether he will accept or not.°^ The mere fact that the vendee sells or offers to sell the goods prior to their receipt has been held not to amount to such an assumption of authority or owner- ship as to constitute an acceptance and receipt within the statute."^" However, it is not necessary that the acceptance should follow or be contemporaneous with the receipt of the goods. The acceptance may take place prior to the receipt or thereafter."^ It is well settled that an oral agreement in relation to goods may be taken out of the statute by a subsequent delivery and acceptance of the chattels which are the subject-matter of the contract. The contract is thus rendered binding on the vendor*^^ and on the vendee."® The statute does not fix or limit the time '^ Edwards v. Grand Trunk R. Co., O'Donnell, 44 N. Y. 661. 4 Am. Rep. 48 Maine 379; Wainscott v. Kellog, 721. In Saunders v. Topp, 4 Ex. 84 ]\Io. App. 621 ; Oilman v. Hill, 36 390, it was doubted whether "accept- N. H. 311; Caulkins v. Hellman, 47 ance" could precede "actual receipt," N. Y. 449, 7 Am. Rep. 461 ; Clark v. but that doubt was removed bv Cus- Tucker, 4 N. Y. Super. Ct. 157; ack v. Robinson, 1 B. & S. 299. Dinnie v. Johnson, 8 N. Dak. 153, 77 '' Edirar v. Breck & Sons Corp., 172 N. W. 612; Gibbs v. Benjamin, 45 Vt. Mass. 581, 52 N. E. 1083; Jackson v. 124. Tupper, 101 N. Y. 515, 5 N. E. 65; "Edwards v. Grand Trunk R. Co., Lawton v. Keil, 61 Barb. (N. Y.) 48 IMaine 379; Wainscott v. Kellog, 558; Petrie v. Dorwin, 1 Hun CN. 84 jNIo. App. 621 ; Stone V. Browning, Y.) 617. 4 Thomp. & C. (N. Y.) 68 N. Y. 598 (goods received subject 695; Matthiessen &c. Co. v. McMa- to examination). See also, first ap- hon's Admr.. 38 N. J. L. 536; Gabriel peal of Stone v. Browning, 51 N. Y. v. Kildare Elevator Co.. 18 Okla. 211. 318. 90 Pac. 10, 10 L. R. A. (N. S.) "Kent V. Huskinson. 3 Bos. & P. 638n. 233, 6 R. R. 777 (receipt but no ac- °* Coffin v. Bradburv. 3 Idaho 770. ceptance). 35 Pac. 715, 95 .A.m. St. 37; McCarthy °'' Jones V. Mechanics' Bank, 29 Md. v. Nash, 14 Minn. 127. Gil. (Minn.) 287. 96 Am. Dec. 533. 95 : Slater Brick Co. v. Shackleton. "Cusack V. Robinson. 1 B. & S. 30 Mont. 390. 76 Pac. 805; Rilev v. 299; Bog Lead Mining Co. V. Monta- Bancroft. 51 Nebr. 864. 71 N. W. gue, 10 C. B. (N. S.) 481; Cross v. 745; Amson v. Dreher, 35 Wis. 615. § 1329 CONTRACTS. 574 when the acceptance and actual receipt of the goods must take place, in order to make the contract valid ; the acceptance and re- ceipt may be after the sale. The authorities allow an oral order on one day and an acceptance on another.*"* § 1329. Kind of acceptance — Must be unconditional. — In this country the language of the decisions is that there must be acts of such a character as to place the property unequivocally within the power and under the exclusive dominion of the buyer, as absolute owner, discharged of all lien for the price.^^ If the con- "** Buckingham v. Osborne, 44 Conn. 133; Davis v. Moore, 13 Maine 424; Marsh v. Hyde. 3 Gray (Mass.) 331; Sprague v. Blake, 20 Wend. (N. Y.) 61 ; IMcKnight v. Dunlop, 5 N. Y. 537, 55 Am. Dec. 370 (where the plain- tiff, by a verbal agreement, in June, purchased 5,000 bushels of barley malt of the defendant, at a fixed price, to be paid for by the plaintiff's note, whenever $1,000 worth of malt should be delivered. The defendant, in August and September, delivered about 1,400 bushels in pursuance of the agreement and refused to deliver the residue. It was held that the contract was valid, and that the plain- tiff was entitled to damages for the nondelivery of the residue of the 5.000 bushels) ; Schmidt v. Thomas, 75 Wis. 529, 44 N. W. 771. ■^Bill v. Bament, 9 M. & W. Z6. To constitute delivery, "the posses- sion must have been parted with by the owner, so as to deprive him of the right of lien." Malone v. Plato, 22 Cal. 103; Devine v. Warner, 75 Conn. 375, 53 Atl. 782, 96 Am. St. 211, and note; Edwards v. Grand Trunk R. Co., 54 Maine 105; Kirby V. Johnson, 22 Mo. 354; Matthiessen &c. Co. V. McMahon's Admr., 38 N. J. L. 536; Marsh v. Rouse, 44 N. Y. 643; Rodgers v. Phillips, 40 N. Y. 519; Shindler v. Houston, 1 N. Y. 261, 49 Am. Dec. 316, and notes where the cases are collected. (In that case the plaintiff and defendant bargained respecting the sale by the former to the latter of a quantity of lumber, piled apart from other lum- ber, on a dock, and in view of the parties at the time of the bargain, and which had before that time been measured and inspected. The parties having agreed as to the price, the plaintiff said to the defendant, "the lumber is yours." The defendant then told the plaintiff to get the in- spector's bill and take it to one House, who would pay the amount. This was done the next day and pay- ment refused. The price was over fifty dollars. It was held, in an ac- tion to recover the price, that there was no delivery and acceptance of the lumber within the meaning of the statute. This case is regarded as a leading authority on the subject in the state of New York, and has been uniformly followed there, and is rec- ognized and supported by the de- cisions of the highest courts in many other states). Hinchman v. Lincoln, 124 U. S. 38, 8 Sup. Ct. 369, 31 L. ed. ZZ7. In Knight v. Mann, 120 Mass. 219, by the terms of the con- tract the buyer was to send for the goods which were picked out in ac- cord with his orders and placed ready for delivery, and seen by buyer, who promised to send for them. They were destroyed by fire before he did so ; it was held there had been no such unequivocal act of acceptance as would take the case out of the stat- ute. No receipt and acceptance un- less the vendor's lien is abandoned. See also. Smith v. Surman, 9 B. & Cr. 561; Howe v. Palmer, 3 B. & Aid. 321 ; Hanson v. Armitage, 5 B. & Aid. 557, 1 Dowl. & R. 128, 24 Rev. Rep. 478; Holmes v. Hoskins, 9 Exch. 753; Baldey v. Parker, 2 B. & C. Z7\ Long v. Martin, 152 Mo. 668, 54 S. W. 473. But see, Wright v. Percival, 8 L. J. Q. B. 258; Dods- ley V. Varley, 12 A. & E. 632, 4 P. 575 STATUTE OF FRAUDS. § 1 329 tract provides that the absokite legal title is not to pass until pay- ment, it seems that there may still be such a receipt and acceptance as will take the case out of the statute. Thus, where a sewing- machine was sold to be paid for in monthly instalments, and it was agreed that the machine should remain the property of the vendor until the last instalment was paid and the machine was de- livered and accepted at the time of the contract, it was held that the acceptance of the machine by the vendee was a sufficient ac- ceptance under the statute."" In such cases the payment is often regarded as a condition precedent, and until performance, the property is not vested in the vendee, but remains in the vendor, subject to be divested by the performance of the condition.*^ Neither is the statute satisfied when the goods are left in posses- sion of the vendor, in order to enable him to inventory the goods and determine the price to be paid for them."^ In order to satisfy the statute "The delivery must be made of the prop- erty; the vendee must take the actual possession; that posses- sion must be open and unequivocal, carrying with it the usual marks and indications of ownership by the vendee. It must be such as to give evidence to the world of the claims of the new owner. He must, in other words, be in the usual relation to the property which owners of goods occupy to their property. This possession must be continuous — not taken to be surrendered back again — not formal, but substantial. But it need not neces- sarily continue indefinitely, when it is bona fide and openly taken, and is kept for such a length of time as to give general advertise- ment to the status of the property and the claim to it by the vendee.""' & D. 448, considered overruled as to Co.) v. Old Sec. Nat. Bank, 112 lien Mich. 223, 81 N. W. 92; Burditt v. °= Pinkham v. Mattox, 53 N. H. Howe, 69 Vt. 563, 38 Atl. 240. 600. See also, Gardet v. Belknap, 1 " Brunswick Grocery Co. v. Lamar, Cal. 399. 116 Ga. 1, 42 S. E. 366. ~ Goodwin v. May, 23 Ga. 205; "Stevens v. Irwin. 15 Cal. 503, 76 Shireman v. Jackson, 14 Ind. 459; Am. Dec. 500. See also. Dauphiny v Bailey v. Harris, 8 Iowa 331, 74 Am. Red Poll Creamery Co., 123 Cal. Dec. 312; Patton v. !\IcCane, 15 B. 548. 56 Pac. 451; Maxwell v. Brown, Mon. (Ky.) 555; Hussey v. Thorn- 39 Maine 98, 63 Am. Dec. 605; Jones ton, 4 Mass. 405, 3 Am. Dec. 224; v. Mechanics' Bank, 29 Md. 287, 96 Armington v. Houston, 38 Vt. 448, 91 Am. Dec. 533 ; Hewes v. Jordan, 39 Am. Dec. 366. See also, McArthur Md. 472, 17 Am. Rep. 578; Snow v. Co. (sub nomine W. & A. McArthur Warner, 10 Mete. (Mass.) 132, 43 § 1330 CONTRACTS. 576 § 1330. Mere words insufficient. — To constitute a delivery and acceptance, such as the statute requires, something more than mere words is necessary. Superadded to the language of the contract, there must be some act of the parties amounting to a transfer of the possession and an acceptance thereof by the buy- er.^° And the fact that the goods are already in the contemplated vendee's possession at the time the verbal offer of sale and its acceptance is made does not necessarily amount to a delivery and acceptance." Nor does the fact that the articles sold are ponder- ous change the rule. There must then be a symbolical or construc- tive delivery.®* Mere words unaccompanied by acts do not amount to a delivery and acceptance of the goods. Acts must be per- formed which place the property under the control and power of the vendee.®^ § 1331. Acts construing an acceptance. — An acceptance to satisfy the statute has been held to mean some act done, after the vendee has exercised, or had the means of exercising, his right of rejection.'" He may refuse or neglect to accept unreasonably, assigning insufficient reasons, or giving no reason at all ; the ques- Am Dec. 417; Remick v. Sandford, white v. Devereux, 15 M. & W. 285; 120 Mass. 309; Mechanical Boiler Taylor v. Wakefield, 6 El. & Bl. 765, Cleaner Co. v. Kellner, 62 N. J. L. 2 Jur. (N. S.) 1086; Smith v. Bryan, 544, 43 Atl. 599; Caulkins v. Hellman, 5 Md. 141, 59 Am. Dec. 104. 47 N Y 449 7 Am. Rep. 461. ** Shindler v. Houston, 1 N. Y. (1 ** Tempest 'v. Fitzgerald. 3 B. & Comstock) 261, 49 Am. Dec. 316. Aid 680 22 R. R. 526; Nicholle v. «° Gardet v. Belknap, 1 Cal. 399. Plume 1 Car & P. 272; Thompson '"Hunt v. Hecht, 8 Exch. 814, 22 V Frakes 112 Iowa 585, 84 N. W. L. J. Ex. 293; Coombs v. Bristol & 703; Dole v. Stimpson, 21 Pick. Exeter R. Co., 3 H & N. 1, 27 L. J. (Mass.) 384; Gorman v. Brossard, Ex. 269, 6 W. R. 335 ; Smith v. Hud- 120 Mich. 611, 79 N. W. 903; Ham son, 6 B & S. 431, 34 L. J Q- B. V. Van Orden, 4 Hun (N. Y.) 709; 145; Caulkms v. Hellman 47 N. Y. Caulkins V. Hellman, 47 N. Y. 449, 449, 7 Am. Rep. 461. Acceptance 7 Am. Rep. 461 ; Bassett v. Camp, 54 * . * * rne^ns something beyond re- Vt. 232 See also, Slaughter v. ceipt." Taylor v. Smith (1893), 2 Q. Moore 17 Tex. Civ. App. 233, 42 B. 65. There is no acceptance unless S W 372 t^^ purchaser has exercised his op- '«" Charlotte &c R. Co. v. Burwell, tion to receive the goods or not or 56 Fla 217 48 So. 213; Godkin v. done something that has deprived him Weber, 154 Mich. 207, 117 N. W. 628, of his option Gilman v. Hill, 36 N. 20 L R A (N. S.) 498; Duplex H. 311. Gorham v. Fisher, 30 Vt. Safety Boiler Co. v. McGinness, 1 428. If the goods are made to order. City Ct. (N. Y.) 438, 64 How. Prac. very decisive acts will be required to (N Y) 99- Silkman Lumber Co. v. prove acceptance before they are fin- Hunholz 132 Wis. 610. 112 N. W. ished and ready for delivery. Ma- 1081 1 L R A. (N S.) 1186n. 122 berley v. Sheppard, 3 M. & Scott 436, Am.' St. 1008. See, however, Lilly- 10 Bing. 99, 2 L. J. C. P. 181. 577 STATUTE OF FRAUDS. § 1 332 tion is not why he did not, or whether he ought to accept, but whether he did accept. And whether he has accepted is to be determined in every case by his acts.''^ As a general rule if the vendee uses a portion of the property purchased for the purpose for which it was bought or sells a portion of it to a third party this constitutes such an act of ownership as to constitute an ac- ceptance.^^ This is generally true even though the resale is made by the first purchaser before the goods are delivered to him." A resale is deemed a waiver of the right to inspect the goods before acceptance.^* An oral contract for the sale of a device has been upheld where a model thereof was, at the time of the making of the contract, delivered to and retained by the pur- chaser, who subsequently obtained a patent thereon.^" The tak- ing possession of a slave without any qualifying act,'^^ or inspec- tion of goods by the vendee and the ordering of them placed at a certain place in his possession," or the execution and delivery of a chattel mortgage on goods by the purchaser after they have been received by him,'® or the taking of an inventory of a stock of goods in a store by the purchaser and his directing his clerk to keep the keys for him till morning,'^ has in each case been held to show such an acceptance as would take the contract out of the statute. § 1332. Further illustrations. — The act or conduct on the part of the buyer to constitute acceptance must be such as would "Knight V. Mann, 118 Mass. 143. is not whether he ought to accept, "First. The statute is not complied but whether he has accepted them, with unless two things concur: The Fourth. The question of acceptance buyer must accept and actually re- or not is a question as to what was cei've part of the goods, and the con- the intention of the buyer, as signi- tract will not be good, unless he does fied by his outward acts." Mechanical both. Second. There may be an ac- Boiler Cleaner Co. v. Kellner, 62 N. tual receipt without acceptance and J. L. 544, 43 Atl. 599. an acceptance without a receipt, and '" Phillips v. Ocmulgee Mills, 55 Ga. acceptance to be inferred from the 633. assent of the buyer, meant by him to " Bowe v. Ellis, 3 Misc. (N. Y.) be final, that the goods are to be 92. 22 N. Y. S. 369. taken bv him as his property under '* Hill v. McDonald, 17 Wis. 97. the contract. Third. It is immaterial '"Jones v. Reynolds, 120 N. Y. 213, whether the buyer's refusal to take 24_ N. E. 279. the goods be reasonable or not. If he " Kelly v. Brooks, 25 Ala. 523. refuses the goods, assigning grounds " Barkalow v. Pfeiffer, 38 Ind. 214. false or frivolous, or assigning no '^Wyler v. Rothchild, 53 Nebr. 566, reasons at all, it is clear that he does 74 N. W. 41. not accept the goods. The question " Gray v. Davis, 10 N. Y. 285. 37— CoNTR.\CTS, Vol. 2 § 1332 CONTRACTS. 578 reasonably lead the seller to think the goods are accepted, and this may be by retention of them for such a time as might reasonably lead to that conclusion.^" The vendee, having an election to re- pudiate the delivery, must do it within a reasonable time, or he is bound by the acquiescence as an acceptance. ^^ The mere use of an article on trial may in some cases be contemplated by the par- ties as a means of ascertaining whether it corresponds in quality with the article agreed to be furnished. In such cases mere use will not constitute an acceptance. ^^ If a chattel is sold and de- livered upon condition that it shall be returned to the seller at a fixed price, in a certain event, and the buyer agrees so to return it, it has been held that such agreement is not for a resale of the chattel, and so not within the statute.®^ But where goods had been sold and delivered, and a part used and appropriated by the vendee, and by a subsequent agreement between the parties the vendor was to "buy back" the property, it was held not a modi- fication or rescission of the original contract simply, but a new contract required to be in writing or accompanied by a delivery to take it out of the statute.^* § 1333. Acceptance of part of the goods. — The acceptance and receipt of part of the articles purchased, or of all of one class of articles purchased, under an entire contract of sale, may take ^ Bowes V. Pontifex, 3 F. & F. back." Similar language was used by 739- Downs v. Marsh, 29 Conn. 409; the same judge in Hopkins v. Apple- Coplay Iron Co. v. Pope, 108 N. Y. by, 1 Stark 477. 232, 15 N. E. 335. «= Curtis v. Pugh, 10 Q. B. Ill, 16 " Coleman v. Gibson. 1 M. & R. L. J. Q. B. 199 (question whether the 168; Parker v. Wallis, 5 El. & Bl. 21, article was dealt with by vendee so 3 W R 417; Hirshborn v. Stewart, as to constitute acceptance); Pierson 49 Iowa 418; Schofield v. Conley, 126 v. Crooks, 115 N. Y. 539, 22 N. E. Mich 712, 86 N. W. 129; Strauss v. 349, 12 Am. St. 831. National Parlor Furniture Co., 76 ''Williams v. Burgess, 10 A. & E. Miss. 343, 24 So. 703; Hornberger v. 499; Fremont Carriage Mfg. Co. v. Feder 30 Misc (N. Y.) 121, 61 N. Thomsen, 65 Nebr. 370, 91 N. W. Y S 865; Pierson v. Crooks, 115 N. 'i1(i (agreement to repurchase shares Y 539, 22 N. E. 349, 12 Am. St. 831; of stock sold). Spencer v. Hale, 30 Vt. 314, 12> Am. ^ Blanchard v. Trim, 38 N. Y. 225. Dec 309 It was said by Lord El- "Where the title of the vendee has lenborough, in Fisher v. Samuda. 1 not been perfected for any reason. Camp. 190, that "It was the duty of a where there has not been a perfect purchaser of any commodity, immedi- delivery, where fraud has occurred, ately on discovering that it was not or where the contract, in any respect, according to order and unfit for the remains executory, the idea of a re- purpose intended, to return it to the scission is quite appropriate." vendor, or give him notice to take it 579 STATUTE OF FRAUDS. § 1333 the whole contract out of the statute*"^ although the rest are not in existence at the time of the contract.*" And even though no part of the purchase is paid an acceptance and receipt of a part of the goods sold by parol contract meets the requirements of the statute of frauds.*^ The acceptance of a part of an entire verbal order of goods renders the entire contract valid, although the re- mainder of the goods are shipped at a different. time.^^ And when a large amount of wood is contracted for, the vendor to deliver as much of it as he could the first winter and the remainder during the following winter and year, a delivery and acceptance of a part of the wood the first winter has been held to take the entire con- tract out of the statute.^'' The same holding has been made when part of the total amount of hay,'*" or total number of staves"^ has been received by the vendee.^- That which has pre- ceded makes it obvious that a part delivery and acceptance sub- sequent to the making of the oral agreement is in a proper case sufficient to take it out of the statute and make it binding on both the vendor"^ and vendee.®^ * Sloan Sawmill Co. v. Guttshall, 3 Colo. 8; Weeks v. Crie, 94 Maine 458, 48 Atl. 107, 80 Am. St. 410; Da- mon V. Osborn, 1 Pick. (Mass.) 476, 11 Am. Dec. 229; New England &c. Co. V. Standard Worsted Co., 165 Mass. 328, 43 N. E. 112, 52 Am. St. 516; Joseph v. Struller, 25 Misc. (N. Y.) 173, 54 N. Y. S. 162; Van Woert V. Albany &c. R. Co., 67 N. Y. 538; Bradley v. Wheeler, 44 N. Y. 495; Brock V. Knower, Z7 Hun (N. Y.) 609; Garfield v. Paris. 96 U. S. 557, 24 L. ed. 821: Danforth v. Walker, 40 Vt, 257; Cotterill v. Stevens, 10 Wis. 422. ^ "If a man enters into an entire agreement for goods made, and for others to be made, his accepting part of the goods made is evidence of his having entered into the agreement." Scott v. Eastern Counties R. Co., 12 M. & W. 2>Z, 13 L. J. Ex. 14, 7 Jur. 996. ''Davis V. Moore, 13 l\Taine 424; Rickey v. Tenbroeck. 63 Mo. 563; Meyer v. Thompson, 16 Ore. 194, 18 Pac. 16. "* Farmer v. Gray, 16 Nebr. 401, 20 N. W. 276. «»Gault v. Brown, 48 N. H. 183, 2 Am. Rep. 210. •"Towne v. Davis, 66 N. H. 396, 22 Atl. 450. °^ Theilen v. Roth, 80 Wis. 263, 50 N. W. 183. " See, however, Atherton v. New- hall, 123 Mass. 141, 25 Am. Rep. 47; Chapin v. Potter, 1 Hilt (N. Y.) 366. Compare Dauphiny v. Red Poll Creamery Co., 123 Cal. 548, 56 Pac. 451. ''Marsh v. Hyde, 3 Gray (Mass.) 331; Bush v. Holmes, 53 Maine 417; Field V. Runk, 22 N. J. L. 525 : Meri- dcn Britannia Co. v. Zingsen, 4 Robt. {27 N. Y. Super Ct.) 312; Allen v. Aguira, 5 N. Y. Legal Obs. 380; Chapin v. Potter, 1 Hilt. (N. Y.) 2>66; McKnight v. Dunlop, 5 N. Y. 537, 55 Am. Dec. 370 (overruling Seymour v. Davis. 2 Sandf. (X. Y.) 239: Gabriel v. Kildare Elevator Co., 18 Okla. 318. 90 Pac. 10, 10 L. R. A. (N. S.) 638n. *• Sloan Saw Mill Co. v. Gutt?h:ill, 3 Colo. 8: Davis v. Moore. 13 Maine 424: Townsend v. Hargraves, 118 Mass. 325 : Gaslin v. Pinney, 24 Minn. 222; Rickey v. Tenbroeck, 63 Mo. § 1334 CONTRACTS. 580 § 1334. Goods sold by sample. — Where the goods are sold by sample, that fact must be considered as an element in the case in determining whether the buyer has taken actual or construc- tive possession as owner, so as to indicate an acceptance thereby.®' "In the case of an executory contract for the future sale and de- liver}^ of goods of a specified quality, in the absence of express warranty the quality is a part of the description of the thing agreed to be sold, and the vendor is bound to furnish articles cor- responding with the description. If he tenders articles of an infer- ior quality the purchaser is not bound to accept them. It has been held that if he does accept them, he is, in the absence of fraud, deemed to have assented that they correspond with the descrip- tion, and is concluded from the subsequent questioning of it. This imposed upon the vendee the duty of inspection before acceptance if he wishes to save his rights in case the goods are of inferior quality."®^ But where the question is whether the contract has been fulfilled, it is sufficient to show an acceptance and actual re- ceipt of a part of the thing sold, even though it does not preclude the purchaser from refusing to accept the residue of the goods, if it clearly appears that they do not conform to the contract." 563; Farmer v. Gray, 16 Nebr. 401, sold. Hinde v. Whitehouse, 7 East 20 N. W. 276; Gault v. Brown, 48 558, 3 Smith 528, 8 R. R. 676; Kh- N. H. 183, 2 Am. Rep. 210; Towne nitz v. Surry, 5 Esp. 267; Talver v. V Davis, 66 N. H. 396, 22 Atl. 450; West, Holt (N. P.) 178; Smith v. Sprague v. Blake, 20 Wend. (N. Y.) Stoller, 26 Wis. 671. 61; Van Woert v. Albany & S. R. 'M Beach on Contracts, § 560, cit- Co 67 N. Y. 538; Vincent v. Ger- ing Pierson v. Crooks, 115 N. Y. moAd, 11 Johns. (N. Y.) 283; Out- 539, 22 N. E. 349, 12 Am. St. 831 ; Pope water v. Dodge, 6 Wend. (N. Y.) v. Allis, 115 U. S. 363, 29 L. ed. 393, 397; Sale v. Darragh, 2 Hilt. (N. Y.) 6 Sup. Ct. 69. In Bacon v. Eccles, 184; Boutwell v. O'Keefe, 32 Barb. 43 Wis. 227, the vendee insures the (N. Y.) 434; Good v. Curtiss, 31 goods in transitu, pays the freight, How. Pr. (N. Y.) 4; Danforth v. and intending to accept the goods if Walker, 40 Vt. 257 ; Cotterill v. Stev- found to be such as ordered, takes ens, 10 Wis. 422 ; Schmidt v. Thomas, them into his possession for examin- 75 Wis. 529, 44 N. W. 771, ation, and then within a reasonable "'Gardner v. Grout, 2 C. B. (N. time refuses to accept them, as not S.) 340; Remick v. Sanford, 120 according to order. Held, that there Mass. 309; Simon v. Wood, 17 Misc. was not an acceptance withm the (N. Y.) 607, 40 N. Y. S. 675; Balti- meaning of the statute, if the goods more Brick' Co. v. Coyle, 18 Pa. are not in fact such as the order Super. Ct. 186; Albree v. Philadel- called for. phia Co., 201 Pa. St. 165, 50 Atl. "Morton v. Tibbett, 15 Q. B. 428 984. If the buyer has received and (leading case, holding that there may retained a sample of the goods, the be an acceptance and receipt "with- statute will be satisfied if the sample out the buyer having examined the was actually a part of the goods goods or done anything to preclude 58i STATUTE OF FRAUDS. § 1335 § 1335. Constructive delivery and acceptance. — The deliv- ery may be actual or symbolical. Where the goods are so situ- ated as not to admit of actual delivery, the sale will be valid with- out it. Where the articles sold are ponderous, a symbolical or constructive delivery will be equivalent in its effect to an actual one. When goods are sold in a warehouse, the delivery of the key has been deemed sufficient. The delivery of wine in a cellar is held to be made by a delivery of the keys of the cellar. The title to a ship at sea may pass by a delivery of the bill of sale.*"^ The circumstances held tantamount to an actual delivery ought, however, to be so strong and unequivocal as not to leave the intent of the parties doubtful."'* The delivery to the vendor him from contending that they do not correspond with the contract"). Kibble V. Gough. 38 L. T. 204, C. A. (goods equal to sample) ; Rickard v. Moore, 38 L. T. 841, C. A. (goods not equal to sample) ; Page v. Mor- gan, L. R. 15 Q. B. D. 228, in which Brett M. R., said, referring to Kib- ble V. Gough, 38 L. T. (N. S.) 204: "It was there pointed out that there must be under the statute both an ac- ceptance and actual receipt, but such acceptance need not be an absolute acceptance." In Taylor v. Smith (1893), 2 Q. B. 65, in which the above mentioned cases were consid- ered Lord Herschell said : " 'Accep- tance' is not used in the statute ac- cording to its own common accep- tation, and in what precise sense it is used has never been determined." Tower v. Tudhope, 2)1 U. C. Q. B. 200; Hewes v. Jordan, 39 Md. 472, 17 Am. Rep. 578. Strong v. Dodds, 47 Vt. 348, where the court said : "No doubt some confusion in the cases deciding what would or would not constitute an acceptance by the purchaser within the meaning of the statute, has arisen by not clearly dis- tinguishing an acceptance by the pur- chaser that will remove the statute disability, from an acceptance that amounts to a waiver, at common law, by the purchaser, of his right to ob- ject to the goods because they do not answer to the order in quantity or quality." Garfield v. Paris. % U. S. 557. 24 L. ed. 821. See also, Smith V. Stoller, 26 Wis. 671. "Currie v. Anderson, 2 El. & El. 592, 29 L. J. Q. B. 87, 8 Week. Rep. 274, 6 Jur. (X. S.) 442; Chaplin v. Rogers, 1 East. 192 (the bulk of the commodity precluded actual de- livery) ; Burton v. Curyea, 40 111. 320, 89 Am. Dec. 350 (discussing the subject of delivery of warehouse re- ceipts) ; Vining v. Gilbreth, 39 Maine 496; Boynton v. Veazie, 24 Maine 286 (sale of logs) ; Badlam v. Tuck- er, 1 Pick. (Mass.) 389, 11 Am. Dec. 202 (ship at; sea) ; Putnam v. Dutch, 8 Mass. 287 (sale of vessel by bill of sale) ; Pratt v. Parkman, 24 Pick. (Mass.) 42 (delivery of a bill of lading, etc.) ; Ricker v. Cross, 5 N. H. 570, 22 Am. Dec. 480: Wilkes &c. V. Ferris. 5 John. (X. Y.) 335 (de- livery of kevs) ; Benford v. Schell, 55 Pa. St. 393 (delivery of keys of a safe sold, and of the room in which it stood). In IMeredith v. Meigh, 2 El. & Bl. 364, Erie. J., says: "I have no doubt that the bill of lading, which is the symbol of property, may be so received and dealt with as to be equivalent to an actual receipt of the property itself." See, however, Quintard v." Bacon. 99 Mass. 185 (a bill of lading left at office of the buy- er who before knowing that it had been left there gave notice that he would not receive the goods. It was held no deliver^'.) ■^Proctor V. Tones. 2 Carr. Sr P. 532: Bentall v. Burn. 3 B. & C. 423: Devine v. Warner, 75 Conn. 375. 53 Atl. 782. 96 Am. St. 211 and note (question as to the acceptance and T 1 -) ■1 1^ 000 CONTRACTS. 582 of the import entry of the goods to the agent of the vendee has been held not to be sufficiently certain to amount to a construc- tion delivery/ If the goods are in the custody of a third person as bailee of the seller, the possession is changed as soon as such custodian, with the authority and consent of the seller, becomes the bailee of the buyer.^ But where the vendor gave the buyer an order on the warehouseman without notifying the warehouseman this was held insufficient as a delivery and acceptance, to satisfy the statute.^ The vendor may be the agent of the vendee to re- ceive the goods, as where they are so situated that the vendee can rightfully take possession at his pleasure, but by mutual con- sent they are retained in the custody of the vendor.* However, it has been held that where the vendor retains the possession and control of the goods as the vendee's agent there is not sufficient delivery and acceptance is insufficient to take the contract out of the statute as against creditors of the vendor, notwithstanding the sale to the vendee was made in good faith.^ There may also receipt of tobacco on poles in barn) ; Clark V. Labreche, 63 N. H. 397. In Farina v. Home, 16 M. & W. 119, where the seller indorsed and deliv- ered to the buyer a document by which the bailee of goods agreed to deliver them to the seller or his in- dorsee, it was held that there was no actual receipt by the buyer until the bailee attorned to him. In Boardman V. Spooner, 13 Allen (Mass.) 353, 90 Am. Dec. 196, it was held that the acceptance of a bill of goods in a warehouse in New York, with an or- der on the warehouseman for their delivery without notice to the ware- houseman, was not an acceptance or receipt of the goods which would take the sale out of the operation of the statute. An agreement with the vendor about the storage of the goods, and the delivery by him of the import entry to the agent of the vendee, were held not to be sufficient- ly certain to amount to a construc- tive delivery, or to afford an in- dicium of ownership in Bailey v. Ogden, 3 Johns. (N. Y.) 399. 3 Am. Dec. 509, a leading case on the stat- ute of frauds and frequently cited in New York, and elsewhere. ' Bailey v. Ogden, 3 Johns. (N. Y.) 399, 3 Am. Dec. 509. "Searle v. Keeves, 2 Esp. 598; Simmonds v. Humble, 13 C. B. (N. S.) 258; Aultman Miller & Co. v. Nilson, 112 Iowa 634, 84 N. W. 692. ^ Boardman v. Spooner, 13 Allen (Mass.) 353, 90 Am. Dec. 196. * Castle V. Sworder, 29 L. J. R. Ex. 235, 30 L. J. R. 310; Marvin v. Wallace, 6 E. & B. 726; Elmore v. Stone, 1 Taunt. 458; Means v. Wil- liamson, Zl Maine 556; Barrett v. Goddard, 3 Mason (U. S.) 107, Fed. Cas. No. 1046. But if the vendor does not part with his lien there is no delivery. Baldey v. Parker, 2 B. & C. 37 ; Rodgers v. Jones, 129 Mass. 420; Safford v. McDonough, 120 Mass. 290. See also, Knight v. Mann, 120 Mass. 219. In the above case the vendee was to send for the goods. He went to the vendee's store and they were pointed out to him. He said he would send for them. Held not such an acceptance and receipt as would take the con- tract out of the statute. "Fitzgerald v. Gorham, 4 Cal. 289, 60 Am. Dec. 616. 583 STATUTE OF FRAUDS. ^3:^^ be a constructive acceptance under the statute, such as may arise from the vendee deahng with the goods as owner/ as directing an alteration in a carriage and using it for driving purposes.' § 1336. Acceptance by agent, bailee or joint purchaser. — Delivery to and acceptance of the goods by an agent or bailee, who is expressly authorized by the vendee to receive and accept them is sufficient to take a verbal contract of purchase out of the statute.® The vendor may hold the goods as the bailee of the ven- dee.® It has been held, however, that the same person cannot act as both agent of the seller to negotiate the sale and as agent of the vendee to receive and accept the goods." Nor does the mere fact, that the vendee or his agent may have possession of the goods at the time the verbal contract of sale is made, of itself, show such a delivery and acceptance as will establish the contract under the statute of frauds." It would seem on principle that delivery to • Parker v. WalHs, S El. & Bl. 21 Baines v. Jevons, 7 Car. & P. 288 Maberley v. Sheppard, 10 Bing. 99 Currie v. Anderson, 2 El. & El. 592 Marshall v. Green, L. R. 1 C. P. Div. 35. ^ Beaumont v. Brengeri, 5 C. B. 301 ; Robinson v. Gordon, 23 U. C. Q. B. 143; Rice v. Austin, 17 Mass. 197; Bass v. Walsh, 39 Mo. 192; Shepherd v. Pressey, 32 N. H. 49; Garfield v. Paris, 96 U. S. 557, 24 L. ed. 821. "If * * * the vendee does any act to the goods, of wrong if he is not the owner of the goods and of right if he is the owner of the goods, the doing of that act is evi- dence that he has accepted them." Parker v. Wallis, 5 E. & B. 21. Chap- lin V. Rogers, 1 East 192, which was assumpsit for a stack of hay. The plaintiff was put to the proof of the delivery of it, which he maintained by showing that the defendant had sold a part of the hay to one who had taken it away. This was held sufficient to prove that the defend- ant had the possession ; inasmuch as he had made a valid sale of the hay, and dealt with the property as his own. Directing silverware to be en- graved with the buyer's name be- fore delivery has been held a good acceptance. Walker v. Boulton, 3 U. C. Q. B. (O. S.) 252. Green v. Merriam, 28 Vt. 801, is an authority for the doctrine that all that a pur- chaser needs to do to accept personal property sold by parol so as to re- move the statute of disability is to assume control over the property. If the goods, at the time of the bargain, are on the land of a third person (such person not having the custody of them as bailee), or are in some public place to which buyer and seller have equal right of access, it seems that the possession, as well as the title, may be transferred by the mere agreement of the parties to that effect. Tansley v. Turner, 2 Bing. N. Cas. 151; Cooper v. Bill, 3 H. & C. 722. ^Rodgers v. Jones, 129 Mass. 420; Vanderbilt v. Central R. R. Co.. 43 N. J. Eq. 669. 12 At). 188: Cutwater V. Dodge, 6 Wend. (X. Y.) 397. "Janvrin v. Maxwell, 23 \\'is. 51. See also, Bassett v. Camp, 54 Vt 232. "Caulkins v. Hellman, 14 Hun (N. Y.) 330, 47 N. Y. 449, 7 Am. Rep. 461. "iMatter of Hoover, 33 Hun (N. Y. 553: Dorsey v. Pike. 50 Hun. (N. Y.) 534. 3 N. Y. S. 730, 20 N. Y. St. 676. § 1337 CONTRACTS. 584 one of several joint purchasers and acceptance by him renders the contract valid as to all the joint purchasers.^^ § 1337. Delivery at a place or to a person designated by the buyer. — When the buyer instructs the seller to deliver the goods to a designated person, who accepts them without objec- tion, and the goods are in fact such as were ordered, and are with- out defect or deficiency, they are deemed to have been received and accepted by the purchaser himself and the contract is thereby taken out of the statute.^^ However, the mere delivery of the chattels purchased at the place designated by the buyer does not, as a general rule, constitute an acceptance sufficient to satisfy the statute when the buyer exercises no act of ownership over the goods subsequent to delivery." Thus, the placing of goods in a highway at a point designated by the vendee has been held in- sufficient to take the case out of the statute.^^ So where the vendor directed that the goods be shipped by sea from a desig- nated wharf and there was a delivery on the wharf, the dehvery was held insufficient to satisfy the statute.^^ § 1338. Delivery to a carrier. — Acceptance and receipt may be through an authorized agent. But a common carrier, whether selected by the seller or the buyer, to whom the goods are en- trusted without the express instructions to do anything but to carry and deliver them to the buyer, is no more than an agent to carry and deliver the goods, and has no implied authority to do the acts required to constitute an acceptance and receipt on the "Smith V. MilHken, 7 Lans. (N. Co., 88 Ga. 578. 15 S. E. 327; Moore Y.) 336. See, however. Chamber- v. Hays, 12 Ind. App. 476, 40 N. E. lain V. Dow, 10 Mich. 319. See dis- 638; Snow V. Warner, 10 Mete, senting opinion of Martin, C. J., in (Mass.) 132, 43 Am. Dec. 417; Dean which he said : "In every joint pur- v. Tallman, 105 Mass. 443 ; Dyer v. chase, each joint purchaser makes, Forest, 2 Abb. Prac. (N. Y.) 282. of necessity, his copurchaser his " Howard v. Borden, 13 Allen agent for the receipt of the proper- (Mass.) 299; Cooke v. Millard, 65 ty; in other words, the delivery to N. Y. 352, 22 Am. Rep. 619; Brew- one under the contract is a delivery ster v. Taylor, 63 N. Y. 587. to all. * * * The acceptance by "Finney v. Apgar, 31 N. J. L. 266. one of the plaintiffs in error was Compare with Bulkley v. Waterman, the acceptance by both, as joint pur- 13 Conn. 328. chasers; either obtaining the prop- **Hart v. Bush, El. Bl. & El. 494. erty under the order acted for both, See also, Hanson v. Armitage, 5 and his act bound both." Barn. & Aid. 557, 1 Dowl. & R. 128, "* Schroder v. Palmer Hardware 24 Rev. Rep. 478. 585 STATUTE OF FRAUDS. § 1338 part of the buyer." It follows that as a general rule the delivery to a carrier is alone insufficient to render valid and binding a sale which is void under the statute of frauds.^* "Delivery to a com- mon carrier is not evidence of acceptance, in the absence of any I "Nicholson v. Bower, 1 El. & El. 172; Norman v. Phillips, 14 M. & W. 277 (in which the effect of the de- livery of goods at a railway station, to be forwarded to the vendee in pursuance of the terms of a verbal contract of sale, was discussed, and a verdict for the plaintiff, founded upon such a delivery and upon the additional fact that the vendor sent an invoice to the vendee which he re- tained for several weeks, was set aside) ; United Hardware &c. Co. v. Blue, 59 Fla. 419, 52 So. 364, 35 L. R. A. (N. S.) 1038 and note; Kei- wert V. Meyer, 62 Ind. 587, 30 Am. Rep. 206; Maxwell v. Brown, 39 Maine 98, 63 Am. Dec. 605 (in which, after an examination and reference to the English authorities, the court held that the delivery to the carrier was insufficient to show an accep- tance by the vendee) ; Snow v. War- ner, 10 Mete. (Mass.) 132, 43 Am. Dec. 417; Frostburg Mining Co. v. New England Glass Co., 9 Cush. (Mass.) 115; Quintard v. Bacon, 99 Mass. 185; Johnson v. Cuttle, 105 Mass. 447, 7 Am. Rep. 545; Gill v. Johnson-Brinkman Com. Co., 84 Mo. App. 456; Pierson v. Crooks, 115 N. Y. 539, 22 N. E. 349, 12 Am. St. 831 ; Rodgers v. Phillips, 40 N. Y. 519; In Morton v. Tibbett, 15 Q. B. 428, the defendant sent a carrier for the grain purchased by sample, and pre- vious to its arrival resold it by the same sample, before he had in- spected it ; and it was held that its receipt by the carrier was not an acceptance, but that his resale of it was evidence of an acceptance. "Smith V. Hudson. 11 Jur. (N. S.) 622, 6 B. & S. 431. 34 L. J. Q. B. N. S. 145, 12 L. T. Zll , 13 W. R. 683; United Hardware &c. Co. v. Blue. 59 Fla. 419. 52 So. 364, 35 L. R. A. (N. S.) 1038 and note; Den- mead V. Glass, 30 Ga. 637 ; Hausman v. Nye, 62 Ind. 485, 30 Am. Rep. 199; Maxwell v. Brown. 39 Maine 98, 63 Am. Dec. 605 ; Ft. Worth Packing Co. v. Consumers' Meat Co., 86 Md. 635, 39 Atl. 746; Frostburg Min. Co. v. New England Glass Co., 9 Cush. (Mass.) 115; Quintard v. Bacon, 99 Mass. 185; Webber v. Howe, 2)^ Mich. 150, 24 Am. Rep. 590; Rind- skopf, v. DeRuyter, 39 Mich. 1, 2>Z Am. Rep. 340;. Smith v. Brennan, 62 Mich. 349, 28 N. W. 892, 4 Am. Rep. 867; Winner v. Williams, 62 Mich. 363, 28 N. W. 904; Gatiss v. Cyr, 134 Mich. 233, 96 N. W. 26, 2 Am. & Eng. Ann. Cas. 544; Waite v. Mc- Kelvy, 71 Minn. 167, 12> N. W. 727; M. H. Eichberg Co. v. Benedict Paper Co., 119 Mo. App. 262, 95 S. W. 963. Ex parte Parker, 11 Nebr. 309, 9 N. W. Z7>; Shepherd v. Pres- sev, 32 N. H. 49 (obiter) ; Standard Wall Paper Co. v. Towns, 12 N. H. 324, 56 Atl. 744; Rodgers v. Phillips, 40 N. Y. 519; Caulkins v. Hellman, 14 Hun (N. Y.) 330, 47 N. Y. 449, 7 Am. Rep. 461; Fein v. Weir. 120 App. Div. (N. Y.) 299, 114 N. Y. S. 426 affd. in 199 N. Y. 540, 92 N. E. 1084; Langeman v. Stevens, 5 N. Y. Leg. Obs. 19; Sherman v. Williams, 4 N. Y. Week. Dig. 415; Dinnie v. Johnson, 8 N. Dak. 153, 11 N. W. 612; Tinkelpaugh-Kimmel Hardware Co. V. Minneapolis Threshing Mach. Co., 20 Okla. 187. 95 Pac. 427; Wil- liams-Havward Shoe Co. v. Brooks, 9 Wvo. 424, 64 Pac. 342. See also, Rickard v. Moore, 38 L. T. (N. S-) 841. "Where a valid and subsist- ing contract for the sale of personal property may be shown to exist, and by its terms the property is to be shipped by the vendor to the vendee, then a delivery of it to a responsible carrier for the vendee, to be carried and delivered to him, will, ordinar- ily, transfer the title to the vendee and place the property at his risk. But this rule requires that the con- tract between the parties shall be at the time legal, valid and subsisting. It does not include cases like the present one, where, on account of a failure to comply with the positive § 1338 CONTRACTS. 586 evidence that the carrier was the defendant's agent for the pur- pose of accepting the goods. "^® Thus, where an agent of a busi- ness firm called upon a party with the samples of goods, and arti- cles were selected which the party agreed to take, the goods to be shipped by a designated express company, and they were ac- cordingly shipped, and a bill of the goods sent to the purchaser, who declined to receive them on the ground that they were not like the samples, it was held that the sole duty of the carrier was to receive and transport the goods, and there was no implied authority from the buyer to accept the goods for him.^° Nor is the rule changed by the fact that the goods are shipped to the vendee and that he reshipped them to the vendor, the former pay- ing the freight both ways.'^ While some cases emphasize the fact that the carrier was not selected by the vendee,^" it is gener- ally true that the fact that the carrier is selected by the buyer, is not, of itself, sufficient to satisfy the statute.^^ But it has been held that when the goods have been accepted by the buyer, so as to rule prescribed by the statute, the contract is void, and must remain so until some act has been performed that will have the effect of giving it legal validity." Rodgers v. Phillips, 40 N. Y. 519. To same effect, Shep- herd v. Pressey, 2,2 N. H. 49. " Standard Wall Paper Co. v. Towns, 72 N. H. 324, 56 Atl. 744. See also, United Hardware &c. Co. v. Blue, 59 Fla. 419, 52 So. 364, 35 L. R. A. (X. S.) 1038n. ^Allard v. Greasert, 61 N. Y. 1. ^ Jarrell v. Young, &c. Co., 105 Md. 280, 66 Atl. 50, 23 L. R. A. (N. S.) 367, 12 Am. & Eng. Ann. Cas. 1. '- Coates V. Chaplin, 2 Q. B. 483, 2 Gale & D. 522, 11 L. J. Q. B. 315, 6 Jur. 1123; Meredith v. Meigh, 2 El. & Bl. 364. 17 Jur. 649, 22 L. J. Q. B. 401, 1 Week. Rep. 368, 23 Eng. Rul. Cas. 217 ("the court referring to Hart V. Sattley, as overruled) ; Nugent V. Beakes, 34 App. Div. (N. Y.) 123, 54 N. Y. S. 486; Hudson Furniture Co. v. Freed Furniture & Carpet Co.. 10 Utah 31. 36 Pac. 132. See also, Hausman v. Nve. 62 Tnd. 485. 30 Am. Rep. 199 Tdecided under a statute, which provided that the contract should be within the stat- ute, "unless the purchaser shall re- ceive part of such property"). ''Norman v. Phillips, 9 Jur. 832, 14 L. J. Exch. 306, 14 M. & W. 277; Taylor v. Smith (1893), 2 Q. B. 65. 61 L. J. Q. B. 331, 67 L. T. (N. S.) 39, 40 W. R. 486; Scott v. Melady, 27 Ont. App. 193 ; Billin v. Henkel, 9 Colo. 394, 13 Pac. 420; Jones v. Mechanics' Bank, 29 Md. 287, 96 Am. Dec. 533 ; Kemensky v. Chapin, 193 Mass. 500, 79 N. E. 781, 9 Am. & Eng. Ann. Cas. 1164; Simmons Hardware Co. v. Mullen, ZZ Minn. 195, 22 N. W. 294; AUard v. Greas- ert, 61 N. Y. 1. See also, the opin- ions of Parke, B., and Abiger, C. B., in Johnson v. Dodgson, 2 Mees. & W. 653, 6 L. J. Exch. 185. In John- son v. Cuttle, 105 Mass. 447, 7 Am. Rep. 545, it is said : "A common car- rier (whether selected by the seller or by the buyer), to whom the goods are intrusted without express in- structions to do anything but to carry and deliver them to the buyer, is no more than an agent to carry and de- liver the goods, and has no implied authority to do the acts required to constitute an acceptance and receipt on the part of the buyer and to take 587 STATUTE OF FRAUDS. § 1 339 answer that portion of the statute which requires acceptance, a delivery to a carrier selected by the buyer will answer that portion of the statute which recjuires the buyer to receive them.** Accept- ance may also be shown by a resale of the goods while they are in transit," or other acts of ownership,-" or conduct showing acqui- escence." The courts of Iowa hold that according to the statute as it exists in that state delivery to the carrier is sufficient."** Delivery to the carrier by the vendor has also been held such a performance of the contract as would take it out of the operation of the statute.-" § 1339. Delivery which takes contract out of the statute. — The fact that logs were banked and marked with the vendee's name ready to be put in the river is not a sufficient deliver}' to take the contract out of the statute of frauds. And payment for logs sold under a verbal contract after the contract was made is not a sufficient payment of some part of the purchase-money "at the time" to take the contract out of the statute of frauds, when the logs were not delivered.^" But where one orally contracting to buy goods, on being told by the seller to take them, directs a third person to do so, the latter, upon doing so, is not liable for their the case out of the statute of frauds." own that part of a shipment of lum- In Llovd V. Wright, 25 Ga. 215, the ber saved from a loss at sea), court said: "The statute requires that "Bushel v. Wheeler, 15 Q. B. 442; the purchaser should 'actually re- Curri v. Anderson, 2 El. & El. 592, ceive' the goods. And although goods 29 L. J. Q. B. 87, 8 W. R. 274, 6 Jur. are forwarded to him by a carrier by (N. S.) 442. his direction, or delivered abroad on ''^ Leggett & Meyer Tobacco Co. v. board of a ship chartered by him, Collier, 89 Iowa 144, 56 N- W. 417; still there is no actual acceptance to Fruit Despatch Co. v. Gilinsky. 84 satisfy the act, so long as the buyer Xebr. 821, 122 N. W. 45; Bullock v. continues to have the right, either to Teschergi, 4 McCrary (U. S.) 184, object to the quantum or quality of 13 Fed. 345 (construing Iowa the goods." Contra, Strong v. Dodds, statutes). 47 Vt. 348; Spencer v. Hale, 30 Vt. =" Castlen v. IMashburn, 8 Ga. App. 314, IZ Am. Dec. 309. 400. 69 S. E. 317. Compare with =*Cusack V. Robinson, 1 B. &. S. Mendel v. Miller, 134 Ga. 610. 68 S. 299, 7 Jur. (X. S.) 542, 30 L. J. Q. E. 430, former hearing 126 Ga. 834, B. 261; Allard v. Greasert, 61 X. Y. 56 S. E. 88, 7 L. R. A. (X. S.^ 1184. 1; Cross v. O'Donnell, 44 X. Y. 661, '"See also. Shaw Lumber Co. v. 4 Am. Rep. 721; Wilcox Silver Plate Manville (Idaho). 39 Pac. 550; Bns- Co. v. Green, 72 X. Y. 17. tol v. :Mente, 79 Anp. Div. (X. Y.) "Morton v. Tibbett, 15 Q. B. 428. Q. 80 X. Y. S. 52. aflPd. 178 X. Y. 19 L. J. Q. B. 382. 14 Jur. 669. 599, 70 X. E. 10^6: Crosbv Hardwood "•Goddard v. Demerritt. 48 Maine Co. v. Tester, 90 Wis. 412, 63 N. 211 (receiving and claiming as his W. 1057. I340 CONTRACTS. 588 value to the seller, his receipt of the goods having the effect of taking the contract of sale out of the statute of frauds/^ And a payment by the vendee for the pasturage of a colt after his pur- chase thereof, the vendor having previously paid therefor, con- stitutes a constructive delivery of the colt.^^ When the contract does not specify the time within which delivery must be made, delivery may be had within a reasonable time,^^ regard being had to the nature and subject-matter of the contract. § 1340. Question for the jury. — It is the general rule that it is a question for the jury whether, under all the circumstances, the acts which the buyer does or forbears to do amount to a receipt and acceptance within the terms of the statute.^* And any acts of the parties indicative of ownership by the vendee may be given in evidence to show the receipt and acceptance. ^^ But when the facts in relation to a contract of sale alleged to be ^ Moore v. Hays, 12 Ind. App. 476, 40 N. E. 638. In Burchinell v. Smidle, 5 Colo. App. 417, 38 Pac. 1097, plaintiff bought a restaurant, and paid full consideration therefor. When the bill of sale was made and the purchase-price paid, the vendor went with plaintiff to the restaurant and gave plaintiff possession, and, after notifying the help of the sale, went away, and plaintiff assumed control. Defendant's officers then came and took possession of the place, under attachment against the vendor. The vendor's name never was on the outside of the restaurant, the only sign being one designating it "Jim's Place," and this sign had been allowed to remain as it was. The bills of fare had not been changed. It was held that there was such a change of possession as would satisfy the statute of frauds. ^'Stockwell V. Baird (Del.), 31 Atl. 811. ^'Cameron Coal &c. Co. v. Univer- sal Metal Co., 26 Okla. 615, 110 Pac. 720, 31 L. R. A. (N. S.) 618. ■^Bushell V. Wheeler, 15 Q. B. 443n; Morton v. Tibbett, 15 Q. B. 428; Thompson v. Frakes, 112 Iowa 585, 84 N. W. 703; Sprankle v. Tru- love, 22 Ind. App. 577, 54 N. E. 461 ; Weeks v. Crie, 94 Maine 458. 48 Atl. 107, 80 Am. St. 410; Greenleaf V. Hamilton, 94 Maine 118, 46 Atl. 798; Corbett v. Wolford, 84 Md. 426, 35 Atl. 1088; Borrowscale v. Bos- worth, 99 Mass. 378 ; Taylor v. Muel- ler, 30 Minn. 343, 15 N. W. 413, 44 Am. Rep. 199 ; Bass v. Walsh, 39 Mo. 192; Pinkham v. Mattox, 53 N. H. 600; Stone v. Browning, 68 N. Y. 598; Burrows v. Whitaker, 71 N. Y. 291, 27 Am. Rep. 42; Hinchman v. Lincoln, 124 U. S. 38, 31 L. ed. ZZ7, 8 S. Ct. 369. "The question in re- gard to what constitutes a delivery under the statute, and what consti- tutes an acceptance, is rather one of fact for the jury than of law for the court." Smith v. Stoller, 26 Wis. 671. ''Gray v. Davis, 10 N. Y. 285; Jones V. Reynolds, 120 N. Y. 213, 24 N. E. 279; Garfield v. Paris, 96 U. S. 557, 24 L. ed. 821 ; Becker v. Holm, 89 Wis. 86, 61 N. W. 307. The bur- den of proof to show acceptance is on the party setting up the contract. Remick v. Sanford, 120 Mass. 309. See also, Pratt v. Chase, 40 Maine 269; Pinkham v. Mattox, 53 N. H. 600. 589 STATUTE OF FRAUDS. § I34I within the statute are not in dispute, it belongs to the court to de- termine their legal effect.^® § 1341. Earnest or part payment. — Earnest and part pay- ment are two distinct things, each of which is sufficient to give validity to a parol contract under the seventeenth section of the statute." Where part payment is made in order to render the contract binding, it is not required that such payment shall be shown in writing. The statute leaves the parties to prove pay- ment by such proof as they may have, but actual part payment is required. A mere agreement to pay or to apply in payment is not sufficients^ Part payment does not require the actual passing of money from the vendee to the vendor. The giving of a check is not absolute payment, but when it is received as such, and is afterward paid, it becomes a good and valid payment as of the time when it was given.^" The payment may be made in prop- erty or in the discharge of an existing debt, in whole or in part, due from the vendor to enforce the contract of sale. The note should be delivered up and canceled, or if not fully paid, an in- dorsement should be made upon it in writing, which shall operate effectually as an extinguishment pro tanto. Or if the money is ' ''Norman v. Phillips, 14 M. & W. ''Colton v. Raymond, 114 Fed. 863, 277 ; Howe v. Palmer, 3 B. & Aid. 52 C. C. A. 382 ; Hershey Lumber Co 321; Tempest v. Fitzgerald. 3 B. & v. St. Paul Sash &c. Co., 66 Minn Aid. 680; Carter v. Toussaint, 5 B. 449, 69 N. W. 215; Matthiessen &c & Aid. 855; Hanson v. Armitage, 5 Co. v. McMahon's Admr.. 38 N. J B. & Aid. 557 ; Thompson v. Macir- L. 536 ; Dow v. Worthen, 11 Vt. 108 ; oni, 3 B. & C. 1 ; Holmes v. Hos- Edgcrton v. Hodge, 41 Vt. 676. The kins, 9 Exch. 753; Hunt v. Hecht, 8 object was to have something pass Exch. 814; Coombs v. Bristol & E. between the parties besides mere R. Co., 3 H. & N. 1; Shepherd v. words. Archer v. Zeh, 5 Hill (N. Pressey, Z2 N. H. 49. Y.) 200. In Walker v. Xussey, 16 M. " The practice of giving something & W. 302, it was verbally agreed that to signify the conclusion of the con- the debt which the vendee owed tract, sometimes a sum of money, should go in part payment for leath- sometimes a ring or other object, to er. It was contended that the credit be repaid or redelivered on the com- on the invoice was sufficient to take pletion of the contract, appears to be the case out of the statute, but it one of great antiquity. It was fa- was held not. "Where one of the miliar to the law of Rome and was terms of an oral bargain is for the an old common-law mode of binding seller to take something in part pay- a bargain to show that the parties ment, that term cannot alone be were in earnest. Howe v. Smith, equivalent to part pavment." L. R. 27 Ch. Div. 89; Blenkinsop v. ~ Hunter v. Wetsell, 17 Hun 135. Clayton, 7 Taunt. 597. See also, affd. 84 N. Y. 549, 38 Am. Rep. 544. Berwin v. Bowles, 183 Mass. 340, 67 N. E. 323. § 1342 CONTRACTS. 59O to be applied to pay an open account, in whole or in part, the creditor and purchaser should part with some written evidence of such application, which shall bind him and put it into the power of his debtor and vendor to enforce the contract. This, or some- thing like this, is necessary to bring the case within the statute.**^ § 1342. Auctioneer's sale. — A sale by auction is within the statute, and the auctioneer who makes the sale is the agent of both parties, and has authority to sign the promise, contract or agree- ment, or a memorandum or note thereof, for the party to be charged therewith.*^ The actual agreement is constituted by the bidding on the one part, and acceptance of it by the auctioneer on the other ; the auctioneer is the agent for the vendor in setting up the property for sale, in receiving the biddings for it, and ac- cepting that of the highest bidder, and thus concluding the bar- gain. He is agent for the highest bidder in recording his bid.'*^ The auctioneer's authorization need not be in writing.*^ § 1343. Judicial sales. — Judicial sales are not within the statute, and are binding upon the purchaser without any written '"Brabin v. Hyde, 32 N. Y. 519. Emmerson v. Heelis, 2 Taunt. 38; Where parties made an oral contract Blagden v. Bradbear, 12 Ves. 466; for the sale of property and each of Kenworthy v. Schofield, 2 B. & C. theoi deposited the sum of $200 in 945, overruling Simon v. Metivier, 1 the hands of a third party as a for- Wm. Bl. 599; Kennell v. Boyer,, 144 feiture to be paid over to the party Iowa 303, 122 N. W. 941, 24 L. R. who was ready to perform the con- A. (N. S.) 488n, Ann. Cas. 1912A. tract if the other party neglected to 1127; O'Donnell v. Leeman, 43 Maine do so, it was held that the deposit 158, 69 Am. Dec. 54; Pike v. Balch, was not an earnest to bind the bar- 38 Maine 302, 61 Am. Dec. 248 ; Mor- gain, nor part payment within the ton v. Dean, 13 Mete. (Mass.) 385; statute that earnest was regarded as Davis v. Rowell, 2 Pick. (Mass.) 64, a part payment of the price. Howe 13 Am. Dec. 398; Cleaves v. Foss, 4 v. HaywaVd. 108 Mass. 54, 11 Am. Greenl. (Maine) 1; McKeag v. Pied- Rep. 306. To same effect, Noakes nor, 74 Mo. App. 593; M'Comb v. V. Morey, 30 Ind. 103. A pecuniary Wright, 4 John. Ch. (N. Y.) 659; deposit upon a purchase is to be con- Hicks v. Whitmore, 12 Wend. (N. sidered as a payment in part of the Y.) 548; Smith v. Arnold, 5 Mass. purchase-money and not as a mere (U. S.) 414. pledge. Ockenden v. Henly, El. Bl. « Dyas v. Stafford, 7 L. R. Ir. 590 ; & El. 485. The question as to the White v. Dahlquist, 179 Mass. 427, 60 right of the purchaser to the return N. E. 791. of the deposit-money must, in each "Kennell v. Boyer, 144 Iowa 303, case, be a question of the conditions 122 N. W. 941, 24 L. R. A. (N. S.) of the contract. Howe v. Smith, L. 488n, Ann. Cas. 1912A. 1127; Love v. R. 27 Ch. Div. 89. Harris, 156 N. Car. 88, 72 S. E. 150. " Bird V. Boulter, 4 B. & Ad. 443 ; 591 STATUTE OF FRAUDS. § I343 contract or memorandum of the terms of sale. The sale is made by the court through the sheriff acting as its officer. The sheriff in such a case is under no duty to bind himself personally, or to demand that the bidder shall be bound to him personally. By bidding one subjects himself to the jurisdiction of the court, and in effect becomes a party to the proceeding, and he may be com- pelled to complete his purchase by an order of the court, and by its process for contempt if necessary." " Attornev-General v. Day, 1 Ves. 20 N. E. 374 ; Hepeman v. Johnson, Jr. 218; Halleck v. Guv, 9 Cal. 181, 35 Barb. CN. Y.) 200; Cazet v. Hub- 70 Am. Dec. 643; Chandler v. Morev, bell, Z6 N. Y. 677; Miller v. CoUyer. 195 111. 596, 63 N. E. 512; Warfield 36 Barb. (N. Y.) 250; Matter of V. Dorsey, 39 Md. 299, 17 Am. Rep. Davis, 7 Daly (N. Y.) 1; Emley v. 562; Armstrong v. Vroman, 11 Gil. Drum, 36 Pa. St. 123; King v. Gun- (Minn.) 142, 88 Am. Dec. 81; An- nison, 4 Pa. St. 171; Fulton v. drews v. O'Mahoney, 112 N. Y. 567, Moore, 25 Pa. St. 468. CHAPTER XXXI. IMPLIED CONTRACTS. § 1355. Implied and quasi contracts § 1379. — Introductory. 1356. Judgments. 1380. 1357. Duties imposed by statute. 1358. Acts of parties. 1359. Contracts not implied by law 1381. where express contracts. 1360. Limits of rule that express contract excludes implied 1382. contract. 1361. Right to recover where minds of parties did not meet on 1383. attempted express contract. 1384. 1362. Accounts stated. 1363. Work and services. 1385. 1364. Contracts for services where 1386. skill is required. 1387. 1365. Same subject continued — When silence imports as- 1388. sent. 1366. Where law will not imply a 1389. promise owing to relation- ship of parties. 1367. Parent and child— Rule as to 1390. services rendered. 1368. Persons standing in loco 1391. parentis. 1369. Same subject continued — 1392. Further illustrations. 1370. Same subject continued — During illicit cohabitation. 1371. Same subject continued — In 1393. expectation of marriage. 1394. 1372. Money had and received. 1373. Rule illustrated. 1395. 1374. Nature of the action. _ 1396. 1375. When action may be main- 1397. tained. 1398. 1376. Money lent. 1377. Money lent to a municipal 1399. corporation. 1400. 1378. Money received and used by borrower. Money paid — Receiving with- out consent of owner. One to whom an obligation is due may proceed against one holding the money. Money voluntarily paid to another with owner's con- sent. Rule as to voluntary and in- voluntary payments further illustrated. Effect of protest. Recovery of money paid under duress or compulsion. The rule illustrated. Voluntary payment of taxes. Recovery of illegal taxes paid under compulsion. Money paid by or under mis- take. Payments by banks — Insur- ance companies — G e n e r a 1 matters. Effect of negligence upon the right of recovery. Recovery of money paid un- der mistake of law. Ignorantia juris neminem excusat — Exception in the case of ignorance of a for- eign law. Contribution. When contribution may be enforced. Goods sold and delivered. Board and lodging. Use and occupation. Waiver of torts and suing on implied contracts. Rule further considered. Other instances in which the tort may be waived and suit brought on the implied contract. § 1355. Implied and quasi contracts — Introductory. — As already shown, in another chapter, contracts are frequently class- 592 593 IMPLIED CONTRACTS. § 1 3 56 ified as either express or implied,^ and implied contracts are divided into contracts implied in fact and contracts implied in law.^^ But, as also shown in the chapter referred to, while con- tracts implied in fact are true contracts growing out of the inten- tion of the parties and differ from express contracts only in the manner in which they are formed or mode of proof, the inten- tion being gathered and the contract inferred or implied from acts, conduct and surrounding circumstances rather than express words, so-called contracts implied in law are not true contracts but may exist where there is no agreement and, indeed, contrary to the actual intention of the party. They are called contracts by a legal fiction adopted for the purpose of accomplishing justice and for the sake of the remedy to enforce the legal obligations so created by law by actions in form ex contractu, and are more properly called quasi contracts.^ It is this latter class of con- tracts that will be briefly treated in this chapter. § 1356. Judgments. — It appears from the foregoing that in a broad sense the term implied and "quasi contracts" applies to those contractual duties which are not enforcible by special assumpsit or by the action of debt.' Debts of record, such as judgments, are generally termed quasi contracts.* ^ See ante, Ch. 2, § 18. action in assumpsit is based requires *a See ante, chapter 2. See also, a consideration for its legal support Highway Comrs. v. Bloomington, 253 and existence. Shannon & Co. v. 111. 164, 97 N. E. 280. McElroy (Ala.), 57 So. 118. ' See Keener, Quasi Contracts 1893, ^ See 2 Street on Foundation of chap. 1 ; Maine's Ancient Law (3d Legal Liabilities 206. Am. ed.) 332; Pracht v. Daniels, 20 * Bidleson v. Whvtel, 3 Burr 1545; Colo. 100, 36 Pac. 845; Sceva v. Rae v. Hulbert, 17 111. 572; O'Brien v. True, 53 N. H. 627; Commercial Young, 95 N. Y. 428, 47 Am. Rep. Bank v. Pfeiffer, 22 Hun (N. Y.) 64; Taylor v. Root, 4 Key. (N. Y.) 327; People v. Speir, 77 N. Y. 144; 335; Gutta-Percha Co. v. Houston, Hertzog v. Hertzog, 29 Pa. St. 465. 108 N. Y. 276, 15 N. E. 402, 2 Am. "Whenever there is a legal liability," St. 412; First Nat. Bank v. Van says the court very broadly in Rlerri- Vooris, 6 S. Dak. 548, 62 N. \V. 378; wether v. Bell, 139 Ky. 402, 58 S. W. State v. New Orleans, 109 U. S. 285, 987, 139 Am. St. 488, 491. "the law 3 Sup. Ct. 211. This, it is believed, creates a promise upon which an ac- results from the obvious fact that a tion of assumpsit will lie." See also, judgment is not an express assump- De Leonis v. Etchepare, 120 Cal. 407, tial obligation voluntarily entered 52 Pac. 718; Highway Comrs. v. into by the parties. For want of a Bloomington, 253 111. 164, 97 N. E. better term perhaps more than any- 280; Lawson's Exr. v. Lawson, 16 thing else, judgments have been Grat. (Va.) 230, 80 Am. Dec. 702; classed as quasi contracts. A judg- notes to Cutter v. Powell, 2 Smith's ment might perhaps be classed as a Leading Cases 17-61. The express debt (Morse v. Toppan, 3 Gray or implied promise upon which an 38 — Contracts, Vol. 2 § 1357 CONTRACTS. 594 § 1357. Duties imposed by statute. — What is said in the preceding section in regard to judgments applies with equal force to statutory legal and official duties. They are termed "quasi contracts".'^ § 1358. Acts of parties. — As above stated, the term "quasi or implied contract" is generally used to denote a promise which the law, from the existence of certain facts, presumes that a party has made or imputes to him. Obligations of this nature are such as reason and justice dictate and which, it is said, the law pre- sumes every man has contracted to perform, and upon this pre- sumption makes him answerable to such person as suffers by his nonperformance.® Implied contracts, as a class, include obli- gations imposed by law upon one person to give value for a benefit conferred by another when it appears that the benefit conferred was not intended as a gratuity and it was so under- stood by the person benefited, such beneficiary having power and capacity to bind himself by an express promise if one had been given. Thus, when one person, in the absence of any express (Mass.) 411), upon which an action ity created by the express terms of a in debt will lie. Williams v. Jones, statute (Bullard v. Bell, 1 Mason (U. 13 M. & W. 628; Kingsland v. For- S.) 243), or which results from an rest, 18 Ala. 519, 52 Am. Dec. 232; official duty (Perkinson v. Gilford, Drennen v. Dunn, 166 Ala. 213, 52 Cro. Car. 539; Ruggles v. Beikie, 3 So. 313, 139 Am. St. 28; Kauffman Up. Can. K. B. (O. S.) 276; Neal V. Richardson, 142 Ala. 429, 11 So. v. Haygood, 1 Ga. 514; Bodenham- 673, 110 Am. St. 40; Spilde v. John- er v. Bodenhamer, 6 Humph, son, 132 Iowa 484, 109 N. W. 1023, (Tenn.) 264) has also been con- 8 L. R. A. (N. S.) 439n, 119 Am. sidered as a debt which will support St. 578. See also, Haynes v. Blanch- an action of debt, ard, 194 Mass. 244, 80 N. E. 504, 120 " Brackett v. Norton, 4 Conn. 517, Am. St. 551; Citizens' Nat. Bank v. 10 Am. Dec. 179; Chudnovski v. Lucas, 26 Wash. 417, 67 Pac. 252, 56 Eckels, 232 111. 312, 83 N. E. 846; L R. A. 812, 90 Am. St. 748. Com- Ottumwa Mill &c. Co. v. Manchester, pare, however, with Ilson v. Dahl, 99 139 Iowa 334, 115 N. W. 911; People Alinn. 433, 8 L. R. A. (N. S.) 444n, v. Bennett, 6 Abb. Pr. (N. Y.) 343; 116 Am. St. 435; Berkson v. Cox, IZ Osborne Co. v. Franklin Mills Co., ^liss. 339, 18 So. 934, 55 Am. St. 45 App. Div. (N. Y.) 325, 60 N. Y. 539. S. 1013 ; 3 Bl. Com. 150. "A promise ° See Augner v. Mayor, 14 App. is implied only upon principles of Div. (N. Y.) 461, 43 N. Y. S. 803; equity and natural justice, and no Pacific Mail Steamship Co. v. Joliffe, implication to pay arises where the 2 Wall. (U. S.) 450, 17 L. ed. 805. circumstances are such that the im- However, a recognizance (Smith v. plication would be inequitable." Ir- Collins, 42 Kans. 259, 21 Pac. 1058; win v. Jones, 46 Ind. App. 588, 92 State V. McGuire, 42 Minn. 27, 43 N. E. 787. A promise will be im- N. W. 687; Green v. Ovington, 16 plied when equity and good con- Johns. (N. Y.) 55; Bodine v. Com- science require one even though none monwealth, 24 Pa. St. 69), or a liabil- was expressly made. Turner v. 595 IMPLIED CONTRACTS. § 1358 agreement, renders valuable services to another, which are know- ingly accepted by such other, the law will imply a promise to pay a fair and reasonable compensation for such services.^ If an at- torney renders services without any express agreement as to the amount of compensation to be received, the law implies a promise to pay him a reasonable compensation for the work done.** The furnishing of merchandise and the performance of services and the acceptance by the defendant of such merchandise and services constitute a sufficient consideration to support the promise for compensation therefor which is implied in law." After a partner- ship has been dissolved and a balance has been struck and agreed upon by the partners, one may maintain assumpsit against the other to recover his balance upon an implied promise. ^*^ And when the master of a ship obtained a chronometer from appellees for the benefit of the ship it was held that appellant by retaining Jones, 1 Lans. (N. Y.) 147. "A con- tract is express when the agreement is formal, and stated either verbally or in writing, and is implied when the agreement is matter of inference and deduction. In other words, a contract is express when it con- sists of words, written or spoken, expressing an actual agreement of the parties. It is implied when it is evidenced by conduct manifesting an intention of an agreement." Gillan V. O'Larrv, 124 App. Div. (N. Y.) 498, 108 N. Y. S. 1024. To same ef- fect, Indianapolis Coal Traction Co. V. Dalton, 43 Ind. App. 330, 87 N. E. 552. "It seems clear that, where a contract is made which is perform- able at the time of the occurrence of a future event, the law imputes to the promisor an agreement that he will put no obstacle in the way of the happening of that event, and that he will hold himself in readi- ness to co-operate where his co-op- eration is a necessary clement in the happening of the contingency. If, in violation of this implied covenant on his part, he does something which prevents the happening of the event, the contract becomes absolute and must be performed as if the event had occurred. * * * The rule is that an implied promise always ex- ists where equity and justice require the party to do or refrain from doing the thing in question, where the cov- enant on one side involves some cor- responding obligations on the other, where by the relations of the parties and subject-matter of the contract a duty is owing by one not expressly bound by the contract to the other party in reference to the subject of it, and where it may be rightfully as- sumed that it would have been made if attention had been drawn to it." Marvin v. Rogers, 53 Tex. Civ. App. 423, 115 S. W. 863. In the follow- ing case the plaintiff was held not liable on an implied contract when it had knowledge that the materials and labor sued for were being furnished by defendant and when the only in- terest the plaintiff had in the prem- ises arose out of its contract to fur- nish heat when the defendant placed an acceptable system in the building. Citizens' Electric Light & Gas Co. v. Van Lent (Iowa), 103 N. W. 795. ' McFarlane v. Dawson, 125 Ala. 428. 29 So. 2,21. See also. Anderson v. Caldwell (Mo.), 146 S. W. 444, 445. « Miller v. Tracev, 86 Wis. 330, 56 N. W. 866. • Krieger v. Feenev, 14 Cal. App. 538. 112 Pac. 901. '"Beede v. Eraser, 66 Vt. 114, 44 Am. St. 824. § 1358 CONTRACTS. 596 and using the instrument after he had knowledge that it was rented from some one else ratified an implied contract of the master to pay the reasonable rental value for the whole term of use." In the case of contracts implied in fact, a contract actually ex- ists which is proved not by introducing evidence as to its express terms, since none have been expressly agreed upon, but the agree- ment of the parties is arrived at by a consideration of their acts and conduct and will be implied as of fact.^^ In the case of a quasi contract or contract implied by law, however, the liability arises from the facts and circumstances independent of agreement or presumed intention. The intention of the parties in such case may be entirely disregarded, while in cases of express and implied contracts, in fact, the intention is the essence of the transaction. The obligation arises not from consent, but from the law or natu- ral equity." As a general rule, a contract will not be implied when an express contract would be invalid." And it has been held that no contract can be implied from the acts of the parties, or result by law from benefits received, but such as the same par- ties were competent expressly to enter into." So, it has been "Reed v. Weule, 176 Fed. 660, 100 to recover upon an implied contract. C. C. A. 212. Weber v. Lewis (N. Dak.), 126 N. W. "^ Highway Comrs. v. Bloomington, 105. 34 L. R. A. (N. S.) 364. 253 111. 164, 97 N. E. 280. Ottumwa "Highway Comrs. v. Blooming- Mill &c. Co. V. Manchester, 139 Iowa ton, 253 111. 164, 97 N. E. 280. See 334, 115 N. W. 911 (holding that a also, Anderson v. Caldwell (Mo.), tenant in possession of premises to 146 S. W. 444; Sceva v. True, 53 N. be improved might, under the cir- H. 627; Columbus, H. V. & T. R. cumstances, hold the contractor liable Co. v. Gaffney, 55 Ohio St. 104, 6 for damages resulting from failure N. E. 152; Hertzog v. Hertzog, 29 to make the improvements within the Pa. St. 465; Leonard v. State, 56 time agreed upon). It does not fol- Tex. Cr. 307, 120 S. W. 183. In a low that merely because there was no proper case the law will imply a con- express promise there may not be an tract against the actual dissent of the actual contract, as distinguished from party. Harty Bros. v. Polakow, 237 one implied by law. See Weinsberg 111. 559, 86 N. E. 1085, revg. 141 111. v. St. Louis Cordage Co., 135 Mo. App. 570. As drawing the distinc- App. 533, 116 S. W. 461. See also, tion between promises implied in fact Harley v. United States, 39 Ct. CI. and those implied in law, see Chi- (U. S.) 105, affd. 198 U. S. 229, 49 cago v. Pittsburgh &c. R. Co., 146 L. ed. 1029, 25 Sup. Ct. 634; Wojahn 111. App. 403. v. National Union Bank, 144 Wis. 646, "Chase v. Second Ave. R. Co., 97 129 N. W. 1068. It is neither neces- N. Y. 384. 49 Am. Rep. 531. sary nor proper to allege a promise ^''Church v. Imperial Gas Light to pay on defendant's part in actions and Coke Co., 6 Ad. & El. 846. 597 IMPLIED CONTRACTS. § 1359 held that a mere moral obligation is not a sufficient consideration to raise an implied promise/* § 1359. Contracts not implied by law where express con- tracts. — It is well settled as a general rule that the law will not imply a promise when there is a subsisting express agreement between the parties which covers the same subject, and this is true regardless of whether such agreement be verbal or in writing." The rule that "where parties have come to an express contract none can be implied" has prevailed so long as to be reduced to axiom in the law/* This is true for the reason that parties to an agreement are bound thereby and no ground can exist upon which to base an implied promise or contract covering the subject where '"Nevvlin v. Duncan, 1 Har. (Del.) 204, 25 Am. Dec. 66. See ante, ch. 9. Consideration. " Toussaint v. Martinnant, 2 T. R. 100; Draper v. Randolph, 4 Har. (Del.) 454; Brougham v. Paul, 138 111. App. 455; Turner v. Owen, 122 111. App. 501; Ford v.^IcVay, 55 111. 119; Brown v. Fales, 139 Mass. 21, 29 N. E. 211; Massachusetts General Hospital V. Fairbanks, 129 Mass. 78, 2)1 Am. Rep. 303 ; Galloway v. Holmes, 1 Doug. (Mich.) 330;Cashin V. Pliter, 168 Mich. 386. 134 N. W. 482; Efron v. Stees, 113 Alinn. 242, 129 N. W. 374 ; Lindersmith v. South Missouri Land Co., 31 Mo. App. 258; Work v. Beach, 53 Hun (N. Y.) 7, 6 N. Y. S. 27; Lynch v. Onondaga Salt Co., 64 Barb. (N. Y.) 558; Vanderkarr v. Vanderkarr, 11 Johns. (N. Y.) 122; Preston v. Yates, 24 Hun (N. Y.) 534; Creigh- ton V. Toledo, 18 Ohio St. 447; Ap- pleton Waterworks Co. v. Appleton, 132 Wis. 563, 113 N. W. 44 (hold- ing that when no new contract is agreed upon by the parties at the beginning of a new year's service it constitutes a new hiring at the for- mer terms) ; Tietz v. Tietz, 90 Wis. 66. 62 N. W. 939. Where the par- ties have made an express contract the law will not imply and raise a contract different from that which the parties have entered into, ex- cept upon some farther transaction between the parties. Britton v. Tur- ner, 6 N. H. 481. See also, Kurtz v. Payne Inv. Co. (Iowa), 135 N. W. 1075. ^^ '* Cutter v. Powell, 6 T. R. 324. "As in physics, two solid bodies can- not occupy the same space at the same time, so in law and common sense, there cannot be an express and an implied contract for the same thing, existing at the same time. This is an axiomatic truth." Walker v. Brown, 28 111. 378, 81 Am. Dec. 287. "It is an ancient and deep- rooted axiom of the common law, \yhich 'use has made familiar and time has rendered sacred,' that 'the law will not imply a promise where there was an express promise; so the law will not imply a promise of any person against his own express declaration, because such declaration is repugnant to any implication of a promise.' Whiting v. Sullivan, 7 Mass. 107; Earle v. Coburn, 130 Mass. 596. While there are instances where the law will imply a promise to pay by a party who protests, as where the law creates a duty to per- form that for which it implies a promise to pay, as in the illustration of the refusal of a man to furnish food and clothing to his wife and children, yet the rule is that such promise shall never be implied against protest, except in cases where the law itself imposes the duty, which must be a legal, and not a mere mor- al or sentimental dutv." Third Nat. Bank v. Rice, 161 Fed. 822. § 1360 CONTRACTS. 598 there is a valid and subsisting express agreement/^ and it has been held immaterial whether the contract is made by the parties them- selves or by others for them.^" When a written contract exists it takes precedence of all others, and forms the only contract be- tween the parties during the time of its existence.^^ Thus, where services have been performed under an express contract, an action to recover compensation for such services must be founded on that contract and on that only, unless in consequence of the fault or consent of the defendant." The existence of an express contract for hire for one year, at a stated weekly compensation, excludes any implied agreement or understanding about wages, and the contract-price cannot be increased without a further agreement to that effect between the parties.^^ A previous im- plied contract is merged in a subsequent express agreement con- cerning the same matter.^* Nor, in many jurisdictions, can one who declares on a special contract recover on an implied agree- ment.'^ So on the other hand, it is held in the same jurisdictions that if suit is brought on an implied promise and the evidence discloses the breach of a special contract, there can be no re- covery.^® § 1360. Limits of rule that express contract excludes im- plied contract. — The above rule to the effect that where there is an express contract the law will not imply one, is only applica- ^* Walker v. Brown, 28 111. 378, 81 agreed between the parties that the Am Dec 287. services should be rendered gratui- =" Walker v. Brown, 28 111. 378, 81 tously). Am Dec 287 ^ Schurr v. Savigny, 85 Mich. 144, =^ North V. Nichols, 37 Conn. 375. 48 N. W. 547. The above case lays down the rule "" Riedinger v. Diamond Match that there can be no implied contract Co., 123 Fed. 244, 60 C. C. A. 1. to pay rent for use and occupation "^ Sanders v. Hartge, 17 Ind. App. of premises where there is a written 243, 46 N. E. 604; Indianapolis Coal lease See also, Snow v. Indiana &c. Co. v. Dalton, 43 Ind. App. 330, B & W R. Co., 109 Ind. 422, 9 N. 87 N. E. 552; Price v. Price, 101 E. 702; Waters v. Richmond &c. R. Ky. 28, 19 Ky. L. 211, 39 S. W. 429; Co., 110 N. Car. 338, 14 S. E. 802, 16 Birlant v. Cleckley, 48 S. Car. 298, L. R. A. 834; Normile v. Oregon 26 S. E. 600; Orynski v. Menger. 15 &c. R. Co., 41 Ore. 177, 69 Pac. 928. Tex. Civ. App. 448, 39 S. W. 388. "See Waite v. Merrill, 4 Greenl. "" Jackson v. Creek, 47 Ind. App. (Maine) 102, 16 Am. Dec. 238 (hold- 541, 94 N. E. 416. See also, Bacob ing that there can be no recovery on v. Phenix Ins. Co., 96 Miss. 223, SO an implied promise for the value of So. 729, 25 L. R. A. (N. S.) 1226. services rendered where it was 599 IMPLIED CONTRACTS. § 1360 ble to those cases in which the express contract and that implied by law relate to the same subject-matter, and where the provisions of the express contract are intended to control and supersede those which would otherwise be raised by implication." Neither does the general rule apply where the provisions of the express con- tract are not intended to control all subsequent conduct between the parties.^® Thus it has been held that the sale of a manuscript by an author to a publisher for the purpose of publication implies an agreement to publish the work and on the refusal of the pub- lisher so to do the author is entitled to tender the purchase-price received by him and recover the manuscript.-® And where the express contract is rescinded,^" or where both parties have de- parted therefrom, ^^ resort may be had in a proper case to an im- plied promise. So where the contract has been fully executed and the time of payment passed, a suit may be maintained either on "Commercial Bank v. Pfieffer, 22 Hun (N. Y.) 327. ^Efron V. Stees, 113 Minn. 242, 129 N. W. 374 (action by lessee to re- cover from lessor for the reasonable value of the leased premises subse- quently occupied by the lessor, the lease having made no provision for such occupancv) ; Waldron v. Davis, 70 N. J. L. 788. In the above case there was an express contract be- tween the plaintiff and the defend- ant's decedent under which the board and lodging of the deceased were agreed upon at a fixed price. Subse- quently the deceased became insane and was afflicted with a cancer and it was necessary to give her constant nursing and attention. It was held that a recovery might be had on an implied contract to pay for services rendered in nursing, notwithstand- ing the express contract for board and lodging. To same effect, Pfeiffer v. Michelsen, 112 Mich. 614, 71 N. W. 156. Compare with Hough- ton v. Kittleman, 7 Kans. App. 207, 52 Pac. 898, in which case one em- ployed as a housekeeper at a fixed compensation was not permitted to recover for services rendered as a nurse. ""Morang v. Le Sneur, 45 Can. Sup. Ct. 95. "" Towers v. Barrett, 1 T. R. 133; Cody v. Raynaud, 1 Colo. 272; Walker v. Brown, 28 111. 378, 81 Am. Dec. 287; Morrison v. Ives, 4 Smed. & M. (Miss.) 652; Columbia Bank V. Patterson, 7 Cranch (U. S.) 299, 3 L. ed. 351. "Goodrich v. LafHin, 1 Pick. (Mass) 57; Ladue v. Seymour, 24 Wend. (N. Y.) 60. See also. Ot- tumwa Mill &c. Co. v. Manchester, 139 Iowa 334, 115 N. W. 911, holding that the law will imply a promise to pay damage for nonperformance of the contract. Connolly v. Sullivan, 173 Mass. 1, 53 N. E. 143, holding that if the plaintiff was prevented by the defendant from going on with the contract he may recover on an implied contract the value of his services. But, on the other hand, if the contract was terminated with his consent he is entitled to recover only the contract-price. "That one can- not maintain an action on a contract without a prior substantial compliance on his part is the well settled law, but this principle must have a rea- sonable application. If there is a substantial performance, the action thereon may be maintained, but with- out prejudice to any set-off or coun- terclaim which may be presented by the defendant in the action. This is a reasonable and just rule, and is the well settled law of this state." Mc- Gowan v. Gate City Malt Co., 89 Neb. 10, 130 N. W. 965, 966. § 1 36 1 CONTRACTS. 60O the Special contract or recover}^ may be had as on an implied con- tract or in general assumpsit ; but in the latter case the amount re- covered will be the rate of compensation fixed by the special con- tract.^" When an express contract is the same as the law implies, an action may lie on either of them.^^ In the case of a surety who had a written promise of indemnity from the principal, and sued on the implied promise, it was held that as the written con- tract contained nothing more than what the law would imply, the plaintiff might make use of his written promise or sue on his im- plied promise as he pleased.^* § 1361. Right to recover where minds of parties did not meet on attempted express contract. — The law will imply a contract in fact when the parties attempt to contract but their minds fail to meet on an essential element thereof, and no inten- tion touching the question appears, and one party has executed his undertaking, and the other has accepted the benefits resulting therefrom.^^ Thus, when the minds of the parties meet upon everything but the compensation to be paid for the services ren- dered, the law will imply a promise to pay a reasonable compen- === James v. Cotton, 7 Bing. 266, 20 CI. (U. S.) 105, affd. 198 U. E. C. L. 125; Londregon v. Crowley, S. 229, 49 L. ed. 1029, 25 Sup. 12 Conn. 558; Walker v. Brown, 28 Ct. 634. Compare the foregoing 111. 378, 81 Am. Dec. 287; Holmes case with United States v. Societe V. Stummel, 24 111. 370; Jackson v. Anonyme &c. Cail (U. S.), 32 Sup. Creek, 47 Ind. App. 541, 94 N. E. Ct. 479, affg. 43 Ct. CI. (U. S.) 25. 416 (contract fully executed except Both involve the use of a patent; in payment of rent) ; Charles v. Dana, the former case it was held there 14 Maine 383; Gambrill v. Schooley, was no implied liability, in the latter 89 Md. 546, 43 Atl. 918; Columbia the United States was held liable on Bank v. Patterson, 7 Cranch (U. S.) an implied contract for the use of a 299, 3 L. ed. 351 ; Hilliard v. Doug- patent. Wojahn v. National Union las Oil Fields (Wyo.), 122 Pac. 626. Bank of Cshkosh, 144 Wis. 646, 129 See also, Appleton Waterworks Co. N. W. 1068. In the above case it V. City of Appleton, 132 Wis. 563, is said: "(a) appellant was requested 113 N. W. 44. on behalf of respondent to perform ^Cornwall v. Gould, 4 Pick, for it services; (b) he complied with (Mass.) 444; Princeton &c. Turnpike such request, continuing his labor Co. v. Gulick, 16 N. J. L. 161 ; Bank till the task assigned to him was of Columbia v. Patterson's Admr., 7 ended ; (c) his services were very Cranch (U. S.) 299; Maynard v. valuable to the respondent. _ From Tidball, 2 Wis. 34. such circumstances there arises, as "Gibbs V. Bryant, 1 Pick. (Mass.) matter of law, a presumption of 118. fact that the services were performed "'Weinsberg v. St. Louis Cordage under contractual relations. It is a Co., 135 Mo. App. 553, 116 S. W. mistake, in the technical sense, to 461; Harley v. United States, 39 Ct. speak of the contract as one implied 6oi IMPLIED CONTRACTS. § I361 sation or the quantum meruit of the services rendered.^" And where the minds of the parties fail to meet on the price to be paid for work in grading a city lot, the reasonable value thereof is recoverable." The courts do not, as a general rule, forbid a recovery because the minds of the parties did not meet on some essential element thereof, either because of a mutual mis- take or uncertainty as to such term. Instead, a party thereto who furnishes material or renders services to the other party in accordance with and in reliance upon the terms of the contract as he understands them, is generally entitled to recover what his labor and materials were reasonably worth.^* The reason for by law. There are such contracts. Thej' arise when there is a legal duty to respond in money which by a legal fiction may be enforced as upon an implied promise. In such case there is no element of contract strictly so-called. There is only the duty to which the law fixes a legal obligation of performance as in case of a promise inter partes. So it is called in the books a quasi-contract. They are implied contracts in the strict sense of the term. In this case we are dealing with the subject of implied contracts in such sense. Such a contract requires, the same as an express contract, the element of mutual meeting of minds and of in- tention to contract. The two species differ only in methods of proof. One is established by proof of expression of intention, the other by proof of circumstances from which the inten- tion is implied as matter of fact. The implication arises upon legal principles and is conclusive in the absence of something efficiently dis- placing it, as a presumption of law. Unlike the latter it being an implica- tion of fact though springing into existence as matter of law, it is re- buttable." See § 1358, Acts of Par- ties. "•Turner v. Webster. 24 Kans. 38, 36 Am. Rep. 251 ; Vickery v. Ritchie, 202 Mass. 247. 88 N. E. 835, 26 L. R. A. (N. S.) 810n. In the above case a contract for the erection of a build- ing was prepared by an architect. At the time the plaintiff signed both copies of the contract the defend- ant's signature was attached and the contract-price therein named was $33,721. When the defendant signed them the contract-price stated in each was $23,200. For this reason the minds of the parties failed to meet on the contract price. "Beers v. Kuehn, 84 Wis. 33, 54 N. W. 109. Compare, however, with Shaw V. Armstrong, 88 Mich. 311, 50 N. W. 248, in which it is held that where the parties disagree as to the amount to be paid for certain services rendered under an express contract, there was no room for the theory that the minds of the parties did not meet with reference to this element of the agreement and that it was for the jury to determine which of the parties was right as to the amount of compensation to be paid. ''Rowland v. New York, N. H. & H. R. Co., 61 Conn. 103, 23 Atl. 755, 29 Am. St. 175 (contract of affreightment) ; The Stanley M. Miner, 172 Fed. 486 (sunken schooner to raise and deliver) ; Hall v. Luck- man, 133 Iowa 518, 110 N. W. 916 (stenographer to take certain testi- mony and make transcript thereof) ; Voss V. Schebeck. 25 Ky. L. 481, 76 S. W. 21 (building repair contract) ; Cobb V. Stevens, 14 Maine 472 (con- tracts for performance of labor) ; Hawkins v. Lange, 22 Minn. 557 (contract to cut and haul timber) ; Russell V. Clough, 71 N. H. 177, 51 Atl. 632, 93 Am. St. 507 (contract to cut timber and make it into lumber) ; Bluemner v. Garvin. 120 App. Div. (N. Y.) 29. 104 N. Y. S. 1009 (architect to furnish plans for a building) ; Beers v. Kuehn, 84 Wis. § 1362 CONTRACTS. 602 this has been stated as follows : "The minds of the parties met upon everything but the compensation. As to that there was no aggregatio mentium. What, then, should result? Should he receive nothing because there was no mutual assent to the compen- sation? That were manifest injustice. Should his understand- ing bind both parties? That were a wrong to them. Should theirs control? That were an equal wrong to him. The law, discarding both, says a reasonable compensation must be paid."^* § 1362. Accounts stated. — An account stated is defined as "an agreement between parties, who have had previous transac- tions of a monetary character, that all items of the account repre- senting such transactions are true, and also that the balance struck is correct, together with the promise, express or implied, for the payment of such balance."*'' The stating of an account is not strictly and in every sense the making of a new contract as a crea- tion of a new debt."*^ An account stated is, however, regarded at common law as creating an implied promise to pay the balance thus ascertained which is in the nature of a new promise and an action brought is upon it and not upon the original items of the account.*^ An account stated is prima facie evidence of its cor- 33, 54 N. W. 109 (lot to be graded) ; &c. Ins. Co. v. Batt (Ind.), 97 Buck V. Pond, 126 Wis. 382, 105 N. N. E. 195; Ida County Sav. Bank v. W. 909 (improvements made upon Johnston (Iowa), 136 N. W. 225; land under invalid contract of pur- Watson v. Dodson, — Tex. Civ. App. chase). See also, McGowan v. Gate — , 143 S. W. 329, citing Elliott on City Malt Co., 89 Nebr. 10, 130 N. W. Ev., § 1609 ; 1 Cyc. 364. The mere 965. Plaintiff furnished brick to de- rendition of an account does not fendant for which the former was make it an account stated. Kent v. compelled to pay $7.50 per thousand. Wilson, 134 N. Y. S. 206. Defendant had contracted for brick "■ See and compare Laycock v. at $7.00 per thousand but neverthe- Pickles, 4 B. & S. 497; Chace v. less accepted and used those fur- Traflford, 116 Mass. 529, 17 Am. Rep. nished by plaintiff. Held that plain- 171 ; McKinster v. Hitchcock, 19 tiff might recover the price ($7.50) Nebr. 100, 26 N. W. 705; Goings v. paid for the brick. Patten, 17 Abb. Pr. (N. Y.) 339, 1 ''Turner v. Webster, 24 Kans. 38, Daly (N. Y.) 168. It has been 36 Am. Rep. 251. To same effect, termed evidence of a debt. Van- Russell V. Clough, 71 N. H. 177, 51 bebber v. Plunkett (Ore.), 27 L. R. Atl. 632, 93 Am. St. 507 (cutting and A. 811 and notes, sawing lumber). See further on this *" Foster v. Allanson, 2 T. R. 479; subject in the subsequent sections on Arthur v. Dartch, 9 Jur. 118; Hendy Work and Services, Money had and v. March, 75 Cal. 566, 17 Pac. 702; Received, Money Lent, &c., §§ 1363, Throop v. Sherwood, 9 111. 92; 1372 et .seq. United States HeaUh &c. Ins. Co. v. '"3 Elliott Ev., § 1605, quoting 1 Ratt (Ind.), 97 N. E. 195; Columbia Am. & Eng. Encyc. of Law (2d ed.) Brewing Co. v. Berney, 90 Mo. App. 437. See also, United States Health 96; Holmes v. DeCamp, 1 Johns. (N. 603 IMPLIED CONTRACTS. § 1 363 rectness and the burden rests upon the party disputing the same to show mistake. It does not, however, operate as an absolute estoppel/^ The ordinary account stated, as distinguished from an express settlement of cross-demands, consists of money trans- actions or debts. Thus, a single item, not of a debt due, and owing, but of an unliquidated claim for damages for the breach of parol or simple contract cannot form the basis for an account stated." § 1363. Work and services. — Where there is no family re- lationship between the parties, and one accepts and retains the beneficial results of another's services, which he had no reason to suppose were gratuitous, and which he could accept or not at his option, the law will imply a previous request for the services and a promise to pay what they were reasonably worth. ''^ Where a city ordinance provided that a fireman should be assigned to at- tend all theater performances, his wages to be paid by the man- ager, it was held that the fireman so assigned might bring an action against the manager to recover the reasonable value of his Y.) 34, 3 Am. Dec. 293; Holmes v. A. 480, 19 L. R. A. 796; Harris v. Page, 19 Ore. 232, 23 Pac. 961. See Johnson, 98 Ga. 434, 25 S. E. 525 also, Shaw v. Lobe, 58 Wash. 219, De Wolf v. Chicago, 26 111. 443 108 Pac. 450, 29 L. R. A. (N. S.) Linn v. Linderoth, 40 111. App. 320 333, and note on the effect of re- Lockwood v. Robbins, 125 Ind. 398, taining statement of accounts to ren- 25 N. E. 455 ; Chamness v. Cox, 2 der it an account stated. The evi- Ind. App. 485, 28 N. E. 777; Mc- dence to support the account stated Garvy v. Roods, 73 Iowa 363, 35 N. may be wholly in writing or wholly W. 488 ; Cowan v. Musgrave, 73 by parol, or in part by writing and Iowa 384, 35 N. W. 496; Shelton v. in part bv parol. Whittington v. Johnson. 40 Iowa 84; Perrv v. Bailey, Stanton (Fla.), 58 So. 489. For a 12 Kans. 539; Nimmo v. Walker, 14 general discussion of accounts stated La. Ann. 581; Casey v. May (Mass.), see 1 Cyc. 351. See also, 1 Am. & 97 N. E. 913 (services rendered in Eng. Encyc. of L. (2d ed.) 433. devising a system for accurately de- " Watson V. Dodson (Tex. Civ. termining the amount of leather re- App.), 143 S. W. 329. quired for cutting pieces for various *'Vanbebber v. Plunkett (Ore.), sizes of shoes); Fowler v. Fowler, 27 L. R. A. 811 and note. See also, 111 Mich. 676, 70 N. W. 336 (house- Charnley v. Sibley, 73 Fed. 980, 20 keeper) ; Rvans v. Hospes, 167 Mo. C. C. A. 157, 34 U. S. App. 705: Era- 342, 67 S. W. 285 (services as nurse ley v. Bispham, 10 Pa. St. 320, 51 and companion) ; Allen's Admx. v. Am. Dec. 486. Richmond College, 41 Mo. 302; Mc- ** Alabama &c. R. Co. v. Hill. 76 Queen v. Wilson, 51 Mo. App. 138; Ala. 303; Ford v. Ward, 26 Ark. 360; In re Cooper. 6 Misc. (N. Y.) 501, Joseph v. Johnson, 7 Del. 468, 82 27 N. Y. S. 425; Ladue v. Sevmour. Atl. 30; Johnson v. The Frank S. 24 Wend. (N. Y.) 60; Gordon v. Hall, 38 Fed. 258; Cincinnati &c. R. French American Stores Co., 132 N. Co. V. Bensley, 51 Fed. 738, 2 C C. Y. S. 762; Blount v. Guthrie, 99 N. ^3(^3 CONTRACTS. 604 services rendered." A fortiori is this true where the party bene- fited requests that the services be performed.*^ Thus, where one person employs another to labor for him or to render him other services, the law is said to imply a contract and a promise to pay a reasonable sum for the services received, although nothing is stipulated concerning the price or payment. ^^ And where a part- ner requests board for the other member of the firm and employes and the board is furnished, the partner requesting the board may be held liable on an implied promise to pay therefor.^* Car. 93; Moreland v. Davidson, 71 Pa. St. 371; Pierce v. Aiken (Tex. Civ. App.), 146 S. W. 950; Morris- sey V. Faucett, 28 Wash. 52, 68 Pac. 352 (sister living witii brother's fam- ily and rendering services, brother promising to make it right with her) ; McMillan v. Page, 71 Wis. 655, 38 N. W. 173; Hav v. Peterson, 6 Wyo. 419, 45 Pac. 1073, 34 L. R. A. 581n. Where a railroad company has been carrying the mails and receiving pay therefor, no express contract being proven, the law implies a contract. Western Union R. Co. v. United States, 101 U. S. 543, 25 L. ed. 1068. Where services are rendered by one person to another and knowingly ac- cepted, unless there is something in the relation of the parties, the na- ture of the services rendered, or other circumstances to rebut the pre- sumption, the law will presume an obhgation to pay therefor. Hood v. League, 102 Ala. 228, 14 So. 572. Al- though a request to do certain work may not have been satisfactorily proved against a corporation sued upon a quantum meruit, yet if the plaintiff in good faith and with full knowledge on the part of the de- fendant, did the work and the de- fendant availed itself of the fruits of plaintiff's labor, it is liable to the extent of the benefit received. Thomas v. Walnut Land &c. Co., 43 Mo. App. 653. Compare with Clary V. Wolf (R. L), 83 Atl. 115, hold- ing that the mere fact that a tenant may have made use of an unauthor- ized improvement does not amount to a ratification by the landlord. See also, Simons v. Paine (Tex. Civ. App.), 140 S. W. 855 (denying re- covery on quantum meruit for dig- ging a well when it did not comply with the contract and the owner had refused to accept it). Recovery can- not be had on an implied contract when the express agreement is con- trary to law. Cashin v. Pliter, 168 Mich. 386, 134 N. W. 482. ^ Tannebaum v. Rehm, 152 Ala. 494, 44 So. 532, 11 L. R. A. (N. S.) 700n, 126 Am. St. 52. "Freel v. Harken (Iowa), 135 N. W. 648; Weinsberg v. St. Louis Cordage Co., 135 Mo. App. 553, 116 S. W. 461 ; Thomas v. Thomasville Shooting Club, 121 N. Car. 238, 28 S. E. 293; Meyer v. Livesley (Ore.), 107 Pac. 476, 108 Pac. 121 (defendant requested plaintiff to care for a hop crop) ; Wojahn v. National Union Bank, 144 Wis. 646, 129 N, W. 1068; McCann v. Doherty, 98 Wis. 335, 73 N. W. 782. "Weston V. Davis, 24 Maine 374; Lewis V. Trickey, 20 Barb. (N. Y.) 387. An acceptance of beneficial services raises an implied assumpsit. Donovan v. Halsey Fire Engine Co., 58 Mich. 38, 24 N. W. 819. One who employs another to perform certain services for his benefit, without any agreement as to terms, impliedly agrees to pay reasonable compensa- tion for the services. Humes v. De- catur &c. Co., 98 Ala. 461, 13 So. 368. Sir William Blackstone gives this example of an implied contract: "If I employ a person to do any business for me, or perform any work, the law implies that I under- took, or contracted to pay him as much as his labor deserves." 2 Bl. Com. 443. **Gessner v. Roeming, 135 Wis. 535, 116 N. W. 171. 605 IMPLIED CONTRACTS. § 1 363 If a man build a house upon the land of another, with his as- sent, in the absence of anything to the contrary the law raises an obligation on his part to pay its value, since he has been benefited to that extent, and, if he did not intend to pay, it was his duty to forbid its construction, or at least to give notice that he would not be chargeable. So, if he had expressly contracted to pay for the house, provided it were built in a certain manner and within a certain time, and he accepted it, although it was not built in the manner or within the time contracted for, he is bound to pay its value, not exceeding the contract-price, less any dam- ages he may have suffered by reason of the failure of the other party to comply with the exact conditions of the contract.^'' One who has accepted the results of a broker's services in effecting an exchange of property has been held liable for the reasonable value of the broker's services." If a man serves a stranger in the capac- ity of clerk, or of a menial servant, or servant in husbandry, for a continued period, the law presumes that the service has been ren- dered in fulfilment of a contract of hiring and service, and if the party has served without anything having been said as to wages, the law presumes that there was a contract for customary and rea- sonable wages.^^ But no recovery can be had for services volun- tarily rendered and with the express assurance that no charge would be made therefor." Moreover, if services are rendered in the mere expectation of remuneration, as by a legacy, and there is nothing in the conduct or language of the person benefited by the services to induce such an expectation, they are deemed volun- tary and gratuitous.^* But where, from the circumstances of the '"' Vanderbilt v. Eagle Iron Works, and set to work, no contract of hiring 25 Wend. (N. Y.) 665. A promise and service is implied therefrom. In to pay may be implied where an archi- such cases, an express hiring must tect prepares plans and specifications be proved in order to support a claim for another. Frost v. Grimmer for wages. Bennett v. Stephens, 8 (Tex. Civ. App.), 142 S. W. 615. Ore. 444. "Millard v. Loser (Colo.), 121 "" Cochran v. Zacher>', 137 Iowa Pac. 156. But where the broker's 585, 115 N. W. 486, 16 L. R.^A._ (N. compensation is fixed by an express S.) 235n, 126 Am. St. 307. "Where contract he is not entitled to recover services are rendered gratuitously on the quantum meruit. Kurtz v. with no intention of charging for Payne Inv. Co. (Iowa), 135 N. W. the same, the party cannot subse- 1075. quently recover compensation for "If a poor person is taken out of such gratuitous service." Joseph v. charity and provided with food, lodg- Johnson, 7 Del. 468, 82 Atl. 30. ing, clothing and other necessaries, "** O shorn v. Governors of Guy's § 1364 CONTRACTS. 606 case, it is manifest that it was understood by both parties that compensation should be made by will, and none is made, an action lies to recover what the services were reasonably worth. ^° § 1364. Contracts for services where skill is required. — Ordinarily, when one undertakes any trust, office or employment, the law raises a promise on his part to perform his undertaking with integrity, diligence and skill, and if he injures his employer by want of either of these qualities, he is liable to an action on his implied contract for reparation. ^^ Where a man holds him- self out to the world as a person of skill and competency in any particular trade or calling, and is employed to perform work in that trade or calling, the law implies a contract on his part to do the work in a skilful and workmanlike manner.^^ But if the em- ployer has in any manner acquiesced in the improper or inferior work, or has suffered the other party to perform it and taken it off his hands, he is bound to pay for whatever benefit or advan- tage he has derived from the work.^® Where a man works by the day he is required to exercise ordinary care and skill, and to do his work in an ordinary, fair, workmanHke manner, and, if he does not, he cannot recover as wages the value of work properly done, without the employer being entitled to a deduction for any defect in the labor, or in the manner of its performance.^*^ A person con- Hospital, 2 Str. 728; Gross v. New- J. Eq. 394, 74 Atl. 703. And where man's Admr., 20 Ky. L. 1910, SO S. the recipient of the services so con- W. 530; Thompson v. Stevens, 71 ducts himself as to warrant a rescis- Pa. St. 161 ; Swires v. Parsons, 5 sion of the contract by the other W. & S. (Pa.) 357; In re Hartman's party, the quantum meruit of the Appeal, 3 Grant's Gas. (Pa.) 271; services rendered may be recovered, Messier v. Messier (R. I.), 82 Atl. not to exceed the amount of pros- 996. pective benefits receivable under the "Norton's Estate v. McAlister will. Mug v. Ostendorf (Ind. App.), (Colo. App.), 123 Pac. 963; Hart v. 96 N. E. 780. Hart, 57 N. J. Eq. 543, 42 Atl. 153; '"* Chudnovski v. Eckels, 232 111. Anderson v. Eggers, 61 N. J. Eq. 85, 312, 83 N. E. 846. 47 Atl. 727, revg. 63 N. Y. Eq. 264, "Hall v. Cannon, 4 Harr. (Del.) 49 Atl. 578, 55 L. R. A. 570; Cullen 360. V. Woolverton, 65 N. J. L. 279, 47 "'Hall v. Cannon, 4 Harr. (Del.) Atl. 626; Gillan v. O'Leary, 124 App. 360; Walsh v. Jenvey, 85 Md. 240, Div. (N. Y.) 498, 108 N. Y. S. 36 Atl. 817 (see 38 Atl. 938 for dis- 1024; Shakespeare v. Markham, 10 senting opinion). See also, Ludlow Hun (N. Y.) 311; Graham v. Gra- Lumber Co. v. Kuhling, 119 Kv. 251, ham's Exrs.. 34 Pa. St. 475; Cross v. 83 S. W. 634, 115 Am. St. 254 and Dunlavy (Tenn.), 46 S. W. 473; note. Jones V. Jincey, 9 Grat. (Va.) 708. «» Eaton v. Woolly, 28 Wis. 628. See also, Deseumeur v. Rondel, 76 N. 607 IMPLIED CONTRACTS. § 1 365 tracting to perform services for another agrees to exercise such care and diHgence in his employment as men of common care and prudence usually exercise in their own business of a similar kind.^" Reasonable skill constitutes the measure of the engagement and responsibility in regard to the work undertaken by him, unless he professed to the highest degree of skill in regard to it, and ex- pressly engaged to do it in the best manner. If a party is em- ployed in a particular business or work, who is known to the party employing him not to possess any skill in it, or that it is not and never has been his particular art, business or employment, and the employer, with full notice or knowledge of that fact, trusts him with the undertaking, the party so employed is bound only for a reasonable exercise of the skill which he possesses, or the judgment which he can employ in it, and if any loss ensues from his lack of skill in it, he is not in law chargeable with it or liable for it.**^ A dentist is required to use a reasonable degree of care and skill in the manufacture and fitting of artificial teeth. "^ So a common carrier of goods or passengers may be sued for an injury to the passenger or goods carried, resulting from its neg- ligence either in assumpsit for the breach of its contract, whether express or implied, to carry safely, or in an action on the case for the wrong.*^^ § 1365. Same subject continued — When silence imports assent. — In the case of contracts which are made by the act of the parties, and not by proposal and acceptance in words, silence, to give assent must, ordinarily at least, be silence under such circumstances as amounts to acquiescence."* Whether the silence of the party, with knowledge that another was doing val- uable work for his benefit, and with the expectation of payment, •"Leighton v. Sargent, 27 N. H. " McCombs v. McGratten, 3 Houst. 460, 59 Am. Dec. 388. All persons (Del.) 35. impliedly undertake, when they en- " Simonds v. Henry. 39 Maine 155, gage to do work, that they have a 63 Am. Dec. 611. reasonable amount of skill in the "' Chudnovski v. Eckels. 232 111. 312. employment and that they will use 83 N. E. 846. See also, 4 Elliott's R. it, and also engage for a reasonable R. (2d ed), §§ 1693. 1694 and nu- amount of care, and a failure in merous cases there cited, these respects prevents them from " See Coles v. Flack. 90 111. App. recovering the contract-price, but 545 ; Murphy v. Northern Steamship only what the labor is reasonably Co., 131 Mich. 120, 91 N. W. 142. worth. Parker v. Piatt, 74 111. 430. § 1365 CONTRACTS. 608 indicates that consent which gives rise to the inference of a con- tract, must be determined by the facts and circumstances devel- oped in each case.°° Thus in an action to recover the value of one- half of a party wall erected partly on the estate of the plaintiff and partly on that of the defendant, it was held that the jury might infer a promise on the part of the defendant to pay, if the plaintiff undertook and completed the building of the wall with the expectation that the defendant would pay him for it and the defendant had reason to know that the plaintiff had so acted with that expectation, and allowed him to so act without objection.*'^ There are some cases so free from ambiguity that a court can legally presume the intention of the parties by their actions ; but in all cases of doubt it is well settled to be a matter proper for the determination of the jury from the evidence whether a promise can be inferred or not." The operation of the foregoing rules is, however, confined within the limits stated. Furthermore, certain well recog- nized exceptions exist thereto. Before there can be a re- covery for services so rendered, upon the theory of a contract implied in fact at least, it must appear that the parties had capacity to contract and that their minds met in the intention to form a contractual relation."* To render the beneficiary liable as a debtor under an implied promise it must be shown not only that the services were valuable but also that they were rendered under such circumstances as to raise a presumption that the par- ties intended and understood that they were to be paid for, or, at least, that the circumstances were such that a reasonable man in the same situation with the person who received and was benefited by them would and ought to understand that compensa- tion was to be paid for such services."® The mere fact that the "See Seals v. Edmondson, IZ Ala. 162, 16 Am. Dec. 536. See also, 295, 49 Am. Rep. 51; Botkin v. Mc- Campbell v. Day, 90 111. 363; Tascott Intyre, 81 Mo. 557. v. Grace, 12 111. App. 639; Wagner ""Day V. Caton, 119 Mass. 513, 20 v. Edison Elec. &c. Co., 177 Mo. 44, Am Rep. 347. See also, Bailey v. 75 S. W. 966; Hannah v. Woodson Rutjes, 86 N. Car. 517. (Va.), 25 S. E. 1014. •"Keel V. Larkins, 52 Ala. 493; «* See ante, § 1358. Godfrey v. Haynes, 74 Maine 96; "» Pew v. First Nat. Bank, 130 Hart V. Hess, 41 Mo. 441 ; Oatfield Mass. 391 ; Wagner v. Edison El. &c. V. Warring. 14 Johns. (N. Y.) 188; Co., 177 Mo. 44, 75 S. W. 966. Hart V. Boiler, 15 Serg. & R. (Pa.) 609 IMPLIED CONTRACTS. § 1 365 one performing the service intended to charge therefor is in itself insufficient. It must appear that under all the facts and circum- stances both he and the beneficiary understood or ought to have understood that compensation was to be made for his services.'" Moreover, even though services are rendered at the request of another, yet if they are not rendered for his benefit and there is no legal liability upon him to have such labor performed, and the request, in view of the circumstances, does not necessarily or rea- sonably imply an employment or promise to pay by the person making the request, an action cannot be predicated against him upon the naked request.''^ Thus, an implied promise to pay is not ordinarily raised against a person who requests a physician to per- form services for a patient, unless the relation of the person to that patient is such as to raise a legal obligation on his part to call a physician and pay for the services. When a husband calls in a physician to attend upon his wife, or where a father calls in a physician to attend upon his minor child, the law implies a prom- ise on his part to pay the reasonable value of the services because there is a legal obligation on his part to furnish necessities for the patient's benefit, but no such implication arises where one calls in a physician to attend upon a stranger or upon one to whom he is under no legal obligation to furnish such necessary.''^ It has been held that a special request by a father to a physician to attend upon his son, then of full age but lying sick at his father's house, raised no implied promise on the part of the father to pay ^"Wagner v. Edison El. &c. Co., gether of minds' is therefore ex- 177 I\Io. 44, 75 S. W. 966; Potter v. eluded by the findings. And the use Carpenter, 76 N. Y. 157; Harlev v. of the device cannot give a right in- United States, 198 U. S. 229, 25 Sup. dependent of the understanding un- Ct. 634. In the above case it is said : der which it was used. 49 L. ed. "In the case at bar the Court of 1029, 40 Ct. CI. 525. The appellant Claims finds that the appellant 'sup- should have been explicit m his de- posed and understood that he would mand. He contends that he was. but be entitled to compensation, and that manifestly he was not, or the curious it would be allowed and paid by the opposition between his expectation Secretary of the Treasury;' but it and that of the Secretary of the also finds that 'on the pa'rt of the Treasury and Chief of Bureau could Secretary and Chief of Bureau (En- not have occurred." graving and Printing) it was sup- ^ See Webster v. Drinkwater, 5 posed and understood that the claim- Greenl. (Maine) 319, 17 Am. Dec. ant (appellant) being an employe of 238n. the Treasury Department would nei- " Meisenbach v. Southern Cooper- ther expect nor demand remunera- age Co.. 45 Mo. App. 232 ; Rankin v. tion.' That there was 'a coming to- Beale, 68 Mo. App. 325. 39 — Contracts, Vol. 2 § 1366 CONTRACTS. 61O for the services rendered.'^ It has also been held that a master who requests a physician to perform services for his servant does not hnpliedly promise to pay for them.''* § 1366. Where law will not imply a promise owing to re- lationship of parties. — One well recognized exception exists to the general rule that where services are rendered and volun- tarily accepted the law will imply a promise upon the part of the recipient to pay for them. It is universally recognized that where persons are living together as one household, services performed for each other are presumed to be gratuitous and the law will not imply a contract to pay for the services from the mere fact that they have been rendered upon the one hand and benefits received upon the other, as in the case of strangers.^^ Nor is it necessary that a blood relationship should exist between the parties. The rule applies when there is no actual blood relationship existing be- tween the parties, provided they sustain to each other the ordinary relation of members of the same family.^" In case services are rendered to each other by members of a family living in one household, the person rendering the services must show an ex- press promise on the part of the party served to pay therefor or such facts and circumstances as will authorize the jury to find "Rankin v. Beale, 68 Mo. App. the master authorizes the physician 325; Crane v. Baudoine, 55 N. Y. to attend to the case. Weinsberg v. 256; Dunbar v. Williams, 10 Johns. St. Louis Cordage Co., 135 Mo. App. (N. Y.) 249; Boyd v. Sappington, 4 553, 116 S. W. 461. Watts (Pa.) 247. In Smith v. Wat- '= Hardiman's Admr. v. Crick, 131 son, 14 Vt. 332, the defendant re- Ky. 358, 115 S. W. 236, 133 Am. St. quested the plaintiff to render medi- 248 and note. The above case holds cal services to his brother, but it did that the relation of son-in-law and not appear that he told the plaintiff mother-in-law is too remote to create that he would pay him for the serv- the presumption that services ren- ices, or that he said anything to him, dered were gratuitous. Rockowitz or did anything from which the v. Rockowitz (Tex. Civ. App.), 146 plaintiff could fairly infer that he in- S. W. 1070; Morrissey v. Faucett, 28 tended to pay for such services. The Wash. 52, 68 Pac. 352; Hodge v. court held that the mere fact that Hodge, 47 Wash. 196, 91 Pac. 764, the defendant calls upon the plain- 11 L. R. A. (N. S.) 873n. See also, tiff to attend his brother would not the exhaustive note on this subject render him liable to pay for such in 11 L. R. A. (N. S.) 873, in con- attendance, nection with the last mentioned case. "Jesserich V. Walruff, 61 Mo. App. ■" Morrissey v. Faucett, 28 Wash. 270. It is otherwise, however, where 52, 68 Pac. 352; Hodge v. Hodge, 47 the physician before he renders the Wash. 196, 91 Pac. 764, 11 L. R. A. services makes it plain that he will (N. S.) 873 and note. See also note look to the master for payment and in 133 Am. St. 248. 6ii IMPLIED CONTRACTS. § 1366 that the services were rendered in the expectation by one of re- ceiving, and by the other of making, compensation therefor." Thus, it has been held that the relation of parent and child, step- parent and step-child, brother and sister, or the like, existing be- tween persons living together in the saine household, creates a strong presumption that no payment or compensation was in- tended to be made for services rendered by one to the other, be- yond that received at the time they were rendered, and the person claiming pay for services, in such a case, must overcome that pre- sumption by clear, direct and positive proof that the relation be- tween the parties was that of debtor and creditor, or servant and master.'* The closer the family relation the stronger, ordinarily "Cowan V. Musgrave, IZ Iowa 384, ,35 N. W. 496; Scully v. Scully's Exr., '28 Iowa 548; Boiling v. Boiling's Admr., 146 Ky. 313, 142 S. W. 387; Covey V. Rogers (Vt.), 81 Atl. 1130 (holding that an express agreement need not be proved) ; Morrissey v. l-aucett, 28 Wash. 52. 68 Pac. 352; Hodge V. Hodge, 47 Wash. 196, 91 Pac. 764, 11 L. R. A. (X. S.) 873 and note. "Davies v. Davies, 9 C. & P. 87; Morris v. Simpson, 3 Houst. (Del.) 568 (suit of a nephew against his uncle for board) ; Cantine v. Phil- lips' Admr., 5 Har. (Del.) 428 (no contract implied for payment of board between father and daughter, or daughter's husband living in the father's house) ; Collar v. Patterson, 137 111. 403, 27 N. E. 604 (where a claimant against an estate performed household services for the deceased, who was the husband of the claim- ant's aunt) ; Hays v. AlcConnell, 42 Ind. 285 (suit of a niece against an uncle for services) ; Keegan v. Es- tate of Malone. 62 Iowa 208, 17 N. W. 461 (brother and sister) ; Price v. Price, 19 Ky. L. 211, 39 S. W. 429 (brother and sister) ; Clark v. Sanborn, 68 N. PI. 411, 36 Atl. 14 (aunt and niece) ; Bundy v. Hyde, SO N. H. 116 (brother-in-law and sister- in-law). In re Pfohl's Estate. 20 Misc. (N. Y.) 627, 46 N. Y. S. 1086. 2 Gibbons 230; Havens v. Havens, 50 Hun (N. Y.) 605, 21 N. Y. St. 958, 3 N. Y. S. 219; In re Wall's Appeal, 111 Pa. St. 460, 5 Atl. 220, 56 Am. Rep. 288 (services of niece for uncle, claim based on parol promise of uncle to provide for her at his death) : Bliss V. Hoyt's Estate, 70 Vt. 534, 41 Atl. 1026 (brother and sister) ; Fitch v. Peckham, 16 V't. 150 ; Davis v. Goode- now, 27 Vt. 715 (action brought by a grandchild to recover for services rendered to her grandfather) ; Will- iams V. Williams, 114 Wis. 79, 89 N. W. 835 (brother and brother. In this case a recovery is permitted) ; Hall v. Finch. 29 Wis. 278. 9 Am. Rep. 559 (brother and sister) ; Ellis v. Cary. 74 Wis. 176. 42 X. W. 252. 4 L. R. A. 55, 17 Am. St. 125 (serv- ices rendered by a step-daughter) ; See also, Muldrick v. Galbraith, 31 Ore. 86, 49 Pac. 886. In Dishrow v. Durand, 54 N. J. L. 343, 24 Atl. 545, Z2> Am. St. 678, it was held that the family relation contemplated in the exception is not limited merely by propinquity of kindred, and that the exception stands upon a reason which logically extends it to all members of a household, however remote their relationship, and even to those who, though not of kin, stand in the sit- uation of kindred in one household. In Horner v. Webster, 12> N. J. L. 387. Mr. Justice Dupue referred to the principle as applying to all cases where the parties stand, in relation to each other, of support on one side and services on the other. § 1367 CONTRACTS. 6l2 is the presumption that services are gratuitous." Remoteness of relationship diminishes the force of the presumption.*** The rela- tion of step-son-in-law and step-mother-in-law has been held en- tirely too remote to create the presumption that services rendered by the step-son-in-law were a mere gratuity.^^ Membership in the same family rather than the mere degree of relationship is, how- ever, the true and ultimate test.*- A family relationship must ex- ist. Thus, where a party went to live in her brother-in-law's fam- ily, and was received and entertained there, not as a member of the family, but as a boarder, and the board was furnished with the hope of compensation on the one hand, and the expectation to award it upon the other, a liability was created for payment of such board.*^ § 1367. Parent and child — Rule as to services rendered. — If a son renders service to his father no contract of hiring is in- ferred.** The law will not imply an agreement on the part of a parent to pay a daughter, who is living in the family, wages for ordinary services, such as housekeeping.*^ Where the relation of ''Quigly V. Harold, 22 111. App. 367, 7 Atl. 61; Briggs' Estate v. 269; Woods v. Land, 30 Mo. App. Briggs, 46 Vt. 571. 176; Lynn v. Smith, 35 Hun (N. Y.) "Huffman v. Wyrick, 5 Ind. App. 275. 183, 31 N. E. 823. In an action to ^ Hill V. Hill, 121 Ind. 255, 23 N. recover for services rendered as E. 87; Shane v. Smith, 37 Kans. 55, nurse to an aunt, who was an in- 14 Pac. 477; Smith v. Myers, 19 Mo. valid for several years immediately 433; Woods v. Land, 30 Mo. App. preceding her death, and part of the 176; Thornton v. Grange, 66 Barb, time quite helpless, it was held that it (N. Y.) 507; Gorrell v. Taylor, 107 was not to be inferred, simply from Tenn. 568, 64 S. W. 888; Kessler's the relation which existed between Estate, 87 Wis. 660, 59 N. W. 129, 41 the parties, that the services were in- Am. St. 74. tended to be gratuitous, and were " Hardiman's Admr. v. Crick, 131 rendered with no view of compensa- Ky. 358, 115 S. W. 236, 133 Am. tion. Bouic v. Maught, 76 Md. 440, St. 248n. To same effect, In re 25 Atl. 423. Succession of Stuart, 48 La. Ann. ** Guenther v. Birkicht's Admr., 22 1484, 21 So. 29 (step-daughter and Mo. 439 (where a step-son continued step-father). to reside in the family of his step- *^ James v. Gillen, 3 Ind. App. 472, father after coming of age); Hert- 30 N. E. 7; Wence v. Wykoff, 52 zog v. Hertzog, 29 Pa. St. 465; Iowa 644, 3 N. W. 685 ; Gill v. Stay- Newell v. Lawton, 20 R. I. 307, 38 lor, 93 Md. 453, 49 Atl. 650; Cowell Atl. 946 (mother and daughter); V. Roberts' Exrs., 79 Mo. 218; Calla- Sprague v. Waldo, 38 Vt. 139 ban V. Riggins, 43 Mo. App. 130; (where a son-in-law took up his Moore v. Renick, 95 Mo. App. 202, abode with his father-in-law). 68 S. W. 936; Disbrow v. Durand, ^'^ Williams v. Rescner, 25 Ind. App. 54 N. J. L. 343, 24 Atl. 545, 33 Am. 132, 56 N. E. 857 (daughter continu- St. 678; Curry v. Curry, 114 Pa. St. ing to render service after arriving 6i3 IMPLIED CONTRACTS. § 1367 parent and child is shown to exist the law will not presume any other.*" This is true even though the child is an adult, and when it continues to live with its parents as a member of the family without any contract or understanding that the parent shall pay for its services, or receive pay for the child's maintenance, the law will not imply a promise to pay on either side." The pre- sumption is that the child renders the services gratuitously, or in consideration of having a home with his parents, of being fur- nished with board and clothing, and of receiving care and atten- tion in case of sickness. In order to sustain an action for com- pensation for services by a child against the father it must be shown by the evidence that a contract existed between the parties at full age) ; Gardner's Admr. v. Schooley, 25 N. J. Eq. 150; Dye v. Kerr, 15 Barb. (N. Y.) 444; Barrett V. Barrett, 5 Ore. 411. *" Sprague v. Nickerson, 1 U. C. Q. B. 284; Hudson v. Hudson, 90 Ga. 581, 16 S. E. 349; Perry v. Perry, 2 Duv. (Ky.) 312; Marple v. Morse, 180 Mass. 508, 62 N. E. 966; Erhart V. Dietrich, 118 Mo. 418. 24 S. W. 188; Lawrence v. Bailey, 84 Mo. App. 107; Brock v. Cox, 38 Mo. App. 40; Prickett v. Prickett, 20 N. J. Eq. 478; Dye v. Kerr, 15 Barb. (N. Y.) 444; In re Candor's Appeal, 5 Watts. & S. (Pa.) 513. In re Mosteller's Appeal, 30 Pa. St. 473 ; Taylor v. Taylor, 1 Lea (Tenn.) 83; Stone- burner V. Motley, 95 Va. 784. 30 S. E. 364; Stansbury v. Stanbury's Admrs., 20 W. Va. 23. Care of an aged and infirm father by a daughter is usually dictated by the better in- stincts of a common humanity, and is so rarely bestowed upon contract that no implied contract can be predi- cated upon its bestowal or receipt. Wright V. Senn Estate, 85 Mich. 191, 48 N. W. 545. "Faloon v. Mclntyre, 118 111. 292. 8 N. E. 315; Hays v. Seward, 24 Ind. 352; Hays v. McConnell, 42 Ind. 285; Williams v. Resener, 25 Ind. App. 132. 56 N. E. 857; Spitzmiller v. Fisher, 77 Iowa 289. 42 N. W. 197; Wilson V. Wilson, 52 Iowa 44. 2 N. W. 615; Turner's Admr. v. Turner. 18 Ky. L. 822. 38 S. W. 506 ; Griggs V. Love, 13 Ky. L. (abstract) 175; Bantz V. Bantz, 52 Md. 686; Kostuba V. Miller, 137 Mo. 161, 38 S. W. 946; Louder v. Hart, 52 Mo. App. 377; Moore v. Moore, 58 Nebr. 268. 78 N. W. 495 ; Munger v. Munger, 33 N. H. 581; Smith v. Smith, 30 N. J. Eq. 564; Re Pfohl, 20 Misc. (X. Y.) 627. 46 N. Y. S. 1086, 2 Gibb. 230; Avitt V. Smith, 120 N. Car. 392, 27 S. E. 91 ; Leidig v. Coover's Exrs., 47 Pa. 534; Newell v. Lawton. 20 R. I. 307, 38 Atl. 946; Gorrell v. Taylor. 107 Tenn. 568, 64 S. W. 888; Harshber- ger's Admr. v. Alger, 31 Grat. (Va.) 52. Compare also. King v. Sow, 1 B. & Aid. 178. A son or daughter residing w'ith a parent does not cease to be a member of the family when they respectively arrive at the age of twenty-one or eighteen from that fact alone. Chicago &c. R. Co. v. Chis- holm. 79 111. 584; Donovan v. Dris- coll, 116 Iowa 339. 90 N. W. 60; Put- nam v. Town, 34 Vt. 429. Where the child, after attaining majority, continues to reside in the father's family and work for him, the law will not imply any change in the re- lationship. In order to entitle the son to recover for such services there must be proof either of an express agreement, or that both parties un- derstood that they were to be paid for. In re Mosteller's .\ppeal. 30 Pa. St. 473; Pellage v. Pellage, 32 Wis. 136; Tvler v. Burrington. 39 Wis. 376; Pritchard v. Pritchard. 69 Wis. 373, 34 N. W. 506. Even when the parent goes to live with the child the law does not ordinarily imply a ^3^7 CONTRACTS. 614 to pay for such services. ^^ The declaration of a parent that his child should be well paid for services rendered, or that it deserved pay, and that he intended to provide for it, is not to be regarded as a contract or sufficient evidence that such a contract existed.®^ It is not necessary, however, that the contract be definite and spe- cific in all particulars. All that is necessary to entitle the child to recover is evidence that there existed between the parent and such child a mutual understanding that the latter was to be paid for services rendered.^** In other words, the promise may be inferred promise by the former to pay the lat- ter for board and services. Brock v. Cox, 38 Mo. App. 40; Marple v. Morse, 180 Mass. 508, 62 N. E. 966; Hallock V. Teller, 2 Dem. Surr. (N. Y.) 206; Lynn v. Lynn, 29 Pa. 369; Pritchard v. Pritchard, 69 Wis. 373, 34 N. W. 506. See, however, Swit- zer V. Kee, 146 111. 577, 35 N. E. 160. "'O'Kelly V. Faulkner, 92 Ga. 521, 17 S. E. 847; Collins v. Williams, 21 Ind. App. 227, 52 N. E. 92 ; McGarvy V. Roods. 73 Iowa 363, 35 N. W. 488 (daughter after becoming of age) ; Spitzmiller v. Fisher, 77 Iowa 289, 42 N. W. 197 (where a young woman performed services in her father's family without any contract) ; Ionia &c. Sav. Bank v. McLean, 84 Mich. 625, 48 N. W. 159; Coe v. Wager, 42 Mich. 49, 3 N. W. 248; Penter v. Roberts, 51 Mo. App. 222 (a son living apart from his father performs service, presumption that they are gratuitous) ; Bonney v. Haydock, 40 N. J. Eq. 513, 4 Atl. 766 (son-in- law) ; Smith v. Smith's Admr., 30 N. J. Eq. 564 (daughter after becom- ing of age) ; Wilkes v. Cornelius, 21 Ore. 348, 28 Pac. 135 (claim by a child against the estate of a deceased parent for board and lodging fur- nished the latter) ; Zimmerman v. Zimmerman, 129 Pa. St. 229, 18 Atl. 129, 15 Am. St. 720 (son) ; Young's Estate, 148 Pa. St. 573, 24 Atl. 124 (a son-in-law's claim against the estate of a decedent based principally upon services rendered by his wife rests upon the same footing as that of any other child or member of the family) ; Murphy v. Murphy, 1 S. Dak. 316, 47 N. W. 142, 9 L. R. A. 820; Sawyer Hebard's Estate, 58 Vt. 375, 3 Atl. 529 (son-in-law); Hall v. Finch, 29 Wis. 278, 9 Am. Rep. 559. In Titman's Admr. v. Titman, 64 Pa. St. 480, the claim was for serv- ices rendered by the plaintiff to her father when she was eighteen years of age. Judge Sharswood said : "The presumption prima facie was un- doubtedly against the plaintiff's claim, and the onus was therefore on her to show, by clear and distinct evidence, a contract by her father to pay her wages." The rule that as between parent and child there can be no re- covery for services, boarding and the like, in the absence of an express contract to pay therefor, does not ap- ply to a son-in-law who boards his father-in-law. Perkins v. Hasbrouck, Admr., 155 Pa. St. 494, 26 Atl. 695. In Smith v. Milligan, 43 Pa. St. 107, it was said by Strong, J. : "Our ob- servation of common usage does not convince us that fathers-in-law per- manently board with sons-in-law without any understanding that com- pensation shall be made. The case, therefore, is not within the excep- tion." But where he seeks to recover for services rendered by his wife he has no greater right than she. Patton v. Conn, 114 Pa. St. 183, 6 Atl. 468. **Dolbeare v. Coultas, 94 111. App. 55; Donovan v. Driscoll, 116 Iowa 339, 90 N. W. 60; Reynolds v. Reyn- olds, 92 Ky. 556, 13 Ky. L. 793, 18 S. W. 517. See also, McClure v. Lenz, 40 Ind. App. 56, 80 N. E. 988. In Dodson v. McAdams, 96 N. Car. 149, 2 S. E. 453, 60 Am. Rep. 408, the grand-daughter sued for services and it was shown that the testator said she was a good girl and should be paid for her work. The recovery was denied. "" Friermuth v. Friermuth, 46 Cal. 42; Miller v. Miller, 16 111. 296; 6i5 IMPLIED CONTRACTS. 1367 from the circumstances of the case.^* These circumstances must be of such a nature and character as to overcome the presumption arising from the relationship of the parties, and justify the infer- ence that compensation was intended."" The presumption as be- tween father and son is only a prima facie bar to a recovery, which may be overcome by proof that shows that the presumption does not apply, and that the parties mutually understood that payment was to be made.°^ Thus, when the parent requested the child to remain at home, stating that she would be well paid for all she did there, the child was held entitled to recover." The courts make a distinction between cases where the child has become of age, been away from home, established a business and supported himself, and then returns upon the request of the parent, and one where the child has continued to live with the parent after arriv- ing of age, and has never had any other home.°^ Circumstances Freeman v. Freeman, 65 111. 106; Schwachtgen v. Schwachtgen, 65 111. App. 127; Neish v. Gannon, 98 111. App. 248; Smith v. Denman. 48 Ind. 65; Hilbish v. Hilbish, 71 Ind. 27; Story V. Story. 1 Ind. App. 284, 27 N. E. 573 ; McCormick v. McCormick, 1 Ind. App. 594, 28 N. E. 122; Har- rison V. Harrison, 124 Iowa 525, 100 N. W. 344; Saunders v. Saunders, 90 Maine 284, 38 Atl. 172; Reando v. Misplav, 90 Mo. 251, 2 S. W. 405, 59 Am. Rep. 13; Hart v. Hess, 41 Mo. 441 ; Shannon v. Carter, 99 Mo. App. 134, 72 S. W. 495; Ronsiek v. Bov- erschmidt, 63 Mo. App. 421 ; Wood V. Flanery, 89 Mo. App. 632 ; DeCamp V. Wilson, 31 N. J. Eq. 656; Green V. Roberts, 47 Barb. (N. Y.) 521; In re Svvorthout, 38 Misc. (N. Y.) 56, 76 N. Y. S. 961 ; White v. Almy (R. I.), 82 Atl. 397; Putnam v. Town, 34 Vt. 429; Morrissev v. Faucett, 28 Wash. 52, 68 Pac. 352; Broderick v. Broderick, 28 W. Va. 378; Byrnes V. Clark, 57 Wis. 13, 14 N. W. 815; Gearv v. Geary, 67 Wis. 248, 30 N, W. 601. « Hilbish V. Hilbish, 71 Ind. 27; Storv V. Story, 1 Ind. App. 284, 27 N. E. 573. See also, White v. Almy (R. I.), 82 Atl. 397. " Smith V. Denman, 48 Ind. 65. A parent may make a valid contract with a child to pay for support and care, and there is no presumption of law arising from the relationship against the existence of such a con- tract. Ulrich V. Ulrich. 136 N. Y. 120, 32 N. E. 606, 18 L. R. A. 11. See also, Boiling v. Boiling's Admr., 146 Ky. 313, 142 S. W. 387. •'Neish V. Gannon, 98 111. App. 248; Hart v. Hess, 41 Mo. 441; Sea- vey V. Seavey, Zl N. H. 125; Ridg- way V. English, 22 N. J. L. 409. "Hill V. Hill, 45 Ind. App. 99, 90 N. E. 331. "'Robnett v. Robnett, 43 111. App. 191; Marion v. Farnan, 68 Hun (N. Y.) 383, 52 N. Y. St. 314, 22 N. Y. S. 946; Robertson v. Robertson (Tenn.), 46 S. W. 1029. As was said in Freeman v. Freeman. 65 111. 106: "After leaving, the presumption arises that he henceforth intended to labor and accumulate property for himself ; and when he returned, at the solicitation of the father, it is but a reasonable presumption the father intended to pay. and he to receive pay for his labor, either in money or by a devise in his father's will." Wilsev V. Franklin, 57 Hun (N. Y.) 382, 10 N. Y. S. 833. where a daugh- ter, for many years after becoming of age. ceased to be a member of her mother's family, and went back to live with her mother, at her mother's solicitation, to do the work of nurse, § 1368 CONTRACTS. 6l6 which show an unusual burden assumed by the son, or special ad- vantages reaped by the father, are sometimes favorably construed in the child's favor.^'^ Where a son, after breaking up his home and removing himself and family to the residence of his infirm father, upon an express promise by the latter to will him his home-place if he would attend to and take care of him for life, performed his part of the agreement, but the father, having be- come insane, failed to make the promised will, it was held that the son could recover of the administrator, upon a quantum meruit, the actual value of his services.®^ § 1368. Persons standing in loco parentis. — The rule in- cludes de facto members of a family irrespective of relationship by blood or affinity."^ The same rule applies to children by adop- tion as to children by blood.®'' Where the services are rendered to one standing in loco parentis, there is no implied promise to pay housekeeper and servant. Compare with Irwin v. Jones, 46 Ind. App. 588, 92 N. E. 787 (child after mar- riage returned and cared for his foster father during old age). ** Adams v. Adams' Admr., 23 Ind. 50, where the son assumed entire con- trol and management of the business, worked the farm and added largely to the family profits by his success- ful management. Brown v. Knapp, 79 N. Y. 136. " The amount must not exceed the value of the home place, and he must account for and have deducted, from the full amount he was entitled to, all he had received from the prop- erty of the father over and above what was necessary for the support and maintenance of the latter during his lifetime. Hudson v. Hudson, 87 Ga. 678, 13 S. E. 583, 27 Am. St. 270. It is impossible to lay down precise or accurate rules to govern all the cases which may arise. Each case will necessarily depend upon its own special circumstances. Hart V. Hess, 41 Mo. 441 ; Guild v. Guild, 15 Pick. (Mass.) 129. Action by a daughter against the administra- tor of her father's estate. Held com- petent for the jury to infer a prom- ise from all the circumstances. If the services were of such a nature as to lead to a reasonable belief that it was the understanding of the par- ties that pecuniary compensation should be made for them, then the jury should find an implied prom- ise, and a quantum meruit. "^Walker v. Taylor, 28 Colo. 233, 64 Pac. 192 ; Deppen v. Personette, 93 111. App. 513; Dawdy v. Nelson, 12 111. App. 74; Martin v. Martin, 101 111. App. 640; Hays v. McCon- nell, 42 Ind. 285; Waechter v. Wal- ters, 41 Ind. App. 408, 84 N. E. 22; Ottoway V. Milroy, 144 Iowa 631, 123 N. W. 467; Smith v. Johnson, 45 Iowa 308 ; Frailey's Admr. v. Thomp- son, 20 Ky. L. 1179, 49 S. W. 13; Sword V. Keith, 31 Mich. 247; Thorp V. Bateman, Zl Mich. 68, 26 Am. Rep. 497; Fitzpatrick v. Dooley, 112 Mo. App. 165, 86 S. W. 719; Schrimpf V. Settegast, 36 Tex. 296. In Gra- ham V. Stanton, 177 Mass. 321, 58 N. E. 1023, Holmes, C. J., said: "It would be a strong thing to say that an actual contract to pay for services could be inferred from the conduct of one who takes a child into his household under the name of daugh- ter. The fact of his calling her so implies that he is not purporting to enter into relations with her on a business footing." "^ Mountain v. Fisher, 22 Wis. 93. See also, ante, § 1367. 6l7 IMPLIED CONTRACTS. § 1 369 for them, although such presumption may be overcome by the facts and circumstances of the case.* § 1369. Same subject continued — Further illustrations. — In an action of assumpsit by a party for board and attendance of his wife's mother during sickness, she having been taken sick while on a visit to his house, and furnished with board and attend- ance for about four or five weeks, and dying soon after her return to her son's house, where she usually resided, it was held that the estate was not liable for food, attendance and necessaries fur- nished, and that if the son-in-law meant to charge her therefor he ought to have given her notice." Where a girl lived with her grandfather for nine years without any contract as regards com- pensation, and besides performing household duties rendered assistance in the transaction of his business, claim for compensa- tion made against the estate at her grandfather's death was disal- lowed, although there was evidence of declarations by the grand- father that she should be well paid for her services.^ Where per- sons, having gone through a form of marriage, live together as man and wife, and the woman, after the man's death, leams for the first time that he had a wife living and not divorced from him, she cannot recover from his administrator for her services as ^ Hurst V. Lane, 105 Ga. 506, 31 ness or charity, has received an or- S. E. 135 ; Howard v. Randolph, 134 phan child into his family, and treats Ga. 691, 68 S. E. 586, 29 L. R. A. it as a member of his family, he (N. S.) 294 (foster-child) ; McClure stands toward it in loco parentis, so V. Lenz, 40 Ind. App. 56, 80 N. E. long as it remains in his family, and 988 (foster-child. Statements by he is bound for the maintenance, parents that they intended to com- care and education of such child, and pensate child and that she had earned entitled to its services without other it held not to show a contract) ; compensation, unless he has other- Waechter v. Walters, 41 Ind. App. wise stipulated. Hogg v. Laster. 56 408. 84 N. E. 22 (foster-child) ; Ir- Ark. 382, 19 S. W. 975; Schrimpf v. win V. Jones, 46 Ind. App. 588, 92 Settegast, 36 Tex. 296. See also, N. E. 787 (foster-child); Wise v. Succession of Daste. 125 La. 657. 51 Outtrim, 139 Iowa 192, 117 N. W. So. 677, 29 L. R. A. (N. S.) 297. 264, 130 Am. St. 301n (no implied " Mariner v. Collins. 5 Harr. (Del.) contract to pay for services rendered 290. To same effect, Boughton v. by a young girl who went to live with Francis, 111 Mich. 26, 69 N. W. 94, decedent's family at an early age and suit by daughter-in-law against estate continued to reside with such family of father-in-law. until the time of her marriage at the 'Barhite's Appeal. 126 Pa. St. 404, age of twentv-four) ; Fross' Appeal, 17 Atl. 617. To same effect, Harris 105 Pa. St. 258; Jackson v. Jackson, v. Smith, 79 Mich. 54. 44 N W 169, 96 Va. 165. 31 S. E. 78. The weight 6 L. R. A. 702 (step-daughter and of authority establishes the doctrine step-father), that when a person, through kind- § 13/0 CONTRACTS. 6l8 housekeeper under an implied contract. The relations of the parties, and the circumstances under which the work was per- formed, negative any implication of an agreement or promise that it should be paid for.* AMiere a man and woman mutually agreed to live together as husband and wife without being mar- ried, and continued the unlawful relation about thirteen years, the woman cannot recover on an implied promise for services ren- dered in keeping house in that relation, or for money delivered to the defendant to be used toward paying their family expenses.' § 1370. Same subject continued — During illicit cohabita- tion. — Neither is there a contract implied by law to pay for serv'ices rendered between parties living together in unlawful cohabitation.^ This is the general rule supported by the weight of authority, but there are some cases which draw a distinction where concubinage was not the motive and the services were merely incidental. § 1371. Same subject continued — In expectation of mar- riage. — It has also been held that one who renders services to another under promise and in expectation of marriage with the * Cooper V. Cooper, 147 Mass. 370, 31 App. Div. (N. Y.) 484, 52 K Y. 17 N E 892 9 Am St. 721. See also, S. 519; Emmerson v. Botkm, 26 Okla. Wall' V.' Wail, 69 111. App. 389. 218, 109 Pac. 531, 29 L. R. A. (N. ^ Brown V. Tuttle, 80 Maine 162, 13 S.) 786, 138 Am. St. 953; Swires Atl 583. To same effect, Schmitt v. v. Parsons, 5 Watts & S. (Pa.) 357. Schneider 109 Ga. 628, 35 S. E. See also, Simpson v. Normand, 51 145 If there had been an express La. Ann. 1355, 26 So. 266, where re- promise the court would not enforce covery was denied on the ground that it as the parties were living together the claim for services as housekeeper in unlawful relations, and the serv- was inseverable from and blended ices rendered and the money fur- with remuneration as a mistress, nished were in furtherance thereof. See, however, Viens v. Brickie, 8 Gilmore v. Woodcock, 69 Maine 118, Mart. (La.) 11, in which it was held 31 Am. Rep. 255; White v. Buss, 3 that recovery might be had on an Gush. (Mass.) 448. See also, fol- implied contract when it did not ap- lowing sections on Services Rendered pear that cohabitation was the motive During Illicit Cohabitation, § 1370 et of the parties coming together. To seq See also ch. 21, Legality of Ob- same effect, In re Pereuilhet's Suc- ject. cession. 23 La. Ann. 294, 8 Am. Rep. •Walraven v. Jones, 1 Houst. 595, holding that a nurse and house- (Del.) 355; McDonald v. Fleming, keeper, and who also was the niis- 12 B Mon. (Ky.) 285; Stringer v. tress of her charge, might recover Mathis, 41 La. Ann. 985, 7 So. 229: on an implied contract for services Brown' v. Tuttle, 80 Maine 162, 13 rendered when it did not appear that Atl. 583; Robbins v. Potter, 11 Allen cohabitation was the object of their (Mass.)' 588; Vincent v. Morriarty, living together in the first instance. 6i9 IMPLIED CONTRACTS. "^Zl^ latter, but without expectation of compensation in money or money's worth, cannot, upon a breach of the promise to marry, recover the value of such services on the ground that there was an impHed promise to pay a money compensation for the services so rendered/ § 1372. Money had and received. — It is a well settled prin- ciple that if a party, through some mistake, misapprehension or forgetfulness of the facts, or some fraud, receives money to which he is not justly and legally entitled, and which he ought not in good conscience to retain, the law regards him as the receiver and holder of the money for the use of the lawful owner of it, and raises an implied promise on his part to pay over the amount to such owner, and on his failure to do so an action for money had and received may be maintained.® Nor is it necessary to show ^La Fontaine v. Hayhurst, 89 Maine 388, 36 Atl. 623, 56 Am. St. 430. * Newsome v. Graham, 10 B. & C. 234; Milnes v. Duncan, 6 B. & C. 671 ; Ciiatfield v. Paxton, cited 2 East 471n; Walker v. Mock's Admr., 39 Ala. 568; Hunt v. Matthews, 133 Ala. 662, 31 So. 613; Rand v. Columbian Realty Co.. 13 Cal. App. 444, 110 Pac. 322; Fox v. Monahan, 8 Cal. App. 707, 97 Pac. 765; Gilson v. Boston Realty Co., 82 Conn. 383, IZ Atl. 765; Stanley Rule &c. Co. v. Bailey, 45 Conn. 464; Union Nat. Bank v. McKey, 102 Fed. 662, 42 C. C. A. 583; Leete v. Pacific &c. Co., 88 Fed. 957; Jackson v. White, 194 Fed. 677; Cullen v. Seaboard Air Line R. Co. (Fla.), 58 So. 182; Highway Comrs. v. Bloomington, 253 111. 164, 97 N. E. 280; Jackson v. Creek, 47 Ind. App. 541, 94 N. E. 416; State v. Mutual Life Ins. Co. (Ind.). 93 N. E. 213; Wor- ley V. INloore, 97 Ind. 15 (mistake in the computation of interest) ; Peo- ple's Nat. Bank v. Mvers, 65 Kans. 122. 69 Pac. 164; Lvon v. Mason &c. Co.. 102 Kv. 594. '19 Ky. L. 1642, 44 S. W. 135; Hotchkiss v. Bon Air &c. Iron Co., 108 Maine 34. 78 .\tl. 1108 (action maintainable to recover money paid through fraud or false pretenses) ; George's Creek &:c. Co. V. Allegheny County, 59 Md. 255; Citizens' Bank v. Graffin, 31 Md. 507, 1 Am. Rep. 66; State Sav. Bank v. Buhl, 129 Mich. 193, 88 N. W. 471, 56 L. R. A. 944 (recovery of money paid by bailee of property in settle- ment of claim for property he sup- posed had been lost while in his pos- session, but which was subsequently found) ; Stoakes v. Larson. 108 Minn. 234, 121 N. W. 1112; Jenkins v. Clopton. 141 Mo. App. 74, 121 S. W. 759; Roberts v. Neale, 134 :^Io. App. 612. 114 S. W. 1120; Himmelberger- Harrison Lumber Co. v. Dallas ( .Mo. App.). 146 S. W 95; Shaffer v Miller, 41 Mont. 417, 109 Pac. 970, 137 Am. St. 746 (a prospective vendee paid vendor's agent certain moneys, which he had no right to receive. Held, that when the negotiation failed the ven- dee might recover the money paid to the vendor's agent) ; Garrison v. Murphy, 2 Nebr. (Unof.) 696, 89 N. W. 766; McDonald v. Metropol- itan Life Ins. Co., 68 N. H. 4, 38 Atl. 500. 1Z Am. St. 548; Redinalon Hub Co. V. Putnam (N. H.). 82 Atl. 715 ; Sarasohn v. Miles, 52 App. Div. (N. Y.) 628, 65 N. Y. S. 108; Dur- kin V. Cranston, 7 Johns. (N. Y.) 442; Waite v. Leggett, 8 Cow. (N. Y.) 195, 18 Am. Dec. 441; Burr v. Veeder. 3 Wend. (N. Y.) 412; Car- negie Trust Co. V. Batterv Place Realty Co.. (H Misc. (N. Y.)'452. 122 N. Y. S. 697; Montgomery v. Fry, 1372 CONTRACTS. 620 privity of contract between the parties in order to entitle the plaintiff to recover." The defendant may have received the money from a third party.^° It is also generally immaterial how the 127 N. Car. 258, ^1 S. E. 259; Luther V. Hunter, 7 N. Dak. 544, 75 N. W. P16; Sandoval v. Randolph, 222 U. B. 161, 2>l Sup. Ct. 48. 56 L. ed. 104 (plaintiff appointed defendant as fiis agent to buy certain mining prop- erty ; in the transaction the agent obtained a secret fraudulent profit for himself. Held that plaintiff might recover the amount so obtained bv the agent in an action for money had and received) ; Turner Falls Lumber Co. v. Burns, 71 Vt. 354, 45 Atl. 896; City Bank of Norfolk v. Peed (Va.), 32 S. E. 34; Milwaukee V. Milwaukee, 114 Wis. 374, 90 N. \V. 447; Marriot v. Hampton, 3 Smith's Lead. Cas. (9th Am. ed.) 1686. Where a municipality has ob- tained the money or property of an- other without authority of law, it is its duty to refund it, not by reason of any contract or obligation it has entered into, but from the natural obligation to do justice, which binds all persons, whether natural or arti- ficial. Bart v. Pierce County, 60 W^ash. 507, 111 Pac. 582. In suits of this character the question to be decided is: "Does the money in just- ice belong to plaintiff, and has the defendant received it, and should he, in justice return it." Rosenbaum v. Drumm Comm. Co., 146 111. App. 229. A demand need not be alleged. Reis- ter V. Bruning, 47 Ind. App. 570, 94 N. E. 1019. See also, Young v. Kim- ber. 44 Colo. 448, 98 Pac. 1132, 28 L. R. A. (N. S.) 626n. However, in an action for money had and received the law will not imply a promise to repay unless, ex aequo et bono, the defendant ought to refund. Daily v. Board of Comrs., 165 Ind. 99, 74 N. E. 977 (citing many authorities) ; Williams v. Shelbourne, 19 Ky. L. 1924. 44 S. W. 110. See also, Charles- ton &c. R. Co. v. Augusta Stockyard Co., 115 Ga. 70. 41 S. E. 598, holding that when the defendant fails to dis- tinctly allege the nonexistence of the supposed facts upon which he relied in making the payment the petition does not state a cause of action. ■ Board of Highway Comrs. v. Bloomington, 253 111. 164, 97 N. E. 280; McClean v. Stansberry, 151 Iowa 312, 131 N. W. 15, 35 L. R. A. (N. S.) 481; Dresser v. Kronberg, 108 Maine 423, 81 Atl. 487; Hoyt v. Paw Paw Grape Juice Co., 158 Mich. 619, 123 N. W. 529; Richardson v. Moffit-West Drug Co., 92 Mo. App. 515, 69 S. W. 398; Bleecker v. Balje, 138 App. Div. (N. Y.) 706, 123 N. Y. S. 809; Madden v. Watts, 59 S. Car. 81, 2>1 S. E. 209. The action may be maintained by the party who has a right to bring it, although the person who has possession of the property has never seen nor heard of the party who has the right of action. Hitchcock v. Lukens, 8 Port. (Ala.) ZZZ; Lewis v. Sawyer, 44 Maine 332; Calais v. Whidden, 64 Maine 249. It may be recovered even though the party who receives it objects to tak- ing the same, if he does actually ac- cept it and use it for his own pur- poses, and accepts the benefits de- rived therefrom. De Celis v. Porter, 65 Cal. 3, 2 Pac. 257, 3 Pac. 120. Where a debtor gives money to his agent to be paid his creditor and the agent fails to turn over the money so received to the creditor, the latter may bring an action for money had and received against the agent. Baker v. Hughes, 5 Ga, App. 586, 63 S. E. 587. ^* Beymer v. Monarch, 19 Idaho 304, 113 Pac. 739; Jackson v. Creek, 47 Ind. App. 541, 94 N. E. 416; St. Charles Sav. Bank v. Orthwein Inv. Co. (Mo. App.), 140 S. W. 921 (re- ceived money embezzled by plaintiff's cashier) ; City of Newburyport v. Spear, 204 Mass. 146, 90 N. E. 522, 134 Am. St. 652 (city held entitled to recover funds belong- ing to it which the city treas- urer paid to defendant in discharge of his personal debt) ; Harrington v. Green, 107 N. Y. S. 403. 621 IMPLIED CONTRACTS. § ^Z7: money came into the hands of the party who has it in his ^josses- sion, if the plaintiff is legally entitled to it." § 1373. Rule illustrated. — Thus where the defendant pur- chased certain land from the plaintiff, the plaintiff agreeing as a part of the contract to pay a ditch tax which was in fact paid by the defendant and the amount deducted from the purchase-price, it was held that the plaintiff might bring her action for money had and received against the defendant where the tax was sub- sequently declared unconstitutional and the amount paid by de- fendant refunded to him.^" An auctioneer or clerk is liable for the return of money in his hands to the purchaser where the sale " The following cases are mainly illustrative of the above principle: Brinser v. Fidelity Trust Co. (Del.) 75 Atl. 792; Mayer v. McCracken, 245 111. 551, 92 N. E. 355; iMontgom- ery v. Wise, 138 Mo. App. 176, 120 S. W. 100; Clark v. Harrisonville First Nat. Bank, 57 Mo. App. 277; Central Mfg. Co. v. Montgomery (Mo. App.), 129 S. W. 460 (defend- ant obtained money of the corpora- tion by creating a fictitious indebted- ness) ; Schaeffer v. Miller, 41 Mont. 417, 109 Pac. 970, 137 Am. St. 746; Rodgers v. Baker, 136 App. Div. (N. Y.) 851, 122 N. Y. S. 91. (Plaintiff sent his employe to defendant's store to buy some nails, and gave him a blank check with which to pay for them. Defendant knew that check was to be filled out for only the amount of the purchase, but notwith- standing this, filled it in so as to in- clude another debt due from plain- tiff to defendant and collected it. It was held plaintiff could recover the amount unlawfully collected.) Hvde V. Thompson (N. Dak.), 120 N. "W. 1095 (plaintiff holding a prior lien was held entitled to proceeds re- sulting from a sale under a subor- dinate lien) ; Brooks v. Ilinton State Bank, 26 Okla. 56, 110 Pac. 46 (first assignee recovering from second as- signee with notice who collected the claim) ; Lieb v. Painter, 42 Pa. Super. Ct. 399 (money paid under contract to deliver stock in a proposed com- pany never actually formed). To the same effect, Watson v. Donald, 142 111. App. 110 (facts similar to those in above case) ; Sherwin v. Sternberg, 77 N. J. L. 117, 71 Atl. 117 (facts similar to two preceding cases). "Appellee thus having in his possession money which ex aequo et bono belonged and ought to have been returned to appellant, an action for money had and received might have been well brought for its re- covery ; and it was not material how the money came into his hands, if the plaintiff is justly entitled to re- ceive it. In such case the law im- plies a promise to pay." Porter v. Roseman, 165 Ind. 255, 74 N. E. 1105, 112 Am. St. 222. A cashier of a bank, who also acted as bookkeeper, by a mistake in bookkeeping caused a cus- tomer of the bank to be credited with $200 to which he was not entitled. The mistake in entry also caused a shortage in cash to appear. The cashier, insisting that some mistake had been made, but being unable to explain the matter satisfactorily, paid the bank $200, and the bank, on the faith of the false entr>% delivered to the customer two shares of stock, of the value of $200, and the latter ac- cepted them to his own use. It was held that, in an action in the nature of an action for money had and re- ceived, the cashier may recover the $200 of the customer, who took the benefit of the cashier's payment of that sum to the bank. Rudisill v. Handley (Ga. App.), 72 S. E. 189. "Vetter v. Sandbo, 114 Minn. 144, 130 N. W. 450. § 1374 CONTRACTS. 622 is not completed through the fault of the vendor.^^ It has been held that an innocent purchaser of property sold on execution may maintain an action for money had and received against the judg- ment creditor for the purchase-price of the property when it is subsequently taken from him as the property of another.^* The person rightfully entitled to a reward, as a general rule, may by an action for money had and received recover the same from one to whom it has been wrongfully or erroneously paid." A promissory note has been held admissible in evidence in an action for money had and received, brought by the payee or indorsee against the maker or indorser.^*^ So a certificate of deposit has been held competent evidence to support a count for money had and received. ^^ § 1374. Nature of the action. — The right to maintain an action for money had and received is general in its nature. Where there is a legal right to demand a sum of money and there is no other remedy the law will for all the purposes of a remedy imply a promise of payment.^* The action is comprehensive in its reach and scope" and is favored under the law.^*' The right ''McClean v. Stansberry, 151 Iowa Y.) 130, affd. 6 N. Y. 33; Poor v. 312, 131 N. W. 15, 35 L. R. A. (N. Gilford, 10 N. Y. 273, 61 Am. Dec. S.) 481 and note. 749. " Dresser v. Kronberg, 108 Maine " Dresser v. Kronberg, 108 Maine 423. 81 Atl. 487. Contra, England v. 423, 81 Atl. 487. Clark, 5 111. 486; Dunn v. Frazier, ^Stockman v. Allen (Mo. App.), 9 Blackf. (Ind.) 432; Lewark v. 142 S. W. 744; Houts v. Dunham Carter, 117 Ind. 206, 20 N. E. 119, (Mo. App.), 142 S. W. 806. "The 3 L. R. A. 440, 10 Am. St. 40. plaintiff obtained from the defendant " Claxton V. Kay (Ark.), 142 S. an option to purchase within 90 days W. 517, and cases cited. Contra, a farm for $23,000. Before the op- Sergeant V. Strvker, 16 N. J. L. 464, tion had expired he effected a sale 32 Am. Dec. 404. of the farm for $24,000, but repre- ^' Boyle V. Carter, 24 111. 49; Lane sented to the defendant that he could V. Adams, 19 111. 167; Titcomb v. not obtain a purchaser who would Powers, 108 Maine 347, 80 Atl. 851; pay more than $23,000, and by this Coursey v. Baker, 7 Har. & J. (Md.) representation he induced the de- 28; Tebbetts v. Pickering, 5 Cush. fendant to reduce the price to $22,000, (Mass.) 83, 51 Am. Dec. 48; Hughes and the price named in the written V. Wheeler, 8 Cow. (N. Y.) 77; option was changed to this amount. Porter v. Cumings, 7 Wend. (N. Y.) With knowledge of the deception 172; Page's Admrs. v. Bank of Alex- practiced on him, and after he had andria, 7 Wheat. (U. S.) 35, 5 L. ed. received a part of the purchase- 390. money from the plaintiff, the defend- " Talladega Ins. Co. v. Landers, 43 ant carried out the arrangement the Ala. 115; State Bank of Illinois v. plaintiff had made with the purchaser Corwith, 6 Wis. 551. to whom he had assigned the option, "Norton v. Coons, 3 Denio (N. made the conveyance to the pur- 62Z IMPLIED CONTRACTS. 1375 to recover is equitable in its nature,-^ although the action is in reality one at law.^^ § 1375. When action may be maintained. — The action can be maintained only to recover either money"^ or the equivalent of chaser, and received from him $24,- 000. This action was to recover the difference between the price at which the defendant agreed to sell to the plaintiff and the amount received by the defendant from the purchaser to whom the plaintiff had assigned the option." The court held that the plaintiff could recover since defend- ant had carried out the contract with full knowledge that he had been de- ceived. Clark V. Kurtz, 220 Pa. 358, 69 Atl. 811. See also, Merriwether V. Bell, 139 Ky. 402, 58 S. W. 987, 139 Am. St. 488; La Forge v. Cor- nell, 127 N. Y. S. 453; Lawson's Exr. V. Lawson, 16 Grat. (Va.) 230, 80 Am. Dec. 702. "^ ]\Ioses V. Macf erlan, 2 Burr. 1005 ; Clarke v. Shee, 1 Cowper 197; Bris- bane V. Dacres, 5 Taunt. 143 ; North- rop's Exrs. v. Graves, 19 Conn. 548, 50 Am. Dec. 264; Dresser v. Kron- berg, 108 Maine 423. 81 Atl. 487; Claflin V. Godfrey. 21 Pick. (Mass.) 1 ; Todd V. Bettingen, 109 Minn. 493, 124 N. W. 443; Stout v. Carruthers- ville Hdw. Co.. 131 Mo. App. 520, 110 S. W. 619; Houts v. Dunham (Mo. App.), 142 S. W. 806; Ball v. Shepard, 135 App. Div. (N. Y.) 612, 120 N. Y. S. 830; Bleeker v. Balje. 138 App. Div. (N. Y.) 706. 123 N. Y. S. 809; White v. Continental Nat. Bank. 64 N. Y. 316; Williams v. Smith. 29 R. I. 562, 72 Atl. 1093. An action in assignment or for money had and received is equitable in its nature, and recovery may be had in such action whenever one person is equitably entitled to money in the hands of another. Grone v. Eco- nomic Life Ins. Co. (Del.), 80 Atl. 809. "Rushton V. Davis, 127 Ala. 279, 28 So. 476 ; Brainard v. Colchester, 31 Conn. 407; Highwav Comrs. v. Bloomington. 253 111. 164. 97 N. E. 280; Jackson v. Hough. 38 W. Va. 236. 18 S. E. 575. "The action of in- debitatus assumpsit for the recovery of money had and received, and for money paid, etc., is an action of the common law, but, to a great extent, an equitable action, adopted for the enforcement of many equitable, as well as legal, rights." Northrop's Exrs. V. Graves, 19 Conn. 548, 50 Am. Dec. 264. "An action of assumpsit, for money had and received, is a remedy equitable in its nature, ex- isting in favor of one person against another, w'hen that other person has received money, either from the plain- tiff or a third person, under such cir- cumstances that, in equity and good conscience, he ought not to retain the same, and which, ex aequo et bona, belongs to plaintiff." Mer- chants' &c. Bank v. Barnes, 18 Mont. 335, 45 Pac. 218, 47 L. R. A. 737n. 56 Am. St. 586. "It is a well established doctrine, both by courts of law and of equity, that, where one person has received money of another which in honesty and good conscience he can- not retain, an action will lie by the party entitled to recover it back, and whether the action be in assumpsit or for money had and received under our code is immaterial." Ingram v. Posey (Tex. Civ. App.), 138 S. W. 421. ""St. Louis & T. R. Packet Co. v. McPeters, 124 Ala. 451, 27 So. 518; Palmer v. Scott, 68 Ala. 380; Na- tional Trust Co. V. Gleason, 77 N. Y. 400, 2>Z Am. Rep. 632; Huganir v. Cotter, 102 Wis. 2,23. 78 N. W. 423, 72 Am. St. 884. "The rule is quite elementary that, to enable a person to maintain an action for money had and received, it is necessary for him to establish that the persons sought to be charged have received money belonging to him or to which he is entitled. That is the fundamental fact upon which the right of action depends. Trust Co. v. Gleason. 77 N. Y. 400. The purpose of such an ac- tion is not to recover damages, but to make the party disgorge; and the recovery must necessarily be limited by the party's enrichment from the 1375 CONTRACTS. 624 money.^* In order to maintain an action for money had and re- ceived it is necessary to establish that defendants have received money belonging to the plaintiff or to which he is in equity and good conscience entitled."® It is not sufficient to show that they have by fraud or wrong caused the plaintiff to pay money to others or to sustain loss or damage."*^ Thus, it has been held that an ac- tion for money had and received cannot be maintained for the purposes of recovering damages for a breach of contract to make improvements for plaintiff's use,"^ nor to recover damages from a bailee for selling a consignment of lumber at less than the agreed price.^^ Nor can an action be maintained against one for money had and received unless money or its equivalent actually comes in possession of the one from whom recovery is sought, or was paid to him for the use and benefit of the one who brings the action. -° So in an action brought against a merchant for alleged transaction." Limited Inv. Assn. V. Glendale Inv. Assn., 99 Wis. 54, 74 N. W. 633, quoted in Johnston V. Abresch Co., 109 Wis. 182, 85 N. W. 348. " Snapp V. Stanwood, 65 Ark. 222, 45 S. W. 546; Baltimore & S. R. Co. V. Faunce, 6 Gill. (Md.) 68, 46 Am. Dec. 655 ; Buckeye v. Clark, 90 Mich. 432, 51 N. W. 528; Mathewson v. Eureka Powder Works. 44 N. H. 289; Beardsley v. Root, 11 Johns. (N. Y.) 464, 6 Am. Dec. 386. Where property belonging to the plaintiff has been reduced to money after it was received by the defendant but before the action is brought, money had and received lies. Devlin v. Houghton, 202 Mass. 75, 88 N. E. 580. Some cases hold that the action will not lie where no money has been received but other courts adopt a more liberal doctrine. Todd v. Bet- tingen, 109 Minn. 493, 124 N. W. 443, reviewing the question and citing a number of cases. '=St. Louis & T. R. Packet Co. v. McPeters, 124 Ala. 451, 27 So. 518; McCormick-Ormand Co. v. Nofziger Bros. Lumber Co., 10 Cal. App. 241, 101 Pac. 688; Whittier v. Home Sav. Bank, 161 Cal. 311, 119 Pac. 92. The plaintiff must show that there has been an actual receipt of money by the defendant or something equiva- lent to it. Boroughs v. Peterson (Utah), 114 Pac. 758 (action by wife to recover money lost by husband at gaming). The burden is on the plain- tiff to show not only that the money was received by the defendant, but also that it was received to the use of the plaintiff. Blake v. Corcoran (Mass.), 97 N. E. 1002. Where one receives money under a claim of right in himself, the law will not im- ply any contract or promise by him to hold the money for the use of the other claimant, or to pay it over to him. Richmond v. Read (R. L), 82 Atl. 387. ^'' National Trust Co. v. Gleason, 11 N. Y. 400, ZZ Am. Rep. 632. See also, Hilliard v. Hilliard (Mich.), 135 N. W. 308 ; Strahl v. Fink, 132 App. Div. (N. Y.) 12, 116 N. Y. S. 352. ^Labadie v. Detroit &c. R. Co., 125 Mich. 419, 84 N. W. 622. ^ Anderson v. Corcoran, 92 Mich. 628, 52 N. W. 1025. =" See Craig v. Matheson, 32 N. S. 452; Mechanics' Bank v. Woodward, 74 Conn. 689, 51 Atl. 1084. In the above case it appeared that a man's wife had forged his name to a prom- issory note and discounted the same, using the proceeds to pay off a prior note to which she had forged his name, and also to pay certain bills for which the husband was liable. 625 IMPLIED CONTRACTS. 1375 money had and received on the ground that his agent bought goods without authority, which, however, were dehvered at the merchant's store and sold by him, it must be made to appear that the merchant received the goods, sold them, and received the money for them before he will be liable therefor.^" It has also been held that one who boards the hands of a subcontractor can- not recover from the contractor money retained by the latter equal to the amount due for board, when the subcontractor owed the contractor a sum in excess of the amount retained by him, since the contractor had received no money from any person for the use of the one who furnished the board.^^ Where an agent forged his principal's name on stock certificates belonging to the latter, sold them and deposited the money in the principal's name, and then embezzled it, it was held that this was not such a receipt of the money as would enable the one to whom the stock certifi- cates were sold to maintain an action against the principal for money had and received when compelled to return such certifi- cates.^^ An action was brought against the husband for money had and received. It was held that the husband was not hable for the rroney expended in pay- ing off the forged note, but was Hable for the amount spent in paying his valid debts. Hassard v. Tompkins, 108 Wis. 186, 84 N. W. 174 ; Johnston V. Abresch Co.. 109 Wis. 182, 85 N. W. 348 (plaintiff's remedy was action for breach of contract). See also, Brown v. Woodward, 75 Conn. 254, 53 Atl. 112. The burden is on the plaintiff to show not only that de- fendant had received money for goods which he failed to pay over, but also some amount thereof still unpaid. M. Levy Dry Goods Co. v. Jacobson (Ark.), 136 S. W. 990; Murphy v. Lindstedt, 142 App. Div. (N. Y.) m, 127 N. Y. S. 609 (holding that an unpaid judgment due the defend- ant from a third person will not sup- port an action for money had and received) ; Jones v. Jones, 55 Wash. 531, 104 Pac. 786 (in which a real estate agent accepted a deposit on a sale, placed the amount so received in the bank and accepted a certificate of deposit therefor. Subsequently he left the city and the certificate was 40 — Contracts, Vol. 2 found by the defendant among the agent's papers indorsed in blank. De- fendant deposited it to his own credit and held it subject to the order of the agent. Held, that this would not subject the defendant to liability to the purchaser for the latter's earnest money or failure to complete the sale. "^ Lesher v. Loudon, 85 Mich. 52, 48 N. W. 278. See also, Combest v. Glenn (Tex. Civ. App.), 142 S. W. 112. " Erickson v. McGeehan Const. Co.. 107 Wis. 49, 82 N. W. 694; distin- guishing Sterling v. Rvan, 72 Wis. 36, Zl N. W. 572. 7 Am. St. 818. '^Fav V. Slaughter, 194 111. 157, 62 N. E.'592, 56 L. R. A. 564. 88 Am. St. 148. To same effect. Newell v. Hadley, 206 Mass. 335. 92 N. E. 507, in which case a thief stole a check and deposited it to the defendant's credit merely in order to enable the thief to collect the proceeds on it, and who did draw out such proceeds before the defendant acquired knowl- edge of the transaction. The de- fendant was held not to refund the amount of the check. Compare the foregoing cases with that of National Trust Co. V. Gleason, 11 N. Y. 400, ^Z7^ CONTRACTS. 626 § 1376. Money lent. — When one applies to another for a loan, and the latter accedes to the request, a promise on the bor- rower's part to repay the money advanced in consequence of these negotiations is to be implied in fact as well as in law.^^ So a promise to pay is implied from an acknowledgment of indebted- ness.^* Thus, a due bill which read "Due A B three hundred and twenty-five dollars payable on demand" has been held an acknowledgment of indebtedness which implied on its face a promise to pay.^^ Money loaned to be repaid "when convenient or when business picked up" was held to be a loan for a reasonablq time, and the borrower could not hold the money indefinitely at his option.^* § 1377. Money lent to a municipal corporation. — The prin- ciple that a loan of money will support an action for money had and received finds one of its best illustrations in cases involving a loan of money to a municipal corporation. It is generally held ceived with knowledge that it be- longs to the bank. See Davenport v. Walker, 132 App. Div. (N. Y.) 96, 116 N. Y. S. 411. '^Couts V. Winston, 153 Cal. 686, 96 Pac. 357. '*Long V. Straus, 107 Ind. 94, 6 N. E. 123, 7 N. E. 763, 57 Am. Rep. 87; Chosen Freeholders v. Newark City Nat. Bank, 48 N. J. Eq. 51, 21 Atl. 185; Kimball v. Huntington, 10 Wend. (N. Y.) 675, 25 Am. Dec. 590; Tassey v. Church, 4 Watts. & S. (Pa.) 141, 39 Am. Dec. 65. See also, In re Big Cahaba Coal Co., 183 Fed. 662 (money advanced to company to be repaid by it when on a working basis) ; Musk v. Hall (R. L), 82 Atl. 593. '''' Kimball v. Huntington, 10 Wend. (N. Y.) 675, 25 Am. Dec. 590. An acknowledgment that money was re- ceived on deposit implies a promise to pay it to the depositor. Long v. Straus, 107 Ind. 94, 6 N. E. 123, 7 N. E. 123, 57 Am. Rep. 87. ^"Samuels v. Larrimore, 11 Cal. App. i2>7, 104 Pac. 1001. When loaned without any understanding as to time of repayment it is presumed to be due on demand. Duke v. Southern &c. Supply Co., 163 Ala. 477, 50 So. 892. 22) Am. Rep. 632, in which it appeared that several persons had conspired to defraud another by means of a forg- er}'. It was held that all the con- spirators would be liable in an action for money had and received, not- withstanding all the proceeds of the unlawful transaction had been appro- priated by one of the conspirators if the whole proceeds were received by the one so appropriating them as a common agent; those for whose benefit it was thus received were jointly liable for the entire sum, and this result would not be varied by the circumstance that the common agent failed to account and absconded with the proceeds. But where plaintiff's paying teller, Chisholm, represented to' defendants, who were brokers, that he was agent for one Webster, and in the name of Webster lost about $50,000 of the plaintiff's money, it was held that the plaintiff could not recover this amount from the de- fendant, the latter having dealt with Chisholm in good faith. First Nat. Bank v. Gibert & Clay, 123 La. 845, 49 So. 593. 25 L. R. A. (N. S.) 631n, 131 Am. St. 382. Compare with St. Charles Sav. Bank v. Orthwein Inv. Co. (Mo. App.), 140 S. W._ 921. Otherwise, where the money is re- t)27 IMPLIED CONTRACTS. § 1 378 that an action for money had and received may be maintained by one who has loaned money to a municipal corporation, which has been applied beneficially to legitimate cori)orate ptirj)oses or ob- jects authorized by law, although the contract under which the money was obtained may have been unauthorized.^^ There can be no recovery in such a case, however, on the original express contract of loan.^^ It has been held that there can be no recovery under an implied contract for money loaned on an unauthorized express agreement when the money so borrowed is expended for an unlawful purpose,^" or when squandered or used extravagantly for buildings or enterprises not reasonably necessary for munici- pal purposes, beyond its actual benefits." Nor can there be any recovery where either the constitution or statute law of the state forbids not only the borrowing of money but the incurring of any debt, or provides that a debt to be valid must be created under certain mandatory restrictions or provisions which have not been complied with.*^ § 1378. Money received and used by borrower. — A bank may be liable in an action for money had and received when money is borrowed for it and is used by it, notwithstanding the "Butts County v. Jackson Banking a specific method of making the con- Co., 129 Ga. 801, 60 S. E. 149, 15 tract, then a liability does not arise L. R. A. (N. S.) 567n, 121 Am. St. by implication." 244; Waitz v. Ormsbv County, 1 Nev. ** Butts County v. Jackson Banking 370; Luther v. Wheeler, 7^ S. Car. Co., 129 Ga. 801. 60 S. E. 149, 15 L. 83, 52 S. E. 874, 4 L. R. A. (N. S.) R. A. (N. S.) 567n, 121 Am. St. 244. 746. See also, Pardee v. Salt Lake =" Davis v. Stokes, 74 N. Car. 374. Co. (Utah.), 118 Pac. 122, in which it '"Luther v. Wheeler, 72, S. Car. 83, is said: "The general rule in this re- 52 S. E. 874, 4 L. R. A. (N. S.) 746. gard is to the effect that where there " Anderson v. Orient Fire Ins. Co., is a legal duty requiring a thing to 88 Iowa 579, 55 N. W. 348. "In its be done, or where a person, or cor- last analysis the action for money poration, public or private, obtains had and received stands on the judi- the money or property of another cial conception that the use by one under such circumstances tliat would person of the money of another cre- make it unjust or inequitable to re- ates a debt ; but this judicial concep- tain the same, and in case of a pub- tion manifestly could have no appli- lic corporation, if the law authorizes cation to municipal corporations in it to incur the obligation in the first the face of positive constitutional or instance but the forms of law were statute law that no debt shall be con- omitted, then the law ordinarily im- tracted by a municipality or that a plies a promise to pay, and an action debt shall be contracted only in a may be maintained upon such a certain manner." Luther v. Wheeler, promise. When, however, the power 73 S. Car. 83, 52 S. E. 874, 4 L. R. to contract upon the subject-matter A. (N. S.) 746. See also, Tehama is withheld from the public corpora- County v. Sisson (Cal.), 92 Pac. 64. tion, or where the statute expresses § 1379 CONTRACTS. 628 note given therefor was unen forcible because executed by the cashier without written authority from the board of directors.*^ On the same principle, the owners of a steamship have been held liable for moneys loaned and advanced to the ship's captain to en- able him to load the vessel and supply and prepare it for its voy- age, even though a note given by the master for the amount so advanced could not be collected because of the master's lack of authority to give it/^ § 1379. Money paid — Receiving without consent of owner. — Payments of money may be classified broadly under two heads. They are: first, payments by a third person of the money of another to one who receives the same without the consent of the real owner thereof; second, payments made to another by the real owner or by a third person with the real owner's consent either for the benefit of the real owner or on behalf of a third person. No other elements entering in, the real owner of money may re- cover an unauthorized payment thereof, made by a third person from the one to whom such payment is made.** A public official who receives money which he is in duty bound to turn over to the proper authorities is liable in an action for money had and re- ceived.*^ So a public corporation*^ or other similar corporation,*' which receives money properly belonging to another person or corporation, may be required to turn over such money to the proper person or corporation.** A stockholder who received ** Union Nat. Bank v. Lyons, 220 held entitled to recover the excess. Mo. 538. 119 S. W. 540. Kansas City v. R. J. & W. M. Boyd " Commercial Nat. Bank v. Slo- Const. Co., 86 Kans. 213, 120 Pac. man, 194 N. Y. 506, 87 N. E. 811. 347. " Brand v. Williams, 29 Minn. 238, " Colusa County v. Glenn County, 13 N. W. 42; Knapp v. Hobbs, 50 N. 117 Cal. 434, 49 Pac. 457; Strough v. H. 476; Haebler v. Myers, 132 N. Y. Jefferson County, 119 N. Y. 212, 23 363, 30 N. E. 963, 15 L. R. A. 588, 28 N. E. 552; Salem v. Marion County, Am. St. 589 ; United States v. State 25 Ore. 449, 36 Pac. 163. Bank, 96 U. S. 30, 24 L. ed. 647; "* See also. Center School Tp. v. Bayne v. United States, 93 U. S. 642, State, 150 Ind. 168, 49 N. E. 961. 23 L. ed. 997; State v. St. Johnsbury, In the above case a school trustee 59 Vt. 332, 10 Atl. 531. expended money for the benefit of " Socorro Board of Education v. the township schools which he should Robinson, 7 N. M. 231, 34 Pac. 295. have paid over to another township *" Chapman v. Douglas County, 107 school corporation. The township U. S. 348, 27 L. ed. 378, 2 Sup. Ct. 62. for whose benefit the money was ex- On the other hand, a municipality pended was held liable to the other which overpaid a contractor has been school corporation for the amount 629 IMPLIED CONTRACTS. 1379 dividends from an insolvent corporation, knowing it to be in such condition, may be required to refund the same in an action brought by the receiver of the company." It has also been held that a husband may recover unauthorized and unwarranted pay- ments of money made by his wife.''^ So a minor child has been held entitled to recover its share of a statutory exemption paid over to its mother in an action for money had and received." One who has a lien on certain money or property may, in a proper case, recover the amount of such lien from a third person who converts or obtains possession of the property subject to his lien." A de jure officer may, in an action for money had and received, recover fees held by a de facto official f^ and where one who holds money, the title to which is, to his knowledge, in dispute, vol- untarily pays the same to one of the parties claiming it, he may be liable to the other in an action for money had and received if the latter prove to be the real owner.^* One who receives money as agent is liable on an implied promise to pay it over to his prin- cipal. °^ of money thus expended. Milwaukee V. Alilwaukee, 114 Wis. 374, 90 N. W. 447. ^"Davenport v. Lines, 72 Conn. 118, 44 Atl. 17; Warren v. King, 108 U. S. 389, 27 L. ed. 769, 2 Sup. Ct. 789. °" Metropolitan Life Ins. Co. v. Trende, 21 Ky. L. 909, 53 S. W. 412 (husband permitted to recover pre- miums paid on insurance policy taken out bv the wife on her life). "Lanford v. Lee, 119 Ala. 248, 24 So. 578, 72 Am. St. 914. °- Haebler v. Mvers, 132 N. Y. 363, 30 N. E. 963, 15 L. R. A. 588, 28 Am. St. 589; Finch v. Park, 12 S. Dak. 63, 80 N. W. 155, 76 Am. St. 588. In case A has a lien on certain property belonging to B, which is seized by C under circumstances which do not discharge B's obligation to A, A may elect to proceed against B. Fowler V. Savings Bank, 113 N. Y. 450, 21 N. E. 172, 4 L. R. A. 145, 10 Am. St. 479. Or see, Bates-Farley Sav- ings Bank v. Dismukes, 107 Ga. 212, 33 S. E. 175; Brand v. Williams, 29 Minn. 238, 13 N. W. 42 (holding that where a sheriff paid money to A, which he should have paid to B, B may elect to proceed against either the sheriff or A. But after he has made his election and has recovered judgment against one person he can- not then proceed against the other party). See Fowler v. Bowery Sav- ings Bank, 113 N. Y. 450, 21 N. E. 172, 4 L. R. A. 145, 10 Am. St. 479. ■"Coughlin V. McElrov. 74 Conn. 397, 50 Atl. 1025, 92 Am. St. 224. '*McDuffee v. Collins, 117 Ala. 487, 23 So. 45; Osborn v. Bell. 5 Denio (N. Y.) 370, 49 Am. Dec. 275; Hind- march v. Hoffman, 127 Pa. St. 284, 18 Atl. 14, 4 L. R. A. 368, 14 Am. St. 842. Thus where one receives money in good faith which was in fact stolen, and is so notified, he will be liable to the real owner in an action for money had and received if after such notice he turns the money over to the one who stole it. Hindmarch v. Hoffman, 127 Pa. St. 284. 18 .\tl. 14. 4 L. R. A. 368, 14 Am. St. 842. , '" Benton v. Craig. 2 Mo. 198. But when an agent receives money on a contract of sale made with his prin- cipal, the purchaser cannot recover from the agent the money so paid by merely showing facts which would § I3S0 CONTRACTS. 63O § 1380. One to whom an obligation is due may proceed against one holding the money. — This but illustrates the principle that if a third person places money in the hands of another with which the latter is to discharge an obligation owed by the first party to still another person, the party to whom the obligation is due may proceed against the one holding the money ,°^ unless the party who receives and holds the money takes it as the agent of the party making the payment,^^ in which case the principal may recover the amount of an unauthorized pay- ment made by the agent from the person to whom it was paid.°* So when the entire amount of a judgment was turned over to the attorney for the successful party, it was held that the sheriff could maintain an action against the attorney for fees due him in connection with the case and which had been collected as part of the cost, notwithstanding he was unable to prove that the attor- ney had received the money under an express agreement to pay the sheriff out of the proceeds.^'' Where one pays money belong- ing to another or upon which the other has a lien to a third person, the latter cannot retain the same and apply it to the discharge of a debt due him from the party making the payment.^" entitle the purchaser to rescind. Kur- pal has been wrongfully paid by his zawski V. Schneider, 179 Pa. St. 500, agent to a stranger, either the prin- 36 Atl. 319. cipal or the agent may maintain an ^* Logan V. Talbot, 59 Cal. 652; action for its recovery." Ingram v. Ehrman v. Rosenthal, 117 Cal. 491, Posey (Tex. Civ. App), 138 S. W. 49 Pac. 460; Coppage v. Gregg, 127 421, quotmg from Houser v. McGm- Ind 359, 26 N. E. 903 ; Benner v. nas, 108 N. Car. 631, 13 S. E. 139. Weeks 159 Pa. St. 504, 28 Atl. 355. '" Knott v. Kirby, 10 S. Dak. 30, 71 "Lewis V. Sawyer, 44 Maine 332. N. W. 138. See also, Lazard v. Merchants' &c. '° Burtnett v. First Nat. Bank, 38 Transportation Co., 78 Md. 1, 26 Atl, Mich. 630; Alter v. Bank of Stock- 897. ham, 53 Nebr. 223, 73 N. W. 667; ''^Dob V Halsey, 16 Johns. (N. Y.) Cady v. South Omaha Nat. Bank, 45 34, 8 Am. Dec. 293; Mt. Verd Mills Nebr. 756, 65 N. W. 906; Farmers' Co. V. McElwee (Tenn. Ch. App.), &c. Nat. Bank v. King, 57 Pa. St. 202, 42 S W 465- Rogers v. Batchelor, 98 Am. Dec. 215; Union Stock Yards 12 Pet. (ij. S.) 221, 9 L. ed. 1063. In Bank v. Gillespie, 137 U. S. 411. 137 case an agent by mistake pays money L. ed. 724; Central National Bank v. to a third party which belongs to Connecticut Mut. Life Ins. Co, 104 his principal, the agent may maintain U. S. 54, 26 L. ed. 693 ; Rock Springs an action for money had and re- Nat. Bank v. Luman, 6 Wyo. 123, 167, ceived in his own name to recover 42 Pac. 874, 43 Pac 514, revg. 5 Wyo. the money so paid. Parks v. Fogle- 159, 38 Pac. 678. When one deposits man, 97 Minn. 157, 105 N. W. 560, money with another for a specified 4 L.'r. a. (N. S.) 363 and note, 114 purpose or person, the latter cannot Am. St. 703. "It is a general rule refuse to perform the agreement and that, where the money of the princi- apply the money so received to the 6.^,1 IMPLIED CONTRACTS. § I381 § 1381. Money voluntarily paid to another with owner's consent. — As above mentioned, the second class of payments consists of those instances in which the real owner or his agent with the owner's consent pays the money to another. Payments of this character may be further subdivided into voluntary and in- voluntary payments. Voluntary payments not induced by fraud, misrepresentation, mistake, duress or undue influence, or other inequitable conduct on the part of the one receiving the same cannot ordinarily be recovered. A voluntary payment of money made with intention that title shall pass and with full knowledge of all the material facts will be deemed voluntary, and even though the demand was unfounded cannot be recovered on the theory of an implied "promise.**^ One who voluntarily pays money to ex- discharge of a debt owed him by the one making the payment, and if he attempts so to do, he is hable in ac- tion for money had and received to the person for whose benefit the money was deposited. Bearce v. Fahrnow. 109 Mich. 315, 67 N. W. 318. Compare with Erickson v. Con- struction Co., 107 Wis. 49, 82 N. W. 694. Thus where the owner of cer- tain cattle gave a lien on them to bank No. 1 and it was subsequently agreed that the cattle should be sold and the proceeds turned over to bank No. 2, it was held that bank No. 2 could not keep the money and apply it to obligations due the bank from the owner of the cattle, but was liable to the first bank for the amount. People's National Bank v. Myers. 65 Kans. 122. 69 Pac. 164. See also, Fletcher v. Warring, 137 Ind. 159, 36 N. E. 896. in which it is held that one who collects money on re- ceivership certificates to the exclu- sion of other certificates that are prior thereto, is liable in an action by the owner of the certificates which constituted a prior lien for the money so collected. INIavburv v. Berkery, 102 Mich. 126, 60 N. W. 699, holding that one who has been made the ben- eficiary of a life insurance policy in consideration thereof may agree with the insured to pay a debt owing by the latter to a third person and that the beneficiary must apply the pro- ceeds of the policy in the manneV specified. " Prichard v. Sweeney, 109 Ala. 651, 19 So. 730; Crenshaw v. Collier, 70 Ark. 5, 65 S. W. 709; Harralson V. Barrett, 99 Cal. 607, 34 Pac. 342; Bucknall v. Storv, 46 Cal. 589. 13 Am. Rep. 220; Skelly v. Bank, 63 Conn. 83, 26 Atl. 474, 19 L. R. A. 599. 38 Am. St. 340; The Agathe, 71 Fed. 528; The Nicanor, 40 Fed. 361; Jef- ferson County V. Hawkins, 23 Fla. 223, 2 So. 362 ; People v. Foster, 133 111. 496, 23 N. E. 615; Burlock v. Cook, 20 111. App. 154; Connecticut Mut. Life Ins. Co. v. Stewart, 95 Ind. 588; Manning v. Poling, 114 Iowa 20, 83 N. W. 895, 86 N. W. 30; Bailey v. Paullina. 69 Iowa 463, 29 N. W. 418; Cummings Harvester Co. v. Sigerson, 63 Kans. 340, 65 Pac. 639; Williams v. Shelbourne, 102 Ky. 579, 44 S. W. 110; Tvler v. Smith. 18 B. Mon. (Ky.) 793; New Orleans &c. Co. v. Improvement Co., 109 La. 13, 33 So. 51. 94 Am. St. 393n ; Regan V. Baldwin, 126 Mass. 485. 30 Am. Rep. 689 ; Francis v. Hurd. 113 Mich. 250, 71 N. W. 582 : Tompkins v. Hol- lister, 60 Mich. 485, 34 N. W. 551 ; Carson v. Cochran, 52 Minn. 67. 53 N. W. 1130; Morley v. Carlson, 27 Mo. App. 5 ; Nebras- ka & L. Ins. Co. V. Segard, 29 Nebr. 354, 45 N. W. 681 ; Redmond V. New York. 125 N. Y. 632, 26 N. E. 727; Flvnn v. Hurd. 118 N. Y. 19, 22 N. E. 1109; Howard vMutual &c. Life .Association. 125 N-^Car. 49. 34 S. E.. 199. 45 L. R. A. 853; Brum- baugh v. Chapman, 45 Ohio St. 368, § i38i CONTRACTS. 632 tinguish the debt of another without the latter's request or au- thority does not impose a HabiHty upon such other to repay."^ But one who pays the debt of another at the latter's request,"^ or who expends money on the faith of the defendant's promise,®* or one who is under the circumstances compelled to discharge the debt of another*'^ or to have performed and to pay for the performance 13 N. E. 584; Oil-Well Supply Co. V. Exchange Bank, 131 Pa. St. 100, 18 Atl. 935; Hubbard v. Martin, 8 Yerg. (Tenn.) 498; Ladd v. South- ern Cotton &c. Mfg. Co.. 53 Tex. 172; United States v. Edmondston, 181 U. S. 500, 45 L. ed. 971 ; Little v. Bowers, 134 U. S. 547, 10 Sup. Ct. 620, 33 L. ed. 1016; Gilson v. Bing- ham, 43 Vt. 410, 5 Am. Rep. 289; Beard v. Beard, 25 W. Va. 486, 52 Am. Rep. 219; Gage v. Allen, 89 Wis. 98, 61 N. W. 361. "The ultimate fact to be reached in the case is the state of mind under which the pay- ments were made. If they were made voluntarily, with a full knowl- edge of all the facts and without fraud and imposition, they are be- yond reclamation. If, on the other hand, the money was extorted from the appellee, * * * or if fraud and imposition was practiced upon him, he is entitled to receive his money back, for the plain reason that the payment was involuntary." Ligonier V. Ackerman, 46 Ind. 552, 558, 15 Am. Rep. 323, quoted in Hollingsworth v. Stone, 90 Ind. 244. However, when an insurer wrongfully refuses to ac- cept a premium when it is tendered, or wrongfully declares a life policy forfeited and refuses further to rec- ognize it as an existing contract, such insurer is liable to the insured or the policy-holder for the full amount of premiums paid. Sum- mers v. Mutual Life Ins. Co., 12 Wyo. 369, 75 Pac. 937, 66 L. R. A. 812, 109 Am. St. 992. *' Weakley v. Brahan, 2 Stew. CAla.) 500; Stephens v. Brodnax, 5 Ala. 258; Kenan v. Holloway, 16 Ala. 53, 50 Am. Dec. 162; Louisville &c. R. Co. V. Central Kentucky Traction Co., 147 Ky. 513, 144 S. W. 739; Huff v. Simmers, 114 Md. 548, 79 Atl. 1003; Newell v. Hadley, 206 Mass. 335, 92 N. E. 507; Cape Gir- ardeau Bell Tel. Co. v. Hamil's Es- tate, 153 AIo. App. 404, 134 S. W. 1103; Bailey v. Gibbs, 9 Mo. 45; Schmidt v. Smith, 57 Mo. 135; Title Guarantee &c. Co. v. Haven, 196 N. Y. 487, 89 N. E. 1082, 25 L. R. A. (N. S.) 1308n. In re. Rider's Estate, 68 Misc. (N. Y.) 270, 124 N. Y. S. 1001; Beach v. Vandenburgh, 10 Johns. (N. Y.) 361; Overseers of Poor v. Overseers of Poor, 14 Johns. (N. Y.) 87; Osborn v. Cunningham, 4 Dev. & B. (N. Car.) 423; Turner v. Patridge, 3 P. & W. (Pa.) 172; Mings V. Griggsby Const. Co. (Tex, Civ. App.), 106 S. W. 192; King v. Riddle, 7 Cranch (U. S.) 168, 3 L. ed. 304; Briggs v. Barnett (Va.), 61 S. E. 797. See also, Stevens v. Smith, 112 N. Y. S. 361 ; Holly St. Land Co. v. Beyer, 48 Wash. 422, 93 Pac. 1065. See, however, S. M. Smith Ins. Agency v. Hamilton Fire Ins. Co. _(W. Va.), 71 S. E. 194, in which it is said : "A stranger who pays a debt without request by the debtor, when his payment is not ratified by the debtor, may bring a suit in equity praying relief in the alternative; that is, that if the debtor do not ratify such payment, the debt may be en- forced in his favor as its equitable assignee, or, if so ratified, that he be decreed re-payment of the amount paid for the use of the debtor," quot- ing from a syllabus of Crumlish v. Improvement Co., 38 W. Va. 390, 18 S. E. 456, 23 L. R. A. 120n, 45 Am. St. 872. Compare with Teter v. Te- ter, 65 W. Va. 167, 63 S. E. 967. "' Owen Creek Presbyterian Church V. Taggart, 44 Ind. App. 393, 89 N. E. 406. '^ Beach v. Bryan, 155 Mo. App. 33, 133 S. W. 635. "'Finnell v. Finnell, 159 Cal. 535, 114 Pac. 820 (holding that one who buys real estate and in order to pro- tect his rights is compelled to pay a claim which he did not assume is en- titled to recover the amount so paid 633 IMPLIED CONTRACTS § 1382 of labor which another was required linder his contract to do/*' may recover from the person properly liable the money so paid."^ § 1382. Rule as to voluntary and involuntary payments further illustrated. — A payment of an illegal demand with a full knowledge of all the facts which render such demand illegal, without an immediate and urgent necessity thereof, or unless to release the person or property from detention, or to prevent an immediate seizure of the person or property, must be deemed vol- untary. And the fact that the party, at the time of making the payment, files a written protest, does not make the payment invol- untary."** Thus where one at the time he discharged an ob- ligation claimed that he was being required to pay more than was due but that he would pay the amount demanded and then commence an action to recover the overpayment, it was held that the amount so paid could not be recovered."" A payment may still from the real debtor) ; Volker v. Fisk, 75 N. J. Ch. 497, 12 Atl. 1011. "Dobbins v. Graer, 50 Colo. 10, 114 Pac. 303. See also, Loomis v. Le- high Valley R. Co., 132 N. Y. S. 138. 147 App. Div. (N. Y.) 195 (holding that a shipper may recover the cost of putting bulkheads in grain cars furnished him) ; Bailey v. Bishop. 152 N. Car. 383, 67 S. E. 968. " One who makes a partial assign- ment of a lease wliich contains no reference as to the share of the rent reserved impliedly agrees to pay a proportional share of the rent re- served. Johnson v. Zufeldt. 56 Wash. 5, 104 Pac. 1132. One who requests another to discharge an obligation for him cannot defend against the one making payment on the ground that payment was not yet due. Min- der &c. Land Co. v. Brustuen, 26 S. Dak. 38. 127 N. W. 546. A creditor who takes out insurance on his debt- or's life cannot recover from such debtor the amount of the premiums paid by him in the absence of an agreement that the debtor should pay or be liable therefor. Stacv v. Parker (Tex. Civ. App.). 132 S. W. 532. But where one is induced to pay the pre- miums on an insurance policy by rep- resentations that she is the beneficiary thereof, she may recover the pre- miums paid from the beneficiary who accepts the proceeds of the policy with knowledge of the facts. Mon- ast V. Marchant (R. L), 12 Atl. 820. See also, Sterling v. Chelsea Marble Works, 62 Misc. (N. Y.) 626. 115 N. Y. S. 1096. An action for money paid cannot be maintained unless it is proved that the money has actually been paid. Hilliard v. Douglas Oil Fields (Wyo.). 122 Pac. 626. °^ Wabaunsee County v. Walker, 8 Kans. 431 ; Bowman v. Boyd, 21 Nev. 281, 30 Pac. 823; Turner v. Barker, 66 N. J. L. 496. 49 Atl. 676 (even though paid under legal process when paid voluntarilv) ; L^nion Pac. R. Co. V. Dodge County, 98 U. S. 541. 25 L. ed. 196 (suit to recover back taxes paid by the Union Pacific R. Co. upon certain lands in Nebraska) ; Lamborn v. Dickinson County, 97 U. S. 181. 24 L. ed. 926. °*At the time the plaintiff made the payment he knew or claimed to know that more had been paid than he was credited with, but did not have the means of proving it. After he had paid the amount demanded he discovered tlie means by which to prove that there had been an over- charge. The court said: "Ignorance of a fact is one thing; ignorance of the means of proving a fact is an- § 1383 CONTRACTS. 634 be voluntary although made unwillingly and only as a choice be- tween evils and risks, when made with full knowledge of the facts.'" There must be a pressing and controlling necessity upon the party making the payment to render it compulsory or involun- tar}-."^ A threat to enforce a demand by suit does not prevent payment from being regarded as voluntary.'^- The law considers it not only the right but the duty of the party threatened to meet the issue of the unjust suit." § 1383. Effect of protest. — The fact that formal protest is made at the time of payment does not prevent it from being voluntary."* A protest is generally available only in cases of other. When money voluntarily paid is recovered back, it is because there was a mistake as to some fact. But here the plaintiff was not mistaken as to the fact. Only at the time he did not know how to prove it. The subsequent discovery of evidence to prove the fact, known to the party when he made the payment, cannot authorize a recovery back of the money." Windbiel v. Carroll, 16 Hun (N. Y.) 101. To same effect, Citizens' Bank v. Rudisell, 4 Ga. App. Z7, 60 S. E 818. ^"See Maxwell v. San Luis Obispo County, 71 Cal. 466, 12 Pac. 484. '^Vick v. Shinn, 49 Ark. 70, 4 S. W. 60, 4 Am. St. 26; Shirey v. Beard. 62 Ark. 621, Zl S. W. 309. See Elliott v. Swart wout, 10 Pet. (U. S.) 137, 9 L. ed. ill. "Brown v. M'Kinnally, 1 Esp. 279; Cahaba v. Burnett, 34 Ala. 400; Ligonier v. Ackerman, 46 Ind. 552, 15 Am. Rep. i2Z ; Muscatine v. Keo- kuk Northern Line Packet Co.. 45 Iowa 185; Matthews v. Smith, dl N. Car. 374. "Cahaba v. Burnett, 34 Ala. 400; Vick v. Shinn, 49 Ark. 70, 4 S. W. 60, 4 Am. St. 26; Ligonier v. Ack- erman, 46 Ind. 552, 15 Am. Rep. ZIZ. '* Rogers v. Garland, 8 Alackey (19 D. C.) 24. In this last case money was paid by the one party to another for the benefit of a third person and in the latter's presence. See also. Prichard v. Sweeney, 109 Ala. 651, 19 So. 730; Rutherford v. Mclvor, 21 Ala. 750; Cahaba v. Burnett, 34 Ala. 400; Vick v. Shinn, 49 Ark. 70, 4 S. W. 60. 4 Am. St. 26; Shirey v. Beard, 62 Ark. 621, 2>1 S. W. 309; Brumagin V. Tillinghast, 18 Cal. 265, 79 Am. Dec. 176; Garrison v. Tillinghast, 18 Cal. 404; Phelan v. San Francisco, 120 Cal. 1, 52 Pac. 38; Connecticut Mut. Life Ins. Co. v. Stewart, 95 Ind. 588; Wabaunsee County v. Walker, 8 Kans. 431 ; Benson v. Monroe, 7 Cush. (Mass.) 125, 54 Am. Dec. 716; Regan v. Baldwin, 126 Mass. 485, 30 Am. Rep. 689; Cook v. Boston, 9 Al- len (Mass.) 393; Devereux v. Roch- ester German Ins. Co., 98 N. Car. 6, 3 S. E. 639; Harvey v. Girard Nat Bank, 119 Pa. St. 212, 13 Atl. 202; De la Cuesta v. Insur- ance Co. of North America, 136 Pa. St. 62, 20 Atl. 505, 9 L. R. A. 631 ; Ladd v. Southern Cotton &c. Mfg. Co., 53 Texas 172; Oceanic Steamship Co. v. Tappan, 16 Blatchf. (U. S.) 296, Fed. Cas. No. 10405; Union Pac. R. Co. v. Dodge County, 98 U. S. 541, 25 L. ed 196. Protest can never make that involuntary which in its absence would be volun- tary. Wessel v. D. S. B. Johnston &c. Co., 3 N. Dak. 160, 54 N. W. 922, 44 Am. St. 529. It has been repeat- edly held that a mere protest, when payment was not made to save arrest, or the seizure or sale of goods, or in submission to process that might im- mediately have been enforced, would not relieve the payment of its pre- sumed voluntarv character. Peebles V. Pittsburgh, 101 Pa. St. 304, 47 Am. Rep. 714. Durham v. Montgomery 635 IMPLIED CONTRACTS. § 1384 payment under duress or coercion, or when undue advantage is taken of the party's situation. It is merely notice to the party re- ceiving the payment, that, if the demand is illegal in whole, or in any specified particular, he may be subjected to an action for the recovery of the amount to which objection is made, and if an action be brought, the protest is only available as evidence of the fact of compulsion." Statutes in some of the states, however, change the rule to some extent, and provide for a recovery of the payment of an illegal tax, although they usually require that at the time of such payment a formal protest shall have been made as prescribed by the statute.'^'* § 1384. Recovery of money paid under duress or compul- sion. — It is well settled, however, that money extorted or involuntarily paid under duress or unlawful compulsion may be recovered.'^^ To enable the party making the compulsory pay- County, 95 Ind. 182; IMuscatine v. Keokuk Northern Line Packet Co., 45 Iowa 185. " McMillan v._Richards. 9 Cal. 365, 70 Am. Dec. 655 ; Brumagim v. Till- inghast, 18 Cal. 265, 79 Am. Dec. 176; Patterson v. Cox, 25 Ind. 261 ; Kan- sas Pac. R. Co. V. Wyandotte, 16 Kans. 587; Chase v. Dwinal, 7 Greenl. (Maine) 134, 20 Am. Dec. 352; Await V. Eutaw Building Assn., 34 Md. 435 ; Benson v. Monroe. 7 Cush. (Mass.) 125, 54 Am. Dec. 716; De- troit V. ^klartin, 34 Mich. 170, 22 Am. Rep. 512; Shane v. St. Paul, 26 Minn. 543, 6 N. W. 349; Clinton v. Strong. 9 Johns. (X. Y.) 370. In Fleetwood V. New York, 2 Sandf. (N. Y.) 475, Sandford, J., said: ''Where there is no legal compulsion, a party yielding to the assertion of an adverse claim, cannot detract from the force of his concession, by saying, I object or 1 protest, at the same time that he actu- ally pays the claim. The payment nullifies the protest as effectually as it obviates the previous denial and contestation of the claim." "There are, no doubt, cases to be found in which the language of the court, if separated from the facts of the par- ticular case under consideration, would seem to imply that a protest alone was sufficient to show that the payment was not voluntary; but on examination it will be found that the protest was used to give effect to the other attending circumstances;" per Waite, C. J., in Union Pac. R. Co. v. Dodge County. 98 U. S. 541, 25 L. ed. 196, citing Elliot v. Swartwout, 10 Pet. (U. S.) 137, 9 L. ed. 111. Bend V. Hoyt, 13 Pet. (U. S.) 263, 10 L. ed. 154 (customs cases, payments made to release goods held for du- ties) ; Philadelphia v. Collector, 5 Wall. (U. S.) 720, 18 L. ed. 614; Col- lector V. Hubbard, 12 Wall. (U. S.) 1, 20 L. ed. 272 (internal rev- enue tax cases, where the pro- visions of the internal revenue acts warranted the conclusion that congress intended to give the tax- payer such remedy) ; Erskine v. Van- Arsdale, 15 Wall. (U. S.) 75, 21 L. ed. 63. A pi-otest made after pay- ment is unavailing. Marriott v. Brune, 9 How. (U. S.) 619, 13 L. ed. 282. ^® See as to protest under such stat- utes and as stating grounds of pro- test the note in 36 L. R. A. (N. S.) 476. " In Brisbane v. Dacres, 5 Taunt. 143, Gibbs, J., mentions that extor- tion was one of those cases in which monev paid might be recovered back. Ashmole v. Wainwright, 2 Q. B. 837; 1385 CONTRACTS. 636 ment to recover it, the compulsion must have been illegal, unjust or oppressive." To constitute the coercion or duress which will be regarded as sufficient to make a payment involuntary, there must be some actual or threatened exercise of power possessed or believed to be possessed by the party exacting or receiving the payment over the person or property of another, from which the latter has no other means of immediate relief than by making the payment. As stated by the Court of Appeals of Maryland, the doctrine established by the authorities is, that "A payment is not to be regarded as compulsory, unless made to emancipate the person or property from an actual and existing duress imposed upon it by the carty to whom the money is paid."^® § 1385. The rule illustrated. — A payment by a person to free his goods from an attachment levied for the purpose of extorting money, by one who knows he has no cause of action, is not voluntary, but compulsory, and may be recovered.^'^ A Atkinson v. Denby, 6 I^. & N. 778 (money obtained by extortion); Smith V. Coker, 110 Ga. 654, 36 S. E. 107 (promise to pay rent because of threat of unlawful eviction) ; Krouse V. Krouse (Ind. App.), 95 N. E. 262; Voiers v. Stout, 4 Bush. (Ky.) 572 (extorting note and coercing pay- ment by military duress) ; Chase v. Dwinal, 7 Greenl. (Maine) 134. 20 Am. Dec. 352; Mowatt v. Wright, 1 Wend. (N. Y.) 355, 19 Am. Dec. 508; Buckley v. New York, 159 N. Y. 558, 54 N. E. 1089, affg. 30 App. Div. (N. Y.) 463, 52 N. Y. S. 452. "First Nat. Bank v. Sargeant, 65 Nebr. 594, 91 N. W. 595, 59 L. R. A. 296. See also, Harrison Tp. v. Ad- dison (Ind.), 96 N. E. 146. But com- pare Vroom V. Litt, 70 ]\Iisc. (N. Y.) 375, 128 N. Y. S. 758 (holding that threats of lawful arrest con- stitute duress, the common-law rule requiring a threat of unlawful arrest not obtaining). "Radich v. Hutchins, 95 U. S. 210, 24 L. ed. 409, quoting from Baltimore V. Lefiferman, 4 Gill (Md.) 425. 45 Am. Dec. 145. To the same effect, Brumagim v. Tillinghast, 18 Cal. 265, 79 Am. Dec. 176; Indiana Natural &c. Gas Co. V. Anthony, 26 Ind. App. 307, 58 N. E. 868; Heaton v. Norton County State Bank, 59 Kans. 281, 52 Pac. 876 ; Wells v. Adams, 88 Mo. App. 215; Mays v. Cincinnati, 1 Ohio St. 268. "The action to recover back may be maintained if the payment is caused, on the one part, by an illegal demand, and made, on the other, re- luctantly, and without being able to regain possession of the property ex- cept by submitting to the payment." In re The John Francis, 184 Fed. 746, and cases cited. "Where the money was paid upon a wrongful demand, to save the party paying from some great or irreparable mischief or dam- age, from which he could not be saved but by the payment of the sum wrongfully demanded, it can be re- covered back." Corkle v. Maxwell, 3 Blatchf. (U. S.) 413, Fed. Cas. No. 3231. *" Chandler v. Sanger, 114 Mass. 364, 19 Am. Rep. 367; Adams v. Reeves, 68 N. Car. 134, 12 Am. Rep. 627; Shuck v. Interstate Building & Loan Assn., 63 S. Car. 134, 41 S. E. 28 (mere threat to foreclose a mort- gage not duress). What is and what is not duress of goods fully dis- cussed. Hackley v. Headley, 45 Mich. 569, 8 N. W. 511. 637 IMPLIED CONTRACTS. § 1385 person under sentence until a fine is paid is under duress, and the payment of an illegal fine, under such circumstances, is not deemed voluntary, and may be recovered.^^ Threats constitute duress where they cause reasonable apprehension of loss of life, or of some great bodily harm, or of imprisonment."- But mere fear that one will be sued does not constitute compulsion, so as to enable the party paying money to recover it back.^^ A pay- ment of money by a producer or manufacturer at the demand of a labor union in order to avoid a boycott by the latter of his goods, has been held an act of extortion which entitled the manufacturer to recover from the union the payment so made.** A shipper of goods who pays excessive charges to a common carrier under pro- test in order to obtain possession of them"° or from business necessity^'' is considered as having been made the payment under App. 579, 6Z Pac. 662; Higgins v. Brown, 78 Maine 473, 5 Atl. 269; Hilborn v. Bucknam, 78 Maine 482, 7 Atl. 272, 57 Am. Rep. 816; Mere- dith V. Meredith, 79 Mo. App. 636; Dunham v. Griswold, 100 N. Y. 224, 3 N. E. 76; Matthews v. Smith, 67 N. Car. 374; Taylor v. Board of Health, 31 Pa. St. 7Z, 72 Am. St. 724; Shel- ton V. Jackson, 20 Tex. Civ. App. 443, 49 S. W. Rep. 415. ** March v. Bricklayers' & Plast- ers' Union, 79 Conn. 7. 63 Atl. 291, 4 L. R. A. (N. S.) 1198, 118 Am. St. 127; Carew v. Rutherford, 106 Mass. 1, 8 Am. Rep. 287. ** Ashmole v. Wainwright, 2 Q. B. 837; Southern Ala. R. Co. v. Mad- dox, 146 Ala. 539, 41 So. 9; Southern R. Co. V. Anniston Foundry & Mach. Co., 135 Ala. 315, ZZ So. 274: South- ern R. Co. V. Schlittler, 1 Ga. .A.pp. 20, 58 S. E. 59; Harmony v- Bing- ham, 12 N. Y. 99, 62 Am. Dec. 142; Mt. Pleasant Mfg. Co. v. Cape Fear 6 Y. Vallev R. Co., 106 N. Car. 207. 10 S. E. 1046; Root v. Oil Creek & A. River R. Co., 31 Phila. Leg. Int. (Pa.) 140; Southern Kansas R. Co. V. J. W. Burgess Co. (Tex. Civ. App.). 90 S. W. 189; Tutt v. Ide. 3 Blatchf. (U. S.) 249, Fed. Cas. No. 14275b. ^ Parker v. Great Western R. Co.. 7 Man. & G. 253; Carton v. Bristol &c. R. Co., 1 B. & S. 112; Mobile & M. R. Co. V. Steiner. 61 Ala. 559; "'Pitt V. Coomes, 2 A. & E. 459. Pitt had been arrested, while privi- leged as in attendance on the court, and had, in order to obtain his lib- erty, paid into court, under a judge's order, the amount for which he was sued. The court ordered it to be restored to him. "The arrest," said Lord Denman, C. J., "we think, was illegal. The consequence is, that the money was improperly extorted." See Delvin v. United States, 12 Ct. CI. (U. S.) 266. where a citizen was tried and convicted in 1865 by a mili- tary commission and sentenced to ten vears' imprisonment and a fine of $10,000. While imprisoned United States bonds were received from him by the jailor and sold, and the sum of $10,000 was retained from the proceeds as payment of the fine. The fine was illegally imposed, and the suit was brought in the nature of an action of indebitatus assumpsit for money had and received. '■ Loan & Protective Assn. v. Hol- land, 63 111. App. 58; Bane v. Detrick, 52 111. 19; James v. Dalbev, 107 Iowa 463, 78 N. W. 51; Harmon v. Har- mon. 61 Maine 227. 14 Am. Rep. 556; Feller v. Green, 26 Mich. 70; Baker V. Morton, 12 Wall. (U. S.) 150, 20 L. ed. 262. ^^ Savannah Sav. Bank. v. Logan, 99 Ga. 291, 25 S. E. 692; Muscatine V. Keokuk Northern Line Packet Co., 45 Iowa 185 ; Stout v. Judd, 10 Kans. § 1386 CONTRACTS. 638 duress and may recover it. The same has been held true of pay- ments of excessive water rates in order to prevent the shutting off of water*' or gas.** This rule does not apply, however, when the payment is made after the service has been fully performed and the property is out of the possession and beyond the control of the carrier.*^ It is true generally that in order to entitle one to re- cover the excessive rate he must show not only that the claim as- serted was unlawful, but also that the payment was not voluntary, that there was some necessity that amounted to compulsion and that payment was made under the influence of such compulsion.®* § 1386. Voluntary payment of taxes. — In the absence of any statutory provision on the subject, a voluntary payment of an assessment made under a mistake of law, but with full knowledge of the facts and not induced by any fraud or improper conduct on the part of the payee, cannot be recovered back.^^ In order to Ohio Coal Co. v. Whitcomb, 123 Fed. 359, 59 C. C. A. 487; Chicago & A. R. Co. V. Chicago. V. & W. Coal Co., 79 111. 121 ; Galesburg &c. R. Co. V. West, 108 111. App. 504; Chicago St. L. & P. R. Co. V. Wolcott, 141 Ind. 267, 39 N. E. 451, 50 Am. St. 320. **' Chicago V. Northwestern Mut. L. Ins. Co., 218 111. 40, 75 N. E. 803, 1 L. R. A. (N. S.) 770; Panton v. Du- luth Gas & Water Co., 50 Minn. 175, 52 N. W. 527, 36 Am. St. 635 ; West- lake V. St. Louis, 11 Mo. 47, 46 Am. Rep. 4; St. Louis Brewing Assn. v. St. Louis, 140 Mo. 419, Z1 S. W. 525. See also, American Brewing Co. V. St. Louis, 187 Mo. 367, 86 S. W. 129, 2 Am. & Eng. Ann. Cas. 821, when neither protest nor threat to turn off water was made. " Indiana Natural &c. Gas. Co. v. Anthony, 26 Ind. App. 307, 58 N. E. 868. *" Knudsen-Ferguson Fruit Co. v. Chicago &c. R. Co., 149 Fed. 973, 79 C. C. A. 483; Thomas v. Philadel- phia &c. R. Co., 1 Week. No. Cas. (Pa.) 621. In Kenneth v. South Carolina R. Co., 15 Rich. L. 284, 98 Am. Dec. 382, it was held that as- sumpsit for money had and received would not lie against a railroad com- pany to recover charges for trans- portation in excess of those which by law the carrier is permitted to exact when such charges are paid voluntarily without objection or pro- test, or notice of discontent, and after the service had been fully per- formed and the property was out o£ the possession of and beyond the control of the carrier. Otherwise, however, where the payment is made in order to secure future services. Peters v. Railroad Co., 42 Ohio St. 275, 51 Am. Rep. 814. See also, Lafayette &c. R. Co. v. Pattison, 41 Ind. 312; West Virginia Transp. Co. v. Sweetzer, 25 W. Va. 434. '^" Illinois Glass Co- v. Chicago Tel. Co., 234 111. 535, 85 N. E. 200, 18 L. R. A. (N. S.) 124 and note; Holmes v. Riggs, 52 Ore. 334, 97 Pac. 551. See ante, ch. 7, Duress and Undue Influence, for more thorough treatment of the subject. " Town Council of Cahaba v- Bur- nett, 34 Ala. 400; San Diego &c. Co. v. La Presa School District, 122 Cal. 981, 54 Pac. 528; Wilmington v. Wicks, 2 Marvel (Del.) 297, 43 Atl. 173; Williams v. Stewart, 115 Ga. 864, 42 S. E. 256; Elston v. Chicago, 40 111. 514, 89 Am. Dec. 361; Phillips v. Jefferson, 5 Kans. 412; Ligonier v. Ackerman, 46 Ind. 552; Smith v. Readfield, 27 Maine 145; Lester v. 639 IMPLIED CONTRACTS. § 1386 justify a recovery by the taxpayer, it is not only necessary that the assessment be invahd, and that the corporation actually re- ceive the money, but it is also necessary that the payment be made involuntarily and under compulsion."- Thus one who voluntarily pays an illegal tax in order to obtain the rebate given for prompt payment cannot recover the same."^ All payments of taxes are supposed to be voluntary until the contrary is made to appear."* Money illegally or erroneously, but voluntarily, paid for license taxes cannot be recovered."^ And the mere fact that the collector might have enforced payment will not make a payment involun- tary when he was taking no steps to collect and made no threats.^" Baltimore, 29 Md. 415, 96 Am. Dec. 542; Deshong v. New York, 74 App. Div. (N. Y.) 234, 11 N. Y. S. 563, affd. 176 N. Y. 475, 68 N. E. 880 ; Van- derbeck v. Rochester, 122 N. Y. 285; Borough of Allentown v. Sacger, 20 Pa. St. 421 ; Houston v. Feizer, 76 Texas 365, 13 S. W- 266; Sowles v. Soule, 59 Vt. 131. "- Bank of Kentucky v. Stone, 88 Fed. 383. An action will not lie for the recovery of money voluntarily paid, although under protest, upon a sewer assessment which is merely irregular, and because of which ir- regularity the collection might have been enjoined. Newcomb v. Daven- port, 86 Iowa 291, 53 N. W. 232. In Winter v. City Council of ]\Iont- gomery, 65 Ala. 403, it was held that, to support an action for money had and received against a municipal corporation, to recover from it the amount of taxes illegally assessed and collected, two facts must concur, namely, first, a want of authority for the imposition and collection of the tax, rendering the proceeding not merely irregular, but void ; and sec- ond, a payment under compulsion or under duress of person or property. "'Louisville V. Becker. 139 Kv. 17, 129 S. W. 311, 28 L. R. A. (N. S.) 1045 and note ; Lee v. Templeton, 13 Gray (Mass.) 476. Otherwise, how- ever, when in addition to paying in order to secure the discount, payment is made to prevent the issuance of a threatened warrant. Stowe v. Stowe, 70 Vt. 609, 41 Atl. 1024. " Helena v. Dwyer, 65 Ark. 155, 45 S. W. 349. Where a municipality, in good faith, but under a misappre- hension of the law, demands a great- er sum than it is legally entitled to, for a license to carry on a particular business, a person, who, with knowl- edge of the facts, pays the sum de- manded, cannot recover back the ex- cess. Camden v. Green, 54 X. J. L. 591, 25 Atl. 357, 12> Am. St. 686- '''" Grimley v. Santa Clara Co., 68 Cal. 575, 9 Pac. 840 : Manning v. Pol- ing, 114 Iowa 20, 83 N. W. 895, 86 N. W. 30; Cook v. Boston, 9 Allen (Mass.) 393; Eslow v. Albion, 153 Mich. 720, 117 N. W. 328, 22 L. R. A. (N. S.) 872 and note; Mays v. Cincinnati, 1 Ohio St. 268. In Sharp V. Carthage, 48 Mo. App. 26, where the city voted against the sale of intoxicating liquors after a license had been obtained, it was held that the dramshop keeper was entitled to recover from the city an appropri- ate part of the money paid for the license. ■* Wilson v. Pelton, 40 Ohio St. 306. In Taylor v. Board of Health, 31 Pa. St. 11, 12 Am. St. 724, where the legislature had imposed a poll- tax on all foreign immigrants com- ing by sea into the state, and after the law had been thirty years in operation, it was declared to be con- trary to the Federal Constitution, and the plaintiff sought to recover back the toll paid under it, it was hold that a payment of taxes is not compulsory because made under a threat, express or implied, that the legal remedies for it will be resorted § 1387 CONTRACTS. 640 § 1387. Recovery of illegal taxes paid under compulsion. — Where an illegal and void tax is paid to prevent a seizure and sale of the taxpayer's property to one having apparent colorable or formal authority to make such seizure and sale, if the danger is imminent and the payment is made under protest, the money so paid may be recovered."^ If a demand for the tax has been made under a warrant in the officer's hands, though no threat to levy has been made, the payment will be deemed involuntary.^^ Any to. "There is no pretense that the defendant's officers did any more than demand the tax under a sup- posed authority of the law; and this is no more a compulsion than when an individual demands a supposed right. The threat that is supposed to underlie such demands is a legally harmless one." Per Lowrie, J. It is true generally that a taxpayer can- not maintain a suit against a county to recover taxes illegally and wrong- fully exacted by the officers of the county after the taxes have been paid out by the disbursing officers of the county. Commonwealth v. Baske, 124 Ky. 468, 99 S. W. 316, 11 L. R. A. (N. S.) 1104 and note. See also, Bart V. Pierce County, 60 Wash. 507, 111 Pac. 582, for a discussion of when the amount so paid may be re- covered. Nor can a taxpayer who has paid taxes upon an erroneous as- sessment maintain an action to re- cover the same. The only remedy he has is to appeal to the boards of equalization provided by statute. First Nat. Bank v. Hopkinsville, 128 Ky. 383, 108 S. W. 311, 16 L. R. A. (N. S.) 685 and note. This right may, however, be given by statute. Wilmington v. Ricand, 90 Fed. 214, 32 C. C. A. 580, 61 U. S. App. 630; Indianapolis v. Morris, 25 Ind. App. 409, 58 N. E. 510. " Town Council of Cahaba v. Bur- nett, 34 Ala. 400; De Fremery v. Austin, S3 Cal. 380; Hubbard v. Brainard, 35 Conn. 563; Kimball v. Corn Exchange Nat. Bank, 1 Brad. (111. App.) 209; Lauman v. Des Moines County, 29 Iowa 310; Bruner V. Clay Citv, 100 Kv. 567, 18 Kv. L. 1008, 38 S. W. 1062 -, First Nat. Bank V. Watkins, 21 Mich. 483; Grand Rapids V. Blakelv, 40 Mich. 367, 29 Am. Rep. 539; Tuttle v. Everett, 51 Miss. 27, 24 Am. Rep. 622.; Vicks- burg V. Butler, 56 Miss. 72 ; Union R. & Transit Co. v. Skinner, 9 Mo. App. 189. In Boston &c. Glass Co. V. Boston, 4 Mete. (Mass.) 181, it was held that "payment of taxes to a collector, who has a tax bill and warrant in the form prescribed by law, is to be regarded as com- pulsory payment; and if such taxes were assessed without au- thority, they may be recovered back in an action for money had and received, although the party made no protest before payment." In Union Bank v. Mayor &c. of New York, 51 Barb. (N. Y.) 159, the trial court held that payment of an illegal tax, under a notice from the receiver of taxes that unless paid a penalty would be imposed by way of interest, and a warrant would be issued, was a voluntary payment. The Commis- sioner of Appeals, in Union Nat. Bank V. Mayor &c., 51 N. Y. 638, held that such payment was not voluntary and reversed the decision, following Bank of Commonwealth v. The May- or, 43 N. Y. 184. In Allen v. Bur- Hngton, 45 Vt. 202, the court : "If the plaintiff was constrained to pay the tax, to save his property from distress, and to avoid a penalty and costs, it was not a voluntary pay- ment." "'Lindsay v. Allen, 19 R. I. 721, 26 Atl. 840; Parcher v. Marathon, 52 Wis. 388, 9 N. W. 23, 38 Am. Rep. 745. A party who, when threat- ened with distress, pays an illegal tax under protest and notice of suit, may maintain an action to recover it back. Grim v. Weissenberg School District, 57 Pa. St. 433, 98 Am. Dec. 237. 641 IMPLIED CONTRACTS. § 1 388 payment is to be regarded as involuntary which is made under a claim involving the use of force as an alternative."'' The rule was stated by Chief Justice Shaw of Massachusetts, as follows: "Where therefore a party not liable to taxation, is called on per- emtorily to pay upon such a warrant, and he can save himself and his property in no other way than by paying the illegal demand, he may give notice, that he so pays it by duress and not voluntarily, and by showing that he is not liable, recover it back, as money had and received."^ Upon this theory the payment of a water license, under threat of turning off the water in case of continued re- fusal, was held payment under compulsion.^ § 1388. Money paid by or under mistake. — As has already been indicated, the law regards a party who through mistake, misapprehension or forgetfulness of the facts receives money to which he is not justly and legally entitled and which he ought not in good conscience to retain, as a receiver and holder of the money for the use of the lawful owner of it, and raises an implied promise on his part to pay it over to such owner.^ An error of fact takes place when some fact which really exists is unknown, or some fact is supposed to exist which really does not exist.* Where there has been an accounting and settlement between par- ties on the basis of merchant's book entries, and afterward an error is discovered in the account by crediting a single item twice or wrongly adding a column of figures, an action at law will lie to recover the balance paid by reason of such mistake.^ So an illiterate debtor who on account of forgetting one pay- ••Atwell V. Zeluff, 26 Mich. 118. Co., 50 Minn. 175, 52 N. W. 527. 36 ^Preston v. Boston, 12 Pick. Am. St. 635; Westlake & Button v. (Mass.) 7. When the tax paid is St. Louis, 11 Mo. 47, 46 Am. St. 4. illegally assessed, and is paid under ' See ante, § 1372. protest, under compulsion, or with * Calkins v. Griswold, 11 Hun (N. notice that the party intends to in- Y.) 208. But where a person is truly stitute suit to test the validity of the acquainted with the existence or tax, it may be recovered back of a nonexistence of facts, but is ignorant collector in an action for money had of the legal consequences he is un- and received, unless the statute pre- der an error of law. Mowatt v. scribes some other remedy, or has Wright, 1 Wend. (N. Y.) 355, 19 annexed other conditions to the right Am. Dec. 508. to sue. State Tonnage Tax Cases, 'Davis v. Krum. 12 Mo. App. 279; sub nomine Cox v. Lott, 12 Wall. Budd v. Eyermann, 10 Mo. App. 437 ; (U. S.) 204, 20 L. ed. 370. Hanson v. Jones, 20 I\Io. App- 595. ^Panton v. Duluth Gas & Water 41 — CoNTKACTS. Vol. 2 § 1389 CONTRACTS. 642 ment made by him and the receipt therefor pays more than is due, may recover the overpayment.'^ One who through ignorance or forgetfulness overpays an obHgation or pays it a second time may recover the excess payment.^ An indorser of a note has been allowed to recover money paid by him under the mistaken belief that the note had been duly presented for payment;* but courts do not relieve against every mistake a party may make in his business transactions. A mis- take in a matter of fact to be a ground of relief must be of a material nature, inducing or influencing the agreement, or in some matter to which the contract is to be applied.'' Money paid by mistake of fact cannot be reclaimed when the defendant received it in good faith in satisfaction of his equitable claim, nor when it was due in honor and conscience." § 1389. Payments by banks — Insurance companies — Gen- eral matters. — In this connection it is proper to mention that it is a general rule sustained by almost universal authority that a payment, in the ordinary course of business, of a check or other paper by a bank upon which it is drawn, under the mistaken belief that the drawer has funds in the bank sufficient to meet it, is not such a payment under a mistake of fact as will permit the bank to See also, Lucas v. Worswick, 1 Int. (Pa.) 392; Guild v. Baldridge, Moody & R. 293. 2 Swan. (Tenn.) 295; Hummel v. "Simms V. Vick, 151 N. Car. 78, Flores (Tex. Civ. App.), 39 S. W. 65 S. E. 621, 24 L. R. A. (N. S.) 309. 517 and note. ' * Talbot v. National Bank of the ' McDermott v. Hickling, 23 Cana- Commonwealth, 129 Mass. 67, Zl dian L. T. (Occ. N.) 40, 1 Ont. Am. Rep. 302. Week. Rep. 19, 768; Citizens' Bank *Maxfield v. Seabury, 75 Minn. 93, V. Rudisill, 4 Ga. App. 2>1, 60 S. E. 11 N. W. 555; Southwick v. First 818; International Bank v. Barta- Nat. Bank, 84 N. Y. 420; Buffalo v. lott, 11 111. App. 620; Chickasaw O'Malley, 61 Wis. 255, 20 N. W. 913, County Farmers' Mut. Fire Ins- Co. 50 Am. Rep. 137. (Action to recover V. Weller, 98 Iowa 731, 68 N. W. the sum of $40, alleged to have been 443; Rhodes v. Lambert, 22 Ky. L. overpaid for the transportation of 691, 58 S. W. 608; Beasley v. Allen, tan-bark. At the place of shipment 11 Rob. (La.) 502; Baltimore & S. it measured sixty-three cords, and R. Co. V. Faunce, 6 Gill- (Md.) 68, three cords were allowed for shrink- 46 Am. Dec. 655 ; Garrison v. Mur- age on repiling. On being repiled phy, 2 Nebr. (Unof.) 696, 89 N. at Duluth in the manner customary W. 1(£; Pool V. Allen, 29 N. Car. there, it measured but forty cords.) 120; Mitchell v. Walker, 30 N. Car. "Moore v. Eddowes, 2 Ad. & El. 243; Norman v. Will, 1 Ohio Dec. 133; Farmer v. Arundel, 2 Wm. Bl. 261; Kerr v. Ames, 39 Phila. Leg. 824. 643 IMPLIED CONTRACTS. § I390 recover the money so paid." The same rule apphes where a bank pays a check in ignorance of the insolvency of the drawer, who is indebted to it/" The reason for this rule is found in commercial necessity and usage.^^ If it appear that the party paying has re- ceived and enjoyed a benefit or consideration, he will not be aided by a court of equity in recovering back that which he has paid, but which he could have been compelled to pay had he resisted in the outset." It has also been held that an insurance company cannot recover money paid in settlement of a life insurance policy on the life of one erroneously supposed to be dead for the reason that there had been a voluntary payment in extinguishment of a claim under an assumption of fact known to both parties to be doubt- ful.^° Moreover, it is said that the mistake which is relied upon as the basis of recovery must arise in the transaction between the parties to the action and even then there can be no recovery if the party who receives the payment has no knowledge of the mistake under which it is made and has by reason of it so changed his po- sition to his prejudice that it would be unjust to require him to re- fund. ^« § 1390. Effect of negligence upon the right of recovery. — If the money be paid under the impression of the truth of a fact which is untrue, it may, generally speaking, be recovered, however careless the party may have been in omitting to use due diligence "* Citizens' Bank v. Schwarzschild R. A. (N. S.) 233n. 120 Am. St. 444. Sulzberger Co., 109 Va. 539, 64 S. See also. Sears v. Grand Lodge &c., E. 954, 23 L. R. A. (N. S.) 1092 163 N. Y. 374, 57 X. E. 618. 50 L. R. and note; Spokane &c. Trust Co. v. A. 204. Compare with Masonic Life Huff, 63 Wash. 225, 115 Pac. 80, 33 Assn. v. Crandall, 9 App. Div. (X. L. R. A. (X. S.) 1023 and note. Y.) 400, 75 X. Y. St. 890, 41 X. Y. ^American Xat. Bank v. Miller, S. 497; Riegel v. American Life Ins. 185 Fed. 338; National Exch. Bankv. Co., 140 Pa. St. 193, 21 Atl. 392, 25 Ginn, 114 Md. 181, 78 Atl. 1026, 33 Atl. 1070. 11 L. R. A. 857. 23 Am. L. R. A. (N. S.) 963. St. 225, affd. 153 Pa. St. 134, 25 Atl. " It may be otherwise, however, 1070, 19 L. R. A. 166. when the drawee or payee induces " "When money has been received the bank to make the payment by by a person in good faith, in the usu- fraudulent and false misrepresenta- al course of business and for a valu- tions. James River X'^at. Bank v. able consideration, it can not be Weber, 19 N. Dak. 702, 124 N. W. pursued into his hands by one from 952. whom it has been obtained through "Louisville v. Zanone, 1 Mete, the fraud of a third person." Ball (Ky.) 151. V. Shepard. 202 X. Y. 247, 95 X. E. " Xew York Ins. Co. v. Chittenden, 719, quoting from Xassau Bank v. 134 Iowa 613, 112 N. W. 96, 11 L. National Bank, 159 N. Y. 456, 54 N. s 1390 CONTRACTS. 644 to inquire into the facts/^ Some authorities seem to countenance the doctrine that a recovery cannot be had where the party paying has access to information which he, by his own laches, neglects to acquire.^* But it is generally held that the fact of the plain- tiff's mistake having been caused by his own negligence will not necessarily, in the absence of other facts, bar a recovery/^ And the general rule is that negligence will not bar a recoveiy where the defendant can be put in statu quo.-° When, however, the sit- uation of the party receiving the money has been changed in con- sequence of the payment, and it would be inequitable to allow a E. 66. See also, Citizens' Bank v. Rudisill, 4 Ga. App. Z7, 60 S. E. 818. "Kelly V. Solari, 9 M. &. W. 54; McDermott v. Hickling, 23 Can. L. T. (Occ. N.) 40, 1 Ont. Week. Rep. 19, 768; Fraker v. Little, 24 Kans. 598, 36 Am. Rep. 262; Baltimore & S. R. Co. V. Faunce, 6 Gill. (Md.) 68, 46 Am. Dec. 655; Koontz v. Cen- tral Nat. Bank, 51 Mo. 275; Alston V. Richardson, 51 Tex. 1. See also. Guild V. Baldridge, 2 Swan. (Tenn.) 295. "West V. Houston, 4 Har. (Del.) 170; Wheeler v. Hatheway, 58 Mich. 77, 24 N. W. 780; Peterborough v. Lancaster, 14 N. H. 382; Brummitt V. McQuire, 107 N. Car. 351, 12 S. E. 191; Buffalo v. O'Malley, 61 Wis. 255, 20 N. W. 913, 50 Am. Rep. 137. See also, McClure v. Trask, 161 N. Y. 82, 55 N. E. 407, affg. 20 App. Div. (N. Y.) 466. " Money paid under a mistake of the payor, as to a material fact, may be recovered by him, though at the time of making such payment he possessed, but neglected to use, the means of ascertaining the actual fact. Brown v. College Corner &c. Road Co., 56 Ind. 110. "If, in con- sequence of such mutual mistake, one party has received the property of the other, he must refund, and this, without reference to vigilance and negligence. * * * In cases of bargains and sales, the rule is ap- plicable, vigilantibus non dormient- ibus leges subvenient," per Hunt, Ch. J., in Kingston Bank v. Eltinge, 40 N. Y. 391, 100 Am. Dec. 516. _ "It is well settled by recent decisions that money paid to the holder of a check or draft drawn without funds may be recovered back, if paid by the drawee under a mistake of fact. And though the rule was orig- inally subject to the limitation that it must be shown that the party seeking to recover back if paid by the drawee by a mistake of fact had been guilty of no negligence, it is now held that the plaintiff in such cases is not precluded from recovery by laches in not availing himself of the means of knowledge in his power" per Colt, J., in Merchant's Nat. Bank v. National Eagle Bank, 101 Mass. 281, 100 Am. Dec. 120. Where the teller of a bank saw fit to check without taking the pre- caution to inform himself of the state of the account of the drawer whose balance on deposit was not sufficient to meet it, it was held that there was nothing in the transaction which bore the character of a mis- take of facts, in a legal sense, but only that of laches, and the plaintiff was not entitled to recover the money back. Boylston Nat. Bank v. Richardson, 101 Mass. 287. In Mil- nes v. Duncan, 6 B. & C. 671, Bay- ley, J., said : "If a party pay money under a mistake of the real facts, and no laches are imputable to him (in respect of his omitting to avail himself of the means of knowledge within his power), he may recover back such money." But the rule on this subject has ceased to be thus limited. ="Devine v. Edwards, 101 111. 138; Wilson V. Barker, 50 Maine 447; Appleton Bank v. McGilvray, 4 Gray (Mass.) 518, 64 Am. Dec. 92; 645 IMPLIED CONTRACTS. § 1 39 1 recovery, the payment cannot be recalled. In such a case, the person making the payment must bear the loss occasioned by his own negligence."^ § 1391. Recovery of money paid under mistake of law. — Generally, money paid under a mere mistake of law cannot be re- covered, although it is against conscience for the defendant to retain it."" The general principle is that where the party with full knowledge, actual or imputed, of the facts, there being no duress, fraud or extortion, voluntarily pays money on a demand, although not enforcible against him, he cannot recover it back." Accordingly, a party who overpaid to a building association in dues, premium and interest cannot recover it back in action, where it was a voluntary payment, in ignorance of the law, and received in good faith."* And where an administrator paid money to a distributee of his intestate, with full knowledge of the facts, but under a mistake of law, it was held that he could not recover it, unless it was necessary to pay the debts of the intestate.^^ Koontz V. Central Nat. Bank, 51 burgh Sav. Bank v. Woodbury, 64 Mo. 275 ; Lawrence V. American Nat. App. Div. (N. Y.) 305. 12 N. Y. Bank 54 N. Y. 432. S. 222. affd. 173 N. Y. 55, 65 N. E. ^Walker v. Conant, 65 Mich. 194; 858; Flower v. Lance, 59 N. Y. 603 Maver V. Mayor, 63 N. Y. 455 ; Fegan (no legal right on the part of the V. Great Northern R. Co., 9 N. Dak. creditor to demand payment in 30. 81 N. W. 39. gold) ; Real Estate Savings' Institu- ''Bilbie v. Lumley, 2 East 469; tion v. Linder. 74 Pa. St. 371; Rogers v. Ingham, L. R. 3 Ch. Div. Natcher v. Natcher, 47 Pa. St. 496: 351; Lowry v. Bourdieu, 2 Dougl. Markley v. Stevens, 89 Pa. St. 279; 468; Brisbane v. Dacres, 5 Taunt. Galveston v. Gorham, 49 Texas 279. 143 (a leading case on the subject); "Merrill v. Brantley, 133 Ala. 537, Beene's Admr. v- Collenberger. 38 31 So. 847; Heath &c. Mfg. Co. v. Ala. 647; Wingcrter v. San Fran- National Linseed Oil Co.. 93 111. App. Cisco, 134 Cal. 547, 66 Pac. 730. 86 13, 197 111. 632, 64 N. E. IZl ; Schwar- Am St 294- Gregory v. Clabrough's zenbach v. Odorless Excavating Ap- Exr, 129 Cal. 475, 62 Pac. 72; Hall paratus Co., 65 IMd. 34, 3 Atl. 676, v. Farmers' Bank, 23 Ky. L. 1450, 65 57 Am. Rep. 301 ; Potomac Coal v. S. W. 365; Norris v. Blethen, 19 Cumberland & P. R. Co., 38 Md. 226 Maine 348; Parker v. Lancaster, 84 (to recover back freights paid in Maine 512, 24 Atl. 952; Regan v. excess of proper rates); Taber v. Baldwin, 126 Mass. 485, 30 Am. New Bedford, 177 IMass. 197, 58 N. Rep 689; Claflin v. McDonough, Zl E. 640; United States v. Wilson, 168 Mo. 412. 84 Am. Dec. 54; Campbell U. S. 273, 42 L. ed. 464, 18 Sup. Ct. v. Clark, 44 IMo. App. 249; Phoenix 85. Ins. Co. V. Hovt, 3 Nebr. (Unof.) =^Dilzer v. Buildmg Assn., 39 Leg. 94, 91 N. W. 186; Eaton v. Eaton, 35 Int. (Pa.) 383. N. J L. 290: Third Ave. R. Co. v. " Shriver v. Garrison, 30 W. Va. Klinker. 29 Civ. Pro. (N. Y.) 51,92 456. N. Y. St. 136,58N.Y. S. 136; New- § 139- CONTRACTS. 646 § 1392. Ignorantia juris neminem excusat — Exception in the case of ignorance of a foreign law. — When the party al- leges merely a mistake of law, the maxim applies, ignorantia juris neminem excusat.-*' It is a rule of law as well as of good faith, and precludes the court being occupied in undoing the ar- rangements of parties, which they have voluntarily made, and into which they have not been drawn by fraud or accident, or by any excusable ignorance of their legal rights and liabilities." But an exception or qualification has been made to this rule where a mistake was made as to law of the jurisdiction foreign to the plaintiff and to the jurisdiction in which the action was brought.^^ § 1393. Contribution. — Where two or more persons are jointly liable to pay a claim and one or more of them pays the whole of it, or more than his or her share, the one so paying may generally recover from the others the ratable proportion of the claim that each ought to pay.^'' The right to contribution does not arise out of any express contract or agreement between the parties to indemnify each other, but on the broad principles of equity which courts of law enforce that where two persons are subject to a common burden it shall be borne equally between them. The law implies a contract between the parties to contribute ratably toward the discharge of the obligation.^'' It is immaterial whether ^'This maxim is a fundamental v. Sacchi, 57 N, Y. 331; Harbach's one, and has always been received, Admrs. v. Elder, 18 Pa. St. 33- The with some few exceptions, as an ele- right to enforce a contribution is mentary principle of the common law not complete until there has been an for many years. Peterborough v. actual payment. Yore v. Yore Lancaster. 14 N. H. 382. Royston v. (Mo.), 144 S. W. 847. Miller, 76 Fed. 50 ; Ege v. Koontz, 3 "" Bering v- Winchelsea, 1 Cox. Pa. St. 109. 318, 2 B. & P. 270; Cowell v. Ed- " Chicago V. Sperbeck, 69 111. App. wards, 2 Bos. & Pul. 268; Stirling v. 562. Forester, 3 Bligh 575 ; Craythorne v. "^See Haven v. Foster, 9 Pick. Swinburne, 14 Ves. Jr. 160; Lingard (Mass.) 112, 19 Am. Dec. 353, where v. Bromley, 1 Ves. & B. 114; Hart- the plaintiff had money paid to the ly v. O'Flaherty, Beatty 61, 77; White defendant under a mistake as to the v. Banks, 21 Ala. 705, 56 Am. Dec. law of New York. Foreign laws 283; Owen v. McGehee, 61 Ala. 440; are generally regarded as facts. 1 Broughton v. Wimberly, 65 Ala. Elliott Ev., § 46; 1 Elliott's Gen. 549; Handley v. Heflin, 84 Ala. 600, Pr-. § 436. 4 So. 725; Bragg v. Patterson, 85 ^'Harbert's Case, 3 Coke, lib; Ala. 233, 4 So. 716; Chipman v. Mor- Stirling v. Forester, 3 Bligh 575; rill. 20 Cal. 130; Bulkeley v. House, Bailey v. Bussing, 28 Conn. 455 ; 62 Conn. 459, 26 Atl. 352, 21 L. R. A. Booth V. Farmers' & Mechanics' 247; Havden v. Thrasher, 28 Fla. 162, Nat. Bank, 74 N. Y. 228; Aspinwall 9 So. 855; West v. Chasten, 12 Fla. 647 IMPLIED CONTRACTS. 1393 the parties are jointly or jointly and severally liable as principal debtors.^^ In order to enforce contribution the payment must 315; Sledge v. Dobbs, 254 111. 130. 98 N. E. 243; Golscn v. Brand, 75 111. 148; Falley v. Gribling, 128 Ind. 110, 26 N. E. 794; Thomas v. Thomas, 2 J. J. Marsh. (Ky.) 60; Mitchell's Admr. v. Sproul, 5 J. J. Marsh. (Ky.) 264; Lans- dale's Admr. v. Cox, 7 T. B. Men. (Ky.) 401; Breckenridge v. Taylor, 5 Dana (Ky.) 110; Smith's Exrs. V. Anderson, 18 Md. 520; Chaffee v. Jones, 19 Pick. (Mass.) 260; Mason v. Lord, 20 Pick. (Mass.) 447; Van Patten v. Rich- ardson, 68 Mo. 379; Fletcher v. Grover, 11 N. H. 368, 35 Am. Dec. 497; Campbell v. Mesier, 4 Johns. Ch. (N. Y.) 334, 8 Am. Dec. 570; Cuylor V. Ensworth, 6 Paige (N. Y.) 32; Norton v. Coons, 3 Den. (N. Y.) 130; Aspinwall v. Sacchi, 57 N. Y. 331; Rindge v. Baker, 57 N. Y. 209, 15 Am. Rep. 475; Wells v. Mil- ler, 66 N. Y. 255 ; Moore v. Moore, 11 N. Car. 358, 15 Am. Dec 523; Sherrod v. Woodard, 4 Dev. L. (N. Car.) 360, 25 Am. Dec. 714; Moore v. Isley, 22 N. Car. 72; Rus- sell V. Failor, 1 Ohio St. 327, 59 Am. Dec. 631 ; Camp v. Bostwick, 20 Ohio St. 337, 5 Am. Rep. 669; Oldham v. Broom, 28 Ohio St. 41; Corrigan v. Foster, 51 Ohio St. 225, 37 N. E. 263, citing 4 Am. & Eng. Encyc. of Law (1st ed.) 1; Durbin V. Kuney, 19 Oregon 71. 23 Pac. 661, citing 4 Am. & Eng. Encyc. of Law (1st ed.) 1; Harris v. Ferguson, 2 Bail. L. (S. Car.) 397; Screven v. Joyner, 1 Hill Ch. (S. Car.) 252, 26 Am. Dec. 199; McKenna v. George, 2 Rich. Eq. (S. Car.) 15; Wavland V. Tucker, 4 Grat. (Va.) 267, 50 Am. Dec. 76. ^ Lanchester v. Tricker, 1 Bing. 201, 8 E. C. L. 472; Holmes v. Will- iamson, 6 M. & S. 158: Edgar v. Knapp, 5 M. & G. 753, 44 E. C. L. 393: Burnell v. Minot, 4 Moore 340. 16 E. C. L. 375: Batard v. Hawes, 2 El. & Bl. 287, 75 E. C. L. 287; Boul- ter V. Peplow. 9 C. B. 493. 67 E. C. L. 493; Woodruff v. Glassford, 4 U. C. Q. B. (O. S.) 155: Allen v. Coy, 7 U. C. Q. B. 419; Thomas v. Hearn, 2 Port. (Ala.) 262; Bragg v. Patterson, 85 Ala. 233, 4 So. 716; Crayton v. Johnson, 27 Ala. 503 ; Green v. Mann, 76 Ga. 246; Gillilan V. Nixon, 26 111. SO; Hoyt v. Lock, 41 111. 119; Hodgson v. Baldwin. 65 111. 532; Harvey v. Drew, 82 111. 606; Judd V. Small, 107 Ind. 398, 8 N. E 284; Minnis v. Johnson, 1 Duv. (Ky.) 171; Dupuy v. Johnson, 1 Bibb (Ky.) 562; Owens v. Collin- son, 3 Gill & J. (Md.) 25; Packard V. Nye, 2 Met. (Mass.) 47; Snyder v. Kirtley, 35 Mo. 423 ; Van Petten y. Richardson, 68 Mo. 379; Labeaume V. Sweeney, 7 Mo. 153 ; Parker v. Ellis, 2 Sandf. (N. Y.) 223; Ransom V. Keyes, 9 Cow. (N. Y.) 128; Mc- Cready v. Van Antwerp, 24 Hun (N. Y.) 322; Weed v- Calkins. 24 Hun (N. Y.) 582; Coburn v. Wheelock, 34 N. Y. 440; Finlay v. Stewart, 56 Pa. St. 183; Morris v. Davis (Tex. Civ. App.), 31 S. W. 850; Graves v. Smith, 4 Tex. Civ. App. 537, 23 S. W. 603. "When several persons de- sire to bring about the same result, one which will be of pecuniary ad- vantage to each, and agree to unite and make common cause each with all others in the undertaking, and join in the appointment of the same agent for tho accomplishment of their purpose, as between themselves each is bound to contribute his pro- portion to the consequent expense; that proportion to be determined by the number uniting, or by a rule established by themselves, or by such equities as may arise from the cir- cumstances attending the transaction. And, if one of them pays, either upon the judgment of a court or voluntar- ily, a claim justly due from all, each of the others is under obligation so to contribute to his repayment as that the final result shall be that each solvent person has paid his pro- portion." Security Ins. Co. v. St. Paul &c. Ins. Co., 50 Conn. 233. See also, Norris v. Churchill, 20 Ind. App. 668, 51 N. E. 104. In the above case there were five joint debtors. One of the five paid his one-fifth share at the time the obliga- s 1394 CONTRACTS. 648 have been made by one obligated to pay the whole, as between himself and the payee, but only bound to pay a proportionate part as between himself and his co-obligors.^- § 1394. When contribution may be enforced. — Co-sure- ties,^^ co-owners of property and others of like character who are subject to common liabilities,^* partners after the partnership has tion was incurred. Subsequently two of the five became insolvent and appellee, Churchill, was compelled to pay in addition to his own share the shares of these two insolvents. It was held that he might enforce contribution for appellant Norris, notwithstanding the latter had paid his one-fifth share at the time the obligation was incurred and had been discharged by the original cred- itor. To same effect, Twichell v. Askew (Tex. Civ. App.), 141 S. W. 1072. "'Yore V. Yore (Mo.), 144 S. W. 847. See also, Twichell v. Askew (Tex. Civ. App.), 141 S. W. 1072. ""Chipman v. Morrill, 20 Cal. 130; Golsen V. Brand, 75 111. 148; Bradley V. Burwell, 3 Denio (N. Y.) 261; Johnson v. Harvey, 84 N. Y. 363, 38 Am. Rep. 515. One co-partner or co- purchaser can in no case recover, in an action for money paid, against his co-partner or co-purchaser, until the money has actually been paid, nor then until the time of payment has ar- rived. Dedman v. Williams, 1 Scam. (111.) 154. Likewise, a surety who pays the debt before maturity can recover indemnity or enforce contri- bution at maturity but not before. Jackson v. Adamson, 7 Blackf. (Ind.) 597; Ross v. Menefee, 125 Ind. 432, 25 N. E. 545; Tillotson v. Rose, 11 Mete. (Mass.) 299; Armstrong v. Gilchrist, 2 Johns. Cas. (N. Y.) 424; Craig V. Craig, 5 Rawle (Pa.) 91. So, at common law, sureties who pay the debt of their principal may main- tain an action in assumpsit in exon- eration or for reimbursement. Hud- son V. Amon (N. Car.), 74 S. E. 97, and cases there cited. ** Following cases relate to pay- ment of mortgage; Young v. Will- iams, 17 Conn. 393; Titsworth v. Stout, 49 III. 78, 95 Am. Dec. 577; Fischer v. Eslaman, 68 111. 78; Bris- coe V. Power, 85 111. 420; Carter v. Penn, 99 111. 390; Vogle v. Brown, 120 111. 338, 11 N. E. 327, 12 N. E. 252; Jones v. Gilbert, 135 111. 27, 25 N. E. 566; Allen v. Clark, 17 Pick. (Mass.) 47; Taylor v. Porter, 7 Mass. 355; Cheesebrough v. Millard, 1 Johns. Ch. (N. Y.) 409, 7 Am. Dec. 494; Sawyer v. Lyon, 10 Johns. (N. Y.) 32. The following to pur- chase-money liens : Newbold v. Smart, 67 Ala. 326; Brown v. Budd, 2 Ind. 442; Soule v. Frost. 76 Maine 119; Leitch v. Little, 14 Pa. St. 250; Wall's Admrs. v. Fife, Z7 Pa. St. 394; Furman v. McMillian. 2 Lea (Tenn.) 121; Rankin v. Black, 1 Head (Tenn.) 650; Gee v. Gee, 2 Sneed (Tenn.) 395. The following to the payment of taxes assessed against the land : Moore v. Woodall, 40 Ark. 42; Cocks v. Simmons, 55 Ark. 104, 17 S. W. 594, 29 Am. St. 28; Eads v. Retherford, 114 Ind. 273, 16 N. E. 587, 5 Am. St. 611; Oliver V. Montgomery, 39 Iowa 601, 42 Iowa 2i6; Weare v. Van Meter, 42 Iowa 128, 20 Am. Rep. 616; Kites v. Church, 142 Mass. 586, 8 N. E. 743; Hurley v. Hurley, 148 Mass. 444. 19 N. E. 545, 2 L. R. A. 172; Davidson V. Wallace, 53 Miss. 475; Allen v. Poole, 54 Miss. 323; Harrison v. Harrison, 56 Miss. 174; Clark v. Lindsey, 47 Ohio St. 437, 25 N. E. 422, 9 L. R. A. 740. See, however, Kean v. Connelly, 25 Minn. 228, 33 Am. Rep. 458. The same principle applies to ground rent. Donagan v. McKee, 13 Phila. (Pa.) 48. When one of several joint tenants or ten- ants in common buys up a superior title the other tenants have a right to share in the interest so acquired upon contributing their ratable pro- portion of the amount paid ; but they cannot share in the benefits unless 649 IMPLIED CONTRACTS. § 1394 been closed" or where there is an agreement between such part- ners to adjust a single item without a general accounting,^" joint tort feasors liable for the tort when the act was committed with- out guilty knowledge or intent" or when the plaintiff does not join in the commission of the wrongful act but is nevertheless ex- posed to liability and suffers damage by reason of the negligence or wrongful act of another,^"'' may enforce contributions when the parties are in equity, and one of them has been compelled to pay the whole or more than his share on the obligation."^ they so contribute. Rothwell v. De- wees. 2 Black. (U. S.) 613, 17 L. ed. 309. To same eflfect, Titsworth v. Stout. 49 111. 78, 95 Am. Dec. 577; Sneed's Heir v. Atherton, 6 Dana (Ky.) 276. 32 Am. Dec. 70; Lee v. Fo.x, 6 Dana (Ky.) 171; Farmer v. Samuel, 4 Litt. (Ky.) 187, 14 Am. Dec. 106; Van Horn v. P'onda, 5 John. Ch. (N. Y.) 388. == Johnson v. Peck, 58 Ark. 580, 25 S. W. 865 ; Mussetter v. Timmerman, 11 Colo. 201, 17 Pac. 504; Wendlandt V. Sohre, Zl Alinn. 162; Brown v. Agncw, 6 Watts & S. (Pa.) 235. '"Foster v. Allanson, 2 T. R. 479; Blakely v. Graham, HI Mass. 8; Gib- son V. Moore, 6 N. H. 547. "Battersey's Case, Winch 48; Betts V. Gibbins, 2 Ad. & El. 57, 29 E. C L. 47; Moore v. Appleton, 26 Ala. 633 ; Coit v. Tracy, 9 Conn 1 ; Bailey V. Bussing, 28 Conn. 455; Herr v. Barber, 2 Mackey (D. C.) 545; Gower v. Emerv, 18 Maine 79; Jacobs V. Pollard, 10 Cush. (Mass.) 287, 57 Am. Dec. 105; Smith v. Ayrault, 71 Mich. 475; Ankenv v. Moffett, Zl Minn. 109, Z2> N. W. 320; Johnson V. Torpy, 35 Nebr. 604. 53 N. W. 575, n Am. St. 447 ; Acheson v. Mil- ler, 2 Ohio St. 203, 59 Am. Dec. 663; Horbach's Admr. v. Eider. 18 Pa. St. Z}) ; Armstrong County v. Clarion Countv. 66 Pa. St. 218, 5 Am. Rep. 368; Gulf &c. R. Co. v. Galveston &c. R. Co., 83 Texas 509, 18 S. W. 956; Thweatt v. Jones, 1 Rand. (Va.) 328, 10 Am. Dec. 538. See also. Bus- kirk V. Sanders (W. Va.), IZ S. E. 937. Contribution will not be en- forced between joint tort feasors who are in pari delicto. Burke v. Hodge (Mass.), 97 N. E. 920. See also, Dow V. Sunset Tel. &c. Co. (Cal.), 121 Pac. 379; Longworth v. Stevens (Tex. Civ. App.), 145 S. W. 257. "a Pearson v. Skelton, 1 M. & W. 504; Wooley v. Batte, 2 C & P. 417, 12 E. C. L. 649; Bailey v. Bussing, 28 Conn. 455; Smith v. Foran, 43 Conn. 244, 21 Am. Rep. 647; Penn- sylvania Steel Co. V. Washington &c. B'ridge Co., 194 Fed. 1011; Horbach's Admrs. v. Elder, 18 Pa. St. ZZ ; Union Stock Yards Co. v. Chicago &c. R. Co., 196 U. S. 217, 49 L. ed. 453, 25 Sup. Ct. 226; Robbins v. Chicago, 4 Wall. (U. S.) 657, 18 L. ed. 427. It is, of course, true, as a general rule, that one of several wrongdoers can- not recover against another wrong- doer, although he may have been com- pelled to pay all the damages for the wrong done, for the reason that the parties are in pari delicto. See Merryweather v. Nixan, 8 T. R. 186, which is the leading case on the sub- ject. See also cases cited ante, this note, and chaps. 21, 28. ''b"The right to contributions being founded in natural justice, is not restricted to any special relation, but applies to original contractors, or any other relation, where equity be- tween the parties is equality of bur- den, and one discharges more than his share of the common obligation." Bragg V. Patterson, 85 .•Ma. 233, 4 So. 716; Aspinwall v. Sacchi, 57 N. Y. 331. See also, Baltimore &c. R. Co. V. Walker, 45 Ohio St. 577, 16 N. E. 475 (railroad companies bound to repair a crossing). See also, the fol- lowing cases which relate to contribu- tions among fraudulent grantees of land: Janvrin v. Curtis, 63 N. H. § 1395 CONTRACTS. 65O § 1395. Goods sold and delivered. — When goods are sold and delivered to another without any agreement as to the price to be paid therefor the law implies that the buyer will pay a rea- sonable price for them.^^ Ordinarily the market price at the time and place of delivery is considered as the reasonable worth of the goods. ^^ But this is untrue when the market is unnaturally in- flated.'*" Thus, where the seller and all the other makers have combined for the purpose of controlling the price, the price so fixed is not necessarily the amount to be paid for it, but the price is only what the article is reasonably worth.*^ It has been held that there can be no recovery on an implied contract for the price of goods sold and delivered if the vendor can maintain an action on a special contract which relates to that price.*^ § 1396. Board and lodging. — It has already been pointed out that as between members of the same family services rendered by each to the other are considered as having been gratuitously performed, and there is no implied liability to pay therefor.*' But as between strangers or parties not members of the same fam- ily the law implies a promise, on the part of the recipient of board and lodging to pay therefor the reasonable value in the absence of any agreement as to price, or an express understanding to the contrary. Thus, where an invalid woman, not a relative, was received into a family and furnished a room with board and nurs- ing, the law raised an implied contract that she was to pay the reasonable value of the boarding and nursing.** Moreover, when necessities are supplied to a person who by reason of disability 312 ; Brice v. Myers, 5 Ohio 121 ; *° Kountz v. Kirkpatrick, 72 Pa. St. Chamberlayne v. Temple, 2 Rand. 376, 13 Am. Rep. 687. (Va.) 384, 14 Am. Dec. 786. See "Lovejoy v. Michels, 88 Mich. 15, Cornish V. Clark, L. R. 14 Eq. 184. 49 N. W. 901, 13 L. R. A. 770. "' Hoadly v. M'Laine, 10 Bing. 482 ; " Carter v. McNeeley, 1 Ired. L. Valpy V. Gibson, 4 C. P. 837; Shealy CN. Car.) 448. See, generally, 3 El- V. Edwards, 73 Ala. 175, 49 Am. Rep. liott Ev., § 1732; St. Louis Hay &c. 43- McEwen v. Morey, 60 111. 32; Co. v. United States, 191 U. S. 159, Taft V. Travis, 136 Mass. 95; James 48 L. ed. 130, 24 Sup. Ct. 47. V. Muir, 33 Mich. 223. " See ante, § 1366 et seq. "* McEwen v. Morey, 60 III. 32; ** McQueen v. Wilson, 51 Mo. App. Fenton v. Braden, 2 Cranch (U. S.) 138. See also, to same effect, Hardi- 550, Fed. Cas. No. 4730. man's Admr. v. Crick, 131 Ky. 358, 115 S. W. 236, 133 Am. St. 248n. 651 IMPLIED CONTRACTS. § 1 397 cannot himself contract, as in case of a lunatic, the law implies an obligation on the part of such imbecile to pay for such necessities out of his own pocket.** An infant is held liable for necessities furnished in the absence of an express contract. The law implies a promise to pay for the necessities of his situation just as in the case of a lunatic.'**' So, if a person furnishes necessities to a wife which the husband was under a duty to supply, the law implies a promise on the part of the husband to pay therefor." § 1397. Use and occupation. — The possession and bene- ficial enjoyment of real property with the permission of the owner is ordinarily sufficient to sustain an action upon an implied agree- ment for use and occupation.** In such cases the law will imply that the relation of landlord and tenant exists in the absence of any evidence to the contrary,*^ and this is true even though there should exist between the parties no express and definite agreement to pay rent.*" The law will in a proper case imply a promise to pay rent." There can, however, be no recovery for the use and occupation of real estate unless the relation of landlord and tenant exist between the parties expressly or by implication. °^ Conse- "See ante, § 27?>, Insane Persons, (N. S.) (N. Y.) 140; Baxter v. Contracts for Necessities. West, 5 Daily (N. Y.) 460; CoUyer "Dumser v. Underwood, 68 111. v. Collyer, 113 N. Y. 442, 21 N. E. App. 121 ; Trainer v. Trumbull, 141 114. See also, Chattanooga Brewing Mass. 527, 6 N. E. 761; Epperson v. Co. v. Smith (Ala.), 58 So. 6Z. Nugent, 57 Miss. 45, 34 Am. Rep. *" Skinner v. Skinner, 38 Nebr. 756, 434; Gay v. Ballou, 4 Wend. (N. Y.) 57 N. W. 534. 403, 21 Am. Dec. 158; Parsons v. '"Wilkinson v. Wilkinson, 62 Mo. Keys, 43 Texas 557. See also, ante, App. 249. § 295 et seq.. Infants Necessities. " United States v. Whipple Hdw. ^'Eiler V. Crull, 99 Ind. 375; Wat- Co., 191 Fed. 945, 112 C C. A. 357; kins V. De Armond, 89 Ind. 553 (In Devereux v. Fleming, 53 Fed. 401; this case the husband gave notice Dickson v. Moffat, 5 Colo. 114; Gunn that he would not be responsible for v. Scovil, 4 Day (Conn.) 228, 4 Am. necessities furnished his wife after Dec. 208; Wills v. Wills, 34 Ind. 106; he had driven her from his home.) ; Logan v. Lewis, 7 J. J. Marsh (Ky.) Cunningham v. Rearden, 98 Mass. 3; Skinner v. Skinner, 38 Nebr. 756. 538, 96 Am. Dec. 670. See also, ante, 57 N. W. 534 ; Hayes v. Acre, Con- ch. 13, Married Women. And see, ference (N. Car.) 19; Sutton v. as to implied promise of father to Mandeville. 1 Munf. (Va.) 407, 4 pav for board and lodging of child. Am. Dec. 549; Eppes' Exrs. v. Cole, Nichole V. Allen, 3 Car. & P. 36. But 4 Hen. & I\I. (Va.) 161, 4 Am. Dec. compare as to illegitimate child, 512. Moncrief v. Ely, 19 Wend. (N. Y.) "In a case where a wife was per- 405. mitted to recover from her husband "Newport v. Saunders, 3 B. & Ad. a fair and reasonable compensation 411 ; Osgood v. Dewey, 13 Johns. (N. for his tise and occupation of her real Y.) 240; Coit v. Planer, 4 Abb. Pr. estate, the court said: "From the 1398 CONTRACTS. 652 quently, the action cannot be maintained when an express contract between the parties shows that it was not intended by them to give rise to the relation of landlord and tenant, as where one takes possession under a contract of sale,*^^ or where the one sought to be charged entered as a mere trespasser and remained such during the term of his occupancy.^* § 1398. Waiver of torts and suing on implied contracts. — In a proper case the law permits a party to treat that which is a tort as having created a contract between himself and the tort feasor, and allows the party wronged to choose between an action in tort or one for a breach of an implied contract, and in case he pursues the latter remedy, he is said to have waived the tort and sued in assumpsit.^^ The most conspicuous example of this foregoing authorities we deduce the following principles: (1) To sustain an action for use and occupation of real estate the relation of landlord and tenant must exist between the parties, based on an agreement, ex- pressed or implied. (2) One in the exclusive possession of real estate of another with the latter's knowledge, in the absence of all evidence on the subject, will be presumed in the pos- session by the owner's permission. (3) That the law, in the absence of all evidence to the contrary, will im- ply the existence of the relation of landlord and tenant between two par- ties, where one owns land, and by his permission it is used and occupied by the other. (4) That, if the ten- ant's use and occupation has been beneficial to him, that is sufficient ground from which to imply a prom- ise on his part to pay a reasonable compensation for such use and oc- cupation, in the absence of any evi- dence negativing such promise. Skinner v. Skinner, 38 Nebr. 756, 57 N. W. 534. See also, Winterbottom V. Ingham, L. R. 7 Q. B. 611; Belger v. Sanchez, 137 Cal. 614, 70 Pac. 738 ; Johnson v. Hibbert (Del.), 82 Atl. 86; Janouch v. Pence, 68 Nebr. 867, 93 N. W. 217; Carpenter v. United States, 17 Wall. (U. S.) 489, 21 L. ed. 680, 9 Ct. CI. (U. S.) 18. "Kirtland v. Pounsett, 2 Taunt. 145; Smith v. Stewart, 6 Johns. (N. Y.) 46, 5 Am. Dec. 186 (defendant entered under a contract for a deed) ; Carpenter v. United States, 17 Wall. (U. S.) 489, 21 L. ed. 680, 9 Ct. CI. (U. S.) 18. (Parol contract to buy on behalf of the United States cer- tain real estate. Officers of the gov- ernment entered into possession, and retained possession until some three years later when the deal was closed and the money paid. The plaintiff then brought this action to recover for use and occupation during the three years the government had been in possession, the legal title, how- ever, during the three-year period rested in the plaintiff and it was held he could not recover.) "Dixon v. Ahern, 19 Nev. 422, 14 Pac. 598; National Oil Refining Co. v. Bush, 88 Pa. St. 335 ; Ackerman v. Lyman, 20 Wis. 454. See also. United States v. Whipple Hdw. Co., 191 Fed. 945, 112 C. C. A. 357. See also, post, § 1398, Waiving Torts and Suing on Contracts, and 3 Elliott Ev., § 1735. "Keating v. Marsh, 1 Montagu Ayrton 582; Missouri Savings &c. Co. v. Rice, 84 Fed. 131, 28 C. C. A. 305; Whittenten Mfg. Co. v. M. & O. Packet Co., 21 Fed. 896; A. G. Rhodes &c. Co. v. Jenkins, 2 Ga. App. 475, 58 S. E. 897 (holding that where one's money is wrongfully obtained the damage may be waived and an action brought for money had and (^53 IMPLIED CONTRACTS. § 1399 principle is found in those cases in which one's goods have been taken from him or detained unlawfully under such circumstances as would entitle him to bring- an action in trover. Suits involv- ing the duty to compensate for chattels wrongfully appropriated have given rise to a conflict of autliorities. The early cases and many modern ones lay down the rule that if the wrongdoer sells the goods and receives the money the one whose goods are taken may waive the tort, affirm the sale and bring an action for money had and received for the proceeds, but that an action on the im- plied contract cannot be maintained unless the property of which the plaintiff has been deprived has been converted into money or an equivalent thereto. ^° § 1399. Rule further considered. — Under the rule as thus stated if the defendant merely converted the property to his own use,^^ or if he merely barters or exchanges the property for other property not the equivalent of money,^® the conversion could not be treated as a sale and an action brought on the implied promise to pay therefor. Subsequently, it was recognized that the general rule as stated was not without exception,^** and the rule has in received); Cooper v. Cooper, 147 Am. Dec. 555; Moore v. Richardson, ^lass. 370, 17 N. E. 892, 9 Am. St. 68 N. J. L. 305. 53 Atl. 1032; Hinds 721, 2 Keener's Cas. 358; Mississippi v. Tweddle, 7 How. Pr. (N. Y.) 278; Central R. Co. v. Fort, 44 Miss. Terrv v. Munger, 121 N. Y. 161, 24 423 ; People v. Speir, 77 N. Y. N. E. 272, 8 L. R. A. 216n, 18 Am. St. 144; 1 Elliott Gen. Pr., § 300. 803; Brush v. Batten. 15 X. Y. St. It seems to have been true originally 548; McCullough v. McCullough, 14 that one who had been injured by the Pa. St. 295; Bethlehem v. Persever- commission of a tort had no remedy ance Fire Co., 81 Pa. St. 445. other than an action in tort. Philips "Woodruff v. Zaban. 133 Ga. 24, V. Thompson, 3 Lev. 191; Jones v. 65 S. E. 123, 134 Am. St. 186n; Bar- Hoar, 5 Pick (Mass.) 285. low v. Stalworth, 27 Ga- 517. "'Potts V. First Nat. Bank, 102 Ala. '^'Fuller v. Duren, 36 Ala. 73. 76 286, 14 So. 663; Bradfield v. Patter- Am. Dec. 318; Kidnev v. Persons, 41 son, 106 Ala. 397, 17 So. 536; Hud- Vt. 386, 98 Am. Dec. 595. In the son v. Gilliland, 25 Ark. 100; Fratt case of Spencer v. Hcwett, 20 Ga. V. Clark, 12 Cal. 89; Lataillade v. 426, it is said in the head-note: "The Orena, 91 Cal. 565, 27 Pac. 924, 25 defendant took the plaintiff's wagon. Am. St. 219; Jester v. Knotts (Del.), without the plaintiff's consent, and 57 Atl. 1094; Cragg v. Arendale, 113 exchanged it for another wagon Ga. 181, 38 S. E. 399; Barlow v. Stal- which he brought to plaintiff in place worth. 27 Ga. 517; Dickinson v. Whit- of his. This the plaintiff would not ney, 4 Gilm. (111.) 406; Ward v. receive, but sued the defendant in Montgomery, 67 111. App. 346; Cooper the form of 'an action upon account' V. Helsabeck. 5 Blackf. (Ind.) 14; * * * Held, that in an action in Isaacs V. Hermann, 49 Miss. 449; that form would not lie." Floyde v. Wiley, 1 Mo. 643; Wood- '" Stockett v. Watkins, 2 Gill & J bury V. Woodbury, 47 N. H. 11, 90 (Md.) 326, 20 Am. Dec 438- Tuttle § I400 CONTRACTS. 654 most states been gradually extended until now it is held by the weight of authority that the tort may be waived and assumpsit maintained whenever the property taken has been converted either into money or into any other beneficial use by the wrongdoer and especially when it has been so applied to his use as to lose its identity. Under the rule as thus announced one who has in any manner thus converted the property of another to his use may be liable for the value to such other in an action for goods sold and delivered.'^" § 1400. Other instances in which the tort may be waived and suit brought on the implied contract. — A carrier's breach of duties relative to the carrying of passengers^^ or freight''^ may be treated as a violation of contract and declared on in assumpsit, or may be considered a tort. An election may be made to sue either in tort or on assumpsit where a bailee refuses to return the V. Campbell, 74 Mich. 652, 42 N. W. 384. 16 Am. St. 652n. ""Lehmann v. Schmidt, 87 Cal. 15, 25 Pac. 161 ; Roberts v. Evans, 43 Cal. 380; Newton Mfg. Co. v. White, 52 Ga. 395 ; Janes v. Buzzard, Hempst. (U. S.) 240, Fed. Cas. No. 7206a. The contrary rule formerly prevailed in this state. Barlow v. Stalworth, 27 Ga. 517; Toledo &c. R. Co. v. Chew, 67 111. 378. The rule was formerly otherwise in Illinois. O'Reer v. Strong, 13 111. 688; Morrison v. Rog- ers, 2 Scam. (111.) 317; Morford v. White, 53 Ind. 547 ; Jones v. Gregg, 17 Ind. 84; Cooper v- Helsabeck, 5 Blackf. (Ind.) 14; Fanson v. Lins- ley, 20 Kans. 235 ; Stewart v. Balder- ston, 10 Kans. 131 ; Aldine Mfg. Co. v. Barnard, 84 Alich. 632, 48 N. W. 280; Tuttle v. Campbell, 74 Mich. 652, 42 N. W. 384, 16 Am. St. 652n ; Fiquet v. Allison, 12 Mich. 328, 86 Am. Dec. 54; Evans v. Miller, 58 Miss. 128, 38 Am. Rep. 313. Disapproving intima- tions to the contrary in O'Conley v. Natchez, 1 Sm. & M. (Miss.) 31, 40 Am. Dec. 87, and Mhoon v- Green- field, 52 Miss. 434; Miller v. Wesson, 58 Miss. 831; New York Market Gardners' Assn. v. O'Neill-Adams Co., J15 App. Div. (N. Y.) 42, 100 N. Y. S. 596, 190 N. Y. 514, 83 N. E. 1128; Goodwin v. Griffis, 88 N. Y. 629; Terry v. Munger, 121 N. Y. 161, 24 N. E. 272, 8 L. R. A. 216n, 18 Am. St. 803 ; McGoldrick v. Wil- lits, 52 N. Y. 612; Osborn v. Bell, 5 Denio (N. Y.) 370, 49 Am. Dec. 275; Wigand v. Sichel, 3 Keyes (N. Y.) 120; Butts V. Collins, 13 Wend. (N. Y.) 139; Abbott v. Blossom, 66 Barb. (N. Y.) 353; Logan v. Wallis, 76 N. Car. 416; Barker v. Cory, 15 Ohio 9; Kirkman v. Philips' Heirs, 7 Heisk. (Tenn.) 222; Alsbrook v. Hathaway. 3 Sneed (Tenn.) 454; Ferrill's Admx. v. Mooney's Exrs., 33 Tex. 219; Mc- Donald V. Peacemaker, 5 W. Va. 439; Walker v. Duncan, 68 Wis. 624, 32 N. W. 689; Norden v. Jones, 33 Wis. 600, 14 Am. Rep. 782. The earlier decisions in this state are to the con- trary. Kelty V. Owens, 3 Pin. (Wis.) 372. 4 Chand. 166; Elliott v. Jackson, 3 Wis. 649. See also, note in 134 Am. St. 191. '^ Bank of Orange v. Brown, 3 Wend. (N. Y.) 158; Boster v. Chesa- peake & O. R. Co., 36 W. Va. 318, 15 S. E. 158. ""Jenkins v. Seaboard Air Line Ry., 3 Ga. App. 381, 59 S. E. 1120; Owens V. Chicago &c. R: Co., 139 Iowa 538, 117 N. W. 762, citing many cases; Waters v. Mobile &c. R. Co., 74 Miss. 534, 21 So. 240. 655 IMPLIED CONTRACTS. § 1400 goods in accordance with the terms of the contract or when they are destroyed while in his possession."' Brokers who dispose of their chent's securities without authority may be sued either in assumpsit or tort at the election of the injured party.*^* In gen- eral, fraudulent acts often give rise to an action in assumpsit,''' especially when practiced by agents.^** When the same act is an infringement of a patent and also the breach of some contract the injured party may waive the infringement and bring his action for breach of contract." An action in assumpsit may be main- "A. G. Rhodes &c. Co. v. Freeman, 2 Ga. App. 473, 58 S. E. 696; Redel V. ■Missouri Valley Stone Co., 126 Mo. App. 163, 103 S. W. 568. "Barber v. Ellingvvood, 122 N. Y. S. 369, 137 App. Div. (N. Y.) 704. "» Steiner v. Clisby, 103 Ala. 181, 15 So. 612; Missouri Sav. &c. Co. v. Rice, 84 Fed. 131. 28 C C. A. 305; Love v. McElroy, 106 111. App. 294 ; Morgan's Louisiana &c. Co. v. Stewart. 119 La. 392, 44 So. 138; Penobscot R. Co. v. Mayo, 67 Maine 470, 24 Am. Rep. 45; Himmelberger-Harrison Lumber Co. V. Dallas (Mo. App.), 146 S. W. 95 (logs over scaled) ; Martin v. Hut- ton, 90 Nebr. 34, 132 N. W. 727, 36 L. R. A. (N. S.) 602 and note; West- cott V. Sharp, 50 N. J. L. 392, 13 Atl. 243; Dresser v. Mercantile Trust Co., 124 App. Div. (N. Y.) 891, 108 N. Y. S. 577; Fenemore v. United States, 3 Dall. (U. S.) 357, 1 L. ed. 634; Huganir v. Cotter, 102 Wis. 323, 78 N. W. 423. 72 Am. St. 884. Thus, where the defendant represented that certain public land was not open to entry, but that its relinquishment would have to be purchased, and plaintiff relying on such representa- tions paid the defendant money with which to obtain the relinquishment, it was held that he might recover the money so paid in an action for money had and received when the land was in fact open to entr>' at the time the representation was made. Martin v. Hutton. 90 Nebr. 34, 132 N. \V. 727, 36 L. R. A. (N. S.) 602. ""First Nat. Bank v. Henrv. 159 Ala. 367. 49 So. 97; State Bank of Chicago v. Cox, 143 Fed. 91, 74 C. C. A. 285 : Dittemore v. Cable Milling Co., 16 Idaho 298, 101 Pac. 593, 133 Am. St. 98n; Farson v. Hutchins, 62 111. App. 439, affd. 163 111. 445, 45 N. E. 297; Berkshire Glass Co. v. Wol- cott, 2 Allen (Mass.) 227, 79 Am. Dec. 781 ; Courter v. Pierson, 72 N. J. L. 393, 61 Atl. 81; Doherty v. Shields, 86 Hun (N. Y.) 303, 67 N. Y. St. 211, 33 N. Y. S. 497; Jones v. Smith. 65 Misc. (N. Y.) 528, 120 N. Y. S. 865; Stroud v. Life Ins. Co. of Virginia, 148 N. Car. 54, 61 S. E. 626; Hornefius v. Wilkinson, 51 Ore. 45, 93 Pac. 474; Kimble v. Caro- thers, 81 Pa. St. 494; Vance V. Mottley, 92 Tenn. 310, 21 S. W. 593; In re Heber's Will, 139 Wis. 472, 121 N. W. 328. One who assumes to contract on behalf of another with- out authority is liable on the express or implied contract made by the assumed agent that he has authority to enter into the agreement for the other ; Meek v. Wendt, L. R. 21 Q. B. Div. 126, 59 L. T. (N. S.) 558. 6 Asp. Mar. Cas. 331; Simons v. Patchett, 7 El. & Bl. 568. 26 L. Q. B. 195, 3 Jur. (N. S.) 742, 5 Week. R. 500; Kent V. Addicks, 126 Fed. 112, 60 C. C. A. 660; White v. Madison. 26 N. Y. 117; Baltzen v. Nicolav. 53 N. Y. 467; Taylor v. Nostrand. 134 N. Y. 108, 31 N. E. 246; Noe v. Gregory, 7 Daly (N. Y.) 283; Haupt v. Vint, 68 W. Va. 657, 70 S. E. 702, 34 L. R. A. (N. S.) 518n. "'B. F. Averv & Sons v. McClure, 94 Miss. 172. 47 So. 901. 22 L. R. A. (N. S.) 256n ; Excelsior Wooden- Pipe Co. v. Pacific Bridge Co.. 185 U. S. 282, 46 L. ed. 910. 22 Sup. Ct. 681 ; Steam Stone Cutter Co. v. Sheldons. 21 Blackf. (U. S.) 260. 15 Fed. 608; Manning v. Galland-Hen- ning P. M. Drum Mfg. Co., 141 Wis. 199, 124 N. W. 291. s 1400 CONTRACTS 656 tained against a thief for goods stolen,^® against an embezzler for money embezzled/^ or against physicians and surgeons for mal- practice/" or for the conversion of standing timber when title to the real estate is not involved.^^ And it has been held that ten- ants in common whose common property has been converted may all waive the tort and join, if they like, in an action of assumpsit or any number less than all, or any separate one may bring as- sumpsit for his or their share of the interest without joining the rest.'^^ As has already been stated in the section in this chapter on the use and occupation of real estate,^"'' no action for use and occupation can be maintained against one guilty of a mere naked trespass.^^ The only action maintained is one in tort for dam- *" Gould V. Baker, 12 Tex. Civ. App. 669, 35 S. W. 708. See also, Howe v. Clancey, 53 Maine 130. See also, Leonard v. State, 56 Tex. Cr. 307, 120 S. W. 183, in which it is said : "Where money has been obtained from an- other, even where it has been done through fraud, misrepresentation, de- ceit, etc., that there is bailment. This, as stated, arises from the reason and justice of the matter. Three propo- sitions may arise: (1) Where force is used, as in the Tones case (Tones V. State, 48 Tex. Cr. 363, 88 S. W. 217, 1 L. R. A. (N. S.) 1024, 122 Am. St. 759) there could be a case of robbery. (2) Where the goods were taken fraudulently, or with a fraudu- lent purpose, without the necessary force to constitute robbery, with a fraudulent intent at the time that it is taken, it would be ordinary theft. (3) If rightfully taken, or what the taker believed to be rightful, or taken without the then purpose of fraudu- lently appropriating the property to his own use, and subsequently the taker does conceive the fraudulent intent, and does then appropriate it, it would be theft by conversion. Un- der the facts of this case the first proposition — that is, robbery — we think is not suggested. The facts in the case might constitute ordinary theft ; but no question is raised in regard to that matter. No charges were asked, and no point made in the court below, and, therefore, under article 723, Code Cr. Proc. 1895. that question will not be discussed. If appellant had the fraudulent design, at the time he took the money from the prisoner's pocket, to then appro- priate it, it might be, and doubtless would be, ordinary theft; but the facts, we think, are ample to show a conversion or theft by bailment." Leonard v. State, 56 Tex. Cr. 307, 120 S. W. 183. See, however, Foster v. •Yucker, 3 Greenl. (Maine) 458, 14 Am. Dec. 243. «• Williams V. Smith, 29 R. I. 562, 72 Atl. 1093. ™ Lane v. Borcourt, 128 Ind. 420, 27 N. E. nil, 25 Am. St. 442. '^Asher v. Cornett (Ky.), 113 S. W. 131 ; Evans v. Miller, 58 Miss. 120, 38 Am. Rep. 313; Whitaker v. Boston, 120 Tenn. 207, 110 S. W. 1019: Parks V. Morris, Lafield & Co., 63 W. Va. 51, 59 S. E. 753. It is otherwise where the title to realty is involved. King V. Mason, 42 111. 223, 89 Am. Dec. 426 ; Gates v. Rifle Boom Co., 70 Mich. 309, 38 N. W. 245. The prin- ciple which governs in the case of trees severed by a trespasser also ap- plies to stones wrongfully quarried and converted to the use of the tort feasor. Phelps v. Church of Our Lady, Help of Christians, 99 Fed. 683, 40 C. C. A. 72 ; Downs v. Finnegan, 58 Minn. 112, 59 N. W. 981, 49 Am. St. 488. "Tankersley v. Childers, 23 Ala. 781. "a See ante, § 1397. '" Smith V. Houston, 16 Ala. Ill; Weaver v. Jones, 24 Ala. 420 ; Downs V. Finnegan, 58 Minn. 112, 59 N. W. 981, 49 Am. St. 488 ; Lloyd v. Hough, 657 IMPLIED CONTRACTS. § 1400 ages/* It is obvious that when there is no tort to waive there can be no waiver." Neither can the tort be waived and suit brought on the implied contract in the absence of any benefit accruing to the tort feasor or his estate.^" And since the action is equitable in its nature only so much can be recovered in gen- eral as the plaintiff is in good conscience entitled to recover.''^ 1 How. (U. S.) 153, 11 L. ed. 83; Watson V. Brainard, 33 Vt. 88. " See cases cited ante, preceding note, and § 1396. " See Bechtel v. Chase, 156 Cal. 707, 106 Pac. 81, recognizing the rule that one whose goods are wrongfully taken and used by another may sue in assumpsit for their value as for goods sold and delivered, but holding that this rule does not apply where one has voluntarily parted with his prop- erty in exchange for something re- ceived bv him. " Phillips v. Homfray, 24 Ch. Div. 439; Patterson v. Prior, 18 Ind. 440, 81 Am. Dec. 367. In the above case suit was brought against two persons, only one of whom had received a benefit from the commission of the tort. It was held that recovery in assumpsit must be confined to the one who had been benefited. Compare the foregoing case with that of Thomp- son V. Bronk, 126 .Mich. 455, 85 N. W. 1084. Both cases have to do with recovery for wrongful imprisonment. Webster v. Drinkwater, 5 Greenl. (Maine) 319; Ford v. Caldwell, 3 Hill (S. Car.) 248, Riley 282. See also, Schillinger v. United States, 155 U. S. 163, 39 L. ed. 108, 15 Sup. Ct. 85. " Western Assur. Co. v. Towle, 65 Wis. 247, 26 N. W. 104. 42 — CoNTR.\cTS, Vol. 2 CHAPTER XXXII. LIMITS OF OBLIGATION CONTRACTS AFFECTING THIRD PERSONS. § 1405. Obligation of contract as be- § 1414. Acceptance necessary for and tween the parties. sufficiency of. 1406. Privity of contracts. 1415. Delivery— Rights of parties in 1407. Further exceptions to the general. English rule. 1416. Particular cases — Insurance. 1408. Obligation of contract as to 1417. Particular cases — Telegraph third person. company cases. 1409. Obligation as to liability of 1418. Particular cases — Building third person. contract cases. 1410. Obligation as to duty of third 1419. Particular cases — Contracts person — Interference by with carriers, third persons. 1420. Miscellaneous cases. 1411. Obligation as to rights of 1421. When third persons may not third persons. enforce contract. 1412. When third persons may en- 1422. Question of construction- force contracts for their Contracts with water corn- benefit, pany and the like. 1413. Must be a clear intent to bene- 1423. Rule further illustrated. fit the third party. 1424. Rule further illustrated— Right to enforce sealed instrument. § 1405. Obligation of contract as between the parties. — The word "obhgation" is used in many varying senses and has been given a construction sufficiently broad to include any legal or moral duty. In a strict legal sense, however, the words "duty" and "obligation" are not synonymous. The word "duty" is more general in its application. It includes not only obligations recog- nized and sanctioned by positive law and en forcible by aid of the law, but also covers duties which operate only on the moral sense and which do not constitute a legal obligation at all.^ The word "obligation" as used in the term "obligation of a contract as be- tween the parties" signifies the legal tie whereby one party binds himself or becomes bound, expressly or impliedly, to pay the other a sum of money or to do or refrain from doing a certain act. It is the coercive principle that obliges a party to perform his express or implied contract, or respond in damages for its breach. ^ See ante, § 21. 658 659 LIMITS OF OBLIGATION — THIRD PERSONS. § I406 The creation of this obligation is the purpose which underlies every contract. In the absence of an obligation enforcible at law no contract exists. Moreover, there is an implied legal obligation or duty to do the act contracted to be performed with reasonable care in order that the person or property of others may not be injured by any force which he sets in motion or by any agent or agency for which he is responsible.^ ,§ 1406. Privity of contract. — The common-law -authorities hold that the right to maintain an action of assumpsit for breach of a simple contract rests only in the person from whom the con- sideration moved.^ This doctrine gave rise to the familiar rule that no one but the parties to a contract can be bound by it or obtain rights under it, or, as commonly expressed, privity of contract must exist between the parties.* By privity of contract was understood the relation which subsists between the immediate parties to the agreement.^ To the general rule above stated, how- ever, there existed certain exceptions or qualifications even at common law. Thus, it is true generally that if the promisee is in fact acting as agent for another, although this fact is undisclosed to the promisor, the undisclosed principal is considered as the real party to the contract and may bring an action to enforce it in his own name.^ • Flint & Walling ]\Ifg. Co. v. Beck- Knights of Modern Macabees v. ett, 167 Ind. 491, 79 N. E. 503, 12 L. Sharp, 163 Mich. 449, 128 X. W. 786; R. A. (N. S.) 924 and note. See also, Webb's Academy & Home for Ship- vol. I, ch. 1. § 5. builders v. Hidden. 118 App. Div. (N. *See 2 Street's Foundations of Y.) 711, 103 N. Y. S. 659. affd. 194 X. Legal Liabilities, p. 152. Y. 547, 87 N. E. 1129. As a general * St. Louis V. G. H. Wright Con- rule, only parties to a contract have a tracting Co., 202 Mo. 451, 101 S. W. right of action on it for its breach. 6, 119 Am. St. 810. Matheny v. Chester, 141 Ky. 790. 133 ° See Black's Law Dictionary under S. W. 754. A stranger to a contract the title "Privity." From a somewhat cannot become a party to it without different point of view it has also the consent of both parties. Kruschke been said to be "something on which v. Quatsoe, 49 Colo. 312, 112 Pac. an obligation, an engagement, a prom- 769. ise can be implied." Anderson's Law ' See also, a fuller statement of the Diet. Tit. Privity. See also, George principle in a subsequent volume of H. Sampson Co. v. Commonwealth, this work. See post, chaps. 59 et seq. 202 Mass. 326, 88 N. E. 911 ; Woods It is otherwise, however, where the v. .\yres, 39 Mich. 345, 33 Am. Rep. party contracting with the agent and 396; Toledo & S. H. R. Co. v. Lam- who had no knowledge of the agency phear, 54 Mich. 575, 20 N. W. 590; may reasonably be supposed to have Monaghan v. Agricultural Fire Ins. entered into such contract in consid- Co., S3 Mich. 238. 18 N. W. 797; § 1407 CONTRACTS. 660 Neither is it essential to the maintenance of an action by one of the parties that there should be an express promise existing be- tween the parties. The law implies a promise where justice im- poses a duty; and in such case no privity of contract need be al- leged or proved and its existence is unnecessary/ § 1407. Further exceptions to the English rule. — ^The courts of England and Massachusetts at one time recognized another exception to the general rule which was that the bene- ficiaries might maintain an action M^hen closely related to the promisee.® Thus, it was held that a child might. maintain an action on a promise made to the parent for the child's benefit.* This doctrine no longer obtains, however, either in England" or Massachusetts.'^ It now seems that in England and in the states of the Union which follow the English doctrine, apart from the qualifications or limitations in regard to agency and implied con- tracts, the only exception to the general rule that no one but a party to a contract is entitled to enforce rights thereunder is a provision contained in a settlement made upon and in consider- ation of marriage for the benefit of children to be born of the marriage.'^ A majority of the jurisdictions in the United States, eration of some element of personal which it is delivered to him, to pay trust and confidence in the agent, such creditor. Exchange Bank y. and the contract remains wholly ex- Rice, 107 Mass. 2>1 , 9 Am. Rep. 1. ecutory The undisclosed principal This is in fact no exception to the cannot enforce the contract in his general rule. Suit is merely brought own name and right. Shileds v. on the implied promise. See ante, Coyne, 148 Iowa 313, 127 N. W. 63, ch. 31. 29 L R A (N. S.) 472. See also, 'See Bourne v. Mason, 1 Vent. 6; ante,'ch."l5. Sprat v. Acher, 1658 K B referred 'McClean v. Stansberry (Iowa), to in Bourne v. Mason 1 Vent^ 6^ 131 N. W. 15, 35 L. R. A. (N. S.) "Button v. Poole, 2 Ley. 210, 1 481- Beardslee v. Horton, 3 Mich. Vent. 318; Felton v. Dickinson 10 560 • Walker v. Conant, 65 Mich. 194, Mass. 287 ; Mellen v. Whipple, 1 Gray 31 N. Y. 786. Notwithstanding the (Mass.) 317. See also, Schmerhorn absence of an expressed promise, an v. Vanderheyden, 1 Johns. (N. Y.) action may be maintained where the 140. 1 ti p c defendant has in his hands money "Tweedle v. Atkinson, 1 B. & ^. which in equity and good conscience 303, 101 E. C. L-.393. belongs to the plaintifif, as where one " Marston v. Bigelow, 150 Mass. 45, person receives from another money 22 N. E. 71, 5 L. R. A. 43; Saunders or property as a fund from which v. Saunders, 154 Mass. 33/, ^8 JN. t. certain creditors of the depositor are 270. ..... to be paid, and promises either ex- ""Whether there is, in that juns- pressly or by implication from his diction (England) any other or tur- acceptance of the money or property ther exception, may be doubted, without objecting to the terms on Knights of the Modern Macabees v. 66 1 LIMITS OF OBLIGATION THIRD PERSONS. § I408 however, recognize a further exception in contracts made for the benefit of a third party, and the beneficiary is entitled, in a proper case, to bring suit to enforce a contract made for his benefit or to sue for its breach.'^ The rights of third parties will be treated more fully in a subsequent section on When Third Persons May Enforce Contracts for Their Benefit/^^ § 1408. Obligation of contract as to third person. — It is elementary law that a party has a right to select and determine with whom he will contract and cannot have another person thrust upon him without his consent.^* Consequently, as a general rule, no obligation is imposed on a party by a contract to which he is a stranger,^° unless he assents to or acquiesces in the agreement." Sharp (Mich.), 128 N. \V. 786; Wald's Pollock on Contracts, pp. 222, 231 234 "Mathenv v. Chester, 141 Kv. 790, 133 S. W. 754; Lawrence v. Fox, 20 N. Y. 268 (the leading case on this subject in the United States). "A contract between two parties based upon a valid consideration may be enforced by third parties when entered into for their benefit, and that is true though such parties are not named in the contract nor are privy to the consideration." St. Louis v. G. H. Wright Contracting Co., 202 :\Io. 451, 101 S. W. 6, 119 Am. St. 810. See also, Hendrick v. Lindsay, 93 U. S. 143, 23 L. ed. 855. Courts of equity have on occasion granted a third party to the contract a remedy. See Lloyd's V. Harper, 16 Ch. Div. 290; Candy v. Candy, 30 Ch. Div. 67. But the rule both in law and equity seem practically the same. "a See post, § 1412. "Boston Ice Co. v. Potter, 123 Mass. 28, 25 Am. Rep. 9; Wooster v. Crane & Co., IZ N. J. Eq. 22, 66 Atl. 1093. See also, Shubert Theatri- cal Co. v. Ziegfeld, 109 N. Y. S. 46. holding that a corporation could not maintain an action on a contract to which it was not a party, and to which the cause of action had not been assigned. " Springer v. Ford. 189 Til. 430. 59 N. E. 953. 52 L. R. A. 930. 82 Am. St. 464. affg. 88 111. App. 529; Griffen V. Manice, 166 N. Y. 188, 59 N. E. 925, 52 L. R. A. 922, 82 Am. St 630. See also, Evans v. United States, 42 Ct. CI, (U. S.) 287. "The obligations of a contract are ordinarily limited to the parties by whom they are made, and those who stand in privity with them, either in estate or contract. Evansville &c. Tract. Co. v. Evansville Belt R. Co., 44 Ind. App. 155, 87 N. E. 21. The following cases hold that an employe of one railroad company who sus- tains an injury by reason of the negli- gence of another railway is not bound by any contract between the com- panies by which they free each other from the liability for negligence when he does not assent thereto. Ziegler V. Danburv &c. R. Co., 52 Conn. 543; Philadelphia W. & B. R. Co. v. State, 58 Md. yil; Brewer v. New York, L. E. & W. R. Co., 124 N. Y. 59, 26 N. E. 324, 11 L. R. A. 483. 21 Am. St. 647; Kennv v. R. Co.. 125 N. Y. 422, 26 N. E. 626, affg. 54 Hun (N. Y.) 143. 7 N. Y. S. 255 ; Ominger v. New York Cent. & H. R. Co., 4 Hun. (N. Y.) 159, 6 Thomp. & C. 498; Sawver v. Rutland & Burlington R. Co., '27 Vt. 370. See Chicago &c. R. Co. v. Lee, 92 Fed. 318. 34 C. C. A. 365. holding that a contract between a shipper of live stock and a carrier providing that the carrier shall not be liable for the negligent injury of the caretaker in charge of the live stock does not bind such caretaker unless he acquiesces therein. Sevbolt V. N. Y.. Lake Erie &c. R. Co., 95 N. Y. 562, 47 Am. Rep. 75, holding that ^ 1409 CONTRACTS. 662 § 1409. Obligation as to liability of third person. — It fol- lows as a natural sequence of what has already been said that a third person is not liable, as a rule, on a contract, express or im- plied, unless he was one of the immediate parties to the agreement or has become a party to it by subsequent agreement with the original parties." Two persons cannot, by mutual agreement, impose contractual liabilities upon one who does not assent there- to.^^ Thus, an independent contractor and his employe cannot enter into a contract which will impose a liability upon the em- ployer of the contractor and toward whom he sustains the relation of an independent contractor.^'' Nor is the lessor of premises liable to pay the employe of the lessee for services rendered by hLm tmder his contract with the lessee when the contract of em- ployment was not entered into for the lessor's benefit.^*' An agent cannot render his principal liable to a subagent or vice versa unless the principal has given the agent express or implied authority to appoint the subagent.^^ Neither is a corporation lia- a postal clerk who does not waive his claim for damages may hold the rail- road liable for injury sustained by reason of its negligence. " See § 26, and ch. 9. "A party may, under certain circumstances, bind himself to the performance of the obligations of a contract, even though he may not be mentioned in it. * * * But where there is nothing in the agreement showing any considera- tion affecting such a party, or induc- ing him to become a party, or showing such relations to either of the actual parties as would lead to the inference that he intended to become surety for, or joint promisor with, one rather than the other, he is prima facie not hound. Nor may parol evidence be resorted to to furnish the basis of an inference one way or the other." Henry O. .Shepard Co. v. Freeman, 40 Mont. 144. ICS Pac. 484, 488. "Bolles V. Carli, 12 Gil. (Minn.) 62 ; Rossman v. Townesend, 17 Wis. 95, 84 Am. Dec. 733. However, priv- ity of estate may render parties lia- ble on contracts not of their own making which relate solely, to cove- nants that run with real estate, or some interest therein. Evansville &c. Tract. Co. v. Evansville Belt. R. Co., 44 Ind. App. 155, 87 N. E. 21. ^* Schmaling v. Tomlinson, 6 Taunt. 147. See also, McNulty v. Keyser Office Bldg. Co., 112 Md. 638, 76 Atl. 1113; Campbell v. Kimball, 87 Nebr. 309, 127 N. W. 142; Lonergan v. San Antonia Loan &c. Co., 101 Tex. 63, 104 S. W. 1061, 106 S. W. 876, 22 L. R. A. (N. S.) 364, 130 Am. St. 803. Where the defendant took paint- ing contracts in his own name and employed the plaintiffs to do the work, the defendant and not his cus- tomers was liable to plaintiff for their pay. Tomlinson v. Timmons (Mo. App.), 135 S. W. 980. See also, Thompson's Negligence, § 680; White's Supplement to Thompson's Negligence, § 680. ^Russell v. Banks, 11 Cal. App. 450, 105 Pac. 261. On the other hand the lessees are not liable to plaintiffs on a contract entered between the plaintiffs and lessors when the lease was not made for the benefit of the plaintiffs and when they had no inter- est in the consideration. Cooper v. Walther, 44 Pa. Super. Ct. 298. -"^ Fairchild v. King, 102 Cal. 320, 36 Pac. 649 ; Davis v. King, 66 Conn. 465, 663 LIMITS OF OBLIGATION — THIRD PERSONS. § I4IO ble on a contract made by its promotors prior to the time of its incorporation, unless Hal3ility therefor is imposed on the corpora- tion by its charter or unless it ratifies the contract after coniinj,^ into existence, notwithstanding the contract of the promoter was made in its name and with the understanding that the con- tract would be performed by the corporation." Nor is the rule changed by the mere fact that the promoters who made the con- tract are the sole members of the corporation." § 1410. Obligation as to duty of third person — Interference by third persons. — But while a contract between two par- ties cannot impose on a stranger, without his assent, a liability in accordance with the terms of the contract, it is nevertheless true that a stranger does owe to the parties to the agreement a duty not to interfere with its due performance. All persons are under a duty to respect the rights of others. The law recognizes that a contract confers certain rights on the person with whom it is made, and not only binds the parties to it by the obligation entered into, but also imposes on all the world, in a sense at least, the duty of respecting the contractual obligation.^* Thus, it is a well established doctrine of law applicable to the relation of the master and servant that one who entices away a servant or induces him to leave his master may be held liable in damages therefor, provided there exists a valid contract for contin- 34 Atl. 107, 50 Am. St. 104; Dunn v. 248. 22 N. E. 907, 5 L. R. A. 586, 15 City Nat. Bank of Birmingham, 58 Am. St. 193; Munson v. Syracuse, G. Fed. 174, 7 C. C. A. 152, 2Z L. R. A. & C. R. Co., 103 N. Y. 58, 8 X. E. 687- Bailie v. Augusta Sav. Bank, 95 355. See also. Turnham v. Calumet Ga.'277, 21 S. E. 717, 51 Am. St. 74; & Oregon Min. Co., 58 Ore. 453, 112 Guelich v. National State Bank of Pac. 711, judgment modified 115 Pac. Burlington. 56 Iowa 434. 9 N. W. 157. See ante, ch. 18. 328, 41 Am. Rep. 110; Exchange Nat. "^ Battelle v. Northwestern Cement Bank v. Third Nat. Bank. 112 U. S. &c. Pavement Co., 2>7 -Mmn. 89, ZZ 276, 28 L. ed. 722, 5 Sup. Ct. 141. See N. W. 327. also ch 15 -^Temperton v. Russell (1893), L. - Pavnc V. New South Wales Coal R. 1 Q. B. Div. 715 ; Raymond v. & I. S.'Nav. Co., 10 Exch. 283; Moore Yarrington. 96 Tex. 443, 72 S. W. & Handley Hardw. Co. v. Towers 580, 72> S. W. 800, 62 L. R. A. 962, 97 Hardw. Co., 87 Ala. 206, 6 So. 41, 13 Am. St. 914. See also. Dunshee v. Am. St. 23; Scadden Flat Gold Min. Standard Oil Co.. 152 Iowa 618, 132 Co. V. Scadden, 121 Cal. ZZ. 53 Pac. N. W. 371, 36 L. R. A. (N. S.) 263 440- Winters v. Hub Min. Co.. 57 and note, and notes m 16 L. R. A. Fed. 287- Park v. Modern Woodmen (N. S.) 746, and 28 L. R. A. (N. S.) of America, 181 111. 214, 54 N. E. 615. 932; Abbott v. Hapgood, 150 Mass. s 1410 CONTRACTS. 664 ued service known to the defendant.^'^ This doctrine is not confined to contracts of service. It covers every case where one person maHciously persuades another to break any contract with a third person."" When loss ensues, mahce is the gist of the action for wantonly or maliciously inducing one to break his contract with intent to injure another.'^ This does not mean that acts done under the right of competition or under cover of friendly neighborly counsel or mere persuasion are, generally speaking, wrongful in law or in fact.^^ Still if the persuasion be ^ Old Dominion Steamship Co. v. ^IcKenna, 30 Fed. 48, 18 Abb. N. Cas. (N. Y.) 262; Hightower v. State, 12 Ga. 482; Jones v. Blocker, 43 Ga. 331 ; Walker v. Cronin, 107 Mass. 555 ; Webber v. Barry, 66 Mich. 127, Zl N. W. 289, 11 Am. St. 466n; Bixby v. Dunlap, 56 N. H. 456, 22 Am. Rep. 475; Noice v. Brown, 39 N. J. L. 569; Haskins v. Royster, 70 N. Car. 601, 16 Am. Rep. 780 ; Hufif v. Watkins, 15 S. Car. 82, 40 Am. Rep. 680. _ But the termination of the relation in a law- ful manner cannot be prevented by injunction. Toledo &c. R. Co. v. Penn- sylvania Co., 54 Fed. 730, 19 L. R. A. 387. So there may be a civil liability for maliciously procuring the dis- charge of an employe or preventing employment. Huskie v. Griffin, 75 N. H. 345, 74 Atl. 595, 27 L. R. A. (N. S.) 966 and note, 139 Am. St. 718. See also, notes in 62 L. R. A. 714, 5 L. R. A. (N. S.) 899, and 19 L. R. A. (N. S.) 561. "^ See Dunshee v. Standard Oil Co., 152 Iowa 618, 132 N. W. 371, 36 L. R. A. (N. S.) 263. See Walker V. Cronin, 107 Mass. 555 ; Jones v. Stanly, Id N. Car. 355 ; Schonwald v. Ragains (Okla.), 122 Pac. 203. See also, note to Sparks v. McCrary, 22 L. R. A. (N. S.) 1224. "Lumely v. Gye, 2 EI. & B. 216; Bowen v. Hall, L. R. 6 Q. B. Div. ZZZ ; Glamorgan Coal Co. v. South Wales Miners' Federation (1903), 2 K. B. 545; Perkins v. Pendleton, 90 Maine 166, 38 Atl. 96, 60 Am. St. 252; Walker v. Cronin, 107 Mass. 555 ; Morgan v. Andrews, 107 Mich. Zi, 64 N. W. 869; Lally v. Cantwell, 30 Mo. App. 524; Haskins v. Royster, 70 N. Car. 601, 16 Am. Rep. 780; Jones V. Stanly, 76 N. Car. 355 ; Angle V. Chicago, St. P. M. & O. R. Co., 151 U. S. 1, 14 Sup. Ct. 240; West Virginia Transp. Co. v. Standard Oil Co., 50 W. Va. 611, 40 S. E. 591, 88 Am. St. 895. A landlord has been held entitled to maintain an action against one who wrongfully and ma- liciously disturbs his tenant, thereby causing him to abandon the premises. Aldridge v. Stuyvesant, 1 Hall (N. Y.) 235. So where one induces an- other to breach his contract to per- form certain farm work (Haskins v. Royster, 70 N. Car. 601, 16 Am. Rep. 780) ; or maliciously induces one to reject a machine (Morgan v. An- drews, 107 Mich. ZZ, 64 N. W. 869). It has even been held that one may be liable for inducing another to break a contract which was in fact within the statute of frauds. Rice v. Man- ley, 66 N. Y. 82, 23 Am. Rep. 30. To same effect, Lucke v. Clothing Cutters, n Md. 396, 26 Atl. 505, 19 L. R. A. 408, 39 Am. St. 421 ; Benton v. Pratt, 2 Wend. (N. Y.) 385, 20 Am. Dec. 623. False statements in regard to certain manufactured goods made with the intention of pre- venting their sale and as an induce- ment to breach a subsisting con- tract have been held to create a cause of action. Snow v. Judson, 38 Barb. (N. Y.) 210. The same has been held true where one induces a singer to break her contract with the lessee of a theater. Lumley v. Gye, 2 El. & B. 216. ''Bowen v. Hall, L. R. 6 Q. B. D. ZZZ; West Virginia Transp. Co. v. Standard Oil Co., 50 W. Va. 611, 40 S. E. 591, 88 Am. St. 895. See Chip- ley v. Atkinson, 23 Fla. 206, 1 So. 934, 11 Am. St. 367. 665 LIMITS OF OBLIGATION THIRD PERSONS. § I4IO used for the indirect purpose of injuring the plaintiff, or benefit- ing the defendant, at the expense of the plaintiff, it is a malicious act, which, in law and in fact, is a wrongful act and therefore an actionable act of injury issued from it.^° But with this explana- tion it may be said that in order to recover in such an action malice must be shown to exist.^° It is also true that no liability ordinarily attaches where the party sought to be charged in dam- ages was acting in the lawful exercise of some distinct right.^^ Moreover, if none of the legal rights of the plaintiff are inter- fered with, an action for damages cannot be maintained.^- An action for damages is not, however, the sole remedy. In a proper case one may properly be enjoined from in any way pro- curing the violation of a lawful and valid contract." While the one who violates his contract may be personally liable to the other party thereto for its breach, the party guilty of such breach may, nevertheless, recover against tlie one who induces him to violate his contract when the latter, by such acts and per- suasion, intended to injure the other contracting party or to coerce him into adopting a line of business against his will and judgment.^* Some cases, however, do not give assent to the doctrine that an action will lie against a third person who interferes with the due performance of a contract. They lay down the rule that merely to induce or procure a free contracting party to break his '"Bowen v. Hall, L. R. 6 Q. B. D. a will by which he devised certain 333; Chiplev v. Atkinson. 23 Fla. real estate to a third person). 206. 1 So. 934, 11 Am. St. 367. ''Dr. Miles Med. Co. v. Piatt, 142 '"Glamorgan Coal Co. v. South Fed. 606; Dr. Miles Med. Co. v. Wales Miners' Federation, 1903, 1 Jaynes Drug Co., 149 Fed. 838. Com- K. B. 118, 87 L. T. 232; McCann v. pare the foregoing cases with Dr. Wolff, 28 Mo. App. 447. The word Miles Med. Co. v. John D. Park & "malicious" does not necessarily Sons Co., 164 Fed. 803, 90 C. C. A. mean that the party who induced the 579, and Dr. Miles Med. Co. v. John breach was actuated by motives of D. Park & Sons Co., 220 U. S. 373, personal ill will but by it is meant an 55 L. ed. 502, 31 Sup. Ct. 376, which unreasonable and wrongful act done disapproves of the first two cases intentionally without just cause or cited; not, however, on the ground excuse. Schonwald v. Ragains that an injunction might not issue in a (Okla.), 122 Pac. 203. proper case, but for the reason that ^ Morgan v. Andrews, 107 Mich, the contracts themselves were illegal 33, 64 N. W. 869. But see Dunshee and consequently their breach would v. Standard Oil Co., 152 Iowa 618, not be enjoined. See ante, ch. 22. 132 N. W. 263. "'Doremus v. Hennessv. 176 111. "Hutchins v. Hutchins. 7 Hill (N. 608. 52 N. E. 924, 54 N.'E. 524, 43 Y.) 104 (inducing testator to revoke L. R. A. 797, 68 Am. St. 203. § 141 1 CONTRACTS. 666 covenant, whether done maliciously or not, to the damage of an- other, is not actionable, and base their decisions on the erroneous ground that the act of one in inducing another to break his contract to the injury of the other party thereto does not consti- tute a legal wrong.^^ This subject will be more fully treated in the third volume of this work, in the chapter on Remedies for Interference by Third Persons.^''^ § 1411. Obligation as to rights of third persons. — It has al- ready been mentioned that at common law the only party entitled to maintain an action on a contract is the one from whom the consideration therefor moved. Under the common law and in those jurisdictions adhering to its principles on this point a man cannot acquire rights under a contract to which he is a stranger. That is to say, two persons cannot enter into an agreement and thereby confer certain contractual rights upon a third person even though the contract is made for such third person's special bene- fit.^" The consideration may draw the promise to it but a mere promise does not create a right of action in the promisee, when the consideration moves from another.^^ This rule apparently had its origin in the primal conception underlying assumpsit. At first, ac- tion on a promise was permitted on the theory of giving a remedy for damages sustained by reason of the nonperformance of a de- ceitful promise. ^^ This theory of the remedy would clearly limit '^Boyson v. Thorn, 98 Cal. 578, 33 848. The courts of California and Pac. 492, 21 L. R. A. 233 (not liable Kentucky recognize contracts for in the absence of a threat, violence, personal services as exceptions to the fraud, falsehood, or benefit to him- general rule which they announce, self) ; Chambers v. Baldwin, 91 Ky. See cases above cited. 121, 15 S. W. 57, 12 Ky. L. 699, 11 L. '=a See post, ch. 56. R. A. 545, 34 Am. St. 165 (not liable '"Price v. Easton, 4 B. & Ad. 433; when fraud and force is not resorted Crow v. Rogers, 1 Strange 592. See to to induce a breach of the con- also, Evans v. United States, 42 Ct. tract) : Soulier v. Macauley, 91 Ky. CI. (U. S.) 287. 135, IS S. W. 60, 12 Ky.L. 737, 11 L. "'"The plaintiff must unite in his R. A. 550, 34 Am. St. 171 (liable only person both the promise and the con- when breach procured by coercion or sideration of it; and if the action, deception) ; Glencoe Land & Gravel in such case, cannot be sustained on Co. V. Hudson Bros. Commission the foundation of the consideration Co.. 138 Mo. 439, 40 S. W. 93, 36 by drawing the promise to it, it can- L. R. A. 804, 60 Am. St. 560. See not be sustained at all." Edmund- Ashley V. Dixon, 48 N. Y. 430, 8 Am. son v. Penny. 1 Pa. St. 334, 44 Am. Rep. 559; Payne v. Western & At- Dec. 137. See also, Warren v. lantic R. Co., 13 Lea (Tenn.) 507. 49 Batchelder, 15 N. H. 129. Am. Rep. 66, See also, Gallup Elec- " See 2 Streets Foundation of Le- tric Light Co. v. Pacific Imnrove- gal Liabilities, pages 31, 32, 33, 156. ment Co., 16 N. Mex. 86, 113 Pac. 667 LIMITS OF OBLIGATION THIRD PERSONS. § 1 412 the right of action for breach of a simple promise to the person from whom the consideration moved ; but, however this may be, it nevertheless remains true that when two parties enter into a con- tract for the benefit of a third person, the promisor owes a duty to such third person to perform his obligation. Yet while this duty might rest upon the promisor the third person had no remedy by which to enforce it. In other words, the contractual duty was broader than the remedy. In the development of the law of con- tracts, the remedy did not keep pace with the development of the law of contracts generally, but was still confined largely within its original limits.^" But even the English judges have upon several occasions shown a tendency to disregard the ancient com- mon-law form of action and to recognize the right of a third per- son to sue on a contract made for his benefit." And in this country, where forms of action have in the main been abolished and where the courts have never been so completely dominated by common-law theories of action as in England, the right of a stranger to sue on a contract made for his benefit is generally recognized. The remedy is made as broad as the contractual obligation. If, under the facts of the case, a legal liability is shown to exist, the one in w4iose favor it runs is given the right to enforce it. § 1412. When third persons may enforce contracts for their benefit. — The foregoing discussion makes unnecessary any extended statement concerning the rights of third persons to en- force contracts made for their benefit. The New York Court of Appeals was the pioneer tribunal in declaring that where a prom- ise is "made to one for the benefit of another, he for whose benefit it is made may bring an action for its breach."" A majority of the courts of this country now adhere to the doctrine that the ^ See, however. In re Rotherham (Mass.) 337. Since overruled by Alum &c. Co.. 25 Ch. Div. 103, 111, in Alarston v. Bigelow. 150 Mass. 45, 22 which Lindley, J., states that the in- N. E. 71. 5 L. R. A. 43. ability of the third person to sue " Lawrence v. Fox, 20 N. Y. 268. is not due to any defect of remedy holding that where one party ad- but is a mere question of contract, vanced a sum of money to another. *"See Starkey v. !^Iill, Style 296; he agreeing to pay it to a creditor Yard v. Eland. 1 Ld. Rayni. 368; of the first party the next day. such Martyn v. Hind, 2 Cowp. 437. 443. creditor could recover on the prom- See also, Brewer v. Dyer, 7 Cush. ise. § 1 41 2 CONTRACTS. 668 beneficiary, though not a party to the contract, may maintain an action directly in his own name against the promisor, when such promise between the promisor and promisee is supported by a sufficient consideration and was made for the benefit of such third party/" The contract between the original parties must be sup- *" Lovely v. Caldwell, 4 Ala. 684; McCoy, 32 Ind. App. 38, 69 N. E. 193, Shotwell V. Gilkey's Admrs., 31 Ala. 102 Am. St. 223; Edwards v. Van 724; Potts V. First Nat. Bank, 102 Cleave, 47 Ind. App. 347, 94 N. E. Ala. 286, 14 So. 663; Chamblee v. 596; Ochs v. M. J. Carnahan Co., McKenzie, 31 Ark. 155; Talbot v. 42 Ind. App. 157, 76 N. E. 788; Wilkins, 31 Ark. 411; Hecht v. Knight & Jillson Co. v. Castle, 172 Caughron, 46 Ark. 132; Lewis v. Ind. 97, 87 N. E. 976, 27 L. R. A. Covillaud, 21 Cal. 178 (which recog- (N. S.) 573 and note; Nelson v. nizes the general American rule and Hardy, 7 Ind. 364; Day v. Patterson, since this decision, the general rule 18 Ind. 114; Weiser v. Ross, 150 Iowa has been well established. The rule, 353, 130 N. W. 387; Johnson v. Col- however, has not been given a very hns, 14 Iowa 63; Rice v. Savery, 22 broad application even under the pro- Iowa 470; Johnson v, Knapp, 36 vision of § 1559 of the Civil Code, Iowa 616; Phillips v. Van Schaick authorizing third parties to sue upon & Wilcox, 37 Iowa 229; German a contract made for his benefit.) ; State Bank v. Northwestern Water Lisenby v. Newton, 120 Cal. 571. 52 & Light Co., 104 Iowa 717, 74 N. W. Pac. 813, 65 Am. St. 203; Sav- 685; Anthony v. Herman, 14 Kans. ings Bank v. Thornton, 112 Cal. 494. The limitations of the doctrine 255, 44 Pac. 466; Buckley v. were stated in Burton v. Larkin, 36 Grey, 110 Cal. 339, 42 Pac. 900, Kans. 246, 13 Pac. 398, 59 Am. 31 L. R. A. 862, 52 Am. St. Rep. 541 (stating limitations) ; Ma- 88; Green v. Richardson, 4 Colo, theny v. Chester, 141 Ky. 790, 133 S. 584; Lehow v. Simonton, 3 Colo. W. 754; Winn v. Schenck, 33 Ky. 346; Green v. Morrison, 5 Colo. 18; L. 615, 110 S. W. 827, Albin Farmers' Bank v. Brown, 1 Har. Co. v. Commonwealth, 33 Ky. L. (Del.) 330; Fish v. First Nat. Bank, 367, 108 S. W. 299; Ballard v. Ameri- 150 Fed. 524, 80 C C. A. 266, judg- can Hemp Co., 30 Ky. L. 1080, 100 S. ment reversed on rehearing, 157 Fed. W. 271 ; Smith v. Lewis, 3 B. Mon. 87, 84 C. C. A. 502. The rule seems (Ky.) 229. And in Allen v. Thomas, slightly limited in its application in 3 Mete. (Ky.) 198, 77 Am. Dec. 169; Florida. Wright v. Terry, 23 Fla. Lucas v. Chamberlain, 8 B. Mon. 160, 2 So. 6; Hunter v. Wilson, 21 (Ky.) 276; Mize v. Barnes, 78 Ky. Fla. 250; Eddy v. Roberts, 17 111. 506; Paducah Lumber Co. v. Pa- 505; Brown v. Strait, 19 111. 88; Bris- ducah Water Supply Co., 89 Ky. tow V. Lane, 21 111. 194; Ball v. Ben- 340, 11 Ky. L. 738, 12 S. W. 554, 13 jamin, 56 111. 105; Snydacker v. Ma- S. W. 249, 7 L. R. A. 77, 25 Am. St. gill, 24 III. 138; Steele v. Clark, 77 536; Mayor &c. v. Bailey, 5 Mart. 111. 471; Thompson v. Dearborn, 107 (La.) (O. S.) 321; Duchamp v. 111. 87; Dean v. Walker, 107 111. 540, Nicholson, 2 Mart. (La.) (N. S.) 47 Am. Rep. 467; Boals v. Nixon, 672; Marigny v. Remy, 3 Mart. (La.) 26 111. App. 517; Cobb v. Heron, 180 (N. S.) 607, 15 Am. Dec. 172; St- ill. 49, 54 N. E. 189; Hartman v. Joseph's Assn. v. Magnier. 16 La. Pistorius, 248 111. 568, 94 N. E. 131. Ann. 338; Dearborn v. Parks, 5 The rule is not without limitation, Greenl. (Maine) 81, 17 Am. Dec. however, and where a partnership is 206; Hinkley v. Fowler, 15 Maine, formed, and the firm agrees to per- 285 ; Warren Academy v. Starrett, 15 form a contract of one of its mem- Maine 443; Maxwell v. Haynes, 41 bers, the firm has been held not liable Maine 559; Coffin v. Bradbury, 89 to the third party interested. Goode- Maine 476, 36 Atl. 988. Maryland now V. Jones, 75 111. 48; McCoy v. recognizes the general rule with lim- 669 LIMITS OF OBLIGATION THIRD PERSONS. § 1 412 ported by a sufficient consideration.'^ In a number of jurisdic- itations. Owings* Exrs. v. Owings, 1 Har. & G. (Md.) 484; Eichelberger V. Murdock, 10 Md. 2,7i, 69 Am. Dec. 140; McNamee v. Withers, i7 Md. 171; Seigman v. llotTackcr, 57 Md. 321 ; Sanders v. Clason, 13 Minn. 379; llawley v. Wilkinson, 18 Gil. (Minn.) 468; Follansbee v. Johnson, 28 Minn. 311, 9 N. W. 882; Jefferson V. Asch, 53 Minn. 446, 55 N. W. 604, 25 L. R. A. 257, 39 Am. St. 618 (stating limits of doctrine) ; Kramer V. Gardner, 104 Minn. 370, 116 N. W. 925 (stating limits of doctrine) ; Sweatman v. Parker, 49 Miss.* 19; Lee V. Newman, 55 Miss. 365 ; Rob- bins V. Ayres, 10 Mo. 538, 47 Am. Dec. 125; Heim v. Vogel, 69 Mo. 529; Fitzgerald v. Barker, 70 Mo. 685. There must be a valuable con- sideration pass between the original parties to the contract. Jones v. Miller, 12 Mo. 408. The promise may be implied. Gibson v. St. Louis, K. C. & N. R. Co., 76 Mo. 549; Shamp V. Meyer, 20 Nebr. 223, 29 N. W^ 379, Ruhling v. Hackett, 1 Nev. 360; Bishop v. Stewart, 13 Nev. 25 ; Miliani v. Tognini, 19 Nev. 133. 7 Pac. 279; Painter v. Kaiser, 27 Nev. 421, 76 Pac. 747, 65 L. R. A. 672, 103 Am. St. 772; Van Dyne v. Vreeland. 11 N. J. Eq. 370; Joslin V. New Jersey Car &c. Co.. 36 N. J. L. 141 ; Deseumeur v. Rondel, 76 N. J. Ch. 394, 74 Atl. 703; Edwards v. National Window Glass Jobbers' Assn. _(N. J.), 68 Atl. 800 (action maintainable either in law or equity) ; Lawrence v. Fox, 20 N. Y. 268; Spiegelberg v. Schoenberg, 107 N. Y. S. 718; Wheat v. Rice, 97 N. Y. 296; Vrooman v. Turner, 69 N. Y. 280, 25 Am. Rep. 195 ; Parlin v. Hall, 2 N. Dak. 473, 52 N. W. 405 ; Thomp- son V. Thompson, 4 Ohio St. 2)2)Z ; Society of Friends v. Haines, 47 Ohio St. 423, 25 N. E. 119; Cincinnati &c. R. Co. v. Bank. 54 Ohio St. 60, 56 Am. St. 700. The right of a third party to sue is recognized in Oregon although limited in its application. Baker v. Eglin, 11 Ore. ZZi, 8 Pac. 280; Chrisman v. State Ins. Co., 16 Ore. 283, 18 Pac. 466; Washburn v. Interstate Inv. Co., 26 Ore. 436, 36 Pac. S2>Z, 38 Pac. 620; Brower Lum- ber Co. v. Miller, 28 Ore. 565, 43 Pac. 659, 52 Am. St. 807; Hind v. Holdship, 2 Watts (Pa.) 104, 26 Am. Dec. 107 (defendant promised to pay a del)t in consideration of an assign- ment for the benefit of creditors) ; Morrison v. Bcckey, 6 Watts (Pa.) 349; Edmundson v. Penny, 1 Pa. St. 334, 44 Am. Dec. 137; Hostettcr v. Hollinger, 117 Pa. St. 606, 12 Atl. 741; Kcim v. Taylor, 11 Pa. St. 163; Urquhart v. Brayton, 12 R. I. 169; Wood v. Moriarty, 15 R. I. 518, 9 Atl. 427; Wilbur v. Wilbur, 17 R. I. 295, 21 Atl. 497; Duncan v. Moon, Dudley (S. Car.) HI; Brown v. O'Brien, 1 Rich. (S. Car.) 268, 44 Am. Dec. 254 ; Thompson v. Gordon, 3 Stob. (S. Car.) 196; Ruohs v. Traders' Fire Ins. Co., Ill Tenn. 405, 78 S. W. 85, 102 Am. St. 790; Mc- Carty v. Blevins, 5 Yerg. (Tenn.) 195, 26 Am. Dec. 262; Robinson v. Denson, 3 Head (Tenn.) 395; Mc- Cown V. Schrimpf, 21 Tex. 22, 73 Am. Dec. 221; Urquhart v. Ury, 27 Tex. 7; Mathonican v. Scott, 87 Tex. 396, 28 S. W. 1063; Stadler v. Talley Bros., 3 Tex. App. Civ. Cas., § 472; Heath v. Coreth, 11 Tex. Civ. App. 91, 22 S. W. 56. The rule and its limitations as recognized in Utah stated in Montgomerv v. Rief, 15 Utah 495, 50 Pac. 623. Johnson v. McClung, 26 W. Va. 659; Hodson V. Carter, 3 Pin. (Wis.) 212, 3 Chand. 234; Bassett v. Hughes, 43 Wis. 319; Hollock v. Parcher, 52 Wis. 393; Grant v. Diebold Safe &c. Co., 77 Wis. 72, 45 N. W. 951 ; Lar- son v. Cook, 85 Wis. 564. 55 N. W. 703; Smith v. Pfluger, 126 Wis. 253, 105 N. W. 476, 110 Am. St. 911; Tweeddale v. Tweeddale, 116 Wis. 517, 93 N. W. 440, 61 L. R. A. 509, 96 Am. St. 1003. ''Jones V. .Miller, 12 Mo. 408; Mc- Arthur v. Dryden, 6 N. Dak. 438, 71 N. W. 125 ; Staver Carriage Co. v. Jones (Okla.), 123 Pac. 148. "It does not follow that the third party can enforce a promise, unless the promise itself is based upon a con- sideration. In other words, it must be a contract as stated in the statute, and unless there is a consideration there is no contract." Eastman Land & Investment Co. v. Long-Bell Lum- ber Co., 30 Okla. 555, 120 Pac. 276. s 1413 CONTRACTS, 670 tions it is provided by statute that a contract made expressly for the benefit of a third person may be enforced by him at any time before the party thereto rescinds it." The codes of a number of the states provide that every action must be prosecuted in the name of the real party in interest, except in certain specified cases. Under a provision of this character the person for whose benefit a contract is made may bring suit thereon unless it comes within one of the exceptions stated in the code/^ § 1413. Must be a clear intent to benefit the third party. — It is a Rile of practically universal application that there must exist on the part of the original parties to the contract a clear intent to benefit the third party, although a majority of the courts do not go so far as to hold with Connecticut that the contract must be for the sole and exclusive benefit of the third party.*® Many of the cases in addition to holding that there must be an intent to **;. F. Hall-Martin Co. v. Hughes (Cal.), 123 Pac. 617; Tatem v. Eg- lanol Min. Co. (Mont), 123 Pac. 28; Eastman Land & Imp. Co. v. Long- Bell Lumber Co., 30 Okla. 555, 120 Pac. 276; Staver Carriage Co. v. Jones (Okla.), 123 Pac. 148; Dakota Comp. Laws 1887, § 3499; Schneider's Oklahoma Stat., § 1044. ^ Starbird v. Cranston, 24 Colo. 20, 48 Pac. 652; Vandalia R. Co. v. Keys, 46 Ind. App. 353, 91 N. E. 173; Stevens v. Flanagan, 131 Ind. 122, 30 N. E. 898; Paducah Lumber Co. V. Water Supply Co., 89 Ky. 340, 11 Kv. L. 738. 12 S. W. 554, 13 S. W. 249, 7 L. R. A. 11, 25 Am. St. 536; Ellis v. Harrison, 104 Mo. 270, 16 S. W. 198. See Bliss on Code Pleading, § 241. ^' See, generally, Thomas Mfg. Co. V. Prather, 65 Ark. 27, 44 S. W. 218; Chung Kee v. Davidson, TZ Cal. 522, 15 Pac. 100; Savings Bank v. Thorn- ton, 112 Cal. 255, 44 Pac. 466; Bur- ton v. Larkin, 36 Kans. 246, 13 Pac. 398, 59 Am. Rep. 541; Holderman V. Tedford, 7 Kans. App. 657, 53 Pac. 887; Paducah Lumber Co. v. Paducah &c. Co., 89 Kv. 340, 11 Ky. L. 738, 12 S. W. 554, 13 S. W. 249, 7 L. R. A. n, 25 Am. St. 536; Hows- mon V. Trenton Water Co., 119 Mo. 304. 24 S. W. 784. 23 L. R. A. 146, 41 Am. St. 654; Jefferson v. Asch, 53 Minn. 446. 55 N. W. 604, 25 L. R. A. 257, 39 Am. St. 618; Chicago &c. R. Co. V. Bell, 44 Nebr. 44, 62 N. W. 314; Joslin v. New Jersey Car &c. Co., Z(y N. J. L. 141; Cin- cinnati &c. R. Co. V. Bank, 54 Ohio St. 60, 56 Am. St. 700; Parker v. Jeffery. 26 Ore. 186, Zl Pac. 712; In re Ayer's Appeal, 28 Pa. St. 179; Urquhart v. Brayton, 12 R. I. 169; Thompson v. Gordon, 3 Strob. (S. Car.) 196; Urquhart v. Ury, 27 Tex. 7 ; Montgomery v. Rief, 15 Utah 495, 50 Pac. 623; Brown v. Markland, 16 Utah 360, 52 Pac. 597, 67 Am. St. 629; Grant v. Diebold Safe &c. Co., n Wis. 72, 45 N. W. 951. See also, Treat v. Stanton, 14 Conn. 445 ; Crocker v. Higgins, 7 Conn. 342; German State Bank v. Northwestern Water & Light Co., 104 Iowa 717, 74 N. W. 685, as favoring a strict rule. "It is not sufficient that the perform- ance of the covenant may benefit the third person. It must have been en- tered into for his benefit, or, at least, such benefit must be the direct result of the performance, and so within the contemplation of the party, and in addition the grantor must have a legal interest that the covenant be performed in favor of the party claiming performance." Durnherr v. Rau, 135 N. Y. 219, Z2 N. E. 49. 671 LIMITS OF OBLIGATION THIRD PERSONS. I413 benefit the third party, place a further Hmitation on the rule to the effect that the promisee must owe some obligation to the third party. Some privity between the two, the promisor and the party to be benefited, and some obligation or duty owing from the for- mer to the latter must exist which would give the l^eneficiary a legal or equitable claim to the benefits of the promise, or an equivalent from the promisor personally.''^ Other courts, how- ever, apparently deny the necessity for the existence of any obli- gation on the part of the promisee to the third party.** While it must clearly appear that the contract was intended for the bene- fit of a third person it is unnecessary that such third person be named in the contract." "Vrooman v. Turner. 69 N. Y. 280. 25 Am. Rep. 195; Townsend v. Rackham, 143 N. Y. 516. 38 N. E. 731; Coleman v. Hiller, 85 Hun (N. Y.) 547, 33 N. Y. S. 357, 67 N. Y. St. 41; Embler v. Hartford Steam &c. Ins. Co., 158 N. Y. 431, 53 N. E. 212. 44 L. R. A. 512 ; Durnherr v. Rau. 135 N. Y. 219. 32 N. E. 49; Litchfield V. Flint, 104 N. Y. 543, 11 N. E. 58. See also. Thomas Mfg. Co. V. Prather, 65 Ark. .27, 44 S. W. 218; German State Bank v. North- western Water & Light Co., 104 Iowa 717, 74 N. W. 685 ; Union Rail- way Storage Co. v. McDermott. 53 Minn. 407. 55 N. W. 606; Jefferson V. Asch, 53 Minn. 446, 55 N. W. 604. 25 L. R. A. 257, 39 Am. St. 618; Howsmon v. Trenton Water Co., 119 Mo. 304, 24 S. W. 784, 23 L. R. A. 146, 41 Am. St. 654; St. Louis v. Von Phul, 133 Mo. 561, 34 S. W. 843. 54 Am. St. 695 ; Street v. Good- ale. 77 Mo. App. 318; Devers v. Howard. 144 Mo. 671. 46 S. W. 625; McDonald v. American Nat. Bank, 25 Mont. 456, 65 Pac. 896; Tatem V. Eglanol Min. Co. (Mont.). 123 Pac. 28 ; Ferris v. Carson Water Co.. 16 Nev. 44. 40 Am. Rep. 485 ; Collins V. Kaw Citv Mill &c. Co., 26 Okla. 641, 110 Pac. 734; Washburn v. In- terstate Investment Co.. 26 Ore. 436, 36 Pac. 5.33. 38 Pac. 620; Fish & Hunter Co. v. New England Home- stake Co. (S. Dak.\ 130 N. W. 841; Montgomery v. Rief, 15 LItah 495. 50 Pac. 623. "So it may be said to be definitely settled law in this state that a third person for whose benefit a contract is made does not in all cases have a right of action thereon. To entitle him to enforce the prom- ise there must appear to have been some privity, by contract or other- wise, between the promisee and the beneficiary, some obligation or duty owing from the former to a third person, giving the latter a legal or equitable claim to the benefit of the promise. No such privity or obliga- tion existed in this case." Kramer v. Gardner, 104 Minn. 370, 116 N. W. 925. '« See Dean v. Walker. 107 111. 540, 47 Am. Rep. 467; Gwaltney v. Wheeler, 26 Ind. 415; Lam v. Don- ovan, 19 Ind. 40; W^alz v. Walz, 84 Ind. 403; Paducah Lumber Co. v. Paducah Water Supplv Co., 89 Ky. 340, 11 Kv. L. 738, 12 'S. W. 554, 13 S. W. 249, 7 L. R. A. 77, 25 Am. St. 536; Brewer v. Maurer, 38 Ohio St. 543. 43 Am. Rep. 436; McCartv v. Blevins, 5 Yerg. (Tenn.) 195, 26 Am. Dec. 262; Tweeddale v. Tweeddale, 116 Wis. 517. 93 N. W. 440, 61 L. R. A. 509, 96 Am. St. 1003. See also, Merriman v. Moore, 90 Pa. St. 78, with which compare Edmundson v. Penny, 1 Pa. St. 334, 44 Am. Dec. 137. '"Chung Kee v. Davidson. 73 Cal. 522, 15 Pac. 100: Bacon v. Davis, 9 Cal. App. 83. 98 Pac. 71; Bristow v. Lane, 21 111. 194; Livingston v. Chi- cago & N. W. R. Co.. 142 Iowa 404, 120 N. W. 1040; Knott v. Dubuque & S. C. Rv. Co., 84 Iowa 462, 51 N. I4I4 CONTRACTS. 672 § 1414. Acceptance, necessity for and sufficiency of. — In some jurisdictions it is held that there must be such an acceptance on the part of the stranger or third party as will release the prom- isee from any legal obligation he may be under to the third party and which the contract was intended to cancel.^" It is not neces- sary, however, as a general rule, for the third party to make any formal acceptance prior to the bringing of the suit.^^ The assent of a beneficiary will be presumed.^" The commencement of an action to enforce the promise is sufficient as an acceptance.^^ The naming of a child in accordance with the terms of an agreement and the continued bearing of that name by the child and the child bringing suit on the agreement will amount to a ratification of W. 57; Burton v. Larkin, 26 Kans. 246, 13 Pac. 398, 59 Am. Rep. 541; Duchamp v. Nicholson, 2 Mart. (La.) (N. S.) 672; Flower v. Lane, 6 Mart. (La.) (N. S.) 151; Maxfield v. Schwartz, 43 Minn. 221, 45 N. W. 429; Lovejoy v. Howe, 55 Minn. 353, 57 N. W. 57; Eau Claire-St. Louis Lumber Co. v. Banks, 136 Mo. App. 44, 117 S. W. 611; Bank of Lacldonia V. Bright-Coy Commission Co., 139 Mo. App. 110, 120 S. W. 648; State V. Laclede Gaslight Co., 102 Mo. 472, 14 S. W. 974, 15 S. W. 383, 22 Am. St. 789; State v. St. Louis & S. F. R. Co., 125 Mo. 596, 28 S. W. 1074; St. Louis V. Von Phul, 133 Mo. 561, 34 S. W. 843, 54 Am. St. 695 ; Street V. Goodale, 77 Mo. App. 318; Joslin V. New Jersey Car &c. Co., 36 N. J. L. 141 ; Whitehead v. Burgess, 61 N. J. L. 75, 38 Atl. 802 ; Coster v. Mayor, 43 N. Y. 399; Simson v. Brown, 68 N. Y. 355 ; Wheat v. Rice, 97 N. Y. 296; Martin v. Peet, 92 Hun (N. Y.) 133, 71 N. Y. St. 725, 36 N. Y. S. 554; Cincinnati &c. R. Co. v. Bank, 54 Ohio St. 60, 56 Am. St. 700; Mc- Cown V. Schrimpf, 21 Tex. 22, 73 Am. Dec. 221 ; Smith v. Bowman, 32 Utah 21, 88 Pac. 687. A contract may be enforced by the party for whose benefit it is made, if he adopts it after it is made though he is not named in the contract or may not have known of it at the time. Beat- tie Mfg. Co. V. Clark, 208 Mo. 89, 106 S. W. 29. It has been held in Maine, however, that in case of a promise to pay the debt of another, if the promise is general to pay all the debts, no particular obligation be- ing designated, an individual creditor cannot sue at law upon the promise. Harvey v. Maine Condensed Milk Co., 92 Maine 115, 42 Atl. 342. A promise to pay a third person may be implied from the circumstances. Gibson v. St. Louis, K. C. & N. R. Co., 76 Mo. 549. "^ See Ramsdale v. Horton, 3 Pa. St. 330; Stone v. Justice, 9 Phila. 22. "Bay v. Williams, 112 111. 91, 1 N. E. 340, 54 Am. Rep. 209; Seaman V. Hasbrouck, 35 Barb. (N. Y.) 151; Smith v. Pfluger, 126 Wis. 253, 105 N. W. 476, 110 Am. St. 911. "Rogers v. Gosnell, 58 Mo. 589; Lawrence v. Fox, 20 N. Y. 268; Baker v. Eghn, 11 Ore. 333,- 8 Pac. 280. See also, Brown v. Markland, 63 Utah 360, 52 Pac. 597, 67 Am. St. 629; Tweeddale v. Tweeddale, 116 Wis. 517, 93 N. W. 440, 61 L. R. A. 509, 96 Am. St. 1003. " North Alabama Development Co. V. Orman, 55 Fed. 18, 5 C. C. A. 22; McCoy v. McCoy, 32 Ind. App. 38, 69 N. E. 193, 102 Am. St. 223; Cop- page V. Gregg, 127 Ind. 359, 26 N. E. 903 ; Copeland v. Summers, 138 Ind. 219, 35 N. E. 514, 37 N. E. 971 ; Motley V. Manufacturers' Ins. Co., 29 Maine 337, 50 Am. Dec. 591; Stariha v. Greenwood, 28 Minn. 521, 11 N. W. 76; Campbell v. Smith, 71 N. Y. 26, 27 Am. Rep. 5. See also, Blake v. Atlantic Nat. Bank, 33 R. I. 464, 82 Atl. 225. 673 LIMITS OF OBLIGATION THIRD PERSONS. § I415 the contract made ])y the parents." An infant may accept the terms of a contract made for his benefit and bring an action to en- force the same." § 1415. Delivery — Rights of parties in general. — Since the making of the contract is the essential fcatnre which enables a third party to enforce the same, it is unnecessary that a contract in writing be delivered to the beneficiary in order to enable such stranger to enforce it.^" It has been held, however, that one is not entitled to the benefits of a contract made in his behalf with- out complying with the conditions and assuming the liability that the original parties have attached thereto." The rights of a party for whose benefit a promise is made must be measured by the terms of the agreement between the principal parties.^* The original parties to the agreement may rescind their contract at any time prior to acceptance by the one for whose benefit it was made.''" It is generally beyond the power of the original party to rescind, however, after the beneficiary accepts the agreement "Daily v. Minnick, 117 Iowa 653, 91 N. W. 913. 60 L. R. A. 840. To same effect, Freeman v. Morris, 131 Wis. 216, 109 N. W. 983, 120 Am. St. 1038. "Gooden v. Rayl, 85 Iowa 592, 52 N. W. 506; Strong v. Marcy, 33 Kans. 109, 5 Pac. 366; Benge v. Hiatt's Admr.. 82 Kv. 666, 6 Ky. L. 714, 56 Am. Rep. 912; McCarty v. Elevens, 5 Yerg. (Tenn.) 195, 26 Am. Dec. 262. See also. Griffin v. Schlenk, 31 Ky. L. 422, 102 S. W. 837. *° Copeland v. Summers, 138 Ind. 219. 35 N. E. 514, 37 N. E. 971; Stevens v. Flannagan, 131 Ind. 122, 30 N. E. 898. "Meridian Life & Trust Co. of Indiana v. Eaton, 41 Ind. App. 118, 81 N. E. 667, 82 N. E. 480 ; Schneider v. United States Life Ins. Co., 123 N. Y. 109, 25 N. E. 321, 20 Am. St. 727. See also, Hoffman v. Habig- horst, 49 Ore. 379. 89 Pac. 952, re- hearing denied 91 Pac. 20. "The third person acquires no rights un- der the promise made for his benefit until he accedes to it. * * * Before such accession on his part, his right to insist upon the performance of 43— Contracts, Vol. 2 the promise in his favor may be lost by revocation or release between the parties to the agreement, or by in- tervention of the rights of others." Blake v. Atlantic Nat. Bank, 33 R. I. 464, 82 Atl. 225. One who sues upon a contract executed by another for his benefit must accept the con- tract as it was made. Western Union Tel. Co. V. Douglass (Tex.), 133 S. W. 877. He must prove the contract, show that it was made for his benefit and be bound by all its terms. Tuck- er V. Gaines, 86 S. Car. 500, 68 S. E. 670. ■^Malanaphv v. Fuller & Johnson Mfg. Co., 125 Iowa 719, 101 N. W. 640. 106 Am. St. 332. '° Commercial National Bank v. Kirkwood, 172 111. 563. 50 N. E. 219; Davis V. Calloway. 30 Ind. 112. 95 Am. Dec. 671 ; Crowe v. Lewin, 95 N. Y. 423; McArthur v. Drvden, 6 N. Dak. 438. 71 N. W^' 125: Brewer v. Maurer. 38 Ohio St. 543, 43 Am. Rep. 436; Trimble v. Strother, 25 Ohio St. 378. See also. Bacon v. Davis, 9 Cal. App. 83 98 Pac. 71 ; Hartman v. Pistorius, 248 111. 568, 94 N. E. 131. See post, § 142L § 141 5 CONTRACTS. 674 and consents to avail himself of its terms."" Likewise when the party for whose benefit the contract is made, is acting in reliance upon the agreement with the knowledge of the parties thereto they cannot rescind the same."^ But the liability of the promisor is measured by his contract with the promisee and he can usually set up any defense to an action brought by the beneficiary which would be good against the promisee"^ such as failure of consid- eration.**^ And it has been held that if the promisor has agreed to pay the promisee's debt up to a certain amount and the total indebtedness of the promisee has not been ascertained, one of the promisee's creditors may sue the promisor, but the promisor may compel the action to be brought for the benefit of all the promis- ee's creditors, so that the decree rendered will bind all and free the promisor from further liability.'''* However where a surety pays the entire amount of his liability to one of the creditors without the assent of others entitled to a distributive share, he may be compelled to pay the latter such sum as they would have been entitled to receive if they had been made parties and a pro rata distribution had. Of this the surety cannot complain; for, al- though he will in fact pay more than the amount of the bond, it results from his own wrong in paying the entire amount of the •^Pugh V. Barnes, 108 Ala. 167, 19 Smith Grocery Co. (Tex. Civ. App.), So. 370; Cedar Rapids &c. Light Co. 127 S. W. 1118. V. Chicago &c. R. Co., 145 Iowa 528, " Crowell v. Currier, 27 N. J. Eq. 124 N. W. 323 (holding that when an 152, affd. 27 N. J. Eq. 650. electric light company had done the "^ Ellis v. Harrison, 104 Mo. 270, grading and furnished the necessary 16 S. W. 198; Dunning v. Leavitt, 85 right of way for a switch track in N. Y. 30, 39 Am. Rep. 617. See accordance with the terms of a con- also, Taylor v. Harvey, 30 Ky. L. tract between the defendant railway 1045, 100 S. W. 258; Davis v. Dunn, companies, the railway companies 121 Mo. App. 490, 97 S. W. 226; could not cancel their agreement Redditt v. Wall (Miss.), 55 So. without taking into consideration the 45, 34 L. R. A. (N. S.) 152. One rights of the electric light company) ; who agrees to pay the costs incurred Dodge's Admr. v. Moss, 82 Ky. 441, by the defendant in a particular suit 6 Ky. L. 707; Pecquet v. Pecquet's is not liable for the costs of a sec- Exr., 17 La. Ann. 204; Knowles v. ond suit in which the attorneys in Erwin, 43 Hun (N. Y.) 150, 5 N. the first suit sued for their fees. Y St 421, affd. 124 N. Y. 633, 26 Joseph Mazzini Society v. Corgiat, N E. 759; Gifford v. Corrigan, 117 63 Wash. 273, 115 Pac. 93. N. Y. 257, 22 N. E. 756, 6 L. R. A. "'Clay v. Woodrum, 45 Kans. 116, 610. 15 Am. St. 508; Thompson v. 25 Pac. 619; Osborne v. Cabell, 17 Gordon, 3 Strob. (S. Car.) 196; Put- Va. 462. ney v Farnham, 27 Wis. 187, 9 Am. «*Bell v. Mendenhall, 71 Minn. 331, Rep. 459; Bassett v. Hughes, 43 Wis. 1Z N. W. 1086. See also, Harvey v. 319, Compare with Meyer v. Walker- Maine Condensed Milk Co., 92 Maine 115, 42 Atl. 342. 6/5 LIMITS OF OBLIGATION THIRD PERSONS. § I416 bond to a part of the beneficiaries in disregard of the rights of Others."' § 1416. Particular cases — Insurance. — The terms of a paid- up pohcy of insurance decide tlie question of the title to its pro- ceeds."" The general rule is that a policy, and the money to be- come due under it, belong, the moment it is issued, to the person or persons named in it as the beneficiary."^ The beneficiary even though not a party to the original contract of insurance is given the right to enforce such policy, and this, generally, by a direct action."® The rights of a beneficiary to an insurance policy are in many instances controlled by the statutes of the various states and reference must be had to these statutes in order to determine the rights of such beneficiaries. It is held by the weight of authority that the beneficiary may maintain an action against the insurer for breach of contract other than failure to pay the indemnity, such as an action for damages for the wrongful can- celation or forfeiture of the policy."" But where an absolute right is not vested in the beneficiary by the contract of insurance and the insured has the right to dispose of the policy by assign- ment, will or gift, without the consent of the beneficiary, the un- certainty of the beneficiary's interest growing out of the contin- gencies incident to the power of the insured to thus deal with the " Curry V. Homer, 62 Ohio St. 233, °» See BrooWyn Life Ins. Co. v. 56 N E 870 Week, 9 111. App. 358; Clemmitt v. "" See, In re, Peckham, 29 R. I. New York Life Ins. Co., 76 Va. 355 ; 250 69 A.tl. 1002. 132 Am. St. 813. Merrick v. Northwestern National "Burdett v. Burdett, 26 Okla. 416, Life Ins. Co., 124 Wis. 221, 102 N. 109 Pac. 922, 35 L. R. A. (N. S.) W. 593. 109 Am. St. 931. It has been 964n : Central National Bank v. held however, that the beneficiary of Hume, 128 U. S. 195, 32 L. ed. 370, a life insurance policy has no right 9 Sup. Ct. 41. of action because of the breach by '' Cleaver v. Mutual Reserve Fund the insurer of its contract with the Life Assn. (1892), 1 Q. B. 147; insured with reference to assess- Grant v. Bradstreet, 87 Maine 583, ments, reserve funds, classification, 33 Atl 165; Nims v. Ford, 159 Mass. etc. Price v. Mutual Reserve Life Ins. 575 35 N. E. 100; Wright v. Ver- Co., 102 Md. 683, 62 Atl. 1040. 4 L. mont Life Ins. Co., 164 Mass. 302, R. A. (N. S.) 870. Upon the re- 41 N. E. 303; Ruohs v. Trader's Fire scission of a policy, the beneficiary Ins. Co., Ill Tenn. 405, 78 S. W. 85, cannot maintain an action to recover 102 Am. St. 790. For numerous the premium paid. All rights to the rases on this subject see 3 Am. premium paid by the insured are & Eng. Ency. of Law 980. See also vested in him. Slocum v. North- further on this subject under the western National Life Ins. Co., 135 title Insurance in Vol. V of this Wis. 288, 115 N. W. 796, 14 L. R. work. A. (N. S.) lllOn. § 1 41 7 CONTRACTS. 676 policy defeats the right of the beneficiary to maintain an action for damages for a breach of the contract/" However, where the insured has the power to change the beneficiary and is dissuaded from making an intended change by reason of the sole benefici- ary's promise to pay a portion of the proceeds of the policy to a designated person it has been held that such person may maintain an action on the promise against the beneficiary.'^ It has been held that a husband and wife cannot insure a homestead, the title to which is in the wiie, and the husband represent that he is the sole and unconditional owner at the time he procures the in- surance and when the risk is destroyed abandon the insurance con- tract and its conditions as to sole ownership and collect the value of the policy on the theory that he, though not the sole owner as represented, yet has an insurable interest in the property.'^ § 1417. Particular cases — Telegraph company cases. — The rule in England has always been that the right of action against the telegraph company for delay in delivery or incorrect transmis- sion is founded upon the contract of sending and that in the absence of such facts as make the addressee a party or privy to the contract, the latter has no right of action against the telegraph company." This is not the accepted doctrine in the United ™ Knights Templar &c. Indemnity recover the residue left after paying Co. V. Gravett, 49 111. App. 252; Slo- the assignee the amount advanced cum V. Northwestern National Life by him as premiums. See, however, Ins. Co., 135 Wis. 288, 115 N. W. Metropolitan Life Ins. Co. v. Eli- 796 14 L R. A. (N. S.) lllOn. son, 72 Kans. 199, 83 Pac. 410, 3 L. ^'Scheele v. Lafayette Bank, 120 R. A. (N. S.) 934, 115 Am. St. 189, Mo. App. 611, 97 S. W. 621; Water- holding that neither the beneficiary house V. Waterhouse, 29 R. I. 485, 72 named in the policy nor one with no Atl. 642, 22 L. R. A. (N. S.) 639n. insurable interest to whom a part of "Bacot V. Phoenix Ins. Co., 96 the proceeds are assigned in consid- Miss. 223, 50 So. 729, 25 L. R. A. eration of his keeping up the pre- (N. S.) 1226n. As to whether one miums can recover on the policy. For who has no insurable interest in the an extensive note on the validity of life of another may take an assign- an assignment of an interest on a ment of a life insurance policy on life insurance policy to one paying the life of such other under an premiums see 3 L. R. A. (N. S.) agreement that the former shall pay 935n. the premiums and receive the pro- ''^ Winterbottom v. Wright, 10 ceeds or only so much as will repay Mees. & W 109; Playford v. United the amount advanced, see Bendet v. Kingdom Electric Telegraph Co., L. EUis 120 Tenn.277, niS.W.795, 18 R. 4 Q. B. 706; Feaver v. Montreal L. R. A. (N. S.) 114, 127 Am. St. Telegraph Co., 23 U. C C. P. 150. 1000, and cases cited holding that the The Georgia courts hold that the administrator of the deceased may telegraph company is the agent of 077 LIMITS OF OBLIGATION THIRD PERSONS. I417 States, however. In most jurisdictions in this country the re- ceiver or addressee of the message who is named thereon or of whose interest notice is given the company at the time, may main- tain an action either ex contractu or ex dehcto and recover such damages as he may have sustained by reasun of delay or incorrect transmission.'* The cases, as a general mle, hold that in order to the sender of the telegram and that the addressee must look to the send- er of the message and not to the company for any damages which he may have sustained by reason of delay or error in transmitting the despatch. Western Union Tel. Co. V. Shotter, 71 Ga. 7oO ; Western Union Tel. Co. v. Flint River Lum- ber Co., 114 Ga. 576, 40 S. E. 815, 88 Am. St. 36; Brooke v. Western Union Tel. Co., 119 Ga. 694, 46 S. E. 826, adhering to the rule and dis- tinguishing Western Union Tel. Co. V. James, 90 Ga. 254, 16 S. E. 83; Western Union Tel. Co. v. Waxel- baum. 113 Ga. 1017, 39 S. E. 443, 56 L. R. A. 741. See also, Ogles v. Nashville C. & S. L. R. Co., 130 Ga. 430, 60 S. E. 1048, holding that where the father of the plaintiff entered into a contract with defendant's agent in Rome, Georgia, by which the agent undertook to issue a ticket for transportation and cause the same to be delivered to the plain- tiff in Cariton, the plaintiff could not maintain an action for breach of the contract. See also, Lavelle v. Western Union Tel. Co. (Ark.), 145 S. W. 205. It is obvious that if the sender is the agent of the addressee, the latter is the party with whom the contract is in fact made and may as principal maintain an action against the company for damages sustained by its breach of the contract to trans- mit and deliver the message. Ken- non v. Western Union Tel. Co., 92 Ala. 399, 9 So. 200. Western Union Tel. Co. V. Wilson. 93 Ala. 32, 9 So. 414, 30 Am. St. 23; Western Union Tel. Co. v. Cleveland, 169 Ala. 131, 53 So. 80; Western Union Tel. Co. V. Rowell. 153 Ala. 295. 45 So. 73 : Manker v. Western Union Tel. Co., 137 Ala. 292, 34 So. 839 (undisclosed principal), overruling Western Union Tel. Co. v. Allgood, 125 Ala. 712, 27 So. 1024 and Lucas v. Southern R. Co., 122 Ala. 529, 25 So. 219; Harkness v. Western Union Tel. Co., 73 Iowa 190, 34 X. W. 811, 5 Am. St. 672 (suit by undisclosed principal of both the sender and ad- dressee) ; Milliken v. Western Union Tel. Co., 110 N. Y. 403, 18 X. E. 251, 11 L. R. A. 281 (undisclosed princi- pal) ; Loper v. Western Union Tel. Co., 70 Texas 689, 8 S. W. 600. But even though the circumstances are such that the sendee cannot sue ex contractu he may sue ex delicto for breach of the public duty. Mc- Gehee v. Western Union Tel. Co., 169 Ala. 109, 53 So. 205, Ann. Cas. 1912B. 205. "Western Union Tel. Co. v. Bur- ris, 179 Fed. 92, 102 C. C. A. 386; Whitehill v. Western Union Tel Co., 136 Fed. 499; Hadley v. Western Union Tel. Company, 115 Ind. 191, 15 N. E. 845 (statutory) ; Western Union Tel. Co. v. Fenton, 52 Ind. 3 (statutory) ; West v. Western Union Tel. Co., 39 Kans. 93, 17 Pac. 807. 7 Am. St. 530n; Western U. Tel. Co. V. Woods, 56 Kans. 737, 44 Pa;. 989; Chapman v. Western Union Tel. Co., 90 Kv. 265, 12 Kv. L. 265, 13 S. W. 880; Western Union Tel. Co. v. Jump, 8 Ky. L. 531 (telegram an- nouncing death of addressee's son) ; IMarkel v. Western Union Tel. Co., 19 Mo. App. 80 (statutory) ; Wolf- skehl V. Western Union Tel. Co., 46 Hun (N. Y.) 542 (holding that either sender or addressee may main- tain an action for damage sus- tained) ; Barrack v. Postal Tel. Co., 12 Ohio S. & C. P. Dec. 78: But- ler V. Western Union Tel. Co., 62 S. Car. 222, 40 S. E. 162. 89 Am. St. 893 (telegram announcing serious illness of addressee's daughter) ; Western Union Tel. Co. v. Cook, 45 Tex. Civ. App. 87, 99 S. W. 1131; Western Union Tel. Co. v. Sweet- I4i8 CONTRACTS. 678 entitle the addressee to maintain an action it must appear that the company at the time it received the message for transmission was given information that it was for the benefit of the sendee or that the language of the message is sufficient to convey such informa- tion." It has been held, however, that the telegraph company is liable where the face of the message clearly shows that a busi- ness transaction is contemplated and that negligence in its trans- mission may reasonably be attended with pecuniary loss.'^'^ It has also been held that an action for damages ex contractu cannot be maintained where the message is not sent for the benefit of the addressee.^' § 1418. Particular cases — Building contract cases. — Un- paid subcontractors, material-men or laborers may bring an action man, 19 Tex. Civ. App. 435, 47 S. W. 676; Western Union Tel. Co. v. Hale, 11 Tex. Civ. App. 79, 32 S. W. 814 (announcing fatal illness of brother) ; Western Union Tel. Co. V. Clark, 14 Tex. Civ. App. 563, 38 S. W. 225 (telegram to mother in- forming her of daughter's illness) ; Western Union Tel. Co. v. Doug- lass (Texas), 133 S. W. 877, affg. 124 S. W. 488 (announcing death of mother). See also, Alexander v. Western Union Tel. Co. (N. Car.), 74 S. E. 449; McLeod v. Pacific Tel. Co., 52 Ore. 22, 94 Pac. 568, 15 L. R. A. (N. S.) 810, 16 Am. & Eng. Ann. Cas. 1239, rehearing denied 52 Ore. 28, 95 Pac. 1009, 18 L. R. A. (N. S.) 954, 16 Am. & Eng. Ann. Cas. 1241 (an action ex delicto ap- plying the same principles applicable to telegraph companies to telephone companies and holding a telephone company liable for negligent failure to summons an addressee to re- ceive a long distance message. See also, note in 15 L. R. A. (N. S.) 810. "Anniston Cordage Co. v. West- ern Union Tel. Co., 161 Ala. 216, 49 So. 770, 30 L. R. A. (N. S.) 1166, 135 Am. St. 124 ; Western Union Tel. Co. v. Weniski, 84 Ark. 457, 106 S. W. 486; Frazier v. Western Union Tel. Co., 45 Ore. 414, 78 Pac. 330, 67 L. R. A. 319, 2 Am. & Eng. Ann. Cas. 396. See also, Butner v. Western Union Tel. Co., 2 Okla. 234, Z1 Pac. 1087. See also, cases cited in preceding note. " Fererro v. Western Union Tel. Co., 9 App. (D. C.) 455, 35 L. R. A. 548; Western Union Tel. Co. v. Federolf (Tex. Civ. App.), 145 S. W. 314. To same effect. Western Union Tel. Co. v. Biggerstaff (Ind.), 97 N. E. 531 (message summoning physician). See also, Vermilye v. Postal Tel. Cable Co., 205 Mass. 598, 91 N. E. 904, 30 L. R. A. (N. S.) 472. A telegram announcing the death of a brother has been held suf- ficient on its face to charge the com- pany with notice that damages may be reasonably expected to result to the sendor from a negligent failure to deliver it. Western Union Tel. Co. V. Garlington (Ark.), 142 S. W. 854. Compare with Western Union Tel. Co. V. Edmonds (Tex. Civ. App.), 146 S. W. 322. "Postal Tel. Cable Co. v. Ford, 117 Ala. 672, 23 So. 684 (sender tes- tified that he sent the telegram for the benefit of the addressee. The court held that it must have been sent for the sole benefit of the ad- dressee, and that this was not the case and denied recovery.) ; Curd v. Cumberland Tel. & Tel. Co., (Ky. App.), 119 S. W. 746. The Alabama court holds that the sendee cannot sue ex contractu unless he is direct- ly a party to the contract or is the principal of the sendee or contem- 679 LIMITS OF OBLIGATIOX THIRD PERSONS. § I418 in most jurisdictions directly on the contractor's bond when he is required tliereby to pay for all labor and materials furnished in connection with the work. The contract of surety is deemed to have been made for the benefit of material-men and laborers.^* This is especially true when the work contracted for is to be per- fomied in the erection of a public building or other public struc- ture upon which the laborer or material-men cannot acquire a lien.'^'* The right of laborers and material-men to sue the sureties may be gathered from the bond when read in connection with the plates the benefit solely of the per- son to whom the message is ad- dressed. MeGehee v. Western Union Tel. Co., 169 Ala. 109, 53 So. 205, Ann. Cas. 1912B. 512. " Knight & Jillson Co. v. Castle, 172 Ind. 97, 87 N. E. 976, 27 L. R. A. (N. S.) 573n; Ochs v. M. J. Carnahan Co., 42 Ind. App. 157, 76 N. E. 788, 80 N. E. 163; Getchell & Martin Lumber & Mfg. Co. v. Peter- son, 124 Iowa 599, 100 N. W. 550 (holding that such contractor may maintain the action). It has been said that the laborers and material- men can maintain an action on such bond only when the work is of such a character that no lien can be acquired thereon for the reason that when a provision of this char- acter is inserted in a contract for the building of a structure on which a lien may be obtained it will be inferred that its object is to pro- tect the owner and not to benefit third persons. See Wald's Pollock on Contracts (3d ed.) 253. But the foregoing cases dissent from this view. For instance, in the case last cited it is said that the primary ob- ject may have been to protect the owner but that it was also unques- tionably inserted for the benefit of subcontractors, and in the case of Ochs V. M. J. Carnahan Co., 42 Ind. App. 157, 76 N. E. 788, it is said: "It is true that in these cases (re- ferring to cases just cited by the court) the bond had been given to secure payment for materials used in a public building, upon which a mechanic's lien could not be ac- quired, and that such fact has a more or less prominent part in the opin- ions ; but while the ability of the material-man and mechanic to com- pel payment of their claims by filing a lien, would be influential in caus- ing them to resort to the bond, it cannot affect the obligation of the bond. If an agreement to pay for material, if the contractor does not, is an undertaking for the benefit of the material-man in one instance, it is in the other. Its terms are not affected by the possibility or im- possibility of otherwise procuring payment. If the material-man pro- duced payment by means of a lien, the appellants would be liable to the owner upon the bond, so that there can be no harshness in avoiding cir- cuity of action, and permitting direct recovery by the party who furnishes the material." ''"Williams v. Markland, 15 Ind. App. 669, 44 N. E. 562 (school- house) : Young V. Young, 21 Ind. App. 509, 52 N. E. 776 (school- house) ; American Surety Co. v. Lauber, 22 Ind. App. 326. 53 N. E. 793 (schoolhouse) ; King v. Dow- ney, 24 Ind. App. 262, 56 X. E. 680 (schoolhouse) ; National Surety Co. V. Foster Lumber Co., 42 Ind. App. 671. 85 N. E. 489 (public buildings) ; Baker v. Bryan, 64 Iowa 50l, 21 N. W. 83 (schoolhouse) ; American Surety Co. v. Thorn-Halliwell Ce- ment Co., 9 Kans. App. 8, 57 Pac. 237 (municipal water-works svstem) ; St. Louis V. Von Phul, 133 ^Io. 561. 34 S. W. 843, 54 Am. St. 695 (street improvement) ; La Crosse Lumber Co. V. Schwartz (Mo. App.). 147 S. W. 501 (soldiers' home) ; King V. Murphy. 49 Xebr. 670. 68 N. W. 1029 (public buildings) ; Gastonia v. § I41S CONTRACTS. 680 building contract proper. Thus, in the erection of pubHc build- ings they have been pennitted to maintain an action of this char- acter when the bond was merely conditioned upon the faithful performance of the contract and the contract contained language sufficient to require the contractor to pay the laborers and ma- terial-men for work performed and material furnished.^" A bond given to secure one in the performance of covenants, condi- tions and agreements contained in a contract for the erection of a dwelling, which bond is also given for the benefit of all persons who may become entitled to liens under the contract, has been con- strued in the light of the context of the building contract to mean that all persons who have the right to accjuire liens upon the property are entitled to its benefit and may sue thereon notwith- standing they failed to perfect their lien on the property.®^ La- borers and material-men cannot, however, bring a direct action against the surety when there is no express provision for a pay- ment for labor or materials either in the contract or bond, and it does not puq^ort to be for their benefit. A general undertaking that the contractor will perform the contract is held not to run to third persons when there is no provision for the payment of labor and materials.*^ It has been held, however, that laborers and McEntee-Peterson Engineering Co., 74 N. W. 1062 (court-house) : Mor- 131 N. Car. 363,42 S. E. 858 (public ton v. Harvey, 57 Nebr. 304, 11 N. water-works and sewer system) ; W. 808 (court-house). See also, R. Connor Co. v. Olson, 136 Wis. 13, Union Sheet Metal Works v. Dodge, 115 N. W. 811 (schoolhouse) ; 129 Cal. 390, 62 Pac. 41; Lacrosse United States Gypsum Co. v. Glea- Lumber Co. v. Schwartz (Mo. App.), son, 135 Wis. 539, 116 N. W. 238, 17 147 S. W. 501; Philadelphia v. Harry L. R. A. (N. S.) 906 (county in- C. Nichols Co., 214 Pa. 265, 63 Atl. sane asylum). 886; Bowditch v. Gourley, 24 Pa. ^' Brown v. Markland, 22 Ind. App. Super. Ct. 342. 652, 53 N. E. 295 (schoolhouse); '^ Gwinn v. Wright, 42 Ind. App. Hipwell V. National Surety Co., 130 597, 86 N. E. 453. Iowa 656, 105 N. W. 318 (public *- Spalding Lumber Co. v. Brown, library building) ; Deavers v. How- 171 111. 487. 49 N. E. 725 ; Sterling ard, 144 Mo. 671, 46 S. W. 625 (pub- v. Wolf, 163 111. 467, 45 N. E. 218; lie well) ; Sample v. Hale, 34 Nebr. Searles v. Flora, 225 111. 167, 80 N. 220, 51 N. W. 837 (public building) ; E. 98, revg. Flora v. Searles, 127 Fitzgerald v. McClav, 47 Nebr. 816, 111. App. 465; Knight & Jillson Co. 66 N. W. 828 (public buildings) ; v. Castle, 172 Ind. 97, 87 N. E. 976, Lyman v. Lincoln, 38 .Nebr. 794, 57 27 L. R. A. (N. S.) 573n; Dunlap v. N. W. 531 (public building) ; Kors- Eden, 15 Ind. App. 575, 44 N. E. meyer Plumbing & Heating Co. v. 560; Greenfield Lumber & Ice Co. v. McClav, 43 Nebr. 649, 62 N. W. 50 Parker, 159 Ind. 571, 65 N. E. 747: (court-house) ; Pickle, Marble & Hart v. State. 120 Ind. 83, 21 N. E. Granite Co. v. McClay, 54 Nebr. 661, 654, 24 N. E. 151 ; Townsend v. Cleve- 68 1 LIMITS OF OBLIGATION THIRD PERSONS. § I419 material-men may bring an action directly against the owner when lie has agreed with the builder to pay for work performed and materials furnished. ^^ § 1419. Particular cases — Contracts with carriers. — The consignee of a shipment of goods has been held entitled to main- tain an action for damages for losses resulting from an unreason- able delay in their transportation, notwithstanding title was re- tained by the consignor.®* But where title is retained by the con- signor a consignee of goods who has refused to receive the same cannot maintain an action for their loss while they are being re- turned to the consignor.®'^ It has also been held that where a father entered into a contract with the defendant railroad com- pany by which it agreed to compensate the father for all stock killed or injured, owned by him, his heirs or assigns, on a desig- nated farm-crossing by the cars or engines of said company or either of them, the plaintiff, who was his father's son and heir land Fire-Proofing Co., 18 Ind. App. 568, 47 N. E. 707 ; Green Bay Lumber Co. V. Independent School Dist., 121 Iowa 663, 97 X. W. 72; Herpolshei- mer v. Hansell-Elcock Co., 141 Mich. 367, 104 N. W. 671; Eau Claire-St. Louis Lumber Co. v. Banks, 136 Mo. App. 44, 117 S. W. 611; M. T. Jones Lumber Co. v. Villegas, 8 Tex. Civ. App. 669, 28 S. W. 558; Montgomery V. Rief, 15 Utah 495, 50 Pac. 623: Smith V. Bowman, 32 Utah 33, 88 Pac. 687, 9 L. R. A. (N. S.) 889n. Laborers and material-men have been denied the right to maintain an action against the surety where the covenant in the bond was readily capable of being construed as for the benefit of such laborer and ma- terial-men. See Searles v. Flora, 225 111. 167, 80 N. E. 98. revg. 127 111. App. 465 ; Hunt v. King. 97 Iowa 88, 66 N. W. 71 ; Macatee v. Hamilton, 15 Tex. Civ. App. 108, 38 S. W. 530; Puget Sound Brick Tile & Ter- ra Cotta Co. v. School District No. 73, 12 Wash. 118, 40 Pac. 608: Ar- mour & Co. V. Western Construc- tion Co., 36 Wash. 529. 78 Pac. 1106: Electric Appliance Co v. United States Fidelity & Guaranty Co., 110 Wis. 434, 85 N. W. 648, 53 L. R. A. 609. A provision in a contract which gave the defendant company the right to protect itself against claims that might be regarded as liens by the application of funds due to the discharge of such claims has been held wholly for the benefit of the companv. Shaw v. Cleveland &c. R. Co., 173 Fed. 746, 97 C. C. A. 520. ^Morrison v. Payton, 31 Ky. L. 992, 104 S. W. 685. "Clute v. Chicago &c. R. Co., 83 Kans. 333, 111 Pac. 431, 30 L. R. A. (X. S.) 1071 and note. See also, Bacharach v. Chester Freight Line, 133 Pa. St. 414, 19 Atl. 409 (title in consignee). *^ Nathan v. Missouri Pac. R. Co., 135 Mo. App. 46, 115 S. W. 496; Gur- witz v. Weir, 127 App. Div. (N. Y.) 352. Ill N. Y. S. 557. See also, Stafsky v. Southern R. Co., 143 Ala. 272, 39 So. 132 (goods reshipped by order of consignor) ; Chicago &c. R. Co., v. Boggs, 134 III. App. 348 (holding that consignor may recover when consignee refused to receive the goods because of damage re- sulting from the carrier's negli- gence). § 1420 CONTRACTS. 682 and who had become owner of the property, might maintain an action on the contract since it had been made for his benefit. ^° And where plaintiff's wife paid money to the defendants' agent for his transportation, the agent agreeing to give the plaintiff notice as soon as possible that a ticket was waiting him, it has been held that the husband had the right to maintain a suit for breach of the contract in his own name.^^ Where a municipality entered into a contract with a water company for the benefit of its inhabitants who were at the time of the execution of the contract consumers of water and those who might thereafter become so, it was held that the consumer might maintain a suit to compel the successor of the one with whom the contract was made to furnish water at the rate stipulated in the contract between the company and the municipality.®^ § 1420. Miscellaneous cases. — The third party need not in all cases be ascertained or known at the inception of the contract to entitle him to the benefits thereof.®^ Thus, where a defendant contracted to pay seven hundred and fifty dollars to the owner of a foal (by the defendant's stallion) that first trotted a mile in two minutes and thirty seconds, the plaintiff was permitted to recover thereon upon meeting the conditions of the promise, although not a party to it.^" And where a landlord leased certain property un- der a contract which provided that the lessee should sell no other beer on the premises except that manufactured by a designated brewing company, which company was not a party to the lease, it was held that since this provision was inserted in the lease for the benefit of the brewing company, it might bring an action to en- force the same.^^ The defendant sold his stock in a livery stable company and contracted with the purchaser never again to engage in the livery business within the corporate limits of the town ^ Livingston v. Chicago &c. R. Co., '' R. Connor Co. v. Olson, 136 Wis. 142 Iowa 404, 120 N. W. 1040. 13, 115 N. W. 811. See also, Blake ^^ Canada v. Yazoo &c. R. Co. v. Atlantic Nat. Bank, 33 R. I. 464, (Miss.). 57 So. 913. 82 Atl. 225. "^Pond V. New Rochelle Water *° Whitehead v. Burgess, 61 N. J. Co., 183 N. Y. 330, 76 N. E. 211, 1 L. 75, 38 Atl. 802. L. R. A. (N. S.) 958. See also, Mc- *' Ferris v. American Brewing Co., Claugherty v. Bluefield Waterworks 155 Ind. 539, 58 N. E. 701, 52 L. R. & Imp. Co., 67 W. Va. 285, 68 S. A. 305. E. 28. 32 L. R. A. (N. S.) 229n. 683 LIMITS OF OBLIGATION — THIRD PERSONS. 1420 where the business was located nor work as an employe in such business therein unless with the company whose stock he sold. The court held that if this contract was made for the benefit of the livery stable corporation as well as for the vendee, the other stockholders as beneficiaries of such contract could maintain an action without any assignment thereof."^ So where plaintiffs' grandfather agreed with their mother that if she would convey to the plaintiffs her interest in a certain real estate he would transfer to them a note he held against their father, it was held that after the mother had carried out her part of the agreement the plaintiff might bring an action to enforce the contract against the grand- father or his representatives.®^ The beneficiary of a contract with an executrix may bring an action to enforce it.®* And cred- itors of a debtor who conveys property or funds to a third party in consideration of the latter's promise to pay all or part of the debtor's liability may maintain an action against the third party on his promise.®' "Anders v. Gardner, 151 N. Car. 004, 66 S. E. 665. See ante. ch. 22. •'Atkinson v. Hardy (Mo. App.), 107 S. W. 466. See also, Hamilton V. Hamilton, 127 App. Div. (X. Y.) 871, 112 N. Y. S. 10 (agreement by son who had received large advance- ments from his father to pay mother and sister an annuity) ; Faust v. Faust, 144 N. Car. 383, 57 S. E. 22, (conveyance made in consideration of the grantee's promise to pay the grantor's daughter a specified sum of monev) ; Hoffa v. Hoflfa. 38 Pa. Super. Ct. 356; Miller v. Hoflfa, 38 Pa. Super. Ct. 364 (property con- veyed by one brother to another in consideration of grantee's promise to pay plaintiflfs each $1,000.00) ; Tweeddale v. Tweeddale, 116 Wis. 517, 93 N. W. 440, 61 L. R. A. 509, 96 Am. St. 1003 (grantee gave grantor a mortgage by which he bound him- self upon a resale of the property to pay a designated sum of money to his brother and sister). " Painter v. Kaiser, 27 Nev. 421, 76 Pac. 747. 65 L. R. A. 672, 103 Am. St. 772. " Spear Min. Co. v. Shinn, 93 Ark. 346. 124 S: W. 1045 (debtor corpo- ration transferred assets to another corporation in consideration of the latter's promise to pay a part of the former's liability) ; Northup v. Alta- dena Min. & In v. Syndicate, 6 Cal. App. 101, 91 Pac. 422 (conveyance by one corporation of its assets to another in consideration of the lat- ter paying the former's debts) ; Bur- son v. Bogart, 49 Colo. 410, 113 Pac. 516 (either debtor or creditor may sue) ; Vandalia R. Co. v. Keys, 46 Ind. App. 353, 91 N. E. 173 (action for damages against the defendant railroad, the injury having been sus- tained while the road was in the hands of a receiver) ; McCoy v. Mc- Coy, 12 Ind. App. 38, 69 N. E. 193, 102 Am. St. 223 (grantee agreed with grantor to pav the plaintiflf $1,000.00) ; Malanaphv v. Fuller & Johnson Mfg. Co.. 125 Iowa 719. 101 X. W. 640, 106 .^m. St. ZZl (vendee agreeing to pav debt of vendor) ; Weiser v. Ross.' 150 Iowa 353, 130 N. \V. 387 (contract between plaintiff and defendant whereby the latter agreed to pay their co-obligation). See in connection with this last case Dilcher v. Nellanv. 52 Misc. (N. Y.) 364. 102 X. Y. S. 264. See also Barry v. Jordan. 116 Minn. 34, 133 N. W. 78 (defendants taking over § I42I CONTRACTS. 684 § 1421. When third persons may not enforce contract. — Some of the states in this country, however, have adopted the Enghsh doctrine and hold that an action at law cannot be main- tained in his own name by one who is not a party to a contract given to another person for his benefit"*' except as to the provisions contained in a settlement made upon and in consideration of mar- riage for the benefit of children to be born of the marriage,"^ or business of a corporation agreeing to pay its debts) ; Leckie v. Bennett, 160 Mo. App. 145, 141 S. W. 706 (corporation succeeding partnership and assuming it debts) ; Hannon v. Rihner, 80 Xebr. 521, 114 X. W. 605 (compromise and settlement by which defendants agreed with a third party that they would pay a mortgage held by plaintiffs) ; Collier V. DeBrigard, 80 X. J. L. 94, 11 Atl. 513 (assignment for benefit of creditors) ; Chambers v. Philadelphia Pickling Co., 79 X. J. L. 1, 75 Atl. 159 (judgment creditor). Compare this last case with King v. Siedler, 137 App. Div. (X. Y.) 523, 121 X. Y. S. 694; Collins v. Kaw City Mill &c. Co., 26 Okla. 641, 110 Pac. 734 (two stockholders of a corporation on selling their stock therein as- sumed its liabilities. One of the vendors paid his share of the debt. It was held that the creditor might sue the other vendor on the con- tract) ; Howes v. Scott, 224 Pa. 7, 12i Atl. 186 (interest in contract for purchase of real estate conveyed to the defendant in consideration of his promise to repay to the plaintiff $200.00 which the transferee had borrowed from him) ; Peters v. Lindsey (Tex. Civ. App.), 144 S. W. 694 (agreement by purchaser from an administrator to pay one-half the purchase-price to plaintiffs) ; Smith V. Pfluger, 126 Wis. 253, 105 N. W. 476, 110 Am. St. 911 (property transferred to defendant in consid- eration of his agreement to pay debts of vendor). See also, Sheppard v. Bridges, 137 Ga. 615, 74 S. E. 245 (new firm assuming obligations of the old partnership) ; Harvey v. Maine Condensed Milk Co., 92 Maine 115, 42 Atl. 342; Bell v. Mendenhall, 71 Minn. 331, 12> X. W. 1086; Hoffman v. Hagbighorst, 49 Ore. 379, 89 Pac. 952; Brown v. Markland, 16 Utah 360, 52 Pac. 597, 67 Am. St. 629; Fanning v. Murphy, 126 Wis. 538, 105 X. W. 1056, 4 L. R. A. (X. S.) 666, 110 Am. St. 946. But where the transferee or seller could not enforce the contract the seller's creditor cannot enforce it. Davis v. Dunn, 121 Mo. App. 490, 97 S. W. 226. ^Austell v. Humphries, 99 Ga. 408, 27 S. E. 736; Field v. Crawford, 6 Gray (Mass.) 116; Dow v. Clark, 7 Gray (Mass.) 198; Colburn v. Phil- lips, 13 Gray (Mass.) 64; Flint v. Pierce, 99 Mass. 68, 96 Am. Dec. 691 ; Exchange Bank v. Rice, 107 Mass. Zl, 9 Am. Rep. 1; Marston v. Bigelow, 150 Mass. 45, 22 X. E. 71, 5 L. R. A. 43; Pipp v. Reynolds, 20 Mich. 88; Turner v. McCarty, 22 Mich. 265; Hicks v. McGarry, 38 Mich. 667; Wheeler v. Stewart, 94 Mich. 445, 54 X. W. 172; Edwards V. Clement, 81 Mich. 513, 45 N. W. 1107; Hidden v. Chappel, 48 Mich. 527, 12 X. W. 687; Fugure v. Mutual Society of St.i Joseph. 46 Vt. 362; Hall v. Huntoon, 17 Vt. 244, 44 Am. Dec. 332. It is also possible that the English doctrine is enforced in a modified form in Xorth Car- olina. See Haun v. Burrell, 119 X. Car. 544, 26 S. E. Ill ; Sams v. Price, 119 X. Car. 572, 26 S. E. 170. Com- pare with Gorrell v. Greensborough Water Supply Co., 124 X. Car. 328, 32 S. E. 720, 46 L. R. A. 513. 70 Am. St. 598. See also, McCarteney V. Wyoming Xat. Bank, 1 Wyo. 382. *' Knights of Modern Macabees v. Sharp, 163 Mich. 449, 128 X. W. 786. 685 LIMITS OF OBLIGATION THIRD PERSONS. § 1 42 1 when suit is authorized by the statute."'^ The courts of Connecticut hold that a third person may maintain an action upon a contract made for his direct, sole and exclusive benefit, where it was part of the agreement that its object should be communicated to h\m°^ As thus stated the rule is, in its operation and effect, practically the same as the English rule. Where the English doctrine obtains it has been held that when an applicant for a loan on real estate agreed to pay the counsel of the lender his charges for the exam- ination of the title the counsel could not sue the applicant thereon for his services.^ Nor can a promise by a debtor to his creditor to pay the amount due the latter to a third person be enforced by such third person." Nor can a contract by a father with his son for the benefit of the foraier's daughter who is a stranger to the contract be enforced by the daughter.^ An agreement by a corporation to take over the business and pay the debts of a co- partnership cannot be enforced by creditors of the copartner- ship not parties to the transaction.'* Even in those jurisdictions which hold that a party may maintain an action on a promise made for his benefit, although the consideration moved from an- other to whom the promise was made, a somewhat limited and narrow construction is placed on the rule ; the contract must be intended to benefit the third party, and the fact that he will be in- cidentally or indirectly benefited is generally held not to entitle "'See Georgia H. Sampson Co. v. 41 Atl. 803, 42 L. R. A. 514. 71 Am. Commonwealth, 202 Mass. 326, 88 St. 169 (promise by husband to his N. E. 911. wife to pay his wife's son a certain •^Morgan v. Randolph & Clowes sum of money) ; Austell v. Humph- Co., 73 Conn. 396, 47 Atl. 658. 51 ries, 99 Ga. 408. 27 S. E. 736; Borden L R. A. 396; Lamkin v. Baldwin & v. Boardman, 157 Mass. 410, 32 N. Lamkin Mfg. Co., 72 Conn. 57, 43 E. 469; Sullivan v Sulhv-an, 161 N. Atl. 593. 44 L. R. A. 786; Baxter v. Y. 554 56 n. E. 16; Keller v Ash- Camp, 71 Conn. 245, 41 Atl. 803, 42 ford 133 U. S 610, 33 L. ed. 667. L. R. A. 514. 71 Am. St. 169; Meech ? Sup. Ct^ 494; Shepherd v May, V. Ensign, 49 Conn. 191, 44 Am. Rep. US U. S. 505, 6 Sup. Ct. 119. 225; Clapp v. Lawton. 31 Conn. 95; Lmneman v Morross Estate, 98 Treat v. Stanton, 14 Conn. 445. Mich. 178, 57 N. W. 103, 39 Am. St. ^Williamson v. McGrath, 180 528. , , , „ ^, ^lass. 55, 61 N. E. 636. * Morgan v. Randolph & Clowes = Saunders v. Saunders. 154 Mass. Co., 73 Conn 396. 47 Atl. 658, 51 L. 337. 28 N. E. 270 (income from an R. A. 396. See, however. Leckie v. estate) • Wheeler v. Stewart, 94 Bennett, 160 Mo. App. 145. 141 S. W. Mich 445 54 N. W. 172 (money due 706. It must be borne m mmd that on a contract of emplovmcnt). See the foregomg cases illustrate the also, Baxter v. Camp, 71 Conn. 245, English rule. § I42I CONTRACTS. 686 him to sue.*^ And some cases go farther and hold that the con- tract must not only have been intended to benefit the third party but that he must be the sole beneficiary.® Moreover, the benefi- "Gulf Compress Co, v. Harris Cortner & Co., 158 Ala. 343, 48 So. 477, 24 L. R. A. (N. S.) 399n (hold- ing that a patron of a cotton compress could not maintain an action against the vendee of such press, who violated a provision in the contract of sale prohibiting him from making more than a specified charge) ; Thomas Mfg. Co. V. Prather, 65 Ark. 27, 44 S. W. 218; Chung Kee v. Davidson, 73 Cal. 522, 15 Pac. 100; Buckley v. Grav, 110 Cal. 339, 42 Pac. 900, 31 L. R. A. 862, 52 Am. St. 88; Treat V. Stanton, 14 Conn. 445j American Exch. Nat. Bank v. Northern Pac. R. Co., 76 Fed. 130; Sayward v. Dex- ter, Horton & Co., 72 Fed. 758, 19 C. C. A. 176; Austin v. Seligman, 21 Blatchf. (U. S.) 506, 66 How. Pr. (N. Y.) 87, 18 Fed. 519; Freeman v. Louisville & N. Ry., 32 Fla. 420, 13 So. 892; Wright v. Terry, 23 Fla. 160, 2 So. 6; Sheppard v. Bridges, 137 Ga. 615, 74 S. E. 245; Crandall v. Pavne, 154 111. 627, 39 N. E. 601, aflfg. 54 111. App. 644; Reynolds v. Louisville, N. A. & C. R. Co., 143 Ind. 579, 40 N. E. 410; Farlow v. Kemp, 7 Blackf. (Ind.) 544; German State Bank v. Northwestern Water & Light Co., 104 Iowa 717, 74 N. W. 685; Burton v. Larkin, 36 Kans. 246, 13 Pac. 398, 59 Am. Rep. 541; Gib- son v. Johnson, 23 Ky. L. 1322, 65 S. W. 116; Greenwood v. Sheldon, 31 Minn. 254, 17 N. W. 478; St. Louis v. G. H. Wright Contracting Co., 202 Mo. 451, 101 S. W. 6, 119 Am. St. 810; Tatem v. Eglanol Min. Co. (Mont.), 123 Pac. 28; Frer- king V. Thomas, 64 Nebr. 193, 89 N. W. 1005; Eaton v. Fairbury Water Works Co., Z7 Nebr. 546, 56 N. W. 201. 21 L. R. A. 653, 40 Am. St. 510; Styles v. F. R. Long Co., 70 N. J. L.'301, 57 Atl. 448; Berry Harvester Co. v. Walter A. Wood Machine Co., 152 N. Y. 540, 46 N. E. 952; Rochester Dry Goods Co. v. Fahy, 111 App. Div. (N. Y.) 748, 97 N. Y. S. 1013, affd. 188 N. Y. 629, 81 N. E. 1174; Durnherr v. Rau, 135 N. Y. 219, 32 N. E. 49; Lorillard V. Clyde, 122 N. Y. 498, 25 N. E. 917, 10 L. R. A. 113; Vrooman v. Turner, 69 N. Y. 280, 25 Am. Rep. 195 ; Sim- son V. Brown, 68 N. Y. 355; Parlin V. Hall, 2 N. Dak. 473, 52 N. W. 405 ; Vought V. Columbus H. V. & A. R. Co., 58 Ohio St. 123, 50 N. E. 442; Brower & Thompson Lumber Co. v. Miller, 28 Ore. 565, 43 Pac. 659, 52 Am. St. 807; Washburn v. Interstate Investment Co., 26 Ore. 436, 36 Pac. 533, 38 Pac. 620; Parker v. Jeffery, 26 Ore. 186, 37 Pac. 712; Blymire v. Boistle, 6 Watts (Pa.) 182, 31 Am. Dec. 458; Constable v. National Steamship Co., 154 U. S. 51, 38 L. ed. 903, 14 Sup. Ct. 1062; National Bank v. Grand Lodge, 98 U. S. 123, 25 L. ed. 75; Montgomery v. Rief, 15 Utah 495. 50 Pac. 623 ; Electric Ap- pliance Co. V. United States Fidelity & Guaranty Co., 110 Wis. 434, 85 N. W. 648, 53 L. R. A. 609; Campbell & Cameron Co. v. Carnegie's Estate, 98 Wis. 99, 73 N. W. 572. "To en- title him to an action, the contract must have been made for his benefit. He must be the party intended to be benefited." Garnsey v. Rogers, 47 N. Y. 233, 7 Am. Rep. 440, quoted in Montgomery v. Rief, 15 Utah 495, 50 Pac. 623. The "benefit must be the direct result of performance." Durnherr v. Rau, 135 N. Y. 219, 32 N. E. 49. "Any breach of the con- tract of copartnership creates a cause of action in favor of the copartner who is injured — not in favor of one whom such partner may have em- ployed as a representative." Lane v. Williams, 156 Cal. 269, 104 Pac. 301. See also, Old Colony Trust Co. v. Standard Beet Sugar Co., ISO Fed. 677. ° See German State Bank v. North- western Water & Light Co., 104 Iowa 717, 74 N. W. 685, in which it is said the rule is : "Confined to cases where the person for whose benefit the promise is made has the sole, ex- clusive interest in its performance." The foregoing statement is quoted in Chicago, R. I. & P. R. Co. v. Ot- tumwa, 112 Iowa 300, 83 N. W. 1074, 51 L. R. A. 763; Messenger v. Votaw, 75 Iowa 225, 39 N. W. 280; Davis v. 687 LIMITS OF OBLIGATION THIRD PERSONS. § I422 ciary acquires no rights under the contract unless he accedes to it before it is revoked or released by the immediate parties to the agreement, or before the rights of others have intervened.' § 1422. Question of construction — Contracts with water company and the like. — The question as to whether a con- tract was intended primarily to benefit a third party is one of con- struction, and the courts vary in their interpretation of contracts which benefit third parties. Consequently, the adjudicated cases of each jurisdiction must be consulted in order to determine whether a construction may be placed upon any particular con- tract which will entitle one who may be benefited thereby to sue. A few illustrative cases, however, will be given. It is held by the great weight of authority that a water company which con- tracts with a municipality to furnish water for the extinction of fires is not liable on an action by a citizen to recover losses sus- tained by such citizen from fire which would have been extin- guished if the company had not neglected to comply with its con- tract with the municipality.* In those jurisdictions which hold Water-Works Co., 54 Iowa 59, 6 N. W. 126, 37 Am. Rep. 185. To same effect, Baxter v. Camp, 71 Conn. 245, 41 Atl. 803, 42 L. R. A. 514. 71 Am. St. 169. See also, Kountz v. Holt- house, 85 Pa. St. 235. ' Blake v. Atlantic Nat. Bank, 33 R. I. 464, 82 Atl. 225. *Lovejoy v. Bessemer Waterworks Co., 146 Ala. 374, 41 So. 76, 6 L. R. A. (N. S.) 429. 9 Am. & Eng. Ann. Cas. 1068; Nickerson v. Bridgeport Hydraulic Co., 46 Conn. 24, 33 Am. Rep. 1 ; Morgan v. Randolph & Clowes Co., 73 Conn. 396. 47 Atl. 658, 51 L. R. A. 396; Boston Safe-Deposit & Trust Co. V. Salem Water Co., 94 Fed. 238', Metropolitan Trust Co. v. Topeka Water Co., 132 Fed. 702; Fowler v. Athens Water-Works Co., 83 Ga. 219, 9 S. E. 673, 20 Am. St. 313; Hollowav v. Macon Gaslight & Water Co., 132 Ga. 387. 64 S. E. 330: Bush v. Artesian Hot & Cold Water Co.. 4 Idaho 618, 43 Pac. 69, 95 Am. St. 161 ; Galena v. Galena Water Co., 229 111. 128, 82 N. E. 421 (obit'^r) ; Peck v. Sterling Water Co., 118 111. App. 533; Fitct v. Sev- mour Water Co., 139 Ind. 214, 37 N. E. 982, 47 Am. St. 258; Becker v. Keokuk Water-Works, 79 Iowa 419, 44 N. W. 694, 18 Am. St. 377 ; Davis V. Clinton Water-Works Co., 54 Iowa 59, 6 N. W. 126, 37 Am. Rep. 185; Mott V. Cherrvval Water & Mfg. Co., 48 Kans. 12, 28 Pac. 989, 15 L. R. A. 375, 30 Am. St. 267; Allen & Currie Co. V. Shreveport Waterworks Co., 113 La. 1091, 37 So. 980, 68 L. R. A. 650. 104 Am. St. 525, 2 Am. & Eng. Ann. Cas. 471, overruling Planters' Oil Mill V. Monroe. 52 La. Ann. 1243, 27 So. 684; Hone v. Presque Isle Water Co., 104 Maine 217, 71 Atl. 769. 21 L. R. A. (N. S.) 1021 and note ;• Howsmon v. Trenton Water Co., 119 Mo. 304, 24 S. W. 784, 23 L. R. A. 146, 41 Am. St. 654; Metz V. Cape Girardeau Waterworks & Electric Light Co.. 202 Mo. 324, 100 S. W. 651 ; PhcEnix Ins. Co. v. Tren- ton Water Co., 42 Mo. App. 118; Eaton v. Fairburv Water-Works Co., 37 Nebr. 546, 56 N. W. 201. 21 L. R. A. 653. 40 Am. St. 510; Ferris v. Carson Water Co., 16 Nev. 44. 40 Am. Rep. 485 : Smith v. Great South Bav Co.. 82 App. Div. .(N. Y.) 427, 81' N. Y. S. 812; Wainwright v. s 14^2 CONTRACTS. 688 that a third person may sue upon a promise made for his benefit, there appears to be no reason why a municipahty could not enter into a contract with a water company which would render it liable to the inhabitants of the municipality as individuals for fire losses due to the company's failure to comply with its contract. The lia- bility of the company would seem to depend entirely upon the con- struction of its contract with the municipality.^ The courts of a small minority of the states permit an individual inhabitant to sue a water company for damages sustained by reason of a breach by the latter of its contract to furnish water with which to extinguish fires, notwithstanding the contract with the municipality contains no express provision to the effect that the company shall be liable to such inhabitant on the theory that the contract is made for the benefit of the one so damaged." On the other hand, the city has, Queens County Water Co., 78 Hun (N. Y.) 146, 28 N. Y. S. 987 (rule applied to an action founded upon a violation of contract between a water company and a fire district estab- lished by the supervisors of a county) ; Lutz v. Tablequah Water Co., 29 Okla. 171, 118 Pac. 128, 36 L. R. A. (N. S.) 568; Akron Water- works Co. V. Brownless, 10 Ohio C. C. 620, 5 Ohio C. D. 1; Blunk y. Dennison Water Supply Co., 71 Ohio St. 250, 11 N. E. 210, 2 Am. & Eng. Ann. Cas. 852; Beck v. Kittanning Water Co. (Pa.), 11 Atl. 300; Cooke V Paris Mountain Water Co., 82 S. Car. 235, 64 S. E. 157 ; Foster v. Look- out Water Co., 3 Lea (Tenn.) 42; House V. Houston Waterworks Co., 88 Tex. 233, 31 S. W. 179, 28 L. R. A. 532; Greenville Water Co. v. Beck- ham, 55 Tex. Civ. App. 87, 118 S. W. 889; Britton v. Green Bay & Ft. H. Waterworks Co., 81 Wis. 48, 51 T^. W. 84, 29 Am. St. 856; Hayes v, Osh- kosh, 33 Wis. 314, 14 Am. Rep. 760. See also, Niehaus Bros. Co. v. Contra Costa Water Co., 159 Cal. 305, 113 Pac. 375, 36 L. R. A. (N. S.) 1045 (liability of a water company on an express or implied contract with the consumer) ; Ancrum v. Camden Water &c. Co. (S. Car.), 64 S. E. 151. 21 L. R. A. (N. S.'^ 1029. Sev- eral reasons are given ny the fore- going cases for so holding, such as want of privity between the owner and the water company, or that the municipality did not act as the agent of the owner in making the contract for the water company, or that the municipality did not enter into the contract with the water company for the benefit of those persons that might have their buildings destroyed from lack of water but entered into it for the benefit of the municipal public as a whole and not for the benefit of its inhabitants as indi- viduals. ° Ancrum v. Camden Water &c. Co. (S. Car.), 64 S. E. 151, 21 L. R. A. (N. S.) 1029 (contract construed as not permitting an individual inhab- itant to sue). See also, Wilkinson V. Light, Heat & Water Co., 78 Miss. 389, 28 So. 877; Wainwright v. Queen? County Water Co., 78 Hun (N. Y.) 146, 28 N. Y- S. 987. Com- pare with Pond v- New Rochelle Water Co., 183 N. Y. 330, 76 N. E. 211, 1 L. R. A. (N. S.) 958. ^"Woodbury v. Tampa Waterworks Co., 57 Fla. 243, 49 So. 556, 21 L. R. A. (N. S.) 1034 (se6 particularly opinion handed down on petition for rehearing. State has code provision providing that suit shall be brought by the real party in interest) ; Lex- ington Hydraulic & Mfg. Co. v. Oots, 119 Ky. 598, 27 Ky. L. 233, 84 S. W. 774, 86 S. W. 684 ; Graves County Water Co. v. Ligon. 112 Ky. 775, 23 Ky. L. 2149, 66 S. W. 725; Paducah 689 LIMITS OF OBLIGATION THIRD PERSONS. § X423 in a case similar in principle to those concerning fire losses, been denied the right to maintain an action and recover the damages sustained by certain of its citizens for their use and benefit. Thus where a street contractor breached his contract to improve certain streets and the city was compelled to relet the contract at an ad- vanced figure, the city was denied the right to maintain an action under the contract against the contractor guilty of the breach for the use and benefit of the property owners of the adjoining lots to the streets and alleys proposed to be improved by the city." § 1423. Rule further illustrated. — It has also been held that the bond of a road contractor conditioned on the "prompt, proper and efficient performance of the contract" by the contractor does not render the surety liable to any individual for the negligence or want of skill exercised by him in his work.^^ And where the plaintiffs were not parties to a contract between a bank and the buyer for the payment of the latter's checks for cotton bought by them, it was held that they were not entitled to recover on the checks as an obligation binding on the bank.^^ The mere fact that an entire stranger to a contract performs the services owing to the promisee upon the failure of the promisor so to do does not entitle such stranger to sue such promisor for the value of the services rendered, he having neither requested their performance nor promised to pay therefor.^* There must be some duty or ob- Lumber Co. v. Paducah Water Sup- "Redditt v. Wall (Miss.), 55 So. ply Co., 89 Ky. 340, 11 Ky. L 45. 34 L. R. A. (N. S.) 152. 738. 12 S. W. 554, 13 S. W. "Continental Bank & Trust Co. v. 249. 7 L. R. A. V, 25 Am. St. 536 Hartman (Tex. Civ. App.), 129 S. (cited in the earlier note) ; Jones v. W. 179. Durham Water Co., 135 N. Car. 553, " Matheny v. Chester, 141 Ky. 790, 47 S. E. 615. One not a party or 133 S. W. 754. In the above case privy to the contract, but who is a property was conveyed to the de- beneficiary thereof, is entitled to fendant in consideration of his prom- maintain an action for its breach, ise to care for a designated person even when the beneficiary is only one during the remainder of her life, of a class of persons, if the class is The defendant failed to do so. The suffi'ciently designated. Gorrell v. plaintiff performed the provisions of Greensborough Water Supply Co., the defendant's contract and then 124 N. Car. 328, 32 S. E. 720, 46 L. sued for the value of his services. R. A. 513, 70 Am. St. 598 (also code Recovery was denied. Case v. Case, provision to the effect that suit is to 137 App. Div. (N. Y.) 393, 121 N. Y. be brought by the real partv in in- S. 746. To same effect. Case v. Case, terest). 203 N. Y. 263. 96 N. E. 440, revg. 137 "St. Louis V. G. H. Wright Con- App. Div. (N. Y.) 393, 121 N. Y. tracting Co., 202 Mo. 451, 101 S. S. 746. W. 6, 119 Am. St. 810. 44 — CoNTR.xcTS, Vol. 2 1424 CONTRACTS. 690 ligation in order for the promisor to be bound to a third party^' who in contemplation of law is a party to the contract or to the consideration.^® § 1424. Rule further illustrated — Right to enforce sealed instrument. — Originally under the common-law rule only the parties to sealed instruments could maintain an action thereon.'^ The distinctions between sealed and unsealed instruments have now been generally abolished, however, and it is now usually true that third persons may sue on sealed contracts in those jurisdic- tions in which they have a right to sue on simple contracts.'^ It is hardly necessary to state that in those jurisdictions in which a third party cannot bring an action on a simple contract made for his benefit he cannot maintain one on a sealed instrument.'^ "Fish & Hunter Co. v. New Eng- land Homestake Co. (S. Dak.), 130 N. W. 841. "Webb's Academy & Home for Shipbuilders v. Hidden, 194 N. Y. 547, 87 N. E. 1129, 118 App. Div. (X. Y.) 711, 103 N. Y. S. 659, affd. tarmulowsky v. Susskind, 53 Misc. (N. Y.) 603, 103 N. Y. S. 763; In re Mallalieu's Estate, 42 Pa. Super. Ct. 101. See also ante, § 1412. It is not under the modern theory necessary for the consideration to move from the third party. McCoy v. McCoy, 32 Ind. App. 38, 69 N. E. 193, 102 Am. St. 223; Hamilton v. Hamilton, 127 App. Div. (N. Y.) 871, 112 N. Y. S. 10; Dilcher v. Nellany, 52 Misc. (N. Y.) 364, 102 N. Y. S. 264; Mont- gomery V. Rief, 15 Utah 495, 50 Pac. 623- Brown v. Markland, 16 Utah 360, 52 Pac. 597, 67 Am. St. 629. "Huckabee v. May, 14 Ala. 263; Home Library Assn. v. Witherow, 50 111. App. 117; Gridley v. Bayless, 43 111. App. 503; Harms v. McCor- mick, 132 111. 104, 22 N. E. 511. See, however, in connection with the fore- going cases, Webster v. Fleming, 178 111. 140, 52 N. E. 975; Haskett v. Flint, 5 Blackf. (Ind.) 69, 33 Am. Dec. 452; Farmington v. Hobert, 74 Maine 416; How v. How, 1 N. H. 49; Loeb v. Barris, 50 N. J. L. 382, 13 Atl. 602; Henricus v. Englert, 137 N. Y. 488, 33 N. E. 550; Case v. Case, 203 N. Y. 263, 96 N. E. 440; De BoUe v. Pennsylvania Ins. Co., 4 Whart. (Pa.) 68, 33 Am. Dec. 38; Woonsocket Rubber Co. v. Banigan, 21 R. I. 146, 42 Atl. 512; Fairchild V. Northeastern Mut. Life Ins. Assn., 51 Vt. 613. See, however. Fellows v. Oilman, 4 Wend. (N. Y.) 414. "Webster v. Fleming, 178 111. 140, 52 N. E. 975; Rogers v. Gosnell. 51 Mo. 466; Emmitt v. Brophy, 42 Ohio St. 82; Coster v. Albany, 43 N. Y. 399; Hughes v. Oregon R. & Nav. Co., 11 Ore. 437, 5 Pac. 206; Stites V. Thompson, 98 Wis. 329. 73 N. W. 774; Bassett v. Hughes. 43 Wis. 319; McDowell V. Laev, 35 Wis. 171. "The cases in which one not a party to a contract may sue upon a promise in it for his benefit were at one time limited to contracts not under seal, and this court in stating the law on the subject, in Follansbee v. Johnson, 28 Minn. 311, 9 N. W. 882, expressed that limitation ; but the distinction in this respect between contracts by specialty and simple contracts has not in the later authorities been adhered to and may now be regarded as aban- doned." Jefferson v. Asch, 53 Minn. 446, 55 N. W. 604, 25 L. R. A. 257, 39 Am. St. 618. See, however, Case V. Case, 203 N. Y. 263, 96 N. E. 440. "See Flynn v. North American Life Ins. Co., 115 Mass. 449; Hunt- ington V. Knox, 7 Cush. (Mass.) 371. See also, Baxter v. Camp, 71 Am. St. 169 and note. CHAPTER XXXIII. ASSIGNMENTS. i 1430. Definition— Different rule at § 1448. common law and in equity under modern law. 1431. Chose in action unassignable 1449. at common law. 1432. The rule in equity. 1433. What may be assigned — Gen- 1450. erally. 1434. Assignment of public con- 1451. tracts — Wages and the like. 1452. 1435. Assignment of contracts in- volving personal liability. 1436. Examples of unassignable con- 1453. tracts. 1454. 1437. Parties may stipulate against 1455. assignment. 1438. Assignment may be forbidden 1456. by statute. 1439. Assignment of liabilities by act of parties. 1440. Assignment of rights by acts 1457. of parties. 1458. 1441. Form and elements of assign- 1459. ments. 1442. Informal assignments. 1443. Partial assignments. 1460. 1444. Partial assignments in equity. 1445. Notice of assignment as be- 1461. tween the assignor and as- signee and the party liable. 1462. 1446. Effect of notice to debtor or person liable — Rights of parties generally. 1447. Assignments by operation of 1463. law — Generally. 1464. 1465. 1466. Assignments by operation of law — Effect of transfer of interest in land. Nature and purpose of cove- nant contracts — Restrictions as to use of real property. Valid covenants running with the land. Effect of marriage. Effect of death of one of the parties — Actions that sur- vive. Actions that do not survive. Effect of assignment. Rights of assignee — Qualified assignments. Implied warranties in assign- ments — Rights and liabil- ities of assignor and as- signee. Title of assignee. Equities of third persons. Rights of assignees as be- tween themselves — Priority of notice. Priority in point of time — Rule criticized. Successive assignees — Exist- ing equities. Evidence of assignment and of assignee's rights — Right of assignee to sue — Burden of proof. Evidence of assignee's right. Proof of the assignment. Assignee of corporation. Delivery and acceptance. § 1430. Definition — Different rule at common law and in equity under modem law. — In the preceding chapter it was seen that, generally speaking, a contract cannot impose liability or confer rights upon a stranger to the agreement. In certain in- stances, however, one of the parties may substitute a stranger for 691 § 1 43 1 CONTRACTS. 692 himself as a part}' to the contract. In other words, he may assign the contract to such stranger or third person. As the term "assign- ment" is here used it signifies the means whereby the interest of one party in a contract is caused to vest in another person who was not an original party thereto.^ Assignments differ from no- vations in that in the former the assignor may transfer his rights and liabilities under the contract to the assignee without the as- sent of the other party to the contract, while in the case of nova- tion both parties assent to a transaction by which one party con- sents to extinguish the existing liability of the other party in consideration of the latter transferring such right and liability to a third person. In effect an existing obligation is extinguished and a new one substituted in its place. An assignment must also be distinguished from a subcontract. In the case of a subcon- tract one party to an agreement merely enters into a contract with another to assist him in performing his first agreement, but does not ordinarily surrender any of his rights thereunder." § 1431. Chose in action unassignable at common law. — At common law choses or things in action could not be assigned.^ ^"The word 'assignment' has sev- ketts, 1 Iowa 582. It has been held that eral meanings. In a broad sense it the pledge of an insurance policy as is used to signify the act by which collateral security is not an assign- one person transfers to another, or ment of such policy within the pro- causes to vest in such other, the en- hibition of the policy. The court tire right, interest, or property which said : "An assignment is a transfer he has in any realty or personalty, in or setting over of property, or of possession or in action, or some some right or interest therein, from share, interest, or subsidiary estate one person to another, and, unless in therein. It is more particularly ap- some way qualified, it is properly the plied to a written transfer, as dis- transfer of one's whole interest in tinguished from a transfer by mere an estate, or chattel, or other thing, delivery." Johnson v. Brewer, 134 In that sense, the policy in question Ga. 828, 68 S. E. 590, 591, 31 L. R. has not been 'assigned.'" Griffey v. A. (N. S.) 332n. See as to nego- New York Central Ins. Co., 100 N. tiable instruments, Townsend v. Car- Y. 417, 3 N. E. 309, 53 Am. Rep. 202. penter, 11 Ohio 21, and compare En- An assignment is, properly speaking, loe V. Reike, 56 Ala. 500, and Bump the act of a living person, and can- v. Van Orsdale, 11 Barb. (N. Y.) not be said to have been made by a 634. _ dead person. Hight v. Sackett, 34 ^At common law an assignment N. Y. 447. As distinguishing an as- was defined as "the transferring and signment from a lease, see Passaic setting over to another of some right, &c. Bridge Proprietors v. State, 21 title, or interest in things, in which a N. J. L. 384; 2 Bl. Com. 326. Corn- third person, not a party to the as- pare, however, with Potts v. Trenton signment, has a concern and inter- Water Power Co., 9 N. J. Eq. 592. est." 1 Bacon Abridgment under title ^ McNutt v. King, 59 Ala. 597; of Assignment 379. Cowles v. Ric- Johnson v. Martin, 54 Ala. 271; Brush 693 ASSIGNMENTS. § M3I Lord Coke attributed this rule to the "great wisdom and pr^Hcy of the sages and founders of our law" in discouraging mainte- nance and litigation.'* Blackstone stated that it was to prevent the transfer of rights of action to great men in order to obtain support and favor in suits brought to assert those rights, and jus- tice be thereby broken down and the weak oppressed.^ In all probability, however, the only reason underlying the rule is that it was enunciated during the early f(jrmative period of the law at which time it was thought impossible to transfer a mere right." The right to enforce a contract is a chose in action ; consequently at common law the rights and benefits of a contract could not be transferred by assigmiient^ with the following exceptions : in- V. Curtis, 4 Conn. 312; Porter v. Morris' Exrs., 2 Har. (Del.) 509; Chicago & A. R. Co. v. Maher, 91 111. 312; Hale v. Andrews, 75 111. 252; Kennedy v. Kennedy, 66 111. 190; Safford v. Miller, 59 111. 205; Mc- Kinney v. Alvis, 14 111. 33; ]\Ioore v. Ireland, 1 Ind. 531. The doctrine of the common law — that choses in action are not assignable — does not obtain in Iowa. Watson v. Hunkins, 13 Iowa 547; Trimble v. Ford, 5 Dana (Ky.) 517; Jarman v. Howard, 3 A. K. Marsh. (Ky.) 383; Trades- men's Nat. Bank v. Green, 57 Md. 602; Coulter v. Havnes. 146 Mass. 458, 16 N. E. 19; Moore v. Spiegel, 143 ^lass. 413. 9 N. E. 827; Tucker V. Tucker, 119 Mass. 79; Connor v. Parker, 114 Mass. 331; Foss v. Low- ell Five Cents Sav. Bank, 111 ]Mass. 285; Moore v. Coughlin, 4 Allen (Mass.) 335; Foss v. Nutting, 14 (jray (Mass.) 484; Sigourney v. Sev- erv, 4 Cush. (Mass.) 176; Hodges v. Holland, 19 Pick. (Mass.) 43; Arms- by V. Farnam, 16 Pick. (Mass.) 318; Coolidge V. Ruggles, 15 Mass. 387; Skinner v. Somes. 14 Mass. 107; Cutts V. Perkins, 12 Mass. 206; Orr V. Amory, 11 ]\iass. 25; Spencer v. Woodbur'v, 1 Minn. 105 ; Edson v. Fuller, 22' N. H. 183; Morrow v. Ver- non, 35 N. J. L. 490; Sergeant v. Strvker. 16 N. J. L. 464, 32 Am. Dec. 404: Garrison v. Sandford. 12 N. J. L. 261 ; Lacey v. Collins, 5 N. J. L. 489; Reed v. Bainbridge, 4 N. J. L. 351 ; Smock v. Taylor, 1 N. J. L. 206 ; Mann v. tlerkimer County Mut. Ins. Co.. 4 Hill (N. Y.) 187; Jessel v. Williamsburgh Ins. Co., 3 Hill (N. Y.) 88; Demarest v. Willard, 8 Cow. (N. Y.) 206; Greenby v. Wilcocks, 2 Johns. (N. Y.) 1, 3 Am. Dec. 379; Sims V. Radcliffe, 3 Rich. (S. Car.) 287; Ware v. Key, 2 McCord (S. Car.) 373. The doctrine of the com- mon law — that choses in action are not assignable — is said not to pre- vail in Texas. Winn v. Fort Worth &c. R. Co., 12 Tex. Civ. App. 198, 33 S. W. 593 ; Read v. Young, 1 D. Chip. (Vt.) 244; Hogue v. Bierne, 4 W. Va. 658; Pillsbury v. Mitchell. 5 Wis. 17. See also, Master v. Miller, 4 T. R. 320; Eakins v. Gawlev, 33 U. C. Q. B. 178; Sterling v. McEwan, 18 U. C. Q. B. 466. * In re Lampet's Case, 10 Coke 48. "2 Bl. Corn. 290. See also, Thall- himer v. Brinckerhoff, 3 Cow. (N. Y.^ 623. 15 Am. Dec. 308. Sir Frederick Pollock states that it is "better explained as a logical consequence of the archaic view of a contract as creating a strictly per- sonal obligation between the cred- itor and debtor." Wald's Pollock on Contracts 278. ^Atlantic &c. R. Co. v. Atlantic &c. Co., 147 N. Car. 368, 61 S. E. 185, 23 L. R. A. (N. S.) 223, 125 Am. St. 510; Glenn v. Marbury. 145 U. S. 499, 36 L. ed. 790, 12 Sup. Ct. 914. s 143-2 CONTRACTS. C94 struments negotiable by the law merchant,® cases in which the crown had an interest/ and, it seems, annuities.^'' § 1432. The rule in equity. — Equity, however, has always recognized as valid, in a proper case, the assignments of choses in action, or things not in esse or mere contingencies, possibilities and expectancies." Courts of equity greatly modified in its prac- tical application the rule against the assignment of contracts, and in most jurisdictions it is now held that a contract may also be assigned at law as well as in equity." This change has been brought about mainly by legislative enactment. Some stat- utes expressly provide that the assignee may sue in his own name.^^ Others enable the assignee to sue in his own name by * See Blanckenhagen v. Blundell, 2 B. & Aid. 417; Keene v. Beard, 8 C. B. (N. S.) 372; Gierke v. Martin, 2 Ld. Raym. 757; Brown v. Harraden, 4 T. R. 148. Promissory notes were declared negotiable by the statute of 3 and 4 Anne, ch. 9. 'Lambert v. Taylor, 4 B. & C. 138, 10 E. C. L. 515. Assignments to or by the United States or to any states were valid. United States v. Buford, 3 Pet. (U. S.) 12, 7 L. ed. 585. See also, United States v. White, 2 Hill (N. Y.) 59, n Am. Dec. 374. "Davis V. Marlborough, 1 Swanst. 74. "Brown v. Heathcote, 1 Atk. 160; Chandos v. Talbot, 2 P. Wms. 601; Crouch v. Credit Foncier of England, L. R. 8 Q. B. 374 ; Brownell Imp. Co. v. Critchfield, 197 111. 61, 64 N. E. 332; Henderson v. Welch, 3 Gilm. (III.) 340; Dix v. Cobb, 4 Mass. 508; Up River Ice Co. v. Denier, 114 Mich. 296, 72 N. W. 157, 68 Am. St. 480; Bleakley v. Nelson, 56 N. J. Eq. 674, 39 Atl. 912; Brindze v. Atlantic City &c. Beneficial Assn., 75 N. J. Eq. 405, 72 Atl. 435; Black v. Sully, 138 App. Div. (N. Y.) 562, 123 N. Y. S. 371; Stott V. Franey, 20 Ore. 410, 26 Pac. 271, 23 Am. St. 132; Morrison v. Deaderick, 10 Humph. (Tenn.) 342; Chicago. R. I. & P. R. Co. V. Denver & R. G. R. Co., 143 U. S. 596, 36 L. ed. 277, 12 Sup. Ct. 479. See also, Barnes v. Shattuck, 13 Ariz. 338, 114 Pac. 952; Godwin V. Murchison Nat. Bank, 145 N. Car. 320, 59 S. E. 154, 17 L. R. A. (N. S.) 935n. Under an equitable as- signment the assignee is entitled to have immediate specific performance of the assignment as soon as the proceeds come into existence in the hands of the assignor. Such equi- table assignments create a present title nonexistent at law which equity stands ready to enforce when the property comes into being. Wheless V. Meyer &c. Grocer Co., 140 Mo. App. 572. 120 S. W. 708. See also, post, § 1433 et seq. "Atlantic &c. R. Co. v. Atlantic &c. Co., 147 N. Car. 368, 61 S. E. 185, 23 L. R. A. (N. S.) 223, 125 Am. St. 550; Dickerson v. Spokane, 26 Wash. 292, 66 Pac. 381. "Wells V. Cody, 112 Ala. 278, 20 So. 381. For a construction of the Alabama statute see, Bohanan v. Thomas, 159 Ala. 410, 49 So. 308; Neyens v. Hossack, 142 111. App. 327; Rogers v. Harvey, 143 Ky. 88, 136 S. W. 128 (statute makes a bond or guaranty assignable) ; Wright v. Hardy,' 76 Miss. 524, 24 So. 697; Cleveland v. Heidenheimer, 92 Tex. 108, 46 S. W. 30; Conaway v. Co- operative Home Builders, 65 Wash. 39, 117 Pac. 716. Such an act does not make assignable a part of a chose in action so as to entitle the assignee of such part to sue in his own name. Sternberg & Co. v. Lehigh Vallev R. Co., 78 N. J. L. 277, 1Z Atl. 39. In connection with this last case see post, § 1443. 69; ASSIGNMENTS. § 1433 providing that actions shall be brought by the real party in inter- est." But even in the absence of a statute it is recognized that contracts assignable in equity may be sued upon at law in the name of the assignor." As a result of this development in the law it is now true, as a general rule, that, unless expressly prohib- ited by statute or in contravention of some principle of public policy, all ordinary business contracts are assignable, and that action for breach of the same can usually be maintained by the assignee in his own narne.^® § 1433. What may be assigned — Generally. — In accord- ance Vi^ith the foregoing principles it is well settled that contracts between private individuals and the rights growing out of them may usually be assigned." Thus it has been held that a contract "Love V. Cahn, 93 Ark. 215, 124 S. W. 259 (holding that an assignee of a claim under a supersedeas bond is the real party in interest) ; Rambo V. Armstrong, 45 Colo. 124. 100 Pac. 586; Dovle v. Nesting, Zl Colo. 522, 88 Pac. 862; Pullman v. Pullman, 81 Kans. 521, 106 Pac. 52 (holding that one may be the real party in interest without having the beneficial interest in the claim or the ownership of the thing in suit) ; Rirdsall v. Coon, 157 Mo. App. 439, 139 S. W. 243, 50 L. R. A. 847; Close v. Independent Gravel Co. (Mo. App.), 138 S. W. 81; Tennent v. Union Cent. Life Ins. Co., 133 Mo. App. 345, 112 S. W. 754; Haupt v. Burton, 21 Mont. 572, 55 Pac. 110, 69 Am. St. 698; King v. Miller, 53 Ore. 53, 97 Pac. 642; Hankwitz v. Barrett, 143 Wis. 639, 128 N. \V. 430. See also, Osborne V. Hughes, 128 App. Div. (N. Y.) 128, 112 N. Y. S. 572. The ^lissouri statute makes assignable everything in action arising out of contract. Steele v. Brazier, 139 Mo. App. 319, 123 S. \V. 477. The Florida statute is similar to that of Missouri. Joseph Dixon Crucible Co. v. Paul, 167 Fed. 784, 93 C. C. A. 204 (construing Florida statute). Where the assign- ment is not authorized by statute the assignee has recourse to the common- law rule and may use the name of the assignor to enforce the assign- ment. Boqua v. Marshall, 88 Ark. ZIZ, 114 S. W. 714. See also, codes of various states. >* Master v. Miller, 4 T. R. 320; Congress Const. Co. v. Farson & Lib- bey Co., 199 111. 398, 65 N. E. 357, affg. 101 111. App. 279; Wey v. Doolev. 134 111. App. 244; Briquette Fuel Co. V. Davis, 134 111. App. 343; Marshall v. Craig, 3 Bibb (Ky.) 291; Leach v. Greene. 116 Mass. 534; Townsend v. Carpenter, 11 Ohio 21 ; New York Guaranty Co. v. Memphis Water Co., 107 U. S. 205, 27 L. ed. 484, 2 Sup. Ct. 279. See also, Baum- ert V. Daeschler, 65 Misc. (N. Y.) 526, 120 N. Y. S. 957. The assignor may require indemnity against costs. Southwick V. Hopkins. 47 Maine 362; Fay V. Guynon, 131 Mass. 31 ; Gordon V. Drury, 20 N. H. 353. The assignor has no right to dismiss the action. Marr v. Hanna, 7 J. J. Marsh. (Ky.) 642, 23 Am. Dec. 449. Nor is a re- ceipt given by him to the defendant (Marr v. Hanna, 7 J. J. Marsh. (Ky.) 642, 23 Am. Dec. 449) ; nor a declaration against interest (Hough V. Barton, 20 Vt. 455), when given or made after the assignment, evi- dence against the assignee. ''Atlantic S:c. R. Co. v. Atlantic &c. Co., 147 N. Car. 368, 61 S. E. 185. 23 L. R. A. (N. S.) 223, 125 Am. St. 550. "Doll V. Anderson, 27 Cal. 248; Swanson v. Kirbv, 98 Ga. 586. 26 S. E. 71; Carr v. Waugh, 28 111. 418; § 1433 CONTRACTS. 696 to furnish wood to a railway company for use in its engines is assignable by that company to its lessee/^ Money due under a contract partly performed^^ and agreements to sell and deliver Pacev V. Troxel. 68 111. App. 367; Brassel v. Troxel, 68 111. App. 131; Blair v. Hamilton, 48 Ind. 32; Mis- souri Valley Life Ins. Co. v. Kelso, 16 Kans. 481 ; Missouri Pac. R. Co. v. Phelps, 10 Kans. App. 1, 61 Pac. 672; McKee v. Hoover, 1 T. B. Mon. (Kv.) 32; Haskell v. Blair, 3 Cush. (Mass.) 534; Blakeley v. Le Due, 22 Minn. 476; Bvars' Garnishees v. Grif- fin, 31 j\Iiss. "603; Early v. Reed, 60 Mo. 528; Leahy v. Dugdale's Admr., 27 :Mo. 437; Empire Pav. &c. Co. v. Prather's Admr., 58 Mo. App. 487; Peabody v, Warner, 16 Mo. App. 556 ; Daugherty v. Gouff, 23 Nebr. 105, 36 N. W. 351 ; Howe v. Smeeth Cop- per & Bronze Co. (N. J.), 48 Atl. 24; Evansville Nat. Bank v. Kauf- mann, 93 N. Y. 273, 45 Am. Rep. 204; Van Santen v. Standard Oil Co., 81 N. Y. 171; Devlin v. New York, 63 N. Y. 8, 50 How. Pr. (N. Y.) 1; Bordwell v. CoUie, 45 N. Y. 494; Fulton Fire Ins. Co. v. Baldwin, 37 N. Y. 648; McBride v. Farmers' Bank, 26 N. Y. 450; Stoutenberg v. Freese, 2 Ohio Dec. (Reprint) 463; Mitchell V. Taylor, 27 Ore. 377, 41 Pac. 119. But see Breen v. Ingram, 1 Bay (S. Car.) 173; Smith v. Hub- bard, 85 Tenn. 306, 2 S. W. 569; Peevy v. Hurt, 32 Tex. 146. But see Holliman v. Rogers, 6 Tex. 91 ; Dela- ware County Comrs. v. Diebold Safe &c. Co., 133 U. S. 473, 33 L. ed. 674, 10 Sup. Ct. 399. "It seems to be well settled that a contract is generally as- signable, unless forbidden by public policy or the contract itself, or its provisions are such as to show that one of the parties reposes a personal confidence in the other, which he would have been unwilling to repose in any other person." Pulaski Stave Co. V. Miller Creek Lumber Co. (Ky.), 128 S. W. 96. Usually a cause of action which survives to the per- sonal representatives is assignable. Grand Rapids &c. R. Co. v. Cheboy- gan Circuit Judge, 161 Mich. 181, 126 N. W. 56, 137 Am. St. 495; Con- awav V. Co-operative Home Builders, 65 Wash. 39, 117 Pac. 716. An actual bona fide assignment of a claim need not be supported by a consideration at least as between the debtor and assignee, although the failure to pay a consideration may constitute an im- portant circumstance bearing upon the good faith of the transaction. Hickman v. Chanev, 155 2\Iich. 217, 118 N. W. 993; King v. Miller, 53 Ore. 53, 97 Pac. 542 ; Levins v. Stark, 57 Ore. 189, 110 Pac. 980; Kenedy Town & Imp. Co. v. First Nat. Bank (Tex. Civ. App.), 136 S. W. 558; Pearce v. Wallis, Landes & Co. (Tex. Civ. App.), 124 S. W. 496. A pre- existing debt is sufficient considera- tion for an assignment of commis- sions or profits to be derived from a shipment of grain. Bank of Yolo v. Bank of Woodland, 3 Cal. App. 561, 86 Pac. 820. See also, Jahn v. Cham- pagne Lumber Co., 147 Fed. 631, on the sufficiency of the consideration. A promise of immediate marriage is sufficient consideration for the prom- isee's assignment to the promisor of his interest in an estate. Huntress V. Hanley, 195 Alass. 236, 80 N. E. 946. ^* Atlantic &c. R. Co. v. Atlantic &c. Co., 147 N. Car. 368, 61 S. E. 185, 23 L. R. A. (N. S.) 223, 125 Am. St. 550. The same has been held true of a contract to furnish steam heat. Voigt v. Murphy Heat- ing Co., 164 Mich. 539, 129 N. W. 701. "Rodgers v. Torrent, 111 Mich. 680, 70 N. W. 335; Alden v. George W. Frank Imp. Co., 57 Nebr. 67, 77 N. W. 369; Anniston Nat. Bank v. School Committee of Durham, 121 N. Car. 107, 28 S. E. 134; Parsons v. Baltimore Bldg. &c. Assn., 44 W. Va. 335, 29 S. E. 999, 67 Am. St. 769. 697 ASSIGNMENTS. § 1434 goods,'"' a contract for drilling an oil well,"^ claims for rent,"'' unpaid subscriptions to the capital stock of a corporation after a call has been made,"^ contracts to convey property,'^* and valid contracts in restraint of trade'' have been declared assignable. It has also been held thai a club may assign a claim for unpaid dues and that the assignee may maintain an action to recover the same.^"* § 1434. Assignment of public contracts — Wages and the like. — Public contracts may in the absence of any statutory or other provision or rule of public policy restricting the right. ^In re Niagara Radiator Co., 164 Fed. 102; Roberts Cotton Oil Co. v. F. E. Morse & Co., 97 Ark. 513, 135 S. W. 334 (contract for purchase of cotton seed meal) ; Sears v. Conover, 3 Key. ( N. Y.) 113; Tvler v. Bar- rows, 6 Robt. (N. Y.) 104; Groot v. Story, 41 Vt. 533 (contract to buy piano assigned by purchaser). Money due for goods sold has been held within the terms of an assignment by the seller of his "bills receivable." Rogers v. Abbott, 206 Mass. 270, 92 N. E. 472, 138 Am. St. 394. "An instrument acknowledging receipt of certain personal property, and con- taining a promise by the maker there- of to pay a certain sum in stated in- stalments, but reserving the title in the vendor as to the property^ until the payments were fully made, is, al- though it contains no words of nego- tiabilitv, assignable under section 3682 6f the Civil Code of 1895." Walker v. Carpenter. 5 Ga. App. 427, 63 S. E. 576. ^ Galev V. Mellon, 172 Pa. St. 443, 33 Atl. 5'60. See also, Anse &c. Min- eral Co. V. Babb, 122 La. 415, 47 So. 754. ~ Sweeney v. Farmers' Rice Milling &c. Co. (Tex. Civ. App.), 137 S. W. 1147. ^Lynah v. Citizens' &c. Bank, 136 Ga. 344, 71 S. E. 469. " Moore v. Gariglietti. 228 111. 143, 81 N. E. 826; Rice v. Gibbs, 33 Nebr. 460, SO N. W. 436; Royce v. Car- penter, 80 Vt. 37, 66 Atl. 888. ^ California Steam Xav. Co. v. Wright, 6 Cal. 258. 65 Am. Dec. 511; Johnston v. Blanchard, 16 Cal. App. 321, 116 Pac. 973 (sale of good will of business with agreement not to re-engage therein) ; Hedge v. Lowe, 47 Iowa 137; Up River Ice Co. v. Denier, 114 Mich. 296, 72 N. W. 157, 68 Am. St. 480; Hickey v. Brinkley, 88 Nebr. 356, 129 N. W. 553; Fran- cisco V. Smith, 143 N. Y. 488, 38 N. E. 980, 62 N. Y. St. 803; Diamond Match Co. V. Roeber, 106 N. Y. 473, 13 N. E. 419, 60 Am. Rep. 464 ; Greite V. Hendricks. 71 Hun (X. Y.) 7. 53 N. Y. St. 851, 24 N. Y. S. 545; Bar- ber Asphalt Pav. Co. v. Brand, 55 Hun (X. Y.) 606, 27 N. Y. St. 883, 4 Silvcrnail (N. Y.) 519, 7 N. Y. S. 744. See contra, Hillman v. Shan- nahan, 4 Ore. 163, 18 Am. Rep. 281. See also, ante, ch. 22. ^Anderson v. Amidon, 114 Minn. 202, 130 N. W. 1002, 34 L. R. A. (N. S.) 647. Contracts for the sale and delivery of saw logs have also been held assignable. Pulaski Stave Co. v. Miller's Creek Lumber Co. (Ky.), 128 S. W. 96 ; Poling v. Condon-Lane Boom & Lumber Co., 55 W. Va. 529, 47 S. E. 279. But it has been held otherwise where credit is extended the purchaser, such purchaser being denied the right to assign the con- tract. Demarest v. Duton Lumber Co., 161 Fed. 264, 88 C. C. A. 310. See also, \\'entworth v. Cock, 10 Ad. & El. 42, holding that a contract to supply slate was binding on the ad- ministrator of the deceased contrac- tor's estate. A contract to make and deliver steel dies has also been held assignable by the party to whom they were to be delivered when his only obligation was to pay for them on 1434 CONTRACTS. 698 be assigned the same as a contract between private individuals." An assignment of unearned wages under an existing contract of employment is valid when not made to defraud creditors and not prohibited by statutory enactment,^* although the term delivery, since this was a duty which could be discharged by any one. Rochester Lantern Co. v. Stiles &c. Glass Co., 135 N. Y. 209, 31 N. E. 1018, affg. 40 N. Y. St. 851, 16 N. Y. S. 781. "Anderson v. De Urioste, 96 Cal. 404, 31 Pac. 266; Taylor v. Palmer, 31 Cal. 240; Cochran v. Collins, 29 Cal. 129; Carlyle v. Carlyle Water &c. Co., 140 111. 445, 29 N. E. 556. But see contra. Pike v. Waltham, 168 Mass. 581, 47 N. E. 437; St. Louis V. Clemens, 42 Mo. 69; Dev- lin V. New York, 63 N. Y. 8, 50 How. Pr. (N. Y.) 1; Corry v. Gay- nor, 22 Ohio St. 584;. Ernst v. Kun- kle, 5 Ohio St. 520; Philadelphia v. Lockhardt, 1Z Pa. St. 211; Columbia Water Power Co. v. Columbia, 5 S. Car. 225; Carter v. State, 8 S. Dak. 153, 65 N. W. 422. As to contracts to which the United States is a party, see U. S. Rev. Stat. (1878), §§ 3477, 2>m; Flint & P. M. R. Co. v. United States, 112 U. S. 1Z1 , 28 L. ed. 862, 5 Sup. Ct. 368; United States v. Gil- lis, 95 U. S. 407, 24 L. ed. 503. '' Chicago &c. R. Co. v. Provolt, 42 Colo. 103, 93 Pac. 1126, 16 L. R. A. (N. S.) 587; Wabash R. Co. v. Smith, 134 111. App. 574; Kane v. Clough, 36 Mich. 436, 24 Am. Rep. 599; Weinberg v. Stratton, 163 Mich. 408, 128 N. W. 926; Leitch v. Northern Pac. R. Co., 95 Minn. 35, 103 N.|W. 704 ; Quigley v. Welter, 95 Minn. 383, 104 N. W. 236; Bell v. Mulholland, 90 Mo. App. 612; Hax v. Acme Ce- ment Plaster Co., 82 Mo. App. 447; Runnells v. Bosquet, N. I. & S. Co., 60 N. H. 38; Provencher v. Brooks, 64 N. H. 479, 13 Atl. 641 ; Rodijkeit V. Andrews, 74 Ohio 104, 11 N. E. 747, 5 L. R. A. (N. S.) 564n; Ber- resford v. Susquehanna Coal Co., 24 Pa. Co. Ct. 557. An action at law may be brought to enforce one's assignment of his entire salary earned and to be earned for a named period. Western Union Tel. Co. v. Ryan, 126 Ga. 191, 55 S. E. 21. See also, Runnells v. Bosquet, N. I. & S. Co., 60 N. H. 38 (made to defeat creditors) ; Robinson v. McKenna, 21 R. I. 117, 42 Atl. 510, 79 Am. St. 793. In answer to the contention that the plaintiff showed only an equitable as distinguished from a legal assignment of the laborer's wages the court said : "While the original agreement, made at the time the laborers were employed, may have amounted only to an agree- ment to assign, the act of the labor- ers after the wages were earned in going over the accounts and in ap- proving the deductions was sufficient in connection with the original agree- ment, to amount to a legal assign- ment." United States Fidelity &c. Co. V. United States, 189 Fed. 339. The assignment of unearned wages does not create a lien thereon and is merely an executory contract to transfer them when earned. Hirsch- berg V. Chic Dress Co., 130 N. Y. S. 134. See also, Schreiber v. Kel- ler Mechanical Engraving Co., 57 Misc. (N. Y.) 644, 108 N. Y. S. 658, holding that the assignment is a mere direction and may be revoked by the employe at will. The statute may require that the employer be given notice of the assignment (Hall V. Boston Plate & Window Glass Co., 207 Mass. 328, 93 N. E. 640), within a specified time. Thompson v. Gimbel Bros., 71 Misc. (N. Y.) 126, 128N.Y. S.210; Bowley V. Erie R. Co., 70 Misc. (N.Y.) 168, 128 N. Y. S. 468. See also, Brindze V. Atlantic City &c. Beneficial Assn., 75 N. J. Eq. 405, 12 Atl. 435 (upholding an assignment of money to be made under a contract to con- duct a circus for four days). The assignment of future wages may be prohibited by statute. Chicago &c. R. Co. V. Ebersole (Ind.), 87 N. E. 1090; Central of Georgia R. Co. v. Dover, 1 Ga. App. 240, 57 S. E. 1002. See also, McCallum v. Simplex Elec- trical Co., 197 Mass. 388, 83 N. E. 1108 (prescribing conditions under which assignment must be made). 699 ASSIGNMENTS. 8 1434 of employment may be indefinite and uncertain.^" However, an assignment of wages unlimited as to time or amount is held unen- forcible.^" It is also well settled, that there can be no assignment of money to be earned under a new or different contract or where there was no existing contract of employment.^^ And the assign- ment by a public official of the unearned fees or salary of his office is against public policy." It has been held, however, that such an assignment by a public official may become effective as the salary is earned or the fees accrue, as against third persons, "Welborn v. Buck. 114 Ala. 277, 21 So. 786; Cox v. Hughes. 10 Cal. App. 553. 102 Pac. 956; Harrop v. Landers &c. Co., 45 Conn. 561 ; Lan- nan v. Smith, 7 Gray (Mass.) 150; O'Connor v. Mehan, 47 Minn. 247, 49 N. VV. 982; Bell v. Mulholland, 90 Mo. App. 612. ""Leitch V. Northern Pac. R. Co., 95 Minn. 35, 103 N. W. 704; Stein- bach V. Brant, 79 Minn. 383, 82 N. W. 651. 79 Am. St. 494. Compare, however, with Weinberg v. Stratton, 163 Mich. 408, 128 N. W. 926. ^' Cox V. Hughes, 10 Cal. App. 553, 102 Pac. 956; National Biscuit Co. V. Consolidated Agencies Co., 153 111. App. 214; Herbert v. Bron- son, 125 Mass. 475 ; Twiss v. Cheev- er, 2 Allen (Mass.) 40; Eagan v. Luby, 133 Mass. 543 ; Bell v. Mulhol- land, 90 Mo. App. 612; Close v. In- dependent Gravel Co., 156 Mo. App. 411. 138 S. W. 81; Thompson v. Gimbel Bros., 71 Misc. (N. Y.) 126, 128 N. Y. S. 210; Billings v. O'Brien, 14 Abb. Prac. (N. S.) (N. Y.) 238. 4 Daly (N. Y.) 556. 45 How. Pr. (N. Y.) 392. Compare with Wallace v. Walter Hevwood Chair Co., 16 Gray (Mass.) 209. "Stewart v. Sample. 168 Ala. 270, 53 So. 182 (assessor's commissions) ; King V. Hawkins, 2 Ariz. 358. 16 Pac. 434 (commissioner of immi- gration) ; Bangs v. Dunn, 66 Cal. 12, 4 Pac. 963 (deputies and copyists employed in office of countv clerk) ; Wilkes V. Sicvers, 8 Cal. App. 659. 97 Pac. 677 ; Shannon v. Bruner. 36 Fed. 147 (assignment of fees by a master before they were earned) ; Schmitt v. Dooling, 145 Kv. 240. 140 S. W. 197, 36 L. R. A. (N. S.) 881 (assignment of salary by fireman) ; Field V. Chipley, 79 Ky. 260, 2 Ky. L. 269. 42 Am. Rep. 215 (clerk of a chancery court assigned his earn- ings until a debt should be paid) ; Holt V. Thurman. Ill Ky. 84. 23 Ky. L. 92, 63 S. W. 280, 98 Am. St. 399 (prosecuting attorney assigning future earnings of his office) ; Dick- inson V. Johnson, 110 Ky. 236, 61 S. W. 267, 22 Ky. L. 1686. 54 L. R. A. 566, 96 Am. St. 434 (county clerk); Granger v. French. 152 I\Iich. 356, 116 N. W. 181, 125 Am. St. 416; Dunkley v. Marquette, 157 Mich. 339. 122 N. W. 126 (city official) ; State V. Williamson, 118 Mo. 146, 23 S. W. 1054, 21 L. R. A. 827, 40 Am. St. 358 (order by mail carrier on a postmaster) ; Nelson v. Townsend. 132 Mo. App. 390. Ill S. W. 894; First Nat. Bank v. State, 68 Nebr. 482, 94 N. W. 633 (prosecuting at- torney) ; Schwenk v. WvckofF, 46 N. J. Eq. 560. 20 Atl. 259.' 9 L. R. A. 221, 19 Am. St. 438 (retired United States army officer) ; Bliss v. Law- rence, 58 N. Y. 442, 48 How. Pr. (N. Y.) 21, 17 Am. Rep. 273 (as- signment by a United States treasury department clerk) ; Bowery Nat. Bank v. Wilson, 122 N. Y. 478, 25 N. E. 855, 9 L. R. A. 706, 19 Am. St. 507 (assignment bv sheriff) ; Wal- ker V. New York. 72 Misc. (N. Y.) 97, 129 N. Y. S. 1059; State v. Barnes. 10 S. Dak. 306, 11 N. W. 80 (prosecuting attornev) ; National Bank v. Fink, 86 Texas 303. 24 S. W. 256, 40 Am. St. 833; Stevenson V. Kyle. 42 W^ Va. 229. 24 S. E. 886, 57 Am. St. 854 (order given by as- sessor). See, however. Brackett v. Blake, 7 Mete. (Mass.) 335, 41 Am. ^ 1435 CONTRACTS. 700 the assignor not objecting.^^ It has even been held that the assignment may be enforced after the assignor has been dis- charged in bankruptcy^* although other cases hold to the con- trary.^° § 1435. Assignment of contracts involving personal liabil- ity. — Even equity, however, does not permit the assignment of every contract. It is well settled that contracts are not as- signable which involve a personal liability, or relation of special trust and confidence or where the skill or experience of one of the parties is of the essence of the contract. ^^ The real difficulty consists in determining whether a given contract involves a per- sonal liability, establishes a relation of personal trust and con- fidence or requires the skill or experience of one of the parties to the contract for its performance. Thus, a building or con- struction contract which contains no provision in regard to as- signments may be assigned when there is nothing in the contract to indicate that it Vv^as limited to the parties making it either by its Dec. 442; Allen v. Chicago Pneu- matic Tool Co., 205 Mass. 569, 91 N. E. 887; McGregor v. McGregor, 130 Mich. 505. 90 N. W. 284, 97 Am. St: 492; State v. Hastings, 15 Wis. 75. ="Roesch V. W. B. Worthon Co. (Ark.), 130 S. W. 551, 31 L. R. A. (N. S.) 374 (assignment given prec- edence over garnishment subsequent- ly levied). See also, Johnson v. Pace, 78 111. 143; Ireland v. Smith, 1 Barb. (N. Y.) 419, 3 How. Pr. (N. Y.) 244. See, however. Shannon v. Bru- ner, 36 Fed. 147. A public official may assign compensation already due him. Carnegie Trust Co. v. Bat- tery Place Realty Co., 67 Misc. (N. Y.) 452, 122 N. Y. S. 697. ^Citizens' Loan Assn. v. Boston & M. R. Co., 196 Mass. 91, 82 N. E. 696. See also. Western Union Tel. Co. V. Ryan, 126 Ga. 191, 55 S. E. 21. ^^In re West, 128 Fed. 205. In re Home Discount Co., 147 Fed. 538; Leitch V. Northern Pac. R. Co., 95 Minn. 35, 103 N. W. 704. ^ Fitch V. Brockmon, 3 Cal. 348; Sloan V. Williams, 138 111. 43, 27 N. E. 531, 12 L. R. A. 496; Davenport V. Gentry's Admr., 9 B. Mon. (Ky.) 427 ; Henry v. Hughes, 1 J. J. Marsh. (Ky.) 453; Force's Admr. v. Thom- aso'n, 2 Litt. (Kv.) 166. Compare Bancroft v. Scribner, 72 Fed.988, 21 C. C. A. 352, 44 U. S. App. 480 ; Hazel V. McCloskey, 6 Ky. L. 736; Redhef- fer V. Learthe, 15 Mo. App. 12; Hil- ton V. Crooker, 30 Nebr. 707, 47 N. W. 3; Chapin v. Longworth, 31 Ohio St. 421. This rule is inappli- cable to involuntary servitudes, pau- pers, criminals, etc. Wilson v. Church, 1 Pick. (Mass.) 23; Hor- ner V. Wood, 23 N. Y. 350; Sum- ner V. Nevin, 4 Cal. App. 347, 87 Pac. 1105; F. Haag & Bros. v. Reich- ert, 142 Ky. 298, 134 S. W. 191; Wooster v. Crane & Co., 12) N. J. Eq. 22, 66 Atl. 1093; Smith v. PiUs, 57 Tex. Civ. App. 97, 122 S. W. 46 (holding that the contract of war- ranty usually contained in deeds con- veying real estate involves a per- sonal obligation upon the part of the grantor to which the grantee has a right, and which cannot be denied him or shifted to another without his consent) ; Epperson v. Epperson, yoi ASSIGNMENTS. § 1436 terms or by the subject-matter of the contract. ^^ But where the character of the work requires skill and experience the builder has a right to make his contract with a party having the requisite knowledge and experience, and when it appears that he has selected a particular contractor on account of his skill and ex- perience, a relation of personal confidence arises between the parties and the contract cannot be assigned.^* § 1436. Examples of unassignable contracts. — Executory contracts for the performance of a particular work, such as the 108 Va. 471, 62 S. E. 344. "When rights arising out of contracts are coupled with obHgations to be per- formed by the contractor, and in- volve such a relation of personal confidence that it must have been in- tended that the rights should be ex- ercised and the obligations per- formed by him alone, the contracts, including both his rights and his obligations, cannot be assigned with- out the consent of the other party to the original contract." Burck v. Taylor, 152 U. S. 634. 38 L. ed. 578, 14 Sup. Ct. 696, quot- ing from Delaware County Comrs. v. Diebold Safe & Lock Co., 133 U. S. 473, ZZ L. ed. 674, 10 Sup. Ct. 399. A contract for personal services cannot be assigned so that the assignee may command the labor of one who has never agreed to serve him. Board of Edu- cation v. State Board of Education, 81 N. J. L. 211, 81 Atl. 163. The nonassignability of a contract arising by inference from a relation of per- sonal confidence may be waived by the consent of the parties or the as- signment of such contracts may be ratified by the party reposing the trust. Weatherhogg v. Board of Commissioners, 158 Ind. 14, 62 N. E. 477 ; Pulaski Stave Co. v. Miller's Creek Lumber Co. (Ky.), 128 S. W. 96. See also, Harlow v. Oregonian Pub. Co.. 53 Ore. 272, 100 Pac. 7. *' Lakeview Land Co. v. San An- torfio Tract. Co., 95 Tex. 252, 66 S. W. 766. See also, American Bond- ing & Trust Co. V. Baltimore & O. S. W. R. Co., 124 Fed. 866, 60 C. C. A. 52; A. & S. Spengler v. Stiles- TuU Lumber Co., 94 Miss. 780, 43 So. 966; Leahy v. Dugdale's Admr., 2 Mo. 437; Columbia Water Power Co. V. Columbia, 5 S. Car. 225; Min- netonka Oil Co. v. Cleveland Vitri- fied Brick Co., 27 Okla. 180, 111 Pac. 326. In the following cases public construction contracts were held assignable by the contractor. Tay- lor V. Palmer, 31 Cal. 240 (contract to grade a street) ; Anderson v. De Urioste, 96 Cal. 404, 31 Pac. 266 (sewer construction contracts) ; St. Louis to the use of Alice Sullivan Admx. V. Clemens, 42 Mo. 69 (con- tract to grade curb and macadamize a street) ; Ernst v. Kunkle, 5 Ohio St. 520 (contract to improve street) ; Compare with Pike v. Waltham, 168 Mass. 581, 47 N. E. 437. The fact that the assignor of a neuralgia lo- tion may have given the first as- signees, persons he knew and in whom he had confidence, a license to use his picture and certificate does not pass to subsequent assignees. Edison v. Edison Polvform Mfg. Co., 72> N. J. Eq. 136, 07 Atl. 392. ^ Swarts V. Xarragansett Elec, &c. Co., 26 R. I. 388, 69 Atl. 77, 26 R. I. 436, 59 Atl. Ill (contract for in- stalling an electric apparatus) ; John- son V. Vickers, 139 Wis. 145, 120 N. W. 837, 21 L. R. A. (N. S.) 359n, 131 Am. St. 1046 (contract to build a canning factory). There is of course a distinction between assign- ment of the performance of the work itself and the mere assignment of payments under the contract. See Sharp V. Edgar, 3 Sandf. (N. V.) 379. 1436 CONTRACTS. 702 smelting of lead ore by particular persons conducting a smelter, when deal involved an allowance of credit,''" to build a side track to the saw mill of a designated person,*" an agreement by a nursery- man to plant, prune and care for fruit trees during a term of years,*^ and a contract with a certain advertising agency,*^ or for legal services,*^ or to take personal charge of a ranch,** have been held unassignable for the reason hereinbefore mentioned. *° A contract between an author and publisher for the publication of a book calls for the performance of a personal service of a par- ticular character which prevents the assignment of the contract by the publisher,**' even though the contract provides that the pub- lisher and its legal representatives and assigns shall keep and per- form the agreement.*^ A contract for the sale of goods to be manufactured cannot be assigned by the vendor where the vendee relies upon the skill and experience of the manufacturer as well as ''Arkansas Valley Smelting Co. V. Belden Min. Co., 127 U. S. 379, 32 L. ed. 246, 8 Sup. Ct. 1308. To same effect, Demarest v. Dulton Lumber Co., 161 Fed. 264, 88 C. C. A. 310. "Tifton &c. R. Co. v. Bedgood, 116 Ga. 945, 43 S. E. 257. "Edison v. Babka, 111 Mich. 235, 69 N. W. 499. *^ Eastern Advertising Co. v. Mc- Gaw, 89 Md. 72, 42 Atl. 923. As to when one is considered as having relied on the special skill or talent of the one with whom he contracts to prepare a booklet for advertising purposes, see H. C. Brown & Co. v. Jno. P. Sharkey Co., 58 Ore. 480, 115 Pac. 156. *' Corson v. Lewis, 11 Nebr. 446, 109 N. W. 735. "^ Fitch v. Brockmon, 3 Cal. 348. See also, Streeter v. Sumner, 31 N. H. 542; Hudson's Admrs. v. Farris, 30 Tex. 574 (agreement to locate colonists' land). ** See also, Spencer v. Woodbury, 1 Minn. 105 (agreement to cut and split several thousand rails). See, however, Janvey v. Loketz, 122 App. Div. (N. Y.) 411, 106 N. Y. S. 690, holding that a contract for the per- formance of certain painting, deco- rating, and white washing involved no personal confidential relation and no exceptional personal skill nor knowledge and might be assigned. It appeared, however, that the de- fendant had knowledge of and con- sented to the assignment. *" Griffith V. Tower Publishing Co. (1897), 1 Ch. 21. See also, Parker V. Evening News Pub. Co., 54 Fla. 544, 45 So. 309 (holding a contract with a newspaper to print delinquent tax list not assignable) ; New York Phonograph Co. v. Davega, 127 App. Div. (N. Y.) 222, 111 N. Y. S. 363 (holding an inventor's contract with a corporation to exploit his inven- tions not assignable). " Wooster v. Crane & Co., 12) N. J. Eq. 22, 66 Atl. 1093. In the above case the contract of publication was made with Crane & Co., a New Jer- sey Corporation. Subsequently this corporation was dissolved and a new one organized bearing the same name under the laws of Arizona, and all the property, plant and contracts of the original corporation were assigned and transferred to the new company. The same stockholders owned and controlled the stock in the new corporation. It was held that the contract of publication was not assignable to the new company against the dissent of the author. Compare with Sunday Mirror Co. v. Galvin, 55 Mo. App. 412. 703 ASSIGNMENTS. § 143^ Upon the implied warranty of quality.** So a beneficiary under a will by which it is made the duty of his children to care for and support him during the remainder of his life cannot assign to another his right to receive care and support during his life.*'' The converse of this is also true and a covenant by a grantee of land to support the grantor, an aged and feeble man, in considera- tion of the conveyance, is personal and cannot be shifted by the grantee to a purchaser of the land against the will and consent of the party with whom the agreement was made.^" Even though there are general provisions in a contract for as- signability, the use of such language does not in every case abso- lutely determine its assignability. Notwithstanding the use of such terms, the intention of the parties must be gathered from a consideration of the terms and the entire tenor of the contract, and if upon such consideration it appears that the contract calls for the performance of an obligation purely personal in its nature, the rule is general that the obligation, if personal, cannot be as- signed without the consent of the party to be benefited.^^ Thus, **"The injustice of permitting an assignment of a contract for per- sonal services, for the painting of a picture, for a partnership, is obvious. A contract for the sale of goods to be manufactured stands on similar grounds where the vendee relies upon the skill and experience of the manufacturer, as well as upon the implied warranty of quality. No man who has employed a tailor to make a suit of clothes ought to be compelled to accept a suit made by the tailor's assignee." Schlessinger V. Forest Products Co., 78 N. J. L. 637, 76 Atl. 1024, 30 L. R. A. (N. S.) 347. 138 Am. St. 627. To same effect, Dr. Jaeger's Sanitary Woolen System Co. v. Walker, 11 L. T. (N. S.) 180. ^' Merchants' Nat. Bank v. Crisp, 140 Iowa 308, 118 N. W. 394, 23 L. R. A. 526n, 132 Am. St. 267. The court said : "The service required was so distinctly a personal service to the father that it could not be converted by him into a money claim." ■^ Divan v. Loomis, 68 Wis. 150, 31 N. W. 760. To same effect, In re Shearn's Estate, 38 Utah 492, 114 Pac. 131. Compare the foregoing case with that of Matheny v. Chest- er (Ky.), 133 S. W. 754, holding that a third person who furnishes care and support to one in accordance with the condition of a deed which required the grantee to furnish such support cannot recover from the grantee the value of the care and ex- penses incurred merely because he had furnished the beneficiary money, or care, or board, which the grantee had obligated himself to do. " Montgomery v. De Picot, 153 Cal. 509, 96 Pac. 305, 126 Am. St. 84; Wooster v. Crane & Co., 11 N. J. Eq. 22, 66 Atl. 1093. In this latter case the court said : "Upon the whole, I am of the opinion that the only effect of the word 'assigns' is to give the right which Crane & Co. have without that word, viz., that their assignee would take whatever interest they had in the contract up to the time of the assignment, pre- cisely as in the case of one partner selling out his interest in the part- nership." ^ 1437 CONTRACTS. 704 in a contract which gave to certain designated persons and their assigns, for a limited time, an exchisive agency for the sale of specified property, the word "assigns" has been construed to mean a purchaser ready, able and willing to buy, to whom the original parties might assign their option and not to the public generally, and not any person to whom the original party might for other purposes assign an interest in the option. ^^ § 1437. Parties may stipulate against assignment. — There exists a second exception to the rule that contracts may be as- signed. The parties themselves may stipulate that the contract shall not be assignable.^^ Thus, a provision in a contract for the conditional sale of real estate to the effect that no assignment of the agreement would be valid without the consent and signature of the vendor has been upheld.^* Under the Iowa statute, how- ever, a stipulation of nonassignability in a contract of this charac- ter will not prevent its transfer to an assignee subject, of course, to all defenses which would have been available in the hands of "''Puffer V. Welch, 144 Wis. 506, 129 N. W. 525, Ann. Cas. 1912A, 1120. Tabler v. Sheffield Land &c. Co., 79 Ala. Zn, 58 Am. Rep. 593; Def- fenbaugh v. Foster, 40 Ind. 382; Andrew v. Meyerdirck, 87 Md. 511, 40 Atl. 173; Wakefield v. American Surety Co., 209 Mass. 173, 95 N. E. 350 (contract for the construction of a sewer which contained a pro- vision that no portion of the work should be assigned without the pre- vious assent of the board of sewer commissioners) ; Omaha v. Stand- ard Oil Co., 55 Nebr. ZZ1 , 75 N. W. 859. But compare Board Trustees School Dist. No. 1 v. Whalen, 17 Mont. 1, 41 Pac. 849; and see, con- tra. In re Turcan, 40 Ch. Div. 5, 58 L. J. Ch. 101, 59 L. T. (N. S.) 712, 37 W. R. 70; Grigg v. Landis, 21 N. J. Eq. 494; Manchester v. Kendall, 103 N. Y. 638; Brewster v. Hornells- ville, 35 App. Div. (N. Y.) 161, 54 N. Y. S. 904; Hackett v. Campbell, 10 App. Div. (N. Y.) 523, 42 N. Y. S. 47, affd. 159 N. Y. 537, 53 N. E. 1125. "One who accepts an assign- ment of a contract, which by express terms is made nonassignable, ac- quires only a cause of action against the assignor." Bonds-Foster Lum- ber Co. V. Northern Pac. R. Co., 53 Wash. 302, 101 Pac. 877. The at- tempted assignee cannot maintain an action thereon. Barringer v. Bes Line Construction Co., 21 Okla. 131, 99 Pac. 775, 21 L. R. A. 597n (time check). " Lockerby v. Amon, 64 Wash. 24, 116 Pac. 463, 35 L. R. A. (N. S.) 1064 and note. See also, Mont- gomery V. De Picot, 153 Cal. 509, 96 Pac. 305, 126 Am. St. 84; Andrew V. Meyerdirck, 87 Md. 511, 40 Atl. 173. Compare the foregoing cases with Cheney v. Bilby, 74 Fed. 52, 20 C. C. A. 291. 36 U. S. App. 720; Johnson v. Eklund, 72 Minn. 195, 75 N. W. 14; Wagner v. Cheney, 16 Nebr. 202, 20 N. W. 222. Such a provision may be waived. Cheney v. Bilby, 74 Fed. 52, 20 C. C. A. 291, 36 U. S. App. 720; Camp v. Wig- gins, n Iowa 643, 34 N. W. 461 ; Ma- day V. Roth, 160 Mich. 289, 125 N. W. 13, 136 Am. St. 441. 705 ASSIGNMENTS. 1438 the assignor."'' And an assignment may be valid as between the immediate parties thereto even though not binding upon the ven- dor.^" A provision against assignment in a contract may be waived by the parties thereto. "^ § 1438. Assignment may be forbidden by statute. — The as- signment of certain contracts may also be specifically forbidden by statutory enactment except on prescribed conditions. Thus an act passed to prevent fraud on the treasury of the United Slates provides that claims against the United States cannot be assigned until the allowance of the claim and the issuance of the warrant therefor."^ These sections make absolutely null and void all voluntary assignments of whatsoever kind or nature, of unal- lowed claims against the government. "^^ These sections have been held not to apply to assignments by a proceeding in bank- ruptcy, voluntary assignments by debtors of all their estate and the passing of claims by operation of law to executors and admin- istrators, legatees and the like.'"' Statutes against the assignment "Thomassen v. De Gey, 133 Iowa 278, 110 N. W. 581, 119 Am. St. 605. '' Sproull V. Miles, 82 Ark. 455, 102 S. W. 204. See also, Montgomery v. De Picot, 153 Cal. 509, 96 Pac. 305, 126 Am. St. 84, holding that vendor may be estopped to deny the con- tract is not assignable. See further on this subject post, § 1448. "Cheney v. Bilby, 74 Fed. ^2. 20 C. C. A. 291, 36 U. S. App. 720; Camp V. Wiggins, 72 Iowa 643, 34 N. W. 461; Pulaski Stave Co. v. Miller's Creek Lumber Co. (Ky.), 128 S. W. 96; Madav v. Roth, 160 Mich. 289, 125 N. W. 13, 136 Am. St_. 441 ; Brewster v. Hornellsville, 35 App. Div. (N. Y.) 161, 54 N. Y. S. 904. See also, Wakefield v. Amer- ican Surety Co., 209 Mass. 173, 95 N. E. 350. in which the evidence was held insufficient to show a waiver. ■^Revised Statutes of United States (1878), §§ 3477, 3737. See also, Cote Case, 3 Ct. CI. (U. S.) 64; Coopers Case, 1 Ct. CI. (U. S.) 85; Sines's Case, 1 Ct. CI. (U. S.) 12; St. Paul &c. R. Co. V. United States, 112 U. S. 733, 28 L. ed. 861, 5 Sup. Ct. 366. '"Emmons v. United States, 189 45 — Contracts, Vol. 2 Fed. 414; Spofford v. Kirk, 97 U. S. 484, 24 L. ed. 1032; National Bank of Commerce v. Downie, 218 U. S 345, 54 L. ed. 1065, 31 Sup. Ct. 89 Compare the foregoing with the fol- lowing, Dulaney v. Scudder, 94 Fed 6, 36 C. C. A. 52; Jernegan v. Os- born, 155 Mass. 207. 29 X. E. 520 Fewell V. American Surety Co., 80 Miss. 782, 28 So. 755, 92 Am. St 625; York v. Conde, 147 N. Y. 486, 42 N. E. 193, which holds that these statutes were enacted for the pro- tection of the government and not the claimant, and that if the govern- ment chooses to recognize the as- signment neither the claimant nor any one else can complain. Freed- man's Sav. & Trust Co. v. Shepherd, 127 U. S. 494. 32 L. ed. 163, 8 Sup. Ct. 1250; Hobbs v. McLean, 117 U. S. 567, 29 L. ed. 940, 6 Sup. Ct. 870 ; Goodman v. Niblack, 102 U. S. 556, 26 L. ed. 229; Lopez v. United States, 24 Ct. CI. (U. S.) 84, 2 L. R. A. 571. ^ ""^ National Bank of Commerce v. Downie, 218 U. S. 345. 54 L. ed. 1065, 31 Sup. Ct. 89; Goodman v. Niblack, 102 U. S. 556, 26 L. ed. 229; Erwin V. United States, 97 U. S. 392, 24 § 1439 CONTRACTS. 706 of claims to a citizen of another state in order to evade the exemp- tion law of the state passing the act have been upheld.®^ A stat- utory provision of this character may be rendered effective by making the assignment a criminal offense/^ or by rendering the assignor liable for the amount collected by the foreign assignee."^ § 1439. Assignment of liabilities by act of parties. — When the personal financial responsibility of one to whom credit is given, was the distinctive feature of the contract and appeared to be the material inducement to it, then, under the general rule, the one to whom credit is given cannot assign the agreement without the consent of the other party so that the latter can be compelled to accept the credit of the assignee since the basis upon which the credit was extended rested on the confidence which the creditor had in the debtor.^* It is so held for the reason that every one has a right to select and determine with whom he will contract and cannot have another person thrust upon him without his con- sent. He has a right to the benefit which he anticipated from the character, credit and substance of the party with whom he con- tracted.''^ On the same principle a contract for personal services cannot be assigned so that the assignee may command the labor of one who has never agreed to serve him.*'® A party who, with no interest to protect, voluntarily and without request pays the debt of another with no understanding at the time that an assignment L. ed. 1065, 14 Ct. CI. (U. S.) 577; 2 B. & Ad. 303, 22 E. C. L. 132; Howes & Co. V. United States, 24 Montgomery v. De Picot, 153 Cal. Ct. CI. (U. S.) 170, 5 L. R. A. 66. 509, 96 Pac. 305, 126 Am. St. 84; •"Sweeny v. Hunter, 145 Pa. St. Parsons v. Woodward, 22 N. J. L. 363, 22 Atl. 653, 14 L, R. A. 594. 196; Arkansas Valley Smelting Co., See also, Bishop v. Middleton, 43 v. Belden Min. Co., 127 U. S. 379, Nebr. 10, 61 N. W. 129, 26 L. R. A. 32 L. ed. 246, 8 Sup. Ct. 1308. See 445; Singer Mfg. Co. v. Fleming, 39 also, Winchester v. Davis Pyrites Nebr. 679, 58 N. W. 226, 23 L. R. A. Co., 67 Fed. 45, 14 C. C. A. 300, 28 210, 42 Am. St. 613; Gordon Bros. U. S. App. 353. V. Wageman, 11 Nebr. 185, 108 N. *" Montgomery v. De Picot, 153 W. 1067. Cal. 509, 96 Pac. 305, 126 Am. St. •^See State v. Dittmer, 120 Ind. 84; Wooster v. Crane & Co., IZ N. 54, 388, 22 N. E. 88, 22 N. E. 299. J. Eq. 22, 66 Atl. 1093; Arkansas ''^Bishop V. Middleton, 43 Nebr. Valley Smelting Co. v. Belden Min. 10, 61 N. W. 129, 26 L. R. A. 445; Co., 127 U. S. 379, 32 L. ed. 246, O'Connor v. Walter, 37 Nebr. 267, 8 Sup. Ct. 1308. See also, ante, 55 N. W. 867, 23 L. R. A. 650, 40 § 1433 et seq. Am. St. 486. "Board of Education v. State "British Waggon Co. v. Lea, 5 Q. Board of Education, 81 N. J. L. 211, B. Div. 149; Robson v. Drummond, 81 Atl. 163. 707 ASSIGNMENTS. § I44O is contemplated, cannot subsequently secure a formal assignment of the claim and enforce collection from the debtor.®^ § 1440. Assignment of rights by acts of parties. — The rights or benefits of a contract, however, which are unconnected with liabilities may be assigned or transferred witliout the other party's consent. This, generally speaking, includes anything that directly or indirectly involves a right of property."® Thus, one may be entitled to transfer whatever interest he had in a con- tract up to the time of the assignment when he could not assign the contract proper."" But while the benefit of the contract may be assigned, the assignor cannot put the assignee in a better posi- tion than he himself sustains. The assignee takes subject to all defenses which would have been available in the hands of the as- signor. ^"^ § 1441. Form and elements of assignments. — As between the assignor or assignee, no special form of words is necessary to make an assignment in the absence of any statutory enactment which restricts the assignor's rights, or in the absence of restric- tions placed by the parties themselves on the manner in which the assignment must be made.^^ Where there is an intention to '^ Cape Gera dean Bell Tel. Co. v. fidence cannot be assigned. See ante, Hamil's Estate, 153 Mo. App. 404, § 1433 et seq. 134 S. W. 1103. "^Wooster v. Crane & Co., 7Z N. "'La Rue v. Groezinger, 84 Cal. J. Eq. 22, 66 Atl. 1093. The ac- 281, 24 Pac. 42, 18 Am. St. 179; crued cause of action may be Louisville, N. A. & C. R. Co. v. assigned. H. C. Brown v. Jno. P. Goodbar, 88 Ind. 213; Mulhall v. Sharkey Co., 58 Ore. 480, 115 Pac. Quinn, 1 Gray (Mass.) 105, 61 Am. 156. "An assignment of moneys Dec. 414; Dayton v. Fargo, 45 Mich, due or to become due is not an as- 153, 7 N. W. 758; Up River Ice Co. signment of the contract." National V. Denier, 114 Mich. 296, 72 N. W. Surety Co. v. Maag, 43 Ind. App. 16, 157, 68 Am. St. 480; Harbord v. 86 N. E. 862. To same effect, In Cooper, 43 Minn. 466, 45 N. W. 860; re Wright. 157 Fed 544, 85 C. C. A. Fleekenstein Bros. Co. v. Fleeken- 206. 18 L. R. A. (X. S.) 193n. stein (N. J.), 53 Atl. 1043; Fran- '"Tolhurst v. .-Xssociated Portland Cisco V. Smith, 143 N. Y. 488, 38 N. Cement Mfgs.. 1901. 2 K. B. 811, E. 980; Grant v. Ludlow's .Admr., 1903, A. C 414; Thomassen v. De 8 Ohio St. 1; Burkett v. Moses. 11 Goey, 133 Iowa 278. 110 X. W. 581, Rich. L. (S. Car.) 432. See ante, 119 Am. St. 605. See post. § 1457. § 1433 et seq. It must, of course, be " Galbreath v. Wallrich, 45 Colo, borne in mind that executory con- 537, 102 Pac. 1085 (contract held tracts for the performance of per- sufficient as an assignment of a con- sonal services or other contracts tract to furnish railroad ties) ; which involve personal trust or con- Southern Mutual Life Ins. Assn. v. § 1 441 CONTRACTS. 708 assign on the one side, and an assent to receive on the other, it will operate as an equitable assignment of the subject-matter of transfer if sustained by a sufficient consideration.'^- In the ab- sence of any statutory provision requiring it the assignment need not be in writing.''^ Durdin, 132 Ga. 495, 64 S. E. 264, as between the assignor and assign- 131 Am. St. 210; McDaniel v. Max- ee, it is not essential that the debt well, 21 Ore. 202, 27 Pac. 952, 28 should have been earned or the fund Am. St. 740. In re Fett's Estate, 39 be in esse at the time of the assign- Pa. Super. Ct. 246; McCleery v. ment, or that notice be given the Stoup, 2)2 Pa. Super. Ct. 42. "If there present or future holder of the fund, be any proposition settled in our The intent of the parties to create law, it is to the effect that no par- the lien being apparent, it is suffi- ticuiar form of words is necessary cient that there be a reasonable ex- to the assignment of an account or pectancy that the debt will be fully obligation. Any act showing an in- earned and the fund come into ex- tention to transfer the party's in- istence." Barnes v. Shattuck, 13 terest for that purpose is sufficient." Ariz. 338, 114 Pac. 952. It is not Wheless v. Meyer & Schmid Grocer always necessary to put the assignee Co. 140 Mo. App. 572, 120 S. W. in the possession of the thing or 708.' It has been held that in the right assigned, especially when the absence of a statute, a mere in- assignor owns no interest in the dorsement upon an instrument not physical property itself (Belden v. negotiable is not sufficient to oper- Farmers' &c. Bank, 16 Cal. App. ate as an assignment of the instru- 452, 118 Pac. 449), or when the ment but this rule may be changed nature of the property is such that bv statute. Larson v. Glos, 235 111. it cannot be physically transferred. 584, 85 N. E. 926. Whether the In re McCawley, 158 Fed. 222. One transaction operated as payment or Hill entered into a contract with the as an assignment held a question for plaintiff brick company which the the jury. Barry v. Curley, 202 defendant gas company adopted and Mass. 42, 88 N. E. 437. acted upon. It was held that Hill's "Wood V. Casserleigh, 30 Colo, agreement became the contract of 287, 71 Pac. 360, 97 Am. St. 138; the gas company. Chanute Brick Col'ehour v. Bass, 143 111. App. &c. Co. v. Gas Belt Fuel Co., 82 530 ; Gray v. Bever, 122 111. App. 1 ; Kans. 752, 109 Pac. 398. An order by Metcalfe v. Kaincaid, 87 Iowa 443, which the clerk of a sale is directed 54 N. W. 867, 43 Am. St. 391 ; Whe- to turn certain of the proceeds to a less V. Meyer &c. Grocer Co., 140 designated party does not amount to Mo. App. 572, 120 S. W. 708; Levins either a legal or equitable assign- V. Stark, 57 Ore. 189, 110 Pac. 980. ment of such funds and may be re- There must, however, be enough to yoked at any time prior to compli- show an intention to assign as dis- ance with the order. Loughlin v. tinguished from a mere offer to do Larson (S. D.), 131 N. W. 304. so. E. Strickland & Co. v. Lesesne, "Heath v. Hall, 2 Rose 271, 4 160 Ala. 213, 49 So. 233. The party Taunt. 326, 13 Rev. Rep. 610; Lowery to whom the assignment is directed v. Peterson, 75 Ala. 109; Wiggins v. is presumed to accept it. Randolph McDonald, 18 Cal. 126; Perkins v. Bank v. Armstrong, 11 Iowa 515. Peterson, 2 Colo. App. 242, 29 Pac. See also, Townson v. Tickell, 3 B. 1135; Mason v. Chicago Title & & Aid. 31, 5 E. C. L. 28; Van Bus- Trust Co., 77 111. App. 19; Leslie E. kirk V. Warren, 4 Abb. Dec. (N. Y.) Keeley Co. v. Hargreaves, 236 111. 457; Moir v. Brown, 14 Barb. (N. 316, 86 N. E. 132; Ross v. Schneider, Y.) 39; Brooks V. Marbury, 11 Wheat 30 Ind. 423; Slaughter v. Foust, 4 (U. S.) 78, 6 L. ed. 423. "To con- Blackf. (Ind.) 379; McAleer v. Mc- stitute an equitable assignment good Namara, 140 Iowa 112, 117 N. W. 709 ASSIGNMENTS. s 1442 § 1442. Informal assignments. — Written assignments very informally worded have been upheld. Thus, a slip attached to a bank book on which were written these words, "Ed., this is for you. Lida," has been held sufficient to sustain an assignment of the funds evidenced by the bank book.''* A life insurance policy may also be assigned by informal words.'^ The statutes of some 1122; Tone v. Shankland, 110 Iowa 525, 81 N. W. 789; Seymour v. Ault- man, 109 Iowa 297, 80 N. W. 401; Preston v. Peterson, 107 Iowa 244, n N. VV. 864; Clark v. Wiss, 34 Kans. 553, 9 Pac. 281; McCubbin v. Atchison, 12 Kans. 166; Newbj' v. Hill, 2 Aletc. (Ky.) 530; Edwards V. Succession of Daley, 14 La. Ann. 384; Delassize's Succession, 8 Rob. (La.) 259; White v. Kilgore, 17 Maine 571, 1 Atl. 739; Sprague v. Frankfort, 60 ]Maine 253; Simpson V. Bibber, 59 Maine 196; Garnsey v. Gardner, 49 Maine 167 ; Porter v. Bullard, 26 Maine 448; Spiker v. Nydegger, 30 Md. 315; Crane v. Gough, 4 Md. 316; Baden v. State, 1 Gill (Md.) 165; Mitchell v. ^litchell, 1 Gill (Md.) 66; Onion v. Paul, 1 Har. & J. (Md.) 114; Smith v. Penn- American Plate Glass Co., Ill Md. 696, n Atl. 264; Macomber v. Doane, 2 Allen (Mass.) 541; Currier v. Howard, 14 Gray (Mass.) 511; Gro- ver V. Grover, 24 Pick. (Mass.) 261, 35 Am. Dec. 319; Dunn v. Snell. 15 Mass. 481 ; Jones v. Witter, 13 Alass. 304; Quiner v. Marblehead Social Ins. Co., 10 J\lass. 476; Crocker v. Whitne3% 10 Mass. 316; Donovan v. Halsey Fire Engine Co., 58 Mich. 38, 24 N. W. 819; Draper v. Fletcher. 26 Mich. 154; Hurlev v. Bendel, 67 Minn. 41. 69 N. W. 477; Pass v. Mc- Rea, 36 r^Iiss. 143 ; Boyle v. Qark, 63 Mo. App. 473; Johnson County v. Bryson, 27 Mo. App. 341 ; Oppen- heimer v. First Nat. Bank, 20 ^lont. 192, 50 Pac. 419; Curtis v. Zutavern, 67 Nebr. 183, 93 N. W. 400; Gage V. Dow, 59 N. H. 383; Jordan v. Gil- len, 44 N. H. 424; Brewer v. Frank- lin Mills, 42 N. H. 292; Thompson V. Emery, 27 N. H. 269; Hutchings V. Low, 13 N. J. L. 246; Lanigan's Admr. v. Bradlev & Currier Co.. 50 N. J. Eq. 201, 24 Atl. 505; New Jer- sey Produce Co. v. Gluck, 79 N. J. L. 115, 74 Atl. 443; Plooker v. Eagle Bank, 30 N. Y. 83, 86 Am. Dec. 351 ; Risley V. Phenix Bank, 83 N. Y. 318, 38 Am. Rep. 421, affd. Ill U. S. 125, 28 L. ed. 374, 4 Sup. Ct. 322; Selleck v. Manhattan Fire Alarm Co., 117 N. Y. S. 964 (reassignment by parol) ; Haller v. Ingraliam, 101 N. Y. S. 789; Ponton v. Griffin. 72 N. Car. 362; Roberts v. First Nat. Bank, 8 N. Dak. 474, 79 N. W. 993 ; Craft V. Webster, 4 Rawle (Pa.) 242 ; Miller v. Newell, 20 S. Car. 123, 47 Am. Rep. 833; Howell v. Bulkley, 1 Nott & McC. (S. Car.) 249; Perry- clear V. Jacobs, 2 Hill Eq. ( S. Car.) 504, Riley Eq. (S. Car.) 47; Cleve- land V. Martin, 2 Head. (Tenn.) 128; Graham v. ]\IcCampbell, Meigs (Tenn.) 52, ZZ Am. Dec. 126; Clark V. Gillespie, 70 Tex. 513. 8 S. W. 121; Ross V. Smith, 19 Tex. 171, 70 Am. Dec. 327; RoUison v. Hope, 18 Tex. 446; Singletary v. Goeman (Tex. Civ. App.), 123 S. W. 436; Hutchins v. Watts, 35 Vt. 360; Wilt V. Huffman. 46 W. Va. 473, 2>l S. E. 279; Kenneweg v. Schilansky, 45 W. Va. 521, 31 S. E. 949; Bentley v. Standard Fire Ins. Co., 40 W. Va. 729, 23 S. E. 584; Scraggs v. Hill, o7 W. Va. 706. 17 S. E. 185; Arpin v. Burch, 68 Wis. 619, 32 N. W. 681; Farmers' & Drovers' Sav. Bank v. Kansas Citv Pub. Co., 3 Dill. (U. S) 287, Fed. Cas. No. 4652. "No par- ticular form is necessary to consti- tute an assignment of a debt. If the intent of the party to effect an as- signment be clearly established, that is sufficient. Neither is it necessary that the assignment be in writing. If in writing, it may be in the form of an agreement, and order, or of any other instrument which the par- ties may use for that purpose. '_] Moore v. Lowrev, 25 Iowa 336, 95 Am. Dec. 790. '* Stacks v. Butcn. 141 Wis. 235, 124 N. W. 403. 135 Am. St. 39. ^Southern Mutual Life Insurance § 144^ CONTRACTS. 7IO States, however, provide that certain kinds of contracts must be assigned with prescribed formaHties/° In some states assign- ments to be valid at law must be in writing.'' However, when a statutory mode of assignment is provided, it is cumulative in the absence of express words inhibiting other modes of assignment.'® But when the statute is mandatory instead of its being merely directory, its provisions must be complied with. Assignments may, by statutory enactment, be required to be in writing.'" Other statutes provide that certain designated assignments must be re- corded.®** So when a statute provides that a purchaser's certifi- cate at a judicial sale may be assigned by indorsement on the cer- tificate, legal title is not invested to such certificate by a blank as- sigment on a separate sheet of paper.^^ In the absence of any statutory restriction or an agreement between the party to the contrary, a valid assignment may be accomplished by delivery only.^^ Neither is it necessary that the assignment should 'be made with the same solemnity that characterizes the execution of the obligation itself.®^ Thus a sealed contract may be assigned by parol so as to vest the equitable title thereto in the assignee.** Assn. V. Durdin, 132 Ga. 495, 64 S. 22 Atl. 171. In the above a recorded E. 264, 131 Am. St. 210. assignment was given preference over '^See Kentucky Refining Co. v. an order for wages due earlier in Globe Refining Co., 104 Ky. 559, 20 date but not accepted in writing until Ky. L. 778, 47 S. W. 602, 42 L. R. after the assignment had been duly A. 353, 84 Am. St. 468. recorded. Gilman v. Inman, 85 " Planters' Bank v. Prater, 64 Ga. Maine 105, 26 Atl. 1049. In this case 609; Turk v. Cook, 63 Ga. 681; the assignment was recorded at the Swann Davis Co. v. Stanton, 7 Ga. domicil of the assignor. The stat- App. 668, 67 S. E. 888. ute provided that the assignment was ^'Gardner v. Mobile & N. W. R. to be recorded at the place in which Co., 102 Ala. 635, 15 So. 271, 48 Am. the assignor "was commorant while St. 84. See also, Kelley v. Love, 35 earning the wages." In this case the Ind. 106; Allen v. Newberry, 8 Iowa assignor was a river driver. It 65. was held that the assignment need "Hartford Fire Ins. Co. v. Amos, not be recorded in the different towns 98 Ga. 533, 25 S. E. 575. The above through which the assignor passed case lays down the rule that if the while earning wages. See also, San assignment is not in writing, the Antonio &c. R. Co. v. Seehorn (Tex. assignee cannot bring an action there- Civ. App.), 127 S. W. 246. on in his own name, but must neces- " Chytraus v. Smith, 141 111. 231, sarily use the name of the assignor 30 N. E. 450. as suing for his use. Foster v. Sut- ^'Littlefield v. Smith, 17 Maine live, 110 Ga. 297, 34 S. E. 1037. 327; Clark v. Rogers, 2 Maine 143. ^ Rachels & Robinson v. Doniphan See also. Pease v. Rush. 2 Minn. 107. Lumber Co., 98 Ark. 529, 136 S. W. ^^ Dennis v. Twitchell, 10 Mete. J558 (assignment to attorney of in- (Mass.) 180. terest in a client's cause of action); '* Barrett v. Hinckley, 124 111. 32, Peabody v. Lewiston, 83 Maine 286, 14 N. E. 863, 7 Am. St. 331. See 711 ASSIGNMENTS. § 1443 An assignment may, however, be unenforcible because of its vagueness and indefiniteness.^' Thus an agreement by a party to pay his attorney a reasonable compensation for services ren- dered by him out of the proceeds of the suit has been held unen- forcible and inoi^erative as an assignment because of its uncer- tainty.*" § 1443. Partial assignments. — It is well settled that at com- mon law a chose in action cannot be assigned in part, so as to enable the assignee of such part to bring suit upon it without the consent of the party liable." Thus, one cannot assign a portion of a claim for wages, the entire sum of which is due and payable at one time, so as to give the assignee the right to sue the debtor in the absence of any assent to or ratification of the assignment by the debtor.*^ The partial assignment of one's interest in a prom- issory note is not binding on the maker of the note, unless ac- cepted by the latter, where there is no suit in equity to which all persons interested are parties.®** The same has been held true of also, Fruhauf v. Bendheim, 127 N. Y. 587, 28 N. E. 417. It has been held that a bond may be assigned by parol. Hofifman v. Smith, 94 Iowa 495. 63 N. W. 182. » Raines's Case, 11 Ct. CI. (U. S.) 648. ^ Story V. Hull 143 111. 506, 32 N. E. 265. Compare, however, with Milmo National Bank v. Convery, 8 Tex. Civ. App. 181. 27 S. W. 828; Bower v. Hadden Blue Stone Co., 30 N. J. Eq. 171. " Kansas Citv, M. & B. R. v. Rob- ertson, 109 Ala. 296. 19 So. 432; Grain v. Aldrich, 38 Cal. 514, 99 Am. Dec. 423: Rivers v. A. & C. Wright & Co., 117 Ga. 81. 43 S. E. 499; Southern Printing Co. v. Potter, 133 Ga. 869. 72 S. E. 427; Getchell v. Maney, 69 Maine 442; Tripp v. Brownell. 12 Cush. (Mass.) 376; Gib- son v. Cooke. 20 Pick. (Mass.) 15 32 Am. Dec. 194; Milroy v. Spurr Mountain Iron Co.. 43 Mich. 231, S N. W. 287; Dean v. St. Paul & D. R.. 53 Minn. 504. 55 N. W. 628-; Beardslee v. Morgner, 73 Mo. 22; McDaniel v. Maxwell. 21 Ore. 202, 27 Pac. 952, 28 Am. St. 740; Philadelphia's Appeals, 86 Pa. St. 179; Harris v. Campbell, 68 Tex. 22, 3 S. W. 243, 2 Am. St 467; Mandeville v. Welch. 5 Wheat. (U. S.) 277. 5 L. ed. 87; Carter v. Nichols. 58 Vt. 553. 5 Atl. 197; Sko- bis v. Ferge, 102 Wis. 122, 78 N. W. 426. However, under a contract for work which provides for payment in instalments, it has been held that each instalment is a separate demand, and may be assigned. Adler v. Kan- sas City, S. & M. R. Co., 92 Mo. 242, 4 S. W. 917. If the debtor re- fuses to recognize a partial assign- ment, the creditor can maintain an action to recover the entire debt. Thiel V. John Week Lumber Co. 137 Wis. 272. 118 N. W. 802. 20 L. R. A. (N. S.) 842, 129 Am. St. 1064. See also, Ives v. New Bern Lum- ber Co., 147 N. Car. 306, 61 S. E. 70. «« Kansas Citv M. & B. R. Co. v. Robertson, 109' Ala. 296. 19 So. 432; Getchell v. Manev, 69 Maine 442; Sternberg & Co. v. Lehigh Valley R. Co.. 78 N. J. L. 277. 73 Atl. 39; Fair- grieves V. Lehigh Navigation Co., 2 Phila. (Pa.) 182; Carter v. Nichols. 58 Vt. 553, 5 Atl. 197. "Shearer v. Shearer, 137 Ga. 51. 72 s 1444 CONTRACTS. 712 the partial assignment of a judgment without the consent of the judgment debtor.°° The purpose of this rule is to prevent a cred- itor from splitting up a single cause of action so as to subject his debtor to several actions instead of one.''^ The reason for the rule fails, however, when the partial assignment makes the as- signor and assignee co-owners, and they join in an action to en- force the entire claim, in which case the suit may be maintained.^^ The debtor may also assent to the partial assignment, and if he does so no one else has the right to object to the assignment on the ground that it is partial.^^ Once having assented, neither the debtor,^* the assignor,''^ nor his creditors"" can subsequently raise the question. § 1444. Partial assignments in equity. — The rule against partial assignments only applies when the assignment is sought to be enforced at law. A partial assignment is upheld in equity for the reason that if parts of a single demand are assigned to differ- S. E. 428; Miller v. Bledsoe, 1 Scam. (111.) 530, 32 Am. Dec. 2,7. See also, Conover v. Earl, 26 Iowa 167 ; Hutchinson v. Simon, 57 Miss. 628; Hughes V. Kiddell, 2 Bay (S. Car.) 324; Lindsay v. Price, 2>2> Tex. 280; Frank v. Kaigler, 36 Tex. 305. "" Love V. Fairfield, 13 Mo. 300, SZ Am. Dec. 148; Loomis v. Robinson, 76 Mo. 488; Hopkins v. Stockdale, 117 Pa. St. 365, 11 Atl. 368. ^ Nor is a partial assignment of one's inter- est in a fund in the hands of another, binding on the latter, unless accepted by him. Shearer v. Shearer, 137 Ga. 51, 72 S. E. 428. See also, Petti- bone V. Thomson, 130 K Y. S. 284. "' :\landeville v. Welch, 5 Wheat. (U. S.) 277, 5 L. ed. 87; Rivers v. Wright, 117 Ga. 81, 43 S. E. 499; Gibson v. Cooke, 20 Pick. (Mass.) 15, 32 Am. Dec. 194; Swift v. Wa- bash R. Co., 149 Mo. App. 526, 131 S. W. 124. •"^ Evans v. Land & Coal Co., 80 Fed. 433, 25 C. C. A. 531; Shilling V. Mullen, 55 ^linn. 122, 56 N. W. 586, 43 Am. St. 475 ; Whittemore v. Judd Linseed &o. Oil Co., 124 N. Y. 565, 27 N. E. 244, 21 Am. St. 708; Ramsey v. Johnson, 8 Wyo. 476, 58 Paa 755, 80 Am. St. 948. "^Methven v. Staten Island Power Co., 66 Fed. 113, 13 C. C. A. 362; Manchester Fire Assur. Co. v. Glenn, 13 Ind. App. 365, 40 N. E. 926, 41 N. E. 847, 55 Am. St. 225; Des Moines County v. Hinkley, 62 Iowa 637, 17 N. W. 915 ; Lannan v. Smith, 7 Grav (Mass.) 150; Grippin v. Ben- ham, 5 Wash. 589, 32 Pac. 555. In an action at law it has been held that where the parties had fought out the merits of the cases and set- tled the amount due under the con- tract, and the defendants alleged that they were willing to pay the money if they could safely do so, and the use-plaintiff conceded the right of the court to so control the payment of the money as to protect the de- fendant from the risk of a subse- quent suit, the rule against partial assignments did not apply. Colum- bian Reinforced Concrete Co. v. Rose, 187 Fed. 803, 109 C C A. 563. ^St. Lawrence &c. Mfg. Co. v. Price, 49 W. Va. 432, 38 S. E. 526. "^ Potter V. Northrup Banking Co., 59 Kans. 455, 53 Pac. 520. ""Burditt V. Porter, 63 Vt. 296, 21 Atl. 955, 25 Am. St. 763. /M ASSIGXMEXTS. s 1444 ent persons the rights of all the assignees can be settled in one suit; and in a suit by one assignee not only the debtor and as- signor, but all assignees or claimants to any part of a fund, can be made parties to the suit, so that one decree may determine the duty of the debtor to each claimant and his rights and interests be fully protected. °^ In equity neither the debtor,"** subsequent as- signees,"" nor attaching creditors^ can object to a partial assign- ment.^ Thus an order drawn upon the debtor, payable out of a designated fund or debt then due or to become due, operates, when delivered to the payee, as an equitable assignment or appro- priation of the fund pro tanto, and no acceptance by the drawee is necessary.^ In such case, however, in order to render the as- signment valid it must not be couched merely in general terms, but must be drawn on a particular fund/ A bill of exchange, order or check drawn generally and not upon a designated fund does not operate as an assignment pro tanto unless accepted. ° *'In re The Elmbank, 12 Fed. 610; Dulles V. H. D. Crippen Mfg. Co., 156 Fed. 706; Daniels v. ]\Ieinhard, 53 Ga. 359; Warren v. Bank, 149 111. 9. 38 N. E. 122, 25 L. R. A. 746; Fordyce v. Nelson, 91 Ind. 447; Des Moines County v. Hinkley, 62 Iowa 637, 17 N. W. 915; National Exch. Bank v. McLoon, IZ Maine 498, 40 Am. Rep. 388; Cantv v. Latternar, 31 Minn. 239, 17 N. VV. 385; Schilling V. Mullen, 55 Minn. 122, 56 N. W. 586, 43 Am. St. 475; Bower v. Hadden Blue Stone Co., 30 N. J. Eq. 171; Field V. New York, 6 N. Y. 179, 57 Am. Dec. 435 ; Risley v. Phenix Bank, 83 N. Y. 318, 38 Am. Rep. 421, affd. Ill U. S. 125, 28 L. ed. 374. 4 Sup. Ct. 322; Chambers v. Lancaster, 160 N. Y. 342, 54 N. E. 707; Dickinson V. Tvson, 125 App. Div. (N. Y.) 735, 110 'N. Y. S. 269; Etheredge v. Vernov, 74 N. Car. 800; McDaniel V. Ma.xwell, 21 Ore. 202. 27 Pac. 952, 28 Am. St. 740; Harris County v. Campbell, 68 Tex. 22, 3 S. W. 243, 2 Am. St. 467; First Nat. Bank v. Kimberlands, 16 W. Va. 555; Dud- ley V. Barrett, 66 W. Va. 363, 66 S, E. 507. Contra. Burnett v. Crandall, 63 Mo. 410; Gardner v. Smith, 5 Heisk. (Tenn.) 256. Some cases hold that the consent of the debtor is necessary even in equity. Bland v. Robinson (Mo. App.), 127 S. W. 614; Mandeville v. Welch, 5 Wheat. (U. S.) 277, 5 L. ed. 87. See James V. Newton, 142 Mass. 366, 8 N. E. 122, 56 Am. Rep. 692; Kingsbury v. Burrill. 151 Mass. 199, 24 N. E. 36. "'Pittsburgh &c. R. Co. v. Volkert, 58 Ohio St. Z(i2, 50 N. E. 924. "* Fairbanks v. Sargent, 117 N. Y. 320, 22 N. E. 1039. 6 L. R. A. 475. 'Warreo v. Bank, 149 111. 9, 38 N. E. 122, 25 L. R. A. 746; Robbins v. Klein, 60 Ohio St. 199, 54 N. E. 94; McDaniel v. Maxwell. 21 Ore. 202, 27^ Pac. 952, 28 Am. St. 740. " Even if separate actions are brought they may in equity be con- solidated. Averv v. Popper, 92 Tex. ZZl, 49 S. W. 219, 50 S. W. 122, 71 Am. St. 849. => McDaniel v. Maxwell, 21 Ore. 202, 27 Pac. 952, 28 Am. St. 740. * Cashman v. Harrison, 90 Cal. 297, 27 Pac. 283; Hall v. Flanders, 83 Maine 242, 22 Atl. 158; Harris Coun- ty V. Campbell, 68 Tex. 22. 3 S. W. 243. 2 Am. St. 467. ^ Le Breton v. Stanley Contracting Co., 15 Cal App. 429, 114 Pac. 1028 (check never presented to nor ac- cepted by the bank upon which it is drawn does not amount to an assign- ^ 1445 CONTRACTS. 714 § 1445. Notice of assignment as between the assignor and assignee and the party liable. — As between the assignor and assignee and those standing in the shoes of the assignor, notice to the debtor or liolder of the fund is not necessary to complete the assignment.*^ It is well settled, however, that the debtor or person liable must have notice of the assignment and he will not be bound thereby until he has received notice.^ And as to inter- ment of the amount called for in the check) ; John M. C. Marble Co. V. ^Merchants' Nat. Bank (Cal. App.), 115 Pac. 59 (unaccepted check not an assignment of the funds against which it is drawn) ; Harlan v. Glad- ding &c. Co., 7 Cal. App. 49, 93 Pac. 400; Eastern Milling Co. v. Eastern Milling &c. Co., 146 Fed. 761, afifd. 151 Fed. 764; Bowker v. Haight & Freese Co., 146 Fed. 257; Western &c. R. Co. V. Union Inv. Co., 128 Ga. 74, 57 S. E. 100 ; Poland v. Love, 7 Ind. Ter. 42, 103 S. W. 759; Hol- brook V. Payne, 151 Mass. 383. 24 N. E. 210, 21 Am. St. 456; Lonier v. State Sav. Bank, 149 Mich. 483, 112 N. W. 1119; Bush v. Foote, 58 Miss. 5, 38 Am. Rep. 310; Chase v. Alex- ander, 6 Mo. App. 505 ; Brill v. Tuttle, 81 N. Y. 454, Z7 Am. St. 515 ; People v. Remington, 45 Hun (N. Y.) 347; Marysville Bank v. Windisch-Muhl- hauser Brew. Co., 50 Ohio St. 151; Croyle v. Guelich, 35 Pa. Super. Ct. 356; McBride v. American R. &c. Co. (Tex. Civ. App.), 127 S. W. 229; Christmas v. Russell, 14 Wall. (U. S.) 69, 20 L. ed. 762. Compare with Vaughan v. Farmers' &c. Nat. Bank (Tex. Civ. App.), 126 S. W. 690, and Hove V. Stanhope State Bank, 138 Iowa 39, 115 N. W. 476. See also, Fredrick v. Spokane Grain Co., 47 Wash. 85, 91 Pac. 570. As to the as- signment of a certificate of deposit, see Philpot v. Temple Banking Co., 3 Ga. App. 742, 60 S. E. 480.^ The rule applies even though the instru- ment is not negotiable. Shaver v. Western Union Tel. Co., 57 N. Y. 461. See also. Smith v. Penn Ameri- can Plate Glass Co., Ill Md. 696, 77 Atl. 264. But an order or check drawn against a special fund or de- posit operates as an equitable assign- ment of the fund. Elliott v. First Nat. Bank (Tex. Civ. App.), 135 S. W. 159. To same effect, see Cope V. C. B. Walton Co. (N. J. Eq.), 76 Atl. 1044; Hall v. Jones, 151 N. Car. 419, 66 S. E. 350; McBride v. American R. &c. Co. (Tex. Civ. App.), 127 S. W. 229; Wamsley v. Ward, 61 W. Va. 65, 55 S. E. 998. Compare with Brady v. Ranch Min- ing Co., 7 Cal. App. 182, 94 Pac. 85 ; Poland v. Love, 164 Fed. 186, 91 C. C. A. 466. As to the liability of the drawer of an order payable in chattels or out of a particular fund, see Maynard v. Maynard, 105 Maine 567, 75 Atl. 299. In some jurisdic- tions a check on a bank is consid- ered as an assignment pro tanto of the drawer's deposit. Loan &c. Sav. Bank v. Farmers' & Merchants' Bank, 74 S. Car. 210, 54 S. E. 364, 114 Am. St. 991; Southern Seating &c. Co. v. First Nat. Bank (S. Car.), 68 S. E. 962. See also. Smith v. Nelson, 83 S. Car. 294, 65 S. E. 261, 137 Am. St. 808. * Gorringe v. Irwell India Rubber Works, 34 Ch. D. 128; Burn v. Car- valho, 4 Myl. & C. 690; Bishop v. Holcomb, 10 Conn. 444; Thayer v. Daniels, 113 Mass. 129; Wood v. Partridge, 11 Mass. 488; Marsh v. Carney, 69 N. H. 236, 45 Atl. 745; Cogan V. Conover Mfg. Co., 69 N. J. Eq. 809, 64 Atl. 973, 115 Am. St. 629; Kafes v. McPherson (N. J. Eq.), 32 Atl. 710; Muir v. Schenck, 3 Hill (N. Y.) 228, 38 Am. Dec. 633. See also. Bank of Yolo v. Bank of Woodland, 3 Cal. App. 561, 86 Pac. 820. ^ Maple Leaf Rubber Co. v. Brodie, 18 Quebec Super. Ct. 352; Graham Paper Co. v. Pembroke, 124 Cal. 117, 56 Pac. 627, 44 L. R. A. 632, 71 Am. St. 26. Compare the foregoing Cali- fornia case with Morgan v. Lowe, Ebbets & Co., 5 Cal. 325, 62, Am. Dec. 132; Adams v. Leavens, 20 Conn. 715 ASSIGNMENTS. § 1446 vening equities the liability of the debtor is determined by the date on which he receives notice of the assignment and not by tlic date on which the assignment was made.® Thus if the debtor or person liable receive no notice, he may discharge all or part of the obligation by payment to the assignor.® § 1446. Effect of notice to debtor or person liable — Rights of parties generally. — After notice of the assignment, the debtor or person liable cannot make a settlement which will be prejudicial to the rights of the assignee without the assent of the latter,^'' and if, after notice, the debtor settles with the assignor. 72,; Woodbridge v. Perkins, 3 Day (Conn.) 364; Bach v. Twogood, 18 La. 414; Lehman Drv Goods Co. v. Lemoine, 129 La. 382, 56 So. 324; Robinson v. Marshall, 11 Md. 251; Shields v. Taylor, 25 Miss. 13 ; Rich- ards V. Griggs, 16 Mo. 416, 57 Am. Dec. 240; Heermans v. Ellsworth, 64 N. Y. 159; Crosby v. Kropf, ZZ App. Div. (N. Y.) 446, 54 N. Y. S. 76; Gardner v. National City Bank, 39 Ohio St. 600 ; Commonwealth v. Sides, 176 Pa. St. 616, 35 Atl. 136; Hobson V. Stevenson, 1 Tenn. Ch. 203; Dillingham v. Traders' Ins. Co. (Tenn.). 108 S. W. 1148; Inglis v. Inglis's Exrs., 2 Dall. (U. S.) 45. 1 L. ed. 282; Loomis v. Loomis, 26 Vt. 198; Stebbins v. Bruce, 80 Va. 389; Cox v. Wayt, 26 W. Va. 807; Stebbins v. Union Pac. R. Co., 2 Wyo. 71. Notice to one partner is notice to the firm. Fitch v. Stamps, 6 How. (Miss.) 487. nValker v. Bradford Old Bank, 12 Q. B. D. 511, 53 L. J. Q. B. 280, 32 W. R. 645; Williams v. Sorrell, 4 Ves. Jr. 389; ]\Ierchants' & Mechan- ics' Bank v. Hewitt, 3 Iowa 93, 66 Am. Dec. 49; American Bridge Co. V. City of Boston, 202 INIass. 374. 88 N. E. 1089; Callanan v. Edwards, 32 N. Y. 483; Clement v. Philadel- phia, 137 Pa. St. 328, 20 Atl. 1000, 21 Am. St. 876: Miller v. Kreiter, 76 Pa. St. 78. See also, Zuccarello v. Randolph (Tenn. Ch.), 58 S. W. 453. And in the absence of any stat- ute requiring or authorizing the re- cording of the assignment of a lien the recording of the assignment to the assignee does not operate as con- structive notice to the debtor. Dial V. Inland Logging Co., 52 Wash. 81, 100 Pac. 157. ° Graham Paper Co. v. Pembroke, 124 Cal. 117, 56 Pac. 627, 44 L. R. A. 632, 71 Am. St. 26; Robinson v. Mar- shall. 11 Md. 251; Washington Tp. V. First Nat. Bank, 147 Mich. 571, 111 N. W. 349, 11 L. R. A. (N. S.) 471n ; Van Keuren v. Corkins, 66 N. Y. 77. See also. Dial v. Inland Log- ging Co., 52 Wash. 81, 100 Pac. 157. "The debtor is liable, at law, to the assignor of the debt, and at law must pay the assignor if the assignor sues in respect of it. If so, it fol- lows that he must pay without suit. The payment of the debtor to the assignor discharges the debt at law. The assignee has no legal right, and can only sue in the assignor's name. How can he sue if the debt has been paid? If a court of equity laid down the rule that the debtor is a trustee for the assignee, without having any notice of the assignment, it would be impossible for the debtor safely to pay a debt to his creditor. The law of" the court has therefore required notice to be given to the debtor of the as- signment, in order to perfect the title of the assignee." Stocks v. Dod- son, 4 DeG. M. & G. 11. As to sufficiencv of notice, see Hellen v. Citv of "Boston, 194 Mass. 579, 80 N. E. 603. See also. post. § 1459. "McCarthy v. Mt. Tecarte Land &c. Co., 110 Cal. 687, 43 Pac. 391; Chestnut-Hill Reservoir Co. v. Chase, 14 Conn. 123: Fanton v. Fairfield Countv Bank, 23 Conn. 485 ; Chapman v. Shattuck, 3 Gilm. (111.) 49; Bart- 1446 CONTRACTS. 716 he does so at his peril." It is the duty of the assignee to give or to procure to be given^- notice of the assignment to the debtor or his agent/^ or, in case of the debtor's death, to his personal representative.^* No special form of notice of an assignment is required." The written assignment itself need not be exhibited,^*" lett V. Pearson, 29 ^Slaine 9; MilHken V. Loring. Zl Maine 408; Jenkins v. Brewster, 14 Mass. 291 ; Laughlin v. Fairbanks. 8 Mo. 367; Thompson v. Emerv, 27 N. H. 269; Wheeler v. Whee'len 9 Cow. (N. Y.) 34; Man- ufacturers' Commercial Co. v. Rochester R. Co., 137 App. Div. (N. Y.) 802, 123 N. Y. S. 1128; Cum- mings V. Fullam, 13 Vt. 434; Camp- bell V. Day, 16 Vt. 558; Blake v. Buchanan, 22 Vt. 548; Loomis v. Loomis, 26 Vt. 198 ; Strong v. Strong, 2 Aik. (Vt.) ZIZ. Where plaintiff received an order of assignment with- out objection and placed it on file, it was held to have assented to the transfer and became obligated to pay the indebtedness to the assignee. }iIontgomery Door & Sash Co. v. At- lantic Lumber Co., 206 ^lass. 144, 92 N. E. 71. See also, Manufacturers' Commercial Co. v. Rochester R. Co., 137 App. Div. (N. Y.) 882. 123 N. Y. S. 1128. Where one notwithstand- ing an assignment of all the moneys due or that might become due under a contract subsequently obtained a judgment against the debtor, it was held proper for a court of equity to order the judgment marked for the use of the assignee. Watson v. Mc- Manus, 224 Pa. 430, IZ Atl. 931. The debtor may, however, have the right to disregard an assignment of which he has notice when it is necessary to pay the assignor part of the funds assigned in order to obtain perform- ance by the assignor of its contract with the debtor when such payment was reasonable and necessary for the protection of his own interests. Peden Iron & Steel Co. v. McKnight, (Tex. Civ. App.). 128 S. W. 156, "Kithcart v. Kithcart, 145 Iowa 549, 124 N. W. 305, 30 L. R. A. (N. S.) 1062n; Wells v. Edwards House &c. R. Co., 96 Miss. 191, 50 So. 628, 27 L. R. A. (N. S.) 404n; Weniger V. 14th Street Store, 191 N. Y. 423. 84 N. E. 394; Kieselstein v. Shoebel, 110 N. Y. S. 907. See also. City Bank of New Haven v. Wilson, 193 Mass. 164, 79 N. E. 246; King v. Miller, 53 Ore. 53, 97 Pac. 542. '=Holt V. Babcock, 63 Vt. 634, 22 Atl. 459; Barron v. Porter, 44 Vt. 587; Brickett v. Nichols, 30 Vt. 743; Webster v. Moranville, 30 Vt. 701 ; Peck & Co. v. Walton, 25 Vt. Z2,. "Anniston National Bank v. Dur- ham, 118 N. Car. 383, 24 S. E. 792; Weed Sewing Machine Co. v. Bou- telle, 56 Vt. 570, 48 Am. St. 821. "'Walker v. Bradford Old Bank, 12 Q. B. D. 511, 53 L. J. Q. B. 280, 32 W. R. 645; Seward v. Garlin, IZ Vt. 583; Brown v. Millington, 25 Vt. 242. " Manning v. Mathews, 70 Iowa 303, 30 N. W. 749 ; Bank of St. !vlary V. Morton, 12 Rob. (La.) 409; Flint V. Franklin, 9 Rob. (La.) 207; De- lassize's Succession, 8 Rob. (La.) 259; Gillett v. Landis, 17 La. 470; Reeves v. Burton, 6 Mart. (La.) (N. S.) 283; Touro v. Cushing, 1 Mart. (La.) (N. S.) 425; Jewett v. Dock- ray, 34 Maine 45; Robbins v. Bacon, 3 Greenl. (Maine) 346; Dale v. Kimpton, 46 Vt. 76. Under the Eng- lish Judicature Act notice must be in writing. It may be given either by indorsing the assignment on the original obligation and forwarding it to the debtor, or by separate writing. Read v. Brown, 22 Q. B. D. 128, 58 L. J. Q. B. 120, 60 L. T. (N. S.) 250, Zl W. R. 131; Harding v. Harding, 17 Q. B. D. 442, 55 L. J. Q. B. 462, 34 W. R. 775; Buck v. Robson, 3 Q. B. D. 686, 48 L. J. Q. B. 250, 39 L. T. (N. S.) 325. 26 W. R. 804; Brice v. Bannister, 3 Q. B. D. 569, 47 L. J. Q. B. 722, 38 L. T. (N. S.) 739, 26 W. R. 670; Lett V. Morris, 1 L. J. Ch. 17, 4 Sim. 607, 6 Eng. Ch. 607; Ex parte South, 3 Swanst. 393. Notice of an equitable assignment may, however, be verbal. Ex parte Agra Bank, L. R. 3 CTh. 555, Z1 L. J. Bankr. 23, 18 L. T. (N. S.) 866, 16 W. R. 879. ^® National Fertilizer Co. v. Thom- Jiy ASSIGXMEXTS. § I447 at least when the party Hable docs not demand it/^ However, in order to effect one with notice not formally given, it must come in such a way or under such circumstances to the person alleged to have been notified, that, as a reasonable man, he ought to re- gard it as notice to control his conduct in relation to the matter which is the subject of the notice.^^ The mere fact that the no- tice was served on Sunday has been held not to affect its legality.^" The question of whether the debtor has notice of the assignment is usually a question of fact, but it may become one of law when it depends merely on the construction to be placed on writing.^" § 1447. Assignments by operation of law — Generally. — Un- der certain conditions, the law operates to effect the transfer of a chose in action from one person to another without any concur- ring act on the part of the parties or indeed without their assent. The usual ways by which such transfers are brought to pass are by the transfer of an interest in land, by marriage, and by death. These different modes of assignment by operation of law will be discussed in the order nained. § 1448. Assignment by operation of law — Effect of trans- fer of interest in land. — Real property is peculiar in that, up- on its transfer, covenants may be annexed to the contract which run with the land and one who subsequently acquires an interest therein takes it subject to the benefits and obligations of such covenants. Thus, in case the lessee of premises assigns the same, the assignee takes the lease subject to the conditions therein con- tained and will, as a general rule, be bound to the landlord by the same duties and entitled to the same rights as his assignor.^^ ason. 109 Ala. 173, 19 So. 415; Touro =*" Renten v. Monnier, 11 Cal. 449, V. Gushing, 1 Mart. (La.) (N. S.) 19 Pac. 820; Whitman v. Winchester 425 ; Davenport v. Woodbridge, 8 Repeating Arms Co., 55 Conn. 247. Greenl. (Maine) 17. 10 Atl. 571; Crouch v. ^luller, 141 " Bean v. Simpson. 16 Maine 49. N. Y. 495, 36 X. E. 394. "Phillips' Estate, 205 Pa. St. 525, =^ Spencer's Case. 1 Smith Lead 55 Atl. 216, 97 Am. St. 750. In the Cas. (8th Am. ed.) 145; Clegg v. above case it was held that a letter Hands, 44 Ch. Div. 503 : Callan v. written which merely contained an in- !McDaniel. 72 Ala. 96; Salisbury v. cidental reference in it to the assign- Shirley, 66 Cal. 223, 5 Pac. 104; Sex- ment was held insufficient as notice, ton v. Chicago Storage Co. 129 111. "Crozier v. John G. Shants & Co., 318. 21 X. E. 920. 16 Am. St. 274: 43 Vt. 478. Webster v. Xichols, 104 111. 160; Gordon v. George, 12 Ind. 408, HufF- § 1448 CONTRACTS. So, covenants to repair or leave in good repair, or to deal with the land in a specified manner, run with the land." When the covenants in a lease concern the thing demised, but also relate to something not in existence at the time of its execution, such cove- nants do not bind the lessee's assignee unless made with the lessee and his assigns." A covenant which is merely personal and cut & W. Am. Cas. Cont. 468 ; Donel- son V. Polk, 64 Aid. 501, 2 Atl. 824; Patten v. Deshon, 1 Gray (Alass.) 325; Trask v. Graham, 47 Minn. 571, 50 N. W. 917; Willi v. Dryden, 52 Mo. 319; Stewart v. Long Island R. Co., 102 N. Y. 601, 8 N. E. 200, 55 Am. Rep. 844; Suydam v. Jones, 10 Wend. (N. Y.) 180, 25 Am. Dec. 552; Masury v. Southworth, 9 Ohio St. 340; Washington Nat. Gas Co. v. Johnson, 123 Pa. 576, 16 Atl. 799, 10 Am. St. 553n; State v. Martin, 14 Lea (Tenn.) 92, 52 Am. Rep. 167; Hunt V. Danforth, 2 Curt. (U. S.) 592, Fed. Cas. Xo. 6,887; Overman V. Sanborn, 27 Vt. 54; De Pere v. Reynen, 65 Wis. 271, 22 N. W. 761, 27 N. W. 155 ; And see Wills v. Sum- mers, 45 Minn. 90, 47 N. W. 463. An action may still be maintained against the lessee on his express covenants after he has assigned the lease. In re Spencer, 1 Smith Lead. Cas. (8th Am. ed.) 145; Wilson v. Gerhardt, 9 Colo. 585, 13 Pac. 705; Grommes v. St. Paul Trust Co., 147 111. 634, 35 N. E. 820, TH Am. St. 248; Harris v. Heackman, 62 Iowa 411, 17 N. W. 592; Greenleaf v. Al- len, 127 Mass. 248; Washington Natural Gas Co. v. Johnson, 123 Pa. 576, 16 Atl. 799, 10 Am. St. 553n; Bailey v. Wells, 8 Wis. 141, 76 Am. Dec. 233. But where the lessee's liability to pay rent is such only as is implied by law from his occupa- tion of the premises, the assignment by him of the lease and surrender of possession to the assignee, the lessor assenting, extinguishes the privity of estate between the lessee, and the consequent implied liability to pay rent. Harmony Lodge v. White, 30 Ohio St. 569, 27 Am. Rep. 492. The receiver of an insolvent corporation who takes possession of its leasehold estate is liable only for a reasonable rent during the time of his occupancy, and he does not be- come an assignee thereof, and is not liable on the covenants of the lease. Bell V. American Protective League, 163 Mass. 558, 40 N. E. 857, 28 L. R. A. 452, 47 Am. St. 481. It is the privity of estate which renders the assignee of a lease liable to the land- lord. Consequently, when the privity ceases to exist it terminates the li- ability of the assignee for future breaches of covenants in the lease, whether express or implied. Mason v. Smith, 131 Mass. 510. A lessee who assigns a lease containing _a covenant to pay taxes, and who is afterwards obliged to discharge this obligation to the lessor, may re- cover the amount from the assignee, though his own interest in the estate has entirely ceased. Mason v. Smith, 131 Mass. 510. See also, Jackson v. Port, 17 Johns. (N. Y.) 479. A lease is assignable by act of the parties, irrespective of whether the word "assigns" is inserted or not. Spear v. Fuller, 8 N. H. 174, 28 Am. Dec. 391. " In re Spencer, 1 Smith Lead. Cas. (8th Am. ed.) 145, and cases collected in note; Callan v. McDan- iel, 72 Ala. 96; Coburn v. Goodall, 72 Cal. 498, 14 Pac. 190, 1 Am. St. 75; Fitch v. Johnson, 104 111. Ill; Donelson v. Polk, 64 Md. 501, 2 Atl. 824; Leppla v. Mackey, 31 Minn. 75, 16 N. W. 470; Norman v. Wells, 17 Wend. (N. Y.) 136; Suydam v. Jones, 10 W^end. (N. Y.) 180, 25 Am. Dec. 552; Demarest v. Willard, 8 Cow. (N. Y.) 206; Post v. Kear- ney, 2 N. Y. 394, 51 Am. Dec. 303. '"^ In re Spencer, 1 Smith Lead. Cas. (8th Am. ed.) 145; Bailey v. Richardson, 66 Cal. 416, 5 Pac. 910; Hansen v. Meyer, 81 111. 321, 25 Am. Rep. 282; Coffin v. Talman, 4 N. Y. 134, 8 N. Y. 465; Newburg Petro- leum Co. V. Weare, 44 Ohio St. 604, 719 ASSIGNMENTS. § I449 collateral and which does not concern the land, does not bind the assignee."* Thus, a covenant with a lessee, for himself and as- signs, not to hire persons to work in the mill demised who were settled in other parishes, was held not to run with the land or bind his assignee.^"* § 1449. Nature and purpose of covenant contracts — Re- strictions as to use of real property. — A covenant of this char- acter may not bind the assigns, though they are expressly men- tioned. Whether the assignee is bound depends more upon the nature and purpose of the covenant than upon its form and the use of any particular words. Thus where the owner of two ad- jacent city lots conveyed one of them by a deed which contained this clause, "said grantor, being also the owner of the adjoining lot, * * * for himself, his heirs, executors, administrators and assigns, does hereby covenant to and with the said party of the second part, his heirs, executors, administrators and assigns, that he will not erect or cause to be erected on said lot * * * any building which shall be regarded as a nuisance," it was held that the covenant was against such erection by the grantor alone, and that he was not liable under it for a nuisance erected by his grantee of the adjoining lot, whose conveyance contained no re- striction as to use.'*' Restrictions in the use of land conveyed in fee are not favored, but the courts will enforce them where the intention of the parties in their creation is clear."^ Where a re- striction is confined within reasonable bounds and the party in whose favor it is made has an interest in the subject-matter of the restriction, or others in privity with him have such an interest, 9 N. E. 845; Bream v. Dickerson, 2 v. Eastern R. Co., 41 Minn. 461, 43 X. Humph. (Tenn.) 126; Hartung v. W. 469, 6 L. R. A. 111. Witte, 59 Wis. 285, 18 N. W. 175. =*Congleton v. Pattison, 10 East See, however, MinshuU v. Oakes, 2 130. H. & N. 793; Masury v. Southworth, =" Clarke v. De Voe, 124 X. Y. 120, 9 Ohio St. 340. Even though a cove- 26 X. E. 275, 21 Am. St. 652. affg. nant may be made by one for himself 48 Hun (X. Y.) 512, 16 X. Y. St. and assigns, yet, if it does concern 264, 1 X. Y. S. 132. See also, Thomas the land and is merely collateral v. JiaN-Avard, L. R. 4 E.xch. 311. thereto, his assignee is not bound " Hutchinson v. Ulrich, 145 111. bv it. Congleten v. Pattison, 10 336. 34 X. E. 556. 21 L. R. A. 391; East 130; Xorcross v. James, 140 Eckhart v. Irons. 128 Til. 568. 20 X. Mass. 188, 2 X. E. 946. E. 687; Peabodv Heights Co. v. ** Xorcross v. James, 140 Mass. Willson, 82 ^Id. 186. 32 Atl. 386, 36 188, 2 X. E. 946; Kettle River R. Co. L. R. A. 393. § 1450 CONTRACTS. 72O it will be sustained.^® "It must not therefore be supposed that incidents of a novel kind can be devised and attached to property, at the fancy or caprice of any owner. * * * Great detriment would arise and much confusion of rights, if parties were allowed to invent new modes of holding and enjoying real property, and to impress upon their land and tenements a peculiar character, which should follow them into all hands, however remote."-" A cove- nant which relates to a matter w^hich is purely personal between the covenantor and covenantee does not run with the land.^*^ § 1450. Valid covenants running vs^ith the land. — However, it has been held that a contract between the owner of land and his neighbor purchasing a part of it that the latter shall either use or abstain from using the land purchased in a particular way may be enforced, the court stating that the question is not whether the covenant runs with the land but whether a party shall be permitted to use the land in a manner inconsistent with the con- tract entered into by his vendor and with notice of which he pur- chased.^^ Thus a covenant not to carry on a particular trade or business is binding upon an assignee with notice.^" It has also been held that the assignee of a contract of conditional sale of real estate might enforce a guaranty by the vendor that certain improvements would be made.^^ The subject of covenants which ='Grigg V. Landis, 21 N. J. Eq. E. 282, 56 Am. Rep. 146; Todd v. 494. Stokes, 10 Pa. St. 155; Nalle v. Pag- ^Keppell V. Bailey, 2 Myl. & K. gi (Tex.), 9 S W. 205, 1 L. R. A. 517. 33. But see, Conduitt v. Ross, 102 '"Lyford v. North Pac. C. R. Co., Ind. 166, 26 N. E. 198: King v. 92 Cal. 93, 28 Pac. 103; Indianapolis Wight, 155 Mass. 444, 29 N. E. 644; Water Co. v. Nulte, 126 Ind. 373, 26 Mott v. Oppenheimer, 135 N. Y. 312, N. E. 72; Glenn v. Canby, 24 Md. 31 N. E. 1097, 17 L. R. A. 409. A 127; Brewer v. Marshall, 18 N. J. covenant to support an old man in Eq. 337, affd. 19 N. J. Eq. 537, 97 consideration of a conveyance by Am. Dec. 679; Costigan v. Pennsyl- him is personal, and cannot be vania R. Co., 54 X. J. L. 233, 23 Atl. shifted to a purchaser of the land 810; Cole v. Hughes, 54 N. Y. 444, from the grantee against the will and 13 Am. Rep. 611; Masury v. South- consent of the party with whom the worth, 9 Ohio St. 340. It has been contract was made. Divan v. held that the right to compensation Loomis, 68 Wis. 150, 31 N. W. 760. or liability to reimburse, for the use ^ Tulk v. Moxhay, 2 Phillips 774. of a party wall, under a contract be- ^' Parker v. Whyte, 1 H. & M. tween adjoining landowners, is per- 167. sonal, and does not run with the ^^ Anderson v. American Suburban land. Cole v. Hughes, 54 N. Y. 444, Corp., 155 N. Car. 131, 71 S. E. 221, 13 Am. Rep. 611. To the same effect, 36 L. R. A. (N. S.) 896. Gibson v. Holden, 115 111. 199, 3 N. 721 ASSIGNMENTS. § 1 45 1 run with the land is one more properly a subject of treatment in a work on real property, but it will be further considered in a subsequent volume under the title of Deeds and Conveyancing.^^* § 1451. Effect of marriage. — At common law the personal property of the wife, the use of her real estate, and the right to her labor and earnings passed to the husband upon marriage.^* At common law a wife could not maintain an action of assumpsit against her husband and in so far as this rule still obtains the wife cannot assign a claim which she has against her husband so as to enable the assignee to sue thereon, for the reason that an assignee of a chose in action takes the same subject to all equities existing between the original parties.^^ However, if the husband does not reduce the choses in action of his wife to possession she does not lose her rights thereto by coverture, and in case her hus- band dies first they survive to her or pass to her personal repre- sentative should she die in his lifetime.^*' Not only did marriage at common law effect a conditional assignment of the wife's rights to the husband, but it also rendered him jointly liable with her for all liabilities that she had incurred before marriage" even though the husband might be an infant.^^ This liability on the part of the husband existed only during the continuance of the relationship.^*^ The rights of husband and wife have been greatly modified by the statutes in both England and the United States. In some jurisdictions all of her disabilities have been abolished.*'' In a number of jurisdictions the husband still remains liable for the wife's antenuptial debts to the extent of the property acquired by him from the wife as a result of the marriage." "a Vol IV, Tit. VII. Eq. (S. Car.) 273, 46 Am. Dec. 43. "Kies V. Young, 64 Ark. 381, 42 "Gray v. Thacker. 4 Ala. 136; S W. 669, 62 Am. St. 198; Botts v. Platner v. Patchin, 19 Wis. 333. Gooch, 97 Mo. 88. 11 S. W. 42, 10 '^ Roach v. Quick, 9 Wend. (N. Am. St. 286; Alexander v. Morgan, Y.) 238. See ante, ch. 11. 31 Ohio St. 546; Platner v. Patchin, ~ Bell v. Stocker. 10 Q. B. D. 129; 19 Wis. 333. Lamb v. Belden, 16 Ark. 539. ''Perkins v. Blethen, 107 Maine '"See ante, ch. 13. 443, 78 Atl. 574, 31 L. R. A. (N. S.) *' Madden v. Gilmer. 40 Ala. 637 1148n. To same effect, Muller v. Wood v. Orford. 52 Cal. 412 Witte, 78 Conn. 495, 62 Atl. 756. Howarth v. Warmser. 58 111. 48 '"See Fleet v. Perrins, L. R. 4 Q. Burns' Rev. Stat. (Ind.) 1908, § B. 500; Boozer v. Addison, 2 Rich. 7862. 46 — Contracts, Vol. 2 § 1453 CONTRACTS. ']22 § 1452. Effect of death of one of the parties — Actions that survive. — All of one's personal estate passes by operation of law, on his death, to his executor or administrator. The same is true of all actions on contracts which will affect the estate or contractual liabilities chargeable against it.*- Suit is main- tained on such contract by or against the personal representative in his own name.*^ Thus the benefits and liabilities arising from covenants attached to a leasehold estate have been held to pass with the personalty to the representative.** An action for money due under a contract survives.^' § 1453. Actions that do not survive. — It is well settled, however, that contracts which involve personal confidence be- tween the parties or which call for the exercise of personal skill on the part of the promisor are construed as conditional on the Hfe of both, and are terminated by the death of either party to the contract.*® Likewise, the personal representative of a deceased cannot bring an action for the breach of a contract which involved a purely personal loss, such as an action for breach of promise to marry the deceased when no pecuniary damages were sustained by the deceased.*^ Nor are the personal representatives liable "Devon v. Powlett, 2 Vinner's Rosensteel, 24 Fed. 583; Middlesex Abridgment 132. Snodgrass v. Cabi- Water Co. v. Knappmann Whiting ness. 15 Ala. 160; Beecher v. Co., 64 N. J. L. 240, 45 Atl. 692, 49 Buckingham, 18 Conn. 110, 44 Am. L. R. A. 572, 81 Am. St. 467; Lacy Dec 580; Henderson v. Henshall, 54 v. Getman, 119 N. Y. 109, 23 N. E. Fed 320 4 C. C. A. 357; Jewett v. 452, 6 L. R. A. 728, 16 Am. St. 806; Smith 12 Mass. 309; Shirley v. Siler v. Gray, 86 N. Car. 566; Blake- Healds 34 N. H. 407. The subject ly v. Sousa, 197 Pa. 305, 47 Atl. 286, of deceased's estates is governed al- 80 Am. St. 821; Dickinson v. Cala- most entirely by the statutes of var- ban's Admrs., 19 Pa. St. 227, Hutf- ious jurisdictions. cut & W. Am. Cas Cont. 479. See "Potter v. Van Vranken, 36 N. also, Griggs v. Swift, 82 Ga. 392, 9 Y 619. S. E. 1062, 5 L. R. A. 405, 14 Am. St. "Chamberlain v. Dunlop, 126 N. 176. But the death of a party to a Y. 45, 26 N. E. 966, 22 Am. St. 807. contract which calls for personal skill "*^ St'ubbs v. Holywell R., L. R. 2 and confidence does not take away a Ex. 311. See also, Wright v. Hoi- right of action already vested. Stubbs brook, Z2 N. Y. 587, holding that a v. Holywell R., L. R. 2 Exch. 311. devisee of real estate has the right And where the contract does not re- to have a promissory note given by quire personal skill and confidence it his devisor for unpaid purchase- is not terminated by the death of one money paid out of the latter's per- of the parties. In re Billings's Ap- sonal assets peal, 106 Pa. 558. "Farrow v. Wilson, L. R. 4 C. P. "Chamberlain v. Williamson, 2 744; Baxter v. Burfield, 2 Strange Ml. & S. 408. 1266; Howe Sewing Mach. Co. v. ^2}^ ASSIGNMENTS. § I454 in an action for the breach by the deceased of a promise to marry, no special damage being alleged/** The executors and adminis- trators of a deceased as such derive no benefit from their dece- dent's contracts of this nature nor does any personal liability attach to them. They merely represent the decedent to the ex- tent of his estate and no more. § 1454. Effect of assignment. — The valid and binding as- signment of a chose in action vests in the assignee the legal and equitable title to the chose to the same extent to which the as- signors held title.*" The assignee, as a general rule, takes the chose subject to all defenses which would have been available against the assignor.'^" The assignment passes all of the as- signor's rights in the contract assigned in accordance with the terms of assignment,^^ the assignor having no further interest therein. °- Thus it has been held that where a contractor who does not have money enough to finance the job makes an absolute transfer of all money due or to become due under the contract to another in consideration of the latter advancing the necessary "Finlay v. Chirney, 20 Q. D. 494; gcncr, 140 Ky. 444. 131 S. W. 188; Hovey v. Page, 55 Maine 142 ; Chase Hoover v. Columbia Nat. Bank, 58 V. Fitz, 132 Mass. 359; Smith v. Nebr. 420, 78 N. W. 717; Kennedy Sherman, 4 Cush. (Mass.) 408; v. Parke, 17 N. J. Eq. 415; Straus Stebbins v. Palmer, 1 Pick. (Mass.) v. Wessel. 30 Ohio St. 211; Winn v. 71. 11 Am. Dec. 146; Wade v. Kalb- Fort Worth &c. R. Co., 12 Tex. Civ. fleisch, 58 N. Y. 282; Lattimore v. App. 198, ZZ S. W. 593. A contract Simmons, 3 Serg. & R. (Pa.) 183; of assignment of "all sums owing Grubb's Admr. v. Suit, Z2 Grat. the assignee * * * under or by vir- (Va.) 203, 34 Am. Rep. 765. Under tue of a certain written agreement the North Carolina statutes the death * * * qj- under or by virtue of any of a defendant does not abate an transaction based upon or growing action for breach of promise. Allen out of said contract or any business V. Baker, 86 N. Car. 91, 41 Am. Rep. done thereunder'' includes only 444. claims arising out of the original " St. John V. Smith, 1 Root contract but also those arising after (Conn.) 156; Dole v. Olmstead, 41 its extension by mutual agreement. 111. 344, 89 Am. Dec. 386 ; Thompson Lindsev Lumber Co. v. Mason, 165 V. Allen, 12 Ind. 539: Wood v. Don- Ala. 194. 51 So. 750. ovan, 132 IMass. 84; Sanders v. Sout- ""Loomis v. Smith. Zl Mich. 595; ter. 136 N. Y. 97, Z2 N. E. 638. Papin v. Massey, 21 Mo. 445 ; Holmes* "* Thomassen v. De Goey, 133 Iowa Exrs. v. Bigelow, 3 Desaus. (S. Car.) 278. 110 N. W. 581. 119 Am. St. 605; 497. See also. Belden v. Farmers' Trimmier v. Valley Falls Mfg. Co., &c. Bank, 16 Cal. .App. 452. 118 Pac. 85 S. Car. 13. 66 S. E. 1055. 449; White v. Fernald- Woodward "Kentucky Refining Co. v. Wag- Co. (N. H.), 79 Atl. 641. § 1455 CONTRACTS. 724 funds and material, the owner cannot be required to pay a part of the money so assigned to subcontractors and material-men.^^ § 1455. Rights of Assignee — Qualified assignments. — It is also tnie generally that in the absence of an agreement to the con- trary, the assignee for value of a note, bill, judgment, decree or other evidence of indebtedness, for the payment of which the assignor holds collateral security, is in equity entitled, by virtue of the assignment to him of the principal obligation or evidence of indebtedness, to the collateral as such, although not named in the instrument of assignment, and regardless of his knowledge or lack of knowledge of the existence of such collateral.^* One who assigns his interest in a debt also vests in the assignee the as- signor's right to sue either an undisclosed principal or his agent.'^'' " South Texas Lumber Co. v. Con- crete Const. Co. (Tex. Civ. App.), 139 S. W. 913. "There is nothing to stand in the way of the validity of an agreement by which a debtor transfers to his creditor a credit which is to mature at some future time, in satisfaction of a debt not yet mature, or even not yet in existence, but which will be mature, or be in existence and payable, by the time the transferred credit itself matures and is payable. In such a case the agreement goes into immediate opera- tion for that part of the debt already existing, and it goes into operation for that part of the debt to be there- after created as the latter debt springs into existence. A agrees to advance to B certain moneys, and B agrees that, as the moneys are ad- vanced, a like amount of credit which he (B) has against C is to be con- sidered as transferred to A, and C is duly notified of this arrangement, and accedes to it. We can discover no legal obstacle to the perfect validity of such an arrangement." Cox v. First Nat. Bank, 126 La. 88, 52 So. 227. "The contractor could not make a valid order on the defendant for a greater sum than was due to him from it. The acceptance of the order operated as an equitable assignment only of the balance due. Nor can the defendant be held for the amount of the order merely because of its oral acceptance, if the amount of the or- der was in excess of the sum due from it." Carboy v. Polstein &c. Const. Co., 62 Misc. (N. Y.) 302, 114 N. Y. S. 838. " Edwards v. Bay State Gas Co., 184 Fed. 979, citing and reviewing the authorities. "It is a well-settled rule of law that the assignment of a debt carries with it every remedy and security for such debt available by the assignor as incident thereto, al- though they are not specially named in the instrument of assignment." In re Levin, 173 Fed._ 119. Thus the assignment of a judgment carries with it the debt upon which it is based and if the latter is secured by a mortgage it carries the mortgage also. King v. Miller, 53 Ore. 53. 97 Pac. 542. See also, Dawson v. Eng- lish, 8 Ga. App. 585, 69 S. E. 1133; Roach V. Sanborn Land Co., 135 Wis. 354, 115 N. W. 1102. Compare with McLean v. Fidelity & Deposit Co., 56 Misc. (N. Y.) 623, 107 N. Y. S. 907. '= Berry v. Chase, 179 Fed. 426, 102 C. C. A. 572. But it has been held that the assignment of a sharehold- er's contract in a colonization com- pany does not convey to the assignee the assignor's right to maintain an action for money had and received against the vendor of the land. Steele V. Brazier, 139 Mo. App. 319, 123 S. W. 477. 7^5 ASSIGNMENTS. § I456 A qualified assignment may be made'^'' and an assignment absolute on its face may be shown to have been given merely as security." But such an assignment will not be so construed unless it is clearly made to appear that it was in fact a qualified assignment/^ § 1456. Implied warranties in assignments — Rights and liabilities of assignor and assignee. — In every transfer of a chose in action by assignment without recourse there is an im- plied warranty that it is genuine, that it is supported by a suffi- cient and valid consideration, and that the amount of money it calls for was owing and unpaid at the time of the assignment in the absence of an express agreement to the contrary.^.'' The assignor does not by the assignment of his contract relieve him- self of the obligation which it imposes upon him.*'** But in the absence of any contract or guaranty the assignor is not liable to his assignee for a breach by the other party to the original agree- ment of the obligations of his contract with the assignor.*'^ On the other hand the assignment of a mere personal contract does not give the other party to the original agreement a right of action against the assignee for its breach.*'- However, if the assignee "'Herbstreit v. Beckwith, 35 Mich. The assignee merely impliedly war- 93. rants that the contract is what it pur- "Wing & Bostwick Co. v. United ports to be; or, in other words, that States &c. Guaranty Co., 150 Fed. it is genuine." Galbreath v. Wall- 672; Bend v. Susquehanna Bridge &c. rich, 45 Colo. 537, 102 Pac. 1085. It Co., 6 Har. & J. (Md.) 128, 14 Am. has been held that no warranty is Dec. 261 ; Despard v. Walbridge, 15 implied by the words "do hereby sell, N. Y. 374. An assignment for secur- assign, transfer and set over unto ity purposes may be annulled and said party of the second part all his made absolute by a subsequent con- right, title and interest in and to a tract of assignment. Barker v. certain contract." Pierce v. Coryn, More, 18 N. Dak. 82, 118 X. W. 823. 126 111. App. 244. '*Desport v. Metcalf, 3 Head " Comstock v. Hitt, 37 111. 542; (Tenn.) 424. Suvdam v. Dunton, 84 Hun (N. Y.) "Trustees of Broaddus Institute 506, 65 N. Y. St. 491. 32 N. Y. S. V. Siers, 68 W. Va. 125, 69 S. E. 333; Adams v. Wadhams, 40 Barb 468, Ann. Cas. 1912A, 920 and note (N. Y.) 225; Heinze v. Buckingham, on page 923. See also. Galbreath v. 62 Hun (N. Y.) 622. 42 N. Y. St. 427, iWallrich. 45 Colo. 537. 102 Pac. 1085. 17 N. Y. S. 12; New York Phono- '^ Martin v. Orndorff, 22 Iowa 504 ; graph Co. v. Davega, 127 App. Div. Hart V. Summers, 38 Mich. 399; Cur- (N. Y.) 222, 111 N. Y. S. 363; An- rier v. Taylor, 19 N. H. 189. derson v. New York &c. R. Co., 132 ^•^'Langdale v. Griffin, 135 Ga. 669, App. Div. (N. Y.) 183, 116 N. Y. 70 S. E. 561. See also, Riley v. Gal- S. 954 ("The assignee of a personal arncault, 103 Minn. 165, 114 N. W. contract is not liable on. and cannot 755. "The assignment of a non-ne- be compelled to perform, the cover gotiable contract does not carry a nants of the assignor") ; Smith v. warranty that it will be performed. Kellogg, 46 Vt. 560. Compare with § 1457 CONTRACTS. 726 expressly agrees to be bound by the terms of the original con- tract°^ or if he promises upon a sufficient consideration to pay money to third parties, the latter may maintain an action on the promise.®* When a contract is assigned after it has been modi- fied by the original parties thereto, it is an assignment not of the contract as originally drawn but as modified.''^ Nor does the assignment of a continuing contract operate as an assignment of the cause of action for a breach committed prior to the assign- ment."* The party liable may, by statements made by him prior to the assignment, estop himself from denying the validity of the claim assigned." An assignment may be avoided by the proper party when procured through fraud, duress or undue influence.^^ § 1457. Title of assignee. — But v^hile the assignee takes all the rights of his assignor under the agreement transferred to him,*'° the assignor can assign no greater interest in the contract than he himself has, and the assignee can take no greater interest therein than that possessed by the assignor at the time when the debtor or person liable receives notice of the assignment.^*^ This American Bridge Co. v. Boston, 202 *' Regan Vapor Engine Co. v. Pa- Mass. 374, 88 N. E. 1089. The mere cific Gas Engine Co., 49 Fed. 68, 1 fact that one takes land subject to C. C. A. 169; Chicago Cheese Co_v. deferred payment does not make him Fogg, 53 Fed. 72 ; Love v. Van Ev- personally liable for such payments ery, 18 Mo. App. 196. in the absence of any express agree- "'Stone v. Hart (Ky.), 66 b. W. ment by which they are assumed. 191. . Lavelle v. Gordon, IS Mont. 515, 39 *^Farjeon v. Indian Territory &c. Pac 740. Oil Co., 120 N. Y. S. 298. •"Wiggins Ferry Co. v. Chicago ""Walker v. Maddox, 105 Ga. 253, &c. R. Co., IZ Mo. 389, 39 Am. Rep. 31 S. E. 165; United States Casualty 519. See also, Anderson v. New Co. v. Bagdley, 129 Mich. 70, 87 W. York &c. R. Co., 132 App. Div. (N. W. 1044, 55 L. R. A. 616, 95 Am. St, Y) 183, 116 N. Y. S. 954; Younce v. 424; Sohnsky v. Fourth Nat. Bank, Broad River Lumber Co. (N. Car.), 82 Tex. 244, 17 S W. JOSO; Wilson 61 S E 624 V. Sullivan, 1/ Utah 341, 53 Pac. "Smith V. Flack, 95 Ind. 116; 994 Wightman v. Spofford, 56 Iowa 145, '"Doherty v. Doe, 18 Colo 456, 33 8 N W 680 • Parks v. Clark, 41 Hun Pac. 165 ; Deming v. Orient Ins. Co., CN"Y) 638 2 N. Y. St. 329. See 78 Fed. 1; Third Nat. Bank v. also, Warrington v. Mengel, 41 Pa. Western &c. R. Co., 114 Ga. 890, 40 Super Ct. 362. Otherwise where S. E. 1016; Ostertag v. Evans, 176 there was no express promise. New 111. 215, 52 \ E. 255 ; Commercial England Dredging Co. v. Rockport Nat. Bank v. Burch 141 11. 519, 6\ Site Co., f49Vss. 381. 21 N. N. E. 420 33 Am. St^ 331 ; Roberts E. 947; Morrill v. Lane, 136 Mass. 93 ; v. Cle land 82 I"^ 538; Peterson v. Turner v. McCarty, 22 Mich. 265; Ball, 121 Iowa 544, 97 N. W. 79 Shafer v. Niver, 9 Mich. 253. Sambaugh J. Current, 111 Iowa 121 «Wood V. Donovan, 132 Mass. 84. 82 N. W. 497; State Trust Co. v. 7^7 ASSIGNMENTS. § 1457 is true even though the assignee may have acquired the chose for value and without notice." Thus, if the assignor has no title the assignee takes none," or if the assignor has no right to a vendor's lien his assignee obtains no such right.'^ The rights of the assignee do not go beyond the assignment to him, nor can they rise higher than those of his assignor.'* Thus, any defense available against the original party to the contract would be available against his assignee," such as illegality,'" or a material Turner, 111 Iowa 664. 82 N. W. 1029, 53 L. R. A. 136; Wing v. Page, 62 Iowa 87, 11 N. W. 639, 17 N. W. 181 ; Gossom v. Sharp's Heirs, 7 Dana (Ky.) 140; Willis v. Twambly, 13 Mass. 204; Hooper v. Van Husen, 105 Mich. 592, 63 N. W. 522 ; Warner V. Whittaker, 6 Mich. 133, 72 Am. Dec. 65; Lewis v. Holdredge, 56 Nebr. 379, 76 N. W. 890, revg. on other grounds on rehearing. 55 Nebr. 173, 75 N. W. 549, modified, 57 Nebr. 219, 77 N. W. 656; LiUlefield v. Al- bany County Bank, 97 N. Y. 581 ; Cal- lanan v. Edwards. 32 X. Y. 483 ; Ray- burn V. Hurd. 20 Ore. 229, 25 Pac. 635; Pittman v. Ravsor, 49 S. Car. 469, 27 S. E. 475 ; Patterson v. Rabb, 38 S. Car. 138, 17 S. E. 463, 19 L. R. A. 831 ; Judson v. Corcoran. 17 How. (U. S.) 612, 15 L. ed. 231; Prim v. Mcintosh, 43 W. Va. 790, 28 S. E. 742. "Bruschke v. Wright, 166 111. 183, 46 N. E. 813, 57 Am. St. 125. The as- signee of a judgment takes it sub- ject "to all the equities of the debtor against the assignors existing at the date of the assignment, or which arose after the assignment and be- fore the debtor had notice of it; and this is the rule of law, though the as- signee has taken the assignment for the value, bona fide, and without notice of the equity." Selden v. Will- iams, 108 Va. 542, 62 S. E. 380. To same efifect. King v. Miller, 53 Ore. 53 97 Pac. 542. "Barrett' v."Hinklev. 124 111. 32, 14 N. E. 863. 7 Am. St. 331. Thus, where the thing assigned is held merely as collateral security for a debt the assignee takes it subject to the rights of the debtor to redeem it. Drake v. Cloonan. 99 Mich. 121, 57 N. W. 1098, 41 Am. St. 586. See also. Real Estate Trust Co. v. Riter- Conley Mfg. Co., 223 Pa. 350, 72 Atl. 695. The assignee of a contract for the sale of land who takes the same with knowledge that his assignor has previously surrendered it to the orig- inal vendor for the purpose of selling the property to the city takes subject to the result of such negotiations with the city, and cannot compel a conveyance until negotiations with the city have been broken off. Allen v. Detroit, 167 Mich. 464, 133 N. W. 317, 36 L. R. A. (N. S.) 890. "Bell v. Pelt, 51 Ark. 433, 117 S. W. 684, 4 L. R. A. 247, 14 Am. St. 57. '* Egbert v. Kimberly, 146 Pa. St. 96, 23 Atl. 437. See also, Watrous V. Hilliard, 38 Colo. 255, 88 Pac. 185; Thurston v. McLellan, 34 App. (D. C.) 294; Quarton v. American Law Book Co., 143 Iowa 517. 121 N. W. 1009; Thompson v. Union Sawmill Co.. 121 La. 318, 46 So. 341 ; American Bridge Co. v. Boston, 202 Mass. 374, 88 N. E. 1089; Selden v. Williams, 108 Va. 542, 62 S. E. 380. _ ■' Boatmen's Bank v. Fritzlen, 175 Fed. 183; Thomassen v. De Goey, 133 Iowa 278. 110 N. W. 581, 119 Am. St. 605; Jack v. Wichita Nat. Bank, 17 Okla. 430. 89 Pac. 219; Real Estate Trust Co. V. Riter-Conlev Mfg. Co., 223 Pa. 350. 12 Atl. 695; Trimmier V. Vallev Falls Mfg. Co., 85 S. Car. 13. 66 S. E. 1055. '"Commercial Nat. Bank v. Burch, 141 111. 519, 31 N. E. 420, Z7> Am. St. 331n; Nester v. Continental Brewing Co., 161 Pa. St. 473, 29 Atl. 102, 24 L. R. A. 247. 41 Am. St. 894. See also, United Shoe Mach. Co. v. Ramlose, 210 Mo. 631, 109 S. W. 567. § 1457 CONTRACTS. 728 alteration of the contract." A right of set-off existing in favor of the debtor or person liable at the time he receives notice of the assignment,'^ or counterclaim for a breach of warranty/* may be pleaded by the debtor. It has also been held that an assignee of architect's certificates for work done under a building contract takes them subject to the right of the owner to recoup for damages suffered by reason of the assignor's default in the performance of his contract.'" If the rights of the assignor cease because of death the rights of the assignee also fail.^^ Where the insolvency of the assignor makes impossible the performance of a contract to secure a loan for him, the insolvent's assignee of the loan contract takes no right thereunder.^^" Nonperform- ance may be set up as a defense against the assignee.^^ So where the future earnings of a contract are assigned, and the assignor fails to complete the work and the owner is compelled to expend all or more of the contract price to protect himself and complete the contract, the assignee can recover nothing.'* " Shiffer V. ^losier, 225 Pa. 552. 74 Atl. 426, 24 L. R. A. (N. S.) Il55n. '^Jennings v. California Bank, 79 Cal. 323, 21 Pac. 852, 5 L. R. A. 233, 12 Am. St. 145; Burton v. Willin, 6 Houst. (Del.) 522, 22 Am. St. 363; Northwestern &c. Bank v. Rauch, 8 Idaho 50, 66 Pac. 807; Benson v. Haywood, 86 Iowa 107, 53 N. W. 85, 23 L. R. A. 335; First Nat. Bank v. Security Nat. Bank, 34 Nebr. 71, 51 N. W. 305, 15 L. R. A. 386, 33 Am. St. 618: King V. Armstrong. 50 Ohio St 222, 34 N. E. 163; Nugent v. Allen, 95 Tenn. 97. 32 S. W. 9 ; Bra- shear V. West, 7 Pet. (U. S.) 608, 8 L. ed. 801. "National Bank of Commerce v. Feeney. 12 S. Dak. 156, 80 N. W. 186, 46 L. R. A. 732, 76 Am. St. 594. *" American Bridge Co. v. Boston, 202 Mass. 374, 88 N. E. 1089. "In re Brown's Appeal, 125 Pa. St. 303, 17 Atl. 419, 11 Am. St. 90. Compare with Harlow v. Oregonian Pub. Co. (Ore.), 100 Pac. 7. '^ First Nat. Bank v. Western Sure- ty Co., 50 Kans. 313, 31 Pac. 1080. *" Pacific Rolling Mill Co. v. Eng- lish, 118 Cal. 123, 50 Pac. 383; Bar- ber V. Johnson, 5 App. (D. C) 305; El Paso Cattle Co. v. Stafford, 176 Fed. 41, 99 C. C. A. 515; Sargent v. Kansas &c. R. Co., 48 Kans. 672, 29 Pac. 1063; Buttrick Lumber Co v. Collins, 202 Mass. 413, 89 N. E. 138 (holding that the assignee could not recover without proof that the con- tract had been performed and that it was for the jury to determine wheth- er there had been performance) ; Chambers v. Lancaster, 160 N. Y. 342, 54 N. E. 707; Hazelton Mercantile Co. V. Union Improvement Co., 143 Pa. St. 573, 22 Atl. 906. See also, Drake v. Cloonan, 99 Mich. 121, 57 N. W. 1098, 41 Am. St. 586. In the above case it appeared that the party against whom the assignee sought to enforce the obligation had on account of nonperformance on the part of the assignor been compelled to ex- pend more money than the contract price in completing the contract. And Grant v. Sicklesteel Lumber Co., 155 Mich. 600, 119 N. W. 1092 (holding that the assignee of a money demand for the sale price of a carload of lumber had no claim against the pur- chaser when he refused to receive the lumber because it was not of the qualitv which he had ordered). "Jenks V. Wells, 90 Mich. 515, 51 N. W. 636; Fisken v. Milwaukee 729 ASSIGNMENTS. § 1458 § 1458. Equities of third persons. — While it is true as a general rule that the assignee of a chose in action takes it sub- ject to the equities which existed between the original parties to the contract, yet as between the assignee and the creditors of the assignor the former will be given priority unless the convey- ance is one which the law will declare fraudulent as to creditors.*"* Nor is the rule changed by the fact that the assignment is made as collateral merely, or as payment to the assignee and others to whom he is to distribute the money derived from the trans- action,^*^ and the rule applies notwithstanding neither the gar- Bridge &c. Works, 86 Mich. 199. 49 N. W. 133, rehearing denied 87 Mich. 591, 49 N. W. 873; Union Pacific R. Co. V. Douglass County Bank, 42 Nebr. 469, 60 N. W. 886; People v. Third Nat. Bank, 159 N. Y. 382, 54 N. E.35; Beardsley V. Cook, 143 N. Y. 143, 38 N. E. 109 ; Greene v. Duncan, Zl S. Car. 239, 15 S. E. 956. See also, Peden Iron &c. Co. v. McKnight (Tex. Civ. App.), 128 S. W. 156, and compare Homer v. Shaw (Mass.), 98 N. E. 697. Thus, when the "prof- its" of a contract are assigned and the contract is performed at a loss the assignee has no right of action against the debtor. Price v. Cush- ing & O'Keefe (Iowa), IIQ N. W. 1030. A surety company's equity of subrogation has been held antecedent to any claim arising under an equi- table assignment of the contract where the work was completed at a loss. Hardawav v. Xational Surety Co., 150 Fed. 465, 80 C. C. A. 283. "Falkner v. Jones, 12 Ala. 165; Early v. Redwood City, 57 Cal. 193; Hopkins v. Pratt, 7 La. Ann. 336; Brett V. Thompson, 46 Maine 480; Baldwin v. Wright, 3 Gill (Md.) 241. See Carroll v. Sullivan. 103 Mass. 31 ; Spengler v. Stiles-Tull Lumber Co., 48 Miss. 780, 48 So. 966; Cope v. C. B. Walton Co., 11 N. J. Eq. 512, 76 Atl. 1044. However, the assignee for value of a distributive share in a decedent's estate takes it subject to debts of the distributee to the estate. Ford V. O'Donnell. 40 ^lo. App. 51; Crater v. Crater, 32 X. J. Eq. 484. See York v. Conde, 66 Hun (N. Y.) 316, 49 N. Y. St. 544, 20 N. Y. S. 961. Compare Kinney v. Reid Ice Cream Co., 57 App. Div. (N. Y.) 206, 68 N. Y. S. 325 ; North Penn Iron Co. V. International Lithoid Co., 217 Pa. 538, 66 Atl. 860. Where a debt is not specifically assigned, but is merely one of a number of sim- ilarly assigned debts, the assignee will not in a court of equity be al- lowed to hold the same to the ex- clusion of the assignor's creditors without showing that the remaining debts assigned fail to satisfy his claim. Perry v. Merchants' Bank, 69 N. Car. 551. When money is paid to an attorney to be applied toward the discharge of certain judgments ob- tained by him for the judgment cred- itors, but which was not so applied, an assignment by the judgment debtor to creditors other than the judgment creditors, belongs to such other creditors in preference to the judgment creditor. Huntingdon v. Spann, 1 McCord Eq. (S. Car.) 167; Slater v. Gaillard, 3 Brev. (S. Car.) 115; FHckey v. Loney, 4 Baxt. (Tenn.) 169; Nelson v. Trigg, 7 Lea (Tenn.) 69. See also, Hubbard v. Turner, 2 McLean (U. S.) 519, Fed. Cas. No. 6819. The assignment is valid as between the parties even if made with intent to defraud cred- itors. King V. Miller, 53 Ore. 53, 97 Pac. 542. '"Jones V. Lowerv Banking Co.. 104 Ala. 252, 16 So. I'l ; Porter v. Bull- ard, 26 Maine 448; Wheeler v. Emer- son, 44 N. H. 182; Claflin v. Kimball, 52 Vt. 6. See also. Finnigan v. Floeck, 8 Tex. Civ. App. 518, 28 S. W. 268. An assignment made as col- lateral must be supported by a valua- ble consideration. Langley v. Berry, 1458 'CONTRACTS. 730 nishee nor attaching creditor has been given notice of the assign- ment,*^ provided notice of the assignment is given to the debtor 14 N. H. 82; Giddings v. Coleman, 12 N. H. 153. ^ ^. ^ Davis V. Freethy, 24 Q. B. Div. 519 59 L. J. Q. B. 318; Badeley v. Consolidated Bank, 38 Ch. Div. 238 57 L J. Ch. 468, 59 L. T. (N. S.) 419, 36 Week. Rep. 745 ; In re General Horticultural Co., 32 Ch. Div. 512 55 L J. Ch. 608, 54 L. T. (N. S.) 898, 34 Week. Rep. 681 ; Morgan v. Lowe, 5 Cal. 325, 63 Am. Dec. 132 (assign- ment was upheld where notice there- of was given within a reasonable time after it became possible to give notice notwithstanding an attachment had been levied on the goods prior to such notice) ; Chamberlin v. Gilman, 10 Colo. 94, 14 Pac. 107; Kitzinger V. Beck, 4 Colo. App. 206, 35 Pac. 278; Clark v. Connecticut Peat Co., 35 Conn. 303; WiUes v. Pitkin, 1 Root (Conn.) 47; Whitten v. Little. 2 Ga. Dec. 99; Knight v. Griffey, 161 111. 85. 43 N. E. 727; Price v. Ger- man Exch. Bank, 60 111. App. 418; Knight V. Griffey, 57 111. App. 583, afifd 161 111. 85, 43 N. E. 727; Gregg V. Savage, 51 111. App. 281, affd. 150 111. 161, 11 N. E. 312. In this jurisdiction a chose in action cannot be trans- ferred as against an attaching or gar- nishing creditor, an attachment or garnishment proceeding having been instituted. Commercial Nat. Bank v. Pavne, 161 111. 316, 43 N. E. 1070. This applies not only to the attaching creditor who commences the suit, but also to other attaching creditors who, under the garnishment law, have a right to share alike in the at- tached fund by reason of their hav- ing recovered judgment at the same term of court. Reeve v. Smith, 113 111. 47. In Indiana in a proceeding supplementary to execution, both the person indebted to the execution de- fendant and the execution defendant himself are necessary parties and both must be served, and if, before service is had on the judgment debtor, the latter assigns the claim held bv him, no lien is acquired by the proceeding although the assign- ment be to assignees in bankruptcy. Hoadley v. Cay wood, 40 Ind. 239; McGuire v. Pitt's Sons, 42 Iowa 535 ; Easley v. Gibbs, 29 Iowa 129; Weire V. Davenport, 11 Iowa 49, 11 Am. Dec. 132; Smith v. Clarke, 9 Iowa 241; West v. Sanders, 1 A. K. IMarsh. (Ky.) 108; Manly v. Bitzer, 12 Ky. L. 262 ; Carlin v. Dumartrait, 8 Mart. (La.) (N. S.) 212. Com- pare the above case with Golsan v. Powell, 32 La. Ann. 521; Littlefield V. Smith, 17 Maine 327; Myer v. Liverpool, London & Globe Ins. Co., 40 Md. 595; Baldwin v. Wright, 3 Gill (Aid.) 241; Kimball v. Le Pert, 1 Allen (Mass.) 469; Gardner v. Hoeg, 18 Pick. (Alass.) 168; Brown v. Maine Bank, 11 Mass. 153; Dix V. Cobb, 4 Mass. 508; Perkins v. Parker, 1 Mass. 117; Buttrick Lum- ber Co. V. Collins, 202 Mass. 413, 89 N. E. 138. But see Brown v. Foster, 4 Cush. (I\Iass.) 214; MacDonald v. Kneeland, 5 Vimn. 352; Schoolfield v. Hirsh, 71 Miss. 55. 14 So. 528, 42 Am. St. 450. See, however, in connection with the above case. Hart v. Forbes, 60 Miss. 745; Smith v. Sterritt, 24 Mo. 260; Sleeper v. Weymouth, 26 N. H. 34; Coates v. First Nat. Bank, 91 N. Y. 20, revg. 47 N. Y. Super. Ct. 322; Callanan v. Edwards, 32 N. Y. 483. Compare with Bishop v. Garcia, 14 Abb. Pr. (N. Y.) (N. S.) 69; Pellman v. Hart, 1 Pa. St. 263. In Pennsylvania an assignee in bankruptcy is not a bona fide _ as- signee to whom notice must be given of an attachment of debtor's effects on execution. Cowden v. Pleasants, 9 Pa. St. 59; Tiernay v. McGarity, 14 R. I. 231 ; Tracy v. McGarty, 12 R. I. 168; Bischoff v. Ward, 5 S. Car. 140 ; Brown v. Mimis, 1 McCord (S. Car.) 80; Johnson v. Irby, 8 Humph. (Tenn.) 654. "As between an as- signee of a fund under an equitable assignment and the receiver of the assignor, an insolvent corporation, notice of the assignment to the debtor or holder of the fund is not neces- sary to perfect the title of the as- signee." Cope V. C B. Walton, 11 N. J. Eq. 512, 16 Atl. 1044, quoting from Cogan v. Conover Mfg. Co., 69 N. J. Eq. 809, 64 Atl. 973, 115 Am. St. 629. To same effect, In re Cin- 7Z^ ASSIGNMENTS. 1459 prior to the entering of judgment,®^ and irrespective of whether the money assigned is due at the time of the assignment, or is to become due subsequently.^" However, where the assignee fails to give notice of the assign- ment to the debtor until after judgment is entered against the latter as garnishee defendant, the attaching creditor is entitled to preference over the assignee."" As between the assignee and prior lienholders, the former takes the thing assigned subject to all valid and subsisting liens thereon at the time of the assign- ment."^ § 1459. Rights of assignees as between themselves — Prior- ity of notice. — As between successive assignees it is well es- tablished that a subsequent assignee who has notice of a prior assignment takes the thing assigned subject to the rights of the prior assignee."^ Difficulty, however, is found in those cases cinnati Iron Store Co., 167 Fed. 486, 93 C. C. A. 122; Spengler v. Stiles- Tull Lumber Co., 48 Miss. 780, 48 So. 966. ^See post, note 90. °* Smith V. Jennings, 15 Gray (Mass.) 69; Millett v. Swift. 138 Ky. 408, 128 S. W. 312. Insolvency on the part of the assignor known to the assignee may render the assignment invalid as against creditors. Cope v. C. B. Walton Co., 11 N. J. Eq. 512, 76 Atl. 1044. Compare with In re Macauley, 158 Fed. 322; Farmers' &c. Bank v. Wood Bros. & Co. (Iowa.), 118 N. W. 282. "*" Vanbuskirk v. Hartford F. Ins. Co., 14 Conn. 141, 36 Am. Dec. 473; Walters v. Washing- ton Ins. Co., 1 Iowa 404, 63 Am. Dec. 451; Wood v. Partridge. 11 Mass. 488; Richards v. Griggs. 16 Mo. 416, 57 Am. Dec. 240; Bishel v. Echert, 3 Leg. Op. (Pa.) 375; Rodes v. Haynes, 95 Tenn. 673. ZZ S. W. 564; Nixon V. Joshua Hendy Mach. Works, 51 Wash. 419, 99 Pac. 11. The effectiveness of the assignment is not impaired by the fact that the garnishee was not informed thereof until after the service of the process of garnishment. If informed thereof soon enough to interpose the same in answer to it timely, the assignee may protect himself from liability as gar- nishee by showing the assignment at any time before judgment. Steltzer V. Condon, 139 Iowa 754, 118 N. W. 39. See also, Jackson v. Hollowav, 14 B. Mon. (Kv.) 108; Nichols v. Hooper, 61 Vt. 295, 17 Atl. 134. But see MacDonald v. Kneeland, 5 Minn. 352; Kafes v. McPherson (N. J.), 32 Atl. 710; Board of Education v. Duparquet, 50 N. J. Eq. 234, 24 Atl 922; Meier v. Hess, 23 Ore. 599. Z2 Pac. 755. '^ Earlv v. Redwood Citv, 57 Cal. 193; Randall v. Archer, 5 Fla. 438; Hetherington v. Hayden, 11 Iowa 335; First Ward Nat. Bank v. Thom- as, 125 Mass. 278; Coverdale v. Aid- rich, 19 Pick. (Mass.) 391; Corning v. White, 2 Paige (N. Y.) 567, 2/ Am. Dec. 659; Franklin Fire Ins. Co. v. West. 8 Watts & S. (Pa.) 350. See also, Tvler v. Mavre, 95 Cal. 160, 27 Pac. 160, 30 Pac. 196. "^Ostertag v. Evans, 176 111. 215. 52 N. E. 255; Heins v. Wicke. 102 Iowa 396, 71 N. W. 345; McCormat V. Smith, 3 T. B. Mon. (Ky.) 429; People V. Svracuse Third Nat. Rank, 159 N. Y. 382. 54 N. E. 35; Gillette V. Murphy. 7 Okla. 91. 54 Pac. 413; Creed v. Lancaster Bank, 1 Ohio St. 1 ; Paul V. Williams, 12 Lea (Tenn.) 215; Leonard v. Burgess. 16 Wis. 41. § 1459 CONTRACTS, 732 where the equities are latent and arise between successive as- signees of the same chose in action, it having been transferred to the subsequent assignee without notice of the prior assignment having been given or the latent equity divulged. While there is a conflict of authority on this point it is believed that the general rule in this countrj^ is that the assignee who first gives notice to the debtor of the assignment obtains priority even though it is in fact subsequent.^^ Thus, it has been held that a subsequent bona fide assignee of a chose in action who takes the same without any notice of a prior assignment and who promptly gives notice of his assignment to the debtor or trustee of the fund and who takes possession of the evidences of the debt has a superior equity to a prior assignee who neglects to give notice to the debtor or trustee holding the fund and does not take possession of the evi- dences of the debt.^* As between two assignees neither of whom gives notice, the one prior in point of time will be sustained.^^ •' Stocks V. Dobson, 4 DeG. M. & G. 11, and extended annotations thereto; Dearie v. Hall, 3 Russ. 1; Graham Paper Co. v. Pembroke, 124 Gal. 117, 56 Pac. 627, 44 L. R. A. 632, 71 Am. St. 26; In re Gillespie, 15 Fed. 734; Methven v. Staten Island Light, Heat & Power Co., 66 Fed. 113, 13 C. C. A. 362; The Elmbank, 72 Fed. 610; Merchants' & :\Iechanics' Bank V. Hewitt, 3 Iowa 93, 66 Am. Dec. 49; Lambert v. Morgan, 110 Md. 1, 72 Atl. 407, 132 Am. St. 412; Mur- doch V. Finney, 21 Mo. 138; Rich- ards V. Griggs, 16 Mo. 416, 57 Am. Dec. 240; Jack v. National Bank, 17 Okla. ^30, 89 Pac. 219; Citizens' Nat. Bank V. Mitchell, 24 Okla. 488, 103 Pac. 720; Spain v. Hamilton's Admr., 1 Wall. 604, 623 ; Judson v. Corcoran, 17 How. (U. S.) 612, 15 L. ed. 231; Laclede Bank v. Schuler. 120 U. S. 511, 30 L. ed. 704, 7 Sup. Ct. 644; Ward V. Morrison, 25 Vt. 593 ; Camp- bell V. Dav, 16 Vt. 558; Coffman v. Liggett's Admr., 107 Va. 418, 59 S. E. 392. A number of Pennsylvania cases are usually cited as sustaining this rule, but see In re Phillip's Es- tate, 205 Pa. St. 515, 55 Atl. 213, 66 L. R. A. (N. S.) 760n, 97 Am. St. 746, where the court said : "With the question now fairly before us, we adopt and announce, as the only safe rule, that, if an assignee fails to give notice to the person holding the fund assigned to him, a subsequent as- signee, without notice of the forrner assignment, will, upon giving notice of his assignment, acquire priority." Trexler v. Kuntz, 36 Pa. Super. Ct. 352; American Exchange Nat. Bank V. Federal Nat. Bank, 226 Pa. 483, 75 Atl. 683, 27 L. R. A. (N. S.) 666n, 134 Am. St. 1071. See Washington V. Wabash Bridge &c. Works, 147 Mich. 571, 111 N. W. 349, 11 L. R. A. (N. S.) 471n, holding that where money is loaned on a written assign- ment of a contract for public^ work and the lender gives no notice of his rights and permits the contractor to retain possession of the contract, complete the work and obtain time orders for the amount due which he sells for value to a stranger, the stranger has the prior rights. See also. King Bros. & Co. v. Central of Georgia R. Co., 135 Ga. 225, 69 S. E. 113, Ann. Cas. 1912A, 672 and note. Hall v. Boston Plate &c. Glass Co., 207 Mass. 328, 93 N. E. 640 (as- signment of wages decided under statute) ; Erie R. Co. v. Smith, 68 Misc. (N. Y.) 136, 123 N. Y. S. 973, affd. 128 N. Y. S. 1122 (assignment of wages decided under statute). »* In re Gillespie, 15 Fed. 734. '"Murdoch v. Finney, 21 Mo. 138. A subsequent assignee may be guilty 733 ASSIGNMENTS. § 1460 § 1460. Priority in point of time — Rule criticized. — How- ever, in almost an equal number of jurisdictions it is held that as between different assignees of the same demand by an express assignment from the same person, the one prior in point of time will be sustained although such prior assignee has given no notice of his assignment either to the subsequent assignee or to the one from whom the demand is due."" The rule announced in the pre- ceding section is believed to state the better doctrine, and the courts of this country are gradually adopting it, for the reason that the purchaser should be required to do all that reasonably lies in his power to make it impossible for the assignor to commit a fraud or to do an injury to subsequent assignees relying on his in- tegrity and having no means of knowing that he had ceased to be the owner. The failure to give notice puts it in the power of the of negligence and no relief extended to him, where he fails to make in- quiry. Murdoch v. Finnev, 21 ^lo. 138; Maybin v. Kirby, 4 Rich. Eq. (S. Car.) 105. See, to the same effect, Bank of Yolo v. Bank of Woodland, 3 Cal. App. 561, 86 Pac. 820. '" White V. Wilev. 14 Ind. 496 ; Tal- bot V. Cook, 7 T. B. Mon. (Ky.) 438; Columbia Finance & Trust Co. v. First Nat. Bank, 116 Kv. 364, 25 Ky. L. 561, 76 S. W. 156; Gill v. Clagett, 4 Md. Ch. 153. See, however, Lau- bert V. Morgan, 110 Md. 1. 72 Atl. 407, 132 Am. St. 412; MacDonald v. Kneeland, 5 Minn. 352; Luse's Exrs. V. Parke, 17 N. J. Eq. 415; Fortunato V. Patten, 147 N. Y. 277. 41 N. E. 572; Williams v. Ingersoll. 89 N. Y. 508; Muir v. Schenck. 3 Hill (N. Y.) 228, 38 Am. Dec. 633; Fairbanks v. Sargent, 104 N. Y. 108, 9 N. E. 870, 6 L. R. A. 475, 58 Am. Rep. 490; York V. Condc, 61 Hun (X. Y.) 26. 15 N. Y. S. 380; Bradlev v. Root, 5 Paige Ch. (N. Y.) 632: Hopkins v. Banks, 7 Cow. (N. Y.) 650; ^leier v. Hess, 23 Ore. 599, 32 Pac. 755; Mavbin v. Kirby, 4 Rich. Eq. (S. Car.) 105; Brander v. Young, 12 Tex. 332; Henke v. Keller, 50 Tex. Civ. App. 533, 110 S. W. 783; Clarke v. Hoge- man, 13 W. Va. 718; Tingle v. Fisher, 20 W. Va. 497; Leonard v. Burgess, 16 Wis. 41. See also. Huntress v. Hanley, 195 ^lass. 236, 80 X. E. 946. The assignee of a bill of lading of goods consigned to the assignee's vendee stands in the position of a purchaser for good faith of the chat- tels themselves while in possession and control of the owner and has a right which is superior to one who holds a prior assignment of the pur- chase-price due from the one to whom the goods are consigned. Man- ufacturers' Commercial Co. v. Roch- ester R. Co., 117 N. Y. S. 989, affd. 123 N. Y. S. 1128. The rule that the one prior in point of time is also prior in point of right has been said to apply only as between parties hav- ing equitable interests, where such interests are in all respects equal. "It is only where the interests as- signed are equitable in their nature, and the equity of no assignee is in- trinsically superior to the others, that the order of time determines the order of priority. Where the subse- quent assignee has acquired the legal title for a valuable consideration and without notice of the prior equitable assignment, he is protected." King Bros. & Co. V. Central of Georgia R. Co., 135 Ga. 225, 69 S. E. 113, Ann. Cas. 1912A, 672. § 1 46 1 CONTRACTS. 734 assignor to do this wrong and the consequences of the failure ought therefore to be upon him who commits it.^^ § 1461. Successive assignees — Existing equities. — Closely connected in principle with the preceding cases are those which have to do with the effect which equities existing between the prior assignee and his assignor have upon the rights of a succes- sive assignee of a chose in action. A number of authorities apply the rule that the succeeding assignee of a chose in action takes it subject to all existing equities at the time of such assign- ment, and hold that the last assignee takes the thing assigned subject to equities existing between the prior assignor and his assignee.®^ Other authorities hold, however, that when the last assignee acts in good faith and without any notice of equities existing between a prior assignor and his assignee he takes the chose assigned free from such equity.''^ Thus, where overdue notes appear on their face to have been assigned absolutely, but were in fact taken as collateral security, it has been held that a bona fide assignee of the one accepting them as collateral security is protected against latent equities of third persons.* The same result was reached where a note secured by a mortgage long overdue was transferred by one holding under an apparently valid transfer from the true owner to an innocent purchaser for value, notwithstanding the assignor had in fact secured the trans- fer to himself by fraud.^ It is, of course, true that the succes- "As stating the reason for the v. Perris Irr. Dist., 107 Cal. 55, 40 rule, see, Dearie v. Hall, 3 Russ. 1, Pac. 45; Y. M. C A. Gym. Co. v. 38; Graham Paper Co. v. Pembroke, Bank, 179 111. 599, 54 N. E. 297, 46 124 Cal. 117, 56 Pac. 627, 44 L. R. A. L. R. A. 753n, 70 Am. St. 135; Moore 632, 71 Am. St. 26; Lambert v. Mor- v. Moore, 112 Ind. 149, 13 N. E. 67i, gan, 110 Md. 1, 72 Atl. 407, 132 Am. 2 Am. St. 170; Williams v. Donnelly, St. 412 ; In re Phillip's Estate, 205 54 Nebr. 193, 74 N. W. 601 : Moore v. Pa. St. 515, 55 Atl. 213, 66 L. R. A. Metropolitan Nat. Bank, 55 N. Y. 41, 760, 97 Am. St. 746. See, ante, 14 Am. Rep. 173, overruling Bush v. § 1459. Lathrop, 22 N. Y. 535; Baker v. '' Sutherland v. Reeve, 151 111. 384, Wood, 157 U. S. 212, 39 L. ed. 677, 38 N. E. 130; Gillette v. Murphy, 7 15 Sup. Ct. 577. Okla. 91, 54 Pac. 413; Westbury v. ^ Y. M. C A. Gym. Co. v. Rockford Simmons, 57 S. Car. 467, 35 S. E. Nat. Bank, 179 111. 599, 54 N. E. 297, 764; Downer v. South Royalton 46^ L. R. A. 7S3n, 70 Am. St. 135. Bank, 39 Vt. 25. See also, Drake v. "Gardner v. Beacon Trust Co., 190 Qoonan, 99 Mich. 121, 57 N. W. 1098, Mass. 27, 76 N. E. 455. 2 L. R. A. (N. 41 Am. St. 586. S.) 767, and note, 112 Am. St. 303. ''Quebec Bank v. Taggart, 27 Ont. To same effect, Radovsky v. Fall 162; First Nat. Bank of Bridgeport River Sav. Bank, 196 Mass. 557, 82 735 ASSIGNMENTS. § I462 sive assignee has no better title, legal or equitable, than his trans- ferrer had, and that the note is subject in his hands to the same infirmities of title as against the true owner and to the same defenses as against the maker that it was subject to in the hands of his transferrer. But there is a broad distinction between those cases in which the transferrer had in fact no title, and those cases in which the true owner of an overdue note transferred it under circumstances which enabled his transferee to deal with it as if he were the true owner and an innocent purchaser for value takes it from such transferee before the transfer has been avoided ; in the latter case no equity attaches to the note in favor of the true owner as against an innocent purchaser for value, since it was by his own act that the perpetrator of the fraud was enabled to commit it.^ § 1462. Evidence of assignment and of assignee's rights — Right of assignee to sue — Burden of proof. — In some juris- dictions it is provided that in case of an assignment by written indorsement the assignor need not be made a party, but that if there is no such assignment he must be made a party to answer as to his own interest. In many jurisdictions the assignee is allowed to sue, in a proper case, in the assignor's name. It is also the law in many jurisdictions that if there appears to be such a written assignment it can only be questioned and put in issue by the defendant by an answer under oath. In such a case it has been held that where the assignment of an account sued on by the assignee is not put in issue by an answer under oath, formal proof of the assignment is unnecessary, and that it is not neces- sary to show the plaintiff's acceptance of the assignment, nor to show demand of payment before the commencement of the action,* but that where the assignment is denied by an answer under oath or other pleading sufficient under the statute, the bur- den is on the plaintiff to show a sufficient assignment by a pre- N. E. 693. Otherwise where the sue- E. 297. 46 L. R. A. 753n, 70 Am. St. cessive assignee takes with notice that 135 ; Gardner v. Beacon Trust Co., the paper is held as collateral secur- 190 Mass. 27, 16 N. E. 455. 2 L. R. A. ity. Qark v. Roberts, 206 Mass. 235, (N. S.) 767. 112 Am. St. 303. 92 N. E. 461. *Woronieki v. Pariskiego, 74 Conn. * See Y. M. C. A. Gvm. Co. v. Rock- 224. 50 Atl. 562 ; Lassiter v. Jackman, ford Nat. Bank, 179 111. 599, 54 N. 88 Ind. 118. § 1463 CONTRACTS. 736 ponderance of the evidence." In another jurisdiction, it has been held that where the complaint alleges that the plaintiff is the actual bona fide owner of the claim sued on, by written assign- ment, although a general denial admits the due execution and delivery of the written assignment, yet such denial puts in issue the right of the plaintiff to sue as the actual bona fide owner of the claim, and the burden is upon him to show that he is its owner for his own benefit, without accountability.^ Where, however, the plaintiff holds the cause of action as collateral security for a debt due him from a third person, the burden of proving a defense arising out of the state of dealings between the plaintiff and his principal debtor, such, for instance, as that the principal debt has been paid, or is not equitably enforcible as against the defendant, has been held to be upon the latter.'' § 1463. Evidence of assignee's right. — In a case where a statement of the account sued on was attached to the complaint, and an assignment of the account in writing appeared at the close thereof signed by the person who performed the services which the account was for, and he testified that the signature was gen- uine, this was held sufficient evidence of the assignee's right to sue.* It has also been held, that where one assigned a trade secret, but did not become the owner thereof until afterward, his assignee took title by estoppel.'' In another case, a promise by a son to his father on receiving property from the latter, that, at the death of the father, the son would pay his sister a certain sum, was held to be or create a chose in action, which, being assigned to the sister, could be enforced by her. It was also held that the agreement of the son with his sister, at the request of the "Stair V. Richardson, 108 Ind. 429, Wis. 145, 120 N. W. 837, 21 L. R. A. 9 N. E. 300; Doty v. Graska (Iowa), (N. S.) 359n, 131 Am. St. 1046. 126 N W 1108 'Hogarty v. Lynch, 6 Bosw. (N. •Uncas Paper Co. v. Corbin, 75 Y.) 138. See, generally, as to when Conn. 675, 55 Atl. 165 ; Woronieki v. assignee may sue m his own name, Pariskiego, 74 Conn. 224, 50 Atl. 562; the notes in 64 L. R. A. 581, and 17 Gaffney v. Tammanv, 72 Conn. 701, L. R. A. (N. S.) 1113. 46 Atl 156- Wagenhurst v. Wine- « Neal v. Heymg (Iowa), 98 N. W. land, 20 App. (D. C.) 85. Where the 603 ^ . . _ answer is a general denial the bur- ^ " Vulcan Detinning Co v American den is on the assignee to show a valid Can Co., 67 N. J. Eq. 243, 58 Atl. 290. assignment. Johnson v. Vickers, 139 ^2)7 ASSIGNMENTS. § I463 father, to pay the money to her, was sufficient evidence of a de- livery of such chose in action.^" In another instance the action was brought on certain bounty claims against the state, and evidence that the plaintiff's as- signor had purchased them from one claiming to be the person named as the owner in a certificate issued to such owner, in accordance with the statute, by the clerk, and who then had such certificate in his possession and thereupon delivered it to the pur- chaser, and each of the holders of such certificates transferred the same in the name of such holder, authorizing the purchaser by power of attorney to receive the warrant therefor from the state controller and the money from the state treasurer, was held suffi- cient to prove that such claims were transferred to plaintiff by the original owners, in the absence of evidence that the persons making the assignments were not the identical persons named in the certificates. The line of argument pursued by the court was substantially as follows : The law presumes that a person is the owner of property from exercising acts of ownership. Likewise, the law presumes that a person is innocent of crime or wrong in civil as well as in criminal cases, and it will be presumed that the persons making the transfers and executing the power of attorney did not attempt to personate others, and by so doing fraudulently procure property to which they were not entitled, but rather that they were the persons whom they represented themselves to be, the persons designated in the cer- tificates of which they had possession, and the owners of claims which they purported to sell. In each transaction the person signing the power of attorney signed, as his name, the name appearing in the certificate as the name of the person to whom the certificate had been issued. Identity of person is presumed from identity of name, and it must therefore be prestmied that the per- son signing the power of attorney was the person named in the certificate as the original owner of the claim. As the person who signed the power of attorney is the person who sold the claim, the proof is complete. ^^ "Ebel V. Piehl, 134 Mich. 64, 95 N. " Bickerdikc v. State. 144 Cal. 681, W. 1004. 78 Pac. 270. See also, Bauer v. State, 144 Cal. 740, 78 Pac. 280. 47 — Contracts, Vol. 2 § 1464 CONTRACTS. 738 § 1464. Proof of the assignment. — It has been held that a patent regularly issued to the assignee of a land warrant is prima facie evidence that the assignment was regularly made/^ and that such an assignment will be presumed from great lapse of time, together with the fact of payment of a consideration for the land." The execution of a written assignment may generally be proved by the acknowledgment of the assignor, or it may be proved, as in New York, by a subscribing witness, before an officer authorized to take acknowledgment and proof of deeds; and this may be done in that state even after the action has been commenced, and at any time before the actual offer of the docu- ment in evidence.^* But unless this is authorized in the particular jurisdiction, and is done, the assignment, whether under seal or not,^^ if attested by a subscribing witness, must generally be proved by the witness or by his handwriting,^* except where, as in many jurisdictions, the rule requiring a subscribing witness to be called has been relaxed by statute or otherwise.^^ Direct proof of an assignment, however, is not always essen- tial. The assignment of a mortgage or collateral may be shown in many instances by proof of an assignment of the principal obligation. ^^ But an assignment of the principal obligation can- not ordinarily be inferred from the mere fact of an assignment of a collateral security or other incident.^" "McArthur v. Phoebus, 2 Ohio unless denied under the oath. Even 415 ; McArthur's Heirs' Lessee v. the beneficiary, it has been held, may Gallaher, 8 Ohio 512. testify to its execution if there is no "Duke V. Thompson, 16 Ohio 34; subscribing witness. Tittle v. Van- Bridenbaugh v. King, 42 Ohio St. leer (Tex. Civ. App.), 27 S. W. 736. 410. " Ryan v. Dunlap, 17 111. 40. 63 Am. "Holbrook v. New Jersey Zinc Co., Dec. 334; Lindsey v. Bates, 42 Miss. 57 N. Y. 616. 397; Jackson v. Blodget, 5 Cow. (N. "1 Greenleaf Ev. (15th ed.),§569; Y.) 202; Green v. Hart, 1 Johns. (N. King v. Smith, 21 Barb. (N. Y.) 158. Y.) 580; Cady v. Sheldon, 38 Barb. "1 Greenleaf Ev. (15th ed.), § 569; (N. Y.) 103; Pattison v. Hull, 9 Cow. Jones v. Underwood, 28 Barb. (N. (N. Y.) 747; Bowdoin v. Coleman, Y.) 481. 3 Abb. Pr. (N. Y.) 431, 6 Duer. (N. "It is now the law in most juris- Y.) 182; Bolen v. Crosby, 49 N. Y. dictions that the execution of an or- 183. See also, Baugher v. Woollen, dinary written assignment of a chose 147 Ind. 308, 45 N. E. 94; Bartlett in action or the like may be proved Estate Co. v. Fairhaven Land Co., 49 by evidence of those who saw it exe- Wash. 58. 94 Pac. 900, 15 L. R. A. cuted, and by proof of the signature, (N. S.) 590n, 126 Am. St. 856. as well as in other ways. So, as al- '* Merritt v. Bartholick, 36 N. Y. ready shown, in many jurisdictions, 44, affg. 47 Barb. (N. Y.) 253. See its execution is regarded as admitted also, Jones v. Williams, 155 N. Car. 739 ASSIGNMENTS. § I465 If the assignment is oral it may be proved by parol," even though there was an agreement unperformed to give a written transfer.^^ But the plain import of a written assignment cannot be varied by parol evidence.-^ It is sufficient proof of a parol assignment that some evidence of the debt, such as a bond and mortgage, or a note held for the debt, or the like, was delivered to the assignee by the assignor,^^ with intent to transfer the title to the demand; and the declarations of the assignor accompanying the delivery may usually be proved as a part of the res gestae. But, on the other hand, it has been held that neither the mere production of a nonnegotiable security,** nor proof of mere words of intention on the part of the alleged assignor, are enough, and that the plaintiff cannot prove his title by mere evidence of oral declarations of the assignor, unknown to the defendant, that he had at a previous time assigned the demand to plaintiff.^^ Under an allegation of an assignment, evidence of an assignment after the commencement of the suit has been held insufficient to sustain the action.^® § 1465. Assignee of corporation. — Where the plaintiff claims as assignee of a corporation, it has been said that evidence 179, 71 S. E. 222, 36 L. R. A. (N. S.) assignment was not made in good 426. faith, but merely for the purpose of ^"Gurnell v. Gardner, 9 Jur. (N. qualifying the assignor as a witness S.) 1220; Hoffman v. Smith, 94 Iowa in the action. 495, 63 N. W. 182; Dunn v. Snell, 15 " Worrall v. Parmelee, 1 N. Y. 519; Mass. 481; Hooker v. Eagle Bank, 30 Crocker v. Muller. 4 Misc. (N. Y.) N. Y. 83, 86 Am. Dec. 351; Kessel v. 685, 83 N. Y. S. 189 (testimony of Albetis, 56 Barb. (N. Y.) 362. the assignor that he intended to as- ^ Doremus v. Williams, 4 Hun (N. sign his title to the chose in action Y.) 458. held sufficient). A mere intention to "Albert v. Albert, 12 Cal. App. 268, assign is not sufficient, however; the 107 Pac. 156. intention must be actually consum- ^Runyan v. Mersereau, 11 Johns, mated. Werner v. Finley (Mo. App.), (N. Y.) 534. And see Kamend v. 129 S. W. IZ. A mere promise to as- Huelbig, 12 Am. Law. Reg. (N. S.) sign is not an assignment. Henke v. 61; Mack v. Mack, 3 Hun (N. Y.) Keller. 50 Tex. Civ. App. 533. 110 S. 323, 5 Thomp. & C. 528 ; Armstrong W. 783. To same effect, Speckman v. V. Cushney, 43 Barb. (N. Y.) 340; Smedlev, 153 Fed. 771; Mathison v. BiHings V. Jane, 11 Barb. (N. Y.) Magnuson. 226 111. 368. 80 N. E. 885. 620. But as to the strict common-law "" Bowen v. New York &c. R. Co., rule, see Palmer v. Merrill, 6 Cush. 202 !Mass. 263, 88 N. E. 781 ; Garrigue (Mass.) 282, 52 Am. Dec. 782. v. Loescher, 3 Bosw. (N. Y.) 578. It " Barrick v. Austin, 21 Barb. (N. has been held that ratification of un- Y.) 241. See also, Platner v. Rvan, authorized assignment of a chose in 76 N. J. L. 239. 69 Atl. 1007, holding action made after suit is brought will evidence admissible to show that the not relate back to the date of such § 1465 CONTRACTS. 74O of the existence of the corporation is admissible without any alle- gation of the fact other than such as is implied in the mention of the corporate name in the complaint. ^^ As against the debtor, an assignment of the cause of action has been presumed valid, although a vote of the board was necessary to its legality, and there was no evidence thereof.^® But where there was evidence that the transfer was made without a vote of the board, the bur- den was held to be on the assignee to show that he took it for value and without notice."" This he may show in support of his title, whether he took directly from the corporation or through a a third person.^'' The fact that the plaintiff, himself,^^ was a director at the time of such an illegal transfer has also been held sufficient evidence of notice to defeat the action. The official character of the officers making the transfer may be proved either by the corporate minutes, or, in a proper case, by witnesses tes- tifying to the fact of their habitually acting as such,^^ and the jur}^ may infer that the officer had authority to do the particular act from evidence of the exercise by him of the same general power, with knowledge and acquiescence of the directors.^^ So, where the due execution of the assignment is admitted in the pleadings, this admission implies that the persons who executed assignment, and thereby support the *^ Smith v. Hall, 5 Bosw. (N. Y.) action. Read v. Buffum, 79 Cal. 11, 319. 21 Pac. 555, 12 Am. St. 131. But ^" Partridge v. Badger, 25 Barb. (N. variance in the mode of assignment Y.) 146. An assignment of a claim may be disregarded, if not prejudi- by a corporation, executed by its cial. Bowman v. Keleman, 65 N. Y. president, and attested by its secre- 598. See as to presumption and proof tary and corporate seal, is sufficient of date, Barrick v. Austin, 21 Barb, to protect the debtor in paying the (N. Y.) 241. amount of the claim to the assignee. "Kennedy v. Cotton, 28 Barb. (N. Purdy v. Nova Scotia Midland R. Y.) 59. Co., 8 Misc. (N. Y.) 510, 28 N. Y. S. '*Belden v. Meeker, 47 N. Y. 307, 758, 59 N. Y. St. 409, affd. 11 Misc. affg. 2 Lans. (N. Y.) 470, 9 Moak's (N. Y.) 406, 32 N. Y. S. 157, 65 N. Eng. 255, note; Houghton v. Mc- Y. St. 282. But authority of the Auliff, 2 Abb. Dec. (N. Y.) 409, 26 secretary to make an assignment of How. Pr. (N. Y.) 270. the indebtedness due to the corpora- " Houghton V. McAuHff, 2 Abb. tion will not be presumed. Read v. Dec. (N. Y.) 409, 26 How. Pr. (N. Buffum, 79 Cal. 11, 21 Pac. 555, 12 Y.) 270. Contra, Caryl v. McElrath, Am. St. 131. 3 Sandf. (N. Y.) 176. =« Merchants' Bank v. State Bank, '"Curtis V. Leavitt, 15 N. Y. 9. 10 Wall. (U. S.) 604, 19 L. ed. Proof of payment of value has been 1008. Compare Hoyt v. Thompson, said to raise a presumption that the 5 N. Y. 320; Jackson v. Campbell, plaintiff took without notice. Warner 5 Wend. (N. Y.) 572. V. Chappell, 32 Barb. (N. Y.) 309. 741 ASSIGNMENTS. 1466 it in behalf of the corporation had authority to do so, and that the seal attached is its common seal.^* § 1466. Delivery and acceptance. — Delivery of a written assignment is sufficiently proved or presumed when the instru- ment is proved to have been executed by the assignor, and is actually produced by the plaintiff at the trial.^' So, it has been held that affirmative proof of the acceptance of an assignment which appears to be beneficial to the assignee is not required from the party relying upon it, and that the party impeaching it must disprove acceptance.^" The presumption is usually indulged in such a case that the assignment, being beneficial to the assignee, was accepted by him,^^ and the same presumption of acceptance has been held to arise in case of a voluntary general assignment for the benefit of creditors.^^ So, the assignment of a mortgage by a nominal mortgagee is sufficient to show an acceptance by him.^^** **Woronieki v. Pariskiego, 74 Conn. 224, 50 Atl. 562. "* Story V. Bishop, 4 E. D. Smith (N Y.) 423; North v. Turner, 9 Sere?. & R. (Pa.) 244. ^ Van Buskirk v. Warren. 4 Abb. App. Dec. (N. Y.) 457. As to evi- dence of delivery and acceptance generally, see Marshall v. Strange, 10 Kv. L. 410, 9 S. W. 250 ; William- son v. Yager. 91 Kv. 282, 15 S. W. 660, 34 Am. St. 184n ; Owen v. Pot- ter. 115 Mich. 556, 11 N. W. 977; Palmer v. Merrill, 6 Cush. (Mass.) 282, 52 Am. Dec. 782: Hackett v. Moxley, 65 Vt. 71, 25 Atl. 898. As to assignment by separate writing, see Franklin v. Twogood, 18 Iowa 515 ; Erickson v. Kelly, 9 N. Dak. 12, 81 N. W. n . As to constructive de- livery where there is no writing, see Preston v. Peterson, 107 Iowa 244, n N. W. 864; White v. Kilgore, 11 Maine 571. 1 Atl. 739; Risley v. Phoenix Bank, 83 X. Y. 318. 38 Am. Rep. 421. affd. Ill U. S. 425, 28 L. ed. 374. 4 Sup. Ct. 322 (proof of de- liverv not required) ; Wolcott v. Merchants' &c. Oil Co., 60 N. Y. S. 862 (Long acquiescence in the as- signee's claim was held to raise a presumption of its legal origin, and proof of delivery was not required. ) ; Rollison V. Hope, 18 Tex. 446; Noyes v. Brown, ZZ Vt. 431. " Kaufman v. State Sav. Bank, 151 Mich. 65, 114 N. W. 863; 18 L. R. A. (N. S.) 630n, 123 Am. St. 259; Peavey v. Tilton, 18 N. H. 151. See note in 45 Am. Dec. 365. and Merrills v. Swift, 18 Conn. 257, 46 Am. Dec. 315. °*Burrill Assignments, § 239; Fleming v. Stiefel, 8 Ohio Dec. R. 779, 9 Wkly. L. Bui. 350. ^Lady Superior of the Congre- gational Nunnery v. McNamara, 3 Barb. Ch. (N. Y.) 375. 49 Am. Dec. 184. And acceptance of a contract to sell real estate has been held suf- ficiently shown by the placing of the matter in the hands of a title guar- anty company with directions to ex- amine the title and prepare a deed, and requiring the assignor to secure title to a small strip of ground upon which a building on the land en- croaches. Evans v. Stratton, 142 Ky. 615, 134 S. W. 1154, 34 L. R. A. (N. S.) 393. CHAPTER XXXIV. JOINT AND SEVERAL CONTRACTS. § 1470. What is joint and what sev- § 1484. eral. 1471. General Rule Stated— Rights 1485. of Parties. 1486. 1472. Illustrative cases — Joint con- tracts. 1487. 1473. Joint contracts — Further il- 1488. lustrated. 1474. Illustrative cases — S e v e r a 1 1489. contracts. 1475. Illustrative cases — Joint and 1490. several contracts. 1476. Intention of parties generally 1491. governs. 1492. 1477. Form of promise as test. 1493. 1478. Interest of parties as test. 1494. 1479. Liability of joint obligors. 1480. Contracts of subscription. 1495. 1481. Subscription Contracts Fur- ther Illustrated— May Be 1496. Joint. 1497. 1482. Effect of release of one joint 1498. debtor. 1483. As Affected by the Intention of the Parties. Settlement with one joint debtor. Covenant not to sue. Effect of Death of Joint Con- tractor at Law. The Rule in Equity. Where the deceased joint debtor is surety. When a surety's estate is held liable. Contribution among joint debtors. Contribution among sureties. Actions on joint contracts. Judgments on joint contracts. Judgments on joint contracts further considered. Actions on joint and several contracts. Statutory modifications. Other statutory modifications. Effect of statute of Limita- tion. § 1470. What is joint and what several. — Contracts may be joint, or several, or they may be joint and several. A joint contract is one by which two or more promisors are jointly bound to fulfil its obligations and either of whom may be charged with the entire liability arising under the contract or by which two or mare obligors are given a joint right.^ "Several contract" is the Mason v. Eldred, 6 Wall. (U. S.) 231, 18 L. ed. 783; Black's L. Diet. In Louisiana a different nomencla- ture is used. In that jurisdiction the term "solidary obligation" is synon- ymous with the common-law term "joint contracts," and "joint obli- gation" with the common-law "sever- al contracts." Thus "A joint obliga- tion under the law of Louisiana binds the parties thereto only for their proportion of the debt * * * whilst solidary obligation, on the contrary, binds each of the obligors for the whole debt." Groves v. Sen- tell, 153 U. S. 465, 38 L. ed. 785, 14 Sup. Ct. 898. 742 743 JOINT AND SEVERAL CONTRACTS. f 1 47 1 antonym of "joint obligation." In the former the h'abihty of each promisor is individual and separate, and is coextensive only with that fraction of the entire obligation assumed by him,^ or it may be that each severally undertakes the entire liability and remains sejiarately responsible without reference to the liability of his co- promisors.^ A joint and several contract combines the elements found in the two groups just mentioned. When the contract is joint and several its obligations are imposed upon each promisor individually and upon all the promisors jointly, and the promisee may elect to sue the parties liable separately on their several en- gagements or together on their joint imdertaking.* § 1471. General rule stated — Rights of parties. — The gen- eral rule may be stated as follows: If the contract made by several persons purports simply to bind themselves or to covenant without more, the obligation, or covenant, is taken to be joint only and not several; if the contract purports that they bind them- selves,- or covenant severally, the liability is separate; if they purport to bind themselves jointly and severally, or to bind themselves and each of them, or to covenant for themselves and each of them, using both joint and several words, the liability is both joint and several.' The introduction into a contract of terms expressly joint will entail a joint liability, although the parties would have been otherwise only sev- erally® or jointly and severally liable.'^ On the other hand, where words of severalty are introduced into the contract or agreement, the parties thereby incurring liability are en- titled to the benefit resulting from them.^ The promisee has no right to treat the contract as either joint or several at his election." 'Evans v. Sanders, 10 B. Mon. 'Chicago. M. & St. P. R. Co. v. (Ky.) 291. See also, Landwerlen v. Chicago. 183 111. 341. 55 N. E. 648. Wheeler, 106 Ind. 523, 5 N. E. 888. 'Perkins Co. v. Miller, 55 Nebr. See also. Bouv. L. Diet. 141, 75 N. W. 577. 'Lurton v. Gilliam, 2 111. 577, 33 *Mansell v. Burredge, 7 T. R. 352; Am. Dec. 430; Pavne v. Jelleff, 67 Lee v. Nixon, 1 Ad. & El. 201: Mc- Wis. 246. 30 N. W.' 526. Arthur v. Board. 119 Iowa 562. 93 * Mason v. Eldred. 6 Wall. (U. N. W. 580: Board of Education of S.) 231. See also, Beecham v. Smith, Newark v. Howard, 65 N. J. L. 75, El. B. & E. 442 ; Schilling v. Black, 46 Atl. 574. See also. Silver v. Tecot- 49 Kans. 552, 31 Pac. 143. sky. 129 N. Y. S. 74. ** Simpson v. Vaughan, 2 Atk. 31. "Eveleth v. Sawyer, 96 Maine 227, § 1472 CONTRACTS. 744 § 1472. Illustrative cases — ^Joint contracts. — When two or more persons assume a contractual obligation or are given a right, it is presumed to be a joint obligation or a joint right in the absence of anytliing to show a different intention or a statutory enactment changing the rule/'' The presumption that the obliga- tion is 3 joint undertaking is not conclusive, however, and may be rebutted, and is rebutted when the obligation contains words of severance which show that it was the intention of the parties that it should be several as well as joint." But a promise, the subject- matter of which is entire, and which is joint in its terms and ob- ject, cannot be made several by any doubtful implication or limi- tations.'^ Such words as "we promise,'"' "we hereby guaran- 52 Atl. 639. A joint promise cannot be treated as a several one. Post v. Shafer, 63 Mich. 85, 29 N. W. 519. However, the same contract may contain covenants that are joint and others that are several. Krbel v. Krbel. 84 Nebr. 160, 120 N. W. 935. See also, Current v. Fulton, 10 Ind. App. 617. 38 N. E. 419. ^"Forster v. Taylor, 3 Camp. 49; London Gaslight &c. Co. v. Nicholls, 2 Car. & P. 365; Gummer v. Mairs, 140 Cal. 535, 74 Pac. 26 (made stat- utory w^ith exceptions) ; McArthur V. Board, 119 Iowa 562, 93 N. W. 580; Hill v. Combs, 92 Mo. App. 242; Turley v. Thomas, 31 Nev. 181, 101 Pac. 568, 135 Am. St. 667n; Alpaugh V. Wood, 53 N. J. L. 638, 23 Atl. 261; Clements v. Miller, 13 N. Dak. 176, 100 N. W. 239; Morrison V. American Surety Co., 224 Pa. 41, 7Z Atl. 10; Hascsak v. Leseinsky, 39 Pa. Super. Ct. 642. "Words of sever- ance are necessary to overcome this primary presumption.'' Pittsley v. Young, 206 Pa. 193, 55 Atl. 920, quoting from Philadelphia v. Reeves, 48 Pa. St. 472. See also, Rosenzweig V. McCaffrey, 27 Misc. (N. Y.) 808, 57 N. Y. S. 219, 28 Misc. (N. Y.) 485, 59 N. Y. S. 863. See, however, Schultz v. Howard, 63 Minn. 196, 65 N. W. 363, 56 Am. St. 470, in which it is said that "There should be no presumption in favor of an obliga- tion being joint, instead of joint and several." See also, Bank of Topeka V. Eaton, 95 Fed. 355 (construing Kansas statute) ; Rose v. Williams, 5 Kans. 483 (statutory) ; Morgan v. Brach, 104 Minn. 247, 116 N. W. 490. See post, § 1496. "Morrison v. American Surety Co., 224 Pa. 41, 12, Atl. 10, holding that the words "we bind ourselves and each of our heirs;" "ourselves, our heirs;" "and every of them;" "respectively;" "to be levied of our several goods;" and also in the par- ticular case the words "the payment whereof said principal binds himself, his heirs, executors, administrators, and assigns, and said surety binds itself and its successors, firmly by these presents" overcome the pre- sumption that the obligation was a joint undertaking. See also, Hascsak v. Leseinsky, 39 Pa. Super. Ct. 642. ^-McCullis V. Thurston, 27 Vt. 596, in which several persons signed a writing which purported by its terms to be a joint agreement to idemnify the plaintiff for becoming bail, but annexed to each of their signatures a character and figure indicating a different sum in dollars and cents. It was held that the contract was not thereby rendered several. ''"Barnett v. Juday, 38 Ind. 86; Taylor v. Reger, 18 Ind. App. 466, 48 N. E. 262, 63 Am. St. 352 ; Albany Furniture Co. v. Merchants' Nat. Bank, 17 Ind. App. 531, 47 N. E. 227, 60 Am. St. 178; New Orleans v. Ripley, 5 La. 121, 25 Am. Dec. 175. "If two, three, or more, bind them- selves in an obligation thus, obli- 745 JOINT AND SEVERAL CONTRACTS. § 1 473 tee,"" "we will undertake,'"' "the plaintiffs are to pay,"'" "the directors promise,"" no other element entering in, import that the contract is not to be performed by one of the obligors but by all of them and is therefore joint. § 1473. Joint contracts — Further illustrated. — A bond in this form : Know all men that we, A as principal and B, C and D as sureties, are bound unto the people in the several sums affixed to our names, viz. : B in the sum of ten thousand dollars, C in the sum of five thousand dollars, D in the sum of three thousand dollars, etc., "for the which payment, well and truly to be made, we severally bind ourselves, our heirs," etc., was held to be an instrument embracing several distinct obligations, each of which is a joint obligation of the principal and one surety, and not joint and several.'^ In the case of a copartnership it has been said that its members "undertake joint enterprises, they assume joint risks, and they incur in all cases joint liabilities."" In a proper case husband and wife may be joint debtors.-" If a joint agree- ment is invalid or incapable of enforcement against all of its makers, it is invalid and incapable of enforcement against any one or more of them.^' § 1474. Illustrative cases — Several contracts. — While in the absence of anything to show a contrary intention, the contract is presumed to be joint, yet when the language used shows an intention on the part of each promisor to assume only a part of the total liability it imports a several contract." Where the con- gamous nos, and say no more, the S.) 231, 18 L. ed. 783. Partners are obligation is and shall be taken to be jointly as well as severally liable, joint only, and not several." Shep- Wood v. Carter, 67 Nebr. 133, 93 N. pard's Touchstone of Common As- W. 158. ^ ^^ , surances 375. =* Stevenson v. Craig, 12 Nebr. 464. "Louisiana &c. R. Co. v. Dillard, In some jurisdictions they are joint- Si La. Ann. 1484, 26 So. 451. Iv and severally liable for family ex- "New Haven &c. R. Co. v. Hay- penses. IMurdy v. Skyles, 101 Iowa den, 119 Mass. 361. 549, 70 N. W. 714, 63 Am. St. 411; "Eller v. Lacy. 137 Ind. 436, 36 N. In re Skillman's Estate, 146 Iowa E. 1088. 601, 125 N. W. 343, 140 Am. St. "Mckensey v. Edwards. 88 Ky. 295. 272, 10 Kv. L. 854, 10 S. W. 815, 3 ''Bennett v. Morse, 6 Colo. App. L. R. A. 397, 21 Am. St. 339. 122, 39 Pac. 582. To same effect, "People v. Hartley, 21 Cal. 585, Smith v. Woodward, 51 Colo. 311, 82 Am. Dec. 758. 117 Pac. 140. "Mason v. Eldred, 6 Wall. (U. "Moss v. Wilson, 40 Cal. 159; § 1474 CONTRACTS, 746 tract requires the obligor to account to each of the obligees, respec- tively, or, by the use of any words, imports a separate right of action, the contract is several, and each obligee may sue thereon." A contract by which stockholders in a corporation agreed to repay to the lenders money borrowed by the corporation, not exceeding in the aggregate five per cent, of the amount of the par value of their respective holdings of stock, has been held the several obligation of each of the signers to pay his separate pro- portionate share. ^* And where the several stockholders in a corporation agreed "each with the other that no one of them would sell or transfer his holdings in said corporation to any outside party without first giving the remaining corporators the right to purchase said holdings," their contract was held several and not joint.^^ It has been held that an agreement by which all the stockholders in a corporation deposited their certificates of stock with a trustee, with authority in such trustee to sell the en- tire assets of the corporation, including stock in hand, was joint only as far as it bound each stockholder to place his certificate of stock in the hands of the trustee to be sold and that an individual stockholder might sue the purchaser for breach of contract on his failure to pay for the stock at the agreed price.^® A contract which provided that certain stock was to be carried by the parties named, pro rata according to the amount of their respective inter- ests in a banking corporation, was held to create a several obli- gation as to the extent and amount of the number of shares of banking stock held by each and its value.^^ A covenant to pay each of different law firms one-third of the agreed fee, has been held not to create a joint right of action, and the legal effect of the contract was held to be the same is if there had been three Colt V. Learned, 118 Mass. 380; Mor- Y.) 369, 104 N. Y. S. 537, affd. 123 rison v. American Surety Co. of App. Div. (N. Y.) 629, 107 N. Y. S. New York, 224 Pa. 41, 1Z Atl. 10. 1054. Such language as "We prom- ' ^^ Consolidated Canal Co. v. Peters, ise each to pay" a certain pro rata 5 Ariz. 80, 46 Pac. 74. share, usually creates a several con- **Dornan v. Swift, 1 Pennew. tract. McArthur v. Board, 119 Iowa (Del.) 457, 41 Atl. 1105. 562, 93 N. W. 580; Fuselier v. Lac- "'Streator v. Paxton, 201 Pa. 135, our, 3 La. Ann. 162; Larkin v. But- 50 Atl. 926. terfield, 29 Mich. 254; Adriatic Fire ""Dowling V. Wheeler, 117 Mo. Ins. Co. v. Treadwell, 108 U. S. 361, App. 169, 93 S. W. 924. 27 L. ed. 754, 2 Sup. Ct. 772. ^'Villard v. Moyer, 54 Misc. (N. 747 JOINT AXD SEVERAL CONTRACTS. 1475 several and separate written contracts in favor of each of the three several firms or groups of attorneys." § 1475. Illustrative cases — Joint and several contracts. — When it appears from the language used that the obligation of the contract is assumed by all or each of the promisors at the option of the promisee, the agreement is joint and several in its nature. Thus where the contract reads "I promise,"^" or ''I hereby bind myself," and is signed by two or more promisors^" it has been held to impose a joint and several liability. The same has been held true of a promissory note which read "I promise to pay" and was signed by one person at the bottom, and by an- other on the back thereof .^^ An agreement between three creditors of a bankrupt, that it should have a third of any dividend paid on a claim filed by two of the debtors, has l^een held a joint and sev- eral contract.^" Such expressions as "We or either of us,"^^ or "We jointly and severally promise"^"* usually give rise to a joint and several obligation. This has also been held true of the 'niclntosh V. Zaring, 150 Ind. 301, 49 N. E. 164. For further illustra- tion of Several Contracts see post, § 1480 et seq. "March v. Ward, Peake (N. P.) 177; Clerk v. Blackstock, Holt (N. P.) 474; Salomon v. Hopkins, 61 Conn. 47, 23 Atl. 716; Maiden v. Web- ster, 30 Ind. 317; Hemmenway v. Stone, 7 Mass. 58, 5 Am. Dec. 27; Wolford v. Bowen, 57 Minn. 267, 59 N. W. 195 ; Ladd v. Baker, 26 N. H. 76, 57 Am. Dec. 355; Van Alstyne v. Van Slyck, 10 Barb. (N. Y.) 383; Wallace v. Je- well, 21 Ohio St. 163, 8 Am. Rep. 48 ; Thompson v. Crocker, 1 Rice (S. Car.) 23; Arbuckle v. Temple- ton, 65 Vt. 205, 25 Atl. 1095; Kel- ler's Admr. v. McHuffman, 15 W. Va. 64; Dill v. White, 52 Wis. 456, 9 N. W. 404; Dart v. Sherwood. 7 Wis. 523, 76 Am. Dec. 228. It has been held, however, in New York, that a promissory note which reads "I promise" is a several note only. Brownell v. Winnie, 29 N. Y. 400, 29 How. Pr. (N. Y.) 193, 86 Am. Dec. 314. ■"Scheid v. Leibschultz, 51 Ind. 38. '^ Booth V. Huff, 116 Ga. 8, 42 S. E. 381, 94 Am. St. 98; Dow Law Bank v. Godfrey, 126 Mich. 521, 85 N. W. 1075, 86 Am. St. 559. A promissory note in form "I promise to pay," etc., and subscribed by two or more persons is a joint and sever- al note. Monson v. Drakeley, 40 Conn. 552, 16 Am. Rep. 74 ; Salomon V. Hopkins, 61 Conn. 47, 23 Atl. 716; Maiden v. Webster, 30 Ind. 317; Hemmenway v. Stone, 7 Mass. 58, 5 Am. Dec. 27; Wolford v. Bowen, 57 Minn. 267, 59 N. W. 195 ; Ladd v. Baker, 26 N. H. 76, 57 Am. Dec. 355; Partridge v. Colbv. 19 Barb. (N. Y.) 248; Parks v. Brinkerhoff, 2 Hill (N. Y.) 663; Wallace v. Jewell, 21 Ohio St. 162: Dill v. White, 52 Wis. 456, 9 N. W. 404. '= Rankin v. McCleery (Ala.), 57 So. 599. " Pogue V. Clark, 25 111. 333 ; Har- vey v. Irvine, 11 Iowa 82. "We either of us hereby guarantee" held joint and several. Savannah &c. Trust Co. v. Purvis, 6 Ga. App. 275, 65 S. E. 35. "Rees V. Abbott, Cowp. 832. § 14/6 CONTRACTS. 748 words "The payment whereof said principal binds himself, his heirs, executors, administrators and assigns, and said surety binds itself and its successors, firmly by these presents."^'' Where the obligatory part of a bond is in these words : "We * * * are holden and bound to M. C. in the sum of five hundred dollars, for the payment of which sum well and truly to be made, we do hereby bind ourselves, and each of us," it is a joint and several bond, on which an action may be brought against one of the obligors separately.^'' Principal and surety are usually held to be jointly liable." § 1476. Intention of parties generally governs. — When a contract is ambiguous and is liable to different constructions, the question of whether the contract is joint, or several, or joint and several, depends upon the intention of the parties as ascer- tained by the established rules of construction. The parties have the right to make their own bargain.^* The contract must be considered as a whole, and if, upon such consideration, the inten- tion of the parties becomes apparent, it must prevail over the literal interpretation of detached words, phrases and clauses.^* ^Morrison v. American Surety joint debtors. Walsh v. Miller, 51 Co. 224 Pa. 41, IZ Atl. 10. Ohio St. 462, 38 N. E. 381 ; Wolf v. ="= Carter v. Carter, 2 Day (Conn.) Fink, 1 Pa. St. 435, 44 Am. Dec. 141. 442, 2 Am. Dec. 113. A bond run- When it is established that the par- ning thus : "For which sums re- ties are sureties on a note the pre- spectively, unto the said State of sumption arises that they are co- California, in the manner and in the sureties. Baldwin v. Fleming, 90 proportions hereinbe'fore set forth, Ind. 177. we bind ourselves, our and each of ^* Morrison v. American Surety our heirs, executors and administrat- Co., 224 Pa. 41, Ti Atl. 10. See also, ors, jointly and severally, firmly by Babcock v. Farwell, 146 111. App. 307, these presents" is a joint and several affd. 245 111. 14, 91 N. E. 683, 137 bond. "We certainly know of no Am. St. 284; Coe v. Harvey, 142 words more apt to express that idea Iowa 574, 120 N. W. 97; In re Col- than those used. They have been ket's Estate, 217 Pa. 643, 66 Atl. 980. long used for that purpose." Peo- ^ Smith v. Woodward, 51 Colo, pie V. Love, 25 Cal. 520. 311. 117 Pac. 140; Landwerlen v. "Lowther v. Chappell, 8 Ala. 353, Wheeler, 106 Ind. 523. 5 N. E. 888; 42 Am. Dec. 364; Caldwell v. Sigour- Jacobs v. Spalding, 71 Wis. 177, 36 ney, 19 Conn. IT; Shepley v. Water- N. W. 608. In the construction of house, 22 Maine 497 ; Frye v. Bar- contracts, the court will look at all ker, 4 Pick. (Mass.) 382; Sigourney the circumstances of the case, and V. Drury, 14 Pick. (Mass.) 387; ascertain by reasonable inference Whitaker v. Rice, 9 Minn. 13, 86 Am. what the parties must have under- Dee. 78; Green v. Greensboro Fe- stood and mutually expected at the male College, 83 N. Car. 449, 35 Am. time of making the contract. Dwel- Rep. 579. Cosureties have been held ley v. Dwelley, 143 Mass. 509, 10 N. 749 JOINT AND SEVERAL CONTRACTS. § 1 477 A contract which is plainly meant to be several is not to be treated as joint merely because several persons have signed it on one side or the other.'"' When persons engage for the performance of distinct and several duties, mere words of plurality, such as "we bind ourselves," will not make the contract joint.'' Where a contract describes the parties on one side as principal and sureties, and stipulates that the principal shall perform the obligations and receive the pay, while the sureties shall only be liable for liquidated damages on his default, it is, in effect, a severable con- tract, and the sureties need not be joined as plaintiffs in a suit upon it." § 1477. Form of proinise as test. — When an express con- tract is entered into which is unambiguous in its terms, no pre- sumptions are indulged in and there is no room for construction. The courts will not permit construction of that which needs no construction. Where the terms of an express agreement are unambiguous the contract itself is the only criterion of the inten- tion of the parties, notwithstanding the real intent of the parties may have been at variance with the particular expressions of their -agreement.*^ E. 468. "'In construing such a con- are to be construed according to tract, it should be taken by the four their spirit and intent. Ludlow v. corners, and the intent of the sign- McCrea, 1 Wend. (N. Y.) 228. ers gathered therefrom, if it is pos- "Collins v. Prosser, 1 B. & C. 682; sible to do so, giving due considera- Gleason v. Sanitary Milk-Supply Co., tion to every part thereof.' In Lach- 93 Maine 544, 45 Atl. 825, 74 Am. mund V. Lope Sing, 54 Ore. 106, St. 370. Ill, 102 Pac. 598. 600, it is said, *= Widner v. Western Union Tel. that: 'The contract must be con- Co., 47 Mich. 612, 11 N. W. 407. By strued to effect the intention of the the terms of the contract the sure- parties as gathered from the entire ties were neither promisors nor prom- instrument ; and, if there are re- isees except in the separate clause re- pugnant clauses, they must be recon- lating to liquidated damages, ciled, if possible. The intent, and " "Where the rights and interests not the words, is the essence of of the parties are definitely and every agreement, if it can be ascer- clearly stated, the terms of the con- tained therefrom.' " Gaines v. Van- tract fairly interpreted should con- decar, 58 Ore. 187, 115 Pac. 721. See trol, for it must be assumed that the also, Shannon Copper Co. v. Potter, intent of the parties is as it is dis- 13 Ariz. 245, 108 Pac. 486. See tinctly and positively expressed by further, post, ch. 35. them." Atlanta &c. R. Co. v. Thomas, *'Larkin v. Butterfield, 29 Mich. 60 Fla. 412, 53 So. 510. See also. 254; Widner v. Western Union Tel. Moreing v. Weber, 3 Cal. App. 14, Co., 47 Mich. 612, 11 N. W. 407. See 84 Pac. 220; International Hotel Co. also, Dornan v. Swift, 1 Pennew. v. Flynn, 238 111. 636, 87 N. E. 855; 7 Atl. 885; Hale v. Spaulding, 145 Mass. 482, 14 N. E. 534, 1 Am. St. 475. See also, cases cited ante this note. The rule that the intent of the parties is to be given effect is an equitable one. See Russell v. Ad- dertton. 64 N. Car. 417. ™Norris v. Ham. R. M. Charlt. (Ga.) 267: Legrand v. Baker. 6 T. B. Mon. (Kv.) 235; McNeal's Admrs. V. Blackburn, 7 Dana (Ky.) 170; Newcomb v. Newcomb, 6 Kv. L. 668; Clagett v. Salmon, 5 Gill & T. (Md ) 314; Kirby v. Taylor, 6 Johns. Ch. (N. Y.) 242; Pierce v. Sweet, 2,2, Pa. 151 ; McLarren v. Robertson, 20 Pa. 125; Massey v. Brown, 4 S. Car. 85. " Connecticut Fire Ins. Co. v. Olen- dorff, 7Z Fed. 88, 19 C. C. A. 379; Munyan v. French, 60 N. J. L. 12, 36 Atl. 771; Sloan v. Courtenay, 54 S. Car. 314, 32 S. E. 431; Bowman V. Rector (Tenn.), 59 S. \\\ 389. "'Rice v. Webster. 18 111. 331; Jov V. Wurtz, 2 Wash. C. C. (U. S.) 266. Fed. Cas No. 7555. Compare, how- ever, with this case. Parmelee v. Law- rence, 44 111. 405 : Milliken v. Brown, 1 Rawle (Pa.) 391. See. however, in connection with this Pennsylvania case, Burke v. Noble, 48 Pa. 168; Bell V. Steele, 21 Tenn. (2 Humph.) 148. § 1484 CONTRACTS. 756 § 1484. Settlement with one joint debtor. — Quite fre- quently an instrument is given one of the joint obligors by which the obligee releases one or more of the promisors and reserves his right against the others by appropriate words, such as "re- serving my rights against all others," or "but this shall not oper- ate to discharge the others."*'® An instrument of this character, it is said, is in fact not a release, but on the contrary it shows that it was not intended by the parties that it shall operate as a re- lease/" It operates as a release only to the extent of the amount actually paid by the joint obligor to whom release is given.'^ Con- sequently when several persons are jointly indebted, and one of them pays his specific share of the debt, and it is received and receipted for by the creditor as such, such payment will not exon- erate the party paying -from his liability for the residue of the debt. Notwithstanding such receipt, the parties to the contract will remain jointly bound, to the extent of what is unpaid, in the same manner as if no such specific payment had been made.'^ It has been held that the satisfaction of a judgment against one of several tort feasors bars an action against the others notwith- standing there is inserted in the satisfaction a stipulation that it was not intended to relinquish the judgment against those not " Northern Ins. Co. v. Potter, 63 ley v. Crooker, 47 Maine 370, 74 Am. Cal. 157; McAllester v. Sprague, 34 Dec. 491. Suit cannot be maintained Maine 296; Bradford v. Prescott, 85 against one of three joint promisors Maine 482, 27 Atl. 461 ; Yates v. Don- on allegations that the other two have aldson, 5 Md. 389, 61 Am. Dec. 283 ; paid their share of the amount due. Kenworthy v. Sawyer, 125 Mass. 28; Eller v. Lacy, 137 Ind. 436, 36 N. E. Berry v. Gillis, 17 N. H. 9. 43 Am. 1088. A receipt for money received Dec. 584; Rogers v. Hosack's Exrs., from one obligor does not operate 18 Wend. (N. Y.) 319; Honegger v. as a release when part payment is Wettstein, 47 N. Y. Super. Ct. 125, made and a partial receipt given revd. 94 N. Y. 252, 13 Abb. N. Cas. (Rogers v. Hemsted, Kirby (Conn.) (N. Y.) 393; Harbeck v. Pupin, 23 44; Clifton v. Foster (Tex. Civ. Abb. N. Cas. (N. Y.) 190; Goldbeck App.), 20 S. W. 1005), or where on V. Kensington Nat. Bank, 147 Pa. 267, part payment a receipt in full is 23 Atl. 565, aflfg. 10 Pa. County Ct. 97. given. Pettigrew Mach. Co. v. Har- '" Northern Ins. Co. v. Potter, 63 mon, 45 Ark. 290 ; Armstrong v. Hay- Cal. 157; McAllester v. Sprague, 34 ward, 6 Cal. 183; Moore v. Gate- Maine 296; Bradford v. Prescott, 85 wood, 5 Ky. L. (abstract) 111; Row- Maine 482, 27 Atl. 461. See also, ley v. Stoddard, 7 Johns. (N. Y.) Clark v. Mallory, 83 111. App. 488, 207; Buckinham v. Oliver, 3 E. D. affd. 185 111. 227, 56 N. E. 1099. Smith (N. Y.) 129. It may be oth- " Howard v. Yost, 6 Kans. App. erwise, however, where the receipt 374, 50 Pac. 1098; Ripley v. Crooker, is under seal. Hale v. Spaulding, 47 Maine 370, 74 Am. Dec. 491. 145 Mass. 482, 14 N. E. 534, 1 Am. ""Eldred v. Peterson, 80 Iowa 264, St. 475. 45 N. W. 755 (part payment) ; Rip- 757 JOINT AND SEVERAL CONTRACTS. § 1 485 expressly released.''^ But the rule that the release of a co- obligor will operate to discharge all the obligors has been held to have no application where the release is made by the consent of all the parties to the instrument." Thus, where a promisee releases a joint promisor at the request of the other joint promisors, the latter are not released.'"* § 1485. Covenant not to sue. — An agreement whereby the obligee releases one or more of the joint obligors and reserves his right against the others has been compared to a covenant not to sue,'° which is not regarded as a release and when given to one of several joint debtors is not construed as a release to the others. The remedy of the party to whom a covenant not to sue is given, if afterward molested on account of the debt, is by a special action founded upon such agreement. It cannot be pleaded in bar of an action against all or set up in defense.^^ A covenant not to sue one of two joint obligors will not discharge the other. '^^ § 1486. Effect of death of joint contractor at law. — It is the settled rule of the common law that the death of a joint promisor discharges his estate and leaves the survivor liable for the entire amount of the debt.^^ Upon the death of one of the makers of a "Ducey v. Patterson, Zl Colo. 216, Nat. Bank, 45 N. J. L. 360; Crane 86 Pac. 109, 9 L. R. A. (N. S.) 1066, v. Ailing, 15 N. J. L. 423; Couch v. 119 Am. St. 284. Mills, 21 Wend. (N. Y.) 424. "Marks v. Deposit Bank, 21 Ky. '« Cuvler v. Cuyler, 2 Johns. (N. L. 117, 50 S. W. 1103; Campbell v. Y.) 186; Miller v. Fenton, 11 Paige Booth, 8 Md. 107. See also. Wande- (N. Y.) 18; Butchers' &c. Bank v. lohr V. Logan, 21 Ky. L. 1773, 56 S. Brown, 1 N. Y. Leg. Obs. 149; Frink W. 412. V. Green, 5 Barb. (X. Y.) 455; Bank "Drake v. Reed, 4 Stew. & P. of Chenango v. Osgood, 4 Wend. (X. (Ala.) 192. An agreement with other Y.) 607; Phelps v. Johnson, 8 Johns, joint obligors to sue the defendant (N. Y.) 54; Lysaght v. Phillips, 5 alone in the first instance does not Duer (N. Y.) 106. A covenant not amount to a release of those not sued, to sue one of two tort feasors does and consequently does not release the not operate as a release of the other defendant. Carter v. Long, 125 Ala. from liability. Musolf v. Duluth 280. 28 So. 74. Edison Electric Co.. 108 Minn. 369, "Bradford v. Prescott, 85 Maine 122 N. W. 499, 24 L. R. A. (N. S.) 482. 27 Atl. 461. 451 and note. "Dean v. Newhall, 8 T. R. 168; "Godson v. Good. 6 Taunt. 587; Hutton V. Eyre, 6 Taunt. 289; Seaman v. Slater. 18 Fed. 485; Haw- Walmesley v. Cooper, 11 Ad. & El. kins v. Ball's Admr.. 18 B. Mon. 216; Webb v. Spicer, 13 Q. B. 894; (Ky.) 816, 68 Am. Dec. 755n ; Foster Thompson v. Lack. 3 M. G. & S. 540; v. Hooper, 2 Mass. 572; New Haven Bradford v. Prescott. 85 Maine 482, &c. Co. v. Havden, 119 Mass. 361; 27 Atl. 461; Bowne v. Mount Holly Bradley v. Burwell, 3 Denio (N. Y.) § 1487 CONTRACTS. 758 joint note his representatives are, at law, discharged, and the sur\4vor alone can be stied.^" But in case of a several contract, or of a contract joint and several, the executor or administrator of one of the parties deceased could be sued in a separate action, but not jointly with the survivors, because he was to be charged de bonis testatoris and they de bonis propriis/^ A joint contract is an entirety and if one of the joint obligees dies the whole inter- est vests in the survivor or survivors/^ § 1487. The rule in equity. — But while, at law, the death of a joint contractor terminates his liability, and the surviving joint contractors alone remain liable, the doctrine of equity is different. In equity, upon the death of one joint contractor, the liability does not rest solely upon the survivors, but may be enforced against the estate of the decedent if an inability to collect from the survivors is shown,^^ This equitable doctrine has been 61 ; Johnson v. Harvey, 84 N. Y. 363, 38 Am. Rep. 515; Potts v. Baldwin, 173 N. Y. 335, 66 N. E. 4, affg. 67 App. Div. (N. Y.) 434, 74 N. Y. S. 655 ; Burgovne v. Ohio Life Ins. & Trust Co., 5 Ohio St. 586; Hogan v. Sulhvan, 79 Vt. 36, 64 Atl. 234. In Lane v. Doty, 4 Barb. (N. Y.) 530, Judge Paige remarks : "In case of a joint contract, if one of the parties died, his executor or administrator is at law discharged from Habihty, and the survivor alone can be sued." "The general rule is, that upon the death of one of several joint con- tractors before complete performance of the contract, the survivors are bound by the obligations of the con- tract and entitled to its benefit." Bab- cock v. Farwell, 245 111. 14, 91 N. E. 683, 137 Am. St. 284, afifg. 146 111. App. 307. ^Towers v. Moor, 2 Vern. 98; Simpson v. Vaughan, 2 Atk. 31 ; Stevens v. Catlin, 44 111. App. 114; Richter v. Poppenhausen, 42 N. Y. 373', Boykin v. Watson's Admrs., 1 Const. Tr. (S. Car.) 157. *Mattison v. Childs, 5 Colo. 78; Seaman v. Slater, 18 Fed. 485; New Haven &c. Co. v. Hayden, 119 Mass. 361. **Brower v. Nellis, 6 Ind. App. 323, 33 N. E. 672 (holding that Indiana code has not changed the rule) ; In- diana B. & W. R. Co. V. Adamson, 114 Ind. 282, 15 N. E. 5 ; Semper v. Coates, 93 Minn. 76. 100 N. W. 662. In case of the death of one of two joint obligees who are partners the right to sue vests in the survivor. Mcintosh V. Zaring, 150 Ind. 301, 49 N. E. 164. " Simpson v. Vaughan, 2 Atk. 31 ; Ex parte Kendall, 17 Ves. 514; Voor- his v. Childs, 17 N. Y. 354; Pope v. Cole, 55 N. Y. 124, 14 Am. Rep. 198; Potts V. Bounce, 173 N. Y. 335, 66 N. E. 4; Hunt v. Rousmanier's Admrs., 8 Wheat. (U. S.) 174, 5 L. ed. 589. The theory upon which the estate of a joint debtor is held bound in equity, is that the obliga- tion is joint and several in equity, al- though joint in form and only joint in law. In cases where there is an obligation to pay the debt irrespective of the joint obligation, equity will conclusively presume that the parties intended that the contract should have been and was intended to be made joint and several, but was joint in form, by mistake. Hunt v. Rous- manier, 1 Pet. (U. S.) 1, 7 L. ed. 27; United States v. Price, 9 How. (U. S.) 83, 13 L. ed. 56. In Pick- ersgill v. Lahens, 15 Wall. (U. S.) 140, 21 L. ed. 119, the court says: 759 JOINT AND SEVERAL CONTRACTS. § 1488 incorporated into the statutes of several of the states. In some states, the statute provides that if one of several joint contractors dies, his estate may be charged, as if the contract had been joint and several, that is, by an action against the personal representa- tive alone."*^ And in a number of states there are statutes ex- pressly authorizing an action to be brought against the survivors and the personal representatives of the deceased joint con- tractor." § 1488. Where the deceased joint debtor is surety. — While the courts have been dis[)osed to treat a joint obligation as joint and several in equity under peculiar circumstances, this rule is not applied as against a surety.^" It is a rule of the common law that if a joint obligor dying be a surety, he is not liable for the "The court will not vary the lejgal effect of the instrument by making it several as well as joint, unless it can see either by independent testi- mony or from the nature of the transaction itself, that the parties concerned intended to create a sep- arate as well as a joint liability. If, through fraud, ignorance or mistake, the joint obligation docs not express the meaning of the parties, it will be reformed so as to conform to it. This has been done where there is a previous equity which gives the obligee the right to a several indem- nity from each of the obligors, as in the case of money loaned to both of them. There a court of equity will enforce the obligation against the representative of a deceased obligor, although tlie bond be joint and not several, on the ground that the lend- ing to both creates a moral obliga- tion in both to pay, and that the rea- sonable presumption is the parties in- tended their contract to be joint and several, but through fraud, ignorance, mistake or want of skill failed to ac- comiilish their object." "Curtis V. Mansfield, 11 Cush. (Mass.) 152; Samnson v. Shaw. 101 Mass. 145, 3 Am. Rep. 327; Thomp- son V. Johnson. 40 N. J. L. 220; Potts V. Dounce, 17?, N. Y. 335, 66 N. E. 4 (holding that while the stnt- ute changes the rule of hiw it does not affect the procedure). "•McClaskey v. Barr, 79 Fed. 408 (construing Ohio statutes). Some statutes provide that upon the death of a joint promisor a joint contract is to be treated as a joint and several contract. Philadelphia &c. Co. v. But- ler, 181 IMass. 468, 62, N. E. 949. Ran- ney, C. J., in Burgoyne v. Ohio Life Ins. &c. Co., 5 Ohio St. 586, referring to the Ohio statute, said : "This statute effected an entire abrogation of the common-law principle to which allusion has been made, and left the estate of the deceased joint debtor liable to every legal remedy, as fully as though the contract had been joint and several." See also, Weil V. Guerin, 42 Ohio St. 299. In Indiana, it has been held that the code of procedure, by abolishing the distinctions between legal and equita- ble actions, and introducing the equital)le doctrines concerning par- ties, and providing for the severance of the judgment, has, without any special provision on this subject, in- troduced this equitable rule into the law. Daily v. Robinson, 86 Ind. 382; Corbaley v. State, 81 Ind. 62; Eaton V. Burns, 31 Ind. 390; Braxton v. State. 25 Ind. 82. '"Rislev V. Brown, 67 N. Y. 160; Pickersgill v. Lahens, 15 Wall. (U. S.) 140, 21 L. ed. 119, and cases cited. § 1489 CONTRACTS. 760 debt irrespective of the joint obligation, and his estate is absolute- ly discharged, both at law and in equity, the survivor only being liable." And it makes no difference that the surety died after a joint judgment was rendered against him and the principal.®^ § 1489. When a surety's estate is held liable. — When, how- ever, the surety or guarantor in a joint obligation is directly bene- fited from the contract, his estate will not be discharged from lia- bility.*^ Accordingly, if the surety participates in the considera- tion for which the joint obligation was given as where it was the discharge of a prior obligation on which the surety was liable, such discharge would be sufficient to render the estate of the surety liable.'*'* Where in some states all causes of action founded on contract survive, the estate of a deceased surety on a joint, but not several, promissory note will not be discharged from lia- bility."^ § 1490. Contribution among joint debtors. — Where two or more persons are jointly liable to pay a claim, and one of them pays the whole of it or more than his relative portion, either voluntarily for the common benefit of the co-obligors, or by com- pulsion of legal process, he may recover from the others the pro- portion of the claim that each ought to pay.®^ The doctrine of *^ Towers v. Moor, 2 Vern. 98; 409; Susong v. Vaiden, 10 S. Car. Simpson v. Vaughan, 2 Atk. 31 ; 247, 30 Am. Rep. SOn ; United States Sumner v. Powell, 2 Mer. 30; Jones v. Price, 9 How. (U. S.) 83, 13 L. V. Beach, 2 DeG. M. & G. 886; Brad- ed. 56. ley V. Burwell, 3 Denio (N. Y.) 61; '* Richardson v. Draper, 87 N. Y. Baskin V. Andrews, 53 Hun (N. Y.) 32,7, affg. 23 Hun. (N. Y.) 188. 95, 6 N. Y. S. 441, 24 N. Y. St. 874, ""Boyd v. Bell, 69 Tex. 735, 7 S. affd. 130 N. Y. 313, 29 N. E. 310 W. 657. (Mr. Baskin having died before the "Brandt on Suretyship, § 140. See enactment of § 758, New York Code also, Hudelson v. Armstrong, 70 Ind. of Civil Procedure, the rule applica- 99. ble to this case is the one existing '^Bailey v. Bussing, 28 Conn. 455; at common law) ; Getty v. Binsse, 49 Roehl v. Porteous, 47 La. Ann. 1582, N. Y. 385, 10 Am. Rep. 379; Wood 18 So. 645; Bennison v. McConnell, v. Fisk. 63 N. Y. 245, 20 Am. Rep. 56 Nebr. 46, 76 N. W. 412; Booth v. 528; Davis v. Van Buren, 72 N. Y. Farmers' & Mechanics' Bank, 74 N. 587; Randall v. Sackett, 77 N. Y. Y. 228; Harbach's Admrs. v. Elder, 480. Compare with Royal Ins. Co. 18 Pa. St. Z2>. In order to recover v. Davies, 40 Iowa 469, 20 Am. Rep. he must prove payment for the com- 581. mon benefit of more than his first ^ Chard v. Hamilton, 56 Hun (N. share of the common obligation. Mor- Y.) 259, 9 N. Y. S. 575, 30 N. Y. St. rison v. Warner, 197 Pa. St. 59, 46 594, affd. 125 N. Y. 777, 27 N. E. Atl. 1030. A joint maker of a note 761 JOINT AND SEVERAL CONTRACTS. § 1490 contribution rests upon the broad principle of justice, that when one has discharged a debt or obhgation, which others were equally bound with him to discharge, and thus removed a common burden, the others who have received a benefit ought, in con- science, to refund to him a ratable proportion."^ The doctrine of contribution applies equally between original contractors, that is. those jointly bound on their own account — not copartners — ®* as it does between cosureties, that is, those jointly bound to answer for the debt or default of another."'' There must be a fixed and posi- tive obligation to pay."" If a party has voluntarily paid money on a void note or obligation, he cannot maintain an action for con- tribution,®^ nor when he pays a claim barred by the statute of lim- itations."^ Where one of two defendants in a joint judgment pays it, but not with the intention of discharging it, he may en- force the judgment against the codefendant for his legal pro- portion of the debt."® may purchase the obligation, and the obligation may be assigned to him, but the assignment to him will not pass title, and he cannot afterward revive it as a subsisting contract against a cosignor. He has only the right to compel the cosignor to con- tribute his ratable proportion of the amount which he has paid for the ob- ligation. Davis V. Stevens, 10 N. H. 186; Deavenport v. Green River De- posit Bank, 138 Kv. 352, 128 S. W. 88, 137 Am. St. 386, holding that a partner cannot purchase an interest in a firm note and then assign or hold the firm liable on the note. The only right remaining in him is the right to enforce contributions against his cosignor, and he can only recover on the basis of the amount actually paid by him. "Aspinwall v. Sacchi, 57 N. Y. 331. See also. Potts v. Dullin, 125 N. Car. 413, 34 S. E. 514. "Sands V. Durham, 98 Va. 592, 36 S. E. 472. "Sadler v. Nixon. 5 B. & Ad. 936; Chipman v. Alorrill. 20 Cal. 130; Snyder v. Kirtlev. 35 Mo. 423; Fin- lay V. Stewart, 56 Pa. St. 183. •^Pitt V. Purssord, 8 M. & W. 538; Esgen V. Smith, 113 Iowa 25, 84 N. W. 954; Frith v. Sprague, 14 Mass. 455. See also, Park v. Kribs, 24 Tex. Civ. App. 650, 60 S. W. 905. " Russell v. Failor, 1 Ohio St. 327, 59 Am. Dec. 631. »« Williamson v. Rees, 15 Ohio St. 572; Williamson v. Collins, 17 Ohio 354. "Wood V. Merritt. 2 Bosw. (N. Y.) 368; Parker v. Ellis. 2 Sand. (N. Y.) 223; Murray v. Bogert. 14 Johns. (N. Y.) 318, 7 .■Xm. Dec. 466. (Where a party has paid a judgment against him for an entire demand, to ^yhich a person not party to a suit was joint- ly liable, he cannot maintain action against such person for contribu- tion.). See also. Sand's Admr. v. Dur- ham. 98 Va. 392, 36 S. E. 472, 54 L. R. A. 614n. Contribution among joint principals. Henderson v. McDuflfee, 5 N. H. 38, 20 Am. Dec. 557; Peas- lee V. Breed. 10 N. H. 489. 34 Am. Dec. 178; Mills v. Hyde. 19 Vt. 59, 46 Am. Dec. 177 and notes. Suit by one joint promisor against another for excess paid by him beyond his share. Fletcher v. Grover. 11 N. H. 368. 35 Am. Dec. 497; Mills v. Hyde, 19 Vt. 59, 46 Am. Dec. 177. § I49I CONTRACTS. 762 § 1491. Contribution among sureties. — An action at law will lie by one surety who has paid more than his share to recover contribution from his cosurety.^ The law implies a contract be- ' Williams V. Riehl, 127 Cal. 365, 59 Pac. 762. 78 Am. St. 60; Burgett V. Strean, 85 111. App. 12\ Harts v. Latham. 84 111. App. 483; Morrison V. Poyntz, 7 Dana (Ky.) 307, i2 Am. Dec. 92; Crisfield v. Murdock, 127 N. Y. 315, 21 N. E. 1046; Rindge v. Baker, 57 N. Y. 209, 15 Am. Rep. 475; Roeder v. Niedermeier, 112 ^lich. 608, 71 N. W. 154; Montgom- ery V. Page, 29 Ore. 320, 44 Pac. 689. The right to contribution "has been considered as depending rather upon a principle of equity than upon con- tract ; but it may well be considered as resting alike on both for its foun- dation ; for although, generally, there is no express agreement entered into between joint sureties, yet from the uniform and almost universal under- standing which seems to pervade the whole community, that from the cir- cumstance alone of their agreeing to be. and becoming accordingly cosure- ties of the principal, they mutually be- come bound to each other to divide and equalize any loss that may arise therefrom to either or any of them, it may with great propriety be said that there is at least an implied con- tract." Agnew V. Bell, 4 Watts (Pa.) 31. Right of surety to enforce contribution from another. Cases collected in note to Gross v. Davis, 87 Tenn. 226, 11 S. W. 92, 10 Am. St. 635n; McBride v. Potter- Lovell Co., 169 Mass. 7, 47 N. E. 242, 61 Am. St. 265. As to the right to enforce contribution being equita- ble in its nature, see White v. Banks, 21 Ala. 705, 56 Am. Dec. 283; Wells V. Miller, 66 N. Y. 255; Gross v. Davis, 87 Tenn. 226, 11 S. W. 92, 10 Am. St. 635n. But see Hood v. Mor- gan, 47 W. Va. 817, 35 S. E. 911. One who is surety on a contractor's bond and who on failure of the contractor to complete the work, finishes it, as surety, is entitled to call upon his co- securities to share the expense thus incurred, but he must also permit the cosureties to share in the amount received by him under the contract. Labbe v. Bernard, 196 Mass. 551, 82 N. E. 688, 14 L. R. A. (N. S.) 457 and note. As between different sets of sureties who secure the same debt at different stages in a legal proceed- ing, it is held as a general principle that the second bond becomes the primary security and that the first is suspended until the second is ex- hausted. CulHford v. Walser, 158 N. Y. 65, 52 N. E. 648, 70 Am. St. 437; Bobo V. Vaiden, 20 S. Car. 271; Morris v. Morris, 9 Heisk. (Tenn.) 814. But when different sets of sure- ties secure one and the same obligation of a common principal, one set may compel contribu- tion from the other. Deering v. Earl of Winchelsea, 2 Bos. & P. 270, 1 Cox 318; Pendlebury v. Walker, 4 Y. & C. 424; Mayhew v. Crickett, 2 Swanst. 193, 1 Wils. Ch. 418; Whiting v. Burke, L. R. 10 Eq. 539; Powell v. Powell, 48 Cal. 234 (two bonds given by the administrator) ; Hutch- ison V. Roberts, 6 Del. Ch. 112, 11 Atl. 48; Snow v. Brown, 100 Ga. 117, 120, 28 S. E. 11; Stevens v. Tucker, 87 Ind. 109; Bosley v. Taylor, 5 Dana (Ky.) 157, 30 Am. Dec. 677; Cobb v. Haynes, 8 B. Mon. (Ky.) 137 (dif- ferent sets of sureties given by an administrator) ; Kellar v. Williams, 10 Bush. (Ky.) 216; Ketler v. Thomp- son, 13 Bush. (Ky.) 287; Loring v. Bacon, 3 Cush. (Mass.) 465; Forbes V. Harrington, 171 Mass. 386, 50 N. E. 641; Brooks v. Whitmore, 142 ^lass. 399, 8 N. E. 117; State v. Fields, 53 Mo. 474; Norton v. Coons, 3 Denio (N. Y.) 130, affd. 6 N. Y. ZZ; Wells v. Miller, 66 N. Y. 255; Armitage v. Pulver, Zl N. Y. 494; Pickens v. Miller, 83 N. Car. 543 (successive bonds given by an administrator) ; Jones v. Hays. 38 N. Car. 502, 44 Am. Dec. 78 ; Jones v. Blanton, 41 N. Car. 115, 51 Am. Dec. 415; Bell's Admr. v. Jasper, 2 Ired. Eq. (N. Car.) 597; Thomp- son V. Dekum, 32 Ore. 506, 52 Pac. 517 (successive bonds by an executor) ; Field V. Pelot, McMul. Eq. (S. Car.) 369; Odom v. Owen, 2 Baxt. (Tenn.) 446; Harrison v. Lane, 5 Leigh (Va.) 414, 27 Am. Dec. 607; Bentley v. Harris' Admr., 2 Grat. (Va.) 357. l^Z JOINT AND SEVERAL CONTRACTS. I49I tvveen the sureties, originating at the time they executed the obligation by which they became such, to contribute ratably toward discharging any liability which they incur in behalf of their principal, and in the case of death of either of them, the obligation devolves upon his legal representatives, the same as any other contract made by him, the breach of which occurs after his death.^ But he must first pay the obligations to which the cosurety is asked to contribute.^ Nor can a surety compel contri- butions when he voluntarily pays that which could not have been coerced from him.'* When a surety liable for contribution is in- solvent, contribution must be in proportion to the number of solvent sureties.^ One surety may be regarded as liable as principal to another surety when it appears positively or by fair inference that such surety intended to stand in the character of principal to subsequent signers, but the mere request by one to another to join him as cosurety does not give rise to this rela- Compare Harnsberger v. Yancey, ZZ Grat. (Va.) 527. It may be provided by the statute that the first surety shall be released upon the giving of a new obligation. Lingle v. Cook's Admrs., 32 Grat. (Va.) 262; People V. Lott, 27 111. 215. One set of sureties cannot enforce contributions from the other unless they secure the same debt. Hutchinson v. Roberts, 6 Del. Ch. 112, 11 Atl. 48; Rosen- baum V. Goodman, 78 Va. 121 ; Har- rison V. Lane, 5 Leigh (Va.) 414, 27 Am. Dec. 607: Langford's Exr. v. Perrin, 5 Leigh (Va.) 552. Thus it has been held that sureties on a replevin bond and a supersedeas bond (Kellar v. Wilhams. 10 Bush. (Ky.) 216) or on a replevin and injunc- tion bond (Brandenburg v. Flynn, 12 B. Mon. (Ky.) 397) are not co- sureties. ^ Bachelder v. Fiske, 17 Mass. 464 ; Wood V. Leland, 1 Mete. (Mass.) 387; Barry v. Ransom, 12 N. Y. 462; Bradlev v. Burwell, 3 Denio (N. Y.) 61 ; Johnson v. Harvev, 84 N. Y. 363, 38 Am. Rep. 515. Contra, Waters' Representatives v. Rilev's Admr., 2 Har. & G. (Md.) 305. The last- named case was expressly disap- proved in Johnson v. Harvey, 84 N. Y. 363, 38 Am. Rep. 515. 'Taylor v. Reynolds, 53 Cal. 686; Magruder v. Admire, 4 Mo. App. 133 ; Ladd V. Chamber of Commerce, TH Ore. 49. 60 Pac. 713, 61 Pac. 1127. 62 Pac. 208. See also, Chenault v. Bush, 84 Ky. 528, 8 Kv. L. 490, 2 S. W. 160 ; Nally V. Long. 56 Md. 567; Wavland v. Tucker, 4 Grat. (Va.) 267, 50 Am. Dec. 76. *Halsey v. Murray, 112 Ala. 185. 20 So. 575. But a surety may with- out compulsion discharge a judgment on an official bond and sue his co- surety for contribution. Mason v. Pierrson, 69 Wis. 585, 34 N. W. 921. ^ Hitchman v. Stewart, 3 Drew. 271; Burroughs v. Lott, 19 Cal. 125; Bosley v. Taylor, 5 Dana (Ky. ) 157, 30 Am. Dec. 677 ; Morrison v. Poyntz, 7 Dana (Kv.) 307. 32 Am. Dec. 92; Cobb v. Haynes, 8 B. Mon. (Kv.) 137; Young v. Lyons. 8 Gill (Md.) 162 ; Van Petten v. Richardson, 68 Mo. 379; Smith v. Mason. 44 Nebr. 610, 63 N. W. 41 ; Henderson v. Mc- Duffee, 5 N. H. 38. 20 Am. Dec. 557j Sloan V. Gibbes, 56 S. Car. 480, 35 S. E. 408, 76 Am. St. 559; Acers v. Curtis. 68 Tex. 423, 4 S. W. 551; Liddell V. Wiswell. 59 Vt. 365. 8 Atl. 680. Compare Whiting v. Burke. L. R. 10 Eq. 539, affd. L. R. 6 Ch. App. 342. The rule was otherwise at com- mon law. Browne v. Lee, 6 B. & C. 689, 9 Dowl. & R. 700; Moore v. § 1492 CONTRACTS. 764 tion.® The weight of authority is that successive accommoda- tion indorsers of negotiable instruments are not, in the absence of an agreement to that effect, cosureties, nor Hable to contribution as between each other/ § 1492. Actions on joint contracts. — An instrument can only be sued upon in the manner in which the parties have made themselves liable. If the words show that they meant to render themselves liable separately and not jointly, then they must be sued severally.^ The common-law rule is that all the obligors to a joint contract must be sued jointly as parties defendant unless they waive the right by not interposing a plea in abatement or provided neither has been discharged by operation of a bankrupt or insolvent law, or is not liable on the ground of infancy.* Where an obligation is made to several persons jointly all the obligees must join in an action to enforce it in the absence of any statute changing the rule." Thus all the parties jointly Baker, 34 Fed. 1; Van Petten v. Richardson, 68 Mo. 379; Stothoff v. Dunham's Exrs., 19 N. J. L. 181; Powell V. Mathis, 26 N. Car. 83, 40 Am. Dec. 427. "Chappel V. John, 45 Colo. 45, 99 Pac. 44, 132 Am. St. 134. 'lanson v. Paxton, 22 U. C. C. P. 505; Sherrod v. Rhodes, 5 Ala. 683; Armstrong v. Harshman, 61 Ind. 52, 28 Am. Rep. 665 ; McGurk v. Huggett, 56 Mich. 187, 22 N. W. 308; McCune V. Belt, 45 Mo. 174; Hillegas v. Stephenson, 75 Mo. 118, 42 Am. Rep. 393; Phillips v. Plato, 42 Hun (N. Y.) 189, 5 N. Y. St. 124; Daniel v. McRae, 9 N. Car. 590, 11 Am. Dec. 787; Atwater v. Farthing, 118 N. Car. 388, 24 S. E. lZ(i; McCarty v. Roots, 21 How. (U. S.) 432, 16 L. ed. 162; Stovall v. Border Grange Bank, 78 Va. 188. »Lee V. Nixon, 1 Ad. & El. 201; Eveleth v. Sawyer, 96 Maine 227, 52 Atl. 639; Board of Education v. Howard, 65 N. J. L. 75, 46 Atl. 574. 'Anderson v. Martindale, 1 East 497; Eccleston v. Clipsham, 1 Wm. Saund. 153, note 1 ; Hopkinson v. Lee, 6 Ad. & El. (N. S.) 964; Foley v. Addenbrooke, 4 Ad. & El. (N._ S.) 197; Brower v. Nellis, 6 Ind. App. 323, 33 N. E. 672; Post v. Shafer, 63 Mich. 85, 29 N. W. 519; Robertson V. Smith, 18 Johns. (N. Y.) 459, 9 Am. Dec. 227 ; Clements v. Miller, 13 N. Dak. 176, 100 N. W. 239. See also, McMaster v. City Nat. Bank, 23 Okla. 550, 101 Pac. 1103, 138 Am. St. 831. Where the contract is not several, nor joint and several, but joint merely, the action on it, if there be two obligors, and both of them living at the time of action brought, must necessarily be a joint action against both. Newman v. Graham, 3 Munf. (Va.) 187. Where a suit is brought agajnst three joint contract- ors, and the writ is served on two only, the two, by pleading the general issue, waive their right to object to the want of service on the third. Bartlett v. Robbins, 5 Mete. (Mass.) 184. Where one of two joint obligors is an infant, a recovery may be had against the other and a discharge as to the infant. Cole v. Manners, 76 Nebr. 454, 107 N. W. 111. " Mcintosh v. Zaring, 150 Ind. 301, 49 N. E. 164; Ohnsorg v. Turner, 2,2, Mo. App. 486; Clark v. Cable, 21 Mo. 223; Dewev v. Carey, 60 Mo. 224; Henry v. Mt. Pleasant, 70 Mo. 500. Nothing is better settled than the rule that, on an undertaking to 7^5 JOINT AND SEVERAL CONTRACTS. § 1 493 insured in a policy of insurance should join in an action to re- cover for a loss." All the payees in a note must join in an action thereon, unless it has been assigned to a less number of them." And all the joint obligees of a bond are necessary parties plaintiff in an action for its breach. They are joint proprietors, and one must have as much right as the other to say and determine when suit shall be brought and when it shall be compromised or settled without suit. Neither can sue alone for his proportion.^^ And there can be no recovery, except for damages in which all such obligees are interested." In assumpsit, the nonjoinder of a co- promisor as defendant can only be taken advantage of by plea in abatement; but the nonjoinder of a copromisee as plaintiff is ground for a nonsuit." If one joint contractor is sued alone, and does not plead in abatement the nonjoinder of the other, and judgment is rendered against the one sued, it merges the cause of action against him, and, unless otherwise provided by statute, inasmuch as the two are no longer jointly liable, prevents a sub- sequent recovery against the other joint contractor.^® § 1493. Judgments on joint contracts. — At common law% in a joint action, whether upon a joint or a joint and several two, both must join in an action on (Mass.) 79; Monaghan v. Agricul- it; otherwise there is no cause of tural Fire Ins. Co., 53 Mich. 238, 18 action. It is a part of the contract N. W. 797. that both shall sue. Rainey v. "Yell v. Snow, 24 Ark. 554. See Smizer, 28 Mo. 310. Compare with also. Slaughter v. Davenport, 151 Curry v. Kansas & C. P. R. Co., 58 Mo. 26, 51 S. W. 471. It is, how- Kans. 6, 48 Pac. 579, in which it is ever, otherwise where the note is said : "The compensation to be paid joint and several. Curtis v. Bowrie, for their joint act was to be paid to 2 McLean (U. S.) 374, Fed. Cas. No. them separately, and none of them 3408. had an interest in the compensation " Ryan v. Riddle, 78 Mo. 521 ; to be paid to the others. 'Where, in Sweigart v. Berk, 8 Serg. & R. (Pa.) a contract, two of the three contract- 308. ing parties agree to perform certain " Burns v. Follansbee, 20 111. App. services for the third, and each of 41. A joint owner of a cause of ac- the two is to receive therefor a sep- tion cannot introduce a new joint arate and distinct compensation, it owner into the contract by individual is not necessary that both of them assignment. Learned v. Ayres, 41 join in a suit for such compensa- Mich. 677, 3 N. \V. 178. tion, but either may maintain a sep- " Holyoke v. Loud, 69 Maine 59, arate action for the amount due 2 Greenleaf Ev., § 110. him.'" Quoting from Richey v. "Vanston v.' Boughton, 71 111. Branson, 33 Mo. App. 418. App. 627; Cowlev v. Patch 120 Mass. "Blanchard v. Dver. 21 Maine 111, 137: Purvis v. Butler 87 Mich 248 38 Am. Dec. 253; Tate v, Citizens' 49 N. W. 564, effect of nonjoinder.' Mutual Fire Ins. Co., 13 Gray § 1493 CONTRACTS. 766 contract, or upon several distinct contracts, the general rule was that there could be no judgment except for or against all of the defendants." Where the plaintiff treats the contract as joint by suing the makers jointly, the rule of recovery in actions upon joint contracts must govem.^^ This general rule was, however, subject to this exception: If one or more of the defendants pleaded infancy or coverture, or discharge in bankruptcy, these pleas being inconsistent with the averment in the declaration of an original joint contract, the plaintiff could enter a nolle prosequi as to such defendants, and recover judgment against the other defendants.^^ A judgment against one of several makers of a note, without process against the others, releases those who are not sued.-" In some of the states, in derogation of the common- law rule, a distinction is taken between joint contracts and such as are joint and several, the courts holding that, in an action upon the latter species of obligation, the plaintiff may enter a nolle prosequi against one of the defendants and proceed to judgment against the others." The statutes of most of the states have changed the common-law rule.^^ "Freeman on Judgments, § 43; or the like. Fuller v. Robb, Nesto V. Foss, 21 Fla. 143; Aten v. 26 111. 246. Enterprise Distilling Co. Brown, 14 111. App. 451; Brown v. v. Bradley, 17 111. App. 509. Excep- Tuttle, 27 111. App. 389; Enterprise tion where one of the joint promisors Distilling Co. v. Bradley, 17 111. App. resides without the jurisdiction. 509; Gibbons v. Surber, 4 Blackf. West v. Furbish, 67 Maine 17. (Ind) 155; Woodward v. Newhall, '"Mitchell v. Brewster, 28 111. 1 Pick. (Mass.) 500; Proctor v. 163; Bell v. State, 7 Blackf. (Ind.) Lewis, 50 Mich. 329, 15 N. W. 495; 23 (a judgment against one defend- Fisk V. Henarie, 14 Ore. 29, 13 Pac. ant on an action on contract against 193 (rule changed by the code) ; two erroneous unless there is a Murdy v. McCutcheon, 95 Pa. St. suggestion of "not found" as to the 435; Wootters v. Kauffmann, 67 other). McMaster v. City Nat. Texas 488, 3 S. W. 465; Minor Bank, 23 Okla. 550, 101 Pac. 1103, V. Mechanics' Bank, 1 Pet. (U. 138 Am. St. 831. S) 46 7 L. ed. 47; Midkifif ^Peyton v. Scott, 2 How. (Miss.) V. Lusher, 27 W. Va. 439 (the 870; 1 Black on Judgments, § 206. judgment being a joint judg- '^Carmien v. Whitaker, 36 Ind. ment, if set aside as to one of 509; Erwin v. Scotten, 40 Ind. 389; the defendants, it would have to be Moore v. Estes, 79 Ky. 282, 2 Ky. L. set aside as to both). 256; Huot v. Wise, 27 Minn. "Gould V. Sternburg, 69 111. 531. 68, 6 N. W. 425; Stedeker v. Bern- "Westheimer v. Craig, 76 Md. 399, ard, 102 N. Y. 327, 6 N. E. 791; Lee 25 Atl. 419; Cole v. Manners, 76 v. Basey, 85 Ind. 543; Sawin v. Ken- Nebr. 454, 107 N. W. 777. The ex- ny, 93 U. S. 289, 23 L. ed. 926. Black ception is where the defense is per- on Judgments, § 82. sonal, as infancy, or bankruptcy, 76/ JOINT AND SEVERAL CONTRACTS. § 1494 § 1494. Judgments on joint contracts further considered. — The doctrine at common law is that a judgment against one or more of several joint debtors absolutely discharges the others from all liability on the joint contract and bars a subsequent action against them.-^ Where all the defendants are brought into court, judgment rendered by agreement against one is tantamount to a dismissal as to the others." When the contract is joint, and not joint and several, the entire cause of action is merged in the judgment. The joint liability of the parties not sued with those against whom judgment is recovered being extinguished, their entire liability is gone. They cannot be sued separately, for tliey have incurred no separate obligation ; they cannot be sued jointly with others, because judgment has already been recovered against the latter, who would otherwise be subjected to two suits for the same cause." It has been held that a judgment recovered against =^ Martin v. Baugh, 1 Ind. App. 20. 27 N. E. 110; Cowley v. Patch, 120 Mass. 137; Candee v. Smith, 93 N, Y. 349; Sloo v. Lea, 18 Ohio 279; McMaster v. Citv Nat. Bank, 23 Okla. 550, 101 Pac. 1103, 138 Am. St. 831; Smith v. Black, 9 S. & R. (Pa.) 142, 11 Am. Dec. 686; Wooters v. Smith, 56 Texas 198. See generally article by G. C. H. Corliss on "Joint Debtors," 36 Albanv Law J. 245. "Henry v. Gibson. 55 Mo. 570. Verdict for a defendant who pleads payment in a suit against him and another on their joint note dis- charges both. Lenoir v. Moore, 61 Miss. 400. The promisee cannot dis- miss as to some of the joint obh- gors and have judgment against the others. Van Leyen v. Wreford, 81 Mich. 606, 45 N. W. 1116. ==King V. Hoare, 13 Mees. & W. 494; Ward v. Johnson, 13 Mass. 148; McMaster v. City Nat. Bank, 23 Okla. 550, 101 Pac. 1103, 138 Am. St. 831; Mason v. Eldred, 6 Wall. (U. S.) 231, 18 L. ed. 783, overruling Sheehy v. Mandeville, 6 Cranch. (U. S.) 254, 3 L. ed. 216; Lauer v. Bandow, 48 Wis. 638, 4 N. W. 774; Bowen v. Hastings. 47 Wis. 232, 2 N. W. 301. The decision in the case of Sheehv v. Mandeville, 6 Cranch. (U. S.) 254, 3 L. ed. 216, to the con- trary has been distinctly overruled in this country and in England. In Wann v. McNulty, 2 Gilm. (111.) 355, 43 Am. Dec. 58, the Supreme Court of Illinois commented upon the case and declined to follow it as authority. ' Ferrall v. Bradford, 2 Fla. 508, 50 Am. Dec. 293. "It is the right of persons jointly liable to pav a debt to insist on being sued to- gether. If then there are three per- sons so liable, and the creditor sues two of them, and those two make no objection, the creditor may re- cover judgment against those two. But should he afterward bring a farther action against the third, that third may justly contend that the three should be sued together." By recovering judgment against two in the same cause of action, the creditor has disabled himself from suing the third in the way in which the third has a right to be sued. Kendall v. Hamilton, L. R. 4 App. Cas. 504. The rule here laid down does not apply where the parties are severally as well as jointly bound, and the recovery of a judg- ment against one is no bar to an ac- tion against the other, until the judg- ment has been satisfied. Bermond- sev Vestry v. Ramsey, L. R. 6 C. P. 247. § 1495 CONTRACTS. 768 one of two partners Is a bar to a subsequent suit against both, although the new defendant was a dormant partner at the time of the contract, and was not discovered until after the judgment.^" The rule that judgment recovered against one or two joint con- tractors is a bar to an action against the other, applies equally when one of the joint contractors is a married woman, contract- ing in respect of her separate property." A judgment in favor of one or more joint debtors, however, who were served with process, is held no bar to a suit against some not served, particu- larly when those not served are nonresidents.^* And there are several cases which hold that where the joint debtors live in different jurisdictions, judgment against one of them in one juris- diction is no bar to a subsequent action against the other or both in another iurisdiction.^** § 1495. Actions on joint and several contracts. — Contracts which are joint and several may be regarded as furnishing two distinct remedies, one by a joint action against all the obligors and the other by a several action against each.^** The only differ- ence between a contract merely joint and one joint and several, as respects the right of the holder of the one or the other in pursu- ing his remedy, is, that on the first he is obliged to sue all the living promisors, whereas on the latter he has the right to elect between one and all of them. Having made his election, the contract becomes, so far as the rules of law applicable to his *' Smith V. Black, 9 Serg. & R. other maker where he is a nonresi- (Pa.) 142, 11 Am. Dec. 686. "No dent, and not made a party to the principle," said the court, "is better former suit. settled than that a judgment once '" Olcott v. Little, 9 N. H. 259, 32 rendered absorbs and merges the Am. Dec. 357; Dennett v. Chick, 2 whole cause of action, and that Greenl. (Maine) 191, 11 Am. Dec. neither the matter, nor the parties, 59; West v. Furbish, 67 Maine 17. can be severed, unless, indeed, where ^"People v. Harrison, 82 111. 84; the cause of action is joint and Cummings v. People, 50 111. 132; Me- several, which, certainly, actions lick v. Foster, 64 N. J. L. 394, 45 against partners are not." Atl. 911; Minor v. Mechanics' Bank, "Hoare v. Niblett, L. R. 1 Q. B. 1 Pet. (U. S.) 46, 7 L. ed. 47. In a 781. joint and several contract, the con- '*Larison v. Hager, 44 Fed. 49; tract is that of each contractor in- Merriman v. Barker, 121 Ind. 74, dividually, and that of all jointly, and 22 N. E. 992. A judgment against different remedies may be pursued one of the joint-makers of a note against each. Mason v. Eldred, 6 does not merge the cause of action Wall. (U. S.) 231, 18 L. ed. 783. and bar a separate action against the 769 JOINT AND SEVERAL CONTRACTS. 1496 remedy are concerned, purely several or purely joint ; and he is no longer at liberty to consider it other than what he has made it by his own determination.^^ If the plaintiff obtains a joint judg- ment, he cannot afterward sue the promisors or obligors sepa- rately, for the reason that the contract or bond is merged in the judgment, nor can he maintain a joint action after he has recov- ered judgment against one of the parties in a separate action, as the prior judgment is a waiver of his right to pursue a joint rem- edy.^^ The action, if brought under the common law, is to be against all the obligors jointly, or one of them singly, and not against any intermediate number, unless some obligor or obligors shall have died, in which case the death of him, or them, must be stated in the declaration.^* § 1496. Statutory modifications. — Joint contracts, or con- tracts which would be joint by the common law, are in many states declared to be construed as joint and several.** Thus it ^ Gibbons v. Surber, 4 Blackf . (Ind.) 155. On a joint and several bond, suit may be brought against one of the sureties without joining another with him (Poullain v. Brown, 80 Ga. 27, 5 S. E. 107), and a suit may be brought against a surety without joining the principal. People V. Butler, 74 Mich. 643, 72 N. W. 273. The law appears to be well settled, that if two or more are bound jointly and severally, the obligee may elect to sue them jointly or severally. United States v. Ar- cher's Exrs., 1 Wall. Jr. (U. S.) 173. The creditor is bound by his election in treating a joint and sev- eral contract either as joint or several. Winslow v. Herrick, 9 Mich. 380; Benson v. Paine, 9 Abb. Pr. (N. Y.) 28, 2 Hilt. 552, 17 How. Pr. (N. Y.) 407; Downey v. Farm- ers' &c. Bank, 13 Serg. & R. (Pa.) 288; United States v. Ames, 99 U. S. 35, 25 L. ed. 295. " Sessions v. Johnson, 95 U. S. 347. 24 L. ed. 596. "Leflwich v. Berkeley, 1 H. & M. (Va.) 61; Saunders v. Wood, 1 Munf. (Va.) 406: Newell v. Wood, 1 Munf. (Va.) 555; Amis v. Smith. 16 Pet. (U, S.) 303, 10 L. ed. 973. When an obligation is joint and 49 — CoNTR.\CTS, Vol. 2 several, it can not be treated as several as to some and joint as to the rest. Streatfield v. Halliday, 3 T. R. 779; Cabell v. Vaughan. 1 Wm. Saund. 291 ; President of Bangor Bank v. Treat, 6 Greenl. (Maine) 207, 19 Am. Dec. 210. All must be proceeded against jointly, or each severally, subject to certain excep- tions, as where one is an infant, or has been discharged in bankruptcy. Fay V. Jenks, 78 Mich. 312, 44 N. W. 380. In California under the code, in an action upon a joint and several contract, the plaintiff may, at his election, sue one or more, or all of the parties severally liable. Code Civ. Proc. § 383. Hurlbutt v. Spaulding Saw Co., 93 Cal. 55, 28 Pac. 795; People of California v. Love, 25 Cal. 520. In many states the law provides that when two or more persons are bound by contract, whether jointly only or jointly and severally or severally only, the ac- tion may, at the plaintiff's option, be brought against any or all of them. Stimson's American Statute Law, § 5015. "Cole V. Harvey, 142 Iowa 574, 120 N. W. 97; Rose v. Will- iams, 5 Kans. 483; Morgan v. Brach, 104 Minn. 247, 116 N. § 1496 CONTRACTS. 770 may be provided by statute that, where the parties unite in a promise and receive a benefit from the consideration, their prom- ise is presumed to be joint and several. ^^ The statutes of some jurisdictions provide that where all the parties who unite in a promise receive some benefit from the consideration, whether past or present, their promise is presumed to be joint and sev- eral.^® The rules of the common law, as it prevails in this coun- try and in England, except as the same have been modified by statute, are very strict in requiring sei-vice of process upon all the defendants in an action on a demand against joint obligors or partners. If any of the joint defendants were beyond seas, or could not be found, so that it was impossible to reach them by the process of the court, the proper mode thereon was to insti- tute proceedings of outlawry against them, and after a judgment of outlawry had been rendered, the plaintiff could then obtain a separate judgment against the defendants before the court.^^ Statutes have been passed in most of the states, and in all in which the code system of pleading prevails, which provide that when action is commenced against two or more defendants, jointly or severally liable on a contract, and the summons iS served on one or more of the defendants, but not on all, the plaintiff may proceed against the defendants served in the same manner as if they were the only defendants..^^ And a recovery W. 490; Knapp v. Hanley, 153 and several, have been held to re- Mo. App. 169, 132 S. W. 747; Mc- late only to proceedings, and not to Master v. City Nat. Bank, 23 Okla. change a joint contract to a several 550, 101 Pac. 1103, 138 Am. St. 831. obligation. White v. Connecticut Belleville Savings Bank v. Winslow, General Life Ins. Co., 34 App. (D. 30 Fed. 488 (under the Missouri C.) 460. statute providing that "all contracts ^ Bell v. Adams, 150 Cal. 772, 90 which, by common law, are joint Pac. 118 (contract by mine owners only, shall be construed to be joint to employ one to operate the mines, and several") ; Wiley v. Holmes, 28 agreeing to pay him the reasonable Mo. 286, 75 Am. Dec. 126. Sections value of his services whenever they of a statute which provided that one sold the mines). Civ. Code of Cal., action may be brought against any § 1659. or all of the parties to a joint or ^'' Gummer v. Mairs, 140 Cal. 535, several contract, that, for the pur- 74 Pac. 26; McKee v. Cunningham, poses of suit, every contract entered 2 Cal. App. 684, 84 Pac. 260. into by two or more persons shall be ^^ Edwards v. Carter, 1 Stra. 473; considered as joint and several, and Hall v. Lanning, 91 U. S. 160, 23 L. that on the death of one of the ed. 271. parties his personal representatives °^Bell v. Adams, 150 Cal. 772, 90 shall be bound to the same extent Pac. 118; Wood v. Watkinson, 17 and in the same manner as if the Conn. 500, 44 Am. Dec. 562n. contract were expressed to be joint 771 JOINT AND SEVERAL CONTRACTS. § 1 497 may be had against one defendant alone, in a proper case, not- withstanding another of the debtors has been released by the plaintiff upon a compromise.^" § 1497. Other statutory modifications. — In most of the states acts called "joint debtor acts" provide that judgment may be given "for or against one or more of several plaintiffs, and for or against one or more of several defendants," and usually con- tain a provision that "in an action against several defendants the court may, in its discretion, render judgment against one or more of them, leaving the action to proceed against the others, when- ever a several judgment is proper."^" Under these statutes, if a plaintiff commences an action against two or more defendants upon a joint obligation, he is no longer compelled to establish a joint cause of action against all, but a judgment may be taken against the party or parties shown to be liable, when the others are not liable.*^ § 1498. Effect of statute of limitation. — On the principle that a discharge of one joint debtor discharges all it has been '"Moss V. Jerome, 10 Bosw. (N. have been brought, or a several judg- Y.) 220. merit on the facts of the case would *" California Code of Civil Pro- be proper. Van Ness v. Corkins, 12 cedure (1899), §§ 578, 579; Iowa Wis. 186; Bonesteel v. Todd, 9 Code (1897), § Z77Z; New York Mich. 371, 80 Am. Dec. 90. Action Code of Civil Procedure (1896), was brought against two parties, one § 1932; Ohio General Code (1910), of whom was alone served with proc- §§ 11583-4; Wisconsin Code (1898), ess. He produced the record of a § 2883; Arkansas Code (1904), judgment recovered against himself § 6229-6230; Wagner on Missouri and his codefendant under the joint Statutes, p. 1019. § 32; 1 Black on debtor act of New York, process in Judgments. § 208. that state having been served upon "Richardson v. Jones, 58 Ind. his codefendant alone. The court 240. Various effects and conse- said: "We cannot, therefore, re- quences are attributed to such judg- gard the liabiHty as extinguished, ments in the states in which they And inasmuch as the new action are rendered. Longstreet & Sedg- must be based upon the original wick V. Rea & Co., 52 Ala. 195 ; Hub- claim, while, as in the case of f or- bell V. Woolf, 15 Ind. 204; Stafford eign judgment at common law, it V. Nutt, 51 Ind. 535; Eyre v. Cook, may be of no great importance 9 Iowa 185 ; Blodget v. Morris, 14 N. whether the action may be brought Y. 482; Lampkin v. Chisom, 10 Ohio in form upon the judgment or on the St. 450; Ah Lcp v. Gong Choy, 13 primary debt, it is certainly more in Ore. 205, 9 Pac. 483; Hall v. Lan- harmony with our practice to re- ning, 91 U. S. 160, 23 L. ed. 271. A sort to the form of action appropri- judgment may be entered against ate to the real demand in contro- any one or more of several defend- versy." Oakley v. Aspinwall. 4 N. ants wherever a several suit might Y. 513. Where the court of ap- § 1498 CONTRACTS. 772 held that where an obligation is barred by the statute of limitation as to one of several debtors it is a bar in favor of all the joint obligors.*^ Thus, where an action is barred against the principal it also bars an action against the surety." For instance, it has been held that a stockholder stands in the relation of a surety to the corporation and that such stockholder's liability ceases when the liability of the corporation is barred by the statute of limita- tion.'** Acts by which one of several joint or joint and several obligors acknowledges his liability on the joint obligation do not toll the statute of limitations as to such other joint obligors.*^ peals of New York considered the effect of a judgment recovered under the joint debtor act of that state upon the original demand, Bronson, J., said : "It is said that the original demand was merged in and extinguished by the judg- ment, and, consequently, that the plaintiff must sue upon the judgment, if he sues at all. That would un- doubtedly be so if both the defend- ants had been before the court in the original action. But the joint debtor act creates an anomaly in the law. And for the purpose of giving effect to the statute, and at the same time preserving the rights of all par- ties, the plaintiff must be allowed to sue on the original demand." ^'Ashby V, Bell's Admr., 80 Va, 811. ** Auchampaugh v. Schmidt, 70 Iowa 642, 27 N. W. 805, 59 Am. Rep. 459; Pacific Elevator Co. v. Whit- beck, (iZ Kans. 102, 64 Pac. 984, 88 Am. St. 229. On the other hand, the fact that the statute of limitations bars an action against the surety does not in itself create a bar to an action against the principal. Berkin V. Marsh, 18 Vt. 152, 44 Atl. 528, 56 Am. St. 565. ** Pacific Elevator Co. v. Whit- beck, 63 Kans. 102, 64 Pac. 984, 88 Am. St. 229. « Boynton v. Spafford, 162 111. 113, 44 N. E. 379, 33 Am. St. 274, affg. 61 111. App. 384 ; Tate v. Hawkins, 81 Ky. 577, 50 Am. Rep. 181 ; Meade v. Mc- Dowell, 5 Bin. (Pa.) 195; Phelps v. Stewart, 12 Vt. 256. CHAPTER XXXV. INTERPRETATION AND CONSTRUCTION. 5 1505. Meaning of terms — Purpose, § 1523. 1506. No room for construction when contract is unambigu- ous. 1524. 1507. Rules of construction gener- 1525. ally. 1508. Rules of construction general- ly — Intention of parties. 1526. 1509. Rules of construction gener- ally — Words understood in 1527. their ordinary meaning. 1510. Rules of construction gener- ally — Language used evi- dences the intent. 1528. 1511. Rules of construction gener- ally — Technical terms. 1512. Rules of construction — Com- mercial terms — Words used 1529. in legal sense. 1513. General rules — Technical 1530. words governed by the in- 1531. tent. 1514. Rules of construction gener- ally — W hole instruments looked to. 1515. Rules of construction gener- ally — Construing particular 1532. clauses. 1516. Rules of construction gener- ally — Noscitur a sociis. 1533. 1517. Rules of construction gener- ally — Surrounding circum- stances. 1534. 1518. Rule illustrated. 1519. Rule concerning surrounding circumstances further con- 1535. sidered. 1520. Subsidiary rules of construc- tion — Construction uphold- 1536. ing contract preferred. 1521. Subsidiary rules of construe- 1537. tion — A reasonable con- 1538. struction will be adopted. 1522. Subsidiary rules of construe- 1539. tion — Construing several in- 1540. struments together. 1541. Contracts contained in more than one instrument fur- ther illustrated. The rule further illustrated. Subsidiary rules of construc- tion — Instruments partly written and partly printed. Repugnant provisions must be irreconcilable. Must not be construed to de- feat intention of parties — Construction of words and figures. Subsidiary rules of construc- tion — Doubtful words con- strued against the party us- ing them. Construction of grants by government. Application of the rule. Subsidiary rules of construc- tion — Language to be un- derstood in sense in which promisor knew or had rea- son to believe the other par- ty understood it. Subsidiary rules of construc- tion — General and particular words — Ejusdcm generis. Subsidiary rules of construc- tion — Expressio unius est exclusio alterius. Subsidiary rules of construc- tion — P unctuation and grammar. Subsidiary rules of construc- tion — Rejecting and inter- polating words. Rejecting and interpolating words — Limits of rule. Practical construction. Contemporaneous and subse- quent acts considered. The rule illustrated. Additional illustrations. Must be the act of both par- ties. § 1505 CONTRACTS. 774 § 1542. Contract must be ambiguous. § 1554. When time is not of the es- 1543. Entire and Severable Con- sence of a contract. tracts. 1555. Time not generally regarded 1544. Contract consisting of several in equity as of the essence distinct items. of the contract. 1545. Illustrations of Entire Con- 1556. Illustrations. tracts. 1557. Where the property is subject 1546. Example of Severable Con- to fluctuations in value. tracts. 1558. Stipulations in regard to real 1547. Dependent and independent estate. Promises. 1559. Rules as to penalties and 1548. Alternative stipulations and liquidated damages. options. 1560. Illustrations. 1549. Rules as to time — Perform- 1561. Stipulations in building con- ance. tracts. 1550. Computation of time from a 1562. P'urther illustrations of pen- particular day or a particu- alties. lar event. 1563. The intention of the parties 1551. Time — Time at law^ generally and nature of the agreement of the essence of a con- — Controlling guides. tract. 1564. Province of courts and jury 1552. Time — Relative to the sale of in construing contract. goods. 1565. Province of court and jury 1553. Conditions precedent. further considered. 1566. Oral contracts. § 1505. Meaning of terms — Purpose. — The terms "inter- pretation of a contract" and "construction of a contract" are asu- ally used interchangeably. They are not, however, exact syno- nyms. The word "interpretation" is narrower in its application. Properly speaking interpretation consists in ascertaining the meaning of the words used.^ When the meaning of the words has been ascertained and the contract still remains ambiguous, the language used will be considered in connection with the condi- tions and circumstances under which the parties were contract- ing, and the relation which they sustain to each other, and an attempt be thus made to arrive at the intention of the parties.* The foregoing indicates the difference between the two. "Inter- pretation" is concerned primarily with the meaning of the words actually used. "Construction" takes into consideration the whole transaction, of which the words used are but a part. The purpose of all interpretations is to ascertain and give effect to the actual contract entered into by the parties, — the contract which they intended to make and upon which their minds met.^ *See Black's L. Diet., under title 20 Idaho 97, 117 Pac. 122, 36 L. R. Construction. A. (N. S.) 313. ^See Pilack's L. Diet, under title ^Pressed Steel Car Co. v. Eastern Construction; Schurger v. Moorman, R. Co., 121 Fed. 609, 57 C. C. A. 77S INTERPRETATION AND CONSTRUCTION. 1^06 § 1506. No room for construction when contract is unam- biguous. — The term "construction" implies an uncertainty as to the meaning of the contract for when the meaning is clear and unambiguous there is nothing to be construed.* Moreover, when the language employed is unequivocal although the parties may have failed to express their real intention, the legal effect of the instrument will usually be enforced as written.'' Where no 635 ; A. Leschen & Son Rope Co. v. Mayflower Gold Min. &c. Co., 173 Fed. 855. 97 C C. A. 465, 35 L. R. A. (N. S.) In; American Bonding Co. V. Pueblo Investment Co., 150 Fed. 17, 80 C. C. A. 97, 9 L. R. A. (N. S.) 557n, 10 Am. & Eng. Ann. Cas. 357. The necessity for a rule of interpre- tation and construction "arises from the imperfection of language and from the imperfect use of it in those in- stances in which language wholly un- equivocal and explicit might be se- lected. 'If,' says Vattel. 'the ideas of men were always distinct and per- fectly determined; if, in order to make them known, they had only proper terms, and none but such ex- pressions as were clear, precise, and susceptible of only one sense, there would never be any difficulty in dis- covering their meaning in the words by which they would express it. Nothing more would be necessary than to understand the language.' Even in this state of things, however, it is obvious to those who have ex- perience in the affairs of life that rules of construction would be neces- sary. In contracts where more than one definite object is stipulated for, (at least wherever a general object is intended to be secured by a stipula- tion concerning a variety of par- ticulars), it is hardly possible to fore- see every case that will arise even under the course of events that is anticipated. Much less can the state of affairs be foreseen which new conjunctures and unexpected events will certainly produce. Yet it would be injurious to both parties, if the exact literal stipulations of a com- plicated contract were to be per- formed, and nothing more; and therefore it is necessary to resort to construction, that is, to inductions drawn from the general views of the parties, ("as expressed in their con- tract) with reference to the existing circumstances; in other words, to collect from the object, drift, and spirit of their agreement what their leading and paramount intentions were and to carry those intentions into effect." Metcalf on Contracts, 272. * Sargeant v. Leach, 47 Ind. App. 318, 94 N. E. 579; Williamson v. Mc- Clure, Zl Pa. St. 402 ; Griffin v. Fair- mount Coal Co.. 59 W. Va. 480, 53 S. E. 24. 2 L. R. A. (N. S.) 1115. Montana Revised Code, § 5025 pro- vides : " 'A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.' However, this section simply means that the intention of the parties shall be ascertained in the first instance by reference to the lan- guage employed by them. Where the words used are clear, certain, and unambiguous, interpretation may not be resorted to. The language em- ployed must be given its ordinary meaning." Quirk v. Rich, 40 Mont. 552, 107 Pac. 821. "There is a dis- tinction between an inaccuracy and an ambiguity of language. Language may be inaccurate without being am- biguous, and it may be ambiguous though perfectly accurate. * * * The language may be inaccurate, but if the court can determine the mean- ing of this inaccurate language with- out any other guide than a knowl- edge of the simple facts upon which, from the nature of language in gen- eral, its meaning depends, the lan- guage, though inaccurate, could not be ambiguous." Donovan v. Boeck, 217 Mo. 70, 116 S. W. 543. quoting from Riggs v. Mvers, 20 Mo. 239. 'Clark V. Mallory, 185 111. 227, 56 § 1507 CONTRACTS. 776 uncertainty exists there is no room for construction," When the meaning is plain another meaning cannot be added by implica- tion or intendment.' , § 1507. Rules of construction generally. — The primary ob- ject of all rules of interpretation and construction is to arrive at and give effect to the mutual intention of the parties as ex- pressed in the contract when not forbidden by law.® It must be N. E. 1099, affg. 83 111. App. 488. one to read the contract in the light "Parties cannot use terms with a of the subject-matter and the effects fixed and certain meaning and then and consequences, obviously evidence disclaim such meaning at least not of facts and circumstances, not mere without reformation of the contract." conversations, leading up to and con- Zohrlaut v. Mengelberg (Wis.), 124 current with the making of the con- N W. 247. See also, Jocobs v. Par- tract, is often necessary." odi. 50 Fla. 541. 39 So. 833; Rosen "Clark v. Mallory, 185 111. 227, 56 v. Rosen, 159 Mich. 72, 123 N. W. N. E. 1099, affg. 83 111. App. 488; 559. 134 Am. St. 712. Compare the Walker v. Tucker, 70 111. 527; Clark foregoing with Klueter v. Joseph v. Mallory, 185 111. App. 227, 56 N. E. Schlitz, 143 Wis. 347, 128 N. W. 43, 1099, affg. 83 111. App. 488; Gibbs v. 32 L. R. A. (N. S.) 383n, in which People's Nat. Bank, 198 111. 307, 64 it is said: "It is said that, when the N. E. 1060; Louisville & N. R. Co. v. language of a contract is plain, it is Louisville Southern R. Co., 100 Ky. not open to construction. That is 690, 19 Ky. L. 11, 39 S. W. 42; true in the general sense, but, un- Menage v. Rosenthal, 175 Mass. 358, less viewed broadly, it does not con- 56 N. E. 579; Johnson v. Dalrymple, vev accurately the full scope of the 140 Mo. App. 232, 123 S. W. 1020; field where rules for construction American Hardwood Lumber Co. v. are applicable. The words of a con- Dent, 151 Mo. App. 614, 132 S. W. tract, in themselves, may be plain, yet 320; Dwight v. Germania Life Ins. when applied to the situation with Co., 103 N. Y. 341, 8 N. E. 654, 57 which it deals, not plain, the literal Am. Rep. 729; Schoonmaker v. Hoyt, sense leading to such unreasonable- 148 N. Y. 425, 42 N. E. 1059; Hart v. ness as to suggest that the parties Hart, 117 Wis. 639, 94 N. W. 890. probably did not so intend. In so See further, post, § 1509. applying the contract oral testimony ^ Diederich v. Rose, 228 111. 610, 81 is generally necessary and permissible N. E. 1140. to the end that the full scope of the * Hubert v. Sistrunk (Ala.), 53 So. situation dealt with may be observed. 819; Donahue v. McNulty, 24 Cal. As to when the language of a con- 411, 85 Am. Dec. 78; Brown v. Slater, tract, in its literal sense, is to be 16 Conn. 192, 41 Am. Dec. 136; Bar- taken as expressing the intention of tholomew v. Muzzy, 61 Conn. 387, the parties, is correctly indicated by 23 Atl. 604, 29 Am. St. 206; Walters Vattel's rule which has been often v. Morrow, 1 Houst. (Del.) 527; E. cited by this and other courts : 'When S. Adkins v. Campbell, 6 Pennew. the meaning is evident, and leads to (Del.) 96, 64 Atl. 628; A. Leschen no absurd conclusions, there can be & Sons Rope Co. v. Mayflower Gold no reason for refusing to admit the Min. &c. Co., 173 Fed. 855, 97 C. C. meaning which the words naturally A. 465, 35 L. R. A. (N. S.) In; present.' Note the language 'when American Bonding Co. v. Pueblo the meaning is evident.' The mean- Investment Co., 150 Fed. 17, 80 C. ing is not evident when, if looking C A. 97, 9 L. R. A. (N. S.) 557n, at the subject-matter, it is so un- 10 Am. & Eng. Ann. Cas. 357; Turner reasonable as to appear unlikely that v. Tremont, 159 Fed. 221 ; Walker v. the parties so intended. To enable Douglas, 70 111. 445; Field v. Leiter, 777 INTERPRETATION AND CONSTRUCTION. § 1507 borne in mind that all applicable laws in existence when an agreement is made necessarily enter into and form a part of it as fully as if they were expressly referred to or incorporated in its terms." ' Moreover, the plain legal import of an instrumenT 118 111. 17, 6 N. E. 877; Clark v. University of Illinois, 103 111. App. 261; Farnam v. Thompkins, 171 111. 519, 49 N. E. 568; Pratt v. Prouty, 104 Iowa 419. 12, N. W. 1035, 65 Am. St. 472; Garden City v. Heller, 61 Kans. 767, 60 Pac. 1060; Hunter's Admrs. v. Miller's Exrs., 6 B. Mon. (Ky.) 612; McConncU v. New Or- leans, 35 La. Ann. 273 ; Lower Terre- bonne Refining Mfg. Co. v. Barrow, 126 La. 263, 52 So. 487; Hawes v. Smith, 12 Maine 429; Bell v. Jordan, 102 Maine 67, 65 Atl. 759; Hall v. Farmers' Nat. Bank, 53 Md. 120; At- wood V. Cobb, 16 Pick. (Mass.) 227, 26 Am. Dec. 657; Worcester Gas Light Co. V. Worcester. 110 Mass. 353 ; Mathews v. Phelps, 61 Mich. Zll , 28 N. W. 108, 1 Am. St. 581 ; Price's Heirs v. Evans, 26 Mo. 30; St. Louis V. St. Louis & S. F. R. Co., 228 Mo. 712, 129 S. W. 691; Walsh v. Sov- ereign Camp, Woodmen of the World (Mo. App.). 127 S. W. 645; Jackson V. Phillips. 57 Nebr. 189, 11 N. W. 683; Melick v. Pidcock, 44 N. J. Eq. 525, 15 Atl. 3, 6 Am. St. 901 ; United Bo.xboard & Paper Co. v. McEwan, Bros. Co. (N. J. Ch.), 76 Atl. 550; Den V. Camp, 19 N. J. L. 148; French v. Carhart, 1 N. Y. 96, 4 How. Pr. 181 ; Dwight v. Germania Life Ins. Co., 103 N. Y. 341, 8 N. E. 654, 57 Am. Rep. 729; Smith v. Kerr, 108 N. Y. 31, 15 N. E. 70, 2 Am. St. 362; Gail v. Gail, 127 App. Div. (N. Y.) 892. 112 N. Y. S. 96; Atlantic &c. R. Co. v. Atlantic &c. Co.. 147 N. Car. 368, 61 S. E. 185, 23 L. R. A. (N. S.) 223n, 125 Am. St. 550; Edwards v. Bowden, 99 N. Car. 80, 5 S. E. 283, 6 Am. St. 487; Young V. Metcalf Land Co., 18 N. Dak. 441, 122 N. W. 1101; Wisner V. Field (N. Dak.). 106 N. W. 38; Wolfe v. Scarborough. 2 Ohio St. 361; Williamson v. McClure. 11 Pa. St. 402; Bradlev v. Washington Steam Packet Co'. 13 Pet. (U. S.) 89, 10 L. ed. 72; Chesapeake & Ohio Canal Co. v. Hill, 15 Wall. (U. S.) 94, 21 L. ed. 64; ^^lauran v. Bullus, 16 Pet. (U. S.) 528, 10 L. ed. 1056 (construction of a letter of guar- anty) ; The Binghamton Bridge, 3 Wall. (U. S.) 51, 18 L. ed. 137; Bock v. Perkins, 139 U. S. 628, 35 L. ed. 314, 11 Sup. Ct. 677; Flagg v. Fames, 40 Vt. 16, 94 Am. Dec. 363; Noyes V. Nichols, 28 Vt. 159; Griffin v. Fair- mont Coal Co., 59 W. Va. 480, 53 S. E. 24, 2 L. R. A. (N. S.) 1115; Weiseger v. Wheeler, 14 Wis. 101. See also, Pittsburg Bridge Co. v. St. Louis Transit Co., 135 Mo. App. 579, 116 S. W. 467, transferred from the Supreme Court (1907), 205 Mo. 176, 103 S. W. 546. The intention of the parties is to be derived from the terms and subject-matter and not from the statements of one party as to what may have been his under- standing when it does not appear that the other party knew or had reason to believe that he so understood it. Meinhardt v. Mode, 22 Fla. 279. "Armour Packing Co. v. United States, 153 Fed. 1, 82 C. C. A. 135, 14 L. R. A. (N. S.) 400n; Seaboard Air Line R. (3o. v. Railroad Commis- sion of Alabama, 155 Fed. 792; Mc- Caskill V. Union Naval Stores Co., 59 Fla. 571, 52 So. 961; State v. Tampa Waterworks Co., 56 Fla. 858, 47 So. 358, 19 L. R. A. (N. S.) 183n; Lynch v. Baltimore & O. S. W. R, Co., 240 111. 567, 88 N. E. 1034; Met- ropolitan Life Ins. Co. v. Johnson (Ind. App.), 94 N. E. 785; Long v. Straus, 107 Ind. 94, 6 N. E. 123, 7 N. E. 763, 57 Am. Rep. 87. The law applicable to a contract is to be con- sidered in construing the same. Strauss v. Yeager (Ind. App.), 93 N. E. 877; J. B. Watkins & Co. v. Kobiela. 84 Nebr. 422. 121 N. W. 448; Hutchinson v. Ward, 114 App. Diy. (N. Y.) 156, 99 N. Y. S. 708; Leiendecker v. /Etna Indemnity Co., 52 Wash. 609, 101 Pac. 219. "All contracts are to be construed in the light of the rules and principles of law applicable to the subject-matter of the transaction, and the rights and ob- ligations of the parties are controlled § 150S CONTRACTS. 778 is a part thereof as well as the express provisions which it con- tains.^" The connotations of a contract are enforcible as well as its express tenns." Rules for the construction of contracts in ascertaining the intention of the parties are, in general, the same whether applied to one kind of contract or another, although different kinds of contracts may be applied or operate differently after their construction has been ascertained.^^ These rules are usually the same in equity as in law.^^ It must be constantly borne in mind, however, that rules of construction are not strict rules of law. They are but aids in ascertaining the intention of the parties.^* § 1508. Rules of construction generally — Intention of par- ties. — When a contract is ambiguous and open to construc- tion the true end to be reached is to ascertain what the parties intended, and when that intention is found, it prevails over verbal inaccuracies, inapt expressions, and the dry words of the stipu- lations. The court should as far as possible place itself in the position of the parties when their minds met upon the terms of by those rules, except where the Co., 5 Ga. App. 142, 62 S. E. 72. "The written contract discloses an inten- express mention of what would be tion to depart therefrom." Haugen otherwise fairly implied cannot V. Sundseth, 106 Minn. 129, 118 N. change the nature of the contract or W. 666. See also, Scripps v. Sweeney, the rights of the parties." Friedman 160 Mich. 148, 125 N. W. 72 (holding v. Hampden County, 204 Mass. 494, contract in question againt public 90 N. E. 851. See also, Blake v. policy); Snider v. Yarbrough, 43 Scott (Ark.), 121 S. W. 1054; Col- Mont. 203. 115 Pac. 411; S. H. Hawes gate v. James T. White & Co., 180 & Co. V. Trigg Co., 110 Va. 165, 65 Fed. 882; New York v. Paoli, 202 S. E. 538; Manvell v. Weaver, 53 N. Y. 18, 94 N. E. 1077; Patterson Wash. 408, 102 Pac. 36; Wright v. v. Guardian Trust Co., 144 App. Div. Computing Scale Co., 47 Wash. 107, (N. Y.) 863, 129 N. Y. S. 807; 91 Pac. 571. Compare with Cronin Creamer v Metropolitan Securities V. Pace, 82 Conn. 252, 1Z Atl. 137. Co., 120 App. Div. (N. Y.) 422, 105 It is not meant by this, however, that N. Y. S. 28; El Paso & S. W. R. the operation or application of some Co. v. Eichel (Tex. Civ. App.), 130 particular law or rule cannot be ex- S. W. 922. As to the meaning of the eluded, in a proper case, by the terms phrase "necessary implication," see of the contract. Tuttle v. Woolworth, 74 N. J. Eq. "Kessler v. Clayes, 147 Mo. App. 310, 11 Atl. 684. See ante, ch. 31. 88, 125 S. W. 799. "If the contract "Daly v. Old, 35 Utah 74. 99 Pac. by its conditions and legal effect in- 460, 28 L. R. A. (N. S.) 463n. vests a party with a right, it is the "Jersey City v. Flynn, 74 N. J. Ch. same as if the right had been ex- 104, 70 Atl. 497. pressly stipulated in the instrument." "Hoffman v. Eastern Wisconsin Noon V. Mironski, 58 Wash. 453, 108 &c. Co., 134 Wis. 603, 115 N. W. 383. Pac. 1069. / See also, Scotch Mfg. Co. v. Carr, 53 " Brown v. Rome Mach. & Foundry Fla. 480, 43 So. 427. 779 INTERPRETATION AND CONSTRUCTION. § 1508 the agreement, and then from a consideration of the writing itself, its purpose, and the circumstances surrounding the transaction endeavor to ascertain what they intended and what they agreed to do, i. e., upon what sense or meaning of the terms used, their minds actually met." The purpose of all rules for the con- struction of contracts is to aid in ascertaining the intention of the parties from a construction of the whole agreement.'" Thus, in the construction of an insurance policy it is the duty of the court to adopt that construction of the policy which in its judgment will best correspond with the intention of the parties." To ascer- " Pressed Steel Car Co. v. Eastern R. Co., 121 Fed. 609, 57 C C. A. 635 ; United States Fidelity &c. Co. v. Board of Comrs., 145 Fed. 144, 76 C. C. A. 114; Uinta Tunnel Min. & Transp. Co. v. Ajax Gold Min. Co., 141 Fed. 563. 11 C. C A. 35; United States Fidelity & Guaranty Co. v. Board of Comrs. of Woodson County Kan., 145 Fed. 144, 76 C. C. A. 114; Brown v. Beckwith, 60 Fla. 310, 53 So. 542 ; L'Engle v. Overstreet. 61 Fla. 653, 55 So. 381 ; Atwood v. Cobb, 1,6 Pick. (Mass.) 227, 26 Am. Dec. ^57; Newbern Banking & Trust Co. /v. Duffv, 153 N. Car. 62. 68 S. E. ■ 915. "The great object of construc- tion is to collect from the terms or language of the instrument, the man- ner and extent to which the parties intended to be bound. To facilitate •this, the law has devised certain rules, which are not merely conven- tional, but are the canons by which all writings are to be construed, and the meaning and intention of men to be ascertained. These rules are to be applied wMth consistency and uni- formity. They constitute a part of the common law and the application of them, in the interpretation and construction of dispositive writings, is not discretionary with courts of justice, but an imperative duty. If it were otherwise, no lawyer would be safe in advising upon the con- struction of a written instrument, nor any partv in taking under it/ South Penn Oil Co. v. Knox, 68 W. Va. 362, 69 S. E. 1020, quoting from Johnson County v. Wood, 84 Mo. 489. "The grammatical and ordinary sense of the words is to be adhered to * * * 'unless that would lead to some absurdity or some repugnance or inconsistency with the rest of the instrument, in which case the gram- matical and ordinary sense of the words may be modified, so as to avoid that absurdity and incon- sistency, but no further.'" Thomp^- son V. Trenton Water Power Co. (X. J. Eq.), 12, Atl. 410. quoting from Grev V. Pearson, 6 H. L. Cas. 61. "Farrell v. Garfield Mining. Mill- ing & Smelting Co., 49 Colo. 159. Ill Pac. 839; Smith v. Woodward. 51 Colo. 311, 117 Pac. 140; Mizell Live Stock Co. V. McCaskill Co., 59 Fla. 322, 51 So. 547; Western Railway E. Co. V. Missouri Malleable I. Co., 91 111. App. 28; Securitv Trust Co. v. Joesting, 96 Minn. 1663, 104 N. W. 830; Kirkman v. Hodgin, 151 N. Car. 588, 66 S. E. 616; El Paso & S. W. R. Co. V. Eichel & Weikel (Tex. Civ. App.). 130 S. W. 922; Caine v. Hag- cnbarth, Zl Utah 69, 106 Pac. 945; Gray v. Clark, 11 Vt. 583. "The in- tent is to be determined from the whole contract, and every clause, and even every word therein, when possi- ble, should have assigned to it some meaning." Warrum v. White, 171 Ind. 574, 86 N. E. 959. It is the mutual intention of both parties, not the intention of one party, that con- trols. Harten v. Loffler. 29 App. D. C. 490. " Jennings v. Brotherhood .A.cci- dent Co., 44 Colo. 68, 96 Pac. 982, 18 L. R. A. (N. S.) 109n, 130 Am. St. 109; Johnson v. Marvland Casualty Co., n N. H. 259, 60' Atl. 1009, 111 Am. St. 609. § 1509 CONTRACTS. 780 tain the intention, regard must be had to the nature of the instru- ment itself, the circumstances under which it was executed and the object which the parties had in view." The words employed, if capable of more than one meaning, are to be given that meaning which it is apparent the parties intended them to have.^° § 1509. Rules of construction generally — Words under- stood in their ordinary meaning. — The words used in a con- tract are to be interpreted in accordance with their usual and ordinary meaning unless it appears from the whole contract that both parties intended that they should be understood in a different sense.-* It has been held that the word "disability" as used in "McConnell v. Murphy, L. R. 5 P. C. 203; Fearnley v. Fearnley, 44 Colo. 417, 98 Pac. 819; Chicago Flour Co. V. Chicago, 243 111. 268, 90 N. E. 674; Pierpont v. Lanphere, 104 III. App. 232; Ramage v. Wilson, 451 Ind. App. 599, 88 N. E. 862; Merica v. Burgett, 36 Ind. App. 453, 75 N. E. 1083; yEtna Indemnity Co. v. Waters, 110 Md. 673, 11 Atl. 712; Laing v. Holmes, 93 Mo. App. 231 ; Wilson v. Wilson, 115 Mo. App. 641, 92 S. W. 145; Mathews v. Modern Woodmen of America, 236 Mo. 326, 139 S. W. 151; Grothe v. Lane, 11 Nebr. 605, 110 N. W. 305; Rhyne v. Rhyne, 151 N. Car. 400, 66 S. E. 348; Common- wealth V. Sanderson, 40 Pa. Super. Ct. 416; Armstrong v. National Life Ins. Co. (Tex. Civ. App.), 112 S. W. 327; Portsmouth Cotton Oil Re- fining Corp. V. Oliver Refining Co., 111 Va. 745, 69 S. E. 958; Hunter V. Wenatchee Land Co., 50 Wash. 438, 97 Pac. 494; Hall Min. Co. v. Consolidated Fuel Co., 69 W. Va. 47, 70 S. E. 857. "Aside from some technical rules adopted for the gen- eral good, there is, ordinarily, no hard and fast rule to govern the in- terpretation of an intention. In con- versation it is shown by look, a ges- ture, an emphasis, or tone of voice. In writing, a mere word, phrase, or sentence will put a meaning on a con- tract which may control implications of law, and which will give it a direc- tion and application contrary to what it otherwise would have received." Lvnch v. Huston, 138 Mo. App. 167, 119 S. W. 994. "Calcutta & Burmah Steam Nav. Co. V. De Mattos, 32 L. J. Q. B. 322 (according to the intent apparent on the face as far as words will admit) ; Williams v. Gray, 9 C. B. 730, 67 E. C. L. 730; Pensacola Gas. Co. v. Lotzes, 23 Fla. 368, 2 So. 609; Mc- Naughton v. Stephens, 8 Ga. App. 545, 70 S. E. 61 ; Benjamin's Suc- cession, 39 La. Ann. 612, 2 So. 187; Belch V. Miller, 32 Mo. App. 387; Crocker v. Hill, 61 N. H. 345, 60 Am. Rep. 322; Tennessee v. Whitworth, 117 U. S. 129, 29 L. ed. 830, 6 Sup. Ct. 645 (the construction is to be ac- cording to the intention of the par- ties). =°Hewet V. Painter, 1 Bulst. 174; Robertson v. French, 4 East 130; Taylor v. St. Helen's Corporation, 6 Ch. Div. 264 ; Stanley v. Western Ins. Co., L. R. 3 Exch. 71 ; Scudder v. Perce, 159 Cal. 429, 114 Pac. 571; Alderson v. Houston, 154 Cal. 1, 96 Pac. 884; Hall v. Rand, 8 Conn. 560; Stettauer v. Hamlin, 97 111. 312; Stears v. Sweet, 78 111. 446; Gibbs v. People's Nat. Bank, 198 111. 307, 64 N. E. 1060; Strauss v. Yeager (Ind. App.), 93 N. E. 877; Warrum v. White, 171 Ind. 574, 86 N. E. 959; Willmering v. McGaughey, 30 Iowa 205, 6 Am. Rep. 673n; Rindskoflf v. Barrett, 14 Iowa 101 ; Cash v. Hin- kie, 36 Iowa 623; Grant v. Dabney, 19 Kans. 388, 27 Am. Rep. 125; Spring Garden Ins. Co. v. Imperial Tobacco Co., 132 Ky. 7, 116 S. W. 234, 20 L. R. A. (N. S.) 277n, 136 Am. St. 164 (construing the word "riot" as used in a fire insurance 78 1 INTERPRETATION AND CONSTRUCTION. s 1509 an accident policy does not mean the same as the word "death"." The word "guarantee" as used in the contract under consideration has been interpreted as a synonym of "agree" or "promise"," and the word "erected" as synonymous with "completed".'^ A transaction which was plainly a loan secured by the assignment of a life insurance policy will not be construed as an offer or option to sell the policy for a certain sum because the agreement gave the company the right to cancel the policy at its option, in case of default of payment of the loan." Under this rule the use of clear and lucid language in a contract, which when viewed as an entirety is unambiguous, is conclusive evidence of the inten- tion of the parties in the absence of fraud or mistake.^^ policy) ; Hawes v. Smith, 12 Maine 429; E. A. Strout Co. v. Gay, 105 Maine 108, 72 Atl. 881, 24 L. R. A. (N. S.) 562n; Hall v. Farmers' Nat. Bank, 53 Md. 120; Mutual Life Ins. Co. of New York v. Murray, 111 Md. 600, 75 Atl. 348 ; Smith v. Abing- ton Bank, 171 Mass. 178, 50 N. E. 545; Rosen v. Rosen, 159 Mich. 12, 123 N. W. 559, 134 Am. St. 712; Bradshaw v. Bradbury, 64 Mo. 334; Lovelace v. Protective Assn., 126 Mo. 104, 28 S. W. 877, 30 L. R. A. 209n; Liggett V. Levy, 233 Mo. 590, 136 S. \V. 299; Simmons v. Westlake Const. Co. (Mo. App.), 126 S. W. 518; Creason v. St. Louis, L M. & S. R. Co., 112 Mo. App. 116, 86 S. W. Ill; Quirk V. Rich, 40 Mont. 552, 107 Pac. 821 ; Moore v. Phoenix Ins. Co., 62 N. H. 240, 13 Am. St. 556, Huff- cut & W. Am. Cas. Cont. 531; American Lithographic Co. v. Com- mercial Casualty Ins. Co., 81 N. J. 271, 80 Atl. 25; Ripley v. ^tna In- surance Co., 30 N. Y. 136, 86 Am. Dec. 362 ; Schoonmaker v. Hoyt, 148 N. Y. 425. 42 N. E. 1059; Mansfield & S. C. R. Co. v. Veeder, 17 Ohio .385 ; Schuylkill Navigation Co. v. Moore, 2 Whart. (Pa.) 477; Monon- gahela Navigation Co. v. Coons, 6 Watts. & S. (Pa.) 101; Strafford Pub. Co. V. Stetson, 41 Pa. Super. Ct. 560; Stewart v. Morris, 84 S. Car. 148, 65 S. E. 1044; West v. Hermann, 47 Tex. Civ. App. 131, 104 S. W. 428 ; Dalv v. Old, 35 Utah 74. 99 Pac. 460, 28 L. R. A. (N. S.) 463n; Clark v. Lillie, 39 Vt. 405; Williams v. South Pa. Oil Co., 52 W. Va. 181, 43 S. E. 214, 60 L. R. A. 795. See also, Rogers v. Modern Brotherhood of America, 131 Mo. App. 353, 111 S. W. 518. The words should be understood in the sense in- tended by the parties. Conwell v. Pumphrey, 9 Ind. 135, 68 Am. Dec. 611; Warn v. Brown, 102 Pa. 347. A reasonable meaning should be given the words used. Wadlington v. Hill, 10 Smedes & M. (Miss.) 560. The phrase "it being understood'' is usually equivalent to "it is agreed." Lind v. United States, 44 Ct. CI. (U. S.) 558. See also Mariner v. Ingraham, 127 111. App. 542 (con- struing the word "advantageous"). Ware v. Hylton, 3 Dall. (U. S.) 199. 1 L. ed. 164; Moran v. Prather, 21 Wall. (U. S.) 492, 23 L. ed. 121. " Hill v. Travelers' Ins. Co., 146 Iowa 133, 124 N. W. 898, 28 L. R. A. (N. S.) 742n. *^ Richard Deeves v. Manhattan Life Ins. Co., 195 N. Y. 324, 88 N. E. 395. ""Hartrath v. Holsman, 127 111. App. 560. **Frese v. ^Mutual Life Ins. Co. (Col. App.), 105 Pac. 265. "Rogers v. Atkinson, 1 Ga. 12; Walker v. Tucker. 70 111. 527: Bearss V. Ford, 108 111. 16; Eagle Fire Ins. Co. v. John Spry Lumber Co., 138 111. App. 609 ; Greene v. Day, 34 Iowa 328; Bobb v. Bancroft. 13 Kans. 123; McLellan v. Cumberland Bank, 24 IMaine 566; Jeffrey v. Grant, 2>7 Maine 236; Mumford v. McPher- i;io CONTRACTS. 782 § 1510. Rules of construction generally — Language used evidences the intent. — The language of a written contract complete in itself and which when viewed as an entirety is unam- biguous is, while it is in force, the only legitimate evidence of what the parties intended and understood by it.-" In such case the in- tention of the parties is to be gathered from the words used.^'^ Having voluntarily selected the words by which they choose to be bound they are bound by them.-^ It is ordinarily presumed that the intention of the parties is expressed by the writing, that it contains the whole contract,"'' and that a person means what his language, by its terms, and under the circumstances un- der which it is used, would be fairly understood to mean, and this presumption cannot be rebutted by proof that he intended some- thing more or different, which he made no attempt to express, and son, 1 Johns. (N. Y.) 414, 3 Am. Dec. 339; Alumford v. McPherson, 1 Johns. (N. Y.) 414, 3 Am. Dec. 339; Westcott V. Thompson, 18 N. Y. 363 ; Dent v. North American Steam- ship Co., 49 N. Y. 390; Heirs of Watrous v. ]\IcKie, 54 Tex. 65 : Zohr- laut V. Mengelberg (Wis.), 124 N. W. 247. ='West Haven Water Co. v. Red- field, 58 Conn. 39, 18 Atl. 978. See 1 Elliott on Evidence, § 568 et seq. See also, Webb v. Missouri State Life Ins. Co., 134 Mo. App. 576, 115 S. W. 481. "Shuler v. Allam, 45 Colo. 372, 101 Pac. 350; Millikin v. Starr, 79 111. App. 443, affd. 180 111. 458, 54 N. E. 328; Stout v. Whitney, 12 111. 218; Tracy v. Chicago, 24 111. 500; Streeter v. Streeter, 43 III. 155 ; Wil- son v. Marlow, 66 111. 385; Wal- ker v. Douglas, 70 111. 445 ; .Schneider V. Turner, 130 111. 28. 22 N. E. 497, 6 L. R. A. 164n; Hill v. Parker, 10 111. .App. 323 ; Chestnut v. Chestnut, 15 111. App. 390; Sinnickson v. Rich- ter, 140 111. App. 212; Illinois Cent. R. Co. V. Vaughn fKy.), 33 Kv. L. 906, 111 S. W. 707: Curtin-Clark Hardware Co. v. Churchill, 126 Mo. App. 462, 104 S. W. 476; Cranes Nest Coal & Coke Co. v. Virginia Iron Coal & Coke Co., 105 Va. 785, 54 S. E. 884; Smith v. Merrill. 134 Wis. 227, 114 N. W. 508. The mean- ing and intention of the parties to a contract is to be ascertained from the face of the instrument and by the application of common sense to the particular case. Green v. Dyers- burg, 2 Flip. (U. S.) 477. See also. Book V. Thomas, 61 Wash. 607, 112 Pac. 917. =" Mallan v. May, 13 M. & W. 511 ; Biddlecombe v. Bond, 4 Adol. & E. 332; Canterberry v. Miller, 76 111. 355; Pratt v. McCoy, 128 La. 570, 54 So. 1012; Maryland Coal Co. v. Cumberland & P. R. Co.. 41 Md. 343; Rogers v. Danforth. 9 N. J. Eq. 289; Dwight V. Germania Life Ins. Co., 103 N. Y. 341, 8 N. E. 654, 57 Am. Rep. 729; Zimmermann v. Loft, 125 App. Div. (N. Y.) 725, 110 N. Y. S. 499; Reagan v. Bruff, 49 Tex. Civ. App. 226, 108 S. W. 185; Noyes v. Nichols, 28 Vt. 159. See also, Up- ton V. Tribilcock, 91 U. S. 45, 23 L. ed. 203; William Cramp &c. Build- ing Co. V. Sloan, 21 Fed. 561 ; Scotch Mfg. Co. V. Carr, 53 Fla. 480, 43 So. 427. See also, Scheweinburg v. Alt- man, 145 App. Div. (N. Y.) 377, 130 N. Y. S. 37. ='Farrar v. Hinch, 20 111. 646; Merchants' Ins. Co. v. Morrison, 62 111. 242, 14 Am. Rep. 93; Harding v. Commercial Loan Co., 84 111. 251 ; Wight V. Sampter, 127 111. 167. 20 N. E. 47: Griffin v. Fairmount Coal Co.. 59 W. Va. 480. 53 S. E. 24, 2 L. R. A. (N. S.) 1115. See 1 Elliott Ev., § 568 et seq. 783 INTERPRETATION AND CONSTRUCTION. § I5IO which a person deaHng with him neither understood nor had rea- son to understand,^" Accordingly, a prior verbal contract will be merged in a subsequent written one.^^ The court cannot import words into a contract which would make it materially different in a vital particular from what it is.^" However, the words used will not be given a literal interpretation when to do so would defeat the intention of the parties as evidenced by the entire con- tract."^ Even an apparently unambiguous contract may be ren- dered ambiguous and open to construction if the words taken literally lead to absurdity or illegality when applied to the facts.^* Moreover, when the language of the agreement is doubtful so that it is susceptible of two constructions one of which makes it fair, customary, and such as prudent men would naturally exe- cute, while the other makes it inequitable, unusual, or such as reasonable men would not be likely to enter into, the interpreta- tion which makes it a rational and probable agreement will be preferred to that which makes it an unusual, unfair or improbable contract/^ ^American Merchants' Mfg. Co. v. Kantrowitz. 11 111. App. 155; Bren- sel V. Kirschner, 128 111. App. 136; Merriam v. Pine City Lumber Co., 23 Minn. 314 : Collier v. Robinson, (Tex. Civ. App.). 129 S. W. 389; Clark V. Lillie, 39 Vt. 405; Zohr- laut V. Mengelberg (Wis.), 124 N. W. 247. A plea of this character is demurrable. Langlcy v. Owens. 52 Fla. 302, 42 So. 457. It is otherwise where the writing does not purport to contain the entire agreement. Chamberlain v. Lesley, 39 Fla. 452, 22 So. 736. "Fuchs & Lang Mfg. Co. v. R. J. Kittredge & Co.. 146 111. App. 350, judgment affirmed 242 111. 88. 89 N. E. 723: Carr v. Xavs. 110 Ind. 408, 11 N. E. 25: Welz v. Rhodius, 87 Ind. 1. 44 Am. Rep. 747, and cases cited; Stoddard v. Nelson, 17 Ore. 417, 21 Pac. 456 ; Stuebben v. Granger, 63 Mich. 306. 29 N. W. 716. " Windmiller v. People, 78 111. App. 273; Robinson v. Stow, 39 111. 568; Fitzgerald v. Staples, 88 111. 234. 30 Am. Rep. 551 ; Gavinzel v. Crump, 22 Wall. (U. S.) 308, 22 L. ed. 783 (construction of a bond) ; First Nat. Rank v. Mcintosh & Peters Live Stock &c. Co., 72 Kans. 603, 84 Pac. 535; Zohrlaut v. Mengelberg (Wis.), 124 N. W. 247. =" Wallis V. Smith, 21 Ch. Div. 243 ; Taber Lumber Co. v. O'Neal. 160 Fed. 596, 87 C. C. A. 498; Carter v. Alexander, 71 Mo. 585. ^* Klueter v. Joseph Schlitz Brew- ing Co., 143 Wis. 347, 128 N. W. 43, 32 L. R. A. (N. S.) 383n; Clappen- back V. New York Life Ins. Co., 136 Wis. 626, 118 N. W. 245. See also, San Jacinto Oil Co. v. Ft. Worth &c. Power Co., 41 Tex. Civ. App. 293, 93 S. W. 173. "Stein V. Archibald. 151 Cal. 220, 90 Pac. 536; A. Leschen & Sons Rope Co. V. Mayflower Gold Min. &c. Co., 173 Fed. 855. 97 C C. A. 465. 35 L. R. A. (N. S.) In; Pressed Steel Car Co. v. Eastern R. Co., 121 Fed. 609, 57 C. C. A. 635: American Bonding Co. v. Pudlow Investment Co., 150 Fed. 17. 80 C. C. A. 97. 9 L. R. A. (N. S.^ 557n. 10 Am. & Fng. .Ann. Cas. 357. See also. Lnsee V. Brunson, 141 111. App. 326; Griffin § I5II CONTRACTS. 784 § 1511. Rules of construction generally — Technical terms. — Technical words are to be interpreted as usually understood by persons in the profession or business to which they relate,^* unless it is evident that they were used in a different sense. ^^ If it appears that a term used in a contract has an established mean- ing among those engaged in the business to which the contract has reference, and, unless it is given that meaning, is indefinite and equivocal, it should be treated, in interpreting the contract, as used according to that understanding.^® § 1512. Rules of construction — Commercial terms — Words used in legal sense. — Mercantile terms used in mercantile contracts are to be understood in their ordinary mercantile mean- ing.^* Commercial letters are not to be construed upon the same V. Fairmount Coal Co., 59 W. Va. 480. 53 S. E. 24, 2 L. R. A. (N. S.) 1115. See post, § 1521. =" Myers v. Tibbals, 72 Cal. 278, 13 Pac. 695; Hatch v. Douglas, 48 Conn. 116, 40 Am. Rep. 154; Soper V. Tyler, 11 Conn. 104, 58 Atl. 699; Potter V. Pheonix Ins. Co., 63 Fed. 382; Reed v. Hobbs, 2 Scam. (111.) 297; Elgin v. Joslyn, 136 111. 525, 26 N. E. 1090; Jacksonville, L. & St. L. R. Co. V. Louisville & N. R. Co., 150 111. 480, Zl N. E. 924; Gauch v. St. Louis Mut. Life Ins. Co., 88 111. 251, 30 Am. Rep. 554; Everett v. Indi- ana Paper Co., 25 Ind. App. 287, 57 N. E. 281; Peterson v. Modern Brotherhood of America, 125 Iowa 562, 101 N. W. 289, 67 L. R. A. 631 ; Aetna Indemnity Co. v. Waters, 110 Md. 673, IZ Atl. 712; Eaton v. Smith, 20 Pick. (Mass.) 150; Thompson v. Thorne, 83 Mo. App. 241; CoUender V. Dinsmore, 55 N. Y. 200, 14 Am. Rep. 224; Nelson v. Sun Mut. Ins. Co., 71 N. Y. 453 ; Levy v. Schreyer, 19 Misc. (N. Y.) 227, 43 N. Y. S. 199, revd. 27 App. Div. (N. Y.) 282, 50 N. Y. S. 584; Strong v. Waters, 27 App. Div. (N. Y.) 299, SO N. Y. S. 257; Dana v. Fiedler, 12 N. Y. 40, 62 Am. Dec. 130; Ellmaker v. Ellmaker, 4 Watts. (Pa.) 89; Welsh V. Huckestein, 152 Pa. St. 27, 25 Atl. 138; McDonough v. Jolly, 165 Pa. St. 542, 30 Atl. 1048; Simpson & Co. v. United States, 31 Ct. CI. (U. S.) 217. =' Wynkoop v. Cowing, 21 111. 570 ; Home Ins. Co. v. Favorite, 46 111. 263; Bowman v. Long, 89 111. 19; Fisher Elec. Co. v. Bath Iron Works, 116 Mich. 293, 74 N. W. 493; Jack- son V. Myers, 3 Johns. (N. Y.) 388, 3 Am. Dec. 504; Mansfield &c. R. Co. V. Veeder, 17 Ohio 385 ; Warn v. Brown, 102 Pa. St. 347; Lehigh & Wilkesbarre Coal Co. v. Wright, 177 Pa. St. 387, 35 Atl. 919. ^' Metropolitan Exhibition Co. v. Ewing, 42 Fed. 198, 7 L. R. A. 381, where the contract was with defend- ant for his services as a base-ball player. The case turned upon the meaning and effect of the clause which gave the club the "right to reserve" the defendant for the sea- son next ensuing. "The promise of a base-ball player to reserve him- self for a particular club for a given season would hardly, without more, convey any definite meaning of the understanding of the parties." New England Granite Works v. Bailey, 69 Vt. 257, Zl Atl. 1043. ** Smith v. Phipps, 65 Conn. 302, 32 Atl. 367; Beach v. Travelers' Ins. Co., IZ Conn. 118, 46 Atl. 867; Bis- sell v. Ryan, 23 111. 566 ; Lyon v. Cul- bertson, 83 111. ZZ^ 25 Am. Rep. 349 ; Cleveland, C. C. & St. L. R. Co. v. Jenkins, 174 111. 398, 51 N. E. 811, 78s INTERPRETATION AND CONSTRUCTION. § I513 principle as bonds, but ought to receive a fair and reasonable interpretation, according to the true import of the terms, or to what is fairly to be presumed to have been the understanding of the parties. *° Bonds usually contain the entire contract, beyond which courts rarely look for circumstances to aid in their con- struction; and, if there be sureties bound by them, and the mean- ing is doubtful, the construction is restricted and made most fa- vorable to the sureties.*^ When terms of law are used in defin- ing the obligations assumed by the parties, their technical legal sense should be preferred. ^^ In case a word which has a definite statutory or legal meaning is knowingly used in a written instru- ment, this meaning will be taken to be its ordinary and common meaning, and courts will assume that it is used by the contracting parties in its statutory or legal sense in the absence of any con- trary intention being evidenced by the instrument.** § 1513. General rules — Technical words governed by the intent. — When the same word has both a technical and popu- lar meaning it will be given its technical sense when it appears 62 L. R. A. 922, 66 Am. St. 296; IMorningstar v. Cunningham, 110 Ind. 328, 11 N. E. 593, 59 Am. Rep. 211; McSherry v. Blanchfield, 68 Kans. 310, 75 Pac. 121; Hawes v. Smith, 12 Maine 429; Duling v. Phil- adelphia, W. & B. R. Co., 66 Md. 120, 6 Atl. 592; Baltimore Base Ball &c. Co. V. Pickett, 78 Md. 375, 28 Atl. 279, 22 L. R. A. 690, 44 Am. St. 304; Thompson v. Hamilton, 12 Pick. (Mass.) 425, 23 Am. Dec. 619; Howard v. Great Western Ins. Co., 109 Mass. 384; Hevworth v. Miller Grain Co., 174 Mo. 171, 7Z S. W. 498; McKee v. Wild. 52 Nebr. 9, 71 N. W. 958; Smith v. Wright, 1 Cai. (N. Y.) 43; Rickerson v. Hartford Fire Ins. Co., 149 N. Y. 307, 43 N. E. 856; Adams v. Pittsburgh Ins. Co., 95 Pa. 348. 40 Am. Rep. 662 ; Ambler V. Phillips, 132 Pa. St. 167, 19 Atl. 71 ; Hansbrough v. Neal. 94 Va. 722, 27 S. E. 593 ; Lamb v. Klaus, 30 Wis. 94. "Bell V. Bruen, 1 How. (U. S.) 169, 11 L. ed. 89; Lawrence v. Mc- Calmont, 2 How. (U. S.) 426, 11 L. ed. 326, stating the principles which should govern the construc- tion of commercial guaranties. -K guaranty is a mercantile instrument, and to be construed according to what is fairly to be presumed to have been the understanding of the par- ties, without any strict technical nicety. Lee v. Dick, 10 Pet. (U. S.) 482, 9 L. ed. 503. "Bell V. Bruen, 1 How. (U. S.) 169, 11 L. ed. 89. "EUmaker v. Ellmaker, 4 Watts. (Pa.) 89; Findley v. Findley, 11 Grat. (Va.) 434. *"Langley v. Owens, 52 Fla. 302, 42 So. 457 ; Green v. Moffett, 22 Mo. 529 (where a statute fi.xed the mean- ing of the word "ton") ; Citv of Roanoke v. Blair, 107 Va. 639. 60 S. E. 75 ; Lathers v. Mutual Fire Ins. Co.. 135 Wis. 431, 116 N. W. 1, 22 L. R. A. (N. S.) 848n. See also, Higgins V. California Petroleum & Asphalt Co., 120 Cal. 629, 52 Pac. 1080. 50 — CoNTR.xcTS, Vol. 2 I5I3 CONTRACTS. 786 that it was the intention of the parties to give it this meaning." But the court will use the terms employed according to their popular signification, if to apply them according to technical rules would defeat the manifest intention of the party. "'^ When words with a popular meaning are used in a sense which is incon- sistent with the special meaning which they have acquired by usage the popular will usually prevail over the special meaning.'*" " Maryland Coal Co. v. Cumber- land & P. R. Co., 41 Md. 343 ; Eaton V. Smith, 20 Pick. (Mass.) 150; Ell- maker V. Ellmaker, 4 Watts. (Pa.) 89; Hart v. Hammett, 18 Vt. 127; Findley's Exrs. v. Findley, 11 Grat. (Va.) 434. "When a new and un- usual word is used in the contract, or when a word is used in a technic- al or peculiar sense, as applicable to any trade or branch of business or to any particular class of people, it is proper to receive evidence of us- age to explain and illustrate it. But when no new word is used, or when an old word, having an es- tablished place in the language, is not apparently used in any new, technical or peculiar sense, it is the province of the court to put a con- struction upon the written contract of parties, according to the estab- lished usage of language as applied to the subject-matter." Willmering V. McGaughey, 30 Iowa 205, 6 Am. Rep. 673n. ** Mansfield &c. R. Co. v. Veeder, 17 Ohio 385. See also, Stone v. Pills- bury, 167 Mass. 332, 45 N. E. 768, in which evidence as to the meaning of "a single dwelling-house" as un- derstood by real estate men, was held inadmissible in an action on a contract containing such phrase en- tered into between parties not real estate men. Braney v. Millbury, 167 Mass. 16, 44 N. E. 1060 (expert evi- dence held inadmissible to show that among contractors a contract to ex- cavate earth does not include stone) ; Kentucky Wagon Mfg. Co. v. Peo- ple's Supply Co., n S. Car. 92, 57 S.E. 676, 122 Am. St. 540n (parol evidence held inadmissible to show that the term "fully insured" as used in the contract in question meant that the property should be kept insured for three-fourths of its value) ; Toothman v. Courtney, 62 W. Va. 167, 58 S. E. 915 (discussing the principle in its relation to deeds and leases). As to the admissibility of the parol evidence of custom and usage in the interpretation of a writ- ten contract see Tilley v. County of Cook, 103 U. S. 155, 26 L. ed. 374; Grace v. American Central Ins. Co., 109 U. S. 278, 27 L. ed. 932, 3 Sup. Ct. 207. "Gibbon v. Young, 8 Taunt. 254; Webb V. Plummer, 2 Barn & Aid. 746; Doed Spicer v. Lea, 11 East. 312; Corwin v. Patch, 4 Cal. 204; Cadwell v. Meek, 17 111. 220; Van Camp Packing Co. v. Hartman, 126 Ind. 177, 25 N. E. 901; Woods v. Miller, 55 Iowa 168, 39 Am. Rep. 170; Castleman v. Southern Mut. Life Ins. Co., 14 Bush (Ky.) 197; Balti- more Base Ball &c. Co. v. Pickett, 78 Md. 375, 28 Atl. 279, 22 L. R. A. 690, 44 Am. St. 304 ; Haskins v. War- ren, 115 Mass. 514; Greenstine v. Borchard. 50 Mich. 434, 15 N. W. 540, 45 Am. Rep. 51; Globe Milling Co. v. Minneapolis Elevator Co., 44 Minn. 153, 46 N. W. 306; Wolff v. Campbell, 110 Mo. 114, 19 S. W. 622; Cummings v. Blanchard, 67 N. H. 268, 36 Atl. 556, 68 Am. St. 664 ; Col- lender v. Dinsmore, 55 N. Y. 200, 14 Am. Rep. 224; Bradley v. Wheeler, 44 N. Y. 495; Sleght v. Rhinelander, 1 Johns. (N. Y.) 192; McCulsky v. Kloaterman, 20 Ore. 108. 25 Pac. 366, 10 L. R. A. 785n ; Sweeney v. Thom- ason, 9 Lea (Tenn.) 359, 42 Am. Rep. 676n; A. M. Dillow & Co. v. Monti- cello, 145 Iowa 424, 124 N. W. 186; Stagg V. Connecticut Mut. Life Ins. Co., 10 Wall. (U. S.) 589, 19 L. ed. 1038; Erickson v. Green, 47 Wash. 613, 92 Pac. 449. 787 INTERPRETATION AND CONSTRUCTION. I514 Thus, the question of whether the word "taxes" as used in a con- tract is intended to include or exclude special assessments for local improvements depends upon the contract.'*^ The foregoing merely illustrates that when words have acquired a peculiar meaning by usage the court will give the words used that mean- ing which is necessary to arrive at the intention of the parties/^ § 1514. Rules of construction generally — Whole instru- ments looked to. — The actual contract of the parties must be deduced from the entire agreement and from all its provisions considered together, and not from specific provisions or fragmen- tary parts of the instrument, because the intention of the parties is not expressed by any single part or provision of the agreement but by every part and term so construed, if possible, as to be consistent with every other part and with the entire agreement since the parties could not have intended apparently conflicting clauses in a contradictory sense.'*'* Effect must be given to all the " Chicago Great Western R. Co. v. Kansas City Northwestern R. Co., 75 Kans. 167, 88 Pac. 1085. ■** Brough V. Whitmore, 4 Term R. 206; Anderson v. Pitcher, 2 Br. & B. 164; Taylor v. Briggs, 2 Car. & P. 525; Doe v. Benson, 4 Barn. & Aid. 588; Furley v. Wood, 1 Esp. 198; Van Ness v. Pacard, 2 Pet. (U. S.) 137, 7 L. ed. 374; Washington Bank V. Triplett, 1 Pet. (U. S.) 25, 7 L. ed. 37; Moran v. Prather, 23 Wall. (U. S.) 492, 23 L. ed. 121; Leach v. Beardslee, 22 Conn. 404 ; Pilmer v. Branch of State Bank, 16 Iowa 321 ; Rindskoff v. Barrett, 14 Iowa 101; Destrehan v. Louisiana Cypress Lumber Co., 45 La. Ann. 920, 13 So. 230, 40 Am. St. 265; Perkins v. Jor- dan, 35 Maine 23 ; Robinson v. Fiske, 25 Maine 401 ; Appleman v. Fisher, 34 Md. 540 ; Seccomb v. Provincial Ins. Co., 10 Allen (Mass.) 305; War- ren Bank v. Parker, 8 Grav (Mass.) 221; Maurin v. Lyon. 69 Minn. 257, 72 N. W. 72. 65 Am. St. 568; Moore V. Phoenix Ins. Co., 62 N. H. 240. 13 Am. St. 556 ; Huffcut & W. Am. Cas. Cont. 531; Smith v. Clews, 114 N. Y. 190, 21 N. E. 160, 11 Am. St. 627, 4 L. R. A. 392n. "The proper office of custom or us- age in trade is to ascertain and ex- plain the meaning and intention of the parties to a contract, whether written or in parol, which could not be done without the aid of extrinsic evidence. It does not go beyond this, and is used as a mode of in- terpretation, on the theory that the parties knew of its existence and contracted with reference to it. It is often employed to explain words or phrases in a contract of doubtfv.l signification or which maj' be under- stood in different senses, according to the subject-matter to which they are applied. But, if it be inconsist- ent with the contract or expressly or by necessary implication contradicts it, it cannot be received in evidence to effect it." A. M. Dillow & Co. v. City of Monticello, 145 Iowa 424. 124 N. W. 186, 188, quoting from Barnard v. Kellogg, 10 Wall. (U. S.) 383. 19 L. ed. 987. ** American Bonding Co. v. Pueblo Investment Co., 150 Fed. 17, SO C. C A. 97, 9 L. R. A. (N. S.) 557n ; Pressed Steel Car Co. v. Eastern R. Co., 121 Fed. 609, 57 C. C. A. 635; Turner v. Citv of Fremont, 159 Fed. 221, affd. 170 Fed. 259. 95 C. C. A. 455; United States Fidelity &c. Co. V. Woodson County, 145 Fed. 144, 76 C. C. A. 114; Uinta Tunnel § 1 5 14 CONTRACTS. 788 provisions and parts of the contract where possible and no part should be rejected unless absolutely repugnant to the general in- tent.^" A single word or sentence should not be construed alone, Min. & Transp. Co. v. Ajax Gold W. 879. See also, Yost v. Anchor Min. Co., 141 Fed. 563, 72> C. C. A. Fire Ins. Co., 38 Pa. Super. Ct. 594. 35 ; Ft. Smith Light & Traction Co. The written and oral parts of an V. Kelley, 94 Ark. 461, 127 S. W. agreement must be construed together. 975; Town of Sterling v. Hurd, 44 American Mercantile Exchange v. Colo. 436. 98 Pac. 174; Brown v. Blunt, 102 Maine 128, 66 Atl. 212, 10 Slater, 16 Conn. 192, 41 Am. Dec. L. R. A. (N. S.) 414n. 136; Hewitt v. Wheeler, 22 Conn. ""Northern v. Tatum, 164 Ala. 368, 557; Tracy v. Chicago, 24 111. 500; 51 So. 17; Hall v. Hardaker, 61 Morey v. Terre Haute Traction & Fla. 267, 55 So. 977; McLean County Light Co., 47 Ind. App. 16, 93 N. E. Coal Co. v. Bloomington, 234 111. 90, 710; Chicago Veneer Co. v. Ander- 84 N. E. 624, reversing judgment son, 32 Ky. L. 7, 105 S. W. 108; 137 111. App. 582; Brooks v. Halane, Chase v. Bradley, 26 Maine 531; 116 111. App. 383; Richmond v. Merrill v. Gore, 29 Maine 346; Chap- Brandt, 118 111. App. 624; Strauss v. man v. Seccomb, 36 Maine 102; Yeager (Ind. App.), 93 N. E. 877; T. Smith V. Davenport, 34 Maine 520 ; M. Sinclair v. National Surety Co. Heywood V. Perrin, 10 Pick. (Mass.) (Iowa), 107 N. W. 184; Smith v. 228, 20 Am. Dec. 518; Goosey v. Durkee, 166 Mich. 484, 131 N. W. Goosey, 48 Miss. 210; Salmon Falls 1116; Gail v. Gail, 127 App. Div. (N. Mfg. Co. V. Portsmouth Co., 46 Y.) 892, 112 N. Y. S. 96; Williams N. H. 249; Colorado Telephone Co. v. Gridley, 187 N. Y. 526, 79 N. E. V. Fields, 15 N. Mex. 431, 110 Pac. 1119; Knickerbocker Trust Co. v. 571 ; Monmouth Park Association v. Ryan, 227 Pa. 245, 75 Atl. 1073 ; Mc- Wallis Iron Works. 55 N. J. L. 132, Millin v. Titus, 222 Pa. 500, 72 Atl. 26 Atl. 140. 19 L. R. A. 456, 39 Am. 240; El Paso & S. W. R. Co. v. St. 626; Hamilton v. Taylor, 18 N. Eichel (Tex. Civ. App.), 130 S. W. Y. 358; Richards v. Warring, 39 922; Ryan v. Curlew Irr. &c. Co., Barb. (N. Y.) 42, affd. 1 Key. (N. 36 Utah 382, 104 Pac. 218.» "In Y.) 576, 4 Abb. Dec. (N. Y.) construing any written instrument, 47; Gulf Refining Co. v. Char- whether a deed of conveyance, a bill lotte Construction Co., 157 N. of sale, mortgage, contract, or what Car. 277, 72 S. E. 1003; At- not, the entire instrument must be lantic &c. R. Co. v. Atlantic considered in order to gather the &c. Co., 147 N. Car. 368, 61 real intent and true design of the S. E. 185, 23 L. R. A. (N. S.) makers thereof. To that end all the 223n, 125 Am. St. 550; Wilkie v. different provisions of such instru- New York Life Ins. Co., 146 N. ment must be looked to and all con- Car. 513, 60 S. E. 427; Stewart v. strued so as to give effect to each and Lang, 2)7 Pa. St. 201, 78 Am. Dec. every of them, if that can reason- 414; Brittson v. Smith, 165 Mich. 222, ably be done. If clauses therein 130 N. W. 599, 18 Detroit Leg. N. seem to be repugnant to each other. 160; Koles V. Borough Park Co., they must be given such an inter- 142 App. Div. (N. Y.) 765, 127 N. pretation and construction as to rec- Y. S. 671 ; Northern Texas Realty oncile them if possible, remembering & Construction Co. v. Lary (Tex. that the intent is the principal thing Civ. App.), 136 S. W. 843; Malloy to be regarded. If one interpreta- V. Interstate Irr. Co., 62 Wash, 487, tion, looking to the other provisions 114 Pac. 167; Wisdom v. Wilson of the instrument and its general (Tex. Civ. App.), 127 S. W. 1128; scope, would lead to an absurd con- Toellner v. McGinnis, 55 Wash. 430, elusion, such interpretation must be 104 Pac. 641, 24 L. R. A. (N. S.) abandoned, and one adopted which 1082n ; Southern Flour & Grain Co. will be more in accord with reason V. McGeehan, 144 Wis. 130, 128 N. and probability." Hull v. Burr, 58 789 INTERPRETATION AND CONSTRUCTION. § I515 but should be considered with reference to the context." § 1515. Rules of construction generally — Construing par- ticular clauses. — In the interpretation of any particular clause of a contract, the court is required to examine the entire contract, and may also consider the relations of the parties, their connec- tion with the subject-matter of the contract, and the circum- stances under which it was made." The construction should make the whole consistent, giving all parts their due weight." Force and effect should be given to all the words employed by the parties where that is possible."* And one part of the agreement Fla. 432, 50 So. 754. "The rule that rejects a repugnant clause of a con- tract is an expedient to which a court will very reluctantly, in any case, have recourse, and never un- less absolutely compelled to do so." Lachmund v. Lope Sing, 54 Ore. 106, 102 Pac. 598. See also, Ford Hard- wood Lumber Co. v. Clement (Ark.), 135 S. W. 343; Scudder v. Perce, 159 Cal. 429, 114 Pac. 571; Nunn- gesser v. Hart, 122 Iowa 647, 98 N. W. 505; A. & S. Spengler v. Stiles- Tull Lumber Co., 94 Miss. 780, 48 So. 966; Humphreys v. McFarland (Miss.), 48 So. 1027. "Tevis V. Ryan, 13 Ariz. 120, 108 Pac. 461 ; Farrell v. Garfield Mining, Milling & Smelting Co., 49 Colo. 159, 111 Pac. 839; Central Trust Co. v. Wabash. St. L. & P. R. Co., 29 Fed. 546, affd. 138 U. S. 1. 34 L. ed. 843, 11 Sup. Ct. 243; Morey v. Terre Haute Trac. &c. Co., 47 Ind. App. 16, 93 N. E. 710; St. Landry Bank v. Meyers, 52 La. Ann. 1769. 28 So. 136; New England Cotton Yarn Co. v. Laurel Lake Mills, 190 Mass. 48, 76 N. E. 231. The meaning of the parties must be ascertained by the tenor of the writing, and not by looking at a part. Baron v. Placide, 7 La. Ann. 229; Metcalf v. Taylor, 36 Maine 28 ; Hevwood v. Hevwood, 42 Maine 229, 66 Am. Dec. 277": Haz- elton Coal Co. v. Buck Mountain Coal Co., 57 Pa. St. 301 ; Boardman v. Reed & Ford's Lessee, 6 Pet. (U. S.) 328. 8 L. ed. 415. "Fearnley v. Fearnlev, 44 Colo. 417. 98 Pac. 819: Central Trust Co. V. Condon, 67 Fed. 84, 14 C. C. A. 314; Western Hardw. & Mfg. Co. v. Bancroft-Charnley Steel Co.. 116 Fed. 176, 53 C. C. A. 548; Burke Land & Live Stock Co. v. Wells- Fargo & Co., 7 Idaho 42, 60 Pac. 87 ; Off V. J. B. Inderriedcn Co., 74 111. App. 105; Reissner v. Oxley, 80 Ind. 580; Beard v. Lofton, 102 Ind. 408. 2 N. E. 129; Kramer v. Messner, 101 Iowa 88, 69 N. W. 1142; J. B. Ehrsam & Sons Mfg. Co. V. Jackman, 73 Kans. 435, 85 Pac. 559, 91 Pac. 486; Trex- ler V. Reynolds. 43 Pa. Super. Ct. 168; Chicago R. I. &c. R. Co. v. Denver & R. G. R. Co., 143 U. S. 596, 36 L. ed. 277, 12 Sup. Ct. 479; Knox Co. v. Ninth Nat. Bank, 147 U. S. 91, 37 L. ed. 93, 13 Sup. Ct. 267; Chicago, M. & St. P. R. Co. V. Hoyt. 89 Wis. 314, 62 N. W. 189. See also, Pratt V. Prouty, 104 Iowa 419, 73 N. W. 1035, 65 Am. St. 472. For a con- struction of the terms "the amount of expenditures actually made." and "shop cost" see, Berlin Iron Bridge Co. V. American Bridge Co., 76 Conn. 1, 55 Atl. 573. "Cincinnati, S. & C. R. Co. v. In- diana, B. & W. R. Co., 44 Ohio St. 287, 7 N. E. 139; McKav v. Barnett, 21 Utah 239, 60 Pac. 1100. 50 L. R. A. 371. And see Bent v. Alexander, 15 Mo. App. 181 ; Chrisman v. State Ins. Co., 16 Ore. 283, 18 Pac. 466. "Chicago. B. & Q. R. Co. v. Bartlett, 120 111. 603. 11 N. E. 867; Bowman v. Long. 89 111. 19; Spring Garden Ins. Co. v. Imperial Tobacco Co., 132 Kv. 7. 116 S. W. 234. 20 L. R. A. (N. S.) 277n. 136 Am. St. 164; Foley v. New York Mut. Benev. Society, 141 App. Div. (N. Y.) 180, § 1 51 5 CONTRACTS. 790 may be resorted to to explain the meaning of the language or expressions of another part when both relate to the same subject- matter.^'^ The meaning of a clause or sentence may be limited by the sentence preceding it.^" Thus, where the words in the operative part of the instrument are of doubtful meaning, the recitals preceding the doubtful part may be used as a test to dis- cover the intention of the parties and fix the meaning of the words.^^ This simply means that the entire language shall be considered, that included in the recitals as well as that included in the operative part of the instrument, and from the whole the in- tention of the parties ascertained. ^'^ Where the contract is a bond the condition should be considered in the construction of the obligatory part.^^ Provisions for both forfeiture and damages are not necessarily irreconcilable.®" In construing a contract entered into by correspondence, the whole correspondence must be considered.**^ But while words or clauses in a contract appar- ently repugnant should be reconciled if it can be done by any rea- sonable construction, yet a proviso which is utterly repugnant to the body of the contract and irreconcilable with a former clause 126 N. Y. S. 12 ; New Jersey Foundry ^ Union Ferry Co. v. Southern & Machine Co. v. United States, 44 Imp. &c. Co., 124 La. 759, 50 So. 704 ; Ct. CI. (U. S.) 570. In Barton v. Otto v. Young, 227 Mo. 193, 127 S. Fitzgerald, 15 East 530, Lord Ellen- W. 9. Other things being equal, borough said: "It is a true rule of words used in a certain sense in one construction that the sense and part of an instrument are deemed to meaning of the parties, in any par- have been used in the same sense in ticular part of an instrument, may be another part thereof. Pringle v. collected ex antecedentibus et conse- Wilson, 156 Cal. 313, 104 Pac. 316. quentibus. Every part of it may be " Walker v. Tucker, 70 111. 527. See brought into action in order to col- also, Altman v. McMillin, 115 App. lect from the whole one uniform and Div. (N. Y.) 234, 100 N. Y. S. 970. consistent sense, if that may be See also, post, § 1516. done." '* Burgess v. Badger, 124 111. 288, "Read's Drug Store v. Hessig- 14 N. E. 850. Ellis Drug Co., 93 Ark. 497, 125 S. "^^ McCormick Harvesting Mach. W. 434;Dollar v. International Bank- Co. v. Laster, 70 111. App. 425: Chi- ing Corp., 10 Cal. App. 83, 101 Pac. cago &c. R. Co. v. Aurora. 99 111. 205 ; 34; Pensacola Gas Co. v. Lotzes, American Surety Co. v. Halliwell Co., 23 Fla. 368, 2 So. 609; Stout v. 9 Kans. App. 8, 57 Pac. 237. Whitney, 12 111. 218; North & South ""United States v. Perkins, 143 RoUing-Stock Co. v. O'Hara, 73 111. Fed. 688. App. 691; Belch v. Miller, 32 Mo. "Gates v. Dudgeon, 72 App. Div. App. 387; German Fire Ins. Co. v. (N. Y.) 562. 76 N. Y. S. 561, revd. Roost, 55 Ohio St. 581, 45 N. E. 173 N. Y. 426, 66 N. E. 116, 93 Am. 1097, 36 L. R. A. 236, 60 Am. St. 711; St. 608; United States v. Boji^wick, Teske V. Dittberner, 83 Nebr. 701, 94 U. S. 53, 24 L. ed. 65. 120 N. W. 198. 791 INTERPRETATION AND CONSTRUCTION. § I516 and repugnant to the general purpose and intent of the contract will be set aside or rejected ; likewise, a subsequent clause irrecon- cilable with a former clause and repugnant to the general pur- pose and intent of the contract will be set aside or rejected."' § 1516. Rules of construction generally — Noscitur a sociis. — The maxim "noscitur a sociis" (it is known from its associates or association) supplements the rules of construction that have been mentioned in the preceding sections of this chapter. It merely means that the sense in which a word or phrase is used in a contract may be determined by reference to the meaning of the words associated with it.°* § 1517. Rules of construction generally — Surrounding cir- cumstances. — Where the language is ambiguous and suscep- tible of more than one construction, the court should attempt to ""Jones V. Pennsylvania Casualty Co., 140 X. Car. 262, 52 S. E. 578, 5 L. R. A. (N. S.) 932, 111 Am. St. 843; Davis v. Frazier. 150 N. Car. 447, 64 S. E. 200; Gulf Refining Co. V. Charlotte Const. Co., 157 N. Car. 277, 72 S. E. 1003. If two clauses of a contract are so wholly repugnant to each other that they cannot stand together the first shall stand if in harmony with the other parts of the contract and the latter be rejected. Henne v. Summers, 16 Cal. App. 67, 116 Pac. 86; Employers' Liability Assur. Corp. v. Morrow, 143 Fed. 750, 74 C. C. A. 640 ; Brady v. Car- olina Steel Bridge &c. Co., 76 S. Car. 297, 56 S. E. 964. See also, post, § 1535 et seq. "" See Birmingham v. Birmingham Waterworks Co.. 152 Ala. 306, 44 So. 581. 11 L. R. A. (X. S.) 613n. hold- ing that the maxim "noscitur a sociis" is applicable to the descrip- tive expression "public boarding house" and that the coupling there- with of the word "public" has no effect to expand the signification present in the term "boarding-house" so as to make it nominative of a class of buildings not used as dwell- ings. Also, American Bonding Co. V. Pueblo Inv. Co., 150 Fed. 17, 80 C. C. A. 97, 9 L. R. A. (N. S.) 557n; Chesapeake & O. R. Co. v. American Exchange Bank, 92 Va. 496, 23 S. E. 935, 44 L. R. A. 449. holding that the phrase "other accidental causes" must be ascertained by reference to the preceding special words and meant other unavoidable accidental causes. See also, State v. Lowrv, 166 Ind. 2,12. 77 X. E. 728, 4 L. R. A. (X. S.) 528n; Hoffman v. East- ern Wisconsin R. & Light Co., 134 Wis. 603, 115 X. W. 383. "Where reference is made to something pre- cedent, the last item next before such reference must be held to be in- tended." Baxter Springs v. Baxter Springs Light &c. Co., 64 Kans. 591. 68 Pac. 63. See also. Perry v. Mott Iron Works Co.. 207 Mass. 501, 93 N. E. 798. "The general rule is that, where in a contract clauses are re- pugnant and incompatible, the earlier prevails, if the inconsistency be not so great as to avoid the instrument for uncertainty. 1 Sheppard's Touch- stone, 88; 2 Parsons on Contracts, 513; Daniel v. Veal, 32 Ga. 589; Petty v. Boothe. 19 Ala. 633. This rule is subject to the qualification, however, that the contract must be construed to effect the intention of the parties as gathered from the en- tire instrument: and, if there are re- pugnant clauses, they must be recon- § I5I7 CONTRACTS. 792 place itself as near as possible in the situation of the parties to the contract at the time the agreement was entered into so that it may view the circumstances as viewed by the parties and thus be enabled to understand the language used in the sense with which the parties used it." In order to accomplish this object it is generally proper for the court to take notice of surrounding and attendant circumstances and construe the language used in the light of such circumstances.^" ciled, if possible. The intent, and not the words, is the essence of every agreement if it can be ascer- tained therefrom." Lachmund v. Lope Sing, 54 Ore. 106, 102 Pac. 598. "Ft. Smith Light & Traction Co. V. Kelley, 94 Ark. 461, 127 S. W. 975; Lintweiler Pumping Engine Co. V. Ukiah Water & Imp. Co., 16 Cal. App. 198, 116 Pac. 707; Vocalion Organ Co. v. Wright, 137 Fed. 313; Wilson V. Roots, 119 111. 379, 10 N. E. 204; Matthews v. Kerfoot, 167 111. 313, 47 N. E. 859; Carroll v. Drury, 170 111. 571, 49 N. E. 311; Chambers v. Prewitt, 172 111. 615, 50 N. E. 145; Close v. Browne, 230 111. 228, 82 N. E. 629, 13 L. R. A. (N. S.) 634; Brockmeyer v. Sani- tary Dist. of Chicago, 118 111. App. 49; Cravens v. Eagle Cotton Mills Co., 120 Ind. 6, 21 N. E. 981, 16 Am. St. 298; Roberts v. Bonaparte, 7Z Md. 191, 20 Atl. 918, 10 L. R. A. 689; Mathews v. Phelps, 61 Mich. 2>27, 28 N. W. 108, 1 Am. St. 581; Laclede Const. Co. v. Moss Tie Co., 185 Mo. 25, 84 S. W. 76; Donovan V. Boeck, 217 Mo. 70, 116 S. W. 543; Alywin v. Morley, 41 Mont. 191, 108 Pac. 778; Smith v. Kerr, 108 N. Y. 31, 15 N. E. 70, 2 Am. St. 362; Gil- let V. Bank of America, 160 N. Y. 549, 55 N. E. 292; Hardwick v. American Can Co., 113 Tenn. 657. 88 S. W. 797; Coleman v. Ebeling (Tex. Civ. App.), 138 S. W. 199; Nash v. Towne. 5 Wall. (U. S.) 689, 18 L. ed. 527; Scott v. United States, 12 Wall. (U. S.) 443; Goddard v. Fos- ter, 17 Wall. (U. S.) 123, 21 L. ed. 589; Merriam v. United States, 107 U. S. 437, 27 L. ed. 531, 2 Sup. Ct. 536, 18 Ct. CI. (U. S.) 760; Walsh V. Myers, 92 Wis. 397, 66 N. W. 250; Zohrlaut v. Mengelberg (Wis.), 124 N. W. 247. This rule applies to ambiguous written instru- ments. Driscoll v. Penrod (Ind.), 95 N. E. 313. See also, Klueter v. Joseph Schlitz Brewing Co., 143 Wis. 347, 128 N. W. 43, 32 L. R. A. (N. S.) 383n. A contract made within the Confederate States during the war of 1861-65 to pay a certain sum in "dollars," without specifying the kind of currency in which pay- ment was to be made, may be shown by the nature of the transaction and the attendant circumstances, as well as by the language of the contract itself, to have contemplated pay- ment in confederate currency. Rives V. Duke, 105 U. S. 132, 26 L. ed. 1031. "^ Shore v. Wilson, 9 CI. & Fin. 355; MacDonald v. Longbottom, 1 El. & El. 977; Carr v. Montefiore, 5 B. & S. 408; Thompson v. McKay, 41 Cal. 221; True v. Rocky Ford Canal Reservoir & Land Co., 36 Colo. 43, 85 Pac. 842; Excelsior Needle Co., v. Smith, 61 Conn. 56, 23 Atl. 693; Nelson v. Ohio Culti- vator Co., 188 Fed. 620; Marx v. American Malting Co., 169 Fed. 582, 95 C. C. A. 80; Western Lumber Co. V. Willis, 160 Fed. 27, 87 C. C. A. 183; Mt. Vernon Refrigerating Co. v. Fred W. Wolf Co., 188 Fed. 164, 110 C. C. A. 200; Jacobs v. Parodi, SO Fla. 541, 39 So. 833; Burke Land 6 Livestock Co. v. Wells, Fargo & Co., 7 Idaho 42, 60 Pac. 87 ; Schurger V. Moorman, 20 Idaho 97, 117 Pac. 122, 36 L. R. A. (N. S.) 313; Haddcn V. Shoutz, IS 111. 581; Thomas v. Wiggers, 41 111. 470; Kuecken v. Vnitz. no 111. 264; Wood v. Clark, 121 111. 359, 12 N. E. 271; Gwinn v. Wright, 42 Ind. App. 597, 86 N. E. 453; Indiana Natural Gas & Oil Co. 793 INTERPRETATION AND CONSTRUCTION. § 1518. Rule illustrated. — Thus, an insurance policy which provided "the risk to be suspended while vessel is at Baker's Island loading" was construed to mean while the ship was at Baker's Island "for the purpose of loading" whether actually engaged in loading or not, in view of the dangerous character of the place."" If the vendor of a city lot should, in a deed of such lot, reserve to himself a building standing thereon it would be manifest that he reserved only the right to remove such build- Lexington &c. R. Co. V. Moore, 140 Ky. 514, 131 S. W. 257. "The court will infer the intention of the parties, * * * from the circumstances at- tending the transaction." Chicago, M. & St. P. R. Co. V. Hoyt, 89 Wis. 314, 62 N. W. 189. The usage of the business may be one of the sur- rounding circumstances to be taken into consideration. Shewsbury v. Tufts, 41 W. Va. 212, 23 S. E. 692. See also, Fox v. Mackay, 125 Cal. 54, 57 Pac. 672. Facts of public notorie- ty relating to the subject of a con- tract must be presumed to have been icnown to the parties at the time of making the contract, and the lan- guage used must be construed in ref- erence to these facts. Anse &c. Oil Mineral Co. v. Babb, 122 La. 415. 47 So. 754, quoting from Woodruff v. Woodruff, 52 N. Y. 53. To same effect, Schurger v. Moorman, 20 Idaho 97, 117 Pac. 122, 36 L. R. A. (N. S.) 313; McMillin v. Titus. 222 Pa. 500, 72 Atl. 240. See also, Trow V. Preferred Accident Ins. Co. (Vt.), 67 Atl. 821. "According to old law, the patent ambiguity of the clause might make the stipulation void; but this doctrine is no longer en- forced as strictly as formerly, and, whether an ambiguity is patent or latent, a court will endeavor to glean the intention of the parties from the whole instrument and the instances attendant on its execution." Con- servative Realty Co. v. St. Louis Brewing Assn., 133 Mo. App. 261, 113 S. W. 229. To same effect, Lex- ington & B. S. R. Co. v. Moore, 140 Ky. 514. 131 S. W. 257. °°Reed v. Merchants' Mut. Ins. Co. of Baltimore, 95 U. S. 23, 24 L ed. 348. V. Stewart, 45 Ind. App. 554, 90 N. E. 384; Pratt v. Prouty, 104 Iowa 419, 12> N. W. 1035, 65 Am. St. 472; Simpson v. Kimberlin, 12 Kans. 579; Chanute Brick and Tile Co. v. Gas Belt Inicl Co., 82 Kans. 752, 109 Pac. 398; First Nat. Bank v. Gerke, 68 Md. 449, 13 Atl. 358, 6 Am. St. 453; Knight V. New England Worsted Co., 2 Cush. (Mass.) 271; Callender v. Flint, 187 Mass. 104, 72 N. E. 345; Mathews v. Phelps, 61 Mich. 327, 28 N. W. 108, 1 Am. St. 581; Crawford v. Elliott, 78 Mo. 497; Kenyon Printing & IMfg. Co. v. Barnsley Bros. Cutlery Co., 143 Mo. App. 518, 127 S. W. 666; Fiscus v. Wilson, 74 Nebr. 444, 104 N. W. 856; Morris Canal & B. Co. v. Matthie- sen, 17 N. J. Eq. 385; United Box- board & Paper Co. v. McEwan Bros. Co. (N. J. Ch.), 76 Atl. 550; Hornthal v. Howcott, 154 N. Car. 228, 70 S. E. 171; Mosier v. Parry, 60 Ohio St. 388, 54 N. E. 364; Lacy V. Green, 84 Pa. St. 514; Lipscomb v. Fuqua. 103 Tex. 585, 131 S. W. 1061, affirming judgment (Tex. Civ. App.), 121 S. W. 193; Merriam v. United States, 107 U. S. 437, 27 L. ed. 531, 2 Sup. Ct. 536, 18 Ct. CI. (U. S.) 760; Mobile & M. R. Co. v. Jurey, 111 U. S. 584, 28 L. ed. 527. 4 Sup. Ct. 566; Brawley v. United States, 96 U. S. 168. 24 L. ed. 622. 13 Ct. CI. (U. S.) 521; Nash v. Towne. 5 Wall. (U. S.) 689, 18 L. ed. 527; Barreda v. Silsbee, 21 How. (U. S.) 146, 16 L. ed. 86; Daly v. Old, 35 Utah 74, 99 Pac. 460, 28 L. R. A. (N. S.) 463n; Nilson v. Morse, 52 Wis. 240, 9 N. W. 1; McMillen v. Pratt, 89 Wis. 612, 62 N. W. 588; Zohrlaut v. Mengelberg (Wis.), 124 N. W. 247; McMillan v. Holley, 145 Wis. 617, 130 N. W. 455. See also, § 1 5 19 CONTRACTS. 794 ing, since a different construction would be destructive of the grant. On the other hand, if a testator devised to his sons a large farm, reserving to his widow the right to occupy the farm- house during her life, it might and probably would be held to include the outbuildings and gardens or messuage. So, while a shop in which an individual carried on a trade might be limited to the particular building, and even to the particular room in which his work was done, we should not apply this narrow construction to the shops in which a large railroad corporation carries on its manufacturing and repairing. Here the word "shops" would include such lands as are used or procured for shop purposes and appurtenant to the shops. "^^ It has been held that where a con- tract provided that the intervener should be limited to such amount of stock and bonds as the Railroad Commission should authorize, the term "should" meant such an amount as the Com- mission elected to authorize.*^** That construction will be adopted which, in the light of surrounding circumstances and upon a view of the whole instrument, is in accordance with the apparent intent of the parties.^® § 1519. Rule concerning surrounding circumstances fur- ther considered. — There should be a proper regard for the object which the parties had in entering into the contract as well as the language employed in arriving at its proper construction.^" •"Chicago &c. R. Co. V. Denver &c. Co. v. Bartlett, 120 111. 603, 11 N. R Co. 143 U. S. 596, 36 L. ed. 277, E. 867; Consolidated Coal Co. v. 12 Sup Ct. 479. Peers, 150 111. 344. Z1 N. E. 937; °* United States & Mexican Trust Bull v. Quincy, 155 111. 566, 40 N. E. Co V. Delaware Western Const. Co. 1035; Starr v. Millikin, 180 III. 458, (Tex. Civ. App.), 112 S. W. 447. 54 N. E. 328; Briquette Fuel Co. of *" Construction Information Co. v. St. Louis v. Davis, 134 111. App. 343; Cass, 74 Conn. 213, SO Atl. 563; Pittsburg C. C. & St. L. R. Co. v. Springsteen v. Samson. 32 N. Y. Wilson, 46 Ind. App. 444, 91 N. E. 703; United States v. Gibbons, 109 725; Jacobs v. Jacobs, 42 Iowa 600; U S. 200, 27 L. ed. 906, 3 Sup. Ct. Field v. Woodmancy, 10 Cush. 117. See also, Twin Falls &c. Fruit (Mass.) 427; Morrill & Whiton Co. v. Salsbury, 20 Idaho 110, 117 Const. Co. v. Boston, 186 Mass. 217, Pac. 118. 71 N. E. 550; Penfold v. Universal '"Messenger v. German-American Life Ins. Co., 85 N. Y. 317, 39 Am. Ins. Co., 47 Colo. 448, 107 Pac. 643; Rep. 660; Robertson v. Ongley Elec- Jennings v. Brotherhood Ace. Co., trie Co., 146 N. Y. 20, 40 N. E. 390; 44 Colo. 68, 96 Pac. 982, 18 L. R. A. Teutonia Fire Ins. Co. v. Mund, 102 (N. S.) 109n, 130 Am. St. 109: Pa. St. 89; Parker v. Oil-Well Sup- Brown V. Slater, 16 Conn. 192, 41 ply Co., 186 Pa. St. 294, 40 Atl. 18; Am. Dec. 136; Chicago, B. & Q. R. Mosier v. Parry, 60 Ohio St. 388, 54 795 INTERPRETATION AND CONSTRUCTION, § I519 Inquiry may be made as to their situation at the time the contract was entered into, and the purpose to be accompHshed by its exe- cution." Thus, where the defendant was given the right to sell a a certain commodity within the state of Illinois on the payment of a royalty to the plaintiff for goods sold in such state the former could not avoid payment of the royalty by making the contract of sale in another jurisdiction with knowledge that the goods were to be used in Illinois. '^^ Previous and contemporary transactions and facts may be taken into consideration to ascertain the sub- ject-matter and the sense in which the parties have used particular terms, but not to modify the plain language." It is proper to look at all the surrounding circumstances and the pre-existing relation between the parties, and then to see what they mean when they speak.''* Accordingly an indemnity bond may be read in the N. E. 364; O'Brien v. Miller. 168 U. S. 287. 42 L. ed. 469. 18 S. Ct. 140; Canal Co. v. Hill, 15 Wall. (U. S.) 94, 21 L. ed. 64. "Contracts are not to be interpreted by giving a strict and rigid meaning to general words or expressions without regard to the surrounding circumstances or the ap- parent purpose which the parties sought to accomplish." Gillet v. Bank of America. 160 N. Y. 549, 55 N. E. 292. The purpose of the con- tract rather than the name given it by the parties is to be looked to in determining its real character. Men- nis V. Manning, 136 111. App. 406. To same effect, Steele v. State, 159 Ala. 9, 48 So. 673; Prather v. Bran- don, 44 Ind. App. 45, 88 N. E. 700; Wilson V. Wilson. 115 Mo. App. 641, 92 S. W. 145. " Payne v. Neuval. 155 Cal. 46, 99 Pac. 476 (contract having some of the features of a grant and some of a lease) ; Kauffman v. Raeder. 108 Fed. 171, 47 C. C. A. 278. 54 L. R. A. 247 ; lUges v. De.xter. 11 Ga. 36 ; Vin- cennes v. Citizens' Gas Light Co., 132 Ind. 114. 31 N. E. 573: Kreitz V. Egelhoff. 231 Mo. 694, 132 S. W. 1124; Citv of St. Louis v. St. Louis & S. F. R. Co., 228 Mo. 712. 129 S. W. 691 ; Wirth v. Kahlenberg. 62 N. Y. S. 1030; Purringtnn v. Grimm, ^Z Vt 466. 16 Atl. 158; Spencer v. Potter's Estate (Vt.), 80 Atl. 821. When an agreement is entered into in anticipation of certain legislation, and such legislation, when enacted, falls within the spirit of the contract, if not within its letter, the legislation is within the contract. Dudley v. Owen, 31 App. D. C. 177. " Illinois Terra Cotta Lumber Co. V. Owen, 167 111. 360, 47 X. E. 722. "^ Brawley v. United States, 96 U. S. 168. 24 L. ed. 622, 13 Ct. CI. 521 ; White V. White. 64 W. Va. 30, 60 S. E. 885. See also, Newcomb v. Kloeb- len, 11 N. J. L. 791, 74 Atl. 511; El Dorado Jewelry Co. v. Hopkins, 34 Pa. Super. Ct. 446 (oral agreement collateral to written agreement). When the parties to a contract de- liberately put their agreement in writing in such terms as import a legal obligation all prior negotiations, letters and telegrams are thereby merged in the written contract. Fuchs & Lang Mfg. Co. v. R. J. Kit- tredge & Co., 146 111. App. 350, affd. 242 111. 88, 89 N. E. 723. " Brevfogle v. Walsh, 80 Fed, 172. 25 C. C. A. 357; Weeks-Betts Hard- ware Co. V. Roosevelt Lead & Zinc Co.. 153 Mo. App. 387. 134 S. W. 35 : Nebraska Hardware Co. v. Hum- phrev Hardware Co., 81 Nebr. 693. 116 N. W. 6.59; Fox v. International Hotel Co.. 168 \. Y. 658, 61 N. E. 1129. affg. 41 App. Div. (N. Y.) 140, 58 N. Y. S. 441 ; Gallup v. Sterling, § I5-0 CONTRACTS. 796 light of surrounding circumstances, in order more perfectly to understand the intent and meaning of the parties. ^° It has even been held that written options preceding the execution of leases and an agreement, afforded some light in ascertaining the under- standing of the parties, and are competent to be considered for that purpose." An obscure and ambiguous oral contract may be interpreted in the light of the conversations of the parties making it."^^ But the rule which requires that a contract be viewed in the light of surrounding circumstances is a rule of con- struction merely, and does not permit the making of a new con- tract, nor a reformation of it, nor a disregard of its terms. It authorizes only a just construction of the terms used and a fair inference as to the common understanding of both of the con- tracting parties.'^* And evidence of the surrounding circum- stances may not be admissible when the contract is plain and when no ambiguity exists as to its terms. The contract then speaks for itself.''® § 1520. Subsidiary rules of construction — Construction upholding contract preferred. — Where the language of an in- strument in writing or the facts of a transaction are of a character to leave in some doubt what the party thereto intended should be the precise nature of the legal effect thereof, the contract is not to be so construed as to render it invalid if it is reasonably suscepti- ble of construction that will render it valid.^'^ If reasonably 22 Misc. (N. Y.) 672, 49 N. Y. S. Y.) 209; Griffiths v. Hardenbergh, 41 942. In re the New York C. R. Co., N. Y. 464. 49 N. Y. 414; Nash v. Towne, 5 "Chicago Auditorium Assn. v. Wall. (U. S.) 689, 18 L. ed. 527; Corporation of Fine Arts Building, Pittsburgh, C. & St. L. R. Co. v. ISO 111. App. 262, judgment affirmed Columbus, C. & I. C. R. Co., 8 Biss. 244 111. 532, 91 N. E. 665. (U. S.) 456, Fed. Cas. No. 11197; ''Jennings v. Whitehead & Ather- Reed v. Insurance Co., 95 U. S. 23, ton Mach. Co., 138 Mass. 594. See 24 L. ed. 348. The agreement is to also. Valley Planting Co. v. Wise, 93 be viewed in the light of surround- Ark. 1, 123 S. W. 768, 26 L. R. A. ing circumstances at the time it was (N. S.) 403. made and not in the light of after '^ Clark v. Woodruff, 83 N. Y. 518. events. Davin v. City of Syracuse, "Grosse v. Barman, 9 Cal. App. 69 Misc. (N. Y.) 285, 126 N. Y. S. 650, 100 Pac. 348; Zohrlaut v. Men- 1002, 129 N. Y. S. 1119. gelberg (Wis.), 124 N. W. 247. Com- ■"* Rogers v. Kimball, 121 Cal. 247, pare with Lexington &c. R. Co. v. 53 Pac. 648; California Sav. Bank v. Moore, 140 Ky. 514, 131 S. W. 257. American Surety Co., 82 Fed. 866; ^"Belden v. Farmers & Mechanics* Bancroft v. Winspear, 44 Barb. (N. Bank, 16 Cal. App. 452, 118 Pac. 449; 797 INTERPRETATION AND CONSTRUCTION. 1520 possible the contract will be so construed as to make it lawful. It will not be presumed that the parties intended to violate the law.®^ Thus, a contract will not be held illegal on the ground Mebius & Drescher Co. v. Mills, 150 Cal. 229, 88 Pac. 917; Hunter W. Finch & Co. v. Zenith Furnace Co., 146 111. App. 257, judgment affirmed 92 N. E. 521, 245 111. 586; Cole v. Brown-Hurley Hardware Co., 139 Iowa 487, 117 N. W. 746, 18 L. R. A. (N. S.) 1161n; Rapp v. H. Line- barger, 149 Iowa 429, 128 N. W. 555, reversing judgment on rehear- ing 125 N. W. 209; State v. Lewin, 128 Mo. App. 149, 106 S. W. 581 (grant from state) ; Young v. Met- calf Land Co., 18 N. Dak. 441, 122 N. W. 1101. "The law does not favor, but leans against the de- struction of contracts because of un- certainty; it will, if feasible, so construe the contract as to carry into effect the reasonable intention of the parties if that can be ascer- tained." IMcIntyre Lumber &c. Co. V. Tackson Lumber Co., 165 Ala. 268, 51 So. 767, 138 Am. St. 66. "It is the understanding and intention of the parties — that is, their mutual intention — which is to govern the contract, if it can be reasonably deduced from the contract itself ; but if the con- tract is so expressed as to be sus- ceptible of one interpretation as- serted by one party as his under- standing, and of another interpreta- tion asserted by the adverse party as his understanding, then there is no mutual intention of the parties, and that interpretation will be adopted which will uphold, rather than de- feat, the validity of the instrument." McEvoy v. Security Fire Ins. Co. of BaUimore City, 110 Md. 275, 73 Atl. 157, 22 L. R. A. (N. S.) 964, 132 Am. St. 428n. "We recognize the rule that, in a case of doubt, courts should favor a construction which upholds the validity of the contract, but such a rule cannot apply to a case where the intent of the parties is obvious. A court cannot do vio- lence to the plain meaning of words and the clear intent by making a contract for the parties, under the fiction of a construction." Scripps V. Sweeney, 160 Mich. 148, 125 N. W. 72. "Wvatt V. Irrigation Co., 18 Colo. 298, 33 Pac. 144, 36 Am. St. 280; Wiggin V. Stock Co., 77 Conn. 507, 59 Atl. 607; Stewart v. Stearns & Culver Lumber Co., 56 Fla. 570, 48 So. 19, 24 L. R. A. (N. S.) 649n ; Luke V. Livingston, 9 Ga. App. 116, 70 S. E. 596 (holds that on demurrer the court will give a contract, open to two constructions, that meaning which will render it lawful, until the circumstances under which the con- tract was made appear in proof) ; Crittenden v. French, 21 111. 598; Hunt V. Elliott, 80 Ind. 245, 41 Am. Rep. 794; Guernsey v. Cook, 120 Mass. 501 ; Wiggins Ferry Co. v. Chicago R. Co., 128 Mo. 224, 27 S. W. 568; Horton v. Rohlff, 69 Xebr. 95, 95 N. W. 36; Rice v. Lincoln & N. W. R. Co., 88 Xebr. 307, 129 N. W. 425 (holds that when a con- tract is readily susceptible of a con- struction that will render it valid the court will not construe doubtful language so as to make the contract contrary to the law against per- petuities) ; Pitney v. Bolton, 45 N. J. Eq. 639, 18 Atl. 211, affd. 46 X. J. Eq. 610, 22 Atl. 56; Archibald v. Thomas, 3 Cow. (X. Y.) 284; Coyne V. Weaver, 84 X. Y. 386; Lorillard V. Clvde, 86 X. Y. 384; Beasley v. Aberdeen & Rockfish R. Co. (X. Car.), 59 S. E. 60; Keadv v. United R. Co. (Ore.), 108 Pac. 197; W. A. INIorgan & Bros. v. Missouri K. & T. R. Co. of Texas, 50 Tex. Civ. App. 420, 110 S. W. 978; Watters v. McGuigan, 72 Wis. 155, 39 X. W. 382 ; Lippert v. Garrick Theater Co., 144 Wis. 413, 129 X. W. 409; Hobbs V. McLean. 117 U. S. 567, 29 L. ed. 940, 6 Sup. Ct. 870; United States v. Central &c. R. Co., 118 U. S. 235, 6 Sup. Ct. 1038. See also, Keller v. State (Tex.). 87 S. W. 669, 1 L. R. A. (X. S.) 489. A fortiori when the party seeking the illegal construc- tion is the one who made the con- tract (Delaware &c. R. Co. v. Kut- § 1 521 CONTRACTS. /QS that the promisor binds himself to labor for the promisee in in- voluntary servitude when it is susceptible of a construction which will make it legaV^ As between two meanings which the words will bear, that meaning should be adopted which will make the agreement a valid and not a void one. The agreement should, if possible, be rendered operative, as the parties are supposed to have intended something by their agreement. ^^ That construction which sustains and vitalizes an agreement should be preferred to that which strikes it down and paralyzes it.^* Thus, where a con- tract is equally susceptible of two interpretations, one of which is consistent with and accomplishes the intention of the parties while the other would render it merely senseless and nugatory, the former is the true one and will be adopted.^^ § 1521. Subsidiary rules of construction — A reasonable construction will be adopted. — In addition, the contract is to be given a reasonable construction. It will not be construed so as to render it oppressive or inequitable as to either party or so as to place one of the parties at the mercy of the other unless it is clear that such was their manifest intention at the time the agree- ter, 147 Fed. 77, 77 C. C. A. 315), or Cent. Ins. Co., 100 N. Y. 417, 3 N. one who has been benefited thereby. E. 309, 53 Am. Rep. 202; Lewis v. Virginia Bridge & Iron Co. v. Crafts, Tipton, 10 Ohio St. 88, 75 Am. Dec. 2 Ga. App. 126, 58 S. E. 322. 498; Thrall v. Newell, 19 Vt. 202, "Potts V. Riddle, 5 Ga. App. 378, 47 Am. Dec. 682; Walsh v. Myers, 63 S E 253 92 Wis. 397, 66 N. W. 250. "Saunders v. Clark, 29 Cal. 299; ''United States Fidelity & Guar- Hammond v. Haskell, 14 Cal. App. anty Co. v. Board of Comrs. of 522, 112 Pac. 575; Brown v. Slater, Woodson County, Kans., 145 Fed. 16 Conn. 192, 41 Am. Dec. 136; 144, 76 C. C. A. 114; Berry v. Fris- Construction Information Co. v. bie, 120 Ky. 237, 27 Ky. L. 724, 86 Cass, 74 Conn. 213, 50 Atl. 563; S. W. 558. Peckham v. Haddock, 36 111. 38; ^ Shreffler v. Nadelhoffer, 133 111. Chicago, M. & N. R. Co. v. National 536, 25 N. E. 630, 23 Am. St. 626. Elevator &c. Co., 153 111. 70, 38 N. To same effect, T. M. Sinclair & Co. E. 915- Minn. Lumber Co. v. White- v. National Surety Co. (Iowa), 107 breast Coal Co., 160 111. 85, 43 N. E. N. W. 184; Farmers' Nat. Bank v. 774, 31 L. R. A. 529; Rankin v. Ran- Delaware Ins. Co., 83 Ohio St. 309, kin, 216 111. 132, 74 N. E. 763; Irwin 94 N. E. 834; Olympia Bottling V. Kilburn, 104 Ind. 113, 3 N. E. 650; Works v. Olympia Brewing Co., 56 Davenport v. Gwilliams, 133 Ind. Ore. 87, 107 Pac. 969. See also, 142 31 N. E 790 22 L. R. A. 244; Thompson v. Trenton Water Power Atwood V. Cobb, 16 Pick. (Mass.) Co., 77 N. J. L. 672, 73 Atl. 410; 227 26 Am. Dec. 657; Black v. New York v. American R. Traffic Bachelder, 120 Mass. 171; Vickers Co., 66 Misc. (N. Y.) 166, 121 N. Y. V. Electrozone Co., 67 N. J. L. 665, S. 221, affd. 128 N. Y. S. 1118 52 Atl. 467; Waldron v. Willard, 17 (memorandum decision). N. Y. 466; Griffey v. New York 799 INTERPRETATION AND CONSTRUCTION. i:;2I ment was made.^* Thus, an agreement by a railroad company with one owning land adjacent to its tracks that, if he would build a coal tipple and a trestle therdfrom to its track, it would construct a switch thereon and thereafter deliver coal to him, has been held not to contain an implication that the switch would be perpetual." An application to a broker for a loan of money for a certain time and rate of interest, the principal and interest payable at such place as the lender may appoint, to be secured by note and trust deed in the broker's ''usual form", does not bind the applicant to agree to pay in gold coin, although that provision appears in the forms used by the broker, where it is not shown that the existence of such provision was known to the applicant.**' And where the plaintiffs might under their contract elect to take *• Paine v. Copper Belle Min. Co. of Arizona (Ariz.), 114 Pac. 964; Chi- cago B. & Q. R. Co. V. Provolt, 42 Colo. 103, 93 Pac. 1126, 16 L. R. A. (N. S.) 587; A. Leschen & Sons Rope Co. V. Mayflower Gold Min. &c. Co., 173 Fed. 855, 97 C. C. A. 465, 35 L. R. A. (N. S.) In; Choctaw O. & G. R. Co. V. Bond, 160 Fed. 403, 87 C. C. A. 355, affg. 6 Ind. T. 515, 98 S. W. 335; Hall v. Hardaker, 61 Fla. 267, 55 So. 977 ; Haag v. Rogers, 9 Ga. App. 650, 72 S. E. 46; Twin Falls &c. Fruit Co. v. Salsbury, 20 Idaho 110, 117 Pac. 118; Gale v. Dean, 20 III. 320; Streeter v. Street- er, 43 111. 155; Wilson v. Marlow, 66 111. 385; Blitz v. Union Steamboat Co., 51 Mich. 558, 17 N. W. 55 ; Con- queror Zinc & Lead Co. v. Aetna Life Ins. Co., 152 Mo. App. 332, 133 S. W. 156; American Hardwood Lumber Co. v. Dent, 151 Mo. App. 614, 132 S. W. 320; Jersey City v. Flynn, 74 N. J. Ch. 104, 70 Atl. 497; Russell V. Allerton. 108 N. Y. 288, 15 N. E. 391; Gillet v. Bank of America, 160 N. Y. 549, 55 N. E. 292; Dunning v. Elmore & Hamil- ton Contracting Co., 139 App. Div. (N. Y.) 249. 124 N. Y. S. 107; Reeves & Co. v. Martin. 20 Okla. 558, 94 Pac. 1058; Bickford v. Coop- er, 41 Pa. St. 142; Smilev v. Gal- lagher. 164 Pa. St. 498. 30 Atl. 713; United States v. Gibbons. 109 U. S. 200, 27 L. ed. 906. 3 Sup. Ct. 117; United States v. Gleason, 175 U. S. 588, 44 L. ed. 284, 20 Sup. Ct. 228; Caine v. Hagenbarth, Zl Utah 69, 106 Pac. 945; Jacobs v. Spalding, 71 Wis. 177, 36 N. W. 608; Kentzler V. American Mut. Ace. Assn.^ 88 Wis. 589, 60 N. W. 1002, 43 Am. St. 934. "That construction of a written instrument will be adopted, if possible, which will make it effectual, rather than ineffectual, and reasonable and just rather than the opposite." DriscoU v. Penrod (Ind.), 95 N. E. 313. See also, Mississippi Home Ins. Co. v. Adams, 84 Ark. 431. 106 S. W. 209; Christian V. First Nat. Bank, 155 Fed. 705, 84 C. C. A. 53; Mercer v. Stupp Bros. Bridge & Iron Co.. 115 111. App. 298; Redwine v. Hudman (Tex.), 133 S. W. 426; Citizens' Bank v. Taylor & Co., 104 Va. 164, 51 S. E. 159. See also, Jacobs v. Spalding, 71 Wis. 177, 36 X. W. 608. However, when parties have made their con- tract, it is the duty of the courts to enforce it as they have elected to make it without regard to the fact that in the light of subsequent events a hardship mav be worked. Nor- cross V. Wills, 198 N. Y. 336. 91 N. E. 803, affg. 130 App. Div. (N. Y.) 470, 114 \. Y. S. 969. To same effect, Lee v. Cochran, 157 Ala. 311, 47 So. 581. " Jones V. Newport News &c. Co., 65 Fed. 736. 13 C. C. A. 95. *" Pcabodv V. Dewev. 153 111. 657, 39 N. E. 977, 'ZJ L. R. A. 322. 1522 CONTRACTS. 800 the entire output of a factory it was held on breach of the con- tract by the defendant that the defendant had not bound itself to make the largest possible output and that the plaintififs were entitled to recover such damages only as they were able to show resulted to them from the failure of the defendant to operate its factory in a reasonable manner and that such damages should be computed on the least quantity that would have been produced in case the factory had been operated in good faith.^^ The words "at once" in a wrecking contract for the removal of a certain building have been construed to mean such time as was reasonable under the attendant circumstances.®** § 1522. Subsidiary rules of construction — Construing sev- eral instruments together. — Several instruments which refer to the same subject-matter between the same parties and made as parts of substantially one transaction are considered as one con- tract and receive the same construction as if their several pro- visions were in one and the same instrument.®^ This principle is ** Nute V. American Glucose Co., 55 Kans. 225, 40 Pac. 279. ""Wetter v. Kleinert, 139 App. Div. (N. Y.) 220, 123 N. Y. S. 755. "In re Phoenix Bessemer Steel Co., 44 L. J. Ch. 683; Whitehurst v. Boyd, 8 Ala. 375 ; Byrne v. Marshall, 44 Ala. 355; Chambers v. Marks, 93 Ala. 412, 9 So. 74; Daigle v. Mad- docks, 2 Alaska 387; Meyer v. Weber, 133 Cal. 681, 65 Pac. 1110; Flinn v. Mowry, 131 Cal. 481, 63 Pac. 724. modified, 131 Cal. 481, 63 Pac. 1006; Getz Bros. & Co. v. Fed- eral Salt Co., 147 Cal. 115, 81 Pac. 416, 109 Am. St. 114; Isham v. Mor- gan, 9 Conn. 374, 23 Am. Dec. 361; R. A. Sherman's Sons Co. v. In- dustrial & Mfg. Co., 82 Conn. 479, 74 Atl. n2>\ Nash v. Milford, 33 App. (D. C) 142; Brown v. Right, ZZ App. (D. C.) 260 (one paper an ab- solute assignment by a borrower of his reversionary interest in a fund and the other a receipt for money which recited that the transaction was a loan) ; Male v. Lafferty, 105 Fed. 564; Woodward v. Jewell, 25 Fed. 689; Phillipi Colliers Co. v. Thompson, 163 Fed. 23, 89 C. C. A. 501 ; Hunt v. Capital State Bank, 12 Idaho 588v 87 Pac. 1129; Illinois Match Co. V. Chicago &c. R. Co., 250 111. 396, 95 N. E. 492; Keith v. Mil- ler, 174 111. 64, 51 N. E. 151; Harris V. Dozier, 72 111. App. 542; Denby v. Graff, 10 111. App. 195; Galena & S. W. Railroad v. Barrett, 95 111. 467; Hennessy v. Gore, 35 111. App. 594 (promissory notes and deed of trust) ; Wilson v. Roots, 119 111. 379, 10 N. E. 204; Chicago Trust & Sav- ings Bank v. Chicago Title & Trust Co., 190 111. 404, 60 N. E. 586, 83 Am. St. 138; Gould v. Magnolia Metal Co., 207 111. 172, 69 N. E. 896; Rider V. Rider, 114 111. App. 202; Leach v. Rains, 149 Ind. 152, 48 N. E. 858; Allen v. Nof singer, 13 Ind. 494; Carr v. Hays, 110 Ind. 408, 11 N. E. 25, 25 Cent. L. Jour. 32; Mc- Cauley v. Schatzley, 44 Ind. App. 262, 88 N. E. 972; Salt Co. v. Barber, 58 Kans. 419, 49 Pac. 524; Kurt v. Lanyon, 72 Kans. 60, 82 Pac. 459; Farmers' Alliance Ins. Co. v. Hanks, 83 Kans. 96, 110 Pac. 99; Bliss v. Young, 7 Kans. App. 728, 52 Pac. 577 (note and coupon to be con- strued together) ; Kurt v. Lanyon, 72 Kans. 60, 82 Pac. 459; Parks' Exr. V. Cooke, 3 Bush (Ky.) 168; 8oi INTERPRETATION AND CONSTRUCTION. § 1 522 of wide application and the illustrative cases are numerous. "^^ Sackett v. Haggard, 142 Kv. 500, 38 Week. Notes Cas. (Pa.) 487; 134 S. W. 888; American Gas & Kenyon v. Nichols, 1 R. I. 411; Ventilation Mach. Co. v. Wood, 90 Stewart v. Morris, 84 S. Car. 148, Maine 516, 38 Atl. 548, 43 L. R. A. 65 S. E. 1044 (two leases construed 449; Gammon v. Freeman, 31 Maine together) ; Olds v. East Tennessee 243; American Gas & Ventilating Stone & Marble Co. (Tenn.), 48 S. Mach. Co. V. Wood. 90 Maine 516, W. 333; Livingston v. Story, 11 Pet. 38 Atl. 548, 43 L. R. A. 449; Make- (U. S.) 351, 9 L. ed. 746; John peace v. Harvard College, 10 Pick. Bailey v. Hannibal & St. Joseph R. (Mass.) 298; Perry v. Holden, 22 Co., 17 Wall. (U. S.) 96, 21 L. ed. Pick. (Mass.) 269; Gaffney v. 611; Joy v. St. Louis, 138 U. S. 1, Hicks, 131 Mass. 124; Avery v. 34 L. ed. 843, 11 Sup. Ct. 243; Greg- Bushnell, 123 Mass. 349; Collins v. ory v. Marks, 8 Biss. (U. S.) 44, Delaporte, 115 Mass. 159; Wash- 4 L. & Eq. 283, Fed. Cas. No. 5802, burn & Moen Mfg. Co. v. Salisbury, 9 Chicago Leg. News 394 (7th U. 152 Mass. 346, 25 N. E. 724; Penn. S. Cir.) (111. 1877) (Where a claim Mut. Life Ins. Co. v. Crane, 134 in a trust deed provided that the in- Mass. 56, 45 Am. Rep. 282 ; Sutton debtedness secured thereby was to V. Beckwith, 68 Mich. 303, 36 N. W. become wholly due and payable in 79, 13 Am. St. 344; Dudgeon v. Hag- case of default in the payment of in- gart, 17 Mich. 273 (where a large terest, it was held that the note and number of cases on this point are the trust deed, being contemporane- collected). Reber v. Pearson, 155 ous, must be construed together, Mich. 593, 119 N. W. 897, 15 De- and that, if default was made in the troit Leg. N. 1111; Myrick v. Pur- payment of interest, the whole in- cell, 95 Minn. 133, 103 N, W. 902; debtedness became due.); Coughran Myrick v. Purcell, 95 Minn. 133, 103 v. Bigelow, 9 Utah 260, 34 Pac. 51, N. W. 902; Jennings v. Todd, 118 affd., 164 U. S. 301, 41 L. ed. 442, Mo. 296, 24 S. W. 148, 40 Am. St. 17 Sup. Ct. 117 (contract and a bond 373 ; Talbott v. Heinze, 25 IMont. 4, referring to the contract construed 63 Pac. 624; Seieroe v. First Nat. together) ; Sterling v. Head Camo, Bank, 50 Nebr. 612, 70 N. W. 220; Pacific Jurisdiction, Woodmen of Nebraska Hardware Co. v. Hum- the World, 28 Utah 505. 80 phrey Hardware Co., 81 Nebr. 693, Pac. 375; Strong v. Barnes, 11 Vt. 116 N. W. 659; Hill v. Huntress, 43 221, 34 Am. Dec. 684; Reed v. Field, N. H. 480; Ownes v. Ownes, 23 N. J. 15 Vt. 672; Portsmouth Cotton &c. Eq. 60; Church v. Brown, 21 N. Y. Co. v. Oliver Refining Co., 109 Va. 315; Pepper v. Haight, 20 Barb. (N. 513, 64 S. E. 56, 132 Am. St. 924; Y.) 429; Hamilton v. Taylor, 18 N. Norton v. Kearney, 10 Wis. 443; Y. 358; Wilson v. Randall, 67 N. Y. Stapleton v. Brannon, 102 Wis. 26, 338; Marsh V. Dodge. 66 N. Y. 533; 78 N. W. 181; Wright v. C. S. Meriden Britannia Co. v. Zingsen, Graves Land Co., 100 Wis. 269, 75 48 N. Y. 247, 8 Am. Rep. 549; Dra- N. W. 1000; Hagerty v. White. 69 per v. Snow, 20 N. Y. 331, 75 Am. Wis. 317, 34 N. W. 92; Hannig v. Dec. 408; Baird v. Erie R. Co., 72 Mueller, 82 Wis. 235. 52 N. W. 98 Misc. (N. Y.) 162, 129 N. Y. S. (deed and bond); Herbst v. Lowe. 329; Battery Park Bank v. Lough- 65 Wis. 316, 26 N. W. 751; Security ran, 122 N. Car. 668, 30 S. E. 17; Trust & Life Ins. Co. v. Ellsworth, Smith V. Turpin. 20 Ohio St. 478; 129 Wis. 349, 109 N. W. 125 (mort- Jacobs V. Mitchell, 46 Ohio St. 601, gage and agency contracts). 22 N. E. 768; Chrisman v. State Ins. "'a The fact that they bear different Co.. 16 Ore. 283. 18 Pac. 466; Dean dates is immaterial if the contract is V. Lawham, 7 Ore. 422; Maffett v. not carried into effect until both are Thompson, 32 Ore. 546, 52 Pac. 565. executed. Knowles v. Toone. 96 N. 53 Pac. 854; Cummings v. Antes, 19 Y. 534. To the same effect, Ncill v. Pa. St. 287; Joseph Iron Co. v. Chessen, 15 111. App. 266; Baltimore Richardson, 2 Pa. Super. Ct. 208, & O. S. W. R. Co. v. Brubaker, 217 51 — Contracts, Vol. 2 § 15-3 CONTRACTS. 802 Thus, where the making of a note is accompanied by an agree- ment in relation thereto, the note and the agreement are to be taken together and form one entire transaction.®^ So a memo- randum written on the back of a note at its inception and prior to its dehvery providing for a renewal of the instrument has been held a part of the note.®^ § 1523. Contracts contained in more than one instrument further illustrated. — Where four contracts were made at the same time, one between the Metropolitan Railway Company and the New York City Company by which the latter company agreed to furnish the former $8,000,000.00, one between the New York City Company and the Metropolitan Securities Company by which the Security company on a consideration moving from the Metropolitan Street Railway Company agreed to furnish the city company the money necessary to carry out its agreement with the Metropolitan Street Railway Company and one between the Met- ropolitan Surety Company and the Interborough-Metropolitan Security Company reciting that the latter owned ninety-six III. 462, 75 N. E. 523 (contract and Glass Co., 11 N. J. Eq. 498, 78 Atl. deed construed together although 710. The contracts may be distinct several months elapsed between the and separate even though made be- execution of the two) ; Canadian tween the same parties and re- Coal Co. V. Lynch, 28 Okla. 585, 115 lating to the same subject-matter. Pac. 466. See also, Alden v. Camden Gayton v. Day, 178 Fed. 249, 101 C. Anchor-Rockland Mach. Co., 107 C. A. 609. A mere collateral agree- Maine 508, 78 Atl. 977; Western ment is not to be construed so as Adv. Co. V. Star Pub. Co., 146 Mo. to add to or change the provisions App. 90, 123 S. W. 969 (recognizing of the original agreement. Milske the rule but holding that it does v. Steiner Mantel Co., 103 Md. 235, not apply where the contracts were 63 Atl. 471, 5 L. R. A. (N. S.) 1105, made between diflferent parties and 115 Am. St. 354. Knudsten v. Rem- with no reference whatever in the mel, 141 App. Div. (N. Y.) 445, 126 one to the other). This rule does N. Y. S. 249 (collateral oral agree- not admit evidence for the purpose ment which added nothing to the of changing, modifying, or abrogat- written proposition), ing the contract, but that the whole "^ Bailey v. Cromwell, 3 Scam, contract in all its parts, may be pre- (111.) 71; Bradley v. Marshall, 54 sented, construed, and interpreted to- 111. 173; i)enby v. Graff, 10 111. App. gether. Oliver Typewriter Co. v. 195; Toledo Computing Scale Co. v. Huffman, 65 W. Va. 51, 63 S. E. Tydoen, 141 111. App. 21; Fuller v. 1086. Documents which go to make Pryor, 57 Tex. Civ. App. 425, 122 up a contract must be construed with S. W. 418 (note and instrument reference to the common and ordi- creating lien to secure payment), nary meaning of the words when "^ Alden v. Camden Anchor-Rock- there is nothing to show that they land Machine Co., 107 Maine 508, 78 are used in a special or technical Atl. 977. sense. Mellon v. Mississippi Wire 803 INTERPRETATION AND CONSTRUCTION. § 1 524 per cent, of the stock of the former company and agreeing to ad- vance it $15,000,000.00 and one between the Interborough Com- pany and the Mercantile Trust Company by which the latter agreed to pay the former $15,000,000.00 they were construed to- gether when they were in pari materia and the first four corpora- tions mentioned were under the same management and control."* A provision for forfeiture in a contract of agency has been held to apply to a "rider" attached thereto when the "rider" is declared to be a part of the agency contract."'^ So an insurance policy and the application will be construed together."*^ A chattel mortgage on buildings in course of erection and upon a leasehold interest, an assignment of the lease, and a contract between the parties in relation to the subject-matter, all executed on the same day, were construed together in determining the rights of the parties thereunder."^ Where a contract has reference to another paper for its terms, the effect is the same as if the words of the paper referred to were inserted in the contract.®^ Where two papers are executed in duplicate, one of the parties signing one of the papers and the other party signing the other, both papers together are to be treated as one document."" § 1524. The rule further illustrated. — For the purpose of arriving at the intent of the parties it has been held that both copies of the contract sued on purporting to have been made in duplicate, but varying in terms, are to be construed together/ A deed of con- veyance and a written agreement for a reconveyance,^ or a cove- ** Metropolitan Securities Co. v. ^ Shelmire v. Williams &c. Ferti- Ladd. 173 Fed. 269, 97 C. C. A. 435. lizer Co., 68 Hun (N. Y.) 196. •" Barton v. Travelers' Ins. Co., 84 'Gaffney v. Hicks, 131 Mass. 124. S. Car. 209. 66 S. E. 118. See also, McClurkan v. Thompson, »* Mutual Life Ins. Co. v. Kelly, 114 69 Pa. St. 305. Where a deed has Fed. 268, 52 C. C. A. 154; been executed and accepted as a per- "^ Edling V. Bradford, 30 Nebr. formance of an executory contract 593, 46 N. W. 836. to convey real estate, the rights of ** Adams v. Hill, 16 Maine 215; the parties rest thereafter solely on Patrick v. Y. M. C. A., 120 Mich, the deed. This is true although the 185. 79 N. W. 208; Stewart v. Mor- deed thus accepted varies from that ris, 84 S. Car. 148. 65 S. E. 1044. provided for in the contract, and the See also, Coughran v. Bigelow, 9 law remits the grantee to his cove- Utah 260, 34 Pac. 51. affd. 164 U. S. nant in the deed if there is no in- 301, 41 L. ed. 442. 17 Sup. Ct. 117. gredient of fraud or mistake in the "Richmond & D. R. Co. v. Shomo, case. Portsmouth Cotton &c. Re- 90 Ga. 496, 16 S. E. 220. fining Co. v. Oliver Refining Co., 109 § 1525 CONTRACTS. 804 nant by the grantee to support and maintain the grantor,' when parts of the same transaction, are to be construed together. When a note is secured by a mortgage the note and mortgage are to be construed together.* And, where a telegram is sent referring to a letter which had been mailed the same day, the letter must also be taken into consideration in determining the relation assumed by the parties.^ Deeds and a mortgage executed at the same time and having a relation to the same subject-matter have been con- strued together.^ Under a contract for the improvement of a street which provided that the grading was to be completed *'in accordance with the plans and specifications therefor" it was held that the specifications furnished the plan for the grading and be- came a part of the contract for this specified purpose, but that they were foreign to the contract for all other purposes/ Where parties make several contracts concerning the same subject- matter, but upon different dates and inconsistent with each other, the latest must control their respective rights and liabili- ties as far as it goes.^ § 1525. Subsidiary rules of construction — Instruments partly written and partly printed. — When the provisions of a Va. 513, 64 S. E. 56, 132 Am. St. 163 Fed. 23, 89 C C. A. 501; Davis 924 V. McVickers, 11 111. 327. ' Fort V. Richey, 128 111. 502, 21 ' Morling v. Weber, 3 Cal. App. 14, N E 498 84 Pac. 220. See also, Womble v. * Schultz V. Plankington Bank, 141 Hickson, 91 Ark. 266, 121 S. W. 401 III. 116, 30 N. E. 346, 33 Am. St. 290; (house to be erected which would Kennion v. Kelsey, 10 Iowa 443 ; duplicate a designated house with cer- Beer v. Altman-Taylor Co., 32 Minn, tain specified exceptions) ; Howe v. 90 19 N. W. 388; Longfellow v. Schmidt, 151 Cal. 436, 90 Pac. 1056; Huffman, 57 Ore. 338, 112 Pac. 8 McArthor v. McGilvay, 1 Ga. App. (note secured by chattel mortgage 643, 57 S. E. 1058; Cleveland C. C. and a contract thereafter executed & St. L. R. Co. v. Moore, 170 Ind. 328, construed together). 82 N. E. 52, 84 N. E. 540 (construc- ''Olds v. East Tennessee Stone & tion contract); Derby Desk Co. v. Marble Co. (Tenn.), 48 S. W. 333. Conners Bros. Const. Co., 204 Mass. Letters and telegrams which evi- 461, 90 N. E. 543 (building con- dence a contract are to be considered tract) ; McGregor v. J. A. Ware in connection with its construction. Const. Co., 188 Mo. 611, 87 S. W. Mann v. Urquhart, 89 Ark. 239, 116 981 (construction contracts). Com- S. W. 219. pare with Beattie v. McMullen, 80 "Knepper v. Eggiman (Ind.), 97 Conn. 160, 67 Atl. 488; Noyes v. N. E. 161 ; Bartels v. Davis, 34 Mont. Butler Bros., 98 Minn. 448, 108 N. 285, 85 Pac. 1027 (note, deed and de- W. 839. feasance, deed intended as a mort- *Loper v. United States, 13 Ct. gage to secure note). See also, CI. (U. S.) 269. See also, Clark v. Phillipi Colliers Co. v. Thompson, Nemann, 56 Nebr. 374, 76 N. W. 892. 8o5 INTERPRETATION AND CONSTRUCTION. § 152 D-0 contract are partly in writing and partly printed and the written and printed parts are inconsistent with each other the written part is presumed to express the true intention of the parties and will govern the printed matter, for the reason that printed forms are very general in their terms, and are intended for any like occasion while the written words are considered as having been especially selected by the parties themselves for the particular case." Thus the written part of an insurance policy will prevail over the printed part in case of repugnancy when the intention of the par- ties is not thereby defeated/" The written part of a contract has also been held to take precedence over the printed matter in a let- ter head,^^ or in a bill head." A written insertion in a printed con- tract which provided "that time was of the essence of the con- tract" has been held to control printed matter providing that the contractor assumed no liability for damages on account of de- lays.^^ A typewritten provision will in general control an uncer- tain or repugnant printed provision.^* * Bolman v. Lohman, 79 Ala. 63 ; Loveless v. Thomas, 152 111. 479, 38 N. E. 907; Chicago v. Weir, 165 111. 582, 46 N. E. 725; American Ex- press Co. V. Pinckney, 29 111. 392 ; Perry v. Acme Oil Co. (Ind. App.), 80 N. E. 174; Russell v. Bondie, 51 Mich. 76, 16 N. W. 239; Sprague Electric Co. v. Hennepin County, 83 Minn. 262, 86 N. W. 332; Murray v. Pillsbury, 59 Minn. 85, 60 N. W. 844; Davis v. Ravenna Creamery Co., 48 Nebr. 471, 67 N. W. 436; Sulli- van V. Spring Garden Ins. Co., 34 App. Div. (N. Y.) 128, 54 N. Y. S. 629; Harper v. Albany Mut. Ins. Co., 17 N. Y. 194; Clark v. Woodruff, 83 N. Y. 518: Chadsey v. Guion, 97 N. Y. 333 ; Wichman v. Fort Orange Oil Co., 6 Ohio Dec. 540; Dick v. Ireland, 130 Pa. St. 299, 18 Atl. 735 ; Commonwealth &c. Ins. Co. v. Ellis, 192 Pa. St. 321, 43 Atl. 1034, 73 Am. St. 816; Armstrong v. National Life Ins. Co. (Tex. Civ. App.). 112 S. W. 327; Thomas v. Taggart, 28 Sup. Ct. 519, 209 U. S. 385, 52 L. ed. 845, affg. In re Jacob Berrv & Co., 149 Fed. 176. 79 C. C. A. 124; Davis V. Lee, 52 Wash. 330, 100 Pac. 752, 132 Am. St. 973; Gilbert v. Stockman, 76 Wis. 62, 44 N. W. 845, 20 Am. St. 23. See also, American Bridge Co. of New^ York v. Glen- more Distilleries Co. (Ky. App.), 107 S. W. 279, 32 Ky. L. 873. The written words are the terms selected by the parties themselves to express their meaning in the particular case. Duffield V. Hue, 129 Pa. St. 94, 18 Atl. 566. ^^ Harper v. Albany Mutual Ins. Co., 17 N. Y. 194; Farmers' Nat. Bank v. Delaware Ins. Co., 83 Ohio St. 309, 94 N. E. 834 (insurance on a quantity of tobacco). "Summers v. Hibbard, 153 111. 102, 38 N. E. 899, 46 Am. St. 872. ^^ Schenck v. Saunders, 13 Gray (Mass.) 37; Sturm v. Boker. 150 U. S. 312, 37 L. ed. 1093. 14 Sup. Ct. 99. As to the admissibility of ad- vertising matter in evidence, see Asbestolith Mfg. Co. v. Howland, 120 N. Y. S. 93. " Pike's Peak Hydro-Electric Co. v. Power & Mining Machinery Co., 165 Fed. 184. " Heyn v. New York Life Ins. Co., 192 N. Y. 1, 84 N. E. 725. § 1526 CONTRACTS. 806 § 1526. Repugnant provisions must be irreconcilable. — It is obvious, however, that the foregoing rule applies only when there exists an inconsistency between the written and printed parts of the contracts." While the written provision of a contract should prevail over one which is inconsistent with it, and which is part of a printed form adopted for general use, yet only so far as it is apparent that the parties intended to modify or disregard the printed stipulations will the latter give way." Moreover, the written and printed parts of the contract will be reconciled, if this can be done by any reasonable construction. Effect will be given to every part of the instrument if possible since it is not presumed that the parties intended that there should exist in the contract inconsistent provisions.^^ § 1527. Must not be construed to defeat intention of par- ties — Construction of vs^ords and figures. — The rule that the written parts of a contract should control those that are printed is subordinate to another rule which provides that the contract is not to be construed so as to defeat the intention of the parties. The written provisions of the contract prevail over the printed form only in so far as it is apparent that the parties intended "Michaelis v. Wolf, 136 111. 68, that may be presented. But the rule 26 N. E. 384 ; Wheeling &c. R. Co. v. can not properly receive an applica- Gourley, 99 Pa. St. 171. tion in cases other than those where ^'Frost's &c. Lumber Works v. the written and printed words so Millers' &c. Ins. Co., 11 Minn. 300, contradict each other that the one 34 N. W. 35, 5 Am. St. 846. must yield to the other. Where they " Bolman v. Lohman, 79 Ala. 63 ; do not, the principle must necessarily Seaver v. Thompson, 189 111. 158, be subordinate to another, to which 59 N. E. 553 ; J. B. Ehrsam & Sons the policy of insurance and all other Mfg. Co. V. Jackman, IZ Kans. 435, contracts are subject in their inter- 85 Pac. 559, 91 Pac. 486; Frost's De- pretation, viz., that every part of troit Lumber & W. W. Works v. them should have effect, if possible. Millers' &c. Ins. Co., Zl Minn. 300, This is a fundamental rule of con- 34 N. W. 35, 5 Am. St. 846; Miller struction, to which we do not at this V. Hannibal & St. Joe R. Co., 90 N. moment recollect an exception, and Y. 430, 43 Am. Rep. 179; Barhydt v. it is founded on the plainest of rea- Ellis, 45 N. Y. 107. "The rule in- sons, namely, that it cannot be sup- voked by this argument, that the posed that terms to which a mean- written parts of the policy should ing can be given, and which have an control those that are printed, is important bearing on the interests correct, because the written words of the parties, were inserted or left are the immediate language and in the contract for no purpose." terms stated by the parties them- Goicoechea v. Louisiana Ins. Co., 6 selves for the expression of their Mart. (La.) (N. S.) 51, 17 Am. Dec. meaning, and the printed ones, a gen- 175. See also, ante, § 1514. eral formula made for all cases 8o7 INTERPRETATION AND CONSTRUCTION. § 1528 to modify or disregard the printed stipulation,^* It is also proper to mention in this connection that where written words and figures are used in a contract to express the same number and there is a discrepancy between the two the words ordinarily pre- vail over the figures/" § 1528. Subsidiary rules of construction — Doubtful words construed against the party using them. — Another subsidiary rule is that when there exists an uncertainty or ambiguity as to the meaning of the terms of an agreement and the language used may be attributed to one of the parties thereto it will be con- strued most strongly against the party using the language since he is considered as having chosen the language thereof.^" The "Frost's Detroit Lumber &c. Works V. Millers' &c. Ins. Co., 2)7 Minn. 300, 34 N. W. 35, 5 Am. St. 846. See also, Goicoechea v. Louisi- ana State Ins. Co., 6 Mart. (La.) (N. S.) 51, 17 Am. Dec. 175. "United Surety Co. v. Summers, 110 Md. 95. 72 Atl. 775; Bradshaw v. Bradbury, 64 Mo. 334. ^ Paine v. Copper Belle Mining Co. of Arizona, 13 Ariz. 406, 114 Pac. 964 (stating that the contract is to be construed favorably to the party who takes an agreement as prepared by another) ; Ford Hardwood Lum- ber Co. V. Clement, 97 Ark. 522, 135 S. W. 343; Laidlaw v. Marye, 133 Cal. 170, 65 Pac. 391; Wyatt v. Lari- mer & Weld Irrigation Co., 18 Colo. 298, iZ Pac. 144, 36 Am. St. 280; Noonan v. Bradley, 9 Wall. (U. S.) 394, 19 L. ed. 757 ; American Surety Co. V. Pauly, 170 U. S. 160, 42 L. ed. 987, 18 S. Ct. 563; Minton v. F. G. Smith Piano Co., 36 App. D. C. 137, 3Z L. R. A. (N. S.) 305 (prize con- test construed against proposer) ; Capital Citv Bank v. Hilson, 59 Fla. 215, 51 So.' 853; McCarty v. Howell, 24 III. 341; Massie v. Belford, 68 111. 290; Kirbv v. Wabash, St. L. & P. R. Co., 109 111. 412; McClenathan V. Davis, 243 111. 87, 90 N. E. 265, 27 L R. A. (N. S.) 1017n; Cobb v. McElroy. 79 Iowa 603, 44 N. W. 824; Barney v. \ewcomb, 9 Cush. (Mass.) 46; American Lithographic Co. V. Commercial Casualty Ins. Co., 81 N. J. 271, 80 Atl. 25; General Proprietors of Eastern Division of New Jersey v. Force's Exrs., 72 N. J. Eq. 56, 68 Atl. 914; Marvin v. Stone, 2 Cow. (X. Y.) 781; Edsall v. Cam- den & A. R. Trans. Co., 50 X. Y. 661 ; Gillet v. Bank of America, 160 N. Y. 549. 55 X. E. 292; Bean v. Ford, 65 Misc. (X. Y.) 481, 119 X. Y. S. 1074; White v. Smith, 2i Pa. 186, 75 Am. Dec. 589; Deblois v. Earle, 7 R. L 26. To same effect, McFarlane v. York, 90 Ark. 88, 117 S. W. 77Z. See also, Ashlcv v. Cath- cart, 159 Ala. 474, 49 So. 75. Xot- withstanding this rule the language should be given a meaning in accord with the object in view. Brown v. Beckwith, 60 Fla. 310, 53 So. 542. He who creates the doubt will have it resolved against his interest. Pavne v. Neuval, 155 Cal. 46, 99 Pac' 476; Dollar V. International Banking Corp., 10 Cal. App. 83, 101 Pac. 34; Loomis v. MacF'arlane, 50 Ore. 129, 91 Pac. 466. Compare with L'Engle V. Overstreet, 61 Fla. 653, 55 So. 381. Notwithstanding the fact that under the statute the promisor is presumed to have caused the ambiguity or un- certainty in the terms of a written contract, when it appears that the promisee wrote the agreement and selected the terms to be used it is presumed that he caused the im- certaintv. Blankenship v. Decker, 34 Mont. 292, 85 Pac. 1035. See also, cases cited ante this note. § 1^28 CONTRACTS. 808 foregoing is particularly applicable to insurance contracts. The insurance company prepares the contract and embodies in it such conditions as it deems proper, and when the language is suscepti- ble of different interpretations that one will usually be preferred which is in favor of the insured.'^ When a contract is entered into upon a regularly printed form of proposal, prepared and generally used by one of the parties, and doubt arises as to the true meaning of such form, it should be construed most strongly against the party preparing it." The rule has also been held applicable to a guar- anty given by a father which read "I will be responsible for any ** Wells V. Pacific Ins. Co., 44 Cal. 397; Boon v. Aetna Ins. Co., 40 Conn. 575; Moorefield v. Fidelity Mut. Life Ins. Co., 135 Ga. 186, 69 S. E. 119 (construing Georgia stat- ute) ; Commercial Ins. Co. v. Robin- son, 64 111. 265, 16 Am. Rep. 557; Forest City Ins. Co. v. Hardesty, 182 111. 39, 55 N. E. 139, 74 Am. St. 161 ; Northwestern Mut. Life Ins. Co. V. Hazelett, 105 Ind. 212, 4 N. E. 582, 55 Am. Rep. 192; Rogers v. Phoenix Insurance Co., 121 Ind. 570, 23 N. E. 498; Goodwin v. Provident Sav. Life Assurance Soc, 97 Iowa 226, 66 N. W. 157, 32 L. R. A. 473, 59 Am. St. 411; McEvoy v. Surety Fire Ins. Co., 110 Md. 275, 11 Atl. 157, 22 L. R. A. (N. S.) 964, 132 Am. St. 428n; Dole v. New England &c. Ins. Co., 6 Allen (Mass.) 2>ll; Park- hurst V. Gloucester Mut. Fishing Ins. Co., 100 Mass. 301, 97 Am. Dec. 100, 1 Am. Rep. 105; Chandler v. Ins. Co., 21 Minn. 85, 18 Am. Rep. 385; Nat. Bank v. Ins. Co., 95 U. S. 673, 24 L. ed. 563 ; Moular v. In- surance Co., Ill U. S. 335, 28 L. ed. 447, 4 Sup. Ct. 466; Thompson V. Phenix Insurance Co., 136 U. S. 287, 34 L. ed. 408, 10 Sup. Ct. 1019. Conqueror Zinc &c. Co. v. ^tna Life Ins. Co., 152 Mo App. 332, 133 S. W. 156 (holds that a contract of indemnity insurance by which the in- surance company was given entire control of the defense to actions is for the benefit of, and should be construed most strongly against the insurer, and that the latter will be liable for the costs of a suit in which judgment is rendered against the in- sured) ; Snyder v. Dwelling House Insurance Co., 59 N. J. L. 544, Z1 Atl. 1022, 59 Am. St. 625; Hoffman V. iEtna Fire Ins. Co., 19 Abb. Prac. (N. Y.) 325, 24 N. Y. Super. Ct. 501, affd. 32 N. Y. 405, 88 Am. Dec. Zyi ; Kratzenstein v. Western Assurance Co., 116 N. Y. 54, 22 N. E. 221, 5 L. R. A. 799; Halpin v. ^tna Fire Ins. Co., 120 N. Y. 70, 23 N. E. 988; Teutonia Fire Ins. Co. v. Mund, 102 Pa. St. 89; Western & A. Pipe Lines v. Home Ins. Co., 145 Pa. St. 346, 22 Atl. 665, 27 Am. St. 703; Brink v. Merchants' &c. Ins. Co., 49 Vt. 442; Wakefield v. Orient Insur- ance Co., 50 Wis. 532, 7 N. W. 647. "Uniform rule of construction of in- surance policies is that, if reasonably susceptible of two constructions, one shall be adopted which is most fav- orable to the insured." Jones v. Pennsylvania Casualty Co., 140 N. Car. 262, 52 S. E. 578, 5 L. R. A. (N. S.) 932, 111 Am. St. 843, quoting from Kendricks v. Mutual Benefit Life Ins. Co., 124 N. Car. 315, 32 S. E. 728, 70 Am. St. 592. Compare with. Spring Garden Ins. Co. v. Im- perial Tobacco Co., 132 Ky. 7, 116 S. W. 234, 20 L. R. A. (N. S.) 277n, 136 Am. St. 164; Wilkie v. New York Mut. Life Ins. Co., 146 N. Car. 513, 60 S. E. 427. "^ Mt. Vernon Refrigerating Co. v. Fred W. Wolf Co., 188 Fed. 164; Hardy v. Ward, 150 N. Car. 385, 64 S. E. 171 ; Farmers' Nat. Bank v. Delaware Ins. Co., 83 Ohio St. 309, 94 N. E. 834. To same effect, Van " Zandt V. Hanover Nat. Bank, 149 Fed. 127, 79 C. C. A. 23. See also, Moorefield v. Fidelity Mut. Life Ins. Co., 135 Ga. 186, 69 S. E. 119; Gold- 809 INTERPRETATION AND CONSTRUCTION. § 1 529 bill that my son James will make," the words being construed as a continuing guaranty.*^ Where a charter-party is prepared by the charterers of a vessel, and contains a clause manifestly inserted for their benefit, ambiguities, if any there are in its phrasing, should be resolved against them.** It has also been said that a vendor is bound to express himself clearly as to the extent of his obligations, and an obscure or ambiguous clause must be in- terpreted against him.^° Words or clauses in a deed of convey- ance which are reasonably susceptible of two constructions are construed most strongly against the grantor for the same rea- son.*" The construction of grants should usually be favorable to the grantee." That doubtful words and provisions are to be taken most strongly against the grantor is an ancient principle of the common law.^* § 1529. Construction of grants by government. — However, every public grant of property, or of privileges, or franchises, if ambiguous, is to be construed against the grantee and in favor of the public for the reason that no presumption arises stein V. D'Arcy, 201 Mass. 312, 87 N. Jackson v. Blodget, 16 Johns. (N. Y.) E. 584. 172; Hathaway v. Power, 6 Hill (N. ^^Newcomb v. Kloeblen, 11 N. J. Y.) 453; Beeson v. Patterson, 36 Pa. L. 791, 74 Atl. 511, 24: Waterman v. Andrews, 14 R. I. °* MacAndrews v. Mignano, 14 U. 589; Griffin v. Fairmont Coal Co., S. App. 10. 59 W. Va. 480. 53 S. E. 24, 2 L. R. "Delogny's Heirs v. Mercer, 43 A. (N. S.) 1115; Green Bay & M. La. Ann. 205, 8 So. 903. Canal Co. v. Hewitt. 55 Wis. 96, 12 *«Hager v. Spect, 52 Cal. 579; N. W. 382, 42 Am. Rep. 701. Sears v. Ackerman. 138 Cal. 583, 72 "Doe v. Williams. 1 H. Bl. 25; Pac. 171 ; Bushnell v. Ore Bed, 31 Winslow v. Patten, 34 Maine 25. Conn. 150; Alton V. Illinois Transpor- ^Marshall v. Niles, 8 Conn. 369 tation Co., 12 111. 38, 52 Am. Dec. 479; East St. Louis Connecting R. Co. v Sharp V. Thompson, 100 111. 447, 39 East St. Louis, 81 111. App. 109, affd Am. Rep. 61 ; Hunt v. Francis, 5 Ind. 182 111. 433, 55 N. E. 533 ; Pike v, 302; Hopwood v. Corbin, 63 Iowa Munroe. 36 Maine 309, 58 Am. Dec. 218, 18 N. W. 911 ; Frisbie V. Bigham 751; Watson v. Bovlston, 5 Mass Masonic Lodge, 133 Ky. 588, 118 S. 411. Hogg's Appeal, 22 Pa. St. 479 W. 359 (holding that a writing which Long Island Water-Supply Co. v, grants an easement is to be construed City of Brooklyn, 166 U. S. 685, 41 most favorably to the claimant of the L. ed. 1165, 17 Sup. Ct. 718. "It is easement) ; Winter v. White, 70 Md. a well known rule in the construction 305, 17 Atl. 84; Salisbury v. Andrews, of private grants, if the meaning of 19 Pick. (Mass.) 250; Melvin v. the words be doubtful, to construe Proprietors of the Locks & Canals them most strongly against the grant- of Merrimac River, 5 Mete. (Mass.) or." Storv, J., in Charles River 15, 38 Am. Dec. 384: Bolio v. Mar- Bridge v. Warren Bridge, 11 Pet. (U. vin, 130 Mich. 82, 89 N. W. 563; S.) 420, 9 L. ed. 111. Dunn V. English, 24 N. J. L. 126; § I530 CONTRACTS. 8lO that the government intended to grant to private persons or to a particular corporation property or rights in which the whole public is interested unless unequivocally expressed or necessarily to be implied in the terms of the grant and for the further rea- son that the grant is supposed to be made at the solicitation of the grantee, and to be drawn up by him or his agent, and there- fore the words used are to be treated as those of the grantee.^" Contracts are to be construed liberally in favor of the public, when the subject-matter concerns the interest of the public.^** § 1530. Application of the rule. — When an exception or reservation is inserted in a deed or other instrument which is reasonably susceptible of different constructions, it is to be con- strued most strongly against the party in whose favor it runs, for the reason that he is presumed to have chosen the words.^^ "Hartford Bridge Co. v. Union Ferry Co., 29 Conn. 210; Mills v. County of St. Clair, 2 Gilm. (111.) 197, affd. 8 How. (U. S.) 569, 12 L. ed. 1201 ; People v. Pullman's Palace Car Co., 175 111. 125, 51 N. E. 664, 64 L. R. A. 366; Republican River Bridge Co. v. Kansas Pacific R. Co., 12 Kans. 409; Chicago &c. R. Co. V. Pfaender, 23 Minn 217; St. Louis V. St. Louis & S. F. R. Co., 228 Mo. 712, 129 S. W. 691; Mayor etc. of New York v. Broadway &c. R. Co., 97 N. Y. 275; Hume v. Rogue River Packing Co., 51 Ore. 237, 83 Pac. 391, 92 Pac. 1065, 96 Pac. 865, 31 L. R. A. (N. S.) 396n, 131 Am. St. 732n (holding that a grant of tide lands by the state does not convey to the grantee the exclusive right to take floating fish) ; Mayor &c. of Allegheny v. Ohio & Pennsylvania R. Co., 26 Pa. St. 355 ; Dugan v. Bridge Co., 27 Pa. St. 303, 67 Am. Dec. 464; Charles River Bridge v. Warren Bridge, 11 Pet. (U. S.) 420, 9 L. ed. ni\ Rice v. Minnesota & N. W. R. Co., 1 Black. (U. S.) 358, 17 L. ed. 147; Central Transp. Co. v. Pull- man's Palace Car Co., 139 U. S. 24, 35 L. ed. 55, 11 S. Ct. 478. The rule that grants of the sovereign are to be strictly construed against its grantees perhaps does not apply in all its severity when the subject-matter of the contracts relates to rights of property not related to a public use, or affecting limitation upon the pre- rogative of the sovereign, and when the contract itself is based upon an adequate and valuable consideration. See Garrison v. United States, 7 Wall. (U. S.) 688, 19 L. ed. 277, 7 Ct. CI. (U. S.) 78. To the same effect, Langdon v. New York, 93 N. Y. 129; Dermott v. State, 99 N. Y. 101, 1 N. E. 242. The king's grant is taken most strongly in favor of the king against the grantee. Willion v. Berk- ley, 1 Plowd 223, 243. See also, 3 Elliott R. R. (2d ed.), § 1080. ^"Joy v. St. Louis, 138 U. S. 1, 34 L. ed. 843, 11 Sup. Ct. 243. *^ United States Mortgage Co. v. Gross, 93 111. 483; Richmond v. Brandt, 118 111. App. 624; Fort Wayne v. Lake Shore &c. R. Co., 132 Ind. 558, 32 N. E. 215, 18 L. R. A. 367, 32 Am. St. 277; Wellman v. Churchill, 92 Maine 193, 42 Atl. 352; Derby v. Hall, 2 Gray (Mass.) 236; Bolio V. Marvin, 130 Mich. 82, 89 N. W. 563; Cocheco Mfg. Co. v. Whittier, 10 N. H. 305; Grafton v. Moir, 130 N. Y. 465, 29 N. E. 974, 27 Am. St. 533; Klaer v. Ridgway, 86 Pa. St. 529. See also, Lange v. Waters, 156 Cal. 142, 103 Pac. 889, 19 Ann. Cas. 1207. 8ll INTERPRETATION AND CONSTRUCTION. § I53I This rule is resorted to, however, only when the language is capable of being given two equally probable constructions and all other rules of construction fail." Moreover, as the statement of the rule implies, it is not applicable to language common to both parties but only to such words as may be attributed to one party." § 1531. Subsidiary rules of construction — Language to be understood in sense in which promisor knew or had reason to believe the other party understood it. — Closely analogous to the rule just considered is the rule to the effect that where the language of an agreement is doubtful that sense is to prevail against either party in which he knew^* or had rea- son to suppose that the other party understood it if this can be done without making a new contract.^"^ Thus, it has been held "Patterson v. Gage, 11 Colo. 50, Wells v. Carpenter, 65 111. 447; For- 16 Pac 560; Falley v. Giles, 29 Ind. est City Ins. Co. v. Hardesty, 182 111. 114- Wiley v. Sirdorus, 41 Iowa 224; 39, 55 X. E. 139, 74 Am. St. 161; T M Sinclair & Co. v. National Sure- Wood v. Allen, 111 Iowa 97, 82 N. ty Co 132 Iowa 549, 107 N. W. 184; W. 451; Evans v. McConnell, 99 Varnum v. Thurston, 17 Md. 470; Iowa 326, 63 N. W. 570, 68 N. W. Aldrich v. Bay State Const. Co., 186 790; Thoubboron v. Lewis, 43 Mich. Mass 489, 12 N. E. 53; Wetmore v. 635, 5 N. W. 1082. 38 Am. Rep. 218; Pattison, 45 Mich. 439, 8 N. W. 67; Bruner v. Wheaton, 46 Mo. 363; Johnson v Wood, 84 Mo. 489; Em- Southern Realty Co. v. Hannon, 89 pire Rubber Mfg. Co. v. Morris, 12> Nebr. 802, 132 N. W. 533; American NIL 602. 65 Atl. 450; Flagg v. Lithographic Co. v. Commercial Cas- Eames, 40 Vt. 16, 94 Am. Dec. 363. ualty Ins. Co., 81 N. J. L. 271, 80 Atl. This rule is the last to be resorted 25; Hoffman v. Aetna Fire Ins. Co., to, and is never to be relied upon but 19 Abb. Pr. 325, 24 N. Y. Super. Ct. where all other rules of exposition 501; 32 N. Y. 405. 88 Am. Dec. 7>2n ; of words fail. Bacon Max. Reg. 3, Tallcot v. Arnold, 61 N. Y. 616; Patterson v. Gage, 11 Colo. 50, 16 White v. Hoyt, IZ N. Y. 505: Gillet Pac 560 V. Bank of America, 160 X. Y. 549. ■"Beckwith v. Howard. 6 R. L 1. 55 N. E. 292; Hamer v. Sidway. 124 "Brent v. Chas. H. Lilly Co., 174 N. Y. 538, 27 X. E. 256, 12 L. R. A. Fed. 877; Potter v. Ontario & L. 463, 21 Am. St. 693; Johnson v. Mut. Ins. Co., 5 Hill (X. Y. 147; nathorn,2 Key. (N. Y.) 476, 3 Key. Barlow v. Scott, 24 N. Y. 40; Jordon (X. Y.) 26, 2 Abb. Dec. 465; Sher- V Dyer, 34 Vt. 104. 80 Am. Dec. wood v. Crane, 12 Misc. (X. 668. See also. Colgate v. James T. Y.) 83, ZZ N. Y. S. 17; Ran- White & Co., 180 Fed. 882. som v. Wheelwright, 17 Misc. "Fowkes V. Manchester &c. As- (X. Y.) 141, 39 X. Y. S. 342; Guc- surance Assn., 3 B. & S. 917; Lassing cione v. Scott. 21 Misc. (X. Y.) 410. V James, 107 Cal. 348, 40 Pac. 534; 47 X. Y. S. 475. affd. ZZ App. Div. Elting V. Sturtevant. 41 Conn. 176; (X. Y.) 214. 53 X. Y. S. 462: Stan- Hatch V. Douglas, 48 Conn. 116. 40 ton v. Erie R. Co.. 131 App. Div. (X. Am. Rep. 154; Potter v. Berthelet. 20 Y.) 879. 116 X. Y. S. 375: Kendrick Fed. 240; American Loan iS: Trust Co. v. Mutual Ben. Life Ins. Co.. 124 N. V. Toledo, C. & S. R. Co., 47 Fed. 343 ; Car. 315, 32 S. E. 728, 70 Am. St § I53I CONTRACTS. 8l2 that where the bank officials had reason to suppose that a cus- tomer of the bank understood that its president "was acting in its behalf in executing and delivering to her a document by which he directed the bank to pay her at a time certain a specified sum of money, the institution" was bound by such understanding.^" It has been held that where one party to a building contract mailed a letter to the other party by which he advised the latter of the construction which he placed on the contract and the con- tract was signed and returned without any reference to the let- ter, the party writing the letter had a right to assume that his con- struction of the contract had been assented to in view of the am- biguity and uncertainty of the contract.^' This rule is applicable only when the language used is fairly susceptible of different con- structions.^^ 592; Chamberlain v. Painesville & H. R. Co., 15 Ohio St. 225; Webster V. Dwelling-House Ins. Co., 53 Ohio St. 558, 42 N. E. 546, 53 Am. St. 658, 30 L. R. A. 719; Williamson v. Mc- Clure, Zl Pa. St. 402; Burkhard v. Travellers' Ins. Co., 102 Pa. St. 262, 48 Am. Rep. 205; San Jacinto Oil Co. V. Ft. Worth Light & Power Co., 41 Tex. Civ. App. 293, 93 S. W. 173 ; Ballard v. Burton, 64 Vt. 387, 24 Atl. 769, 16 L. R. A. 664. Thus "when the terms of an agreement have been intended in a different sense by the parties to it, that sense is to prevail against either party in which he had reason to suppose the other under- stood it." Inman Mfg. Co. v. Ameri- can Cereal Co., 133 Iowa 71, 110 N. W. 287, 8 L. R. A. (N. S.) 1140n. It has also been said that the language of a promisor is to be interpreted as the promisee had a right to under- stand it or as the promisor expected him to understand it (Gunnison v. Bancroft, 11 Vt. 490), and that the language used is not to be given a meaning which the promisor made no attempt to express, — a sense in which it was not understood by the prom- isee and in which he had no reason to understand it. Clark v. Lillie, 39 Vt. 405. ''Patterson v. First Nat. Bank, 78 Nebr. 228. 110 N. W. 721. "Snead & Co. Iron Works v. Merchants* Loan & Trust Co., 225 111. 442, 80 N. E. 237, 9 L. R. A. (N. S.) 1007n. See, further, as to aiding the construction of building contracts by extrinsic documents un- der title six, vol. 4. ^ Street v. Chicago Wharfing &c. Co., 157 111. 605, 41 N. E. 1108, affg. 54 111. App. 569; Rouss v. Creglow, 103 Iowa 60, 72 N. W. 429; Cole v. Harvey, 142 Iowa 574, 120 N. W. 97 ; Peterson v. Modern Brotherhood, 125 Iowa 562, 101 N. W. 289, 67 L. R. A. 631 ; Johnson v. Northwestern Nat. Ins. Co., 39 Wis. 87. The contract will not be interpreted as understood by the promisee when the language is plain and unambiguous unless the plain import of the words would ren- der the contract absurd, unjust or un- reasonable. Montgomery v. Fire- men's Ins. Co., 16 B. Mon. (Ky.) 427. The language used must be ca- pable of the construction placed upon it. See Cowles Elec. Smelting &c. Co. V. Lowrey, 79 Fed. 331, 24 C. C. A. 616, 47 U. S. App. 531; Metro- politan Bank v. Northern Fuel Co., 1Z 111. App. 164, affd., 173 111. 345, 50 N. E. 1062; Johnson v. Northwestern Nat. Ins. Co., 39 Wis. 87. See also, Johnson's Admr. v. Sellars' Admr., ZZ Ala. 265. One who permits an- other to proceed with the execution of a contract with knowledge that the party executing it has attached 8l3 INTERPRETATION AND CONSTRUCTION. § 1 532 § 1532. Subsidiary rules of construction — General and par- ticular words — Ejusdem generis. — The doctrine of ejusdem generis is applied in cases where there is a doubt as to the inten- tion of the parties, and as a rule for the construction of contracts is stated to be that when general words are used in a contract after specific terms, the general words will be limited in their meaning or restricted to things of like kind and nature (ejusdem generis) with those specified.''* Thus, a provision in a contract for the shipment of horses which read that "the owner * * * under- takes all risk of loss, injury, damage and other contingencies in loading, unloading, conveyance and otherwise, whether arising from the negligence, default or misconduct, gross or culpable, or otherwise, on the part of the railway company's servants, agents, or officers," has been held to refer to default in the particulars specified in the previous articles, such as "loading, unloading, conveyance and otherwise."*" A policy of marine insurance against designated perils of the sea and all other perils and losses that should come to the said goods shipped has been construed to cover only cases of marine damage similar to the kinds specific- ally enumerated.*^ Where a contract between two parties pro- vided that "if by reason of fire, explosion or other cause" the fac- tory (of the defendant) shall be closed down, the words "other cause" were limited in their application to causes of the same gen- thereto a certain meaning may be the things previously specified." estopped to deny that such is the Hawkins v. Great Western R. Co., 17 meaning of the contract. Farley v. Mich. 57, 97 Am. Dec. 179. See also, Pettes, 5 Mo. App. 262. Thompson v. Trenton Water Power ^'Stettauer v. Hamlin, 97 111. 312; Co., 11 N. J. L. 672, 11 Atl. 410; First Nat. Bank v. Adam, 138 111. South Penn Oil Co. v. Knox, 68 W. 483, 28 N. E. 955; Chicago Union Va. 362, 69 S. E. 1020 (holding that Tract. Co. v. Chicago, 199 111. 484, a particular description prevails over 65 N. E. 451; 59 L. R. A. 631; Amer- a general description). As applied ican Bridge Co. of New York v. to the statutory construction see Glenmore Distilleries Co. (Ky.), 107 State v. Prather, 79 Kans. 513, 100 S. W. 279, 32 Ky. L. 873; Railton v. Pac. 57, 21 L. R. A. (X. S.) 23n, Taylor, 20 R. I. 279, 38 Atl. 980, 39 131 Am. St. 339; State v. Chamber- L. R. A. 246: Alabama v. IMontague, lain, 112 Minn. 52, 127 X. W. 444, 117 U. S. 602, 29 L. ed. 1000, 6 Sup. 30 L. R. A. (X. S.) 335. To the Ct. 911; United States v. Mescall, same effect, Strange v. Grant County, 215 U. S. 26, 54 L. ed. 11, 30 Sup. Ct. 173 Tnd. 640, 91 X. E. 242. 19. "The rule is usually applicable, ""Hawkins v. Great Western R. that where no intention to the con- Co., 17 Mich. 56. trary appears, general words used " Cullen v. Butler, 5 M. & S. 461. after specific terms are to be con- See also, Phillips v. Barber, 5 B. & iined to things ejusdem generis with Aid. 161; Thames &c. Ins. Co. v. § 1532 CONTRACTS. 814 eral nature as are fire and explosion.*^ The rule is said to be uni- versal that general words in a contract are strengthened by excep- tions, and weakened by enumeration.'*^ Words are not to be taken at their broadest import and extended to those things concerning which it is apparent the parties did not intend to contract when it is equally appropriate to limit them to the object the parties had in view.** Thus, in a contract for the sale of a patent which provided that it should be void if certain designated defects were found to exist in the patent, "or if there should be any other de- fect whatever," the general clause was held to refer to defects in the patent and not to defects in the machine itself.*^ It must be borne in mind, however, that the rule of ejusdem generis is not in and of itself a rule of interpretation, but an aid to interpretation, when the intention is not otherwise apparent.** It has no binding Hamilton, 12 App. Cas. 484; Ellery V. New England Ins. Co., 8 Pick. (Mass.) 14; Swift v. Union Mut. Marine Ins. Co., 122 Mass. 573. "Hickman v. Cabot, 183 Fed. 747, 106 C. C. A. 183. ''Shappless v. Mayor, 21 Pa. St. 147, 59 Am. Dec. 7S9n ; Webster v. Morris, 66 Wis. 366, 57 Am. Rep. 278. And see Wisconsin Cent. R. Co. V. Taylor County, 52 Wis. Z7, 8 N. W. 833. According to Lord Bacon "all words, whether they be in deeds or statutes, or otherwise if they be general, and not express and precise, shall be restrained into the fitness of the matter and the person." Broom's Legal Maxims, (8th ed.) 646. See also, Thorpe v. Thorpe, 1 Ld. Raym. 235; Moore v. Magrath, 1 Cowp. 9; Roe V. Vernon, 5 East 51 ; Morrell v. Fisher, 4 Exch. 591 ; Wood v. Row- cliffe, 6 Exch. 407. " Brickell v. Batchelder, 62 Cal. 623 ; Hendricks v. Webster, 159 Fed. 927, 87 C. C. A. 107; Hall v. Hardaker, 61 Fla. 267, 55 So. 977; Frisby v. Ballance, 4 Scam. (111.) 287, 39 Am. Dec. 409; Street v. Chicago Wharfing Co., 157 111. 605, 41 N. E. 1108; Fol- som V. McDonough, 6 Cush. (Mass.) 208; Gage v. Tirrell, 9 Allen (Mass.) 299; Fisher Electric Co. v. Bath Iron Works, 116 Mich. 293, 74 N. W. 493; Harris v. Carlies, 40 Minn. 106, 41 N. W. 940, 2 L. R. A. 349; Hoff- man V. ^tna Fire Ins. Co., 32 N. Y. 405, 88 Am. Dec. 337n ; Holmes v. Hubbard. 60 N. Y. 183; Smith's Estate, 210 Pa. 604, 60 Atl. 255 ; Rei- ser V. Reading Suburban Real Estate Co., 43 Pa. Super. Ct. 130; Bock v. Perkins, 139 U. S. 628, 35 L. ed. 314, 11 Sup. Ct. 677. "General expres- sions must be strictly limited to the subject-matter of the contract." Daly V. Old (Utah), 99 Pac. 460. A con- tract to do all the sheet metal work consisting of ceilings, side walls, and wainscoting has been held to refer only to interior work. New York Metal Ceiling Co. v. New York. 133 App. Div. (N. Y.) 110, 117 N. Y. S. 632. See also, New York v. Ameri- can R. Traffic Co., 66 Misc. (N. Y.) 166, 121 N. Y. S. 221, affd., 128 N. Y. S. 118 (memorandum decision), as to the meaning given general words followed by specific terms. Scudder v. Perce, 159 Cal. 429, 114 Pac. 571. ''Vaughan v. Porter, 16 Vt. 266. *^ Strange v. Grant County, 173 Ind. 640, 91 N. E. 242. "But this [the rule of ejusdem generis] is only a rule of construction to aid us in arriving at the real legislative intent. It is not a cast-iron rule, it does not over- ride all other rules of construction, and it is never applied to defeat the real purpose of the statute, as that purpose may be gathered from the 8i5 INTEUrRETATIOX AND CONSTRUCTION. § 1533 force in the construction of a contract when it is clear that a larger object was in the minds of the parties to which the more general phrases can distinctly apply.*^ § 1533. Subsidiary rules of construction — Expressio unius est exclusio alterius. — It is a familiar maxim that the naming of one person or thing is an exclusion of the other, or as usual- ly stated, the express mention of one thing implies the exclusion of another.*'* Thus when an insurance company by a legal and proper rule provides a particular method of changing a benefi- ciary, no change of beneficiary may be made in any other mode or manner for the reason that the expression of one thing ex- cludes other and different things.'"' The express grant of the right to construct underground entries for the purpose of mining and removing coal for certain leased land has been held to negative any implied grant which might otherwise arise.'^" Nothing, it is whole instrument. * * * Whilst it is aimed to preserve a meaning for the particular words, it is not in- tended to render meaningless the general words. Therefore, where the particular words exhaust the class, the general words must be construed as embracing something outside that class. If the particular words ex- haust the genus, there is nothing ejusdem generis left, and in such case we must give the general words a meaning outside of the class indi- cated by the particular words, or we must say that they are meaning- less, and thereby sacrifice the general to preserve the particular words. In that case the rule would defeat its own purpose." United States v. Mescall, 215 U. S. 26, 54 L. ed. 11, 30 Sup. Ct. 19. " Lindeke v. Associates' Realty Co., 146 Fed. 630. 11 C. C. A. 56. To same effect, Hoffman v. Eastern Wiscon- sin &c. Light Co., 134 Wis. 603, 115 N. W. 385. "See Bav v. Davidson (Iowa), 111 N. W. 35, 9 L. R. A. (N. S.) 1014; St. Landry State Bank v. Mevers, 52 La. Ann. 1769. 28 So. 136; Vander- ford V. Farmers' & Mechanics' Nat. Bank, 105 Md. 164. 66 Atl. 47. 10 L. R. A. (N. S.) 129n; Ancient Order of Gleaners v. Burry, 165 Mich. 1, 130 N. W. 191, 34 L. R. A. (X. S.) 277n. "But in all these instances, where a contract is silent, the court or jury who are called upon to im- ply an obligation or the other side which does not appear in the terms of the contract must take great care that they do not make the contract speak where it was intentionally silent ; and above all that they do not make it speak entirely contrary to what, as may be gathered from the whole terms and tenor of the con- tract, was the intention of the par- ties. This I take to be a sound and safe rule of construction with re- gard to implied covenants and agreements which are not expressed in the contract." East Ohio Gas. Co. V. Akron, 81 Ohio St. Zl, 90 N. E. 40, 42, quoting with approval from Churchward v. Queen. L. R. 1 Q. B. 173. See also. Joseph v. Sulz- berger, 136 App. Div. (N. Y.) 499, 121 N. Y. S. 11 (as to when a prom- ise will be implied). " Ancient Order of Gleaners v. Burv. 165 Mich. 1. 130 N. W. 191, 34 L. R. A. (N. S.) 277n. "^ Thos. Beck & Sons v. Economv Coal Co., 149 Iowa 24, 127 N. W. 1109. 1534 CONTRACTS. 8i6 said, is more clearly established than that when there is an express contract between the parties, they cannot resort to an implied one/^ The maker of a promissory note which purports to bind him and no one else will not, under ordinary circumstances at least, be permitted to show by parol that he in fact acted as agent or in any capacity other than maker/^ It has been held that the maxim could not be invoked to give validity to a contract void at common law as against public policy because it does not fall within the provisions of the statute on the subject.^^ And while recognizing that the maxim applies to the construction of writ- ten instruments, such as deeds, wills and leases, the court has refused to apply it to a contract specifying remedies available under the law independent of the contract. °* § 1534. Subsidiary rules of construction — Punctuation and grammar. — The punctuation of a written contract may be looked to as shedding light upon the meaning of the parties, but it is never allowed to overturn what seems to be the plain meaning of the whole contract. ^^ Punctuation is a fallible stand- " Cutter V. Powell, 6 T. R. 320, 6 Eng. Rul. Cas. 627, 2 Smith's Lead. Cas. 1. See ante, ch. 31. "Hypes V. Griffin, 89 111. 134, 31 Am. Rep. 71 ; Hiatt v. Simpson, 8 Ind. 256; Junge v. Bowman, 72 Iowa 648, 34 N. W. 612; Bogan v. Cal- houn, 19 La. Ann. 472; Brown v. Parker, 7 Allen (Mass.) 2,Z7. Morell V. Codding, 4 Allen (Mass.) 403; Sparks v. Dispatch Transfer Co., 104 Mo. 531, 15 S. W. 417, 12 L R. A. 714n, 24 Am. St. 351; Duncan v. Kirtley, 54 Mo. App. 655: Bass v. O'Brien, 12 Gray (Mass.) 477; Chap- pell V. Dann, 21 Barb. (N. Y.) 17; Ruckman v. Lightner's Exrs., 24 Grat. (Va.) 19. It is competent to prove, however, that the name of one of the parties who appears as the maker of the note was not in fact written by himself but by an- other person at his direction. Morse V. Green, 13 N. H. 32, 38 Am. Dec. 471. "Bay V. Davidson (Iowa). Ill N. W. 25, 9 L. R. A. (N. S.) 1014. ■^Strauss v. Yeager (Ind. App.), 93 N. E. 877. "Osborn v. Farwell, 87 111. 89, 29 Am. Rep. 47; Olivet v. Whitworth, 82 Md. 258, 2,2, Atl. 723; Perry v. J. L. Mott Iron Works Co., 207 Mass. 501, 93 N. E. 798; Rice v. Lincoln & N. W. R. Co., 88 Nebr. 307, 129 N. W. 425 (holds that punctuation marks will not be allowed* to give the con- tract an unconscionable and inequi- table meaning) ; Bunn v. Wells, 94 N. Car. 67; White v. Smith, 2,2 Pa. St. 186, 75 Am. Dec. 589; In re Abbott's Estate, 198 Pa. 493, 48 Atl. 435; Amory Mfg. Co. v. Gulf C. & S. F. R. Co., 89 Tex. 419, 27 S. W. 856, 59 Am. St. 65 ; Ewing v. Burnet, Fed. Cas. No. 4591, 1 McLean 266, affd., 11 Pet. (U. S.) 41, 9 L. ed. 624; Joy v. St. Louis, 138 U. S. 1, 23 L. ed. 843, 11 Sup. Ct. 243. Punctuation does not control. English's Exr. v. Mc- Nair's Admrs., 34 Ala. 40; Central Trust Co. V. Wabash St. L. & P. R., 29 Fed. 546, affd., 138 U. S. 1, 34 L. ed. 843, 11 Sup. Ct. 243. Neither do rules of grammar. Tucker v. Meeks, 2 Sweeny 736 ; Northrup v. Smothers, 39 111. App. 588; Nettleton v. Billings, 13 N. H. 446; Gray v. Clark, 11 Vt. Siy INTERPRETATION AND CONSTRUCTION. § 1 535 ard by which to interpret a writing. It may be resorted to when all other means fail, but the court will first take the instrument by the four corners in order to ascertain its meaning, and, if it is apparent, the punctuation will not change it.^" In a contract the words and not the punctuation are the controlling guides in its interpretation. The words control the punctuation marks and not the punctuation the words. ''^ When the meaning of a clause in an instrument is doubtful, the court may insert punctuation as a means of showing what construction the words are capable of, and if, by such aid, the court is enabled to see that the language can bear an interpretation which will make the whole instrument rational and self-consistent, it is bound to adopt that interpreta- tion in preference to another which would attribute to the par- ties an intention utterly capricious, insensible and absurd. '^^ § 1535. Subsidiary rules of construction — Rejecting and interpolating words. — When it can reasonably be done, words or clauses apparently repugnant will be reconciled each with the other because it cannot be assumed that the parties intended to in- sert inconsistent provisions.^® However, words which in view of the purpose of the transaction are nonsensical, or repugnant with the manifest intention of the parties may be rejected as sur- plusage, if without them the contract may be sustained and be given effect according to the intent.®*' The court may disregard or correct one part of the instrument in which there is an ob- vious mistake when the intent is clear from other parts of the instrument.®^ Thus an absurd repugnant clause in a bill of ex- 583. Strict rules of grammar will Series 427; Cowles Electric Smelting not control a writing made by men &c. Co. v. Lowrey, 79 Fed. 331, 24 who are not grammarians. Watson C. C. A. 616; Burgess v. Badger, 124 V. Blaine, 12 Serg. & R. (Pa.) 131, 14 111. 288, 14 N. E. 850. Am. Dec. 669. "" See ante, § 1514. ''Ewing V. Burnet, 1 McLean (U. ""Cornell v. Green. 88 Fed. 821, S.) 266. Fed. Cas. No. 4591, affd., 11 aflfd.. 95 Fed. 334, 37 C. C. A. 85; Pet. (U. S.) 41, 9 L. ed. 624. See also. Walker v. Douglas. 70 111. 445; Commonwealth v. Grant, 201 Mass. Holmes v. Parker. 25 111. -App. 225. 458, 87 N. E. 895. affd.. 125 111. 478, 17 X. E. 759; Stock- " Holmes v. Phenix Ins. Co., 98 ton v. Turner, 7 J. J. Marsh. (Ky.) Fed. 240, 39 C. C. A. 45. 47 L. R. A. 192 ; Buck v. Burk. 18 N. Y. 337 ; 308. See also. White v. Smith. 33 Pa. Straus v. Wanamaker. 175 Pa. 213. St. 186, 75 Am. Dec. 589; Ketchem v. 34 Atl. 648. Spurlock, 34 W. Va. 597, 12 S. E. 832. "Marion v. Faxon. 20 Conn. 486; ■^ In re Denny's Estate, 8 Ir. R. Eq. Steele v. McBurney, 96 Iowa 449, 65 52 — Contracts, Vol. 2 s 1535 CONTRACTS. 818 change may be rejected as surplusage.^^ If the condition of a bond be that if the obhgor do not pay, the bond shall be void, the word "not" will be rejected for when the condition recites a debt and subsequently lays an obligation not to pay it, it is in that re- pugnant and void.®' Where a void provision of a contract is severable it does not invalidate the whole contract."* It has been held that an abbreviation®^ or the sign "etc." may be disre- garded when without meaning."® Recitals such as "hereinafter named" may be treated as surplusage when there is nothing to which the recital can apply and it is unnecessary to the validity of the contract.®^ On the other hand words which have been inadvertently omitted may be interpolated and the instrument made to read according to the obvious intention of the parties in spite of the clerical error or omission when it can be corrected by perusing the instrument as a whole.®^ Thus the dollar-sign,®" the word "days,"'® "not,"'^ and the verb "fail"'' have been in- N. W. 332; Mercantile Ins. Co. v. Jaynes, 87 111. 199; Hibbard v. Mc- Kindley, 28 111. 240; Schill v. Reis- dorf, 88 111. 411; Siegel v. Colby, 176 111. 210. 52 N. E. 917, affg. 61 111. App. 315; Fowler v. Woodward, 26 Minn. 347, 4 N. W. 231; De Soto v. Dickson, 34 Miss. 150: Newbern Banking & Trust Co. v. Duffy, 153 N. Car. 62. 68 S. E. 915; Richmond v. Woodard, 32 Vt. 833; Weed v. Ab- bott, 51 Vt. 609. "'Henschel v. Mahler, 3 Hill (N. Y.) 132. affd., 3 Denio (N. Y.) 428. «=■ Wilson V. Wilson, 5 H. L. Cas. 40; Wells v. Tregusan, 2 Salk. 463. See also, Stockton v. Turner, 7 J. J. Marsh. (Ky.) 192. "*Mack V. Jastro, 126 Cal. 130, 58 Pac. 372. See also. Nelson v. Allen, 117 Wis. 91, 93 N. W. 807. •"Berry v. Kowalsky, 95 Cal. 134, 30 Pac. 202, 29 Am. St. 101. "'' Harrison v. McCormick, 89 Cal. 327, 26 Pac. 830, 23 Am. St. 469. •"Way V. Greer, 196 Mass. 237, 81 N. E. 1002. *^ Richelieu Hotel Co. v. Interna- tional Military Encampment Co., 140 111. 248, 29 N. E. 1044, 33 Am. St. 234; Schied v. Leibshultz. 51 Ind. 38; Dodd V. Mitchell, 77 Ind. 388; Dan- ker V. Atwood, 119 Mass. 146; But- ler V. Bohn, 31 Minn. 325, 17 N. W. 862; Gran v. Spangenberg, 53 Minn. 42, 54 N. W. 933; Monmouth Park Association v. Wallis Iron Works, 55 N. J. L. 132, 26 Atl. 140, 19 L. R. A. 456, 39 Am. St. 626; Sisson v. Don- nelly, 36 N. J. L. 432; Monmouth Park Assn. v. Wallis Iron Works, 55 N. J. L. 132, 26 Atl. 140, 19 L. R. A. 456, 39 Am. St. 626. Ex parte Fulton, 7 Cow. (N. Y.) 484. In order to give effect to the intention of a contract, words may be trans- posed, rejected, or supplied, if neces- sary to make the meaning of the agreement clear. Potthoff v. Safety Amorite Conduit Co., 143 App. Div. (N. Y.) 161, 127 N. Y. S. 994. '^ Richelieu Hotel Co. v. Interna- tional Military Encampment Co., 140 111. 248, 29 N. E. 1044, 33 Am. St. 234. "Boykin v. Bank of Mobile, 72 Ala. 262, 47 Am. Rep. 408. "Irwin V. Nichols, 87 Ark. 97, 112 S. W. 209; Schroeder v. Griggs, 80 Kans. 357, 102 Pac. 469. "Monmouth Park Assn. v. Wallis Iron Works. 55 N. J. L. 132, 26 Atl. 140, 19 L. R. A. 456, 39 Am. St. 626. 8l9 INTERPRETATION AND CONSTRUCTION. § 1 53 5 lerpohted when it appeared from a reading of the context that they had been inadvertently omitted. Where a receipt had in one corner one hundred and fifty dollars in figures and the body of the receipt read "Received * * * hundred and fifty dol- lars," it v^as held that the figures indicated that the word "one" had been omitted from before the word "hundred."" Not only may the words be interpolated but the words actually used may be changed, and the meaning thus made to conform with the in- tention of the parties. Thus the word "and" may be read as "or" or vice versa if the context discloses this to be the proper reading.'* The word "each" has been substituted for "such" when it appeared that the use of the latter word was a clerical error. ''^ The word "may" when considered in connection with its context has been held not to indicate a conditional obliga- tion but to be construed as absolute.'® Plural language may in a proper case be held to include the singular" and the singular the plural.'^ The court may, where there is an obvious mistake on the face of the instrument which is corrected by other expressions "The court said: "It is true that Betteman v. Harness, 42 W. Va. 433, where words and figures are used 26 S. E. 271, 36 L. R. A. 566. Com- to express the same number, and they pare with Atlantic Terra Cotta Co. do not agree, the words must pre- v. Masons' Supply Co., 180 Fed. 332, vail. That is because people are 103 C. C. A. 462; Bridgers v. Or- more liable to mistake in writing mond, 153 N. Car. 113, 68 S. E. 973. figures than words. Such is not this " Sheetz v. Price (Mo. App.) case. The words alone show that 136 S. W. 733. A lease of a dairy for there was a mistake. Resorting to three years with a provision to the the figures to ascertain what word effect that sixty days prior to tlie was omitted does not make the end of "such" year the lease might figures prevail over the words." be terminated by either party, may be Gran v. Spangenberg, 53 Minn. 42, terminated on notice at the end of 54 N. W. 933. any one of the years. '*Manson v. Davton, 153 Fed. 258, "Watson v. Donald, 142 111. App. 82 C. C. A. 588; Chicago B. & O. R. 110. Compare, however, with North- Co. v. Bartlett, 120 111. 603, 11 N. E. wester Traveling Men's Assn. v. 867; McCall v. Trevor, 4 Blackf. Crawford, 126 111. App. 468, affd., (Ind.) 496; Davis v. Boardman, 12 Crawford v. Northwestern Traveling Mass. 80; Litchfield v. Cudworth, 15 Men's Assn., 226 111. 57. 80 N. E. Pick. (Mass.) 23; Jackson v. Top- 736, 10 L. R. A. (X. S.) 264n. ping, 1 Wend. (N. Y.) 388, 19 Am. " Cowles Electric &c. Co. v. Low- Dec. 515; Decker v. Carr, 11 App. rev. 79 Fed. 331. 24 C. C. A. 616. Div. (N. Y.) 432, 42 N. Y. S. 243, " Kniselv v. Shenbcrger, 7 Watts, affd., 154 N. Y. 764, 49 N. E. 1096; (Pa.) 193; Leith v. Bush, 61 Pa. St. Lvcoming Fire Ins. Co. v. Wood- 395 ; George v. Tate, 102 U. S. 564, worth, 83 Pa. 223 ; Dumont v. United 26 L. ed. 2Z2. States, 98 U. S. 142, 25 L. ed. 65; § 1536 CONTRACTS, 820 therein when the whole instrument is considered, correct the error" without resort to equity.^** § 1536. Rejecting and interpolating words — Limits of rule. - — However, the court will refuse to add words to a contract to help a doubtful construction when a more natural meaning can be gathered from the contract as it stands.^^ Moreover when a contract is silent in regard to a matter it is not to be lightly pre- sumed that it was intended to imply an agreement upon that point. Great care should be taken not to make the contract speak where it is intentionally silent, and above all not to make it speak entirely contrary to the intention of the parties. The im- plication should clearly appear from the whole instrument.*^ Thus it has been held that when a contract between plaintiff and defendant contained no express provision binding the plaintiff to take and pay for certain stock none would be implied.®^ Wlien a contract is indefinite and uncertain and no attempt has been "Marion v. Faxon, 20 Conn. 486; Hibbard v. McKindley, 28 111. 240; Schill V. Reisdorf, 88 111. 411; Steele V. McBurney, 96 Iowa 449, 65 N. W. 332; Fowler v. Woodward, 26 Minn. 347, 4 N. W. 231 ; De Soto v. Dick- son, 34 Miss. 150; Richmond v. Woodard, 32 Vt. 833; Weed v. Ab- bott, 51 Vt. 609. ^Siegel V. Colby, 176 111. 210, 52 N. E. 917, affg. 61 111. 315; Amett V. Williams, 226 Mo. 109, 125 S. W. 1154. ^ Klauder v. C. V. G. Import Co., 61 Misc. (N. Y.) 255, 113 N. Y. S. 716. " Churchward v. Queen, L. R. 1 Q. B. 173; East Ohio Gas. Co. v. Akron, 81 Ohio St. 33, 90 N. E. 40. When the language used is clear and plain the court cannot by implication put into a written instrument what the parties have left out of it, though by mistake; nor reject what they have put into it, unless repugnant to some other part. Caverly-Gould Co. V. Springfield, 83 Vt. 396, 76 Atl. 39. "It is the duty of the courts to lean against the destruction of contracts on the ground of uncertainty." How- ever, "Courts have no right to impose contracts upon parties, and this they do when they interpolate or elimi- nate a term of material legal conse- quence to save them." Elmore v. Parrish, 170 Ala. 499, 54 So. 203. See also, Schreiber v. Straus, 147 111. App. 581; Burt v. Garden City Sand Co., 141 111. App. 603, affd., 237 111. 473, 86 N. E. 1055; Smyser v. Fair, 11 Kans. IIZ, 85 Pac. 408; Strout Co. v. Gay, 105 Maine 108, 72 Atl. 881, 24 L. R. A. (N. S.) 562n; Lig- gett V. Levy, 233 Mo. 590, 136 S. W. 299; Zohrlaut v. Mengelberg, 144 Wis. 564, 124 N. W. 247. "What is mutually understood and agreed to by the parties will enter into and be- come a part of a contract, as will a well-established custom of the trade enter into and become a part of it when the custom is known and un- derstood by the parties and the con- tract is made with reference to it." Postal Telegraph-Cable Co. v. Louis- ville Cotton Oil Co. (Ky. App.), 122 S. W. 852. *^ Joseph V. Sulzberger, 136 App. Div. (N. Y.) 499, 121 N. Y. S. 11. 821 INTERPRETATION AND CONSTRUCTION. § 1 537 made to reform it, the court must find liability in the contract as written, or not at all.** § 1537. Practical construction. — It is a familiar law that when a contract is ambiguous in its terms, a construction given to it by the parties thereto and by their actions thereunder, before any controversy has arisen as to its meaning, with knowledge of its teiTiis, is entitled to great weight, and will, when reasonable, be adopted and enforced by the courts.**^ The construction placed •*"In Faulkner v. Des Moines 116 Iowa 733, 89 N. W. 234; Baxter Drug Co., 117 Iowa 120, 90 N. W. Springs v. Baxter Springs Light & 585, it is said : 'It is a familiar propo- Power Co., 64 Kans. 591, 68 sition that a contract, to have any Pac. 63 ; Lewiston & A. R. Co. binding force or effect in law, must v. Grand Trunk R. Co., 97 Maine be sufficiently definite and certain in 261, 54 Atl. 750; Stone v. Clark, its terms to furnish a criterion 1 Met. (Mass.) 378, 35 Am. Dec. whereby the damages recoverable for 370n ; Reynolds v. Boston Rub- the breach thereof can be ascer- ber Co., 160 Mass. 240, 35 N. E. tained.'" Rapp v. H. Linebarger & 677; Dwelley v. Dwelley, 143 Mass. Son (Iowa), 125 N. W. 209. 509, 10 N. E. 468; Switzer v. Pin- *" Forbes v. Watt, L. R. 2 Sc. & D. conning Mfg. Co., 59 Mich. 488, 26 214; Keith v. Electrical Engineering N. W. 762; Murray v. Nickerson, Co., 136 Cal. 178, 68 Pac. 598; Lovell 90 Minn. 197, 95 N. W. 898; La- V. Goss, 45 Colo. 304, 101 Pac. 72, 22 clede Const. Co. v. Moss Tie Co., 185 L. R. A. (N. S.) 1110, 132 Am. St. Mo. 25, 84 S. W. 76; C. D. Smith 184;Farrell v. Garfield Min. &c. Co., Drug Co. v. Saunders, 70 Mo. App. 49 Colo. 159, 111 Pac. 839; Construe- 221; Williams v. Kansas &c. Co.. 85 tion Information Co. v. Cass, 74 Conn- Mo. App. 103 ; Williams v. Auten, 213, 50 Atl. 563; Harten v. Loffer, 29 68 Nebr. 27, 93 N. W. 943; Gorder v. App. (D. C.) 490; Fitzgerald v. Pankonin, 83 Nebr. 204, 119 N. W. First Nat Bank, 114 Fed. 474, 52 C. 449, 131 Am. St. 629; Becker v. Lin- C. A. 276; Gronstadt v. Withoff, 21 ton, 80 Nebr. 655, 114 N. W. 928, Fed. 253 ; Uinta Tunnel Min. &c. Co. 127 Am. St. 795 ; Hale v. Sheehan, V. Ajax Gold Min. Co.. 141 Fed. 563, 52 Nebr. 184, 71 N. W. 1019; Fis- 73 C. C. A. 35; Nickerson v. Atchi- cus v. Wilson, 74 Nebr. 444. 104 N. son, T. & S. F. R. Co., 17 Fed. 408, W. 856; Helme v. Strater, 52 N. J. 3 McCrary (U. S.) 455; Vermont Eq. 591, 30 Atl. 333; Jackson v. Per- St. M. E. Church v. Brose, 104 111. rine, 35 N. J. L. 137; Sattler v. Hal- 206; Purcell Co. v. Sage. 200 111. lock. 160 N. Y. 291, 54 N. E. 667. 46 L. 342, 65 N. E. 723; Merrifield v. Canal R. A. 679, 73 Am. St. 686; Seymour v. Comrs., 212 111. 456, 72 N. E. 405, 67 Warren, 179 N. Y. 1. 71 N. E. 260; L. R. A. 369; Slack v. Knox, 213 111. Kling v. Bordner. 65 Ohio St. 86. 61 190, 72 N. E. 746, 68 L. R. A. 606; N. E. 148: Butler v. Moses, 43 Ohio Walker v. Illinois Cent. R. Co., 215 St. 166, 1 N. E. 316; Straus v. 111. 610. 74 N. E. 812; Vinton v. Bald- Wanamaker, 175 Pa. St. 213. 34 Atl. win, 95 Ind. 433; Fulton County v. 648; Gillespie v. Iseman, 210 Pa. 1, Gibson, 158 Ind. 471. 63 N. E. 982; 59 Atl. 266; Hassett v. Cooper, 20 R. Johnson v. Gibson. 78 Ind. 282, and I. 585, 40 Atl. 841 ; Chicago v. Shel- authorities cited; .Etna Life Ins. Co. don. 9 Wall. (U. S.) 50, 19 L ed V. Nexsen, 84 Ind. 347, 43 Am. Rep. 594; Brooklyn Life Ins. Co. v. 91; Indianapolis v. Kingsbury, 101 Dutcher, 95 U. S. 269, 24 L ed 410- Ind. 200. 51 Am. Rep. 749; Pratt v. Topliff v. Topliff, 122 U. S PI 30 Prouty, 104 Iowa 419, 73 N. W. 1035, L. ed. 1110, 7 Sup. Ct. 1057: Dis- 65 Am. St. 472; Stewart v. Pierce, trict of Columbia v, Gallaher, 124 U. § 1537 CONTRACTS. 822 on the contract by parties thereto prevails when the language used will reasonably allow such construction^^ even though the court would probably adopt a different construction were it not for the practical construction already placed by the parties on their agreement." The construction placed upon the contract by the pyarties themselves is of great value in determining its correct interpretation.*^ The reason underlying this rule is that it is the duty of the court to give effect to the intention of the parties where it is not wholly at variance with the correct legal interpre- tation of the terms of the contract, and a practical construction placed by the parties upon the instrument is the best evidence of their intention.®^ S. 505, 31 L. ed. 526, 8 Sup. Ct. 585, 23 Ct. CI. (U. S.) 493; Knox County V. Ninth National Bank, 147 U. S. 91, n L. ed. 93, 13 Sup. Ct. 267; Wood- ward V. Edmunds, 20 Utah 118, 57 Pac. 848; Thompson v. Prouty, 27 Vt. 14; Janesville Cotton Mills v. Ford, 82 Wis. 416, 52 N. W. 764, 17 L. R. A. 564. The practical construc- tion put upon a contract by the par- ties to it, is sometimes almost con- clusive as to its meaning. NicoU v. Sands, 131 N. Y. 19, 29 N. E. 818; Woolsey v. Funke, 121 N. Y. 87, 24 N. E. 191. See, however, Meissner v. Standard Equipment Co., 211 Mo. 112, 109 S. W. 730. " Edgar Lumber Co. v. Cornie Stave Co., 95 Ark. 449, 130 S. W. 452; Kennedy v. Lee, 147 Cal. 596, 82 Pac. 257; Buckhorn Plaster Co. V. Consolidated Plaster Co., 47 Colo. 516, 108 Pac. 27; Packwaukee v. Am. Bridge Co. of N. Y., 183 Fed. 359, 105 C. C. A. 579; Michigan Home Colony Co. v. Tabor, 141 Fed. 332, 72 C. C. A. 480; Mizell Live Stock Co. V. J. J. McCaskill Co., 59 Fla. 322, 51 So. 547; Coulter v. Crawfordsville Trust Co., 45 Ind. App. 64, 88 N. E. 865; Welsh v. Mischke, 154 Mo. App. 728, 136 S. W. 36; School Dist. of City of South Omaha v. Davis, 76 Ncbr. 612. 107 N. W. 842; Jobst v. Hayden Bros., 84 Nebr. 735, 121 N. W. 957; Brad- dox V. Boner, 29 Ohio C. C. 300; Provident Trust Co. v. Spokane, 63 Wash. 92, 114 Pac. 1030. "Pittsburgh &c. Bldg. Brick Co. V. Bailey, 16 Kans. 42, 90 Pac. 803, 12 L. R. A. (N. S.) 745; City of N. Y. V. N. Y. City R. Co., 193 N. Y. 543, 86 N. E. 565, affg. 124 App. Div. (N. Y.) 936, 109 N. Y. S. 1126. ** Waters v. Kopp. 34 App. (D. C.) 575; Mitchell v. Lambert, 34 App. (D. C) 583; David Bradley Mfg. Co. v. Tedford, 127 111. App. 1; Collins & Burgie Co. v. Silver, 150 111. App. 430; Scott v. Lafayette Gas Co., 42 Ind. App. 614, 86 N. E. 495; Henry v. Mason City &c. R. Co., 140 Iowa 201, 118 N. W. 310; Walton- Wilson-Rodes Co. v. McKitrick, 141 Ky. 415, 132 S. W. 1046; Carthage Tissue Paper Mills v. Carthage, 200 N. Y. 1, 93 N. E. 60, affg. 127 App. Div. (N. Y.) 945, 111 N. Y. S. 1112 (memorandum decision) ; Boyer v. Metropolitan Sewing Mach. Co., 128 App. Div. (N. Y.) 458, 112 N. Y. S. 817, judgment affirmed, 199 N. Y. 593, 93 N. E. 1116; Ferguson Con- tracting Co. V. State, 70 Misc. (N. Y.) 472, 126 N. Y, S. 808; Trexler v. Reynolds, 43 Pa. Super. Ct. 168; Buckley v. Herder (Tex. Civ. App.), 133 S. W. 703 ; Moore v. Ohio Valley Gas Co., tl W. Va. 455, 60 S. E. 401. Some cases state that the construction placed upon a contract by the par- ties thereto is entitled to great, if not controlling influence. Rust v. McWilliams, 3 Alaska 561 ; Consaul v. Cummings, 24 App. (D. C.) 36. See also Bruce v. Indianapolis Gas Co., 46 Ind. App. 193, 92 N. E. 189. *" See cases cited in the preceding notes of this section. 823 INTERPRETATION AND CONSTRUCTION. § 1538 § 1538. Contemporaneous and subsequent acts considered. — In order to prove lliis intent ion resort may Ixi had to the con- temporaneous construction given to the contract by the parties, as evidenced by possession, or similar acts."" Subsequent acts performed before any controversy arose are admitted to show how the parties understood their contract and may be a prac- tical construction of it."^ And the fact that considerable time elapses, in this case seven months, after the execution of the con- tract, before the acts of the parties thereto occur, does not change their effect as a construction of the contract."^ It makes no dif- ference whether the acts which result in a partial construction of the contract are contemporaneous or subsequent when performed before any controversy arose. It is allowable to look to them for assistance in ascertaining the true meaning of the agreement."^ "Leete v. Pacific Mill & Mining Co., 88 Fed. 957, affd., 94 Fed. 968, 36 C C. A. 587; Ingraham v. Marin- er, 194 111. 269, 62 N. E. 609; Metro- politan Bank v. Northern Fuel Co., 73 111. App. 164, affd., 173 111. 345, SO N. E. 1062 ; McLean County Coal Co. V. Bloomington, 234 111. 90, 84 N. E. 624, revg. judgment 127 111. App. 582; Williamson v. Warfield, Pratt, How- ell Co., 136 111. App. 168; Guccione v. Scott, 21 Misc. (N. Y.) 410, 47 N. Y. S. 475. affd. 33 App. Div. (N. Y.) 214, 53 N. Y. S. 462. " Mayberry v. Alhambra Addition Water Co.. 125 Cal. 444, 54 Pac. 530, 58 Pac. 68; Lvman v. Kansas City & A. R. Co., '101 Fed. 636; Long- Bell Lumber Co. v. Stump, 86 Fed. 574, 30 C. C. A. 260; Schofield v. State Nat. Bank, 97 Fed. 282, 38 C. C. A. 179; Hammerquist v. Swens- son, 44 111. App. 627; Ogden v. Stev- ens, 241 111. 556. 89 N. E. 741, 132 Am. St. 237; Beltine Chemical & Mfg. Co. V. Zulfcr, 152 111. App. 308; Pratt V. Proutv, 104 Iowa 419, 73 N. W. 1035, 65 Am. St. 472; St. Louis Gas Light Co. v. St. Louis, 46 Mo. 121; United Boxboard & Paper Co. V. McEwan Bros. Co. (N. J. Eq.), 76 Atl. 550; Coleman v. Grubb. 23 Pa. St. 393; Svms v. Mavor, 105 N. Y. 153. 11 N. E. 369; Williamson -V. Eastern Bldg. & Loan Assn. of Syracuse N. Y., 54 S. Car. 582, 32 S. E. 765. 71 Am. St. 822; Topliff v. Topliff, 122 U. S. 121, 30 L. ed. 1110. 7 Sup. Ci. 1057 ; Chicago v. Sheldon, 9 Wall. (U. S.) 50, 19 L. ed. 594; Jenkins v. Jensen, 24 Utah 108, 66 Pac. 773, 91 Am. St. 783; Gray v. Clark, 11 Vt. 583; Barker v. Troy & R. Co., 27 Vt. 766; Vermont & Can- ada R. Co. V. Vermont & Central R. Co., 34 Vt. 1; Malloy v. Interstate Irr. Co., 62 Wash. 487, 114 Pac. 167. In Chapman v. Bluck, 5 Scott's Re- ports 515, Tindall, J., says: "But we are also at liberty to look at the acts of the parties, than which there can not be a better means of ascertain- ing their intention;" and Park, J., after laying down the general rule as given by Lord EUenborough, "that the intention of the parties, as declared by the words of the instru- ment, must govern the construction," adds that subsequent acts and declar- ations of the parties may be looked to in aid of the construction. Where the language is ambiguous, the practi- cal interpretation of it by the parties, is entitled to great, if not controlling influence. " Powers V. World's Fair Min. Co., 10 Ariz. 5, 86 Pac. 15. "Vermont Street M. E. Church v. Brose. 104 111. 206. See also, Will- iam W. Braner Steamship Co. v. Piano Mfg. Co., 135 111. App. 100; St. Louis V. St. Louis & S. F. R. Co., § 1539 CONTRACTS. 824 The acts of the parties in the execution of a parol agreement are the best guides for its interpretation.** § 1539. The rule illustrated. — Thus, where a contract pro- vided that a theater should be operated as "a first-class place of amusement," the court, in order to determine whether there has been a breach of this condition, will take, as a standard of first- class attractions, one which the parties themselves thought first- class.*^ And where mail-transportation service has been ren- dered in a certain way for nearly twelve years, under three suc- cessive contracts, the court will adopt the construction given by the parties, although the abstract inclined to a different one.*' In a contract for the hauling of stone where there was a dispute as to whether the person to do the hauling was to be paid by the perch or by the cubic yard and as to how the amount hauled was to be determined, it was held that where the parties had made bi- monthly settlements based on payment by the cubic yard deter- mined in a certain way, the parties were bound by their con- struction of the contract to which, at the time, neither party objected.*^ Where a city and a water company, for about four years, proceeded under a contract for the maintenance of a water- works system upon the theory that the water company was re- quired to give direct pressure in case of fire, whenever requested, such construction was held binding.*^ The installation of a standard duplex pump with a capacity of pumping 500,000 gal- lons of water in twenty-four hours has been held a circumstance proper for the consideration of the jury in construing a contract to supply a pump of the above-mentioned character "of ample daily capacity."** Where, under a contract for the sale of hops 228 Mo. 712, 129 S. W. 691; Peter- '"Leavitt v. Windsor Land & In- son V. Tacoma R. & Power Co., 60 vestment Co., 54 Fed. 439, 4 C. C. A, Wash. 406, 111 Pac. 338, 140 Am. 425. St 936 '"Carr v. United States, 22 Ct. CI. ^Robbins V. Kimball, 55 Ark. 414, (N. Y.) 152. 18 S. W. 457, 29 Am. St. 45. A ver- "' Trapp v. Conley, 28 Ky. L. 475, bal agreement will be construed ac- 89 S. W. 514. cording to the facts and circum- "' Bounds v. Hubbard City, 47 Tex. stances of the case. Arbuckle v. Civ. App. 233, 105 S. W. 56. Smith, 74 Mich. 568, 42 N. W. 124; »* Hubbard City v. Bounds (Tex. Thompson v. Andrus, 73 Mich. 551, Civ. App.), 95 S. W. 69. 41 N. W. 683. 825 INTERPRETATION AND CONSTRUCTION. § I54O for several successive years, the vendor for two years notified the vendee when the crops were ready for delivery whereupon the latter went and inspected the entire crop and made selections therefrom to fill the contract, this was held a practical construc- tion of the contract showing that the vendee had the right to make such inspection.^ Two railroad companies entered into a succes- sion of contracts in pari materia, all relating to the joint use of terminal property, all of which originally belonged to one com- pany, but which was subsequently added to by the other, in fixing a basis for the division between them of the cost of maintenance. The terms, "wheelage" and "car and engine mileage" were used indiscriminately, but, in the execution of the contract from the first, they based a division of the cost of maintenance on wheel- age, and that construction was adopted by the courts in determin- ing their rights thereunder.- Where one who was under contract to furnish three wood-turning lathes to the United States for use in a navy yard was in doubt as to the meaning of one part of the specifications and wrote the naval constructor in regard there- to and was informed specifically as to the requirements and after- ward delivered the lathes in conformity therewith, without ob- jection, and also signed a voucher for the contract-price, it was held that even if the contract was ambiguous he was bound by the construction based thereon by the government and on which he acted in performing it, and could not subsequently insist upon a different construction and recover an additional sum, on the ground that the lathes furnished were more expensive than those required by the contract.^ § 1540. Additional illustrations. — The principle of prac- tical construction by the parties has been applied to leases,* ante- nuptial contracts,** and to contracts with a municipality for street lights.* Where the writing which embodies the contract of the *Mitan V. Roddan, 149 Cal. 1. 84 ed. 136. 41 Ct. CI. (U. S.) 214, 29 Pac. 145. 6 L. R. A. (N. S.) 275. Sup. Ct. ^7 ' Columbus &c R. Co. v. Pennsyl- * Gorder v. Pankonin, 83 Nebr. 204, vania Co., 143 Fed. 757. 74 C. C. A. 119 N. W. 449, 131 Am. St. 629. 647. Becker v. Linton, 80 Nebr. 655, » Walker v. United States (U. S. 114 X. W. 928, 127 Am. St. 795. D C Pa.), 143 Fed. 685. See also, " Ba.xter Sprmgs v. Baxter Sprmgs Bowers Hydraulic Dredging Co. v. Light &c. Co., 64 Kans. 591, 68 Pac. United States, 211 U. S. 176, 53 L. 63. § 1 541 CONTRACTS. 826 parties has been lost it has been held that its meaning can best be ascertained by what the parties did under its provisions.'^ If the contract, the meaning of which is in dispute, was not reduced to writing its nature and terms must be ascertained as matter of fact from the conversations, negotiations, and acts of the parties by whom it was made.^ It is provided by statute in California that the terms of a contract may be evidenced by conduct when not stated in words.^ § 1541. Must be the act of both parties. — The acts per- formed must, however, be the acts of both parties. And it ought to appear with reasonable certainty that acts alleged to have been performed in the construction of the contract were in fact the voluntary acts of both parties performed with knowledge of the terms of the contract and in view of a purpose at least consistent with that to which they are sought to be applied.^" Thus where the lease of a coal mine provided for a royalty of $1.50 per "railroad car, or its equal of coal," and no act was performed by the lessor other than to receive the money under it at the rate of $1.50 per railroad car, for which he was not required to execute a written receipt, such lessor was not deemed to have acquiesced in the construction sought to be placed upon the lease by the lessee, nor to be estopped thereby from proving that he had a different un- derstanding of the lease from that claimed by the lessee." The construction placed upon a contract between husband and wife by an attorney of the latter, unknown to the husband, has been held not to fix the meaning of the contract nor affect its binding force.^^ No other element entering in, the interpretation placed on a contract by one of the parties thereto is inadmissible to es- tablish its meaning." " Humphreys v. Fort Smith Tract. " Belcher v. Big Four Coal & Coke &c. Co., 71 Ark. 152, 71 S. W. 662. Co., 68 W. Va. 716, 70 S. E. 712. 'Patton V. Wells, 121 Fed. ZZ7, 57 "Stokes v. Stokes, 240 111. 330, 88 C. C. A. 551 ; Massey v. Belisle, 2 N. E. 829. Ired. L. (N. C.) 170. " Dakan v. Union Mut. Life Ins. •Perry v. Noonan Furniture Co., Co., 125 Mo. App. 451, 102 S. W. 634. 8 Cal. App. 35, 95 Pac. 1128. Cali- See also, Ryley-Wilson Grocer Co. fornia Civil Code 1906, § 1621. v. Seymour Canning Co., 129 Mo. " Sternbergh v. Brock, 225 Pa. 279, App. 325, 108 S. W. 628. 74 Atl. 166, 24 L. R. A. (N. S.) 1078n, 133 Am. St. 877. 82/ INTERPRETATION AND CONSTRUCTION. § 1542 § 1542. Contract must be ambiguous. — The rule that prac- tical construction of the contract by the parties is entitled to great weight applies only when the contract is ambiguous and the inten- tion doubtful. Where the contract is free from ambiguity and its meaning is clear in the eye of the law an erroneous construction of it by the parties will not control its effect." The construction of a building contract by the parties thereto as to priority and validity of liens and the like, is immaterial when the agreement is necessarily made with reference to the statutory right of cred- itors to liens.^° The practical construction of a contract adopted by the parties thereto will not control or override language that is so plain as to admit of no controversy as to its meaning. In such cases the intent of the parties must be determined by the lan- guage employed, rather than by their acts; but if the language employed is of doubtful import, or if the contract contains no provisions on a given point, or if it fails to define with certainty the duties of the parties with respect to a particular matter or in a given emergency, then it is proper to consider how the parties have construed the instrument with respect to such debatable points.^" In holding that the acts of the parties performed under "Pierce v. Merrill, 128 Cal. 464, 61 Pac. 64, 79 Am. St. 56; Cowles Electric Smelting &c. Co. v. Lowrey, 79 Fed. 331, 24 C. C. A. 616; Davis V. Shafer, 50 Fed. 764; Omaha Elec- Light & Power Co. v. Omaha, 172 Fed. 494; Davis v. Sexton, 35 111. App. 407 ; Grinton v. Strong, 148 111. 587, 36 N. E. 559; Ingraham v. Mar- iner, 194 111. 269. 62 N. E. 609; Mor- ris v. Thomas, 57 Ind. 316; Wilkins V. Young. 144 Ind. 1. 41 N. E. 68 55 Am. St. 162 ; Fawkner v. Lew Smith Wall-Paper Co.. 88 Iowa 169 174, 55 N. W. 200, 45 Am. St 230 Citizens' Ins. &c. Co. v. Doll, 35 Md 89, 6 Am. Rep. 360; Menage v Rosenthal. 175 Mass. 358, 56 N. E 579; St. Paul &c. R. Co. v. Black- mar, 44 Minn. 514, 47 N. W. 172 Meissner v. Standard R. Equipment Co., 211 Mo. 112, 109 S. W. 730 Bader v. Chicago Mill & Lumber Co. 134 Mo. App. 135, 113 S. W. 1154 ^Michael v. St. Louis Mut. Fire Ins Co.. 17 Mo. App. 23: Chrisman v Hodges, 75 Mo. 413; Miller v. Dun- lap, 22 Mo. App. 97; Stewart v. Lehigh Valley R. Co., 11 N. J. L. 53 ; Giles v. Comstock, 4 X. Y. 270, 53 Am. Dec. 374; Cincinnati v. Gas Light &c. Co., 53 Ohio St. 278, 41 N. E. 239; Sternbergh v. Brock, 225 Pa. 279, 74 Atl. 166, 24 L. R. A. (N. S.) 1078n, 133 Am. St. 877 (quoting with approval language to the effect that if clear and free from ambiguity, the intention shown by its face, if written, must be followed, though contrary to the practical in- terpretation by the parties, and ac- quiesced in for a long period of time) ; El Paso & S. W. R. Co. v. Eichel & Weikel (Tex. Civ. App.), 130 S. W. 922 : Railroad Co. v. Trim- ble, 10 Wall. (U. S.) 367, 19 L. ed. 948. " Hawes & Co. v. Trigg & Co., 1 10 Va. 165. 65 S. E. 538. " Central Trust Co. of New York v. Wabash &c. R. Co.. 34 Fed. 254, where a contract between two rail- way companies operating a joint line did not expressly provide how § 1543 CONTRACTS. 828 a written contract are admissible for the purpose of ascertaining the construction placed upon it, there is no encroachment upon the rule that contemporaneous parol evidence is not admissible to vary a written instrument, for acts done in execution of the contract are subsequent in time to the execution of the instru- nent, and different from the mere verbal statements.*' § 1543. Entire and severable contracts. — This subject has •ilready been mentioned in the chapters on Consideration and Legality of Object."^ But it is proper to give this subject brief fnention at this place for the reason that the question of whether 4 contract is entire or is to be regarded as severable is a ques- tion of construction.*^ (_ A contract is entire when its terms, nature and purposes show that it is contemplated and intended that each and all of its parts, material provisions and the consid- eration are common each to the other and interdependent. A divisible contract is one which from its nature and purposes is susceptible of division and apportionment and has two or more parts in respect to matters and things embraced by it, and not necessarily dependent on each other, and the parties do not intend that they shall be.*^ The fact that the contract is embraced in one instrument does not make it entire and indivisible.^'* On the other hand, the fact that the contract is embraced in more than one instriunent does not make it severable.^* Whether or not the contract is entire or divisible depends on the intention of the par- ties." The intention is to be ascertained from the language used, cars should be obtained or supplied Mountain Spring Co., 56 Wash. 176, for the use of the line. The fact that 105 Pac. 243 (holding that when the one company for several years paid considerations moving from each the other for the use of its cars was party are practically concurrent the considered as a construction placed contract is indivisible), on the contract by the parties, and ^Strauss v. Yeager (Ind. App.), enforced accordingly. 93 N. E. 877. " Lyles V. Lescher, 108 Ind. 382, 9 " Floyd v. Arky, 89 Miss. 162, 42 N. E. 365. So. 569. "a See chaps. 9, 21. ^ Los Angeles Gas &c. Co. v. " Sterling v. Gregory, 149 Cal. 117, Amalgamated Oil Co., 156 Cal. 116, 85 Pac. 305; Los Angeles Gas. &c. 106 Pac. 55; Sterling v. Gregory, 149 Co. V. Amalgated Oil Co., 156 Cal. Cal. 117, 85 Pac. 305; White Brass 776, 106 Pac. 55. Castings Co. v. Union Metal Mfg. "Strauss v. Yeager (Ind. App.), Co., 135 111. App. 32. 93 N. E. 877. See also. State v. 829 INTERPRETATION AND CONSTRUCTION. § 1 544 the subject-matter of the contract and from a consideration of all the circumstances.*^ § 1544. Contract consisting of several distinct items. — The divisibility of the subject-matter, while not controlling, is fre- quently of importance in determining the intention of the parties. Generally when the part to be performed by the promisor consists of several distinct items and the price to be paid is apportioned to each item according to its value and not as a part of a lump sum, the contract is considered as several." A contract by which one is to sow and harvest corn, oats and other crops upon the land of another has been held severable with respect to the va- rious grains involved." But the fact that a price has been affixed to each bushel of a crop contracted to be threshed,^® or the fact that the mode of measuring the price is by the bushel, ton, or pound, will not necessarily change the effect of the agreement.-^ Where one agreed to furnish a certain quantity of crushed stone for a fixed price per cubic yard, at a stated rate per day, it was held that the contract was entire, and that it required full per- formance before payment of the consideration was due.*^ A con- tract to change a gas engine into a gasoline engine and set it up, has been held a single and entire contract, though separate quota- tions were given on the cost of transforming and the cost of in- stalling. It was also held that the person making the guaranty was entitled to recover either for the transformation or the in- stallation where the engine did not work according to the guar- anty.-® » Cole V. Harvey, 142 Iowa 574, 120 Mass. 158, 86 N. E. 306. See ante. N. W. 97 ; Quarton v. American Law ch. 9. Book Co., 143 Iowa 517, 121 N. W. ^ Stoneking v. Long, 142 III. App. 1009; Bamberger Bros. v. Burrows, 203. 145 Iowa 441, 124 N. W. 333; Gil- =" Johnson v. Fehsefeldt, 106 Mmn. more & Co. v. W. B. Samuels & Co., 202, 118 N. W. 797, 20 L. R. A. (N. 135 Ky. 706, 123 S. W. 271; Ganong S.) 1069n. & Chenweth v. Brown. 88 Miss. 53, -"^ McKeefry v. United States 40 So. 556, 17 Am. St. 731 ; Powell v. Radiator Co., 31 Pa. Super. Ct. 263 Russell. 88 Miss. 549. 41 So. 5; Dick See also. Sauser v. Kearney, 147 V. Riddle, 139 Mo. App. 584. 123 S. Iowa 335, 126 N. W. 322. W. 486; Cullv v. Isham. 194 N. Y. -" Prautsch v. Rasmussen, 133 Wis. 584. 88 N. E. 1117. affg. 125 App. Div. 181, 113 \. W. 416. See also. Fletch- (N. Y.) 97. 109 N. Y. S. 92; Clark er v. McMillan, 132 Ga. 477. 64 S. V. West. 137 App. Div. (N. Y.) 23, E. 268 (contract concerning timber) 122 N Y S 380. =• Kumberger v. Hartford. 114 N. ** Barlow Mfg. Co. v. Stone, 200 Y. S. 808. An agreement by which § 1545 CONTRACTS. 83O § 1545. Illustrations o£ entire contracts.— A building con- tract which provided for the erection of a house and stable, has been held an entirety, and payments made by the owner thereof are to be credited to the account of the whole work.^'^ A con- tract which requires a contractor to remove all parts of a wrecked vessel so as to secure a specified depth of water, and provides that "upon the satisfactory completion of the same" he shall be paid $1,100 is entire.^' A telephone rental contract required the lessee to subscribe for one share of the telephone company's stock, to be paid for in instalments, and the lease of the telephone would not have been made on refusal to subscribe for the stock. The subscription was held dependent on the lease, and not a separate contract, and the lease being unenforcible for want of mutuality, the subscription was also invalid/^ An artist contracted with plaintiff to execute a bronze statue ; by the terms of the contract 10 per cent, of the price was to be paid when the sketch model of the statue was approved, lo per cent, when the staff model was completed and placed on its pedestal, and other payments were to be made at various stages of the work. The sculptor was required to give a bond on the receipt of each payment condi- tioned for the completion of the contract in accordance with its terms. Two payments were made, and bonds executed, signed by defendant as surety, after which the principal defaulted. The contract M^as held an entire one for completion of the statue, and not a series of independent contracts for the completion of each step of the work, and the failure to fully perform it was a breach of the condition of each bond given, and entitled plaintiff to recover thereon as substantial damages at least the amount of the payments made, for which it had received no consideration.^' Plaintiff agreed to print in its stamp directory the name and busi- one acquires certain tangible proper- ^ Co-Operative Tel. Co. v. Katus. ty, together with certain patent rights, 103 N. W. 814, 140 Mich. 367, 112 is an entire contract, notwithstanding Am. St. 414. a separate valuation was placed upon "*' American Surety Co. of New the tangible property. White Brass York v. Fidelity Trust Co., 179 Fed. Castings Co. v. Union Metal Mfg. 699, 103 C. C. A. 29, affg. Fidelity Co., 135 111. App. 32. Trust Co. v. American Surety Co., '"First Xat. Bank v. Mitchell. 46 175 Fed. 200. See also, Holman v. Misc. CN. Y.) 30, 93 N. Y. S. 231. Updike, 208 Mass. 466, 94 N. E. 689. ^Poynter v. United States, 41 Ct. CI. (U. S.) 443. 831 INTERPRETATION AND CONSTRUCTION. § 1 546 ness of defendant, and to obtain orders from at least lOO persons for portraits to be given free by defendants on presentation of stamps worth $25. The defendants agreed to pay plaintiff $175 for 100 frames on the completion of the canvas, and to receive from the latter stamps to carry out the scheme, for which they were to pay 50 cents per 100. The contract also stipulated that it was a part of the agreement that 100 persons should order 100 frames. The agreement was held not a severable contract, and plaintiff performing it in part was not entitled to recover, especially where it fraudulently altered orders for portraits pro- cured by it.^^ Where the defendant agreed, as a condition to the sale of mining stock to the plaintiff, that he would repurchase it at one dollar per share within one year from the date of sale, the agreement was held an entire contract for the sale of the stock. It was also held that the plaintiff was entitled to recover one dollar per share where he offered the stock back to the defendant within the year at one dollar per share.^^ A gas company con- tracted to lay and connect certain gas mains with the plaintiff's lots. The agreement was held not divisible so as to allow the plaintiff to recover for failure to connect with certain of the lots after the supply of natural gas had failed.^" § 1546. Examples of severable contracts. — A contract re- cited that in consideration of $1 C held in trust for B and H two undivided third interests in all rights and interest acquired or to be acquired by C under and by virtue of an agreement of W to convey to C certain land on certain named terms and condi- tions, also two undivided thirds of certain other land. All said lands, rights and interest had been purchased by C with funds furnished in equal parts by himself, H and B. The contract was "American Copying Co. v. Leh- bind themselves to support their par- mann, 6 Cal. App. 1, 91 Pac. 414. See ents in consideration of the convey- also, Edward Thompson Co. v. ance of certain land to them has been Washburn, 191 Mass. 6, 11 N. E. held entire, and not severable. It 483 (sale of law books) ; Ben C. was also held that when it was Jones & Co. v. Gammel-Statesman breached by one of the obligors, this Pub. Co.. (Tex. Civ. App), 94 S. avoided the agreement in its entirety. W. 191 (sale of Texas reports). Epperson v. Epperson, 108 Va. 471, »Vohland V. Gelhaar, 136 Wis. 75. 62 S. E. 344. 116 N. W. 869. A contract entered "^ Bruce v. Indianapolis Gas. Co., into by two children by which they 46 Ind. App. 193, 92 N. E. 189. § 1547 CONTRACTS. 832 held severable in that while not en forcible as to the first tract it might be enforced as to the second.^^ The agreement by a trust company to accept a certain contract if the construction company would pay certain expenses, and the agreement of the construction company to do so have been held to be two separate agreements of the construction company.^^ An agreement to waive any claim for damages caused by reason of the defendant's negligence has been held separable from the rest of the contract.'^ A lumber company contracted with another corporation to sub- scribe for a certain amount of its capital stock, to be paid for in lumber. The latter agreed to increase its capital stock, to merge its existing business into the new business, to secure land for a lumber yard and to perform other acts. This latter agreement was held independent and separable, so that strict performance of it was not a condition precedent to a right to maintain an action for failure of the lumber company to perform its contract.''** § 1547. Dependent and independent promises. — Where a contract contains mutual promises, whether to pay money or perform some other act, and the time for performance by one party is to, or may, arrive before the time for performance by the other, the latter promise is an independent obligation, and non- performance thereof merely raises a cause of action in the prom- isee, and does not defeat the right of the party making it to recover for a breach of the promise made to him.''^ The question of whether conditions in a contract are dependent or independent is determined by the intention of the parties as expressed in the instrument." In case of doubt the covenants in the contract are to be construed as dependent.*' "Cantwell v. Crawley, 188 Mo. 44, 104 Pac. 641, 24 L. R. A. (N. S.) 86 S. W. 251. 1082n. . ^ ^ , ..„ ^Kidd V. New Hampshire Tract. "Ink v. Rohng, 23 S. Dak. 548, Co., 74 N. H. 160, 66 Atl. 127. 122 N. W. 594. To the same effect, ^ Piper V. Boston &c. R. Co., 75 N. World's Fair Mining Co. v. Powers, H. 435, 75 Atl. 1041. 12 Ariz. 285, 100 Pac. 957. See also, *" Pacific Mill Co. v. Inman, 46 Ore. Laswell v. National Handle Co., 147 352, 80 Pac. 424; post, § 1577. Mo. App. 497, 126 S. W. 969. For "Kinney v. Federal Laundry Co., cases illustrating dependent and in- 75 N. J. L. 497, 68 Atl. 111. dependent covenants, see Marinovich ^'Con P. Curran Printing Co. v. v. Kilburn, 153 Cal. 638, 96 Pac. 303 St. Louis, 213 Mo. 22, 111 S. W. 812; (sale of shares of stock with agree- Toellner v. McGinnis, 55 Wash. 430, ment to purchase such stock on cer- 833 INTERPRETATION AND CONSTRUCTION. § 1 548 § 1548. Alternative stipulations and options. — Contracts which are optional in respect to one party are strictly construed in favor of the party that is bound and against the party in whose favor the option runs.** The party who has the right of election must, in exercising the right, give such notice as will leave no doubt of his intention to exercise the right given him/' and once having made his election, he is concluded thereby." It has been held that where by the terms of an agreement one party thereto is given an option to determine or to consummate it as a contract, the law will grant a like privilege to the other party until both are bound, when it becomes a binding contract.'*^ § 1549. Rules as to time — Performance. — Questions con- cerning time of performance are determined by the intention of the parties. For this reason it is difficult to lay down any hard and fast rules by which such intentions may be ascertained. It is a general rule of law, however, that in the computation of time fractions of a day are not reckoned.*^ Consequently where a contract provides that it shall be performed by a certain day the promisor has the whole of the last day to perform it/'^ includ- ing the night of the day on which a transaction must be completed to be binding when the nature of the business so permits.'^** A tain conditions) ; Mailhot v. Turner, 151 ; Wright v. Mills, 4 H. & N. 157 Mich. 167, 121 N. W. 804, 133 488; Queen v. St. Mary, 1 El. & Bl. Am. St. 333n (lease of homestead 816. Sir William Grant, in Lester with a privilege of purchase, the v. Garland, 15 Ves. 248, says : "Our lease was invalid and this was held law rejects fractions of a day more to avoid the contract as a whole) ; generally than the civil law does. The Pearce v. Alward, 163 Mich. 313, effect is to render the day a sort of 128 N. W. 210 (agreement to de- indivisible point; so that any act, liver 2,500 grapevines which defend- done in the compass of it, is no more ant was to cultivate and divide the referable to any one, than to any fruit with the plaintiff, who also other portion of it; but the act and agreed to replace the vines dying the day are coextensive, and there- within two years) ; post, § 1578. fore the act can not properly be said **Kolachnv v. Galbreath, 26 Okla. to have passed, until the day is 772, 110 Pac. 902. passed." "* German Ins. Co. v. Hazard Bank, '"Preston v. Dunham. 52 Ala. 217; 31 Ky. L. 1126, 104 S. W. 725. Massie v. Belford, 68 111. 290; Stev- "Twaits V. Pennsvlvania R. Co., ens v. Blunt, 7 Mass. 240; Connolly n N. J. Eq. 103, 75 Atl. 1010. v. Anderson, 1 Hill (N. Y.) 519. " Mclntyre Lumber &c. Co. v. '^ See Elizabeth City Cotton Mills v. Jackson Lumber Co., 165 Ala. 268, 51 Dunstan, 121 N. Car. 12, 27 S. E. So. 767, 138 .A.m. St. 66. 1001, 61 Am. St. 654, holding that a "In re Hull R. &c. Co., L. R. 20 contract by which one subscribed Ch. Div. 203; Field v. Jones, 9 East for capital stock in a corporation S3— Contracts, Vol. 2 § 1550 CONTRACTS. 834 promise to pay on or before a designated day is construed as a promise to pay on that day with the optional privilege of paying before the time specified. ^^ § 1550. Computation of time from a particular day or a particular event. — In the interpretation of contracts, v^here time is to be computed from a particular day or a particular event, as when an act is to be performed within a specified pe- riod from or after a day named, the general rule is to exclude the day thus designated and to include the last day of the specified period/^ In a leading English case in regard to a lease which was to commence from the day of the date, the matter turned upon the question whether the phrase "to commence from the day of the date" was to be construed as excluding, or including, the day on which the lease bore date. The court established the prin- ciple that the words when used in an instrument were to receive an inclusive or exclusive sense, according to the intention with which they were used, to be derived from the context and subject- matter, and so as to effectuate, and not destroy, the deed of the parties. °^ Many early cases made a distinction between compu- conditioned on a certain amount be- Rep. 470; Duffy v. Ogden, 64 Pa. St. ing subscribed by a certain day be- 240 (a lease for one year) ; Weld v. comes binding if such amount is sub- Barker, 153 Pa. St. 465; Phelan v. scribed on the night of the day Douglass, 11 How. Pr. (N. Y.) 193. named. "Time is not, therefore, computed "Wilson V. Bicknell, 170 Mass. from the hour of the day on which 259, 49 N. E. 113; Helmer v. Kro- the event happened, to the corres- lick, 36 Mich. 371 ; Mattison v. Marks, ponding hour of the day of perform- 31 Mich. 421, 18 Am. Rep. 197. ance; but the computation is from ^^ Sheets v. Selden's Lessee, 2 Wall, the day when the act was done, such (U. S.) 177, 17 L. ed. 822. See Cor- day being regarded as a point of nell V. Moulton, 3 Denio (N. Y.) time. The computation begins with 12, which was an action on a promis- the expiration of such day. It is sory note payable on demand. The thus computed literally from such note was dated February 14, 1839, day, that is, from its close, its end- and the question was whether suit ing, its expiration." commenced on the 14th of February, °^ Pugh v. Duke of Leeds, Cowp. 1845 saved the operation of the stat- 714; Sands v. Lyons, 18 Conn. 18. In ute of limitations. The court held the leading case of Bigelow v. Will- that it did. Also Blackman v. Near- son, 1 Pick. (Mass.) 485, it was held ing, 43 Conn. 56, 21 Am. Rep. 634. that under a statute authorizing the "No rule, however, is to be enforced owner of an equity of redemption, so sternly as to defeat the intent of sold on execution and conveyed by the parties; that is always paramount an officer, to redeem it "within one to all other considerations, and is al- year next after the time of execut- ways to be carried into effect, if not ing" the deed, the day on which the contrary to law or public policy." Be- deed was executed was excluded, mis V. Leonard, 118 Mass. 502, 19 Am. 835 INTERPRETATION AND CONSTRUCTION. § I550 tations from a day or a date and computations from an act done, or from an event. But this distinction does not rest upon a sound principle and in most jurisdictions it is no longer recog- nized. The tendency of recent decisions is very strongly toward the adoption of a general rule wliich excludes the day as the terminus a quo in such cases. But this rule is not inHexible, and in the interpretation of a statute or contract it yields to a mani- fest purpose or intention in conflict with it.°* Words such as "until,'"^" "from" or the like/" will be given an exclusive or in- clusive meaning depending upon the subject-matter of the con- tract and the intention of the parties. The nile that the law in the computation of time does not consider the fractions of days does not prevail when it becomes essential for the purpose of justice to ascertain the exact hour or minute. ^^ It is subject to just and reasonable exceptions, and does not govern in questions concerning acts of the parties where it becomes necessary to distinguish and ascertain which of several persons has a priority of right, as where a bond and release are executed on the same day.*^* Where an insurance policy was made to expire at noon on a given day it has been held that the question of whether noon meant standard or sun time depended upon the custom of the com- munity, unless an intention contrary to the custom was evidenced "Seward v. Hayden, 150 Mass. 158. N. E. 1083; Marys v. Anderson, 24 The American cases almost uniform- Pa. St. 272. ly exclude the first day. Teucher v. " Combe v. Pitt, 3 Burr. 1423 ; Hiatt, 23 Iowa 527; Portland Bank Grosvenor v. Magill, Zl 111. 239; V. Maine Bank, 11 Mass. 204; Rand Westbrook Mfg. Co. v. Grant. 60 V. Rand, 4 N. H. 267; Snyder v. Maine 88, 11 Am. Rep. 181; Follett Warren, 2 Cow. (N. Y.) 518, 14 Am. v. Hall, 16 Ohio 111, 47 Am. Dec. Dec. 519. Ex parte Dean, 2 Cow. 365. Generally the law does not re- (N. Y.) 605. 14 Am. Dec. 521. Gil- gard fractions of a day, except in lespie V. White, 16 John. (N. Y.) cases where the hour itself is ma- 117. In Iowa the manner of com- terial. Mitchell v. Schoonover, 16 puting time has been regulated by Ore. 211. 17 Pac. 867, 8 Am. St. 282, Rev. Laws 1860, § 4121. "tnlcss the citing Marvin v. Marvin, 75 N. Y. terms 'clear days' are used, the mode 240. To the same effect, Judd v. of computing time is by excluding the Fulton, 10 Barb. (N. Y.) 117, 4 How. first day and including the last." Pr. 298; Columbia Turnpike Road v. Other states have also made similar Haywood, 10 Wend. (N. Y.) 422; provisions. Hughes v. Patton, 12 Wend. (N. Y.) "Webster v. French, 12 111. 302; 234; Blvdenburgh v. Cotheal. 4 N. Kendall v. Kingslev. 120 Mass. 94. Y. 418, 3 Code Rep. 216. 5 How. Pr. " Sands v. Lyons. ' 18 Conn. 18 : Hig- 200. gins V. Halligan, 46 111. 173; Peoria '''Louisville v. Portsmouth Sav. Sav. &c. Co. V. Elder, 165 111. 55, 45 Bank, 104 U. S. 469. 26 L. ed. 775; s 1550 CONTRACTS. 836 by the contract."' When a contract fails to fix a time within which performance is to be made, it is presumed that the contract is to be performed within a reasonable time.'^'* Consequently the promisor is not in default until a reasonable time has elapsed. "^^ However, a failure to perform within a reasonable time constitutes a breach of the contract.®^ And the promisee is not required to accept performance after a reasonable time has elapsed, and especially after he has changed his position.''^ It is true as a general rule that what constitutes a reasonable time is a question of fact to be determined by the jury from all the cir- cumstances of the case.*'* Thus where a contract provided that "if work is pushed, a few days of grace will be allowed," it was held not for the court to say that thirteen days were the few days of grace contracted for, but that the question depended upon the In re Welman, 20 Vt. 653. See also, Maine v. Gilman, 11 Fed. 214; West- brook Mfg. Co. V. Grant, 60 Maine 88, 11 Am. Rep. 181; In re Richard- son, 2 Story (U. S.) 571. •* Globe &c. Ins. Co. v. David Moffat Co., 154 Fed. 13, 83 C. C. A. 91 ; Rochester German Ins. Co. v. Peaslee-Gaulbert Co., 120 Ky. 752, 27 Ky. 1155, 28 Ky. 130, 87 S. W. 1155, 89 S. W. 3, 1 L. R. A. (N. S.) 364. See also, Salt Lake City v. Robinson" (Utah), 116 Pac. 442, 35 L. R. A. (N. S.) 610, holding that in the case of a contract the question as to whether it is to be governed by standard or sun time may be one of fact for the jury, but that in the construction of a statute or municipal ordinance, such as one designating a closing hour for saloons, the ques- tion is one of law for the court. ** Ellis V. Thompson, 3 M. & W. 445 ; McFadden v. Henderson, 128 Ala. 221, 29 So. 640; Griffin v. Ogle- tree, 114 Ala. 343, 21 So. 488; Comer V. Way, 107 Ala. 300, 19 So. 966, 54 Am. St* 93; Bryant v. Atlantic Coast Line R. Co., 119 Ga. 607, 46 S. E. 829; Atchison &c. R. Co. v. Burlingame Tp., 36 Kans. 628, 14 Pac. 271, 59 Am. Rep. 578 ; Howe v. Taggart, 133 Mass. 284; Calkins v. Chandler, 36 Mich. 320, 24 Am. Rep. 593; Pinney V. First Div. of St. Paul & P. R. Co., 19 Minn. 251; Stewart v. Marvel, 101 N. Y. 357 ; Van Arsdale v. Brown, 18 Ohio C. C. 52; Gammon v. Bun- nel, 22 Utah 421, 64 Pac. 958; Den- nis V. Stoughton, 55 Vt. 376; Poling V. Condon-Lane Boom &c. Co., 55 W. Va. 529, 47 S. E. 279. "^Bell V. Mendenhall, 78 Minn. 57, 80 N. W. 843. «"-Hume V. Mullins, 18 Ky. L. 108, 35 S. W. 551 ; Gainor v. Cheboygan River Boom Co., 86 Mich. 112, 48 N. W. 787 ; Lynd v. Apponang &c. Print- ing Co., 20 R. I. 344, 39 Atl. 188; Reynolds v. Reynolds, 74 Vt. 463, 52 Atl. 1036. •^'Meader v. Allen, 110 Iowa 588, 81 N. W. 799. •^ Drake v. Goree, 22 Ala. 409; Watt's Exrs. v. Sheppard, 2 Ala. 425 ; Campbell v. Heney, 128 Cal. 109, 60 Pac. 532; Jenkins v. Lykes, 19 Fla. 148, 45 Am. Rep. 19; Bearden Mer- cantile Co. V. Madison Oil Co., 128 Ga. 695, 58 S. E. 200 ; Harding v. Ol- son, 177 111. 298, 52 N. E. 482, affg. 76 111. App. 475; Morrison v. Wells, 48 Kans. 494, 29 Pac. 601; Asher v. Asher, 141 Ky. 268, 132 S. W. 415; Peabody v. Fellows, 181 Mass. 26, 62 N. E. 1053; Elder v. Rourke, 27 Ore. 363, 41 Pac. 6; Hays v. Hays, 10 Rich. (S. Car.) 419; Brainerd v. Van Dyke, 71 Vt. 359, 45 Atl. 758; Boyington v. Sweeney, 11 Wis. 55, 45 N. W. 938. 837 INTERPRETATION AND CONSTRUCTION. § 1 55 1 character of the work to be done, the time necessarily required in doing it, and all the circumstances surrounding the transaction.®' However, where the facts are undisputed, and different infer- ences cannot be reasonably drawn from the same facts, the question of what is the reasonable time is one of law.°° § 1551. Time — Time at law generally of the essence of a contract. — At law, as a general rule, time is deemed of the essence of a contract, and performance is required at the day, or the consequence of default may follow." If the vendor, in a contract for the sale of land, is not ready and able to perform his part of the agreement on the day fixed by the contract, the purchaser may consider the contract at an end, and stand dis- charged from its obligation.*'^ Where a contract for the sale of land recited a payment of a material portion of the purchase- price and declared that on the payment of the balance any time within the year with six per cent, interest the defendant agreed to convey the land to plaintiff, time was not of the essence of the contract. °° Where a party contracts to perform certain work or labor in a specified manner, and by a specified time, time is as much the essence of the contract as the manner in which the work or labor is to be performed.^'' In the contracts •»Ross V. Loescher, 152 Mich. 386, (U. S.) 455, 7 L. ed. 219 (agreement 116 N. W. 193, 125 Am. St. 418. to purchase land). ** Cotton V. Cotton, 75 Ala. 345; ** Stowell v. Robinson, 3 Bing. N. Luckhart v. Ogden, 30 Cal. 547; C. 928; Inman v. Western Fire Ins. Atwood V. Clark, 2 Maine 249: Hill Co.. 12 Wend. (N. Y.) 452. V. Hobart, 16 Maine 164; Echols v, ^ Fullenwider v. Rowan, 136 Ala. New Orleans &c. R. Co., 52 Miss. 610; 287, 34 So. 975. Turner v. Snvder. 139 Mo. App. 656, '"Merritt v. Pcnmsular Const. Co., 123 S. ,W. 1050; Wright v. Bank of 91 Md. 453, 46 Atl. 1013; Pittsburgh the Metropolis, 110 N. Y. 237, 18 N. T. & S. &c. Co. v. National Tube E. 79, 1 L. R. A. 289, 6 Am. St. 356n; Works, 184 Pa. St. 251. 39 Atl. 76; Hedges v. Hudson River R. Co., 49 Warren v. Bean, 6 Wis. 120. See N. Y. 223. I^Iorrison v. Wells, 48 Kans. 494. 29 ''Wood V. Joliet Gaslight Co., Ill Pac. 601, where the parties to a writ- Fed. 463, 49 C. C. A. 427 ; Ogden v. ten contract conditioned the payment Kirby, 79 111. 555 (a subscription to of money upon the completion of aid in the construction of a railroad certain work upon a building by a to be completed to a certain place by time fixed therein. Allen v. Inhabi- a certain time) ; Cromwell v. Wil- *tants of Cooper, 22 Maine 133, where kinson, 18 Ind. 365; McEntyre v. the court declares that "if there was Tucker, Id .App. Div. (N. Y.)'53, 55 an agreement, in the first instance, N. Y. S. 153 ; Inman v. Western Fire as to the time within which the con- Ins. Co., 12 Wend. (N. Y.) 452; tract was to be performed, and no Bank of Columbia v. Hagner, 1 Pet. waiver of it, then, at law, time was § 1552 COXTRACTS. 83S of merchants, the time of shipment is the usual and convenient means of fixing the probable time of arrival, with a view of providing funds to pay for the goods, or of fulfilling contracts with third persons. A statement descriptive of some material in- cident, such as the time and place of shipment, is ordinarily to be regarded as a warranty, in the law, that is to say, a condition precedent, upon the failure or nonperformance of which the party aggrieved may repudiate the whole contract.'* Where a policy of life insurance stipulates for the payment of an annual premium by the insured, with a condition to be void on nonpay- ment, time is material and of the essence of the contract. Non- payment at the day involves absolute forfeiture, if such be the terms of the contract, and courts cannot with safety vary the stipulation of the parties by introducing equities for the relief of the insured against their own negligence.'^ A waiver of a provision that time shall be of the essence of the contract may be implied from the circumstances." § 1552. Time — Relative to the sale of goods. — Time is us- ually of the essence of an executory contract for the sale and subsequent delivery of goods, where no right of property in th« of the essence of the contract." The will be compelled. Carter v. Phil» contract in that case was for laying lips, 144 Mass. 100, 10 N. E. 500. out and building a public road, and "New York Life Ins. Co. v. Stat- the work was to be done within that ham, 93 U. S. 24, 23 L. ed. 789. and the next year. Pickering v. "Both at common law and in chan- Greenwood, 114 Mass. 479. "The eery there are exceptions to this rule, time being stated in the contract growing out of the nature of the when the work should be finished, it thing to be done and the conduct of was of the essence of the contract, the parties. The familiar case of and the work must be performed part performance, possession, etc., in within that period." chancery, where time is not of the "Pope V. Porter, 102 N. Y. 366, 7 essence of the contract, or has been N. E. 304; Norrington v. Wright, waived by the acquiescence of the 115 U. S. 188, 29 L. ed. 366, 6 Sup. party, is an example of the latter; Ct. 12; Filley v. Pope, 115 U. S. 213, and the case of contracts for build- 29 L. ed. 372, 6 Sup. Ct. 19. When ing houses, railroads or other large the contract fixes the time within and expensive constructions in which which it is to be performed, and it the means of the builder and his appears from its nature, or the cir- labor become combined and affixed cumstances connected with its per- to the soil, or mixed with materials f ormance, that the parties intended • and money of the owner, often af- to make the time an essential ele- ford examples at law." Phillips &c. ment of the agreement, time will be Const. Co. v. Seymour, 91 U. S. 646, deemed of the essence of the con- 23 L. ed. 341. tract, and strict compliance therewith "Vider v. Ferguson, 88 III. App. 136. §39 INTERPRETATION AND CONSTRUCTION. § 1 553 same passes by the bargain from the vendor to the purchaser, and the rule in such a case is, that the purchaser is not lx)und to accept and pay for the goods unless the same are delivered or tendered on the day specified in the contract.''* A party in New York wrote to parties in Boston, offering to sell them coal, and stating that he had a vessel of 375 tons which he could load on Monday. The Boston parties telegraphed in reply: "Ship * * * that cargo coal 375 tons immediately." The party in New York did not begin to load until nine days afterward, and then shipped a cargo of 392 tons. The Boston parties were not bound to take it. Both the quantity and time of delivery were essential elements of the contract.^^ In the absence of a stipu- lated time for delivery, the law prescribes a reasonable time, and what is a reasonable time is a question of fact for the jury to be determined by the circumstances of each case.^^ If from the facts found, or undisputed, in a particular case, the court can draw the conclusion as to whether the time is reasonable or not, by the application of any general principle or definite rule of law, the question is one of law for the court. ''^ § 1553. Conditions precedent. — Where time is of the es- sence of the contract there can be no recovery at law in case of failure to perform within the time stipulated.''^ It is an elemen- tary principle that a party bound to perform a condition precedent ''* Wilson V. Empire Dairy-Salt Co., " Cochran v. Toher, 14 Gil. SO App. Div. (N. Y.) 114, 63 N. Y. (Minn.) 293; Pinney v. First Div. of S. 565: Jones v. United States. 96 U. St. Paul & P. R. Co., 19 Minn. 251. S. 24, 24 L. ed. 644, 13 Ct. CI. (U. S.) In Mellish v. Rawdon. 9 Bing. 416, 524. relative to a bill of exchange, Tin- " Rommel v. Wingate, 103 Mass. dal, C. J., said: "Whether there 327. has been in any particular case rea- " Smith V. Bruner, 68 111. App. 61 ; sonable diligence used, or whether Pinney v. First Div. of St. Paul & unreasonable delay has occurred, is a P. R. Co., 19 Minn. 251 ; Hand v. mixed question of law and fact, to Brooks, 21 App. Div. (X. Y.) 489, be determined by the jury acting un- 47 N. Y. S. 583 ; Ideal Wrench Co. der the direction of the judge, upon V. Garvin Mach. Co., 65 App. Div. the particular circumstances of each (N. Y.) 235, 72 N. Y. S. 662; Browne case." V. Paterson, 165 N. Y. 460, 59 N. E. " Perin v. Cathcart. 115 Iowa 553, 296, affg. 36 App. Div. (X. Y.) 167, 89 N. W. 12; Hill v. School District. 55 N. Y. S. 404; Cragin v. O'Connell. 17 Maine 316: Denton v. McTnnis. 169 N. Y. 573. 61 N. E. 1128. affg. 85 Mo. App. 542; Slater v. Emer- 50 App. Div. (N. Y.) 339, 63 N. Y. son, 19 How. (U. S.) 224, 15 L. ed. S. 1071 ; Kellam v. McKinstry. 69 N. 626. Y. 264. § 1553 CONTRACTS. 840 cannot sue on the contract without proof that he has performed that condition. An offer to perform conditions precedent is not usually sufficient.'^ In a contract to aid the construction of a rail- road by a subscription, a condition that the road should be put into operation by a certain time was a condition precedent to the right of the company to recover on the contract.^*^ In determining whether stipulations as to the time of perfonning a contract of sale are conditions precedent, the court seeks to discover the in- tention of the parties, and if time appears, from the language used and the circumstances, to be of the essence of the contract, stipu- lations in regard to it will be held conditions precedent." Silence on the part of a party to a contract may amount to a waiver of the performance of a condition precedent in cases in which such silence is inconsistent with any other explanation.^^ Where one '"Cincinnati,, S. & C. R. Co. v. Benslev. 51 Fed. 738, 2 C. C. A. 480, 19 L. R. A, 796; Gouverneur v. Til- lotson, 3 Edw. Ch. (N. Y.) 348; Tones v. United States, 96 U. S. 24, 24 L. ed. 644, 13 Ct. CI. (U. S.) 524. See Dermott v. Jones, 23 How. (U. S.) 220, 16 L. ed. 442, an action upon a special contract to build a house by a certain day, which was not ful- filled. By the terms of the contract, the performance of the work was a condition precedent to the payment of the money sued for. The case was remanded to the circuit court to be tried upon the common counts for work and labor done and materials furnished. See generally post, §§ 1583, 1584. *<• Burlington &c. R. Co. v. Boestler, 15 Iowa 555. For the principle is laid up among the fundamentals of the law that, when a time for the per- formance of an act, or a condition precedent, is fixed by the contract, the act or condition must, at least in a court of law, be performed within or at the time. Memphis &c. R. Co. V. Thompson, 24 Kans. 170. (An action upon certain bonds issued by the City of Parsons in aid of the con- struction of a railroad, subject to a condition that the plaintiff should "have its road constructed and in operation * * * on or before the first day of July, 1878." It was held that time was of the essence of the contract, and that the failure of the plaintiff to complete the road by the day named was fatal to a re- covery, notwithstanding that the road was completed shortly after, and the city received the benefit of it.). On _a contract where time does not consti- tute its essence, there can be no re- covery at law on the agreement, where the performance was not with- in the time limited, but a subsequent performance and acceptance will au- thorize a recovery on a quantum meruit. Slater v. Emerson, 19 How. (U. S.) 224, 15 L. ed. 626. *^ Harris v. Gregg, 17 App. Div. (N. Y.) 210, 45 N. Y. S. 364; Hig- gins V. Delaware &c. R. Co., 60 N. Y. 553. *^ Burlington &c. R. Co. v. Boest- ler, 15 Iowa 555; Thompson Lum- ber Co. V. Howard, 22 Ky. L. 424, 57 S. W. 615. No parol assent or silent acquiescence can destroy the effect of an express condition con- tained in a deed. Jackson v. Crys- ler, 1 John. Cas. (N. Y.) 125. In case of default in a building con- tract, absolute performance may be waived by allowing the party in de- fault to go on so as to render the other party liable for the contract price of the work when completed. Phillips & Colby Const. Co. v. Sey- mour, 91 U. S. 646, 23 L. ed. 341. 841 INTERPRETATION AND CONSTRUCTION. § 1 554 party to a contract demands a strict performance as to time, he must perform, on his part, all the conditions requisite to enable the other party to perform his part, and a failure to do so operates as a waiver of the time provision."^ § 1554. When time is not of the essence of a contract. — In a contract for work or skill, and the materials upon which it is to be bestowed, a statement fixing the time of performance of the contract is not ordinarily of its essence, and a failure to perform within the time stipulated, followed by substantial performance after a short delay, will not justify the aggrieved party in repudi- ating the entire contract, but will simply give him his action for damages for the breach of the stipulation.®* A contract by a lith- ographing company to make and furnish, *'in the course of a year," designs of certain buildings of a manufacturing company, with sketches of its trademarks, to execute engravings, and to embody same on large amounts of stationery, etc., is one for work and labor requiring artistic skill ; and the stipulation as to time was held not of the essence of the contract so as to justify a re- pudiation thereof, because of a delay in delivery of six or eight days after the expiration of the year.®° It has been held that an express stipulation in a contract for the construction of a house that it should be completed on a day certain, and that, in case of failure to complete it within the time limited, the builder would forfeit $1,000, would not justify the owner of the land on which the house was constructed in refusing to accept it for a breach of this stipulation, when the house was completed shortly after the time fixed, nor even in retaining the penalty stipulated in the con- tract, but that he must perform his part of the contract, and that he could retain from or recover of the builder the damages he sustained by the delay and those only.^^ The court may ordinar- ** Standard Gaslight Co. v. Wood, Hamblv v. Delaware &c. R. Co., 21 61 Fed. 74, 9 C. C. A. 362; Dannat Fed. 541; Bounds v. Hickerson. 26 V. Fuller, 120 N. Y. 554, 24 X. E. Tex. Civ. App. 60S, 63 S. W. 887; 815; Gallagher v. Nichols, 60 N. Y. Tayloe v. Sandiford, 7 Wheat. (U. 438; Grube v. Schultheiss, 57 X. Y. S.) 13, 5 L. ed. 384. 669; District of Columbia v. Camden ** Beck &c. Lith. Co. v. Colorado Iron Works, 181 U. S. 453. 45 L. ed. Milling &c. Co., 52 Fed. 700, 3 C. 948, 21 Sup. Ct. 680; McDonald v. C. A. 248. Cole. 46 W. Va. 186. 32 S. E. 1033. "Tayloe v. Sandiford. 7 Wheat. ** American Typefounders Co. v. (U. S.) 13, 5 L. ed. 384. Packer, 130 Cal. 459. 62 Pac. 744; § 1555 CONTRACTS. 842 ily compensate for delay in the payment of money by the allow- ance of interest;*^ hence from mere designation of time for pay- ment of money there can be no necessary implication that time was intended to be of the essence of the contract.^^ Time cannot be made essential in a contract merely by so declaring, if it would be unconscionable to allow it. Parties may stipulate to make it so, where the stipulation is reasonable; but, if the stipulation is not reasonable the court will not regard it.®* § 1555. Time not generally regarded in equity as of the essence of the contract. — The time fixed for performance is not generally considered of the essence of the contract in equity, unless the parties have expressly so treated it, or it necessarily follows from the nature or circumstances of the contract."** If, however, it clearly appears to be the intention of the parties to an agreement that time shall be deemed of the essence of the contract it must be so considered in equity."^ And when parties have de- liberately by their agreements or covenants fixed the time for the performance of an act, a court of equity will not interfere unless essential justice demands the exercise of its jurisdiction."^ ^ Deford v. Maryland Steel Co., Jewett v. Black, 60 Nebr. 173, 82 N. 113 Fed. 72, 51 C. C. A. 59. W. 375; Reynolds v. Burlington &c. "'Seaton v. Tohill, 11 Colo. App. R. Co., 11 Nebr. 186, 7 N. W. 12n \ 211, 53 Pac. 170; Dynan v. McCol- Baldwin v. VanVorst, 10 N. J. Eq. loch, 46 N. J. Eq. 11, 18 Atl. 822, 577; Thompson v. Keeler (N. J. Eq.), affd., 46 N. J. Eq. 608, 22 Atl. 56. 42 Atl. 1043; Benedict v. Lynch. 1 **See Richmond v. Robinson, 12 John. Ch. (N. Y.) 370, 7 Am. Dec. Mich. 193, where, by the terms of the 484 (Specific performance denied, contract, it was "expressly under- Opinion by Chancellor Kent which stood and declared that time is and has been often cited. Note to case shall be deemed and taken as of the in 7 Am. Dec. 484.) ; Cheney v. Libby, very essence of the contract." 134 U. S. 68, 2>l L. ed. 818. 10 Sup. ""Dvnan v. McColloch, 46 N. J. Ct. 498; Brown v. Guarantee Trust Eq. I'l, 18 Atl. 822; affd., 46 N. J. &c. Co., 128 U. S. 403, 32 L. ed. Eq. 608, 22 Atl. 56; Shinn v. Roberts, 468, 9 Sup. Ct. 127. "But it must 1 Spencer (N. J.) 435, 43 Am. Dec. affirmatively appear that the parties 636; Thacker &c. Mfg. Co. v. Mai- regarded time or place as an essential lory, 27 Wash. 670, 68 Pac. 199. element in their agreement, or a "Oaken v. Pike, 34 L. J. Ch. (N. court of equity will not so regard S.) 620; Seton v. Slade, 7 Ves. 265; it." Secombe v. Steele, 20 How. Parkin v. Thorold, 16 Beav. 59; (U. S.) 94. Quinn V. Roath, il Conn. 16; Hull "'Potter v. Tuttle, 22 Conn. 512; &c. Coke Co. V. Empire &c. Coke Co., Eaton v. Schneider, 185 111. 508, 57 113 Fed 256, 51 C. C. A. 213; Stow N. E. 421; Bullock v. Adams' Exrs., V. Russell, Z(i 111. 18; Missouri River 20 N. J. Eq. 367. &c. R. Co. V. Brickley, 21 Kans. 275 ; 843 INTERPRETATION AND CONSTRUCTION. § 1 556 §1556. Illustrations. — Where a contractor agrees "not to delay the work any time after the stone is deHvered," he cannot be held responsible for a delay caused by the failure to deliver him stone."^ When a building contract provides that, in case of delay in the completion of the structure by a certain fixed date, the builder shall pay a forfeit of a certain sum daily during the period of default, other provisions of the contract must be ex- amined and compared, in order to determine upon whom, from the general tenor and provisions of the contract, the fault is imposed in causing the delay in the completion of the building. When those other provisions disclose that the builders are to fur- nish the materials and perform the work, and the architects are to furnish the plans and specifications and superintend the work, it is an easy matter to show by evidence whether the delay in the completion of the work was caused by the fault of the builders or the architects.** The general rule of equity is that time is not of the essence of the contract, unless it clearly appears from the terms of the contract, in the light of all the circumstances, that such was the intention of the parties.®'' § 1557. Where the property is subject to fluctuations in value. — Time may become of the essence of a contract for the sale of property, not only by the express stipulation of the parties, but from the very nature of the property itself, and especially when it is subject to sudden, frequent or great fluctuations in value, as in case of mining property.®" Contracts for the pur- chase of stock are of this description, and the reason assigned is, that the daily fluctuations in the price render a punctual per- formance of the essence of the contract." "If, therefore," said Alderson, B., "the thing sold be of greater or less value ac- cording to the effluxion of time, it is manifest that time is of the •"Taylor v. Netherwood, 91 Va. "^ Brown v. Covillaud, 6 Cal. 566; 88 20 S. E. 888. Waterman v. Banks, 144 U. S. 394, " Mahonev v. St. Paul's Church, 47 36 L. ed. 479. La. Ann. 1064. 17 So. 484. "' Macbrvde v. Weekes. 22 Beav. "Steele V. Branch, 40 Cal. 3; Bev- 533: Doloret v. Rothchild. 1 Sim & erly v. Blackwood, 102 Cal. 83, 36 Stu. 590; Edgerton v. Peckham, 11 Pac. 378. Paige (N. Y.) 352. § 1558 CONTRACTS. 844 essence of the contract, and a stipulation as to time must then be literally complied with in equity as well as in law.""^ § 1558. Stipulations in regard to real estate. — The doctrine that time is not of the essence of a contract is generally applied in equity to stipulations for the payment of money upon an agree- ment for the sale and purchase of real estate. The principal grounds of the doctrine are that the rule of common law, requir- ing performance of every contract at the appointed day, is often harsh and unjust in its operation; and although some time of performance by each party is usually named in any agreement for the sale of land, it is often not regarded by the parties as one of the essential terms of the contract.''^ Time is not to be deemed of the essence of a contract to convey real estate unless made so by its terms, or by implication from the nature of the subject- matter, the object of the contract, or the situation of the parties.^ Where a contract for the sale of land contained the provision that "in case of the failure of the vendee to make either of the pay- ments, or perform any of the covenants on his part, the vendors, at their option, might declare a forfeiture, and retain all payments previously made as liquidated damages," the court held that these stipulations showed that time was of the essence of the contract.^ "^Hipwell V. Knight, 1 Y. & C. 401, sence of a contract to convey real Weston V. Savage, L. R. 10 Ch. Div. estate, in the absence of any express 736- Withy v. Cottle, T. & Russ. 78; provision. Martindale v. Waas, 3 Pollard V. Clayton, 1 K. & J. 462. In McCrary (U. S.) 108, 8 Fed. 854. Taylor v. Longworth, 14 Pet. 172, = Kimball v. Tooke, 70 111. 553. The 10 L. ed. 405, Story, J., says: "In only payment that was made on the the first place, there is no doubt that purchase was the sum of $100, at time may be of the essence of a con- the date of execution of the agree- tract for the sale of. property. It may ment. Wells v. Smith, 7 Paige (N. he made so by the express stipula- Y.) 22, 31 Am. Dec. 274n, was a case tion of the parties, or it may arise by where the vendee agreed to build a implication from the very nature of house on the lot purchased, or pay the property, or the avowed objects $1,000 of the purchase-money as a of the seller or the purchaser." first payment, on a certain day be- " Prentiss v. Lyons, 105 La. 382, 29 fore the deed was to be given. He So. 944; Barnard v. Lee, 97 Mass. neither built the house nor paid the 92; Hoper v. Pike, 70 Minn. 84, 72 money. He filed his bill for a spe- N. W. 829, 68 Am. St. 512. cific performance. The specific per- ^ Green v. Covillaud, 10 Cal. 317, formance was denied on the ground 70 Am. Dec. 725; Austin v. Wacks, that it was the intention of the par- 30 Minn. 335, 15 N. W. 409; Cramer^ ties to make the building of the v. Mooney, 59 N. J. Eq. 164, 44 Atl. house or the payment of the money 625; Bullock v. Adams' Exrs. 20 N. at the time specified an essential part J. Eq. 367. Time is not of the es- of the contract. "There is no doubt 845 INTERPRETATIOiX AND CONSTRUCTION. § 1 559 In this country time is regarded as more important in respect to the sale of land than in England, because the value of land is more fluctuating here than there.' Although there may not be performance at the day, when time has not been made essential, if the delay is excused, and the situation of the parties or of the property is not changed so that injury will result, and the party is reasonably vigilant, the court will relieve from the consequences of the delay and grant a specific performance. Each case must be judged by its own circumstances.* The parties to a contract may, by its terms, make the time of performance essentially im- portant, and its observance in that respect requisite to relief, and when that is not so, either of the parties to the contract may, by a reasonable notice to the other party for that purpose, render the time of performance as of the essence of the contract and avail himself of forfeiture on default."^ § 1559. Rules as to penalties and liquidated damages. — Whether the sum mentioned in a contract is to be considered as liquidated damages or as a penalty merely "is a question that has often come before the courts, both in this country and in England, and has given rise to as great a variety of judicial utterance as there are kinds of contracts among men."* It was originally true at common law that the penalty named in the bond was a security for the performance of a condition annexed to it. Upon for- feiture of the condition the obligee was entitled to recover the penalty, which was at the same time the utmost limit and beyond it the obligor's liability could not be extended.^ However, there that equity may decree a specific per- contract, it was held that time was of formance of a contract for sale of the essence of the contract. Rich- property, notwithstanding' a default mond v. Gray, 3 Allen (Mass.) 25; in payment upon the day specified. Hepburn v. Auld, 5 Cranch (U. S.) The books are full of instances where 262. 3 L..ed. 96. such relief has been granted, and in * Hubbell v. Von Schoening, 49 N. many cases where there is an express Y. 326. stipulation of forfeiture. But this "Schmidt v. Reed, 132 N. Y. 108. relief has always been afforded upon 30 N. E. 373; Myers v. De Mier, 52 equitable principles." Per Bliss, J., N. Y. 647. in O'Fallon v. Kennerly, 45 Mo. 124. " Smith v. Newall, 37 Fla. 147, 20 ' Rogers v. Saunders, 16 Maine 92, So. 249. 33 Am, Dec. 635; Goldsmith v. Guild, ^Williams v. Green, 14 Ark. 315; 10 Allen. (Mass.) 239, where the Sun Printing &c. Assn. v. Moore, plaintiff agreed to pay for land "with- 183 U. S. 642, 46 L. ed. 366, 22, Sup. in ten days" from the date of the Ct. 240. § 1559 CONTRACTS. 846 was developed in equity a tendency to relieve against penalties and forfeitures annexed to bonds and other instruments, the design of which was to secure the due fulfilment of the principal obliga- tion by decreeing that the judgment of the principal sum should stand as security for the payment by the obligor of such damages as the obligee had actually sustained.^ Subsequently the statute of eight and nine William III was enacted which made provision for practically the same measure of relief in an action at law as might have been obtained in equity. That is to say, the statute restricted obligees in actions for penalties to a collection of the actual damages sustained.® The equitable rule as embodied in the statute of eight and nine William III has in the main been adopted by the various jurisdictions in the United States. How- ever, when penalties became unavailing for the reason that the obligee was required to accept the compensation in damages for such injury as he could show he had sustained, there arose a form of contract whereby the parties anticipated and agreed in advance for a certain amount of damages which would be accepted as full compensation for such injuries as might be sustained by a breach of the contract.^" Out of this has grown the distinction between a penalty and liquidated damages, a distinction to be kept in mind on account of the different effect given by courts to provisions of this character. A penalty is considered as a sum in gross to be paid for the non-performance of the agreement irrespective of the damages actually sustained. Under the modern theory a contract for the payment of a penalty is void, in that the actual damage sustained must be proved, ^^ and only actual damages may be recovered, and they may be either greater^- or less" than the amount * Williams v. Green, 14 Ark. 315; Minn. 523, 86 N. W. 760, 85 Am. St. Sun Printing & Publishing Assn. v. 473 ; Johnson v. Cook, 24 Wash. 474, Moore, 183 U. S. 642, 22 Sup. Ct. 64 Pac. 729. 240, 46 L. ed. 366. See also. Wallis '' Williston v. Mathews, 55 Minn. V. Smith, L. R. 21 Ch. Div. 243; 422, 56 N. W. 1112; Morrill v. Weeks, Lowe V. Peers, 4 Burr. 2225; Whit- 70 N. H. 178, 46 Atl. 32; Gloucester field V. Levy, 35 N. J. L. 149. City v. Eschbach. 54 N. .J. L. 150, •Whitfield V. Levy, 35 N. J. L. 23 Atl. 360; Commerce Milling & 149; Sun Printing &c. Assn. v. Grain Co. v. Morris, 27 Tex. Civ. Moore, 183 U. S. 642, 46 L. ed. 366, App. 553, 65 S. W. 1118; Watts v. 22 Sup Ct 240. Camors. 115 U. S. 353, 29 L. ed. "Williams V. Green, 14 Ark. 315. 406, 6 Sup. Ct. 91. "Wilson V. Dean, 10 Iowa 432; "Henry v. Louisville &c. R Co., Taylor v. Times Newspaper Co., 83 91 Ala. 585, 8 So. 343; Chicago House 847 INTERPRETATION AND CONSTRUCTION. § 1 559 Specified by the penalty. In the case of liquidated damages the parties anticipate and agree in advance for a certain amount of damages which will be accepted as a full compensation for such injury as may be sustained by a breach of the agreement. A good faith valuation of the damages which will result from the breach of a contract is generally upheld and the amount specified recoverable.^* It is unnecessary to prove the actual damage sus- tained," though it must appear that more than nominal damages have been sustained." The amount named in the contract as liquidated damages forms a measure of damages. The obligee is entitled to this much ; the obligor is not required to pay more." Whether the amount stipulated in a contract to be paid by a party upon failure of performance is to be treated as liqui- dated damages or as a penalty is one of construction to be de- termined from the language and subject-matter of the contract, the evident intent of the parties and all the facts and circum- stances under which the contract was made." No form of words is regarded as controlling. Notwithstanding the contract terms the sum named as liquidated damages it may be treated as a pen- alty when it appears from the whole transaction that such was in fact its character.^® On the other hand, the provision for a Wrecking Co. v. United States, 106 Moore, 183 U. S. 642, 46 L. ed. 366, Fed. 385, 45 C. C. A. 343, 53 L. R. 22 Sup. Ct. 240; Drumheller v. A 122- Hennessy v. ISIetzger, 152 111. American Surety Co., 30 Wash. 530, 505 38 N. E. 1058, 43 Am. St. 267; 71 Pac. 25; Madler v. Silverstone, 55 Low V. Nolte, 16 111. 475; Lord v. Wash. 159, 104 Pac. 165, 34 L. R. Caddis, 9 Iowa 265; Foley v. Mc- A. (N. S.) 1. Keegan, 4 Iowa 1, 66 Am. Dec. 107; "Jacqua v. Headmgton. 114 Ind. Hahn v. Horstman. 12 Bush. (Ky.) 309, 16 N. E. 527; Salem v. Anson, 249- Perkins v. Lvman, 11 Mass. 76, 40 Ore. 339, 67 Pac. 190, 56 L. R. A. 6 Am. Dec. 158; Hamaker v. 169; Kelso v. Reid, 145 Pa. St. 606, Schroers, 49 Mo. 406; Lindsay v. 23 Atl. 323. 27 Am. St. 716; Clark v. Anesley, 28 N. Car. 186; Kelley v. Barnard, 108 U. S. 436; American Seay, 3 Okla. 527. 41 Pac. 615; Big- &c. Works v. Malting Co., 30 Wash, ony V. Tvson. 75 Pa. 157; Bearden 178. 70 Pac. 236. V Smith.'ll Rich. L. (S. Car.) 554; "Hathaway v. Lynn, 75 Wis. 186, Watts V. Camors, 115 U. S. 353. 29 43 N. W. 956, 6 L. R. A. 551. L. ed. 406, 6 Sup. Ct. 91 ; Van Buren " See cases cited m the precedmg V Digges' 11 How. (U. S.) 461, 13 notes of this section. L ed 771 ; Johnson v. Cook, 24 " Hennessy v. Metzger. 152 111. 505, Wash 474, 64 Pac. 729. 38 N. E. 1058. 43 Am. St. 267; Tay- " Williams v. Green, 14 Ark. 315; lor v. Times Newspaper Co.. 83 Minn. Van Tuvl v. Young, 23 Ohio C. C. 523. 86 N. W. 760. 85 Am. St. 473; 15- Pittsburgh &c, Co. v. National Whitfield v. Levy, 35 N. J. L. 149. Tube Works Co., 184 Pa. St. 251, 39 " Kemble v. Farren. 6 Bmp. 141 : Atl. 76; Sun Printing &c. Assn. v. Chicago House Wreckmg Co. v. 1559 CONTRACTS. 848 penalty may be construed as a contract for the payment of liqui- dated damages.-*^ Such words as "forfeits", "forfeiture", "paid sum", "or penalties", may furnish a strong indication of the in- tention of the parties; yet it is well settled that the weight to be given to such words will depend on their connection with other parts of the instrument, the nature of the agreement, the inten- tion of the parties, and other facts and circumstances.^^ The term used by the parties is considered as prima facie correct.'^^ But while the courts will attempt to give effect to the intention of the parties, the question of whether the sum mentioned in the contract is to be considered as liquidated damages, or as a penalty merely, is a question of law for construction by the courts.-^ Moreover, the courts are inclined to treat the contract as creat- ing a penalty to cover damages actually sustained by the breach and not as liquidated damages, and where any doubt exists as to the intention of the parties the stipulation will be treated as a penalty when open to two constructions.^* This rule is founded United States, 106 Fed. 385, 45 C C. A. 343, 53 L. R. A. 122; Tilley v. Loan Association, 52 Fed. 618; Dwinel v. Brown, 54 Maine 468; Hoagland v. Segur, 38 N. J. L. 230; Bagley v. Peddie, 16 N. Y. 469, 69 Am. Dec. 713; Disosway v. Edwards, 134 N. Car. 254, 46 S. E. 501 ; Shreve V. Brereton, 51 Pa. St. 175; Grand Tower Co. v. Phillips, 23 Wall. (U. S.) 471, 23 L. ed. 71 ; Fitzpatrick v. Cottingham, 14 Wis. 219. =" Duffy V. Shockey, 11 Ind. 70, 71 Am. Dec. 348; Robinson v. Aid So- ciety, 68 N. J. L. 723, 54 Atl. 416; Tode V. Gross, 127 N. Y. 480, 28 N. E. 469. 13 L. R. A. 652n, 24 Am. St. 475; Illinois Central R. Co. v. Sou- thern &c. Cabinet Co., 104 Tenn. 568, 58 S. W. 303, 50 L. R. A. 729, 78 Am. St. 933. ^^ Mclntire v. Cagley, 37 Iowa 676; Wolf V. Des Moines &c. R. Co., 64 Iowa 380; De Graff, Vrieling & Co. V. Wickham, 89 Iowa 720, 52 N. W. 503, 57 N. W. 420, affd., 89 Iowa 720, 57 N. W. 420 ; Chamberlain v. Bagley, 11 N. H. 234. *' "Liquidated damages" — prima facie correct. Stegman v. O'Connor, 80 L. T. (N. S.) 234; Kelly v. Fejer- vary, 111 Iowa 693, 83 N. W. 791; Garst V. Harris, 177 Mass, 72,_ 58 N. E. 174. "Penalty" — prima facie cor- rect. Smith V. Brown, 164 Mass. 584, 42 N. E. 101 ; Wilkinson v. Col- ley, 164 Pa. St. 35. 30 Atl. 286, 26 L. R. A. 114. Held penalties "in the penal sum of estimated amount of freight." Watts v. Camors, 115 U. S. 353, 29 L. ed. 406, 6 Sup. Ct. 91. "Forfeiture." Van Buren v. Digges, 11 How. (U. S.) 461, 13 L. ed. 771. "The parties themselves denominate it a penalty ; and it would require very strong evidence to authorize the court to say that their own words do not express their own intention." Taylor v. Sandiford, 7 Wheat. (U. S.) 13, 5 L. ed. 198. ^ Smith V. Newell, 37 Fla. 147, 20 So. 249; Chase v. Allen, 13 Gray (Mass.) 42; Whitfield v. Levy, 35 N. J. L. 149; Kemp v. Knickerbocker Ice Co., 69 N. Y. 45. See also, Foley V. McKeegan, 4 Iowa 1, 66 Am. Dec. 107. ^ Scofield V. Tompkins, 95 111. 190, 35 Am. Rep. 160; Foley v. Mc- Keegan, 4 Iowa 1, 66 Am. Dec. 107; Carey v. Mackey, 82 Maine 516, 20 Atl. 84, 9 L. R. A. 113, 17 Am. St. 500; Shute v. Taylor, 5 Mete. (Mass.) 61; Myer v. Hart, 40 Mich. 849 INTERPRETATION AND CONSTRUCTION. 1559 both on equitable principles and on the rule that a provision in a contract for the benefit of one of the parties is to be construed most strongly against those for whose benefit it is introduced.""^ Since the cjuestion of whether the amount named shall be treated as a penalty or as liquidated damages is in its last analysis one of law for the courts, certain general principles have been announced by which to determine the nature of the pro- vision. The principal rule by which the courts are guided is, that when the actual damages which may result from the breach of the contract are in their nature uncertain and cannot be meas- ured with any degree of accuracy and may depend upon extrinsic considerations and circumstances the sum agreed to be paid by the party in default will be regarded as liquidated damages.^^ And when the damages are of this character the mere fact that the sum agreed to be paid appears to be excessive does not in it- self make the sum a penalty.^^ However, it has been held that 517, 29 Am. Rep. 553; Tinkham v. Satori, 44 Mo. App. 659; Hamann v. Nebraska Underwriters' Ins. Co. of Omaha, 82 Nebr. 429, 118 N. W. 65; Chiddick's Exr. v. Marsh, 21 N. J. L. 463; Colwell v. Lawrence, 38 N. Y. 71, 36 How. Pr. (N. Y.) 306; Moore v. Colt, 127 Pa. St. 289, 18 Atl. 8, 14 Am. St. 845; Baird v. Tol- liver, 6 Humph. (Tenn.) 186, 44 Am. Dec. 298; Kellam v. Hampton (Tex. Civ. App.), 124 S. W. 970; Tayloe V. Sandiford, 7 Wheat. (U. S.) 13, 5 L. ed. 198; Madler v. Silverstone, 55 Wash. 159, 104 Pac. 165, 34 L. R. A. (N. S.) 1. The meaning of words will not be extended beyond their plain meaning in order to work a forfeiture. Albers v. Merchants' Exch. of St. Louis, 144 IMo. App. 446, 120 S. W. 139. See also, Jen- sen V. Palatine Ins. Co., 81 Nebr. 523, 116 N. W. 286. ** See ante, note 8 this section and following note. See also, Forest City Ins. Co. V. Hardestv, 182 111. 39, 55 N. E. 139, 74 Am. St. 161. '"Kemble v. Farren, 6 Bing. 141; Reynolds v. Bridge, 6 El. & Bl. 528; Watt's Exrs. v. Shcppard, 2 /Ma. 425 ; Tingley v. Cutler. 7 Conn. 291 ; San- ders V. Carter, 91 Ga. 450, 17 S. E. 345; Scofield v. Tompkins, 95 111. 54 — Contracts, Vol. 2 190, 35 Am. Rep. 160, citing Sedg. Damages, 492; Gobble v. Linder, 76 111. 157; Hennessy v. Metzger, 152 111. 505, 38 N. E. 1058, 43 Am. St. 267 ; Hamilton v. Overton, 6 Blackf. find.) 206, 38 Am. Dec. 136; Duffy v. Shockey, 11 Ind. 70, 71 Am. Dec. 348; Foley v. McKeegan, 4 Iowa 1, 66 Am. Dec. 107 ; Holbrook v. Tobev, 66 Maine 410, 22 Am. Rep. 581 ; Max- well V. Allen, 78 Maine Z2, 2 Atl. 386, 57 Am. Rep. 7^Z ; Pierce v. Full- er, 8 Mass. 223, 5 Am. Dec. 102; Morse v. Rathburn, 42 Mo. 594, 97 Am. Dec. 359; Hurd v. Dunsmore, 63 N. H. 171; State v. Dodd, 45 N. J. L. 525; Cotheal v. Talmage, 9 N. Y. 551, 61 Am. Dec. 716, Seld. Notes 238; Baglev v. Peddie, 16 N. Y. 469, 69 Am. Dec. 713; Lange v. Werk, 2 Ohio St. 519; Powell v. Burroughs, 54 Pa. St. 329 ; Muse v. Swayne. 2 Lea (Tenn.) 251, 31 Am. Rep. 607; Sun Printing &c. Assn. v. Moore, 183 U. S. 642, 46 L. ed. 366. 22 Sup. Ct. 240; Crawford v. Heatwole, 110 Va. 358, 66 S. E. 46, 34 L. R. A. (N. S.) 587; Herberger v. H. E. Orr Co., 62 Wash. 526, 114 Pac. 178; Ly- man V. Babcock, 40 Wis. 503. ''Mead v. Wheeler, 13 N. H. 351; Van Buren v. Biggs, 11 How. (L^. S.) 461, 13 L. ed. 771; Sun &c. Print- § 1559 CONTRACTS. 850 if the amount fixed is unconscionably large it will be deemed a penalty.-^ And when the contract concerns a matter of cer- tain value and the damages sustained can be readily shown, the sum which it is agreed shall be paid on breach of the contract will be regarded merely as a penalty to insure prompt payment or performance.-® A third general rule is to the effect that where there are various stipulations or terms in a contract which are of varying or uncertain value and the same fixed sum is to be paid for the breach of any one of such provisions it will be deemed a penalty.'" ing Assn. v. Moore, 183 U. S. 642, 46 L. ed. 366, 22 Sup. Ct. 240 (re- viewing authorities). =' Morse v. Rathburn, 42 Mo. 594, 97 Am. Dec. 359; Bradstreet v. Baker, 14 R. I. 546. This is more on the ground, however, that the ex- cessive amount named shows that the obligor was the victim of op- pression. In Greer v. Tweed, 13 Abb. Pr. (N. Y.) (N. S.) 427, the defend- ant agreed to furnish his biography to the plaintiff for publication, within a time fixed, and, for every day's delay beyond that time, to pay $165. On a suit to recover for a delay to furnish the biography for one hun- dred and sixty-one days, it was held that the plaintiff could recover only his actual loss. The court said the contract was "so extortionate and unjust that it raises the presumption of deceit and fraud in its inception." See also, Chicago House Wrecking Co. V. United States, 106 Fed. 385, 45 C. C. A. 343. 53 L. R. A. 122; Gay Mfg. Co. v. Camp, 65 Fed. 794. 13 C. C. A. 137, 25 U. S. App. 134, affd., 68 Fed. 67, 15 C. C. A. 226, 25 U. S. App. 376. These latter cases are, however, disapproved by Sun Printing &c. Assn. v. Moore, 183 U. S. 642, 46 L. ed. 366, 22 Sup. Ct. 240. "Where the amount of the damages for the breach of a contract is un- certain and difficult of ascertainment, and the agreement discloses the in- tention of the parties to fix a sum certain as the liquidated damages, the contract will be enforced. But where the contract discloses no such intention, or leaves the intention of the parties in this regard in doubt, and the amount specified is out of all reasonable proportion to the ac- tual damages sustained, the contract is not an agreement for liquidated damages." Union Pac. R. Co. v. Mitchell-Crittenden Tile Co., 190 Fed. 544, 111 C. C. A. 396. For instances in which damages sustained by reason of the breach of the contract are considered as uncertain and the amount specified considered as liquidated damages, see title six, vol. 4. '*Astley V. Weldon, 2 Bos. & Pul. 346; Sanders v. Carter, 91 Ga. 450; Schoffield v. Tompkins, 95 111. 190, 35 Am. Rep. 160; Poppers v. Mea- gher, 148 111. 192, 35 N. E. 805; J. I. Case Threshing Co. v. Souders (Ind. App.), 96 N. E. 177, reviewing the Indiana authorities; Smith v. Wedg- wood, 74 Maine 457; Willson v. Bal- timore, 83 Md. 203, 34 Atl. 774. 55 Am. St. 339; Myer v. Hart, 40 Mich. 517, 29 Am. Rep. 553; J. I. Case Threshing Machine Co. v. Fronk, 105 Minn. 39, 117 N. W. 229; Basey v. Ambrose, 28 Mo. 39; Morse v. Rath- burn. 42 Mo. 594, 97 Am. Dec. 359; Brennan v. Clark, 29 Nebr. 385, 45 N. W. 472; Lansing v. Dodd, 45 N. J. L. 525; Moore v. Colt, 127 Pa. St. 289, 18 Atl. 8, 14 Am. St. 845; Clement v. Schuylkill River E. S. R. Co., 132 Pa. St. 445, 19 Atl. 274; Bradstreet v. Baker, 14 R. I. 546; Baird v. Tolliver, 6 Humph. (Tenn.) 186, 44 Am. Dec. 298. =» Willson V. Love (1896), L. R. 1 Q B 626; Keeble v. Keeble, 85 Ala. 552, 5 So. 149; Home Land &c. Co. V. McNamara, 111 Fed. 822, 49 C. C. A. 642; Smith v. Newell, 37 Fla. 851 INTERPRETATION AND CONSTRUCTION. 1^60 § 1560. Illustrations. — Calling the sum named a penalty or liquidated damages is not conclusive, if the intention appears otherwise, from the consideration of the whole agreement; if it be doubtful, from the whole agreement, whether it is intended to be a penalty or stipulated damages, it will be construed as a penalty, and if it is called a penalty it will be held to be such, unless that construction is overcome by a very clear intention to the contrary, derived from other parts of the agreement. ^^ Un- less the intent of the parties is very clearly expressed, a forfeiture named for non-fulfdment of a contract, where excessive will not be construed as intended to be liquidated damages. Thus when a contract for doing a piece of work in building a vessel stipu- lated for its completion by a specified time, "under a forfeiture of one hundred dollars a day for each and every day after the above date, until the same is completed," it was held a penalty.^" 147, 20 So. 249; Trower v. Elder, 11 111. 452; Carpenter v. Lockhart, 1 Ind. 434; Foley v. McKeegan, 4 Iowa 1, 66 Am. Dec. 107; Heatwole v. Gor- rell. 35 Kans. 692, 12 Pac. 135; State V. Larson. 83 Minn. 124, 86 N. W. 3, 54 L. R. A. 487; Carter v. Strom, 41 Minn. 522, 43 N. W. 394; Morse v. Rathburn, 42 Mo. 594, 97 Am. Dec. 359; Squires v. Elwood. 2)7) Nebr. 126. 49 N. W. 939; Monmouth Park Assn. V. Wallis Iron Works, 55 N. J. L. 132, 26 Atl. 140, 19 L. R. A. 456, 39 Am. St. 626; Lansing v. Dodd, 45 N. J. L. 525 ; Lampman v. Cochran, 16 N. Y. 275 ; Cotheal v. Talmage, 9 N. Y. 551, 61 Am. Dec. 716, Seld. Notes 238; Berry v. Wisdom, 3 Ohio St. 241 ; El Reno v. Cullinane, 4 Okla. 457, 46 Pac. 510; Wilhelm v. Eaves, 21 Ore. 194. 27 Pac. 1053, 14 L. R. A. 297; Keck v. Bieber, 148 Pa. St. 645. 24 Atl. 170, ZZ Am. St. 84C, Bignall v. Gould, 119 U. S. 495, 7 Sup. Ct. 294. 30 L. ed. 491 ; John- son V. Cook, 24 Wash. 474, 64 Pac. 729; Madison v. American Sanitary Engineering Co., 118 Wis. 480, 95 N. W. 1097: Kerslake v. Mclnnis, 113 Wis. 659, 89 N. W. 895; Lyman v. Babcock. 40 Wis. 503. "Green v. Price. 13 M. & W. 695; Whitfield V. Levy, 35 N. J. L. 149; Cheddick's Exr. v. Marsh, 21 N. J. L. 463; Shiell v. M'Nitt, 9 Paige (N. Y.) 101; Pastor v. Solomon, 26 Misc. (N. Y.) 125, 55 N. Y. S. 956. Chief Justice Marshall, in Tayloe v. Sandi- ford. 7 Wheat. 13, 5 L. ed. 198, said : "In general a sum of money, in gross, to be paid for the non-perform- ance of an agreement, is considered as a penalty. * * * it will not, of course, be considered as liquidated damages. * * * Much stronger is the inference in favor of its being a penalty, when it is expressly reserved as one." Durst v. Swift, 11 Texas 273, discussion of the rules respecting stipulations for penalties and liquidated damages. ^' In Colwell V. Lawrence, 38 N. Y. 71, the word "forfeiture" which is equivalent to a penalty is used, which manifests that a penalty was intend- ed. "When the parties to a con- tract, in which the damages to be as- certained, growing out of a breach, are uncertain in amount, mutually agree that a certain sum shall be the damages in case of a failure to per- form, and in language plainly ex- pressive of such agreement. I know of no sound principle or rule ap- plicable to the construction of con- tracts, that will enable a court of law to say that they intended something else. Where the sum fixed is great- ly disproportionate to the presumed actual damage, probably a court of § 1 561 CONTRACTS. 852 If the contract provides that a larger sum shall be paid on the failure of the party to pay a less sum, the larger sum is treated as a penalty. ^^ In the case of a contract for the payment of money simply, a stipulation to pay a fixed sum in default of per- formance by the obligor will be regarded as a penalty and not as a covenant for liquidated damages. This rule is based upon the principle that damages for the breach of such contracts are fixed and liquidated by the law, and require no liquidation by the par- ties.'* §1561. Stipulations in building contracts. — The stipula- tions of parties for specified damages on the breach of a contract to build within a limited time have frequently been enforced by the courts. In one case, where the contract was to complete a grand-stand for a race course by a designated day, the contractor agreed to pay the owner one hundred dollars a day for every day that he should be in default after the day stated, which sum was thereby agreed upon, fixed and determined as the damages the owner would suffer by reason of such default, "and not by way of penalty." It was also agreed that the owner might deduct and retain the same out of any moneys becoming due to the contractor equity may relieve; but a court of Smith's Admrs. v. Wainwright, 24 law has no right to erroneously con- Vt. 97. strue the intention of the parties, " Kuhn v. Myers, H Iowa 351. when clearly expressed, in the en- Liquidated damages are not applica- deavor to make better contracts for ble to such case. If they were, they them than they have made for them- might afiford a sure protection for selves. In these, as in all other usury, and countenance oppression cases, the courts are bound to ascer- under the forms of law. State v. tain and carry into effect the true in- Larson, 83 Minn. 124, 86 N. W. 3, tent of the parties." Per Wright, J., 54 L. R. A. 487; Gray v. Crosby, 18 in Clement v. Cash, 21 N. Y. 253. John. (N. Y.) 219; Wright v. Dobie The words "liquidated damages" are 3 Tex. Civ. App. 194 ($500 paid as a by no means conclusive. Wallis v. "forfeit;" held that whether the pay- Smith, L. R. 21 Ch. Div. 243. It was ment was made as a penalty, or as thought in Reilly v. Jones, 1 Bing. liquidated damages, was a question 302, that they were conclusive, but of intent to be determined by the Kemble v. Farren, 6 Bing. 141, has jury.). "Whether the sum mentioned shown that they are not. in an agreement to be paid for a "Astley V. Weldon, 2 B. & P. 346; breach, is to be treated as a penalty Reynolds v. Bridge, 6 E. & B. 528, or as liquidated and ascertained dam- 26 L. J. Q. B. 12; Rutherford v. ages is a question of law, to be de- Stovel, 12 Up. Can. C. P. 9; Halde- cided by the judge upon a considera- man v. Jennings, 14 Ark. 329; Peine tion of the whole instrument." Wilde, v. Weber, 47 111. 41 ; Morse v. Rath- C. J., in Sainter v. Ferguson, 7 C. B. burn, 42 Mo. 594, 97 Am. Dec. 359; 716. 8.53 INTERPRETATION AND CONSTRUCTION. 1^62 under the contract. The court lield that the sum of one hundred dollars a day was liquidated damages. ^^ § 1562. Further illustrations of penalties. — Where a build- ing contract specified that twenty dollars should be paid for every day's delay in completing the house, the court held the stipu- lation to be a penalty, and said that only nominal damages could be recovered in the absence of proof that the owner was injured by the delay.^" When the damages can be really assessed, and they are fixed by the contract itself at an unconscionable sum, it is the plain duty of a court exercising equity powers to relieve against such injustice, and treat the sum named as a penalty merely. A contract to raise a dwelling, the rental value of which was about twenty-five dollars per month, provided that the owner should be paid one hundred and fifty dollars per week after the expiration of the period within which the work was to be com- pleted. The real damage being easily ascertainable, the stipulated sum was unconscionable.^^ In case of failure to complete build- building by a certain day, under a "penalty of $30" a day for every day thereafter that it should remain un- finished, to be paid as "liquidated damages;" it was held liquidated damages. See ^Malone v. Philadel- phia, 147 Pa. St. 416, 23 Atl. 628, where a contract for erection of a bridge, stipulating that the contrac- tors pay $50 for each day they were in default, was held to provide for liqui- dated damages, as the damages were uncertain and not capable of being ascertained by any satisfactorv rule. '' Wilcus V. Kling, 87 111. 107 ; Kelly V. Fejervary, 111 Iowa 693, 83 N. W. 791 ; Condon v. Kemper, 47 Kans. 126, 27 Pac. 829, 13 L. R. A. 671 (erecting a party wall and moving a building) ; Spink v. Mueller, 77 Mo. App. 85; Brennan v. Clark, 29 Nebr. 385, 45 N. W. 472 (building a house). Compare In re White, 84 Law T. 594, 50 Weekly Rep. 81, where a pay- ment for delay on a building con- tract, though called a penalty, was construed to be liquidated damages. In Muldoon v. Lynch, 66 Cal. 536, a statutorv rule prevailed. "Clements v. Schuvlkill River E. S. R. Co., 132 Pa. St. 445, 19 Atl. 274. " See also, Monmouth Park Assn. V. Wallis Iron Works, 55 N. J. L. 132, 26 Atl. 140, 19 L. R. A. 456, 39 Am. St. 626; Fletcher v. Dyche, 2 T. R. 32 (10 pounds per week for delay in finishing the parish church) ; Duckworth v. Al- ison, 1 M. &. W. 412 (5 pounds per week for delay in completing repairs of a warehouse) ; Legge v. Harlock, 12 Q. B. 1015 (1 pound per day for delay in erecting a barn, wagon shed and granarv) ; Law v. Local Board, L. R. (1892) 1 Q. B. 127 (100 pounds and 5 pounds per week for delay in constructing sew- erage work) ; Ward v. Hudson River Bldg. Co., 125 N. Y. 230, 26 N. E. 256 ($10 a day for delay in erecting dwelling houses) ; O'Donnell v. Rosenberg, 4 Dalv (N. Y.) 555. 14 Abb. Pr. (N. S.) 59 (a stipulation for $10 a day for every day's delay in completing a building contract). In Pearson v. Williams' Admrs., 26 Wend. (N. Y.) 630, a purchaser of 14 city lots engaged to erect on the lots two brick buildings by a certain day, or to pay on demand $4,000; it was held liquidated damages. In Farnham v. Ross. 2 Hall (N. Y.) 167, the covenant was to finish a 1563 CONTRACTS. 854 ings which are intended to be rented, the amount of damages ordinarily would be the loss of rent.^'* § 1563. The intention of the parties and nature of the agreement — Controlling guides. — The question whether a sum stipulated for in a written contract, to be paid on its breach, is a penalty or liquidated damages, is a question for the court, to be determined by the intention of the parties as drawn from the words of the whole contract, examined in the light of its subject- matter and of its surroundings; in this case the court will con- sider the relation which the sum stipulated bears to the extent of the injury which may be caused by the several breaches provided against, the ease or difficulty of measuring a breach in damages, and such other matters as are legally or necessarily inherent in the transaction.^^ Where there was an agreement for the sale of "« Cannon v. Hunt, 113 Ga. 501, 38 S. E. 983 ; Brennan v. Clark, 29 Nebr. 385, 45 N. W. 472; Bounds v. Hick- erson, 26 Tex. Civ. App. 608, 63 S. W. 887. In Cochran v. People's R. Co., 113 Mo. 359, a suit at law for a balance on a building contract, where the plaintiff agreed to pay $50 for every day that the building was de- layed after a certain time, the amount fixed not being denom- inated in the contract, either as pen- alty or liquidated damages, the court held it a penalty to compel the per- formance of the contract. There was a delay of sixty-five days in the completion of the building. The court, per Gantt, J., said : "Apply- ing to this case the ordinary tests, is it or not unreasonable as liquidated damages? Viewing it from the point of an investment, the capital was $18,000, and for sixty-five days this capital yielded no income. Allowing ten per cent — a large interest on so large a sum — and we find $325 would compensate for the use of the money, as a loan or mere investment. * * * At the rate stipulated the damages would have amounted in a year to a sum almost as large as the capital in- vested or total cost of the building." In re Newman, L. R. Ch. D. 724 (stipulation held a penalty). "Reynolds v. Bridge, V Eng. L. & Eq. 122; Magee v. Lavell, L. R. 9 C. P. 107; Brooks v. Wichita, 114 Fed. 297, 52 C. C. A. 209; Radloff V. Haase, 196 111. 365, 63 N. E. 729; Robinson v. Board of Education of Chicago, 98 111. App. 100; Kilbourne V. Burt &c. Lumber Co., Ill Ky. 693, 23 Ky. L. 985, 64 S. W. 631, 55 L. R. A. 275 ; Taylor v. Times &c. Co., 83 Minn. 523, 86 N. W. 760, 85 Am. St. 473 ; Cochran v. People's R. Co., 113 Mo. 359, 21 S. W. 6; Missouri- Edison Electric Co. v. M. J. Stein- berg Hat &c. Co., 94 Mo. App. 543, 68 S. W. 383; Lansing v. Dodd, 45 N. J. L. 525 ; Colwell v. Lawrence, 38 N. Y. 71, 36 How. Pr. (N. Y.) 306; Cotheal v. Talmage, 9 N. Y. 551, 61 Am. Dec. 716, Seld. Notes 238; Knox Rock-Blasting Co. v. Grafton Stone Co., 64 Ohio St. 361, 60 N. E. 563; Emery v. Boyle, 200 Pa. St. 249, 49 Atl. 779; March v. Allabough, 103 Pa. St. 335; Brown Iron Co. v. Norwood (Tex.), 69 S. W. 253; Jen- nings v. McCormick, 25 Wash. 427, 65 Pac. 764. The use by the parties of the expression "penalty" or "liquidated damages" is not conclu- sive. The distinction between penal- ties and liquidated damages depends on the intention of the parties to be gathered from the whole contract. If the intention is to secure per- formance of the contract by the im- position of a fine or penalty, then the sum specified is a penalty; but if. 855 INTERPRETATION AND CONSTRUCTION. § 1564 real estate which contained this stipulation : "The parties to the above agreement cloth severally agree to forfeit the sum of five hundred dollars, say five hundred dollars, in case either party fail to comply with the terms of this agreement," the word "for- feit" was held to mean "to pay," and although the jury found the actual damages were fifty dollars, one-tenth the stipulated sum, the court, upon the point reserved, whether the defendant was liable for the penalty or for only the actual damages, rendered judgment for the penalty.*" § 1564. Province of courts and jury in construing contract. ' — The construction of a written contract is for the courts and not the jury when the evidence establishing the agreement is not in conflict,*^ and this is true notwithstanding the agreement is on the other hand, the intention is to assess the damages for breach of the contract, it is liquidated dam- ages. Per Lopes. L. J., in Law v. Local Board (1892), 1 Q. B. 127. *" Smith V. Dickenson, 3 Bos. & Pul. 630; Astley v. Weldon, Bos. & Pul. 346; Kemble v. Farren, 6 Bing. 141 ; Streeper v. Williams, 48 Pa. St. 450; Mathews v. Sharp, 99 Pa. St. 560; Pennypacker v. Jones, 106 Pa. St. 2V; Dakin v. Williams, 17 Wend. (N. Y.) 447, affd.. 22 Wend. (N. Y.) 201. The conflict in the decisions on this subject is due to the fact that each case presents new and distinct considerations. Sanders v. Carter, 91 Ga. 450. "The subject-matter of the contract, and the intention of the parties are the controlling guides. If, from the nature of the agree- ment, it is clear that any attempt to get at the actual damage would be difficult, if not in vain, then the courts will incline to give the relief which the parties have agreed on. But if, on the other hand, the con- tract is such that the strict construc- tion of the phraseology would work absurdity or oppression, the use of the term liquidated damages will not prevent the courts from inquiring into the actual injury sustained, and doing justice between the parties." Sedgwick on Damages (8th ed.), § 396. "Storm v. Montgomery, 79 Ark. 172, 95 S. W. 149; Rheam v. Martin, 26 App. (D. C.) 181; Hull &c. Co. v. Empire &c. Co., 113 Fed. 256, 51 C. C. A. 213; McLelland v. Single- tary, 113 Ga. 601, 38 S. E. 942; Illi- nois Cent. Co. V. Foulks, 191 111. 57. 60 N. E. 890; Collins & Burgle Co. V. Silver, 150 111. App. 430; Robinson V. Yetter, 238 111. 30. 87 N. E. 363. affg. 143 111. App. 172; Zeigler v. Il- linois Trust & Savings Bank. 245 111. 180, 91 N. E. 1041. 28 L. R. A. 1112n: Indiana Fuel Supply Co. v. Indianap- olis Basket Co., 41 Ind. App. 658. 84 N. E. 776; Burton v. I. M. Yost Mill- ing Co., 6 Kans. App. 921, 51 Pac. 67; N. B. Brown & Co. v. St. John Trust Co.. 71 Kans. 134, 80 Pac. 11; Lexington & B. S. Rv. Co. v. Moore, 140 Kv. 514. 131 S. W. 257; Licking Rolling Mill Co. v. W. P. Snvder & Co., 28 Ky. L. 357. 89 S. W. 249; Schuster v. Snawder, 31 Ky. L. 254, 101 S. W. 1194; Emerv v. Owings. 6 Gill (Md.) 191; Douglass v. Paine, 141 Mich. 485, 104 N. W. 781; Mc- Clurg V. Whitney. 82 ^lo. App. 625; New York Life Ins. Co. v. Wolf son, 124 Mo. App. 286. 101 S. W. 162; Mc- Cormick Harvesting &c. Co. v. Davis, 61 Nebr. 406, 85 N. W. 390; Peru Plow & Implement Co. v. Johnson Bros.. 86 Nebr. 428. 125 N. W. 595; Grueber Engineering Co. v. Waldron, 71 N. J. Law 597. 60 Atl. 386; Smith v. United Tract. &c. Co., 168 N. Y. 597, 61 N. E. 1134. affg. 49 App. Div. (N. Y.) 641. 63 N. Y. S. 665; Whit- ney V. Olean, 45 App. Div. (N. Y.) § 1564 CONTRACTS. 856 contained in several writings, such as letters and telegrams ex- changed between the parties*^* or a circular of a building and loan association upon the faith of which stock was bought in the concern.'*^ It is also the duty of the court to interpret the mean- ing of particular words except in cases where there is evidence that a particular word was used in a sense peculiar to a particular trade or business, or that its meaning depends on the usage of a particular place." If a doubt arises upon the construction of a phrase in a written instrument, it is to be decided by the court upon inspection, and not by the jury.^* Where a written con- tract has been lost, and parol evidence of its contents has been 435, 60 N. Y. S. 951; Banks v. Blades construction of a contract, unless Lumber Co., 142 N. Car. 49, 54 S. there is something peculiar to the E. 844; El Paso & S. W. R. Co. v. words, by reason of the custom of Eichel & Weikel (Tex. Civ. App.), the trade to which the contract re- 130 S. W. 922. In Wason v. Rowe, lates, is for the court. Bowes v. 16 Vt. 525, it is said that it is a wise Shand, 2 L. R. App. Cas. 455, per and well-established rule of law that Lord Cairns. Written contract to be the true construction of written con- construed by the court. Phillips v. tracts is to be declared by the court, Aflalo, 43 Eng. C. L. 436 (4 M. & G. and not submitted to the finding of 846) ; Chicago Cheese Co. v. Fogg, a jury. Veitch v. Jenkins, 107 Va. 53 Fed. 72; Williams v. Waters, 2>6 68 57 S E. 574; Dennis v. Monte- Ga. 454; Nash v. Drisco, 51 Maine sano Nat. Bank, 38 Wash. 435, 80 417; Barton v. Gray, 57 Mich. 622, Pac. 764; Southern Flour & Grain 24 N. W. 638; State v. Lefaivre, 53 Co. V. McGeehan, 144 Wis. 130, 128 Mo. 470; Monadnock R. Co. v. Felt, N. W. 879; Thomas V. Columbia Pho- 52 N. H. 379; Dwight v. Germania nograph Co., 144 Wis. 470, 129 N. W. Life Ins. Co., 103 N. Y. 341, 8 N. 522 E. 654, 57 Am. Rep. 729; Brady v. "a McDonough v. Williams, 77 Ark. Cassidy, 104 N. Y. 147, 10 N. E. 261. 92 S. W. 783, 8 L. R. A. (N. S.) 131; Arnold v. Bailey, 24 S. Car. 493; 452; Mann v. Urquhart, 89 Ark. 239, State v. Fort, 24 S. Car. 510. But 116 S. W. 219; Cincinnati Punch & where the making of the contract is Shear Co. v. Thompson, 80 Kans. in dispute, it is for the jury to say 467, 102 Pac 848; American Jobbing whether it is established. Folsom v. Assn. V. James, 24 Okla. 460, 103 Cook, 115 Pa. St. 539, 9 Atl. 93. Pac. 670 ; Scanlan v. Hodges, 52 Fed. " Rex v. Hucks, 1 Stark. 424 ; Fos- 354, 3 C. C. A. 113; Lindsay v. Ham- ter v. Chicago, 197 111. 264, 64 N. E. burg-Bremen Ins. Co., 115 N. Car. 322, affg. 96 111. App. 4 ; Kerr v. Top- 212, 20 S. E. 370; De Camps v. Car- ping, 109 Iowa 150, 80 N. W. 321; pin 19 S. Car. 121; Teasdale v. Man- Watson v. Richardson, 110 Iowa 673, Chester Produce Co., 104 Tenn. 267, 698, 80 N. W. 407, 416; Silver Val. 56 S. W. 853; Ranney v. Higby, 5 Min. Co. v. North Carolina Smelting Wis. 62, 6 Wis. 28. See also, Bales Co., 122 N. Car. 542, 29 S. E. 940; V. Northwestern Consol. Milling Co., Brite v. Mt. Airy Mfg. Co., 129 N. 21 Okla. 421, 96 Pac. 599. Car. 34, 39 S. E. 634; Smith v. United *^ Williamson v. Eastern Bldg. & Tract. &c. Co., 49 App. Div. (N. Y.) Loan Assn., 54 S. Car. 582, 32 S. 641, 63 N. Y. S. 665, affd., 168 N. Y. E. 765, 71 Am. St. 822. 597, 61 N. E. 1134; Keefer v. School *^ Simpson v. Margitson, 11 Q. B. District of Sunbury, 203 Pa. 334, 52 23 ; Johnson v. London Guar. &c. Co., Atl. 245. 115 Mich. 86, 72 N. W. 1115. The 857 INTERPRETATION AND CONSTRUCTION. § 1 564 received, its construction is still for the court, and not for the jury," and such loss must be first shown,*" and the burden of proof is upon the plaintiff to establish the execution and contents of such contract or promise by a preponderance of proof.*^ In an action on a written contract, it has been held error for the court to allow the question as to what was the contract to go to the jury/** It is for the court to determine the legal effect of a prom- issory note, and it is error to leave the construction to a jur>^■"' Where, by a written agreement, the plaintiff undertook to do work to some houses of the defendant in South street and South- ampton street, and it was proven that the defendant had no houses in Southampton street at the time of the agreement, and the judge asked the jury whether the parties meant to describe houses in South street only, and whether the insertion of the word "and" in the agreement was a mistake, it was held to be a misdirection to leave it to the jury to say what was the intention of the parties.^" Where the contract is ambiguous in any of its terms, and the ambiguity can be solved by reference to other parts of the contract, or surrounding circumstances which are uncon- troverted by the evidence, it is the duty of the court to solve the ambiguity, and to declare the true meaning of the contract. But where the ambiguity cannot be solved by reference to other parts of the contract, and the surrounding circumstances are contro- verted, the court should charge the jury hypothetically as to the true interpretation of the contract.°^ "Berwick v. Horsfall, 4 C. B. N. S. 161; Philadelphia v. Stewart, 201 Pa. 450; Wellman v. Jones, 124 Ala. 580, St. 526, 51 Atl. 348; Blaisdell v. 27 So. 416. Davis, 72 Vt. 295, 48 .\tl. 14; Car- ** Watson V. Richardson, 110 Iowa stens v. Earles, 26 Wash. 676, 67 673. 698, 80 N. W. 407, 416. Pac. 404. See Ginnuth v. Blanken- *^ Gallagher v. McBride, 63 N. J. ship (Tex. App.), 28 S. W. 828, L. 422, 44 Atl. 203. where the court below construed a " Miller v. Dunlap, 22 Mo. App. 97. provision in a contract which was "Terry v. Shively, 64 Ind. 106. near the border line of uncertainty "Hitchin v. Groom, 17 L. J. C. P. and ambiguity, and in its charge to 145, 5 C. B. 515. the jury gave it a certain meaning. "Thorn & Hunkins Lime &c. Co. It was held that the court should V. St. Louis E-xpanded Metal &c. Co., have left the construction of the 11 Mo. App. 21 ; Wilcox v. Baer, 85 contract in this respect to the jury. Mo. App. 587; Deutmann v. Kilpat- The uncertainty or ambiguity did not rick, 46 Mo. .^.pp. 624; Fruin v. arise from the meaning to be given Crystal R. Co., 89 Mo. 397, 14 S. W. to the words used, but sprung from 557; Shickle v. Chouteau &c. Iron the fact as to what claims or persons Co., 10 Mo. App. 241, affd., 84 Mo. were embraced or not embraced with- § 1565 CONTRACTS. 858 § 1565. Province of court and jury further considered. — > It is the duty of the jury to take the construction from the court, either absohitely, if there be no words to be construed, as words of art or phrases used in commerce, and no surrounding circum- stances to be ascertained, or, conditionally, when those words or circumstances are necessarily referred to them.°* Where a writ- ing is obscure or ambiguous by reason of its containing unfamil- iar abbreviations, or where it is obscurely written, or partially erased, so as to be uncertain and ambiguous, it is proper to leave it to the jury to ascertain its meaning." To establish a lost deed by parol, the evidence must clearly and satisfactorily show the existence and execution of the supposed deed.°* But where the ambiguity of the writing is in the words themselves, the court must determine the meaning if it can be done.^° When written instruments contain technical terms, or words used in a sense pe- culiar to some particular art, trade, or business, it is often proper to leave it to the jury to ascertain and determine the sense in which such terms are employed.®^ It has been held that when a contract employs terms of art and those having knowledge of the art differ as to what the words mean, the question may prop- in the meaning of the expression, 535; McAvoy v. Long, 13 111. 147; "excepting those subscribers taking Prather v. Ross, 17 Ind. 495; Wil- stock, etc.," and the ambiguity being Hams v. Woods, 16 Md. 220; Eaton of that character, evidence showing v. Smith, 20 Pick. (Mass.) 150; Smith what was the intention of the parties v. Faulkner, 12 Gray (Mass.) 251; was required to move it. Rosenthal v. Ogden, 50 Nebr. 218, 69 "Neilson v. Harford, 8 M. & W. N. W. 779; Sellars v. Johnson, 65 805 (action on the case for the in- N. Car. 104; Goddard v. Foster, fringement of a patent) ; Butte &c. 17 Wall. (U. S.) 123, 21 L. ed. 589. Mining Co. v. Montana Ore &c. Co., In Morrell v. Frith, 3 M. & W. 402, 121 Fed. 524, 58 C. C. A. 634; West- Lord Abinger, C. B., said : "One case ern Mfg. Co. v. Rogers, 54 Nebr. in which the effect of a written docu- 456, 74 N. W. 849 ; Freston v. Law- ment must be left to a jury is, where rence Cement Co., 155 N. Y. 220, 49 it requires parol evidence to explain N. E. 768. it. as in the ordinary case of mercan- " Holland v. Long, 57 Ga. 36 ; tile contracts, in which peculiar terms Paine v. Ringold, 43 Mich. 341, 5 N. and abbreviations are employed." W. 421 ; Newberry v. Durand, 87 Mo. The use of the word "sell" in the App. 290. memoranda of the initiatory part of a "Slipman v. Telschow, 24 Ohio contract, the result of several con- Cir. Ct. 536. ferences and conversations, has been "Morrell v. Frith, 3 M. & W. 402; held not conclusive, as matter of law, Camp V. Wilson, 97 Va. 265, 33 S. as to the nature of the contract. Pa- E. 591. cific Export Lumber Co. v. North "Simpson v. Margitson, 11 Ad. & Pac. Lumber Co., 46 Ore. 194, 80 Pac. E. (N. S.) 23, 63 Eng. Com. Law 21; 105. Hutchison v. Bowker, 5 M. & W. 859 INTERPRETATION AND CONSTRUCTION. § 1566 eriy be submitted to the jury." If there are peculiar expressions which have, in particular places or trades, a known meaning at- tached to them, it is for the jury to say what the meaning of these expressions is, but for the court to decide what the meaning of the contract is."* What is the true interpretation, however, of mercantile phrases in commercial correspondence is not always a question of law, but may in many cases be properly left to the jury to decide, where the phrases admit of different meanings.'^* § 1566. Oral contracts. — Where a contract is oral, the question as to what the contract is must, if controverted, be tried by the jury as a question of fact, but where the terms of a contract are undisputed, its construction and effect, where the contract is oral as well as where it is written, are to be determined by the court.®" When the terms of a parol agreement are given, and are "Burton v. Jennings, 185 Fed. 382, 107 C. C. A. 438. ^ Hutchison v. Bowker, 5 M. & W. 535; Brown v. Orland, 36 Maine 376; Burnham v. Allen, 1 Gray (Mass.) 496; Eaton v. Smith, 20 Pick. (Mass.) 150; Taliaferro v. Cundiff, 33 Tex. 415. Questions as to the meaning of particular words used in a special sense in a written instru- ment are for the jury. Pitney v. Glen's Falls Ins. Co., 61 Barb. (N. Y.) 335, 65 N. Y. 6. What was in- tended by "a first-class long raft-line" as used in a towing contract is for the jury. Stevenson v. Michigan Log-Towing Co., 103 Mich. 412,. 61 N. W. 536. " Atlanta Ace. Assn. v. Alexander, 104 Ga. 709, 30 S. E. 939. 42 L. R. A. 188 ; Fagin v. Connoly, 25 Mo. 94, 69 Am. Dec. 450. and note. Mr. Justice Story, in delivering the opinion of the court in Brown v. McGran, 14 Pet. (U. S.) 479. 10 L. ed. 551. said: "It is certainly true, as a general rule, that the interpretation of written in- struments properly belongs to the court, and not to the jury. But there certainly are cases in which, from the different senses of the words used, or their obscure and indeter- minate reference to unexplained cir- cumstances, the true interpretation of the language may be left to the con- sideration of the jury for the pur- pose of carrying into effect the real intention of the parties. This is espe- cially applicable to cases of commer- cial correspondence, where the real objects and intentions and agree- ments of the parties are often to be arrived at only by allusions to cir- cumstances which are but imper- fectly developed." "" Moore v. Garwood, 4 Exch. 681 ; Morrell v. Frith. 3 M. & W. 402; Begg V. Forbes, 30 Eng. L. & Eq. 508; Bradburv v. Marbury. 12 Ala. 520, 46 Am. Dec. 264; Guptill v. Da- mon, 42 Maine 271 ; Globe Works v. Wright, 106 Mass. 207 ; Perth Amboy Mfg. Co. v. Condit, 21 N. J. L. 659; Rogers v. Colt, 21 N. J. L. 704; Brown's Admrs. v. Hatton, 9 Ired. L. (N. Car.) 319. It is for the jury to determine in what sense several terms having no accepted legal sig- nification were used by the parties in an oral agreement for a sale. Becker v. Holm. 89 Wis. 86, 61 N. W. 307. In such case the jury passes merely on the existence of the contract. Manti Citv Sav. Bank v. Peterson, 30 Utah 475. 86 Pac. 414. 116 Am. St. 862. 33 Utah 114, 93 Pac. 566, 14 L. R. A. (N. S.) 1043. § 1566 CONTRACTS. 860 unambiguous, its interpretation is as much a question of law for the court as the interpretation of an unambiguous written instru- ment.°^ .Where the contract is oral the terms of the agreement are a matter of fact, and if those terms be obscure, or equivocal, or are susceptible of explanation from extrinsic evidence, it is for the jury to find the meaning of the terms employed, but the effect of a parol agreement, when its terms are given and its meaning fixed, is as much a question of law as the construction of a written agreement."^ Exceptional cases arise where the con- tract rests partly in correspondence and partly in oral communi- cations, in which it is held that the question whether or not there is a contract is a question for the jury.®^ Statements and conduct of the parties subsequent to a conversation in which it is alleged that a contract was made are competent only as they tend to show what was their real understanding as to that transaction, and not for the purpose of controlling or in any way changing the effect of the conversation.^* '^ McCurdy v. Alaska &c. Commer- *' Spraggins v. White, 108 N. Car. cial Co., 102 111. App. 120; Norton v. 449, 13 S. E. 171. See also, Annadall Higbee, 38 Mo. App. 467 ; Young v. v. Union Cement & Lime Co., 165 Ind. Van Natta 113 Mo. App. 550, 88 S. 110, 74 N. E. 893; American Towmg W 123; Willard v. A. Siegel Gas- & Lightering Co. v. Baker- Whiteley Fixture Co., 47 Mo. App. 1. Where a Coal Co., Ill Md. 504, 75 Atl. 341; contract is oral, its construction is Embry v. Hargadme, McKittnck Dry for the jury. Holmes v. Chartiers Goods Co., 127 Mo. App. 383, 105 S. Oil Co., 138 Pa. St. 546, 21 Atl. 231, W. 777; Kaley v. Van Ostrand, 134 21 Am. St. 919. The construction of Wis. 443, 114 N. W. 817. an oral contract is for the jury where ^ Scanlan v. Hodges, 52 Fed. 354, there is any doubt about its terms. 3 C. C. A. 113. See also, Picard v. The province of the jury is to settle Beers, 195 Mass. 419, 81 N. E. 246. disputed questions of fact. If no " Potter v. Phenix Ins. Co., 63 Fed. such disputed facts exist there is 382; Byrd v. English, 117 Ga. 191, 43 nothing for them to do, and it is for S. E. 419, 64 L. R. A. 94; Belknap v. the court to determine the legal ef- Belknap, 20 S. Dak. 482, 107 N. W. feet of the contract. Elliott v. Wan- 692. amaker, 155 Pa. St. 67, 25 Atl. 826. CHAPTER XXXVI. COVENANTS AND CONDITIONS. 1575. Generally — When words con- § 1595. strucd as convenant and when as condition. 1596. 1576. Kinds of covenants — Depend- ent and independent — Mu- 1597. tual. 1598. 1577. Time of performance. 1578. Covenants construed as de- 1599. pendent. 1600. 1579- Examples of covenants con- strued as independent. 1601. 1580. Mutual promises — Reliance on remedy or condition. 1602. 1581. Conditions in insurance poli- cies. 1603. 1582. Conditions in insurance poli- cies — Suicide. 1604. 1583. Examples of conditions prec- edent — Vendor and pur- chaser. 1605. 1584. Examples of provisions held not conditions precedent in cases of vendor and pur- 1606. chaser. 1585. Vendor and purchaser — Mis- 1607. cellaneous. 1586. Conditions as to arbitration — 1608. Waiver. 1609. 1587. Conditions and acts to be per- formed in sales of goods. 1610. 1588. Sales of goods — Conditions to passing of title. 1611. 1589. Sale of goods to arrive. 1590. Sales of goods — Delivery by instalments. 1612. 1591. Sales — Instalments — Review of cases. 1613. 1592. Insolvency of buyer. 1593. Conditional sales. 1614. 1594. Form and construction of con- tract of conditional sales- Transfer of rights under con- ditional sale. Conditional sales — Rights of the parties on default. Waiver of forfeiture and title. Risk of loss — Destruction of the property. Recording. Miscellaneous matters con- cerning conditional sales. Architect's or engineer's cer- tificate of approval. Architect's certificate — Illus- trations- Promise conditional upon ap- proval of promisor. Cases holding that right of approval must be exercised reasonably. Cases holding right of ap- proval absolute and unqual- ified — Good faith. Failure to fully perform — Substantial performance. Building contracts — Substan- tial performance. Personal services. Conditions in subscriptions generally. Conditions in subscriptions to stock. Conditions subsequent i n deed — Subsequent defeas- ance. Surety's bond signed under condition. Time of performance — Rea- sonable time. Waiver — Miscellaneous. § 1575. Generally — When words construed as covenant and when as condition. — Questions so frequently arise as to the interpretation or construction and the operation of covenants 86 1 § 1575 CONTRACTS. 862 and conditions that it has been thought advisable to devote a chap- ter to this particular subject, especially as many of the general rules already found are well illustrated and applied in such cases, while at the same time they possess some peculiar features of their own. Particular phases of the subject are and will be treated in other connections. The word "covenant" is not used here in its restricted sense of a promise under seal, nor in its widest sense as including contracts in general, or all parts of a contract, but rather as referring to a clause or stipulation in a contract whereby one party agrees to perform or give something to or for the other, or stipulates for the truth of certain facts. No attempt will be made to classify and determine the effect of all the various kinds of covenants nor to consider at length matters that will hereafter be treated under the special topic of deeds, but particular attention will be given to the construction of certain provisions regarded as covenants and more especially to the con- struction and operation of conditions in various kinds of con- tracts. Neither express words of covenant, nor any particular and technical form of words is necessary to charge a party with a covenant, and even words of proviso or condition may be con- strued into words of covenant when such is the apparent intention and meaning of the parties, but a covenant will not arise unless it can be collected from the whole instrument that there was an agreement or promise or engagement, upon the part of the per- son sought to be charged, for the performance or nonperform- ance of some act.^ Nor is any set form of words necessary to create a condition,^ although certain words are recognized as apt "■ Hale V. Finch, 104 U. S. 261, 26 liable. See also, Graves v. Deterling, L. ed. 732. In this case there was in 120 N. Y. 447, 24 N. E. 655 ; Ball v. terms a covenant in a contract for Milliken, 31 R. I. 36, 76 Atl. 789, Ann. sale of a steamboat to defend the Cas. 1912B 30; Reisenbach v. Wash- title, but this was immediately fol- ington Short Line R. Co., 10 Wash, lowed by a provision to the ef- 357, 38 Pac. 1026. feet that the sale was upon the " Sumner v. Darnell, 128 Ind. 38, 27 express condition that the boat N. E. 162; Rawson v. School Dist., 7 should not be used on certain Allen (Mass.) 125, 128, 83 Am. Dec. waters within a prescribed time. 670; Farnham v- Thompson, 34 Minn. It was held that, upon a breach by so 330. 26 N. W. 9; First M. E. Church using it, or permitting it to be used, v. Old Columbia &c. Co., 103 Pa- St. while the vendee might lose the boat, 608, 613 ; Jeffrey v. Graham, 61 Tex. there was no covenant on his part 482; Horner v. Chicago, M. &c. R. under which he would be personally Co., 38 Wis. 165. 863 COVENANTS AND CONDITIONS. § 1 576 and customary.® Indeed, the same words may be employed to create either a condition or a covenant.* In determining whether it should be deemed a covenant or a condition the endeavor here, as elsewhere, is to get at and carry out the intention of the par- ties, but where the stipulation would destroy an estate if con- strued as a condition the courts are inclined, in doubtful cases, to construe it as a covenant rather than as such a condition. ° § 1576. Kinds oi covenants — Dependent and independent — Mutual. — Covenants are variously classified on different bases, but the classification that immediately concerns us here is that which relates to their relationship, dependence or nonde- pendence of one on another, or time or condition of performance. Viewed in this light there are three kinds of covenants or prom- ises : I. Such as are called mutual and independent, where either party may recover damages from the other for the injury he may have received by a breach of the covenant in his favor, and where it is no excuse for the defendant to allege a breach of the covenant on the part of the plaintiff. 2. There are covenants which are conditions and dependent, in which the performance of one depends on the prior performance of another "See Brady v. Gregory (Ind. C. C. A. 27, 16 U- S. App. 253; Boone App.), 97 N. E. 452; Gray v. Blanch- v. Clark, 129 111. 466, 501, 21 N. E. ard, 8 Pick. (Mass.) 284, 291 ; Pasch- 850, 5 L. R. A. 276: Brady v. Gregory all V. Passmorc, 15 Pa. St. 295. 307; (Ind. App.). 97 N. E. 452 (But stipu- Brown v. Caldwell, 23 W. Va. 187, lations in a deed for support of grant- 190. 48 Am. Rep. 376. or are not subject to the strict rules ^Elj-ton Land Co. v. South & N. of construction against conditions A. R. Co., 100 Ala. 396, 405, 14 So. subsequent generally.) ; Taylor v. 207; Parmelee v. Oswego & S. R. Co., Campbell (Ind. App.), 98 N- E. 657; 6 N. Y. 74, 80; Hartung v. Witte, 59 Jeffersonville &c. R. Co. v. Barbour, Wis. 285. 18 N. W. 175. See also, 89 Ind. 375, 378; Thompson v. Brady v- Gregory (Ind. App.), 97 N. Thompson, 9 Ind. 323, 330, 68 Am. E. 452. Dec. 638; Ruggles v. Clare, 45 ''Thornton v. Trammell, 39 Ga. Kans. 662, 26 Pac. 25; Kilpat- 202- Gallaher v. Herbert. 117 111. rick v. Baltimore, 81 Md. 179. 31 160, 169. 7 X. E. 511; Bradv v. Greg- Atl. 805, 27 L. R. A. 643, 48 Am. cry (Ind. App.), 97 X. E. 452; Peden St. 509; Barrie v. Smith. 47 Mich. V. Chicago, R. I. &c. R. Co., 73 Iowa 130. 10 N. W. 168; Studdard v. 328, 35 X. W. 424. 5 Am. St. 680; Wells, 120 Mo. 25, 29, 25 S. W. 201; Woodruff V. Woodruff, 44 N. J. Eq. Graves v. Deterling. 120 N. Y. 447, 349. 16 Atl. 4. 1 L. R. A. 380; Post 455, 24 N. E. 655; Lewis v. Henry's V. Weil, 115 X. Y. 361, 22 X. E. 145, Exrs.. 28 Gratt. (Va.) 192. 203; 5 L. R. A. 422. 12 Am. St. 809; Hart- Brown v. Caldwell. 23 W. Va. 187. ung V. Witte. 59 Wis. 285. 18 X. W. 48 Am. Rep. 376. 379. For additional 175. Such conditions are not favored authorities and further treatment of and are strictly construed. Mahon- this phase of the general subject, see ing County v. Young, 59 Fed. 96, 8 vol. iv, of this work, Tit. Deeds. § 1577 CONTRACTS. 864 and, therefore, until this prior condition is performed, the other party is not Hable to an action on his covenant. 3. There is also a third sort of covenants, which are mutual conditions to be per- formed at the same time ; and in these, if one party vv^as ready, and offered to perform his part, and the other neglected, or refused, to perform his, he who was ready and offered has fulfilled his en- gagement, and may maintain an action for the default of the other, although it is not certain that either is obliged to do the first act. The dependence or independence of covenants is to be col- lected from the evident sense and meaning of the parties, and, however transposed they may be in the deed, their precedency must depend on the order of time in which the intent of the trans- action requires their performance.^ There is also another kind of covenant that may be included here, namely, an alternative or disjunctive covenant, which is one for the performance of one or more of several things at the election of one of the parties/ § 1577. Time of performance. — The following rules of con- struction as to the intention of the parties have been deduced from the times appointed for the performance of the respective promises : If a day be appointed for payment of money or part of it, or for doing any other act, and the day is to happen, or may happen, before the thing which is the consideration of the money, *Stavers v. Curling, 3 Bing. N. C. right of one to maintain an action 355 ; Cutter v. Powell, 6 T. R. 320, 2 against the other shall be conditioned Smith L. C. 1 ; Pordage v. Cole, 1 or dependent upon the plaintiff's per- Wms. Saund. 319i; Kingston v. Pres- formance of covenants entered into ton, cited in Jones v. Barkley, 2 on his part. On the other hand, they Doug. 684. In Loud v. Pomona Land may agree that the performance by &c. Co., 153 U. S. 564, 38 L. ed. 822, one shall be a condition precedent to 14 Sup. Ct. 928, 932, it is said : "The the performance by the other. The Question whether covenants are de- question in each case is, which intent pendent or independent must be de- is disclosed by the language employed termined in each case upon the proper in the contract?" Ivlany other author- construction to be placed on the Ian- ities might be cited to the effect that guage employed by the parties to ex- the intention of the parties controls, press their agreement. If the Ian- Among them are the following: Ful- guage is clear and unambiguous, it enwider v. Rowan, 136 Ala. 287, 34 must be taken according to its plain So. 975 ; Hewitt v. Berryman, 5 Dana meaning as expressive of the inten- (Ky.) 162; Couch v. Ingersoll, 2 tion of the parties, and under the set- Pick. (Mass.) 292; Boulware v. tied rules of judicial decision should Crohn, 122 Mo. App. 571, 99 S. W. not be controlled by the supposed in- 796; Ink v. Rohrig, 23 S. Dak. 548, convenience or hardship that may 122 N. W. 594. follow such construction. If parties ^ See post, chapter 41, Per form- think proper, they may agree that the ance. 865 COVEXANTS AXD CONDITIONS. § 1 578 or other act, is to be performed, an action may be brought for the money, or for not doing such other act, before performance; for it appears that the parly relied upon his remedy, and did not in- tend to make the performance a condition precedent ; and so it is where no time is fixed for performance of that which is the con- sideration of the money or other act.* When a day is appointed for the payment of money, and the day is to happen after the thing which is the consideration of the money is to be performed, no action can be maintained for the money before perform- ance.'' Where two acts are to be done at the same time, as where A covenants to convey an estate to B on such a day, and, in con- sideration thereof, B covenants to pay A a sum of money on the same day, neither can maintain an action without showing per- formance of, or an offer to perform, his part, although it is not certain which of them is obliged to do the first act; and this applies to all cases of sales.'" The text of this section is taken in substance from the note of Sergeant Williams in the leading case of Portage v. Cole, first cited. The note referred to has been very generally regarded as greatly clarifying the law. upon the subject and has often been referred to and followed." § 1578. Covenants construed as dependent. — The question as to whether a stipulation or covenant is dependent or independ- « Pordage v. Cole, 1 Wms. Saund. Terry v. Duntze, 2 H. Bl. 389 ; Dicker 319i See also, Thorpe v. Thorpe, 12 v. Jackson, 6 C. B. 103 ; Rolt v. Mod. 455. 1 Salk. 171; Eastern Coun- Cozens, 18 C. B. 673; Judson v bow- tics R. Co. V. Philipson, 16 C. B. 2; den, 1 Exch. 162; Peelers v. Opie. 2 Devore v. Devore, 138 Mo. 181, 39 S. Wms. Saund. 350; Doogood v. Rose. W. 68; Acklev v. Richman, 10 N. J. 9 C. B. 132; Giles v. Giles, 9 Q. B. L. 304; Underhill v. Saratoga &c. R. 164; Borders v. Rury, 91 111. App. 1; Co. 20 Barb. (N. Y.) 455; Edgar v. Martin v. Hurley, 84 Mo. App _670; Boies, 11 Serg. & R. (Pa.) 445; ante, Shinn v. Roberts. 20 N. J. L. 43o, 43 § 1547 Am. Dec. 636; Ewing v. Wightman, •Pordage v. Cole, 1 Wms. Saund. 167 N. Y. 107, 60 N. E. 322; Campbell 319i; Stone v. Cover, 1 Ala. 287; v. Gittings, 19 Ohio 347; Powell v. Southern Pac. R. Co. v. Allen, 112 Dayton, S. &c. R. Co.. 12 Ore. 488. Cal 455, 44 Pac. 796; Beau v. At- 8 Pac. 544; Scott v. Smith. 58 Ore. water, 4 Conn. 3 ; Couch V. IngersoU, 591, 115 Pac. 969: Von Roeder v. 2 Pick. (Mass.) 292; Husenetter v. Robson, 20 Tex. 754; Stein v. Wad- GuUikson, 55 Xebr. 32, 75 X. W. 41; dcU. 37 Wash. 634. 80 Pac. 184; Lewis Dey V Dox. 9 Wend. (X. Y.) 129, 24 v. Wellard, 62 Wash. 590, 114 Pac. Am. Dec. 137. 455. r . » ^ " Pordage v. Cole, 1 Wms. Saund. " In Loud v. Pomona Land &c. Co., 319i; Thorpe v Thorpe, 1 L. Ravm. 153 U. S. 564, 38 L. ed. 822, 14 Sup. 662; Campbell v. Jones, 6 T. R. 570; Ct. 928. 932, for instance, the Su- preme Court of the United States, 55 — Contracts, Vol. 2 I57S CONTRACTS. 866 ent must usually be determined from the terms of the contract, but the courts are inclined to construe such covenants as depend- ent, the rule being that the stipulation or covenant will be con- strued as dependent unless a contrary intention appears.^" As already stated, however, the intention governs and whether the requirements of a contract are conditions precedent which must quotes from said note and refers to it as the "learned note" of Sergeant Williams. ^-Leonard v. Bates, 1 Blackf. (Ind.) 171, 176; Robinson v. Har- bour, 42 Miss. 795, 97 Am. Dec. 501, 2 Am. Rep. 671; Glenn v. Rossler, 156 N. Y. 161, 50 N. E. 785, 787; Ink v. Rohrig, 22, S. Dak. 542, 122 N. W. 594; Bank of Columbia v. Hagner, 1 Pet. (U. S.) 455, 7 L. ed. 219; Stein V. Waddell, Z7 Wash. 634, 80 Pac. 184. In Davis v. Jeffris, 5 S. Dak. 352, 58 X. W. 815, where a contract for the construction of a creamery and cold storage building — the con- tractors agreeing to furnish all mate- rial and labor, and the cold storage being constructed under the oSIcCray patent — it was held that a stipulation by w-hich the contractors "agree to furnish with said contract a patent deed from the McCray Refrigerator Company, * * * conveying all the rights under said patents," is a de- pendent stipulation, and that the con- tractors could not recover the amount agreed to be paid by the subscribers to the contract, in the absence of proof that said patent deed had been furnished or tendered to the sub- scribers. The court said : "In the early case of President, &c., v. Hag- ner, 1 Pet. (U. S.) 455, the Supreme Court of the United States states the rule as follows : 'Admitting, then, that a contract was entered into be- tween the parties, the inquiry arises whether the plaintiffs have shown such performance on their part as will entitle them, in a court of law, to sustain an action for the recovery of the purchase-money. In contracts of this description the undertakings of the respective parties are always con- sidered dependent unless a contrary intention clearly appears. A different construction would in many cases lead to the greatest injustice, and a purchaser might have payment of the consideration money enforced upon him, and yet be disabled from procur- ing the property for which he paid it. Although many nice distinctions are to be found m the books upon the question whether the covenants or promises of the respective parties to the contract are to be considered in- dependent or dependent, yet it is evi- dent the inclination of the courts has strongly favored the latter construc- tion, as being obviously the most just. The seller ought not to be compelled to part with his property without re- ceiving the consideration, nor the purchaser to part with his money without an equivalent in return. Hence, in such cases, if either a ven- dor or vendee wish to compel the others to fulfill his contract, he must make his part of the agreement prec- edent, and cannot proceed against the other without an actual perform- ance of the agreement on his part, or a tender and refusal; and an aver- ment to that effect is always made in the declaration upon contracts con- taining dependent undertakings, and that averment must be supported by proof, and that the one now before the court must be considered a con- tract of this description cannot ad- mit of a doubt." The principles there enunciated have since been generally followed by the courts of the country. For a very full review of the English and American descriptions upon this question, see Lester v. Jewett, UN. Y. 453. See also. Smith v. Lewis, 26 Conn. 110; Clark v. Weis, 87 111. 438, 29 Am. Rep. 60 ; Griggs v. Moors, 163 Mass. 354, 47 N. E. 128; Kane v. Hood, 13 Pick. (Mass.) 281; Swan V. Drury, 22 Pick. (Mass.) 485; Will- iams V. Healey, 3 Denio (N. Y.) 363; Grant v. Johnson, 5 N. Y. 247; Parker v. Parmele, 20 Johns. (N. Y.) 130, 11 Am. Dec. 253; Galvin v. 867 COVENANTS AND CONDITIONS. § 1578 be strictly complied with, or are independent stipulations the failure to completely perform which may be compensated in damages, is to be determined by an examination and fair inter- pretation of the entire contract.*^ Where an agreement for the sale and shipment of a certain amount of coke was expressly conditioned on the ability of the seller to induce operators to build ovens and make the coke, and it provided for notice by the seller to the buyer, at specified times, as to how much of the entire quan- tity of coke could be supplied during certain periods, it was held that the seller was bound thereby as soon as he induced operators to build ovens and make the coke, and hence the agreement was mutual.'* Covenants to convey "on" payment being made, "as soon" as it is made, "when" it is made, and the like are held mutual or dependent covenants.'"^ The rule as to dependent cove- Prentice. 45 X. Y. 162, 6 Am. Rep. 58; Dunham v. Pettee, 8 N. Y. 508, Seld. Notes 154; Brown v. Binz (Tex. Civ. App.). 50 S. W. 483; Coos Bay Wagon Co. v. Crocker, 6 Sawy. (U. S.) 574, 4 Fed. 577; ante, § 1547. " Howell V. James Lumber Co., 102 Ga. 595, 27 S. E. 699; Duncan v. Charles. 5 111. 561; Rothenberger v. Click, 22 Ind. App. 288, 52 N. E. 811 ; Eddv V. Davis, 116 N. Y. 247. 22 N. E. 362; Scarborough v. Arrant, 25 Tex. 129; Loud v. Pomona Land &c. Co., 153 U. S. 564, 38 L. ed. 822, 14 Sup. Ct. 928, 932, 933. In Keller v. Reynolds (Ind. App.), 40 N. E. 76, 280, it is said: "Whether or not the performance of those things to be done by appellee is to be regarded as a condition precedent is to be deter- mined from an examination of the entire contract, giving to it a reason- able and fair interpretation. Those matters as to which appellee has failed to aver performance constitute but a part of the consideration for the agreement of appellants to pay to her the amounts named ; and since the agreement has been in an essen- tial feature performed by appellee and the benefit of such performance received by appellants, and any loss to appellants from the failure to com- pletely perform may be compensated by damages, such stipulations will be regarded as independent, and not as constituting conditions precedent. Pickens v. Bozell, 11 Ind. 275; Har- man v. Moore, 112 Ind. 221, 13 X. E. 718; Cummings v. Pence, 1 Ind. App. 317, 27 X. E. 031; Boone v. Eyre, 1 H. Bl. 273, note; 2 Parsons on Con- tracts (5th ed.), 525-529. There are. of course, many contracts in which the requirements must be regarded as conditions precedent or as covenants interdependent, performance o f which must be alleged; but, when fairly construed, this contract is not of that character. It would be mani- festly iniquitous to say that appel- lants should receive and keep appel- lee's $3,000 because she had not kept the investment up to that amount continually, or because she had failed to perform some other matters called for in this contract. The appellee furnished appellants this $3,000. which they invested in teeth, sold them, and collected the money, which it then became their duty, under the contract, to pay over to her with its profits, or otherwise satisfactorily ac- count to her therefor. The complaint alleges a clear breach of this obliga- tion, and is therefore good upon de- murrer." " Sheffield Furnace Co. v. Hull Coke Co.. 101 Ala. 446, 14 So. 672. "Hill v. Grigsby, 35 Cal. 656; Tripp V. Smith, 180 Mass. 122. 61 N. E. 804; Culver v. Burgher, 21 Barb. 8 1579 CONTRACTS. nants nas oeen held to require only that a tender of the deed pre- cede an action for the purchase-money/'' § 1579. Examples of covenants construed as independent. — On the other hand, where a contract provided tliat a land com- pany, "after the making of the payment and full performance of the covenants hereinafter to be made" by the other party, should, in consideration thereof, execute a deed to the other party, and that until delivery of the deed or tender of all payments precedent thereto, no title should pass, equitable or otherwise, it was held that the covenants were not dependent even as to the last instalment of the price, and that payment or tender of the entire purchase-price was a condition precedent to the right to a con- veyance." In a Texas case where the owner of land made an executory contract to convey when one-half the price was paid in monthly instalments, and the vendee made default, it was held that the owner might declare a forfeiture and sue to recover the land, as such payment was a condition precedent to the vesting of title in the vendee.^^ And covenants to pay at a fixed time and, on the other hand, to convey at a different time have often been held so far independent at least that the performance of the earlier does not depend upon the performance of the later cove- nant.'* (N. Y.) 324; Smith v. Smith, 83 Hun "Loud v. Pomona Land &c. Co., (N. Y.) 381, 64 N. Y. St. 756, 31 N. 153 U. S. 564, 38 L. ed. 822, 14 Sup. Y. S. 924; Hardy v. McKesson, 6 Ct. 928 (also holding that the land Jones L. (51 N. Car.) 554. See also, company could maintain an action Kessler v. Pruitt, 14 Idaho 175, 93 for the price without a conveyance or Pac. 965. And compare Bailey v. actual tender thereof, on allegation Lay, 18 Colo. 405, 33 Pac. 407. So of readiness and willingness to con- in Glenn v. Rossler, 156 N. Y. 161, vey) ; Wilson v. Wittrock, 19 U. C. 50 N. E. 785, even where the contract Q. B. 391. Compare also, Eastern provided that defendants should, Oregon Land Co. v. Moody, 198 Fed. "after the payments mentioned are 7. fully made," execute and deliver a " Pell v. Chandos (Tex. Civ. good and sufficient deed, it was held App.), 27 S. W. 48; Moore v. Gies- that the covenant to pay the last in- ecke, 76 Tex. 543, 13 S. W. 290. See stalment and to deliver the deed were also, Hubbard v. Chapman, 165 N. Y. dependent and defendant could not 609, 58 N. E. 1088, affg. 34 App. Div. require payment of the price without (N. Y.) 252. tendering such a deed. But see au- " Sayre v. Craig, 4 Ark. 10, 37 Am. thorities cited in first two notes to Dec. 757; Carver v. Fcnnimore, 8 Ind. next following section. 135; Davis v. Heady, 7 Blackf. (Ind.) '"Suvdam v. Dunton, 84 Hun (N. 261; Battey v. Beebe, 22 Kans. 81; Y.) 506, 65 N. Y. St. 491, 32 N. Y. S. Saunders v. Beal's Admr., 4 Bibb. 333. (Ky.) 342; Augusta Bank v. Ham- 869 COVENANTS AND CONDITIONS. § 1 580 § 1580. Mutual promises — Reliance on remedy or condi- tion. — When upon consideration of the whole instrument, it is clear that the one party relied upon his remedy, and not upon the performance of the condition by the other, such performance is not a condition precedent. On the other hand, where it is clear that the intention was to rely on the performance of the condition, and not on the remedy, the performance is a condition prece- dent.*" But the parties to a contract may, if they think proper, agree that any matter shall be a condition precedent; and, if words are used in the contract so precise, express and strong, that such intention, and such intention only, is compatible with the terms employed, however inconsistent it may be with general principles of reasoning, a court can only give effect to such de- clared intention of the parties. The only question in every par- ticular case is, whether such intention is so declared. ^^ Parties may think some matter, which is apparently of very little import- ance, essential, and, if they sufficiently express an intention to make the literal fulfilment of such a thing a condition precedent, it will be one ; or they may think that the performance of some matter, which is apparently of essential importance, and, prima facie, a condition precedent, is not really vital, and may be com- pensated for in damages; and, if they sufficiently express such intention, it will not be a condition precedent."" § 1581. Conditions in insurance policies. — The conditions expressed in an insurance policy are a part of the contract and the insured is bound, ordinarily at least, to take notice of them.""^ blet, 35 Maine 491; Wilcox v. Ten East 295; Greaves v. Legg, 11 Exch. Eyck, 5 Johns. (X. Y.) 78. See also, 641; Seeger v. Diithie, 8 C. B. (N. Goldshorough v. Orr, 8 Wheat. (U. S.) 45; Ellen v. Topp, 6 Exch. 424; S.) 217, 5 L. ed. 600. London Gas-Light Co. v. Chelsea, 8 =** Roberts v. Brett, 18 C. B. 561; C. B. (N. S.) 215; Poussard v. Sheeren v. Moses. 84 111. 448; Spiers. L. R. 1 Q. B. Div. 410. See Moonev v. United States Industrial also, Griggs v. Moors, 168 Mass. 354, Co., 27'lnd. App. 407. 61 X. E. 607. 47 X. E. 128. ^ Stavers v. Curling. 3 Bing. X. C. '^ Quinlan v. Providence Washing- 355; McElwain v. Metropolitan Life ton Ins. Co., 133 X. Y. 356, 31 X. E. Ins. Co., 33 App. Div. (X. Y.) 60, 53 31, 28 Am. St. 645: O'Brien v. Com- N. Y. S. 253. mercial Fire Ins. Co.. 63 X. Y. 108; - Bettini v. Gyc. L. R. 1 Q. B. Div. Bell v. Lycoming Fire Ins. Co.. 19 183. See following cases for in- Hun (X. Y.) 238; Blossom v. Ly- stances of the application of the rules coming Fire Ins. Co., 64 X. Y. 162; above given : Ritchie v. Atkinson, 10 McDermott v. Lycoming Fire Ins. ^ i^Si CONTRACTS. 870 And the fact that he did not read them or know of the conditions is generally immaterial.-* But there may be circumstances under wiiich this general rule should not be applied because they show that the insured or applicant for insurance was misled or not negligent in failing to read the instrument at once or the like.""^ And after liability actually attaches under the policy, the relation between the parties is changed from that of insurer and insured to that of debtor and creditor ; and clauses in the policy which provide that certain acts or omissions prior thereto shall invali- date it are inoperative.^** If an insurance company is in the habit of demanding payment of premiums, its failure to do so may estop it to take advantage of a condition forfeiting a policy for nonpayment, although the policy provides for the payment at cer- tain times." And it has also been held that if a company take notes in payment of premiums this prevents it from forfeiting the Co., 12 J. & S. (N. Y.) 221; Edwards V. Lj'coming &c. ins. Co.. 75 Pa. St. 378; Railway Passenger Assur. Co. v. Burwell, 44 Ind. 4G0; Chamberlain v. Prudential Ins. Co., 109 Wis. 4, 85 N. W. 128, 83 Am. St. 851. See gen- erally as to conditions, Pulaski Mut. Fire Ins. Co. v. Dawson, 87 111. App. 514; Springfield Steam Laundry Co. V. Traders Ins. Co. of Chicago, 151 Mo. 90, 52 S. W. 238, 74 Am. St. 521 ; Norris v. Hartford Fire Ins. Co., 55 S. Car. 450, 33 S. E. 566, 74 Am. St. 765. Where the policy requires in- sured, in the event of a loss, to pro- duce his books and invoices for ex- amination, he must do so, or he can- not recover ; and the fact that he kept no books is not a legal avoidance of the condition. Judgment, Forehand V. Niagara Ins. Co., 58 111. App. 161, reversed. Niagara Fire Ins. Co. v. Forehand, 169 111. 626, 48 N. E. 830. " Herndon v. Triple Alliance, 45 Mo. App. 426; Snider v. Adams Ex- press Co., 63 Mo. 376; Palmer v. Continental Ins. Co., 31 Mo. App. 467; Robinson v. Jarvis, 25 Mo. App. 421 ; Rothschild v. Frensdorf, 21 Mo. App. 318; Brown v. Wabash, St. L. & P. R. Co., 18 Mo. App. 568; Tay- lor v. Fox, 16 Mo. App. 527; Quinlan V. Providence Washington Ins. Co., 133 N. Y. 356, 31 N. E. 31, 28 Am. St. 645. See also, Martin v. Smith, 116 Ala. 639, 22 So. 917. ^ Fitchner v. Fidelity Mut. Fire Assn., 103 Iowa 276, 72 N. W. 530 ; McMaster v. New York Life Ins. Co., 183 U. S. 25, 46 L. ed. 64, 22 Sup. Ct. 10, revg. 99 Fed. 856, 40 C. C. A. 119. And see Cent. R. Co. v. Wie- gand, 79 Fed. 991, 25 C. C. A. 681 ; Hurt V. Wallace (Tex. Civ. App.), 49 S. W. 675. ^ Sevk V. Millers' Nat. Ins. Co., 74 Wis. 67, 41 N. W. 443, 3 L. R. A. 523. And to same effect, Concordia Fire Ins. Co. v. Koretz, 14 Colo. App. 386, 60 Pac. 191; Union Cas- ualty &c. Co. V. Bragg, 63 Kans. 291, 65 Pac. 272 ; Harrington v. Fitchburg Ins. Co., 124 Mass. 126; Browning v. Home Ins. Co., 71 N. Y. 508, 27 Am. Rep. 86, affg. 6 Daly (N. Y.) 522: Brown v. Roger Williams Ins. Co., 5 R. I. 394; Dogge v. Northwestern Nat. Ins. Co., 49 Wis. 501, 5 N. W. 889; Alkan v. New Hampshire Ins. Co.. 53 Wis. 136. 10 N. W. 91. ^ Union Cent. Life Ins. Co. v. Cald- v^ell, 68 Ark. 505, 58 S. W. 355 : Har- rington V. Home Ins. Co., 128 Cal. 531, 58 Pac. 180; Rife v. Union Cent. &'c. Co.. 129 Cal. 455, 62 Pac. 4S; Weisman v. Commercial Fire Ins. Co., 3 Pen. (Del.) 224, 50 Atl. 93: Mutual Life Ins. Co. v. Logan, 87 871 COVEXAXTS AND CONDITIONS. policy, although the policy expressly stipulates that it is to become void for nonpayment of premiums,"'' and this though it may be shown that the notes were unpaid where the policy contained a provision that failure to pay a note would render it void."® Where a condition in a policy provided that the company would not be liable for a loss by "riot," it was held that the breaking of five masked men into a house, who compelled the owner to leave and then burned the building, was a "riot" within the meaning of the policy.^" Receiving what is due as a premium, with knowledge of the facts after the condition as to payment has been broken, is a waiver of forfeiture.^^ Conditions for the benefit of the in- Fed. 637, 31 C. C. A. 172; Reese v. Fidelity Mut. Life Assn., Ill Ga. 482, 36 S. E. 637; Equitable .Xcc. Ins. Co. V. Van Etten. 40 111. App. 232; Ross V. Hawkeye Ins. Co., 83 Iowa 586, 50 N. W. 47 ; Beeman v. Farmers' Pio- neer Mut. Ins. .Vssn., 104 Iowa 83, n N. W. 597, 65 Am. St. 424; New- ton V. Southwestern Mut. &c. Assn., 116 Iowa 311, 90 X. W. li; Elgutter V. Mut. Reserve &c. Assn., 52 La. Ann. 1733, 28 So. 289; Conley v. Washington Casualty Ins. Co., 93 Maine 461. 45 Atl. 508; Jacob v. Omaha Life Assn., 146 Mo. 523, 48 S. W. 462 ; Stilwcll v. Covenant Mut. Life Ins. Co., 83 Mo. App. 215; .Vn- drus V. Fidclitv ^lut. Life Ins. .Xssn., 168 IMo. 151, 67 S. W. 582; Burnham V. Royal Ins. Co., 75 Mo. App. 394; Antes V. State Ins. Co., 61 Xebr. 55, 84 N. W. 412; Houston v. Farmers' Ins. Co., 64 Nebr. 138, 89 N. W. 635; I^IcDougall V. Provident Sav. &c. Soc, 64 Hun (X. Y.) 515, 46 X. Y. St. 502, 19 X. Y. S. 481, revd. 135 N. Y. 551, Zl X. E. 251 ; Lamb v. Pru- dential Ins. Co., 22 App. Div. (X. Y.) 552, 48 X. Y. S. 123; Snvder v. Xed- erland L. Ins. Co., 202 Pa. 161, 51 Atl. 744; Oliver v. Mutual Life Ins. Co., 97 Va. 134, 2,1 S. E. 536; Monger V. Rockincham Home &c. Ins. Co.. 96 Va. 442, 31 S. E. 609. Contra. ^lan- hattan Life Ins. Co. v. Savage's Admr., 23 Ky. L. 483. 63 S. W. 278. ** Michigan Mut. Life Ins. Co. v. Bowes, 42 Mich. 19. 51 X. W. 962. ^ Leeper v. Franklin Ins. Co., 93 Mo. App. 602. 67 S. W. 941. An ofiFer of compromise and pleading same in the answer of the defendant company is a waiver of a condition. W'ildey Casualtv Co. v. Sheppard, 61 Kans. 351, 59 Pac. 651, 47 L. R. A. 656. See also, Concordia F"ire Ins. Co. v. Koretz, 14 Colo. App. 386, 60 Pac. 191. ^"Germania Ins. Co. v. Deckard, 3 Ind. App. 361, 28 X. E. 868. "Arnott v. Prudential Ins. Co., 63 Hun (X. Y.) 628, 44 N. Y. St. 480. 17 N. Y. S. 710. To similar effect, Daft V. Drew, 40 111. App. 266; Conti- nental Ins. Co. v. Miller, 4 Ind. App. 553, 30 X. E. 718; Morrow v. Des Moines Ins. Co., 84 Iowa 256, 51 X. W. 3; DeFrece v. Xational Life Ins. Co., 64 Hun (X. Y.) 635, 46 X. Y. St. 479, 19 X. Y. S. 8, affd. 136 X. Y. 144, Z2 N. E. 556. As to what will or will not constitute a waiver, see gcnerallv. Petit V. German Ins. Co., 98 Fed. 80J ; Live Stock v. Xorthwestern Ins. Co., 7 Kans. App. 179, 53 Pac. 784; and compare Shaffer v. Milwaukee Mech. Ins. Co., 17 Ind. App. 204, 46 X. E. 557. It has been held that an insur- ance agent authorized to solicit busi- ness and issue policies can waive for- feitures of conditions in policy. Woolpert V. Franklin Ins. Co., 42 \V. Va. 647, 26 S. E. 521. But this is not always the case. See post, vol. V, Tit. Insurance. The following rulings have been made on this subject. A condition as to ownership is waived where the insurer had full knowledge at the time of the execution of the policy of the true situation of af- fairs as to the ownership of the prop- crtv. Graham v. .\mcrican Fire Ins. § 1582 CONTRACTS. 872 surer providing for forfeiture or the like are strictly construed against the insurer.^" § 1582. Conditions in insurance policies — Suicide. — There has been considerable difference of opinion as to the effect of sui- cide when the insured is insane, but insurance companies have re- cently inserted in the conditions of their policies words of limita- tion touching suicide, so that the company will not be liable in case the insured died by his own hand, sane or insane. This takes the subject from the domain of controversy, and precludes all liability by reason of the death of the insured by his own act, whether he was at the time a responsible moral agent or not.^^ Thus it has been held that one who shows intelligence enough to employ a rope and hang himself cannot be said to be so unconscious of the result as to prevent the operation of the condition to his policy which nullifies it if he commits suicide, sane or insane;^* Co., 48 S. Car. 195, 26 S. E. 323, 59 Am. St. 707. A condition against a change of ownership does not apply to a mortgage effected upon the prop- erty insured before the policy was executed. Cowart v. Capital City Ins. Co. (Ala.), 22 So. 574. A con- dition that petroleum or any of its products shall not be kept upon the premises does not apply to the use of kerosene in an oil stove for cook- ing purposes. Snyder v. Dwelling House Ins. Co., 59 N. J. L. 544, il Atl. 1022, revg. 34 Atl. 931. Where by statute it is required that no in- surance shall be declared forfeited except by a notice duly addressed and mailed to the person whose life is in- sured, the statutory requirement is complied with by the mailing of the notice and it is not necessary to show that it was received by the in- sured. McConnell v. Provident Life Assur. Soc. of New York, 92 Fed. 769, 34 C. C. A. 663. "Xance v. Oklahoma F. Ins. Co. (Okla.), 120 Pac. 948, 38 L. R. A. (N. S.) 426, and note; post, vol. v, Tit. Insurance. "Zimmerman v. Masonic Aid Assn., 75 Fed. 236; Breasted v. Farm- ers' Loan & Trust Co., 4 Hill. (N. Y.) IX affd. 8 N. Y. 299, 59 Am. Dec. 482, Seld. Notes 114; Bigelow v. Berkshire Life Ins. Co., 93 U. S. 284, 23 L. ed. 918; Pierce v. The Travelers' Life Ins. Co., 34 Wis. 389. See generally, Grand Lodge of Illinois &c. V. Wieting, 168 111. 408, 48 N. E. 59, 61 Am. St. 123 ; Seller v. Economic Life Assn., 105 Iowa 87, 74 N. W. 941, 43 L. R. A. 537; Camp- bell V. Supreme Conclave Imp. Order Heptasophs, 66 N. J. L. 274, 49 Atl. 550, 54 L. R. A. 576; Hall v. Mutual Reser\'e Fund Assn., 19 Pa. Super. Ct. 31 ; Tritschler v. Keystone Mut. Ben. Assn., 180 Pa. St. 205, 36 Atl. 734; Parish v. Mutual Benefit Co., 19 Tex. Civ. App. 457, 49 S. W. 153. See also, Mutual Life Ins. Co. v. Leubrie, 71 Fed. 843, 18 C. C. A. 332, for the rule where the policy does not con- tain a "sane or insane" clause. Cady V. Fidelity & Casualty Co., 134 Wis. 322, 113 N. W. 967, 17 L. R. A. (N. S.) 260, and note. ^"Somerville v. Knights Templars &c. Assn., 11 App. (D. C.) 417, 25 Wash. Law 734; Sabin v. Senate of Nat. Union, 90' Mich. 177, 51 N. W. 202; Streetcr v. Western Union &c. Ace. Soc, 65 Mich. 199, 31 N. W. 779, 8 Am. St. 882. Suicide is a defense and the burden of proof is on the in- surer. Fidelity & Casualty Co. v. Weise, 80 111. App. 499, revd. 182 111. 496, 55 N. E. 540. Compare Cady v. 873 COVENANTS AND CONDITIONS. i;82 and such conditions are generally held to preclude a recover}', although the insured acts in obedience to an insane impulse which has overcome his will.^^ It is also held in many cases, though there is some conllict, not necessary to relieve the insurer from liability that a person taking his own life was conscious of the moral quality or consequence of his act if he knew he was about to so cause his death. ^" But it has been held that the condition does not apply where the death is accidental, and where the in- sured dies under mysterious circumstances which suggest suicide, and that in such a case the burden of proof is on the company to prove suicide, the presumption being that accident caused death.^^ If the condition as to suicide omits to provide for an insane act, then suicide, while insane, does not prevent recovery.^* But the Fidelity &c. Co., 134 Wis. ^22, 113 N. W. 967, 17 L. R. A. (N. S.) 260, and note where the cases on both sides are reviewed and other cases supporting the text are cited. "Mutual Life Ins. Co. v. Kelly, 114 Fed. 268, 52 C. C. A. 154; Haynie v. Knights Templars' & Masons' Life Indemnity Co., 139 Mo. 416, 41 S. W. 461 ; I^illinsj^s v. Accident Ins. Co , 64 Vt. 78, 24 Atl. 656, 17 L. R. A. 89, 2>i Am. St. 913. See also, Riley v. Hart- ford Life &c. Ins. Co., 25 Fed, 315; Seitzinger v. Modern Woodmen &c., 204 111. 58, 68 X. E. 478: Scarth V. Security Mut. Life Soc, 75 Iowa 346. 39 N. W. 658; Hart v. Modern Woodmen, 60 Kans. 678, 57 Pac 936, 72 Am. St. 380; Cooper v. ^lass. Mut. Ins. Co.. 102 Mass. 227, 3 Am. Rep. 451; Adkins v. Columbia Life Ins. Co., 70 Mo. 27. 35 Am. Rep. 410: De Gogorza v. Knickerbocker Life Ins. Co., 65 N. Y. 232; Terry v. Mutual Life Ins. Co., 1 Dill. (U. S.) 403, Fed. Cas. No. 13839, affd. 15 Wall. (U. S.) 580. 21 L. ed. 236; Mutual Life Ins. Co. v. Terry, 15 Wall. (U. S.) 580, 21 L. ed. 236; Chapman v. Republic Life Ins. Co., 6 Biss. (U. S.) 238. "This is the bet- ter rule, in that it gives elTect to the contract made by the parties, and the logical conclusion of the better con- sidered cases." Per Taft, J., in Bill- ings V. Accident Co., 64 Vt. 78, 24 Atl. 656, 17 L. R. A. 89, Zi Am. St. 913. '^ Nelson v. Equitable L. Assn. Soc, 72) 111. App. 133; Scherar v- Pruden- tial Ins. Co., 63 Nebr. 530, 88 N. W. 687, 56 L. R. A. 611. ^' IngersoU v. Knights of the Gol- den Rule. 47 Fed. 272. See also. Home Benefit Assn. v. Sargent, 142 U. S. 691, 35 L. ed. 1160, 12 Sup. Ct. 332. See as to effect of a statute touching suicide, Knights Templar &c. Co. V. Berry, 50 Fed. 511, 1 C. C. A. 561, and Berry v. Knights Temp- lars &c. Co., 46 Fed. 439, which sus- tains validity of statute making void a condition of forfeiture for suicide. Germania Life Ins. Co. v. Ross-Lew- in, 24 Colo. 43, 51 Pac. 488, 65 Am. St. 215; Carnes V. Iowa State Travel- ing Men's Assn., 106 Iowa 281, 76 N. W. 683. 68 Am. St. 306; Inghram v. National Union, 103 Iowa 395, 72 N. W. 559; Travelers' Ins. Co. of Hart- ford V. Nicklas, 88 Md. 470. 41 Atl. 906; Sackberger v. National Grand Lodge &c., 72> Mo. App. 2,?<. Compare Logan V. Fidelitv & Casualty &c. Co., 146 Mo. 114, 47 S. W. 948. '^Mutual Life Ins. Co. v. Leubrie, 71 Fed. 843. 18 C. C. A. Z2,2: Equi- table Life .\ssur. Soc. v. Patcrson. 41 Ga. 338, 5 Am. Rep. 535: Hammers v. Maccabees. 78 111. App. 162; Michi- gan Mut. Life Ins. Co. v. Naugle, 130 Ind. 79, 29 N. E. 393; Northwestern Mut. Life Ins. Co. v. Hazelett, 105 Ind. 212. 4 N. E. 582, 55 Am. Rep. 102; Phillips v. Louisiana Ins. Co. 26 La. Ann. 404, 21 Am. Rep. 549; Mai- § 1583 CONTRACTS. 874 word "insane" need not necessarily be used. Thus the words "suicide felonious, or otherwise" have been held equivalent to "suicide sane or insane," and exempt the company in case of insane suicide.^" The word "suicide" has also been held synony- mous with "dying by one's own hand," in insurance policies. ■*" A full treatment of this general subject will be found in the fifth volume of this work under the title of Insurance, where the au- thorities are more fully cited and reviewed and what are deemed to be the correct doctrines or rules are carefully stated. The purpose here has been to merely illustrate or throw light on the general subject of this chapter by showing some of the rulings of the courts in regard to conditions in insurance policies. § 1583. Examples of conditions precedent — Vendor and purchaser. — In contracts for the sale of land, the conveyance of the estate and the payment of the purchase-money are, in gen- eral, concurrent acts and dependent promises, whether a particular day be appointed for completion or not ; and a tender or readiness and willingness to complete on either side is a condition precedent to liability to complete on the other." Under such contracts the vendor can usually recover the purchase-price when he ten- ders a deed of the land.^" On the one hand, the vendor must per- lory V. Travelers' Ins. Co., 47 N. Y. " Marsden v. Moore, 4 H. & N. 500 ; 52, 7 Am. Rep. 410; Penfold v. Uni- :\Ianby v. Cremonini, 6 Exch. 808; versal Ins. Co., 85 N. Y. 317, 39 Am. Laird v. Pirn, 7 M. & W. 474; Heard Rep- 660; Breasted v. Farmers' Loan v. Wadham, 1 East 619; Baum v. & Trust Co., 8 N. Y. 299, 59 Am. Dec. Grigsby, 21 Cal- 172, 81 Am. Dec. 482; Schultz v. Ins. Co., 40 Ohio St. 153; Bailey v. Lay, 18 Colo. 405, 33 217, 48 Am. Rep. 676; Connecticut Pac. 407; Glos v. Wilson, 198 111. 44. Mut. Life Ins. Co. v. Groom, 86 Pa. 64 N. E. 734: McDole v. Purdy, 23 St. 92, 27 Am. Rep. 689; Phaden- Iowa 277; Phillips v. Skinner, 6 hauer v. Germania Life Ins- Co., 7 Bush (Ky.) 662; Eckford v. Halbert, Heisk. (Tenn.) 567, 19 Am. Rep. 30 Miss- 273; Ransom v. Brown, 63 623n; Mut. Life Ins. Co. v. Terry, Tex. 188; Gilman v. Brown, 1 Mas. 15 Wall. (U. S.) 580, 21 L. ed. 236; (U. S.) 191, Fed. Cas. No. 5441, affd. Lycoming Fire Ins. Co. v. Haven, 95 4 Wheat. (U. S.) 255, 4 L. ed. 564; U. S. 242, 24 L. ed. 473; Manhattan Bayley v. Greenleaf, 7 Wheat. (U. S.) Life Ins. Co. v. Broughton, 109 U. S. 46, 5 L. ed. 393; Baer's Sons Grocer 121, 27 L. ed. 878, 3 Sup. Ct. 99. Co. v. Cutting Fruit-Packing Co., 42 ^Bigelow V. Berkshire Life Ins. W- Va. 359, 26 S. E. 191. Co., 93 U. S. 284, 23 L. ed. 918; "Banbury v. Arnold, 91 Cal, 606, Pierce v. Travelers' Life Ins. Co., 34 27 Pac. 934; Smith v. Mohn, 87 Cal. Wis. 389. 489, 25 Pac. 696. (An averment that *" Borradaile v. Hunter, 5 Man. & the vendor duly performed all the G. 639; Bigelow v. Berkshire Life conditions of the contract to be per- Ins. Co., 93 U. S. 284, 23 L. ed. 918. formed by him up to the time of 875 COVENANTS AND CONDITIONS. § 1 583 form the conditions precedent to his right to demand the pur- chase-price," and, on the other hand, the vendee must comply ^vith the conditions precedent to his right to demand a t onvey- ance,^* Thus, the removal of encumhrances upon the properly may be a condition precedent which the vendor must perform,""^ and the acquisition of a valid title was likewise held such a condi- tion where the vendor did not have title at the time but was to procure it and payment was to be made when he was "able to convey a good title."" So, on the otlier hand, where the contract provided that the purchaser should not only pay a certain amount, but, also, give security fur the balance of the purchase-price, it was held that he must give such security as well as make such pay- ment in order to be entitled to a conveyance. ■*"* Where a lot was orally donated to a person for the purpose of erecting a boarding house thereon, with an express oral stipulation that there should be no liquor sold on the premises, after the boarding-house was erected and the party demanded a conveyance, although there was no agreement that the stipulation touching the sale of liquor should be inserted in the conveyance, it was held that the convey- ance should contain such condition, and that the sale of liquor should be enjoined until the party should accept such a convey- ance/^ So where a written option was given to sell certain real estate for a specified price, conditioned that the purchaser would pay his note given to the vendor for merchandise within six bringing suit is a sufficient averment " Walker v. Sawyer, 34 Ind. App. of the performance of conditions 239, 70 X. E. 540: Appleton v. Chase, precedent.); Wilcoxson v. Stitt. 65 19 Maine 74; Simpson v. Pease, 53 Cal. 596, 4 Pac. 629, 52 Am. Rep. 310; Maine 497: Erickson v. Brandt. 53 Lvman v. Gednev. 114 111. 388, 29 Minn. 10. 55 X. W. 62; Parmentier v. X'. E. 282, 55 Am. Rep. 871 ; Boston \\'heat, 33 Pa. St. 192. See also. V. Xichols, 47 111. 353 ; Lynch v. Jen- Stuvvesant v. Western Mortgage Co., nings, 43 Ind. 276. (The proceeding 22 Colo. 28, 43 Pac. 144. But see to recover the price where a deed is where the vendor had incapacitated tendered is an equitable suit by ven- himself from performing his part of dor for specific performance.) See the contract. Miller v. Whittier, 32 Beach Modern Equity Jurisprudence, Maine 203. § 566 et seq., where many cases are *^McDonough v. Zacharie, 5 La. collected. 247 ; Xeglcv v. Jefters, 28 Ohio St. 90. "Florine v. Best. 2 Bibb. (Ky.) *" Saunders v. Curtis. 75 Maine 493 ; 547; McDonough v. Zacharie. 5 La. Appleton v. Chase. 19 !Maine 74. 247; Burwell v. Jackson. 9 X. Y. -""a Appleton v. Chase. 19 Maine 74. 535. Seld. Xotes 243 ; Xeglev v. Jef- See also. Stuvvesant v. Western Mort. fers, 28 Ohio St. 90; Telfener v. &c. Co.. 22 Colo. 2S. 43 Pac 144. Russ, 162 U. S. 170, 40 L. ed. 930, 16 " Bad River Lumbering &c. Co. v. Sup. Ct. 695. Kaiser, S2 Wis. I60, 51 X. W. 1100. § 1^84 CONTRACTS. 876 months, and also pay the purchase-price within a given time, it was held a condition precedent that the note be paid within the time.** Where plaintiff, a landowner, gave a bond to con- vey on condition that the defendant pay the notes therein men- tioned, it was held that as the vendor has the right of posses- sion until the notes are paid, his act of resuming possession after the vendee's voluntary abandonment of possession of the land has no tendency to show an intention to waive a forfeiture of the bond, but his seeking to enforce payment of the notes does so." § 1584. Examples of provisions held not conditions prece- dent in cases of vendor and purchaser. — ]\Iere matters of in- ducement, not expressed as conditions, will not ordinarily be con- strued or given effect as conditions so as to defeat an estate or prevent it from vesting.^" Payment by the purchaser is not ordi- narily a condition precedent where the covenants as to payment and conveyance are independent,^^ or where, for instance, the conveyance is to be made at a fixed time before payment, or the like."^ So it has been held that where the vendor gives the purchaser an order upon a third person for a deed, such third person having the legal title, and the order contains no condition as to payment, the deed cannot be withheld on the ground that the purchase-money has not been paid ;" and that when a convey- ance is to be made "when called for," without any reference to payment, the purchaser may demand a deed before making pay- ment." The same rule that the performance of one covenant is not ordinarily a condition precedent to performance of another on the other side when they are independent applies in favor of the vendor and a conveyance is not a condition precedent to a demand of payment by him in such cases. ^* *^Schields v. Holback, 30 Nebr. note; also Granfield v. Rawlings 536, 46 N. W. 629. (Iowa), 6 N W. 31 ; Buckingham v. ^'Xiles V. Phinney, 90 Maine 122, Ludlum, 40 N. J. Eq. 422, 2 Atl 265. yi \.\.\ 880 I'Ut conveyance may be a condition ^^nvinton V. Fort, 58 X. Car. 251. precedent to payment in such a case. See also, Ramsey v. Edgefield &c. R. Huff v^ Lawlor 45 "d 80; Honne v. Co 3 Tenn. Ch. 170. Best, 2 Bibb. (Ky.) 547; Burwell v. ^''Simonds V. Bcauchamp, 1 Mo. Jackson 9 N. Y^ 535. 589; Bennet v. Pixley's Exrs., 7 " Owings v. Brown, 5 T- B. Mon. Johns. (X. Y.) 249. See also, Hern- (Ky.) 462. don V. Venable, 7 Dana (Ky.) 371. -Simmons v. Sp™l". 56 N Car 9^ "a See cases cited in last preceding " Perry v. Rice, 10 Tex. 367, Bailey 877 COVENANTS AND CONDITIONS. § 1 585 § 1585. Vendor and purchaser — Miscellaneous. — In Eng- land it is customary for the vendor to furnish an abstract of title and this may be a condition precedent." But it is said that in this country, in the absence of an express stipulation to the con- trary, it is not a condition precedent that the vendor furnish an abstract of title, and that contrary to the English rule, the pur- chaser furnishes his own abstract from the pubhc records. '" This, however, is not the rule in all the states, ^^ and the matter is frequently controlled by agreement, under which the vendor is most often required to furnish the abstract. In such cases, the furnishing of an abstract by him showing a good title is gener- ally made a condition precedent. °^ After a conveyance, the vendor can sue at law to recover the purchase-price. °° And the mere recital of the receipt of the purchase-price in the convey- ance is not contractual in its character, and is only prima facie evidence of the payment of the purchase-money, w^hich may be rebutted by parol evidence.'^'* It has also been held that if a pur- chaser secures possession of a deed by fraud and claims under it, the vendor may ratify the deed and bring an action for the pur- V. Clay. 4 Rand. (Va.) 346. See also, N. E. 844. See also. Allen v. Pock- generally. Sayre v. Craig. 4 Ark. 10, witz, 103 Cal. 85, 36 Pac. 1039, 42 n Am. Dec. 757; McRaven v. Crister, Am. St. 99 (title to be approved by 53 Miss. 542; Andrews v. Aloore, attorney); Smith v. Tavlor, 82 Cal. Tappan (Ohio) 183. 538, 23 Pac. 217; Kane v. Rippey, 24 "Pomerov Specif. Perform., §413; Ore. 338, 2,1 Pac. 936. But compare Williams Real Prop. (5th cd.) 448; Kelsey v. Crowther, 162 U. S. 404, In re Ford, L. R. 10 Ch. Div. 365 ; 40 L. ed. 1017. 16 Sup. Ct. 808. In re Johnson. L. R. 30 Ch. Div. 42. ''Laird v. Pim, 7 M. & W. 474; "Warvelle Vendors, §§ 289, 290; Smith v. Arthur, 110 N. Car. 400, 15 Easton v. Montgomery. 99 Cal. 307, S. E. 197; Niland v. Murphy. IZ 27 Pac. 280, 25 Am. 'St. 123 ; Espy Wis. 326, 41 N. W. 335. See also. V. Anderson, 14 Pa. St. 308. Com- Dikeman v. Arnold, 78 Mich. 455, 44 pare Curtis v. Hawley. 85 111. App. N. W. 407. 429. It has been held that yendee ^2 Warvelle Vendors, Ch. 34; may recover back payments made by Larkinsville Mining Co. v. Flippo, him, \vhere the vendor fails to fur- 130 Ala. 361. 30 So. 358; Harkiess nish an abstract as he agreed to do v. Smith. 115 Ga. 350, 41 S. E. 634; though his title is perfect. Des Smith v. Arthur, 110 N. Car. 400, Moines & N. W. Real Estate & Loan 15 S. E. 197; Rice v. Carter's Admr.. Co. V. Beale. 78 111. App. 40. 22 N. Car. 298 ; Choat v. Wright, 2 "See Chapman v. Lee's Admr., 55 Dev. (13 N. Car.) 289; Alexander v. Ala. 616. McDoniel, 56 S. Car. 252. 34 S. E. "Taylor v. Williams. 2 Colo. App. 405. Consideration may be varied 559, 31 Pac. 504; Kessler v. Pruitt, by parol, Langan v. Iverson. 78 Minn. 14 Idaho 175. 93 Pac. 965; Con- 299, 80 N. W. 1051; Boren v. Boren, stantine v. East, 8 Ind. App. 291, 35 29 Tex. Civ. App. 221, 68 S. W. 184. § I5S5 CONTRACTS. 8/8 chase-price.''^ As long as a contract for sale of land remains ex- ecutor}% a purchaser may reclaim the money that he has paid for the property if the title proves defective, or he may defend against a claim for the purchase-money. But when it is once executed and the deed delivered, then the purchaser has received full con- sideration for his promise. That consideration is such title as the vendor can convey to him, and no other, and ordinarily, at least, he is absolutely without remedy either at law or in equity, unless the deed contains covenants of title. He cannot reclaim money that he has paid and he cannot defend against a claim for the purchase-price." Where "at the time of the purchase of a piece of real estate it was contemplated by the purchaser that cer- tain municipal improvements then going on might cause damage to the property, therefore a conditional note for part of the pur- chase-money was given, payable 'provided no damage be done' to the property at any time prior to a specified date," it was held that it was incumbent on the vendor to show affirmatively that no damage was done to the property by the improvements ; that if damage was done, but, on the whole, the property was increased in value at the expiration of the period during which the note was to run, the plaintiff, the vendor, was entitled to recover, and the general rise of property in the neighborhood was not to be considered in deciding whether the property was really damaged or benefited.*'^ As a general rule, if the purchase-money is to be paid upon an appointed day, and the time appointed for the con- veyance will not, or may not, arrive until after that day, the con- veyance is not a condition precedent to the payment, and it is sufficient that the vendor be able and willing to convey according to the contract to entitle him to claim the purchase-money."^ <^ Smith V. Arthur, 110 N. Car. 400, 362, 35 S. E. 715, 49 L. R. A. 176; 15 S. E. 197. Turner v. Howell, 21 Ky. L. 979, 53 "' McLeod V. Barnum, 131 Cal. 605, S. W. 643 ; Brokaw v. Duffy, 165 N. 63 Pac. 924; Bletz V. Willis, 8 Mackcy Y. 395, 59 N. E. 196; Nathans v. (D. C) 449; Horner v. Lowe, 159 Steinmeyer, 57 S. Car. 386, 35 S. E. Tnd. 406, 64 N. E. 218; Refeld v. 733; Renshaw v. First Nat. Bank Woodfolk, 22 How. (U. S.) 318, 16 (Tenn.), 63 S. W. 194. Contra in L. ed. 370; Noonan v. Lee, 2 Black, case of warranty deed. Swope v. (U. S.) 499, 17 L. ed. 278; Patton v. Missouri Trust Co., 26 Tex. Civ. App. Taylor, 7 How. (U. S.) 132, 12 L. 133, 62 N. W. 947. ed. 637. See also. Fields v. Clay- "'PActz v. Wilh's, 19 D. C. 449. ton, 117 Ala. 538, 23 So. 530, 67 Am. "^ Pordage v. Cole, 1 Wms. Saund. St. 189; Home v. Rogers, 110 Ga. 319i; Yates v. Gardiner, 20 L. J. 879 COVENANTS AND CONDITIONS. i;86 § 1586. Conditions as to arbitration — Waiver. — A provi- sion in a contract for the i)aynicnt of money ui)on a contingency that the amount to be ])ai(l shall be submitted to arbitration, and that such award shall be final as to the amount, is a valid stipu- lation.*^^ And there are many cases which hold that, if the con- tract further provides that no action shall be maintained upon it until after such an award, then the award becomes a condition precedent to the right of action.''" But wdien no such condition is expressed in the contract, or implied from its terms, the author- ities are agreed that a provision for submitting the amount to arbitration is collateral and independent ; and that, while a breach of such a provision may support a separate action, it cannot be pleaded in bar to an action on the principal contract.*^^ There is some conflict in the authorities as to when such conditions are precedent or merely optional.''^ But the authorities are agreed that whether such conditions be absolute and precedent, or merely optional, they may be waived. Thus, in an action on a policy providing that, in case of disagreement as to the loss, it should be ascertained by appraisers, and that no action should be maintained until after full compliance with the policy, it appeared that, the appraisers having failed to agree, the company adjusted the loss, Exch. 327; Dicker v. Jackson, 6 C B. 103 ; Bolton v. Hulins, 91 111. App 350, revel. 195 111. 384. 63 N. E. 143 ""Wood Insurance (2d ed.), §§ 456 457; May Insurance (4tli ed.), § 493 Poppers V. Knight, 69 111. App. 578 Wolff V. Liverpool Ins. Co., 50 N. J L. 453, 14 Atl. 561; Weggner v, Greenstine, 114 Alich. 310, 72 N. W 170; Downing v. Lee, 98 Mo. App 604. 12> S. W. 721; Grady v. Home Fire &c. Ins. Co., 27 R. I. 435, (^l Atl. 173. 4 L. R. A. (N. S.) 288 and note; United States v. Robinson, 9 Pet. (U. S.) 319, 9 L. ed. 142. But see contra. State v. North American Land &c. Co., 106 La. 621, 31 So. 172. As we have elsewhere shown, this doctrine is not unlimited. See also, vol. V, Tit. Insurance. '"Gaither v. Douehcrtv, 18 Kv. L. 709, 38 S. W. 2: Fisher v. Alerchants' Ins. Co.. 95 Maine 486. .50 Atl. 282, 85 Am. St. 428; Gradv v. Home Fire £:c. Ins. Co., 27 R. I. 435, 63 Atl. 173, 4 L. R. A. (N. S.) 288, and numerous other cases cited in opinion and note; Rounds V. Aiken Mfg. Co., 58 S. Car. 299, 36 S. E. 714; Florida Athletic Club v. Hope Lumber Co., 18 Tex. Civ. App. 161, 44 S. W. 10; Hamilton V. Liverpool &c. Ins. Co., 136 U. S. 242, 34 L. ed. 419, 10 Sup. Ct. 945; Martinsburgh & P. R. Co. v. March, 114 U. S. 549. 29 L. ed. 255, 5 Sup. Ct. 1035; United States v. Robeson, 9 Pet. (U. S.) 319, 9 L. ed. 142. "^Hamilton v. Home Ins. Co., 137 IT. S. 370, 34 L. ed. 708, 11 Sup. Ct. 133. ""Wood Insurance, 1015; Kahn- weiler v. Phoenix Ins. Co., 57 Fed. 562, revd. 67 Fed. 483, 14 C. C. A. 485 ; Nurnev v. Fireman's &c. Ins. Co., 63 Mich. 633, 30 N. \V. 350, 6 Am. St. 338; Wright v. Susquehanna &c. Ins. Co., 110 Pa. St. 29, 20 Atl. 716; Phoenix Ins. Co. v. Badger, 53 Wis. 283, 10 N. W. 504. § 1587 CONTRACTS. 880 and requested plaintiff to make proof thereof in such amount, which request was compUed with. It was held a waiver by the company of the provisions for appraisal.*^® But failure of arbi- tration without fault of the insurance company where there is nothing to show that it could not be had, has been held not to abrogate such a condition precedent."" § 1587. Conditions and acts to be performed in sales of goods. — In contracts for the sale of goods the delivery of the goods and payment of the price are presumptively intended to be concurrent acts. The law is that nothing to the contrary ap- pearing the presumption is that a cash sale is intended.^^ Readi- ness and willingness on both sides, at the proper time for com- pletion, to perform their respective parts of the contract are mu- tual conditions precedent.'" It is not necessary, however, that the buyer should actually tender the money, or that the seller should make an actual tender of the goods, in order to satisfy the condition of readiness and willingness to complete." But if the contract expressly provides that payment is to be after deliv- ** Manchester Assur. Co. v. Koer- Faber v. Hougham, 36 Ore. 428, 59 ner, 13 Ind. App. 372, 40 N. E. 1110, Pac. 547, 1111; Fletcher v. Cole, 23 41 N. E. 848, 55 Am. St. 231. See Vt. 114. also, Latrobe v. Winans, 89 Md. 636, "Benjamin Sales (6th Am. ed. 43 Atl. 829. Contra, Bales v. Gil- Bennett), § 707 and cases cited, bert, 84 AIo. App. 675. See generally, " Waterhouse v. Skinner, 2 B. & vol. V, Tit. "Insurance." P. 447; Boyd v. Lett, 1 C. B. 222; "Grady v. Home Fire &c. Ins. Co., Rawson v. Johnson, 1 East 203; 27 R. I. 435, 63 Atl. 173, 4 L. R. A. Jackson v. Allaway, 6 C. B. 942; (X. S.) 288. Boiling v. Kirby, 90 Ala. 215, 7 So. "Staunton v. Wood, 16 Q. B. 638; 914, 24 Am. St. 789; Hull v. Pitrat, Bergan v. Magnus, 98 Ga. 514, 25 S. 45 Fed. 94; Aultman v. Henderson, E. 570; Hough v. Rawson. 17 111. 32 111. App. 331; Morgan v. East, 126 588; Morton v. Clark, 181 Mass. 134, Ind. 42, 25 N. E. 867, 9 L. R. A. 558; 63 N. E. 409 ; Ryder v. Hathaway, 21 Daugherty v. Fowler, 44 Kans. 628, Pick. (Mass.) 298; McArthur Co. v. 25 Pac. 40, 10 L. R. A. 314; Byam Old Second Nat. Bank, 122 Mich. 223. v. Hampton, 57 Plun (N. Y.) 585, 32 81 N. W. 92; Carter v. Cream of N. Y. St. 771, 10 N. Y. S. 372 Wheat Co., 73 Minn. 315, 76 N. W. Thompson v. Leslie, 60 Hun (N. Y.) 55; Whitman &c. Assn. v. National 579, 39 N. Y. St. 47, 14 N. Y. S. 472 &c. Assn., 45 Mo. App. 90; South- Upham Manufacturing Co. v. Sanger, western Freight & Cotton Press Co. 80 Wis. 34, 49 N. W. 28. As else V. Stanard, 44 Mo. 71, 100 Am. Dec. where shown, "tender" in this con- 255; Morris v. Rexford, 18 N. Y. nection is used in a somewhat differ- 552; Palmer v. Hand, 13 John. (N. ent sense from that in which it is Y.) 434, 7 Am. Dec. 392; Haggerty used where an actual tender of money V. Palmer, 6 Johns. Ch. (N. Y.) 437; in payment of an ordinary debt is Keeler v. Field, 1 Paige (N. Y.) 312; required. See post, ch. 44. Simmons v. Green, 35 Ohio St. 104; 88l COVENANTS AND CONDITIONS. § 1 588 ery, it has been held that an actual delivery, and not mere readi- ness and willingness to deliver, is a condition precedent/* § 1588. Sales of goods — Conditions to passing of title. — It has been held that where personal property is contracted to be sold upon condition that it shall be delivered at a particular place, it is subject to attachment at the suit of the creditors of the vendor until it is delivered in accordance with the condition of the con- tract.'' And where property is sold on approval, it is generally a condition precedent to the passing of title that the buyer in some way signify his approval before the title passes."® So, there are many instances where goods must be weighed, measured or the like before the property will pass." Where goods are to be delivered at a particular place by the seller, delivery to a carrier to take to such place is generally considered delivery to him as the seller's bailee or agent to perform for him the act of delivery in execution of his contract, and until delivery is consummated in such a manner as to be effectual between seller and buyer, the goods are at the seller's risk.'^ But, in other instances, delivery to the carrier for the buyer is, at least, prima facie deemed to be a delivery to the buyer.''® The carrier is not, however, the buyer's agent to inspect and examine the goods and accept them as com- '* Benjamin Sales (Bennett's 6th 227; Turley v. Bates. 2 H. & C. 200: Am. ed.), § 677; Eppens v. McGrath, Foster v. Ropes, 111 Mass. 10. See 18 N. Y. St. 927, 3 X. Y. S. 213. vol. v, Tit. Sales, for further consid- " Johnson v. Bailey. 17 Colo. 59. 28 eration and citation of authorities; Pac 81; Rhoades v. Cotton, 90 Maine also note in 26 L. R. A. (N. S.) 1 453, 38 Atl. 367. But see Hill v. et seq. Fruita Mercantile Co., 42 Colo. 491, "Benjamin Sales (Bennett's ed.), 94 Pac. 354, 126 Am. St. 172 (where §§ 181. 693; Dcvine v. Edwards. 101 the goods were sold at the seller's 111. 138; McXeal v. Braun. 53 X. J. place and after delivery to the car- L. 617. 23 Atl. 687, 26 Am. St. 441 : rier were held subject to attachment Bellefontaine v. Vassaux, 55 Ohio St. as goods of the buyer). 323; McLaughlin v. Marston, 78 Wis. "Ellis V. Mortimer, 1 B. & P. (N. 670, 47 N. W. 1058. R.) 257; Glasscock v. Hazell. 109 N. "Main v. Jarrett. 83 Ark. 426. 104 Car. 145, 13 S. E- 789. See also, S. W. 163. 119 Am. St. 144; Hill v. Mowbrav v. Cadv, 40 Iowa 604; Wil- Fruita Mercantile Co.. 42 Colo. 4^1, son V. Stratton,"47 Maine 120, 126; 94 Pac. 354. 126 Am. St. 172. 175. Stone V. Browning, 68 N. Y. 598; citing Elliott R. R. (2d ed.).§ 1414; Chamberlain v. Smith, 44 Pa. St. 431 ; State v. Rnsenbemer, 212 Mo. 648, Hall & Brown Woodworking &c. Co. Ill S. W. 509, 126 Am. St. 580; State V. Brown. 82 Tex. 469, 17 S. W. 715; v- Mullin. 78 Ohio St. 358, 85 X. E. and post. vol. v. Tit. Sales. 556. 18 L. R. A. (N. S.) 609, 125 " Ross V. Hannan, 19 Can. Sup. Ct. Am. St. 710. 56 — CoNTR.^cTS, Vol. 2 § 1589 COXTRACTS. 882 plying with the contract,^** and in a contract of sale by sample, it is a condition precedent implied that the bulk shall correspond with the sample and that the buyer shall have a fair opportunity, by examining the goods, to satisfy himself that they are in accord- ance with the contract.*^^ § 1589. Sale of goods to arrive. — Contracts for the sale of goods "to arrive by," or "on arrival by," or "expected to arrive by," a certain ship named are held conditional, the words "to arrive," or other ecjuivalent words, not importing a warranty that the goods will arrive, and the obligation to perform the contract by an actual transfer of the property is, therefore, in the absence of other words showing a contrary intent, contingent upon its arrival; and the condition is said to be a double one, namely, the arrival of the ship, with the goods on board. '-^^ This rule has been applied in Ohio*- and New Jersey^^ in leading and illus- trative cases. In the former case there was a sale of goods "to arrive by the 15th of November." This was held to create a con- dition precedent, that if the salt did not arrive there was no sale, "Keiwert v. Meyer, 62 Ind. 587, 30 ble v. Morgan, 1 Woods (U. S.) 406, Am. Rep. 206 ; Schwartz v. Church Fed. Cas. 3881 ; The Tybee, 1 Woods of the Holy Cross, 60 Minn. 183, 62 (U. S.) 358; The Barque Iddo Kim- N. W. 266; Salomon v. King, 63 N. ball, 8 Ben. (U. S.) 297; The Eddy, 5 J. L. 39. 42 Atl. 745; Pierson v. Wall. (U. S.) 481, 18 L. ed. 486; Crooks, 115 N Y. 539, 22 N. E. 349, Richardson v. Goddard, 23 How. (U. 12 Am. St. 831; Pope v. Allis, 115 U. S.) 28, 16 L. ed. 412. And compare S. 363, 29 L. ed. 393, 6 Sup. Ct. 69. Graves v. Hartford &c. Steamboat See also, ante, § 1338. Co., 38 Conn. 143, 9 Am. Rep. 369 ; '^ Benjamin Sales (6th ed. Ben- Moses v. Boston & M. R. Co., 32 N. nett), p. 563; Startup v. MacDonald, H. 523, 64 Am. Dec. 381. 6 Man. & G. 593; Isherwood v. Whit- "^ Rogers v. Woodruff, 23 Ohio St. more, 11 M. & W. 347; Magee v. 632, 13 Am. Rep. 276. And see to Billingsley 3 Ala. 679; McNeal v. same effect, Shields v. Pettee, 2 Sand. Braun, 53 N. J. L. 617, 23 Atl- 687, (N. Y.) 262, affd. 4 N. Y. 122; Rus- 26 Am. St. 441; Croninger v. Crocker, sell v. Nicoll, 3 Wend. (N. Y.) 112, 62 N. Y. 151; Luger Furniture Co. 20 Am. Dec. 670; Benedict v. Field V. Street, 6 Okla. 312, 50 Pac. 125; 16 N. Y. 595; Boyd v. Siffkin, 2 Pope V. Allis, 115 U. S. 363, 29 L. ed. Camp. 326; Idle v. Thornton, 3 Camp. 393, 6 Sup. Ct. 69. See generally, as 274; Lovatt v. Hamilton, 5 M. & W. to reasonable time for the examina- 639; Alewyn v. Pryor,^^ Ryan ir tion and as to the liability of the car- Moody 406. The words to arrive rier, Bourne v. Gatliffe. 3 Man. & G. and "on arrival are considered as 643; Price v. Powell. 3 N Y 322; synonymous. Johnson v. MacDonald, Dunham v. Boston & A. R. Co.. 46 9 M. & W. 600. Hun (N. Y.) 245, 11 N. Y. St. 472; "Rogers v. Woodruff, 23 Ohio St. Miller v. Steam Nav. Co., 10 N. Y. 632, 13 Am. Rep. 276. 431. Seld. Notes 64T Bradstreet v. '" Neldon v. Smith, 36 N. J. L. 148. Heron, Abb. Adm. (U. S.) 209; Dib- 883 COVENANTS AND CONDITIONS. § 1 59O although not to come by ship. The latter case exempts the seller who contracted to deliver coal "provided he could secure it" from a railroad company by a certain date. His failure to ob- tain it within the time was a defense. It has been held that where the evident purpose of the parties is that a shipment of fruit shall be made at a particular date so that the vendee shall have the advantage of their sale during the holiday season ship- ment at that date is a condition precedent.** And where the language of the contract asserts the goods to be on board of the vessel named, there is a warranty that the goods are on board, and if the vessel arrives, the seller's duty to deliver is fixed. *° A sale of goods "on arrival of" a ship named has also been held an absolute one, and not excused, although the goods are not on board. ^° In sales of goods "to arrive" the condition is often made that the Vendor shall give notice of the name of the ship on which the goods are expected to arrive as soon as it becomes known to him; and it is held that the naming of the ship is then a condition precedent to the liability of the buyer to accept the goods." § 1590. Sales of goods — Delivery by instalments. — As a general rule, although there is some conflict among the author- **Ridlands Orange Growers' Assn. *'Hale v. Rawson, 4 C. B. (N. S.) V. Gorman, 76 Mo. App. 184. If the 85; Dike v. Reitlinger. 23 Hun (N. ship has goods on board consigned Y.) 241. See Browne v. Paterson, to another person, but of the same 36 App. Div. (N. Y.) 167. 55 N. Y. description, the condition is not satis- S. 404, revd. 165 N. Y. 460, 59 N. E. fied and there is no sale. Gorrisscn 296. V. Perrin. 2 C. B. (N. S.) 681. The "Busk v. Spence, 4 Camp. 329 goods must answer the description, (holding a delay of eight days after and if they do not substantially do knowledge of name by vendor dis- this. although of the kind and quan- charged buyer from contract) ; titv, the buyer may reject. Vernede Graves v. Legg, 9 Exch. 709; Gilkes V. 'Weber, 1 H. & N. 311; Shields v. v. Leonino, 4 C. B. (N. S.) 485. In Pettee, 2 Sandf. (N. Y.) 262, affd. 4 contracts to ship a cargo of sugar N. Y. 122. If the buyer takes any where the amount of the cargo is portion and consumes it before dis- specified to be from seven liundred covering that the goods are not the to eight hundred tons, it has been same in quality bargained for, while held that the sellers, the price of he may rescind the contract, he must sugar having advanced after the sale, pay for the portion consumed. Love may select the alternative which is V. Barnesvillc Mfg. Co.. 3 Pennew. the least burdensome to themselves. (Del.) 152. 50 Atl. 536; Shields v. and deliver seven hundred tons only. Pettee. 2 Sandf. (N. Y.) 262, affd. althougli the vessel was loaded with 4 N. Y. 122. eight hundred and forty-nine tons. "Gorrisscn v. Perrin, 2 C. B. (N. St"andard Sugar Refinery v. Castano, S.) 681. 43 Fed. 279. I590 CONTRACTS. 884 ities, in contracts for the sale and delivery of goods by instal- ments at stated periods, the seller is bound to deliver the quantity stipulated, and has no right either to compel the buyer to accept a less quantity or to require him to select part of a greater quan- tity ; and a default in delivery of an instalment, in respect of quan- tity or quality, gives the buyer, prima facie at least, the right to repudiate the whole contract.**^ The parties can, however, by express provisions, stipulate that a default as to one delivery shall not put an end to the contract.^** So, on the other hand, the readiness of the buyer to accept an instalment has been said ^'Norrington v. Wright, 115 U. S. 188, 29 L. ed. 366, 6 Sup. Ct. 12, a leading case in which all the authori- ties are reviewed. A contract had been made to sell 5,000 tons of iron rails, the same to be shipped from Europe delivered at Philadelphia, at the rate of about 1,000 tons per month. One month 400 tons were shipped and another 885 tons were shipped. It was held that this was a sufficient breach of the contract by the seller so that the buyer might repudiate the whole contract. "In the contracts of merchants, time is of the essence. The time of shipment is the usual and convenient means of fixing the probable time of arrival, with a view of providing funds to pay for the goods, or of fulfilling contracts with third persons. _ A statement descriptive of the subject- matter, or of some material incident, such as the time or place of shipment, is ordinarily to be regarded as a war- ranty in the sense in which that term is used in insurance and maritime law, that is to say, a condition prec- edent, upon the failure or non-per- formance of which the party ag- grieved may repudiate the whole contract." Per Gray, J., 203. Cleve- land Rolling-Mill v. Rhodes, 121 U. S. 255, 30 L. ed. 920, 7 Sup. Ct. 882 ; Greenbrier Lumber Co. v. Ward, 36 W. Va. 573, 15 S. E. 89. (This case also holds that the first instalment may be returned by the seller if the latter deliveries are not sufficient in quantity to fulfil the contract re- quirements.) See Pope v. Porter, 102 N. Y. 366, 7 N. E. 304, a sale of iron to arrive, "500 tons of Coltness pig-iron * * * to be due here in April next; 500 tons of Caulder pig- iron * * * to be due here in March next." Plaintiffs made default in the March instalment, but were ready to perform the April one. It was held that defendants had a right to re- scind. To the same effect. Hill v. Blake, 97 N. Y. 216; Russell v. Nic- oll, 3 Wend. (N. Y.) 112, 20 Am. Dec. 670; Catlin v. Tobias, 26 N. Y. 217, 84 Am. Dec. 183 (holding that the breach not only justifies repudia- tion of contract by buyer, but that such breach is a bar to an action by the vendor for the price of the goods delivered, where the buyer expends the goods delivered in the business, thinking that the seller will comply with the terms of the contract, a cer- tain quantity a month) ; The Elting Woolen Co. v. Martin, 5 Daly (N. Y.) 417; King Philip Mills v. Sam- uel Slater & Sons, 12 R. I. 82, 34 Am. Rep. 603. See also, Mersey Steel &c. Co. V. Naylor, 9 L. R. App. Cas. 434 ; Bollman v. Burt, 61 Md. 415; Win- chester V. Newton, 2 Allen (Mass.) 492; contra, Jonassohn v. Young, 4 B. & S. 296; Coddington v. Pale- ologo, L. R. (1867) 2 Ex. 193; Blackburn v. Reilly. 47 N. J. L. 290, 1 Atl. 27, 54 Am. Rep. 159; Lucesco Oil Co. V. Brewer, 66 Pa. St. 351; Shinn V. Bodine, 60 Pa. St. 182, 100 Am. Dec. 560; Morgan v. McKee, 11 Pa. St. 228; Scott v. Kittanning Coal Co., 89 Pa. St. 231, Z2> Am. Rep. 753. *• Simpson v. Crippin, L. R. 8 Q. B. 14. 88 = COVEN'ANTS AND CONDITIONS. § 1590 to be a condition precedent to the delivery of subsequent instal- ments, and his failure to accept one instahnent will discharge the seller from delivering subsequent instalments.^" And certainly a positive refusal of the buyer without cause to receive or pay for an instalment to be separately paid for ordinarily relieves the seller from forwarding subsequent instalments,"^ although, unless a different intention appears, a mere omission or failure to pay for an instalment at the proper time may not entitle the seller to treat the contract as repudiated if there is nothing to show any intention to repudiate and the buyer is desirous and able to complete the contract."" If, however, a default in payment be made, with the declared intention of repudiating the contract, the seller is discharged."^ Where an agreement is made to fur- nish an article of a given description and the description is neces- sary to the identity of the article, it is a condition precedent and if the article delivered is not of the description of the one ordered, *^ Haines v. Tucker & Co., 50 N. H. 307. And see cases in preceding note, which support the converse of this proposition. Hoare v. Rennie, 5 H. «& N. 19. Contra, Simpson v. Crippin, L. R. 8 Q. B. 14; Roper v.. Johnson, L. R. 8 C. P. 167. "' Withers v. Remolds, 2 B. & Ad. 882; Bloomer v. Bernstein, L. R. 9 C. P. 588; Edward Hines Lumber Co. V. Alley. 11 Fed. 603, 19 C. C. A. 599, 43 U. S. App. 169; Bradley V. King. 44 111. 339; Stephenson v. Cady, 117 Mass. 6; Kokomo Straw Board Co. v. Inman, 134 N. Y. 92. 31 N. E. 248. See also, Hull Coal & Coke Co. V. Empire Coal &c. Co., 113 Fed. 256. 51 C. C. A. 213; Quar- ton V. American Law Book Co., 143 Iowa 517. 121 N. W. 1009. 32 L. R. A. (N. S.) 1 and note; Ross Mee- han Foundry Co. y. Rover Wheel Co., 113 Tenn. 370, 83 S. \V. 167, 68 L. R. A. 829, 3 Ann. Cas. 898. "• Mersey Steel &c. Co. v. Naylor, 9 App. Cas. 434; Freeth v. Burr, L. R. 9 C. P. 208; Erwin v. Harris, 87 Ga. Ill, 13 S. E. 513; Hime v. Klasey, 9 111. App. 166; Hansen v. Consumers' Steam-IIcating Co., 12> Iowa n, 34 N. W. 4^5; Beatty v. Howe Lumber Co., 11 Minn. 272, 79 N. W. 1013; Otis v. Adams, 56 N. J. L. 38, 27 Atl. 1092; Pierson v. Duncan, 162 Pa. St. 187, 29 Atl. IIZ ; Norrington v. Wright, 115 U. S. 188, 210, 29 L. ed. 366, 6 Sup. Ct. 12. See also, Quarton v. .Vmerican Law Book Co., 143 Iowa 517, 121 N. W. 1009, 32 L. R. A. (N. S.) 1 and note. Gerli V. Poidebard &c. Co., 57 N. J. L. 432, 31 Atl. 401, 30 L. R. A. 61, 51 Am. St. 611. °^ See Bloomer v. Bernstein, L. R. 9 C. P. 588, where it is held that it is a question of fact whether the cir- cumstances of nonpayment are such as to give the seller reasonable ground for believing that the buyer will be unable to pay for future de- liveries, and, if so, the seller may re- scind. Keeler v. Clifford, 165 111 544. 46 N. E. 248; Stephenson v Cady, 117 Mass. 6; Star Glass Co. v Morev, 108 Mass. 570; Winche.ster V. Newton, 2 Allen (Mass.) 492; Granite Mills v. Keystone Oil Cloth Co., 15 Mont. Co. Law (Pa.) 36 Webby. Stone. 24 N. H.282; Stocks- dale v. Schuvler, 55 Hun (N. Y.) 610, 29 N. Y.'St. 380, 8 N. Y. S. 813, aflfd. 130 N. Y. 674, 29 N. E. 1034; Fletcher v. Cole, 23 Vt. 114. See also, Peters Grocery Co. v. Collins Bag Co., 1'2 N. Car. 174, 55 S. E. 90. § 1 591 CONTRACTS. 886 the purchaser generally has the right to reject it and to rescind the contract in toto. Thus, where an order is given for a monu- ment with certain inscriptions, among wliich are the name, date of death and age of the deceased, and the manufacturer omits from the inscription the age, the orderer has a right to reject the monument and absolutely rescind the agreement.®* § 1591. Sales — Instalments — Review of cases. — The lead- ing case in point is Mersey Steel Company v. Naylor,°^ decided by the House of Lords, to the effect that the failure of the buyer to pay for the first instalment of the goods upon delivery does not, unless the circumstances evince an intention on his part to be no longer bound by the contract, entitle the seller to rescind the contract and to decline to make further deliveries under it.®° But the opinion of the Lords, incidentally in deciding the case, in substance lays down the rule that default by one party in making particular payments or deliveries will not release the other party from his duty to make the other deliveries or payments stipulated in the contract, unless the conduct of the party in default be such as to evince an intention to abandon the contract or a design no longer to be 'bound by its terms. This rule leaves the party com- plaining of a breach to recover damages for his injury on the normal principle of compensation, without allowing him the ab- normal advantage that might enure to him from an option to rescind the bargain. It also accords with the ancient doctrine laid down by Sergeant Williams in his notes to Pordage v. Cole," that where a covenant goes only to part of the consideration on both sides, and a breach of such covenant may be paid for in damages, it is an independent covenant, and an action may be maintained for a breach of the contract without averring per- formance. It is inapplicable where the parties have expressed ** American White Bronze Co. v. '^ ATersey Steel &c. Co. v. Naylor, Gillette, 88 Mich. 231, SO N. W. 136, 9 L. R. App. Cas. 434. 26 Am. St. 286; Benj. Sales, § 1349. ""Cited with approval on the pomt See also, Nichol v. Godts, 10 Exch. decided in Norrington v. Wright, 191; Bowes v. Shand, 2 L. R. App. 115 U. S. 188, 29 L. ed. 366, 6 Sup. Cas. 455; Gould v. Stein, 149 Mass. Ct. 12. 570, 22 N. E. 47, 5 L. R. A. 213, 14 "Pordage v. Cole, 1 Wms. Saund. Am. St. 455; note in 38 L. R. A. (N. 319i. S.) 539. 887 COVENANTS AND CONDITIONS. § 1 592 their intention to make performance of a stipulation toucliing a part of a bargain a condition precedent to the continuing obhga- lion of the contract; and pecuhar cases might arise where the courts would infer such an intention from the nature and cir- cumstances of the bargain itself, cases in which the courts would see that the partial stipulation was so important, so went to the root of the matter, to use a phrase of Lord Blackburn,"* as to make its performance a condition of the obligation to be proved in the contract. Accordingly, the rule as laid d(jwn by this case has been approved by some of the American courts, which hold that if the contract is not entire, a failure in one delivery will not, without more, justify rescission."" But the weight of authority in America is that the doctrine of this case is, in some respects, inapplicable in cases of deliveries by instalments, and it is gener- ally held that where the contract is entire, default either in de- livery or acceptance of one instalment usually or prima facie gives cause of discharge from contract.^ § 1592. Insolvency of buyer. — Insolvency of the buyer may justify the seller in refusing to deliver any instalments until past instalments are paid for.- But the mere insolvency of one of the parties to a contract of sale is not equivalent either to a rescis- sion or a breach. It simply relieves the seller from his agreement to give credit, and payment may be substituted.^ In such a case it has been held that the seller, notwithstanding he may have agreed to allow credit for the goods, is not bound to deliver any ''Poussard v. Spiers, L. R. 1 Q. cases \t\ preceding notes and also B Div 410 compare Blackburn v. Reillv, 47 X. '^* Drake v. Goree, 22 Ala. 409; J. L. 290. 1 Atl. 27, 54 Am. Rep. 159. More V. Bonnett. 40 Cal. 251. and == Freeth v. Burr, L. R. 9 C P. 208; see other cases collected in Norring- Bloomer v. Bernstein. L. R. 9 C. P. ton V. Wright, 115 U. S. 188, 198, 29 588; New England Iron Co. v. Gil- L. ed 366, 6 Sup. Ct. 12; Cole v. bert (Metropolitan) Elevated R. Co., Cheovenda. 4 Colo. 17; Bradley v. 91 N. Y. 153; Pardee v. Kanady, 100 King, 44 111. 339; Dibol v. Minott. N. Y. 121. 2 N. E. 885; Mann v. Sals- 9 Iowa 403; Dwinel v. Howard, 30 berg. 17 Pa. Super. Ct. 280. IMaine 258; Dugan v. .Anderson. 36 * Pardee v. Kanady. 100 N. Y. 121, Md %7 11 \m Rep. 500; Allen v. 2 N. E. 885. See also, Florence Min. Mckibbin, 5 Mich. 449; Dunlap v. Co. v. Brown. 124 U. S. 385, 31 L. Petrie's Exrs.. 35 Miss. 500; Coleman ed. 424, 8 Sup. Ct. 531. Contra, Mor- V. Huclson, 2'Sneed (Tenn.) 463. gan v. Bain, L. R. 10 C. P. 15. Com- ^Norrington v. Wright, 115 U. S. pare Mess v. Duflfus (1901), 6 Com. 188, 29 L.^ed. 366, 6 Sup. Ct. 12. See Cas. 165. 1593 CONTRACTS. 888 more goods under the contract until the price of the goods not yet deHvered is tendered to him ; and if a debt is due to him for goods already delivered, he is entitled to refuse to deliver any more till he is paid the debt due for those already delivered.* If goods are sold on credit, it is an implied condition of the contract that the buyer shall keep his credit good, and the seller is not bound to deliver the goods if the buyer is insolvent; and the fact that the buyer has given his note for the price does not change the rule.^ To justify a seller in refusing to give credit and to deliver instal- ments on this ground the buyer must be insolvent. By the term "insolvent" is usually meant inability to pay debts as they become due in the ordinary course of business.*' But it is said that a man cannot be said to be insolvent merely because he has not money enough on hand to meet his liabilities as they fall due in the course of trade.^ § 1593. Conditional sales. — A conditional sale is one w^hich depends for its validity or is to take effect on the performance or fulfilment of some condition, or, more specifically, it is a sort of sale in which the transfer of title to the thing sold to the purchaser, or his retention of it, is made to depend upon some* condition.^ A sale of personal property on credit, with delivery of possession to the purchaser, under a distinct agreement that the title shall not pass from seller to buyer until the price is paid, is *Ex parte Chalmers, L. R. 8 Ch. tin, 13 Wall (U. S.) 40, 20 L. App 289; Fulton v. Gibiam, 98 Ga. ed. 481; Cunningham v. Norton, 125 224 25 S. E. 431; Converse v. U. S. 11, 31 L. ed. 624, 8 Sup. Ct. Sickles 17 Misc. (N Y.) 169, 40 804; Clarion Bank v. Jones, 21 Wall. N Y. 'S. 971, modified in 16 App. (U. S.) 325, 22 L. ed. 542; Buchanan Div (N Y) 49, 44 N. Y. S. 1080, v. Smith, 16 Wall. (U. S.) 277. 21 affd in i61 N. Y. 666, 57 N. E. 1107. L. ed. 280; Wager v. Hall, 16 Wall. ■'Diem V. Koblitz, 49 Ohio St. 41, (U. S.) 584, 21 L. ed. 504; Dutcher 29 N. E. 1124, 34 Am. St. 531. See v. Wright, 94 U. S. 553, 24 L. ed. also, McKenzie V. Rothchild, 119 Ala. 130; In re Bininger, 7 Blatch. (U. 419 24 So. 716; Skinner v. Michigan S.) 262. Hoop Co., 119 Mich. 467, 78 N. W. ^ Smith v. Collins, 94 Ala. 394, 10 547. 75 Am. St. 413; Gratton & So. 334. Knight Mfg. Co. v. Troll, 11 Mo. "6 Am. & Eng. Ency. L. (2d ed.) App. 339; Avery v. Dickson (Tex. 437. So also, Andrews & Co. v. Civ. App.), 49 S. W. 662. Colorado Sav. Bank, 20 Colo. 313, 46 *in re Phoenix Bessemer Steel Co., Am. St. 295 and note; Gaar v. Nich- L. R. 4 Ch. Div. 108; May v. Le ols, 115 Iowa 223, 225, 88 N. W. 382; Ciaire, 18 Fed. 164; Syracuse Knit- Christensen v. Nelson, 38 Ore. 473, ting Co. v. Blanchard, 69 N. H. (iZ Pac. 648, 650. 447, 43 Atl. 637; Toof v. Mar- 889 COVENANTS AND CONDITIONS. 1593 valid." And the buyer cannot convey the title or subject it to execution for his own debts, where the bill of sale is recorded or the subsequent encumbrancer has actual notice of the same, until the condition governing the agreemert to sell has been per- formed. ^'^ " Piedmont Land & Imp. Co. v. Thomson-Houston Motor Co. (Ala.), 12 So. 768; Hart v. Carpenter, 24 Conn. 427 ; Williams v. Connoway, 3 Houst. (Del.) 63; In re Gait, 120 Fed. 64, 56 C. C. A. 470 ; Johnston v. Eichelberger, 13 Fla. 230; Jowers v. Blandy, 58 Ga. 379; McGirr v. Sell, 60 Ind. 249; Keck v. State, 12 Ind. App. 119, 39 N. E. 899; Vaughn v. Hopson, 10 Bush (Ky.) 2>i7 ; Pink- ham V. Appleton, 82 Maine 574, 20 Atl. 237; Walsh v. Taylor, 39 Md. 592. (This case justifies a trespass by the seller to obtain possession after breach of condition by buver.) Nichols v. Ashton, 155 Mass. 205, 29 N. E. 519; Dewes Brewery Co. V. Merritt, 82 Mich. 198, 46 N. W. 379, 9 L. R. A. 270; Marquette Mfg. Co. V. JefTery, 49 Mich. 283; Ketchum v. Brennan, 53 ]\Iiss. 596; Sumner v. Cottey, 71 Mo. 121 ; King V. Bates, 57 N. H. 446; Cole v. Berry, 42 N. J. L. 308, 36 Am. Rep. 511; Bean v. Edge, 84 N. Y. 510; Korne- gay V. Kornegav, 109 N. Car. 188, 13 S. E. 770; Call v. Sevmour, 40 Ohio St. 670; Skelton v. Manchester. 12 R. I. 326; Talmadge v. Oliver, 14 S. Car. 522; Bradshaw v. Thomas, 7 Yerg. (Tenn.) 497; Christian v. Bunker, 38 Tex. 234 ; Segrist v. Crab- tree, 131 U. S. 287, Z3 L. ed. 125, 9 Sup. Ct. 687; Harkness v. Russell, 118 U. S. 663, 30 L. ed. 285, 7 Sup. Ct. 51 : Page v. Edwards, 64 Vt. 124, 23 Atl 917. As will hereafter be shown, however, there are statutes in most jurisdictions requiring such contracts to be recorded, at least, in order to be effective against those who would otherwise be bona fide purcha.'Jcrs or the like. But they do not fall within a chattel mortgage act and. in the absence of fraud, are valid as to third persons as well as between the parties. Freed Furni- ture & Carpet Co. v. Sorensen, 28 Utah 419. 79 Pac. 564. 107 Am. St. 731 and note. '"Sears v. Shrout. 24 Ind. App. 313, 56 N. E. 728; Cole v. Berry, 42 N. J. L. 308, 36 Am. Rep. 511 (where ail the cases are collected) ; Putnam's Sons V. Macleod, 23 R. I. 2,72, 50 Atl. 646; Segrist v. Crabtree, 131 U. S. 287, 23 L. ed. 125, 9 Sup. Ct. 687; Harkness v. Russell, 118 U. S. 663, 30 L. ed. 285, 7 Sup. Ct. 51. See also, Dresser Mfg. Co. v. Waterston, 3 Mete. (Mass.) 9; Cog- gill V. Hartford &c. R. Co., 3 Gray (Mass.) 545, 15 Am. L. Rev. 380; Wadleigh v. Buckingham, 80 Wis. 230, 49 N. W. 745 ; Kimball Co. v. Mel- lon. 80 W^is. 133, 48 N. W. 1100. And see cases in preceding note, nearly all of which arose from seller assert- ing rights against bona fide pur- chasers from buver. Contra, Van Duzor V. Allen. 90 111. 499; Vaughn V. Hopson, 10 Bush (Ky.) 227, over- ruling Patton v. McCane, 15 B. Mon. (Ky.) 555; Forrest v. Nelson Bros., 108 Pa. St. 481. In Pennsylvania a distinction is taken between delivery under a bailment, with an option in the bailee to purchase at a named price, and a delivery under a contract of sale containing a reservation of title in the vendor until the contract- price is paid, it being held, that in the former instance, property does not pass as in favor of creditors and purchasers of the bailee, but that in the latter instance, delivery to the vendee subjects the property to ex- ecution at the suit of his creditors and makes it transferable to bona fide purchasers. Chamberlain v. Smith, 44 Pa. St. 431 ; Rose v. Story, 1 Pa. St. 190, 44 Am. Dec. 121 ; Mar- tin V. Mathiot, 14 Serg. & R. (Pa.) 214, 16 Am. Dec. 491 ; Ilaak v. Lin- dorman. 64 Pa. St. 499. 3 Am. Rep. 612; Lippincott v. Holden. 11 Pa. Super. Ct. 15. "This distinction is discredited by the great weight of authority, which puts possession un- der a conditional contract of sale and possession under a bailment on the same footing — liable to be assailed by creditors and purchasers for actual 1594 CONTRACTS. 890 § 1594. Form and construction of contract of conditional sales. — In order to determine whether a transaction is a con- ditional sale, it is essential to ascertain the character of the agree- ment. To do this, courts look to the purpose of the parties as evidenced by the agreement and its provisions, and by applying the law, determine the real character of the transaction; and its construction and the terms and essence of the contract are the test of its nature, no matter what its framers may call it." An agree- fraud, but not fraudulent per se." Cole V. Berry, 42 N. J. L. 308, 315. And as to how difficult it is in Penn- sylvania to effect the same object as a conditional sale efifects elsewhere, see Forrest v. Nelson Bros., 108 Pa. St. 481, which inhibits the transac- tion from being done under the guise of a bailment. Where the mere pos- session of a conditional buyer is held to warrant a purchaser buying from him, and thereby getting a good title, this certainly clothes possession with the attributes of ownership, a very dangerous doctrine. " Hydraulic Press Alfg. Co. v. Whetstone, 63 Kans. 704, 66 Pac. 989; Chism V. Barnes, 104 Ky. 310, 20 Ky. L. 569, 47 S. W. 22>2; Blanchard V. Cooke, 144 Mass. 207, 11 N. E. 83 ; Schermerhorn Bros. v. Herold, 81 Mo. App. 461 ; Singer Mfg. Co. v. Gray, 121 N. Car. 88, 28 S. E. 257; Equitable General Providing Co. v. Eisentrager, 34 .Misc. (N. Y.) 179, 68 N. Y. S. 866; Hervey v. Rhode Island Locomotive Works, 93 U. S. 664, 23 L. ed. 1003; Page v. Edwards, 64 Vt. 124, 23 Atl. 917; Davenport v. Shants, 43 Vt. 546; Buzzell v. Cum- mings, 61 Vt. 213, 18 Atl. 93. In Sanders v. Wilson, 8 Mackey (19 D. C.) 555, the contract recited that the buyer had rented a piano and had agreed to pay as rent certain sums until the price was paid and then the piano was to be buyer's. Held, a conditional sale. Nichols v. Ashton, 155 Mass. 205, 29 N. E. 519, is a case in which the transaction or written contract recited that the purchaser had borrowed and received certain goods which he could purchase by paying a certain sum in instalments, but that no partial payment would entitle the purchaser to keep the goods after demand by seller for default in pay- ment. There was a mortgage back to the seller by the buyer. It was held a conditional sale. Wadleigh v. Buckingham, 80 Wis. 230, 49 N. W. 745, was held to be a conditional sale, although there was a provision that the chattel should be at risk of buyer; that is, if lost or destroyed, the buyer bore the loss. See also, Johnson's Exr. v. Clark, 5 Ark. 321 ; Stockton Sav. & Loan Soc. v. Pur- vis, 112 Cal. 236, 44 Pac. 561, 53 Am. St. 210; Parke &c. Co. v. White River Lumber Co., 101 Cal. Zl , 35 Pac. 442; Case V. UOeble, 84 Fed. 582; Havs v. Jordon, 85 Ga. 741, 11 S. E. 833, 9 L. R. A. ZIZ; Fleury v. Tufts, 25 111. App. 101; Gaar v. Nichols, 115 Iowa 223, 88 N. W. 382; Smith v. Aldrich, 180 Mass. 367, 62 N. E. 381 ; Aultman v. Olsen, 43 Minn. 409, 45 N. W. 852; Plarn v. Cernigilia, 11 Miss. 290, 18 So. 577; Davis, v. Gid- dings, 30 Nebr. 209, 46 N. W. 425; Pate V. Oliver, 104 N. Car. 458, 10 S. E. 709; Clark v. Hill, 117 N. Car. 11, 23 S. E. 91, 53 Am. St. 574; Sho- shonetz v. Campbell, 7 Utah 46, 24 Pac. 672; McComb v. Donald's Admr., 82 Va. 903, 5 S. E. 558. Compare Bridget v. Cornish, 1 Mackey (D. C.) 29; Cannon v. Mc- Michael, 6 Mackey (D. C.) 225. In Farquhar v. McAlevy, 142 Pa. St. 233, 21 Atl. 811, 24 Am. St. 497, wliere machinery was delivered under a contract termed a "lease," the lessee promising to pay a certain sum in instalments, as hire in ad- vance for the said machinery, and when the whole sum was paid and $1 additional, the machinery became the buyer's, it was held a condi- tional sale. "It lacked the essential feature of a bailment, viz., a stipula- tion for a return of the property at the end of the term. * * * It is of 891 COVENANTS AND CONDITIONS. § 1 595 ment whereby a person becomes entitled to the possession of goods, with right to the profits by retaihng them, and is to pay for them in instahnents to the party who retained the title, has been held a conditional sale.^" There is some conflict among the deci- sions as to what constitutes a conditional sale, and this is par- ticularly true where property, such as a piano, sewing-machine, or article of furniture, is delivpred under a contract that the party receiving it shall pay for il in weekly or monthly instal- ments or the like, and that when so paid for it shall become his property, but that in the meantime, the title shall remain in the original owner until all the purchase-money is paid. It is some- times difficult to determine whether contracts of this general nature are conditional sales or contracts of lease or hiring: but the weight of authority is that they are conditional sales." § 1595. Transfer of rights under conditional sale. — The seller in a conditional sale may transfer his rights to a third person.^* It is held that the rule that the agreement is valid as against third persons as well as between the parties, relates, in the absence of a statute requiring contracts of conditional sale of chattels to be recorded, to parties dealing with it as a chattel the essence of a contract of bail- 317, 9 Atl. 894; A. D. Puffer Mfg. ment that the article bailed be re- Co. v. Lucas, 112 N. Car. THl , 17 S. turned, in its own or some altered E. 174. 19 L. R. A. 682; Carpenter v. form, to the bailor, so that he may Scott, 13 R. I. 477; Cowan v. Smger have his own asrain." Gross v. Jor- Mfg. Co., 92 Tenn. 376, 21 .S. \V. dan, 83 Maine 380, 22 Atl. 250; Col- 663; Collender Co. v. Marshall. 57 lins V. Houston, 138 Pa. St. 481, 21 Vt. 232; Quinn v. Parke. 5 Wash. Atl. 234; Dearborn v. Ravsor, 132 276, 31 Pac. 866. See also, Kelley Pa St. 231. 20 Atl. 690; Summer- Springfield Road Roller Co. v. son V Hicks. 134 Pa. St. 566, 19 Atl. Schlimme. 220 Pa. St. 413, 69 Atl. 808; Stephens v. Gifford, 137 Pa. St. 867, 123 Am. St. 707. Rut compare 219 20 Atl 542, 21 Am. St. 868; Standard Sewmg Mach. Co. v. Stadtfeld v. Huntsman. 92 Pa. St. Frame. 2 Penn. (Del.) 430, 48 Atl. 53 Zl '\m. Rep. 661, 2 Ky. L. 103. 188; Fleet v. Hertz. 201 111. 594. 66 " Richardson Glove Co. v. Ober- N. E. 858, 94 Am. St. 192 ; Powell v. felder, 58 Nebr. 822, 80 N. W. 50. Eckler, 96 Mich. 538. 56 N. W. 1 ; ^'Hine v. Roberts, 48 Conn. 267, Lippincott v. Scott, 198 Pa. St. 283, 40 Am Rep 170; Sanders v. Wil- 47 Atl. 1115, 92 Am. St. 801; Lehigh son, 8 Mackey (19 D. C.) 555; Met- Co. v. Field, 8 Watts & S. (Pa.) 232; ropolitan Trust Co. v. Railroad Ludden &c. Music House v. Dusen- Equipment Co., 108 Fed. 913. 48 C. berry. 27 S. Car. 464. 4 S. E. 60. C A. 135; Havs v. Jordan, 85 Ga. "Norton v. Pileer. 30 Nebr. 860, 741, 11 S. E. 833, 9 L. R. A. yil\ 47 N. W. 471; San Antonio -Rrew- Murch V. Wright, 46 Til. 487. 95 Am. ing Co. v. Artie Tee Co.. 81 Tex. 00, Dec. 455- T.ucas v. Campbell. 88 Til. 16 S. W. 1^1: TCimbnIl Co. y. Mellon. 447- Gorham v. Holden, 79 Maine SO Wis. 133, 48 N. W. 1100. § 159^ CONTRACTS. 892 and does not apply to third persons without notice of the condi- tion where the character of the property as to them has been changed to realty by being affixed to the soil.^° If notes have been taken for the price, the seller, upon rescinding the sale, must generally return them to the buyer.^*' And the seller is bound to account for the notes he may have taken so as to save the buyer harmless before he can recover the goods or the price for wdiich he sold them. If he has negotiated the notes his rights are transferred to the holder." Where an agent of a com- pany dealing in pianos sold an instrument under a written con- tract of conditional sale, and transferred this contract to the com- pany, but also took from the purchaser negotiable notes which recited that they were secured by the piano for the price, which he transferred to a bona fide purchaser for value, it was held that the holder of the notes was entitled to enforce their payment out of the piano, in preference to the piano company, the assignee of the non-negotiable contract.^® Where a note was taken for the price of the goods, and the buyer and seller agreed that the goods might be disposed of or traded for others which should stand in their place as security for payment, this transaction was held valid, even against a third person, who in good faith purchased from the buyer.^^ § 1596. Conditional sales — Rights of the parties on de- fault. — Upon default in the payment of any of the instal- ments, the seller may resume possession. -° And it is not neces- " Washburn v. Inter-Mountain Min. held that the seller could enforce Co., 56 Ore. 578, 109 Pac. 382, Ann. payment of the note against the Cas. 1912C. 356. horse, although the buyer had sold "Benjamin Sales, § 730; Sumner him to an innocent purchaser. See V. Woods, 67 Ala. 139, 42 Am. Rep. also, Dedman v. Earle, 52 Ark. 164, 104. 12^ S. W. 330. "Benjamin Sales, § 730; Hein- ""Benjamin Sales (Bennett's ed.), bockel V. Zugbaum, 5 Mont. 344, 5 § 425, and authorities c'lted ; Shire- Pac. 897, 51 Am. Rep. 59; Kimball man v. Jackson, 14 Ind. 459; Orner Co. V. Mellon, 80 Wis. 133, 48 N. W. v. Sattley Mfg. Co., 18 Ind. App. 122, 1100. 47 N. E. 644; Smith v. Barber. 153 "Kimball Co. v. Mellon, 80 Wis. Ind. 322, 53 N. E. 1014 (or treat the 133, 48 N. W. 1100. sale as absolute and sue for the pur- " Perry v. Young, 105 N. Car. 463, chase-pnce) ; Proctor v. Tilton, 65 11 S. E. 511, where a mule was sold, N. H. 3, 17 Atl. 638. See al.so. Scy- the parties agreeing to trade it for mour v. Farquhar. 93 Ala. 292, 8 So. a horse, the horse to take the place 466; Nattin v. Riley. 54 .A.rk. 30, 14 of the mule as to security. It was S. W. 1100; Campbell Printing Press 893 COVENANTS AND CONDITIONS. 1597 sary that there be an express provision authorizing the vendor to retake possession. In every conditional sale, his right is im- plied.-^ Accordingly, when the seller resumes possession, this operates as a rescission of the sale.*" But the seller has the option either to retake possession or to bring an action for the price. "^ And when the seller elects to sue, the buyer cannot offer to rescind and tender back the goods."* § 1597. Waiver of forfeiture and title. — A forfeiture for nonpayment may be waived by the seller. If, after an instalment has become due and remains unpaid, the vendee is still permitted to retain possession, and the vendor receives part payment, this is an assent to delay, and a waiver of any forfeiture and a recog- nition of the right of the vendee to acquire title by payment of the residue of the price, which right continues until a request for such payment, and a refusal of the vendee." But a waiver of & Mfg. Co. V. Henkle, 8 Mackey (19 D. C) 95; Snook v. Raglan, 89 Ga. 251. 15 S. E. 364; Wiggins v. Snow, 89 Mich. 476, 50 N. W. 991; Tufts V. D'Arcambal, 85 Mich. 185, 48 N. W. 497, 12 L. R. A. 446, 24 Am. St. 79; Richardson Drug Co. v. Teasdall. 52 Nebr. 698, 72 N. W. 1028; Webber v. Osgood, 68 N. H. 234, 38 Atl. 730. ^^ Wiggins V. Snow, 89 Mich. 476, 50 N. W. 991; Tufts v. D'Arcambal, 85 Mich. 185, 48 N. W. 497, 12 L. R. A. 446, 24 Am. St. 79; Adams v. Wood, 51 Mich. 411, 16 N. W. 788; Edwards v. Symons, 65 iMich. 348, 32 N. W. 796; Gormullv & Jeffery Mfg. Co. V. Catharine. 25 Misc. (N. Y.) 338, 55 N. Y. S. 475. " Hine v. Roberts. 48 Conn. 267, 40 Am. Rep. 170; Cade v. Jenkins, 88 Ga. 791, 15 S. E. 292; Snook v. Rag- lan, 89 Ga. 251. 15 S. E. 364: Rlanch- ard V. Cooke, 147 Mass. 215, 17 N. E. 313; Weil v. State, 46 Ohio St. 450, 21 N. E. 643; Hineman v. Matthews, 138 Pa. St. 204, 20 Atl. 843, 10 L. R. A. 233; Summerson V. Hicks, 134 Pa. St. 566, 19 Atl 808; Wvckoff v. Summerson (Pa.), 19 Atl. 809. ''Appleton V. Norwalk Library Corp., 53 Conn. 4, 22 Atl. 681 : Cade V. Jenkins, 88 Ga. 791, 15 S. E. 292 ; Turk V. Carnahan, 25 Ind. App. 125, 57 N. E. 729, 81 Am. St. 85; Smith V. Aldrich, 180 .Mass. 367, 62 N. E. 381; Dederick v. Wolfe, 68 Miss. 500, 9 So. 350, 24 Am. St. 283 ; Mun- roe V. Williams, Zl S. Car. 81 ; Ben- singer Self-Adding Cash Register Co. V. Cain (Tex. App.). 18 S. W.^ 136; Wing V. Thompson, 78 Wis. 256, 47 N. W. 606. "Appleton V. Norwalk Library Corp., 53 Conn. 4, 22 Atl. 681 ; Ben- singer Self-Adding Cash Register Co. V. Cain (Tex. App.), 18 S. W. 136. = 0'Rourke v. Hadcock, 114 N. Y. 541, 22 N. E. ZZ; Hutchings v. Mun- ger, 41 N. Y. 155; Lupin v. Marie. 6 Wend. (N. Y.) 11, 21 Am. Dec. 256; Smith V. Lvnes, 5 X. Y. 41 ; Lawrence V. Dale, 3 John. Ch. (X. Y.) 23, affd. 17 Johns. (X. Y.) 437. See also. Hill V. Townsend, 69 .-Ma. 286; Kentucky Chair Co. v. Commonwealth, 105 Kv. 455. 20 Ky. L. 1279, 49 S. W. 197; Fairbank v. Phelps, 22 Pick. (Mass.) 535 ; Deyoe v. Jamison, ZZ Mich. 94. "The vendor may waive his right to a forfeiture for prior neglect to pay, by seeking afterward to collect the balance due," head note. Johnston V. Whittemore, 27 Mich. 463 : Giddey V. .\ltman, 27 Mich. 206: Preston v. Whitney, 23 Mich. 260. But compare, § 1598 CONTRACTS. 894 one or more forfeitures is not a circumstance tending to show a waiver of subsequent independent defaults, and is not relevant evidence therefor.-*^ The taking of negotiable notes in conditional payment of the price is no waiver of his title by the seller."^ Where property was conditionally sold and mortgaged by the buyer, it was held that there was no waiver of title by the seller, although he advised the mortgagees to take the mortgage, stating at the time that he had a claim thereon which he would not waive."^ To constitute a waiver of title, there must generally be not only an act of delivery, but an intent not to insist on immedi- ate payment as a condition of title passing. Thus, where the seller loaded wheat on cars designated by the buyer and noted in the bill that it was to be put "free on board," this did not estop the seller from reclaiming the property from a bona fide pur- chaser from the buyer, although he relied on the recital ''free on board" in the bill.-' § 1598. Risk of loss — Destruction of the property. — The risk of loss, according to the weight of authority, where goods are delivered to the buyer and title is retained by the seller as security for unpaid purchase-money, is the buyer's.^" Thus where Hegler v. Eddy, 53 Cal. 597; Quinn pare, Blackett v. Royal Exch. Co., 2 V. Parke & Lacy Machinery Co., 5 Cromp. & J. 244; Brown v. Foster, Wash. 276, 31 Pac. 866. 113 Mass. 136, 18 Am. Rep. 463; ^'Hill V. Townsend, 69 Ala. 286. Dickinson v. Gay, 7 Allen (Mass.) 29, "Benjamin .Sales, § 730. But see, 83 Am. Dec. 656; Dodd v. Farlow, 11 Vaughn v. McFaddyen, 110 Mich. Allen (Mass.) 426, 87 Am. Dec. 726; 234 68 N. W. 135. Osborne v. Nelson Lumber Co., 33 =*Ames Iron Works v. Richardson, Minn. 285, 22 N. W. 540; Paine v. 55 Ark. 642, 18 S. W- 381. See also. Smith, 33 Minn. 495, 24 N. W. 305; Hervey v. Dimond, 67 N. H. 342, 39 Thompson v. Ashton, 14 Johns. (N. Atl. 331, 68 Am. St. 673. Y.) 316; Frith v. Barker, 2 Johns. (N. "Globe Milling Co. v. Minneapolis Y.) 327; Barnard v. Kellogg, 10 Wall Elevator Co., 44 :\linn. 153, 46 N. (U. S.) 383, 19 L. ed. 987. W. 306; Wolf V. DiLarenzo, 22 Misc. '" Phillips v. Hollenberg Music Co., (N. Y.) 323, 49 N. Y. S. 191. Com- 82 Ark. 9, 99 S. W. 1105; Roach v. pare Pond Mach. Tool Co. v. Rob- Whitfield, 94 Ark. 448, 127 S. W. inson, 38 Minn. 272, 37 N. W. 99. 722, 140 Am. St. 131; Collcrd v. The first case cited is interesting as Tully, 78 N. J. Eq. 557, 80 Atl. 491, an attempt was made to convert by Ann. Cas. 1912C. 78; ]\Iarion Mfg. a local custom a conditional sale Co. v. Buchanan, 118 Tenn. 238, 99 into an absolute one. "But a local S. W. 984, 8 L. R. A. (N. S.) 590, usage cannot be proved to contradict 12 Am. & Eng. Ann. Cas. 707; La a contract. * * * If, by the contract Vallev v. Ravenna, 78 Vt. 1.52, 62 for the sale of this wheat, it was for Atl. 47, 2 L. R. A. (N. S.) 97. 112 cash on delivery, the usage could Am. St. 898; Osborn v. South Shore not make it a sale on credit." Com- Lumber Co., 91 Wis. 526, 65 N. W. 895 COVENANTS AND CONDITIONS. 1599 there is a conditional sale, it is generally held that the accidental destruction of the property by fire or otherwise does not relieve the buyer of the necessity to pay the purchase-price.'" But the parties may by express agreement determine upon whom the loss shall fall in case of destruction.^^ § 1599. Recording. — Statutes making it necessary to re- cord conditional sales, in the absence of express words to the con- trary, are construed for the benefit of bona fide purchasers and mortgagees, and a failure to record does not invalidate the sale between the parties or affect in any manner the seller's remedies against the buyer.^* Where the statute declared a conditional sale invalid for want of registration as against "subsequent purchasers and mortgagees," it was held that it did not apply in case of a pledge, and that the seller under an unrecorded conditional sale might regain possession from the buyer's pledgee.^* And stat- 184. But see. Bishop v. Minder- hout, 128 Ala. 162, 29 So. 11. 52 L. R. A. 395. 86 Am. St. 134; Glisson V. Heggie, 105 Ga. 30, 31 S. E. 118. "' Roach V. \\hitfield, 94 Ark. 448, 127 S. W. 722. 140 Am. St. 131; Burnley v. Tufts. 66 Mass. 48, 5 So. 627, 14 Am. St. 540 ; Gould v. ]Murch, 70 Maine 288, 35 Am. Rep. 325; Thompson v- Gould, 20 Pick. (Mass.) 134; Tufts V. Wvnne, 45 Mo. App. 42; Tufts V. Griffen, 107 N. Car. 47, 12 S. E. 68, 10 L. R. A. 526, 22 Am. St. 863; Ilarlev v. Stanley, 25 Okla. 89, 105 Pac. 188, 138 Am. St. 900, and note citing many other cases- Compare Vincent v. Cornell, 13 Pick. (Mass.) 294, 23 Am. Dec. 683; New- hall V. Kingsburj% 131 Mass. 445; Swallow V. Emerv, 111 Mass- 355; Snvder v. Murdock. 51 Mo. .175; Walker v. Owen, 79 Mo. 563. Con- tra, Randle v. Stone, 77 Ga. 501, and cases cited at end of preceding note- "Bishop V. Minderhout, 128 Ala. 162. 29 So. 11, 52 L. R. A. 305, 86 Am. St. 134; Gould v- Murch, 70 Maine 288. 35 Am. Rep. 325 : Thomp- son V. Gould, 20 Pick. (Mass.) 134; Burnley v. Tufts. 66 Miss- 48. 5 So. 627. 14 Am. St. 540: Tufts v. Wynne. 45 Mo. App. 42 (See the ingenious argument of defendant's counsel in this case, trying to place the loss up- on the party who had title at the time) ; Tufts v. Griffin, 107 X. Car- 47, 12 S. E. 68, 10 L. R. A. 526. 22 Am. St. 863; Wadleigh v. Bucking- ham, 80 Wis. 230, 49 N. W. 745. ■"In re Wilcox Co.. 70 Conn. 220. 39 Atl. 163; Hudnall v- Paine, 39 Fla. 67, 21 So. 791 ; Mann v. Thomp- son, 86 Ga. 347; Morton v. Prick Co., 87 Ga. 230, 13 S. E. 463 ; Harp v. Pat- apsco Guano Co., 99 Ga. 752. 27 S. E. 181; Welch v. National Cash Register Co.. 103 Kv. 30. 19 Kv. L. 1664, 44 S. W. 124 ; Campbell v. Ath- erton, 92 Maine 66. 42 Atl. 232 ; Hop- kins V. Maxwell. 91 Maine 247, 39 Atl. 573; Mansur-Tebbetts Imp. Co- V. Price. 81 Mo. App. 243; Loctiler v. Damoree, 75 Mo. App. 207; D. M- Osborne v. Piano Mfg. Co., 51 Nebr. 502. 70 X. W. 1124; Norton v. Pilger, 30 Nebr. 860, 47 N. W. 471; Korn- egav V. Kornegav, 109 N. Car. 188, 13 S. E. 770; Hi'neman v. Matthews 138 Pa. St. 204, 20 Atl. 843, 10 L. R. A. 233; San Antonio Brewing .\ssn. V. Arctic Ice Mfg. Co., 81 Tex. 99, 16 S. W. 797 ; Mershon v. Moores, 76 Wis. 502. 45 N. W. 95 ; W'ing v. Thompson, 78 Wis. 256. 47 N. W. 606; Kimball Co. v. Mellon. 80 Wis. 133. 48 N. W. 1100. " Canton Surgical & Dental Co. v. Webb, 42 N. Y. St. 187, 16 N. Y. S. 932. § l600 CONTRACTS. 896 utes requiring chattel mortgages to be recorded are generally held not to apply to conditional sales.^^ It has been held, however, that a statute making an unrecorded conditional sale void as against bona fide purchasers and creditors applies to creditors before the sale as well as after, and a creditor of the buyer may levy on the chattel although his debt was contracted before the sale.^° And it has been held that the goods are liable to a creditor's claim, although he knew and had actual knowledge that the sale was a conditional one.^^ But it is generally held that actual notice is equivalent to registration.^^ Where the statute directs that the contract of sale shall be "sub- scribed by the parties," it has been held not complied with when only one party — the buyer — signs.^'* But when the seller brings suit to foreclose his lien on the chattels, this is notice sufficient, and a failure to comply with the registr}^ laws cannot thereafter be taken advantage of by purchasers or creditors of the buyer.*" Statutes regulating conditional sales, their registry and the amount of money to be refunded by seller upon retaking goods, are to be construed as applying to sales made after their passage. They usually are not retroactive." § 1600. Miscellaneous matters concerning conditional sales. — There are, in some states, penal statutes punishing the buyer who sells goods without the seller's consent. Where they exist, it is not incumbent upon the seller to keep watch '= Maxwell v. Tufts, 8 N. Mex. 396, 463 ; Batchelder v. Sanborn, 66 N. 45 Pac. 979, 33 L. R. A. 854 ; Grant v. H. 192, 22 Atl. 535. Skinner, 21 Barb. (X. Y.) 581; Lima ''See last two cases cited in pre- ]\Iach. Works v. Parsons, 10 Utah ceding note; also Larned First Nat. 105, 2>7 Pac. 244; McComb v. Don- Bank v. Tufts, 53 Kans. 710. 2,7 aid's Admr., 82 Va. 903, 5 S. E. 558 ; Pac. 127 ; Dyer v. Thorstad, 35 Minn. Kimball Co. v. Mellon, 80 Wis. 133, 534, 29 N. W. 345; McPhail v. Gerry, 48 N. W. 1100. But see, Bond v. 55 Vt. 174- Brewer, 96 Ga 443, 23 S. E. 421; ^Kimball Co. v. Mellon, 80 Wis. Daniels v- Thompson, 48 111. App. 133, 48 N. W. 1100; Sheldon Co. v- 393; Gilbert v. Gere, 67 111. App. 590; Mayers, 81 Wis. 627, 51 N. W. 1082. Heryford v. Davis, 102 U. S. 235, 26 ^ San Antonio Brewmg Co. v. L. ed. 160, 2 Ky. L. 95. Arctic Ice Co., 81 Tex. 99, 16 S. W. =^ Collins V Wilhoit, 108 Mo. 451, 18 797. S. W. 839, overruling Coover v. *" Harrell v. Godwm, 102 N. Car. Johnson, 86 Mo. 533. 330, 8 S. E. 925. See also, Bowen v. "Elliott V. Emerson Piano Co., 80 Frick, 75 Ga. 786; Moseley v. Shat- II!. App. 51; Collins v. Wilhoit, 108 tuck, 43 Iowa 540; Standard Imp. Mo. 451, 18 S. W. 839. Contra, Mor- Co. v. Parlin & Orendorff Co., 51 ton V. Frick, 87 Ga. 230, 13 S. E. Kans. 544, 2>2, Pac. 360; Case Mfg. 897 COVENANTS AND CONDITIONS. § 160I over the buyer and see that he does not sell. Even the failure to comply with the registry laws does not serve as an excuse to vio- late the penal statute." And the fact that the buyer is actuated by good faith and ignorant of the law is no defense." If the buyer wants to prevent a forfeiture on the ground that he ten- dered the price, it has been held that he must keep his tender good and be ready to pay all the time.'' Where a manufacturer and wholesale vendor of articles or personal property sells upon credit, and delivers a lot of such articles to a retail dealer therein, for the apparent or implied purpose of resale by such vendee, it has been held that the doctrine of conditional sales does not apply or govern the sale, as between the original seller and the purchaser thereof from the original buyer, because the purposes for which the possession of the property is delivered to the buyer are in- consistent with the continued ownership by the seller, and for this reason the condition upon which the sale and delivery- are made must be deemed fraudulent and void as against purchasers from the original vendee.'^ But it is competent for the parties as be- tween themselves to make a conditional sale of goods to be re- tailed. And a contract by which a brewing company agrees to ship to a firm all beer ordered by them at an agreed price per barrel, the title to remain in the company until the beer is sold, has been held valid as to creditors of the firm.'® § 1601. Architect's or engineer's certificate of approval. — The subject of conditions or provisions concerning the approval Co. V. Garven, 45 Ohio St. 289, 13 jamin Sales, § 319; Leigh Bros. v. N. E. 493. Mobile & O. R. Co.. 58 Ala. 165. Con- *= Chambers v. State, 85 Ga. 220, tra, Lewis v. McCabe, 49 Conn. 141, 11 S. E. 653; Weil v. State, 46 Ohio 44 Am. Rep. 217; Rogers v. White- st- 450, 21 X. E. 643. house, 71 Maine 222; Burbank, v. "Chambers v. State, 85 Ga. 220, Crooker. 7 Gray (Mass.) 158, 66 Am. 11 S. E. 653. Dec. 470; Sargent v. Metcalf. 5 "Summcrson v. Hicks, 134 Pa. St. Gray (Mass.) 306, 66 Am. Dec. 368; 566. 19 Atl. 808. Armington v- Houston, 38 Vt. 448, "Winchester &c. Co. v. Carman. 109 91 Am. Dec. 366. Ind. 31, 9 X. E. 707. 58 Am. Rep. 382; *« Thompson v. Massey, 16 Mo. Ludden v. Hazen, 31 Barb. (X. Y.) App. 197. See also. Dewes Brewery 650; Griswold v. Sheldon. 4 X. Y. Co. v. Merritt, 82 Mich. 198. 46 X. 581, 1 Code R. (X. S.) 261; Fitzger- W. 379, 9 L. R. A. 270. Compare, aid V. Fuller. 19 Hun (X. Y.) 180; Rawson Mfg. Co. v. Richards. 69 Bowen v. Lansing Wagon Works, 91 Wis. 643, 35 X. W. 40. See the fol- Tex. 385, 43 S. W. 872. See also, Ben-, lowing articles on conditional sales : 57 — CoNTR.\CTS, Vol. 2 CONTRACTS. 898 of architects and the like will be treated in another part of this work. But a few words upon the general subject may not be out of place here/^ An architect's or engineer's certificate of ap- proval is often made a condition precedent to the payment of work done. And when this is so, the procurement of tlie cer- tificate required by the contract is ordinarily necessary to sustain an action for compensation.*® But if the architect arbitrarily and unreasonably refuses to give to the contractor his certificate, as required, then the owner cannot justify a refusal to pay for lack of a certificate.*^ Nor is the decision of an architect, engineer, or similar umpire final and conclusive where he is guilty of fraud 10 L. R. A. 314, 620; 12 L. R. A. 446, 700; "Conditional Sales," by Judge A. H. Henn in 24 Am. L. Rev. 64. *" See post, ch. 41 ; and vol. iv, Tit. Building Contracts. '' Tallv V. Parsons, 131 Cal. 516, 63 Pac. 833 ; Bush v. Jones, 144 Fed- 942, 75 C. C. A. 582, 6 L. R. A. (N. S.) 744 and note; International Cement Co. V. Beifeld, 173 111. 179, 50 X. E. 716, 67 111. App. 110; Vincent v. Stiles, 77 111. App. 200; McCone v. Williams, 37 111. App. 591 ; Barney v. Giles, 120 111. 154, 11 N. E. 206; Ohio &c. R. Co. v. Crumbo, 4 Ind. App. 456, 30 N. E. 434; Roy v. Boteler, 40 Mo. App. 213; Neenan v. Donoghue, 50 Mo. 493; Yeats v. Ballentine, 56 Mo. 530; Dinsmore v. Livingston, 60 Mo. 241 ; Wortman v. Montana Cent. R. Co., 22 Mont. 266, 56 Pac. 316; O'Brien v. New York. 65 Hun (N. Y.) 112, 19 N. Y. S. 793, 47 N. Y. St. 258; Crouch v. Gutman, 45 N. Y. St. 470; Schultze v. Good- stein, 82 App. Div. (N. Y.) 316, 81 N. Y. S. 946 ; Vanderhoff v. Shell, 42 Ore. 578, 72 Pac. 126; Barlow v. United States, 35 Ct. CI. (U- S.) 514, affd. 184 U. S. 123, 46 L. ed. 463. 22 Sup. Ct. 468, 37 Ct. CI. (U. S.) 547; Long V. Pierce Countv, 22 Wash. St. 330, 61 Pac. 142: .McAlpine v. Trus- tees. 101 Wis. 468, 78 N. W. 173. *' Davis V. Badders, 95 Ala. 348, 10 So. 422; Bush v. Jones, 144 Fed. 942, 75 C. C. A. 582, 6 L. R. A. (N. S.) 774 and note; North American R. Const. Co. V. R. E. McMath Survev- in? Co.. 116 Fed. 169. 54 C C. A. 27; Elizabeth v. Fitzgerald, 114 Fed. 547, 52 C. C. A. 321; Crane Elevator Co. V. Clark, 80 Fed. 705, 26 C. C. A. 100 ; ^lichaelis v. Wolf, 136 111. 68, 26 N. E. 384; Braun v. Winans, 37 111. App. 248; McCone v. Williams, 37 111. App. 591 ; Keating v. Neelson, 33 111. App. 357; Fitts v. Reinhart, 102 Iowa 311. 71 N. W. 227; Gillis v. Cobe, 177 Mass. 584, 59 N. E. 455 ; Anderson v. Imhoff, 34 Nebr. 335, 51 N. W. 854; Thomas v. Stewart, 132 N. Y. 580, 30 N. E. 577; Flaherty v. Miner, 123 N. Y. 382, 25 N. E. 418; Smith v. Alker, 102 N. Y. 87, 5 N. E. 791 ; Nolan v. Whitney, 88 N. Y. 648; Bowery Nat. Bank v. New York, 63 N. Y. 336; Thomas v. Fleury, 26 N. Y. 26; Smith V. Wetmore, 24 Misc. (N. Y.) 225, 52 N. Y. S. 513, affd. 41 App. Div. (N. Y.) 290, 58 N. Y. S. 402, 167 N. Y. 234, 60 N. E. 419; Collins v. United States, 34 Ct. CI. (U. S.) 294. The judgment of the architect or en- gineer is not conclusive. Whether he was justified in refusing a certificate is for the jury. Connecticut Valley Granite & Mining Co. v. New York & Brooklvn Bridge, 32 App. Div. (N. Y.) 83, 52 N. Y. S. 667; Flaherty v. ^liner, 123 N. Y. 382, 25 N._ E. 418 (where the jury was permitted to say as a question of fact whether the refusal to give the certificate was jus- tified) : Perrv v. Levenson, 82 App. Div. (N. Y.) 94, 81 N. Y. S. 586, affd. 178 N. Y. 559, 70 N. E. 1104; Pittsburgh Terra-Cotta Lumber Co. V. Sharp, 190 Pa. St. 256, 42 Atl. 685 ; Long V. Pierce Countv, 22 Wash. 330, 61 Pac. 142; Childress v. Smith. 90 Tex. 610, 38 S. W. 518, 40 S. W. 389; Linch V. Paris Lumber Co., 80 Texas 23, 14 S. W. 701, 15 S. W. 208; 899 COVEXAXTS AXD COXDITIOXS. § 1602 or mistake so great as lo show bad faith on his part/" And the owner may waive the architect's certificate or his failure to pass upon a certain matter.^^ § 1602. Architect's certificate — Illustrations. — As a gen- eral rule, where the owner is charged with the duty of obtaining the certificate the lack of the certificate is no defense." Where a board of public improvements was charged with the duty of in- specting the work and certifying it in a street paving contract, a certificate of approval by such board was held conclusive on the city.°' And it is the general rule that when an architect is made judge between the parties, by the contract, his decision and cer- tificate are final in the absence of fraud or gross mistake.*^' But his decision is not an arbitration, and the certificate is not an Brown v. Winchill, 3 Wash. St. 524, 28 Pac. 1037. ""Spauldins v. Coeur D'Alene R. &c. Co.. 5 Idaho 528. 51 Pac. 408; Edwards v. Hartshorn, 11 Kans. 19, 82 Pac. 520, 1 L. R. A. (N. S.) 1050 and note ; Anderson v. Imhoff, 34 Nebr. 335. 51 N. W. 854; Gonder v. Berlin Branch R. Co., 171 Pa- St. 492, Zi Atl. 61; Tetz v. Butterfield, 54 Wis. 242, 11 N. W. 531, 41 Am. Rep. 29. See also, St. Louis & P. R. Co. v. Kerr, 48 111. App. 496, afifd. 153 111. 182, 38 N. E. 638 ; Baltimore &c. R. Co. V. Scholer. 14 Ind. App. 524, 43 N. E. 156. 56 Am. St. 307; Ilounroth v. Peters, 50 111. App. 366; Moran v. Schmitt, 109 Mich. 282, 67 N. W. Z27>. " Hunn V. Pennsylvania Inst, for Blind, 221 Pa. St. 403. 70 Atl. 812, 18 L. R. A. (X. S.^ 1248n. "McKone v. Williams, 2>1 111. App. 591. " Fitzgerald v. W' alker, 55 Ark. 148, 17 S. W. 702. " Scanlan v. San Francisco &c. R. Co. (Cal.), 55 Pac. 694; Crumlish V. Wilmington &c. R. Co., 5 Del. Ch. 270: Brevman v. Ann Arbor R. Co., 85 Fed. 579; Sanders v. Hutchinson, 26 111. .Xpp. 633; Davis v. Gibson, 70 111. App. 273; Ewins v. Fiedler, 30 111. App. 202; Covington v. Limerick, 19 Kv. L. 330, 40 S. W- 254; Welch v. LIubschmitt Building & Woodworking Co., 61 N. J. L. 57. 38 Atl. 824; Whitehead v. Brothers Lodge, 23 Ky. L. 29, 62 S. W. 873; Kelly v. Public Schools of Muskegon, 110 Mich. 529, 68 N. W. 282; Langdon v. Northfield, 42 Minn. 464, 44 N. W. 984; St. Paul &c. R. Co. V. Bradbury, 42 Minn. 222, 44 X. W. 1 ; Williams v. Chicago, S. F. & C. R. Co., 153 Mo. 487. 54 S. W.689; Welch v. Hubschmitt Bldg. Co.. 61 N. J. L. 57, 38 Atl. 824 ; Jones V. New York. 32 Misc. (N. Y.) 211, 65 N. Y. S. 747. affd. 60 App. Div. (X. Y.) 161. 70 X. Y. S. 46; Weeks v. Rector. 56 App. Div. (X. Y.) 1%, 67 N. Y. S. 670; Sewer Comrs. v. Sulli- van, 162 X. Y. 594, 57 X. E. 1123, affg. 11 App. Div. (X. Y.) 472, 42 X. Y. S. 358; Lawrence v. Xew York. 162 X. Y. 617, 57 X. E. 1115. affd. 29 App. Div. (N. Y.) 298, 51 N. Y. S. 416; Sweet v. Morrison. 116 N. Y. 19, 22 X. E. 276. 15 Am. St. 376, affd. 24 N. E. 1097; Harlow v. Home- stead. 194 Pa. St. 57. 45 Atl. 87; Seim V. Krausc. 13 S. Dak. 530. '^l N. W. 583; Brin v. McGregor (Tex. Civ. App.). 45 S. W. 923; Kennedv v. United States, 24 Ct. CI. (U. S.) 122; United States v. Gleason, 175 U. S. 588, 44 L. ed. 284. 20 Sup. Ct. 228, 35 Ct. CI. (U. S.) 625; Driscoll v. United States. 34 Ct. CI. (U. S.) 508; Alle- ghanv Iron Co. v. Teaford. 96 Va. yil. 31 S. E. 525; Ashland Lime, Salt t1- Cement Co. v. Shores 105 Wis. 122, 81 X. W. 136. § l602 CONTRACTS. 9OO award/^ and the certificate is not always conclusive on the owner who may in a proper case dispute its correctness as to the amount due.^*^ So it has been held that the owner may show negligent performance in the work despite the certificate to the contrary."^ In the absence of a waiver, the certificate must be substantially such as the contract calls for. Where the contract requires the certificate to show that the job has been completed to the satisfaction of the architects, a certificate stating only the balance due the contractor is insufficient.^^ A mere payment is not necessarily a waiver. Thus where payments were made with- out requiring the certificate, this was held no waiver of the cer- tificate for the remaining instalments.^'* But where a contract for excavation provided for payment to be made as the work progressed, on the production of the proper engineer's certificates, and about three-fourths of the amount earned was paid without insisting on the engineer's certificates, and refusal of the balance was not based on the nonproduction of the certificates, it was held that the requirement of such certificates was waived.^" Where the contract gives the owner the election to finish the building at the contractor's expense in case of his refusal to com- plete the work, if the owner elects to complete the work, the con- tractor is entitled to the certificate of the architect.''^ The cer- ■"Wadsworth v. Smith. L. R. 6 Q. Newark, 19 N. J. Eq. Z16\ Newman B. Ill ; Sharpe v. San Paulo R. Co., v. Fowler, Zl N. J. L. 89. L. R. 8 Ch. App. 597. Under a build- '' Roy v. Boteler, 40 Mo. App. 213. ing contract providing that final pay- See also, Michaelis v. Wolf, 136 111. ment should be made when the build- 68, 26 N. E. 384. But the form of ing was "completed, and accepted by the certificate is not essential (O'- the architect," a certificate of the Brien v. New York, 15 N. Y. S. 520, architect of his approval of the work affd. 65 Hun (N, Y.) 112, 47 N. Y. was not necessary to enable the con- St. 258, 19 N. Y. S. 793) and a_ parol tractor to maintain an action for a approval will satisfy the condition of balance due him, as the matter of a certificate unless a written one is approval was one of fact. Devlan expressly stipulated for. Roberts v. V. Wells, 65 N. J. L. 213. 47 Atl. 467. Watkins, 14 C. B. (N. S.) 592; Wil- To the same effect. Young v. Wells kens v. Wilkerson (Tex.), 41 S. W. Glass Co., 187 111. 626, 58 N. E. 605; 178. Spink V. Mueller. 11 Mo. App. 85; '^''Ashley v. Henahan, 56 Ohio St. Chandley v. Cambridge Springs, 200 559, 47 N. E. 573; Brown v. Wme- Pa St 230 49 Atl 772. hill, 3 Wash. St. 524, 28 Pac. 1037. '"Scliuler'v. Eckert, 90 Mich. 165, ""Boden v. Maher, 105 Wis. 539, 51 N W 198 81 N. W. 661. "Wagner v. Cawker. 112 Wis. 532, "Crouch v. Gutman, 45 N. Y. S. 88 N. W. 599. See also. Davidson v. 470. Provost, 35 111. App. 126; Bond v. 901 COVENANTS AND CONDITIONS. § lC02 tificates must be for each payment, if the contract requires it, although the building is completed. Thus where there was to be payment in six instalments, the last two to be made after the com- pletion of the building, obtaining a certificate for the fifth instal- ment does not do away with the necessity of obtaining one for the sixth instalment."" But where a certificate is necessary to obtain part payment as the work progresses, this is not necessarily construed to mean that the certificate is essential to obtain final payment upon completion."^ In a well-considered Massachusetts case, however, where a building contract provided that the pay- ments should be made on the architect's certificate, and that the second payment would be due when all the work was completed, and the final payment thirty days later, with the further stipula- tion that no certificate given, except that for the final payment, should be conclusive evidence of the performance of the con- tract, it was held that a certificate for the second payment did not dispense with the necessity for the final certificate, and that one who assumes a building contract, and agrees to pay all sums due or to become due from the owner thereunder, "according to the tenor thereof," is entitled to the benefit of a provision in the con- tract that the final payment would not be due till thirty days after the completion of the work, and would be paid only on the cer- tificate of the architect, although the work was completed when the contract was assumed, and the agreement to assume stated that there was then due a sum of money from the owner to the contractor." ^'Michaclis v. Wolf, 136 III. 68, 26 merit, shall be conclusive evidence N. E. 384. of the performance of this contract, *" Braim v. Winans, 2i7 111. App. either wholly or in part, against any 248; Childress v. Smith (Tex. Civ. claim of the owner.' * * * The owner App.), 2)7 S. W. 1076, revel. 90 Tex. 'hereby contracts to pav the same at 610, 38 S. W. 518, 40 S. W. 389. the time, in the manner and upon "In Beharrell v. Quimby, 162 Mass. the conditions above set forth.' Xo 571, 39 N. E. 407, the several pay- later certificate was given than that ments were to be made "provided, for the second payment. The plaintiff that in each of the said cases the therefore was not entitled to re- architect shall certify in writing that cover, against Orcutt, the final pay- all the work upon the performance ment, unless sufficient reason or e.x- of which the payment is to become cuse for not furn'shing such a certif- due has been done to his satisfaction, icate was shown. What would * * * 'No certificate given or pay- amount to such sufficient reason or ment made under this contract, ex- excuse has been often considered, cept the final certificate or final pay- both in England and in this country, § i6o3 CONTRACTS. go2 § 1603. Promise conditional upon approval of promisor. — Contracts are often made to pay for work or the like upon con- dition of the work heing done to the satisfaction or approval of the promisor.''^ This subject is also treated elsewhere, but it may be well to consider it somewhat briefly in this connection. °® Where one contracts to work for a year provided his work is to the satisfaction of the employer, it has been held that he may be discharged at any time without the need of the employer assigning any reason therefor.*'^ So, it has often been held that a contract to employ an agent for a year, or the like, if he "could fill the place satisfactorily," may be terminated by the employer when in his judgment the agent fails to meet that requirement.*'^ And it is well settled that in such cases where the object of the contract is to gratify taste, serve personal convenience, or satisfy individ- ual preference, the party for whom the work is done may properly determine for himself whether it shall be accepted. Thus where a tailor agreed to make a satisfactory suit of clothes and they were rejected as not satisfactory, no recovery was allowed.'^'* It has also been held that a sculptor who agrees to make a bust to the satisfaction of a buyer cannot recover, even where its rejection as appears by the authorities cited 280, and for further instances see for the plaintiff and for the defend- the following cases: McCarren v. ant, to which may be added Clarke McNulty, 7 Gray (Mass.) 139; Gray V. Watson, 18 C. B. (N. S.) 287; Bat- v. Central R. Co., 11 Hun (N. Y.) terbury v. Vyse, 2 Hurl. & C. 42 ; No- 70 (the case of a steamboat) ; Moore Ian V. Whitney, 88 N. Y. 648 ; United v. Goodwin, 43 Hun (N. Y.) 534, States V. Robeson, 9 Pet. U. S. 319, 7 N. Y. St. 154; Singerly v. Thayer, 327 9 L. ed. 142; Hudson v. Build- 108 Pa. St. 291, 2 Atl. 230, 56 Am. ing Contracts, 265, 297-301." Rep. 207; McClure v. Briggs, 58 Vt. "^^ Church V. Shanklin, 95 Cal. 626, 82, 2 Atl. 583, 56 Am. Rep. 557 30 Pac. 789; Brown v. Foster, 113 (where an organ was allowed to be Mass. 136, 18 Am. Rep. 463; Gibson rejected). V Cranage, 39 Mich. 49, 33 Am. Rep. ™ See Brown v. Foster, 113 Mass. 351; Doll V. Noble, 116 N. Y. 230, 22 136, 18 Am. Rep. 463, where the N. E. 406, 5 L. R. A. 554, 15 Am. St. court said: "H the plaintiff saw fit 398; Russell v. Allerton, 108 N. Y. to do work upon articles for the de- 288. 15 N. E. 391 ; Duplex Safety fendant and to furnish the materials Boiler Co. v. Garden, 101 N. Y. 387, therefor, contracting that the ar- 4 N. E. 749, 54 Am. Rep. 709; Hart- tides, when manufactured, should be ford Mfg. Co. V. Brush, 43 Vt. 528; satisfactory to the defendant, he can Tickler v. Andrae Mfg. Co., 95 Wis. recover only upon the contract as it 352, 70 N. W. 292. was made; and even if the articles *° See post, ch. 41 ; also vol. iv, Tit. furnished by him were such that the "Building Contracts." other party ought to have been sat- ^ Spring V. Ansonia Clock Co., 24 isfied, it was yet in the power of Hun (N. Y.) 175. the other party to reject them as •^ Tyler v. Ames, 6 Lans. (N. Y.) unsatisfactory." 903 COVENANTS AND CONDITIONS. § 1604 is caused by unreasonable dissatisfaction, and although the bust is a masterpiece.'^'' So, a painter who agrees to paint a pic- ture to one's satisfaction has no cause of action for the price unless the buyer is satisfied, however good the picture is." And where a contract to furnish "good wheat bread" gave the buyer the right to cancel the contract if he did not consider the bread good it was held that the contract might be canceled no matter whether the bread furnished was of the quality contracted for or not." § 1604. Cases holding that right of approval must be exer- cised reasonably. — There is considerable difference of opin- ion as to the exact rule where the object of the contract is not to gratify taste, or satisfy individual preference, and some courts hold that a recovery cannot be defeated by arbitrarily and unrea- sonably declaring that the work is not done to the satisfaction of the promisor." Thus, where the contract provided that the work was to be done in the best workmanlike manner to the entire satisfaction of the owner, it was held that the mechanic could recover, although the owner was dissatisfied, if he should '^Zaleski v. Clark, 44 Conn. 218, 26 Am. Rep. 446. "Gibson v. Cranage. 39 :\Iich. 49, 33 Am. Rep. 351 ; Hoffman v. Gal- laher, 6 Daly (N. Y.) 42; Walker v. Edward Thompson Co., 37 App. Div. (N. Y.) 536. 56 N. Y. S. 326; Barrv V. Rainey, 27 Misc. (N. Y.) 772, 57 N. Y. S. 766 ; Pennington v. How- land, 21 R. I. 65, 41 Atl. 891, 79 Am. St. 774. This rule applies to a teacher's contract that his instruction shall be satisfactory in every respect. Dermody v. Flesher, 22 Misc. (N. Y.) 348.' 49 N. Y. S. 150. '"Tavlor v. Trustees of Poor, 1 Penncw. (Del.) 555. 43 Ad. 613. ^ See Electric Lighting Co. v. El- der, 115 Ala. 138. 21 So. 983; Silsby Mfg. Co. V. Chico. 24 Fed. 893; Keeler v. Clifford. 62 Til. App. 64, affd. 165 111. 544, 46 N. E. 248; Wood &c. Mach. Co. V. Smith. 50 Mich. 565, 15 N. W. 906, 45 Am. Rop. 57; Sax V. Detroit, G. H. & M. R. Co., 125 Mich. 252, 84 N. W. 314, 84 Am. St. 572; Doll V. Noble. 116 N. Y. 230, 22 N. E. 406, 5 L. R. A. 554, 15 Am. St. 398; Russell v. .\llerton, 108 N. Y. 288, 15 N. E. 391; Duplex Safety Boiler Co. v. Garden, 101 N. Y. 387, 4 X. E. 749. 54 Am. Rep. 709; Hummel v. Stern, 164 N. Y. 603, 58 N. E 1088, affg. 21 App. Div. (N. Y.) 544, 48 N. Y. S. 528; Varian v. Johnston, 108 N. Y. 645, 15 N. E. 413; Smith v. Brady. 17 N. Y. 173. 72 Am. Dec. 442; Johnson v. De- Pevster. 50 N. Y. 666; Phillip v. Gal- lant. 62 N. Y. 256; Woodward v. Fuller, 80 N. Y. 312; Nolan v. Whit- ney, 88 N. Y. 648 ; Bowery Nat. Bank V. 'New York, 63 N. Y. 336: Smith v Alker. 33 Hun (N. Y.) 665. affd. 102 N. Y. 87, 5 N. E. 791 ; Thomas v. Gage, 156 N. Y. 612, 51 N. E. 307; Sinclair v. Tallmadge. 35 Barb. (N. Y ) 602 • Singerlv v. Thaver. 108 Pa. St. 291. 2 Ati. 230. 56 Am. Rep. 207; Knight V. United States. 35 Ct. CI. (U S) 129; McClure v. Brigg.-^. 58 Yt 82, 2 Atl. 583, 56 .\m. Rep. 557. § l604 CONTRACTS. 9O4 have been satisfied.'* In another case a charter party provided that the shipowners should furnish ventilation to the approval of the charterer, a cattle shipper, and it was held that this did not confer upon the charterer the right to refuse to load, if all that could reasonably be required for ventilation was furnished." Again, a contract provided that a passenger elevator "warranted satisfactory in every respect" should be put in a building, and it was held that the elevator could not be rejected for mere caprice.'^ So, where the contract called for the erection of a furnace in a good and workmanlike manner, and to guarantee the furnace to work "satisfactorily" in melting iron, it was held that the word "satisfactorily" as used in the contract did not mean that the workman obligated himself, in erecting the furnace, to satisfy any whim or caprice of the other party, but it meant that he should do the work reasonably well.'^' And it has been said broadly that in contracts which provide for work to be done to the satisfaction of one party, or the like, such satisfaction is not an arbitrary or capricious one, that it has its measure by which it can be fulfilled, i. e., that which the law shall say a contracting party ought in reason to be satisfied with, the law will say he is satisfied with, so that "the law in this case will determine for the defendant when he ought to be satisfied."'* "Doll V. Noble, 116 N. Y. 230, 22 jected by the following cases and N. E. 406, 5 L. R. A. 554, 15 Am. St. held to mean satisfactorily to plain- 398. See also. Electric Lighting Co. tiff: Taylor v. Brewer, 1 AI. & S. V. Elder, 115 Ala. 138, 21 So. 983. 290; Campbell Printing Press Co. v. "Russell V. Allerton, 108 N. Y. Thorp, 36 Fed. 414, 1 L. R. A. 645; 288, 15 N. E. 391. And it is not nee- McCormick Harvesting ]\Iach. Co. v. essary to show that the shipper's re- Chesrown, 33 Minn. 32, 21 N. W. fusal to load was in actual bad faith. 846; Singerlv v. Thayer, 108 Pa. St. '^Singerly v. Thaver, 108 Pa. St. 291, 2 Atl. 230, 56 Am. Rep. 207. 291, 2 Atl. 230, 56 Am. Rep. 207. In " Folliard v. Wallace, 2 Johns. (N. this case it was held that the words Y.) 395. See also, McNeil v. Arm- "warranted satisfactory in every re- strong, 81 Fed. 943, 27 C. C. A. 16; spect" meant the promisor's satisfac- Keeler v. Clifford, 165 III. 544, 46 tion ; that is, the buver's. Schleicher N. E. 248; Richison v. Mead, 11 S. V. United Security &c. Co., 191 Pa. Dak. 639, 80 N. W. 131. See follow- St. , 477, 43 Atl. 380, 44 Week. N. ing cases where the question was Cas. 188. raised as to whether or not the de- " Pope Iron &c. Co. v. Best, 14 Mo. fendant capriciously refused to be App. 502. This case also holds that satisfied. Worthington v. Given, 119 the meaning of the term "satisf actor- Ala. 44, 24 So. 739, 43 L. R. A. 382; ily" when used alone is satis- Stockton &c. R. Co. v. Stockton, 51 factory to a reasonable and fair- Cal. 328; Wood v. Strother, 76 Cal. minded man, who is an expert in 545, 18 Pac. 766, 9 Am. St. 249; Peo- such matters, which meaning is re- pie v. Alameda, 45 Cal. 395; Logan 905 COVENANTS AND CONDITIONS. ^ 1605 ^ 1605. Cases holding right of approval absolute and un- qualified — Good faith. — Some of the broad statements men- tioned or referred to in the last preceding section undoubtedly go too far and some of the decisions cited are extreme in one direction. So, on the other hand, a few of those hereinafter referred to seem extreme in the other direction and apparently allow one to take advantage of such provisions as those under consideration, even though he not only acts somewhat arbitrarily or capriciously, but also in bad faith. The weight of authority is to the effect that the parties must stand to their contract as they have made it, and, if the one party has agreed to do some- thing that shall be satisfactory to the other, he constitutes the lat- ter the sole arbiter of his own satisfaction," at least so long as he acts in good faith and his dissatisfaction is real and not feigned or a mere subterfuge. Thus, where the vendor of a harvesting machine gave a warranty that the contract of purchase should be of no effect unless the machine worked to the buyer's satisfaction, it was held that the purchaser had reserved the absolute right to reject the machine, and that his reasons for doing so could not be investigated.**" So, where the agreement was that a certain V. Berkshire Apartment Assn., 46 satisfaction; Manny v. Glcndinning, N. Y. St. 14, 18 N. Y. S. 164; Heron 15 Wis. 50. V. Davis, 3 Bosw. (N. Y.) 336; Dag- ™ Campbell Printing Press Co. v. gett V. Johnson, 49 Vt. 345. "Indeed, Thorp, 36 Fed. 414. 1 L. R. A. 645; to such import are really all of the White v. Randall, 153 Mass. 394, 26 authorities, which hold simply that N. E. 1071 ; Sax v. Detroit &c. R. Co., to be dissatisfied in such a case is 125 Mich. 252, 84 N. W. 314, 84 sufficient reason to refuse the pur- Am. St. 572; Frary v. American Rub- chase; for to be dissatisfied is a fact, ber Co., 52 Minn. 264, 53 N. W. 1156, and must be a veritv, and not a pre- 18 L. R. A. 644; Adams Radiator & text. It is not 'I will not accept it.— Boiler Works, v. Schnader, 155 Pa. will not have it,'— but 'It is not sat- St. 394, 26 Atl. 745, 35 Am. St. 893; isfactorv,' or 'I am reallv and hon- Barrett v. Raleigh &c. Coke Co., 51 estlv dissatisfied with it.' "This is im- W. Va. 416, 41 S. E. 220. 90 Am. plied in the verv statement of the St. 802. See also, Ellis v. Mortimer, principle." Per 'Orton, J„ in Ex- 1 Bos. & Pul. (N. R.) 257; Taylor haust Ventilator Co. v. Chicago, M. v. Brewer, 1 M. & S. 290; Barnes v. & St. P. R. Co., 66 Wis. 218, 28 N. W. Rawson, 111 Iowa 426. 82 N. W. 947; 343, 57 Am. Rep. 257; Hartford Daniels v. Decatur County, 99 Iowa &c. Mfg. Co. V. Brush, 43 Vt. 528. 440. 68 N. ^^^ 718; Tyler v. Ames. 6 See Exhaust Ventilator Co. v. Chi- Lans. fX. Y.) 280; Spring v. An- cago M & St P. R. Co., 66 Wis. sonia Clock Co.. 24 Hun (X. Y.) 175; 218, '28 X. W. 343. 57 Am. Rep. Hart v. Hart. 22 Barb. (X. Y.) 606; 257, which holds, also, that the chat- Rnssiter v. Cooper. 23 Vt. 522. tel must be properlv tested and tried '"Wood &c. Mach. Co. v. Smith, before the buyer can reject for dis- 50 Mich. 565, IS N. W. 906, 45 Am. Rep. 57. § i605 CONTRACTS. 9^0 grain binder should do good work and "give satisfaction," it was held that, unless the defendant was satisfied with the machine, although it did good work, he was not bound to purchase.^' A\'here there was a guaranty that a corn binder would work satis- factorily, it was held that, in case, upon reasonable trial, it did not work satisfactorily, it was unnecessary to return it, but it was sufficient for the buyer, within a reasonable time, to notify the seller that it did not work to his satisfaction, and that he declined to accept it.*- A similar ruling was made with regard to a steam- boat ;'^ with regard to a machine for generating gas f^ with re- gard to a fanning mill f^ with regard to a passenger elevator f ' and in the case of a printing press.*'^ This rule ought not, how- ever, to apply where the party is in fact satisfied but fraudulently and in bad faith feigns dissatisfaction to obtain an advantage when this is not his real reason.^* And there are many decisions to the effect that the dissatisfaction must be real, and not feigned, and that the party is not at liberty to say he is dissatisfied when, in reality, he is not.^^ The same cases, however, declare the rule that, while he is bound to act honestly, it is not enough to show that he ought to have been satisfied, and that his discontent was without good reason.***^ But it is said that to permit- a party under "Piano ^lanufacturing Co. v. Ellis, 252, 84 N. W. 314, 84 Am. St. 572; 68 Mich 101, 35 N. W. 841. See Thomas v. Gage, 156 N. Y. 612, 51 also, Piatt V. Broderick, 70 Mich. N. E. 307. 577 38 N W 579. *' Campbell Printing Press Co. v. *='McCormick Harvesting Mach. Thorp, 36 Fed. 414, 1 L. R. A. 645; Co V Chesrown, 33 Minn. 32, 21 N. Adams Radiator & Boder Works v. W' 846 See also, Thomas v. Gage, Schnader, 155 Pa. St. 394, 26 Atl. 156 N Y 612, 51 N. E. 307, revg. 745, 35 Am. St. 893; Hartford Sor- 84 Hun (N. Y.) 607. (?um Mfg. Co. v. Brush, 43 Vt. 528; ^'Gray v. Central R. Co., 11 Hun Daggett v. Johnson, 49 Vt. 345; Mc- (N Y ) 70. Clure v. Briggs. 58 Vt. 82, 2 Atl. 583, **' Aiken v Hyde, 99 Mass. 183. 56 Am. Rep. 557; Exhaust Ventilator '=*Singerlv v Th'ayer, 108 Pa. St. Co. v. Chicago, M. & St. P. R. Co., 291 2 Atl 230, 56 Am. Rep. 207; 66 Wis. 218. 28 N. W. 343, 57 Am. Howard v. Smedley, 140 Pa. St. 81, Rep. 257. Where a vendor sells an 21 Atl. 253. article subject to the approval of the *" Goodrich v. Van Nortwick, 43 vendee, he constitutes the vendee the l\\ 445, judge of his own satisfaction, pro- " Campbell Printing Press Co. v. vided that, if the vendee claims to be Thorp, 36 Fed. 414, 1 L. R. A. 645. dissatisfied, his dissatisfaction must ^ See Silsby Mfg. Co. v. Chico, be real, and not feigned. Buckley v. 24 Fed 893. (And to show the par- Meidroth, 93 111. App. 460. ty's satisfaction, his declarations ad- ""Silsby Mfg. Co. v. Chico, 24 Fed. mitting satisfaction are admissible.) 893 ; Lynn v. Baltimore &c. R. Co., 60 Sax V Detroit &c. R. Co., 125 Mich. Md. 404, 45 Am. Rep. 741 ; Baltimore 907 COV^EXAXTS AXD COXDITIOXS. § 1 606 all circumstances to refuse to pay because dissatisfied and at the same time to retain the fruits of the agreement is an unwarrant- able extension of the doctrine applied to machines or articles of manufacture which can be rejected; that if the party relies upon dissatisfaction as a defense he must rescind the agreement and re- store the status quo, and if he does not do this, or is unable to, then he must be satisfied if in reason he ought to be. Thus, where a printing press was unable to be restored the buyer was held precluded from setting up as a defense the fact of his dis- satisfaction."^ A furnace after being built into a house was held subject to a like rule, and the buyer's only remedy was said to be to recoup for damages.'*- But where a party having the power to rescind the contract and restore the chattel elects to keep it, he must pay the contract price and cannot recoup damages, because of his failure to be satisfied therewith, in an action for the price." § 1606. Failure to fully perform — Substantial performance. — After one party has performed a contract in a substantial part, and the other party has accepted and had the benefit of the part performance, the latter may thereby be precluded from relying upon the performance of the residue as a condition precedent to his liability; and may be required to perform the contract on his part and rely upon his claim for damages in respect of the defective performance. "It is remarkable that, according to this rule, the construction of the instrument may be varied by matter ex post facto ; and that which is a condition precedent when the deed is executed may cease to be so by the subsequent conduct of the covenantee in accepting less. * * * This is no objec- tion to the soundness of the rule, which has been much acted upon. But there is often a difticulty in its application to particu- lar cases, and it cannot be intended to apply to every case in &c R Co. V. Brvdon, 65 Md. 198, 3 "^Campbell Printing Press Co. v. Atl. 306, 57 Am.'Rep. 318. And see Thorp, 36 Fed. 414. 1 L. R. A. 645: the remarks of Mr. Justice Brown Vice v. Brown, 22 Ind. App. 345, 53 in Campbell Printing Press Co. v. N. E. 776. Thorp. 36 Fed. 414, 1 L. R. A. 645, " Shupe v. Collender, 56 Conn. 489, where many of the cases are exam- 15 Atl. 405, 1 L. R. A. 339; Pope ined. See also, cases collected in Iron & Metal Co. v. Best, 14 Mo. Duplex Safety Boiler Co. v. Garden, App. 502. 101 X. Y. 387, 4 N. E. 749, 54 Am. "Campbell Printing Press Co. v. Rep. 709. Thorp, 36 Fed. 414, 1 L. R. A. 64o. CONTRACTS. 908 which a covenant by the plaintiff forms only a part of the con- sideration, and the residue of the consideration has been had by the defendant. That residue must be the substantial part of the contract.""* This doctrine, however, is not fully accepted in all jurisdictions, and is not to be indiscriminately applied without qualification or limitation. Where a building is erected upon and becomes a part of the realty of the owner, and, although defective in some respects, is of real and substantial value to the owner, it has often been held that the contractor can recover the value of his work, less the damages to the other party, for a failure 10 comply with the terms of the agreement."^ And it has been rea- " Ellen V. Topp, 6 Exch. 424. See also, Graves v. Legg, 9 Exch. 709; Behn v. Burness, 3 B. & S. 751; Ox- ford V. Provand, L. R. 2 P. C. 135; White V. Beeton, 7 H. & N. 42 ; Car- ter V. ScargiU, L. R. 10 Q. B. 564; Ritchie v. Atkinson, 10 East 295 (Where a ship owner having contract- ed to load a complete cargo, sailed with only part, it was held that the freighter must pay freight, and re- cover damages sustained by cross ac- tion.) ; Glaholm v. Hays, 2 AI. & G. 257 (holding that conditions in charter parties that the ship shall be ready for loading at a certain day or a certain place, which are originally conditions precedent to the obliga- tion pf the charterer to load are con- verted into mere subsidiary stipula- tions, remediable in damages, after the loading and sailing of the ship) ; Havelock v. Geddes, 10 East 555; Davidson v. Gwynne, 12 East 381 (holding that a promise to sail by the first convoy, although at first a con- dition precedent, was not such after the voyage had actually been per- formed, although not by the first con- voy, and the freighter was held lia- ble) ; Pust V. Dowie, 5 B. & S. 20; People's Bank & Loan Assn. v. Rey- nolds, 17 Ind. App. 453, 46 N. E. 1008 ; Connelly v. Priest, 72 Mo. App. 673. ** Aetna Iron & Steel Works v. Kossuth County, 79 Iowa 40, 44 N. W. 215; Wolf V. Gerr, 43 Iowa 339 (contract to build a railroad) ; Jem- mison v. Gray, 29 Iowa 537; McClay V. Hedge, 18 Iowa 66; Pixler v. Nich- olas, 8 Iowa 106, 74 Am. Dec. 298; School District No. 2 v. Boyer, 46 Kans. 54, 26 Pac. 484; Barnwell v. Kempton, 22 Kans. 314; Duncan v. Baker, 21 Kans. 99; Usher v. Hiatt, 21 Kans. 548; Nelson Manufacturing Co. v. Mitchell, 38 Mo. App. 321 (building a boiler in a house) ; Fleischmann v. Miller, 38 Mo. App. 177 (a valuable case). "It is plain that this was in the nature of a build- ing contract, and that it is conse- quently governed by the rule in Yeats v. Ballentine, 56 Mo. 530. Under this rule, although the plaintiff may not have performed the contract pre- cisely in accordance with the terms of the agreement, he can recover the reasonable value of the work done, less the damages which the defend- ant may have sustained through his failure to complete the contract in accordance with its terms." Com- pare, Gruetzner v. Aude Furniture Co., 28 Mo. App. 263, and Fox v. Pullman Palace Car Co., 16 Mo. App. 122; Gove v. Island City, etc., Co., 19 Ore. 363, 24 Pac. 521 (excepts volun- tary abandonment ) ; Carroll v. Welch, 26 Tex. 147, "The doctrine of the earlier decisions to the effect, that where the contract in cases like the present is entire, the performance by the employe is a condition prece- dent, and he has no remedy until he has fully performed his part, is not now the recognized doctrine of the court. * * * According to the modern decisions, and the decisions of this court, the rule appears to be, that if the employe abandons his 909 COVENANTS AND CONDITIONS. § 1607 soned even more broadly as follows: A formal acceptance of the work, or an acquiescence in the breach, is not essential to recovery in a building contract. The benefits arising from the services ren- dered, the materials furnished, and labor performed in erecting the buildings, are the owner's without acceptance. He has no choice but to use and enjoy those benefits, although but a part performance of the contract. The benefits derived from the serv- ices he cannot restore. The building becomes a part of the realty. And it is for these reasons that a recovery can be had on a quan- tum meruit where the contractor confers benefits on the owner, although he has not complied with his contract."" § 1607. Building contracts — Substantial performance. — There is conflict and confusion in the authorities upon the sub- ject of the performance of building contracts. Some authorities hold that the contractor, in order to recover, must substantially perform his contract, and that, if he fails in this regard, he can- not recover in any form of action for what he has done under the contract, no matter how beneficial it may be to the owner. Under this rule, it is possible for a landowner to contract for the erection of a building (the contractor after having built a por- tion of it abandoning the contract without excuse), and have the benefit of a partial performance without paying anything there- for. Such seems to be the great weight of authority in America. It has been so held in California,^' in Colorado,"* Massachu- contract, the employer shall be will imply a promise to pay for it) ; charged with only the reasonable Allen v. Curies, 6 Ohio St. 505. A worth, or the amount of benefit he contractor who before the building is has received upon the whole trans- complete ceases to work upon the action." Hillvard v. Crabtree's Admr., same upon notice from the owner that 11 Tex. 264, 62 Am. Dec. 475; he elects to complete the building can- Compare Linch V. Paris Lumber Co., not recover on a quantum meruit on 80 Tex. 23, 14 S. W. 701, 15 S. W. the grounds that the owner prevented 208. See also, next following sections completion. Beecher v. Schuback, 53 and note in 24 L. R. A. (X. S.) 327. N. E. 1123, affg. 1 App. Div. (N. Y.) "" .^tna Iron & Steel Works v. Kos- 359, 12 N. Y. St. 511, 37 N. Y. S. 325. suth County, 79 Iowa 40, 44 N. W. affd. 158 N. Y. 687, 53 N. E. 1123. 215. Contra. Elliott v. Caldwell, 43 See also, Norwood v. Lathrop, 178 Minn. 357, 45 N. W. 845, 9 L. R. A. ^lass. 208, 59 N. E. 650. 52 (holding that where a builder fails "'Harlan v. Stufflebeem, 87 Cal. 508. to complete, or completes in a manner 25 Pac. 6v% ; Griffith v. Happersberger, not substantially conforming to the 86 Cal. 605, 25 Pac. 137, 487; Mar- contract, tlie mere fact that it remains chant v. Hayes, 117 Cal. 669, 49 Pac. on the land, and the owner enjoys the 840. benefit of it. he having no option to "■* Cochran v. Balfe, 12 Colo. App. reject it, is not such an acceptance as i6o7 CONTRACTS. 910 setts,^* ^Michigan/ ^Minnesota," New Hampshire,^' New York,* North Dakota/ Ohio/ Pennsylvania/ In IHinois' a substantially equivalent rule seems to prevail, so in Connecticut/ Maryland/^ New Jersey/^ Nevada/- and Wisconsin.'^ But some cases seem to hold that notwithstanding the contractor has, either wilfully or without excuse, abandoned his contract, or performed com- paratively little work he may recover the value of his services, leaving the owner to recoup damages for his failure to perform his contract/* 75, 54 Pac. 399 (no recovery even on quantum meruit unless there has been strict performance). ■•" Wilev V. Athol, 150 ^lass. 426, 23 N. E. 3/1, 6 L. R. A. 342. "It seems that the performance must be of a substantial part of the contract, and that the acceptance must be imder such circumstances as to show that the party accepting knew, or ought to have known, that the contract was not being fuUv performed." ^ Scheible v. Klein, 89 Mich. 376, 50 N. W. 857. = Elliott V. Caldwell, 43 Minn. 357, 45 N. W. 845, 9 L. R. A. 52. ^Bailey v. Woods, 17 N. H. 365 (but quaere). The same rule is not applied in case of contracts for per- sonal services. See Britton v. Turner, 6 N. H. 481, 26 Am. Dec. 713. * Flaherty v. ^liner. 123 N. Y. 382, 25 N E. 418; Whelan v. Ansonia Clock Co.. 27 Hun (N. Y.) 557. affd. 97 N. Y. 293 ; Nolan v. Whitney, 88 N. Y 648; Heckmann v. Pinkney, 81 N. Y. 211 ; Glacius v. Black, 50 N. Y. 145, 10 Am. Rep. 449; Lennon v. Smith, 23 App. Div. (N. Y.) 293, 48 N. Y. S. 456; MacKnight Flintic Stone Co. V. New York, 31 App. Div. (N. Y.) 232 52 N. Y. S. 747, revd. 160 N. Y. 72. 54 N. E. 661 ; Spence v. Ham, 163 N. Y. 220, 57 N. E. 412, 51 L. R. A. 238. ' Braseth v. State Bank, 12 N. Dak. 486, 98 N. W. 79. « Goldsmith v. Hand, 26 Ohio St. 101 ; Allen v. Curies, 6 Ohio St. 505. ' Moore v. Carter, 146 Pa. St. 492, 23 Atl. 243. * Illingsworth v. Slosson, 19 111. App. 612; Peterson v. Pusey, 237 111. 204, 86 N. E. 692. ' Smith V. Scott's Ridge School Dist., 20 Conn. 312; Pinches v. Swedish Evangelical Church, 55 Conn. 183, 10 Atl. 264. "'Gill V. Vogler, 52 Md. 663. "Trenton v. Bennett, 27 N. J. L. 513, 72 Am. Dec. 373. ^- Virginia &c. R. Co. v. Lyon Coun- ty, 6 Nev. 68. " Manitowoc Steam Boiler Works V. Manitowoc Glue Co., 120 Wis. 1, 97 N. W. 515. " Fitzgerald v. LaPorte, 64 Ark. 34, 40 S. W. 261 ; .F:tna Iron & Steel Works v. Kossuth County, 79 Iowa 40, 44 N. W. 215; School District v. Boyer, 46 Kans. 54, 26 Pac. 484; White V. Oliver, 36 Maine 92; Busch- mann v. Bray, 68 I\Io. App. 8; West V. Van Pelt, 34 Nebr. 63, 51 N. W. 313; Linch v. Paris Lumber Co., 80 Tex. 23. 15 S. W. 208; Carroll v. Welch, 26 Tex. 147; Taylor v. Will- iams, 6 Wis. 363 ; but the rule does not obtain in the contracts of personal service, no recovery in that case be- ing allowed. See Diefenback v. Stark, 56 Wis. 462, 14 N. W. 621, 43 Am. Rep. 719. So where work is aban- doned by a contractor and the owner completes it under a right reserved in the contract, the work is deemed to be done under the contract and the contractor is entitled to any balance of the contract-price above the cost of completion. White v. Liv- ingston, 174 N. Y. 538. 66 N. E. 1118, affg. 69 App. Div. (N. Y.) 361, 75 N. Y. S. 466. See also, Davis v. Bad- ders, 95 Ala. 348, 10 So. 422; Barn- well V. Keating, 72 Conn. 732, 43 Atl. 984 ; Shepard v. Mills, 70 111. App. 72, affd. 173 111. 223, 50 N. E. 709; Cum- mings V. Pence, 1 Ind. App. 317, 27 N. E. 631 ; Masonic Mutual Benefit Assn. V. Beck, 77 Ind. 203, 40 Am. 911 COVEXAXTS AND CONDITIONS. § 1G07 The following rules touching building contracts have been laid down by the Supreme Court of the United States: While the special contract remains executory, the contractor must sue upon it. W'lien it has Ijcen fully executed according to its terms, and nothing remains to be done but the payment of the price, he may sue on the contract, or indebitatus assumpsit, and rely upon the common counts. In either case, the contract will determine the riglit of the parties. When the contractor has been guilty of fraud, or has wilfully abandoned the work, leav- ing it unfinished, he cannot recover in any form of action. Where he has in good faith fulfilled, but not in the manner or not within the time prescribed by the contract, and the other party has sanc- tioned or accepted the work, the contractor may recover upon the common counts." The weight of authority is now clearly in favor of allow- ing compensation for services rendered and material furnished under such a contract, though not in entire conformity with it, provided that the deviation from the contract was not wil- ful, and the other party has availed himself of, and been bene- fited by, such labor and materials, at least where the departure is slight and comparatively immaterial; and as a general rule, the amount of such compensation depends upon the extent of the benefit conferred, having, in a proper case, reference to the con- tract-price for the entire w^ork, or the contract-price less tiie cost of making the work conform to the contract. ^° In those states where it is necessary that the contractor should "substantially perform" the condition precedent, before he can recover anything. Rep. 295; Taylor v. Almanda, 50 La. is substantial and draws a distinc- Ann. 351, 23 So. 365. tion as to the measure of damages). " Dermott V. Jones, 2 Wall. (U.S.) See also, Pinches v. The Swedish 1, 17 L. ed. 762. Church. 55 Conn. 183, 10 Atl. 264, "Jefferson Hotel Co. v. Brum- citing Havward v. Leonard. 7 Pick, baugh, 168 Fed. 867. 94 C. C. A. 279; (Mass.) '181, 19 Am. Dec. 268; Pitcairn v. Philip Hiss Co., 113 Fed. Blakeslee v. Holt, 42 Conn. 226; Wag- 492. 51 C. C. A. 323; Toher v. Lap- geman v. Jamssen, 74 111. App. 38; pine. 60 X. Y. St. 853. 9 Misc. (N. Corwin v. Wallace, 17 Iowa 374; Y.) 204, 29 N. Y. S. 603; Hamburger White v. Oliver. 36 Maine 92; Smith V. Rottenberg, 61 N. Y. St. 102. 9 v. First Congregational ^[eeting- Misc. (N. Y.) 477, 30 N. Y. S. 240; House. 8 Pick. (Slass.) 178; Moul- Focller v. Ilcintz, 137 Wis. 169, 118 ton v. McOwen, 103 Mass. 587; Lucas N. W. 543. 24 L. R. A. (N. S.) 327 v. Godwin. 3 Bing. N. Cas. 737; and note (This case states a test for Kelly v. Bradford, 33 Vt. 35. determining when the performance § l607 CONTRACTS. 912 substantial performance means that there has been no wilful de- parture from the terms of the contract, and no omission of any of its essential parts, and that the contractor has in good faith performed all of its substantive tenns. If so, he will not be held to have forfeited his right to a recovery by reason of trivial de- fects or imperfections in the work performed. If the omission is so slight that it cannot be regarded as an integral or substantive part of the original contract, and the other party can be compen- sated therefor by a recoupment for damages, the contractor does not lose his right of action; and this rule is peculiarly applicable in a case where the other party has received the benefit of what has been done, and is enjoying the fruits of the work.^^ It is the sound and settled rule that the right of a party to enforce a contract will not be forfeited or lost by reason of technical inad- vertence, or unimportant omissions or defects. A substantial performance must be established, in order to entitle the party claiming the benefit of the contract to recover; but this does not mean a literal compliance as to details that are unimportant. There must be no wilful or intentional departure, and the defects of performance must not pervade the whole, or be so essential as substantially to defeat the object which the parties intend to accomplish. Whether, in any case, such defects or omissions are substantial, or merely unimportant mistakes that have been or may be corrected, is generally a question of fact.^^ Where the plaintiff contracted to build a house for the defend- ant "and charge everything at the exact cost, for which I will get "Harlan v. Stufflebeem, 87 Cal. 508, 80 N. Y. 312; Heckmann v. Pinkney, 25 Pac. 686. See following cases 81 N. Y. 211; Dauchey v. Drake, 85 where it was held that performance N. Y. 407; Van Clief v. Van Vech- was sufficient. VanClief v. Van ten, 130 N. Y. 571, 29 N. E. 1017; Vechten, 130 N. Y. 571, 29 N. E. 1017; Crouch v. Gutmann, 134 N. Y. 45, 31 Arndt v. Keller, 96 Wis. 274, 71 N. N. E. 271, 30 Am. St. 608n ; Miller W 651 V. Northern Imp. Co., 28 Misc. (N. "Milierv. Benjamin, 142 N.Y. 613, Y.) 762, 59 N. Y. S. 305; Perry v. 37 N. E. 631. See also, Laidlaw v. Levenson, 82 App. Div. (N. Y.) 94, Marye, 133 Cal. 170, 65 Pac. 391 ; Pal- 81 N. Y. S. 586, affd. 178 N. Y. 559, mer v. Meriden Britania Co., 188 111. 70 N. E. 1104; Rowe v. Gerry, 86 App. 508, 59 N. E. 247; Franklin v. Schultz, Div. (N. Y.) 349, 83 N. Y. S. 740; 23 Mont. 165, 57 Pac. 1037; Miller v. Ashley v. Henahan, 56 Ohio St. 559, Benjamin, 142 N. Y. 613, Zl N. E. 47 N. E. 573; Jennings v. Wilier 631; Glacius v. Black. 50 N. Y. 145, (Tex.), 32 S. W. 24, 375; Rhodes 10 Am. Rep. 449; Phillip v. Gallant, v. Clute, 17 Utah 137, ^Z Pac. 990. 62 N. Y. 256; Woodward v. Fuller, 9^3 COVENANTS AND CONDITIONS. § 1607 vouchers," for a consideration to be paid upon completion of tlie building, it was held that vouchers furnished to defendant were prima facie evidence sufficient Xo show performance, and plaintiff was not bt)und to prove that every item of material and labor was expended in the building.'" Where it appeared that the plaintiff made every reasonable effort to perform a building contract in the required time, but failed to do so in some minor particulars, and the defendant took possession of the building when com- pleted, and used it for the intended purpose, for which it was adequate, it was held that plaintiff could recover the contract- price, less compensation to defendant for the minor imperfections and omissions; and that the plaintiff was not liable for delay in the completion of the building where it was due to the fact that defendant's architect either changed the plans and specifications, or failed to furnish necessary lines and levels; but was liable where the delay resulted from the condemnation of materials which he furnished, and on which the architect was required to pass under the contract.-'' And where an architect, made by the building contract the sole arbiter between the parties of mat- ters concerning materials and character of work, was present, and had knowledge of the character of the materials being used, and did not object at the time, it was held that this amounted to an approval of the same, which could not be revised, to the injury of the contractor, and that any delays caused by the wrongful withholding of a monthly estimate were excusable.-' So, it has been held that the provision of a building contract for forfeit of ten dollars for each day the building remains unfinished after the day fixed does not apply to delay necessitated by changes in the material ordered by the owners, although the contract pro- vided that any change in the plans, "either in quantity or quality of the work," should be executed by the contractor, "without "Blazo V. Gill, 143 X. Y. 232, 38 Y. S. 308; Chandler v. Wheeler N. E. 101. (Tenn.), 49 S. W. 278. =" White V. Braddock School Dist., "'Wright v. Meyer (Tex.), 25 S. 159 Pa. St. 201, 28 Atl. 136. See also, W. 1122. See al.so, Benson v. Miller, Chapman v. Kansas Citv &c. R. Co., 56 Minn. 410, 57 X. W. 943; Sisters 146 Mo. 481, 48 S. W. 646; Jones v. of Charity v. Smith (N. J.). 46 Atl. Savage, 24 Misc. (X. Y.) 158, 53 N. 598. 58 — CoxTR.\cTS, Vol. 2 § l6o8 CONTRACTS. 914 holding the contract as violated or void in any other respect. "^^ The doctrine of "substantial performance" of building contracts does not apply when the omission or departure from the contract is intentional, or so substantial as not to be capable of remedy, and where an allowance out of the contract-price would not give the owner essentially what he contracted for.-^ § 1608. Personal services. — There is also a difference of opinion as to whether one who has agreed to work for a certain time, and has abandoned his work without cause, can still recover the value of his services rendered, and some courts which have allowed a recovery on a quantum meruit in a building contract where the contractor abandons his contract have refused to allow a recovery on contracts for personal services where the condition is not substantially performed.^* Some courts declare that the weight of authority at the present time is against the doctrine that where a contract is entire, and consequently not apportion- able, and has been only partially performed, the failing party is not entitled to recover or receive anything for what he has ac- tually done; and it is held that if the doctrine has been over- turned with respect to all contracts except those for personal services, it should be overturned with reference to those also, as the acquiring of a benefit, which is the reason that permits a re- covery in other cases of contract, is the same in the case of those -Lilly V. Person. 168 Pa. St. 219, to complete the work by the agreed 32 Atl. 23. In Maher v. Davis &c. time has the burden of showing such Lumber Co., 86 Wis. 530, 57 N. W. failure. Dunn v. Morgenthau, 175 N. 357, defendant contracted in writing Y. 518, 67 N. E. 1081, affg. 12, App. to pay plaintiff a certain amount for Div. (N. Y.) 147, 76 N. Y. S. 827. drawing lumber to defendant's lum- ^ Hoglund v. Sortedahl, 101 Minn, bcr yard, to furnish a wagon for such 359, 112 N. W. 408; Elliott v. Cald- purpose, and to pay 25 cents addition- well, 43 Minn. 357, 45 N. W. 845, 9 al on every 1,000 feet if all should be L. R. A. 52; Spence v. Ham, 27 App. delivered within a specified time. It Div. 379, 50 N. Y. S. 960, affd. 163 was held that plaintiff was entitled N. Y. 220, 57 N. E. 412, 51 L, R. A. to recover the additional pay, al- 238; Anderson v. Todd, 8 N. D. 158, though he did not deliver the lumber 11 N. W. 599. See also, Leeds v. Lit- in the required time, if the delay was tie, 42 Minn. 414, 44 N. W. 309; Phil- caused by defendant's refusal to fur- lip^ v. Gallant, 62 N. Y. 256. nish a wagon, and his failure to fur- ^ Hanel v. Freund, 17 Mo. App. nish refjuisite facilities for unload- 618; Taylor v. Williams, 6 Wis. 363; ing the lumber in the yard. A de- Diefenback v. Stark, 56 Wis. 462, 14 fendant in an action on a contract N. W. 621, 43 Am. Rep. 719. See who counterclaims liquidated dam- Story on Contracts (9th ed.), § TtZ. ages for the failure of the contractor 915 COVEXANTS AXD CONDITIONS. § 1G08 for personal services." Other courts declare that the weight of authority is to the effect that there can be no recovery, and that the reason for recovery in case of partial performance of other contracts does not exist in case of contracts for personal services ; and that to allow suit in such cases upon a quantum meruit without full performance, and recoupment of damages, would in most cases be quite inadequate to indemnify the em- ployer under the ordinary rule of such damages.^" The doctrine, that a party cannot recover ujjon a contract for personal services, when he had failed to perform his part thereof, where the ad- verse party has neither waived, prevented nor dispensed with such performance, but that he may recover for services per- formed under such contract upon the quantum meruit, the em- ployer having the right to set up against the same any damages sustained by reason of such nonperformance, has been approved and recovery allowed in Indiana,^^ lowa,*^ Kansas,"" Nebraska,^" New Hampshire,^^ North Carolina,^^ Texas,^^ South Dakota,'"'* ^Duncan v. Baker, 21 Kans. 99; McKnight v. Bertram Heating &c. Co., 65 Kans. 859, 70 Pac. 345; Mc- Millan V. Malloy, 10 Nebr. 228, 4 N. W. 1004, 35 Am. Rep. 471; Par- cell V. McComber, 11 Nebr. 209, 7 N. W. 529, 38 Am. Rep. 366. "And so I think the law may be considered to be pretty generally settled through- out the western States." See also, McClay v. Hedge, 18 Iowa 66. ""Diefenback v. Stark, 56 \\'is. 462, 14 N. W. 621, 43 Am. Rep. 719; Lan- trv V. Parks, 8 Cow. (N. Y.) 63; Nelson v. Hatch. 174 N. Y. 546, 67 N. E. 1085, affg. 70 App. Div. (N. Y.) 206. 75 N. Y. S. 389. And compare Eldridge v. Rowe, 2 Gilm. (111.) 91,43 Am. Dec. 41. "Wheatley v. Miscal, 5 Ind. 142; Cummings v. Pence, 1 Ind. App. 317, 27 N. E. 631 ; but quaere. See also, Pickens v. Bozell. 11 Ind. 275; Fulton V. Heffelfinger, 23 Ind. App. 104, 54 N. E. 1079. ""McClav V. Hedge. 18 Iowa 66; Pixler V. Nichols, 8 Iowa 106, 74 Am. Dec. 298. "^ Duncan v. Baker, 21 Kans. 99, contains an elaborate review of Brit- ton V. Turner, 6 N. H. 481, 6 Am. Dec. 713. '"West V. Van Pelt, 34 Nebr. 6Z, 51 N. W. 313; Parcell v. McComber, 11 Nebr. 209, 7 N. W. 529, 38 Am. Rep. 366. The opinion declares the weight of authority in the western states is in favor of allowing recov- erv. See Mc^Millan v. Mallov, 10 Nebr. 228, 4 N. W. 1004, 35 Am; Rep. 471. "Britton V. Turner, 6 N. H. 481, 26 Am. Dec. 713, a celebrated and leading case. A farm laborer agreed to work from March, 1831, to ^larch, 1832, and his emplover was to give him at the end of the time $120. The servant abandoned the work without cause in December, 1831. He was al- lowed to recover on a quantum meruit the value of his services. ''Chamblee v. Baker, 95 N. Car. 98. ^^Hollis V. Chapman, Z6 Texas 1; Riggs V. Horde, 25 Texas Supp. 456, 78 Am. Dec. 584. "" Bedow V. Tonkin, 5 S. Dak. 432, 59 N, W. 222. § i6o9 CONTRACTS. 916 and Vermont. ^° On the other hand, the courts of Illinois,^° Mis- souri,^' Ohio,^^ Pennsylvania/'' and Wisconsin**' allow no recov- ery pro tanto where a contract for personal services is not sub- stantially performed. And in California/^ Connecticut,*^ Massa- chusetts," Minnesota,** New York, and perhaps several other states*^ the courts also deny the right to recover in such cases.*" It is thus seen that the weight of authority is to the effect that where the hiring is for a definite time under an entire contract the employe who thus abandons it without consent and without excuse is not entitled to recover, ordinarily at least, for what he has done. § 1609. Conditions in subscriptions generally. — Subscrip- tions to various enterprises are often made conditional. In so Tenton v. Clark, 11 Vt. 557. But see. Cahill v. Patterson, 30 Vt. 592. *' Thrift V. Pavne, 71 111. 408; Trawick v. Peoria & Ft. C. St. R. Co., 68 111. App. 156 ; American Silica Sand Co. v. McGarry, 68 111. App. 233. ^'Hanel v. Freund, 17 Mo. App. 618; Earp v. Tyler, 73 Mo. 617; Downs V. Smit, 15 Mo. App. 583; White V. Wright. 16 Mo. App. 551. ''Larkin v. Buck, 11 Ohio St. 561. ^' Shaw V. Lewistown & K. Tpk. Co., 2 Pen. & W. (Pa.) 454; Gillespie Tool Co. V. Wilson, 123 Pa. St. 19, 16 Atl. 36, but quaere. *"Diefenback v. Stark, 56 Wis. 462, 14 N. W. 621, 43 Am. Rep. 719. ^'Hartman v. Rogers, 69 Cal. 643, 11 Pac. 581, but quaere. "^Dayton v. Dean, 23 Conn. 99, affirms principle, but evidence showed waiver by employer. *^ Stark V. Parker, 2 Pick. (Mass.) 267, 13 Am. Dec. 425. See also, Wiley V. Athol, 150 ^lass. 426, 23 N. E. 311, 6 L. R. A. 342. "Peterson v. Mayer, 46 Minn. 468, 49 N. W. 245 ; Nelichka v. Esterly, 29 Minn. 146, 12 N. W. 457; Kohn v. Faendel, 29 Minn. 470, 13 N. W. 904. *= Goldstein v. White, 16 N. Y. S. 860, 43 N. Y. St. 121. See also, Law- rence v. Miller, 86 N. Y. 131; Cun- ningham V. Jones, 20 N. Y. 486; Smith V. Brady, 17 N. Y. 173, 72 Am. Dec. 442; Waters v. Davies, 8 N. Y. St. 162, 55 Super. Ct. (N. Y.) 39. Unless there is a special agree- ment to the contrary, work, whether measured by the job or by time, must be finished in order that there shall be a right to pay for it. Gold- stein v. White, 16 N. Y. S. 860, 43 N. Y. St. 121. *«See Hawkins v. Gilbert, 19 Ala. 54; Dugan v. Anderson, 36 Md. 567, 11 Am. Rep. 509; Olmstead v. Bach, 78 Md. 132, 27 Atl. 501, 22 L. R. A. 74, 44 Am. St. 273; Timberlake v. Thayer, 71 Miss. 279, 14 So. 446, 24 L. R. A. 231. See also, following cases more or less discussing the right of parties to recover on a quantum meruit when they have not fulfilled their contracts : Griffith v. Happersberger, 86 Cal. 605, 25 Pac. 137; Ponce v. Smith, 84 Maine 266, 24 Atl. 854; Kriger v. Leppel, 12 Minn. 6, 43 N. W. 484; Boteler v. Roy, 40 Mo. App. 234; Globe Light & Heat Co. v. Doud, 47 Mo. App. 439; Oberlies v. Bullinger, 132 N. Y. 598, 30 N. E. 999, 4 Silvernail (N. Y.) 2.S0; Walden v. Eldrcd. 58 Hun (N. Y.) 605, 11 N. Y. S. 856, 34 N. Y. St. 398; Dennis v. Walsh, 41 N. Y. St. 103, 16 N. Y. S. 257; Moore v. Car- ter, 146 Pa. St. 492, 23 Atl. 243; Hughes V. Cameron, 1 Sneed (Tenn.) 622. In England in contracts for Avork and labor, the work is a con- dition precedent, and must be com- pleted before the payment for it can 917 COVENAXTS AND CONDITIOXS, § iGOQ far as the general nature of such contracts or the consideration is concerned this subject has already been treated, but we have here to do with the construction and effect of conditions. The general rule of interpretation that the intention of the parties should be ascertained and given effect applies here as elsewhere. If the sub- scription is made on particular terms and conditions going to the whole promise these usually constitute conditions precedent to liability on the part of the subscriber." The courts, hov»-ever, are inclined to construe conditions in stock subscriptions as subse- quent when it can properly be done so as to hold the subscription absolute,^* and the condition subsequent in the nature of a sepa- rate contract to be enforced like other contracts." And in a case where there was a provision in a subscription for the location of a school that it be erected within the state and under the patron- age of a certain church, the court said : "The agreement did not provide that it should be located at any particular point, nor docs the location of the school constitute a condition precedent to the payment of the money.""" A substantial compliance with con- ditions in a subscription is required and is generally sufficient without an absolutely literal compliance." There is some dif- ficulty and some conflict of decision in determining when time is of the essence in such cases, but if no time is fixed in the con- tract the general rule is that performance may and must be within a reasonable time.^" be claimed. }iIorton v. Lamb, 7 T. R. Paducah & M. R. Co. v. Parks, 86 125. Peeters v. Opie, 2 Wms. Saund. Tenn. 554, 8 S. W. 842. See also, 346 Johnson v. Georgia M. & G. R. Co., ^'Cincinnati &c. R. Co. v. Bensley, 81 Ga. 725, 8 S. E. 531. 51 Fed. 738. 2 C. C. A. 480, 6 U. S. '"' 1 Elliott R. R. (2nd ed.), § 111. App. 115, 19 L. R. A. 796; Burling- ""Northwestern Conference &c. v. ton &c. R. Co. V. Boestler, 15 Iowa Myers, 36 Ind. 375. But see Roth- 555: First M. E. Church of Burling- enberger v. Click, 22 Ind. App. 288, ton V. Swenv, 85 Iowa 627. 52 N. W. 52 N. E. 811. 546; Taggart v. Western Md. R. Co., "1 Elliott R. R. (2d ed.), § 117 et 24 Md. 563, 89 Am. Dec. 760 and seq. ; Johnston v. Ewing Female Uni- note; Sickels v. Anderson, 63 ]\Iich. vcrsitv. 35 111. 518; Hall v. \'irginia, 421, 30 N. W. 78. See as to public 91 111. 535; Cottage Hospital v. Mer- aid and subscriptions to railroads, as rill, 92 Iowa 649, 61 N. \V. 490; Suit to when time is of the essence and v. Warren School Twp., 8 Ind. App. what is sufficient compliance with 655, 36 N. E. 291 (when not suffi- conditions as to completion of road, cicnt) ; McAuley v. Billenger. 20 2 Elliott R. R. (2d ed.). §§ 851-851b. Johns. (N. Y.) 89. But see. Bohn ^Belfast & M. L. R. Co. v. Moore, Mfg. Co. v. Lewis, 45 Minn. 164, 47 60 Maine 561 ; Henderson &c. R. Co. X. W. 652. V. Leavell. 16 B. :Mon. (Ky.) 358; '= Paddock v. Bartlett, 68 Iowa 16. CONTRACTS. 918 § 1610. Conditions in subscriptions to stock. — Subscrip- tions to the stock of a corporation prior to the procurement of its charter, in order to obtain the amount required for incorpora- tion must be absokite, and it has been held that any condition at- tached thereto is void.^^ But, after incorporation, a person may, in his subscription, in general, impose any conditions not contrary to public policy or contrary to some statute.^'* Anything which may be legally done by the corporation may be made a condition to a subscription for stock,^^ Whether conditions in subscrip- tions to stock are precedent or subsequent is a question of intent, to be determined by considering the words both of the clause con- taining the condition and of the whole contract.^® When sub- 25 X. W. 906; Waters v. Union Trust Co., 129 Mich. 640, 89 N. W. 687; Green v. Dyersburg, 2 Flip. (U. S.) 477, Fed. Cas. No. 5756; 1 Elliott R. R. (2d ed.), § 116 (citing cases as to time being essential when fixed), 2 Elliott R. R. (2d ed.), § 851b. " Boyd V. Peach Bottom R. Co., 90 Pa. St. 169; Caley v. Philadelphia &c. R. Co., 80 Pa. St. 363 ; Troy R. Co. v. Tibbits, 18 Barb. (N. Y.) 297 (hold- ing the subscription void) ; Cham- berlain V. Painesville & H. R. Co., 15 Ohio St. 225 ; Morrow v. Nashville Iron & Steel Co., 87 Tenn. 262, 10 S. W. 495, 3 L. R. A. Zl , 10 Am. St. 658. See also, Brand v. Lawrence- ville Branch R. Co., 11 Ga. 506, 1 S. E.^55; Burke v. Smith, 16 Wall. (U. S.) 390, 21 L. ed. 361. ^ New Albany & S. R. Co. v. Mc- Cormick, 10 Ind. 499, 71 Am. Dec. Zll; McMillian v. Maysville &c. R. Co., 15 B. Mon. (Ky.) 218, 61 Am. Dec. 181 ; Skowhegan R. Co. v. Kins- man, n Maine 370; Kennebec & P. R. Co. V. Jarvis, 34 Maine 360 ; Bucks- port & B. R.. Co. V. Buck, 65 Maine 536; Proprietors of City Hotel &c. V. Dickinson, 6 Gray (Mass.) 586; Lexington & W. C. R. Co. v. Chand- ler, 13 Mete. (Mass.) 311; Penobscot & K. R. Co. v. Bartlett, 12 Gray (Mass.) 244, 71 Am. Dec. 753 ; Boston, Barre & Gardner R. Co. v. Welling- ton, 113 Mass. 79; Union Hotel Co. V. Hersee, 15 Hun (N. Y.) 371, revd. 79 N. Y. 454. 35 Am. Rep. 536; Bur- rows V. Smith, 10 N. Y. 550; Ashta- bula & N. L. R. Co. V. Smith, 15 Ohio St. 328. "1 Elliott R. R. (2d ed.), § 112; Penobscot & K. R. Co. v. Dunn, 39 Maine 587; Ticonic Water Power & Mfg. Co. V. Lang, 63 Maine 480; Hackett v. Northern Pac. R. Co., 36 Misc. (N. Y.) 583, IZ N. Y. S. 1087; Ashtabula & N. L. R. Co. v. Smith, 15 Ohio St. 328; Hanover Junction & S. R. Co. v. Grubb, 82 Pa. St. 36; Milwaukee & N. L R. Co. v. Field, 12 Wis. 340. See generally, Smith v. Tallassee &c. Co., 30 Ala. 650; Jacks V. Helena, 41 Ark. 213; People v. Chambers, 42 Cal. 201; Chattanooga R. & C. Co. V. Warthen, 98 Ga. 599, 25 S. E. 988; Mitchell v. Rome R. Co., 17 Ga. 574; Isbester v. Murphy Mfg. Co., 95 111. App. 105; Paris & D. R. Co. v. Henderson, 89 111. 86; Cooper v. McKee, 53 Iowa 239, 5 N. W. 121 ; Swatara R. Co. v Brune, 6 Gill. (Md.) 41; Detroit & C. R. Co. v. Starnes, 38 Mich. 698; Highland Co. V. McKean, 11 Johns. (N. Y.) 98; Moore v. Hanover Junction &c. R. Co., 94 Pa. St. 324 ; Caley v. Phila- delphia &c. R. Co., 80 Pa. St. 363; Woonsocket R. Co. v. Sherman, 8 R. I. 564. But compare Butternuts & O. Turnpike Co. v. North, 1 Hill (N. Y.) 518; Macedon &c. Plank Road Co.v. Snediker, 18 Barb. (N. Y.) 317. '^^ Beach on Private Corporations, § 532, citing Bucksport & B. R. Co. v. Brewer, 67 Maine 295; Chamberlain v. Painesville & H. R. Co., 15 Ohio St. 225. Compare Chapman v. Vir- 919 COVEXAXTS AND CONDITIONS. § 161O scriptions are made to take stock in an existing corporation upon a condition precedent, as for example upon condition that a speci- fied amount of subscriptions shall hereafter be obtained, the con- tract of the subscribers is twofold in character. It is a contract between the several subscribers and it is also a continuing offer to the corporation to take and pay for the amount of stock sub- scribed, upon the terms proposed, whenever the specified amount of subscriptions shall be obtained. The obtaining of the amount specified within a reasonable time is an acceptance of the offer by the corporation and tiie contract of each subscriber then be- comes absolute. '^^ The subscriber has been held not a member of the corporation until the conditions prescribed by him are per- formed by the company.^^ A subscriber cannot, ordinarily at least, withdraw his subscription even though it be conditional, unless unreasonable delay occurs in performing the condition. °® When the company .obtains solvent subscribers for the amount specified, that becomes an effectual acceptance of the offer of all those who have previously subscribed, and then subscriptions are no longer conditional, but become absolute and are thereafter payable, according to the terms of the contract, on the call of the board of directors.'^'^ The subscribers are then entitled to all the rights and privileges of stockholders, and come under the cor- relative obligations and duties of holders of stock in a corpora- tion."^ Where there are recitals in the charter, or in the pros- ginia Real Estate Inv. Co., 96 Va. N. Y. 451; McClure v. People's 177, 31 S. E. 74. Freight R. Co., 90 Pa. St. 269. Com- " Cravens v. Eagle Cotton ]Mills pare, however, Junction R. Go. v. Co., 120 Ind. 600, 21 N. E. 984, fol- Reeve, 15 Ind. 236; Taggart v. West- lowing 120 Ind. 6, 21 N. E. 981, 16 ern Md. R. Co., 24 Md. 563. 89 Am. Am. St. 298; Minneapolis Threshing Dec. 760; Lowe v. Edgefield &c. R. Mach. Co. v. Davis, 40 Minn. 110, 41 Co., 1 Head (Tenn.) 659; and see N. W. 1026, 3 L. R. A. 796, 12 Am. Rroadbent v. Johnson, 2 Idaho 325, St. 701. See also, 1 Elliott R. R. 13 Pac. 83. (2d ed.), § 113. ~ Beach on Private Corporations, " Montpelier & W. R. Co. v. Lang- § 532, citing New Albany & S. R. Co. don, 46 Vt. 284. See also. Monad- v. Pickens, 5 Ind. 247; Estell v. nock R. Co. V. Felt, 52 N. H. 379; Knightstown & M. Turnpike Co., 41 Burrows V. Smith, 10 X. Y. 550; Ash- Ind. 174; Beckner v. Riverside &c. tabula & N. L. R. Co. v. Smith, 15 Turnpike Co., 65 Ind. 468; Phoenix Ohio St. 328; Philadelphia & W. C. Warehousing Co. v. Badger, 67 X. R Co. V. Hickman. 28 Pa. St. 318. Y. 294, and see Cravens v. Eagle "Garner v. Hall, 114 Ala. 166. 21 Cotton Mills Co.. 120 Ind. 600, 21 So. 835 ; Johnson V. Wabash, Mt. Ver- X. E. 984, following 120 Ind. 6, 21 non Plank Road Co., 16 Ind. 3»(): X. E. 981. 16 Am. St. 298. Lake Ontario &c. R. Co. v. Mason, 16 "' Butler University v. Scoonover, CONTRACTS. 920 pectus, or in the subscription paper, that the capital stock of a company which, at the time, has not commenced active opera- tions, shall be a certain amount, there is an implied condition that the amount of stock specified shall be taken before the subscribers shall become liable on their contract,*'' unless a contrary intention appears in the charter, enabling act, articles of association or contract of subscription. '^^ So where a corporation, incorpo- rated under general law requiring that the amount of its stock be stated in the certificate of incorporation, enters into active business with less capital stock subscribed than the amount thus stated, it has been held that a subscriber cannot be held to his subscription.*'* A substantial performance is all that is usually required.^^ This rule applies particularly to the time of comple- tion, and the location, termini, and the method of building a rail- road,*'*' but what is necessary to constitute performance or what may be regarded as a reasonable time is usually, if not always, a question of law.*'^ The question as to whether a condition has been performed is usually a question of fact.*'^ 114 Ind. 381, 16 N. E. 642, 5 Am. St. 627. *= Memphis &c. R. Co. v. Sullivan, 57 Ga. 240; Temple v. Lemon, 112 111. 51, 1 N. E. 268; Rockland Mt. D. & S. Steamboat Co. v. Sewall, 80 :\Iaine 400, 14 Atl. 939; Haskell v. Worth- ington, 94 IMo. 560, 7 S. W. 481; Contoocook Val. R. Co. v. Barker, 32 N. H. 363; Bray v. Farwell, 81 N. Y. 600. ^ Beach on Private Corporations, § 535 ; Schloss v. Montgomery Trade Co., 87 Ala. 411, 6 So. 360, 13 Am. St. 51; Peoria & R. I. R. Co. v. Preston, 35 Iowa 115; Musgrave v. Morrison, 54 Md. 161. •"Haskell v. Worthington, 94 Mo. 560, 7 S. W. 481. See also. Topeka Bridge Co. v. Cummings, 3 Kans. 55; Hager v. Cleveland, 36 Md. 476; Hughes V. Antietam Mfg. Co., 34 Md. 316; Cabot & West Springfield Bridge V. Chapin, 6 Cush. (Mass.) 50; Stoneham Branch R. Co. v. Gould, 2 Grav (Mass.) 277; Sedalia R. Co. v. Abell, 17 Mo. App. 645. ** Paris & D. R. Co. v. Henderson, 89 111. 86; Des Moines Valley R. Co. V. Graff, 27 Iowa 99, 1 Am. Rep. 256; Springfield R. Co. v. Sleeper, 121 ^lass. 29. '^ Beach on Private Corporations, § 540, citing Missouri Pac. R. Co. v. Tygard, 84 Mo. 263, 54 Am. Rep. 97 ; People V. Holden, 82 111. 93; Des Moines Valley R. Co. v. Graff, 27 Iowa 99, 1 Am. Rep. 256; Detroit &c. R. Co. V. Starnes, 38 Mich. 698; Cayuga Lake R. Co. v. Kyle, 5 Thomp. & C. (N. Y.) 659, affd. 64 N. Y. 185; Moore v. Hanover Junction &c. R. Co.. 94 Pa. St. 324. <" See Garner v. Hall, 122 Ala. 221, 25 So. 187; Blake v. Brown, 80 Iowa 277, 45 N. W. 751 ; Chicago R. Co. v. Schewe, 45 Iowa 79; Stevens v. Cor- bitt, 33 Mich. 458; Chartiers R. Co. V. Hodgens, 85 Pa. St. 501 ; LaCrosse Brown Harvester Co. v. Goddard, 114 Wis. 610, 91 N. W. 225. ^ Jewett V. Lawrenceburgh & U. M. R. Co., 10 Ind. 539; St. Louis R. Co. V. Eakins, 30 Iowa 279; Toledo & Ann Arbor R. Co. v. Johnson, 49 Mich. 148, 13 N. W. 492. But see Brand v. Lawrenceville Branch R. Co., 77 Ga. 506, 1 S. E. 255; Eliza- beth City Cotton Mills v. Dunstan, 121 N. Car. 12, 27 S. E. 1001, 61 Am. St. 654. 921 COVEXAXTS AXD COXDITIOXS. § iGlI § 1611. Conditions subsequent in deed — Subsequent de- feasance. — Conditions in deeds will be treated in another volume, but a word or two upon the subject of conditions in deeds and wills may not be out of place here. As between conditions, whether precedent or subsequent, and covenants, the courts favor the latter and incline to a construction that will make the pro- vision a covenant.*"* And as between a condition precedent and a condition subsequent they favor the latter in the same way.''*' The object of construction here as elsewhere is to get at and effectuate the intention, and certain tests have been suggested but they are too general and indefinite to be of much use.^^ As a genpral rule it may be said that to create a condition subsequent in a deed, the intention of the parties to the deed must be clearly expressed in some words importing that the estate is to depend upon a contingency provided for.'- Where the condition subse- quent in a deed conveying an estate in fee-simple was the pay- ment of a certain annuity by the grantee to the grantor on a given day in each year during tlie life of the grantor, it was held that it was not broken so long as the annuity was not in arrears, and until the conditions were broken the grantor had no right to re-enter as for a forfeiture, and no cause of action to cancel the deed as a cloud upon his title. "^ So, it has been held that where land is conveyed in payment of a debt by deed absolute and with- out any agreement for a defeasance, a subsequent agreement exe- cuted by the grantee, stipulating that if he sells the land he will give the grantor the refusal to purchase or to find a purchaser upon the same terms offered to others, or if he sells a portion and realizes enough to pay the debt he will reconveythe property to the "•Hawlev v. Kafitz, 148 Cal. 393, 83 '= Garcia v. Gunn. 119 Cal. 315. 51 Pac. 248. 3 L. R. A. (N. S.) 741, and Pac. 684; North & South R. S. Co. v. note 113 Am. St. 282. See note to O'Hara, 73 111. App. 691; Brown v. Ecrovd V. CoRgeshall, 21 R. I. 1, 41 Chicago. & N. W. R. Co. (Iowa). 82 Atl. 260, 79 Am. St 741 ; Shreve v. N. W. 1003 : Faith v. Bowles. 86 Md. Norfolk & W. R. Co., 109 Va. 706, 13. 37 Atl. 711. 63 Am. St. 489; An- 64 S. E. 972, 23 L. R. A. (N. S.) 771, derson v. Gaines. 156 Mo. 664. 57 S. and note. W. 726; Baker v. Mott. 78 Hun (N. '"In re Stickncv's Will. 85 :Md. 79, Y.) 141. 60 N. Y. St. 174. 28 N. Y. S. 36 Atl. 654, 35 L. R. A. 693, 60 Am. 968. affd. 152 N. Y. 637. 46 N. E. St. 308. 1144; Ecrovd v. Coggeshall. 21 R. I. " See for statement of these tests 1, 41 Atl. 260. 79 Am. St. 741. and for an elaborate note on the sub- " Denham v. Walker, 93 Ga. 497, 21 ject of conditions precedent, 102 Am. S. E. 102. St. 366 et seq. § l6l2 CONTRACTS. 922 grantor, does not convert the fee into a defeasible estate.^* While in such a case the subsequent agreement may not be read with the conveyance for the purpose of establishing the latter as a mort- gage, yet where the two instruments were executed in pursuance of the original agreement and so constitute a part of the same transaction, they may be so read together, although they were not reduced to writing at the same time and do not bear even date."^ Where premises had never been used for the purpose for which they were conveyed and many years had elapsed, it was held that this was a breach of condition subsequent for which the grantor had a right of entry."*' § 1612. Surety's bond signed under condition. — Where one signs, as surety, a bond, which in form is a joint obligation, upon condition that others are to sign the same with him, and it is deliv- ered without the condition having been complied with, the instru- ment is invalid as to the one signing as surety, unless the obligee, prior to the delivery, had no notice of such condition, or the surety, after signing, waived the condition." It is equally well settled that, when such a bond is delivered to the obligee without being signed by all the persons named in the body thereof as obligors, it is sufficient to put the obligee upon inquiry whether those who signed consented to its being delivered without the signatures of the others, and to charge the obligee with notice, if such be the fact, that the person signing did so upon the condition that the others named should also sign.^^ "Pond V. Harwood, 139 N. Y. Ill, bond cannot be enforced against the 34 N. E. 768. one so signing as surety, unless the ^^ Kraemcr v. Adelsberger, 122 N. obligee had no notice of the condi- Y. 467, 25 N. E. 859. tion, or it be established that the '* Fav V. Locke, 201 Mass. 387, 87 surety, after signing, waived the con- N. E. 753, 131 Am. St. 402. As to how dition. Cutler y. Roberts, 7 Nebr. 4; advantage may be taken of breach of Sharp v. United States, 4 Watts condition subsequent see note to (Pa.) 21; Fletcher v. Austin, 11 Vt. Trustees of Union College v. New 447; Hall v. Parker, 37 Mich. 590; York, 173 N. Y. 38, 65 N. E. 853, 93 Lovett v. Adams, 3 Wend. (N. Y.) Am. St. 569, 572. See also, Spring- 380; State v. Pepper, 31 Ind. 76; field &c. Trac. Co. v. Warrick, 249 People v. Bostwick, 32 N. Y. 445." 111. 470, 94 N. E. 933, Ann. Cas. 1912A, '* Sacramento v. Dunlap, 14 Cal. 187; Ball v. Milliken. 31 R. I. 36, 76 421; People v. Hartley, 21 Cal. 585, Atl. 789, Ann. Cas. 1912B, 30. 82 Am. Dec. 758; Clements v. Cas- " Spencer v. McLean, 20 Ind. App. sillv, 4 La. Ann. 380; Wood v. Wash- 626, 50 N. E. 769, 67 Am. St. 271; burn, 2 Pick. (Mass.) 24; Cutler v. Mullen V. Morris, 43 Nebr. 596, 62 Roberts, 7 Nebr. 4, 29 Am. Rep. 371 ; N. W. 74, per Nerval, C. J. : "The State Bank v. Evans. 15 N. J. L. 155, 923 COVEXAXTS AND COXDITIOXS. § i^Ji3 § 1613. Time of performance — Reasonable time. — Where an option is to be exercised or a condition to be performed in a time not limited by tlie agreement, the general rule is that it must be acted upon and the conditicjn performed or abandoned within a reasonable time.'" But while one party has time and oppor- tunity to comply with a condition precedent, if the other party does or says anything to put him off his guard, and induce the former to believe that the condition is waived, or that strict com- pliance will not be insisted on, the latter may be afterward estopped from claiming nonperformance of the condition. Thus, where bonds were purchased with the understanding that, if the customer did not want to hold them the broker would take them off his hands at cost price, a delay on the part of the customer to exercise his option was held not to deprive him of his right to do so, where the broker encouraged him to hold on to the bonds by predicting better prices.*" So, it may appear from the terms of the contract and the nature of the transaction, although there 28 Am. Dec. 400; Sharp v. United States, 4 Watts (Pa.) 21; Bean v. Parker, 17 Mass. 591. Is there any presumption that such a bond is in- complete and unfinished until exe- cuted by all the parties whose names appear in it as obligors? Upon this point the authorities are not har- monious. The following cases hold that no presumption arises that such a bond was not considered as bind- ing until the signatures of all the obligors named in the body have been obtained, but, on the contrary, its execution is deemed prima facie complete, and it is for the defend- ants to establish that they signed on the express condition that they w-ere not bound until all the obligors named in the instrument should sign. John- son V. Weatherwax, 9 Kans. 75 ; Ras- kins V. Lombard, 16 Maine 140, 33 Am. Dec. 645 ; Cutter v. Whittemore, 10 ]\Iass. 442; Dillon v. Anderson. 43 N. Y. 231; Johnson v. Baker, 4 Barn. & Aid. 440. Some of the au- thorities which hold that the pre- sumption is that such instrument was not to be delivered until all had signed are Sharp v. United States, 4 Watts (Pa.) 21; Clements v. Cas- sillv. 4 La. Ann. 380. •"Vvse V. Wakefield. 6 M. & W. 442; Catlin v. Green, 120 N. Y. 441, 24 N. E. 941; Fitzpatrick v. Wood- ruflf, 96 N. Y. 561 ; Wooster v. Sage, 67 N. Y. 67; Johnston v. Trask. 40 Hun (N. Y.) 415. 116 N. Y. 136. 22 N. E. 377, 5 L. R. A. 630, 15 Am. St. 394. And the question as to what is a reasonable time is held one of fact for the jury in Campbell v. Heney. 128 Cal. 109, 60 Pac. 532. See also, Kentucky Chair Co. v. Common- wealth, 105 Ky. 455. 20 Ky. Law, 1279, 49 S. W. 197; Lind v. Apponaug Bleaching &c. Co., 20 R. L 344. 39 Atl. 188; Andrae v. Watson (Tex. Civ. App.), 73 S. W. 991; Lang v. Menasha Paper Co., 119 Wis. 1, 96 N. W. 393. ^Johnston v. Trask. 40 Hun (N. Y.) 415, affd. 116 N. Y. 136. 22 N. E. 377, 5 L. R. A. 630. 15 Am. St. 394. See also. Thompson v. Kvle, 39 Fla. 582, 23 So. 12, 63 Am. 'St. 193. i6i4 CONTRACTS. 924 is no express provision as to time, tliat the parties must have in- tended that it might not be completed for months or even years. ^^ § 1614. Waiver — Miscellaneous. — Full performance, time of performance, and other conditions may be waived.®- A com- plaint alleging that, after plaintiffs became the owners of the note in suit, defendant admitted to them that it was due, and .agreed that, in consideration of an extension of time for thirty days, he would pay it, and that he failed to do so, shows a waiver by de- fendant of the performance of a condition precedent in the note." The acceptance of contract work bi-weekly as it progresses, by the superintendent of a corporation, as done to his "satisfaction,'' in compliance with the terms of the contract, and a final accept- ance of the whole in writing, is conclusive on the company as to performance, in the absence of fraud or mistake on the part of the superintendent.®* And when one who was under contract to furnish lamps of the most approved form, made by a certain company, in good faith furnished lamps made by it having a new ^ Fitch V. Windram, 184 Alass. 68, 67 N. E. 965. *^ Three States Lumber Co. v. Bowen, 95 Ark. 529, 129 S. W. 799; Westerveh v. Huiskamp, 101 Iowa 196. 70 N. W. 125 ; Hanover Junction & S.- R. Co. V. Haldeman, 82 Pa. St. 36, 2 Chest. County (Pa.) 256; An- derson V. Middle &c. Tenn. Cent. R. Co., 91 Tenn. 44, 17 S. W. 803. *^ Johnson v. Bucklen, 9 Ind. App. 154, 36 N. E. 176, where the court said : "The performance of a condi- tion precedent may be waived in many ways. A person who made a subscription to the capital stock of a railway company on the express condition that the road should be con- structed on a certain line, and to within a certain distance of a given place, after the road had been con- structed on another line, gave his note for the amount of his subscrip- tion. This was held to be a waiver of the condition. Evansville &c. R. Co. V. Dunn, 17 Ind. 603. Where money is stipulated to be paid upon a condition expressed, and subse- quently a promissory note is given for the amount, pavable without con- dition, the condition precedent is waived. Swank v. Nichols, 20 Ind. 198, 24 Ind. 199. See also, Hunter v. Leavitt, 36 Ind. 141 ; Masonic &c. Assn. v. Beck, 77 Ind. 203, 207. It was at the option of the pleader to aver performance of the condition precedent, or to aver a waiver of the condition. Indiana Ins. Co. v. Capehart, 108 Ind. 270, 273, 8 N. E. 285. We think the only purpose of the averments with reference to the extension of the time of the maturity of the note is to show that the ap- pellant waived a strict performance of the condition. The facts alleged do constitute a waiver." See also, Spreckels v. Bender, 30 Ore. 577, 48 Pac. 418. "* Sheffield & B. Coal, Iron & R. Co. V. Gordon, 151 U. S. 285. 38 L. ed. 164, 14 Sup. Ct. 343, per Brown, J. : "It is difficult to see what effect should be given the acceptance of the work by the superintendent, if not to foreclose the parties from thereafter claiming that the contract had not been performed according to its terms. Martinsburch & P. R. Co. V. March. 114 U. S. 549, 29 L. ed. 255, 5 Sup. Ct. 1035." Bradv v. Cas- sidv, 145 N. Y. 171, 39 N. E. 814. 925 COVENANTS AND CONDITIONS. § 1614 kind of burner, it was held that the purchaser could not recover damages on the ground that this burner was a failure, and that it would cost three dollars per lamp to exchange it for the old kind, when there was no evidence that it ever made any such change, or paid any money therefor, or sold the lamps for any less price on account of the burner, or how much less the lamps were worth with the new burner than with the old.^' Where a person con- tracted to build a gas tank for a company, and complete it by a day specified, under a certain penalty per day for failure so to complete, provided the company would have the foundation ready by a day specified, it was held that the completion of the founda- tion by the company on the day mentioned was a condition prece- dent, in default of which the company could not claim the penalty as liquidated damages.'*'' And where a bond was given toward the endowment of a professorship, it was held that the establish- ment and endowment of such professorship was not a condition precedent to the collection of the bond." A stipulation in a bond to "secure" land for a railroad company for its depot requires the securing of a good title to the land, and the construction of a depot is not a condition precedent to the company's right to re- cover on the bonds for defendant's failure to secure the land.'' "^ Cincinnati Siemens-Lungren Gas the funds, is a trust assumed by the Co V Western &c. Co.. 152 U. S. acceptance of the bond, and such 200, 38 L. ed. 411, 14 Sup. Ct. 523. trusts, as we have already seen, may ^'Standard Gas Co. v. Wood, 61 be enforced upon the failure of the Fed 74 9 C. C. A. 362; Dannat v. trustee to perform them. That the Fuller 120 N Y. 554, 24 N. E. 815; performance of the trust is not a con- Mansfield V. New York Cent. &c. R. dition precedent, see Northwestern Co.. 102 N. Y. 205. 6 N. E. 386; Der- Conference v. Myers. 36 Tnd. 3/5 mott V. Tones. 23 How. (U. S.) ^Rogers v. Galloway Female Col- 2^0 16 L ed 442 lege. 64 Ark. 627. 44 S. W. 454. 30 "Barnett v. Franklin College, 10 L. R. A. 636; Frey v. Fort \\orth Tnd. App. 103. Zl N. E. 427. "The &'c. R. Co.. 6 Tex. Civ. App. 20. 24 endowment of the James Forsyth S. W. 950, revd. 86 Tex. 46o, 2o S. professorship, like the application of W. 609. CHAPTER XXXVII. PAROL EVIDENCE. § 1620. Merger of negotiations in § 1639. written contracts. 1621. Extrinsic evidence not admis- 1640. sible to contradict or vary 1641. written contracts — General 1642. rule. 1643. 1622. The rule illustrated — Trans- fers of real property. 1644. 1623. The rule illustrated — Insur- 1645. ance contracts. 1624. Bills and notes, promise to pay 1646. out of particular fund. 1647. 1625. Contemporaneous contracts — To defeat validity or legal 1648. effect of note. 1649. 1626. Contemporaneous agreement 1650. to pay note in property or 1651. work. 1652. 1627. Aliscellaneous illustrations. 1653. 1628. Rule applies to what is im- 1654. plied by law as part of con- tract. 1655. 1629. Limitations and qualifications of general rule. 1656. 1630. Rule does not ordinarily apply 1657. to strangers. 1658. 1631. Incomplete writings. 1632. Existence and validity of con- 1659. tract. 1633. Collateral and independent 1660. agreements. 1634. Collateral agreements — Evi- 1661. dence held admissible. 1662. 1635. Collateral agreements — Evi- dence held inadmissible. 1663. 1636. Conditions precedent. 1664. 1637. Conditions precedent — Bills 1665. and notes. 1638. Conditions precedent — Sure- ties. Conditions precedent — Rule further illustrated. Subsequent agreements. Object — Purpose — Intent. Consideration. One contract as consideration for another. Bills of lading. Evidence to connect different writings. Resulting trust. Showing deed to be a mort- gage. Dates. Illegality. Fraud and duress. Fraud — llllustrative cases. Mistake. iMistake — Illustrative cases. Discharge — Performance — Waiver. Parol evidence to aid interpre- tation. Patent ambiguity. Latent and patent ambiguity. Another statement as to pat- ent and latent ambiguity. Identification of subject-mat- ter. Identification of subject-mat- ter — Illustrative cases. Meaning of words — Generally. Translations and illegible writings. Usage and custom. Identification of parties. Abbreviations, technical trade, and local terms. § 1620. Merger of negotiations in written contracts. — A written contract which is complete in itself and the validity of which is conceded cannot be varied by showing that prior or con- 926 927 PAROL EVIDENCE. § 162O temporaneous agreements were made which were not reduced to writing but, in accordance with the understanding of the par- ties thereto, were to remain in full force and effect.^ The prior mutual understanding of the parties is unimportant when they have signed a contract covering the subject-matter thereof. It is well settled that the execution of a contract in writing supersedes and merges all the oral negotiations or stipulations concerning its terms and the suhjcct-niaticr which preceded or accompanied the execution of the instrument, in the absence of accident, fraud, or mistake of facts; and in action on the contract any representa- tion made prior to or contemporaneous with the execution of the written contract is generally inadmissible to contradict, change or add to the terms plainly incorporated in and made a part of the written contract." This rule is equally applicable where the in- tention of the party is set out in two written instruments as well as where it is contained in only one.^ When the parties of their own volition omit certain terms in reducing the contract to writing,'' as where a clause pro- viding for the abatement of rent is voluntarily omitted,'' the terms thus omitted cannot be enforced. Thus where a woman ^Abrey v. Crux, L. R. 5 C. P. ^7 ; 63 N. J. Eq. 282. 49 Atl 1081 afltg. Woollam V. Hearn, 7 Ves. Jr. 211; 60 N. J. Eq. 282, 47 Ad- ^7; Thomas Omerod v. Hardman. 5 Ves. Jr. 722; v. Scutt, 127 N. Y. 133, 27 N. E. 961; Hildreth v. Hartford &c. Tramway Travelers' Ins. Co. v. Myer, 62 Ohio Co., 72, Conn. 631, 48 Atl. 963; Quinn St. 529, 57 N. E. 458, 49 L. R A /60: V. Roath, 2>7 Conn. 16 ; Sun &c. Asso- Union Central &c. Co. v. Hook, 6- ciation V. Edwards, 113 Fed. 445, 51 Ohio St. 256, 56 N. E. 906; Philadej- C C. A. 279; Rector v. Hartford De- phia & D. C. R. Co. v. Conway. 1/7 posit Co., 190 111. 380, 60 N. E. 528; Pa. St. 364, 35 Atl 716; Heist v. Tichenor v. Newman, 186 III. 264. Hart, 7Z Pa. St. 286. Gilbert v. 57 X. E. 826; Ehrsam v. Brown, 64 Stockman. 76 \\ is. 62. 44 N- >). «45, Kans. 466. 67 Pac. 867; Wight v. 20 Am. St. 23; Union Mut Life Ins. Shelbv County R., 16 B. Mon. (Kv.) 4, Co. v. Mowry, 96 U. S. 544, 24 L. 63 Am Dec '522; Holmes v. Holmes, cd. 674. Contra, under the California 129 Alich 412, 89 N. W. 47, 95 Am. statute. Snyder v. Holt Mfg. Co., St. 444; McCrav Refrigerator Co. v. 134 Cal. 324, 66 Pac._ 311 Woods, 99 Mich. 269, 58 X. W. 320, "Wenzel v. Kieruj, 168 Mich. 92. 41 Am. St. 599: Loth v. Frederick, 133 N. W. 921; McNinch y North- 95 :\Iich 598, 55 N. W. 369; Plumb west Thresher Co.. 23 Okla. 3b6. V. Cooper, 121 Mo. 668, 26 S. W. 678; 100 Pac. 524. 138 Am St. 803 Largey v. Leggatt, 30 Mont. 148, 75 M-larrison v. Tate, 100 Ga. 383, J8 Pac. 950; Montana Mining Co. v. S. E 227. ^, , o Milling Co., 20 Mont. 304, 51 Pac. * Eleventh Street Clnirch y Pen- 824 affd 171 U. S. 650, 43 L. ed. nington. 18 Ohio C. C. 40b, 10 Ohio •320! 19 Sup. Ct. 61 ; Crawford v. C. D. 74. Minnesota &-c. Imp. ' Co., 15 Mont. ' Seitz Brewing Co. y^ Ayers, 60 153, 38 Pac. 713 ; Russell v. Russell, X. J. Eq. 190, 46 Atl. 535. § l620 CONTRACTS. 928 executed a written instrument whereby she abandoned her claim to certain horses and carriages in another's possession until such other's claim for board was paid in full, it was held that the woman could not show a contemporaneous oral agree- ment by which she might have the use of such horses in the ordi- nary course of her business.*' And in case the law grants no priority of payment between notes secured by one mortgage but falling due on different dates, extrinsic evidence will not be ad- mitted to show that the assignee should have priority.^ Where four notes are secured by a mortgage, extrinsic evidence is inad- missible to show that such mortgage was to be released upon the payment of two of the above-mentioned notes.^ An indorser of one of several notes secured by mortgage will not be permitted to show that by an oral agreement the proceeds of the mortgage were to be applied first to the satisfaction of the note last matur- ing.^ And under a contract by which one agrees to pay "all of the outstanding indebtedness" of another, "not to exceed in all one hundred thirty thousand dollars," extrinsic evidence is inad- missible to show an oral contract by which the former obli- gated himself to pay only a part of the latter's debts.^'' A con- tract to supply one with all the material needed by him cannot be varied by parol to show that the contract was to furnish only a limited amount. ^^ When a contractor by a written agreement assumes the contracts for materials already made, he cannot show that there was a contemporaneous oral understanding between the parties that he should in fact assume only a certain amount of such contracts and that the other party was to assume the ex- cess over such amount.^^ Evidence is inadmissible to show that a part only of an entire indebtedness was to be paid when, under the terms of the written agreement, the entire indebtedness was to be paid.^^ And where a written contract for the sale of land " Radigan v. Johnson, 174 ^lass. 68, " Bell v. Mendenhall, 78 Minn. 57, 54 N. E. 358. 80 N. W. 843. 'Jennings v. Moore, 83 Mich. 231, "Dean v. Washburn &c. Mfg. Co., 47 X. W. 127, 21 Am. St. 601. 177 Mass. 137, 58 N. E. 162. 'First National Bank v. Prior, 10 '^Bandholz v. Judge, 62 N. J. L. N. Dak. 146, 86 N. W. 362. 526. 41 All. 723. ^Schulty V. Plankinton Bank, 141 "First National Bank v. Nashville 111. 116, 30 N. E. 346, 33 Am. St. 290. St. R. Co. (Tenn. Ch. App.), 46 S. W. 312. 929 PAROL EVIDENCE. § 1 62 1 provides for the payment of taxes and assessments, parol evidence is inadmissible to show an agreement on the part of the vendor to pay the taxes thereon." Nor in such case is extrinsic evidence admissible to show that certain taxes were to be excepted from the operation of a covenant against encumbrances." It cannot be shown under a written permission for the assignment of a lease that tlie liability of the lessee was to end with such assign- ment.^" Under a contract whereby one of the parties thereto is to furnish castings and sink a well for a given sum it cannot be shown by parol that he was also to furnish the tubing and pump for the same price." When an insurance agent is employed un- der a contract which provided that it could be ended at will with- out liability except for commissions earned, the agent will not be permitted to show a contemporaneous oral contract giving him commissions on future renewals.^® Under a written contract for the sale of machines, complete in itself, it cannot be proved by parol that the machines sold were to be set up by the agent. ^^ § 1621. Extrinsic evidence not admissible to contradict or vary written contracts — General rule. — \MiiIe not without its limitations and exceptions, the general rule that parol evidence is inadmissible to contradict or vary the tenns of a valid writleti contract is so well settled that it cannot be a proper subject of discussion.^" In general, extrinsic evidence cannot be introduced "Gilbert v. Stockman, 16 Wis. 62, Rigdon v. Conley, 141 111. 565. 30 X. 44 N. W. 845, 20 Am. St. 23; and E. 1060; Brunson v. Henry, 140 Ind. see Garwood v. Wheaton, 128 Cal. 455, 39 N. E. 256; Diven v. Johnson, 399. 60 Pac. 961. 117 Ind. 512, 20 N. E. 428. 3 L. R "Stanisics v. McMurtry, 64 Nebr. A. 308; Smith v. Barber, 153 Ind. Z21 761, 90 N. W. 884. 53 X. E. 1014; Singer Mfg. Co. v "Rector v. Hartford Deposit Co., Forsvth, 108 Ind. 334, 9 N. E. 2>12 190 111. 380, 60 X. E. 528. Hunt v. Grav, 76 Iowa 268. 41 X. W "Meader v. Allen, 110 Iowa 588, 14; Johnson v. Zweigart, 114 Kv 81 N. W. 799. 545. 24 Ky. L. 1323. 71 S. W. 445 " Stowell V. Greenwich Ins. Co., INIuhlig v. Fiske, 131 Mass. 110 163 N. Y. 298, 57 X. E. 480. Stackpole v. Arnold, 11 Mass. 27, ( "Dowagiac Mfg. Co. v. Corbit, 127 Am. Dec. 150; Cook v. First Xat Mich. 473, 86 X. W. 954, 87 X. W. Bank, 90 Mich. 214, 51 X. W. 206 886. Xational Gaslight &c. Co. v. Bixhv. '"Meres v. Ansell. 3 Wils. 275; 48 Minn. Z2Z, 51 X. W. 217; Bavard Adams v. Wordley, 1 M. & W. 374; v. Malcolm, 1 Johns. (X. Y.) 453. Preston v. Merceau, 2 W. Bl. 1249; revd. 2 Johns. (X. Y.) 550. 3 Am. Coker v. Guy. 2 B. & P. 565; Fer- Dec. 450; Societa Italiana di Bcne- guson Cont. Co. v. Manhattan Trust ficenza v. Sulzer, 138 X. Y. 468, 34 Co., 118 Fed. 791, 55 C. C. A. 529; N. E. 193; Bast v. First Xat. Bank, 59 — Contracts, Vol. 2 1 62 1 CONTRACTS. 930 to contradict or vary the intention of the parties as set out in a written contract by showing the existence of a prior or contempo- raneous oral understanding contrary to the terms of the written contract." A written contract cannot be varied by an oral agree- ment made substantially at the same time." A party cannot be relieved from express and definite conditions voluntarily inserted in a written contract, on the mere ground that, at the time of executing the contract, verbal conditions were agreed to, con- tradicting the writing.^^ The rule, that where the parties finally put their contract in writing an independent contem- poraneous oral agreement relating to the subject-matter which is inconsistent with the terms of the instrument cannot be given effect to vary or modify its purpose, does not, however, confiict with another well-settled rule to the effect that for the purposes of interpretation and application of the terms of a contract, evi- dence showing the subject-matter with which the parties dealt, 101 U. S. 93, 25 L. ed. 794; The Ga- zelle, 128 U. S. 474, 32 L. ed. 496. 9 Sup. Ct. 139; DeWitt v. Berry, 134 U. S. 306, 33 L. ed. 896, 10 Sup. Ct. 536; Best v. Sinz, 73 Wis. 243, 41 X. W. 169; Whitworth v. Brown, 85 Wis. 375, 55 N. W. 422. Many other authorities might be cited to the same effect, but a sufficient number to fully illustrate the rule are cited in subse- quent sections. '''Bomar v. Rosser, 131 Ala. 215, 31 So. 430; Adams v. Turner, 73 Conn. 38, 46 Atl. 247; Housekeeper Publishing Co. v. Swift, 97 Fed. 290, 38 C. C. A. 187; Smith v. American Nat. Bank, 89 Fed. 832, 32 C. C. A. 368; American Harrow Co. v. Dol- vin. 119 Ga. 186, 45 S. E. 983; Carter V. Williamson, 106 Ga. 280, 31 S. E. 651 ; Maxwell v. Willingham, 101 Ga. 55, 28 S. E. 672; Becker v. Dalby Howa), 86 N. W. 314; Crane v. WiUiamson, 111 Ky. 271, 23 Ky. L. 689, 63 S. W. 610; White v. Will- iams, 105 Ky. 802, 20 Ky. L. 1600. 49 S. W. 808; St. Landry State Bank V. Mevers, 52 La. Ann. 1769, 28 So. 136; Baylor v. Butterfass, 82 Minn. 21, 84 X. W. 640; Ming v. Pratt, 22 Mont. 262, 56 Pac. 279; Aultman v. Hawk, 4 Nebr. 582 funof.), 95 N. W. 695; Hoffman v. Standard Life & Accident Co., 127 N. Car. 337, 37 S. E. 466; First Nat. Bank v. Cen- tral Chandelier Co., 17 Ohio C. C 443, 9 Ohio C. D. 807; Harley v. Weber, 1 Ohio C. D. 360, 2 Ohio Cir. Ct. 57; Kaufmann v. Friday, 201 Pa. St. 178, 50 Atl. 942; Ivery V. Phillips, 196 Pa. St. 1, 46 Atl. 133; Burwell v. Chapman, 59 S. Car. 581, 38 S. E. 222; Martin v. Mononga- hela R. Co., 48 W. Va. 542, 37 S. E. 563; Coman v. Wunderlich, 122 Wis. 138, 99 N. W. 612; Newell v. New Holstein Canning Co., 119 Wis. 635, 97 X. W. 487. '^ McGuinness v. Shannon (1891), 154 Mass. 86, 27 N. E. 881. "It must therefore be treated merely as an oral agreement, which was incon- sistent wjth the written agreement, and was' made substantially at the same time, and it can not have the effect to vary it. It was not an altera- tion of the written contract by a sub- sequent new oral agreement between the parties, and in this respect it closely resembles Clark v. Hough- ton, 12 Gray (Mass.) 38. See also, Doyle V. Dixon, 12 Allen (Mass.) 576; Fitz v. Cormey, 118 Mass. 100; Frost v. Brigham, 139 Mass. 43, 29 N. E. 217." =^St. Vrain Stone Co. v. Denver &c. R. Co., 18 Colo. 211, 32 Pac. 827. 93 1 PAROL EVIDENCE. § 1 622 and the object which they sought to accompHsh, as shown by the preceding negotiation, is competent, not to vary what has been reduced to writing, but to aid in its construction and to make plain in what sense the parties used and understood the language they employed." § 1622. The rule illustrated — Transfers of real property. — Extrinsic evidence cannot be introduced to show that a deed was not intended as a transfer of land therein described," or that it was intended that it should operate only as a power of attor- ney.^^ Should a deed be deposited in escrow to be delivered on the conditions specified in a written contract it cannot be shown that the deed was intended to operate as a gift.^^ A contract for the "purchase" of land cannot be shown to be a contract for an easement.** A lessor whose title was in dispute agreed by a writ- ten contract to indemnify his lessee against any loss that might result from paying rent, in case such lessor's title was adjudged defective. It was held that such contract could not be contra- dicted by a contemporaneous oral contract which provided for the nonpayment of rent until the title was settled.-® Extrinsic evidence is inadmissible to contradict or vary the effect of a covenant against incumbrances.^" § 1623. The rule illustrated — Insurance contracts. — In case a contract for an insurance policy provides that it shall not become effective until the acceptance of the application and the policy is issued and delivered, evidence is inadmissible that the policy was to become effective immediately.^^ So too it cannot be shown that a policy of insurance which by its terms covered the husband's interest alone was intended to cover the wife's in- terest also. Thus a clause which provided that the policy should " DeFriest v. Bradlev, 192 Mass. ^ Camden &c. Rv. v. Adams, 62 N. 346. 78 N. E. 467. See ante. ch. 38. J. Eq. 656. 51 Atl. 24. "Oliver V. Brown. 102 Ga. 157, 29 * Proutv v. Adams, 141 Cal. 304, S. E. 159; Jacob Tome Institute v. 74 Pac. 845. Davis, 87 Md. 591, 41 Atl. 166. *" Smith v. Abington Sav. Bank. " Anderson v. Continental Ins. Co., 171 Mass. 178. 50 N. E. 545. 112 Ga. 532, 37 S. E. 766. " Chamberlain v. Prudential Ins. "Hilgar v. Miller, 42 Ore. 552, 72 Co.. 109 Wis. 4, 85 X. \V. 128, 83 Pac. 319. Am. St. 851. § 1624 CONTRACTS. 932 be inoperative if the insured conveyed his interest applies where the husband conveys to his wife, notwithstanding an oral provi- sion to the contrary.^^ A provision to the effect that the policy shall become inoperative in case the building is enlarged without the assent of the insurer cannot be varied by extrinsic evidence showing that the enlargement was agreed upon prior to the issu- ance of the policy, when the building was described as it existed at at the time the policy was issued. ^^ And where a policy was made payable to a granddaughter as beneficiary, evidence was held in- admissible to show that it was issued to the grandfather, and at the latter's request made payable to the granddaughter.^* Nor can it be shown by parol evidence that a policy of insurance which by its terms is made payable to the insured was in fact payable to his sister.^^ I § 1624. Bills and notes, promise to pay out of particular fund. — Where the terms of a note constitute a plain un- conditional promise, on a stipulated date, to pay to the plaintiff a given sum of money for value received, evidence of a contempo- raneous parol agreement is inadmissible to contradict or vary such provision in the note.^® A contract to pay money which by its terms imposes a general liability on the promisor cannot be varied by showing that it was a contract to pay out of a particular fund,^^ as out of profits to be derived from the transaction in connection with which the written promise was given,^^ or from dividends paid on the stock in payment for which the note was given.^" When a note is payable in money, a parol agreement that it is to be paid in designated bank notes which were not a legal ten- " Walton V. Agricultural Ins. Co., ^"Rivers v. Brown (Fla.), 56 So. 116 N. Y. 317, 22 N. E. 443, 5 L. R. A. 553. 677. "Conner v. Clark, 12 Cal. 168, 7Z "^ Frost's Detroit Lumber &c. Works Am. Dec. 529; Murchie v. Peck, 160 V. Millers' & Mfg. Mut. Ins. Co., 2,7 111. 175, 43 N. E. 356; Currier v. Hale, Minn. 300, 34 N. W. 35, 5 Am. St. 8 Allen (Mass.) 47; Harrison v. Mor- 846. rison, 39 Minn. 319, 40 N. W. 66; "Burton v. Conn. Mut. Life Ins. Wilson v. Wilson, 26 Ore. 251, 38 Co., 119 Ind. 207, 21 N. E. 746, 12 Pac. 185; Ellis v. Hamilton, 4 Sneed Am. St. 405. (Tenn.) 512. "Union Central Life Ins. Co. v. ^'Lakeside Land Co. v. Dromgoole, Phillips, 102 Fed. 19, 41 C. C. A. 89 Ala. 505, 7 So. 444. 263. ^Fuller v. Law, 207 Pa. St. 101, 56 Atl. 22Z. 933 PAROL EvaoENCE. § 1625 der is unen forcible.'"* However an agreement to redeem in gold the bank-bills for which a note is given has been held enforcible."^ And where contracts were made during the war between the states, in the southern states the weight of authority holds that the parties to the contract had a right to show that they intended that payment should be made in money of the United States,^- or in confederate money.*^ § 1625. Contemporaneous contracts — To defeat validity or legal effect of note. — In the absence of any other element making the note invalid, one who makes a promissory note will not be permitted to show that by an oral understanding between himself and the payee the note was to have no validity/* Thus where a note and mortgage were given to a bank to enable the bank to use them as apparent collateral security, extrinsic evidence has been held inadmissible to show this fact/° The same has been held true when notes are given a bank in order that it may exhibit them to the bank examiner as assets.*" Extrinsic evidence has, however, been held admissible to show that a written contract delivered between the parties was in fact never intended to take effect and that its delivery was merely a matter of form. Under this rule it has been held that where one signed a contract agreeing to take a certain amount of street-car advertising from another at a given ra.te, and delivered it to the latter's agent, the former could show in an action on the con- tract that the real contract was an oral agreement for a less amount at a lower rate, and that he signed the written contract so that his order might be shown to other prospective customers *"Baugh V. Ramsey, 4 T. B. Mon. 52 Pac. 655; Henry Wood's Sons Co. (Ky.) 155; Racine County Bank v. v. Schaefer, 173 Mass. 443, 53 X. E. Keep, 13 Wis. 209. 881, 72, Am. St. 305; Lillie v. Bates, " Racine County Bank v. Keep, 13 2 Ohio C. D. 54, 3 Ohio Cir. Ct. 94. Wis. 209. *° Dominion National Bank v. Man- *" Bryan v. Harrison, 76 N. Car. ning, 60 Kans. 729, 57 Pac. 949, ques- 360; Stearns V. Mason, 24 Grat. (Va.) tioning and distinguishing Higgins v. 484. Ridgway. 153 N. Y. 130. 47 X. E. *^ In re Confederate Note Case, 19 2t2; Breneman v. Furniss, 90 Pa. 186, Wall. (U. S.) 548, 22 L. ed. 196; Car- 35 Am. Rep. 651. michael v. White. 11 Heisk. (Tenn.) "Mills Countv National Bank v. 262; Donlev v. Tindall, 32 Tex. 43, 5 Perrv, n Iowa '15, 2Z N. W. 341, 2 Am. Rep. 234. Am. St. 228. "Leonard v. Miner, 120 Cal. 403, § 1625 CONTRACTS. 934 without disclosing that he had been given a lower rate.*^ This case would seem to practically abrogate the rule against varying a writing by parol evidence. A payee of a note who assigns it by signing it on its face under the name of the maker will not be permitted to show by parol evidence that he was only an indorser.*^ The same is true of a note negotiable in form. It cannot be shown that it was intended to operate as a nonnegotiable instrument.*^ And where a check is given in payment of a subscription to a monument, the maker cannot show an agreement with the payee that it should be sur- rendered and the maker's subscription be payable at a later time, or that it should be taken in place thereof.^" Extrinsic evidence is inadmissible to show that a written subscription was given in order to obtain the necessary certificate of the state engineer and that the amount of the subscription was to be paid by the town.°^ A son received property from his father and gave the latter a note therefor. It was held that evidence to show that the property was given as an advancement merely and that the note was intended as a receipt was inadmissible.^^ Other authorities have expressed a different view on this subject and it would seem that the only ground on which these latter cases can be reconciled with those holding to the contrary is upon the theory that the note was not supported by a consideration." A written contract for the payment of a designated sum of money cannot be varied by evidence showing that a different amount from that specified was to be paid.®* Thus where a written contract is entered into for the sale of milk, it cannot be shown that a discount of four cents a can was to be given to be applied on a note for a milk route.®® And in case it is agreed that royalties shall be paid at a *' Southern &c. Advertising Co. v. " Grand Isle v. Kinney, 70 Vt. 381, Metropole Shoe Mfg. Co., 91 Md. 61, 41 Atl. 130. 46 Atl 513 °' Russell v. Smith, 115 Iowa 261, **Cook V. Brown, 62 Mich. 473, 29 88 N. W. 361. N. W 46, 4 Am. St. 870 (there be- "Marsh v. Chown, 104 Iowa 556, ing no evidence to show that a mis- 12> N. W. 1046 ; Brook v. Latimer, 44 take had been made in so signing). Kans. 431, 24 Pac. 946, 11 L. R. A. ''"Mallory v. Fitzgerald's Estate, 69 805, 21 Am. St. 292. Nebr. 312, 95 N. W. 601. " McLeod v. Hunt, 128 Mich. 124, "^La Fayette County Monument 87 N. W. 101. Corporation v Magoon, 73 Wis. 627, " Kelley v. Thompson, 175 Mass. 42 N. W. 17, 3 L. R. A. 761. 427, 56 N. E. 713. 935 PAROL EVIDENCE. § 1 626 certain rate, evidence of an oral contract for the payment of a minimum amount is inadmissible.^" § 1626. Contemporaneous agreement to pay note in prop- erty or work. — When a written promise to pay money is given, evidence to show that it was to be paid in property," such as building material,*^^ lots," corporate stock,"" or by surrendering to the promisee accounts against a third person,"^ or in work, is inadmissible."- In accordance with this rule, it has been held that in an action to recover rent under a lease, it cannot be shown that a part of the rent was to be paid by the lessees boarding the lessor."^ The same is true in an action on a note where it is sought to be shown that such note was to be paid by the maker's collecting certain claims for the payee on a commission, which commission was to be applied to the discharge of the note."* This rule also applies where it is agreed that damages due the maker of a note and arising out of another transaction are to be credited on such note as a part payment thereof.""" § 1627. Miscellaneous illustrations. — A warranty cannot be eliminated by extrinsic evidence.*" A surety will not be permitted to show that, according to his contract with the payee, he was not to be held liable on the note."' One cannot show that he signed a bond and then show by extrinsic evidence an agreement with the obligee to the effect that he was not to be held liable thereon."' It cannot be shown that one receiving wheat received it merely as "•Standard Fireproofing Co. v. St. " StuU v. Thompson, 154 Pa. St. Louis Expanded Metal Fireproofing 43, 25 Atl. 890. Co 177 Mo. 559. 76 S. W. 1008. " Singer Mfg. Co. v. Potts, 59 "Clement v. Houck, 113 Iowa 504, Minn. 240, 61 X. W. 23. See, how- 85 N W 765 ever, Johnston v. McCart, 24 Wash. "Kimball v. Bryan, 56 Iowa 632, 19, 63 Pac. 1121 (enforcing a con- 10 N W 218 tract of this character). "•Mosher v. Rogers, 117 111. 446, "Phelps v. Abbott, 114 Mich. 88, 5 N. E. 583. . 72 N. W. 3. • . ^ •"Perry v. Bigelow, 128 Mass. 129. *" Arguimbau v. Germania Ins. Co., " Bender v. Montgomery, 8 Lea 106 La. 139, 30 So. 148. f Tf-nn ) 586 " Kulenkamp v. Grofif, 71 Mich. 675, «= Stein V ' Fogartv, 4 Idaho 702, 40 N. W. 57, 1 L. R. A. 594, 15 Am. 43 Pac. 681: Merrigan v. Hall, 175 St 283 co c r- Mass 508 56 N. E. 605; Vradenburg "^Wallace v. Langston, 52 S. Car. V. Johnson, 3 Nebr. (unof.) 326, 91 133, 29 S. E. 552. N. W. 496. § 1627 CONTRACTS. 936 a bailee when a receipt with a promise to pay therefor is given.^^ A written contract which shows an absolute sale of a machine cannot be varied so as to show that such machine was merely rented on commission/" A written release of mutual rights will not be defeated by the fact that by an oral contemporaneous agreement such release was to have no validity." A release by a son of all his interest in the estate of his father, given him by his father's will, is not a bar to an action by the son against the executor on a promissory note given the son by the father in his lifetime, and not mentioned in the release ; and oral evidence is in- competent to show that the claim in such an action was under- stood at the time to be embraced in the settlement and release,^^ for this would be to engraft upon the written contract an additional oral stipulation founded upon the same considera- tion and entered into at the same time, and would be con- trary to settled rules." The terms of a railroad ticket which is a complete contract cannot be contradicted by ex- trinsic evidence showing that it was to operate as an un- limited ticket when by its terms it was limited/* Two rail- road companies entered into a contract whereby all the trains of one company were to have a priority of crossings. Extrinsic evidence was held inadmissible to show that this provision for priority applied only to certain classes of trains. ^^ A contract which by its terms is to be performed in the alternative cannot be restricted by a contemporaneous oral agreement to the per- formance of one of the alternatives. Thus a bill of lading pro- vided that the carrier should deliver the goods specified therein to a connecting railroad, or to a steamer. Extrinsic evidence was held inadmissible to show that the actual contract was to deliver to the connecting railroad, and not to the steamer. '^^ And where '^ Horn V. Hansen, 56 Minn. 43, 57 " Walker v. Price, 62 Kans. 327, N. W. 315, 22 L. R. A. 617. 62 Pac. 1001, 84 Am. St. 392. '"Price V. Marthen, 122 Mich. 655, "Cornwall R. Co. v. Cornwall &c. 81 N. W 551. R. Co., 125 Pa. St. 232, 17 Atl. 427, "Loth V. Frederick, 95 Mich. 598, 11 Am. St. 889. 55 N. W. 369. ™McEIveen v. Southern R. Co., " Frost V. Brigham, 139 Mass. 43, 109 Ga. 249, 34 S. E. 281, 77 Am. St. 29 X. E. 217. 371. "Doyle V. Dixon, 12 Allen (Mass.) 576. 937 PAROL EVIDENCE. § 1 628 a contract for the shipment of property to New York did not specify the route by which the goods were to be sent, it could not be shown by parol evidence that a route had been agreed upon." On the other hand, it has been held that where the bill of lading did not designate the route over which the goods were to be shipped an oral agreement specifying to what connecting line the initial carrier should deliver the goods might be shown.''* Parol evidence is not competent to show that a chattel mortgage/" or bill of sale**" of personalty was not intended to include all property it purports to convey or that under a written contract of sale, title was to remain in the seller,®^ or that it was the intention of the parties that a written contract for work was not intended to cover work therein described.**" Where husband and wife enter into a clear, unambiguous agreement for the purpose of perpetuating a parol antenuptial agreement, such written agreement will be deemed to have merged all their parol negotiations made at and before its execution, and, not having been questioned by them during their joint lives, will not be modified afterward.*^ And evidence of a parol agreement and understanding antecedent to or contemporaneous with the execution of an instrument under seal is not admissible to vary its terms.®* The rule that the true consideration of a written contract may be shown by parol does not authorize oral stipulations to be added to a written contract under the claim that such oral agreement was part of the consid- eration.®'* § 1628. Rule applies to what is implied by law as part of contract. — It is said that the law enters "as a silent factor" into every contract. That which is implied by law becomes a part "Webster v. Paul. 10 Ohio St. 531. ^ Clavpool v. Jaqua, 135 Ind. 499, '* Louisville & N. R. Co. v. Duncan, 35 N. E. 285. And see also, McAn- 137 Ala. 446, 34 So. 988. nulty v. McAnnultv, 120 111. 26, 11 "Drumm-Flato Commission Co. v. N. E. 397. 60 Am. Rep. 552. Barnard, 66 Kans. 568. 72 Pac. 257; " Barnett v. Barnes, IZ 111. 216; Lawrence v. Comstock, 124 Mich. 120, Winnesheik Ins. Co. v. Holzgrafe, 82 N. W. 808. 53 111. 516; Strehl v. D'Evers. 66 ^Hodson V. Varney, 122 Cal. 619, 111. 11; Loach v. Farnum. 90 111. 368; 55 Pac. 413. Gable v. Wetherholt. 116 111. 313, 6 ^Finnigan v. Shaw, 184 Mass. 112, N. E. 453. 56 Am. Rep. 774; Wilson 68 N. E. 35. V. Deen. 74 N. Y. 531. *^ Norwood V. Lathrop, 178 ]\Iass. **Brintnall v. Briggs, ^1 Iowa 538, 208, 59 N. E. 650; Daly v. Kingston, 54 N. W. 531; Mast v. Pearce, 58 177 Mass. 312, 58 N. E. 1019. Iowa 579, 8 N. W. 632. § 1 628 CONTRACTS. 938 of the written contract the same, in general, as if it were written therein, and if the contract is thus made clear and complete it can no more be varied or contradicted by parol evidence as to the matter imported into it by law than it can in any other respect.^* This doctrine is frequently applied where a contract is silent as to the time of performance. The general rule in such cases is that it must be performed within a reasonable time and that this implication of law cannot be varied by parol evidence," although such evidence may be admissible to show what is a reasonable time.^^ So, while there is much conflict among the authorities and some difference of opinion as to what the legal implication from a blank indorsement is, that implication cannot, ordinarily, * Rector v. Bernaschina, 64 Ark. 650, 44 S. W. 222; Godkin v. Mona- han, 83 Fed. 116, 27 C. C. A. 410; Powell V. Fraley, 98 Ga. 370, 25 S. E. 450; Johnson v. Glover, 121 111. 283, 12 N. E. 257; Long v. Straus, 107 Ind. 94, 6 N. E. 123, 7 N. E. 763, 57 Am. Rep. 87; Fawkner v. Smith, &c. Wall.-Paper Co., 88 Iowa, 169, 55 N. W. 200, 45 Am. St. 230, revg. 49 N. W. 1003; Hobbs v. Batory, 86 Md. 68, Zl Atl. 713; Daly v. Kingston, 177 Mass. 312, 58 N. E. 1019; Liljen- gren Furniture &c. Co. v. Mead, 42 Minn. 420, 44 N. W. 306; Barry v. Ransom, 12 N. Y. 462; Cauble v. Worsham, 96 Tex. App. 86, 70 S. W. ITH, 97 Am. St. 871, revg. 69 S. W. 194; The Delaware v. Oregon Iron Co., 14 Wall. (U. S.) 579, 20 L. ed. 779. Thus, in the case of Long v. Straus, 107 Ind. 94, 6 N. E. 123, 7 N. E. 763, 57 Am. Rep. 87, it is said: "The obligation implied by law from the language employed is as much a part of the contract as though what the law implies had been fully ex- pressed in words. * * * The law imported into the contract does not create an independent agreement, but makes the instrument express the full agreement of the parties. * * * All contracts have imported into them legal principles which can no more be varied by parol evidence than the strongest and clearest ex- press stipulations. We have already given one example, that of the days of grace added by force of law to a promissory note. A more striking example, perhaps, is that supplied by the contract of endorsement, for, in such cases, although not a word more than the name of the endorser is written, the contract which the law implies can not be varied by parol." Nor is parol evidence ordinarily ad- missible to raise an implied contract different from that which is clearly expressed. See Dickson v. Zizinia, 10 C. B. 602, 70 E. C. L. 602 ; Roddy v. Fitzgerald, 6 H. L. Cas. 823 ; Har- rell V. Durrance, 9 Fla. 490 ; and com- pare, St. Landry &c. Bank v. Meyers, 52 La. Ann. 1769, 28 So. 136. "Greaves v. Ashlin, 3 Camp. 426; Jenkins v. Lykes, 19 Fla. 148, 45 Am. Rep. 19; Atwood v. Cobb, 16 Pick. (Mass.) 227, 26 Am. Dec. 657; Stange v. Wilson, 17 Mich. 342 ; Coon v. Spaulding, 47 Mich. 162, 10 N. W. 183 ; Liljengren Furniture &c. Co. v. Mead, 42 Minn. 420, 44 N. W. 306; Blake Mfg. Co. v. Jaeger, 81 Mo. App. 239; Thompson v. Phelan. 22 N H- 339. See Boehm v. Lies, 18 N. Y. S. 577, 46 N. Y. St. 26, 60 N. Y. Super. Ct. 436. affd. 138 N. Y. 609, ZZ N. E. 1082; Irish v. Dean, 39 Wis. 562. We are not, of course, refer- ring to a case in which there has been a waiver of a new contract. "* Ellis v. Thompson, 3 M. & W. 445; Coates v. Sangston, 5 Md. 121; Cocker v. Franklin &c. Bagging Co., 1 Story (U. S.) 332, Fed. Cas. No. 2931. 939 PAROL E\7DENCE. § 1628 be varied or contradicted by parol evidence.^' Other illustrations are found in cases in which it is held that an agreement to per- form an act involves an undertaking to secure the necessary means to perform it;®" that a bill of lading silent as to place of stowage imports a contract to stow under deck and parol evidence to show an agreement to stow on deck is not admissible ;" that an agreement to pay a certain sum imports or implies that it shall be lawful money ;"^ that growing crops not reserved in a conveyance of land pass to the vendee and a parol reservation thereof cannot be shown f^ and that a quit-claim deed operates upon whatever «»Holt V. Moore, 5 Ala. 521; Day V. Thompson, 65 Ala. 269; Thompson V. McKee, 5 Dak. 172, 37 N. W. 367 ; Levy &c. Co. v. Kauffman, 114 Fed. 170, 52 C C. A. 126; Finley v. Green, 85 111. 535 ; Smvthe v. Scott, 106 Ind. 245, 6 N. E. 145; Brown v. Nichols &c. Co., 123 Ind. 492, 24 N. E. 339; Cross V. Hollister, 47 Kans. 652, 28 Pac. 693; Cochran v. Atchison, 27 Kans. 728; Howe v. Merrrill, 5 Cush. (Mass.) 80; Prescott Bank v. Cav- erly, 7 Gray (Mass.) 217, 66 Am. Dec. 473 ; Bowler v. Braun, 63 Minn. 32, 65 N. W. 124, 56 Am. St. 449; Bank &c. v. Dunn, 6 Pet. (U. S. 51, 8 L. ed. 316; Brown v. Wilev, 20 How. (U. S.) 442, 15 L. ed. 965; Martin V. Cole, 104 U. S. 30, 26 L. ed. 647. See also, Jenkins v. Shinn, 55 Ark. 347, 18 S. W. 240. But see as to en- dorsement without recourse, Carroll V. Nodine, 41 Ore. 412, 69 Pac. 51. 93 Am. St. 743; and for authorities tending to show that the legal impli- cation from a blank endorsement may be varied as between the parties by parol evidence. Jaster v. Currie, 69 Neb. 4, 94 N. W. 995, revd. 198 U. S. 144, 49 L. ed. 988, 25 Sup. Ct. 614. •"Godkin v. Monahan, 83 Fed. 116, 27 C. C. A. 410: Meekins v. Newber- ry, 101 N. Car. 17, 7 S. E. 655. "The Delaware v. Oregon Iron Co., 14 Wall. (U. S.) 579, 20 L. ed. 779. So as to place of delivery where the law fixes the place, La Farge v. Rickert, 5 Wend. (N. Y.) l87, 21 Am. Dec. 209. "'Roane v. Greene. 24 Ark. 210; Stein V. Fosjartv, 4 Idaho 702, 43 Pac. 681; Mosher v. Rogers, 117 111. 446, 5 N. E. 583 ; Galena Ins. Co. v. Kup- fer, 28 111. 332, 81 Am. Dec. 284; Lawrence v. Schmidt, 35 111. 440, 85 Am. Dec. 381 ; Coapstick v. Bos- worth, 121 Ind. 6, 22 N. E. 772; Pack v. Thomas, 13 Sm. & M. (Miss.) 11, 51 Am. Dec. 135; Stull v. Thompson, 154 Pa. St. 43, 25 Atl. 890. It must not merely imply payment out of a specific fund. Conner v. Clark, 12 Cal. 168. 73 Am. Dec. 529; Gorrell v. Home Life Ins. Co., 63 Fed. 371, 11 C. C. A. 240; Mumford v. Tolman, 157 111. 258, 41 N. E. 617; Tucker v. Talbott, 15 Ind. 114. See also, Wil- son V. Wilson, 26 Ore 251, 38 Pac. 185. But see as to contracts made in the seceding states during the war, Neely V. McFadden, 2 S. Car. 169; Stewart V. Smith, 3 Baxt. (Tenn.) 231; Don- ley V. Tindall, 32 Tex. 43, 5 Am. Rep. 234: In re Confederate Note Case, 19 Wall. (U. S.) 548. 22 L. ed. 196; Meredith v. Salmon, 21 Gratt. (Va.) 762. In Richie v. Frazier, 50 Ark. 393, 8 S. W. 143, the law authorized payment in warrants, and the rule was applied to exclude parol evidence that payment was to be made only in money. •"Gibbons v. Dillingham, 10 Ark. 9. 50 Am. Dec. 233; Fiske v. Soule, 87 Cal. 313, 25 Pac. 430; Smith v. Price, 39 111. 28, 89 Am. Dec. 284 ; Chapman V. Veach, 32 Kans. 167. 4 Pac. 100; Brown v. Thurston, 56 Maine 126, 96 Am. Dec. 438; Mcllvaine v. Har- ris, 20 Mo. 457, 64 Am. Dec. 196; Austin V. Sawyer, 9 Cow. (N. Y.) 39. But see, Heavilon v. Heavilon, 29 Ind. 509; Kluse v. Sparks. 10 Ind. App. 444, 36 N. E. 914, 37 N. E. 1047 ; Hisey v. Troutman, 84 Ind. 115; Hendrickson v. Ivins, 1 N. J. Eq. 562. § 1629 CONTRACTS. 940 title the grantors possess at the time and an intention to convey only a particular interest cannot be shown by parol.®* § 1629. Limitations and qualifications of general rule. — It is said in Elliott on Evidence, quoting from Taylor on Evidence/"^ that " The parol evidence rule 'applies only ( i ) between the par- ties; (2) to exclude parol evidence; (3) when the effect is to vary, contradict or control; (4) when the purport of the instru- ment has been ascertained; (5) and provided it affirmatively ap- pears that the parties have intended to have the instrument em- body their agreement and understanding.' This gives a fair idea in a general way, of the scope of the rule, or, rather, of the limits within which it may be applied ; but the statement is not to be taken entirely without qualification, and there are other so-called exceptions or limitations. Most of them, however, are not true exceptions. They tend rather to define the limits of the rule or furnish illustrations of classes of cases in which the rule has no application. Thus, if the writing is invalid so that it never had any legal effect, the rule has no application, and where its validity is questioned on the ground of fraud, or the like, parol evidence going to that question is generally admis- sible. So, if the writing is incomplete and not intended to em- body the entire contract, or where the contract is partly in parol and is therefore regarded as an oral contract, parol evidence may be admissible as not within the rule."®* Flint V. Conrad, 61 N. Car. 190, 93 v. St. Louis &c. R. Co., 29 Kans. 544; Am. Dec. 588 ; Baker v. Jordan, 3 Gorton v. Rice, 153 Mo. 676, 55 S. W. Ohio St. 438; Backenstoss v. Stah- 241; Conner v. Coffin, 22 N. H. 538; ler's Admrs., 33 Pa. St. 251, 75 Am. La Farge v. Richert, 5 Wend.- (N. Dec 592; Merrill v. Blodgett, 34 Vt. Y.) 187, 21 Am. Dec. 209; Jones v. 430 Timmons, 21 Ohio St. 596; Baer's »*'Cauble v. Worsham, 96 Tex. App. Appeal, 127 Pa. St. 360, 18 Atl. 1, 4 86, 70 S. W. 737, 97 Am. St. 871, revg. L. R. A. 609; Fuller v. Hapgood, 39 69 S. W. 194. But see as to limita- Vt. 617. _ . tion to particular title or interest ** 1 Elliott on Evidence § 573, citmg, where the intention is expressed in 2 Taylor's Ev. (Chamberlayne's Ed.) the deed, Plummer v. Gould, 92 Mich. 808. 1 52 \ W 146, 31 Am. St. 567. See *" In Thomas v. Scutt, 127 N. Y. further in support of the general rule 133, 27 N. E. 961, these are treated that the legal import can not be con- as the two prmcipal real exceptions tradicted by parol evidence. Mer- to the rule, the court saying: 'The cantile Bank v. Taylor, L. R. (1893) real exceptions may be grouped in App. Cas. 317: Ford v. Yates, 2 M. two classes, the first of which in Jades & G. 549, 40 E. C. L. 738; Hopkins those cases in which parol evidence 941 PAROL EVIDENCE. § 1 629 The most complete statement of limitations and exceptions, or matters that may be proved, notwithstanding the parol evi- dence rule, is that found in Stephen's Digest of Evidence, as follows: (i) "Fraud, intimidation, illegality, want of due execution, want of capacity in any contracting party, the fact that it is wrongly dated, want or failure of consideration, or mistake in fact or law, or any other matter which, if proved, would produce any effect upon the validity of any document, or of any part of it, or which would entitle any person to any judgment, decree, or order relating thereto. (2) The existence of any separate oral agreement as to any matter on which a docu- ment is silent, and which is not inconsistent with its terms, if from the circumstances of the case the court infers that the parties did not intend the document to be a complete and final statement of the whole of the transaction between them. (3) The exist- ence of any separate oral agreement, constituting a condition precedent to the attaching of any obligation under any such con- tract, grant, or disposition of property. (4) The existence of any distinct subsequent oral agreement to rescind or modify any such contract, grant, or disposition of property, provided that such agreement is not invalid under the statute of frauds, or otherwise. ( 5 ) Any usage or custom by which incidents not ex- pressly mentioned in any contract are annexed to contracts of that description; unless the annexing of such incidents to such contract would be repugnant to or inconsistent with the express terms of the contract. Oral evidence of a transaction is not excluded by the fact that a documentary memorandum of it was made, if such memorandum was not intended to have legal effect as a contract, or other disposition of property. Oral evidence of the existence of a legal relation is not excluded by the fact that it has been created by a document, when the fact to be proved is the existence of the relationship itself, and not the terms on which has been received to show that that but regard it as incomplete, either which purports to be a written con- obviously, or at least possibly, and tract is in fact no contract at all admit parol evidence, not to contra- * * *. The second class embraces diet or vary, but to complete. th«i those cases which recognize the writ- entire agreement, of which the writ- ten instrument as existing and valid, ing is only a part." § 1629 CONTRACTS. 942 it was established or is carried on. The fact that a person holds a public office need not be proved by the production of his written or sealed appointment thereto, if he is Sjhown to have acted on it."" § 1630. Rule does not ordinarily apply to strangers. — It has often been laid down in unlimited terms that the parol evi- dence rule is applicable only in suits between the parties to the in- strument. It is unquestionably true that the rule does not oper- ate to exclude parol evidence, otherwise admissible, in a contro- versy between strangers, or one of the parties and strangers, who are not representatives or privies of a party and have no connec- tion with the instrument, where they are not seeking to enforce it as effective for their own benefit, or the like. The authorities to this effect are numerous."® But where one, although not a party to the instrument, bases his case upon it, and seeks to render it effective in his favor as against the other party to the action by enforcing a right originating in the relation established by it, or which is founded upon it, the parol evidence rule applies.®" § 1631. Incomplete writings. — A contract partly in wait- ing and partly oral is generally regarded as a parol contract to "'Stephen's Dig. Ev., art. 90. 51 N. W. 657; Libby v. Mt. Monad- '' King V. Cheadle, 3 B. & Ad. 833 ; nock &c. Co., 67 N. H. 587, 32 Atl. Coleman v. Pike, 83 Ala. 326, 3 So. 772; Plainfield First Nat. Bank v. 755, 3 Am. St. 746; Walker v. State, Dunn, 55 N. J. L. 404, 27 Atl. 908; 117 Ala 42, 23 So. 149; Powell v. Hankinson v. Vantine, 152 N. Y. 20, Young, 51 Ala. 518; Dunn v. Price, 46 N. E. 292; Lowell Mfg. Co. v. 112 Cal. 46, 44 Pac. 354; O'Shea v. Safeguard Ins. Co., 88 N. Y. 591; New York C. & St. L. &c. R. Co., 105 Bruce v. Roper Lumber Co., 87 Va. Fed. 559, 44 C. C. A. 601; Central 381, 13 S. E. 153. 24 Am. St. 657. As Coal &c. Co. V. Good, 120 Fed. 793, shown by these authorities, neither 57 C. C. A. 161 ; Sigua Iron Co. v. the stranger nor a party, as between Greene, 88 Fed. 207, 31 C. C. A. 477; himself or the stranger, is precluded Northern Assur. Co. v. Chicago &c. by the rule from showing the actual Ass'n, 198 111. 474, 64 N. E. 979; facts. Harts V. Emery, 184 111. 560, 56 N. E. '" Schultz v. Plankington Bank, 141 865; Burns v. Thompson, 91 Ind. 146; 111. 116, 30 N. E. 346, 33 Am. St. 290; Hubbard v. Harrison, 38 Ind. 323; Minneapolis St. P. & S. S. M. R. Co. Livingston v. Stevens, 122 Iowa 62, v. Home Ins. Co., 55 Minn. 236, 56 N. 94 N. W. 925; Strader v. Lambeth, 7 W. 815, 22 L. R. A. 390; Sayre v. B. Mon. fKy.) 589; Ashley v. Ashley, Burdick, 47 Minn. 367, 50 N. W. 245; 4 Gray (Mass.) 197; Clark v. Hough- Schneider v. Kirkpatrick, 80 Mo. App. ton, 12 Gray (Mass.) 38; Highstone 145; Selchow v. Stymus, 26 Hun (N. V. Burdette, 61 Mich. 54, 27 N. W. Y.) 145; Wodock v. Robinson, 148 852 ; National Car Locomotive Build- Pa. St. 503, 24 Atl. 73. See also. Clow er V. Cyclone &c. Co., 49 Minn. 125, v. Brown, 134 Ind. 287, 33 N. E. 1126. 943 PAROL EVIDENCE. § 1031 which the parol evidence rule does not apply/ If the writing does not purport to be complete, but is a mere memorandum^ or merely purports to contain some of the stipulations between the parties, parol evidence is clearly admissible to show such addi- tional stipulations as are not inconsistent with the writing.^ But most of the authorities, while admitting that extrinsic evidence is admissible, when not inconsistent with the writing, where the contract appears to be a mere incomplete memorandum or to be partly in writing and partly in parol, draw a distinction and hold * Harris v. Rickett, 4 Hurl. & N. 1 ; Lafitte V. Shawcross, 12 Fed. 519; Har- man v. Plarman, 70 Fed. 894, 17 C. C. A. 479; Bacon v. The P'oconoket, 70 Fed. 640, criticized in Godkin v. Mon- ahan, 83 Fed. 116, 27 C C. A. 410; Mann v. Smvser, 76 111. 365; Wood v. Williams, 142 111. 269, 31 N. E. 681, 34 Am. St. 79; Tomlinson v. Briles, 101 Ind. 538, 1 N. E. 63 ; Louisville N. A. &c. R. Co. V. Reynolds, 118 Ind. 170, 20 N. E. 711 ; Stagg v. Compton, 81 Ind. 171; Bruce v. Pearsall, 59 N. J. L. 62, 34 Atl. 982 ; Chapin v. Dob- son, 78 N. Y. 74, 34 Am. Rep. 512; Selig V. Rehfuss, 195 Pa. St. 200, 45 Atl. 919; Schwab v. Ginkinger, 181 Pa. St. 8, n Atl. 125; Knowles v. Rogers, 27 Wash. 211, 67 Pac. 572; Ballston Spa Bank v. Marine Bank, 16 Wis. 120. In other words, where the original contract was verbal and entire, and a part of it only is re- duced to writing, the parol evidence rule does not apply to prevent the en- tire contract from being shown. -Bill of parcels (Grant v. Frost, 80 IMaine 202. 13 Atl. 881; Atwater v. Clancy, 107 Mass, 369; Filkins v. Whvland, 24 N. Y. 338; Harris v. Johnston, 3 Cranch. (U. S.) 311, 2 L. ed. 450; Palmer v. Lawrence, 72 Vt. 14, 47 Atl. 159) ; order for goods not containing complete terms (More- head V. Murrav. 31 Ind. 418; Palmer V. Roath, 86 Mich. 602, 49 N. W. 590; Tufts V. Hunter, dl Minn. 464, 65 N. W. 922) ; entries in account books, (Rice V. Heath. 39 Cal. 609; Mack v. Adler, 22 Fed. 570; Swift v. Pierce. 13 Allen (Mass.) 136; Robinson v. Mulder, 81 Mich. 75, 45 N. W. 505; Park V. Miller, 27 X. J. L. 338; Chap- in V. Cambria Iron Co., 145 Pa. St. 478, 22 Atl. 1041. But see Wiener v. Whipple, 53 Wis. 298, 10 N. W. 433, 40 Am. Rep. 775). 'Allen V. Pink, 4 M. & W. 140; Powell V. Thompson, 80 Ala. 51 ; Savre v. Wilson, 86 Ala. 151, 5 So. 157; Guidery v. Green, 95 Cal. 630, 30 Pac. 786; Kreuzberger v. Wing- field, 96 Cal. 251, 31 Pac. 100; Frank- lin County V. Lavman, 145 111. 138. ZZ N. E. 1094; Singer Mfg. Co. v. For- syth, 108 Ind. 334, 338. 9 N. E. 112; Burton v. IMorrow, 133 Ind. 221, 32 N. E. 921 ; Gould v. Boston &c. Co., 91 Maine 214, 39 Atl. 554, 64 Am. St. 221; MacDonald v. Dana, 154 Mass. 152, 27 N. E. 993; Hutchinson Mfg. Co. V. Pinch, 107 Mich. 12, 64 N. W. 729, 66 N. W. 340; O'Neil v. Grain, 67 Mo. 250: Hurd v. Bovee, 134 X. Y. 595, 31 X. E. 624; Thomas v. Xelson, 69 X. Y. 118; Brigg v. Hilton. 99 X. Y. 517, 3 X. E. 51, 52 Am. Rep. 63; Had- ley V. Clinton County Importing Co., 13 Ohio St. 502, 82 Am. Dec. 454. As to oral evidence of time of payment where contract is silent, see, Howell V. Denton, (Tex. Civ. App.) 68 S. W. 1002; Horton v. Clark, 181 Mass. 134. 63 X. E. 409. As to oral evidence admitted to show amount to be paid, see, Savre v. Wilson, 86 Ala. 151, 5 So. 157; Howell v. Denton. (Tex. Civ. App.) 68 S. W. 1002; Ireland v. Spickard, 95. :Mo. App. 53, 68 S. W. 748. In De Lassalle v. Guildford, 70 L. J. K. B. 533. 84 L. T. 549, a parol warranty was held collateral to a lease and admissible in evidence where the lease was silent. See also, Chapin v. Dobson, 78 X. Y. 74, 34 Am. Rep. 512; Hahn v. Doolittle, 18 Wis. 196, 86 Am. Dec 757. § 1632 CONTRACTS. 944 that it is only admissible when that part of the contract sought to be thus established relates to some matters about which the writing is silent, and that if the proposed evidence is in any way inconsistent with the terms of the writing such evidence is inad- missible.* "Two things," it is said by the New York Court of Appeals, ''however, are essential to bring a case within this class : ( I ) The writing must not appear, upon inspection, to be a com- plete contract, embracing all the particulars necessary to make a perfect agreement, and designed to express the whole arrange- ment between the parties, for in such a case it is conclusively pre- sumed to embrace the entire contract. (2) The parol evidence must be consistent with, and not contradictory of, the written instrument."^ The question as to whether the writing is the complete contract of the parties is usually determined from the writing itself,® but it may, we think, at least in case of ambiguity and doubtful completeness, be read in the light of surrounding circumstances, and if, when so read, it is apparent that it does not embody their entire contract, parol evidence is admissible, in a proper case, to bring the entire contract before the court.^ § 1632. Existence and validity of contract. — The parol evi- dence rule presupposes the existence of a valid written contract, and when the execution of the contract is the very question in issue the rule does not apply to that issue. In other words, parol evidence is not rendered inadmissible by the rule when it relates *Jeffery v. Walton, 1 Stark. 213; "Thomas v. Scutt 127 N. Y. 133, West V. Kelly, 19 Ala. 353, 54 Am. 27 N. E. 961. Dec 192; Fawkner v. Lew Smith ^Hardwick v. McClurg, 16 Colo. Wail Paper Co., 88 Iowa 169, 55 N. App. 354, 65 Pac. 405; Pierce v. W 200 45 Am. St. 230; Blair v. Woodward, 6 Pick. (Mass.) 206; Buttolph 72 Iowa 31, 33 N. W. 349; Dixon v. Blondin, 58 Vt. 689, 5 Atl. Hutchinson Mfg. Co. v. Pinch, 107 514; Hei v. Heller, 53 Wis. 415, 10 N. Mich 12 64 N. W. 729, 66 N. W. W. 620; See also, Dennis v. Sly- 340; Thomas v. Scutt, 127 N. Y. 133, field, 117 Fed. 474, 54 C. C. A. 520; 27 N E 961 ; See also, Whatley v. Union Stockyards &c. Co. v. Western Reese, 128 Ala. 500, 29 So. 606; Land &c. Co. 59 Fed. 49, 7 C. C. A. Chamberlain v. Lesley, 39 Fla. 452, 660; Naumberg v. Young, 44 N. J. L. 22 So. 736; Horn v. Hansen, 56 331, 43 Am. Rep. 380; Seitz v. Brew- Minn 43, 57 N. W. 315 ; Gardner v. er's &c. Co., 141 U. S. 510, 35 L. ed. Mathews, 81 Mo. 627; Taylor v. 837, 12 Sup. Ct. 46. Hunt, 118 N. Car. 168, 24 S. E. 359; ' Peabody v. Bement, 79 Mich. 47, Baltimore &c. S. Co. v. Brown, 54 Pa. 44 N. W. 416; Wheaton &c. Mill Co. St. 77, and dissenting opinion in Har- v. John T. Noye &c. Co., 66 Minn, man v. Harman, 34 U. S. App. 316, 156, 68 N. W. 854. See also, Eighmie 70 Fed. 894, 17 C. C. A. 479. v. Taylor, 98 N. Y. 288. 945 PAROL EVIDENCE. § 1 633 to the execution, delivery or authenticity of the alleged written contract in question.^ It is frequently necessary to show the exe- cution, delivery or acceptance of the contract by parol, and the time, place and circumstances of its execution may usually be thus shown as independent facts in support of the existence and validity of the contract and not as contradicting, adding to or varying its terms.'' Thus, it has been held that parol evidence is admissible to show that an instrument purporting to be signed by one person for another was written and signed in the presence of the latter and at his request/'^ So, ordinarily, where the validity of the contract depends upon the authority of an agent his au- thority may be shown by parol." § 1633. Collateral and independent agreements. — Parol evidence of a distinct, valid, parol agreement between the parties, although prior to or contemporaneous with a written contract, is not excluded by the rule in question where it does not in any way vary or contradict the writing,^' and there are cases in which this is true, although the parol agreement may be collateral to the written contract and relate in some way to the same subject- * Verzan v. McGregor, 23 Cal. 339; 25 Am. Rep. 510. So, a legal relation Printup V. Mitchell, 17 Ga. 558, 63 may be thus shown, such as the fact Am. Dec. 258; Lennon v. Goodspeed, of partnership, but not the terms of 89 111. 438; Uhl v. Moorhouse, 137 the instrument. Alderson v. Clay, 1 Ind. 445, 2>1 N. E. 366; Bank of North Starkie 327; Widdifield v. Widdfield, America v. Emburv, 21 How. Pr. (N. 2 Binnev (Pa.) 245; Cutler v. Thom- Y.) 14; Relph v. Gist, 4 xMcCord (S. as' Estate, 25 Vt. IZ, and see King Car.) 267; Mitchell v. Allen, 69 Tex. v. Holy Trinity, 7 B- & C. 611. App. 70, 6 S. W. 745. "" Morton v. Murray, 176 111. 54. 51 » See Plunkett v. Dillon, 4 Del. Ch. N. E. 767, 43 L. R. A. 529. See also. 198; Cheney v. Barge, 26 111. App. Cain v. Mack, ZZ Texas 135. 182; Wilbur v. Stoepel, 82 Mich. 344, "Chicago v. Gage, 95 111. 593. 35 46 N. W. 724, 21 Am. St. 568. See also. Am. Rep. 182; Bank of North Amer- Abercombie v. Bradford, 16 Ala. 560; ica v. Embur\-, 21 How. Pr. (N. Y.) Rapley v. Price &c. Co., 9 Ark. 428; 14; Mechanics' Bank v. Bank of Co- Pacific Iron Works v. Newhall, 34 lumbia. 5 Wheat. (U. S.) 326. 5 L Conn. 67 (verbal acceptance of writ- ed. 100; Coulter v. Blatchley, 51 W ten proposal) : Chandler v. IMorey, Va. 163, 41 S. E. 133. 195 111. 596, 63 N. E. 512; Harris v. "Marshall v. Baker, 19 Maine 402 Doyle, 130 Tklich. 470. 90 N. W. 293 ; Blackwood v. Brown. 34 Mich. 4 Huntoon v. O'Brien. 79 Mich. 227, 44 Dean v. Adams. 44 Mich. 117, 6 N. W N. W. 601; Boulevard Globe & Lamp 229; Chase v. Redfield Creamerv Co., Co. V. Kern Incandescent Gaslight 12 S. Dak. 529, 81 N. W. 951: 'Pace Co., 67 N. J. L. 279. 51 Atl. 704; v. Sheffield. 2 Curt. (U. S.) Zll , Fed. Western Transportation & Coal Co. Cas. No. 10667: Buzzell v. Willard. 44 V. Kildcrhouse, 87 N. Y. 430: Philo- Vt. 44. See also. Mosier v. Kershow, math College v. Hartlcss, 6 Ore. 158, 16 Colo. App. 453, 66 Pac. 449; Drake 60 — Contracts, Vol. 2 § 1633 CONTRACTS. 946 matter/^ at least where the writing is silent upon the subject and the parol agreement does not appear to be so closely connected with the matter of the written contract that it should be deemed to have entered into the negotiations or formed a part of the trans- action or matter of which the writing was intended to be a com- plete and final statement. But a complete, valid, written contract merges all prior and contemporaneous negotiations and agree- ments within its purview, and if the parol agreement is not really collateral, but is an element of the written contract, or tends to vary or contradict the same, either in its express provisions or its legal import, it is inadmissible/* The question usually is as to whether the parol evidence sought to be introduced contradicts or alters the written contract, or leaves it to stand unchanged and simply tends to establish an additional collateral agreement." It is often difficult to determine this question, and there is much conflict among the authorities. The form in which the question arises may sometimes be an important factor in determining the admissibility of the evidence, and, referring to leases, it is said that "A part of the apparent conflict in the decisions may be ex- V. Allen, 179 Mass. 197, 60 N. E. 477 ; agreement to give plaintiff a corn- Huffman V. Ellis, 64 Nebr. 623, 90 N. mission if he sold property and that W. 552 ; Gibbons v. Bush County, 52 written option was given him to bet- App. Div. (N. Y.) 211, 65 N. Y. S. ter enable him to do so). See also, 215, affd. in 169 N. Y. 574, 61 N. E. Page v. Lashley, 15 Ind. 152; Zabel v. 1129; Johnson v. East Carolina Land Nyenhuis, 83 Iowa 756, 49 N. W. 999; & Railway Co., 116 N. Car. 962, 21 Scott v. Baltimore &c. Co., 93 Md. S. E. 28 ; Phillips v. Preston, 5 How. 475, 49 Atl. 327 ; Many illustrative (U. S.) 278, 12 L. ed. 152; Green v. cases are given in § 1633. Randall, 51 Vt. 67; Lonabaugh v. "Wilson v. Union Distilling Co., 16 Morrow, 11 Wyo. 17 70 Pac. 724. Colo. App. 429 66 Pac. 170; Godkin "Weaver v. Fletcher, 27 Ark. 510; v. Monahan, 83 Fed. 116, 27 C. C. A. Savings Bank v. Asbury, 117 Cal. 96, 410; Sun &c. Assn. v. Edwards, 113 48 Pac. 1081; Sivers v. Sivers, 97 Fed. 445, 51 C. C. A. 279; Tichenor Cal. 518, 32 Pac. 571 (time of pay- v. Newman, 186 111. 264, 57 N. E. 826; ment) ; Basshor v. Forbes, 36 Md. Robieson v. Royce, 63 Kans. 886, 66 154; Snow v. Alley, 151 Mass. 14, 23 Pac. 646; Crane v. Williamson, 111 N. E. 576; DeCamp v. Scofield, 75 Ky. 271, 23 Ky. L. 689, 63 S. W. 610; Mich. 449, 42 N. W. 962; Hersom v. Merritt v. Peninsular Const. Co., 91 Henderson, 21 N. H. 224, 53 Am. Dec. Md. 453, 46 Atl. 1013; Leffel v. Piatt, 185 ; Chapin v. Dobson, 78 N. Y. 74, 126 Mich. 443, 86 N. W. 65 ; Engel- 34 Am. Rep. 512; Weaver v. Wood, horn v. Reitlinger, 122 N. Y. 76, 25 9 Pa. St. 220; Hamilton v. Clark, N. E. 297, 9 L. R. A. 548; Eighmie rTex. Civ. App.) 26 S. W. 515; Red- v. Taylor, 98 N. Y. 288; Seitz v. field V. Gleason, 61 Vt. 220, 17 Atl. Brewers &c. Machine Co., 141 U. S. 1075, 15 Am. St. 889; Johnston v. Mc- 510, 35 L. ed. 837, 12 Sup. Ct. 46. Cart, 24 Wash. 19, 63 Pac. 1121 (how " Snowden v. Guion, 101 N. Y. 458, payment should be made) ; Ricmer v. 5 N. E. Z22. Rice, 88 Wis. 16, 59 N. W. 450 (parol 947 PAROL EVIDENCE. § 1634J plained, if we observe that it is one question whether such a col- lateral agreement may be proved for the purpose of sustaining an action for its breach ; and a different question whether it may be proved for the purpose of defeating an action on the written lease.'"* Another writer suggests the following test for deter- mining whether a parol agreement is collateral and admissible: *'If it interferes with the writing it cannot be proved; if on the other hand it relates to a matter beyond the scope of the written contract, the writing does not affect it. * * * In each case it must be determined from the character of the writing and from the circumstances of the case whether the parol agreement offered to be proved was in regard to a matter which it is reasonable to infer the parties thought settled by the terms of the writing; and, if it was, evidence to show it should be excluded. The writing must speak just so far as it is fair to conclude that the parties, acting as reasonable men and using intelligible language, intended it should speak, and no farther."" § 1634. Collateral agreements — Evidence held admissible. — Parol evidence is admissible to show that when a note was given to a bank, the maker directed that any deposit he should make should be credited on the note, although before maturity, as this does not vary or contradict the note.^* There is also a class of cases in which it is held that parol evidence of a collateral con- temporaneous agreement which assumes the contract as indicated by the writing and undertakes to deal with some contingency or new relation of the parties in the future that may arise under the written agreement, is admissible.^^ It has also been held that "Abbott's Trial Ev. (2d ed.) 649, Trade Cont.. §141. See also, Seitz note. A comparison of the follow- v. Brewers &c. Machine Co., 141 U. S. ing cases will show the truth of the 510, 35 L. ed. 837, 12 Sup. Ct. 46, and general proposition that the form of compare Puget Sound Iron &c. the issue and purpose of the evidence Works v. Clemmins, 32 Wash. 36, 72 mav have an important bearing. Pac. 465. Clinton v. Estes, 20 Ark. 216; Rhine "Roe v. Bank of Versailles, 167 V. Ellen, 36 Cal. 362 ; Purinton v. Mo. 406, 67 S. W. 303. Northern 111. R. Co., 46 111. 297; "See Jefferv v. Walton. 1 Stark. Gardner v. Lightfoot, 71 Iowa 577, 213; Erskine v. Adcanc. L. R. 8 Ch. 32 N. W. 510; Cunningham v. Dwyer, App. 756; Morgan v. Griffith, L. R. 6 23 Md. 219; Christopher v. Christo- Exch. 70; Batterman v. Pierce 3 pher, 64 Md. 583, 3 Atl. 296; EUinger Hill (N. Y.) 171 ; Johnson v. Oppen- V. Crowl, 17 Md. 361. heim. 55 N. Y. 280. reviewed in Eigh- " Jones Constr. of Commercial & mie v. Taylor, 98 N. Y. 288, where 1 634 CONTRACTS. 948 parol evidence is admissible to show an agreement as to the time, place or manner of payment or performance under a written con- tract, which is silent upon the subject and is not contradicted or varied thereby;^" to show in an action for a balance due on a lien note for a horse, that at the time of the sale and delivery of the note it was agreed that the horse should be taken on trial and returned if not satisfactory;" to show an agreement of war- ranty, or the like, where the bill of sale is silent ;^^ to show an agreement to destroy game, rebuild or repair^^ as collateral to a lease, and to show an agreement by a vendor or lessor not to en- gage in a rival or competing business.'* But many of these de- cisions are of questionable soundness, and, as shown in the next ^section, the weight of authority is against some of them. It has also been held that parol evidence is admissible to show an agree- ment by a grantor to pay for a sewer in process of construction at the time of the execution of the deed ; but the weight of authority is to the effect that a parol warranty cannot be shown where the bill of sale or other written contract appears to be complete, when Chapin v. Dobson, 78 N. Y. 74, 34 Am. Rep. 512, is sought to be distin- guished on this ground. See also, Nickerson v. Saunders, 36 Maine 413 ; Clark V. Deshon, 12 Cush. (Mass.) 589; Holbrook v. Holbrook, 30 Vt. 432; Kickland v. Menasha Wooden Ware Co., 68 Wis. 34, 60 Am. Rep. 831 '»' Lindley v. Lacey, 17 C. B. (N. S.) 578; Sivers v. Sivers, 97 Cal. 518, 32 Pac. 571; Ewaldt v. Farlon, 62 Iowa 212, 17 N. W. 487 ; Gray v. An- derson, 99 Iowa 342, 68 N. W. 790, 61 Am. St. 243; Paul v. Owings, 32 Md. 402 ; Cummings v. Putnam, 19 N. H. 569; Sowers v. Earnhart, 64 N. Car. 96; Musselman v. Stoner, 31 Pa. St. 265; Johnson v. Portwood, 89 Tex. 235, 34 S. W. 596; Brent's Exrs. v. Bank of Metropolis, 1 Pet. (V. S.) 89, 7 L. ed. 65; Johnston v. McCart, 24 Wash. 19, 63 Pac. 1121; Becker v. Knudson, 86 Wis. 14, 56 N. W. 192. Agreement between sureties, Sloan V. Gibbes, 56 S. Car. 480, 35 S. E. 408, 76 Am. St. 559, and numerous author- ities there cited. ^ Gilman v. Williams, 74 Vt. 327, 52 Atl. 428. ^Hersom v. Henderson, 21 N. H. 224, 53 Am. Dec. 185 ; Chapin v. Dob- son, 78 N. Y. 74, 34 Am. Rep. 512; Boorman v. Jenkins, 12 Wend. (N. Y.) 566, 27 Am. Dec. 158; Puget Sound Iron &c. Works v. Clemmons, 32 Wash. 36, 72 Pac. 465; Hahn v. Doolittle, 18 Wis. 196, 86 Am. Dec. 757. See also, De Lassalle v. Guild- ford, 70 L. J. K. B. 533, 84 L. T. 549; Allen V. Pink, 4 M. & W. 140 ; Thom- as V. Barnes, 156 Mass. 581, 31 N. E. 683 ; Perrine v. Cooley's Exrs., 39 N. J. L. 449. Note to 5_ Am. St. 198. But compare authorities cited in § 1635. ^Erskine v. Adeane, L. R. 8 Ch. App. 756 ; Morgan v. Griffith, L. R. 6 Exch. 70; De Lassalle v. Guildford, 70 L. J. K. B. 533, 84 L. T. 549 ; Vande- grift V. Abbott, 75 Ala. 487; Gum- ming V. Barber, 99 N. Car. 332, 5 S. E. 903 ; See also, Graffam v. Pierce, 143 Mass. 386, 9 N. E. 819; Lewis v. Seabury, 74 N. Y. 409, 30 Am. Rep. 311 (agreement as to fixtures) ; John- son V. Blair, 126 Pa. St. 426, 17 Atl. 663. But see § 1635. "Durham v. Lathrop, 95 111. App. 429; Welz v. Rhodius, 87 Ind. 1, 44 949 PAROL E\aDENCE. § I ^^35 it contains nothing upon the subject of warranty," that an oral agreement between the insurer and assured that the former should hold the policy until payment of the first quarterly pre- mium, and that it should be in force during such time does not contradict the terms of the policy requiring payment of the pre- mium in advance;-" and that a parol agreement that a grantor might retain possession for a certain time is admissible." § 1635. Collateral agreements — Evidence held inadmis- sible. — The weight of authority is to the effect that a parol warranty cannot be shown where the bill of sale or other written contract appears to be complete, when it contains nothing upon the subject of warranty,-'' as well as when it contains an express warranty.-" So, contrary to decisions referred to in the preceding section, it has been held that a prior or contemporaneous parol agreement by a vendor or lessor not to carry on a competing Am. Rep. 747; Fusting v. Sullivan, 41 Md. 162; Pierce v. Woodward, 6 Pick. (Mass.) 206. This is contrary to the weight of authority, and at least one of these cases has been practically overruled. ""Carr v. Doolev, 119 Mass. 294; Cole V. Hadley, 162 Mass. 579, 39 N. E. 279. See also, Robinius v. Lis- ter, 30 Ind. 142, 95 Am. Dec. 674; Hopper v. Calhoun, 52 Kans. 703, 35 Pac. 816, 39 Am. St. 363; Durkin v. Cobleigh, 156 Mass. 108, 30 N. E. 474, 17 L. R. A. 270, 12 Am. St. 436. But compare Flvnn v. Bourneuf. 143 Mass. 277. 9 N.'E. 650, 58 Am. Rep. 135; Stanisics v. McMurtry, 64 Nebr. 761, 90 N. W. 884. ^ Prudential Ins. Co. v. Sullivan, 27 Ind. App. 30, 59 N. E. 873. But see Insurance Co. v. Mowry, 96 U. S. 544. 24 L. ed. 674. " Hersey v. Verrill. 39 Maine 271 ; Willis v. Hulbert, 117 Mass. 151; Quimby v. Stebbins. 55 N. H. 420; Hamilton v. Clark (Tex. Civ. App."), 26 S. W. 515; Merrill v. Blodgett, 34 Vt. 480. See also, Farrar v. Smith, 64 Maine 74. For other illustrative cases see, Harman v. Harman. 34 U. S. App. 316, 17 C. C. A. 479. 70 Fed. 894; Gould v. Boston Excel. Co., 91 Maine 214, 39 Atl. 554, 64 Am. St. 221 ; Rackemann v. Riverbank Imp. Co., 167 Mass. 1, 44 N. E. 990, 57 Am. St. 427; Bretto v. Levine, 50 Minn. 168, 52 N. W. 525. =*McMillen v. DeTamble, 93 111. App. 65 ; Conant v. National State Bank, 121 Ind. 121, 22 X. E. 250; Mast v. Pearce, 58 Iowa 579, 8 X. W. 632, 12 N. W. 597, 43 Am. Rep. 125 and note; Ehrsam v. Brown, 64 Kans. 466, 67 Pac. 867; Diebold Safe & Lock Co. V. Huston, 55 Kans. 104, 39 Pac. 1035. 28 L. R. A. 53 ; Lamb v. Crafts. 12 Mete. (Mass.) 353; Hall wood Cash Register Co. v. Millard, 127 Mich. 316. 86 N. W. 833; McCray Refrigerator & Cold Storage Co. v. Woods, 99 Mich. 269, 58 N. W. 320, 41 Am. St. 599 and note; Xaumberg V. Young, 44 X. J. L. 331. 43 Am. Rep. 380; Eighmie v. Tavlor, 98 X. Y. 288; Reed v. Van Ostrand, 1 Wend. (X. Y.) 424. 19 Am. Dec. 529. See note in 5 Am. St. 107-201. See also. Van Winkle v. Crowell, 146 U. S. 42. Z(, L. ed. 880, 13 Sup. Ct. 18. * Johnson v. Latimer, 71 Ga. 470; McCormick Harvesting Machine Co. V. Yoeman, 26 Ind. App. 415. 59 X. E. 1069; Osborne v. Wigent. 127 Mich. 624, 86 X. W. 1022; Cosgrove V. Bennett, 32 Minn. 371. 20 X. W. 359; Dewitt v. Berrv. 134 U. S. 306, II L. ed. 896, 10 Sup. Ct. 536. i635 CONTRACTS. 950 business is inadmissible where the written contract appears to be complete.^" And so the better rule is that an oral warranty of the condition of the premises or agreement on the part of the lessor to make repairs or improvements cannot be shown in such a case.^^ It has also been held that oral evidence is not admis- sible to show that rentals on a railroad lease are to be applied upon a construction contract, so as to impose upon the lessee a new burden in addition to payment of the agreed rent when the road is completed and accepted, which is all that the lease pro- vides for.^^ So, it has been held that a written contract to erect a tablet with a certain word on top cannot be enlarged by a con- temporaneous verbal agreement that the word should be cut in raised letters f^ that a prior or contemporaneous parol agreement that only one of several notes, absolute on their face, should be paid, and that there should then be no liability on the other, can- not be shown ;^'* and that where a deed or other writing is un- ambiguous and purports to express the entire contract, stating the consideration, and the subject-matter, and the conditions, '" Walther v. Stampfli, 91 Mo. App. 398; Smith v. Gibbs, 44 N. H. 335; Costello V. Eddv, 58 Hun N. Y.) 605, 34 N. Y. St. 565. 12 N. Y. S. 236, affd. 128 N. Y. 650, 29 N. E. 146; Scholz V. Dankert, 69 Wis. 416, 34 N. \V. 394. See also. Haycock v. Johnston, 81 Minn. 49, 83 N. W. 494, 1118; Gordon v. Parke & Lacy Mach. Co., 10 Wash. 18, 38 Pac. 755. ^^ Roehrs v. Timmons, 28 Ind. App. 578, 63 N. E. 481 ; Diven v. Johnson, 117 Ind. 512, 20 N. E. 428, 3 L. R. A. 308; Tracy v. Union Iron Works Co., 104 Mo. 193, 16 S. W. 203; York v. Steward, 21 Mont. 515, 55 Pac. 29. 43 L. R. A. 125; Hall v. Beston, 26 App. Div. (N. Y.) 105, 49 N. Y. S. 811. affd. 165 N. Y. 632. 59 N. E. 1123; Hartford & New York Steam- boat Co. V. New York. 78 N. Y. 1, affg. 12 Hun (N. Y.) 550. See also, Angell V. Duke, 32 L. T. 320; Nave V. Berry, 22 Ala. 382 ; Averill v. Saw- yer, 62 Conn. 560, 27 Atl. 73 ; Rector V. Hartford Deposit Co., 190 111. 380, 60 N. E. 528; Lerch v. Sioux City Times Co., 91 Iowa 750, 60 N. W. 611; Stevens v. Pierce, 151 Mass. 207, 23 N. E. 1006; Grashaw v. Wilson, 123 Mich. 364, 82 N. W. 73; McLean V. Nicol, 43 Minn. 169, 45 N. W. 15 ; Stoddard v. Nelson, 17 Ore. 417, 21 Pac. 456; Patterson v. Park, 166 Pa. St. 25, 30 Atl. 1041 ; Johnson v. Witte (Tex. Civ. App.), 32 S. W. 426; Richard v. Dana, 74 Vt. 74, 52 Atl. 113. ''^ Reynolds v. Louisville N. A. & C. R. Co., 143 Ind. 579, 40 N. E. 410. See also, Harrison v. Howe, 109 Mich. 476, 67 N. W. 527. =" Nelson v. Godfrey, 74 Vt. 470. 52 Atl. 1037. See also, Town of Brewton v. Glass, 116 Ala. 629, 22 So. 916; Patek v. Waples, 114 Mich. 669, 72 N. W. 995; Tuttle v. Bur- gett's Admr., 53 Ohio St. 498, 42 N. E. 427, 30 L. R. A. 214, 53 Am. St. 649; Dixon- Woods Co. v. Phillips Glass Co., 169 Pa. St. 167, 32 Atl. 432; Long v. Ferine, 41 W. Va. 314, 23 S. E. 611. ^ Barnard State Bank v. Fesler, 89 Mo, App. 217. To same effect where mortgage secures all the notes, see, First Nat. Bank v. Prior, 10 N. Dak. 146, 86 N. W. 362. But a parol agree- ment that there should be no personal liability on notes given by a corpora- tion has been held admissible. Brown v. Eastern Slate Co.. 134 Mass. 590. 951 PAROL EVIDENCE. § 1 636 Stipulations, reservations, and acts to be performed, specifically and in detail, it is more than a mere conveyance or act in carry- ing out a prior or contemporaneous contract, and cannot be varied nor contradicted by parol evidence of such alleged contract.^" And there are many authorities in which it is held that where a written contract appears to be complete and unambiguous, parol evidence of a prior or contemporaneous agreement, even as to the time or manner of performance or conditions not going to the validity of the writing, is not admissible.^" § 1636. Conditions precedent. — The general rule which excludes parol evidence when offered to contradict or vary the terms, provisions or legal effects of a written instrument, is sub- ject to many qualifications. Among these qualifications is one to the effect that conditions relating to conditions precedent may be shown by extrinsic evidence. A party who concedes that the instrument evidencing the contract was placed in the possession of the party seeking rehef, but claims that the latter took it with the understanding that it was not to go into effect until the hap- pening of some other or further event and that such event has ** Moore v. Terry, (id Ark. 393, 50 Campbell v. Hodgson, 1 Gow. 74; S. W. 998; Arnold v. Scharbauer, 118 Preston v. Merceau, 2 W. Bl. 1249; Fed 1008- Godkin v. Monahan, 83 Bomar v. Rosser, 131 Ala. 215, 31 Fed. 116, 27 C C. A. 410; Sun &c. So. 430; Keith v. Parker, 115 Fed. Assn. V. Edwards, 113 Fed. 445, 51 397; Ferguson Contracting Co. v. C C A 279- Haworth v. Norris, 28 Manhattan Trust Co., 118 Fed. 791, FJa 763. 10 So. 18; McEnery v. Mc- 55 C. C. A. 529; Conant v. National Enery, 110 Iowa 718. 80 N. W. 1071; State Bank, 121 Ind. 2>2l, 22 X. E. Morris V. Morris. 2 Bibb. (Kv.) 311; 250; Hanson v. Stetson. 5 Pick. Tripp V. Smith. 180 Mass. 122, 61 (Mass.) 506; Allen v. Furbish. 4 N. E. 804; Radigan v. Johnson. 174 Gray (Mass.) 504; Hunt v. Adams, 7 Mass 68 54 N E 358; Walker v. Mass. 518; First State Bank v. Xoel, Mack. 129 Mich. 527. 89 N. W. 338; 94 Mo. App. 498, 68 S. W. 235; Rid- Putnam v. Russell. 86 Mich. 389, 49 dell v. Peck &c. Ventilating Co., 27 N W 147 ; Montgomery v. Chase, 30 Mont. 44, 69 Pac. 241 ; Armington Minn 132. 14 N. W. 586; Savre v. v. Stelle, 27 Mont. 13. 69 Pac. 115; Burdick 47 Minn. 367. 50 N. W. 245 ; Kistler v. McBride, 65 N. J. L. 553, Baum V. Lvnn, 72 Miss. 932. 18 So. 48 Atl. 558; First Nat. Bank v. Prior, 428, 30 L. R. A. 441; Hutchins v. 10 N. Dak. 146. 86 N. W. 362; Riley Hu'tchins. 98 N. Y. 56; En.gelhorn v. v. Treanor (Tex. Civ. App.), 25 S. Reitlinger\ 122 N Y 76, 25 N. E. W. 1054; McAleer v. United States, 297 9 L R. A. 548; Milos v. Covace- 150 U. S. 424. 11 L. ed. 1130. 14 vich. 40 Ore. 239. 66 Pac. 914; Hop- Sup. Ct. 160. 29 Ct. CI. 560. Agree- kins V. Woldert Grocery Co. (Tex. ment not to enforce contract as writ- Civ. App.), 66 S. W. 63. And see ten or making it conditional: Bar- authorities reviewed in 6 L. R. A. 33. nett v. Barnctt. 83 Va. 504, 2 S. E. "Hoare v. Graham. 3 Camp. 56; 12>Z. See also, Garner v. Fite. 93 Rawson v. Walker, 1 Stark. 288; Ala. 405, 9 So. 367; Osborne v. Tay- i637 CONTRACTS. 952 not transpired is not considered as one seeking to vary or con- tradict a written contract, but as one endeavoring to show that no contract between the parties ever in fact came into existence. For this reason, evidence of such conditions precedent is held admis- sible.^^ Cases which so hold merely give recognition to the well- settled rule that an instrument may be delivered by one party to another to take effect on the happening of a contingency, and that by such collateral agreement, the legal operation of the writ- ing is merely postponed until the happening of the contingency.^* § 1637. Conditions precedent — Bills and notes. — Thus as between the parties and all but bona fide holders, extrinsic evi- dence may be introduced to show that a note in the possession of the payee was not to become a binding obligation until the hap- pening of some event which never has transpired.^^ Under this lor, 58 Conn. 439, 20 Atl. 60S ; Coap- stick V. Bosworth, 121 Ind. 6, 22 N. E. 112; McCormick Harvesting Co. V. Wilson, 39 Minn. 467, 40 N. W. 571 ; Curtice v. Hokanson, 38 Minn. 510, 38 N. W. 694; ^leekins v. New- berry, 101 N. Car. 17. 7 S. E. 655. " Pvm V. Campbell, 6 El. & Bl. 370 ; Wallis V. Littell, 11 C. B. (N. S.) 369 ; Hurlburt v. Dusenberv, 26 Colo. 240, 57 Pac. 860; Bourke v. Van Keuren, 20 Colo. 95, 36 Pac. 882 ; Mc- Farland v. Sikes, 54 Conn. 250, 7 Atl. 408, 1 Am. St. Ill; Tug River &c. Salt Co. V. Brigel, 86 Fed. 818, 30 C. C A. 415; Price v. Hudson, 125 111. 284, 17 X. E. 817; McCormick Harvesting ;Mach. Co. v. Morlan, 121 Iowa 451, 96 N. W. 976; Reichart v. Wilhelm. 83 Iowa 510, 50 N. W. 19; Beall V. Poole. 27 Md. 645 ; Adams v. Morgan, 150 Mass. 143, 22 N. E. 708; Wilson V. Powers, 131 ]\Iass. 539; Fulton V. Priddy, 123 Mich. 298, 82 N. W. 65, 81 Am. St. 201 ; Westman V. Krumweide. 30 Minn. 313, 15 N. W. 255 ; Harnickell v. New York Life Ins. Co., Ill N. Y. 390, 18 N. E. 632, 2 L. R. A. 150 ; Reynolds v. Rob- inson, 110 N. Y. 654, 18 N. E. 127, 2 Silvernail Ct. App. fN. Y.) 99; Benton v. Martin, 52 N. Y. 570; Sweet V. Stevens, 7 R. I. 375; Biss- enger v. Guitemen Bros., 6 Heisk. (Tenn.) 277; Burke v. Dulaney, 153 U. S. 228, 38 L. ed. 698, 14 Sup. Ct. 816; Ware v. Allen. 128 U. S. 590, Z2 L. ed. 563, 9 Sup. Ct. 174; Oilman v. Williams, 74 Vt. ZZI , 52 Atl. 428; Catt V. Olivier, 98 Va. 580, 36 S. E. 980; Reiner v. Crawford, 23 Wash. 669, 63 Pac. 516, 83 Am. St. 848; Curry v. Colburn, 99 Wis. 319, 74 N. W. 778. 67 Am. St. 860; Nutting v. Minnesota Fire Ins. Co., 98 Wis. 26, 12, N. W. 432. "The making and de- livering of a writing, no matter how complete a contract according to its terms, is not a binding contract if de- livered upon a condition precedent to its becoming obligatory. In such case it does not become operative as a contract until the performance or happening of the condition prec- edent." Cleveland Refining Co. v. Dunning, 115 Mich. 238, 11 N. W. 239, citing Ware v. Allen, 128 U. S. 590, 32 L. ed. 563, 9 Sup. Ct. 174; Phelps V. Abbott, 114 Mich. 88, 12 N. W. 3. '* Kelly v. Oliver, 113 N. Car. 442. 18 S. E. 698; Hughes v. Crooker, 148 N. Car. 318, 62 S. _E. 429, 128 Am. St. 606 and note; Reiner v. Crawford. 23 Wash. 669, (^Z Pac. 516. 83 Am. St. 848; Golden v. Meier, 129 Wis. 14, 107 N. W. 27, 116 Am. St. 935. ** McFarland v. Sikes. 54 Conn. 250, 1 Am. St. 111. 7 Atl. 408; Oilman v. Williams. 74 Vt. Z21 , 52 Atl. 428; Catt v. Olivier, 98 Va. 580, Z(> S. E. 980. 953 PAROL EV7DENCE. § 1 637 rule, it is proper to show that a note given for the purchase-price of a horse was to take effect only if such horse was warranted,*** or that the note was to become a binding obligation only if nego- tiated at a certain place;*' or that a note given for a policy of insurance was conditional upon such policy being satisfactory to the maker of such note,*" or if the maker did not demand its re- delivery by a certain day,*^ or that it was given on condition that the transaction of which it was a part should be approved by the maker's attorney,** or that when given for the purchase-price of certain property it was not to become binding on the maker until after he had an opportunity to examine and accept the property purchased.*^ However, some jurisdictions hold that where the maker of a note has voluntarily placed it in the hands of the payee, the former cannot show that the instrument was not to take effect until some other person or persons had signed it, for the reason that the adverse party cannot be made the holder of an instrument in escrow. *° In conformity with this latter rule, if a mortgage*^ or a deed*^ is voluntarily surrendered to the mort- gagee or grantee, it cannot be shown that such surrender was to be inoperative until the happening of a contingency. It may be shown that a stock subscription contract was not to go into effect until a certain number of persons had signed or a certain amount of the stock had been subscribed for.*" Testimony of this char- acter does not contradict the terms of the collateral agreement postponing its legal operation until the happening of the contin- gency." "Trumbull v. O'Hara, 71 Conn. **Ware v. Allen, 128 U. S. 590, Z2 172, 41 Atl. 546. L. ed. 563, 9 Sup. Ct. 174. *^'United States Nat. Bank v. Ewing, " Burke v. Dulaney, 153 U. S. 228, 131 N. Y. 506, 30 X. E. 501, 27 Am. 38 L. ed. 698. 14 Sup. Ct. 816. St 615 "Findlev v. Means, 71 Ark. 289, "Parker v. Bond, 121 Ala. 529, 25 72> S. \V. 101; Clanin v. Esterly Har- So 898. See also, Mehlin v. Mutual vesting Mach. Co.. 118 Ind. 2)72, 21 &c' Life Assn., 2 Ind. Ten 396, 51 N. E. 35, 3 L. R. A. 863. S. W 1063. "Sargent v. Cooley, 12 N. Dak. 1, *« McFarland v. Sikes. 54 Conn. 250, 94 X. \V. 576. 7 Atl 708 1 \m St. 111. To same ''Hubbard v. Greeley, 84 Mame effect, Ada Dairy Assn. v. Mears, 123 340. 24 Atl. 799. 17 L. R. A. 511. Mich. 470, 82 X.'W. 258 (written con- *" Oilman v. Gross, 97 Wis. 224, 72 tract of subscription for stock). See X. W. 885. also Adams v. Morgan, 150 Mass. °^ Hughes v. Crooker, 148 X. Car. 143, 22 N. E. 708. 318. 62 S. E. 429, 128 Am. St. 606 and note. § 1638 CONTRACTS. 954 § 1638. Conditions precedent — Sureties. — One who has signed as surety may show that he signed with the understanding and on condition that he was to be Hable only upon the signature of others being obtained with his.^^ However, if the payee of a bill or note has no knowledge of the fact that the surety was not to be held liable unless others signed with him, the surety cannot avoid liability to the payee, notwithstanding the principal debtor delivered such bill or note to the payee in violation of his contract with the surety. This is true of both negotiable^^ and nonnego- tiable instnmients.^' § 1639. Conditions precedent — Rule further illustrated. — It has been held proper to show that a written contract of guar- anty was conditioned upon the purchase of a certain amount of leather by the party for the benefit of whose credit the guaranty was executed,^* or that a policy of insurance was not to become effective until after the cancelation by the insured of another policy on the same property in another company ;^^ or that a writ- ten order for goods was to take effect only upon condition the pur- chaser succeeded in obtaining the cancelation of a written order which had already been given to another person f^ or that a lease for certain property was to become a binding obligation only in the event that the lessees should be able to obtain a specified amount of money from another ;^^ or that a sale of mining stock "' Guild V. Thomas, 54 Ala. 414, 25 ■" Carroll v. Ruggles, 69 Iowa 269, Am. Rep. 703 ; Hudspeth's Admr. v. 28 N. W. 590, 58 Am. Rep. 223. "A Tyler, 108 Ky. 520, 22 Ky. L. 221, surety on a bond of any kind cannot 56 S. W. 973 ; Readfield v. Shaver, 50 defeat his liability thereon by show- Maine 36, 79 Am. Dec. 592; Hessell ing that it was delivered in viola- V. Johnson, 63 Mich. 623, 30 N. W. tion of agreements between himself 209, 6 Am. St. 334; Hall v. Parker, and the principal, or any other co- 37 Mich. 590, 26 Am. Rep. 540; Cut- maker, unknown to the party for ler V. Roberts, 7 Nebr. 4, 29 Am. whose benefit it was given." Rich- Rep. 371 ; Dair v. United States, 16 ardson v. Peoples' Nat. Bank, 57 Wall. (U. S.) 1, 21 L. ed. 491. Ohio State, 299, 48 N. E. 1100. "* Clark V. Bryce, 64 Ga. 486 ; Whit- ^ Lennox v. Murphy, 171 Mass. 370, comb V. Miller, 90 Ind. 384 ; Mickle- 50 N. E. 644. wait V. Noel, 69 Iowa 344, 28 N. W. "Moore v. Farmers' Mut. Insur- 630; Smith v. Moberly, 10 B. Mon. ance Association, 107 Ga. 199, 33 S. (Ky.) 266, 52 Am. Dec. 543; Wyhe E. 65. V. Commercial Nat. Bank, 63 S. Car. "^ Cleveland Refining Co. v. Dunn- 406. 41 S. E. 504; Lookout Bank v. ing, 115 Mich. 238, 73 N. W. 239. Aull, 93 Tenn. 645, 27 S. W. 1014, 42 " Hurlburt v. Dusenbery, 26 Colo. Am. St. 934; Farmers' & Mechanics' 240, 57 Pac. 860. Bank v. Humphrey, 36 Vt. 554, 86 Am. Dec. 671. 955 PAROL EVIDENCE. § 164O was, in fact, made on the condition that the vendor's agent in another place had not already disposed of the same stock i^" or that a written contract of sale was to become a binding obligation only on the approval of the purchase by the vendee's engineer;^' or that a policy of insurance temporarily in the custody of the insured, but subsequently withdrawn by the agent, was to become effective only on the approval of the insurance company."" § 1640. Subsequent agreements. — A new and distinct agreement based on a new consideration may usually be shown by parol evidence, either as a substitute for the old agreement, or in addition to it;"^ and it is a general rule that an executory bilateral written contract, not under seal, may, before breach thereof, be waived or annulled, modified or varied by a new valid parol contract, even though it is to be taken in connection with the written agreement and proved partly by the writing and partly by the new parol terms, provided the statute of frauds does not require it to be entirely in writing."- As stated by Mr. Freeman : "The rule forbidding the introduction of parol evidence to con- tradict, add to, or vary a writing, has no application to stipula- ■» Reiner v. Crawford, 23 Wash. 58, 65, 27 E. C. L. 34; Pecos Valley 669, 63 Pac. 516, 83 Am. St. 848. Bank v. Evans-Snider-Buel Co., 107 '» Pym V. Campbell, 6 El. & Bl. 370. Fed. 654, 46 C. C A. 534 ; Spann v. •^ Nutting V. :Minnesota Fire Ins. Baltzell, 1 Fla. 301, 46 Am. Dec. 346; Co., 98 Wis. 26. 11 N. W. 432. Wilson v. McClenny, 32 Fla. 363, 13 *^ Cerrusite Mining Co. v. Steele, 18 So. 873; Bowman v. Cunningham, 78 Colo. App. 216, 70 Pac. 1091; Toledo, 111. 48; Loomis v. Donovan, 17 Ind. St. L. & K. C. R. Co. V. Levy, 127 198; Illinois Cent. R. Co. v. Manion, Ind. 168. 26 N. E. Ill; Hubbell v. 113 Ky. 7. 23 Ky. L. 2267, 67 S. W. Ream, 31 Iowa 289; McDonald v. 40, 101 Am. St. 345; Thomas v. Stewart, 18 La. Ann. 90; Janney v. Barnes, 156 Mass. 581, 31 N. E. 683; Brown, 36 La. Ann. 118; Atwell v. Cummings v. Arnold, 3 Mete. Miller, 11 Md. 348, 69 Am. Dec. 206; (Mass.) 486, Zl Am. Dec. 155; Chou- Richardson v. Hooper, 13 Pick, teau v. Jupiter Iron-Works, 94 Mo. (Mass.) 446; Rand v. Mather, 11 388, 7 S. W. 467 ; Juilliard v. Chaffee. Cush. (Mass.) 1. 59 Am. Dec. 131; 92 N. Y. 529; Harris v. Murphv, 119 Grafton Bank v. Woodward, 5 N. H. N. Car. 34, 25 S. E. 708, 56 Am. St. 99, 20 Am. Dec. 566 ; Sharp v. Wyck- 656, and e.xtended note ; Oregonian off, 39 N. J. Eq. 376; Coe v. Hobby, R. Co. v. Wright, 10 Ore. 162; Hollo- n N. Y. 141, 28 Am. Rep. 120; Heath- way v. Frick, 149 Pa. St. 178. 24 Atl. erlv V. Record. 12 Tex. 49; Piatt's 201 ; Brvan v. Hunt. 4 Sneed (Tenn.) Admr. v. United States. 22 Wall. (U. 543, 70 Am. Dec. 262; Swain v. Sea- S.) 496, 22 L. ed. 858. 10 Ct. CI. 163; mens. 9 Wall. (U. S.) 254, 271, 19 L. Brown v. Everhard. 52 Wis. 205, 8 N. ed. 554; Emerson v. Slater. 22 How. W. 725. Compare last two cases on (U. S.) 28. 16 L. ed. 360; Bannon v. question as to whether independent Aultman, 80 Wis. 307, 49 N. W. 967, consideration is necessary. 27 Am. St. il . "Goss v. Lord Nugent, 5 B. & Ad. § 1 641 CONTRACTS. 956 tions or agreements made between the parties subsequent to the execution of the written instrument. Agreements not by specialty, whether written or unwritten, are of the same grade and dignity in law, and are denominated simple contracts. Hence, it follows that to admit evidence of a subsequent parol agree- ment, for the purpose of showing an abandonment, discharge, or alteration of the terms of a previous written agreement not under seal, would not be to affect or dissolve the agreement by matter of an inferior nature. And, therefore, it is generally ad- mitted that it is competent for the parties to an executory written contract not under seal, at any time before breach thereof, by a subsequent verbal agreement, founded on a sufficient considera- tion, either to waive altogether, or dissolve, or annul the previous written agreement, or in any manner to add to, subtract from, or vary or qualify the stipulations of such agreement, and thus to make a new or different contract, which may be proved by parol, whether it is a substitute for the old, or in addition to, or beyond it."^^ If the parol contract was, in fact, made subsequent to the WTitten contract, and evidence thereof is otherwise unobjection- able, it makes no difference how short the interval may have been.^* But a new contract varying the terms of a previous bind- ing contract upon the same subject-matter will not be binding unless supported by a new consideration.®" § 1641. Object — Purpose— Intent. — As said by the Supreme Court of the United States: "The rule which excludes parol tes- timony to contradict or vary a written instrument has reference to the language used by the parties. It cannot be qualified or varied from its natural import, but must speak for itself. The rule does not forbid an inquiry into the object of the parties in executing and receiving the instrument."^® The secret intention *'Note to Harris v. Murphy, 119 L. ed. 775, approved and followed in N. Car. 34, 25 S. E. 708, 56 Am. St. Brick v. Brick, 98 U. S. 514, 25 L. ed. 656 662 256. See also. Pierce v. Robinson, 13 "Rogers v. Atkinson, 1 Ga. 12; Cal. 116; Couch v. Meeker, 2 Conn. Brewster v. Countryman, 12 Wend. 302. 7 Am. Dec. 274; Schmdler v. (N. Y.) 446, cited in note referred to. Muhlheiser, 45 Conn. 153; Crosman "Barlow v. Cottula (Tex. Civ. v. Fuller, 17 Pick. (Mass.) 171 ; Davis App.), 141 S. W. 292. v. Davis, 97 Mich. 419, 56 N. W. 774; "Peugh v. Davis, 96 U. S. 332, 24 revd. 100 Mich. 162, 58 N. W. 651; 957 PAROL E\aDEXCE. 164I of the parties contrar}' to the natural import of the language used cannot, ordinarily, be shown, at least where there is no ambiguity, fraud, or mistake ;" but when the purpose for which a writing was executed is not inconsistent with its terms, such purpose, when relevant and otherwise admissible, may be shown by parol."** There are many instances in which the purpose or object that the parties had in view becomes important, and may be shown without in any way contradicting or varying the terms of the written instrument. In such cases, it is clear that the parol evidence rule has no application to such evidence. There are also cases, especially in equity, in which the true nature, purpose, or object of the transaction may be shown by parol, even though it may apparently contradict the writing as to the consideration, object or purpose thereof as indicated therein."'' Thus, as else- where more fully shown, parol evidence is admitted to show that a deed absolute on its face, was intended as a mortgage." So, parol evidence is admissible to show that the purpose of a writ- ten assignment of an instrument, although absolute in terms, was for collateral security," or that it might be collected;" and, in Clark V. Ducheneau, 26 Utah 97, 72 Pac. 331 ; Wendlinger v. Smith, 75 Va. 309, 40 Am. Rep. 121. "Shore V. Wilson, 9 Clark & F. 355, 525 ; Ford v. Yates, 2 Man. & G. 549; Morris v. Robinson, 80 Ala. 291; Ward v. Campbell, 11 Ga. 97; Kurtz V. Hibner. 55 111. 514, 8 Am. Rep. 665; Allen v. Brvson, 67 Iowa 591, 25 N. W. 820, 56 Am. Rep. 358; Chabot V. Blanc, 5 Mart. (O. S.) (La.) 328; Sargent v. Hutchings, 86 Maine 28, 29 Atl. 926; American Bible Soc. v. Pratt, 9 Allen (Mass.) 109; Drew v. Swift, 46 N. Y. 204; Davis V. King, 89 N. Car. 441; Best V. Hammond, 55 Pa. St. 409; Phillips V. Jarvis, 19 Wis. 204. ** Baldwin v. Carter, 17 Conn. 201, 42 Am. Dec. 735; Robinson v. Bar- nett, 18 Fla. 602, 43 Am. Rep. 327; Downes v. Union Congregational So- cietv. 61 N. H. 151; Bell v. Shibley, 33 Barb. (N. Y.) 610: Hutchins v. Hebbard, 34 N. Y. 24; Brick v. Brick, 98 U. S. 514, 25 L. ed. 256. "» Averv v. Miller. 86 Ala. 495, 6 So. 38; Locket v. Child. 11 Ala. 640; Ward V. Allen. 28 Ga. 74; Stack v. Beach, 74 Ind. 571, 39 Am. Rep. 113; Hughes V. Stanley, 45 Iowa 622; Pond V. Eddy, 113 Mass. 149; Matthews v. Sheehan, 69 X. Y. 585; Robertson v. Dunn, 6 X. Car. 133, 5 Am. Dec. 525; Walker v. McDonald, 49 Tex. 458. '"German Ins. Co. v. Gibe, 162 111 251. 44 N. E. 490; Kitts v. Will- son, 130 Ind. 492, 29 X. E. 401 : Cole V. Gray, 139 Ind. 396. 38 X. E. 856 (giving the reasons for the rule and exception) ; Beebe v. Wisconsin Mtg. Loan Co., 117 Wis. 328, 93 N. W. 1103. ^ McCathern v. Bell, 93 Ga. 290. 20 S. E. 315; Ginz v. Stumph. 11 Ind. 209; Pond v. Eddy, 113 Mass. 149; Reeve v. Dennett, 137 Mass. 315; Hvler V. Nolan, 45 Mich. 357, 7 N. W. 910; Davis v. Crookston Waterworks &c. Co., 57 Minn. 402. 59 X. W. 482. 47 Am. St. 622; Scharman v. Schar- man. 38 Nebr. 39, 56 X. W.^ 704; Matthews v. Sheehan, 69 X. Y. 585. See also, Westheimer v. Thompson. 3 Idaho 560, Zl Pac. 205 (admissible to determine intention as to merger). "Smith V. Childress. 27 Ark. ll%\ McWhirt v. McKee, 6 Kans. 412, 1642 CONTRACTS. 958 some instances, the same rule applies to indorsements of promis- sory notes.'^ It has also been held that parol evidence is admis- sible to prove that an indorsement by the payee was made at the request of the plaintiff to show that the note had,, been paid.''* Parol evidence has likewise been held admissible to show that a certificate of shares issued by the corporation to a third person at the request of a stockholder in place of those which he had held and which were surrendered and canceled was intended as security for a loan.'° So, where a note has been delivered con- ditionally, or the like, and the obligation performed or dis- charged, this may be shown as between the parties.'^* § 1642. Consideration. — Parol evidence is not only admis- sible, under the modern rule, to show the real consideration when the writing is silent as to the consideration," but also, as a gen- eral rule, to contradict a recital of the consideration in the in- strument." So, failure or original want of consideration of an " Dale V. Gear, 38 Conn. 15, 9 Am. Rep. 353 ; Case v. Spaulding, 24 Conn. 578; Downer v. Chesbrough, 36 Conn. 39, 4 Am. Rep. 29; Friend V. Duryee, 17 Fla. Ill, 35 Am. Rep. 89; Carhart Bros. v. Wynn, 22 Ga. 24; Tombler v. Reitz, 134 Ind. 9, 33 N. E. 789; Stack v. Beach, 74 Ind. 571, 39 Am. Rep. 113; Hazzard v. Duke, 64 Ind. 220; Ayer v. Hutchins. 4 Mass. 370, 3 Am. Dec. 232; Church V. Barlow, 9 Pick. (Mass.) 547; Hud- son V. Wolcott, 39 Ohio St. 618. See also, Jaster v. Currie, 69 Nebr. 4, 94 N. W. 995. " Spencer v. Sloan, 108 Ind. 183, 9 N. E. 150, 58 Am. Rep. 35. See also. Cole V. Smith, 29 La. Ann. 551, 29 Am. Rep. 343. "Brick V. Brick, 98 U. S. 514, 25 L. ed. 256. '" McFarland v. Sikes, 54 Conn. 250, 7 Atl. 408. 1 Am. St. Ill; Benton v. Martin, 52 N. Y. 570; Burke v. Du- laney, 153 U. S. 228, 38 L. ed. 698, 14 Sup. Ct. 816; Clark v. Ducheneau, 26 Utah 97. 72 Pac. 331. "Guidery v. Green, 95 Cal. 630, 30 Pac. 786; Warren v. Walker, 23 Maine 453 : Board of Trustees &c. v. Saunders, 84 Wis. 570, 54 N.jW. 1094. "Mason v. Buchanan, 62 Ala. 110; IMobile Saving Bank v. McDonnell, 89 Ala. 434, 8 So. 137, 9 L. R. A. 645, 18 Am. St. 137 ; Cheesman v. Nicholl, 18 Colo. App. 174, 70 Pac. 797 ; How- ell V. Moores, 127 111. 67, 19 N. E. 863; Nichols &c. Co. v. Burch, 128 Ind. 324, 27 N. E. 737 ; Hays v. Peck, 107 Ind. 389, 8 N. E. 274; Poor's Exr. V. Scott, (Ky.), 68 S. W. 397; Car- neal's Heirs v. May, 2 A. K. Marsh (Ky.) 587, 12 Am. Dec. 453; Bourne V. Bourne, 92 Ky. 211, 13 Ky. L. 545, 17 S. W. 443; Goodspeed v. Fuller, 46 Maine 141, 71 Am. Dec. 572; Hodges V. Healy, 80 Maine 281, 14 Atl. 11, 6 Am. St. 199; Fusting v. Sullivan, 41 Md. 162 ; Miller v. Good- win, 8 Gray (Mass.) 542; Cardinal v. Hadley, 158 Mass. 352, 33 N. E. 575, 35 Am. St. 492; Wood Mowing &c. Mach. Co. V. Gaertner, 55 Mich. 453, 21 N. W. 885 ; Bolles v. Sachs, 37 Minn. 315; Harrington v. Samples, 36 Minn. 200, 30 N. W. 671 ; Aller v. Aller, 40 N. J. L. 446; McKinster v. Babcock, 26 N. Y. 378; Barker v. Bradley, 42 N. Y. 316, 1 Am. Rep. 521 ; Hayden v. Mentzer, 10 Serg. & R. (Pa.) 329; FuUwood V. Blanding, 26 S. Car. 312, 2 S. E. 565 ; Lawrence v. Tucker. 23 How. (U. S.) 14, 16 L. ed. 474; Har- wood V. Harwood's Estate, 22 Vt. 959 PAROL EVIDENCE. § 1 642 unsealed contract, and, in many jurisdictions, of a sealed instru- ment, may usually be shown in the same way, as between the parties.^* If there was originally no consideration, there is no binding contract, and if the consideration has failed, it would be unjust to hold a party to its performance without benefit and at his loss. So, the recital of consideration in a writing is gen- erally a mere formal matter, which is regarded as in the nature of a receipt, and may be varied or contradicted by parol evidence. But when these reasons do not apply to the particular written contract in question, as, for instance, when the consideration is contractual, parol evidence thereof is generally inadmissible, and the right to introduce parol evidence to vary the consideration expressed in the instrument or to prove that it was never paid does not authorize the introduction of such evidence to defeat or change the contract itself.^" A case decided by the Supreme Court of Indiana, which is not far from the line, furnishes an excellent illustration. It was an action against a railroad com- pany for damages for personal injuries, and the defendant pleaded and introduced in evidence a written contract releasing it from liabiHty in consideration of the agreement on its part to pay certain expenses of the plaintifif, in addition to a sum of money agreed to be paid and recited as having been paid. The court held that the consideration was contractual, and that parol 507; Marks v. Spencer, 81 Va. 751. 30 N. E. 736. See for a review of This rule is most frequently applied numerous authorities holding that where the consideration is stated only parol evidence of the consideration in general terms, and that is some- of a deed is admissible, note to Velten times said to be the test ; but it is not v. Cormack, 23 Ore. 282, 31 Pac. 658, alwavs a satisfactory or safe one. 20 L. R. A. 101-114. '» lleifchild's Case. L. R. 1 Eq. Cas. ^ Hendrick v. Crowley. 31 Cal. 231 ; Tull V. Parlett, 1 Moodv & M. 471 ; Belden v. Seymour. 8 Conn. 304, A72; Cowan v. Cooper, 41 Ala. 187; 21 Am. Dec. 661: Schneider v. Turn- Lufhurrow v. Henderson. 30 Ga. 482; er. 130 111. 28, 22 N. E. 497, 6 L. R. A. Dicken v. Morgan. 54 Iowa 684, 7 164; Reisterer v. Carpenter, 124 Ind N W 145; Northwestern Crcamerv 30, 24 X. E. 371; Gelpcke v. Blake. 19 Co. V. Lanning, 83 Minn. 19, 85 N. Iowa 263; Ruggles v. Clare. 45 Kans. W. 823 ; Buckels v. Cunningham, 6 662. 26 Pac. 25 ; Barter v. Greenleaf, Sm & M (Miss.) 358; Barbee v. 65 Maine 405; Stillmgs v. Timmms. Barbee, 109 N. Car. 299, 13 S. E. 7^2; 152 Mass. 147. 25 X. E. 50: Baurn v. Wilfong V. Johnson, 41 W. Va. 283. Lvnn, 72 Miss. 932, 18 So. 428, 30 L. 23 S. E. 730. But see Lasher v. Wil- R. A. 441 ; Jackson v. Chicago &c. R. liamson, 55 N. Y. 619; Moore v. Co., 54 Mo. App. 636; Morse v. Shat- Prentiss Tool & Supplv Co.. 39 X. tuck. 4 X. H. 229. 17 Am. Dec. 419; Y St 361. 59 X. Y. Super. Ct. 516, McCrea v. Purmort, 16 Wend. (N. 15 N. Y. S. 150. affd. 133 N. Y. 144, Y.) 460, 30 Am. Dec. 103. § 1643 CONTRACTS. 960 evidence was not admissible, under a plea of no consideration, to contradict or vary the contract.^^ § 1643. One contract as consideration for another. — It sometimes happens that the true consideration of a contract, either in whole or in part, is another contract. Where this is true, the principle stated in the last preceding section sometimes applies to permit evidence of the contract constituting the real consideration of the alleged contract in question.^'^ The actual decision in many cases in which it is broadly stated that the parol evidence rule does not exclude evidence of the purpose or object of the parties might well be based upon this principle and the fact that the evidence in question went to the consideration of the contract. So, in many of the illustrative cases cited in the last preceding section and in later sections having to do with the invalidity and discharge of contracts, the evidence held admissible really went to the consideration of the contract. Other illustra- tions are also given in the earlier sections on collateral contempo- raneous and prior agreements. More than one reason may exist for the admission or rejection of particular evidence, and the dif- ferent branches of the subject now under consideration are so in- "St. Louis & S. F. R. Co. V. Dear- v. Lindsay, 114 Pa. St. 166, 6 Atl. 332 born, 60 Fed. 880, 9 C. C. A. 286; In- and note; (Pennsylvania courts, dianapoHs &c. R. Co. v. Houlihan, 157 however, go farther than most courts Ind. 494, 60 N. E. 943, 54 L. R. A. in admitting parol evidence.) Down- 787, distinguishing Stewart v. Chica- ey v. Hatter, (Tex.) 48 S. W. 32; go, E. I. R. Co., 141 Ind. 55, 40 N. E. See also, Moore v. Harrison, 26 Ind. 67; and Pennsvlvania Co. v. Dolan, 6 App. 408, 59 N. E. 1077; American Ind. App. 109, '32 N. E. 802, 51 Am. Building &c. Ass'n. v. Dahl, 54 Minn. St. 289. See also, Jackson v. Chicago 355, 56 N. W. 47 ; Barnett v. Pratt, Zl &c. R. Co., 54 Mo. App. 636; But Nebr. 349, 55 N. W. 1050; Keuka Col- compare Komp V. Ravmond, 175 N. lege v. Ray, 167 N. Y. 96, 60 N. E. Y. 102, 67 N. E. 113; Myron v. Union 325; International &c. R. Co. v. Daw- R. Co., 19 R. I. 125, 32 Atl. 165. son, 62 Tex. 260. But the principle is ^ Howard v. Stratton, 64 Cal. 487, to be carefully applied, and where the 2 Pac. 263; Moffatt v. Bulson, 96 Cal. contract is valid and complete in it- 106, 30 Pac. 1022, 31 Am. St. 192; self, parol evidence of other terms Hazzard v. Duke, 64 Ind. 220; Singer should not be admitted under the Mfg. Co. V. Forsyche, 108 Ind. 334, 9 guise of showing the consideration. N. E. Zll; Dicken v. Morgan, 54 Diven v. Johnson, 117 Ind. 512, 20 N. Iowa 684, 7 N. W. 145 ; Andrews v. E. 428, 3 L. R. A. 308 and note, crit- Brewster, 124 N. Y. 433, 26 N. E. 1024; icizing Welz v. Rhodius, 87 Ind. 1, 44 Breitenwischer v. Clough, 111 Mich. Am. Rep. 747, which is also expressly 6, 69 N. W. 88, 66 Am. Rep. 372; overruled in Western Paving & LaGrande Nat. Bank v. Blum, 26 Supply Co. v. Citizens' St. R. Co., 128 Ore. 49, 37 Pac. 48; Thomas v. Loose, Ind. 525, 26 N. E. 188, 28 N. E. 88, 10 114 Pa. St, 35, 6 Atl. 326; Cullmans L. R. A. 770, 25 Am. St. 462. 96i PAROL EVIDENCE. § 1643 terlaced that it is difficult to separate them or clearly distinguish one from another. So, it is difficult to lay down general rules ap- plicable alike to all instruments in all cases. Some instruments, even of the most solemn character, are, from their very nature, adapted to merely transfer title in execution or consideration of an agreement"^ which they do not purport to show rather than to state the entire agreement, and, in such cases, parol evidence is frequently admitted when it would not be admissible in case of an instrument in which the provision is contractual and professing to embody the entire contract. In most of the cases, however, in which evidence has been admitted on this theory, it will be found that the evidence went to the consideration, or was admissible under some other exception or limitation of the parol evidence rule, and the doctrine should not be unduly extended, even under the guise of permitting parol evidence of consideration.*** *^This is said to be true in case of deeds, mortgages, assignments, bills of sale, leases and the like. Ludeke V. Sutherland. 87 111. 481, 29 Am. Rep. 66 (deed). See also, Davis v. Hop- kins, 18 Colo. 153, 32 Pac. 70 (deed) ; De St. Aubin v. Field, 27 Colo. 414, 62 Pac. 199 (bill of sale) ; Collins v. Tillou's Admr., 26 Conn. 368, 68 Am. Dec. 398 (deed) ; Bever v. Bever, 144 Ind. 157, 41 N. E. 944 (deed) ; Green V. Batson, 71 Wis. 54, 36 N. W. 849, 5 Am. St. 194 and note; Hahn v. Doo- little. 18 ^^'is. 196, 86 Am. Dec. 757 (assignment rule stated as covering all of the above) ; Leases and mort- gages : Equator Min. &c. Co. v. Guan- ella. 18 Colo. 548, 33 Pac. 613; Kidder V. Vandersloot. 114 111. 133. 28 N. E. 460; Keisselbrack v. Livingston, 4 Johns. Ch. (N. Y.) 144; Gould v. Conant, 66 Vt. 644, 30 Atl. 39; Rey- nolds V. Hassam, 56 Vt. 449. But see, generallv. Mast v. Pearce, 58 Iowa 579. 8 N. W. 632, 12 N. W. 597, and authorities reviewed upon the dis- puted question as to proof of parol warranty. Compare Hersom v. Hen- derson. '21 X. H. 224, 52 Am. Dec. 185. See also authorities in last note to this section. ** Harrison v. McCormick, 89 Cal. .327, 26 Pac. 830, 23 Am. St. 469; Gal- pin v. Atwater, 29 Conn. 93 ; White v. Boyce, 21 Fed. 228; McClure v Jeffrey, 8 Ind. 79; Pickett v. Green 120 Ind. 584, 22 N. E. 737 ; Welch v Horton, 73 Iowa 250, 34 X. W. 840 Shepherd v. Gilroy, 46 Iowa 193 Willard v. Ostrander, 46 Kans. 591 ; 26 Pac. 1017; Xational Cash Register Co. V. Blumenthal, 85 Mich. 464. 48 X. W. 622; Berthold v. Fox, 13 Minn. 501, 97 Am. Dec. 243 ; Lear v. Durgin, 64 X. H. 618. 15 Atl. 128; Durgin v. Ireland. 14 X. Y. 322; Howard v. Thomas, 12 Ohio St. 201. "It is true that the actual consideration of a con- tract may be shown by parol evi- dence ; but it is not true that, where the acts that a party agrees to per- form are expressly and specifically set forth, it may be shown by parol evi- dence that he agreed to do other things. Where the writing states spe- cifically the acts which the parties are to perform, no other acts can be proved by parol, except in cases of fraud or mistake." Conant v. Xat. State Bank. 121 Ind. 323, 22 X. E. 250. quoted with approval in Western Paving 8c Supplv Co. v. Citizens' St. R. Co.. 128 Ind. '525, 26 X. E. 188, 28 X. E. 88, 10 L. R. A. 770, 25 Am. St. 462. 61 — Contracts, Vol. 2 1 644 CONTRACTS. 962 § 1644. Bills of lading. — Bills of lading usually partake of the nature of a contract and of the nature of a receipt.®^ The general rule is that, in so far as they are contracts, they cannot be contradicted or varied by parol evidence,"® but in so far as they are mere receipts they may be contradicted or varied by such evidence.*^ Mere recitals of the receipt of goods or of qual- ity, value or condition of the property received for carriage come within the branch of the rule applicable to receipts and may be contradicted as between the parties by parol evidence f^ and it is generally held that the carrier may show that no goods were ac- *4 Elliott R. R. §1415. **• The Delaware v. Oregon Iron Co., 14 Wall. (U. S.) 579, 20 L. ed. 779; Southern Exp. Co. v. Dickson, 94 U. S. 549, 24 L. ed. 285. See also, 4 Elliott R. R. § 1423 ; McTyer v. Steele, 26 Ala. 487; Louisville &c. N. R. Co. V. Fulgham, 91 Ala. 555, 8 So. 803; Barber v. Brace, 3 Conn. 9, 8 Am. Dec. 149; Jones v. Hoyt, 25 Conn. 374; O'Rourke v. Two Hun- dred & Twenty-One Tons of Coal, 1 Fed. 619; Central &c. Banking Co. v. Hasselkus, 91 Ga. 382, 17 S. E. 838, 44 Am. St. 37; McElveen v. Southern R. Co., 109 Ga. 249, 34 S. E. 281, 77 Am. St. 371 ; Stewart v. Cleveland &c. R. Co., 21 Ind. App. 218, 52 N. E. 89; Pennsylvania R. Co. v. Clark, 2 Ind. App. 146, 27 N. E. 586, 28 N. E. 208 ; Cincinnati &c. R. Co. v. Pearce, 28 Ind. 502; Louisville. E. & St. L. R. Co. V. Wilson, 119 Ind. 352, 21 N. E. 341, 4 L. R. A. 244; Burgher v. Chica- go &c. R. Co., 105 Iowa 335, 75 N. W. 192; Missouri, K. & T. R. Co. v. Sim- onson, 64 Kans. 802, 68 Pac. 653, 57 L. R. A. 765, 91 Am. St. 248; Wolfe v. Myers, 3 Sandf. (N. Y.) 7; Van Et- ten V. Newton, 134 N. Y. 143, 31 N. E. 334, 30 Am. St. 630; Morganton Mfg. Co. V. Ohio R. & C. R. Co., 121 N. Car. 514, 28 S. E. 474, 61 Am. St. 679; St. Louis Southwestern R. Co. v. Gates, 15 Tex. Civ. App. 135, 38 S. W. 648; But see Illinois Cent. R. Co. v. Eblen, 114 Ky. 817, 24 Ky. L. 1609, 71 S. W. 919. "4 Elliott R. R. §§1419-1422, and numerous authorities there cited. The Willie D. Sandhoval, 92 Fed. 286; Cunard Steamship Co. v. Kelley, 115 Fed. 678, 53 C. C. A. 110; Great West- ern R. Co. V. McDonald, 18 111. 172; Bissel v. Price, 16 111. 408; Chapin v. Chicago, M. & St. P. R. Co., 79 Iowa 582, 44 N. W. 820 ; Witzler v. Collins, 70 Maine 290. 35 Am. Rep. 327; Mc- Fadden v. Missouri Pac. R. Co., 92 Mo. 343, 4 S. W. 689, 1 Am. St. 721 ; Meyer v. Peck, 28 N. Y. 590; Bur- well V. Raleigh & Gaston R. Co., 94 N. Car. 451. So, ambiguities may be explained in a proper case. 4 Elliott R. R. § 1423 ; Mouton v. Louisville & N. R. Co., 128 Ala. 537, 29 So. 602; McClure v. Cox, 32 Ala. 617, 70 Am. Dec. 552; Pickering v. Weld, 159 Mass. 522, 34 N. E. 1081; Baltimore & Phila. Steamboat Co. v. Brown, 54 Pa. St. 77. And it may be shown in a proper case that the allowed con- tract never had any legal existence, or the like. Caldwell v. Felton. 21 Ky. L. 397, 51 S. W. 575 ; O'Malley v. Great Northern R. Co., 86 Minn. 380, 90 N. W. 974, and authorities cited; Mobile & M. R. Co. v. Jurey, 111 U. S. 584, 28 L. ed. 527. 4 Sup. Ct. 566. «M Elliott R. R., §§1419-1421; Berkley v. Watling, 7 Adol. & El. 29; Horsman v. Grand Trunk R. Co., 31 U. C. Q. B. 535, 30 Q. B. (Can. U. C.) 130; St. Louis A. & T. R. Co. v. Neel, 56 Ark. 279, 19 S. W. 963; Mears v. New York, N. H. &c. R. Co., 75 Conn. 171, 52 Atl. 610, 56 L. R. A. 884, 96 Am. St. 192; Baird v. St. Louis &c. R. Co., 41 Fed. 592 ; Cunard Steamship Co. v. Kelley, 115 Fed. 678, 53 C. C. A. 110; Lake Shore & M. S. R. Co. V. Nat. &c. Bank. 178 111. 506, 53 N. E. 326; Baltimore &c. R. Co. v. Wilkins. 44 Md. 11, 22 Am. Rep. 26; Lane v. Boston &c. R. Co., 112 Mass. 455; National Bank of Commerce v. 963 PAROL EVIDENCE. § 164: tually received, even as against a bona fide holder of the bill,*" although the authorities are not unanimous on this point/" and there are, doubtless, cases in which the carrier may^have become estopped as against bona fide holders from denying that any goods were received or even that they were of the condition, quality or value specified. § 1645. Evidence to connect different writings. — The parol evidence rule does not exclude parol evidence to connect contem- poraneous writings, each of which is necessary to constitute the complete contract, especially where one refers to the other.^^ So, where a writing refers to something that may be either a con- Chicago, B. & N, R. Co., 44 Minn. 224, 46 N. W. 342, 560, 9 L. R. A. 263n, 20 Am. St. 566; Hazard v. Illi- nois Cent. R. Co., 67 Miss. 32, 7 So. 280; Abbe v. Eaton, 51 N. Y. 410; Ellis V. Willard, 9 N. Y. 529, Seld. Notes (N. Y.) 242; Dean v. King, 22 Ohio St. 118; Missouri Pac. R. Co. v. Fennell, 79 Tex. 448. 15 S. W. 693; St. Louis, I. M. & S. R. Co. v. Knight, 122 U. S. 79, 30 L. ed. 1077. 7 Sup. Ct. 1132; note in 38 Am. Dec. 410- 426. '' Grant v. Norway, 10 C. B. 665, 70 E. C. L. 665 ; Jessel v. Bath, L. R. 2 Exch. 267; Brown v. Powell &c. Coal Co., L. R. 10 C. P. 562; Hunt v. Mis- sissippi Cent. R. Co., 29 La. Ann. 446; Baltimore &c. R. Co. v. Wilkens, 44 Md. 11, 22 .-Km. Rep. 26; National Bank v. Chicago B. & N. R. Co., 44 Minn. 224. 46 N. W. 342, 560, 9 L. R. A. 263n, 20 Am. St. 566; Black v. Wilmington R. Co., 92 N. Car. 42. 53 Am. Rep. 450, and note; Pollard v. Vinton, 105 U. S. 7, 26 L. ed. 998; Friedlander v. Texas &c. R. Co., 130 U. S. 416. 32 L. ed. 991, 9 Sup. Ct. 570; Missouri Pac. R. Co. v. McFad- den. 154 U. S. 155, 38 L. ed. 944, 14 Sup. Ct. 990. ^ See opinion of Finch, J. in Bank of Batavia v. New York &c. R. Co., 106 N. Y. 195, 60 Am. Rep. 440. See also, Armour v. Michigan Cent. R. Co., 65 N. Y. 111. 22 Am. Rep. 603; also. St. Louis & I. M. R. R. Co. v. Lamed, 103 111. 293 ; Wichita Savings Bank v. Atchison &c. R. Co., 20 Kans. 519; St. Louis & S. F. R. Co. v. Adams, 4 Kans. App. 305, 45 Pac. 920; Sioux City &c. R. Co. v. First Nat. Bank. 10 Nebr. 556, 7 N. W. 311, 35 Am. Rep. 488; Brooke v. New York &c. R. Co., 108 Pa. St. 529, 1 Atl. 206. 56 Am. Rep. 235. " North-west Transp. Co. v. Mc- Kenzie, 25 Can. Sup. Ct. 38; Tyrrell V. Hope. 2 .'\tk. 558; Smith v. Sur- man, 9 B. & C. 561, 17 E. C. L. 253; McGehee v. Rump, 37 Ala. 651 ; Drcn- nen v. Sattertield, 119 Ala. 84, 24 So. 723; Ransdel v. Moore, 153 Ind. 393, 53 N. E. 767, 53 L. R. A. 753; Amos V. Amos, 117 Ind. 19, 19 N. E. 543; Myers v. Munson, 65 Iowa 423, 21 N. W. 759; Wichita University v. Schweiter. 50 Kans. 672, 32 Pac. 352; Dillingham v. Estill, 3 Dana (Ky.) 21 ; Cook V. Johnson, 165 Mass. 245. 43 N. E. 96; Sutton v. Beckwith. 68 Mich. 303. 36 N. W. 79. 13 Am. St. 344; Lynch v. Curfman, 65 Minn. 170, 68 N. W. 5; Wilson v. Randall. 67 N. Y. 338; Haag v. Hillemeier, 120 N. Y. 651. 24 N. E. 807, 2 Silvernail (N. Y.) 596; Masterson v. Burnett, 27 Tex. Civ. App. 370. 66 S. W. 90; Lee V. Dick. 10 Pot. (U. S.) 482. 9 L. ed. 503; Bradley v. Pike, 34 Vt^. 215. But see. Hughes v. Wilkinson, 35 Ala. 453 ; Cadwaladcr v. Nash, 73 Cal. 43, 14 Pac. 385: Revnolds v. Louisville. N. A. & C. R. Co., 143 Ind. 579. 40 N. E. 410; Hcnnershotz v. Gallagher, 124 Pa. St. 1, 16 Atl. 518. 23 Wklv. N. Cas. 280: Dunlop v. Munroe. 7 Cranch (U. S.) 242. 3 L. ed. 329. This principle is often applied where a contract is made by correspondence. § 1646 CONTRACTS. 964 versation or another writing, evidence is admissible, in a proper case, to show which it is, and, if a writing, to identify and con- nect it with the writing already in evidence so as to permit it also to be introduced."" When the instruments so connected and read together constitute a complete and unambiguous contract, they must speak for themselves f^ but, on the other hand, parol evidence may be admissible to explain an ambiguity caused by inconsistent statements in them,°* or to supply omissions apparent upon their face when read together.®^ § 1646. Resulting trust. — The rule does not apply to ex- clude parol evidence of facts and circumstances establishing an implied or resulting trust. The theory seems to be, in such cases, that the evidence does not contradict the writing or its legal im- port, but simply shows facts and circumstances from which the law determines that the title or legal estate created or evidenced by the instrument must be held in trust, or, in other words, that it engrafts a trust upon the legal estate.®^ At all events, it is well settled that such evidence is admissible to establish a resulting trust where the purchase-money has been paid by one person and the conveyance taken in the name of another, or where the money ** Ridgway v. Wharton, 6 H. L. Rifle Mfg. Co., 31 Conn. 1. But com- Cas. 238, 3 De G. M. & G. 677 ; Oliver pare, Wolfe v. McMillan, 117 Ind. V. Hunting, L. R. 44 Ch. D. 205, 59 L. 587, 20 N. E. 509. J Ch. 255; Cave v. Hastings, L. R. 7 ^ Johns v. Church, 12 Pick. (Mass.) Q B Div 125, 50 L. J. Q. B. Div. 557, 23 Am. Dec. 651 ; Thayer v. Tor- 575. See also. Lamb v. State, 66 Md. rey, 37 N. J. L. 339; Wilson v. Tuck- 285, 7 Atl. 399; Rutland &c. R. Co. v. er, 10 R. I. 578. See also, Lyle v. Crocker, 4 Blatchf. (U. S.) 179, Fed. Richards, L. R. 1 H. L. 222, 35 L. J. Cas. No. 12176, 29 Vt. 540; Young v. Q. B. Div. 214; Stewart v. Chad- Young, 59 Vt. 342, 10 Atl. 528. But wick, 8 Iowa 463; Hill v. Miller, 76 compare Lockwood v. Smith, 5 Day N. Y. 32. (Conn.) 309. "'Singer Mfg. Co. v. Forsyth, 108 "'Drennen v. Satter field, 119 Ala. Ind. 334, 9 N. E. 372; Maxted v. Sey- 84, 24 So. 723; Isett v. Lucas, 17 Iowa mour, 56 Mich. 129, 22 N. W. 219; 503, 85 Am. Dec. 572 (Legal effect of Wilson v. Tucker, 10 R. I. 578; executing two mortgages can not be Thomas Mach. Co. v. Voelker, 23 R. ahered or varied by parol.) ; Mallory I. 441, 50 Atl. 838; Deery v. Cray, 10 V. Tioga R. Co., 42 N. Y. 354, 3 Abb. Wall. (U. S.) 263, 19 L. ed. 887; Dec. (N. Y.) 139, 5 Abb. Pr. (N. S.) Beirne v. Rosser, 26 Gratt. (Va.) (N. Y.) 420, 36 How. Pr. (N. Y.) 537. 202; Looney v. Rankin, 15 Ore. 617, "'McGuire v. Ramsey, 9 Ark. 518; 16 Pac. 660; McFarland v. Boston Boyd v. Boyd, 163 111. 611, 45 N. E. & L. R. Corp., 115 Mass. 63; 118. See also, Harvey v. Pennypack- Johnson v. Pierce, 16 Ohio St. 472. er, 4 Del. Ch. 445; Pritchard v. See also, Parker v. Norman, 65 Ark. Brown, 4 N. H. 397, 17 Am. Dec. 431 ; 333, 46 S. W. 134; Rowan v. Sharps' Collins v. Corson, (N. J.) 30 Atl. 862; 965 PAROL EVIDENCE. § 1 647 has been paid by several and the conveyance taken in the name of only one.**^ § 1647. Showing deed to be a mortgage. — The rule is established in most jurisdictions that parol evidence is admissible to show that an instrument in the form of a deed absolute on its face is a mere security for a debt, and therefore to be treated as a mortgage."^ In a leading case upon the subject, it is said : "It is an. established doctrine that a court of equity will treat a deed, absolute in form, as a mortgage when it is executed as se- curity for a loan of money. The court looks beyond the terms of the instrument to the real transaction, and when that is shown to be one of security, and not of sale, it will give effect to the actual contract of the parties. As the equity, upon which the court acts in such cases, arises from the real character of the transaction, any evidence, written or oral, tending to show this is admissible. The rule which excludes parol testimony to con- tradict or vary the written instrument has reference to the lan- guage used by the parties." It "does not forbid an inquiry into the object of the parties in executing and receiving the instru- *^ Willis V. Willis, 2 Atk. 12; But- Anthony v. Anthony, 23 Ark. 479; ler V. Shumaker, 4 Ariz. 16, 32 Pac. Holt v. Moore, 11 Ark. 145 ; Raynor 265 ; Osborne v. Endicott. 6 Cal. 149, v. Lyons, 11 Cal. 452 ; Davis v. Hop- 65 Am. Dec. 498 ; Stewart v. Stevens, kins, 18 Colo. 153, 32 Pac. 70 ; Wash- 10 Colo 440, 15 Pac. 786; In re Corr's burn v. Merrills, 1 Day (Conn.) 139,2 Appeal 62 Conn. 403, 26 Atl. 478; Am. Dec. 59; Franklin v. Aver, 21 Lofton V. Sterrett. 23 Fla. 565, 2 So. Fla. 654; Cole v. Gray, 139 Ind. 396. 837; Springer v. Kroeschell, 161 111. 38 N. E. 856; Mott v. Fiske. 155 Ind. 358 43 N. E. 1084 ; Irwin v. Ivers, 7 597, 58 N. E. 1053 ; German Ins. Co. v. Ind 308, 63 Am. Dec. 420; Mvers v. Gibe, 162 111. 251, 44 N. E. 490; Ens- Jackson, 135 Ind. 136, 34 N. E. 810; minger v. Ensminger, 75 Iowa 89. 39 Kringle v. Rhomberg, 120 Iowa 472, N. W. 208, 9 Am. St. 462 and note; 94 N W 1115. The evidence in such Crutcher v. Muir's Exr., 90 Ky. 142, cases often takes a wide range. Bak- 11 Ky. L. 989, 13 S. W. 435, 29 Am er V Vining. 30 Maine 121, 50 Am. St. 366; Campbell v. Dearborn. 109 Dec 617 : Witts v. Hornev. 59 Md. Mass. 130. 12 Am. Rep. 671 ; Cullen v. 584; De Peyster v. Gould, 3 N. J. Eq. Carey, 146 Mass. 50. 15 X. E. 131; 474 29 Am Dec. 122>\ Foote v. Bry- Tower v. Fetz, 26 Nebr. 706. 42 N. ant' 47 N Y 544; Llovd v. Woods. W. 884, 18 Am. St. 795; Ryan v. Dox. 176 Pa St 63, 34 Atl. 926. See Kelly 34 X. Y. 307. 90 Am. Dec. 696 and V Kellv 126 111. 550. 18 \. E. 785; note; Pancake v. Cauffman, 114 Pa. Bruce v Roney, 18 111. 67; Behm v. St. 113. 7 Atl. 67; Nesbitt v. Cavcn- Mollv. 133 Pa. St. 614, 19 Atl. 421; der, 27 S. Car. 1, 2 S. E. 702: Lewis Chambers v. Emery, 13 Utah 374, 45 v. Bayliss, 90 Tenn. 280, 16 S. W. 376 ; Pac 19^ Eckford v. Berrv. 87 Tex. 415. 28 S. '^Langton v. Horton, 5 Beav. 9; W. 937; Perkins v. West. 55 Vt. 265 : Dixon. V. Parker, 2 Ves. Sr. 219; Gilchrist v. Beswick, Zl W. Va. 168; § 1648 CONTRACTS. 966 ment."®® So, as between the parties, parol evidence has been ad- mitted to show that an instrument in the form of a bill of sale should be treated as a chattel mortgage;^ that an apparently ab- solute assignment of a note was intended as collateral security;^ and that a bond was given, to be held only to secure the obligee's support.^ § 1648. Dates. — The date of an instrument, like a recital of consideration, is regarded as a merely formal part of the in- strument and not such a part of the contract itself as to come within the rule excluding parol evidence.* Thus, not only is parol evidence of the true date of execution admissible in case of fraud or mistake,^ but such evidence of actual date of execution or de- livery is admissible in many other cases, as, for instance, where it becomes material as to when, if at all, it took effect in order to determine its validity, whether the statute of limitations is a bar, whether a condition had been performed in time, or the like." 10 S. E. 371 ; Beebe v. Wisconsin Mortgage Loan Co., 117 Wis. 328, 93 N. W. 1103. •• Peugh V. Davis, 96 U. S. 332, 24 L. ed. 775, quoted with approval in Brick V. Brick, 98 U. S. 514, 25 L. ed. 256. ^ Voorhies v. Hennessy, 7 Wash. 243, 34 Pac. 931. See also, Seavey v. Walker, 108 Ind. 78, 9 N. E. 347; Booth V. Robinson, 55 Md. 419; Parks v. Hall, 2 Pick. (Mass.) 206. But not where the assignment is a com- plete and specific contract containing mutual stipulations. Marsh v. McNair, 99 N. Y. 174, 1 N. E. 660. 'McCathern v. Bell, 93 Ga. 290, 20 S. E. 315; Pond v. Eddy, 113 Mass. 149; Scharman v. Scharman, 38 Nebr. 39, 56 N. W. 704; Vickers v. Batter- shall. 84 Hun (N. Y.) 496, 65 N. Y. St. 470, 32 N. Y. S. 314. See also, Jaster v. Currie, 69 Nebr. 4, 94 N. W. 995, revd. 198 U. S. 144, 49 L. ed. 988, 25 Sup. Ct. 614. * Davidson v. Young, 167 Pa. St. 265, 31 Atl. 557. * Clayton's Case, 5 Coke la, 70a; Hall V. Cazenove, 4 East 477; Steele V. Mart, 4 Barn. & C. 272; Oshey v. Hicks, Cro. Jac. 263; Gately v. Ir- vine, 51 Cal. 172; Moody v, Hamil- ton, 22 Fla. 298; Abrams v. Pom- eroy, 13 111. 133 ; Clauss v. Burgess, 12 La. Ann. 142 ; Partridge v. Swazey, 46 Maine 414; Mcllhargy v. Cham- bers, 117 N. Y. 532, 23 N. E. 561; Geiss v. Odenheimer, 4 Yeates (Pa.) 278, 2 Am. Dec. 407 ; Parke v. Neeley, 90 Pa. St. 52; McCracken v. Ansley, 4 Strob. (S. Car.) 1; Erickson v. Brookings County, 3 S. Dak. 434, 53 N. W. 857, 18 L. R. A. 347 : Bruce v. Slemp, 82 Va. 352, 4 S. E. 692 ; Moore V. Smead, 89 Wis. 558, 62 N. W. 426. ^Briggs V. Fleming, 112 Ind. 313, 14 N. E. 86 (holding, however, that the mistake or time of delivery must be alleged. But see Black v. Sharkey, 104 Cal. 279, Zl Pac. 939) ; Arberry V. Noland, 2 J. J. Marsh. (Ky.) 421; Stockham v. Stockham, 32 Md. 196; Breck v. Cole, 6 N. Y. Super. Ct. 79; Parker v. Luffborough, 10 Serg. & R. (Pa.) 249. ^Aldridge v. Branch Bank, 17 Ala. 45 ; Mcintosh v. Lee, 57 Iowa 356, 10 N. W. 895; Shaughnessey v. Lewis, 130 Mass. 355; Saunders v. Blythe, 112 Mo. 1, 20 S. W. 319; Kincaid v. Archibald, 12> N. Y. 189; District of Columbia v. Camden Iron Works, 181 U. S. 453, 45 L. ed. 948, 21 Sup. Cf. 680; Ordeman v. Lawson, 49 Md. 135. 967 PAROL EVIDENCE. 1O49 So, where the instrument is not dated, parol evidence is admis- sible to show the true date of its execution and delivery,'' § 1649. Illegality. — As already stated, parol evidence is admissible to show that a contract never had any legal existence because of fraud or the like and, upon the same principle, it may also be shown by parol that it is illegal for other reasons, as "it is only in virtue of its superior obligation that a written contract has the effect of extinguishing the verbal contract, upon which it is founded."* Thus, parol evidence is admissible to show that the contract is, in reality, usurious;" or that it was in furtherance of an unlawful purpose, such as an adulterous intercourse, the com- pounding of a felony, or the like;^° and, in short, that it was in furtherance of any object or purpose forbidden by statute, com- mon law or public policy, by which it is rendered illegal. ^^ So, it may likewise be shown that the contract had no legal existence by reason of the incapacity of a party to make it." ^ Burditt V. Hunt, 25 Maine 419, 43 Am. Dec. 289; Hewes v. Taylor, 70 Pa. St. 387; Kincaid v. Archibald. 10 Hun (N. Y.) 9, affd. IZ N. Y. 189; Perry's Admr. v. Smith, 34 Tex. 277; Varner v. Dexter &c. Assn. (Tex.), 39 S. W. 206. See also, Blake v. Cole- man, 22 Wis. 415, 99 Am. Dec. 53. *Lear v. Yarnel, 3 A. K. Marsh. (Ky.) 419; See also, Levy v. Brown, 11 Ark. 16; Allen v. Hawks, 13 Pick. (Mass.) 79; Kranich v. Sherwood, 92 Mich. 397. 52 N. W. 741. » Roe V. Kiser, 62 Ark. 92. 34 S. W. 534, 54 Am. St. 288; Ferguson v. Sutphen, 3 Gil. (111.) 547; Fenwick V. Ratliff's Representatives, 6 T. B. Mon. (Kv.) 154; Hammond v. Hop- ping, 13 Wend. (N. Y.) 505; Newsom V. Thighen, 30 Miss. 414; Chamber- lain V. McClurg, 8 Watts. & S. (Pa.) 31 ; See also, Koehler v. Dodge, 31 Nebr. 328, 47 N. W. 913, 28 Am. St. 518 and note; and also, note to Bank of Newport v. Cook, 60 Ark. 288, 30 S W. 35, 29 L. R. A. 761, 46 Am. St. 171. '"Friend v. Miller, 52 Kans. 139, 34 Pac. 397, 39 Am. St. 340; Fletcher's Succession, 11 La. Ann. 59; Sherman V. Wilder, 106 Mass. 537; Worcester V. Eaton, 11 Mass. 368; Dale v. Roosevelt, 9 Cow. (N. Y.) 307. See also. Pope v. St. Leiger, S Mod. 13 (for gambling debt). " Pettit's Admr. v. Pettit's Distrib- utees, 32 Ala. 288; Chandler v. John- son, 39 Ga. 85; Friend v. Miller, 52 Kans. 139, 34 Pac. 397. 39 .\m. St. 340; Snvder v. W^illey. Z2> Mich. 483; Roby v.'Wcst, 4 N. H. 285, 17 .'\m. Dec. 423; Lindsay v. Smith, 78 X. Car. 328, 24 Am. Rep. 463; Martin V. Clarke, 8 R. L 389. 5 Am. Rep. 586 ; United States Bank v. Owens, 2 Pet. (U. S.) 527. "Intoxication cases (Prentice v. Achorn. 2 Paige Ch. (X. Y.) 30; Bar- rett V. Buxton, 2 Aik. (Vt.) 167, 16 Am. Dec. 691) ; infancy or coverture (VanValkenburgh v. Rouk. 12 Johns. (X. Y.) ZV1\ Dale v. Roosevelt. 9 Cow. (X. Y.) 307); mental incapac- ity (Grant v. Thompson, 4 Conn. 203, 10 Am. Dec. 119: Den v. Clark, 10 N. J. L. 258; Jackson v. King. 4 Cow. (N. Y.) 207, 15 Am. Dec. 354) ; Mitchell v. Kingman, 5 Pick. (Mass.) 431. See, generallv, Sutton v. Reag- an, 5 Blackf. (Ind.) 217. IZ Am. Dec. 466; Van Deuson v. Sweet, 51 X. Y. 378; Riggan v. Green. 80 X. Car. 236, 30 .\m. Rep. 11; Farlev v. Parker, 6 Ore. 105, 25 .Am. Rep. 504. i6;o CONTRACTS. 968 § 1650. Fraud and duress. — Parol evidence is always ad- missible, in a proper case, to prove that a> contract, whether sealed or unsealed, never had any legal existence." So, when fraud or duress is charged, a wide latitude is given to the testimony bearing on the circumstances under which the contract was executed, even though all the necessary elements of a contract appear in writing." Testimony may be given in such cases^^ to show era- sures," omission, insertion," or misrepresentation'^ of any mate- "Waddell v. Glassell, 18 Ala. 561, 54 Am. Dec. 170; Isenhoot v. Cham- berlain, 59 Cal. 630; Benicia &c. Works V. Estes, 98 Cal. 17, 32 Pac. 938; Hamilton v. Conyers, 28 Ga. 276; Hunter v. Bilyeu, 30 111. 228; Razor v. Razor, 39 111. App. 527, affd. 142 111. 375, 31 N. E. 678; Catling v. Newell, 9 Ind. 572; Akin v. Drum- mond, 2 La. Ann. 92; Vicknair v. Trosclair, 45 La. Ann. Z7Z, 12 So. 486; Farrell v. Bean, 10 Md. 217; Holbrook v. Burt, 22 Pick. (Mass.) 546; Thomas v. Scutt, 127 N. Y. 133, 27 X. E. 961 ; Sandford v. Handy, 23 Wend. (N. Y.) 260; Baltimore & Phila. Steamboat Co. v. Brown, 54 Pa. St. 77; Bottomley v. United States, 1 Story (U. S.) 135, Fed. Cas. No. 1688; Starke's Exr. v. Lit- tlepage, 4 Rand. (Va.) 368. See note 6 L. R. A. 45 ; Webster v. Smith, 72 Vt. 12, 47 Atl. 101. "Thweatt v. McLeod, 56 Ala. 375; Andrews v. Jones, 10 Ala. 460 ; Ken- nedy's Heirs v. Kennedy's Heirs, 2 Ala. 571; Hick v. Thomas, 90 Cal. 289, 27 Pac. 208; Tyler v. Anderson, 106 Ind. 185, 6 N. E. 600; Hines v. Driver, 72 Ind. 125; Christ v. Diffen- bach, 1 Serg. & R. (Pa.) 464, 7 Am. Dec. 624; Chandler v. Von Roeder, 24 How. (U. S.) 224, 16 L, ed. 633; IMorris v. Nixon, 1 How. (U. S.) 118, 11 L. ed. 69. "And see also, as to fraudulent erasures, insertions and the like in judicial and official records : Warren V. Kimball. 59 Maine 264; Common- wealth V. Bullard, 9 Mass. 270 ; Peo- ple V. Townsend, Z7 Barb. (N. Y.) 520; Lowry v. McMillan, 8 Pa. St. 157, 49 Am. Dec. 501; Randall v. Collins, 58 Tex. 231; Buford v. Bu- ford, 4 Munf. (Va.) 241, 6 Am. Dec. 511. See also, Russell v. Tuttle, 2 Root. (Conn.) 22; Iowa Falls &c. R. Co. V. Woodbury, 38 Iowa 498; Mc- Gregor & M. R. Co. V. Brown, 39 Iowa 655; Thome v. Traveler's Ins. Co., 80 Pa. St. 15, 21 Am. Rep. 89; Monti V. Barber, 1 Del. Co. (Pa.) 222; Eddy v. Wilson, 43 Vt. 362. "Davidson v. Cooper, 11 Mees. & W. 778; Gilmor's Estate, 154 Pa. St. 523, 26 Atl. 614, 35 Am. St. 855; United States v. Spaulding, 2 Mason (U. S.) 478, Fed. Cas. No. 16365. See Jones v. Crowley, 57 N. J. L. 222, 30 Atl. 871; Nelson v. State (Tex.), 75 S. W. 502. "Waddell v. Glassell, 18 Ala. 561, 54 Am. Dec. 170; Benicia &c. Works V. Estes, 98 Cal. 17, 32 Pac. 938 Isenhoot v. Chamberlain, 59 Cal. 630 Hamilton v. Conyers, 28 Ga. 276. Hunter v. Bilyeu, 30 111. 228; Razor V. Razor, 39 111. App. 527, affd. 142 111. 375, 31 N. E. 678; Catling v. New- ell, 9 Ind. 572; Fuller v. Lamar, 53 Iowa 477, 5 N. W. 606; Vicknair v. Trosclair, 45 La. Ann. 2>72,, 12 So. 486; Akin v. Drummond, 2 La. Ann. 92; Farrell v. Bean, 10 Md. 217; Hol- brook v. Burt, 22 Pick. (Mass.) 546: Thomas v. Scutt, 127 N. Y. 133, 27 N. E. 961; Sandford v. Handy, 23 Wend. (N. Y.) 260; Baltimore & Philadelphia Steamboat Co. v. Brown, 54 Pa. St. 77; Bottomley v. United States, 1 Story (U. S.) 135, Fed. Cas. No. 1688; Stark's Exr. v. Littlepage, 4 Rand. (Va.) 368. " Cozzins v. Whitaker, 3 Stew. & P. (Ala.) 322; Barfield v. South Side Irr. Co., Ill Cal. 118, 43 Pac. 406; Summerour v. Pappa, 119 Ga. 1, 45 S. E. 713; Kranich v. Sherwood, 92 Mich. 397, 52 N. W. 741 ; Fleming v. Slocum. 18 Johns. (N. Y.) 403, 9 Am. Dec. 224; M'Farlane v. Moore, 1 Overt. (Tenn.) 174, 3 Am. Dec. 752; 969 PAROL EVIDENCE. § 1650 rial part." But unless it is clear that fraud or duress was prac- ticed, the written contract should be allowed to stand. Verbal statements, secret agreements, or acts made or done on or before the inception of a contract, if they were material and were relied upon, are generally admissible for the purpose of proving the fraud, notwithstanding the general rule excluding parol evidence ; for the law does not always conclusively imply that the written part contains the whole contract ;^" and in such cases the rule that all prior negotiations are merged in the writing does not apply.-^ Where property is transferred in fraud of creditors a wide latitude is allowed in evidence introduced to prove it.^^ Duress or undue influence may be shown, as in cases of those holding public office, a fiduciary relation of honor and trust,'^ in the case of a bene- American Cotton Co. v. Collier, 30 Tex. Civ. App. 105, 69 S. W. 1021; Hurlbert v. T. D. Kellogg Lumber &c. Co., 115 Wis. 225, 91 X. \V. 673; McKesson v. Sherman, 51 Wis. 303, 8 N. W. 200: Gross v. Drager, 66 Wis. 150, 28 X. W. 141 (where the person could not read English). "Hazard v. Irwin, 18 Pick. (Mass.) 95; Partridge v. Messer, 14 Gray (Mass.) 180; Hoitt v. Holcomb, 23 N. H. 535; Johnson v. Miln, 14 Wend. (X. Y.) 195 (bv reason of statute) ; Phillips v. Potter, 7 R. I. 289, 82 Am. Dec. 598; Hartshorn v. Dav, 19 How. (U. S.) 211, 15 L. ed. 605; Chew v. Moffett, 6 Munf. (Va.) 120; Tomlinson's Admr. v. Mason, 6 Rand. (Va.) 169. '"Kennedy's Heirs v. Kennedy's Heirs, 2 Ala. 571 ; Hick v. Thomas, 90 Cal. 289, 27 Pac. 208; Scroggin v. Wood, 87 Iowa 497, 54 N. W. 437; Blanchard v. Moore, 4 J. J. Marsh (Ky.) 471; Prentiss v. Russ, 16 Maine 30 ; Wesley v. Thomas, 6 Harr. & J. (Md.) 24: Holbrook v. Burt, 22 Pick. (Mass.) 546: Elliott v. Connell, 5 Sm. & M. (Miss.) 91; State v. Cass, 52 X. J. L. V, 18 Atl. 972; Chetwood v. Brittan, 2 X. J. Eq. 438 ; Phyfe V. Warden, 2 Edw. Ch. (N. Y.) 47, affd. 5 Paige (X. Y.) 268, 28 Am. Dec. 430; Mallory v. Leach, 35 Vt. 156, %2 Am. Dec. 625: Dano v. Sessions, 65 Vt. 79, 26 Atl. 585. ^Hick V. Thomas, 90 Cal. 289, 27 Pac. 208; Hines v. Driver, 12 Ind. 125; Moore v. Harmon, 142 Ind. 555, 41 X. E. 599; Scroggin v. Wood, 87 Iowa 497, 54 X. W. 437; Prentiss v. Russ, 16 Maine 30 ; Holbrook v. Burt, 22 Pick. (Mass.) 546; Leicher v. Keeney, 98 Mo. App. 394, 11 S. W. 145 ; Gwaltney v. Provident &c. Soc, 132 X. Car. 925. 44 S. E. 659; Mallory ^v. Leach, 35 Vt. 156, 82 Am. Dec. 625 ; Dano v. Sessions, 65 Vt. 79, 26 Atl. 585; In State v. Cass, 52 X. J. L. 11, 18 Atl. 972, evidence of fraudulent representations was re- ceived,^ although there was a written warranty. Lear v. Yarnell, 3 A. K. ]\Iarsh. (Kv.) 419; Kranich v. Sher- wood, 92 ^iich. 397, 52 X. W. 741. ^ See Shealy v. Edwards, 75 Ala. 411; Staton v. Commonwealth, 32 Kv. (2 Dana) 397: Phinney v. Holt. 50 ]\Iaine 570; Snvder v. Free, 114 Mo. 360, 21 S. W. 847; Russell v. Rogers, 15 Wend. (X. Y.) 351; Monell v. Colden, 13 Johns. (X. Y.) 395, 7 Am. Dec. 390: Gray v. Handkinson's Exrs. 1 Bay (S. Car.) 278; Adams v. Wylie, 1 Xott. & McC. (S. Car.) 78; Wright V. Linn, 16 Tex. 34 : Reming- ton v. Linthicum. 14 Pet. (U. S.) 84, 10 L. ed. 364: Ogden State Bank v. Barker, 12 Utah 13, 40 Pac. 765; Flynn v. Jackson, 93 Va. 341, 25 S. E. 1; Winner v. Hovt. 66 Wis. 227, 28 X. W. 380. 57 Am.' Rep. 257. -'Allen V. Davis. 4 DeG. & S. 133; Wright v. Proud. 13 Ves. 136: Xor- ton V. Rellv, 2 Eden 286; Lvon v. Home. 16 Wklv. R. 824: Llbvd v. § 1 65 1 CONTRACTS. 97° ficiary under a will,-* or in the case of those employing physical or artificial means to secure a contract in invitum,^'^ or in further- ance of something forbidden by law."" § 1651. Fraud — Illustrative cases. — Although a contract- ing party is usually guilty of negligence if he signs the written contract without reading it, and cannot ordinarily rely upon the statements of the other as to its contents and character, yet if their relation is such that he rightfully reposes a known trust and confidence in such person, and the latter is guilty of misrepresentation and fraud, by which the for- mer is induced to execute the instrument for the benefit of the latter, believing that it is another and different in- strument, relief may usually be had and parol evidence is admissible to show such facts.^^ So, one who is not a party to a written instrument, and who seeks to impeach it as a means adopted by his adversary to defraud him, may, in a proper case, contradict it by parol evidence showing the real transaction.^^ Such evidence has also been held admissible in an action to rescind an insurance contract and recover a premium paid before knowl- Clark, 6 Beav. 309; Lambert v. Lam- Ga. 479; Ewing v. Smith, 132 Ind. bert, 6 Brown 272; Page v. Home, 205, 31 N. E. 464. 11 Beav. 227; Coulson v. Allison, 2 =M Smith's Leading Cas. 154, 168 DeG. F. & J. 521; Sharp v. Leach, 31 note, and cases there cited; Chitty Beav. 491; Sturge v. Sturge, 12 Cont. 519, 527; Collins v. Blantern, 2 Beav. 229; Sercombe v. Sanders, 34 Wils. 347; Biggs v. Lawrence, 3 T. R. Beav. 382; Tate v. Williamson, L. R. 454; Waynell v. Reed, 5 T. R. 599; 2 Ch. App. 55; Ferres v. Ferres, 2 Doe v. Ford, 3 Ad. & EI. 649; Catlin Eq. Cas. Abr. 532; Willan v. Willan, v. Bell, 4 Camp. 183; Norman v. 2 Dow 274; Griffiths v. Robbins, 2 Cole, 3 Esp. 253; Sinclair v. Steven- Madd. 105 ; Anderson v. Elsworth, 3 son, 1 Car. & P. 582 ; Commonwealth Giff. 154; Grosvenor v. Sherratt, 28 v. Pease, 16 Mass. 91. Beav. 659; Terry v. Wacher, IS Sim. ^ Givan v. Masterson, 152 Ind. 127, 447; Rhodes v. Bate, L. R. L Ch. 51 N. E. 237. See also, Beck & Pauli App. 252 ; Cole v. Gibson, 1 Ves. Sr. Lithographing Co. v. Houppert, 104 503; Whelan v. Whelan, 3 Gov. (N. Ala. 503, 16 So. 522, 53 Am. St. 11; Y.) 537. Barrie v. Frost, 105 111. App. 187; =* Bancroft v. Otis, 91 Ala. 279, 8 Trambly v. Ricard, 130 Mass. 259; So. 286, 24 Am. St. 904 ; Tyson v. Ty- Van Valkenburgh v. Rouk, 12 Johns, son, 37 Md. 567; Wheeler V. Whipple, (N. Y.) Zil ; Cutler v. Roanoke R. 44 N. J. Eq. 141, 14 Atl. 275, affd. 45 &c. Co., 128 N. Car. 477, 39 S. E. 30; N. J. Eq. 367, 19 Atl. 621; Post v. Hartshorn v. Day, 19 How. (U. S.) Mason, 91 N. Y. 539, 43 Am. Rep. 211, 15 L. ed. 605; Cameron v. Esta- 689; In re Smith's Will, 95 N. Y. brooks, 73 Vt. 73, 50 Atl. 638. 516; Mackall v. Mackall, 135 U. S. ''Burns v. Thompson, 91 Ind. 146. 167, 34 L. ed. 84, 10 Sup. Ct. 705. See also, Aleshire v. Lee County Sav. "^ Lyon v. Home, L R. 6 Eq. 653 ; Bank, 105 111. App. 32. Adams' Exrs. v. Jones' Admr., 39 971 PAROL EVIDENCE. § 1 652 edge of the fraud, on the ground that the medical examiner of the company fraudulently and incorrectly wrote the answers of the applicant, so that the policy was void.*" It is said that "it is always competent to show by parol that a given contract was entered into relying upon fraudulent representa- tions; and, when a written contract does not contain the entire agreement between the parties, it is competent to show by parol or other writings executed at the same time what the balance of the agreement or transaction was."^" This statement, without qualification, is, perhaps, a little too broad, but there are many cases illustrating the general doctrine that, notwithstanding a con- tract has been reduced to writing, this is no ground for excluding parol evidence that one of the parties was induced to execute it by the false and fraudulent representations of the other, and that the facts may be shown by parol in a proper case.^^ § 1652. Mistake. — In cases of mistake parol evidence is likewise often admitted. The ground of its admission in such cases has been said to be that it would operate as a fraud if the alleged mistake could not be corrected, and in many cases it could only be corrected by introducing parol evidence ; but no such wide latitude is allowed as in ordinary cases of fraud. Parol evi- dence is most often admitted to correct mistakes in suits in equity brought for the express purpose of correcting or reforming written instruments where there has been a mutual mistake of fact in reducing them to writing. As has been said, "An ob- jection that the plaintiff cannot have relief because he cannot prove the allegations without varying the terms of a written con- tract by parol is scarcely deserving of mention. It is obvious that, if this rule was applicable to cases like the one at bar, -"Bennett v. Massachusetts &c. Ins. ell, 9 Ind. 572; Conant v. National Co.. 107 Tenn. 371, 64 S. W. 758. State Bank, 121 Ind. 223, 22 X. E. '"Ilurlbcrt v. Kellogg Lumber &c. 250; Scroggin v. Wood, 87 Iowa 497, Co., 115 Wis. 225, 91 X. W. 673. 54 N. W. 437; O'Donnell v. Clinton, ''Wright V. Crookes, 1 Scott X. R. 145 Mass. 461, 14 X. E. 747: Rambo 685; Hotson v. Browne. 9 C. B. (X. v. Patterson, 133 Mich. 655, 95 X. W. S) 442, 99 E. C. L. 441; Dobell v. 722; Bridgcr v. Goldsmith, 143 X. Y. Stevens. 3 B. & C. 623, 10 E. C. L. 424, 38 X. E. 458; Foss v. Xewbury, 283; Harrell v. Hill, 19 Ark. 102, 68 20 Ore. 257, 25 Pac. 669; Barrcda v. Am. Dec. 202; Fox v. Tabel. 66 Conn. Silsbee, 21 How. (U. S.) 146. 16 L. 397, 34 Atl. 101; Antle v. Sexton. 137 ed. 86; Hartshorn v. Day, 19 How. III. 410, 27 N. E. 691 ; Catling v. Xew- (U. S.) 211, 15 L. ed. 605. '§ 1652 CONTRACTS. 972 the jurisdiction * * * to reform instruments because of fraud or mutual mistake would be entirely defeated. The one purpose of such actions is to contradict or vary the terms of the written agreement, and the evidence in most cases is mainly or wholly oral. One of the most frequent occasions for the exercise of this jurisdiction is the mistake of a scrivener in reducing the contract to writing, and the inadvertent signing of it by the 'parties."^^ So, in suits to compel specific performance of an al- leged written contract, such evidence may be introduced by the de- fendant to show that by reason of mistake, the alleged agreement is not the true agreement, and that in fact he did not execute it.^' Parol evidence may also be admissible, usually upon the ground of estoppel, in actions upon insurance policies to show mistakes in the applications for insurance, especially where it is claimed that the insured made true and correct answers, and that the agent of the insurance company wrote them incorrectly.^* ''Story V. Gammell, 68 Nebr. 709, 94 N. W. 982. The alleged mistake must be clearly proved, and this can not ordinarily be done without show- ing by parol in what particulars the true agreement differs from the writ- ing. Silbar v. Ryder, 63 Wis. 106, 23 N. W. 106; Hartford &c. Ore Co. V. Miller, 41 Conn. 112; Nowlin v. Pyne, 47 Iowa 293 ; Linton v. Unex- celled Fire-Works Co., 128 N. Y. 672, 28 N. E. 580, 3 Silvernail (N. Y.) 565; Canal Co. v. Hewitt, 62 Wis. 316, 21 N. W. 216, 22 N. W. 588. See also, as to the necessity of clearly proving the mistake. Brant- ley V. West, 27 Ala. 542; Habbe v. Viele, 148 Ind. 116, 45 N. E. 783, 47 X. E. 1 ; Heavenridge v. Mondy, 49 Ind. 434; Tesson v. Atlantic Mut. Ins. Co., 40 Mo. 33, 93 Am. Dec. 293 ; Mead v. Westchester Fire Ins. Co., 64 N. Y. 453; Svlvius v. Kosek, 117 Pa. St. 67, 11 Atl. 392, 2 Am. St. 645; Simmons Creek Coal Co. v. Doran, 142 U. S. 417, 35 L. ed. 1063, 12 Sup. Ct. 239; Fudge v. Payne, 86 Va. 303, 10 S. E. 7; Fishack v. Ball, 34 W. Va. 644, 12 S. E. 856. Notes in 6 L. R. A. 46, 30 Am. St. 642, 648. "* Webster v. Cecil, 30 Beav. 62; Quinn V. Roath, 37 Conn. 16; Goode V. Riley, 153 Mass. 585, 28 N. E. 228; Chambers v. Livermore, 15 Mich. 381 ; Fitschen v. Thomas, 9 Mont. 52, 22 Pac. 450 ; Ryno v. Darby, 20 N. J. Eq. 231; Gillespie v. Moon, 2 Johns. Ch. (N. Y.) 585, 7 Am. Dec. 559; Best V. Stow, 2 Sandf. Ch. (N. Y.) 298; Coles v. Bowne, 10 Paige (N. Y.) 526; Cathcart v. Robinson, 5 Pet. (U. S.) 264, 8 L. ed. 120; Towner v. Lucas, 13 Gratt. (Va.) 705. See also, Newcomer v. Kline, 11 Gill & J. (Md.) 457, 37 Am. Dec. 74. ^ Lycoming Fire Ins. Co. v. Jack- son, 83 111. 302, 25 Am. "Rep. 386; Marston v. Kennebeck Mut. Life Ins. Co., 89 Maine 266, 36 Atl. 389, 56 Am. St. 412; North American Fire Ins. Co. V. Throop, 22 Mich. 146, 7 Am. Rep. 638; Brown v. Metropolitan &c. Ins. Co., 65 Mich. 306, 32 N. W. §'10, 8 Am. St. 894; Planters' Ins. Co. v. Myers, 55 Miss. 479, 30 Am. Rep. 521 ; Flynn v. Equitable Life Ins. Co., 78 N. Y. 568, 34 Am. Rep. 561 ; Grat- tan V. Metropolitan Life Ins. Co., 80 N. Y. 281, 36 Am. Rep. 617, 92 N. Y. 274, 44 Am. Rep. 372 ; Plumb v. Cat- taraugus County Mut. Ins. Co., 18 N. Y. 392, 72 Am. Dec. 526 and note; Insurance Co. v. Williams, 39 Ohio St. 584, 48 Am. Rep. 474; Moliere v. Pennsylvania Fire Ins. Co., 5 Rawle (Pa.) 342, 28 Am. Dec. 675; Manhat- 973 PAROL EVIDENCE. § 1 653 § 1653. Mistake — Illustrative cases. — Cases have already been cited in which parol evidence of a mistake is admissible in proceedings to reform or set aside a written instrument," and, as already stated, it is in such cases that evidence of mistake is most often admitted. But suits brought expressly for reforma- tion or cancelation are not the only cases in which such evidence has been admitted.*" Thus, in action of assumpsit by a lessee to recover money paid to his lessor as rent for water rights, parol evidence was admitted that the lease was taken with the under- standing by both parties that the premises were to be used for a certain purpose, and that this understanding was based on a mis- take as to the true facts of the case, there being a mistake as to the subject-matter." In another case oral evidence of a parol agreement for the sale of land, the boundaries of which were pointed out by the vendor on the ground, was held admissible to show that the deed did not convey the entire tract paid for.=^ So, where the defendant in an action on an insurance policy pleads false representations in the application, and the reply pleads that the defendant's agent wrote them and, without the plaintiff's knowledge, did not correctly write his answers, it has been held that such facts may be shown by parol.'"^ In an action on a promissory note, the defendant by cross-complaint, pleaded a mistake and asked to have the note reformed to express the real contract, and parol evidence was held admissible to sustain the allegations of the cross-complaint." In a settlement between a county treasurer and the sheriff as tax collector, the former gave the latter a receipt for certain money, and afterward discovering tan Ins. Co. v. Webster. 59 Pa. St. 141 U. S. 260, 35 L. ed. 678, 11 Sup. 227, 98 Am. Dec. 332 ; Planters' Ins. Ct. 972. ., ^ , ^ Co V Sorrels, 1 Baxt. (Tenn.) 352, ^ See, Terrell Coal Co. v. Lacey 25 Am. Rep. 780; McCall v. Phoenix (Ala.) 31 So. 109. Mut Life Ins. Co.. 9 W. Va. 237. 21 "Bedell v. Wilder 65 Vt. 406, 36 Am. Rep. 558. See also, New Jersey Atl. 589, 36 Am. St. 871. Mut. Life Ins. Co. v. Baker, 94 U. S. -Equitable Trust Co vMilhgan, 610 24 L. ed.268. But compare McCoy 31 Ind. App. 20, 65 N. E 1U44. V. Metropolitan Life Ins. Co.. 133 =" Parno v. Iowa Merchants Mut. Mass 82; Franklin Fire Ins. Co. v. Ins. Co., 114 Iowa 132, 80 N. \\ . 210. Martin. 40 N. J. L. 568, 29 Am. Rep. See also, Snell v. Insurance Co.. 98 271 -^ ^ U. S. 85. 25 L. ed. 52. and last note "See last preceding section; also, to last preceding section. Kee V Davis. 137 Cal. 456, 70 Pac. *" Lawrence County Bank v. Arndt, 294; Brunson v. Henry. 140 Ind. 455. 69 Ark. 406, 65 S. W. 1052. 32 N. E. 256; Griswold v. Hazard, § 1654 CONTRACTS. 974 a discrepancy he demanded a return of the receipt, on the ground that it had been given by mistake ; the sheriff denied any mistake, and suit was brought by the state against both the sheriff and the treasurer and their sureties for the money. The court held that parol evidence was admissible to show the alleged mistake/^ But parol evidence of mistake that might be admissible in a proper proceeding under proper pleadings may be inadmissible, because the proceeding or pleadings are such that it is not admissible in the particular case," and there are cases where such evidence is not admissible, because it would affect the interest of third per- sons who acquired rights under the written instrument in good faith, without knowledge of the mistake, and for a valuable con- sideration, or the like.*^ § 1654. Discharge — Performance — Waiver. — The parol evidence rule does not exclude oral evidence of the discharge or performance of a contract in a proper case, and as a general rule evidence of a subsequent parol agreement to extend the time, change the place or manner of performing a prior unsealed writ- ten contract, or, before breach thereof and for a new considera- tion, to waive, annul or discharge it or any of its provisions, is admissible.** Thus, it is competent to show by parol evidence "Butler V. State, 81 Miss. 734, 33 C. C. A. 534; Rhodes v. Thomas. 2 So. 847. So, in a proper case, parol Ind. 638; Frick Co. v. Western Star evidence of mistake is admissible to Milling Co., 51 Kans. 370, 32 Pac. defeat an action on a written con- 1103; Maysville & B. S. R. Co. v. tract in the form it bears. Ewing v. Pelham, 26 Ky. L. 474, 20 S. W. 384; Smith, 132 Ind. 205, 31 N. E. 464; Gardiner v. Bataille, 5 La. Ann. 597; Ewing V. Wilson, 132 Ind. 223, 31 N. Edson v. McGraw, 37 La. Ann. 294; E. 64, 19 L. R. A. 767. Cummings v. Arnold, 3 Mete. ^'Nvstuen v. Hanson (Iowa), 91 N. (Mass.) 486, 37 Am. Dec. 155; Har- W. 1071; Kreuger v. Nicola, 205 Pa. ris v. Brooks, 21 Pick. (Mass.) 195, 38, 54 Atl. 494. See also, Newcomer 32 Am. Dec. 254; Savage v. Blanch- V. Kline, 11 Gill. & J. (Md.) 457, 37 ard, 148 Mass. 348, 19 N. E. 396; Am. Dec. 74; New Idea Pattern Co. Duplanty v. Stokes, 103 Mich. 630, 61 V. Whelan, 75 Conn. 455, 53 Atl. 953 ; N. W. 1015 ; Levering v. Langley, 8 Young V. Jacoway, 9 Smedes & M. Gil. (Minn.) 82; Lee v. Hawks, 68 (Miss.) 212. Miss. 669, 9 So. 828, 13 L. R. A. 633, ^ Kilpatrick v. Strozier, 67 Ga. 247 ; and note on parol evidence to show Heilner v. Imbrie, 6 Serg. & R. (Pa.) waiver; Buel v. Miller, 4 N. H. 196; 401 ; Tabor v. Cilley, 53 Vt. 487. Mairs v. Sparks, 5 N. J. L. 513; Keat- *^Goss V. Lord Nugent, 5 Barn. & ing v. Price, 1 Johns. Cas. (N. Y.) 22, Ad. 58; Adler v. Friedman, 16 Cal. 1 Am. Dec. 92; Nicoll v. Burke, 78 138; O'Keefe v. Corporation of St. N. Y. 580, 8 Abb. N. Cas. (N. Y.) Francis' Church, 59 Conn. 551, 22 213; Hope v. Balen, 58 N. Y. 380; Atl. 325; Pecos Valley Bank v. Ev- Harris v. Murphy, 119 N. Car. 34, ans-Snider-Buel Co., 107 Fed. 654, 46 25 S. E. 708, 56 Am. St. 656, an ex- 975 PAROL EVIDENCE. § 1 654 that a written agreement is entirely discharged or performed according to its terms. '"^ So, a release or other discharge without performance of the terms of the original written contract may be shown by parol in a proper case." And a waiver of particular provisions may be similarly shown in a proper case, as, for in- stance, in an action for the price of logs, parol evidence has been held admissible to show that the delivery of the logs at a place different from that designated in the written contract was at the request of the defendant." The question as to the admissibility of such evidence of waiver most frequently arises in insurance cases, and in such cases it is generally held that a waiver may be shown after breach, or, in other words, parol evidence is generally held admissible to show a waiver of a breach of condition or war- ranty in an insurance policy, either where the agent has knowledge of the facts at the time of issuing the policy, or where there is such subsequent conduct on the part of the company or its agents as subjects the insured to expense and leads him to believe that the breach is waived, or otherwise amounts to a valid waiver or estoppel.*** Some courts have also admitted proof of a custom tended note; Walters v. Walters, 34 Raymond v. Krauskopf, 87 Iowa 602, N Car. 28, 55 Am. Dec. 401; Le 54 N. W. 432: Levering v. Langley, Fevre v. Le Fevre, 4 Serg. & R. 8 Gil. (Minn.) 82; Conrad v. I-isher, (Pa) 241, 8 Am. Dec. 696; Holloway Z7 Mo. App. 352, 8 L. R. A. 147; V. Frick, 149 Pa. St. 178, 24 Atl. 201; Juilliard v. Chaffee, 92 X. Y. 529; Bryan v Hunt. 4 Sneed (Tenn.) Parker v. Syracuse. 31 N. Y. 376; 543 70 Am Dec. 262; Clark v. Mead v. Parker, 111 X. Y. 259, 18 N. Ducheneau, 26 Utah 97, 72 Pac. 331; E. 727; Xegley v. Jeffers. 28 Ohio St. Perkins v Adams. 30 Vt. 230. 90; Tate v. Reynolds, 8 Watts. & S. "Tucker v Tucker, 113 Ind. 272, (Pa.) 91; Swain v. Seamans, 9 Wall. 13 N. E. 710: Isbell v. Brinkman. 70 (U. S.) 254, 19 L. ed. 554. But see, Ind. 118: Baile v. St. Joseph &c. Co., Lindsav v. Garvin, 31 S. Car. 259, 9 S. 7i Mo. 371; pavment, (Vincent v. E. 862. 5 L. R. A. 219. Larson. 1 Idaho 241; Ketcham v. *' Duplanty v. Stokes, 103 Mich. Hill, 42 Ind. 64; Stewart v. McDon- 630, 61 X. W. 1015. See also, for aid,' 18 La. Ann. 194; Thornton v. other illustrative cases. Herzog v. Wood. 42 Maine 282); settlement Sawyer, 61 Md. 344; Leathe v. Bul- under' account stated as amount due lard. 8 Gray (Mass.) 545: Fleming v. under written contract, (Krueger v. Gilbert, 3 Johns. (X. Y.) 528; Brady Dodge, 15 S. Dak. 159. 87 X. W. v. Cassidy, 145 X. Y. 171, 39 X. E. 965); merchandise agreed to be tak- 814; Grove v. Donaldson, 15 Pa. St. en, and actuallv delivered in payment 128. of note (Buchanan v. Adams. 49 ** Sheldon v. Connecticut Mut. L. N J L. 636, 10 Atl. 662. 60 Am. Ins. Co.. 25 Conn. 207. 65 Am. Dec. Rep 666) See also, Howard v. 565 ; Bevin v. Connecticut &c. Ins. Stratton. 64 Cal. 487. 2 Pac. 263. Co., 23 Conn. 244: Xew York Life '•Katz V Bedford, 77 Cal. 319. 19 Ins. Co. v. Baker. 83 Fed. 647. 27 C. Pac 523 1 L R A. 826; Worrell v. C. A. 658; Mobile Fire Department Forsyth ' 141 111. 22, 30 X. E. 673; Ins. Co. v. Miller. 58 Ga. 420; Home § 1655 CONTRACTS. 976 among insurance companies to accept premiums after they are due." This phase of the subject is treated in a subsequent volume under the title of Insurance. *^^ § 1655. Parol evidence to aid interpretation. — It is fre- quently said that a contract should be "read in the light of sur- rounding circumstances," and parol evidence is, perhaps, more often received to aid in the interpretation of written instruments than for any other purpose connected with such instruments. The courts, in order to get at the true meaning of the language used and the true intent of the parties, although such intent must not be different from that expressed in the instrument, arc fre- quently obliged to place themselves in the situation of the parties and consider the facts and circumstances attending its execution, and they cannot do this without the aid of extrinsic evidence. It is difficult, if not impossible, to formulate a general rule upon the subject which shall be at the same time comprehensive and strictly accurate, but the following is, perhaps, as comprehensive and nearly accurate as any that has been suggested : "Parol evi- dence is admissible, in the construction of contracts, to define the nature and qualities of the subject-matter, the situation and rela- Ins. Co. V. Duke, 84 Ind. 253 (but see 234, 24 L. ed. 689; Hartford &c. Ins. Havens v. Home Ins. Co., Ill Ind. Co. v. Unsell, 144 U. S. 439, 36 L. ed. 90, 12 N. E. 137, 60 Am. Rep. 689) ; 496, 12 Sup. Ct. 671 ; Oshkosh Gas- Moffitt V. Phenix Ins. Co., 11 Ind. Light Co. v. Germania Fire Ins. Co., App. 233, 38 N. E. 835; Viele v. Ger- 71 Wis. 454, Zl N. W. 819, 5 Am. St. mania Ins. Co., 26 Iowa 9, 96 Am. 233; But see Batchelder v. Queen Dec. 83; Hilt v. Metropolitan &c. Ins. Co., 135 Mass. 449; Franklin Co., 110 Mich. 517, 68 N. W. 300; Fire Ins. Co. v. Martin, 40 N. J. L. Aetna &c. Ins. Co. v. Olmstead, 21 568, 29 Am. Rep. 271 ; State &c. Ins. Mich. 246, 4 Am. Rep. 483 ; Plumb v. Co. v. Arthur, 30 Pa. St. 315. Other Cattaraugus County Mut. Ins. Co., 18 early decisions also denied that there N. Y. 392, 72 Am. Dec. 526; Rowley could be any such waiver. There is V. Empire Ins. Co., 36 N. Y. 550; still some conflict as to when, if at all, Pechner v. Phoenix Ins. Co., 65 N. Y. a waiver should be implied. But this 195, affd. 95 U. S. 183, 24 L. ed. 427; is a matter of substantive law rather Titus V. Glens Falls Ins. Co., 81 N. than of the law of evidence. Y. 410; Kiernan v. Dutchess County ** Busby v. North America &c. &c. Ins. Co., 150 N. Y. 190, 44 N. E. Ins. Co., 40 Md. 572, 17 Am. Rep. 698; McFarland v. Kittanning Ins. 634; Baxter v. Massasoit Ins. Co., 13 Co., 134 Pa. St. 590, 19 Atl. 796, 19 Allen (Mass.) 320; Girard L. Ins. Am. St. 723 ; Imperial Fire Ins. Co. v. Co. v. Mutual L. Ins. Co., 86 Pa. St. Dunham, 117 Pa. St. 460, 12 Atl. 668, 236. See also, Candee & Co. v. Citi- 2 Am. St. 686; Union Mut. Life Ins. zens' Ins. Co., 4 Fed. 143; Mutual Co. v. Wilkinson, 13 Wall. (U. S.) Benefit Life Ins. Co. v. Ruse, 8 Ga. 222, 20 L ed. 617; Knickerbock- 534. er L. Ins. Co. v. Norton, 96 U. S. "^ Vol. V, tit. 10. 977 PAROL EVIDENCE. § 1 656 tions of the parties, and all the circumstances, in order that the courts may put themselves in the place of the parties, see how the terms of the instrument affect the subject-matter, and ascertain the signification which ought to be given to any phrase or term in the contract which is ambiguous or susceptible of more than one interpretation ; and this, although the result of the evidence may be to contradict the usual meaning of terms and phrases used in the contract; but if the words are clear and unambiguous, a con- trary intention may not be derived from the circumstances.""" § 1656. Patent ambiguity. — Lord Bacon, influenced per- haps by Lord Cheney's case,^^ seems to have originated the terms "ambiguitas latens" and "ambiguitas patens", and to have first clearly laid down the rule that a latent ambiguity may be supplied by extrinsic evidence, because an ambiguity which arises out of a fact maybe removed by proof of the fact while a patent ambiguity "is never holpen by averment." In commenting upon the maxim, he says: "There be two sorts of ambiguities of words; the one is ambiguitas patens and the other latens. Patens is that which appears to be ambiguous upon the deed or instrument ; latens is that which seemeth certain and without ambiguity, for anything that appeareth upon the deed or instrument ; but there is some collateral matter out of the deed that breedeth ambiguity. Am- biguitas patens is never holpen by averment ; and the reason is, because the law will not couple and mingle matters of specialty, which is of the higher account, with matters of averment, which is of inferior account in law; for that we were to make all deeds hollow and subject to averments, and so, in effect, that to pass w^ithout deed which the law appointeth shall not pass but by deed. Therefore if a man give land to J. D. and J. S. et haeredibus. and do not limit whether of their heirs, it shall not be supplied by averment to whether of them the intention was the inheritance should be limited." "But if it be ambiguous latens then other- \vise it is : as if I grant my manor of S. to J. F. and his heirs, here appeareth no ambiguity at all. But if the truth be, that I have the manors both of South S. and North S.. this ambiguity is matter "" Browne Parol Ev. 179. " 5 Co. Lit. 68. 62 — Contracts, Vol. 2 § 1657 CONTRACTS. 978 in fact ; and therefore it shall be holpen by averment, whether of them it was that the party intended should pass."°^ This is not far wrong in the sense in which Lord Bacon meant it and as ap- plied by him, but it has occasioned, if not directly caused, much confusion and some erroneous decisions. He used the term am- biguity in a limited and specific sense and stated the rule as one of pleading rather than as a rule of evidence ; but in one of the earliest books thereafter published,^^ in which there is an attempt to state the law of evidence, it is treated as a rule of evidence ; and we now find many decisions, some of them right upon the facts and some of them erroneous, in which it is stated as a rule of evidence in general terms that a latent ambiguity can be ex- plained and removed by extrinsic evidence, and that a patent ambiguity cannot be.^* § 1657. Latent and patent ambiguity. — Written instru- ments are not mere abstractions, to be considered apart from the subject and objects to which they refer, and in the interpretation of any document there may arise from the mere reading of it a doubt as to what, if any, effect it can be given. As suggested by Judge, now Mr. Justice Holmes, "In every case the words used must be translated into things and facts by parol evidence,"^^ and this very process of necessary translation may show that an uncertainty or ambiguity which apparently exists on the face of the instrument does not in reality exist as well as it may show that by reason of extrinsic facts there is an uncertainty or ambiguity not apparent upon the face of the instrument. It is doubtless true that a writing may not contain a "sufficient expression" to be valid, although this may well be said to be determined by the substantive law rather than by the law of evidence, and it may be '=See Bacon's Law Tracts, pp. 99, (Tex.), 27 S. W. 823, revd. 88 Tex. 100; Bacon's Max. Reg. 23, 25; 120, 30 S. W. 551. See also, the re- Broom's Leg. Max. 608 et seq. cent case of Trustees of Southamp- '' Buller's Nisi Prius, in its first ton v. Jessup, 173 N. Y. 84, 65 N. E. edition sometimes called Bathurst on 949. Trials. "Doherty v. Hill, 144 Mass. 465, "Craven V. Butterfield, 80 Ind. 503; 11 N. E. 581. Language, independ- Mudd V. Dillon, 166 Mo. 110, 65 S. ent of the subject-matter or the au- W. 973; Ferguson v. Staver, 32 Pa. thor's general purpose, is usually 411; Pfeiffer v. Lindsay, 66 Tex. 123. meaningless and obscure. Kendall v. 1 S. W. 264; Curdy v. Stafford Green, 67 N. H. 557, 42 Atl. 178. 979 PAROL EVIDENCE. § 1 657 SO defective and uncertain that whether read alone or with the aid of extrinsic evidence it could convey no clear idea and could not be carried into effect/" In such cases, as, for instance, where the name of the grantee or donee is left blank, or the like," parol evidence may be inadmissible, although in cases of "equivocation," even the declarations of a testator as to his intention may be received, but this does not depend upon any distinction between patent and latent ambiguity."^* So, by mistake, the description or other parts of the instrument, with or without the aid of extrinsic evidence, may be so erroneous as to render it ineffective, and the law may not permit extrinsic evi- dence to correct it in the case of a will, but this is not l>ecause there is either a latent or patent ambiguity, nor is it because there is any rule of evidence excluding such evidence in all cases in which there is no latent ambiguity. "Generally speaking," says Professor Thayer, "ambiguities, or any other difficulties, patent or latent, are all alike as regards the right and duty to compare the documents with extrinsic facts, and as regards the possibility that they may vanish when this is done."°® And again he says: "In truth the only patent ambiguity that was not open to explana- tion by extrinsic matter was one that, in the nature of things, was not capable of an explanation.""" So, a text-writer upon the spe- "See Schattler v. Cassinelli, 56 297, 47 N. E. 631, 46 L. R. A. 168, Ark. 172. 19 S. W. 746; Doyle v. 62 Am. St. 526. Teas, 4 Scam. (111.) 202; Herrick v. **Doe v. Needs, 2 M. & W. 129; F. Morrill, Zl Minn. 250, ZZ N. W. 849, V. Hawkins in 2 Jur. Soc. Pap. 324; 5 Am. St. 841 ; United Press v. New Thayer's Prelim. Treaties on Ev. York Press Co., 164 N. Y. 406, 58 425- A fundamental error of some N. E. 527, 53 L. R. A. 288; In re courts is in treating the excluding Willey's Estate, 105 Wis. 22, 80 N. rule as applying to all kinds of parol W. 102. Apparently meaningless sym- evidence in case of so called patent bols were explained by extrinsic evi- ambiguity instead of confining its dence in Kell v. Charmer, 23 Beav. application as a general excluding 195. rule to evidence of declarations of in- " Clayton v. Nugent, 13 M. & W. tention. The case of "equivocation" 200; Hunt v. Hort, 3 Bro. C. C. 311; would then be an exception to the Baylis v. Attorney-General, 2 Atk. general rule, and neither would nec- 239; Strode v. Russell, 2 Vern. 621- essarily depend upon any distinction But even here the situation may be between patent or latent ambiguity, practically that of equivocation, or "'Thayer's Prelim. Treatise on Ev. the beneficiary may be so designated 425. as to let in parol evidence of identity "^Thayer's Prelim. Treatise on Ev. and render the instrument effective. 424. Professor Thayer carefully re- Price V. Page, 4 Ves. Jr. 679; Marske views the old English cases and V. Willard, 169 111. 276. 48 N. E. shows the history and development of 290; Dennis v. Holsapple, 148 Ind. the doctrine. i657 CONTRACTS. 980 cific subjects states the general nile in terms almost the opposite of the nile as stated by many of the courts that have extended and misapplied Lord Bacon's maxim. "Parol evidence," he says, *'is admissible in respect to the subject-matter, the situation and relation of the parties and all the circumstances, to explain any ambiguity apparent on the face of the instrument; but mere evi- dence of intention, except as derivable from such proof, is incom- petent in respect to such patent ambiguity.""^ Many decisions of the courts considering the question and criticizing the distinction and the statement so often made that extrinsic evidence is not ad- missible to explain a patent ambiguity, are cited below,"^ where another and very similar exposition of the subject is also noted/'^ "'Browne on Parol Ev. 116, 435, reviewing many authorities. " Colpoys V. Colpoys, Jac. 451; Peacher v. Strauss, 47 Miss. 353; Schlottman v. Hoffman, IZ Miss. 188, 18 So. 893, 55 Am. St. 527; Fish v. Hubbard's Admrs., 21 Wend. (N. Y.) 651 ; Roberts v. Short, 1 Tex. ZIZ. See also, Warner v. Alarshall (Ind.), 75 N. E. 582, 590, citing 1 Elliott Ev. § 600, from which this and other sections are substantially taken. *""It is believed that in nearly all cases of so-called ambiguity the facts can be thrown into the following classification: I. Where the docu- ment read alone or with the aid of extrinsic evidence has no, or more than one equally clear, logical mean- ing, n. Where the document read alone apparently has no, or more than one, such meaning; but proof of some extrinsic fact shows it to have one, and only one, logical meaning, ni. Where the document, however read, has such a meaning; but proof of some extrinsic fact shows no, or more than one, way in which to ef- fect it. IV. Where the document, however read, has such a meaning, and proof of some extrinsic fact shows no, or more than one, way in which to efifect it; but proof of ad- ditional facts shows that one, and only one, way of effecting it could have been meant. A close examina- tion of these possible combinations reveals the fact that there are really two different kinds of meaning in- volved. The first may be called the logical ; the second, the executable meaning. The question in the first instance is, does the document con- vey any idea ; in the second, granted that it does convey an idea, is it one which can be carried into effect. The first is obtained by reading the docu- ment generally, as language; the sec- ond, by reading it particularly, as language applicable to certain sub- jects and objects. Now since am- biguity may signify either of doubt- ful meaning or of double meaning, it appears that from the two kinds of meaning indicated above we may derive four kinds of ambiguity, viz. : (1) Where it is doubtful whether the document has any logical meaning or not. (2) Where there is a question as to which of two or more logical meanings is the proper one. (3) Where it is doubtful whether the document has any executable mean- ing or not, and (4) Where there is a question as to which of two or more executable meanings is the proper one. Any one or all of these questions may arise in the determina- tion of the meaning of any docu- ment; indeed, the first and the third must always be settled in the affirm- ative before the document can be given any force. They may be an- swered unconsciously; but they must, nevertheless, be answered. In any one of these cases extrinsic evi- dence may be admitted for the pur- pose of dispelling the ambiguity in the document. * * * it would seem that if anything could be called 9^1 PAROL EVIDENCE. § 1658 § 1658. Another statement as to patent and latent am- biguity. — The rules upon this subject are thus summed up by a writer who uses the terms "patent ambiguity" and "latent am- biguity", but at the same time shows that they are of little value as generally understood, and that, with one exception, the governing rules are the same: "To sum up, then, extrinsic evidence may be given to translate, or decipher, or to show the facts relating to the person claiming or the thing claimed, under the will. Next, where there is any ambiguity, that is, any double meaning, it is either patent or latent. If patent, the underlying facts may be shown in order to put the judge, so to speak, into the atmosphere sur- rounding the testator. If, in the light of these facts the term used is sensible, it must be applied without any direct evidence of intent; if insensible, the provision must fail. If latent, then in all the cases the underlying facts may here also be shown. If in their light the meaning is sufficiently clear to satisfy the mind of the judge, it must be applied; if still insensible, the provision fails. Thus far the rules concerning latent ambiguities are alike. In the one particular class of latent ambiguities known as equivo- cations, already described, further extrinsic evidence of intent is admitted. Thus, it appears that extrinsic evidence of the facts is a patent ambiguity, it would be the And the reason for this limitation contents of a document which ap- appears clearly; to go farther is not parently had no logical meaning upon to derive a meaning from the docu- its face, to a person of ordinary in- ment, but to give a moaning to it. To telligence. * * * But it has been restate the conclusion, it is that when shown above that in cases answering the document shows on its face that exactly to this definition extrinsic in the light of all possible facts it evidence has been properly admitted, cannot possibly have one clear, log- It seems, therefore, that the rule as ical meaning, then, and then only, ordinarily stated does not contain a may it be said to be 'patently ambig- valid and valuable distinction, when uous,' and the rule of exclusion be it makes patency and latency the test applied. It must be possible to say of whether extrinsic evidence shall of the author of the document, 'Quod be admitted or not. * * * To say voluit non dixit-' Then the court will that the extrinsic evidence cannot be not allow other facts to come in to admitted because the ambiguity ap- aid them in expressing a wish for pears on the face of the instrument him. * * * and it is this same pos- is going too far. It is because the sibility which makes it questionable court can take the document and say whether any expressions of the au- of it that no matter how read, or thor's intent, dehors the document with the aid of whatever evidence, and not part of the res gestae, should one clear logical meaning could not ever be admitted in evidence to ex- be derived from it. With this limita- plain the document." 41 Am. Law tion alone, it is submitted, the ex- Reg. (N. S.) 304 et seq. trinsic evidence should be admitted. § 1659" CONTRACTS. 982 admitted in all cases of both latent and patent ambiguities, while extrinsic direct evidence of intent is admissible in only one class of latent ambiguities. And this is all there is in the rule concern- ing latent and patent ambiguities.""* So, the older text-writers who use the terms and insist on the distinction are careful to observe that words cannot be said to be ambiguous merely be- cause they are inaccurate or unintelligible to a man who is unin- formed, and that no judge should pronounce an instrument am- biguous or too uncertain to be effective until he has brought to his aid all the light afforded by collateral facts and circumstances. Some of the writers and courts, by carefully limiting the term "patent ambiguity", and treating every so-called ambiguity that is really capable of explanation and thus being rendered a "sufficient expression" of intent as a latent, rather than a patent, ambiguity, have brought about right results; and others have introduced a third class of ambiguities, which they call intermediate or mixed ambiguities, and admit parol evidence to explain.®*^ But ambigu- ities treated as belonging to this class seem to be such as fall fairly within the ordinary definition of patent ambiguities, and it is unnecessary and confusing either to create another class or to call them latent ambiguities. Some courts, on the other hand, perceiving that they fall within the definition of patent ambigui- ties, have committed error in applying to them the supposed rule that parol evidence is never admissible to explain a patent am- biguity, when, in truth, there is no such general rule. It seems to us that the simplest solution of the difficulty is to discard these uncertain and confusing terms altogether, or, at all events, to recognize the fact that they supply no certain test and to state the rule in other terms, substantially as suggested by the writers from whom we have quoted. § 1659. Identification of subject-matter. — It is laid down in Stephen's Digest of Evidence^^ that "in order to ascertain the •* Chaplin's Principles of the Law Peisch v. Dickson, 1 Mason (U. S.) of Wills, as quoted in Browne's Parol 9, Fed. Cas. No. 10911; Ganson v. Ev. 438. Madigan, IS Wis. 144, 82 Am. Dec. « Moody V. Alabama G. S. R. Co., 659. 124 Ala. 195, 26 So. 952; Chambers "Stephen's Dig. of Ev., art. 91. V. Ringstaff, 69 Ala. 140; Gentile v. See also, Castle v. Fox, L. R. 11 Crossan, 7 N. Mex. 589, 38 Pac. 247; Eq. 542; Doe v. Burt, 1 T. R. 701; 983 PAROL EVIDENCE. § 1 659 relation of the words of a document to facts, every fact may be proved to which it refers, or may probably have been intended to refer, or which identifies any person or thing mentioned in it." Where a description is ambiguous, parol evidence is frequently admissible to show the extent and character of the grantor's ownership or possession,*^ and the identity or location of monuments referred to in the written instrument,®* but not to vary or contradict those clearly stated therein.*" So, where the property or family of a grantor or testator is referred to as the subject-matter of his deed or will, proper parol evidence is admissible to identify it. Thus, where a testator devises or bequeaths to one all his property, or all his property in a certain town, or all his household furniture, or the house he lives in, or his farmhouse, or the like, without more particularly describing it, parol evidence is neces- sary and admissible in order to identify the property and apply the language of the instrument to the subject-matter.^*^ In short. Doe V. Martin. 4 Barn. & Adol. 771; S. W. 796; Harris v. Oakley, 130 X. Colpoys V. Colpoys, Jac. 451; Harri- Y. 18, 28 N. E. 530; Wills v. Lev- son V. Barton, 30 L. J. Ch. 213; In- erich, 20 Ore. 168. 25 Pac. 398; Ech- dianapolis &c. R. Co. v. Reynolds, erd v. Johnson, 126 N. Car. 409. 35 116 Ind. 356, and authorities cited on S. E. 1036; McAfferty v. Connover's pages 358-360; Madden v. Tucker, Lessee, 7 Ohio St. 99, 70 Am. Dec 46 Maine 367; Warner v. Milten- 57; Rapley v. Klugh, 40 S. Car. 134. berger's Lessee, 21 Md. 264, 83 Am. 18 S. E. 680; Minor v. Kirkland Dec. 573; Aldrich v. Aldrich, 135 (Tex.), 20 S. W. 932; Wead v. St. Mass. 153; Benham v. Hendrickson, Johnsbury &c. R. Co., 64 Vt. 52. 24 •32 N J. Eq. 441 ; Hinneman v, Atl. 361 ; Pickett v- Nelson, 79 Wis. Rosenback, 39 N. Y. 98; Brawley v. 9, 47 X. W. 936. United States, 96 U. S. 168. 24 L. ed. ~Guilmartin v. Wood. 76 Ala. 204; 622, 13 Ct. CI. 521; Scraggs v. Hill, Pride v. Lunt, 19 Maine 115; Hall 37 W. Va 706, 17 S. E. 185. v. Eaton. 139 Mass. 217, 29 X. E. *" Hereford v. Hereford, 134 Ala. 660; Beardslev v. Crane, 52 Mmn. 321, 32 So. 651; Chambers v. Ring- 537, 54 X. W. 740; Dean v. Erskine, staff 69 Ala. 140; In re Frahm's Es- 18 X. H. 81; Drew v. Swift. 46 X. tate, 120 Iowa 85, 94 X. W. 444; Y. 204; Thayer v. Finton, 108 X. Y. Flynn v. Holman, 119 Iowa 731. 94 394. 15 X. E. 615: Segar v. Babcock, N W. 447; Baker v. Hall. 158 Mass. 18 R. I. 203, 26 Atl. 257; Parker v. 361 33 N. E. 612; Farwell v. Kane, 22 How. (U. S.) 1. 16 L. ed. Mather, 10 Allen (Mass.) 322, 87 286- See also. Miller v. Travers, 8 Am. Dec. 641; Hurlev v. Brown. 98 Bing. 244; Kurtz v. Hibner. 55 111. Mass. 545. 96 Am. Dec. 671; Bell v. 514, 8 Am. Rep. 665 and note, also Woodward 46 N. H. 315; Tinsley discussion pro and con in Am. Law V. Dowell (Tex.), 24 S. W. 928. Reg. (X. S.) 94. 353. •'Putnam v. Bond. 100 Mass. 58, '"Angel v. Simpson, 85 Ala. 53, 3 1 Am. Rep. 82; Flagg v. Mason, 141 So. 758; Towle r Carmelo Land &c. Mass. 64, 6 N.E. 702; Waterman v. Co., 99 Cal. 397. 33 Pac. 1126; Johnson, 13 Pick. (Mass.) 261; Hodges v. Kowing, 58 Conn. 12. 18 Campbell v. Wood, 116 Mo. 196, 22 Atl. 979, 7 L. R. A. 87; Maguire v. 1 659 CONTRACTS. 984 In order to interpret the instrument in such cases, the courts endeavor to put themselves in the position of the parties, and proper oral evidence is admissible for the purpose of so doing and thus applying the terms of the instrument to the subject- matter." Of course, an instrument that is absolutely void for uncertainty cannot be made good by parol evidence,^^ but in the class of cases referred to in this section, the courts generally proceed upon the ground that "that is certain which can be ren- dered certain,"" and where part of a description is false or incor- rect, especially where the instrument is a will, the false or incor- rect part may be rejected if enough is left to identify the subject- Baker, 57 Ga. 109; Colerick v. Hooper, 3 Ind. 316, 56 Am. Dec. 505 ; Chambers v. Watson, 60 Iowa 339, 14 N. W. 336. 46 Am. Rep. 70; HolHs v. Burgess, 2>1 Kans. 487, 15 Pac. 536; Moayon v. Moayon, 114 Ky. 855, 24 Ky. L. 1641, 72 S. W. ZZ. 60 L. R. A. 415, 102 Am. St. 303; Benham v. Hendrickson, 32 N. J. Eq. 441 ; Willis V. Fernald, ZZ N. J. L. 206; Cleverly V. Cleverly, 124 Mass- 314; Mead v. Parker, 115 Mass. 413, 15 Am. Rep. 110; Goodenow v. Curtis, 18 Mich. 298; Black v. Hill, 32 Ohio St. 313; Raymond v. Cofifev. 5 Ore. 132 ; Doc- tor V. Hellberg, 65 Wis. 415, 27 N. W. 176. See also, Doe v. Holtom, 4 Adol. & El. 76; Doe v. Langton, 2 Barn. & Adol. 680; Vejar v. Mound City &c. Assn., 97 Cal. 659, 32 Pac. 713; Peart v. Brice, 152 Pa. St. 277, 25 Atl. 537. "Guv V. Sharp, 1 Mylne & K. 589; VValsh v. Hill, 38 Cal. 481; Clark v- Crawfordsville Coffin Co., 125 Ind. 277, 25 N. E. 288 ; Abbott v. Abbott, 51 Maine 575; Farwell v. Mather, 10 Allen (Mass.) 322, 87 Am. Dec. 641; Baker v. Hall, 158 Mass. 361, ZZ N. E. 612; Gregory v. Lake Linden, 130 Mich. 368, 90 N. W. 29; Schneider v. Patterson, 38 Nebr. 680, 57 N. W. 398; Richard- son V. Palmer, 38 N. H. 212 ; Monnett V. Monnett, 46 Ohio St. 30, 17 N. E. 659; In re Gilmor's Estate, 154 Pa. St. 523, 26 Atl. 614, 35 Am, St. 855 ? Minor v. Povi^ers CTex.), 24 S. W. 710, revd. 87 Tex. 83. 26 S. W. 1071 ; Merriam v. United States, 107 U. S. 437, 27 L. ed. 531, 2 Sup. Ct. 536, 18 Ct. CI. 760; Gilmer v. Stone, 120 U. S. 586, 7 Sup. Ct. 689, 30 L. ed. 734. "Pearce v. Watts, L. R. 20 Eq. 492; Peck v. Halsey, 2 P. Wms. 387; Schattler v. Cassinelli, 56 Ark. 172, 19 S. W. 746; Higgins v. Carlton, 28 Md. 115. 92 Am. Dec. 666; Sewell v. Slingluff, 57 Md. 537; Crooks v. Whitford, 47 Mich. 283, 11 N. W. 159; Knight v. Alexander, 42 Ore> 521, 71 Pac. 657; Wofford v. Mc- Kinna, 23 Tex. 36, 76 Am. Dec. 53 and note. See also, as to specific performance, Farthing v. Rochelle, 131 N. Car. 563, 43 S. E. 1. See also, to the efifect that property to which the description cannot be made to apply cannot be included by parol evidence of an intention to include it. Becker v. Dalby (Iowa), 86 N. W. 314; Madden v. Tucker, 46 Maine 367; Child v. Wells, 13 Pick. (Mass.) 121 ; Drexel v. Murphy, 59 Nebr. 210, 80 N. W. 813; VosburgK v. Teator, 32 N. Y. 561; Norwood v. Byrd, 1 Rich. L. (S. Car.) 135, 42 Am. Dec. 406; Goodsell v. Rutland &c. R. Co., 75 Vt. 375, 56 Atl. 7. " Baldwin v. Boyce, 152 Ind. 46, 51 N. E. 334. See Turner v. Gonzales, 31 Ind. Ter. 649, 64 S. W. 565; Flvnn v. Holman. 119 Iowa 731, 94 N. W. 447; Graham v. Botner, 18 Ky. L. (yZl, 37 S. W. 583 ; Hurley v. Brown, 98 Mass. 545, 96 Am. Dec. 671; Ab- bott v. Coates, 62 Nebr. 247, 86 N. W. 1058; Jenkins v. Sharpf. 27 Wis. 472. "Id certum est quod certum reddi potest." 985 PAROL EVIDENCE. § 1660 matter of the description, in accordance with the maxim, falsa demonstratio non nocet.'* § 1660. Identification of subject-matter — Illustrative cases. — Statements of the doctrine of the last preceding section and il- lustrations of its application are found in many recent cases. Thus, it is stated in broad terms that "evidence aliunde is admissi- ble in all cases where there is doubt as to the true location of a survey, or a question as to the application of a grant to its proper subject-matter."" Where a deed describes the property con- veyed as situated in a certain town and known on the plat of said town as "Lot No. 30, Block 7." the identity of the plat may be shown by parol evidence." Parol evidence has been held admis- sible to identify a spring branch mentioned in a deed," and in an- other case it was held that ambiguity in a deed describing the land as beginning at the "north" corner of a certain lot, where such lot had two north corners, might be removed by parol evidence that, taking the northeast corner as the beginning point, land owned by the grantor would be included, without altering de- scriptions, whereas, by taking the northwest corner land not owned by him and not in his possession would be included." So. where a contract provided for the sale of all lumber of certain grades "(estimated to be about four million feet, more or less) '*Lindgren v. Lindgren, 9 Beav. v. White, 117 U. S. 210, 29 L. ed. 358- Moslev v. Massev, 8 East 149; 860, 6 Sup. Ct. 617; Allen's Lessee v. Goodtitle v.' Southern, 1 M. & S. 299; Lvons, 2 Wash. C. C. 475. See also. Decker v. Decker, 121 111. 341, 12 note in 31 Am. St. 29. N E 750- Bingel v. Volz, 142 111. " Peerv v. Elliott. 101 Va. 709. 44 214, 31 N. E. 13, 16 L. R. A. 321, 34 S. E- 919. quoting from Reusens v. Am. St. 64; Whitcomb v. Rodman, Lawson, 91 Va. 226, 235, 21 S. E. 156 111. 116. 40 X. E. 553, 28 L. R. 347. A 149 47 \m St. 181 ; Pocock v. '" Snooks v. Wingfield, 52 W. Va. Redinger, 108 Ind. 573, 9 N. E. 473, 441, 44 S. E. 277. See also. Mann v. 58 Am. Rep. 71; Groves v. Gulp. 132 Bergmann, 203 111. 406, 67 N. E. 814; Ind 186 31 N. E. 569; Lanman v. Warner v. Marshall, 166 Ind. 88. 75 Crooker.' 97 Ind. 163. 49 Am. Rep. X. E- 582; Baker v. Hall, 158 Mass. 437. and authorities cited; Eckford 361, 33 N. E. 612; Xoonan v. Lee. V. Eckford. 91 Iowa 54. 58 X. W. 2 Black. (U. S.) 499. 17 L. ed. 278. 1093, 26 L. R. A. 370; Riggs v. See also, Konnerup v. Milspaugh Mvers. 20 Mo. 239; Winklev v. (Wash.). 126 Pac. 939. Kaime 32 N. H 268; Peters v. Por- " Xew River Mineral Co. v. Pamt- ter. 60 How. Pr. (X. Y.) 422; Mer- cr, 100 Va. 507. 42 S. E. 300. rick V. Merrick. 37 Ohio St. 126. 41 "Hereford v. Hereford, 131 Ala. Am. Rep. 403; Moreland v. Bradv. 573. 32 So- 620. 8 Ore. 303 34 Am. Rep. 581; Patch i66i CONTRACTS. 986 obtained from about six million feet of white pine saw logs now banked and being banked at W," it was held that parol evidence was admissible to show that such logs were banked at such place and the amount of lumber obtained therefrom, although less than the amount estimated/* In another case where there was a writ- ten contract to deliver a certain number of "Cooley Hay Stack- ers," it was held that parol evidence was admissible to identify the kind of stackers contracted for, and thus apply the contract to its subject-matter.®" So, in many other cases, parol evidence has been held admissible for this purpose in mercantile contracts," and it is also admissible in a proper case to identify the property covered by a chattel mortgage,*^^ or the debt secured by a mort- gage.®' § 1661. Meaning of words — Generally. — Parol evidence is generally not admissible to explain or contradict words and ex- pressions in a written instrument that have a common and well- known meaning.®* But there may well be a distinction between "Rib River Lumber Co. v. Ogilvie, 113 Wis. 482, 89 N. W. 483, citing Ganson v. Madigan, 15 Wis. 144, 82 Am. Dec. 659; The Janesville Cotton Mills V. Ford, 82 Wis. 416, 52 N. W. 764, 17 L. R. A. 564, and other Wis- consin cases in support of the gen- eral rule. See also, Wolff v. Wells, 115 Fed. 32, 52 C. C A. 626; Barry V. Bennett, 7 Mete. (Mass.) 354; Gregory v. Lake Linden, 130 Mich. 368, 90 N. W. 29. ^ Clark V. Crawfordsville Coffin Co., 125 Ind. 277. 25 N. E. 288. ^'Heff^eld v. Meadows, L. R. 4 C P. 595; Roots v. Snelling, 48 L. T. 216; Doe v. Burt, 1 T. R. 701; Bain- bridge V. Wade, 20 L. J. Q. B. 7; Sutton V. Bowker, 5 Gray (Mass.) 416; Streeter v. Seigman (N. J.), 48 Atl. 907; Inglebright v. Hammond, 19 Ohio 337, 53 Am. Dec. 430; Dorris V. Kling (Tenn.), 54 S. W. 683; Lowry V. Adams, 22 Vt. 160; Noyes V. Canf^eld, 27 Vt. 79. See also, Broaddus v. Smith, 121 Ala. 335, 26 So. 34, 77 Am. St. 61 (to identify property levied on by execution) ; u^tna Ins. Co. v. Strout, 16 Ind. App. 160, 44 N. E. 934; Baldwin v. Boyce, 152 Ind. 46, 51 N. E- 334; Boak Fish Co. V. Manchester Fire Ins. Co., 84 Minn. 419, 87 N. W. 932 (to show of what a warehouse covered by in- surance policy consisted). "'Burditt V. Hunt, 25 Maine 419. 43 Am. Dec. 289 ; Galen v. Brown, 22 N. Y. 37. See also, Reinstein v. Rob- erts, 34 Ore. 87, 55 Pac. 90, 75 Am. St. 564; Barker v. Wheelip, 5 Humph. (Tenn.) 329, 42 Am. Dec. 432; Weber v. Illing, 66 Wis. 79, 27 N. W. 834. ^ Posey V. Decatur Bank, 12 Ala. 802; Kiser v. Carrollton Dry Goods Co., 96 Ga. 760, 22 S. E. 303 ; Stowe V. Merrill, 77 Maine 550, 1 Atl. 684; Payson v. Lamson, 134 Mass. 593, 45 Am. Rep. 348; Cutler v. Steele, 93 Mich. 204, 53 N. W. 521; Swedish &c. Bank v. Germania Bank, 76 Minn. 409, 79 N. W. 399; Fitzpatrick v. School Comrs., 7 Humph. (Tenn.) 224, 46 Am. Dec 76; Thompson v. Cobb, 95 Tex. 140, 65 S. W. 1090, 93 Am. St. 820; Blewett v. Bash, 22 Wash. 536, 61 Pac. 770. See also, Martindale v. Parsons, 98 Ind. 174. **Nichol v. Godts, 10 Exch. 191; Bank of New Zealand v. Simpson, L. R. App. Cas. (1900) 182; Edward Lloyd Limited v. Sturgeon Falls &c. Co. Limited, 85 L. T. 162; Wikle v. 987 PAROL EVIDENCE. § 1 66 1 explaining and contradicting a writing; and where the language of the writing is such that the court cannot otherwise understand it, especially where unusual letters, figures, characters, abbrevia- tions or terms are used, such evidence is usually admissible to explain it.*° There is some conflict ajnong the authorities in the application of the rule, but there are many cases in which it has been applied and parol evidence held admissible, even where the words were intelligible in themselves, or would have been intelli- gible in certain connections, but were unintelligible or am- biguous, without the aid of parol evidence, in the particular in- strument or without knowing the connection in which they were used. Thus, parol evidence has been held admissible to show the meaning of the word "artesian" in the written contract for the digging of an "artesian well," where it appeared that the water in the well bored by the plaintiffs, who sued for the contract price, did not overflow under natural pressure and lacked about sixteen feet of coming to the top.**^ So, parol evidence has been held admissible in certain cases to explain such terms as "assist," when used in regard to making up trains,"^ "bale," in a certain Johnson Laboratories, 132 Ala. 268, W. 1067; Hinote v. Brigman, 44 Fla- 3\ So. 715; Bullock v. Consumers' 589, 33 So. 303; Savannah F. & W. Lumber Co. (Cal). 31 Pac. 367; R. Co. v. Collins, 77 Ga. 376, 3 S. E. Hutchinson v. Ulrich, 145 111. 336, 416, 4 Am. St. 87; Cole v. Leach. 34 N. E. 556, 21 L. R. A. 391; 47 Ind. App. 341, 344. 94 X. E. 577. Lowry v. Megee, 52 Ind. 107; Spears 578. citing 1 Elliott Ev., §§ 605. V. Ward. 48 Ind. 541; Lantz v. Rv- 607, 608; Cameron v. Fellows. 109 man, 102 Iowa 348. 71 X. W. 212; Iowa 534, 80 N. W. 567; Mau- Violette v. Rice, 173 Mass. 82, 53 N. rin v. Lvon. 69 Minn. 257. 72 E. 144; Dotv v. Thomson, 39 Hun X. W. 72, 65 Am. St. 568; Heirn v. (N. Y.) 243, revd. 116 N. Y. 515, McCaughan, 32 Miss. 17. 66 Am. Dec. 22 N. E. 1089; Abraham v. Oregon 588; Thompson v. Thorne. 83 Mo. &c. R. Co.. 37 Ore. 495, 60 Pac. 899, App. 241 ; State v. Collins, 68 N. H. 64 L. R. A. 391. 82 Am. St. 779; The 299. 44 Atl. 495; Behrman v. Linde. Delaware. 14 Wall. (U. S.) 579. 20 47 Hun (N. Y.) 530. 15 X. Y. St. L. ed. 779. So where the meaning 129; Long v. Davidson. 101 X. Car- is clear from the entire instrument. 170. 7 S. E. 758; Bradstreet Co. v. Adams v. Turner, 73 Conn. 38, 46 Gill, 72 Tex. 115. 9 S. W. 753. 2 L. Atl. 247, and authorities cited. R. A. 405, 13 Am. St. 768; Clay v. « Roots v. Snelling. 48 L. T. (X. Field. 138 U. S. 464. 34 L. ed. 1044, S.) 216; Gorrissen v. Perrin. 2 C. B. 11 Sup. Ct. 419. (N. S) 681; Attorney-Gen. v. Clap- '^ Hattiesburg Plumbing Co. v. Car- ham, 4 DeG. M. & G. 591. 24 L. J. michael. 80 Miss. 66. 31 So. 536. Ch 177- Birch v. Depevster. 1 Stark. "^Memphis &c. R. Co. v. Graham. 167; Sp'icer v. Cooper,' 1 Q. B. 424. 94 Ala. 545, 10 So. 283. So. as to 41 E. C. L. 608; Drake v. Goree. 22 "loading off-shore." and "depart with Ala 409- Western Assurance Co. v. convov." Lethulier's Case, 2 Salk. Altheimer Bros., 58 Ark. 565, 25 S. 443; Johnson v. Xorthwestern Xat. § 1 662 CONTRACTS. 988 trade or business,^' "British weight,"^'' "Canada money,""" "currency" or "current funds,"«^ "cargo,"^^ "dollars,""^ "good custom cowhide,""* "hard pan,"^'* "months and weeks,""" "square inch of water,"" "thousand,""' "winter strained lamp oil,""" and the like.^ § 1662. Translations and illegible writings. — An instru- ment written in a foreign language may be read and translated by a witness, in a proper case, in order to enable the court to under- stand it,^ and if a writing is obscure and difficult to read, parol evidence may be resorted to, in order to decipher it.' So, if it ihas become illegible by lapse of time or is partly obliterated so as to become illegible, parol evidence may likewise be resorted to, Ins. Co., 39 Wis. 87. See also, Dixon Iv. Central &c. R. Co., 110 Ga. 173, 35 S. E. 369. ^Gorrissen v. Perrin, 2 C. B. (N. S.) 681. So, as to "cotton in bales," Taylor v. Briggs, 2 Car. & P. 524. So, as to "barrels," Miller v. Stevens, '100 Mass. 518, 97 Am. Dec. 123, 1 Am. Rep. 139. ^Goddard v. Bulow, 1 Nott. & McC. (S. Car.) 45, 9 Am. Dec. 663. '^Thompson v. Sloan, 23 Wend. (N. Y.) 71, 35 Am. Dec. 546. So as to "Texas money." Roberts v. Short, 1 Tex. 2>7Z. "'Huse V. Hamblin. 29 Iowa 501, 4 Am. Rep. 244; Pilmer v. Branch of State Bank, 16 Iowa 321; 31 L. R. A. (N. S.) 240 note. But see contra, Marine Bank v. Birney, 28 111. 90, 92; Butler v. Paine, 8 Minn. 324. '^Allegre V. Maryland Ins. Co., 2 Gill. & J. (Md.) 136, 20 Am. Dec. 424. '^' Hightower v. Maull. 50 Ala. 495 ; Austin V. Kinsman, 13 Rich. Eq. (S. Car.) 259; Donley v. Tindall, 32 Tex. 43, 5 Am. Rep. 234; Thorington v. Smith, 8 Wall. (U. S.) 1, 19 L. ed. 361 ; Confederate note cases, 19 Wall. (U. S.) 548, 22 L. ed. 196; 31 L. R. A. (N. S.) 241 note. "Wait V. Fairbanks, Brayt. fVt.) 77. "Horse chains," Swett v. Shum- way, 102 Mass. 365, 3 Am. Rep. 471. •'Blair v. Corby, Z7 Mo. 313. *" Jolly V. Young, 1 Esp. 186; Grant V. Maddox, 15 M. & W. 736. ^Janesville Cotton Mills v. Ford, 82 Wis. 416, 52 N. W. 764, 17 L. R. A. 564. So as to "square yard" or "foot." Walls V. Bailey, 49 N. Y. 464, 10 Am. Rep. 407. See also. Ford v- Tirrell, 9 Gray (Mass.) 401, 69 Am. Dec. 297. "'Smith V. Wilson, 3 B. & Adol. 728 **'Hart V. Hammett, 18 Vt. 127. ^ See Whitney v. Boardman, 118 Mass. 242; Locke v. Rowell, 47 N. H- 46; Coit v. Commercial Ins. Co., 7 Johns. (N. Y.) 385, 5 Am. Dec. 282; Astor v. Union Ins. Co., 7 Cow. (N. Y.) 202; Ganson v. Madigan, 15 Wis. 144, 82 Am. Dec. 659. See notes 6 L. R. A. ZZ, 6 Am. Rep. 678. ^Erusha v. Tomash, 98 Iowa 510, 67 N. W. 390 ; Taylor v. Sotolingo, 6 La. Ann. 154; Badart v. Foulon, 80 Md. 579, 31 Atl. 513. In Republic of Columbia v. Cauca Co., 106 Fed. 337, 349 (affirmed in 113 Fed. 1020, 51 C. C. A. 604), expert testimony was held admissible to show the true meaning of the words in a submis- sion to arbitration written in a for- eign language. ^ Masters v. Masters, 1 P. Wms. 421 ; Remon v. Hayward, 2 Ad. & El. 666, 29 E. C. L. 309; Jefferson v. Savory, 2 Greene (Iowa) 238; Ha- ven V. Brown. 7 Maine 421, 22 Am. Dec. 208; Sheldon v. Benham, 4 Hill (N. Y.) 129, 40 Am. Dec. 271; Arm- strong V. Burrows, 6 Watts (Pa.) 266. 989 PAROL EVIDENCE § 1 663 SO far as it may be necessary, to decipher and understand it.* And the same is true, in general, where, from any cause, the writ- ing is unintelligible,'^ unless it is so defective that it is impossible to arrive at the intention of the parties or to ascertain the legal effect of the instrument. § 1663. Usage and custom. — A usage or custom may often be shown and a brief discussion of the subject is here given. It will be fully treated in a separate chapter. A usage or custom may be proved by parol evidence for the purpose of explaining the meaning of terms used in a written contract that would other- wise be ambiguous." Indeed, under the modem authorities, it seems that such evidence is admissible in a proper case to explain rather than to contradict, even though there is no ambiguity upon the face of the instrument.'' Such evidence is held admis- sible to aid the court in interpreting the contract,^ and, in a proper case, it may be admitted even to annex incidents or stipulations as to the time and manner of performance not expressed in the writing," or to give words used therein a different signification * Goldsmith v. Picard, 27 Ala. 142; 728; Mooney v. Howard Ins. Co., Walrath V. Whittekind. 26 Kans. 482 ; 138 Mass. 375, 52 Am. Rep. 277; Fenderson v. Owen, 54 Maine 111, Soulier v. Kellerman, 18 Mo. 509; 92 Am. Dec. 551 ; Little v. Downing. Barton v. McKelway, 22 N. J. L. Zl N. H. 355; Arthur v. Roberts, 60 165; Walls v. Bailey. 49 N. Y. 464, Barb. (X. Y.) 580; Fallis v. Griffith, 10 Am. Rep. 407. See also. Regma Wright (Ohio) 303. v. Stoke-on-Trent, 5 Q. B. 303 : Grant "St. Clair County Benev. Soc. v. v. Maddox, 15 M. & W. 736: Hmton Fietsam, 6 111. App. 151, affd. in 97 v. Locke. 5 Hill (X. Y.) 437. But 111. 474; Moulding v. Prussing, 70 111. compare Silberman v. Clark. 96 N. 151; F. A. Thomas Mach. Co. v. Y. 522; Gibbon v. Young, 8 Taunt. Voelker, 23 R. I. 441, 50 Atl. 838. 254; Willmerling v. McGaughey, 30 "Hinote v. Brigman, 44 Fla. 589, Iowa 205, 6 Am. Rep. 673; Randall Zl So. 303 ; Van Camp Packing Co. v. Smith, 63 Maine 105, 18 Am. Rep. V Hartman, 126 Ind. 177, 25 N. E. 200; Rogers v. Woodruff, 23 Ohio 901; Lvon v. Lenon, 106 Ind. 567, 7 St. 632, 13 Am. Rep. 276: Broadwell N. E. '311; Leiter v. Emmons. 20 v. Butler, 6 McLean (U. S.) 296, Fed. Ind. App. 22. 50 N. E. 40; Williams Cas. No. 1910. Xewb. 171. V. Woods, 16 Md. 220; Walls v. ^Everitt v. Indiana Paper Co., 2d Bailev, 49 N. Y. 464. 10 Am. Rep. Ind. App. 287. 57 X. E. 281; Cox y. 407. and authorities cited in the f ol- O'Riley, 4 Ind. 368, 58 .\m. Dec 633 ; lowing notes; Long v. Davidson, 101 Shaw v. Binkard, 10 Ind. 227. N. Car. 170. 7 S. E. 758. See also, ' Hutton v. Warren, 1 M. & W. 46d, Cole V. Leach, 47 Ind. App. 341, 474; Wigglesworth v. Dallison, 1 344, 94 N. E 577, 578, citing 1 El- Doug. 201, 1 Smith Lead. Cas. (II th liott Ev § 607 cd.) 545: East Tennessee, V. & G. R. 'Brown v Bvrne. 3 El. & Bl. 703. Co. v. lohnston. 75 Ala. 596. 51 Am. 11 E C. L. 702; Mvers v. Sari. 3 E. Rep. 480; Evcringham v. Lord, 19 111. E. 306; Smith v. Wilson, 3 B. & Ad. App. 565; Pittsburgh, C. & St. L. R. 1 663 CONTRACTS. 990 from that commonly aiiribiited to them.^" But, while parol evi- dence is generally competent to show a custom or usage of the business, profession, or trade, when it is known to the parties, or so general and well settled that it must be presumed to have been known to them and they must be deemed to have contracted with reference thereto,^^ the rule is otherwise where one of the parties is unfamiliar with the usage, and it is not of such a general or well-known character that the parties will be presumed to have known it and deemed to have contracted with reference to it.^^ Co. V. Nash, 43 Ind. 423; Mand v. Trail, 92 Ind. 521, 47 Am. Rep. 163; Hirchhorn v. Bradley, 117 Iowa 130, 90 N. W. 592; Robinson v. United States, 13 Wall. (U. S.) 363, 20 L. ed. 653, (evidence admitted of usage to deliver grain in sacks) ; Gehl v. Milwaukee Produce Co., 116 Wis. 263, 93 N. W. 26. So. generally, as to the mode of determining or meas- uring the quantity or amount of goods or material furnished, or work done. Soutier v. Kellerman, 18 Mo. 509; Price v. Mouat, 11 C. B. (N. S.) 508; Thompson v. Brannin, 94 Ky 490, 21 S. W. 1057, 15 Ky. L. 36; Patterson v. Crowther, 70 Md. 124, 16 Atl. 531 ; Jones v. Hoey, 128 Mass. 585; Merick v. McNally, 26 Mich. 374; Merchant v. Howell, 53 Minn. 295, 55 N. W. 131 ; Hagan v. Domes- tic Sewing Machine Co., 9 Hun. (N. Y.) 7i; Walls v. Bailey, 49 N. Y. 464, 10 Am. Rep. 407; Newhall v. Apple- ton, 114 N. Y. 140, 26 N. E. 1107, 4 Silvernail (N. Y.) 411. But see, Ken- dall V. Russell, 5 Dana (Ky.) 501, 30 Am. Dec. 696; Lowe v. Lehman, 15 Ohio St. 179; Sweeney v. Thomason, 9 Lea (Tenn.) 359, 42 Am. Rep. 676; Humphreysville Copper Co. v. Ver- mont Copper Mining Co., 22> Vt. 92. ^" Mooney v. Howard Ins. Co., 138 Mass. 375, 52 Am. Rep. 277. See also, Spartali v. Benecke, 10 C. B. 212; Brown v. Byrne, 3 El. & Bl. 703, 77 E. C. L. 702; Morningstar v. Cunning- ham, 110 Ind. 328, 11 N. E. 593, 59 Am. Rep. 211 ; Van Camp Packing Co. v. Hartman, 126 Ind. 177, 25 N. E. 901 ; Southwestern Freight &c. Co. v. Stanard, 44 Mo. 71, 100 Am. Dec. 255; Carter v. Philadelphia Coal Co., 77 Pa. St. 286. And, see, as to individ- ual usage, Jaqua v. Witham &c. Co., 106 Ind. 545, 7 N. E. 314; Marrett v. Brackett, 60 Maine 524; Warren Bank v. Parker, 8 Gray (Mass.) 221; Grinnell v. Western Union Tel. Co., 113 Mass. 299; Fabri v. Phoenix Ins. Co., 55 N. Y. 129. "Humfrey v. Dale, 7 El. & Bl. 266; Corbett v. Underwood, 83 111. 324, 25 Am. Rep. 392; Cole v. Leach, 47 Ind. App. 341, 94 N. E. 577; Lupton v. Nichols, 28 Ind. App. 539, 63 N. E. 477 ; Howe v. Hardy, 106 Mass. 329 ; Baxter v. Massasoit Ins. Co., 13 Allen (Mass.) 320; Robertson v. National Steamship Co., 139 N. Y. 416, 34 N. E. 1053; Girard Life Ins. Co. v. Mutual Life Ins. Co., 86 Pa. 236. ^^ So held as to local usages, espe- cially where one party is a stranger. Ocean S. S. Co. v. Aetna Ins. Co., 121 Fed. 882; Byrne v. Massasoit Packing Co., 137 Mass. 313; Saw- telle v. Drew, 122 Mass. 228; Insur- ance Co. of North America v. Hi- bernia Ins. Co., 140 U. S. 565, 35 L. ed. 517, 11 Sup. Ct. 909; Chateau- gay, Ore & Iron Co. v. Blake, 144 U. S. 476, 36 L. ed. 510, 12 Sup. Ct. 731. So as to parties not in the same trade, Great Western Elev. Co. v. White, 118 Fed. 406, 56 C. C. A. 388; Pennell v. Delta Transportation Co., 94 Mich. 247, 53 N. W. 1049; Van Hoesan v. Cameron, 54 Mich. 609, 20 N. W. 609; Keavy v. Thuett, 47 Minn. 266, 50 N. W. 126; Brown v. Strimple, 21 Mo. App. 338; Long Bros. v. J. K. Armsby Co., 43 Mo. App. 253. See also, in support of the proposition generally, Kirchncr v. Venus, 12 Moo. P. C. 361 ; Isaksson v. Williams, 26 Fed. 642; Martin v. Maynard, 16 N. H. 165; Harris v. 991 PAROL EVIDENCE. § 1664 So, parol evidence is not admissible to prove a custom or usage that contradicts the written contract and varies its express terms," nor if the usage or custom is unreasonable,^* nor if it is in conflict with a sound and well settled rule of law." § 1664. Identification of parties. — Parol evidence is admis- sible to identify the parties to a written instrument,^" as, for instance, where a party has signed it by a wrong or fictitious name," or where it is signed by a firm name and does not show on its face who are members of the firm.^* So, a legal relation between parties, such as the fact of partnership, may be shown Tumbridge, 83 N. Y. 92, 38 Am. Rep. 398; Consumers' Ice Co. v. Jennings, 100 Va. 719, 42 S. E. 879. But com- pare Fleet V. Murton, L. R. 7 Q. B. 126. "Lonergan v. Courtney, 75 111. 580; Spears v. Ward. 48 Ind. 541 ; Seavey V. Shurick, 110 Ind. 494. 11 N. E. 597; Scott V. Hartley. 126 Ind. 239, 25 N. E. 826; Louisville &c. Packet Co. v. Rogers, 20 Ind. App. 594, 49 N. E. 970; Benson v. Gray, 154 Mass. 391, 28 N. E. 275, 13 L. R. A. 262 ; Brown V. Foster, 113 Mass. 136, 18 Am. Rep. 463; Detroit Advertiser & Tribune Co. V. Detroit. 43 Mich. 116, 5 N. W. 72; Collender v. Dinsmore, 55 N. Y. 200, 14 Am. Rep. 224 ; Deacon v. Mat- tison, 11 N. Dak. 190, 91 N. W. 35; The Delaware. 14 Wall. (U. S.) 579, 20 L. ed. 779; National Bank v. Burk- hardt, 100 U. S. 686. 692, 25 L. ed. 766; Partridge v. Phoenix &c. Ins. Co., 15 Wall. (U. S.) 573, 21 L. ed. 229; Barnard v. Kellogg, 10 Wall. (U. S.) 383, 19 L. cd. 987. "Anderson v. Whittaker, 97 Ala. 690, 11 So. 919: Cook v. Hawkins, 54 Ark. 423, 16 S. W. 8; Gallatin v. Bradford. 1 Bibb. (Ky.) 209; Has- kins V. Warren, 115 Mass. 514; Mer- chants' Ins. Co. V. Prince. 50 Minn. 53, 52 N. W. 131, 36 Am. St. 626. " Sohn V. Jervis, 101 Ind. 578. 1 N. E. 12> ; Cox V. O'Riley, 4 Ind. 368, 58 Am. Dec. 633 ; Wheeler v. Newbould, 16 N. Y. 392; Hopper v. Sage. 112 X. Y. 530, 20 N. E. 350, 8 Am. St. 771 ; See also. Noble v. Durell, 3 T. R. 271 ; Edie v. East India Co., 1 W. Bl. 295, 2 Burr. 1216; Raisin v. Clark, 41 Md. 158, 20 Am. Rep. 66; Eager v. Atlas Ins. Co., 14 Pick, (Mass.) 141, 25 Am. Dec. 363 ; Koppitz &c. Brewing Co. v. Behm, 130 Mich. 649, 90 N. W. 676; Walters v. Senf., 115 Mo. 524, 22 S. W. 511; Dunham v. Gould, 16 Johns. (N. Y.) 367, 8 Am. Dec. Ill; Ingle- bright V. Hammond, 19 Ohio ZZl , 53 Am. Dec. 430; Barnard v. Kellogg, 10 Wall. (U. S.) 383, 19 L. ed. 987. But there are of course, cases in which a custom, or even a usage, may be proved, if not contrary to public policy, statute or good morals, not- withstanding a different result would have been reached under the princi- ples of the law in the absence of any such custom. See Lawson's Usages and Customs 465. "Trueman v. Loder. 11 Ad. & El. 589; Newell v. Radford, L. R. 3 C. P. 52 ; Henderson v. Hacknev, 23 Ga. 383, 68 Am. Dec. 529; Scanlan v. Wright, 13 Pick. (Mass.) 523, 25 Am. Dec. 344; Burrows v. Turner, 24 Wend. (N. Y.) 276, 35 Am. Dec. 622; Clinton v. Hope Ins. Co., 45 N. Y. 454; Stokes v. Rilev. 29 Tex. Civ. App. 373, 68 S. W. '703 ; Union Pa- cific Co. v. Durant, 95 U. S. 576, 24 L. ed. 391. " Richardson's Case, L. R. 19 Eq. 588; Simons v. Marshall, 3 Greene (Iowa) 502; Rape v. Westcott, 18 N. J, L 244. '"Lindsay v. Hoke, 21 Ala. 542; Saltmarsh v. Bower, 34 Ala. 613; Clark V. Houghton, 12 Grav (Mass.) 38; Uhler v. Browning, 28 N. J. L. 79; Sullivan v. Visconti, 68 N. J. L. 542, 53 Atl. 598, affd. 69 N. J. L. 452, 55 Atl. 1133; See De Cordova v. Korte, 7 N. Mex. 678, 41 Pac. 526, § 1665 CONTRACTS. 992 by third parties by parol." And where two persons have the same name, parol evidence is generally admissible to show which was intended, when the writing does not show it."" The rule ex- cluding parol evidence to contradict or vary a written contract does not exclude parol evidence to show that a person named in a written contract or signing the same was the agent of an undis- closed principal and acted with the latter's authority and that such principal has complied with the terms of the contract.^^ Such evidence is most frequently admitted in will cases, in order to identify the legatee or devisee and ascertain the object of the testator's bounty." § 1665. Abbreviations, technical trade, and local terms. — Parol evidence is usually admissible to explain "mercantile short- hand" and other abbreviations that are not common and generally understood.'^ But if they are so generally understood that the court should take judicial notice of them, it would seem that parol evidence should not, ordinarily, be received to give them a con- trary meaning. Thus, it has been held that such abbreviations as "C. O. D." and "F. O. B." have acquired a fixed and well known affd. 171 U. S. 638, 43 L. ed. 315, 19 528, 38 L. R. A. (N. S.) 783 and Sup. Ct. 35 (partnership in name of note. one partner). But compare Williams ^^ Chappell v. Missionary Society V. Gillies, 75 N. Y. 197. &c., 3 Ind. App. 356, 29 N. E. 924, 50 ■ " Alderson v. Clay, 1 Stark 327 ; Am. St. 276 and extended note ; In re Widdifield v. Widdifield, 2 Binn. Gaston's Estate, 188 Pa. St. 374, 41 (Pa.) 245; Cutler v. Thomas' Estate, Atl. 529, 68 Am. St. 874, and note; 25 Vt. IZ. See also, Rex v. Holy Trin- Phillips v. Ferguson, 85 Va. 509, 17 ity, 7 Barn. & C. 611 ; Russell v. Ir- Am. St. 78. See note in 6 L. R. A. 43, win's Admrs.. 41 Ala. 292; Keidan v. and authorities hereinafter cited in Winegar, 95 Mich. 430, 54 N. W. 901, this section. Nor is parol evidence 20 L. R. A. 705 ; Bradley Fertilizer ordinarily admissible to show that Co. V. Caswell, 65 Vt. 231, 26 Atl. the grantee named in a deed is not 956; Riley v. Gregg, 16 Wis. 697; the one intended by the grantor. Northern Nat. Bank v. Lewis, 78 Whitmore v. Learned, 70 Maine 276, Wis. 475, 47 N. W. 834. 283. See also, Oliver v. Brown, 102 ^Begg V. Begg, 56 Wis. 534, 14 N. Ga. 157, 29 S. E. 159; Jackson v. W. 602. See also, Moseley's Admr. v. Hart, 12 Johns. (N. Y.) 11, 7 Am. Mastin, Zl Ala. 216; Coit v. Stark- Dec. 280; Jackson v. Foster, 12 Johns, weather, 8 Conn. 289; Peabody v. (N. Y.) 488, 490; Crawford v. Spen- Brown, 10 Gray (Mass.) 45; State v. cer, 8 Cush. (Mass.) 418. Weare, 38 N. H. 314; Diener v. "' Marshall v. Lynn, 6 M. & W. 109 ; Schley, 5 Wis. 483. Goblet v. Beechev, 3 Sim. 24; Mouton ^Davidson v. Hurty, 116 Minn. v. Louisville & N. R. Co., 128 Ala. 280, 133 N. W. 862, 39 L. R. A. (N. 537, 29 So. 602; Berry v. Kowalsk>' S.) 324 and note (contract for sale (Cal.), 27 Pac. 286; Penn Tobacco of real estate^. See also, McLeod v. Co. v. Leman, 109 Ga. 428, 34 S. E. Eshelman, 66 Wash. 683, 120 Pac. 679; McChesney v. City of Chicago, 993 PAROL EVIDENCE. § 166 = 'meaning, and that parol evidence is not needed to explain them,** but other courts have taken a different view.*'^ At all events, when their meaning is shown or clearly appears and all ambiguity is removed, parol evidence is not further admissible to vary them in ordinary cases.'" Where a writing contains technical terms of art or science not commonly understood, parol evidence is usually admissible to explain their meaning,*^ and it seems that it may be shown, in a proper case, that they were used in a technical sense, even though they may also have a popular meaning when used in another connection.*^ So, on the other hand, it has been held that it may be shown that a technical term used in a con- tract drawn by a layman has a popular meaning as well, and was used in its popular sense,"" at least, where the contract would otherwise be meaningless.^" The rule admitting parol evidence of the meaning of technical terms is not confined entirely to terms of art or science in the strict sense, but extends in proper cases to trade terms, ^^ and even to terms peculiar to the business locality 173 111. 75, 50 N. E. 191; Jaqua v. Witham &c. Co., 106 Ind. 545. 7 N. E. 314; Barton v. Anderson, 104 Ind. 578; Western Union Tel. Co. v. Col- lins, 45 Kans. 88. 25 Pac. 187, 10 L. R. A. 515: Springfield First Nat. Bank v. Fricke. 75 AIo. 178, 42 Am. Rep. 397; White v. McMillan. 114 N. Car. 349, 19 S. E. 234 ; Davis v. Ham- bell (Tex. Civ. App.), 24 S. W. 972. See also, Cole v. Leach, 47 Ind. App. 341, 344, 345. 94 X. E. 577, 578, cit- ing 1 Elliott Ev., § 608. '* American Merchants' Union Ex- press Co. v. Schier, 55 111. 140; United States Exp. Co. v. Keefer, 59 Ind. 263 ; State v. Intoxicating Liquors, 73 Maine 278. "'Collender v. Dinsmore. 55 N. Y. 200, 14 Am. Rep. 224; Silberman v. Clark, 96 N. Y. 522. See also, Mc- Nichol V. Pacific Exp. Co., 12 Mo. App. 401. ="4 Elliott R. R.. § 1425; Sheffield Furnace Co. v. Hull &c. Co., 101 Ala. 446, 14 So. 672; American Exp. Co. V. Lesem, 39 111. 312; Silberman v. Clark. 96 N. Y. 522. "Hills V. Evans. 8 Jur. (N. S.) 525, 31 L. J. Ch. 457: Revnolds v. Jour- dan, 6 Cal. 108; Mvers v. Tibbals. 72 €al. 278, 13 Pac. 695; New Jersey 63 — CoNTR.\CTS, Vol. 2 Zinc Co. V. Boston Franklinite Co., 15 N. J. Eq. 418; Stroud v. Frith, 11 Barb. (N. Y.) 300; Brauns v. Stearns, 1 Ore. 367; Weisenberger v. Harmony Fire &c. Co., 56 Pa. St. 442; Loom Co. v. Higgins, 105 U. S. 580, 26 L. ed. 1177. =' Powell v. Horton. 2 Bing. N. Cas. 668. See Clayton v. Gregson. 4 Nev. & Man. 602; Chaurand v. An- gerstein. Peake 43 ; Smith v. Wilson, 3 B. & Ad. 728. 23 E. C. L. 319; My- ers v. Walker. 24 111. 133; Hartwell v. Camman, 10 N. J. Eq. 128, 64 Am. Dec. 448; Collender v. Dinsmore, 55 N. Y. 200, 14 Am. Rep. 224; Caro- lina. C. G. & C. R. Co. V. Seigler, 24 S. Car. 124. =»Kohl V. Frederick, 115 Iowa 517, 88 N. W. 1055, and other Iowa cases then cited. '"See Stephen's Dig. Ev. 170; Doe v. Hiscncks, 5 M. & W. 363. " Bradlev v. Newcastle on Tvne, 2 El. & Bl. 427. 75 E- C. L. 427 ; Taylor v. Briggs. 2 C. & P. 525. 12 E. C. L. 712; Parker v. Ibbetson. 4 C. B. (N. S.) 346, 93 E. C. L. 346; Mc- Clure v. Cox. 32 Ala. 617. 70 Am. Dec. 552; Elgin v. Joslvn. 136 111. 525. 26 N. E. 1090; Grasmier v. Wolf (Iowa), 90 N. W. 813 (meaning of 1665 CONTRACTS. 994 of persons using them.^^ When an instrument contains terms called "mercantile shorthand" it is proper to aver extrinsic facts and to receive evidence to explain such terms.^^ Where a written contract for laying bricks is silent as to the manner in which the number of bricks is to be determined, parol evidence is admissible to show the custom by which such a matter is determined and in reference to which the parties must be deemed to have con- tracted.^* Many other illustrations of the application of these rules have already been given.^^ "mixeo cast and forged iron" among traders in old iron) ; Seymour v. Armstrong, 62 Kans. 720, 64 Pac. 612; Houghton v. Watertown Fire Ins. Co.. 131 Mass. 300; Dages v. Brake, 125 Mich. 64, 83 N. W. 1039, 84 Am. St. 556; St. Paul & Minne- apolis Trust Co. V. Harrison, 64 Minn. 300, 66 N. W. 980; Wilcox v. Baer, 85 Mo. App. 587 (meaning of "traveling expenses" among mer- chants) ; Evans v. Western Brass Mfg. Co., 118 Mo. 548, 24 S. W. 175; Nelson v. Sun Mutual Ins- Co., 71 N. Y. 453; Missouri &c. R. Co. v. De Bord, 21 Tex. Civ. App. 691. 53 S. W. 587; Hesser-Milton-Renahan Coal Co. V. La Crosse Fuel Co., 114 Wis. 654, 90 N. W. 1094- ^' Shore v. Attorney-General, 9 Clark & F. 355; Mouton v. Louisville & N. R. Co., 128 Ala. 537, 29 So. 602; Cannon v. Hunt, 116 Ga. 452, 42 S. E. 734; Jaqua v. Witham &c. Co., 106 Ind. 545, 7 N. E. 314 ; Prather V. Ross, 17 Ind. 495; Wood v. Allen, 111 Iowa 97, 82 N. W. 451 ("dry goods," meaning in the particular lo- cality) ; Noyes v. Canfield, 27 Vt. 79. "'Cole V. Leach, 47 Ind. App. 341, 349, 94 N. E. 577, 578, citing 1 Elliott Ev., § 608. ^*Ford V. Tirrell, 9 Gray (Mass.) 401, 69 Am. Dec. 297; Hinton v. Locke, 5 Hill (N. Y.) 437; Walls v. Bailey, 49 N. Y. 464, 10 Am. Rep. 407; howe v. Lehman, 15 Ohio St. 179; Richlands Glass Co. v. Hilte- beitel, 92 Va. 91, 22 S. E. 806. ^ See notes to this section and the preceding sections of this chapter. CHAPTER XXXVIII. CUSTOMS AND USAGES. 1670. Introductory. § 1671. Usages defined. 1672. Customs defined. 1673. Local customs having the force of laws. 1674. Caution in the use of usages. 1675. Term "laws" in treaties in- cludes customs and usages. 1676. Legislative abolition of cus- toms or usages. 1677. Requisites of a valid custom or usage. 1678. Custom or usage must be uni- form and certain. 1679. Reasonableness of customs or usages. 1680. Reasonableness of custom or usage — Examples of cus- toms invalid for unreason- ableness. 1681. Reasonableness of customs or usages — Examples of customs held not unreason- able. 1682. Necessity that custom should be general. 1683. Effect of occasional deviations from general custom. 1684. Necessity that custom or usage should be general — Il- lustrations of principle. 1685. Individual usages or prac- tices. 1686. Antiquity as element of cus- tom or usage. 1687. Antiquity — Illustration of principle. 1688. Legality of custom or usage. 1689. Legality of customs or usages — Customs which contra- vene public policy. 1690. Legality of customs or usages — Contravention of estab- lished legal principles. 1691. Legality of customs or usages — Contraventions of legal principles — Illustrations. 995 1692. Legality of customs or usages — Contravention of statutes. 1693. Legality of railway and bank- ing customs. 1694. Effect of partial illegality of custom. 1695. Effect of adoption of usage by courts. 1696. Knowledge of custom or us- age — Essential. 1697. Presumption of knowledge of usage. 1698. Presumption of knowledge continued — As to railroads and banks. 1699. Knowledge of established custom. 1700. Particular usages without binding force for want of knowledge. 1701. Necessity of knowledge of us- age giving arbitrary mean- ing to words. 1702. Mississippi doctrine of pre- sumption of knowledge. 1703. Usage in violation of rules. 1704. Agent's knowledge imputed to principal — Bill of lading — Charter party. 1705. Custom or usage to explain contract. 1706. Custom or usage to show in- tention of parties. 1707. Construction of words in con- tract. 1708. Construction of words of con- tract — Unusual and techni- cal words. 1709. Contract not created by cus- tom or usage. 1710. Incorporation of custom or usage in contract. 1711. Incorporation of custom in contract — Custom as to pro rata delivery of manufac- tured articles. CONTRACTS. 996 5 1712. Custom construed — Charter § 1739. party — Demurrage. 1713. Express contract may not be varied or contradicted by custom or usage. 1740. 1714. Test of variance. 1715. Customs and usages may not 1741. vary express contracts — Il- lustrations. 1716. Exclusion of custom or usage 1742. by express contract. 1717. Implied exclusion of custom by terms of contract. 1718. Cases illustrating the rule of 1743. implied exclusion of cus- toms. 1744. 1719. Implied exclusion of custom or usage where controversy relates solely to terms of 1745. contract. 1720. Presumption of intent to in- 1746. elude usage in contract. 1721. Custom or usage to explain 1747. matters on which contract is silent — Adding to terms of 1748. contract. 1722. Illustrative cases of added 1749. terms. 1723. Usage to explain meaning of 1750. unambiguous terms having 1751. a peculiar meaning. 1724. Test to determine whether in- 1752. strument to be interpreted 1753. by custom or usage. 1725. Warranty may not be added. 1754. 1726. Strict construction of usage. 1727. Usages relating to bills of 1755. lading and shipping con- tracts. 1756. 1728. Custom making bills of lad- ing negotiable. 1757. 1729. Effect of custom on liability 1758. of connecting carriers. 1730. Custom as to delivery of 1759. goods to carrier. 1760. 1731. Usage as to capacity of cars. 1732. Custom and usage as to de- 1761. livery of goods by carrier. 1752. 1733. Customs as to delivery of goods by carrier by water. 1734. Custom as to notice to con- 1763. signee of arrival of goods. 1735. Custom as to delivery of bag- 1764. gage to carrier. 1765, 1736. Usages allowing passengers 1766, to carry packages on trains. 1737. Usage as to furnishing re- frigerator cars. 1767 1738. Guaranty of freight bills. Effect of usage on transac- tion of business at stock- holders' meeting — Usage as by-law. Corporate lien on stock by usage or custom. Creation and amendment of corporate by-laws by cus- tom or usage. Powers of president of cor- poration inferred from usage, custom or habit of acting. Duties of treasurer as affected by custom or usage. Effect of usage or custom on right of corporate officer to compensation. Usages as to ownership of dividends. Insurance customs and usages generally. Usage as to authority of in- surance agents. Custom to notify insured of maturity of premium. Notice of cancelation of pol- icy. Customs as to re-insurance. Custom of paying losses not covered by policy. Origin of banking customs. Essentials of good bank usage. Customs and usages must not be unreasonable. Bank usages as to powers and duties of officers. Cashier's powers and duties affected by usage. Certification of checks. Custom of bank to pay notes out of depositor's funds. Interest on overdrafts. Local custom of banks as to substituted check. Customs as to days of grace. Presumption of knowledge of bank custom where note payable at bank. Bank usages as to demand and notice. Mailing notice of protest. Collection customs of banks. Collection customs of banks — Custom will not excuse negligence. Custom of sending collection to drawee condemned. 997 CUSTOMS AND USAGES. § 1670 § 1768. Collection customs — Remit- § 1789. tance of proceeds. 1769. Value of foreign money. 1790. 1770. Customs and usages in master and servant relation. 1791. 1771. Customs and usages in prin- 1792. cipal and agent relation. 1772. Principal and agent — Authori- ty of agent. 1793. 1773. Brokers and factors. 1774. Usage of brokers to treat 1794. stock certificates as negoti- able paper. 1795. 1775. Use of stock of customer by broker. 1796. 1776. Sale of collateral securities to enforce pledge. 1797. 1777. Landlord and tenant. 1778. Measurements and weights. 1779. Partnership customs and us- 1798. ages. 1780. Sales of goods. 1799. 1781. Charges for professional serv- ices. 1800. 1782. Interest on contracts. 1783. Theatrical and amusement contracts. 1801. 1784. Custom of sending telegraph message by telephone. 1802. 1785. General custom need not be specially pleaded. 1803. 1786. Local customs and usages must be pleaded. 1787. Customs and usages as evi- 1804. dence need not be pleaded. 1788. Technical meaning of words 1805. need not be pleaded. Pleading local usage in ac- tion for compensation. Judicial notice of customs and usages. Judicial notice — Examples. Proof preliminary to admis- sion of evidence of usage or custom. Burden of proof of custom or usage. Presumption of knowledge of usage. Character of evidence to es- tablish custom or usage. Opinion evidence as to cus- toms or usages. Competency of experts on question of custom or usage. Number of witnesses required to establish custom. Parol proof of usage or cus- tom. Custom or usage not estab- lished by proof of isolated instances. Evidence of knowledge of custom or usage. Evidence of custom of prompt payment or collection. The South Carolina rule as to evidence of custom to vary contract. Custom or usage as question of law or fact. Knowledge of question for jury. § 1670. Introductory. — Some confusion has crept into the cases by reason of the use of the terms "custom" and "usage" as meaning the same thing. In some of the cases the courts have gone so far as to expressly declare the terms to be synonymous.^ The terms have distinct meanings based on different characteris- tics and the purposes they fulfil.' Most of the decisions on the subject, however, have to do with local or trade usages, as here- after defined, and when this is thoroughly understood there is no great misunderstanding in the use of the terms as interchange- able. ^Richmond v. Union Steamboat Co.. 87 N. Y. 240. "-Bvrd V. Beal. 150 Ala. 122, 43 So. 749; Currie v. Syndicate Des Culti- vators &c., 104 ill. App. 165; Mor- ningstar v. Cunningham, 110 Ind. 328, 11 N. E. 593. 59 Am. Rep. 211; American Lead Pencil Co. v. Xa«h- ville &c. R. Co., 124 Tenn. 57, 134 S. W. 613. "A usage, which is also § 1 671 CONTRACTS. 998 § 1671. Usages defined. — A usage is the established method of deahng adopted in a particular place or by persons engaged in a particular vocation or trade and it acquires legal force because people make contracts with reference to it. The term is synonymous with the expression "particular custom".^ The term has also been defined to be "such a reasonable and law- ful public custom concerning transactions of the same nature as those which are to be affected thereby, existing at the place where the obligation is to be performed, and either known to the parties, or so well established, general and uniform, that they are presumed to have acted with reference to the usage. Usage in a particular locality is something which exists in general repute in the trade affected thereby in that community, and all residents are supposed to know of its existence and are presumed to act and contract with reference to it."* The term is thus defined in the statutes of one of the states: "Usage is a reasonable and lawful public custom concerning transactions of the same nature as those which are to be affected thereby, existing at the place where the obligation is to be performed, and either known to the parties or so well established, general and uniform that they must be pre- sumed to have acted with reference thereto."^ It is a funda- mental principle of the law of usage that the usage enters into and becomes a part of the contract of the parties.^ A usage of this character is not to be confused with a mere personal habit or practice,^ for, "there is a great variety of things, which, in the called a custom, though the latter Lowry v. Read, 3 Brewst. (Pa.) 452. word has also another signification, * Miller v. Wiggins, 227 Pa. 564, is a long and uniform practice, ap- Id Atl. 711. plied to habits, modes, and courses "Rev. Code N. Dak., § 5128; First of dealing. It relates to modes of Nat. Bank v. Minneapolis &c. Ele- action, and does not comprehend the vator Co., 11 N. Dak. 280, 91 N. W. mere adoption of certain peculiar 436. doctrines or rules of law." Dickinson * Currie v. Syndicate Des Culti- V. Gay, 7 Allen (Mass.) 29, 83 Am. vators &c., 104 111. App. 165. Dec. 656. 'Fisher v. Campbell, 9 Port. (Ala.) " Byrd V. Beall, ISO Ala. 122, 43 So. 210 ; Austill v. Crawford, 7 Ala. 335 ; 749, 124 Am. St. 60; Wilmington McClure v. Cox, 32 Ala. 617, 70 Am. City R. Co. V. White, 6 Pennew. Dec. 552; Gronstadt v. Witthoff. 15 (Del.) 363, 66 Atl. 1009; Ames Mer- Fed. 265; Currie v. Syndicate Des cantile Co. v. Kimball S. S. Co., 125 Cultivators &c., 104 111. App. 165; Fed. 332; Currie v. Syndicate Des Illinois Masons' Benev. Soc. v. Bald- Cultivators &c., 104 111. App. 165; win, 86 111. 479; Doughty v. Paige, 48 Morningstar v. Cunningham, 110 Ind. Iowa 483; Farmers' Bank v. Duvall. 328, 11 N. E. 593, 59 Am. Rep. 211; 7 Gill. & J. (Md.) 78; Anewalt v. 999- CUSTOMS AND USAGES. § 1 672 ordinary transaction of business, are habitual and usual, but which are in no sense customs which, in law, are incorporated into and become parts of the contract entered into."* It is also to be dis- tinguished from the understanding of a community or of a class as to the legal effect or implication of existing law.** Neither is it to be confused with acts of mere accommodation, or courtesy,'" as, where, for example, the officers of a river steamboat carry valuable packages for their customers without charge, as a matter of accommodation and in the hope that the beneficiaries of usage will favor the boat with freight shipments." A usage is something more than a mere exchange of customary courtesies," and the mere fact that an act has been performed repeatedly for the accommodation of a party is not enough to make the act a bind- ing usage. ^* "Many things are done in the course of trade, by way of favor, which cannot be held to constitute usage entering into contracts of the parties. The fact that such acts have con- stantly been done, not in obedience to duty or contract, but as matter of form, cannot compel their continuance."" § 1672. Customs defined. — The term "custom" is the larger term for it includes usage. There may be usage without custom but there can be no custom without usage to accompany or precede it. Usage may be termed the germ which by constant repetition and general use and great antiquity develops into cus- tom ; and custom when fully developed is law. A custom is such usage as by common consent and uniform practice has become the law of the place where it exists or of the subject-matter to which it relates. Customs are binding without regard to the assent of the parties." "Strictly speaking, custom is that length of usage Hummel, 109 Pa. St. 271; Carter v. Dec. 199; Runyan v. Central R. Co., Philadelphia Coal Co., 11 Pa. St. 64 N. J. L. 67, 44 Atl. 985. 48 L. R. 286. A. 744. *Sawtelle v. Drew. 122 Mass. 228. "Cincinnati & L. Mail Lme Co. v. •Haskins v. Warren, 115 Mass. Boal. 15 Ind. 345. 514; Silliman v. Whitmer. 196 Pa. "Pitch Pine Lumber Co. v. Wood St. 363, 46 Atl. 489. Lumber Co.. 57 Fla- 140. 48 So. 993. '"Madden v. Plain. 66 Ga. 49 (cus- "Johnson v. Concord R. Corp.. 46 torn of free treatment between physi- N. H. 213, 88 Am. Dec. 199. cians) : Cincinnati & L. Mail Line Co. " Runyan v. Central R. Co.. 64 N. V. Boal. 15 Ind. 345; Norton v. Hey- J. L. 67, 44 Atl. 985, 48 L. R. A. wood, 20 Maine 359; Johnson v. Con- 744. cord R. Corp., 46 N. H. 213, 88 Am. " Barlow v. Lambert, 28 Ala. 704, § 1672 CONTRACTS. "" lOOO which has become law."^® What was at one time the usage of merchants in respect to notes and bills became an established custom and hence the law as to commercial paper. In like man- ner the ancient custom in the county of Kent in England for all the sons to succeed to the father's inheritance, is the law of the county, in contradistinction to the general rule in England, un- der which the eldest son alone inherits. This custom known as the custom of gavelkind is the law of inheritance for that county.^^ It is said in this connection that a custom to become a law must be so ancient that the memory of man runneth not to the contrary, but a usage need only be old enough to be well estab- lished in the trade or place.^^ The term "custom" as thus defined would seem to describe the process by which laws become a part of the common law, and when they become a part of the common law it would seem improper to longer designate the subject-matter as a custom. A better classification would limit the term to those customs which have passed beyond the stage of usages and stand at the threshold, waiting recognition as laws. "It may well be questioned," says one of the courts, "whether any modern custom becomes incorporated in the common law until it has been established as a matter of fact by judicial authority. The change of the status of such a question from one of fact to one of law is by gradual and almost imperceptible steps."" 65 Am Dec. 374; Byrd v. Beall, else." Collins v. Chicago &c. R. Co. 150 Ala. 122, 43 So. 749, 124 Am. (Wis.), 136 N. W. 628. A custom St. 60; Tyson v. Laidlaw, 18 La. is a rule of action having the force 380; The Success, 18 La. Ann. 1; of law resulting from a long series Bank of Columbia v. Fitzhugh, 1 of actions constantly repeated, which Har. & G. (Md.) 239; McMasters by uninterrupted acquiescence, ac- V. Pennsylvania R. Co., 69 Pa. St. quires its force by common consent. 374 8 Am. Rep. 264; Common- Broussard v. Bernard, 7 La. 211. wealth V. Mavloy, 57 Pa. St. 291 ; " Walls v. Bailey, 49 N. Y. 464, 10 Adams v. Palmer, 30 Pa. St. 346; Am. Rep. 407. Adams v. Pittsburg Ins. Co., 76 Pa. "Currie v. Syndicate Des Culti- St 411 ; American Lead Pencil Co. vators &c., 104 111. App. 165. V. Nashville &c. R. Co., 124 Tenn. 57, '' Currie v. Syndicate Des Culti- 134 S. W. 613; Trott v. Wood, 1 vators &c., 104 111. App. 165; Cole v. Gall. (U. S.) 443, Fed. Cas. No. Skrainka. ?>7 Mo. App. 427; Sleght 14190; McGregor v. Insurance Co. of v. Hartshorne, 2 Johns. (N. Y.) 531; Pennsvlvania, 1 Wash. C. C fU. S.) Blin v. Mayo, 10 Vt. 56, 2Z Am. Dec. 39, Fed. Cas. No. 8811. "Popularly 175. the word custom may be used as a "Bonham v. Charlotte &c. R. Co., synonym for mode or practice, but 13 S- Car. 267. in law the word means something lOOI CUSTOMS AND USAGES. § 1 673 § 1673. Local customs having the force of laws. — In Eng- land there are many local customs which have the force of laws in particular localities by reason of their antiquity and uninter- rupted recognition. These laws make what may be characterized as the local common law of districts or counties. They are laws which had their origin before the time of legal memory, which is generally considered as antedating the time of Richard I.^° "The custom of the county in which the land lies is as much the law of that county as the common law is the law of the other parts of the country where they have no such particular custom. The particular custom prevents the application of the common law to the county or district in which the custom prevails, by showing that the common law, as to this subject, never had any existence in that county or district."" A familiar illustration of the prin- ciple is the custom of gavelkind which is the local common law of the county of Kent by which lands descend to all the sons and not to the eldest as is the case in the rest of England." § 1674. Caution in the use of usages. — The courts have long recognized the danger likely to result from an indiscriminate resort to usages in the construction of contracts. This danger lies in the possibility that a new and different contract may be made from an existing written contract by poorer evidence or that there may be the entire defeat of the contract actually entered into by the parties." Said Judge Story, who early saw the dan- ger from this source : 'T own myself no friend to the almost in- discriminate habit of late years, of setting up usages or customs in almost all kinds of business and trade, to control, vary, or annul the general liabilities of parties under the common law, as well as under the commercial law. It has long appeared to me, that there is no small danger in admitting such loose and incon- clusive usages and customs, often unknown to the particular par- ties, and always liable to great misunderstandings and misinter- *'Hammerton v. Honev, 24 \V. R. 18 Am. Rep. 200; Runyan v. Central 603. ■ R. Co., 64 N. J. L. 67. 44 Atl. 985. 48 ^Harris v. Carson. 7 Leigh (Va.) L. R. A. 744; The Reeside. 2 Sumn. 632, 30 Am. Dec. 510. (U. S.) 567. Fed. Cas. No. 11657: "Currie v. Syndicate Des Cuhi- Donnell v. Columbian Ins. Co.. 2 vators &c.. 104 ill. App. 165. Sumn. (U. S.) 366, Fed. Cas. No. ** Randall v. Smith, 63 Maine 105, 3987. §1675 CONTRACTS. 1002 pretations and abuses, to outweigh the well-known and well- settled principles of law, and I rejoice to find, that, of late years, the courts of law, both in England and America, have been dis- posed to narrow the limits of the operation of such usages and customs, and to discountenance any further extension of them."^* § 1675. Term "laws" in treaties includes customs and usages. — The word "laws" used in a treaty between different nations is broad enough to include those customs and usages which have the force of laws. The term is not limited to statu- tory enactments. The principle is important in our jurispru- dence where rights of property are involved in territory taken over by our government from other nations and the treaties evi- dencing the transfer provide that property and contract rights ac- quired under the laws of the ceding sovereignty are preserved.^® In a case involving this question under the treaty by which Flor- ida was acquired, the Supreme Court of the United States said : "We cannot impute to congress the intention to not only authorize this court, but to require it to take jurisdiction of such a case, and to hear and determine such a claim according to the princi- ples of justice ; by such a solemn mockery of it as would be evinced by excluding from our consideration usages and customs (which are the law of every government) for no other reason than that in referring to the laws and ordinances in the second section congress had not enumerated all the kinds of laws and ordinances by which we should decide whether the claim would be valid if the province had remained under the dominion of Spain. We might as well exclude a royal order because it was not called a law."^« § 1676. Legislative abolition of customs or usages. — The legislature, in the exercise of its police power, has an undoubted right to abolish a custom however well established it may be.-' '*The Reeside, 2 Sumn. (U. S.) ^United States v. Arredondo, 6 567, Fed. Cas. No. 11657. Pet. (U. S.) 691, 8 L. ed. 547. " United States v. Arredondo, 6 ^^ Hospital St. Cross v. Howard, 6 Pet. (U. S.) 691, 8 L. ed. 547; T. R. 338; Noble v. Durrell, 3 T. R. Strother v. Lucas, 12 Pet. (U. S.) 271; Harris v. Rutledge, 19 Iowa 410, 9 L. ed. 1137. 388, 87 Am. Dec. 441; House v. I003 CUSTOMS AND USAGES. 1677 The legislature may, for example, abolish a custom or usage as to what shall constitute a ton or other unit of weight.^* § 1677. Requisites of a valid custom or usage. — It is essen- tial to the validity of a custom or usage that it sliould be reason- able, uniform, certain, notorious, general and so well established and of such duration that persons in the business to which the custom related may be presumed to have contracted with refer- ence to it ; and it must be legal, by which is meant that the custom or usage must not conflict with public policy or settled legal prin- ciples.^" Concerning the essentials of certainty, uniformity, gen- Mayes, 227 Mo. 617, 127 S. W. 305 ; Green v. Moffett, 22 AIo. 529; Evans V. Myers, 25 Pa. St. 114; Mays v. Jennings, 4 Humph. (Tenn.) 102. ^ House V. Maves, 227 Mo. 617, 127 S. W. 305. ^Herring v. Skaggs, 11 Ala. 446; Barlow v. Lambert, 28 Ala. 704, 65 Am. Dec. 374; Wilkinson v. William- son, 76 Ala. 163 ; East Tennessee &c. R. Co. V. Johnston, 75 Ala. 596, 51 Am. Rep. 489; Hass v. Heidmon, 83 Ala. 174, 3 So. 302; Antomarchi's Exr. v. Russell, 63 Ala. 356, 35 Am. Rep. 40; Steele v. McTyer's Admr., 31 Ala. 667, 70 Am. Dec. 516; Mobile &c. R. Co. V. Jay, 61 Ala. 247 ; Smith v. Rice, 56 Ala. 417; Desha v. Holland. 12 Ala. 513. 46 Am. Dec. 261; West v. Ball, 12 Ala. 340; Savage v. Pelton, 1 Colo. App. 148. 27 Pac. 948 ; Sturges V. Buckley, 32 Conn. 18; Continental Coal Co. V. Birdsall, 108 Fed. 882. 48 C. C. A. 124; Chicago M. & St. P. R. Co. V. Lindeman. 143 Fed. 946. 75 C. C. A. 18 ; Wheelwright v. Dval. 99 Ga. 247, 25 S. E. 170; Packer v. Pente- cost, 50 111. App. 228; Sweet v. Leach, 6 111. App. 212 ; Turner v. Dawson. 50 111. 85; Bissell v. Ryan, 23 111. 566; Dixon v. Dunham. 14 111. 324; Strange v. Carrington, 116 111. App. 410; American Ins. Co. v. France, 111 111. App. 310; Currie v. Svndicate. 104 111. App. 165; Quinn v. Herhold. 100 111. App. 320; Newton Rubber Works v. Home Rattan Co., 100 111. App. 421: Mobile Fruit & Trading Co. v. Judv. 91 111. App. 82 ; Wallace v. Morgan. 23 Ind. 399j Har- per v. Pound. 10 Ind. 32 : Rochester German Ins. Co. v. Peaslee-Gaulbert Co.. 27 Ky. L. 1155, 87 S. W. 1115; Caldwell v. Dawson, 61 Ky. 121 ; Huston V. Peters, 1 Mete. (Ky.) 558; Kendall v. Russell, 5 Dana (Ky.) 501, 30 Am. Dec. 696; Ran- dall v. Smith. 63 Maine 105. 18 Am. Rep. 200; Marrctt v. Brackett, 60 Maine 524; Leach v. Perkins, 17 Maine 462, 35 Am. Dec. 268; Hartley V. Richardson, 91 Maine 424. 40 Atl. 336; Murrav v. Spencer. 24 Md. 520; Citizens' Bank v. Grafflin, 31 Md. 507, 1 Am. Rep. 66; Shute v. Bills, 191 Mass. 433, 78 N. E. 96, 7 L. R. A. (X. S.) 965, 114 Am. St. 631; Butler V. Charlestown. 7 Grav (Mass.) 12; Cutter V. Howe. 122 Mass. 541 ; Will- iams V. Powell, 101 Mass. 467. 3 .\m. Rep. 396; Lincoln v. Shaw. 17 Mass. 410; Dvvight v. Whitney. 15 Pick. .(Mass.) 179; Goodenow v. Tyler, 7 Mass. 36, 5 Am. Dec. 22; Porter v. Hills, 114 Mass. 106; Schurr v. Savig- nv, 85 Mich. 144. 48 X. W. 547; Black v. Ashlev. 80 Mich. 90. 44 X. W. 1120; Ledyard v. Hibbard. 48 Mich. 421. 12 X. W. 637. 42 Am. Rep. 474; Pennell v. Delta Transp. Co.. 94 Mich. 247. 53 X. W. 1049; Shackel- ford v. Xew Orleans &c. R. Co.. ll Miss. 202; Ober v. Carson's Exr.. 62 Mo. 209; Foye v. Leighton. 22 X. H. 71, 53 Am. bee. 231 : Farnsworth v. Chase, 19 N. H. 534. 51 Am. Dec. 206; Palmer v. Harrison, 28 Misc. (X. Y.) 180. 58 X. Y. S. 1107: In re Haves. Zl Misc. (N. Y.) 264. 75 X. Y. 'S. 312: Cough v. Davis. 24 Misc. (X. Y.) 245. 52 N. Y- S. 947. affd. 30 App. Div. (N. Y.) 639. 57 X. Y. S. 1139; Smith v. Milton. 169 X. Y. 583, 62 N. E. 1100; Miller v. Burke, § 1 677 CONTRACTS. 1004 erality and notoriety, it has been well observed : "A custom has the force of law and furnishes a standard for the measurement of many of the rights and acts of men. It must be certain or the measurements by this standard will be unequal and unjust. It must be uniform, for, if it vary, it furnishes no rule by which to mete. It must be known, or must be so uniform and notorious that no person of ordinary intelligence who has to do with the subject to which it relates and who exercises reasonable care would be ignorant of it ; for no man may be justly condemned for the violation of a law or a custom which he neither knows nor ought to know. In short, a binding custom must be certain, defi- nite, uniform, and known, or so notorious that it would have been known to any person of reasonable prudence who dealt with its subject with the exercise of ordinary care."^** The question of 68 N. Y. 615 ; White v. Tripp, 125 N. Car. 523, 34 S. E. 686 ; Cope v. Dodd, 13 Pa. St. 33; Robeson v. Pels, 202 Pa. St. 399, 51 Atl. 1028; Saint v. Smith, 1 Cold. (Tenn.) 51; Oriental Lumber Co. v. Blades' Lumber Co., 103 Va. 730, 50 S. E. 270; Sterling Organ Co. v. House, 25 W. Va. 64; Power V. Kane, 5 Wis. 265; Hall v. Storrs, 7 Wis. 253. "" Chicago M. & St. P. R. Co. v. Lindeman, 143 Fed. 946, 75 C. C. A- 18. "But a usage repugnant to the terms and objects of a written con- tract is not competent to vary or control it; as a usage for a master cooper to send his apprentice abroad on a whaling voyage, and receive his earnings on such voyage, Randall v. Rotch, 12 Pick. 109; or where, by the terms of a contract to manufac- ture brick, the bricks, when made, were the joint property of the con- tracting parties, that one of the par- ties had no interest in them. Ma- comber V. Parker, 13 Pick. 181 ; or, in a written contract for the manu- facture of retorts, that founders, in the absence of an express agreement, should not be held to warrant their castings against latent defects, or, in case of apparent defects, they were entitled to have the castings returned to them in a reasonable time, Whit- more V. South Boston Iron Com- pany, 2 Allen 60; or, when the con- tract of pledge of stock only pro- vided that it might be transferred after default, that it might be trans- ferred at the pleasure of the holder. Dyke v. Allen, 7 Hill 497; or, where, by a policy of insurance, the re-in- surer is to make a full indemnity within the amount of risk taken by him, that he is chargeable only for such proportion of the loss, as the amount of re-insurance bears to the original policy. Mutual Safety Ins. Co. V. Howe, 2 Comst. 241 ; or, for an insurance company in case of a total loss to retain two per cent, per month on the balance of the premium notes from the date of the last as- sessment, until the expiration of the terms of the policy, when such usage limits and controls the terms of the policy, Swampscot Co. M. Partridge, 5 Foster (N. H.) 369; Foye V. Leighton, 2 Id. 71 ; Leach v. Beardslee, 22 Conn. 404 ; McGregor V. Ins. Co. of Penn., 1 Wash. Cir. Ct. 39; Knox v. The Nienta, Crabbe, 534. "So, no usage can be sustained in opposition to the established prin- ciples of law, as a usage to return a portion of a premium note, when the insurance is effected on a cargo from a particular port to a foreign port and back, if the vessel fails to get a return cargo. Homer v. Dorr, 10 Mass. 26; or, that a vessel war- ranted to be neutral is not neutral but only pretended to be, Lewis v. I005 CUSTOMS AND USAGES. 1678 the existence of a usage is always a matter of fact and not of opinion and *s to be established, it has been said, only by proof of a series of acts of a similar character performed at different times by different persons.^^ It is of a higher degree than a mere mutual exchange of courtesies which bind neither party and which do not become of binding force upon a contract made by the parties.^* The different elements which go to make a valid custom or usage will receive a separate consideration in the suc- ceeding sections. § 1678. Custom or usage must be uniform and certain. — A custom or usage in order to be controlling and change the rights and liabilities of persons arising from their dealings with each other must be certain and uniform. This requires that it should be uniform in its application to the class affected and of such certainty as to be capable of proof. It must not be left to con- jecture or dispute.^^ "Before any custom can be admitted in the Thatcher, 15 Mass. 431 ; or to short- en the time of presentment, de- mand and notice in respect to prom- issory notes within that fixed by law, applicable to such a class of notes, Mechanics' Bank v. Merchants' Bank, 6 Mete. 13; or to make the seller of manufactured goods, by sample, lia- ble to the purchaser for damages oc- casioned by latent defects in the goods sold, not discoverable either in them or the sample, by ordinary care, Dickerson v. Gay, 7 Allen 29; or, for the master of a stranded ship to sell the cargo without necessity. Bryant \. Commonwealth Insurance Com- pany, 6 Pick. 131 ; Walker v. Trans- portation Company, 3 Wall. 150; Thompson v. Riggs, 5 id. 663; Dodd et al. V. Farlow, 11 .\llen 430. "So, also, the law refuses to give its sanction to a usage that is ab- surd or unreasonable, as a usage of ship owners to pay the seamen's ad- vance wages to their own shipping agent employed to procure a crew, and for him. in his turn, to pay the same to the boarding-house keeper who brings the seamen to him. Met- calf V. Weld. 14 Gray 210; or for merchants of a particular locality, engaged in the whaling trade, to ac- cept the bills of their masters drawn for supplies furnished abroad, Bowen et al. v. Stoddard, 10 Mete 380." Randall v. Smith, 63 Maine 105, 18 Am. Rep. 200. "Ames Mercantile Co- v. Kimball S. S. Co., 125 Fed. 332. " Pitch Pine Lumber Co. v. Wood Lumber Co., 57 Fla. 140, 48 So. 993. "Buford V. Tucker. 44 Ala. S9: Desha v. Holland. 12 Ala. 513. 46 Am. Dec. 261 ; Crusoe v- Clark. 127 Cal. 341, 59 Pac. 700; Heistand v. Bateman, 41 Colo. 20. 91 Pac. 1111; The Gualala, 178 Fed. 402. 102 C. C. A. 548 ; Berrv v. Cooper. 28 Ga. 543 : Swern v. Churchill. 155 111. App. 505 ; Strange v. Carrington. 116 111- App. 410; Cincinnati &c. Mail Line Co. v. Boal, 15 Ind. 345; Baltimore Base Ball Club &c. Co. v. Pickett. 78 Md. 375. 28 Atl. 279, 22 L. R. A. 690. 44 Am. St. 304; Folev v. Mason. 6 Md. 37; Citizens Bank v. Grafflin, 31 Md. 507, 1 Am. Rep. 66; Strong v. Grand Trunk R. Co., 15 Mich. 206. 93 Am. Dec. 184; Xippolt v. Firemen's Tns. Co., 57 Minn. 275, 59 N. W. 101; Ober V. Carson. 62 Mo. 209; Fhrlich V. ;Etna Life Ins. Co., 103 Mo 231, 15 S. W. 530; Smith v. Gibb<;. 44 N. H. 335; Palmer v. Harrison. 28 Misc. (N. Y.) 180. 58 N. Y. S. 1107: Eck- stein V. Schleimer, 62 Misc. (N. Y.") § 16/8 CONTRACTS. IOO6 law, it must appear that the usage has been general and uniform, a custom peaceably acquiesced in, and not subject to contention and dispute."^* "A custom must be general and uniform. It must be certain, reasonable, and sufficiently ancient to afford the pre- sumption that it is generally known * * * and must not be in opposition to any principle of general policy, nor inconsistent with the terms of the agreement between the parties or against the established principles of law. Besides this, it must be gen- erally known and established, and so well settled and so uniform- ly acted upon as to raise a fair presumption that it was known to both contracting parties, and that they contracted in reference to it and in conformity with it."^^ A custom which is uniform and general is valid though not uniformly acquiesced in, for this would have the effect of annulling customs by those unwilling to abide by them.^^ In one of the cases where the contention was for a usage that in sales of large lots of goods, the buyer was not obli- gated if the variation in the quantity was considerable and the de- termination of this matter rested with the buyer and there was no well recognized definite test for such determination, the usage was held invalid for uncertainty.^^ So, these elements are lacking in a so-called usage of clerks on steamboats to receive and carry packages of money from one port to another without charge in the expectation that shippers would prefer the boat to other boats in making shipments of their ordinary freight.^^ And so a cus- tom was held not to be enforced which allowed an intermediate carrier, accepting property subject to charges, to deduct from the freight earned by a prior carrier the value of any deficiency in the freight as delivered to such intermediate carrier.^® There can be no comparative degrees of certainty and hence an instruc- 635, 116 N. Y. S. 7; Cavanagh v. ^Cleveland, C. C. & St. L. R. Co. O'Neill, 20 Misc. (N. Y.) 233, 45 v. Jenkins, 174 111. 398, 51 N. E. 811, N. Y S. 789; United States v. Du- 62 L. R. A. 922, 66 Am. St. 296. val, Gilp (U. S.) 356, Fed. Cas. No. "« Desha v. Holland, 12 Ala. 513, 15015 ; Oelricks v. Ford, 23 How. (U. 46 Am. Dec. 261. S ) 49, 16 L. ed. 534 ; Nelson v. " Kalamazoo Corset Co. v. Simon, Southern Pac. R. Co., 15 Utah 325, 129 Fed. 144, affd. 129 Fed. 1005, 64 49 Pac. 644; Russell's Exr. v. Fer- C. C. A. 166. guson, n Vt. 433, 60 Atl. 802; Lins- '* Cincinnati &c. Mail Line Co. v. ley V. Lovely, 26 Vt. 123; Angell v. Boal, 15 Ind. 345. Keith, 24 Vt. 371. '' Strong v. Grand Trunk R. Co., IS ^ Strong V. Grand Trunk R. Co., Mich. 206, 93 Am. Dec. 184. 15 Mich. 206, 93 Am. Dec. 184. 100/ CUSTOMS AND USAGES. § 1679 tion that a custom must be as "certain as the business to which the rule applies will permit" is invalid." § 1679. Reasonableness of customs or usages. — A custom l)r usage must stand the test of reasonableness; for it is one of the requisites of a good custom that it must be reasonable. A custom or usage which shocks the sense of fairness cannot be upheld.** "A custom or usage, to be legal and valid, must be reasonable and consistent with good morals and sound policy, so that the par- ties may be supposed to have made their contracts with reference to it. If such a usage is shown to exist, then it becomes the law by which the rights of the parties are to be regulated and gov- *" Nelson v. Southern Pacific R. Co., 15 Utah 325, 49 Pac. 644; Saunders v. Southern Pacific R. Co., 15 Utah 334, 49 Pac. 646. " Devonald v. Rosser, 9i L. T. 274 ; Bvrd V. Deall, 150 Ala. 122, 43 So. 749; Stone v. Rice, 58 Ala. 95; An- derson V. Whittaker, 97 Ala. 690, 11 So. 919; Lindsay v. Cusimano, 12 Fed. 504; Liverpool & Great West- ern Steam Co. v. Suitter, 17 Fed. 695; Young v. One Hundred & Forty Thousand Hard Brick, 78 Fed. 149; Central R. &c. Co. v. Anderson, 58 Ga. 393; Wallace v. Morgan, 23 Ind. 399; Castleman v. Southern Mut. Life Ins. Co., 77 Ky. 197; Leach V. Perkins, 17 Maine 462, 35 Am. Dec. 268 ; Rosenstock v. Tormev, iZ Md. 169, 3 Am. Rep. 125; Second Nat. Bank v. Western Nat. Bank, 51 Md. 128, 34 Am. Rep. 300; Eager v. Atlas Ins. Co., 31 Mass. 141, 25 Am. Dec. 363; Seccomb v. Provincial Ins. Co., 92 Mass. 305 ; Whitney v. Esson, 99 Mass. 308, 96 Am. Dec. 762; Has- kins V. Warren, 115 Mass. 514; Strong V. Grand Trunk R. Co., IS Mich. 206, 93 Am. Dec. 184; Clark V. Humphries, 25 Mo. 99; Cole v. Skrainka, 2>7 Mo. App. 427; Jacobs V. Shorey, 48 N. H. 100. 97 Am. Dec. 586; Duguid v. Edwards, 50 Barb- (N. Y.) 288: Eckstein v. Schleimer. 62 Misc. (N. Y.) 635, 116 N. Y. S. 7; Penland v. Ingle, 138 N. Car. 456, 50 S. E. 850; McMasters v. Pennsylvania R. Co., 69 Pa. St. 374. 8 Am. Rep. 264; Horner v. Watson, 79 Pa. St. 242. 21 Am. Rep. 55 ; Con- solidated Kansas City &c. Refining Co. V. Gonzales, 50 Tex. Civ. App. 79, 109 S. W. 946; Sterling Organ Co. V. House, 25 W. Va. 64. "The courts are frequently required to hold a custom unreasonable and void, not- withstanding strong reasons urged in favor of it as a rule of convenience by the class by whom it has been adopted, and where the hardships in any case would not be greater than in this. The case of Leuckhart v. Cooper, 3 Bing. N. C. 99, is an il- lustration of such cases. The usage given in evidence there was for pub- lic warehousemen in London to have a general lien on all goods from time to time housed with them for and in the name of the merchants or other persons by whom they were em- ployed, for all moneys or balances due from such merchants or persons for expenses incurred about goods consigned from abroad, and irre- spective of the ownership of the goods upon which lien was claimed. In Bryant v. Commonwealth Ins. Co., 6 Pick. 131, a custom for the master of a vessel stranded to sell the cargo without necessitv was held void. In Bowen v. Stoddard. 10 Met. 380. a custom among merchants of Xew Bedford and Fairhavcn engaged in the whaling trade, to accept the bills of their masters, drawn for supplies furnished abroad, failed to receive the sanction of the court, on the ground that a usage could not be reasonable which put at hazard the property of the owner at the pleas- ure of the master. And see Jordan V. Meredith, 3 Yeates (Pa.) 318 § 1679 CONTRACTS. IOO8 erned."*^ Thus, a usage has been declared Invahd which author- ized a dealer in bonds or securities, after an absolute sale and delivery to a customer, to retain a right to represent such cus- tomer and to expend money without an express contract giving him this right. In a case of this character, a court said : "To hold that any agency for the purchasers, or right of control over the bonds and securities so sold and delivered, remained in the vendor, under said alleged usage, without any contract or agree- ment on the part of the purchasers, would be unreasonable. Any usage which authorizes and empowers a vendor, after an absolute sale and delivery of bonds or securities, and receipt of the price, to meddle further in respect to them, and institute, defend, or con- trol litigation which may affect their values and validity, at the same time charging the purchasers or holders of such bonds or securities with the costs, disbursements and expenses of such liti- gation, without the consent or agreement of such purchasers or holders, is contrary to the plainest principles of law, and to the absolute right and dominion of such purchasers and holders over their own property."" Parties may be bound to act in reference to a reasonable custom, although they have not expressly agreed to do so." If the custom is in fact reasonable, it is not invalid on [2 Am. Dec. 373], and Spear v. "Saunders v. Southern Pac. R. Newell, referred to in 23 Vt. 159. Co., 15 Utah 334, 49 Pac. 646; Nel- Some of the cases cited were more son v. Southern Pac. R. Co., 15 Utah liable to work injustice generally 325, 49 Pac. 644. In Cleveland, C. C. than the present ; but as a custom, & St. L. R- Co. v. Zider, 61 Fed. 908, if good at all, is compulsory on all 10 C. C. A. 151, it appeared that an cases falling within it (1 Bla. Com. employe of a car company, working 78), we are not at liberty to regard on one of its cars placed on the side it exclusively in the light of its ef- track of a railroad, was killed by the fects in the majority of cases. Spe- railroad company's switching engine cial customs are so liable to create running into the car. In an action confusion of legal rules in directions against the railroad company there- not contemplated in their adoption, for, the complaint alleged that the that they are admitted into the law car company's unfinished cars were with great reluctance; and it is not accustomed to be placed, with de- often a hardship to parties to reject fendant's knowledge and consent, on a custom so long as they are left its side tracks, to be there finished free to make their own bargains, and and made ready for shipment. It can incorporate it in their contracts was held that evidence of an agree- if they see fit to do so." Strong v. ment between the companies for the Grand Trunk R. Co., 15 Mich. 206, use by the car company of the side- 93 Am. Dec. 184. tracks as a delivery track, but not **Farnsworth v. Hemmer. 1 Allen for constructing or completing cars (Mass.) 494, 79 Am. Dec. 756. thereon, was immaterial, as it was "Municipal Inv. Co. v. Industrial not inconsistent with the alleged cus- & General Trust Co., 89 Fed. 254. tom, and the railroad company would I009 CUSTOMS AND USAGES. § 1G80 the ground that it may be abused." The reasonableness of a custom must in some measure depend upon the place where the contract is made.*" § 1680. Reasonableness of custom or usage — Examples of customs invalid for unreasonableness. — The principle which denies validity to customs or usages on the ground of unreason- ableness is abundantly illustrated by the adjudicated cases. Thus a usage is invalid for unreasonableness where the whole price of stone sold at a certain price per cubic yard is to be com- puted by measuring the stone after it has been laid in a solid wall and the result of this computation would be to double the quantity actually sold." And it has been so held as to the custom of brokers to charge commission to both parties without informing either that they were employed by the other.^^ So as to the usage of a railroad company requiring claims for damages for loss or injury to shipments to be made \vithin ten days after delivery at the station.*® So as to a cus- tom which allows an employe to carry on a business in competi- tion with his employer.**" So with the usage of plasterers to charge half the size of the windows at a price agreed on when that price includes the cost of materials.*^^ So with the custom that a tenant may convert his landlord's personal property found on the prem- ises without payment therefor." So with a publishers' usage to insert advertisements until ordered discontinued though the object of the advertisement has been accomplished.^' So with the cus- tom that an agency to act for a ship in distress is irrevocable." So with the custom that the act of marking or staking ice on public waters was a sufficient appropriation of the same.'^ So be bound to act in reference to such ** Browning v. Long Island R. Co., custom whether it originated in an 2 Daly (N. Y.) 117. agreement or grew up independently. "* Stonev v. Farmers' Transp. Co., "Miller v. Eschbach. 43 Md. 1. 17 Hun (X. Y.) 579. See also. Charlotte Oil &c. Co. v. "Jordan v. Meredith. 3 Ycates Hartog. 85 Fed. 150, 29 C. C. A- 56. (Pa.) 318. 2 Am. Dec. 373. '* Fatman v. Thompson, 2 Disn. " Anewalt v. Hummerl, 109 Pa. St. (Ohio) 482, 13 Ohio Dec. 295. 271. "Rogers v. Hayden, 91 Maine 24, ^Thomas v. O'llara. 1 Mill. 39 Atl. 283. Const. (S. Car.) 303. ^Farnsworth v. Hemmer, 83 Mass. "Minis v. Nelson, 43 Fed. 777. 494, 79 Am. Dec 756. "Becker v. Hall. 116 Iowa 580, 88 64 — CoNTR.A,cTS, Vol. 2 N. W. 324, 56 L. R. A. 573. § i68l CONTRACTS. lOIO with a usage binding the owner of property to pay a percentage to an architect such as the architect might figure out and at a price which he puts upon the probable cost of the building.^*' So with the custom of a smehing company to appropriate to its own use, without payment, ore shipped to it where the shipper fails to give directions within fifteen days after its receipt by the smelting com- pany." So with a custom or usage of carpet making which would give the color mixer an exclusive title as against his em- ployer to the various combinations and shades of color devised by him for use in the manufacture of carpets in his employer's mill.^^ And so with a usage in the lumber business by which the con- signor is compelled to settle for shortage on an unsworn report of the consignee transmitted to such shipper by the unsworn statement of the party ordering the lumber.^^ A local custom that insurance agents, after the termination of their agency, may cancel any of the policies issued through them, and transfer the insurance to other companies represented by them, is also unrea- sonable, and subversive of the principles governing the relation of principal and agent, and is therefore void and inadmissible in evidence.^" § 1681. Reasonableness of customs or usages— Examples of customs held not unreasonable. — The following customs and usages have been upheld as against the objection of unrea- sonableness: a custom of sawyers to retain slabs as part of the compensation for sawing f^ a river custom allowing persons em- ployed on steamboats to go free of charge f ' a usage which forbids printers to print private copies from type set up for the use of a customer;''^ a custom among whalers that a whale belongs to the ■^ Sully V. Pratt, 106 La. 601, 31 R. A- 573; Merchants' Ins. Co. v. So 161 Prince, 50 Minn. 53, 52 N. W. 131. "Consolidated Kansas City &c. Re- 36 Am. St. 626; Coleman v Chad- fining Co. V. Gonzales, 50 Tex. Civ. wick, 80 Pa. St. 81. 21 Am. Rep. 93 ; Ann 79 109 S. W 946. Tilley v. County of Cook, 103 U. S. ^'bempsey v. Dobson, 184 Pa. 588, 155, 26 L. ed. 374; United States v- 39 Atl. 493, 40 L. R. A. 550, 63 Am. Buchanan, 8 How. (U. S.) 83, 12 L. St. 809. ed. 997. "Byrd v Beall, 150 Ala. 122, 43 " Wyman v. Banton, 66 Mame 171. So 749 "'The New World v. King, 16 ''Paxton V. Courtnay, 2 Foster & How. (U. S.) 469, 14 L. ed. 1019- F 131- Anderson v. Whittaker, 97 ""Williams v. Gilman, 3 Greenl. Ala. 690, 11 So. 919; Becker v. Hall, (Maine) 276. 116 Iowa 589, 88 N. W. 324, 56 L. lOII CUSTOMS AND USAGES. § 1681 person whose lance is found in its body when it rises f* a ware- house custom which allows warehousemen to send warehouse cot- ton to the jiickery for the separation of damaged cotton from tliat which is merchantable;'"* a custom of real estate agents to receive commissions only on sales actually made and to receive nothing for services when no sales are made ;°" a custom to deliver at the port of shipment bills of lading only to the party holding the receipt of the maker or agent of the vessel;"^ a usage among tobacco dealers of warranting certain kinds of tobacco to remain sound and mer- chantable for four months after the sale;"* a custom of the river which allows the captain to insure the boat and give the notes of the owners for the premiuins ;*"' a local custom among factors to give a credit of six months on sales and to charge the amcjunt of sales immediately to the account of the principal and charge it back in case of the failure of the purchaser, providing the factor has not been negligent ;"° a custom of country banks to send valuable packages by the captain of a steamboat once a week instead of sending such papers by mail ;'^ a board of trade usage which limits the time within which the buyer of grain by sample with express warranty must object to the quality. ''- Evidence to show that an agreement in writing to serve as traveling salesman imposes upon the salesman the duty of making up samples necessary for his business is admissible in an action for breach of such con- tract. ^^ In an action on a contract under which plaintiff exca- "* Ghen v. Rich, 8 Fed. 159. by written contract to furnish to de- *" Desha v. Holland, 12 Ala. 513, fendant at his furnaces fifteen cars 46 Am. Dec. 261. of coke per day for si.x months at an "° Green v- Wright, 36 Mo. App. agreed price per ton. The coke 298. company, however, was "not to be " Blossom V. Champion, 37 Barb, held in damages for the railroad (N. Y.) 554. company's failure to supply trans- ** Fatman v. Thompson, 2 Disn. portation." It was held that the con- (Ohio) 482. 13 Ohio Dec. 295. tract was subject to a custom pre- "" Adams v. Pittsburgh Ins. Co., 95 vailing among coke producers of that Pa. St. 348, 40 /\m. Rep. 662. region, and known to both parties. "Dwight V. Whitney, 15 Pick, to distribute, in case of shortage of (Mass.) 179. cars, all the cars received propor- " Bridgeport Bank v. Dyer. 19 tionately among the orders on hand; Conn. 136. and defendant had no ground of com- " Everingham v. Lord. 19 111. App. plaint if he received his proper pro- 565. portion of cars during the period of "Brown v. Baldwin & Gleason Co., shortage. McKeefrev v. Connellsville 13 N. Y. S. 893. 37 N. Y. St. 362. A Coke Co., 56 Fed. 212. 5 C C. A. coke manufacturing company agreed 482, and see Howard v. Walker, 92 § 1 682 CONTRACTS. I0I2 vated earth and rock from defendant's lots, and which provided that he be paid on estimates made by a surveyor, it was not error to permit plaintiff to prove the custom of surveyors in making allowances to excavators on their being obliged to excavate below the depth mentioned in the contract to reach a level, where such custom was a reasonable one, and known to both parties before entering into the contract^* § 1682. Necessity that custom should be general. — It is essential to a valid usage or custom that it be general or notorious in the locality. It is not enough that the act has been frequently done. It must be shown to be so generally known and recognized that a fair presumption arises that the parties entering into their contract do so in recognition of the custom or usage in the local- ity. In other words, the usage must be so general as to furnish a presumption of knowledge thereof by both parties," although it has been held that a usage is general if generally recognized and observed by those engaged in the kind of transactions to which it applies within the region where it is claimed to ex- ist and that it is not essential that it be observed in every Tenn. 452, 21 S. W. 897, as to bank- ing customs in collecting drafts for customers. "Pucci V. Barney, Com. Pi. (N. Y.) 1893, 2 Misc. (N. Y.) 354, 51 N. Y. St. 581, 21 N. Y. S. 1099. "Florence Wagon Works v. Trin- idad Asphalt Mfg. Co., 145 Ala. 677, 40 So. 49; Byrd v. Beall, 150 Ala. 122, 43 So. 749, 124 Am. St. 64 ; West- ern R. Co. V. Hart, 160 Ala. 599, 49 So. 371 ; Syson v. Hieronymus, 127 Ala. 482, 28 So. 967; Capital Fire Ins. Co. V. Kaufman, 91 Ark. 310, 121 S. W. 289; Merchants Grocery Co. V. Ladoga Canning Co., 89 Ark. 591, 117 N. W. Itl; Southern In- diana Express Co. v. United States Express Co., 88 Fed. 659, affd. 92 Fed. 1022, 35 C. C. A. 172; Whipple V. Tucker, 123 111. App. 223; Mobile Fruit &c. Co. V. Judy, 91 111. App, 82; Swern v. Churchill, 155 111. App 505; Currie v. Syndicate, 104 111 App. 165 ; National Fire Ins. Co. v Hanberg. 215 111. 378, 74 N. E. ZV \ Star Mills v. Bailey, 140 Ky. 194, 130 S. W. 1077, 140 Am. St. 370; Ireland V. Clark (Maine), 83 Atl. 667; Hart- ley V. Richardson, 91 Maine 424, 40 Atl. 336; Duling v. Philadelphia &c. R. Co., 66 Md. 120, 6 Atl. 592; Citi- zens Bank v. Grafflin, 31 Md. 507, 1 Am. Rep. 66; Maryland &c. R. Co. v. Brown, 109 Md. 304, 71 Atl. 1005; Barrie v. Quinby, 206 Mass. 259, 92 N. E. 451; Martin v. Hall, 26 Mo- 386; Johnston v. Parrott, 92 Mo. App. 199; Eckstein v. Schleimer, 62 Misc. (N. Y.) 635, 116 N. Y. S. 7; Duguid V. Edwards, 50 Barb. (N. Y.) 288; Hatch V. Luckman, 64 Misc. (N. Y.) 508, 118 N. Y. S. 689; Fletcher v. Seekell, 1 R. I. 267; Standard Paint Co. V. San Antonio Hardware Co. (Tex. Civ. App.), 136 S. W. 1150; San Antonio Machine &c. Co. v. Josey (Tex.), 91 S. W. 598; Texas Central R. Co. v. Waldie (Tex. Civ. App.), 101 S. W. 517; Schumacher V. Trent, 18 Tex. Civ. App. 17. 44 S. W. 460; Southwest Virginia Min- eral Land Co. v. Chase, 95 Va. 50, 27 S. E. 826. ^* Traders' Ins. Co. v. Dobbins, 114 Tenn. 227, 86 S. W. 383. IOI3 CUSTOMS AND USAGES. § 1 682 individual transaction." It follows that a custom cannot be established by proof of a single transaction.'^ Neither can a habit be said to constitute usage. The habit or practice of particular persons, or of persons in a particular trade, does not in itself constitute usage. It is only when the practice has come to have the essential characteristics of usage that it can be considered as a valid usage." It is sometimes said that the custom or usage to have the force of law must be universal and that a general but not universal custom is not sufficient to dis- place ordinary legal rights.^'* But the word universal in this con- nection is intended to mean universal among persons engaged in the particular business.**** It is the holding of some of the cases that the custom or usage must be coextensive with the state in order to be general.®^ It is believed to be the better statement of the principle to say that a custom or usage is sufficiently general to satisfy the rule where it is so general and notorious in the particular locality as to charge persons entering into contracts with knowledge thereof. It is sufficient that the custom was generally observed in the region where it was claimed to exist." It should be so general to the particular trade, and so well estab- lished that any one dealing in that trade will be presumed to know it.®^ But the rules of voluntary organizations in a business, trade or occupation are neither law nor custom and cannot be permitted to have any force and effect as such, upon the community. They are valid and binding upon their members, but cannot ordinarily be made use of in the courts to affect the rights of others than the members.** "Star Mills v. Bailev. 140 Ky. 194, 215 111. 378, 74 N. E. 377; Spears v. 130 S. W. 1077, 140 Am. St. 370. Ward, 48 Ind. 541 ; Harper v. Pound, '* Sloss-Sheffield Steel &c. Co. v. 10 Ind. 32. Smith (Ala.), 40 So. 91; Currie v. "" Rastetter v. Reynolds, 160 Ind. Syndicate, 104 III. App. 165. 133, 66 N. E. 612: Wallace v. Mor- " Dodge V. Hedden, 42 Fed. 446; gan. 23 Ind. 399; Traders Ins. Co. v. Ulmer v. Farnsworth, 80 Maine 500, Dobbins. 144 Tenn. 227, 86 S. W. 15 Atl. 65; Scudder v. Bradbury, 106 383; Southwest Virginia Mineral Mass. 422: Suictz v. Kennedy, Riley Land Co. v. Chase, 95 Va. 50, 27 S. (S. Car.) 218. E. 826. **• Hartley v. Richardson, 91 Maine ** Schumacher v. Trent. 18 Te.x. 424, 40 Atl. 336; Porter v- Hills, 114 Civ. App. 17. 44 S. W. 460. Mass 106 "Swern v. Churchill, 155 111. App. ■^Maffet V. Quine, 93 Fed. 347; 505. National Fire Ins. Co. v. Hanberg, § 1683 CONTRACTS. IOI4 § 1683. Effect of occasional deviations from general cus- tom. — A custom which possesses the quality of generality is not rendered less general by the fact of occasional deviations. Where there is evidence that a certain custom is "generally" and "usually" pursued in a particular manner this is sufficient to establish a custom and it is not necessary to show that the par- ticular manner is never deviated from.^° § 1684. Necessity that custom or usage should be general — Illustrations of principle. — To make an underwriter's cus- tom valid it is essential that the custom should have been known to the underwriters as well as to the insured. The principle re- quires knowledge on the part of both parties to a contract. ^^ Tt is competent to prove a general custom among insurance com- panies to refuse a risk on a canning factory but not a private prac- tice of a single company of which the insured had no notice. ^'^ In another insurance case it was held not necessary in order to show the existence of a custom of retail hardware dealers to keep dyna- mite in stock, to prove the existence of the custom throughout the state, but it was sufficient to show that it was generally ob- serv'ed in the particular region where the existence of the custom was claimed.** Proof of a particular habit in the matter of doing a particular act is not proof of a local custom, but of a particular method or system of doing work.*^ Prices customary to be charged for work should be limited to a general custom.°° The test as to a custom, it is said, should be that prevailing among well- conducted similar establishments.^^ It is not necessary to show a great number of instances provided those shown satisfy the rule as to generality. Thus, for example, where there were only two stores in a community several miles from a railroad, it was held that the custom of these stores as to the hours of business con- stituted the custom.''^ A general usage may be established by the "Glantz V. Chicago, B. & Q. R. '"Jones v. Herrick, 141 Iowa 615, Co., 90 Nebr. 606, 134 N. W. 242. 118 N. W. 444. ** Martin v. Delaware Ins. Co., 2 "" Syson v. Hieronymus, 127 Ala. Wash. C. C. 254, Fed. Cas. No. 9161. 482, 28 So. 967. "Catlin V. Traders' Ins. Co., 83 °' Maryland &c. R. Co. v. Brown, 111. App. 40. 109 Md. 304, 71 Atl. 1005. ''Traders' Ins. Co. v. Dobbins, 114 *' Capital Fire Ins. Co. v. Kaufman, Tenn. 227, 86 S. W. 383. 91 Ark. 310, 121 S. W. 289. I0I5 CUSTOMS AND USAGES, § 1 685 testimony of a single witness."^ A port custom is not valid unless it is shown to be acted on by the whole of the part of the business community which it afTects."* In order to hold a railroad com- pany liable for medical services rendered to employes, it must be shown that the custom was so general as to raise the presumj)- tion that the services were rendered with reference to it."'^ So the custom of physicians treating each other witliout charge will not bind in a particular instance in the absence of proof that it was the general practice of persons in such business to regard the custom as established and contract with that in mind."" The fact that a railroad company in the payment of its employes fol- lows the custom of four other railroad companies does not show the existence of a general custom to pay in that particular way.®^ A right to a livery-stableman's lien is not shown by a local cus- tom in the particular city under which a livery-stable keeper has a lien for his charges on horses kept by him.°^ § 1685. Individual usages or practices. — The particular usage or practices of an individual or a small number of individ- uals or houses do not make a trade usage in the proper sense of the term, for the reason that knowledge of them cannot be pre- sumed and they lack generality. It is essential to a binding usage that the parties to the contract in which its aid is invoked must have knowledge of the existence of such usage."® Where, how- ever, the party sought to be bound by the particular usage has "Barrie v. Quinbv, 206 Mass. 259, 561; Marshall v. Perrv. 67 Maine 78; 92 N. E. 451. " Packard v. Earle, 113 Mass. 280; "The Bark Innocenta, 10 Ben. (U. Luce v. Dorchester Mut. Fire Ins. S.) 410. Co., 105 Mass. 297, 7 Am. Rep. 522; "'Mobile &c. R. Co. v. Jay, 61 Ala. Stevens v. Reeves, 9 Pick. (Mass.) 247. 198; Collins v. New England Iron ""Madden v. Blain. 66 Ga. 49. Co.. 115 Mass. 23; Johnson v. Con- " Thompson v. Minneapolis &c. R. cord R. Corp.. 46 X. H. 213. 88 .^m. Co., 35 Minn. 428, 29 N. W. 148. Dec. 199; Baker v. Drake, 66 X. Y. "'Saint V. Smith, 1 Cold. (Tenn.) 518, 23 Am. Rep. 80; Markham v. 51 Jaudon. 41 N. Y. 235: Miller v. "Scott V. Irving. 1 B. & Ad. 605; Burke, 68 N. Y. 615; Farmers' & Bartlett v. Pentland, 10 B. & C. 760; Mechanics' Bank v. Sprague. 52 N. Gabay v. Lloyd. 3 B. & C. 793; Glen- Y. 605; Hursh v. North. 40 Pa. St. dale Woolen Co. v. Protective Ins. 241 : National Bank v. Burkhardt. Co., 21 Conn. 19. 54 Am. Doc. 309n ; 100 U. S. 686, 25 L. ed. 766; Boody Deshler v Beers. 32 111. 368. 83 Am. v. Rutland &c. R. Co.. 24 Vt. 660; Dec. 274; Indianapolis. B. & W. R. Stevens v. Smith. 21 Vt. 90. But Co. V. Murray. 72 111. 128; \\'illiams knowledge may be imputed. V. Niagara Fire Ins. Co., 50 Iowa § l686 CONTRACTS. IOI6 knowledge of the usage of the other party, there may arise a presumption of acquiescence in the usage that will authorize the courts to construe the contract with reference to the particular usage/ The acquiescence in the particular practice may be shown by previous dealings between the parties based on such usage or practice." In a case of doubt as to what a person has done, it may be considered more probable that he has done what he has been in the habit of doing than that he has acted other- wise ; hence, it has been held that the particular habit or custom of an individual may be shown where there is conflicting evidence as to whether he has or has not done some act material to the issue.^ § 1686. Antiquity as element of custom or usage. — A com- mon-law custom to become a law must be so ancient that the memory of man runneth not to the contrary.* But it is not re- quired that local and trade usages should have immemorial an- tiquity of recognition back of them. If this were true the trades that have developed in modern times would have no binding usages. What is required is that the usage should be uniform, general, certain, legal, and have existed for such a length of time as to impute knowledge to those sought to be affected. An- tiquity is not important where the evidence shows a usage which exists throughout the entire trade at the time and place of the "■ Robinson v. Mollett, L. R. 7 H. L. kee &c. R. Co., 38 Iowa 100 ; Kester 802; Walker v. Jackson, 10 M. & W. v. Reynolds, 6 Hun (N. Y.) 626; 161; Stewart v. Aberdein, 4 M. & W. Gray v. Gannon, 4 Hun (N. Y.) 57, 211; Marrett v. Brackett, 60 Maine 6 Thomp. & C. (N. Y.) 245; Fabbri 524; Grinnell v. Western Union Tel. v. Phoenix Ins. Co., 55 N. Y. 129; Co., 113 Mass. 299, 18 Am. Rep. 485; Russell Mfg. Co. v. New Haven Warren Bank v. Parker, 8 Gray Steamboat Co., 50 N. Y. 121 ; Johns- (Mass.) 221; Fabbri v. Phoenix Ins. ton v. Parker Sav. Bank, 101 Pa. St. Co., 55 N. Y. 129; Block v. Colum- 597; Juniata Bldg. &c. Assn. v. Het- bian Ins. Co., 42 N. Y. 393 ; Gibson v. zel, 103 Pa. St. 507. Culver, 17 Wend. (N. Y.) 305, 31 ^Lawson on Usages and Customs, Am. Dec. 297; Renner v. Bank of § 46; Denver Tramway Co. v. Owens, Columbia, 9 Wheat. (U. S.) 581, 6 L. 20 Colo. 107, 36 Pac. 848; State v. ed 166; Blin v. Mayo, 10 Vt. 56, 33 Manchester &c. R. Co., 52 N. H. 528. Am. Dec. 175. *Currie v. Syndicate, 104 111. App. * Brown v. Kough, 53 L. T. 878; 165; Ulmer v. Farnsworth, 80 Maine Lewis V. Great Western R. Co., L. R. 500, 15 Atl. 65; Thomas v. Hooker- 3 Q. B. Div. 195 ; East Tennessee &c. Colville Steam Pump Co., 28 Mo. R. Co. v. Johnston. 75 Ala. 596, 51 App. 563; Ocean Beech Assn. v. Brm- Am. Rep. 489; Bridgeport Bank v. ley, 34 N. J. Eq. 438: Society for Es- Dyer, 19 Conn. 136 ; Green V. Milwau- tablishing Useful Manufacturers v. I0I7 CUSTOMS AND USAGES. § 1686 contract." Usage need only be old enough to be well establisned in the trade or locality; it must have existed for a length of time sufficient to acquaint the parties with the knowledge of its exist- ence at the time the contract was entered into." It must be so well established that the parties may be presumed to have con- tracted in reference to such usage.' The true test is its having existed a sufficient length of time to have become generally known, and to warrant the jury in finding that the contracts were made in reference to it.* If the usage exists as a general usage of the trade it is established by evidence to that effect, but not Haight, 1 N. J. Eq. 393; Hatch v. Luckman, 64 Misc. (X. Y.) 508. 118 N. Y. S. 689; Silliman v. Whitmer, II Pa. Super. Ct. 243 ; Jones v. Wag- ner, 66 Pa. St. 429. 5 Am. Rep. 385; Harris v. Carson, 7 Leigh (Va.) 632, 30 Am. Dec. 510. "Taylor v. Briggs, 2 C. & P. 525; Noble V. Kennoway, 2 Doug. 510; Smith V. Rice, 56 Ala. 417; Cooper v. Berry, 21 Ga. 526, 68 Am. Dec. 468; Dorchester &c. Bank v. New England Bank, 55 Mass. 177; Matheson v. Equitable Ins. Co., 118 Mass. 209, 19 Am. Rep. 441 ; Walker v. Barron, 6 Gil. (Minn.) 353; Barton v. McKel- way, 2 N. J. L. 165; Wall v. East River Ins. Co., 3 Ducr. (X. Y.) 264; Adams v. Pittsburg Ins. Co., 95 Pa. St. 348, 40 Am. Rep. 662. •Edelstein v. Schuler. 87 L. T. 204; Buford V. Tucker, 44 Ala. 89; Ward Furniture Mfg. Co. v. Isbell. 81 Ark. 549, 99 S. W. 845; Merchants Groc. Co. V. Ladoga Canning Co., 89 Ark. 591, 117 S. W. 767: Beach v. Travel- lers' Ins. Co., IZ Conn. 118, 46 Atl. 867; Crosby v. Fitch, 12 Conn. 410. 31 Am. Dec. 745 ; Townscnd v. Whitbv, 5 Har. (Del.) 55; Mott v. Hall, 41 Ga. 117; American Ins. Co. v. France, III 111. App. 310; Swern v. Church- ill, 155 111. App. 505; People v. Chi- cago, N. W. R. Co.. 57 111.436; Rastet- ter V. Reynolds, 160 Ind. 133. 66 N. E. 612; Morning Star v. Cunningham. 110 Ind. 328. 11 N. E. 593, 59 Am. Rep. 211 ; Cox v. O'Reiley, 4 Ind. 368, 58 Am. Dec. dZZ; Rafert v. Scrog- gins. 40 Ind. 195 ; \\arren v. Regis- tration Board, 11 Mich. 398, 40 N. W. 553, 2 L. R. A. 203n ; Walker v. Bar- ron, 6 Gil. (Minn.) 353; Knowles v. Dow, 22 X. H. 387, 55 .-\m. Dec. 163; Lockney v. Police Beneficiary Assn., 217 Pa. 568, 66 Atl. 844. ' Templeman v. Biddle, 2 Har. (Del.) 75; Blakemore v. Heyman, 6 Fed. 581 ; Turner v. Dawson, 5U 111. 85; Cahn v. Michigan Cent. R. Co., 71 111. 96; Lyon v. Culbertson, 83 111. Zl, 25 Am. Rep. 349; Oldershaw v. Knoles, 4 111. App. 63; Ledoux v. Ar- mor, 4 Rob. (La.) 381; Walker v. Barron. 6 Gil. (Minn.) 353; Phillips V. Scott, 43 Mo. 86, 97 Am. Dec. 369 ; Cole V. Skrainka, 11 Mo. App. 427; Knowles v. Dow, 22 X. H. 387. 55 Am. Dec. 163; Sipperly v. Stewart, 50 Barb. (X. Y.) 62: Minnesota Cent. R. Co, V. Morgan, 52 Barb. (X. Y.) 217; Adams v. Pittsburgh Ins. Co., 95 Pa. St. 348, 40 Am. Rep. 662. "Crosby v. Fitch, 12 Conn. 410, 31 Am. Dec. 745; Beach v. Traveller's Ins. Co., li Conn. 118, 46 Atl. 867; Goette V. Lane, 111 Ga. 400, 36 S. E. 758; Powell v. Bradlee, 9 Gill & J. (Md.) 220; Burroughs v. Langley, 10 Md. 248; Johnson v. Parrott. 92 Mo. App. 199; Smith v. Wright. 1 Caines (X. Y.) 43. 2 Am. Dec. 162; Treadwell v. Union Insurance Co.. 6 Cow. (X. Y.) 270; Bliven v. Xew England Screw Co., 23 How. (U. S.) 420, 16 L. ed. 510. § 1687 CONTRACTS. /018 othenvise.' The evidence must clearly establish a fixed habit or custom/'* § 1687. Antiquity — Illustration of principle. — In the fol- lowing cases the usage has been held to lack the element of suf- ficient duration: a custom to pay debts in confederate money in force for only four years ;^^ a usage existing for but five years which authorizes the masters of steamboats to give bills of lading containing an exemption of losses by fire;^' a port regulation which had prevailed for less than six years ;^^ a custom in New Jersey that the widow of a proprietor of lands sold by him in severalty under the council of proprietors was not entitled to dower where the custom was not shown to have existed for more than fifty years.^* But a regular usage, uncontradicted for twenty years, has been held sufficient to warrant a jury in find- ing the existence of an immemorial custom/^ In another case the usage was held of sufficient antiquity where it had existed for over fifty years/^ A custom of thirty years' standing for clerks of steamboats to execute notes for necessary repairs and to con- tract for such repairs on the direction of the captain has been held of sufficient antiquity to create a valid custom." An Eng- lish case holds valid a custom enjoyed from time immemorial and continued without interruption, for all the fishermen inhabi- tants of a parish, to dry their nets on a particular close adjoining the sea which belonged to a private owner. The custom was for the benefit of the public and was held not unreasonable because it happened to be prejudicial to the interests of a private individual. The variation in the user, arising from time to time by reason nVood V. Wood, 1 C. & P. 59; Wash. C. C 254, Fed. Cas. No. 9161. Howard v. Great Western Ins. Co., " Nocona Nat. Bank v. Bolton 109 Mass. 384; Porter v. Hills, 114 (Tex. Civ. App.), 143 S. W. 242. Mass. 106; Folsom v. Merchants' " Buford v. Tucker, 44 Ala. 89. Mut. Marine Ins. Co., 38 Maine 414; ''Cooper v. Berry, 21 Ga. 526, 68 Chenery v. Goodrich, 106 Mass. 566; Am. Dec. 468. Martin v. Hall, 26 Mo. 386; South- *' Clark v. Gifford, 7 La. 524, 26 western Freight &c. Co. v. Stanard, Am. Dec. 511. 44 Mo. 71, 100 Am. Dec. 255; Dickin- "Ocean Beach Assn. v. Brmley, 34 son V. Poughkeepsie, 75 N. Y. 65 ; Ad- N. J. Eq. 438. ams V. Pittsburgh Ins. Co., 95 Pa. St. " Knowles v. Dow, 22 N. H. 387, 55 348, 40 Am. Rep. 662; Cope v. Dodd, Am. Dec. 163. 13 Pa St. 33; United States v. Bu- "Wood v. Watson, 53 Mame 300. chanan, 8 How. (U. S.) 83, 12 L. ed. " Mott v. Hall, 41 Ga. 117. 997; Martin v. Delaware Ins. Co., 2 IOI9 CUSTOMS AND USAGES. § 1688 of the varying exigencies of the fishing industry and the require- ments of improved nets, did not render the custom void for un- certainty, notwithstanding that such variation entailed longer periods for drying and an increase in the number and sorts of nets dried. The custom was also held to extend over the additional area added to the original close by accretion owing to the reces- sion of the sea." § 1688. Legality of custom or usage. — The law does not recognize the validity of a custom or usage which violates its own rules. In otlier words, the custom or usage must be legal and cannot be sustained where it violates public policy,"* the established principles of the common law"" or the maritime "Mercer v. Denne, 91 Law. T. 513. "Lehman v. Marshall, 47 Ala. 362; Chilberg v. Lyng, 128 Fed. 899, 63 C. C. A. 451 ; Marsland v. The Yosemite, 18 Fed. 331; The Hound, Fed. Cas. No. 6731 ; Van Camp Packing Co. v. Hartman, 126 Ind. 177, 25 X. E. 901 ; Bryant v. Commonwealth Ins. Co., 23 Pick. (Mass.) 131; Mussey v. Eagle Bank, 9 Mete. (Mass.) 306; Murphy V. Callev. 1 Allen (Mass.) 107; Day V. Flolmes, 103 Mass. 306; Wadley v. Davis, 63 Barb. (N. Y.) 500; Kedian V. Hovt, 23 Hun ( N. Y.) 145; Rapp V. Palmer, 3 Watts. (Pa.) 178; Brown v. Arrott, 6 Watts & S. (Pa.) 402; Rumfield v. Neal (Tex.), 46 S. W. 262; Lamb v. Parkman, 1 Spr. (U. S.) 343, Fed. Cas. No. 8020. ^National Safe Deposit &c. Co. v. Hibbs, 32 App. D. C. 459; Petty v. Gayle, 25 Ala. 472; Wilson v. Jerni- gan, 57 Fla. 277, 49 So. 44; Miller v. Moore, 83 Ga. 684, 10 S. E. 360. 6 L. R. A. 374. 20 Am. St. 329 ; Hatcher v. Comer, 73 Ga. 418; Entwhistle v. Henke. 113 111. App. 572, affd. 211 111. 273, 71 N. E. 990. 103 Am. St. 196; Western LTnion Cold Storage Co. V. Winona Produce Co., 94 111. App. 618, revd. 197 111. 457. 64 N. E. 496; McCurdv v. .Maska & Chicago Commercial Co., 102 111. App. 120; Webster v. Granger, 78 111. 230; :Marc V. Kupfer. 34 111. 286; Marine Rank V. Chandler, 17 Peck (111.) 525. 81 Am. Dec. 249; McCurdy v. Alaska & Chicago Commercial Co.. 102 111. .\pp. 120; Cox V. O'Rilcy, 4 Ind. 368, 58 Am. Dec. 633 : Bauer v. Samson Lodge Xo. 32, K. of P., 102 Ind. 262. 1 X. E. 571; Williams v. Robb. 104 Mich. 242, 62 X. W. 352; Grant v. Robb, 71 Kans. 846. 80 Pac. 585; Clark V. Allaman. 71 Kans. 206. 80 Pac. 571, 70 L. R. A. 971 ; Carr v. Cal- laghan. 3 Litt. (Kv. ) 365; Morrison v. Hart, 2 Bibb. (Ky!)4,4 Am. Dec. 663 ; Gallatin v. Bradford. 1 Bibb. (Ky.) 209; United States Bank v. Fleckner, 8 Mart. (O. S.) (La.) 309. 13 Am. Dec. 287; Foley v. Bell. 6 La. Ann. 760; Raisin v. Clark. 41 Md.^ 158, 20 .\m. Rep. 66; Pickering v. Weld. 159 Mass. 522, 34 X. E. 1081 : Haskins v. Warren, 115 Mass. 514; Dickinson v. Gay, 7 Allen (Mass.) 29. 83 Am. Dec. 656; Lee v. Kilburn, 3 Gray (Mass.) 594; Cabot Bank v. Russell, 4 Grav (Mass.) 167; Chicopee Bank v. Eag- er, 9 Mete. (Mass.) 583: Strong v. Bliss, 6 Mete. (Mass.) 393: McFar- lin V. Essex Co., 10 Cush. (Mass.) 304; Commonwealth v. Chapin, 5 Pick. (Mass.) 199. 16 Am. Dec. 386; Waters v. Lillev, 4 Pick. (Mass.) 145, 16 Am. Dec. 333; Shattuck v. Woods, 1 Pick. (Mass.) 171; Eager V. Atlas Ins. Co.. 14 Pick. (Mass.) 141. 25 Am. Dec. 363 ; Homer v. Dorr, 10 Mass. 26 ; Commonwealth v. Coop- er, 130 Mass. 285 ; Richardson v. Copeland, 6 Gray (Mass.) 536. 66 .\m. Dec. 424; I^Iechanics' Bank v. Merchants' Rank. 6 Mete. (Mass.") 13: Walker v. Osgood. Q8 Mass. 348. 93 Am. Dec. 168: Boardman v. Spooner, 13 Allen (Mass.) 353, 90 § 1 688 CONTRACTS. 1020 law,-^ or plain statutory" or constitutional provisions.^^ "The rule Am. Dec. 196; Koppitz-Melchers Brewing Co. v. Behm, 130 Mich. 649. 90 N. W. 676; Healy v. Mann- heimer. 74 Minn. 240, 76 N. W. 1126; Dartt V. Sonnesj-n, 86 Minn. 55, 90 X. W. 115; Merchants' Ins. Co. v. Prince. 50 Minn. 53. 52 N. W. 131, 36 Am. St. 626; Johnson v. Gilfillan, 8 Gil. (Minn.) 352; Hurt v. Jones, 105 Mo. App. 106, 79 S. W. 486; Fisher v. Steward, Smith (N. H.) 60; Beach V. Morgan, 67 N. H. 529, 68 Am. St. 692, 41 Atl. 349; Ackerman v. Shelp, 8 N. J. L. 125; Groat v. Gile, 51 N. Y. 431 ; Markham v. Jaudon, 41 N. Y. 235, revg. 2 Abb. Prac. (N. S.) (N. Y.) 286, 49 Barb. (N. Y.) 462; Min- nesota Cent. R. Co. v. Morgan, 52 Barb. (N. Y.) 217; Wheeler v. New- bould, 16 N. Y. 392; Smith v. Lynes, 3 Sandf. (N. Y.) 203; Dykers v. Al- len, 7 Hill (N. Y.) 497. 42 Am. Dec. 87; Miller v. Stern, 25 Misc. (N. Y.) 690, 55 N. Y. S. 765; Thomas v. Guarantee Title &c. Co., 81 Ohio St. 432. 91 N. E. 183, 26 L. R. A. (N. S.) 1210; Indianapolis Rolling-Mill Co. V. Addy, 5 Ohio Dec. (Reprint) 588, 6 Am. Law Rec. 764 ; Silliman v. Whitmer, 196 Pa. St. 363, 46 Atl. 489; Newbold v. Wright, 4 Rawle (Pa.) 195; Blythe v. Richards, 10 Serg. & R. (Pa.) 261, 13 Am. Dec. 672; Wa- ters-Pierce Oil Co. V. Davis, 24 Tex. Civ. App. 508, 60 S. W. 453; Ollen- heimer v. Folev, 42 Tex. Civ. App. 252, 95 S. W. 688; Hudson v. Hen- derson, 1 White & W. Civ. Cas. Ct. App. (Tex.), § 353; Vermilye v. Ad- ams Exp. Co., 21 Wall. (U. S.) 138, 22 L. ed. 609; Thompson v. Riggs, 5 Wall (U. S.) 663, 18 L. ed. 704; Reese v. Bates, 94 Va. 321, 26 S. E. 865 ; Governor v. Withers, 5 Grat. (Va.) 24, 50 Am. Dec. 95; Coleman V. McMurdo, 5 Rand. (Va.) 51; Westfall V. Singleton, 1 Wash. 227. ^Vans V. Higginson, 10 Mass. 29; Eager v. Atlas Ins. Co., 14 Pick. (Mass.) 141, 25 Am. Dec. 363; Reed V. Richardson, 98 Mass. 216, 93 Am. Dec. 155; Warren v. Franklin Ins. Co., 104 Mass. 518; Frith v. Barker, 2 Johns. (N. Y.) 327; Stillman v. Kurd, 10 Tex. 109. "Hyde v. United States, 35 App. D. C. 451; Jones v. McLean, 18 Ark. 456; Williamson v. Richardson, Fed. Cas. No. 17754; Fleming v. King, 100 Ga. 449, 28 S. E. 239; Marine Bank V. Chandler, 17 Peck. (111.) 525, 81 Am. Dec. 249; Healy Ice Mach. Co. V. Clow, 148 111. App. 421 ; Harrod v. Lafarge, 12 Mart. (O. S.) (La.) 21; D'Aquin v. Coiron, 3 La. 387; Thom- son V. Albert, 15 Md. 268; Shattuck v. Woods, 1 Pick. (Mass.) 171; Per- kins V. Franklin Bank, 21 Pick. (Mass.) 483; Tremble v. Crowell, 17 Mich. 493; Cowgill v. Jones, 99 Mo. App. 390, 11 S. W. 995 ; Penn v. Old- hauber, 24 Mont. 287, 61 Pac. 649; Ettien v. Drum, 32 Mont. 311, 80 Pac. 369; Scribner v. Hollis, 48 N. H. 30; Ocean Beach Assn. v. Brinley, 7 Stew. (N. T. Eq.) 438; Dunham v. Dey, 13 Johns. (N. Y.) 40, affd. 16 Johns. (N. Y.) 367, 8 Am. Dec. 323; Dunham v. Gould, 16 Johns. (N. Y.) 367, 8 Am. Dec. 323 ; New York Fire- men Ins. Co. V. Ely, 2 Cow. (N. Y.) 678; Bank of Utica v. Nager, 2 Cow. (N. Y.) 712, afifd. 8 Cow. (N. Y.) 398; Bank of Utica v. Smalley, 2 Cow. (N. Y.) 770, 14 Am. Dec. 526, affd. 8 Cow. (N. Y,) 398; Wyatt v. Wanamaker, 58 Misc. (N. Y.) 429, 110 N. Y. S. 900; Gore v, Lewis, 109 N. Car. 539, 13 S. E. 909; Patapsco Guano Co. v. Magee, 86 N. Car. 350; Niagara County Bank v. Baker, 15 Ohio St. 68; First Nat. Bank v. Eld- ridge, 26 Okla. 538. 109 Pac. 62 ; Port- land Fish Co. V. Benson, 56 Ore. 147, 108 Pac. 122; Godcharles v. Wige- man, 113 Pa. St. 431, 6 Atl. 354; Greene v. Tyler, 39 Pa. St. 361 ; Com- monwealth V. Ellis, 46 Pa. Super. Ct. 72; Smetz v. Kennedy, Riley (S. Car.) 218; Mays v. Jennings, 4 Humph. (Tenn.) 102; Cooper v. San- ford, 4 Yerg. (Tenn.) 452, 26 Am. Dec. 239; Mitchel v. United States, 9 Pet. (U. S.) 711, 9 L. ed. 283; Walk- er V. Western Transp. Co., 3 Wall. (U. S.) 150, 18 L. ed. 172; Winter v. United States, Hempst. (U. S.) 344, Fed. Cas. No. 17895; United States V. The Forrester, Newb. (U. S.) 81, Fed. Cas. No. 15132; Delaplane v. Crenshaw, 15 Gratt. (Va.) 457. ^' Manufacturers Land &c. Co. v. Camden (N. J.), 11 Atl. 11. 1 02 1 CUSTOMS AND USAGES. § 1689 admitting evidence of a usage is always subject to this limitation, however, that proof will never be allowed to establish a usage which is repugnant to, or which controls, displaces, or alters, the legal effect of any of the express terms of a contract. A usage can- not be appealed to for the purpose of eliminating terms from a con- tract, and ingrafting upon it others different from or inconsistent with those displaced ; nor will proof be heard of a usage that is contrary to public policy, or good morals, or to the common or statutory law.""* And even "a universal usage which is not ac- cording to law cannot be set up to control the law."" It is to be noted in this connection, however, that many express rules of law may be waived by the parties to a contract and there are cases which hold that where this may be done the waiver may be by usage as well as express contract.*® § 1689. Legality of customs or usages — Customs which contravene public policy. — A usage, however widely recog- nized, is invalid which violates public policy and the tendency of which is to encourage fraud and dishonesty.^^ Thus a custom in the Alaskan mining regions whereby brokers in claims employ subagents whose commissions are paid out of the purchase-price, usually by an increase in the price fixed by the owner, was de- clared illegal as directly leading to fraud and questionable prac- tices."* So a custom is void which allows mining lessees to de- stroy the surface support."'* So with a river usage allowing '"Van Camp Packing Co. v. Hart- Lowcl! (U. S.) 110, Fed. Cas. Xo. man. 126 Ind 177. 25 X. E. 901. 13696. = Meyer v. Dresser, 16 C B. (N. =^ Marsland v. The Yosemitc. 18 S.) 646; Columbus &c. Coal Co. v. Fed. 331: Van Camp Packing Co. v. Tucker. 48 Ohio St. 41, 26 X. E. 633, Hartman, 126 Ind. 177, 25 X. E. 901 ; 12 L. R. A. 577, 29 Am. St. 528. See Brvant v. Commonweahh Ins. Co., 6 also. Meyer v. Dresser, 16 C. B. (N. Pi6k. (Mass.) 131: Murphy v. Calley, S.) 646: Inglebright V. Hammond, 19 83 Mass. 107; Southwest Missouri R. Ohio 2)2)7, 53 \m. Dec. 430; Thomas Co. v. Morning Hour Min. Co., 138 V. Guarantee Title &c. Co., 81 Ohio Mo. App. 129. 119 S. W. 982: Seagar St. 432. 91 N. E. 183, 26 L. R. \. (N. v. Sligerland. 3 Caines (X. Y.) 219; S.) 1210; Stoever v. Whitman's Les- Hollis v. Wells, 3 Clark (Pa.) 169 see, 6 Bin. (Pa.) 416. (bundling) : Rumfield v. Xeal (Te.x), =«Grinman v. Walker, 9 Iowa 426: 46 S. W. 262. Williams v. Oilman, 3 Greenl. =" Chilberg v. Lvng, 128 Fed. 899. 63 (Maine) 276: Kleekamp v. Meyer. 5 C. C. A. 451. IMo. App. 444; .Xdams v. Pittsburg ^Southwest Missouri R. Co. v. Ins. Co.. 95 Pa. St. 348. 40 Am. Rep. Morning Hour Min. Co., 138 Mo. 662; Dabnev v. Campbell, o Ilumpli App. 129, 119 S. W. 982. (Tenn.) 680; Swift v. Gifford, 2 § 1690 CONTRACTS. I022 Steamboat men to sell goods entrusted to them for other purposes than those indicated by the contract.^" So with a usage among brokers to buy stock themselves at thirty days and deliver it to their customers at the end of sixty days at an increased price and interest, besides the usual commissions.^^ So with a custom among the banks of a certain city to certify that checks drawn by their customers are "good" when such customers have no money on deposit out of which to pay such checks.^^ So with a custom whereby a person employed to cut staves from bolts belonging to another takes and appropriates to his own use not only the clippings and corner pieces but the culls without the consent of the owner.^^ And so a custom has been held against public policy as tending to encourage dishonesty which permitted property to pass by mere delivery of a warehouse receipt without indorse- ment.^* § 1690. Legality of customs or usages — Contravention of established legal principles. — A custom or usage will not be permitted to prevail which contravenes well-established legal rules or principles established for the protection of the rights of par- ties.^^ The reason for the rule is strong where the rule of law is established not merely to define the rights of parties under par- ticular circumstances but to protect these rights by enforcing '"Rapp V. Palmer, 3 Watts (Pa.) 54 So. 920; Commonwealth v. Coop- 178 er, 130 Mass. 285 ; Walker v. Osgood, =' Commonwealth v. Cooper, 130 98 Mass. 348, 93 Am. Dec. 168; Dartt Mass. 285. v. Sonnesyn, 86 Minn. 55, 90 N. W. "Mussev V. Eagle Bank, 9 Mete. 115; Johnson v. Gilfillan, 8 Gil. (Mass) 306 (Minn.) 352; Merchants' Ins. Co. v. "Wadley v. Davis, 63 Barb. (N. Prince, 50 Minn. 53, 52 N. W. 131, 36 Y ) 500 Am. St. 626 ; Beach v. Morgan, 67 N. '" Lehman v. Marshall, 47 Ala. 362. H. 529, 41 Atl. 349, 68 Am. St. 692 ; "Wilson V. Jernigan, 57 Fla. 277, Ackerman v. Shelp, 8 N. J. L. 125; 49 So 44; Miller v. Moore, 83 Ga. Markham v. Jaudon, 41 N. Y. 235; 684, 10 S. E. 360, 6 L. R. A. 374, 20 Sawyer v. Dean, 114 N. Y. 469, 21 N. Am St. 329; Hatcher v. Comer, 7i E. 1012; Thomas v. Guarantee Title Ga. 418; Geiselman v. Roddinghaus, &c. Co., 81 Ohio St. 432, 91 N. E. 158 111. App. 316; Entwhistle v. 183, 26 L, R. A (N. S.) 1210; Silh- Ilenke, 113 111. App. 572, affd. 211 111. man v. Whit.mer, 196 Pa. St. 363. 46 273. 71 N E. 990, 103 Am. St. 196; Atl. 489; Ollenheimer v. Foley, 42 Webster v. Granger. 78 111. 230: Cox Tex. Civ. App. 252, 95 S. W. 688; V. O'Riley. 4 Ind. 368. 58 Am. Dec. Thompson v. Riggs, 5 Wall. (U. S.) 633; Clark v. Allaman, 71 Kans. 206, 663, 18 L. ed. 704; Reese v. Bates, 94 80 Pac. 571; Gallatin v. Bradford, 1 Va. 321, 26 S. E. 865; Sauer v. Stem- Bibb. (Kv.) 209; Clement v. South bauer, 14 Wis. 70. Atlantic S. S. Line Co.. 128 La. 399, I023 CUSTOMS AND USAGES. § 169I good faith and fair dealing between them."'"' "A usage in con- flict with plain, well-established rules of law, is not admissible in evidence in any case, and must be disregarded. We may be per- mitted to add the remark that were the courts, by their decisions, to encourage the growth of these local usages, originating gen- erally in lax business practice or mistaken ideas of law, they might become as great an evil, a source of as much want of uni- formity in the law, as was the local legislation of the past — an evil supposed to be eradicated from our political system by the new constitution."^^ "A custom, to be valid, must be as old as the common law; it must be immemorial. And if the particular custom be proved to be immemorial it necessarily excludes the general custom, or common law ; for two opposite and incon- sistent customs cannot have immemorially existed, in the same place, and as to the same thing. But the case is widely different in this country. Our ancestors brought with them the common law or general customs of England, but none of the particu- lar customs. The common law became the law of our whole state, and gave the rule to every part of jt. * * * Any practice or usage, however general, introduced into this country since its settlement, and in opposition to the common law, can have no force on the ground of custom — because it lacks the es- sential ingredient of a good custom — it is not immemorial. It is clear that it could not have existed any time, even as a recent custom, until after the settlement of the country, and after the common law attached to every part of it. And nobody will con- tend that a recent usage or practice, however general, will change the common law."^* § 1691. Legality of customs or usages — Contraventions of legal principles — Illustrations. — Under this principle, the fol- lowing customs and usages, among others, have been declared invalid by the courts : a usage that a factor may pledge the goods of his principal;^® a custom of brokers to collect commissions "Merchants Ins. Co. v. Prince, 50 ** Harris v. Carson. 7 Leigh. (Va.) Minn. 53, 52 N. W. 131. 36 .Am. St. 632, 30 .Am. Dec. 510. 626 '•Xewbold v. Wright, 4 Rawle " Cox V. O'Riley, 4 Ind. 368, 58 .Am. (Pa.) 195. Dec. 633. § 169I CONTRACTS. IO24 from both parties;^" the payment of bank obligations in depreci- ated currency;*^ a usage allowing the master of a vessel to sell the cargo without necessity ;*^ a custom to take fish from a navi- gable stream on the premises of another person;*^ a custom per- mitting insurance agents, after the termination of their agency, to cancel policies issued through them and transfer the insur- ance to other companies represented by them ;** the charging of interest where the statute provides none shall be charged;*^ a custom to cut timber on lands without first obtaining permission of the owner;*" a custom which would relieve a purchaser from the obligations imposed on him by the doctrine caveat emptor;*^ a usage authorizing a landlord to re-enter for a forfeiture in a manner different from that provided by law ;*^ a custom author- izing another without authority from the owner of lands and without his consent or knowledge to sell such lands on the ordi- nary terms and bind the owner ;*^ a general custom between man- ufacturers and purchasers of engines and boilers, by which such property when attached to the realty is still to be regarded as personal property ;°° a usage of brokers that one on receipt of an order to buy stock on a margin assumes the contract himself instead of making it with a third person ;^^ a local custom to sell notes and drafts pledged as security at private sale at the best price obtainable after demand of payment and notes f^ a custom that when a seller of goods receives the consignee's note without "Raisin v. Clark. 41 Md. 158. 20 "Henry v. Risk, 1 Dall. (U. S.) Am. Rep. 66; Walker v. Osgood, 98 265, 1 L. ed. 130. Mass. 348, 93 Am. Dec. 168; Dartt v. "Wilson v. Jernigan, 57 Fla. 277, Sonnesyn. 86 Minn. 55, 90 N. W. 49 So. 44. 115; Kedian v. Hoyt, 33 Hun (N. " Dickinson v. Gay, 7 Allen (Mass.) Y.) 145. 29, 83 Am. Dec. 656; Thomas v. Guar- ^'Marc V. Kupfer, 34 III. 286; Ma- antee Title &c. Co., 84 Ohio St. 432, fine Bank v. Chandler, 27 111. 525, 81 91 N. E. 183, 26 L. R. A. (N. S.) Am. Dec. 249. 1210; Barnard v- Kellogg, 10 Wall. '' Bryant v. Commonwealth Ins. (U. S.) 383, 19 L. ed. 987. Co., 6 Pick. (Mass.) 131. ** Stoever v. Whitman's Lessee, 6 "Waters v. Lilley, 4 Pick. (Mass-) Bin. (Wis.) 416. 145, 16 Am. Dec. 333; Common- ^" Carr v. Callaghan, 13 Ky. (3 wealth V. Chapin, 5 Pick. (Mass.) Litt.) 365. 199, 16 Am. Dec. 386; McFarlin v. "^ Richardson v. Copeland, 6 Gray Essex County, 10 Cush. (Mass.) 304; (Mass.) 536, 66 Am. Dec 424. Beach v. Morgan, 67 N. H. 529, 41 "Commonwealth v. Cooper, 130 Atl. 349, 68 Am. St. 692. Mass. 285. ** Merchants Ins. Co. v. Prince, 50 "'Wheeler v. Newbold, 16 N. Y. Minn. 53, 52 N. W. 131, 36 Am. St. 392. 626. 1025 CUSTOMS AND USAGES. § 1 692 the buyer's indorsement, the latter is discharged and the maker of the note alone is responsible ;" a custom of trade that an im- porter's order for goods to be manufactured abroad is not sub- ject to countermand ;'* a custom that a party having a claim for money due on a contract may not pursue the usual remedies pro- vided for its enforcement ;" a custom that in a sale of goods by sample the buyer has twenty-four hours in which to examine and reject the goods as inferior to the sample.'" The principle is the same where the usage violates a well-established principle of maritime law.'"' The fact that a usage is universally followed in a locality will not make it valid if it is in violation of law.''* But it has been held that the general custom existing in the District of Columbia whereby holders of stock certificates assigned in blank are regarded by persons dealing therein as the owners for the purpose of selling and pledging them does not violate this principle, as the custom rather follows established law than sets up a new and independent rule governing such transactions." So it has been held that evidence of a custom to sell lumber in a certain town without manufacturing it may be received unless it appears that the lumber in question is such as the law requires to be manufactured to sell."^*^ § 1692. Legality of customs or usages — Contravention of statutes. — A custom or usage is without validity when it is in conflict with an express statutory provision. One is not to be deprived of his statutory rights by local customs, unless he ex- pressly so agrees." "A custom sometimes makes the law, but a "Prescott V. Hubbel, 1 McCord 8 Mart. (O. S.) (La.) 309. 13 Am. (S. Car.) 94. Dec. 287. . "Ollenheimer v. Folev. 42 Tex. "' National Safe Deposit &c. Co. v. Civ. App. 2.52. 95 S. W. 688. Hibbs. 32 App. D. C. 450. "Bauer v. Samson Lodge No. 32 '"Lee v. Kilburn, 3 Gray (Mass.) K. of P., 102 Ind. 262. 1 N. E. 571. 594. "Webster v. Granger. 78 111. 230. "Jones v. McLean, 18 .-\rk. 456; "Vans V. Higcinson. 10 Mass. 29; Deadwyler v. Karow, 131 Ga. 227. 62 Eager v. Atlas Ins. Co., 14 Pick. S. E. 172. 19 L. R. A. (N. S^) 197n; (M^ass) 141 25 Am. Dec. 363; Reed Fleming v. King. 100 Ga. 440. 28 S. V Richardson, Og Mass. 216. 93 Am. E. 239; Marine Bank v. Chandler. Dec 1S5- Warren v. Franklin Ins. 27 111. 525. 81 Am. Dec. 249: Healy Co 104 Mass 518; Frith v. Barker, Ice Mach. Co. v. Clow. 148 111. .Xpp. 2 fohns (N Y) 327; Stillman v. 421; Clement v. South .Atlantic S. S. Kurd 10 Tex. 109. T.ine Co.. 128 La. 300. 54 So. 920; *^ United States Bank v. Fleckner, Thomson v. .-Mbert, 15 Md. 268; Per- 65 — Contracts, Vol. 2 § 1692 CONTRACTS. 1026 custom in direct conflict with positive law has no such effect. It is nugatory and binds no one."'^' It is the first requisite of a good custom — as opposed to a usage, — that it shall have been used so long that the memory of man runneth not to the contrary. It follows that no custom can prevail against a legislative act, since the act itself constitutes proof of the time when such custom did not exist. °^ Under the main principle, a local usage as to interest must yield to the usury laws of the state.*^* So a local custom to pay duties in depreciated currency is without force where an express statute forbids the practice. "No custom can compel a creditor, in the absence of a special agreement, to receive any- thing but the constitutional currency of the country. The fact that the business men of the particular place have been in the habit of receiving depreciated paper money in the payment of their de- mands, by no means proves that all creditors in that locality have agreed to receive the same, much less a person residing hundreds of miles distant. To have such an effect, a special agreement must kins V. Franklin Bank, 21 Pick. (Mass.) 483; Jones v. Hoey, 128 :vlass. 585; Cowsjill v. Jones, 99 Mo. App. 390. IZ S. W. 995; Ettien v. Drum, 32 Mont. 311, 80 Pac. 369; Commercial Bank v. Varnum, 3 Lans. (N. Y.) 86, revd. 49 N. Y. 269; Wyatt v. Wanamaker, 58 Misc. (N. Y.) 429, 110 N. Y. S. 900; Patapsco Guano Co. v. Magee, 86 N. Car. 350; Gore v. Lewis. 109 N. Car. 539, 13 S. E. 909; Niagara County Bank v. Baker. 15 Ohio St. 68; First Nat. Bank v. Eldridge, 26 Okla. 538, 109 Pac. 62; Portland Fish Co. v. Benson, 56 Ore- 147, 108 Pac. 122; Pennsylvania Coal Co. v. Sanderson, 94 Pa.' St. 302, 39 Am. Rep. 785 ; Com- monwealth V. Ellis, 46 Pa. Super. Ct. 72, 79; Cooper v. Sandford. 4 Yerg. (Tenn.) 452, 26 Am. Dec. 239; Mays V. Jennings, 4 Humph. (Tenn.) 102; Mitchell v. United States, 34 U. S. 711. 9 L. ed. 283; Walker v. West- ern Transp. Co., 3 Wall. (U. S.) 150. 18 L. ed. 172; Delaplane v. Cren- shaw. 15 Gratt. (Va.) 457. ^'Cowgill V. Tones, 99 Mo. App. 390. IZ S. W. 995. ^ Ocean Beach Assn. v. Brinley. 34 N. J. Eq. 438; Pennsylvania Coal Co. V. Sanderson, 94 Pa. St. 302, 39 Am. Rep. 785. "Customs similar to those of gavelkind and borough-English, cannot exist here, for they cannot have the antiquity necessary to their validity. To be recognized by the courts, they must have existed im- memorially, that is, before the be- ginning of the reign of Richard the First. This country was not dis- covered until more than three hun- dred years after the commencement of that sovereign's reign, and conse- quently no custom can have existed here for the period required to make it legal." Ocean Beach Assn v. Brinley, 34 N. J. Eq. 438. "Jones V. McLean. 18 Ark. 456; Harrod v. Lafarge, 12 Mart. (O. S.) (La.) 21 ; D'Aquin v. Coiron, 3 La. 387; Cowgill v. Jones, 99 Mo. App. 390, 1Z S. W. 995; Dunham v. Dey, 13 Johns. (N. Y.) 40, followed in 16 Johns. (N. Y.) 367. 8 Am. Dec. 323; Dunham v. Gould. 16 Johns. (N. Y.) 367. 8 Am. Dec. Z2Z; New York Firemen's Ins. Co. v. Elv. 2 Cow. (N. Y.) 678; Gore v. Lewis. 109 N. Car. 539. 13 S. E. 909; Niagara Countv Bank v. Baker, 15 Ohio St. 68; Greene v. Tyler, 39 Pa. St. 361; I027 CUSTOMS AND USAGES. § 1693 be proved. "°' So it has been held that a local custom is invalid which makes ship owners liable for the neglij,'ence of their agents in cases in which they are exempt by statute."" So usages among merchants to give preferences to accommodation loans cannot be enforced where opposed to the general insolvent law of a state." So with a custom authorizing a notary to act contrary to his statutory duty."^ So with a custom of giving 2,268 pounds for a ton of coal where the law specially provides that 2,000 pounds shall make a ton."" So, likewise, with a neighborhood custom as to the ascertainment of the quantity of corn to be delivered in barrels, which is in direct conflict with the statute establishing the standard of measurement.'" So of a local custom to have the agricultural lien on crops, to be grown, signed and delivered after supplies have been furnished, where the statute authorizing such lien requires that the agreement should be executed and delivered before the advancements are made and the supplies furnished. '^^ § 1693. Legality of railway and banking customs. — A usage or custom cannot be invoked by a party and introduced into a contract, as an element of it, if it is contrary to law. Accord- ingly, a failure to comply with the Texas statute requiring rail- road companies to deliver freight, upon a tender by the owner of the freight charges, as shown by the bill of lading, is not ex- cused by the refusal of the owner to surrender the bill of lading, or to give an indemnity bond in lieu of such surrender : and it is immaterial that there is a general custom among railroads re- quiring the surrender of the bill of lading." It has been held in Alabama that evidence of a general custom of passing checks Smetz V. Kennedy, Rilev (S. Car.) '"Mays v. Jennings, 4 Humph. 218; Cooper v. Sandford, 4 Yerg. (Tenn.) 102. (Tenn ) 452, 26 Am. Dec. 239. '' Patapsco Guano Co. v. McGee, 86 " Marine Bank v. Chandler, 27 111. N. Car. 350. 525, 81 Am. Dec. 249. "-Gulf Coast & S. F. R. Co. v. Mc- ** Walker V Western Transp. Co., Cown (Te.x.), 25 S. W. 435: "Upon 3 Wall (U. S.) 150. 18 L. ed. 172. both points the court was correct- "Thomson v. .-Mbcrt. 15 Md. 268. '^be carrier cannot refuse to dehver *« Commercial Bank v. Varnum. 3 freight on the ground that the bill Lans (N Y ) 86, revd. 4^ N. Y. 269. of lading is not surrendered to him. "" Evans v Myers. 25 Pa. St. 114. Dwver v. Gulf &c. R. Co., 69 Texas See also, Godcliarles "v. Wigeman, 113 707, 7 S. W. 504. Nor can he require Pa. St 431, 6 Atl. 354. an indemnity bond upon failure of § 1 693 CONTRACTS. 1028 payable to an existing person or bearer, by delivery only, will not affect the operation of the Alabama statute providing that all bills or notes payable to an existing person or bearer must be con- strued as if payable to such person or order.'^ It has also been held that a custom cannot make a contract where there is none, nor prevent the eft'ect of settled rules of law.'^* A party cannot in- voke and have the benefit of a local usage inconsistent with the law merchant which he himself had ceased to observe. Thus, plaintiffs doing a banking business, after abandoning a practice to give no- tice of the dishonor of notes by mail, notwithstanding that the in- dorser and holder lived in the same town, could not rely on such custom, even though it continued to prevail among other banks; and an allegation by plaintiffs, doing a banking business, that a general custom prevailed among all the local banks to give notices of dishonor by mail, notwithstanding that the indorser and holder lived in the same town, is not supported by proof of a practice prevailing among other banks, in which plaintiffs did not par- ticipate.'^^ Where a check is payable to a named person or bearer, the owner to surrender it. It cannot coerce the owner into giving in- demnity for refusal to do what the law declares he is not bound to do. The law protects him in the refusal, and the carrier cannot force burdens upon him because he insists upon his rights. As to custom : It cannot de- prive one of a legal right without his consent and without compensa- tion; it cannot make contracts for parties ; it can in some cases con- strue the terms used in a contract, but it is not a good custom if it is unreasonable, or contrary to law. The custom contended for cannot be en- forced. Missouri &c. R. Co- v. Pa- gan, 72 Tex. 127, 9 S. W. 749, 2 Greenl. Ev. 251." "First Nat. Bank v. Nelson, 105 Ala. 180, 16 So. 707. "It has been argued that by the general custom, bank checks, when payable to an ex- isting person or bearer, pass from hand to hand by delivery merely, and are payable to the holder without in- dorsement, and that this circum- stance shows the construction which the general public has placed upon this statute, — a fact, as urged, which should have great weight with courts in determining the true construction of this statute. It is not to be de- nied, that if the meaning of words of a statute be uncertain, usage may be resorted to for the purpose of interpreting them (Lawson, Usages & Cust. 462, § 223; South St. Const., § 308) ; but popular disregard of a statute, or a custom opposed to it, will not repeal it ; and a custom or usage which would contradict the com- mands of a statute ought not to be considered." Lawson, Usages & Cust, § 216; South St. Const, § 137; Richmond &c. R. Co. v. Hissong, 97 Ala. 187, 13 So. 209; Barlow v. Lam- bert, 28 Ala. 704, 65 Am. Dec. 374; East Tennessee &c. R- Co. v. John- ston, 75 Ala. 596, 51 Am. Rep. 489. ■'Adams v. Goddard, 48 Maine 212; Dykers v. Allen, 7 Hill (N. Y.) 497, 42 Am. Dec. 87; National Bank v. Burkhardt, 100 U. S. 686, 25 L. ed- 766; Bliven v. New England &c. Co., 23 How. (U. S.) 420. 16 L. ed. 510; Thompson v. Riggs, 5 Wall. (U. S.) 663. 18 L. ed. 704; Tilley v. Cook, 103 U. S. 155, 26 L. ed. 374. "Isbell V. Lewis, 98 Ala. 550, 13 So. 335. I029 CUSTOMS AND USAGES, § 1 693 and the payee indorses it in blank and delivers it to a bank and receives credit for it, in an action by the indorsee against the maker, evidence — that, by a custom among bankers, where a check is drawn on a bank and presented to another bank, it is passed to the credit of the customer, but that the credit so given is treated as a receipt for the check, and not as a payment, — is inad- missible, as the indorsement and check evidence the agreement between the payee and indorsee, and the transfer of the check is governed by the law merchant.'" A custom on the part of a car- rier or of carriers generally at a particular place to deliver goods to one other than the consignee, who merely holds the bill of lading without any indorsement, does not justify such delivery, as the carrier is bound by law to deliver only to the person who has title to the bill of lading.^' Proof of a custom is not admis- sible to enlarge the powers of officers whose authority is defined by statute." A usage of trade for banks to take pledges from factors as security for the payment of the general balance of ac- counts between them, for goods known to be held by them as fac- tors, is unlawful, and cannot be invoked by the parties.''" " Shaw V. Jacobs. 89 Iowa 713, 55 ly at a particular place to make de- N. W. 333, 56 N. W. 684, 21 L. R- A. liveries to persons merely in posses- 440, 48 Am. St. 411. sion of the bill of lading is a bad " Nebraska Meal Mills Co. v. St. custom, and cannot be adduced in Louis S. \V. R. Co., 64 Ark. 169. evidence to exempt such carrier or 41 S. \V. 810, 38 L. R. A. 358, 62 carriers from liability for deliveries Am. St. 183; Raliegh &c. R. Co. to wrong persons." Title to bill of v. Lowe. 101 Ga. 320, 28 S. E. 867; lading may pass by delivery if this St. Louis S. W. R. Co. v. Elgin is the intention of partv. Hoffman Condensed Milk Co.. 74 111. App. v. Lake Shore M- S. R. Co., 125 Mich. 619. affd. 175 111. 557, 51 N. E. 201. 84 N. W. 55. A bill of lading 911, 67 Am. St. 238; Diamant V. Long represents the property, transfer of Island R. Co.. 30 Misc. (X. Y.) 444, which transfers property. White 62 X. Y. S. 519; Storey v. Hershev, Live-Stock &c. Co. v. Chicago, M. & 19 Pa. Super. Ct. 485. Louisville cS: St. P. R. Co., 87 Mo. App. 330. N. R Co. V. Barkhouse. 100 Ala. 543. "MValters v. Senf, 115 Mo. 524. 22 13 So. 534: "A bill of lading does S. W. 511; Walters v. Brooks, 115 not pass by delivery, and the posses- Mo. 534. 22 S. W. 514. sion of it by one other than the con- '"Allen v. St. Louis Xat. Bank. 120 signee without indorsement will not U. S. 20, 30 L. ed. 573, 7 Sup. Ct- authorize or justify the carrier in de- 460. The usage "cannot aid the plain- livering the consignment to such per- tiff; * * * because it was contrary son. Hutch. Carriers, § 344. 2 Am. to law. in that it undertook to alter & Eng. Enc. Law. pp. 230, 231. The the nature of the contract between obligation to deliver only to the party the factors and their principals which having title to the bill of lading is authorizes them to sell, but not tn imposed by law on the carrier, and pledge, and in that it would sustain is absolute. Any custom of a par- a pledge by a factor of the goods ticular carrier or of carriers general- of several principals to secure the § 1694 CONTRACTS. IO3O § 1694. Effect of partial illegality of custom. — It is con- ceivable th.1t a custom or usage may be illegal in part only. In such a case, the rules applicable to a statute, partially invalid, govern. If a part of a custom would be valid if it stood alone as a separate and independent custom, such part would be in- valid when another part of the entire custom of which it forms a part was invalid, unless it is reasonably certain that to enforce the former as a separate and independent custom would corre- spond with the intent and purpose with which the custom as a whole was established and used.®" § 1695. Effect of adoption of usage by courts. — Generally speaking where, in the absence of any statutory provision on the subject, a usage has been adopted by a court of last resort in a state, the usage will thenceforward be presumed to conform to such rule throughout the state; and this presumption, if not con- clusive, can only be rebutted by clear proof of a uniform and settled usage to the contrary.*^ § 1696. Knov^ledge of custom or usage — Essential. — One is bound by a particular local custom or usage only where he has knowledge of its existence. This knowledge, however, may be ac- tual or it may be constructive. The party is charged with con- structive knowledge of the usage where it is so certain, notorious, uniformly and well established that his knowledge of its existence will be conclusively presumed and understood by him in entering into the contract.*"" The reason for the principle is that it is the payment of his own general balance 446; Smith v. Rice, 56 Ala. 417; East account to a third person." Robinson Tennessee &c. R. Co. v. Johnston, 75 V. Mollett, L. R. 7 H. L. 802; Leh- Ala. 596, 51 Am. Rep. 489; Marlatt man v. Marshall, 47 Ala. 362; Leuck- v. Clary, 20 Ark. 251; Arkadelphia hart V. Cooper, 3 Bing. N. Cas. 99; Lumber Co. v. Henderson, 84 Ark. Newbold v. Wright, 4 Rawle (Pa.) 382, 105 S. W. 882; McCarthy v. Mc- 195; Irwin v. Williar. 110 U. S. 499, Arthur, 69 Ark. 313, 63 S. W. 56; 28 L. ed. 225, 4 Sup. Ct. 160. Bodcaw Co. v. Ford, 82 Ark. 555, *»Deadwvler v. Karow, 131 Ga. 227, 102 S. W. 896; Ward Furniture Mfg. 62 S. E. 172, 19 L. R. A. (N. S.) Co. v. Isbell, 81 Ark. 549, 99 S. W. 197n. 845 ; Corey v. Struve, 16 Cal. App. 310, "Isham V. Fox. 7 Ohio St. 317. 116 Pac. 975; Isaksson v. Williams, *' German-.^Vmerican Ins. Co. v. 26 Fed. 642; Adams v. Manufactur- Commercial Fire Ins. Co., 95 Ala. 469, ers' & Builders' Fire Ins. Co.. 17 Fed. 11 So. 117, 16 L. R. A. 291; Steele v. 630; Chilberg v. Lvng, 128 Fed. 899, McTver's Admr., 31 Ala. 667, 70 Am. 63 C. C. A. 451; Chicago. M. & St. Dec. 516; Herring v. Skaggs, IZ Ala. P. R. Co. v- Lindeman, 143 Fed. 946, I03I CUSTOMS AND USAGES. § 1696 essence of a contract that it should arise out of the intention of the parties to do or not to do certain things, and it follows that 75 C. C. A. 18; Great Western Ele- vator Co. V. White, 118 R-d. 406; Vaughan's Seed Store v. Stringfel- lovv, 56 Fla. 708, 48 So. 410 ; Kelly v. Kauffman .Milling Co., 92 Ga. 105, 18 S. E. 363 ; Central R. & Banking Co. V. Andcr.son, 58 Ga. 3'J3; McCall v. Herrin, 118 Ga. 522, 45 S. E. 442; S. W. Bacon Fruit Co. v. Blessing. 122 Ga. 369, 50 S. E. 139; Hendricks v. Middlel)rooks Co., 118 Ga. 131; Lar- son V. Johnson, 42 111. App. 198 ; Cor- rigin v. Herrin, 44 111. App. 363; Bank of Commerce v. Miller, 105 111. App. 224; International Salt Co. v. Tennant, 144 111. App. 30; First Xat. Bank V. Mackey, 157 111. App. 408; Bradford v. Homestead Fire Ins. Co., 54 Iowa 598, 7 N. W. 48; Beatty v. Gregory, 17 Iowa 109, 85 Am. Dec. 546; Underwood v. Iowa Legion of Honor, 66 Iowa 134, 23 N. W. 300; Graydon v. Patterson, 13 Iowa 257, 81 Am. Dec. 432; Sherwood v. Home Saving Bank, 131 Iowa 528, 109 N. W. 9; Rake v. Townsend (Iowa). 102 N. W. 499; Citizens' State Bank v. Chambers. 129 Iowa 414, 105 N. W. 692; Sullv v. Pratt, 106 La. 601, 31 So. 161 : "Marshall v. Perry, 67 Maine 78; Norton v. University of IMaine, 106 Maine 436, 76 Atl. 912; Denton Bros. V. Gill, 102 Md. 386. 62 Atl. 627, 3 L. R. A. (N. S.) 465; Raisin V. Clark, 41 Md. 158. 20 Am. Rep. 66; Bvrne v. Massasoit Packing Co., 137 Mass. 313; Packard v, Earle. 113 Mass. 280; Berkshire Woolen Co. v. Proctor, 7 Cush. (Mass.) 417; How- ard V. Great Western Ins. Co., 109 Mass. 384; Warren Bank v. Parker, 8 Grav CMass.") 221; Stevens v. Reeves. 9 Pick. (Mass.) 198; Pierce v. Butler. 14 Mass. 303; Luce v. Dor- chester Fire Ins. Co., 105 Mass. 297. 7 Am. Rep. 522 ; Barrie v, Ouimhv, 206 Mass. 259. 92 N. E. 451 ; Brown v. Foster, 113 Mass. 136, 18 Am. Rep. 463; Eaton v. Gladwell. 108 Mich. 678, 66 N. W. 598; Hutchings v- Ladd. 16 Mich. 493; Milligan v. Slieh Furniture Co., Ill Mich. 629. 70 N. W. 133: Blodgett v. Vogel. 130 Mich. 479. 90 N. W. 277; Reynolds V. Continental Ins. Co., 36 Mich. 131; Flatt v. Osborne, 33 Minn. 98, 22 N. W. 440; Johnson v. Gilfillan, 8 Gil. (Minn.) 352; Baxter v. Sher- man, 73 Minn. 434, 76 N. W. 211, 72 Am. St. 631; Globe Milling Co. v. Minneapolis Elevator Co., 44 Minn. 153; Paine v. Smith, 33 Minn. 495. 24 N. W. 305 ; Hyde v. St. Louis Book & News Co., 32 Mo. App. 298; Brown V. Strimple, 21 Mo. App- 338; Steam- boat Keystone v. Moies, 28 Mo. 243, 75 Am. Dec. 123; Fitzgerald v. Han- son, 16 Mont. 474, 41 Pac. 230; Mil- waukee & W. Inv. Co. v. Johnston, 35 Nebr. 554, 53 N. W. 475; Gam- ble V. Staubcr Mfg. Co. (Nebr.). 69 N. \W. 960; Bixby v. Bruce, 69 Nebr. 78, 95 N. W. 34; McKee v. Wild, 52 Nebr. 9, 71 N. W. 958; Martin v. Maynard, 16 N. H. 165; Goodall v. New England Mut. Fire Ins. Co., 25 N. H. 169; Hilbrand v. Dininnv. 73 App. Div. (N. Y.) 511, 77 N. Y. S. 317; Hopper v. Sage, 112 N. Y. 530; Higgins v. Moore, 34 N- Y. 417; Child v. Sun Mut. Ins. Co., 3 Sandf. (N. Y.) 26; Weir v. Dwver, 62 Misc. (N. Y.) 7, 114 N. Y. S. 528; Gough V. Davis, 24 Misc. (N. Y.) 245. 52 N. Y. S. 947, affd. 39 App. Div. (N. Y.) 639, 57 N. Y. S. 1139; Rickerson V. Hartford Fire Ins. Co., 149 N. Y- 307, 43 N. E. 856; Robertson v. Na- tional Steamship Co., 139 N. Y. 416, 34 N. E. 1053; Woodruff v. Acosta. 11 N. Y. St. 286; Flour City Nat- Bank v. Traders' Nat. Bank, 35 Hun (N. Y.) 241; Stoney v. Farmers' Transp. Co., 17 Hun (N. Y.) 579; Lawrence v. Gallagher, 42 N. Y. Super. Ct. 309. affd. 73 N. Y. 613; Johnson v. De Pevster, 50 N. Y. 666; Wadlev v. Davis, 63 Barb. (N. Y.) 500; Wheeler v. Newbold. 12 N. Y. Super. Ct. 29, affd. 16 N. Y. 392; Hoi ford V. Adams, 9 N. Y. Super. Ct. 471; Wood v. Hickok, 2 Wend. (N. Y.) 501; Newhall v. Appleton. 102 N. Y. 133. 6 N. E. 120; Farmers' & ]\Iechanics' Nat. Bank v. Sprague, 52 N. Y. 605 ; St. John v. Van Sant- voord, 25 Wend. (N. Y.) 660: Gil- mer V. Young. 122 N. Car. 806. 29 S. E. 830; Robbins v. Maher. 14 N. Dak. 228. 103 N. W. 755: Mathias Planing MWl Co. v. Hazen. 20 Ohio C. C. 287, 11 Ohio C D. 54; Hart- 1696 CONTRACTS. 1032 one cannot be held to have contracted to do or not to do some- thing of which he neither had nor is presumed to have had any knowledge or notice.®^ It is not enough that one of the parties to the contract has knowledge of the usage, but the principle requires that both parties should have this knowledge.®* The ford Protection Ins. Co. v. Harmer, 2 Ohio St. 452, 59 Am. Dec. 684 ; Lewis V. Gavlord, 1 Ohio Dec. 73 ; Talbot V. :\Ia"ttox &c. Realty Co., 26 Okla. 298, 109 Pac 128. And see Holmes v. Whitaker, 23 Ore. 319, 31 Pac. 705; Corcoran v. Chess, 131 Pa. St. 356, 18 All. 876; Collins v. Alech- ling. 1 Pa. Super. Ct. 594, 38 Wklv. Notes Cas. 235, 26 Pittsb. Leg. J. (N. S.) 459; McMasters v. Pennsylvania R. Co., 69 Pa. St. 374, 8 Am. Rep. 264; Martin v. Western Union Tel. Co., 81 S. Car. 432, 62 S. E. 833 (de- livery outside free-delivery limits) ; Dabne}' v. Campbell, 9 Humph. (Tcnn.) 680; Stozier v. Lewey, 3 Willson Civ. Cas. Ct. App. (Tex.), § 129; Xeill Bros. v. Billingsley, 49 Tex. 161 ; [Missouri &c. R. Co. v. Mav- field, 29 Tex. Civ. App. 477, 68 S. W. 807; Johnson v. Buchanan (Tex. Civ. App.), 116 N. W. 875; Chateaugay Ore & Iron Co. v. Blake, 144 U. S- 476, 12 Sup. Ct. 731, 36 L. ed. 510; Bank of Alexandria v. Deneale, 2 Cranch (U. S.) 488, Fed. Cas. No. 846; Irwin v. Williar, 110 U. S. 499, 4 Sup. Ct. 100. 28 L. ed. 225 ; Stevens v. Smith, 21 Vt. 90; Ferguson V. Gooch, 94 Va. 1, 26 S. E. 397. 40 L. R. A. 234; Hansbrough v. Neal, 94 Va. 722. 27 S. E. 593; Bowles v. Rice, 107 Va. 51, 57 S. E. 575; Con- sumers' Ice Co. V. Jennings, 100 Va. 719, 42 S. E. 879; Moritz v. Hersko- vitz, 46 Wash. 192, 89 Pac. 560; Power V. Kane, 5 Wis. 265; Hall v. Storrs, 7 Wis. 253; Pickert v. Mars- ton, 68 Wis. 465, 32 N. W. 550, 60 Am. Rep. 876; Nagle v. Hake, 123 Wis. 256, 101 N. W. 409; O'Brien Lumber Co. v. Wilkinson, 123 Wis. 272, 101 N. W. 1050; Brunnell v. Hud- son Sawmill Co., 86 Wis. 587, 57 N. W. 364. A Wisconsin corporation, owning a cattle ranch in Wyoming, appointed an agent in Wyoming, with power to hire and pay for necessary help, and pay current expenses with money remitted on his statement, and to care for and round up the cattle, and ship them, when fit for market, to Chicago, in care of a particular commission house. It was held, in replevin by said corporation to re- cover cattle purchased by defendants from the agent, that evidence that it was the custom or usage of managers of cattle companies doing business in Wyoming to sell the cattle from the ranches of such companies was inad- missible, in the absence of proof that the plaintiff had knowledge of such usage. [Milwaukee Inv. Co. v. Johns- ton, 35 Nebr. 554, 53 N. W. 475. " Currie v. Syndicate, 104 111. App. 165. "It would seem, however, that upon principle, for a party to be bound by a local usage, or a usage of a particular trade or profession, he must be shown to have knowledge or notice of its existence. For upon what basis is it that a contract is held to be entered into with reference to, or in conformity with, an existing usage? Usage is engrafted upon a contract or invoked to give it a mean- ing, on the assumption that the par- ties contracted in reference to it; that is to say, that it was their inten- tion that it should be a part of their contract wherever their contract in that regard was silent or obscure. But could intention run in that way unless there was knowledge of the way to guide it? No usage is admis- sible to influence the construction of a contract unless it appears that it be so well settled, so uniformly acted upon, and so long continued, as to raise a fair presumption that it was known to both contracting parties, and that thev contracted in reference thereto." Walls v. Bailey, 49 N. Y. 464, 10 Am. Rep. 407. '^ Gould V. Gates Chair Co., 147 Ala. 629, 41 So. 675; Corey v. Struve, 16 Cal. App. 310, 116 Pac. 975; Sher- wood v. Home Savings Bank, 131 Iowa 528, 109 N. W. 9; Caldwell v. Dawson, 4 Mete. (Ky.) 121; Norton 1033 CUSTOMS AXD USAGES, § 1697 principle is broad enough to cover the case where one ignorant of the existence of a custom seeks to have it made a part of the contract after he acquires knowledge of its existence. It is his knowledge at the time of entering into the contract and not after- ward which makes the usage binding." And, according to some of the decisions, the knowledge must be personal to the parties sought to be charged and it is not sufficient that the knowledge was possessed by an agent.*'" But it is believed that the authori- ties do not generally support this view without qualification." Again, a party is not affected with knowledge of a custom pre- vailing in a particular business in which he is not engaged.^^ § 1697. Presumption of knowledge of usage. — Actual or express notice of a custom or usage is not absolutely required. A custom which is uniform, long established and generally acqui- esced in,' and so widely and generally known as to induce the belief that the parties contracted with reference to it, is binding, without actual notice thereof to the parties. In such a case, knowl- edge of the custom is presumed. '*® In other words, where a custom is found to be general and notorious, and to have the other requi- sites of a valid custom, it is a conclusion of law that the parties must have contracted with reference to it, and their knowledge V. University of Maine, 106 I^Iaine :\Iich. 247. 53 N. W. 1049; Bernard 436 76 Atl. 912; Gough v. Davis, 39 v. Mott. 89 Mo. App. 403; Dabney v. App. Div. (X. Y.) 639, 57 N. Y. S. Campbell, 5 Humph. (Tenn.) 680. 1139. ^Florence Wagon Works v. Trini- "••Jt necessarily follows that, un- dad Asphalt Mfg. Co., 145 Ala. 677, less he did in fact have such knowl- 40 So. 49: Smith v. National Bank, edge, and actually contracted with 191 Fed. 226; Isaksson v. Williams, reference to such custom, he is not 26 Fed. 642; Rugcr v. Fireman's in a position to assert that it became. Fund Ins. Co., 90 Fed. 310: Swern v. by implication, a part of a contract Churchill, 155 111. App. 505 : Morn- into which he and another entered, ingstar v. Cunningham, 110 Ind. 328, whether the latter had or had not, 11 X. E. 593, 59 Am. Rep. 211; Ever- in prior dealings with others, given ett v. Indiana Paper Co., 25 Ind. App. recognition to the custom." Hen- 287, 57 N. E. 281 : British &c. .Mort- dricks v. Middlebrooks Co., 118 Ga. gage Co. v. Tibballs, 63 Iowa 468, 19 131 44 S E 835 X. W. 319; Norton v. University of «"'Berrv V. Cooper, 28 Ga. 543; Rob- Elaine, 106 Maine 436. 76 Atl. 912; bins V. 'Maher, 14 N. Dak. 228, 103 Lyon v. George, 44 Md. 295: Eaton N W 755 V. Crowe Coal &c. Co., 161 Mo. App. *'^ee post § 1704 30, 142 S. W. 1107; Hevworth v. Mil- ^ Fleming' V. Wells, 45 Colo. 255, Icr Grain Co.. 174 Mo. 171. 73 S. W. 101 Pac 66: Great Western Elevator 498; Cameron v. McNair S:c. Real Co V White, lis Fed. 406, .% C. C. A. Estate Co.. 76 Mo. App. 366: McKee 388; Packer v. Pentecost, 50 111. App. v. Wild. 52 Xebr. 9. 71 N. W. 958; 228; Pennell v. Delta Transp. Co., 94 Union Stockyards Co. v. Westcott, § 1697 CONTRACTS. IO34 is conclusively presumed.^'' But a party is not bound where he has neither actual nor constructive knowledge of the existence of a particular usage."' It is the duty of one engaged in a par- ticular trade or business to inform himself as to the customs and usages of the business, and the law will presume that he has per- formed this duty and has knowledge of the custom."- One is presumed to know the customs and usages of the business in which he is engaged."^ Where both parties to a contract are en- gaged in the same trade or business, they will be presumed to have knowledge of the customs of the trade or business, and it is not necessary to prove actual knowledge or that the custom is so generally or universally known that knowledge may be pre- 47 Nebr 300, 66 N. W. 419; Erie R. Am. Rep. 199; Walsh v. Mississippi Co V. Waite, 62 Misc. (N. Y.) 372, Val. Transp. Co., 52 Mo. 434; Fitz- 114 N Y S 1115; Wadley v. Davis, gerald v. Hanson, 16 Mont. 474, 41 63 Barb (N. Y.) 500; Botany Wors- Pac. 230; Bixby v. Bruce, 69 Nebr. ted Works v Wendt. 22 Misc. (N. 78, 95 N. W. 34; Steward v. Scudder, Y ) 156 48 N. Y. S. 1024 : Riddick v. 24 N. J. L. 96 ; Leach v. Hughes, 74 Dunn, 145 N. Car. 31, 58 S. E. 439; Misc. (N. Y.) 69 131 N. Y 5^570; Gihner v. Young. 122 N. Car. 806. 29 Walls v. Bailey. 49 N. Y. 464, 10 Am. S E 830- McMasters v. Pennsyl- Rep. 407; Wood v. Hickok, 2 Wend. vania R. Co., 69 Pa. St. 374, 8 Am. (\. Y.) 501; Macklin v. New Jer- Reo 264; Hansbrough v. Neal, 94 sey Steamboat Co., 7 Abb. Pr. (N. Va 7^2 27 S. E. 593. S.) (N. Y.) 229; Talbot v. Mattox "'' Beach v. Travellers' Ins. Co., 73 &c. Realty Co., 26 Okla. 298, 109 Pac. Conn 118, 46 Atl. 867; Macv v. Per- 128; Dabney v. Campbell, 9 Humph, rv 91 Fed 671 affd. 99 Fed. 1004, 40 (Tenn.) 680; Bentlev v. Daggett. 51 C'C A 217; McCurdy v. Alaska &c. Wis. 224, 8 N. W. 155, 37 Am. Rep. Commercial Co.. 102 111. App. 120; 827. Lupton V. Nichols. 28 Ind. App. 539, ^-Deshler v. Beers, 32 111. 368, 83 63 N E 477; Northern Light Lodge Am. Dec. 274; Daniels v. Hudson V Kennedv 7 N D 146, 73 N. W. River Fire Ins. Co., 12 Cush. (Mass.) 524- Hostetter v. Park, 137 U. S. 30, 416, 59 Am. Dec. 192; Dwight v. Whit- 34 L ed. 568, 11 Sup. Ct. 1; And see, ney, 15 Pick. (Mass.) 179; Gleason v. also, Parsons Cont. (7th ed.) 675. Morrison 20 Misc (N. YO 320. 45 R ''West v Ball 12 Ala. 340; Great Y. S. 684; Wall v. Howard Ins. Co., 14 Western Elevator Co. v. White, 118 Barb. (N-Y.) 383; Hartshorn v. Mu- Fed. 406, 56 C. C. A. 388; Chicago tual Ins. Co 56 N^Y 172 ; McCarty M & St P R Co. V. Lindeman, 143 v. New York &c. R. Co.. 30 1 a. bt. Fed 946 75 C C. A. 18; Packer v. 247: Carter v. Philadelphia Coal Co., Pentecost, 50 111. App. 228: Smith v. 77 Pa. St. 286 ; Hazard v. New Eng- Hess. 83 Iowa 238, 48 N. W. 1030; land Marine Co., 1 Sumn. (U. S.) McSherry v. Blanchfield, 68 Kans. 218, Fed Cas^ No. 6282 revd. 8 Pet. 310, 75 Pac. 121 ; Caldwell v. Dawson, (U- S.)_ 557, 8 L. ed. 1043. 61 Kv 121; Folev v. Mason, 6 Md. «= Dwight v. Whitney, 15 Pick 37; Barker v. Borzone, 48 Md. 474; (Mass.) 179; Lowry v. Russell, 8 Stevens v. Reeves, 9 Pick. (Mass.) Pick (Mass^) ^^^^ . ^arrie v. 198; Howard v. Great Western Ins. Quimby, 206 Mass. 259, 92 N E. 4M Co 109 Mass. 384; Johnson v. Gil- Gleason v. Morrison 20 Misc. (JN. fillan. 8 Minn. 395; Tavlor v. Muel- Y.) 320, 45 N. Y. S. 684. ler, 30 Minn. 343, 15 N. W. 413, 44 I035 CUSTOMS AND USAGES. § 1697 sumed.®* A person dealing at a particular market will be taken to have dealt according to the known general custom and usage of that market, and, if he employs another to act for him in buying or selling at such market, he will be held as intending that the business should be conducted according to such general usage and custom, and such has been held to be the rule whether he, in fact, knows of the custom or not."^ "Parties who are engaged in a particular trade or business, or persons accustomed to deal with those engaged in a particular business, may be presumed to have knowledge of the uniform course of such business. Its usages may therefore in the absence of an agreement to the contrary, reasonably be supposed to have entered into and formed part of their contracts and understandings in relation to such business, as ordinary incidents thereto.""*' But this presumption does not obtain where the party sought to be charged was not in the same business or trade. ^^ It is well settled that proof of local usages will not raise a presimiptionof knowledge of their existence on the part of one who is engaged generally in the business to which they pertain in a certain city, at least where the domicil of the party sought to be charged is elsewhere; or, in other words, in order to create even a prima facie presumption that a party has knowl- edge of a usage incident to a particular business about which he is engaged, the usage must be shown to be a general one in that business, in such sort as that it would be unreasonable to suppose he was ignorant of it.°^ Accordingly, on an issue as to the exist- ence of a general custom in a certain place, as claimed by plaintiff, and as to its effect on a contract between plaintiff and defendant, "Smith V. Russell Lumber Co., 82 Lonergan v. Stewart, 55 111. 44; Conn. 116. 72 Atl. 577. Home Ins. Co. v. Favorite, 46 111. "Cleveland. C. C. & St. L. R. Co. 233. V. Jenkins. 70 III. .App. 415, revd. 174 °^ Morningstar v. Cunningham. 110 111. 398, 51 N. E. 811, 62 L. R. A. Ind. 328, 11 N. E. 593, 59 Am. Rep. 922, 66 Am. St. 296; Pardridge v. 211. Cutler, 68 111. App. 569. revd. 168 111. "^ Great Western Elevator Co. v. 504, 48 X. E. 125; Union Stock Yard White, 118 Fed. 406. 56 C. C. A. 388; Co. V. :\Iallorv &c. Co., 157 111. 554, Packer v. Pentecost, 50 111. App. 228; 41 N. E. 888, 48 Am. St. 341, follow- Pennell v. Delta Transp. Co., 94 ing Samuels v. Oliver, 130 111. 7i. 22 ^lich. 247, 53 X. W. 1049; Bernard N. E. 499; Hevworth v. Miller Grain v. Mott, 89 Mo. .App. 403; Dabney v. &c. Co., 174 Mo. 171. 72> S. W. 498. Campbell. 9 Humph. (Tenn.) 680. And also, see. Bailey v. Bensley, ^7 "' German-.American Ins. Co. v. Ill 556; Doane v. Dunham. 79 111. Commercial Fire Ins. Co., 95 Ala. 131; Lvons v. Culbertson, 83 111. ZZ; 469. 11 So. 117. 16 L. R. A. 291. 1698 CONTRACTS. IO36 an instruction was erroneous which ignored all inquiry as to the length of time the custom had prevailed, and as to defendant's knowledge of its existence, or opportunity of acquiring such knowledge.''^ The presumption may be rebutted where the cus- tom or usage is restricted to a certain locality or business, though it has become general and uniform in that locality or in that par- ticular business/ § 1698. Presumption of knowledge continued — As to rail- roads and banks. — It appears to be the usage in this country for all railroad companies receiving cars from other roads to make necessary repairs at their own expense, unless the car is inspected and branded as defective when received. In consequence of such usage, a company which claims cars belonging to another road, and pending a judicial determination of the title thereto, is, by agreement, permitted to retain and use them subject to a rental in case the decision is against it, cannot, after such decision, set off against the rental any claim for the cost of repairs.^ A for- eign manufacturer employing an agent to solicit orders is bound by a general custom which authorizes such agents to accept orders without conference with their principals, although he may have no actual knowledge of the custom.^ And where the payee of a draft selects a bank as his collecting agent, he is presumed to know the methods by which such transactions are effected through general banking customs, and actual ignorance of them does not avail as an excuse.* § 1699. Knowledge of established custom. — No person can be made liable by reason of a custom except when it is shown that he had actual or constructive knowledge of the custom. In cases where the custom is a limited or special one, actual knowledge must generally be proved, and every custom is a limited or special one until it is shown to have existed long ''Buyck V. Schwing, 100 Ala. 355, 343, 54 N. W. 50, 34 Am St 350; 14 So 48 Springer v. Westcott, 166 N. Y. 117, ^Busch V. Tones, 94 Mich. 223, 53 59 N. E. 693, affg. 19 App. Div. (N. N W 1051. Y.) 366, 46 N. Y. S. 589. '- Central Trust Co. v. Wabash, St. " Howard v. Walker, 92 Tenn. 452, L. & P. R. Co., 50 Fed. 857. 21 S. W. 897. "Austrian v. Springer, 94 Mich. 1037 CUSTOMS AND USAGES. § I /OO enough to sustain the test above stated.'* When, in an ac- tion for a specified contract price per foot for drilhng wells, plaintiff claims to recover under a custom of the trade for drill- ing wells that were started and abandoned on account of strik- ing solid bottom, in addition to those that were completed, an instruction that some evidence was offered from which it was claimed that the jury would find such a custom existed, and that, if they found there was such a known and established custom in the trade, the parties would be presumed to have contracted with the custom in view, and they might allow the claim, but it must be a universal, certain and general usage and custom of the trade, is erroneous in not stating what must be proved to show that a custom is a known and established one, and in treating the pre- sumption that might be drawn from such a custom as one of law.' § 1700. Particular usages without binding force for v^ant of knowledge. — Among other cases where a particular usage was held without binding force for lack of knowledge may be mentioned a local usage of brokers to charge $io per car on goods bought by them for sale from shippers;^ a schedule of charges obtaining among local architects;^ a trade custom requir- ing workmen to give their employers notice a certain number of days before leaving their employment;® a local usage of an in- surance company to charge extra premiums upon unoccupied * Svson V. Hieronymus, 127 Ala. order to show that a custom is 482, '28 So. 967: Smith v. Phipps, 65 a known and established one. and Conn. 302. Z2 Atl. 367; Great West- also in treating the presumption ern Elevator Co. v. White. 118 Fed. which might be drawn from such a 406. 56 C. C. A. 388; Hendricks v. custom as one of law. There was no Middlebrooks Co., 118 Ga. 131, 44 evidence that the defendant had any S. E. 835 ; Bank of Commerce v. Mil- actual knowledge of the custom, and ler, 105 ill. .-Xpp. 224; Currie v. Syn- she was liable, if at all, by reason of dicate, 104 111. .Kpp. 165 ; Rastetter v. the custom, because it was a general, Reynolds, 160 Ind. 133, 66 N. E. 612; known, and established one." Bernard v. Alott, 89 Mo. App. 403; ^ S. W. Bacon Fruit Co. v. Blessing, Gamble v. Stauber Mfg. Co., 50 122 Ga. 369, 50 S. E. 139. Nebr. 463, 69 N. W. 960; Bixby v. ' Laver v. Hotaling (Cal.), 46 Pac. Bruce, 69 Xebr. 78, 95 N. W. 34; 1070; Sully v. Pratt, 106 La. 601, 31 Gough v. Davis, 39 App. Div. (N. So. 161. Y.) 639, 57 N. Y. S. 1139. • Stevens v. Reeves, 9 Pick. 'Smith v. Phipps, 65 Conn. 302, 32 (Mass.) 198; Collins v. New England Atl. 367. "This instruction seems to Iron Co., 115 Mass. 23; Birkshire us to have been insufficient for the Woolen Co. v. Proctor, 7 Cush. guidance of the jury, in that it does (Mass.) 417. not state what must be proved in § I/OI CONTRACTS. IO38 dwelHng-hoiises ;^° a local custom which allows a traveling sales- man to work in retail stores during the holiday season ;" a usage of dealers in a certain locality to settle their accounts by offset- ting all outstanding demands between them without regard to whether the bills are due to or from them as factors or as prin- cipals;" a custom to pay the board of workmen where the place of employment is remote from their homes ;^^ a custom of brokers at the place of sale of grain to negotiate sales in their own names without disclosing the names of their principals and to assume personal liabilit}- ;^'* a custom of an exchange by which commis- sion merchants are personally liable on contracts for the sale of grain entered into for their principals and may supply the grain themselves and charge it to their principals who fail to meet their engagements ;^^ a local custom to pay traveling salesmen for goods purchased by merchants in the town f-^ a local mining cus- tom to return notes given for the purchase of a mining claim where the claim proves unprofitable;^^ a custom of insurance companies to allow their agents to consent to the transfer of in- sured property ;^^ a custom of builders to use timbers less in size than those stipulated for in the contract/** § 1701. Necessity of knowledge of usage giving arbitrary meaning to words. — It is the rule that a trade usage, by which words are given an unusual or arbitrary significance in a particular line of business generally or in the locality where the parties reside, must be shown to be of such definite character and such general acceptance that knowledge thereof by both parties may be reasonably inferred.-" A private custom to use words " Luce V. Dorchester Mut. Fire Ins. " Simon v. Johnson, 101 Ala. 368, Co., 105 Mass. 297, 7 Am. Rep. 522. 13 So. 491. " MiUigan v. Sligh Furniture Co., " Leonard v. Peeples, 30 Ga. 61. Ill Mich 629, 70 N W. 133. '^Bradford v. Homestead Fire Ins. '' Baxter v. Sherman, 73 Mass. 434, Co., 54 Iowa 598, 7 N. W. 48. 76 N W 211, 72 Am. St. 631. "Eaton v. Gladwell, 108 Mich. 678, "Scott V. Brown, 27 Misc. (N. Y.) 66 N. W. 598. 203, 57 N. Y. S. 763 ; Hilbrand v. '" Spartali v. Benecke, 10 C. B. 212 ; Dininny, 73 App. Div. (N. Y.) 511, Jaqua v. Witham &c. Co., 106 Ind. 77 N Y. S. 317. 545, 7 N. E. 314; Citizens' State Bank "Robbins v. Maher, 14 N. Dak. v. Chambers, 129 Iowa 414. 105 N. W. 228, 103 N. W. 755 692; Underwood v. Legion of Honor, "Irwin V. Williar, 110 U. S. 499, 28 66 Iowa 134. 23 N. W. 300; Brad- L. ed. 225, 4 Sup. Ct. 160. ford v. Homestead Fire Ins. Co., 54 1039 CUSTOMS AND USAGES. § I7OI in a particular or restricted sense cannot become a part of a con- tract where the party sought to be char<^ecl is ignorant of the cus- tom."^ There was a case of this character where an agent was employed to solicit orders for publication at a certain amount for each order and the employer sought to read into the contract that the orders were to be "approved orders" under the usage of the business, but this right was denied because of the agent's ig- norance of such custom. ^^ In another case where a custom that the taking of a bill of lading by a seller in his own name did not reserve the right of disposition of the goods was not so universal as to charge the buyers, who were residents of a foreign country, with knowledge thereof, and actual knowledge of the custom was not shown to have been brought home to them, it was held that the custom did not change the express terms of the contract."^ A custom among underwriters in New York City to class certain stores as distinct buildings for purposes of insurance, and to in- sure them severally as separate risks, is not binding on an in- surance company domiciled in Alabama, without proof that the latter had knowledge of such custom when a contract was made with another company for re-insurance in that city.^* So also, a steamboat company, in contracting, through its agent, to pay plaintiff and his assistants an agreed sum per day to clear a river of snags for navigation purposes, is not chargeable with knowl- edge of a local custom existing among lumbennen to pay the board of their men in cleaning out streams for the purpose of running logs, even though the agent resided in that vicinity. In order to bind the company in such a case, if the custom was not made known to its agent when the contract was made, it must Iowa 598, 7 N. W. 48 ; Rake v. Town- "" Newhall v. Appleton, 102 N. Y. send (Iowa), 102 N. W. 499; Mur- 133, 6 X. E. 120. ray v. Brooks, 41 Iowa 45 ; Rindskoff " Collicnon v. Hammond Milling V. Barrett. 14 Iowa 101 ; Beatty v. Co., 68 Wash. 626. 123 Pac. 1083. Gregory, 17 Iowa 109, 85 Am. Dec. "* German-.A.merican Ins. Co. v. 546; Van Hoesen v. Cameron, 54 Commercial Fire Ins. Co., 95 Ala. Mich. 609. 20 N. W. 609: Johnson v. 469, 11 So. 117, 16 L. R. A. 291. "Xo De Pevster, 50 X. Y. 666; Irwin v. general usage is proved, * * * and Williar, 110 U. S. 499. 28 L. ed. 225, the defendant cannot be held beyond 4 Sup. Ct. 160: Brunnell v. Hudson the terms of its compact dissociated Saw Mill Co., 86 Wis. 587, 57 X. W. from anv effect of the alleged usage." 364. Cobb V. Lime Rock &c. Ins. Co., 58 ^ Citizens' State Bank v. Chambers, Maine 326. 129 Iowa 414, 105 X. W. 692. ^ 1 70 1 CONTRACTS. IO4O appear that defendant or its agent had been engaged in a busi- ness, before the contract was made, in some manner connected with the business in which the custom is sought to be estab- Hshed.^^ In an action for the price of goods sold, evidence by plain- tiff of its custom of dealing, and that defendant knew it, is admissible to show the meaning of the term "net" weight.-" Where the purchaser of Smyrna canary seed refused to receive it at New York, not because of its deficiency as to quantity or quality, but simply because it was not brought by the specified steamer of shipment, the Aleppo, but by the Aurania, to which it was transferred at Liverpool, it was held on appeal to be error to reject the seller's offer to show by the broker who negotiated the sale of the seed that there were not at the time, and never had been, freight steamers sailing direct from Turkey to New York, and that the invariable custom known to all persons engaged in the trade was to carry such goods to Liverpool and there trans- ship them to a steamer for New York. It was also held on ap- peal that this offered evidence was not contradictory to the broker's note of sale, but rather explained it, and enabled the court to choose between two possible constructions of it, and therefore should have been admitted."^ But in an action for a balance due for work as trimmer in defendant's sawmill, evi- dence that certain trimmers in defendant's employ worked under a contract containing a condition that a part of their wages was to be retained by defendant, and forfeited to it if they should leave its employ before the end of the sawing season, and that it was defendant's custom to retain part of the wages of all its employes, is incompetent to show that plaintiff worked under such a contract, in the absence of testimony that he had any knowledge of such custom.^^ "Pennell v. Delta Transp. Co., 94 Cas. (Pa.) 537. And see, McKeefrey Mich. 247, 53 N. W. 1049. And see v. Connellsville Coke &c. Co., 56 Fed. also, Van Hoesen v. Cameron, 54 212, 5 C. C. A. 482. Mich. 609, 20 N. W. 609. ^ lasigi v. Rosenstein, 141 N. Y. " Nonantum Worsted Co. v. North 414, 36 N. E. 509. Adams Mfg. Co., 156 Mass. 331, 31 '*Brunnell v. Hudson Saw Mill N. E. 293; Dempsey v. Dobson, 184 Co., 86 Wis. 587, 57 N. W. 364. and Pa. St. 588, 39 Atl. 493, 40 L. R. A. see, Kelley v. Schupp, 60 Wis. 76, 18 550, 63 Am. St. 809, 41 Wkly. Notes N. W. 725. In Deane v. Everett, 90 I04I CUSTOMS AXD USAGES. 1702 § 1702. Mississippi doctrine of presumption of knowledge. — The Mississippi doctrine is that a custom in regard to a certain business existing among all the persons engaged therein in a city is a general custom, with reference to which it will be presumed, in the absence of rebutting evidence, that contracts touching the business were entered into.'" Iowa 242, 57 N. W. 874, it is said : "A numljcr of witnesses were called by the defendant by which it was sought to prove that there was a cus- tom or usa^e of wholesale merchants by which tlicir traveling agents were authorized to bind their principals by fixing the price of goods sold. None of these witnesses claimed to have any knowledge of any such custom or usage in the sale of iron safes. This was sufficient ground for reject- ing the evidence. We do not deter- mine whether such evidence would be competent in any case." ^Eddy V. Northern S. S. Co., 79 Fed. 361 ; Burhridge v. Cumliel, 12 Miss. 371. 16 So. 792. "The offer of the defendants was to show not only that it was the custom of the cotton factors in New Orleans market, but also the custom of cotton factors generally, to imply instructions as to insuring cotton only to the season or cotton year in which such instruc- tions were given. * * * The testi- mony offered was to show, not a purely local custom, but a general one, and should have gone to the jury, under proper charges. Even if the offer had been to prove only the custom of the cotton factors in New Orleans, the testimony sh(5uld have been received. Says Mr. Lawson, in his work on Customs and Usages (pages 40, 41, § 17) : 'Knowledge of a usage is necessary in every case in order to bind a person by its terms. Sometimes this notice must be ex- pressly proved, and sometimes from its generality and notoriety the law raises the presumption that it v.'as known. It is therefore only as affect- ing the question of notice that the generality of the usage becomes material. And as express notice is dif- ficult to prove, because in the major- ity of cases nothing has been said by the parties in their negotiations about 66 — CoNTR.\cTS, Vol. 2 the usage, it is obvious that in the greatest number of instances it be- comes absolutely necessary to prove such a usage as the law will presume the party intended to be bound by; and, consequently, in all these cases the generality of the custom becomes vital, and the rule that a usage must be general is applied by the courts with rigor. It becomes, therefore, of importance to determine what the courts understand by this rule. And, in the first place, it is settled that a usage may be 'general,' as this term is used here, notwithstanding that it is confined to a particular city, town, or village. It may be generally known in that city, town, or village, and be understood by all persons dealing there, and yet it may not exist in any place beyond. * * * Again, in § 24, the author quotes approvingly from RIavor &c. of Pittsburg v. O'Neill. 1 'Pa. St. 342: 'All trades have their usages, and, when a contract is made with a man about the business of his craft, it is framed on the basis of its usage, which becomes a part of it, except vihcn its place is occupied by par- ticular stipulations' — and refers to many instances, illustrative, where, 'the usage being proved, it was held not material that the proof did not show, in addition, that the party to be affected by it has express notice of it,' but 'it would be presumed' that thev had notice. Sewell v. Corp, 1 Car. & P. 392; Given v. Charron. 15 Rid. 502; Lyon v. George, 44 Md. 295. In Couch v. Watson Coal Co., 46 Iowa 17, the same doctrine is ex- pressly stated, saying : 'If it had been shown that operators of mines in this state, similarly situated, and us- ing substantially the same kind of machinery, generally constructed cages with bonnets, it could be rea- sonably presumed that defendant had § 1/03 CONTRACTS. IO42 § 1703. Usage in violation of rules. — A rule promulgated by an employer for the conduct of his business by employes may be considered as abrogated as to third parties by a long usage to the contrary of which the employer has actual or constructive knowledge. This principle finds frequent illustration in the case of rules of railroads for the government of station agents: "The trading public, as a rule, have no access to the superintendent, and can only know the station agents with whom they have deal- ings. They can have no control of the business regulations of the railroad, and have no power of appointment or removal. Whatever regulation, custom or usage such station agent adopts, or permits to be adopted, the public must either conform to or will feel itself justified in conforming to. The rules observed by shippers in their general transactions, if continuous or frequent, although not universal, grow into a usage which would authorize others to treat it as the proper rule and as an element of the con- tract of affreightment. This constitutes the very spirit, the in- tent of a usage of trade. It supplies by implication an unex- pressed fact, or link in the chain of facts, which go to make up and prove the contract."^" § 1704. Agent's knowledge imputed to principal — Bill of lading — Charter party. — As a general rule, a principal is im- puted with his agent's knowledge of usages of the place to which knowledge of such custom,' etc. So, authorities supra and the following in § 18, ^Ir. Lawson says that, in the cases, cited in note 1 to § 17, to wit : case of particular usages, knowledge Gleason v. Walsh, 43 Maine 397; 'is to be shown by express proof or Thompson v. Hamilton, 12 Pick. 426; by evidence of their generality;' us- Perkins v. Jordan, 35 Maine 23, and ing the word 'generality' in the sense Clark v. Baker, 11 Mete. (Mass.) explained by him in § 17. And he 186) from a custom thus general in concludes (§ 24) : 'If a party closes that market that the plaintiffs (them- his eyes and shuts his ears to what selves cotton factors in that market) is universally known in his commu- knew of that custom, and contracted nity by others, he will not be allowed with reference to it — a presumption to shelter himself under a plea of which plaintiffs might, if they could, ignorance.' If, therefore, defendants rebut, all testimony touching which could show the custom of the cotton custom, in all its aspects, should have factors of the New Orleans market been submitted to the jury, the triors to be as insisted, they should have of the facts. See also, note to Wig- been allowed to do so. If thev sue- glesworth v. Dallison, 1 Smith's ceeded in showing such established. Lead. Cas. (9th Am. ed.) 842; Adams uniform, certain custom there, among v. Otterback, 15 How. 539." other cotton factors in that market, a ^" Montgomery &c. R. Co. v. Kolb, presumption would arise (under the IZ Ala. 396, 49 Am. Rep. 54. I043 CUSTOMS AND USAGES. § 1705 the agent is sent on business for his principal." A bill of lading must be assumed to have been made between the parties to it with reference to a settled usage of trade existing at the place where it was entered into, if such usage does not contradict, but is ex- planatory of it. In such a case, a shipper of merchandise, hav- ing knowledge of such a usage when he receives a bill of lading, is as much bound by it as he would be if it were written in the bill of lading; and, if the shipment is made by an agent of the shipper, the agent's knowledge of the usage is to be imputed to and is binding upon his principal." The principle has been ex- tended to charter parties. Thus where a usage existed in a cer- tain port for shipbrokers to execute charters without reference to the master of the vessel, a person permitting his vessel to be chartered by brokers at such port would be regarded as contract- ing according to such usage.^^ § 1705. Custom or usage to explain contract. — The pri- mary inquiry in the interpretation of any contract is the intent of the parties. Where this is clear, the construction is free from difficulty and no reference may be had to customs and usages to explain the meaning of the contract,^* for no rule is better settled than the rule that customs and usages cannot operate to change an express contract.^^ It is only where the contract is ambigu- " Guesnard v. Louisville &c. R. Co., ** Costikyan v. Sloan, 33 App. Cas. 76 Ala. 453; Randall v. Sprague, 74 (D. C.) 420; Western R. Co. v. Hart, Fed. 247, 21 C C. A. 334; Pardridge 160 Ala. 599, 49 So. 371; Glendale V. Cutler, 168 111. 504, 48 X. E. 125; Woolen Co. v. Protection Ins. Co., 21 Taylor v. Bailey, 169 111. 181, 48 N. Conn. 19. 54 Am. Dec. 309; Mulliner E. 200; Biggs v. Langhammcr, 103 v. Bronson, 14 111. App. 355 ; Randolph Ind. 94, 63 Atl. 198; Long v. Armsbv, v. Halden. 44 Iowa 327; Kimball v. 43 Mo. App. 253; Smith v. Clews. 114 Brawner, 47 Mo. 398; Mutual Safety N. Y. 190, 21 N. E. 160, 4 L R. A. Ins. Co. v. Hone, 2 N. Y. 235 ; Wads- 392, 11 Am. St. 627: Robertson v. worth v. Allcott, 6 N. Y. 64; Cooper National Steamship Co., 139 X. Y. v. Purvis. 46 N. Car. 141 ; Silver Val- 416, 34 N. E. 1053; First Xat. Bank lev Min. Co. v. North Carolina Smelt- V. Northern Pac. R. Co., 28 Wash, ing Co.. 122 N. Car. 542, 29 S. E. 439, 68 Pac. 965. 940; Tvson v. Belmont. 3 Blatchf. "= First Nat. Bank V. Northern Pac. (U. S.) 530. Fed. Cas. No. 1281; R. Co., 28 Wash. 439, 68 Pac. 965. Peyser v. Western Dry Goods Co., But see, Houghton v. Todd. 58 Nebr. 53 Wash. 633, 102 Pac. 750. 360. 78 N. W. 634: Robertson v. Na- ^Abendpost Co. v. Hertel. 67 111. tional Steamship Co., 139 N. Y. 416, App. 501 ; Meloche v. Chicago &c. R. 34 N. E. 1053. Co.. 116 Mich. 69, 74 N. W. 301; "Biggs v. Langhammcr, 103 Md. Burnham v. Milwaukee, 100 Wis. 55, 94, 63 Atl. 198. 75 N. W. 1014. ^ 170 /^o CONTRACTS. 1044 ous, imprecise, incomplete, or inconsistent that the search for the intent may be aided by reference to customs and usages.^" Here it is equally well settled that evidence of custom or usage may be received to explain an ambiguous contract or instrument. This evidence has its legitimate place in aiding to interpret the inten- tion of the parties to a contract — the real character and purpose of which is to be ascertained.^^ In the interpretation of a con- tract reference may always be made to a custom or usage con- sistent with the terms of the contract, peculiar to the subject- matter thereof, known to the parties, and probably intended to be included in the contract, as shown by their situation and pur- ^° Sampson v. Gazzan, 6 Port. (Ala.) 123, 30 Am. Dec. 578; Amer- ican Can Co. V. Agricultural Ins. Co., 12 Cal. App. 133, 106 Pac. 720; Kil- gorc V. Bulkley, 14 Conn. 362 ; Sey- mour V. Page, 33 Conn. 61 ; Lvon v. Culbertson, 83 111. 33, 25 Am' Rep. 349; Thompson v. Hamilton, 12 Pick. (Mass.) 425, 23 Am. Dec. 619; Day V. Holmes, 103 Mass. 306; Foye v. Leighton, 22 N. H. 71, 53 Am. Dec. 231; In re Hayes, 37 Misc. (N. Y.) 264, 75 N. Y. S. 312; Bradley v. Wheeler, 44 N. Y. 495; Babcock v. Mav, 4 Ohio 334: Renner v. Bank of Columbia, 9 Wheat. (U. S.) 581, 6 L. ed. 166; United States v. Macdaniel, 32 U. S. (7 Pet.) 1, 8 L. ed. 587; Linsley v. Lovelv, 26 Vt. 123 ; Lamb V. Klaus, 30 Wis. 94. ^' Costikyan v. Sloan, 33 App. Cas. (D. C.) 420; Barron v. Mobile & O. R. Co., 2 Ala. App. 555, 56 So. 862 ; Rose V. Lewis, 157 Ala. 521, 48 So. 105; McClure v. Cox &c. Co., 32 Ala. 617, 70 Am. Dec. 552; Hibler v. McCart- ney, 31 Ala. 501 ; Puritas Laundry Co. V. Green, 15 Cal. App. 654, 115 Pac. 660; Heistand v. Bakeman, 41 Colo. 20, 91 Pac. 1111; Knollin v. Western Live Stock Commission Co., 51 Colo. 355, 117 Pac. 999; Soper v. Tyler. 77 ■ Conn. 104, 58 Atl. 699 ; Burton v. Jen- nings, 185 Fed. 382; St. Paul Fire & Marine Ins. Co., Balfour, 168 Fed. 212 ; Albion Phosphate Min. Co. v. Wvllie. 77 Fed. 541, 23 C. C. A. 276; The Queen of the East, 12 Fed. 165; United States v. Kerr, 196 Fed. 503; Steidtmann v. Joseph Lay Co., 234 111. 84. 84 N. E. 640; Zibell v. W^estern Steel Co., 152 111. App. 80; Dixon v. Dunham, 14 111. 324; Leiter v. Em- mons, 20 Ind. App. 22, 50 N. E. 40; Todd V. Howell, 47 Ind. App. 665, 95 N. E. 279; Lyon v. Lenon, 106 Ind. 567, 7 N. E. 311; Gandy v. Seymour &c. Stave Co. (Ind. App.), 90 N. E. 915; Thomas v. Charles (Ky. App.), 119 S. W. 752; Farrar v. Stackpole, 6 Greenl. (Maine) 154, 19 Am. Dec. 201 ; Foley v. .Mason, 6 Md. 37; Drury V. Young, 58 Md. 546. 42 Am. Rep. 343; Shaw v. Mitchell, 2 Mete. (Mass.) 65; Floyd v. Mann, 146 .Mich. 356, 109 N. W. 679 ; Walker v. Syms, 118 Mich. 183, 76 N. W. 320; Cronk v. Mulvanev, 168 Mich. 346, 134 N. W. 9; Ledyard v. Hibbard, 48 Mich. 421, 12 N. W. 637, 42 Am. Rep. 474; Harper v. Calhoun, 7 How. (Miss.) 203; St. Louis v. St. Louis & S. F. R. Co. (Mo.), 129 S. W. 691; Barton v. McKelway, 22 N. J. L. 165 ; Sewall V. Gibbs, 1 N. Y. Super. Ct. 663; Turner v. Burrows, 5 Wend. (N. Y.) 541, affd. 8 Wend. (N. Y.) 144; Al- len V. ^Merchants' Bank, 22 Wend. (X. Y.) 215. 34 Am. Dec. 289; Hone V. Mutual Safety Ins. Co., 1 Sandf. (X. Y.) 137; McManus v. Donahue, 7 Alb. Law J. (N. Y.) 411; Fellows v. New York, 17 Hun (X. Y.) 249; Gring V. Vanderbilt, 13 N. Y. St. 457, 47 Hun (X. Y.) 633; Mallory v. Commercial Ins. Co., 22 N. Y. Super. Ct. 101 ; Mangum v. Far- rington, 1 Daly (N. Y.) 236; In- glebright v. Hammond, 19 Ohio 337, 53 Am. Dec. 430; Manerud v. Eu- gene (Ore.). 124 Pac. 662; Miller v. Wiggins, 227 Pa. 564, 76 Atl. 711; Morris v. Supplee, 208 Pa. St. 253. 57 Atl. 566; Burger v. Farmers' Mut. I045 CUSTOMS AND USAGES. § 1 706 poses, the nature of the subject-matter, and the attendant circum- stances.^^ Such evidence is pecuharly apphcable to explain the contract where the parties thereto have omitted to state import- ant parts of their agreement and the usage invoked is consistent with the express terms of the contract and the usage can clearly be presumed to have been intended by the parties.^^ "Within bounds, also, known, established, and general usage may be read into the contract to get the meaning of its language, when a doubt in regard to that meaning fairly arises on the whole instru- ment, keeping always steadily in mind that the exposition which springs from the very vitals of the contract is the fittest and most powerful."" § 1706. Custom or usage to show intention of parties. — Evidence of usage or custom is not considered in the nature of parol evidence to contradict or vary the legal import of a written agreement but is received for the purpose of ascertaining the intent and understanding of parties, by their contracts, which are made with reference to such usage or custom. The use of such evidence is confined, however, to cases where the intent is not clearly expressed in the contract," for it is to be remembered that Ind. Co., 71 Pa. St. 422; American (Ala.) 123, 30 Am. Dec. 578 ; Leach v. Lead Pencil Co. v. Nashville & St. Bcardslee, 22 Conn. 404; Kilgore v. L. R. Co., 124 Tenn. 57, 134 S. W. Bulkley. 14 Conn. 362; Seymour v. 613; Woldert v. Arledge, 4 Tex. Civ. Page, 33 Conn. 61 ; Lonergan v. Stew- App 692, 23 S. W. 1052; Turnbull art, 55 111. 44; Off v. Inderrieden Co., V. Citizens' Bank, 4 Woods. (U. S.) 74 III. App. 105; Fay v. Strawn. 32 111. 193, 16 Fed. 145; Anderson v. Daly 295; Lyon v. Culbertson, 83 111. 33, Mming Co., 16 Utah 28, 50 Pac. 815; 25 Am. Rep. 349; Rindskoff v. Bar- Salmon Falls Alfg. Co. V. Goddard, rctt, 14 Iowa 101; Leach v. Perkms, 14 How. (U. S.) 446, 14 L. ed. 493; 17 Maine 462, 35 Am. Dec. 268; National Bank v. Burkhardt, 100 U. Thompson v. Hamilton, 12 Pick. 5 686, 25 L. ed. 766; Bowman v. First (Mass.) 425, 23 Am. Dec. 619; Day Nat. Bank, 9 Wash. 614, 38 Pac. 211, v. Holmes. 103 Mass. 306; Cole v. 43 Am. St. 870; Lavcock v. Parker, Skrainka, 37 Mo. App. 427; Foye v. 103 Wis. 161, 79 N. W. 327; Vollmar Leighton. 22 N. H. 71, 53 Am. Dec. 6 Below Co. V. Bayfield Mill Co., 146 231 ; Smith v. Clayton, 29 N. J. L. Wis 412 131 N. W. 899; Gehl v. 357; Miller v. Ins. Co., 1 Abb. N. C. Milwaukee Produce Co., 116 Wis. (N. Y.) 470; Bradley v. Wheeler, 44 263, 93 N. W. 26. N. Y. 495; Babcock v. May. 4 Ohio ^Raleigh Lumber Co. V. Wilson, 69 334; United States v. Macdaniel, 32 W. Va. 598, 72 S. E. 651. U. S. (7 Pet.) 1, 8 L. ed. 587; Renner '"Corey v. Struve, 16 Cal. App. 310, v. Bank of Columbia, 9 Wheat. (U. 116 Pac '975. S.) 581, 6 L. ed. 166; Linsley v. '"St. Louis V. St. Louis & S. F. R. Lovely. 26 Vt. 123; Lamb v. Klaus. 30 Co. (Mo.), 129 S. W. 691. Wis. 94. In construing a contract for " Sampson v. Gazzam, 6 Port, the sale of canned goods on commis- § 1/07 CONTRACTS. 1046 usage cannot make a contract where there is none/^ Where there is an absence of clear stipulations in contracts the usage may be proved to show the actual intent and purpose of the par- ties. General usage affecting any branch of business furnishes good evidence of what is regarded as right and reasonable in that respect."*^ § 1707. Construction of words in contract. — The words of a contract are to be understood in their ordinary and popular sense/* unless by the usage of trade or otherwise, they have, in respect to the subject-matter, acquired a peculiar meaning;*^ and such meaning is not clearly inconsistent with the terms of the sion, evidence tending to show gen- eral custom prevailing in the business of selling such goods for future de- livery is competent for the purpose of determining the rights and obliga- tions of the parties in respect to mat- ters about which the contract is silent. Off V. Inderrieden. 74 111. App. 105. *^ Barnard v. Kellogg, 10 Wall. (U. S.) 383, 19 L. ed. 987; First National Bank v. Burkhart, 100 U. S. 686, 25 L. ed. 766; Bliven v. Screw Co., 23 How. (U. S.) 433, 16 L. ed. 514. "Leach v. Beardslee, 22 Conn. 404. **Hall V. Rand, 8 Conn. 560; Stearns v. Sweet, 78 111. 446; Stet- tauer v. Hamlin, 97 111. 312; Gibbs v. People's Nat. Bank. 198 111. 307, 64 N. E. 1060; Willmering v. Mc- Gaughey, 30 Iowa 205, 6 Am. Rep. 673- Cash v. Hinkle, 36 Iowa 623; Grant v. Dabney, 19 Kans. 388, 27 Am. Rep. 125; Hawes v. Smith, 12 Maine 429; Bradshaw v. Bradbury, 64 Mo. 334; Lovelace v. Traveller's Protective Assn., 126 Mo. 104, 28 S. W. 877, 30 L. R. A. 209, 47 Am. St. 638; Moore v. Phoenix Ins. Co., 62 N H. 240, 13 'Am. St. 556; Ripley v. ;Etna Ins. Co., 30 N. Y. 136, 86 Am. Dec. 362; Schoonmaker v. Hoyt, 148 N. Y. 425, 42 N. E. 1059; Smith v. Abington Sav. Bank, 171 Mass. 178; 50 N. E. 545; Schuvkill Nav. Co. v. Moore, 2 Whart. (Pa.) 476, 491 : Mo- nongahela Nav. Co. v. Coons, 6 Watts. & S. fPa.) 101; Moran v. Prather. 23 Wall, f U. S.") 492, 23 L. ed. 121 ; Clark V. Lillie, 39 Vt. 405: Williams v. South Penn. Oil Co., 52 W. Va. 181, 43 S. E. 214, 60 L. R. A. 795. « Callahan v. Stanley, 57 Cal. 476; Higgins V. California &c. Asphalt Co., 120 Cal. 629. 52 Pac. 1080 ; In re Cur- tis-Castle Arbitration, 64 Conn. 501, 30 Atl. 769, 42 Am. St. 200; Myers V. Walker, 24 111. 133; University of Illinois v. Bruner, 175 111. 307, 51 N. E. 687; Heath &c. Mfg. Co. v. Na- tional &c. Oil Co., 197 111. 632, 64 N. E. 732 ; Morningstar v. Cunningham, 110 Ind. 328, 11 N. E. 593, 59 Am. Rep. 211; Rastetter v. Reynolds, 160 Ind. 133, 66 N. E. 612; Wood v. Al- len, 111 Iowa 97, 82 N. W. 451 ; Sey- mour v. Armstrong, 62 Kans. 720, 64 Pac. 612; Patterson v. Crowther, 70 Md. 124, 16 Atl. 531 ; Miller v. Stev- ens, 100 Mass. 518, 97 Am. Dec. 123, 1 Am. Rep. 139; Mooney v. Ins. Co., 138 Mass. 375, 52 Am. Rep. 277; Breen v. Moran, 51 Minn. 525, 53 N. W. 755; Snoqualmi Realty Co. v. Moynihan, 179 Mo. 629, 78 S. W. 1014; Smith & Wallace Co. v. Lunger, 64 N. J. L. 539, 46 Atl. 623; Hinton v. Locke, 5 Hill. (N. Y.) 437; Walls v. Bailey. 49 N. Y. 464, 10 Am. Rep. 407; Atkinson v. Truesdell, 127 N. Y. 230. 27 N. E. 844 ; Long v. David- son, 101 N. Car. 170, 7 S. E. 758; Lowe V. Lehman, 15 Ohio St. 179; Steele Works v. Dewey, 2>1 Ohio St. 242 ; McCulskv v. Klosterman, 20 Ore. 108, 25 Pac. "366, 10 L. R. A. 785n ; Brown v. Brooks, 25 Pa. St. 210; Mc- Cullough V. Ashbridge, 155 Pa. St. 166. 26 Atl. 10; Morris v. Supplee, 208 Pa. 253. 57 Atl. 566; Dwver v. Brenham, 70 Tex. 30, 7 S. W. 598. I047 CUSTOMS AND USAGES. § 1707 contract." The terms of mercantile contracts are to be under- stood in the sense which they have acquired from mercantile usage. And such a usage will be considered as established when it is uniform and has existed a suflicient length of time to have become generally known, and to warrant a presumption that con- tracts are made with reference to it." This, of course, excludes *' Hollovvay v. McNear. 81 Cal. 154, 22 Pac. 514; Gilbert v. McGinnis, 114 111. 28, 28 X. K. 382; Lake Shore &c. R. Co. V. Richards, 126 111. 448, 18 N. E. 794; Scott v. Hartley, 126 Ind. 239, 25 X. E. 826; Van Camp Pack- ing Co. V. Hartman, 126 Ind. 177, 25 N. E. 901; Randolph v. Halden, 44 Iowa 327; Rvan v. Dubuque, 112 Iowa 284, 83 N. W. 1073; Baltimore Base- ball &c. Co. V. Pickett, 78 Md. 375, 28 Atl. 279-, 22 L. R. A. 690, 44 Am. St. 304; Brown v. Foster, 113 Mass. 136, 18 Am. Rep. 463; Menage v. Rosenthal, 175 Mass. 358, 56 X. E. 579; Lamb v. Henderson, 63 Mich. 302, 29 N. W. 732; Meloche v. Chi- cago &c. R. Co., 116 Mich. 69, 74 N. W. 301 ; Globe Milling Co. v. Minne- sota Elevator Co., 44 Minn. 153, 46 N. W. 306; Wolff v. Campbell, 110 Mo. 114, 19 S. W. 622; Schenck v. Griffin, 38 X. J. L. 462; Collender v. Dinsmore. 55 X. Y. 200, 14 Am. Rep. 224; O'Donohue v. Leggett, 134 X. Y. 40, 31 N. E. 269; Beer v. Forest City Mut. Ins. Co.. 39 Ohio St. 109; Birmingham Fire Ins. Co. v. Kroe- gher, 83 Pa. St. 64, 24 Am. Rep. 147; Pittsburg Ins. Co. v. Frazee, 107 Pa. St. 521 ; Moran v. Prather, 23 Wall. (U. S.) 492, 23 L. ed. 121; The Gazelle, 128 U. S. 474, 32 L. ed. 496, 9 Sup. Ct. 139; Dewitt v. Berrv, 134 U. S. 306, 33 L. ed. 896, 10 Suj). Ct. 536; Southwest Virginia Mineral Co. V. Chase, 95 Va. 50, 27 S. E. 826; Mowatt V. Wilkinson, 110 Wis. 176, 85 X. W. 661. *' Smith V. Phipps. 65 Conn. 302. 32 Atl. 367; Beach v. Travelers' Ins. Co., 73 Conn. 118, 46 Atl. 867; Knollin v. Western Live Stock Commission Co., 51 Colo. 355. 117 Pac. 999; Bissell v. Ryan. 23 111. 566; Lvon v. Cul- bertson. 83 111. 33, 25 Am. Rep. 349; Cleveland &c. Ry. Co. v. Jenkins. 174 111. 398. 51 N. E. 811. 62 L. R. A. 922, 66 Am. St. 296; Morningstar v. Cun- ningham, 110 Ind. 328, 11 N. E. 593, 59 Am. Rep. 211; McSherry v. Blanchfield, 68 Kans. 310, 75 Pac. 121 ; Duling v. Pluladelphia, W. & B. R. Co., 66 Md. 120, 6 Atl. 592; Balti- more Baseball &c. Co. v. Pickett, 78 Md. 375, 28 Atl. 279. 22 L. R. A. 690, 44 Am. St. 304; Howard v. Great Western Ins. Co., 109 Mass. 384; Thompson v. Hamilton, 12 Pick. CMass.) 425, 23 Am. Dec. 619; Hey- worth V. Miller Grain Co., 174 Mo. 171, 73 S. W. 498; McKee v. Wild, 52 Xebr. 9, 71 X. W. 958; Smith v. Wright. 1 Caines (X. Y.) 43, 2 Am. Dec. 162; Rickerson v. Hartford Fire Ins. Co., 149 X. Y. 307, 43 X. E. 856; Adams v. Pittsburg Ins. Co., 95 Pa. St. 348, 40 Am. Rep. 662; Ambler v. Phillips, 132 Pa. 167, 19 Atl. 71; Hansbrough v. Xeal, 94 Va. 722, 27 S. E. 593; Vollmar & Below Co. v. Bavfield Mill Co.. 146 Wis. 412, 131 X. W. 899; Lamb v. Klaus, 30 Wis. 94. Usage of trade permissible to show that sale of commodity "sight draft against papers" meant "that the seller should ship the goods and re- ceive payment only on presentation of shipping receipt or bill of lading showing shipment. Ellsworth v. Knowles, 8 Cal. App. 630, 97 Pac. 690; Gandv v. Sevmour Slack Stave Co. (Jnd. .App.). 90 X. E. 915; Steidt- manrj v. Joseph Lay Co., 234 111. 84, 84 X. E. 640 ("f. o. b. cars at place of business") ; Birelv v. Dodson, 107 ^Id. 229, 68 Atl. 488 (invoice) ; Mc- Lean V. Sanduskv Lumber &c. Co., 160 Mich. 324, 125 X. W. 31 ; Riley- Wilson Grocer Co. v. Sevmour Can- ning Co., 129 Mo. App. 325. 108 S. W. 628. In an action on a contract for the sale of "all patterns that are sta- ple and down to date," where no cri- terion was fixed by which to deter- mine w'hat patterns came within that description, it was error to exclude evidence regarding the standard usu- ally adopted by the trade in selecting and purchasing such patterns. Hay- § 1/07 CONTRACTS. IO48 the individual customs of one of the parties. Accordingly, in a case where a mortgage provided that it should be void on payment of the note thereby secured according to its "tenor and effect," and the note required payment of a certain sum by a spe- cified date, without providing for interest, a custom of the mort- gagee to charge interest on such notes cannot be shown to ex- cuse a refusal to enter a satisfaction after payment of the amount of the note.'*'' The word "mackerel" may be shown by custom to mean clear and not rusty mackerel.*" In a contract for the s:ile of lumber which excludes "waney" stock, evidence is admissible of the meaning of the term and the amount of such stock as would warrant the rejection of the shipment.^" A provision in a contract requiring, "brick to be laid close, and the joints thoroughly flushed with mortar," may be controlled by a custom among bricklayers of the locality which gives meaning to the term "flushed. "^^ And so, when the sellers of logs, and those who have a right to collect toll on them, after stipulating for measurement by "board measure," do not choose to express their intention, in the contract, as to the mode of establishing the board measure, custom and usage will be admitted to supply the omission.^- In an action on an account for polished marble slabs, ordered by defendant to be of a specified thickness, plain- tiff may show that in the marble trade such an order means slabs of the stated thickness as they come from the saw, and does not require them to be of such thickness when prepared for use. And this admission of evidence as to usage is not inconsistent den V. Frederickson, 55 Nebr. 156, one hundred bales, interest added" 75 N. W. 530. Term "winter season" means under trade usage that pur- in policy permitting sawmill to re- chaser could pay either in cash or main idle during winter season by note drawn to his order and in- means under Michigan usage the pe- dorsed by him. Morris v. Supplee, riod between closing mill in fall and 208 Pa. St. 253, 57 Atl. 566. the arrival of logs in spring. Barker ^'Thomason Grocery Co. v. Mit- V. Citizens' &c. Fire Ins. Co., 136 chell, 114 Ala. 315, 21 So. 461. Mich. 626, 99 N. W. 866. Calumet "Procter v. Atlantic Fish Co., 208 Const. Co. V. Board of Education, 78 Mass. 351, 94 N. E. 281. N. J. L. 676, 76 Atl. 970 (meaning "^"Burton v. Jennings, 185 Fed. 382. of term "rigidly attached" in concrete "Laycock v. Parker, 103 Wis. 161, instruction contract). Rule specially 79 N. W. 327. applicable to technical terms. Soper ^' Destrehan v. Louisiana Cvpress V. Tyler, 11 Conn. 104, 58 Atl. 699. Lumber Co., 45 La. Ann. 920, 13 So. Expression "cash basis, note at sixty 230, 40 Am. St. 265; Hansbrough v. days from date of shipment of each Neal, 94 Va. 122, 21 S. E. 593. I049 CUSTOMS AND USAGES. § 1708 with the general rule that a written contract is not to be con- tradicted or varied by parol evidence." § 1708. Construction of words of contract — Unusual and teohnical words. — Resort may be had to established usages to explain and illustrate the meaning of new and unusual words used in a technical or peculiar sense, provided the usage does not vary or contradict the meaning of the contract.^* But evidence ''Evans v. Western Brass Mfg. Co., 118 Mo. 548, 24 S. W. 175. "The general rule undoubtedly is that pa- rol evidence cannot be admitted to contradict, add to, or vary a written contract; and it is the duty of the court to construe the writing. Bunce V. Beck, 43 Mo. 266; Black River Lumber Co. v. Warner, 93 Mo. 374, 6 S. W. 374 ; State v. Hoshaw, 98 Mo. 358, 11 S. W. 759. But it is equally well settled that proof of usage is often admitted to interpret the mean- ing of the language used, for under many circumstances the parties may be supposed to contract with refer- ence to a usage or custom, as they are presumed to use words in their ordi- nary signification. 1 Greenleaf Ev., § 292. 'The courts,' says Starkie, 'have long allow-ed mercantile instruments to be expounded according to the us- age and customs of merchants, who have a style and language peculiar to themselves, of which usage and cus- tom are the legitimate interpreters.' Starkie Ev. (10th ed.), p. 701. Hence it has been held by this court that it may be shown, by way of a general and well-established custom, that two packs of shingles of a certain size constitute a thousand. Soutier v. Kcl- lerman. 18 Mo. 509. See also. Blair v. Corby, Z7 Mo. 314; Kimball v. Brawner, 47 Mo. 398; Fruin v. Crvs- tal R. Co., 89 Mo. 402, 14 S. W. 557 ; Wolff V. Campbell. 110 Mo. 119, 19 S. W. 622 ; Robinson v. United States. 13 Wall. 363. It is true, as some of the cases just cited show, that usage cannot be permitted to control the terms of a special contract by intro- ducing something which is repugnant to or inconsistent with the contract. But it does not follow that evidence of usage can only be received where the W'ords of the contract are ambigu- ous. Such evidence is often received to show tliat words are used in a sense different from their ordinary meaning, as in Soutier v. Kellerman, 18 Mo. 509. Such evidence is received on the theory that the parties knew of the usage or custom, and con- tracted in reference to it, and in such cases the evidence does not add to or contradict the language used, but sim- ply interprets and explains its mean- ing. It was therefore competent for the plaintiffs to show that in the mar- ble trade an order for slabs of a specified thickness, prepared for use, means slabs of the stated thickness as they come from the saw; and, the evidence being admissible, there was no error in refusing to instruct it out of the case, for that is what the refused instruction seeks to do. A custom or usage, to be of any avail, ought to be shown to be well estab- lished, but the defendant did not seek to have this matter explained by in- structions. We do not know what the evidence of the alleged custom and usage was, for very little of it is pre- served in the bill of exceptions. Though such evidence ought to be admitted with care, still we cannot say the court erred in admitting the evidence or in refusing the instruc- tion." "Barlow v. Lambert. 28 Ala. 704, 65 Am. Dec. 374; Callahan v. Stan- lev, 57 Cal. 476; Johnston-Woodburv Hat Co. v. Lightbodv. 18 Colo. .^pp. 239, 70 Pac. 957; llindsav v. Cusi- mano. 10 Fed. 302, 12 Fed. 503 ; Bul- lock v. Finley. 28 Fed. 514; Allegro's Admrs. v. Marvland Ins. Co., 2 Gill. 61' T. (Md.) 1.^6, 20 Am. Doc. 424: Williams v. Woods, 16 Md. 220; Fatnn v. Smith. 20 Pick. (Mass.) 150; A\'hitmarsh v. Conwav Fire Ins. Co., 16 Gray (:\Iass.) 359, 77 Am. Dec. § 1709 CONTRACTS. IO5O of this character is improper in cases where the meaning of such terms is clear and free from doiibt.^^ On the theory that words and terms were used in an unusual sense, resort has been had to usage to determine the meaning of such expressions as "week- ly" in a theatrical salary contract for a season with the conclusion that it excluded the period when the actor was not at work after the regular season had closed ;°** the quality of grain intended by the term "prime barley" in a contract for the sale of barley;" the meaning of "old style tin" in a roofing contract;^* the mean- ing in the oil trade of the expression "buyers' option, ten days and five days notice" f^ the term "yearling" meaning cattle born at any time from January first to June first of the year previous;^" the meaning of the words "six per cent, off for cash" indorsed on a bill of goods f^ that a sale of a grade of paper of "fifty-three pounds weight" includes the wrapping necessary for transporta- tion f- that the word "noon" in a policy which expires at "noon" of a fixed date means solar, and not standard noon, according to the usage of the locality ;^^ that the term "dry goods" in a contract for the sale of dry goods does not include clothing, hats, and caps, according to the usages of the particular locality.^* § 1709. Contract not created by custom or usage. — Usage or custom cannot create or bring a contract into being where without it no contract exists. The contract arises out of the intention of the parties to do or not to do certain things 414; Nonantum Worsted Co. v. North 15 L. ed. 656; Moran v. Prather, 23 Adams Mfg. Co., 156 Mass. 331, 31 Wall. (U. S.) 492, 23 L. ed. 121. N. E. 293; Coit v. Commercial Ins. ^^ Leavitt v. Kennicott, 157 111. 235, Co., 7 Johns. (N. Y.) 385, 5 Am. Dec. 41 N. E. 737. 282; Mead v. Northwestern Ins. Co., " Whitmore v. Coates, 14 Mo. 9. 7 N. Y. 530; Seld. Notes (N. Y.) 21; "^^ Storck v. Mesker, 55 Mo. App. 26. Brunold v. Glasser. 25 Misc. (N. Y.) "° Hackett v. Smith, 4 Wkly. Notes 285, 53 N. Y. S. 1021 ; Long v. David- Cas. (Pa.) 475. son, 101 N. Car. 170, 7 S. E. 758; Gor- «" Parks v. O'Connor, 70 Tex. 377, don V. Little. 8 S. & R. (Pa.) 533, 11 8 S. W. 104. Am. Dec. 632; Morris v. Supplee, 208 "^Linsley v. Lovely, 26 Vt. 123. Pa. 253, 57 Atl. 566; Harris v. Nich- "^Everett v. Indiana Paper Co., 25 olas. 5 Mumf. (Va.) 483. Tnd. App. 287, 57 N. E. 281. "Pedersen v. Eugster, 14 Fed. 422; "^Rochester German Ins. Co. v. Branch v. Palmer, 65 Ga. 210; Galena Peaslee-Gaulbert Co., 120 Ky. 752, 27 Ins. Co. v. Kupfer, 28 111. 332, 81 Am. Ky. L. 1155. 87 S. W. 1115, 1 L. R. Dec. 284; Macomber v. Parker. 13 A. (N. S.) 364. Pick. (Mass.) 175; Garrison v. Mem- «*Wood v. Allen, 111 Iowa 97, 82 phis Ins. Co., 19 How. (U. S.) 312, N. W. 451. 1 051 CUSTOMS AND USAGES. § 1 710 and, of course, they cannot be held to have contracted to do or not to do some things of which tliey neither had, nor are pre- sumed to have had knowledge or notice. In other words, usage or custom cannot make a contract when the parties themselves have made none."'* Thus, upon an issue in an action between two real estate brokers as to whether there was an. agreement between them to divide commissions for a certain sale, evidence of a usage among real estate brokers that two making a sale divide the commission equally unless a different arrangement is made is not admissible, for the existence of such a usage would not suggest a presumption that the brokers did or did not make a special arrangement for the division of the commission earned.*'*' So, a custom of attorneys in a certain county to become responsi- ble for sheriffs' fees in their cases would not render an attorney liable for such fees in the absence of express agreement, since the custom of certain persons to make express contracts is not suffi- cient to establish a contract with others by implication."^ So, proof of a custom of a bank to receive from its stockholders their stock in payment of their debts to the bank may not be shown to establish an implied contract to do so in a particular case."® § 1710. Incorporation of custom or usage in contract. — Generally speaking, persons who deal with each other in a busi- ness in which certain customs or usages are firmly established are presumed to deal in reference to such usages and regulations, ^ Salomon v. McRae, 9 Colo. App. Dec. 87 ; Thomas v. Guarantee Title 23, 47 Pac. 409; Municipal Inves. Co. Co., 81 Ohio St. 432. 91 X. E. 183; V. Industrial &c. Trust Co., 89 Fed. Albright v. Bedford Co.. 106 Pa. St. 254; Cooper v. Berry, 21 Ga. 526. 68 582; Colcock v. Louisville C & C R. Am. Dec. 468; Latimer v. Alexander, Co., 1 Strob. (S. Car.) 329; Guggen- 14 Ga. 259; Hedenberg v. Seeberger, heim v. Rosenfeld, 9 Baxt. (Tenn.) 140 111. App. 618; McSherry v. Bland- 533; National Bank v. Burkhardt, 100 field, 68 Kans. 310, 75 Pac. 121 ; Wat- (U. S.) 686, 25 L. ed. 766; Thompson kins' Heirs v. Eastin, 1 A. K. Marsh, v. Riggs, 5 Wall. (U. S.) 663, 18 L. (Kv.) 402; Davis V. Turnbull, 7 Mart. ed. 704; Tillev v. Cook. 103 U. S. (O. S.) (La.) 228; Ulmer v. Earns- 155. 26 L. ed.'374: Savings Rank v. worth, 80 Maine 500, 15 Atl. 65; Ward, 100 U. S. 195. 25 L. ed. 721. Smith V. Barringer, 37 Minn. 94, 33 " Smith v. Barringer. 37 Minn. 94, N. W. 116; Schenck v. Griffin. 38 N. 33 N. W. 116. See also, Hedenberg J. L. 462; Dobson v. Kuhnla. 66 Hun v. Seeberger, 140 111. App. 618. (N. Y.) 627, 49 N. Y. St. 735, 20 N. ''Doughty v. Paige, 48 Iowa 483. Y. S. 771 ; Collender v. Dinsmnre, 55 ** Harper v. Calhoun, 7 How. N. Y. 200. 14 Am. Rep. 224; Dvkers (Miss.) 203. V. Allen, 7 Hill (N. Y.) 497, 42" Am. § i/io CONTRACTS. 1052 and such customs and usages become a part of their contracts, unless an intention to exckide them is clearly shown by the con- tract itself. It is another statement of the principle to say that the parties to a contract are presumed to contract with reference to uniform, continuous, and well settled customs and usages pertaining to the subject-matter of the contract, where the customs and usages are not in opposition to well settled principles of law, and are not unreasonable and not in contradiction of the express terms of the contract, oral or in writing.^'* And where this custom or usage is general and well established, it usually be- «* Humfrey v. Dale, 7 EI. & Bl. 266, 90 E. C. L. 266 ; Heywood v. Picker- ing, 43 L. J. Q. B. 145; Robertson V. Jackson, 2 C. B. 412, 52 E. C. L. 412; Leidemann v. Schultz, 14 C. B. 38, 78 E. C. L. 38; Russian Steam Nav. Trading Co. v. Silva, 13 C. B. (N. S.) 610, 106 E. C. L. 610; Syers V. Jonas, 2 Exch. Ill; Rushforth v. Hadfield, 6 East 519; Mallan v. May, 13 M. & W. 511; Phillipps v. Briard, 1 H. & X. 21 ; Crawshav v. Homfray, 4 Barn. & Aid. 50, 6 E. C._ L. 385 ; Wiltshire v. Sims, 1 Camp. 258; Dick- inson V. Lihvall, 4 Camp. 279; Ezell V. Miller, 6 Port. (Ala.) 307; Samp- son V. Gazzam, 6 Port. (Ala.) 123. 30 Am. Dec. 578; Ezell v. Miller, 6 Port. (Ala.) 307; Mobile Marine Dock &c. Ins. Co. v. McMillan, 27 Ala. IT; Waring v. Gradv's Exr., 49 Ala. 465, 20 Am. Rep. 286; Vulcan Iron Works v. Cook, 15 Cal. App. 410, 114 Pac. 995: Halsey v. Brown, 3 Dav (Conn.) 346; Smith v. Russell Lumber Co., 82 Conn. 116, 72 Atl. 577; Bragg v. Bletz. 7 D. C. 105; Ward V. Vosburgh, 31 Fed. 12; The Venezuela, 173 Fed. 834; Hostetter V. Grav, 11 Fed. 179, affd. 137 U. S. 30, 34' L. ed. 568, 11 Sup. Ct. 1; Wheelwright v. Dyal, 99 Ga. 247, 25 S. E. 170; Munn v. Burch, 25 111. 35; McCurdy v. Alaska &c. Commercial Co., 102 111. 120; Steidtmann v. Jo- seph Lav Co., 234 111. 84. 84 X. E. 640; Doane v. Dunham, 79 111. 131; United States Life Ins. Co. v. Ad- vance Co.. 80 111. 549; Oldershaw v. Knoles. 4 111. App. (iZ\ Swern v. Churchill, 155 111. App. 505; Collins Ice-Cream Co. v. Stephens, 189 111. 200. 59 N. E. 524; Chisholm v. Bea- man Machine Co., 160 111. 101, 43 N. E. 796, affg. 57 111. App. 344; Leavitt V. Kennicutt, 157 111. 235, 41 N. E. IZl ; Todd v. Howell, 47 Ind. App. 665, 95 X. E. 279; Cole v. Leach, 47 Ind. App. 341, 94 X. E. 577; Lupton V. Xjchols, 28 Ind. App. 539, 63 X. E. 477; Morningstar v. Cunningham, 110 Ind. 328, 11 X. E. 593, 59 Am. Rep. 211; Postal Telegraph-Cable Co. v. Louisville Cotton Oil Co., 136 Ky. 843, 122 S. W. 852 ; Thompson v. Pack- wood, 2 La. Ann. 624; Bodfish v. Fox, 23 Maine 90, 39 Am. Dec. 611; Mer- chants' Mut. Ins. Co. v. Wilson. 2 ^Id. 217; Appleman v. Fisher, 34 I\Id. 540; Marrett v. Brackett. 60 Maine 524; Birely v. Dodson, 107 Md. 229, 68 Atl. 488; Clark v. Baker, 11 Mete. (Mass.) 186, 45 Am. Dec. 199; Mooney v. Howard Ins. Co., 138 Mass. 375, 52 Am. Rep. 277; Kar- wick V. Pickands (Mich.), 137 X. W. 219; Burbridge v. Gumbel, 72 ]Miss. 371, 16 So. 792; Soutier v. Keller- man, 18 Mo. 509; Staroske v. Pu- litzer Pub. Co., 235 Mo. dl . 138 S. W. 36; Lebanon v. Heath, 47 X. H. 353; Whitehouse v. Moore, 13 Abb. Pr. (X. Y.) 142; Esterlv v. Cole, 3 Const. (X. Y.) 502; Dalton v. Daniels, 2 Hilt. (X. Y.) 472; Walls v. Bailey, 49 X. Y. 464, 10 Am. Rep. 407 ; ^lil- ler v. Fischer, 142 App. Div. (X. Y.) 172, 126 X. Y. S. 996; Weir v. Dwver, 62 Misc. (X. Y.) 7, 114 X. Y. S. 528; Motlev V. Elmenhorst. 142 App. Div. (X. Y.) 830, 127 X. Y. S. 625; Pul- lan V. Cochran, 6 Ohio Dec. (reprint) 1070. 10 Am. Law Rec. 184, 6 Vv'kly. Law Bui. 390; Adams v. Palmer, 30 Pa. St. 346; Conner v. Robinson, 2 Tlill Law (S. Car.) 354; Con.soli- dated Kansas Citv &'C. Refininnr Co. V. Gonzales, 50 Tex. Civ. App. 79, 109 1053 CUSTOMS AXD USAGES. § I7IO comes a part of the contract whether the party knows of the cus- tom or not.'^" The principle finds frequent application in the cus- toms and usages of banks as to the discount and protest of com- mercial paper,"' in port customs," the customs which relate to tlie sale of commodities through boards of trade," the customs which pertain to contracts having to do with charter parties,^* and con- tracts for the transportation of goods by water.'' So, a general usage of merchants which fixes a period at which book accounts bear interest is impliedly made a part of a contract in a locality for the sale of goods." So with the usage as to what constitutes a season's employment in a particular trade,'' and similarly as to trade customs as to inspection,"* and delivery of goods.'" The principle must always be understood with the qualification that the custom or usage satisfies the definition of a good usage or custom. A particular trade usage will not bind a party having no knowledge of its existence.*"^ The custom or usage is, of course, binding where the contract expressly provides for its S. W. 946; Bliven v. New England Screw Co., 23 How. (U. S.) 420. 16 L. ed. 510; Keogh v. Daniell, 12 Wis. 163. '* Steidtmann v. Joseph Lav Co., 234 111. 84. 84 N. E. 640; Samuels v. Oliver, 130 111. 73. 22 X. E. 499; Tay- lor V. Bailey, 169 111. 181, 48 N. E. 200; Lyon v. Culbertson, 83 111. ZZ, 25 Am. Rep. 349; Doane v. Dunham, 79 111. 131 ; Bailey v. Bensley, 87 111. 556. "Bridgeport Bank v. Dyer. 19 Conn. 136; Bank of Statesville v. Pinkers. d^Z N. Car. 2)77; Fowler v. Brantlev, 14 Pet. (U. S.) 318, 10 L. ed. 473.' ''The Glover, 1 Brown Adm. 166; Charlotte Oil &c. Co. v. Hartog. 85 Fed. 150. 29 C. C. A. 56. " Corbett v. I'nderwood. 83 111. 324, 25 Am. Rep. -302; Tavlor v. Bailev, 169 111. 181. 48 N. E. 200; Whitehouse V. Moore. 13 Abb. Pr. CN. Y.) 142. But see Greelev v. Doran Wright Co., 148 Mass. 116.' 18 X. E. 878. ' '* Weber v. Kingsland. 21 N. Y. Super. Ct. 415; Lamb v. Parkman, 1 Sprague (U. S.) 343, Fed. Cas. Xo. 8020. '^ Walsh V. Frank. 19 Ark. 270; Barber v. Brace, 3 Conn. 9. 8 Am. Dec. 149; Miller v. Fischer. 142 App. Div. (N. Y.) 172, 126 N. Y. S. 996. A party to a contract to furnish a tug and booms for towing logs may .=how that the contract was made with reference to the custom that the re- fponsibility for loss of logs was on the adverse partv. Karwick v. Pick- ands (Mich.), 137 N. W. 219. '"Adams v. Palmer. 30 Pa. St. 346; Koons v. :\Iillcr, 3 Watts & S. (Pa.) 271. " Johnston- Woodburv Hat Co. v. Lightbodv, 18 Colo. App. 239. 70 Pac. 95_7. " Hanson v. Wittcnbersr. 205 Mass. 319. 91 X. E. 383 : Rhodesia Mfg. Co. V. Tombacher. 129 X. Y. S. 420. '"Smith V. Russell Lumber Co.. 82 Conn. .116, 72 Atl. 577: Loewenstein k Co. V. Bennet. 19 Ohio C. C. 616, 10 Ohio C. D. 530. ^ McDonoueh v. Evans Marble Co., 112 Fed. 634, 50 C. C. A. 403. § 1 71 1 CONTRACTS. IO54 recognition.^^ The parties will not be presumed to have intended to incorporate into the contract an obsolete or inapplicable usage.**" § 1711. Incorporation of custom in contract — Custom as to pro rata delivery of manufactured articles. — The principle of implied incorporation of a custom into a contract has been held to apply to the custom of a manufacturer to deliver a pro rata portion of his product to his customers. Concerning a contention to this effect, the Supreme Court of the United States has said : *Tt may also be safely admitted that the custom of a party to deliver a part of a quantity of goods contracted to be delivered, though invariable, cannot excuse such party from a full compliance with his contract, unless such custom is known to the other contracting party, and actually enters into and forms a part of the contract. Mere knowledge of such a usage would not be sufficient, but it must appear that the custom actually consti- tuted a part of the contract. But when it appears that such custom was well known to the other contracting party as neces- sarily incident to the business, and actually formed a part of the contract, then it may furnish a legal excuse for the nondelivery of such a proportion of the goods as the general course of the business and the usage of the seller authorize, for the reason that such general usage, being a part of the contract, has the effect to limit and qualify its terms. "^^ § 1712. Customconstrued— Charter-party— Demurrage.— The construction of a custom as to the discharge of merchandise from a vessel, which affects the payment of demurrage for a delay of a vessel, is not to be governed by another usage in rela- tion to the sale of the merchandise ; thus, in a charter-party the words *'to discharge with customary despatch, * * * cargo to be * * * discharged according to the custom of the port," do «^ Smith V. Lawrence, 26 Conn. 468; (U. S.) 299; Jupiter Min. Co v. Bo- ^ \ordaas v Hubbard, 48 Fed. 921; die Consolidated Mm. Co., 11 Fed. ■ Clem V Martin, 34 Tnd. 341; Law- 666, 7 Sawy. (U. S.) 96; Johnson v. rence v Gallagher. 10 Jones & S. (N. Concord R. Corp., 46 N. H. 213, 88 Y.) 309, affd. 11 N. Y. 613; Union Am. Dec. 199. Bank v. Union Ins. Co., Dud. (S. *^Bliven v. New England Screw Car.) 171. Co., 23 How. (U. S.) 420, 16 L. ed. ® North Noondav Min. Co. v. Ori- 510. ent Min. Co., 1 Fed. 522, 6 Sawy. I055 CUSTOMS AND USAGES. § I713 not include a custom whereby all cargoes of fruit are sold at auc- tion by one firm, not more than one cargo being sold in one day, and no cargo being discharged until it has been thus sold, since such custom manifestly has its origin in the sale, and not in the discharging of cargoes; and for demurrage caused by such a cus- tom, the cargo is liable.*** A custom of the port of Mobile, by which vessels taking on additional cargo at a deeper anchorage bear the cost of lightering, although not so notorious or so acqui- esced in as to have the force of law, is binding on a vessel whose charter-party provides that the custom of the port is to be ob- served in all cases not especially provided for.^° A charter-party of a vessel to a safe port cannot be controlled by evidence of a cus- tom to consider safe a particular port which, in fact, is not rea- sonably safe, because to admit such custom in evidence would contradict the charter-party and would, therefore, be incompetent as matter of law.*"" In an action against a propeller for a contract to make as many trips as possible, because she towed more than two vessels, the construction of the contract cannot be varied by evidence of a custom for propellers of her class to tow, at times, as many as five vessels, where it is not shown that they always tow more than one or two.^^ § 1713. Express contract may not be varied or contra- dicted by custom or usage. — No principle of the law is better settled than the one that an express contract embodying in clear and positive terms the intention of the parties cannot be varied nor contradicted by evidence of usage or custom. The usage must be consistent with the contract.®^ The office of the custom " Milburn v. Thirty &c. Boxes Eddy v. Northern Steamship Co., 79 Oranges & Lemons, 57 Fed. 236, 6 C. F"ed. 361. C. A. 317 ; Liverpool &c. G. W. Steam " Nordaas v. Hubbard, 48 Fed. 921 ; Co. V. Suitter, 17 Fed. 695, affd. 22 Donnell v. Amoskeag Mfg. Co., 118 Fed. 560; Lindsav v. Cusimano, 10 Fed. 10, 55 C. C A. 178. Fed. 302, 12 Fed. 503. Parol evidence '"ITayton v. Irwin. L. R. 5 C. P. D. of a usage whereby lake navigation 130; The Gazelle, 128 \J. S. 474, 32 is considered as closing November L. ed. 4%. 9 Sup. Ct. 139; Barnard 30th each year is admissible to show v. Kellogg, 10 Wall. (U. S.) 383. 19 the termi'nation on that date of a L. ed. 987. charter which requires the vessel to "The Oregon v. Pittsburgh Iron carry as many cargoes as she can be- Co.. 55 Fed. 666. 5 C. C. A. 22*^. tween the date of the charter and the ® Joj-nson v. Hunt, 93 L. T. 470: "close of navigation for the season." Florence Wagon Works v. Trinidad 1/13 CONTRACTS. 1056 or usage is to explain the meaning of words and phrases used in a written contract and to annex thereto certain incidents which circumstances indicate the parties intended when the words used Asphalt Co., 145 Ala. 677, 40 So. 49; Mobile &c. R. Co. v. Bay Shore Lum- ber Co., 165 Ala. 610, 51 So. 956, 138 Am. St. 84; Corwin v. Patch, 4 Cal. 204; First Nat. Bank v. Londonderry Min. Co., 50 Colo. 85, 114 Fac. 313; Hirsch v. Georgia Iron &c. Co., 169 Fed. 578, 95 C. C. A. 76; Smith v. National Bank, 191 Fed. 226; The Gran Canaria, 16 Fed. 868; Turnbull V. Citizens' Bank, 16 Fed. 145, 4 Woods (U. S.) 193; Kalamazoo Cor- set Co. V. Simon, 129 Fed. 144, affd. 129 Fed. 1005, 64 C. C. A. 166 ; Hunt V. Fidelity &c. Co., 99 Fed. 242, 39 C. C. A. 496; Lillard v. Kentucky Distilleries & Warehouse Co., 134 Fed. 168, 67 C. C. A. 74; Chilberg v. Lyng, 128 Fed. 899. 63 C. C. A. 451; Smith V. National Bank of D. O. Mills & Co., 191 Fed. 226; Hirsch v. Georgia Iron & Coal Co., 169 Fed. 578, 95 C. C. A. 76; Lima Locomotive & Machine Co. v. National Steel Cast- ings Co., 155 Fed. 11, 83 C. C. A. 593, 11 L. R. A. (N. S.) 713; Williams v. Continental Ins. Co., 24 Fed. 767; Proctor & Gamble Co. v. Blakely Oil & Fertilizer Co., 137 Ga. 407, IZ S. E. 378; Park v. Piedmont &c. Life Ins. Co., 48 Ga. 601 ; Fleming v. King. 100 Ga. 449, 28 S. E. 239; Mobile Fruit &c. Co. V. Judy, 91 111. App. 82; Maver v. Lawrence, 58 111. App. 194; Illinois Masons Benev. Soc. v. Bald- win, 86 111. 479; Corbett v. Under- wood, 83 111. 324, 25 Am. Rep. 392; Sigsworth v. Mclntvre. 18 111. 126; Cadwell v. Meek, 17 111. 220; Whip- ple V. Tucker, 123 111. App. 223; Abendpost Co. v. Hertel. 67 111. App. 501 ; Shedd v. American Credit-In- demnitv Co. dnd. App.), 95 N. E. 316; Hitz v. Warner, 47 Ind. App. 612. 93 N. E. 1005; Atkinson v. Al- len, 29 Ind. 375 ; Van Camn Packing Co. V. Hartman, 126 Ind. 177. 25 N. E. 901 : Seavev v. Shurick. 110 Ind. 404. 11 N. E .'^97: Atkinson v. Allen. 29 Ind. 375: Gladstein v- Levine (Ind. App.), 97 N. E. 184: Marks v. Cass Countv Mill &c. Co.. 43 Towa 146; Duncan v. Green. 43 Towa 679; Steele V. Andrews. 144 Towa 360. 121 N. W. 17; Graham v. Trimmer, 6 Kans. 230; Castleman v. Southern Life Ins. Co., 14 Bush (Ky.) 197; Crook v. Tensas Basin Levee District, 51 La. Ann. 285, 25 So. 88; Norton v. University of Maine, 76 Alaine 436, 76 Atl. 912; Ripley v. Crooker, 47 Mame 370, 74 Am. Dec. 491; Bodfish v. Fox, Z3 Maine -90, 39 Am. Dec. 611; Denton Bros. V. Gill, 102 xMd. 386, 62 Atl. 627, 3 L. R. A. (N. S.) 465; Foley v. Mason, 6 ]\Id. 2)1 ; Hammond v. American Express Co., 106 Md. 295, 68 Atl. 496; Menage v. Rosenthal, 175 Mass. 358, 56 N. E. 579; Boardman v. Spooner, 13 Allen (Mass.) 353, 90 Am. Dec. 196; Grinnell v. Western Union Tel. Co., 113 Mass. 299, 18 Am. Rep. 485; Brown v. Foster, 113 Mass. 136, 18 Am. Rep. 463; Potter v. Smith, 103 Mass. 68; Macomber v. Parker, 13 Pick. (Mass.) 175; Randall v. Rotch, 12 Pick. (Mass.) 107; John- son v Norcross, 209 Mass. 445, 95 N. E. 833; Harvev v. Cadv, 3 Mich. 431; Ledvard v. Hibbard, 48 Mich. 421, 12 N; W. 637, 42 Am. Rep. 474; Pitts- burgh Coal Co. V. Northy, 158 Mich. 530, 123 N. W. 47; Meloche v. Chi- cago &c. R. Co., 116 Mich. 69, 74 N. W. 301 ; Torpey v. Murray, 93 Minn. 482, 101 N. W. 609; Globe Milling Co v. Minneapolis Elevator Co.. 44 Minn. 153, 46 N. W. 306; Postal Telegraph-Cable Co. v. Willis. 93 Miss. 540, 47 So. 380; Miller v. Dun- lap, 22 Mo. App. 97; Goodfellow Exrs. V. Meegan, 32 Mo. 280^ Keller V. Meyer, 74 Mo. App. 318: New Hampshire Mut. Fire Tns. Qo. v. Rand, 24 N. H. 428; Swamscot Mach. Co. V. Partridge, 25 N. H. 369, Bar- ton V. McKelwav, 22 N. J. L. 165; Schenck v. Griffin, 38 N. J. L. 462; Deacon v. Mattison, 11 N. Dak. 190, 91 N. W. 35 : American Steam-Boiler Tns. Co. V. Anderson, 57 N. Y-. Sup. Ct 179. 25 N. Y. St. 814. 6 M, Y. S. 507; Coates v. Harvev, 17 N. Y St. 389. 2 N. V- S- 5 ; Hopper v. Sage, 15 Jones & S. 77; Farmers' & Mer- chants' Naf. Bank v. Logan. 74 N. Y. .■^68: Bank of Commerce v. P.issell. 72 N, Y. 615; Holmes v. PettingiH. 60 N Y. ^^(^\ ColVnder v. Dinsmore. 55 N. Y. 200, 14 Am. Rep. 224; Bradley I057 CUSTOMS AND USAGES. § ^7^3 do not necessarily exclude the operation of such custom or usage but they may not be used to contradict nor vary the plain meaning of the contract.®'* "Usage may be admissible to explain what is V. Wheeler, 44 N. Y. 495; Simmons V. Law, 42 N. Y. 217, 4 Abb. Dec. (N. Y.) 241; Howell v. Dimock, 15 App. Div. (N. Y.) 102, 44 N. Y. S. 271; Goulds Mfg. Co. v. Muncken- beck, 20 App. Div. (N. Y.) 612, 47 N. Y. S. 325; Mctz v. Miller, 113 X. Y. S. 527; Beer v. Forest City Mut. Ins. Co., 39 Ohio St. 109; Babcoch V. May, 4 Ohio 334 ; Savage v. Salem Mills Co., 48 Ore. 1, 85 Pac. 69; Manerud v. Eugene (Ore.), 124 Pac. 662; Pittsburg Ins. Co. v. Frazee, 107 Pa. St. 521 ; Stokes v. Fenner, 30 Leg. Ins. (Pa.) 84, 10 Phila. (Pa.) 14; Coxe V. Heisley, 19 Pa. St. 243 ; Por- ter V. Patterson, 15 Pa. St. 229; Maust V. Creasy, 42 Pa. Super. Ct. 633; Fairly v. Wappoo Mills, 44 S. Car. 227, 22 S. E. 108, 29 L. R. A. 215; American Lead Pencil Co. v. Nashville & St. L. R. Co., 124 Tenn. 57, 134 S. W. 613; Henry v. Green Ins. Co. of America (Tex. Civ. App.), 103 S. W. 836; Moore v. Ken- nedy, 81 Tex. 144, 16 S. W. 740; Meahcr v. Lufkin, 21 Tex. 383; Thompson v. Riggs, 6 D. C. 99, affd. 5 Wall. (U. S.) 663, 18 L. ed. 704; Hearne v. Marine Ins. Co., 20 Wall. (U. S.) 488, 22 L. ed. 395; Stagg v. Connecticut Mut. Life Ins. Co., 10 Wall. (U. S.) 589, 19 L. ed. 1038; Anderson v. Daly Min. Co., 16 Utah 28, 50 Pac. 815 ; Linsley v. Lovely, 26 Vt. 123 ; Harris v. Carson, 7 Leigh (Va.) 632, 30 Am. Dec. 510; Swadling V. Barncson, 21 Wash. 699, 59 Pac. 506; IMenz Lumber Co. v. McNeeley, 58 Wash. 223, 108 Pac. 621, 28 L. R. A. (X. S.) 1007; Detwiler v. Green, 1 W. Va. 109; Exchange Bank v. Cookman, 1 W. Va. 69; Burnham v. ]\Iilwaukee, 100 Wis. 55, 75 N. W. 1014; Mowatt v. Wilkinson, 110 Wis. 176, 85 N. W. 661. **Lima Locomotive & Machine Co. V. National Steel Castings Co., 155 Fed. 77, 83 C. C. A. 593, 11 L. R. A. (N. S.) 713; Whipple v. Tucker, 123 111. App. 223 ; Mobile Fruit &c. Co. v. Judy, 91 111. App. 82; Fowler Utilities Co. V. Chaffin Coal Co., 43 Ind. App. 438, 87 N. E. 689. "Another principle by which usages are limited is, that 67 — Contracts, Vol. 2 they are void if they contradict the terms of a contract, or the legal in- terpretation or effect of a contract. This principle has been recognized in many cases in this state. Among them is Lewis v. Thatcher, 15 Mass. 431, in which a usage by which a warranty in a policy of insurance that a ves- sel was neutral was understood to mean that she merely pretended to be so, but was not so in fact, was held void, because it was contradictory to the import of the contract. The case of Bryant v. Commonwealth Ins. Co., 6 Pick. (Mass.) 131, in which a usage allowing the master of a stranded vessel to sell the cargo without neces- sity was held void, rests on the prin- ciple that it is contrary to his im- plied authority, and also on the prin- ciple that it is contrary to the rule of law. The cases of Randall v. Rotch, 12 Pick. (Mass.) 107; Ma- comber V. Parker, 13 Pick. (Mass.) 175; Atkins v. Howe, 18 Pick. (Mass.) 16; Eaton v. Smith, 20 Pick. (Mass.) 150; Taunton Copper Co. v. Merchants' Ins. Co., 22 Pick. (Mass.)^ 115; Mechanics' Bank v. Merchants' Bank, 6 Mete. (Mass.) 13; Bowcn v. Stoddard, 10 Mete. (Mass.) 375; Ma- comber V. Howard Ins. Co.. 7 Gray (Mass.) 256; Miller v. Pendleton, 8 Gray (Mass.) 547; Parsons v. Mar- tin, 11 Gray (Mass.) 112; Farns- worth V. Hemmer, 1 Allen (Mass.) 494, 79 Am. Dec. 756; Ware v. Hay- ward Rubber Co., 3 Allen (Mass.) 84, and Codman v. Evans, 5 Allen (Mass.) 308, furnish instances of the application of one or both of these principles in various ways. So a us- age by which a manufacturer is held not to warrant against latent defects, where the law implies such a war- ranty, is held void : Whitmore v. South Boston Iron Co., 2 Allen (Mass.) 52. But some of our cases appear at first sight to be inconsist- ent with these principles. The most prominent of them is Clark v. Baker, 11 Mete. (Mass.) 186, 45 Am. Dec. 199. The case arose out of the sale of a cargo of com in the ship, the quality of which was warranted. The § 1 71 3 CONTRACTS. IO58 doubtful; it is never admissible to contradict what is plain. "°^ "This rule," says Mr. Justice Harlan, "is based upon the theory that the parties, if aware of any usage or custom relating to the subject-matter of their negotiations, have so expressed their in- tention as to take the contract out of the operation of any rules established by mere usage or custom."®^ "The proper office of a custom or usage in trade," says Mr. Justice Davis, "is to ascer- tain and explain the meaning and intention of the parties to a contract, whether written or in parol, which could not be done without the aid of this extrinsic evidence. It does not go beyond this, and is used as a mode of interpretation on the theory that the parties knew of its existence, and contracted with reference to it. It is often employed to explain words or phrases in a contract of doubtful signification, or which may be understood in different senses, according to the subject-matter to which they are applied. But if it be inconsistent with the contract, or expressly or by nec- essary implication contradicts it, it cannot be received in evidence to affect it."^^ On the question of the right of one to invoke a custom or usage to vary or contradict an express contract it was said by Mr. Justice Story: "The true and appropriate office of usage or custom is to interpret the otherwise indeterminate in- tentions of the parties and to ascertain the nature and extent purchaser had paid a part of the pur- the court say that 'local usages have chase-money, and then proceeded to been held admissible by the judicial take a portion of the corn. A part tribunals, as competent to explain and of it did not answer the warranty, qualify the contract, and give to it an and he refused to take any more, but effect materially different from that did not return that which he had which the general law would have taken, and which was good. He done in the absence of all evidence brought his action to recover back the of such usage.' And though they re- balance of the money which he had garded the usage as being in contra- paid over and above the price vention of the rules of the common of the corn he had taken, law in relation to rescinding a con- It had already been decided tract of sale accompanied by a war- that he could not recover it by the ranty or false representation, yet they rules of the law, because he had not sustained it as reasonable." Dicken- returned the whole of the corn, and son v. Gay, 7 Allen (Mass.) 29, 83 so had not rescinded the contract: Am. Dec. 656. Clark V. Baker, 5 Mete. (Mass.) 452. '"Blackett v. Royal Exchange As- But he proved on a new trial that sur. Co., 2 Cromp. & J. 244. there was a usage by which the pur- '^ Grace v. American Central Ins. chaser in such cases kept the prop- Co., 109 U. S. 278, 27 L. ed. 932, 3 erty so far as it answered the war- Sup. Ct. 207. ranty, and returned onlv the residue. °- Barnard v. Kellogg, 10 Wall. (U. This usage was held to be good. And S.) 383, 19 L. ed. 987. I059 CUSTOMS AND USAGES. § I714 of their contracts, arising not from express stipulations, but from mere implications and presumptions, and acts of a doubtful or equivocal character. * * * But I apprehend, that it can never be proper to resort to any usage or custom to control or vary the positive stipulations in a written contract, and, a fortiori not in order to contradict them. An express contract of the parties is always admissible to supersede or vary, or control, a usage or custom; for the latter may always be waived at the will of the parties. But a written and express contract cannot be controlled, or varied, or contradicted by a usage or custom ; for that would not only be to admit parol evidence to control, vary, or contradict written contracts; but it would be to allow mere presumptions and implications, properly arising in the absence of any positive expressions of intention, to control, vary, or contradict the most formal and deliberate declarations of the parties."®^ § 1714. Test of variance. — The principle of the foregoing section is that in order to read a usage into a contract it must be consistent with the terms of the writing and not repugnant there- to.®* "To fall within the exception, therefore, of repugnancy, the incident must be such that if expressed in the written contract would make it insensible or inconsistent."®^ § 1715. Customs and usages may not vary express con- tracts — Illustrations. — The rule which forbids proof of cus- toms or usages to vary the terms of a clearly expressed contract is frequently invoked in the cases of contracts for the sale of goods which contain warranties, and the holding is invariable that the warranty may not be varied nor contradicted in this manner."' So, where a contract of sale names a price "f. o. b. cars" at a cer- tain place, although evidence is admissible to show what these letters mean, it cannot be shown by proof of custom or otherwise •'The Reeside, 2 Sumn. (U. S.) "^ Humfrey v. Dale. 7 El. & Bl. 266. 567. See also, Yates v. Pym, 6 Taunt. •* Florence Wagon Works v. Trini- 446. dad Asphalt Co., 145 Ala. 677, 40 So. •* Denton Bros. v. Gill, 102 Md. 386, 49; Steele v. Andrews, 144 Iowa 360. (2 Atl. 627, 3 L. R. A. (N. S.) 465; 121 N. W. 17; Lewis v. Thatcher, 15 Capital Gas &c. Co. v. Gaines, 20 Ky. Mass. 431 ; Higgins v. Livermore, 14 L. 1464, 49 S. W. 462; New Roads Mass. 106. Oilmill & Mfg. Co. V. Kline, 154 Fed. 296, 83 C. C. A. 1. § 1 71 5 CONTRACTS. I060 that these letters have a meaning or effect different from what would, have attached to the full words "free on board" if they had been inserted in the contract®' So the terms of an insurance policy may not be varied by the customs of a particular commu- nity. Thus an agent's custom to give short credits on first pre- miums may not be shown to vary the express terms of the policy that it shall not go into effect until the premiums are paid.®^ So an explicit provision in the policy requiring watchmen during all the hours of the night, may not be varied by a local custom which allows watchmen to go home at midnight on Saturday nights."^ So, likewise, of a provision against the storage of rags in a country store.^ So a requirement that the insured keep a set of books showing sales and purchases, may not be varied by evidence that merchants in a particular locality keep their records on slips of paper.- So a custom or usage may not be shown to fix a differ- ent maturity from that which plainly appears on the face of the draft.^ So in a case where the contract provided in plain and unequivocal terms for a certain number of shingles 5x16, it was held improper to show that by the custom and usage among shingle-cutting mill men a shingle 5x16 inches counted one and a quarter shingles.* So where the sale of goods was absolute and unconditional, the buyer could not show a custom of the community giving him the right to return goods unsold and re- ceive a credit therefor.^ So where the contract explicitly prO' vided for the delivery of a stated number of barrels of a com- modity, each barrel of which was to contain a certain number of pounds, it was held that this contract could not be varied by •' United States Exp. Co. v. Keef er, " Glendale Woolen Co. v. Protec- 59 Ind. 263. See also, Moseley's tion Ins. Co., 21 Conn. 19, 54 Am. Dec. Admr. v. Mastin, Zl Ala. 216; Shef- 309. field Furnace Co. v. Hull &c. Coke ^ Macomber v, Howard Fire Ins. Co., 101 Ala. 446, 14 So. 672; Amer- Co., 7 Gray (Mass.) 257. ican Exp. Co. v. Lesem, 39 111. 312; * Henry v. Green Ins. Co. (Tex. Mobile Fruit &c. Co. v. Judy, 91 111. Civ. App.), 103 S. W. 836. App. 82; United States Exp. Co. v. 'Hammond v. American Express Keefer, 59 Ind. 263; State v. Intoxi- Co., 107 Md. 295, 68 Atl. 496. See eating Liquors, IZ Maine 278; Keller also. Auto &c. Mfg. Co. v. Merchants' V Meyer, 74 Mo. App. 318; Adamant Nat. Bank, 116 Md. 179, 81 Atl. 294. Mfg. Co. V. Bach, 168 N. Y. 555, 57 * Birmingham & A. R. Co. v. Mad- N. E. 1103; Collender v. Dinsmore, dox, 155 Ala. 292, 46 So. 780. 55 N. Y. 200, 14 Am. Rep. 224. "Gladstein v. Levine Clnd. App.), »' Smith V. Provident &c. Assur. 97 N. E. 184. See also. Savage v. Sa- Soc, 65 Fed. 765, 13 C. C. A. 284. lem Mills Co., 48 Ore. 1, 85 Pac. 69. I06l CUSTOMS AND USAGES. § I716 a usage to deliver less than this number of pounds for a barrel.^ So where the amount of the compensation for work is fixed, this is final and a usage to allow more cannot be shown. ^ Proof of custom is not admissible to show that an absolute written contract to furnish all coal needed between certain dates was not binding in case of a strike.® In an action for a breach of a warranty upon a sale of baled cotton, a usage of the trade as to a buyer's re- turning cotton found defective, and as to the notice required to lay a claim for damages, is not admissible for the purpose of showing that the conduct of plaintiff, who knew of such usage, was not consistent with the existence of the claim made by him in the action." Where a sale of coffee was in writing, and no mention made of samples, the seller could not show a custom making it the duty of buyers of coffee to accept or reject it im- mediately after the receipt of overland samples, and that, con- sequently, the buyer had accepted the coffee by retaining such samples for two days, because to allow the admission of such a custom would, in effect, alter the contract in a particular material to defendants' rights/" .Where a contract to build a house calls for a good three-coat plastering, it is not admissible to show, in an action for the balance due on the contract, that it is the custom of plasterers in that vicinity to slight their work, and do "drawn work," which is two-coat work, when three-coat work is con- tracted for." § 1716. Exclusion of custom or usage by express contract. ^-It goes without saying that the parties to a contract may ex- pressly stipulate that the contract shall be construed without reference to existing customs or usages. When there is in the 'Richard v. Haebler, 36 App. Div. 'Ryan v. Dubuque, 112 Iowa 284, 83 (N Y ) 94 55 N Y. S. 583. N. W. 1073 ; Richard v. Haebler, 36 'Jefferson v. Burhaus. 85 Fed. 949, App. Div. (N. Y.) 94, 55 N. Y. S. 29 C. C. A. 481; Ryan v. Dubuque, 583; Gage Mfg. Co. v. Woodward, 112 Iowa 284, 83 N. W. 1073; Norton 17 R. I. 464, 23 Atl. 16. And see The V. University of Maine. 106 Maine Reeside, 2 Sumn. (U. S.) 567, Fed. 436, 76 Atl. 912; Davis v. New York Cas. No. 11657. Steam Co., 33 App. Div. (N. Y.) 401, "O'Donohue v. Leggett. 134 N. Y. 54 X. Y S. 78. 40. 31 N. E. 269. ' Covington v. Kanawha Coal &c. " Cook v. Hawkins, 54 Ark. 423, 16 Co., 121 Kv. 681, 28 Kv. L. 636. 89 S. W. 8. S. W. 1126,' 3 L. R. A. 248, 123 Am. St. 219. § I7I7 CONTRACTS. 1062 writing a distinct provision expressly denying a right claimed under the custom, the term in the writing prevails and the custom goes for nothing. It is optional with the parties to exclude the usage if they think fit and to frame their contract so as to be re- pugnant to its operation." The parties may, of course, agree to be bound by existing usages." § 1717. Implied exclusion of custom by terms of contract. — The general rule is that a custom or usage, however well established, cannot be incorporated into a contract if it is incon- sistent with the clear intention of the parties. And an express exclusion is not necessary: it is sufficient that the custom or usage is excluded by necessary implication.^* A custom may only be considered where it adds to the contract an incident which by virtue of such custom, is tacitly contained therein, and not when it is inconsistent with the contract and its effects contradic- "New Roads Oil Mill &c. Co. v. Kline, 154 Fed. 296, 83 C. C. A. 1; Vardeman v. Penn Mutual Life Ins. Co., 125 Ga. 117, 54 S. E. 66; Dixon V. Dunham, 14 111. 324; Deshler v. Beers, 32 111. 368, 83 Am. Dec. 274; Rennell v. Kimball, 5 Allen (Mass.) 356. "Western Union Tel. Co. v. Bow- man (Ala.), n So. 493 (extra charge for delivery of messages by telegraph company). "Wilkinson v. Williamson, 16 Ala. 163 ; Smith v. Russell Lumber Co., 82 Conn. 116, 72 Atl. 577; Wiggin v. Federal Stock &c. Co., 11 Conn. 507. 59 Atl. 607; Brent v. Lilly Co.. 174 Fed. 877; Hammett v. Chase, 158 Fed. 203; Jenkins S. S. Co. v. Preston. 186 Fed. 609, 108 C. C A. 473; Em- pire Warehouse Co. v. The Brooklyn, 46 Fed. 132; The Clintonia, 104 Fed. 92; Delaware &c. Canal Co. v. Mit- chell. 113 111. App. 429, affd. 211 111. 379, 71 N. E. 1026; Currie v. Syndi- cate, 104 Til. App. 165; Independent Torpedo Co. v. J. E. Clark Oil Co. TTnd.). 95 N. E. 592; Randolph v. Halden, 44 Iowa 327; Smyth v. Ward's Exrs., 46 Iowa 339; Bowell V. Draper, 149 Iowa 725. 129 N. W. 54; Independent School District v. Swearngin, 119 Towa 702. 94 N. W. 206; Camp v. Baldwin-Melville Co., 123 La. 257, 48 So. 927; Caldwell v. Dawson, 4 Mete. (Ky.) 121; Capital Gas &c. Co. V. Gaines, 20 Ky. L. 1464, 49 S. W. 462; Lewis v. Thatcher, 15 Mass. 431 ; Rennell v. Kimball, 5 Al- len (Mass.) 356; Boardman v. Spooner, 13 Allen (Mass.) 353, 90 Am. Dec. 196; Boruszewski v. Mid- dlesex Mut. Assur. Co., 186 Mass. 589, 72 N. E. 250; Brigham v. 'Martin, 103 Mich. 150, 61 N. W. 276; Houghton V. Bradley, 113 Mich. 599, 71 N. W, 1112; Manufacturers' Society v. Haight, 1 N. J. Eq. 393; Howell v. Dimock, 15 App. Div. (N. Y.) 102, 44 N. Y. S. 271; Cappel v. Weir, 45 Misc. (N. Y.) 419, 90 N. Y. S. 394; Goulds' Manufacturing Co. v. Munck- enbeck. 20 App. Div. (N. Y.) 612, 47 N. Y. S. 325 ; Richard v. Haebler, 36 App. Div. (N. Y.) 94. 55 N. Y. S. 583; Diamant v. Long Island R. Co., 30 Misc. (N. Y.) 444, 62 N. Y. S. 519; Spota V. Hays, 36 Misc. (N. Y.) 532, IZ N. Y. S. 959; Mcintosh v. Pendleton. 75 App. Div. (N. Y.) 621, 78 N. Y. S. 152; Sweet v. Jenkins, 1 R. I. 147, Ze Am. Dec. 242; Bedford V. Flowers, 11 Humph. (Tenn.) 242; Greer v. First Nat. Bank (Tex.), 47 S. W. 1045; Bowers Hydraulic Dredging Qo. v. United States, 211 U. S. 176, 53 L. ed. 136. 29 Sup. Ct. 11; Williams v. Ninemire, 23 Wash. I06;j CUSTOMS AND USAGES. § I718 tory to the provisions of such contract." "When parties in un- mistakable tenns fix the duration of a contract, it must be pre- sumed that they did not intend to follow the usage or custom in that regard, if there be such, and in the absence of proper alle- gations or proof, parties cannot be permitted to depart from the terms of the contract in this regard any more than in any other. These principles are elementary."^" But consideration of the custom or usage will not be refused unless the language employed by the parties is plainly irreconcilable with the usage or custom invoked." An intent to exclude custom or usage may be shown by parol.^® § 1718. Cases illustrating the rule of implied exclusion of customs. — The rule that customs and usages may not be con- sidered where they are impliedly excluded by the contract has been frequently applied. Thus, for example, where a charter particularly provided for the delivery of the cargo alongside, within reach of the vessel's tackles, it was held that there could be no charge against the vessel for the cost of piling the cargo beyond the reach of the tackles, though a custom of the port authorized such charge.^" So where the parties to an employ- ment contract agreed on a definite term, evidence of usage in sim- ilar cases was held irrelevant for such usage could not be substi- tuted for the express will of the parties.*" So a general or local custom may not be shown to contradict the express or implied terms of a transportation contract."^ So a contract for the sale of grain at the rate of a fixed number of pounds to the bushel may not be changed by proof that this was not the customary number of pounds for a bushel recognized in the locality. ^^ So where an 393, 63 Pac. 534; Peyser v. Western "Union Trust Co. v. Whiton, 97 Dry Goods Co., 53 Wash. 633. 102 N. Y. 172. Pac. 750 ; Exchange Bank v. Cook- " Hammett v. Chase. 165 Fed. 1005, man, 1 W. Va. 69; Detwiler v. Green, 91 C. C. A. 663, affg. 158 Fed. 203. 1 W. Va. 109. =«Camp v. Baldwin-Melville Co., 123 "Jenkins S. S. Co. v. Preston, 186 La. 257, 48 So. 927 (theatrical con- Fed. 609, 108 C. C. A. 473. tract) ; Connell v. Averill, 8 App. "California Pine Box &c. Co. v. Div. (X. Y.) 524, 75 N. Y. St. 247, 40 Wasatch Orchard Co. (Utah), 117 N. Y. S. 855. Pac. 35. -^Browning v. McNear, 158 Cal. "Lillard v. Kentucky Distilleries & 525. Ill Pac. 541: Cappel v Weir 45 Warehouse Co., 134 Fed. 168, 67 C. I\Iisc. (N. Y.) 410. 90 X Y S 304. C. A. 74. ~ Brent v. Lilly Co., 174 Fed. 877. § 1 719 CONTRACTS. IIO64 express contract between the landlord and tenant fixes the divi- sion of the crops, evidence is inadmissible which goes to show a general custom in the neighborhood fixing a different propor- tion."' So where the contract fixed the price of picking cotton, the court properly refused evidence as to the reasonable and cus- tomary price for such work in the neighborhood.^* So where the parties to a contract for the shipment of cattle expressly agreed on the place of delivery, it was held that evidence was inadmis- sible showing a custom for a delivery at another place.^^ So where the covenants of a lease were unambiguous as to the duty to make repair, the lessor could not be compelled to make such repairs because of a custom or usage to that effect in the local- ity.^® So where there is a contract between the parties but a dispute as to some of its terms, this dispute may not be deter- mined by reference to customs and usages governing in like matters.'' So where the contract calls for the delivery of a spe- cified weight of an article, evidence is inadmissible to show a usage to deliver a less weight.^^ So where the contract with the master of a vessel specially excluded liability of the owner's riding bills, the master was not entitled to charge these expenses though they were usual and proper in the port at which the charges were made.^^ § 1719. Implied exclusion of custom or usage where con- troversy relates solely to terms of contract. — As a general rule, when an agreement has been made upon a particular point and controversy is as to the terms of that agreement, such terms cannot be shown by proof of the usage respecting them. The special agreement excludes the usage.^'* "It is only where a con- ** Turner v. Morris, 142 Mo. App. ==® Richard v. Haebler, 36 App. Div. 60, 125 S. W. 238. (N. Y.) 94, 55 N. Y. S. 583. "Mullanax v. Pyron (Tex. Civ. '" Rennell v. Kimball, 5 Allen App.), 123 S. W. 1139. (Mass.) 356. ^Williams v. Ninemire, 23 Wash. ""Boon v. Belfast, 40 Ala. 184, 88 393, 63 Pac. 534. Am. Dec. 761 ; Wilkinson v. William- "» Healy v. Tyler, 150 Iowa 169, 129 son, 76 Ala. 163 ; Currie v. Syndicate, N. W. 802. 104 111. App. 165; McGraw v. Stur- "^ Currie v. Syndicate, 104 111. App. geon, 29 Mich. 426; Smith v. Bar- 165; Mcintosh v. Pendleton, 75 App. ringer, Z7 Minn. 94, Z2, N. W. 116; Div. (N. Y.) 621, 78 N. Y. S. 152; Holmes v. Pettingill, 60 N. Y. 646; Peyser v. Western Dry Goods Co., 53 Mcintosh v. Pendleton, 75 App. Div. Wash. dZl, 102 Pac. 750. (N. Y.) 621, 78 N. Y. S. 152; Sim- 1065 CUSTOMS AND USAGES. § I72O tract is silent in some particular or is ambiguous that proof of custom is admissible, and such proof is then admissible only for the purpose of finding out what the contract really was, and not to overthrow it. Proof of custom is received in such cases upon the assumption that, as to those matters not covered by express stipulations in the agreement, the parties are presumed to have made their contract with reference to the established custom and usage of that place ; and these the law will incorporate into the contract in order to explain or complete it. But it is always within the power of the parties to exclude custom from their dealings by their express agreement."'^ The principle was ap- plied in a recent case of a commission contract with a traveling salesman where the controversy was as to the right of the sales- man to commissions for sales made by others in his territory and there was no controversy as to the fact of the contract. The court held that evidence was not to be received showing a general cus- tom among wholesale dealers as to the payment of commissions for sales made in the territory of a salesman by other persons.^^ § 1720. Presumption of intent to include usage in contract. — Where a contract is made with reference to a particular busi- ness, it is presumed it was made with reference to the ordinary course of such business and it is proper to consider the general and known course of such business. While it is true that usage cannot control an express contract, yet, where a contract is ambig- uous, the presumption is that it was made with reference to the known usage or general course of the particular business.^' "When such a contract becomes the subject of litigation, the pre- sumption is indulged, if the parties have not expressed a contrary intention, that they intended to incorporate therein a usage known to them ; and evidence of such is admissible, not to vary or con- mons V. Lawe, 3 Keys. (N. Y.) 217, '* Williams v. Ninemire, 23 Wash. 4 Abb. Dec. (N. Y.) 241; Barnard v. 393, 63 Pac. 534. Kellog. 10 Wall. (U. S.) 383, 19 L. " Pevser v. Western Drv Goods ed. 987; Williams v. Ninemire. 23 Co.. 53 Wash. 633, 102 Pac. 750. Wash. 393, 63 Pac. 534; Vollrath v. '^ Heistand v. Bateman, 41 Colo. 20, Crow. 9 Wash. 374, 37 Pac. 474; 91 Pac. 1111; Leiter v. Emmons. 20 Swadling v. Barneson, 21 Wash. 699, Ind. App. 22, 50 N. E. 40; Van Du- 59 Pac. 506; Pevser v. Western Dry sen-Harrington Co. v. Jungeblut, 75 Goods Co., 53 Wash. 633, 102 Pac. ^linn. 298, 77 N. W. 970, 74 Am. St. 750. 463n. § 1/21 CONTRACTS. I066 tradict the terms of the contract, but to interpret it, as it was understood by the parties at the time it was made."^* § 1721. Custom or usage to explain matters on which con- tract is silent — Adding to terms of contract. — Where a cus- tom does not contradict or is not inconsistent with the terms of a contract, it may be invoked to introduce a new element not expressly employed in the contract and in reference to which the parties are presumed to have contracted. The reason is that where there is nothing in a contract to exclude the inference, the parties will be presumed to have contracted in reference to cus- toms and usages prevailing in the particular business and applic- able to the contract in question. ^° In other words a custom or usage, consistent with the terms of the contract, peculiar to the subject-matter thereof, known to the parties, and probably in- tended to be included in the contract, as shown by their situation and purposes, the nature of the subject-matter and the attendant circumstances may be shown as an aid to the interpretation of a contract.^® It is in this sense that a custom or usage may add new terms to contracts,^^ for the settled rule is that a custom or usage is not allowed to alter or modify the contract between the parties ; ** Hiestand v. Bateman 41 Colo. 20, 61 Md. 192 ; Foley v. Mason, 6 Md. 91 Pac. nil. Zl; Kraft v. Fancher, 44 Md. 204; "^ Proctor V. Atlantic Fish Co., 208 Haskins v. Warren, 115 Mass. 514; Mass. 351, 94 N. E. 281; Barrie v. Lowry v. Russell, 8 Pick. (Mass.) Quimby, 206 Mass. 259, 92 N. E. 451; 360; Loveland v. Burke, 120 Mass. Standard Paint Co. v. San Antonio 139, 21 Am. Rep. 507; Parkhurst v. Hardware Co. (Tex. Civ. App.), 136 Gloucester Mut. Fishing Ins. Co., 100 S. W. 1150; Bowles v. Driver (Tex. Mass. 301, 100 Am. Rep. 105; Kield- Civ. App.), 112 S. W. 440. sen v. Wilson, 11 Mich. 45, 43 N. ^ Raliegh v. Wilson, 69 W. Va. 598, W. 1054 ; Atchison & N. R. Co. v. n S. E. 651. Miller, 16 Nebr. 661, 21 N. W. 451; '^ Adams v. Insurance Co., 11 Boorman v. Jenkins, 12 Wend. (N. Pittsb. Leg. J. 265; Stone v. Van Y.) 566, 27 Am. Dec. 158; Mercantile Nort. 3 L. T. (N. S.) 84; Smith v. Mut. Ins. Co. v. State Mut. Fire & Mobile Nav. & Mut. Ins. Co., 30 Ala. Marine Ins. Co., 25 Barb. (N. Y.) 167; Alabama & T. R. R. Co. v. Kidd, 319; Simmons v. Law, 21 N. Y. 29 Ala. 221 ; Barlow v. Lambert, 28 Super. Ct. 213, affd. 3 Keyes (N. Y.) Ala. 704, 65 Am. Dec. 374; Candee 217, 4 Abb. Dec. (N. Y.) 241; Bla- V. Citizens' Ins. Co., 4 Fed. 143; Bui- lock v. Clark, 137 N. Car. 140, 49 lock V. Finley, 28 Fed. 514; Illinois S. E. 88; Corcoran v. Chess, 131 Pa. Mut. Fire Ins. Co. v. O'Neile, 13 111. St. 356, 18 Atl. 376; Kirby v. Phoe- 89; Gilbert v. McGinnis. 114 111. 28, nix Ins. Co., 13 Lea (Tenn.) 340; 28 N. E. 382; Morningstar v. Cun- White v. San Antonio V/aterworks ningham. 110 Ind. 328. 11 N. E. 593, Co., 9 Tex. Civ. App. 465, 29 S. W. 59 Am. Rep. 211; Jackson v. Beling, 252; Oelricks v. Ford. 23 How. (64 22 La. Ann. ZT7 ; Gibney v. Curtis, U. S.) 49, 16 L. ed. 534; Partridge 1067 CUSTOMS AND USAGES. § 1722 its office is to explain a part of it which would otherwise be in- definite and ambigiioiis.^^ "Proof is admissible in the absence of expressed stipulations, or where the meaning of the parties is un- certain upon the language used, and where the usage of the trade to which the contract relates, or with reference to which it was made, may afford explanation, and supply deficiencies in the instrument. Technical, local, or doubtful words may be thus ex- plained. So, where stipulations in the contract refer to matters outside of the instrument, parol proof of extraneous facts may be necessary to interpret their meaning. As a general rule, there must be ambiguity or uncertainty upon the face of the written instrument, and arising out of the terms used by the parties, in order to justify the extraneous evidence, and when admissible, it must be limited in its effect to the clearing up of the obscurity. It is not admissible to add to or engraft upon the contract new stipulations, nor to contradict those which are plain."^® § 1722. Illustrative cases of added terms. — Where a con- tract by its terms is silent as to the mode of delivery, this omis- sion may be supplied by evidence of the custom of the community as to delivery." So where a contract for the sale of logs did not specify the length the logs should be cut, it was proper to show the existence of a custom in the community that logs were usually cut in even numbers from 10 to 20 feet in length.*^ So, where a contract for the sale of goods is silent as to the mode,*^ or time of payment, reference may be had to a custom or usage in these V. Phoenix Mut. Life Ins. Co., 82 W. 752; Remy v. Healv, 161 Mich. U. S. 573, 21 L. ed. 229; Turner v. 266, 126 N. W. 202, 29 L. R. A. (X. Yates, 16 How. (57 U. S.) 14, 14 S.) 139n ; Hayward v. Wemple, 136 L. ed. 824; Van Ness v. Pacard, 2 N. Y. S. 625; Thompson v. E.xum. 131 Pet. (U. S.) 137, 7 L. ed. 374; Na- X. Car. Ill, 42 S. E. 543; Cleveland tional Bank v. Burkhardt, 100 U. S. Oil &c. Co. v. Norwich Union Fire 686. 25 L. ed. 766; Kuan v. Gardner, Ins. Co., 34 Ore. 228, 55 Pac. 435; 1 Wash. C. C. 145, Fed. Cas. No. Watkins v. Green, 22 R. I. 34, 46 12100; Johnson v. Burns. 39 W. Va. Atl. 35. 658, 20 S. E. 686; John O'Brien Lum- '* Oelricks v. Ford, 23 How. (U. ber Co. v. Wilkinson, 123 Wis. 272, S.) 49. 16 L. ed. 534. 101 N. W. 1050. *° Robinson v. United States, 13 '"Kendall v. Russell. 5 Dana (Ky.) Wall. (U. S.) 363. 20 L. ed. 653. 501, 30 Am. Dec. 696; Covington v. "Thomas v. Charles (Ky.), 119 S. Kanawha Coal &c. Co., 121 Kv. 681, W. 7S2. 28 Ky. L. 636, 89 S. W. 1126. 3 L. -= Blalock v. Clark, 137 N. Car. 140, R. A. (N. S.) 248, 123 Am. St. 219; 49 S. E. 8a Thomas v. Charles (Ky.), 119 S. § 1722 CONTRACTS. IO68 respects in the particular trade and community.'*' So, where a broker's contract for the sale of real estate was silent as to the amount of the commission, this defect was supplied by references to the usage in this respect in the particular community/* So, likewise where the omission related to the rate of interest." So, where a contract of sale requires the buyer to furnish a confirmed bank credit, and is silent as to the time when this should be done, a general custom in the business may be shown to supply the omission." So, where an insurance policy was to expire at noon of a given day, evidence of the local custom as to the observance of solar time was held admissible to show when the policy actual- ly expired.*^ So, where a contract of carriage failed to fix the amount to be carried in a car, evidence was admissible to show the usage as to the weight to be carried as a carload.*^ So, a cus- tom may govern where the contract is silent as to the time for delivery of goods sold.^^ So, where a building contract is silent as to the disposition of the debris, recourse may be had to customs prevailing in the community as to the matter.^" So, where a partial contract of insurance omitted to indicate the time when it should become operative, evidence of other insurance companies in this respect was held competent." So, where a lease is silent as to its duration, this defect may be cleared by reference to usage in such cases in the particular community.^^ So, where a contract was silent as to the place of weighing, it was competent to show the custom among dealers in the community at the place of deliv- ery as to the place where weights should be taken.^^ In a case where a building contract required the work to be performed in a workmanlike manner according to specifications, describing the kind of materials without designating the same as new, or *^Mand v. Trail, 92 Ind. 521, 47 "" Goode v. Chicago &c. R. Co., 92 Am Rep. 163; Barrie v. Quimby, 206 Iowa 371, 60 N. W. 631. Mass. 259, 92 N. E. 451; Hayes v. " Kriete v. Myer, 61 Md. 558. Union Mercantile Co., 27 Mont. 264, '''' Cooper v. Kane, 19 Wend. (N. 70 Pac 975 Y.) 586, Z2 Am. Dec. 512. ^ Hansbrough v. Neal, 94 Va. 722, " Cleveland Oil &c. Co. v. Norwich 27 S E 593. Union Fire Ins. Co., 34 Ore. 228, *" knobloch V. Romeis, 34 111. App. 55 Pac. 435. 577 ''- Brincefield v. Allen, 25 Tex. Civ. "Rose V. Lewis, 157 Ala. 521, 48 App. 258, 60 S. W. 1010. So 105 "Gehl v. Milwaukee Produce Co., "Globe &c. Ins. Co. v. David Mof- 116 Wis. 263, 9Z N. W. 26. fat Co, 154 Fed. 13, 83 C. C. A. 91. 1069 CUSTOMS AND USAGES. § 1 723 providing that secondhand materials shall be used, and providing for the making of a large window sash specified by the architect, and requiring the owner to furnish the materials, it was held proper to show a common usage in the vicinity to furnish new material and mill-made sash, where not otherwise specified, to aid in construing the contract without modifying it.''* In an- other case where a contract for the cutting of hay by one on the land of another was silent as to the pay for the services, evidence was held admissible as to the custom of paying in that neighborhood."^" § 1723. Usage to explain meaning of unambiguous terms having a peculiar meaning. — There are cases where usage is admissible to show the meaning of words which are used in a sense different from their ordinary meaning. This occurs where, by some usage of trade, words have acquired a peculiar meaning distinct from the popular meaning of the same words, or where the context evidently shows that they must be under- stood in some other special and peculiar sense.^" Under " Todd V. Howell, 47 Ind. App. 665, one place than in another. In 2 95 N. E. 279. Parsons on Contracts, the author " Cronk v. Mulvaney, 168 Mich, says that, custom 'may give to words 346, 134 N. W. 9. of number an entirely different sense '"'Ocean Steamship Co. v. Aetna from that which they usually bear.' Ins Co, 121 Fed. 882; Peet v. Peet, He cites numerous cases to that ef- 229 111 341. 82 N. E. 376, 13 L. R. feet. Among them are 3 B. & Ad. A. (N. S.) 780; Louisville &c. 728, where '1.000 rabbits' was held Packet Co. v. Rodgers, 20 Ind. App. to mean 1.200 rabbits, by the custom; 594, 49 N. E. 970; Walker v. Syms, and Hinton v. Locke, where '12 118 Mich. 183, 76 N. W. 320; Soutier shillings per day' was made to mean V. Kellerman, 18 Mo. 509; Evans v. 12 shillings per 10 hours, or V/i days Western Brass T^Ifg. Co., 118 Mo. for every day on which 12'^ hours' 548 24 S W. 175 ; Brunold v. Glasser, work was done. But it is useless to 25 Misc. (N.Y.) 285. 53 N. Y. S. 1021; multiply authorities. The reason Lowe V. Lehman, 15 Ohio St. 179. and necessity of the rule lies at the "Neither do we think that proof of foundation of all language. It is as this custom is objectionable, on the true now as it was in the time of ground that it contradicts the con- Horace, that custom is at once the tract. Authorities to support this arbiter and standard of language- view are numerous and almost uni- 'usus, quem pene et jus et norma form, and the rule is of every-day loquendi.' It belongs to the imper- application. It is applied to shingles, fection of language, that while much to printers' ems, to lumber, etc. It is the larger part of its words become, applied to measures and weights of by usage, fixed and universal in their numerous commodities. A ton of meaning, yet some of them must one article often contains over, and always be left subject to the changes sometimes under, 2.000 pounds, and and variations necessarily occasioned not unfrequently more pounds in by local usages and the customs of § 1723^ CONTRACTS. IO7O this rule, evidence is admissible to explain the meaning but not to contradict an instrument and this, though no ambiguity exists on the face of the instrument. °^ "Such evidence is re- ceived on the theory that the parties knew of the usage or cus- tom, and contracted in reference to it, and in such cases the evidence does not add to or contradict the language used, but simply interprets and explains its meaning."^^ Thus where a contract is for brick-laying at so much a thousand, a well-known custom prevalent in the business and in the locality may be proved to show that a thousand is estimated according to the cubic foot of masonry of laid brick and of one-half the openings in the build- ing, rather than the actual count of the brick laid.^® So, as to the custom in measuring brick walls of counting the openings made by doors and windows as part of the solid wall.^° So, in a sale of silk thread it was held competent to show that ten ounces of silk thread signified, between dealers, not a full pound, but a trade pound. *'^ So, a provision in a building contract for the use of San Domingo mahogany was, according to usage, satisfied by the substitution of a good figured mahogany equal in density to the San Domingo variety.^^ And so a well-known custom or usage that the weight of bales of cotton is 500 pounds, has been held sufficient to remove ambiguity in a contract for the sale of a stipulated niunber of bales of cotton.®^ In the following cases, proof of custom was admitted to change the plain meaning of expressions in the contract : where the word "thousand" was used in a lease of a rabbit breeding establishment, evidence of a trades." Lowe v. Lehman, IS Ohio make a contract or to add a new ele- St. 179. See also. Walker v. Syms, ment to the terms of the contract 118 Mich. 183. 76 N. W. 320. previously made by the parties." "Peet V. Peet, 229 111. 341, 82 N. Louisville &c. Packet Co. v. Rogers, E. 376, 13 L. R. A. (N. S.) 780. 20 Ind. App. 594, 49 N. E. 970. "Evidence of the usage and custom ^* Evans v. Western Brass Mfg. of trade is admissible in mercantile Co., 118 Mo. 548, 24 S. W. 175. contracts to prove that the words in " Brunold v. Glasser, 25 Misc. (N. which they are expressed in a par- Y.) 285, 53 N. Y. S. 1021. ticular trade to which the contract *" Walker v. Syms, 118 Mich. 183, refers are used in a particular sense, 1(i N. W. 320. and different from the sense that ""Baer v. Glaser, 90 Mo. App. 289. they ordinarily import, and in cer- " Snoqualmi Realty Co. v. Moyni- tain cases for the purpose of annex- han, 179 Mo. 629, 78 S. W. 1014. ing incidents to the contract in mat- "Ellis v. Casey (Ala. App.), 58 So. ters upon which the contract is 724. silent; but it is never admitted to lOyi CUSTOMS AND USAGES. § 1 724 custom was admitted to show that "twelve hundred" was meant ;'* where the word "barrel" was used in a contract, evidence was ad- mitted to show that the word meant a vessel of a certain capacity and not the statute measurement of capacity i®*^ where shingles were sold by the thousand, evidence was admitted to show that two packs were regarded as one thousand without regard to the actual quantity;*'" where the contract specified "feet" as the basis of measurement, proof of a custom to reject fractions of a foot was received."^ § 1724. Test to determine whether instrument to be inter- preted by custom or usage. — The test of the completeness of an instrument to determine whether it is to be aided by reference to customs or usages is the instrument itself. If this shows care- ful preparation and a deliberate regard for the questions which would naturally arise out of the contract, and it is reasonable to conclude from the instrument that the parties have therein clearly expressed their final intentions in regard to the matters covered by the instrument, then it will be deemed a complete statement of these intentions and it may not be aided by reference to customs and usages. But it is said the language of the instrument should be unambiguous and so complete in its provisions as to show an intention to exclude customs and usages.^^ Where the instrument shows its informality on its face, there will arise no presumption that it contains all the terms of the contract and when this is the case, parol evidence is admissible to give the con- tract the meaning intended by the parties."^ § 1725. Warranty may not be added. — The doctrine of caveat emptor cannot be changed by a usage of trade. It is fundamental that the principles of the common law cannot be altered by local usage. It follows that where the common law •* Smith V. Wilson, 3 B. & Ad. 729. S.) 578; White v. Bovce. 21 Fed. 228; •» Miller v. Stevens. 100 Mass. 518, Smith v. Dallas, 35 Ind. 255; Button 97 Am. Dec. 123. 1 Am. Rep. 139. v. Gerrish. 63 Mass. 89, 55 Am. Dec. "Soutier v. Kellerman, 18 Mo. 45; Helmrichs v. Gehrke, 56 Mo. 79 509. Eighmie v. Tavlor. 98 N Y 288 " Merrick v. McNally, 26 Mich. 374. Marsh v. McNair. 99 N Y 174 1 N ~ Eighmie v. Tavlor. 98 N. Y. 288; E. 660. revg. 25 Hun ("V Y )" 314 Filkins v. Whvland. 24 N. Y. 338. Wilson v. Deen, 74 N Y 531 ••Lindley v.'Lacey, 17 C. B. (N. § 1726 CONTRACTS. IO72 does not, on the admitted facts, imply a warranty of goods sold, a custom in the trade of the particular article will not as a general rule at least, be admitted to imply such a warranty.^" If there is a warranty, in fact, a trade custom may be shown to explain its extent, but such custom cannot create a warranty in the first instance." The principle is not applied in the case of a sale by sample because there is no opportunity of a personal examination of the bulk of the commodity which the sample is shown to represent. In such a case, there is an implied warranty, the extent of which may be shown by custom or usage.'^^ § 1726. Strict construction of usage. — Usages in deroga- tion of the common law are strictly construed and operate only on cases clearly covered by them. The usage is allowed to be proved only because it forms a part of the contract of the parties and hence it may not extend further than to make clear what the contract of the parties actually was. Great care should be exer- cised in allowing a custom, usage or practice to change contracts expressly entered into or implied at common law.^^ The proof of a custom has been held improper if it does not tend to prove any material fact in controversy.'* § 1727. Usages relating to bills of lading and shipping con- tracts. — Here, as elsewhere, the rule against the use of a cus- tom to vary an unambiguous contract prevails. Thus, where a bill of lading explicitly provides that the liability of the carrier shall terminate on the arrival of the goods at their destination '"Baird v. Matthews, 6 Dana nard v. Kellogg, 10 Wall. (U. S.) (Ky.) 129; Whitmore v. South Bos- 383, 19 L. ed. 987. See Vol. V, Tit. 15. ton Iron Co., 2 Allen (Mass.) 52; "Leigh & Smith, 1 Car. & P. 638; Rice V. Codman, 1 Allen (Mass.) Currie v. Syndicate, 104 111. App. Zll; Dickinson v. Gay, 7 Allen 165 ; Leggat v. Sands' Ale Brwg. Co., (Mass.) 29, 83 Am. Dec. 656; 60 111. 158; Metcalf v. Weld, 14 Gray Thompson v. Ashton, 14 Johns. (N. (Mass.) 210; Thornton v. Suffolk Y.) 316; Wetherill v. Neilson, 20 Pa. Mfg. Co., 10 Cush. (Mass.) 376; St. 448, 59 Am. Dec. 741; McKinney Overman v. Hoboken City Bank, 30 V. Fort, 10 Tex. 220 ; Barnard v. N. J. L. 61 ; Runyan v. Central R. Co., Kellogg, 10 Wall (U. S.) 383, 19 L. 64 N. J. L. 67, 44 Atl. 985, 48 L. R. ed. 987. But see Sumner v. Tyson, A. 744; Oelricks v. Ford, 23 How. 20 X. H. 384. (U. S.) 49. 16 L. ed. 534; South- " Baird v. Matthews, 6 Dana (Ky.) west Virginia Mineral Co. v. Chase, 129. 95 Va. 50, 27 S. E. 826. "Boorman v. Jenkins, 12 Wend. ^* Smith v. Cleveland &c. R. Co., (N. Y.) 556. 27 Am. Dec. 158; Bierne 149 111. App. 348. V. Dord, 2 Sandf. (N. Y.) 89; Bar- I073 CUSTOMS AND USAGES. § 1 728 and the bill of lading was assented to by the shipper, such ship- per cannot show the existence of a custom which will allow him more than a reasonable time for the removal of his goods." Where, however, the terms used in a bill of lading have, by usage, acquired a particular meaning, the parties will be presumed to have used them in that sense." Again, a custom may be inter- posed where that is essential to get at the intention of the parties. Thus, where a seller of goods takes a bill of lading to his own or- der, he thereby reserves prima facie right of disposition, and evi- dence of a custom to the contrary has been held admissible to de- termine the intention of the parties.'^^ There is no uniform custom which would reasonably read into a contract of shipment a bill of lading not assented to or read by the shipper.''^ It would seem clear that custom to change or alter dates on bills of lading, at the time of and prior to the issuance thereof, to make the date on the bills conform to the true date of issue, would be without force where it would change the date of the true instrument.'® In a case where a lumber shipping contract provided for stoppage en route for dressing, and the lumber was burned while at the planing mill, it was held proper to show the general custom in shipping lumber, when dressing in transit arrangements are al- lowed, not to vary or control the contract but to enable the court to arrive at the real meaning of the parties, who are presumed to have contracted in conformity with the established usage.^° § 1728. Custom making bills of lading negotiable. — Bills of lading may not be made negotiable instruments as against a carrier by general or local custom of others to use them as col- lateral security and thereby make the carrier liable to the indorsee in the same way that he would be if he had drawn negotiable bills "Tallassee Falls Mfg. Co. v. '"Wayne v. The General Pike, 16 Western R. of Ala., 128 Ala. 167, 29 Ohio 421. So. 203. Where a bill of lading of " Collignon v. Hammond Millmg stock provided for delivery to con- Co., 68 Wash. 626, 123 Pac. 1083. signees at Ft. Worth, it was held '* Cleveland, C. C. & St. L. R. Co. competent to show a general custom v. Potts, 23 Ind. App. 564, 71 N. E. to deliver all stock consigned to such 685. t> 1 • consignees at the stockvards in North " Merchants' Nat. Bank v. Balti- Ft. Worth. Houston & T. C. R. Co. more &c. Steamboat Co., 102 Md. 573, V. Hill (Tex. Civ. App.), 128 S. W. 63 Atl. 108. 445 «« Baron v. Mobile &c. R. Co. (Ala. App.), 56 So. 862. 68 — Contracts, Vol. 2 § 1729 CONTRACTS. "1IO74 of exchange.^^ Says an authoritative writer on the subject of col- lateral securities : "A bill of lading is merely a receipt by the car- rier for the merchandise received for transportation and evidence of a contract with a shipper to carry the merchandise to its desti- nation. The carrier's liability would be the same if he received the goods and undertook to transport them without issuing a bill of lading. The carrier's contract is with the shipper and with no one else. If the shipper indorses his contract to any one else, the indorsee acquires only the rights of the shipper, and it is not for the interest of commerce that he should acquire any other rights. The common law makes it no part of the duty of a car- rier to issue bills of lading which shall have the effect of negotia- ble securities as against him ; though it holds him rigidly to the performance of his contract as a carrier. While merchants have from time immemorial treated bills of lading as convenient sym- bols or instruments of title, which they have transferred by in- dorsement, and have thus given them a quasi-negotiability or capacity to pass from hand to hand, this custom of merchants is one wholly for their own benefit, and is one which does not bene- fit the carrier or in any way concern him, unless it be to make him liable to the indorsee, instead of the shipper, for the delivery of the goods."" § 1729. Effect of custom on liability of connecting carriers. — Usage or custom may often exert an important influence upon the relative rights, duties and liabilities of the different carriers as among themselves, particularly in regard to delivering and receiv- ing goods, which, unknown to the shipper, and not such as he ought to take notice of, would not affect the rights of the ship- per.*^ Carriers may sometimes be held liable to a shipper as partners, when, as between themselves, they are not partners, and private arrangements between themselves may bind them without "^Robinson V. Memphis &c. R. Co., other, insufficient); Wallace v. 9 Fed. 129. Rosenthal, 40 Ga. 419; Condon v. *" Jones Col. Sec, f 250. Marquette &c. R. Co., 55 Mich. 218, ^Southern Indiana Exp. Co. v. 21 N. W. 321, 54 Am. Rep. 367; Mc- United States Exp. Co., 92 Fed. 1022, Donald v. Western R. Co., 34 N. Y. 35 C. C A. 172 (custom to receive 497; Conkey v. Milwaukee &c. R. goods without prepayment of charges Co., 31 Wis. 619, 11 Am. Rep. 630. and to advance back charges to each I075 CUSTOMS AND USAGES. § 1 73O in any way binding the shippers or affecting their duties and lia- bilities to him.^* § 1730. Custom as to delivery of goods to carrier. — A car- rier may not be charged with the loss of property unless it has been delivered to him or his agent for transportation but the law does not demand an actual delivery. A delivery in accordance with the usage and custom of the carrier will ordinarily suffice.®'* "It is well settled by a series of adjudications, of high authority, that if a uniform custom is established and recognized by the car- rier, and is known to the public, that property intended for car- riage may be deposited in a particular place, without express notice to him, that a deposit of property for that purpose in ac- cordance with the custom is constructive notice, and would ren- der any other form of delivery unnecessary. The rule is founded in reason; as the usage, if habitual, is a declaration by the carrier to the public, that a delivery of property in accordance with the usage will be deemed an acceptance of it by him for the purpose of transportation. To allow a carrier, when property is thus de- livered, to set up by way of defense the general rule, which re- quires express notice, would operate as a fraud upon the public, and lead to manifest injustice."^® But the party relying upon a usage of this character must bring himself strictly within its terms.®^ In one of the cases, a sufficient delivery was shown according to the usage of the business where goods were left on the dock near the boat with express notice to the master, but there were more goods left there than the master was notified of, and it was held that the owners of the vessel were not liable for the ** Block V. Fitchburg R. Co., 139 v. Norwich & New York Transp. Co., Mass. 308, 1 N. E. 348; Hill Mfg. 33 Conn. 166; Illinois Central R. Co. Co. V. Boston &c. R. Co., 104 Mass. v. Smvser, 38 111. 354, 87 Am. Dec. 122, 6 Am. Rep. 202 ; Wyman V. Chi- 301; Ford v. Mitchel, 21 Ind. 54; cago &c. R. Co., 4 Mo. App. 35; Green v. Milwaukee &c. R. Co.. 38 Champion V. Bostwick, 18 Wend. (N. Iowa 100; Wright v. Caldwell, 3 Y.) 175, 31 Am. Dec. 376; Pattison Mich. 51; Blanchard v. Isaacs. 3 V. Blanchard, 5 N. Y. 186. Barb. (N. Y.) 388; Packard v. Get- "Buckman v. Levi, 3 Camp. 414; man, 6 Cow. (N. Y.) 757, 16 Am. O'Bannon v. Southern Exp. Co., 51 Dec. 475; Freeman v. Newton, 3 E. Ala. 481; Hickox v. Naugatuck R. D. Smith (N. Y.) 246. Co., 31 Conn. 281, 83 Am. Dec. 143; *> Wright v. Caldwell. 3 Mich. 51. Merriam v. Hartford &c. R. Co.. 20 "Leigh v. Smith. 1 Car. & P. 638; Conn. 354, 52 Am. Dec. 344; Converse Wright v. Caldwell, 3 Mich. 51. § 1 73 1 CONTRACTS. IO76 excess/^ Delivery of letters to boats engaged in river navigation will be governed by common usage to receive and carry such letters although the letters are delivered to a clerk and carried without charge. ^^ Although usage will make that a delivery which without it would not have been a sufficient delivery, yet it will not make an actual delivery insufficient until something fur- ther has been done.*" § 1731. Usage as to capacity of cars. — Where the question involved in an action for breach of a contract for furnishing commodities in carload lots is the capacity of a car, it is proper to receive evidence as to the usage among railroad men and shippers in respect to the commodity involved. Such evidence is received to explain and not to vary the contract.®^ § 1732. Custom and usage as to delivery of goods by car- rier. — Custom frequently exerts an important influence in determining the time, place and manner of delivery of goods by a carrier.®^ A general custom of the business or a well estab- lished usage at the place of delivery usually becomes a part of the contract and governs as to the place, time and mode of making the delivery.®^ Thus, carriers have been held liable for loss occasioned by departing from an established custom,** and so, «« Packard v. Getman, 6 Cow. (N. Tenn. 239, 79 S. W. 124, 64 L. R. A. Y.) 757, 16 Am. Dec. 475. 443. *' Hosea v. McCrory, 12 Ala. 349 ; "' Loveland v. Burke, 120 Mass. 139, Garey v. Meagher, 33 Ala. 630 ; Knox 21 Am. Rep. 507 ; Arthur v. St. Paul V. Rives, 14 Ala. 249, 48 Am. Dec. &c. R. Co., 38 Minn. 95, 35 N. W. 97 718; New York Cent. R. Co. v. Stand- »" Hickox V. Naugatuck R. Co., 31 ard Oil Co., 87 N. Y. 486 ; Gibson v. Conn. 281, 83 Am. Dec. 143; Illinois Culver, 17 Wend. (N. Y.) 305, 31 Cent. R. Co. v. Smyser, 38 111. 354, Am. Dec. 297; Louisville & N. R. 87 Am. Dec. 301 ; Freeman v. New- R. Co. v. United States Fidelity &c. ton, 3 E. D. Smith (N. Y.) 246. Co. (Tenn.), 148 S. W. 671; Richard- ■^Good V. Chicago &c. R. Co., 92 son v. Goddard, 23 How. (U. S.) 28, Iowa 371, 60 N. W. 631; Floyd v. 16 L. ed. 412; Higgins v. United Mann, 146 Mich. 356, 109 N. W. 679. States &c. Steamship Co., 3 Blatchf. <>' Chicago, I. & L. R. Co. v. Rey- (U. S.) 282, Fed. Cas. No. 6469; man (Ind.), "Ji N. E. 587, 166 Ind. Blossom v. Smith, 3 Blatchf. (U.S.) 278, 76 N. E. 970; Sleade v. Payne, 316, Fed Cas. No. 1565; Farmers' & 14 La. Ann. 453; Bachant v. Boston Mechanics' Bank v. Champlain &c R. Co., 187 Mass. 392, 7Z N. E. Transp. Co., 16 Vt. 52, 42 Am. Dec. 642, 105 Am. St. 408; Shelton v. 491. Merchants' Transp. Co., 59 N. Y. "* Southern Exp. Co. v. Everett, 258, 48 How. Pr. (N. Y.) 257; Weed Z7 Ga. 688; Richmond v. Union v. Barney, 45 N. Y. 344, 6 Am. Rep. Steamboat Co., 87 N. Y. 240. 96 Pennsylvania R. Co. v. Naive, 112 I077 CUSTOMS AND USAGES. § 1 733 on the other hand, they have been reHeved from further Hability by complying with such a custom. It has been held, however, that if the carrier relies on a custom or upon the instructions of the consignee as to the manner of delivery of the goods, it must show that it has fully complied with such custom or instructions."' An example of the influence of custom is found in a recent case. It was shown that the carrier had been accustomed to deliver goods to an independent warehouseman whose custom it was to notify the consignee and that the consignee was aware of this custom and had long acquiesced in it. The court held that the liability of the carrier ended with the delivery of the goods to the warehouseman and that it was not liable for the loss of the goods by fire while in the warehouse.''" So, it has been held that where there are two places in the same town for the delivery of freight, one being the depot proper and the other a platform where heavy and bulky articles were usually deposited, the usage of the place as to which would be the proper point for delivering cotton bales may be shown where neither is specifically designated."^ As a general rule, however, unless the course of dealing between the parties has been such as to render proof of a general custom un- necessary,"" the usage must be lawful, general, uniform and cer- tain, or, at least, such that the parties should have known it and must be presumed to have contracted or dealt with reference to it for no usage can override a valid, express and specific contract."" § 1733. Customs as to delivery of goods by carrier by water. — The mode of delivery of goods transported by water depends much upon the usage of the place where that delivery is to be made and parties to shipping contracts are presumed to know the usages and laws of the port where the contract is to be »*Hibler v. McCartney, 31 Ala. 501; Loveland v. Burke, 120 Mass. 139, 21 Baldwin v. American Exp. Co., 23 Am. Rep. 507. 111. 197, 74 Am. Dec. 190; Haslam v. '"Powell v. Thompson, 80 Ala. 51; Adams Exp. Co., 19 N. Y. Super. Georgia R. Co. v. Pound, 111 Ga. 6, Ct 235 36 S. E. 312; Wevand v. Atchinson " Black V. Ashley, 80 Mich. 90, 44 &c. R. Co.. 75 Iowa 573, 39 N. W. N. W. 1120. 899, 1 L. R. A. 650, 9 Am. St. 504; "Homesly v. Elias, 66 N. Car. 330. Benson v. Gray, 154 Mass. 391. 28 N. See also, I\IcMasters v. Pennsylvania E. 275, 13 L. R. A. 262; Dickinson R. Co., 69 Pa. St. 374, 8 Am. Rep. v. Gay. 7 Allen (Mass.^ 29. 83 Am. 264. Dec. 656; Collender v. Dinsmore, 55 »* Barnes v. Foley, 5 Burr. 2711; N. Y. 200, 14 Am. Rep. 224. § 1733 CONTRACTS. 3078 performed and to contract with reference to them.* But it has often been held to be within the legitimate and proper scope of a usage of trade to regulate the time, place and manner of the de- livery of a cargo, when there is no express contract upon the subject; and, under such circumstances, the usage is deemed to enter into and form a part of the contract.^ "According to all the decisions, the rules of law which would otherwise exist as to the beginning or end of the liability of a carrier may be modified to some extent by the course and usages of trade and business, though there may be a difficulty in defining by a general state- ment how far such modification may go."^ It is the general usage that a carrier by water must convey from port to port or from wharf to wharf. He is not bound to deliver goods at the warehouse of the consignee. It is the duty of the consignee to receive his goods out of the ship or upon the wharf,* and it is held that the vessel is not obliged to deliver freight at a pier nearest to the address of the consignee as given in the bill of lading.^ The delivery must be made within such parts of the port as have be- come fixed by established usage if a customary berth can be ob- tained within a reasonable time.^ Where the general laws of the country change the place of delivery in cases of quarantine, ' ^ Shepherd v. Lanfear, 5 La. 336, 25 ' Pickering v. Weld, 159 Mass. 522, Am. Dec. 181; Jameson v. Sweeney, 34 N. E. 1081; Miller v. Mansfield. 32 Misc. (N. Y.) 645, 66 N. Y. 494; 112 Mass. 260; Robinson v. United Ankeny v. Young, 52 Wash. 235, 100 States, 13 Wall. (U. S.) 363, 20 L. Pac. 736. Where a charter party ed. 653 ; Hostetter v. Park, 137 U. S. provides for lay days for loading in 30, 34 L. ed. 568, 11 Sup. Ct. 1. specific terms, the contract cannot 'Judson v. Railroad Corp., 4 Allen be afifected by any custom of the port. (Mass.) 520; Mansur v. New Eng- The Mary S. Bradshaw, 155 Fed. land &c. Ins. Co., 12 Gray (Mass.) 696. Where a broker's notes of a 520; Haskins v. Warren, 115 Mass. sale of canary seed recited "March 514; Reed v. Richardson, 98 Mass. steamer shipment from Turkey, 216, 93 Am. Dec. 155; Pickering v. * * * goods to be taken from dock Weld, 159 Mass. 522, 34 N. E. 1081; on arrival of steamer," indorsed, Richardson v. Goddard, 23 How. (U. "Name of steamer reported Aleppo. S.) 28, 16 L. ed. 412. No arrival, no sale," — a delivery in * Kohn v. Packard, 3 La. 224, 23 New York by the Aleppo was not Am. Dec. 453; Moore v. United required, it appearing that no steamer States, 196 U. S. 157, 49 L. ed. 428, ever took goods directly from Tur- 25 Sup. Ct. 202, 40 Ct. CI. 513; Dib- key to New York, but that the uni- ble v. Morgan, 1 Woods (U. S.) 406, versal custom, known to the parties. Fed. Cas. No. 3881. was to transship at Liverpool. lasigi "Western Transp. Co. v. Hawley, V. Rosenstein, 3 App. Div. (N. Y.) 1 Daly (N. Y.) 327. 500, n N. Y. St. 679, 38 N. Y. S. ' The Port Adelaide, 38 Fed. 753. 354, affd. 158 N. Y. 678, 52 N. E. 1124. I079 CUSTOMS AND USAGES. § 1 734 then it is the duty of the consignee to receive the goods at the place designated by the law/ § 1734. Custom as to notice to consignee of arrival of goods. — The adjudged cases recognize the force of usage and custom and affirm that custom may require notice or may dis- pense with notice of the arrival of goods.® A well known local custom that a carrier of goods shall notify the consignee of their arrival is to be considered a part of the agreement of transporta- tion." On the other hand, notice to the consignee of the arrival of goods may be dispensed with by a well recognized custom at the point of destination.^" § 1735. Custom as to delivery of baggage to carrier. — What is a sufficient delivery of baggage to a carrier is often de- termined by custom or usage. The delivery need not always be made to the persons specially authorized to care for the bag- gage; it may sometimes be made to the ticket agent or other agent who is permitted to hold himself out as authorized to re- ceive baggage and does actually receive baggage, especially where such is the custom." Thus, when it is customary to take baggage to a railway station and deposit it in the carrier's depot, the car- rier may become liable although the attention of the agent was not specially called to the baggage.'^ In England, it is customary for 'Shepherd v. Lanfear, 5 La. 336, 25 '"Gibson v. Culver, 17 Wend. (N. Am. Dec. 181. V.) 305, 31 Am. Dec. 297; Atlantic ' Richmond &c. R. Co. v. White, 88 Nav. Co. v. Johnson, 27 N. Y. Super. Ga. 805, 15 S. E. 802; Briant v. Ct. 475; Farmers' & Mechanics' Louisville &c. R. Co., 9 Ky. L. 47; Bank v. Champlain Transp. Co., 16 Bachant v. Boston &c. R. Co., 187 Vt. 52, 42 Am. Dec. 491. Mass. 392. 72 N. E. 642, 105 Am. St. " Chicago, R. I. & P. R. Co. v. 408; Herf &c. Chemical Co. v. Lack- Clayton, 78 111. 616; Jordan v. Fall awanna Line, 100 Mo. App. 164, 73 River R. Co.. 59 Mass. 69, 51 Am. S. W. 346; Burlington &c. R. Co. v. Dec. 44; Rogers v. Long Island &c. Arms, 15 Nebr. 69. 17 N. W. 351; R. Co., 38 How. Pr. (X. Y.) 289; Gibson V. Culver, 17 Wend. (N. Y.) Camden & Amboy R. Co. v. Belknap, 305, 31 Am. Dec. 297; Russell Mfg. 21 Wend. (N. Y.) 354; Witbeck v. Co. V. New Haven Steamboat Co., Schuyler, 44 Barb. (N. Y.) 469, 31 52 N. Y. 657; Pennsvlvania R. Co. v. How. Pr. (N. Y.) 97; International Naive. 112 Tenn. 239, 79 S. W. 124, &c. R. Co. v. Folliard. 66 Tex. 603, 64 L. R. A. 443. 1 S. W. 624. 59 Am. Rep. 632. "Herf &c. Chemical v. Lacka- "Green v. Milwaukee &c. R. Co.. wanna Line, 100 Mo. App. 164, 73 S. 38 Iowa 100; Wright v. Caldwell, 3 W 346- Roth Clothing Co. v. Maine Mich. 51; Freeman v. Newton, 3 E. Steamship Co.. 44 Misc. (N. Y.) 237, D. Smith (N. Y.) 246. 88 N. Y. S. 987. § 1736 CONTRACTS. IO80 porters to receive baggage for the company and it is held that the Hability of the carrier attaches as soon as the baggage is placed in their hands for the purpose of transportation/^ but not where it is placed in their hands merely for custody and deposit." The mere deposit of baggage on the platform of the carrier or the vehicle without calling the attention of any one to the fact is not a sufficient delivery, at least, in the absence of a custom or an ar- rangement to that effect.^' Where baggage is delivered to the carrier and accepted by him liability attaches at that time al- though the baggage is not checked until later. "The custom of checking can have no effect upon the character of the delivery. That custom did not necessarily qualify the delivery and accept- ance. The check is in the nature of a receipt, and may be given and received at any time when the convenience and custom of the company dictate. It is not the contract, but evidence of the ownership, delivery, and identity of the baggage. It is the de- livery and acceptance, the abandonment of all care of the baggage by the passenger, and the assumption of it by the agents of the carriers, expressly or impliedly, for the purpose of transportation, which fix the liability of the latter as such, and that liability begins when the baggage is delivered to the agent of the company for carriage."" § 1736. Usages allowing passengers to carry packages on trains. — A usage which would bind a carrier to allow passen- gers to carry packages with them on trains must be so general, certain, uniform and notorious, and must be so clearly proved, that it can be concluded that the officers and agents of such com- pany possessed knowledge of such usage, and acquiesced therein, in such manner that it became a part of the contract of carriage. A habit of one particular passenger to carry packages of "Lovell V. London &c. R. Co., 45 R. Co., 127 Iowa 431, 103 N. W. 343; L. J. Q. B. 476. Rider v. Wabash &c. R. Co., 14 Mo. " Great Western R. Co. v. Bunch, App. 529 ; Ball v. New Jersey Steam- 57 L. J. Q. B. 361, 13 App. Cas. 31; boat Co., 1 Daly (N. Y.) 491; Greg- Welch V. London &c. R. Co., 34 ory v. Webb, 40 Tex. Civ. App. 360, Wkly. Rep. 166. 89 S. W. 1109. "Kerr v. Grand Trunk R. Co., 24 '* Hickox v. Naugatuck R. Co., 31 U. C. C. P. 209 ; Wright v. Caldwell, Conn. 281, 83 Am. Dec. 143. 3 Mich. 51 ; Lennon v. Illinois Cent. I08l CUSTOMS AND USAGES. § 1 737 merchandise into the cars and with him on his journey will not constitute the usage or practice which can be relied on by passen- gers as a general regulation of the railroad company." § 1737. Usage as to furnishing refrigerator cars. — Custom and usage exert an important influence upon the question of the duty of a railroad carrier to provide itself with suitable, safe and proper cars and equipments for carrying property of a perishable nature or property which requires for its preservation peculiar means and methods. Thus it is probably true that where a rail- road company accepts a charter to operate a railroad in a locality where the business involves the transportation of goods from points and markets where perishable fruits and the like are the ordinary and usual commodities of commerce, there is an implied duty to provide itself w-ith suitable and proper cars and equip- ments for the transportation of that kind of property, and it may be that, under modern conditions and methods, most railroad companies in this country would be required to furnish refriger- ation according to the established custom." § 1738. Guaranty of freight bills. — A guarantor of the pay- ment of freight bills, which may become due to a railroad com- pany from a certain shipper, is not relieved from any part of his liability because the company failed to enforce against such ship- per its custom of collecting its bills weekly.^** § 1739. Effect of usage on transaction of business at stock- holders' meeting— Usage as by-law.— Where the custom or usage is well established, special business may be transacted at the regular meeting without special notice to that effect.-" Thus, where a charter provided that the president should annually give I " Runvan v. Central R. Co., 64 N. " Philadelphia & R. R. Co v. Snow- L. 67, 44 Atl. 985, 48 L. R. A. don. 166 Pa. St. 236. 30 Atl. 1129. /44 • Bullock V. Delaware &c. R. Co., =" Sampson v. Bowdoinham &c. 60 N J L. 24, 36 Atl. 773, 37 L. R. ^lill Corp., 36 Maine 78; Mutual Fire }^ 417 •* Ins. Co. V. Farquhar. 86 Md. 668. 39 "Johnson v. Toledo R. Co.. 133 Atl. 527; Miller v. Eschbach, 43 Md. Mich 596 95 N. W. 724, 103 Am. 1 ; Atlantic Mut. Fire Ins. Co. v. St 464- Popham v. Barnard. 77 Mo. Sanders, 36 N. H. 252; Warner v. Aon 619- New York P. & N. R. Co. Mower, 11 Vt. 385; State v. Conklin, V. Cromwell. 98 Va. 227, 35 S. E. 34 Wis. 21. 444, 49 L. R. A. 462, 81 Am. St. 722. § 1739 CONTRACTS. I082 notice of the meeting for the election of directors, this did not prevent the meeting then held, being made, by custom, an occa- sion for the transaction of general business. This had been the unbroken custom of the corporation for many years. The court said: "It cannot be doubted that all the members understood and must be regarded as having agreed that at these meetings, not only were the directors to be elected, but that any other mat- ters in which the company was concerned could be taken up, con- sidered, and definitely passed upon. A custom or usage so long continued and so invariably pursued has the force of a by-law, and not being repugnant to any provision of the charter, is valid."-^ § 1740. Corporate lien on stock by usage or custom. — Under some of the authorities the right of a corporation to a lien on stock may rest upon a general usage or course of business. Thus, it has been held that a usage of a corporation not to permit stock to be transferred while the holder is indebted to it will bind the stockholder, who becomes its debtor with knowledge of such usage, and neither he nor his voluntary assignee with notice can maintain an action for a refusal to transfer the stock without payment of the debt." But this principle would not, of course, apply as against bona fide purchasers of the stock without notice of such custom or usage." § 1741. Creation and amendment of corporate by-laws by custom or usage. — Great formality is not required in the en- actment of a by-law, and a jury may find a by-law, its terms and adoption from the usage of the corporation, in the absence of other evidence where no particular form of adoption is pre- scribed.2* The repeal of a by-law may be proved by showing a course of conduct inconsistent therewith, in a manner similar to that by which its adoption is shown by usage." Where the mode ^ Mutual Fire Ins. Co. V. Farquhar, =^ Fairfield T. Co. v. Thorp, 13 86 Md. 668, 39 Atl. 527. Conn. 173; Langsdale v. Bonton, 12 ° Morgan v. Bank, 8 Serg. & R. Ind. 467 ; McCabe v. Fountain Coun- (Pa ) IZ 11 Am. Dec. 575; Brent v. ty, 46 Ind. 380; Union Bank v. Ridge- Bank of Washington, 10 Pet. (U. S.) ly, 1 Har. & G. (Md.) 324. 596 9 L ed. 547. ^ Attornev-General v. Middleton, 2 ""Fitzhugh V. Bank, 3 T. B. Mon. Ves. Sr. 327. See also, Henry v. (Ky.) 126, 16 Am. Dec. 90. Jackson, 11 Vt. 431. 1083 CUSTOMS AND USAGES. § 1 742 of action of directors is prescribed by by-laws, these rules may be varied by tisage,^' at least, where the by-laws are made by the directors themselves." And, generally, a person dealing with the corporation will not be held to so strict a knowledge of limitations and restrictions upon the general authority of the directors con- tained in the by-laws as of those contained in public statutes.^® § 1742. Powers of president of corporation inferred from usage, custom or habit of acting. — Generally speaking, the president of a corporation possesses such powers as he habitually exercises in dealing with the public, and the public in dealing with the corporation have the right to assume that he is in the rightful possession of, and properly exercising, such powers.^® The au- thority of the president in any or all matters may generally be implied from long usage. ^"^ Where the officers act openly and publicly in the execution of contracts on behalf of the corporation, with the full knowledge and acquiescence of the directors, it is not necessary to show that authority was expressly conferred by reso- lution or otherwise.^^ If a president has been held out as a general agent, or as having a special authority which he does not in fact possess, then persons dealing with him are not required to know the limitations upon his power.^^ Persons who deal with the president in the usual manner and within the scope of the power which he has been accustomed to exercise, not ultra vires of the corporation, have the right to assume that he has been actually invested with those powers. ^^ Where a corporation held out a person as its officer, it was held bound by acts apparently within * Pittsburgh &c. R. Co. v. Clarke, v. Fitzgerald, 137 U. S. 98, 34 L. ed. 29 Pa. St. 146. 608, 11 Sup. Ct. 36; First Nat. Bank " In re Royal British Bank. 26 L. v. Kimberlands, 16 W. Va. 555. J. Ch. 545 ; Samuel v. Holladay, 1 ^ Estes v. German Nat. Bank, 62 Woolw. (U. S.) 400, McCahon 214, 1 Ark. 7, 34 S. W. 85; Missouri &c. Kans. [Dass. Ed.] 612, Fed Cas. R. Co. v. Sidell, 67 Fed. 464, 14 C. C 12288. A. 477. " Bissell V. Michigan Southern R. " Sherman Center Town Co. v. Co., 22 N. Y. 258. Swigart, 43 Kans. 292. 23 Pac. 569. " Ceeder v. Loud &c. Lumber Co., 19 Am. St. 137; Chambers v. Lan- 86 Mich. 541, 49 N. W. 575, 24 Am. caster, 160 N. Y. 342. 54 N. E. 707. St. 134 ; Olcott V. Tioga R. Co., 40 ^ Fitzhugh v. Franco-Texas Land Barb. (N. Y.) 170. affd. 27 N. Y. Co.. 81 Tex. 306. 16 S. W. 1078. .546. 84 Am. Dec. 298: Citv Nat. Bank "Berlin v. Cusachs, 114 La. 744, V. Parke Nat. Bank. 32 Hun (N. 38 So. 539. Y.) 105; Fitzgerald &c. Const. Co. § 1743. CONTRACTS. IO84 the scope of his authority, notwithstanding limitations on his power unknown to the party dealing with him.^* Authority to contract for the corporation on the part of the president may arise from his having assumed and exercised the power in the past, and being invested with such authority, he may enter into such contracts as pertain to the regular course of the corporate business under his direction.^^ The power of the president of a manufacturing corporation to borrow money and give the notes of the corporation therefor may be inferred from the fact that he had long been accustomed without interference to conduct the entire business of the corporation,^® So, where a president, with the concurrence of the board of directors, as shown by a long con- tinued custom, has assumed the powers of a general manager of the affairs of the corporation, and in such capacity has transacted its affairs, and executed contracts or notes in the conduct of the business, his acts in such cases have been held binding upon the corporation." In one of the cases a bank was held liable for overdrafts made by the president and secretary, where they had for a long time signed checks which had been paid by the bank.^* But where for five years the president contributed from the funds of his corporation to the payment of taxes on the real estate oi a third person, it was held to be no evidence of an agreement on the part of the corporation to continue such payment.^® § 1743. Duties of treasurer as affected by custom or usage. — The corporation may enlarge the authority of the treasurer and usage may so extend the scope of his authority as to carry it beyond that which is inherent in the office itself. By continued usage the power of the treasurer may be enlarged and he may bind the corporation by acts performed within the scope of the "Johnson v. Waxelbaum Co., 1 Ga. vernail (N. Y.) 155, affd. 125 N. Y. App. 511, 58 S. E. 56; Cake v. Potts- 695. 26 N. E 751. ^^ ^ ^ ^ ^., ville Bank, 116 Pa. St. 264, 9 Atl. ''^ Libby v. Union Nat. Bank, 99 111. 302, 2 Am. St. 600. 622; Fitzgerald & Mallory Construc- *Meating v. Tigerton Lumber Co., tion Co. v. Fitzgerald IJ/U. b. y», 113 Wis. 379, 89 N. W. 152. 34 L. ed. 608, 11 Sup. Ct. 36. '•Martin v. Niagara Falls Paper ^ Mahoney Mining Co. v. Anglo- Co., 44 Hun (N. Y.) 130, 8 N. Y. California Bank, 104 U. S. 192, Zd St. 265, affd. 122 N. Y. 165, 25 N. L. ed. 707. E. 303; Marine Bank v. Butler Col- ''Freifeld v. Groh 116 App. Div. liery Co., 52 Hun (N. Y.^ 612, 23 (N. Y.) 409, 101 N. Y. S. 863. N. Y. St. 318, 5 N. Y. S. 291, 1 Sil- 1085 CUSTOMS AND USAGES. § 1 744 agency created or sanctioned by usage.*° It has been held that drafts accepted by the treasurer are presumed to be properly ac- cepted.*^ The treasurer of a corporation has no power as such to confess judgment for it :" nor, as a rule, can he conduct litiga- tion for the corporation. It is held, however, that he has author- ity to compromise a disputed claim which he is authorized to collect." While the general rule is that the treasurer, by virtue of his office, has no authority to conduct litigation for the corpo- ration, yet such authority may be implied in particular instances ; thus, if a promissory note is placed in his hands for collection, he may cause suit to be brought upon it." Unless the authority to execute accommodation paper is specially conferred upon the treasurer or is vested in him by usage, he cannot bind the corporation by the execution of such paper.*"* § 1744. Effect of usage or custom on right of corporate officer to compensation. — The right of an officer to claim or recover compensation may depend largely on the usage and cus- tom of the corporation in this respect and proof of such custom or usage is proper and admissible. Whether or not there was such a usage in any given case is a matter of fact and not a conclusion either of the law or of a witness. It may be presumed that if there had been no salary paid, and no contract in reference thereto, this would determine, largely, the expectations of officers rendering services. If an officer knew of the existence of a custom or usage by which the corporation gave no compensation for the particular services, the inference would naturally be that he ac- cepted the office and performed its duties without expectation of being compensated for his services. And if any usage in fact ex- isted, either as to the payment of compensation or that no com- pensation was paid for the particular services, the position of the officer as a member and officer of the corporation "Page V. Fall River &c. R. Co., *^ Stevens v. Carp River Iron Co., 31 Fed. 257; Lester v. Webb. 1 Allen 57 Mich. 427, 24 N. W. 160. (Mass.) 34; Merchants' State Bank " Gafford v. American Mortgage V. State Nat. Bank, 10 Wall. (U. S.) &c. Co., 11 Iowa 736. 42 X. W. 550. 604, 19 L. ed. 1008. ** North Brookfield cS:c. Bank v. "Credit Co. v. Howe Machine Co., Flanders. 161 Mass. 335. 11 N. E. 307. 54 Conn. 357, 8 Atl. 472, 1 Am. St. " Usher v. Raymond Skate Co., 163 123 Mass. 1, 39 N. E. 416. § 1745 CONTRACTS. I086 would be sufficient, prima facie, to charge him with knowledge of the existence of such usage, and might therefore be binding on him on the one hand, or on the corporation on the other.*® In an action by a secretary to recover the value of services upon an implied promise it was held competent for the corporation to show that by the usage and custom of the corporation no com- pensation was chargeable for such services ; and the secretary was presumed to have knowledge of such custom, and the inference was indulged that he accepted the office and performed its duties without accepting compensation.*^ An officer's salary, though fixed by a by-law, may be changed by usage and the corporation bound by acquiescence.*^ § 1745. Usages as to ownership of dividends. — A dividend belongs to the owner of stock at the time it is declared, even when it is made payable at a future date, and this rule cannot be displaced or overcome by evidence showing a usage of the stock exchange to the contrary.*^ § 1746. Insurance customs and usages generally. — In the construction of an insurance policy the language must be con- strued according to its natural and popular sense unless it has a different meaning under some well-known trade usagc^** The in- surance company is bound to know the customs of a place where it transacts business and it will be presumed to have made its con- tracts in reference to such customs.^^ But the local customs or **Fraylor v. Sonora Min. Co., 17 Maine 326; Coit v. Commercial Ins. Cal. 594; McCarthy v. Mount Te- Co., 7 Johns. (N. Y.) 385, 5 Am. carte Land &c. Co., Ill Cal. 328, 43 Dec. 282; Rankin v. American Ins. Pac. 956. Co., 1 N. Y. Super. Ct. 682; Burger " Fraylor v. Sonora Min. Co., 17 v. Farmers' Mut. Ins. Co., 71 Pa. St. Cal. 594; Barstow v. City R. Co., 42 422; Hearn v. New England Ins. Co., Cal. 465. 3 Clifif. (U. S.) 318, Fed. Cas. No. "Bowler v. American Box Strap 6301; Hancox v. Fishing Ins. Co., Co., 22 Misc. (N. Y.) 335, 49 N. Y. S. 3 Sumn. (U. S.) 132, Fed. Cas. No. 153. 6013. *' Hopper V. Sage, 112 N. Y. 530, "Joyce on Insurance, § 50; May on 20 N. E. 350, 8 Am. St. 771; Board- Insurance (4th ed.), §§ 23b, 582; man v. Lake Shore &c. R. Co., 84 N. Ruger v. Fireman's Fund Ins. Co., Y. 157; Jermain v. Lake Shore &c. 90 Fed. 310; Lauchheimer v. Jacobs, R. Co., 91 N. Y. 483; In re Ker- 126 Ga. 261, 55 S. E. 55; Hardeman nochan. 104 N. Y. 618, 11 N. E. 149. v. English, 79 Ga. 387, 5 S. E. 70; •"Red Wing Mills v. Mercantile Todd v. German American Ins, Co., Mut. Ins. Co., 19 Fed 115; Cobb v. 2 Ga. App. 789, 59 S. E. 94; Yost v. Lime Rock Fire &c. Ins. Co.. 58 Anchor Fire Ins. Co., 38 Pa. Super. 1087 CUSTOMS AND USAGES. § 1747 usages in a particular locality cannot affect contracts entered into in other localities.''^ The insurance company is presumed to know the usages of trade which have given a limited or peculiar mean- ing to terms used in the policy." But this peculiar meaning cannot be imposed on the company in the face of a judicial construc- tion of the term giving it a different meaning." Usage or cus- tom may be invoked where the policy is ambiguous," as where it is silent as to the time it is to become operative,""" but not where the terms of policy are clear and explicit." A clear require- ment of the policy that the insured shall keep a set of books showing sales and purchases is not to be negatived by a local custom of merchants not to keep such books but to keep such records upon slips of paper.^^ § 1747. Usage as to authority of insurance agents. — A well-defined local usage whereby marine insurance agents can make binding contracts to take effect on the day of application, without consulting their superiors, is presumably known to a for- eign company engaged for years in insurance business at the place where the usage obtains and is sufficient to prevail over the private instructions of such agents when the insured is in ignorance thereof, and is without notice of fact sufficient to put him upon inquiry.^® An offer to show a general custom by which general Ct. 594; Lebanon j\Iut. Ins. Co. v. " Runyan v. Runyan (Ark.), 142 S. Hoover, 113 Pa. St. 591. 8 Atl. 163, W. 519. 57 Am. Rep. 511. '* Henry v. Green Ins. Co. (Tex. ■^^iMason v. Franklin Fire Ins. Co., Civ. App.), 103 S. W. 836. 12 Gill & J. (Md.) 468; Parkhurst ''"Greenwich Ins. Co. v. Waterman, V. Gloucester Mut. Fishing Co., 100 54 Fed. 839. 4 C. C. A. 600, per Taft, Mass. 301, 97 Am. Dec. 100, 1 Am. J.: "If such a definite usage m re- Rep. 105; Natchez Ins. Co. v. Stan- spect to local agents of foreign m- ton, 2. Sm. & M. (Miss.) 340. 41 Am. surance companies had been proven, Dec. 592; Child v. Sun Mut. Ins. Co., the Greenwich Insurance Company S N. Y. Super Ct. 26. would have been charged with notice ^•'Wall v. Howard Ins. Co., 14 of it, and by establishing Ward as Barb. (N. Y.) 383. its local agent the company would " Bargett v. Orient Mut. Ins. Co., have given him apparent authority 16 N. Y. Super. Ct. 385. to bind it in accordance with that ''New York Belting &c. Co. v. usage, if reasonable. Goodenow v. Washington Fire Ins. Co., 23 N. Y. Tvler. 7 Mass. 31 ; Fisher v. Sargent, Super Ct. 428; Fabbri v. Phoenix 10 Cush. 250; Graves v. Legg, 2 Hurl. Ins. Co.. 55 N. Y. 129; Johnson v. & N. 210; Mechem, Ag. sec. 281. The Northwestern Ins. Co., 39 Wis. 87. evidence discloses that the Green- ■* Cleveland Oil &c. Co. v. Norwich wich Insurance Company had been Fire Ins. Co., 34 Ore. 228, 55 Pac doing a marine insurance business in 435. Detroit for ten years at least, and it § I74S CONTRACTS. IO88 agents of life insurance companies exercised an authority to grant short credits on first premiums, without offering to show that the custom prevailed in the issuance of a policy which provided that it should not go into effect until the premium had actually been paid, and expressly stated that the agent could not waive the stip- ulation, is properly rejected in the case of such a policy.^" Where it is doubtful from the evidence whether an agent of an insurance company and the plaintiff had entered into a parol agreement of insurance or a parol agreement for the issue of a written policy, evidence has been held admissible of the custom of other insur- ance companies as to matters of this character.^^ The customer of a warehouseman is liable for his proportionate share in the expenses incurred by the warehouseman in prosecuting suits for the recovery of insurance money for goods destroyed in the ware- house, where the customer is chargeable with knowledge of a general custom of warehousemen to keep a customer's goods in- sured in open policies, in favor of the warehouseman, on goods held in trust, and to charge each customer for such insurance at a certain monthly rate on his goods covered by such policies.^^ § 1748. Custom to notify insured of maturity of premium. ' — There is a lack of harmony in the cases on the question of whether a habit of an insurance company to notify policy-holders could be fairly presumed that the °" Smith v. Provident Sav. Life company was familiar with any local Assur. Soc, 65 Fed. 765, 13 C. C. A. usage obtaining there in the insur- 284. And see also, Greenwich Ins. ance business. If, as testified by sev- Co. v. Waterman, 54 Fed. 839, 4 C. eral witnesses, millions of dollars of C. A. 600; Sternaman v. MetropoH- insurance were placed on the day of tan Life Ins. Co., 49 App. Div. (N. sailing, it would be extraordinary if Y.) 473, 63 N. Y. S. 674. Under a vessel owners would consent to an charter fixing the rate of demurrage arrangement by which no insurance to be paid by the charterer at "cus- should be binding on their vessels tomary" dollars per day, the rate re- until time enough had elapsed after coverable for delay in discharging in the day of sailing for their applica- New York is not governed by the tions to be forwarded to the general rules of the maritime association of agents of the insurance companies at that port in the absence of proof distant points, and by them approved, that the rate thereby fixed is the with the arbitrary right thus secured customary rate. Randolph v. Wiley, to the insurance companies, in case of 118 Fed. 11 . a loss meantime, to reject the ap- "^ Aetna Ins. Co. v. Northwestern plication. A usage by which local Iron Co., 21 Wis. 458. agents could make binding prelimi- "^Buyck v. Schwing, 100 Ala. 355, nary contracts for the company would 14 So. 48. seem to us, therefore, to be reason- able." 1089 CUSTOMS AND USAGES. § 1 749 of the maturity of premiums becomes a part of the contract. Some of the slates have laws which require this to be clone. It is believed that the weight of authority makes such a usage a part of the contract, even in the absence of such a statute, and this more particularly where the failure to pay the premium at matur- ity was solely due to the want of the customary notice and the premium was ready and tendered as soon as notice was given.*'' The rule is applied to the somewhat common custom of sending collectors to the home of the assured to collect the premiums on his policy.®* But the rule requires diligence on the part of the insured to find out the reason for failure to send the notice.*' On the other hand, there are numerous cases which hold that the mere fact that an insurance company is in the habit of sending its premium receipts to an agent for collection does not make this a custom binding on the company so as to make it a part of the con- tract of insurance. ®° § 1749. Notice of cancelation of policy. — A local usage that notice of cancelation of a policy shall be given to the broker by whom it was obtained will not prevail where the policy stipu- lates that notice shall be given directly to the insured. A usage cannot be availed of to contradict the express or implied terms of SO plain a contract provision.*'^ "Equitable Accident Ins. Co. v. ** Sterling Life Ins. Co. v. Rapps, Van Etten, 40 111. App. 232; Supreme 130 111. App. 121; Goedecker v. Met- Council Catholic Knights v. Winter's ropolitan Life Ins. Co., 30 Mo. App. Admr., 108 Kv. 141, 21 Ky. L. 1583, 601; Carey v. John Hancock Mut. 55 S. W. 908; Gunther v. New Orleans Life Ins. Co., 114 App. Div. (N. Y.) &c. Mut. Aid Assn., 40 La. Am. 776, 769, 100 N. Y. S. 289. 5 So. 65, 2 L. R. A. llBn, 8 Am. "'Grant v. Alabama Gold Life Ins. St. 554; Elgutter v. Mutual Reserve Co., 76 Ga. 575 (delay of eight Fund Life Assn., 52 La. Ann. 1733, months too long). 28 So. 289; Attornev-General v. Con- '^Vebb v. Mutual Fire Ins. Co., 63 tinental Ins. Co., 33 Hun (N. Y.) Md. 213 ; Mandego v. Centennial Mut. 138; Union Central Life Ins. Co. v. Life Assn., 64 Iowa 134. 17 X. W. Poettker, 33 Ohio St. 459, 31 Am. 656, 19 X. W. 877; Mutual Fire Ins. Rep. 555; Helme V. Philadelphia Life Co. v. Miller Lodge, 58 Md. 463; Ins. Co., 61 Pa. St. 107, 100 Am. Riley v. Pennsylvania Mut. Life Ins. Dec. 621; Kavanagh v. Security Co., 189 Pa. St. 307, 42 Atl. 191; Trust Co., 117 Tenn. 33. 96 S. W. Girard Life Ins. Co. v. Mutual Life 499, 7 L. R. A. (N. S.) 253n ; Hart- Ins. Co.. 97 Pa. St. 15; Thompson v. ford Life Ins. Co. v. Hvde, 101 Tenn. Knickerbocker Life Ins. Co., 104 U. 396, 48 S. W. 968; New York Life S. 252, 26 L. ed. 765. Ins. Co. V. Eggleston, 96 U. S. 572, 24 " Mutual Assur. Soc. v. Scottish- L. ed. 841 ; Knoebel v. North Ameri- Union &c. Ins. Co.. 84 Va. 116, 4 can Ace. Co., 135 Wis. 424, 115 N. S. E. 178, 10 Am. St. 819. W. 1094, 20 L. R. A. (N. S.) 1037n. 69 — Contracts, Vol. 2 § 1750 CONTRACTS. IO9O § 1750. Customs as to re-insurance. — The re-insurance contract binds the re-insurer to pay the re-insured the whole loss sustained in respect to the subject insured to the extent for which the company is re-insurer. The contract is one of indemnity and is solely for the benefit of the insurer and not of the policy- holders who have no interest therein.''^ The practice is common and the policy of re-insurance is not invalid in the absence of usage or stipulations to the contrary.®" Among the underwriters of the city of New Orleans there is a custom with respect to re- insurance by which the risk is divided and the re-insurer does not take the whole of it, and when the application is silent this is understood in that city.'" In New York re-insurance is held to be a valid contract both as to fire and marine policies. The risk assumed by the first insurer gives him such an insurable interest as to make the re-insurance a valid contract.'^ A policy of re- insurance executed in one city and sent to another, and taking effect by the acceptance of the risks under it, by the agent of the insurer in that state, is not affected by a local usage of the place where the policy was executed." Here as elsewhere a custom is inadmissible to vary or contradict the specific provisions of an express contract. Thus where under a written contract between two insurance companies the method of ceding to defendant company a surplus for re-insurance was clearly defined, it was held that evidence of the custom between insurance companies as to the manner of ceding such insurance was inadmissible to contradict the express terms of the written contract.'^ § 1751. Custom of paying losses not covered by policy. — The law does not allow the payment by mutual insurance com- ** Eagle Ins. Co. v. Lafayette Ins. '" Egan v. Fireman's Ins. Co., 27 La. Co., 9 Ind. 443; Barnes v. Hekla Fire Ann. 368; Louisiana Mut. Ins. Co. v. Ins. Co., 56 Minn. 38, 57 N. W. 314, New Orleans Ins. Co., 13 La. Ann. 45 Am. St. 438. 246. ** Manufacturers' Fire &c. Ins. Co. '' Herckenrath v. American Mutual V. Western Assur. Co., 145 Mass. 419, Ins. Co., 3 Barb. Ch. (N. Y.) 63; 14 N. E. 632; Merry v. Prince, 2 Delaware Ins. Co. v. Quaker City Mass. 176; Herckenrath v. American Ins. Co., 3 Grant Cas. (Pa.) 71. Mut. Ins. Co., 3 Barb. Ch. (N. Y.) "Insurance Co. of North America 63; Delaware Ins. Co. v. Quaker v. Hibernia Ins. Co., 140 U. S. 565, City Ins. Co.. 3 Grant Cas. (Pa.) 71; 35 L. cd. 517, 11 Sup. Ct. 909. Insurance Co. of North America v. " Northwestern Fire Ins. Co. v. Hibernia Ins. Co., 140 U. S. 565, 35 Connecticut Fire Ins. Co., 105 Minn. L. ed. 517, 11 Sup. Ct. 909. 483, 117 N. W. 825. 1 091 CUSTOMS AND USAGES. § 1 752 panics of claims not covered by their policies. Thus, recovery for loss of a barn by being knocked down by lightning but not burned cannot be had under a policy in a mutual company insuring against loss by fire only, and this although the custom has been to pay such losses and to levy assessments therefor on the policy- holders. Such payment would amount to a misappropriation of the funds by the company.''* § 1752. Origin of banking customs. — It may be said gen- erally that a very large portion of the banking law of the country has been derived from usages in the conduct of the banking busi- ness which have from time to time incorporated themselves with, and have finally become settled rules of, the common law." "The usage of merchants has established the great body of the law in reference to bills of exchange. It gave grace to such bills, and thus changed the contract. It has settled the particular time of demand by the notary. The rule of law that requires a protest of a foreign bill is wholly founded upon the customs of mer- chants."^^ Thus as to the custom governing checks on bankers. The general rule in the relation of debtor and creditor is that the creditor cannot divide up his demand against the debtor and re- quire the latter to pay it in parcels. "But everybody knows, and the courts no less than commercial men, that an exception to this rule exists as to deposits in bank. It has been so long and so uni- versal a custom with bankers to receive deposits from time to time, as the convenience of the depositor may require, and to allow him to draw out his funds on checks, in parcels, in such sums as he sees fit, that the mere fact of opening a deposit ac- count with a banker implies a contract on the part of the banker to allow the depositor to withdraw his deposits in parcels. * * * It is only by force of such a custom that such a con- tract, which is against the general rule of law, can be implied."" ^* Sleet V. Farmers' Mut. Fire Ins. Harper v. Calhoun, 7 How. (Miss.) Co (Ky.), 113 S. W. 515, 19 L. R. A. 203; Commercial "Bank v. Varnum. (N S) 421. See also. Smith v. Mo- 49 N. Y. 269; Allen v. Merchants' bile Nav. &c Ins. Co., 30 Ala. 167. Bank, 22 Wend. (N. Y.) 215, 34 Am. "Munn V. Burch, 25 111. 35; Bell Dec. 289. V Hagerstown Bank, 7 Gill (Md.) ™ Commercial Bank v. Varnum, 49 216; Citizens* Bank v. Grafflin, 31 N. Y. 269. Md. 507, 1 Am. Rep. 66; Central " Munn v. Burch. 25 111. 35. Bank v. Davis, 19 Pick. (Mass.) 2>75; § 1753 CONTRACTS. IO92 § 1753. Essentials of good bank usage. — Banking cus- toms, however, must be uniform, certain and sufficiently notori- ous to warrant the legal presumption that the parties made their contract with regard to them." And the persons who transact business at a bank must be presumed to agree to conform to its mode of doing business so far as they are known to them. They incorporate the known bank usages into, and make them a part of, their contracts and are bound not by the force of the usage but by virtue of their own contract.^^ It is, also, essential to a good bank usage that it should apply to a place rather than to a particular bank. It must be a rule of all the banks of the place, or it cannot consistently be called a usage. If every bank could establish its own usage, the confusion and uncertainty would greatly exceed any local convenience resulting from the arrangement.^" Thus, evidence of the usage of two banks in New York City and of single instances in accordance therewith and the practice of other banks was held insufficient to show a local custom or usage.®^ But the uniform custom of the single bank may suffice to show a local custom where that bank was the only bank in the place.^^ And, generally, it would seem that a usage even if confined to only one of the banks of a place might be effectual to bind the bank or one who dealt with it after knowl- edge of such usage.^^ The custom may not be invoked to con- tradict or vary the terms of an express contract clear as to its meaning.^* Accordingly, a custom or usage may not be shown which would fix a different maturity from that plainly appearing on the face of a draft. *^ The existence of a general usage among banks must be established as a fact and not as a matter of judg- ment or opinion of witnesses deduced from the manner of dealing " Citizens' Bank v. Grafflin, 31 Md. bank for deposit, was taken at a dis- 507, 1 Am. Rep. 66. count, and was subject to check im- '" Central Bank v. Davis, 19 Pick, mediately after entry in the de- (Mass.) 2>7Z. positor's pass book, it could not be *" Adams v. Otterback, 15 How. (U. shown that it was the custom of S.) 539, 14 L. ed. 805. bankers to credit such items as cash, Stringfield v. Vivian, 63 Mich, though in fact they are taken only 681, 30 X. W. 346. for collection, as this would contra- " Sahlien v. Bank of Lonoke, 90 diet the contract. Auto & Acces- Tenn. 221, 16 S. W. 373. scries Mfg. Co. v. Merchants' Nat. "Fowler v. Brantly, 14 Pet. (U. Bank. 116 Md. 179, 81 Atl. 294. S.) 318, 10 L. ed. 473. *° Hammond v. American Exp. Co., "Where a draft, indorsed to the 107 Md. 295, 68 Atl. 496. I093 CUSTOMS AND USAGES. § 1 754 in a few instances in particular banks.*" The custom of banks with reference to the presentation of checks for payment is one of general observance in the banking business, of which knowledge on the part of all persons dealing with such institutions will be presumed.**^ § 1754. Customs and usages must not be unreasonable. — The banking custom must be reasonable and where it lacks this requisite it has no binding force. A special custom of bankers in the particular locality is unreasonable which allows the pay- ment of bank obligations in depreciated paper.*^ And the rule is the same with a local custom of banks not to correct mistakes in the receipt or payment of money unless discovered before the person leaves the banking room.®" A usage is unreasonable which will not allow a bank to correct a mistake in certification.®" § 1755. Bank usages as to powers and duties of officers. — The usages of banks with respect to the powers and duties of their officers, where these usages are well established and known to the public, enter into and become a part of contracts made by such banks through their officers.®^ Thus, a bank will be bound by a usage which sanctions the right of the president to sign drafts or checks in the absence of the cashier.®^ So, the bank may be bound by the certificate of its cashier or teller that the check is good where the custom is well established that such officer may so certify."^ * Chesapeake Bank v. Swain, 29 v. Johnson, 17 Mass. 449, 9 Am. Dec. Md. 483; Duvall v. Farmers' Bank, 165; Blanchard v. Hillard, 11 Mass. 9 Gill & J. (Md.) 31. 85; Smith v. Whiting, 12 Mass. 6, " Plover Sav. Bank v. Moodie 7 Am. Dec. 25 ; City Bank v. Cutter. (Iowa), 110 N. W. 29. 3 Pick. (Mass.) 414; Yeaton v. Bank "* Marine Bank v. Chandler, 27 111. of Alexandria, 5 Cranch. (U. S.) 49, 525, 81 Am. Dec. 249; Thompson v. 3 L. ed. 33; Brent's Exrs. v. Bank Riggs, 5 Wall. (U. S.) 663, 18 L. ed. of Metropolis, 1 Pet. (U. S.) 89, 7 L. 704. ed. 65. ''Gallatin v. Bradford, 1 Bibb. *" Palmer v. Yates. 3 Sandf. (N. (Ky.) 209. Y.) 137: Neiffer v. Bank of Knox- »° Second National Bank v. West- ville, 1 Head. (Tenn.) 162. ern Nat. Bank, 51 Md. 128- 34 Am. "^ Meads v. Merchants' Bank, 25 N. Rep. 300. Y. 143, 82 Am. Dec. 331; Farmers* " Hartford Bank v. Stedman, 3 & Mechanics' Bank v. Butchers' &c Conn. 489; Jones v. Fales. 4 Mass. Bank. 16 N. Y. 125. 69 Am. Dec. 678; 245; Widgerv v. Munroe, 6 Mass. \\'illets v. Phoenix Bank. 9 N. Y. 449; Lincoln '&c. Bank v. Page, 9 Super. Ct. 121 ; Clarke National Bank Mass 155, 6 Am. Dec. 52; Whitwell v. Albion Bank, 52 Barb. (N. Y.) § 1756 CONTRACTS. IO94 § 1756. Cashier's powers and duties affected by usage. — The powers and duties of cashiers may be affected and controlled by the common usage of banks in the particular locality; and when a custom prevails with certainty and uniformity, the cus- tomers of a bank, in the absence of notice to the contrary, have the right to presume that the cashier possesses the authority exercised by him under the particular usage ; and the act of any cashier under such circumstances will bind his bank.®* Thus, it has been held that the requirement of certain duties from the cashier, by the board of directors may be presumed from the acts of the board and of the cashier and need not be established by a recorded order, resolution or vote.^^ Where it appeared that the buying and selling of government bonds was commonly transacted over the counter, a bank was held liable for funds deposited by a customer with the cashier to be invested in such bonds ; and an agreement between the bank and the cashier that he should do such business on his own account was held no de- fense to the action."^ And where it was the custom of a bank to receive stocks and bonds from its depositors for sale, it was held liable for a fraudulent misappropriation of such securities by its cashier.®^ The powers of the cashier may be limited or enlarged by special usages peculiar to the particular bank. If the directors suffer him to pursue a particular line of conduct for a considerable period, the bank may be bound although the acts done were in excess of his express authority. It may be stated as a rule that under such circumstances proof of the particular usage will sanction any acts of the cashier done in conformity thereto, when not forbidden by statute or by the charter of the bank. Where a cashier in the ordinary business of receiving paper for collection failed to enter it as received on the books of the bank, and retained it without collection, protest or notice, the bank was held responsible for losses in consequence of his conduct^^ 592 ; Girard Bank v. Bank of Penn- "* Caldwell v. National Mol.awk sylvania, 39 Pa. St. 92, 80 Am. Dec. Val. Bank, 64 Barb. (N. Y.) 333. See 507; Merchants' Bank v. State Bank, also, Zugner v. Best, 44 N. Y. Super. 10 Wall. (U. S.) 604, 19 L. ed. 1008. Ct. 393. •*Steinke v Yetzer, 108 Iowa 512, ""Williamson v. Mason, 12 Hun 79 N. W. 286. (N. Y.) 97. ^'Durkin v. Exchange Bank, 2 Pat. "' Pahquioque Bank v. Bethel Bank, & H. (Va.) 277. 36 Conn. 325, 4 Am. Rep. 80. See also, I095 CUSTOMS AXD USAGES. § 1 757 The authority of the cashier to issue certificates may be estab- lished by proof of the custom of the bank in this respect." § 1757. Certification of checks. — A bank in the certifica- tion of a check undertakes that the maker has sufficient funds in the bank to meet the check and that these funds shall not be witli- drawn and extrinsic evidence is not admissible to prove that the contract had by local usage or the understanding of bankers and merchants a larger scope and meaning than it had under set- tled legal constructions.^ § 1758. Custom of bank to pay notes out of depositor's funds. — It is a question whether a local custom will authorize a bank to pay the notes of a depositor out of funds deposited with it by the maker of the note in the absence of instructions to that effect. It is clear that this may not be done in the absence of a certain and uniform custom authorizing it, of which both par- ties have knowledge. This would seem to follow from a consid- eration of the relation of the parties to the deposit. The relation is one purely of debtor and creditor. Said one of the courts in passing on this question : "Reduced to its last analysis, then, the question at issue here may be said to be : If a creditor makes a note payable to a third party at his debtor's place of business, does it operate as an order on the debtor to pay the note, in the absence of any instructions, and in the absence of any understand- ing or agreement growing out of the previous course of dealing between the parties? In the absence of authority, the question would seem to carry its own answer in the negative."^ § 1759. Interest on overdrafts. — The principle which in- validates a custom in violation of an express statute has been applied to a custom of banks to charge ten per cent, interest on overdrafts and to compute the interest on the basis of thirty days Mercantile Bank v. McCarthy, 7 Mo. Merchants' Bank, 182 111. 1(^1, 55 N. App. 318 ; Citv Bank v. Perkins, 17 E. 360. 74 Am. St. 180 ; Security Bank N. Y. Super. Ct. 420. affd. 29 N. Y. v. National Bank, 67 N. Y. 458, 23 554, 86 Am. Dec. 332. Am. Rep. 129. ** Abbott V. Jack. 136 Cal. 510, 69 " Grissom v. Commercial National Pac. 257. Bank, 87 Tenn. 350, 10 S. W. 774, 3 ^ Metropolitan National Bank v. L. R. A. 273, 10 Am. St. 669. 1760 CONTRACTS. IO96 to the month in states where the statute limits the interest to a less per cent, in the absence of a contract for a greater rate.' § 1760. Local custom of banks as to substituted checks.— The local custom of a bank to take up checks drawn upon it by its depositors with its own checks on other banks will not excuse holders from exercising the proper diligence in collecting the substituted checks.* § 1761. Customs as to days of grace. — The allowance of days of grace on commercial paper rests on custom.^ Days of grace have become so thoroughly established as part of the law of commercial paper that it has been held that courts will presume the existence of the custom in another state in the absence of special custom or contract.® And this presumption has been indulged by courts in states where days of grace have been abolished by stat- ute.' The general usage to allow days of grace is so thoroughly established as part of the unwritten law that it may not be affect- ed by any local usage.^ Where the right to days of grace has been established by statute it is all the more clear that the right cannot be defeated by local usage.® § 1762. Presumption of knowledge of bank custom where note payable at bank. — The rule is well established that those who make or indorse notes payable at a bank are presumed to have knowledge of valid usages of that bank in respect to the presentation and protest of such paper.^® Accordingly, "when "Talbot V. First National Bank, 106 rison v. Bailey, 5 Ohio St. 13, 64 Am. Iowa 361, 76 N. W. 726, affd. 185 U. Dec. 632. S. 172, 46 L. ed. 857, 22 Sup Ct. 612. * Mechanics' Bank v. Merchants' * Noble V. Doughton, 72 Kans. 336, Bank, 6 Mete. (Mass.) 13; Perkins 83 Pac. 1048, 3 L. R. A. (N. S.) 1167. v. Franklin Bank, 21 Pick. (Mass.) ''Goddin v. Shipley, 7 B. Mon. 483. (Ky.) 575; Hill v. Norvell, 3 Mc- '"Bank of Columbia v. Fitzhugh. Lean (U. S.) 583, Fed. Cas. No. 1 Har. & G. (Md.) 239; Planters' 6497. Bank v. Markham, 5 How. (Miss.) 'Wood V. Corl, 4 Met. (Mass.) 397; 37 Am. Dec. 162; Carolina Na- 203 ; Lucas V. Ladew, 28 Mo. 342. But tional Bank v. Wallace, 13 S. Car. see Goddin v. Shipley, 7 B. Mon. 347, 36 Am. Rep. 694; Benedict v. (Ky.) 575. Rose, 16 S. Car. 629; Mills v. Bank 'Lucas V. Ladew, 28 Mo. 342. of United States, 11 Wheat. (U. S.) ^Bowen v. Newell, 8 N. Y. 190, 431, 6 L. ed. 512; Renner v. Bank of Seld. Notes 87; Merchants' Bank v. Columbia, 9 Wheat. (U. S.) 581, 6 Woodruff, 6 Hill. (N. Y.) 174; Mor- L. ed. 166; Bank of Washington v. I097 CUSTOMS AND USAGES. § 1763 a note is made payable or negotiable at a bank, whose invariable usage it is to demand payment and give notice on the fourth day of grace, the parties are bound by that usage, whether they have a personal knowledge of it or not."" And so the purchaser of a note made in a peculiar form in accordance with the usage of a bank at which it is made payable is presumed to know of this usage." One dealing with a bank is presumed to know its usage as to crediting checks and drafts conditionally, subject to collec- tion on nonpayment.^' § 1763. Bank usages as to demand and notice. — The well- established and well-known usages of banks as to demand and notice on bills and notes are binding on persons liable on such paper payable at the bank." Thus, the usage of banks to give notice to indorsees by mail is generally sustained as a valid usage.^° And so, a custom may be valid which allows a demand of payment on the fourth instead of the third day after paper is due.^*^ The rule is the same and the parties are bound in the case of a usage allowing a demand on the maker without presenting the note to him," or a demand on a day preceding a day which is Triplett, 1 Pet. (U. S.) 25, 7 L. ed. n. "Mills V. Bank of United States, 11 Wheat. (U. S.) 431, 6 L. ed. 512. "Fowler v. Brantly, 14 Pet. (U. S.) 318. 10 L. ed. 473. But see, Lea- vitt V. Simes, 3 X. H. 14. " Moors V. Goddard, 147 Mass. 287, 17 N. E. 532. " Kilgore V. Bulkley, 14 Conn. 362 ; Hartford Bank v. Stedman, 3 Conn. 489; Bridgeport Bank v. Dyer, 19 Conn. 136; Godden v. Shipley, 7 B. Mon. (Ky.) 575; Boston Bank v. Hodges, 9 Pick. (Mass.) 420; War- ren Bank v. Parker, 8 Gray (Mass.) 221 ; Widgery v. Munroe, 6 Mass. 449; Lincoln &c. Bank v. Page, 9 Mass. 155, 6 Am. Dec. 52; Planters' Bank v. Markham, 5 How. (Miss.) 397, Zl Am. Dec. 162; Commercial &c. Bank v. Hamer, 7 How. (Miss.) 448, 40 Am. Dec. 80 ; Cohea v. Hunt, 2 Sm. & M. (Miss.) 227. 41 Am. Dec. 589; Bowen v. Newell. 7 (N. Y.) Super. Ct. 326. revd. 8 N. Y. 190, Seld. Notes 87; Isham v. Fox, 7 Ohio St. 317. "Gindrat v. Mechanics' Bank, 7 Ala. 324 ; Ray v. Porter, 42 Ala. Ill ; Grinman v. Walker, 9 Iowa. 426; Bell V. Hagerstown Bank, 7 Gill (Md.) 216; Chicopee Bank v. Eager, 9 Mete. (Mass.) 583; Lincoln Bank V. Hammatt, 9 Mass. 159; Bene- dict V. Rose, 16 S. Car. 629; Carolina National Bank v. Wallace, 13 S. Car. 347, 36 Am. Rep. 694. " Raborg v. Bank of Columbia, 1 Har. & G. (Md.) 231; Bank of Co- lumbia V. Fitzhugh, 1 Har. & G. (Md.) 239; Bank of Columbia v. Magruder's Admx., 6 Har. & J. (Md.) 172. 14 Am. Dec. 271; Grand Bank v. Blanchard, 23 Pick. (Mass.) 305; Renner v. Bank of Columbia. 9 Wheat. (U. S.) 581, 6 L. ed. 166; Mills V. Bank of United States. 11 Wheat. (U. S.) 431 ; Bank of Wash- ington V. Triplett, 1 Pet. (U. S.) 25, 7 L. ed. 37; Patriotic Bank v. Far- mers' Bank. 2 Cranch. C. C. 560. Fed. Cas. No. 10811; Jackson v. Hender- son. 3 Leich. (Va.) 196. "Whitwell V. Johnson, 17 Mass. 449, 9 Am. Dec. 165. § 1763 CONTRACTS. IO98 not Strictly a holiday — as, for example, commencement day at Harvard College,^^ or a notice on the day before or a day later than the legal day,^® or the delivery of a notice by leaving it at the cashier's desk vvhere it is intended for a director,^" It is essential, however, in all these cases that the custom should be a valid custom and well understood in the community.^^ A custom of a bank at which a note is payable by which a demand on the note is made without presenting the note or having it in possession is good as to the maker.-- In one of the cases, a usage to notify an indorser by giving a letter "to some individual down from their neighborhood," was held too loose and uncertain to be valid in the absence of proof of the assent of the indorser to the person selected as messenger.^^ It has been held that a usage of a bank requiring an indorser to waive demand and notice was not binding and was not provable against an indorser who had not, in fact, made a waiver.^* A customary form of notice long used by a bank is generally sufficient as to an indorser of a note payable at that bank.^^ Where a customer has knowledge of the usage, he cannot complain of the act of a bank in sending a written demand for payment while the note remains in the hands of the bank.^* The Supreme Court of the United States has held valid a parol agreement that a demand may be made at the bank, when the note does not name the place of payment, provided this is in accord- ance with a custom of the bank to demand such agreement when discounting note against a nonresident.^^ It has been held that the usage of a bank to make demand on the day of maturity and to send notice on the last day of grace was good as to an indorser of a note to the bank.^^ ^^City Bank v. Cutter, 3 Pick. "" Gallagher v. Roberts, 11 Maine (Mass.) 414. 489. "Peirce v. Butler, 14 Mass. 303; ^' Thome v. Rice, 15 Maine 263. Jones V. Fales, 4 Mass. 245 ; Blanch- ^* Piscataqua Exch. Bank v. Car- ard V. Hillard, 11 Mass. 85; Wood ter, 20 N. H. 246, 51 Am. Dec. 217. V. Corl, 4 Mete. (Mass.) 203; Taun- "* Smith v. Whiting, 12 Mass. 6, 7 ton Bank v. Richardson, 5 Pick. Am. Dec. 25. (Mass.) 436. "^ Shove v. Wiley, 18 Pick. (Mass.) '"Weld V. Gorham, 10 Mass. 366. 558. "^Rickford v. Ridge, 2 Camp. 537; =" Brent's Exrs. v. Metropolis Bank, Boddington v. Schlencker, 4 Barn. 1 Pet. (U. S.) 89, 7 L. ed. 65. & Ad. 752. ^Boston Bank v. Hodges, 9 Pick (Mass.) 420. 1099 CUSTOMS AND USAGES. § 1 764 § 1764. Mailing notice of protest. — The mode of giving notice of protest may be affected by the usage of the bank at which the note is payable and such usage may justify and make sufficient and binding a notice sent through the post-office to indorsers residing in the place where the bank is located. ^^ And though the holder and indorser reside in the same town, if it is customary to give notice of protest by mail, it will be sufficient where it is shown that such notice was actually received by the indorser.^* But the existence of a general custom among local banks to give notice of dishonor by mail notwithstanding the in- dorser and holder live in the same town was held not established by proof of a practice prevailing among other banks in which the bank urging the custom did not participate.^^ § 1765. Collection customs of banks. — When one selects a bank as his collecting agent, in the absence of special direction he is bound by any reasonable usage prevailing and established among the banks at the place where the collection is made, and this with- out regard to his knowledge or want of knowledge of the existence of the custom. ^^ Generally speaking, a customer is entitled to ex- pect and require of his bank that it shall not capriciously or need- lessly deviate from the established system, whatever that may be, and if it does so deviate and a loss is the result he may look to the bank for compensation.^^ "This rule regulating the relations of collecting banks to parties who take advantage of the means which they offer in this respect is founded on sound reason. Every business man knows that in the constantly increasing volume and variety of banking transactions, the larger number of which are settled or disposed of by a simple exchange of credits, methods have been adopted by bankers to economize labor, reduce ^ Carolina National Bank v. Wal- Kershaw v. Ladd. 34 Ore. 375, 56 Pac. lace, 13 S. Car. 347, 36 Am. Rep. 694. 402, 44 L. R. A. 236; Sahlien v. Bank '"Carter v. Odom, 121 Ala. 162, 25 of Lonoke, 90 Tenn. 221, 16 S. W. So. 774. See also, Isbell v. Lewis, 2)7i; Howard v. Walker, 92 Tenn. 98 Ala. 550, 13 So. 335. 452, 21 S. W. 897; Jefferson County *Msbell V. Lewis, 98 Ala. 550, 13 Savings Rank v. Commercial Na- So. 335. tional Rank. 98 Tenn. 2,2,7, 39 S. W. "Davis V. First National Rank, 118 338; Merchants' Nat. Bank v. Dor- Cal. 600, 50 Pac. 666; Holder v. Chester (Tex. Civ. App.), 136 S. W. Western German Bank, 132 Fed. 187; 551. affd. 136 Fed. 90, 68 C. C. A. 554; "Morse Bks. & B. (4th ed.), § 243. § 1765 CONTRACTS. IIOO risks, and simplify dealings with one another, and with their cus- tomers. Some of these methods are of a general character, while others are dictated by local convenience or necessity. That these methods so prevail is a fact of such public notoriety that no business can well affect to be ignorant, and, least of all, a bank- ing institution. It is in view of this we have held that, in choosing a bank as a collecting agent, the principal impliedly agrees that the agency may be performed in accordance with such reasonable methods as, sanctioned by experience, have ripened into usage, when such usage is not in contravention of a general law; and in this holding we are well supported by authority."** And the custom of all the banks at the place as to the method of collecting commercial paper though unknown to the party sending the paper there for collection is binding on him as part of the contract of agency when the custom is not in contravention of the general law or unreasonable.^^ Under this rule, it has been held that a usage to hold a note for no more than ten days after presentation, on the promise and expectation of payment was valid in the absence of special instructions.*^ The usage is, of course, binding where the parties have knowledge of its exist- ence.*^ A practice of other banks as to notes held for collection is not material in respect to a note at a bank which has a different practice.*® But it has been held that the knowledge of an accept- or of a bank custom not to make a personal demand will not bind him with respect to a bill held by the bank where he had no reason to know that the note was in the bank.*** Bank cus- tomers are charged with the knowledge of a long continued usage in a place to give notice before due on notes held for collection instead of making demand when due/" A usage of a bank adopted for its own convenience to hand "Jefiferson County Savings Bank Chester &c. Bank v. New England V. Commercial Bank, 98 Tenn. 337, Bank, 1 Cush. (Mass.) 177; Moore 39 S. W. 338. V. Waitt, 13 N. H. 415. * Sahlien v. Bank of Lonoke, 90 ^* Camden v. Doremus, 3 How. (U. Tenn. 221, 16 S. W. 373. S.) 515, 11 L. ed. 705. "Sahlien v. Bank of Lonoke, 90 ''Lewis v. Planters' Bank, 3 How. Tenn. 221, 16 S. W. 373. See also, (Miss.) 267. Whitwell V. Johnson, 17 Mass. 449, *** Warren Bank v. Parker, 8 Gray 9 Am. Dec. 165. (Mass.) 221. " Jones V. Fales, 4 Mass. 245 ; Dor- IIOI CUSTOMS AND USAGES. § 1766 paper to a notary for demand will not vary the contract between the bank and their customer, for the notary, in this particular, acts as the agent of the bank." It is believed, however, that the rule would be otherwise where the parties had knowledge of the custom." The drawer of a check payable to the cashier of a bank for collection is not bound by a custom of the bank, of which he has no knowledge, to pay the proceeds of such checks to the person depositing them." Generally, the usage of banks mu- tually to credit the proceeds of collections cannot deprive third persons, who own the bills or notes deposited for collection, of their rights." It has been held under an Iowa statute, providing that in determining what is a reasonable time for the presentation of a bill of exchange, regard must be had to the nature of the in- strument and the usage of the trade or business, that the usage of banks relating to the presentation of checks for payment was rel- evant to the question whether the check in question had been presented within a reasonable time, so as to charge the indorser, independent of the latter's knowledge or want of knowledge of such usage." § 1766. Collection customs of banks — Custom will not ex- cuse negligence. — No general custom will excuse a collecting bank from exercising all reasonable diligence in making a collec- tion and a special usage will have no greater effect than will a general custom. Usage or custom will not excuse negligence,*" or nonperformance of duty.*^ Another custom condemned by the courts is the custom of banks to hold collections at the request of debtors and unknown to parties drawing on the bank.** Where a bank neglects to send a check through the clearing-house ** Ayrault v. Pacific Bank, 47 N. Y. "* Bank of Commerce v. Miller, 105 570, 7 Am. Rep. 489. 111. App. 224; Citizens' National Bank "Warren Bank v. Suffolk Bank, 10 v. Third National Bank, 19 Ind. App. Cush. (Mass.) 582. 69, 49 N. E. 171; Ivory v. Bank of " Kuder v. Greene, 72 Ark. 504, 82 Mo.. Z6 Mo. 475, 88 Am. Dec. 150 ; S. W. 836. Exchange Nat. Bank v. Third Nat. **Hackett v. Reynolds, 114 Pa. St. Bank, 112 U. S. 276, 28 L. ed. 722. 328. 6 Atl. 689. See also, Lawrence 5 Sup. Ct. 141. V. Stonington Bank, 6 Conn. 521. " Citizens' Nat. Bank v. Third Nat. ** Plover Sav. Bank v. Moodie, 135 Bank.. 19 Ind. App. 69, 49 N. E. 171. Iowa 685, 110 N. W. 29, 113 N. W. **Dern v. Kellogg, 54 Nebr. 560, 476. 74 N. W. 844. § 1767 CONTRACTS. 1 102 at the customary time and in the ordinary manner and elects rather to keep it till a later hour and present it at the counter, then, if it would have been paid through the clearing-house but is refused at the counter, this conduct of the bank being con- trary to this custom will render it liable to the depositor of the check for its amount.*® It has been held the duty of a bank, re- gardless of its custom, to send instructions as to the residence of an indorser to its correspondent where there is another person bearing his name and this fact is known to the sending bank.^" § 1767. Custom of sending collection to drawee con- demned. — On the clearest principle, a custom of banks to send drafts and checks held by them for collection directly to the drawees is bad for unreasonableness. There is practical unanimity in the American cases in support of this principle.^^ The reasons against such a custom are thus stated : "Undoubtedly an agent who undertakes to collect a claim, although by custom he may be allowed to employ subagents, yet he is certainly bound to select his subcollecting agents with judgment and care, and one of the first elements of care is to select a subagent who is. not adversely interested in the subject matter. What would be the use of a party placing his claim in the hands of a bank for collection, if that duty could be performed by merely indorsing the paper by mail to the party who is obligated to pay it and receive his check *• Boddington v. Schlencker, 4 B. Minneapolis Sash & Door Co. v. & Ad. 752; Alexander v. Burchfield, Metropolitan Bank, Id Minn. 136, 78 Car. & M. 75. N. W. 980, 44 L. R. A. 504, 11 Am. ■^Borup V. Nininger, 5 Gil. (Minn.) St. 609; American Exchange Nat. 417. Bank v. Metropolitan Nat. Bank, 71 "Farley National Bank v. Pol- Mo. App. 451; Western Wheeled lock, 145 Ala. 321, 39 So. 612, 2 L. R. Scraper Co. v. Sadilek, 50 Nebr. 105, A. (N. S.) 194. 117 Am. St. 44; Ger- 69 N. W. 765, 61 Am. St. 550; Pickett man Nat. Bank v. Burn, 12 Colo. v. Baird Investment Co. (N. Dak.), 539, 21 Pac. 714, 13 Am. St. 247; 133 N. W. 1026; Wagner v. Crook; First Nat Bank v. Fourth Nat. 167 Pa. St. 259, 31 Atl. 576, 46 Am. Bank, 56 Fed. 967, 6 C. C. A. 183; St. 672; Merchants' Nat. Bank v. Holland v. Mutual Fertilizer Co., 8 Goodman, 109 Pa. St. 422, 2 Atl. 687. Ga. App. 714, 70 S. E. 151; Drovers' 58 Am. Rep. 782; Givan v. Bank of Nat. Bank v. Anglo-American Pack- Alexandria (Tenn.), 52 S. W. 923, ing &c. Co., 117 111. 100, 7 N. E. 601, 47 L. R. A. 270; First Nat. Bank v. 57 Am. R(ep. 855; Anderson v. City Nat. Bank, 12 Tex. Civ. App. Rodgers, 53 Kans. 542, 36 Pac. 1067, 318, 34 S. W. 458; Farwell v. Cur- 27 L. R. A. 248; First Nat. Bank v. tis, 7 Biss. (U. S.) 160, Fed. Cas. Citizens' Savings Bank, 123 Mich. No. 4690. 336, 82 N. W. 66, 48 L. R. A. 583; 1 103 CUSTOMS AND USAGES. § 1 768 on New York? The owner of the paper could send it directly, and receive his New York exchange in much less time. A cus- tom must be reasonable, and the best considered cases hold, not only that the bank or party who is to pay the paper is not the proper person to whom the paper should be sent for collection, but also that a custom to that effect is unreasonable and bad."^^ The act is an act of negligence and custom cannot justify negli- gence." The principle is the same where the collecting bank surrenders a draft for the check of the drawee. A collecting bank has no implied power to receive anything but money in pay- ment." Usage will not justify the receipt of worthless checks in payment of collections. ""^ A number of English cases, how- ever, would seem to justify the practice of sending checks by mail to the drawee bank through the clearing-house.^'^ § 1768. Collection customs— Remittance of proceeds. — The custom of banks in regard to making collections and remit- ting therefor is so well established, and has become so universally known that knowledge thereof must be imputed to the courts; and they are therefore required to take judicial notice of the fact that a bank, when it makes a collection for a foreign correspond- ent, never, unless specially directed so to do, remits the specie collected, but takes the specie to its own use and sends its draft or certificate of deposit to such correspondent." And where plain- " Farley National Bank v. Pollock, (N. S.) 523, 4 L. T. 363, 9 Wkly. 145 Ala 321, 39 So. 612, 2 L. R. A. Rep. 738; Bailey v. Bodenham, 16 C. (N. S.) 194, 117 Am. St. 44. B. (N. S.) 288, 10 L. T. 422, 33 L. "Pinknev v. Kanawha Valley J. C. P. (N. S.) 252. 10 Jur. (N. S.) Bank, 68 W Va. 604, 69 S. E. 1012. 821, 12 Wkly. Rep. 865; Prideaux v. *=> National Bank of Commerce v. Criddle, L. R. 4 Q. B. 455. 38 L. J. American Exchange Bank, 151 Mo. Q. B. (N. S.) 232, 20 L. T. 695, 10 320 52 S W. 265, 74 Am. St. 527; Best & S. 515 ; Heywood v. Pickermg. Midland Nat. Bank v. Brightwell, L. R. 9 Q. B. 428, 43 L. J. Q. B. (N. 148 Mo. 358, 49 S. W. 994, 71 Am. S.) 145. . St 608 See also. Minneapolis Sash "Morse Bks. & B.. § 248; Marine & Door Co. V. Metropolitan Bank, Bank v. Rushmore, 28 111. 463 ; Tmk- 76 Minn. 136, 78 N. W. 980, 44 L. R. ham v. Heyworth. 31 111. 519; A 504 77 Am. St. 609. But see First Jockusch v. Towsey, 51 Tex. 129; Nat Bank v. First Nat. Bank Marine Bank v. Fulton County Bank, (Tenn.) 134 S. W. 831. 2 Wall. (U. S.) 252. 17 L. ed. 785 "National Bank of Commerce v. In Fowler v. Brantly, 14 Pet. (U. American Exchange Bank, 151 Mo. S.) 318, 10 L. ed. 473, the court laid 320. 52 S. W. 265, 74 Am. St. 527. down the followmg rule in respect "•Hare v. Henty. 10 C. B. (N. S.) to the binding force of banking cus- 65 30 L. J. C P. (N. S.) 302, 7 Jur. toms as to the discount of notes: 1769 CONTRACTS. 1 104 tiff sued the receiver of a bank for the amount of a draft collected by it, and claimed that the bank held the amount in trust for plaintiffs at the time of its suspension, it was held to be a reversi- ble error for the court below to exclude evidence of the general banking custom above mentioned.^® A banking custom, how- ever, to be binding must be general as to place, and not confined to a particular bank, and must have become notorious.'* § 1769. Value of foreign money. — The relative value of foreign and American money is a question largely of commer- cial usage. What this usage is in a given case may be proved by the testimony of any one acquainted with the usage.^" § 1770. Customs and usages in master and servant relation. — Where there has been no express contract as to the term of employment of a servant, usage is generally admissible to show the length of time of the hiring." And likewise an admission as to the amount of the wages of the servant and the mode and time of their payment may be controlled by custom or usage which prevails in the community.®^ Usage is also ad- "The known customs of the bank, and its ordinary modes of transact- ing business, including the prescribed forms of notes offered for discount, were matters of proof, and entered into the contract; and the parties to it must be understood as having governed themselves by such cus- toms and modes of doing business; and this, whether they had actual knowledge of them or not; and it was especially the duty of all those dealing for the paper in question to ascertain them if unknown. Such is the established doctrine of this court, as laid down in Renner v. Bank of Columbia. 9 Wheat. (U. S.) 581, 6 L. ed. 166; Mills v. United States Bank. 11 Wheat. (U. S.) 431, 6 L. ed. 512; Bank of Washington v. Triplett, 1 Pet. (U. S.) 25, 7 L. ed. 38." "'Bowman v. First Nat. Bank, 9 Wash. 614, 38 Pac. 211, 43 Am. St. 870. "Adams v. Otterback, 15 How. (U. S.) 539, 14 L. ed. 805. "It must be rule of all the banks of the place, or it cannot, consistently, be called a usage. If every bank could estab- lish its own usage, the confusion and uncertainty would greatly exceed any local convenience resulting from the arrangement." ""Kermott v. Ayer, 11 Mich. 181. ^ Holcraft v. Barber, 1 Carrington & K. 4; Arkadelphia Lumber Co. v. Asman, 85 Ark. 568, 107 S. W. 1171; Gleason v. Walsh, 43 Maine 397; Given v. Charron, 15 Md. 502; Har- ris v. Nicholas, 5 Munf. (Va.) 483; Anderson v. Lewis, 64 W. Va. 297, 61 S. E. 160. "^ Sewall v. Corporation, 1 Car. & P. 392; Pursell v. McQueen's Admr., 9 Ala. 380; Hayes v. Moynihan, 60 III. 409; Weber v. Noyes, 151 111. App. 596; Ewing v. Beauchamp, 4 Bibb. CKy.) 496; Dodge v. Favor 65 Gray (Mass.) 82; Thayer v Wadsworth, 19 Pick. ("Mass.) 349 Eldridge v. Smith. 13 Allen ("Mass) 140; Swain v. Cheney, 41 N. H. 232 Lowinson v. McKenna, 126 N. Y. S 604; Anderson v. Lewis, 64 W. Va 297, 61 S. E. 160. II05 CUSTOMS AND USAGES. § I770 missible to show when the servant has performed the particu- lar service for which he was employed."^ There is a case in which it is held that judicial notice will be taken of a custom by merchants under which business establishments furnish the clerks or customers of each other with goods and charge them to each other."* So a custom may be shown under which em- ployes are allowed the privilege of working for themselves after the hours of work for their employers have expired."" The prin- ciple that a custom cannot be invoked to vary the plain terms of a contract is applicable in the master and servant relation,"" and has been applied in cases where an employer under a custom in a neighborhood sought to justify his discharge of an overseer before the end of the term for which he was hired."^ Where the terms of employment of hotel porters in a contract were clear and explicit a custom was held not admissible to show what the term was understood to be in that city."^ In another case, however, it was held that a custom not to pay when the employe was not at w^ork could be considered in construing a contract of employ- ment for an indefinite term as this custom did not vary the con- tract but merely explained it."* It has been held that a contract for the employment of a master of a vessel should be considered with reference to a prevailing custom by owners of employing masters at the close of the preceding season.'^" In the absence of evidence that the contract between an engineer and his employer prohibited the engineer from employing his assistants, evidence "Vaughn's Executor v. Gardner, "Jones v. Jackson, 22 La. Ann. 7 B. Mon. (Ky.) 326; Hunt v. Car- 112. lisle, 1 Gray (Mass.) 257; Martin v. *' Connell v. Averill, 8 App. Div. Hilton. 9 Mete. (Mass.) 371. (N. Y.) 524, 75 N. Y. St. 247, 40 N. " Cameron v. Blackman, 39 Mich. Y. S. 855. 108 ''Leavitt v. Kennicott, 157 111. 235, "Barnes v. Ingalls, 39 Ala. 193. 41 N. E. m. •"A contract of employment of a '"Carney v. Ionia Transp. Co., 157 traveling man for services to be Mich. 54, 121 N. W. 806. In a case rendered in the New England States where the issue was whether the is not enlarged so as to permit the hiring was for a year or for an in- emplover to require work outside the definite term, an offer of evidence as New England States by a clause of to what was the custom in steamboat the contract in which' the employe circles with respect to the hirmg of agrees to give "his entire and un- captains was properly excluded as divided attention to the sale of goods too indefinite. Cook v Eriterpnse manufactured by the party of the Transp. Co., 197 Mass. 7, 83 N. E. first part." Menage v. Rosenthal, 175 325. Mass. 358, 56 N. E. 579. 70 — Contracts, Vol. 2 1 771 CONTRACTS. 1106 is competent to show that it was the custom for engineers to hire their assistants, in order to estabHsh the relation of master and servant between the engineer's employer and his assistant." § 1771. Customs and usages in principal and agent relation. — The nature and extent of the written authority of an agent cannot be varied by evidence of usage of other agents in like cases. The language of the instrument, where not ambiguous, controls." No custom or usage will authorize an agent to depart from his positive instructions. These instructions are the law which govern the agent in his conduct.^^ The usage may, how- ever, be considered where the language of the contract is ambig- uous or capable of different constructions.''* It is also admissible to make clear the powers actually given or the manner of their execution.''^ And where there is a usage of a place that an agency should be executed in a particular way the parties to a contract of this character will be presumed to have impliedly "White V. San Antonio Water- works Co., 9 Tex. Civ. App. 465, 29 S. W. 252: "We are of opinion that there was evidence from which the jury might have found that WilHs was an employe of the Waterworks Company in respect to the pump house and machinery, and, there be- ing no evidence of a contract which excluded the power of this employe to employ assistants, it was competent for plaintiff to show that his employ- ment carried with it this power, by proving that by a universal custom men employed as he was exercised the power. Lawson on Usages and Customs 371 ; Moore v. Kennedy, 81 Tex. 146, 16 S. W. 740; Mechem on Agency, § 281 ; Harrell v. Zimpleman, 66 Tex. 294. 17 S. W. 478; Birming- ham &c. Mfg. Co. V. Gross, 97 Ala. 220, 12 So. 36." "2 Rice on Evidence, § 349; Wig- glesworth v. Dallison, 1 Dong. 201 ; Hogg V. Snaith. 1 Taunt. 347; Tal- lassee Falls Mfg. Co. v. Western R. Co. of Alabama, 128 Ala. 167, 29 So. 203; Currie v. Syndicate Des Culti- vators &c,. 104 Til. App. 165 ; Lehman V. Clark, 71 111. 'App. 366. revd. 174 111. 279, 51 N. E. 222, 43 L. R. A. 648; Menage v. Rosenthal, 175 Mass. 368, 56 N. E. 579; Cameron v. Mc- Nair & Harris Real Estate Co., 76 Mo. App. 366; Spota v. Hayes, 36 Misc. (N. Y.) 532,. 73 N. Y. S. 959; Simmons v. Law, 3 Keyes (N. Y.) 217, 4 Abb. Dec. (N. Y.) 241; Fox V. Parker, 44 BaYb. (N. Y.) 541; Delafield v. Illinois, 26 Wend. (N. Y.) 192; Appalachian Bank v. Catch, 7 Ohio (N. P.) 307, 2 Ohio Dec. 366; Silliman v. Whitmer, 11 Pa. Super. Ct. 243; Riley v. Penn- sylvania Mut. Life Ins. Co.,*189*Pa. St. 307, 42 Atl. 191; Reese v. Med- lock, 27 Tex. 120, 84 Am. Dec. 611; Swadling v. Barneson, 21 Wash. 699, 59 Pac. 506; Burnham v. Milwaukee, 100 Wis. 55, 75 N. W. 1014. "Wanless v. McCandless, 38 Towa 20; Parsons v. Martin, 11 Gray (Mass.) Ill; Leland v. Douglass, 1 Wend. CN. Y.) 490; Barksdale v. Brown, 1 Nott. & McC. (S. Car.) 517, 9 Am. Dec. 720; Catlin v. Smith, 24 Vt. 85; Bliss v. Arnold, 8 Vt. 252, 30 Am. Dec. 467 ; Hall v. Storrs, 7. Wis. 253; Osborne v. Rider, 62 Wis. 235 "Pole v. Leask, 28 Beav. 562. "Frink v. Roe. 70 Cal. 296. 11 Pac. 820; Reese v. Medlock, 27 Tex. 120, 84 Am. Dec. 611. 1 107 'CUSTOMS AND USAGES. § I77I incorporated this usage in their contract where they do not ex- pressly exclude it.''" It is the duty of an agent to insure the goods of his principal where the general usage of trade requires it." Where there is a custom to that effect an agent working on a stated salary may claim extra compensation for services per- formed for his principal outside the scope of his agency.''® The principle of agency will not permit an agent to retain profits incidentally obtained in the execution of his duty even though a usage in the community may sanction such appropriation.''" Where no express contract has been made, fixing the amount of the agent's compensation it may be regulated by the usage of the business,*" There are cases which hold that where the power has been delegated to an agent to do an act he may, by usage and cus- tom, delegate the performance of this act to another person." Generally speaking an agent cannot sell on credit, unless he is so "Brady v. Todd, 9 C. B. (N. S.) 592; Pickering v. Busk. 15 East 38; Graves v. Legg, 2 Hurlst & N. 210; Bayliffe v. Butterworth, 1 Exch. 425; Young V. Cole. 3 Bing. (N. C.) 724; Sutton V. Tatham, 10 Ad. & El. 27; Willard v. Buckingham, 36 Conn. 395; Polzin v. McCarthy, 159 111. App. 526; American Central Ins. Co. V. McLanathan, 11 Kans. 533; Gree- ley V. Bartlett, 1 Greenl. (Maine) 172, 10 Am. Dec. 54; Randall v. Kehlor, 60 Maine ZT, 11 Am. Rep. 169; Rosen- stoch V. Tormey, 32 Md. 169, 3 Am. Rep. 125 ; Goodenow v. Tyler, 7 Mass. Z6, 5 Am. Dec. 22; Upton v. Suffolk Mills, 11 Cush. (Mass.) 586, 59 Am. Dec. 163; Dav v. Holmes, 103 Mass. 306; Davlitrh't Burner Co. V. Odlin. 51 N. H. 56. 12 Am. Rep. 45; McKinstrv v. Pear.sall. 3 Johns. (N. Y.) 319'; Smith v. Tracv, Z(y N. Y. 79; Frank v. Jenkins. 22 Ohio St. 597; Watson v. Brewster. 1 Pa. 381; Benners v. Clemens. 58 Pa. St. 24; Schuchardt v. Aliens, 1 Wall. (U. S.) 359, 17 L. ed. 642. " French v. Backhouse. 5 Burr. 2727; Crauford v. Hunter, 8 T. R. 13 ; Crosbie v. MacDoual. 13 Ves. 148; Walsh v. Frank, 19 Ark. 270; Tonge V. F. Kennett. 10 La. Ann. 800; Lee v. Adsit, Zl N. Y. 78; Thome v. Deas, 4 Johns. (N. Y.) 84; De Forest v. Fulton Fire Ins. Co., 1 Hall (N. Y.) 84; Randolph v. Ware, 3 Cranch (U. S.) 503, 2 L. ed. 512; Columbus Ins. Co., v. Law- rence, 2 Pet. (U. S.) 49, 7 L. ed. 344; Kingston v. Wilson, 42 Wash. C. C. (N. S.) 310, Fed. Cas. No. 7823 ; Collings v. Hope, 5 Wash. C. C. (U. S.) 149, Fed Cas. iCo. 3003. "United States v. Fillebrown, 7 Pet. ("U. S.) 28, 8 L. ed. 596; United States V. Macdaniel, 7 Pet. (U. S.) 1, 8 L. ed. 587. "Diploch V. Blackburn, 3 Camp. 43; Massey v. Davies, 2 Ves. 317; Lees V. Nuttal. 1 Russ. & M. 53; Jacques V. Edgell, 40 Mo. 76; Reed V. Warner, 5 Paige (N. Y.) 650; Minnesota Central R. Co. v. Morgan, 52 Barb. (N. Y.) 217. *" Cohen v. Paget, 4 Camp. 96 ; Auriol V. Thomas, 2 T. R. 52; Stew- art V. Kahle, 3 Stark. N. P. 161; Eicke V. Mever. 3 Camp 412; Read V. Rann, 10 Barn. & C. R. 438; Baynes v. Fry. 15 Ves. 120. "Moon V. Guardians, 3 Bing. (N. C.) 814; Johnson v. Cunningham, 1 -Ma. 249: Darling v. Stanwood. 14 Allen. (Mass.) 504; Grav v. Murrav, 3 Johns. Ch. (N. Y.) 167. § 1772 CONTRACTS. II08 authorized by his power of attorney, or by the fixed usage of the trade in reference to the articles sold, and such usage must be brought home to the knowledge of the persons affected. ^^ As a general rule an agent of the seller has no implied authority to warrant the quality of the goods, unless it is the custom in sales of goods of that kind for an agent to warrant them.^^ He may, however, make a contract of warranty where there is a custom or usage of the trade in which he is engaged for agents to make such contracts.^* Accordingly, where it is shown to be the general cus- tom for local agents selling mill machinery to warrant the same, the buyer may recover from the principal for a breach of the agent's warranty.®^ A custom of real estate agents to take a secret rebate on repairs made upon the property is void; such a custom is contrary to sound public policy.®^ § 1772. Principal and agent — Authority of agent. — In every agency, in the absence of anything to the contrary, it may be presumed that the authority was conferred in contem- plation of the usage that prevails in such matters; and hence, persons dealing with the agent in good faith will be protected if the power has been exercised in accordance with such usage, unless the limitations upon power of the agent were known to those who dealt with him." The particular custom or usage must, however, be a reasonable one, and must have existed 'long ^'Kops Bros. Co. v. Smith, 137 ''Little v. Phipps, 208 Mass. 331, Mich. 28, 100 N. W. 169; State v. 94 N. E. 260, 34 L. R. A. (N. S.) Chilton, 49 W. Va. 453, 39 S. E. 612. 1046. ""Cafre v. Lockwood, 22 App. Div. ''Greaves v. Legg, 11 Exch. 642; (N Y ) 11 47 N Y. S. 916; Penn. Russell v. Hankey, 6 T. R. 12; Brady & Delaware Oil Co. v. Spitelnik, 27 v. Todd, 9 C. B. (N. S.) 592, 99 Misc (N. Y.) 557, 58 N. Y. S. 311; E. C. L. 591; Sutton v. Tatham, 10 Reese v. Bates, 94 Va. 321, 26 S. Ad. & E. 27, Zl E. C. L. 39; Young E 865. V. Cole, 3 Bing. (N. C.) 724, 32 E. "Reese v Bates, 94 Va 321, 26 C. L. 334; Willard v. Buckingham, S E 865 * 36 Conn. 395; Taylor v. Bailey, 169 «» Larson v. Aultmann &c. Co., 86 111. 181, 48 N. E. 200; Bailey v. Bens- Wis. 281, 56 N. W. 915, 39 Am. St. ley, 87 III. 556; Samuels v. Oliver, 893. In Eastern Granite Co. v. Heim, 130 111. 1Z, 22 N. E. 499; American 89 Iowa 698, 57 N. W. 437. Evidence Cent. Ins. Co. v. McLanathan, 11 that it is usual to use the Latin let- Kans. 533; Randall v. Kehlor, 60 ter in German inscriptions on granite Maine V, 11 Am. Rep. 169; Talcott monuments is admissible to show v. Smith, 142 Mass. 542, 8 N. E. compliance with a contract for erec- 413; McKee v. Wild, 52 Nebr. 9^ tion of a granite monument, inscrip- 71 N. W. 958; Frank v. Jenkms, 22 tions thereon to be in German. Ohio St. 597; McMasters v. Penn- 1109 CUSTOMS AND USAGES. § 1 772 enough to have become generally known, so that the parties must have acted with a view to it.** If the usage is a mere local one, and not generally known, the presumption that otherwise prevails as to the principal's knowledge of the same may be overcome by him, by proving that he had in fact no notice or information of the same.*" But the mere fact that the principal had no actual knowledge of the custom or usage, if general, does not excuse him from being charged with notice thereof. '"' It would be dif- ficult, if not impossible, for the parties to an agency contract to provide for every contingency that may arise in the execution thereof. Many questions may come up as to which no provision has been or can well be made in the specification of the power conferred by the principal. In all such cases the usage of trade is the criterion by which the agent's authority is to be measured ; and this is so, although the principal and agent have agreed in their contract that things are to be done w^hich are directly in conflict with the usages and customs of trade, provided the usage is general and reasonable, and the third party had no information concerning the agent's limitations.®^ The courts will give effect to the customs of shipmasters in charge of vessels at river ports to insure their vessel and give premium notes therefor, and such notes will bind the owners of such boats.®^ So, where a customer has given a broker an order for a quantity of stock, the broker may, in accordance with custom, direct his correspondents in another state to purchase the stock.®^ Of course, as between principal and agent, the latter will never be justified by custom or sylvania R. Co., 69 Pa. St. 374, 8 Am. Rep. 407; Barnard v. Kellogg, Am. Rep. 264; Gehl v. Milwaukee 10 Wall. (U. S.) 383, 19 L. ed. 987. Produce Co., 105 Wis. 573, 81 N. W. ""Bailey v. Benslav, 87 111. 556; 666. Samuels v. Oliver, 130 111. 7i. 22 N. *»Buyck V. Schwing, 100 Ala. 355, E. 499; Union Stock Yards &c. Co. 14 So. 48;.Knowles v. Dow, 22 N. v. Mallory &c. Co., 157 111. 554, 41 H. 387, 35 Am. Dec. 163. Whether a N. E. 888; Cole v. Skrainka, 2,7 Mo. custom is reasonable or not is a App. 427; Sleght v. Hartshorne, 2 question of law for the decision of Johns. (N. Y.) 531 ; Blin v. Mayo, 10 the court; while usage, which is the Vt. 56, ZZ \m. Dec. 175. evidence of custom, is a question of " See Upton v. Suffolk County fact for the jurv. Bourke v. James, I^Iills. 11 Cush. (Mass.) 586, 59 Am. 4 Mich. Zi6. Chicago Packing &c. Dec. 163. Co. V. Tilton, 87 111. 547; Randall "Adams v. Pittsburgh Ins. Co., V. Smith, 63 Maine 105, 18 Am. Rep. 95 Pa. St. 348. 10 Am. Rep. 662. 200. ** Rosenstock v. Tormey, 32 Md. "Walls V. Bailey, 49 N. Y. 464, 10 169, 3 Am. Rep. 125. § 1775 CONTRACTS. IIIO usage in departing from his plain instructions." Moreover, usage can never be relied upon to violate a positive law;**^ nor can it be invoked to change the intrinsic character of a contract as between the parties thereto."® A traveling salesman, selling by sample, for credit or cash, to be paid on receipt of the goods, has no implied authority to collect the money agreed to be paid, and a custom in the town in which the goods are sold to pay such salesman is not binding on nonresident principals in the absence of evidence of notice to them of such custom.®^ Where an agent, authorized to buy cedar logs, stated, at the time of making an arrangement to pay for supplies furnished to the seller out of the money due him, that he had no authority to make debts, the principal was not bound, although there was a local custom that agents authorized to buy logs should have authority to make such agreements.®* § 1773. Brokers and factors. — A person who employs a broker must be supposed to give him authority to act as other brokers act, whether he himself is or is not acquainted with brokers' rules.®* A person who deals in a certain market must ordinarily be taken to deal according to the custom of that market, and this is the rule, though he deal through an agent or " Day V. Holmes, 103 Mass. 306; "Mollett v. Robinson, L. R. 5 C. Hutchings v. Ladd, 16 Mich. 493. P. 646, L. R. 7 H. L. 802; Pickering °°Healey v. Mannheimer, 74 Minn. v. Weld, 159 Mass. 522, 34 N. E. 240, 76 N W. 1126; McKee v. Wild, 1081; Brown v. Foster, 113 Mass. 52 Nebr. 9, 71 N. W. 958; Hopper 136, 18 Am. Rep. 463; Meloche v. V. Sage, 112 N. Y. 530, 20 N. E. Chicago &c. R. Co., 116 Mich. 69. 350, 8 Am. St. 771. No custom or 74 N. W. 301; McKee v. Wild, 52 usage which will relieve a party from Nebr. 9, 71 N. W. 958; Allen v. a just legal obligation will be recog- Dykers, 3 Hill CN. Y.) 593, affd. nized by the courts; and this being 7 Hill (N. Y.) 497, 42 Am. Dec. 87; true, evidence tending to prove such Hopper v. Sage, 112 N. Y. 530, 20 custom is properly excluded. West- N E. 350, 8 Am. St. 771 ; Swadling ern Union Cold Storage Co. v. Wino- v. Barneson, 21 Wash. 699, 59 Pac. na Produce Co., 94 111. App. 618, 506; Burnham v. Milwaukee, 100 revd. 197 111. 457, 64 N. E. 496. Wis. 55, 75 N. W. 1014. Barnes v. Zettlemoyer, 25 Tex. Civ. " Simon v. Johnson, 101 Ala. 368, App. 468, 62 S. W. 111. Nor can the 13 So. 491; Johnston- Woodbury Hat existence of a custom be established Co. v. Lightbody, 18 Colo. App. 239, by evidence of a single act, custom 70 Pac. 957. being the result of a series of acts; •'American Lead Pencil Co. v. or, in other words, custom is the Wolfe, 30 Fla. 360, 11 So. 488. result of usage, and must be proved ** Sutton v. Tatham, 10 Ad. & by usage. Shields v. Kansas City El. 27; Greaves v. Legg, 11 Exch Suburban Belt R. Co., 87 Mo. App. 642 ; Ankeny v. Young, 52 Wash. 235, 637. 100 Pac. 7Z6. A custom or usage of nil Customs and usages. § 1774 broker.* Where a broker represents that he has certain stock in his possession, when, in fact, lie has no such stock, and a sale is closed on the faith of this representation, in an action to recover the price paid, evidence of a custom amonj^ brokers to sell stock in their own name, and to become personally liable to perform the contract is inadmissible for the alleged custom is irrelevant to the actual issue.^ And so evidence of the custom of brokers, when collateral security is put up as a margin, and the account becomes reduced sufficiently to jeopardize it, to advertise and sell the col- lateral, and charge the customer with the balance, is properly ex- cluded where the broker sells his customer's stocks upon the lat- ter's express order, and not to protect himself from a shrinking margin.^ A custom of dealers in bonds and stocks, whereby an option to sell at the end of a given period expires on the last day of such period, does not apply to the case of an option to demand a rescission of the sale of bonds and stocks after their obligatory retention for a year by the purchaser.* A custom among factors in a certain city to credit the buyer with the amount of the sale and charge him with goods received from him is not binding on the principal of the factor. The effect of such a custom would be to permit an agent to appropriate the property of his principal to the payment of his own debt." § 1774. Usage of brokers to treat stock certificates as ne- gotiable paper. — A usage of brokers or bankers to treat a certificate of stock as a negotiable instrument cannot give the certificate this character. Even a usage to issue powers of attor- ney for the transferring of stock, with the name of the trans- feree left blank has been declared vicious, which no considera- tions of convenience are sufficient to justify." But the validity real estate agents in a particular 19 S. W. 622. And see also, Kimball locality to look after the property of v. Brawner, 47 Mo. 398. their clients while vacant is admis- ^ De Cordova v. Barnum, 130 N. sible to explain the intended scope Y. 615, 29 N. E. 1099, 27 Am. St. of the agency. Cameron v. McNair 538. &c. Real Estate Co., 76 Mo. App. 'Weld v. Barker. 153 Pa. St. 465, 366. 26 Atl. 239. ^Bavliffe v. Butterworth, 1 Exch. "Licbhardt v. Wilson. 38 Colo. 1, 425; Furber v. Dane, 203 Mass. 108, 88 Pac. 173. 120 Am. St. 97. 89 N. E 227. 'Dennv v. Lvon, 38 Pa. St. 98, 80 'Wolff V. Campbell, 110 Mo. 114, Am. Dec. 463. § 1775 CONTRACTS. 1 1 12 of such powers is well established.^ Some of the cases, how- ever, assimilate certificates of stock very closely to negotiable instruments and give a bona fide holder for value very much the same rights that such a holder of negotiable paper has who takes it before maturity.^ § 1775. Use of stock of customer by broker. — A general custom that a broker may pledge the stock of his customer for the purpose of raising money to carry it, is valid if such custom is known to and acquiesced in by the customer.® It is probable that this is the general custom in such transactions and a knowledge of such custom would be imputed to one who purchases stock from a broker to be carried in this manner. Authority in the pledgee to sell stock held in pledge is inconsistent with the con- tract of pledge, and a custom or usage for a broker holding stock in pledge to sell it will not avail to vary the terms in the implied agreement.^" The contract of pledge recognizes the general prop- erty of the bailor and his right to redeem and have the thing pledged. A custom or usage for a pledgee to sell the thing pledged is not consistent with the contract because such sale would put it out of his power to return it to the pledgor upon payment of the debt secured." § 1776. Sale of collateral securities to enforce pledge. — The court of appeals of New York has held void a usage among the bankers of New York to dispose of notes held as collateral by making sales of them because such a usage was a violation of the law. The ground of the decision is that notes not being usually marketable at their face value, must generally be sold at a sac- rifice and so injustice would be likely to be done to the debtor 'Rice V. Gilbert, 173 111. 348, 50 "Oregon &c. Co. v. Hilmers, 20 N E 1087; Persch v. Quiggle, 57 Fed. 717; Kraft v. Fancher, 44 Md. Pa St. 247; German Union Building 204; Rich v. Boyce, 39 Md. 314; First Assn V Sendmeyer, 50 Pa. St. 67. National Bank v. Taliaferro, 72 Md. *Prall V. Tilt, 27 N. J. Eq. 393, 164, 19 Atl. 364; German Saving afifd 28 N. J. Eq. 479; Mount Holly Bank v. Renshaw, 78 Md. 475, 28 Turnpike Co. v. Ferree, 17 N. J. Eq. Atl. 281 ; Fay v. Gray, 124 Mass. 117; Broadway Bank v. McElrath, 500; Lawrence v. Maxwell, 53 N. 13 N. J. Eq. 24; Leavitt v. Fisher, Y. 19. 4 Duer. (N. Y.) 1. "Jones Col. Sec, § 503. "Vanhorn v. Gilbough, 21 Am. L. Reg. (N. S.) 171. I I 13 CUSTOMS AND USAGES. § I 777 even if the sale were at public auction." A custom of brokers to sell at the stock exchange without the notice required at common law, stocks and bonds deposited as collateral is unreasonable and void." In a case in New York, where an offer of testimony was made to show a custom of brokers to sell without notice the tes- timony was held to be inadmissible. In this case the court said : "The broker has no right to sell without notice. A practice or custom to do otherwise would have no more force tlian a custom to protest notes on the first day of grace, or a custom of brokers not to purchase the shares at all, but to content themselves with a memorandum or entry in their books of the contract made with their customer. Such practice, in each case, would be in hostility to the terms of the contract, an attempt to change its obligation, and would be void. The proof, therefore, cannot be legally given. "^* § 1777. Landlord and tenant. — There would seem to be a large field for resort to customs and usages in the interpretation of contracts between landlord and tenant. "The common law, in- deed, does so little to prescribe the relative duties of landlord and tenant, since it leaves the latter at liberty to pursue any course of management he pleases, provided he is not guilty of waste, that it is by no means surprising that the courts should have been favorably inclined to the introduction of those regulations in the mode of cultivation which custom and usage have established in each district to be the most beneficial to all parties."^^ The rela- tion of landlord and tenant of farm lands imposes an obligation to farm the land according to the customs of the country.^® It is a well settled custom that an outgoing tenant is entitled to "Morris Canal & Banking Co. v. " Markham v. Jaudon, 41 X. Y. Lewis. 12 N. J. Eq. 323; Wheeler v. 235. Newbould, 16 N. Y. 392, 5 Duer. (N. " Hutton v. Warren, 1 Mee. & W. Y.) 29; Brown v. Ward, 3 Duer. 466. (N. Y.) 660; Atlantic Fire & Ma- "Leigh v. Hewitt, 4 East 154; rine Ins. Co. v. Boles, 13 N. Y. Super. Martin v. Gilham, 7 Ad. & El. 540; Ct 583; Moody v. Andrews, 39 N. Sutton v. Temple. 12 Mees. & W. 52; Y. Super. Ct. 302, affd. 64 N. Y. Powley v. Walker. 5 T. R. 373 ; Fal- 641. mouth V. Thomas, 1 Cromp. & M. "Wheeler v. Newbould, 16 N. Y. 88; Angerstein v. Handson, 1 C. M. 392; Lawrence v. Maxwell, 53 N. Y. & R. 789; Barrington v. Justice, 2 19; Smith v. Savin, 141 N. Y. 315, Clark (Pa.) 501. 36 N. E. 338. 1778 CONTRACTS. III4 crops which must be harvested after the expiration of his term." The right of a tenant to cut wood on the premises may be deter- mined by local custom.^* Custom of the country may determine the time when a lease expires where the instrument is silent in the matter." But the general principle applies here as elsewhere that the plain terms of a lease may not be varied or contradicted by evidence of usage or custom.^" A custom or usage that the landlord retains control of the outside yard and roof of a dwelling leased by him is not binding where it contradicts the plain pro- visions of the agreement of the parties. It would also violate a rule of law.^^ A landlord may not add a condition to his lease based on his individual custom with his tenants where the lease is silent as to the condition. The principle of usage does not ex- tend to the business rules or customs of individuals.^^ § 1778. Measurements and weights. — Questions of weights and measures are largely determined by usage in the absence of controlling statutes and express provisions in contracts. Thus, where a written contract for laying brick was in controversy, and it was silent as to the method of measuring the quantity of the brick, parol evidence was allowed to show the custom in respect to such measurement.^^ So also, where, in an action to foreclose a mechanic's lien on an irrigating ditch, the contract for the con- struction of the ditch was silent as to the basis of estimates of "Wiggleworth v. Dallison, 1 Doug. Price, 8 Watts. (Pa.) 282; 34 Am. 201 ; Holding v. Pigott, 7 Bing. 465 ; Dec. 465. Beavan v. Delahay, 1 H. Bl. 5; ^* Honywood v. Honywood, 18 L. Boraston v. Green, 16 East 71; Grif- R. Eq. 306. fiths V. Puleston, 13 Mee. & W. 358; "Webb v. Plummer, 2 B. & Aid. Caldecott v. Smythies, 7 Car. & P. 746. 808 ; Dorsey v. Eagle, 7 Gill. & J. "" Thorpe v. Eyre, 1 Ad. & El. 926 ; (Md.) 321; Howell v. Schenck, 24 Stafford v. Gardner, L. R. 7 C. P. N. J. L. 89 ; Society for Establishing 242 ; Sutton v. Temple, 12 Mee. & W. Useful Manufactures v. Haight, IN. 52 ; Roberts v. Barker, 1 Cromp & J. Eq. 393; Foster v. Robinson, 6 M. 808; Roxburghe v. Robertson, 2 Ohio St. 90; Stultz v. Dickey, 5 Bligh 156; Clarke v. Roystone, 13 Binn. (Pa.) 285, 6 Am. Dec. 411; Mee. & W. 752; Wiltshear v. Cot- Carson V. Blazer, 2 Bin. (Pa.) 475, trell, 1 El. & Bl. 674; Hughes v. 4 Am. Dec. 463 ; Demi v. Bossier. 1 Gordon, 1 Bligh 287. Pen. & W (Pa.) 224; Iddings v. '" Shute v. Bills, 191 Mass. 433, 78 Nagle, 2W. & S. (Pa.) 22; Hunter v. N. E. 96, 7 L. R. A. (N. S.) 965, Jones, 2 Brewst. (Pa.) 370; Craig 114 Am. St. 631. V. Dale, 1 W. & S. (Pa.) 509; Biggs v. ^Thompson v. Exum, 131 N. Car. Brown, 2 S. & R. (Pa.) 14; Clark 111, 42 S. E. 543. V. Harvey, 54 Pa. St. 142 ; Forsythe v. " Rogers v. Hayden, 91 Maine 24, 1 1 15 CUSTOMS AND USAGES. § 1 778 work and labor, testimony of custom was admissible.** Where the plaintiff sold to the defendant granite blocks at specified prices per "square yard," with the understanding that they were to be used in the construction of a sewer, and there was no express agreement as to how the number of "square yards" should be determined, whether by a measurement of the area of the com- pleted stone work in the sewer, or by taking the aggregate measurement of the faces of the blocks, it was held, in an action for the price of the blocks, that the circumstances with reference to which the contract was made might be considered for the pur- pose of discovering the real intention of the parties, and that proof of a local custom, under such circumstances, to measure stone in the completed structure was admissible, although such a custom had not been pleaded.*' And in an action for mason work, at a specified price per perch, where the dispute is as to the number of perches contained in the work, a uniform, universal and notorious custom of measurement among masons may be binding, although the result of such measurement is greater than the actual contents.^® Thus in the absence of a provision for measurement in a building contract, a custom in measuring brick walls of counting the openings made by doors and windows as part of the solid wall will prevail." A standard in general use for the measurement of standing timber may be used for that purpose, 39 Atl. 283; Walker v. Syms, 118 paid. Defendants answered by a Mich. 183, 76 N. W. 320; Richlands counterclaim, stating that it is the Flint Glass Co. v. Hiltebeitel, 92 Va. custom for the purchasers of po- 91, 22 S. E. 806. tatoes on such island to furnish a "Bradbury v. Butler, 1 Colo. App. boat for their shipment, and notify 430, 29 Pac. 463. the seller when it will be there, which "Rogers v. Hayden, 91 Maine 24, plaintiffs, though knowing of such 39 Atl. 283; Breen v. Moran, 51 Minn, custom, had failed and neglected to 525, 53 N. W. 755. And see Wall v. do, in consequence of which the po- Bailey, 49 N. Y. 464, 10 Am. Rep. tatoes were destroyed. It was held 407, thav the local usage in such a that it was proper to admit evi- case need not ordinarily be pleaded, dence of such custom, if known to See Lowe v. Lehman, 15 Ohio St. 179. plaintiffs at the time the contract ^ McCullough V. Ashbridge, 155 Pa. was made, as such contract was St. 166, 26 Atl. 10. Plaintiffs en- silent as to the consignee or place tered into a written contract to pur- of destination of the potatoes, or who chase a large quantity of potatoes should furnish the boat on which on Brown's island, paying part of they should be shipped. Holmes v. the purchase-price. Subsequently Whitaker, 23 Ore. 319. 31 Pac. 705. high waters destroyed the potatoes, "Walker v. Syms, 118 Mich. 183, and plaintiffs then brought suit to 76 N. W. 320; Lowe v. Lehman, 15 recover back the amount of money Ohio St. 179. § 1779 CONTRACTS. III6 provided it be a standard in general use.^® On the question of weights a custom may be shown which requires the deduction of the weight of the containers, as for example the deduction of the weight of sacks in which grain is contained. ^^ And in an action for the price of tobacco, in the absence of an express agreement between the parties in regard to the manner of ascertaining the net weight, it was held competent for plaintiffs to show that, according to the custom of the tobacco trade, defendant was re- quired to take it at the last ascertained weight, looking to plain- tiffs to make good any loss or diminution.^" In a case where the question was the weight of structural steel where it appeared that the weight was customarily computed from measurement of dimensions and by reference to tables, and not by actual weight, it was held proper to show, in an action on the contract for the agreed price, that the weight of steel, by general custom in this business referred to the gross weight as per measurement, and not to the net weight of steel actually employed in the structure after the necessary trimming and shaping for fitting the parts to- gether had been completed.^^ § 1779. Partnership customs and usages. — Articles of part- nership may be enlarged by a general usage or habit, of conduct- ing the affairs of the firm acquiesced in by all. the members.^^ The authority of one partner to act for and charge, the firm may be shown by a course of business between the members- of the firm.^^ But the "course of business" to bind an individual part- ner, who did not expressly authorize it, must be such as to indicate that he not only knew the course of dealing but assented to it as a regular course of dealing.^* Infrequent acts are not sufficient ** Strickland v. Richardson, 135 '' Pursley v. Ramsey, 31 Ga. 403; Ga. 513, 69 S. E 871. Woodward v. Winship, 12 Pick. =» United States v. Kerr, 196 Fed. (Mass.) 430; Davis v. Dodge, 30 503 Mich. 267; Midland National Bank '"Thompson v. Brannin, 94 Ky. v. Schoen, 123 Mo. 650. 27 S. W. 490 15 Ky. Law 36, 21 S. W. 547; Burchell v. Voght, 35 App. Div. 1057; Loeb v. Crow, 15 Tex. Civ. (N. Y.) 190, 55 N. Y. S. 80, affd. App. 537, 40 S. W. 506. 164 N. Y. 602, 58 N. E. 1085 ; Gallo- ** Commercial Tribune Bldg. Co. way v. Hughes, 1 Bailey (S. Car.) V. Potthorf &c. Iron Co., 28 Ohio 553. C. C. 439. "^Eady v. Newton Coal &c. Co., " Eady v. Newton Coal &c. Co., 123 Ga. 557, 51 S. E. 661, 1 L. R. A. 123 Ga. 557, 51 S. E. 661, 1 L. R. (N. S.) 650. A. (N. S.) 650. in/ CUSTOMS AND USAGES. § I780 to show a course of dealing. Thus, the fact that a partnership may frequently have drawn checks against its funds in bank to discharge the individual debt of a member does not constitute a course of dealing that will justify the bank in assuming that it is in the scope of the partnership business to pledge its credit and give its note in satisfaction of a debt due by one of the partners to the bank.^' Generally speaking, the act of one member of the firm inconsistent with the practice and usage of the business of the partnership is outside the scope of the partnership as a mat- ter of fact and a party thus acting with the firm will not be heard to plead ignorance.'* § 1780. Sales of goods. — Usages as to the time and place of the inspection of goods by the purchaser or his agent as a condition to their acceptance are ordinarily binding, unless waived, where the usage is well established and of such notoriety as to charge the purchaser with knowledge of the existence of the usage.'^ The failure of the seller to deliver the quantity of the commodity purchased under an express contract cannot be ex- cused by a trade usage.'* Where goods are purchased on an ab- solute written order, the purchaser cannot defeat a recovery of a balance due on the order, by showing a local custom which allows him to return unsold goods and receive a credit therefor. This would allow a custom to vary the term of an express contract.^'' Where an express warranty is given with a commodity, the seller cannot defeat a recovery on the warranty by showing the failure of the purchaser to comply with a custom for the return of the commodity for replacement by the seller. This would tend to contradict the terms of the contract.*" In a case where the ac- ceptance of an order was unconditional, and the time of delivery was not stated so that the law would imply delivery within a reasonable time, it was held that the seller could not show a cus- tom in the trade making delivery subject to the exigencies of " People's Saving Bank v. Smith, ^^ Pittsburgh Coal Co. v. Northy, 114 Ga. 185, 39 S. E. 920. 158 Mich. 530, 123 N. W. 47. "Biggs V. Hubert, 14 S. Car. 620. '"Gladstone v. Levine (Ind. App), "Guggenheim v. Hoffman, 128 111. 97 X. E. 184. App. 289; Motlev v. Elmhorst, 142 "Steele v. Andrews, 144 Iowa 3(50, App. Div. (N. Y.') 830, 127 N. Y. S. 121 N. W. 17. 625. § 1 78 1 CONTRACTS. IIII8 transportation, and that the contract of sale could not be binding if delivery could not be made within a reasonable time/^ But a plainly expressed condition may be qualified by a custom where the condition has a meaning in the trade different from the popu- lar meaning. Thus where a contract called for amber colored bottles of a stated weight, it was held proper to show that it was impossible to produce bottles absolutely uniform in weight and color and that the custom of manufacturers has established a limit of variations to be allowed." It is usually the custom of the place of acceptance and the place from which the offer is made that will prevail.^^ § 1781. Charges for professional services. — ^There is a cus- tom obtaining in some localities for professional men to render professional aid to each other without charge, but it is believed that this custom has not yet reached the status of a binding usage. It is more in the nature of an accommodation usage or an ex- change of courtesies.** There is authority that it is custom of the medical profession to make the consulting physician's fee a charge against the patient and not against the attending physician who requests the service of the consulting physician.*^ On the ques- tion of custom to determine the amount of attorneys' fees it has been observed : "Where services of the same general nature and extent are of such frequent recurrence among the legal profession that a certain fee, or a certain basis for its estimation, has become customary and usual in such cases, evidence thereof is proper to show what is reasonable."''*^ On the question of the compensa- tion of an architect, resort may be had to usage where the con- tract is silent or incomplete in this respect.*' *^ Meaz Lumber Co. v. McNeeley *^ Baer v. Williams, 75 N. J. L. 30, (Wash.), 108 Pac. 621. 66 Atl. 961. *^ Whitney v. Hop Bitters Mfg. Co., ** Faulk v. Hobbie Grocery Co. 50 Hun (N. Y.) 601, 18 N. Y. St. (Ala.), 59 So. 450; Knight v. Russ, 891 2 X. Y. S. 438, af?d. 121 N. Y. 77 Cal. 410, 19 Pac. 698; Nathan v. 682^ 24 N. E. 1098. See also, Eld- Brgnd, 167 111. 607, 47 N. E. 771; ridie v. McDermott (Mass.), 59 N, Stanton v. Embry, 93 U. S. 548, 23 E. 806. L. ed. 983; Vilas v. Downer, 21 Vt. *^ Somerset Door &c. Co. v. Weber 419. Co., 43 Pa. Super. Ct. 290. "Weber v. Noyes, 151 111. App. ** Madden v. Blain, 66 Ga. 49. But 596; Lowinson v. McKenna 126 N. see Bremerman v. Hayes, 9 Pa. Y, S. 604. Super. Ct. 8. 1 1 19 CUSTOMS AND USAGES. § 1 782 § 1782. Interest on contracts. — Interest can only be de- manded on pure contracts in cases specified in the statute or where there has heen a special promise to pay such interest or such a promise can be inferred from the circumstances, or the particu- lar mode of dealing adopted by the parties or the usage of the trade in which they dealt.** A custom to charge interest on ac- counts after maturity does not, generally, create an implied con- tract to pay such interest unless the debtor knew of the custom.'** A promise to pay interest on an advancement may be implied from a uniform custom or usage in the particular trade governing transactions in which the parties are engaged.'^" § 1783. Theatrical and amusement contract. — A usage which forbids an actor to perform under another management during the existence of his contract will generally be read into a contract for his services which is silent in this respect.^^ Oral evidence is admissible to explain the meaning of the term "sea- son" in a theatrical contract. In doing this, the court does no more than when he refers to a dictionary to ascertain the meaning of a word and this reference does not amount to the use of a cus- tom to vary a contract.^" In a case where a contract was entered into with a baseball player for a stated period, it was held that the employer could not justify the discharge of the player on the ground that a custom existed which gave him the right to dis- charge him on ten days' notice for definite work. This would allow the termination of a special contract at will by a custom not known to the parties. ^^ Where the parties make a lease con- **Sammis v. Clark, 13 111. 544. 1074 (Witness is competent to testify *'Rayburn v. Day, 27 111. 46; Veiths as to meaning of term). In the case V. Hagge, 8 Iowa 163 ; Liotard v. of a written contract for employment Graves, 3 Caines (N. Y.) 226; Est- as a theater manager for an indefinite erly v. Cole, 1 Barb. (N. Y.) 235, term at a stated weekly salary, evi- affd. 3 N. Y. 502; Heyward v. Sear- dence was held admissible to show son, 1 Spear (S. Car.) 249; Wood that the word "weekly," according V. Smith, 23 Vt. 706. to theatrical custom means the weeks '"Ayers v. Metcalf 39 111. 307; of the theatrical season, and not of Lamb v. Klaus, 30 Wis. 94. the entire year. Such evidence ex- " Montague v. Flockton, L. R. 16 plains, but does not vary the term Eq. 189. of the contract. Leavitt v. Kennicott, "Montague v. Flockton. L. R. 16 157 111. 235. 41 N. E. 1Z1. Eq. 189; Mvers v. Walker, 24 111. 133; "'Baltimore Base Ball Club &'C. Co. Leavitt V. 'Kennicott, 157 111. 235. 41 v. Pickett, 78 Md. 375, 28 Atl. 279, 22 N. E. 1Z1\ Mclnto.sh v. Miner, il L. R. A. 690, 44 Am. St. 304. App. Div. (N. Y.) 483, 55 X. Y. S. § 1784 CONTRACTS. 1 1 20 tract with a well-established theatrical custom in mind and can be fairly said to have made the agreement in reference to it, such custom can be proved and will be construed in conjunction with the terms of the lease. The rule, of course, depends for its appli- cation upon the knowledge of the parties of such custom or usage and their evident intent of making the contract with this custom or usage in mind.^* §1784. Custom of sending telegraph message by tele- phone. — A custom by a telegraph company to receive mes- sages for transmission by telephone which is of long standing, will render the contract to transmit the message binding and the company liable for failure to deliver the message.^^ "If such be a customary method of receiving messages, it cannot be claimed that a message so received and transmitted over the wire for the usual hire was not received by the company, or that in the act of receiving and writing down the message the company's employee was acting as the servant of the sender."^® § 1785. General custom need not be specially pleaded. — It is not required that a general custom, of which the court will take judicial notice, should be specially pleaded." Where the plead- ing alleges a general custom as opposed to a particular usage it is not defective for failure to aver knowledge of the parties.^^ § 1786. Local customs and usages must be pleaded. — The rule is well settled that a special or particular custom or usage must be specially pleaded in order to permit evidence to show the existence of such custom or usage.^^ The pleader of a local •* Wigglesworth v. Dallison, 1 mond v. Barry, 109 Va. 274, 63 S. Doug. 201; American Academy of E. 1074; Ryder-Gougar Co. v. Gar- Music V. Bert, 26 Wkly. Notes Gas. retson, 53 Wash. 71, 101 Pac. 498, (Pa.) 351, 8 Pa. County Gt. 223; Van 132 Am. St. 1053; John O'Brien Ness V Pacard, 2 Pet. (U. S.) 137, Lumber Co. v. Wilkinson, 123 Wis. 7 L ed 374. 272, 101 N. W. 1050; Hewitt v. John »* Western Union Tel. Co. v. Todd Week Lumber Co., 11 Wis. 548, 46 N. (Ind. App.), 53 N. E. 194; Gore v. W. 822. Western Union Tel. Co. (Tex. Civ. '^'Doell v. Schrier, 36 Ind. App. App.), 124 S. W. 977. 253, 75 N. E. 600. ""Western Union Tel. Co. v. Todd '''Elmore v. Parish, 170 Ala. 499, (Ind. App.), 53 N. E. 194. 54 So. 203; Antomarchi's Exr. v. ^Templeman v. Biddle, 1 Har. Russell, 6Z Ala. 356, 35 Am. Rep. 40; (Del.) 522; Stultz v. Dickey, 5 Bin. Goldsmith v. Sawyer. 46 Gal. 209: (Pa.) 285, 6 Am. Dec. 411; Rid- Wilmington City R. Co. v. White, 6 1121 CUSTOMS AND USAGES. § 1786 usage should show tliat the usage has all the requisites of a good usage/'" including knowledge of its existence by the parties."^ Where "a particular or local custom is relied upon, it must be pleaded and pleaded so explicitly that it will appear not only that such local or particular custom existed, but that both parties had knowledge of it at the time the contract was made, and, in addition, contracted with reference to it."°- It should be alleged with particularity that the contract was entered into with refer- Del. 363. 66 Atl. 1009 ; Templcman v. Biddle, 1 Har. (Del.) 522; Pittsburg Steel Co. V. Streety, 61 Fla. 393, 401, 55 So. 67; Maddox v. Washburn- Crosby Milling Co., 135 Ga. 539, 69 S. E. 821 ; Hendricks v. Middlebrooks Co.. 118Ga. 131,44 S. E. 835 ; iMobile Fruit & Trading Co. v. Judy. 91 111. App. 82; McCurdv v. Alaska &c. Commercial Co., 102 111. App. 120; Gladstein v. Levine (Ind App.), 97 N. E. 184; Sherwood v. Home Sav. Bank, 131 Iowa 528, 109 N. W. 9; Farmers' & Merchants' Bank v. Wood (Iowa), 118 N. W. 282; Lind- ley V. First National Bank, 76 Iowa 629, 41 N. W. 381, 2 L. R. A. 709, 14 Am. St. 254; Eagle Distilling Co. V. McFarland, 14 Ky. L. 860; Flight V. Bacon, 126 Mass. 10, 30 Am. Rep. 639; Turner v. Fish, 28 Miss. 306; Staroske v. Pulitzer Pub. Co., 235 Mo. 67, 138 S. W. 36; Hayden v. Grillo's Admr., 42 Mo. App. 1 : Har- nett V. Holdrcdg, 73 Nebr. 570. 103 N. W. 277, 119 Am. St. 905; First National Bank v. Farmers' &c. Bank, 56 Nebr. 149. 76 N. W. 430; Society for Establishing Useful Manufac- tures V. Haight, 1 N. J. Eq. 393; Overman v. Floboken Citv Bank, 30 N. J. L. 61; Miller v. Fischer, 142 App. Div. (N. Y.) 172, 126 N. Y. S. 996; Dommerich v. Garfunkel. 32 Misc. (N. Y.) 740. 65 N. Y. S. 564. nffd. 33 Misc. (N. Y.) 743. 67 N. Y. S. 167; Smith v. Stewart. 29 Okla. 26, 116 Pac. 182; Girard Life Insurance &-C. Trust Co. V. Mutual Life Ins. Co. of N. Y.. 13 Pbila. (Pa.) 90; Amer- ican Lead Pencil Co. v. Nashville. C. 8z St. L. R. Co.. 124 Tcnn. 57. 134 S. '^^^. 613; Anderson v. Roege (Tex.). 28 S. W. 106; Standard Paint Co. v. San Antonio Hardware Co. CTex. Civ. App.). 136 S. W. 1L';0 (refund- ing freight charges by wholesaler) ; 71 — CoNTR-'^CTS. Vol. 2 Gano V. Palo Pinto County, 71 Tex. 99, 8 S. W. 634; Norwood v. Alamo Fire Ins. Co., 13 Tex. Civ. App. 475, 35 S. W. 717; Patton v. Texas & P. R. Co. (Tex. Civ. App.), 137 S. W. 721; Oriental Lumber Co. v. Blades Lumber Co., 103 Va. 730, 50 S. E. 270; Liggatt v. Withers, 5 Grat. (Va.) 24, 50 Am. Dec. 95. A local usage as to the weight of cotton bales must be pleaded; "A rule of pleading requires that all those parts of a contract counted upon, which are material for the purpose of enabling that court to form a just idea of what the contract actually was, or ^v^^ich are necessary for the purpose of fur- nishing the jury with a criterion in the assessment of damages, should be stated with certaintv and precision." Elmore v. Parish. 170 Ala. 499, 54 So. 203. A particular usage was iipt sufficiently charged in a comprint which alleged that a newspaper pub- lisher had established a system of de- livery of its newspapers by carriers, that where a route was acquired by a carrier, it was understood between the publisher and tlie carrier, accord- ing to custom which had existed for more than fifteen years, that tjie car- rier had the exclusive righf for an indefinite period of time to sell the newspaper to subscribers on his route. Staroske v. Pulitzer Pub. Co.. 235 Mo. 67, 138 S. W. 36. "" Mobile. J. & K. C. R. Co. v. Bav Shore Lumber Co.. 158 Ala. 622. 48 So 377; Wallace v. Morgan. 23 Tnd. 309- Poland v. Hollander. 62 Misc. (n'y) 523. 115 N. Y. S. 1042. " Smart v. Haase. 79 Conn. 587. 65 Atl 972. ^ Staroske v. Pulitzer Pub. Co.. 235 Mn 67 138 S. W. 36. See also. Har- rison V. Birrell. 58 Ore. 410. 115 Pac. 141. § 1 787 CONTRACTS. 1 122 ence to the usage relied iipon."^ An allegation that by a general custom prevailing at the time of the execution of a timber con- tract, burr oak was classified as white oak, was held sufficient without the allegation of knowledge of the custom by both parties to the contract."* In an action against a warehouse company foi the value of tobacco destroyed by fire while deposited with it, where the plaintiff alleged a custom that wareliousemen should insure their customers' tobacco, and that plaintiff deposited his tobacco with defendant with reference to such custom, it is proper to charge that, if defendant notified plaintiff that the tobacco was held at the warehouse at plaintiff's risk, and plaintiff acquiesced therein, the finding should be for defendant, although there was such a custom as was alleged."^ § 1787. Customs and usages as evidence need not be pleaded. — It is not required that a usage be pleaded where it is merely incidental to an implied contract and is relied upon only as evidence of some fact in issue. The custom or usage in the latter case may be offered in evidence to interpret and apply the facts proved and relied upon though the custom is not pleaded."*^ Proof of a custom not pleaded is sometimes allowed where it is necessary to establish an ultimate fact charged in the pleading.^^ § 1788. Technical meaning of words need not be pleaded. — As a general rule the technical meaning of words in the con- tract may be proved in an action on the contract without being specially pleaded."^ So a custom merely explanatory of words used in a contract need not be pleaded. ^^ § 1789. Pleading local usage in action for compensation. — Where there is no contract between the parties except that which *' Hendricks v. Middlebrooks Co., W. 793; Lowe v. Lehman. LS Ohio 118 Ga 131 44 S E. 835. St. 179; Harrison v. Birrell, 58 Ore. "Doell V. Schrier, 36 Ind. App. 253, 410, 115 Pac. 141. 75 N. E. 600. " Donk Coal & Coke Co. v. Thil, 128 *= Western Warehouse Co. v. Hayes, 111. App. 249. 97 Ky 16. 29 S. W. 738. "^ Steidtmann v. Joseph Lay Co., 234 "' Arkadelphia Lumber Co. v. As- 111. 84, 84 N. E. 640. man, 85 Ark. 568. 107 S. W. 1171; ""Globe & Rutgers &c. Ins Co v. Sherwood v. Home Sav. Bank, 131 • David Moffat Co., 154 Fed. 13, 83 C. Iowa 528, 109 N. W. 9; Fish v. Craw- C. A. 91. ford Mfg. Co., 120 Mich. 500, 79 N. I 123 CUSTOMS AND USAGES. § 1790 the law implies, and the action is brought to recover what the services performed are reasonably worth, there does not seem to be any good reason why the pleader should set up a local usage or custom by which the value of the services are fixed, since he is entitled to recover what is usual and customary for like services.''" § 1790. Judicial notice of customs and usages. — Courts will take judicial notice of settled customs of general application and will not require proof of such customs.^ ^ "Courts will not profess to be more ignorant than the rest of mankind."'" But courts will not accord judicial notice to mere local customs and usages." A local usage must generally be proved as any other fact. Courts will not take judicial notice of it, nor can its exist- ence be left without proof by witnesses to the private information of jurors.^* § 1791. Judicial notice — Examples. — Judicial notice will be taken of the general nature and business of commercial agencies and the reliance of merchants thereon ;" of the changes and new '"Hansbrough v. Xeal, 94 Va. 712, 27 S. E. 593. " Butler V. Good Enough Min. Co., 1 Alaska 246; Davis v. Hanly, 12 Ark. 645; McGirr v. Humphreys Grocery Co.. 192 Fed. 55 ; Alunn v. Burch, 25 111. 35; Columbia Bank v. Fitzhugh, 1 Har. & G. (Md.) 239; Merchants' Mut. Ins. Co. V. Wilson, 2 Md. 217; Samberg v. .American Express Co., 136 Mich. 639. 99 N. W. 879; Mc- Kibbin v. Great Northern R. Co.. 78 Minn. 232. 80 N. W. 1052; Prudoehl V. Randall. 108 Minn. 185. 121 N. W. 913; Turner v. Fish. 28 Miss. 306; Crawford Countv v. Hathowav. 67 Nebr. 325, 93 N. "W. 781. 60 L. R. A. 889. 108 Am. St. 647: Francis v. Mu- tual Life Ins. Co.. 55 Ore. 280. 106 Pac. 323 : Fleischman v. Southern R. Co.. 76 S. Car. 237. 56 S. E. 974, 9 L. R. A. (N. S.) 519; State v. Met- calf. 18 S. Dak. 393. 100 N. W. 923, 67 L. R. .\. 331 ; Chadoin v. Magee. 20 Tex. 476; Prince v. Prince. 64 Wash. 552. 117 Pac. 255; Bernard v. Benson. 58 Wash. 191. 108 Pac. 439, 137 Am. St. 1051. See 1 Elliott Ev., § 64. " Fleischman v. Southern R. Co.. 76 S. Car. 237, 56 S. E. 974, 9 L. R. A. (N. S.) 519. " Sampson v. Gazzam. 6 Port. (Ala.) 123, 30 Am. Dec. 578; San- ders V. Brown, 145 Ala. 665, 39 So. 72)2; Sullivan v. Hense, 2 Colo. 424; Meydenbauer v. Stevens. 78 Fed. 787; Rapp V. Grayson, 2 Blackf. (Ind.) 130; Schultz v. Ford, 133 Iowa 402. 109 N. W. 614; Gannon v. Chicago. R. I. & P. R. Co. (Iowa). 117 N. W. 966; Livermore v. Avers. 86 Kans. 50, 119 Pac. 549; Tranter v. Hibbard. 108 Kv. 265. 56 S. W. 169 ; Ward v. Ever- ett. 1 Dana (Ky.) 429; Soye v. Mer- chants' Ins. Co.. 6 La. .^.nn. 761 ; Tur- ner v. Fish. 28 Miss. 306; Youngs v. Ransom. 31 Barb. (N. Y.) 49; Wood V. Smith, 23 Vt. 706; Cadv v. Case. 11 Wash. 124, 39 Pac. 375: Columbian Banking Co. v. Bowen. 134 Wis. 218. 114 N. W. 451. See 1 Elliott Ev.. § 64. "Morris v. Tamieson. 205 Til. ^7, 68 X. E. 742: Kenvon v. Charlevoix Imp. Co.. 135 Alich. 103. 97 N. W. 407; First Nat. Bank v. Minneapolis &c. Elevator Co.. 11 N. Dak. 280. 91 N. W. 436. " Furry v. O'Connor, 1 Ind. .\pp. § 1 791 CONTRACTS. 112 J^ methods of carrying on trade;''' of the transportation of cattle by rail;"^ of the general method of carrying the public mails;" of the custom of storing wheat in mass with other wheat of the same grade and quality in general commercial elevators ;^^ of the cus- tom of charging interest;^'' of general customs in regard to the management and operation of railroads f'^ of the general custom of railroads to carry sample trunks of commercial travelers as baggage of their employers, but not of the conditions or limita- tions under which it is done f' that the usual method of canceling a signature is to draw a line through it f^ that telegraph messages are written ;*** that applications for insurance are usually made to agents in their capacity as representatives of the company f^ that 573, 28 N. E. 103; Genesee County Savings Bank v. Michigan Barge Co., 52 Alich. 164. 17 N. W. 790; Eaton, Cole & Burnham Co. v. Avery, 83 N. Y. 31, 38 Am. Rep. 389; Wilmot v. Lyon, 7 Ohio Civ. Dec. 394, 11 Ohio Cir. Ct. 238. But see Holmes v. Har- rington, 20 Mo. App. 661. " Richards v. Michigan Cent. R. Co., 40 Fed. 165. affd. 158 U. S. 299, 39 L. ed. 991. 15 Sup. Ct. 831 ; Gregory v. Wendell, 39 Mich. Z2,7, 2,2> Am. Rep. 390 (of the ordinary methods of car- rying on business) ; Wiggins Ferry Co. v. Chicago &c. R. Co.. 5 Mo. App. 347, revd. 72, Mo. 389, 39 Am. Rep. 519, 119 U. S. 615, 30 L. ed. 519. 7 Sup. Ct. 398 ; Sacalaris v. Eureka &c. R. Co., 18 Nev. 155, 1 Pac. 835, 51 Am. Rep. 72,7. "Michigan, S. & N. I. R. Co. v. McDonough, 21 Mich. 165, 4 Am. Rep. 466. "Gamble v. Central R. Co., 80 Ga. 595. 7 S. E. 315. 12 Am. St. 276. "Davis V. Kobe. 36 Minn. 214, 30 N. W. 662, 1 Am. St. 663. *°0'Ferrall v. Davis. 1 Towa 560; Watt V. Hoch. 25 Pa. St. 411. But see Wood V. Smith. 23 Vt. 706. *^ Alabama, Midland R. Co. v. Cos- kry, 92 Ala. 254. 9 So. 202 ; South & North Ala. R. Co. v. Pilgreen. 62 Ala. 305 ; Atchison. T. & S. F. R. Co. V. Headland, 18 Colo. 477, 2,2, Pac. 185, 20 L. R. A. 822; Mann Boudoir Car Co. V. Dupre. 54 Fed. 646. 4 C. C. A. 540. 21 L. R. A. 289; Gulf &c. R. Co. V. Ellis. 54 Fed. 481. 4 C. C. A. 454; McDonald v. Illinois Cent. R. Co., 187 111. 529, 58 N. E. 463; Burlington, C. R. & N. R. Co. v. Dey, 82 Iowa 312, 48 N. W. 98, 12 L. R. A. 436, 31 Am. St. 477; Mason v. Richmond & D. R. Co., Ill N. Car. 482, 16 S. E. 698, 18 L. R. A. 845. 32 Am. St. 814. But they have not taken notice that the footboard on the front of an engine is the post of duty of a yardmaster. Highland Ave. 6 B. R. Co. V. Walters, 91 Ala. 435, 8 So. 357. The New York courts have taken notice that elevated rail- roads in New York City have in- creased traffic on the avenues along which they run (Bookman v. New York &c. R. Co., 137 N. Y. 302, Z2, N. E. 222,), and that telegraph lines are necessary to the operation of rail- roads, and are usually wired on posts along the railway, but not of the ex- act space required. P. & H. H. Youree v. Vicksburg &c. R. Co. (La. Ann.), 34 So. 779. *nicKibbin v. Great Northern R. Co., 78 Minn. 232. 80 N. W. 1052; Fleischman v. Southern R. Co.. 76 S. Car. 237. 56 S. E. 974, 9 L. R. A. (N. S.) 519. *' Sandberg v. American Express Co., 136 Mich. 639. 99 N. W. 879. ** People V. Western Union Tel. Co., 166 111. 15, 46 N. E. 731, 36 L. R. A. 627, and that telephone connec- tions are made by means of a switch board. State v. Cadwallader. 172 Ind. 619, 87 N. E. 644. 89 N. E. 319. _ ^ Howe V. Provident Fund Society, 7 Ind. App. 586, 34 N. E. 830. II: CUSTOMS AXD USAGES. § 1 79 1 it is the custom of life insurance companies to forward a policy on its final approval and execution to a local agent for delivery to the insured ;"*" of the general method employed in the location of mines where these metliods are common to all districts;"^ of the customs and usages governing the creation and existence of political parties which are matters of general knowledge and com- mon information;'^ that contracts for the sale of real property are recorded ;'" that it is the custom in states recognizing the prin- ciple of community property for husbands and wives to make mutual wills for the disposition of the community estate;"'' that tliere is a distinction in the commercial world between the whole- sale dealer and the manufacturer;"^ that contracts to buy real estate are often made with the expectation on the part of the pur- chaser of selling at a profit before he is required to complete his contract ;°^ and that thieves often resort to pawnbrokers and junk dealers."^ The courts have refused to take judicial notice of the fol- lowing usages because of their purely local character: the local rules and regulations of miners,"* local customs as to days of grace on commercial paper,"^ usage allowing commissions on bills of exchange received in payment of a judgment,"'' a custom re- quiring the owner of an untenanted house to have it guarded by a keeper in order to enable him to recover the insurance in case of its loss by fire,"^ a custom of merchants not to extend credit to « Francis v. Mutual Life Ins. Co., Wis. 19, 81 N. W. 1024, 82 N. W. 691. 55 Ore. 280, 106 Pac. 323. But the courts seem to have gone '" Butler V. Good Enough Min. Co., to extreme lengths in some of these 1 Alaska 246. cases. ** State V Metcalf, 18 S. Dak. 393, "Grand Rapids v. Braudy. 105 100 N. W. 923, 67 L. R. A. 331. Mich. 670, 64 X. W. 29, 32 L. R. A. *» Bernard v. Benson, 58 Wash. 191, 116, 55 Am. St. 472. 108 Pac. 439, 137 Am. St. 1051. " Sullivan v. Hense, 2 Colo. 424 ; ** Prince v. Prince, 64 Wash, 552, Mevdcnbauer v. Stevens,, 78 Fed. 787. 117 Pac. 255. So held as to authority of officer of " Kansas City v. Butt, 88 Mo. App. private corporation depending on by- 237. laws or its particular usage. Elkhart "Anderson v. Blood, 86 Hun (N. Hvdraulic Co. v. Turner, 170 Ind. Y ) 244, 66 N. Y. St. 750, 33 N. Y. 455. 458. 84 X. E. 812. S 233. afifd 152 X. Y. 285. 46 X. E. "* Tranter v. Hibberd. 108 Ky. 265, 493. 57 Am. St. 515. And that ordi- 21 Ky. L. 1710. 56 S. W. 169. narily prudent men usually keep their *° Ward v. Everett, 1 Dana (Ky.) large manufacturing establishments 429. insured for nearly their full value. " Soye v. Merchants' Ins. Co., 6 La. Hill V. American Surety Co., 107 Ann. 761. § 1^92 CONTRACTS. 1 1 26 their customers beyond six months,^^ a custom requiring em- ployes to accept goods from the store of their employers in pay- ment of wages,"" the hours of business recognized in a foreign jurisdiction/ that Pullman porters assist passengers in boarding and alighting from such cars in the same way that brakemen render like service to their passengers,^ that banks require re- newal of notes not paid promptly at maturity.^ § 1792. Proof preliminary to admission of evidence of usage or custom. — It has been held that evidence of a usage or custom should not be received until the party offering it has distinctly stated to the court what he intends to prove,* and the existence of such a custom has been established by other evi- dence.'^ "Before evidence of a custom or usage can be received, it must appear that there exists a usage established long enough to have become generally known, and to warrant a presumption that the contract in question was made in reference to it, and that the usage is uniform in reference to the business and locali- ties involved in the inquiry."^ The proof must show that the custom was so general that the parties will be presumed to have knowledge of its existence.'^ Where, however, the custom which is proved for the purpose of construing a contract is in accord- ance with the legal principles which would be employed in that construction, it may be received in evidence though its generality and uniformity have not been established.* Where the existence of the custom has been shown without objection then evidence is competent as to what the custom is." The contract should be «nVood V. Smith, 23 Vt. 706. affd. 56 Hun (N. Y.) 646, 31 N. Y. *'Cady V. Case, 11 Wash. 124, 39 St. 1003, 10 N. Y. S. 951; Dwight v. Pac 375 Badgley, 60 Hun (N. Y.) 144, 38 N. ' Columbia Bank Co. v. Bowen, 134 Y. St. 112, 14 N. Y. S. 498. Wis 218 114 N. W. 451. 'Auto &c. Mfg. Co. v. Merchants == Gannon v. Chicago, R. I. & P. R. National Bank, 116 Md. 179, 81 Atl. Co. (Iowa), 117 N. W. 966. 294. ''Livermore v. Ayers, 86 Kans. SO, ' McKinney v. Chester, 2 Del. 119 Pac. 549. County Rep. CPa.) 525. See also, * Susquehanna Fertilizer Co. v. Papin v. Goodrich, 103 111. 86; Couch White, 66 Md. 444, 7 Atl. 802, 59 Am. v. Watson Coal Co., 46 Iowa 17 ; Rep 1^6- Hcker v Moore, 2 Pin. ^foore v. Michigan Cent. R. Co.. 3 (Wis.) 425, 2 Chand. ("Wis.) 85. Mich. 23: Eaton v. Gladwell, 108 "Tower Co. v. Southern Pac. R. Mich. 678, 66 N. W. 598. Co., 184 Mass. 47?_ 6Q N. P. 348 ; ' Kellv v. Waters, 31 Mich. 404. Kenyon v. Luther. 50 Hun (N. Y.) * Morgan v. Mason, 4 E. D. Smith 602, 19 N. Y. St. 32, 4 N. Y. S. 498, (N. Y.) 636. I 127 CUSTOMS AND USAGES. § 1 793 proved before the admission of any evidence as to a custom or usage whicli should control its construction." Evidence of the existence of a custom is properly refused after the court has de- cided that the contract was not made with reference to the cus- tom.'' § 1793. Burden of proof of custom or usage. — The burden of proof of a local usage is on the party who asserts the usage.'" The presumption is generally indulged in, in the absence of proof, that the usages of a foreign country are similar to those existing in this country.'^ In the case of a general custom the burden of proof of ignorance of its existence is upon the party pleading such ignorance.'* § 1794. Presumption of knowledge of usage. — When a sufficient usage is shown to be established in a trade there is a pre- sumption that the usage is known to all parties in the trade and within the jurisdiction of the usage.'° This presumption of knowl- edge exists where the usage is thus established and the contract was made in the ordinary course of the trade or business in which the usage prevails."' Under this principle it is not material how " Moore v. Eason, 32 N. Car. 568. " Olivari v. Thames &c. Marine Ins. "Withers v. Moore (Cal.), 71 Pac. Co., 37 Fed. 894. But see Reynolds 697. revd. 140 Cal. 591. 74 Pac. 159. v. Continental Ins. Co, 36 Mich. 131. '-Caldecott v. Smythies, 7 C. & P. "Johnson v. DePeyster, 50 N. Y. 808; German-American Ins. Co. v. 666. The claimants of the custom Commercial Ins. Co., 95 Ala. 469, 474, having proved user of the close for 16 L. R. A. 291 ; Dingley v. McDon- the purposes of the custom during aid, 124 Cal. 682. 57 Pac. 574; The living memory (extending over sev- Sultan, 15 Fed. 618; jNIinis v. Nelson, enty years) and by reputation for 43 Fed. 777; The John H. Cannon, 51 many years before their birth, the Fed. 46; Beatty v. Gregory, 17 'Iowa onus is on the person denying the 109, 85 Am. Dec. 546; Tyson v. Laid- custom to demonstrate the impossi- law, 18 La. 380; Senac v. Pritchard, liility of its existence in the time of 4 La. 160; Allen v. Lyles, 35 Miss. Richard I. Mercer v. Denne, 91 L. T. 513; Thomas v. Hooker Colville 513. Steam Pump Co.. 28 :\ro. App. 563; "United States Life Tns. Co. v. .\d- Runvan v. Central R. Co., 64 N. T. L. vance Co., 80 111. 549; Bradley v. 67. 44 Atl. 985, 48 L. R. A. 744 ; 'Ma- Wheeler. 44 N. Y. 495 ; Sewall v. fine Nntional Bank v. National Citv Gibhs, 1 Hall (N. Y.) 602; Robinson Bank. 59 N. Y 67, 17 Am. Rep 305: v. United States. 13 Wall. (U. S.) Mallorv v. Commercial Tns. Co.. 22 363. 20 L. ed. 653. N. Y. Super. Ct. 101; Sniero v New " Mott v. Hall. 41 Ga. 117; Wilson York 8cc R. Co.. 64 MUc. (N Y) v. Bauman. 80 Til. 493; Barker v. 53. 117 N. Y. S. 10.39; Ohio Oil Co. Bor^one. 48 Md. 474; .\ppleman v. V. McCrorv, 7 Ohio C. D. 344. 14 Fisher. 34 ^Id. 540; Soutier v. Kel- Ohio C. C. 304: Hall v. Storrs, 7 lermann. 18 Mo. 509; Boardman v. Wis. 253. Gaillard, 1 Hun (N. Y.) 217. 3 § 1/94 CONTRACTS. I 1 28 large a territory is covered by the usage if it is shown that the parties are so circumstanced that it is reasonable to assume that they are familiar with the usages of the particular trades to which they relate.^'^ "The authorities are abundant that a usage may be general and still confined to a particular city, district, town, or village,"^® Where a usage is special and confined to a particular business or has reference to a particular port only, there is no presumption of knowledge and it would be unjust to admit it except upon proof that both parties were or ought to have been aware of and intended to be governed by it. Even though there is a presumption it is at best but a prima facie one, liable to be rebutted by proof that it was unknown to the party against whom it is set up.^^ The presumption of knowl- edge of purely local usages may be rebutted. "We have seen that there are usages which have become so general and so universally received and acted upon, as that they have become a part of the common law, and no one can be heard to profess ignorance of them. But it is equally true that there are usages so restricted as to locality, or trade, or business, as that ignorance of them is a valid reason why a party may not be held to have contracted in reference to them. * * * It seems then, to come to this: Is the presumption, which the jury may thus make conclusive, or may not that presumption be repelled by express negatory proof of ignorance? When the de- fendant proposed, by the question which was rejected, to offer evi- dence tending to show his ignorance of the existence of the usage, he claimed no more than to exercise the right of attempting, by direct evidence, to repel the presumption of his knowledge, which might without that proof, or perhaps in opposition to it, be made from the facts of the case. It is for the jury then, under proper in- structions from the court, to take all the evidence in the case ; that as to the existence, duration and other characteristics of the cus- Thomp. & C. (N. Y.) 695, affd. 60 Clark v. Baker, 52 Mass. 186; Thomp- N. Y. 614; Ripley v. ^tna Ins. Co., son v. Hamilton, 29 Mass. 425; Van 30 N. Y. 136, 86 Am. Dec. 362; Hig- Ness v. Pacard, 2 Pet. (U. 'S.) 148, gins V. Moore, 34 N. Y. 417; Harris 7 L. ed. 378; P>axter v. Leland, 1 V. Tumbridge, 83 N. Y. 92, 38 Am. P.latchf. (U. S.) 526, Fed. Cas. No. Ren. 398. 1125. "Gleason v. Walsh, 43 Maine 397; ^" Gleason v. Walsh, 43 Maine 397. Perkins v. Jordan, 35 Maine 23 ; " Isaksson v. Williams, 26 Fed. 642. 1 129 CUSTOMS AXD USAGES. § 1 795 torn or usage, and that as to the knowledge thereof of the parties ; and therefrom to determine whether there is shown a custom of such age and character, as that the i)resumption of law will arise, that the parties knew of, and contracted in reference to it; or whether the usage is so local and particular, as that knowledge in the party to be charged, must be siiown affirmatively or may be negatived."*'* The usage will not be presumed to have entered into the contract if the circumstances show that it is not reason- able to assume that the parties dealt with reference to the usage by reason of lack of knowledge of its existence."^ § 1795. Character of evidence to establish custom or usage. — It is often said that the proof of a usage or custom must be clear, cogent and convincing. The party charged with this proof must clearly establish such a usage as can fairly be presumed to have entered into the intention of the parties.*^ Where the evidence is uncertain and contradictory the custom is not established and the court should so instruct the jury.^^ "A usage, to be binding, should be definite, uniform, and well known. It should be established by clear and satisfactory evidence, so that it may be justly presumed that the parties had reference to it in making their contract."** The existence of the custom =" Walls V. Bailey, 49 N. Y. 464, 10 Steward v. Scudder, 24 N. J. L. 96; Am. Rep. 407. Dickinson v. Poughkeepsie, 75 N. Y. '^Buckie V. Knoop, L. R. 2 Exch. 65; Booth &c. Granite Co. v. Baird, 125; Gabay v. Llovd. 3 B. & C. 793; 87 Hun (N. Y.) 452, 68 N. Y. St. Abbott V. Bates, 43 L. J. C. P. 150; 324, 34 N. Y. S. 392; Penland v. In- Southwestern Freight & Cotton Press gle, 138 N. Car. 456, 50 S. E. 850; Co. V. Stanard, 44 Mo. 71, 100 Am. Adams v. Pittsburg Ins. Co., 76 Pa. Dec. 255; Walls v. Bailev, 49 N. Y. St. 411; Pratt v. Bank, 12 Phila. 464, 10 Am. Rep. 407; Esterly v. Cole, (Pa.) 378; Wootters v. Kauffman. 67 3 X. Y. 502 ; Scott v. Whitnev, 41 Tex. 488, 3 S. W. 465 ; Bowles v. Rice. Wis. 504; Bentlev v. Daggett, 51 Wis. 107 Va. 51, 57 S. E. 575; Hinton v. 224, 8 N. W. 15'5, 2,7 Am. Rep. 827; Coleman, 45 Wis. 165; Lenike v. Hinton v. Coleman, 45 Wis. 165. Ilage. 142 Wis. 178, 125 N. W. 440, "Desha v. Holland. 12 Ala. 513, 46 135 Am. St. 1066. Am. Dec. 261 ; Rauth v. Southwest '' Desha v. Holland, 12 Ala. 513. 46 Warehouse Co.. 158 Cal. 54, 109 Pac. Am. Dec. 261 ; Bissell v. Ryan, 23 111. 839; Savage v. Pelton. 1 Coin. App. 566; Parrott v. Thacher, 9 Pick. 148, 27 Pac. 948; The Gualala. 178 CMass.) 426; Joseph v. Andrews Co.. Fed. 402. 102 C. C. A. 548; Adams 72 Mo. App. 551; Penland v. Ingle. V. Manufacturers' &c. Fire Ins. Co.. 138 N. Car. 456. 50 S. E. 850; Lemke 17 Fed. 630; Cobb v. Lime Rock &c. v. Hage, 142 Wis. 178, 125 N. W. 440, Ins. Co., 58 Maine 326; Parrott v. 135 Am. St. 1066. Thacher. 9 Pick. (Mass.) 426: Boyd =* Bowling v. Harrison, 47 U. S. 248, V. Graham, 5 Mo. App. 403 ; Joseph 12 L. ed. 425. V. Andrews Co., 72 Mo. App. 551; § 1796 CONTRACTS. I 1 30 must be proved by satisfactory evidence and it is not sufficient to simply set it up in answer.^^ A custom will not be applied to the construction of a contract where the witnesses examined as to the custom differ with reference thereto."^ The courts allow less distinct and certain proof of the existence of a custom when the parties, in making their contract, apparently had in mind the usage which it is sought to apply in the construction of the con- tract.^^ It has been held that a custom is not shown to be estab- lished where the testimony of the witnesses, who aver that the custom exists, is met by an almost equal number of witnesses, with equal facilities of knowing, who testify to never having heard of such custom.^^ § 1796. Opinion evidence as to customs or usages. — The existence of a custom or usage is a matter of fact and not of opinion, and may not be established by opinion evidence. It may be proved by witnesses who testify as to its existence and uni- formity from their knowledge obtained by observation of what is practiced by themselves and others in the trade to which it relates. But their conclusion or inferences as to the effect of the custom or usage either upon the contract or the legal title or rights of parties are not competent to show the character or force of the usage. ^^ The custom of merchants or mercantile usage does not " Bowles V. Rice, 107 Va. 51, 57 S. Hoey, 128 Mass. 585; Calvert v. E 575 Schultz, 143 Mich. 441, 106 N. W. ^-Herr v. Tweedie Trading Co., 181 1123; Ford v. St. Louis &c. R. Co., Fed 483 63 Mo. App. 133; Mills v. Hallock, 2 "kentuckj- Distilleries &c. Ware- Edw. Ch. (N. Y.) 652; Walls v. Bai- house Co. V. Lillard, 160 Fed. 34, 87 ley, 49 N. Y. 464, 10 Am. Rep. 407; C. C A. 190. Austin v. Williams, 2 Ohio 61 ; Lips- "* The Harbinger, 50 Fed. 941, afifd. comb v. Houston & T. C. R. Co., 95 53 Fed. 394. 3 C. C. A. 573; Oregon Tenn. 5, 64 S. W. 923, 55 L. R. A. Short Line & U. N. R. Co. v. North- 869, 93 Am. St. 804; Standard Paint ern Pacific R. Co., 51 Fed. 465, affd. Co. v. San Antonio Hardware Co. 61 Fed. 158, 9 C. C. A. 409. (Tex. Civ. App.), 136 S. W. 1150. ^* Lewis V. ^Marshall, 7 Man. & G. Usage must be proved by evidence of 729; Carey v. Meagher, 33 Ala. 630; facts, not by mere speculative opin- Price V. White, 9 Ala. 563 ; Ames ions, and by witnesses who have had Mercantile Co. v. Kimball Steamship frequent and actual experience of the Co., 125 Fed. 332; Horan v. Strachan, usage, and who do not speak from 86 Ga. 408. 12 S. E. 678, 22 Am. St. report alone, and they must speak as 471 ; Gilbert v. Kuppenhiemer, 67 111. to the course of the particular trade. App. 251 ; Shultz v. Ford. 133 Iowa 2 Grcenleaf on Evidence, §§ 248, 251, 402, 109 N. W. 614: Haskins v. War- 252. citing, as to the difference be- ren, 115 Mass. 514; Kershaw v. tween a local and general usage in Wrigh*- lis Mass. 361 ; Jones v. respect to the sufficiency of the proof 1 131 CUSTOMS AND USAGES. § 1 797 depend upon the private opinions of merchants as to what the law is, or even upon their opinions pubHcly expressed but it de- pends upon their acts.^'* "Usage is a matter of fact, not of opin- ion. Usage of trade is a course of deahng; a mode of conduct- ing transactions of a particular kind. It is proved by witnesses testifying of its existence and uniformity from their knowledge obtained by observation of what is practiced by themselves and others in the trade to which it relates. "^^ The testimony of a witness, to the effect that an order by coal dealers to a carrier to turn over a car of coal to the purchaser amounts to a delivery to or acceptance by the purchaser under the custom of the place, is an example of evidence of a legal conclusion.'^ And the state- ment of a witness that a certain matter was according to an exist- ing custom is no more than the expression of an opinion and is without probative force. ^' But evidence is admissible of the be- lief of a witness in the existence of a usage as derived from a knowledge of the business for a long series of years and it is not a fatal objection that the knowledge of the witness is derived from his own business if it also appears that his business is suf- ficiently extensive to enable him to testify to the fact of usage. ''^ Evidence is objectionable on the ground that it is opinion evi- dence where a witness testifies that a custom is so general and uniform as to create a presumption of knowledge of its exist- ence.^^ § 1797. Competency of experts on question of custom or usage. — The existence of a custom or usage is a proper sub- ject of expert testimony.^*' Generally speaking, the custom or required, Booth &c. Granite Co. v. '* Redfield v. Oakland Consolidated Baird. 87 Hun 452, 34 N. Y. S. 392. St. R. Co., 112 Cal. 220, 43 Pac. 1117; ™ Allen V. Merchants' Bank, 22 In re Gavlor's App., 43 Conn. 82; Wend. (N. Y.) 215, 34 Am. Dec. 289. The Alaska, 33 Fed. 107. aflfd. 130 U. ^'Raskins v. Warren, 115 Mass. S. 201, 32 L. ed. 923. 9 Sup. Ct. 461 ; 514. Crafts v. Clark, 38 Iowa 237; At- '= Calvert v. Schultz, 143 Mich. 441, water v. Clancv. 107 Mass. 369 ; 106 N. W. 1123. Tower Co. v. Southern Pac. Co., 184 '^Haskins v. Warren. 115 Mass. Mass. 472. 69 X. E. 348; Pac:e v. 514: Henrv v. Taylor, 16 S. Dak. 424, Cole. 120 Mass. 37; Pratt v. Mostet- 93 N. W. 641. ter, 9 Civ. Proc. R. (X. Y.) 351, 1 N. ''Hamilton v. Nickerson, 13 Allen Y. St. 75; Sullivan v. Owens (Tex. (Mass.) 351. Civ. App.), 90 S. W. 690: Missouri. "Ford V. St. Louis &c. R. Co., 63 K. & T. R. Co. v. Cr?ne. 13 Tex. Civ. Mo. App. 133. App. 426, 35 S. W. 797; Wall v. Mel- § 1797 CONTRACTS. 1 1 32 usage must be proved by witnesses who have had actual experi- ence or knowledge about which they testify and not by witnesses who can merely give a speculative opinion as to the existence of the custom."^ The witness must qualify by showing a familiarity with a custom.^* It is no valid objection to the competency of a witness that his knowledge is derived from his own business if the knowledge thus derived is sufficiently extensive to enable him to testify to the fact of usage.^® The testimony may be given by a witness who knows the custom although he may not have been actually engaged in the business to which the custom applies/'' The witness must testify as to a general knowledge of the custom or usage and his testimony in this respect must show a knowledge of the custom extending over a period of time and extent of lo- cality that would show a custom general enough to satisfy the requirements of a valid usage or custom/^ He is competent if he testifies to the existence and uniformity of the custom from his knowledge obtained by observation of his own practice and that of others in the trade to which it relates.*^ Accordingly, one who knows the usage between commission merchants may testify thereto, though he be not a commission merchant himself." So, the owner of a tanyard who had been engaged in the business of ton (Tex.), 94 S. W. 358; Roberts V. Clancy, 107 Mass. 369; Gaunt v. Cooper, 20 How. (U. S.) 467, 15 L. Pries, 21 Mo. App. 540; Van Doren ed 969 V. Jelliffe, 1 Misc. (N. Y.) 354, 48 " Chicago, M. & St. P. R. Co. v. N. Y. St. 784, 20 N. Y. S. 636 ; Hobby Lindeman, 143 Fed. 946, 75 C. C. A. v. Dana, 17 Barb. (N. Y.) Ill; Ku- 18- Suarez v. Duralde, 1 La. 260; gelman v. Levy, 4 Misc. (N. Y.) 519, Shackelford v. New Orleans &c. R. 54 N. Y. St. 123, 24 N. Y. S. 559; Co. 2)7 Miss. 202; Prigg v. Preston, E. C. Fuller Co. v. Pennsylvania R. 28 Pa. Super. Ct. 272; Nagle v. Hake, Co., 61 Misc. (N. Y.) 599. 113 N. Y. 123 Wis. 256, 101 N. W. 409. S. 1001; Griffin v. Rice, 1 Hilt. (N. "^Schultz V. Ford, 133 Iowa 402, Y.) 184 ; Holmes v. Whitaker, 23 Ore. 109 N. W. 614; Whipple v. Tucker, 319, 31 Pac. 705; King v. Wood- 123 111. App. 223 ; Hess v. Shurtleff, bridge. 34 Vt. 565. 74 N. H. 114, 65 Atl. 377. "Hale v. Gibbs, 43 Iowa 380 "* Hamilton v. Nickerson, 13 Allen (knowledge of witness covered one (Mass) 351 year only). See also, Wallace v. Le- ^ Nelson V Wood, 62 Ala. 175; Off ber, 65 N. J. L. 195, 47 Atl. 430; V. Tnderrieden, 74 111. App. 105 ; Gregg Woldert v. Arledge, 11 Tex. Civ. v. Garverick, ZZ Kans. 190, 5 Pac. App. 484. ZZ S. W. 372. 751; Luce v. Dorchester Mut. Fire ''Ames Mercantile Co. v. Kimball Ins. Co., 105 Mass. 297, 7 Am. Rep. Steamship Co., 125 Fed. 332; Tower .522; Kershaw v. Wright. 115 Mass. Co. v. Southern Pac. Co., 184 Mass. 361 ; Worchester v. North Borough, 472. 69 N. E. 348. 140 Mass 397. 5 N. E. 270; Page v. "Gregg v. Garverick, ZZ Kans. 190, Cole, 120 Mass. Z7 ; Atwater v. 5 Pac. 751. I 133 CUSTOMS AND USAGES. § 1 798 tanning for nearly twenty-five years during which time he had seen the work going on and knew how it was done was hekl an expert as to such matters although he may have employed others to do the work for him and he was not a practical tanner/* A person who has purchased and shipped potatoes from a certain island, and can testify to a custom in shipping potatoes therefrom, from his own experience and his observation of the practice of others for three years, as well as one who has lived on the island for ten years, raising and selling potatoes during that time, is competent to testify to such custom." On the question of the meaning of the term "merchantable measurement" of lumber, evidence of those who buy and manufacture, as well as those who buy and sell lumber, may be received. ■'° But a witness who knows of a custom in but two cities in the country is not competent to testify as to a general custom throughout the United States.*^ § 1798. Number of witnesses required to establish custom. It seems to be well settled that a usage or custom may be estab- lished by the testimony of one witness, where it appears that he has full knowledge and long experience on the subject about which he speaks, and testifies explicitly to the duration and uni- versality of the usage, and is not contradicted.*** But it seems that the witness must not be contradicted. "All the courts agree that, if the testimony of the one witness in support of a custom be contradicted by others, the custom cannot be held established. It is reasonable to presume that if such general usage exist as is essential to show a custom in a particular branch of business, that every one engaged in such business should know it ; and hence, if the fact be called in question, more than one witness could be brought to support it."" The witness must testify to a general custom. Proof of the custom of the witness alone is not " Nelson v. Wood, 62 Ala. 175. v. Quinbv, 206 Mass. 259, 92 N. E. « Holmes v. Whitaker, 23 Ore. 319, 451 ; Jones v. Hoey, 128 Mass. 585 ; 31 Pac 705 Vail v. Rice, 5 N. Y. 155 ; Southwest " Gaunt V. Pries, 21 Mo. App. 540. Va. &c. Land Co. v. Chase. 95 Va. "Edwards v. Davidson (Tex.), 79 50, 27 S. E. 826; Robinson v. United S. W. 48. States. 13 Wall. (U. S.) 363, 20 L. ed. ^ Jones V. Ilerrick, 141 Iowa 615, 653. 118 N. W 444. See also, Marston v. "Wootters v. Kaufifman, 61 Tex. Bank of Mobile, 10 Ala. 284; Part- 488,3 S. W. 465. ridge v. Forsvth. 29 Ala. 200; Barrie § 1799 CONTRACTS. 1 1 34 sufficient.^" In other words the evidence of the custom of one person is not sufficient to establish a general course of trade. ^^ Thus it was held that a custom was not established by the testi- mony of an insurance broker as to the authority of agents in a certain locality to make binding preliminary contracts where his testimony was based wholly on the practice of his own office." A particular custom that one who undertakes to dig a well is not entitled to compensation unless a reasonably sufficient supply of water is obtained has been held not established by the testimony of two persons that they follow such custom in their own busi- ness.^^ Similarly, proof was held insufficient where the evidence offered to prove the existence of a particular custom consisted in the testimony of only four persons who testified merely as to what their practice was respecting the matter in question.^* Whether the general knowledge of the witness is such as to qual- ify him to give testimony as to a common usage or custom is a preliminary inquiry to be decided by the trial judge.^^ § 1799. Parol proof of usage or custom. — It is well settled that a usage or custom may be proved by parol to explain the meaning of terms in a written contract that would otherwise be ambiguous,'*' and the authorities go to the extent- of allowing such evidence in a proper case to explain rather than to contra- dict in cases where there is no ambiguity upon the face of the instrument." This evidence is admissible to aid the court in in- ^ Sloss-Sheffield Steel & Iron Co. v. Hartman, 126 Ind. 177, 25 N E. V Smith (Ala.), 40 So. 91; Jewell v. 901; Lyon v. Lenon, 106 Ind 567 7 Center 25 Ala. 498; Greenwich Ins. N. E. 311; Leiter v. Emons 20 Ind. Co. V.' Waterman, 54 Fed. 839, 4 C. App. 22, 50 N E 40; Packard v. C A. 600; Jones v. Herrick, 141 Iowa Van Schoick, 58 HI. 79; Randall v. 615 118 N W 444- Parrott v. Kehlor, 60 Mame 2,1, 11 Am. Kep. Thacher, 9 Pick. '(Mass.) 426. 169; Drake v. Hudson, 7 Har & y "Burr V Sickles, 17 Ark. 428, 65 (Md.) 399; Williams v. Woods, 16 Am Dec 437 Md. 220; Murray v. Hatch. 6 Mass. "^Greenwich Ins. Co. v. Waterman, 465; Walls v. Bailey, 49 N. Y. 464, 54 Fed 839 4 C. C. A. 600. 10 Am. Rep. 407; Long v. Davidson, ^^Lemke v Hage, 142 Wis. 178, 125 101 N. Car. 170, 7 S. E. 758; Blythe N W 440, 135 Am. St. 1066. v. Richards. 10 Serg. & R. (Pa.) 261. "Anewalt v. Hummel, 109 Pa. St. 13 Am. Dec. 672 ; Livingston v 271. See also, Hibbard v. Peek, 75 Maryland Ins. Co., 11 U. S. 506, 3 Wis 619 44 N W 641. L. ed. 421. "Barrie v Quinby, 206 Mass. 259, " Brown v. Byrne, 3 El. & Bl. 703. 92 N E 451 77 E. C. L. 703 ; Myers v. Sari, 3 El. ^'Hinote v Brigman, 44 Fla. 589, & El. 306; Smith v. Wilson, 3 B. & 33 So 303 ; Van Camp Packing Co. Ad. 728 ; Regina v. Stoke-upon-Trent, II35 CUSTOMS AND USAGES. 1799 terpreting the contract,^^ and in a proper case it may be admitted even to annex incidents or stipulations as to tlie time or manner of performance not expressed in the writing,"^" or to give words used therein a different meaning from that commonly attributed to them.**" But, while parol evidence is generally competent to show a custom or usage of the business, profession, or trade, when it is shown to the parties or is so general and well settled that it must be presumed to have been known to them and they must be deemed to have contracted with reference thereto,"^ the rule is otherwise where one of the parties is not familiar with 5 Q. B. 303 ; Grant v. Aladdox. 15 M. 6 W. Til ; Mooney v. Howard Ins. Co., 138 Mass. 375, 52 Am. Rep. 277; Soulier v. Kellerman, 18 Ato. 509; Barton V. McKelvvay, 22 N. J. L. 165; Walls V. Bailey. 49 N. Y. 464, 10 Am. Rep. 407; Hinton v. Locke, 5 Hill (N. Y.) 437. " Everitt V. Indiana Paper Co., 25 Ind. App. 287, 57 N. E. 281 ; Cox v. O'Riley, 4 Ind. 368, 58 Am. Dec. 633; Shaw V. Binkard. 10 Ind. 227. "Price V. Mouat, 11 C. B. (N. S.) 508; Hutton.v. Warren. 1 M. & W. 466, 474; VVigglesworOi v. Dallison, 1 Dour. 201. 1 Smith Lead. Cas. (11th ed.) 545; East Tennessee, V. & G. R. Co. v. Johnston, 75 Ala. 596. '51 Am. Rep. 489; Evermgnam v. Lord, 19 111. App. 565 ; Afand v. Trail, 92 Ind. 521, 47 Am. Rep. 163; Pittsburg. C. & St. L. R. Co. V. Nash, 43 Ind. 423 ; Hirschhorn v. Bradlev, 117 Iowa 130, 90 N. W. 592; Thompson v. Brannm, 94 Ky. 490, 15 Kv. L. 36, 21 S. W. 1057; Patterson v. Crowther 70 Md. 124, 16 Atl. 531 ; Jones v. Hoev, 128 Mass. 585; Merick v. McXally, 26 Mich. 374; Merchant v. Howell 53 Minn. 295. 55 N. W. 131; Soutier V. Kellerman. 18 Mo. 509; Walls v. Bailev. 49 N. Y. 464. 10 Am. Rep. 407; Newhall v. Appleton, 114 N. Y. 140, 21 N. E. 105, 3 L. R. A. 859; Hagan v. Domestic Sewing Machine Co., 9 Hun (N. Y.) 12,; Lowe v. Lehman. 15 Ohio St. 179; Robinson V. United States, 13 Wall. (U. S.) 363. 20 L. ed. 653 (evidence admitted of usage to deliver grain in sacks) ; Humphreysville Copper Co. v. Ver- mont Copper Min. Co.. 2)2> Vt. 92; Gehl V. Milwaukee Produce Co., 116 Wis. 263, 93 N. W. 26. In the ab- sence of any express agreement as to the amount or time of payment for work contracted to be done, parol evi- dence is admissible to show a certain usage of the business and of the lo- cality, known to the parties, or so general and well settled as to raise the presumption that the parties dealt with reference to the usage, and with a tacit understanding that their rights and responsibilities should be deter- mined therebv. Anderson v. Lewis, 64 W. Va. 297, 61 S. E. 160. But see Kendall v. Russell, 5 Dana (Ky.) 501, 30 Am. Dec. 696; Sweeney v. Thomason, 9 Lea. (Tenn.) 359, 42 Am. Rep. 676. '^'Moonev v. Howard Ins. Co., 138 Mass. 375, '52 Am. Rep. 277. See also, Brown v. Bvrne, 3 El. & Bl. 703, 11 E. C. L. 703; Spartali v. Benccke, 10 C. B. 212; Mornihgstar v. Cunning- ham, 110 Ind. 328, 11 \. E. 593, 59 Am. Rep. 211; Van Camp Packing Co. v. Hartman, 126 Ind. \11 , 25 X. E. 901 ; Jaqua v. Witham &c. Co., 106 Ind. 545, 7 N. E. 314; Marrett v. Brackett, 60 Maine 524; Grinnel v. Western Union Tel. Co.. 113 Mass. 299; Warren Bank v. Parker, 8 Gray (Mass.) 221; Southwestern Freight & Cotton Press Co. v. Stanard, 44 Mo. 71, 100 Am. Dec. 255; Fabrri v. Phoenix Ins. Co.. 55 N. Y. 129; Car- ter v. Philadelphia Coal Co., 11 Pa. St. 286. •'Humfrev v. Dale. 7 El. & Bl. 266; Corbett v. Underwood, 83 111. 324. 25 Am. Rep. 392; Lupton v. Nichols. 28 Ind. App. 539, 63 X. E. 477; Howe v. Hardv. 106 Mass. 329; Baxter v. Mas- sasoit Ins. Co., 13 Allen (Mass.) 330; § 1799 CONTRACTS. II36 the usage and it is not of such a general or well-known character that the parties will be presumed to have known it and deemed to have contracted with reference to it.®- Neither is parol evidence admissible to prove a custom or usage that contradicts the written contract and varies its express terms,*^^ nor if the usage or custom is unreasonable,*'* nor if it is in conflict with a sound and well- settled rule of law.'^^ Chief Justice Marshall says, *'The usage may be proved by parol, and the effect of the usage remains the same whether it originated in an edict, or in instructions giren by the government to its officers."*"' But parol evidence is not admissible to show that a usage was different, at the time, from Robertson v. National Steamship Co., 139 N. Y. 416, 34 N. E. 1053; Mc- Pherson v. Cox, 86 N. Y. 472; Es- terly v. Cole, 3 N. Y. 502; Girard Life Ins. Co. v. Mut. Life Ins. Co. of N. Y., 86 Pa. St. 236. "^Kirchner v. Venus. 12 Moo. P^ C. 361; Isaksson v. Williams, 26 Fed. 642 ; Great Western Elevator Co. v. White, 118 Fed. 406, 56 C. C. A. 388; Ocean Steamship Co. v. /Etna Ins. Co., 121 Fed. 882; Byrne v. Massasoit Packing Co., 137 Mass. 313; Sawtelle V. Drew, 122 Mass. 228; Van Hoesen V. Cameron, 54 Mich. 609, 20 N. W. 609; Pennell v. Delta Transp. Co., 94 Mich. 247, 53 N. W. 1049; Keavy v. Thuett, 47 Minn. 266, 50 N. W. 126; Brown v. Strimple, 21 Mo. App. 338; Long Bros. v. Armsby Co., 43 Mo. App. 253; Martin v. Maynard, 16 N. rl. 165; Harris v. Tumbridge, 83 N. Y. 92, 38 Am. Rep. 398; Insurance Co. of North America v. Hibernia Ins. Co., 140 U. S. 565, 35 L. ed. 517, 11 Sup. Ct. 909; Chateaugay Ore & Iron Co. V. Blake, 144 U. S. 476 36 L. ed. 510, 12 Sup. Ct. 731 ; Consum- ers' Ice Co. V. Jennings, 100 Va. 719, 42 S. E. 879. But compare Fleet v. Murton, L. R. 7 Q. B. 126. ^'Lonergan v. Courtney, 75 111. 580; Spears v. Ward. 48 Ind. 541 ; Seavey V. Shurick, 110 Ind. 494. 11 N. E. 597; Scott v. Hartley. 126 Ind. 239, 25 N. E. 826; "Louisville & C. Packet Co. V. Rogers. 20 Ind. App. 594, 49 N. E. 970; Brown v. Faster. 113 Mass. 136, 18 Am. Rep. 463; Benson v. Gray, 154 Mass. 391, 28 N. E. 275, 13 L. R. A. 262; Detroit Adverti.ser V. Detroit, 43 Mich. 116, 5 N. W. 12\ Collender v. Dinsmore, 55 N. Y. 200, 14 Am. Rep. 224; Deacon v. Matti- son, 11 N. Dak. 190, 91 N. W. 35; The Delaware, 14 Wall. (U. S.) 579, 20 L. ed. 779 ; National Bank v. Burk- hardt, 100 U. S. 686, 25 L. ed. 766; Partridge v. Phoenix Mut. Life Ins. Co., 15 Wall. (U. S.) 573, 21 L. ed. 229; Barnard v. Kellogg, 10 Wall. (U. S.) 383, 19 L. ed. 987. •"Anderson v. Whitaker, 97 Ala. 690, 11 So. 919; Cook v. Hawkins, 54 Ark. 423, 16 S. W. 8; Gallatin v. Bradford. 1 Bibb. (Ky.) 209; Has- kins V. Warren, 115 Mass. 514; Mer- chants' Ins. Co. V. Prince, 50 Minn. 53, 52 N. W. 131, 36 Am. St. 626. •="Sohn V. Jervis. 101 Ind. 578, 1 N. E. IZ ; Cox V. O'Riley, 4 Ind. 368, 58 Am. Dec. 633 ; Wheeler v. Newbould, 16 N. Y. 392; Hopper v. Sage, 112 N Y. 530, 20 N. E. 350. 8 Am. St. IIX. See also. Raisin v. Clark, A) Md. 158, 20 Am. Rep. 66; Eager v. Atfas Ins. Qo., 14 Pick. (Mass.) 141, 25 Am. Dec. 363 ; Koppitz &c. Brewing Co. v. Behm, 130 Mich. 649. 90 N. W. 676; Walters v. Senf, 115 Mo. 524, 22 S. W. 511; Dunham v. Gould. 16 Johns. (N. Y.) 367, 8 Am. Dec. 323; Ingle- bright v. Hammond, 19 Ohio Zltl . 53 Am, Dec. 430; Barnard v. Kellngg, 10 Wall. rU. S.) 383. 19 L. ed. 987. See also. Noble v. Durell. 3 T. R. 271; Edie V. East India Co., 1 W. Bl. 295, 2 Burr.^ 1216. ^Livingston v. Maryland Ins. Co., 11 U. S. 506, 3 L. ed. 421. I 137 CUSTOMS AND USAGES. § 180O what the courts have solemnly adjudged it to be. It is admissible, however, to show that the usage was thereafter changed."^ § 1800. Custom or usage not established by proof of iso- lated instances. — A custom or usage cannot be established by proof of isolated instances of its application."® These in- stances, however, may be so numerous as to establish the custom or usage. "A custom or usage of trade that is the habit of a body of persons can be established by specific instances, provided they are sufficiently numerous to indicate a fairly regular course of business, where they occur under similar circumstances."*^" Accordingly, it has been held that evidence of the omission of a benefit society to forfeit certificates for failure to pay dues, in a few instances, was not sufficient to show an established custom of the association not to declare forfeitures for failure to pay dues.'" Furthermore,, the proof of this character though not competent otherwise to show the existence of the custom may be competent as tending to show knowledge of the custom by the party sought to be charged with the same." Neither is a custom to be estab- lished by the mere opinion of witnesses that such a custom or us- age exists.'- Where it is sought to charge one with an infallible habit in his business, he may rebut this evidence by evidence of specific instances where the custom was not observed.'^ Although the existence of a usage may be established by the uncontradicted testimony of one witness, when he is explicit as to its duration, certainty and notoriety, the testimony of an insurance broker as '" Cookendorfer v. Preston, 4 How. Wis. 178, 125 N. W. 440, 135 Am. St. (U. S.) 317, 11 L. ed. 992. 1066. ■"Herring v. Skaggs, 73 Ala. 446; '^Broussard v. South Tex. Rice Co. Burr V. Sickles. 17 Ark. 428, 65 Am. (Tex. Civ. App.), 120 S. W. 587. See Dec. 437; Willcuts v. Northwestern also. Bardsley v. Gill, 218 Pa. 56, 66 Rlut. Life Ins. Co.. 81 Ind. 300; Du- Atl. 1112. vail V. Farmers' Bank, 9 Gill. & J. '" Illinois Masons' Benev. Soc. v. (Md.) 31 ; Flatt v. Osborne, 33 ^linn. Baldwin, 86 111. 479. 98, 22 N. W. 440; Runvan v. Central ""Off v. Inderrieden Co., 74 111. R. Co., 64 N. J. L. 67, 44 Atl. 985, App. 105. 48 L.-R. A. 744; First Nat. Bank v. "See § 1799; Ilavward v. Middle- Minncapohs" &c. Elevator Co.. 11 N. ton, 3 McCord (S. Car.) 121, 15 Am. Dak. 280, 91 N. W. 436; Cope v. Dec. 615: Williams v. Ninemirc. 23 Dodd, 13 Pa. St. 33; Nichols v. De Wash. 393. 63 Pac. 534. Wolf. 1 R. I. 277: Garrison v. Mem- " Parrntt v. .^tlnntic 8: N C R Co phis Ins. Co.. 19 How. (U. S.) 312. 140 N. Car. 546, 53 S. E. 432. 15 L. ed. 656; Lemke v. Hage, 142 72 — CoNTR.\CTS, Vol. 2 § ISOI CONTRACTS. II38 to the authority of agents in a certain locality to make binding preliminary contracts, which is based wholly on the practice of his own office, is not sufficient to go to the jury."'' It has also been held that the rules of the chamber of commerce established for the purpose of maintaining uniformity in commercial usages of the place are admissible to show the existence or nonexistence of a particular usage in that place.'^^ § 1801. Evidence of knowledge of custom or usage. — Wliere a custom is set up to qualify a contract, it must be shown that the custom was known to the party sought to be charged with it or that it was of such well-known character as to warrant an inference that he knew the custom or usage.'^® A party may be charged with knowledge of a custom where it is shown that he was in the habit of dealing in accordance with such custom.'^ Where a party seeks to set up a general custom, knowledge of which would be presumed, it is competent for the opposite party to show that neither he nor other persons residing in the vicinity ever heard of the alleged custom and that there was no such gen- eral custom in the region." Knowledge, of coAirse need not be "Black V. Aslilev, 80 IMich. 90, 44 Thayer v. Smoky Hollow Coal Co., N. W 1120; Reynolds v. Continental 121 Iowa 121, 96 N. W. 718; Cald- Ins. Co., 36 M'ich. 131; Schurr v. well v. Dawson, 4 Mete. (Kv.) 121: Savignv, 85 Mich. 144, 48 N. W. 547; Norton v. University of Maine, 106 Stringfield v. Vivian, 63 Mich. 681, Maine 436, 76 Atl. 912; Bourbonnais 30 N W. 346; Lamb v. Henderson, v. West Boylston Mfg. Co., 184 Mass. 63 Mich. 302, 29 N. W. 732; Ricker- 250, 68 N. E. 232; Collins v. New son V. Hartford Fire Tns. Co.. 149 England Iron Co., 115 Mass. 23; N. Y. 307. 43 N. E. 856; Southwest Shields v. Kansas City Suburban Virginia Mineral Co. v. Chase, 95 Belt R. Co., 87 Mo. App. 62,7; Cam- Va 50, 27 S. E. 826; Bowling V. Har- eron v. McNair, 76 Mo. App. 366; rison, 6 How. (U. S.) 248, 12 L. ed. Silliman v. Whitmer, 11 Pa. Super. 425- United States v. Buchanan. 8 Ct. 243; Godcharles v. Wigeman, 113 How. (U. S.) 83, 12 L. ed. 997; Pa. St. 431, 6 Atl. 354; Standard Greenwich Fire Ins Co. v. Water- Paint Co. v. San Antonio Flardw. Co. man, 54 Fed. 839, 4 C. C. A. 600: (Tex. Civ. App.), 136 S. W. 1150; "'it is well settled that a usage or Scott v. Whitney, 41 Wis. 504. custom, to affect the construction of " Rastetter v. Reynolds, 160 Ind. contracts, or to extend the apparent 133, 66 N. E. 612; Warren Bank v. authority of agents beyond their ac- Parker, 8 Gray (Mass.) 221; Dodge tual authority, must be uniform, no- v. Favor, 15 Gray (Mass.) 82. See tofious and well defined." also. Stern v. Simons, 77 Conn. 150, "Kershaw v. Wright, 115 Mass. 58 Atl. 696. 361 '* Prigg V. Preston. 28 Pa. Super. '*Chilberg v. Lvng, 128 Fed. 899, Ct. 272. See also. Walls v. Bailey, 49 63 C C A 451 ;' Rastetter v. Rev- N. Y. 464, 10 Am. Rep. 407. nolds, 160 ind. 133, 66 N. E. 612; 1 139 CUSTOMS AND USAGES. § l802 proved where the custom is so widely accepted that law will impute such knowledge to all parties in the trade/® Neither is it necessary to siiow how long a usage is continued if it is other- wise shown to have been known to the parties.*"* Tiiere is no pre- sumption, ordinarily, that one living outside of the state has knowledge of local customs within the state. His knowledge of such custom must be proved.®^ § 1802. Evidence of custom of prompt payment or collec- tion. — It is not evidence of payment that the party from whom it is sought to recover payment was a prompt and punc- tual* man in the payment of his debts.®- This evidence is some- times admitted, however, to show the ability of the party to pay his debts.®^ In one of the cases, it is held that the character of the creditor for promptness in the collection of his debts may be given in evidence as a circumstance to show that a debt has been paid, where the question arose after a long lapse of time.^''* In an action for goods sold, it has been held that the plaintiff may show by his bookkeeper, in corroboration of his own testimony, that the debt has not been paid, his usage in regard to his system of entry in his books, when checks and money have been received, and that the books fail to show any evidence of payment.^^ § 1803. The South Carolina rule as to evidence of custom to vary contract. — The South Carolina rule is that evidence of custom and usage is not admissible to explain or vary the terms of an express contract, whether written or verbal, unambigu- ous in its terms, unless to show the meaning of certain terms used in such contract, which, by well-established custom or long usage, have acquired a meaning different from that which they primarily '"Tliaver v. Smokv Hollow Coal don, 8 Allen (Mass.) 532; Doak v. Co.. 12riowa 121, 96 "N. W. 718; Pat- Curry, 4 Pitts. Leg. J. (O. S.) (Pa.) terson v. Crowther, 70 Md. 124, 16 829; Strong v. Slicer. 35 Vt. 40. See Atl. 531 ; Tower Co. v. Southern Pac. also. Fletcher v. Dulaney, 1 Ind. Ter. Co.. 184 Mass. 472. 69 X. E. 348. 674. 43 S. W. 955. '*Lamb v. Klaus, 30 Wis. 94. "Orr v. Jason, 1 111. App. 439. "^ Gould V. Cates Chair Co.. 147 ^Leiper v*. Erwin, 5 Yerg. (Tenn.) Ala. 620. 41 So. 675; Miller v. Wig- 97. gins. 227 Pa. 564. 76 Atl. 711. » Harbison v. Hall, 124 N. Car. 626, «' Martin v. Shannon. 92 Iowa 374, 32 S. E. 964. 60 N. W. 645; Abercrombie v. Shel- i8o3 CONTRACTS. 1 140 bear, for the reason that when parties in making a contract, use terms which, by usage or custom, have acquired a certain mean- ing, they must, in the absence of any evidence to the contrary, be assumed to have used such terms in such acquired sense.^" '"Meloche v. Chicago, M..& St. P. R. Co., 116 Mich. 69, 74 N. W. 301; Goulds Mfg. Co. V. Munckenbeck, 20 App. Div. (N. Y.) 612, 47 N. Y. S. 325. In Fairly v. Wappoo Mills, 44 S. Car. 227, 22 S. E. 108, 29 L. R. A. 215, the court reviews some of the decisions as follows: "In Globe Milling Co. V. Minneapolis Ele- vator Co., 44 Minn. 153, 46 N. W. 306, the question was whether the title to certain grain sold vested in the vendee. By the terms of the con- tract of sale the grain was sold for 'cash on delivery,' which had not been complied with; but vendee sought to sustain his claim by proof of a custom prevailing in that local- ity, whereby the title was regarded as having passed when certain things were done, whatever might be the terms of the sale agreed upon by the parties. But the court said: 'A local usage cannot be proved to contradict a contract. * * * If, by the contract of sale of this wheat, it was for cash on delivery, the usage cannot make it a sale on a credit.' In Page v. Cole, 120 Mass. 2)1, the action was to re- cover damages for the breach of a contract for the sale of a 'milk-route,' and evidence as to the meaning and effect which that term had acquired by usage prevailing in that locality was held competent. In Walls v. Bai- ley, 49 N. Y. 464, the action was to recover the amount due plaintiff for plastering which he had contracted to do at so much per square yard, and it was held competent to prove that the custom was to measure the open- ings for windows, and doors, as well as the solid walls. In that case it was said that: 'Every legal contract is to be interpreted m accordance with the intention of the parties; and usage, when it is reasonable, uniform, and well settled, not in opposition to fixed rules of law, not in contradic- tion to the express terms of the con- tract, is deemed to form a part of the contract, and to enter into the inte', 49' N. Y. 464, to the contrary, on the familiar prin- 10 Am. Rep. 407, a case reviewing ciple that custom cannot be shown Barnard v. Kellogg, 10 Wall. (U. S.) wlien it contravenes the law. The 383, 19 L. ed. 987; and Dodge v. evidence must not be of opinions, as Favor, 15 Gray, (Mass.) 82. See in Shackelford v. New Orleans &c. to the same effect, Sampson v. Gaz- Co., 37 Miss. 202, where the general zam, 6 Port. (Ala.) 123, 30 Am. Dec. doctrine is recognized and approved, 578, where the court says : "Where a in the court's statement, of the custom or usage is proved to exist, 'foundation of this whole doctrine in relation to a particular trade or of custom and usage.' and in which pursuit, if it be general, all persons case the mode of showing knowledge engaged therein are presumed to con- is not passed on except as to opin- tract in reference to such usage." See ions. In Dodge v. Favor, 15 Gray also. Andrews v. Roach, 3 Ala. 590, (Mass.) 82. it is stated (page 83) 37 Am. Dec. 718; Mooney v. Howard that 'they did not offer to prove bv Ins. Co.. 138 Mass. 375, 52 Am. Rep. direct testimony, that the plaintiff 277; Currie v. Syndicate Dcs Culti- knew of this custom, but contended vators &c., 104 111. .\pp. 165; Runyan that they could satisfy the jury on V. Central R. Co., 64 N. J. L. 67, 44 the evidence in the case that he did Atl. 985. 48 L. R. A. 744; and the know of it.' This was allowed. It authorities in note to Smith v. went to the jurv. Clews, 114 X. Y. 190, 21 N. E. 160, "Booth &c. Granite Co. v. Baird. 4 L. R. A. 392, 11 Am. St. 627; 87 Hun (N. Y.) 4,=^2. 68 N. Y. St. Scott V. Brown. 29 Misc. (N. Y.) 324, 34 N. Y. S. 392. 320, 60 N. Y. S. 511. In Barnard v. l8o^ CONTRACTS. 1 144 his compensation from the patient, it not being shown that the custom was known to him or so general that knowledge and adoption of it might be presumed. °° But in an action on a con- tract for the manufacture of candy boxes, evidence is admissible as to the mode in which such boxes are made and printed in the candy trade, in the absence of a special direction as to the mode of printing."^ ■^Fitzgerald v. Hanson, 16 Mont. Spain in sales of iron ore to fix a 474, 41 Pac. 230. standard of 50 per cent, witli a slid- " Gair V. Auerbach, 13 Misc. ing scale, and that the purchaser (N. Y.) 264, 67 N. Y. St. 859, 34 was obliged to receive the ore if it N. Y. S. 3. In Guillon v. Earnshaw, did not go below 45 or 46 per cent. 169 Pa. St. 463, 32 Atl. 545, it was And see Carey v. Bright, 58 Pa. St. held to be error to reject evidence 70. offered to plaintiff of a custom in CHAPTER XXXIX. TRADE CONTRACTS. § 1810. Introductory. 1811. Construction of particular terms in contracts of sale, barter or exchange gener- ally. 1812. Abbreviations generally. 1813. "Sales on credit" — "Time sales." 1814. "Cash sale" — "Terms cash." 1815. "Cost" — "Actual^ cost"— "Wholesale cost." 1816. "More or less" in sales of personalty. 1817. "More or less" in descriptions of land. 1818. "About"— "Almost." 1819. "Say" and "say about." 1820. Terms relating t o time, "year," "month," "week," "day," "Sunday." 1821. "From and after" — "On"— "Or before" — "On or about" — "Since." 1822. "Until" — "By" — "Forthwith" — "Immediate" — "Present- ly" — "At once." 1823. Sale on trial. 1824. Interest with respect to transfer of property right — "Interest in land" — "As in- terest mav appear." 1825. "C. O. D." "and "F. 0. B." 1826. "Carloads." 1827. "On sale and return." 1828. "Satisfactory." 1829. "For collection." 1830. "Dollar"— "Greenbacks." 1831. "Supplies." 1832. "Regrating" and "Forestall- ing." 1833. "Stock in trade." 1834. Terms used in grain and lum- ber contracts. 1835. "Strike" clauses. 1836. "Extra" in building contract. 1837. "Agency," "agent," "sub- agent," "attorney in fact." 1838. Construction of conditions and warranties. 1839. Terms relating to position, "near," "abutting," "ad- jacent," "contiguous," "on," "meander line." 1840. "Guaranty," "unlimited guar- anty," "primarily liable," "secondarily liable," "sure- ty." 1841. Terms used in dealing with real estate. 1842. "Real estate," "vested es- tate." "perpetuity," "ap- purtenant." 1843. "Conditional estates," "condi- tions" in deeds, "defeas- ances," "vendor's lien." 1844. "Lease" or "license," "sub- tenant." 1845. "All crops grown and to be grown." 1846. ^Miscellaneous terms. § 1810. Introductory. — The general principles of the law of contracts in their application to trade contracts have already been sufficiently set out and it is not intended in this chapter to restate these principles. It is the purpose here to apply those principles, or show how they have been applied, in ascertaining the meaning of certain words and clauses of wide use in sucli contracts. 1 145 .§ iSlI CONTRACTS. I 1 46 § 1811. Construction of particular terms in contracts of cale, barter or exchange generally. — A "sale" is the transfer of tlie absohite or general property in a thing for money or in a wide sense it may be anything of value.^ The word usually implies or imports a money consideration.- A "conditional sale" is a sale in which the transfer of title in the thing sold to the purchaser, or his retention of it is made to depend upon the performance of some condition.^ A "consideration" is defined as any benefit to the promisor, or any loss, trouble or inconvenience to or charge upon the person to wdiom the promise is made. It is that which the party to whom a promise is made, does or agrees to do in exchange for the promise."* The word may mean either "price" or "motive", though consideration is usually a different thing from mere motive.^ "Performance" means the doing or com- pleting of an act.*" The w^ord "approve" means to sanction official- ly ; to ratify ; to confirm,' and is often synonymous with "ratify".^ The words "on approval" have a well-understood meaning in the diamond trade and as ordinarily interpreted are neither incon- sistent with an authority "to show" or an obligation "to return on demand."'^ The word "delivered" in a contract of sale has been held to mean or imply a transfer sufficient to give the seller an action for goods sold and delivered or, at least, a complete voluntary transfer of the possession of goods from one to an- ^Roberson v. State, 100 Ala. Zl , 85 N. W. 635; Ayres v. Chicago &c. 14 So. 554; Vincent v. Walker, 93 R. Co., 52 Iowa 478, 3 N. W. 522; Ala 165 9 So. 382; Cain v. Ligon, Chicora Fertilizer Co. v. Dunan, 91 71 Ga. 692, 51 Am. Rep. 281 ; Bar- Md. 144, 46 Atl. 347, 50 L. R. A row V Window 71 111. 214; Micks 401; St. Marks Church v. feed, 120 V. Stevenson, 22 Ind. App. 475, 51 N. Y. 583, 24 N. E. 1014; Phoenix N E 492; Albemarle Lumber Co. v. Mut. Life Ins. Co. v. Raddin, 120 Wilcox, 105 N. Car. 34. 10 S. E. U. S. 183, 30 L. ed. 644, 7 Sup. Ct. 871- Ott V. Sweatman, 166 Pa. St. 500; Ballard v. Burton. 64 Vt. 387, 217;' Iowa v. McFarland, 110 U. S. 24 Atl. 769, 16 L. R. A 664. 471 28 L. ed. 198, 4 Sup. Ct. 210; 'State v. Pirkey, 22 S. Dak. 550, Butler V. Thompson, 92 U. S. 412, 118 N. W. 1042. ,^ , ^ , 23 L ed 684; Ross v. Portland Cof- " Knudtson v. Robinson, 18 N. Dak. fee & Spice Co., 30 Wash. 647, 71 12. 118 N. W. 1051. Pac 184- Cone v. Ivinson, 4 Wyo. ''Long v. Needham, o7 Mont. 408, 203,' 33 P'ac. 31, 35 Pac. 933. 96 Pac. 731. == Alcorn v Gieseke, 158 Cal. 410, « Baker v. Hammett, 23 Okla. 480, 111 Pac 98 100 Pac. 1114. ^Poirier Mfg. Co. v. Kitts, 18 N. "Smith v^ Clews 114 N^ Y 190, Dak 556, 120 N. W. 558. 21 N. E. 160, 4 L. R. A. 392, 11 Am. * Eastman v. Miller, 113 Iowa 404, St. 627. I 147 TRADE CONTRACTS. § 181I Other/** A contract for the sale of goods for dehvery "at the specified dates" which are set out requires dehvery on these dates and the buyer caniKji l)c compelled to accept the goods at a later date.^^ "Earnest" under the civil law is a sum of money which one of the contracting parties delivers to the other at the time of the contract, and is presumed to be a forfeit in the absence of evidence that tlie parties intended to bind themselves then and there by an irrevocable contract.'" The word "assume" in a con- tract for the exchange of property in which the party assumes incumbrance means that the party assuming the incumbrance shall pay the incumbrance when it is due.^^ The word "merchantable" describes the grade or quality of the thing sold and is determined by experts with approximate certainty.^* The word is practically synonymous with the word "marketable."^^ By "value," in com- mon parlance, is meant "market value" which is no other than the fair value of property as between one who wants to purchase and another who desires to sell and the courts have frequently used the terms as interchangeable and both as being the equivalent of "actual value," "salable value," and in proper cases, "rental value."'"^ An agreement to purchase all the coal of a stated kind that the "purchaser may use" during a specified time has been held valid and binding upon the purchaser to take from the seller all the coal that may be needed or required in the conduct of his business during the specified time." A con- tract to sell the entire "output" of a mill for a year re- quires the seller to deliver no more than the actual pro- duction of the mill during the year although this is less than its estimated capacity.^® The words "net to us" in a telegram offering to sell a commodity at a certain price per pound mean *° Stanley v. Dryer, 70 Misc. (N. thincfs which merchants sell. Rohlf Y.) 561. 127 X. Y. S. 468. v. Kasemeier (Iowa), 118 N. W. " Oshinskv v. Lorraine Mfg. Co., 276. 187 Fed. 120, 109 C. C. A. 38. "Eaton v. Blackburn, 49 Ore. 22, '^Legier v. Braughn, 123 La. 463, 88 Pac. 303. 49 So. 22. "Iletland v. Bilstad, 140 Iowa 411, "Olsen V. Sortedahl (Iowa), 121 118 N. W. 422. N. W. 559. '• Golden Cycle Min. Co. v. Rap- "Lee Lumber Co. v. Hotard, 122 son Min. Co., 188 Fed. 179, 112 C. La. 850. 48 So. 286. 129 Am. St. 368. C. A. 95. The word "merchandise" in anti- " Burt v. Garden Citv Sand Co., trust statute refers primarily to those 237 111. 473, 86 N. E. 1055. § I Si 2 CONTRACTS. 1 1 48 the amount specified free from all charges and dediictions.^^ The term "quick assets" is used to distinguish liquid assets from those permanently invested in the business like real estate and ma- chinery.-" § 1812. Abbreviations generally. — Abbreviations are largely used in contracts and there is no impropriety in their use where they have a well-understood meaning or the meaning can be de- rived from the context. In the case of meaningless abbrevia- tions, the rule is that, where a complete contract is expressed without the abbreviation employed therein, a meaningless abbre- viation may be disregarded as surplusage.^^ § 1813. "Sales on credit"— "Time sales."— The term "sales on credit" has the popular meaning and requires that the price be agreed upon as well as the time and likewise the time at which the payment shall be made. There is not such a sale where no time was given for the payment of the price, or leave given to take the property away without payment." The word "sell" as used in an assignment for the benefit of creditors authorizes a sale on credit.'^ § 1814. "Cash sale"— "Terms cash."— A "cash sale" is a Sale for the money in hand and the owner is not bound to deliver the goods until the price is paid.^* The expression "terms cash" excludes all idea of credit,^^ but it may be shown to have a differ- ent meaning, as, for example, a cash payment after the expiration of a given time.^" §1815. "Cost"— "Actual cost"— "Wholesale cost."— The term "cost" is equivocal, particularly where the term is applied to the production of a commodity. "Even in the simpler appli- " Floral Creamery Co. v. Dillon, 83 30 Pac. 1064 ; Steward v. Scudder, Conn. 65, 75 Atl. 82. 24 N. J. L. 96; Philadelphia & R. R. ^"In re American Knit Goods Mfg. Co. v. Lehigh Coal & Nav. Co., 36 Co.. 173 Fed. 480, 97 C C. A. 486. Pa. 204; Austin v. Welch, 31 Tex. ^ Berry v. Kowalsky, 95 Cal. 134, Civ. App. 526, 12 S. W. 881 ; Hall v. 30 Pac. 202, 29 Am. St. 101. Storrs, 7 Wis. 253. " Riley v. Wheeler, 42 Vt. 528. "^ Lawder & Sons Co. v. Mackie ^Keep V. Sanderson, 2 Wis. 42, 60 Grocery Co., 97 Md. 1, 54 Atl. 634, Am. Dec. 404. 62 L. R. A. 795n. " Dazet V. Landry, 21 Nev. 291, "^ George v. Joy, 19 N. H. 544. I 149 TRADE CONTRACTS. § 181G cation" says one of the courts, "to mere bargain and sale of a thing already in existence, and not to be manufactured, the term is ambiguous, and so much so that it is not impossible that often it will be found to avoid the contract for incurable uncertainty."" Like difficulty is encountered in connection with the meaning of the term "actual cost." It would seem a matter of ordinary prudence in contracts involving these terms that the parties clearly indicate the elements that are to enter into the computation of the items of cost.^^ Says the court in one of the recent cases, "The term, 'wholesale cost,' is not free from ob- scurity, and is to some extent ambiguous, making it necessary to look to the surrounding circumstances to determine what it really means as used by the parties in this contract. It has generally been said in the adjudged cases that such terms as 'actual cost,' 'estimated cost,' 'first cost,' 'original cost,' 'prime cost,' and Vhole cost' are indefinite, and that surrounding circumstances must often be looked to in order to arrive at a proper interpre- tation."^' § 1816. "More or less" in sales of personalty. — The words **more or less" have a plain, ordinary, and popular signification, and are often used in contracts relating both to real and per- sonal estate. As applied to quantity, they arc to be construed as ciualifying a representation or statement of an absolute and definite amount, so that neither party to a contract can avoid it or set it aside by reason of any deficiency or surplus occasioned by no fraud or want of good faith, if there is a reasonable ap- proximation to the quantity specifically stipulated in the con- tract.^" In sales of merchandise, especially in large quantities, "' Hazelton Tripod-Boiler Co. v. v. Citizens* Street Ry. Co., 11 Fed. Citizens' St. R. Co., 72 Fed. 317. See 317; McCoy v. Hastings, 92 Iowa also, In re City of Newton, 172 585, 61 N. W. 205; Boaz v. Owens, J^Iass. 5. 51 N. E. 183. 20 Ky. L. 257, 45 S. W. 876; Herst -'Lexington & W. C. R. Co. v. v. De Coineau, 31 N. Y. Super. Ct. Fitchburg R. Co. 9 Gray (Mass.) 590; Holloway v. Frick. 149 Pa. 178, 226; Newton v. Boston & A. R. Co., 24 Atl. 201; Eagan v. Clasbcv, 5 Utah 172 Mass. 5, 51 N. E. 183. 154, 13 Pac. 430. affd. 137 U S. ^'Finn V. Culberhouse (Ark.), 150 654. 34 L. cd. 822, 11 Sup. Ct. 231. S. W. 698. citing. Goodwin v. United ""' Hackett v. State. 103 Cal. 144. States. 10 Fed. Cas. Xo. 625. 2 Wash, yj Pac. 1.S6: Chicago v. Galpin, 183 C. C. (U. S.) 493. Fed. Cas. No. 5. 554. 111. 3W, 55 N. E. 731 ; C^bot v. Win- See also, Hazelton Tripod-boiler Co. sor, 1 Allen (Mass.) 546. The plain i8i6 CONTRACTS. II5O the office and effect of the words "more or less," in connection with the specific amount which forms the subject-matter of the contract, is to cover any variation from the estimate which is Hkely to arise from differences in weight, errors in counting, diminution by shrinking or other similar causes. It is sometimes briefly expressed to be "an absolute contract for a specified quan- tity within a reasonable limit. ""'^ The term permits a limited deviation within reasonable limits in quantity.^^ What is a rea- sonable limit and a substantial compliance with such a contract, if the facts are not in dispute between the parties, is a question of law for the determination of the court.^^ It has been held that there was a material deviation where there was a deficiency of 7,000 feet in the sale of 23,000 feet of lumber;^* and where on a sale of 262 head of cattle, the count was 88 short.^'^ and obvious meaning of the expres- sion is that the parties are to run the risk of gain or loss, as there might happen to be an excess or de- ficiency in the estimated quantity. Harrison v. Talbot. 2 Dana (Ky.) 258. The words should be construed to qualify the representation of quantity in such a manner that if made in good faith neither party should be entitled to any relief on account of deficiencv or surplus. Jones V. Plater. 2 Gill. (Md.) 125, 41 Am. Dec. 408. ''Cabot V. Winsor. 1 Allen (Mass.) 546, where it was held that a shortage of five per cent, on "500 bundles, more or less, gunny bags" was not such a deficiency as to fall outside of the fair and reasonable limit of short delivery, and that by delivering of a portion of 475 bundles and a readiness to deliver the resi- due of the 475, the plaintiff proved a full compliance with tlie terms of his contract. After declaring the law in substantially the language of the text, the court continued : "In such cases, parol evidence is not admitted to show that the parties intended to buy and sell a different quantity or amount from that stated in the writ- ten agreement. On the contrary, it is held to be a contract for the sale of the quantity or amount snccified ; and the effect of the words 'more or less' is only to permit the vendor to fulfil his contract by a delivery of so much as may reasonably and fairly be held to be a compliance with the contract, after making due allowance for an excess or short de- livery arising from the usual and ordinary causes, which prevent an accurate estimate of the weight or number of the articles sold." See further, to the point that the words "more or less" do not render a con- tract prima facie void, Holland v. Rea, 48 ^lich. 218, 12 N. \V. 167 and cases there cited. ^Morris v. Levison, L R. 1 C. P. Div. 155; Cockerell v. Auconipte, 2 C. B. (N. S.) 440; Brown v. Bellows, 4 Pick. (Mass.) 179. ••'^Hackett v. State. 103 Cal. 144. .37 Pac. 156; Chicago v. Galpin, 183 111. 399, 55 N. E. 731; Kelly v. Bowker, U Gray (Mass.) 428. 71 Am. Dec. 725; Cabot v. Winsor, 1 Allen (Mass.) 546; Rea v. Holland, 48 Mich. 218, 12 X. W. 167. "Cross v. Eglin, 2 Barn. & Ad. 106; ]Moore v. Campbell. 10 Exch. 323; Bourne v. Sevmour, 16 C. B. 337; Cabot v. Winsor, 1 Allen (Mass.) 546; Pembroke Iron Co. v. Parsons, 5 Grav (Mass.) 589; Steb- bins V. Eddy, 4 Mas. (U. S.) 414, Fed. Cas. No. 13342. '*Creighton v. Comstock, 27 Ohio St. 548. ^'Tilden v. Rosenthal, 41 III. 385, 89 Am. Dec. 388. II^I TRADE CONTRACTS. I817 § 1817. "More or less" in descriptions of land. — Generally speaking, the wurds "more or less" lollowing a description of land in a deed indicates that the statement of quantity is mere matter of description and the buyer takes the risk of quantity if there is no intermixture of fraud or gross error. The expression covers small errors of surveying. The words are words of safety and precaution.^" The effect of these words was thus declared in Massachusetts : "In an agreement for the sale and purchase of land for an entire sum, either the description of the land by its boundaries, or the insertion of the words 'more or less,' or equivalent words, w^ill control a statement of the quantity of land or of the length of one of the boundary lines so that neither party may be entitled to relief on account of a deficiency or sur- plus, unless in case of so great a difference as will naturally raise the presumption of fraud or gross mistake in the very essence of the contract."^^ The w^ords are intended to cover slight and rea- °° Hodges V. Rowing, 58 Conn. 12, 18 Atl. 979, 7 L. R. A. 87; Tyler v. Anderson, 106 Ind. 185. 6 N. E. 600; Aloore v. Harmon, 142 Ind. 555, 41 N. E. 599; Caldwell v. .Aloore, 3 Dana (Ky.) 340; Young v. Craig, 2 Bibb. (Kv.) 270, 8 Cranch (U. S.) 375 note, 3 L. ed. 595 note. Libby v. Dickey, 85 Maine 362, 27 Atl. 253; Tyson v. Hardesty. 29 Aid. 305 ; Slo- thower v. Gordon, 23 Aid. 1 ; Hall v. Alavhew, 15 Aid. 551 ; Jenkins v. Bol'cnano, 53 Aid. 407 ; Blanev v. Rice, 20 Pick. (Alass.) 62, 32 Am. Dec. 204 ; AIcArthur v. Alorris. 84 N. Car. 405: Crislip V. Cain. 19 W. Va. 438. "Noble V. Googins. 99 Alass. 231, citing, Stebbins v. Eddv, 4 Alas. (U. S.) 414, Fed. Cas. No. 13342; Stull V. Hurtt, 9 Gill (Aid.) 446; Weart V. Rose, 16 N. J. Eq. 290; Alarvin v. Bennett. 8 Paige (X. Y). 312. aft'd. 26 Wend. (N. Y.) 169; Alorris Canal Co. V. Emmett. 9 Paige (N. Y.) 168. Zl Am. Dec. 388 ; Faure v. Alartin, 7 N. Y. 210. SI Am. Dec. 515; Ketchum V. Stout. 20 Obio 453. The latitude v/hich will be given by a court of equity to the words "more or less" in such cases was thoroughly dis- cus-^^ed in the light of the authorities bv Com^tock, J., in Belknap v. Sea- lev, 14 N. Y. 143. 67 Am. Dec. 120. For other cases involving the phrase "more or less" in deeds, see Harrell V. Hill, 19 Ark. 102, 68 Am. Dec. 202. Dale v. Smith, 1 Del. Ch. 1, 12 Am. Dec. 64; Alaccoun v. Delanv, 3 Bibb. (Ky.) 46, 6 Am. Dec. 635; Poague V. Allen, 3 J. J. Alarsh. (Ky.) 421; Shipp v. Swann, 2 Bibb. (Kv.) 82; Pollock v. Wilson, 3 Dana (Ky.) 25; Willi ford v. Bentlev, 5 J. J. Alarsh. (Ky.) 181; Fannin v. Bel- lomv, 5 Bush (Ky.) 663; Smallwood V. Hatton, 4 Aid. Ch. 95 ; Hoffman v. Johnson. 1 Bland (Aid.) 103; Tvson v. Hardestv, 29 Aid. 305; Blanev v. Rice, 20 Pick. (Alass.) 62, Zl Am. Dec. 204 ; Phipps v. Tarpley. 24 Aliss. 597; AlcConnell v. Bravncr, 63 AIo. 461 ; Williamson v. Hall,' 62 AIo. 405; Sullivan v. Ferguson, 40 AIo. 79; Gerrens v. Huhn. 10 Xev. 137; Couse V. Boyles, 4 X. J. Eq. 212, 38 .A.m. Dec. 514; Bradv v. Hennion. 21 N. Y. Super. Ct. ' 528; PeUit v. Shcpard. Z2 N. Y. 97; Gentrv v. Hamilton. 38 N. Car. 376; Smith v. Evans, 6 Binn. (Pa.) 102, 6 Am. Dec. 436; Baynard v. Eddings, 2 Strob. (S. Car.) 374; Peden v. Owens. Rice Eq. (S. Car.) 55; Allison v. Allison, 1 Yerg. (Tenn.) 16; Smith v. Flv. 24 Tex. 345. 76 Am. Dec. 109; United States V. D'Aguirre. 1 Wall. (U. S.) 311, 17 L. ed. 595; Thomas v. Perrv. Pet. C. C. (U. S.) 49, Fed. Cas. No i8i7 CONTRACTS. II52 sonable deficiencies or excesses of quantity.^^ The words relieve from the necessity for exactness but do not reHeve from gross deficiency.^^ The use of the words "more or less" in a con- veyance of a tract of land, containing so many acres more or less may indicate a sale in gross and not by the acre and this excludes the idea of warranty of quantity." Where metes and bounds are set forth, they govern and not the number of acres set out in the deed." The deviation has been held immaterial in cases where there was a deviation of six acres in a "more or less" convey- ance of four hundred thirty-one acres," eight acres in a convey- ance of five hundred fifty-two acres," three and one-half acres in a conveyance of one hundred acres,*'* forty acres in a conveyance of nine hundred acres.*^ In other cases, the variance was re- garded as material where there was a deficiency of twenty acres in a conveyance of one hundred thirty-five acres;**' eight and fifty-eight hundredths acres in a conveyance of two hundred acres;" four acres in a conveyance of eight acres ;*^ seventy-eight 13908; Duvals v. Ross, 2 Munf. (Va.) 290; Pendleton's Exrs. v. Stewart, 5 Call (Va.) 1. See Law- son's Concordance of Words, Phrases and Definitions, title "More or Less." A deficiency of 8 acres in a contract for 552 acres is no more than a purchaser who buys for more or less can reasonably expect. Nel- son V. Matthews. 2 Hen. & M. (Va.) 164, 3 Am. Dec. 620. ^'Touart v. Jett Contracting Co., 169 Ala. 638, 53 So. 751 ; Kitzman v. Carl. 133 Iowa 340, 110 N. W. 587; Hosleton v. Dickenson, 51 Iowa 244, 1 N. W. 550; Phipps v. Tarpley, 24 Miss. 597; Couse v. Bovles, 4 N. J. Eq. 212, 38 Am. Dec. 514; Belknap V. Sealev, 14 N. Y. 143, 67 Am. Dec. 120; Gentry v. Hamilton, 38 N. Car. 376; Dout'hit v. Hipp, 23 S. Car. 205; Smith v. Fly, 24 Tex. 345, 76 Am. Dec. 109; Duvals v. Ross, 2 Munf. (Va.) 290; Pratt v. Bowman, 37 W. Va. 715, 17 S. E. 210. ^Boggs V. Bush, 137 Ky. 95, 122 S. W. 220. '° Pollock V. Wilson, 3 Dana (Kv.) 25 ; Faure v. Martin, 7 N. Y. 210, 57 Am. Dec. 515; Wilson v. Randall, 67 N. Y. 338; Bellamy v. McCarthy, 75 Tex. 293, 12 S. W. 849 ; Franco-Tex- an Land Co. v. Simpson. 1 Tex. Civ. App. 600, 20 S. W. 953 ; Hull v. Cun- ningham's Exr., 1 Munf. (Va.) 330; Anderson v. Snyder, 21 W. Va. 632; Depue V. Sergent, 21 W. Va. 326. "Rogers v. Peebles, 72 Ala. 529; Dozier v. Duffee, 1 Ala. 320 ; Bishop V. Morgan, 82 111. 351, 25 Am. Rep. 327; Armstrong v. Brownfield, 32 Kans. 116, 4 Pac. 185; Austrian v. Dean, 23 Minn. 62 ; Mann v. Pearson, 2 Johns. (N. Y.) 37; Glen v. Glen, 4 S. & R. (Pa.) 488; Kennedy v. Bovkin, 35 S. Car. 61, 14 S. E. 809, 28 "Am. St. 838. "Young V. Craig, 2 Bibb. (Ky.) 270, 8 Cranch (U. S.) 375 note, 3 L. ed. 595 note. "Nelson v. Matthews, 2 Hen. & M. (Va.) 164, 3 Am. Dec. 620. '^Smallwood v. Hatton, 4 Md. Ch. 95. «Douthit V. Hipp, 23 S. Car. 205. *' Couse V. Bovles, 4 N. J. Eq. 212, 38 Am. Dec. 514. "P^isher v. Trumbauer (Iowa), 138 N. W. 528. '^ Belknap v. Scaley, 14 N. Y. 143, 67 Am. Dec. 120. I 153 TRADE CONTRACTS, § 1818 acres in a conveyance of one hundred eighty acres i"*" one hundred fifteen acres in a conveyance of five hundred acres ;^" one hun- dred ninety-two acres in a conveyance of eight hundred acres. "^ The words "containing by estimate" a certain number of acres in a deed describing land by metes and bounds are equivalent to the words "more or less."'" § 1818. "About"— "Almost."— The word "about" means, when used in connection with expressions of distance or number, nearly or approximately, and, when used in statements of courses or distances, it is discarded as being without significance if there are no other words necessary to retain it.^^ A contract for a herd of cattle containing; two hundred sixty-two head, "more or less," was held elastic enough to require an acceptance of one hundred seventy-eight.^'' Under a contract calling for "about three hun- dred quarters more or less" of rye, the buyer was not compelled to accept three hundred fifty quarters. '^^ But under a contract to deliver five hundred thousand feet of lumber, "more or less," a deliver}^ of four hundred seventy-three thousand feet was said to be a deviation quite within the degree the courts have held to be reasonable.^" A contract to pay "a claim * * * {qi- about one hundred fifty dollars" was held to be a contract to pay the whole amount, although the latter was in fact fifty dollars more than the sum mentioned. ^'^ The word "almost" implies un- "Harrell v. Hill, 19 Ark. 102, 68 121. "Where a contract is made to Am. Dec. 202. sell or furnish certain foods identi- "^ Smith V. Fly, 24 Tex. 345, 76 fied by reference to independent cir- Am. Dec. 109. cumstances, such as an entire lot de- "Quesnel v. Woodlief, 2 lien. & posited in a certain warehouse, or M. (Va.) 173 note. all that may be manufactured by the "Maver v. Wooten. 46 Tex. Civ. vendor in a certain establishment, or App. 2,11, 102 S. W. 423. that may Ije shipped by his agent or "^ Featherman v. Hennessy, 43 correspondent in certain vessels, and Mont. 310, 115 Pac. 983. the quantity is named with the quali- "'Tilden v. Rosenthal, 41 111. 385, fication 'about,' or 'more or less.' or 89 Am. Dec. 388, "We understand words of like import, the contract ap- the phrase 'more or less,'" said Law- plies to the specific lot; and the nam- rence, J., "as having been used by ing of the quantity is not regarded as the parties to cover such trifling in the nature of a warranty, but deficiencies in number as might be only as an estimate of the probable caused by the ordinary casualties of amount, in reference to which good death or loss." faith is all that is required of the " Cross v. Eglin, 2 B. & Ad. 106. partv making it. In such cases the "Holland v. Rea, 48 Mich. 218, 12 governing rule is somewhat an- N. W. 167. alogous to that which is applied in "Turner v. Whiddcn. 22 Maine the description of lands, where nat- TZ — C0XTR.\CTS. \''0L. 2 § lSl9 CONTRACTS. 1 1 54 certainty, want of precision, and one using it within certain limits does not commit himself to exactness, but the word also implies that the limits are narrow, and, when such limits are passed the expression may and sometimes must, cease to be re- garded as an opinion and becomes a representation of a fact.^^ § 1819, "Say" and "say about." — The same words may have ditlerent meanings, according to the context, in different contracts.^^ But, unless there is something in the context to in- dicate a more positive signification, such words as "say," or "say about" when used to specify quantity, ought not to be construed as words of warranty.*^" Thus, a contract to sell all the naphtha that the vendor might make during a certain period, "say from one thousand to one thousand two hundred gallons per month," was held not to impose an absolute obligation to supply that num- ber of gallons.*'^ In a similar connection, the words "say about" aft'ord a contractor as much latitude as the words "say from."®^ On the other hand, an agreement to furnish "say not less than" a certain quantity leaves no uncertainty as to the minimum.''^ And a contract to load "a full and complete cargo of iron ore, say about i,ioo tons," where the ship could carry one thousand ural boundaries and monuments con- eight hundred eighty cords of wood, trol courses and distances and esti- "more or less as shall be determined mates of quantity. But when no to be necessary," by an agent of the such independent circumstances are vendee. Subsequently, the agent in referred to, and the engagement is good faith notified the contractor to furnish goods of a certain quality that only forty cords were required, or character to a certain amount, and it was held that there was no the quantity specified is material and liability beyond the value of the forty governs the contract. The addition cords. of the qualifving words, 'about,' or °^Hotchkiss v. Bon Air Coal &c. 'more or less? and the like, in such Co., 108 Maine 34, 78 Atl. 1108. cases, is only for the purpose of pro- °' McConnel v. Murphy, L. R. 5 P. viding against accidental variations C. App. 203, 217. arising from slight and unimportant *"* McConnel v. Murphy, L. R. 5 excesses or deficiencies in number, P. C. App. 203, 217. measure or weight. If, however, the " Gwillim v. Daniell, 2 Cromp. M. qualifying words are supplemented & R. 61. by other stipulations or conditions °' McConnel v. Murphy, L. R. 5 which give them a broader scope or P. C. App. 203, 217, holding that 496 a more extensive significancy, then will satisfy "say about 600." the contract is to be governed by '^Leeming v. Snaith, 16 Q. B. 275, such added stipulations or condi- declared in McConnel v. Murphv, L. tions." Per Justice Bradley in R. 5 P. C. App. 203, 217, not to_ be Brawley v. United States. 96 U. S. inconsistent with Gwillim v. Daniell, 168,24L.ed.622,13Ct. CI. fU. S.) 521, 2 C. M. & R. 61. where a contractor agreed to furnish I 155 TRADE CONTRACTS. g 1020 two hundred ten tons, was not fulfilled by loading one thousand eighty tons."* § 1820. Terms relating to time, "year," "month," "week," "day," "Sunday." — Under a statute which provides that the \vord "year" is equivalent to "year of our Lord" the expression "in any one year" means a calendar year."^ The words "current year", in a statute exempting from execution supplies necessary for running a farm for the current year, means from harvest to harvest and not a calendar year."" The word "month" in a contract for the delivery of a fixed quantity of a commodity in any month means a calendar month. "^ The word "week" is usually regarded as referring to a period of seven successive days."® A "day" or "natural day" is a continuous period of twenty-four hours commencing at midnight and is the unit of measure. The law usually takes no notice of fractions of a day."^ By common usage the terms "Sabbath" and "Sunday" are used indiscriminately to denote the Christian Sabbath, that is, Sunday. But properly speaking, the word Sabbath carries with it a re- ligious meaning and is not synonymous with Sunday under the practices of many religious societies.^" Sunday within the mean- ** Morris v. Levison, L. R. 1 C. P. tract. Only 1080 tons were loaded, D. 155, where Brett, J., premising and consequently defendant has that the words "full and complete loaded 53 tons short." In the same cargo" were a material factor in the case Archibald, J., said that "The construction, continued : "What, then, nature of the subject-matter must is the meaning of the word 'about?' be considered in determining what This is partly matter of fact, and meaning is to be attributed to such partly matter of law. I think the expressions." direction to the jury has always been "^ Sawyer v. Steinman, 148 Iowa that the deviation must not be very 610. 126 N. W. 1123. large. The difference must be such ""Hinton v. Roane, 124 La. 927, as people would ordinarily consider 50 So. 79S. 134 Am. St. 526. as included in the word 'about.' "• Fairchild-Gilmore-Wilton Co. v. There can be no exact rule of law Southern Refining Co., 158 Cal. 264, as to the percentage of difference al- 110 Pac. 951. lowed, but I have known juries often *" Jackson^ v. Cuss. 86 Kans. 280, allow in practice 3 per cent. Here 120 Pac. 3S3. we are placed in the position of a "* Brainard v. Buslinell, 11 Conn, jury, and are entitled to find the 16; Fox v. Abel, 2 Conn. 541 ; Towell facts, and we think that 3 per cent. v. Hollweg, 81 Tnd. 154; Cummins v. above 1100 tons is somewhere about Holmes, 11 Til. App. 158. affd. 109 the right quantitv to fix upon. Tf so. Til. 15; Kdmundson v. Wragg, 104 the undertaking" was to load a full Pa. St. 500. 49 Am. Rep. 5^0. and complete cargo, but the ship- "" Winnfield v. Grigsby, 126 La. 929, owner undertook to be content with 53 So. 53. 1133 tons as a fulfilment of the con- § l82I CONTRACTS. II56 ing of a statute forbidding work on that day means the entire day extending from midnight Saturday until midnight Sunday. '^^ A contract for services to be recompensed at the end of each week refers to week days and is not rendered invahd by the fact that some of the services are performed on Sunday in violation of the law.'" § 1821. "From and after"— "On"— "On or before"— "On or about" — "Since." — In the construction of the w^ords "from and after," as applied in a contract to a period of time, if the time is computed from an act done, it includes the day on which the act is done; if from a day specified, it excludes the day.^^ "' Muckenfuss v. State (Tex. Civ. App.), 116 S. W. 51. " Keith V. Kellermann, 169 Fed. 196. "When time is to be computed after a certain date, it is meant that such day should be excluded in the computation. Holt v. Richardson, 134 Ga. 798, 67 S. E. 798. Chicago Title & Trust Co. v. Smyth, 94 Iowa 401, 62 N. W. 792. "We next inquire as to the proper construction to be given to the words 'from and after April 1, 1893,' as written in this con- tract. * * * The learned district judge, after noting that the courts have differed in their construction of the words 'from and after,' cor- rectly states the rule to be as sus- tained by the weight of authority, 'that if it is from an act done it is inchisive, but if from a day it is exchisive.' This statement of the rule is based upon reason as well as authority. If it is from an act done, the time commences immediately upon the act being done. We have a famih'ar illustration in legislative enactments which are to take effect from and after their passage, or from and after publication. In the case of Arnold v. United States, 147 U. S. 494, Zl L. ed. 254, 13 Sup. Ct. 406, the question was whether the additional duties imposed by an act passed and which took effect on July 1, 1812, were chargeable upon the cargo of a ship that came within the jurisdiction of the United States, and within one of its collection dis- tricts, on the 1st day of July 1812. The courts says: 'The statute was to take effect from its passage, and it is a general rule that, where the computation is to be made from an act done, the day on which the act is done is to be included.' It was held that the goods were subject to the additional duty. In Arrowsmith V. Hamering. 39 Ohio St. 573, a pe- tition in error was filed on April 18, 1883, without leave of court. On that day an act was passed and took ef- fect, amending the statute so as to require leave to be first granted. It was held that by presumption of law the act took effect from the com- mencement of that day, but that such presumption would not prevail where it is in conflict with any right required in actual points of time, or on that day before that act took effect, and that in such case the exact time in the day may be shown ; that in the absence of proof that the case was pending on that day. before the act was passed and took effect, the pre- sumption of law will prevail that the net took effect from the commence- ment of the day. Mr. Bishop, in his work on Contracts (§ 1343), states the rule thus: 'Where time is computed from an act done, the gen- eral rule is to include the day. Where it is computed from the day of the act done, the dav is excluded.' He adds: 'Rut it is believed that not all courts will, and none should, ad- here to this or any other like techni- cal distinction, in a case where, by disregarding it. they can better carry into effect what, all the con- 1 157 TRADE CONTRACTS. § 182I The word "from" in its literal and restricted sense generally implies exclusion, but it may be used in a connection that means inclusive/'* Under a contract to pay plaintiff a certain price for all stamps ordered and delivered by a certain date, which amount is to be full compensation for everything done under the contract, plaintiff agreeing to keep on hand stamps sufficient to meet all orders, the United States is not liable for stamps remaining on hand after expiration of the period, although manufactured and stored under supervision of a governmental agent. ''^ When the words "from a date" or "from" a day named are used in connec- tion with the creation of an estate or interest and it is not con- trary to the expressed intention of the parties, the date named from which the estate or interest is to exist is to be included and it vests on that day.^" The word "on" is often given the meaning of "in" or "during" and this meaning of the word is well recog- nized when used to designate a date or calendar division of time.''^ A note payable "on or before" a certain date is valid as a negotiable instrument. The words mean immediately at or any time in advance of the date named. '^ The word "before" as ordinarily used in a note containing the "on or before" privi- lege gives the payor the privilege of paying the note at any time before the date named on which payment must be made.^^ The phrase "on or about" in a claim of mechanic's lien describing the date when the materials were furnished is a relative term which does not show definitely when the materials were furnished.'**' The word "since" is not always limited in meaning to the time between the present and a certain past event or a space of time sideration being taken into account, ™ Continental Bank Note Co. v. it is reasonably plain the parties United States, 154 U. S. 671, 26 L. meant.'" ed. 997, 14 Sup. Ct. 1194. •* Baker v. Hammett, 23 Okla. 480. '" Budds v. Frey, 104 ^linn. 481. 100 Pac. 1114. The words "from and 117 N. W. 158. after" indicate when the time begins " Henry v. Lovenberg (Tex. Civ. to run and when it ends for the App.), 128 S. W. 675. Sqc also, as to purposes of computation only, that these words in insurafice policies, is. the time began to run and included note in il L. R. A. (N. S.) 620. the day work was completed, in a "Lovenberg v. Henry (Tex.). 140 case where the law allowed a me- S. W. 1079. chanic's lien and the time ran from "Henry v. Lovenberg (Tex. Civ. and after completion. Cascade Lum- .^pp.). 128 S. W. 675. ber Co. V. Aetna Indemnity Co., 56 '"Godfrev Lumber Co. v. Kline, Wash. 503, 106 Pac. 158. 167 Mich. 629, 133 N. W. 528. § 1 822 CONTRACTS. 1 1 58 between two certain past events, but sometimes reaches beyond the present and embraces future time, and, when used as a prepo- sition, may niean "during or within the time after; ever after, or at any time after; for and after the time, occurrence, or exist- ence of."^^ § 1822. "Until" — "By" — "Forthwith" — "Immediate" — "Presently" — "At once." — The word "until" may be con- strued either exchisive or inchisive of the day to which it apphed, according to the context and subject-matter.^- Its more obvious meaning requires the exclusion of the day named, but the cir- cumstances and subject-matter of each case presented must de- termine. Where an act continued the charter of a corporation "until the first day of January," it was held that the charter ex- pired on the 31st day of December.^^ In an action on a policy of insurance for six months from the 14th day of February until the 14th day of August, the question was whether the 14th day of August was included so as to cover a fire which occurred on that day, and it was held that it was.^* The word "till" in a stat- ute fixing the termination of an office means "up or down to ; as far as; until."®^ A contract to complete work "by" a certain time generally means that it shall be done before that time. Where parties agreed to build a saw-mill and "to have it completed by November next," it was held that the month of November was excluded.**^ The phrase "until otherwise provided by law" means until the law provides some other method and is used in the sense of "up to that time," "till the point or degree that."" There is no precise definition, so far as time is concerned of the words "State V. Mathevv, 68 W. Va. 89, ruary was included, the 14th of 69 S. E. 644. August was not. Otherwise the *^king V. Stevens. 5 East 244. period of more than six months "People V. Walker, 17 N. Y. 502. would be covered by the policy." The provision requiring books con- *"* Oberhaus v. State (Ala.), 55 So. taining the record of assessed valua- 898. tion of real and personal estate to *" Rankin v. Woodworth, 3 Pen. & be open for examination and cor- W. (Pa.) 48. "Where a thing is or- rection from the second Monday of dered by a particular day, it is with January until the first day of May, a view of having the use of it on does not include the last day men- the day. Thus a coat is ordered by tioned Clarke v. New York, 111 N. Sundav, with a view of wearing it to Y. 621, 19 N. E. 436. church." ^ Isaacs V. Roval Insurance Co., 5 *^ TTolcomb v. Chicago &c. R. Co., L. R. Ex. 296. "If the 14th of Feb- 21 Okla. 667, 112 Pac. 1023. I 159 TRADE CONTRACTS. § l822 "forthwith" and "immediately." In every case, the meaning depends upon the circumstance of the case and the act to be per- formed.'**' Where a pohcy of insurance required notice, of loss by fire to be given to the secretary "forthwith," it was held that the rule meant due diligence under all the circumstances and no- tice after eighteen days was not, in that case, deemed sufficient.*® Where a policy of insurance required immediate notice to be given by the assured in case of a loss, and in the great fire in Chicago, on October 9, 1871, the plaintiff's property was burned, notice of the loss given November 13, 1871, was held to have been given in sufficient time, in view of the great derangement in all kinds of business caused by the fire."** In giving a con- struction to terms of this description, some regard must undoubt- edly be had to the nature of the act or thing to be performed, and the circumstances of the case. Nothing more is imposed upon the party than what is called due diligence, under all the circumstances of the case. There must be no unnecessary pro- crastination or delay, nothing which the law' calls laches.®^ The term "immediate" does not have its usual meaning of "instantly, forthwith, nothing intervening as to place, time or action," where the question involved relates to transportation but it rather means within a reasonable time having due regard to the cir- cumstances."" The word "immediately" when used in connection ** Lewis V. Curry, 156 Cal. 93, 103 of the assured, and strictly against Pac. 493. the insurer. Piedmont & Arlington ** Edwards v. Lvcoming County Life Ins. Co. v. Young, 58 Ala. 476, Mut. Ins. Co., 75 Pa. St. 378. 29 Am. Rep. 770. See also, Alabama ""Knickerbocker Ins. Co. v. Mc- Gold Life Ins. Co. v. Johnston, 80 Ginnis, 87 111. 70. "Forthwith" in all .\la. 467. 60 Am. Rep. 112; Hydraulic such policies means without unneces- Engineering Co. v. McHaffie, L. R. sary delay, or with reasonable dili- 4 Q. B. D*iv. 670 (construction of the gence, under the circumstances of words "as soon as possible") ; Roberts the particular case. St. Louis Ins. v. Brett, 11 H. L. Cas. 337, and 34 Co. V. Kyle, 11 Mo. 278, 49 Am. Dec. L. J. C. P. 241 Cas to interpretation of 74, where the fire occurred on the "forthwith") ; Strauton v. Wood, 16 15th and the plaintiffs hearing of it Q. B. 637 (where the contract was on the 18th gave notice by mail on to deliver goods "forthwith" the the 23d, this was held to be a suf- price being made payable within ficicnt compliance with a condition fourteen days from the making of requiring notice to be given "forth- the contract). with." New York Central Ins. Co. " Tnman v. Western Fire Ins. Co., V. National Protection Ins. Co., 20 12 Wend. (N Y.) 452. Barb. (N. Y.) 468. revd. 14 N. Y. °= Williams v. Southern R. Co. 155 85. The settled rule is to construe N. Car. 260, 71 S. E. 346. such requirements liberally in favor § 1823 COXTRACTS. 1 160 with the right of one to rescind a contract for fraud immedi- ately upon discovery of the fraud means a reasonable time under the circumstance within which to do the things necessary to re- scind. ^^ A contract, the legal import of which is that it shall be performed "presently," has been held to mean, not that it may be performed "within a reasonable time," but that it must be per- formed "immediately; now; at once."^* An order for an article to be delivered "at once" denotes a prompt or immediate ship- ment.''^ But the words "at once" in a note indicating its time for payment, mean a reasonable time and not a cash payment, espe- cially where the parties themselves have so construed the con- tract.'" § 1823. Sale on trial. — A sale on trial has been held to be a sale on condition precedent to buy if satisfied ; that is, the title does not pass until the condition prescribed is fully performed, although the possession is delivered. It is rather a bailment with an option to buy than a sale. It may become a binding promise through delay.^^ § 1824. Interest with respect to transfer of property right — "Interest in land" — "As interest may appear." — The term "interest" has a varied significance when applied to a transfer of property and its meaning in a particular case must be determined by the circumstances or context.®^ Under some circumstances it may include title.''^ Again it may mean a limited property right less than an absolute ownership.^ "Interest" may denote the property itself,' or it may denote the "estate."^ It is sometimes "^ Long V. International Vending Fire Ins. Co., 59 Minn. 267, 61 N. W. &c. Co., 158 Mo. App. 662, 139 S. W. 137, 50 Am. St. 405. 819 ■« Dickson v. Wildman, 183 Fed. ^*" Hawkins v. Studdard, 136 Ga. 398, 105 C. C. A. 618; Ormsby v. 727, 71 S. E. 1112. Ottman, 85 Fed. 492, 29 C. C. A. "'Bowser v. Atkinson (Mo.), 143 295; Ragsdale v. Mays, 65 Tex. 255. S W 75 ^ Garner v. Milwaukee Mechanics' '" Rivers v. Campbell, 51 Tex. Civ. Ins. Co., 73 Kans. 127. 84 Pac. 717. App. 103, 111 S. W. 190. 4 L. R. A. (N. S.) 654, 117 Am. St. ""Osborne v. Francis, 38 W. Va. 460; Copeland v. Eaton, 209 Mass. 812, 18 S. E. 591, 45 Am. St. 859. 139, 95 N. E. 291; Merrill v. Agri- '' Arkansas Fire Ins. Co. v. Wilson, cultural Ins. Co., 73 N. Y. 452, 29 67 Ark. 553, 55 S. W. 933, 48 L. R. Am. Rep. 184. A. 510. 77 Am. St. 129; Hough v. == Pierce v. Pierce. 14 R. T. 514. City Fire Ins Co.. 29 Conn. 10. 76 MVidincamp v. Phenix Ins. Co., 4 Am. Dec. 581; Gibb v. Philadelphia Ga. App. 759, 62 S. E. 478; Ladd v. Il6l TRADE CONTRACTS. § 182 held to inclufle the title of a lessee.* The word "estate" has a variety of significance. It may mean the property of a living man or the property of a. decedent which passes to his adminis- trator for the payment of debts. It may also be appropriately, though inaccurately, used to signify the property of a decedent so long as it remains." A contract by which one who had laid a cement sidewalk took in prirt payment the sand excavated in the course of the work is not a contract "in or concerning an interest in land" within the meaning of the statute of frauds."^ The sale of standing timber, however, has been held a sale of an "interest in land" and so within the statute of frauds unless under the agreement the title is not to pass till such tim- ber has been severed.' A mere license to enter, cut down and take away standing timber is not a sale of an "interest in land." within the meaning of the statute of frauds.^ A power of attorney given by joint owners of land to another joint owner of the same land to sell and convey it, which conveys to the attorney no interest in the land to be sold is not a "power coupled with an interest."" The words "as interest may appear" should be construed to mean such interest as by proper proofs was shown to appear at the time of the loss.^'^ § 1825. "C. O. D." and "F. O. B."— The abbreviation, "f. o. b." has a well-defined business meaning and as applied to the sale of merchandise destined for shipment is a term used to indicate that it will be placed on a car or vessel free of expense to the purchaser." The letters "C. O. D." mean collect on deliv- ery; that is, to deliver upon payment of the charges due the seller for the price and the carrier for the carriage of the goods." Both Ladd, 8 How. (U. S.) 10, 12 L. cd. '" Fenton v. Cascade &c. Fire Assn., 967 60 Wash. 389, 111 Pac. 343. * Sanford v. Johnson, 24 Minn. 172. " Sheffield Furnace Co. v. Hull "West V. Hermann, 47 Tex. Civ. Coal &c. Co., 101 Ala. 446, 14 So. A.PP 131 104 S W 428 672; Branch v. Palmer, 65 Ga. 210; ' "Okin 'v. Selidor (N. j.), 7S Atl. Silberman v. Clark, 96 N. Y. 522; 770 Hobart v. Littlefield. 13 R. I. 341; 'Hurley v. Hurley, 110 Va. 31, 65 Manganese &c. Safe Co. v. First S E 472. State Rank. 25 S. Dak. 119, 123 N. "Goodnouph &c. Stock Co. v. Gal- W. 572. lowav 171 Fed. 940. " American Exp. Co. v. \\ ettstem. "Gilmer's Heirs v. Veatch. 56 Tex. 28 Til. .Xpp. 96; Adams Exp. Co v. Civ App 511 121 S. W. 545. McConnell. 27 Kans. 238; Collender § 1826 CONTRACTS. I 1 62 terms are generally regarded as having required a fixed and well- known meaning so that parol evidence is not needed to explain them" and courts take judicial notice of their meaning.^* Some courts, however, have taken a different view and allow parol evi- dence to explain their meaning/^ The cases are by no means harmonious upon the question whether the words "f. o. b." of themselves impose upon the purchaser or upon the seller the duty of furnishing or designating the cars by which the goods are to be shipped. According to a goodly array of authority, the expres- sion means that the seller will secure the cars, load them and do whatever may be required to accomplish the shipment and con- signment of the buyer free of all expense to him.^*^ Other cases hold that the prima facie effect of the phrase without qualification is to cast this duty upon the purchaser/' The prima facie effect of the presumption under either rule may be rebutted by circum- stances showing a different intention.'^ Where goods are sold under an agreement for delivery f. o. b. cars at the place of ship- ment and no time of payment, inspection or acceptance is men- tioned, the buyer generally has the right of inspection after the arrival of the goods at their destination/^ § 1826. "Carloads." — A contract to deliver a certain num- ber of carloads of wood is not void for uncertainty, because a V. Dinsmore, 55 N. Y. 200, 14 Am. 525; Cincinnati S. & C R. Co. y. Rep 224. Consolidated Coal &c. Co., 7 Ohio ''Kilmer v :\Ioneyweight Scale Wkly. L. Bull. 200; Vogt v. Schiene- Co 36 Ind. App. 568, 76 N. E. 271 ; beck, 122 Wis. 491, 100 N. Y. 820, 67 United States Exp. Co. v. Keefer, 59 L. R. A. 756, 106 Am. St. 989. Ind. 263 ; American Exp. Co. v. '' Baltimore & L. R. Co. v. Steel Shier, 55 111. 140; State v. Intoxicat- Rail Supply Co., 123 Fed. 655, 59 ing Liquors, 1^ Maine 278. C. C. A. 419; Evanston Elevator & "Capehart v. Furman Farm Imp. Coal Co. v. Castner, 133 Fed. 409; Co 103 Ala 671, 16 So. 627, 49 Am. Davis v. Alpha Portland Cement Co., St. 60 ; Sheffield Furnace Co. v. Hull 134 Fed. 274, affd. 142 Fed. 74, IZ Coal &c. Co., 101 Ala. 446, 14 So. C. C. A. 388; Consolidated Coal Co. 672; American Exp. Co. v. Shier, 55 v. Schneider, 163 111. 393, 45 N. E. 111. 140; United States Exp. Co. v. 126; Consolidated Coal Co. v. Jones Keefer, 59 Ind. 263; State v. Intoxi- &c. Co., 120 111. App. 139; Kunkle eating Liquors, 1Z Maine 278. v. Mitchel, 56 Pa. 100; Hocking v. "Collender v. Dinsmore. 55 N. Y. Hamilton, 158 Pa. 107, 27 Atl. 836. 200 14 Am. Rep. 224; Silberman v. "Davis v. Ainha Portland Cement Clark, 96 N. Y. 522. Co., 134 Fed. 274, affd. 142 Fed. 74, " Elliott v. Howison, 146 Ala. 568, 1?> C. C. A. 388. 40 So. 1018; Hurst v. Altamont Mf.g. ''Eaton v. Blarkhurn. 52 Ore 300. Co.. 73 Kans. 422, 85 Pac. 551, 6 96 Pac. 870. 97 Pac. 539. 20 L. R. A. L. R. A. fN. S.) 928, 117 Am. St. (N. S.) 53, 132 Am. St. 705. II63 TRADE CONTRACTS. § 18J7 carload varies from thirty-five thousand to sixty thousand feet. The vendee has a right to insist upon as much, at least, as the specified number of loads of the smallest capacity.^** § 1827. "On sale and return." — A contract "on sale and return" though sometimes given a broader meaning is said to be an agreement by which goods are delivered by a wholesale dealer to a retail dealer, to be paid for at a certain rate, if sold again by the retailer and if not sold to be returned within reasonable time in case no time is specified in the contract. Un- der such a contract, if the retailer returns the goods within a rea- sonable time where no time is specified, the contract of sale is terminated. It becomes absolute, however, where the goods are retained beyond a reasonable time. The title to the property under such a contract passes to the purchaser subject to an op- tion in him to return them within a reasonable time. Where the retailer disables himself from performing the condition of the contract or fails to perform it within a reasonable time, his lia- bility to pay the price fixed becomes unconditional. \Miat is a reasonable time for the return of the goods depends upon the circumstances of each case, and no fixed rule can be laid down.-' § 1828. "Satisfactory." — A contract to furnish an article warranted "satisfactory" means that the article shall be satisfac- tory to the purchaser. But this does not justify a rejection for mere caprice and some courts have held that it is sufficient if the article is such as ought to satisfy the purchaser as a reasonable man; the ground of rejection must be bona fide." It has been * Indianapolis Cabinet Co. v. Herr- carloads, to deliver the remainder of mann, 7 Ind. App. 462, 34 N. E. 579, the specified number of thirty. See where the court said that "So far as also, O'Ferrall v. Van Camp, 124 Ind. the contract is uncertain, the courts 336, 24 N. E. 134. cannot enforce it, but, within the "^ House v. Beak, 141 111. 290. 30 limits that the contract is certain, the N. E. 1065, 33 Am. St. 307; Frantz courts will enforce it." In Schreiber v. Fink. 125 La. 1013. 52 So. 131. 28 V. Butler, 84 Ind. 576, it was held L. R. A. (N. S.) 539; Hunt v. Wy- that a contract for the delivery of man, 100 Mass. 198; Hickman v. a certain number of carloads of ice Shimp, 109 Pa. St. 16; Haskins v. was not void for uncertainty and Dern. 10 Utah 89, 59 Pac. ^^53. that the quantity could be made cer- ^ Zaleski v. Clark, 44 Conn. 218, tain by averment and proof. The 26 Am. Rep. 446; Berthold v. St. suit was based upon the refusal of Louis Electric Const. Co., 165 Mo. the defendant, after delivering ten 280, 65 S. W. 784; Stutz v. Loyal- § 1829 CONTRACTS. I164 held, however, that the word means that the purchaser has re- ceived to himself an unqualified option, and is not willing to have his freedom of choice subject to any contention or to be subject to any investigation whatever and that his determination of the matter is final and conclusive."^ § 1829. "For collection."— The indorsement "for collec- tion" is restrictive and does not pass title. The indorsee takes the instrument as agent or trustee for the indorser.-* Accordingly an indorsement on a check "for collection, pay to the order of the cashier" is notice to all purchasers of the check that the indorser is entitled to the proceeds and that the indorser is only an agent for collection.*^ The words "for collection" in a note allowing attorneys' fees for collection only authorize such fees after ma- turity.'*' § 1830. "Dollar"— "Greenbacks."— The word "dollar" sig- nifies the money unit of the United States and it is of the value of one hundred cents. -^ When figures are used to denote a sum of money, these figures are ordinarily understood to represent dollars unless a different intention is fairly expressed in the instrument.'* The term is an expression of value as well as the name of a coin and is certain as an expression of value.'^ The term "greenback" is a popular name applied to all United States treasury notes. ^'^ § 1831. "Supplies." — Pig iron furnished a manufacturing company engaged in making steel and other metals is a "supply" within the meaning of a statute giving a lien to persons furnish- Hanna Coal &c. Co.. 131 Pa. St. 267, "" Shenandoah National Bank v. 18 Atl 875; Suigerly v. Thayer, 108 Marsh, 89 Iowa 273, 56 N. W. 458, Pa. St. 291, 2 Atl. 230, 56 Am. Rep. 48 Am. St. 381. 207. See ante §§ 1604, 1605. ''Leonard v. State, 115 Ala. 80, 22 ^Baltimore &c. R Co. v. Brydon, So. 564; Newlove v. Mercantile Trust 65 Md. 198, 611, 3 Atl. 306, 9 Atl. Co. (Cal.), 105 Pac. 971; McDonald 126, 57 Am. Rep. 318. See ante v. State (Ga. App.), 58 S. E. 1067; §§ 1603, 1605. United States v. Fuller, 4 N. Mex. ^'Tvson V. Western Nat. Bank, 77 358, 20 Pac. 175. Md 412, 26 Atl. 520, 23 L. R. A. ^ Newlove v. Mercantile Trust Co. 161; First Nat. Bank v. Gregg. 79 Pa. (Cal.), 105 Pac. 971. 384; Freiberg v. Stoddard, 161 Pa. =" State v. Barr. 61 N. J. L. 131, 38 St. 259, 28 Atl. 1111. Atl. 817. ^Bank of ATetropolis v. First Na- ^"McDonald v. State (Ga. App.), tional Bank, 19 Fed. 301. 58 S. E. 1067. I 1 65 TRADE CONTRACTS. § 1832 ing supplies necessary in the operation of a manufacturing com- pany.^' § 1832. "Regrating" and "forestalling."— The word "re- grating" means the huying of corn or other dead victuals in any market and selHng it again in the same market, for this enhances the price of provisions, as every successive seller must have a suc- cessive profit.^' The word "forestalling" means the buying of victuals on their way to market before they reach it with the intent to sell again at a higher price. ^^ § 1833. "Stock in trade." — Generally speaking, the "stock in trade" includes everything necessary for carrying on a busi- ness.^* It includes unfurnished goods in the course of manufac- ture^° and tools and implements of the business.^" It is generally held to exclude money in bank^' and revenue stamps.^® The term has been held to include goods in stores bought on joint account and sold for the mutual profit of the insured and another person.^® § 1834. Terms used in grain and lumber contracts. — "Country run" oats means the grain as it comes from the coun- try station in carload lots with the identity of the contents of the cars preserved, and a contract for the sale of such oats is not complied with by furnishing oats which have been stored in a ter- minal elevator. ""^ The word "lumber" has not the same meaning as "logs" or "timber."*^ The "stumpage value" of a tree is understood to be merely the value of the tree of standing timber." § 1835. "Strike" clauses. — It would seem well settled that a common carrier may stipulate by special contract for exemp- " Virginia Development Co. v. ^'' Moadinger v. Mechanics' Fire Crozer Iron Co., 90 Va. 126, 17 S. E. Ins. Co., 2 X. Y. Super. Ct. 527. 806. 44 Am. St. 893. "'Boston Investment Co. V. Bos- "Dutton V. Knoxville. 121 Tenn. ton, 158 Mass. 461, 33 N. E. 580. 25. 113 S. W. 381. 130 Am. St. 748. "^ Palfrey v. Boston, 101 Mass. 329, "Button V. Knoxville, 121 Tenn. 3 Am. Rep. 364. 25. 113 S. W. 381. 130 Am. St. 748. '" Millaudon v. Atlantic Ins. Co., 8 ^* Harper v. Albany Mut. Ins. Co., La. 557. 17 N. Y. 194. *^ Updike Grain Co. v. Williams "Benuilliard v. Bartlett. 19 Kans. Grain Co., 198 Fed. 828. 382, 27 Am. Rep. 120; ^IcAbe v. "Craze v. Alabama Land Co., 155 TJiompson, 27 Minn. 134, 6 N. \V. Ala. 431. 46 So. 479. 479. *" Stanlev v. Livingston, 9 Ga. App. 523, 71 S. E. 87S. § 1836 CONTRACTS. II66 tion from liability for loss occurring by reason of delay in the transportation of goods, caused by mob or strike or threatened violence to person or property, provided the carrier is free from fault, and the principle should apply to other contracts containing a like resers-ation. In all cases the strike or other form of vio- lence must be the direct and proximate cause of the delay.'*^ § 1836. "Extra" in building contract. — The word "extra" whether used as an adjective or a noun, ordinarily expresses an idea of something in addition to or in excess of what is usual or necessary. As used in building or other similar contracts it denotes something done or furnished in addition to the require- ment of such contract.** § 1837. "Agency," "agent," "subagent," "attorney in fact." — "Agency" is the legal relation founded upon an express or implied contract of the parties or created by law, by virtue of which the agent is employed and authorized to act for the prin- cipal. ''^ The word "agent" is employed in more than one sense, and it is frequently used to indicate that a merchant or dealer has the exclusive right to sell a specified article in certain territory when in fact no agency exists. The dealer in no sense represents the manufacturer but simply buys from him in the regular course of trade and sells the specified article to the public.*'' A "sub- agent" is one employed by an agent to assist him in transacting the affairs of his principal." An "attorney in fact" is a private or express attorney appointed for some particular or definite pur- pose not connected with a proceeding at law.*^ § 1838. Construction of conditions and warranties. — "War- ranties" and "representation" are not equivalent terms.*'' In con- struing a contract containing an express warranty "the object to ^'See Miller v. Norcross, 92 App. ^'Poirier Mfg. Co. v. Kitts, 18 N. Div. (N. Y.) 352, 87 N. Y. S. 56; Dak. 556, 120 N. W. 558. Hall V. Pennsylvania R. Co., 14 Phila. " Fanset v. Garden City Bank, 24 (Pa.) 414; Gulf. C. & S. F. R. Co. S. Dak. 248, 123 N. W. 686. V Gatewood, 79 Tex. 89, 14 S. W. ■" Harkins v. Murphy, 51 Tex. Civ. 913. 10 L. R. A. 419n. App. 568, 112 S. W. 136. "Fullerton v. Des Moines (Iowa), *° Minnesota Mut. Life Ins. Co. v. 115 N. W. 607. Link, 131 111. App. 89. "Harkins v. Murphy. 51 Tex. Civ. App. 568, 112 S. W. 136. I 167 TRADE CONTRACTS. § 1839 be attained is the intent of the parties; but this intent must be ascertained, if possible, by the language which the parties have themselves adopted and used in such contract, and not by reading into the same words that import an intent and understanding wholly unintended and unexpressed when the contract was writ- ten, but suggested by some apparent hardship in the enforcement thereof.'"^" The word "purchase-money" under the principle allowing the recovery of the purchase-money on a breach of warranty includes the actual consideration paid whether in money, property or otherwise/^ § 1839. Terms relating to position — "Near," "abutting," "adjacent," "contiguous," "on," "meander line." — The word "near" means "adjacent to, close by, not far from." It is a rela- tive term and its precise import can only be determined by sur- rounding facts and circimistances.^- The word "abutting" means "joined to" or "adjoining" but does not necessarily imply that the things spoken of are in contact. ^^ The w^ords "abutting" and "adjacent" are not synonymous. The former contemplates the street boundary toward the lot as identical with the boundary of the latter toward the former, while the idea of the latter is the parcel near by the street but separated therefrom by an intervening abutting strip or parcel.^* The word "contiguous" means land which touches other land on the sides.^^ When used as indi- cating relative situation "on" means at, near, or adjacent to, without implying contact or support.^® The words "to", "on", "by", "at", "along", in a conveyance of land bounded by a non- tidal stream or highway presumptively carry title to the center or as far into the stream or highway as the grantor possesses such title.^^ A "meander line" is not established as a boundary •^Nave V. Powell (Ind. App), 96 cited in Elliott Roads & Sts. (3d N. E. 395. cd.), § 876. note 1. "Tavlor v. Allen, 131 Ga. 416, 62 "Northern Pac. R. Co. v. Douglas S. E. 291. County, 145 Wis. 288, 130 X. W. 246. "Karczenska v. Chicago, 239 111. "° Griffin v. Denison Land Co., 18 483, 88 N. E. 188; Kilgore v. Jack- N. Dak. 246, 119 X. W. 1041. son, 55 Tex. Civ. App. 99, 118 S. W. ""O'Mara v. Jensma, 143 Iowa 297, 819. 121 N. W. 518. "People V. Willison, 237 111. 584, " Learv v. Jersey City, 189 Fed. 86 N. E. 1094. See generally cases 410. 2 Elliott, Roads & Sts. (3d ed.), § 914. § 1840 CONTRACTS. II68 but is a line drawn along the shore of water disregarding its minor sinuosities and is not ordinarily used to mark the limits of a tract of land, but simply as a basis from which to measure such tract and determine the number of acres for which the gov- ernment will demand payment/* § 1840. "Guaranty," "unlimited guaranty," "primarily lia- ble," "secondarily liable," "surety." — "Guaranty" is an un- dertaking by one person that another shall perform his contract or fulfil his obligation and that in case he does not do so the guarantor will do it for him/® A guarantor of a bill or note is one who engages that the note shall be paid/" It has been said that the word implies that the entire matter was one concurrent act and the contract of guaranty was part of the original agree- ment and supported by the same consideration/^ An "unlimited guaranty" is one that is unlimited both as to time and amount. A "continuing guaranty" is one that is not limited in time or to a particular transaction or to specific transactions, but is opera- tive until revoked/" A guaranty made to apply in terms to sales made "on and after the date thereof," applies alike to present and future sales/^ The terms "primarily liable" and "second- arily liable" as used in a statute fixing the liability of a guarantor have reference to the remedy provided by law for enforcing the obligation of one signing negotiable in- struments rather than to the character and limits of the obligation itself/* A "surety" is an insurer of the debt. A "guarantor" is an insurer of the solvency of the debtor/^ "A surety and guarantor have this in common : that they are both bound for another person. Yet there are points of difference be- tween them. * * * A surety is usually bound with his principal "'Barringer v. Davis, 141 Iowa 419, Belcher (Mo.), 104 S. W. 894. But 120 N. W. 65. see last note to this section. '' Miller v. Lewiston Nat. Bank, 18 " Merchants' National Bank v. Idaho 124, 108 Pac. 901; Northern Cole, 83 Ohio 50, 93 N. E. 465. State Bank v. Bellamy, 19 N. Dak. ""Bond v. Farwell Co., 172 Fed. 509, 125 X W. 888 ; Clvmer v. Terry, 58. 96 C. C. A. 546. 50 Tex Civ. App. 300, 109 S. W. " Northern .State Bank v. Bellamy, 1129 19 N. Dak. 509, 125 N. W. 888. *° Northern State Bank v. Bellamy, ""Northern State Bank v. Bellamy 19 N. Dak. 509, 125 N. W. 888. 19 N. Dak. 509, 125 N. W. 888. ®' Great Western Printing Co. v. Il69 TRADE CONTRACTS. § 184I by the same instrument, executed at the same time and on the same consideration. He is an original promisor." The contract of the guarantor, however, is his own separate undertaking, in which the principal does not join. It may be entered into before or after that of the principal and is often founded on a separate consideration from that supporting the contract of the princi- pal.«" § 1841. Terms used in dealing with real estate. — A "deed" in its broadest meaning includes all varieties of sealed instru- ments ; in its secondary and more common meaning it signifies a writing under seal conveying real estate.*^ An "executed deed" is a deed signed, sealed if necessary, acknowledged if necessary, and delivered.^^ A "quitclaim deed" is a form of deed in the na- ture of a release, though it may contain words of grant as well as of release,'" and it will convey what the grantor has as well as any other deed.'"" A "trust deed" is substantially a mortgage with power of sale and the trustor or his successor is the holder of the legal title entitled to exercise the ordinary incidents of owner- ship subject to the execution of the trust." The meaning of the word "hold" as applied to real estate has to do with the duration of the estate and is somewhat different from the mode of acquisi- tion." The term "seized" when applied to dower in personalty means "title" or "ownership" which carries with it the immediate right of possession." There is a " 'delivery' of a deed, where, after its execution, the scrivener, in accordance with the uncondi- "Musgrove v. Luther Pub. Co., 5 often used to express merely fhe act Ga. App 279, 63 S. E. 52; 1 Brandt of signing the instrument. Morris on Suretyship (3d ed.). § 2. v. Butler (Mo. App.), 122 S. W. 111. "Malsby v. Gamle, 61 Fla. 310, 54 ""Nathans v. Arkwright, 66 Ga. So. 766; Fisher v. Pender, 52 N. Car. 179; State v. Kemmerer, 14 S. Dak. 483. A "conveyance" is any instru- 169, 84 N. W. 771 ; Balch v. Arnold, ment by which an estate in real 9 Wyo. 17, 59 Pac. 434. But see Chew property is created and includes a v. Kellar, 171 Mo. 215, 71 S. W. 172. mortgage. Farmers' &c. Bank v. "Smith v. Pendell, 19 Conn. 107, Citizens' Nat. Bank, 25 S. Dak. 91, 48 Am. Dec. 146; Utley v. Fee, ZZ 125 N. W. 642. Kans. 683, 7 Pac. 555. "Creamer v. Bivert, 214 Mo. 473. "Hollywood Lumber Co. v. Love. 113 S. W. 1118. In strict legal under- 155 Cal. 270, 100 Pac. 698. standing the word "to execute" as "Lehman v. State, 45 Ind. App. applied to deeds, notes or written 330. 88 N. E. 365. contracts, includes, signing and de- " Burdett v. Burdett, 26 Okla. 416, livery, but in popular speech it is 109 Pac. 922. 74 — Contracts, Vol. 2 § 1842 CONTRACTS. II70 tional instructions of the grantor, turns it over to the grantee."'* A "cloud upon title" is in itself a title or encumbrance apparently valid but in fact invalid. It is something which, nothing else being shown, constitutes an encumbrance on the property or a defect in its title.'^'' A title need not in fact be bad in order to make it unmarketable. The question is whether a reasonably prudent man, familiar with the facts and apprised of the question of law involved, would accept the title in the ordinary course of business. If there be doubt or uncertainty sufficient to form the basis of litigation the title is not marketable.'^ On the question of knowledge of defects in title as bearing on the question of good faith the rule is that the purchaser of land, with knowledge of such facts as would put a prudent man upon inquiry which if pursued with ordinary diligence would lead to actual notice of adverse claims, may be deemed guilty of bad faith if he neglects to make such inquiry, and is chargeable with the "actual notice" he would have received.'' A mortgage "deficiency" is the bal- ance due after exhausting the property given as security.'* § 1842. "Real estate," "vested estate," "perpetuity," "ap- purtenant." — The words "real property" or "real estate" in- clude every estate, interest and right in lands, tenements and hereditaments.'® A "chattel real" at common law was an inter- est annexed to, or growing out of, real estate, as a term of years, having the character of immobility, which denominated it as real while other chattels proper are movable.^" Coal in place is "real estate" within the meaning of statutes giving a wife dower in her husband's "real estate."®^ The homestead right of minors "Conway v. Rock, 139 Iowa 162, Henderson v. Harness, 176 111. 302, 117 N. W. 273. 52 N. E. 68; Bodwell v. Heaton, 40 '' McArthur v. Griffith, 147 N. Car. Kans. 36, 18 Pac. 901 ; Kiser v. Saw- 545. 61 S. E. 519. ver, 4 Kans. 503; Slattery v. Jones, "Williams V. Bricker, 83 Kans. 53, 96 Mo. 216, 8 S. W. 554, 9 Am. St. 109 Pac. 998. 344; Nichols v. Guthrie, 109 Tenn. "Cooper V. Flesner, 24 Okla. 47, 535, 73 S. W. 107; Potter v. Couch, 103 Pac. 1016. 141 U. S. 296, 35 L. ed. 721, 11 Sup. '"Barley v. Block (Tex.), 134 S. Ct. 1005. W. 323. "Comer v. Light (Ind.), 93 N. " Stull V. Graham, 60 Ark. 461, 31 E. 660. S. W. 46; California &c. R. Co. v. *^ Reynolds v. Whitescarver, 66 W. Mecartney, 104 Cal. 616, 38 Pac. 448; Va. 388, 66 S. E. 518. I 1 71 TRADE CONTRACTS. § 1843 in land of their deceased father is "real estate."" An estate "vests" in a person who is given a present and immediate interest as distinguished from 'an interest, the existence of which depends on a contingency. Tlie word applies to estates in personalty, as well as estates in land.**^ A "perpetuity" is any limitation tend- ing to take the subject of it out of commerce for a longer period than a life or lives in being and 21 years beyond.^* A thing is deemed to be incidental or "appurtenant" to land when it is by right used with the land for its benefit.®'^ § 1843. "Conditional estates," "conditions" in deeds, "de- feasances," "vendor's lien." — An estate upon condition is one which is made to vest or to be enlarged or defeated upon the hap- pening or not happening of some event. An express condition in this view is one declared in terms in the deed creating the estate. An implied condition is one which the law implies, either from its being always understood to be annexed to certain estates or as annexed to estates held under certain circumstances.®* A condition precedent is one which must happen before the estate dependent upon it can arise or be enlarged. A condition subse- quent, is such as when it does happen, defeats the estate. ^^ Where it clearly appears from the language of a deed that it was the in- tention of the parties that on breach of a restriction the estate should be defeated and returned to the grantor, this restriction is a "condition" without regard to whether apt words were used to create the condition or not.** The word "business" in a deed forbidding the use of the lot for business purposes excludes the use of the lot for a physician's office.*'' An instrument which ■"Ancell V. Southern 111. &c. Bridge "Armstrong v. Barber, 239 III. 389, Co.. 223 Mo. 209, 122 S. W. 709. 88 N. E. 246. "When the 'homestead' of a land- " Corea v. Higuera. 153 Cal. 451. owner is alluded to in common 95 Pac. 882, 17 L. R. A. (N. S.) speech it is never understood to be 1018n. limited to the dwelling-house or ^ Raley v. Umatilla County. 15 Ore. other house within curtilage, but em- 172, 13 Pac. 890, 3 Am. St. 142. braces the tract of land on which is " Ralev v. Umatilla County, 15 Ore. located the dwelling and tributary 172, 13 Pac. 890. 3 Am. St. 142. improvements." Hancock v. King, ** Ball v. Milliken, 31 R. I. 36, 76 133 Ga. 734. 66 S. E. 949. Atl. 789. »' Armstrong v. Barber, 239 111. '" Semple v. Schwarz (Mo.V 100 389, 88 N. E. 246; In re McQellan, S. W. 633. 221 Pa. 261, 70 Atl. 737. § 1 844 CONTRACTS. 1 1 72 defeats the force or operation of some other deed or of an estate is a "defeasance" ; but if the provision is in the same deed it is a condition.®" A conveyance of real estate for which the con- sideration is not paid raises a claim in equity upon the property conveyed and this is commonly called a "vendor's lien."®^ § 1844. "Lease" or "license," "subtenant."— There is a plain difference between a lease and a license. The test to deter- mine whether an agreement for the use of real estate is a license or a lease is whether the contract gives exclusive possession of the premises against all the world including the owner, in which case it is a lease; or whether it merely confers a privilege to occupy under the owner, in which case it is a license, and this is a ques- tion of law arising out of the construction of the instrument.®* A "subtenant" is one who leases all or a part of rented premises from the original lessee for a term less than that held by the latter.®^ § 1845. "All crops grown and to be grown." — A chattel mortgage covering "all crops growing and to be grown" is not void for uncertainty as to that part which refers to "all crops growing" in that it fails to specify the year in which the crop was to be grown but is void as to the part which refers to the crop "to be grown without stating any year."®* A mortgage describing the property as "my entire crop, grown the present or next year" has been held to embrace the crop of each and both years, and equivalent to the phrase "my entire crop, whether grown the present or next year," and hence not defective as to description because covering the crop of one or the other of two years with- out showing which of the two crops was intended to be mort- gaged.®' § 1846. Miscellaneous terms. — A note payable "at" a des- ignated bank which is negotiable within the statute declaring a •"Epperson v. Epperson, 108 Va. '^ Hudgins v. Bowes (Tex. Civ. 471, 62 S. E. 344. App.), HO S. W. 178. " Wilson V. Plutus Mining Co., 174 " Luce v. Moorehead, 12, Iowa 4y«, Fed. 317, 98 C. C. A. 189. 35 N. W. 598. 5 Am. St. 695 •"Shaw V Caldwell, 16 Cal. App. ""Hoist v. Harmon, 122 Ala. 45J, 1, 115 Pac. 941. 26 So. 157. 11/3 TRADE CONTRACTS. § 1 846 note payable in a bank within the state, shall be negotiable. The word "at" is equivalent to "in"."^ A "check" is an order on a bank purporting to be drawn upon a deposit of funds," and is by com- mon law negotiable and a consideration is presumed."* The in- dorsement of commercial paper "without recourse" does not avoid the warranty of its genuineness and of its title in the indorser.®" The words "obligation executed" as used in a statute prohibiting any corporation from pleading usury on any obligation executed by it refers to corporate obligation such as bonds, mortgages and the like and is without application to an agreement to pay usuri- ous commission to an agent. ^ One of the meanings of the word "advance" is "a loan" and the use of the word quite naturally may import a reimbursement and the relation of debtor and cred- itor may be implied from the use of the word.^ "Best judgment" means substantially the same thing as "opinion" or "belief."^ The terms "good faith" and "notice" are intimately related but are not of uniform meaning; the former retains in some measure the popular sense of honest belief, but its technical significance depends largely upon the doctrine of notice as developed in the progress of the equity system.* A corporate "surplus" is that which remains after the payment of expenses and dividends."'' Under the laws of Mississippi usurious interest is "received" when it is charged in the settlement of a building and loan asso- ciation with the borrowing member." The word "general" in its use to designate newspaper circulation is equivalent to extensive.^ "Halstead v. Woods (Ind. App.), *Grone v. Economic Life Ins. Co. 95 N. E. 429. (Del.), 80 Atl. 809. "State V. Hammelay, 52 Ore. 156, 'Harris v. State (Tex.), 137 S. W. 96 Pac. 865, 17 L. R. A. (N. S.) 244n, 27Z. 132 Am. St. 686. * Richmond v. Ashcraft (Mo. •"Purcell V. Armour Packing Co. App.), 117 S. W. 689. (Ga. App.), 61 S. E. 138. ''Mark v. American Brewing Co., " State V. Corning Saving Bank, 126 La. 666, 52 So. 983. 139 Iowa 338. 115 N. W. 937. 'Mississippi Building &c. Assn. v. ^ Mazarin v. Hudson County &c. McElveen (Miss.). 56 So. 187. Building Co., 80 N. J. L. 35, 76 Atl. ' Times Printing Co. v. Star Pub. 2,22. Co., 51 Wash. 667, 99 Pac. 1040. I LAW LIBRARY UNIVERSITY OF CALIFORNIA LOS ANGELES AA 000 728 19 UNIVERSITY OF CALIFORNIA LIBRARY Los Angeles This book is DUE on tlu- last date .stani|je(l below. Form L9-Serics 4939 .,,^,^^fj_<;vrr.|Ji^{j^j,5.jf,,.M*r>^i_^^f*^ ^^■PVBVI^^^B